Hong Kong, CONTRACTS-AND-LAW-IN-CONSTRUCTION

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Requirement

1- Write a repot on "CONTRACTS-AND-LAW-IN-CONSTRUCTION" with references upto 20-25 within 4000 words.

Solution

Task 1

Hong Kong has a common jurisdiction of law in which land law and building law are incorporated within the system of case law have been modified by legislation.International laws are not applicable to the regulations of Hong Kong’s Real Estate.The key legislation and relevant agencies are incorporated within ‘Building Ordinance section 38-Regulations'. Under the subsidiary legislation that is relevant to the construction and building laws of Hong Kong, certain regulations regarding the design and planning of building could be made by the Secretary under Bos38(c). By regulations the Secretary might provide for certain amendments and regulations under L.N.330, 1999; L.N.106, 2002; L.N.130, 2007; and L.N.20, 2008. The Secretary is liable for making relevant applications for building planning and also granting approval for construction works of both commercial and residential buildings (Penget al. 2017). The Secretary might further give consent or approval for the commencement of building works and carrying out planning regarding commercial and residential buildings. The Secretary supervises and makes a decision in cases where the land or building owner desires to alter, add or redevelop the works or planning of the building, the construction works of which have already commenced with approval from the Secretary. In this case, the client has desired to alter residential planning to commercial planning for restaurants. The secretary might provide for the planning, construction and design building works based on site formation.The client must be aware of certain aspects regarding the design and planning of construction works that include sanitation, ventilation, lighting, projections, heights, open spaces, plot ratio, service lanes, site coverage, staircases, fire escapes and etc (Goodfellow, 2017).

The client must be aware of the procedures associated with building control before appealing for the redevelopment of the desired project which has already commenced. Building Control regulations are incorporated within ‘Building Ordinance, Cap 123). It is a sub-structure of development control.The building control regulations of Hong Kong states that Public Housing in Hong Kong is controlled by the Department of Housing. The structure under construction is required to be sustainable in terms of safety and must be capable of sustaining imposed loads, dead loads and wind loads. The structure must not cause deformation, deflection or any kind of movement that might cause damage or affect the stability to the building or harm a part of it. There are certain limitations to design stresses that the client must not exceed while the construction work is ongoing (Ho and Atkinson, 2018). The client must comply with the mechanic's law of Hong Kong and understand the principles of engineering. 
The client might choose to appeal for the redevelopment of the building work for altering it to the commercial purpose which was primarily commenced with the interest of residential use. However, the client at one point had realized that according to the government provisions of Lease, residential construction is prohibited in the particular site which had compelled the client to appeal for alteration so that the client might redevelop it for commercial use, the primary interest being restaurants. The client, therefore, needs to have a comprehensive understanding of the procedures that are involved in the process applicable to appeal regarding the redevelopment of the building (Chan and Choi, 2015). The client might choose to appeal under section 17 of ‘Town Planning Ordinance’ for appeal which includes the following:

  • The law associated with it states that an applicant who desires to appeal after being aggrieved by the board’s decision regarding construction works based on section 17 might appeal to the court by lodging.

  • After receiving notification regarding the decision of the Board, the client might choose to appeal within 60 days clearly mentioning the grounds for which the appeal has been made in the appeal notice. (elegislation.gov.hk 2019)

The Secretary is responsible for monitoring the building decisions and decide on the procedures in which an appeal could be made. The decisions regarding the construction and redevelopment or alteration of buildings come under Building Ordinance. Appeals and reviews are incorporated within the planning application (Zhanget al. 2016). The appellant must furnish a written statement to the Secretary which includes 
The decision and its particulars on which the appeal has been made.

  • It further includes the grounds on which the appeal has been made and if such grounds are not specified in the appeal notice.

  • The appellant must also mention an extensive description of the scenario based on which the appeal has been made. 

  • The details of the documents that the appellant wish to produce during the legal hearing.

  • The appellant must mention the details of witnesses who would be called at the legal hearing on the behalf of the appellant. 

  • The appellant must clearly mention the description and the address of the land for which the appeal has been made.

  • The appellant is required to produce a statement of the appellant's interests. (elegislation.gov.hk 2019)

These are some of the important procedures regarding which the client must have a clear understanding.

The planning Standard and Regulatory Guidelines of Hong Kong indicates that the BO along with its regulations and Building Planning of Hong Kong is the only existing statute which has explicitly set limits on building density and also provides for planning and management enforcement. The Building Regulations and Planning has specified the permitted ratio of the plot for both residential and commercial use (Morris and Vickers, 2015). It has also specified the maximum site coverage which would be permitted for non-domestic and domestic buildings in terms of the height of the building. All land allotted for building construction is leasehold in Hong Kong. Developments of private land and also its redevelopment are controlled through statutory guidelines of development and planning by the government based on land and building lease. The Building Control in Hong Kong was responsible for urban development for more than 100 years. The plan was later revised by the government which include two integral parts. The first part of the plan was associated with the Standard of Planning and the second part of the plan was concerned with the development strategy of urban buildings. At present, The Building Ordinance is responsible for monitoring and making amendments in the Standards of planning and business regulations. (elegislation.gov.hk 2019)
"Chapter 123 Building (Planning) Regulation" of statutory control- regulations and ordinance state that design as well as planning control on safety and health matters and on density. "Chapter 123 Building (Construction Regulation)" states the control of several methods of construction including testing method, fire resisting and etc. The construction activities in Hong Kong like any other country is subjected to noise and therefore, statutory control on noise is essential on the construction sites. The construction activities in Hong Kong are generally divided into two different categories and both the categories are checked by the means of a CNP (Construction Noise Permits). The first category is the general construction activities including excavation, road works renovation and etc. It is inevitable that the general activities of construction are subjected to noise and therefore, statutory control is essential on such activities. Similarly, the second category that is the percussive pilling is also subjected to noise (Wahiet al. 2016). The activities under percussive pilling include the use of a hydraulic hammer and etc. It is essential that statutory control is applied on percussive pilling as well in order to control the level of noise pollution around the construction site. The objective of statutory control is to maintain safety as well as the health of the neighbours around the construction sites. Various activities of construction in Hong Kong requires a statutory control on noise and the application of statutory control is different with time. Statutory control varies during the weekdays on Hong Kong and during the 0700 hours, permission is required during the percussive piling and even during the unrestricted activities of ‘powered mechanical equipment'. On the contrary, during the 1900 hours, no permission is required while using the ‘powered mechanical equipment' (Shanet al. 2016). The application of the statutory control is different during the Sundays and during the time of holidays, no permission is required while using the ‘powered mechanical equipment’. (researchgate.net,2019)
The laws of trespass, as well as nuisance related to the industry of construction, are discussed below:

Trespass:

  • It is defined to the interference of an individual's rights to the security concerned with his land, property or body.

  • It is also referred to a process of intrusion upon premise or land which he possessed by somebody else without right or permission. (iclg.com,2019)

  • It also includes several items such as scaffoldings or cranes which might over sail the property which is adjacent (Tam, 2018). 

Trespass in sites of construction:

  • Trespass of any manner is actionable even if it does not involved with damage to the property. Trespass is generally restrained by the process of injunction and damage in such cases are recoverable. 

  • The neighbours land can be accessed during the process of construction in Japan, with rights and permission and this generally comes as a temporary license.

  • Trespass would be committed if the permission acquired is exceeded by the individual. (researchgate.net,2019)

Nuisance:

  • Nuisance in the construction sites of Hong Kong is actionable when prospective damage is caused and the damage caused might not be physical but it must be demonstrated through the interference of unreasonable materials or encroachment. 

  • Unlike trespassing, nuisance is defined as a non-physical invasion (Luet al. 2017). 

  • Construction might be subjected to private nuisance and this may come in the following forms:

                       A- Unreasonableness

                       B- Interference

                       C- Defendant’s conduct

                       D- Private nuisance issues (iclg.com,2019)

  • It is a matter of degree as well as balance

  • The duration as well as the timing of nuisance matters

  • Repetition of nuisance activities is also counted in the construction laws of Hong Kong

  • Nuisance in the construction sites of Hong Kong generally depends on a number of circumstances such as a specific location, the kinds of activities which have been performed in that area (Arditiet al.2017). 

  • It can be also defined as a substantial and unreasonable interference by interfering or using the property of someone else without unlawful entry or physical trespassing (researchgate.net,2019)

The occupier’s liability and vicarious liability are applied in the following ways:

Occupier’s liability:

  • A premise occupier would owe to the visitors if the premise is subjected to danger due to its condition. 

  • A person is obliged for having control over movable structures and premises in respect to property damage or persons, who are not visitors.

  • A premise occupier owes to visitors with respect to safety and danger due to the premise condition. (researchgate.net,2019)

  • ‘common duty of care' is applicable in cases like this:

  • This duty assures the safety of the visitors while they use the premise on permission and invitation of the occupier who is present there. 

  • There are several reasons for using insurance policies such as legislation, contract requirements and risk allocation (Huet al. 2018). 

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Vicarious Liability:

  • Insurance is required against a property or a person or injury caused to an individual

  • A "compensation insurance is required by the employees and liability insurance is required by the third party.

  • Both the insurances are required to be created in joint names that are the employer and the contractor, the subcontractors and the respective subcontractors of every tire. (researchgate.net,2019)

  • The contractors take out the compensation insurance all the employees

  • The period covered begins from the Commencement Date and it continues till the “Defect Rectification Certificate” for the entire work which has been issued (Luet al.2016). 

The legislation of the vicarious liability are listed below:

  • The legal requirement for this vicarious liability is the “Employees Ordinance Cap 282”

  • The compensation of the employees’ insurance policies are taken out by the employers and this covers the liability when injuries or death are caused during an accident which occurs during the course of the individual’s employment. 

  • In other words, the employers are liable for any kind of risk, harms, and injuries of the employees while he is still performing at the construction site (Shanet al. 2016). 

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Plan for the contractor

According to the laws of process construction and business, registered contractors must be appointed. Therefore, the commencement notice of the building works as well as street works would be undertaken by the registered contractors, according to the BA-10 Notice. The sub-contractors must be managed by the contractors in a careful manner. The contractors are required to indemnify employers. The contractors are liable for indemnifying the employers against expenses, damages, loss and liabilities. This is with respect to any proceeding or claims by the employers of the construction site (Luet al.2016). 
The statutory control is applicable to building control, under the “Building Ordinance, CAP 123”, followed by the planning control under the “Town Planning Ordinance, CAP 131” and finally the Environmental Protection Control. Under the “Environmental Impact Assistance Ordinance, CAP 499”. The Board of Town Planning states the zoning plan like land use, permitted use, density and etc. The Building Authority states the regulation and the building ordinance and the objective of the building control is the health and safety of the community and to ensure the safety of the environment (Shanet al. 2016). 
Some of the legal requirements include the legal transaction of the contracts which are legally bound. A contractor must possess the legal ability to enter the construction contract. The legal effects on the agreement are much flexible. Legal obligations are intended while creating building contracts and etc. The name of the contractors can be removed by the building authority under the law of subsection (4), by the decision of a disciplinary board which has been appointed under the law of subsection (11) (Huet al. 2018). 

Task 2

The property disposal process in Hong Kong is governed by a number of laws and legislation and this has enabled the authorities to manage property disposal in an effective manner. The "Conveyancing and Property Ordinance (Chapter 2019) or CPO states the rights as well as ownership of properties including buildings and land. It also includes the provisions related to property laws and conveyancing, deeds and agreements related to land, the holding as well as the acquisition of properties and land and etc. It also includes standard agreements as well as deeds in relation to land. This law governs the properties in the jurisdiction of Hong Kong. (researchgate.net,2019)
The “New Territories Ordinance (Chapter 97)” states those laws which are related to the regulation and administration of the New Territory. The “Land Registration Ordinance (Chapter 128)” states that all instruments must be registered affecting the immovable or real property. Land registry record must be maintained as well during the process of land disposal and several other factors associated with land disposal must be recorded as well. Hong Kong falls under the category of common law jurisdiction and therefore the land law of Hong Kong persists as a system of case law and it has been modified by the legislation of the nation (Huet al. 2018). 
Every land in Hong Kong is owned by the Government of the country, therefore, "ownership" of the "leasehold land" is governed by the leases of the government and the grant conditions which the government grants to corporations and private individuals.  There are no international laws applicable to property disposal in Hong Kong. Ownership of property is not restricted to any specific class of an individual and therefore, there are no ownership restrictions in Hong Kong. Ownership in Hong Kong is not restricted to non-resident individuals as well and thus, the property can be disposed to anyone in Hong Kong. (iclg.com,2019)
Some of the jurisdiction might not be registered during the process of property disposal, including the unwritten interests that is the equitable interest which occurred under a constructive trust or a resulting trust. The "leases for terms" which has not exceeded a period of three years might not be registered during the process of land disposal. The first registration during the process of property disposal is not subjected to the probation period and neither is it subjected to different quality or classes of titles (Luet al.2016). These are some of the laws and legislation associated with the process of property disposal in Hong Kong. 
Some of the impacts of relevant legislation on the disposal and development of urban construction projects include the evolution of urban planning and development, along with building management in Hong Kong. It is due to the relevant legislation, that Hong Kong was able to make remarkable progress in the disposal as well as the development of large construction projects for urban planning. Due to these legislations, the nation was able to make advanced leaps and bounds for a period of almost 200 years and develop from being a fishing village to one of the most well-known international cities in the world. (researchgate.net,2019)
The building markets and industries of Hong Kong made rapid development and established the city as an impressive skyscraper. Hong Kong has extensive experience when it comes to the field of architectural designing and urban planning. An imbalance between the dense population and land resources in Hong Kong enabled the nation to make use of the land resources in an effective manner during urban construction projects. The public housing density is 2,500 residents/ ha. Due to this, the land is extremely expensive in Hong Kong and the architectural design is often subjected to multiple legal limitations in the country (Morris and Vickers, 2015). 
It is also true that Hong Kong is subjected to extreme development pressures by setting targets for enhanced densities in the urban areas and it is due to this reason, high-rise cityscape in the country is unavoidable. The legal system and the departments of Government in Hong Kong have constantly supervised and controlled over the urban planning and this has effectively evolved the architectural design as well as the building industries. The action of the legal system has contributed to the success of the large urban construction projects in the country. (researchgate.net,2019)
The building control in Hong Kong has been a part of urban planning for several years until the Government created the Colony Outline Plan in the year 1965. Therefore, urban planning has two categories, planning standard and development strategy. Planning standards aim at setting density limits in the country. The development of private lands is controlled by the Hong Kong Government. Both are responsible for the evolution of urban planning in the country (Shanet al. 2016). 

For determining the evolution of land law for shaping the ownership of modern lands it is important to look back at Hong Kong's rich history of socio-cultural development. Hong Kong was invaded by foreign countries for the transit port that it provided. Foreign invaders had shown grave interest in Hong Kong for the industrial benefits that it had provided for which public buildings like the commercial, business and industrial buildings emerged in Hong Kong. These public buildings serve the commercial interest and play a pivotal role in the development of Hong Kong's economy. It is thus important to trace the evolution of land ownership for assessing how far it has been amended since origin. The existing problem in Hong Kong regarding the need of residential ownership and housing developed new laws in the territory for urban planning and maintenance (Ho and Atkinson, 2018). Therefore it is important to assess private ownership and public ownership for evaluating its role in shaping modern land ownership based on the new urban planning. The customary laws of China, on the other hand, plays a significant role in the new land ownership laws of Hong Kong. This is associated with the customary law of selling and buying of properties. Previously the government was not responsible for monitoring public and private buildings. However, the BO specifies ownership laws of both commercial and residential lands. The New Territories of Hong Kong was included with the BO and according to Section 8 and Section 15, all land properties that are situated in the new territories of Hong Kong were deemed to be Government property and owners were required to comply with the new laws of ownership. As a result, new contract laws were framed in Hong Kong which affected the interest of both buyers and sellers (Chan and Choi, 2015). New laws for tenants and landlords were introduced as land ownership evolved continuously demanding the requirements of additions and changes. There are certain obligations that were introduced for owners and only a few benefits were granted to the owners. (researchgate.net 2019)

Contract law has a major role in property deals regarding the buying and selling of properties about which one must conceive a clear knowledge before issuing a contract. When buying and selling of a property are executed with a contract there are certain factors regarding which both parties must be having a comprehensive understanding.  

  • Both parties, the buyer and the seller must agree on price money for which both parties have negotiated before. It is only after the agreement of price both the parties, the buyer and the seller would be able to enter into a deal regarding the property.

  • The contract which is associated with the property is legally binding regarding which both the involved parties must have an extensive understanding (Goodfellow, 2017). The contract for the property is based on purchase agreement and provisional sale and both the involved parties must conform to the agreements of the contract.

  • The parties might come across unfavourable scenarios in which the purchase agreement and the formal sale as stated in the contract could not be signed by either or both involved parties. In this case, the parties would be granted two viable options. They could either depend on a contractual agreement which is provisionally made or they might choose to sue so that they could be compensated. In the former case, the parties would be able to carry on the deal. (elegislation.gov.hk 2019)

  • There are some aspects associated with a provisional agreement regarding which both the involved parties must have an extensive understanding before either of them sign the deal.The provisional contractual agreement must incorporate certain relevant data and information regarding the property like the price and the address of the property, the initial amount and the final amount of the deposit, a date stating when the formal agreement would be signed by both parties, the day of completion and etc (Zhanget al. 2016). The contract must clearly state the purpose for which the property is bought and if it would be allowed for residential use or for commercial use. 

There are a few ways in which Landlord Law and Tenant Law are widely used in Hong Kong for the management of the property. Both these laws are incorporated within ‘The Tenant and Landlord Ordinance'. Here are the few ways of property management as agreed by both the tenant and the landlord:

  • Agreements of oral tenancy

  • Short leases

  • Lease registration

  • Exemption Clause

  • The general term of the contract lease

  • The representative of the tenant on the committees of management

  • Renovation and repairs

  • Vacancy of possession

  • Forfeiture relief

  • Maintenance of damages (Zhanget al. 2016)

Generally, the tenants are responsible for the maintenance, renovation and repair of non-structural property matters and internal impairments. The landlords are the property's registered owners and are responsible for the regular maintenance. The incorporated owners are further responsible for monitoring nuisance or other internal and external damages that have been caused by the tenant.Without a contractual agreement, the involved parties, the landlord and the tenant might get into unnecessary disputes. It is thus recommended that clear obligations are specified in the contract regarding the maintenance and renovation of the property. (hkclic.org 2019)
The use and disposal of the property must also be clearly specified in the contract that would eventually be agreed by both the landlord and the tenant. Disposal of property might include renting out the property or selling the property. This could create a number of legal issues about which both parties must have a clear knowledge (Penget al. 2017). For controlling and managing the disposal of the existing property it is important that a written agreement between the tenant and the landlord is issued. The agreement of residential lease must specify the significant terms of rental that could develop the inter-personal relationship between the landlord and the tenant.The provisions at the time of disposal must include some relevant information regarding the tenant so that no issues occur after the disposal of the property had been carried out.The name and the address of the tenant must be specified along with the tenancy period. The amount of the agreed rent money and security deposit must also be clearly specified before disposal. (practical law 2019)

Reference List

  • Journals

  • Arditi, D., Nayak, S. and Damci, A., 2017. Effect of organizational culture on delay in construction. International journal of project management, 35(2), pp.136-147.

  • Chan, D.W. and Choi, T.N., 2015. Difficulties in executing the Mandatory Building Inspection Scheme (MBIS) for existing private buildings in Hong Kong. Habitat International, 48, pp.97-105.

  • Goodfellow, T., 2017. Taxing property in a neo-developmental state: The politics of urban land value capture in Rwanda and Ethiopia. African Affairs, 116(465), pp.549-572.

  • Ho, H.K. and Atkinson, R., 2018. Looking for big ‘fry’: The motives and methods of middle-class international property investors. Urban Studies, 55(9), pp.2040-2056.

  • Hu, Y., Le, Y., Gao, X., Li, Y. and Liu, M., 2018. Grasping institutional complexity in infrastructure mega-projects through the multi-level governance system: A case study of the Hong Kong–Zhuhai–Macao Bridge construction. Frontiers of Engineering Management, 5(1), pp.52-63.

  • Lu, W., Chen, X., Ho, D.C. and Wang, H., 2016. Analysis of the construction waste management performance in Hong Kong: the public and private sectors compared using big data. Journal of Cleaner Production, 112, pp.521-531.

  • Lu, W., Webster, C., Peng, Y., Chen, X. and Zhang, X., 2017. Estimating and calibrating the amount of building-related construction and demolition waste in urban China. International Journal of Construction Management, 17(1), pp.13-24.

  • Morris, P. and Vickers, E., 2015. Schooling, politics and the construction of identity in Hong Kong: the 2012 ‘Moral and National Education’crisis in historical context. Comparative Education, 51(3), pp.305-326.

  • Peng, M.W., Ahlstrom, D., Carraher, S.M. and Shi, W.S., 2017. An institution-based view of global IPR History. Journal of International Business Studies, 48(7), pp.893-907..

  • Shan, M., Chan, A.P., Le, Y., Hu, Y. and Xia, B., 2016. Understanding collusive practices in Chinese construction projects. Journal of Professional Issues in Engineering Education and Practice, 143(3), p.05016012.

  • Tam, A., 2018. In Name Only: Democratic Paralysis and Potential in Post-Umbrella Movement Hong Kong. Hong Kong Studies, 1, pp.83-99.

  • Wahi, N., Joseph, C., Tawie, R. and Ikau, R., 2016. Critical review on construction waste control practices: legislative and waste management perspective. Procedia-Social and Behavioral Sciences, 224, pp.276-283.

  • Zhang, Y., Qiao, J., Gao, S., Hu, F., He, D., Wu, B., Yang, Z., Xu, B., Li, Y., Shi, Y. and Ji, W., 2016. Probing carrier transport and structure-property relationship of highly ordered organic semiconductors at the two-dimensional limit. Physical review letters, 116(1), p.016602.

  • Website

  • atb.gov.hk (2019), law of appeal, available at: https://www.atb.gov.hk/en/general_info/index.html [Accessed on 21.06.2019]

  • elegislation.gov.hk (2019), Hong Kong legislation, available at: https://www.elegislation.gov.hk/hk/cap123!en@2013-09-02T00:00:00 [Accessed on 21.06.2019]

  • hkclic.org (2019), landlord and tenant law, available at: http://www.hkclic.org/en/topics/landlord_tenant/all.shtml [Accessed on 20.06.2019]

  • iclg.com,(2019), laws, available at: https://iclg.com/practice-areas/real-estate-laws-and-regulations/hong-kong [Accessed on 20.06.2019]

  • practicallaw (2019), Hong Kong real estate, available at: https://uk.practicallaw.thomsonreuters.com/1-598-6545?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1 [Accessed on 22.06.2019]

  • researchgate.net (2019), evolution and impact of land law, available at: https://www.researchgate.net/publication/300883795_The_Impact_of_Building_Control_on_Urban_Planning_and_Building_Management_in_Hong_Kong [Accessed on 21.06.2019]

  • researchgate.net,(2019), building plan, available at: https://www.researchgate.net/publication/300883795_The_Impact_of_Building_Control_on_Urban_Planning_and_Building_Management_in_Hong_Kong [Accessed on 20.06.2019]

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