BANKRUPTCY AND THE OWNER OF AN HDB FLAT

• Citation: (1997) 9 SAcLJ 199
• Published date: 01 December 1997
• Date: 01 December 1997

Ng Lai Wat Official Assignee v Housing and Development Board

Under the Home Ownership Scheme of the Housing and Development Board (HDB) introduced in 1964, 81 per cent of those who live in HDB flats own their flats. HDB flat owners are registered under the Land Titles Act1 as lessees of 99 years. Since the HDB itself hold State leases the individual registered lessees of the HDB are in effect sublessees. The rights and obligations of the individual lessees of HDB flats are governed by the leases themselves and Part IV of the HDB Act.2 After the dissolution of the Housing and Urban Development Corporation Ltd. (HUDC) in 1982, its properties and functions were transferred to the HDB.3 From then on flats for the middle income group under the HUDC scheme were developed by the HDB. These HUDC flats of the Third and Fourth Phases are also governed by Part IV of the HDB Act.

The policy of the HDB is that the HDB flat is for the occupation of the purchaser and members of his family nucleus which are referred to as the authorised occupiers.4 This policy is enforced through the terms of the lease and conditions of ownership imposed by the HDB backed up by sections 55 and 56(1) HDB Act. The purchaser and his authorised occupiers must be in occupation of the flat.5 He may not assign or sublet the whole flat without the prior consent of the HDB.6 He may not charge or mortgage his flat without the consent of the HDB.7 In line with this policy the flat is not available to the owner’s creditors even on his being declared a bankrupt. Section 51(2) states that no flat shall vest in the Official Assignee on the bankruptcy of the owner and section 51(3) provides that no HDB flat shall be attached in execution of any court decree. Similar provisions in grants of private property would be void and struck down as being against public policy which is that property of a debtor should be available for the satisfaction of his debts.8 Section 51 HDB Act clearly takes the HDB flat out of the general law. In the case of HDB flats the public policy is that the owner of an HDB flat should not be without a roof over his head.

This aspect of the HDB flat was before the courts in Re: Ng Lai Wat Official Assignee v Housing and Development Board.9 Ng and his wife are the joint owners of a HDB flat. He also rented business premises from the HDB. He fell into arrears with his rent and the service and conservancy charges. The HDB sued him for $75,744.79 by way of double rent, service and conservancy charges and on 5 December 1986 the HDB obtained judgement in default. In July 1988 the HDB, not having received any satisfaction on the judgement, took out bankruptcy summons and on 21 April 1989 Ng was declared a bankrupt. In...