News
News //
Submitted by // K Bowers, Partner / Solicitor Advocate
04 July 2018


Levy Collection under Property Management Services Ordinance (Cap. 626)

Background

This Alert is a follow-up to HWB's January 2017 Property and Building Management Law Alert. To briefly recap, the Property Management Services Ordinance ("Ordinance") was passed during May 2017 to monitor the operation of property management companies ("PMCs") and practitioners.

The main changes brought about by the enactment of the Ordinance include (among other things) the establishment of the Property Management Services Authority ("PMSA") and a new 'licencing' system for PMCs. These changes were implemented to assist PMCs achieve an appropriate industry standard, given the trend of the professionalization of property management services.

Part 8 of the Ordinance

Part 8 of the Ordinance and the Property Management Services (Levy) Regulation came into operation on 1 July 2018.

This part of the Ordinance refers to a levy which is payable for each leviable instrument. A leviable instrument is a conveyance on sale chargeable with stamp duty. Generally, the purchaser or the transferee is liable to pay the levy. Any person with a vested interest in the immovable property should have the obligation to pay the levy. In situations where there is more than one transferee, they are jointly and severally liable to pay the levy.

Levy and consequence of late payment

The levy payable for a leviable instrument is fixed at HK$350, to be paid within 30 days after the instrument is executed. The levy will be collected on behalf of the PMSA by the Stamp Office of the Inland Revenue Department, when stamp duty is submitted for stamping.

Non-payment or late payment of the levy will attract penalties under sections 57 and 58 of the Ordinance. The penalty is two times the levy payable if late payment is made within one month of the deadline; four times the levy payable for non-payment / late payment of not more than two months from the deadline. If the outstanding levy is not settled within four months of the deadline, the PMSA can register a Certificate in the Land Registry against any premises or land in respect of which the levy and penalty arose in accordance with section 59 of the Ordinance.

Upon registration of the Certificate, the levy and penalty are recoverable from a person who appears from the Land Register to be the owner of the premises or land. The Certificate also constitutes a legal charge on the premises or land. A properly registered Certificate has priority starting from the day after the date of its registration. The PMSA may also recover the outstanding amount of any levy or penalty payable as a civil debt under section 60 of the Ordinance.

Exemptions

Under the Property Management Services (Levy) Regulation, a person is not liable to pay a levy under Part 8 of the Ordinance if that person is not liable to pay stamp duty in respect of a leviable instrument under sections 41 or 41(3) of the Stamp Duty Ordinance.

Accordingly, the government and any incorporated public officer or person acting in his capacity as a public officer shall not be liable for payment of a levy under Part 8 of the Ordinance. This exemption does not apply to any public officer acting in his capacity as Official Administrator, Official Receiver, Official Trustee or liquidator, or any public officer acting under any Order of any Court.

With the first of many key sections of the Ordinance coming into operation, building managers should keep themselves updated as to any guidelines issued by the PMSA to ensure they stay on top of the changes.
 

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; P Yeung, Partner
21 June 2018

 

ILO First Conduct Rule breaches: not just anti-competitive, but illegal 

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News //
Submitted by // K Bowers, Partner; M Withington, Partner
19 June 2018


Reimbursement of Defence Cost if Claim Not Covered by Policy

Oldham v QBE Insurance (Europe) Ltd [2017] EWHC 3045 (Comm)

Introduction

In the English case of Oldham v QBE Insurance (Europe) Ltd [2017] EWHC 3045 (Comm), the Court considered whether an insurer was entitled to the reimbursement of defence costs which it had funded after it was determined that the claim was not covered under the policy. The Court found in favour of the insurer and held that an insured who is unsuccessful in showing that the claim is covered under the policy must reimburse the insurer for the advanced defence costs.

Facts

The Insured, Mr. Oldham, is an accountant and insolvency practitioner. He had taken out a professional indemnity insurance policy with QBE Insurance ("QBE") which was subject to the minimum indemnity requirements of the Institute of Chartered Accountants in England and Wales ("ICAEW"). Mr. Oldham was sued by the liquidators of a company for which he had acted as a joint administrator.

QBE declined cover on the claim on the ground of late notification, and Mr. Oldham disputed this. This dispute was referred to arbitration pursuant to the terms of the policy. Pending the coverage dispute between Mr. Oldham and QBE, QBE accepted that it had to fund the defence costs by virtue of Clause 10.2 of the policy, which provides that if there is a coverage dispute between the insured and the insurer, the insurer will advance defence costs "pending resolution" of such dispute. QBE advanced over £40,000 in defence costs.

In the arbitration, the arbitrator found in favour of QBE, and determined that Mr. Oldham’s claim was not covered under the policy and that QBE should be entitled to the reimbursement of the defence costs. He also ordered Mr. Oldham to pay the costs of the arbitration, which were significant.

The Court took as a starting point the fact that the insurer is only liable for defence costs if there is coverage under the policy. It held that Mr. Oldham's arguments would alter the meaning of Clause 10.2, such that defence costs would be covered for ineligible claims provided they were incurred prior to the resolution of the coverage dispute. This would be an "unbusiness-like consequence". The Court similarly rejected the argument that the lack of an express claw-back provision prevented QBE from claiming reimbursement. It held that it was clear that the payment of defence costs was provisional and subject to reimbursement. If there is no coverage, then the defence costs do not fall within the scope of what is indemnified, and have to be repaid.

Mr. Oldham was successful in one respect, which was that the arbitrator's decision to award the costs of the arbitration against him was remitted back to the arbitrator for reconsideration. The Court held that Mr. Oldham had not been given a fair opportunity to advance an argument that might have convinced the arbitrator to rule differently. Mr. Oldham challenged the arbitration award in the High Court on grounds that QBE did not have a right to repayment as this was not expressly provided for under the policy and that the interpretation of "pending resolution" under clause 10.2 should mean "until resolution".

Decision

The High Court held that QBE was entitled to the reimbursement of the defence costs. It was necessary for the Court to consider the minimum indemnity requirement, which took precedence over the policy terms. The Court also observed that where wording is drafted by a regulator setting minimum terms (as is often the case with mandatory professional insurance), there will be a balance between protecting the public versus the cost and availability of cover.

Comment

This decision confirms that, even in the absence of an express right to seek reimbursement of defence costs following a determination that the claim is not covered, an insurer will be able to be reimbursed. The case turns to some extent on the specific wording of the policy in question, but this kind of wording is not unusual in professional indemnity policies. Of course, it is preferable for insurers to include an express claw-back provision in the policy. Insurers should also consider including in their initial coverage letter a statement to the effect that defence costs are subject to coverage being confirmed, and that any defence costs paid in advance may have to be repaid.

This case also illustrates the difficulties that insureds can face when dealing with a coverage dispute whilst defending a claim. QBE's costs of the arbitration (which the arbitrator ordered Mr. Oldham to pay) were greatly in excess of the defence costs that were in issue.

 

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; intellectual property; 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; P Yeung, Partner
31 May 2018

 

ILO With great power comes great responsibility

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