LegCo Paper No. CB(2)1691/96-97
Ref : CB2/BC/47/95

Minutes of the Twelve Meeting of the Bills Committee
on the Legal Services Legislation (Miscellaneous Amendments) Bill 1996

held on Tuesday, 4 March 1997 at 4:30 pm
in Conference Room A of the Legislative Council Building

Members Present :

    Hon Fred LI Wah-ming (Chairman)
    Hon Ronald ARCULLI, OBE, JP
    Dr Hon LEONG Che-hung, OBE, JP
    Hon Andrew CHENG Kar-foo
    Hon Albert HO Chun-yan
    Hon IP Kwok-him
    Hon Ambrose LAU Hon-chuen, JP
    Hon Bruce LIU Sing-lee
    Hon Margaret NG

Members Absent :

    Hon Mrs Selina CHOW, OBE, JP (Deputy Chairman)
    Hon Mrs Miriam LAU Kin-yee, OBE, JP
    Hon Emily LAU Wai-hing
    Dr Hon Philip WONG Yu-hong
    Hon Christine LOH Kung-wai
    Dr Hon LAW Cheung-kwok
    Hon Mrs Elizabeth WONG, CBE, ISO, JP
    Hon James TO Kun-sun
    Hon Howard YOUNG, JP

Attendance by Invitation:

The Law Society of Hong Kong
Mr Christopher CHAN
President
Mr Vincent LIANG
Vice-President
Mr Simon IP
Member
Mr Patrick MOSS
Secretary General

Clerk in Attendance :

Ms Doris CHAN
Chief Assistant Secretary (2)3

Staff in Attendance :

Mr LEE Yu-sung
Senior Assistant Legal Adviser
Miss Flora TAI
Senior Assistant Secretary (2)3



I.Meeting with the Law Society of Hong Kong

Members noted three submissions from the Law Society of Hong Kong (the Law Society) on the following issues which were tabled at the meeting and subsequently issued to absent members vide LegCo Paper No. CB(2) 1408/96-97:

  1. Multi-disciplinary practices and notaries;
  2. Invalidation of contractual provisions; and
  3. Costs Committee.

Multi-disciplinary practices and notaries

2. At the invitation of the Chairman, Mr Christopher CHAN briefed members on the submission on the multi-disciplinary practices (MDPs) and notaries. Mr Bruce LIU asked whether the Law Society would remain opposed to the proposal on the entitlement to notary public to enter into partnership with persons who were not notaries if membership requirement of the Hong Kong Society of Notaries was made mandatory. Mr CHAN said that the Law Society would not oppose the proposal if the Hong Kong Society of Notaries could regulate the behaviour of notaries. In response to members’ enquiries about the Law Society’s stance on multi-disciplinary practices, Mr CHAN explained that the Law Society had reservation on the proposal of MDPs because it was a new concept and there was no precedent from other jurisdictions to show that problems brought about by MDPs could be overcome satisfactorily. Although the Law Society agreed that implementation of MDPs would have advantages to the legal profession in the long term, its implementation at a pre-mature stage might prejudice public interest. LegCo therefore should not set a timetable for the Law Society to implement MDPs and flexibility should be provided so that the Law Society could decide at their own pace, having regard to overseas experience. The Law Society did not oppose the proposal in principle because of the convenience of "one-stop shopping" for a broad range of services. Yet, the Law Society would not consider it a great loss if the proposal was abandoned. In this connection, Mr Ronald ARCULLI said that he had strong reservation on the implementation of MDPs as it could enable large non-legal corporations to dominate the market of legal services. Mr IP Kwok-him also asked and Mr CHAN responded that the Law Society had consulted its members on the proposal at a meeting and their written views had also been invited. Mr CHAN pointed out that the Law Society’s stance on the matter was based on the feedback from its members.

Invalidation of contractual provisions

3. Mr Vincent LIANG briefed members on the submission on invalidation of contractual provisions. Mr LIANG cautioned that unnecessary legislative intervention in the United Kingdom (e.g. rent restriction and security of tenure) had brought undesirable side effects of discouraging investment and therefore adversely affected the public interest ultimately. The Law Society was unaware of any comparable legislation in other jurisdictions restricting the contractual right of parties as to who should bear the costs. The proposal would set a bad precedent for the Administration to legislate unnecessarily to interfere with an individual’s right to enter freely into contract. He explained that purchaser was encouraged to have joint representation for project conveyancing because he would only be required to pay 100% of the full scale but would have to pay 150% for separate representation. Under the Law Society’s recent recommendation on conveyancing fees to the Costs Committee, joint representation was still in the interests of the purchaser for project conveyancing as far as the amount of conveyancing fees was concerned. In response to the Chairman’s enquiry, Mr Christopher CHAN explained that according to the Law Society’s recent recommendation to the Costs Committee, the purchaser should pay 60% of the full scale and the vendor 40% of the full scale for separate representation, and where there was joint representation, the total fees were lower with only 80% being charged. Miss Margaret NG then asked and Mr CHAN explained that although purchaser might still be encouraged to use joint representation because of the lower costs, it was a matter of fairness that lawyer should not charge the same level of legal costs if a lesser amount of work was involved. At Mr Bruce LIU’s suggestion, Mr CHAN agreed to provide information comparing the legal costs to be borne by the purchaser for separate and joint representations in respect of project conveyancing as well as completed properties.

Law
Society

4. At the suggestion of Miss Margaret NG and Mr Ambrose LAU, the Chairman asked the Clerk to invite views from the Hong Kong Housing Authority and the Hong Kong Housing Society as to: (a) what would be the effect if the contractual provisions requiring the purchaser of property to pay the vendor’s legal costs were invalidated; and (b) whether they would put up the property prices in order to cover the legal costs.

Clerk

5. Mr Andrew CHENG was not convinced that the proposal would limit consumer choice because the contractual provision requiring the purchaser to pay the vendor’s costs left the consumer with no choice but to resort to joint representation. Mr Vincent LIANG responded that the Law Society did not oppose requiring the developers to pay legal costs.

However, it should not be imposed by way of legislation. To make joint representation unlawful was the direct way to ensure separate representation. Mr CHENG asked and Mr LIANG said that sale and purchase agreement for project conveyancing was endorsed by the court and Lands Department, thereby ensuring sufficient safeguard for the purchasers. Consumers should therefore be allowed to decide whether or not to have joint representation. He informed members that according to his experience, over 50% of purchasers used separate representation for project conveyancing. Mr Christopher CHAN added that whether the purchaser or the vendor himself would pay the vendor’s costs was a matter of bargain, depending on the market situation. Mr Ronald ARCULLI asked and Mr LIANG responded that joint representation was allowed for the purchaser and the banker in arranging home mortgage for project conveyancing as well as completed properties and the purchaser would have to bear the banker’s legal costs. Mr ARCULLI further asked and Mr LIANG said that to his knowledge the Consumer Council also considered this kind of contractual requirement unfair and yet the Administration had not taken any action to invalidate such kind of contractual provision between purchaser and banker. He therefore was of the view that the Administration was applying different standards in an unfair manner. In this connection, the Chairman said that the Administration should be asked to explain why it had adopted a different stance on the matter.

Costs Committee

6. Mr Simon IP stressed that the Administration had not conducted any prior consultation with the legal profession or the public on the proposal to amend the composition and functions of the Costs Committee. He remarked that the proposal was a calculating effort by the Administration to destroy the independence of the legal profession. He pointed out that the Administration was already represented on the Costs Committee by the Director of Lands or the Director of Intellectual Property. Mr IP also explained the existing system of determining the remuneration for solicitors to members. Fees of the solicitors who were officers of the courts were subject to the overall supervision of the court. Any client of a solicitor had the lawful right to require that solicitor to submit the bill to the court for certification that the fees charged were fair and reasonable. The Costs Committee was also given the task to prescribe the fees for solicitors in non-contentious work and regulate other issues concerning fees. He reiterated that the current proposals were therefore seen as an attempt by the Administration to interfere with what had traditionally been a matter for the legal profession and the court. Mr IP then proceeded to brief members on the submission on the Costs Committee.

7. The Chairman asked and Mr Simon IP reiterated that the existing system of the Costs Committee had offered sufficient protection to the consumers and therefore there was no need for any change. In addition, the Administration had also not given any justification for increasing the participation of non-solicitors in determining the remuneration for solicitors. Mr Ambrose LAU then asked and Mr IP responded that the Law Society would not oppose strongly a proposal to increase consumer participation on the condition that there were equal numbers of solicitors and non-solicitors in the Costs Committee. In this regard, Mr Albert HO remarked that it was the trend to allow outsiders to participate in monitoring the provision of professional services and it might be the reason for the Administration to propose such a change. Mr HO therefore asked whether the Law Society would accept a proposal of having equal numbers of solicitors and non-solicitors on the Costs Committee if non-solicitor members excluded the High Court judge, the Registrar of the Supreme Court and the Director of Lands (or the Director of Intellectual Property). Mr IP said that the Law Society would oppose to any change which would result in a majority of non-solicitor members on the Costs Committee who could control the remuneration for solicitors. In this connection, Mr Bruce LIU remarked that if the High Court judge and the government officials in the Costs Committee did not have voting power, the proposal of having equal numbers of solicitors and consumers might be able to address the Law Society’s concern. In response to Mr HO’s enquiry, Mr IP explained that the chairman of the Costs Committee did not have casting vote and members had to resolve their differences by negotiation in case of a tie vote. In this connection, Mr Andrew CHENG said that he shared the Law Society’s concern. However, the Administration might have put forward the proposal to change the composition of the Costs Committee because there was dissatisfaction in the community that the existing system had been working to the disadvantage of the consumers. He therefore asked and Mr Christopher CHAN agreed to provide information as to the number of complaints of over-charging that had been received by the Law Society during the previous three years for members’ reference.

(Post-meeting notes : The Law Society has provided the requisite information in its letter dated 6 March 1997 which was issued to members vide LegCo Paper No. CB(2) 1461/96-97.)

Law
Society

8. Mr Simon IP opined that although it might be beneficial to have consumers’ views represented on the Costs Committee, it was not necessary to have equal numbers of solicitors and consumers. He cautioned that the Bill proposed to include persons with a consumer or business background in the Costs Committee who would be appointed by the Governor or the Chief

Executive after 30 June 1997. He expressed concern that the interests of these persons might be in conflict with the legal profession and the consumers being laymen would not have the knowledge to determine the remuneration of legal services. Miss Margaret NG also expressed reservation on any proposal that remuneration for a professional service would be controlled by the service-users whose interests would be different from those of the service-provider. Miss NG then asked and Mr IP and Mr Christopher CHAN responded that solicitors might refuse to offer conveyancing service if conveyancing fees were determined at a unreasonably low level and it would not be in the interest of the consumers. At Miss NG’s suggestion, the Chairman asked the Clerk to write to various professional bodies as to whether any control had been exerted over their remuneration, and if yes, what was the form of that control. In this connection, the Chairman said that the Administration could also provide relevant information, if any, to support its proposal.

Clerk

II.Date of next meeting and item for discussion

9. The Chairman reminded members that the next meeting would be held on Wednesday, 12 March 1997 at 8:30 am for members’ discussion on the Bill.

Clerk

10. The meeting ended at 6:30pm.

LegCo Secretariat
25 March 1997

Last Updated on 27 October 1997