Tong Cun Lin v. HKSAR

FACC000001/1999

FACC No. 1 of 1999

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 1 OF 1999 (CRIMINAL)

(ON APPEAL FROM HCCC NO. 303 OF 1996)

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Date of Hearing: 2 December 1999

Date of Judgment: 14 December 1999

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J U D G M E N T

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Chief Justice Li:

1. I have read the judgment in draft of Mr Justice Litton PJ and agree with it.

Mr Justice Litton PJ:

2. This appeal concerns an application for costs made by a defendant after his acquittal in a criminal trial in the High Court.

3. There were five defendants on trial. The appellant was the 1st defendant in an indictment containing six counts. The appellant was implicated in counts 1 and 4. Count 1 alleged that the appellant and his co-defendants had conspired to defraud the Securities and Futures Commission ("SFC") between 1 January 1990 and 30 June 1991 in relation to the takeover of Bond Corporation International Ltd ("Bond") by Tomson Pacific Ltd ("Tomson"). Count 4 charged the appellant with offering a bribe of $26.4 million to an employee of a brokerage company on 22 June 1990, contrary to s.9(2)(a) of the Prevention of Bribery Ordinance, relating to that takeover.

4. The facts are these. The appellant was the chairman of Tomson which sought to acquire a substantial shareholding in Bond. It succeeded to the extent of 34.5%. This was just below the limit under the takeover rules, the exceeding of which would have triggered the requirement that Tomson should make a general offer to the remaining shareholders. At about this time Bond placed 31.5% of its share capital to various parties. Of particular relevance among them were two: The Chiu Ming Hung syndicate and Hauxton Ltd.

5. It was the prosecution case that those two parties were not independent of Tomson and that the appellant was aware that had the SFC known this it would have made further enquiries and these might well have led to Tomson being required to make a general offer for the remaining shares in Bond. The close connection between Tomson and those two parties was accordingly disguised, to make it appear that they were independent.

6. At trial the prosecution led evidence to this effect: Whilst the Chiu Ming Hung syndicate had funded the purchase of 72 million shares with its own resources, there was in fact an arrangement with the appellant and his associates that should the share price drop below the placement price the syndicate would be indemnified. As things turned out, this did happen. Accordingly 30 million shares were bought back by a Mr Hsu, the appellant's brother-in-law, at more than twice their market value.

7. As regards another 30 million of the shares placed with the Chiu Ming Hung syndicate, they were bought back by a Mr Koo, a friend of the appellant, at the original placement price of $2.50. The appellant then compensated Mr Koo for the diminution in the value of the shares.

8. Evidence was also led, unchallenged, to the effect that a substantial part of the funding for the purchase of a large block of shares by another party, Hauxton Ltd, came indirectly from two bank accounts held by one of the appellant's companies. The appellant had signed a declaration to the effect that he was wholly independent of Hauxton Ltd.

9. In relation to count 1, it was the prosecution case that the appellant knew that the arrangements he had entered into with those parties were very likely to be seen by the SFC as amounting to a concert party in terms of the takeover rules and that Tomson was likely to be required by the SFC to make a general offer if it knew of the arrangements. Accordingly the appellant took steps to keep them secret.

10. After a trial lasting over 5 months the appellant and his co-defendants were acquitted on all counts. Following this, the appellant applied pursuant to s. 73A(1) of the Criminal Procedure Ordinance, cap. 221, for an order that his costs be paid out of public revenue. This provision has since been repealed, upon the enactment of the Costs in Criminal Cases Ordinance, cap. 492. Section 73A states:

"73A. (1) Where after trial in the court a person is acquitted, the court may order the payment out of the public revenue of the costs of the defence, including the costs of any proceedings before a magistrate.

(2) The costs payable to any person under this section shall be such sums as appear to the court reasonably sufficient to compensate that person for any expenses properly incurred by him in or about the defence.

(3) The amount of costs ordered to be paid under this section shall, except where the amount is fixed by the court, be ascertained by the Registrar.

(4) In this section, 'court' means the High Court and the District Court."

11. The judge (Keith J), having heard the application in November 1998, dismissed it. With leave of the Appeal Committee, the matter now comes before us.

Power to award costs

12. Section 73A(1), enacted in 1978, is modelled on the provisions of s.4(1)(b) of the Costs in Criminal Cases Act 1973 of the United Kingdom. As can be seen, the section does not define the circumstances under which a judge should make an order in favour of an acquitted defendant. The Practice Direction given by the English Court of Appeal on 5 June 1973 following the passing of the statute of that year shows how that court viewed the matter: see Practice Direction (Costs: Successful Defendants) reported in [1973] 1 WLR 718 as follows:

" LORD WIDGERY C.J., at the sitting of the court, announced the following practice direction, given after consultation with the judges of the Queen's Bench and Family Divisions.

Although the award of costs must always remain a matter for the court's discretion, in the light of the circumstances of the particular case, it should be accepted as normal practice that when the court has power to award costs out of central funds it should do so in favour of a successful defendant, unless there are positive reasons for making a different order. Examples of such reasons are:

(a) Where the prosecution has acted spitefully or without reasonable cause. Here the defendant's costs should be paid by the prosecutor.

(b) Where the defendant's own conduct has brought suspicion on himself and has misled the prosecution into thinking that the case against him is stronger than it really is. In such circumstances the defendant can properly be left to pay his own costs.

(c) Where there is ample evidence to support a verdict of guilty but the defendant is entitled to an acquittal on account of some procedural irregularity. Here again, the defendant can properly be left to pay his own costs.

(d) Where the defendant is acquitted on one charge but convicted on another. Here the court should make whatever order seems just having regard to the relative importance of the two charges, and to the defendant's conduct generally."

13. There have been minor changes in the Practice Directions since that time. They have no relevance for the purposes of this case. Keith J stated the governing principle thus:

" In Ng Yui Kin [1983] HKLR 356, it was held that applications for costs by successful defendants should be decided in accordance with the prevailing practice directions in England. The practice direction in England in 1990 when the offences which the Defendants faced had allegedly been committed provided that orders for costs in favour of acquitted defendants -

'should normally be made unless there are positive reasons for not doing so. Examples of such reasons are: (a) the defendant's own conduct has brought suspicion on himself and has misled the prosecution into thinking that the case against him is stronger than it is...": Practice Note (Criminal Law: Costs) [1989] 2 All E.R. 604.'"

The governing principle

14. The legislature in empowering the court to award costs has not laid down the conditions under which the broad discretion under s.73A(1) should be exercised. The court must therefore by construction fill the gap. What then are the governing principles? When a defendant has been brought to trial upon particular charges and is then found not guilty it is clearly right that he should normally be compensated out of public revenue for the costs incurred in defending those charges. In considering whether, despite this general rule, he should be deprived of all or part of his costs, the judge exercising the discretion must obviously look to his conduct generally, so long as such conduct is relevant to the charges he faced. This cannot be confined to any particular period of time. Since, however, the discretion is being exercised in the context of an acquittal - the averments constituting the charges having been found by the jury as not amounting to the crimes alleged - it follows that, generally speaking, the conduct most relevant to the matters under consideration must be the defendant's conduct during the investigation and at the trial: How he first responded to the investigators, the answers he gave when confronted with the accusations, the consistency of those answers with his subsequent defence, etc. Wrapped up with this is the strength of the case against the defendant and the circumstances under which he came to be acquitted: These too are relevant to the exercise of the discretion to deprive him of his costs, so long as the judge is not, indirectly, thereby punishing him by taking a view of the facts palpably different from that taken by the jury and reflected in the not-guilty verdict. The person in the best position to weigh those matters is clearly the judge himself.

How the judge exercised his discretion

15. Here in relation to count 1, Keith J focussed principally on the way the appellant had brought suspicion upon himself in the course of the investigation conducted by the inspector appointed by the Financial Secretary to investigate the circumstances of the takeover. He said that when interviewed the appellant had "all but admitted that he had been a party to buy-back and indemnity arrangements relating to the shares". The judge found that the appellant had admitted that "he had been behind the purchase of the 30 million shares which had nominally been bought by Michael Hsu". The appellant had also admitted that he had compensated Mr Koo for his loss in buying back the shares at the original placement price. Whilst the appellant never in terms admitted that he had entered into a concert party in terms of the takeover rules, there was amply justification, both from the admissions and from other evidence, for the prosecution to suspect that he had in fact done so and was guilty of deceiving the SFC. Among the admissions, as found by the judge, was the admission that he had deliberately taken steps to conceal the fact that he was buying back the shares himself. Those admissions were in the context of count 1. None of the judge's findings have been challenged by Mr Robinson QC, counsel for the appellant, who conceded with total candour that the appellant had indeed by his conduct brought suspicion upon himself, thereby bringing the appellant within the exceptions to the general rule regarding the award of costs to an acquitted defendant. But counsel says that there were countervailing factors which pointed the other way. So it becomes a matter of degree. Once this point is reached it becomes almost inevitable that the appeal should be dismissed in relation to the costs incurred in defending count 1.

16. In my judgment the approach adopted by the judge in the exercise of his discretion under s.73A not to award costs in respect of count 1 was impeccable. There was ample material to justify his conclusion. The facts fall squarely within the governing principles.

Acquittal on count 4

17. It was the appellant's case before the judge that there was no conduct on his part which could amount to bringing suspicion on himself that he was guilty of corruptly offering a bribe in terms of count 4. Accordingly it was submitted that the appellant should not have been deprived of all the costs incurred in defending the two charges.

18. It was common ground that the averments relevant to count 4 were relevant also as overt acts of the conspiracy charged in count 1. Accordingly, even if the appellant had not been charged in relation to the offer of $26.4 million as a bribe to an employee of the brokerage company, the evidence relevant to count 4 would still have been led. The judge said that the time taken in court for "dissection and analysis by counsel" of that evidence would not have been saved. He considered that the costs, for the most part, would still have been incurred in the appellant's defence to count 1.

19. Before us, Mr Robinson QC submits that the fact of the payment of $26.4 million was never in dispute, but because the prosecution alleged that this was corrupt as averted in count 4, it called for additional matters to be put before the jury, beyond those relevant to count 1. The judge, counsel submits, erred in principle in refusing to order that the costs referrable at least to those matters, if not the entire defence to count 4, be paid to the appellant. Mr Robinson concedes, however, that had Keith J made such an order, the ascertainment by the Registrar of the proper amount in terms of s.73A(4) would have been an extremely difficult task.

20. The section as mentioned earlier, gives a wide discretion to the trial judge who, of all people, is in the best position to assess the large number of factors relevant to the exercise of that discretion. An application for an order for costs under s.73A(1) is a summary process, brought before the very judge who had presided over the whole case, and is not amenable to much elaboration and argument. It is not intended that, in the discharge of his function under s.73A, the judge should add substantially to the costs by entertaining lengthy submissions. His reasons for exercising his discretion - one way or the other - must necessarily be brief. It is only where it can be shown that the judge has clearly gone outside the ambit of his powers - such as, for example, taking into account a factor which plainly is not relevant to the exercise of those powers - that an appellate court's function becomes engaged. In my judgment the appellant comes nowhere near surmounting that threshold in this case. The judge's order refusing to allow the appellant's costs generally cannot be disturbed.

The Court's jurisdiction

21. It is common ground that no appeal lies to the Court of Appeal from a judge's refusal of costs in a criminal case. The question then arises as to whether this Court has the jurisdiction to entertain such an appeal.

22. Section 31 of the Hong Kong Court of Final Appeal Ordinance, cap.484, states:

"An appeal shall, at the discretion of the Court, lie to the Court in any criminal cause on matter, at the interim of any party to the proceedings, from -

(a) .....

(b) any final decision of the Court of First Instance (not being a verdict or finding of a jury) from which no appeal lies to the Court of Appeal."

23. In my judgment, the matter before us plainly comes within the scope of s.31(b). But, given the nature of the issues involved, it would be an extreme case before we would interfere with the judge's exercise of discretion on such a matter.

Conclusion

24. I would dismiss this appeal with costs.

Mr Justice Ching PJ:

25. I agree.

Mr Justice Nazareth NPJ:

26. I agree with the judgment of Mr Justice Litton PJ.

Lord Hoffmann NPJ:

27. I agree with Mr Justice Litton PJ's judgment.

Chief Justice Li:

28. The Court unanimously dismisses the appeal with costs.

Representation:

Mr Vivian Robinson, QC and Mr Keith Yeung instructed by Messrs David Lo & Partners for the Appellant

Mr Martin Wilson, QC and Mr Anthony E Schapel, on fiat and Ms Louisa Lai, SGC of Department of Justice for the Respondent