HKSAR v. CHAN YIU WAH

HCMA 1249/1998

HEADNOTE

The offence charged (accepting an advantage, contrary to s. 3 of the Prevention of Bribery Ordinance, Cap. 201) was one which required the Secretary for Justice's consent to the bringing of a prosecution. Such a consent accompanied the original charge in which the advantage accepted is particularised as "a gift consisting of" certain shares. At the beginning of the trial, the Magistrate acceded to the prosecution's application to amend the charge to particularise the advantage accepted as "a loan being the capital contribution for" those shares. The prosecution undertook to obtain a fresh consent, but before that the evidence-in-chief of the main prosecution witness was taken. The trial was then adjourned. A fresh consent was then obtained before the resumed hearing. The appellant was convicted.

One of the grounds of appeal was that there was a material irregularity in the conduct of the trial because that witness's evidence-in-chief was taken before the fresh consent had been obtained.

The conviction was quashed on other grounds. As to the ground of appeal complaining about the lateness of the fresh consent, the High Court referred to the decisions of the Court of Appeal in R v. Do Bing-hung [1998] 1 HKLR 558 and R v. Liu Cheung-hon [1994] 1 HKCLR 102 and without deciding the point as to the lateness of the fresh consent, pointed out the need for prosecutors to exercise caution in these matters, saying:

"What I will say is that it is not in anybody's true interest for the validity of a trial and its eventual result to be risked by the taking of shortcuts even if well-motivated by a desire to save time and avoid wasting costs. The consequences could well end up disastrously. R v. Do Bing-hung was about no fresh consent. The point in the present case, which point I do not decide, is about a late fresh consent. So long as the point remains undecided, prosecutors should exercise caution to avoid the risk of the point being well founded. If in any given case, a prosecutor appears to be proceeding in ignorance of the risk, it would of course be appropriate for the court to point it out."

HCMA 1249/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 1249 OF 1998

(ON APPEAL FROM ESC 1922/1998)

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J U D G M E N T

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1. This appellant appeared before R B McNair Esq. in the Magistrate's Court at Eastern on six charges of accepting an advantage, contrary to s. 3 of the Prevention of Bribery Ordinance, Cap. 201. He was acquitted on Charge 1 when no evidence was offered on that charge. Then he was acquitted on Charges 2 - 5 when the Magistrate ruled that there was no case to answer on those four charges. That left only Charge 6.

2. On 20 November 1998 the appellant was convicted on Charge 6 as amended. He was fined $10,000.00 and ordered to pay $10,000.00 costs. He asked for costs on the five charges on which he had been acquitted, but the Magistrate refused to award him any costs. He now appeals against his conviction. Originally, he also appealed against the Magistrate's refusal to award him costs on the charges on which he was acquitted; but this was later abandoned. I am therefore only concerned with his appeal against conviction.

3. In its original form, Charge 6 was particularised as follows:

"Chan Yiu-wah, being a Crown servant, namely a Structural Engineer of the Architectural Services Department, on the 17th day of July 1996, in Hong Kong, without the general or special permission of the Governor accepted an advantage, namely a gift consisting of four thousand nine hundred and ninety nine shares each of a nominal value of $1.00, Hong Kong currency, of Pridol Development Limited from Chan Pak-ling."

As amended, its particulars read:

"Chan Yiu-wah, being a Crown servant, namely a Structural Engineer of the Architectural Services Department, on the 17th day of July 1996, in Hong Kong, without the general or special permission of the Governor accepted an advantage, namely a loan being the capital contribution for four thousand nine hundred and ninety nine shares each of a nominal value of $1.00, Hong Kong currency, of Pridol Development Limited from Chan Pak-ling."

The difference, as one sees, is that what had originally been particularised as "a gift consisting of" came to be particularised instead as "a loan being the capital contribution for" those shares.

4. As to conviction, seven amended perfected grounds of appeal have been put forward on behalf of the appellant. The argument advanced on behalf of the appellant under the first six of those grounds is, in short, that there was no evidence on which the Magistrate could convict or, at least, that the conviction is unsafe and unsatisfactory.

5. What is clear is that on 13 July 1996 Pridol Development Limited (which I will call "Pridol") was incorporated; that on 17 July 1996 the Registrar of Companies was notified that Chan Pak-ling (whom I will call "Mr Chan") and the appellant were Pridol's first directors; and that also on 17 July 1996 the Registrar of Companies was notified that Mr Chan and the appellant had each been allotted 4,999 i.e. half of the 9,998 shares of a nominal value of $1.00 each allotted in Pridol. All of that background appeared from Pridol's certificate of incorporation, its return of first directors and its relevant return of allotments. So all of that was clear. But the rest of the prosecution's case depended on the testimony of Mr Chan whose testimony the Magistrate accepted.

6. The basis on which the Magistrate convicted appears from these two paragraphs in his Statement of Findings (in which Mr Chan is referred to as "PW1" and the appellant is referred to as "the defendant"):

"On 17 July 1996 the defendant and PW1 were registered as the two directors of Pridol (Ex. P1). The total shares allotted was 9,998 at a nominal value of $1.00/share. Each director was allotted 4,999 shares. The defendant listed himself as "Merchant" on the Registry documents. PW1 regarded the defendant as a partner; they agreed to share profits and losses on a "50/50" basis. As the defendant did not have any money to contribute PW1 paid all the costs to set up Pridol; the defendant paid nothing. He agreed with PW1 that when he had the money he would pay PW1 his one half share of the start up costs, amounting to between $30,000.00 and $40,000.00.

I found that the defendant had agreed to repay PW1 his 50% share of the start up costs of Pridol. In return he received one half the shares of Pridol and became one of the two directors. The defendant agreed that he was to receive one half of the profits and would share any losses equally with PW1. He had received substantial commissions already arising out of Tycoon and he could reasonably expect further income from Pridol. I found that this deferral of the defendant's contribution to the set-up costs of Pridol constituted a loan from PW1 to the defendant. I further found that this loan was for the capital contribution for 4,999 shares of Pridol, each of a nominal value of $1.00 Hong Kong currency. I found that this loan constituted an advantage, contrary to s. 3 Cap. 201 and no permission, general or special, had been sought or granted by the Governor. I found the prosecution had proven its case on charge 6 beyond any reasonable doubt and I convicted the defendant accordingly."

7. Did Mr Chan's testimony, even making all legitimate allowances, support those findings? Even in his evidence-in-chief Mr Chan never spoke of any "loan" to the appellant. And this was despite a valiant effort on the part of the prosecution to get him to come up with the word "loan".

8. Then came the cross-examination of Mr Chan. In the course of cross-examination Mr Chan conceded the following:-

(1) The appellant had very little involvement in the running of Pridol.

(2) Mr Chan himself was actually the boss and in control of Pridol.

(3) The appellant had nothing to do with Pridol's running expenses.

(4) Mr Chan did not have to share Pridol's profits with the appellant.

(5) The appellant was made a director and shareholder to comply with the requirements of the Companies Ordinance.

(6) The appellant did not have to pay for his shares in Pridol.

(7) Mr Chan and the appellant did not actually have the same rights in respect of Pridol.

(8) The appellant was only a nominal director and shareholder of Pridol.

(9) If Pridol were to flourish then the appellant's position in Pridol might have changed, but at the time when Pridol was established the appellant's position was only nominal.

9. What a court is left to suspect is one thing. Whether a specific charge has been proved beyond reasonable doubt is a totally different matter. I am of the view that this conviction is at best unsafe and unsatisfactory. Indeed I think that there was in truth no evidence to support this charge which was positively negatived by the prosecution's own evidence. That being so, this conviction must be quashed even before we reach the seventh and last amended perfected ground of appeal against conviction, which reads:

"There was a material irregularity in the conduct of trial in that the proceedings in relation to the amended charge 6 proceeded, and concluded in so far as the evidence in chief of PW1, without a valid Secretary for Justice consent in relation to the prosecution on the amended charge."

10. This arose in the following way. A Secretary for Justice's consent dated 3 July 1998 accompanied the original charges. On the first day of the trial, 14 September 1998, Charge 6 was amended in the way which I mentioned earlier on in this judgement. The prosecutor undertook to obtain a fresh consent from the Secretary for Justice. On that basis, the trial proceeded. Mr Chan gave his evidence-in-chief. The trial was then adjourned to 12 October 1998. At the start of the resumed hearing on that date, the prosecution produced the fresh Secretary for Justice's consent which was dated 9 October 1998. The cross-examination of Mr Chan then commenced.

11. Mr Andrew Macrae SC, who did not appear at the trial and now appears as leading counsel for the appellant, has cited the decision of the Court of Appeal in R v. Do Bing-hung [1988] 1 HKLR 558. The circumstances of that case may be taken from the headnote where it is said (at p.558) that:

"The appellant was charged, with the Attorney General's consent, with having accepted a "favour" of a parking permit, contrary to s. 3 of the Prevention of Bribery Ordinance, on two occasions. Later the charge was amended and the word "gift" was substituted for "favour". In response to an objection that the two amended charges were invalid without the Attorney General's consent, the magistrate ruled that since the Attorney General had given his general consent for the prosecution of the offences under s. 3, and since the defence had not been taken by surprise, the amendment did not require a fresh consent. The appellant, having been convicted, appealed. That appeal was referred by O'Dea, J. to the Court of Appeal."

12. The Court of Appeal quashed the convictions holding that the trial had been a nullity because a fresh consent was needed for the amended charges since there was a fundamental difference between the charges as originally worded and the charges as amended. At p. 561F the Court of Appeal said that "any amendment of substance requires a fresh consent".

13. It is argued on behalf of the appellant that the amendment in the present case was one of substance; that the hearing prior to the fresh consent was a nullity; and that that amounts to a material irregularity which vitiates this conviction. To what extent the decision in R v. Do Bing-hung is affected by the later decision of R v. Liu Cheung-hon [1994] 1 HKCLR 102 (in which the earlier decision was not cited) is a question which may have to be dealt with one day.

14. A point of this kind is of wide implication. I do not propose to decide it since it is not necessary to do so. If it had been necessary to decide it, I would have been disposed to refer the appeal to the Court of Appeal, as the judge had done in R v. Do Bing-hung. What I will say is that it is not in anybody's true interest for the validity of a trial and its eventual result to be risked by the taking of shortcuts even if well-motivated by a desire to save time and avoid wasting costs. The consequences could well end up disastrously. R v. Do Bing-hung was about no fresh consent. The point in the present case, which point I do not decide, is about a late fresh consent. So long as the point remains undecided, prosecutors should exercise caution to avoid the risk of the point being well founded. If in any given case, a prosecutor appears to be proceeding in ignorance of the risk, it would of course be appropriate for the court to point it out.

15. I quash the conviction and set aside the fine and order for costs made against the appellant by the Magistrate.

16. It is common ground between the appellant and the respondent that if I were to quash the conviction on the ground on which I have in fact quashed it, there should be no order as to the costs of the trial but that the appellant should be awarded the costs of the appeal. Accordingly, I award the appellant the costs of the appeal.