Provisional Legislative Council

PLC Paper No. CB(1)1363
(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 March 1998, at 2:30 pm in Conference Room B of the Legislative Council Building

Members present :

Hon Ronald ARCULLI, JP (Chairman)
Hon WONG Siu-yee
Hon Mrs Peggy LAM, JP
Hon Kennedy WONG Ying-ho
Hon Howard YOUNG, JP
Hon IP Kwok-him
Hon Ambrose LAU Hon-chuen, JP
Hon KAN Fook-yee
Dr Hon LAW Cheung-kwok

Members absent :

Hon David CHU Yu-lin
Hon HO Sai-chu, JP
Hon Edward HO Sing-tin, JP
Dr Hon Raymond HO Chung-tai, JP
Hon MA Fung-kwok
Dr Hon Charles YEUNG Chun-kam
Hon YEUNG Yiu-chung
Hon Bruce LIU Sing-lee
Hon NGAN Kam-chuen
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
(12th draft of CSAs at PLC Papers No. CB(1)1201 and 1207)

The Chairman advised that this meeting was convened to discuss new Committee stage amendments (CSA) proposed by the Administration pursuant to its discussions with the Judiciary Administrator.

The charging of stamp duty

2. Referring to members�earlier enquiry about whether stamp duty would be charged if the successful purchaser at the auction was the majority owner, the Principal Assistant Secretary for Planning, Environment and Lands (PAS/PEL) informed that he had consulted the Inland Revenue Department and was advised that stamp duty would not be chargeable if there was no actual transfer of title. Hence, where the majority owner was the purchaser of the lot at the auction, he would only need to pay stamp duty in respect of the shares of the minority owners, i.e. those shares which he had not already owned.

3. In response to the Chairman, PAS/PEL agreed to seek further advice from the Commissioner of Inland Revenue on whether tax would be charged in respect of the conveyancing of properties from one associated body corporate to another. Admin

The Bill and its interface with the Landlord and Tenant (Consolidation) Ordinance

4. PAS/PEL reported on the discussions with the Judiciary Administrator on the implications of the Bill. The Judiciary Administrator was concerned that the provisions of the Bill had provided for automatic termination of tenancies upon the day on which the purchaser became the owner of the lot and that they would override the provisions of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7. She considered it necessary to spell out more clearly in the Bill the interface between the Bill and the Ordinance.

5. PAS/PEL pointed out that clause 8 of the Bill provided that the Lands Tribunal could make reference to the Landlord and Tenant (Consolidation) Ordinance in the determination of tenants�compensation. Meanwhile, in the determination of whether an order for sale should be made, the provisions of the Bill allowed the Lands Tribunal to take into consideration other factors, apart from the age and state of repair of the building. The Judiciary Administrator had suggested stating that the Bill should state clearly whether the Tribunal, in granting an order for sale, should take into account any provision of the Landlord and Tenant (Consolidation) Ordinance in relation to the right of a tenant whose tenancy was terminated.

6. Members deliberated on the Judiciary Administrator suggestion. They opined that since minority owners would be forced to sell their property if the majority owners applied successfully for an order for sale, it would be unfair that the tenants should be given the chance to dispute the application on grounds of undue hardship. Members concurred that tenants should be adequately compensated but their hardship should not be one of the factors to be taken into consideration by the Lands Tribunal in the determination of the application for a sale order. Members accepted the suggestion proposed by the Judiciary and advised the Administration to draft the CSA accordingly. Admin

7. PAS/PEL pointed out another concern of the Judiciary Administrator concerning the basic difference between the Bill and the Landlord and Tenant (Consolidation) Ordinance. The former had provisions for automatic termination of tenancies which was not provided for in the latter. Members were supportive of the need for provisions to be made for automatic termination of tenancies since without which, it would not be possible to implement the Bill. They did not consider that automatic termination of tenancies would pose a problem as long as tenants were given fair and reasonable compensation.

8. According to PAS/PEL, the Judiciary Administrator had also enquired whether compensation should be payable to tenants who had moved out after the granting of a sale order but sought compensation upon learning the unsuccessful sale of the lot. Members opined that it was unlikely that tenants would move out in the knowledge of the making of an application for a sale order. Normally, tenants would not vacate their premises unless and until adequate compensation had been paid. The case quoted by the Judiciary Administrator would rarely exist. The Assistant Legal Adviser 1 (ALA1) pointed out that under the provisions of the Bill, tenants would be notified of termination of tenancies within 14 days after the purchaser of the lot became the owner of the lot and would be required to vacate their premises upon the expiry of six months. Tenants should be aware of their rights to compensation. If they moved out before the sale was completed, they surrendered their tenancy rights and would not be eligible for compensation.

Appointment of trustees

9. PAS/PEL informed that the Judiciary Administrator had reservations over the appointment of trustees by the Lands Tribunal under clause 4. She envisaged administrative difficulties in making such an appointment and suggested that the trustees should be appointed by the majority owner of the lot, subject to the approval of the Lands Tribunal.

10. While accepting that the Lands Tribunal should be relieved of the duty to appoint trustees, members held the view that the appointment of trustees should not be left solely to the majority owners. After deliberations, members agreed that trustees should be nominated by the majority owners, subject to the approval of the Lands Tribunal. In this way, the Lands Tribunal would have the ultimate power to approve or reject the nomination. The Administration was requested to introduce CSAs to amend clause 4(1)(c)(i) to this effect. Admin

11. Members also agreed to confer powers on the Secretary for Planning, Environment and Lands to specify matters to be taken into account in the nomination and appointment of trustees under clause 12(1)(c) of the Bill.

12. On technical aspects, PAS/PEL relayed the Judiciary Administrator suggestion of empowering a member of Lands Tribunal to order that any question arising from the application for an order for sale be heard by another member of the Tribunal. According to the Judiciary Administrator, such a power was vested in the High Court, but not in the Lands Tribunal. Members had no objection to the proposed arrangement and agreed that the Administration would introduce amendments accordingly. Members noted that consequential amendments would be made to the Lands Tribunal Ordinance, Cap. 17. Admin

13. Members proceeded to examining the 12th draft CSAs which was tabled at the meeting. The Senior Assistant Law Draftsman (SALD) was requested to highlight the differences between the 10th and the 12th drafts.

Buildings connected by common staircase - clause 3(1A)(b)

14. SALD explained that in response to members�request, the Administration proposed to amend clause 3 to specify that the minimum acquisition level of buildings connected by common staircases should be an average of 90% of undivided shares in the lots on which these buildings respectively stood.

Successors in title - clause 4(9)(b)

15. Members noted an amendment to the clause 4(9)(b) to specify that majority owners would include successors in title and that if any of these persons did not wish to be a party to the application, the application would thereupon be deemed to be withdrawn irrespective of the shares owned by the other persons who wished to remain as parties to the application.

Purchaser in default of payment - clause 5(3)

16. SALD advised that the Administration had taken on board members�suggestion at the last meeting to amend clause 5(3) to the effect that the trustees under the order for sale should only proceed to instituting legal proceedings against the purchaser upon receipt of written agreement by the majority owners and minority owners. Otherwise, the deposit money would be forfeited as liquidated damages to the trustees for the benefit of the majority owners and minority owners. This would address members�concern that some owners might not wish to proceed with the legal proceedings as these might be both costly and time-consuming.

17. Members had reservations over the use of the word iquidated�as this would restrict the damages to an amount which was no more than the deposit money. This would also prevent the owners from suing the purchaser in default for any further relief for loss and damages. Members suggested and the Administration agreed that the word iquidated�should be deleted from clause 5(3) and that the clause should be amended to provide that the deposit money paid by the purchaser would be forfeited as damages for the benefit of the majority owners and minority owners and that any further action to seek relief for the loss and damages by reason of the purchaser default including the seeking of specific performance of the purchaser agreement to purchase the lot would be taken only with the agreement in writing of all owners. Admin

Mode of service of notice of termination of tenancies - clause 8(2)

18. SALD explained the amendment to clause 8(2) to the effect that the notice of termination of tenancies would be served on the tenant of the tenancy by leaving the notice with an adult occupier of the property not later than 14 days after the purchaser became the owner of the lot. This arrangement would be in line with the mode of service of termination of tenancies as provided for under the Landlord and Tenant (Consolidation) Ordinance.

Apportionment of expenses and proceeds - new clause 9A

19. Members noted that the Administration had taken on board their suggestion to introduce a new clause 9A setting out the basis of apportionment of expenses and proceeds.

20. Given the complexity of apportionment and the difficulties that might arise in the distribution of proceeds, a member was concerned that the trustees might encounter problems in the discharge of duties, which might necessitate an extension of their service. This would be a cause for concern to the majority owners who would be responsible for the remuneration of trustees.

21. The Chairman envisaged only two possibilities of hiccup in the distribution of proceeds, namely disputes in tenants�compensation and missing owners. The problem of tenants�compensation was a matter for the owners to resolve, whereas the proceeds due to missing owners would be paid into the court. He therefore expected that the trustees should not have difficulties in distributing proceeds.

Application of proceeds of sale - clause 10(1)

22. Members noted an amendment to clause 10(1) to the effect that the proceeds of sale for the lot would be paid to the trustees after deduction of the expenses of the auction and legal costs on the assignment of the lot.

Time for redevelopment - Schedule 3

23. SALD advised that the Administration had taken on board members�suggestion at the last meeting to amend Schedule 3 to empower the Lands Tribunal to grant an extension of the time for redevelopment upon the application by the purchaser of the lot and to specify a period shorter than six years where necessary.

Service of sale order - clause 4(3)

24. Members noted the Judiciary suggestion that the responsibility for serving a copy of a sale order on each minority owner should rest with the majority owner, not the Lands Tribunal as was originally proposed. Members agreed that the Administration should amend clause 4(3) to achieve this effect. Admin

Legislative time-table

25. Members agreed that a report on the deliberations of the Bills Committee be submitted to the House Committee on 27 March 1998. The Bills Committee recommended resumption of the Second Reading debate on the Bill at the Council meeting on 7 April 1998. The Chairman reminded members of the deadline for giving notice to move CSAs by 27 March 1998.

26. The Chairman thanked members and the Administration for their work in the scrutiny of the Bill.

27. The meeting ended at 4:00 pm.

Provisional Legislative Council Secretariat
11 June 1998