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Submitted by // K Bowers, Partner / Solicitor Advocate; P Yeung, Senior Associate
28 June 2017

 

Complying with data access requests: Is it permissible to charge employees for access to their personal data?

Pursuant to the Personal Data (Privacy) Ordinance (Cap. 486) ("PDPO"), an employee (or former employee) can ask that his/her employer provide him/her with copies of any personal data which relates (directly or indirectly) to them. This is known as a "data access request" ("DAR").

DARs can be made in respect of any personal data where it would be practicable for the employee's identity to be directly or indirectly ascertained. This may include personnel files, disciplinary records, interview notes, appraisals and performance reports, etc. An employer who receives a DAR from an employee must comply with the request (or inform the employee in writing the reasons for its refusal or inability to comply with the request) within 40 calendar days of receiving the DAR.

In complying with the DAR, an employer can impose a fee for supplying the requested personal data or decline to supply such data unless and until the employee has paid the imposed fee. This does not mean, however, that the employer has an unrestricted discretion to impose DAR fees. Any imposed fee must not be "excessive" and should be "directly related to and necessary" for the compliance of the DAR.

Direct and necessary costs

According to the Privacy Commissioner for Personal Data, "direct and necessary costs" does not bear the same meaning as "reasonable costs". Furthermore, not all costs which are actually incurred by an employer in complying with the DAR will constitute direct and necessary costs. For instance, administrative overheads should not fall under the umbrella of direct and necessary costs. The question for the employer is whether it is possible to comply with each item requested under the employee's DAR without incurring costs for that particular item. If the employer can supply an item without incurring costs, it should not charge a fee for any costs incurred for providing that particular item.

If an employer decides to seek legal advice on its obligations to comply with a DAR, it is arguable that the costs of seeking such legal advice were reasonable. However, such costs should not be imposed as a fee on the employee as the legal advice was not a necessary cost for complying with the DAR. Rather, the legal advice was obtained for the benefit of the employer only. Similarly, although redaction costs are generally allowed, the employer should not charge a fee for any redactions made to the requested personal data, which are exempted from disclosure under any relevant legislation. This is because such costs are incurred for the protection of the employer's interests and are not directly related to and necessary for compliance with the DAR.

Excessive costs

The costs of complying with DARs should be minimal unless the DARs are wide-ranging or complicated (i.e. covering an extensive time period, involving a massive trove of documents, requiring convoluted searches, etc.). Where costs are incurred beyond what should have been incurred as a result of an extraordinary situation created by the employer, such costs are deemed to be excessive and should not be borne by the employee. In a 2011 case, an employer incurred exorbitant costs in order to recover personal data from a laptop which it had caused to crash. Since the recovery costs would not have been incurred under normal circumstances, it was held that a corresponding fee based on such costs would be excessive.

What fees are permissible?

The employer may take into account the direct labour necessary for complying with a DAR, including costs such as time spent by its employees to find, retrieve and reproduce the requested personal data. The chargeable labour costs should be calculated at the employees' hourly rate (including fringe benefits and salary) multiplied by the number of hours spent on the matter. As a general rule, an employer should not assign managerial level employees to perform administrative tasks for the purposes of handling DARs as this task allocation will unnecessarily raise labour costs. However, an employer may charge for the costs of technical assistance which is essential for complying with the DARs (e.g. technical assistance for duplicating video footage). Alternatively, an employer may wish to charge a "flat-rate fee" for complying with all DARs. This is permissible to the extent that the flat-rate fee imposed is lower than the direct and necessary costs for compliance with the DAR.

The costs of photocopying the documents containing the requested data are also direct and necessary costs. Generally speaking, the photocopying charge imposed at HK$1 per page will not be considered excessive.

It is important for an employer to bear in mind that the right to impose a DAR fee should not be exercised for the purpose of deterring employees from making DARs. An employer who fails to comply with a DAR without a reasonable explanation commits an offence which could result in a fine of up to HK$10,000. Where an employee believes that they have been charged excessively for compliance with their DARs, he/she may lodge a complaint with the Privacy Commissioner's Office. Ultimately, the burden rests on the employer to justify the imposed fee and how it relates to the costs incurred.


About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; and financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.

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Submitted by // K Bowers, Partner / Solicitor Advocate
28 June 2017


USE IT OR LOSE IT!

Not so easy to claim possession over rooftops that are not reasonably useful to anyone

Introduction

This case concerned an application for judgment in default of the Defendant giving notice of an intention to defend a Court action. The relief claimed by the Plaintiff was that it had acquired the ''possessory title'' of the rooftop (''Rooftop'') of a factory building (''Building'') by way of adverse possession. The Plaintiff was the registered owner of several units on the top floor of the Building. The Defendant was the registered owner of the Rooftop (among other parts) of the Building, who could not be found in the course of the proceedings.

Plaintiff's Application

The Rooftop in question was essentially a ''concrete slab'' with no proper fencing or other means of protection to prevent people or objects from falling off its edges. The Court held that there was no sound basis for suggesting that the Rooftop was reasonably safe for ordinary daily activities usually associated with properly fenced-off rooftops, such as parties, or other gatherings.

There were also pipes on the surface of the Rooftop, and the Plaintiff did not dispute that they were for the common use of the occupiers of the Building.

In support of its application, the Plaintiff relied upon the following as its conduct of excluding others from the Rooftop and in support of its claim for adverse possession:-
(1) hanging a plastic chain along the edges of the Rooftop with notices stating "Danger Do Not Come Close";
(2) installing air-conditioner units on the Rooftop;
(3) spending a substantial amount of money to replace the water-proofing layer (''Water-Proofing Layer'') on the surface of the Rooftop; and
(4) locking the only entrance to the Rooftop.

Previous Authority

The Court cited the previous Court of Final Appeal (''CFA'') decision in Incorporated Owners of San Po Kong Mansion v Shine Empire Ltd (2007), a case in which the appellant also sought adverse possession of the rooftop of a building. The appellant's alleged acts of possession in this CFA case included holding gatherings for residents, allowing other residents to use the roof for drying clothes, and installing a central antenna for television aerials. The appellant was unsuccessful in the lower courts, and the CFA also dismissed the appellant's appeal.

The main reason for the dismissal of the appeal was that the alleged acts of possession ''…plainly do not constitute or demonstrate the necessary factual possession or requisite intention to possess''. The CFA also added that the rooftop in question must have been reasonably safe for carrying out the alleged acts of possession, and that the erection of a central antenna by the appellant was ''…no more than an individual act of minor trespass to the parapet walls'' which did not amount to an act of possession.

Decision

The Court ruled that the Plaintiff's alleged acts of possession in this case were even more ''obscure'' than that of the appellant in Incorporated Owners of San Po Kong Mansion v Shine Empire Ltd, in circumstances where the physical condition of the Rooftop was not designed or built in a way which would render it reasonably useful to anyone, except for the building manager, who could visit the Rooftop from time-to-time for the repair and maintenance of common facilities (such as the pipes and the Water-Proofing Layer). Consequently, the Plaintiff failed to persuade the Court that its alleged acts of possession of the Rooftop should amount to adverse possession.

Identification of the part of the property subject to a claim for adverse possession

The Court also observed another flaw in the Plaintiff's submission in relation to the Water-Proofing Layer on the Rooftop. The Plaintiff submitted that:-
(1) it had spent a substantial amount of money to repair the Water-Proofing Layer; and
(2) the building manager was ''permitted'' to access the Rooftop to perform repair and maintenance.

The Court questioned whether the conduct at (1) and (2) above concerned the same part of the Rooftop, as the obligation of a building manager to repair is usually limited to the common parts of a building. Therefore, the Court doubted whether the Water-Proofing Layer was a common part, or a part of the Building which was actually owned by an individual co-owner. If the two types of conduct concerned different parts, then the Plaintiff's claim for adverse possession (even if successfully established) did not extend beyond the part not owned by the Defendant. In this regard, the Court held that the Plaintiff had failed to properly identify the property it claimed to adversely possess, which in itself was a good ground for refusing the relief sought.

Comment

This case demonstrates that the physical condition of a building is important to the Court's decision in a case in which adverse possession is claimed. If the physical condition of a rooftop (in this case) suggests that it is not built or designed in a way which would make it reasonably useful to anyone, it will be difficult to persuade the Court to accept acts sufficient to establish actual possession, or the requisite intention to possess. The case also demonstrates that it is important to precisely identify the property allegedly adversely possessed, and that failure to do so should be a good ground for refusing an application for adverse possession.

 

About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; banking; financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

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Submitted by // K Bowers, Partner / Solicitor Advocate
23 June 2017


Non-disclosure of inside information does not equate to insider dealing 

Securities and Futures Commission v Yiu Hoi Ying Charles and Others [2017] HKCU 1027

Introduction

In a recent Court of Appeal decision, the Court dismissed an appeal brought by the Securities and Futures Commission ("SFC") against the determination of the Market Misconduct Tribunal ("MMT") and clarified the difference between "non-disclosure" and "use" of inside information in respect of the meaning of "insider dealing" in the Securities and Futures Ordinance, Cap. 571 ("SFO").

Background

The MMT proceedings were brought by the SFC to investigate senior executives at Asia Telemedia Limited ("ATML") for an alleged breach of the insider dealing provisions contained in part XIII of the SFO. The MMT found that there was no breach of the insider dealing provisions as the senior executives were able to successfully raise a defence under s. 271(3) of the SFO, on the ground that their dealings were solely motivated by a speculative surge in the price of the company shares, and not by their knowledge of inside information.

The meaning of "use" under s. 271(3) of the SFO

The SFC's argument in the appeal was that the definition of "using inside information" in s. 271(3) should include the withholding or non-disclosure of relevant information. In the SFC's view, the senior executives should have known that if they had disclosed the inside information, the speculative surge in the price of the company shares would have been halted. By selling the shares without disclosing the information, they obtained a higher return on the shares than if they had disclosed the information. Therefore, the SFC argues, withholding inside information should have the same meaning as using inside information and the defence under s.271(3) should not apply.

The Court rejected the SFC's argument. The Court regarded the extension of the definition of "use" to "withholding" or "non-disclosure" within the meaning of s. 271(3) as a strained interpretation. Widening the definition in this way would mean that any senior executive who deals in the shares of the company whilst in possession of inside or price-sensitive information ("PSI") would be committing insider dealing, even if the deal was not motivated by his knowledge of the information. In the Court's view, this would have the effect of making the defence under s.271(3) inoperable.

The Court also noted in the judgement that since Part XIVA of the SFO already imposes an obligation to disclose PSI, there was no reason to widen the meaning of 'using' inside information to limit the scope of the s. 271(3) defence. In the Court's view, the regulatory intent to ensure the disclosure of inside information was 'fully reflected' in Part XIVA of the SFO.

Conclusion

The Court made a clear distinction between insider dealing and the non-disclosure of inside information. Under Part XIVA of the SFO, listed companies and their officers have a continuing obligation to disclose inside information. On the other hand, the insider dealing rules are intended to prevent those in the know from using inside information to manipulate the market.

The Court of Appeal in dismissing this case confirmed the use of the 'no profit motive' defence under section 271(3) of the SFO. However, as the MMT noted in the original decision, only in rare circumstances will a person who deals in shares of a listed company whilst in possession of inside information be able to demonstrate that his dealing was totally unconnected with any desire to make a profit or avoid a loss by using that information. It remains best practice to disclose inside information as soon as reasonably practicable and to deal only after due disclosure.


About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; banking; financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.

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Submitted by // K Bowers, Partner / Solicitor Advocate
16 June 2017


Farewell to the Automatic Opt-in - What you should know about the Arbitration Ordinance from 1 June 2017 onwards!

Introduction

The Arbitration Ordinance (Cap. 609) ("Ordinance") which came into operation on 1 June 2011, replacing the previous ordinance (Cap. 341) ("Old Ordinance"), has recently undergone a change. Specifically, after a 6-year transitional period, the automatic opt-in applicable to domestic arbitration provisions expired on 1 June 2017. This has important implications for parties wishing to engage in arbitration from 1 June 2017 onwards.

Background

Under the Old Ordinance, arbitration could either be governed by the domestic or international regime. The Ordinance abolishes the distinction between domestic and international arbitration by creating a unitary regime for arbitration (based on UNCITRAL Model Law), bringing it more in line with modern international arbitration practices and standards. It also preserves certain provisions which were only applicable to domestic arbitration by providing an automatic opt-in system.

Automatic Opt-in before 1 June 2017

Previously, pursuant to section 100 of the Ordinance, parties would (unless agreed to the contrary) enjoy automatic opt-in into Schedule 2 of the domestic regime if their arbitration agreement specifically referred to "domestic arbitration" and was entered into (i) before the commencement of the Ordinance; or (ii) at any time within a period of 6 years after the commencement of the Ordinance.

The key opt-in provisions under Schedule 2 include:-
• appointment of a sole arbitrator in absence of an agreement (section 1);
• consolidation of arbitral proceedings by the Court (section 2);
• referral of preliminary questions of law to the Court (section 3);
• ability to challenge an arbitral award on the ground of serious irregularity (sections 4 and 7); and
• ability to appeal against an arbitral award on questions of law (sections 5, 6 and 7).

In a nutshell, up until 1 June 2017, parties to arbitration had the benefit of automatically enjoying the "convenience" of the opt-in system by simply stating that their arbitration is a "domestic arbitration" in their arbitration agreement.

However, this position has recently changed.

Current Position

From 1 June 2017 onwards, the automatic opt-in provision is no longer in force. It is no longer sufficient for parties who wish for the provisions of Schedule 2 to apply to simply state in their arbitration agreement that their arbitration is a "domestic arbitration". Rather, pursuant to section 99 of the Ordinance, parties wishing to opt into some or all of the provisions of Schedule 2 must now make express reference in their arbitration agreement to the exact provisions which they wish to apply to their agreement.

A benefit of this change is that parties now have the flexibility of adopting Schedule 2 in whole or in part by cherry-picking specific provision(s) which they wish to incorporate into their arbitration agreement.

So what did / does this mean in practice?

Below are some key examples of how the position has changed.

 

The Old Ordinance (Cap. 341)

The Ordinance (Cap. 609)

Domestic arbitration

International arbitration

Before 1 June 2017

After 1 June 2017

Automatic opt-in for "domestic arbitration" (unless otherwise agreed)

 

 

 

 

 

 

Unitary regime for arbitration (based upon UNCITRAL Model Law)

 

 

Lapse of automatic opt-in; parties may cherry-pick which provision(s) of Schedule 2 are to apply by making express reference to them in their arbitration agreements.

No. of arbitrator

Sole

Parties had the freedom to determine the number of arbitrators, failing which it would either be 1 or 3 (as decided by the Hong Kong International Arbitration Centre)

Sole

Consolidation of arbitrations

 

X

Determination of preliminary question of law by Court

 

X

Challenging arbitral award on the ground of serious irregularity

 

X

Appeal against arbitral award on question of law

X


Comments

Whilst arbitration agreements providing for "domestic arbitration" concluded before 1 June 2017 will not be affected, this change carries important implications for all parties entering into arbitration agreements on or after 1 June 2017.

This is particularly so for the construction industry, as "domestic arbitration" is frequently referred to in a number of standard forms for main contracts. In short, so long as the arbitration agreement in the main construction contract provides for "domestic arbitration" and was entered into before 1 June 2017, Schedule 2 should continue to apply to arbitration agreements contained in every construction sub-contract entered into after 1 June 2017.
[1]

Going forward, parties should bear this recent change in mind when drafting arbitration agreements and / or take steps to amend any existing contracts in standard forms, especially if they wish for any of the Schedule 2 provisions to apply.

_________________________________________________
[1] subject to certain conditions under section 101 of the Ordinance 

 

About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; banking; financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.

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