Legislative Council

LC Paper No. LS 71/98-99

Paper for the House Committee Meeting
on 4 December 1998

Legal Service Division Report on
Theft (Amendment) Bill 1998

Object(s) of the Bill

To create a statutory offence of fraud.

LegCo Brief Reference

2. LP 452/00C issued by the Department of Justice in November 1998.

Date of First Reading

3. 2 December 1998.


4. The two main proposals of the Bill are to create a statutory offence of fraud and to retain the common law offence of conspiracy to defraud. The first one is to implement part of the recommendations of the Law Reform Commission of Hong Kong ("LRC") contained in its report "Report on Creation of a Substantive Offence of Fraud" published in July 1996 ("the Report").

5. Under the existing law in Hong Kong, there is no offence of "fraud". There is instead a broad concept of fraud and what it means to defraud someone. This has been defined as "dishonestly to prejudice or to take the risk of prejudicing another's right, knowing that you have no right to do so". Cases involving aspects of fraudulent behaviour are dealt with either as specific offences under the Theft Ordinance (Cap. 210), or where a criminal agreement between two or more persons can be proved, by means of a charge of "conspiracy to defraud" under the common law. Chapters 2 and 3 of the Report set out the weaknesses in the various offences under the Theft Ordinance relating to fraud. Because of the growing complexity of fraudulent behaviour and development of modern technology, the LRC considered that the offences under the Theft Ordinance are inadequate to cope with the problem of fraud. Furthermore, the LRC has identified a number of defects in the existing common law offence of conspiracy to defraud.

6. In the Report, the LRC recommended the creation of a new offence of fraud. Under this new offence, a person by deceit and with intent to defraud induces another to act or make an omission which results in either prejudice or a substantial risk of prejudice (financial or proprietary) to another or benefit (financial or proprietary) to the fraudster or another would commit an offence. The LRC intended that "deceit" could be both by a positive misrepresentation of the facts and by a deliberate concealment of the true position. The maximum penalty of the offence was recommended to be 14 years. Apart from the creation of a new offence, the LRC also recommended that the present common law conspiracy to defraud be specifically repealed and replaced by a conspiracy to commit the new substantive offence.

7. The recommendations of the LRC were submitted to the former Legislative Council as the Fraud Bill which received its First Reading on 20 November 1996. A Bills Committee was formed to consider the Fraud Bill, but it did not commence work due to other priorities and the Fraud Bill lapsed on dissolution of the former Legislative Council.

8. This Bill proposes the creation of an offence of fraud, same as the Fraud Bill and the recommendations of the LRC. However, this Bill differs from the Fraud Bill and the recommendations of the LRC in that in the new offence of fraud proposed in this Bill, the prejudice and benefit are not restricted to financial or proprietary in nature. Another difference with the Fraud Bill and the recommendations of the LRC is that the common law offence of conspiracy to defraud is specifically retained by this Bill (clause 3, in the proposed section 16A(4)).

9. The Administration's reasons for the departure from the Fraud Bill and the recommendations of the LRC are stated in paragraphs 6 to 8 of the LegCo Brief.

Public Consultation

10. The Administration has consulted the Bar Association and the Law Society. The points made by the two professional bodies and the Administration's views are contained in paragraph 19 of the LegCo Brief.

Consultation with Panel

11. The Administration briefed the Panel on Administration of Justice and Legal Services generally on this Bill on 17 November 1998. The Bar Association and the Law Society have also respectively made submissions to the Panel on various points. Members of the Panel had raised various concerns including the departure from the recommendations of the LRC in the treatment of the common law offence of conspiracy of defraud. The Panel was generally of the view that the issues should be considered by a Bills Committee.


12. There are various policy and technical legal issues in the Bill which merit detailed consideration. Members may wish to set up a Bills Committee to consider the Bill.

Prepared by

LEE Yu-sung
Senior Assistant Legal Adviser
Legislative Council Secretariat
2 December 1998