LegCo Paper No. CB(1) 908/96-97
(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 Tuesday, 10 December 1996 at 8:30 am in Conference Room B of the Legislative Council Building

Members present :

    Hon Andrew CHENG Kar-foo (Chairman)
    Hon Mrs Selina CHOW, OBE, JP
    Hon Edward S T HO, OBE, JP
    Hon LEE Wing-tat
    Hon LI Wah-ming
    Hon NGAN Kam-chuen

Members absent :

    Hon Ronald ARCULLI, OBE, JP
    Hon Albert CHAN Wai-yip
    Hon James TO Kun-sun
    Hon CHAN Kam-lam
    Hon CHAN Yuen-han
    Dr Hon LAW Cheung-kwok
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 (Acting)

Clerk in attendance :

    Mrs Vivian KAM
    Chief Assistant Secretary (1)2

Staff in attendance :

    Mr Stephen LAM
    Assistant Legal Adviser 4
    Miss Becky YU
    Senior Assistant Secretary (1)3

I.Meeting with the Administration

In the absence of a quorum at the beginning of the meeting, members agreed to hold the meeting as an informal discussion. A quorum was subsequently formed at 8:55 am.

2. As the Bills Committee (BC) had concluded discussions on the six major areas where Committee stage amendments (CSAs) to the Bill were being considered by the Administration, the Chairman sought clarification on the time required for drawing up relevant CSAs. The Senior Assistant Law Draftsman (Acting) (SALD (Atg)) advised that this would take about one to two months on account of the need to consult the Policy Branch, the Civil Division and the Legal Policy Division of the Attorney General’s Chambers (AGC) on the amendments. Members urged the Administration to expedite the drafting process and forward draft CSAs which were ready for examination by the Bills Committee. For the current meeting, members would examine the list of major issues raised by the Chairman and Hon NGAN Kam-chuen circulated vide LegCo Paper No. CB(1) 462/96-97.

3. Before commencing discussion, the Chairman invited the Administration to brief members on the information paper on criminal penalties and disciplinary sanctions relating to the Bill circulated vide LegCo Paper No. CB(1) 484/96-97. The Assistant Secretary for Housing (AS for H) explained that serious offences such as undertaking estate agency work without licences, and furnishing false or misleading information would be subject to criminal penalties, while breaches relating to provision of property information, professional competence and regulatory compliance would be subject to disciplinary actions.

Clause 7. Directions by Secretary for Housing

4. Having regard to the extensive power of the Estate Agents Authority (EAA) under the Bill, the Chairman considered a need for the Secretary for Housing (S for H) to inform the Legislative Council (LegCo) of the rationale when making policy directions to EAA to ensure a proper check and balance mechanism in the operation of EAA. The Principal Assistant Secretary for Housing (PAS for H) emphasized that the objective of clause 7 was to protect public interest and that similar provisions existed in other legislation, such as the Airport Authority Ordinance (AAO), the Hospital Authority Ordinance (HAO) and the Securities and Futures Commission Ordinance (SFCO). He assured members that any rules or regulations prescribed by the Administration would be subject to the scrutiny of LegCo. SALD (Atg) supplemented that except for the provision under clause 79G(8) of the Criminal Procedures Ordinance where rules or directions made by the Chief Justice would be subject to the approval of LegCo, it was common for the Governor or a Branch Secretary to give directions to a statutory body. In reply to a related question, AS for H advised that S for H could only invoke the power under clause 7 when public interest was at risk. The Chairman considered the term "public interest" too broad, and suggested that the Administration should spell out explicitly the circumstances under which S for H could exercise such a power. SALD (Atg) advised that while it was feasible to confine the scope of "public interest", this would reduce the flexibility for S for H to give directives for different circumstances. Moreover, the term "public interest" was commonly used in other legislation.

5. As regards "public officers" who were responsible for giving directives under ordinances mentioned above, AS for H advised that the Governor was the authority in the case of HAO and SFCO, and the Governor in Council in the case of AAO. Hon Mrs Selina CHOW considered that as the power under clause 7 could only be invoked under special circumstances, it was logical to appoint a higher hierarchy of authority such as the Governor or the Governor in Council rather than the S for H. She explained that the autonomy of EAA would be compromised if S for H or one of his officials were to serve on the Board of the EAA, in particular in the event of divergent views between the Authority and the Administration. Since such a power should not be exercised by any member of the Board, it would be vital for the directions to come from the Governor or the Governor in Council. She urged the Administration to amend this clause or else she would move a CSA to that effect. The Chairman and Hon NGAN Kam-chuen were in support of this view. The Chairman added that members had no intention of casting doubt on Housing Branch officials but that it was essential to strike a balance in the monitoring mechanism. PAS for H emphasized that the spirit of clause 7 was to protect public interest and this should not be regarded as interference on the operation of EAA. He supplemented that the public officer to be appointed to EAA would have to be decided by the Governor and that the officer so appointed might not necessarily come from the Housing Branch. The Policy Secretary could seek advice from the Governor in Council whenever required but it should not be necessary for the Governor in Council to be approached every time when an issue came up. PAS for H nevertheless undertook to consider members’ proposal.

Clause 15. Estate agents to be licensed

6. The Chairman considered the phrase "any of the functions of an estate agent" under clause 15(1)(c) too broad, and urged the Administration to re-define the relevant provision. SALD (Atg) advised that subsequent to previous discussions on clause 15, consideration had been given to including the phrase "in the course of business" after the word "done" in the definition of "estate agency work" under clause 2 on Interpretation, and replacing the phrase in question by "doing estate agency work as an estate agent" to eliminate possible grey areas.

Clause 17. Licences and conditions

7. The Chairman suggested re-phrasing clause 17(3) as "the Authority may, in the interest of the public, attach to a licence such conditions as it considers appropriate and conditions so attached to a licence may include conditions prescribed under section 57". He explained that the phrase "in the interest of the public" would provide a parameter within which additional conditions could be prescribed, and allay the concerns of small estate agents on clause 17(3). Mrs CHOW however took a different view and was opposed to the proposed inclusion as the Bill was aimed at protecting public interest; furthermore, clause 5 had already provided a framework within which EAA should discharge its functions. PAS for H agreed with Mrs CHOW and pointed out that clauses 5(a) and (b), together with clause 17(3), had prescribed the manner in which conditions to licences should be made. AS for H supplemented that the objective of clause 17(3) was to provide flexibility for EAA to prescribe additional conditions for circumstances not covered by subsidiary legislation, and that it was common for licensing authorities to have such powers. Moreover, estate agents were entitled under clause 32(1)(b) to appeal against a condition attached to a licence under clause 17. She cautioned that the proposed addition might lead to confusion on the application of the clause. To allay the Chairman’s concern, SALD (Atg) suggested replacing the phrase "it considers appropriate" with "it considers to be in the public interest". The Assistant Legal Adviser advised that while conditions so prescribed under the Chairman’s proposal would be more objective in nature, it was not uncommon for licensing authorities to be accorded greater flexibility in attaching additional conditions to licences as and when necessary. The Chairman undertook to consider members’ views on behalf of the Democratic Party, although he remained unconvinced that confusion might arise as a result of the proposed inclusion.

Clause 20. Grant of estate agent’s licences to companies restricted

8. In response to members, SALD (Atg) explained that clause 20(1)(a) aimed at spelling out the composition of estate agency companies; these should comprise a certain number of licensed estate agents to be prescribed by EAA through subsidiary legislation. She however agreed with members on the need to include such a phrase as "or proportion" after the word "number" in the clause to eliminate possible grey areas. Hon Edward S T HO considered it inappropriate for the Administration to prescribe a fixed number of directors for a company. Reference should be made to the Architects Registration Ordinance where only one registered architect was required to take full control and management of the business of a company, even if such a company carried out multi-disciplinary practices. PAS for H clarified that the size of estate agency companies was not a major concern of the Administration when drawing up clause 20(1)(a). He agreed that it was basically sufficient for an estate agency company to have one licensed agent to act as director although large-scale estate agents could have more than one licensed agent. Members’ suggestion for inclusion of the phrase "or proportion" in the clause would however be duly considered.

Clause 27. Objections

9. PAS for H undertook to consider the suggestions outlined in the information paper prepared by Hon NGAN Kam-chuen, as well as the proposed deletion of clause 27.

Clause 37. Information as regards properties, etc.

10. Mr NGAN considered it impractical for estate agents to disclose such interests as commission to clients having regard to the dynamic changes in the market value of properties. He was of the view that clients would be fully aware of these changes in view of the availability of property information. AS for H emphasized the need for estate agents to disclose fully to their clients their interest in property transactions, in particular when the estate agents were representing both the vendor and the purchaser, to safeguard against misrepresentation of facts and conflict of interest. Such disclosure was compatible with the Bill of Rights Ordinance as confirmed by AGC, and would be confined to pecuniary interest of estate agents in property transactions. Mrs CHOW supported retention of the clause as this was essential for consumer protection, particularly in the case of dual representation. Mr NGAN agreed to consider members’ views.

Clause 38. Accountant’s reports

11. The Chairman expressed reservations on the need for EAA to examine accounts other than those involving clients’ money, and suggested confining the scope of clause 38(1) to clients’ accounts only. While agreeing in principle with the Chairman, Mrs CHOW considered a need for the Administration to specify in clause 29 on Investigations circumstances under which EAA could have access to accounting documents, such as the illegal transfer of clients’ money to estate agents’ accounts. PAS for H took note of members’ views but advised that clause 39 had provided for estate agents to keep clients’ money in accounts which were separate from the agents’ own business accounts; this would serve as a proper safeguard.

Clause 39. Accounts regulations

12. The Chairman remained of the view that the provisions under clause 39(3) for EAA to disclose at liberty information about estate agents’ accounts to the Crown Prosecutor for use in any prosecution were too broad, and that the Administration should consider re-defining the clause. AS for H acknowledged the member’s concern and agreed that the phrase "at liberty" might need to be spelt out clearly. She supplemented that as there was no express provision in the Bill forbidding disclosure of information to the Crown Prosecutor, the Administration was examining with AGC whether it was appropriate to delete the clause from the Bill.

Clause 40. Effective control of offices; managers

13. In response to the Chairman, SALD (Atg) affirmed that subsequent to previous discussions on clause 40, consideration had been given to including clause 37(1)(a)(ii) in clause 40(3)(a) so that managers of estate agents would also be responsible for verifying the accuracy of information provided by employers of the managers.

14. Members considered the provisions under clause 40(4)(a)(i)(A) for managers to attend regularly and for significant periods at the offices too detailed for a primary legislation. Furthermore, it would be difficult to quantify such terms as "regularly" and "significant" in a concrete manner. PAS for H emphasized that the spirit of clause 40(4)(a)(i)(A) was to ensure effective control of estate agent offices by qualified licensed estate agents. The Administration was however prepared to re-phrase the clause if members considered such provisions too vague.

Clause 47. Advertising

15. A member considered that clause 37 should be linked with clause 47(a) to ensure accuracy of property information in advertisements. However, in view of the dynamic situation of the property market and property prices, estate agents should be deemed to have fulfilled their obligations if they had truly reflected vendors’ instructions in the initial advertisements. She also held the view that offences relating to willful deceit should be subject to criminal sanctions while non-compliance due to negligence would be a matter of disciplinary actions. AS for H appreciated the member’s suggestion and advised that consequent upon previous discussions, consideration was being given to improve the wording of "false, inaccurate or misleading" in clause 47 to allay the worries of estate agents.

16. As to whether the transfer of cases by way of sub-contracts among estate agents would be allowed, PAS for H advised that this was prohibited as estate agents could escape from the regulatory system by virtue of being sub-contractors. This would reduce the extent of consumer protection under the Bill. Mrs CHOW however took a different view and pointed out that the transfer of cases among estate agents was a normal business practice of the trade. Moreover, the provisions under clause 37 for estate agents to disclose fully to their clients (the vendor and/or purchaser) their interest in property transactions had provided for consumer protection. Some members suggested including a specific provision to cover possibilities of advertisements being passed by estate agents to whom cases had been transferred. Hon LEE Wing-tat was opposed to such an approach as this would run contrary to the spirit of the Bill. It would be more appropriate for vendors to appoint multiple agents. Mr NGAN did not agree with Mr LEE as vendors might be anxious to sell their properties as soon as possible. He remarked that vendors who preferred sole agency could delete the provision from the agreements. SALD (Atg) advised that in reality it might be possible to include in estate agency agreements a specific provision for the contracting out of advertisements, and that sub-contractors concerned would be required to verify relevant property information by virtue of clause 47(1)(a) only if an estate agency agreement had been executed subsequently. PAS for H supplemented that the transfer of cases among estate agents would not create problems so long as the vendor concerned agreed to such an arrangement in an estate agency agreement and the estate agent concerned would be bounded by the duties under clause 37. He added that clause 50(2) had provided flexibility for EAA to prescribe by regulations particulars to be included in documents embodying estate agency agreements. Nevertheless, the Administration would consider refining clause 47 having regard to members’ views.

II.Any other business

17. Before concluding, the Chairman reminded members of the next meeting scheduled for Tuesday, 17 December 1996, at 10:45 am. Members who wished to discuss other clauses were requested to notify the Clerk.

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

Legislative Council Secretariat
20 February 1997

Last Updated on 23 Apr, 1997