Provisional Legislative Council

PLC Paper No. CB(2)1250
(These minutes have been
seen by the Administration)

Ref : CB2/BC/11/97

Bills Committee on
Building Management (Amendment) Bill 1998

Minutes of 1st Meeting held on Friday, 20 February 1998 at 3:50 pm in Conference Room B of the Legislative Council Building

Members Present :

Hon CHAN Kam-lam (Chairman)
Hon HO Sai-chu, JP
Dr Hon Raymond HO Chung-tai, JP
Prof Hon NG Ching-fai
Hon LEE Kai-ming
Hon Mrs Peggy LAM, JP
Hon Henry WU
Hon CHAN Wing-chan
Hon IP Kwok-him
Hon NGAN Kam-chuen

Members Absent :

Hon Ronald ARCULLI, JP
Hon CHAN Choi-hi
Hon Ambrose LAU Hon-chuen, JP

Member Attending :

Dr Hon LAW Cheung-kwok

Public Officers Attending :

Mr LEE Lap-sun
Deputy Secretary for Home Affairs

Mr Francis LO
Principal Assistant Secretary for Home Affairs

Mr John WONG
Senior Government Counsel

Clerk in Attendance :

Mrs Constance LI
Chief Assistant Secretary (2) 2

Staff in Attendance :

Ms Bernice WONG
Assistant Legal Adviser 1

Mr Colin CHUI
Senior Assistant Secretary (2) 2

I. Election of Chairman

1.Mr CHAN Kam-lam was elected Chairman of the Bills Committee.

II. Meeting with the Administration

2.At the invitation of the Chairman, the Deputy Secretary for Home Affairs (DSHA) briefed members on the main provisions of the Bill. The salient points of discussion are set out below.

Power of owners' corporations (OCs) to carry out renovation, improvement or decoration works

3.Referring to paragraph 4 of the Provisional Legislative Council Brief on the Bill (Ref: HAB/BM/92/42 V), members shared the concerns of OCs and building management practitioners about a High Court ruling in 1995 that although OCs could carry out maintenance works, they were not empowered under Building Management Ordinance (the Ordinance) to renovate or improve the common parts of their buildings unless with the full consent of all owners. Having declared interest as chairman of an OC, Mr IP Kwok-him pointed out that building repairs or maintenance works usually involved a certain degree of renovation, improvement or decoration. In view of the 1995 court ruling, many OCs had been reluctant to carry out repairs or maintenance works to their buildings. Members generally agreed that the present situation was unsatisfactory. In view of the growing number of ageing buildings which were in need of repairs and improvements to bring the safety and living environment up to a reasonable standard, members considered that legislative amendment should be made as soon as possible to put beyond doubt that OCs could carry out renovation, improvement or decoration works to their buildings.

4.In this connection, a member asked why the Administration had taken such a long time to forward the legislative proposal to the Provisional Legislative Council. DSHA explained that the Administration had taken some time to examine the possibilities of appealing against the court ruling, or amending the Ordinance to expressly provide OCs with powers to carry out renovation, improvement or decoration work to the common parts of their buildings. After careful consideration, the Administration decided to amend the Ordinance to put beyond doubt that OCs have such powers. Given the time required for law drafting and the tight legislative timetable, it was only possible to introduce the Bill in the current session.

5.A member asked whether the drafting of the Bill could achieve the legislative intent. The Principal Assistant Secretary for Home Affairs (PAS/HA) said that clauses 4 and 5 of the Bill sought to address these concerns by expressly empowering OCs under sections 14 and 18 to carry out renovation, improvement or decoration works to the common parts of their buildings. Senior Government Counsel (SGC) confirmed that the amendments as drafted could achieve the objective.

Requisite owners' shares for objection to appoint a management committee

6.A member enquired about the reason for raising the percentage of owners' shares from 10% to 30% for objection to the convening of a meeting of owners to appoint a management committee. DSHA explained that under section 3A, not less than 30% of the owners' shares might apply to the Secretary for Home Affairs (SHA) for an order to convene an owners' meeting for the purpose. However, the order could be nullified if not less than 10 % of the owners' shares objected to the appointment of a management committee. This created an imbalance in which 10% of the owners' shares could override an application by 30% of the owners' shares, and this was not in line with the Government objective to encourage formation of OCs. The Administration therefore proposed to rectify this by increasing the percentage of objection to 30% of owners' shares. In response to the member, DSHA said that it would take time to trace the origin of adopting 10% as the threshold for nullification of the SHA’s order. In this connection, the Chairman said that the original 10% requirement was probably drawn up to protect the interests of minority owners of buildings where the majority of shares were held by a principal owner. At a member’s request, DSHA undertook to provide information on the number of objection cases under section 3A.

(Post-meeting note : The Administration had provided the information which was circulated to members vide PLC Paper No. CB(2)1098 on 26 February 1998.)

7.While agreeing that the existing 10% requirement for objection to an order under section 3A was inappropriate, Dr Raymond HO disagreed with fixing the percentage at 30 %. He suggested that a higher percentage be set for objections to SHA’s orders. DSHA explained that 30% was considered fair and reasonable as an equivalent percentage of owners' shares was required for the application of an order. A member pointed out that an owners' meeting was usually convened according to the deed of mutual covenant, or by owners of not less than 5 % of shares under section 3 of the Ordinance. However, a resolution to appoint a management committee could only be passed with not less than 50% of the owners' shares. Only when owners failed to secure the requisite 50% support for passing the resolution would they apply for SHA’s order to hold an owners' meeting to appoint a management committee.

8.In reply to a member, PAS/HA said that section 3A(3) and section 4(4) of the Ordinance respectively provided for voting by proxy at meetings of owners convened by order of SHA or the Lands Tribunal to appoint a management committee.

Mandatory public liabilities insurance for private buildings

9.A member asked whether the Ordinance would be amended to make it compulsory for owners of buildings to take out public liabilities insurance for their buildings. DSHA responded that this would represent a change of policy which would require public consultation and careful consideration by the central committee set up recently under the chairmanship of SHA to co-ordinate building management matters.

Assistance to OCs in building management

10.Two members expressed concern about the assistance available to OCs especially those with problems in management. DSHA said that the Home Affairs Department had an on-going programme to promote good building management practices. Educational booklets on building management were distributed to OCs, while seminars, talks and training courses on building management were organised in the districts. Moreover, a Building Management Resource Centre (BMRC) would open in April 1998 to provide a wide range of services, including free preliminary professional advice from lawyers, accountants, surveyors and property managers. The Administration hoped to establish more BMRCs in the territory in future.

11.A member asked whether the Administration would provide OCs or individual owners of buildings with loans for carrying out renovation, improvement or decoration works to the common parts of buildings. He remarked that some owners or OCs might have difficulties in financing such works or recovering costs from owners. This would affect the progress of improving the structure and fire safety of ageing buildings. DSHA advised that the Administration would establish fund(s) to provide loans to owners or OCs to undertake works to improve the structure or fire safety of buildings. PAS/HA added that the Administration planned to seek the Finance Committee’s approval on 20 March 1998 to establish the Building Safety Improvement Fund and Fire Safety Improvement Fund. Details of the eligibility criteria and application procedure were being worked out by the Administration.

Alternative mode of serving notices

12.A member was concerned as to whether the proposed additional means of serving notices of placing them in the letter boxes of the buildings would give rise to disputes about the receipt of such notices. PAS/HA responded that the existing and proposed delivery means were reasonable and convenient ways of serving notices. The corporations or management committees could choose to use one or a combination of the delivery methods specified in the Ordinance. SGC added that should there be litigations concerning the delivery of notices to owners of buildings, the court would rely on evidence relating to the serving of notices including the presence of witnesses and records of delivery.

Public consultation

13.In reply to a member, DSHA said that the Administration had consulted the Panel on Home Affairs of the former Legislative Council in April 1997 and the Panel on Home Affairs of the Provisional Legislative Council in October 1997. The Administration had taken into account the views and representations of the District Boards and professional bodies in drafting the Bill. Another member pointed out that respondents to the public opinion surveys conducted by him in Kwun Tong, Wanchai, Central and Western districts generally supported the Bill. As the Bill aimed at improving building management without any major policy changes, members considered the Bill acceptable.

Mandatory formation of OCs

14.In response to some members, DSHA said that the Administration was examining the feasibility of mandatory formation of OCs and the legislative framework. The requisite owners' shares for objection to the appointment of a management committee proposed in the Bill would not unduly restrict the Government in its consideration of mandatory formation of OCs. As regards the suggestion of requiring all private buildings to provide or improve fire protection measures, DSHA said that these issues would be considered by the central committee chaired by SHA. Further legislative amendments would be proposed if necessary.

Clause-by-clause examination

Clause 4

15.ALA1 suggested that the word "and" should be replaced by "or" in section 14(1) to empower the corporation to pass a resolution with respect to any one type of works specified. It would also be consistent with the new section 18(2)(fa) which stated that ‘A corporation may carry out any renovation, improvement or decoration work ...". The Administration agreed to the proposed amendment.

Clause 5

16.ALA1 said that the definition of "common parts" in section 2 of the Ordinance already included "facilities or installations of the building", as specified in the First Schedule. It was therefore unnecessary to specify facilities and installation in the new section 18(2)(fa). The Administration agreed to delete "facilities or installations" from the clause.

17.Subject to the proposed Committee stage amendments (CSAs) to clauses 4 and 5, members supported the provisions in the Bill.

III. Way Forward

18.The Bills Committee supported the resumption of the Second Reading debate of the Bill as soon as possible. A report will be made to the House Committee after the Administration has provided the draft CSAs.

(Post-meeting note : The Administration has provided the draft CSAs to members on 28 February 1998. A report will be made to the House Committee on 6 March 1998.)

19.The meeting ended at 5:00 pm.

Provisional Legislative Council Secretariat
18 March 1998