HKSAR v. Hui Rafael Junior , also known as Hui Si-yan Rafael and Others

Subject to reporting restrictions as per paragraph 46 of the judgment

HCCC 98/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CRIMINAL CASE NO. 98 OF 2013

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BETWEEN

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R U L I N G

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1.Application is made on behalf of D2, D3, D4 and D5 that Counts 1, 6 and 8 be severed from the indictment and tried separately from the remaining counts. The prosecution oppose the application. D1 remains neutral.

2.Counts 1, 6 and 8 have these features in common.  Each count is laid solely against D1 and alleges his misconduct in public office by failing to disclose certain matters, contrary to common law and section 101I(1) of the Criminal Procedure Ordinance, Cap 221 (the Ordinance); at a time when he was Managing Director of the Mandatory Provident Fund Schemes Authority (MPFA) (Count 1), Chief Secretary for Administration of the Government of the Hong Kong Special Administrative Region (the Government) (Count 6) and a Non-Official Member of the Executive Council of the Government (Count 8).

A summary of the parties’ positions

3.It is argued on behalf of D2, D3, D4 and D5 that, even if the evidence in relation to non-disclosure by D1 may have some marginal relevance to certain other counts on the indictment by way of contextual background evidence, there is a danger that the jury might use it (or misuse it) as relevant, admissible evidence against the defendants on the other more serious counts.  This will oblige the defendants to deal with evidence that is both marginal and unnecessary, and that will inevitably occasion prejudice which this court cannot by direction realistically dispel.  Furthermore, such evidence, and the measures necessary to deal with it, will unnecessarily complicate the issues for the jury and lengthen an already difficult case, which will also prejudice the interests of a fair trial.  Therefore, it is incumbent on me to step in and ensure that the case placed before the jury is fairly presented in terms of relevant, discernible issues, is manageable in terms of its length and complexity and is rendered amenable to a proper understanding by the jury of the issues and the legal directions applicable to them.  To achieve these objectives, I should sever the identified counts from the indictment.

4.Although I have summarised the essential arguments advanced before me by the defence, it is fair to point out that the approach taken by Mr Kelsey-Fry QC on behalf of D3 (supported by Mr Winter QC for D4) is slightly different from that argued by Ms Montgomery QC on behalf of D2 and Mr Chan on behalf of D5.

5.Mr Perry QC, on behalf of the prosecution, in essence contends that not only is there a factual nexus between the allegations made in Counts 1, 6 and 8 on the one hand and the remaining counts in the indictment on the other, but the evidence on the non-disclosure counts is clearly relevant and admissible as providing the background context, without which an appreciation of those other counts would be incoherent and incomplete.  He submits that the evidence on Counts 1, 6, and 8 goes to explain why D2, D3, D4 and D5 made the payments, or were involved in the payments, to D1.  Further, that the evidence on the non-disclosure counts goes to explain the relationship and its history between D1 and, in particular, D2 and D3, and the context in which the payments were made.

6.The prosecution do not accept that the length and complexity of this trial will be unduly aggravated by evidence to be called on Counts 1, 6 and 8, so as to warrant severance, or that their inclusion in the indictment presents any particular prejudice by way of forensic or logistical difficulties for the defence, beyond those invariably encountered in complex trials involving a number of defendants charged with multiple counts, which cannot be effectively dealt with by judicial instruction.

7.Before addressing these competing arguments, which I shall address in more detail later, I should identify the applicable legal principles relevant to this application.  Those principles are not in dispute.

The relevant law

8.Section 23(3) of the Ordinance, which mirrors in exact terms section 5(3) of the Indictments Act, 1915 in England, is as follows:

“Where, before trial, or at any stage of a trial, the court is of opinion that a person accused may be prejudiced or embarrassed in his defence by reason of being charged with more than one offence in the same indictment, or that for any other reason it is desirable to direct that the person should be tried separately for any one or more offences charged in an indictment, the court may order a separate trial of any count or counts of such indictment.”

9.Of this section in the English Act, Lord Pearson, giving the judgment of the House of Lords in Ludlow v Metropolitan Police Commissioner [1971] AC 29, said at 41F:

“The judge has no duty to direct separate trials under section 5(3) unless in his opinion there is some special feature of the case which would make a joint trial of the several counts prejudicial or embarrassing to the accused and separate trials are required in the interests of justice. In some cases the offences charged may be too numerous and complicated…, or too difficult to disentangle…, so that a joint trial of all the counts is likely to cause confusion and the defence may be embarrassed or prejudiced. In other cases objection may be taken to the inclusion of a count on the ground that it is of a scandalous nature and likely to arouse in the minds of the jury hostile feelings against the accused…”

10.It is clear, therefore, that severance of an indictment is a matter of discretion for the presiding judge in applying the above principles to the facts and circumstances of the particular case before him.  Of this discretion, it was said by Lord Lane CJ in R v Cannon (1991) 92 Cr App R 16, at 23:

“…the fact remains that the Indictments Act 1915 gives the judge a discretion, and it is a well-known fact, and a well-known principle, as Salmon LJ in his usual clear language sets out in the case of Flack[1969] 1 WLR 937, that that is not a matter with which this Court will interfere, unless it is shown that the judge has failed to exercise his discretion upon the usual and proper principles, namely, taking into account all things he should, and not taking into account anything which he should not.” (Emphasis added)

11.In R v Christou [1997] AC 117, at 129 D-F, Lord Taylor of Gosforth, giving the principal judgment of the House of Lords, sought to address some of the factors which would be engaged by the words emphasised in Cannon (supra):

“They will vary from case to case, but the essential criterion is the achievement of a fair resolution of the issues. That requires fairness to the accused but also to the prosecution of those involved in it. Some, but by no means an exhaustive list, of the factors which may need to be considered are: -- how discrete or inter-related are the facts giving rise to the counts; the impact of ordering two or more trials on the defendant and his family, on the victims and their families, on press publicity; and importantly, whether directions the judge can give to the jury will suffice to secure a fair trial if the counts are tried together. In regard to that last factor, jury trials are conducted on the basis that the judge’s directions of law are to be applied faithfully.”

12.It is clear from the authorities placed before me that in some cases where the evidence on one charge in an indictment is inadmissible on another, it would be asking too much of a jury to disregard the inadmissible evidence, and the prejudice arising would be too great for any judicial direction to overcome: R v Sims [1946] 1 KB 531.  However, there are also cases where the evidence may be legally admissible as between different charges but, by virtue of the nature of the particular charges joined in an indictment, its probative value is outweighed by its prejudicial effect so that the only proper way of avoiding such prejudice is to order separate trials: see R v Fitzpatrick [1963] 1 WLR 7.

13.Where the case is lengthy and complex, the difficulties for the jury in giving effect to judicial directions, particularly, perhaps, in those cases where the jury must distinguish between evidence which is admissible on one particular charge but inadmissible on another, are potentially rendered even greater.  It has been said in R v Novac and Others (1977) 65 Cr App R 107, a trial involving an indictment containing 19 counts, which had lasted 47 working days, at 118:

“A trial of such dimensions puts an immense burden on both judge and jury. In the course of a four or five day summing-up the most careful and conscientious judge may so easily overlook some essential matter. Even if the summing-up is faultless, it is by no means cynical to doubt whether the average juror can be expected to take it all in and apply all the directions given. Some criminal prosecutions involve consideration of matters so plainly inextricable and indivisible that a long and complex trial is an ineluctable necessity. But we are convinced that nothing short of the criterion of absolute necessity can justify the imposition of the burdens of a very long trial on the court.”

14.The Court went on to observe that it would be “quite wrong” for the prosecution to join different defendants and counts in a single indictment “simply because some nexus may be discoverable between them”, and then leave it to the court to resolve the question of severance.

15.The principles and strictures to be derived from these cases, and others to which I have been referred, are that there is imposed upon the prosecution, and ultimately the court, a duty to ensure, particularly in lengthy or complex cases, that a trial is manageable and that an indictment is not overloaded.  Even where there is a clear nexus between the allegations, the court must ensure that the defendant’s interests will not be prejudiced or embarrassed by the length and complexity of the resulting trial, or for any other reason; and that the jury will properly and fairly be able to discharge their duty in applying the directions of law they receive to the evidence they hear.

16.With these considerations in mind, I turn to the particular case before me.

Count 8

17.I propose to deal with Count 8 first, since its relationship to Count 7 is obvious and clear-cut.  A simple examination of the particulars of Counts 7 and 8 (stripping the elements down to their essentials for present purposes) quickly reveals that D1 is charged with wilfully misconducting himself in public office by failing to declare or disclose to, or by concealing from, the Government his receipt of HK$11.182 million through a series of payments (Count 8), which payments D2, D3, D4 and D5 had conspired to offer him as a corrupt advantage (Count 7).

18.The nexus between the two counts is plain from their particulars alone.  Moreover, symptomatic of each allegation is the secrecy attached to the making and receipt of the payments.  A convoluted structure was allegedly devised to disguise and channel the payments (and later reimbursements), the receipt of which D1 did not disclose to the Government.  On the prosecution case, he did not (and could not) make such a disclosure because the payment was a corrupt one.  Such clandestine secrecy on his part is thereby both relevant and admissible in relation to all defendants on Count 7 and highly probative, in particular, of the case against D1 on that count.

19.Furthermore, since the fact that D1’s alleged failure to disclose is both relevant and admissible on Count 7, and given the close nexus between the facts of Count 8 and the facts and circumstances of Count 7, I cannot see that even if there were severance, the prosecution could be prevented from leading the evidence in relation to Count 8.  In such circumstances, I can see little or no benefit in the length and complexity argument so far as the inclusion of Count 8 is concerned.

20.I am mindful of Ms Montgomery’s argument that, if the jury were to conclude that the relevant payments in Count 7 emanated from D2, she may be handicapped as to whether, and if so how, she deals with the prejudicial effect of D1’s non-disclosure on Count 8.  However, in my judgment, the purported prejudice for which she contends does not override the clear probative value of the evidence in relation to D1 and the other defendants on Count 7.  Moreover, such concerns can in my view be met by appropriate judicial directions.

21.Nevertheless, there could still be merit in Mr Kelsey-Fry’s submission that, if I were persuaded to sever Counts 1 and 6 from the indictment, Count 8 might likewise be severed in the interests of simplifying the indictment in an otherwise complex case.  Mr Chan, on behalf of D5, makes a similar point on the basis that the jury should not be unnecessarily troubled by a charge (or charges) which in the normal course would be dealt with by a single judge sitting alone.

22.Accordingly, I turn to consider the application in relation to Counts 1 and 6.

Counts 1 and 6

23.It appears to be accepted on behalf of the defendants that there is a nexus between the facts and circumstances giving rise to Counts 1 and 6 and the facts and circumstances relevant to Counts 2, 3, 5 and 7; albeit not in the obvious way in which Counts 7 and 8 are connected.  It also seems to be accepted that the evidence on Counts 1 and 6 may be relevant and admissible, if only marginally, as contextual background evidence.  However, it is submitted that the evidence on Counts 1 and 6, even if arguably admissible on that limited basis, is not logically probative of the other counts.  Therefore, the admission of such evidence would be more prejudicial than probative, a problem which can be avoided by severance.

24.Ms Montgomery and Mr Chan further submit that it would be prejudicial to expect the defence to have to deal with the fact and reasons for D1’s non-disclosure when the evidence on Counts 1 and 6 is at best marginally admissible in relation to Counts 2, 3, 5 and 7, and when any prejudice could readily be met by severing Counts 1 and 6 and the parties agreeing suitable admissions covering the fact of the negotiation of the consultancy agreement; the provision of the two Leighton Hill units without a formal lease being in place and without rent being paid; and the fact of the making of the three loans.  This would have the added advantage of reducing the volume of evidence and lessening the burden on the jury (and the Court) in identifying that evidence which is relevant and admissible in respect of the non-disclosure counts but not admissible in proof of the other counts.

25.Mr Kelsey-Fry (with whose submissions Mr Winter agrees) similarly argues that the evidence in relation to Counts 1 and 6, even assuming it is legally admissible in the limited way I have described, proves nothing that cannot be incorporated in suitably worded formal admissions, which would thereby prevent the jury from regarding the failure of D1 to disclose advantages which are not alleged to be corrupt as somehow questionable and thereby probative of the other counts.  It is this error of thinking into which he suggests the prosecution and this Court (by its judgment of 13 February 2014) have already fallen, and which no judicial direction can effectively prevent the jury from likewise falling into the same ‘trap’.  Severing the three counts would also obviate the difficulty of the other defendants having to deal with D1’s non-disclosure.

26.Mr Perry for the prosecution does not accept that the evidence going to proof of Counts 1 and 6 is of mere marginal relevance to the other counts.  He submits that such evidence is important background evidence, which has a direct bearing on the relationships and dealings between D1 and the other defendants, in particular D2 and D3, and helps to answer the critical question of why the defendants concerned should have made the payments they did to D1.  In simple terms, the prosecution contends that if a substantial payment is made by one person to another, the jury will need to understand the background to the transaction and the relationship between the parties to determine why it was made.  By way of an example, which was much traversed in the earlier application for discharge on Count 3, the jury will have to ask themselves whether the HK$4.125 million payment to D1 in Count 3 was a corrupt payment for future services, as alleged by the prosecution, or could it have been a bonus for past services, as contended by D3?  The jury can only sensibly answer that question by looking at the context and background to the payment, the nature of the relationship between the parties and any other relevant dealings which shed light on that relationship.

27.Furthermore, the fact that D1 did not make disclosure of the matters particularised in Counts 1 and 6 (and 8) is relevant and admissible evidence which goes to D1’s state of mind qua conspirator in Counts 2, 3, 5 and 7, which is an issue in the case.

28.So far as the length and complexity of the trial and the difficulties for the jury associated with such a trial are concerned, Mr Perry does not accept that the inclusion of Counts 1 and 6 (and 8) renders the trial unfair or unmanageable or will result in a trial of such length and complexity as to provide a legitimate basis for severance.  Nor does he consider, assuming the evidence he seeks to introduce is relevant and admissible, that the interests of justice warrant restrictions by way of limited admissions, which may be suitable to the defence, being imposed upon the prosecution.

29.In my judgment, as a starting point, there is a clear and sufficient nexus between the facts giving rise to Counts 1 and 6 (and 8) and the facts and circumstances relevant to Counts 2, 3, 5 and 7 to warrant their joinder in the same indictment.

30.Count 1 alleges, among other things, that D1 failed to disclose his acceptance of two unsecured loans of HK$0.9 million and HK$1.5 million from Honour Finance Company Limited, a wholly-owned subsidiary of Sun Hung Kai Properties Limited (SHKP) concerned mainly with providing mortgage loans to purchasers of properties from SHKP.  Count 6 alleges that D1 failed to disclose the provision to him, and annual extensions, of a third unsecured loan of HK$3 million, also from Honour Finance Company Limited.

31.Although the loans referred to in Count 1 were accepted when D1 was a public official (as Managing Director of the MPFA), whereas the extensions of the loan referred to in Count 6 were granted when he was a different public official (as Chief Secretary to the Government), the original loan having been advanced on 31 May 2004 at a time when he was not a public official, all three of them were granted by Honour Finance Company Limited and all were approved by D3; with the approval of the HK$3 million loan being copied to D2.

32.The character and nature of Counts 1 and 6 are clearly connected as between themselves so far as the subject-matter of the loans and the failure to disclose them are concerned.  However, the advancing of the loans and the extensions of the third loan are also relevant to show the relationship and dealings between D1 on the one hand and D2 and D3 on the other, at the time when D1 was a public official.  The jury would surely be entitled to know when assessing allegations of conspiracy to provide a public official with substantial corrupt payments by the senior directors/executives of a publicly listed company, what the relationship between the parties was and what the nature of any other dealings between them was at the time the recipient was a public official.  Such evidence may help them determine the true complexion of the payments which are alleged to be corrupt.  For example, and as a matter of common sense, loans, especially substantial, unsecured or unpaid loans (even perfectly proper ones), create indebtedness and a sense of obligation between the grantee and the grantor.  Whether that has any bearing on the purpose and complexion of the other alleged payments may be a matter for the jury to consider.  It would give a somewhat distorted picture if the jury were to know nothing about such loans when assessing the alleged corrupt payments and the context in which they were made.

33.I appreciate that the background and relationship between the parties does not answer the specific defence concern about the jury knowing of D1’s non-disclosure of the loans and extensions.  I am merely making the general point, by way of an obvious example, that juries cannot look at the payments alleged by Counts 2, 3, 5 and 7 in a vacuum without knowing something of the background relationship and dealings between the parties.

34.In relation to the allegation in Count 1 of D1’s non-disclosure of his acceptance of the provision and rent-free use of units 20A and 20B, Tower 6 at the Leighton Hill, the prosecution contend that not only did D1 never pay anything for his occupation of the two units but that HK$4.8 million of the payment of HK$8.5 million particularised in Count 5 to D1, from or through D2, D3, D4 and D5, was in respect of 30 months’ rental for the two units from 1 July 2005.  Common to both allegations is the provision of rent-free accommodation for which D1 did not pay anything and was not expected to pay anything, at a time when he was a public official, albeit Managing Director of MFPA in Count 1 and Chief Secretary to the Government in Count 5.

35.The jury are surely entitled to know by way of relevant background evidence, in assessing the prosecution allegation in Count 5, that D1 had occupied the same units rent-free between at least 1 April 2003 and 13 August 2003 (although he had been given the keys to them on 13 February 2003), at a time when D1 was Managing Director of MPFA and when he was in negotiations with D2 and D3 concerning a consultancy agreement with SHKP and/or Sun Hung Kai Real Estate Agency Limited.

36.It will be a matter for the jury in due course whether they accept the prosecution case that the HK$4.8 million was part of a “package” to keep D1 sweet while he was Chief Secretary to the Government or whether there may have been some innocent reason for the payment(s) in Count 5 unconnected with D1’s office.  To make that assessment, the jury are entitled to know the background of D1’s occupation of the two units, which would include issues such as when his occupation began; whether anything was ever paid by him in respect of his occupation; the fact that HK$1.375 million had been settled by D1 and D2 in respect of one of the units; and the way in which payment for the other unit was dealt with.

37.In his submissions before me, Mr Kelsey-Fry spent some time referring to documents which he said demonstrated that the provision of rent-free accommodation to D1 dated back to 2003 and that what happened, at around the same time as the events concerned in Count 3, was the making good on an arrangement between a family company called Harsco Limited and D2 and D3, in respect of rent they had undertaken to pay at least a year before and which was never owed by D1.  It seems to me that in making those submissions, Mr Kelsey-Fry was doing the very same thing which Mr Perry wishes to do, namely to examine the background relationship and dealings between the parties in order to explain the payment.  These are areas both parties are clearly entitled to explore and which the jury must be allowed to know.

38.I should add that Mr Kelsey-Fry appeared to be proceeding on the assumption that I had not looked at these same documents, which he had mentioned at the earlier hearing dealing with the amendment of the indictment and D3’s application for discharge, having declared in the course of that hearing that I would look at them myself.  Accordingly, he took issue with the reference in my judgment to a background of “already fulsome generosity” shown by D3 to D1, when I was dealing with D3’s application for discharge in respect of Count 3.  I might point out that the explanation which Mr Kelsey-Fry wrongly assumed I had denied myself (and which derives in particular from four documents made between 17 April 2004 and 12 January 2005) was in fact set out in considerable detail in the written representation to the Director of Public Prosecutions by Mr McCoy SC on behalf of D3 dated 9 July 2012[1], which I had been obliged to read in preparation for the earlier hearing, since it formed part of the material relied upon in Mr Perry’s written submissions.  Whilst Mr Kelsey-Fry was perfectly entitled to point to the difficulties of applying a decision of this Court with which he may not agree, the imputation that in arriving at its decision this Court might not have done what it said it would do was, with respect, not one that should have been made.

39.I had at one time in the course of argument wondered whether the allegation in Count 5 concerning the HK$4.8 million payment, which the prosecution say represents a secret re-imbursement of 30 months’ rental in respect of the two units at Leighton Hill, does not derive evidential support from the fact of D1’s non-disclosure of his acceptance of the provision and rent free use of the two units during the relevant period in 2003; at least so far as the case against D3 (and D2) is concerned.  For it is asserted in the written representation made on behalf of D3, to which I have just made reference, that by the end of 2003 D3 had learned that D1 had already moved into the two units at Leighton Hill[2], although he had earlier been told by D2 in October 2002 that one of the units would be used either for investment or to provide D1 with residential accommodation upon his becoming a consultant for the SHKP Group[3].  The draft consultancy agreement dated 22 July 2002 also refers to the provision of accommodation to D1 at Leighton Hill.

40.If the jury did not accept that D3, as a senior director of SHKP, only came to know that someone as prominent as D1 was occupying two units at the recently completed Leighton Hill development by the end of 2003, and if the jury were to find that someone in D3’s equally prominent position at the head of a publicly listed company in Hong Kong must have realised that such a substantial advantage (as rent-free accommodation of two units up until 13 August 2003) could not in the circumstances be disclosed by D1, I wondered whether such non-disclosure could support the clandestine nature of the arrangement alleged by the HK$4.8 million part of the payment in Count 5, and the fact that the payment was designed to effect a continuation of the provision of rent-free accommodation which had begun in 2003.

41.However, I am persuaded by Ms Montgomery’s answer to the point that, as the anticipated evidence presently stands, this process of reasoning is difficult to sustain.  Nevertheless, I mention this matter for two reasons.  First, I wish to make it clear that my initial thinking on this aspect of Counts 1 and 5 forms no part of my decision on this application for severance.  The only basis upon which I consider the relevance and admissibility of the evidence on Count 1 is as contextual background evidence that is necessary for a proper understanding and appreciation of other counts on the indictment, with which, as I have found, it has a sufficient nexus.

42.Secondly, if this process of reasoning demonstrates what Mr Kelsey-Fry described as “the trap of equating the non-disclosure on the corruption charge with the non-disclosure in respect of a benefit which is not said to have been corrupt”, then the non-disclosure issue is, in my view, perfectly susceptible to judicial direction at the appropriate time.  The fact that I am alive to it means that it will be dealt with if, when all the evidence including any evidence from the defence has been heard, it is not a permissible way of looking at the evidence.

43.Finally, I do not accept that the inclusion of Counts 1, 6 and 8 adds significant or sufficient length or complexity to the trial such as to justify severance on that basis.  Although a comparison of trial statistics is not a particularly useful exercise, this case is not in the league of difficulty for either a court or a jury as were the facts and issues in, for example, the cases of R v Cohen and others (1992) 142 NLJ 1267, R v Kellard (1995) 2 Cr App R 134 or R v Novac (supra).

Conclusion

44.Having reviewed the arguments of counsel in the light of the evidence as I apprehend it to be, the nature of the counts, the expected length of the trial and the issues which are likely to emerge, I do not consider that there is a special feature of this case sufficient to make a joint trial of Counts 1, 6 and 8 with Counts 2, 3 (and 4), 5 and 7 prejudicial or embarrassing to the defendants and which, in the interests of justice, calls for me to sever the indictment in the exercise of my discretion.  Nor do I consider that the perceived dangers of trying the non-disclosure counts together with the other counts on the indictment are such that they cannot be met by proper and, if necessary, emphatic judicial directions to the jury.  And nor do I regard their inclusion in the indictment as rendering the trial unmanageable or unduly complex for the jury.

45.In all the circumstances, I decline to order severance.

Reporting of this judgment

46.The content of this judgment including my ruling may not be reported until the conclusion of the trial in accordance with the Order made by the Court on 25 March 2014.

Mr David Perry QC, Mr Joseph Tse SC, Mr Louis Mably, Ms Maggie Wong, Counsel on fiat, Ms Winnie Ho SADPP & Ms Betty Fu Ag SPP, for the Director of Public Prosecutions

Mr Danny Chan, instructed by Tang, Lai & Leung, for the 1^st defendant

Ms Clare Montgomery QC, Mr Lawrence Lok SC and Mr Benson Tsoi, instructed by Boase, Cohen & Collins, for the 2^nd defendant

Mr John Kelsey-Fry QC, Mr Gerard McCoy SC and Mr Steven Kwan, instructed by Sit, Fung, Kwong & Shum, for the 3^rd defendant

Mr Ian Winter QC, Mr Daniel Marash SC, Mr Bernard Chung and Mr Adrian Wong, instructed by Tsang, Chan & Wong, for the 4^th defendant

Mr Charles J Chan and Mr Billy Kwan, instructed by Chan & Tsu, for the 5^th defendant

[1] Paragraphs 55 - 63

[2] Paragraph 83

[3] Paragraph 52, footnote¹¹