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DCCC1065/2021
[2023] HKDC 1616
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CRIMINAL CASE NO 1065 OF 2021
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HKSAR |
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LEUNG WING KEUNG ALBERT (D1) |
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| Before: |
Deputy District Judge Ada Yim in Court |
| Present: |
Mr. Sean Wai Sum Eddie, Counsel on Fiat, for HKSAR/ Director of Public Prosecutions |
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Mr. YEUNG Yat Hung, Alan, Public Prosecutor, for HKSAR/ Director of Public Prosecutions |
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Miss CHEUK Lung Sang, Janice, Senior Public Prosecutor, for HKSAR/ Director of Public Prosecutions |
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Mr. CHAN Derek, S.C. (Senior Counsel), instructed by Oldham, Li & Nie, for the 1st Defendant’s |
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Ms. CHAN Ferrida, instructed by Oldham, Li & Nie, for the 1st Defendant’s |
| Offence: |
[1] Conspiracy to defraud |
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[2] Fraud |
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RULING
APPLICATION FOR STAY OF PROCESSINGS
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1. This is the 1st Defendant’s Application for Stay of Proceeding for an order that the present proceeding be permanently stayed on the ground that a fair trial is impossible and continuing the prosecution would amount to an abuse of process. A fair trial is not possible because he is unable to adduce privileged communications covered by legal processional privilege (“LPP”) in support of his defence as to his state of mind or his involvement or otherwise in the internal Jacobs China Limited (“JCL”) decision making process not to report the Simulated Tests Irregularity to Civil Engineering and Development Department of the HKSAR (“CEDD”).
THE CHARGE
2. D1 is jointly charged with D2 one count of “Conspiracy to Defraud ” , contrary to Common Law and punishable under section 159C(6) of the Crimes Ordinance Cap.200, that they conspired together to defraud officers of CEDD by dishonestly, concealing or failing to disclose “the Simulated Tests Irregularity”, thereby causing the said officers of the CEDD to have failed to discharge their duty of providing reliable, efficient and effective construction materials compliant testing services for public work projects in Hong Kong.
3. They also jointly faced an alternative charge of “Fraud”, contrary to section 16A of the Theft Ordinance, Cap.210, that they by deceit, namely by deliberately concealing “the Simulated Tests Irregularity”, and with intent to defraud, induced staff members of CEDD to release payment to JCL, which resulted in benefit to the said JCL and prejudice to the CEDD.
4. It is D1’s case that he and JCL had knowledge of “the Simulated Tests Irregularity” and relying the legal advice from both JCL in-house counsel and external counsel, he was not acting dishonest in failing to disclose “the Simulated Tests Irregularity” and he was in the belief that he was not under a duty to disclose.
5. Mr Derek Chan SC represented D1 submits that the main issue in the Application is whether D1’s conduct of the defence against the allegation that, inter alia, whether D1 was involved in the decision making process whether to report; whether D1 was dishonest applying the Gosh Test (in the Amended Charge); or whether D1 had an intention to practice deceit, i.e. whether he believed there was no duty of disclosure in respect of the Simulated Tests Irregularity (in the alternative Charge) in the present proceeding is prejudiced to an extent that a fair trial is impossible because of the JCL’s LPP claims.
6. Mr Eddie Sean, counsel-on-fiat represented the Prosecution opposes the application on the basis that D1 would still be able to conduct his defence properly in the absence of the LPP communications.
THE LAW
7. The jurisdiction to stay criminal proceedings has been considered by the Court of Final Appeal in HKSAR v Lee Ming Tee & Another [2001] 4 HKCFAR 133, at pg. 148 – 150:
“The decision whether or not to bring a prosecution falls entirely within the province of the Secretary for Justice: Basic Law art.63. In general, if a prosecution is brought, the court’s duty is to try the case.
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The trial of course proceeds in the vast majority of cases. However, the court also unquestionably has jurisdiction to stay criminal proceedings brought by the Secretary in the exceptional cases where such a course is justified. That jurisdiction rests on the court’s inherent power to prevent abuse of its own process.
In most such cases, the court only grants the stay because, notwithstanding the range of remedial measures available at the trial, a fair trial for the accused is found to be impossible and continuing the prosecution would amount to an abuse of process.
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A second line of stay cases …. proceeds on a different basis. These are the rare cases where the court is prepared to grant a permanent stay even though a fair trial undoubtedly remains possible. (But) the Court granted a stay because the circumstances involved an abuse of power which so offended the Court’s sense of justice and propriety that the entire prosecution was tainted as an abuse of process.
While the jurisdiction on this dual basis clearly exists, it is only most sparingly exercised. There are cogent reasons why in principle and in practice such stays are highly exceptional.
In the first place, it is only in very unusual circumstances that a court can properly be satisfied that a fair trial is “impossible”. The “fairness” achievable is judged in practical and not absolute terms.
More importantly, the court’s primary endeavour is to ensure that a fair trial takes place, employing the law’s available resources, and not to abort it on the ground that fairness cannot be attained, save as a last resort.”
8. D1’s application is based on the first limb. It is agreed that the burden of proof lies on D1 and the standard of proof is on the balance of probabilities. D1 must show he will suffer serious prejudice to the extent that a fair trial has become “impossible”.
BACKGROUND
9. Jacobs Engineering Group Inc. (“JEG”) was (and still is) one of the top multinational engineering companies in the world. JCL was incorporated in Hong Kong in 1995 and was (and still is) only a subsidiary within the JEG group of companies for its business and operation in Hong Kong.
10. Between 2012 and 2017, CEDD established a Public Works Regional Laboratories at Siu Ho Wan (“the Lab”) for the Test for the Hong Kong-Zhuhai-Macao Bridge Local Project (“the Project”). In March 2012, CEDD entered into a Consultancy Agreement (“the Agreement”) with JCL for outsourcing the management and operation of the Lab to JCL covering the period between 1 June 2012 and 30 June 2016. On 7 March 2016, the Agreement was extended to the effect that the Lab would be closed on 31 March 2017.
11. At the material time, D1 was the Director of Operations of JCL, and D2 was the Divisional Director and Head of geotechnical engineering team of JCL. CEDD paid JCL in accordance with the Agreement.
12. On 26 July 2016, the Time Manipulation Irregularity was discovered. Through a meeting on 27 July 2016 and a letter dated 28 July 2016, CEDD asked JCL to conduct an internal investigation into the Time Manipulation Irregularity and to submit an investigation report including proposed measures of preventing the recurrence of the Time Manipulation Irregularity in the future.
13. During the investigation of the Time Manipulation Irregularity, the Simulated Tests Irregularity was discovered. But JCL, D1 or D2 did not disclose the Simulated Tests Irregularity to CEDD. Without knowledge of the Simulated Tests Irregularity, CEDD released payment to JCL accordingly. CEDD was later informed by ICAC of the existence of the Simulated Tests Irregularity on 18 May 2017.
14. By a letter dated 15 June 2017, JCL represented to CEDD that the decision for not to disclose the internal investigation on Simulated Tests Irregularity was made by relying on legal advice and its technical assessment from a structural engineering perspective.
15. On 15 May 2017, D1’s personal computer, work diary and various documents were seized from his residence with search warrant executed. Upon D1 and D2’s arrest by ICAC on 16 May 2017, their work computers together with electronic copies and hardcopies of various documents were seized from JCL with search warrant executed. Later on various dates in November 2018, additional electronic copies and hard copies of various documents were seized from JCL.
16. JCL raised their LPP claims over documents seized. Parties agreed to submit the issue for determination by independent counsel. The determination was concluded by 12 April 2022, 256 items were determined to be covered by LPP and no party has sought to challenge that determination.
Legal professional privilege LPP
17. Mr Chan SC submits that with the voluminous exchange between JCL and his legal advisers a strong inference could be drawn that:
(1) JCL in-house lawyers and external lawyers were heavily involved in the investigation process as soon as a serious integrity issue was raised by the CEDD on or around 28 July 2016;
(2) During the period of the investigation process, staff were interviewed and some staff reported doing the Simulated Testing. It would appear that the Simulated Tests Irregularity was far smaller in scale than the Time Manipulated Irregularity issue;
(3) Proper documentation of the interviews with the staff of the falsified tests was kept by those involved in the investigation;
(4) Internal reports were constantly prepared by the investigation team; Mr Emery, an internal auditor, flew in from Australia to conduct this investigation. Proper documented internal reports were provided to lawyers.
(5) JCL in-house lawyers and external lawyers were heavily involved in the preparation, actual drafting, revising, and/or commenting on the 1st Report of Investigation and the Final Report of the Investigation;
(6) A draft in D1’s computer contained a reference to Simulated Test, which indicated D1 had knowledge of the matter.
(7) During the investigation period there was constant communication with lawyers, in-house and external.
(8) The topic of Simulated Tests must have come up in the discussion with the lawyers. The issue would have been thoroughly and carefully considered, advice was sought and given as to whether it needed to be disclosed.
(9) Having relied on legal advice from both in-house counsel of JCL and external lawyers, JCL limited their response to those issues raised by the CEDD and therefore only addressed the Time Manipulation Irregularity. JCL did not include reference to the Simulated Tests Irregularity on the basis of the legal advice received.
18. D1 gave evidence to support his application. According to his evidence, no one in JCL had any intent to deceive CEDD. The final decision not to disclose to CEDD was not made by him, though he was involved in the process. He was present during some of the discussions with lawyers, he understood the reasoning of the legal advice and he was told the decision not to disclose was based on legal advice received. His input was not sought when JCL issued the letter dated 15 June 2017 to CEDD. He is not able to explain matters related to the charges against him thoroughly without referring to the LPP materials.
19. Mr Chan SC submits that given the absolute nature of LPP, D1 is deprived of the ability to adduce in evidence the privileged communications in support of his defence as to his state of mind or his involvement or otherwise in the internal JCL decision making process not to report the Simulated Tests Irregularity to CEDD, unless JCL waives the privilege. Since JCL had already expressly stated to D1 that it would continue to maintain the LPP claims, D1 is unable to show that in relying on the legal advice, no one at JCL (including D1 himself) was dishonest in relation to the Amended Charge and no one in JCL (including D1 himself) at all times failed to act in good faith or had intention to deceive anyone, which goes to D1’s state of mind in relation to the Alternative Charge.
20. Mr Sean agrees that where LPP exists and is not waived or abrogated, it is absolute and is not subject to balancing exercise of weight competing public interests against each other. And LPP covers communications and documents between a client or his lawyer and third parties which were created for the dominant purpose of gathering evidence in obtaining legal advice.
21. However, Mr Sean does not agree a fair trial is impossible. Mr Sean submits that the conclusion of the legal advice was never known to the prosecution. Hence, the Prosecution would have no clue as to whether such materials would assist the defence or would strengthen the Prosecution case. As such, whether the absence of such materials would deprive D1 a fair trial cannot be determined solely based on D1’s allegation.
22. Mr Sean also submits that the LPP materials could not assist D1 to establish his innocence or materially assisted his defence. The Defence has mixed up the LPP communications with facts leading to the decision making process of not reporting the Simulated Tests Irregularity to CEDD. JCL by letter dated 15 June 2017 represented that the decision for not to disclose was made by relying on legal advice and its technical assessment from a structural engineering perspective. In short, D1 is still able to adduce evidence on JCL’s technical assessment result in his defence. And D1’s belief, state of mind and opinion are facts which are not covered by LPP.
23. Mr Chan SC agrees with Mr Sean that the LPP materials must have covered the discussions and exchanges amongst JCL’s internal legal counsel, external legal advisors and various senior personnel including D1, before the legal advice was rendered by Pinsent Mason, the external advisor. It must be the case that JCL’s legal advisors would have perused all the relevant documents and taken into account the views of JCL’s senior management personnel before rendering the legal advice.
24. Mr Chan SC also agrees with Mr Sean that from the descriptions of the documents, these were likely no more than instructions and documents provided to legal advisors for the purpose of rendering the legal advice as well as discussions in relation to the Simulated Tests Irregularity amongst the parties. In this case, even if D1 was not involved in the drafting of the letter to CEDD dated 15 June 2017, he would have knowledge of the technical assessment concerned.
25. Mr Chan SC, however, submits that the circumstance of the present case is very unusual, D1 is able to explain the technical assessment, but this is only part of the matter, he would not be able to explain the whole matter thoroughly without the LPP materials. The legal advice was sought in the period concerned as stated in the charges, D1 was involved and had first-hand knowledge of the legal advice which directly influenced his mind yet he is not able to rely on this material evidence in his defence because he is not a party to the LPP as JCL has made it clear that it will not waive its claims on the LPP.
26. I noted that JCL had taken up the Time Manipulation Irregularity and held out to CEDD that it accepted it was accountable for the irregularity, the Simulated Tests Irregularity was discovered and followed up during the investigation of the Time Manipulation Irregularity. D1 was involved in the investigation. Both irregularities go to the strength/quality of the cement used in the Project and their accumulative effect would have potential adverse impact on the safety of the Project.
27. According to the evidence of D1, JCL was expected to receive an adverse report for the Time Manipulation Irregularity, if so JCL would also likely to receive adverse report for the Simulated Tests Irregularity on top of the Time Manipulation Irregularity. This undoubtedly would have impact on the company’s reputation, legal advice was sought shortly after JCL was notified of the Time Manipulation.
28. It is common ground that JCL carried on to investigate the Simulated Tests Irregularity and D1 was involved but the irregularity was not disclosed to CEDD. Time being instructions and documents were provided to internal and external legal advisors by JCL for the purpose of rendering legal advice, probably including whether to disclose the Simulated Tests Irregularity to CEDD.
29. The LPP materials probably contained the reasoning and opinion of others. D1 was involved in the discussion and had first-hand knowledge of the legal advice and its reasoning. In general, reasoning and opinion from professional tend to be more influential. But be it the case, legal opinion is only a piece of advice for consideration before one comes to his own decision. The issue here is the state of mind of D1 at the material time, his own reasoning and how he came to his final decision.
30. Upon discovery of the Irregularities, D1 would have been aware that some results of the cement tests carried out for/provided to CEDD under the Agreement, which said to be accurate were fake due to the irregularities. Being an experienced structural engineer working in the industry for over 35 years at the material time, expert in the technique of cement, the Director of Operations of JCL, a director of one of the top international engineering firm, the second man in the Hong Kong office, taking part in a major infrastructure project, ultimately it was D1’s own interpretation/opinion on the contract or his duty versus CEDD that caused him to make his own final decision not to/ agreed not to disclose the Simulated Tests Irregularity which had potential adverse impact on the safety of the Project.
31. Unlike the defendants in the case of Chan Kong On [2011] 2 HKLRD 1085, D1 is an experienced structural engineer and expert in the technique of cement as mentioned above. D1’s case is that without the LPP materials he is not able to explain thoroughly how he was influenced in his decision making process. D1’s case is not that without the LPP materials he would be forced to sacrifice his right to remain silence.
32. It is probably because simply producing the LPP materials, even if it is available, the state of mind of D1 would still be unknown without his own testimony. When D1 elects to testify in Court to defend himself, he can give evidence about his own decision making on not to/agree not to report the Simulated Tests Irregularity to CEDD without making any reference to the content of the LPP materials.
33. D1 is aware that there is a community standard on honesty. His personal view or opinion as to not to report the Simulated Tests Irregularity are facts within his own domain. The LPP claims by JCL would not prevent him from telling the Court all the relevant facts to prove his state of mind, for instance, his own opinion regarding the technical assessment or his own view as to why the Simulated Tests Irregularity would not be required to report to CEDD under the Agreement or his relationship with CEDD at the material time.
CONCLUSION
34. For the aforesaid reasons, I am not satisfied that D1 has made out his case. I do not agree that D1’s defence in the present proceedings is severely prejudiced to an extent that a fair trial is not possible because of the LPP claims by JCL. I am with the view that D1 fails to show a fair trial is impossible, his application to stay is refused accordingly.
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( Ada Yim )
Deputy District Judge
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