PLC Paper No. CB(1) 19/97-98
(These minutes have been seen
by the Administration and
cleared with the Chairman)
Ref : CB1/BC/16/96/2

Bills Committee on Housing (Amendment) (No. 2) Bill 1997

Minutes of meeting held on Tuesday, 27 May 1997, at 8:30 am in Conference Room B of the Legislative Council Building

Members present :

    Hon Ronald ARCULLI, OBE, JP (Chairman)
    Hon Frederick FUNG Kin-kee
    Hon LEE Wing-tat
    Hon CHAN Kam-lam
    Hon CHAN Yuen-han
    Hon Bruce LIU Sing-lee

Members absent :

    Hon Emily LAU Wai-hing

Public officers attending :

    Housing Branch

    Mr Andrew R Wells
    Deputy Secretary for Housing

    Housing Department

    Mr Simon LEE
    Legal Adviser Mr S Y WONG
    Chief Estate Surveyor Mr W L LAU
    Senior Estate Surveyor Mr K M LIU
    Senior Housing Manager

Clerk in attendance :

    Mrs Vivian KAM
    Assistant Secretary General 1 (Acting)

    Staff in attendance :

      Mr LEE Yu-sung
      Senior Assistant Legal Adviser
      Mr George CHAN
      Senior Assistant Secretary (1)3

    I Confirmation of minutes of meeting

    (LegCo Paper No. CB(1) 1636/96-97)

    The minutes of meeting held on 9 May 1997 were confirmed.

    II Meeting with the Administration

    (LegCo Paper No. CB(1) 1640/96-97(01) -- Marked-up copy of the Bill;

    LegCo Paper No. CB(1) 1640/96-97(02) -- Information note provided by the Administration)

    2. Introducing the Housing (Amendment) (No. 2) Bill 1997, the Deputy Secretary for Housing (DS for H) advised that the Housing Panel had discussed the principles of the legislative amendment at its meeting held on 7 April 1997. The two major provisions in the Bill were the imposition of additional fines against false declarations of income and assets by tenants and applicants of public rental housing (PRH) estates under the Housing Authority (HA), and the contracting out of premium assessment work to qualified estate surveyors in the private sector as premium assessment work was increasing in the secondary market for flats under the Home Ownership Scheme (HOS) and the Private Sector Participation Scheme (PSPS) which passed the ten-year resale restriction period.

    3. Members agreed with the need for tenants to furnish particulars regarding total household income and assets as this would facilitate implementation of the Administration’s policy of providing subsidized public housing to those in genuine need. In view of the growing number of HOS and PSPS flats passing the ten-year resale restrict period and the resultant increase in the number of cases of premium assessment, members also had no objection to empowering the Director of Housing to delegate his function to assess prevailing market value to other persons. Members however had serious reservations on the proposal for imposing an additional fine of treble the amount of rent undercharged upon those found guilty of knowingly providing false information when declaring income and assets. Members deliberated on this concern as follows.

    Insufficient evidence to justify harsher penalty

    4. Members appreciated the intention behind the proposal for strengthening the deterrent effect against making false declarations to HA. Members however were not convinced of such a need as evidenced by the small number of convictions in previous years: there were only 51 cases of successful convictions in 1994, 64 in 1995, 59 in 1996, and 10 in the first quarter in 1997. Against an estimated number of over 100,000 tenants required to make such declarations, the number of convictions was insignificant to justify an increase in penalty. Members also noted that there was no trend of increase in these cases.

    (Post-meeting note: The Administration clarified subsequent to the meeting that the number of successful conviction cases should be 58, 65, 60 and 15 respectively.)

    Criminal liability

    5. The proposed increase in penalty was additional to the existing penalty provision in clause 26(1) in the Housing Ordinance (Cap 283) whereby persons found guilty of knowingly making false statements were liable on conviction to a fine at level 5 and to imprisonment for six months. Members considered that the criminal record resulting from a conviction, which affected inter alia a person’s applications for visas to travel overseas, already served as a far more serious and effective deterrent than cash penalty. This re-affirmed members’ view that the proposed additional fine was unnecessary.

    6. As a related issue, members noted that household members were required to make separate asset declarations and that the particular household members who furnished inaccurate information would face prosecution and the consequential criminal liabilities on conviction. The Chairman raised the alternative of conferring on the Director of Housing similar powers as the Commissioner of Inland Revenue (CIR) whereby he could negotiate with the offenders and not prosecute those who were willing to pay three times the amount of overdue tax. DS for H however did not deem this feasible in the context of the Bill. The Legal Adviser of HD pointed out that the nature of the two cases was different. The CIR had the duty to recover arrears in taxes, whereas the proposal here was not to allow the Authority to recover rent. The proposed additional penalty would go to Government. The proposal was aimed at deterring the commission of the offence so as to ensure the effective implementation of the Authority’s policy on safeguarding rational allocation of public housing resources.

    Time limit for prosecution

    7. The Bill also sought to provide that the time limit for prosecuting such offences should be within six years of the commission of the offence or within one year after discovery of the offence, whichever expired first. Members obtained the Administration’s confirmation that the provision would not have any retrospective effect, and that resources in HD would only permit perusal of cases up to a maximum of six years.

    The Administration’s position

    8. DS for H held the view that existing penalties were insufficient and that the proposed increase in penalty was required to uphold the principle of safeguarding the rational allocation of public housing resources. The requirement for better-off tenants to pay market rent, introduced on 1 April 1997, was a new arrangement, and it would have an indirect effect of inducing false declarations of household income and assets if unaccompanied by a preventive and effective penalty to deter fraudulent declarations. The existing penalty provisions were not designed to cater for the new arrangements and neither would conviction statistics in the past few years be indicative as the new policy had just become effective. The Administration did not want to wait until the situation got out of hand.

    9. The Administration therefore maintained that the proposal for imposing an additional fine of three times the rent undercharged, modelled on provisions in the Inland Revenue Ordinance, was necessary to tie in with the implementation of the new policy and to increase the deterrent effect. The Legal Adviser of HD stressed that the facts of every suspected case would be thoroughly investigated and prosecution action would be taken only if there was evidence on intention to provide false information. On the low level of penalties imposed by Magistrates, he was concerned that Magistrates might not be aware of the housing resources that had been abused. In response to a member, the Legal Adviser said that it would not be advisable to increase existing penalties as this would procedurally require the cases to be tried in the District Courts which would mean substantial increase in legal costs in prosecuting and defending the cases.

    10. DS for H further disclosed that HA’s original proposal was to have the additional penalty of three times rent undercharged stipulated as a mandatory penalty. Upon advice from the Attorney General’s Chambers, the proposal was revised. Penalties would be, as always, at the discretion of the Courts. Regarding the penalty which would then include a fine, a term of imprisonment and a further fine of treble the rent undercharged, the Administration explained that the latter was intended to link the act of fraud with the rent for PRH and to bring out the message clearly to PRH tenants and judges. In response to DS for H on whether the objection was on the grounds of objection to the additional fine and the new policy on better-off tenants, Hon Frederick FUNG Kin-kee confirmed in the affirmative.


    11. On the proposal for the further fine, members remained unconvinced of the Administration’s assertions in view of the absence of statistical support to suggest deteriorating situations, and of the fact that the further fine was not binding on judges’ decisions during sentencing. They maintained the view that heavier penalties should only be imposed on the basis of a clear record of deceit cases. Members saw it as a more effective deterrent for the Administration to enhance publicity on the criminal liability for committing such offences, and accordingly decided to move Committee stage amendments to delete the proposal for an additional fine from the Bill. All members of the Bills Committee present at the meeting held this view, while Hon Ronald ARCULLI on behalf of the Liberal party had reservations on such a decision. He nevertheless agreed to move the amendments in his capacity as Chairman of the Bills Committee.

    12. Members unanimously agreed with other proposals in the Bill for requiring PRH tenants and applicants to furnish particulars regarding total household income and assets, and for contracting out premium assessment work.

    13. The Chairman therefore concluded that the Bills Committee supported the Bill, subject to Committee stage amendments for deleting the proposal for the additional fine, and recommended resumption of Second Reading debate of the Bill as soon as possible. The Chairman advised that if the Bill were to resume Second Reading on 17 June 1997, the Administration should give notice for resumption by 31 May 1997 and for Committee stage amendments by 6 June 1997.

    III Any other business

    14. There being no other business, the meeting ended at 10:30 am.

    Provisional Legislative Council Secretariat
    10 July 1997

    Last Updated on 18 Jul, 1997