Hong Kong: Beware! The Building Authority is Changing the Rule of the Game in General Building Plans Approval Process, but Did Not Conduct Any Consultation in Advance

Last Updated: 4 November 2010
Article by FK Au and Alan T.S. Yip

Originally published November 4, 2010

Keywords: Hong Kong, Building Authority, approval process, general building plans

From 21 October 2010, a developer is required to prove that it owns the land or has a realistic prospect of controlling the land before the Building Authority will process the building plans. A validity period will also be imposed for granting modifications/ exemptions from the Buildings Ordinance.

By a letter from the Building Authority (the "BA") dated 20 October 2010 (the "BA's Letter") addressed to the authorised persons, registered structural engineers and registered geotechnical engineers, the BA promulgated the following new practice (the "New Practice") adopted by it with effect from 21 October 2010:

  1. An applicant in submitting general building plans ("GBP") to the BA for approval should provide particulars and documentary proof of ownership or realistic prospect of control of the land forming the site (the "Ownership Proof Requirement").
  2. A time limit, generally speaking two years, will be imposed by the BA on the granting of modifications or exemptions (the "Modification/Exemption Time Limit Requirement") of or from the provisions of the Buildings Ordinance (the "BO").

PDF version of the BA's Letter can be found in "What's New" session (October 2010) in the Buildings Department's webpage: http://www.bd.gov.hk/english/whats.html.

The New Practice constitutes fundamental changes to the long-standing practice established in the development industry, made without any prior consultation.

Ownership Proof Requirement

According to paragraph one of the BA's Letter, an applicant, when submitting GBP to the BA for approval, is required to submit a Form BA5 and particulars of ownership or realistic prospect of control of the land forming the site, together with the required documentary proof.

Paragraph two goes on to say that failure to provide such particulars or documentary proof may lead the BA to refuse to give his approval of GBP under section 16(1) of the BO.

BA'S LONG-STANDING PRACTICE DOES NOT REQUIRE PROOF OF OWNERSHIP

The stated purpose of the Ownership Proof Requirement, as given in paragraph one of the BA's Letter, was that the BA has always taken the stance that the site of a proposed building for the purpose of the BO "can only include land which the applicant owns or which he has a realistic prospect of control".

However, quite contrary to the stated purpose, it has all along been the practice of the BA, before the introduction of the Ownership Proof Requirement, that (a) a person need not own or control the land forming the site before he can apply for approval of any GBP for the site because, under the BO and its subsidiary legislation, there is no such requirement and (b) the BA did not require applicants to submit any particular or documentary proof regarding the ownership or control of a site in considering the GBP.

OWNERSHIP IS NOT A PRE-REQUISITE FOR APPROVAL OF GBP UNDER THE BO

Section 16(1) of the BO sets out the grounds on which the BA may refuse to give his approval of GBP. As a matter of law, the BA is only entitled to refuse to give his approval of GBP on one or more of the grounds set out in section 16(1) of the BO.

The fact that an applicant is not an owner of the site or does not have an interest in a site is not an express ground on which the BA may refuse to give his approval of GBP under section 16(1) of the BO.

PRIVY COUNCIL'S DECISION IN CHENG YICK CHI

It appears that the requirement that an applicant should have a "realistic prospect of controlling" a site is derived from the judgment of the Privy Council in the case of Attorney General v. Cheng Yick Chi [1983] 1 HKC 14.

The Privy Council, in delivering its judgement in Cheng Yick Chi, said, at pages 19H to 20A, the following :-

"Their Lordships are of the opinion that the land which forms a 'site' for the purposes of the Regulations must be ascertained as a question of fact in the case of each development. It means, in addition to the land on which it is proposed to erect buildings, any land which the developer bona fide proposes to include in the development. It can only include land which he owns or which he has a realistic prospect of controlling. The additional land must be at least sufficient to enable the proposed building to comply with the Regulations and it must, of course, not have been taken into account and, so to speak, used up in enabling some other existing building to comply with the Regulations." (Emphasis added.)

However, it is to be noted that:

  1. The issue in Cheng Yick Chi was whether the land in front of certain houses at a site (On Hing Terrace in that case) which was unbuilt upon and which had been dedicated to the public for passage may be included as part of the "site" for plot ratio and site coverage calculations.
  2. The quoted passage in Cheng Yick Chi was therefore made only in the context of what can or cannot be included in a "site" for the purpose of plot ratio and site coverage calculations.
  3. Accordingly, the question as to whether the Building Authority is entitled to reject GBP unless the developer actually owns or has a realistic prospect of controlling the site was not the issue before the Privy Council in Cheng Yick Chi.

UNCERTAINTIES CREATED BY THE OWNERSHIP PROOF REQUIREMENT

In any event, even assuming for the present purpose that the BA is entitled to require proof of ownership, the question of whether the applicant has a "realistic prospect of controlling the site" is always debatable, as no guidance has been provided in the BA's Letter as to how and to what extent an applicant will be regarded as having a "realistic prospect of controlling the site".

The Ownership Proof Requirement has created a lot of uncertainties to the industry. To name a few:

  1. What is the threshold for determining whether an applicant has a "realistic prospect of controlling the site"? What are the criteria for determining whether such threshold is reached? What are the rationale and justifications for the BA to adopt such threshold and criteria?
  2. If the site in question involves the acquisition of units in existing buildings, and if the applicant is in the process of amalgamating the site by acquiring some interest (say, several units) in the site, then
  1. would such applicant, who has only acquired some but not all the units in the existing buildings, be regarded as having a "realistic prospect of controlling" the site?
  2. whether and, if so, how and to what extent the applicant is required to demonstrate that he is making genuine efforts in acquiring the remaining interests in the site?
  3. how many units have to be acquired by the applicant before he will be regarded as having a "realistic prospect of controlling the site"? Is it sufficient for the applicant to acquire over, say, 10% of the units in the site?
  4. would the answer to the above questions be different if the applicant may have to invoke the Land (Compulsory Sale for Redevelopment) Ordinance to apply to the Lands Tribunal for an order for compulsory sale of the building within the site at a later stage?

Modification/ Exemption Time Limit Requirement

Under section 42(1) of the BO, where in the opinion of the BA special circumstances render it desirable, the BA may permit by notice in writing modification of the provisions of the BO.

The exemptions/ modifications requested to be granted by the BA usually relate to the exemption of certain areas of a site from gross floor area/ plot ratio calculations (e.g., carparks, green features).

By introducing the Modification/Exemption Time Limit Requirement, as stated in paragraph four of the BA's Letter, the BA is now saying that:

  1. A time limit, generally speaking two years, should be imposed as a condition in the permit (Form BD106) when modifications or exemptions under section 42 are granted (the "Modification/ Exemption Time Limit").
  2. Amendment GBP based on any previously approved GBP in relation to which the Modification/Exemption Time Limit has expired may be refused under section 16(1)(d) of the BO.
  3. Application for consent to commence the building works shown in the previously approved GBP in relation to which the Modification/Exemption Time Limit has expired may also be refused under section 16(3)(d) of the BO.

VALIDITY OF APPROVED GBP

Under section 16(3)(d) of the BO, the BA may refuse to give his consent to the commencement of any building works where a period exceeding two years has elapsed since the approval of the GBP.

In a Practice Note for Authorised Person and Structural Engineers (PNAP 215 re-issued as APP-97, "PNAP 215"), it is provided in paragraph 14 that, whilst the BO does not prescribe a validity period of approved GBP, section 16(3)(d) of the BO provides the BA with the opportunity to review any GBP that are approved more than two years ago upon application for consent to commence works.

The industry has therefore adopted the following practice:

  1. Prior to the expiration of the two-year period for the purpose of section 16(3)(d) of the BO, amendment GBP (incorporating minor amendments) would be submitted to the BA for approval.
  2. Once the amended GBP have been approved, then the two-year time period for the purpose of section 16(3)(d) would start to run again.

However, the introduction of the Modification/Exemption Time Limit cast doubt as to whether the industry can still adopt this practice to have the two-year time period starting to run again.

APPLICATION FOR AMENDMENT GBP BASED ON PREVIOUSLY APPROVED GBP

Section 16(1)(d) of the BO provides that the BA may refuse to give his approval of GBP on the ground that the carrying out of building works shown on the GBP would contravene, among other things, the provisions of the BO or of any other enactment.

Assuming that a developer submits amendment GBP based on the previously approved GBP before the expiration of the Modification/Exemption Time Limit :-

  1. According to what was said in paragraph four of the BA's Letter, such amendment GBP will not be rejected by the BA under section 16(1)(d) of the BO because the Modification/Exemption Time Limit has not yet expired.
  2. However, it is unclear from the said paragraph four whether the Modification/ Exemption Time Limit imposed by the BA in approving the previously approved GBP will start to run again as from the date on which the BA approves the amendment GBP.
  3. If the Modification/Exemption Time Limit will not start to run again as from the date on which the BA approves the amendment GBP, then this would mean that even if the BA approves the amendment GBP, such approval will not allow the developer to enjoy another two-year time period as mentioned above because the Modification/Exemption Time Limit would in any event expire two years from the date on which the original GBP were approved.

APPLICATION FOR CONSENT TO COMMENCE BUILDING WORKS

It is also doubtful whether the BA is entitled to rely on section 16(3)(d) of the BO to refuse to give his consent to commencement of building works on the ground of expiration of the Modification/ Exemption Time Limit :

  1. The BA's power to refuse to give his consent to the commencement of building works under section 16(3)(d) of the BO is specifically confined to the situation where a period of two years has elapsed since the approval of the GBP.
  2. Further, paragraph 14 of PNAP 215 provides that the BA will invoke section 16(3)(d) of the BO to refuse consent if the building works do not comply with the current standards specified in the BO and allied regulations. It would appear that the expiration of the Modification/ Exemption Time Limit cannot be regarded as non-compliance with the current standards specified in the BO and allied regulations.
  3. In any event, the expiration of the Modification/Exemption Time Limit is not a ground specified in any of the paragraphs in section 16(3) of the BO which entitles the BA to refuse to give his consent to commence building works.

ACTUAL PERIOD OF THE MODIFICATION/EXEMPTION TIME LIMIT

Paragraph four of the BA's Letter provides that, generally speaking, the Modification/Exemption Time Limit will be for a period of two years.

This seems to suggest that the actual Modification/Exemption Time Limit could be longer or shorter than two years.

However, no reason has been given as to why two years have been specified and no guidance has been given as to the circumstances under which the BA will determine a period which is longer or shorter than two years.

Conclusion

The New Practice adopted by the BA (a) constitutes a fundamental change to the long-standing practice adopted by the BA in GBP approval process as well as the current system established under the BO and its subsidiary legislation and (b) has created a lot of uncertainties, practical problems and difficulties to the development industry.

When the BA introduces a new practice or policy, the BA will normally issue a formal Practice Note for Authorised Persons and Structural Engineers and will conduct consultations beforehand. However, it is very strange that the BA (a) did not conduct any prior consultation with the development industry, the relevant professional bodies/ associations and other stakeholders on the New Practice and (b) announced the New Practice only by way of a letter instead of formally issuing a new Practice Note.

We consider that the BA should:

  1. conduct thorough consultations with the development industry, the relevant professional bodies and associations and other stakeholders before implementing the New Practice;
  2. clarify the issues and uncertainties in its implementation as suggested above; and
  3. only introduce such New Practice as is appropriate after thorough consultations.

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Copyright 2010. JSM, Mayer Brown International LLP and/or Mayer Brown LLP. All rights reserved. Mayer Brown is a global legal services organization comprising legal practices that are separate entities ("Mayer Brown Practices"). The Mayer Brown Practices are: JSM, a Hong Kong partnership, and its associated entities in Asia; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; and Mayer Brown LLP, a limited liability partnership established in the United States. The Mayer Brown Practices are known as Mayer Brown JSM in Asia.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.

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