HKSAR v. Kwok Chi Hung and Others

CACC000261/1999

CACC 261/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 261 OF 1999

(ON APPEAL FROM DCCC NO. 945 OF 1998)

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Coram: Stuart-Moore V-P, Mayo V-P and Keith JA in Court

Dates of Hearing: 30 and 31 May 2000

Date of Judgment: 6 July 2000

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J U D G M E N T

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Keith JA (giving the judgment of the Court):

Introduction

1. Concrete piles form the foundations of buildings. When shafts for the piles are excavated by boring, the piles are known as bored piles. Short-piling is the name given to the practice of excavating shafts for bored piles to a depth less than the specifications require. That is concealed from the developers and the main contractors, who then pay for work which has not been properly done. This case concerns a short-piling fraud at the site of the new Hong Kong Central Station on reclaimed land on the harbour front on Hong Kong Island ("the site"). That such a fraud took place was never in dispute. The critical question was whether all or any of the persons charged in relation to the fraud were parties to it.

2. The trial took place in the District Court before Judge Wright. It lasted for a number of weeks. There were eight defendants in all, and they faced a total of ten charges. This application for leave to appeal relates to four of the defendants, who were respectively D1, D6, D7 and D8 at the trial. We trust that we will be forgiven for describing them in that impersonal way for ease of reference. They had pleaded not guilty. They were convicted on charge 1, which had charged them with conspiracy to defraud. In addition, D7 and D8 were convicted on charge 9, which had charged them with offering an advantage to an agent. D6, D7 and D8 now apply for leave to appeal against their convictions, and D1, D6 and D7 apply for leave to appeal against their sentences.

The nature of the conspiracy

3. Little needs to be said about the nature of the conspiracy, but in view of the issues which have been canvassed on the application, some detail is necessary. The foundation works at the site had been sub-contracted to B+B Construction Co. Ltd. ("B+B"). If the foundation works had not been completed by the due date, B+B would have been liable for penalties. However, B+B only provided plant, equipment and managerial supervision for the foundation works, because it sub-contracted the labour to Pak Kee Transportation Co. Ltd. ("Pak Kee"). D7 was in day to day control of Pak Kee's business, but he never came to the site, because Pak Kee had in its turn sub-contracted its obligations, i.e. the provision of labour, to On Foundation Engineering Co. ("On Foundation"). Among the employees of On Foundation who worked on the site were D8 (a superintendent) who had responsibilities at a number of other sites, D1 (an engineer) and D6 (a foreman). The proprietor of On Foundation was Hui Wai Chung, who was named in the chargesheet as an unindicted co-conspirator. The consultant engineers appointed by the developers were Ove Arup and Partners (Hong Kong) Ltd. ("Ove Arup").

4. B+B, Pak Kee and On Foundation were closely associated with each other. 45% of Pak Kee's shares were owned by B+B, and the other 55% were owned by members of D7's family. On Foundation had initially been registered by D7's brother.

5. The principal prosecution witness was one of the Defendants, D3, who had pleaded guilty to charge 1. He had agreed to give evidence for the prosecution. He had been employed as an engineer by B+B. His evidence, which the judge accepted, was that he had been told by Hui that the contract was not profitable, and that the deadline for completing the works could not be met, thereby exposing B+B to the risk of penalties. Hui's instructions had been that the shafts for the piles should not be excavated as deep as they should have been in order to save time and costs. As a result, nearly all of the piles on the site were shorter than the specifications had provided for. Out of 87 piles which were constructed, 82 of them were short.

6. In order to carry out this fraud, a number of things were said and done to deceive the developers and the main contractors into believing that the piles had been constructed to specification. Three of them are relevant for present purposes:

(i) Strips in the middle of the tapes used to measure the depth of the shafts into which concrete for the piles would be poured were cut out of the tapes. The length of the strips was equivalent to the depth by which the shafts had been excavated shorter than required. Once the strips in the middle of the tapes had been removed, the ends of the tapes were stuck together with glue. In this way, credence was given to the false measurements which the use of the doctored tapes produced.

(ii) Once the shafts had been excavated, they had to be reinforced with steel cages. Those cages had to be built to a length which corresponded with what the specifications provided should be the depth of the shafts. However, since the shafts were not excavated to the required depth, the cages had to be shortened so as to correspond with the actual depth of the shafts.

(iii) The shallower the shafts, the less concrete would be needed to be poured into the shafts to create the piles. Thus, in order to prevent the shallowness of the shafts being discovered, and in order to conceal the fact that less concrete was delivered than the amount of concrete which would have been needed if the piles had been constructed to specification, false concrete delivery dockets were created.

The conviction of D6

7. D6 was employed by On Foundation as one of its foremen on the site. The evidence relating to D6's participation in the conspiracy came from D3. The most damning part of that evidence related to D6's involvement in the doctoring of the measuring tapes. D3's evidence was that it had been the foremen on the site who decided the amount by which the measuring tapes should be shortened, based on the notional depth of the shafts (which was supplied by D3) less the actual depth of the shafts (which was known to the foremen). On one occasion, D6 had cut an incorrect amount from one of the measuring tapes, and at a meeting attended by D1, D6 and D8, D8 had reprimanded D6 over what he had done. Indeed, D3's evidence was that D6 had told him from time to time the amount by which the measuring tapes had been cut. Finally, three other parts of D3's evidence implicated D6: (a) D1 had reported to him (D3) about concerns which D6 had expressed about the quantity of concrete being delivered, (b) D1 and D8 had reported to him (D3) that D6 had been one of the foremen responsible for arranging for the shortening of the steel cages, and (c) D6 had reported false information regarding the progress of the drilling for inclusion in the excavation logs.

8. This evidence was supported by what D6 had said when he was interviewed by ICAC officers. The interview had been recorded on video, and there was no dispute as to what was said. D6 had admitted that he had cut strips out of the measuring tapes on three separate occasions. He had acknowledged that his conduct had been wrong and that it had resulted in inaccurate measurements being taken of the depth of the shafts. He had claimed that he had simply been following the instructions which he had been given, but he had added words to the effect that the reason for resorting to this practice had been because it had been difficult to bore through rock, and that to do so would have taken too long.

9. D6 did not give evidence on the general issue. However, he gave evidence on a voir dire relating to the admissibility of the evidence of his interview. The judge ruled the evidence to be admissible. D6 was not represented on the application for leave to appeal, but he contended that (a) the judge should not have accepted the evidence of D3 in relation to the participation of D6 in the conspiracy, and (b) the judge should have ruled the evidence relating to the interview to be inadmissible. We have not discerned any basis for concluding that the judge's acceptance of D3's evidence was flawed, or that the judge was in error in ruling that the evidence relating to the interview was admissible. D6's application for leave to appeal against his conviction on charge 1 must therefore be dismissed.

The convictions of D7

10. As we have said, D7 was in day to day control of Pak Kee's business, but he never came to the site because Pak Kee had sub-contracted its obligations to provide labour for the site to On Foundation. D7 was not implicated by D3 in D3's evidence, and the only evidence which implicated D7 in the conspiracy was the evidence which implicated him on charge 9, the charge of offering an advantage to an agent. The particulars of that charge were that, on 29 October 1997, he and D8 had offered $100,000.00 through Lau Yee Lai ("Lau") to Mak Yiu Man ("Mak"), an inspector of works employed by Ove Arup, to induce him not to take any further action in relation to false concrete delivery dockets for a particular bored pile, no. BP7. It is convenient here to add that D8 faced a similar charge (charge 10) of offering a further sum of $100,000.00 to Mak, the particulars of which were the same save as to the date, which was 31 October 1997. D8 was acquitted on that charge.

11. Events prior to 29 October. The events leading up to the visit which D7 admits he made to the site on 29 October were described by Mak in his evidence. On 17 October, he discovered that the shaft for pile BP7 had been excavated to a depth less than the specifications required. He was assured that this was due to the presence of a substance used in the construction process. He gave instructions for the pouring of concrete into the shaft to be delayed until the substance was removed. However, on the following day, Mak discovered that concrete had been poured into the shaft. He was worried by that, because he thought that inadequate time had been allowed to carry out the work which he had instructed should be done. He reported the matter to the person who was acting as resident engineer for the time being. He also asked for the concrete delivery dockets for the concrete which had been poured into pile BP7, but he was not initially supplied with them.

12. When the concrete delivery dockets remained unavailable, he checked the suppliers' own records. They showed that about 50 cu. m. of concrete less than that needed for a pile of the specified depth had been delivered. When Mak eventually received the concrete delivery dockets supposedly relating to pile BP7, he discovered that there were seven dockets which did not correspond with the suppliers' records but which, if the quantities of concrete referred to in them were added to the quantities of concrete delivered according to the suppliers' records, made up the shortfall. He reported these findings on 21 October to the acting resident engineer, who directed that core samples be taken from pile BP7. The taking of the samples involved drilling into the newly concreted pile to establish its depth and integrity. That exercise took place over a number of days and finished on 27 October. Although Mak was unhappy about the number of samples which had been taken, he nevertheless carried out various tests, from which it appeared that the depth of the pile had been correct. The fact remained, though, that a number of the concrete delivery dockets produced to Mak did not correspond with the suppliers' records.

13. On 27 October, Mak had lunch with, and at the invitation of, B+B's contract manager. Mak was requested not to "corner" anyone, and was told that he would be introduced to the "boss" of one of the sub-contractors. Mak was told that his name was Shek. This evidence was only admissible to show the state of Mak's knowledge at the time of the crucial meeting with D7 on 29 October, and we have not discerned the judge relying on this evidence for any other purpose.

14. Events of, and subsequent to, 29 October. We turn, then, to the events of 29 October. Two witnesses gave evidence about them, Mak and Lau. D7 did not give evidence. The evidence of Mak and Lau contained a number of differences, and it is necessary therefore to set out the evidence of each of them separately.

(i) Mak's version of events. On the evening of 29 October, Mak was working in his office on the site when Lau arrived unannounced. Mak had known Lau for some years, but had not seen him recently. Lau said that the reason for his coming to see Mak was that D8 was worried about the false concrete delivery dockets which Mak had discovered. Lau took out an envelope containing $100,000.00. He told Mak that Mak would be paid $200,000.00 in all if he would "give them a chance". Mak said that he had already reported his findings to the resident engineer, and he refused to take the money. Lau said that he would arrange for someone else to come to the office. He went outside taking the money with him. Mak heard him make a telephone call, but he could not hear what Lau said.

15. About 20 minutes later, Lau returned, this time with D7. D7 introduced himself to Mak as the proprietor of Pak Kee. One of the first things which D7 said to Mak was:

"There are over 100 people working for me. You don't want me to die, do you?"

Mak told him that he had already reported to the resident engineer the fact that false concrete delivery dockets had been presented, and that there was nothing he could do. D7 then said:

"You don't have to deal with it. Somebody would deal with the matters."

Mak took this to mean that somebody could cover up what had happened. A few minutes later, D7 and Lau left. During the time that D7 had been in the office, there had been no mention of any money, nor had the money which Lau had earlier shown been produced.

16. A few minutes later, Lau returned to the office. He begged Mak to take the money. Mak continued to refuse to do so, and the conversation ended with Lau leaving the envelope with the money on the table and walking out. By way of comment on the events of that evening, Mak said that he had been surprised that the discovery that false concrete delivery dockets had been presented had got out. His evidence was that only three people in Ove Arup had known about the matter - presumably Mak himself, the acting resident engineer (to whom Mak had reported the matter on 21 October) and the resident engineer (who had returned to the site on 28 October, and who had been told then of the presentation of the false concrete delivery dockets).

17. We turn to Mak's evidence relating to the events of 31 October, which formed the basis of charge 10. He was paged by Lau, and when he returned Lau's call, they arranged to meet at Pak Sha Wan. They met in a vehicle driven by Lau, who handed a further sum of $100,000.00 to Mak. Mak commented that Lau was acting as a go-between again, and Lau said that Mak would be invited out for a meal. Mak was indeed invited out for dinner by Lau, and at the dinner which took place on 31 October, D7 was there, along with D8 and Lau, though nothing was mentioned about the money or events at the site.

18. The judge noted a significant feature of Mak's version of the events of the evening of 29 October. In his evidence-in-chief, Mak had not mentioned anything about Lau showing him the $100,000.00, or even offering it to him, during their conversation prior to the arrival of D7. That part of his evidence only emerged following the cross-examination of him by counsel for D7, during which he was referred to the tape recording of an interview between him and Ove Arup's solicitors in November 1997. Mak claimed that prior to listening to the tape he had forgotten this part of his evidence.

(ii) Lau's version of events. Before setting out Lau's version of these events, it is right to record that Lau pleaded guilty to charges of offering the two sums set out in charges 9 and 10 to Mak, and he was sentenced to terms of imprisonment. At the time of the trial from which the present application for leave to appeal is brought, he was facing sentence for an offence or offences involving firearms and ammunition which were discovered when he was arrested in connection with the corruption offences. The judge noted that these offences appeared to be completely unrelated to the trial over which he was presiding, but he commented that Lau might be anticipating some reduction in sentence by giving evidence in the present case.

19. Lau's version of events was as follows. D8 had told him that there was a problem on the site, and that he wanted Lau to arrange a meeting between him (D8) and Mak. Lau did not say whether D8 had told him what the problem was. Lau contacted Mak and said that he wished to come to Mak's office. When he arrived, he told Mak that the purpose of his visit was to invite Mak to meet D8 for a chat. Mak was unwilling to do so. Realising that he was making no progress, Lau left Mak's office. Money had not been mentioned. Indeed, Lau had not had the money with him at that stage.

20. Lau then telephoned D8, and reported that he was not making any progress. D8 told him to await the arrival of "a boss". Lau then went back to Mak's office, and they continued to talk. After a while, D7 arrived. D7 then spoke to Mak, but Lau could only hear part of what was said. Their conversation seemed to Lau to relate primarily to a complaint by Mak over difficulties he had experienced with D8 and the fact that D8 seemed to respect a Western inspector more than him. In addition, though, Lau heard references to concrete delivery dockets, but he was not sure of the context in which those references were made. When D7 left, Lau followed him outside where, without warning, D7 thrust an envelope into his hands. D7 gestured in such a way as to cause Lau to understand that it was to be given to Mak. Lau went back into the office, he placed the envelope on the desk without a word, and quickly left.

21. As for the subsequent events, Lau's version was as follows. D8 asked him to deliver a further $100,000.00 and said that he had asked Mak to contact Lau. When Mak contacted Lau, Lau told him that D8 had something to give to him. They arranged to meet at Pak Sha Wan. Lau was driven there by D8, and walked to where he and Mak had agreed to meet. When Mak arrived, Lau got into Mak's car. They went for a ride, during which he handed the further $100,000.00 to Mak. As for the meal, Lau's evidence was that it had been Mak who had invited him out. He agreed that although D7 had been there, nothing had been said about the money or events at the site.

(iii) The evidence of Mak and Lau compared. That there were a number of differences between the versions which Mak and Lau respectively gave of the events of 29 October is undeniable. The judge recognised that by accepting, as "substantially correct", a submission that they were irreconcilable. But simply because their evidence differed in some respects did not mean that their evidence differed in all respects. Indeed, their versions of the events of the evening of 29 October were not that dissimilar. They both said that Lau had come to see Mak in his office. They both said that Mak had not been prepared to go along with what Lau had requested him to do. They both said that shortly after Lau had left he had returned with D7. They both said that the conversation between Mak and D7 had included references to concrete delivery dockets. They both said that D7 and Lau had left Mak's office together. And they both said that shortly afterwards Lau had returned with the money and had left it in the office.

22. However, it is not simply the case that Mak's and Lau's versions of the events of the evening of 29 October were similar in a number of respects. We have concluded that it would have been open to the judge, on whosever evidence he preferred, to conclude that (a) D7 was a party to the offer of $100,000.00 to Mak on 29 October and (b) the offer was made to buy Mak's silence on the false concrete delivery dockets.

23. Take Lau's evidence. As for whether D7 had been, on Lau's evidence, a party to the offer of the money to Mak, Lau's evidence was that it had been on D7's instructions that he had handed the money over to Mak, even though those instructions had been conveyed by gesture rather than words. As for what the money had been handed over to Mak for, Lau's evidence was that, although the problem in connection with which Lau had been asked to mediate had been a problem between Mak and D8, he had heard Mak and D7 talking about concrete delivery dockets - against the background of Mak's recent discovery that a number of the concrete delivery dockets which had been presented were false.

24. Similarly, the judge would have been entitled to draw the same inference from the evidence of Mak. Mak's evidence of what D7 had said to him could only sensibly be construed as a request to Mak not to press on with his complaint about the false concrete delivery dockets, since it would be possible to cover up what had happened. The offer of $100,000.00 - whether it had only occurred after Mak's conversation with D7 (as was his evidence in examination-in-chief) or whether it had also occurred before his conversation with D7 (as was his evidence following his cross-examination) - could therefore only sensibly be linked with that request. And the inference that D7 had been a party to the offer (leaving aside the question whether the offer had initially be made prior to D7's arrival) was inescapable in view of (a) D7's arrival at the office after Mak had in effect said that it was too late for him to do anything about the matter because he had already reported it to the resident engineer, and (b) the leaving of the money on Mak's desk so soon after D7's departure.

25. The critical point is that, in order to determine D7's guilt, it is strongly arguable that the judge did not need to decide whose evidence of the two he preferred, provided that he was satisfied that the version of one or the other of them was true. The evidence of each of them, taken alone, was such as to make it, not merely open to the judge to infer that D7 had been a party to the offer of $100,000.00 to Mak to buy his silence over the false concrete delivery dockets, but to make the drawing of that inference well nigh inescapable.

(iv) The judge's findings. As it was, the judge preferred the evidence of Mak to Lau. He described Lau as "an unsatisfactory witness in almost every respect". He was not prepared to rely on Lau's evidence where it was contradicted by Mak's, and was only prepared to accept it when it was "positively confirmed by other, reliable evidence". On the other hand, he regarded Mak as an honest and reliable witness, despite (a) the fact that "there were areas of his evidence in which he lacked the certainty and clarity of others", (b) the fact that he was tainted to some extent in that he had accepted the $100,000.00 (and the further $100,000.00 which was paid to him two days later) before having second thoughts and coming clean about what had happened, and (c) the significant shift in his evidence while he was in the witness box. And the judge preferred the evidence of Mak to Lau despite the submission of prosecuting counsel that Lau's evidence was to be preferred to Mak's where it differed. It may be that that submission was made because the prosecution believed that (a) an inference that D7 had been a party to the making of the offer would be easier to draw on Lau's evidence in view of Lau's evidence as to what D7 had done as soon as they had left Mak's office, and (b) the conviction of D8 on charges 9 and 10 would be more likely if Lau was believed in preference to Mak.

(v) The thrust of D7's complaint. The thrust of D7's complaint, as argued by Mr Andrew Macrae SC (who did not appear for D7 at the trial), is that the judge should not have accepted the evidence of Mak. The evidence of Mak had to be ignored for that reason. Since the judge had only been prepared to rely on Lau's evidence when it was "positively confirmed by other, reliable evidence", and since the judge should not have regarded Mak's evidence as reliable, it followed that there had been no evidence on which D7 could safely have been convicted.

26. At first blush, the logic of this proposition cannot be faulted, even if it leads to the conclusion that the evidence of both witnesses had to be rejected. That follows from the judge's observation that the charges against D7 rest "solely on the evidence of Mak in the light of the view I take of Lau's evidence". However, in view of the principal ground on which it was asserted that the judge should not have accepted the evidence of Mak, we think that the proposition which Mr Macrae advanced is flawed.

27. We say that for this reason. The principal ground on which it was asserted that the judge should not have accepted the evidence of Mak is that it differed from the evidence of Lau, and that where Mak's evidence differed from that of Lau, the judge should have preferred Lau's evidence. It seems to us that Mr Macrae was seeking to have it both ways. For the purpose of asserting that the judge had been wrong to accept Mak's evidence, Mr Macrae maintained that the judge should have accepted Lau's evidence. However, for the purpose of asserting that there had been no evidence on which D7 could have been convicted, Mr Macrae relied on the judge's rejection of Lau's evidence.

(vi) Should Mak's evidence have been accepted? Nevertheless, in deference to Mr Macrae's careful submissions, we have examined whether the judge could be said to have fallen into error in accepting the evidence of Mak in the light of the evidence of Lau. The argument was that Lau's account of the events of 29 and 31 October had been confirmed by other evidence, whereas Mak's evidence had not been. The judge, it was said, fell into error (a) in purporting "to convict on the basis of Mak's evidence, which he thought was confirmed when it was not", and (b) "rejecting Lau's evidence, which he thought was not confirmed when it was". We reject both these assertions. We deal with each of them in turn.

28. As for (a), we do not think that the judge fell into the trap of thinking that Mak's evidence had been confirmed when it had not been. It is true that there had been no confirmation of that part of Mak's evidence which related to the events of 29 and 31 October, but there had been confirmation of those parts of Mak's evidence which related to prior events. When the judge referred to there having been support for Mak's evidence, he did so in that part of his Reasons for Verdict headed "Credibility", and he must therefore be taken to have been referring to the whole of Mak's evidence, not simply to that part of his evidence which had implicated D7. The judge was alive to the fact that there had been no independent support for that part of Mak's evidence, and we have already referred to the judge's observation that the charges against D7 rested "solely on the evidence of Mak in the light of the view I take of Lau's evidence".

29. As for (b), it is necessary to identify the areas of Lau's evidence to which the submission related. They were summarised by Mr Macrae as follows:

(i) Lau was asked to intercede on behalf of D8 with Mak, whom he had known for many years, because of a dispute between Mak and D8.

(ii) He attended Mak's office to try and resolve the dispute and arrange a meal between Mak and D8.

(iii) When Mak remained unmoved, he telephoned D8 who must have subsequently requested D7, whom he had never seen before, to visit Mak on his behalf.

(iv) Upon D7's arrival, D7 and Mak had a conversation during which Mak repeatedly complained about D8.

(v) Matters were smoothed over, and two days later D8 arranged a dinner to which Mak was invited and at which D8 and Mak made up.

30. We are inclined to agree with Mr Macrae that these five features of Lau's evidence were confirmed by other evidence, but we have not found anything in the judge's Reasons for Verdict which show that the judge erroneously thought that there was no confirmation of Lau's evidence. In any event, two important comments must be made about the five areas of Lau's evidence on which Mr. Macrae relied. First, with the possible exception of (v), Lau's evidence on these aspects of the case was in no way inconsistent with Mak's evidence. Secondly, by confining comment on Lau's evidence to these five areas, the evidence of Lau which had really implicated D7 was ignored. They were Lau's confirmation that D7 and Mak had also talked about concrete delivery dockets, and Lau's evidence that it had been on D7's instructions that he had handed over the $100,000.00 to Mak on 29 October. It is sufficient for us to state that there was nothing in the nature of the difference in the versions of Lau and Mak, or the extent to which their respective versions were confirmed by other evidence (if at all) which would remotely justify the conclusion that the judge fell into error by accepting the evidence of Mak.

31. Four other points were made by Mr Macrae. First, it was said that the judge gave insufficient weight to the fact that Mak had been tainted by his initial acceptance of the money. The particular criticism of the judge was that he had accepted too readily Mak's explanation for his initial acceptance of the money, and then his refusal to co-operate with the ICAC by (a) exercising his right of silence when originally interviewed by them, (b) refusing to confront or identify any of the persons involved in the conspiracy and (c) declining to assist by being "wired up" at any further meetings. The explanation given by Mak had been that he had been concerned by D7's visit when he, Mak, had been alone on the site, and by D7's reference to the number of people employed on the site. He had been concerned for the well being of his family.

32. What must not be overlooked is how Mak behaved over the next few weeks. The evidence before the judge was that on 4 November (only 4 days after receiving the second $100,000.00) Mak had been so concerned about his position that he had sought advice from the Salvation Army Advisory Service. The advice which he had received was to do nothing for the time being. However, having spoken to the Advisory Service again on 25 November, he had decided to bring the matter to the attention of Ove Arup. He had done so on 26 November, and had paid the $200,000.00 to Ove Arup on 29 November.

33. It was, of course, for the judge to decide whether the circumstances of D7's visit to Mak on the evening of 29 October had been such as to account for what the judge called Mak's subsequent "dissimulation", which we take to refer to the fact that Mak had paid the money into his bank account, and had done so in small amounts so as to avoid suspicion. We note that Mak's apprehension had not prevented him from socialising with D7 on the evening of 31 October, but that does not mean that Mak had no longer been worried about the events which had occurred. In our view, once Mak's "dissimulation" is seen in the light of the speed with which (a) he took advice and (b) came clean with his employers, it was open to the judge to accept that the factors which had had the potential to taint him as a witness did not in the event detract from the worth of his testimony.

34. Secondly, the judge was heavily criticised for the way in which he had treated the significant shift in Mak's evidence. In particular, the judge was criticised for accepting Mak's evidence that he had earlier forgotten that Lau had showed him the $100,000.00 during their conversation prior to the arrival of D7. Not only would this have been a very surprising thing for Mak to have forgotten, but the judge had relied, as support for Mak's evidence that he had forgotten it, upon Mak's relatively poor understanding of, or ability to communicate in, English. As Mr Macrae said, the quality of Mak's English when he was interviewed by Ove Arup's solicitors had nothing to do with him forgetting the details of the events of 29 October.

35. We see the force of this criticism which we acknowledge undermines the basis on which the judge accepted Mak's evidence on when the $100,000.00 was first produced. But for the reasons we have already given, if the judge had ignored that part of the evidence, he would still have had to draw the inference that D7 had been a party to the offer of $100,000.00 to buy his silence over the false concrete delivery dockets. If the judge had not accepted Mak's later evidence on when the $100,000.00 had first been produced, would that have been regarded by the judge as making such a dent in Mak's credibility that he could not safely have relied on the rest of Mak's evidence? Having looked at the whole of the judge's Reasons for Verdict, we are sure that it would not have been regarded in that way.

36. Thirdly, the judge was criticised for having misunderstood a particular answer given by Lau in connection with the dinner on 31 October. We do not wish to lengthen this already lengthy judgment by spelling the point out, and it is sufficient for us to state that it is the point made in para. 16 of Mr Macrae's written argument. We are inclined to think that the judge did misunderstand the answer, but we are wholly unpersuaded that had he not misunderstood it his conclusion as to the guilt of D7 would, or even could, have been any different.

37. Fourthly, the judge was criticised for not considering a letter which Mak had written to Ove Arup on 29 November in which he had claimed to have been worried that if he had disclosed the events of 29 and 31 October, it would have had severe consequences for Lau, who he had described as his "long-standing friend". It is true that the judge did not refer to this letter in his Reasons for Verdict (perhaps because it was never exhibited, even though certain passages in it were read out in court), but we wholly reject the suggestion that simply because the judge did not refer to the letter in his Reasons for Verdict he did not consider it. A judge is not obliged to refer to every piece of evidence in his Reasons for Verdict. He need only refer to those parts of the evidence which bear upon the issues which he has to decide. That is especially so in a trial which lasted as long as this.

38. For these reasons, we reject the suggestion that the judge fell into error in accepting Mak's evidence, and it follows that D7's application for leave to appeal against his conviction on charge 9 must be dismissed.

39. D7's conviction on the charge of conspiracy. The judge's finding on charge 9 amounted to a finding that D7 was party to the offer of $100,000.00 to Mak to induce him not to take the problem over the false concrete delivery dockets any further. However, it could not be inferred from Mak's evidence that D7 had originally been a party to a conspiracy to excavate the shafts for the bored piles to a depth less than the specifications provided, and then to conceal that fact from the developers and the main contractors. Mak's evidence only pointed to D7's involvement in the conspiracy once it had become apparent that the fraud was about to be discovered.

40. However, it is here necessary to consider the terms of charge 1. D7 was charged with conspiring, between 1 May 1997 and 30 November 1997 (i.e. a period which included D7's visit to Mak's office), to defraud the developers and the main contractors by dishonestly

(i) not constructing the bored piles in accordance with the specifications,

(ii) falsely representing that the bored piles had been constructed in accordance with the specifications, and

(iii) causing the developers and the main contractors to pay for work which (a) had not been done at all or (b) had not been done in accordance with the specifications.

Mak's evidence did not point to D7 having done anything in furtherance of (i) or (ii), but since the effect of Mak's evidence was to point to conduct on the part of D7 which would have had the effect of concealing from the developers and the main contractors the evidence which could have revealed the existence of the fraud, D7's conduct can properly be characterised as having been done in furtherance of (iii). Mr Macrae did not seriously contend otherwise.

41. It is against that background that the judge's conclusion relating to D7's participation in the conspiracy has to be read. The judge said:

"Looking at the facts as they have been established and as I have outlined them, I cannot see what inference may be drawn other than that [D7] was a party to the conspiracy at the time when he visited Mak. Of course, there is no direct evidence before me of when it was that he joined the conspiracy but it is not for me to speculate once I am satisfied that, indeed, he had joined it. What [D7] was seeking to do was to promote the interests of the conspirators by urging Mak to the dereliction of his duty."

In effect, D7 had conspired with D8 (and maybe others) to persuade Mak not to press his concerns about the false concrete delivery dockets. If Mak had been persuaded to refrain from doing that, the developers and the main contractors may not have learned of the short-piling. In that way, he had conspired with D8 to cause the developers and the main contractors to pay for work which had not been done in accordance with the specifications. It follows that D7's application for leave to appeal against his conviction on charge 1 must be dismissed.

The convictions of D8

42. D8 was employed by On Foundation, and was the superintendent on the site, though he had responsibilities for other sites as well. The evidence relating to D8's participation in the conspiracy came primarily (though not exclusively) from D3. His evidence implicated D8 in five ways. First, he said that he had actually heard D8 (a) instruct one of the foremen on the site to dispose of the doctored measuring tapes, even though measuring tapes would usually be retained for re-use, and (b) reprimand D6 for cutting an incorrect amount from one of the measuring tapes. Secondly, D3 said that D8 had suggested that the suppliers of the concrete should be approached to ascertain whether they would provide delivery dockets for more concrete than they had actually supplied, and that D3 had subsequently reported to D8 that the suppliers had refused to do that. Thirdly, D3 said that the practice had been for D8 to be informed of the true depth to which the shafts had been excavated. Fourthly, D3 said that D8 had told him that the report on core samples obtained as a result of the drilling of pile BP7 would contain false findings. Finally, D3 said that D8 had brought him substantial sums of money from Hui to pay for, amongst other things, a surcharge for creating reports which contained false findings of certain sonic tests which had been carried out to ascertain the true depth of the shafts.

43. D8 was also interviewed by ICAC officers. As with D6, the interviews had been recorded on video, and there was no dispute as to what was said. D8 admitted that he had on occasions cut strips out of the measuring tapes. He said that the tapes had been doctored on Hui's instructions, and he acknowledged that the reason for resorting to the practice had been to prevent Ove Arup's staff from discovering the true depth of the shafts. In addition, he said that when they had been unable "to achieve the standard for each pile" or when he had been unable to "complete a pile", Hui would be informed. The judge regarded these answers as admissions that D8 had been informed when a shaft had not been excavated to its specified depth, and that this had been the information which he had conveyed to Hui. We agree with the judge's understanding of these admissions.

44. There was other evidence which implicated D8 in the conspiracy. It was the same evidence which implicated him on charge 9, the charge of offering an advantage to an agent. The evidence came from what D8 said in his interviews. He said that Hui had given him a sum of money for onward transmission to Lau in October or November 1997, though he did not know how much. He had given the money to Lau outside the site. In his first interview, he said that he did not know why the money was paid. In another interview later that day, he admitted that he had known what the money was for, even though Hui had not actually told him what it had been for and even though he had been "unable to speak it out" at the time. Later in the interview, he tried to water down that admission, but the judge characterised his attempts to do so as unconvincing. Having read the transcript of the interview, we agree. Answers he gave later on in the interview make it plain that the occasion on which he gave the money to Lau was the occasion when Lau met Mak, and when they were joined by D7.

45. D8 did not give evidence on the general issue. However, unlike D6, he did not give evidence either on a voir dire relating to the admissibility of the evidence relating to his interviews. The judge ruled the evidence to be admissible. Mr Paul Fok for D8 contended that (a) the judge should not have accepted the evidence of D3 in relation to the participation of D8 in the conspiracy, and (b) the judge should have ruled the evidence relating to one of the interviews to be inadmissible.

46. When the grounds advanced by Mr Fok in support of (a) are analysed, they are, we think, no more than an assertion that there were features about the evidence which could have justified the judge taking a more sceptical view of D3's credibility as a witness. Take as an example D3's evidence that D8 had brought him money to pay for the surcharge for the false sonic testing reports. Mr Fok pointed out that when D3 was interviewed by ICAC officers he was at that stage saying that he had got the money direct from Hui. The other points made by Mr Fok had a similar flavour. But whether taken individually or collectively, they cannot get over the fact that the judge saw and believed D3. The care with which he recorded his findings against each defendant shows that he was mindful of some, if not all, of the points made by Mr Fok, but nevertheless regarded D3 as a witness upon whose testimony he could rely.

47. As for (b), the argument relates to D8's third interview. In the course of the voir dire, it was put to the officers who had conducted that interview (a) that at the time of D8's arrest at his home he had been refused permission to contact a legal representative, (b) that at the time they had acted in an intimidating way towards D8, and (c) that prior to the third interview, D8 had been induced to forego his rights to legal representation which he had then wanted and to continue to answer questions by promises that they would mitigate on his behalf and that he would be used as a witness against Hui. Mr Fok contended that the judge should have ruled the evidence relating to the third interview inadmissible on those grounds. We reject that submission. The judge noted that the officers denied all these allegations. He said that he simply had no reason not to accept their evidence. The fact that D8 had not given evidence to support his allegations could not, of course, be held against him, but in the circumstances it is not surprising that the judge accepted the officers' denials as true.

48. In our judgment, in the light of the findings of primary fact which the judge made in connection with D8 (as a result of the judge's acceptance of D3's evidence about what D8 had done), the judge's conclusion that D8 had been a party to the conspiracy is one which cannot be faulted. It follows that D8's application for leave to appeal against his conviction on charge 1 must be dismissed.

49. We turn to D8's conviction on charge 9. The critical question is whether D8 knew that the money which Hui had given to him to hand over to Lau was to be offered to Mak to induce Mak not to take any further action in relation to the false concrete delivery dockets for pile BP7. If Lau's evidence had been preferred to Mak's, the case against D8 on charge 9 would have been even stronger. But Lau was not believed, and that was why D8 was acquitted on charge 10. Accordingly, in determining whether D8 knew what the money was for, the judge put Lau's evidence to one side.

50. The judge expressed his conclusions as follows:

"I am satisfied that [D8] knew full well what the purpose of the payment was to be, particularly bearing in mind his position in relation to the site, his awareness of the fact of short piling on the site, his communication of information to Hui and the fact that he was aware that he was passing on a very substantial sum of money, in cash, to Lau."

We have thought long and hard as to whether it was open to the judge to conclude from these facts that D8 had known that the money was being offered to Mak to induce him not to take any further action in relation to the false concrete delivery dockets for pile BP7. We have concluded that it was open to the judge to reach the conclusion which he did. The extent of D8's involvement in the conspiracy as appears from the five ways in which D3's evidence implicated him in it, together with his relative seniority, were compelling factors which justified the conclusion, not simply that D8 had known that the payment was connected in some way with the short-piling, but that he had known the actual purpose for which the money was to be offered. It follows that D8's application for leave to appeal against his conviction on charge 9 must also be dismissed.

The applications for leave to appeal against sentence

51. In his comprehensive sentencing remarks, the judge referred at some length to the hazards which would have been created had the conspiracy gone undetected, the cost of rectifying the defective piles when the conspiracy was uncovered, and the damage which a conspiracy of this kind does to the reputation of the construction industry as a whole. Having referred to the fact that the four defendants who had pleaded guilty had accepted that their activities had resulted in the foundations being "seriously defective to support a major development", the judge continued:

"The public of Hong Kong, the users of the buildings are entitled to have confidence in the integrity of their construction. It is quite clear that the [defendants] .... acted with flagrant disregard for the safety of any subsequent construction on the site based on the defective bored piles and, in due course, to the safety of users of that building. They placed in jeopardy not only the structure and those using it but also the reputation of Hong Kong. The potential consequences of their actions may quite fairly be described as disastrous."

52. In addition to these factors, the judge regarded three other matters as relevant to the sentencing exercise which he had to conduct. First, the judge warned himself of the tendency, with the benefit of hindsight, to impose too high a set of standards on the conduct one is entitled to expect of others. But he unhesitatingly rejected the suggestion that the defendants' conduct was in any way excused by their vulnerable position as employees whose employment would have been put at risk if they had declined to go along with the scheme. Secondly, the judge had in mind the size of the conspiracy. He said that

".... this was not just a single, isolated incident. It was a planned, ongoing conspiracy which ran for at least five months before being uncovered although not all of the [defendants] were involved from the inception. It involved a substantial number of bored piles. It involved a number of different subterfuges to avoid detection. This was a very substantial project and a part of the programme of construction consequent upon the construction of the new airport. The conduct of [the defendants] on a project of this magnitude casts a shadow over the entire construction industry. It is also important to recall that each of the [defendants] was either experienced in the field or possessed an appropriate qualification - none has any valid claim to ignorance."

Thirdly, the judge took the view that deterrent sentences were called for. He said that

".... the conduct of cutting measuring tapes, especially, and of recording piles as being longer than they in fact are is not unknown in the construction industry. I believe it the duty of the court to sound a clear warning that those who participate in conduct of this nature may expect to receive immediate custodial sentences."

We entirely agree with all of these comments, and would add that the sentences of imprisonment which circumstances like these must inevitably attract should be substantial. With all these considerations in mind, we turn to the cases of the three defendants who are applying for leave to appeal against their sentences - D1, D6 and D7.

53. D1. D1 was the most senior employee of On Foundation who was exclusively on the site. The judge described him as having played as prominent a role as D3, who was his opposite number in B+B. He had dealt directly with Hui in connection with the fraud. He knew that the measuring tapes had been doctored. He knew the amount by which various piles were short, and had passed that information on to those who needed to know it. He had been directly involved in the arrangements which led to the production of the false concrete delivery dockets. He knew of the reduction in length of the reinforcing steel cages. He had disposed of embarrassing documentation. He had prepared a small number of false records himself. On two occasions, he had lured members of Ove Arup's supervisory staff away from the sonic tests which were being carried out to prevent them from discovering that the tests were not genuine, and he had looked after such a test himself on another occasion. The judge took 4 years' imprisonment as his starting point. He discounted it by 4 months to reflect D1's previous good character, and accordingly sentenced D1 to a term of imprisonment of 3 years and 8 months.

54. Mr Paul Leung for D1 pointed out that all these activities related to the implementation of the scheme and its concealment from the developers and the main contractors. What D1 was not responsible for was the initial decision to embark upon a short-piling fraud. The scheme was hatched and planned, so Mr Leung submitted, by Hui and D3, and D1 was simply carrying it out. That may be so, and it would explain why the judge took a higher starting point of 5 years' imprisonment for D3. But granted that D1, on any view, played an important part in the implementation of the scheme and its concealment, we think that the judge was entirely justified in taking 4 years' imprisonment as his starting point. In the circumstances, we are unable to characterise the sentence which the judge imposed on D1 as either manifestly excessive or wrong in principle, and D1's application for leave to appeal against his sentence must be dismissed.

55. D6. We have already referred to the role played by D6 when considering his application for leave to appeal against his conviction. The judge took 3 years' imprisonment as his starting point. He discounted it by 3 months to reflect D6's previous good character, and accordingly sentenced D6 to a term of imprisonment of 2 years and 9 months.

56. Mr Leung also represented D6. He submitted that the role played by D6 had not been a prominent one. We agree that D6's role was not as prominent as that played by D1, but D6 was nevertheless a not unimportant member of the conspiracy. Without people like him to implement the scheme and to conceal what was going on, the fraud could never have got off the ground. Again, we think that there are no grounds for interfering with the sentence which the judge imposed, and D6's application for leave to appeal against his sentence must also be dismissed.

57. Before we turn to D7, we should comment on the case of R. v. Siu Hon Sum [1989] 1 HKLR 327, which Mr Leung drew to our attention. In that case, the defendant had been convicted, after pleading not guilty, of six charges of corruption on a construction site in the 1960s involving $200,000.00. He was sentenced to terms of imprisonment totalling 2 years and 9 months and fined sums totalling $350,000.00. The court remarked that the sentences might have been at the upper end of the scale, but that was not sufficient to warrant the court's interference. We acknowledge that $200,000.00 was worth far more then than it is now, but the case has little bearing on the positions of D1 and D6, who were convicted of the offence of conspiracy to defraud, and not of an offence of corruption.

58. D7. We have already referred to the role played by D7 when considering his application for leave to appeal against his convictions. In doing so, we have already taken on board the point made by Mr Macrae in mitigation, namely that it cannot be inferred that D7 had originally been a party to the conspiracy, and that the evidence only pointed to D7's involvement in the conspiracy once it had become apparent that the fraud was about to be discovered. Mr Macrae described D7 as having been on the horns of a dilemma. Pak Kee was a small transportation business, whose only benefit for having been engaged as a sub-contractor to provide labour to B+B was the commission it earned from sub-contracting to On Foundation its obligation to provide that labour. Pak Kee would have been ruined if B+B's liability to penalties had been passed on down the line to it. This may explain why D7 resorted to crime as a way out, but it does not begin to excuse his conduct.

59. Although D7 may have come to the conspiracy late, the fact is that when he joined it, the steps which he took to prevent the fraud from being discovered involved the corruption of Mak. It is bad enough offering a bribe, for example, to obtain a lucrative contract, but it is far more serious when the bribe is offered to persuade the intended recipient not to press on with an investigation which could lead to the discovery of a conspiracy which would create potentially dangerous hazards if it was not uncovered.

60. In our view, the judge was correct to view the two offences which D7 committed globally. Looking at D7's culpability in terms of totality, he took 4 year's imprisonment as his starting point. He discounted it by 4 months to reflect D7's previous good character, and he accordingly sentenced D7 to terms of imprisonment of 3 years and 8 months on each charge to run concurrently with each other. Having considered the matter with the care which the cases of all the defendants deserve, we are unable to characterise the sentences which the judge imposed on D7 as either manifestly excessive or wrong in principle. Accordingly, D7's application for leave to appeal against his sentences must also be dismissed.

Finally, we wish to pay tribute to Judge Wright's contribution to the case. His Reasons for Verdict and Sentence are as comprehensive as any we have seen, and were set out with great clarity of both thought and expression.

Representation:

Mr Paul Leung, instructed by the Legal Aid Department, for the 1st and 6th Defendants (re: sentence)

So Bor Shun, the 6th Defendant, appearing in person (re: conviction)

Mr Andrew Macrae SC and Mr James Tse, instructed by Messrs Haldanes, for the 7th Defendant

Mr Paul Fok, instructed by Messrs Wong, Packwood & Co., for the 8th Defendant

Mr Kevin Zervos and Mr Alex Lee, of the Department of Justice, for the Respondent