LAM KWOK WAI and Another v. R.

IN THE SUPREME COURT OF HONG KONG

(Appellate Jurisdiction)

MAGISTRACY CRIMINAL APPEAL NO. 35 OF 1996

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J U D G M E N T

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1. The 1st Appellant, Lam Kwok-wai (D1) faced one charge of accepting an advantage contrary to s.9(1)(a) of the Prevention of Bribery Ordinance. The 2nd Appellant, Shum Leung-him also known as Stephen Shum (D2) faced one charge of offering an advantage contrary to s.9(2)(a) of the same Ordinance. Both were convicted after trial before a magistrate and was each sentenced to 15 months' imprisonment. In addition, D1 was ordered to pay $146,000.00 to Alexander Realty pursuant to s.12 of the Ordinance on or before 25th February 1996 and in default a consecutive sentence of 3 months' imprisonment. D2 was ordered to pay $100,000.00 on or before the same date with a sentence of imprisonment of 3 months in default. They now appeal against their convictions and sentences.

2. Briefly the facts were these. D1 was employed by Alexander Realty (AR) as an estate agent and team leader. AR received instructions from the owner-vendor to sell the 4 units on the 11th Floor of Tern Plaza on conditions that all 4 units were to be sold at the same time and the average price for all 4 units must be not less than $10,000.00 per square foot. On 11th March 1994, another employee of AR found a buyer who was willing to buy only Units 1 and 2 at $10,600.00 and $10,400.00 per square foot respectively. D2, a property speculator and a friend of D1, was told by D1 about the deal and the particulars of sale. As a result of their discussion, D2 agreed to buy Units 3 and 4 at just over $9,500.00 per square foot and this would bring the average price for all 4 units to $10,000.00 per square foot. The Sale and Purchase Agreements were signed by the owner-vendor in the afternoon of 12th March 1994. D2 resold the two units within two months and made a profit of over $1,000,000.00. It is not in dispute that on or about 7th July 1994, D2 gave D1 a cheque for $146,000.00 which D1 deposited into his personal savings account on the same day.

3. The magistrate found that the $146,000.00 was commission paid to D1 in respect of the sale of the two properties and D1 had no permission or authority from his employer to receive and keep the money.

4. After D1 was arrested by officers of the ICAC, he made a statement under caution in which he admitted that the $146,000.00 was paid to him as tea money. The main thrust of the appeal argued by Mr. Egan on behalf of D1 was that the magistrate erred in admitting the cautioned statement in violation of the Rules and Directions for the Questioning of Suspects and the Taking of Statements. His complaint was that officers of the ICAC had refused to allow D1 to contact Mr. Leo Lok, a lawyer of D1's own choice. But it was not disputed that D1 was given a list of solicitors provided by the Law Society and after that D1 contacted his friend, Mr. Raymond Hung, who is a solicitor. Mr. Hung came to the office of the ICAC and spoke to D1 and before leaving Mr. Hung told the officers that he would not be involved in any subsequent interviews. This was before the interview began. The reason given by the officers as to why they did not allow D1 to have access to Mr. Lok was because they believed that there might be some conflict of interest as Mr. Lok had already been retained by D2 to look after his interests. Investigation would be delayed if it turned out that there was a conflict of interest. This explanation was accepted by the magistrate who went into the matter in considerable depth and detail. At p.132 and p.133 of the transcript, he said :-

"I considered that the 26 years of law enforcement experience of Senior Investigator Wong, and the fact that his superior presumably had equal or even more experience, put him in a legitimate position to suspect that D2's lawyer would have a conflict arising in advising D1 and that time would be wasted if Lok were to be contacted. It was quite proper, in these unique and limited circumstances, for the ICAC to refuse access to Lok, tell D1 why and provide the full list of solicitors, as was done here."

He concluded in these words :-

"I accept without reservation that it would be thoroughly improper for a law enforcement agency of any sort to vet or interfere with the selection of legal advisers available to a defendant who is detained under arrest but, in the circumstances here prevailing it was not improper."

5. This passage indicates that the magistrate had the issue foremost in his mind and gave it full and careful consideration. He also considered but rejected arguments advanced by defence counsel in regard to Article 11(2)(b) of the Bill of Rights.

6. D1 gave evidence on the general issue to the effect that the payment represented profit from the joint venture with D2, which contradicted what he said in the cautioned statement. The magistrate rejected this evidence and found that his cautioned statement was, by and large, a truthful account of the events. Having admitted the cautioned statement as voluntary and found the contents to be true, the magistrate was entitled to rely on it to convict D1.

7. The case against D2 is somehow different. It consisted of the undisputed fact that he gave D1 a cheque for $146,000.00 and his cautioned statement in which he said that the money was profit from a joint venture with D1. There is no other evidence and D2 did not give evidence. This is how the magistrate approached his case at p.136 and p.137 :

"D2's interview was conducted in April 1995, some six months after D1's. D1's testimony on the main issues was strikingly similar to the narrative of events contained in D2's interview, in particular regarding joint-enterprise which, in the defence case, legitimized any private profit taken by D1. I found that D1's lying in that aspect of his testimony. His lies in court are not evidence, of course, against D2. D1's viva voce evidence on the main issues are admissible against D2, to the extent that it is believed by the trier of fact.

In all the circumstances I found it proper to comment on the fact that D2 had failed to testify on oath before the trier of fact, in accordance with the statutory authority under section 26, Cap. 201 and I did so in the course of considering the evidence ...... I found his statement to be untruthful in most aspects and truthful in some self-serving aspects ...... I found that D2's cautioned statement as it related to a joint venture was a lie."

8. It is trite law that what an accused said about another accused in a cautioned statement is not evidence against the other accused. And what does s.26 of the Prevention of Bribery Ordinance provide, it says :-

"Notwithstanding any law or practice to the contrary, it shall be lawful for the court in any proceedings for an offence under Part II to comment on the failure of the accused to give evidence on oath."

9. I find it difficult to understand the rationale of the magistrate's decision. The cautioned statement of D1 was not and could not be evidence against D2 and thus it could not be used to impugn the truth or otherwise of the cautioned statement of D2. Since the magistrate had found that the lies told in court by D1 was not evidence against D2, that again could not be used to prove that D2's cautioned statement was false. The magistrate also found that D1's viva voce evidence on the main issues were admissible against D2, to the extent that it was believed by the trier of fact. But the trier of fact did not believe the viva voce evidence of D1 on the main issue and although that evidence was admissible for and against D2, there was nothing in the evidence to prove guilt. I gather what the magistrate was really saying was that since D1 was lying in the witness box about the joint venture, D2 must also have lied in his cautioned statement because these two accounts were so strikingly similar. Plainly, this cannot be right. If D2 had been tried separately, he could not be convicted on the evidence available, namely the undisputed fact that D2 paid D1 $146,000.00 and his cautioned statement that the payment was profit from a joint venture between him and D1. On this evidence, what inference could possibly be drawn against D2? Before an inference is drawn against an accused "the inference must be compelling - one (and the only one) that no reasonable man could fail to draw from the direct facts proved." per Lord Diplock in R. v. Kwan Ping-bong and Another [1979] HKLR 1 at p.5. The fact that the evidence given by D1 in the witness box about the joint venture was so strikingly similar to what D2 said in his cautioned statement is not compelling that an inference of guilt could be drawn.

10. This leaves s.26 of Cap. 201. What is permitted by this section is that "it shall be lawful for the court to comment on the failure of the accused to give evidence on oath." This can only be invoked, if at all, after the prosecution have adduced sufficient evidence to establish a case against the accused and he elected not to give evidence to undermine, contradict or explain the prosecution case. This is not such a case. In R. v. Hubbard [1991] Crim.L.R. 449, it was held by the English Court of Appeal that it was a misdirection to tell the jury that the failure of the defendant to give evidence can amount to corroboration of the evidence of an accomplice. A fortiori, failure to testify should never be relied upon as evidence where there is no or insufficient evidence to establish guilt. It would be wrong to do so.

11. In the result, the 1st Appellant's appeal against conviction is dismissed. The 2nd Appellant's appeal against conviction succeeds. Consequently, his conviction is quashed and the sentence set aside.