Hoo Ming Tak v. The Queen

CACC000731/1979

Coram: Trainor, J.

Date of Judgment: 11 September 1979

-----------------

JUDGMENT

-----------------

1. HOO Ming-tak was charged in the Magistrate's Court that on the 13th April, 1977 without lawful authority or reasonable excuse he being an employee of the Banque Nationale de Paris accepted an advantage, namely "one thousand shares of May Fung Industrial Company Limited stock (sic) with a face value of $100,000 from Shum Ka-ching as an inducement to or reward for or otherwise on account of his showing favour to the said May Fung Industrial Company Limited in relation to its business with the said Banque Nationale de Paris".

2. He was convicted on the 26th June, 1979 and now appeals against the conviction. Briefly the facts of the case were that the appellant was the bank manager and he approached, or there approached him, the Mr. Shum mentioned in the charge and as a result a banking relationship was established between the Banque Nationale de Paris and the company referred to in the charge and Mr. Shun Ka-ching. In early 1977 the position was that the company, and as such I shall refer to "the May Fung Industrial Company" in this judgment, was indebted to the bank to a considerable extent and it applied for a further $4,000,000 to enable it to purchase a factory costing $5,600,000. That accommodation was applied for about March 1977.

3. The appellant as bank manager forwards applications for accommodation by a client and with it his recommendation. In this case that procedure was followed and subsequently an official of the bank, I think he was a person who was in charge of the department that analysed applications for credit, with the appellant visited the premises of the company. The application was presented to the head office in Hong Kong and, as I understand the position, it was turned down; but it was forwarded to Paris and from there consent to the granting of the facility was given. There was, it would appear from the cross examination of P.W.1, a decision of the company that the capital would be increased from $2 million to $4 million.

4. The notification of the granting of the extra facilities to the company was received by the company and by the appellant in April, and the formalities whereby the facilities were in effect made available to the company were completed on the 13th of April.

5. I made reference to the position in 1977 but prior to that, in 1976, the company had received accommodation from the bank after Mr. Shum had met the appellant and business had commenced between the two of them. In that year there appeared on the register of shareholders of the company one Hoo Lick Yip as the holder of 1,000 shares in the company. He is the eleven year old son of the appellant. It would appear that similar proceedings might have been taken against the appellant with respect to those shares but an amnesty was granted by His Excellency the Governor which would have covered the offence.

6. The capital of the company was doubled and on the 13th April a Return of Allotment of shares was filed with the Registrar of Companies and it included the name of the appellant's son for 1,000 shares. The position then was that the appellant's son was on the register as the owner of 2,000 shares, the first having been acquired before the amnesty and the second, it would appear having been acquired about the time when the Return of Allotment of shares was filed. There was no evidence as to why or when they were allotted except what was in the notice. The present proceedings are in respect of those second thousand shares and it was held by the learned magistrate that although those shares were in the name of Hoo Lick Yip they were in fact for the benefit of the appellant. The allegation of the Crown was that those shares had been given to the appellant by Mr. Shum for the reason set out in the charge and that he, in doing so, was acting on behalf of the company.

7. Mr. Shum was not called as a witness in the proceedings below. The evidence that was adduced in the court below was simply that of an officer of the Banque Nationale de Paris who established the position of the appellant with the bank, and that the appellant was not entitled to receive benefits from clients. The second and third witnesses, there were in all three witnesses, were two officers of the Independent Commission Against Corruption who had taken statements from the appellant. In fact the most substantial portion of the evidence against the appellant was what was contained in his statements.

8. The appellant made two statements, the first one when he was interviewed alone, as I understand it, on the 21st February, 1979 and the second which was made on the 1st March at the request of the appellant himself; I understand that he indicated that he wanted to make some corrections in his earlier statement. In the first statement it was conceded by the appellant that the shares in his son's name as from 1976 had in fact been given to his son. He was asked to explain how this could be so. His answer to that was:

"About two or three weeks after bank facilities were approved Shum Ka-ching suggested to me that he wanted to give me a thousand May Fung shares. I refused at that time. He told me that I was not going to work for the bank for life. If his factory turned out well I would turn out well also. Shum Ka-ching non-stoppingly suggested to me to give me a thousand shares. I refused each time. Later Shum Ka-ching suggested to give it to my son Hoo Lap Yip. Owing to that it is hard to turn away cordiality, and for the sake of Shum Ka-ching's face, it was pretty hard for me to turn him down. Therefore on the 6th October, 1976, my son Hoo Lap-yip became one of the shareholders of 'Mei Fung' and accepted 1,000 shares from Shum Ka-ching. Later I felt all the time that I should not have done so and intended to return the shares to Shum Ka-ching. But he did not agree all the time. The shares transfer deed was already prepared in April or May 1977 and placed on Shum Ka-ching's desk. But he did not sign until August 1977. After that my son was no longer a shareholder of May Fung."

That of course refers to the shares covered by the amnesty. The interviewer of the appellant on that occasion then asked the appellant if his son had "acquired" a further thousand shares in April 1977 and the answer of the appellant was "correct".

9. No evidence was adduced by the Crown as to the circumstances in which the shares came to be allotted to the appellant's son other than what is to be seen from the Return of Allotment.

10. The company is now in liquidation and the Return of Allotment was produced by consent. A witness from the firm of accountants which is the receiver of the company gave evidence. He produced the register of members of the company but nothing else. The minutes were not produced nor was anything else to indicate how it was resolved to increase the capital and how the shares representing the increase were to be issued; for cash by way of a rights issue or as bonus shares. There was some evidence that further capital was to be put into the company. That evidence is to be found in a telex sent by the bank in Hong Kong to its head-office in Paris: "You have in hand the non-audited balance sheet of 31/3/76. Since that date capital was increased to HK$2,000,000 - by cash $250,000 and incorporation of reserves for $750,000. Self financing of our client will be done by new increase of capital $2,000,000 before we grant the loan. Consequently, $400,000 will be left to supplement the working capital". There was nothing to suggest if the "self financing" was to be from reserves or otherwise.

11. On the evidence available to the court below the new shares might have been issued to members for valuable consideration or as a bonus issue. There was nothing before the court to suggest that the appellant had not given valuable and real consideration for them nor was there evidence to suggest that they were not a bonus issue, a growth, so to speak, on the original holding. What the appellant was alleged to have received was an "advantage". If what the appellant received was as a result of a rights issue and he had exercised his right to "acquire" extra shares that would be no advantage (it must be remembered that the original shares could not form the basis of any charge) unless he received them on terms more favourable than the other shareholders. There was no evidence that that was so. If the shares were "acquired" by way of a bonus issue then he received nothing more than he was entitled to.

12. When the accused was making a statement on the 1st March, 1979 he was asked the following questions and gave the following answers:

(I am told that "did you know" and "I knew" translation from Cantonese, the dialect used in the statement, is equqlly susceptible to the translation to "Do you know" and "I know"). There is a strong indication there that the appellant was referring to a bonus issue of shares. From the Statement of Findings of the learned magistrate it would appear that he concluded the shares the subject of the charge were a bonus issue. He said:

"It is submitted that the increased allotment of shares was entirely out of the hands of the defendant as it was automatically increased without his knowledge".

He then continues

13. If those shares were a bonus issue, and there is no evidence they were not, the accused committed no offence.

14. This appeal must be allowed.

Representation:

Mr. Y.C. MOK (David Tong & Co.) for Appellant

Mr. Dorson, c.c. for Crown.