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Following is a question by the Hon Wu Chi-wai and a written reply by the Secretary for Home Affairs, Mr Tsang Tak-sing, in the Legislative Council today (October 29):
Question:
According to section 40B of the Building Management Ordinance (Cap. 344), where it appears to the Secretary for Home Affairs (SHA) that there is a danger or risk of danger to the occupiers or owners of a building, SHA may order the management committee (MC) of the building to appoint a building management agent. It has been reported that a property developer has acquired around 30 per cent of the flats in a building but has long been defaulting payment of management fees payable for the flats concerned, causing operational difficulties to the owners' corporation of the building. The developer has also been trying to acquire other flats by means of harassment. However, SHA has not invoked the aforesaid provision to order the MC of that building to appoint a building management agent. It has also been reported that the MC of a building has refused to appoint a new MC chairman after the resignation of the incumbent chairman, resulting in the owners of the building being unable to convene general meetings. The Lands Tribunal subsequently ruled that the owners had the right to convene general meetings, and ordered that the MC be dissolved and a general meeting be held for electing new MC members. In this connection, will the Government inform this Council:
(1) whether the authorities received in the past three years any request for an order to be made under the aforesaid provision for the appointment of a building management agent; if they did, of the number of such cases and details of each case;
(2) whether it has reviewed, in the light of the aforesaid ruling of the Lands Tribunal, the relevant internal guidelines and the procedures for instituting prosecutions against those who have contravened Cap. 344; if it has, of the details; if not, the reasons for that;
(3) whether it knows the number of cases currently handled by the Lands Tribunal in which dissolution of an MC was requested on account of the office of the MC chairman being vacant; of the number of requests for assistance received by the Home Affairs Department (HAD) in the past five years involving dissolution of MCs, the number of MCs involved in such cases and the assistance provided by HAD;
(4) as SHA stated in reply to a question raised by a Member of this Council on July 2 this year that the authorities would, in the process of reviewing Cap. 344, study in detail the problem that no general meeting could be convened as a result of the office of the MC chairman being vacant, of the progress of the study;
(5) as the Government has set up a committee a few months ago to review Cap. 344, of the work progress of the committee, including the time for conducting consultations with stakeholders and the public, the time for proposing legislative amendments, as well as the legislative timetable; and
(6) whether, before Cap. 344 is amended, the authorities will revise the Code of Practice on Building Management and Maintenance issued by HAD, in order to help property owners solve the problem that no general meeting can be convened as a result of the office of the MC chairman being vacant; if they will not, of other means available for the authorities to help property owners solve the aforesaid problem?
Reply:
President,
As management of private buildings is the responsibility of the owners, the Government's policy is to assist building owners to discharge their building management responsibilities through multi-pronged measures, including the provision of a legal framework and appropriate support services. The Building Management Ordinance (BMO) provides a legal framework for building management, formation and operation of owners' corporations (OCs) and other related matters. The BMO empowers the OCs, which are independent body corporates, to act on behalf of the owners to deal with matters relating to building management and at the same time, empowers owners to monitor the operation of the OCs and their management committees (MCs). The BMO also empowers the Authority, i.e. Secretary for Home Affairs (SHA), to exercise certain powers in specified circumstances. In accordance with section 45 of the BMO, the Lands Tribunal shall have jurisdiction in relation to building management and shall hear and determine any proceedings relating to the interpretation of the provisions of the BMO, provisions of deed of mutual covenant, powers and duties of OCs and MCs, building management expenses and other related matters.
My reply to the six parts of the question is as follows:
(1) In accordance with section 40B of the BMO, where it appears to the Authority in the case of any building having an MC that no person is, for the time being, managing that building; the MC has failed substantially to perform the duties of an OC under section 18 of the BMO; and by reason of the circumstances mentioned above, there is a danger or risk of danger to the occupiers or owners of the building, the Authority may order that the MC must, within a specified period, appoint a building management agent for the purposes of managing that building. The purpose of this provision is to protect the safety of residents and members of the public by allowing the Authority to make a timely intervention in case of emergencies arising from the lack of effective management of a building. Should there be requests from the owners, the Authority will consider carefully the individual circumstances and justifications put forth by the owners according to the established procedures before making a decision.
In the past three years, there was only one case in which the Authority was requested to invoke section 40B of the BMO for the appointment of a building management agent. In the above case, an owner requested the Authority to issue an order to the MC to appoint a building management agent to manage the building as all MC members had resigned. However, after investigation by the Home Affairs Department (HAD), we came to know that a property management company (PMC) had been appointed by the OC to assist in its building management. After the PMC had sought legal advice on the issue, one of the corporate owners appointed another authorised representative as an MC member, who subsequently convened an OC general meeting under the relevant provisions of the BMO to fill the remaining MC vacancies. In the light of the fact that the MC was functioning normally, the PMC was discharging daily building management duties continuously and no imminent danger was observed, the Authority considered it unnecessary to invoke its powers under section 40B of the BMO to appoint a building management agent for the building concerned.
(2) In accordance with paragraph 1(2) of Schedule 3 to the BMO, an MC chairman shall, upon receipt of requests from not less than 5 per cent of the owners, convene and hold a general meeting within the designated period. This is a duty assigned by the BMO to the MC chairman. The Authority is not empowered by the BMO to institute prosecution against any MC chairman who fails to comply with this provision.
If an MC chairman refuses to convene an OC general meeting, or fails to convene one as prescribed by the BMO on account of his resignation, the owners may, in accordance with section 45 of the BMO, make an application to the Lands Tribunal for an order to the MC chairman for convening an OC general meeting, or to the MC for filling the vacant office of the chairman as soon as possible with a view to following up owners' requests.
In August this year, the Lands Tribunal heard a case where an MC chairman resigned after receiving a request for an OC general meeting from not less than 5 per cent of the owners. The MC was alleged for failing to conduct a by-election of the chairman within a reasonable period of time to handle owners' request. Taking into account the facts of the case, the Lands Tribunal determined to dissolve the MC and appoint an administrator to convene an OC general meeting. In the light of this judgment, the HAD has advised its frontline staff in District Offices (DOs) to inform MC chairmen and members of the above judgment when there are similar cases. Details of this judgment have also been uploaded onto HAD's dedicated webpage on Building Management (www.buildingmgt.gov.hk) for owners' and public reference.
(3) For the number of cases being handled by the Lands Tribunal in which dissolution of an MC was requested on account of the office of the MC chairman being vacant, the Lands Tribunal responded that it has not kept the statistics of cases broken down by their nature. However, a master case record or the notice of application of individual case is available for public inspection at the Lands Tribunal upon payment of the prescribed fee.
Any MC chairman vacancy may be filled in accordance with the mechanism stipulated in paragraph 6(4) of Schedule 2 to the BMO, under which two possible ways are provided for. First, the OC may, by a resolution passed at an OC general meeting, appoint a person among its MC members to fill the vacancy till the next OC annual general meeting at which the MC members retire under paragraph 5(1) of the BMO; and second, if no OC general meeting is so convened or no appointment is made to fill the vacancy at a general meeting, MC members may appoint a person among themselves to fill the vacancy till the next OC general meeting.
The HAD does not keep any statistics on the number of cases of request for assistance involving the dissolution of MCs. Nevertheless, such cases are not common and the HAD are following up on six cases only. Upon receipt of such a request, DO staff will immediately contact the MC concerned and advise the MC to fill the vacant office as soon as possible in accordance with the mechanism stipulated in paragraph 6(4) of Schedule 2 to the BMO to ensure OC's normal operation. In the event that the OC fails to make timely arrangements for a by-election, we will advise the owners to seek legal advice and consider whether they will apply for a determination by the Lands Tribunal pursuant to the BMO.
(4) and (5) The Government has established the Review Committee on the Building Management Ordinance earlier to study how to resolve or handle common building management problems through amending the BMO. After considering the recommendations of the Review Committee, we will consult the stakeholders and the public later this year. A consultation paper to this effect will include amendment proposals for paragraph 1(2) of Schedule 3 to the BMO. On the basis of views collated through public consultation, we will start drafting amendments to the BMO after working out the proposed legislative amendments.
(6) The Code of Practice on Building Management and Maintenance is issued by SHA under section 44(1)(b) of the BMO to provide guidance and advice on standards and practices in relation to building management, building safety, fire safety, slope safety and electrical, gas, lift and escalator installations for OCs' compliance and adherence.
According to the legal advice of the Department of Justice, given that the composition and procedures of an MC and the meetings and procedures of an OC have been set out in Schedule 2 and Schedule 3 to the BMO respectively, SHA cannot stipulate any other arrangements by revising the Code of Practice under section 44(1)(b) of the BMO to override the requirements that have been provided for in Schedule 2 and Schedule 3 to the BMO. As such, revising the aforesaid Code of Practice cannot resolve the problem of not being able to convene an OC meeting in accordance with paragraph 1(2) of Schedule 3 to the BMO as a result of the failure to fill the vacant office of an MC chairman in accordance with the mechanism stipulated in paragraph 6(4) of Schedule 2 to the BMO. Any amendments to the requirements for MC procedures and OC meetings and procedures, which have been stipulated in Schedule 2 and Schedule 3 to the BMO respectively, shall be made by means of legislative amendment to the BMO.
As mentioned in parts (2) and (3) above, DO will, upon receipt of an enquiry or a request for assistance, contact immediately the MC concerned and advise it to fill the vacant office of the MC chairman as soon as possible in accordance with the mechanism stipulated in paragraph 6(4) of Schedule 2 to the BMO. The MC chairman and members shall also be informed of the Lands Tribunal's latest judgment. Details of the judgment have also been uploaded onto HAD's dedicated webpage on Building Management for owners' and public reference.
Ends/Wednesday, October 29, 2014
Issued at HKT 16:31
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