HKSAR v. YAN PAK CHEUNG

HCMA 647/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 647 OF 2008

----------------------

----------------------

--------------------------------------------

REASONS FOR JUDGMENT

------------------------------------------

1.  On 8 December 2008 I dismissed the appeal against conviction and indicated that I would hand down my reasons at a later date. These are they.

2.  The appellant was convicted after trial by William Lam, Magistrate, of two charges of conspiracy to accept an advantage as an agent contrary to ss. 159A and 159C of the Crimes Ordinance, Cap. 200, and 9(1)(a) and 12(1) of the Prevention of Bribery Ordinance, Cap. 201 (POBO).

3.  It suffices to recite the particulars of offence in respect of charge 1 as those in charge 2 are the same save as to dates and the identity of the co-conspirator and his employer:

"YAN Pak-cheung, between 12 May 1994 and 20 May 2004, in Hong Kong, without lawful authority or reasonable excuse, conspired with TAM Kwok-wing being an agent, namely an employee of either Alba Management Ltd or Liu Chong Hing Bank Ltd... for TAM Kwok-wing to accept advantages, namely fees, rewards or commissions consisting of money from YAN Pak-cheung, as an inducement to or reward for or otherwise on account of TAM Kwok-wing doing or forebearing to do, or having done or foreborne to do an act in relation to his principal’s affairs and business, namely engaging or continuing to engage the services of Kow Tung Tyre Company"

The evidence

4.  The evidence before the magistrate came from two sources: agreed facts and the contents of records of interviews, under caution, of the appellant by the ICAC. The appellant elected not to give or call evidence. 

5.  At the time of the offences, which together spanned a period from May 1994 to May 2004, the appellant operated a business which supplied motor vehicle tyres and batteries.  Each of the two co-conspirators named, individually, in the respective charges was employed by Liu Chong Hing Bank Ltd. as a driver: the co-conspirator named in Charge 1 earlier had been employed by a company, Alba Management.  In the course of his duties, each driver would drive a motor vehicle to the appellant’s premises where the appellant would supply whatever items had been ordered by the employer.  Thereafter the appellant would look to the employer for payment of the amount due to him.

6.  It was an agreed fact that the persons referred to in the records of interview as “Ah Wing” was TAM Kwok-wing, the named co-conspirator/driver and the first defendant in charge 1, and as “Ah Leung” was CHAN Fong-leung, the named co-conspirator/driver in charge 2.

7.  Another agreed fact was:

"At all material time, Alba Management and the Bank prohibited their employees to solicit or accept any advantage from anyone including the defendant, in relation to the affairs or business of Alba Management and the Bank respectively"

8.  The appellant explained, in the course of the interviews, that he had paid to each of the drivers, on more than one occasion, the details of which he could not recall, sums of money which he referred to as “tea money".  He had made these payments, he said, because he apprehended that, having been asked for them, if he failed to pay the drivers would make false complaints about the quality of the goods supplied which may have had two adverse effects on his business, namely, the necessity to expend time and money in order to address the bogus complaint and the potential loss of the custom of the bank, each of which would result in financial loss to him.

9.  The appellant explained further that the amount paid to each driver was calculated by taking a percentage of the amount which would be charged to his employer.

10.  It is helpful to have regard to a number of extracts from the records of interview:

Interview commencing at 16h42:

216  ...he asked me for it... under the circumstances of avoiding trouble I entertain him by offering some to him, to have tea, something likely, tea money.

234  ...when signing the invoice... (let me) have a cup of tea... thus not too willingly, (I paid) several hundred dollars and left it at that.

235  To your understanding, what did he mean by "have a cup           of tea"?

236  ...to get some tips.

254  ...from the profit we were entitled to... some was forked out...

272  ...to avoid the necessity of... any trouble, a packet of laisee is offered, tea money is offered.  It is too bothersome, don't bother me.  In such a manner, trouble is reduced.

273  ...did you reflected any persons of Liu Chong Hing the matter of Ah Leung... asking tea money from you?

274  One thing I considered was to settle disputes... for peace, no more talking, it’s meaningless.  The bad case is just an isolated one, right?

278  ...sometimes, as (I) said that, sometimes (I) did not pay him.  Sometimes, as (I) said, there is some grumbling.  Only that create trouble for us.  Only then did I put off trouble for the sake of peace.

320  ...they asked us for it, solicited.  Only to avoid trouble did we did such a foolish act.  Honestly, it is not correct.... So it continuously created disturbance, interference for us.  We would be done for.  We had to make a living, right?  ... [emphasis supplied]

326  Ah Leung whom I have been talking about just now somewhat did so.  He created trouble....

Interview commencing at 19h42:

283  Did you actually give money to [Ah Wing]?

284  (Yes, I) did.

300  ...he asked me (for it), so (I) gave him several hundred dollars...

330  ...(it) was calculated in percentage

346  ...I hoped that, there would be a great turnover that, hope that... we could deal with the second order, and new order, we wouldn't be blocked by him...

11.  Submissions were made to the magistrate which did not find favour with him.  Two of those submissions are now repeated as grounds 1 and 3 of this appeal: the others, such as they were, sensibly have not found their way any further.

The grounds of appeal

12.  The grounds of appeal are as follows:

“ 1.  The learned Trial Magistrate erred in law in failing to direct himself on the appellant's lack of intention or knowledge that [each co-conspirator] was not permitted by their principal to receive advantages: a fact or circumstance which was an ingredient of the substantive offence, and the prosecution was required to prove it for the conspiracy charges.

2.  The learned Trial Magistrate erred in law in finding that the law of conspiracy as expounded in R v Saik was inapplicable.

3.  The learned Trial Magistrate erred in law and in fact when he found the appellant being blackmailed into paying the money to D1 and Chang Fong Leung was not a reasonable excuse."

Ground 1

13.  The magistrate found that the prosecution had proved that there was a "global conspiracy" in that the appellant had arrived at an agreement with the drivers that when the cars were taken in for service and “tea money” money was requested, he would pay them in order to “avoid trouble”.

14.  It is not surprising that he found proven, on the evidence before him, that the drivers, individually or collectively, had sought advantages and accepted the "tea money" which he had paid to them; that those moneys were sought and accepted for forbearing to do an act, i.e. falsely complain about the quality of the goods or services provided by the appellant; and that that act was in relation to the affairs of their respective principals from time to time.  No issue is taken with these findings.

Is the lack of lawful authority or reasonable excuse an element of an offence under section 9(1) or a defence?

15.  It had been submitted before the magistrate on behalf of the appellant, as it has in this appeal, that because an agreement which constitutes a criminal conspiracy, if carried to fruition, necessarily must result in the commission of a criminal offence, for the prosecution to meet that requirement in the present case, it would be incumbent upon it to prove that the appellant knew that the drivers lacked both lawful authority and reasonable excuse. 

16.  In the course of that submission counsel indicated to the magistrate:

“Now, in our instant case, the material fact is the lack of "permission" by Chan and Tam's principles.  And, of course, this is an ingredient of the offence of accepting an advantage...

All this, sir, goes to support my submission that the lack of knowledge of Chan and Tam’s situation makes the prosecution's task of proving this global conspiracies impossible." [emphasis supplied]

17.  The prosecutor, who crisply encapsulated the point made in this connection by the appellant's counsel, said in reply:

"... I would say that the prosecution is not required to prove that the defendant knew that the principle prohibits the agent to accept advantage.  It is not in this section.  It is not an element of the offence."

18.  The magistrate allowed counsel to reply to points of law which attracted the following response:

"The second submission, sir, is about the elements of the substantive offence.  I started my submission by quoting that example and by submitting that, by charging conspiracy, in fact, in this particular case, it makes the prosecution's job more difficult because of the word "necessarily", "necessarily" amounting to an offence of accepting an advantage.  I relied on the word "necessarily".  Because it is a conspiracy charge and for that substantive offence to take place necessarily, it is incumbent upon the prosecution to prove that the defendant knew Tam and Chan acted without their principal’s permissions.”

19.  The magistrate turned his attention to whether the absence of lawful authority or reasonable excuse was an element of a substantive offence under s. 9(1)(a) by analysing the offence and finding that it was comprised of four elements, which he described as being:

“...simple and clear, viz (1) without lawful authority or reasonable excuse, (2) solicits or accepts any advantage, (3) for doing or forbearing to do an act, and (4) the act is in relation to the principal’s affairs”.

20.  In this connection he said:

“Regarding the first element, it is not the defence case that D1 or Chan had, or may have had, lawful authority, because D1 and Chan had not been permitted to receive advantages from [the appellant].  Nor had there been any reasonable excuse, because [the appellant] was in the car service business, and it is not disputed that he knew D1 and Chan's "grumbling", unless tea money was paid, was unwarranted.  Defence counsel properly and correctly used the term "blackmail" as committed by D1 and Chan.  And blackmailing [the appellant] is not, of course, a reasonable excuse."

21.  Unfortunately, nowhere does the magistrate appear to consider in his Statement of Findings the conflicting approaches before him. He simply asserts that lack of lawful authority or reasonable excuse, indeed, is an element of the offence.  

22.  In my judgment, the magistrate erred.

23.  The fundamental flaw in the appellant’s argument arises because it approaches the issue from the point of view of what it is suggested is necessary to prove to establish a conspiracy of this substantive offence and then applying those considerations to the substantive offence, rather than first determining what it is necessary to prove to establish the substantive offence.

24.  Section 9 of POBO reads, in part as relevant to this matter:

“(1)  Any agent who, without lawful authority or reasonable excuse, solicits or accepts any advantage as an inducement to or reward for or otherwise on account of his-

(a)  doing or forbearing to do, or having done or forborne to do, any act in relation to his principal's affairs or business; or

(b)  showing or forbearing to show, or having shown or forborne to show, favour or disfavour to any person in relation to his principal's affairs or business,

shall be guilty of an offence.

(2)  ...

(3)  ...

(4)  If an agent solicits or accepts an advantage with the permission of his principal... neither he nor the person who offered the advantage shall be guilty of an offence under subsection (1) or (2).

(5)  ...

25.  It seems to me that whether or not the agent has lawful authority or reasonable excuse, the nature of the conduct at which s. 9(1) is aimed and which need be performed in order to establish criminal liability remains unchanged. “...Lawful authority in the context of the POBO is one that is sourced in a positive rule of law that expressly or impliedly empowers, countenances or authorises the defendant to conduct himself  in a way that would otherwise be an offence...” (McWalters Bribery and Corruption Law in Hong Kong, LexisNexis Butterworths 2003)

26.  The effect of s. 9(4), whilst it may be an instance of lawful authority, creates a specific defence to conduct which otherwise would be criminal in nature. It does not qualify the defence of lawful authority or reasonable excuse. 

27.  The argument advanced on behalf of the appellant fails to recognize the provision contained in s. 24, POBO, which provides:

“In any proceedings against a person for an offence under this Ordinance, the burden of proving a defence of lawful authority or reasonable excuse shall lie upon the accused.”

thus underscoring the fact that the legislative intent of s. 9(1)(a) is that the existence of lawful authority or reasonable excuse will constitute a defence to conduct which otherwise would be criminal.

28.  It therefore follows that an offence under section 9(1)(a) is complete once what the magistrate characterised as the “second, third and fourth elements” of the offence are proven.

29.  The existence of lawful authority or reasonable excuse as a defence will only arise once the prosecution has proven beyond a reasonable doubt those elements which constitute the corruption offence. Thus, a lack of lawful authority or reasonable excuse cannot be an element of the offence which the prosecution is required to prove.

Should section 24 be struck down?

30.  The appellant seeks to deal with s. 24 by submitting that, insofar as s. 9 is concerned, it offends the presumption of innocence and, presumably, should thus be struck down.  It is hardly necessary to consider this argument as the only effect of s. 24 is to make it clear upon whom the burden of establishing lawful authority or reasonable excuse lies. However, for the sake of completeness I shall briefly do so.

31.  Section 24 was considered by the Court of Final Appeal in HKSAR v NG Po-on [2008] 4 HKLRD 176 in connection with s. 14, POBO.  The Court said, at §11:

"It should be emphasised that in this appeal, the court is concerned with s. 24 exclusively as read in conjunction with and affecting the meaning of s. 14(4).  Section 24 is also relevant to other provisions in the Ordinance, such as ss. 4, 5, 6, 7, 8 and 9 which create offences incorporating an element of "reasonable excuse".  Its interaction with such other provisions raises separate considerations which fall outside the scope of this judgment."

32.  Section 14(4) relates to the consequences of the failure of a person upon whom a notice under s. 14(1) has been served to respond to that notice.  After a false start, the magistrate who tried that matter held that the respondents, upon whom such notices had been served, were required to discharge the burden imposed upon them by s. 24 on a balance of probabilities.  On appeal against that finding, her decision was set aside and it was held that s. 24, for the purposes of section 14(4), imposed the lesser evidential burden.  On further appeal, the Court of Final Appeal held that to be so.

33.  The Court of Final Appeal recognized, consistent with earlier judgments, that:

“69.  The insidious nature of corrupt offences derives from the fact that corrupt transactions inevitably take place in secret, with the parties likely to be mutually satisfied with their illicit arrangement, each having every incentive to conceal it, making detection, investigation and prosecution particularly difficult....

70.  However, it is important to note that section 14(4) is not itself a corruption offence... It is an ancillary offence aimed at promoting the effectiveness of the special powers of investigation confirmed by the Ordinance.  Prosecution for non-compliance with a notice does not involve proving any insidious arrangement made in the shadows between partners in corruption, but proving non-compliance with a statutory demand for information.  Accordingly, while I would accept the relevance of the difficulties inherent in investigating and prosecuting corruption offences, they are difficulties which do not bear directly on proving the ancillary offence and cannot be given significant weight when assessing the proportionality of the reverse burden in the context of section 14(4)."

34.  If indeed, the Court of Final Appeal declined to strike down s. 24 when considering its application to s. 14(4), I am satisfied that is not reasonably arguable that that section should be struck down when it is applied to s. 9(1).  I do not regard it as either necessary or desirable to make a finding as to whether s. 24 imposes an evidentiary or a persuasive burden when applied to s. 9(1), for that matter was not fully ventilated before me in the course of this appeal nor arose in the trial.

The “necessarily” argument

35.  The appellant’s submissions centring around the fact that the agreement forming the conspiracy must "necessarily" amount to the commission of an offence comes from the definition of the offence of conspiracy as appears in s. 159A(1) of the Crimes Ordinance, Cap 200, as follows:

“(1)  ...if a person agrees with any other person or persons that a course of conduct shall be pursued which, if the agreement is carried out in accordance with their intentions, either-

(a)  will necessarily amount to or involve the commission of any offence or offences by one or more of the parties to the agreement; or

(b)  would do so but for the existence of facts which render the commission of the offence or any of the offences impossible,

he is guilty of conspiracy to commit the offence or offences in question.”

36.  Before the magistrate, reliance was placed on the decision of the House of Lords in R v Saik [2007] 1 AC 18. After reciting the English legislation, which accords with s. 159A(1) of the Crimes Ordinance, Lord Nicholls of Birkenhead said at §3:

“...The offence therefore lies in making an agreement.  Implicitly, that subsection requires also that the parties intend to carry out the agreement.  The offence is complete at that stage.  The offence is complete even if the parties do not carry out their agreement.  The offence is complete even if the substantive offence is not thereafter committed by any of the conspirators or by anyone else.

4.  Thus under this subsection the mental element of the offence, apart from the mental element involved in making an agreement, comprises the intention to pursue a course of conduct which will necessarily involve commission of crime in question by one or more of the conspirators.  The conspirators must intend to do the act prohibited by the substantive offence.  The conspirators’ state of mind must also satisfy the mental ingredients of the substantive offence.  If one of the ingredients of the substantive offence is that the act is done with a specific intent, the conspirators must intend to do the prohibited act and must intend to do the prohibited act with the prescribed intent."

37.  With respect, there is nothing novel in that, nor, from the context, does it appear that there was intended to be: it encapsulates and restates, in straightforward language, what has been recognised consistently, and frequently been set out, as being the essentials of the offence of conspiracy.

38.  Once it is appreciated that the existence of lawful authority or reasonable excuse constitutes a defence to a charge under s. 9(1), as opposed to being an element of the offence, then, if the prosecution succeeds in proving what the magistrate characterised as the “second, third and fourth elements”, it will have proven that the parties to the conspiracy have agreed to pursue a course of conduct which will necessarily involve the commission of an offence under that section.  In R v LOOI Kim-lee & Anor [1985] 2 HKC 410 McMullin V-P, giving the judgment of the court said of an offence under s. 9(1):

“The intent required is an intention to do the acts forbidden by the section with the intention of the recipient ....."showing or forebearing to show ....." etc. as the section sets out.”

39.  In this matter, there is no dispute that the appellant paid the bribes in order that the co-conspirators would forebear making false complaints.

40.  The proposition advanced before the magistrate, and not disavowed in the appeal, that because the offence was charged as a conspiracy the prosecution “...has to prove something [an accused’s knowledge of a lack of lawful authority or reasonable excuse] which they may not have to prove in the substantive offence in terms of the mental elements.” is simply untenable. The elements of a substantive offence cannot vary depending on whether the offence is charged substantively or by way of conspiracy.

41.  It was also submitted that the decisions of the Court of Final Appeal in LAM Yuk-fai v HKSAR (2006) 9 HKCFAR 281 and NG Po-on v HKSAR [2008] 4 HKLRD 176, delivered respectively by Lord Woolf NPJ and Ribeiro PJ support the proposition that the prosecution must prove knowledge of lack of lawful authority or reasonable excuse. With respect, that was not the issue which the Court was required to consider in LAM Yuk-fai, nor does the passage upon which reliance is placed assist the appellant.

42.  Indeed NG Po-on runs directly counter to the appellant’s contentions, Ribeiro PJ, considering LAM Yuk-fai and saying, at §37:

“The precise offence charged has to be borne in mind. Thus, if a defendant is charged with an inchoate offence of conspiracy, attempt or incitement relating to a statutory offence, it does not matter that the substantive offence may, on construction, be found to contain a reverse onus provision. The inchoate offence exists at common law and, in accordance with the general common law rule, does not involve any reverse onus.” [emphasis supplied]

43.  If the defence, indeed, had existed then it coexisted with the agreement at the time of its conclusion, and thereafter, thus remaining available to the appellant.

Ground 2

44.  The second ground of appeal, that the magistrate erred in finding that the law of conspiracy as set out in R v Saik was “inapplicable”, takes out of context what the magistrate said in this connection.  In his statement of findings as well as in his reasons delivered at the time of conviction, the magistrate had not actually made such a finding.  However, he had expressed himself along these lines when he was seeking the assistance of the prosecutor in this connection.

45.  In his statement of findings, he specifically made the point, this being a conspiracy charge, that Saik involved a conspiracy to commit "... a completely different substantive offence.", namely, money laundering.  It was in that sense that he rejected the applicability of that decision to the facts before him. 

46.  That said, it is clear that he appreciated that he was dealing with a charge of conspiracy as he says:

“8.  ... clearly [the appellant] had agreed that every time D1 and Chan took their cars in for service, [the appellant] would pay them tea money in order to avoid trouble.  In other words, [the appellant] had "globally" agreed with D1 and Chan, and the agreement would hold good whenever car service was required.

9.  That there was an agreement, be it global or in each individual instance, is not in dispute.”

47.  There is no merit in this ground.

Ground 3

48.  Ground 3 contends that the magistrate erred in law and in fact by not taking the fact that the appellant was being "blackmailed" into making payments as being a reasonable excuse for making them. The concept of the appellant being blackmailed was introduced by counsel during the course of submissions.  The magistrate echoed his refrain.

49.  The magistrate was quite right in rejecting what may fairly be described as a novel proposition.  Even if, technically, the conduct of the drivers did amount to blackmail, the remedy of the appellant was to report that fact to the authorities, or at the least to their employers, rather than acquiesce in the demands made to him.  The appellant, as he accepted in his interviews, made a conscious decision to effect the payments with the intention described in R v LOOI Kim-lee & Anor and referred to in §38 above.

50.  As is clear from entry 320 in the interview which commenced at 16h42 (§10 above), the appellant fully appreciated that what he was doing was wrong.

51.  There is no merit in this ground.

Disposal

52.  The hearing of an appeal from a magistrate is a rehearing.  There was no oral evidence before the magistrate which may have involved a consideration of the credibility or demeanour: I am in every bit as good a position to make a decision in this matter as was the magistrate.

53.  Even though the magistrate may have erred in finding that the lack of authority or reasonable excuse was an element of the substantive offence, the appellant was correctly convicted on the evidence before the magistrate.  The evidence by way of facts which he agreed and what he said when being interviewed establishes his guilt beyond peradventure.

54.  The appeal is dismissed and the conviction confirmed for the reasons given.