HKSAR v. Cheung Siu Tong

CACC000466/1997

IN THE COURT OF APPEAL

1997, No. 466
(Criminal)

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Coram: Hon. Power, V.-P., Mayo, J.A. and Stuart-Moore, J. in Court

Date of hearing: 14 November 1997

Date of delivery of judgment: 28 November 1997

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J U D G M E N T

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Mayo, J.A. (giving the judgment of the Court):

1. The Applicant was convicted of 10 counts of offering an advantage to a public servant while having dealings with a public body contrary to S.8(2) of the Prevention of Bribery Ordinance Cap. 201. This was after a trial before Deputy Judge Tallentire. He now seeks leave to appeal against these convictions.

2. The Applicant was a director of two companies, Fairlite Industries and Best Billion Engineering both of which had dealings with the KCR Corporation which it was agreed is a public corporation. These dealings were over a protracted period.

3. It was the prosecution case that during this period he caused payments to be made to Mr. Victor Sinn who was a senior manager of KCRC. These payments were made on 10 occasions between July 1991 and May 1994. They were paid into various accounts held by Victor Sinn and on one occasion into his wife's account.

4. According to the prosecution these payments were 'advantages' as defined by S.2 of the Ordinance.

5. It was an agreed fact that the payments had been effected as described in the charges. However the Applicant had given evidence to the effect that the payments were made to Mr. Sinn for various gambling purposes and so far as the final payment to Mrs Sinn was concerned for speculation on the property market. This evidence was disbelieved by the Judge for the reasons he gave. The Judge was satisfied that the charges had been proved at the appropriate level and convicted the Applicant on all of them.

6. There are two main grounds of appeal.

"1. There was a material irregularity in the course of the trial of the defendant in that it proceeded upon a fundamental misunderstanding on the part of prosecuting counsel, defence counsel and the learned Deputy Judge, as to the issues in the case and, in particular, whether or not the defence case raised any issue of 'lawful authority or reasonable excuse'

2. In his Reasons for Verdict the learned Deputy Judge erred in law in the following respects:

(i) finding that there was only one issue in the case namely, has the defendant proved that there was a lawful authority or reasonable excuse for the ten payments (Reasons for Verdict page 29 G-J), whereas in fact, the main issue was whether or not the prosecution had proved beyond reasonable doubt that the various amounts of money which passed from the bank accounts of either FIL or BBE to the accounts of Victor Sinn and his wife, were advantages as defined in Section 2(1)(a) of the Prevention of Bribery Ordinance Cap.201 and, as particularised in the ten charges brought against the defendant (namely '... a gift, fee reward or commission.').

(ii) finding that the burden of proof had shifted to the defendant to prove lawful authority or reasonable excuse on the balance of probabilities, whereas in fact such issues did not arise on the evidence and the burden of proof remained with the prosecution throughout. (Reasons for Verdict pages 29G-J, and 34A-G)

(iii) finding that it was '... incontrovertible that this matter turns on your personal credibility' (Reasons for Verdict page 31 N) whereas the real issue was whether the prosecution had proved the essential ingredients of the charges beyond reasonable doubt.

(iv) finding that the defendant had failed to discharge the burden imposed by Section 24 of the Prevention of Bribery Ordinance Cap. 201 (Reasons for Verdict page 34G) whereas in fact Section 24 Cap.201 had no application to the facts of the case."

7. These 2 grounds can conveniently be considered together.

8. It appears to be accepted by Mr. McWalters in his helpful skeleton argument that the Judge was wrong to have made reference to S. 24 of the Ordinance in the way he did. S. 24 provides:

"24. Burden of proof

In any proceedings against a person for an offence under this Ordinance, the burden of proving a defence of lawful authority or reasonable excuse shall lie upon the accused."

9. There was no question in this case that the Applicant had lawful authority or any excuse in making these payments. It was his case that the payments were entirely separate and independent of his business dealings with Mr. Sinn and related to their common interests in gambling and speculation.

10. The question which has to be considered is whether this misunderstanding of the position on the part of the Judge and both counsel amounted to a material irregularity and was fatal to these convictions.

11. To answer this question it is first necessary to consider whether the prosecution had prime facie proved all the essential elements of the charge laid under S. 8(2) of the Ordinance.

12. This section reads:

"8(2) Any person who, without lawful authority or reasonable excuse, while having dealings of any kind with any other public body, offers any advantage to any public servant employed by that public body, shall be guilty of an offence."

13. What had to be determined was whether there was sufficient evidence at the close of the prosecution case to establish that:

(1) whilst having dealings of any kind with a 'public body' (other than the Government) as that term is defined in s.2(1) of the POBO as read together with the schedule to that ordinance;

(2) made an 'offer', within the definition of that word in s.2(2)(a) of the POBO;

(3) of an 'advantage' within the definition of that word in s.2(1) of the POBO;

(4) to a 'public servant', within the definition of that term in s.2(1) of the POBO, that was employed by the public body referred to in (1).

14. In effect there was only one live issue. That was whether the prosecution had been able to prove beyond a reasonable doubt that the payments referred to constituted an advantage according to the definition in the Ordinance.

15. Mr. Plowman, S.C. submitted on the authority of the judgment of Keith, J in R v Ng Man Ho [1993] 1 HKC 632 that it was necessary to identify what the payment which had been made to the defendant had been for. Keith, J. said this at p636 of his judgment:

"(1) The acceptance of an advantage

The Crown had to prove that the $128,000 which the appellant accepted constituted an advantage. An advantage is defined in, inter alia, s 2(1)(a) of the Ordinance as:

any gift, loan, fee, reward or commission consisting of money or of any valuable security or other property or interest in property of any description.

The particulars of the charges which the appellant faced alleged that the $128,000 was 'a gift, fee, reward or commission', and the Crown therefore had to bring the sum into one of those four categories. That is plain from the rationale underlying the dictum of Roberts CJ, in delivering the judgment of the Court of Appeal in R v Lee Chiu Yin (Crim App 553/79, unreported):

... if the particulars of offence allege a particular form of act or omission as being the basis of the solicitation or acceptance, it is for the Crown to establish on the evidence that the solicitation or acceptance was so framed.

In both her opening and closing speeches, counsel for the Crown alleged that the $128,000 amounted to a reward, but that did not mean that the magistrate could only convict the appellant if he was sure it amounted to a reward. It was open to him to convict the appellant if he thought it amounted to a gift, fee or commission, even if he was not sure it amounted to a reward. In order to determine whether the payment can be characterized as a gift, fee, reward or commission, it is necessary to identify what the payment was made to the appellant for. There can be no doubt on the facts that the payment he received represented the secret profit which he was earning on the sale of the products. Contrary to the Crown's argument, therefore, he was not being paid for diverting Hoi Tung's business to LICO. Although he had diverted Hoi Tung's business to LICO, LICO did not make the payment to him for doing that. That diversion was designed to conceal the profit which the appellant proposed to make for himself. LICO was merely the vehicle which the appellant used to make that profit for himself. Since the appellant had done nothing for LICO, it is impossible to characterize the payment by LICO as either a fee, reward or commission. Nor could it be characterized as a gift: LICO was not giving the appellant anything - it was merely passing on to him his own secret profit. The magistrate recognized this up to a point. That is why he described the appellant as having 'received these sums as a result of the profits he had caused to be earned'. Where he fell into error was in thinking that those profits had been earned by LICO. They had not been. They had been earned by the appellant using LICO as the vehicle by which he earned them. The magistrate' s belief that the profits had been earned by LICO led him to conclude that, although the appellant had received the lion's share of the profits, it could not be said that he was paying himself. That again was where the magistrate fell into error. He was paying himself, albeit through LICO. What he was doing was paying LICO its administration and other expenses by permitting LICO to withhold those expenses from the sums which they were to account to him for. Since the $128,000 accepted by the appellant could not be characterized as an advantage of any of the types specified in the charge, the appeal has to be allowed on this ground alone."

16. We do not think that Keith, J was attempting to lay down any requirement that it was incumbent upon a Judge to specify in his reasons for verdict exactly which of the different types of advantage referred to in the section was applicable to any particular case.

17. Here there was a wealth evidence from which the Judge could have inferred that the payments did amount to an advantage. There was evidence concerning the work which was undertaken by the companies and its relevance to the requirements of the KCRC. There was also evidence concerning the duties of Mr. Sinn as to how these duties could be relevant to the work and services performed by the companies.

18. There was also the evidence of the Accountant who was able to state that in his opinion the moneys which had been paid to Mr. Sinn had come from the companies funds rather than from any personal account of the Applicant.

19. In this connection it is helpful to consider the judgment of MacDougall, J.A., as he then was, in R v Lo Siu Wing and another, Cr App 509/1989 at page 15:

"Where an inference of guilt may properly be drawn from a set of facts, a jury or a judge sitting without a jury, is entitled, in the absence of a credible explanation leading to a different conclusion, to convict the accused on the basis of that inference.

If it were the law that a man may not be found guilty whenever it is possible to place an innocent explanation on his actions by assuming the existence of a state of mind or an explanation that is incompatible with guilt, then the law would be rendered powerless in a great many cases."

20. It was overwhelmingly the case that at the conclusion of the prosecution case there was a prime facie case that all of the elements of S. 8(2) of the Ordinance had been satisfied.

21. No submission was made to the effect that there was no case to answer.

22. The Applicant was therefore in practical terms faced with the virtual certainly that if he did not go into the witness box and give evidence he would inevitably be convicted as charged.

23. He had various alternatives open to him. He could attempt to give evidence which would cast doubt upon whether all of the elements required in S. 8(2) had been proved.

24. Another approach might have been to attempt to invoke S.24. Having regard to the circumstances of this case that course would have been inapplicable.

25. What is almost certain is that the Applicant would have had to give evidence which would have had to be accepted by the Judge if he was to have any prospect of being acquitted.

26. Mr. Plowman submitted that the thrust of the defence's case should have been to challenge the prosecution contention that the payments which had been made had been "advantages" under the Ordinance.

27. He went on to contend that his client had been seriously prejudiced as he claimed that it could be seen from the Judge's reasons for verdict that he had placed an unjustified evidential burden upon the Applicant to prove on the balance of probabilities that S. 24 was applicable.

28. It is clear that the Judge was under a mistaken impression and that this amounted to a material irregularity. The question which then arises is whether this has caused a miscarriage of justice and if not whether the proviso under S.83(1) of the Criminal Procedure Ordinance can be applied.

29. On the authority of other R v Kwan Ping Tong [1979] HKLR 1 Mr. Plowman argued that this would not be an appropriate case for the proviso to be applied as the error in question related to the burden of proof.

30. We do not think that this is the case. If the reasons for verdict are read as a whole it is clear that the Judge did accept on the evidence which was before him that the prosecution had proved beyond a reasonable doubt that all of the elements of S. 8(2) had been established.

31. It was also clear that the Judge had not engaged in any balancing exercise when rejecting the evidence of the Applicant albeit that the Judge had been labouring under the mistaken impression that S. 24 was applicable to the case.

32. The case did involve the Applicant's credibility and the Judge rejected this in no uncertain terms.

33. For these reasons we are satisfied that this is a proper case for the application of the proviso as no injustice arises as the result of the Judge's misunderstanding concerning S. 24.

34. The result of this is that we allow the application and treating it as the appeal disallow the appeal.

Representation:

Mr. I.C. McWalters, SADPP & Ms Mary Wu, S.G.C. (D.P.P.) for Respondent

Mr. Gary Plowman, S.C. (Wong & Chu) for Applicant