Ernest Percival Max Hunt v. The Queen
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CACC000810/1973 IN THE SUPREME COURT OF HONG KONG (APPELLATE JURISDICTION) CRIMINAL APPEAL NO. 810 OF 1973 -----------------
----------------- Coram: Briggs, C.J., Huggins & Pickering, JJ. Date of Judgment: 15th February 1974. ----------------- JUDGMENT ----------------- 1. The appellant who appeals with the leave of the trial judge, is a superintendent in the Royal Hong Kong Police Force and, on 14th February 1973, was served on behalf of the Attorney General with a written notice under s.14 of the Prevention of Bribery Ordinance (Cap. 201) requiring him to furnish to the Director of the Anti-Corruption Office a statutory declaration regarding his assets, expenditures and liabilities. A similar notice was served upon his wife upon the same day and on 30th May 1973 a second such notice was served upon the appellant's wife. On 6th July 1973 a notice under s.10 of the Ordinance was served upon the appellant who was eventually charged in the District Court under s.10(1)(a) of that Ordinance. The subsection reads as follows:
2. The period during which the appellant was alleged to have maintained a standard of living above that commensurate with his official emoluments was expressed to be between the 15th day of May 1971 and the 14th day of February 1973. 3. In the District Court the learned judge, in overruling a submission of no case to answer at the end of the prosecution case, found that the appellant's standard of living during the period charged had been supported by expenditure totalling $222,727.60 whereas his official emoluments during that period totalled $156,559.41. At the conclusion of the case for the defence, in the course of which the appellant himself did not give evidence, though various witnesses did so on his behalf, the judge adjusted the figure of $222,727.60 to $207,404.52. Holding, however, that evidence of the appellant's incomings other than by way of official emoluments and evidence of his wife's incomings or other moneys did not of itself satisfactorily explain how a standard of living had been maintained in the absence of evidence that such incomings or moneys were used for the purpose of paying for the goods and services which made up the appellant's standard of living, and regarding with "the gravest suspicion" a bank account which had been, during part of the period charged operated by the defendant's wife in her maiden name of "Ellerbrok" and which contained frequent, substantial but unexplained credit entries, the learned judge found that no "satisfactory explanation" had been made and that the appellant was guilty of the offence charged. He sentenced the appellant to one year's imprisonment and it is against that conviction and sentence that this appeal is brought. 4. The first ground of appeal with which we propose to deal relates to the expertise or otherwise of Dr. Edgley, Government Chemist, in the matter of handwriting. 5. There was admitted by agreement a written statement of Dr. Edgley in regard to the signatures of the appellant upon certain cheques and other documents, the statement being in the nature of proof by formal admission as contemplated by s.65(c) of the Criminal Procedure Ordinance (Cap. 221). The statement itself contained no assertion or declaration of Dr. Edgley's experience or qualifications as an expert upon handwriting and at the conclusion of the case Mr. Hampton, solicitor for the appellant, submitted that since it had not been shown that Dr. Edgley was an expert, the statement was inadmissible. The learned trial judge rejected that contention asserting that the statement had been understood by all concerned to be that of an expert and had been admitted as such so that it was unnecessary even to call Dr. Edgley to state his qualifications and experience. 6. The importance of the point is that if various signatures to which Dr. Edgley's statement related were not shown to have been those of the appellant, then the purchases to which those signatures related, were not shown to have been made by him and the effect of that would be that the Crown had failed to show a standard of living in excess of one consistent with present or past official emoluments. 7. The point taken in the court below has also been relied upon in this court as a ground of appeal but we think it to be without substance. Dr. Edgley could only have been giving evidence as to handwriting either in the capacity of an expert or as somebody familiar with the handwriting of the appellant. Nowhere in Dr. Edgley's statement is there any suggestion that he is in fact familiar with the appellant's handwriting and the whole tenor of the statement is that of expert evidence; it is inherent in the nature of the document that it is evidence of an expert and it could not have been otherwise understood. That the defence was alive to the necessity of expert evidence coming only from an expert was apparent from the fact that when the prosecution proposed to lead evidence from a Mr. Robertson, an employee of the chartered accountants Lowe, Bingham & Matthews, he not being academically qualified, the defence objected to the introduction of that evidence as not being that of an expert - and made this objection at the proper time, that is to say before the evidence was adduced. 8. Moreover we are informed by counsel for the Crown, although this does not appear on the face of the record, that when Mr. Dimanlig, assistant manager of the Carlton Hotel, was asked to identify the appellant's signature upon the hotel reception card, the judge intervened to say that there was no point in that evidence being adduced since the Crown was calling expert evidence on handwriting; thus there was no doubt in anybody's mind that expert evidence as to handwriting was to be called. Again at p.181 of the record the defence informed the court that it was now prepared to agree that the control signatures were the signatures of the appellant. The expression "control signatures" could not have been intended to refer to anything other than expert evidence. 9. Moreover this contention that Dr. Edgley's agreed statement contained no assertion or details of his expertise was not raised at the point of the submission of no case to answer and, though Dr. Edgley was twice in court encumbered with photographic enlargements, and prepared to give oral evidence, he was upon both occasions released without so doing upon the basis that his oral evidence was unnecessary. 10. That in the mind of everybody concerned Dr. Edgley's agreed statement upon the very technical subject of handwriting was being put forward as that of an expert and not that of the man-in-the-street is, in our considered view, beyond a peradventure: it was so understood by the judge, by counsel for the Crown, and, we are convinced, by the defence solicitor, and the inevitable conclusion is that the objection was an after-thought. Mere silence upon the point, on the part of the defence at the stage of the introduction of the statement, might have been legitimate since there is no obligation on the part of the defence in a criminal trial to point out loopholes in the prosecution's case. That this was not in the mind of the defence at that stage is evident from the fact that at the stage of the submission of no case to answer the point was not taken. It was an after-thought, indeed an admitted after-thought, since at p.297 of the record the defence solicitor argued that it was immaterial that the defence did not see the point "at the time", and the after-thought came too late. The agreed statement had been agreed upon the basis that Dr. Edgley was an expert and the subsequent attempt to withdraw from that basis was rightly rejected by the learned trial judge. 11. If that conclusion involves an imputation upon the conduct of this aspect of the defence case in the court below, we do not shrink from it. 12. Before turning to what we may term the more substantial grounds of appeal, it will be useful to put on record the chronology of some of the more important events affecting those grounds. There was evidence that by the year 1969 the appellant, then living separately from his first wife, was friendly with a lady, who is now his second wife, and who was then a Mrs. Holtof. It was at the end of that year, namely on the 30th December 1969, that this lady opened a bank account, in Hong Kong with the Bank of America, in her maiden name of Ellerbrok with an initial deposit of $15,000 in 30 $500 notes. Thereafter the account was augmented by numerous cash payments usually in round figures of two, three, four, five six or seven thousand dollars. During one period of thirteen months $222,313.27 was so deposited. In December 1970 alone, $45,000 was paid into the account and the 31st of that month saw the highest single payment into the account, namely $20,000. In January 1971, the appellant's elder son Timothy, commenced school at a well-known English public school and on the 6th January of that year his basic school fees for a period of five years were prepaid in the equivalent of $54,640.88 by means of a withdrawal from the Ellerbrok account. The only other substantial withdrawal from this account occurred on the 2nd March 1971 when a sum of $181,634.25 was transferred by Mrs. Holtof (nee Ellerbrok) to herself, care of a Berta Ellerbrok in West Germany. Shortly afterwards the appellant and Mrs. Holtof went on holiday to Germany. The account was moribund between 2nd March 1971 and the 30th September 1971, when it was closed by the withdrawal of $1,035.14 therefrom. In the meantime the month of May of that year had seen the commencement of the period in respect of which the appellant stands charged. In February 1972, the appellant and Mrs. Holtof were married and one year later, on the 14th February 1973, there ended the period in respect of which the appellant is charged. 13. There were numerous grounds of appeal apart from that relating to Dr. Edgley's status. These argued included the complaint that the learned trial judge's quantification of the appellant's actual standard of living during the period the subject of the charge was swollen by the inclusion of items which were not properly attributable to that standard of living whereas, conversely, the appellant's official emoluments during the period were understated by the judge by virtue of the exclusion of items which should properly have been included. It was further said that the learned trial judge had failed to head the fact that the present Mrs. Hunt had not been charged under the Ordinance or as an aider or abettor of the appellant and that the judge should have held that were possession by her of her own assets constituted a satisfactory explanation of such possession for the purpose of attributing possession to the appellant; s.10 of the Ordinance, it was said, was not retrospective but had been applied retrospectively; the learned judge, moreover, had failed to distinguish between maintaining a standard of living and the ability to maintain such a standard and had been wrong in taking into account items going to make up the standard of living which had been prepaid before the commencement of the period charged - notably Timothy's school fees. 14. Any consideration of these arguments necessarily involves interpretation of s.10 of the Ordinance including the interpretation of various phrases appearing therein and to that task we now address ourselves. 15. In interpreting s.10 we find considerable looseness of language and it is legitimate, and indeed essential in order to avoid both injustice and absurdity, to bear continually in mind the context in which it appears. The preamble to the Ordinance states that it is an Ordinance
Thus when the section places a burden upon a defendant to give a satisfactory explanation the court has at least to be satisfied that the standard of living in question was not maintained with the aid of resources acquired in circumstances which would constitute an offence under the provisions of this Ordinance. Whether or not the explanation might be regarded as unsatisfactory for reasons not associated with this Ordinance is not a question which arises upon this appeal and we leave that issue open. On the other hand it was clearly not intended that it should be a "satisfactory explanation" to show that resources had been provided by a third party without proof also that the existence of those resources had not involved an offence under the other provisions of this Ordinance. We shall have to return to this particular matter when we come to deal fully with the meaning of "a satisfactory explanation". 16. We turn to the phrase "standard of living". Although the phrase is in common use, there is no reported English case in which an attempt has been made to define it. However, we have been referred to In re Golodetz' Will(1) where the court had to construe a will which empowered trustees to use capital to enable the widow of the deceased to maintain the standard of living to which she was accustomed at the date of his death. The learned Surrogate held that a standard of living is a matter of fact and not of opinion and he defined it as (p.712):
That may have been an acceptable basis for the interpretation of the phrase in a case concerned with the utilisation of capital to enable a widow to continue to live in the style to which she had been accustomed. But clearly in her case "standard of living" did not contemplate such matters as savings or the acquisition of fresh investments. Equally clearly in the context of this Ordinance and having regard to the manifest aim of our Legislature, such matters cannot be excluded from the definition, so that the Golodetz interpretation is only useful, for our purposes, so far as it goes, and is by no means exhaustive. One can imagine, for example, a case where the prosecution could prove that all the official emoluments had been paid into a particular bank account and that no withdrawals at all had been made during the charge period. That would, as we shall show when we come to deal with the argument that ability to maintain is all that need be demonstrated, call for explanation, even though the apparent standard of living was well within the standard of living commensurate with the official on luments. It follows that in assessing the standard of living maintained by a defendant the court must include any increase in a bank balance between the beginning and the end of the charge period and any fresh investments or capital assets acquired during that period. 17. Although a standard of living is a matter of fact the question arises, how is it to be measured? It is common ground that an assessment must be made in terms of money, but such an assessment is by no means a simple matter. Of necessity the maintenance of a standard of living involves the acquisition of goods and services and it is these goods and services which will normally represent the greater part of what has to be quantified. In deciding what is included in the standard of living to be measured one must, of course, look to the charge period. However, in quantifying that standard of living one must (a) consider what are the possible methods of quantification and (b) decide which of those methods is at the same time both most consonant with the aim of the legislation and fair to the defendant. 18. It is obvious that goods and services acquired during the charge period do not represent the whole of a defendant's standard of living during that period: there may be capital assets, such as houses or motor-cars, acquired prior to the charge period, and we have to consider how, if at all, these are to be brought into the quantification. Of course, all running costs, the expense of repairs or maintenance and outgoings connected with the possession of the property must be included, but these do not reflect the full value of the property to the defendant during the charge period. Whatever may be the correct approach we are, with respect, unable to agree with the learned judge that previously acquired capital assets should be included in the quantification of the standard of living maintained in the form of estimated depreciation. Depreciation is relevant only to calculations in the nature of trading accounts where it is necessary to make provision for capital replacement. 19. Thus standard of living, during a particular period, includes the amenities of life enjoyed during that period and it matters not whether the cost of these amenities was met during the period, prepaid before the commencement of the period or, by virtue of credit, not to be paid for until after the expiration of the period. 20. One of the difficulties inherent in any investigation of an alleged "standard of living above" as that phrase is used in s.10, is the necessity for isolating, in any charge under s.10(a), a particular period of time. Clearly this must be done if an accused person is to know exactly what is alleged against him but the very fact of isolating a period of time may, in many cases, introduce an element of artificiality. This will not be the case where, during the period charged, all goods and services enjoyed are paid for from current income. But where the cost of goods or services has been prepaid before the commencement of the period charged or where they are obtained on credit and not intended to be paid for until after the expiration of that period, any complete consideration of the standard of living enjoyed during the period charged necessarily entails consideration of events before or after the period as the case may be. The ability to prepay is a legitimate subject for enquiry. Likewise the ability to obtain credit during the period charged, renders necessary enquiry into the nature of the expectation upon which the application for credit was based. Where, therefore, the Crown has put forward a prima facie case, so that an explanation is required of an accused person, and that explanation relates to prepayment for goods or services enjoyed during the period charged it may be necessary to look at the source of the prepayment in order to ascertain whether the explanation be "satisfactory". And where, as in the case of Timothy's school fees, the prepayment has come from an apparent outside source it is necessary to scrutinise that source with care. 21. We turn to a consideration of the word "maintains", which suggests some element of continuity. Even in the Golodetz Case where the standard of living had to be assessed with reference to a particular date, namely that of the testator's death, a quantification of the kind which we have to undertake could only be made on the basis of a substantial period of time. Counsel for the Crown conceded that any charge under s.10 would in practice have to be related to a period of time rather than to a particular date. That must be so even though a standard of living is something which is continually going up and down day by day as capital assets depreciate and as goods and services are acquired or disposed of. This element of continuity gives weight to the contention of counsel for the appellant that what are being assessed are, for the most part, "outgoings", that term being used to signify all expenditure during the charge period, by or for the benefit of the defendant - whether it be made in respect of usual expenses or for the purchase of either consumer or capital goods. It is argued that one must compare like with like and that "maintains" means something more than "has" and that it means "supports". That is not the entire picture. It would clearly be contrary to the spirit of the section if one were to exclude from the quantification of the standard of living maintained any part of the standard of living of the defendant which was maintained by somebody else. Equally it cannot be right that the defendant may spend money on someone else's standard of living and not include that outgoing as part of his own standard of living: gifts constitute part of the giver's standard of living as well as the standard of living of the recipient. In particular, a wife or dependent child, while living with the defendant, must, prima facie, be regarded as having the same standard of living as the husband and that whether she be a "working wife" or not: compare the position in relation to the provision of "necessaries". 22. In our view, therefore, "maintains" brings in all outgoings and also capital accretions even though they may tend to raise, and not merely to preserve, the standard of living. We do not agree with counsel for the Crown that only accretions which form part of the apparent standard of living are to be included and that items purchased purely for investment can be caught only under para.(b) of the subsection. Even less do we agree with the submission of counsel for the appellant that paras.(a) and (b) of s.10 are mutually exclusive. Clearly a standard of living is governed in part by previously acquired capital assets but those assets are not part of the standard of living "maintained". The Crown's stand on this, as we understand it, is that one must bear capital assets in mind as an unquantified item in the standard of living maintained. In other words they are contending that if, but only if, one finds that the standard of living maintained is higher than that commensurate with the official emoluments the court can say: "And that of course disregards the unquantified items, including the capital assets, so that although the defendant does not have to explain the unquantified items I can insist on a higher standard of explanation of the difference actually quantified". This seems to involve the introduction of uncertainty which is hardly consistent with established principles of English law. 23. Although we are of opinion that previously acquired capital assets are not to be brought into the quantification of the standard of living maintained, we do not think it would be realistic to conclude that a prepayment of what would otherwise be periodic outgoings within the period charged, should in like manner be disregarded on the basis that it is a previously acquired asset. It is true that the previous purchase of a house for owner-occupation renders the payment of rent during the charge period unnecessary, so that in a sense a "normal outgoing" has been "prepaid". The previous purchase of a car may in the same sense be equivalent to prepayment of fares on public transport. In those cases, however, the actual capital liability arose outside the charge period. In the case of a genuine prepayment the liability which is to be met does not arise outside the charge period, nor indeed do the goods or services in respect of which the payment is made and which form part of the standard of living to be quantified come into existence until the charge period. 24. Again, where goods or services are obtained on credit such items should be brought into quantification at the date when the goods or services are obtained and not at the date when payment is made. 25. In connection with the phrase "was able to maintain", we would observe only that ability to maintain is not shown by proof of unexpended assets. Indeed, the presence of unexpended assets may be conclusive evidence of maintaining a standard of living which calls for explanation, as in the example already given where it is shown that the whole of the official emoluments have been deposited in a bank and not withdrawn. 26. As to the phrase "official emoluments", since the purpose of the first part of the court's enquiry is to ascertain whether the defendant has on the face of it spent more than has come into his hands lawfully from official sources, only those official emoluments which have actually been paid during the charge period (regardless of the period in respect of which they have been paid) should be brought into the computation. 27. The only dispute has been as to what is included in the "present ... official emoluments" of the appellant, for it appears to have been assumed that in this case that is all we are concerned with, and by "present" it has been taken that the Legislature meant "during the charge period". The principle is the same as the one which we have applied in respect of goods or services obtained on credit during the charge period. It follows that sums earned in, or payable in respect of, the charge period but not paid until later should be excluded, although they may be brought in by way of explanation if credit has been obtained during the charge period on the strength of an expectation that the emoluments would be paid. 28. We will defer consideration of the phrase "satisfactory explanation" to a later stage. Such explanation only becomes necessary after the Crown has demonstrated beyond reasonable doubt that an accused person has maintained a standard of living above that commensurate with his present or past official emoluments and it will be more logical to consider the phrase after we have referred to the learned judge's findings in regard to standard of living and to defence counsel's attack, in this appeal, upon those findings. 29. We have referred to the necessity for the Crown to prove beyond reasonable doubt that an accused person has maintained a standard of living above that commensurate with his present or past official emoluments, and we pause here to emphasise, what may perhaps be obvious and elementary but which is nonetheless of basic importance. That is, that in charges under this section, two standards of proof are involved. That upon the Crown, which arises at the outset of the enquiry is proof beyond reasonable doubt. But, if and when the Crown has discharged that burden, so that explanation by the person accused becomes necessary, the onus upon him is only that of proof on the balance of probabilities. 30. At the stage of the submission of no case to answer, the learned judge considered that the quantification of the appellant's standard of living during the period charged, required him to give a satisfactory explanation involving expenditure of some $222,682.06. Subsequently the judge revised this figure to $207,404.52. We think that on either basis the learned judge was unduly generous to the defence. We have made our own quantification of the appellant's standard of living during the period charged and consider that he should have been asked to explain expenditure in excess of $283,000. We do not propose to detail all the items which go to make up the difference between that figure and either of the figures adopted by the trial judge since it would be manifestly unfair to substitute our own figure for that which the appellant was asked to explain. A few examples will suffice. 31. Thus during the charge period four air conditioners were installed in the appellant's flat, three having been purchased outright and one taken on hire-purchase. A total of $7,560 was paid out in respect of them during the charge period. Similarly a gas-heater and gas-cooker were purchased and installed at a total price of $1,994 and a Telefunken colour television set at a price of $4,288. The learned judge obviously took the view that he was required to calculate what proportions of the useful life of these appliances fell within the charge period and to include only equivalent proportions of the purchase prices in his quantification. Since there was no evidence to enable him to make such calculations he excluded these items altogether. In our view that was not the correct approach. Undoubtedly these appliances constituted part of the appellant's standard of living during the charge period. Since the purpose of the quantifications is to balance outgoings against receipts the proper course was to include the full purchase price becoming due within the charge period. 32. A restaurent account, referred to in the trial as the Steak House account, was excluded by the learned judge to the extent of $1,400 on the basis that there was a "built-in" explanation by reason of the bill's remaining unpaid at the end of the charge period. As a general rule the fact that an element in the standard of living has been created during the charge period requires the inclusion of that element in the maintained standard of living. The facts (i) that there is a liability to pay for such element and (ii) that the liability is not met during the charge period are not ground for excluding it from the computation, but the outstanding liability may be made the basis of the explanation, pro tanto, of any excessive standard of living which may be found. We therefore think that this sum of $1,400 should have been included in the quantification. 33. Then we would have included the school fees of the second son Jeremy at Belton Grange. The appellant signed a statutory declaration to the effect that Jeremy was wholly dependent upon him during the charge period and in the absence of any court order the appellant would remain liable to maintain his children. Therefore the expenses of those children form part of his standard of living. The fact that part of his liability was in fact discharged by the first Mrs. Hunt did not justify the exclusion of that part from the quantification of his standard of living although, as we shall see, this fact might be material at the stage of explanation. 34. Although salary tax is not an obvious part of the apparent standard of living like most other items which fall to be quantified, it is nevertheless a chargeable item and this was not contested by Mr. Cripps. What has been in issue is the method of quantification. The learned judge included a sum which he estimated to be the appellant's liability in respect of the official emoluments earned during the charge period, which came to $14,692.27, but he subsequently excluded $10,046.06 of this on the basis that it had not been paid and had thus been satisfactorily explained. The original method adopted by the learned judge was in line with the contention of counsel for the Crown that salary tax becomes payable when it is earned even though it is not assessed until later and though the demand when made usually requires payment later still. Mr. Penlington confined his argument to criticising the judge's view that non-payment was a "built-in" explanation. We think the better view is that contended for by the appellant, namely that salary tax should be treated like any other outgoing and that the tax actually paid within the charge period should be included in the quantification. Our quantification would, therefore, have included the sums of $4,344 and $5,480 which the appellant actually paid to the Inland Revenue during the charge period, but would have excluded the estimated liability to tax which the learned judge included. 35. Finally we give as an example of the items which we think were wrongly omitted the sum of $1,335.57 which was the difference between the appellant's bank balance on 15th May 1971 ($1,945.89) and that on 14th February 1973 ($3,281.46), which counsel for the appellant conceded ought to be brought into account. We think it properly comes in at the stage of quantification of the standard of living maintained and not, as was suggested in argument, by deduction from the proceeds of the insurance policy, although the result is the same. 36. However what in fact the appellant was asked to explain was expenditure of $207,404.52 against receipt of official emoluments of $156,559.41 and it is upon the basis of the gap between those two figures, rather than upon that of the larger gap discernible between official emoluments and our own quantification of expenditure, that we deal with the matter. 37. Mr. Cripps attacked the gap of approximately $51,000 from two angles. On the one hand he strove to demonstrate that certain items of expenditure had been wrongly included in the appellant's standard of living, and on the other he argued that other items had been wrongly excluded from the appellant's official emoluments. The result of these twin submissions was to arrive at a figure for the standard of living being maintained during the period charged, of $172,255.20 and for that commensurate with official emoluments during that period, of $169,113.70. The resulting gap of $3,141.50 or less than 2% was so slight, Mr. Cripps urged, as to put the issue well within the bounds of reasonable doubt and was in any event satisfactorily explained by resources other than official emoluments, in the form of wife's salary, sales of cars and the proceeds of an insurance policy, to a total of $95,890.79. 38. If Mr. Cripps' submissions regarding actual standard of living and actual emoluments are valid, then the gap is indeed minimal and it is therefore necessary to examine his detailed submission in those regards and to consider his arguments as to resources other than official emoluments. 39. He contended that the deposit with Goodyear Property Management Limited was wrongly included in the form of interest calculated at $709 and that there was in any event an error in the learned judge's calculation because he said the money could have earned "at least 5% per annum" and he then worked on a figure of 8%. We think that there was here no contradiction and that the learned judge deliberately took 8% as being the normal rate of interest which has been awarded by the courts in relation to other matters. However, we would exclude any item of notional interest in respect of such a deposit on the general principle that the quantification is based on outgoings, but, on the other hand, we would for the same reason include the full amount of the deposit. Similarly we agree, for the reasons already given, that depreciation of $8,225 should not have been included in respect of the motor-car No.AW4542 (AX9004) but that the purchase price should have been included at $20,225.50. Although we think Mr. Cripps correctly submitted that to include depreciation was wrong, the fact that we would have included the items at a higher figure prevents our reducing the quantification of the standard of living to be explained below $207,404.52. 40. We are asked to exclude the payment made for the wedding reception on two grounds, that the liability was not that of the appellant and that there was in any event no evidence that he had in fact paid. The basis of the first argument is that according to Western custom the wedding feast is normally the responsibility of the wife's parents and from that it is submitted that we ought to assume, in the absence of contrary evidence that in the present case the husband did not pay. While we might be willing to take judicial notice of a custom that on the first marriage of a yound girl, at least where the girl is dependent, the bride's parents usually provide a wedding reception, both parties to this marriage had been married before and the bride was a woman of independent means. We are not prepared to take notice of a custom that the wife or her parents would provide a wedding reception in such circumstances, but rather would we regard any entertainment given as being attributable to the husband in the absence of any evidence that the wife or her parents had agreed to accept liability. The evidence was that the appellant was not present at the reception because he was sick and that a Mr. MacDonald signed the bill. Who paid the account subsequently rendered by the hotel is not clear. There was no evidence as to who placed the order for the reception but the learned judge found as a fact that Mr. MacDonald on signing the bill was acting on behalf of the appellant. The grounds of appeal did not attack that finding but, as we understand the argument, it is in effect contended that there was no evidence to support it, for we think that the fact that a person signs such a bill, otherwise than as agent, is prima facie evidence that that person acknowledges his liability. Mr. MacDonald expressly said that he had received no instructions from the appellant "as to signing the bill" and that he signed "to indicate that the account was correct as far as [he] was concerned". Unfortunately he was not asked why he thought it right to sign for that purpose nor how far he was concerned. There was evidence that it would be presented to "somebody in charge" for signature. The learned judge seems to have assumed that a person who was at the time assistant to the appellant in the Police Force and who apparently came to know the second Mrs. Hunt through the appellant would be so unlikely himself to provide a wedding reception for his superior that the possibility of his being personally liable could be ignored. Somebody must have ordered the reception and there was no suggestion that Mr. MacDonald was acting on behalf of anyone other than the appellant or possibly the wife. The wife was present at the reception. The bill was in the name of the appellant and, as we have said, we think this was an expense which would normally be attributable to the husband. There was evidence that Mr. WONG Ming-kwong, the husband of the appellant's amah, received cash from the second Mrs. Hunt to pay the account but even if it was paid by the wife that would not alter the fact that the reception was part of the appellant's standard of living within the meaning of this Ordinance. We may add that this is the only item upon which we have had any doubt but we think there was just enough evidence to justify the judge's finding. In any event the amount is such ($4,836.75) that it cannot affect the ultimate decision. 41. The appellant was resident in the Hong Kong Hotel for a period from 16th September 1971 and incurred a liability in the sum of $1,507.20. This was met by two payments, one of $687.65 on 6th October 1971 and one of $819.55 on 16th October 1971. It is said that there is no evidence who made the second of these payments, that it could have been Mrs. Hunt and that therefore the $819.55 should be excluded from the appellant's standard of living. We think this example shows very clearly the fallacy in the argument that where an expense is met by a third party that expense forms no part of the appellant's standard of living. In our view there can be no possible justification for differentiating between that part of the total liability of $1,507.20 which was met by the appellant himself and that part which was (or may have been) met by someone else: the expense was incurred by him and any payment made was in discharge of his liability. At best a payment by a third party might be included as part of the explanation of the standard of living maintained by the appellant but it would then by necessary to satisfy the court that such payment was made with untainted moneys. 42. We come then to the largest item which it is sought to exclude from the quantification, the sum of $20,559.02 which was paid in advance (outside the charge period) on account of Timothy's school fees of $21,233.07. This prepayment was part of a voluntary "composition fee" paid upon terms contained in a form signed by the appellant on 6th January 1971. It was voluntary in the sense that no parent was under any obligation to pay the fees in this way: the only liability arose at the beginning of each term, when the term's fees were payable in advance. In certain circumstances the whole or part of the composition fee might be refunded. The judge found that Timothy commenced school in January 1971. The figure of $21,233.07 was the result of the learned judge's calculation of the fees which would have been attributable to the charge period regardless of the dates when the fees would normally have become payable. We think it is more consistent with the general scheme of the Ordinance to enquire what fees would actually have had to be paid within the charge period if no composition had been made, making allowance for the fact that the prepayment was at a discount. The consolidated fee normally payable was £260 a term but the learned judge appears to have found that this was increased by £39 to £299 a term with effect from the Lent term 1972. The composition fee was equivalent to £249.20 for fifteen terms and we therefore assess this element of the standard of living as follows:
The difference between that total and $20,559.02 cannot alter the final result of the case. 43. On the other side of the balance sheet, it is submitted, various official emoluments have been wrongly omitted. These all relate to sums earned during, or otherwise payable in respect of, the charge period but not paid until later. They include, for example, the salary for the half month from 1st to 14th February 1973 (the latter date being that on which the charge period ended) which was not paid until the end of the month. For the reasons which we have given when dealing with general principles earlier in this judgment we think that they were rightly excluded. 44. We come, therefore, to the explanation offered of a standard of living quantified at $207,404.52. We have agreed with the learned judge that it was not enough merely to show that three motor-cars acquired before the charge period had been sold within the charge period without also showing that they came from an untainted source in the first instance, or simply to show that the second Mrs. Hunt had earnings in the region of $50,000 which she may have, or could have, made available towards maintaining the appellant's standard of living. Apart from the sums paid by the first Mrs. Hunt which we have said we would have included had the learned judge included them in the quantification of the appellant's standard of living, the only sum satisfactorily explained was the payment of $21,404.13 from the Refuge Assurance Company Limited. 45. The difference which the appellant was called upon to explain was $50,845.11. 46. There is no question of any presumption of guilt arising: that is specifically excluded in regard to s.10 by s.21. The onus is, however, upon the appellant to explain his standard of living. How is that explanation to be essayed? 47. It is over-facile, in the context of an Ordinance aimed at corruption, to say, as was urged upon us in this appeal, that all the section requires is proof of ability to maintain, as opposed to proof of how an accused person did in fact maintain, the standard of living under enquiry; in other words it is not enough for an accused person to demonstrate that he could have maintained the disputed standard of living out of his official emoluments plus, for example, the proceeds of the maturity of insurance policies, if in fact the evidence shows that the standard was actually maintained with the assistance of moneys from some unexplained source as, in this case, the Ellerbrok account. Thus in the present case the appellant was required, following the over-ruling of the submission of no case to answer, to explain expenditure of approximately $222,000 as contrasted with his official emoluments of a little in excess of $156,000. At the close of the case the learned judge came to the conclusion that the figure of $222,000 should be reduced to approximately $207,000. At that stage, upon the interpretation sought for, it could have been argued that the appellant had explained the $207,000 expenditure and had demonstrated, from a combination of official emoluments, the sale of cars and the proceeds of the Refuge Insurance Policy, command of some $210,000. This, however, would have been to ignore the substantial unexplained credits in, and the use, for the appellant's benefit of, the Ellerbrok account, to fail to require any explanation of the source of capital assets in the form of the cars and generally to close one's eyes to the intent and purpose of the Ordinance. 48. An explanation is not "satisfactory" merely because it demonstrates payment outside the period charged for goods and services enjoyed during the period or by some third party. In any of these events it is legitimate and may be essential to scrutinise the source of the money used for the payment. Thus "satisfactory explanation", for the purposes of this case, means an explanation which shows, upon a balance of probabilities, that the difference between an accused person's standard of living over the period charged and that which would have been commensurate with his present or past official emoluments has, if the standard of living actually maintained has been the higher of the two standards, been paid for with money the ultimate source of which was untainted by any corruption on the part of the accused. We deliberately abstain from any expression of opinion at this stage as to whether an explanation which involved an admission of some other form of illegality as the source of the money in question, could be "satisfactory" within the meaning of this section. 49. Thus to prove that a wife provided the money which made up the difference and that she obtained that money by corruption to which her husband was not a party, would be a sufficient explanation for the purposes of the section. But merely to show that the wife provided the money is insufficient - at any rate in a case where perusal of the wife's bank account shows frequent, substantial, unexplained credits, unrelated to her earnings, and made at a time when the appellant, if not yet married to her, was known to be very friendly with her. For in the absence of other explanation (and at this stage the onus of proof is upon him, upon a balance of probabilities) there is at least a strong possibility that such accretions came from him. And ex hypothesi, to the extent that such accretions were used to maintain a higher standard of living than was commensurate with present or past official emoluments. Similarly, it is not a satisfactory explanation for a defendant merely to say that he maintained his standard of living, in part, with the proceeds of sale of previously acquired capital assets, unless he shows that those assets were acquired with untainted moneys. 50. The learned judge was entirely right to view the Ellerbrok account with the gravest suspicion and merely to point to the existence of a suspect account in somebody else's name does not amount to a "satisfactory explanation". Mr. Cripps complains that the learned judge appears to have taken a suspicious view of assets in possession of the wife before the period charged and to have founded his finding of guilt upon an unsatisfactory explanation, or a lack of explanation, of the source of that money. We see nothing wrong in that approach. Nor is it correct to say that it involves a finding of guilt against the wife for if the substantial accretions to the Ellerbrok account ($222,000 in 13 months) did in fact come from the appellant and were the proceeds of corruption, the wife may have been unaware of their true source. They may even have come from him, having been acquired legitimately by him. But what the Ordinance demands is a satisfactory explanation - and none has been forthcoming. Moreover we find no substance in Mr. Cripps's complaint that to require explanation of the large sums of money which were in the wife's account at a date before the Ordinance came into force is, in effect, to proceed under s.10(1)(b) in a retrospective manner. It was the appellant who introduced, by way of attempted explanation of a charge under s.10(1)(a), this account. The charge necessarily related to a period after the Ordinance had come into operation and if the purported explanation relates to a period before the Ordinance was in operation, it is legitimate to pursue that explanation in relation to that latter period. The process is not one of proceeding under s.10(1)(b) and applying that section retrospectively, but of pursuing an explanation tendered in respect of a charge under s.10(1)(a). 51. Nor is the further argument relevant that, both because she had closed the account before the beginning of the period charged and also because she is not a Crown servant, Mrs. Hunt could not have been prosecuted under the Ordinance in respect of the Ellerbrok account. It is the appellant who is required to explain and if he purports so to do by reference to an account which is, on the face of it, suspect, and proffers no explanation of the suspicious features, he is not giving a "satisfactory explanation". Moreover the source of the cash with which, from time to time Mrs. Hunt paid large bills, remained unexplained. There was no evidence that the sums came from her bank account or from that of the appellant. 52. Although the learned judge in fact called upon the appellant to explain how he could maintain a standard of living quantified at $222,682.06 he eventually came to the conclusion that he had been wrong to do so and that the standard of living should have been quantified at $207,404.52. He appears then to have been of opinion that what he described as "built-in" explanations were not satisfactory and that of that lower standard of living only $177,963.54 had been satisfactorily explained. We see no reason to differ from him as to that. It is true that counsel for the Crown appeared to concede that the moneys paid by the first Mrs. Hunt, by way of an allowance to Alison her daughter by the appellant, and as school fees for Jeremy, came from an untainted source and we therefore accept that a good explanation has been given pro tanto. However, the learned judge did not include these items in his quantification of the appellant's standard of living and although we think they should have been included, the appellant cannot have the benefit of them at both stages of the enquiry and we must disregard them altogether. In the event, therefore, the appellant has failed to give a satisfactory explanation of the standard of living which he maintained beyond the amount of his official emoluments. It is not necessary for us to decide whether we could have supported the conviction if we had come to the conclusion that the appellant had satisfactorily explained a standard of living quantified at $207,404.52 but had not satisfactorily explained a standard of living quantified at $222,682.06. The appeal must be dismissed. 53. Before leaving this case we wish to pay tribute to the manner in which the learned judge conducted the trial in the court below. Although we have disagreed with him on a number of points we have done so only after hearing very full argument over several days, after subsequent consideration, and with the benefit of having before us his careful ruling and judgment. The section which he was the first to be called upon to construe, is one of extreme difficulty and one in relation to which no assistance was to be derived from precedent in this or any other jurisdiction. Representation: A. Cripps, Q.C. & M.H. Jackson-Lipkin (Gordon Hampton & Winter) for appellant. R.G. Penlington, Assistant to Attorney General & F. Wong, C.C. for Crown/Respondent. (1) (1952) 118 N.Y.S. 2d 707 |