Building Management(Amendent) Bill 2000

A Brief on the

Building Management (Amendment) Ordinance 2000

Introduction

In January 2000, the Administration introduced the Building Management (Amendment) Bill 2000 (the Bill) to the Legislative Council for first reading. The purpose of the Bill was to enhance the measures on improving building management provided for in the Building Management Ordinance (Cap. 344)(the Ordinance).

2.The Bill was passed by the Legislative Council on 27 June 2000 and became the Building Management (Amendment) Ordinance 2000 (the Amendment Ordinance). Except for sections relating to the purchase of mandatory third party liability insurance, the Amendment Ordinance will commence operation from 1 August 2000. This document aims to introduce to members of the public the main points of the Amendment Ordinance.

Owners may form OCs more conveniently

3.According to s. 3(1) & (2) of the existing Ordinance, if the deed of mutual covenant contains no provision for the appointment of an MC, a meeting of owners may be convened by the owners of not less than 5% of the shares and an MC may be appointed by a resolution of the owners of not less than 50% of the shares. If owners are unable to utilize the above provision, then under s.3A of the Ordinance, the Authority (i.e. the Secretary for Home Affairs) may, upon application by the owners of not less than 30% of the shares, order that a meeting of owners shall be convened by such owner (“convenor”) as the Authority may direct to appoint an MC by a resolution passed by a majority of the owners of the shares at the meeting. In addition, s.4 of the Ordinance provides that the Lands Tribunal may, upon application by the owners of not less than 20% of the shares, order that a meeting of the owners shall be convened to appoint an MC.

4.At the Bills Committee stage, the Administration accepted the proposal of the Committee to lower the requirement of the percentages stated in para.3 (i.e. 50%-30%-20%) so as to facilitate the formation of OCs in buildings. The Amendment Ordinance has now lowered the 50%-30%-20% percentages above to 30%-20%-10% respectively.

Notice of Meeting

5.Owners who intend to convene a meeting of owners for the purpose of appointing an MC are required to publish a notice of meeting in both an English and a Chinese language newspaper in accordance with s.5(3)(b) of the Ordinance. The Amendment Ordinance has now simplified the notice requirement topublication in either an English or a Chinese language newspaper listed in the specified list only.

Appointment of proxies for jointly-owned flats

6.Before the Bill waspassed, the provisions of the Ordinance in relation to the arrangement for the appointment of a proxy by co-owners to attend and vote at a meeting was that if the co-owners did not appoint a proxy jointly or one co-owner did not appoint the others, then the co-owner whose name stood first in relation to that share in the register kept at the Land Registry should cast the vote. At the Bills Committee stage, members suggested that under certain circumstances, such an arrangement could cause a co-owner whose name did not stand first in the register to lose the right to appoint a proxy. The Administration accepted the suggestion and proposed toamend the requirement to allow any one of the co-owners to cast a vote either personally or by proxy. However, in case more than one of the co-owners seek to cast a vote in respect of a share, only the vote cast by the co-owner whose name stands highest in relation to that share in the register kept at the Land registry shall be treated as valid.

Accounts of corporation

7.Previously, section 27 of the Ordinance provides that accounts of an OC may be audited by persons other than a professional accountant. As the accounts of an OC of a building containing a large number of flats can be fairly complicated and persons other than qualified accountants may not be competent to audit the accounts properly, the Amendment Ordinance introduced a new requirement such thatthe accounts of an OC incorporated in respect of a building containing more than 50 flats shall be audited by a qualified accountant approved by the OC by a resolution passed at a general meeting. That accountant shall prepare audit reports in respect of the OC’s accounts and report as to whether such accounts present fairly the financial transactions during the period to which the accounts relate, and the financial positionof the OC at the end of that period. With respect to this provision, when calculating the number of flats, garages, carparks and car ports are not regarded as ‘flats’.

Obligations regarding insurance

8.The Amendment Ordinance introduced a new section to require that an OC shall, on behalf of the OC and the occupiers and owners of a building, procure and keep in force in relation to the building and all parts thereof including the common parts and the property of the OC, such policy of insurance with an insurance company in respect of third party risks as complied with any requirement prescribed for the purpose of this section. In the event of a contravention of this provision, every member of the MC shall be guilty of an offence, unless he proves that the defence provisions in the Bill apply to him.

9.To implement this requirement, the Amendment Ordinance empowers the Administration to make relevant Regulation. As it takes time to draw up the Regulation in respect of third party insurance, the provision on compulsory third party insurance will not come into effect immediately. The Administration will bring the provision into effect only after the insurance trade has been consulted, Exco has approved and Legco has passed the Regulation.

Mandatory Building Management

10.For buildings having serious management and maintenance problems, the Amendment Ordinance adds new sections to empower the Authority to, under specified circumstances, order the OC of such a building to appoint a management agent for the purposes of managing that building. The OC shall appoint a building management agent from the list of building management agents to be compiled by the Authority from time to time. If the MC fails to comply with the order without reasonable excuse, each member of that MC shall be guilty of an offence unless the defence provisions apply to him/her.

11.In dealing with problematic buildings that have not set up their own OCs, the Authority may apply to the Lands Tribunal for an order under which one of the owners shall convene a meeting of owners, to form an OC and to appoint a building management agent to manage that building. If the meeting of owners did not resolve to form an OC or appoint a building management agent, then the owner named in the Tribunal's order may appoint a management agent on behalf of all of the owners. The remuneration, tenure of office and appointment for that building management agent will be specified in the order.

Code of Practice on Building Management and Maintenance

12.Another main provision of the Amendment Ordinance enables the Authority to draft and publish standards and rules regarding building management and safety which OCs should comply with. These rules and standards cover building management security, fire safety, slope safety, lifts and escalators, communal facilities and other equipment.

13.The Administration has drawn up a Code of Practice on Building Management and Maintenance by making reference to relevant statutory criteria, rules or standards. To avoid double enforcement of law, non-compliance with the Code is not a breach of the law directly. But owners should pay attention to the fact that as many criteria in the Code apply the existing legal standards, non-compliance with these standards may constitute an offence under the relevant legislation.

14.A booklet on the Code of Practice on Building Management and Maintenance is being prepared by the Government. Printed copies of the Code will be distributed through District Offices upon commencement of operation of the Amendment Ordinance.

Jurisdiction of the Lands Tribunal in Building Management

15.The existing Ordinance contains several criminal offence provisions which may result in fines for those who breach these provisions. When the Bill was being scrutinized by the Bills Committee, there was a view that people might be misled to think it was possible to initiate criminal prosecutions under the Ordinance before the Lands Tribunal. Therefore, the Amendment Ordinance contains minor amendments to make clear that the Lands Tribunal only possesses civil jurisdiction in matters concerning building management.

Number of members ofan MC

16.Paragraph 1 of the Second Schedule of the Ordinance provides for the minimum number of members of an MCdepending on the number of flats in a building. For instance, paragraph 1(a)(iii) specifies that if a building contains more than 100 flats, the MC shall consist of not less than 9 members. In counting the number of flats, some legal professionals consider that it should include garages, car parks or carports. However, there were also views to the contrary. Therefore, to make the intentions of the Ordinance clearer, the present Amendment Ordinance has added amendments to specify that garages, car parks or carports should not be counted as “flats”in determining the number of members of an MC.

Termination of Building Manager’s Appointment by an OC

17.Under the previous provisions of paragraph 7 of the Seventh Schedule of the Ordinance, an OC may, by a resolution of the owners of not less than 50% of the shares, terminate the manager’s appointment by giving not less than 3 months’ notice. While scrutinizing the Bill, the Bills Committee proposed that, in lieu of notice, provision should be made so as to allow the OC to make an agreement with the manager for the payment to him of a sum equal to the amount of remuneration which would have accrued to him during that period. Such an arrangement would provide the OC and the manager with more flexible options in terminating the employment either by notice or remuneration. The Administration accepted the proposal and the Legislative Council has passed relevant amendments in the Amendment Ordinance.

18.Moreover, for the sake of equity, the Amendment Ordinance also includes an amendment that when an OC resolves to terminate the appointment of a manager, the owners of shares that are not required or not liable to pay the management expenses relating to those shares shall not be entitled to vote. In such cases, the counting of the number of owners of shares will only take account of those that are entitled to vote. In other words, the OC may pass a resolution if there are owners of not less than 50% of the shares that are entitled to vote.

Home Affairs Bureau

July 2000

e內容簡介.doc