Chung Yat and Others v. The Queen
Read the full judgment text of CACC 160/1978 on BabelCite. This Court of Appeal judgment.
1. Jones Construction Co. Ltd. is a company limited by shares incorporated in Hong Kong carrying on the business of building contractors and registered with the Public Works Department as registered contractors. As such Jones Construction Co. Ltd. to which I will hereafter refer to for the purposes of brevity as "Jones" were in April 1970 appointed to carry out building works at Wai Yip Street, Kwun Tong for China Engineers Ltd. Apparently a large concern, Jones had nine directors and the unchal
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CACC000160/1978
----------------- Coram: Leonard, J. Date of Judgment: 20th July, 1978. ----------------- JUDGMENT ----------------- 1. Jones Construction Co. Ltd. is a company limited by shares incorporated in Hong Kong carrying on the business of building contractors and registered with the Public Works Department as registered contractors. As such Jones Construction Co. Ltd. to which I will hereafter refer to for the purposes of brevity as "Jones" were in April 1970 appointed to carry out building works at Wai Yip Street, Kwun Tong for China Engineers Ltd. Apparently a large concern, Jones had nine directors and the unchallenged evidence of the first appellant was that the board was headed by two persons, a Mr. Timothy KWOK Lam and a Mr. Samuel Tak Lee. He referred to them as "the management" and to himself and the third appellant as "managers". Mr. Lam and Mr. Lee were the managing directors. The first and third appellants were directors and as were shall see the third appellant signed various papers on behalf of Jones. Labels or titles are dangerous as they may mislead. I think the title "executive directors" did in this case. Each had distinct and different functions and I shall continue to refer to them as the first and third appellants respectively. 2. On the 29th of April 1970 the authorised architect appointed in respect of the works gave notice to the Building Authority of the appointment of Jones to be the registered contractor for them and Jones confirmed the appointment and undertook to carry out the works in "strict compliance" with the Buildings Ordinance. This undertaking was signed for and on behalf of Jones by the third appellant. The building was completed by the 22nd April 1971 whereupon Jones as registered contractor certified that the building "has been erected in accordance with the provisions of the Buildings Ordinance". This certificate was again signed for and on behalf of Jones by the third appellant. The authorized architect in his turn certified that the building had been erected in accordance with the plans approved and was in his opinion structurally safe. Minor objections were raised by the Building Authority and on the 25th May 1971 occupation was permitted. In late 1975 cracks appeared in various portions of the building. The Building Authority obtained a closure order and following closure the Building Authority conducted various tests which revealed flaws in the building and non-compliance with the building plans. Thereafter various summonses were issued against each of the appellants and others. Against the first appellant four summonses were issued.
3. The second appellant faced three charges. He was charged:
4. In Summonses 29537, 29538, 29539 and 29540 the third appellant was charged with offences identical to that with which the first appellant had to meet in 29530, 29531, 29532 and 29533. 5. Jones as a limited company and as the registered contractor was also charge with four offences, the particulars of which were identical with the particulars of the offences with which the first and third appellants were charged save, of course, that Jones was charged as the registered contractor and not as a director. 6. Apparently although this is not clear from my record the authorised architect and his assistant were similarly charged. It was however found that neither had a case to answer and both were discharged for reasons into which I need not go at this stage. 7. Originally all four appellants appealed against both conviction and sentence. They were sentenced as follows:
The summonses upon which the first, third and fourth appellants were convicted and discharged were, then, in each case those of using defective concrete in eleven specified and identified beams, three specified and identified floor slabs and one specified column. These summonses charged offences contrary to section 40(2)(5) and in the cases of the first and third appellants section 40(6) of the Buildings Ordinance. Cap. 123. There was an inevitable overlap between these summonses and those said to be issued for offences contrary to section 40(2)(7) and in the case of the first and third appellants section 40(6) of the Buildings Ordinance. 8. The references in the various summonses to section 40(2)(5) and section 40(2)(7) are slightly misleading because there were in fact no sub-sub-subsections to section 40(2). There construction of section 40 is unusual. Section 40(1) provides that:
Section 40(2) provides:
There follows a table headed "Offence". Paragraph 5 of the table reads:
Paragraph 7 of the table reads:
The drafting is odd and has been amended in subsequent legislation not in force at the relevant time. The only sections specified in the table are in paragraph 1 of it. Contravention of those sections is an offence under section 40(1). There was no argument before me as to whether paragraphs 5 and 7 of the table created offences. It was accepted that they did, or to be more accurate, it was accepted that anyone who contravened them committed an offence. Having heard no argument I assume that this is so. It was not contended by the Crown before me that the offences created were absolute offences and all parties assumed that some form of mens rea was necessary for their commission i.e. before a person could be convicted he or it must be fixed with knowledge actual or constructive of the existence of the offensive material or other defrct. That this was the intention of the Legislature generally in relation to the section, appears likely from section 40(5) which deals with the case of a person who "permits" the commission of an offence specified in the section. Section 40(6) of the Ordinance reads:
That this subsection, being only a "deeming section", cannot relieve the Crown from the obligation to prove every constituent ingredient of the offence is clear. Some form of guilty knowledge on the part of the limited company must be proved before it can be invoked against a director. The intention of the draftsman is difficult to determine when one considers that many limited companies and firms are registered contractors and reads the subsection in conjunction with section 9 of the Ordinance which obliged a registered contractor to
Assuming that guilty knowledge is an essential ingredient before a limited company can be fixed with knowledge of defects, deviations or divergences the "brains" of the limited company must be so fixed. In the words of the well-known dictum of Lord Denning in Bolton (Engineering) Co. v. Graham(1):
In Tesco Supermarkets Ltd. v. Nattrass(2) Lord Reid said:
The question which arose in Tesco Supermarkets Ltd. v. Nattrass(2) was not similar to those arising hen section 40 is under consideration. My difficulty in determining the intention of the draftsman arises from the danger of a circular argument. Before an offence can be committed by a limited company it must have mens rea. That mens rea can only reside in those who represent its directing mind and will - generally its directors. Each of the directors is deemed to commit an offence of which the company is guilty unless he proves the absence of mens rea but if it is through him that the company has acquired the guilty knowledge he can, of course, not supply that proof. In such case he would be guilty without the operation of the subsection if he had performed the actus reus. 9. By section 9(3) of the then Buildings Ordinance a registered contractor was obliged to give "continuous supervision to the carrying out of the building works" but no offence for breach of that duty was created. In this particular case Jones appointed as "site foreman" the second appellant whose superior on the site, the first appellant, was a director of Jones. The foreman had worked on building sites for 11 years by the relevant time. In his own words his salary at the time was "a few hundred dollars. I don't remember the exact amount perhaps $500 to $600". He knew that his duty was to see that the building was completed in the time allowed, as he put it, and his second duty to see that the work was carried out in accordance with his instructions which, by implication, were to be based on the plans approved by the Building Authority. 10. The first appellant in the course of his evidence indicated the existence of "the management" and "the managers" (clearly intending to indicate that he and the third appellant were site managers and not charged with the overall management of the company). He also gave evidence that the second appellant was "the only foreman appointed by the company for the Wei Yip site". (my emphasis). He himself visited the site every day or every second day. His evidence was that he had complete confidence in the second appellant as a foreman and that his own duties did not entail his being on the site the whole time. He had lots of jobs to look at, he said, and the company and he had left supervision to the second appellant. He agreed that his idea of the duty of supervision imposed on him was that if he was not informed of defects "that was good enough". He relied on others to tell him. He further gave evidence that he and Jones relied on its site foreman. His job was to check the second appellant's job and that was the job given to him by the "management". He did not personally exercise continuous supervision there. He reiterated again and again that much of the supervision was left to the second appellant to whom he had at times referred as "my foreman" and at other times as "the company's foreman". It was abundantly clear that the first appellant was the director entrusted with control of the site as far as the upper structure was concerned, and that he had largely left the supervision of the site to the site foreman on whom both he and Jones relied for detailed supervision. In the final sentences of his cross-examination by the Crown he had this to say:
11. The third appellant was in a very different position. He was a director of Jones and also the authorised signatory of forms to be submitted by it to the Public Works Department. Among other documents he signed was the certificate for the completion of the building works dated the 22nd April 1971 to which I have earlier referred. His evidence was that before signing it he already knew that the architect had signed his portion of it; all he did was to inspect "test cube reports", (these were reports on test samples of concrete taken in the course of the building and it was common case that in all of them the concrete was up to standard) and obtain reports from the first appellant. It was common case that it was not part of the third appellant's duties regularly to inspect the building in the course of its erection. He ceased to be concerned with it after the foundations were completed and the piles capped. Although he signed the relevant completion certificate he was not concerned with supervision but relied on others for the information which resulted in his signing it. 12. I turn then to the function of the fourth appellant, Jones. It was the registered contractor. When deciding a submission that Jones had a case to answer the learned magistrate attributed to Jones the knowledge which he found the first and third appellants had had and not the knowledge he found the second appellant the site foreman had had. His reasoning at this point reads as follows:
This I find a little difficult to follow. It is tantamount to saying the directors have knowledge therefore the company is responsible and it follows that the directors are responsible. It seems probable that at this stage the learned magistrate fell victim to the circular argument the danger of which I have already pointed out. Furthermore it assumes that the third appellant "took an active part in the work". At that stage there was no evidence that the third appellant had done so. Indeed the evidence was that he had ceased to take an active part in the work from the moment the foundations were completed. This however is perhaps now academic except insofar as it shows how the learned magistrate approached the case; for the appellants did not stand on their submissions but gave evidence. 13. Assuming knowledge is a necessary ingredient in order to sustain the charges the Crown was obliged to prove as against the first, third and fourth appellants firstly that defective concrete was used in the identified beams, floor slabs and columns by the fourth appellant and that knowledge of its use could be imputed to the fourth appellant. Once the fact of use of defective concrete was established and knowledge of that fact could be imputed to the fourth defendant section 40(6) would come into operation and the guilt of the fourth appellant would be shared by the first and third appellants unless they could satisfy the onus placed on them by that subsection. The position was similar when the other three charges (those of divergence or deviation) were considered. Knowledge had to be established as against the second and fourth appellants but once established against the fourth appellant section 40(6) came into operation. 14. I say "assuming knowledge was an essential ingredient" because the learned magistrate, obviously with reluctance - a reluctance with which I sympathize - so held and there has been no application on the part of the Crown to seek to uphold the convictions on the basis that knowledge was not an essential ingredient of the offences insofar as the second and fourth appellants were concerned. In mentioning my sympathy I am not to be taken as expressing an opinion that A.C. v. CHAN Wing-on(3) by which the learned magistrate found himself bound was wrongly decided. The reasoning in that case was not the subject of attack before me so that I, too, must assume that knowledge actual or constructive was an essential ingredient. Knowledge must be proved and that it could not be imputed to the fourth appellant from its duties under the ordinance and regulations nor from its having through the third appellant completed the certificate of completion. It was on the basis that CHAN Wing-on's Case(3) was binding on him that the learned magistrate found that the architect had no case to answer. 15. Before Jones could be convicted it had to be shown that it used defective concrete in the building works and its "brain" had knowledge of that use and in respect of the other charges that the deviations specified had occurred and that it had knowledge of them - that is to say that its "brain" had that knowledge. 16. Before the first (or third) appellant could be found guilty it had to be shown either that he had incorporated the defective concrete in the building and had knowledge of the fact that it was defective and in the case of the deviation summonses that he caused and had knowledge of the deviations or that Jones did so with the requisite knowledge and he failed to discharge the onus imposed by section 40(6). In the case of the first defendant it was, of course, most relevant from the point of view of punishment to decide if his guilt arose from his personal responsibility or by reason of section 40(6). 17. I would agree with the learned magistrate that knowledge can be imputed to the appellants by showing that they actually knew of the defects or deviations or having good reason to know turned a blind eye to them. The learned magistrate may have been over favourable to the appellants when he said:
I think it would be sufficient to show insofar as each of the first, second and third appellants is concerned that he was guilty of a grave dereliction of duty in relation to defects or deviations - a dereliction going beyond mere negligence or laziness or optimism. Be that as it may I am content to adopt for the purpose of this appeal the criterion of constructive knowledge expressed by the learned magistrate in the terms I have quoted in the absence of any notice by the Crown of intention to support the magistrate's findings on other grounds but in applying the criterion one must bear in mind the statutory duty imposed on the fourth appellant to give constant supervision to building works of which it was the registered contractor. Section 9(3) of the Ordinance then in force reads:
In this section "continuous supervision" is clearly intended to mean exactly that. Every material operation on the site must be supervised. The purpose for which continuous supervision is required is laid down in Regulation 14 of the Building (Adminstration) Regulations and is to ensure that they (the building works) are carried out in accordance with the plans and Ordinance. This obligation was recognised by the first, second and third appellants and by Mr. Horroyd, a senior structural engineer with the Public Works Department for many years, who said when giving evidence of the system usual in Hong Kong:
and again
and later
He was, of course, speaking here as to the recognised course of business usually followed in Hong Kong. He appreciated that others besides the registered contractor had responsibilities. At the relevant time the second appellant had been in the building trade for over 10 years and had "acquired a lot of knowledge as to what goes on on building sites". His view of his duties was that he had "to continually supervise" to see that the work was carried out in accordance with his instructions. He had "to supervise not only Jones employees but also sub-contractors and their workers. A foreman never leaves it to sub-contractors to supervise our part of the work. I have to supervise work and architect has to supervise it too." "I was responsible to check work even when the architect was there". Clearly he recognised that these duties were imposed on him by reason of his employment as site foreman with Jones the registered contractor and that he in turn was at the relevant time answerable for the discharge of his duties to the first appellant as director of Jones "Chung Yat is in charge of me - can't leave everything to me. That is why (he) visited site every day or other day". The first appellant likewise recognised that "continuous supervision" meant just that. "By word 'continuous' I mean I would have to stand there all day and a man in my position cannot do that". He did not admit that he personally had to give continuous supervision but did agree that it had to be given by Jones
and later
Time and again he says that he left various matters - various parts of the duty continually to supervise - to the second appellant. But it is abundantly clear that he and through him Jones recognise the existence of that duty resting on Jones. Breach of that duty is not an offence but the existence of that duty and recognition of its existence is in my view a paramount consideration when deciding whether or not the Crown has proved constructive knowledge on the part of Jones. In arriving at the conclusion that the existence of the duty is a paramount consideration I do not mean to that knowledge can be imputed from breach of that duty. So to find would amount a refusal to follow CHAN Wing-on's Case(3) a refusal I am not prepared to make having regard to the course which the case took before me. Nevertheless I do find that the existence of the duty and knowledge of its existence on the part of the first and second appellants is a most important factor (but only one factor of a number) to be taken into account in deciding if constructive knowledge of the defects and deviations existed. 18. Recognition by the second appellant of the duty of continuous supervision placed on him by virtue of his employment with Jones is a paramount consideration when considering if the Crown has proved constructive knowledge on the part of the second appellant and the precise nature of the first appellant's duties require to be examined to determine if he had such constructive knowledge or if, and as Mr. Cheng contends on his behalf, he is guilty only by virtue of the operation of section 40(6). 19. Despite valient efforts by Miss McGrowther to attack the scientific evidence I am quite satisfied from a consideration of the record generally and from the learned magistrate's findings that the evidence shows conclusively that there was use of defective concrete in the two beams on the 12th floor, the three beams on the 10th floor and on each of the single specified beams on the 9th, 8th, 7th, 6th, 4th and 3rd floors in the identified slabs (not the floors generally) and in a single beam. I am equally satisfied that the deviations particularised (and I emphasise the word particularised) in the various summonses occurred - the evidence is overwhelming. That the learned magistrate went much further is immaterial to this finding of fact. He would appear to have found that the use of defective concrete due to the use of insufficient cement was general throughout the building, and that the floors throughout rather than the identified slabs in them were too thin and that in consequence there must have been savings of vast quantities of cement so that he was driven to the conclusion that a deliberate fraud was perpetrated on the building owner. These conclusions were based on speculation and unwarranted by the evidence and by the nature of the case put forward by the Crown. How far his judgment was vitiated by them is the question which has caused me the greatest anxiety in this case. I will deal with it further later suffice it to say at this stage that his findings of fraud must have included a finding that the defects and deviations did exist. The latter finding was amply justified. 20. Granted their existence, were they caused by the appellants? There was no room for any finding but that they were caused by the second appellant who as site foreman was responsible for overseeing all the work done and by Jones who as registered contractor was responsible for the building as a whole. There is some little room for argument that they were not caused by the first appellant but much more for argument that they were not caused by the third appellant. The only evidence against the third appellant went to show that apart from signing the relevant forms, he had nothing to do with the site once the piles had been capped. He was not shown to have had anything to do with the superstructure in which alone the defects and deviations were found except to consider reports and tests of concrete cubes. This indeed was common ground. The learned magistrate's note of Crown counsel's opening makes it clear:
The third appellant was the signatory of all necessary forms but apart from that there was nothing in the evidence adduced by the Crown that he was ever on the site after the foundations were completed. The evidence of the first appellant if accepted on this point was as follows:
His evidence in cross-examination suggests that the third appellant did not come to the site after the "ground beams" were put in. The evidence of the first appellant was similar
I can see no reason to disbelieve this statement. It was clearly against the interest of the maker. The learned magistrate does not say he disbelieves it. Even taken alone it indicates that third appellant could not be said to have caused the defects or deviations and as the Crown recognised in its opening if the prosecution against him was to succeed it could succeed only if he failed to discharge the onus placed on him by section 40(6). The case against the first appellant was much stronger by reason of this admission. He was in my opinion proved to have caused the defects and deviations. 21. As against the first and second appellants and Jones then causation was proved. It remained to be considered whether the first, and third appellants and Jones were fixed with knowledge and whether in the event of Jones doing so fixed whether the third appellant (and the first appellant if not fixed with knowledge) had discharged the onus under section 40(6). 22. As I see it it is implicit in the evidence accepted by the learned magistrate as distinct from the speculations as to fraud into which he entered that the second appellant had knowledge. At best he shut his eyes to what went on. There is no other possible explanation for what happened. Jones had as he well knew entrusted him with the duty of continuous supervision. I have already set out his functions as he recognised them. He knew how the concrete should be mixed - it was not so mixed. The faulty mix was found in eleven identified beams, three floor slabs and one column. The mix was faulty because insufficient cement was used in it. As he acknowledged in a cautioned statement and in evidence that it was his duty to see that the mix was correct. As he acknowledged in evidence he was in charge of materials including cement on the site. It is particularly to be noted that test cubes were taken at irregular intervals determined by the architect or the architect's assistant and the first appellant was frequently if not invariably present. The test cubes were invariably perfect! 23. As to the charge relating to the misplacement of reinforcing stirrups in three identified beams here again the second appellant acknowledged in evidence that reinforcement was one of the most important matters which were to be overseen by him. His suggestion here was that the stirrups might have become misplaced during the pouring of the concrete. He stated that he did not feel it was his duty to measure the positioning of the stirrups. 24. Finally, his position as to the thinness of the floor slabs was entirely untenable. These slabs were of considerable size 100 feet in length. They should have been 5 inches thick. The five slabs identified in the relevant summons were respectively 3 15/16 inches, 4 ¼ inches, 4 inches, 4 inches and 4 ½ inches thick. Some eleven other slabs were measured and varied between 4 1/3 inches to 5 inches in thickness but only one or two were up to 5 inches. Those of 4 ½ inches or over were regarded as "tolerable" by expert witnesses. Among the papers found on a search of Jones premises were certain pink slips relating to the floor slabs. They bore a notation in the handwriting of the second appellant of the figures "4 ½" in the remarks column while the column relating to thickness was blank. The foreman to the sub-contractor whom the learned magistrate described as "as unreliable self-serving witness" stated that this "4 ½" related to the thickness of the slabs while the second appellant stated that the "formers" into which concrete was poured for the purpose of making the slabs would unless cambered upwards at the centre sag under the weight of the concrete. The "formers" would therefore be 4 ½ inches at the centre sloping to 5 inches at the edges so that after the inevitable sagging had taken place the slabs would have a uniform thickness of 5 inches. This however was contradicted by the clear evidence that the slabs did not have such a uniform thickness and that the figure 4 ½ (as indicating thickness) was used as a basis on which to calculate, for the purpose of payment to the concreting sub-contractor, the volume of concrete poured. Clearly in my view the learned magistrate was fully entitled on the evidence to conclude that the second appellant was fixed with knowledge not only of the deviations in respect of which he was charged but also of the defects in the concrete used in the identified beams, floor slabs and column in respect of which the other appellants faced an additional charge. 25. The position of the first appellant was somewhat different in that his duties were those of a general overseer of the site rather than those of a site foreman. He was the second appellant's superior and visited him on the site to inspect if the work was being properly carried out. According to the second appellant he came to the site every day or on alternate days and "would actually inspect work and see it was done according to plan". In a statement made to the police through his solicitors in answer to a questionnaire: Question 15 read:
The answer given was:
The "estimator" remained a shadowy figure throughout although referred to in the evidence of the first and second appellant and in the answer to the questionnaire as Mr. LEE Pak-kin. He was not called as a witness. That he was not called rendered entirely speculative the learned magistrate's deliberations as to fraud. 26. The learned magistrate's approach to the question of the knowledge of the first, third and fourth appellants is to be assessed from three documents:
In his findings on the submission he is principally concerned with the question whether there was evidence that the fourth appellant had the necessary knowledge. The key passage comes after he has decided that the evidence is insufficient to enable him to attribute the knowledge of the second appellant to the company. I have quoted it earlier. 27. In his judgment he goes into the question of knowledge in greater detail. He refers to the
and having indicated that mere negligence of laziness or optimism would be insufficient applies the criterion as to proof of constructive knowledge which I have earlier quoted. Thereafter he unfortunately descends to generalizations. He states that the evidence shows that 10 of the floors had been constructed with concrete parlously understrength that on five floors the thickness was some 10 - 20% less than it should have been and that on three floors vital reinforcing stirrups had been misplaced and omitted within specified areas leading to dangerous overstressing. His statement that the concrete was "parlously understrength" is accurate on the evidence but his use of the words "on five floors" and "on three floors" is deceptive for what had been proved was that five concrete floor slabs (of which more than one go to make up a "floor") were too thin and the "vital reinforcing stirrups" were missing not from "floors" but from individually specified beams supporting floors. 28. Unfortunately he goes on to conclude (a matter on which there was no evidence due perhaps to the fact that Mr. LEE Pak-kim had not been called) that the cement saved or disused as a result of the cement deficiency in the concrete "must have been a very substantial quantity weighing very many tons", surmises that the cement deficiency was caused by the concreting workers putting one bag of cement into the mixer instead of two and from all this deduces fraud on the part of the fourth appellant and its directors. 29. Again he concludes in relation to the pink slips that the figure of "4 ½" relates to thickness. That appears to me to be a fair and necessary inference. Unfortunately he uses that inference as the basis for a further one that the fourth appellant was dishonest. Such an inference was not irresistible, an inference that the plans were ignored through utter negligence was as readily available. 30. Again the learned magistrate's reliance on a letter from the company to the building owner in which the company stated that it had made a loss of over $120,000 on the building when it had made a profit was unfortunate. This letter was dated 10th December 1970. It was signed not by either of the directors charged but by a Mr. Timothy Lam, one of the managing directors. It contained what was undoubtedly a dishonest claim but the dishonesty of that claim was entirely irrelevant to the charges faced by any of the appellants. Furthermore the letter was produced not by Jones but by the first appellant, presumably for the purpose of showing that he was not the only director concerned with this project but was as he put it a "manager" rather than "the management" to which he was subject. The first appellant having produced it, was quite properly cross-examined on it by counsel for a co-accused and his answer that "the figure of $120,000 was not to be taken seriously but the letter itself was quite irrelevant to any consideration of the question whether the company had knowledge of the defective concrete and the deviations from the plans. 31. To my mind the learned magistrate was on much surer ground when he held at the end of the day that Jones knew of the situation through the knowledge of the site foreman. Jones was under a statutory duty to give continual supervision. It elected to exercise that statutory duty through its site foreman, the first appellant, and through his superior, the second appellant. 32. The third document from which the mind of the learned magistrate appears is his statement of findings. In it he adopts and enlarges on his judgment and makes it clear that his findings of knowledge resulted from inferences and not from findings of primary facts and indeed this is manifest from his judgment and from the very nature of the evidence. Proof of knowledge could be established only by irresistible inference. 33. It is well established that an appellate court is in almost as strong a position as is a court of original jurisdiction when dealing with secondary findings of fact. It appears to me that if an appellate court may and should interfere with a secondary finding of fact it may equally well ignor such a finding if the finding is unnecessary. It may substitute its inferences for those of the trial magistrate. It is that course I propose to adopt. 34. The primary facts are simply stated in the light of what I have already said:
35. The only possible inference from these primary facts is that the first and second appellants knew of the defects or deliberately closed their eyes to the possibility of their existence. I do not consider that the only possible inference is one of fraud; the Crown did not set out to prove fraud and the appellants did not have to meet a charge of fraud. Another inference is open - complete dereliction of duty amounting to connivance. The responsibility for that complete dereliction must rest alike on the first and second appellants for if the second appellant was, as he should have been, the eyes of Jones constantly on the site the first appellant was its brains and it was to him that the second appellant was primarily responsible. Jones had its statutory duty to observe even if that statutory duty was not subject to penal sanctions. Had it exercised the statutory duty it must have known of the defective concrete it was using and of the various deviations in the building it was erecting. It delegated the statutory duty both to its director and its foreman and for their knowledge or recklessness it must be responsible. Reg. v. Winson(4) is directly in point. 36. The position of the third appellant is entirely different. Responsibility had been delegated to him but only insofar as the foundations were concerned. He ceased to visit the site after the piles were capped or at the latest after the first and second floors were completed. At the times the defective concrete was used and the other deviations occurred he was in the same position as were the directors other than the two managing directors and the first appellant. He was not responsible for the issue of cement or indeed for any activity other than signing the certificate of completion which he did for and of behalf of Jones. There was positive evidence that he was in charge of other project while that part of the building above the ground floor was in course of erection. 37. Mr. Litton in a careful and detailed examination of the evidence has convinced me that the learned magistrate erred in failing to distinguish between the first and third appellants to whom he refers on a number of occasions as "executive directors". For example in speaking of them he says:
(i.e. the defects) or to any particular explanation or excuse other than the general statement 'I was there I saw nothing so everything seemed all right. Therefore I am not to blame.' 38. This was not the attitude demonstrated by the third appellant. Rather his case was that he was engaged on other projects. What he had been responsible for as far as this building was concerned was the foundation work. In short the only way in which the third appellant could be held responsible was by virtue of the operation of section 40(6) of the Ordinance. Under that section in the event of conviction of Jones he as director
I cannot find in the judgment any detailed evaluation of the evidence of the third appellant conducted with a view to deciding whether, by detailing the various other jobs on which he was engaged, giving evidence of his absence from the site at the relevant time and evidence of the parts played by him and by the two managing directors in connection with it, he had discharged that burden. Indeed the learned magistrate's decision that Jones was engaged in fraud precluded an evaluation of the evidence of the third appellant for that purpose. There was nothing in the Crown's case to connect the third appellant with the defects except his signature of the completion certificate made on behalf of Jones. The learned magistrate apparently gained some insight from his demeanour and as to that I cannot, of course, speak. He does make a distinction between the third appellant and the first appellant when it comes to sentence recognising there for the first time that the third appellant's "direct responsibility had ceased before they occurred". I consider it would be unsafe and unsatisfactory to permit his conviction to stand in view of the absence of an evaluation of his evidence to see whether it was sufficient to satisfy the requirements of section 40(6) of the Ordinance. I therefore allowed his appeal. The appeals of the other appellants against conviction are dismissed because of the inferences that I, with my mind unclouded by notions of fraud, find to be irresistible from the primary facts I have outlined. 39. In turn to the question of sentence. The sentences imposed were imposed on the basis that the appellants were a party to fraud, a finding open to the learned magistrate. They were not charged with fraud and the Crown did not argue that the motive for their actions or inaction was fraud. What they were charged with was in essence a reckless dereliction of duty. Again I consider that Mr. Ching was quite right when he urged that if there was to be a sentence of imprisonment the sentences should have been concurrent and not consecutive. All the summonses were intimately connected and even on the basis of fraud the sentences should have been concurrent as springing from the some incident. See for example LIN Shu-tong v. The Queen(5) and NG King v. The Queen(6). 40. After careful consideration I have come to the conclusion that the public interest requires an immediate custodial sentence in the cases of both the first and second accused. A lengthy sentence is not required. What is necessary is that they should hear the clang of the prison gates behind them and that the public generally and those engaged in the building trade in particular should know that recklessness in building and in particular in the use of defective concrete with all its attendant perils will not be answerable with payment of a mere fine. 41. The appeal of the first appellant against sentence is allowed but he will go to prison for two months on each summons the sentences to be concurrent. The appeal of the second appellant is also allowed. He will go to prison for one month on each summons again the sentences will be concurrent. The fines imposed on the fourth appellant will stand. Third appellant to be entitled to the costs of this appellant to be taxed.
Representation: Mr. Charles Ching, Q.C. and Mr. Y.C. Mok (Chu & Lau) for 1st appellant. Miss McGrowther (Lau, Wong & Chan) for 2nd appellant. Mr. Henry Litton, Q.C. and Mr. Baretto (Edmund Cheung & Co.) for 3rd appellant. Miss McGrowther (K.C. Yung & Co.) for 4th appellant. Mr. Alderdice, S.C.C. for Crown/respondent. (1) (1957) 1 Q.B. 159, p.172. (2) (1971) 2 W.L.R. 1166, p. 1177. (3) (1964) H.K.L.R. 495. (4) (1969) 1 Q.B. 371. (5) (1959) H.K.L.R. 129, p. 136. (6) (1966) H.K.L.R. 18.
----------------- Coram: Leonard, J. Date of Judgment: 20th July, 1978. ----------------- JUDGMENT ----------------- 42. This should be added to my judgment as an addendum. Mr. Litton for the successful third appellant prays for an order under section 120 of the Magistrates Ordinance that I should make an award of costs in this case. The appellant was charged with various offences under the Buildings Ordinance and the Crown in charging him relied upon section 40(6) of the Buildings Ordinance. The Legislature clearly intended the section to be Draconian and to enable the Crown to prosecute each and every director and to place on each and every director responsibility for the acts of the company unless he could prove his innocence. For that reason I consider that it would be an interference with the Legislature in that it would inhibit the Crown in the exercise of its powers under this section to make an order as to the costs in the court below. However in my view the position drastically changes as soon as the director in question having been convicted launches an appeal. Because of the very Draconian nature of the legislation I consider that the Crown is then and there placed under a responsibility of enquiring whether or not the director in question was properly convicted. Unless the Crown is quite satisfied I consider it then becomes the duty of the Crown at the earliest available opportunity to indicate to the director that an appeal by him will not be resisted. Otherwise the Crown should be at risk as to costs. This I think is but just. Accordingly I consider that this appeal having been allowed to take its course this appellant is entitled to the costs of the appeal to be taxed. I say this particularly because of the position in which an innocent director would otherwise find himself if wrongly convicted.
Representation: |