Legislative Council

LC Paper No. CB(2)2040/98-99
(These minutes have been
seen by the Administration)

Ref : CB2/BC/10/98

Legislative Council
Bills Committee on Theft (Amendment) Bill 1998
Minutes of meeting held on Thursday, 11 February 1999 at 8:30 am in Conference Room B of the Legislative Council Building

Members Present:

Hon Mrs Miriam LAU Kin-yee, JP (Chairman)
Hon Margaret NG
Hon Jasper TSANG Yok-sing, JP

Members Absent:

Hon Martin LEE Chu-ming, SC, JP
Hon Ambrose LAU Hon-chuen, JP
Hon Andrew CHENG Kar-foo

Public Officers Attending:

Mr Stephen Kai-yi WONG
Deputy Solicitor General

Senior Assistant Director of Public Prosecutions

Ms Sherman CHAN
Senior Assistant Law Draftsman

Mr Llewellyn MUI
Senior Government Counsel
Clerk in Attendance:
Mrs Percy MA
Chief Assistant Secretary (2)3
Staff in Attendance:
Mr LEE Yu-sung
Senior Assistant Legal Adviser

Mr Paul WOO
Senior Assistant Secretary (2)3
I. Confirmation of minutes of meeting
(LC Paper No. CB(2)1199/98-99)

The minutes of the meeting held on 5 January 1999 were confirmed.

II. Meeting with the Administration
(LC Paper Nos. CB(2)1256/98-99(01) and 1329/98-99(01))

General discussion

2. At the invitation of the Chairman, Senior Assistant Director of Public Prosecutions (SADPP) took members through the paper tabled at the meeting (LC Paper No. CB(2)1329/98-99(01)). The paper sought to illustrate the meaning of "to defraud" or "to act fraudulently" with some court cases and the principles derived from the court's judgment on those cases.

3. Miss Margaret NG pointed out that in most of the cases quoted in the paper, it appeared that the same elements of acting with deliberate dishonesty for the purpose of economic gain came into play. She questioned whether the cases provided sufficient grounds to justify the wide scope of the proposed new offence of fraud under the Bill to capture circumstances involving non-financial or non-proprietary gain or loss.

4. In reply, SADPP said that the paper endeavoured to highlight, firstly, cases of fraud committed with deceit, which, in the opinion of law enforcement and prosecuting officers, could be more effectively dealt with under the proposed fraud offence; and secondly, cases of conspiracy to defraud involving no deceit which could not have been charged had the existing common law offence of conspiracy to defraud been abolished.

5. Regarding the concern about non-economic frauds, SADPP advised that the case of R v. King HO Yu-sang and others [1993] was adduced as an example of a fraud (by the convicted medical practitioners) whereby a statutory public body (the School Medical Board) was caused to breach its public duty to provide economical medical services to pupils at school. Although in the case in question the convicted doctors made money from the fraudulent medical scheme, it was not strictly an economic loss case because the defence could properly argue that the defendant doctors offered a service in return for the payments they received. The indictments in the CHIM Pui-chung and World Trade cases, on the other hand, both contained charges to defraud the Securities and Futures Commission by circumventing the requirements under the takeovers and mergers codes of the Commission. Although the defendants were ultimately acquitted of those particular charges, there was a proper legal basis for preferring those charges in both instances, which also involved the element of breach of public duty. The Allied case, which was currently under preparation for trial, involved charges of conspiracy to defraud the Stock Exchange and the Securities and Futures Commission in their respective public duties in approving the listing of shares.

6. Miss Margaret NG said that in terms of legal policy, the drafting of criminal legislation should aim at capturing an offence correctly, reflecting the "wickedness" of those conducts which the community wanted to punish by criminal sanctions. A criminal prosecution sometimes failed, not because the law had failed to capture all the necessary elements of the offence, but because of other factors such as insufficiency of evidence to bring about a conviction. A criminal law should not be changed for the purpose of facilitating prosecuting officers in prosecution. She opined that as far as the above cases produced by the Administration were concerned, the community would not be interested in punishing the persons solely for causing a statutory or public body to breach its public duty, as much as in punishing them for deceiving other people for the purpose of perpetrating economic gains for themselves and causing economic loss to others. She considered that the mischief relating to breach of public duties should be a matter for the relevant authorities to improve and tighten up their regulatory mechanisms to minimize the possibility of people suceeding in abusing the system.

7. The Chairman relayed a question raised by Mr Martin LEE, who queried the need to apply the proposed substantive offence of fraud to cover situations involving non-economic gain or loss, in view of the fact that cases of the fraudster acting alone which were not caught by the existing provisions of the Theft Ordinance or the Crimes Ordinance were rare (as mentioned in paragraph 22 of LC Paper No. CB(2)1256/98-99(01)). The Chairman further pointed out that a primary objective of the Law Reform Commission's (LRC) study was to examine the creation of a substantive offence of fraud to encompass conducts presently caught by the common law offence of conspiracy to defraud, and to codify them in the form of statute law to achieve better clarity. However, it appeared that the changes now proposed in the Bill would make things more complicated by opening up the new offence of fraud to non-financial areas, while at the same time seeking to retain the common law offence of conspiracy to defraud. She queried what good the Bill would do to the criminal system, apart from the advantage of catching the minimal number of cases involving deceit committed by a person acting alone.

8. Deputy Solicitor General (DSG) replied that it had been made clear at the outset by the Administration that according to the experience of law enforcing officers involved in prosecuting commercial crimes cases, many company managements in Hong Kong were not aware of fraudulent conducts existing within their organizations. From the operators' (i.e. law-enforcers') point of view, the changes brought about by the proposed Bill and the retention of the common law offence of conspiracy to defraud were necessary so that there would be no areas of fraud left uncovered by the law upon the passage of the Bill. He said that the Administration wanted to achieve the same goal as that of the LRC to bring clarity to the law so that a clear message could be put across to prosecutors, the defence as well as the public at large that fraudulent conducts which the community found condemnable should be punished. Under the proposed new offence of fraud, clarity and simplicity could be achieved in that in addition to conducts involving deceit committed by a person acting alone, conducts presently covered by the offence provisions of the Theft Ordinance and the Crimes Ordinance could also be effectively charged and prosecuted under a single substantive offence which focused on the element of fraud.

9. Miss Margaret NG maintained the view that the Bill should target at major or prevalent fraud cases. However, the wide scope of coverage of the proposed offence of fraud, under the wide definitions of the terms "deceit" and "benefit" etc., could lead to the strange scenario that even trivial occurrences were caught by the proposed offence, as illustrated by the hypothetical example suggested by her at the last meeting of a person (A) with deceit inducing a marriage to another person (B) by making a false representation to person (B).

10. In response, SADPP opined that Miss NG's example appeared to be very much a matter of a private nature between the persons concerned without sufficient evidence to warrant a criminal prosecution of fraud. He added that according to prosecution guidelines, the seriousness of the offence was one of the aspects which the prosecution would take into account in a decision to prosecute, and the Department of Justice had the authority to exercise a discretion not to take action on minor offences.

11. Miss Margaret NG said that whether or not conduct committed was criminal was determined by the law, depending on whether the conduct in question satisfied all the elements prescribed in the particular legislation which captured the offence. She added that as the Administration's power to prosecute was absolute, it would be a highly undesirable situation if there was no certainty as regards how the law would be enforced to deal with different offence situations. She considered that the protection of the general public should not rest ultimately with the prosecutorial discretion of the prosecuting authoritites which could hardly be set out in clear and specific terms. Miss NG's views were shared by Mr TSANG Yok-sing.

12. Miss Margaret NG said that she found it difficult to accept the Bill as it stood unless the proposed substantive offence of fraud was re-drafted to apply only to circumstances involving financial or proprietary gain or loss.

Way forward

13. Members generally felt that the Administration had yet to provide sufficient justification for the wide scope of the new offence of fraud as proposed in the Bill. The Administration was requested to consider the following options to deal with the Bill and to report back to the Bills Committee at the next meeting -

  1. to restrict the proposed new offence of fraud to circumstances in which there was financial or proprietary gain or loss and to abolish the common law offence of conspiracy to defraud;

  2. to restrict the proposed new offence of fraud to circumstances in which there was financial or proprietary gain or loss and to retain the common law offence of conspiracy to defraud; or

  3. not to proceed with the Bill, i.e. to maintain the status quo.
(Post-meeting note: The Administration's response to the above proposed options was circulated to members vide LC Paper No. CB(2)1402/98-99(01) on 4 March 1999.)

II. Next meeting

14. The next meeting was scheduled for 9 March 1999 at 8:30 am to discuss the Administration's response to the proposed options set out above.

15. There being no other business, the meeting ended at 10:00 am.

Legislative Council Secretariat
19 May 1999