LEGISLATIVE COUNCIL ─ 11 February 2004 3379 OFFICIAL RECORD OF PROCEEDINGS Wednesday, 11 February 2004 The Council met at half-past Two o'clock MEMBERS PRESENT: THE PRESIDENT THE HONOURABLE MRS RITA FAN HSU LAI-TAI, G.B.S., J.P. THE HONOURABLE KENNETH TING WOO-SHOU, J.P. THE HONOURABLE JAMES TIEN PEI-CHUN, G.B.S., J.P. DR THE HONOURABLE DAVID CHU YU-LIN, J.P. THE HONOURABLE CYD HO SAU-LAN THE HONOURABLE ALBERT HO CHUN-YAN IR DR THE HONOURABLE RAYMOND HO CHUNG-TAI, J.P. THE HONOURABLE LEE CHEUK-YAN THE HONOURABLE MARTIN LEE CHU-MING, S.C., J.P. DR THE HONOURABLE ERIC LI KA-CHEUNG, G.B.S., J.P. DR THE HONOURABLE DAVID LI KWOK-PO, G.B.S., J.P. THE HONOURABLE FRED LI WAH-MING, J.P. DR THE HONOURABLE LUI MING-WAH, J.P. 3380 LEGISLATIVE COUNCIL ─ 11 February 2004 THE HONOURABLE NG LEUNG-SING, J.P. THE HONOURABLE MARGARET NG THE HONOURABLE MRS SELINA CHOW LIANG SHUK-YEE, G.B.S., J.P. THE HONOURABLE JAMES TO KUN-SUN THE HONOURABLE CHEUNG MAN-KWONG THE HONOURABLE HUI CHEUNG-CHING, J.P. THE HONOURABLE CHAN KWOK-KEUNG, J.P. THE HONOURABLE CHAN YUEN-HAN, J.P. THE HONOURABLE BERNARD CHAN, J.P. THE HONOURABLE CHAN KAM-LAM, J.P. THE HONOURABLE MRS SOPHIE LEUNG LAU YAU-FUN, S.B.S., J.P. THE HONOURABLE LEUNG YIU-CHUNG THE HONOURABLE SIN CHUNG-KAI THE HONOURABLE ANDREW WONG WANG-FAT, J.P. DR THE HONOURABLE PHILIP WONG YU-HONG, G.B.S. THE HONOURABLE WONG YUNG-KAN THE HONOURABLE JASPER TSANG YOK-SING, G.B.S., J.P. THE HONOURABLE HOWARD YOUNG, S.B.S., J.P. DR THE HONOURABLE YEUNG SUM THE HONOURABLE YEUNG YIU-CHUNG, B.B.S. LEGISLATIVE COUNCIL ─ 11 February 2004 3381 THE HONOURABLE LAU CHIN-SHEK, J.P. THE HONOURABLE LAU KONG-WAH, J.P. THE HONOURABLE LAU WONG-FAT, G.B.S., J.P. THE HONOURABLE MIRIAM LAU KIN-YEE, J.P. THE HONOURABLE AMBROSE LAU HON-CHUEN, G.B.S., J.P. THE HONOURABLE EMILY LAU WAI-HING, J.P. THE HONOURABLE CHOY SO-YUK THE HONOURABLE ANDREW CHENG KAR-FOO THE HONOURABLE SZETO WAH THE HONOURABLE TIMOTHY FOK TSUN-TING, S.B.S., J.P. DR THE HONOURABLE LAW CHI-KWONG, J.P. THE HONOURABLE TAM YIU-CHUNG, G.B.S., J.P. DR THE HONOURABLE TANG SIU-TONG, J.P. THE HONOURABLE ABRAHAM SHEK LAI-HIM, J.P. THE HONOURABLE LI FUNG-YING, J.P. THE HONOURABLE HENRY WU KING-CHEONG, B.B.S., J.P. THE HONOURABLE TOMMY CHEUNG YU-YAN, J.P. THE HONOURABLE MICHAEL MAK KWOK-FUNG THE HONOURABLE ALBERT CHAN WAI-YIP THE HONOURABLE LEUNG FU-WAH, M.H., J.P. 3382 LEGISLATIVE COUNCIL ─ 11 February 2004 DR THE HONOURABLE LO WING-LOK, J.P. THE HONOURABLE WONG SING-CHI THE HONOURABLE FREDERICK FUNG KIN-KEE THE HONOURABLE IP KWOK-HIM, J.P. THE HONOURABLE LAU PING-CHEUNG THE HONOURABLE AUDREY EU YUET-MEE, S.C., J.P. THE HONOURABLE MA FUNG-KWOK, J.P. PUBLIC OFFICERS ATTENDING: THE HONOURABLE DONALD TSANG YAM-KUEN, G.B.M., J.P. THE CHIEF SECRETARY FOR ADMINISTRATION THE HONOURABLE HENRY TANG YING-YEN, G.B.S., J.P. THE FINANCIAL SECRETARY THE HONOURABLE ELSIE LEUNG OI-SIE, G.B.M., J.P. THE SECRETARY FOR JUSTICE THE HONOURABLE MICHAEL SUEN MING-YEUNG, G.B.S., J.P. SECRETARY FOR HOUSING, PLANNING AND LANDS PROF THE HONOURABLE ARTHUR LI KWOK-CHEUNG, G.B.S., J.P. SECRETARY FOR EDUCATION AND MANPOWER DR THE HONOURABLE YEOH ENG-KIONG, J.P. SECRETARY FOR HEALTH, WELFARE AND FOOD DR THE HONOURABLE PATRICK HO CHI-PING, J.P. SECRETARY FOR HOME AFFAIRS LEGISLATIVE COUNCIL ─ 11 February 2004 3383 DR THE HONOURABLE SARAH LIAO SAU-TUNG, J.P. SECRETARY FOR THE ENVIRONMENT, TRANSPORT AND WORKS THE HONOURABLE FREDERICK MA SI-HANG, J.P. SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY THE HONOURABLE STEPHEN LAM SUI-LUNG, J.P. SECRETARY FOR CONSTITUTIONAL AFFAIRS THE HONOURABLE AMBROSE LEE SIU-KWONG, IDSM, J.P. SECRETARY FOR SECURITY THE HONOURABLE JOHN TSANG CHUN-WAH, J.P. SECRETARY FOR COMMERCE, INDUSTRY AND TECHNOLOGY CLERKS IN ATTENDANCE: MR RICKY FUNG CHOI-CHEUNG, J.P., SECRETARY GENERAL MR LAW KAM-SANG, J.P., DEPUTY SECRETARY GENERAL MR RAY CHAN YUM-MOU, ASSISTANT SECRETARY GENERAL 3384 LEGISLATIVE COUNCIL ─ 11 February 2004 TABLING OF PAPERS The following papers were laid on the table pursuant to Rule 21(2) of the Rules of Procedure: Subsidiary Legislation/Instruments L.N. No. Specification of Arrangements (Government of the Kingdom of Belgium) (Avoidance of Double Taxation on Income and Capital and Prevention of Fiscal Evasion) Order .............................. 16/2004 Employees Retraining Ordinance (Amendment of Schedule 2) Notice 2004 .............................. 17/2004 Education (Miscellaneous Amendments) Ordinance 2004 (1 of 2004) (Commencement) Notice 2004 ........ 18/2004 Other Papers No. 55 ─ Hong Kong Arts Development Council Annual Report 2002-2003 No. 56 ─ The Hong Kong Academy for Performing Arts Annual Report 2002-2003 and the Financial Statements and Auditor's Report for the year ended 30 June 2003 No. 57 ─ Vocational Training Council Annual Report 2002/2003 Report of the Bills Committee on Construction Industry Levy (Miscellaneous Amendments) Bill 2003 ORAL ANSWERS TO QUESTIONS PRESIDENT (in Cantonese): Questions. First question. LEGISLATIVE COUNCIL ─ 11 February 2004 3385 Complaints Against and Regulation of Property Management Companies 1. MR ALBERT CHAN (in Cantonese): Madam President, recently, I have received many complaints from property owners alleging that some property management companies had made unauthorized use of the building maintenance fund when discharging their duties and awarded the building maintenance works to persons and companies with whom they had close relations, without going through open tender exercises and consulting the owners. These owners hold the view that such practice has infringed their rights and contravened the Code of Practice on Building Management and Maintenance issued by the Home Affairs Bureau and may involve criminal acts. In this connection, will the Government inform this Council: (a) of the number of relevant complaints received as well as the number of prosecutions instituted against the property management companies and their staff in each of the past three years; and (b) whether it will consider enacting laws to regulate property management companies so as to strengthen the protection for property owners' rights; if so, of the details of its consideration; if not, the reasons for that? SECRETARY FOR HOME AFFAIRS (in Cantonese): Madam President, (a) For the past three years (that is, from 2001 to 2003), the number of complaints received by the Home Affairs Department (HAD) in respect of property management companies were seven, five and 19 respectively. The complaints were mainly about the excessive authority granted to property management companies under the Deed of Mutual Covenant (DMC) or the inappropriate use of the power as set out in the DMC by property management companies. On receipt of these complaints, the 18 District Offices would take the necessary follow-up actions. They would find out more details about the case and then offer appropriate assistance to the complainant. The cases would be referred to the police or the Independent Commission Against Corruption (ICAC) where necessary. 3386 LEGISLATIVE COUNCIL ─ 11 February 2004 For complaints on property management reported to the ICAC in the past three years, 227, 191 and 222 cases were related to property management companies or security companies. The ICAC has completed prosecution for 34, 21 and nine cases respectively in the past three years. (b) Management of private buildings is squarely the responsibility of owners. The Government's policy is to actively encourage and assist owners to form owners' corporation (OC) to facilitate the effective management of their buildings. In this regard, the Government plays the role of a "facilitator", adopting various means to help owners to discharge their building management responsibilities. One of the most crucial means adopted is the provision of a legal framework for compliance by owners. The enactment of the Building Management Ordinance (BMO) is to provide such a framework to facilitate the incorporation of owners and prescribe the rules for property management. The purpose of regulating property management companies is to protect the interests of owners. In fact, there are already existing provisions in the BMO to protect their pecuniary interests and guard against the misuse of owners' money. Part VIA of and the Seventh Schedule to the BMO are mandatory terms incorporated into all DMCs and are applicable to all DMCs. These provisions require that the manager, that is, the property management company, shall appropriately handle their clients' monies. All property management companies have to comply with the rules set out in the DMCs. Hence, whether an OC or an owners' organization has been formed in a building, the manager, that is, the property management company, must, in accordance with the Seventh Schedule to the BMO, maintain an interest-bearing account and shall use that account exclusively in respect of the management of the building. On receipt of the management and maintenance fees, the property management company shall, except for a reasonable amount to cover expenditure of a minor nature, deposit all money into that account without delay. LEGISLATIVE COUNCIL ─ 11 February 2004 3387 Furthermore, we encourage owners to form themselves into OC. Once an OC is formed in a building, the OC could maintain an interest-bearing account in accordance with section 20 of the BMO. Owners will then be able to deposit the management fees directly into that account. The OC shall use that account exclusively in respect of the management of the building.