LCQ8: Third party risks insurance

Following is a question by the Hon Raymond Ho and a written reply by the Secretary for Home Affairs, Dr Patrick Ho, in the Legislative Council today (November 23):

Question:

Accidents involving fallen aluminium windows or air conditioners had occurred frequently in Hong Kong recently, and some even resulted in deaths and injuries. In this connection, will the Government inform this Council:

(a) whether there are provisions in the existing legislation stipulating that property owners are liable criminally and in damages for the deaths and injuries caused by the installations of their properties;

(b) if there are such provisions, whether the victims concerned may in the end receive no compensation if the property owners are unable to make the compensation payment and have not taken out any relevant accident insurance; and

(c) whether the authorities will consider setting up a fund to compensate those victims who cannot receive any compensation payment in the above circumstances?

Reply:

Madam President,

My reply to the three-part question is as follows -

(a) Allowing the drop of objects from buildings is a criminal offence under the Summary Offences Ordinance (Cap.228). Section 4B(1) of the Ordinance provides that if anything is dropped or allowed to fall from any building to the danger or injury of any person in or near a public place, the person who drops that thing or allows it to fall commits an offence and is liable to a fine of $10,000 and imprisonment for six months.

Section 40(2B) of the Buildings Ordinance (Cap.123) further provides that any person directly concerned with any form of building works who causes injury to any person or damage to any property shall be guilty of an offence and shall be liable on conviction to a fine of $1,000,000 and to imprisonment for three years. Those who have suffered loss and damage caused by the drop of objects from a building may claim compensation for property damage, bodily injury or death.

This is a question of civil liability to be determined by the court taking into account various factors, including but not limited to whether the common parts of a building or a unit of which an owner has exclusive possession is involved, whether the drop of objects is caused by an individual owner, an owners' corporation (OC) or a contractor, whether the person claiming the compensation and any other person (other than the owners) has contributed to the accident, and any other factors which the court considers relevant.

(b) The Government strongly encourages property owners and OCs to procure third party risks insurance. The Building Management (Amendment) Ordinance 2000 introduced a new section in the BMO (section 28) which provides that all OCs shall procure and keep in force in relation to the common parts of the building a policy of third party risks insurance. This section of the BMO has yet to come into operation. A draft Building Management (Third Party Risks Insurance) Regulation 2005 which sets out the implementation details has been drawn up and submitted to the Legislative Council together with the Building Management (Amendment) Bill 2005. Once the Building Management (Amendment) Bill 2005 is enacted, we will refer the draft Building Management (Third Party Risks Insurance) Regulation 2005 back to the Chief Executive in Council for approval of its enactment.

In the case where the court has ruled that a property owner is liable for the compensation, then the owner will have to pay the amount on his own. Where the court has ruled that the OC is or all the owners are liable, then the owners will have to contribute to the amount in accordance with the provisions in the deed of mutual covenant (DMC) of the building. If there is no DMC, or if the relevant DMC contains no provision determining an owner's shares, then an owner's share of contribution shall be determined in the proportion which his undivided share in the building bears to the total manner of shares into which the building is divided. Whether the compensation amount will be covered by the insurance policy (if any) will depend on the terms and coverage of the insurance policy.

Where the individual owner or the OC is not covered by any third party risks insurance policy or that the policy amount is not sufficient to cover the judgement debt, the owner(s) will have to be wholly responsible for settling the judgement debt or to contribute to the shortfall, as the case may be.

(c) Management and maintenance of buildings is the responsibility of property owners. It is also squarely their responsibilities if the court rules that any owners are liable for any damages/ compensation to be awarded to third parties. We do not consider it appropriate to use public funds to assist the private property owners in settling such judgement debts. Neither do we consider it fair if a fund were to be set up with contribution from all property owners in Hong Kong so as to provide a buffer for those property owners who have not properly managed and maintained their buildings, thus causing accidents resulting in bodily injuries or deaths of third parties.

November 23, 2005