Cheng Kelly Kit Yin and Others v. Secretary for Justice

CACV 20/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 20 OF 2013

(ON APPEAL FROM HCAL NO. 127 OF 2012)

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BETWEEN

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Hon Stock Ag. CJHC (giving the judgment of the Court):

Introduction

1.At the centre of this case is the fact that a senior public prosecutor caused to be deleted from the document management system of the Department of Justice a number of documents said to have been relevant to a criminal prosecution.  The defendants contend that that act deprived them of a fair trial and compromised the integrity of the criminal justice system.  So they applied for a stay of the proceedings.  Their application failed.  So they sought leave to launch judicial review proceedings.  Leave was refused; and this is the appeal from that refusal.

2.The subject matter is a proposed trial in the District Court of three defendants who face 10 charges of conspiracy to defraud various banks in Hong Kong by applications for the issue of letters of credit and falsification of documents required for the negotiation of such documentary credits and of causing payments to be made to third parties pursuant to such negotiation when, in each case, so it is alleged, there was no underlying commercial transaction relating to the letter of credit.  The 11^th charge lies against the first applicant and against two others with whom we are not concerned and is a like charge of conspiracy to defraud.  There is a 12^th charge against the second and third applicants of dealing with property known or believed to represent the proceeds of an indictable offence.

3.The trial judge was Judge Douglas Yau.  In May 2012, the applicants asked him to stay the criminal proceedings but in a ruling dated 5 June 2012, that application was rejected.  Because of facts which thereafter emerged – the deletion of documents – the application for a stay was re-opened in July 2012, but that second application was rejected in a ruling dated 10 September 2012.

4.Instead of utilising the criminal appeal process which is available in the event of a conviction, the applicants decided to challenge the second stay refusal by route of an application for leave to apply for judicial review.

5.The notice of application for leave to apply for judicial review is dated 8 October 2012.  The relief sought is an order of certiorari to bring up and quash that decision and an order of mandamus directing the District Court to grant a permanent stay or an order to remit the stay application to the District Court for a new hearing before a different judge.

6.The application for leave was heard on notice and by his judgment dated 18 January 2013, Jeremy Poon J refused to grant leave.  His refusal was based not merely on his finding that this was a case which did not warrant a collateral application but on the merits themselves, for he decided that the grounds relied upon in the notice of application were not reasonably arguable.

7.The notice of appeal dated 1 February 2013 seeks an order to set aside that judgment and an order that leave be granted.  However, given that the hearing before Poon J was on notice and that his judgment followed full inter-partes argument on the merits, Mr Caplan QC, for the applicants (now the appellants), sensibly accepts that in the event of success upon this appeal, there would be scant practical purpose in merely granting leave to enable argument at first instance on the application for judicial review.  Accordingly, we shall treat the hearing of the application for leave as having been a hearing of an application for judicial review and the decision of Poon J as a decision to dismiss that application.

The importance of context

8.We regret to say that the presentation of the papers was less than helpful; not all relevant documents were contained in the files compiled for the hearing, so key additional documents were presented piecemeal during the hearing, and we ended up with a sizeable bundle of documents in disparate clips of paper and in no chronological order.  This has made our task difficult, for the significance of the act of deletion of some documents in May 2012 which lies at the heart of this case can only properly be assessed by appreciating the detailed chronological context in which that conduct occurred.

9.On the face of it, the deletion by a prosecutor of case relevant documents from a central repository whilst the case is in progress and whilst relevant documents are sought is a most serious matter and the mind will immediately tend to the conclusion that the deletion was intended to withhold documents that may be of assistance to the defence.  In this case, the District Court judge held that the prosecutor did not act in bad faith and it is that finding which is said by Mr Caplan to be perverse.

10.Yet, face value assumptions must always be conscientiously tested against full context.  There are few more salutary judicial reminders than that of Megarry J in John v Rees that :

“As everybody who has anything to do with the law well knows, the path of the law is strewn with examples of open and shut cases which, somehow, were not; of unanswerable charges which, in the event, were completely answered; of inexplicable conduct which was fully explained; fixed and unalterable determinations that, by discussion, suffered a change.”[1]

11.The reminder is apt to this case because, on the one hand, it is asserted that the deletion of the information must be assumed to have been for the purpose or, at least with the effect of, depriving the defence of material helpful to its case whereas, on the other hand, the respondent, although decrying the deletion of the information, asserts that it was for an altogether different and personally idiosyncratic purpose with no intent to deprive the defendants of anything at all.  It seems that the judge came to the latter conclusion and in order to assess whether he fundamentally erred in so doing, the detail is vital.

The alleged criminal conduct

12.We can conveniently take the broad background of the case from the helpful summary provided by Poon J:

“6. At all material times, Wing Fai Construction Company Limited (“Wing Fai”) engaged in the business of, among other things, engineering and construction. It maintained bank accounts with 4 banks (“the Banks”). The 1^st applicant was a director of Wing Fai until her resignation on 22 April 2002. The 2^nd applicant, the 1^st applicant’s daughter, and the 3^rd applicant were shareholders and directors of Famous Capital Enterprises Ltd (“Famous”). The 3^rd applicant was also the account clerk of Wing Fai. D4 and D5 were the shareholders and directors of King Capital Engineering Ltd (“King”) and King’s account clerk and project manager respectively.

7. Between 3 September 2001 and 19 January 2002, Wing Fai made a total of 11 applications to the Banks for letters of credit to be issued in favour of Famous or King, as the case may be, for the purported sales and purchases of asphalt, concrete mix and steel bars when none of the underlying transactions in fact existed. The application documents were all signed by the 1^st applicant. Supporting documents submitted by Famous and King were signed by the 3^rd applicant and D4 respectively. 11 Letters of credit totaling HK$31 million were then issued by the Banks. This constituted the 11 charges of conspiracy to defraud. Further, some of the proceeds of the letters of credit were deposited into the bank account of Famous, which were then applied by the 2^nd and 3^rd applicants as signatories of the account between 12 September 2001 and 1 February 2002. Some other proceeds were deposited into King’s bank account, which were paid by D4 and D5 to another company by way of a cheque dated 30 January 2002 and signed by them. This constituted the two charges of money laundering.

8. On 22 April 2002, Wing Fai was sold to Sino Glister International Investments Limited. A winding up petition was soon presented thereafter. On 6 July 2002, provisional liquidators were appointed. On 9 December 2002, Wing Fai was ordered to be wound up. Liquidators were appointed on 28 February 2003.

9. Following investigations, the liquidators made a report to the Commercial Crime Bureau on 20 January 2004. The 1^st applicant, the 3^rd applicant and D4 were arrested on 14 May 2008; D5, the following day; and the 2^nd applicant, 18 July 2008. They were formally charged on 10 December 2009.

10. The defendants’ principal defence in the criminal proceedings appears to be that there was no economic loss or any risk of such loss to the Banks or Wing Fai.”

Pressure by the liquidators

13.The basis of the first application for stay was twofold: first, unjustifiable delay, with which the judicial review proceedings are not concerned and, second, that “the liquidators had themselves or through their legal representatives, used the criminal prosecution of the defendants as leverage against the defendants to pressure them into a global settlement of the various civil proceedings that was ongoing between them”; that the liquidators failed to disclose material facts to the police when they filed a complaint; and that the police and the Department of Justice were “influenced by the conduct of the liquidators to the extent that they had abdicated their responsibilities as an independent investigator and prosecutor respectively.”[2]

14.This theme is reflected in the affirmation of Mr Midgley, solicitor for the applicants, filed in support of the judicial review application in which he says that :

“The principal issue in this application was whether the independence, impartiality and objectivity of the Department of Justice had been compromised by the alleged misconduct/criminal activity of the liquidators … who had launched a criminal investigation … with the leave of the High Court by making a written complaint to the [Commercial Crime Bureau]. The defence submission was that the liquidators had initiated the complaint for an improper purpose, namely to force a settlement of their civil proceedings against the defendants when there was, in fact, no economic loss and when they were anxious simply to recover the costs of the liquidation and excessive fees. The motives/conduct of the liquidators had compromised the prosecution and, when faced with reason to doubt the credibility of the liquidators, the DOJ had turned a blind eye and had abdicated its independence, objectivity and responsibilities as prosecutor.”[3]

15.The civil proceedings to which reference is made were ongoing civil proceedings concerning Wing Fai, the detail of which matters not for present purposes save that there were periodic ongoing negotiations between the liquidators and those representing the directors of Wing Fai for a settlement of those actions.  The relationship between the liquidators and the directors of Wing Fai hardly ran smooth for we see that there was satellite litigation instituted by the directors (including the applicants) against the liquidators which included proceedings in defamation and for alleged contempt of court.

16.The basis of the applicant’s assertion of undue pressure by the liquidators for a settlement stems from a number of suggested incidents. The contention is that on a number of occasions the liquidators proposed a settlement figure of HK$35 million (later, a figure of HK$38 million) with an indication that if a settlement in that sum was reached, the criminal complaint would not be pursued.  The position of the directors was that there could be no settlement unless the prospect of criminal proceedings was withdrawn.

Events in 2008

17.We have seen from the summary provided by Poon J that on 14 May 2008, the first and third applicants were arrested; the second applicant was arrested in mid-July 2008.

18.Following the May arrests, there were several meetings in 2008 between legal representatives of the applicants and personnel in the Department of Justice.  The first two were on 23 June and 1 September; the third on 16 October.  They were each held at the instigation or request of those representing the applicants in an attempt to persuade the Department of Justice that the interests of justice would adequately be served by discontinuing the criminal proceedings or rather, the threat thereof, thereby opening the way to a settlement of the civil proceedings; a course which was suggested to be acceptable since the banks had, in the event, suffered no loss.  

19.The meeting on 16 October 2008 was attended on the part of the Department of Justice by Mr Gavin Shiu, a Senior Assistant Director of Public Prosecutions who was in supervisory charge of the case and Ms Denise Chan, Senior Public Prosecutor who was the advising counsel in the case; Mr Clive Grossman SC, acting for the applicants; Mr Grossman’s junior, Mr Sham; Mr Camille Jojo, the solicitor acting for the applicants; and Mr Hill, one of the liquidators.

20.A relatively full note was taken of that meeting by Mr Sham, a copy of which was before Judge Yau. It shows that at the meeting it was emphasised on behalf of the applicants that the letters of credit, which were the subject matter of the CCB investigations, had all been paid; the stumbling block to achieving a global settlement was the absence of finality to the criminal investigation; and that whilst it was appreciated that the prosecuting authorities had their duty to investigate possible commission of crimes, the applicants, who were emotionally drained by the long-running and greatly expensive litigation, were anxious to ascertain whether the prosecuting authorities might agree “after weighing the interests of all parties, … the cessation of all hostilities is the best outcome.”  At this meeting, Mr Hill said that he could not recall any debt being outstanding and that “settlement is the best way forward.”  The note records Mr Shiu as saying that : “There is no quid pro quo”, but adding that he wanted to see if any individuals had suffered and that he would speak with Ms Chan and have a conference with the police.

21.A few developments immediately thereafter merit mention:

(1)   The following morning, 17 October 2008, Mr Shiu sent an e-mail to Ms Chan asking her to compile file notes in relation to the previous day’s meeting.  The note said: “I think it important to document everything.  There is obviously a lot of money flowing about in this case and if things turn out unsatisfactorily for them, they may try to use their call for meetings in some way.  If we have adequate notes it will assist us.”

(2)   Ms Chan sent a memorandum on or shortly after 16 October, routed through Mr Shiu, to the police officer in the case asking him what he knew about the liquidator’s involvement in the matter: “Have you received any letters from [ the first applicant’s] legal representatives indicating [ that she had been written to, pressing her to settle civil proceedings ]?  ... We would like to know if you find [the liquidator] misleading or deceptive?  Do you have any suspicions that the police may have been misled?  Please consider the issue critically and carefully, as it may be possible that some matters raised by the liquidator, with hindsight, could be viewed as ambivalent or ambiguous.”

(3)   In a further memorandum at about that time, also routed through Mr Shiu, Ms Chan said to the police: “As you know, the facts supporting this case are rather stale.  It is a matter that should be given priority, for if we intend to prosecute we should not allow the investigation of peripheral issues to delay collecting evidence of the L/C fraud.”

(4)   The reply from the police to Ms Chan, dated 17 October 2008 was to the effect that Mr Kennedy, the member of the team of liquidators in respect of whom the query had been raised, had never provided a statement to the police, merely some documents to initiate a report ( implying therefore that there was no current basis to suspect that any misleading information had been provided); and that no letter concerning settlement proposals had ever been received from the first applicant’s legal representatives.

22.There was evidence that a few days before the meeting of 16 October, Mr Hill had spoken to Mr Jojo suggesting that in the event of a settlement “he would be in a position to confirm to the DOJ that the liquidators had no further interest in pursuing a criminal complaint.”[4]

23.There was evidence by another solicitor that in the context of seeking a global settlement of the civil proceedings in the sum of $38 million, it was suggested by one of the liquidators that in the event of such a settlement there would be “no worries for the criminal matter”; in other words, that they would withdraw the complaint.

24.There was also testimony that in March 2010, in the context of settlement negotiations, a solicitor (referred to as “Mr A”) representing the liquidators suggested to a solicitor acting for the applicants that Mr Hill could stay out of the jurisdiction so as to avoid giving evidence, in which case the prosecution would “lose impetus”.  It is fair to record that this assertion has never been put to Mr A.

25.In the event, the settlement negotiations did not bear fruit.  We are informed that they collapsed a few weeks after the October 2008 meeting.

Charging the applicants

26.In early September 2009, solicitors acting for the liquidators wrote to the Department of Justice stating that the settlement discussions had stalled, that there appeared to be little prospect of settlement, that “we write to enquire the progress of the prosecution of the respondents”; and that “our client has also instructed us to offer his assistance in regard to this prosecution.”

27.The applicants were charged with the present offences in December 2009.

28.“Accordingly,” says Mr Midgley “there was evidence that the liquidators have been acting in an improper manner and were using the criminal process for an improper purpose. The defence sought at an early stage further disclosure from the DOJ regarding the contact between the Department/police and the liquidators prior to charges being preferred in December 2009.  It was material to know to what extent the Department was aware of the conduct and motives of the liquidators and to what extent it could be argued that it had compromised its duties and obligations as a prosecutor.  Were the liquidators able to push the button to arrest or charge at a given time?  Was the Department aware of the use of the criminal process by the liquidators for an improper purpose, namely to force the payment of a ‘settlement’? What actions or supervisory steps did the DOJ take to protect the integrity of the proceedings?”[5]

The request for disclosure

29.In August 2011 a letter was written to the Department of Justice by those acting for the applicants seeking all correspondence, documents, notes of meetings and other contact between the liquidators on the one hand, and the Department of Justice and the police on the other.  The reply, dated 21 September 2011, stated that notes of such meetings as may have taken place before 4 September 2009 between the liquidators on the one hand and the Department of Justice and the police on the other had been misplaced and could no longer be located; but an index of correspondence between the Department and the liquidators after that date was attached.  It is relevant to note that such correspondence as had taken place between the police and the liquidators before that date was still available and further that neither the Department nor those acting for the applicants have asked the liquidators to provide copies of such correspondence or notes in their possession relating to meetings or representations between themselves and the Department before 4 September 2009.

The events of May 2012

30.In early May 2012, those acting for the applicants filed their submissions in support of the application for a stay.  The theme of the application, which we see from the written submissions, is that it was an abuse of the court’s process to use that process for an indirect or improper purpose; and that in this case the proposed prosecution was but a device to force the applicants to succumb to the liquidators’ pressure to settle the civil litigation.

31.As a result of receipt of those written submissions, there flowed an exchange of memoranda within the Department of Justice which have now become of central relevance.  We need to deal with them in some detail.

32.On 9 May 2012, shortly before he was due to go on leave, Mr Shiu was given a copy of the defence submissions for the stay application.  It is right to record the fact in March 2010 the case file had been transferred from Ms Chan to another counsel who was not under Mr Shiu’s supervision.

33.Mr Wesley Wong, Deputy Director of Public Prosecutions, wrote a lengthy note to Mr Shiu dated 21 May 2012, the date upon which the hearing of the stay application commenced.  It is a four-page note which sought from Mr Shiu “such information and documents which may be relevant” to the pending stay application.  It refers in particular to the meeting of 16 October 2008 and requires “a detailed written explanation” in relation to a host of questions concerning the meeting; for example –“the full circumstances leading to the holding a meeting”; who initiated the meeting; the purpose of the meeting; why, instead of a meeting, written representations from those acting for the applicants were not made; whether Mr Shiu had sought approval from any of his superior officers to hold the meeting; whether the police had been invited to attend the meeting and if not, why not; and whether or not Mr Shiu’s decision to agree with Ms Chan’s advice in favour of prosecution was affected by any extraneous considerations.  He was required to reply by noon 24 May.  

34.It is relevant to state that this note from the Deputy Director to a senior officer in the Department of Justice is in formal vein, carrying the colour of interrogatories and the clear implication that the fact of holding the meeting on 16 October 2008 without prior approval was a matter of concern.  We make the point not by way of criticism but as fact, to the relevance of which we will return.

35.On 21 May, Mr Shiu was on leave.  He returned to work on 23 May.  He was obviously not pleased with the tone and content of the note with which he was then presented.  That much is evident from his reply dated 23 May.  He complained of the short notice he was given and his irritation, even anger, is illustrated by a passage in which he says:

“I ask in what capacity do you write to me? Are you the instructing solicitor of [the case]? Are you a trial counsel? Are you writing as a representative of my employers? Why can you not speak to me about this matter?”

36.This response and other exchanges did not go down well with the Director of Public Prosecutions who wrote an urgent note to Mr Shiu dated 24 May 2012 referring to Mr Shiu’s “reluctance … to cooperate with the prosecution team in the handling of the case.”  The Director formally required him to provide detailed explanations in response to the note 21 May and to comply as well with “any further directions that I may give you in respect of the handling of the case as well as any possible examination that I may conduct on the appropriateness of the participation by DOJ officers at the meeting of 16 October 2008 or any other related matter.”

37.The outcome was a reply by Mr Shiu dated 24 May 2012 much in the form of a witness statement.  He there tells of the normal responsibility for case files in the section for which he was responsible; that at some stage the case file was allocated to Ms Denise Chan who was advising counsel for the case and he supervising counsel; that the responsibility of Ms Chan was to provide prosecutorial advice and to be in day-to-day control of the case; himself, to approve or disapprove advice given.  In relation to the meeting of 16 October 2008 he said that he believed that Mr Grossman had approached Ms Chan for a meeting and had asked Mr Shiu to be present.  In his statement, Mr Shiu contends that “there was no need to seek approval from anyone as this was within the normal working practice of the DOJ and in particular the [Commercial Crime Unit]. … .”  At all times, he said “as far as I was concerned Ms Chan and I acted with integrity and consistently with the then published “statement of prosecution policy and practice”.  Ms Chan’s advices were consistent with that and I countersigned them as I was satisfied that they were valid opinions based on the facts stated in the advices.  I have been asked if her opinions on my countersigning was affected by extraneous considerations.  I am not clear what is exactly meant by the enquirer but I was not affected by any consideration inconsistent with all or any of my duties.”

38.Mr Shiu was due to testify in the stay application on Tuesday 29 May 2012.

The deletion

39.On Friday May 25, the day after he had made his statement, there occurred the event which lay at the heart of the second stay application and is the act upon which the application for leave to apply for judicial review concentrates.  Mr Shiu instructed his secretary, Ms Rebecca Nip, to download a number of documents from the Document Management System onto a USB thumb drive and then to delete them from the System.  To the precise circumstances in which he came to do so, we will return but it is common ground that he did so.

Testimony in May 2012

40.On 29 May 2012, Mr Shiu testified.  He was asked about the extensive delay in pursuing the prosecution and said that whilst he could not speak as to much of it because the complaint had been made well before he came into the case, he thought it had partly to do with the fact of ongoing litigation and with issues of legal professional privilege[6]. He said that by October 2008 he knew very little about the case and remembered in particular some problem about the return to Hong Kong of the second applicant, the first applicant’s daughter.  As for the meeting of 16 October 2008, he repeated the contention that whatever the attitude of the liquidators “we would carry on with our prosecution if we wanted to, using our own policy and practice and going by our own investigation and we would not pay heed to what [Mr Hill, the liquidator who attended the meeting in October] suggested in any way. … We would not allow that to interfere with our decision-making.”[7] As for the missing file, he knew nothing about it save what he had been told.

41.There was no mention made by him of the earlier meetings with Mr Grossman; but it is fair to say that he was not asked whether he had had previous meetings.

42.The following day, 30 May 2012, Ms Denise Chan testified.  The effect of her evidence was that she was the person who recommended who should be charged and what charges should be preferred, a recommendation which was reviewed by Mr Shiu; that the charges which were in fact laid were those which she had recommended; and that at no stage in the making of the recommendations was she in any way influenced by anything said by the liquidators.[8] Contrary to the evidence of Mr Shiu, she said that he asked her to attend the meeting with Mr Grossman.  As to the impact of improper motive by the liquidator, had that been established, she noted that whilst that would have been a matter for investigation, nonetheless “there was other evidence in this case as far as I can recollect, because if I remember correctly, he was only a person who made a complaint to the police.”[9]

June 2012

43.What happened next is that Ms Chan was upset by the implication, which arose both from the cross-examination the day before and newspaper reports the following morning, that the meeting with Mr Clive Grossman on 16 October 2008 had been arranged by her.  She then realised that she could retrieve old e-mails from her archive folder; which she did and discovered a number of documents which revealed not only the memoranda sent out by her pursuant to Mr Shiu’s instructions following that meeting but also the fact of the meeting on 1 September 2008 between Mr Grossman and Mr Shiu, with Mr Sham and one other in attendance.  She immediately drew this to the attention of Mr Wesley Wong.

44.The notes of the meeting of 1 September, compiled by Mr Shiu and dated 2 September 2008, had been copied by him to Ms Chan, a fact of some significance.  There is no challenge to the accuracy of what is there recorded, namely, representations by Mr Grossman attacking the bona fides of the liquidators and emphasising that, in the event, no one had suffered financially. If the civil case were settled, he asked, would the prosecution drop the case? “I informed Mr Grossman SC,” Mr Shiu recorded “that I was not making any decision or comment vis-a-vis his request.  He said he did not expect me to, until after we had considered everything.  I asked for [a copy of a letter referred to during the meeting in which the first applicant had been pressed to settle the civil proceedings].  I did say that normally we make no promises and there is no quid pro quo for making a civil settlement.  Mr Grossman agreed but said this was an abnormal situation because of [the liquidator’s] involvement and other factors he had outlined.”

45.We next see from admitted facts dated 1 June 2012 – that is, whilst the first stay application was still in progress – that the applicants were provided with a copy of the note of the meeting dated 1 September 2008.

46.On 4 June 2012, there was an interview conducted by David Leung of Ms Rebecca Nip, who was Mr Gavin Shiu’s secretary.  She was asked about a document that was missing from the document management system, namely, an e-mail sent by Ms Nip to Ms Chan on 16 October 2008 attaching the case conference record of the meeting on 1 September 2008.  According to the record of that interview, she was reluctant to answer “anything that involves my boss.  He has said to me that if anyone approaches me, I cannot answer.”  She said that as for the missing document, her boss had “instructed me to save [certain documents] in his [USB thumb drive]” and having done so, she deleted them from the document management system.  “He said he wanted to keep it himself, has to save at his thumb drive.”  She was told by Mr Leung not to inform Mr Shiu that the matter had been enquired of her.

The first ruling

47.This was the state of play at the time of the first ruling dated 5 June 2012.

48.The judge noted the gravamen of the applicant’s complaint, delay apart, that “the police and the Department of Justice had been influenced by the conduct of the liquidators to the extent that they have abdicated their responsibilities as an independent investigator and prosecutor respectively.”

49.He noted that, on the evidence before him, “Mr Shiu was mindful of the role that the liquidator might be playing or seeking to play in the criminal prosecution.  He was the one who questioned the integrity of the liquidator, asking the police for information.  Having heard from Ms Chan in the witness box, I have no doubt that she had acted professionally and without any regard to anything the liquidators might have said on the criminal proceedings. I believe her when she said that she made that decision based only on the evidence and the evidence alone as to who to charge and what to charge them with.”  He noted as well, as to the meeting of 16 October 2008, Mr Shiu’s comment in relation to the representations made to him that “there is no quid pro quo.”

50.“My finding,” he said “is that, whatever the motives and conduct [of] the liquidators or their legal representatives, the Police and in particular the Department of Justice has proved that they had maintained their independence, impartiality and objectivity throughout.”

After the first ruling

51.On or about 7 June 2012, the police were called in to the Department of Justice to investigate the deletion of documents by Mr Shiu.

52.The long and short of this exercise, in terms of the result, is that all the documents transferred to the USB thumb drive and deleted from the document management system were retrieved.  So much is common ground between the parties.  In all, 27 files had been deleted from the system between 20 and 25 May 2012 of which only seven were files which had been created by Mr Shiu or Ms Nip.  We are told that the record of the minutes of 1 September 2008 was separately restored.

53.Of those seven documents, two were unconnected with this case; one was a note from Mr Shiu to Ms Chan dated 16 October 2008 asking her whether there was any substance to the claims made by Mr Grossman about the liquidator; another was a file note about the case but which is not said to have any bearing on the stay issue; similarly with an attendance note dated 17 July 2008; and notes of a telephone conference with the police on 16 July 2008 about the proposed arrest of the second applicant on her return to Hong Kong.

54.In a note from Mr Wesley Wong to Ms Chan dated 27 June 2012, Mr Wong said that on 22 June 2012, Mr Grossman told the Department of Justice that “having gone through fee notes and diaries, there was in fact one more meeting held ‘at the office of Gavin Shiu’ on 23 June 2008.”  Ms Chan was asked to see whether she had any records relevant to that meeting.  She found manuscript notes she had made, and they revealed a theme advanced by Mr Grossman similar to that in the subsequent two meetings, namely, concern about the suggested misleading conduct by the liquidators, with a view to persuading the prosecutors that this may not be an appropriate case to pursue further.  There is included in the notes the phrase: “Premature to comment charge or not.”  The record also suggests that Mr Grossman said that when the second applicant arrived in Hong Kong in July she would surrender to the police and that those representing her asked for an undertaking not to arrest her upon her arrival in Hong Kong.

The second application

55.All matters discovered by the Department of Justice after the hearing of the first application were disclosed to those acting for the applicants.  This resulted in a second stay application which concentrated upon the deletion of documents and the suggested ramifications thereof.  

56.At the hearing of the second application, Mr Shiu, Ms Chan and Ms Nip testified:

(1)   Ms Chan testified that the meeting of 16 October 2008 was not arranged by her at Mr Grossman’s request, as had been suggested by Mr Shiu.  Nor had she told Mr Shiu that Mr Grossman did not want the police to be present at the meeting.  The judge asked her a number of questions to ascertain whether it was still her position that in recommending whom to charge and with what offences, she had not been influenced by anything communicated by the liquidators in relation to Wing Fai; and she confirmed that that was indeed her position.

(2)   Mr Shiu was cross-examined extensively by leading counsel for the applicants:

(i) He agreed that documents relevant to a current investigation or prosecution should never be destroyed; but he baulked at the suggestion that they should never be deleted from a computer system, suggesting that in certain circumstances that might not matter if the record was still intact on some other memory device[10].  He said that when he made his statement prior to the proceedings in May, he had not remembered the meetings with Mr Grossman prior to 16 October 2008 and as for the differences between his evidence and that of Ms Chan as to the circumstances in which the third meeting came to be held, he was relying on his memory and the events were almost four years ago.[11]

(ii) As to the circumstances in which he instructed his secretary on 25 May 2012 to delete documents, he said that he had asked the previous day to see whether she could find relevant documents and on the morning of 25 May she presented him with a sheaf of papers at which he glanced briefly and shortly after asked her to put them on a thumb drive and delete them from the system.  Then this:

“Q. … why did you want her to delete them?

A. Well, my concern was that in fact -- was that I wanted to be in control of them, in possession of them and that when my colleagues wanted them I would be – know when they got them and in what context and I'd also be able to explain to them the context of the drafts because, as I have just been saying to you, they are drafts. I am not 100% certain whether are the final version that went on the record. The record is the hard copy which has been lost and I was just a little bit concerned. In fact, if anything, I was a bit concerned that my secretary would get dragged into some potential conflict of my colleagues and that’s one of the concerns. That was one of my concerns.

Q. So you were really trying to protect her, in effect.

A. That’s one of the reasons, yes, and it was only a momentary decision…. . It was just one of those momentary things. And obviously, now, I regret that I did that … .”[12]

(iii) He was asked why, when he gave evidence on 29 May, he did not draw to the attention of the judge the fact of the meeting of September 2008, which was reflected in one of the deleted documents; and he replied that he did not see the document until the evening 31 May[13]. He denied that he had told Ms Nip that if anyone approached her, she should not speak to them[14].

(3) Ms Nip said that it was Mr Shiu who presented her with a clip of documents and asked her to find them in the document management system and, having first transferred them to his thumb drive, to delete them from the system. She did so and returned the thumb drive to him. She was asked whether on any occasion other than that, Mr Shiu had ever asked to do something like that before and she replied: “Only occasionally”; she did not know what those previous documents were, whether his personal documents or not.

The impugned ruling

57.The judge noted the applicants’ contention that the evidence of Ms Nip suggested that there might be other documents in relation to the case which had been deleted and since no one knew what those documents were and what information they might contain, the applicants could not enjoy a fair trial; further, that the instruction to delete certain documents and Mr Shiu’s failure to inform either the prosecution or the defence or the court about that deletion had “so prejudiced the integrity of the justice system that the court ought to exercise its discretion to stay proceedings even if the defendants could still have a fair trial.”

58.The judge noted that all documents removed from the computers had been restored and that it was not suggested by the applicants that the restored documents were relevant.  As for the answer given by Ms Nip that on occasion she had deleted documents on Mr Shiu’s instructions, the judge’s interpretation of that evidence was that the deletion of documents was “nothing out of the ordinary” and the judge concluded that “there is insufficient evidence to support the drawing of an inference that since Nip had done other deletions before, there must be documents relating to this case that had gone missing.”

59.As for Mr Shiu’s motive in deleting documents, the judge said that Shiu must have been well aware that there was a backup system, to which he had not sought access and he had openly asked another person to do the deletion for him and the nature of the documents themselves which were retrieved showed that “there was nothing for Shiu to hide.”  Furthermore, the notes of the meeting of 1 September 2008 had been copied to Ms Chan and he had not asked her to delete the record from her computer.  “I find,” he said “that I can accept Mr Shiu’s explanation given in court of why he instructed Ms Nip to locate and delete the files from the service.  It may not have been the wisest move on his part but I do not find that there were any sinister motives behind the deletions.”  He noted further that the meetings in question had been held with the applicants’ legal representatives so it could hardly be suggested that he was hiding anything from them.  Then this, which is said by Mr Caplan to be a perverse finding which taints the findings as a whole:

“I find that there is not enough evidence to prove that Mr Shiu had acted in bad faith in the deletion of the documents and his failure to disclose to the court such deletions.”

60.Accordingly, the judge held that the applicants had failed to prove to the requisite standard that they were deprived of a fair trial.

61.As for the second limb of the stay application, that the conduct in question was an affront to the integrity of the criminal justice system such as to warrant a stay, the judge noted key principles, namely, that it was only in exceptional circumstances that a stay would be ordered where a fair trial was possible and, citing Lord Steyn in R v Latif[15] as referred to in HKSAR v Lee Ming Tee & Anor [16] “[i]n the absence of a finding of “bad faith”, [exceptional circumstances warranting a stay] will rarely, if ever be [established] in a case where a fair trial is still possible.  Even if there be a finding of ‘bad faith’, that finding would not necessarily conclude the matter.”

62.The judge took into particular account that at the meeting of 16 October 2008, Mr Shiu “had tersely indicated that there would be no quid pro quo from the Department should the parties choose to settle”; that documentary evidence showed that after the meeting, specific enquiry had been made of the police about the integrity of the liquidators and that Ms Chan, to whom primarily fell the decision whether to prosecute, was “alive to that issue.”  Long after the applicants had been arrested and charged, Mr Shiu instructed his secretary to seek out some files, copy them to a thumb drive and then delete them from the office computer.  The motive, said the judge, was innocent.  Whereas “on the face of it, this is suspicious action, but if one looks at the contents of the documents deleted and restored as well as the circumstances surrounding the deletion, there was nothing much in relation to the deletions that is relevant to the present case.”  He noted Mr Shiu’s failure to inform the Court of the deletion but “taking all the circumstances into consideration, a proper balancing exercise would lead one to conclude that no stay should be granted.  By my reasoning above, I find that the conduct of Mr Shiu was not done with bad faith.  I further find that his action in instructing Ms Nip to make the deletions and his failure to tell the court about the instructions is not so serious that ‘irreparable prejudice’ would be caused to the integrity of the judicial system if the prosecution were continued.”

63.Accordingly, he rejected the second application.

The notice of application

64.The notice of application for leave to apply for judicial review asserts that “any reasonable tribunal should have found on the evidence that Gavin Shiu acted in bad faith and that his conduct and the wider ramifications of his lack of candour undermined the prosecution’s fundamental duty of disclosure and the integrity of the proceedings such that a permanent stay should have been ordered”; and that “this application has … wider importance to the system of criminal justice in Hong Kong, to the standards which the courts expect and require of prosecutors, and to the public perception as to whether those standards are in fact maintained.”

The judgment of Poon J

65.Poon J was unimpressed by the suggestion that other documents relevant to the case may have been deleted earlier than May 2012; the inference to that effect sat ill, he thought, with the nature of the documents recovered.  They simply did not support the suggestion that he was seeking to hide from the defendants, documents that were or might be of use to them.

66.As to the second limb of the stay application – the one which concentrated on the integrity of the criminal process generally – the judge said that in the overall circumstances of the case, the conclusion of the District Court judge was correct; at the close of the submissions on the first stay application, the missing minutes deleted by Ms Nip had been provided to the defence and, in any event, it was beyond dispute that at the meetings in question Mr Shiu had made it amply clear that any global settlement pursued by the liquidators had no bearing, as far as he was concerned, on the question whether the prosecution would be pursued.  The District Court judge had accepted Ms Chan’s evidence that the decision was hers and that she was in no way influenced by the liquidators’ conduct.  On the merits, Poon J’s judgment was against the application, but he commented that in any event there existed no exceptional circumstances that warranted the exercise of the court’s supervisory jurisdiction to interfere with the criminal proceedings.  As far as he was concerned, the applicants had failed to establish a reasonably arguable basis for the grant of leave and, accordingly, he refused leave.

This appeal

67.This appeal is in effect a regurgitation of the arguments in the court below.  It is said, as to the issue of abuse of process, that the instruction of a case officer to delete relevant documentation during the currency of criminal proceedings constitutes serious misconduct and that it is palpably clear that Shiu acted in bad faith; there could be no acceptable explanation for his conduct other than that it was to undermine the disclosure process which is a fundamental requirement of a fair trial.  Having regard to Ms Nip’s evidence that deletions had occurred before, speculation that material relevant to this case had previously been deleted was reasonable speculation.  Not only was it no longer possible for there to be a fair trial, but the executive conduct in this case was so grave as to warrant a stay on the basis that it constituted an affront to the conscience of the court and undermined public confidence in the integrity of the criminal justice process.

68.It is conceded by Mr Caplan that it is only in exceptional circumstances that the court in its supervisory function will entertain a challenge collateral to ongoing criminal proceedings but, he contends, serious misconduct must be admonished and the circumstances of this case were unique, such that it was inappropriate to permit the criminal proceedings to roll on.

Analysis

69.We are firmly of the view that there is no valid basis upon which to impugn the refusal of the District Court judge in July 2012 to order a stay; that the conclusions drawn by Poon J were correct; and, most particularly, that there has been shown no valid basis upon which the Court of First Instance ought to have been asked to exercise its supervisory jurisdiction in the face of the alternative remedy available to disgruntled defendants in criminal proceedings, namely, the normal criminal appellate process in the event of a conviction.

70.But for the fact that, on its face, the deletion of material by a prosecutor is such a troubling occurrence, the call upon this supervisory procedure might properly have been rejected summarily.  Although it was not rejected summarily, a study of the evidence in full, the fact that what was deleted was retrieved and, in so far as it related to the case at all, related to events the details of which were well known to the defence and had nothing to do with the evidence relating to the charges themselves, readily illustrates the proper exercise of the District Court judge’s discretion and that a collateral challenge was not warranted.

71.The core complaint is that the District Court Judge concluded that Mr Shiu did not act in bad faith.  It seems to us, in context, that by that he meant that Mr Shiu was not engaged upon a deliberate course of conduct designed to enure to the disadvantage of the applicants in the criminal case.  But, even if the judge was generous in his exoneration of Mr Shiu’s conduct or motives, it appears to us that it was perfectly open on the evidence for him to conclude that such unacceptable conduct upon which Mr Shiu had engaged was not designed to prejudice the defendants.  And if that be so, the application for a stay was one which sought the court’s action as a punitive measure rather than because the circumstances as a whole were such as to render it unconscionable for the criminal case against the applicants to proceed.  The former motivation for relief, the punitive course, is not an appropriate basis upon which to order a stay: see HKSAR v Ng Chun-to Raymond & another.[17]

72.What, one is bound to ask, is the motive to be attributed to Mr Shiu’s conduct?  One may postulate three alternatives:

(1)   to hide evidence that may undermine the alleged criminal liability of the applicants in relation to the charges they face;

(2)   to hide evidence that the prosecution has been pursued for an improper purpose which in the context of this case means as a weapon to force settlement of the civil actions; or

(3)   as part of a dispute or battle of wills internal to the Department of Justice, in which Mr Shiu saw himself unjustly treated with hostility by senior officers to which treatment or perception he reacted in anger, or in apprehension as to his own position for taking part in meetings with Mr Grossman without the authorisation of his seniors.

73.The first alternative may safely be discounted.  It has never been put forward as a realistic motive in this case and the documents retrieved do not in the slightest contain material which casts some new light, heretofore unknown to the applicants, upon their culpability.  Indeed, the core facts seem to be admitted with the sole issue resting upon the question whether economic prejudice or the risk thereof may be shown.

74.As for the second alternative, the one suggested by the applicants, a rational analysis of the established facts leads ineluctably against such a conclusion.  The established facts are these:

(1)   The applicants were eager to settle, so long as the prosecution was dropped.  The liquidators were eager to settle and at the meeting of 16 October were making representations in support of dropping the criminal prosecutions.  The prosecution is said to have been dancing to the tune of the liquidators: that was the basis of the application for stay.  Yet at no stage did the prosecution as much as hint that the prosecution would be dropped.  To the contrary, we see twice recorded the stated position of Mr Shiu that there would be “no quid pro quo”.

(2)   The testimony of Ms Denise Chan was that she was in no way influenced by the liquidators.  That testimony was accepted by the judge.  There is no challenge to her veracity or to that finding.

(3)   The documents deleted were all recovered and there is nothing in them to support the theory that Mr Shiu was hiding anything that might assist the applicants.

(4)   The allegations made by the applicants that the liquidators had misled the police were investigated at the behest of Mr Shiu.  In his meeting with them on 16 July 2008 he disclosed to them the fact of his meeting with Mr Grossman on 23 June.  As for the meeting on 1 September 2008, which he also did not mention in court when he first testified, he had copied his notes of that meeting to Ms Chan; and the meeting notes of 16 October referred to “our last meeting”.  This sits ill with the notion that he was intent on hiding the fact or content of those earlier meetings; a notion that also ignores the fact that the meetings were called at the behest of those acting for the applicants themselves: Mr Shiu could hardly have thought that the applicants were unaware of the meetings.

(5)   The judge had the advantage of twice hearing and seeing Mr Shiu testify.  That does not conclude the matter in favour of the judge’s analysis but it is a relevant factor.

(6)   In so far as the applicants stress the fact that deletions were made on other occasions, Mr Shiu was not recalled to be asked what those deletions might have been.  In the light of what we know about the documents deleted in May 2012, there is no basis upon which to infer that what was earlier deleted may have been documents about this case the revelation of which might have assisted the applicants.

75.As against that, there is much to support the notion that the deletions were occasioned by strife between Mr Shiu and his superiors within the Department of Justice.  The questions asked by them of Mr Shiu were in the nature of a formal inquiry, suggesting that he may have acted improperly in holding the three meetings with Mr Grossman in 2008 without prior approval.  Mr Shiu’s reaction was highly defensive and antagonistic.  It is difficult to fathom quite what he meant by his answer to Mr Caplan’s question as to the motive for the deletion; but it is clear enough that he was saying that his motive had nothing whatsoever to do with the merits of the prosecution or of the stay application, rather it was a move in protection of himself against what he perceived to be high-handedness by senior officers in the Department.  In the round, we cannot see that the judge erred in favouring this interpretation of his motive.

76.That this was not the behaviour acceptable of a senior prosecutor is conceded by the respondent.  Even if his conduct may properly be classified as conduct in bad faith, not all acts in bad faith will warrant a stay of proceedings.  The purpose and circumstances of the act are crucial, as are all facts germane to the question whether despite the impugned conduct it is nonetheless possible for the applicants to have a fair trial and, if so, whether the pursuit of the prosecution undermines the integrity of the justice system.

77.The question whether to grant a stay is a matter within the discretion of the trial judge.  Far from establishing that the judge exercised his discretion in a way amenable to remedy, we are satisfied that he exercised his discretion correctly.

78.This is a lengthy way of illustrating that the case stands firmly against the applicants on the merits of the application for leave.  But the detailed examination of the facts illustrates most particularly why this was never a case for a collateral challenge.

Collateral challenges

79.In Yeung Chun Pong v Secretary for Justice [2008] 3 HKLRD 1 at para 67 it was said that:

“67. There is a clear public interest in ensuring that charges, once before a court, must be tried. There is built into the system a host of safeguards to secure for an accused a fair, and an appropriately speedy, determination. If those safeguards are not afforded in a particular instance, there is provided by the legislature a prescribed appeal mechanism. That mechanism does not envisage interlocutory appeals or collateral challenges. That is for very good reason, namely, that in practice most trials would constantly be interrupted to the disadvantage of effective decision-making and the disruption of the system as a whole. Sometimes disruption to and delay of a particular trial caused by a judicial review application – or even by repeated applications in the one case – may derail a prosecution properly brought by the effect of that delay upon witnesses or their availability. This disruption may find aggravated form as in the present case, where there is an ex parte application made for leave; leave is granted without hearing the prosecutor respondent; an application is then made to set aside leave; that is refused; there is an appeal from that refusal, an appeal that may find its way to the Court of Final Appeal and, if the leave is not disturbed, there is a judicial review and renewed appeals from whatever decision emerges therefrom; and whilst all this is going on, hearing dates for trial are repeatedly vacated. The outcome is that unwarranted applications to stay proceedings combined with collateral challenges themselves run the risk of abusing the court’s process.”

80.Instead, the applicants sought to draw comfort from Dairy Farm Co Ltd v Director of Food and Environmental Hygiene [2005] 3 HKC 1, reliance upon which we sought strongly to discourage in Re : Kit Ko & Ors [2008] 4 HKC 323.  There is no principle underlying Dairy Farm which assists the applicants.  The collateral challenge ought not to have been mounted. 

Conclusion

81.Accordingly, we dismiss this appeal.  We make a costs order nisi that the costs of and occasioned by the appeal be to the respondent.  

Mr Jonathan Caplan QC, Mr Cheng Huan SC and Mr Bernard Cheng, instructed by Haldanes, for the 1^st  to 3^rd Applicants/Appellants

Mr Daniel Marash SC (on fiat) and Mr Ira Liu SSP, of the Department of Justice, for the Putative Respondent