HKSAR v. CHAN PAK HOE PABLO

FACC No. 1 of 2012

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 1 OF 2012 (CRIMINAL)

(ON APPEAL FROM HCMA NO. 754 OF 2010)

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J U D G M E N T

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Chief Justice Ma:

1.  I agree with the Judgment of Mr Justice Ribeiro PJ.

Mr Justice Bokhary PJ:

2.  Can a magistrate review a sentence while an appeal against conviction is pending?  That is what the magistrate did in the present case.  He did so on the prosecution’s application.  After the review was applied for but before it was heard, the defendant launched an appeal against conviction.  The conviction, it should be mentioned for the sake of completeness, was a conviction for insider dealing, contrary to s.291(5) and (8) of the Securities and Futures Ordinance, Cap. 571.  Upon the review, the magistrate substituted four months’ imprisonment and a fine of $120,000 for the 240 hours’ community service which he had originally imposed.  The order that the defendant pay $44,478 costs was not disturbed on review.  Following the imposition of the substituted sentence, the defendant launched an appeal against sentence.  So his appeal became an appeal against conviction and sentence.  When that appeal against conviction and sentence came before the High Court, the judge (Mr Justice Macrae) affirmed the conviction.  But he allowed the appeal against sentence by setting aside the substituted sentence and reinstating the original sentence. 

3.  The judge did that even though he did not consider the substituted sentence open to criticism on the merits.  His reason for doing so was his view that a magistrate cannot review a sentence while an appeal against conviction is pending.  He based that view on his understanding of subsection (9) of s.104 of the Magistrates Ordinance, Cap. 227.  The power of magistrates to review their decisions is contained in s.104 which consists of ten subsections.  Subsection (9) reads:

“No application for a review shall be granted and no exercise by a magistrate shall be made of the power conferred on him by subsection (5) subsequent to the commencement of proceedings by either party with a view to questioning the decision of the magistrate by way of appeal, mandamus or certiorari, unless such proceedings shall have been abandoned. ”

4.  Leave to appeal to this Court was granted to the prosecution under the “point of law” limb of s.32(2) of the Court’s statute. The point of law of great and general importance involved concerns the effect of s.104(9) of the Magistrates Ordinance.  As a matter of form, the point was certified as the one raised by the question of whether an appeal against a decision of a magistrate precludes him from reviewing another decision of his in the same case.  Mr Gerard McCoy SC for the defendant contends that no such question can arise under s.104(9).  That is because, he submits, “the decision of the magistrate” referred to in the subsection is to be understood as the magistrate’s decision collectively on conviction, sentence and anything else on which the magistrate may decide – such as costs, disqualification, forfeiture and so on.

5.  Naturally the form of the certificate does not shut out the substance of Mr McCoy’s submission.  And if his submission is correct, then s.104(9) would indeed operate to preclude a magistrate from reviewing a sentence while an appeal against conviction is pending.  So is Mr McCoy’s submission correct?

6.  I see no support in the language of s.104 for that submission.  What about purpose and context?  In that regard, Mr McCoy – most ably as always – has pointed to various scenarios in which, he argues, absurdity would arise if his submission were not accepted.  But he has not identified any problem that cannot be avoided by a proper exercise of discretion or proper case management.  As to the problems that may arise if his submission be correct, he points to the Court of Appeal’s power under s.81A of the Criminal Procedure Ordinance, Cap. 221, to review a sentence upon the Secretary for Justice’s application.  But that power only came into existence in 1972 while the power of magistrates to review their own decisions has been a part of our law since 1890.  I do not see how the power introduced in 1972 helps to define the scope of the power introduced in 1890.

7.  For the foregoing reasons, I would allow the prosecution’s appeal to hold that a pending appeal against one part of a magistrate’s decision does not preclude a review by that magistrate of another part of her or his decision in the same case.  So a magistrate can review a sentence while an appeal against conviction is pending.

8.  That does not compel this Court to reinstate the imprisonment, the fine, either of them or any part of either of them.  There have been instances in which we have allowed an appeal by the prosecution against an acquittal on intermediate appeal so as to decide the point in the prosecution’s favour but have stopped short of reinstating the conviction.

9.  Mr McCoy does not oppose the reinstating of the fine in the event of the law being decided in the prosecution’s favour.  But he does oppose the reinstating of the imprisonment.  In my view, it would be wrong in principle to reinstate the imprisonment.  The defendant was sentenced to the maximum period of community service permitted by law.  And he has served the whole of that period of community service.  The cases and books, here and abroad, make it clear that community service is meant to be an alternative to imprisonment.  Setting aside a community service order hardly clears the way for imprisonment after the community service which was ordered has been served.  It does not unless one treats – and I do not see how one can treat – the serving of a sentence as of less impact than the passing of the sentence.

10.  In the result, I would allow the prosecution’s appeal to: (i) hold that a pending appeal against one part of a magistrate’s decision does not preclude a review by that magistrate of another part of her or his decision in the same case; and (ii) reinstate the fine.  But I would not reinstate the term of imprisonment or any part of it.  I conclude with an expression of my indebtedness to counsel on both sides for their assistance.

Mr Justice Chan PJ:

11.  I agree with the Judgment of Mr Justice Ribeiro PJ.

Mr Justice Ribeiro PJ:

12.  This case concerns the scope of a magistrate’s power of review under section 104 of the Magistrates Ordinance[1] where an appeal has been lodged.

A. Section 104

13.  Section 104 materially provides as follows:

“(1) Within 14 clear days after the determination in any manner by a magistrate of any matter which he has power to determine in a summary way it shall be lawful for either party thereto to apply to the magistrate to review his decision in the matter.

(2) An application may be made whether by the party himself or by his counsel, and shall be made in writing to the magistrates' clerk.

...

(4) It shall be lawful for the magistrate to grant the application for a review at any time provided that the application for the review shall have been duly made in accordance with the provisions of subsections (1) and (2).

...

(5) It shall also be lawful for a magistrate on his own initiative, within 14 clear days after the determination in any manner of any matter which he has power to determine in a summary way, to re-open the case, and thereafter, whether within the said period of 14 clear days or after its expiration, to review his decision in the matter.

(6) If the magistrate on his own initiative reviews his decision or grants an application for a review, it shall be lawful for him upon the review to re-open and re-hear the case wholly or in part, and to take fresh evidence, and to reverse, vary or confirm his previous decision.

...

(9) No application for a review shall be granted and no exercise by a magistrate shall be made of the power conferred on him by subsection (5) subsequent to the commencement of proceedings by either party with a view to questioning the decision of the magistrate by way of appeal, mandamus or certiorari, unless such proceedings shall have been abandoned.

(10) For the purpose of determining the time within which an appeal whether by way of case stated under section 105 or under section 113 may be lodged, the determination of a case by way of review under this section or the refusal to grant a review shall, in the event of such determination or refusal and notwithstanding anything contained in the sections aforesaid, or in section 114 be the date as from which the respective periods for lodging an appeal shall run but nothing in this Ordinance shall authorize an appeal, whether by way of case stated or otherwise, from the refusal of a magistrate to grant a review.”

B. The proceedings before the magistrate

14.  On 5 August 2010, the respondent was convicted of insider dealing[2] before Mr Anthony Yuen, sitting at Eastern Magistracy.[3]  On 19 August 2010, he was sentenced to community service for 240 hours and ordered to pay HK$44,478 towards the prosecution’s costs.   

15.  The prosecution applied on 23 August 2010 for a review of the sentence under section 104.  Two days later, on 25 August, the respondent filed a notice of appeal against conviction.

16.  On 14 September 2010, the magistrate granted the application for review and substituted a sentence of 4 months’ imprisonment and a fine of $120,000.00, leaving the order for payment of the prosecution’s costs unchanged.  The profits made by the respondent were not large, amounting to $120,387.63. However, in substituting the sentence of imprisonment and the fine, the magistrate noted that the appellant had abused his position as a member of the team negotiating the take-over of a listed company on behalf of the seller; that he had dealt with the relevant shares on a number of occasions while the negotiations were on-going; and that he had shown little remorse for his conduct.  

17.  On the same day, 14 September, the respondent filed an amended notice of appeal against conviction and, a fortnight later, he also filed a notice of appeal against sentence.

C. The proceedings on appeal

18.  The appeals against conviction and sentence came before Macrae J who dismissed the appeal against conviction but allowed the appeal against sentence.  The sentence of imprisonment and the fine were set aside and the original orders for community service and the payment of costs reinstated.[4]

19.  The respondent’s success on his appeal against sentence rested on section 104(9) set out above.  The Judge was persuaded that since the appellant had filed a notice of appeal against conviction before the prosecution’s application for review was heard, section 104(9) had deprived the magistrate of jurisdiction to grant the application.

20.  Counsel then appearing for the prosecution had sought to argue that the magistrate’s powers under section 104 were unaffected because the filing of the amended notice of appeal on the day of the review hearing constituted abandonment of the original appeal.  That was rejected by Macrae J who held that the amendment did not entail any such abandonment. 

21.  The prosecution had also sought to argue that the combined effect of subsections (4) and (10) was to make it lawful for the magistrate to grant an application for review “at any time” – even after the subsequent filing of a notice of appeal – provided that the original application for review had been duly made.  That argument was also rejected, the Judge holding that:

“The language and meaning of the subsection [ie, section 104(9)] is clear: no magistrate can grant an application for review after either party has commenced proceedings to appeal his decision unless those proceedings are first abandoned.”

D. Leave to appeal

22.  Leave to appeal was sought by the prosecution on the basis of the following question:

“Does the proper institution of an appeal to a judge under the Magistrates Ordinance (Cap 227) against a decision of a magistrate, by operation of section 104(9) of the same Ordinance, preclude the same magistrate from exercising his powers, to which he would otherwise be so entitled, to review himself in respect of another decision not being the subject of the appeal in question.”

23.  It was a question which had not been canvassed before Macrae J but exceptionally, because of its practical significance, the Appeal Committee[5] decided to grant leave.

E. The issues on this appeal

24.  The argument made by Mr David Leung[6] on the prosecution’s behalf is simple:  The application it had made was for review of the magistrate’s decision as to sentence.  The appeal lodged by the respondent two days later was an appeal against conviction.  On its true construction, so the argument runs, section 104(9) places no impediment in the way of a review of the magistrate’s decision as to sentence which, at the relevant time, was not the subject of any appeal.

25.  At the core of the argument made on the respondent’s behalf by Mr Gerard McCoy SC,[7] is the submission that the magistrate must be taken to have made a single decision covering both conviction and sentence so that the appeal lodged against conviction triggered section 104(9) and deprived the magistrate of his review jurisdiction. 

26.  In oral submissions and in the printed case, the point was elaborated upon along the following lines:

“The magistrate, after convicting a defendant is not functus officio until he has decided upon the appropriate sentence to be passed. He, after he has convicted a defendant, will not have fully discharged his duty unless and until he has also handed down a sentence. In other words, his decision is incomplete unless and until he also decides on the issue of sentencing. There cannot be an appeal against conviction or a review of it, unless and until a sentence is imposed. Therefore, the words ‘the decision’ must be interpreted to refer to the decision on conviction and the decision on sentence collectively.”

27.  Based on his “single decision” premise, Mr McCoy contended that to permit the magistrate to proceed with a review of sentence after an appeal or application for judicial review had been instituted would result in confusing concurrent jurisdictions being exercised at different levels of court.

28.  Echoing a statement made by the Judge, Mr McCoy submitted that where review is excluded by operation of section 104(9), the Secretary for Justice ought, if at all, to seek a review of sentence under section 81A of the Criminal Procedure Ordinance.[8] “The very existence of this provision”, the respondent contends, “militates against the appellant’s argument.”

F.  The statutory scheme

29.  The purpose of section 104 has been considered by this Court on two occasions.   In each case, the Court has emphasised the utility of the review process as a speedy and simple means of correcting mistakes without incurring the time and expense of an appeal.  Thus, in Poon Chau Cheong v Secretary for Justice,[9] Lord Cooke of Thorndon NPJ noted:

“Mindful that mistakes can be made, the legislature in Hong Kong has provided a useful remedy of review within the summary jurisdiction.”

30.  And as Li CJ pointed out in Yeung Siu Keung v HKSAR:[10]

“The power of magistrates to review their decisions has been a feature of our criminal justice system since 1890. This power is a useful one and its uses include the correction of mistakes through a speedy and simple procedure. This is beneficial in obviating the need for an appeal with the time and expense involved.”

31.  The statutory intention is to facilitate this remedial process by giving the magistrate wide and flexible powers of review.  A liberal construction of section 104 is therefore adopted.  In Poon Chau Cheong, Lord Cooke stated:

“Section 104 does not prescribe or limit in any way either the grounds on which a review may be granted or the factors to be taken into account in the exercise of powers upon the review. The section, including the formula ‘reverse, vary or confirm his previous decision’, is manifestly a wide one enabling inter alia the relatively speedy and simple correction of mistakes. It should receive a correspondingly liberal construction to achieve its purpose.”[11]

32.  This was acknowledged by Li CJ in Yeung Siu Keung, where his Lordship noted:

“The purpose of s.104 is to confer on a magistrate the power to review his decision. As this Court has observed, the statutory provision is a wide one and should receive a liberal construction to achieve its purpose.”

33.  Section 104 provides for flexibility in both phases of the two-stage process, namely, the decision whether to grant or dismiss the application for review; and the decision as to what should be done upon the review.[12] Thus, a review may be granted at any time upon application duly made by one of the parties or undertaken by the magistrate on his own initiative,[13] the powers exercisable upon review are powers to re-open or rehear the case wholly or in part, to take fresh evidence and to reverse, vary or confirm his previous decision.[14]

34.  Construing the provisions liberally, the magistrate should not be deprived of such beneficial powers unless good reason is shown for so doing.

G.  The magistrate’s power to review his own decision

35.  I do not think that the respondent’s reasons for depriving the magistrate of his power to review the sentence are valid.  As noted above, such reasons are founded on the premise that the magistrate’s decision to convict and his decision on sentence must be regarded as a single, inseverable decision so that the notice of appeal filed prior to the review hearing triggered section 104(9)’s exclusion of the power of review.

36.  I can see no basis for that premise.  A magistrate’s decision that all the elements of the offence have been proved beyond reasonable doubt so as to justify convicting the defendant is self-evidently separate and distinct from his subsequent decision as to the appropriate sentence to impose.  Either decision may be, and often is, challenged on appeal without challenging the other. 

37.  There is nothing in the language of section 104 to compel the court to categorise them as a single decision.  On the contrary, the section gives the review process a wide ambit, making it applicable to a magistrate’s decision on “any matter” which he has power to determine in a summary way.[15]  The acknowledged object is to facilitate the speedy correction of mistakes made when deciding any such “matters”. 

38.  Mr McCoy urged the Court to decide that a magistrate has no jurisdiction to entertain an application for review before he has completed his duties and become functus in the case.  The point does not presently arise since the magistrate had in fact decided on both conviction and sentence before the lodging of the review application. It is therefore unnecessary and undesirable that we should decide that question.  However, I cannot in any event see its relevance.  The question being addressed is whether a magistrate who has reached a decision on both conviction and sentence can properly review his decision on sentence while there is pending an appeal against his decision on conviction.  When a magistrate becomes functus is not relevant to the answer.

39.  The purpose of section 104(9) is to avoid the duplication of proceedings.  Where one of the parties has already commenced proceedings to be pursued in a higher court by way of appeal, mandamus or certiorari in order to question the decision of the magistrate, to permit a subsequent review before the magistrate himself of that same decision would be of dubious value.  If the outcome of the review does not satisfy the appellant, he may be expected to proceed with the pending appeal or judicial review, making the magisterial review a wasteful and unproductive detour.  If the outcome of the review favours the appellant, it does not follow that the proceedings are at an end since the review decision is subject to possible appeal by the other party.[16] The virtues of the review procedure are therefore undermined where appeal or judicial review proceedings have already been commenced – but only if the application for review concerns the very decision which has been made the subject of challenge in a higher court.  The words “decision of the magistrate” in section 104(9) should be construed accordingly: “decision” in that section must be construed to refer back to the words “decision in the matter” in sections section 104(1) and (5); that is, the particular decision sought to be reviewed.

40.  Where, as in the present case, the pending appeal is against conviction, a review of the separate decision regarding sentence may be beneficial and might well not lead to an appeal.  There is no reason to treat the review of such decisions as falling within the mischief of section 104(9).  It is accordingly my view that the section was not engaged and that the magistrate had jurisdiction to review his earlier decision as to sentence and to substitute the sentences passed upon review.

H.  Abuse and section 81A

41.  Macrae J remarked that the construction of section 104(9) urged by the respondent may be thought to facilitate a tactic bordering on abuse of the process of appeal:

“It might seem strange, or even abusive of the court’s process, that a defendant can effectively prevent a magistrate from reviewing a decision such as sentence by simply putting in a notice of appeal; the more so if it is done as a matter of deliberate tactic (although I do not believe that happened here).”[17]

42.  However, his Lordship took comfort from the existence of section 81A of the Criminal Procedure Ordinance expressing the view that “the Secretary for Justice on behalf of the SFC could have (and should have) sought a review of the original sentence” under this section.   As noted above, the respondent submits that the very existence of section 81A militates against the appellant’s construction of section 104(9). 

43.  While I accept that section 81A is capable of being invoked by the Secretary for Justice in circumstances which include the situation where a review has been precluded by section 104(9), I am with respect unable to agree with two aspects of the points made in the present context.  In the first place, I do not consider that section 81A is or was intended as a suitable alternative to a section 104 review.  The existence of 81A therefore does not support the respondent’s construction of section 104(9).  Secondly, given the construction of section 104(9) adopted in this judgment, treating the magistrate’s decision on sentence as distinct from his decision on conviction for section 104(9) purposes, an attempt at abuse of the process by the means identified would not be effective.  I deal with each of these points in turn.

I.  Section 81A not a suitable alternative

44.  Section 81A relevantly provides:

“(1) The Secretary for Justice may, with the leave of the Court of Appeal, apply to the Court of Appeal for the review of any sentence (other than a sentence which is fixed by law) passed by any court, other than the Court of Appeal, on the grounds that the sentence is not authorized by law, is wrong in principle or is manifestly excessive or manifestly inadequate.

45.  To regard section 81A as a suitable alternative to the section 104 procedure is to suggest that in cases where section 104(9) applies, the prosecution should leap-frog the case to the level of the Court of Appeal.  However, that is a course which requires the leave of the Court of Appeal and leave is unlikely to be granted, or if granted, review will be refused, unless it can be shown that the sentence was not authorized by law, wrong in principle, manifestly excessive or manifestly inadequate.  Section 81A therefore operates in very different territory, setting the bar significantly higher than in a magistrate’s review and confining the grounds upon which the sentence can be challenged.  It is plainly intended for sentencing issues which merit the attention of the Court of Appeal and cannot be regarded as a practical alternative to the simple corrective device of a magistrate’s review of his own decision. 

46.  As the prosecution points out, the magistrate’s power of review has been on our statute books since 1890 whereas the Secretary’s power to refer a sentence for review by the Court of Appeal dates only from 1972.  The existence of the section 81A procedure is therefore no guide to the statutory intention underpinning section 104.

J.  Attempted abuse would not succeed

47.  As for the suggested potential for abuse, the scenario runs as follows:  A defendant, having been convicted and sentenced by the magistrate, is faced with the prosecution’s application for a review of sentence[18] and decides to trigger section 104(9) to prevent the magistrate from granting the application.  He therefore commences proceedings by way of appeal under section 113 of the Magistrates Ordinance.[19] 

48.  The tactic no longer works.  If the appeal is against conviction only, on the construction of section 104(9) adopted in this judgment, the pending appeal does not prevent a review of his sentence.  On the other hand, the magistrate’s power to review sentence is eliminated if the defendant lodges an appeal against sentence (whether or not accompanied by an appeal against conviction).  But that does not do him any good since the Judge on appeal has power under section 119(d) and (e) of the Magistrates Ordinance[20] to increase his sentence in dealing with his appeal against sentence.  If the sentence appeal is abandoned, the power of review revives by virtue of section 104(9).

Disposal of this appeal

49.  For the foregoing reasons, I would allow the prosecution’s appeal and set aside the Judge’s decision.  A question then arises as to sentence.  In the normal course, the magistrate’s sentence of four months’ imprisonment and a fine of $120,000.00 plus payment of the prosecution’s costs in the sum of $44,478 would be restored.  However, the respondent has performed the 240 hours of community service required by the Judge’s sentence.  To what extent should that be taken into account?

50.  The Judge’s views in this context are highly pertinent.  His Lordship noted that insider dealing is a serious criminal offence carrying a maximum sentence on indictment of 10 years’ imprisonment and a fine of $10 million or, on summary conviction, of three years’ imprisonment and a fine of $1 million.  He cited Sir Anthony Mason NPJ’s[21] description of insider dealing as an “insidious mischief” which threatens the integrity of financial markets as well as public and investor confidence and a “species of dishonest conduct”.  The courts recognize that insider dealing is a fraud on the public and, in a case like the present, that it also involves a breach of trust.[22] Against that background, his Lordship stated:

“In my judgment, the appropriate sentence for such an offence should, save in exceptional circumstances, be one of immediate imprisonment, coupled with a financial penalty, which at the very least removes a defendant’s unjust profits.”[23]

51.  In allowing the appeal, the Judge remarked that the respondent should consider himself extremely fortunate, adding:

“But for the conclusion to which I have come on the jurisdictional point, I would have upheld the sentence imposed upon review of four months’ imprisonment together with the fine of HK$120,000 as neither manifestly excessive nor wrong in principle. Indeed, I would have regarded six months’ imprisonment, which was the magistrate’s starting point upon review, before he discounted the sentence by two months because of the review, as a lenient sentence in the circumstances of this particular case. A CSO was a wholly inadequate response to the seriousness of the offence, as the magistrate himself belatedly recognized; whilst the failure to impose any fine whatsoever did not even deprive the appellant of his ill-gotten gains.”[24]

52.  I agree with Macrae J’s views as to the proper sentence.  However, as stated above, I do not agree that there was any want of jurisdiction since the “decision” as to conviction under appeal was not the “decision” as to sentence under review.  In the circumstances, it is in principle appropriate that the Judge’s sentence should be set aside and the custodial sentence plus the fine imposed upon review should be restored.  However, I would take account of the respondent’s performance of the community service by reducing that sentence of imprisonment by one month and would therefore substitute a sentence of three months’ imprisonment and a fine of $120,000.00 plus payment of the prosecution’s costs in the sum of $44,478.

Lord Collins of Mapesbury NPJ:

53.  I agree with the judgment of Mr Justice Ribeiro PJ.  There is nothing in section 104 to require the court to categorise conviction and sentence as a single decision.  The power of review in section 104 was enacted in 1890, at a time when the prosecution did not have a power to apply to the Court of Appeal for a review of sentence.  The section cannot be taken to have been intended to extend the prohibition of review in section 104(9) to sentencing decisions which are not themselves the subject of an appeal.

54.  As regards the substituted sentence, there is no unfairness to the respondent, who has known that since the day after he was sentenced to community service that the prosecution was seeking an increase; who has known that the magistrate on review thought that four months’ imprisonment was appropriate; and who has known that Macrae J considered that a community service order was a wholly inadequate response to the seriousness of the offence, and that 6 months’ imprisonment would have been a lenient sentence in the circumstances of the case.

Chief Justice Ma:

55.  Accordingly, the appeal is unanimously allowed in respect of the certified question.  As to the appropriate consequential order, this Court, by a majority of four to one, orders that the custodial sentence be restored but reduced from four months to a sentence of imprisonment for three months, that there be a fine of $120,000 and also payment of the prosecution's costs in the sum of $44,478.