Government Grant Interpretation – Liability for Slope Maintenance BA v Appeal Tribunal (Buildings), Court of Appeal 11 August 2017 CACV 229/2016 Summary The Court of Appeal allowed an appeal against the quashing by the High Court (on judicial review) of a decision of the Building Appeal Tribunal as to the scope of a land grant obligation to construct and maintain a road. The obligation did not extend to the maintenance of slopes supporting the road. The case highlights the need in both Government and other forms of lease for specific drafting to cover existing works which are to be “taken over” by a new granteeRead More →

Division of a single demise into separate tenements Impact on major landlords and tenants in Hong Kong Proper applicability to Hong Kong?      Woolway v Mazars [2015] UKSC 53 (UK Supreme Court) Introduction In 2015 the Supreme Court of the United Kingdom held that non-contiguous floors occupied in the same building by the same business, whether or not held under the same lease, should be treated separately for rating purposes. This was a decision stemming from the Rating Act in England and Wales, a statute which differs materially from Hong Kong’s Rating Ordinance. There has been some suggestion from the surveying profession that, following this decision,Read More →

Introduction to Hong Kong SAR Real Estate System Fundamentals of Land Holdings, Ownership and Use Land Holdings and Registration Systems Land holdings All land in Hong Kong is owned by the People’s Republic of China as State property and is managed by the Government of the Hong Kong Special Administrative Region (Government) under the Basic Law of Hong Kong. Land identified as suitable for private development is sold by the Government through public tender.  Government can make land available through direct grant although this is only in limited circumstances for special purposes and subject to approval by the Executive Council. The right to develop, occupyRead More →

Implied covenant of quiet enjoyment and non-derogation from grant Overseas Union Enterprise Ltd v Three Sixty Degree PTE Ltd [2013] SGHC 71 Summary A tenant failed in its bid to rely on implied covenants of quiet enjoyment and non-derogation from grant when it could not obtain a fire safety certificate required for its operations. The case highlights risks for tenants: Failing to undertake sufficient due diligence. Relying on implied covenants rather than negotiating express provisions. Accepting the exclusion of warranties. Facts Overseas Union Enterprise (OUE) leased to Three Sixty Degree PTE (Three Sixty) the 39th floor of a wing of the Mandarin Orchard, Singapore (Property)Read More →

Overview of Hong Kong Leasing Law and Practice (Commercial Premises) Introduction This Memorandum contains an overview of the law relating to leasing in Hong Kong, together with some comments on leasing practice and typical clauses/amendments found in leases in Hong Kong. It is written from the perspective of a tenant of commercial premises. Landlord’s land interest All land in Hong Kong is owned by the state of the People’s Republic of China and is managed by the Government of the Hong Kong Special Administrative Region pursuant to the Basic Law of Hong Kong. The landlord will usually hold the land under a lease from theRead More →

Hong Kong Land Supply and Entitlement Issues Greenfield Sites, Converted Industrial Buildings and Rock Cavern Developments Introduction The Government has recognised the vital role of the data centre industry in Hong Kong and has over the past few years introduced a number of policy changes aimed at facilitating the development of data centres.   This paper considers some of the issues around data centre development and the ongoing challenges for the industry.  Following a brief overview of Hong Kong’s development system, we discuss potential greenfield sites, existing industrial sites, Hong Kong Science and Technology Park sites and issues around rock cavern development. Background to development controlRead More →

Graded Buildings and the Antiquities and Monuments Ordinance In 1976 the Antiquities Advisory Board (AAB) was established with a view to preserve the archaeological and built heritage of Hong Kong and to promote awareness and appreciation of its cultural legacy. Between 1996 to 2000, a territory wide survey of buildings (mainly built before 1950) was carried out with some 8,800 buildings being recorded.  It was not until 2009, that the AAB carried out a more in-depth assessment of 1,444 of those buildings, the result of which led to 955 buildings being catergorised as follows: (a)     Grade 1 – Buildings of outstanding merit ‑ every effort should beRead More →

Variation of Leases and Discharge of Guarantor AVC Property Development Co Ltd v Joyful Grace Trading Ltd, Court of Appeal [2017] HKCU 1515 Summary A landlord succeeded in overturning on appeal the finding of the High Court that a lease guarantee had been discharged by a variation of the lease. The case highlights the risk for landlords in agreeing a variation of a lease without consent from a guarantor. Facts This note is only concerned with the guarantor’s obligations.  The relevant facts of the case are: AVC Property Development Co Ltd, a landlord, had rented a shop in Wanchai to a tenant, the 1st defendant. ARead More →

Contractual Real Estate Issues – Notes for End Users Introduction Companies are increasingly moving their data centre requirements offsite. Benefits include more efficient use of office space and cost savings in the form of cheaper rents for non-office space, which can be located outside of the main business districts; economies of scale through the sharing of power and cooling; and greater operational security through the provision of diverse power and cabling routes to the data centre, and extensive on-site security. There are however risks which need to be managed in order to ensure continuity of service and data security. This paper discusses some of theRead More →

Registration of Leases for 3 Years or Less (Risks of Under-Value Rents) Option Invalid for Uncertainty Registration of Options to Renew and Exercise Notices Tse Siu Hoi v Lee Dick Gold and Jewellery Ltd, Lands Tribunal [2015] HKCU 2007 Summary An unclear “option to renew” in a tenancy agreement was held to be invalid.  Further, neither the option nor its exercise had been registered and the rent was at less than the market rent. A purchaser from the original landlord was not bound by it and acceptance of rent after the end of the term did not change this. The case highlights: The risk for aRead More →