China Shanshui Cement Group Ltd and Others v. Zhang Caikui and Others
Read the full judgment text of HCA 2880/2015 on BabelCite. This High Court CFI judgment was delivered on 9 March 2017.
1. This hearing is for the cross-examination of D3 on his 3 affirmations filed in response to a disclosure order.
Cited by 5 cases · Cites 8 cases
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HCA 2880/2015 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 2880 OF 2015 ____________
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______________ D E C I S I O N ______________ 1.This hearing is for the cross-examination of D3 on his 3 affirmations filed in response to a disclosure order. 2.D3 was arrested and investigated by the ICAC for 2 offences. He claimed privilege against self-incrimination (“PSI”) so that he would have not to answer any question or produce any document at all in this cross-examination. 3.I refused to grant his blanket application before the start of the cross-examination and all similar claims to individual questions posed to him during the course of the cross-examination. Here are my reasons. Legal principles for claiming PSI 4.A witness is not bound to answer any question or produce a document which would, in the opinion of the court, have a tendency to expose him to any criminal charge which the court regards as reasonably likely to be brought. 5.The privilege prevents placing the witness in a position where: (a) if the answer must be true, it might be self-incriminating; (b) it would be perjury if the answer were false; and (c) refusal to answer might lead to an accusation of contempt of court: HKSAR v Leung Oi Yin Scarlette [2016] 2 HKLRD 472, §32, CA. 6.PSI is an entrenched right at common law. The Court of Final Appeal has made clear that abrogation of such a right must be by express words or by necessary implication: A v Commissioner of ICAC (2012) 15 HKCFAR 362, §24. The Court of Appeal has confirmed, in the context of Order 48 examination that PSI has not been abrogated by statute: Pacific Harbour Advisors Pte Ltd v Winson Federal Ltd [2016] 6 HKC 14, per Lam VP, §§33-34. 7.However, the court must make sure that the privilege is not abused, but applied only where the court concludes that its invocation is justified. A mere statement by the witness that an answer may incriminate him is not sufficient to found the claim for PSI. The court must be satisfied that there is reasonable ground and that the objection is taken bona fide. See Den Norske Bank ASA v Antonatos [1999] QB 271, at 285-288, Waller LJ, 286B-C, 287D. 8.Nor is it enough for an examinee to establish that he is facing a real risk of prosecution of a particular offence. He must also establish that requiring him to answer questions in this examination has a tendency to expose him to a criminal charge: Pacific Harbour Advisors, HCMP 532/2016, 12 May 2016, per Lam VP, at §5; and [2016] 6 HKC 14, per Lam VP, at §13 & 29. 9.In deciding whether or not the claim for PSI should be upheld, the court will have to examine whether there is a clear link between the answers sought and the offence: Pacific Harbour Advisors, HCA 1257/2013, 29 January 2016, per Deputy High Court Judge Le Pichon, at §34. 10.There must be a real risk of prosecution, not a theoretical or fanciful risk, before one can rely on PSI to refuse to answer questions. In assessing whether there is a real risk, the matter must be looked at realistically and the court should consider the balance of the proceedings in the light of all the materials before it. Pacific Harbour Advisors, HCMP 532/2016, per Lam VP, at §5. 11.Where the court considers it appropriate, any danger to the witness can be removed by protective measures, for example sitting in closed court: Pacific Harbour Advisors [2016] 6 HKC 14, per Lam VP, at §§24-25. D3’s case 12.Subsequent to the making of the order for cross-examination, D3 has been arrested and investigated for 2 charges:
Both of these charges can end up with lengthy sentences of imprisonment. 13.With regard to the conspiracy charge, the allegation was that there was a conspiracy between D3 and others including the Zhangs to offer an advantage to one Li Yanmin in connection with the transfer of certain stocks of a trust. 14.D3 had declined to answer each of the questions ICAC asked of him on the first charge. He was asked no questions of the second charge but, if he was, he said would not have answered either. He had been shown a number of documents but he had not identified any of them in his affirmation. The ICAC had not revealed the informant but D3 submitted that it was not hard to imagine who that might have been. 15.The offence of perverting the course of justice must involve impairing the administration of justice in curial proceedings. Conduct with a tendency to result in unlawfulness which does not interfere with curial proceedings does not constitute the offence: HKSAR v Egan (2010) 13 HKCFAR 314, at §§126, per Ribeiro PJ. 16.At present, there are 3 sets of curial proceedings connected to D3. Two of them have not gone beyond the stage of service of proceedings. The only action which has gone beyond is the present case. D3 had been told twice by the ICAC officer who appeared to be in charge of the investigation that the officer was aware that D3 had to undergo this cross-examination. D3 considered that the unparticularised conspiracy must be to pervert the administration of justice in the present case. 17.Mr Bruce SC made clear that his application was not based on the arrest or charge of D3 or even investigation of him but the tendency to incriminate. He suggested that it may be the judgment of this court that had been the inspiration for ICAC's allegations. The cross-examination must be an interrogation about the core of the allegation of ICAC. 18.Mr Bruce SC pointed out that the plaintiffs have asserted that D3 has been a party to hiding documents that formed the subject matter of the disclosure order. Such conduct would render D3 liable to prosecution for one of the many variants of perverting the course of justice. Mr Bruce SC submitted that the ultimate effect of the questions put in cross-examination would be an attempt to make D3 incriminate himself for the crime he had been accused of. The authorities revealed that what was critical was not that any one question sought the revelation of an answer which of itself would bring about such a situation. It could be the accumulation of information from a series of questions. Analyses 19.In respect of the first charge, ICAC’s allegations concerned a wholly different subject matter unrelated to this cross-examination. The related case was張才奎所託管中國山水投資有限公司股份相關員工及其他人 v 張才奎及另一人, HCA 1661/2014, 13 May 2015, consolidated with 5 other actions (“the Trust Actions”). The subject company was China Shanshui Investment Co Ltd. The charge went to the Zhangs offering an advantage to Li Yanmin, the trustee of the Li Trust holding shares in CSI as remuneration for Li Yanmin refraining from pursuing claims against Zhang senior for illegally transferring shares in the Li Trust to his name. PSI is unsustainable. 20.In respect of the second charge, ICAC had not stated the bases for the charge. The Plaintiffs suggested that the allegations would have been based on evidence that members with senior positions in the group (of which D3 was one) were involved in threatening hundreds of plaintiff employees into signing pro-forma letters purporting to revoke K&L Gates’ authority to act for them in the Trust Actions and to terminate the Trust Actions: the Trust Action inHCA1661/2014, 9 October 2015, §§42-54. Deputy Judge Seagroatt considered it so serious as to justify referring the papers to the Director of Prosecutions (§54). There is no requirement that the person accused of perverting the course of any proceedings be a party to those proceedings. If so, I agree that the 2nd charge would not be related to the cross-examination. 21.On the other hand, Mr Bruce SC submitted that conduct in paragraph 20 was performed outside Hong Kong and unlikely to be within the investigative powers of ICAC. Hence the curial proceedings involved must be the present case. 22.In my view, even if the curial proceedings were the present case, PSI would not apply when one considered the purpose of the cross-examination, which was
23.In §62 of the same decision, it was made clear that the order did not involve issue of privacy as the cross-examination was to be about the Plaintiffs’, not D3’s, records and assets. Even if D3 was unable to state the current whereabouts of the Listed Items, cross-examination would still be useful for him to say what the Listed Items comprised, how they might be constituted, what became of them and who (apart from himself) was responsible for keeping them. It would make the injunction and disclosure orders more effective. 24.The cross-examination was not to be a dress rehearsal for the trial. Nor should it be used to gather information which would be used later to impugn D3’s credit or to fix liability for contempt. (§25 of the Decision). 25.Whilst the plaintiffs have filed a list of documents since the cross-examination order was first made, it was quite apparent that they fell short of what the Listed Items expected. As pointed out by Mr Barlow SC, the current board simply did not know what documents existed in the first place and that was why cross-examination of D3 was necessary to ascertain the current whereabouts of the documents. 26.Taking all circumstances into account, there was no clear link between the answers sought and the 2nd charge, or any real risk of D3 being prosecuted for the 2nd charge as a result of this cross-examination. Safeguards 27.Mr Bruce SC submits that whatever protections the court might impose, eg by eliciting undertakings from parties not to reveal anything to unconnected third parties like officers of the ICAC, there was no effective sanction for breach of the undertaking because the ICAC would not reveal their sources. The common law privilege against disclosure of such sources was upheld by the Court of Appeal in HKSAR v Agara [2014] 2 HKLRD 648, §22. It was not possible for D3 to police any undertakings which might be given except by contempt proceedings. Such a remedy was not realistic or effective. 28.I disagreed. Even if PSI was sustainable in respect of the 2nd charge, safeguards could be imposed to prevent access of ICAC to the answers given in this cross-examination. At the request of D3, and since the matter really concerned the proprietary right of the Plaintiffs over its own documents, of which the public had little interest, the court sat in closed chambers. Even D7’s legal representatives were asked to leave the court room. Those sitting in court were all professionals. The transcript of proceedings would not be available to third parties without court approval. Conclusion 29.For the above reasons, I have dismissed the claim for PSI. As it turned out, D3 claimed PSI even when asked to confirm if the affirmations made by him were signed by him. I have rejected all instances when he made a similar claim. 30.Having regard to paragraph 18 above, I have, in the course of the cross-examination, listened carefully to see if individual questions, a group of questions or the questions overall required me to review my rejection of the PSI claim. I saw no reason for changing my decision in whole or in part. Where questions were not relevant to the cross-examination or sought to establish liability for certain conduct, I have already disallowed them. 31.I therefore dismissed D3’s claim for PSI but reserved costs.
Mr Barrie Barlow SC leading Mr David Chen, instructed by Wilkinson & Grist, for the 1st, 2nd and 3rd plaintiffs Mr Andrew Bruce SC leading Mr David Khosa, instructed by Smyth & Co, for the 3rd Defendant | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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