HIS HONOUR JUDGE SWEENEY AND ANOTHER v. TSANG YUK KIU

IN THE COURT OF APPEAL

1995, No. 239
(Civil)

Headnote

Judicial review - District Court Judge had refused an application to stay criminal proceedings on the ground of delay - District Judge's order was quashed on certiorari by High Court Judge on judicial review.

Held (Court of Appeal): The District Judge was entitled to refuse the application for stay on the material before him; the High Court Judge erred in the exercise of his jurisdiction under Order 53 of the Rules of the Supreme Court.

Observations by Court of Appeal on prolixity of the Form 86A notice and on the extent of the High Court's powers in entertaining an application for certiorari.

IN THE COURT OF APPEAL

1995, No. 239
(Civil)

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J U D G M E N T

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Litton, V.-P. (giving the judgment of the Court):

Introduction

1. On 6 March 1995 Mr Tsang Yuk Kiu, the respondent to this appeal, was charged in the District Court with obtaining property by deception, contrary to s17(1) of the Theft Ordinance. The case is entitled Case No. DCC 218 of 1995. The particulars of the charge are as follows:

"Particulars of offence:-

TSANG Yuk-kiu, you are charged that on the 13th day of December, 1988, you dishonestly enabled Jade Lion Investment Limited to obtain from Asia Wide Properties Limited 600 shares in Transworld Properties Limited with the intention of permanently depriving the said Asia Wide Properties Limited thereof by deception, namely by falsely representing:-

(a) that the said Jade Lion Investment Limited was a company in which the said TSANG Yuk-kiu had no interest;

(b) that the purchaser of the said shares was a company which was a mainland Chinese company which already had an interest in premises at Bulkely Street, Kowloon; and

(c) that the sum of $4.8 million Hong Kong dollars was the highest price that could be obtained for the sale of properties owned by Transworld Properties Limited situated at 95 and 97 Bulkely Street, Kowloon."

2. The respondent then applied to the District Court for an order to stay the proceedings permanently on the ground that the continued prosecution of the charge against him would be an abuse of the court's process. There were two broad grounds for the application: (1) That the prosecution was tainted by the ulterior motives of the complainants and (2) that the complaint was so stale that the continuation of the prosecution would inevitably lead to an unfair trial and a miscarriage of justice.

3. This application was heard by His Honour Judge Sweeney who, by his ruling dated 1 July 1995, dismissed the application and refused the stay.

4. On 14 July 1995 the respondent applied under Order 53 r3 of the Rules of the Supreme Court for leave to judicially review Judge Sweeney's ruling. The Form 86A notice filed with the application made it clear that the challenge to Judge Sweeney's ruling was on the ground that the respondent would not receive a fair trial "by reason of prejudice resulting from undue and unjustifiable delay on the part of the complainants": not on the further ground, as originally averred, that the prosecution was tainted by ulterior motives.

5. The particulars set out in the Form 86A notice amounted to 33 paragraphs and subparagraphs. On 20 July 1995 Saied J on Mr Tsang's ex parte application gave him leave to apply for judicial review and pursuant to the powers conferred by Order 53 r3(10) directed that the criminal proceedings be stayed pending the substantive application for judicial review.

6. This was eventually heard by Patrick Chan J who, by his judgment dated 6 November 1995, quashed the District Judge's decision and he then went on to order that the criminal proceedings be permanently stayed.

7. The Attorney General being dissatisfied with Patrick Chan, J.'s order now appeals to this court.

Order 53 proceedings

8. We would make at the outset a point which should not need mentioning: that Order 53 proceedings are in no way an appeal from the decision of the court, tribunal or authority concerned. What the respondent here obtained leave to do was to seek an order of certiorari to quash Judge Sweeney's ruling. That was all that was sought in the application and all that Saied J, granting leave on 20 July, allowed the respondent to do. In this regard s21K(5) of the Supreme Court Ordinance is relevant. It says:

"(5) If, on an application for judicial review seeking an order of certiorari, the High Court quashes the decision to which the application relates, the High Court may remit the matter to the court, tribunal or authority concerned, with the direction to reconsider it and reach a decision in accordance with the findings of the High Court."

9. In entertaining the application for judicial review, it was no part of Patrick Chan J's function to substitute his opinion for that of the District Judge. It was Judge Sweeney, and he alone, who was charged with the responsibility of ensuring that the criminal process in the District Court was not abused by the prosecution. It would only be in situations where, for instance, the District Judge had exceeded his jurisdiction or there was an error of law on the face of the record or his decision was Wednesbury unreasonable that the High Court could intervene.

The factual foundation for Judge Sweeney's ruling

10. As stated in Judge Sweeney's written decision (numbering 31 pages) the history of the matter goes back to a joint-venture formed by three persons: a Mr Tsang Kwong Fun (K.F. Tsang), his relative an Indonesian-born Chinese called Lucas Sasmito and the respondent. The joint-venture vehicle was a company called Asia Wide Investment Limited in which Sasmito owned 85% of the shares, K.F. Tsang 5% and the respondent 10%. Through this company the partners embarked upon a large number of real estate ventures. Sasmito being the majority shareholder made the final decisions on tenders and prices and on the types of development. He lived however in Indonesia and as K.F. Tsang did not read English it was the respondent who was in effect the executive director in charge of the business of the joint-venture. K.F. Tsang's role seems to have been confined to keeping the accounts.

11. As part of the joint-venture Asia Wide Investment Limited acquired a 60% interest in a company called Trans-World Properties Ltd., the other 40% being owned by the respondent beneficially through a company called Wellgan Investment Ltd. In March 1988 Trans-World bought No. 97 Bulkely Street, Hunghom for $2.05m and in May 1988 it bought the next door property No. 95 for the same price. Thus, it owned Nos. 95-97 Bulkely Street for a total of $4.1m. Trans-World's only asset was Nos. 95-97 Bulkely Street.

12. The following undisputed matters then occurred:

(i) On 16 September 1988 Asia Wide and Wellgan entered into an agreement to sell their shares in Trans-World for $4.8m. The purchaser of the shares was a company called Jade Lion Investment Limited. The transaction was completed on 13 December 1988 (the date named in the charge).

(ii) On 21 April 1989 Trans-World, now wholly-owned by Jade Lion, sold Nos. 95-97 Bulkely Street to China Heart Investments Ltd., a company owned by mainland-Chinese interests, for $9.4m.

13. Accordingly, Jade Lion made a gain of $4.6m, in effect doubling its outlay of $4.8m within a few months. At the time Jade Lion bought the shares in Trans-world its shareholders (holding shares with a nominal value of $1 each) were two nominee companies, and its directors were Tsang Yuk Yin, the respondent's brother and Wong Yuk Wah, Tsang Yuk Yin's wife. The shares in Jade Lion were in fact held in trust for the respondent beneficially and Tsang Yuk Yin and his wife were, in effect, nominee directors, having been so appointed about three weeks before Jade Lion acquired the shares in Trans-world.

14. It was the respondent who, as the executive director of Asia Wide, caused Asia Wide to enter into the transaction of 16 September 1988 (completed on 13 December 1988) which eventually enabled his own company Jade Lion to make a very substantial gain by the sale of Nos. 95-97 Bulkely Street.

15. Judge Sweeney was unable to say, from the material before him, when Sasmito and K.F. Tsang (the two complainants) became aware of (1) the true beneficial owner of Jade Lion and (2) the amount of profit it made on the re-sale.

16. However, on 3 September 1990 the complainants' solicitors Messrs Philip K.H. Wong & Co. wrote to Messrs Baker & McKenzie the respondent's solicitors, a letter as follows:

"We are instructed that our clients (the complainants) were at all material times passive investors in Asia Wide and Asia Wide's daily management was the responsibility of Mr Tsang Yuk Kiu [the respondent], its Executive Director, at all material times. Therefore our clients have only agreed that Asia Wide should sell its shareholdings in Trans-World at the said consideration based on recommendations by your client, Mr Tsang Yuk Kiu. We are further instructed that our clients have recently found out that Jade Lion was all material times controlled by Messrs Tsang Yuk Yin and Wong Yuk Wah, who were apparently husband and wife and Mr Tsang Yuk Yin is a brother of your client Mr Tsang Yuk Kiu. Furthermore, our clients also found out from the search at the Land Office that Trans-world sold the said premises to a third party at the total consideration of HK$9.4 million on 21st April 1989 which was the date of the agreement and such transaction was completed on 20th May 1989.

Our clients therefore wish to put on record the following:-

1. They were at all material times relying on your client's advice and recommendation in reaching their decision to cause Asia Wide to sell its shares in Trans-World at the said consideration;

2. It is apparent that the said consideration for Asia Wide's share in Trans-World was below market value;

3. At all material times, our clients were not aware that Jade Lion, which purchased Asia Wide's shares in Trans-World was controlled by your client's brother and his family member.

By virtue of the aforesaid, our clients would like to reserve all their rights hereunder and in particular our client's rights to claim against your client, Mr Tsang Yuk Kiu, for damages suffered by virtue of his breach of fiduciary duty as an Executive Director of Asia Wide."

17. In their reply dated 7 September 1990 Messrs Baker & McKenzie on behalf of the respondent said as follows:

"We have instructions to comment as follows:

1. In mid 1988, one of your clients, Mr Tsang Kwong Fun informed our client, Mr Tsang Yuk Kiu, that Mr Lucas Sasmito (also one of your clients) had no more interest in waiting for the merger of the adjoining buildings of the Property and decided to sell the shares in Trans-World Property Ltd. 'the shares').

2. Afterwards, our clients found Jade Lion Investment Ltd. ('Jade Lion') which offered to purchase the shares at $4.8 million. At that time, Mr Tsang Kwong Fun had informed Mr Tsang Yuk Kiu that he had consulted some property surveyors and agents who advised that the offer from Jade Lion was fair by comparison with market values then prevailing. Moreover, Mr Tsang Kwong Fun informed Mr Tsang Yuk Kiu that Mr Sasmito was satisfied with the price and agreed to proceed with the sale without further delay.

3. The increase in the purchase price of the property subsequent to the sale of the shares was due to the fact that the subsequent sale was effectuated by another developer who had acquired the large buildings adjoining to the property. This happened almost six months after the sale of shares from our respective clients to Jade Lion.

Due to the difference in time and the circumstances relating to the sale of the shares from our respective clients to Jade Lion and the subsequent sale of the property by Jade Lion to its purchaser, our clients considered that the difference in purchase prices in the two sales is fully explicable.

4. Lastly, we are instructed that at all material times during the negotiation of the sale and purchase of the shares, Mr Tsang Kwong Fun was fully aware that Mr and Mr Tsang Yuk Yin were the Directors of Jade Lion.

Our clients are surprised to receive your letter which put forward allegations which, in our clients' opinion, are totally unfounded."

18. It would appear from the terms of the letter of 3 September 1990 that, as at that date, the complainants did not realise that Jade Lion was beneficially owned by the respondent and that Tsang Yuk Yin and Wong Yuk Wah were mere nominees. The reply of 7 September 1990 did nothing to dispel that ignorance. In paragraph 2 of the letter of 7 September 1990 the solicitors said: "Our clients found Jade Lion ... which offered to purchase the shares at $4.8m." More accurately they might have said: "Our client decided to use his own company Jade Lion to purchase the shares at $4.8m." What is clear is that, even at this point, the respondent was not prepared to make a full and frank disclosure to his partners that it was he himself who had bought Asia Wide's 60% share in Trans-World through Jade Lion, and he alone enjoyed the profit on re-sale.

19. As can be seen from the letter of 3 September 1990 what the complainants were saying was this: they relied on the respondent's "advice and recommendation in reaching their decision to cause Asia Wide to sell its shares in Trans-World". What such advice and recommendation amounted to was not spelt out: on its face, this is not inconsistent with the allegation of false representations as particularised in the criminal charge.

20. It appears from Judge Sweeney's written decision that, after the solicitors were instructed, private investigators Messrs John Picken & Co. were asked to inquire into the matter. Their report was made on 2 August 1993; counsel's advice was then obtained and on 24 April 1994 Mr K.F. Tsang made a report to the police.

21. This then led to the charge in the magistracy on 6 March 1995 when the case was immediately transferred to the District Court.

Delay

22. There is no doubt that on the material before the court there has been some delay on the part of the complainants in reporting the matter to the police; but not nearly as grave as counsel Mr Huggins QC has submitted; nor is it clear from the material before us that the delay can be attributed wholly to the complainants. There were other persons involved: such as solicitors, counsel and the investigators. By September 1990, as can be seen from the letter of 3 September, there was enough suspicion in the air for Messrs Philip K.H. Wong & Co. to have written their letter of that date. But, on the face of it, they did not then know that it was the respondent himself who had bought the shares through Jade Lion. Even on 28 April 1994, when K.F. Tsang made his report to the police, the complaint was that Jade Lion was "held" by the respondent's brother and sister-in-law: not that it was owned by the respondent. It was apparently not until the police had executed search warrants that declarations of trust, evidencing the respondent's beneficial ownership of Jade Lion, were revealed.

23. Whilst, on 28 April 1994, K.F. Tsang did not allege that the respondent's beneficial ownership of Jade Lion was disguised by nominee shareholdings, he did advert to one matter which, arguably, could be said to evidence the respondent's dishonest intent: there was mention in Mr K.F. Tsang's statement of a cheque for $24,000 purportedly issued as commission to the broker who negotiated the sale of 95-97 Bulkely Street in September 1988, which had found its way into the respondent's own bank account. It is not clear on the material before the court when K.F. Tsang first learnt of this.

24. Mr Sasmito, in his statement dated 13 May 1994, said this:

"7. In 1991, after discovering TSANG Yuk-kiu's means, I thought to make a report to police. After discussing with TSANG Kwong-fun, (I) made no report to police. It was because we might have chance to meet again. As our relationship was very poor at the later stage, (we) couldn't co-operate to do business in the company. In addition, the private investigators who had been hired by us handed us particulars after making inquiries. Having discussed the particulars with TSANG Kwong-fun, I made a report to Commercial Crime Bureau."

25. The District Judge, in dealing with the application for stay, quite properly accepted that there was some delay on the part of the complainants in reporting the matter to the police. This was dealt with fully in his written decision. At p16 he said:

" Whilst I am in no position to assess if the Applicant did anything illegal in 1988 in relation to this property I can say that the unusual way he acquired this property and the way in which he managed to sell it on for twice the price within six months must have registered in his memory as a unique venture, an unforgettable 'killing' on the property market. Given that fact and that this was not 'a swiftly moving event passing before his eyes years ago' I would expect that the Applicant would have retained clear recollections of these events up to September 1990. I believe he would then have activated his memories to his solicitors in answer to the civil accusation. I believe that that very accusation would have offended him to the extent that he would have kept the facts fresh in his mind thereafter and that, even if there were no 'Baker and McKenzie' file to refresh himself with, he would still have recalled the events by June 1994 when Commercial Crimes Bureau first put this into a criminal accusation against him."

26. As to whether it had been established on the material before him that the respondent would not, through the passage of time, have a fair trial, the District Judge said this at p26 of his decision:

" This brings me to what I see as the cure for all the ills that Mr Huggins complains of:-

The ability of the Trial Judge to ensure a fair trial. 'The Trial Judge has wide power at Common Law to regulate the admissibility of evidence. The trial process itself should ensure that all relevant factual issues arising from delay would be before the Court for its consideration and the Judge's ability to direct his mind to how the question of delay affects the issues he has to decide'.

See A.G.'s reference (No. 1 of 1990) [1992] 1 Q.B. 630 at 644 [paraphrased to cover the situation of a Judge sitting without a Jury]."

27. And as regards the exercise of his discretion generally the District Judge referred to the judgment of this Court, approved by the Privy Council in George Tan v. Judge Cameron [1992] 2 AC 205 at 223 to this effect:

"Stays imposed on the grounds of delay or for any other reason should only be employed in exceptional circumstances. If they were to become a matter of routine, it would be only a short time before the public, understandably, viewed the process with suspicion and mistrust.... In principle, therefore, even where the delay can be said to be unjustifiable, the imposition of a permanent stay should be the exception rather than the rule. Still more rare should be cases where a stay can properly be imposed in the absence of any fault on the part of the complainant or prosecution."

28. Having read and re-read Judge Sweeney's decision with care, we are unable to detect any flaw in his decision-making process which would have led us to take the view that he had exceeded his jurisdiction or acted in such a way as to render his ruling in refusing a stay unsustainable in law. And if the decision to grant or refuse a stay in the circumstances of this case had been ours, we would in all probability have reached the same conclusion as he did.

29. How, then, did Patrick Chan J come to issue the order of certiorari and quashed the District Judge's decision?

The application for judicial review

30. The application for judicial review, in Form 86A, with its 33 grounds, is an astonishing document. It subjected Judge Sweeney's written decision to a microscopic examination, in places almost line by line: worthy of a scholar of the Dead Sea Scrolls but wholly inappropriate as grounds for an application for an order of certiorari.

31. Take for instance paras 5, 6(a) and (b):

"5. The learned judge erred in holding that 'the unusual way in which he acquired this property and the way he managed to sell it on for twice the price within 6 months must have registered in his memory as a unique venture, an unforgettable "killing" on the property market' [Judgment p.16 Q-17A], and that 'Even by Hong Kong standards that was an exceptional gain, especially in the fairly calm property market that prevailed in 1988/89.' [Judgment p.6 J-L]

There was no evidential foundation for any finding that this was a 'unique venture' nor that the property market was 'fairly calm' at that time, and no evidential foundation for the finding that the Applicant must therefore be in a position now to recall conversations he had had with the Complainants in 1988 during which it is alleged now that he made specific and deceitful misrepresentations of fact.

6(a) The learned judge failed to appreciate the important distinction between cases in which the Prosecution's case is based (or primarily based) on documentary evidence on the one hand and cases in which the prosecution case is dependent (or primarily dependent) on individual recollections on the other. He concluded that since this was not a case involving the need to recall 'a swiftly moving event', and that therefore he would expect the Applicant to have had a clear recollection of the incidents on the 3rd September 1990 and to have instructed his solicitors then to prepare a defence.

Judgment p.15 E-K & 17B-D

(b) He failed completely to appreciate the fact that the Crown's case depends entirely on vague and unreliable individual recollections of oral conversations many years ago (which conversations were never recorded in any shape or form in any contemporary documentation), and on allegations which are manifestly inconsistent with such contemporary documentation as is now available."

32. How such matters can properly be investigated in the context of an Order 53 application, and how, even if established, they could be the foundation for relief by way of certiorari is difficult to comprehend. Even as grounds of appeal, seeking to challenge the decision upon its merits, these would probably have been otiose.

The hearing of the application for judicial review

33. The judge, in entertaining the application for judicial review, ought never to have played to counsel's tune. But, unfortunately, he did: and in the process he slipped into an appellate "mode", without perhaps fully realising its implications. He was led to speculate as to how the trial might have proceeded, had it taken place much earlier. Whilst acknowledging that the "key witnesses" were undoubtedly the two complainants and the respondent, the judge was nevertheless led to speculate on the possible consequences of some of the "peripheral" witnesses losing their memory or being unavailable, and on documents having been lost through the lapse of time.

34. An example was the Hong Kong Telecom records. It was said that if such records were available they would have pin-pointed the date or dates when the respondent spoke to Mr Sasmito in Indonesia. How that is relevant escapes us. What the Hong Kong Telecom records would not have shown was what the respondent said: Was it, as Mr Sasmito alleges, to the effect that No. 93 Bulkely Street had been bought by a mainland-Chinese company and that as Nos. 95-97 alone had no development potential, the price offered by the owner of No. 93 - $4.8m - was a good offer? The Hong Kong Telecom record could not possibly have assisted in the resolution of that issue.

35. Take another example: The payment of $24,000 allegedly as commission, the cheque for which, according to the prosecution case, found its way into the respondent's bank account. It was a cash cheque. There is prosecution evidence to the effect that in April 1990 the auditors of Asia Wide asked who the payee was and a Miss Thong, a company employee got the information from a Miss Chung, the accounts clerk, to the effect that the payee was a person called Tsang Ying: information, it is said, derived from the respondent - the implication being that he was not prepared to reveal his true identity. Miss Chung has emigrated to New Zealand. This is said by counsel, somehow, to have grievously prejudiced the respondent's case. This point wholly escapes us. If anyone is prejudiced by Miss Chung's absence, it would be the prosecution: for without Miss Chung's evidence the suggestion that it was the respondent who had supplied the false name Tsang Ying (if it be false) is simply not established.

36. It would be undesirable for us to go any more closely into the material which the judge examined so minutely. We would simply recall what Griffiths, L.J. said in R. v. Chief Registrar of Friendly Societies [1984] QB 227 at 260, as cited with approval by the Privy Council in Tan v. Cameron at p222-B as follows:

"The court must take a broad view of the decision and not allow itself to be bogged down in minutiae, or led into the error of taking over the role of a fact finding tribunal ... particular care must be taken before stigmatising a decision as one at which no reasonable person could have arrived, for this is coming dangerously close to the court substituting its own discretion for that of the tribunal."

37. The main point in this appeal is simply this: By the stage the judge embarked upon his microscopic examination of the material before him, he had apparently lost sight of the main thrust of the proceedings by way of judicial review and had launched forth in effect upon a re-hearing of the material before the District Judge. Such examination, by its very nature, must be based upon suppositions and hypotheses: assuming the prosecution evidence to be led in a particular way, then it might be countered by the defence in a different way. It is no wonder that the District Judge did not allow himself to be drawn into this exercise: an approach wrongly criticised by Patrick Chan J at p45 of his judgment where he said:

" The cursory way in which the District Judge dealt with the points on prejudice raised by the applicant in the passage I have quoted above suggested that he had not appreciated the nature of the case against the applicant and the importance of these other documents and evidence to the defence."

38. Regrettably, the judge himself erred in his approach: drawn as he was into a microscopic examination of the material before him by the way the formal notice of application was framed.

Conclusion

39. The error in the judge's approach is perhaps best illustrated by the concluding remarks at p47 of his judgment:

" I am also satisfied that the applicant has made out a case that there was undue delay by the complainants, that there was no satisfactory explanation for such delay, that he has suffered and will suffer prejudice at the trial such that there is a real risk that he may not be able to have a fair trial. I do not think in the circumstances of this case the applicant should be asked to go through a lengthy and expensive trial. This case falls within the category of exceptional circumstances so that the court should exercise its discretion and intervene. For the reasons I have given, I would quash the decision of the District Judge and grant a permanent stay of the proceedings."

40. The judge had plainly overlooked this cardinal point: that his supervisory jurisdiction by way of judicial review did not go so far as to enable him to usurp the functions of the District Judge. His was not an appellate jurisdiction. He had no power to grant a permanent stay.

41. Before concluding this judgment we should mention this fact: that there is before us a "summons" by the appellant to the effect that this appeal should be treated as an appeal in the criminal jurisdiction of this court, the heading to the proceedings being wrongly entitled Civil Appeal No. 239 of 1995. In so far as the point is taken as a point in the appeal it must be right. How the title should be formally corrected is not a matter with which we need to concern ourselves.

42. Our conclusion is that this appeal must be allowed. The judge's order of 6 November 1995 must be quashed with the result that Judge Sweeney's decision of 1 July 1995 is restored. The respondent will pay the costs here and below.