Provisional Legislative Council

PLC Paper No. CB(1)1362
(These minutes have been
seen by the Administration)

Ref : CB1/BC/6/97


Bills Committee on
Land (Compulsory Sale for Redevelopment) Bill

Minutes of the meeting held on Thursday, 12 March 1998, at 8:00 am in Conference Room B of the Legislative Council Building



Members present :

Hon Ronald ARCULLI, JP (Chairman)
Hon WONG Siu-yee
Hon Edward HO Sing-tin, JP
Hon Howard YOUNG, JP
Hon IP Kwok-him
Hon KAN Fook-yee
Hon NGAN Kam-chuen

Members absent :

Hon David CHU Yu-lin
Hon HO Sai-chu, JP
Dr Hon Raymond HO Chung-tai, JP
Prof Hon NG Ching-fai
Hon Mrs Peggy LAM, JP
Hon MA Fung-kwok
Hon Kennedy WONG Ying-ho
Dr Hon Charles YEUNG Chun-kam
Hon YEUNG Yiu-chung
Hon Bruce LIU Sing-lee
Hon Ambrose LAU Hon-chuen, JP
Dr Hon LAW Cheung-kwok
Hon CHOY So-yuk

Public officers attending :

Mr Richard LUK
Principal Assistant Secretary for Planning, Environment and Lands

Mr Gordon HO
Assistant Secretary for Planning, Environment and Lands

Ms Fanny IP
Senior Assistant Law Draftsman

Clerk in attendance:

Miss Odelia LEUNG
Chief Assistant Secretary (1)1

Staff in attendance :

Ms Bernice WONG
Assistant Legal Adviser 1
Mrs Mary TANG
Senior Assistant Secretary (1)2

Meeting with the Administration

Members discussed the issues raised at the meeting on 11 March 1998.

Assignment of interest after the filing of application for sale order

2 Members concurred that an application for a sale order should not be terminated automatically upon changes in title ownership and that the majority owners and the minority owners could freely assign their interests despite the filing of an application.

3 Members noted that the definitions of "majority owner" and minority owner" under clause 2 of the Bill included successors in title to such owners. The proposed clause 4(9) of the Bill provided that if the majority owners or their successors in title did not wish to proceed with the application for a sale order, they could inform the Lands Tribunal at any time before an order for sale was made. The application would thereupon be deemed to be withdrawn irrespective of the percentage of undivided shares in the lot owned by the other persons who wished to remain as parties to the application.

4 Members deliberated on the different situations which might arise in respect of assignment of interests, particularly in connection with transactions between the majority owners and the minority owners, who would then become the successors in title to the opposing party. After careful consideration, members and the Administration agreed to the following -

  1. Both the application for an order for sale and the order itself would have to be registered under the Land Registration Ordinance, Cap. 128, in order to ensure that prospective purchasers were aware of the status of the lot;

  2. Where the assignment of interest of a majority owner had resulted in a lower acquisition percentage below the minimum threshold, the application would have to be terminated;

  3. Where the successor in title to the majority owner did not wish to go along as a party to the application, he could inform the Lands Tribunal and the application would thereupon be deemed to be withdrawn irrespective of the percentage of shares held by the other parties to the application;

  4. Since the definition of "majority owners" under clause 2 provided for the inclusion of successors in title, the order for sale would not be affected by any changes in title ownership provided that the successor in title agreed to be a party to the application, and that proper legal procedures had been complied with;

  5. Where a minority owner assigned his interest in the property to a majority owner who would wish to be a party to the application, arrangements would be made for a consent order to be submitted to the Lands Tribunal, notifying it of the changes in the application; and

  6. Clause 4(9) should be re-drafted to stipulate categorically that the persons referred to under the clause would include successors in title.

Admin

Mode of service of notice of termination of tenancies

5 Regarding the mode of service of the notice of termination of tenancies, the Assistant Legal Adviser 1 pointed out that the proposed Committee stage amendment was at variance with the existing arrangement under the Landlord and Tenant (Consolidation) Ordinance, Cap. 7, which required the serving of the notice on the tenant by mail, by post, or by learning it with an adult occupier at the unit concerned. The Senior Assistant Law Draftsman (SALD) explained that the mode of service had to be made simpler as the tenants concerned had to deliver vacant possession upon the expiry of six months after the purchaser had become the owner and should be made aware of the termination of tenancies as soon as possible.

6 Members opined that since the Bill dealt with the compulsory sale of properties for redevelopment, it was imperative that the purchaser of the lot should arrange for the tenants to be properly notified so that appropriate arrangements could be made by the tenants to vacate the premises within six months after the successful sale of the lot. Members agreed that the mode of service of the notice should be the same as that provided for under the Landlord and Tenant (Consolidation) Ordinance. To allow more time for the preparation of the notice, members suggested and the Administration agreed that the notice should be served on the tenant not later than 14 days, instead of 10 days, after the date the purchaser became the owner of the lot. Admin

Payment of costs

7 The Principal Assistant Secretary for Planning, Environment and Lands (PAS/PEL) referred members to a chart showing the payment of costs relating to the auction. (The chart was tabled at the meeting and was circulated to members vide PLC Paper No. CB(1)1123). The chart listed out the responsibilities for payment of costs in the event of successful and unsuccessful bids. Members noted that where there was a successful bid, the auction expenses together with the legal costs of assignment and tenants' compensation would be deducted from the proceeds of sale before distribution to the majority owners and the minority owners. The expenses would be borne by the majority owners should the sale be unsuccessful. However, where the purchaser defaulted on payment, a decision would need to be made on whether legal proceedings should be instituted to seek relief for loss and damages caused by the default.

8 SALD stated that the proposed Committee stage amendments (CSAs) under clause 4(6) provided that the trustees, the majority owners or the minority owners might seek directions from the Lands Tribunal in case of doubt or difficulty. Since the outcome of the suit was uncertain, members were concerned that some owners might prefer to have the forfeited deposit distributed instead of taking legal action against the purchaser. After deliberations, members agreed that the trustees under the order should only institute legal proceedings against the purchaser upon receipt of agreement in writing by all the majority owners and the minority owners. Otherwise, the deposit money paid by the purchaser would be forfeited to the trustees for the benefit of the majority owners and the minority owners. The Administration agreed to move CSAs to this effect. Admin

Trustees' remuneration

9 Members accepted that the trustees' remuneration should be borne by the majority owners irrespective of whether there was a successful bid. They were however concerned about termination of the trustees' appointment and the responsibility for remunerating the trustees should their appointment be extended. Some members considered it unfair to the majority owners to continue to remunerate the trustees after the proceeds of sale had been distributed. They considered it necessary to draw a line to delineate the responsibility between the majority owners and the new purchaser in this respect. Members suggested including a provision allowing the purchaser to appoint his own trustees.

10 PAS/PEL explained that after the completion of sale, the trustees' duty was to distribute the proceeds to the majority owners and the minority owners after deducting legal costs and tenants' compensation. They would act in accordance with the instructions from the Lands Tribunal. Any amount held in view of lis pendens affecting the lot would be set aside and arrangements would be made for tenants to be given the full compensation upon vacating the premises. In response to members, the Administration agreed to advise on the circumstances under which the trustees' services would be extended after proceeds had been distributed. Members also noted that the Administration was still awaiting comments from the Judiciary on the CSAs to be introduced concerning the appointment of trustees. Admin

The time for redevelopment (Schedule 3)

11 The Administration advised that it had taken on board members' suggestion at the last meeting and would introduce CSAs to allow the Lands Tribunal to grant an extension of the time for redevelopment upon application by the purchaser of the lot and to specify a period shorter than six years when necessary.

Buildings connected by common staircase

12 Members noted that for the purposes of title transfer, units in a building straddling several lots were sold as undivided shares of and in each lot on which the building stood. Hence, in the redevelopment of buildings straddling several lots, the general principles of the Bill requiring the minimum acquisition of 90% of undivided shares of each lot would apply.

13 Members considered it necessary to have clearer provisions to specify how the minimum threshold would apply in cases where buildings were connected by a common staircase. The Administration took on board members' suggestion and agreed to introduce CSAs to the effect that the minimum acquisition level of buildings connected by a common staircase should be an average of 90% of the undivided shares in the lots on which these buildings respectively stood. Admin

Conditions of sale to be included in Schedule 2

14 Referring to the earlier submission by the Law Society of Hong Kong concerning the draft conditions of sale to be included under Schedule 2 to the Bill, ALA1 said that she agreed with the Administration that most were general conditions of sale and needed not be specifically provided for. She however drew members' attention to the issues of proof of title and of delivery of vacant possession by owner-occupiers.

15 Regarding the problem of proof of title, members noted that prospective purchasers could check against the titles before participating in the auction/tender. Minority owners refusing to produce relevant documents for proof of their titles could be charged with contempt of court. Specific directions for sale and purchase were given under Order 31 of the Rules of Supreme Court. As regards delivery of vacant possession by owner-occupiers, members agreed that vacant possession should be delivered by owner- occupiers on the day when the purchaser became the owner of the lot, as in normal conveyancing practice.

16 Members initially agreed that a report on the deliberations of the Bill be submitted to the House Committee on 20 March 1998 recommending resumption of the Second Reading debate on the Bill on 1 April 1998. They requested the Administration to provide as soon as possible the full set of CSAs incorporating the latest amendments and would decide on the need for a further meeting upon receipt of CSAs. Clerk

17 There being no other business, the meeting closed at 9:40 am.


Provisional Legislative Council Secretariat
11 June 1998