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Subdivided Buildings—Developments in Australia, Singapore and England

Published online by Cambridge University Press:  17 January 2008

Extract

This article considers the development in several Commonwealth jurisdictions of the law relating to “horizontal subdivisions”2, or subdivided buildings. The latter expression describes the situation where title to land can relate to a slice of defined area or cubic space, which is not grounded on the surface layer of the earth, and is divided not only horizontally, but vertically as well.

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Articles
Copyright
Copyright © British Institute of International and Comparative Law 1996

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References

1. From Smollet's Humphrey Clinker, a fictional description of eighteenth-century Edinburgh, cited in the 1965 Report of the Wilberforce Committee on Positive Covenants Affecting Land. The Committee had referred to the position in Scotland (“where separate ownership of the different floors of buildings has long been a common practice”: para.39). Quoted in Simpson, Rowton S., Land Law and Registration (1976), p.264.Google Scholar

2. This is the term used by Simpson, idem, p.263.

3. R. C. B. Risk, “Condominiums and Canada” (1968) 18 U.Toronto L.J. 1.

4. Now Cap.158. Revised Edition of Singapore Statutes, 1988.

5. These cover a variety of matters such as the type of tenure granted to owners, the specific obligations between interdependent owners and the methods of dispute resolution.

6. As a direct result of colonisation. By virtue of the Second Charter of Justice 1826, Singapore inherited fundamental common law principles which became part of Singapore law. In addition, the colonial British administrators practically re-enacted for Singapore much of the English land legislation of the 1880s, including the Yorkshire Registries Act, the Conveyancing Acts, Settled Estates Act and the Trustees Act. These form the basic frame work of land law in Singapore.

7. In Auslerberry v. Oldham Corporation (1885) 29 Ch.D. 750, 781 the Court of Appeal confirmed as a clear rule of law that the burden of a covenant between freeholders cannot run with the land.

8. See generally CCH Australia Ltd, Strata Title Management and Practice in New South Wales (6th edn, 1993)Google Scholar, Alex, Ilkin, Strata Title Management and the Law (1989)Google Scholar and Peter, Butt, Land Law (2nd edn, 1988).Google Scholar For a history of legislation relating to strata titles in New South Wales see Sackville and Neave, Property Law, Cases and Materials (3rd edn, 1981)Google Scholar and Rath, A. F., Grimes, P. J. and Moore, J. E., Strata Titles (1962).Google Scholar

9. The reasons for this are discussed infra Sections III.A and IV.B.

10. The first legislation was the Transfer of Land (Stratum Estates) Act 1960, passed in Victoria. This provided for the subdivision of a building into stratum estates and for the formation of a service company to hold title to all the common parts of the building and its curtilage.

11. Rath, Grimes and Moore, op. cit. supra n.8.

12. These include extensive provisions for cross-easements of support and shelter and the passage of services such as water, sewerage, and drainage. Strata plans must be lodged with the Registrar-General to indicate that the necessary local government approvals have been obtained. In addition, a “body corporate” comprising unit-holders in the subdivided building must be formed. This will be the administrative body responsible for the proper administration and maintenance of a subdivided building subject to the Act.

13. These by-laws provide for the control, management, use and administration of the units and common property: see Scheds. 1 and 2 to the Act.

14. Also based on the New South Wales Conveyancing (Strata Title) Act of 1961.

15. A number of problems had arisen as a result of the Act, particularly in relation to title, management and dispute resolution.

16. The most significant of which, from a management point of view, related to the compulsory licensing of “strata managing agents”. Since 1 Oct. 1981 all managing agents appointed to manage a strata scheme must be the holders of a strata managing agents' licence issued under the Auctioneers and Agents Act 1941. The legislation is also kept under constant review by the New South Wales government through its Strata Title Act Review Committee.

17. By s.54(1) of the Act, registration of a strata plan is the means by which land may be divided into lots and common property and the body corporate automatically formed.

18. Sched. 1, by-laws 14–20, 22–24, 27.

19. This meeting is to discuss matters such as insurance, maintenance contributions, the election of a council and the amendment or variation of the statutory by-laws. Part 1, Sched.2 contains detailed rules governing the conduct of meetings of the body corporate.

20. Cap.158, Revised Edition of Singapore Statutes, 1988, hereafter the LT(S)A.

21. The Board, constituted under s.3 of the Housing and Development Act 1959, replaced the Singapore Improvement Trust in 1960.

22. Income ceilings are imposed to determine eligibility, thus catering for the lower- and middle-income groups.

23. See Khublall's, N. comment (The Law of Real Property and Conveyancing in Singa pore (1991), p.543) that the nature of an HDB lease can be regarded as so different from a lease under general law that one may even regard the HDB lease as a “new interest in land” in Singapore. However, the law governing public housing in Singapore is not discussed here as the LT(S)A applies only to private housing.Google Scholar

24. See Ho Chi, Wing and Sim Loo, Lee, Studies on the Property Market (1992), chap.2.Google Scholar

25. National income, which was increasing steadily in the 1960s, grew rapidly in the late 1970s. E.g. the GDP increased dramatically from S$13,681 million in 1975 to S$22,438 million in 1980: Yearbook of Statistics (Department of Statistics, Singapore, 1975/76 and 1980/81).

26. In addition, the population structure comprised a younger group. E.g. in 1980 approximately 37.1% was made up of persons between 20 and 39 years old (Wing and Lee, op. cit. supra n.24). Many of these, being in the higher-income group, were not eligible for public housing and had to resort to private developments to fulfil their desire to become home-owners.

27. The “condominium” concept of development was formally introduced in Singapore on 16 May 1972. One feature that distinguishes a condominium housing development from other conventional housing is that it involves more comprehensive planning in terms of more liberal spacing of buildings, the preservation of natural features of the land, improved living environment and the provision of more communal facilities.

28. Under s.3(1)(a) of the Residential Property Act (Cap.274, Revised Edition of Singa pore Statutes, 1985) no person may, whether for consideration or by way of lifetime gift or otherwise, transfer any residential property or any estate or interest therein to any foreign person; however, by s.4(1) of the Act, this prohibition does not apply to the purchase or acquisition by, or a transfer to, a foreign person of an estate or interest in any flat comprised in a building consisting of six or more levels or any flat or dwelling-house shown as a unit in an approved plan bearing the title “condominium”.

29. See Phyllis P. L. Tan, “Reflections on Conveyancing Practice” [1979] M.L.J. cxxviii.

30. The Singapore case of Wong Peng Kin & On v. Melodies Ltd [1981] 1 M.L.J. 128 boasted a lease for 999,999 years!

31. While Singapore had emulated much of the land legislation of England of the 1880s, the sweeping English land law reforms of 1925 were not similarly followed. In these circum stances the English Land Registration Act of 1925 could not have been adapted in Singapore in isolation from the other statutes comprised in the 1925 package of reforms. On the other hand, the Torrens system of land registration could readily be adapted for implementation in Singapore without the necessity of any excess legislative baggage.

32. The draftsmen of the model strata titles Bill were alert to ensure that the system of strata titles could be implanted on to the existing Torrens system with minimum disruption. E.g. accepted forms of certificate of title, transfer, mortgage and other dealings were to be used, and their processing was to be carried out in the usual manner.

33. Except for leaseholds, where there exist privity of estate.

34. In this context easements of support and fencing may be permitted (see Dalton v. Angus (1881) 6 App.Cas. 740 and Crow v. Wood [1971] 1 Q.B. 77 respectively). Both these easements are capable of being granted by law so as to run with the land and to be binding on successors: being rights which lie in grant, they are of such a nature that they can pass under s.62 of the Law of Property Act 1925. While the general rule is that the servient owner is under no obligation to expend money on the maintenance of any property over which an easement is exercised (Holden v. White [1982] Q.B. 679), in the case of the easement of fencing the servient owner is under a duty to take positive steps to expend money on the maintenance of any property over which the easement is exercised.

35. E.g. if no sinking fund is established and some tenants are unable to pay their share of repair costs.

36. Chaired by Edward Nugee QC, and known as the Nugee Committee, it prepared a report on the management of privately owned blocks of flats. Singled out for attention were leases which are badly defective in that no adequate provision is made for the proper maintenance and care of the block, the well-being of the occupants or the legitimate interests of the reversioner.

37. There are however, cases of statutory freeholds. These are colourfully known as “flying freeholds”. Probably the most renowned is New Square, Lincoln's Inn, where the build ings were originally erected and governed by Articles of Agreement entered into in 1682 between the Honourable Society of Lincoln's Inn and the developer. This agreement was superseded by the Lincoln's Inn Act of 1860. Interestingly, rentcharges were imposed to cover the services provided by the Inn, which calls into question the nature of the “freehold”. To cite a more recent example, s.74 of the West Yorkshire Act 1980 deals with the repair of double-deck houses, built on top of each other, in Hebden Road, Yorkshire, which were formerly unmortgageable but are now accepted by building societies. It is noted that such statutory freeholds are exceptional and mostly of historical interest. Cited in Gangatharan, , Law Relating to Ownership, Management and Transfer of Flats in Singapore, Ph.D. thesis, London University (1986), p.144.Google Scholar

38. George, Edward F. and Arthur, George, The Sale of Flats (5th edn, 1984), p.22Google Scholar

39. E.g. Sched. 1. Part II, para. 13 of the Trustee Investments Act 1961 classifies leaseholds for which the unexpired term at the time of investment is not less than 60 years as falling under “Narrower Range Investments Requiring Advice”, thereby restricting the trustees' power of investment: Hayton, and Marshall, , Cases and Commentary on the Law of Trusts (9th edn, 1991), p.627.Google Scholar

40. This aspect is dealt with infra Section V.C, in the context of the Leasehold Reform and Urban Development Act 1993.

41. In 1961 the Law Reform Commission on Restrictive Covenants was set up and was followed in 1963 by the Wilberforce Committee on Positive Covenants Affecting Land.

42. Law Com. No. 127.

43. And justifiably so, as the reports of the Wilberforce Committee on Positive Covenants of 1965, the Law Commission on Restrictive Covenants of 1967, and its 1971 working paper on Rights Appurtenant to Land, and the Benson Committee on Legal Services of 1979 were studied. See Wilkinson, H. W., “The Law Commission and the Reform of Covenants” (1984) 270 E.G. 11541156.Google Scholar

44. Law Com. No. 127, para.4.21.

45. The word “land” was used because the obligations were for the benefit of (or burden to) land and not merely personal, and “obligation” because there was a duty involved.

46. Unless, of course, the restrictive covenant is construed so as not to be enforceable by or against a party who no longer has any interest in the land.

47. In the Land Obligations Bill.

48. Law Com. No. 127, para. 6.7 ff. The scheme would be set up by a deed executed by the developers and will have the effect of creating a kind of “local law” for the development.

49. As denned in s.1(1) of the Law of Property Act 1925.

50. This 1987 working group, under the chairmanship of Trevor Aldridge and known as the Aldridge Working Group on Freehold Flats and Freehold Ownership of Other Inter dependent Buildings, proposed a new land ownership scheme for England and Wales called commonhold.

51. Cm.1345.

52. The Leasehold Reform and Urban Development Act 1993.

53. This is to be expected, as a preliminary study of “condominium” legislation in various other parts of the world was conducted before the then Lord Chancellor, Lord Hailsham, established the Aldridge Group. See supra Part I regarding the various labels used for sub divided buildings.

54. This is because the proposed statutory obligations enjoyed by a unit owner will be automatic and standard.

55. As a result the legal interest will not expire and will (subject of course, to the physical condition of the property) continue to provide a good security for a loan.

56. There are also provisions for the majority to make an application to the court where the vote in favour of a resolution is at least 80%.

57. See generally N. Khublall, Strata Titles (1995) and op. cit. supra n.23, at chaps.24 and 25, Lim Lan Yuan, A Guide to Management Corporations (1987) and Gangatharan, op. cit. supra n.37.

58. That is, both freehold and leasehold.

59. LT(S)A, s.45(3).

60. There is no universally accepted basis of determining the most equitable number of share values to be allocated to each strata lot. Those based on floor areas may not necessarily be consistent with those based on the capital value of each unit.

61. The term “commonhold” is defined as “property which is divided into freehold units, possibly but not necessarily with some collectively used property as well managed as a whole under the proposed Commonhold Act”.

62. The scheme would be appropriate where there are a number of units which are in some way interdependent because they are physically joined, or because their occupiers use the same common facilities. The fundamental requirement is that there must be at least two units and the focus is on situations where there is interdependence between or among occu piers, as the case may be.

63. Para.3.37 of the report and cl.13 of the Bill. According to cls.13 and 1, the basis upon which the above rights and liabilities are to be determined is as follows: a number will be used for the calculation of the unit's service charge contribution and a number (which will usually be the same) for the calculation of the unit's share of the capital assets on winding up.

64. Cap.314, Revised Edition of Singapore Statutes, 1985.

65. Philip Motha, , Singapore Real Property Guide (3rd edn, 1989), p.15.Google Scholar

66. Established by the Jurong Town Corporation Act, Cap.150, Revised Edition of Singa pore Statutes, 1985.

67. From Publicity Division, Ministry of Information and the Arts, Singapore 1994.

68. As a result of which there was no difficulty in imposing burdens upon successive owners, as there is in relation to freehold estates.

69. See Hague, N. T., Leasehold Enfranchisement (2nd edn, 1987), chap.1.Google Scholar

70. The Duke of Westminster, who owns much of Mayfair and Belgravia, was led to with hold donations to the Conservative party, and this galvanised opinion in the House of Lords.

71. Reported in The Times, 9 Mar. 1993.

72. Flats and other horizontal subdivisions had been excluded from the benefits of enfranchisement under the 1967 Act. However, doubts have been expressed as to the extent to which the new right under the 1993 Act will be utilised: the financial cost of purchase and the protracted procedure may be deterrents to the optimum utilisation of the provision. See Clarke, D. N., “Tenure of Horizontally Divided Residential Property”, paper presented to Society of Public Teachers of Law, 09 1993, p.11.Google Scholar

73. See s.5 for definition of “qualifying tenant”.

74. No further documentation or transfer of the benefit and burden of obligations is required as statute confers the benefit and imposes the liability: cl.6 of the Bill.

75. Generally said to be more conservative.

76. One can be certain that such a directive would not enter the rule book of regulations binding unit owners in England, as sun-bathing in skimpy attire on communal lawns in summer is the prerogative of residents.

77. This had been the criticism levelled against the by-laws contained in Sched.l to the New South Wales Strata Titles Act 1973.

78. See comment in Khublall, op. cit. supra n.23. at p.582, that by definition it is inaccurate to term a set of rules contained within a Sched. to an Act as “by-laws”. In Kriise v. Johnson [1898] 2 Q.B. 91 a “by-law” was defined as a law made by a subordinate body which is statutorily empowered to make such a law (viz. subsidiary legislation). The by-laws in Sched.1 to the Singapore Act were enacted directly by Parliament. However, this does not affect the validity of the by-laws in the Act.

79. Cap.30, Revised Edition of Singapore Statutes, 1985.

80. Official Report of the Select Committee on the Land Titles (Strata) (Amendment) Bill 1987, p.D62.

81. S.237/88.

82. See ss.94–107 of the Act.

83. According to para. 16.7 of the Law Commission: Commonhold–legislation on commonhold will provide for cases to be allocated either to the county court or the High Court, subject to proposals resulting from the Civil Justice Review.

84. Idem, paras.16.8–16.12.

85. Ibid.

86. E.g. some tribunals established by statute determine disputes which have arisen not between an individual and public authority but between individuals. Examples include the Rent Conciliation Board and the Lands Tribunal.

87. See e.g. Phillip, Kenny, “Commonhold—the Latest Proposals” (1991) E.G. (9103) 127.Google Scholar

88. College of Estate Management Research Paper 90/03.

89. In particular, the details of the statutory obligations of the unit owners, the democratic nature of the system and the dispute-settlement machinery.

90. E.g. prices of condominium units soared from about S$l 250 (£543) per square metre (psm) to about S$3.500 (£1,521) psm during the boom period between 1980 and 1982. Presently, the market is experiencing another boom, with prices ranging from S$4.000 (about £1,739) psm to S$6.000 (£2,608) psm in prime residential areas.