The Queen v. Chung Cheong
Read the full judgment text of DCCC 137/1977 on BabelCite. This District Court judgment was delivered on 22 December 1977.
1. The accused is charged with possession of unexplained property, contrary to S.10(1)(b) of the Prevention of Bribery Ordinance, Cap.201 Laws of Hong Kong.
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DCCC000137/1977 IN THE DISTRICT COURT OF HONG KONG HOLDEN AT VICTORIA CRIMINAL JURISDICTION CASE NO.137 OF 1977 -----------------
----------------- Coram: Judge Hooper in Court. Date of Judgment: 22 December 1977 ---------------------------------- REASONS FOR VERDICT ---------------------------------- 1. The accused is charged with possession of unexplained property, contrary to S.10(1)(b) of the Prevention of Bribery Ordinance, Cap.201 Laws of Hong Kong. 2. The Particulars of Offence allege that he, being a Crown Servant, namely an Assistant Building Surveyor of the P.W.D. of the Hong Kong Government, was on the 31st day of January 1972, in Hong Kong, in control of pecuniary resources and property disproportionate to his then past and present official emoluments. 3. Further particulars were supplied on a Statement of Further Particulars as follows:-
4. At an early stage of the trial an application was made by Mr. Hampton on behalf of the accused for yet further particulars in addition to those set out above. He conceded receiving in place of a "summary of evidence" copies of the statements of all the prosecution witnesses, and claimed that it was apparent from these that there were certain built in explanations. He sought further particulars as to which assets, alleged to be in the control of the accused, the Crown accepted as having been explained. Miss Beeson for the Crown objected to giving further particulars, saying in effect that the Crown required an explanation in respect of the whole of the assets set out in the particulars above. She did, however, refer to the schedules attached to Mr. Fowler's statement (which was later during the trial accepted in evidence by agreement as Exh. P25 and the 2 schedules being marked Exh. P25A & B accordingly.) Mr. Fowler is an accountant working with the ICAC and the schedules prepared by him are entitled Assets Betterment Statements (ABS's) and cover 2 periods of time, namely (1) 27/3/69 to 14/5/71 (just over 25 ½ months) (Exh.P25A), (2) 15/5/71 to 31/1/72 (8 ½ months) (Exh.P25B). The ABS's purport to show that approximately $95,000 came from sources other than the accused's official emoluments, bank interest and gambling. Miss Beeson nevertheless maintained that it was the sum total of the accused's assets which was disproportionate to his past and present official emoluments, and that the Crown should not be tied down to a figure of $95,000. 5. Being of the opinion that the particulars supplied were more than adequate, bearing in mind that the Defence had had copies of all the statements of the Crown with nesses, I ruled against the application. 6. During the hearing a large number of witnesses' statements were agreed as being true and were admitted into evidence as agreed evidence. In the case of most of the witnesses the statements were admitted as a result of unlimited admissions as to their truth, though in some cases the actual statements itself had been edited to some extent by agreement between counsel. 7. Some of the statements of witnesses were admitted in evidence by agreement as a result of limited admissions of fact. 8. In addition to these witnesses' statements, a large number of documents were admitted into evidence by agreement, again some to an unlimited extent, and some to a limited extent. 9. The facts set out in the statements and documents which were admitted as a result of unlimited admissions, were proved conclusively under S.65C of the Criminal Procedure Ordinance. Lists of these are set out in Annexes V and VII to this judgment. The facts set out in the statements and documents which were admitted as a result of limited admissions, were conclusively proved to the extent of the limited admission. Lists of these are set out in Annexes VI and VIII. 10. In addition to this evidence a number of witnesses testified in the witness box. The First Step 11. In cases brought under para.(b) of S.10(1) of the Prevention of Bribery Ordinance, the first step is to quantify the property and the emoluments in terms of dollars and cents. (See Sturgeon's case 1975 HKLR 677 at 685) Official Emoluments 12. As a result of the agreement with regard to the statement of Mr. LAW Kin-kong (PW1) contained in Exh. P19 it was admitted that the total official emoluments actually received by Mr. CHUNG Cheung (the accused) during the period of the employment from 23/9/58 to 31/1/72 was $134,430.22 plus an unspecified amount in respect of overtime payments from the period of 23/9/58 to 1/4/63 which was agreed between the Crown and the defendant as amounting to $4,000. The total official emoluments actually received by him was therefore $138,430.22. Pecuniary Resources and Property 13. Turning now to the matter of his pecuniary resources and property, it is common ground that all the amounts stated in the particulars relating to the bank accounts were in fact assets in the control of the accused on 31/1/72 (the charge date). These sums alone amount to $51,778.44. It will be noticed at this stage that the aggregate of the amounts in his bank accounts alone amount to 37.4% of his total official emoluments up to the charge date. The percentage is considerably larger than the 12.27% in the case of Sturgeon. 14. So far as paragraphs (e) (the flat) & (f) (32 G.T. Enterprise Ltd. shares) of para. (2) of the Statement of Further Particulars are concerned, it is disputed by the defence that the Crown has proved that these assets were in the control of the accused on the charge date. Mr. Hampton has also attacked the methed of valuation adopted by the Crown in respect of both these items and also in respect of item (g) the motor vehicle. 15. I shall deal first with the submission that the assets in para. (e) & (f) were not proved to be in the control of the accused on the charge date. Para. (c) the instalments on the flat 16. Mr. Hampton attacks the phrase used in the statement of further particulars. He submits that there cannot be such an asset as "instalments paid" and further that there is no evidence that the flat was registered in the name of the defendant on the charge date. Miss Beeson concedes that there has not been proof of the legal ownership as at the date of the charge, but maintains that it is nevertheless clear that at least on 25/1/72 (less than a month before the charge date) the property was still in the hands of the defendant. In this connection she refers to the accused's answers in the questionnaire (Exh. P24) to questions number 86 and 93 and also an entry in the accused's own note book, (Exh. RJ/3(i) which had been seized from the bedroom of the accused's own home on 17/7/75), at pages 77 and 90. She also submits that the Defence has agreed the statement of PW13 (Exh. P16) where payments on the house are referred to. She points out that the Defence has not challenged that evidence from the time that the accused was questioned by Mr. Cass (PW28) in the questionnaire (Exh. P24) in 1976 up till the trial and that the Defence did not challenge the Crown putting forward flat instalments as an asset. She also put forward an argument based on estoppel which I am afraid I didn't understand. 17. It is clear from the agreed statement of Mr. KAM Tin-sang (PW13) (Exh. P16) that the flat in question was sold to the accused. The purchase price was $56,260 to be paid by 5 instalments of $11,252. The assignment was executed on or about 26/11/73 (after the charge date). By the charge date the accused had paid 4 instalments amounting to $45,008. He clearly had an interest in the flat as at the charge date though it hadn't been legally assigned to him. I can see nothing wrong with the way in which the Crown has chosen to describe this interest as "instalments paid on flat etc". The statements of both KAY To-wong (PW12) (Exh. P5) and KAM Tin-sang (PW13) (Exh. P16) indicate that the flat was purchased in the name of the accused. In the answer to Q.86 of the questionnaire (Exh. P24) the accused was describing the flat as his flat on the date when that interview was conducted, namely 26/3/76, though he was claiming in his answer to Q.93 that the assets set out in his note book (Exh. RJ/3(i)) on page 90(L) as at 25/1/72 (which assets included this same flat) included monies paid by his brother. The point however is this whether the funds came partly from his brother or not the accused was using them in the purchase of a flat which was purchased in his name. He clearly had this asset (the interest which he had in the flat) in his control as at the charge date. Para.(f) 32 shares of G.T. Enterprises Ltd. 18. The accused's answers to the questionnaire referred to above are relevant also to the consideration whether the shares were in the control of the accused as at the charge date. These answers and his entries in his notebook are very strong indications that these shares were in the control of the accused as at the 30/11/71 and 25/1/72 even though they were registered in the name of his brother CHUNG Yat-kuen (PW24). There can be no doubt that the position was unchanged on 31/1/72 (the charge date) because he admitted purchasing a "further 15 shares on 6/6/72" (see his answer to Q.25 of the questionnaire). He admitted and it has been proved that all the money for these 32 shares was paid by cheque Exh. KCW/4(3) on 25/11/71 drawn on accused's account with the First National City Bank. (See statement of Mr. Fowler Exh. P22 and the agreed documents referred to therein). For these reasons and for reasons which will appear later I am satisfied that it has been proved beyond reasonable doubt that the accused himself was in control of these shares as at the 31/1/72. 19. However the Crown can also call in aid the presumption in S.10(2). I agree with the view expressed by Judge Rhind in VDC 40/77 The Queen v. LI Ping-lun and another that without the presumption in S.10(2) whether "control" is proved becomes a pure question of fact. If "control" can be proved even independently of the presumption, then a fortiori it can be proved with the benefit of the presumption. I also agree with him that this presumption may benefit the Crown even though it may relate to events prior to the 14th February 1974, the date this presumption became law. It is after all merely an evidential provistion. I too would have been prepared to apply it to this charge had the point not become academic on account of the Crown proving control without the aid of the presumption. 20. The accused gave a statement Exh. JT/2 to Mr. Tsui, an investigator with the ICAC on 17/7/75 to the effect that he and his brother had half shares in these 32 shares, but that the shares were registered in the name of his brother. It is clear that at that date he was admitting that half the shares belonged to him. He also admitted in the same statement that he was one of the promotors of the company and that after it was formed he represented his brother at all meetings. It is therefore correct to say that even on the accused's own statement he had hidden the fact that half of the shares were really his by registering them all in the name of the brother, even though there is a dispute as to whether the other half really belonged to him. 21. Another matter which is of importance on this matter is the accused's brother's evidence. He testified that during 1971 the accused had mentioned to him that he had friends who were interested in making money by housing development and asked him whether he was interested in making an investment. He also testified that he subsequently paid the accused a sum of $16,000 as a half share for the purchase of 32 shares in G.T. Enterprises Ltd. and that this took place in November 1971. 22. A study of the accused's bank accounts for November 1971 shows that all 32 shares were purchased with funds debited from the First National City Bank. It is clear that of the $32,000 paid $20,000 came from his fixed deposit account with the Chartered Bank, while $4,000 came from his savings account with the Hongkong & Shanghai Banking Corp. (1) He already had $3,664 in his First National City Bank account at the beginning of November. A further sum of $5,000 was paid in to the First National City Bank in cash on 13th November 1971. That was the only sum paid in cash in November 1971 that went towards the 32 G.T. Enterprises Shares. The accused's cash in hand as indicated in his note book had increased by $2,952 by the end of November. The total increase of funds in November therefore was $7,952, a long way from the $16,000 which the accused's brother claimed to have paid in November. Even if the figure of $3,664 already lying in that account were included it still would not reach that figure. Further there were no entries in the accused's note book indicating that the accused's brother paid anything towards these shares. I will deal with the note book more fully later. 23. In the Assets Betterment Statements I have drawn up (which I will refer to later and which appear at Annexes I and II) the income which came from 'other sources' during the two periods and which was unexplained in the note book is 11,512.31 + 6,787.31 making a total of $18,299.62, well below the total amount of approximately $36,000 which the accused's brother claims to have paid towards the flat and the shares. 24. All these factors go to show that the accused was actually in control of the shares and that the shares were merely registered in the name of his brother for the purpose of hiding the truth. I shall have more to say on this matter later in this judgment. (Post pages 35-40) 25. On the evidence as a whole I am satisfied that it has been proved beyond reasonable doubt that the 32 shares were in the control of the accused on 31st January 1972. 26. I am also satisfied beyond reasonable doubt that by having regard to the closeness of the accused's brother's relationship to the accused and the other circumstances to which I have referred above, there was reason to believe that the accused's brother by having the shares registered in his name, was holding them in trust for or otherwise on behalf of the accused. That being the case the presumption would also have arisen that such shares were in the control of the accused until the contrary was proved. 27. I do of course appreciate that the burden on the accused to rebut the presumption would not have been as onerous as that on the Crown and that the standard of proof would have been proof on a balance of probabilities and that in deciding whether the contrary is shown the evidence as a whole should be considered. 28. The accuse has chosen not to give evidence and the only evidence which the Court could have taken into account therefore, is the Crown evidence. I am not satisfied that the accused on that evidence could have rebutted the presumption. 29. Even therefore if the Crown had to rely solely on the presumption, it has not been rebutted. Para.(g) the motor car 30. It is common ground that the motor car referred to in para.(g) of the statement of further particulars was registered in the name of the accused, on the charge date. Quantification of Accused's Assets 31. There is of course no difficulty in respect of the accused's bank accounts, but Mr. Hampton has made a submission that the figures given in paras.(e), (f) and (g) in respect of the value of the flat, the shares and the car are incorrect, in that they represent the purchase price of these assets and not the actual value of these assets on the charge date. The Crown can point to various decisions in this Court to assist their contention that the money paid in the acquisition of these assets should be taken to be the value of these assets on the charge date. Mr. Hampton on the other hand in a very persuasive submission has conceded that there are decisions in the Victoria District Court which support the Crown's contention but he has submitted that these decisions stem from the view expressed by Judge Liu in Kan Ping's case, VDC 55/74. Judge Liu's view has been supported by Judge Hopkinson in CHAN Ching-cheung's case VDC 36/76, has been reaffirmed by Judge Liu himself in the Queen v. CHEUNG Chee-kwong VDC 269/76, and was further supported by Judge Bewley in CHEUNG Shiu-keung VDC 89/77. It appears that Judge Liu was concerned that civil servants may be exposed to harassment if the value to be adopted was the market value on the date of the charge. He said:-
32. Judge Hopkinson in supporting the above view said:-
33. Judge Bewley found the approach of Judge Liu persuasive and adopted it in CHEUNG Siu-keung's case (VDC 89/77). 34. It appears that these decisions have been based upon expediency and with a view to providing certainty, and to preclude the necessity of the Crown calling expert evidence of valuation of the various assets as at the charge date. I hope I will not be regarded as a judicial maverick if I choose to differ from these views. 35. Personally I support Mr. Hampton in his contention. Although in most cases it will not make a great deal of difference, whether one selects the actual value on the charge date, or whether one takes the value on the date of purchase, in some cases the difference could be critical. It seems to me that it is the value on the charge date which must be disproportionate, not the value on the day of purchase which might have been a considerable time before the charge date. 36. Mr. Hampton supports his argument by example and puts forward the hypothetical situation of a government servant who buys $100,000 worth of shares one week and the next week the shares almost overnight come crashing down in value, and for the logic of the argument, he assumes that they crash right down to a value of nil. He argues that if the Crown sought to charge that government servant, whose emoluments were $50,000, with possession one week after the purchase of the shares, and it is proved that the value is nil, then that would be the end of the case. I agree with him to the extent that a S.10(1)(b) offence would not have been proved. In another example he suggests that if the government servant purchased shares for $100,000, and the shares depreciated to $25,000 and not to nil, as against official emoluments of $50,000, the correct exercise would be for the Judge to say that as at the charge date assets had been proved of $25,000 set against official emoluments of $50,000, and that as this is disproportionate, please explain. He maintains that it would do the government servant no good to produce an explanation of additional legitimate income of $25,000 because this would be an unsatisfactory explanation as to how he was able to pay a purchase price of $100,000 a week before. In other words he argues that the purchase price is a matter to be taken into consideration when considering explanation. I agree with him. 37. It seems to me that there are three very good reasons why his arguments should be correct.
38. I appreciate that in Sturgeon's case the Full Court were satisfied that assets amounting to just over 12% of the accused's total net emoluments were disproportionate to those emoluments. They held -
39. I do not take that to mean that all the Crown has to do in every case is to show that it is questionable whether the defendant could have acquired his pecuniary resources and property with his official emoluments. That would seem to be creating an offence not set out in S.10 because such a question could arise without any disproportion at all. The offence is only committed if the assets are disproportionate to official emoluments. That is an essential element in the offence in para.(b). The Full Court at p.685 of the report in Sturgeon's case indicated that the obvious first step in considering whether the property was disproportionate is to quantify the property and the emoluments in terms of dollars and cents. This implies a mathematical calculation. This might be unnecessary if all the Crown had to do was to show that it was questionable whether the defendant could have acquired it with his official emoluments. The Full Court in the passage quoted above said that the calculation was not merely an arithmetical one. This does not exclude the necessity for the arithmetical exercise. It would seem to be the law as laid down by the Full Court that in a case such as Sturgeon's case where the disproportion is not immediately obvious, the Court should go on to consider whether it is questionable etc. 40. There must surely come a point where, by no stretch of the imagination could it be said that the property is disproportionate. I would have thought that Sturgeon's case was getting close to that point. The Full Court has given guidance to the lower Courts in a situation where on the figures alone the disproportion is not immediately obvious. 41. I do of course appreciate the advantages to both sides if the trial can proceed without the necessity of expert evidence to prove market value. However it seems to me that the machinery is provided, if the parties wish to take advantage of it, to do away with this necessity by admitting facts under S.65C Cap.221. If the parties do not wish to take advantage of this section then in my view the value should be proved in the same way, as every other essential element. A safeguard against harassment is provided by the need for a proper enquiry before the issue of the Attorney General's consent to prosecute. There is nothing to prevent the Crown selecting the date which is most convenient from the Crown point of view even if it makes the accused's task more difficult. Market Values of Assets (e), (f) & (g) 42. I will now consider whether the Crown has proved the market value of these three assets, the flat, the shares, and the motor vehicle, as at the charge date. The Flat 43. So far as the interest in the flat is concerned, the accused's own valuation of it in his note book on 25th January 1972 was $45,008. I can also take judicial notice of the fact that prices for property have generally increased since the disturbances in 1967 and that the value of property has generally continued to appreciate. The accused was not challenging his own valuation at the time of the questionnaire in 1976. I am of the view that the valuation of the accused's interest in that flat as being the amount of the instalments paid by the 31st January 1972 is fair and reasonable and if anything favourable from the accused's point of view. The Shares 44. So far as the shares are concerned, I will also accept the accused's valuation as at the 25th January 1972. I do of course appreciate that the market value of shares can change from day to day, but it is significant that the accused paid precisely the same price when he bought the further 15 shares on 6th June 1972. (See his answer to Q.25 of the questionnaire) This would appear to show that as far as the accused was concerned, the market value of these shares in G.T. Enterprises Ltd. at a nominal value of $1,000 per share was precisely the same 6 months later. I will take the accused's own valuation of these shares as being their market value on the charge date. The Car 45. So far as the motor vehicle is concerned, the evidence is that this vehicle was purchased by the accused on the 24th March 1971 for a price of $12,500. There was a trade in at this time of one used Morris 1100 1964 model for $4,280 leaving a balance which was paid for in cash of $8,460, which included a sum of $210 as annual registration and licence fee. This is the figure which the Crown has used as the value of this motor vehicle. Since the trade in of the Morris car cancelled out a part of the price of the car, it will be convenient for the purposes of this trial to treat the purchase price as $8,460 inclusive of registration and licence fee. No expert evidence has been produced before me as to the value of this motor vehicle on the charge date, but the accused himself at page 90 of his note book has put a valuation of $6,000 on this car, as at 25th January 1972. I will accept the accused's figures as being accurate also as for the 31st January, 1972, which seem if anything to be extremely favourable from the accused's point of view. 46. It is clear therefore that even if one adopts the market value of the assets as at the charge date the figures are the same as set out in the Crown's statement of further particulars with the exception that the value of the motor car was $6,000 instead of $8,460. I am satisfied that the value of the assets on the charge date of $134,786.44 was in no small any disproportionate to the accused's agreed past and present official emoluments of $138,430.22. Even if the valuations which I have put upon the accused's property as at the charge date were to be regarded as unfair from the accused's point of view and were drastically reduced, his assets would still be disproportionate to to his past and present official emoluments. The exercise is only relevant to determine disproportion. Once that has been established one must look at the market value on the date of purchase for the purpose of explanation. It is obviously questionable in this case whether the accused would have acquired these assets with his official emoluments. Burden on accused 47. It is therefore necessary for the accused, if he wishes to avoid conviction, to explain to the satisfaction of the count how such pecuniary resources or property came under his control. I have directed myself that "satisfactory explanation" for the purpose of this case means an explanation which shows, upon a balance of probabilities, that the pecuniary resources and property which is disproportionate to his past and present official emoluments, consists of money or has been paid for with money, the ultimate source of which is untainted by any corruption on the part of the accused. (See by way of comparison the Full Court's definition of a satisfactory explanation in relation to a para.(a) type of offence.) 48. Of course in discharging this burden the accused may point to any built in explanation which exists. If therefore property has appreciated in value between the purchase date and the charge date, he would be entitled for the purposes of explanation to have the value of the property taken to be the price he paid (provided of course it was the market price at that time). Similarly when property has depreciated since he purchased it, it is necessary, for the purposes of explanation, to treat the value of the assets as being what he paid for it. 49. The only item which is effected in the present case is of course the motor car, which had a market price of $12,500 on 24th March 1971 and which on the 25th January 1972 the accused had valued himself as worth $6,000. The actual cash he paid on the 24th March 1971 was $8,460. The Crown has never sought an explanation from the accused in respect of the value of the car which he traded in towards the purchase price of this car, and I will therefore disregard that for the present purposes. 50. For the purposes of explanation, therefore, I will treat the value of the car as $8,460. Jurisdiction 51. Before going on to consider the matter of explanation I will deal with the Defence submission that this Court does not have jurisdiction to hear this matter by reason of the improper exercise of the Attorney General's discretion to issue his fiat in circumstance which were in breach of natural justice. This submission has its root in the way in which the accused's explanation was sought and the reaction of the accused at that time. 52. For the purpose of seeking an explanation from the accused, Mr. Fowler (PW27) an accountant consultant with the ICAC, examined the financial affairs of the accused in relation to the 2 periods previously mentioned.
53. As a result of his investigation he prepared ABS's (Assets betterment statements) in respect of these two periods, in which he calculated the value of these assets having regard to their purchase price. Mr. Fowler's written statement in relation to this exercise was accepted by the Defence as being Mr. Fowler's evidence that he did that exercise and that he did it to the best of his ability. His written statement was therefore accepted as Exh. P25. Having examined the bank documents, and also the accused's note book Exh. RJ/3(I) (which note book covered the period from 23/10/70 to 31/1/72). Mr. Fowler prepared from these analyses of all deposits and withdrawals, clarifying each item as appropriate. Summaries of these analyses were attached to the ABS's and marked for identification ABS-2 for each period. With regard to the note book in which both the accused's cash income and expenditure were recorded, Mr. Fowler made a page by page summary of this expenditure for each period. These appear at ABS-3-1 and ABS-3-3 for the later period. From these cash summaries and using the cash deposits and cash withdrawal totals from the bank account summaries, he then prepared a cash account for each period. These appear as ABS-3 for each period. They indicate the flow of cash through the accused's hands. The sources of cash (are given on the left hand side of each account) as withdrawals from bank accounts, fixed deposit interest received in cash, and other expenditure as per the note book summaries. Having then prepared both both bank and cash accounts for each period, he then combined them and rearranged the format so as to present an ABS for each period. A revised version of these ABS's with the various summaries referred to by Mr. Fowler were produced without objection by Mr. Fowler while he was in the witness bos and marked Exh. P25A (for the first period) and Exh. P25B (for the second period). These revised versions were improvements on the original ABS's, which had been prepared by Mr. Fowler for the meeting between Mr. Cass (PW28) (an investigating officer in charge of this case) and Mr. Fowler, both of the ICAC on the one hand, and Mr. Hampton. the accound on the other hand. when the accused's explanation was sought. At the request of the Defence, the original ABS's were produced in evidence by Mr. Fowler and marked Exhs. D1 and D2. 54. The significance of these ABS's was that at this meeting, which was on the 28/4/77 the accused was asked to explain a certain item in the ABS's under the heading "other sources". In the ABS's Mr. Fowler had set out the assets acquired by the accused during each period, and under the heading "Financed by" - he set out the income which would have been needed to finance the acquisition of these assets during these periods. He set out the known income from sources which are clearly untainted with corruption, and it is under the heading "other sources" that he set out the income in respect of which an explanation was required. The figure for the first period, which the accused was required at this meeting to explain was $27,342.41 (see Exh. D1) and for the second period was $60,399.14 (see Exh. D2). 55. Under cross-examination Mr. Fowler agreed with Mr. Hampton that Mr. Hampton at this meeting had queried whether the figures of expenditure and assets were complete, or whether having explained the assets that he was being invited to explain, the accused might be faced at a later stage with larger amounts of expenditure or assets requiring explanation. He also testified in cross-examination that Mr. Cass, the investigating officer had replied to this question that the only amounts of expenditure or assets which the Crown would allege against the only amounts of expenditure or assets which the Crown would allege against the accused were those included in the two schedules (Exhs. D1 and D2). Mr. Fowler also conceded under cross-examination that these ABS's were revised after that meeting to include amongst the assets also the amount of $8,460 representing the motor car. He identified these revised ABS's as Exhs. P25A and P25B. Further under cross-examination Mr. Fowler had to concede that there were certain small errors in the ABS's Exh. P25B in the amount of $382.50 bank interest and in respect of an amount of $463.50 travelling expenses. In respect of the first figure the schedule ABS-2-2 did not show this sum as having been paid in cash to the accused on the 30/6/71, despite the fact that it clearly had been so paid (see statement of PW10 Exh. P4 at para.13). The figure of $463.50 in respect of travelling expenses, which had been proved as a result of the agreed statement of Mr. Parsons (PW2) (Exh. P18) (para.13) does not appear at all in either ABS for either period. Instead in ABS P25B there appears the figure of $167 in respect of travelling expenses reimbursement. Mr. Parsons' statement did not break down this figure of $463.50, so that it could be apportioned to either or both these two periods, but clearly at the end of the day the accused should be given the benefit of the balance between $167 and $463.50 as adding to his income during the combined periods. 56. In addition to these minor errors Mr. Fowler indicated in Court that there was another rather substantial amendment to be made to his ABS Exh. P25A in respect of the accused's known expenditure during that first period. In that ABS he had given the figure of $17,589.70, including in that figure a sum of $10,497. This will be seen at the supporting schedule ABS-3-2. However he had discovered that this figure of $10,497 should not have been included as cash expenditure because it represented the first instalment on the flat plus some small items of expenditure connected therewith. The figure of $17,589.70 was therefore reduced by this amount to a total of $7,092.70. This resulted in a number of consequential amendments to the ABS and the various relevant schedules. 57. In view of the errors and revisions to the original ABS's which had been shown to the accused at the meeting on the 28th April, Mr. Hampton submitted that this Court did not have jurisdiction to hear this case, because there was a breach of natural justice in that the Attorney General's consent to prosecute had been issued without hearing the accused's explanation. He relied on the decision of the Appeal Court in Criminal Appeal 600/76 CHAN Ching-cheung v. Queen. In further support of his argument Mr. Hampton relied further on the letter written by his company to the ICAC dated 30/5/77 Exh. D3 in which his firm informed the Director of Operations of the ICAC that they had advised the accused that it would not be in his interests to attempt an explanation of the alleged increase in his assets based on the schedules by the ICAC as he cannot accept them as being accurate. 58. I was satisfied that I did have jurisdiction in this matter because in his answers to the questionnaire Exh. P24 the accused had been unable to give an explanation in relation to many of his financial affairs; and said in one answer that he would give an explanation in Court if he had to; secondly because the amounts he had been required to explain in exhibits D1 and D2 though different from those in the revised editions, were nevertheless substantial and he, the accused, had not made any explanation of them. There was no attempt in that letter of the 20th May to point out what figures in the schedules the accused did not accept as being accurate. Furthermore there was no suggestion that an explanation would be forthcoming in due course, whether the schedules remained as they were or whether they were amended. This is not a case where the accused indicated that he wanted corrections to be made, or time to make an explanation. The letter of the 20th May did not indicate that an explanation would be forthcoming. However quite apart from this aspect, the very presence of the notebook in the hands of the ICAC made the accused's task of satisfactorily explaining his income very difficult. He had already been questioned on this note book and his answers thereon, making every allowance for the fact that he hadn't studied the questions over a period or made any extensive investigation before answering left a lot to be desired. I think this is a case where the assets were of such value and their acquisition surrounded by such circumstances that the possibility of an innocent explanation could be fairly ignored. But in any event as I have indicated before, the letter from Messrs. Hampton, Winter and Glynn dated 20/5 (Exh. D3) did not indicate that an explanation would be forthcoming. I therefore ruled that this Court did have jurisdiction to hear this matter, there being nothing improper on the issue of the Attorney General's fiat in June 1977. Explanation 59. In view of the errors which were contained in the various ABS's, and in view of the fact that it is the duty of this Court to reach its own conclusions on the figures, I have, by using the same method as described by Mr. Fowler, drawn ABS's myself in respect of those two periods with their supporting schedules. The format in each case is the same as that devised by Mr. Fowler. In drawing up these ABS's and supporting schedules, I have examined all relevant documents admitted in evidence and statements and a reference to each exhibit number is recorded to support each figure or collection of figures. 60. Although I have held that the market value of the car on the charge date was $6,000, I have adopted the same method as Mr. Fowler of including it at the purchase price, because all explanations must relate to the purchase price (on the assumption that the market value on the charge date is reflected by normal depreciation between the purchase date and the charge date). The ABS's which I have prepared are attached to this judgment as Annexe I and Annexe II. 61. In drawing up these ABS's of course reliance has been placed on the agreed facts in the form of statements and documents and on the entries in the accused's note book Exh. RJ/3(i). The note book 62. I accept this note book as being a record of the accused's daily expenditure and income from various sources. The note book is also a detailed document kept by the accused of day to day matters of interest to him. It is quite obvious that at that time covered by the note book the accused had taken a lot of trouble to go into detail in recording the smallest sums of money on a day to day basis. It is also clear that he has gone to the trouble of recording items of income from various different sources (other than from his official emoluments) which he has identified by initials or a name. From time to time throughout the note book, the sums are computed and included in his running account of his assets which include the balances in his bank accounts. Certain sources of income are described by the letters "Gam" which the accused has in his answers to the questions in the questionnaire Exh. P24 indicated meant gambling income. This is shown particularly in his answer to question 63 and 70. The initials or names against these other sources of income are as follows:-
63. Details of income with dates and totals in respect of the sums appear in Annexe IV. 64. The accused has correctly recorded in this note book 4 typhoons which occurred during the period covered by the note book. There is an entry on page 41(L) in respect of Typhoon Freda indicating that signal 3-8 was up on 17/6/71. Also on page 42(R) there is an entry in respect of typhoon Gilda indicating that No.3 signal was hoisted on 27/6/71. Again there is an entry on page 49(L) relating to typhoon Lucy indicating that No.5 and 6 signals were hoisted on the 22/7/71. Finally on page 54(L) a similar entry was recorded in respect of typhoon Rose indicating No.10 signal on 16/8/71. All these typhoons are confirmed by the evidence of the Royal Observatory records Exh. DCC/3 which were admitted as agreed facts. 65. There are also a number of personal entries relating to the accused's health on individual days and also relating to appointments that he had and to matters of particular interest to him. 66. So far as financial matters are concerned entries relating to instalments paid on the flat and also in respect of the acquisition of G.T. shares are recorded at the appropriate place. 67. The accused towards the end of the period covered in the note book started taking an interest in girls at the Fuji and Oriental ballrooms and in particular one CHAN Lai-ling alias LEE Mei-wah of the Fuji ballroom or "Fu Kee" as it is apparently called (according to the agreed evidence of Mr. YUEN Shun-him (PW22) (Exh.P28)). Mr. Yuen confirmed that a girl by this name was working at the ballroom during this period. Large sums of money were spent on this and other girls but they have all been taken into consideration as part of the expenditure recorded in the note book. CHAN Lai-ling's name and amounts spent appear on pages 62(L), 63(L), 65, 66(R), 67(L), 68(L), 68(R), 69(R), 71(L), 72(L) and 73(L). The amount at this stage to talled $6,588. Further entries appear also on 80(R) and 81(L) where further sums of $606 and $486 were expended. 68. Two other girls who worked at the Fuji Ballroom during this period and who were accompanied by the accused are KOO Yuet-ling alias LEE Siu-kum and WONG Kwan-yue alias WONG Nga-wing. 69. The names and the amounts spent appear, in the case of the first, on P61(R) and in the case of the latter on 73(R), 76(L) and 70(L) Mr. Yuen (PW22) (Exh. P28) confirmed the fact that all these girls worked at the Fuji ballroom during these periods. 70. Another girl's name is recorded in the note book as FONG Yuen-wah of the "Tung Kee" and the amount of money spent. Mr. WONG Yan-mo (PW20) (Exh. P27) confirmed that a girl by this name worked as a dancing hostess at the Oriental Ballroom, which is often called "Tung Kee". 71. From the evidence referred to above which is confirmatory of the accuracy of the entries in the accused's note book, I come to the conclusion that it is an accurate record in respect of the entries made in it, relating to some amounts of income received by the accused other than from official emoluments and bank interest. His salary and some bank interest is reflected in it from time to time of course because he set down from time to time the balances in his bank accounts. I therefore considered it appropriate to do as Mr. Fowler had done to include the figures recorded in that note book in the calculations in respect of the ABS's drawn up by me. Amounts recorded in notebook which have no built in explanation 72. It will be seen from Annexe I the ABS relating to the 1st period, that making allowance for the items in respect of which the accused has a built in explanation, there is an amount requiring explanation of $23,992.31, which figure is made up of an income of $12,480 recorded in the notebook, and $11,512.31 which does not appear therein. To be fair to the accused, it was elicited from the Crown witnesses Mr. Cass and Mr. Fowler that they thought it was probable that the accused had a sum of cash in hand of $2,603.90 at the commencement of this first period which has not been included in this ABS. This figure of $2,603.90 is the difference between the entry in the bank statement (Exh. CWH/2) for the commencement of business on 27/3/69 and the figure appearing in his other notebook Exh. RJ/3(iii) (the green notebook at page 31 16) as showing his balance of funds on 27/3/69). I will therefore reduce the amount which requires explanation for the first period from $23,992.31 to $21,388.41. 73. It will be noticed that in the respect of Annexe II the ABS for the second period, there is a figure of $59,432.31 requiring explanation, which is made up of $52,645.00 from sources recorded in the notebook and $6,787.31 from sources not recorded anywhere. 74. It will be seen that the total sum received by the accused from other sources whether recorded in the notebook or not amounts to $80,820.72. 75. To be fair to the accused I feel that this figure should be reduced to allow for the extra travelling expenses which were paid out during the two periods under review but which were not identified specifically with either period. Of this sum of $463.50, $167 has already been included in the ABS for the second period so this leaves a balance of $296.50. The total sum of $80,820.72 should be reduced by this figure, bringing it to $80,524.22 to be explained. 76. It will be noticed that the first instalment paid for the flat is then made up of 2 payments, i.e. $1,000 on the 23rd October 1970 and $10,497 on the 26th October 1970. These of course total $11,497, i.e. $245 more than the first instalment of $11,252. 77. Since this extra sum of $245 was spent on the flat it should also be taken into consideration and the figure requiring explanation should be increased by this amount. However the Crown have chosen to ignore this and I will too. 78. There is a minor error of 5 cents in the addition of the accused's expenditur for 18/3/71 - 22/3/71 in respect of page 24(L) of the notebook. The total should read 101.60 instead of 101.65 as recorded in schedule ABS-3-2 page 3 Annexe I. This has the effect of pushing up the unexplained income by 5 cents. However it appears that there is a figure of $330 being an item of expenditure on page 10(L) of the notebook which has been calculation in the same schedule in respect of the dates 1st - 4th December 1970 as only $3.30, there by giving a figuring $57,90 This would have the opposite effect and work to the advantage of the accused in that it would reduce the amount he would have to explain. But to make every allowance for the accused I will reduce the figure of $80,524.22 to $80,524.17. 79. This figure is in my view more than fair to the accused because the calculation for the first period is on the basis that the accused had no personal expenditure at all for the 18 months period between 27/3/69 [the last date in the green notebook Exh. RJ/3(iii)] and the 23/10/70 [the first date in the blue notebook Exh. RJ/3(i)]. The expenditure recorded in this blue notebook and set out in the ABS is only that from 23/10/70 to 31/1/72. Although the accused in his answer to question 10 of the questionnaire (Exh. P24) implied that his brother during part of this time paid mostly for the food, it is highly unlikely that his brother would have paid for every but of the accused's personal expenditure. 80. This figure of $80,524.17 is in my view a favourable one from the accused's point of view in respect of which there is no built in explanation and in respect of which the accused should give a satisfactory explanation, within the meaning I have given to that phrase earlier in this judgment. 81. The accused has in his statements to the ICAC indicated 2 sources of money -
82. So far as the income recorded in the notebook is concerned, the accused has in his answer to the ICAC questionnaire (Exh. P24) indicated that this was all from gambling (with the possible exception of $1,500 in respect of "Hoi Wai"). The figure for the first period is $12,480. The figure for the second period is $52,645. The last period it will be remembered was only 8 ½ months. The sum total for both periods is $65,125. In my view these are fantastic sums to win at gambling for a man on the accused's salary. 83. This notebook Exh. RJ/3(i) (blue notebook) was obviously an embarrassment to the defence and a vigorous attempt was made to prevent it going in as evidence. Clearly when faced with this notebook during the interview with the questionnaire, the accused was somewhat reluctant to answer questions in relation to it. (See answer to Q.57) However he obviously thought better of it and indicated he was prepared to answer. The accused's explanation in respect of these sources of income recorded in this notebook does not ring true. Why should he refer specifically to sources of income as gambling in only a few cases if all this money was obtained from gambling. He seems to be trying to suggest that there is a distinction between what he calls gambling and other forms of gambling such as black jack or poker. However he has not apparently distinguished between gambling and black jack when he made the entry in respect of money lost at black jack at page 78(R) of the notebook. The entry was "Gam - 270 black jack". Why also should he therefore make a distinction when it comes to winning? Why also would it be necessary to record it as winnings from a person? It is true that Patrick AU (PW23), who was called by the Crown to refute the defence allegation that he could have paid as gambling losses all these sums identified by the letters PA or Pau, admitted under cross-examination that he might have done. The total sums recorded in the notebook as paid by Mr. Au for each period were
84. The total sum of $20,250 is a particularly large sum for a man in Mr. Au's position to pay. Mr. Au was obviously in a very difficult position in the witness box; the accused and he were obviously colleagues of long standing; judging by the notebook they frequently dined together at various restaurants; Mr. Au would find it very embarrassing to reveal that he had paid such large sums to the accused. He was as the saying goes skating on very thin ice. He only came round to admitting under cross-examination that he might have paid sums totalling such a large sum to the accused when it was suggested to him by Mr. Hampton that he could himself have won on these occasions and that the amounts he paid to the accused did not reflect his own winnings from other members of the gambling school. This would be an explanation which would possibly satisfy his own embarrassment. However I found it remarkable that on nearly every occasion the alleged winnings on any one day all appeared to come from only one person. I do appreciate that there were a few exceptions but on most occasions all the alleged winnings came from only one person. This seems unlikely. Furthermore a substantial quantity of these payments were numbered as if they were in reality instalments due to the accused. This numbering is inconsisent with the sums representing winnings and the accused could give no explanation for the numbering at the time of the questionnaire (see Q.58). Neither has he given any explanation since. 85. Furthermore the way in which the accused distributed his assets in so many different bank accounts (5 accounts with 3 different banks. 2 at different branches of the same bank.) indicates that he had something to hide. His explanation for opening the second account on the other side of the harbour (Q.5) was not convincing. There were a number of entries in his notebook which he described as representing cash in hand. These were Wd, BS, PILL, DCS, SIC, Eric, RS, K, ...(illegible) , RC, Rub Cov., DES, D, L, E, SFDI, DK, BCTC 4, SHO, and SWAN. The accused's explanation that most of these represent cash-in-hand appears in his answers to questions 69 and 86 of the questionnaire (Exh. P24). Again the fact that the accused should have had such substantial sums of cash in hand stashed away in so many different places again is strongly indicative of the fact that he had something to hide. The accused's answers to questions 69 and 86 of the questionnaire are in my view evasive. He said in effect that he couldn't identify these initials which represent cash-in-hand. They do however appear with such frequency throughout his notebook in relation to such substantial amounts, that making allowance for the lapse of time it seems incredible that he should not be able to identify them or a substantial number of them. Again this appears to be an attempt to evade the truth. 86. Further in his answer to question 73 of the questionnaire, which covered a number of pages in the accused's notebook, the accused having been referred particularly to page 57 of the notebook and the figure of 600 alongside the name "TSE", the accused was unable to explain the meaning of the entry alongside this figure which is in brackets as follows "(Excl. 150 for Com)". His answer to the question was "I can't read my own writing so far as the entry alongside the TSE-600 but the first words appear to mean 'excluding 150 for' , the last word I can't read." In fact the last word appears to be an abbreviation for something, but the letters are very clearly formed. I cannot see how the accused would have difficulty reading them. It seems highly likely that the real meaning of this entry is $600 (excluding $150 for commission). The fact that the accused claimed he couldn't read his writing appears again to be an attempt to hide the truth. Whatever it means it does not seem to be consistent with the accused's contention that this sum represents winnings from black jack or poker. 87. The items of expenditure specifically recorded in the accused's notebook in respect of gambling exceeds the income specifically recorded in his notebook in respect of gambling wins. This would appear to indicate that the accused was not the most successful of gamblers. Furthermore so far as the other sources of income recorded in his notebook are concerned, it would appear that it was a substantially one way flow of money. The accused never seems to have lost large sums of money at black jack or poker to any of the persons concerned as one could expect if his story were true, and as I said before, on most occasions it came from only one source, and not several as one might expect if the gambling went on at a gambling school or syndicate. 88. For the above reasons I do not accept the accused's explanation as made in his replies to the questionnaire that these sources of income in his notebook are attributable to gambling winnings. There being no other explanation to account for them I hold that the accused has not discharged the burden on him to show on a balance of probability that these sums came from sources untainted with corruption on his part. 89. The second source of income which the accused put forward as an explanation was his brother CHUNG Yat-kuen. Not only did this appear in the accused's answers to the questionnaire but also in the statement (Exh. P23) which the accused gave to Mr. Cass (PW28) and the statement (Exh.JT/2) which he gave to Mr. Tsui (PW5) (Exh. P14). The accused was supported also by his brother (PW24) who gave evidence during the Crown case. In the statement (Exh. P23) the accused said in respect of the shares:-
90. With regard to the purchase of the flat the accused in the statement had this to say:-
91. If these two amounts for the shares "in excess of $16,000" and the flat "about $20,000" are added together it seems clear that the accused was attempting to say that his brother paid about $36,000 altogether. 92. Also in his answer to question 93 of the questionnaire (Exh. P24) he again claimed that his assets (including the shares and the flat) included "The monies paid by my brother but I am unable to state the exact figure he contributed." 93. It is to say the least remarkable that no precise figure has been put forward as the contribution of the accused's brother for such large items as a flat and $32,000 worth of shares. This seems highly improbable in itself, for one would imagine that if the accused's brother had contributed large sums of money, he would want to know what his share of these properties came to. 94. The Defence did however have the evidence of the accused's brother to support this embarrassingly insubstantial and vague statement. This brother, who had been listed as a Prosecution Witness but who was only called when the Court ordered that he should be called following upon defence submissions, (see p.256 of record) answered a number of leading questions put to him by Mr. Hampton in cross-examination in which he confirmed that $16,000 was paid "As a half share for the purchase of 32 shares in a company known as G.T. Enterprises Ltd." He also stated "This took place in November 1971". 95. He also confirmed that he infermed his brother the accused that he would pay half the cost of the flat and that between August and September 1970 he paid a sum of approximately $10,000 being a down payment for that and that in fact he made other payments to the accused totalling approximately $20,000. 96. Again even with benefit of leading questions no precise figure emerged as the contribution of the accused's brother to these assets the flat and the shares. 97. I am satisfied not only on a balance of probabilities but also beyond reasonable doubt that the accused's brother made no such contribution of $36,000. My grounds for such finding are as follows:-
98. The burden is on the accused to satisfy this court on a balance of probabilities that all this extra income came from sources untainted from corruption. He has chosen not to go into the witness box himself. The circumstances in this case clearly call for an explanation from the accused himself. I am entitled to comment on his failure to give evidence on oath by virtue of S.26 of the Prevention of Bribery Ordinance. 99. When faced with original ABS's the accused chose to find fault with the Crown's figures and give no explanation. When faced with the evidence before this court he again chose to attack the Crown case but give no explanation. In my view the facts in this case call for an explanation and the burden is on him. 100. Taking all things into account I cannot say I am satisfied that the accused has proved on a balance of probabilities that any part of this sum $80,524.17 of came from sources untainted by corruption by him. I therefore find that the accused has failed to satisfactorily explain a sum of $80,524.17. 101. I therefore find the accused guilty and he is accordingly convicted.
Representation: |