In response to Mrs Selina CHOWs enquiry, the Chairman recapitulated the 2 sets of view of the Bills Committee on the revised constitution of the Costs Committee. Mrs CHOW then commented that it was unfair if solicitors could not occupy half of the membership of the Costs Committee as it was to determine their charges. Mr Philip WONG shared her view. In this connection, Miss Margaret NG asked and Mr ALLCOCK explained that the quorum of the Costs Committee should be the chairman and two members according to section 74(2) of the Legal Practitioners Ordinance (Cap. 159). According to the Interpretation and General Clauses Ordinance (Cap. 1), the decision of a committee could be taken by a simple majority and the chairman would have a casting vote.

Repeal of the scale fee for conveyancing (clause 20 and Schedule 2)

2. Mr R ALLCOCK informed members that the Costs Committee had met to discuss the proposals submitted by the Law Society of Hong Kong (the Law Society) on scale fees in respect of conveyancing but approval of the Chief Justice had yet to be sought. In this connection, Legal Adviser advised that the Interpretation and General Clauses Ordinance (Cap. 1) provided that the LegCo had 28 days to scrutinize the rules to be made by the Costs Committee in the form of subsidiary legislation. Since LegCo could extend the scrutiny period to the next sitting by a resolution, these rules had to be gazetted on 16 May 1997 in order to be laid on the table of LegCo on 21 May 1997 in order that LegCo would have the full period of consideration as provided by Cap. 1. In view of the fact that the proposals submitted by the Law Society would not be able to meet the normal legislative schedule, Mrs Miriam LAU asked and Legal Adviser pointed out that as a matter of legislative procedures, it would be in order for subsidiary legislation to be amended in the form of a bill. It would also be a workable option and within the ambit of the Bill, by moving a Committee stage amendment to the Bill, as the scale fees in conveyancing was part of the Bill. However, Legal Adviser cautioned that members had to consider the way forward carefully as there should be good justification for the LegCo to bypass the existing legislative mechanism, i.e. the rule making power of the Costs Committee, even though LegCo had the power to do so. In this connection, Miss Margaret NG expressed concern that the LegCo could intervene with solicitor fees in such a direct manner.

3. Mr Andrew CHENG was concerned that it might give a confusing message to the public if the Bills Committee had made a decision to abolish scale fees and the Costs Committee subsequently announced a new scale of conveyancing fees. He therefore remarked that it might be better for the Bills Committee to wait for the decision of the Costs Committee before deciding on the abolition of scale fees. However, the Chairman opined that the Bills Committee should consider whether scale fees should be abolished as a matter of principle. Ms Emily LAU was of the view that the Bills Committee could wait so long as time allowed since the level of scale fees to be determined by the Costs Committee might be a factor for members to consider. In this regard, Miss Margaret NG cautioned that the Costs Committee which had the knowledge and expertise would have gone through detailed discussion in determining a fair and reasonable charge. Members should not simply go for the cheapest charges. In this regard, the Chairman asked the Clerk to seek information from the Costs Committee regarding the progress of the proposals submitted by the Law Society on scale fees in respect of conveyancing. Miss NG suggested that the Clerk should also explain the importance of the time factor in the letter to the Costs Committee.

Clerk

4. Miss Margaret NG asked and Mr ALLCOCK explained that Rule 5 of the Solicitors (General) Costs Rules would apply to conveyancing fees on the basis of a fair and reasonable principle if scale fees were to be abolished. Miss NG further asked whether the Administration had considered the possibility of a sudden increase in the number of disputes. Mr ALLCOCK responded that fewer disputes might occur if scale fees were abolished because it would give the consumers more freedom in reaching agreement with solicitors by negotiation in respect of conveyancing fees.

5. The Chairman then invited members to express views on abolition of scale fees. There were 3 sets of views among members, namely: (a) support abolition; (b) against abolition; and (c) no position taken, depending on the decision of the Costs Committee on the Law Societys proposals. Dr Philip WONG said that he did not support abolition of scale fees because the position of the legal profession in respect of their charges should be respected. Mrs Miriam LAU said that the Liberal Party did not support the abolition of scale fees as a matter of principle as it should be a matter for the Costs Committee to decide. Mrs Selina CHOW added that, from a consumers point of view, she opposed the Administrations proposal at the present stage as it might not be beneficial to the consumer interests. She cautioned that careful consideration was needed to change a system which had been in existence for years, particularly when it would mean a fundamental change to the legal profession. Mr IP Kwok-him informed members that the Democratic Alliance for the Betterment of Hong Kong, after having regard to the consumer interests, preferred to retain scale fees but the levels of the scale should be re-considered. Mr Ambrose LAU said that the Hong Kong Progressive Alliance did not support abolition of scale fees on the grounds that: (a) it would create confusion in the market; (b) the quality of legal services could not be guaranteed; and (c) the Costs Committee should be entrusted to make the decision in respect of conveyancing fees as LegCo would have the negative vetting power on the matter. Mr Bruce LIU informed members that the Association for Democracy and Peoples Livelihood had not yet formulated its position, pending the decision of the Costs Committee. However, its decision would be based on 3 factors of consideration, namely: (a) to avoid confusion; (b) to ease public dissatisfaction with the existing scale fees; and (b) to introduce an element of competition into the market. Mr Andrew CHENG said that the Democratic Party supported the Administrations proposal to abolish scale fees although it would give due regard to the opinion of the Costs Committee if time was permissible. Ms Emily LAU said that she supported the Administrations proposal in principle in the light that competition would give benefit to consumers. Miss Margaret NG cautioned that the Administrations proposal would have far-reaching impact which warranted careful consideration and sufficient justification. She clarified that non-acceptance of the proposal did not mean that scale fees must be retained forever as a well-established land title registration system might enable solicitors to charge conveyancing fees at a low and fixed level. However, it was important to give due regard to public interest and the integrity of the legal profession.

6. In the light that many members present tended to favour retaining the scale fees, the Chairman asked and Mr ALLCOCK undertook to inform members of the Administrations position in due course, after having reflected on members views.

Admin

Invalidation of contractual provisions that require the purchaser of a property to pay the vendors legal costs (clause 18)

7. As the Secretary for Housing had indicated in his letter dated 25 March 1997 which had been issued vide LegCo Paper No. CB(2) 1699/96-97 that the Executive Committee of the Hong Kong Housing Society would need to determine whether the legal costs should be recovered from the purchaser or borne by the Housing Society if clause 18 was enacted. Miss Margaret NG asked and the Chairman said that the Bills Committee had not received any further information on the matter. In this connection, Mr ALLCOCK informed members that he had contacted the Housing Authority which supported the provision in the Bill but it had not yet made any decision on how to deal with the question of legal costs. In response to Miss NGs further enquiry, Mr ALLCOCK explained that the prices of the properties of the Housing Authority were not fixed by market value and it was therefore an option for the Housing Authority to increase the property prices in order to cover the costs. Mrs Selina CHOW expressed concern that the burden would be shifted to the consumers. She therefore remarked that it should be a matter for the Housing Panel to discuss.

8. Mr ALLCOCK then proceeded to brief members on the paper relating to clause 18 of the Bill which was attached to his letter dated 3 April 1997 (issued vide LegCo Paper No. CB(2) 1718/96-97). Mr Ambrose LAU queried from a consumers viewpoint, whether the Administrations proposal would benefit the consumers since invalidation of contractual provisions requiring the purchaser to pay the vendors legal costs was limited to project conveyancing and the vendor could always include the legal costs in the selling prices. Dr Philip WONG shared his view. He opined that it was a matter for individual consumers to choose. Mrs Miriam LAU cautioned that the amount of stamp duty payable would increase correspondingly to the selling prices. Mrs Selina CHOW said that the principle of freedom of contract was extremely important that it should not be subjected to any restriction unless there was overwhelming justification to do so. She therefore could not support the Administrations proposal. Mr Andrew CHENG said that the Democratic Party supported the Administrations proposal in view of the importance of having separate representation for consumer interests. In addition, vendors had to give regard to the market situation and thus might not be able to push up the prices as they wished. Ms Emily LAU shared the same view. Miss Margaret NG remarked that the decision of having joint or separate representation ultimately rested with the consumers, having regard to the desirability of separate representation versus the time involved etc.. She reminded members that the Law Society had put forward a new proposal excluding the disincentive for separate representation in conveyancing. Miss NG therefore did not support any mandatory provision on the matter which should be left to the consumers to decide. Mr Bruce LIU said that the Association for Democracy and Peoples Livelihood did not support the Administrations proposal because it was more important for consumers to understand their right to separate representation. It was not necessary to stipulate the invalidation in the legislation. However, Mr LIU pointed out that magnitude of the proposed reduction in legal costs for conveyancing put forward by the Law Society was not sufficient. In this connection, Mr IP Kwok-him informed members that the Democratic Alliance for the Betterment of Hong Kong had not yet formulated its stance on the matter.

9. In response to members views, Mr ALLCOCK stressed that the Bill did not propose any mandatory provision. It only meant to ensure the availability of a choice for consumers to have separate representation so that they would not be penalized by having to pay the vendors legal costs.

10. As the Bills Committee had concluded the policy deliberation of the Bill, the Chairman asked the Clerk to prepare a summary of members views. The Chairman also asked and Mr ALLCOCK undertook: (a) to respond to all the outstanding points arising from previous meetings before 20 May 1997; and (b) to inform members of the Administrations position on the various provisions of the Bill after reflecting on members views.

Clerk
Admin

II.Dates of future meetings

11. The Chairman reminded members that the next two meetings would be held as follows:

Tuesday, 20 May 1997 at 4:30 pm; and
Thursday, 22 May 1997 at 8:30 am.

12. There being no other business, the meeting ended at 12:10 pm.

Provisional Legislative Council Secretariat
11 August 1997

Last Updated on 27 October 1997

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

held on Tuesday, 13 May 1997 at 10:30 am in the Chamber of the Legislative Council Building

I.Members discussion

Costs Committee (clause 17)

Repeal of the scale fee for conveyancing (clause 20 and Schedule 2)

Invalidation of contractual provisions that require the purchaser of a property to pay the vendors legal costs (clause 18)

II.Dates of future meetings

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

held on Tuesday, 13 May 1997 at 10:30 am
in the Chamber of the Legislative Council Building

I.Members discussion

Invalidation of contractual provisions that require the purchaser of a property to pay the vendors legal costs (clause 18)