Dear Fellow Owners and Residents,
- Another attempt is now being made to force us through the painful and damaging process of an attempted en-bloc sale. We have seen the notice for the Extraordinary General Meeting on 1 Dec 2007, and we have serious reservations about it. Apart from the numerous minor procedural errors (the proxy form appears to be for the election of a Council member, for instance), there are major questions unanswered. First and greatest: Should there not be a vote first on whether the owners want an en-bloc sale committee at all? We believe that this is the obvious first step, since it is far from clear that the majority of the owners actually wish to leave their homes in Botanic Gardens View.
- In the interest of transparency and fairness, we have some proposals, which we hope that you will support:
(a) The EOGM should first vote on whether it wishes a Sale Committee to be formed or not. To go straight to electing members of a committee without this preliminary stage will pre-empt the decision of the meeting, be prejudicial to the interests of the majority and may leave the outcome of the EOGM open to subsequent legal challenge.
In addition, the EOGM may not be valid due to the lack of a motion for the formation of a Sale Committee and various other defects in the Notice.
(b) The vote should be by secret ballot. Secret balloting is a voting method in which a voter's choice remains confidential and the aim is to ensure that the voter states his or her sincere choice without fear of intimidation or otherwise. We realise that this is unusual. But the fact is that concerns have been raised with us by some of our fellow majority owners. They fear intimidation and even criminal actions against them by their neighbours if they reveal that they oppose an en-bloc sale. An open vote may lead to pressure being put on those present to vote otherwise than how they wish. - In the interest of transparency, openness and in order to remove any possibility of undue influence by any party, we therefore propose the following procedure for the EOGM:
(a) The first vote will ask whether a Sale Committee should be formed or not.
· The MC will give a form asking this question to the representative of each share value and proxy-holder present at the EOGM.
· Those present will be asked to identify themselves to the MC so that each share value will only be represented by one person.
· NOTHING ON THE FORM WILL IDENTIFY THE NAME OR ADDRESS OF THE VOTER
· Each form should be stamped by the MC to prevent duplication.
· The form will require a simple Yes/No answer.
· Abstentions will not be counted.
· Each share value representative will complete the form, then immediately put the completed form into a sealed box held by the MC.
· The votes will then immediately be counted in public by the Chair and Secretary of the MC.
· The result will be announced immediately by the Chair of the MC.
· If the majority of those present and voting oppose the formation of the Sale Committee, there will be no further action and the EOGM will end.
(b) If the majority in the first vote support the formation of the Sale Committee, we will proceed to the next step:
· The MC will, as before, hand out a form listing the persons nominated for the Sale Committee.
· NOTHING ON THE FORM WILL IDENTIFY THE NAME OR ADDRESS OF THE VOTER
· Owners and proxy-holders will then tick “Yes” or “No” against each name.
· Abstentions will not be counted.
· Each share value representative will immediately put the completed form into a sealed box held by the MC.
· The votes for each nominee will then immediately be counted in public by the Chair and Secretary of the MC.
· The results will be announced immediately by the Chair of the MC.
· If three or more of the nominees are supported by a majority of those present and voting, they will constitute the Sale Committee.
· If fewer than three of the nominees are supported by a majority of those present and voting, no Sale Committee will be formed and the EOGM will end. - We believe that this proposal will lead to a fair and equitable vote, that will more accurately reflect the views of the owners of Botanic Gardens View. We will shortly propose to the MC that this procedure be adopted at the EOGM. If the MC refuses to consider this proposal, we will raise the issue at the EOGM. We hope that you will be able to support this procedure.
- We recognise that some owners would indeed be interested in an en-bloc sale if the terms were right. Those of you in that position may wish to consider some issues that have been raised before and that remain unanswered. For instance, in an en-bloc sale, how will proceeds be apportioned? Will owners be paid according to the floor area of their flats or by share value or by some other means? We would point out that any means of apportionment except by floor area will mean that owners of three-bedroom flats will lose out; you will receive less than a fair value for your homes. What will the other terms of the Sale Agreement be? Will it take heed of the lessons of the Horizon Towers case?
- The property market continues to rise. This is not in fact good for the victims of an en-bloc sale. Those of us who have no other home but Botanic Gardens View will be left high and dry. There will be nowhere affordable that will not be inferior in location, size, legal status (ie freehold or 999-year lease), maintenance costs and convenience to Botanic Gardens View. We will gain nothing and lose what we already have.
- We urge you to attend the EOGM and oppose the creation of another Sale Committee.
Best regards,
Vanessa Chan
Blk 9, #10-09
Wong Hwei Ming
Blk 9, #09-17
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2 comments:
I am a resident in BGV.
I am surprised and disappointed that the previous sale committee has decided to re-start the en bloc sale process again, after their previous attempt failed to get majority support.
I have serious doubts about whether the same committee will be able to carry out their responsibilities effectively, based on what happened with the previous Collective Sale Agreement, where:
(a) the committee agreed to the commission of the property agent on a so-called "reduced" basis, while at the same time setting a reserve price and agreeing to an incentive commission rate which in fact increased the commission from 0.30% to a blended rate of 0.59% - nearly double the original rate! This was not spotted by the committee - the property agent only admitted this after an astute resident pointed it out at the 1st meeting! I don't know how the committee could still claim at the meeting that they had worked on the CSA very carefully for months to achieve the best agreement for residents.
(b) the committee agreed to the property agents' commission rate on the basis of $1,500 psfppr, and at the same time set a reserve price of $2,000 psfppr and agreed to an incentive rate of 1.5% for prices above $1,500. This meant that the property agents did not need to do anything to "earn" the incentive commission for the amount between $1,500 and $2,000! Again, pointed out by a resident.
(c) despite repeated questioning at the 1st and subsequent meetings, the CSA did not contain the formula for apportionment of the sale proceeds to owners. Even though it was said to be set out in the 5th schedule, there was no such formula in that schedule. This was not amended, even up to the very last meeting (2 months after the 1st meeting!), where the lawyer admitted that it had not been done. Again, this point was brought up by residents. It was not spotted by the committee, neither did the committee follow up to correct this critical error, after it had been pointed out at the 1st meeting! And apportionment of the sale proceeds is such a fundamental issue.
Saying that the committee members are volunteers doing this on their own time (as was done at one meeting) is not good enough - committee members who accept the position owe fiduciary duties to the owners, as well as a duty to owners not to be negligent, and to do a good job. The basic, fundamental errors mentioned above were pointed out by owners and not spotted by the committee members. Who knows what other errors were in the CSA which had not been spotted or pointed out?
If owners had suffered losses due to such errors or negligence, the committee members should be held accountable, and they should be required to indemnify owners against such consequences. As agents of the owners, the committee members owe fiduciary duties to the owners and should be held to the highest standards. Instead, the CSA contained provisions to excuse them from all liability!
If there is to be a new CSA, owners should insist that to protect their interests, the CSA should include an indemnity from the committee members jointly and severally. Also, the CSA should not contain any clauses that exculpate the committee members from errors or negligence. The Horizon Towers saga should serve as an instructive warning to owners of what could happen if things go wrong. In such a situation, owners should have recourse against the committee members who put them in trouble.
Further, in order to have a better assurance that the sale committee will be able to carry out their responsibilities and to answer for their liabilities if anything should go wrong, much more information should be provided about the members of the committee. There should be full and frank disclosure of their backgrounds, relevant experience, whether they are residents, how long they have been owners, and any current or potential conflicts of interest. Just knowing their names, addresses and occupations is not enough, especially when owners give the committee such great powers under the CSA to deal with such an expensive asset as their home.
The previous attempt for an en bloc sale of BGV failed without getting anywhere near the required consent level. This was despite a last minute attempt to get owners to sign the collective sale agreement by:
(a) increasing the reserve price sharply: and
(b) arguing that the property bubble was about to burst, and owners had to sell at that point in time, or they would miss the peak.
In response to these:
(a) The sale price is not within the control of the sale committee. It is a result of market forces. And the sharp increase in the reserve price, coming less than 2 months after the sale committee set the original reserve price, calls into question what the actual achievable price for BGV should be, and what advice had been given by the property agents in relation to the initial reserve price and the increased reserve price. If a sufficient majority had signed the CSA based on the original reserve price, owners would have missed out on the nearly 20% "increase"!
(b) since the sale did not go through at that time, according to the committee's own argument, this would mean that owners have already missed the peak. So why is the committee still trying to do an en bloc sale now? Are they simply trying to get a quick return on their en-bloc investment, at whatever price they can get? This would explain why the original sale price was set at a lower level, as it would facilitate a quick sale, rather than trying to get a sale at the best price.
Selling at this time would mean that owners who have a long-term view would lose out, as BGV, by virtue of its location, will always be valuable as a super-pime location, and its value will inevitably increase over time. BGV is like a New York condo overlooking Central Park, or a London home next to Holland Park - the location will ensure its increasing value in the long run.
Also, and as important, having an en bloc sale would ignore the effects that it would have on residents' lives, such as those with children going to schools in the neighbourhood, or elderly residents who enjoy the Botanic Gardens and the security of a familiar environment. Why should owners who choose to live in BGV, with all its convenience and advantages, be forced by others to sell out at a time not of their own choosing, and to re-locate, probably to locations which are less convenient and less desirable?
For the reasons above, I am totally against the en bloc attempt. And as a resident, I will object to any use of the Management Corporation funds for the en bloc process, when the EOGM can be requisitioned by only 20% of the owners. The use of the MC funds should only be allowed if approved by the necesary majority at a duly convened General Meeting.
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