HKSAR v. LESLIE HARRY SWANN

DCCC1065/2021

[2024] HKDC 1091

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 1065 OF 2021

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DECISION
(Costs)

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1.  The 2^nd Defendant was jointly charged with the 1^st Defendant for Conspiracy to defraud and an alternative charge of Fraud. It was alleged that D2 had knowledge of “the Simulated Tests Irregularity” carried out in the Siu Ho Wan Laboratory (SHW Lab) and deliberately concealed the matter from CEDD. All along D2’s case was that he had no knowledge of the matter.

2.  After due consideration, I accept D2’s evidence and find he had no knowledge of the matter. Accordingly he was acquitted of both charges on 1 June 2024. D2 indicated on 1 June he would apply for costs.

3.  By the Submissions on Costs dated 4 June 2024, D2 made an application seeking:-

(i) an order for the prosecution to pay the costs of D2, to be taxed if not agreed; and

(ii) a certificate for two counsel, should the Court be amenable to the above application.

4.  The Prosecution has indicated his objection on 1 June 2024, and by the Prosecution’s submission on D2’s Costs dated 14 June 2024, reiterated his stance but has no objection to granting a certificate for two counsel in the event the Prosecution is ordered to pay the costs of D2.

5.  D2 submitted his Reply Submission on 24 June 2024.

Background

6.  D2 was the Project Director of the consultancy agreement related to the operation of the SHW Lab (the project). He was notified of the time manipulation in SHW Lab on 28 July 2016, an ad hoc meeting about the matter was held on 29 July 2016.

7.  The Senior Management decided to hold an internal independent investigation, headed by Jonathan Emery from Australia, to investigate the matter. D2 was excluded from that investigation held in August 2016, and this arrangement was made known to CEDD. JCL discovered “the Simulated Tests Irregularity/the Steel Bar Issue” during the investigation in August 2026. The investigation was concluded by end of August 2016.

8.  To prove knowledge of D2, the Prosecution relied heavily on Tom Ngan’s evidence that he had informed D2 and others in the management team of JCL about the Steel Bar Issue on 28 and 29 July 2016. However, after due consideration, I considered that part of his evidence not only implausible but also contradictory to the contemporaneous evidence and testimony from all other witnesses.

9.  D2, being the Project Director, was required to monitor the follow up actions of any shortcoming discovered in SHW Lab. Jonathan Emery sent two emails in January and February 2017 respectively to D1 and D2 requested for update of the outstanding follow up actions, including those related to the Steel Bar Issue.

10.  In the normal course of operation, the full findings of the independent investigation would be provided to D2 upon completion of the investigation. There is no evidence whether, when sending out the emails, Jonathan Emery knew D2 had knowledge of the full findings of the investigation, or just believed the Senior Management should have told D2 the full findings of the investigation.

11.  The evidence before the court is such that, apart from the two emails from Jonathan Emery received by D2 in January and February 2017 respectively, all the information provided to and materials came into existence after 26 July 2016 that D2 might have access did not contain any reference to the Steel Bar Issue.

12.  D2 elected to give evidence that he had no knowledge of the Steel Bar Issue. He signed the Interim and Final Investigation Reports only because he was the Project Director. He relied on his judgment and the people who prepared the report. He said during a meeting with CEDD on 27 September 2016 with D1’s presence, WK Pun asked “if there’s anything else to report please include it”, this raised his suspicions on the matter of disclosure. He related WK Pun’s statement in a teleconference with the Senior Management later on the same day and was given reassurance that there was nothing else to report. Because he was heavily engaged in other projects, he did not go through the emails from Jonathan Emery. Whilst he concedes in hindsight this was an unfortunate oversight on his part. I consider and accept his evidence and he was acquitted accordingly.

The Law

13.  The Costs in Criminal Cases Ordinance Cap. 492, section 5 provides that “where after trial in the District Court or the Court of First Instance a defendant is acquitted, the District Court or the Court of First Instance may order that costs be awarded to the defendant.”

14.  Parties agree that the general rule is to award costs to an acquitted defendant unless there are positive reasons to deprive him of such costs.

Position of D2

15.  It is D2 position that this is not a case in which (i) D2 was acquitted on a “technicality”; (ii) D2 brought suspicion upon himself; or (iii) D2 had misled the Prosecution/investigator into believing that the case against him was stronger than it was. Thus, there is no proper basis, either in law or in fact, for him being denied his costs.

16.  The decision of the Prosecution to charge D2 with either or both charges, to proceed with those charges and then to continue with the case was in the circumstances, unreasonable. It was apparent from the outset that D2’s defence was based on his lack of knowledge. Large part of the Prosecution’s case relied on Tom Ngan’s bare allegation. The Prosecution should not have relied on Ngan’s evidence if due consideration was given to the plethora of contemporaneous evidence and testimonial evidence from other Prosecution witnesses that were contradictory to Ngan’s claims.

17.  D2’s conduct at any stage is incapable of bringing suspicion upon himself nor misled the Prosecution. It is not disputed that during ICAC’s cautioned interviews with D2 that D2 exercised his right to silence. However, during those interviews, D2 was never questioned by the ICAC about Ngan’s allegations and/or D2’s explanation behind his receipt of the Emery emails.

18.  It is the Court finding that D2 “had no knowledge of the matter prior his arrest. As such, D2 could not give an explanation to something that he had no knowledge. ICAC did not question D2 about the Emery emails at the relevant time, it cannot be said that D2 “had a perfectly good defence but chose not to give the slightest hint as to its existence” during the investigation stage or at any time prior to receiving the Prosecution’s bundle.

Prosecution’s Reply

19.  D2 had plainly brought suspicion upon himself by his conduct prior to the investigation and trial stage, as well as by his conduct during the investigation stage.

20.  Prosecution refers to the fact that D2 retained a role of liaising with CEDD during JCL’s internal investigation. And one would expect D2 being an experienced engineer should have familiarized himself with the investigation findings by taking steps to personally ensure that the reports included all relevant matters and that they reflect the whole truth before signing and approving the reports for issue.

21.  There was no independent objective evidence was available to show directly that D2 was not privy to JCL’s internal investigation and had no knowledge of the Steel Bar Issue. In other words, the case against D2 did not stand or fall on the evidence of Tom Ngan, nor was there independent objective evidence that was contradictory to the Prosecution’s case that D2 had the requisite knowledge.

22.  Regarding D2’s conduct during the investigation stage, he knew full well that the investigation concerned falsity in the investigation reports in respect of JCL’s internal investigation. It later transpired that it was D2’s case that he was excluded from JCL’s internal investigation and he involved in the liaison with CEDD and signed the reports only because of his capacity as the Project Director. And unlike in the normal course of business, he was not provided with the full findings of the investigation. Those are perfectly good defence to the allegation of falsity in the investigation reports.

23.  However, despite how the facts and circumstances were highly suspicious in that they seemed, on the face of it, to suggest that D2 was involved in the internal investigation and the subsequent remedial works, D2 chose not to disclose the above defences to the ICAC during the investigation stage.

24.  In other words, D2 had neglected to bring forward a good and valid explanation at an early and appropriate moment. Thus, D2’s conduct both prior to the investigation and trial stage, as well as during the investigation stage, had brought suspicious upon himself.

Case vs D2

25.  It was apparent from the outset that D2’s defence was based on his lack of knowledge, and it was for the Prosecution to prove that he had knowledge of the Simulated Tests Irregularity/Steel Bar Issue.

• Tom Ngan’s evidence

26.  As mentioned above, there is clear evidence in the Prosecution’s case that D2 was excluded from the JCL internal independent investigation carried out in August 2016 and CEDD was aware of this arrangement. The relevancy of Tom Ngan’s evidence is that the Steel Bar Issue was related to D2 directly/explicitly on 28 & 29 July 2016, i.e. prior to August 2016.

27.  However, it transpired during the trial that his evidence was contrary to other contemporaneous evidence (some are unused materials provided to the defence) and testimonial evidence from other Prosecution witnesses.

• Emery’s emails

28.  The Emery’s emails it is another piece of evidence, which Prosecution relied on to prove D2’s knowledge. The emails requested D2 to provide update of the outstanding follow up actions, including those related to the Steel Bar Issue. However, the emails on their own is not sufficient to draw any irresistible inference that D2 had knowledge.

29.  The evidence before the court is such that, apart from the Emery’s emails, all the information provided to and materials came into existence after 26 July 2016 that D2 might have access did not contain any reference to the Steel Bar Issue.

30.  As such, the prosecution relied heavily on Ngan’s evidence to prove D2’s knowledge. Yet his witness statements/evidence is contrary to other contemporaneous evidence available to the Prosecution.

D2’s conduct

31.  As mentioned above there is clear evidence from the Prosecution that D2 was not involved in the internal independent investigation. The relevant evidence is also summarized in D2’s Reply Submission at paragraph 3.

32.  It was clear to the Prosecution that it was a Jacobs Group decision to have the internal independent investigation and the final report of the investigation prepared by Johnathan Emery was submitted to the Senior Management. Thus, to exclude D2 was a decision from the Senior Management.

33.  The Senior Management decided to keep D2 excluded from the finding of the Steel Bar Issue/Simulated Tests Irregularity upon completion of the independent investigation. Request from CEDD during a meeting on 27 September 2016 raised D2’s suspicious on the matter of disclosure; he did raise his suspicious with the Senior Management after the meeting but was reassured there was nothing else to report.

34.  D2 believed he had been informed of the full findings of the investigation and signed the reports submitted to CEDD with this belief. He only became aware of the Steel Bar Issue upon receiving the Prosecution’s bundle.

35.  It is not disputed that D2 remained silence in his cautioned interviews concerned falsity in the reports submitted to CEDD. However, ICAC never questioned D2 about Ngan’s allegations, his explanation behind his receipt of the Emery’s emails and his involvement in SHW Lab’s remedial works.

36.  It is argued on D2’s behalf that D2 could not give an explanation to something that he had no knowledge of, and in such circumstances, the only answer he could have proffered to ICAC was a bare denial of the allegations he faced. In the face of such a bare denial, it is highly unlikely that the Prosecution would have then decided not to charge and prosecute D2.

37.  As mentioned above it was apparent to the Prosecution that D2’s defence was lack of knowledge, that implied in contrary to the normal course of business, he was not provided with the full findings of the investigation by JCL. I consider and agree that D2 exercised his right of silence during the investigation stage should not deprive him of his costs. Upon considering the whole circumstances, I do not consider D2 had brought suspicious upon himself.

Conclusion

38.  I agree there is no positive reason to deprive D2 of the costs in this case and the general rule applies. The prosecution is to pay the costs of D2, with two counsel certificates, to be taxed if not agreed.