LegCo Paper No. CB(1) 2028/95-96
(These minutes have been seen by the Administration)
Ref : CB1/BC/11/95/2

Bills Committee on Estate Agents Bill

Minutes of Meeting
held on Wednesday, 5 June 1996 at 8:30 am
in Conference Room A of the Legislative Council Building

Members Present :

    Hon Andrew CHENG Kar-foo (Chairman)
    Hon Mrs Selina CHOW, OBE, JP
    Hon Ronald ARCULLI, OBE, JP
    Hon LEE Wing-tat
    Hon CHAN Yuen-han
    Dr Hon LAW Cheung-kwok
    Hon NGAN Kam-chuen

Members Absent :

    Hon Edward S T HO, OBE, JP
    Hon Albert CHAN Wai-yip
    Hon LI Wah-ming
    Hon James TO Kun-sun
    Hon CHAN Kam-lam

Public Officers Attending :

Mr William SHIU
Principal Assistant Secretary for Housing
Miss Eva TO
Assistant Secretary for Housing
Ms Sherman CHAN
Senior Assistant Law Draftsman (Atg)

Staff in Attendance :

Mrs Vivian KAM
Chief Assistant Secretary (1)2
Mr Stephen LAM
Assistant Legal Adviser 4
Miss Becky YU
Senior Assistant Secretary (1)3

I. The Meeting

The Chairman informed members of the invitation from the Property Agencies Association Ltd. for members of the Bills Committee to join the Association in a study tour to Singapore from 11 to 15 June 1996 on the local property market and government control systems. As Members were unable to join the study tour since meetings had been scheduled during this period, the Clerk was requested to thank the Association for the invitation and to ask for a report on the findings for members’ reference.

(Post meeting note: A letter to the Association was issued on 5 June 1996.)

2. The Chairman then referred members to documents circulated vide LegCo Paper No. CB(1) 1511/95-96 which included a list of observations made by members so far on the Bill and the Administration’s response to some major issues raised in previous meetings. Members agreed to discuss the Administration’s response upon conclusion of the clause-by-clause examination.

Clause 34. Tribunal proceedings, etc.

3. Members considered it necessary to specify in sub-clause 34(1)(i) the party who should be responsible for the costs of the tribunal. They sought elaboration on the type of persons, referred to in sub-clause 34(2), who could be present at proceedings apart from counsel or solicitors and asked whether directors of a company could participate in proceedings. Members also considered that reference should be made of the background of persons to be present at proceedings.

4. In response, Mr William SHIU said that reference had been made in a number of provisions in the Bill relating to a tribunal’s power to award costs. The Administration was prepared to examine the merit of standardizing these provisions to ensure consistency. On the type of persons to be present at proceedings, Mr SHIU emphasized that the intention of the provision was to provide for flexibility for the tribunal to accept other suitable persons to be present at these proceedings. These persons could be accountants who were appointed as representatives to either party in the proceedings. In accordance with sub-clause 34(2), directors of companies could participate in the proceedings. Miss Eva TO supplemented that the presence of such other persons would be subject to the approval of the tribunal. As regards the background of such persons, Mr SHIU advised that this would be determined by the Estate Agents Authority (EAA) taking into account the nature and type of subject matters likely to be determined by a tribunal.

Clause 35. Inquiry proceedings

5. Members questioned the rationale for empowering the EAA, a committee or other persons conducting the inquiry, to admit or exclude the public or any member of the public from the inquiry as provided for under sub-clause 35(1)(c). They also sought clarification on the circumstances under which sub-clause 35(1)(c) should be invoked and on whether hearings or inquiry would be conducted in public. Mr SHIU advised that generally speaking, a tribunal should have the power to allow or prohibit persons in a hearing to ensure maintenance of order in proceedings. A person who misbehaved or disturbed the hearing could be excluded from the proceedings. On questions concerning the conduct of closed hearings and the circumstances under which sub-clause 35(1)(c) should be invoked, Mr SHIU said that this would be determined by the EAA taking into account practices in other regulatory bodies. Ms Sherman CHAN supplemented that the power of a tribunal to prohibit the presence of certain persons from proceedings was not uncommon in other legislation. She quoted examples of provisions which prohibited the presence of the media in certain tribunals. Ms CHAN said that the Administration had adopted a moderate approach in this respect and confirmed that reference had been made to the Bill of Rights Ordinance.

Clause 36. Contractual or other liability unaffected by suspension, etc. of licences

6. Members queried the need for this clause given that the question of liability should already have been covered under the common law. Mr SHIU acknowledged that while such a provision might not be common in other legislation, the intentions were to eliminate any possible grey areas and to protect the interests of all contracting parties to an estate agency agreement. The suspension, revocation or expiration of an estate agent’s licence would not affect the contractual liabilities of parties concerned in an agreement. Ms CHAN supplemented that it was a criminal offence to undertake estate agency work without a licence, and the provision made it clear that losses on the part of a vendor or purchaser as a result could be recovered through civil proceedings under the common law. Members doubted the need for inclusion of this clause having regard to the provisions under the common law and urged the Administration to examine the possible side-effect of the clause and consider deleting or re-phrasing it as appropriate. Mr SHIU undertook to consider members’ views.

Central Data Bank

7. Before commencing examination of Clause 37, the Chairman requested the Administration to update members on the Administration’s views on the suggestion for a Central Data Bank of property information. Mr SHIU advised that the Administration recognized the importance of public access to property-related information and that there were a number of channels through which property information could be obtained. These included the new infoline service to be introduced by the Rating and Valuation Department this summer where the public including estate agents could have access to information such as the date of completion and saleable area of a particular property; the Direct Access System launched by the Land Registry which enabled subscribers to conduct on-line searches of the land registry through computer terminals; and the microfilming and imaging work undertaken by the Buildings Department. The microfilming of all building plans might take three to four years. Mr SHIU was firmly of the view that the provision of essential property information was fundamental to the primary objective of the Bill and essential to the protection of consumers. The Administration acknowledged the need for improving public access to property information. It was the Government’s objective to centralize the provision of information in the long run.

8. Turning to the concern of the trade, Mr SHIU assured members that the Administration would have regard to views collated. The Administration’s intention to bring in the concept of "due diligence" and "reasonable care" so that estate agents who had taken all reasonable steps to comply with the requirements would not be unduly penalized was a step in this direction. Mr SHIU further advised that responses received on the Bill had been supportive of the need for estate agents to provide data on properties to clients. The Administration would consider implementing different provisions in the Bill by phases if necessary so long as this would not affect the standard of service and the efficient operation of the trade. The Administration would also consider suggestions for using disciplinary actions rather than criminal sanctions for minor breaches and cases of non-compliance due to negligence; breaches of services and cases of wilful deceit would still be subject to criminal sanctions.

9. While members supported in principle the requirements on provision of property information, they were concerned that estate agents might not be able to obtain the required materials due to the absence of an efficient information retrieval system. Some members cautioned that as outlined in the report produced by the Research and Library Services Division of the LegCo Secretariat, access to property information was not as easy as that envisaged by the Administration. Special consideration should also be given to facilitate access to property information in the New Territories where the only information available was the Area Lot Number. In this connection, the Administration was requested to provide examples of similar provisions in other legislation on information requirements such as in the case of the Insurance Companies Ordinance, and a checklist on the sources through which information on properties could be obtained, the time and costs required and the accuracy of information supplied. Mr SHIU undertook to provide the list as requested but advised that reference on information requirements in other legislation was not possible in view of the unique nature of this Bill.

10. On the suggestion for operational matters of estate agents to be excluded from the principal ordinance to allow flexibility, Mr SHIU re-iterated that since many complaints against malpractices of estate agents were related to operational issues, it was necessary for the Bill to set the parameters and for specific provisions to be included in the Bill for addressing such issues. He assured members that the timing for implementation of different provisions in the Bill could be phased out if circumstances so required. A member remarked that subsidiary legislation would be required if the Bill were to be implemented in phases.

11. In view of the non-exclusive nature of most agency relationship i.e. a vendor could ask several estate agents at the same time to advertise a property, members suggested that consideration be given for estate agents handling the same property to share the costs for obtaining the required information. Mr SHIU advised that there were no restrictions on the number of estate agents handling a particular property, and the important point was to ensure full disclosure of information to the clients concerned. As regards the envisaged charges for the infoline service referred to in paragraph 7 above, Mr SHIU advised that the general principle was to recoup the operating costs.

Clause 37. Information as regards properties, etc.

12. Members held different views on whether double agency should be allowed to continue. While some advocated separate representation for reasons of conflict of interests, others considered dual agency acceptable if both the vendors and the purchasers were able to obtain sufficient information. Mr SHIU advised that the dual agency system was a unique feature of estate agency work in Hong Kong. To allay members’ concern on possible misrepresentation of facts, measures were in place to require estate agents to disclose fully to their clients (the vendor/purchaser, or both) their interest in a property transaction as well as information on all offers made so that parties concerned could reach their own decisions based on available information. Such an approach was agreeable to both the Consumer Council and the Independent Commission Against Corruption which handled also complaints against malpractices of estate agents. Mr SHIU shared members’ view on the need to review the system after the Bill had been implemented, say in two years’ time, and undertook to set out in writing the envisaged impact of dual agency on the efficiency and cost-effectiveness of property transactions.

13. On members’ suggestion for making it a requirement for estate agents to inform potential clients that they could request an agent to act only for them and not for the other party, Mr SHIU advised that the EAA would be requested to issue guidelines to estate agents in this respect. He emphasized that dual agency would not be feasible in the event the vendor opted for separate representation.

14. Members sought clarification on whether sub-clause 37(1)(a) would apply to overseas properties, whether the obligations outlined in sub-clause 37(1)(a)(i) would be applicable in the case of verbal agreements, and whether persons could be authorised to sign written agreements. In reply, Ms CHAN confirmed that overseas properties were included in the application of the Bill. On the validity of verbal agreements, Miss TO said that Clauses 49 and 50 stipulated the requirement for written agreements which were essential for the protection of interests of all parties concerned including the estate agents. The Administration would step up publicity efforts to promote awareness in the importance of estate agency agreements in property transactions.

15. On the circumstances under which the word "may" used in sub-clause 37(2) should apply and the authority which would decide on such circumstances, Miss TO advised that the intention of sub-clause 37(2) was to set out guidelines but at the same time provide for the EAA to prescribe the type of information to be provided. The use of the word "may" provided flexibility and discretion in including information that was considered appropriate. As regards the authority, Ms CHAN explained that sub-clauses 37(1) and (2) should be read in conjunction; the term "prescribed" in sub-clause 37(1) referred to regulations to be prescribed under the Bill with the approval of the Secretary for Housing. As such, subsidiary legislation governing information to be provided would be made by the EAA and this would be subject to normal legislative procedures.

16. Members considered that measures should be in place to safeguard against unauthorized disclosure of information on properties by estate agents; they also wished to know whether the Bill would allow ‘cold calls’ as in the insurance trade. Ms CHAN advised that Clause 47 on Advertising prohibited the supply of misleading information. The Assistant Legal Adviser agreed that sub-clause 47(1)(b) stipulated that advertisements on a particular property could only be publicized with the prior consent of the vendor. In reply to a related question, Ms CHAN advised that the type of sanctions in relation to Clause 47 would be decided by the EAA as deemed appropriate through the introduction of subsidiary legislation.

II. Date of Next Meeting

17. The Chairman reminded members that the next meeting had been scheduled for Tuesday, 11 June 1996, while the meeting on 12 June 1996 had been cancelled owing to the need to make way for a joint meeting of the Housing and Planning, Lands and Works Panels. Members agreed to hold two additional meetings on:

    - Wednesday, 19 June 1996 at 8:30 am; and

    - Tuesday, 25 June 1996 at 4:30 pm.

18. There being no other business, the meeting closed at 10:40 am.

LegCo Secretariat
4 September 1996

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