HKSAR v. LO CHAU YUEN

Coram: Hon D. Pang J in Court

JUDGMENT

1. The appellant was convicted after trial of two of the charges on the charge sheet, namely charge (2) Offering An Advantage To An Agent, and charge (3) Conspiracy To Offer An Advantage To An Agent.  The legal provisions involved are sections 9(2)(a) and 12(1) of the Prevention of Bribery Ordinance, Cap. 201, Laws of Hong Kong, and sections 159A and 159C of the Crimes Ordinance, Cap. 200, Laws of Hong Kong.  He was sentenced to 7 months’ imprisonment for each charge.  The sentences are to run concurrently.  The appellant now appeals against his conviction (the appeal against sentence having been withdrawn before the hearing).

Dramatis Personae

2. The appellant was the first defendant (‘D1’) of this case.  At the time of the commission of the offences, he was the proprietor of Sun Hang Wai Engineering and Construction Company (‘Sun Hang Wai’).  The person surnamed Tang, who was alleged in charge (3) to have conspired together with him, was the second defendant (‘D2’) and was a subcontractor of Sun Hang Wai at the time of the commission of the offences.

3. D2 pleaded guilty to charge (3) before the trial began.  He also pleaded guilty to the remaining charge on the charge sheet, i.e. charge (1), which was another charge of Offering An Advantage To An Agent.  Following that, he became a witness of the prosecution and was called the second prosecution witness (‘PW2’) in this case.

Prosecution case

4. Kwong Fai Mansion (‘Kwong Fai’) is a private residential building situated in Kwai Chung, which has its own owners’ corporation (‘the Corporation’).

5. In 2004 the Buildings Department issued a repair order to the Corporation.  After discussion in an annual general meeting, the owners agreed that full-scale renovation should be carried out to the building and that the areas covered should be wider than those specified in the repair order.

6. On 7 November 2006, Sun Hang Wai was chosen to be the contractor for the above-mentioned project.  However, there were different opinions among the owners as to the exact scope of the project and it was decided that there was to be another general meeting in which matters including the contract price would be canvassed and only after that would a contract be entered into with Sun Hang Wai.

7. On the same day, the owners authorized the Corporation to negotiate with Sun Hang Wai about the price, and it was supposed to just negotiate about the price.  However, the Corporation acted against this resolution and on 14 December 2006 it, without authorization, signed a contract with Sun Hang Wai.  The contract price was slightly more than two million dollars.

8. Reverend Lai (‘PW1’), who had full authority to deal with matters relating to the 4 units owned by the Evangelical Lutheran Church (‘the Church’) in Kwong Fai, was dissatisfied with this arrangement.  Furthermore, after PW1 obtained a duplicate copy of the contract in question, he discovered many big mistakes and problems in it.

9. For instance, the building had a total of 19 storeys, but the work for repairing the air-conditioner condenser pipes only covered 11 storeys; the building was not equipped with any car park, but there were provisions about a car park in the contract; the gas pipes only needed to be painted, but the contact stipulated that new pipes would be installed; some items which had not been approved by the owners appeared in the contract; and so forth.  Moreover, the Corporation had indicated that they had succeeded in reducing the contract price by 9%, i.e. from $1,800,000 odd to $1,600,000 odd, but the price stated in the contract for carrying out the works was over $2,000,000.

10. On 30 January 2007, PW1 raised these matters at another owners general meeting.  As a result, with no objection from any owner, a Building Renovation Working Group (‘Working Group’) was officially formed, which was specifically charged with the task of monitoring and supervising matters concerning the renovation project, particularly clearing up problems found in the contract, and PW1 was appointed as the convenor.  In March of the same year, it was formally resolved in an owners general meeting that Sun Hang Wai was to stop work at once.

11. It is also worth noting that PW1 frequently obtained authority from other owners to attend the owners general meetings.  On some occasions, he was representative of as many as 20 undivided shares.  On the other hand, after the setting up of the Working Group, the Corporation, management company, consultant company for the project and Sun Hang Wai formed a united front and kept pressing the owners in various meetings to pass resolutions about paying money for the project and allowing Sun Hang Wai to resume work, but they were all voted down by the owners.

12. After the Working Group was formed, PW1 was frequently approached by people who wanted to talk with him about the project, but PW1 refused all of them until PW2 called. PW1 mistook that he was one of the owners, so they met for the first time.  During the meeting, PW1 made it clear to PW2 that everything related to Kwong Fai’s project would be dealt with according to the contract.

13. On 4 April 2007, PW1 made a formal complaint to the I.C.A.C. about matters relating to the project.  In the meantime, PW2 repeatedly called, asking to see him.  Consequently, PW1 arranged with PW2 to meet him in a café in a hotel on 8 June, with the meeting monitored by the I.C.A.C.  During the meeting, PW2 said that his boss (the appellant) had given him full power to deal with matters concerning the project, and that his purpose of meeting PW1 was to try to successfully solve the problems which Sun Hang Wai was faced with, so that work could be resumed as quickly as possible.

14. In addition, PW2 believed that all Kwong Fai’s owners would do what PW1 suggested, that is to say, they would “follow his lead”.  PW1 asked PW2 whether he was trying to persuade him to stop “talking” about problems concerning the contract.  Then PW2 said, “Look, if … if it is agreed, well, I’ll just charge you half of what you people should pay.  Well, I can make the decision.  That can be solved in this way.”  But PW1 made no response.

15. On 4 July 2007, the Corporation was dissolved by an owners general meeting.  The general meeting also accepted the recommendation made by an officer of the Home Affairs Department, who was present to give assistance, and elected PW1 to be the provisional administrator.  After 20 odd days, PW1 was further elected as vice-chairman at the re-election of the Corporation.

16. One day in August of the same year, PW2 called again and asked for a meeting with PW1 in respect of matters concerning the project.  As a result, under I.C.A.C. surveillance, PW1 had a meeting with PW2 and the appellant in a café of a hotel at noon on 31 August 2007.

17. In the course of the meeting, the appellant knew very well that PW1 was elected as the vice-chairman of the Corporation and that one week later Kwong Fai would hold a general meeting to discuss matters about the renovation project, with respect to that the appellant indicated that he would like to “come to an understanding” with PW1 beforehand.

18. The appellant was of the view that PW1 had won the trust of everybody and was able to exert big influence on the people, so he hoped that PW1 would give him “some help” by persuading the chairman of the newly elected Corporation to allow Sun Hang Wai to continue to undertake the project at the original contract price.

19. As for the share of the project fee which the Church should pay, the appellant indicated that it needed not be paid.  PW1 answered that if it was done in that way, that would be shown in the records and other owners would be aware of that.  The appellant and PW2 immediately modified their previous remark by saying that PW1 should pay in the normal way but the appellant himself would subsequently refund the money.  In other words, the appellant would contribute the money for PW1 to pay.

20. PW1 asked the appellant how this suggestion would be actually carried out.  The appellant said, “Regarding this matter, … I give you my word.”  The appellant further said that at present it was PW1 who “called the shots”, and that if in future the appellant did not keep his word, PW1 could refuse to pay the project fee or put up all sorts of obstacles.  Finally, the appellant made it clear that thereafter he relied on PW1 to “take charge” of matters for him in the Corporation, and he sounded as if PW1 was a part of Sun Hang Wai.

21. The appellant reiterated that he hoped that in the meeting to be held in the following week, PW1 would support Sun Hang Wai to continue with the project at the original contract price.  However, PW1 gave no response to any of these remarks.

22. At last, the appellant was arrested by I.C.A.C. officers on 4 July 2008.  Under caution, the appellant denied the accusations and refused to answer any questions.

Defence case

23. The appellant neither gave evidence nor called any witness.

24. At the first instance trial, the only issue raised by the defence was whether the appellant had the mens rea.  The defence submitted that even though the two conversations between the appellant and PW1 did sound like the offering of bribes, in fact the appellant was only trying to sound out PW1’s views on this matter.

25. The defence argued that there was no need for the appellant to bribe PW1 at all, because at that time the owners’ opinions were still quite divided, and so, even if the appellant had PW1’s support, there was no guarantee that Sun Hang Wai could continue to be the contractor for Kwong Fai’s project.

26. The defence also said that during the meeting held on 31 August, most of the time was spent on discussing how to solve problems relating to the project, and that the content about the waiving of PW1’s renovation fee appeared only at the final stage of the conversation.  That could show that in the conversation as a whole, there was no intention to bribe.

27. Finally, the defence submitted that the absence of any follow up action on the part of the appellant after the two meetings with PW1 was not consistent with the allegation that the appellant really wanted to bribe PW1.

Verdict given at the first instance trial

28. The result was that the deputy magistrate who tried this case found the appellant guilty of the two charges.

29. The following is her general analysis of this case stated in her written judgment (only the relevant parts are quoted):

‘39.     I noted that during the trial, the defence did not challenge the integrity of PW1 and PW2 or the reliability of their evidence…….

……

43.     From the standpoint of the appellant, PW1 was the source of all the problems.  As a person who won the trust of so many people and could exert so much influence, his decision could be decisive when dealing with [matters concerning the renovation project]. [Moreover,]……the owners had not yet reached a consensus as to whether the contract with Sun Hang Wai had to be set aside ……. In my judgment, the appellant …… wanted [PW1] to make use of his capacity as the convenor of the Working Group and the vice-chairman of the Corporation to lead the owners to support Sun Hang Wai to continue to be the contractor for the Kwong Fai renovation project at the original price stipulated in the contract.

……

50.     According to PW2’s evidence, before the 8 June [i.e. the first] meeting he had talked with the appellant about PW1’s attitude to the Kwong Fai project.  The appellant asked PW2 whether PW1’s purpose was to “get some benefit”.  With this idea in mind, after the appellant and PW2 discussed with each other, they decided to talk with PW1.  PW2 said the appellant had set a limit on the terms they should offer to PW1, namely the minimum was to waive 5% of the amount payable by him and the maximum was 50%.

51.     I noted that the defence did not conduct any significant cross-examination as to the evidence relating to the appellant’s involvement before this meeting.  I accepted without any doubt PW2’s evidence that the promise he made to PW1 was what he and the appellant decided on after they discussed with each other.

52.     I verily believe that the appellant was fully aware of what happened in this meeting attended by PW2.  During the second meeting, when the appellant suggested that all the renovation fee payable by PW1 would be waived, PW1 thereupon smiled and said to PW2 that on the previous occasion he was willing to waive only half, but on the present occasion his boss was more generous than him.  The appellant at once responded by saying that the previous occasion was different from the present one, because the purpose of the previous occasion was to “cooperate”, while on the present occasion PW1 was the one who “called the shots”.

53.     I consider that in the meeting when PW2 said that half of the renovation fee payable by PW1 would be waived, he was making a definite promise to PW1 on behalf of the appellant and that this promise constituted “offering an advantage” prohibited by section 9 of the Prevention of Bribery Ordinance.

54.     [As for the second meeting, i.e.] the meeting on 31 August …… the appellant directly took part.  It could be clearly heard in the audio recording that the appellant told PW1 that the renovation fee payable by him would be waived.  This suggestion was straight forward, simple and clear.  Obviously, the appellant was referring to all the renovation fee payable by the Church in respect of this renovation project.  He asked PW1 to help Sun Hang Wai by, for example, persuading the new chairman of the Corporation to allow him to continue with the project, and by taking the lead in supporting Sun Hang Wai in the meeting to be held on Monday, so that Sun Hang Wai could continue to be the contractor for this project.  I find that the making of this promise was precisely offering an advantage.’

30.  In response to the defence put forward by the defendant at the first instance trial (see paragraphs 24-27 above), the magistrate made the following comments:

‘56.     As regards the meeting on 8 June 2008, PW2’s evidence is that if PW1 had accepted it, it would have become binding.  The prosecuting counsel asked him in examination-in-chief, “At that time were you trying to sound him out?”  PW2 answered, “Yes.” When he was asked what the meaning of sounding him out was, PW2 said that from his point of view, PW1’s purpose was to “get some benefit, that must be so.”, so “I quoted him this price to see whether he is agreeable.”  When he was further asked whether he wanted to use the 50% concession to sound PW1 out, PW2 answered, “Yes, I wanted to find out whether he would agree to speak for us.”  PW2 said that 50% was the limit set by the appellant before the meeting.

57.     After carefully considered PW2’s evidence as a whole, I conclude that when he agreed to the phrase “sound out”, he meant he wanted to find out whether PW1 would agree to accept the term offered, namely 50%.  There was no other meaning at all.

58.     As regards the meeting on 31 August, when the appellant told PW1 that he did not need to pay his share of the project fee, PW1 immediately asked the appellant how that would be actually carried out.  PW1 then explained at length that he would never go back on his word, because future matters had to be approved by the Corporation, i.e. PW1 and the appellant did not want any trouble or hindrance.  Looking at the whole conversation in context, I find that the appellant at that time gave PW1 a very definite promise that he himself would refund PW1 the project fee payable by the Church.  The conversation was by no means just intended to be exploratory.

59.     I think that whether or not the appellant took any follow up action subsequently cannot prove whether the words spoken earlier constituted a promise or were just exploratory in nature. In this case, the appellant had on two occasions made an offer to PW1, hoping that he could help him. The offer made on the first occasion was to reduce the fee by one half. On the second occasion, the whole amount was waived. Furthermore, the appellant was arrested by the I.C.A.C. just a few days after this meeting, so he could not possibly took any follow up action in respect of this matter.

60.     Moreover, as far as the second meeting is concerned, I find that the proposition put forward by the defence that it was just a “ sounding out” exercise is not supported by any evidence. PW2’s evidence in court did not mention that the purpose of this meeting was to “sound out” PW1. Besides, the main function of PW2’s presence at the meeting on that day was to listen to the conversation and to echo what the appellant said. There is no evidence which shows that he knew what was in the appellant’s mind.

61.     I believe that only the appellant was in a position to give evidence as to whether he was making a promise or was sounding PW1 out on that day so as to enable the court to consider this exculpatory explanation of the defence. But he did not do that, therefore I think that the credibility of this proposition was greatly weakened.

62.     Based on the contents of the conversations which took place in the two meetings, I find that the appellant had obviously made a promise to give an advantage to PW1 and that the promise was real and specific, and was not in any sense equivocal. I do not think that the appellant at that time did not possess the relevant mens rea to make that promise.’

The appeal

31. The argument put forward by the appellant is very simple.

32. He argues that the magistrate, by making the comment in paragraph 61 of the written judgment quoted above, erroneously imposed on the appellant the burden of proving his own innocence or, put it in another way, the magistrate erroneously made adverse comment against him because the appellant did not give evidence.

33. Furthermore, if the comment in paragraph 61 was only directed against charge (2), i.e. what happened during the meeting on 31 August 2007, then by making another comment in the oral judgment, i.e. the comment directed against charge (3), the meeting on 8 June 2007, the magistrate committed a completely identical error.

34. However, I do not agree with this argument.

35. In Li Defan & Another v HKSAR (2002) 5 HKCFAR 320 the Court of Final Appeal held that there were cases in which the prosecution case on a particular issue might be strengthened by the failure of the accused to give evidence, even though such cases were not great in number and were hard to clearly define, so that the judge had the duty to draw it to the attention of the jury. The following is part of the comments made by the Court of Final Appeal on this point (p.328 E-G of the judgment):

“8[sic].     Even in cases in which the judge feels confident that there is no reason why the accused, if innocent, should not have put forward an explanation or contradiction on oath, there are dangers in any comment which goes beyond the standard direction. This is because the line between treating failure to give evidence as an admission and treating it as lending additional strength to the prosecution case on a particular issue is a fine one and the distinction may not be easy for the jury to understand. Nevertheless, the reasoning itself is permissible and there is an unbroken line of authority in England and Hong Kong which recognizes that there may be occasions when the judge may properly consider it his duty to draw it to the attention of the jury that such reasoning is open to them.”

36. It should be noted that the above comments were made in relation to a trial by jury.  As for a trial by a professional judge sitting alone, the Court of Final Appeal remarked that this was a matter of common sense and not too much restraint should be put on the judge (p. 334 E-J of the judgment):

“30.   The next question is the extent to which this practice has been [sic] modified in a trial by judge alone. The need for the standard direction and for considerable caution in inviting the jury to regard the accused’s failure to testify as in any way relevant to the determination of guilt arises from a concern that the jury may overstep the limits of permissible reasoning and treat the failure to testify as an admission of guilt. There is far less need for concern when the tribunal of fact is a professional judge …

31.     ... unless there are indication to the contrary, the judge is aware that the accused is not obliged to give evidence and that failure to give evidence is not an admission of guilt. If therefore the judge appears to have, or says he has, used the failure of the accused to give evidence as an element in the reasoning by which he arrived at a finding of guilt, the only question is whether on the particular facts of the case such reasoning was legitimate. As Lord Diplock remarked in Haw Tua Tau v Public Prosecutor [1982] AC 136, it is hard to say more that [sic] that this is a matter of common sense.”

37.  In any event, whether it is a trial by jury or a trial by a professional judge alone, there are some criteria which govern under what circumstances a judge can (or even should) give additional comment on the failure of the accused to give evidence.  In Li Defan the Court of Final Appeal said (p.333 J - p.334 A of the judgment):

“29.   ... Although it is impossible to generalize and every case must depend upon its own facts, the kind of case in which the judge may feel that the jury needs additional comment is that in which the criteria stated in R v Martinez-Tobon [1994] 1 WLR 388 are satisfied…”

38. The criteria stated in R v Martinez-Tobon [1994] 1 WLR 388 (p.397 D-E of the judgment) are basically:

“the defence case involves alleged facts which are at variance with prosecution evidence or additional to it and exculpatory, and must, if true, be within the knowledge of the defendant.”

39. In my judgment, the above-stated criteria are applicable to this case.  It may not be the most typical case, nonetheless the criteria are applicable.  The reason is that it is indisputable that when either PW2 or the applicant was talking with PW1, there was some suggestion of bribery.  Therefore, even if the appellant really wanted to sound PW1 out for any innocent reason, for example, to collect evidence to inform against him, that is something of which only the appellant could have knowledge.  That being the case, since he elected not to give evidence, those remarks, which at least prima facie appeared to be suggesting bribery, naturally could have more probative force to prove that the appellant possessed the relevant mens rea.  This is my view.

40. There is one more point that should be mentioned: when the magistrate delivered his oral judgment, he cited Li Defan, that shows that he was not ignorant of the accused’s right to silence, but was just applying the law.

41. Finally, for the sake of completeness, I hereby hold that even if the magistrate’s comments are really wrong, that is only a technical error; whereas the evidence in this case is overwhelming and the conviction of the appellant is totally justified.

Decision

42. The appeal is dismissed.

Ms. Maggie Yang, Senior Public Prosecutor of the Department of Justice, for the HKSAR.

Mr. Jackson Poon, instructed by Wong, Kwan & Co., for the Appellant.