LEUNG FUK WAH OIL v. COMMISSIONER OF POLICE

CACV 2744/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 2744 OF 2001

(ON APPEAL FROM HCAL 371 OF 2001)

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J U D G M E N T

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Hon. Cheung JA: (giving the judgment of the Court)

The Facts

1. Mr. Leung Fuk Wah Oil ("Mr. Leung") was a sergeant of the Hong Kong Police. In May 1997 Mr. Leung was in serious financial difficulties. He was at that time earning about $21,000 per month. His total indebtedness exceeded $350,000. According to the Police internal administration directives he was classified as an "active debtor". As his debt exceeded $100,000, he was interviewed by his Formation Commander who instructed him to report regularly to the staff relation officer (DSRO) who would monitor his progress in reducing his debts.

2. Over the course of the following year, the debt increased substantially. He was warned by the DSRO that unmanageable debts would be viewed most seriously by the force and he was in danger of facing disciplinary proceedings. However by March 1998, Mr. Leung had become indebted to various banks, financial institutions and credit card companies in a sum exceeding $700,000. He was classified as having "unmanageable debts". His Formation Commander directed that he should no longer be allowed to carry a firearm and that his future duties should not allow him to handle cash.

The charge

3. In December 1998 he was charged with two disciplinary offences, pursuant to section 3(2)(e) of the Police (Discipline) Regulations ("the Regulations"). The relevant charge for the purpose of this appeal is in respect of Charge A. The charge in its final form is as follows :

" SGT 7114, LEUNG Fuk-wah, of the Hong Kong Police Force, you are charged that on 21 March 1998, in Hong Kong, you did fail to be prudent in your financial affairs by incurring unmanageable size of debts whereby your efficiency as a police officer was impaired, contrary to PGO (i.e. Police General Order) 6-01(8)."

The proceedings

4. A disciplinary hearing took place in early 1999 pursuant to Part II of the Regulations. Superintendent Rocha ("the adjudicating officer") was appointed as the appropriate Tribunal ("the Tribunal"). Mr. Leung was found guilty of the offence on 28 March 1999.

5. The Tribunal then referred the punishment to a Senior Police Officer who imposed a penalty of reduction to the rank of police constable and dismissal from the force. The Force Diciplinary Officer confirmed the finding of guilt and penalty.

6. Mr. Leung then, pursuant to Regulation 15, appealed to the Commissioner of Police ("the Commissioner") against the finding of guilt and penalty. The appeal was dismissed on 8 March 2000.

7. Mr. Leung applied for judicial review to quash the decisions of the Tribunal, the Senior Police Officer and the Deputy Commissioner of Police ("the Deputy Commissioner") who exercised the delegated authority of the Commissioner. Hartman J. dismissed the application in respect of the decisions of the Tribunal and the Senior Police Officer. However, he quashed the decision of the Deputy Commissioner.

The appeals

8. The Commissioner now appeals against the decision quashing the decision of the Deputy Commissioner. Mr. Leung cross-appeals against the refusal to quash the decision of the Tribunal. The decision in respect of the Senior Police Officer was not appealed against.

The Police Force Ordinance

9. Under s. 30 Police Force Ordinance, Cap. 232 ("the Ordinance") every police officer is bound to obey all lawful orders and to conform to police regulations and orders made under the Ordinance.

10. Under s. 45(d) of the Ordinance the Chief Executive-in-Council was empowered to make regulations for discipline and punishments of police officers. The Regulations are made under this provision.

11. Under s. 46(1) of the Ordinance the Commissioner of Police is empowered to make orders enabling him to administer the police force and make it efficient in the discharge of its duties.

12. Regulation 3(1) of the Regulations makes junior police officer (which includes the rank of a sergeant) liable to punishment if he pleads guilty or is found guilty of the disciplinary offences identified in Regulation 3(2). These offences include contravention of any police orders : Regulation 3(2)(e).

13. Police General Orders ("PGO") have been published under the authority of the Commissioner. PGO 6-01(8) reads :

" A police officer shall be prudent in his financial affairs. Serious pecuniary embarrassment from whatever cause is regarded as a circumstance which impairs the efficiency of an officer. "

The Deputy Commissioner's decision

14. The challenge against the decision of the Deputy Commissioner is on the ground that the principle of fairness was not observed in Mr. Leung's appeal because the Deputy Commissioner when considering the appeal had relied on certain documents which were not disclosed to Mr. Leung.

The Commissioner's case

15. The gist of the Commissioner's case is that there is no requirement in the appeal procedure under Regulation 15 or under the principle of fairness to give Mr. Leung a right to have disclosure of materials, or the 'last word' on his appeal or a right to respond to views expressed to the Commissioner in the absence of reliance or reference to new materials not placed before the original tribunal.

16. Mr. Westbrook S.C., Counsel for the Commissioner, drew a distinction between first instance hearings and an appeal by way of petition. He submitted that in the former, the person affected by the decision obviously should be given the right to be heard and to have disclosure of materials placed before the decision maker. But having given such an opportunity, he would not be entitled to it at the appeal stage. He argued that many of the decisions which imposed the procedural requirement of fairness or its former description of natural justice are in fact first instance decisions in which the interested person were not offered with the opportunity to be heard.

17. Kanda v. Government of Malaya [1962] 322 was a police disciplinary proceeding, the decision maker considered a report which was extremely critical of the conduct of an inspector but was not available to him. Mahon v. Air New Zealand [1984] 1 AC 808 was in respect of a public inquiry. Chan Tak Shing v. Chief Executive of HKSAR [1999] 2 HKLRD 39 was a first instance proceedings for dismissal of a public servant by the Chief Executive where the former was given no opportunity to rebut the case against him. R v. Home Secretary ex p. Doody [1994] 1 AC 531, was a first instance decision-making process on the length of time prisoners serving 'life' sentences had to spend in prison.

18. There are of course, other decisions, such as Harjit Kaur & Ano v. Director of Immigration (HCAL No. 47 of 1999) which is concerned with an appeal process. Mr. Westbrook submitted in that case the original decision-making process was summary and secretive and the applicants had been denied any opportunity to comment on adverse allegations. He submitted that if the case suggested a wider interpretation of the duty of disclosure then it went too far.

Principle of fairness

19. In considering the requirement of fairness, one does not need to look beyond Doody where Lord Mustill stated that :

" Fairness will very often require that a person who may be adversely affected by the decision will have an opportunity to make representations on his own behalf either before the decision is taken with a view to producing a favourable result; or after it is taken, with a view to procuring its modification; or both. Since the person affected usually cannot make worthwhile representations without knowing what factors may weigh against his interests fairness will very often require that he is informed of the gist of the case which he has to answer. "

20. Although Regulation 15 does not provide for the right to be heard or disclosure of material to the appellant, it does not mean that the principle of fairness should not be available. It is precisely because of the absence of such a right, that the principle of fairness come into being if the circumstances of the case required.

21. The rationale is because, as Lord Mustill said, where a statute confers an administrative power there is a presumption that it will be exercised in a manner which is fair in all the circumstances.

The statutory framework

22. Part II of the Regulations deals with the investigation into disciplinary offences, punishment and appeals in relation to junior police officers i.e. those below the rank of an inspector. These involve the following stages :

Stage 1

23. After a charge has been laid against the junior police officer, the Tribunal which is headed by a superintendent shall hear the evidence in relation to the charge. The junior police officer has the right to give evidence and call witness. After hearing the evidence, the Tribunal will make its finding and impose the punishment. The Tribunal may ask a Senior Police Officer to impose the punishment if it considers that the punishment which it can award is insufficient. The Tribunal can review its own decision. (Regulations 4 - 13)

Stage 2

24. After the finding or award had been made by the Tribunal, a Senior Police Officer may confirm, vary or set aside the finding and order a rehearing by another tribunal. He may also confirm, remit or substitute any award he is empowered to award. (Regulations 14(1) - (4)).

Stage 3

25. The Force Disciplinary Officer may, after the action taken by the Senior Police Officer, confirm, vary or set aside the finding and order a rehearing by another tribunal. He may also confirm, remit and substitute any award the Senior Police Officer is empowered to award. (Regulations 14(5) - (7))

Stage 4

26. The junior police officer may, after the announcement by the Force Discipline Officer of any finding, decision or punishment, appeal in writing to the Commissioner by petition. The Commissioner may vary the finding and substitute any finding which he could have made on the evidence adduced, or order the rehearing of the case and substitute any other punishment that he is entitled to award. The Commissioner may permit the appellant to appear before him in person to support his appeal. (Regulation 15)

The distinction

27. The disciplinary hearing procedure i.e. Stage 1 under this statutory framework clearly incorporates the principle of fairness in relation to the dismissal and other disciplinary offence of a junior police officer : see Ridge v. Baldwin [1964] AC 40 and Chief Constable of the North Wales Police v. Evans [1982] 1 WLR 1155.

28. However, we do not agree that there is any real distinction between the first instance hearing before the Tribunal and appeal to the Commissioner in terms of disclosure of documents. The Commissioner may permit the appellant to appear in person to support his appeal. This clearly envisage a right to be heard. Whether the appellant can insist on having a hearing is not a matter of concern in this appeal. However, once it is accepted by the Commissioner that he should disclose material received by him which is adverse to the appellant and not previously disclosed to him in the disciplinary hearing, then the distinction between the two types of hearing will become meaningless. Fairness requires the material to be disclosed so that the appellant may have a chance to respond to it.

The Defaulter Report

29. Throughout the various stages of the disciplinary procedure, a Defaulter Report is required to be kept and endorsed by the various police officers for transmission to the next officer required to deal with the matter. Hence the Tribunal will endorse its findings in the Defaulter Report and forward it to the Senior Police Officer who then forward it to the Force Discipline Officer.

30. The Commissioner who hears the appeal obviously has to refer to this document. In this case, the staffing notes which consisted of memos prepared by the Senior Police Officer and Force Discipline Officer when they were discharging their duties under the disciplinary procedure clearly form part of the Defaulter Report and should be disclosed to Mr. Leung so that he could make a meaningful presentation in the appeal petition.

31. The Commissioner stated that in order to assist him to consider the appeals quickly and efficiently, it is normal practice within the Hong Kong Police Force to assign more junior police officers to review the appeal petition and to provide him with a staffing note and minutes which summarise and analyse the various points made and offer comments and recommendations for his consideration.

32. If the four memos prepared for the Commissioner consisted of a summary of the primary documents, then in essence they are part of the Defaulter Report and should be disclosed as well. The Commissioner stated that these memos do not contain new materials. However, until the material is disclosed, Mr. Leung will not know if it contains new or adverse matters. In our view, the disclosure should not depend on the views of an individual on the nature of the content but rather as a matter of procedural requirement. We are not convinced with the argument that the disclosure will result in infinite comments and counter comments by the parties of the other side's case. If there is a proper disclosure in the first place, then this imaginary ping-pong game would not have happened. It is after all Mr. Leung's appeal and he should have the last word.

Disclosure is required

33. In our view the judge was right when he considered that the material needed to be disclosed as a matter of fairness. His earlier decision in Chan Kim Hung v. Commissioner of Police HCAL 2400 of 2000 was concerned with the right to be heard only which is different from the issue in this case.

Does the non-disclosure vitiate the decision?

34. The real question in this appeal is whether the non-disclosure vitiates the decision of the Commissioner and requires it to be quashed. Certainly Lord Denning in Kanda had said that it is not for the court to inquire whether the evidence not disclosed to the applicant did work to his prejudice; it is sufficient if they might do so; the court will not go into the likelihood of prejudice, the risk is enough. In General Medical Council v. Spackman [1943] AC 627 Lord Wright held that if the principle of natural justice is violated, it is immaterial whether the same decision would have been reached in any event : "The decision must be declared to be no decision". Likewise in Chan Tak Shing v. Chief Executive of the HKSAR [1999] 2 HKLRD 389 it was held that it made no difference if the material contained no new ground of complaint against the applicant and no new facts and the applicant knew perfectly well the case against him : "No person with any power of adjudication may hear evidence or receive representations from one side behind the back of the other."

35. See also The Ealing Magistrates' Court, ex parte Fanneran (1996) 8 Admin LR 351 and Nguyen Thanh Trong v. Minister for Immigration, Local Government and Ethnic Affairs 45 A.L.D. 507

No technical breach of fairness

36. However, there is an equally powerful line of authorities which emphasis the importance of looking at the substantial prejudice to the applicant. In Malloch v. Aberdeen Corporation [1971] 1 WLR 1578, Lord Wilberforce held that :

" A breach of procedure, whether called a failure of natural justice, or an essential administrative fault, cannot give him a remedy in the courts, unless behind it there is something of substance which has been lost by the failure. The court does not act in vain. "

37. In George v. Secretary of State for the Environment and Another [1979] 77 LGR 689, Lord Denning held that :

" On reading those cases, it seems to me that there is no such thing as a "technical breach of natural justice"....You should not find a breach of natural justice unless there has been substantial

prejudice to the applicant as a result of the mistake or error which has been made. In this case there was no substantial prejudice. "

38. See also R. v. Chief Constables of the Thames Valley, ex parte Cotton [1990] IRLR 344 and Dawood Khan and Others v. The Secretary for Planning and Lands HCAL 260 of 2000.

39. In Cotton, Bingham L.J., who accepted that the applicant was given a full opportunity to present his case and was not treated unfairly, stated that the circumstances in which someone who was denied the opportunity to present his case and yet held not to be unfair should be rare. He gave six reasons for this which he repeated in an article entitled 'Should Public Law Remedies be Discretionary' 1991 Public Law 64 :

"(1) Unless the subject of the decision has had an opportunity to put his case it may not be easy to know what case he could or would have put if he had had the chance.

(2) As memorably pointed out by Megarry J in John v Rees [1970] Ch 345 at p.402, experience shows that that which is confidently expected is by no means always that which happens.

(3) It is generally desirable that decision-makers should be reasonably receptive to argument, and it would therefore be unfortunate if the complainant's position became weaker as the decision-maker's mind became more closed.

(4) In considering whether the complainant's representations would have made any difference to the outcome the court may unconsciously stray from its proper province of reviewing the propriety of the decision-making process into the forbidden territory of evaluating the substantial merits of a decision.

(5) This is a field in which appearances are generally thought to matter.

(6) Where a decision-maker is under a duty to act fairly the subject of the decision may properly be said to have a right to be heard, and rights are not to be lightly denied. "

See also Wade Administrative Law 8th Ed at page 501-503.

The reconciliation

40. These two lines of views were drawn together recently by Lord Steyn in Boddington v. British Transport Police [1999] 2 AC 143 at page 174 when he said :

" It is true that cases could occur where it might be right in regard to an established ground of judicial review to refuse a discretionary remedy and in that respect absence of prejudice may be a relevant factor .... But that is altogether different from saying that prejudice is an element that an applicant must prove to establish a ground of review. "

Judicial review is a discretionary remedy. If the breach of the principle of fairness does not produce a substantial prejudice to the applicant, the court is bound to take this into account in deciding whether relief should be given. This is consistent with the concept that the court should not substitute its own decision for that of the decision-maker.

41. Furthermore, it is inevitable that court will look at the substance of the complaint. Kanda is clearly a case where the critical report of the applicant should have been disclosed. Spackman is another case in which the applicant should be given the opportunity to deal with the evidence of adultery when the General Medical Council was considering a case of infamous conduct in a professional respect against him. Ultimately, the question is one of fairness.

New submissions

42. The Commissioner's argument is that no useful purpose is served by the disclosure. In the court below it was not suggested that new evidence was put before the Commissioner. However, it was argued in this appeal that there were indeed new matters contained in the undisclosed documents; had Mr. Leung been provided with the new documents, he would have made the following submissions to the Commissioner. It is necessary to examine this aspect of the case.

(1) DSRO

43. An internal directive of the Police entitled "Instructions as to the Management of Indebtedness" ("the Instructions") was only disclosed in an affidavit filed in the court below. This document referred to the role of District Staff Relations Officers (DSRO) who is entrusted with the task of monitoring the indebtedness problems of police officers. The document stated that DSRO should not be involved in any disciplinary proceedings.

44. Mr. Leung had objected to the DSRO giving evidence at the Tribunal but the objection was overruled by the Tribunal. In the working floater referred to in Memo M 8, it was said that "most of the defaulter's arguments were irrelevant". Mr. Leung said he could have referred to the restriction on the DSRO giving evidence. It was suggested that the Commissioner may consider it unfair to Mr. Leung to accept the evidence of the DSRO.

45. The Instruction is not in the form of a statutory regulation, the non-observance of which may result in certain legal consequence such as, for example, the exclusion of the evidence. This is not the case. But looking at the evidence of the DSRO, it is hardly likely that the restriction would have any impact on the outcome of the case. At the Tribunal hearing, the DSRO produced as exhibits the record of interviews she had with Mr. Leung. They contained details of Mr. Leung's indebtedness. These documents would have been available to the Tribunal irrespective of whether the DSRO gave evidence or not.

46. The DSRO also said that at an interview on 18 March 1998 Mr. Leung was emotionally not as calm as before. He was nervous and it seemed that he did not know what to do. Even if the DSRO's evidence is excluded, there is evidence from other witnesses dealing with the emotional state of Mr. Leung as well.

(2) The 14 day limit

47. The Senior Police Officer who confirmed the Tribunal's finding only informed Mr. Leung of the penalty one day after the 14 day limit under Regulation 14(1)(a).

48. However, this is no longer a point pursued by Mr. Leung in this appeal. This cannot be of any assistance to him.

(3) Construction by the Tribunal of PGO 6-01(8)

49. The working floater stated the Tribunal had wrongly construed PGO 6-01(8). Mr. Leung said that he would have adopted the same argument in the petition.

50. We will deal fully with the construction of PGO 6-01(8) later on. For the purpose of this particular submission, the view expressed in the working floater in fact was not agreed by the Force Disciplinary Officer who confirmed the finding of the Tribunal. As the views expressed by the Tribunal are contained in the record of proceedings, Mr. Leung could have made comments on them in any event.

(4) Construction by the Senior Police Officer of PGO 6-01(8)

51. The Senior Police Officer (Memo M 4) was of the view that despite the wrong construction of the PGO, there was evidence to show that the efficiency of Mr. Leung had been impaired.

52. Again Mr. Leung could have made the same submission in his petition.

(5) Vacation Leave

53. In a memo to the Force Disciplinary Officer (Memo M 9) it was stated that the "substantial amount of vacation leave taken, namely 801/2 days between October 97 and March 98 helps indicate that he was not keen in his work.".

54. Mr. Leung said this was unfair comment as he was entitled to take the leave. It is a fact that in a 6 month or 180 odd day period Mr. Leung had taken 801/2 days of leave. Clearly these are objective data upon which the Force Disciplinary Officer could draw his own view on whether Mr. Leung was keen on his job or not. His decision in confirming the finding was not challenged by Mr. Leung in the judicial review.

(6) Remorse

55. Also in Memo M 9, it was stated that Mr. Leung's "performance prior to the discovery of the offence as well as his remorseless attitude displayed during the hearings fell far short of the Force expectation of an NCO".

56. Mr. Leung said he would want to explain why he should not be taken as remorseless. The fact remains that Mr. Leung did not give any mitigation after the finding was made against him in the Tribunal.

(7) Ability of Mr. Leung

57. In a memo to the Force Disciplinary Officer (Memo M 10), it was said that Mr. Leung had caused his Formation Commander to doubt his capacity to perform a full range of constabulary duties.

58. Mr. Leung said he wants an opportunity to argue there was no evidence on which such comments could be based. This obviously is something he could have made in the petition in any event because his Formation Commander had already given evidence in the Tribunal.

(8) Comment by the Force Disciplinary Officer

59. The Force Disciplinary Officer in Memo M 12, stated that the Tribunal adopted a correct approach in requiring evidence to prove that Mr. Leung was financially imprudent by incurring a substantial amount of debt.

60. Mr. Leung said that no explanation was given for this comment. He had been deprived of the chance of persuading the Commissioner that the wrong approach had been adopted by the Tribunal.

61. The data of the indebtedness was before the Commissioner. Prior to December 1997, Mr. Leung had a debt of $374,111 when his monthly salary and allowance was about $21,000 - $22,000. Yet he still purchased a new flat costing $300,000 in the Mainland in December 1997. He used his salary of $10,000 as a down payment and obtained a new loan of $20,000 for the down payment and other expenses of the flat. Further loans were raised allegedly on behalf of his wife to invest in shares. By 8 March 1998, he owed about $700,000 to eight financial companies and four credit card companies. Whether there is evidence of financial imprudence clearly is available for everyone to see.

(9) Factory

62. The Senior Police Officer in Memo M 15 commented that Mr. Leung "had gone to China for visiting his factory while he was on leave."

63. Mr. Leung said this is wrong, he had no factory in the Mainland. Throughout the record of interview produced by the DSRO there were references to Mr. Leung operating a factory in the Mainland. If he said the contents were incorrect, he could have dealt with it in the petition.

(10) Tannam's report

64. In Memo M 15 prepared for the Commissioner it was stated that "Did the AO (i.e. the Tribunal) place any weight on the SIP Tannam's written reports in arriving a guilty verdict against the appellant? I believe that the AO did not."

65. The prosecution in the Tribunal had submitted two reports prepared by Mr. Tannam on the performance and emotional state of Mr. Leung. There were in same terms. Mr. Tannam referred to Mr. Leung telephoning on more than one occasions from the Mainland to request additional vacation leave at short notice. He also said that Mr. Leung also appeared to him to be dispirited and somewhat fatalistic and required almost constant supervision and did not convey the sense of trustworthiness that is expected of an NCO.

66. Mr. Leung had objected to the production of the two documents. The Tribunal had informed the parties that the documents were admitted as evidence, and he would decide on "the weight of the report." Mr. Leung submitted that the Tribunal did not reject the reports in the judgment. It was likely that it had been relied upon.

67. It is important to bear in mind that the record of proceedings is available to the parties. Whether the Tribunal had relied on the Tannam reports is something that one can judge from the judgment itself. No amount of comment or counter-comments would change this fact. Mr. Leung could not have advanced his case further even if Memo M 15 was disclosed to him.

(11) Insufficient reasons

68. Mr. Leung complained in the petition of insufficient reasons being given by the Tribunal. The analysis prepared for the Commissioner disagreed with this.

69. Again the Tribunal's judgment is available to Mr. Leung. Whether it contained sufficient reasons or not is an objective fact. What the analysis said and further comments by Mr. Leung would not change this fact.

(12) Suspended sentence

70. Earlier, on 4 May 1998 Mr. Leung was convicted of six counts of disciplinary charges. According to a document entitled "Brief Background of (Mr. Leung)", these involved ：

"(i)	One count of "Contravention of Police Order" [Contravening PGO 6-01(4) in that on 1995-04-11 he placed himself under financial obligation to a person other that as permitted by the Acceptance of Advantages (CE's Permission) Notice 1992];
	* awarded "Dismissal, suspended for 12 months"
(ii)	Three counts of "Absence from duty without leave or good cause" on 1995-03-03, 1996-11-27 and 1998-01-19;
	* awarded "Severe reprimand and forfeiture of one hour's pay" for the first two counts and "Severe reprimand" for the third count.
(iii)	Two counts of "Making a false statement in a material particular" on 1995-03-03 and 1996-11-27.
	* awarded "Severe reprimand" for both counts." "

71. It further stated that Mr. Leung had been "interdicted from carrying out constabulary duties since 1998-05-14."

72. In the analysis prepared for the Commissioner, it was said that even if a lower award was given in the present case, it would make no difference to Mr. Leung because the previous suspended award of 'Dismissal' would have to be automatically activated upon his conviction of the present offence. Mr. Leung disagreed.

73. Regulation 28(3) of the Police (Discipline) Regulations provided that if "during the period of suspension, the defaulter is convicted of a further offence against discipline, being an offence committed after the offence for which the suspended punishment was awarded, the suspended punishment shall be executed forthwith and any punishment on such further offence shall not be suspended."

74. Mr. Leung was convicted of the present offence on 29 March 1999 in respect of an offence committed on 21 March 1998. The conviction occurred during the 12 months suspension starting from 4 May 1998 and the offence occurred after the previous offence of 11 April 1995 in which he received the suspended dismissal. By virtue of Regulation 28(3) the activation would come into effect. Again the disclosure of Memo M 15 would not have assisted Mr. Leung.

The result would have been the same

75. Having considered all the circumstances of this case, it is abundantly clear that the disclosure of the new documents to Mr. Leung would not have made the slightest difference to his petition to the Commissioner. Despite the submission that new matters were raised in the undisclosed materials, many were not new matters. Also, he could either have made the representation in the petition or the matter is so apparent that no amount of arguments would have made a difference to the outcome of the appeal.

76. Judicial review being a discretionary remedy, if Mr. Leung does not, as a matter of substance, suffer prejudice, then the failure to observe the principle of fairness should not be a ground for quashing the decision. This is what happens here. As the judge was not invited to consider the question of discretion, we are entitled to exercise the discretion ourselves. The discretion should be exercised against the granting of any relief. The Commissioner's appeal must be allowed.

The cross-appeal

77. The challenge against the decision of the Tribunal is on the following basis : The decision was wrong in law. Before Mr. Leung could be convicted of the offence charged, it was necessary to prove not only that he had incurred debts of such size that they were unmanageable but that as a consequence his efficiency as a police officer was impaired. There was, however, no evidence to support the second essential element of the offence. Alternatively, the Tribunal made a finding which was wrong in law or Wednesbury unreasonable in that he found that the order by Mr. Leung's Formation Commander to refrain him from carrying a firearm or dealing with cash had the consequence of impairing his efficiency and that this was sufficient to prove the second essential element of the offence.

The focus of PGO 6-01(8)

78. In considering the cross-appeal it is important to focus on the purpose of PGO 6-01(8). The PGO is in the form of instructions or directions to the officers. It is not in the form of a statute. Ordinary language is being used. However, it is clear from the wording that the mischief that this order wishes to confront is serious pecuniary embarrassment of the police officer due to his financial imprudence. The disciplinary offence committed by the police officer is serious pecuniary embarrassment by reason of imprudence in his financial affairs. This, however, does not ignore the relevance of impairment of efficiency, which is already provided for when there is serious pecuniary embarrassment.

The rationale

79. Serious pecuniary embarrassment is treated seriously because it is regarded as a circumstance which impairs efficiency. Imprudence is necessary in order to exclude financial problems due to unforeseen and compassionate circumstances which the Force Policy clearly recognized should be treated sympathetically.

80. The rationale for making this a disciplinary offence is discernable from various internal directives of the Police.

Internal Directives

81. "Force Policy on the Management of Indebtedness" ("the Force Policy") is an internal directive of the police. It is Annexure "A" to the Instructions. The Force Policy supports the construction placed on PGO 6-01(8). It provides, among other things, that :

"The Force exists in a society where being in debt is acceptable and many legitimate sources of credit are available. The existence of debts amongst Force members in itself is not a cause for concern but it becomes a problem where debts become unmanageable ..... (emphasis added)

2. When an officer has an unmanageable debt .......... , the potential for his duty performance to suffer and/or for his integrity to be compromised is high. The pressure involved may place stress on him to the extent that he can no longer concentrate fully on his duties and/or the need to obtain money reaches such a level as to convince him to turn to corruption or other illegal means to meet that need. Every effort must be made to avoid such circumstances arising. (emphasis added)

4. A police officer shall be temperate and prudent in his financial affairs. Serious pecuniary embarrassment from whatever cause, is regarded a circumstance which impairs his efficiency and is not acceptable. It is an officer's responsibility to ensure that he lives within his means and does not incur expenses which he is unable to afford. "

82. Para. 21 of the Instructions further provides that :

" Officers with unmanageable debts or debts originating from an unauthorised source may be in a position where they can be compromised and accordingly they should be subject to close supervision. In each case Formation Commanders should examine whether the officers are suitable to fill or to remain in sensitive posts ...."

83. The Hong Kong Police, playing such a vital role in the enforcement of law and order in this territory, obviously, and rightly, requires the highest personal standards from its officers. This means that they must be prudent in their financial affairs so that they may not be in a situation of serious financial embarrassment.

Proof of the offence

84. Serious pecuniary embarrassment is proved, for example, by the police officer having unmanageable debts. Imprudence is proved by the circumstances in which these debts occurred. However, as serious pecuniary embarrassment is regarded as a circumstance impairing efficiency, it is not necessary to adduce further evidence on the impairment of efficiency.

85. No useful purpose is served by the arguments that notwithstanding the financial problems of the police officer, he still may be discharging his duties efficiently. There are other provisions in Regulation 3(2) which deal with the efficiency of a police officer e.g. absence from duty without leave or good clause; conduct to the prejudice of good order and discipline; and neglect of duty or orders. These are also disciplinary offences.

86. However, the Regulations have specifically provided for the contravention of PGO 6-01(8) to be a disciplinary offence, and one must turn to PGO 6-01(8) to ascertain its true meaning. In terms of the language used, this clearly is not a provision dealing with the general efficiency of a police officer. Rather it is concerned with a specific offence that arises by reason of the acute financial problems of the police officer.

The Civil Service Regulation

87. This construction is also consistent with the Civil Service Regulations which govern the conduct of the civil servants as a whole. Regulation 455 provides that :

" Serious pecuniary embarrassment from whatever cause is regarded as a circumstance which impairs the efficiency of an officer and, if occasioned by imprudence or other reprehensible cause, may form the basis of a disciplinary charge. "

The charge

88. In the charge, the phrase "by incurring unmanageable size of debts" was followed by "whereby your efficiency as a police officer was impaired". Whilst this may give the impression that the prosecution has to prove two matters, namely, the officer incurring unmanageable debts and his efficiency being impaired, one really has to look at the Order itself to ascertain its meaning.

Previous case

89. In Ng Kam Chuen v. Secretary for Justice [1999] 2 HKC 291, the court construed PGO 6-01(8) as meaning a 'two-pillar' charge sounding both to financial prudence and the consequent impairment of efficiency. In so far as this means or is interpreted as meaning the prosecution is required to adduce evidence on both financial imprudence and impairment of efficiency, then we are unable to accede to this construction for the reasons we have indicated.

Evidence

90. In this case, there was clearly evidence of serious financial embarrassment and imprudence on the part of Mr. Leung. He had unmanageable debts which obviously constitutes serious pecuniary embarrassment. Despite his substantial indebtedness by December 1997 of about $374,111 when his monthly salary and allowance was about $21,000 - $22,000 he still purchased a new flat costing $300,000 in the Mainland in December 1997. He used his salary of $10,000 as a down payment and obtained a new loan of $20,000 to pay for the down payment and other expenses of the flat. Further loans were raised allegedly on behalf of his wife to invest in shares. By 12 March 1998, he owed about $700,000 to eight financial companies and four credit card companies. These were clear evidence of financial imprudence. There was clearly evidence of impairment of efficiency as provided for in the Order itself.

91. The Tribunal was clearly correct in finding the charge proved against Mr. Leung. The cross appeal is accordingly dismissed.

Conclusion

92. The Commissioner's appeal is allowed. There shall be costs nisi in respect of the appeal and cross appeal in favour of the Commissioner against Mr. Leung. Mr. Leung's own costs are to be taxed in accordance with Legal Aid Regulations.