LC Paper No. CB(2)2287/98-99
(These minutes have been
seen by the Administration)
Ref : CB2/BC/10/98
Bills Committee on Theft (Amendment) Bill 1998
Minutes of meeting
held on Tuesday, 23 March 1999 at 8:30 am
in Conference Room A of the Legislative Council Building
Members Present :
Hon Mrs Miriam LAU Kin-yee, JP (Chairman)
Hon Martin LEE Chu-ming, SC, JP
Hon Margaret NG
Hon Jasper TSANG Yok-sing, JP
Members Absent :
Hon Ambrose LAU Hon-chuen, JP
Public Officers Attending:
Clerk in Attendance:
- Mr John READING
- Senior Assistant Director of Public Prosecutions
- Ms Sherman CHAN
- Senior Assistant Law Draftsman
- Mr Llewellyn MUI
- Senior Assistant Solicitor General (Acting)
Staff in Attendance:
- Mrs Percy MA
- Chief Assistant Secretary (2)3
I. Meeting with the Administration
- Mr LEE Yu-sung
- Senior Assistant Legal Adviser
- Mr Paul WOO
- Senior Assistant Secretary (2)3
(LC Paper No. CB(2)1531/98-99(01))
Option (b) proposed by the Bills Committee
The Administration took members through LC Paper No. CB(2)1531/98-99(01)). Members noted that the Administration had accepted the Bills Committee's view that there would be relatively few cases of "breach of public duty" which would not be prosecutable under other offences. Therefore, it would not be necessary to create an offence of fraud to cover financial or proprietary gain or loss and breach of public duty. The Administration was prepared to adopt the second option previously put forward by the Bills Committee to deal with the Bill, i.e. to restrict the proposed new offence of fraud to circumstances in which there was financial or proprietary loss or gain and to retain the common law offence of conspiracy to defraud.
Proposal to retain the common law offence of conspiracy to defraud
2. Members noted that both the Hong Kong Bar Association and the Law Society of Hong Kong supported the Law Commission Reform's recommendation to abolish the common law offence of conspiracy to defraud upon the creation of a new substantive offence of fraud. Members sought advice from the Administration as to the justifications for its position to retain the common law offence.
3. Senior Assistant Director of Public Prosecutions (SADPP) said that the common law offence of conspiracy to defraud had been commonly used in Hong Kong and it had worked well especially for the prosecution of some high profile commercial crime cases. In many common law jurisdictions such as the UK, Canada and some of the Australian States, the common law offence of conspiracy to defraud was still being retained. He advised that the common law offence of conspiracy to defraud extended to cover situations in which people entered into an agreement to commit a fraud even though they did not go on actually to complete the fraud. By retaining the common law offence, cases in which no deceit or no financial gain or loss was involved might be dealt with. He cited a number of cases to substantiate the Administration's position to retain the common law offence of conspiracy to defraud.
A recent appeal case involving conspiracy to defraud the Director of Immigration
4. The defendants were charged with conspiracy to defraud officers of the Immigration Department into granting visas to allow a number of foreign workers to come to Hong Kong under the Importation of Labour Scheme. SADPP explained that although the defendants committed the alleged offence for the purpose of obtaining economic gain, it could not be said that the gain resulted directly from the act committed by the Immigration officials. Hence the conduct could not be charged under the new offence of fraud as it did not fall within the meaning of fraud as set out in the proposed section 16A of the Bill.
The CHIM Pui-chung case
5. The defendants were charged with conspiracy to defraud the Securities and Futures Commission (SFC) with the intention to avoid making a general offer, in pursuant to certain conditions specified under the SFC's mergers and takeover code, to buy out the remaining shareholding of the company held by other shareholders. This was another example in which there was deceit but no direct gain or loss in financial terms. SADPP said that although the defendants were ultimately acquitted, there was a proper legal basis for instituting the charges under those circumstances to deal with the element of public officers being defrauded in the course of carrying out their public duty.
R v. King HO Yu-sang and others
(the facts of this case were detailed in LC Paper No. CB(2)1329/98-99(01) circulated on 23 February 1999)
6. In this case, a public body, i.e. the School Medical Service Board, was caused by fraud to breach its public duty to provide economical medical service to school children. SADPP said that there was no deceit in this case because the Secretary to the School Medical Service Board was part of the fraud himself. Although the defendant doctors obviously made money from the fraudulent medical scheme, it was held by the judge that this was not an economic gain or loss case. In this particular case, the defendants could properly argue that they did offer a medical service to treat school pupils who joined the scheme, and it was only up to the pupils whether or not to use the service.
Scott v. Metropolitan Police Commissioner 
(the facts of this case were also set out in LC Paper No. CB(2)1329/98-99(01))
7. SADPP explained that there was no element of deceit in this case because the copyright owners of the films knew nothing about the illegal copying of the films by the conspirators. Although the latter ultimately obtained financial benefits from selling copies of the films, there was no inducement by deceit of any person to commit an act to result directly in the benefit. Hence, the parameters under proposed section 16A for the offence of fraud were not satisfied.
8. Miss Margaret NG and Mr Martin LEE considered that from all the cases mentioned above, it appeared that deceit and financial or proprietary gain or loss, which were the essential elements of the offence of fraud, did exist. Miss NG opined that the offence of fraud as presently drafted under proposed section 16A(1) did not require that a financial gain or loss had to be directly resulted from an act (or the omission of an act) of the person being deceived. She said that one should approach the offence of fraud from the perspective of causation and effect, where an act induced by a false representation could be just a step in a chain of actions which eventually led to a financial gain or loss. The test for deceit, on the other hand, was to judge whether a person would have acted in the way he did had he known of the true position. If not, then a case of inducement by deception was established. Miss NG considered that the proposed offence of fraud should be able to cover those cases raised by the Administration.
9. SADPP said that senior presecutors in the Commerical Crime Unit in the Department of Justice had discussed at length the definition of fraud as proposed in the Bill. They were of the view that the Court would interpret the proposed section 16A on the meaning of fraud as requiring an immediate link between an act induced by deceit and an economic gain or loss. As such, the cases quoted earlier might not totally fit in with the new offence of fraud because of the particular characteristics as had been explained. They were concerned that if the common law offence of conspiracy to defraud was removed, future similar cases could not be charged under the new statutory offence of fraud alone.
10. Members considered that the Administration had yet to come up with sufficient arguments to justify the need to retain the common law offence of conspiracy to defraud along with the creation of a statutory offence of fraud. The Chairman pointed out that a conclusion reached by the LRC in its detailed study, which was supported by the Hong Kong Bar Association and the Law Society of Hong Kong, was that a substantive offence of fraud should be able to encompass conduct fitting within the scope of the existing common law offence of conspiracy to defraud. Therefore, the Administration had to make out a convincing case if it was to obtain the support of the Bills Committee to its position that the common law offence should be retained. Echoing the Chairman's view, Mr Martin LEE invited the Administration to provide more examples of cases which would not have proceeded had there been a statutory offence of fraud alone to enable the Bills Committee to further consider the issue.
11. In view of the concern expressed by the legal professional bodies, Miss Margaret NG undertook to discuss with prosecuting officers of the Department of Justice before the next meeting of the Bills Committee on how they could run into real difficulties in prosecuting prevalent offences should the common law offence of conspiracy to defraud be abolished. She would then report to the Bills Committee on the outcome of discussion. SADPP responded that such a meeting could be arranged.
(Post meeting note : Miss Margaret NG has reported on the outcome of discussion with representatives of the Department of Justice to the Bills Committee at the meeting held on 29 April 1999.)
12. The Chairman requested the Administration to prepare draft Committee Stage amendments (CSAs) to be moved by the Administration in respect of proposed section 16A(3) of the Theft Ordinance to limit the definitions of "benefit" and "prejudice" to financial or proprietary gain or loss.
(Post meeting note : The draft CSAs have been tabled for the Bills Committee's consideration at the meeting held on 29 April 1999.)
II. Next meeting
13. The next meeting was scheduled for 29 April 1999 at 8:30 am.
14. The meeting closed at 9:40 am.
Legislative Council Secretariat
3 June 1999