SECRETARY FOR JUSTICE v. SING PAO NEWSPAPER MANAGEMENT LTD

CAAR 2/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

APPLICATION FOR REVIEW NO. 2 OF 2007

(ON APPEAL FROM ESS 12787-9 AND ESS 18133-6 AND 18913-6 OF 2006)

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Dates of Hearing: 28 November 2007 and 15 May 2008

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J U D G M E N T

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Hon Tang VP:

1.  “Wages shall become due on the expiry of the last day of the wage period and shall be paid as soon as is practicable but in any case not later than 7 days thereafter.” Section 23 of the Employment Ordinance, Cap. 57.

2.  Termination payments:

“(1)    … shall be paid to him as soon as is practicable and in any case not later than 7 days after the day of termination.”  Section 25.

3.  “Any employer who wilfully and without reasonable excuse contravenes section 23, 24 or 25 commits an offence and is liable to a fine of $200000 and to imprisonment for 1 year.”  Section 63C.

4.  As from 30 March 2006, the penalty has been revised to:

“… a fine of $350000 and to imprisonment for 3 years.”

5.  The respondent is a member of the Sing Pao Group of Company (“the Group”).  It has over 300 employees.  The well known newspaper Sing Pao is published by the Group.  It has been in operation for 67 years and had, up to the date of the offences, a clear record.  The respondent was a costs centre of the Group, responsible for making payment to employees and for other expenditure.

6.  The respondent was charged with 11 offences under section 63C for contravention of section 23 or 25.

7.  On 3 January 2007, the respondent pleaded guilty to the charges, 10 of which concerned the late payment of wages to 3 of its employees and the remaining one, the late payment of termination payment to one of those employees.

8.  5 out of the 10 charges for the contravention of section 23 occurred after 30 March 2006 as well as the 11^th charge under section 25.  So the amended section 63C applied to them.

9.  On 3 January 2007, the magistrate, Mr Joseph To imposed fines totalling $4,200 for the 11 charges, the details of which have been summarised by counsel appearing for the applicant as follows:

10.  In doing so, the learned magistrate recognised that prior to the 30 March 2006 amendment the average fine for such offences in 2005 was about $3,200, but that he was of the view that there were special reasons  「特殊原因」 why he should impose the lower fines.

11.  On 5 January 2007, the learned magistrate, on his own initiative decided to reopen the case and to review his decision under section 104(5) of the Magistrates Ordinance, Cap. 227.  He did so because he thought that on the question of special reasons, he should have required the respondent to provide further background material, and if necessary, even further evidence and that insofar as he had not done so, he had erred.

12.  From the statistics provided by the prosecution at the review hearing (the review), it appeared that the average fine per summons for a section 23 offence (based on 360 summonses in 2005) was HK$3,208 and that the average fine per summons for section 25 offences (based on 224 summonses in 2005) was HK$3,211.  From evidence provided to us at our request, it appeared that the median fine for section 23 offences for both 2005 and 2006 was $3,000 per summons but that the median fine for defendants who were corporations and where the late payment of wages had not exceeded 6 weeks, was $3,000 for 2005 and $4,000 for 2006.

13.  At the hearing of the review, the prosecution provided material to show the increase in such offences over the years:

“	Year	No. of convicted summonses	Change compared to previous year
	2002	139	-
	2003	445	+220%
	2004	504	+13%
	2005	587	+16%
	2006	785	+34%	”

14.  At the review the respondent produced an affirmation of one Mr Thomson Lai who was the secretary of the SMI Publishing Group Limited, the ultimate shareholder of the respondent.  Mr Lai claimed that the commission of the offence was not intentional, but arose out of the confusion resulting from changes in the management of the respondent between January and April 2006.  He said:

“8.     … in less than 3 months, chief officers and senior management of the Defendant all stepped down from their positions, leaving a vacuum in the management level of the Defendant. … All of a sudden, there witnessed a flood of discontent staff members resigning from their posts.  These included but without limitation, staff in the accounts department and human resources department.  The Defendant’s operation, in particular, the accounting and human resources records, were in a state of chaos.”

He also said:

“12.   … after the abrupt storm of resignation of the Old Management and accounting staff, most of the account records were mislaid. …

.…..

15.     … The new personnel staff therefore spent a lot of time to trace the scattered personnel data of the Defendant comprising of 300 old employees before they could ascertain which person was the then existing staff and which had left employment.”

15.  The respondent was not willing to permit Mr Lai to be cross-examined.

16.  Even so, the learned magistrate placed weight on Mr Lai’s affirmation after considering the decision of the English Court of Appeal in R v Kevin John Underwood and Ors [2005] 1 Cr App R (S) 90.  It is unnecessary for me to decide whether the learned magistrate was right to do so.  I am prepared to proceed on the basis that the late payment was the result of chaos in the defendant’s management.

17.  The learned magistrate affirmed his previous decision.  He was of the view that there were special reasons which justified his departure from what he regarded as the normal fines. 

18.  By an application dated 21 February 2007, the Secretary of Justice applied for a review of sentence under section 81A of the Criminal Procedure Ordinance, Cap. 221, in respect of the sentences passed on 3 January 2007, and affirmed, after a review hearing on 2 February 2007.  The application was made on the basis that it was manifestly inadequate and/or wrong in principle.

19.  Mr Robert Lee, SADPP, who appeared on behalf of the applicant submitted that the learned magistrate seemed to have been of the view that the crucial factor determining culpability was not the delay in payment, but whether it was committed wilfully and without reasonable excuse.  He referred to the decision on review where the learned magistrate seemed to have said that the chaos or confusion arising from management changes amounted to an exceptional reason, which suggested that the offences were not committed entirely “wilfully and without reasonable excuse”.

20.  In paras. 12 to 15 of the Decision the learned magistrate said the emphasis of section 65C was not on the delay in payment but that it was done wilfully and without reasonable excuse.  He said:

「14.    …但犯案的意圖才是案件的關鍵。

15.   這一重點，不論是在定罪的裁決或是判刑時，皆有着重要的意義。就判刑方面，不難想〔像〕到一些極其嚴重的犯案意圖：如用拖欠薪金作為手段，以達到打壓己等等的可恥目的。」

“14.   … this case, however, turns on the intent to commit the crime.

15.     This crucial factor is of major significance as regards not only the decision to convict but also sentence.  In respect of sentence, it is not difficult to envisage some extremely grave intents for the commission of the crime, such as delaying the payment of wages in order to achieve some despicable purposes such as harassing and suppressing one’s opponents etc.” (English Translation)

21.  But the respondent had pleaded guilty to the charges.  It is clear from the admitted facts the respondent had agreed that the late payments were wilful and without reasonable excuse.  It is clear in the passages quoted above the learned magistrate was saying no more than that the blame worthiness of the respondent’s conduct was relevant to sentencing, for example, the learned magistrate went on to compare the culpability of the respondent with employers, who delayed payment in order to punish an employee.

22.  The learned magistrate then went on to emphasis that the wages had all been paid.  He said that in「經濟罪案」(commercial crime) the fact that restitution has been made is a powerful mitigating factor.  That is so.

23.  But with respect, I believe the learned magistrate has under-rated the importance of the punctual payment of wages or termination payment.  That was the principal purpose of sections 23 and 25.

24.  The serious view which the legislature took of late payment was reflected even before the amendment in 2003, in the sentence of a maximum fine of $200,000 and imprisonment for 1 year.  After amendment, they had become $350,000 and imprisonment for 3 years.  It is against such penalties that one should consider the normal fines for such offences.

25.  I can see no special reason to reduce the fine.  Nor was it helpful for the learned magistrate to compare the culpability of the defendant with employers who deliberately delayed payment in order to punish or harass his employees.  In such situations, the court may properly consider a custodial sentence.  In any event, the fine should be much more substantial than the average or median fine.

26.  In this case, the respondent is a limited company but under section 64B when a relevant offence committed by a body corporate is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, any director, manager, secretary or other similar officer of the body corporate, the director, manager, secretary or any other similar officer shall be guilty of the like offence.  A custodial sentence is an available and necessary deterrent.

27.  Nor should the lowness of the amount of wages outstanding be regarded as a mitigating factor.  That often reflected the lowness of the wages paid to the wage earner.  I would caution against under-estimating the impact of a late payment of wages to a person already earning very low wages.  It is hardly a mitigating factor to say that an employer was only withholding $3,000 when that represented the entire wage for the employee for the relevant wage period.

28.  The learned magistrate also mentioned that compensation being an important factor in employer – employee cases, short delays in payments of wages should attract lenient sentences.  I agree if wages were never paid, non payment would normally make the offence more serious so that the fines would be much more substantial and in suitable cases imprisonment would be appropriate.  I note that, subject to the powers of the Secretary for Justice, the consent of the Commissioner is required before an employer could be prosecuted and that such consent should not be given unless he has had an opportunity to be heard.  Section 64.  So the court is unlikely to be concerned with trivial cases or cases with strong mitigating factors.

29.  The learned magistrate treated the respondent as a first offender.  In Shum Ming and Ors v The Queen [1978] HKLR 41 and 42, which as follows in Secretary for Justice v Au Man Kei, Alex and Ors, CAAR 2/2000, unreported, dated 11 August 2000, Stuart-Moore VP said at page 27:

“102. It has long been regarded, as this court said in Shum Ming and others and The Queen (1978) HKLR 41 at p. 42, as difficult to regard persons who appear before the court for the first time, and who are charged with a number of offences, as true ‘first offenders’. We confirm, should it be necessary to do so, that the approach taken in Shum Ming towards offenders committing a series of offences remains the proper one to adopt.”

I should mention that subsequent to the offences with which we are concerned the respondent has been prosecuted on more than one occasion for late payment of wages.  Since those offences were committed subsequently I have ignored them.  In this case, it does not matter whether the respondent should be treated as a first offender, the sentences passed are manifestly inadequate.  I would only add that for repeated offenders, substantial fines and imprisonment must be regarded as real options.

30.  This matter first came before us on 28 November 2007.  On that occasion, Mr Shi Bin Hai, a director of the respondent appeared on behalf of the respondent and requested an adjournment to file evidence in response to the application for review.  We granted an adjournment.

31.  An affirmation of Shi Bin Hai affirmed on 8 January 2008 was subsequently filed.  The only matter of substance in the affirmation is a letter addressed to the court signed by about 22 employees.  Briefly stated, the letter said that the management of the respondent had done their utmost to avoid or remedy later payment of wages and that heavy fines:

「…可能使成報雪上加霜，使已經進行的改革措施半途而廢，功虧一簣…」

“… It will possibly make the dire straits in which Sing Pao found itself even worse, causing the reform measures already in place to fall halfway down the road, hence failure in realizing the desired goals at the last minute …” (English Translation)

32.  At the time we granted the adjournment on 28 November 2007, we were under the impression that there might be evidence forthcoming on the financial position of the respondent.  Naturally, the court would not wish to push a struggling employer over the brink and the means of an employer is a relevant consideration.  An employer who has fallen on hard times and is making honest and reasonable efforts to salvage his business should be encouraged to do so. 

33.  No evidence on the means of the respondent has been made available.  Indeed, on the resumed hearing, no one appeared for the respondent.

34.  In the circumstances, I would substitute a fine of $3,000 for each of the offences committed prior to the amendment and a fine of $4,000 for each offence committed afterwards.  The total fine would be $39,000.  I do so on the basis that the late payment was the result of management chaos arising out of change of management, and that the management has been taking bona fide and reasonable effort to improve its position.  I have no doubt that to be effective fines under section 23 or section 25 must carry deterrent effect and that employees should know that chaos in management is not a special reason for a low fine.  Depending on the circumstances more substantial penalties than those imposed by us would be required.

Hon Yeung JA:

35.  I agree with the judgment of Tang VP and have nothing to add.

Hon Yuen JA:

36.  I agree with the judgment of Tang VP and have nothing to add.