Land (Compulsory Sale for Redevelopment) Bill

A BILL

Enable persons who own a specified majority of the undivided shares in a lot to make an application to the Tribunal for an order for the sale of all of the undivided shares in the lot for the purposes of the redevelopment of the lot; to enable the Tribunal to make such an order if specified criteria are met; and for matters incidental thereto or connected therewith.

Enacted by the Provisional Legislative Council.

1. Short title and commencement

(1) This Ordinance may be cited as the Land (Compulsory Sale for Redevelopment) Ordinance.

(2) This Ordinance shall come into operation on a day to be appointed by the Secretary for Planning, Environment and Lands by notice in the Gazette.

2. Interpretation

(1) In this Ordinance, unless the context otherwise requires--

"auction" (拍賣), in relation to a lot, means the auction of the lot pursuant to section 5(1);

"building" (建築物) means a building within the meaning of the Buildings Ordinance (Cap. 123);

"directions" (指示) means directions under section 4(5);

"lot" (地段)--

(a) means--

(i) any piece or parcel of ground the subject of a Government lease;

(ii) a section which by virtue of section 8(3) or 27(2) of the Crown Rent and Premium (Apportionment) Ordinance (Cap. 125) is deemed to be a lot for the purposes of that Ordinance;

(b) includes a section and subsection of a lot;

"majority owner" (多數份數擁有人), in relation to a lot, means the person or persons who has or have made an application under section 3(1) in respect of the lot;

"minority owner" (少數份數擁有人), in relation to a lot which is the subject of an application under section 3(1), means the person or persons who--

(a) owns or own undivided shares in the lot otherwise than as a mortgagee; but

(b) is or are not the person or persons who has or have made the application;

"mortgage" (按揭) means a security over a lot (including an undivided share in a lot) for securing money or money's worth;

"mortgagee" (承按人) includes any person claiming under a mortgagee;

"order for sale" (售賣令) means an order under section 4(1)(b)(i);

"property" (財產) means immovable property;

"redevelopment" (重新發展), in relation to a lot, means the replacement of a building on (or formerly on) the lot with a new, sound and substantial building, completed fit for occupation, and conforming to the covenants, conditions and stipulations of the Government lease of the lot;

"tenancy" (租賃) includes a sub-tenancy;

"Tribunal" (審裁處) means the Lands Tribunal.

(2) References in this Ordinance to an application under section 3(1) shall be construed to include any documents required by that section or Schedule 1 to accompany the application.

(3) For the avoidance of doubt, it is hereby declared that the provisions of this Ordinance are in addition to, and do not derogate from, the provisions of--

(a) the Government lease of a lot;

(b) the Buildings Ordinance (Cap. 123).

3. Application to Tribunal for compulsory sale of lot

(1) Subject to subsection (4), the person or persons who owns or own, otherwise than as a mortgagee, not less than 90% of the undivided shares in a lot may make an application--

(a) complying with the conditions specified in Part 1 of Schedule 1;

(b) accompanied by a valuation report as specified in Part 2 of Schedule 1; and

(c) to the Tribunal for an order to sell all the undivided shares in the lot for the purposes of the redevelopment of the lot.

(2) Subject to subsection (3), the majority owner of a lot who has made an application under subsection (1) shall serve a copy of the application on each minority owner of the lot.

(3) Where it appears to the Tribunal that a copy of an application under subsection (1) cannot be served in accordance with subsection (2), the Tribunal may, if it thinks fit, by order--

(a) dispense with such service on any minority owner or class of minority owners mentioned in the order; and

(b) direct notices to be published at such time and in such manner as it thinks fit, calling upon all persons claiming to be minority owners of the lot and who have not been so served, to establish their claims before the Tribunal within a time specified in the notice,

and after expiration of the time specified, all persons claiming to be minority owners shall be bound by the proceedings as if they had been served in accordance with subsection (2).

(4) Subject to subsection (5), the Chief Executive in Council may, by notice in the Gazette, specify a percentage other than the percentage mentioned in subsection (1) in respect of a lot belonging to a class of lots specified in the notice and, in any such case, subsection (1) and the other provisions of this Ordinance shall be construed as if, in relation to a lot belonging to that class of lots, that percentage so specified were substituted for the percentage mentioned in subsection (1).

(5) No percentage may be specified in a notice under subsection (4) which is less than 80%.

(6) For the avoidance of doubt, it is hereby declared that a notice under subsection (4) is subsidiary legislation.

4. Determination of application

(1) Subject to subsection (2), the Tribunal shall determine an application under section 3(1) by--

(a) first, if any minority owner of the lot the subject of the application disputes the value of his property as assessed in the application, hearing and determining the dispute; and

(b) second--

(i) making an order that all the undivided shares in the lot the subject of the application be sold for the purposes of the redevelopment of the lot; or

(ii) refusing to make such an order.

(2) The Tribunal shall not make an order for sale unless, after hearing the objections, if any, of the minority owners of the lot the subject of the application under section 3(1) concerned, the Tribunal is, subject to section 12, satisfied that--

(a) the sale sought of the lot is to enable redevelopment of the lot to take place;

(b) the redevelopment of the lot is justified--

(i) due to the age or state of repair of the existing development on the lot; or

(ii) on 1 or more grounds, if any, specified in regulations made under section 12; and

(c) the majority owner has taken all reasonable steps to acquire all the undivided shares in the lot, including negotiating for the purchase of those shares on terms that are fair and reasonable.

(3) Subject to subsection (4), the Tribunal shall cause a copy of an order for sale to be served on the majority owner and each minority owner of the lot the subject of the order.

(4) Where it appears to the Tribunal that a copy of an order for sale cannot be served in accordance with subsection (3), the Tribunal may, if it thinks fit, by order--

(a) dispense with such service on any owner or class of owners mentioned in the order; and

(b) direct notices to be published at such time and in such manner as it thinks fit, informing all persons claiming to be owners of the lot--

(i) that the Tribunal has made an order for sale of the lot; and

(ii) where and the times during which a copy of the order may be obtained.

(5) Where the Tribunal makes an order for sale, it may also give such directions as it thinks fit relating to the sale and purchase of the lot, the termination of tenancies of any tenants of any premises on the lot, and the application of the proceeds of the sale, which are not inconsistent with the other provisions of this Ordinance and, in any such case, subsections (3) and (4) shall, with all necessary modifications, apply to those directions as they apply to an order for sale.

5. Lot to be sold by auction

(1) Where an order for sale is granted, the lot the subject of the order shall be sold by public auction--

(a) after the majority owner of the lot has complied with section 7 in respect of the lot; and

(b) in accordance with the conditions specified in Schedule 2.

(2) Where--

(a) the auction is not held within the 3 months immediately following the date on which the order for sale of the lot is made (or such longer period as the Tribunal may specify in directions); or

(b) at the auction--

(i) no bid is made for the lot; or

(ii) the highest bid is less than the reserve price to which the lot is subject,

then that order shall immediately be deemed to be of no effect as if it had been cancelled by the Tribunal.

(3) For the avoidance of doubt, it is hereby declared that--

(a) the lot the subject of an order for sale shall be sold to the highest bidder at the auction;

(b) nothing in this Ordinance shall operate to prevent the majority owner or any minority owner of the lot the subject of an order for sale from purchasing the lot at the auction.

6. Tribunal may impose conditions on

purchaser of lot

The Tribunal may in an order for sale specify conditions--

(a) to be imposed on the purchaser of the lot the subject of the order and the purchaser's successors in title;

(b) in relation to the redevelopment of the lot; and

Schedule 3.

7. Registration of order for sale

The majority owner of the lot the subject of an order for sale shall cause a copy of--

(a) the order; and

(b) Schedule 3,

to be registered under the Land Registration Ordinance (Cap. 128) against the lot to which the order relates and the conditions specified in the order and that Schedule shall be binding on and enforceable against the purchaser of the lot and the purchaser's successors in title.

8. Protection of purchaser of lot, etc.

(1) Where the lot the subject of an order for sale is sold at the auction in accordance with the conditions specified in Schedule 2--

(a) immediately upon the purchaser of the lot becoming the owner of the lot all the rights of any prior owner (including the prior owner's assigns or personal representatives) in or over the lot or any part thereof shall absolutely cease except to the extent, if any, specified in the order;

(b) no action or suit shall lie against the purchaser or the purchaser's successors in title for any loss or damage suffered by any prior owner of the lot as the result of the lot being so sold except to the extent, if any, specified in the order;

(c) immediately upon the purchaser of the lot becoming the owner of the lot, there shall by virtue of this section vest in the purchaser and the purchaser's successors in title the right to terminate the tenancy of any tenant of any premises on the lot--

(i) who is such a tenant by virtue of any lease entered into at any time before the purchaser became such owner;

(ii) notwithstanding any of the provisions of that lease or of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7);

(iii) by giving notice in writing to the tenant requiring the tenant to deliver up vacant possession of the premises before the expiration of 6 months (or such shorter or longer period as the Tribunal may specify in directions) immediately following the date on which the purchaser became such owner; and

(iv) subject to section 12, in accordance with such conditions, if any, as the Tribunal specifies in directions.

(2) Subject to subsections (3), (4), (5) and (6), conditions referred to in subsection (1)(c)(iv) may relate to the compensation payable by the purchaser and the purchaser's successors in title to the tenant, including determining such compensation by reference to any of the provisions of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7), and whether with or without modifications thereto specified in directions.

(3) Subject to subsection (5) and (6), in the case of any lease referred to in subsection (1)(c) which was granted by or on behalf of the majority owner of the lot concerned, conditions referred to in subsection (1)(c)(iv) may relate to compensation payable by the majority owner to the tenant, including determining such compensation by reference to any of the provisions of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7), and whether with or without modifications thereto specified in directions.

(4) Subject to subsections (5) and (6), subsection (3) shall apply to the minority owner of the lot as it applies to the majority owner of the lot.

(5) Without prejudice to the generality of subsection (2), (3) and (4), the Tribunal may take into account the representations, if any, of the tenant as to whether compensation should be payable to the tenant and, if so, the amount of the compensation.

(6) No compensation shall be payable to the tenant in relation to any lease entered into on or after the date on which the order for sale of the lot concerned was made.

(7) In this section--

"lease" (租契) includes every agreement for the letting of any premises, whether oral or in writing, and howsoever described;

"prior owner" (前擁有人), in relation to a lot, does not include the purchaser of the lot at the auction.

9. Breach of conditions

Where there is a breach of any condition specified in an order for sale or in Schedule 3, that condition and any other conditions so specified shall thereupon be deemed to be conditions of the Government lease of the lot the subject of the order, and thereafter failure to comply with any such condition shall entitle the Government to re-enter the lot under and in accordance with the provisions of the Crown Rights (Re-entry and Vesting Remedies) Ordinance (Cap. 126).

10. Application of proceeds of sale

(1) The proceeds of the sale by auction of the lot the subject of an order for sale shall, after deduction of the expenses of the auction, be paid to trustees appointed by the Tribunal.

(2) Trustees appointed under subsection (1) shall apply the proceeds of sale paid to them in respect of the lot concerned in the following order--

(a) first, in the discharge of any liability due to the Government in respect of the lot;

(b) second, in the discharge of any incumbrance affecting the lot;

(i) the majority owner of the lot in accordance with directions but only after any compensation payable by the majority owner under section 8(3) has been paid to the tenant concerned--

(A) by the majority owner; or

(B) by the trustees out of the residue payable to the majority owner; and

(ii) the minority owner of the lot in accordance with directions but only after any compensation payable by the minority owner under section 8(4) has been paid to the tenant concerned--

(A) by the minority owner; or

(B) by the trustees out of the residue payable to the minority owner.

(3) Subject to any directions, trustees appointed under subsection (1) may continue to hold in trust any residue referred to in subsection (2)(c) in respect of which the majority owner or minority owner cannot be found.

11. Apportionment of proceeds of sale

The apportionment of the proceeds of sale between the majority owner and minority owners of the lot the subject of an order for sale shall be on the basis specified in Part 3 of Schedule 1.

12. Regulations

The Secretary for Planning, Environment and Lands may make regulations--

(a) specifying matters to be taken into account for the purposes of section 4(2)(a), (b)(i) or (c) or 8(1)(c)(iv);

(b) specifying grounds for the purposes of section 4(2)(b)(ii);

13. Rules

The Chief Justice may make rules dealing generally with all matters of practice and procedure and incidental matters arising out of this Ordinance.

14. Amendment of Schedules

The Chief Executive in Council may, by notice in the Gazette, amend Schedule 1, 2 or 3.

Consequential Amendments

Lands Tribunal Ordinance

15. Ordinances under which matters may be submitted to the Tribunal for determination

The Schedule to the Lands Tribunal Ordinance (Cap. 17) is amended by adding--

" of 1998 Land (Compulsory Sale for Redevelopment) Ordinance.".

SCHEDULE 1 [ss. 2(2), 3(1), 11 & 14]

Conditions to which Application is Subject, Valuation

Report and Apportionment of Proceeds

PART 1

Conditions with which application

under Section 3(1) of this

Ordinance shall Comply

PART 2

Valuation report

A valuation report setting out the assessed market

value of each property on the lot on a vacant

possession and existing use basis.

PART 3

Basis of Apportionment of Proceeds

of Sale of Lot

On a pro rata basis in accordance with--

(a) subject to paragraph (b), the values of the respective properties of the majority owner and minority owners of the lot as assessed in the application concerned under section 3(1) of the Ordinance;

(b) where there has been a dispute referred to in section 4(1)(a) of the Ordinance which has resulted in a variation of those values, those values as so varied.

SCHEDULE 2 [ss. 5(1), 8(1) & 14]

Conditions in Accordance with which

Lot shall be Sold by Auction

1. The public shall be given notice of the auction by means of an advertisement--

(a) published--

(i) in not less than 1 Chinese language newspaper (and in the Chinese language), and in not less than 1 English language newspaper (and in the English language), circulating generally in Hong Kong; and

(ii) not less than once in each of the 3 weeks immediately preceding the date on which the auction is to be held; and

(b) stating--

(i) that the lot the subject of the auction is being sold pursuant to an order for sale under this Ordinance;

(ii) where section 8(1)(c)(iv) is applicable, that the purchaser of the lot and the purchaser's successors in title and (where applicable) the majority owner and minority owner of the lot will be subject to certain directions of the Tribunal;

(iii) that the purchaser of the lot and the purchaser's successors in title will be subject to the conditions specified in Schedule 3 and the conditions, if any, specified in the order for sale;

(iv) where, and during what times, a copy of the order for sale and the directions may be obtained or inspected; and

(v) the date, time and place of the auction.

2. The lot the subject of the auction shall be sold subject to a reserve price--

(a) which takes into account the redevelopment potential of the lot; and

(b) approved by the Tribunal.

SCHEDULE 3 [ss. 6, 7, 9 & 14

& Sch. 2]

Conditions to which Purchaser of Lot

and Purchaser's Successors in

Title shall be Subject

1. The redevelopment of the lot shall be completed--

(a) subject to paragraph (b), not later than 6 years after the date on which the purchaser of the lot at the auction became the owner of the lot;

(b) such shorter period, if any, as may be specified by the Tribunal in the order for sale to which the lot is subject.

Explanatory Memorandum

The object of this Bill is to--

(a) enable the person or persons who owns or own not less than 90% of the undivided shares in a lot ("the majority owner") to make an application to the Lands Tribunal ("the Tribunal") for an order to sell all the undivided shares in the lot for the purposes of the redevelopment of the lot; and

(b) empower the Tribunal to make such an order after hearing the objections, if any, of the persons who own the other undivided shares in the lot ("the minority owner") and only if the Tribunal is satisfied, inter alia, that the majority owner has taken all reasonable steps to acquire all the undivided shares in the lot. (Including negotiating for the purchase of those shares on terms that are fair and reasonable).

2. Clause 2(1) defines the terms used in the Bill. The definitions of "majority owner", "minority owner", "order for sale" and "redevelopment" should, in particular, be noted. Clause 2(3) should also be noted, as the clause puts it beyond doubt that the Bill will not derogate from the provisions of the Government lease of a lot, or of the Buildings Ordinance (Cap. 123), in relation to the redevelopment of the lot after its sale pursuant to an order for sale.

3. Clause 3 and Parts 1 and 2 of Schedule 1 relate to the majority owner's application to the Tribunal for an order for sale and the documents which are required to accompany the application. Clause 3(4) empowers the Chief Executive in Council to, by notice in the Gazette, reduce the threshold limit for making an application from 90% of the undivided shares in a lot to a percentage not lower than 80% of the undivided shares in the lot in the case of a class of lots specified in the notice. (See clause 3(5)). Such a notice is subsidiary legislation.

4. Clause 4(1)(b) empowers the Tribunal to make an order for sale provided all the criteria specified in clause 4(2) have been met. Where the Tribunal makes an order for sale, it also has the power to give ancillary directions. (See clause 4(5)).

5. Clause 5 provides that the lot the subject of an order for sale shall be sold by public auction in accordance with the conditions specified in Schedule 2. It should be noted that both the majority owner and the minority owner may bid at the auction.

6. Clause 6 empowers the Tribunal to specify in an order for sale conditions to be imposed on the purchaser of the lot the subject of the order. The conditions must relate to the redevelopment of the lot and cannot be inconsistent with the mandatory conditions specified in Schedule 3 also binding on the purchaser.

7. Clause 7 requires the majority owner to cause to be registered under the Land Registration Ordinance (Cap. 128) a copy of the order for sale and of Schedule 3. Once registered, the conditions specified in the order and in Schedule 3 are binding on and enforceable against the purchaser of the lot concerned and the purchaser's successors in title.

8. Clause 8(1) protects the purchaser of the lot the subject of an order for sale against the claims of any prior owner, and vests in the purchaser a statutory power to terminate any lease of premises on the lot entered into before he became the owner of the lot. (And notwithstanding the provisions of the lease). However, compensation may be payable. (See clause 8(2) to (6)).

9. Clause 9 provides that continued failure to comply with any condition specified in an order for sale or in Schedule 3 entitles the Government to re-enter the lot the subject of the order under and in accordance with the provisions of the Crown Rights (Re-entry and Vesting Remedies) Ordinance (Cap. 126).

10. Clause 10(1) provides that the proceeds of the sale by auction of the lot the subject of an order for sale shall, after deducting the expenses of the auction, be paid to trustees appointed by the Tribunal. Clause 10(2) specifies how the trustees are to apply those proceeds. Clause 11 and Part 3 of Schedule 1 specifies that the proceeds of sale shall be apportioned between the majority owner and minority owners on a pro rata basis in accordance with the values of their respective properties.

11. Clause 12 empowers the Secretary for Planning, Environment and Lands to make regulations for the purposes of the Bill, in particular specifying matters to be taken into account for the purposes of clauses 4(2)(a), (b)(i) and (c) and 8(1)(c)(iv). Clause 13 empowers the Chief Justice to make rules relating to matters of practice and procedure arising out of the Bill. Clause 14 empowers the Chief Executive in Council to amend Schedule 1, 2 or 3. Clause 15 makes a consequential amendment to the Lands Tribunal Ordinance (Cap. 17).