2. The Chairman informed members that the Administrations response to concerns raised at the informal meeting on 18 November 1996 had been tabled at the meeting. Members then proceeded with examining the major issues raised at the meetings on 13 and 18 November 1996.

Research report by the Legislative Council (LegCo) Research and Library Services Division (RLS)

3. In response to the Chairman, the Assistant Secretary for Housing (AS for H) reiterated that the Administration had no intention of challenging the results of the research report, but it did request a meeting with RLS to clarify some findings of the survey, albeit not in writing. The Deputy Registrar Manager (DRM) added that he approached Ms Vicky LEE of RLS upon receipt of the research report on 16 January 1996 with a view to obtaining samples of problematic cases which required longer searching time. This was for the purpose of finding out whether the Land Registry (LR) could take necessary action to improve the service. Miss Eva LIU explained that as RLS had signed an undertaking with the Census and Statistics Department for not disclosing data relating to other parties, RLS was not in a position to accede to the request. Notwithstanding this, RLS had responded to more general requests put forward by LR on 5 February 1996. The Chairman concluded that the matter had been clarified and that further discussions on the subject would not be required.

Provision of property information (Clause 37)

4. AS for H advised that in response to concerns raised by representatives of the trade at the informal meeting on 18 November 1996, the Administration had adopted a three-pronged approach to allay the trades worries. She summarized that there were basically three areas of concerns. First, the exact types of property information which would be required under clause 37(2), secondly, the avenues through which this information could be obtained, and finally, the liability in the event of non-availability of such information. She elaborated the three-pronged approach as follows:

the introduction of a new infoline service on saleable areas and years of completion of domestic properties by the Rating and Valuation Department (RVD) in early 1997 which would reduce significantly the need to make referrals to the Buildings Department (BD) for similar information;
the bringing in of the concept of "due diligence" so that estate agents who had take reasonable steps to collate and inform clients to the best of their knowledge would not be unduly penalized, even in the event of non-availability of information; and
the decriminalization of breaches relating to provision of information.

Furthermore, the Administration would also consider refining the scope of clause 37(2) along the following lines so as to remove possible ambiguities:

current ownership and incumbrances in respect of properties as shown in prescribed records;
where applicable, saleable floor areas as calculated or expressed or shown in a prescribed manner;
where applicable, years of completion of properties as recorded in Occupations Permits (OPs) or other prescribed documents;
user restrictions as stated in prescribed documents;
unexpired terms of lease and right of renewal as shown in relevant Crown or other lease; and
terms of lease of properties if lease were to be granted.

The Estate Agents Authority (EAA) would have the power to prescribe under clause 37 the exact types of information required, and where such information would be normally available. AS for H trusted that the above proposals would go a long way in alleviating the worries of the trade without compromising the principle of customer protection. In reply to a related question, AS for H advised that the Bill had provided flexibility for the EAA to prescribe by way of subsidiary legislation the types of information required for different properties.

5. Members noted from the meeting on 13 November 1996 that 70% of property data required further searches in BD, and considered a need for the Administration to resolve the problem. AS for H emphasized that it was not necessary for referrals to be made to BD for information on saleable floor areas and years of completion of properties as these were mostly available from the current automated system in LR or the infoline service to be introduced by RVD in early 1997 which would cover all classes of properties in Hong Kong including residential, commercial, and industrial buildings as well as some village type houses. While information on some properties such as pre-war buildings might not be so readily available, this should not pose a significant problem in view of the limited number of transactions involving these properties. Furthermore, it was proposed that in making the relevant regulations, estate agents would be deemed to have exercised due diligence if they had conducted searches in LR and RVD in an attempt to obtain the information as prescribed under clause 37. AS for H added that sales brochures would serve as a useful source of information for newly completed properties awaiting rates assessments.

6. While appreciating the progress in facilitating accessibility to information on saleable areas and dates of completion of properties, members remained concerned about information on user restrictions prescribed in OPs given the fact that over 60% of such data required further searches at BD. They sought clarification on measures which would be in place to tackle the problem. The Chief Building Surveyor (CBS) advised that efforts had been made to improve public access to property information held by BD including building plans (BPs) and OPs. Since March 1996, two designated staff members had been assigned to handle appointments for viewing of BPs; this had resulted in a reduction of average waiting time from six to five weeks despite an upsurge in the number of applications from around 500 in September 1995 to more than 800 nowadays. Further reduction would be possible after all BPs had been microfilmed. Moreover, an Electronic Filing System (EFS) developed by the Management Services Agency which converted OPs into electronic images had been implemented to facilitate retrieval. The average processing time for OPs would take seven to 10 days due to the shortage in manpower to verify data in applications and check on files. To improve the situation, BD was working with the Information Technology Services Department to develop a more advanced building information system with a view to further reducing the processing time. Members urged BD to expedite the upgrading and microfilming without delay as cost incurred could be recouped through charging of fees. CBS took note of members concern but advised that related funding requests would be subject to approval within the Administration and be considered alongside with other competing priorities.

7. AS for H stressed that referrals to BD for information on user restrictions on OPs would only be required if such information was not available in LR. One way to tackle the problem would be to allow estate agents to provide such information at a later stage e.g. before signing of preliminary Agreements for Sale and Purchase (ASP) as suggested by some members of the trade at the meeting on 18 November 1996. Consideration could also be given to phasing out implementation of the provisions in the Bill, for example, to start first with residential properties. In the light of the Administrations response, the Chairman suggested confining the scope of user restrictions to those stated in Crown Lease rather than OPs. Moreover, it would be the responsibility of solicitors in verifying information contained in Crown Lease upon signing of ASP. AS for H welcomed the suggestion but advised that there might be cases where referrals to OPs were necessary. In reply to a related question, AS for H advised that it was unnecessary for information as regards user restrictions to be spelt out in advertisements.

8. In referring to paragraph 1(b) of the information paper, some members expressed reservations at the provision for estate agents to rely on information provided by another party such as vendors as this could vary from case to case. They enquired if prospective purchasers could institute legal proceedings against estate agents in the event of misrepresentation on the part of vendors. AS for H emphasized that the Bill would not create additional liability for estate agents to verify information provided by vendors and that misrepresentation would be covered under the common law. In reply to a related question, AS for H advised that clause 37(2)(g) had provided flexibility for EAA to prescribe the manner in which vendor statements should be made. In response to a member for devising a standard form for use by vendors, AS for H replied that EAA had the power to prescribe the form.

Central Data Bank on property information

9. In response to members, AS for H said that while the Administration recognized the merits of a Central Data Bank on property information, the project would require collation of a significant volume of data integration as well as alignment of incompatible data and systems. She emphasized that it remained the Administrations objective to centralize property information in the long term but a Central Data Bank was not a pre-requisite requirement of the Bill. AS for H reiterated that there were a number of channels through which property information required under clause 37 could be obtained. These included:

the new infoline line service to be introduced by RVD;
the Direct Access System (DAS) in LR which would enable subscribers to conduct on-line searches of all Urban and New Territories (NT) Land Registers;
the imaging of land documents by the Document Imaging System so that DAS subscribers could receive copies of the imaged land documents through facsimile machines installed at their offices; and
and the microfilming of all building plans by BD.

DRM added that such efforts as centralizing search offices in Admiralty on the same floor, setting up an information counter to help fill out search tickets and forms, and making available bilingual forms had been made by LR to facilitate counter searches and improve access to information. AS for H believed that these measures, together with the incorporation of the concept of "due diligence", and the proposed decriminalization of breaches relating to provision of information should be able to address the concerns of the trade. While appreciating the progress on accessibility of property information, the Chairman expressed worries that the Administration might shelve the establishment of the Central Data Bank on property information after enactment of the Bill.

Drafting of the Bill

10. As to whether the Administration would consider re-drafting some of the provisions of the Bill, the Senior Assistant Law Draftsman (Acting) (SALD (Atg)) explained that drastic changes would not be desirable after gazettal of the Bill unless there were major policy changes. She conceded that certain refinements such as a clear definition for floor area might be required possibly in the subsidiary legislation to eliminate possible grey areas. The usual practice would be for the principal ordinance to set out broader issues leaving the details to be covered by subsidiary legislation. Members generally supported the exclusion of operational details from the Bill and enquired about the actual arrangements. AS for H advised that if the Bill were enacted, the commencement dates of different provisions in the Bill could be specified by way of gazettal in a commencement notice and the Administration hoped to be able to set up the EAA within three months after the passage of the Bill.

Matters arising from the meeting on 13 November 1996

(LegCo Paper No. CB(1) 379/96-97(02)

11. While acknowledging Hon Andrew CHENG Kar-foos concern expressed previously on the provisions under clause 39(3) for EAA to disclose information about estate agents accounts to the Crown Prosecutor for use in any prosecution, AS for H emphasized that the intention for making certain information available to the relevant authority was for assisting in the investigation of commission of possible offences. The Administration would discuss further with the Attorney Generals Chambers (AGC) in this respect. The Chairman remained of the view that the provisions under clause 39(3) were too broad, and that the Administration should consider re-defining the clause taking into account similar provisions in other legislation.

12. As regards the deletion of the term " fair, open and honest" from clause 37, SALD (Atg) advised that this had been proposed by the Legal Policy Division of AGC on the basis that the conceptual requirement of acting in a "fair, open and honest" manner was too vague to make this a satisfactory statutory duty, and that most of the salient elements constituting the term had been spelt out in clause 37(1). AS for H supplemented that the Administration had an open mind on the proposed deletion and would consider reinstating the term in the Bill if clearer guidelines or definitions could be devised for "fair, open and honest". The Chairman emphasized that as the targets of clauses 37(1) and 37(4) were different, the former might not be able to provide the necessary protection for clients in the case of dual agency. She considered it undesirable to remove the requirement for estate agents to conduct transactions in a "fair, open and honest" manner unless a safeguard particularly for dual representation could be devised. AS for H assured members that EAA could, under clause 37 and 57, draw up clear practising guidelines on the manner in which dual agency should be conducted.

13. At members request, AS for H undertook to provide a full list of criminal and disciplinary sanctions in relation to all elements under clauses 37 and 56 in due course.

(Post-meeting note: The list of criminal and disciplinary sanctions relating to the Bill had been circulated vide CB(1) 484/96-97.)

Issues requiring further discussions

(LegCo Paper No. CB(1) 379/96-97(05)

Clause 7. Directions by Secretary

14. While acknowledging that the Secretary for Housing could only give policy directions to EAA under special circumstances, Hon LEE Wing-tat considered a need for the Administration to inform LegCo when making these directions and the rationale behind so that the latter could monitor the operation of EAA. Hon CHAN Kam-lam however expressed reservations over the proposal as this was unprecedented in other legislation. Dr Hon LAW Cheung-kwok remarked that apart from policy issues raised by the Administration, it was not uncommon for LegCo to discuss matters of public concern, such as practising guidelines issued to banking institutions by the Hong Kong Monetary Authority. AS for H undertook to consider members views taking into account similar provisions in other legislation.

II Any other business

15. The next two meetings would be held on:

- Tuesday, 10 December 1996, at 4:30 pm; and

- Tuesday, 17 December 1996, at 4:30 pm.

(Post-meeting note: The meeting on Tuesday, 10 December 1996, at 4:30 pm was subsequently advanced to 8:30 am in order not to clash with the meeting of the Bills Committee on Legal Services Legislation (Miscellaneous Amendments) Bill 1996.)

16. There being no other business, the meeting closed at 6:30 pm.

Legislative Council Secretariat
21 February 1997

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