Provisional Legislative Council

PLC Paper No. CB(1)1353
(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 Monday, 16 February 1998, at 2:30 pm in Conference Room A of the Legislative Council Building


Members present :

Hon Ronald ARCULLI, JP (Chairman)
Hon WONG Siu-yee
Hon Mrs Peggy LAM, JP
Hon Howard YOUNG, JP
Dr Hon Charles YEUNG Chun-kam
Hon IP Kwok-him
Hon Ambrose LAU Hon-chuen, JP
Hon KAN Fook-yee
Hon CHOY So-yuk

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
Prof Hon NG Ching-fai
Hon MA Fung-kwok
Hon Kennedy WONG Ying-ho
Hon YEUNG Yiu-chung
Hon Bruce LIU Sing-lee
Hon NGAN Kam-chuen
Dr Hon LAW Cheung-kwok

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
(PLC Paper No. CB(1)944)

The Chairman referred members to the written response from the Administration addressing the concerns raised at the first meeting on 10 February 1998 which was circulated under PLC Paper No. CB(1)944.

2. In response to members' concern about the power of the Chief Executive in Council in reducing the minimum threshold percentage from 90% of undivided shares to not less than 80%, the Principal Assistant Secretary for Planning, Environment and Lands (PAS/PEL) advised that the said power might be exercised in respect of a class of lots. The possible classes of lots would be a lot containing buildings with less than ten flats or a lot situated in an area where priority redevelopment was justified. PAS/PEL further advised that in exercising this power, the Chief Executive in Council had to make a notice in the Gazette which was a piece of subsidiary legislation subject to negative vetting by the legislature.

3. Members requested for further clarification of the basis upon which the Chief Executive in Council would consider priority redevelopment of the lot justified. They stressed the need for setting criteria for exercising such a power, otherwise the Chief Executive in Council might have to consider the merits of each and every case. PAS/PEL reiterated that the Chief Executive in Council would consider a class of lots, not individual lots, in lowering the minimum acquisition level.

4. Referring to clause 5(2)(a) on auction procedures, the Chairman was concerned that the order for sale would be deemed to be of no effect if the auction was not held within three months after the date of the order and enquired if there were provisions for extension of time to cater for special situations. The Senior Assistant Law Draftsman (SALD) said in response that where a longer time was needed to hold an auction the majority owners might so request at the time when the Lands Tribunal made an order of sale, or thereafter.

5. As regards the Chairman's further enquiry as to whether the reserve price could be revised to take account of market conditions after the making of a sale order, SALD said that this was a sensitive issue and he considered it not advisable for the majority owners to be given the chance to pick and choose the most opportune time to set the price. He added that the Administration was considering introducing Committee Stage amendments (CSAs) to allow the Lands Tribunal to specify in directions what the appointed trustees should do in the event of the purchaser's failure to complete the transaction. Admin

Clause-by-clause examination of the Bill

Clause 1 Short title and commencement

6. PAS/PEL advised that the subsidiary legislation would come into operation together with the Ordinance on a day to be appointed by the Secretary for Planning, Environment and Lands (SPEL), hopefully within six months after the passing of the Bill. Admin

Clause 2 Interpretation

7. Members noted that the Administration was still considering whether the word "property", which referred to immovable property, should be translated as or .

(The Chairman left the meeting at this juncture and Mr Ambrose LAU presided over the meeting)

8. The Administration agreed to revise the definition of "tenant" to include sub-tenant. The same amendment would be made to the definition of "tenancy" to include sub-tenancy. As to whether the definition of "lot" included "lots", SALD advised that an application for an order for sale might cover a number of lots provided that the requisite percentage of undivided shares was acquired in each of the lots by the applicant.

Clause 3 Application to Tribunal for compulsory sale of lot Admin

9. Referring to subclause (1), a member sought clarification on whether mortgagees in possession of the properties should be included as owners. SALD agreed to consult SPEL.

10. Regarding the requirement on the majority owners to serve a copy of the application on each minority owner as provided for under subclause (2), the Assistant Legal Adviser 1 (ALA1) opined that the Administration should consider notifying persons other than the registered minority owners such as occupiers who might claim adverse possession or an interest in the property. Since the successful purchaser of the lot would have a clean title and all the rights of prior owners would cease as provided for under clause 8, interested parties should be notified about the application for an order for sale.

11. SALD advised that the intention of the Bill was to protect the interests of owners who were registered under the Land Registration Ordinance, Cap. 128. Persons claiming to have an interest in the property needed to institute separate proceedings to establish their claim. Admin

12. ALA1 suggested and the Administration agreed to consider reviewing subclause (2) to provide that in submitting an application for an order for sale, the majority owners would be required to cause a notice to be affixed upon the building and/or published in newspapers, calling upon all persons claiming to be minority owners to establish their claim before the Lands Tribunal.

Clause 4 Determination of application

13. Members requested the Administration to consider - Admin

  1. providing for the right of minority owners to dispute the valuation of not just their own properties but those of the majority owners; and

  2. reviewing the appropriateness of including the word "all" before "reasonable steps" and whether SPEL should issue guidelines on what constituted "reasonable steps".

Admin

(The Chairman resumed chairing the meeting.) Admin

Clause 5 Lot to be sold by auction

14. As agreed, the Administration would introduce CSAs to allow the Lands Tribunal to extend a further period of three months within which the auction for the sale of the lot had to be held after the date of an order for sale under special circumstances.

Clause 6 Tribunal may impose conditions on purchaser of lot

15. Responding to members' enquiries about the conditions to be imposed by the Lands Tribunal, SALD explained that the clause would provide the Lands Tribunal with residual powers. The conditions for sale to be imposed by the Lands Tribunal would mainly be conditions in relation to the redevelopment of the lot. Depending on the nature of the application, the Lands Tribunal might specify other conditions as necessary.

16. Members considered it necessary to confine the scope of conditions to be imposed by the Lands Tribunal. They were of the view that other than the time for completion of redevelopment, conditions such as plot ratios and environmental upgrading etc, should not be specified by the Lands Tribunal, since the imposition of excessive conditions might frustrate the redevelopment of the lot. The Administration agreed to review the drafting of the clause. Admin

Clause 8 Protection of purchaser of lot

17. Members requested the Administration to provide clarification on how adversary titles would be dealt with under the provisions of the Bill. The Chairman drew members' attention to a technical defect in subclause (1)(b) mentioned in Mr M Y WAN's submission (PLC Paper No. CB(1)934) which would prevent the majority owners and the minority owners from suing the purchaser for default of payment. The Administration noted members' concerns and would review the drafting and address these issues in a written response to Mr WAN. Admin

18. Members were concerned that the Lands Tribunal would be thrusted with the burden of deciding on the equity of compensation payable to tenants. They suggested that clear guidelines should be spelt out in the Bill.

19. In response, SALD made the following points -

  1. At the time of the making of an order for sale, the Lands Tribunal would specify compensation payable to tenants. Normally the majority owners and the minority owners would be required to pay compensation to their own tenants. However, the Lands Tribunal might exercise discretion when the proceeds of sale attributable to the minority owners were insufficient to compensate the tenants.

  2. The Lands Tribunal would consider cases of spurious tenancies in which leases of an unreasonable duration had been entered into by the minority owners with a view to frustrating the sale of the lot. The majority owners, on the other hand, might include unattractive terms in their existing tenancies in a bid to lower the purchase price of the whole lot.
  3. The Administration would consider amending clause 8 requiring the payment of compensation by the majority owners and the minority owners to their own tenants, unless the Lands Tribunal was satisfied that there were compelling reasons for not doing so.

Admin

20. Referring to subclause (1)(c), members considered it unsatisfactory to vest a right upon the purchaser to terminate the tenancy of any tenant of any premises on the lot. The Chairman was concerned that the onus would rest with the purchaser to vacate the tenants. Under the proposed arrangement, the purchaser would need to apply to the Lands Tribunal for an order for vacant possession in order to redevelop the site. In this connection, the Chairman requested the Administration to consider the merits of providing for automatic termination of contractual tenancies upon the completion of sale by the purchaser. Admin

21. In response, SALD pointed out that automatic termination of tenancies would be to the disadvantage of the purchaser as the tenants did not have to pay rent before vacating the premises. The Chairman opined that the purchaser might not necessarily be the majority owners and he would be more concerned about vacant possession than the collection of rents. Admin

22. Members requested the Administration to provide more information regarding the operation and determination of the Lands Tribunal on compensation under the Landlord and Tenant (Consolidation) Ordinance, Cap. 7 which might facilitate better understanding of subclause (2) and (3). While agreeing to provide the required information, PAS/PEL pointed out that the Bill involved a new domain. Unlike the Landlord and Tenant (Consolidation) Ordinance which sought to ensure fair and equitable compensation payable to tenants, the Bill was primarily concerned about compulsory sale of property for redevelopment purposes. As such, the focus of the Bill should be different.

23. There being no other business, the meeting closed at 4:20 pm.


Provisional Legislative Council Secretariat
11 June 1998