LegCo Paper No. CB(1) 2029/95-96
(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, 11 June 1996 at 4:30 pm
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 LI Wah-ming
    Hon CHAN Kam-lam
    Hon CHAN Yuen-han
    Dr Hon LAW Cheung-kwok

Members Absent :

    Hon Ronald ARCULLI, OBE, JP
    Hon Albert CHAN Wai-yip
    Hon LEE Wing-tat
    Hon James TO Kun-sun
    Hon NGAN Kam-chuen

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 (Atg)

Staff in Attendance :

Mrs Vivian KAM
Chief Assistant Secretary (1)2
Mr Stephen LAM
Assistant Legal Adviser 4
Miss Becky YU
Senior Assistant Secretary (1)3


Study Tour of the Property Agencies Association Ltd

The Chairman reported that the Association had been informed that members were unable to join the study tour to Singapore from 11 to 15 June 1996. The Chairman of the Association, Mr TANG Hoi-tung, had confirmed in response that a report on the findings would be provided for members’ reference and had requested a meeting between representatives of the Association and the Bills Committee to supplement their views. Members agreed to devote half an hour at the beginning of the meeting on 25 June for meeting with the deputation.

Luncheon Meeting with Jones Lang Wootton

2. The Chairman referred to a letter tabled at the meeting from Mr C K LAU, Director of Jones Lang Wootton, inviting members of the Bills Committee to a luncheon meeting and consulted members on their availability. Members agreed to accept the invitation subject to a date to be fixed by the Chairman.

(Post meeting note: At the instruction of the Chairman, the luncheon meeting had been scheduled for Tuesday, 25 June 1996 and members were notified vide LegCo Papers No. CB(1) 1622/95-96.)

Confirmation of Minutes of Previous Meetings

(LegCo Papers No. CB(1) 1577, 1578 & 1579/95-96)

3. The minutes of the meetings held on 23, 29 and 30 April 1996 were confirmed.

Examination of the Bill

Clause 37. Information as regards property

4. Members enquired whether vendors would also be held liable for providing misleading information, and whether a standard format for the statement as required under sub-clause 37(2)(g) could be devised. Ms Sherman CHAN advised that although the Bill did not stipulate any criminal liabilities on the part of vendors, they would still have civil liabilities under the common law. As regards the proposal for a standardized statement, Mr William SHIU advised that this would be decided by the Estate Agents Authority (EAA).

5. Members considered a need for rephrasing the term "open and honest and fair" in sub-clause 37(3)(b) and other sub-clauses with similar terms in view of its ambiguity. They further enquired about measures which would be in place to ensure that an estate agent acted in a fair and open manner to both parties when he represented both the vendor and the purchaser. Miss Eva TO advised that the term "open, honest and fair" related mainly to full disclosure of information and possible conflict of interest. As most salient elements constituting "open, honest and fair" were already contained in various items under sub-clause 37(1)(a), the Administration was seeking legal advice from the Attorney General’s Chambers (AGC) on the merit of deleting the term in sub-clauses 37(3)(b) and (4) having regard to the provisions under sub-clause 37(1). On dual agency, Mr SHIU advised that in order to safeguard against a possible misrepresentation of facts, measures were in place to require estate agents to disclose fully to their clients (the purchaser/vendor, or both) their interest in a property transaction as well as information on all offers made so that parties concerned could reach their own decisions in a level playing field.

6. Members sought elaboration on the need for the term "any particulars" under sub-clause 37(6)(a)(ii) and its possible implications. Miss TO advised that the subsection referred to in the clause should be (1)(a) instead of (1)(c). She emphasized that sub-clause 37(6)(a)(ii) would only apply to civil proceedings arising wholly or partly from the failure of an estate agent to perform his duties. The word "particulars" referred to the type and detail of the information prescribed for the purpose of sub-clause 37(1)(a). An estate agent’s knowledge of the information required under sub-clause 37(1)(a)(iii) would be presumed unless the contrary was proved.

7. Members sought clarification on the relationship between sub-clauses 37(1)(a) and 37(6)(a)(ii) and questioned the rationale for shifting the burden of proof to estate agents as this was contrary to the spirit of the common law and would easily be open to abuse. They also requested the Administration to provide examples of similar provisions in other professional bodies, such as the Law Society of Hong Kong and the Hong Kong Institute of Surveyors. Ms CHAN advised that sub-clause 37(1)(a) stipulated the type of information to be provided and estate agents were therefore presumed in appropriate cases to be aware of such information unless the contrary was proved under sub-clause 37(6)(a)(ii). She emphasized that the presumption in sub-clause 37(6)(a)(ii) was compatible with the principles of mandatory presumption otherwise for relevant criminal law and would not alter commonly accepted rules on burden of proof. By way of illustration, Ms CHAN said that sub-clause 37(1)(a)(iii) required an estate agent to provide certain information to a client and the information would be no more than that which was proportionate to that warranted by the nature of the matter in question. Mr SHIU supplemented that both the Working Group on the Regulation of Estate Agents and public opinion collated had been supportive of the need for estate agents to provide data on properties to clients. It was therefore not unreasonable to require estate agents in legal proceedings to prove to the courts that they were or should not have been reasonably aware of the information. Mr SHIU re-iterated the Administration’s intention to bring in the concept of "due diligence" and "reasonable care" so that estate agents who had taken all reasonable steps to comply with the requirements would not be unduly penalized. On the concern of possible abuse, Mr SHIU assured members that every precaution would be taken by the court to ensure that parity treatment would be accorded to all parties in legal proceedings. As regards practices in other professional bodies, Mr SHIU advised that a direct comparison between the trade and other professions suggested by members would not be appropriate since the latter were primarily self-regulatory in nature and this was different from the spirit of the Bill.

8. Members were not convinced of the arguments put forward regarding the burden of proof and requested the Administration to set out in writing the rationale for the inclusion of sub-clause 37(6)(a)(ii) and to consider making the provisions therein more explicit. A member re-iterated the stance of the Liberal Party for operational issues to be excluded from the principal ordinance.

9. In response to a member, Ms CHAN explained that the intention behind inclusion of sub-clause 37(8) in the Bill was to ensure that the application of the common law would not be unduly affected by the provisions under sub-clause 37(2)(g). She shared members’ view on the need to make the clause more explicit to eliminate any possible misunderstanding and undertook to consider refining the wordings as appropriate.

Clause 38. Accountant’s reports

10. Members sought clarification on the rationale for including the accounts of the estate agents in the reports, in addition to those of the agents’ moneys. They were concerned with the requirement of three months for submission of the reports and asked whether extension was possible in the event of delay due to unforeseen reasons. Mr SHIU advised that the Administration was well aware of the trade’s concern on the nature and extent of information to be included in the report and would examine the merits of specifying in the Bill the scope of the report such as confining this to clients’ accounts. As regards the period within which a report should be submitted, Mr SHIU advised that a period of three months was reasonable and that reference had been made to other legislation with similar provisions. On the proposal for flexibility, Ms CHAN advised that sub-clauses 38(2) and 38(4)(e) had already provided for flexibility for the EAA to prescribe other periods by regulations.

11. While some members considered the power of the Secretary for Housing (S for H) under sub-clause 38(4) too wide and would limit the operational flexibility of the EAA, others agreed with the Administration’s approach to enhance the accountability of the EAA. Miss TO advised that the power of the S for H under this clause was consistent with that of Clause 3 on Exemptions and other regulation-making power which would be subject to the approval of the S for H and normal legislative procedures. At members’ request, Miss TO undertook to provide a comparison with other statutory bodies where policy secretaries were given similar power.

Clause 39. Accounts regulations

12. Members considered that the clause might need amendments consequential to the proposed changes in Clause 38. Ms CHAN advised that the focus of Clauses 38 and 39 was different: the former dealt with requirements for accountant’s reports while the latter on the moneys in accounts. The Administration would examine the need to refine both clauses to eliminate any possible grey areas.

13. On the extent of control of estate agents over the moneys in clients’ account, Miss TO advised that Clause 46 stipulated the estate agents’ liability for certain money received. The general principle was that the money held by an estate agent should be kept in a bank account separate from the agent’s own business account, and that proper records or ledger should be kept for such amount of money. As regards the power of the EAA to obtain reports, Miss TO advised that it was proper for the EAA to have power of access to relevant accounting documents of estate agents to ensure compliance with accounting regulations.

14. Members questioned the rationale for empowering the EAA to disclose a report to the Crown Prosecutor as this was unprecedented in other legislation. Mr SHIU undertook to liaise with the AGC for a written response.

Clause 40. Effective control of offices; managers

15. Members asked for an estimate on the number of managers required arising from the Bill for the management of all estate agent offices in Hong Kong. Mr SHIU emphasized the need for office managers to assume a monitoring role and advised that this was also a common practice in overseas countries. It was however not possible to provide an estimate on the number required since information on the number of qualified licensed estate agents as managers would not be available until implementation of the Bill. He re-iterated that the intention of the clause was to facilitate management of an estate agent office by a qualified licensed estate agent.

16. On the definition of the term "office", Miss TO confirmed that there was no specific definition in the Bill for this term. As regards whether the sales venue of a completed property was considered an office of an estate agent, and whether a manager was required to be present at such a place to oversee the conduct of business, Miss To re-iterated the spirit of the clause which was to ensure effective control and supervision of salespersons in discharging their duties by qualified managers; the place itself was not the most important consideration.

17. Members questioned the rationale for including sub-clause 40(1)(b)(ii) having regard to the provision in sub-clause 40(1)(b)(i), and for excluding the provisions in sub-clause 37(1)(a)(ii) from sub-clause 40(3)(a). Ms CHAN advised that the focus of sub-clause 40(1)(b)(i) and (ii) was different: the former required a licensed estate agent to have effective control of a manager under his employment, while the latter stipulated the obligations of the manager concerned and focused on violation of the law. In reply to members on the exclusion of managers from the application of Clause 38, Miss TO confirmed that licensed estate agents who were self-appointed as managers of their offices would come under the jurisdiction of Clause 38 on Accountant’s reports; managers who were appointed as employees would be exempted. Ms CHAN supplemented that Clause 48 had already spelt out the type of licensed estate agents to be exempted from the application of certain clauses including Clause 40(1)(a). On members’ request for a legal definition for the word "significant" if this was to be retained in sub-clause 40(4)(a)(i)(A), Ms CHAN undertook to follow-up.

18. Members considered the presentation of the Bill too cumbersome as frequent cross referencing had to be made and urged the Administration to consider re-arranging the order of the clauses in the Bill to facilitate reference.

Date of Next Meeting

19. Members agreed to hold the next two meetings on:

    - Tuesday, 2 July 1996 at 4:30 pm; and

    - Thursday, 4 July 1997 at 10:45 am.

(Post-meeting note: The meeting scheduled for 2 July 1996 had been cancelled.)

20. There being no other business, the meeting closed at 6:40 pm.

LegCo Secretariat
4 September 1996

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