Response to whether selling rights to build small houses involves criminal offences

A developer and a number of indigenous villagers were earlier convicted by the District Court of conspiracy to defraud the Government by purchasing and selling the rights to build small houses. On the question of whether such transactions involve criminal offences, the Lands Department (LandsD) responded to media enquiries as follows:

When executing a small house grant (including a building licence issued in respect of private agricultural land), the small house applicant is required, through the warranty clause (Note) stipulated in the grant, to expressly warrant that he has never made any arrangements to transfer his right to develop a small house or his eligibility to apply for a small house grant.

The Government, through the Development Bureau (DEVB), agreed in 2006 and 2007 that these terms would no longer form part of the applicant's statutory declaration but would instead be incorporated into the land lease. This was agreed at the request of Heung Yee Kuk (HYK), and took into account the fact that, with the approval of small house applications being a land administration matter, the incorporation of these terms into the land lease (including building licences issued in respect of private agricultural land) would not affect the right of LandsD in taking lease enforcement action (such as revocation of free building licences granted and re-entry of the lot as appropriate) where breaches of the relevant terms are identified.

Lease enforcement action itself is not a criminal prosecution. By saying "these measures do not involve criminal conviction of grantees or licensees" (Note: This is English translation of the letters which were in Chinese) in its letters issued to the HYK, the DEVB was precisely referring to lease enforcement measures. It is against the law to obtain government approval by deception through false representation or fraud. Criminal prosecution can be initiated if the illegal acts are established by the law enforcement departments, and this is so even if the person concerned has not made any statutory declaration about his not engaging in those acts. The Judge, when commenting on the 2007 letter in his judgement, has also pointed out that the said letter could not possibly be interpreted as the Government allowing the selling of small house rights and agreeing that such acts would not be subject to criminal prosecution.

The Court's decision sets out how the policy and arrangements should be interpreted. The understanding as set out therein has always been the Government's position. As pointed out in the judgement, the stipulation of relevant conditions in the building licence instead of in the statutory declaration has not changed the eligibility criteria for small house applications, and this case is one involving the Common Law offence of conspiracy to defraud.

Note: the terms and conditions are as follows-

* I have never entered into any arrangements or agreement with any person or persons to transfer, alienate, dispose or otherwise deal with the lot(s) or any part thereof or any interest therein or my rights in and over the lot(s), including but not limited to the right to develop the lot(s) or any part thereof (only applicable to private lots held by the applicants);

* I have never made any arrangements to sell or otherwise dispose of my eligibility to apply for a grant of a Licence, Private Treaty Grant or Exchange of land under the Small House Policy of the Government for indigenous villagers in the New Territories.

Ends/Monday, December 7, 2015
Issued at HKT 20:44