PLC Panel on Home Affairs
Meeting on 15 December 1997
Licensing of Guesthouses under the Hotel and Guesthouse Accommodation Ordinance
At the meeting of the PLC Panel on Home Affairs on 20.10.97, we presented paper No.CB(2)426(05) and briefed Members on the legislative intent of the Hotel and Guesthouse Accommodation Ordinance (Cap 349) (the Ordinance), the licensing of guesthouses under the Ordinance and matters arising from the injunction issued by the Lands Tribunal on two guesthouses in Hamilton Mansion, Causeway Bay. This paper reports progress.
Guesthouses in Hamilton Mansion
2.The Licensing Authority (LA) issued notices of intent under Section 10 of the Ordinance to cancel the licences. The two guesthouses covered by the injunction have already ceased business and their licences will be revoked accordingly. It is our intention not to renew the licences of the other three guesthouses in Hamilton Mansion.
Deeds of Mutual Covenant
3.At the meeting on 20.10.97, we explained to Members that a Deed of Mutual Covenant (DMC) was a private contract among the owners of a building and that Government was not a party to the private contract. The LA has the statutory responsibility to implement the licensing scheme under the Ordinance. The LA, however, is not in a position to enforce a private contract such as a DMC, to which Government is not a party. The owners must enforce their own contracts. They can take matters relating to DMCs to the Lands Tribunal for adjudication, pursuant to Section 45 of the Building Management Ordinance. The above-mentioned cases relating to Hamilton Mansion pertain to this category.
4.This issue was addressed in the Legislative Council Brief issued by Government in January 1990. Paper No.CB(2)426(05) contained an extract from that Brief.
5.As discussed at the meeting on 20.10.97, we conducted a research into the DMCs of the licensed guesthouses. We have perused a sample of 113 DMCs relating to buildings in which 354 licensed guesthouses operate. Of these DMCs, 48 appear to contain provisions prohibiting the operation of guesthouses in the buildings in which 111 guesthouses operate.
Whether the LA should revoke the licences
6.In considering whether the LA should revoke the licences of the guesthouses in buildings with DMCs seemingly containing prohibitive provisions, we have taken the following factors into consideration :
- whether the guesthouses have prejudiced the safety of the buildings;
- whether the LA should revoke the licences in pursuance of DMC; and
- the effect of the revocation on the guesthouse industry and Hong Kong's tourist industry.
7.Regarding (i), the licensed guesthouses meet the statutory safety requirements under the Ordinance and that they do not pose fire and building safety problems to the buildings.
8.Regarding (ii), as explained in paragraph 3 above, the LA is not in a position to enforce private contracts, to which Government is not a party. Moreover, the LA is not a court of law. It is inappropriate for the LA to revoke licences under the Ordinance based on its own non-judicial interpretation of the terms and conditions of a private contract. Otherwise, the LA would be on flimsy legal grounds and its decision may be judicially reviewed.
9.Regarding (iii), guesthouses have contributed and will continue to contribute to Hong Kong's tourist industry. To revoke the licences of a significant number of guesthouses at one go would have an adverse impact on Hong Kong's tourist industry.
10.Based on the above considerations, we do not consider it appropriate to revoke the licences solely based on Government's non-judicial interpretation of the terms and conditions of the DMCs, unless there are clear court judgements, e.g. injunction issued by the Lands Tribunal.
11.We welcome Members' comments on the content of this paper and will be pleased to discuss with Members at the meeting of the Panel on 15.12.97.
Home Affairs Bureau