HKSAR v. Chan Tat Chung Danny
Read the full judgment text of HCMA 547/2009 on BabelCite. This High Court CFI judgment was delivered on 15 December 2009.
1. The appellant was convicted after trial in the Magistracy before Magistrate Mr John Glass, of one count of “Attempting to offer advantages to an agent”, contrary to s.9(2)(a) and s.12(1) of the Prevention of Bribery Ordinance, Cap. 201 (POBO), and s.159G and s.159J of the Crimes Ordinance, Cap. 200. He was sentenced to eight months’ imprisonment and appealed against his conviction only.
Cited by 4 cases · Cites 3 cases
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HCMA 547/2009 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MAGISTRACY APPEAL NO. HCMA 547 OF 2009 (ON APPEAL FROM TWCC 513/2009) ____________ BETWEEN
____________ Before: Hon Beeson J in Court Date of Hearing: 2 October 2009 Date of Judgment: 15 December 2009 _______________ J U D G M E N T _______________ 1.The appellant was convicted after trial in the Magistracy before Magistrate Mr John Glass, of one count of “Attempting to offer advantages to an agent”, contrary to s.9(2)(a) and s.12(1) of the Prevention of Bribery Ordinance, Cap. 201 (POBO), and s.159G and s.159J of the Crimes Ordinance, Cap. 200. He was sentenced to eight months’ imprisonment and appealed against his conviction only. 2.The particulars of the charge were as follows:-
3.The evidence before the Magistrate came from a number of sources:-
Background 4.The appellant was a 99% shareholder of Mega which engaged in the trading business of garment labels. His mother held one share in the company but took no active role in running it, as she was aged and infirm. Chow Yiu-charn Andrew (Chow) was the operations director and minor shareholder of Revolution HK and Revolution Group Inc (Revolution US). He was one of three partners of Revolution; the other partners were Ray Hart (Ray) and Ishmael. Chow had charge of the Hong Kong office. 5.On an occasion prior to early 2006, when the appellant was dining with Chow, alone, the appellant told Chow he could offer him rebates with a view to securing more business from Revolution. The amount of rebate offered was 5% of the turnover that Mega could receive from both the Hong Kong and the US offices of Revolution. 6.Chow did not respond immediately. When Chow next came to Hong Kong the appellant raised the subject again and both men agreed on the rebate arrangement. Chow gave the appellant his personal HSBC bank account number. Between January 2006 and the end of 2007 the appellant offered rebates in the sum of $300,000 to $400,000 Hong Kong to Chow to secure more business from Revolution. 7.Cash from the personal savings accounts of the appellant with Citic Ka Wah Bank Ltd was paid into the personal account of Chow with HSBC. The appellant, in his cautioned interview, said that he had never mentioned to Chow’s partners at Revolution, Ray and Ishmael, that he had paid rebates to Chow, because he believed that those rebates were illegal. 8.A reading of the cautioned interview makes it clear that the appellant knew that what he was doing was illegal. This is shown by his answers to various questions as set out below:-
Defence Case at Trial 9.The appellant, who elected to give evidence, directed his account to denying or contradicting the admissions he had made under caution. He said that he had full authority to run Mega. The Revolution Group Inc (Revolution US) had no staff in Hong Kong; Chow was the boss of Revolution HK and divided his time between Hong Kong and the US. He said he had offered Chow a 5% rebate on orders placed by Revolution Hong Kong and Revolution US. He considered that was a normal business tradition and because Chow was Revolution Hong Kong’s boss, he did not believe that paying rebates to Chow was illegal. He told the court that he did not know of any fiduciary relationship between Chow and Revolution US. Nor did he know if there was any relationship between Revolution US and Revolution Hong Kong. He claimed he did not understand the nature of the relationship which existed amongst Chow, Ray and Ishmael. 10.The Magistrate rejected the appellant’s claim that he was ignorant of those matters. Under caution the appellant had said Chow was one of the three partners of Revolution US and under cross-examination admitted that Chow was a representative of Revolution US. The Magistrate found that the appellant had worked with the companies for a long time; that he had met Chow, Ray and Ishmael in Hong Kong and had attended Revolution US’s office in Los Angeles. The appellant had heard them refer to themselves as “partners”, and in his video interview had referred to the relationship of Chow, Ray and Ishmael as a partnership. [Items 309 to 358 supra] 11.Exhibit P6 was a document, prepared on the instructions of the appellant, which contained details of orders with payments for both Revolution US and Revolution Hong Kong and which recorded the calculation of the rebates. The Magistrate found that this document showed the appellant’s understanding of the close relationship between the two companies in the way he addressed each of them in the same document as “the HK office” and “the LA office”. 12.The appellant pointed out that if he had wanted to hide the giving of rebates he would not have kept such a document. The Magistrate noted, that the appellant [VI 164-166] had not expected such a record to exist and concluded that the appellant had forgotten such a record had been made. 13.Under cross-examination the appellant said he understood that ‘Chow was a USA representative plus boss of HK’. He had admitted, [VI 274], that he knew Chow was one of the three partners of Revolution US, but said he was not sure if it was a business or a ‘casual’ partnership. He did not explain what he thought the distinction was. The Magistrate rejected the appellant’s claim not to know the true nature of the relationship, because of Mega’s lengthy association with Revolution and the extent to which Mega depended on those companies for its business. 14.In both his cautioned interview and his evidence the appellant had admitted that the payments he made to Chow were from his personal current account. The times and dates of withdrawals from the appellant’s accounts and of deposits to Chow’s personal account corresponded to a large extent, or were contemporaneous. [VI 500- 592]. 15.The Magistrate referred to VI 350 to 354 (supra). He found that those comments indicated the appellant’s knowledge that the payments were illegal. 16.He rejected the appellant’s evidence that he had paid rebates to Chow because he believed him to be the boss of Revolution HK and that it was usual business practice. The Magistrate was aware that s.19 POBO specifically excludes custom as a defence; he found that a number of factors showed the appellant’s knowledge that the payments were illegal and that they were intended for Chow personally. 17.The payments were made from the appellant’s private account to Chow’s private account. Payments were made in cash [VI 500]. There was no formal office documentation relating to the payments, as Chow was expected to recognise what the deposits were for [VI 582]. The payments were never disclosed to Ray or Ishmael [VI 357-366]. 18.The Magistrate found that the elements of the charge had been established, that the appellant had no lawful authority or reasonable excuse for paying rebates to Chow and that the appellant had not invoked the defence under s.9(4) POBO. He convicted the appellant. 19.The Magistrate directed himself, following HKSAR v. Ng Po-on (2008) 11 HKCFAR 91 (NG), that he “should use the evidential burden and not the persuasive burden, as there was otherwise a risk of the defendant being convicted when there was some doubt as to him having lawful authority or legal excuse”. [S of F 33(b)(i)] 20.Eventually he found that although in his view the appellant had raised the evidentiary onus, that at the end of the trial the prosecution had proved beyond reasonable doubt that he had neither lawful authority or reasonable excuse. 21.The Magistrate also found that the appellant had not succeeded in establishing the defence under s.9(4) POBO and he drew an irresistible inference from the proven facts that neither Revolution US, nor Revolution HK, nor Ray, nor Ishmael had given permission for Chow to receive rebates. Grounds of Appeal 22.The Perfected Grounds of Appeal against conviction can be stated as follows:-
23.Ground 2 alleged that the Magistrate erred in his approach to the law of attempt, in that he considered it only [para. 34 Statement of Findings] in terms of the requirement that the appellant’s actions be more than merely preparatory. The appellant submitted that it was incumbent on the Magistrate to consider whether the appellant’s actions constituted an attempt in law. 24.Had he done so he should properly have concluded that as the prosecution had failed to prove the absence of lawful authority or reasonable excuse, the appellant could not in law be convicted of either the full offence or an attempt. HKSAR v. Ng Po-on 25.The authoritative case on the issues raised in this appeal is HKSAR and Ng Po-on and Chan Chung-keung, Eddy (2008) 11 HKCFAR 91 (NG). There Court of Final Appeal had to decide various questions in relation to s.14(1) POBO, a provision which authorised the Commissioner of ICAC to serve a notice requiring the person served to furnish information as to assets and liabilities relevant to an investigation. Failure to comply without reasonable excuse resulted in a fine of 20,000 and imprisonment for one year. 26.The questions were:-
27.The court in NG set out a 4-stage approach as to how the examination of an impugned section should proceed. 28.The court was to ascertain first the meaning of the provision according to common law principles, as supplemented by relevant statutory provisions. The second step was to consider whether the interpretation derogated from the presumption of innocence and the right to a fair trial as protected by the Basic Law and the Bill of Rights. 29.If it did, the court must decide whether that derogation could be justified and, if not, whether it could contravene the Basic Law and the Bill of Rights and whether invalidity could result. If so, it was necessary to decide whether the validity of all or part of the provision could be saved by applying any rule of construction, e.g. severing the offending part, reading down, reading in or any other remedial technique available to the court. 30.The courts have not dealt with the questions raised by NG in relation to a s.9 POBO offence when considered together with s.24 POBO and s.94A CPO. Mr Duncan SC submitted that s.9 POBO, s.24 POBO and s.94A CPO in combination imposed on the appellant a reverse persuasive onus which derogated from the presumption of innocence and although the test for rationality might be satisfied, the proportionality test could not be satisfied. In particular the prosecution had to prove with compelling reasons why the imposition of the persuasive burden was necessary. 31.The statutory provisions scrutinised are set out below. Section 9 POBO 32.The relevant parts of section 9 are as follows:-
33.S.94A (4) of the Criminal Procedure Ordinance, Cap. 221 embodies a statutory principle of construction. Where the provision imposes criminal liability of the nature listed in that section, the provision is construed as imposing a persuasive burden on the accused to bring himself within such exception or qualification, thus engaging the presumption of innocence. 34.S.24 POBO provides:-
35.S.24 POBO places the burden of proving lawful authority or reasonable excuse on the accused; the standard of proof is on the balance of probabilities. The defence is a negative averment and s.24 operates in a similar manner to s.94A CPO. The burden of proof for a negative averment follows this pattern:-
36.S.24 POBO applies to a number of sections under the POBO. Often the defence advanced by or on behalf of an accused will not be directed to showing lawful authority or reasonable excuse, but to whether the prosecution has successfully proved the essential elements of the offence beyond reasonable doubt. 37.It is true that a reverse onus provision is involved if one wishes to raise the defence set out in s.9(4) POBO. However that section, if invoked, does not impose on the appellant anything other than proof on the balance of probabilities. The prosecution first has to establish the elements of the offence beyond reasonable doubt. Only then can the question of whether the appellant has permission, or can show lawful authority or reasonable excuse be considered. The answers may arise from the prosecution evidence, or it may be that the accused raises the matter and gives evidence himself and/or calls witnesses. If an accused wishes to rely on the defence in s.9(4) POBO the burden is on him to establish the requisite permission of the principal. 38.The legal or persuasive burden remains on the respondent to negative any defence so raised by the appellant. Evidential Burden 39.An evidential burden in contrast to a reverse persuasive burden, does not require an accused to establish anything as a matter of proof. It arises where an accused wishes to put in issue a potentially exculpatory matter, while the prosecution continues to bear the persuasive burden throughout. 40.There must be evidence which both supports the exculpatory matter and which is sufficiently substantial to raise a reasonable doubt as to the accused’s guilt. If the prosecution fails to remove that reasonable doubt, it fails to prove its case. 41.If the accused:-
there is nothing to prevent the prosecution proving its case beyond reasonable doubt. A burden of that type, functioning in that way, is wholly consistent with the presumption of innocence. 42.Ribeiro PJ in NG explained the nature of an evidential burden - it is not something vague or fanciful, nor can it be conjured into existence on the bare say-so of the accused. 43.He stated:-
44.A shift of the evidential burden only, does not necessarily preclude a constitutional challenge, but the court must still be satisfied that the shifting of the evidential burden is “a rational and proportionate response to a real need and that it is consistent with the presumption of innocence under our constitutional arrangements.” (Tse Mui-chan v. HKSAR FACC No. 4 of 2003 page 17 para. 39) Is The Presumption of Innocence Engaged? 45.The presumption of innocence is engaged where a statutory provision places a persuasive burden on an accused to prove, on the balance of probabilities, an ultimate fact which is necessary to the determination of his guilt or innocence. In deciding whether such engagement has occurred regard must be had to ‘the substance and reality’ of what the provision means rather than to its form. 46.It is necessary to decide whether the legislation exposes the accused to the risk of conviction, even though there might be a reasonable doubt about some matter which is determinative of his criminal liability.
47.If the provision expressly imposes a burden on an accused to prove some ultimate fact on which the verdict depends the matter of construction is quite simple; proof is on the balance of probabilities. 48.If there is no express allocation of the persuasive burden, the court must apply common law and statutory principles in construing the provision. For provisions which prohibit the doing of acts, subject to provisos, exemptions and the like, the prosecution does not have to prove a prima facie case of lack of excuse or qualification or similar. The accused must prove he was entitled to do the prohibited act. That places the persuasive (legal) burden of proof on the accused. Two Tests – Is the derogation rational and proportionate? 49.If the presumption of innocence is engaged, it is necessary to decide whether the derogation is justified as rational and proportionate. The dual test was set out in HKSAR v Lam Kwong Wai &Another (2006) 9 HKCFAR 574 (@para. 17)
50.Where the legislature has imposed a reverse onus on an accused, the court gives weight to that decision by taking into account the nature of the problem it seeks to solve and whether it involves adoption of a policy which the legislature is better placed than the court to assess. Having done so, the court must exercise its constitutional duty by deciding the issue. 51.The state must justify the derogation for compelling reasons, but at the same time give such respect as is due for the legislature’s decision under challenge. 52.If the reverse onus provision fails either test, contravening art.87(2) of the Basic Law and art. 11(1) of the Bill of Rights, the court has to decide whether the validity of all or part of the provision can be saved by the application of any remedial technique available to the court. Appellant’s Argument 53.Mr Duncan’s Perfected Grounds of Appeal in effect were rolled up into the following enquiry:-
54.Mr Duncan took issue with the Magistrate’s finding, arguing that there were no proven facts from which to draw an inference that no permission had been given. However, as the Statement of Findings made clear the Magistrate had accepted the cautioned interview as truthful evidence and as in that interview the appellant had admitted that he knew the payments were illegal; that he had suggested the payments; that he had admitted how payments were made; that he had confirmed he made no mention of the payments to Ray or Ishmael; that monies passed from his account to Chow’s account untrammelled by any documentation; it was possible to infer that Chow had no permission to accept the rebates. 55.Although the Magistrate had not referred expressly in his Statement of Findings to his having “drawn an irresistible inference”, the omission of that formula did not preclude him from deciding that the admissions and the manner in which the payments were offered and effected showed that the appellant knew Chow had no permission to accept rebates. The s.9(4) POBO Defence 56The respondent challenged the evidential value of two documents on which the appellant, on appeal, wished to rely to establish the s.9(4) POBO defence. Exh. D1 was a report, from an undercover officer of the ICAC, of a telephone call to Ray which, on its face, suggested that Mr Chow had, or may have had, permission from his principal to accept rebates; Exh. D2 was a later letter from the Hong Kong solicitors acting for the appellant confirming that Ray did not intend to come to Hong Kong and would not give evidence in court. 57.Both documents had been admitted in evidence at trial, but the contents were treated as inadmissible hearsay. No witness was ever called to establish the truth of the contents. 58.Despite that, both Mr Poll, who appeared at trial and Mr Duncan SC on appeal, argued that, despite the documents being inadmissible, it was incumbent nevertheless on the Magistrate to give them evidential weight. Mr Poll in his final submission can be seen admitting the inadmissibility of the documents, but in the same breath suggesting to the Magistrate that “it is something that you should keep in the background of your mind”, presumably so the Magistrate could take the inadmissible material into account nonetheless. [B553] 59.The Magistrate acknowledged the documents were inadmissible and, properly, excluded that evidence, placing no weight on them in his Statement of Findings. 60.Mr Duncan SC argued that even if Exh. D1 and Exh. D2 were hearsay, they had been introduced in evidence without objection from the respondent and the Magistrate should have treated them as cogent evidence, despite their inadmissible content. 61.This argument must be rejected – the evidence was rightly excluded, it did not form part of the Magistrate’s findings and, in any event, the appellant did not seek in his cautioned interview, or at trial, to show that Mr Chow had permission to receive payments. His defence at trial was directed at showing the prosecution had failed to prove the elements of the offence, in that he thought Mr Chow was the sole boss of Revolution Hong Kong and that he had no knowledge of his relationship with Revolution US or that Chow, Ray and Ishmael were partners. This directly contradicted what he had said in his cautioned interviews and, ultimately, was rejected by the Magistrate. 62.Even if the Magistrate had allowed Exhs. D1 and D2 to be admitted in evidence, their content and scope were insufficient to enable the appellant to rely for his defence on s.9(4) POBO. If permission was given retrospectively, according to s.9(5), it was necessary for the one giving the permission to have given thought to it. The documents contained no allusion to the matters set out in 9(5)(b) or (c). Ground 1(d) 63.The appellant argued in Ground 1(d) that as the respondent had charged the appellant with an attempt and not the full offence, it was an indication, or a tacit admission, that the respondent either believed, or accepted, that Chow had been given permission by his principal to accept the payments. 64.The respondent disputed that suggestion, although agreeing that if it were thought likely the appellant could prove at trial that Chow had his principal’s permission to accept rebates, it was possible that an attempt charge rather than a substantive offence might be laid. However even if that were so, it could not be taken as any form of evidential concession by the prosecution. 65.I do not agree that by preferring an attempt charge the respondent must be taken to have conceded that permission had been given as required by s.9(4). It appears rather to have been a pragmatic recognition by the respondent that:-
Ground 2 66.Nor is there substance in Mr Duncan SC’s complaint that the Magistrate had considered only the requirement that an attempt required the defendant’s actions to be more than merely preparatory. 67.The Magistrate had devoted almost the entirety of his Statement of Findings to setting out the elements of the offence as he discerned them from the evidence and showing how they were supported. Those findings showed the appellant to have far exceeded the state of preparation required to support an attempt. The Magistrate did not need to repeat the lengthy and detailed findings he had made. 68.I am satisfied that the Magistrate reached the correct decision in this case although on an erroneous basis unduly favourable to the appellant. The charge he was dealing with was of a type more serious than that examined in NG. The persuasive burden was on the appellant, if the elements of the charge otherwise were proved beyond reasonable doubt, to establish lawful authority or reasonable excuse, or to establish that permission sufficient to satisfy s.9(4) had been given. Respondent’s Argument 69.The respondent complained that the appellant had introduced a new ground of appeal and raised a constitutional challenge which had not been advanced at trial, had not been included in the appellant’s PGA or skeleton submissions and which had been sprung on the respondent without adequate warning. 70.There was some force in this complaint, although Mr Duncan SC, somewhat speciously, sought to justify his inclusion of the constitutional argument, on the basis that the respondent had “invited” it by asserting that NG did not apply to a s.9 POBO offence. However, for the purposes of this appeal, I considered that I was able to deal with the matter following the general principles which relate to POBO offences and, while accepting that in NG the primary focus of the court was on the impact of s.24 on a s.14 offence (rather than on all the sections which offer a similar statutory defence), it was possible to extrapolate from it principles of general application. 71.The respondent argued that the Magistrate was incorrect in following NG and imposing on the appellant an evidential burden, because s.24 POBO and s.94A CPO put the burden of establishing the defence on the appellant. The Magistrate was wrong to do so as NG concerned an ancillary offence, whereas a true corruption offence like s.9 POBO justified the imposition of a persuasive burden because of the inherent difficulties in detecting and prosecuting such offences. Thus the defence should bear the burden of raising and establishing reasonable excuse or lawful authority, or the specific defence under s.9 (4). 72.The court in NG had stated that s.24 was relevant to other provisions of the POBO also (including s.9), which created offences incorporating an element of lawful authority or reasonable excuse, but gave a clear warning:- “Its interaction with such other provisions raises separate considerations which fall outside the scope of this judgment.” The respondent argued this comment meant that NG had no application to s.9 offences – the appellant’s position was that NG did not exclude s.9 from its application. 73.In NG, s.14 POBO was recognised and treated as an ancillary offence – the Court of Final Appeal found it satisfied the rationality test, but eventually it failed the proportionality test and was read down. The respondent argued that that approach should not be followed for actual corruption offences such as s.9. 74.The respondent submitted that even if (which was not conceded) the Magistrate had imposed the evidential burden correctly, he had rejected the oral evidence of the appellant and had relied on the contents of the cautioned interview which showed the appellant knew he was acting illegally by offering rebates to Mr Chow. Thus the appellant had not shown, even on the balance of probabilities, the reasonable excuse or lawful authority which might have absolved him from the charge. Further he had not succeeded in advancing the s.9(4) POBO defence at trial – on appeal he tried to do so again. 75.Mr Duncan SC, submitted that the Magistrate had erred in finding that the appellant could not avail himself of the statutory defence under s.9(4). Counsel said the Magistrate had borne in mind the principles of NG and had concluded, correctly, that the appellant had raised the evidential onus which obliged the prosecution to discharge the persuasive burden on it, that of negativing the statutory defence that the necessary permission existed, but thereafter had wrongly inferred the appellant’s guilt. 76.Although Mr Duncan SC was dismissive of the respondent’s submission that the distinction between an ancillary offence (s.14) and a corruption offence (s.9) was significant, it was a significant distinction that the court in NG itself acknowledged:-
77.The Court of Final Appeal has not yet dealt with the ramifications of NG as applied to s.9 when considered together with s.24 POBO and s.94A CPO but the effect of NG on s.9 POBO was examined in some aspects in HKSAR v. Yan Pak-cheung HCMA 647/2008, where Wright J found that a Magistrate hearing a charge under s.9(1)(a) had, wrongly, treated the absence of lawful authority or reasonable excuse as an element of the substantive offence under that section. The Magistrate had found that the offence comprised 4 elements:-
and concluded that the unlawful authority or reasonable excuse was an element of the offence which had to be established by the prosecution. 78.Wright J commented :-
79.There was an application in Yan to strike down s.24 POBO as unconstitutional which Wright J refused to do, noting that as the court in NG had declined to do so for what was a lesser offence under s.14 POBO, he could not do so for the more serious offence under s.9. Wright J found himself unable to make a finding whether s.24 POBO imposed an evidentiary or persuasive burden on an accused, because the matter was not fully argued before him, nor had it been argued at the trial. Conclusion 80.The Magistrate, in my view, came to the right decision in convicting the appellant, but was overgenerous in imposing on the appellant an evidentiary rather than the persuasive burden which is indicated by the investigative exigencies of a s.9 charge. 81.I agree with the respondent that the Magistrate placed the burden of proving lack of lawful authority or reasonable excuse beyond reasonable doubt on the prosecution – that was an error as the prosecution did not have to prove those matters as elements of the offence. 82.The distinction between an ancillary offence and the corruption offence was real and the reverse onus could be justified. 83.The guilt of the appellant was established ultimately by the agreed facts and in particular, by the admissions he made in his cautioned statement. The elements of the prosecution case having been made out, it was for the appellant to prove on the balance of probabilities any defence of lawful authority or reasonable excuse, or to prove the principal’s permission, or to challenge whether the essential elements of the offence had been proven. 84.The appellant did not succeed in doing any of those things even on the balance of probabilities. The Magistrate rejected, as he was entitled to do, the account of events the appellant gave in court which were in direct conflict with his admissions at interview. 85.Assuming that the evidential burden was applicable in this case the appellant had in any event failed to raise it. If, as I find, a reverse onus existed and it was rational and proportionate for a true corruption offence such as s.9 POBO, such derogation from the presumption of innocence was justified, it was for the appellant to establish legal authority or excuse, or to establish the defence under s.9(4) POBO. If he was unable to do so a conviction must follow. 86.This appeal against conviction is dismissed and the conviction and sentence are confirmed.
Mr Peter Duncan, SC leading Mr Osmond Lam, instructed by Tang & So, for the Appellant Mr Beney Wong, SPP of Department of Justice, for the Respondent | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment