enbloc parl debate - 4may99 3rd readg

8/14/2019 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 Select

Committee 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 economically

viable. The 90% / 80% level l inked 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 uti lised 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 Tit les Board be empowered to decide on a


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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 be

lowered 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 Tit les 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.


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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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Sir, I beg to move.

Question proposed.

Mr Chiam See Tong (Potong Pasir): Mr Speaker, Sir, the right of ownership of land in Singaporeis no longer sacrosanct. First, we have the Land Acquisition Act which allows the Government to

compulsorily acquire land for general development which, amongst other things, could mean that theGovernment can take your land and plant a few roadside trees on it.

Now we have the amendment to the Land Titles (Strata) Act where under the law, the majority ofsubsidiary proprietors can vote to sell the whole development. It would appear that there is no longerany permanency of residence in Singapore. I wonder how this kind of situation squares up with thecall by the Government to make Singapore a better home. To me, a home is a place where you canlive in comfort for as long as you like, and not to be tossed out against your wishes.

Sir, having spoken my feelings in regard to the amendments in the Bill, I would like now to makesome comments on it.

I have read the Bill and agree that the minority subsidiary proprietors' interest must be protected.There should be no conflict of interest and of collusion in the en bloc sale. I think section 84A(1) is fair.

I agree that there must be a majority of 90% or 80% share value consent level before an en bloc salecan be carried out for a building less than 10 years old and more than 10 years old respectively. Ihope the Government shall stick to this majority of share values and not lower the percentages toallow en-bloc sale. It is right that the Strata Titles Board should not take an interventionist role. In thisrespect, I note that the issue of distribution of the proceeds of sale is still largely unresolved.

Section 84A(1) requires that there must be an in-principle sale and purchase agreement whichspecifies the proposed method of distribution of the sale proceeds. I would l ike now to propose thatthe compensation prices for each unit must be determined by taking the average price of twovaluation prices of recognised valuers. Anyway, I note that when there is a dispute, the provisions inthe Bill require the parties to mediate and the Board has powers to call for a valuation report. In thecourts where there are disputes concerning the division of proceeds of sale of properties, for example,in divorce cases, valuation reports are inevitably called for. Presently, I believe that the suggestedway for the division of proceeds of sale is by the quantum of share values. In my view, that form ofdistribution of proceeds of sale by share values is not satisfactory. The share value pegged to a unitor flat is tied to the land which the block or blocks of f lats or shops are built. Theoretically, should thebuilding be destroyed, each of the subsidiary proprietors would still own a portion of the landproportionate to his share value. The share value of each flat or unit is not directly linked to the marketvalue of the flat. Each subsidiary proprietor should be compensated based upon the open value of hisproperty. The worth of a residential unit compared to a similar size flat, in my view, should be on theopen market sale and amongst the factors by which it is determined, ie, its position, the view itcommands, whether it is sited in a sunset posit ion, and so forth. As for a commercial unit of a similarsize, its commercial worth depends largely on where it is sited in the building. A shop that is placed atthe road front is certainly worth more than one which is tucked away in a fine corner of a building.

Since the amendment already gives power to the Board to call for a valuation report under section84A(4), why not make it mandatory for the parties to decide on the mode of distribution andincorporate it into the in-principle sale and purchase agreement? The mode of distribution can bebased on the average price of two valuation reports aforesaid. This will stop any dispute right from thestart on the issue of distribution, thus saving cost and time. I hope the Minister would consider thisproposal.

It was pointed out to me that under the Fourth Schedule, subsidiary proprietors can only take a votefor en-bloc sale in an extraordinary meeting. Would the Minister consider amending clause 1(a) in theFourth Schedule to include Annual General Meeting. If that amendment is made, the first line of thatclause 1(a) would then read, "consider the collective sale at an annual general meeting orextraordinary meeting held in accordance with the Act". I hope the Minister has no objection to thisproposal because sometimes it is difficult to convene an EOGM.


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Mr Shriniwas Rai: Mr Speaker, Sir, thank you for giving me this opportunity. Sir, may I declare myinterest. I am a member of the Strata Titles Board.

Sir, the Select Committee received 46 representations. The Minister has given the breakdown.They were very useful representations and I am glad that the Government has sent this Bill to aSelect Committee. The public input has improved and the Committee has agreed to many changeswhich the Minister has dealt with. These changes are to be welcomed.

Sir, my only concern is that all the 46 representors who wrote to the Select Committee were in theEnglish Language. I think a message could be sent to the public at large that, despite theadvertisements in the newspapers, representations have not been made in any of the four languages.It would be useful for non-English educated Singaporeans to give their input. I am glad that theMinister has agreed to go beyond the practice of the High Court where the advertisement onlyappears in two languages. We have advertisements in four languages. I welcome this.

Sir, I have a proposal for the Minister. The Board members are going to be increased from 24 to 30.Since we are going to deal largely with the value of the property, may I urge the Minister to considerappointing more valuers and some community leaders to this panel. I am also glad that from two, weare going to have four and effectively, we either have three or five members. The discretion lies withthe President or Deputy President. This is most welcomed.

My learned friend, Mr Chiam, spoke about the sanctity of land. I beg to differ. My philosophy hasbeen that, had we stuck to the old English concept, Singapore could never have made progress. Weare a country of limited land size. But, nevertheless, we must see that our laws are framed in such away that the individual rights are protected when a property is acquired. In this particular case, noproperty is going to be acquired. The owners themselves are going to agree or disagree whether theyare going to have the proposed development.

Sir, the other important factor which the House is aware is the mediatory role of the Board. I canassure the House that, since I joined the Board, I have seen more often than not the cases areresolved through mediation. And I am glad that the Select Committee has decided to have the StrataTitles Board instead of the High Court. It would be cheaper and it would also not strain the resourcesof the High Court.

Mr Speaker, Sir, the Bil l has also specified the role of the Board. Hence, it would be easier for theBoard to follow certain guidelines that have been laid. The Board will of course have to see the valueof the property. The Board will also see that the sale is at arm's length. It is fair and equitable as it isspecified in paragraph 47 of the Report by the Select Committee. The Board will review a case"(regardless of whether there is an objection) to see whether on the face of the application it issatisfied that the transaction is in good faith and at arm's length, after taking into account the saleproceeds, method of distributing the sale proceeds and the relationship of purchaser to any of theowners." This is a very important safeguard which the Bill has introduced.

Sir, I would urge the Minister to consider, when appointing the members, as I have said earlier, thatthere is a broader representation so that public confidence would always be maintained.

Mr Simon Tay: Sir, I spoke on the Bill at the Second Reading and expressed concerns in fourareas. First, the question of public interest as opposed to private profit. Second, the different balancebetween private property and the idea of communal property or communal living, which is a phraseused by the Minister of State in the Second Reading. Third, the safeguards in the Bill, as it was then.Fourth, it leaves these safeguards to the Strata Titles Board, rather than the court.

I would not repeat these points I have made previously. I shall attempt to look at therecommendations of the Select Committee. Some of the concerns that I have expressed and otherMPs have expressed have been addressed by the Select Committee. They have gone through a lot ofwork and I think they have put in more safeguards. This should be acknowledged and people shouldfeel slightly more assured.

But still, Sir, I think there are some concerns to be raised. In raising these concerns, I amparticularly conscious of the fact that at the same sitting when we are debating this Bill, we will also


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debate the Singapore 21 Report and the motion that this House endorses the vision of Singapore 21as the basis for strengthening the heartware of Singapore. I mention this because Singapore 21 asksus to consider the heartware of Singapore and, as part of the heartware, to make Singapore ourhome, our best home. Singapore 21 also asks us to consider that every Singaporean matters. We willof course have occasion to discuss the Singapore 21 Report and the motion in full later. But it isevident to me at least that some of these ideas may be in tension with some of the ideas in thepresent Bill.

First, Sir, let me clarify that I recognise the difference between public good and the importance thatpublic good must be placed over private good. But I want to distinguish the public good from thepresent Bill. Public good, Sir, that people understand, and I think the Member for Potong Pasir, MrChiam, alluded to, is highways, infrastructure, public facilit ies for the whole populace. Public good isalso having Singapore with no slums. But, Sir, while the Bill may indirectly give a higher density andutilisation of land, the primary driving factor behind this Bill wil l not be public good in the sense I havedefined it, but rather, private profit. And that is the essential starting point in recognising the differencebetween the Land Acquisition Act, which Mr Chiam referred to, and the present Bill. Under the LandAcquisition Act, I think most Singaporeans accept that if a house has to be taken from them, or part ofa garden has to be taken from them for public good, they will accept. This Bill, however, is different.

The first idea is Singapore as home. Sir, I have to ask: does it strengthen the idea of Singapore ashome if we can point not to the city skyline as a whole or to the Padang in the heart of city, but to our

own individual home? Does it strengthen our commitment to Singapore when we can do that? Ibelieve it does. Consequently, Sir, I must also ask: does it weaken the idea of Singapore as home if,as this Bill allows, other people can force us to sell our homes against our choice? Sir, I amparticularly disturbed by paragraph 17 of the Report by the Select Committee. Perhaps, theCommittee was concerned more about legal rules and the definition of the work, as much of theCommittee's Report makes it clear that they were not aimed at dealing with the major principles of theBill, rather the greater details. But paragraph 17 says that it does not recognise the differencebetween owner-occupiers and those who hold property as investment. That is to say, it refuses to seethe difference between people who see their houses as homes and people who see their houses ascash earning profit or holding its value.

If we take the idea of Singapore as home seriously, I think that while legal matters must of coursebe legal matters, we must increasingly take these non-legal, non-economic but very real issues intoconsideration. And I would urge that this House considers this when we think about the impact of thisBill. The other element I mentioned of - that Singapore 21 may be in tension with the present Bill - isthe idea that every Singaporean matters. Normally the majority should prevail but an individual or aminority must have certain rights or place under the sun which cannot be taken from them by themajority. Is private property one of these rights?

At this point, I must clarify that condominium living is not communal living. As pointed out in theReport very carefully, one part of condominium living is communal, one part is common property, ie,the share value that accumulates to the condominium in terms of the carpark, the facilities, thecommon areas. But another part is completely private, and this is the actual delineated airspace orground space that belongs to that one owner, that is, the person's home. No one can come throughthe door unless that person says, "Yes, you can come in." This is not, in that sense, like communalproperty. This is private property and when we change this law, we change the meaning of privateproperty.

Much has been made of the so-called oppression of the minority, both in the Report and in theSecond Reading. I agree with this. No single person or small number should frustrate a basically gooddeal for no good reasons. However, I would caution that this should not be overstated. No one isstopped from selling his house under the existing law. The right to buy, sell and alienate is preserved.What is stopped by the present law is that one cannot do an en-bloc sale. I can sell my house, but Icannot sell my house in conjunction with everyone else, including those who did not wish to sell.

We are moving then to a different balance. This must be recognised. And I am not saying thisbalance is necessarily wrong, though I think it is. Others may disagree, but the Select Committee hasdone a good job in bringing together people who disagree with the Bill as well as agree. I am not theperson to tell the whole of Singapore what the balance should be. But I wish that, with the passage of


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this Bill, people do see that we are moving to a different balance and that brings me to the question ofsafeguards.

The Report installs profit as the safeguard and the Strata Titles Board (STB) as the guardian. Thisis a step forward. In the original Bill, there was no question of this. Now, we have the safeguard thatwhere there is no profit or only an actual loss, then the deal will not go through. Bur we have to askourselves: is this still sufficient? What if there is only a marginal profit? Among the papers that were

submitted to the Select Committee, some spoke of very high profits, 30%-50%. But it is possible sinceprices have come off, that people might make 5% or 1% if they had bought at the top of the market.What of them, as compared to the neighbours who have made much more? Will there be equity in thissense between those who have bought at different prices? Is there even transparency when Ipurchase a house, to know how much my neighbour has paid for it?

Secondly, the non-monetary but real factors must be borne in mind - location, closest to family, costof moving, condition of the house, whether you have paid a lot of money for renovation. All these, asfar as I understand from the Report of the Select Committee, are still not taken into account. Let methen paint a concrete but hypothetical picture and ask the Minister for clarification. If I see a widow inher 60s or 70s living now alone in a flat, it is a familiar neighbourhood, near her family, the sale mayproceed but it gives her only a small profit, can the existing safeguards save this widow from theinconvenience of having to move at an old age? Can the guardian, the Strata Titles Board, save thiswidow from her situation? I would l ike the Minister to explain this to us. As far as I see it, it cannot.

Secondly, the safeguard as regards the developer's blocking vote. Many of the papers focus on theissue of developers' practice, ie, some of them retain units or transfer them to their own holdingcompanies. Then they have a sizeable block, that given the requirements of 80% or 90% agreement,they can either frustrate the deal or try to push the deal, so it goes to them to redevelop. If I could askthe Minister to explain whether this question has been addressed by the Select Committee. It seemsto me that we cannot take care, I agree with the Minister here, of every situation in writing this Bill. Butwe can provide general guidelines, general principles, and entrust this to a particular person toadminister case by case.

Under the existing law, this is entrusted to the Courts under general principles of equity. The Billseems to me to be different. It seems to be empowering a different person, the Strata Titles Board,and telling it not to look at these non-economic but sometimes very real matters. I would have beenmuch more comfortable with the Bill if the Select Committee had recommended even simple wordingssuch as, "to consider extenuating circumstance of families and of the elderly", and to look at individualcases in this light. With this, may I ask the Minister's clarifications.

Prof. Jayakumar: Sir, I thank the three speakers for their comments on the Bill. Both Mr Chiamand Mr Simon Tay began their speeches by restating their positions during the Second Reading of theBill about the sanctity of the home, the importance of property ownership and so on. I have two waysof dealing with it. One is to go again into all the explanations and justifications which had been madeby the Minister of State, Assoc. Prof. Ho Peng Kee. But that is not the purpose of the Third Reading.The purpose of the Third Reading is really to examine the changes which had been recommended bythe Select Committee and not to have another full-scale debate on the issues or questions of principlewhich had been fully canvassed and debated in the Second Reading. Much as I am tempted to gointo details on the points raised by Mr Chiam and Mr Simon Tay, I will not go into them except torecapitulate the points which had been very cogently put forward by my colleague, the Minister ofState.

The first point is that, for those who oppose the very principle of the Bill - and the principle of the Billis to change the law to move away from unanimous requirement - I recognise they have their reasonsto do so. If you oppose that basic principle, then of course, you must oppose the rest of the Bill. But ifyou agree with the fundamental principle that unanimous requirement should be changed tosomething less than unanimous, then you have to deal with a host of questions. What should be themajority consent level, if it is not unanimous? Should it be pegged to the age of the development, andwhat should be the age of the development? How do you deal with objections, financial andpecuniary, as well as emotional objections? What should be the institutional mechanism to deal withthis?


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The Bill, as amended by the Select Committee, addresses these issues consequent to the principleto move away from unanimous requirement. We can have a divergence of views on all theseconsequential matters because it will not be honest for me to say that there is a perfect or correctanswer to each of these solutions. It calls for a judgement. Government's response, as now modifiedby the Select Committee, is to arrive at what we think is a reasonable and practical approach to workout this regime for facilitating en-bloc sales. It is really a facilitating process. It need not be the

Government or the Strata Titles Board directing or instructing that such and such a developmentshould now proceed with en-bloc sale. The regime is really to leave it as much as possible to those inthe development to decide for themselves.

Then we have this key feature, ie, 90%/80% consent requirement pegged to the age of the building,ie, 10 years or less and 10 years or more, coupled with the institutional mechanism of the Strata TitlesBoard rather than the Courts for the reasons which are spelt out in the Bill. And the role of the StrataTitles Board is, again, that of facilitating the process, as an avenue for mediating when there areobjections and the situation and the type of objections are imponderable. Some examples were givenbut those are not the only ones. The Board wil l be taking a non-interventionist approach but we dospell out a few of the categories where the Board expresses its disapproval. But apart from that, theBoard will really take a mediating role.

If you read the Select Committee's Report, the papers which had been presented and the

discussions which the Committee had with many of the representors, it will be evident that this is not aclear-cut issue of the majority imposing its will on the minority. We have a very good illustration whichwas brought to the attention of the Committee where actually it was the unreasonableness of theminority. You had an en-bloc sale which was frustrated by a couple who were divorcing and eachparty to the divorce wanted to get the maximum out of the proposal of the en-bloc sale and themajority of the committee decided to overcome this by coughing out from their own pockets to meetthe demands of one of the parties to the divorce. So it is not so clear-cut that this is really a minoritybeing run roughshod by a majority.

Then we have a point made in the Second Reading and repeated now, about this question of thehome, the heartware, Singapore 21 and so on. We pointed out during the Second Reading that youhave to distinguish between landed property and the concept of strata title development. Mr SimonTay referred to actual delineated ground space. In strata title, there is no delineation of the subsidiaryproprietor's identifiable plot of land. There is no such thing. You have, in common with the othersubsidiary proprietors, a certain share value of the land area as well as a share value of all thecommon properties, and when we talk about common properties, it covers a whole range fromcarparks, the pool, the garden, lifts, corridors, external walls, columns, roads, drainage, sewerage andgas pipes and electric cables serving the development. So there is a distinction. When we talk aboutstrata titles, the concept is different. You are having an identifiable airspace but with respect to landand other common properties, you have common ownership together with the rest of the subsidiaryproprietors according to the share values.

Therefore, if you read the Select Committee's Report, many of the representors agreed with me, infact, all agreed with me, when I put it to them that, in the end, it is a question of balance. The minoritycan say he has a right not to alienate but the majority also has a right to alienate. So, how do youbalance these two? I think Mr Simon Tay wants to take the floor.

Mr Simon Tay: Thank you, Mr Minister. You said that the minority has the right not to alienate, butthe majority wants the right to alienate. They still have the right to alienate, but they must only alienatetheir own property, their own share value. They never had a right to alienate theirs and theirneighbour's property.

Prof. Jayakumar: Sir, if you look at the existing scheme, under section 78, it is possible for anapplicant or some applicants to go to the court and get a court order even though you do not have100% consent to achieve exactly what the Bill achieves, except that the Bill now provides a morefacilitating method of achieving this result. So it is not a question that it was impossible for asubsidiary proprietor or group of subsidiary proprietors where there is no unanimous consent not tohave en-bloc sale. It is possible. What we are doing here is to recognise the frustrations anddifficulties, to recognise in land scarce Singapore, this will enable optimum utilisation of land. Is it or is


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it not desirable to make this move? So that is the fundamental question which has been addressed inthe Second Reading debate. The Third Reading here is to discuss the improvements which havebeen made by the Select Committee.

I think Mr Chiam said that he agrees with the approach where the Strata Titles Board will payattention to factors such as is there collusion, is there conflict of interest? And he therefore is inagreement with that approach. He also agrees with the approach of not taking an interventionist

approach.

His main point was about the distribution of proceeds, and here we have a difference of views. MrChiam's approach would be, first, for the Board itself to decide on the distribution of proceeds.Secondly, in conferring the power to the Board to decide, he also has a proposal which is that itshould not be by share values, but by open market value, take the average of two valuation reports. Isay we have a difference of views, because the Government's approach as well as the approachtaken by the Select Committee is that it is best to leave it to the parties to come up with their ownarrangements.

Why do we take that approach? Because the factors that will have to be taken into account can bevery diverse, and Mr Simon Tay has alluded to that. If you read the Report, some even talk aboutcustoms, superstitions, feng shui and so on. How does one quantify this at the level of Strata TitlesBoard or by the courts, if it were to go to the courts? Then there are emotional factors. There was this

problem of a divorcing couple. How do we have objective criteria to work this into a decision? So, it isbest to leave it to the proponents of the en-bloc sale to negotiate and try their best to accommodatethe objections of the minority, and the objections of the minority can be based on numerous pecuniaryas well as non-pecuniary matters. Mr Simon Tay pointed out that there may be a case of someonewho recently bought the flat and spent a lot of money in renovations. So it can be quite a complicatedbusiness. It might be best to leave it to the parties to come up with a proposal.

As to the methods of distribution of proceeds and whether they are fair or not, his point that theStrata Titles Board ought to take into cognizance his suggestion, I think they will do so. But pleasebear in mind that the Board is not going to impose its terms and conditions. It will really leave it to theproponents of the application for en-bloc sale.

Mr Chiam's other point was to change the Fourth Schedule so that instead of an ExtraordinaryGeneral Meeting (EOGM), it can be an Annual General Meeting. Let me explain why we have madean amendment to provide for Extraordinary General Meeting. This was a change made by the SelectCommittee after hearing many representors. The concern of the representors was that if we did nothave a general meeting - let us leave aside for the moment Extraordinary General Meeting or AnnualGeneral Meeting - they felt that individual owners can be pressurised by various kinds ofrepresentations. So the thrust of this amendment is transparency. Have a general meeting. The nextquestion is: why Extraordinary General Meeting? I think it is better to have an Extraordinary GeneralMeeting so that it can be a special meeting. There can be no doubt in anyone's mind that it is calledfor a special purpose. To have an en-bloc sale proposal is indeed a very significant step. So it shouldbe delinked from the Annual General Meeting.

I have taken note of his point that it is very difficult to convene an EOGM, but perhaps that itselfmay be a good reason to have an EOGM, because, do not forget, to have a 90% or 80% requirementis not going to be easy in any case. So I would commend keeping the Extraordinary General Meetingrequirement.

Mr Shriniwas Rai made some suggestions as to the future composition of the Strata Titles Board. Inview of the amendments for its enlargement, whether we could draw in people from other professionsand community leaders. I shall give this some thought in consultation with the President of the StrataTitles Board whose views will have to be solicited.

Let me deal with a specific point that Mr Simon Tay raised. He talked about paragraph 17 of theReport. I think he has missed the point. This should not be read as the Committee disregardingprimacy over home ownership as opposed to those who are not having the unit for their home.Basically, paragraph 17 dealt with the proposal by some who argued that when calculating the votingrights, a higher weightage be given to those owners who are l iving in their own homes. The first


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problem that the Select Committee had with that is you immediately would have an inconsistency withthe whole structure of the Strata Titles Board where for all other matters concerning maintenance,funds, sinking funds, decisions on whether you are going to spend half a million dollars on repairingthe swimming pool or putting in new lifts, all those decisions are based on share values, and notwhether you are staying there or not. So the Select Committee decided it is better to keep to thatbasic approach.

Secondly, you may not be living there, but why should you have a lesser voting right on suchimportant decisions than a person who is living there? So what if you have rented it out? You mighthave allowed your son or daughter-in-law to stay there. So should you have a lesser voting right? Ithink Mr Simon Tay has completely missed the thrust of that paragraph.

As to his point that individuals must have rights, I have already alluded to it. This Bill is aboutbalancing of rights, balancing the interest of the minority whose viewpoint is to be safeguarded, whofeel that they should not be forced to alienate, as well as the interest of the majority who cannotunderstand why their interest to alienate should be frustrated.

Coming back to his final point about emotional factors, the approach taken by the Board is not toadjudicate and decide on these matters. We should leave it to the parties, whether it is the emotionalaspect of an elderly lady or widow or some other emotional aspects. These cases are so numerousand so imponderable that it will not be possible for the Strata Titles Board to decide on. But it can

mediate, it can recommend, it can suggest. But in the end, it should be a decision left to the parties todecide. Whether individuals or developers own a large chunk of the voting rights, if they own 25%-30%, then, of course, they may meet the requirements of the Bil l, and then the ingredients for en-blocsale will proceed.

I hope I have answered most of the questions, Sir.

Question put, and agreed to.

Bill accordingly read a Third time and passed.

enbloc parl debate - 4may99 3rd readg

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