PLC Paper No. CB(1)11/97-98
(These minutes have been seen
by the Administration and
cleared with the Chairman)
Bills Committee on Government Rent (Assessment and Collection) Bill
Minutes of meeting held on Thursday, 13 March 1997, at 4:30 pm in Conference Room B of the Legislative Council Building
Members present :
Hon Albert CHAN Wai-yip (Chairman)
Hon Ronald ARCULLI, OBE, JP
Hon Howard YOUNG, JP
Hon Ambrose LAU Hon-chuen, JP
Hon Margaret NG
Hon NGAN Kam-chuen
Members absent :
Hon James TO Kun-sun
Hon CHEUNG Hon-chung
Dr Hon LAW Cheung-kwok
Public officers attending :
Clerk in attendance :
- Mr Trevor KEEN
- Principal Assistant Secretary for Planning, Environment and Lands
- Mr Esmond LEE
- Assistant Secretary for Planning, Environment and Lands
- Mr C S WONG, JP
- Deputy Commissioner of Rating and Valuation
- Mr F G HEATH
- Assistant Commissioner of Rating and Valuation
- Mr R C BARAM
- Government Land Agent/Estate Management
- Ms Sherman CHAN
- Senior Assistant Law Draftsman
- Mr James ONEIL
- Deputy Crown Solicitor
- Mr Tony ROBERTSON
- Deputy Principal Solicitor/Legal Advisory and Conveyancing Office
- Miss Odelia LEUNG
- Chief Assistant Secretary (1)1
Staff in attendance :
- Ms Bernice WONG
- Assistant Legal Adviser 1
- Mr Kenneth KWOK
- Senior Assistant Secretary (1)2
I. Confirmation of minutes of meeting
1. The minutes of the meeting held on 30 January 1997 were confirmed.
II. Matters arising
(LegCo Paper No. CB(1)1092/96-97)
Justifications for charging Government rent at 3% of the rateable value on leases for special purposes which have been granted at a concessionary premium
2. At the Chairmans request, Principal Assistant Secretary for Planning, Environment and Lands (PAS/PEL) briefed members on the paper. He said that paragraph 3 of Annex III to the Joint Declaration (JD) provided for charging of Government rent after 30 June 1997 on new leases that were granted since the entry into force of the JD. These new leases included special purpose leases which were granted at a concessionary premium. It would be anomalous not to charge Government rent on special purpose leases which had been extended. As a matter of fact, the rateable values and hence, the Government rent of churches or cemeteries should normally be much lower than those of commercial buildings.
Members did not accept the Administrations explanations and opined that paragraph 2 of Annex III to the JD should be interpreted in such a way that short term tenancies and leases for special purposes were not obliged to pay Government rent upon extension.
Breakdown by type of leases of the estimated revenue from collection of Government rent
3. Assistant Commissioner of Rating and Valuation (ACRV) explained that a breakdown by type of leases of the estimated revenue from collection of Government rent was not available. The Administration could only estimate Government rent payable on places of public religious worship and agricultural land. Places of public religious worship were divided into two types :
- purpose-built churches and temples, etc, which were usually large and free-standing. They were exempted from the assessment to rates; and
- adapted churches and temples, etc, which were situated in domestic/commercial buildings. They were exempted from payment of rates.
The total projected revenue from collection of Government rent on all places of public religious worship would be around $15 million per annum. Regarding agricultural land, it was estimated that only 20,000 out of 100,000 lots would be required to pay an average of $220 per annum per lot. Hence, the total revenue generated would be less than $5 million per annum which would be equal to the administrative costs in collecting the rent.
4. Members considered it not cost-effective to collect Government rent from lessees of places of public religious worship and agricultural lots.
Legal basis upon which tenements exempted from assessment to rates under the Rating Ordinance are capable of being so assessed under the Bill and assigned with rateable values for the purpose of charging Government rent
5. PAS/PEL clarified that the definition of rateable value was applicable to all kinds of tenements including those which were exempted from assessment to, or payment of, rates. Section 36 of the Rating Ordinance (RO), Cap. 116 set out the exemptions; subsections (1), (2) and (3) provided for tenements which were exempted from assessment to and payment of rates; and subsection (3A) empowered the Commissioner of Rating and Valuation (CRV) to ascertain the rateable values of these tenements.
6. On any difference between "assessment" as used in section 36(1), and "ascertainment" in section 36(3A), DCRV responded that the two terms carried the same meaning. This was in line with section 7 of the RO which set out the formula for ascertaining rateable value. Members opined that if this was the case, tenements exempted from assessment to rates should also be exempted from ascertainment of rateable value and hence, payment of Government rent.
Clause 36 Legal effect of demand, etc., on unauthorized structures, etc.
7. PAS/PEL explained that clause 36 was needed to prevent any misunderstanding that payment of Government rent would give rise to a lessor-lessee relationship between the rent-payer who might not be the lessee of the land concerned and the Government.
8. Deputy Principal Solicitor, Legal Advisory and Conveyancing Office, Lands Department (DPS) elaborated that the clause was introduced to protect the interest of both the Government and the lessee.
|9. Albeit members understanding of the rationale for the clause, they could not accept any express provision that authorized the Government to collect Government rent from occupants of unauthorized structures.||ALA1|
10. Assistant Legal Adviser 1 (ALA 1) would confirm if deletion of clause 36 would have the consequence as pointed out by the Administration.
III Clause-by-clause examination
11. Members continued with a clause-by-clause examination of the Bill.
Clause 38 Lease, etc., over-ridden
12. PAS/PEL explained that the clause was intended to iron out inconsistencies between conditions in an applicable lease and the Bill relating to Government rent and rateable value by allowing the Bill to over-ride the former. Inconsistencies arose because the granting of land was administered by the Director of Lands, whereas the Government rent was collected by CRV. For example, Government rent was normally payable annually as specified in a standard lease while this was payable quarterly as stipulated in the Bill.
13. Members opined that the clause was drafted in such a general way that it was difficult to ascertain its full effect. Besides, it called into question whether the Administration should use legislation to modify contractual terms. Members asked for specific information on lease conditions which were considered inconsistent and would be over-ridden. The Administration then tabled a paper on the subject (LegCo Paper No. CB(1)1092/96-97) and members deliberated on this in detail.
Item 1 Rent payment
14. Members raised no objection.
Item 2 Rateable value
15. DCRV explained that the RO provided for ascertainment of rateable value for rating purpose while the Bill provided for the same but for renting purpose. Although the Rating and Valuation Department (RVD) did not ascertain rateable value for rating purpose for undeveloped sites, the Bill empowered the RVD to do this for the purpose of charging Government rent.
Item 3 Effective date of valuation list and of interim valuation, correction, alteration, or variation of rateable value
16. Regarding the difference on the effective date of interim valuation between standard land grant conditions and the provisions in the Bill, DCRV explained that under the former, the effective date which was applicable to new properties only would be 90 days from the date of issue of relevant documents such as the letter of compliance for domestic tenements and 180 days or the date of occupation, whichever was the earlier for non-domestic tenements. Under the Bill, Government rent would be payable from 28 June 1997 for most applicable leases. For newly granted land lots, the effective date would be 1 July 1997 but for new properties thereafter, the principle specified under standard land grant conditions would apply.
Item 4 Rateable value of tenement partly on lot
17. Assistant Commissioner of Rating and Valuation (ACRV) pointed out that standard land grant conditions provided for apportionment of the rateable value of tenements situated partly on land which should be subject to Government rent. Under the Bill, the same principle was adopted but CRV might use other methods to determine the rateable value if he was of the opinion that it would be unfair to use the stated principle of ascertainment in special cases. In any event, appeals could be lodged against CRVs decision.
Item 5 Notional rateable value
18. DCRV said that the Bill would empower CRV to assess the rateable values of tenements without a rateable value in the Valuation List.
Item 6 Deletion of rateable value due to demolition or Court/Government order
19. DCRV briefed members that the Bill provided for the use of the last ascertained rateable value for demolished tenements for the purpose of charging Government rent until a new building had been constructed. This would apply even if it took ten years to develop a piece of land. There would be no interim valuation when the land was being developed.
20. The Chairman enquired if a land owner could request the use of 5% of the land premium in lieu of the last ascertained rateable value. DCRV replied in the negative. He added that 5% of the land premium was normally higher than the last ascertained rateable value. The last ascertained rateable value would be used regardless of the reasons for demolishing the building. For newly granted lots which did not have last ascertained rateable values, 5% of the capital value would be taken as the rateable value.
Item 7 Tenement partly replaced
21. DCRV explained that the Bill conferred discretion to CRV to determine the rateable value of the portion of a tenement not yet replaced by a new building. Such power rested with the Director of Lands in the standard land grant conditions.
Item 8 Rounding of rental payment
22. Members noted that under standard land grant conditions, annual rent would be rounded up to multiples of four, whereas under the Bill, quarterly rent payable would be rounded down to the nearest whole dollar with any odd cents carried forward to the following payment.
Item 9 Collection of rent
23. Members noted that CRV might issue a combined rates and rent demand note. The same flexibility for the collection of rates and rent was provided in the standard land grant conditions.
Item 10 Demand for rent
24. Members noted that under the Bill, CRV might demand rent from the lessee or the person liable to pay rates. Under the standard land grant conditions, the collector of rates could demand rent from the lessee only.
|25. Members suggested that the Administration specify the above over-ridden provisions in a schedule to the Bill. The Administration agreed to consider.||Admin.|
Clause 39 Use of returned requisition as evidence
|26. DCRV said that a returned requisition would be admissible as evidence in court. He agreed to provide a copy of the requisition for members reference.||Admin.|
Clause 40 False or incorrect statements
27. In response to a member, the Administration confirmed that it would be an offence to knowingly provide false information in a returned requisition. However, as of date, no prosecution had ever been taken. Members suggested that the clause be deleted. DCRV responded that the Administration considered it necessary to reserve this power despite its non invocation in the past.
Clause 41 Refusal to give information and obstruction
28. Whilst members agreed that a person who refused to give the necessary information to CRV would commit an offence, they had reservations about subclause 4(a), which would render a person who neglected to do so liable to prosecution. The Administration agreed to review this subclause.
Clause 42 Additional penalty for loss in revenue
29. As to whether CRV could request additional rent for late payment, PAS/PEL replied that the Bill did not provide CRV with such power except surcharges.
Clause 43 Complaints may be made, etc., within 6 years of offence
30. This clause provided that a complaint for an offence under the Bill might be lodged within six years from the date of the offence. Members considered the period too long and suggested shortening this to six months in accordance with section 26 of the Magistrates Ordinance (Cap. 227). ALA 1 advised that if this was the case, this clause was unnecessary. PAS/PEL agreed to consider members suggestion.
Clause 44 Interim valuation after conviction
|31. DCRV said that this clause would enable CRV to re-assess the rateable value for a tenement which had been wrongly assessed based on incorrect information. The effective date of the new rateable value would be the day following the conviction of an offence under the Bill.||Admin.|
Clause 45 Mode of service of notices, etc.
32. As to whether modes of service of notices included electronic mail, DCRV answered in the negative.
Clause 46 Misnomer
|33. Members were of the view that this clause conferred excessive power to CRV to correct particulars in documents issued by him. They considered that CRVs amending power should be confined to accidental/inadvertent mistakes only. The Chairman said that the person affected should be notified of any such amendments. The Administration agreed to review the drafting.||Admin.|
Clause 47 Judge, etc. not disqualified
|34. Members considered it not necessary to have an express provision for non-disqualification of judges on the ground of common interests. The Administration agreed to review the need for this clause.||Admin.|
Clause 48 Validity of signature on notices
35. Regarding the reasons for this clause, DCRV explained that CRV could not sign each notice personally given its sheer number. This clause was necessary to give legal effect to forms with CRVs name printed thereon.
36. Members were concerned about the possibility of abuse of issuing documents with CRVs name printed thereon for other purposes. Senior Assistant Law Draftsman (SALD) agreed to re-draft this clause to the effect that where the name of the Commissioner, etc was printed and not signed in a requisition, declaration, etc, the requisition, declaration, etc would not be invalid if but only if it was printed under the authorization of CRV.
IV Internal discussion
Leases for special purposes
37. Members disagreed with the Administration on the interpretation of paragraph 2 of Annex III to the JD and opined that it would amount to a change in the existing policy if the Administration charged Government rent at 3% of the rateable value on special purpose leases which had been granted at a concessionary premium. They were of the view that the Bill should not apply to special purpose leases which had been granted before the entry into force of the JD and which had yet to be extended.
38. Regarding those special purposes leases which had already been extended with an express provision for payment of Government rent, members considered it inappropriate to use legislation to modify contractual terms. The persons concerned might resort to civil actions to resolve the matter.
Tenements exempted from assessment to rates
39. Taking account of ALA 1s advice, members suggested that the rateable values of tenements exempted from assessment to rates under section 36 of the RO should be deemed to be below the minimum rateable value for the purpose of payment of Government rent.
Clause 36 Legal effect of demand, etc., on unauthorized structures, etc.
40. Members considered that this clause would legitimize the unreasonable collection of Government rent on illegal structures and suggested that this be deleted.
41. Members agreed to discuss the draft Regulation at the next meeting.
42. The meeting ended at 7:00 pm.
Provisional Legislative Council Secretariat
7 July 1997
Last Updated on 11 Jul, 1997