RE LAU HEI WING

HCAL 49/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 49 OF 2016

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J U D G M E N T

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1.  The applicant was the owner of Kimberley Hotel (‘the Hotel’).  He controlled the business through Regent National Enterprises Limited (‘RNEL’). In 2009, the applicant applied to Industrial and Commercial Bank of China (Asia) Limited (‘ICBC’) for a loan to finance the renovation project of the Hotel.  The project was scheduled to commence in January 2010 with a total cost of $204.6 million[1]. A loan of $200 million was approved by ICBC exclusively for this renovation project.  ICBC required RNEL to submit supporting documents, including general design plans, documents evidencing cost paid and cost payable, before any draw down of the loan.  In February 2010, the applicant submitted a project agreement with Beijing Zhuhe Architectural Design Limited to ICBC accordingly.  

2.  In February, March and April 2010, the applicant submitted supporting documents to ICBC and successfully obtained $20 million, $100 million and $80 million respectively.  The sums were deposited into the accounts according to the instructions of the applicant. 

3.  It transpired that the sums were for the personal use of the applicant.  There was no renovation work in the Hotel in 2010 as stipulated in the project agreement.  ICBC would not have approved the draw downs had they been aware that the sums were for the personal use of the applicant.  ICBC subsequently confirmed that RNEL had fully repaid the sums in May 2014. 

4.  In November 2015, the applicant was charged with three counts of fraud[2] in connection with the three draw downs.  The case was transferred to the District Court for trial (‘DCCC 954/2015’).  

5.  By a letter dated 25 November 2015, the applicant wrote to the Director of Public Prosecutions (‘DPP’) inviting the latter to re-consider the trial venue.  The applicant thought the trial should be held at the Court of First Instance.  He pointed out that the total sum involved in the charges was $200 million.  There might be important issues involved.  He and the victim bank were of high social status.  

6.  A public prosecutor replied on 15 December 2015.  The prosecutor indicated that he had considered the matter raised in the applicant’s letter.  He had also considered the circumstances of the case and the Prosecution Code.  He maintained that the District Court would be the appropriate venue. 

Application for leave for judicial review

7.  The applicant sought an order of certiorari to quash the decision of the DPP.  He relied on the following grounds:

a  The DPP’s decision as to venue was inconsistent with the Prosecution Code 2015. 

b  The DPP failed to give reasons. 

c  The applicant was deprived of the right to apply for discharge under s 16, Criminal Procedure Ordinance, Cap 221.

Inconsistent with the Prosecution Code 2015

8.  Counsel for the applicant, Mr Minju Kim, argued that the factors set out under paragraph 8.4 (a)—(f) of the Prosecution Code 2015 supported the conclusion that the trial venue should be the Court of First Instance.  

9.  These factors are: the maximum sentencing power of the trial court; the general circumstances of the case; the gravity of the offence; the likely issues in dispute; the public importance of the proceedings and whether the accused held a high public status, responsibility or trust.  

10.  Mr Kim pointed out that the present case was a fraud involving $200 million.  The applicant was a well-known hotel operator with high public status.  The victim was one of the four largest banks in the Mainland. The allegation was serious.  Given this background, Mr Kim concluded that the decision of the DPP was inconsistent with the Prosecution Code.  This was particularly so when the venues of trial in other comparable cases[3] were the Court of First Instance. 

11.  In the course of his submission, Mr Kim fairly conceded that the principle set down in Chiang Lily v Secretary for Justice[4] was applicable and binding.  

12.  In Chiang Lily case, the appellant was charged with conspiracy to defraud and other offences under the Theft Ordinance and the Companies Ordinance.  She challenged the decision of the Secretary for Justice (‘SJ’) to try her case in the District Court.  She argued that the power to transfer the case to District Court under s 88 of the Magistrates Ordinance was unconstitutional.  The Court of Final Appeal rejected this argument holding that the choice of venue for a prosecution was clearly a matter covered by Article 63 of the Basic Law. That Article empowered the SJ to control criminal prosecutions free from any interference.  It was not a judicial function exercised by a magistrate.  

13.  Mr Kim pointed out that the basis of Chiang Lily case was the Prosecution Code 2009 while the present case should be governed by the Prosecution Code 2015.  The latter was more elaborate and different approach should follow.  

14.  Paragraph 14.1 of the Prosecution Code 2009 governs the choice of venue.  After setting out the maximum sentencing power in various levels of courts, the Code continues in the following terms,

“....In the selection of venue, the sentence which is likely to be imposed upon an accused after trial is an important factor for the prosecutor to examine. The prosecutor will also wish to consider the general circumstances of the case, the gravity of what is alleged, the antecedents of the accused and any aggravating factors. Matters such as the length of trial or the possibility of a guilty plea are not usually relevant.”

15.  The Code also reminded prosecutors to consider an appropriate venue, the special requirement for summary offences and the possibility of enhanced sentence under the Organized and Serious Crimes Ordinance, Cap 455.  

16.  On the same topic in the Prosecution Code 2015, paragraph 8.4 provides,

“When deciding the venue for trial, a prosecutor should have regard to:

(a)  the maximum penalties available for offences dealt with in the Magistrates’ Court (2 years’ imprisonment in most cases), the District Court (7 years’ imprisonment) and the Court of First Instance (The prescribed maximum penalty);

(b)  the general circumstances of the case;

(c)  the gravity of the allegations;

(d)  issues likely to be in dispute;

(e)  the public importance of the proceedings;

(f)  whether or not the accused held a position of high public status, responsibility or trust;

(g)  whether or not issues arise for determination that require the application of community standards and/or values;

(h)  any aggravating and mitigating factors;

(i)  the accused’s antecedents.

After considering the above, the prosecutor should select an available venue for trial that will enable the relevant court to deal most appropriately with the matter and impose an adequate sentence to address the criminality involved in the conduct.  A prosecutor should take into account the possibility of an enhanced sentence for an organised crime offence. ”

17.  In both versions, the most important factor in deciding venue is the sentence likely to be imposed after conviction.  It is true that the Prosecution Code 2015 is more elaborate.  The basic considerations are similar to the 2009 version.  I do not think it justifies any qualification of the principles set out in the Chiang Lily case.  

18.  I accept that Article 63 is not absolute.  The SJ must act within the constitutional power.  He must not act on political instruction, in bad faith or fettered by a rigid policy.  In RV v Director of Immigration, Hartmann J[5] had this to say:

“I am bound therefore by the judgment of the Court of Appeal in Re C (Bankrupt) to recognise that art. 63 of the Basic Law enshrines the independence of the Secretary for Justice to control criminal proceedings as he thinks best and that, in the exercise of that power, the Secretary is free of both political interference and “judicial encroachment”.  

       But it seems to me that the judgment of the Court of Appeal recognises that today the power of the Secretary for Justice to control criminal prosecutions is a constitutional power.  It is a power bestowed by the Basic Law and defined by that Law.  As such, it must be exercised within constitutional limits.

...Put another way, the limits of the constitutional power are defined by the constitution itself.  Any definition of those limits must therefore require an interpretation of the Basic Law and that is a function of the courts. ”[6]

19.  His Lordship went on to stress that the SJ’s control of criminal prosecutions was amendable to judicial review.  However, it must be an exceptional circumstance that a court would hold that the SJ acted outside of his constitutional power:

“The prosecutorial independence of the Secretary is a linchpin of the rule of law. That is the way it has been prior to the Basic Law and the way it now remains. The exceptional circumstances of which I speak must be truly exceptional and must demonstrate that the Secretary has acted outside of his very broad powers...”[7]

20.  In my judgment, there is nothing in the present case that warrants interference with the decision of the SJ.  I believe that the full restitution to ICBC in May 2014 is an important factor in deciding the venue of trial.  While restitution may not absolve imprisonment entirely, it certainly is a strong mitigating factor for the reduction of sentence.  

21.  Given the above, this ground must fail.

Duty to give reasons

22.  Mr Kim argued that the expanded considerations in the Prosecution Code 2015 imposed on the SJ a duty to give reasons.  

23.  He relied on the judgment of Secretary for Security v Prabakar[8].  In that case, Li CJ pointed out that the high standard of fairness required the Secretary for Security to give reasons if the torture claim was rejected.  The reasons needed not be elaborate but must be sufficient for the potential deportee to consider the possibilities of administrative review and judicial review.[9] 

24.  In my judgment, the position of the Secretary for Security is very different in torture claims.  The Secretary decides the rights of a claimant under Part VIIC of the Immigration Ordinance.  He is under a duty to act according to a high standard of fairness.  That requires him to give reasons for his decision. 

25.  In deciding the venue of trial, the SJ is exercising a prosecutorial choice which is free from interference by virtue of Article 63 of the Basic Law.  There is no positive duty to give reasons. The SJ needs not give reasons as to the weight of individual factors contributing to the choice of venue.  In most cases, the circumstances are obvious.  In my view, in the majority of cases like the present one, the most important factor is the sentence likely to be imposed on conviction. 

26.  Where the SJ chooses to give reasons in exceptional circumstances departing from the norm, the adequacy of the reasons must be left to the professional judgment of the SJ.  An extended debate as to various contributing factors should always be avoided.  

27.  In rejecting the argument that the transfer proceedings under s 88 of the Magistrates Ordinance was a judicial decision, Li CJ commented in Chiang Lily case:

“There are plainly matters that may properly guide the prosecutor but which it would be highly undesirable for a magistrate to explore before the trial. It would obviously be most inappropriate for there to be a debate as to likely sentence or antecedents or aggravating factors before the magistrate regarding a person fully entitled to the presumption of innocence. The present system avoids this by properly treating the question of venue as a prosecutorial choice with the transfer following on a mandatory basis. ”[10]

28.  In my judgment, parties should bear this principle in mind in any discussion as to the choice of venue.  

29.  Furthermore, in the context of judicial review, the burden is on the Applicant to demonstrate that the decision of the SJ is wrong before the SJ needs to respond.  Failure to give reasons would not necessarily render the decision of the SJ unreasonable.  

30.  In the letter dated 25 November 2015, the applicant had not established that there were exceptional circumstances calling for a jury trial or that he would be treated fairer in a jury trial.  The applicant had not complained that he could not have a fair trial in the District Court.  Neither was there any relevant detail in the Form 86.

31.  The prosecutor reiterated that he had considered the matter raised in the applicant’s letter.  He also considered the circumstances of the case and the Prosecution Code.  He maintained that the venue should be the District Court.  Given that there is no right of a jury trial, coupled with the likely penalty on conviction, the reply is sufficient in the circumstances. 

32.  This ground fails.

Procedural unfairness

33.  Mr Kim further argued that upon the transfer to the District Court, the applicant lost the benefit of challenging the case under s 16 of the Criminal Procedure Ordinance, Cap 221.  This section only applied to cases transferred to the Court of First Instance and before arraignment. This caused unfairness to the applicant. 

34.  Before arraignment, s 16(1) and (3) allow an accused to challenge the charges on the ground that there is no prima facie evidence. The judge may after perusal of the documents, and after hearing any representations from the parties, direct that the accused be discharged.  

35.  In the Form 86 or the letter dated 25 November 2015, there is nothing which supports a realistic challenge under s 16.  There was no detail as to the possible prejudice to the applicant without the benefit, as he claimed, under s 16.  

36.  In any event, if there is insufficient evidence, the applicant can always make a no case submission during the trial.  His right to stop the case on the ground of no prima facie evidence is always available. 

37.  There is no procedural unfairness.

Conclusion

38.  For the analysis above, I conclude that this case is not reasonably arguable.  There is no realistic prospect of success. 

39.  I refuse leave for judicial review.