Internal discussion
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Members noted that the Clerk had prepared, as agreed at the last meeting, a tentative workplan of the Bills Committee (issued vide LegCO Paper No. HB 672/95-96). In this connection, Mrs Selina CHOW queried the appropriateness for the Bills Committee to proceed into detailed discussion of the Bill. In the light that the wide scope of the Bill might lead to over-regulation of the trade, she suggested Members to discuss the principles first and to consider whether some of the regulatory aspects should be included in the principal Ordinance or not. Messrs CHAN Kam-lam and Edward HO shared the view. They remarked that the scope of interference of the Bill might need to be limited.
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2. Messrs LEE Wing-tat and Albert CHAN held a different view. They pointed out that the main principle of the Bill for the need to regulate the trade had already been agreed and repeated arguments on the same point should be avoided. However, the Bills Committee could consider controversial issues before proceeding to detailed discussion of each clause. After deliberation, Members agreed that the Bills Committee should discuss important issues in the order as set out in para. 4 - para. 16 of the LegCo Brief with a view to reaching consensus on the general approach of the Bill for the Administration to respond. Members also agreed that representatives of the Administration could be invited to attend and to respond, if required, during the ensuing discussion of important issues among themselves.
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(Representatives of the Administration were invited to join the meeting.)
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Definition of estate agents
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3. Mr Ronald ARCULLI referred to para. 4 of the LegCo Brief which stated that property developers, and their staff selling their own properties would not be included in the definition of estate agents. He pointed out that the drafting might not achieve such a purpose. In addition, he asked the Administration to consider whether it was feasible technically to exclude property developers leasing out their own properties and subsidiary companies or separate companies of property developers to handle sale of properties on their behalf from the definition. The Chairman also asked the Administration to provide answer on whether staff of property developers would be covered by the Bill.
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4. Mr Albert CHAN asked the Administration to consider whether subsidiary companies of property developers handling sale of carparks or shopping arcades on their behalf should be included in the definition of estate agency work".
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5. Mr LEE Wing tat referred to the summary of submissions by clauses prepared by the Clerk (issued vide LegCo Paper No. HB 790/95-96) and suggested that the Administration should respond to the queries and concerns raised in the submissions. In this regard, Mr William SHIU remarked that the Administration might not be able to respond to every single point raised in the submissions. However, he undertook to prepare a written response on the Administrations stance in general.
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Licensing system
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6. Mrs Selina CHOW was of the view that although it was accepted that the trade should be regulated by licensing, the Bill had incorporated too many licensing details which should be prescribed by the Estate Agents Authority (EAA). She maintained that the Bill should only lay down a broad regulatory framework for the EAA to operate. In this regard, Mr Edward HO opined that similar registration requirements for professions had been incorporated in their principal Ordinances. Mr James TO shared the view. He pointed out that EAA had already been delegated the power to prescribe operational and licensing details by way of regulation. He further referred to clause 21(3) which only required the EAA to give regard to various factors in determination of a persons eligibility for a salespersons licence. Hence the EAA had already been given sufficient discretion. In this connection, Mr Ronald ARCULLI remarked that EAA could lay down additional conditions as well. The Chairman was also of the view that there should be guidelines in the principal Ordinance for EAA to follow. At Mr ARCULLIs suggestion, the Chairman asked the Administration to confirm whether EAA had all the powers in determining licensing requirements.
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7. Mr Ronald ARCULLI referred to clause 16(1)(b) and requested that clear procedures and transitional arrangement should be stipulated as to whether a person could accept employment as a salesperson before a salespersons licence had been granted.
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8. With reference to clause 21(2)(b)(ii), Mrs Selina CHOW remarked that EAA would be bound by the Bill to prescribe educational qualifications as a licensing requirement. However, Messrs Edward HO and James HO had a different view. In response, Assistant Legal Adviser 2 (ALA2) said that she tended to support Mrs CHOWs proposition. Mr LEE Wing-tat further asked whether EAA could prescribe no educational qualification in determining a persons eligibility if the Bill was enacted in its present form. In response to the Chairmans enquiry, ALA2 suggested and the Chairman agreed that the point would be considered after the Administration had responded to Mr LEEs question after the meeting.
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9. With reference to clause 27 regarding objections for granting a licence, Mr ARCULLI asked the Administration to explain whether there was any comparable provision in other legislations.
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Estate Agents Authority
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10. Mr ARCULLI referred to clause 6(2)(a) and queried whether EAA would need a licence if it involved in the sale and purchase of property on behalf of a third party. The Chairman asked the Administration to note such a query regarding the general powers of the Authority.
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11. Mrs Selina CHOW was of the view that EAA should not largely composed of representatives from the trade in the light that it was not a profession. Mr James TO shared the view. In this connection, Mrs CHOW further asked whether there was any safeguard to ensure that EAA would be operated openly. At the invitation of the Chairman, Mr William SHIU explained that the Bill would also amend the schedule of public body in the Prevention of Bribery Ordinance to include EAA as a public body. In addition, under Clause 10 of the Bill, Members of the EAA were required to disclose any of their interests which were relevant to the work of the Authority. Also, other provisions had been stipulated to ensure checks and balances such as the availability of appeals against the decision of EAA. However, Mrs CHOW maintained that the Administration should consider further enhancement.
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12. As regards the membership of EAA, Mr Edward HO referred to para. 3(1)(c)(ii)(B) of the Schedule to the Bill and queried that the drafting of the provision had not reflected clearly the categorisation of membership. He further pointed out that the phrase "or to be otherwise particularly suitable for appointment to membership of the Authority" might enable the Governor to appoint persons having no knowledge of estate agency work as persons of Category B. Such phrase should therefore be deleted from the provision so as to reflect the purpose of the drafting to the effect that one-third of its members would come from the trade, one-third from related professions and the remaining from the community. At the suggestion of ALA2, Members agreed that the Bills Committee would consider the proper drafting after the Administration had responded to their view. In this connection, Dr LAW Cheung-kwok asked whether the Administration would consider appointing "persons of Category A" by election in the trade. Mr William SHIU responded that it would be done by way of appointment which would be made on a personal basis. Although there were a number of trade associations in the estate agency field, their size of membership varied and each of these might not at present necessarily represent a full spectrum of the views from the trade. He remarked that it would be more appropriate to members of the EAA to serve as individuals instead of as representatives of the trade associations. The Administration would, as far as practicable, ensure that the appointments would result in a balanced mix of trade practitioners. In this connection, Dr LAW Cheung-kwok and Mrs Selina CHOW urged the Administration to ensure that interests of the small estate agents would be represented in the EAA. Mr James TO opined that the Secretary for Housing could give an undertaking to ensure that estate agents of different sizes would be evenly represented in the EAA when the Bill resumed its Second Reading debate. However, Mrs Selina CHOW maintained that such requirement could be stipulated in the provision. The Chairman asked the Administration to note Members views and suggested to consider the point during the clause by clause examination.
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13. With reference to clause 7 of the Bill, Mr LEE Wing-tat asked whether there was any defined relationship between the Secretary for Housing and the EAA. In response, Mr William SHIU said that the EAA could only make regulations with the approval of the Secretary. The Secretary had a responsibility to ensure the work of the EAA was in line with the original objective of setting up the Authority. The relevant clause had enabled that the Secretary might, if he considered the public interest so required, give directions to the Authority as to the performance of the Authoritys functions. If necessary, the Secretary might give directions to the EAA for it to comply with as soon as practicable. Mr James TO remarked that it was unusual for the Secretary to possess such power. However, Mr SHIU stressed that the EAA, being self-financing, had its own executive functions to perform. Unless public interest was affected or the EAA acted contrary to its principal functions, it was not necessary for the Secretary to give such directions. In this connection, the Chairman asked the Administration to respond to the view of the Law Society of Hong Kong that the Bill had not given sufficient degree of independence to the EAA.
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14. Members noted that the Administration would seek the approval of the Finance Committee of the LegCo of a loan of $40M for the Authority to cover the expenses of its initial operation. Mr Ronald ARCULLI then asked and Mr SHIU agreed to explain why the EAA needed $40M and the establishment of 23 staff for its operation. In light of the fact that the EAA would finance its operation through licence fees, Mrs Selina CHOW also asked whether the Bill should prescribe clearly how the licence fees would be determined in the future. The Administration undertook to revert to Members later.
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Duties of estate agents
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15. Mr Ronald ARCULLI asked whether the duty of estate agents to supply specified information about a property to a client applied to any property including buildings not yet completed or land. Mr William SHIU pointed out that the definition of property had been stated in Clause 2 and the defined ambit included land and uncompleted buildings. However, he would take account of Members views and consider if there was a need to include greater details in the relevant Clause. Mrs Selina CHOW also queried whether supply of such information which was related to trade operation should be stipulated in the principal Ordinance. In this regard, Mr James TO held the view that it was not unusual for fundamental operational principles to be included in the principal Ordinance. As an alternative, he suggested that such points could be prescribed in the Schedule or as code of practice. Mr TO further stressed that the six items of information required under the Bill was basic and essential in relation to property transactions. He therefore insisted that the supply of such information should be a statutory requirement so as to protect consumers interest. However, Mrs CHOW remarked that a gradual approach should be adopted in view of the practical difficulties in obtaining all the information.
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16. Dr LAW Cheung-kwok acknowledged the need to protect consumers interest and the importance of not affecting the trade adversely at the same time. He tended to support a more flexible and gradual approach in requiring supply of information specified under the Bill.
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17. As regards availability of information, the Chairman remarked that the Administration had to provide more details such as completion date of the central data bank in order to justify the statutory requirement for an estate agent to supply the information required under the Bill.
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18. Mr Ronald ARCULLI referred to clause 37(1)(a)(v) and queried why an estate agent had to inform a vendor client of each offer regarding the property concerned only prior to the conclusion of a contract to dispose that property. He opined that this kind of operational details should not be included in the Bill.
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19. In view of the fact that a vendor would appoint more than one estate agent to sell his property, Mr Ronald ARCULLI further asked whether the Administration had considered the financial implication to require the supply of the information specified under the Bill. Mr William SHIU agreed to respond later.
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20. As regards the accountants reports required in clause 38 of the Bill, the Chairman referred the Administration to some deputations views that the accountants report should be submitted within a period of 6 months instead of 3 months and it should report on clients accounts only. In response, Ms Eva TO explained that the requirement was to ensure every licensed estate agents to keep a proper and accurate record of accounts. She further drew Members attention to clause 38(4) which delegated the authority to the EAA in prescribing the information to be contained in an accountants report and in granting exemption from such requirement.
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21. Mrs Selina CHOW held the view that no authority should be empowered to demand provision of private companys accounts. Mr James TO shared the view that report on clients accounts would be sufficient to protect consumers interest. The Administration was asked to explain the justification for such a report on the companys accounts. In view of the fact that the EAA possessed considerable powers and yet its members were not appointed by election, the Chairman asked the Administration to explain why it was proper to give such powers to the EAA.
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22. Mrs Selina CHOW further referred to the requirement for an estate agent to keep any clients money in a separate bank account and asked the Administration whether it could waive the need for him to submit report on his own bank account. In a related issue, Mr Ronald ARCULLI queried whether EAA would have sufficient manpower to scrutinise all accountants reports from about 4,800 estate agents. He was of the view that it might be more appropriate for the EAA which possessed investigative power to request such a report only if necessary. Mr William SHIU undertook to consider Members views in this respect.
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23. Mr Ronald ARCULLI referred to clause 39(3) which empowered the EAA to pass information about a licensed estate agents accounts to the Crown Prosecutor and opined that a confidentiality clause should be needed. Mr James TO agreed with Mrs Selina CHOWs view that the provision should only be invoked under very limited circumstances. The Administration was asked to note Members concerns.
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24. Mrs Selina CHOW also suggested and Members agreed that the Bills Committee should discuss the concerns expressed by the trade regarding investigations and discipline (Part IV of the Bill).
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Dates of subsequent meetings
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25. The following two meetings were scheduled to discuss remaining issues in the Legislative Council Brief and the Administrations responses :
- Monday, 18 March 1996 at 8:30 a.m.; and
- Tuesday, 19 March 1996 at 4:30 p.m..
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26. There being no other business, the meeting ended at 6:35 p.m..
LegCo Secretariat
30 April 1996
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Hon Andrew CHENG Kar-foo (Chairman)
