HKSAR v. NG PO ON AND ANOTHER

FACC No. 6 of 2007

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 6 OF 2007 (criminal)

(ON APPEAL FROM HCMA No. 198 of 2006)

_______________________

_______________________

J U D G M E N T

_______________________

Chief Justice Li:

1.  I agree with the judgment of Mr Justice Ribeiro PJ.

Mr Justice Bokhary PJ:

2.  I agree with the judgment of Mr Justice Ribeiro PJ.

Mr Justice Chan PJ:

3.  I agree with the judgment of Mr Justice Ribeiro PJ.

Mr Justice Ribeiro PJ:

A.  The issues

4.  Section 14(1) of the Prevention of Bribery Ordinance, Cap 201 (“the Ordinance”) gives the court power to authorize the Commissioner of the Independent Commission Against Corruption (“ICAC”)  to serve a notice requiring the person served to furnish information relating to assets and liabilities relevant to an investigation or proceedings being conducted pursuant to the Ordinance.  Section 14(4) makes it an offence punishable by a fine of $20,000 and imprisonment for one year for that person to neglect or fail to comply with such a notice without reasonable excuse. 

5.  The questions which fall to be determined on this appeal are: (i) whether the persuasive burden of establishing that a failure to comply was “without reasonable excuse” lies on the prosecution or the defence; (ii) if on the defence, whether that is consistent with the presumption of innocence which enjoys constitutional protection under Article 87(2) of the Basic Law and Article 11(1) of the Bill of Rights; and (iii) if on the prosecution, whether the defence has an evidential burden in relation to the issue of reasonable excuse.  The third issue encompasses the situation where a remedial interpretation is required whereby the persuasive burden resting on the defence is read down to an evidential burden.

B.  The relevant statutory provisions

6.  Where the Commissioner[1] seeks an order authorizing service of a notice under section 14(1), this is done on an ex parte application to the Court of First Instance.[2]  Such orders may be made both against suspects and non-suspects. 

7.  If satisfied that there are reasonable grounds for suspecting that an offence under the Ordinance has been committed, the court may authorize, as it did in the present case, service of a notice requiring a suspect to provide a statutory declaration giving details of his assets, expenditure and liabilities in the categories defined in section 14(1)(a) and (b).  Such details may include information about his acquisition and disposal of property that are or were in his ownership or possession;[3] details of expenditure he incurred as living expenses for himself and his family;[4] and details of liabilities he incurred,[5] all relating to the three-year period preceding the date of the notice.  A suspect can also be required to furnish information about money or other property sent out of Hong Kong during the period specified in the notice.[6]

8.  Non-suspects may be served with notices compelling a variety of disclosures including disclosures about when and from whom particular property was acquired, and of information and documents relating to specified matters, subject to the Judge being satisfied on the ex parte application that reasonable grounds exist for thinking that such persons have access to the information in question, and that it is relevant to the investigation or the proceedings.[7]   

9.  The provision which makes non-compliance by the recipient of a notice an offence is section 14(4) which states as follows:

“Every person on whom a notice under subsection (1) is served shall, notwithstanding the provisions of other Ordinance or rule of law to the contrary ..., comply with the terms of that notice within such time as may be specified therein or within such further time as the Commissioner may, in his discretion, authorize, and any person on whom such a notice has been served, who, without reasonable excuse, neglects or fails so to comply shall be guilty of an offence and shall be liable on conviction to a fine of $20,000 and to imprisonment for 1 year.”

10.  Also important is section 24 which provides:

“In any proceedings against a person for an offence under this Ordinance, the burden of proving a defence of lawful authority or reasonable excuse shall lie upon the accused.”

11.  It should be emphasised that in this appeal, the Court is concerned with section 24 exclusively as read in conjunction with, and affecting the meaning of, section 14(4).  Section 24 is also relevant to other provisions in the Ordinance, such as sections 4, 5, 6, 7, 8 and 9 which create offences incorporating an element of “reasonable excuse”.  Its interaction with such other provisions raises separate considerations which fall outside the scope of this judgment. 

C.  The proceedings below

12.  On 13 September 2002, the Commissioner made an ex parte application to Deputy High Court Judge Day and obtained from him orders authorizing the service of notices under section 14(1)(a) on the respondents (as well as on three other suspects who can be ignored for present purposes).

13.  Notices in identical terms dated 16 September 2002 and purporting to have been issued pursuant to the aforesaid orders were served on the respondents.  The notices required the respondents each to make a statutory declaration providing detailed information on their assets, including bank accounts, investment accounts, stocks and shares, land and so forth; as well as their expenditure and liabilities, held and incurred during the preceding three years.

14.  Statutory declarations were provided by the respondents on 9 October  2002, supplemented, in the case of the 2^nd respondent, by a further statutory declaration dated 5 December 2002.  After receiving letters from the ICAC expressing dissatisfaction with the adequacy of certain paragraphs of the statutory declarations, they were, on 27 March 2003, arrested and charged under section 14 for non-compliance with the notices.

15.  The magistrate, Ms Adriana Tse, initially ruled that there was no case to answer.  However, on a case stated, Tong J set aside that decision and remitted the matter to her for trial.[8]  In the resumed proceedings, the respondents were convicted and each fined $10,000.  Details of the non-compliance alleged are not presently relevant.  However, in convicting the respondents, the magistrate held that they bore the burden of proving on the balance of probabilities that they had a reasonable excuse for the non-compliance and that they had failed to discharge that burden.[9] 

16.  The imposition of that burden of proof on the respondents was the principal ground of their appeal determined by McMahon J on 7 April 2007.[10]  His Lordship held that the relevant provisions imposed on the accused the persuasive burden of proving that there was a reasonable excuse for failing to comply with the notices,[11] that this encroached upon the constitutionally protected presumption of innocence,[12] that imposition of a persuasive burden was not proportionate,[13] and that to meet the constitutional objection, “section 24 can be treated as imposing a merely evidential burden so far as section 14(4) of the Ordinance is concerned.”[14]  Accordingly, McMahon J quashed the convictions and set aside the sentences imposed.  He also declined to order a retrial.

17.  It is from that decision that the HKSAR brings this appeal.  However, on 31 May 2007, this Court published its judgment in P v Commissioner of the ICAC.[15]  It was held that an order made under section 14(1) which fails to define the scope of the authorization granted, thereby giving the Commissioner carte blanche to decide the width of the notice to be issued, is invalid.  The Court stated that as a matter of practice, the draft notice ought to be placed before the judge for his consideration and then annexed to his order.

18.  The orders which had been obtained from Deputy High Court Judge Day in September 2002 suffered from the same vice.  They did not define the scope of the authority granted and merely tracked the general wording of section 14(1)(a), leaving it to the Commissioner subsequently to draft the notices to be served on the respondents.  Mr Kevin Zervos SC, appearing with Mr Marco Li for the HKSAR, accepted that those orders were accordingly invalid and that the orders made by McMahon J quashing the respondents’ convictions and refusing a retrial must stand.  The Court nevertheless exceptionally agreed to determine the questions referred to in Section A above, since they raise matters of public importance.  In particular, the Court was invited to rule on Mr Zervos’s submission that McMahon J was wrong to read down section 24, taken in conjunction with section 14(4), as imposing merely an evidential burden.  Counsel’s contention was that the section imposes a legal or persuasive burden which is constitutionally acceptable and valid.

D.  The legal principles

19.  In Hong Kong, the approach and legal principles applicable to a constitutional challenge mounted against a reverse onus provision on the basis that it derogates from the presumption of innocence have been authoritatively laid down in the judgment of Sir Anthony Mason NPJ in HKSAR v Lam Kwong Wai.[16]

D.1    The presumption of innocence

20.  Article 87 of the Basic Law materially provides: “Anyone who is lawfully arrested ... shall be presumed innocent until convicted by the judicial organs.”  Article 11(1) of the Bill of Rights (given constitutional effect by Article 39 of the Basic Law) states: “Everyone charged with a criminal offence shall have the right to be presumed innocent until proven guilty according to law.”  Both provisions therefore confer constitutional protection on the presumption of innocence, there being no difference between them in this respect.[17] 

21.  As Sir Anthony Mason NPJ points out,[18] the presumption of innocence is a reflection of the central rule of the common law, clearly established since Woolmington v. Director of Public Prosecutions,[19] that the prosecution has the burden of proving beyond reasonable doubt the defendant’s guilt of the offence charged.  In accordance with this principle, the common law does not (in the absence of statutory intervention) impose any persuasive burden on the accused, but places the burden throughout on the prosecution to prove the ingredients of the offence and to negative any defence raised by the accused beyond reasonable doubt.[20] 

22.  While the criminal standard of proof beyond reasonable doubt is ingrained in the common law, it is not expressly prescribed in the Bill of Rights or the Basic Law.  However, it may well be implicit in Article 87(1) of the Basic Law which affords constitutional protection to “the principles previously applied in Hong Kong and the rights previously enjoyed by parties” to both criminal and civil proceedings.  Moreover, there is a clear basis for suggesting that such standard of proof is implicit within Article 11(1) of the Bill of Rights.  Protection of the presumption of innocence necessarily means that the prosecution is required to prove the guilt of the accused, who must therefore in some sense be given the benefit of the doubt.  In discussing Article 6(2) of the European Convention on Human Rights, the Strasbourg Court indicated acceptance of a standard of proof similar to the requirement for proof beyond reasonable doubt.  Thus, in Barberà, Messegué and Jabardo v Spain,[21] the Court stated:

“Paragraph 2 embodies the principle of the presumption of innocence. It requires, inter alia, that when carrying out their duties, the members of a court should not start with the preconceived idea that the accused has committed the offence charged; the burden of proof is on the prosecution, and any doubt should benefit the accused.” (Italics supplied)

23.  This was applied in Janosevic v Sweden.[22]  However, the standard of proof was not in issue on the present appeal.  It does not matter for present purposes and therefore does not presently have to be decided whether the criminal standard which applies in Hong Kong to criminal prosecutions arises solely as a matter of common law or also by virtue of a provision in our constitutional instruments. 

24.  The value and importance of the presumption of innocence are plain.  Where the state seeks to bring to bear its coercive power against an individual alleged to have committed an offence, elementary notions of fairness dictate that it should have to prove its case so as to leave no reasonable doubt of the accused person’s guilt before any criminal sanction is administered.  It should not be up to the individual to disprove the alleged guilt in order to escape punishment.[23] 

25.  Yet, many statutory offences reverse the burden of proof, requiring the accused to prove “an ultimate fact which is necessary to the determination of his guilt or innocence.”[24]  Where such a reverse onus is employed, the accused is required to satisfy that burden on the balance of probabilities.[25] 

26.  The objectionable character of reverse burdens is widely acknowledged.  As Sir Anthony Mason NPJ explains, such a burden is:

“... inconsistent with the presumption of innocence because it allows the defendant to be convicted on failing to discharge the reverse onus, even though the prosecution fails to prove all the elements of the offence beyond reasonable doubt.”[26]

A defendant may in other words be convicted even though there is a reasonable doubt as to his guilt of the offence charged or as to his entitlement to rely on an applicable defence, on the ground that he has not persuaded the tribunal of fact that the evidence he relies on in respect of the relevant ultimate fact is probably true.  Indeed, a reverse burden requires the defendant to be convicted even if his version of the facts is considered equally likely to be right as to be wrong.

27.  An evidential burden stands in contrast to a reverse persuasive burden.  It does not require the accused to establish anything as a matter of proof.  An evidential burden arises where the defendant wishes to put in issue some matter that is potentially exculpatory while the prosecution continues to bear the persuasive burden throughout.  In such cases, there must be evidence supporting such exculpatory matter which is sufficiently substantial that it raises a reasonable doubt as to the defendant’s guilt.  Unless such reasonable doubt is removed, the prosecution fails to prove its case.  If, on the other hand, the accused fails to adduce or point to any evidence on the relevant issue or if the evidence adduced is rejected or is not sufficiently substantial to raise a reasonable doubt, the potentially exculpatory matter places no obstacle in the way of the prosecution proving its case beyond reasonable doubt.  An evidential burden, functioning in this manner, is wholly consistent with the presumption of innocence.[27]

28.  Returning to the persuasive burden, it is established that the constitutional protection accorded to the presumption of innocence is not absolute and that derogation from it may be justified if such derogation has a rational connection with the pursuit of a legitimate aim and if it is no more than necessary for the achievement of that aim.[28]  Where the legislature has chosen to impose a reverse onus on the defendant, the Court gives weight to that legislative decision, taking into account the nature of the problem addressed in the statute and in particular, whether it involves adoption of a policy which the legislature is better placed than the Court to assess, as discussed in Lam Kwong Wai.[29]  The Court must of course ultimately exercise its constitutional responsibility by determining the issue, after giving appropriate respect to the legislative judgment.

D.2  The approach to be adopted

29.  It is against this background that the approach set out by Sir Anthony Mason NPJ proceeds:

“Our first task is to ascertain the meaning of [the relevant statutory provision] according to accepted common law principles of interpretation as supplemented by any relevant statutory provisions.  Our second task is to consider whether that interpretation derogates from the presumption of innocence and the right to a fair trial as protected by the Basic Law and the BOR.  If that question is answered “Yes”, we have to consider whether the derogation can be justified and, if not, whether it could result in contravention of the Basic Law or the BOR and consequential invalidity.  If invalidity could result, then it will be necessary to decide whether the validity of the section or part of it can be saved by the application of any rule of construction, severance of the offending part, reading down, reading in or any other remedial technique available to the Court.”[30]

D.3  Construing the impugned provision

30.  The first two tasks referred to by Sir Anthony Mason NPJ are closely linked.  The aim of construing the provision in question is quite specific.  It is to ascertain, applying common law principles of construction as supplemented by any relevant statutory measures, whether the impugned provision imposes a persuasive burden of proof on the accused.  If that is its effect then there is an abrogation of the presumption of innocence, but not otherwise.  The exercise of construction therefore effectively provides the answer to the consideration arising as the second task identified.

D.3a  Where the provision expressly imposes a reverse onus

31.  The impugned provision may expressly place a burden on the accused to prove some ultimate fact upon which the verdict depends.  If so, the exercise of construction needs little discussion.  As pointed out above, where this occurs, that burden is taken to require proof on a balance of probabilities.  Thus, for instance, in Lam Kwong Wai itself, section 20(3)(c) of the Firearms and Ammunition Ordinance[31] which provides that a person does not commit the offence of unlawful possession of an imitation firearm[32] “if he satisfies the magistrate that ... he was not in possession of the imitation firearm for a purpose dangerous to the public peace, or of committing an offence [etc],” was interpreted as an express imposition of a reverse persuasive burden which had to be discharged on the balance of probabilities.[33]

D.3b  Where the allocation of the burden is not express

32.  Where there is no express allocation of the persuasive burden, the court must construe the provision applying relevant common law and statutory principles.  Two principles which have been invoked in aid of deciding whether an enactment is to be construed as imposing a persuasive burden on the accused should be mentioned.

33.  The first is the common law principle stated by Lawton LJ in R v Edwards.[34]  His Lordship held that the common law “has evolved an exception to the fundamental rule of our criminal law that the prosecution must prove every element of the offence charged” in relation to enactments prohibiting “the doing of acts, subject to provisos, exemptions and the like”.  In such cases, “there is no need for the prosecution to prove a prima facie case of lack of excuse, qualification or the like ...”  Instead, “it is for the defendant to prove that he was entitled to do the prohibited act. What rests on him is the legal or, as it is sometimes called, the persuasive burden of proof.”  Plainly, if a statutory provision is found to come within this principle, it will be held to impose a reverse onus which engages the presumption of innocence. 

34.  The second is the statutory principle of construction laid down by section 94A of the Criminal Procedure Ordinance[35] which provides:

(1)     It shall not be necessary in an indictment, charge, complaint or information alleging an offence to negative any exception or exemption from or qualification to the operation of the law creating the offence.

(2)  For the avoidance of doubt it is hereby declared that in criminal proceedings –

(a)  it is not necessary for the prosecution to negative by evidence any matter to which this subsection applies; and

(b) the burden of proving the same lies on the person seeking to avail himself thereof.

(3)    ...

(4)  The matters to which subsection (2) applies are any licence, permit, certificate, authorization, permission, lawful or reasonable authority, purpose, cause or excuse, exception, exemption, qualification or other similar matter.

35.  Where an enactment imposes criminal liability subject to an exception or qualification of the type listed in section 94A(4), that enactment is construed as imposing a persuasive burden on the accused to bring himself within such exception or qualification, thereby engaging the presumption of innocence.  Although reference can be found in the case-law both to Edwards and to section 94A in this context, it appears clear that section 94A covers the wider ground so that in practice, reference to Edwards adds nothing and is unnecessary.

36.  A note of caution should be sounded as to what does not follow from a statutory provision being held to fall outside the Edwards and section 94A principles.  Those two principles provide established ways of reaching the conclusion that a reverse onus is imposed.  But they are not the only routes to that destination.  Of course, a provision falling outside their ambit may well be construed as imposing no reverse onus on the accused (as the Court held, for instance, in Tong Yiu Wah v HKSAR[36]), but that is the result of construing the provision generally and not something which follows automatically from deciding that those two principles are inapplicable.  An impugned provision may not come within the list of exceptions, etc, referred to in Edwards or section 94A but may nevertheless contain language construed as imposing a reverse onus.  AG of Hong Kong v Lee Kwong-kut,[37] is an example.  It was held that section 30 of the Summary Offences Ordinance[38] did not create an offence within the class identified in Edwards since the controversial element was an essential ingredient of the offence rather than one of the exceptions, etc, listed by Lawton LJ.[39]  Section 30 was nevertheless held to have placed a persuasive burden on the defendant to prove that ingredient, abrogating the presumption of innocence.

D.3c  Inchoate offences

37.  The precise offence charged has to be borne in mind.  Thus, if a defendant is charged with an inchoate offence of conspiracy, attempt or incitement relating to a statutory offence, it does not matter that the substantive statutory offence may, on construction, be found to contain a reverse onus provision.  The inchoate offence exists at common law and, in accordance with the general common law rule, does not involve any reverse onus.  This is unaffected by section 94A.  Thus, in HKSAR v Lam Yuk Fai,[40] a count alleging a conspiracy to commit the statutory offence of transferring a passport to another person without reasonable excuse was held not to involve the imposition of any persuasive burden on the accused and the presumption of innocence was not engaged. Lord Woolf NPJ stated:

“As Count 3 alleges a conspiracy, the task of the prosecution was to prove in the normal way the nature of the conspiracy; namely that (a) there was an agreement alleged between the appellant and Philip Chu and; (b) the purpose of the agreement, which on the case for the prosecution, was that the passport should be used for an unlawful purpose and so without reasonable excuse (see for example Yip Chiu Cheung v R [1995] 1 AC 111).  This conspiracy could not either under s 94A or at common law give rise to any reverse burden.  In view of the ingredients of the offence of conspiracy it is unlikely that any charge of conspiracy should give rise to any burden being placed on a defendant.”

D.4  Whether the presumption of innocence is engaged

38.  As indicated above, the presumption of innocence is abrogated where a statutory provision places a persuasive burden on the accused person to prove, on the balance of probabilities, an ultimate fact which is necessary to the determination of his guilt or innocence.

39.  It has often been emphasised that in determining whether an impugned provision has this effect, the Court looks at the substance and reality of the enactment rather than its form.[41]  Thus, it does not matter whether the ultimate fact which the defendant is required to prove involves an element which may be characterized as an essential ingredient of the offence or a matter of defence.  Its substantive effect is what counts: does the enactment expose the defendant to a conviction even though there may be a reasonable doubt regarding some matter determinative of his criminal liability?

40.  Thus, in R v. Whyte,[42] the Canadian Supreme Court rejected the argument that where the relevant element was properly characterized as forming part of the defence, the presumption of innocence was not infringed.  Dickson CJC stated:

“The short answer to this argument is that the distinction between elements of the offence and other aspects of the charge is irrelevant to the s 11(d) inquiry. The real concern is not whether the accused must disprove an element or prove an excuse, but that an accused may be convicted while a reasonable doubt exists. When that possibility exists, there is a breach of the presumption of innocence.” 

41.  That view was endorsed by Lord Steyn in R v Lambert,[43] who added:

“The distinction between constituent elements of the crime and defensive issues will sometimes be unprincipled and arbitrary.  After all, it is sometimes simply a matter of which drafting technique is adopted: a true constituent element can be removed from the definition of the crime and cast as a defensive issue whereas any definition of an offence can be reformulated so as to include all possible defences within it. It is necessary to concentrate not on technicalities and niceties of language but rather on matters of substance.”

D.5  Justification of an encroachment on the presumption of innocence

42.  If, having performed the first two tasks referred to by Sir Anthony Mason NPJ, one concludes that the presumption of innocence is not engaged, that is an end to the discussion.  But if it is engaged, the third task is to consider whether its abrogation is justified, it being recognized that the individual’s right to the presumption is not absolute.[44]

43.  In accordance with the principles laid down by this Court in Leung Kwok Hung v HKSAR,[45] the dual test for justifying an encroachment on the presumption of innocence was stated in Lam Kwong Wai in the following terms:

“(1)    is the derogation rationally connected with the pursuit of a legitimate societal aim (the rationality test); and

 (2)  are the means employed, the imposition of the reverse persuasive onus, no more than is necessary to achieve that legitimate aim (the proportionality test)?”[46]

44.  The burden is on the state to justify the derogation for reasons which must be compelling,[47] although, as previously noted,[48] the Court will carry out its constitutional responsibilities with appropriate respect for the legislature’s decision under challenge.  As Lord Bingham of Cornhill noted in Sheldrake v DPP: 

“The justifiability of any infringement of the presumption of innocence cannot be resolved by any rule of thumb, but on examination of all the facts and circumstances of the particular provision as applied in the particular case.”[49]

D.6  Invalidity and remedial measures

45.  If the reverse onus provision fails the rationality or proportionality test so that it contravenes Article 87(2) of the Basic Law and Article 11(1) of the Bill of Rights, the court proceeds to its fourth task, which is to decide whether validity of the provision or part of it can be saved by the application of any remedial technique available to the Court.[50]

46.  Lam Kwong Wai[51] reiterates that the Basic Law impliedly confers upon the courts of the Region power to apply a remedial interpretation to provisions which may otherwise be struck down as constitutionally invalid with a view, if possible, to preserving their validity.  A remedial interpretation is capable of going beyond ordinary common law interpretation and may involve the use of judicial techniques such as reading down and reading in.  The remedial techniques open to the Court also include the severance or striking out of parts or the whole of the offending provision (as held in Leung Kwok Hung v HKSAR[52]).

47.  The Court recognizes that such remedial techniques necessarily have their limits.  The Court cannot take up a curative measure which is so fundamentally at odds with the intent of the legislation in question that adoption of such a measure properly calls for legislative deliberation.[53]  In Leung Kwok Hung v HKSAR,[54]in the context of severance, this Court endorsed the test for the limits of intervention adopted by the Privy Council.[55]  This involves asking whether what remains after application of the remedial techniques:

“... cannot independently survive or, as it has sometimes been put, whether on a fair review of the whole matter it can be assumed that the legislature would have enacted what survives without enacting [the provision in the terms found to be constitutionally objectionable].”

E.  The legal principles applied

E.1  The meaning of sections 14(4) and 24 read together

48.  Where a person prosecuted under section 14 seeks to contend that he has a reasonable excuse for failing to comply with the notice served on him, the combined effect of section 14(4) and section 24[56] is to impose on him the persuasive burden of establishing the existence of such reasonable excuse on the balance of probabilities.  The wording of section 24 – “the burden of proving a defence of ... reasonable excuse shall lie upon the accused” – leaves no room for doubt that a persuasive burden is expressly imposed. 

E.2          Derogation from the presumption of innocence

49.  The effect of sections 14(4) and 24 read in conjunction is accordingly to expose the defendant to the risk of being convicted even though there is a reasonable doubt as to his guilt.  He faces such risk if he fails to prove the facts constituting his excuse (which would be considered reasonable if established) on the balance of probabilities, even though he may do enough to raise a reasonable doubt as to whether his excuse is made out.  The two sections read together therefore derogate from the presumption of innocence and it becomes necessary to consider whether derogation is justified.

E.3  The rationality test

50.  Is the imposition of a reverse onus on a person charged with neglecting or failing to comply with a section 14 notice rationally connected with the pursuit of a legitimate societal aim?

51.  In my view, the answer is plainly “Yes”.  The aim of the Ordinance is the suppression of corruption.  The legitimacy and importance of that societal objective is obvious.  Section 14 confers special powers on the ICAC to investigate and secure evidence of corruption with a view to its prosecution and suppression.  Making non-compliance with section 14 notices an offence (which provides for a reverse onus) is a rational means of enforcing those investigative and prosecutorial powers. 

E.4    The proportionality test

52.  Is the imposition of a persuasive burden on the accused to prove any reasonable excuse for non-compliance on the balance of probabilities no more than necessary to equip the ICAC with the investigative powers needed to carry out its duties?  Or would an evidential burden on the accused to raise the issue of reasonable excuse be sufficient?  In this context, the HKSAR bears the burden of providing compelling reasons why a persuasive reverse burden is no more than necessary and why an evidential burden does not suffice.

53.  Mr Zervos SC advanced arguments which I understand to involve six reasons why imposition of a persuasive burden on the accused is proportionate and constitutionally acceptable in this case.  I will consider each in turn.

E.4a  The gravamen of the offence

54.  First, Mr Zervos submitted that the gravamen of the offence is a failure on the part of the recipient of a section 14 notice to comply strictly with its disclosure requirements.  Such a failure, he argued, meant that the recipient was prima facie guilty of wrongdoing so that it was entirely reasonable and proportionate he should bear the burden of excusing his failure.

55.  I cannot accept that argument.  The essence of the offence is surely a failure to comply with the notice without reasonable excuse.  As McMahon J pointed out, “Innocent non-compliance is not difficult to imagine.”[57]  He gave some examples:

“The loss or unavailability of documents would perhaps be the most obvious example of a good reason for non-compliance with a section 14(1) notice.  But other reasons may well exist.  The volume of transactions and the particulars requested may mean that the time period limited by the notice was insufficient to allow compliance.  Illness of the recipient of the notice may prevent compliance.”[58]

56.  I respectfully agree with his Lordship’s conclusion that the failure which the section seeks to penalise has “to occur in the context of there being no good reason for the failure” and that “the legislature no doubt wished the offence contained in section 14(4) to apply only to culpable non-compliance.”[59] 

E.4b  Relatively low penalties

57.  Secondly, Mr Zervos pointed to the relatively low maximum penalties (of imprisonment for up to one year and a maximum fine of $20,000) which may be imposed under section 14(4). 

58.  I agree that the severity of the potential punishment is a factor relevant to proportionality.  As Lord Nicholls of Birkenhead stated in R v Johnstone: “The more serious the punishment which may flow from conviction, the more compelling must be the reasons.”[60]  However, a relatively low level of penalty is merely a negative factor in the proportionality assessment: it means that the objection against derogation from the presumption of innocence is not augmented by the prospect of severe punishment following a conviction.  A relatively mild penalty does not provide any positive justification for the encroachment.

E.4c  The existence of special safeguards

59.  Thirdly, Mr Zervos relies on the framework of procedural safeguards established by the Ordinance as an important factor justifying use of the reverse onus.  Those safeguards have been mentioned in Section B above.  A suspect is only at risk of prosecution and therefore of being made subject to the reverse onus if a Judge of the Court of First Instance has first been satisfied on the ex parte application that there are reasonable grounds for suspecting that an offence under the Ordinance has been committed. 

60.  Furthermore, as the Court held in P v Commissioner of the ICAC,[61] the Judge has a discretion to refuse or vary the order where compliance with the notice would be oppressive.[62]  The Court made it clear that the grounds upon which recipients of a notice (non-suspects in that case) may apply to the judge to rescind or vary his order do not include a challenge on the basis that reasonable grounds for suspecting commission of an offence should not have been found to exist.  However, it is plainly open to a suspect to apply for relief from oppressive aspects of the notice, such as a serious ambiguity in its terms or an impracticably short period allowed for compliance. 

61.  The importance of such safeguards is clear, as was acknowledged in P v Commissioner of the ICAC.  However, their object is to ensure that use of the ICAC’s special powers to extract information from suspects and non-suspects is not unwarranted or oppressive.  The safeguards do not bear on the appropriateness of a persuasive burden over an evidential burden.  That is an issue which arises after the procedural safeguards have already had their effect: the Judge has made the order and the notice has been served; non-compliance has occurred in circumstances thought by the ICAC to involve no reasonable excuse; and a prosecution has been launched.  Important though they are, the safeguards are not a relevant factor in assessing the proportionality of the reverse onus.

E.4d  The defendant’s peculiar knowledge

62.  Fourthly, it was argued that imposition of a persuasive burden on the accused is no more than is necessary to achieve the Ordinance’s legitimate aim because the existence of a reasonable excuse is something peculiarly within the defendant’s knowledge.

63.  To assess this argument, the nature of the section 14(4) offence and the element of reasonable excuse need to be examined. 

(a) If the defendant simply refuses to respond to the notice and says nothing about any reasonable excuse then the issue obviously does not arise. 

(b) Neither are we concerned with cases where the defendant asserts that he has fully complied with the notice, but the Commissioner believes that he is lying.  There, the defendant’s potential liability is under section 14(5) which makes it an offence wilfully to make a false statement in answer to a section 14(1) notice.  No reasonable excuse defence and no reverse onus arises, the prosecution having to prove beyond reasonable doubt that the statement was wilfully false. 

(c) The present discussion concerns the case where a defendant accepts that he has not complied with the notice but suggests that he has a reasonable excuse for his failure to comply.  The question is whether the tribunal of fact should judge that excuse on the basis that the defendant must be acquitted if there is a reasonable doubt whether his excuse is both reasonable and true; or whether he should be convicted notwithstanding the existence of a reasonable doubt so long as the tribunal is not satisfied that his story is more likely than not to be true.

64.  There is no reason to think that facts put forward by a defendant as constituting his excuse cannot be investigated, tested, rebutted and assessed in the ordinary way.  Indeed, given the special investigative powers at its disposal, the ICAC may be better able to rebut such evidence than other law enforcement agencies in comparable cases.

65.  While the defendant’s peculiar knowledge of the facts can be a factor in assessing proportionality, it is in principle not sufficient in itself to justify a reverse onus.  As Lawton LJ stated:

“There is not, and never has been, a general rule of law that the mere fact that a matter lies peculiarly within the knowledge of the defendant is sufficient to cast the onus on him. If there was any such rule, anyone charged with doing an unlawful act with a specified intent would find himself having to prove his innocence because if there ever was a matter which could be said to be peculiarly within a person's knowledge it is the state of his own mind.”[63]

66.  I do not accept that there is anything in the present case to justify regarding the existence or otherwise of a reasonable excuse as a matter within the defendant’s peculiar knowledge in some special way making it necessary to impose a reverse onus on him. 

E.4e  Difficulties inherent in investigating and prosecuting corruption

67.  Fifthly, Mr Zervos contended that a reverse onus is justified because of the inherent difficulties faced by the ICAC in investigating and prosecuting corruption offences. 

68.  Such inherent difficulties have often been acknowledged by our courts.  In AG v Hui Kin Hong,[64] Bokhary JA put it as follows:

“Specific corrupt acts are inherently difficult to detect let alone prove in the normal way.  The true victim, society as a whole, is generally unaware of the specific occasions on which it is victimized.  And, unlike in dangerous drugs cases for example, there is no obviously unlawful commodity, like the drugs themselves, which the criminals can be caught in possession of.”

69.  The insidious nature of corrupt offences derives from the fact that corrupt transactions inevitably take place in secret, with the parties likely to be mutually satisfied with their illicit arrangement, each having every incentive to conceal it, making detection, investigation and prosecution particularly difficult.  This has led to recognition that special investigative powers are needed by the ICAC.  Thus, in P v Commissioner of the ICAC,[65] Li CJ stated:

“Section 14 confers on the Commissioner the power to obtain information concerning suspected POBO offences from suspects and non-suspects after obtaining judicial authorization.  As corrupt activities are by their nature difficult to detect and investigate, let alone prove in the normal way, these special powers of investigation are necessary for the purpose of combating corruption.  This is well recognised by the courts.”

70.  However, it is important to note that section 14(4) is not itself a corruption offence.  Its nature has just been examined in Section E.4d of this judgment.  It is an ancillary offence aimed at promoting the effectiveness of the special powers of investigation conferred by the Ordinance.  Prosecution for non-compliance with a notice does not involve proving any insidious arrangement made in the shadows between partners in corruption, but proving non-compliance with a statutory demand for information.  Accordingly, while I would accept the relevance of the difficulties inherent in investigating and prosecuting corruption offences, they are difficulties which do not bear directly on proving the ancillary offence and cannot be given significant weight when assessing the proportionality of the reverse burden in the context of section 14(4).

E.4f   Use of an evidential burden will encourage poor compliance

71.  Mr Zervos’s final argument on proportionality postulates that if section 24, taken together with section 14(4), were merely to assign an evidential rather than a persuasive burden, this would encourage poor compliance with section 14 notices.  I do not consider that argument well-founded.

72.  It must be emphasised that an evidential burden is not something nominal or illusory.  It requires the defendant to adduce or otherwise be able to rely on evidence which is sufficiently substantial to raise a reasonable doubt which the prosecution must negative if he is to be convicted. 

73.  In R v Lambert,[66] Lord Hope of Craighead put this point as follows:

“If the evidential burden were to be so slight as to make no difference – if it were to be enough, for example, for the accused merely to mention the defence without adducing any evidence – important practical considerations would suggest that in the general interest of the community the burden would have to be a persuasive one.  But an evidential burden is not to be thought of as a burden which is illusory. What the accused must do is put evidence before the court which, if believed, could be taken by a reasonable jury to support his defence.”

74.  To suggest that the extent of a defendant’s compliance with section 14 notices is likely to depend on whether setting up a reasonable excuse involves either an evidential or persuasive burden, is to suggest that such defendant knows the difference between the two burdens and therefore that he is properly advised as to the law.  But if he is taken to be properly advised, he may also be taken to realise that he has to place sufficient evidence before the court to raise a reasonable doubt as to the genuineness of that excuse and that inadequate or incredible evidence of the excuse will not avail him.  He may thus be expected to put forward the best evidence available in support of his excuse, whether he bears the evidential or persuasive burden.  His excuse, in other words, is likely to be the same on either basis.  As Lord Hope[67] indicates, any change in the burden of proof is far more relevant to the standards applied by the tribunal than to the way the accused consequently behaves:

“The change in the nature of the burden is best understood by looking not at the accused and what he must do, but rather at the state of mind of the judge or jury when they are evaluating the evidence.”

75.  I therefore do not accept that there is any basis for accepting that behaviour in relation to compliance with section 14(4) notices would change for the worse if defendants were required to discharge an evidential as opposed to a persuasive burden.

76.  The foregoing reasons, individually and cumulatively, fall short of being compelling reasons justifying abrogation of the presumption of innocence in the present case.  It has not been shown that imposition of a persuasive burden of proving a reasonable excuse in section 14(4) cases is no more than necessary in the pursuit of the legitimate aim of the Ordinance.  The reverse persuasive burden therefore contravenes Article 87(2) of the Basic Law and Article 11(1) of the Bill of Rights.

E.5    The remedy

77.  The obvious remedy in the present case is to read down section 24 in conjunction with section 14(4) so that they are understood as imposing an evidential burden instead of a persuasive burden.  So read down, the accused would be required to raise the issue of reasonable excuse, supported by sufficient credible evidence to engender a reasonable doubt as to the prosecution’s case, but the prosecution would retain throughout the persuasive burden of proving non-compliance, encompassing a burden of negativing any purported reasonable excuse.  Read in this way, the two sections would be consistent with the presumption of innocence and the validity of the section 14(4) offence would be preserved.  It would accord with the intent, which may properly be attributed to the legislature, of arming the ICAC with appropriate investigative powers, backed by criminal sanctions, in a manner compatible with the Basic Law and the Bill of Rights.

F.  Conclusion

78.  I would therefore answer the three questions set out in Section A above as follows: (i) Section 24, read together with section 14(4), places a persuasive burden on the defence; (ii) this is inconsistent with the presumption of innocence protected by Article 87(2) of the Basic Law and Article 11(1) of the Bill of Rights; and (iii) the two sections, read in conjunction, do place a persuasive burden on the prosecution and an evidential burden on the defence after a remedial interpretation has been applied, giving them such effect. 

79.  I would accordingly order:

(a)  That the appeal be dismissed.

(b) That it be declared that section 24 in conjunction with section 14(4) of the Ordinance should be read and given effect as imposing an evidential burden only.

(c) By order nisi, that the appellant do pay the respondents’ costs of this appeal, with liberty to the parties to make any submissions as to costs within 21 days of the date of this judgment, in default of which the order shall thereupon become absolute.

 

Sir Anthony Mason NPJ:

80.  I agree with the judgment of Mr Justice Ribeiro PJ.

Chief Justice Li:

81.  The Court unanimously dismisses the appeal and makes the orders set out in the concluding paragraph of the judgment of Mr Justice Ribeiro PJ.

[1]          By which term I include an investigating officer where either of them is authorized to act for the purposes of the Ordinance.

[2]          Section 14(1A).

[3]          Section 14(1)(a)(i).

[4]          Section 14(1)(a)(ii).

[5]          Section 14(1)(a)(iii).

[6]          Section 14(1)(b).

[7]          Sections 14(1)(c)-(f), 14(1A), 14(1B) and 14(2).

[8]          Secretary for Justice v Sin Kam Wah and Others HCMA 443/2004 (4 February 2005).

[9]          Statement of Findings, §§215 and 287.

[10]        [2007] 2 HKLRD 245.

[11]        Ibid at §30.

[12]        Ibid at §36.

[13]        Ibid at §39.

[14]        Ibid at §42.

[15]        [2008] 1 HKLRD 214.

[16]        (2006) 9 HKCFAR 574.

[17]        Lam Kwong Wai at §36.

[18]        Lam Kwong Wai at §§23-27.

[19]        [1935] AC 462.

[20]        The exception of the insanity defence which arises out of the presumption of sanity does not require discussion.

[21]        (1989) 11 EHRR 360 at §77.

[22]        (2004) 38 EHRR 22 at §97.

[23]        See Sheldrake v DPP [2005] 1 AC 264 at 292-293, §9 per Lord Bingham of Cornhill.

[24]        Lam Kwong Wai at §27.

[25]        Kwan Ping Bong v. The Queen [1979] HKLR 1 at 5-6 per Lord Diplock; Chan Chuen Ho v HKSAR (1999) 2 HKCFAR 198 at 201 per Ching PJ; Lam Kwong Wai at §27.

[26]        Lam Kwong Wai at §25. 

[27]        Lam Kwong Wai at §§25-26.

[28]        Lam Kwong Wai at §21.

[29]        Lam Kwong Wai at §45.

[30]        Lam Kwong Wai at §29.

[31]        Cap 238.

[32]        Under section 20(1).

[33]        Lam Kwong Wai at §34.

[34]        [1975] QB 27 at 39-40; approved in R v Hunt (Richard) [1987] AC 352.

[35]        Cap 221.

[36]        [2007] 3 HKLRD 565.

[37]        [1993] 2 HKCLR 186; [1993] AC 951.

[38]        Cap 228.  It provided: “Any person who is brought before a magistrate charged with having in his possession or conveying in any manner anything which may be reasonably suspected of having been stolen or unlawfully obtained, and who does not give an account, to the satisfaction of the magistrate, how he came by the same, shall be liable to a fine of $1,000 or to imprisonment for 3 months.”  The controversial element is italicised.

[39]        While section 94A was not mentioned, by parity of reasoning, it would also have been held inapplicable.

[40]        (2006) 9 HKCFAR 281, §33.

[41]        AG of Hong Kong v Lee Kwong-kut and Others [1993] 2 HKCLR 186 at 197; AG v Hui Kin Hong [1995] 1 HKCLR 227 at 232; and Tong Yiu Wah v HKSAR [2007] 3 HKLRD 565 at 569-570, §10.

[42]        (1989) 51 DLR (4th) 481 at 493.

[43]        [2002] 2 AC 545 at 571, §35.  It was also cited in Lam Kwong Wai at §28.

[44]        As discussed in Section D.1 above.

[45]        (2005) 8 HKCFAR 229 at 253-254.

[46]        Lam Kwong Wai §17.

[47]        Lam Kwong Wai at §44.

[48]        Section D.1 above.

[49]        [2005] 1 AC 264 at 297, §21.

[50]        Lam Kwong Wai §29.

[51]        At §§57-79.

[52]        (2005) 8 HKCFAR 229 at 265.

[53]        Lam Kwong Wai at §66.

[54]        (2005) 8 HKCFAR 229 at 265.

[55]        In Ming Pao Newspapers Ltd v AG of Hong Kong [1996] AC 907 at 921.

[56]        Set out in Section B above.

[57]        Judgment §23.

[58]        Judgment §22.

[59]        Judgment §§21 and 23.

[60]        [2003] 1 WLR 1736 at §50.

[61]        [2008] 1 HKLRD 214 at §28.

[62]        Ibid at §§29-30.

[63]        R v Edwards [1975] QB 27 at 35.

[64]        [1995] 1 HKCLR 227 at 235.

[65]        [2008] 1 HKLRD 214 at §16.

[66]        [2002] 2 AC 545 at §90.

[67]        R v Lambert [2002] 2 AC 545 at §91.