LC Paper No. CB(2)1199/98-99
(These minutes have been seen
by the Administration)
Ref : CB2/BC/10/98
Legislative Council Bills Committee on Theft (Amendment) Bill 1998
Members Present :
Minutes of Meeting
held on Tuesday, 5 January 1999 at 10:45 am
in Conference Room B of the Legislative Council Building
Hon Mrs Miriam LAU Kin-yee, JP (Chairman)
Hon Martin LEE Chu-ming, SC, JP
Hon Margaret NG
Hon Ambrose LAU Hon-chuen, JP
Hon Andrew CHENG Kar-foo
Hon Jasper TSANG Yok-sing, JP
Hon James TO Kun-sun
Public Officers Attending:
Clerk in Attendance:
- Mr Stephen WONG
- Solicitor General (Acting)
- Mr John READING
- Senior Assistant Director of Public Prosecutions
- Ms Sherman CHAN
- Senior Assistant Law Draftsman
- Mr Llewellyn MUI
- Senior Government Counsel
Staff in Attendance:
- Mrs Percy MA
- Chief Assistant Secretary (2)3
I. Election of Chairman
- Mr LEE Yu-sung
- Senior Assistant Legal Adviser
- Mr Paul WOO
- Senior Assistant Secretary (2)3
Mrs Miriam LAU was elected Chairman of the Bills Committee.II. Meeting with the Administration
(the Bill; the Legislative Council Brief - Ref: LP452/00C; the Law Reform Commission's Report on Creation of a Substantive Offence of Fraud published in July 1996; LC Paper Nos. LS71/98-99; CB(2)949/98-99(03); CB(2)782/98-99(01); CB(2)656/98-99(01); marked-up copy of the Bill)
2. Members noted the information paper (LC Paper No. CB(2)949/98-99(03)) prepared by the Administration in response to the queries raised by members of the Panel on Administration of Justice and Legal Services on the Bill at a meeting on 17 November 1998. At the invitation of the Chairman, Solicitor General (Acting) ("SG(Ag)") took members through the key issues set out in the paper.Law of fraud in other jurisdictions
3. SG(Ag) advised that after researching into the law of fraud in other jurisdictions, it was found that there had been no significant changes and developments in this area in other major common law jurisdictions, such as England, Scotland, Canada and New Zealand, since the Law Reform Commission Report ("LRC Report") was published in 1996. In Australia, the law as described in the LRC Report remained largely accurate, except that section 429 of the Queensland Criminal Code (the offence of cheating) had been repealed and replaced with section 408C, where the element of "dishonesty" was included in a crime of fraud.
Comparison of the Bill and the LRC's recommendations
4. SG(Ag) said that the Bill sought to address the concern that the implementation of the LRC's recommendations would be defective by providing for the following -
- With the proposed definition of "benefit" and "prejudice" in the Bill (under proposed section 16A(3) of the Theft Ordinance (Cap.210)), which removed the restriction to financial or proprietary loss or gain, the new offence of fraud would protect not only an individual's proprietary interest, but also the public interest in the integrity of the administration of public affairs;
- By retaining the existing common law offence of conspiracy to defraud (proposed section 16A(4)), in addition to the creation of a new offence of fraud, conduct not involving an element of deceit (but currently covered by the existing offence of conspiracy to defraud) would continue to be caught. In addition, the retention of the common law offence would address the concern of those jurisdictions which had entered into agreements on surrender of fugitive offenders with Hong Kong and which had listed the offence of conspiracy to defraud as an extradictable offence. They were concerned that some requests for extradition made to Hong Kong could fail for want of double criminality if the common law offence of conspiracy to defraud was abolished and the new statutory offence did not comprehend all the conduct previously comprehended by the common law offence.
Comments on the submission from the Law Society of Hong Kong (LC Paper No. CB(2)656/98-99(01)
|5. At members' request, the Administration agreed to provide a list of the countries which had entered into agreements with Hong Kong on surrender of fugitive offenders, and those countries which had listed in the agreements the offence of conspiracy to defraud as an extradictable offence.||Adm
6. SG(Ag) said that the Administration did not agree with the views of the Law Society. The Administration held the view that as the proposed new offence of fraud required that there must be deceit on the part of the fraudster with intent to defraud, it was difficult to envisage how the new fraud offence would intrude upon ordinary lawful civil or commercial activities. As to the possibility of overlap between the common law offence of conspiracy to defraud and the new statutory offence of fraud, SG(Ag) pointed out that overlap was not uncommon in criminal law. In any event, the penalty for the new offence of fraud and the offence for conspiracy to defraud was the same, i.e. imprisonment for 14 years on conviction upon indictment.
Comments on the submission from the Hong Kong Bar Association (LC Paper No. CB(2)782/98-99(01))
7. Members noted that the Bar Association was concerned that the new offence of fraud might not be construed as an offence of dishonesty. It submitted that "dishonesty" should be expressly provided for as an element of the new fraud offence. SG(Ag) advised that the Administration felt that given the inclusion of "deceit" with "intent to defraud" as necessary elements of the new offence of fraud, and by virtue of the proposed new section 16A which defined, among others, the key elements of "deceit", "intent to defraud", "benefit" and "prejudice", the new offence of fraud necessarily involved "dishonesty". In this connection, he added that one should not confuse motive with the objective fact of the falsity of a statement which would found a charge of fraud if there was the intent to defraud. Motive (whether benign or ill-intentioned) should go to mitigation alone, not criminality. This was made clear in the case of Wai Yu-tsang where conviction for fraud of the accused, who was a bank accountant who believed that his actions would prevent a run on the bank, was upheld by the Privy Council.
Discussion on the BillThe new offence of fraud and retention of the common law offence of conspiracy to defraud
8. The Chairman asked the Administration to elaborate further on the proposals to remove the restriction to financial or proprietary loss or gain and to retain the common law offence of conspiracy to defraud. She pointed out that a primary objective of the LRC study was to consider the creation of a substantive offence of fraud to encompass conduct presently caught by the common law offence of conspiracy to defraud. After lengthy deliberations of the LRC, it came to the view that the common law offence should be abolished. The Chairman queried why the Administration had differed from the LRC's conclusion.
9. In response, Senior Assistant Director of Public Prosecutions ("SADPP") replied that the proposed amendments enabled action to be taken on cases involving no financial benefit or prejudice, such as public officials being caused to breach their public duty or act in a way in which they would not have acted had they known of the true position. In addition, actual experience showed that prosecutions in a number of cases involving bank frauds or other commercial crimes would not have been possible had the common law offence of conspiracy to defraud been dispensed with. SADPP quoted a number of cases to substantiate the point. He further advised that under the existing law, while two or more persons involving in fraudulent conduct might be charged with offence of conspiracy to defraud, similar conduct committed by one person acting alone did not constitute an offence unless it fell within the confines of one of the existing offences under the Theft Ordinance. Such cases would be covered with the introduction of the proposed new offence of fraud.
10. SG(Ag) supplemented that according to the views expressed by officers involved in prosecuting commercial crime cases, many companies were not aware of frauds within their organisations. However, such fraudulent activities had enormous impacts and resulted in tremendous overall loss. It was necessary to take steps by legislative means to deal with the situation.
|11. Members considered that the cases which SADPP had referred to involved complicated aspects of fraud and points of law. At the request of the Chairman, the Administration undertook to provide in writing a more detailed account of those cases and to explain why prosecution of those cases could be brought under the existing common law offence of conspiracy to defraud, but not the new offence of fraud.||Adm |
Meaning of "deceit", "intent to defraud" and "benefit/prejudice"
|12. Referring to the "public duty" argument to justify the proposed removal of the restriction to financial or proprietary loss or gain, SADPP quoted a precedent case of a medical scheme for primary school children in which two doctors were prosecuted for conspiring to defraud school principals and pupils to join the medical scheme, which nevertheless failed to provide the kind of medical services that were represented to them, and thereby causing the School Medical Service Board to breach its public duty to provide economical medical treatment to school students. The Chairman requested the Administration to provide details of this case for members' reference.||Adm
13. Miss Margaret NG was concerned about the wide scope of the proposed new offence of fraud under proposed section 16A of Cap. 210. She opined that given the inclusive meaning of "deceit", "benefit" and "prejudice", which contained such broad references as "whether or not the deceit is the sole or main inducement", "whether deliberate or reckless", "intentions or opinions" and "financial or non-financial" etc., virtually any kind of untruths uttered would face the danger of falling within the scope of the new offence. It was possible for the new offence of fraud to intrude into many ordinary civil activities. Mr James TO shared the concern of Miss Margaret NG. To illustrate their point, Miss NG and Mr TO said that such wide and embracing definitions in proposed section 16A could result in the following situations being caught -
- A person A, who was attracted by the sole beauty of another person B, successfully induced B to marry him by falsely representing to B that he loved her dearly;
- A person seeking employment falsely representing to a prospective employer that the latter was his "idol", and because of that he got the job;
- Press reporters making up certain untrue remarks or statements with the purpose of inducing a public figure, for example a senior Government official, to comment on certain issues or disclose certain information on such issues. This would be caught by the "public duty" element of the new offence of fraud.
14. Mr James TO supplemented that similar examples were many and varied in real life situations. Citing the real estate agencies business as another example, he said that the introduction of the new offence would put practitioners in the trade at serious risk. As real estate agents normally represented both parties in a transaction, it was common tactics for the agents to conceal certain facts or material information from either party in order to make it easier to achieve a deal. As the Bill now stood, such act by the agents would constitute a deceit practised with intent to defraud and thus would be caught by the new offence of fraud.
15. The Administration responded that the matter concerning the scope of the new offence had been carefully considered. The views sought from prosecuting officers were that the Bill as presently proposed was necessary to ensure that there would be no areas of fraud left uncovered and that prosecutions could be brought against some cases of substantive commercial crimes which could not be prosecuted under the current law. Referring to the example given by Mr James TO, the Administration said that genuine cases of deceit practised by real estate agents should be prosecuted. The Administration added that members' concern about prosecution of unwarranted cases, such as cases of "white lies", could be addressed by prosecution policy which provided a prosecutorial discretion not to take action on offences of a trivial nature. Miss Margaret NG doubted this was the case. She said that she had the impression that prosecuting officers normally would take action on cases where prima facie evidence existed to avoid accusation of being biased or unfair. In any case, she considered that it was not desirable to rely on the discretionary power of the prosecution as the ultimate safeguard.
16. Miss Margaret NG pointed out that "deceit" formed the basis of fraud and the offence of fraud was a criminal offence. However, the definition of "deceit" as proposed in the Bill did not seem to contain a criminal element. She said that the LRC saw the danger of extending the scope of "deceit" to mere expressions of opinion or commercial exaggerations or conduct of that kind and therefore recommended to limit the scope by the nature of "benefit" and "prejudice" where a lie was acted upon. The LRC concluded that benefit/prejudice should be limited to financial or proprietary loss or gain. Miss NG said that she tended to agree with the LRC's position.
17. Miss Margaret NG added that many deceitful acts committed in daily life, notwithstanding that such conduct might have caused some potential or actual prejudice, did not in fact involve a criminal element and therefore should not be criminalised. In her opinion, promulgation of codes of proper conduct mandating the quality of integrity would be a better alternative than a wide and inclusive statutory offence of fraud to regulate and sanction certain acts of deception.
18. Miss Margaret NG further questioned why "opinions" was included in the definition of "deceit". The Administration explained that it was intended to be consistent with the definition of "deception" under section 17 of the Theft Ordinance, which also contained the reference to "opinions". The proposed definition of "deceit" was similar to the existing definition of "deception" in section 17(4) of the Theft Ordinance. The Administration advised that apart from this and the proposed definitions of "benefit" and "prejudice", which removed the restriction to financial or proprietary loss or gain, the meaning of the terms under proposed section 16A(3) did not vary in substance from the LRC's proposals. SG(Ag) added that section 408C of the Queensland Criminal Code on the crime of fraud also contained references to benefit or advantage to any person that was "pecuniary or otherwise". There were also similar provisions in the laws of fraud in other common law jurisdictions.
19. The Chairman cautioned that the Administration should be careful not to straight-forwardly copy a certain part of a specific legal provision and incorporate the same in another provision, and by so doing provided it with an unnecessarily wide scope of application.
|20. Members were of the view that the Administration had yet to convince them of the need to create a new statutory offence of fraud with a wide scope and to retain the common law offence of conspiracy to defraud together with the introduction of the new offence of fraud. To enable the Bills Committee in further scrutinising the Bill, the Administration should provide more justifications for the consideration of the Bills Committee, with actual case studies to highlight major areas of concern.||Adm
21. In the light of the foregoing discussion, the Administration was requested to respond to the following points for discussion at the next meeting -
- To explain the justifications for the wide meaning of "deceit" and "benefit" as proposed in the Bill and to illustrate by examples how prosecution policy would ensure that only worthwhile cases would be prosecuted;
- To explain why by removing the restriction to financial or proprietary loss or gain, the new offence of fraud would protect also the public interest in the integrity of the administration of public affairs; and
- To reconsider the comments made by the Hong Kong Bar Association and the Law Society of Hong Kong.
22. Members agreed that the response from the Administration to the points raised at this meeting should be sent to the Hong Kong Bar Association and the Law Society of Hong Kong for comments. If necessary, representatives from the legal profession would be invited to present their views at a future meeting.
III. Next meeting
23. The next meeting was scheduled for 11 February 1999 at 8:30 am.
24. There being no other business, the meeting ended at 12:10 pm.
Legislative Council Secretariat
3 February 1999