HKSAR v. LEE MAN YEE AND ANOTHER

HCMA414/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(APPELLATE JURISDICTION)

MAGISTRACY APPEAL NO. 414 OF 1999

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J U D G M E N T

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1. This is an appeal against conviction by the two Appellants.

2. The 1st Appellant is the daughter of the 2nd Appellant and they were respectively D1 and D2 in the trial before the Magistrate. They were each charged with an offence contrary to s.26(2)(a) of the Housing Ordinance, Cap.283.

3. D1 was charged that on 2 May 1996 in Hong Kong, she made a statement which she knew to be false or misleading as to a material particular to the Housing Authority, namely, that she and all the persons listed in the application had not sold any domestic property or disposed of any interest therein at any time within 24 months immediately prior to the closing date (6 May 1996) of submitting the application for the purchase of Flat H, 9/F, Block 3, Harmony Garden, Siu Sai Wan, Hong Kong, under the Home Ownership Scheme/Private Sector Participation Scheme Phase 18A, being land in an estate or land in respect of which the Housing Authority was authorised to nominate purchasers.

4. The 2nd Appellant, D2, was also charged with the same offence, that on 25 June 1996 at Home Ownership Centre, 3/F, Lok Fu Shopping Centre, Kowloon, she made a statement which she knew to be false or misleading as to a material particular to the Housing Authority, namely she had not sold any domestic property in Hong Kong or disposed of any interest therein at any time within 24 months immediately prior to the closing date (6 May 1996) of submitting the application for the purchase of the said flat.

5. The Appellants applied to purchase a flat in the Home Ownership Scheme, namely, the flat named in the charges. According to that Scheme, any person who had at any time within 24 months immediately prior to the closing date for submitting the application, ie 6 May 1996, and before the purchase of a flat under the Scheme owned or co-owned any domestic property would not be eligible. The false material particular that was alleged and found by the Magistrate was that within 24 months immediately prior to 6 May 1996, that is the restrict period, D2 had not disposed of any domestic property. In fact by assignment dated 5 July 1994, D2 disposed of a domestic property ("the domestic property"). The assignment was signed by D2 as one of the two co-owners and was also signed by D1 as the lawful attorney of the other co-owner, her brother. There is no dispute on these findings. It is also not disputed that D1 did make the application on 2 May 1996 and D2 did sign a declaration dated 25 June 1996, each containing a statement with the false material particular. The issue that the Magistrate had to decide, and decided, was whether each of D1 and D2 knew the false particular at the time when she provided the respective document to the Housing Authority. The main ground of appeal is that the Magistrate had adopted an objective standard of test in reaching his conclusion that each of the Appellants made a statement which she knew to be false and misleading as to a material particular.

6. Mr Chan, Counsel for the Appellants, refers me to Atwal v Massey [1972] 56 Cr App R 6 which concerned handling stolen goods and the issue was whether the defendant knew that the kettle received by him was a stolen article. At page 7 the Lord Chief Justice said :

" If when the justices said that the appellant ought to have known that the kettle was stolen they meant that any reasonable man would have realised that it was stolen, then that was not the right test. It is not sufficient to establish an offence under section 22 that the goods were received in circumstances which would have put a reasonable man on his enquiry. The question is a subjective one : was the appellant aware of the theft or did he believe the goods to be stolen or did he, suspecting the goods to be stolen, deliberately shut his eyes to the consequences?"

7. In Secretary of State for Trade and Industry v Hart [1982] 1 WLR 481 where the issue was whether the defendant knew he was disqualified from being the auditor of a company of which he was a director and secretary, Ormrod L.J. said at page 487H of the report as follows :

" In other words, the offence, as was correctly set out in the information, is that the defendant acted as an auditor of a company at a time when he knew that he was disqualified for that appointment. And interpreting the language quite simply, it seems to me to indicate that the defendant is not guilty of a criminal offence unless he knew that he was disqualified.

If that means that he is entitled to rely on ignorance of the law as a defence, in contrast to the usual practice and the usual rule, the answer is that the section gives him that right. Whether it does so intentionally or not is another matter. Whether it is easy for anyone to prove or establish that, in the defendant's position, he did not know he was disqualified, will be problematical."

8. In his Statement of Findings, the Magistrate stated the following :

"17. Insofar as D1 was concerned ... I ... found that she is honest and reliable witness insofar as it contained admission of the role or part she played in the application on 2nd May 1997. However, I do not accept her evidence that she did not know that the declaration she made in Exhibit P1 was inaccurate. Being the lawful attorney to the transaction to sell the domestic property she should have known the time as to when the conveyance was executed. At the very least, D1 should have had an inkling of the approximate date of the transaction and warning signals should have sounded in her mind. On such basis I found her guilty of the offence.

18. Even if I was wrong on this, I found it totally inescapable for D1 to be simply satisfied with the vague or ambiguous answer given to her by D2 that the 24 months restriction had probably expired to be a good and sufficient answer without ascertaining or ensuring the exact date of the Deed of Assignment for the sale of the domestic property. This is especially so when she was a party to the said transaction. Given that the answer given by D2 was vague and ambiguous, D1 took no steps to ascertain or ensure whether the answer given by D2 was true and accurate, despite D1's knowledge of the transaction. This type of action was equivalent to turning a blind eye and I draw the irresistible inference, which I am entitled to, that she knew the material particular given to her by D2 was false or inaccurate.

19. Insofar as D2 was concerned, ...I ...found that she is a honest and reliable witness insofar as it contained admission of her role or part in the said interview on 25th June 1996. However, I do not accept the explanation given by D2 about her answer to Part II Question 9 of Exhibit P3. I found that the answer given by her was false. This is particularly so when it was the unchallenged evidence of the prosecution that she was told the restricted period in question during the interview. Had D2 not been sure, she would have been expected to say to PW1 that she was not sure. That is not the case here. Therefore, I found that D2 had given the material particular with knowledge that the same was false.

20. Even if I was wrong on this, given that she was explained and asked on or about 2nd May 1996 by D1 about the material particular, D2 took no steps to find out whether the alleged approximate date of transaction was true and accurate. D2 deliberately turned a blind eye and had an attitude of indifference to the truth or accuracy of the material particular. On such basis, I draw the irresistible inference, which I am entitled to, that D2 knew the material particular given by her to PW1 was false." (emphasis added)

9. While the Magistrate had seemed on occasions referred to the objective test, he did couch his decision in the alternative in his Statement of Findings by drawing inference from the fact that where D1, and similarly D2, was not sure as to the accuracy of the statements made by her to the Housing Authority that she or anyone included in the application had not sold any domestic property within the restricted period. She should have either checked the date of the assignment of the domestic property or told the Housing Authority that she was not sure. He treated the Appellants turning a blind eye to their being unsure of the date of the assignment of the domestic property as entitling him to draw an irresistible inference that they knew that they provided the false particular to the Housing Authority.

10. If the evidence before the Magistrate was stated by him correctly, I do not think that his conclusion of drawing such an inference can be faulted. However, there are two matters which give rise to concern, namely, that there was no evidence or no concrete evidence before him which justifies his finding that D1 was "simply satisfied with the vague or ambiguous answer given to her by D2 that the 24 months restriction had probably expired". D1's evidence was that D2, her mother, told her that "it was already 24 months after the selling of the property." And D1 testified also : "I have asked my mother, my parents, and they said they were also eligible". These answers of D1 given by her in her evidence in-chief were not challenged by the prosecution in cross-examination. They cannot form the basis for the Magistrate's said finding. D2's evidence in-chief was that her daughter, D1, asked her if she had sold property before and "I said it should be sufficient for two years." She was then cross-examined.

"Q: On that day (when she was interviewed by the Housing Department), you knew you sold your property on 5 July 1994, is that correct?

A: I can't quite recall the date."

11. There was no concrete evidence for the Magistrate to have concluded or made the finding that either of the Appellants was not sure or why he used the word "probably" in his findings. Even if the evidence could be interpreted as the Appellants were not sure of the date of the assignment of the domestic property, there was but a suspicion, and there is no direct evidence that they knew the date of the assignment was within the restricted period. Of course, the Magistrate was entitled to draw inference of such a knowledge from the evidence. What he said was that the Appellants turned a blind eye to what they were not sure, not necessarily to the fact that they knew or suspected that the date of the assignment was within the restricted period. For the Magistrate to have properly used the term "irresistible inference" in the context of his findings, it is necessary that there was evidence before him that the Appellants turned a blind eye to the obvious, or turned a blind eye to their belief. However, from the evidence, it appears that the Appellants' belief was that the assignment took place before the restricted period, not the other way round, and it was not obvious to them that the assignment took place within the restricted period. Had the Magistrate disbelieved them, then of course again he could have drawn a reasonable inference that they knew the false particular. But the Magistrate found them to be honest and reliable.

12. Apart from the various passage uttered by the Magistrate that are cited above in this judgment, he said, when giving his verdict upon the conclusion of the evidence and defence counsel's submissions, as follows :

"I consider they D1 and D2 are honest and reliable, but failed in the duty to check that information provided was accurate. I found that the 1st and 2nd Defendants had knowledge of the material particular and did make a statement which they knew to be false or misleading as to the material particular."

13. Apart from the above, I am not without concern that the Magistrate all along, during defence counsel's submissions, expressed views that indicated that he had applied the objective test instead of the proper subjective test of knowledge. He also talked of the duty to ensure the correctness of the statement which also helps demonstrate that he used the reasonable man standard in assessing the evidence. In the transcript, the Magistrate is recorded to have said the following :

"I mean, for God's sake, the fact that she (D1) thought that 24 months had expired does not really matter because at the end of the day, she is the one who is making the declaration, she has the duty to ensure that the information given therein is correct. And I mean, if it is wrong, found out subsequently to be wrong, she then has a duty to ensure that steps are taken, to ensure that the Housing Authority knows that the information was wrong. ... She may have given evidence she was confused as to which date to apply, but to me, that doesn't really matter. The fact is, she made a false declaration. I mean, maybe not knowingly to the effect that she wanted to cheat, okay?"

"They (D1 and D2) must have known it's false, I mean, without checking it. Are you suggesting that because of the words 'knew to be false or misleading as to material particular'? You have to be very sure that you knew of the particulars therein, but these are matters which must have been known to them, because they were parties to the assignment, parties to adjust. I mean, the fact that they didn't check, how can that negative the knowledge? I mean, these are matters which are well within their knowledge, you know. I mean, the fact that you were mistaken as to which is the exact date etc. does not salvage them. I mean, the facts were with them."

"They knew. They knew the statement may not have been deliberately to be false, but they knew the statement was not accurate."

"I mean, my problem here is, is how can they not know? I mean the fact that they have been careless and not checked the information, that is not a defence."

"The point is, they must or at least they have a duty to ensure that the information was correct. I mean, if you are not sure, you shouldn't make the declaration."

"But how do I get over the hurdle that they make the representation, knowing that the representation was likely to be false, okay, or not sure as to whether it is true? In both scenario, don't you think a person with normal common sense would have tried and checked documents, to ensure that the information given therein is correct, as correct as possible? I mean, I know sometimes it's difficult, ... But I mean, I would have thought these are normal duties. I mean, any reasonable adult would have expected that sort of duties." (emphasis added)

It is instructive to compare the provisions of s.26(2) and s.26B(3) of the Ordinance. Section 26(2) provides :

"Any person who makes any statement to the authority which he knows to be false or misleading as to a material particular shall be guilty of an offence..."

Section 26B(3) provides that :

"If the purchaser fails to appear to answer to a summons or if the court after due enquiry is satisfied that the purchaser

(a) knew that the statement which was the subject of the offence had been made by the convicted person to the authority; and

(b) knew that the statement was false or misleading or with reasonable diligence could have ascertained that it was false or misleading.

..."

14. Whilst s.26(2), the provision under which the Appellants were prosecuted, makes it an offence for a person to make any statement which he knows to be false or misleading as to a material particular, s.26B(3) deals with what orders a court shall make regarding a purchaser where there is a conviction of a person, but not the purchaser himself, under s.26(2). Section 26B(3) provides that a court may exercise the powers under that section if it is satisfied that "the purchaser knew that the statement was false or misleading or, with reasonable diligence, could have ascertained that it was false or misleading". The alternative mens rea of failing to use reasonable diligence, which is an objective test, does not appear in s.26(2). Had the legislature intended the same test to apply in both sections, s.26(2) would have included the same wording as I highlighted before. It is therefore clear, by a comparison of these two sections, that the Court must apply a subjective test for considering an offence under s.26(2).

15. Although in his verdict and Statement of Findings, the Magistrate did conclude that the two Appellants knew the false particular, in addition to his incorrect reliance on the word "probably" in the context quoted above, I feel there is a lurking doubt if in reaching his verdict, he did apply the proper subjective test. I am also concerned that he might have placed too much reliance on his often uttered statements that the Appellants failed in their duty to ensure that the information provided by them to the Housing Authority was accurate. No doubt, they should be under such a duty, but failure of that duty alone should not be treated as tantamount to their knowing the material particular of the information so provided by them was false.

16. In the circumstances, I am compelled to allow the appeal. The convictions are quashed and the sentences as well as the Order made by the Magistrate under s.26A(1)(a) of the Housing Ordinance set aside.