HKSAR v. Ma Sin Chi and Another
Read the full judgment text of CACC 424/2013 on BabelCite. This Court of Appeal judgment was delivered on 17 June 2016.
1. The appellants were convicted on 6 December 2013 after trial before P Li J and a jury for offences under section 9 of the Prevention of Bribery Ordinance, Cap 201 (“POBO”). The 1 st appellant was convicted of 4 offences (counts 1-4) of, being an agent, accepting an advantage contrary to section 9(1)(a) of the POBO and the 2 nd appellant of 4 offences (counts 5-8) of offering an advantage to an agent, namely, the 1 st appellant, contrary to section 9(2)(a) of the same ordinance. These offences
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CACC 424/2013 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CRIMINAL APPEAL NO 424 OF 2013 (ON APPEAL FROM HCCC 323 OF 2012) ------------------------
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_________________ J U D G M E N T _________________ Hon McWalters JA (giving the judgment of the court): 1.The appellants were convicted on 6 December 2013 after trial before P Li J and a jury for offences under section 9 of the Prevention of Bribery Ordinance, Cap 201 (“POBO”). The 1st appellant was convicted of 4 offences (counts 1-4) of, being an agent, accepting an advantage contrary to section 9(1)(a) of the POBO and the 2nd appellant of 4 offences (counts 5-8) of offering an advantage to an agent, namely, the 1st appellant, contrary to section 9(2)(a) of the same ordinance. These offences are punishable under section 12(1) of the POBO and the maximum penalty for a section 9 offence is 7 years’ imprisonment. On 9 December 2013 each appellant was sentence to a total period of 7 years’ imprisonment. 2.The appellants sought leave to appeal against conviction and sentence and they were granted leave on both on 30 June 2015 by Lunn VP. The second appellant was not granted leave to appeal in respect of grounds 6 and 9 of his Perfected Grounds of Appeal and did not pursue them further. At the hearing of the appeals we reserved our judgment, which we said we would hand down in due course. This we now do. The charges 3.The charges against the 2nd appellant alleged that he, together with members of his family, offered advantages to the 1st appellant. The charges against the 1st appellant alleged that he accepted these advantages. 4.The charges averred that the 1st appellant was an agent of two principals, Deutsche Bank Aktiengesellschaft (“Deutsche Bank”) and Deutsche Securities Asia Limited (“DSAL”). He was, in fact, a chief trader of the derivative warrant trading group in Deutsche Bank and was licensed by the Securities and Futures Commission to deal in securities and futures. 5.Tried together with the appellants, but separately jointly charged with the 2nd appellant with offering advantage offences, were the 2nd appellant’s two sons (D3 and D4 at trial) and his sister (D5 at trial). The sons and sister were all acquitted after trial. 6.The offers and acceptances of the advantages were alleged to have taken place between July 2007 and May 2008. Throughout this period the 2nd appellant and to a lesser extent his sons, were very active traders of Deutsche Bank derivative warrants. In this way the 2nd appellant and his family had dealings with the 1st appellant which related to the affairs or business of the 1st appellant’s principal. 7.The advantages, which were in the form of monetary payments, had a total value for all four counts of HK$24.8 million. The value of the advantage in each count was made up of a number of different payments emanating from the same bank account, but in respect of none of them was the 2nd appellant the account holder. They came from the bank accounts of the 2nd appellant’s two sons and his sister. The breakdown of the payments that were offered and accepted in relation to each count was as follows:
8.In respect of count 5, the 2nd appellant was jointly charged with D3; for count 6 he was jointly charged with D4; and for counts 7 and 8 he was jointly charged with D5. 9.The corrupt purpose for which these advantages were offered by the 2nd appellant and accepted by the 1st appellant, as particularised in the charges, was for the giving of information. The charges averred that the payments were offered and accepted as an inducement to or reward for or otherwise on account of the 1st appellant doing or having done acts in relation to his principal’s affairs or business, namely, “giving information on derivative warrants, issued by Deutsche Bank and of which DSAL was the liquidity provider, [to the 2nd appellant]; which may assist the [2nd appellant] and his associates in their trading of those derivative warrants.” 10.In his opening address to the jury, the prosecutor, Mr Dunn, described what was alleged by each of the eight counts by taking, as a sample, the 1st count:
11.He went on to describe the 2nd to 4th counts as making an identical allegation in respect of different offerors and involving different amounts of money. He described the 5th to 8th counts as simply mirror images of the 1st to 4th counts, but this time targeting the persons offering the advantages. 12.Mr Dunn went on to tell the jury what it was that the prosecution had to prove in respect of these counts. He said there were three matters the prosecution had to prove. The first was that the 1st appellant was an agent of Deutsche Bank, the second was that advantages in the form of sums of money were offered to the 1st appellant by the 2nd appellant. These two matters, he said, were not in dispute. As to the third matter which was the corrupt purpose element of the offence, he said:
13.As the words particularising the corrupt purpose element of the offence informed the way in which both the prosecution and defence conducted their respective cases at trial it is necessary to understand just what the prosecution meant by them. 14.Although these words, on their face, appear innocuous enough it became clear as Mr Dunn described the evidence he would adduce in proof of the charges that he was not presenting the prosecution case on the basis that the 1st appellant did nothing improper in providing this information. On the contrary, the prosecution was alleging that the giving of this information, which was for the purpose of assisting the 2nd appellant with his trading, was highly improper. The question then became, how was it improper for it could have been said to have been improper on a number of different bases. 15.For example, it could have been said that the two appellants developed a relationship in which each performed favours for the other – the 1st appellant by assisting the 2nd appellant with his trading in derivative warrants (with that assistance including, but not limited to, the giving of information) and the 2nd appellant providing a facility for the 1st appellant to secretly trade in Hang Seng Index Futures.[1] 16.It could also have been presented as a general sweetener form of bribery where the payments were not referable to any specific act by the 1st appellant but were simply provided to ensure that he remained favourably disposed to the 2nd appellant. 17.But, it was not presented on either of these bases. Rather, the prosecution case was that the 1st appellant, in committing particular acts of providing information, was actively colluding with the 2nd appellant to improperly assist him to make profits in his trading which would necessarily be at the expense of the interests of Deutsche Bank. Given the size of the advantages, it is, perhaps, hardly surprising that the prosecutor pitched his case at this high level. After all, it is unlikely that a total amount of $24.8 million would have been paid as simply a generous gratuity by a satisfied customer of the bank for services properly performed by one of its staff. The natural inclination is to expect that when large amounts of money of this size are given, then something in return is expected and the larger the payment the more likely it is that that something will involve impropriety. 18.That this was the way the prosecution was presenting its case is apparent from the way the prosecutor explained his case in his opening address. He said:
19.The prosecutor also said:
20.It is clear from all these comments that what the prosecutor was alleging between the two appellants was an improper and corrupt relationship in the course of which the 1st appellant would, in return for bribes, subordinate the interests of his principal to the interests of the 2nd appellant and his family so that the HAs could make extraordinary profits in their trading; profits which they would not otherwise have made without the corrupt assistance of the 1st appellant. The 1st appellant possessed the skills and the tools to limit the profits the HAs made and to increase the profits the bank made. However, he actively assisted the HAs over the interests of the bank and in doing so caused prejudice to the bank. The prosecution case 21.The prosecution case relied heavily on the evidence of an expert witness, Mr Cheng, who was PW10 at trial. Other witnesses were called but for the purposes of this appeal it is not necessary to set out their evidence. 22.Mr Cheng was a former director at the surveillance department of the Securities and Futures Commission (“SFC”) and he had been engaged by the ICAC to prepare a report on the derivative trading of the HA’s and this report became Exhibit P93 in the trial. 23.In paragraph 7 of his report Mr Cheng recited, as part of the background to him being engaged to prepare his report, the allegation that the ICAC was investigating. He said:
24.In setting out his instructions he revealed that he had been asked to render opinions on two areas. The first, was a factual explanation of the derivative warrant market in Hong Kong, the roles of those participating in it, the extent to which a liquidity provider can determine the market price of a warrant and the factors that will affect investors in trading derivative warrants. The second, and much more contentious, area in which he was asked to render his expert opinion was as follows:
25.In his report Mr Cheng analysed the HA family’s trading records and said that they showed that over the course of the material period the HA family traded in 96 stocks, 282 Deutsche Bank warrants and 51 non-Deutsche Bank warrants. Most of the derivative warrant trades that they conducted were day trades and over the 347 trading days of the material period the HA family accounts “in aggregate bought and sold on aggregate $161 million worth of DB warrants every day.” He calculated that the HA family had made a total profit of $228.26 million, of which $224.46 million came from the trading of Deutsche Bank derivative warrants. Mr Cheng said that the HA family lost money in trading non-Deutsche Bank derivative warrants but earned a substantial profit in trading Deutsche Bank derivative warrants. 26.An important opinion expressed by Mr Cheng was that which flowed from the fact that in the bulk of the trades in derivative warrants the counterparty (ie the other party to the trade) was the liquidity provider (ie Deutsche Bank). At paragraph 95 of his report he said that given this situation, unless Deutsche Bank could successfully hedge the risk to which it was exposed by these trades, the profits enjoyed by the HAs would necessarily lead to a consequential loss to the bank. This comment suggested that if the 1st appellant was helping the HA family to make profits from their trading in derivative warrants then his conduct was inevitably causing his principal to suffer losses. 27.Mr Cheng analysed the trading pattern of the HA’s accounts, which involved pair trades (the buying and selling of a similar quantity of derivative warrants repeatedly during the day), and day trading (the buying and selling of warrants on the same day), and at paragraph 101 of his report he commented on the pair trade strategy, saying:
This comment suggested that the HA’s trading strategy depended for its success on the collusive assistance from someone within Deutsche Bank and, on the prosecution case, this was the 1st appellant. 28.On the key issue of showing that the source of the collusive assistance was the 1st appellant, the important part of Mr Cheng’s expert opinion evidence was that concerned with his analysis of and comments on the contents of telephone calls that had taken place between the 1st and 2nd appellants and which had been recorded on the 1st appellant’s office telephone during the period between January 2007 and May 2008. It was in the course of these telephone calls that the prosecution said the 1st appellant provided assistance to the 2nd appellant in his derivative warrant trading by giving him information. 29.The transcripts of these telephone calls were the primary evidence of the corrupt purpose element of the offence, Mr Dunn’s third matter, as particularised in the charges. Mr Dunn described the significance of these telephone calls in his opening address. He said:
30.In analysing the telephone conversations, Mr Cheng crossed-referenced the conversation transcript with the trading record, and stated at paragraph 105 of his report that in respect of around 86% of the 211 incidents in which a specific Deutsche Bank warrant was mentioned, the HAs traded in that warrant on that day. He said that in most cases the same quantity of Deutsche Bank warrants was bought and sold the same day. 31.At paragraph 108 of his report Mr Cheng divided the telephone conversations into 8 categories as follows:
32.At paragraph 111 he said that most of the conversations were in relation to the trading of Deutsche Bank derivative warrants with both sides exchanging ideas as to which Deutsche Bank warrant to trade and how they should be traded. He then went on to comment on each of the eight categories. He did so under the heading “Was the discussion between MA and HAs common between an investor and a trader of the issuer?” 33.In respect of category (a) Mr Cheng said that there was no irregularity. It was sensible for Deutsche Bank to find out what might interest their prospective investors. 34.In respect of categories (b) and (c) Mr Cheng said these types of communications could be regarded as normal sales communication but that the contents of the telephone calls did not in anyway resemble recommendations or sales communication. He said there was no rationalization of why a particular Deutsche Bank warrant was chosen and there were no price targets. 35.Importantly, at paragraph 115 of his report when dealing with category (d), where the 1st appellant responded to the 2nd appellant’s enquiries on the relative expensiveness of a Deutsche Bank warrant, Mr Cheng said of the 1st applicant conduct:
This was yet another comment which suggested that the information the 1st appellant was providing to the 2nd appellant would prejudice the interests of his principal. 36.After discussing his categories of telephone calls Mr Cheng then made comments under a heading “Conflicts of Interest”. He said at paragraph 122 of his report:
37.At paragraph 123 of his report Mr Cheng also commented that the 1st appellant must have known that the HAs were making lots of money by trading those Deutsche Bank warrants that he had recommended. He noted: “The profits made was not one off but gradually accumulated on a daily basis.” 38.Mr Cheng then went on to make comments under a heading entitled “Any sign showing MA had provided assistance or any favourable quotes or shown any favour to the HA family in trading DB Warrants.” 39.Under this heading he expressed the opinion that, in a general sense, the information divulged by the 1st appellant to the HA family could give them an advantage when they traded with Deutsche Bank. Knowing the relative expensiveness of a Deutsche Bank warrant was one kind of favour which could help the HAs to better time their buying and selling. 40.Although the bulk of these conversations may have revealed an unusually close relationship and even hinted at an improper one, they did not contain any “smoking gun” incident to which the prosecution could point as demonstrating unequivocally improper conduct by the 1st appellant which impacted upon the affairs or business of his principal and which benefited the 2nd appellant or his family. However, there were telephone call recordings which did provide the prosecution with “smoking gun” acts of favour by the 1st appellant. These were occasions on which the prosecution alleged the 2nd appellant had requested from the 1st appellant a special and specific favour and which he then provided to them. As earlier mentioned the prosecutor had referred to these occasions in his opening address when he said:
41.These occasions were referred to in the very contentious paragraph 128 of Mr Cheng’s report where he asserted that the 1st appellant had helped the HA family “to make better profits or help HAs to avoid potential financial hazards of keeping a position involuntarily” and then proceeded to quote examples of such situations. He said:
42.In order to appreciate the true significance of paragraph 128, and of Mr Cheng’s evidence in relation to the incidents described in it, it is necessary to understand how it benefited the prosecution in proving its case against the appellants. 43.As we have said earlier in this judgment, the prosecution case was presented on charges that limited the assistance provided by the 1st appellant to the giving of information, but with assertions that the giving of this information was highly improper, that it impacted adversely upon the affairs or business of Deutsche Bank and that it conferred benefits on the 2nd appellant at the expense of Deutsche Bank. Though the prosecution drafted its charges quite narrowly, it pitched its case on those charges quite high. However, by adducing evidence of other acts of assistance which were more obviously tainted by impropriety, namely the incidents described in paragraph 128, the prosecution could draw upon these other acts to stain the acts of giving information with the same taint of impropriety. 44.For the sake of completeness we should mention that the 1st appellant’s video record of interview was adduced into evidence. In it the 1st appellant denied providing any special assistance to the 2nd appellant. Also during this cautioned interview, the 1st appellant asserted that the 2nd appellant had lent him $10 million to buy a flat. 45.However, when the 1st appellant testified in his defence he admitted that this assertion of money lent to fund the purchase of a flat was not true. The truth, he said, was that he was using a HA family account to trade in Hang Seng Index futures without the knowledge of his employer. He explained that because he had not declared his futures account to Deutsche Bank, he decided to put up another explanation, as he feared Deutsche Bank might dismiss him. 46.The prosecution relied on this lie as evidence against the appellant and the adequacy of the judge’s direction on lies is the subject of grounds of appeal. The voir dire in respect of Mr Cheng 47.Prior to the commencement of the trial the defence counsel informed the judge that they would challenge the expertise of Mr Cheng. Thus, on 9 September 2013, prior to the empanelment of the jury, a voir dire took place to determine whether Mr Cheng was qualified to give evidence as an expert. The defence position on this voir dire was that:
48.Although the issues addressed on the voir dire were the basis of many of the grounds of appeal, it is not necessary, for the purpose of this judgment, to go into all of them. Consequently, we shall not set out the evidence of Mr Cheng on the voir dire. Suffice it to say that on the voir dire the attack was on Mr Cheng’s qualifications and not his character, honesty, independence or motivation as an expert witness. 49.The judge gave his ruling on the voir dire on 13 September 2013. In that ruling the judge found that with Mr Cheng’s trading experience in futures, options, foreign exchange and securities, plus his 10 years’ experience in the surveillance department of the SFC, Mr Cheng had substantial knowledge in the present derivative warrant market. The judge said he was satisfied that Mr Cheng was qualified as an expert to give opinions on the derivative warrant market. The judge further remarked that the fact that Mr Cheng had no actual trading experience in derivative warrants since the year 2002 would only affect the weight of his opinion. The application to edit Mr Cheng’s report 50.After the judge’s ruling Mr Dunn and the defence counsel tried to resolve how Mr Cheng’s report, should be edited. Mr Dunn prepared an edited version of the report, but the defence sought further redactions. Consequently, on 25 September 2013 submissions by counsel took place on the further editing of the report. 51.The defence sought the removal of parts of paragraphs 114 and 123 and the complete removal of paragraphs 110, 116, 128 and 138. 52.The key paragraph is paragraph 128. It is fully quoted at paragraph 41 ante but as it features so heavily in this judgment it is worth repeating the key parts of it. In the final version of paragraph 128, under a heading “Any sign showing Ma had provided assistance or any favourable quotes or shown any favour to the HA Family in trading DB Warrants”, Mr Cheng said:
53.At this time the argument for its removal was based on a claim that it did not fall within the judge’s ruling on the limits of Mr Cheng’s testimony as an expert. Mr Tse SC, who appeared for the 2nd appellant at trial and on the appeal, submitted that in paragraph 128 Mr Cheng was doing no more than providing his interpretation of the telephone call and this was not a matter for him; rather it was for the jury to decide what was meant by what was said. 54.In justifying the retention of this paragraph, Mr Dunn described its significance to the prosecution case. He said:
55.The judge delivered his ruling the following day. He allowed paragraph 128 to be retained, but subject to some editing. The objection to paragraph 128 and evidence of other acts of assistance 56.Thus, by the time Mr Cheng came to commence his evidence he had survived a challenge to his expertise generally and, also specifically in respect of the contents of the telephone conversations, and his paragraph 128 had survived an objection to its admissibility based on the ground that its contents related to the interpretation of evidence, which was a matter for the jury and not of any expert. Now the paragraph came under further attack on a quite different basis. 57.After having commenced his evidence on 30 September 2013, by 7 October Mr Dunn had reached the stage in his examination-in-chief of asking Mr Cheng questions about paragraph 128 of his report. At this stage Mr Bell SC, who appeared for the 1st appellant at trial and on the appeal, objected to Mr Cheng giving evidence outside the parameters of the Particulars of the charge which alleged only the giving of information. In submitting that the evidence was admissible Mr Dunn said:
58.Mr Bell submitted that the prosecution was bound by the Particulars of the charge and what it was now doing was going outside those Particulars to adduce evidence of other improper conduct to prove the conduct that was particularised. He said:
59.All other counsel similarly objected to Mr Cheng giving this evidence. When called upon to respond, Mr Dunn referred to the fact that he had adverted to this other assistance in his opening address and, whilst conceding it was evidence which went beyond the narrow drafting of the count, described it as proving the general background as showing that the 1st appellant “is a man who’s in hock to the HA family, and he’s doing them favours”. 60.Mr Bell replied, submitting of this evidence that “its prejudicial value is clearly very significant because Mr Dunn is alleging improper behaviour, which does not fall within the compass of the charge.” 61.In his reply Mr Tse said:
62.At this stage, it is worth noting that none of the trial counsel sought to categorize this type of evidence in legal terms and to articulate the legal principles applicable to it. However, towards the end of his submissions on this appeal Mr Bell asserted that it fell into the category of “uncharged acts” and this led to him applying to amend his Perfected Grounds of Appeal to include a new ground specifically in respect of it being governed by the legal principles applicable to uncharged acts evidence and of the judge erroneously failing to direct the jury to apply such legal principles to it when directing them on the use they may make of it. 63.On 8 October 2013 the judge delivered his ruling. He said:
64.It is apposite at this stage to express our bewilderment as to why the prosecution did not simply apply to amend the charge at the beginning of the trial. Had such an application been made and granted the problems associated with justifying the admissibility of the evidence of the paragraph 128 incidents within the compass of such a narrowly drawn charge would not have arisen. The evidence of Mr Cheng 65.It is not necessary to discuss the evidence of Mr Cheng in any great detail but it is important to note that when he was being cross-examined a wide-ranging attack was made upon him. It was composed of an attack upon:
66.Under cross-examination, Mr Cheng admitted that he had no experience in trading derivative warrants for himself or in dealing as a liquidity provider. He also agreed that he had been criticised in two Market Misconduct Tribunal hearings and that one of the criticisms was for giving an opinion which was outside his role as an expert. He also confirmed he had been a defendant in a District Court trial in which he and his wife had been charged with an offence of dishonesty and both had been acquitted[4]. The judge who tried his case found that he had told the truth in some aspects, but had not told the whole truth on a particular matter and that on some issues his testimony was inherently improbable. The defence case 67.The 1st appellant gave evidence at trial, whilst the 2nd appellant did not testify. In a nutshell, the 1st appellant’s case was:
68.The 1st appellant admitted that during the material time he had, over the telephone, given information on derivative warrants to the 2nd appellant but he said this information was not given in return for monetary payments. He contended that the information, which he claimed was publicly available, was only given in his position as market maker at Deutsche Bank and it was no different to the information he would give or would be expected to give to any other trader/investor purchasing or seeking to purchase derivative warrants offered by Deutsche Bank. 69.Under cross-examination, he admitted that he had lied to the ICAC officers during his cautioned interview and also to police officers from the Commercial Crime Bureau when, in 2008, he had been asked about the source of the roughly 10 million dollars from D5’s account. He explained that he needed legal advice to decide what to say but was unable to instruct a lawyer as he had no money on him. 70.The defence case also relied on the report and testimony of Dr Fitzgerald, an expert witness in the area of derivatives trading. He was called by the 1st appellant. For present purposes it is not necessary to go into his evidence in any great detail. 71.Dr Fitzgerald disagreed with Mr Cheng that high turnover was the main reason for an investor to trade in derivative warrants. He also disagreed that a liquidity provider would control the turnover by widening the spread or reducing the quote size. 72.He agreed with Mr Cheng that the HA family made profits depending on Deutsche Bank maintaining a tight spread and a large quote size. He found these quoting practices of Deutsche Bank not surprising, nor was the HA family’s reliance on this practice surprising. He expected other investors would rely on such quoting practices too. 73.In respect of the comparison of the HA family trading result of Deutsche Bank warrants with that of non-Deutsche Bank warrants, Dr Fitzgerald pointed out that the conclusions made by Mr Cheng, by comparing Deutsche Bank and non-Deutsche Bank warrants, were only based on a very small base sample of 330 out of 21,000, that he himself would not be confident of drawing a conclusion. 74.One of the main differences between the expert opinions of Mr Cheng and Dr Fitzgerald was whether hedging was taken into consideration. Dr Fitzgerald said that given the bank was hedging through a combination of means Mr Cheng was wrong to say that the HA family’s trading profit evenly matched Deutsche Bank’s loss. 75.The core elements of the defence case that came out in evidence[5] were first, that there was nothing improper or unusual in the information the 1st appellant provided to the 2nd appellant; secondly, that the 1st appellant was just doing his job and that he was not treating the 2nd appellant any more favourably than he was other investors trading in derivative warrants; and thirdly, that the profits earned by the 2nd appellant were not at the expense of the bank and, just because the 2nd appellant and his family made profits from their trading, it did not follow that the bank suffered losses to the same amount or at all. 76.In summary the defence case as it came out at trial was:
The prosecutor’s closing address 77.In his closing address Mr Dunn referred to the corrupt purpose element of the charges. In respect of the 1st appellant he said:
78.Likewise in respect of the 2nd appellant and his family members he said:
79.Although Mr Dunn did refer also to the giving of information, there is no doubt that he regarded the prosecution case, as can be seen from the above quotations, as though it encompassed all forms of giving assistance, rather than being limited solely to the giving of information. One such example is when he said:
80.This comment clearly adverted to the special favours mentioned in paragraph 128 of Mr Cheng’s report. When dealing with this evidence Mr Dunn said:
81.Towards the end of the 1st day of Mr Dunn’s address, Mr Dunn made the following comment:
82.Immediately after the jury left the courtroom Mr Tse rose to his feet to complain about this last comment and also about Mr Dunn’s comment to the jury on how they could use the evidence of other acts of assistance. It is clear from the submissions advanced by Mr Dunn that he did not fully appreciate the limited use that he could make of conduct by the appellants outside of the charge period and of the acts of other assistance. 83.The judge ruled that the jury “should only look at the period as stated in different charges in the indictment, right, they should ignore other assistance which is not included in any of the reports or any exhibits produced.” In response to a concern raised by Mr Tse, the judge qualified his position by saying that the jury could also consider anything raised by the defence. 84.As already indicated earlier in the judgment the defence case was to deny any favouritism being shown by the 1st appellant to the 2nd appellant and to claim that the information provided by the 1st appellant was publicly available information. This was of concern to the judge and at the time that he was dealing with the closing address of Mr Dunn the following exchange took place:
85.Mr Dunn addressed these concerns towards the end of his closing speech. He said:
86.Mr Dunn then analysed the account of the 5th defendant before returning to his theme of what matters were not essential to the prosecution case. Then, he set out those matters that were essential. He said:
87.Earlier in his closing speech Mr Dunn had dealt with the evidence of the defence expert, Dr Fitzgerald. He said:
88.He had also earlier foreshadowed the position he would take on the hedging issue; a position different from that he had adopted at the beginning of the trial and which was clearly prompted by the evidence that had come out in respect of the bank hedging its risks to avoid possible losses. Mr Dunn expressed it in this way:
89.By the end of the trial it was apparent that the prosecution had to make some concessions to the way it presented its case. It was no longer being put that wins by the HA’s automatically meant losses of the same amount by the bank. In respect of risk to the bank Mr Dunn could now only say that the HA’s profit-making created the possibility of losses being incurred by the bank. Rather surprisingly, the prosecution never attempted to adduce evidence on whether any such losses were in fact incurred by the bank. What had started out as quite an important element of the prosecution case was, by the end of the trial, relegated by Mr Dunn to being a non-essential matter. 90.Likewise, in respect of the propriety of the 1st applicant’s conduct. Mr Dunn appeared to be saying that whether it was proper and acceptable to Deutsche Bank or whether it was normal or okay for the 1st appellant to provide this information was also not vital to the prosecution case. Instead, Mr Dunn focussed on whether the information that was provided by the 1st appellant was capable of assisting and did in fact assist the 2nd appellant in his trading in derivative warrants. 91.Mr Dunn was also forced to concede that some of the information provided by the 1st appellant was publicly available but he asserted that notwithstanding that fact it nevertheless assisted the 2nd appellant in his derivative warrant trading because of the nature of the trading strategy adopted by the 2nd appellant. Speed was a crucial element of this trading strategy and so the 2nd appellant benefited from immediately gaining this information which it would otherwise take him longer to access through public channels. Other information provided by the 1st appellant was in the form of advice and recommendations. Its value and capability to assist the 2nd appellant came from the fact that it was provided by the 1st appellant. His position, expertise and experience, gave it value. The 1st appellant’s closing address 92.In his closing speech on behalf of the 1st appellant Mr Bell was quick to emphasize that the charge was confined to the giving of information. He said there were three fundamental principles he wished to emphasize to the jury. The first was the 1st appellant was innocent until proven guilty and, secondly that each juror has sworn by their oath to return a true verdict according to the evidence. As to the third, he said:
93.In his criticism of Mr Cheng, Mr Bell said:
94.Later Mr Bell referred to a part of Mr Cheng’s evidence and accused him of knowingly giving “a completely misleading picture”, of “trying to paint a picture that favours the prosecution case when it is simply not justified” and of sometimes manipulating the figures. 95.Mr Bell then turned to the telephone calls. He suggested that of all the hundreds of calls to which Mr Cheng listened, only four calls were significant and they were the ones referred to by Mr Cheng in paragraph 128 of his report. Mr Bell then asserted that the main point in respect of these calls was that they did not fall within the charge as they did not involve the 1st appellant giving information to the 2nd appellant. 96.As to the actual information the 1st appellant gave, Mr Bell said:
97.He also commented on the way the prosecution put its case in Mr Dunn’s closing address. He said:
The 2nd appellant’s closing address 98.Mr Tse, on behalf of the 2nd appellant adopted everything said by Mr Bell in his closing speech. He emphasized that the case was about whether the 1st appellant gave information over the phone in return for the alleged bribes. It was not about him providing other assistance to the HAs in return for the bribe. 99.He also strongly criticised Mr Cheng, asserting that:
100.Mr Tse also said of Mr Cheng that he was “acting as an advocate for the prosecution”; was found by a District Judge to be dishonest; in areas of his report was “grossly misleading” and, finally that he was “deliberately flaunting his professional duty as an expert.” Mr Tse urged the jury to have every doubt about his integrity. THE SUMMING-UP BY THE JUDGE 101.The judge repeatedly directed the jury that the main dispute or most important issue in the trial was whether the 1st appellant accepted the payments as a reward for giving information which may assist the 2nd appellant and the other defendants in their trading of derivative warrants by Deutsche Bank. 102.The judge directed the jury on the elements of the accepting offences as follows:
103.The judge then gave similar directions in respect of the offering counts. He then turned to the evidence and summarised the testimony and other evidence that had been adduced in the trial. 104.In directing the jury on how to approach the issue which he described as the main issue of the reason for the acceptance of the advantages, the judge said:
This is the only direction to the jury on the evidence of other acts of assistance. 105.On Mr Cheng’s credibility there were a number of times the judge reminded the jury of the criticisms that had been made of him. When referring to the cross-examination of Mr Cheng he reminded the jury of Mr Cheng’s lack of practical experience in derivative warrant trading, the criticisms that had been made of him in two Market Misconduct Tribunal hearings and the finding that had been made by the District Judge presiding over his trial for a fraud offence that he had not told the truth. There were also matters relating to his performance of the role of expert, namely that he had not revealed some data that he had relied on in compiling his report and that in certain paragraphs of his report he had made mistakes in what he had said. 106.Towards the end of summing-up the judge returned to the issue of Mr Cheng and he directed the jury as follows:
107.Before the summing-up was concluded Mr Bell and Mr Tse raised with the judge their concern and disagreement with his comments in, inter alia, two areas. One was his direction on the other acts of assistance and the second was his direction that the credibility of Mr Cheng “may not be a major factor concerning his expert opinion”. 108.In respect of the direction on “other acts of assistance”, the following exchange took place between Mr Bell and the judge:
109.Notwithstanding Mr Bell’s objection to the way the judge had expressed himself on this issue the judge did not revisit it in his supplementary directions to the jury. 110.On the judge’s direction of the importance of Mr Cheng’s credibility to the jury’s assessment of the weight to be given to his expert evidence the following exchange took place between Mr Tse and the judge:
111.In response to this exchange the judge gave the following supplementary direction to the jury:
112.This was the extent to which the judge went in acceding to Mr Tse’s request. The Grounds of Appeal against Conviction 113.The appellant’s grounds of appeal against conviction can be summarized as follows:
DISCUSSION: CONVICTION 114.In view of the conclusions we have reached on the grounds of appeal relating to the admission of the acts of other assistance evidence, which was characterised by the appellants as uncharged acts, and the ground of appeal concerning the judge’s directions to the jury on Mr Cheng’s credibility, it is not necessary for us to consider the other grounds of appeal. 115.Dealing first with Ground 12 of the 1st appellant and Ground 8(4) of the 2nd appellant on the direction on the credibility of Mr Cheng, it is apparent from the procedural history of the trial and the way Mr Cheng was cross-examined that a persistent and wide ranging attack on Mr Cheng was a core element of the defence strategy. The trial in fact started before the empanelment of the jury with a voir dire to determine whether Mr Cheng should be allowed to give expert evidence and if so the scope of his evidence. When the defence failed to prevent Mr Cheng from giving evidence in the trial they tried other means to lessen his impact as a prosecution witness. When these tactical measures had only limited success they embarked on a full scale attack upon him and his opinions in their cross-examination of him. 116.This was not the normal attack on an expert witness and, in fact, it bore greater similarity to the kind of attack that is usually mounted on accomplice witnesses. We say that because the attack went so far as to accuse him of dishonestly tailoring his evidence in order to satisfy the needs of the prosecution. 117.He was accused of having deliberately concealed data on which he relied in compiling his report, and of being an expert with a history of trying to say more than he should when he appeared before the Market Misconduct Tribunal and of being willing to lie on oath when he testified in his District Court trial. He was lacking in both professional and personal integrity, and was willing to be dishonest if that was required of him. No mistake and failing of Mr Cheng was due to neglect, human error or even incompetence; on the defence case all his mistakes and failings were deliberate, dishonest and motivated by a desire to assist the prosecution. 118.As noted earlier, the judge said of the issue of Mr Cheng’s credibility “... he is an expert witness in this trial, credibility may not be a major factor concerning his expert opinion.” We do not understand why the judge would downplay the issue of his credibility as being relevant to the jury’s assessment of the weight they would give to his evidence. It was plainly relevant. It was, as Mr Tse reminded the judge, one of the main planks of the defence case. 119.This is all in the context of a trial in which the evidence of Mr Cheng was the prosecution case; without his evidence there was no prosecution case. The defence case was, one way or another, to destroy the credibility of the Mr Cheng and to present the jury with an alternative and acceptable explanation in the form of the evidence of Dr Fitzgerald and the 1st appellant. But persuading the jury that their evidence should be accepted in preference to Mr Cheng’s required providing the jury with reasons not to accept Mr Cheng as a credible expert witness. 120.In these circumstancesthe judge had an obligation to place squarely before the jury all the significant pieces of evidence adverse to Mr Cheng and what the defence said was the effect of this evidence. This was simply a matter of fairly putting the defence case as part of a balanced summing-up. The judge had to do more than just recite the different pieces of prejudicial evidence; he had to put that evidence in the context of an expert witness on whom there are particular obligations. For example, the failure to comply with the Code of Practice for experts may well have been just oversight or neglect but the defence were saying it was far more than that. On the defence case it was deliberate conduct that evidenced Mr Cheng’s personal dishonesty and his lack of professional integrity. It was for the jury to decide whether his expert opinions had been influenced by any of the matters raised by the defence and in order for them to do that it was incumbent upon the judge, as part of a fair and balanced summing-up, to remind the jury of these matters and how they impacted upon the credibility of Mr Cheng. This he failed to do. 121.In Lin Pin Keung v HKSAR (2005) 8 HKCFAR 52 Chan PJ, with whom the other judges of the Court of Final Appeal agreed, emphasised that a defendant had a right to have his case fairly presented to the jury and in so doing the judge must truly and accurately reflect the evidence. At page 59G-H, paragraph 24 he said:
At page 60B-E, paragraph 26 he continued:
122.Here, with respect to the judge, the defence was not presented to the jury in a way that truly and accurately reflected the evidence; nor was it presented in a way that provided fair and balanced guidance to the jury. 123.Given the importance of Mr Cheng and his opinions to the prosecution case, the judge’s failure to accurately present to the jury the defence criticisms of Mr Cheng resulted in the defence case not being fairly placed before the jury. 124.On this ground alone we allow the appeal and quash the convictions of both appellants. However, there was also one other ground of appeal which was of concern to us and that was the evidence of the acts of other assistance. 125.Before us the appellants’ counsel categorised this evidence as uncharged acts evidence. They submitted that it was evidence of wrongful conduct not encompassed by the charges and which had the potential to prejudice the appellants because it could be wrongly used by the jury as evidencing a propensity to misconduct. That is, the jury might be tempted to impermissibly reason that, if the appellants had committed these other wrongful acts, then they must also be guilty of the offences with which they were charged. 126.The first issue to consider is whether the impugned evidence does fall into the category of uncharged acts and, if not, whether it falls into some other specific category of evidence which required that it receive special treatment by the judge. 127.The respondent argues that the acts of other assistance do not fall into the category of uncharged acts as they do not constitute the actus reus of any offence and could not have been the subject matter of any charge. That being so they did not require any special direction beyond what was said by the prosecutor, namely that they were not part of the charges. The respondent argues that this was made clear by what the prosecutor said and by the directions of the judge in his summing-up. 128.The decision of this court in HKSAR v Kwok Hing Tony, on which the 1st appellant solely relies, does not contain any definition of uncharged acts evidence, but by its very nature such evidence must be composed of acts which could themselves be the subject of charges. Uncharged acts evidence is most commonly encountered in sexual cases were a defendant is charged with a select number of offences in respect of a victim but the prosecution seek to adduce evidence of other acts of sexual offences by the defendant in respect of the same victim in order to show the complete context in which the charged acts allegedly occurred. In the context of the present case uncharged acts evidence would be evidence of other acts of acceptances or offers of advantages by the 1st and 2nd appellants. We are not persuaded that the other acts of assistance fall into the category of uncharged acts evidence. 129.However, that may not be the end of the matter. Here the prosecution was alleging that a corrupt relationship existed between the two appellants whereby the 2nd appellant bribed the 1st appellant to act improperly in the discharge of his agent duties to the prejudice of his principal. In that context, it sought to rely on evidence that the 1st appellant performed acts of assistance of a kind not covered by the charges, but whose purpose was the same as that alleged in the charges, and which acts were clearly improper and in betrayal of the principal’s interest. 130.In our view it is arguable that such evidence may fall into the category of evidence of bad character or propensity, commonly referred to generically as similar fact evidence. If in fact it does fall within such category then it would be governed by the legal principles laid down by the Court of Final Appeal in its judgment in HKSAR v Zabed Ali (2003) 6 HKCFAR 192. The following passages from the headnote of that case summarise those principles:
131.Neither party referred us to Zabed Ali, although much was made by the appellants of the propensity quality inherent in the acts of other assistance evidence. That being so, we deliberately refrain from expressing any view on whether the evidence of other acts of assistance falls to be treated in accordance with the Zabed Ali principles or if it does what the outcome of the application of these principles to it would be. Conclusion 132.For these reasons we allow the appeal and quash the convictions of both appellants and set aside the sentences imposed on them. We shall now hear the parties on ancillary applications.
Mr Martin Hui Ag. DDPP and Ms Peggy Lo SPP, of the Department of Justice, for the respondent Mr Adrian Bell SC, Mr Edward Chan and Mr Nicholas Oh, instructed by Lee & Chow, for the 1st appellant Mr Joseph Tse SC and Ms Doris Ho, instructed by Howell & Co, for the 2nd appellant [1] The 1st appellant testified that the 2nd appellant did in fact secretly provide him with such a facility and that the payments he received from the HA’s were the profits from his trading. There was some evidence from the prosecution witnesses that such a facility existed but the prosecution disputed that this explained the payments. [2] This paragraph refers to evidence the prosecution adduced, over the objection of the defence, of specific acts of assistance requested by the 2nd appellant of the 1st appellant in respect of particular derivative warrant trades of either himself or one of his sons. The basis of the defence objection to this evidence was that it was not within the particulars of the charge as these acts of assistance were not the giving of information. The prosecution received a favourable ruling of the judge allowing it to adduce this evidence and this ruling is the subject of one of the grounds of appeal. [3] Appeal Bundle: Page 857 at paragraph122. [4] They were charged with four joint charges of furnishing false information relating to the obtaining of private tenancy allowance. [5] Apart from favourable answers obtained from the cross-examination of prosecution witnesses the 1st appellant called a person who had been working in the Sales and Marketing Department of Deutsche Bank when he was the chief warrant trader. This person said it was normal for traders to talk to investors and brokers and she had never heard the 1st appellant say anything wrong or improper in his conversations with the 2nd appellant. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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