HKSAR v. PHILIP RUSSELL BOUTTLE

HCMA74/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(APPELLATE JURISDICTION)

MAGISTRACY APPEAL NO. 74 OF 1999

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J U D G M E N T

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1. The Appellant was convicted of one charge of soliciting and another charge of accepting an advantage, both contrary to section 3 of the Prevention of Bribery Ordinance, Cap 201, in that he on or about 13 January 1997, without the general permission of the Governor, solicited and accepted an advantage, namely, a loan in the sum of $300,000 from CHAN Ka-ho. The solicitation constituted one offence and the acceptance constituted another.

2. From the prosecution evidence and the admitted facts by both parties, it is clear that

(a) On 13 January 1997, a cheque of $300,000 was drawn by PW2, Ms Zoe TANG who is the wife of PW1, ie, the said CHAN Ka-ho named in the charges, on her account with the Hang Seng Bank. The cheque was given by PW1 to the Appellant but the payee was not filled out. The name of the Appellant's wife was later written on the cheque as payee and the cheque was deposited into the joint account of the Appellant and his wife with the Hongkong Bank on the same date.

(b) Out of this amount of $300,000 deposited into the account, $187,000 was used to send a remittance to Australia as deposit for the purchase of a house, and $100,000 was paid into the Appellant's current account with the Hongkong Bank to reduce an overdraft of $92,000.

(c) On 9 July 1997, the Appellant received a sum of $812,890.38, being the equivalent of ￡62,404.74 @ ￡1 to $13.10, credited to his Standard Chartered Bank account. The sum was paid to him by the Hong Kong Government as his career compensation package.

(d) On 21 August 1997, a cheque for $150,000 was drawn by the Appellant on his account with the Standard Chartered Bank and given by him to PW1, which was eventually paid into PW2's account with the Hongkong Bank.

(e) Apart from this $150,000, nothing was further paid by the Appellant to PW1 or PW2.

(f) No permission of the Governor was obtained by the Appellant for soliciting or accepting a loan of $300,000 or at all.

3. There was no dispute over the above facts between the Appellant or the Prosecution. The only issue that was disputed was the true nature of the payment of $300,000, whether it was a loan or not. The Appellant's case was that he had an investment in shares held by PW1 on his behalf. When he and his wife returned from Australia in January 1997, having paid a small cash deposit on a house there, he requested PW1 to sell the share investment. PW1 said that the shares would go up in price, and that he would hold the shares for him instead of immediately selling them. PW1 would pay the Appellant $300,000 first and when the shares were eventually sold (presumably at a higher price), he would pay the Appellant the difference. The cheque for $300,000 was thus paid by PW1 to the Appellant.

4. After examining the evidence at some length, the Magistrate rejected the evidence of the Appellant. He found his evidence devoid of credence. Mr Lok, SC on behalf of the Appellant, did not argue otherwise. He rather complained about the quality of the prosecution evidence to ground the appeal.

5. PW1 was the only prosecution witness who gave evidence about a loan of $300,000. He testified in Punti before the Magistrate. The relevant passages in PW1's evidence in-chief as interpreted are set out below:

"Q Can you tell us why did you write the words 'Three hundred thousand only' and '$300,000' in figures on that cheque?

A According to my memory, once Phillip (ie the Appellant) said that there is something wrong with him he said they needed money. That's why I wrote this cheque with $300,000 written on it."

"Q What were the circumstances in which you saw that cheque (ie, the one for $150,000)? Sorry.

A It seems it was given to me by Phillip.

Q Why was it given to you by Phillip?

A I think maybe repay money to me.

Q Why was he repaying money to you?

A Because at first I gave him a cheque with $300,000.

Q He was repaying you $150,000, is that correct?

A I think maybe.

Q So there was a balance of $150,000 not accounted for, is that right?

A According to that two cheques, I suppose yes.

Q What arrangements, if any, were made with regard to the repayment of the $300,000?

A No arrangement.

Q When you received $150,000 did you have any conversation with Mr Bouttle about the remaining $150,000?

A No."

"Q What was it that you thought about? What were your thoughts when you went to ICAC and that amount came to your mind?

A At the time, according to the cheque, I received $150,000. That means I would be receive another $150,000 in the future.

...

Q Have you in fact received that further $150,000?

A No.

Q Was there any interest charged?

A No.

Q There's never any arrangement for interest?

A Correct.

Q Was there any documentation involving this amount that was paid to Mr Bouttle, is that correct?

A Correct."

6. PW1 was cross-examined by Mr Egan, counsel for the Appellant, before the Magistrate. PW1 accepted that it was possible that the Appellant and police officers invested in stocks and shares relying on PW1's advice. PW1 knew Kelly PONG, the then girl-friend of the Appellant who broke up with him in 1994 before his marriage to his wife in 1995. PW1 said that his wife PW2 had her own investments and she sought his advice as to how to invest.

7. The following passages are important verbatim notes of PW1's evidence in cross-examination concerning the payment of $300,000 to the Appellant, with my emphasis highlighted:

"Q Was there a point of time when Mr Bouttle and his wife bought, on your advice, some stocks which required the assistance of your wife or in which your wife assisted then in the purchase of the stocks and shares?

A Cannot remember.

Q Try and think about this - I know you've been at some difficulty throughout your evidence this morning remembering things - but wasn't there a situation where Mr Bouttle and his wife either through or wife your wife, on your advice, placed some money in stocks and shares?

...

A I suppose they did ask for my advice.

Q This girl, Kelly PONG, that I mentioned before, she would liaise with your wife, would she not, in respect of the placing of investments, stocks and shares?

A In fact, Kelly PONG did ask for my tips before.

Q And you gave them?

A Yes.

Q You also advised your wife?

A Yes.

Q Mr Bouttle and his wife had placed an amount of money in stocks and shares, had they not, where they used your advice for the purposes of speculating on those stocks and shares?

A I am not clear about that.

Q Let's get to the point of time where this amount of money was requested from you. You've told this court - I think you've told this court - that you believed that was a loan that Mr Bouttle was requesting from you?

A Correct.

Q Isn't this the situation, Mr Bouttle returned from Australia early in January 1997 and contacted you and indicated that he and his wife wanted to buy a house in Australia, and they needed money to do it. Do you remember that?

A It seems there is such matter happening.

Q Do you remember Mr Bouttle contacting you and saying to you that he and his wife had money invested in the stock market, either through Kelly PONG or Zoe, and he needed the money back in order to pay the deposit on this home in Australia, and asked you for the money back. Do you remember that?

A I cannot remember. I can just remember that when he ask money from me, at the time I just thought how much I could offer him and I did not listen to the things he said following.

Q You see, wasn't this the situation, that what he said to you - try to remember this - he said to you this, he said, 'Look, we need the money for a deposit on a house in Australia. I need to sell my share ...'

COURT: Can we take this in stages, please.

MR EGAN: Certainly, your Worship.

COURT: He said to you he needed money for a deposit on a house in Australia?

A Yes.

Q Did he then refer to the fact that stocks and shares that he and his wife had bought over the year through Kelly PONG were with Zoe, that's your wife, and he needed to sell those stocks and shares?

A Cannot recall.

Q Didn't you ask him, 'Why do you want to sell those stocks and shares?' That's when he told you he needed the money for a deposit on the house. Do you remember that?

A I cannot recall. Maybe he did say so because I always talk about stocks since I got up until at night. I could not remember whom I did talk to.

Q You continuously talked about stocks and shares all day, that was your business?

A Correct.

Q Can I suggest - and try and think of this, I know you may have involved in many, many transactions, but do you remember saying to Mr Bouttle, 'Look, the stock that you want to sell is good stock, I think it will go up in value. I will hold the stock and give you the money against it.'

A It's not surprise if I said so because at the time whoever ask me about the stock I would recommend him or her to hold the stock.

Q So the $300,000 that was given to Mr Bouttle wasn't - you might have called it a loan - but it wasn't not really a loan at all, was it, he was being given the value of the stocks and shares that were being held through your wife, Zoe, he was being given the value of that back.

COURT: So the question is, he was being given the value of the stocks and shares?

MR EGAN: Yes, back. The stocks and shares that were held at the time ...

COURT: Let's have a simple question because you're complicating it otherwise. Let's get it simple so I know what the question is that's asked.

MR EGAN: Yes, your Worship.

COURT: He was being given the value of the stocks and shares ...

Q Of the stocks and shares that he and his wife ...

COURT: Had with your wife?

Q Through your wife, yes?

A I'm not sure about that.

Q It's possible?

A Yes, possible."

"MR EGAN: The stocks and shares against which the witness gave Mr Bouttle the $300,000, those stocks and shares fell in value?

A It's possible.

Q The reason the stocks and shares were retained, and I suggest retained more or less under your control because you were the one that knew the market, these shares were retained rather than sold when Mr Bouttle wanted his money back because you believed the market would go up, whereas in fact the market, in due course, went down?

A It's possible.

Q` What in fact happened is that, in an attempt to recover the losses that were occasioned by the stock dropping in value, your wife invested in one of the China EB stocks?

A Cannot remember she invested on that or not.

Q Possible?

A I did invest on that stock.

Q Yourself. Did you lose money as well?

A Yes.

Q The 150,000 that Mr Bouttle returned to you, was it that in fact the amount of money that the stocks that you'd held lost? That was the loss, the $150,000. So what he was doing when he gave you ...

COURT: That's what you put to him, is that correct or not?

A I'm not sure because at the time I was involved in many transactions which involved large amount of money and I did not pay attention to that.

Q Wasn't there a time when you had a conversation with Mr Bouttle and basically told him that the net position in respect of these stocks and shares that were being held on his and his wife's behalf was 150,000?

A Cannot remember.

Q Possible?

A Possible.

COURT: Did you have or do you keep documentation of these matters?

A No, it's not record down."

"COURT: He's asking you whether in fact it was the true position that the shares that were held for Mr Bouttle and his wife, that their net position was in fact $150,000. Is it the case that you have any documentation which would show that, if that is in fact the case?

A It's possible because of my friends ask me to chase stocks for them and sometimes there would be transaction of the stock or I will return money back to them. If it was a small amount, I would not remember then.

Q The fact is, Mr CHAN, isn't it, that whilst there may be records showing the number of stocks and shares that were transacted in, what you're saying is you didn't keep records of the transactions you had with people in respect of shares?

A You're correct.

Q So whilst you might know the total number of a particular type of shares that had been bought, you wouldn't necessarily have records of the different subgroups of owners of those shares, if there were subgroups of owners of those shares?

A Correct.

Q It doesn't sound like a particularly tidy way of doing business, but is that a traditional Chinese way of doing business?

A Since this is my private investment, sometimes my friends' investment I just said it casually and then afterwards I forgot."

8. Regarding PW1's evidence, the Magistrate had this to say in his verdict:

"I have rehearsed PW1's evidence at some length because it is necessary carefully to assess his credibility as a witness. He was frequently extremely guarded in his replies, particularly in cross-examination, and was often markedly unwilling firmly to commit himself for or against any proposition which was put to him. The defence were able to demonstrate that he had not been consistent in his account of matters because he'd given different figures to the ICAC during the course of their investigations.

However, it does not follow in my judgment that his evidence is simply to be rejected in its entirety, although I do need to treat it with considerable caution. ... But as Mr Ryan (then counsel for the Prosecution) has pointed out, juries are frequently reminded that they are entitled to accept part of a witness's evidence whilst rejecting or doubting other parts. ...

The crucial part of PW1's evidence is as to whether there was a business relationship between himself and the defendant which involved him holding a portfolio for the defendant. In-chief he unequivocally said, 'No.' In re-examination he said, 'I suppose no.' In cross-examination, insofar as it was put to him, he said he could not remember about discussions regarding the sale of the shares. He said it was possible that the defendant was being given the value of the stocks held by his, PW1's wife on behalf of the defendant's wife although this was not in fact the defendant's case in evidence."

9. Then the Magistrate started to analyse the Appellant's evidence and rejected it as a "convoluted account" and "not true". Later, he returned to deal with the value of PW1's evidence, and said:

"So far as PW1 is concerned, I accept his evidence that he did not have business dealings with the defendant. It follows that he did not hold a portfolio of shares on behalf of the defendant. He said in cross-examination in-chief that there was no such relationship and in his cautious answer in re-examination he reaffirmed that position. In cross-examination when various propositions suggesting such a business relationship were put to him, he said that he couldn't remember. At no stage did he accept such propositions."

10. It can be seen that apart from the evidence that the $300,000 was a loan, the only thing that the Magistrate accepted from PW1's evidence was that he did not have business dealings with the Appellant. This absence of business dealings between PW1 and the Appellant was crucial to the Magistrate's determination that the Appellant was guilty of the offences charged, because he used this evidence as the basis to make the finding that PW1 did not hold a portfolio of shares on behalf of the Appellant. Obviously, the Magistrate equated the term "business dealing" with transactions relating to stocks and shares. The term, however, introduced by Mr Ryan, counsel for the Prosecution in the examination-in-chief of PW1, was undefined and there was no attempt to elaborate upon it or its meaning. Mr Zervos argued before me that this term meant the transactions relating to stocks and shares as alleged by defence counsel in cross-examination of PW1, and that PW1 understood that to be the meaning. These arguments do not, in my view, conform with the evidence. In PW1's evidence in-chief, there were the following questions and answers:

"Q Did you ever have any business dealing with him (the Appellant)?

A No.

Q So you were just friends, is that right?

A Yes."

11. The term of "business dealing" was not used in the cross-examination of PW1. As can be seen in the passages cited above from the cross-examination, despite his characteristic vagueness, PW1 volunteered categorically the information that friends asked him to purchase stocks for them, that such transactions of stocks or his returning money to them did not have documentation, and that he did not have records of different subgroups of owners of such shares. He treated such as his private investment, sometimes his friends' investments, and he mentioned them casually and afterwards forgot them. The relevant passages in re-examination by Mr Ryan immediately following this evidence in cross-examination, further clarifying the subject, are as follows:

"Q Mr CHAN, are you a stockbroker?

A Not stockbroker.

Q So as far as you know, Mr Phillip Bouttle or his wife did not actually have an account with you in the form of an account with a stockbroker?

A Correct.

Q What you say is it was purely a casual arrangement; is that what you say?

A Yes, my usual practice.

Q Would you like to have some time to see whether you have any documentation relating to any investment that Mr Bouttle or his wife might have made through you?

A I have no documentation on this.

Q How would you be able to remember whether anyone had made investments through you?

A Since what I did just involve small amounts, sometimes 100-odd to $200, sometimes 200-odd to $300, usually I would not remember them.

...

COURT: $300,000 a small amount to you?

A Yes.

COURT: So that's one of the ones you might forget about?

A Correct."

"COURT: He gave certain answers about dealings with Mr Bouttle. I think is what you should say. Have you got the question clearly now?

Q To your memory, did you or did you not have business dealings with Mr Bouttle?

A I suppose no."

12. PW1's evidence is simply not clear enough to allow the use of the term "business dealing", introduced by counsel for the Prosecution but not adopted by counsel for the defence, to necessarily include the transactions about stocks and shares between PW1 and his friends of whom the Appellant was one. In fact, looking at the verbatim transcript of PW1's testimony at the various stages of his evidence, my impression is that he was more probably than not differentiating the transactions that involved his friends from business dealings which he considered as such when he purchased shares in his own name (whether for himself alone or for the joint investment of him and his friends) from stockbrokers. I am of the view that it is not beyond a reasonable doubt from all the evidence, especially the passages highlighted, that PW1 had flatly denied that the Appellant did not have stocks and shares with him, or that the Appellant did not ask him to sell such shares in January 1997. It follows that it was not permissible for the Magistrate to have treated PW1 as having denied the existence of such transactions when he merely denied having business dealings with the Appellant. PW1's evidence in cross-examination in its totality shows that he accepted that it was possible that those transactions existed, which contradicted his evidence in-chief that the $300,000 was a loan to the Appellant.

13. In a normal case, it is correct that it is for the person deciding on facts to accept parts of the evidence of a witness and reject other parts. However, the evidence of PW1 about the possibility of stock and share transactions between him and the Appellant and his evidence of the loan of $300,000 are in a direct conflict. Both relate to the nature of the payment, and where the payment being an amount relating to the sale or proposed sale of the Appellant's shares kept by PW1 or PW2 was a possibility, then there must be a doubt whether it was a loan. While I appreciate that the Magistrate had rejected the Appellant's evidence on the nature of the payment and there is no challenge to this rejection, one must never forget the cardinal principle of criminal evidence law that the standard of proof is one beyond a reasonable doubt. If this possibility as accepted by PW1 could be considered as a reasonable doubt, the Appellant simply should not have been convicted. Taking into account the quality of PW1's evidence, the reluctance with which he was answering questions, the guarded manner he delivered his answers and the vague way he expressed himself, I feel very uneasy that the Appellant should be convicted on PW1's evidence.

14. I was reminded by Mr Zervos of the decisions of my brethren in R v HUI Kee Fung, HCMA 196 of 1994 (26 July 1994, unreported) and R v YIP Kam Lam, HCMA 731 of 1996 (14 August 1996, unreported) that the judge on appeal, not having the benefit of seeing the witnesses in flesh as the magistrate, will usually not interfere with the latter's findings on the basis of the weight of evidence. In HUI Kee Fung, at p.7, Keith J said that:

"... it will be rare indeed for a Judge to say that the findings of fact made by the magistrate were so contrary to the weight of the evidence that doubts as to the correctness of the magistrate's findings exist."

In YIP Kam Lam, at p.2, Stock J had this to say:

"The appellant must understand that my job is not to determine the true facts of the case. If I were to do so I would have to hear not only from the appellant but also from the sergeant. Under our system of law, the Appeal Court examines the record and decides whether the magistrate has made any obvious error as to law or whether he has come to the decision which was irrational in the light of the evidence that was given. ... Now he saw and heard to the witnesses in the case and it so happens that he believed the evidence of the sergeant and he did not accept the evidence of the appellant. Now that was a decision to which the magistrate who saw both the witnesses was entitled to come and behind which I cannot in the circumstances go."

15. I am in entire agreement with those observations. However, they have no application to the present appeal where the only witness who talked about the crucial subject of the nature of the money payment particularised in the charges gave one definite version in-chief which had been at least diluted, if not contradicted, in cross-examination. If in a trial for theft, while the victim tells the court in-chief that the defendant had permanently deprived him of his pen, he accepts in cross-examination that it is possible that the pen belongs to the defendant, I have not hesitation to acquit because there is a reasonable doubt whether theft has in fact been committed. A clearer but less apt analogy is where the only witness of a murder charge tells in-chief that he recognises the defendant as the one using a gun to shoot the deceased dead but he accepts in cross-examination that it is possible that the person he saw using the gun was not the defendant. Would any reasonable jury or judge convict? The answer is obviously no.

16. Mr Zervos argued that PW1's evidence as to the possibility that the Appellant might have kept a portfolio of shares with PW2 is irrelevant as that was not the Appellant's case. There was in fact a difference between the case put by Mr Egan to PW1 and the evidence of the Appellant in this aspect. While PW1 was asked if there were stocks and shares belonging to the Appellant and his wife held by Kelly PONG or PW2, the Appellant testified that the shares belonged to him (not mentioning his wife) which had been originally held by Kelly PONG for himself and later transferred by Kelly PONG to PW1 (not PW2). The Appellant also said that the fact that PW1 (not PW2) held the shares was only known to him long after he had severed his relationship with Kelly PONG. Mr Zervos therefore argued that although PW1 accepted in cross-examination the possibility of the matters put, those acceptances were irrelevant and did not in any way affect the quality of PW1's evidence of a loan, so definitely stated by him in-chief. Mr Zervos, however, clarified his submission by saying that he was not saying that the rejection of the Appellant's evidence must necessarily, or in this case did, support the Prosecution's case or evidence.

17. Moreover, I do not accept Mr Zervos's suggestion that the difference between the case put and the defence evidence was a variance so substantial as to demonstrate that the Appellant did not have a case to tell right from the beginning of the trial or he was only making up a case as the trial proceeded, dependent on the prosecution's evidence. While the case put was not as precise as one would normally expect, the difficulty with cross-examining a witness as vague and as non-committing as PW1 must be taken into consideration. His attitude towards answering questions was described by the Magistrate himself as "frequently extremely guarded in his replies, particularly in cross-examination, and was often markedly unwilling firmly to commit himself for or against any proposition which was put to him." Even Mr Ryan did not try or was not able to clarify with PW1 if the transactions which he mentioned to be possible were "business dealings" but simply asked him in re-examination to confirm what he had said in-chief that there was no "business dealings", obtaining a response of "I suppose no."

18. The main thrust of the defence case put to PW1 was that the $300,000 was not a loan but a payment relating to the sale of the shares belonging to the Appellant and that the $150,000 subsequently paid by the Appellant to PW1 was for the loss upon the sale. PW1 many a time said he could not remember because the matter involved such a small sum (by his own standard) but he eventually accepted that it was possible.

19. Mr Zervos also ascribed descriptions to Mr Egan's way of conducting the cross-examination of PW1 as too general, skirting, meandering, vague, nebulous, double-barreled and convoluted. I do not think that these comments were justified. One has to be fully appreciative of counsel's role when he is on his feet conducting examination of a witness, at any of the three procedural stages. While he must be totally alert and responsive to the answers coming from the witness, while keeping an eye on the reaction of the bench, he has to use his best endeavours to reflect his client's instructions. It is not an easy task and counsel's conduct should not be criticised unless one has full knowledge of the situation in which counsel was operating.

20. Owing to the unsatisfactory evidence of PW1, and for the reasons given above, I am of the opinion that the verdict reached by the Magistrate is unsafe and unsatisfactory. I therefore allow the appeal. The convictions are quashed and the sentences set aside.