HKSAR v. Luk Kin Peter Joseph

CACC 283/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 283 OF 2014

(ON APPEAL FROM DCCC NO. 851 OF 2013)

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Before: Hon McWalters JA in Chambers (Open to Public)

Date of Hearing: 16 September 2014

Date of Decision: 16 September 2014

Date of Reasons for Decision: 23 September 2014

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REASONS FOR DECISION

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1.The applicant applied for bail pending appeal. He was convicted by District Judge Browne of conspiracy for agents to use a document with intent to deceive their principal, contrary to sections 9(3) and 12(1) of the Prevention of Bribery Ordinance, Cap 201 (“POBO”) and sections 159A and 159C of the Crimes Ordinance, Cap 200, and offering an advantage to an agent, contrary to sections 9(2) and 12(1) again of the POBO. He was sentenced to 2 years’ imprisonment on each charge with both sentences ordered to be served concurrently.

2.The offences arose out of the sale by company B to company C of the entire shareholding that it held in company D.  It was alleged that the applicant was, in fact, behind company C and that as the applicant was a director of company B the sale of its asset to himself was a connected transaction which breached the listing rules of the Hong Kong Stock Exchange. The reason it breached the listing rules was because company B is the wholly owned subsidiary of company A which is a listed company.

3.The applicant had a past involvement with company A but in the charge period no longer held an official position in it.  Company B had no management and only two directors, the applicant and his co‑conspirator.  His co-conspirator was the beneficiary of the advantage in Charge 2.

4.The sale of the shares in company D, the asset of company B, required a resolution of the Board of Directors of company B.  The Board duly met and passed a resolution approving the sale in the course of which the Board noted that the directors had declared their interests in this transaction and that “none of the Directors was interested in the transactions herein contemplated”.  The Board minutes were signed off by the applicant who passed it to his secretary and they became the official records of company B.  The Board minutes is the document that is the subject of the first charge and it is the statement in it that the directors had no interest in the sale that is said to be “false or erroneous or defective in any material particular”.

5.The charge, on its face, alleges a principal/agent relationship between the applicant and company B.  The prosecution says it also alleges a principal/agent relationship between the applicant and company A.

6.Mr Duncan SC, who appeared for the applicant at trial and now on this bail application, claims that was never his understanding of the charge.  Be that as it may the judge convicted the applicant on the basis of there being two principal/agent relationships and of the applicant deceiving both of his principals.

7.I raised with counsel certain concerns I had about proof of each of the principal/agent relationships because it appeared that no dispute had taken place at trial in relation to this element of the offence.  As a result, no consideration had been given at all to this key element of the offence; that there was such a relationship seems to have been assumed.

8.In respect of the applicant and company B there can be no doubt that the applicant is within the POBO definition of agent.  But, the question I raised with counsel is how does an agent mislead a company?  Does there have to be a human mind of the company that is, or is capable of being, misled and does such a person have to be one of those controlling the company?  If so, is there such a person in respect of company B when company B, as a wholly owned subsidiary of company A, is in effect a bare shell with no management and the only directors of it being the conspirators?

9.In respect of the relationship between the applicant and company A, how is it said he is the agent of company A?  The only relationship between the applicant and company A in the charge period is that the applicant is a director of company B and company A is its sole shareholder.  In such circumstances does a director become, for the purposes of the POBO definition, an agent of its shareholder?

10.These are issues which are relevant to the first charge as the existence of a principal/agent relationship is the primary element of a section 9(3) offence.  None of the questions I raised could be satisfactorily answered by counsel for the respondent but to be fair to her she had no notice of them. Nevertheless, they raised sufficient concerns in my mind to cause me to conclude that in respect of the first charge and in conjunction with the other grounds of appeal the applicant had a reasonable likelihood of succeeding on his appeal.

11.In respect of the second charge the initial ground of appeal attacks the judge’s analysis of and treatment of the evidence.  The submissions advanced by Mr Duncan clearly raise an arguable ground of appeal but, being evidence based, not one with the same prospects of success as those in respect of the first charge.

12.The applicant is due for release on 5 December 2015.  I am told that the appeal could be listed as early as January 2015, but whether it will be is quite a different matter.  I must look to the reality of the situation, conscious that the right of appeal must not be rendered illusory by the lapse of time.  For these reasons I decided that I should grant the applicant bail pending appeal.

Ms Florrie Chan SPP (Ag), of the Department of Justice, for the respondent

Mr Peter Duncan SC and Mr Joe Chan, instructed by V Hau & Chow, for the applicant