*******************************************************
Following is a question by the Hon Lee Wing-tat and a written reply by the Secretary for Transport and Housing, Ms Eva Cheng, in the Legislative Council today (January 18):
Question:
After the media uncovered the unusual behaviour in the property transactions of the development project of "39 Conduit Road" in December 2009, the Government had first written to the developer of the property in March 2010 to make enquiries, and then submitted the relevant correspondences to the Legislative Council (LegCo) in July of the same year, and indicated that it would follow up and investigate the incident. The Police had also officially stepped in immediately to investigate the cancellation of the Agreement for Sale and Purchase (ASP) of some of the first-hand units of "39 Conduit Road", and went to the developer's head office as well as the law firm concerned to seize a batch of documents suspected to be related to the case. In this connection, will the Government inform this Council:
(a) whether it knows how many units and which units of "39 Conduit Road" have been successfully sold to date, as well as the respective selling prices of the units sold, and the number of units the ASP of which has been cancelled and the units involved, as well as the number of these units for which only a 5% deposit was charged; the respective numbers of units for which deficiency in price has and has not been recovered, and the deficiency in price recovered;
(b) of the total number of times the authorities have exchanged correspondences with the developer of "39 Conduit Road" to date, and how many correspondences have not been submitted to LegCo, and how they will arrange to pass those correspondences to LegCo; the progress and outcome of the follow-up actions taken and investigations conducted by the LandsD and the Police on the incident; whether anyone has been interviewed; if so, which people have been included; whether they have examined if there was anyone who conspired to create fraudulent property transactions;
(c) what follow-up investigations have been conducted so far after the Police seized the documents from the developer, and which government departments are responsible for and under which legislation the investigations are conducted;
(d) when the authorities expect to complete the investigations, and whether they will consider releasing the interim investigation results; and
(e) whether the authorities have learnt any lesson from the incident, and will, under the proposed legislation to regulate the sale of first-hand residential properties, include provisions to avoid any loophole that enables developers to collude with buyers to create the illusion of transactions on the market; if so, of the provisions to be included?
Reply:
President,
The Government is committed to enhancing the transparency of the sales of first-hand private residential properties, safeguarding the reasonable rights of consumers, and ensuring that consumers have access to accurate and comprehensive property information when purchasing first-hand private residential properties. The Government does not tolerate deceptive transactions and the release of misleading and incomplete information on flat sales.
Following the media reports on the exceptionally high transaction prices of individual units at 39 Conduit Road, the Government and the public were concerned about 24 of those transactions (the 24 units or transactions of the first batch). In this regard, the Lands Department (LandsD) has issued a series of letters to the developer of 39 Conduit Road (the developer) between March 18, 2010 and now, to make enquiries about the transactions concerned. The developer announced on June 15, 2010 that only four out of the 24 units of the first batch had been taken forward to completed transactions. Relevant government departments, including the Police, are now investigating the case.
The Administration's reply to the five parts of the question is as follows:
(a) As regards the transaction status of the 24 units of the first batch, according to the Land Registry (LR)'s record, as at January 6, 2012, four out of these 24 units had completed transactions (i.e. the assignments were completed). The transactions of the remaining 20 units were cancelled.
The LR's record shows that in respect of the four units (out of the 24 units of the first batch) which had completed transactions, namely Units 30A, 30B, 31A and 31B, the amount of consideration was around $124 million, $134 million, $126 million and $134 million respectively.
The LR's record shows that the 20 units (out of the 24 units of the first batch) which had cancelled transactions involved Units 8A, 8B, 9A, 9B, 10A, 10B, 11A, 11B, 12A, 12B, 28A, 28B, 29A, 29B, 32A, 32B, 33A, 33B, 45A (also known as 68A) and 45B (also known as 68B).
According to the developer's reply letter to the LandsD, the developer retained 5% of the transacted price of each of the 20 aforementioned cancelled transactions. The developer had not pursued recovering the deficiency in prices of the 20 cancelled transactions.
Besides, the LR's record shows that, as at January 6, 2012, apart from the 24 units of the first batch, there were three other units of 39 Conduit Road which had completed transactions, and another three units which had cancelled transactions (i.e. cancellation of the Agreement for Sale and Purchase (ASP) has been registered). As regards the three units (not being part of the 24 units of the first batch) which had completed transactions, namely Unit 21B, 41 Duplex Unit B (also known as 61B) and 43 Duplex Unit A (also known as 66A), their amount of consideration was around $94.5 million, $338 million and $361 million respectively.
The LR's record shows that the three other units (not being part of the 24 units of the first batch) which had cancelled transactions involved Units 16B, 26B and 36B. The developer retained 10% of the transacted price of each of these 3 cancelled transactions and reserved the right to recover the deficiency in prices of these 3 cancelled transactions.
(b) Between March 18, 2010 and now, the LandsD and the developer of 39 Conduit Road exchanged a total of 31 letters in relation to the 24 units of the first batch. Of the 31 letters, 13 were sent by the LandsD to the developer, requesting the developer to provide information on the 24 transactions of the first batch; and the remaining 18 were replies from the developer to the LandsD.
In respect of the 20 letters exchanged (covering the period from March 18, 2010 to July 5, 2010) between the LandsD and the developer of 39 Conduit Road, after the developer took the initiative to pass to the Legislative Council (LegCo) on July 5, 2010 its reply letters to the LandsD, the Administration also passed to LegCo on the same day the LandsD's letters to the developer by that time and in their entirety. Subsequently, the Administration passed to LegCo on July 12, 2010 a duplicate set of the 20 letters between the LandsD and the developer for the period from March 18, 2010 to July 5, 2010 in chronological order.
Thereafter, another 11 letters were exchanged between the LandsD and the developer between August 24, 2010 and now. Of the 11 letters, four were issued by the LandsD to the developer, and seven were issued by the developer to the LandsD. Primarily, the four letters of the LandsD made further enquiries on the 24 transactions aforementioned.
As the Administration had emphasised when it passed to LegCo in July 2010 the letters between the LandsD and the developer, and reiterated at the LegCo meeting on January 26, 2011, under normal circumstances, the Administration will not disclose information relating to a case which is under investigation by the law enforcement agencies, lest such disclosure will adversely affect and prejudice ongoing investigations or undermine any future actions that the Administration may take upon completion of the investigations. However, the decision by the developer to take the initiative to release on July 5, 2010 its letters changed the situation by removing one of the major legal considerations, i.e. the possibility of any prejudicial effect on the developer resulting from the disclosure of the correspondence between March 18 and July 5, 2010. Therefore, the Administration passed to LegCo the exchange of correspondence immediately after the developer had passed its letters to LegCo.
Regarding the 11 letters exchanged between the LandsD and the developer from August 24, 2010 until now, the Administration understands that the developer has not taken the initiative to disclose them. Therefore, the Administration has not disclosed the correspondence concerned in accordance with normal practice. The Administration has also ascertained the developer's position on this. The developer considers that as the case is under investigation by the Police, it would be inappropriate to disclose the aforementioned 11 letters under the circumstances.
(c) and (d) The Commercial Crime Bureau of the Police is conducting a thorough investigation on the case, and is considering from various perspectives whether it involves any criminal element. It is not appropriate for the Administration to comment on details of the investigation at this stage.
(e) To enhance the transparency and fairness of the sales arrangements of first-hand residential properties, the Transport and Housing Bureau (THB) set up a Steering Committee in October 2010 to consider issues relating to the regulation of the sales of first-hand residential properties by legislation. The Steering Committee completed its work within one year, and came up with detailed recommendations on regulating the sales of first-hand residential properties by legislation. Having considered the recommendations made by the Steering Committee, THB issued the public consultation document in the form of a draft legislation in November 2011 to seek views from the public on the draft legislation. The public consultation exercise will end on January 28, 2012.
The proposed legislation sets out measures to enhance the transparency of the sales arrangements and transaction information of first-hand residential properties, which include :
1. the vendor is required to release the price list at least three calendar days before the commencement of the sale, and sell the units according to the prices as set out in the price list. The first and subsequent price lists have to meet the prescribed minimum number of units. If the vendor would like to change the prices of the units, the vendor must revise the relevant price lists and the units can only be sold three calendar days after the revised price lists have been issued;
2. the vendor should make public at least three calendar days before the commencement of the sales certain key information relating to sales arrangements, such as the date and time for the commencement of sales, the sales venues, and the method to be used to determine the order of priority of purchasers;
3. the vendor should disclose transaction information using a standardised template within 24 hours upon the signing of the Preliminary Agreement for Sale and Purchase (PASP). The vendor should also disclose information concerning the ASP on the Register within one working day after the signing of an ASP. If the ASP is not duly signed by the purchaser within three working days after the signing of the PASP, the vendor should indicate such information on the Register on the fourth working day; and
4. the vendor should disclose whether a transaction involves the directors of the developer, the immediate family members of the directors or the senior staff of the developer.
The proposed legislation sets out clearly the penalties for breaches of the requirements, including misrepresentation and dissemination of false or misleading information. Depending on the nature of the offences, the maximum penalty is a fine of $5 million and imprisonment of seven years.
THB will submit the draft Bill into the LegCo in the first quarter of 2012, and will make every effort to have the legislation enacted in 2012.
Ends/Wednesday, January 18, 2012
Issued at HKT 13:34
NNNN