The Queen v. Lui Kwok Wai

HCMA000933/1990

IN THE SUPREME COURT OF HONG KONG

(Appellate Jurisdiction)

MAGISTRACY CRIMINAL APPEAL NO. 933 OF 1990

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BETWEEN

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Coram: Hon. Hooper, J. in

Date of hearing: 8 November 1990

Date of delivery of judgment: 13 November 1990

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JUDGMENT

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1. On the 31st may 1990, the appellant was convicted in the magistrates Court at Central of two offences set out in Charges A & C.

2. Charge A was the offence of being an agent using a false document to mislead his principal, contrary to Section 9(3), Prevention of Bribery Ordinance, Cap.201, Laws of Hong Kong and Charge C was inciting an agent to use a false document to mislead his principal, contrary to Common Law and section 9(3).

The particulars of the A charge were as follows:

"LUI Kwok-wai, being an agent, namely a Department Manager of Swire Engineering (1988) Limited, in Hong Kong, between December 1988 and May 1989 with intent to deceive his principal used a document, namely a work order No. W9581001/D of Swire Engineering (1988) Limited in respect of which his principal was interested and which contained a statement which was false in a material particular namely that Sing Wei Electrical Egnineering were to carry out the work therein specified and which to his knowledge was intended to mislead his principal."

The particulars of the C charge were as follows:

"LUI Kwok-wai, on 9th January 1989, in Hong Kong, incited WONG Yun-choi, an agent, namely a contracts Manager of Swire Engineering (1988) Limited ('SEL'), to deceive his principal by using a document, namely an invoice no. 044589 in which his principal was interested which contained a statement which was false in a material particular namely that Sing Wei Electrical Engineering had carried out a wiring job at Pacific Place, Queensway, and which to his knowledge was intended to mislead his principal."

3. The facts giving rise to the charges were set out by the magistrate in his statement of findings as follows:

"The factual situation which gave rise to the charges is also relatively straight-forward. The Electrical Section of Swire-Haden, which later became Swire Engineering (1998) Ltd., tendered for work at Pacific Place Phase I. They won the contract, which had to do with supplying music or sound system at the complex. The man in charge of the job at Pacific Place was a Mr K.K. WONG, who allegedly worked for Kornhills.

Swire Engineering (1988) Ltd.'s chain of command went from Povey at the top, down to Frankie Au, down to the appellant as the departmental head of the Electrical Section, and then to Y.C. WONG. Y.C. WONG was the man to supervise the work involved at Pacific Place on behalf of Swire Engineering (1988) Ltd.

There was a lot of trouble with the project, as far as Swire's were concerned, and it seemed that everyone was prepared to lay the cause of the trouble at the feet of K.K. WONG. Y.C. WONG felt that he was not getting enough support from his superiors over this and other matters, and Swire's became equally displeased with Y.C. WONG's efforts on their behalf. The falling out caused Y.C. WONG to be transferred within Swires, and in early January 1989 Y.C. WONG brought the case to the attention of the I.C.A.C.

Y.C. WONG alleged that there was bribery involved. He told the ICAC that K.K. WONG had been promised stereo equipment, and that later this had changed to a payment of $40,000 'petrol fee' instead. The bribe was allegedly to be given to K.K. WONG, and it was the failure to deliver the promise that led to all the trouble at the site.

Y.C. WONG alleged that the person principally involved was the appellant, and that the appellant had repeatedly tried to get Y.C. WONG to prepare false documents so that the bribe(s) could be paid.

The charges laid, relate to two allegedly false documents, and not to bribery. Accordingly, much of the evidence which was before me, was only background. I found no evidence that any money was paid over or stereo equipment delivered. However, I had to go much further than that.

In December 1988, the appellant asked Peter CHENG, a contract manager at Swires (in fact he was of the same rank in Swires as Y.C. WONG), to contact Sing Wei Engineering i.e. YUEN Pui-sing, and to ask him to bring $200,000 cash to Swires by way of a loan. This was done, and the cash, was duly delivered. Two amounts were given to various people to pay for the wages of sub-sub-contractors' employees, and the remaining $40,000 was retained by the appellant.

The next day, again on the appellant's instructions, Peter CHENG instructed YUEN PUi-sing, to prepare an invoice claiming $40,000 from Swires for cabling work done at Pacific Place Phase I. All involved knew that no such work had in fact been done, yet YUEN PUi-sing did as instructed. That document which is part of Ex P5, is the basis of the 'C' charge.

The document arrived at Swires, was signed by Gary Ho at the appellant's instructions, by the appellant, and by Frankie Au, before it was passed on the accounts section. The fact that all these persons had signed it, meant that each had confirmed that it was in order for the company to pay out that amount. However, payment could only be made, if there was also a 'works order', a document emanating from Swires directing someone to do works on Swires behalf.

The workers order, which is also part of Ex P5, was prepared by Gary Ho on the appellant's instructions, and was also signed by all those in the company who had to approve the documents as being correct before payment would be made, and that again included the appellant. It was odd, that the works order was prepared only after the invoice was received - normally a works order is issued before, and an invoice is received only after, the work has actually been completed.

YUEN Pui-sing was subsequently paid $40,000 by Swires in relation to the invoice, for work he'd never done at Pacific Place Phase I."

4. The magistrate set out the contentions of the parties as follows:

"The Crown contended, that the appellant having retained $40,000 of YUEN Pui-sing's cash, used the works order with intent to deceive and mislead Swires, resulting in Swires paying that amount to Yuen Pui-sing.

The appellant's explanation for all these machinations is simply 'creative accounting'. Due to the shortage of labourers at the time, the cost of employing workers escalated. This led to sub-contractors being in difficulty - they were squeezed between having to do the work and not being able to afford to pay the workers. Swires, according to the appellant, decided to resolve that difficulty, by claiming for the extra costs incurred from their principal clients once the works had been completed. In the meantime, before they could lodge those claims, Swires would use money available for one project to meet the shortfalls of other projects.

In this case, the appellant said, money was being taken from the Pacific Place Phase I project to pay Sing Wei $40,000 due to Sing Wei in respect of other work done elsewhere. The appellant said that he had full authority to do this, and that his superiors knew full well what was going on. He said there was no intent to mislead or to deceive Swires. He said he'd used the $40,000 cash to pay for the wages of other sub-contractors' labourers."

5. The magistrate then set out his reasons for convicting the appellant as follows:

"Bearing all matters in mind, and warning myself of the danger of accepting the evidence of the Crown witnesses, I had no doubt that the appellant was an agent of Swire's at the material time, and also that Swire's were 'interested' in the works order and other accompanying documents. I was satisfied that the appellant had 'used' the works order in that he'd instructed Gary Ho to prepare it, and once it was coupled up with other documents, he'd arranged for all the necessary persons to sign it and thereby indicate that it was proper and valid for the company to pay out on it. The appellant himself, had instigated the document and forwarded it along the chain for its ultimate payment.

I was satisfied that the document contained a material particular that was false - Sing Wei Engineering had not done any work at all at Pacific Place Phase I.

Was the document intended by the appellant to mislead his principals? I had no doubts at all that it was. My reasons included the following:

The only rational conclusion open to me was to find that the deliberate falseness was intended to mislead the appellant's principals.

I next had to consider whether the Crown have proved beyond reasonable doubt that the appellant, in using that works order, intended thereby to deceive his principals. Having found that it was intended to mislead, I considered why that should be. The answer I found, was that the appellant knew that had the true position been put forward, the company would not have paid. The only inference I could draw from all the facts is that the appellant did intend to deceive Swires.

I duly convicted the appellant on the 'A' charge. As the 'B' charge was an alternative, I returned no verdict on that charge.

Following the same line of reasoning, I was satisfied in relation to the 'C' charge that the invoice contained a false material particular, which to the appellant's knowledge was intended to mislead his principals, with the intention of deceiving them.

The tape recording clearly shows, in my judgment, that the appellant was inciting Y.C. WONG to use the invoice to achieve that. Y.C. WONG's evidence alone I could not have accepted, but in this regard, there was corroboration in the tape recording, and also support from the evidence of Peter CHENG, YUEN Pui-sing and Gary Ho. As I've said before, I disbelieve the appellant's denials in his evidence, and I did not place reliance on his tape-recorded interview wherein he denied incitement.

I found all the ingredients had been proved beyond reasonable doubt and I duly convicted the appellant on the 'C' charge."

6. The first ground of appeal is that the learned magistrate erred in finding that the appellant had intentionally misled and deceived his principal. Five reasons are set out for this contention as follows:

7. Mr Cheng Huan, who not only appeared for the appellant in the Magistrates Court but who also represents him in this appeal, has taken me through the record of evidence to support the points made in his ground of appeal. He stresses that the whole basis of the prosecution case was that the $40,000.00 was needed to pay a "petrol fee" to K.K. Wong, a factor which the magistrate recognised in his brief notes for judgment. For proof of this matter, the prosecution relied on two witnesses, Y.C. Wong (PW1) and K.C. Lee (PW2). However, he says, in view of the fact that the magistrate made no finding that money was paid to K.K. Wong, the whole basis for the Crown's case was destroyed. Whilst he accepts that there was a false document in exhibit P5, he argues that it was not proved from this that the appellant intended to deceive his principal. This was because it was also the defence case that it was a false document, but that it was created for the purpose of obtaining $40,000.00 to partly repay Sing Wei for the $200,000.00 which the company had borrowed from Sing Wei. He argues that truthful evidence was given on this subject by Yuen Pui-sing (PW4). He stresses that the $200,000.00 loan was required as part of "responsibility accounting", a mechanism whereby the cost of inflation money from one project would be juggled around and used for other projects. He says that the company closed its eyes as to how the money was used and how the books were balanced.

8. Mr Cheng Huan accepts that the magistrate approached his task properly when considering the burden and standard of proof, the question of inconsistencies in the evidence, the credibility and reliability of witnesses, the accomplice direction, corroboration, and on the law of deception as stated in DPP v. the Welham [1961] AC 103 and the law as to incitment as stated in Race Relations Board v. Atkin (1973)2 QBD 815, 825. He accepts that the documents were false in that Sing Wei had not done any work at all at Pacific Place Phase I. However, he comes back to his main point that the fundamental question whether the purpose of the transaction was to pay a bribe or to repay a loan. He says that question was never answered.

9. He has taken me in great detail through the evidence of the witnesses referred to in his grounds of appeal. Whilst he accepts the factual correctness in reasons (ii) and (iii) of the magistrate's reasons for reaching the conclusion that the appellant misled his principals, he argues that they do not take the Crown case any further because they were in line with the defence case. He disputes reason (iv) and has taken me to the evidence. He has also challenged reason (v). He argues that reason (vi) does not assist the prosecution case and in relation to reason (vii), he argues that the magistrate totally misconceived K.C. Lee's evidence.

10. Mr MacLeod for the Crown on this appeal supports the convictions. He argues that it matters not in deciding whether or not the appellant had the necessary intent to mislead, how the $40,000.00 was used. The learned magistrate had carefully evaluated and analysed the mental element of the offences and was justified on the evidence and on the reasons given for reaching the conclusion which he did. He was right to hold that the deliberate falseness was intended by the appellant to mislead his principal and that the appellant knew that had the true position been put forward, Swires would not have paid. It was clear from all the management officers of Swires that Swires would not have made payment of $40,000.00, had it known that no work had in fact been carried out by Sing Wei at Pacific Place Phase I. This, he says, is borne out by the evidence of Mr. Lee Wai-ming (PW5), Mr. Frankie Au (PW7) and Mr. Povey (PW8) and he has referred to specific parts of their evidence. The learned magistrate found, having heard and seen both the appellant and his witness Wong Yuk-chi (DW2), that no weight could be attached to their evidence. The learned magistrate plainly rejected the evidence of the appellant that it was all due to "responsibility accounting". He submits that it is simply contrary to common sense to accept the defendant's explanation that the document was prepared as part of "responsibility accounting", and was part payment of the alleged loan of $200,000.00. He has drawn my attention to the very unsatisfactory nature of the evidence by Mr Yuen as to the reason for the alleged loan, pointing out that Mr Yuen initially disagreed that it was a loan and only after he had been questioned some fifteen times, including questions from the bench, that he finally gave in and said that it was a loan. Clearly, the magistrate cannot be criticised for rejecting the appellant's explanation, he says. He argues that the magistrate was right in taking into consideration the evidence of Mr K.C. Lee to the effect that he had pleaded guilty and was in fact guilty of an indentically worded charge, and had finished serving his 8 months sentence therefor. He points out that on the evidence there had been discussions implicating the appellant that the sum of $40,000.00 bribe money was to be paid to Mr K.K. Wong, and that Mr Lee thought, as a result of his conversations with the appellant, that the submission of the false invoice was to obtain $40,000.00 from Swires to bribe K.K. Wong. He argues that the magistrate was perfectly correct in assessing the witnesses' credibility to act on the evidence of Mr K.C. Lee. So far as ground 1 (e) (ii) is concerned, he argues that the issue of the credibility of witnesses, including that of Mr Lee, was clearly and carefully considered by the magistrate. The matter that Mr Lee had been told to give his evidence in accordance with his previous statement was examined both in cross-examination and re-examination. He argues that the learned magistrate must have been conscious of that fact.

11. I have considered the submissions made by both counsel and examined the parts of the record to which they have referred me, and can only say that it was clearly open to the magistrate to reach the conclusion he did on the reasons which he set out in his statement of findings. Ground 1 of these grounds of appeal, therefore, fails.

12. The second ground of appeal is that the learned magistrate was wrong in law to refuse the appellant's application to be provided with the previous statements of Mr Gary Ho and Mr K.C. Lee. It is contended that the application was made under section 32 (1) of the Criminal Procedure Ordinance, Cap.221. Affidavits are tendered from Mr Kevin Chan Sai Kit, junior counsel for the appellant at this appeal who was also present during the proceedings in the Magistrates Court and also Helen Pui Ling Chan, an Articled Clerk to Messrs Tai, Ho, & Chan, the instructing solicitors of the abovenamed appellant who was also present at the trial before the magistrate. Their evidence by affidavit relates to the note of the magistrate appearing at page 67 of the appeal record after the defence is recorded as having stated:

"I've got only one written statement.

Ask for other statements."

The record continues:

"Adjourn to 11:30 a.m. (witness warned)".

Defence : S. 32 (1), Cap.221.

Not trying to be difficult. Have only 1 witness statement and Crown must have video as well and maybe another statement. I'm happy to proceed on basis of the witness statement we have.

F.T.B. : S. 32, in my view, does not relate to witness statements."

Both Kevin Chan and Helen Pui Ling Chan referred to their own notes which were taken at the time and state that there is no reference in their notes to the effect that they were happy to proceed on the basis of the witness statement.

13. There is another disputed passage in the notes of proceedings at page 91 of the appeal record which appears at the end of the cross-examination of PW6, Gary Ho. During cross-examination, it appears from the record that defence counsel had asked Gary Ho if there were any tape recordings of the defendants, Peter Cheng, Lee Wai-wing, Yuen Pui-sing, and received a negative answer. A similar question was asked in respect of K.C. Lee and an affirmative answer was given to the effect that there were about ten tapes relating to him. He was asked if they were about the $40,000 and the answer was that some related to it and that it should be that two related to it. At this stage, the record shows "Defence : Merely state that not been supplied with them".

14. These matters were brought to the attention of the magistrate and his reply on the 22nd August 1990 was in the following terms:

"I do not agree to amend the notes of proceedings.

I find it offensive to suggest that I have recorded something in the record which counsel for the defendant did not say. I am not in the habit of making up what counsel submits in open court."

15. Kevin Chan in his affidavit admits that although he kept a fairly full note, it was not a verbatim note of the proceedings. Helen Pui Ling Chan says:

"I was instructed to keep a full notes of proceedings during the trial. After checking on my own notes, it is found that in relation to (1) there is no reference to the effect that we were happy to proceed on the basis of the witness statement we have and (2) there is no record of the Defence saying 'merely state that had not been supplied with them'."

16. Looking at the exhibited notes of these two deponents, it is quite clear that neither of them had recorded with complete accuracy what occurred because there are substantial differences between the two sets of notes. Furthermore in Kevin Chan Sai Kit's note in respect of the first disputed part of the record, there is an uncompleted sentence written down and then crossed out. Furthermore it seems quite clear in respect of his notes in respect of the second disputed passage that although defence counsel is recorded as having paid that K.C. Lee's video tape recordings had not been supplied to the defence, this was made after they had closed their cross-examination. It therefore appears to have been merely a comment even on junior counsel's note. Miss Helen Pui Ling Chan's note of the second disputed area does not record the note which had been recorded by junior counsel. Furthermore, there is a passage which has been written out and then deleted.

17. However if the notes of these two deponents is anything like accurate, then there are substantial gaps in the magistrate's record.

18. The procedure for challenging the record of a trial judge or magistrate has been set out by the Court of Appeal in Criminal Appeal No.210 of 1982 Lee Yat-lung S others v. R. Sir Denys Roberts, C.J. Stated:

"Where the official record of a trial consists of a hand-written note kept by the judge, it is inevitable that there will, from time to time, be mistakes and omissions, as there are equally likely to be in any note kept by counsel. What, therefore, is this court to do when counsel challenges the record provided by the judge?

Unless the dispute is itself to be the subject of a trial, at which evidence is to be given by counsel and the judge, which would surely be inappropriate, there seems to us to be no alternative, as a general rule in cases of conflict of this kind, but that the version of the trial judge, who is responsible for maintaining the proper record of the proceedings, should be accepted, save only where the judge's record, or his reply to the variations put to him by counsel, suggests that his version of what happened is so inherently improbable that we should not accept it.

We therefore informed counsel for D.3 that we felt obliged to adopt the judge's record and the comments which he had tendered on the submissions made to him by counsel."

19. I find myself in the same position in this case and accept the magistrate's record that defence counsel did indicate at the relevant time that he was happy to proceed with the one statement which he had. That being the case, it is too late now to complain that other witness statements weren't made available to him at the trial. This ground of appeal also fails.

20. The third ground of appeal was that the learned magistrate took no account of the appellant's good character in the assessment of his credibility. Further, he appeared to ignore the favourable comments about the appellant's character by Mr F. Au and Mr Povey.

21. The amount of weight to be attached to a witness's evidence was a matter entirely for the magistrate and he had properly directed himself on the way in which he should approach that task.

22. Having examined the record in these proceedings and considered the reasons giving for his decision, I am satisfied that the magistrate based his decision on all the evidence before the court including that referred to in this ground of appeal. There is nothing in this ground.

23. Ground four is merely that in all the circumstances the convictions are unsafe and/or unsatisfactory. No additional grounds are put forward under this particular ground but reliance is placed upon the former grounds. This ground therefore fails.

24. For these reasons the appeals against conviction on each charge are dismissed and the convictions affirmed.

25. The appeal against the sentences in this case is that in all the circumstances of the case, the sentences imposed are manifestly excessive and/or not the proper sentences and the reasons are stated to be, inter alia, the six factors set out :-

a.    his good behaviour;

b.    his family and personal background;

c.    there was no evidence of corruption;

d.    there was no evidence of personal gain;

e.    the company did not suffer any monetary loss; and

f.    the company was of the view that he had no criminal intent.

The maximum penalty on conviction on indictment as has been recognised is $500,000 and imprisonment for seven years and on summary conviction, $100,000 and imprisonment for three years. In R. v. Lai Yuk-kui [1981] HKLR 691, the former Chief Justice, Sir Denys Roberts held that for offences against s.4 (1) and (2), 5, 6, 7 and 8 of the Prevention of Bribery Ordinance, an immediate custodial sentence should normally be imposed and that the usual minimum should be 12 months imprisonment. He specifically omitted s.9 because it involves a far wider range of moral culpability. In R. v. Chui Yiu-lau, M.A. 5/90, Duffy J. passed a suspended sentence on a young man who was convicted, under s.9 (l) (a) of being an agent accepting advantages totalling $10,000 over a period of four months, there being four charges relating to each particular bribe, and the learned judge said in that case at p.7 :-

"In this case, I am dealing with an appellant who accepted a total of $10,000" over a period of 4 months. The loss to his company is calculated in terms of loss of advantage over a competitor, in the sense that the service provided to the competitor, would put it, in relation to contemporaneous knowledge of Comex dealings, on a par with the appellant's employers, a position the competitor would not have occupied had that service not been provided.

There was no evidence as to how serious was the competition that Kingsmere provided, nor as to any actual monetary loss incurred by Malahon.

With respect to the learned Magistrate, while of course it is true to say that all corruption offences are serious offences, not all corruption offences merit an immediate custodial sentence. I do not quarrel with the learned Magistrate's imposition of terms of imprisonment of 2 months for each of the offences. However, it seems to me there are factors involved which militate in favour of suspending these sentences. These relate to the appellant himself, an extremely hard working young man with a previously unblemished character. It should also be borne in mind that he claimed such commission taking was not uncommon in the business, a factor of no weight in exculpation but worthy of some consideration in mitigation. The amount involved was small and the loss to Malahon could not really have been great."

And for that reason he suspended the terms of imprisonment, but he also, in addition, ordered that the defendant pay a further $7,500 in fine.

26. Reliance has also been placed by the appellant in this case on the case of John Barrick [1985]81 Cr.App.R. 78 where guidelines were given by the English Court of Appeal in respect of sentences imposed for breach of trust cases in England.

27. The magistrate has imposed sentences of 9 months imprisonment for an offence under s.9 (3) and also a concurrent sentence of 9 months for an offence of inciting another to commit an offence under. s.9 (3). The magistrate found no evidence of bribery but made no findings as to what happened to the $40,000 which appears to have been covered up by a false document in both charges. It is clear, however, that he manifestly disbelieved the defence witness' evidence that it was used to pay him in respect of work done by his company, but really the matter was left open and I think I must look at the factual situation before the magistrate in considering what was the appropriate sentence. There is no doubt about it that on the facts found by the magistrate, the matter was extremely suspicious as to what had happened to this sum, but in the absence of any finding as to this, I cannot assume that it was corrupt money. It is really left open and the only thing that the court does know is that the $40,000 was obtained from the company.

28. Despite this, I must say it is of some surprise to me to read the record and find that his superiors were prepared to take the view that the company had not really lost any money. Indeed, it appears that even the managing director of Swire Engineering Ltd. took a favourable view of the appellant, a matter which, coming from a person, so high up in the company, has a bearing, I think, on the sentence which should be imposed on the appellant.

29. In these circumstances, I consider that the facts in this case, where there was no proof of corruption, are unusual and places the offence at the lower end of the scale when it comes to sentence and whilst I really cannot criticise the magistrate for imposing prison sentences for an offence under s.9, I think perhaps it would have been better if he had suspended those sentences on the facts as he found them. In the circumstances, bearing in mind that the appellant has already spent some time in prison, I am going to make an order now that the sentences be suspended for a period of three years. The appellant should understand that that means his prison sentence will still stand at 9 months' imprisonment in respect of each charge to run concurrently. However, he will be free to leave this court now, but if he commits any other offence which is punishable by imprisonment during the next three years, which is what is called the "operational period" of this suspended sentence, the sentence which has been imposed upon him by the magistrate may be activated and he will then, in all probability, serve it consecutively to any sentence imposed upon him for any fresh offence which he may have committed during that time. This is the order of the Court. The appeal is allowed to that extent.

Representation:

Mr Cheng Huan, Q.C. & Mr Kevin Chan (Tai Ho & Chan) for appellant

Mr H. Macleod, Senior Crown Counsel, for Crown