HKSAR v. Chan Chi Wan Stephen and Another
Read the full judgment text of CACC 92/2013 on BabelCite. This Court of Appeal judgment was delivered on 26 October 2015.
1. At all material times the 1 st respondent Chan Chi-wan, Stephen (“Chan”) was the General Manager (Broadcasting) of Television Broadcasts Limited (“TVB”), and the 2 nd respondent Tseng Pei-kun (“Tseng”) was the sole director cum shareholder of Idea Empire Advertising & Production Company Limited (“IEAP”). Since IEAP’s incorporation in August 2008, it had business dealings with TVB, including entering into service agreements with TVB on behalf of outside bodies, so that those bodies could enga
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[English Translation – 英譯本] IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CRIMINAL APPEAL NO. 92 OF 2013 (ON APPEAL FROM DCCC NO. 1214 OF 2010) ________________
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IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CRIMINAL APPEAL NO. 183 OF 2014 (ON APPEAL FROM DCCC NO. 1214 OF 2010) ________________
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JUDGMENT Hon Yeung VP (giving the judgment of the Court): Introduction 1.At all material times the 1st respondent Chan Chi-wan, Stephen (“Chan”) was the General Manager (Broadcasting) of Television Broadcasts Limited (“TVB”), and the 2nd respondent Tseng Pei-kun (“Tseng”) was the sole director cum shareholder of Idea Empire Advertising & Production Company Limited (“IEAP”). Since IEAP’s incorporation in August 2008, it had business dealings with TVB, including entering into service agreements with TVB on behalf of outside bodies, so that those bodies could engage TVB artistes to participate in their business promotional activities. 2.This appeal arose from the following incident: Through IEAP, Chan accepted $112,000 from Olympian City, a shopping complex under the Sino Group, for his performance in a Be My Guest show (“the additional Be My Guest show”), which was a sideshow within a show organized by TVB for Olympian City for publicity purposes, called New Year’s Eve Countdown for 2010, which was to take place on 31 December 2009. The prosecution alleged that Chan accepted the $112,000 in contravention of section 9 of the Prevention of Bribery Ordinance, Cap 201 Laws of Hong Kong (“the Ordinance”), and Chan and Tseng were charged with one count of conspiracy for an agent to accept an advantage (charge 1). Chan and Tseng each faced one further charge alternative to charge 1; they were respectively agent accepting an advantage (charge 2) and offering an advantage to an agent (charge 3). 3.In addition, Chan and Tseng were charged with one count of conspiracy to defraud (charge 5), and Tseng and Chan Wing-shuen, Wilson were charged with another conspiracy to defraud (charge 4). 4.Chan, Tseng and Chan Wing-shuen denied all the charges and were tried before Acting Chief District Judge (as he then was) Poon Siu-tung (“the trial judge”). 5.In respect of charges 1, 2 and 3, the position taken by Chan and Tseng was that when Chan participated in the New Year’s Eve Countdown for 2010 and performed in the additional Be My Guest show, he was not acting in the capacity of an agent of TVB. The reason was that the additional Be My Guest show was not related to TVB’s affairs or business. Both of them also stated that TVB had on many occasions granted Chan permission to accept remuneration for his participation in publicity activities of a similar nature, and so Chan had TVB’s permission to accept or acquiescence in accepting remuneration from Olympian City for his performance in the additional Be My Guest show. The defence put forward by Tseng was that he, not being an employee of TVB, had no knowledge of the details of the work and contractual arrangements between Chan and TVB. Neither Chan nor Tseng gave evidence, and they did not call any defence witness. 6.On 2 September 2011, the trial judge acquitted Chan and Tseng of all charges. He dismissed the charges and ordered the Secretary for Justice (“the Secretary”), who represented the prosecution, to pay Chan’s and Tseng’s costs. 7.For charges 1, 2 and 3, the trial judge found that Chan was not acting as an agent of TVB when he performed in the additional Be My Guest show, that the additional Be My Guest show was not related to TVB’s affairs or business, and that therefore what Chan did was not caught by section 9 of the Ordinance. Moreover, the trial judge considered that even if Chan was acting in the capacity of an agent of TVB and the additional Be My Guest show was related to TVB’s business, TVB had either allowed Chan to accept the remuneration in question from Olympian City or acquiesced in his doing so. The trial judge found that, as Chan’s understanding was that TVB would definitely allow him to accept remuneration for his performance in the additional Be My Guest show, he would think that he had no duty to apply to his superior for permission, nor was it necessary to do so. The trial judge further found that both Chan and Tseng could rely on the defences provided in section 9 of the Ordinance, namely Chan had obtained TVB’s permission to accept $112,000 from Olympian City and/or he had lawful authority or reasonable excuse to accept the sum of money. Section 9 of the Ordinance provides that:
8.The Secretary was dissatisfied with the verdicts of not guilty given by the trial judge in favour of Chan and Tseng in respect of charges 1 to 3 and appealed by way of case stated pursuant to section 84 of the District Court Ordinance. 9.This Court handed down judgment on 21 November 2012. The Secretary’s appeal was allowed, the verdicts of not guilty given by the trial judge in favour of Chan and Tseng in respect of charges 1 to 3 were set aside. 10.This Court found that the additional Be My Guest show was related to TVB’s business, and that when Chan accepted the $112,000 and when he performed in the additional Be My Guest show, he was acting in his capacity as an agent of TVB. This Court also found that Chan did not have any permission recognized by the Ordinance or any lawful authority for accepting the said remuneration. 11.This Court considered that the only issue that remained was whether Chan’s act of accepting the $112,000 could be supported by the defence of reasonable excuse. At the trial, the trial judge did not set out all the evidence which could support the defence of reasonable excuse. This Court took the view that the fair way to deal with the matter was to remit the case to the trial judge for him to decide whether Chan and Tseng should be allowed to raise the defence of reasonable excuse afresh, and if he allowed them to do so, he had to set out the factual elements pertaining to the defence and, on the basis of such factual elements, make a finding as to whether the defence of reasonable excuse was established. At the same time, this Court ordered that the issue of costs was to be dealt with after the trial judge had given his verdicts. 12.The background of this case, the issues arising therefrom and how they were dealt with were set out in the judgment handed down by this Court on 21 November 2012, and they will not be repeated here. 13.The trial judge resumed the trial of the case on 20 and 21 February 2013 in accordance with the directions given by this Court. No fresh evidence was adduced by any party during the resumed trial. Chan relied on the following inferences drawn by the trial judge to support his defence that he had a reasonable excuse:
14.Tseng’s position was that the defence of reasonable excuse invoked by Chan was also applicable to him. Another argument advanced by Tseng was that if he honestly believed that Chan had obtained TVB’s permission for accepting the remuneration, he could rely on the defence of reasonable excuse. 15.On 7 March 2013 the trial judge handed down his Reasons for Verdict of the resumed trial. He again dismissed charges 1 to 3, which were against Chan and Tseng. 16.The trial judge took the view that the scope of the defence of reasonable excuse was wider than that of the defence of lawful authority, and that its purpose was to make up for the deficiency in the defence of lawful authority. The trial judge quoted the following comment on p 288 of Bribery and Corruption Law in Hong Kong, 2nd Edition:
17.The trial judge considered that it was reasonable for Chan to accept $112,000 for his performance in the additional Be My Guest show, and that it was also reasonable for him to agree to perform in that programme. The trial judge remarked that although according to the employment contract between Chan and TVB, Chan was duty bound to apply to his superior if he wanted to engage in any outside work, it was not specified in the contract to whom he should apply for obtaining permission and all along the way he communicated with Chan Ching-cheong and Lee Po-on, both of them were members of TVB’s senior management, was to “inform” them of relevant matters. The trial judge pointed out that the senior management of TVB had never required Chan to make any formal application and had never made any formal reply to his “informing” them, nor had they sent the “information” or applications to the personnel department for record. The trial judge emphasized that starting from May 2009, on a total of 7 occasions Chan had taken up outside work for which he was paid and about which he had not informed TVB. The trial judge considered that TVB could easily learn about such outside work from the media, but that TVB had never taken exception to that, nor had TVB indicated to Chan that they objected to or were concerned about his engagement in paid outside work. 18.At the resumed trial, the trial judge made further findings of facts and drew further inferences as follows:
19.Besides finding that Chan had TVB’s acquiescence in accepting the $112,000 involved in this case, the trial judge further held that Chan could rely on the defence of reasonable excuse provided in section 9(1)(a) of the Ordinance on the basis of the following findings of fact:
20.The trial judge concluded that at the material time Chan definitely or, at least, probably honestly believed that he was entitled to accept the remuneration of $112,000 from Olympian City for his performance in the additional Be My Guest show and that it was not necessary for him to apply to TVB for permission beforehand. 21.In the end, the trial judge found that Chan had a reasonable excuse in relation to his act of accepting the $112,000 as remuneration for his performance in the additional Be My Guest show and that the defence was also applicable to Tseng; therefore he once again cleared Chan and Tseng of all charges. 22.Chan and Tseng did not ask for costs in respect of charges 1 to 3, but they asked for an order that costs of charges 4 and 5 be paid by the prosecution. 23.The Secretary considered that the trial judge committed errors in relation to legal points involved in this case, and he appealed again by way of case stated pursuant to section 84 of the District Court Ordinance. The Secretary asks this Court to set aside the verdicts of not guilty. He also appeals against the costs order made by the trial judge and asked this Court to set aside the order. 24.In this appeal which is again proceeded by way of case stated, the Secretary asked for this Court’s opinion of the following questions:
Secretary’s grounds of appeal 25.Mr Eric Kwok SC, acting for the Secretary, started off by submitting that if Chan and Tseng wished to rely on the defence of reasonable excuse, it was incumbent on them to adduce sufficient and credible evidence which could create a reasonable doubt in the prosecution case against them, before they could rid themselves of the charges (see HKSAR v Chan Tat Chung Danny [2010] 2 HKC 268). Mr Kwok SC stressed that if they wished to rely on the defence of permission provided in section 9(4) of the Ordinance, the burden was on them to establish on the balance of probabilities that Chan had obtained TVB’s permission to accept the $112,000 from Olympian City, and that further, the permission had to meet the criteria laid down in section 9(5) of the Ordinance. 26.Mr Kwok SC’s position is that neither Chan nor Tseng had adduced evidence sufficient to support the defence of reasonable excuse which could create a doubt in the prosecution case against them. Mr Kwok SC submitted that the inferred facts which the trial judge said could support the defence of reasonable excuse were not supported by sufficient primary facts. The inferred facts found by the trial judge which Mr. Kwok SC referred to are set out below:
27.Mr Kwok SC pointed out that when TVB processed their employees’ applications concerning outside work, they attached great importance to whether the outside work was related to TVB’s business, because outside work which was not related to TVB’s business was a matter about the employment contract and was governed by specific application procedures and principles pertaining to granting approval, but that if an employee accepted remuneration for outside work which was related to TVB’s business, the employee’s acceptance of the remuneration was subject to the criminal law, and that therefore TVB had different application procedures and approval-granting principles to govern such applications. Mr Kwok SC submitted that for both kinds of activities, ie employees’undertaking outside work and employees’ accepting advantages, TVB had a clear and definite policy and had prescribed application procedures, and that under such policy it was clearly stipulated that an employee could accept certain kinds of advantages only, which could not possibly include the $112,000 involved in the present case. 28.Mr Kwok SC emphasized that in the past the activities for which Chan accepted remuneration with TVB’s approval were all outside work not related to TVB’s business. Mr Kwok SC submitted that in making relevant findings of fact, the trial judge completely overlooked this important factor and unreasonably rejected the evidence of Lee Po-on, TVB’s General Manager, that if Chanapplied to him for permission to accept remuneration for any performance which was related to TVB’s business, he definitely would refuse the application. Mr Kwok SC considered that the trial judge erroneously rejected Lee Po-on’s evidence, in that the trial judge commented that Mr Lee’s dealing with such application in this way was “not supported by any reasonable ground, in contravention of the usual rules and illogical” (see paragraph 38 of the Reasons for Verdict of the resumed trial). 29.Mr Kwok SC particularly referred to the fact that Chan had hosted 150 odd episodes of Be My Guest produced by TVB and had not accepted any extra remuneration, that Chan had never accepted any remuneration on account of his performing in any programme produced by TVB, ie taking part in performance which was related to TVB’s business, and that in addition, such way of handling the matter was contrary to TVB’s policy, therefore it was unlikely that TVB would permit Chan to accept $112,000 as remuneration from Olympian City through IEAP for his performance in the additional Be My Guest show. 30.Mr Kwok SC considered that the trial judge had no basis to find that TVB definitely knew Olympian City would pay Chan $112,000 as remuneration for his performance in the additional Be My Guest show and that TVB would acquiesce in Chan’s acceptance of the $112,000. 31.Mr Kwok SC also took the view that when the trial judge considered the reasonable excuse factor, he lost sight of the fact that the purpose of the Ordinance was to ban secret commission, and that the $112,000 which Chan received from Olympian City on account of TVB’s business was precisely secret commission, and that therefore whether TVB suffered any loss or whether Chan deliberately concealed this matter had no bearing on the illegal nature of the $112,000 which Chan received from Olympian City through IEAP. 32.Mr Kwok SC reiterated that the $112,000 which Chan received through IEAP from Olympian City was related to TVB’s business, that its nature was different from that of the outside work which he took up previously, and that therefore Chan should not have thought that he had no duty or did not need to apply to his superior for permission to accept the remuneration. Mr Kwok SC also stressed that Chan did not make any or sufficient disclosure to TVB about his acceptance of Olympian City’s $112,000. 33.Mr Kwok SC submitted that when dealing with the issue of reasonable excuse, the court should consider objective social norms. He submitted that the fact that TVB allowed Chan to accept remuneration from Olympian City or acquiesced in his doing so, which the defencesuggested, could not constitute the defence of reasonable excuse provided in the Ordinance. 34.Mr Kwok SC contended that the answers to the questions set out in the stated case should all be “yes”, and that this Court should direct the trial judge to find Chan and Tseng guilty as charged and to continue to hear the case on this basis. Respondents’ position 35.The basic position taken by Chan’s legal representative Mr Tse SC, is that Chan’s defence of reasonable excuse was established and that the not-guilty verdicts given by the trial judge were correct. Mr Tse SC considered that there was sufficient evidence in this case to support the verdicts. He submitted that TVB knew that Olympian City would certainly pay Chan for his performance in the additional Be My Guest show and that therefore they acquiesced in Chan’s acceptance of the remuneration. According to Mr Tse SC, evidence which supports the argument that TVB acquiesced in Chan’s acceptance of the remuneration includes: (1) the history of cooperation between Olympian City and TVB; (2) TVB knew of and did not object to Olympian City’s inviting Chan to take part in performing in the additional Be My Guest show; (3) TVB was not responsible for contacting Chan and inviting him to perform in the show, and Olympian City was left to contact him on their own; (4) the production fee of $1,300,000 agreed on between TVB and Olympian City did not include Chan’s performing fee; therefore, when Olympian City additionally paid $160,000 to invite Chan and another artiste Lai Yiu-cheung, they must have regarded them as performing guests, rather than artistes sent by TVB. 36.Mr Tse SC emphasized that TVB knew Olympian City would definitely pay Chan for his performance and that during the performance, both Chan and Lai Yiu-cheung put on Olympian Citystickers to show that they were Olympian City’s guests, not artistes sent by TVB. Mr Tse SC submitted that TVB knew in what capacity Chan acted when he performed in the additional Be My Guest show, ie he was a guest invited by Olympian City, not an artiste of TVB, and that TVB also treated Chan as one acted in that capacity. In these circumstances, Mr Tse SC asserted that TVB knew Olympian City invited Chan to perform in the additional Be My Guest show and would pay Chan remuneration but TVB raised no objection, and that therefore TVB acquiesced in Chan’s acceptance of the remuneration from Olympian City for his performance in the additional Be My Guest show. 37.Mr Tse SC emphasized that even though Lee Po-on claimed that he did not know Chan would take part in performing in the additional Be My Guest show, other controllers of TVB, including Ho Lai-chuen, Lok Yee-ling and other colleagues of different departments all knew about that, and that therefore at least TVB should know that Chan accepted remuneration for performing in the additional Be My Guest show. Mr Tse SC said, in these circumstances, Chan believed that TVB acquiesced in his acceptance of remuneration for his performance in the additional Be My Guest show, and that if he made a formal application, TVB would grant the application. Mr TseSC asserted that in these circumstances Chan had a reasonable excuse to accept the $112,000. Mr Tse SC stressed that Chan simply could not conceal the fact that he performed in the additional Be My Guest show, and that therefore he had no reason to deliberately refrain from applying to Lee Po-on for permission to accept remuneration from Olympian City for his performance. 38.Referring to the trial judge’s finding that Chan’s performance in the additional Be My Guest show was beneficial to both parties and his rejection of Lee Po-on’s evidence that if Chan applied for permission to accept remuneration from Olympian City for his performance in the additional Be My Guest show, he would refuse the application, Mr Tse SC submitted that the trial judge’s findings were not altogether unreasonable, that they were supported by evidence, and that therefore the Court of Appeal had no basis to reverse them. 39.Mr Tse SC submitted that Chan did in the same way as what he did when he performed in the 150 odd episodes of Be My Guest in the past, ie he did not receive any remuneration from TVB for his performance in the additional Be My Guest show. Mr Tse SC considered that in view of the fact that TVB had knowledge of, did not object to and even acted in such a way as to facilitate [Chan’s performance], TVB should not object to Chan’s acceptance of the $112,000 from Olympian City for his performance in that sideshow. 40.In Mr Tse SC’s view, the trial judge correctly took into account the factor of whether Chan had acted dishonestly in the incident, and the fact that Chan did not act dishonestly was necessarily one of the factors for determining whether Chan had a reasonable excuse. Mr Tse SC’s position is that since Chan did not apply to TVB for permission in respect of his acceptance of the $112,000, he had to rely on the defence of reasonable excuse and that in dealing with this issue, the court should take into account the background of the incident in its entirety, including the way in which Chan and TVB handled applications of similar nature in the past, the absence of any conflict of interest between Chan and TVB in relation to his acceptance of the $112,000 from Olympian City and the fact that Chan did not deliberately conceal his acceptance of the remuneration. 41.Mr Tse SC contended that Chan’s failure to disclose to TVB his acceptance of the remuneration from Olympian City was not of crucial importance in the incident. Mr Tse SC did not agree with the Secretary’s view, and he argued that the trial judge did not overlook the fact that what happened in this case was related to TVB’s business. He submitted that the crux of this case was that the trial judge found that Chan reasonably believed he was entitled to accept remuneration from Olympian City for his performance in the additional Be My Guest show, and that TVB not only knew about that but they should not object to Chan’s acceptance of the remuneration. 42.Mr Tse SC pressed the point that permission, lawful authority and reasonable excuse are three different defences provided for by statute in the case of an agent accepting an advantage, therefore the court should give different considerations to these different defences. Mr Tse SC further argued that if Chan’s acceptance of the remuneration was illegal, then Olympian City should also have been charged. 43.Mr Tse SC pointed out in his oral submissions that Chan’s performance in the additional Be My Guest show was not the first time he accepted remuneration from a third party for his doing an act in relation to TVB’s business. He submitted that the undisputed documentary exhibit P27 showed that Chan had made application in respect of a certain performance which was related to TVB’s business and was granted permission to accept $50,000 from a third party as remuneration. The content of exhibit P27 relied on by Mr Tse SC is as follows:
Mr Tse SC’s argument is that the above-mentioned performance was comparable to Chan’s performance in the additional Be My Guest show, and that Chan at that time was under the supervision of Chan Ching-cheong, who approved his acceptance of the $50,000; therefore, Chan’s acceptance of the $112,000 for his performance in the additional Be My Guest show was not the first time he accepted remuneration from a third party for his doing an act in relation to TVB’s business. However, Mr Tse SC admitted that at the trial he did not ask Chan Ching-cheong about his understanding of the exact meaning of “the client has committed sponsorship for exposure in ‘Scoop’ on Jade’. His argument is that the nature of that performance should be the same as that of the additional Be My Guest show. 44.Mr Tse SC concluded that the trial judge’s finding that Chan’s acceptance of the $112,000 from Olympian City through IEAP was supported by a reasonable excuse was correct, and that the answers to the Secretary’s questions set out in the stated case should all be “No”. 45.Ms Maggie Wong, counsel for Tseng, submitted that the trial judge’s verdicts were based on the following factors:
46.Ms Wong considered that there was sufficient evidence for the trial judge to make the findings of fact in question, particularly the one that TVB acquiesced in Chan’s acceptance of remuneration from a third party for his performance in the additional Be My Guest show. She submitted that the trial judge’s findings of fact were not perverse, and that the Court of Appeal should not disturb them. 47.Ms Wong contended that Chan had reason to expect that TVB would approve his acceptance of remuneration for doing outside work. She submitted that not only that TVB should not object to Chan’s acceptance of remuneration for his performance in the additional Be My Guest show, they should even support it. 48.Ms Wong stressed that Tseng, not being an employee of TVB, had no knowledge of Chan’s employment terms, or the rules that Chan should follow, and that therefore he could not possibly know whether Chan was entitled to accept remuneration for his performance in the additional Be My Guest show. Taking into account the cooperation relationship between TVB and Olympian City, Tseng would reasonably think that TVB would agree that IEAP could engage Chan and pay him remuneration for his performance in the additional Be My Guest show. Ms Wong took the view that Tseng had reasonable grounds to believe that TVB knew of, allowed or acquiesced in Chan’s acceptance of remuneration for his performance in that programme. Ms Wong asserted that these factors were sufficient to support Tseng’s defence of reasonable excuse. 49.Ms Wong submitted that since the Secretary appealed by way of case stated, he had to prove that the trial judge had committed an error of law and that his findings of fact were such that no reasonable judge could have come to and were perverse. Ms Wong considered that the trial judge’s findings of fact which the Secretary asked this Court to reverse did not meet this standard at all. She cited Li Man Wai v Secretary for Justice (2003) 6 HKCFAR 466, Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336 to support her argument. 50.Ms Wong submitted that the scope of reasonable excuse was wider than that of lawful authority or permission, and that whether the defence of permission was available to a defendant should not adversely affect the availability of the general defences of lawful authority and reasonable excuse to that defendant. She also argued that if a defendant honestly believed that he was justified in accepting a certain reward, even if he did not obtain permission from his employer, he could still rely on the defence of reasonable excuse. Ms Wong asserted that if the principal knew of or acquiesced in his agent’s acceptance of remuneration or allowed the agent to do so, the agent’s acceptance of remuneration would not be a contravention of section 9 of the Ordinance. Ms Wong stressed that in the circumstances of this case, there was sufficient evidence to show that Tseng honestly believed that Chan had obtained permission from TVB to accept remuneration from Olympian City for his performance in the additional Be My Guest show, and that therefore Tseng could rely on the defence of reasonable excuse. 51.Ms Wong submitted that reasonable excuse and permission were two separate defences. She emphasized that a defendant who had to rely on the defence of reasonable excuse must have accepted a reward without the permission granted by the principal under section 9(4) of the Ordinance, and that therefore in considering whether the defence of reasonable excuse was established, factors other than whether the agent had obtained the principal’s acquiescence had also to be taken into account, including what was in the mind of the defendant, whether he intended to conceal anything, whether he acted dishonestly, whether there was any conflict of interest, the background of the two parties concerned and the usual way of doing things. 52.According to Ms Wong, looking at Chan’s acceptance of the $112,000 from the point of view of the public, and adopting an objective standard, a reasonable man would consider that Chan had a reasonable excuse. 53.Ms Wong cited a number of cases to support her contention that when a principal knew that his agent would accept remuneration from a third party, he could not raise any objection by arguing that he was not aware of the details or the exact amount involved. Ms Wong’s position is that TVB could not claim that their acquiescence in Chan’s acceptance of the advantage in question was invalid by saying that they did not know how much Chan accepted from Olympian City and complaining that Chan did not make sufficient disclosure. 54.Although Ms Wong did not separate Tseng’s case from Chan’s case in her original written submissions, upon enquiry by the court, she submitted that the court should give separate consideration to whether Tseng had a reasonable excuse and should not be constrained by the finding which the court made in respect of the same defence invoked by Chan. Ms Wong submitted that the relevant differences between Tseng’s case and Chan’s case included the following:
55.Ms Wong agreed that when a defendant sought to use reasonable excuse as his defence to a charge of agent accepting an advantage or offering an advantage to an agent, he bore the burden of proving the defence on the balance of probabilities, but she argued that when the charge was conspiracy for an agent to accept an advantage, the burden was on the prosecution to disprove defences such as lawful authority and reasonable excuse. Ms Wong cited a number of cases, including Churchill v Walton [1967] 2 AC 224 and HKSAR v Ng Po On (2008) 11 HKCFAR 91, to support her argument. 56.Ms Wong submitted that the answers to the questions raised by the Secretary in the stated case should all be “No”. Discussion 57.In Ng Po On, the issues which the Court of Final Appeal dealt with were about the interpretation of sections 14(1), 14(4) and 24 of the Ordinance. Under section 14(1) of the Ordinance the Court of First Instance may make an order authorizing the Commissioner of the ICAC to require, by a notice in writing, a person to furnish a statutory declaration or a statement in writing enumerating certain information. Section 14(4) of the Ordinance provides that any person on whom such a notice has been served who, without reasonable excuse, fails to comply with the terms of the notice shall be guilty of an offence. It is laid down in section 24 of the Ordinance that in any proceedings related to the Ordinance, the burden of proving a defence of lawful authority or reasonable excuse shall lie upon the accused. In Ng Po On, at the trial the magistrate held that the defendants bore the persuasive burden of proving that they had a reasonable excuse for their non-compliance with the notice. A judge of the Court of First Instance quashed the defendants’ convictions, holding that a persuasive burden encroached on the presumption of innocence and that section 24 could be treated as imposing a merely evidential burden so far as section 14(4) was concerned. On a remedial interpretation, the Court of Final Appeal read down section 24 in conjunction with section 14(4) so that they imposed an evidential burden instead of a persuasive burden. So read down, the accused who raises the defence of reasonable excuse will be required to adduce sufficient and credible evidence to engender a reasonable doubt as to the prosecution case, but the prosecution will retain throughout the persuasive burden of proving non-compliance, encompassing a burden of negativing any purported reasonable excuse. 58.However, the Court of Final Appeal made it clear that the above-mentioned interpretation was exclusively concerned with how section 24 of the Ordinance affects the operation of section 14(4) of the Ordinance, and that when it came to consider other provisions in the Ordinance, such as sections 4, 5, 6, 7, 8 and 9, in which reasonable excuse also featured, such interpretation was not necessarily applicable. 59.In our view, whether a reverse burden of proof is inconsistent with the presumption of innocence is dependent on whether the reverse burden is related to an element of the offence in question or is related to a defence only. The elements of the offence under section 14(4) of the Ordinance include (1) non-compliance with the terms of a notice; and (2) absence of a reasonable excuse. Generally speaking, the act of omission of not complying with a notice cannot constitute an unlawful act, but in order to enable the Commissioner of the ICAC to carry out his statutory duties more effectively, section 14(4) of the Ordinance stipulates that non-compliance with the terms of a notice without reasonable excuse after the notice has been served is an unlawful act. 60.HKSAR v Lam Yuk Fai (2006) 9 HKCFAR 281 is about the transfer of a travel document to another without reasonable excuse. The offence has two limbs: the first is the transfer of a travel document, and the second limb requires that the transfer should be without reasonable excuse. The Court of Final Appeal held that when a defendant was charged with conspiracy to transfer a travel document to another without reasonable excuse, the prosecution had the burden to negative the defendant’s reasonable excuse. In Churchill v Walton [1967] 2 AC 224 the House of Lords dealt with the case in a similar way. Viscount Dilhorne commented on page 237:
The House of Lords held that when prosecuting someone for conspiracy to use gas oil in respect of which the required payment had not been made, the prosecution not only had to prove that the defendant had in fact used the oil, but also had to prove that when the defendant conspired to use the oil, he knew that the required payment had not been made. The reason was that using the oil was not per se unlawful, and that what constituted the unlawful act was that when using the oil, the defendant knew that the required payment had not been made. 61.The offences involved in the present case are agent accepting an advantage and offering an advantage to an agent. Each offence comprises only three elements: (1) accepting or offering an advantage; (2) as a reward for certain conduct; and (3) such conduct was related to the principal’s affairs or business. Without reasonable excuse is not an element of the offence (see HKSAR v Yan Pak Cheung [2009] 1 HKC 339 and Chan Tat Chung Danny, etc.). 62.Reasonable excuse is one of the defences applicable to the offence of agent accepting an advantage and the offence of offering an advantage to an agent, but according to section 24 of the Ordinance, the burden of proving this defence is on the defendant. In our view, in the case of the offence of conspiracy for an agent to accept an advantage, the prosecution only needs to prove that the defendant entered into an agreement, the object of which was to enable an agent to accept an advantage for his doing an act in relation to his principal’s business, and that is sufficient to discharge the burden of proof required in respect of the offence. The prosecution bears no burden to negative the defence that the defendant has lawful authority/reasonable excuse etc.. When the elements of the offence is proved, it is for the defendant to prove the defence of lawful authority/reasonable excuse according to the civil standard of proof. Only if he is able to do so can he exonerate himself from any liability. 63.In section 9 of the Ordinance, three defences are set out to the offence of an agent accepting an advantage on account of his doing an act in relation to his principal’s business, namely lawful authority, reasonable excuse and permission. Section 9(5) of the Ordinance provides that if an agent alleges that he accepted an advantage with the permission of his principal, the permission must fulfil the following two conditions in order to be effective:
64.The Ordinance does not state what can constitute lawful authority or a reasonable excuse. This application[sic] does not involve any issue about lawful authority. It is no easy matter to describe in a general way what constitutes a reasonable excuse in a case of an agent accepting an advantage. Each case has its own particular facts, just as Kirby J said in Taikato:
65.At the material time, Chan was the General Manager (Broadcasting) of TVB. According to the employment contract between Chan and TVB, he could not undertake any outside work of whatever nature, whether paid or unpaid, before obtaining written consent of TVB. Furthermore, TVB had implemented a clear and definite policy, which unequivocally stipulated that in respect of any matter related to TVB’s business, an employee could accept from a third party the following advantages only:
66.Originally, Chan’s applications for undertaking outside work were handled by Mr Chan Ching-cheong, Assistant Managing Director of TVB. After he retired in May 2008, Chan’s applications were handled by Mr Lee Po-on, Group General Manager of TVB. 67.Evidence shows that between June 2008 and January 2010, Chan engaged in outside work 20 times, out of which he accepted remuneration 18 times. Chan stated that of these 18 times of his acceptance of remuneration for outside work, he informed his immediate superior only 9 times, and that very often he did not follow the official procedures prescribed by TVB for making applications and obtaining approval. For this reason, Mr Tse, Senior Counsel for Chan, emphasized that all along the two parties did not handle seriously matters concerning granting approval for Chan’s engaging in outside work, and that TVB had never objected to Chan’s acceptance of remuneration for his outside work. Ms Wong also pointed out that in April 2009 Chan had accepted $410,000 for his performance in the theatrical version of Be My Guest show, and that his superior at that time, Chan Ching-cheong, did not object in any way. 68.We must point out that Chan’s acceptance of remuneration for his performance in the additional Be My Guest show cannot be equated with his acceptance of remuneration for his engagement in outside work. As correctly pointed out by Mr Kwok SC, the work for which Chan engaged in and for which he accepted remuneration 18 times was outside work, which was not related to TVB’s business. The nature of such work was totally different from that of the additional Be My Guest show in which he performed and accepted remuneration for his performance. According to the finding we made earlier, Chan’s performance in the additional Be My Guest show was undoubtedly related to TVB’s affairs or business. Chan’s acceptance of remuneration for his engagement in outside work was something about the employment contract between him and TVB, whereas his acceptance of $112,000 for his performance in the additional Be My Guest show was acceptance of an advantage by an agent for doing an act in relation to his principal’s business, and was governed by section 9(1)(a) of the Ordinance. 69.We do not agree that exhibit P27 can serve as proof that TVB had approved Chan’s acceptance of remuneration from a third party for his doing an act in relation to TVB’s business. The content of exhibit P27 does not support this argument. Exhibit P27 is entitled “Outside Job”. Chan Ching-cheong gave evidence that Chan had never made any application to him for accepting remuneration from any outside body for his performance in any TVB programme. He was shown 9 documents, including exhibit P27, and he clearly said that they were about Chan’s applications for outside work. Lee Po-on also repeatedly stressed that TVB had never granted Chan permission to accept remuneration from a third party for his doing an act in relation to TVB’s business. At the trial, Chan Ching-cheong’s and Lee Po-on’s evidence was not challenged, and no one put to them that what they said was incorrect. Mr Tse SC had no basis to insist that exhibit P27 could prove that Chan’s acceptance of remuneration for his performance in the additional Be My Guest show was not the first time he accepted remuneration from a third party for his doing an act in relation to TVB’s business. 70.Chan Ching-cheong and Lee Po-on agreed that there were occasions on which Chan applied to TVB for permission to accept remuneration from a third party in relation to outside work. If any of Chan’s applications met certain existing criteria, it would be granted by TVB. However, they said with one voice that if Chan participated in TVB’s activities in front of the camera or other activities which were related to TVB’s business, TVB would not allow him to accept remuneration from a third party for that. They also confirmed that Chan had never applied to TVB for permission to accept remuneration from a third party for his involvement in any work which was related to TVB’s business. 71.Lee Po-on emphasized in his evidence that he would never grant permission to let Chan accept remuneration for his participation in any performance which was related to TVB’s business, and that Chan had never made any application for accepting remuneration from a third party for his taking part in any act in relation to TVB’s business. Lee Po-on’s stance is not difficult to understand and his reason is obvious. If TVB had approved Chan’s acceptance of remuneration for his doing an act in relation to TVB’s business, then TVB would have allowed a third party to profit from TVB’s business. Such way of doing things would impair TVB’s reputation and would conflict with TVB’s interests. Lee Po-on’s stance and statement were supported by reason; they were reasonable and credible. 72.The trial judge, in rejecting Lee Po-on’s evidence referred to above, commented that since he had never objected to Chan’s acceptance of remuneration for engaging in outside work, it was impossible that he would object to Chan’s acceptance of remuneration for his performance in the additional Be My Guest show. In making this finding, the trial judge did not take into account the fundamental difference between the outside work which Chan had engaged in and the additional Be My Guest show in which he performed. 73.The trial judge, on the ground that TVB had on many occasions approved Chan’s acceptance of remuneration for his engagement in outside work, found that if Chan had made the application, Lee Po-on certainly would have approved his acceptance of the $112,000 for his performance in the additional Be My Guest show. We consider that this finding made by the trial judge was made without basis and was wrong. 74.We cannot overlook the fact that Chan had never made any application in connection with any work which was related to TVB’s business, and that he had never received any remuneration for any work of that nature. His acceptance of remuneration for his performance in the additional Be My Guest show was the first time he received remuneration in the capacity of an agent for an act done in relation to his principal’s business. Nor can we ignore that if the additional Be My Guest show had not been a live broadcast sideshow of the publicity activities organized by TVB for Olympian City, that show could have attracted the attention of only the shoppers in Olympian City and there could have been no way for it to reach the mass audience of TVB, and Chan could not possibly have been paid the remuneration by Olympian City. TVB had no right to order Chan to perform in the additional Be My Guest show, but regardless of whether Chan performed in that sideshow, TVB could still receive the same amount of remuneration. The trial judge did not take into account this consideration. 75.The trial judge found that the reason for Chan’s failure to apply to his superior for permission to accept the remuneration was that he considered that he had no duty and had no need to do so. This finding was made on the basis that Chan had, on many occasions, taken up outside work, accepted remuneration for such work and did not inform TVB, and that when he did notify the top management of TVB by way of “informing” them, without making any formal application, the top management did not require him to make any formal application, nor did they give him any formal reply or send such “information” or applications to the personnel department for record. We do not agree with this finding made by the trial judge. 76.In our judgment, the trial judge’s findings were made as a result of his misapprehension of the above-mentioned facts and his failure to properly take into account relevant considerations. The conclusions he came to are those which no reasonable tribunal could have come to and, as such, are errors of law which can be reversed by an appellate court (see Li Man Wai v Secretary for Justice (2003) 6 HKCFAR 466). 77.If Chan considered that he had no duty and had no need to apply to TVB for approval in respect of his performance in the additional Be My Guest show, it was because he was ignorant of the law or misunderstood the law. According to section 9(5) of the Ordinance, if Chan wanted to lawfully accept the $112,000 involved in this case, he had to apply to TVB and obtain their permission before he accepted the money, or apply for and obtain TVB’s permission as soon as reasonably possible after he accepted the money. In addition, when he made the application, he had the duty to disclose to TVB all relevant circumstances in order to enable TVB to decide whether to give him such permission or not. He could not use his ignorance or misunderstanding of the law as a reason for claiming that he was not governed by the law. A defendant’s ignorance or misunderstanding of the law cannot constitute a valid defence. 78.If Ms Wong’s stance is that as long as an agent honestly believes that he was justified in accepting a certain reward for his act done in relation to his principal’s business, even though he accepted the reward without the permission of his principal, he could rely on the defence of reasonable excuse, the stance she took was wrong and the case HKSAR v Peter Norman Elliott CACC 126/2003 she cited does not support her stance. 79.Chan and Tseng did not give any evidence in defence, nor did they adduce any other evidence to support their argument that there was a reasonable excuse which could support Chan’s acceptance of $112,000 from Olympian City through IEAP for his performance in the additional Be My Guest show. The undisputed evidence shows that Chan had never accepted any remuneration from a third party in relation to TVB’s business and that TVB had never granted him permission to do that. There was no evidential basis at all which could provide Chan with a reasonable ground to form the opinion that he was entitled to accept the $112,000 in question without obtaining permission from TVB. 80.We also consider that there was no objective factor which could provide Tseng with any reasonable ground for his opinion that Chan had obtained TVB’s permission to accept the $112,000 in question. Tseng was Chan’s manager and was responsible for arranging outside work for Chan, but he had never arranged for Chan any work which was related to TVB’s business, nor is there any evidence which shows that Chan had received any remuneration from a third party in relation to such work. Moreover, there is no evidence in this case that Tseng had ever asked Chan whether he could accept remuneration for engaging in work which was related to TVB’s business. Chan did not furnish any reason, let alone convincing reason, which could show that he had reasonable grounds to think that Chan had obtained TVB’s permission to accept the $112,000 in question. 81.The trial judge placed emphasis on the fact that matters concerning Chan’s performance in the additional Be My Guest show all along proceeded in the open, that the production of the programme involved different departments of TVB, and that therefore TVB definitely knew that Chan would perform in the additional Be My Guest show. The trial judge also stressed that no one would expect that Chan would perform in the additional Be My Guest show free of charge, and that for this reason TVB must have known that Olympian City would pay Chan remuneration. In our view, the staff members who produced the additional Be My Guest show certainly knew that Chan would perform in the show, but those staff members were Chan’s subordinates and they had no duty to ask Chan whether he would accept remuneration for his performance in the additional Be My Guest show and whether, if he accepted any remuneration, he had obtained permission from Lee Po-on. They would not know whether Chan had declared to Lee Po-on that he would perform in the additional Be My Guest show and further, they could not possibly know whether Chan had applied to Lee Po-on for permission to accept remuneration for his performance in that show. 82.The senior officer of TVB responsible for supervising Chan was Lee Po-on. He gave evidence that before the event he simply did not know Chan would perform in the additional Be My Guest show, and that it was not until the night of the live broadcast of the show that he was aware that Chan performed in the show. He strongly denied that he knew Chan would accept remuneration for his performance in the additional Be My Guest show. 83.In his evidence, Lee Po-on said that after the event, in early January 2010, he got wind of the fact that Olympian City paid a sum of money to a third party in connection with the publicity activities in question, and that therefore he instructed an accounting officer of TVB to ask Olympian City in a roundabout way whether they had paid extra money to IEAP in connection with the publicity activities. A manager of Olympian City, Mr Au Kwok-hang, confirmed that he had received a telephone call from a staff member of TVB’s accounting department, who asked him matters about the payment of $160,000 by Olympian City to IEAP. The above-mentioned evidence has not been challenged and it reveals that Lee Po-on did not know Chan would accept remuneration from Olympian City for his performance in the additional Be My Guest show. 84.In fact, at the trial the defence did not put to Lee Po-on that he knew beforehand that Chan would perform in the additional Be My Guest show and that Chan would accept remuneration from Olympian City for his performance. 85.Chan’s acceptance of remuneration for his performance in the additional Be My Guest show was the first time he had ever accepted any remuneration for his doing an act in relation to TVB’s business. A clear and definite company policy was in force in TVB, according to which an employee would not be allowed to accept any cash or gift in excess of $500. The trial judge’s findings that Lee Po-on had acquiesced in Chan’s acceptance of the remuneration for his performance in the additional Be My Guest show, that TVB would have no objection to Chan’s acceptance of the remuneration for his performance in the additional Be My Guest show, and that Lee Po-on’s evidence that if Chan applied to him, he would not agree was contrary to common sense and illogical were not only devoid of any evidential basis, but were also at variance with the undisputed evidence. 86.Even if TVB or Lee Po-on ought to have known that Chan would perform in the additional Be My Guest show, it does not follow that they acquiesced in Chan’s acceptance of remuneration in circumstances where the requirements laid down in section 9(5) of the Ordinance were not met. It is possible that Chan could perform in the additional Be My Guest show without charging any remuneration on account of the relationship with Olympian City. In his evidence, Chan Ching-cheong said that whether Chan would receive any income for any performance was dependent on many considerations, for example, he performed free of charge because he wished to boost his personal fame. Not only that Chan did not make any application to TVB before or after his performance, but he had never mentioned to TVB before or after the event that he had accepted any remuneration. Under these circumstances, we consider that Chan could not hold that TVB would acquiesce in his acceptance of a secret reward without obtaining any permission, in violation of the Ordinance, by solely relying on the ground that TVB ought to have known that he would perform in the additional Be My Guest show. We have to stress again that the additional Be My Guest show was the first occasion on which Chan accepted remuneration from a third party for his doing an act in relation to TVB’s business. The argument that TVB acquiesced in his doing so is not supported by any evidence at all. 87.However Chan and Tseng phrased and embellished their grounds of defence, their primary ground of defence boils down to the assertion that TVB “must have known of”, “permitted” or “acquiesced in” Chan’s acceptance of the $112,000 as remuneration for his performance in the additional Be My Guest show from Olympian City through IEAP. In the final analysis, the “knowledge”, “permission” or “acquiescence” relied on by Chan and Tseng points to the “permission” given by TVB in respect of Chan’s acceptance of the $112,000 in question. However, in order to legitimize an act of accepting an advantage by relying on the permission given by the principal, the agent must follow the procedures prescribed in the Ordinance, ie the principal’s permission must be applied for and obtained before the advantage is accepted, or applied for and obtained as soon as possible after the advantage has been accepted. If the court readily allows an act of accepting a secret reward to be legitimized by a permission which fails to meet the requirements laid down in the Ordinance, then the clear legislative intent will be defeated. 88.We agree that permission and reasonable excuse are two separate defences provided for by the Ordinance. We also agree that reasonable excuse is wider in scope than permission. However, when an agent claims that his principal would “permit” or “allow” him to do certain things, or “acquiesce in” his doing certain things, he must demonstrate that he has done all he could to comply with what the law requires of him, so as to legitimize his act of accepting an advantage; otherwise, the court will not find that he has a reasonable excuse to accept the advantage which is related to his principal’s business. Under some circumstances, it is possible that an agent who does not have his principal’s permission but accepts an advantage which is related to his principal’s business can use reasonable excuse as his defence. Take for example, an agent who has from time to time applied to his principal for permission to accept an advantage on account of his doing an act in relation to his principal’s business, and to whom the principal has always granted permission, will reasonably believe that under the same circumstances he can obtain his principal’s permission. However, on one occasion, when the agent applied for permission from his principal pursuant to section 9(5)(b) of the Ordinance after he accepted an advantage, his principal, without informing him of any change, suddenly, for no reason, refuses to give him permission. The agent cannot legitimize his acceptance of the advantage by the permission provided in the Ordinance, but it is highly likely that he can successfully convince the court that he has a reasonable excuse and thereby legitimizing his acceptance of the advantage. 89.In the present case, whether before or after Chan accepted the $112,000 from Olympian City through IEAP, he did not apply to TVB for permission to accept the said advantage. We consider that Chan is not entitled to contend that he had a reasonable excuse for accepting the secret profit of $112,000 in question. 90.We are not prepared to delve into the issues of whether Chan or Tseng acted dishonestly, whether Chan deliberately conceal his acceptance of advantage from Olympian City for his performance in the additional Be My Guest show, and whether his performance and his acceptance of the advantage conflicted with TVB’s interests. These factors are not elements of the offence which the prosecution must establish. When Chan performed in the additional Be My Guest show, he put on Olympian City stickers. This was what he had to do in order to fulfil one of the conditions stipulated by Olympian City and had nothing to do with TVB. Therefore, the fact that Chan put on Olympian City stickers does not mean that at the material time he was not acting in the capacity of an agent of TVB. Actually, except for the fact that the venue of the performance was different, the nature of Chan’s performance in the additional Be My Guest show was totally the same as that of his previous unpaid performance in the 150 odd episodes of Be My Guest produced by TVB. Chan had no reason at all to think that he could accept the $112,000 in question from Olympian City. 91.The burden was on Chan and Tseng to prove, on the balance of probabilities, that Chan had a reasonable excuse to accept the remuneration of $112,000 from Olympian City through IEAP. We hold that judging from the facts and the evidence of the case as a whole, neither Chan nor Tseng succeeded in establishing this defence. 92.As for the questions raised by the Secretary, our answers are as follows:
93.In our judgment, on the basis of the evidence in this case, the only reasonable outcome is that the trial judge should find Chan and Tseng guilty of charge 1, namely conspiracy for an agent to accept an advantage. 94.We shall remit the case to the trial judge and order him to find Chan and Tseng guilty of the charge in question in accordance with our directions and to sentence them in respect of the charge.
Mr Eric Kwok, SC and Mr Felix Tam, Acting Senior Public Prosecutor, instructed by the Secretary for Justice, for the Appellant. Mr Joseph Tse, SC and Mr Charles J Chan, instructed by Messrs Ivan Tang & Co, for the 1st Respondent. Ms Maggie Wong, Mr Derek Chan and Mr Samuel Sung, instructed by Messrs Ivan Tang & Co, for the 2nd Respondent. Translated by the Judgment Translation Unit of the Judiciary and vetted by Mr. Patrick W.S. Cheung, Barrister-at-law. |
Cases cited in this judgment
Further hearings and rulings under CACC 92/2013