LegCo Paper No. CB(1) 630/96-97
(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, 23 July 1996 at 4:30 pm in Conference Room B of the Legislative Council Building

Members present :

    Hon Andrew CHENG Kar-foo (Chairman)
    Hon James TO Kun-sun
    Dr Hon LAW Cheung-kwok
    Hon NGAN Kam-chuen
Members absent :
    Hon Mrs Selina CHOW, OBE, JP
    Hon Edward S T HO, OBE, JP
    Hon Ronald ARCULLI, OBE, JP
    Hon Albert CHAN Wai-yip
    Hon LEE Wing-tat
    Hon LI Wah-ming
    Hon CHAN Kam-lam
    Hon CHAN Yuen-han
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
Staff in attendance :
    Mr Stephen LAM
    Assistant Legal Adviser 4
    Miss Becky YU
    Senior Assistant Secretary (1)3

I The Meeting

(LegCo Paper No. CB(1) 1848/95-96)

The Chairman thanked the Assistant Legal Adviser (ALA) for the cross-referencing table on the offences and penalties provisions under Clause 56 which would provide useful references in the ensuing examination of the Clause.

Clause 56. Offences

Clause 56(2)(a)

2. The Senior Assistant Law Draftsman (Acting) (SALD(Atg)) explained that it would be an offence for a licensed estate agent or a licensed salesperson who, without reasonable excuse, failed to comply with any of the conditions attached to his licence under Clause 17(3).

3. In response to members, SALD(Atg) advised that that the objective of Clause 17(3) was to provide for flexibility for the Estate Agents Authority (EAA) to prescribe additional conditions for circumstances not covered by subsidiary legislation. These might include such conditions as the eligibility criteria for handling overseas properties. Hon James TO Kun-sun was not convinced that EAA should be conferred such extensive flexibility. He cautioned that unlike subsidiary legislation, the Legislative Council might not have the opportunity to examine conditions attached to a licence even if these would attract criminal sanctions. He quoted the example of the Security and Guarding Services Ordinance where such important issues as the number of working hours of permit-holders had been included as a separate condition in the permits. To avoid similar recurrences, Mr TO considered that the Administration should define parameters within which conditions could be prescribed and that such conditions should be introduced by way of a schedule for the approval of LegCo. ALA suggested and members agreed that one possible approach to confine the power of EAA in this respect would be to re-word Clause 17(3) as "The Authority may attach to a licence such conditions as prescribed under section 57(1)(e)". The Principal Assistant Secretary for Housing (PAS for H) undertook to consider refining Clause 17(3) but emphasized the need for flexibility for licensing authorities to prescribe additional conditions in the light of actual experience. He further assured members that regulations so prescribed would be subject to normal legislative procedures.

Clause 56(2)(b)

4. SALD (Atg) explained that it would be an offence for a licensed estate agent or a licensed salesperson who, without reasonable excuse, used any names other than that specified in his licence in the course of estate agency business.

5. As for the difference in penalties between Clauses 56(2)(a) and (b), SALD (Atg) advised that sub-clause (2)(b) had been drawn up from a policy angle. The Assistant Secretary for Housing (AS for H) explained that the use of names of other estate agents to conduct estate agency work was a serious breach and dishonest act. There was a need for adequate penalty to guard against such possible abuse.

Clauses 56(2)(c) and (d)

6. The Chairman reiterated the Bills Committee’s reservations at the criminal sanctions for non-compliance of Clause 37 before the establishment of a Central Data Bank on property information. He remarked that Clauses 56(2)(c) and (d) would be re-examined when the Administration’s response on related concerns raised by members at previous meetings was discussed.

Clause 56(2)(e)

7. SALD (Atg) explained that it would be an offence for a licensed estate agent or a licensed salesperson who, without reasonable excuse, failed to deliver an accountant’s report to EAA within a specified period of time.

8. Some members recalled that at the clause-by-clause examination stage of Clause 38, the Administration undertook to consider the Bills Committee’s suggestion of confining the scope of accountant’s reports to the client’s account maintained separately by estate agents. They asked if the Administration would reduce accordingly the penalties for non-compliance. While acknowledging members’ concern, PAS for H pointed out that even though estate agents were not required to submit regular reports on their own accounts, powers to have access to accounts of estate agents under specified circumstance would still be required so as to ascertain whether estate agents had complied with the account rules. He would nevertheless consider the need to refine the clause. As for penalties, PAS for H advised that reference had been made to the Companies Ordinance when drawing up these provisions. AS for H supplemented that similar offences under the Leveraged and Foreign Exchange Trading Ordinance (LFETO) would be liable to a fine of $200,000 or to imprisonment of two years.

Clause 56(2)(f)

9. SALD (Atg) explained that it would be an offence for a licensed estate agent who, without reasonable excuse, failed to appoint a manager in his principal office as well as in each of his other offices.

10. Some members were worried that there might not be sufficient qualified managers for all estate agent offices in view of the large number of such offices in Hong Kong, and enquired if transitional arrangements would apply. PAS for H considered that the situation envisaged by members would most unlikely happen as managers were just licensed estate agents. He assured members that EAA could draw up separate guidelines if circumstances so required.

Clause 56(2)(g)

11. SALD (Atg) explained that it would be an offence for a licensed estate agent who, without reasonable excuse, employed or continued to employ as a salesperson any person who for the time being was not the holder of a licence.

12. Members considered that the nature of offences on the part of licensed estate agents would be similar to those for practising estate agency work without a licence, particularly in the event of estate agents continuing to employ salespersons who were not properly licensed, and that the penalties provisions under Clause 56(1)(b) should similarly apply. AS for H undertook to consider members’ views but advised that the proposed penalties for Clause 56(2)(g) had taken into account the seriousness of the offences.

Clause (2)(h)

13. SALD (Atg) explained that it would be an offence for a licensed estate agent who, without reasonable excuse, failed to provide a registered address or notify EAA in respect of changes.

14. Members were worried that estate agents might be unduly penalized in the event of inadvertent delay in notifying EAA of any changes, and enquired if similar penalties provision existed in other legislation. AS for H advised that similar offences would be liable under LFETO to a fine of $25,000 or imprisonment of six months, and the Insurance Companies Ordinance to a fine of $100,000 or imprisonment of two years, or the Money Lenders Ordinance to a fine of $100,000 or imprisonment of six months. In reply to a member, SALD (Atg) confirmed that overseas registered estate agents would be deemed to have complied with the clause if they had a registered address in Hong Kong.

Clause 56(2)(i)

15. SALD (Atg) explained that it would be an offence for a licensed estate agent who, without reasonable excuse, failed to file within 31 days returns on changes as required under Clauses 42(1) to (5).

16. Members also expressed reservations on the criminal sanctions which would be applicable in the event of delay in notifying EAA; they considered that alternatively EAA should revoke the licences of estate agents concerned for repeated offences. SALD (Atg) advised that estate agents could file such returns as the appointment of directors to EAA when the same was submitted to the Company Registrar. The Chairman urged the Administration to re-consider the penalties provisions in parallel with those for Clause 37.

Clause 56(2)(j)

17. No particular comments were made on this sub-clause.

Clause 56(2)(k)

18. On the difference between Clauses 56(2)(j) and (k), SALD (Atg) explained that the former aimed to specify the circumstances under which estate agents failed to repay to clients the moneys received in accordance with Clauses 46(1) or (3), while the latter focused on salespersons who failed to repay estate agents the moneys received according to Clause 46(2). The Chairman remarked that the penalties provisions under Clause 56(2)(k) would serve as a yardstick for offences committed by salespersons.

19. Hon NGAN Kam-chuen expressed reservations at the unduly high level of penalties under Clause 56 taking into account the relatively small number of complaints when compared with the overall number of property transactions, and urged the Administration to consider refining the clause. The Chairman said that this could be discussed upon receipt of the Administration’s response.

Clause 57. Regulations

20. The Chairman acknowledged members’ concern on the inclusion of educational qualifications in the principal Ordinance and suggested re-examining the subject again at a subsequent meeting.


Constitution of Authority

21. To allay the trade’s concern over possible domination of EAA by large estate agents, some members considered a need for the Administration to refine the composition of EAA to include representation of small and medium scale estate agents. PAS for H emphasized that the representativeness of prospective appointees in the trade and their contribution and commitment to the improvement of estate agency work would be carefully considered. Other factors such as experience, expertise, integrity and impartiality would also be taken into account. No specific reference would be made in the Bill regarding the size of estate agency companies and their representation in the Authority as it would be arbitrary to define small and large estate agency companies. PAS for H also took the opportunity to dispel a misconception that there was a pre-determined membership list for EAA. The Chairman remarked that this clause would need further consideration by the Bills Committee having regard to the divergent views.

22. The Chairman said that as the Bill Committee had concluded the clause-by-clause examination of the Bill, the meeting on 29 July 1996 would be cancelled. The next meeting of the Bills Committee would be held on 17 September 1996 at 4:30 pm to consider the Administration’s response to members’ concerns raised at previous meetings.

23. There being no other business, the meeting closed at 6:10 pm.

Legislative Council Secretariat
6 January 1997

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