EnBloc Parl Debate - 4May99 3rd Readg

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Parliament No: 9Session No: 1Volume No: 70Sitting No: 12Sitting Date: 1999-05-04Section Name: BILLSTitle: LAND TITLES (STRATA) (AMENDMENT) BILL (As reported from Select Committee)MPs Speaking: Prof. S. Jayakumar (Minister for Law); Mr Chiam See Tong; Mr Shriniwas Rai; MrSimon S. C. Tay;LAND TITLES (STRATA) (AMENDMENT) BILL(As reported from Select Committee)

Order for Third Reading read. 2.00 pm

The Minister for Law (Prof. S. Jayakumar)

: Mr Speaker, Sir, I beg to move, "That the Bill be nowread a Third time."As Members know, this Bill was referred to a Select Committee. The Report of the SelectCommittee was presented to the House on 19th April 1999.The Select Committee received 46 representations which reflected a good cross section of views.They were from 39 individuals, one management corporation, two en bloc sale committees and fourorganisations. The four organisations were the Association of Property and Facility Managers, theSchool of Building and Real Estate of the National University of Singapore, the Law Society ofSingapore, and the Singapore Institute of Surveyors and Valuers.The Select Committee, however, did not limit itself to the views put forth by the representors butalso considered views expressed in this House during the Second Reading debate. The SelectCommittee has accepted several useful suggestions and incorporated them in the amended Bill whichis before the House.The full explanations for the various amendments are set out in the Select Committee's Report.Therefore, I do not intend to repeat all that is extensively set out in the Report which Members wouldhave read.What I propose to do is to highlight only some of the changes made by the Select Committee aswell as some of the issues considered by the Committee.Firstly, the issue as to whether to vary the 90% / 80% majority share value consent level. TheCommittee heard diverse and sometimes diametrically opposing views on this issue. Some felt that90% / 80% consent level should be made stricter. Others were in favour of a more liberal, lower levelconsent requirement, especially for older buildings.The Select Committee has decided to keep the present approach in the Bill, ie, the 90% consentlevel for developments less than 10 years and 80% for developments 10 years or older. Ultimately, itshould be left to market forces and conditions which will determine if an en-bloc sale is economicallyviable. The 90% / 80% level linked to the 10 years age of the development was considered areasonable criterion. The consent level should be pegged to the age of the development as it is morelikely that older developments will be sub-optimally utilised and have higher repair bills.The second issue concerns developments with 10 or fewer units. The Bill originally had excludeddevelopments with 10 or fewer units. It was thought that it may not be possible in some of these casesto designate a clear 90% / 80% majority because of the small number of units in these developments,eg, in a development with four units of equal shares, three out of the four owners would account foronly 75% of the share values.One representor proposed that the Minister or the Strata Titles Board be empowered to decide on a

case by case basis if a development could qualify for en-bloc sale. Others suggested lowering theconsent level to 70% or allowing a sale if there were not more than one or two objecting unit ownersof such developments.The Select Committee has decided to make a change so that the majority owners of developmentswith 10 or fewer units should also be able to apply to the Board provided they can meet the specifiedconsent level of 90% / 80%. However, the Committee did not think that this consent level should belowered as it would not be fair to the minority owners of such developments.Many of these developments which have 10 or fewer units are old or have large areas which areunder-utilised, thus rendering them suitable for redevelopment. In fact, as at September 1998,developments with 10 or fewer units account for nearly half of all strata developments in Singapore.Of the 2,272 strata developments which are freehold or close to 999 years, 47% are developmentswith 10 or fewer units. These developments account for 7% of the total number of units and about 80hectares (10%) of the land area. Requiring unanimous decision will frustrate en-bloc redevelopment ofthese developments.Another issue concerns whether it should be the High Court or the Strata Titles Board which shouldhear objections, and whether the approach and guidelines in the Bill for en bloc sale should be madeclearer as well as expressly stated in the provisions of the Bill.A number of MPs during the Second Reading debate as well as some representors during theSelect Committee hearings felt that the High Court and not the Strata Titles Board should hear en-bloc cases. In the Select Committee hearings it became clear that some representors had taken thisview because they felt that the general guidelines in the Bill were too broad or gave insufficientguidance on how the Board will decide on the objections of the minority. Some representors also feltthat even if no objections are raised, the Board should in any case review the application to see if itshould be approved.The Committee felt that the Strata Titles Board and not the Courts would be the appropriate body tohear objections because the objections would almost invariably be non-legal issues which lendthemselves more to mediation or counselling rather than to adjudication.But the Committee agreed with the view expressed on the need for greater clarity of the approachof the Board in dealing with objections. The Select Committee also agreed with representors on theneed to spell out in greater detail the factors which the Board will take into account. Accordingly,several important changes have been made:Firstly, even where there is no objection, the Board must review every application to the Board foren bloc sale and satisfy itself that the transaction is in good faith and at arm's length, taking intoaccount the sale proceeds, the method of distributing the sale proceeds and the relationship of thepurchaser to any of the unit owners. The Board must also ensure that the sale and purchaseagreement does not compel a minority owner to be part of a joint venture agreement with thedeveloper of the land. This will address concerns expressed on the safeguarding of the interests ofthe minority owners;Secondly, where objections have been raised, the Board will, where relevant, mediate. Wheremediation on objections of a personal or non-pecuniary nature fails, the Board cannot stop the salefrom proceeding unless the Board is satisfied, for example, that the minority owner will suffer a loss,that is, the purchase price which he will receive is less than the price he paid for his unit, including allallowable deductions; the purchase price also which a minority owner receives is not sufficient for himto discharge a mortgage or charge on his unit; the Board can also refuse if the minority owner isforced to be part of a joint venture agreement with the purchaser/developer; or if the Board is satisfiedthat the sale is not in good faith or at arm's length taking into account the sale proceeds, method ofdistributing the sale proceeds and the relationship of the purchaser to any of the unit owners.In deciding on a case, the Board will not impose its own terms and conditions on the parties. If theBoard feels that the price is too low or the method of distribution of the sale proceeds is not equitable,it will order that the sale not proceed. The majority owners must then address the issue.

Sir, let me add that when the revised approach of the Board as I have outlined just now wasclarified to the representors who spoke on this issue, most of them agreed that the Board, rather thanthe court, would be the more appropriate body to mediate and hear en bloc cases. One representorfelt that the Board would then be performing a function which was more administrative than judicial.Another issue was the setting out in greater detail the procedure for service of notice on all theowners of units and other interested parties.The Select Committee has accepted the representors' views that the procedure for giving notice tothe owners and other interested parties should be made much clearer, as well as be included in theBill itself. As a result, many changes have been made, including the following:(a) the requirement that there should be convened at least one general meeting to discuss the enbloc sale before the majority owners can apply to the Board;(b) advertisement in all the four language newspapers;(c) service of notice of the sale to all the owners, the mortgagees and chargees and themanagement corporation by registered post and by leaving a copy under the main door of every unit;(d) affixing a copy of the notice to the door or gate of a minority owner;(e) affixing a copy of the notice to a conspicuous part of each building in the development; and(f) filing a copy of the application to the Board with the Registrar of Titles and Deeds for notificationon the land register.Another issue concerns the role of the Board with regard to matters of compensation payable to thelessee of a minority owner's unit.A number of representors felt that the Board should decide on the compensation payable to thelessee of a minority owner in order to expedite and facilitate an en bloc sale. The minority owner maybe unable to agree with his lessee on the latter's compensation. The Committee agreed that theBoard can determine the amount of compensation payable to the lessee of a minority owner on thelatter's request. The Board, however, will not decide on the compensation payable to the lessees ofthe majority owners, as the majority owners must make their own arrangements with their lesseesbefore they commit to the en bloc sale.One representor suggested that the Bill should stipulate the maximum amount of compensationpayable to obviate cases where lessees demand an unreasonable compensation. The Committee feltthat it is difficult now to decide on the maximum compensation. This is a matter on which the Boardcould formulate some guidelines when this issue first arises.Then there is a question on the composition of the Board to enable it to deal with en-bloc salecases. A number of MPs and representors felt that the Board should have more panel membersdrawn from a wider range of relevant occupation groups so that it can effectively perform its enlargedfunctions. Sir, the Select Committee has amended the Bill in several ways:(a) to increase the number of members on the Board's panel from a proposed 24 to a maximum of30;(b) to appoint up to three Deputy Presidents instead of the proposed two Deputy Presidents; and(c) to give the President of the Board power, where necessary, to appoint four instead of two panelmembers to form a Board of five or three persons headed by the President or a Deputy President.In closing, Sir, let me say that the Select Committee certainly benefited from the suggestions andviews given by the representors, some of whom were experts in their respective fields. I believe thatthe changes which are now incorporated in the Bill will improve the legislation and help it achieve itsobjectives more effectively.

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