Provisional Legislative Council

PLC Paper No. CB(1)1356
(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 Tuesday, 24 February 1998, at 10:45 am in Conference Room A of the Legislative Council Building

Members present :

Hon Ronald ARCULLI, JP (Chairman)
Hon MA Fung-kwok
Hon Howard YOUNG, JP
Hon IP Kwok-him
Hon Ambrose LAU Hon-chuen, JP
Hon KAN Fook-yee
Hon NGAN Kam-chuen

Members absent :

Hon WONG Siu-yee
Hon David CHU Yu-lin
Hon HO Sai-chu, JP
Hon Edward HO Sing-tin, JP
Dr Hon Raymond HO Chung-tai, JP
Prof Hon NG Ching-fai
Hon Mrs Peggy LAM, JP
Hon Kennedy WONG Ying-ho
Dr Hon Charles YEUNG Chun-kam
Hon YEUNG Yiu-chung
Hon Bruce LIU Sing-lee
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

Mr Geoffrey A FOX
Senior Assistant Law Draftsman

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

The minimum threshold for making an application for an order for sale

1 Members deliberated on the proposal of the Law Society of Hong Kong (LS) to give discretion to the Lands Tribunal to lower the minimum acquisition percentage and consider an application for a compulsory sale order on equitable grounds based on a "balance of hardship test". Most members found the arrangement complicated and difficult to be put into practice since the degree of hardship was hard to define. The arrangement would also entrust excessive power to the Lands Tribunal. Although members were in support of a mechanism to address exceptional cases, they considered that the arrangement proposed by LS would create uncertainties and would place the Lands Tribunal in a difficult position in the assessment of applications for sale orders.

2 Members then examined the difficulties associated with acquisition of interests in buildings of four units or less. They noticed that where the owner of one unit refused to sell, this would put the redevelopment project to a halt since the minimum ownership threshold of 80% could not be attained. A member suggested considering a different approach whereby the majority owners who had acquired all but one unit in a building might apply for a sale order. The Chairman however considered this arrangement undesirable in view of its implications on two-unit buildings.

3 As a means to address these cases, members weighed the merits of reducing the acquisition threshold to 75%. A member raised concern about the large number of owners in a multi-storey building which might be affected. He considered the primary 90% threshold and the reduced threshold of not less than 80% acceptable. In his view, the limit should not be lower than 80% except in cases where owners holding one unit of a four-unit building refused to sell.

4 Members learnt from the Administration that the Planning Department was conducting a study on the number of lowrise buildings in Hong Kong. As far as redevelopment was concerned, the main difficulties rested with multi-storey buildings, not lowrise buildings. In the light of the Administration's advice, members agreed that special arrangement needed not be made to cater for lowrise buildings.

5 On balance, members generally accepted the proposal in the Bill of setting the acquisition threshold at 90% or not lower than 80% if specified by the Chief Executive in Council by notice in the Gazette.

6 The Chairman remarked that members who had information which suggested serious acquisition problems in respect of buildings of four units or less might bring it to the attention of the Bills Committee.

Scope of the Bill

7 Members noted that the 90% threshold would apply to a single lot but the provisions of the Bill did not prohibit majority owners holding 90% of undivided shares in each of the contiguous lots to make one application for a sale order. However, majority owners who held an average of 90% of aggregate undivided shares in contiguous lots could not apply to redevelop the lots as a package if they failed to acquire the requisite percentage in each of the lots. On the issue of adverse possession in respect of pre-war buildings which might not have undivided shares, members agreed with the Administration that these should be dealt with through separate proceedings in the Court of First Instance.

Grounds for redevelopment

8 Members noted that the Secretary for Planning, Environment and Lands might make regulations under clause 12 to specify the grounds for redevelopment under clause 4(2)(b)(ii). To address members' concern about the difficulties in satisfying the Lands Tribunal that "all" reasonable steps had been taken to acquire the undivided shares in the lot, the Principal Assistant Secretary for Planning, Environment and Lands (PAS/PEL) agreed that the word "all" before "reasonable steps" would be deleted from clause 4(2)(c) and a Committee stage amendment (CSA) would be moved to this effect. He added that clause 4(2)(a) would also be deleted as redevelopment of the lot in question was an inherent condition of a sale order.

9 Referring to clause 4(2)(c), the Chairman expressed concern about the meaning of "fair and reasonable" terms. He opined that the compensation offered by the private sector could not be compared with those offered by the Land Department Corporation (LDC) as far as in situ rehousing was concerned. The disparity of compensation between redevelopment projects undertaken by the private sector and those by LDC might be used as the evidence for arguing that fair and reasonable terms had not been offered. SALD explained that in determining an application, the Lands Tribunal would only need to be satisfied that the majority owners had taken reasonable steps to acquire all the undivided shares in the lot, including negotiating for the purchase of shares on terms that were fair and reasonable. The Lands Tribunal was not expected to make reference to the terms offered by LDC. It would be up to the majority owners to convince the Lands Tribunal that fair and reasonable terms had been offered.

Time limit for completing redevelopment

10 Members noted that Schedule 3 had provided for completion of redevelopment of the lot in not more than six years, or any shorter period as might be specified by the Lands Tribunal. In response to members, the Administration agreed to amend section 1(b) of Schedule 3 to the effect that where appropriate and upon application, the Lands Tribunal could allow for a period longer than six years for completion of redevelopment.

Extinguishment of third party interests by way of adverse possession by order for sale

11 To address members' concerns about third party interests, including adverse possession, easements and rights of way, SALD advised that the Administration proposed to amend the Bill to make clear the preservation of rights subsisting in the lot. In other words, easements or right of way would not be affected by a sale order. Where there were any third party claims registered as lis pendens under the Land Registration Ordinance, Cap. 128, the Lands Tribunal would direct the trustees to set aside part of the proceeds of sale and to pay those proceeds upon the occurrence of a specified event (e.g. determination by the Court of First Instance). It followed that any third party interests would be monetized as claims against the proceeds rather than claims against the title of the property. This would avoid a possible perpetuation of title claims by the minority owners in order to frustrate the sale of the lot.

12 The Assistant Legal Adviser 1 (ALA1) pointed out that the CSAs to be introduced in dealing with third party interests rested on the assumption that the third parties had knowledge of what was going on. In this connection, ALA1 suggested that all relevant persons should be served with a notice advising the making of an application for a sale order. SALD responded that a CSA would be introduced to require the applicant to affix the notice in a conspicuous place in the lot, notifying all owners/occupants about the application for an order for sale.

13 Members agreed to continue discussion at the next meeting on 25 February 1998. There being no other business, the meeting closed at 12:00 noon.

Provisional Legislative Council Secretarial
11 June 1998