PLC Paper No. CB(1)14/97-98
(These minutes have been
seen by the Administration and
cleared with the Chairman)
Ref: CB1/BC/8/96

Bills Committee on Government Rent (Assessment and Collection) Bill

Minutes of meeting held on Monday, 21 April 1997, at 12:30 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 Margaret NG

Members absent :

    Hon James TO Kun-sun
    Hon CHEUNG Hon-chung
    Hon Ambrose LAU Hon-chuen, JP
    Dr Hon LAW Cheung-kwok
    Hon NGAN Kam-chuen

Public officers attending :

    Mr Esmond LEE
    Principal Assistant Secretary for Planning, Environment and Lands
    Mr Barry WOODROFFE
    Commissioner of Rating and Valuation
    Mr C S WONG, JP
    Deputy Commissioner of Rating and Valuation
    Mr R C BARAM
    Government Land Agent/Estate Management
    Mr Tony ROBERTSON
    Deputy Principal Solicitor/Legal Advisory and Conveyancing Office
    Lands Department
    Ms Sherman CHAN
    Senior Assistant Law Draftsman Legal Department

Clerk in attendance :

    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 Examination of Committee stage amendments

(LegCo Paper No. CB(1)1329/96-97)

Members continued to discuss the proposed Committee stage amendments (CSAs).

Clause 36 Legal effect of demand, etc.

2. The Deputy Principal Solicitor, Lands Department (DPS) explained the proposed amendments to members. The Commissioner of Rating and Valuation (CRV) supplemented that if a non-applicable tenement was found to have been inadvertently assessed and charged for Government rent, the Rating and Valuation Department (RVD) would delete the tenement from the Government Rent Roll (GRR) and refund the Government rent to the payee. In the event that the rateable value of a tenement had mistakenly included an unauthorized structure, CRV would re-ascertain the rateable value to exclude the unauthorized structure and refund the overpaid Government rent.

3. Regarding the need for clause 36, DPS reiterated that clause 6(5) provided that the Government might demand Government rent from the lessee or the ratepayer of an applicable lease. This arrangement was to facilitate collection because over 90% of ratepayers were lessees and it would take 70 man years to compile a list of lessees’ names and addresses. Since rates were charged on the basis of occupation, a ratepayer might be a tenant, a licensee or an owner of a structure. If the Administration had inadvertently charged and collected Government rent from a ratepayer who was not the lessee, he/she could argue that a lessor/lessee relationship had been created between them. If the ratepayer could successfully establish this argument, he/she would acquire interest in the tenement. The Administration might also have difficulties in demolishing unauthorized structures and resuming the land under the Crown Lands Resumption Ordinance, Cap. 124 and squatters might be entitled to compensation. Clause 36 was therefore necessary to protect the interests of both the Government and the lessee by making it clear that this would not be the case. This clause was vital to the land administration in Hong Kong. DPS also confirmed that neither clause 36 nor the proposed amendments would legitimize occupation of unauthorized structures.

4. In this connection, members discussed whether it was fair policy-wise to impose liability on ratepayers for payment of Government rent. DPS said that provisions similar to clause 6(5) were enshrined in the Crown Leases Ordinance, Cap. 40. Under clause (6)6, if a person who paid the rent was not the lessee, the rent paid was a debt due to the person by the lessee unless there was a prior agreement otherwise. On the death of the lessee, the rent-payer could recover the amount from his successors or assignee on the basis of the definition of lessee in clause 2. If the lessee was a liquidated company, the rent paid could also be recovered from the liquidator.

5. On the assignment of interest, DPS said that the Administration would issue demand notes to the assignee should it be aware of the assignment. If the demand note was inadvertently sent to the original assignor, the assignor could recover the Government rent from the assignee under clause 6(5).

6. Concerning any measures to reduce inadvertent charging of Government rent, DPS said that the Administration would not issue rent demand notes to unlawful tenants, licensees or occupants if their status was known.

7. As regards clause 36(2), DPS explained that this was modelled on section 6 of the Crown Rights (Re-entry and Vesting Remedies) Ordinance (CR(RVR)O), Cap. 126, which provided that acceptance of Government rent would not amount to waiver of the Administration’s right of re-entry or forfeiture for any breach of the terms or conditions of the lease. This condition was included in standard land grants and was approved by the Land Commission. Leases extended under the New Territories Leases (Extension) Ordinance, Cap. 150 had incorporate this condition in one form or another.

8. Albeit members’ understanding of the Administration’s reasons for retaining clause 36, they maintained that this provision was prejudicial to rent-payers in court proceedings relating to legal rights arising from payment of Government rent. The effects on dwellers of unauthorised structures were especially a cause for concern. The onus was on the Administration to avoid inadvertent inclusion of tenements involving non-applicable leases in the Government Rent Roll. Since clause 36(1) and (2) should be considered as a package, the majority of members of the Bills Committee agreed that the whole clause should be deleted.

9. As regards clause 6(5), a member remained of the view that clause 6(5) imposed liability on ratepayers for payment of Government rent and was more than a collection mechanism. In the event that rent was not paid, Government could re-enter the land. DPS responded that the primary liability to pay Government rent rested with the lessee. The Bill had incorporated a provision for non-lessees to recover Government rent from the lessee. It was extremely unlikely that the Administration would exercise the right of re-entry where the lessee was not aware of a breach of the lease conditions. The right of re-entry or forfeiture would be exercised as a last resort. It was the Administration’s normal practice to issue a notice of re-entry before re-entry action would be taken. In any case, the lessee could still apply to the court for a relief.

10. Some members acknowledged the need for clause 6(5). Since the Bills Committee had discussed this issue before, members agreed that it would be up to individual members to consider moving amendments. Mr Ronald ARCULLI stated that he had reservations about this clause.

Clause 38 Lease overridden

11. The Principal Assistant Secretary for Planning, Environment and Lands (PAS/PEL) explained that the CSAs to clause 38 were intended to address members’ concern over its generality and ambiguity. The details of standard lease grant conditions which would be overridden by the Bill were specified in the Schedule.

12. Assistant Legal Adviser 1 (ALA 1) confirmed that the proposed amendments had addressed members’ concern. Mr Ronald ARCULLI reserved his position on the amendments.

Clause 38A Deed of mutual covenant overridden

13. DPS briefed members on this new clause. In essence, this clause specified that provisions in the Bill would override those in a Deed of Mutual Covenant (DMC) relating to contribution to or payment of Government rent other than those in respect of the common areas. The provision would take away the manager’s right to call for contribution to payment of Government rent but would at the same time remove his liability for such payment for individual tenements.

14. Regarding the apportionment of payment of Government rent as provided under a DMC, DPS explained that the Bill would override the relevant provisions in the DMC and each flat of a building would be a tenement and would be charged at 3% of its rateable value for Government rent.

15. Responding to the Chairman’s enquiry, DPS confirmed that if an individual flat owner defaulted on payment of Government rent, the Government could not legally recover this from the owners’ corporation. To improve the drafting, a member suggested that the Administration consider adding "or liability" after "contribution" in subclause (1) (a).

Clause 43 Complaints may be made, etc., within 1 year of offence

16. CRV explained that the Administration proposed to shorten the period for lodging complaints to one year after commission of the offence because this was the minimum time required to make an interim valuation of a tenement. Members had no objection.

Clause 8 Valuation of land and tenements

17. ALA 1 drew members attention to the addition of subclause (3) which deemed the rateable value of a tenement not exceeding the minimum rateable value to be $1. CRV might demand payment of Government rent from such tenements.

18. In response to a member’s enquiry, CRV confirmed that it would not be cost-effective to collect Government rent from such tenements which were mostly agricultural lots.

II Date of next meeting

19. Members agreed to continue discussions on the proposed CSAs at the next meeting on 22 April 1997 at 4:30 pm.

(Post-meeting note: Since ALA 1 had advised that the proposed CSAs were legally in order, with the concurrence of the Chairman, the meeting on 22 April 1997 had been cancelled.)

20. The meeting ended at 2:30 pm.

Provisional Legislative Council Secretariat
7 July 1997

Last Updated on 11 Jul, 1997