HKSAR v. YIP WAI KING AND OTHERS

HCMA 427/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 427 OF 2008

(ON APPEAL FROM KCCC 4781/2007)

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J U D G M E N T

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1.  These Appellants were convicted by Mr Henry Mierczak after trial in the Magistracy, of conspiracy to offer an advantage to an agent contrary to sections 9(2)(b) of the Prevention of Bribery Ordinance, Cap. 201 and sections 159A and 159C of the Crimes Ordinance, Cap. 200.  They were each sentenced to a CSO of 100 hours.

2.  A3 and A4 were convicted after trial of an offence under the same section, although particularised differently and each was sentenced to a CSO of 140 hours.  All four appealed against conviction.  They were represented at trial by Mr Gary Plowman S.C. who had also represented them on appeal.

3.  The facts, briefly, as they appeared from the evidence, were as follows.  Hip Hing Construction (HH) was the main contractor on the Kowloon Station Construction site.  KONE was a subcontractor employed by HH to install 10 lifts at the site.  In turn KONE had a subcontractor, Global Top Engineering Ltd, (GT) which was controlled by A3 and A4.  A1 and A2 were the subcontractors of GT.  The responsibility of HH for supervision of the subcontractors stopped at KONE; site safety on a day to day basis was the responsibility of KONE.

4.  Access to the site was only by swipe cards.  All the workers were required to attend safety courses run by the main contractor and knew of the penalties that might be imposed for safety breaches.  Workers were told that they would be supplied with photographs showing any breach complained of.  Penalties for breaches of safety regulations were confiscation of site access cards for varying periods; fines which ranged from $500 to $3,000; or expulsion from the site.  Workers were told that receipts would be given for any fines paid.

5.  KONE employed Lui Man-lung (Lui) as a Senior Foreman and Nip Chung Kuen (Nip) as an Assistant Foreman.  Their duties included supervising the work carried out by GT and A1 and A2.  They had responsibility for site safety and could impose fines and confiscate access cards.  It is clear from an overview of the evidence before the court that these foremen were abusing their power in a very cynical manner in order to make money.

6.  They were prepared to manipulate, for their own advantage, the hapless subcontractors who came within their supervisory ambit.  One technique was to trick the subcontractors into breaching safety regulations by assuring them that a particular activity, normally outwith their safety capacity, could be carried out with their permission.

7.  Once the activity was completed Lui and Nip would inform the subcontractors that they had breached safety regulations and so were liable to a penalty fixed by them.  Given the nature of the supervisory hierarchy there was little the subcontractor could do but accept the penalty.

8.  PW1, Mr Chan Siu-ming, Operations Director of KONE said in cross-examination said that the firm was trying out new contractors after having had to dismiss the former sub-contractors for improprieties. [AB 1908]  Thus, the machinations of Lui and Nip were made easier because, as this was the first time that GT had entered into a contract with KONE, presumably GT was not entirely familiar with the accepted working practices.  Further, understandably, GT was anxious to ensure that they carried out their work to KONE’s satisfaction, no doubt hoping to be selected for repeat contracts in future.

9.  The two foremen would have had little difficulty in applying pressure to the partners, or the workers of GT in those circumstances.  The facts of Charge 1, as elicited at trial, showed that two workers were tricked into breaching safety regulations.  As a result Lui and Nip told the workers that as they had breached safety regulations they would have to be expelled from the site.

10.  It was for these two workers, that the foremen eventually arranged work at another site.  Their absence from the Kowloon Station installation meant that GT was short of workers and had to continue with 3 rather than 5 workers.  As a result, GT was obliged to cut the number of lifts they had contracted to install from 6 to 4.

11.  In Charge 1 the person allegedly offered an advantage was Lui.  A1 and A2 were alleged to have conspired to pay Lui $2,000 so that he and Nip would arrange employment for the expelled workers, PW6 and PW7, at another site under the aegis of KONE.

12.  In Charge 2, A3 and A4 were alleged to have conspired to pay $9,000 to Lui and Nip, in return for their not making adverse comments about the working performance of GT to KONE.  The behaviour for which their silence was sought presumably included the seizure of access cards from 3 workers for breaches of safety regulations relating to the wearing of safety harnesses.

13.  The prosecution alleged that this payment was a bribe, but the defence contended that the sum demanded was for fines imposed for safety breaches, albeit at a higher than usual amount for what were first offenders.  The Appellants, A3 and A4, realised some time later that they had not been supplied with the photographs which usually supported the evidence of the breach and had not been given receipts for the fines.

14.  As a result A3 and A4 were instrumental in bringing the corrupt behaviour of Lui and Nip to the attention of the KONE management.  Their complaint, made at a meeting with PW1 and PW2 of KONE was that Lui and Nip had solicited money from them for the payment of fines; the fines had been fixed at the top of the range, which was unusual for first offenders and that although a long time had lapsed they had never been given a receipt for the money paid.  Subsequently a complaint was made to the ICAC by KONE, and after an investigation Nip and Lui were arrested. 

15.  Nip pleaded guilty to on 18 July 2007 to a charge arising from these events and was sentenced to 6 months’ imprisonment.  However, Lui said nothing on arrest or under caution and as a result was not charged.  It is not clear why charges were not laid against him on the basis of the evidence that could have been given by these Appellants.  Instead the Appellants who might properly be regarded as victims, were charged.

16.  The only evidence against the Appellants was contained in the cautioned statements each of them made, eventually, to operatives of the ICAC.  The admissibility of the VIs made by each of the Appellants was challenged at trial.  The Magistrate adopted the alternative procedure and found that the VIs had been given voluntarily.  He found there was a case to answer.  None of the Appellants elected to give evidence on the general issue.

GROUNDS OF APPEAL – Charge 1- Against A1 and A2

Ground 1

17.  In finding that this charge was proved against A1 and A2 the Magistrate erred by using the contents of the RIs of A1 and A2 as evidence against each other

18.  The particulars are as follows:

(a)       A2 did not admit in his RI (Exhibit P10b) that “[A1] had told him outside the restaurant what LUI had told [A1]”.  A2 only admitted to such a conversation having taken place, not to its content.  [SF AB p. 67 – 68]

(b)       The Magistrate used the content of A1’s RI to find that A2 was a member of the conspiracy.  [SF AB p. 68 para. 2]

(c)       There was no evidence, other than A1’s RI, to support the finding of the learned Magistrate that “The payment to LUI was in fact made in the presence of [A2]”.  [SF AB p. 69 para. 3]

(d)       A2 did not admit in his RI (Exhibit P10b) that they were “both told by [LUI] that the two workers were merely not allowed on the site and LUI could arrange for them to work on another site of KONE”.  Only A1 made such an admission (Exh P9b Counter numbers 208-226).  [SF AB p. 70 para. 3]

(e)      The Magistrate failed to consider the position of A1 and A2 separately.  [SF AB 70-71]

Ground 2

19.  The Magistrate drew adverse inferences against both A1 and A2 where such inferences were not justified by the evidence.

(a)  AB page 67, 1^st paragraph;

(b)  AB page 68, 1^st and 2^nd paragraphs;

(c)  AB page 69, 1^st paragraph;

(d)  AB page 71, 1^st paragraph.

20.  In respect of A2 the Magistrate disbelieved the exculpatory parts of his VI for insufficient reason

(a)  [626-627];

(b)  [630-631];

(c)  [634-635];

(d)  [642-643].

Ground 3

21.  That in all the circumstances the convictions of A1 and A2 were unsafe and unsatisfactory.

GROUNDS OF APPEAL – Charge 2 – against A3 and A4

Both Appellants

22.  There was insufficient evidence to prove that the payment of $9,000 was as an advantage to Lui and Nip, so they would not make adverse remarks on GT’s performance to KONE.

23.  The Magistrate erred in finding that A1 and A2 intended, by their reporting the matter to KONE, ‘to cover their tracks’ when this motivation had never been suggested by the prosecution; there was no supporting evidence for such a finding and a number of prosecution witnesses supported their accounts

For A3

24.  The Magistrate disbelieved for insufficient reason parts of A3’s RI, which suggested a purpose for the payment of $9,000 different from the one particularised in the charge and therefore was not probative of a conspiracy with A4.

For A4

25.  The Magistrate disbelieved for insufficient reason the exculpatory parts of A4’s Ris.

26.  The Magistrate wrongly relied on the contents of the second RI to convict A4 as if they were inculpatory admissions, whereas they are exculpatory, or at least, equivocal.

Consideration of Grounds of Appeal – Appellants 1 and 2

27.  The Appellants had all given cautioned video taped interviews to the ICAC.  The admissibility of those Records of Interview (RIs) was challenged by each Appellant which resulted in the Magistrate adopting the alternative procedure to determine voluntariness.  He found all the RIs were voluntarily given and on their being admitted as evidence, the RIs formed the main evidence against each of the Appellants.  [See SF AB51 – 65 for Magistrate’s consideration of RIs.]

28.  A reading of the statements shows that the method of questioning by the ICAC officers was amateurish and clumsy.  The interviewees were cross-examined rather than questioned and too often answers were suggested by the questioners and presented for comment.  In some instances the interviewer asked a question, provided an answer himself before the interviewee had a chance to answer, then sought confirmation that the “answer” was correct.  On occasion the interviewee gave a non-verbal answer (e.g. “huh”-“mm”-“uh”), which the interviewer would interpret as either neutral, or as assent, without seeking proper clarification.  Several times answers given by the interviewee were misquoted, or converted to accord with the answer, or answers, which the officer was seeking.  There was a great deal of repetitive questioning.  Thus the RIs, which I accept were given voluntarily, were imperfect vehicles for the account of events the prosecution was putting forward and relying on as evidence.

29.  Be that as it may, the Magistrate had to examine the RIs to see whether they contained the agreement founding the conspiracy which the prosecution alleged had been formed between Appellants 1 and 2 to offer an advantage to Lui and Nip for their showing favour in relation to their principal’s affairs by arranging for 2 workers (PWs 6 and 7), who were employed by GT and had been expelled from the Kowloon Station site, to work at another site.

30.  As a matter of law, the Magistrate was obliged to separately consider each of A1’s and A2’s cases.  He could not treat the content of one Appellant’s RI as evidence against the other Appellant, his co-defendant, unless that other Appellant, or another prosecution witness, gave evidence in court confirming what was stated, or unless other evidence supported it.  The Magistrate was aware that he should look at the ‘tenor of the whole VIR as edited’ not just pluck answers from it in isolation.  [SF AB67].

31.  The Magistrate showed his understanding of the legal position in stating,

“I am very cognizant of the fact that what one (defendant) attributes to another in a caution statement VIR, is not admissible against that other person or the truth of it, but here there is much more.” [B 67 ]

It is not clear what he meant by “much more”, as the only evidence against A1 and A2 was their RIs.  Nor did he explain thereafter what ‘much more’ entailed.

32.  It is necessary to recall also that when the Magistrate referred to the ‘tenor of the whole VIR’ or the ‘context’ in which answers appear, he was referring to RIs, as explained above, in which the answers were not always clear or unequivocal and where it was difficult to discern their precise meaning, or assess their accuracy or weight.

33.  The Magistrate’s findings on Charge 1 appear between AB65 and AB71 of his Statement of Findings.  After examining the evidence he considered he was able to draw an irresistible inference that A1 and A2 had agreed to carry out the unlawful act and convicted both A1 and A2 of Charge 1.

GROUNDS OF APPEAL – A1 and A2

34.  The major ground of appeal was that the Magistrate, despite correctly enunciating the relevant legal principles, in reality failed to follow them.  He had confused or combined the admissions in the RIs of each of A1 and A2.  Thereafter he had wrongly drawn adverse inferences from them.

35.  Counsel for the Appellants set out a number of instances where, it was contended, the Magistrate had failed to separate their individual cases.  He had either transposed what they said in their RIs, or had been mistaken as to the meaning of what each had said, or had relied on the admissions by one as having been made by the other.  Counsel submitted that he ‘had purported to draw an irresistible inference of guilt when, properly, he could not do so’ and if that contention was correct the appeal should be allowed on that basis alone.

36.  The RIs of A1 and A2 referred, inter alia, to the occasion when A1 and A2 had attended a meal, suggested by Lui and, to be paid for by them at his behest.  This took place some days after the 2 workers had been excluded from the Kowloon Station site.  Lui called A1 out during the meal and had a brief conversation with him in which he asked for $2000 to be paid as money for a meal and worshipping.  A1 said that he had told A2 later of this conversation.  He claimed that A2 knew that the real reason for the payment was so that work could be arranged by Lui and Nip for the 2 expelled workers, at another of KONE’s sites.

37.  The Magistrate found that A2 had agreed with A1 both that the payment be made and that he knew what the payment was for.  In fact the only evidence of any agreement, or of A2’s knowledge of the reason for payment, came from the RIs of A1.  At no time in his RIs did A2 admit knowledge.  He knew of and agreed the payment for the meal and for worshipping expenses, but made no admission that he knew of any other purpose and made it clear he had never asked A1 about it.  The only evidence that A2 knew the reason for the payment was contained in A1’s RI, which was not admissible against A2.

38.  The Magistrate also found that A2 had stated in his RI that the payment had been made so the case would be “fixed”, [Counter 261 Exh10b], but it is difficult to see how a sinister meaning for “fixed” can be extrapolated from that counter, or indeed any other counter in A2’s RIs.  A2 maintained throughout that he was not told that the 2 workers could be arranged to work at another site - the only reference to that arrangement was made by A1 in his own RIs.

39.  In his Statement of Findings [AB 68] the Magistrate relied on A1’s RI to contradict A2’s denial that he knew the purpose of the payment.  It is difficult to see (and no explanation is given) how the Magistrate could be satisfied beyond reasonable doubt ‘that A2 had taken part in the same agreement and that he knew what it was all about’ when the whole of A2’s RIs amounts to a denial that A1 had ever told him the purpose.

40.  In the same vein the Magistrate found, again in the absence of any admission in the RIs of A2, that both A1 and A2 had been told at lunch by Lui that he could arrange work at another site for the expelled workers.  This finding is incorrect as, according to A1’s RIs [Exh 8A – Counter 1138 – 1177], the conversation took place away from the lunch table and involved him and Lui only.  The money was said to be for the meal or worshipping the gods.  Prior to their conversation no reference had been made during the meal that it was possible to arrange alternative work.  The payment was made to Lui after salaries were received; A2 was present but according to him did not hear what was said.

41.  The Magistrate simply ignored the exculpatory elements of A2’s RI, to the effect that he did not know about the alleged conversation with Lui, or the purpose of the payment, and that he did not believe the payment was connected with official business.  The only evidence was contained in A1’s RIs, but the admissions made by A1 could not be evidence against A2 – and, absent that possibility, there was no evidence to establish any conspiratorial agreement.

CONCLUSION

42.  I have considered the arguments advanced by counsel for A1 and A2 and have noted the counter-arguments of the Respondent.  I am satisfied that the Magistrate did fail to deal separately with the evidence for each Appellant and erred by attributing to A2 what was germane only to the case of A1.

43.  This failure alone is sufficient to enable me to allow their appeals, but there is a further ground, which should be referred to.

44.  The Magistrate drew adverse inferences against both the Appellants when, on the evidence, such inferences could not be justified.  For instance in RI Exh. P. 10b paragraph 1, A2 says ‘… [the payment] was for tea or whatever purposes I was just like that’.  The Magistrate then makes the bald statement that both Appellants knew the true reason was a bribe and that the only inference ‘from the evidence as accepted by me’ was that they had agreed to carry out the unlawful act [AB 67].  However a proper reading of the RIs does not bear out this conclusion.

45.  A further instance occurs at SF AB71 paragraph 1, when the Magistrate recapitulates the details of the payment to Lui.  This enables him to say that he finds all the necessary elements have been made out and that no inference other than guilt can be drawn from ‘the whole of the evidence’.  In fact the vital agreement cannot be inferred from the evidence.

46.  Another unsatisfactory matter was the Magistrate’s treatment of the exculpatory sections of A2’s RIs.  He treated his denials about various matters not as showing, simply, that there was an absence of evidence on the point the interviewee was being questioned about, but as proving the converse position.  Categorical denials were made in A2’s RI [Exh 10b] at counters 627, 631, 635 and 643.  A2 denied that he had been told the purpose of the payment; that he had ever enquired about the payment; that the payment was connected with official business, or that the payment was to insure against the sub-contractors being picked on.  Nevertheless the Magistrate treated them as establishing the opposite.

judgment – A1 and A2

47.  For these reasons, I allow the appeal against conviction in respect of A1 and A2 and quash their convictions and sentences.  I make an order nisi for costs of the appeal in favour of A1 and A2, such order to be perfected if there is not objection thereto within 14 days of the date of handing down of this judgment.  Costs of the appeal to be taxed if not agreed.

CHARGE 2 - against A3 and A4

48.  Appellants 3 and 4 were charged with having conspired to offer an advantage – a payment of $9000 to Lui and Nip.  This, allegedly, was an inducement or reward for their having shown favour to GT, as the particulars of charge stated, by refraining from making adverse remarks to KONE’s management about GT’s work performance.

49.  The cases of A3 and A4 shared similar features with those of Al and A2.  Although their activities may not have been wholly obvious to the Appellants at the time, there were references to Liu and Nip being “picky” – presumably in pursuance of their policy of harassing the sub-contractors.  Again the RIs of A3 and A4 were the major planks of the prosecution case and Appellants 3 and 4 elected not to give evidence on the general issue.

50.  Similar comments, as were made in the case of A1 and A2, about interviewing techniques resulting in equivocal or unclear answers, can be made about the RIs of A3 and A4.  However, 2 witnesses gave evidence which served to clarify various matters, namely PW1 Mr Chun Wing-sum and PW2 Mr Chan Kin-wa the employees of KONE.  PW1 was Operations Director and PW2 the Field Logistics Manager.  Their evidence chimed with and supported certain aspects of the RIs of A3 and A4, particularly in relation to their state of mind.

51.  The Magistrate had to decide whether A3 and A4 had made admissions in their Rls, which established that they had committed the offence as particularised.  A3 and A4 contended that they had not made any such admission.  The incident, the basis of Charge 2, concerned three workers who were alleged to have breached safety regulations by failing to wear safety harnesses correctly.  The safety officer of HH, the main contractor had detected the breaches by the workers and subsequently their access cards were taken by Lui, who apparently was acting on his own in so doing.  Without an access card a worker could not remain on site.

52.  Subsequently, Lui requested payment of $10,000 from A3, A4 being in Shenzhen at the time.  A3 telephoned A4 to tell him of the request and asked him to arrange funds for the payment.  A4, who himself had had no contact with Lui, arranged to borrow the money from a friend, Mr Leung Kai-yin and asked him to deposit the money to A3’s account; subsequently, a payment of $9,000 was made in the evening of the same day to Nip.  Mr  Leung said A4 had told him he needed the money to pay “a fine involving workers”.

53.  The prosecution case was that this payment was a bribe to ensure that Lui and Nip did not adversely affect GT’s future position vis-a-vis KONE; as comments about poor work performance might count against them when future contracts were being awarded.

54.  The defence submitted that the payment was made by A4 who believed it was to meet the fines imposed for the breaches of safety regulations by their 3 workers.  In his RI A4 said he had heard A3’s account of how the request had been made and was unclear whether the payment was a penalty.  Later, he told the interviewer that it had not occurred to him that the money was paid to prevent Lui making life difficult for them; he believed it was “paid to resolve the safety issue”.  He repeated this belief several times in his RIs.

55.  Three things later aroused his and A3’s suspicions about the nature of the payment.  The first was that A4 found out from A3 that Lui had been drinking with the main contractors – they suspected this was done with the cash handed over.  Next, they realised that no photographs had been supplied to support the alleged breaches. Last and most significant, no receipts were issued for the payment.  A3 and A4 suspected that the payment had not reached HH, the main contractor.  For those reasons, A4 and A3 complained to KONE at a meeting initiated by them, and attended by PW1 and PW2.

56.  In his RI, [Exh. P.13b Counters 47-51], A4 elaborated on these matters, saying that, properly, any penalties should have been imposed by the main contractor and that later i.e. after the payment had been made, he recognised that there was an element of Lui “asking us to offer him an advantage”.  He made it clear [Counter 37] that at the time the payment was made he was not sure whether the payment was a penalty, but that he intended the payment to meet the penalty for safety breaches, not as a bribe.  This was supported implicitly by his refusal to pay more than the maximum fine which could be imposed – 3 x $3000 – only $9000 was paid to Nip.  Moreover, when A3 and A4 realised that no photos or receipts were forthcoming, they acted on their suspicions and complained to KONE about Lui and Nip.

57.  The Magistrate based his findings about A4’s guilt chiefly on the material at counters 43-57 of A4’s RI Exh 13b, in which he talked about the effect a poor safety record might have in excluding GT from future contracts and commented that even if there might be an element of Lui requiring them to offer an advantage, they had no choice in the matter, but to pay up first on the basis that it was a penalty.

58.  The elements of the complaint made by A3 and A4 were confirmed by PW1 and PW2 as having been repeated to them.  However, the Magistrate chose to ignore that support and in his findings stated that their complaint had been made to KONE only for the purpose of “covering their tracks” and “tailoring” their evidence.  

59.  This appears to have been an afterthought on the part of the Magistrate.  It was never raised as part of the prosecution case that their complaint was anything but genuine and the Magistrate himself had never raised the point at trial.  Thus, the defence had no opportunity to make relevant submissions or call rebuttal evidence.  The Magistrate did not explain how the tailoring or track covering was achieved, or why it was necessary.

Appellant 3

60.  A similar submission was advanced on behalf of A3, namely that his RI [Exh. P11b] did not amount to an admission of the conspiracy alleged in Charge 2.  A3 did not dispute the making of the payment, but said it was so that Nip could ‘fix up with the main contractor by having a meal or something like that’.  He considered the purpose of the payment was to get himself and D3 as well as Lui and Nip out of trouble with ‘construction’ by which he meant the main contractor - the trouble being the safety breaches.

61.  His RIs do not establish clearly what, if any, agreement had been reached between A4 and himself, other than their decision to make the payment.  The Magistrate relied on A3’s comments at Counters 280 and 282 [Exh. P11b] when he said he felt that if he refused the payment he might not be able to work on the project.  The Magistrate believed this contradicted A3’s saying the payment was for a meal to get them all out of trouble.  In fact, A3’s fear of GT being excluded from consideration by KONE for future contracts was wholly consistent with his agreeing to pay for a meal to get them out of trouble they believed they were in with the main contractor on safety issues.

judgment – A3 and A4

62.  After consideration, I cannot be sure that the Magistrate dealt correctly with the evidence in this case, nor that it was sufficient to establish the guilt of these Appellants.  Accordingly, I allow the appeal against conviction in respect of A3 and A4 and quash their convictions and sentences.  I make an order nisi for costs of the appeal in favour of A3 and A4, such order to be perfected if there is no objection thereto within 14 days of the date of handing down of this judgment.  Costs of appeal to be taxed if not agreed.