ATTORNEY GENERAL v. LI FOOK-SHIU RONALD

Criminal Appeal No. 3 of 1990

Headnote

                Complex Commercial Crimes Ordinance (Cap 394) Application for discharge pursuant to s 22(1). The law to be applied by the Judge hearing such an application considered.

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JUDGMENT

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Kempster, JA (giving the judgment of the Court) :

1. At times material to this appeal, namely between November 1985 and April 1987, Mr Ronald Li Fook-shiu (the Respondent) was Chairman of the Stock Exchange of Hong Kong Limited (SEHK) which had recently replaced the four stock exchanges previously operating in the Territory. He was also Chairman and Convener of the Listing Sub-Committee. As such he was, and was perceived to be, in a position to influence the outcome of applications for permission to list and deal in shares on the Exchange. What is now recounted is no more than the evidence which the Crown expects to adduce if the respondent is brought before a jury for trial on counts 2 and 3 of an indictment dated 7 August 1989 which read :-

"

Second Count

Statement of Offence

               Accepting an advantage as an agent, contrary to s 9(1) (a) of the Prevention of Bribery Ordinance, Cap 201.

Particulars of Offence

               Li Food-shiu, Ronald, on or about the 19th day of May, 1986 in Hong Kong, being an agent of the Stock Exchange of Hong Kong Limited ("the Exchange Company"), namely the Chairman of the Exchange Company and Convener of the Listing Sub-Committee, without lawful authority or reasonable excuse, accepted an advantage, namely a reward being a preferential allocation of a beneficial interest in 500,000 Cathay Pacific Airways Limited ordinary shares at the price of $3.88 Hong Kong currency per share as an inducement to or reward for or otherwise on account of his doing or having done an act in relation to his principal's affairs or business, namely supporting or approving the granting of the listing of and permission to deal in 2,652,325,500 Cathay Pacific Airways Limited ordinary shares of $0.20 Hong Kong currency each on the Stock Market of the Exchange Company, or alternatively forbearing to do or having forborne to do an act in relation to his principal's affairs or business, namely opposing or delaying the granting of the listing of and permission to deal in the said ordinary shares on the Stock Market of the Exchange  Company.

Third Count

Statement of Offence

               Accepting an advantage as an agent, contrary to s 9(1) (a) of the Prevention of Bribery Ordinance, Cap 201.

Particulars of Offence

               Li Fook-shiu, Ronald, on or about the 7th day of April, 1987 in Hong Kong, being an agent of the Stock Exchange of Hong Kong Limited ("the Exchange Company"), namely the Chairman of the Exchange Company and Convener of the Listing Sub-Committee, without lawful authority or reasonable excuse, accepted an advantage, namely a reward being a preferential allocation of a beneficial interest in 300,000 Novel Enterprises Limited ordinary shares at the price of $2.00  Hong Kong currency per share as an inducement to or reward for or otherwise on account of his doing or having done an act in relation to his principal's affairs or business, namely supporting or approving the granting of the listing of and permission to deal in 569,384,000 Novel Enterprises Limited ordinary shares of $0.10 Hong Kong currency each on the Stock Market of the Exchange Company, or alternatively forbearing to do or having forborne to do an act in relation to his principal's affairs or business, namely opposing or delaying the granting of and permission to deal in the said ordinary shares on the Stock Market of the Exchange Company".

2. During January 1986 Cathay Pacific Airways Ltd (CPA) formally applied to SEHK to list and deal in 2,652,325,500 and immediately to offer for sale 397,850,000 of its HK 20¢ shares on the Exchange at a price of HK$3.88 payable in full on application. This was the first such application to be made to the new body and CPA's intention had publicly been announced during the preceding November. Baring Brothers & Co. Ltd (Baring) and Wardley Ltd (Wardley) were appointed joint financial advisors and issuing houses.

3. While expressing himself content with the underwriting and other arrangements made the respondent, who a jury might think was well aware of the potential profit to be made, asked Wardley for a preferential allocation to local brokers of between 5 and 10 per cent of the shares to be put on the market. He achieved no success. On 10 April the Listing Sub-Committee approved CPA's application in principle. At or about this date the respondent, again unsuccessfully, renewed his request for an allocation of shares for local brokers. He also sought the assistance of CPA in persuading the Commission for Securities to exercise its powers under s 35 of the Stock Exchanges Unification Ordinance (Cap 361) to approve the imposition on new issues of the levy of .025 per cent on transactions taking place on the Exchange used to finance the operations of SEHK and of its costly computer systems. It was not suggested that CPA's application would deliberately be delayed by reason of this concern or of any objection which might be raised under the Securities (Stock Exchange Listing) Rules made pursuant to s 14(1) (a) of the Securities Ordinance (Cap 333). In the event the Securities Commission agreed to changes in the listing rules to allow the application of the levy to new issues on 14 April. On the following day CPA received a letter on behalf of the Committee of SEHK giving agreement in principle to the listing. It was expected that dealings would begin on 15 May.

4. On 17 April the respondent telephoned Mr Holman of wardley asking if they would make some shares available to him at the offer price of HK$3.88 per share. Fullpath Ltd, a company in which he was financially interested, was allocated 500,000 shares at offer price in consequence. That company sent wardley a cheque for HK$1,965,705 in payment. Neither the respondent nor Mr Holman disclosed this allocation to Baring, to CPA or to the Commissioner for Securities. It transpired that, had the respondent made an application in competition with other brokers and the public, he would have been required to seek an allotment of at least 25,000,000 shares and to have furnished a cheque for more than HK$80 million in order to receive 500,000.

5. Meanwhile the formal agreement of SEHK to CPA's proposals had been expressed in a letter dated 6 May and when dealings in their shares opened as foreshadowed the offer was heavily oversubscribed. The share certificates for the 500,000 shares were made available to the respondent's order on 17th of that month which, it is agreed, should be the date pleaded in count 2 of the indictment. Between 20 May and 11 September the respondent sold these shares at a profit of HK$794,619.

6. On 18 November 1986 Indosuez Asia Ltd, for and on behalf of Novel Enterprises Ltd (Novel), wrote to the respondent asking for "advance booking for listing of shares" in the latter company. After the request had subsequently been clarified and discussed what was eventually sought was consent to an offer to the public of a new issue of 142,500,000 shares of HK10¢ at a price of HK$2 per share. At a meeting of the Listing Committee held on 3 March 1987 the respondent indicated that there would be no problem in the listing of the Novel shares which was approved in principle. On the following day he rang Mr Lam of Wardley, again one of the underwriters, and said he would like some shares placed with him. The agreement of Novel to the provision of 300,000 of the shares to be issued, at HK$2 per share, for the respondent, again in the name of Fullpatn Ltd, was secured. This involved some reduction in the number of shares available for the friends, associates and staff of Novel's chairman.

7. Novel's share issue, applications for which were lodged on 20 March 1987, was also heavily oversubscribed. It transpired that, had the respondent applied for shares in competition with other brokers and the public, he would have. been required to seek an allocation of 7,900,000 shares and to have sent a cheque for HK$15,800,000 in order to receive an allotment of 300,000. Formal agreement for the listing was given by SEHK on 30 March. The share certificates were made available to the respondent's order on 7 April. Between 9 April and June he sold 240,000 of the shares at a profit of HK$70,746.

8. On 12 November 1987 the respondent informed the members of the SEHK Committee, in the presence of Mr Fell who, following a collapse in share prices, had been appointed Chief Executive of the Exchange at the request of Government, that he had told Mr Fell about an earlier practice in the superseded exchanges involving the placement of newly issued shares with the chairman and members and that as regards SEHK

"... as far as the public offering was concerned nobody got anything ... None of us sitting around the table would be able to get any allotment as such ... This is a proven fact ..."

Since the respondent alone of the SEHK Committees responsible for the two listings had received allocations of shares at issue price he might appear to have deceived not only Mr Fell but his colleagues as well. This, however, with any implications or inferences is preeminently a matter for the consideration of a jury.

9. On 2 January 1988 the respondent was arrested and charged under s   9(1) (a) of the Prevention of Bribery Ordinance (Cap 201). Further charges were subsequently preferred against him and others. On 1 August 1989 three charges under the section were transferred to the High Court pursuant to ss 3 and 4 of the Complex Commercial Crimes Ordinance (Cap 394) and included in the indictment to which reference has already been made. The respondent sought their discharge by application in open court pursuant to s 22(1) which reads : -

"The accused may at any time before the jury is empanelled apply to the judge for his discharge on the ground that the evidence disclosed is insufficient to establish a prima facie case against him for the offence with which he is charged ..."

The terms of s 22(6) show that by "evidence disclosed" is meant the materials specified in ss 13 or 21 of the Ordinance as the case may be being, effectively, copies of the statements of the witnesses and of the exhibits whom and which the prosecution intends to call or to have proved at trial.

10. At the hearing of the application by Ryan J on 12, 13 and 14 December 1989 it was conceded that the evidence of primary facts which the Crown proposed to adduce on the first count in the indictment details of which, together with such evidence as related to the second and third counts, had been furnished without recourse to s 13(1), was insufficient to establish a prima facie case against him. The respondent was discharged on that count accordingly. Further, in his reserved judgment given on 21 December the judge came to the same conclusion as regards the remaining two counts and made the appropriate order. The Crown appeals to this court pursuant to s 81(E) of the Criminal Procedure Ordinance (Cap 221) claiming that the materials before the judge sufficed to establish a case fit for the consideration of a jury on counts 2 and 3.

11. Section 9(1) of the Prevention of Bribery Ordinance reads : -

It may be appropriate, if only for the information of those who may be concerned, to mention that by sub-section 2 : -

12. Ryan J stated, and it was common ground, that in considering an application under s 22 the same test should be applied  as on a submission of "no case to answer". It was also common ground that the necessary elements of the offences to be proved by the Crown were : -

In relation to elements (i) to (iii) the judge found himself satisfied that a prima facie case was demonstrated but as to element (iv), upon proof of which element (v) necessarily depends and which was and is a matter of inference, he was not.

13. In his initial approach to his task the judge had found that it was for the Crown "to show by direct facts or inferences which can reasonably be drawn (by a jury) from those facts that prima facie the elements of the charges have been made out". This was unexceptionable but later he directed himself : -

"It is not necessary for the Crown to identify a specific act of support or forbearance in relation to the CPA and Novel listings but it does have to prove that the only inference which can reasonably be drawn from the facts is that the reward was accepted as a reward for such support or forbearance and that the defendant believed that to be the case".

14. It is not clear whether he was referring to his task or to that which might fall to a jury. However, he concluded his judgment with the words : -

"I do not accept that on the evidence disclosed a jury properly directed could properly find that when the defendant accepted the advantages he believed this to be for his having supported or having not opposed or obstructed the listings".

15. On the correctness of that conclusion, to some extent a matter of first impression, the success of this appeal ultimately depends since there is no substance in the submission made by Mr Denny, on the respondent's behalf, to the effect that the indictment was defective in the manner in which "advantage" was particularised. The words "a preferential allocation" appearing in each count necessarily postulate, as the respondent would surely have understood, the provision of share certificates. Share certificates constitute "property" for the purposes of s 2(1) (a) of the Prevention of bribery Ordinance. We would wish to add that while it was accepted before us that the charges had to specify the category of advantage relied upon within the parameters of s 2(1) of the Ordinance, we must not, in the absence of argument, be taken to accept that the Crown is required to confine itself as it did here to a single particular, namely one category of advantage. As at present advised we think that the Crown would be entitled to follow the section and plead in the alternative, so that in relation to a particular advantage more than one inference could properly be left for consideration by the jury. Had that been done, Mr Denny conceded, he would have had no submission to make in this regard.

16. The classic statement of the law in England and, we think, Hong Kong relevant to a submission of "no case" is to be found in the judgment of the Court of Appeal, given by Lord Lane CJ, in R v Galbraith [1981] 1WLR 1039 at p 1042 : -

In that appeal the court held :-

"... that this was eminently a case where the jury should be left to decide the weight of the evidence upon which the prosecution based their case. It was not a case where the judge would have been justified in saying that the prosecution evidence taken at its highest was such that the jury properly directed could hot properly convict upon it".

17. A like approach had been adopted by the courts in Hong Kong where, in AG v Yau Ka Ping [1977] HKLR 76 at p 80, Huggins JA helpfully pointed out that in determining whether or not there is a prima facie case the judge did not have to make findings of fact beyond all reasonable doubt

"but that, in determining the question of law whether or not a reasonable jury might safely convict, the judge had to bear in mind that the standard of proof to be applied in arriving at any such theoretical conviction was that beyond reasonable doubt. The standard of proof might affect what a reasonable jury would decide: thus evidence which might raise a prima facie case in a civil action for negligence ... might not raise a prima facie case if given in a criminal prosecution .... "

More generally in AG v Li Nai Ho and Ors [1980] HKLR 792 at p 794, Roberts CJ, giving the judgment of the Court of Appeal, said : -

"The judge should have done no more than consider, at the close of the Crown case, whether the evidence of the prosecution witnesses, as a whole, contained material upon which a jury, properly directed, might have convicted. the defendants".

18. It was orally submitted by Mr Denny to us and, we believe, to Ryan J that at the submission or application stage the trial should be allowed to continue only if the judge is himself then satisfied that any inference critical to the prosecution case is the only one which could be drawn from the primary facts. In other words he must at this stage direct himself in the way he might, if the trial proceeded, direct the jury as suggested by Lord Diplock in Kwan Ping Bong v R [1979] HKLR 1 at pp 5 and 6 and be satisfied beyond all reasonable doubt that the inference is right. This court, considering that authority in R v Hung Hom Yee and Ors Cr App No 148 of 1987 (unreported), held that Lord Diplock's test is satisfied if the jury is appropriately directed on the standard of proof and told that the Crown asserts that the inference or conclusion is irresistible. An application for special leave to appeal to the Privy Council was refused.

19. Particular reliance is placed on a paragraph from the Reasons of the Board, again delivered by Lord Diplock, in Haw Tua Tau v Public Prosecutor [1982] AC 136 at p 151 : -

"At the conclusion of the prosecution's case what has to be decided remains a question of law only. As decider of law, the judge must consider whether there is some evidence (not  inherently incredible)which, if he were to accept it as accurate,  would establish each essential element in the alleged offence".

Therefore, it is contended, he must determine whether such evidence, if accepted, would allow of no inference other than that relied upon by the prosecution. But the Board was there considering primary facts within the context of s 188(1) of the Singapore Criminal Procedure Code which reads : -

"When the case for the prosecution is concluded the court, if it finds that no case against the accused has been made out which if unrebutted would warrant his conviction, shall record an order of acquittal or, if it does not so find, shall call on the accused to enter on his defence".

These were the words which Lord Diplock quoted when he said, at p 152 : -

"... the hypothetical question of law which the judge has to ask himself at that stage of the proceeding : 'If I were to accept the prosecution's evidence as accurate would it establish the case against the accused beyond a reasonable doubt?' "

We cannot accept that "would", as used in either extract quoted, is apt for a court applying the ordinary principles of the English and Hong Kong criminal law.

20. That the judge must be satisfied that an inference could properly be  drawn Lord Keith made clear in considering whether a prima facie case had been made out for the purposes of extradition proceedings in R v the Governor of Pentonville Prison, ex parte Tarling (1978) Cr App R 77 at pp 138 and 139 : -

"I do not consider there to be room for the view that either of these matters could properly be inferred beyond reasonable doubt from the evidence of what was actually done or omitted to be done by the alleged conspirators ... Having carefully considered the evidence adduced I am unable to find anything which could properly found an inference that beyond reasonable doubt an intention existed of inducing members of the. public to acquire HPBIL shares from existing holders".

His was not a lone voice.

"There is no direct evidence of the intentions imputed and no evidence of facts from which the intention can be inferred"

per Lord Wilberforce at p 111.

"I take the view that a jury might well regard this as an irresistible inference from the language and purpose of the M & G offer itself".

per Lord Edmund Davies at p 136.

21. It would seem that the test is the same in Australia and that no distinction falls to be made in that or any other Common Law jurisdiction as between primary facts and inferences : -

"When, at the close of the case for the prosecution, a submission is made that there is 'no case to answer', the question to be decided is not whether on the evidence as it stands the defendant ought to be convicted but whether ... he could lawfully be convicted".

May v O'Sullivan (1955) 52 CLR 654 at p 658 per Dixon CJ, Webb, Fullagar, Kitto and Taylor JJ.

22. Bearing in mind the different standards of proof to be applied by the jury the relevant law both in civil and criminal proceedings in England and the Commonwealth has changed little over the years.

"And if the facts as to, which evidence is given are such that from them a further inference of fact may legitimately be drawn it is for the jury to say whether that inference is to be drawn or not but it is for the judge to determine ... as a matter of law, whether from those facts that further inference may legitimately be drawn".

Metropolitan Railway Co v Jackson [1877] 3 App Cas 193 at p 207 per Lord Blackburn. Earlier in the same case, at p 197, Lord Cairns had pointed out : -

"It would be a serious inroad on the province of the jury if, in a case where there are facts from which negligence may reasonably be inferred, the judge were to withdraw the case from the jury upon the ground that in his opinion negligence ought not to be inferred ..."

23. While in R v Laverty (1970) 54 Cr App R 495 an unsuccessful submission of "no case" was made at trial the English Court of Appeal was concerned with the evidence available to the_.jury at the conclusion of the hearing before Aylesbury Quarter Sessions and, as Lord Parker CJ said, the real point was

"Whether there was any evidence ... which enabled the jury to draw that inference"

being whether or not a complainant had handed over a cheque in reliance upon a false representation. The appellate court was not satisfied that this was the only inference which the jury could draw. Had the appeal been argued with reference to the submission the test would still, it would appear, have been whether there was evidence at that stage upon which the jury could infer only that the complainant parted with the cheque as a result of the false representation.

24. These authorities seem to us to show that in his oral submissions, which Ryan J may have accepted, Mr Denny over stated the obligations of the judge. In relation equally to primary facts and to inferences to be drawn from such facts his concern is not with present proof to his satisfaction but with potential future proof to that of a jury. Both primary facts and the inferences therefrom are "matters generally speaking within the province of the jury" in the language of Galbraith. Both can critically be affected by later evidence or lack of evidence from the defence. Assuming all proper directions the test is not what the judge thinks the jury, and still less he, "must" conclude at that moment: but what a jury "could, may or might" properly conclude in the future.

25. If elaboration of the approach explained in Galbraith is called for we are of the opinion that a judge faced with a submission of "no case" or an application for discharge in circumstances where the Crown's case depends, as it usually does, upon an inference or inferences from primary facts, may ask himself : -

Mr Denny's written submissions, delivered after the close of the hearing before this Court, were to similar effect.

26. We have considered the obligations of the judge in detail out of deference to their importance and to counsel's arguments, not because we regard them as critical to the consideration of present facts.

27. We are firmly of the opinion that a jury properly directed could properly convict on the basis of the primary facts outlined and that the answer to each of the questions suggested could only have been "yes" in relation to counts 2 and 3. The respondent was given not any shares but shares in the respective issues approval for which SEHK had given. The respondent had requested allocations shortly after approval in principle had been given and not at an unrelated time. Gratitude was not and is not a necessary element in the concept of reward and those provided by wardley were of value only because listing permission had been given. The respondent had no particular claim to the favour of CPA or of Novel. Thus a jury could, may or might be satisfied beyond reasonable doubt in each instance that there was a direct relationship between approval given and request made and that the respondent had accepted his shares believing that Wardley had rewarded him for past support or forbearance in order to facilitate the passage of new issues in the future; a consideration material to Wardley's motive as also demonstrated by underwriting favours granted to or to the nominees of the respondent. We express these views without inhibition having regard to the provisions restricting written or broadcast reports provided by rule 6 of the Criminal Procedure (Appeal against Discharge) Rules.

28. We accept that a jury may, might or could find, in Mr Denny's submission the only legitimate inference, that the advantages were afforded as a general "sweetener" because the respondent was "the top man" but for the reasons outlined the true inferences are for them to draw.

29. We allow this appeal, quash the orders for discharge and order the Respondent to be tried on counts 2 and 3 of the indictment dated 7 August 1989.