HKSAR v. LEE MING TEE AND ANOTHER

FACC No. 8 of 2000

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 8 OF 2000 (CRIMINAL)

(ON APPEAL FROM HCCC NO. 191 OF 1999)

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J U D G M E N T

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Chief Justice Li:

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

Mr Justice Bokhary PJ:

2. I agree with the judgment of Mr Justice Ribeiro PJ.

Mr Justice Chan PJ:

3. I agree with the judgment of Mr Justice Ribeiro PJ.

Mr Justice Ribeiro PJ:

4. The respondents were charged jointly on two counts of conspiracy to defraud and four counts of publishing a false statement of account, contrary to s 21(1) of the Theft Ordinance, Cap. 210. On 21 July 2000, Pang J ordered that those proceedings be permanently stayed.

5. The charges related to four separate transactions which were announced to have taken place during 1990 and 1991 involving the issue and placement of a substantial number of shares in Allied Group Limited ("AGL"), Allied Tung Wing Limited ("ATWL") and Allied Properties (HK) Limited ("APL"). These were companies listed on the Stock Exchange and formed part of a larger group (the "Allied Group") of which AGL was the holding company.

6. The 1st respondent held a controlling interest in AGL and was at the material times, chairman and a director of AGL and APL, and a director of ATWL. The 2nd respondent was a director of AGL and acted as financial controller of AGL and other companies in the Allied Group.

7. The gist of the prosecution's case was that the public had been misled, with the respondents' connivance, into believing that the four transactions had genuinely resulted in the raising of corporate funds by the issue of shares to independent investors. It was alleged that only a small fraction of the proceeds of the share issues had actually been received by the issuing companies, the reality being that other companies in the Allied Group had been enabled, under the disguise of certain sham banking arrangements, to acquire the shares without payment.

8. Several years prior to the institution of criminal proceedings against the respondents, the Financial Secretary, Mr Hamish Macleod, had appointed an Inspector, Mr Nicholas Allen, to investigate and report upon the affairs of the Allied Group, including the four transactions upon which the charges were based. Pang J ordered the stay on two broad grounds, both arising out of the relationship between the company inspection and the criminal proceedings subsequently brought.

9. In the first place, the judge held that the Inspector had supplied to the police and prosecuting authorities information and documents acquired in the course of the inspection for use in aid of the prosecution and that this amounted to an abuse of the Inspector's statutory powers and a violation of the respondents' rights. He held that pursuing the prosecution in such circumstances amounted to an abuse of the process of the court which would not be permitted.

10. The stay on the ground of abuse of process rested additionally upon the judge's finding that in the course of resisting the respondents' challenges to the inspection by way of judicial review, an affidavit and certain correspondence which were culpably misleading had been put forward on behalf of the Inspector and the Financial Secretary.

11. The second ground for the stay was Pang J's conclusion that by taking the unprecedented step of publishing the Inspector's report when criminal proceedings were intended, by giving such publication prominence at a press conference and by orchestrating such publicity to coincide with a series of high-profile police raids on Allied Group premises, the Government had created such severe prejudice against the respondents that a fair trial had become impossible.

12. A third ground, based on delay and allegations as to the state of the 1st respondent's health, failed before Pang J and was not maintained on appeal.

A. The certified questions

13. The Secretary for Justice appeals against the order for a stay by leave of the Appeal Committee granted on 19 October 2000. Pang J had certified certain questions of law as being of great and general importance under s 32(2) of the Hong Kong Court of Final Appeal Ordinance, Cap. 484. At the hearing of the leave application, the certified questions were reformulated as follows :-

B. The facts

14. The principal facts established for the purposes of the stay application may be summarised as follows.

15. On 11 June 1992, having conducted an investigation in response to complaints received, the chairman of the Securities and Futures Commission ("SFC") wrote to the Financial Secretary expressing suspicions of misfeasance by the 1st respondent and his associates and recommending the appointment of a company inspector to undertake a wider investigation into the affairs of the Allied Group.

16. That recommendation was accepted and in early August 1992, the Financial Secretary decided to appoint an inspector whose work would be monitored by a Steering Group to be chaired by Mr Tam Wing-pong ("Mr Tam"), Deputy Secretary for Monetary Affairs, on behalf of the Financial Secretary and comprising representatives from the Attorney-General's Chambers and the SFC. This was the first time that such a Steering Group had been set up in Hong Kong: In re Allied Group Limited [1994] 1 HKLR 299 at 301.

17. The Steering Group was set up to assist the Financial Secretary. Its functions included monitoring the progress and cost of the inspection. This was intended to help meet anticipated criticism from the public and members of the Legislative Council who were thought likely to question the benefits and high cost of such an inspection.

18. It was also recognized from the outset that criminal proceedings were a likely outcome and the decision was taken to keep the police informed.

19. On 14 August 1992, Mr Nicholas Allen was formally appointed Inspector under s 143(1)(c) of the Companies Ordinance, Cap. 32 ("the Ordinance"). His terms of reference in relation to the relevant companies were as follows :-

During the first two months of the inspection, documents from Allied Group companies were obtained and scrutinised. By 12 October 1992, the Inspector felt able to inform the Steering Group that there was "strong evidence to suggest there was never any intention that placements be paid for, which constitutes fraud."

20. It was decided to tell the police of these suspicions and, on 22 October 1992, Mr Tam held a preliminary meeting with Chief Superintendent B W Munford where the respective roles of the Inspector and the police were considered.

21. In November 1992, the 2nd respondent sought to challenge the Inspector's powers under the Ordinance. He contended that such powers were invalidated by various provisions of the Hong Kong Bill of Rights ("the Bill of Rights") contained in the Hong Kong Bill of Rights Ordinance, Cap. 383, especially by the guarantee in Article 11(2)(g) that every person "shall be entitled not to be compelled to testify against himself or to confess guilt." Jones J rejected the application, holding that Article 11(2)(g) was only concerned with the rights of persons charged with or convicted of a criminal offence and had no application to a company inspection: In re Tse Chu-fai, Ronald [1993] 2 HKLR 453. An appeal to the Court of Appeal was dismissed on 26 November 1992.

22. Interviews with each respondent therefore proceeded. As preparation of the Inspector's report would take some time, it was decided to give the police access to the materials obtained by the Inspector to begin reading into the case, in parallel with the Inspector's finalisation of his report.

23. The decision to give the police such access was taken on legal advice. The Steering Group and the Inspector were alive to the possible criticism that the police were impermissibly exploiting the inspection to obtain evidence which would otherwise be unavailable to them. To avoid such a suggestion, Messrs Herbert Smith, the Inspector's solicitors, advised that the respondents' interviews should be completed before the police commenced looking at the documents so that it could not be said that interview questions had been posed at the behest of the police. Subject to that precaution, which reflected their advice that "the CCB's [Commercial Crime Bureau's] involvement should take place entirely outside the inspection you are conducting", Herbert Smith stated that the Inspector was not only entitled, but bound to afford the CCB "all possible assistance in familiarising themselves with the material concerned".

24. The respondents' interviews were effectively completed in the first week of January 1993. One further interview was held with the 1st respondent in August 1993, but this had not been foreseen in January.

25. On 7 January 1993, at the Inspector's suggestion, Mr Tam wrote to the Inspector stating that "the Financial Secretary considers that it is appropriate for the CCB to begin familiarising themselves with the materials you have gathered to date" and asking him to "afford them all such assistance as they require."

26. Thereafter, from about 15 January 1993 onwards, the police were supplied with documents and other materials obtained in the inspection, including interview transcripts and written answers to questions put by the Inspector in correspondence.

27. As the inspection progressed, the Inspector considered it necessary to clarify or re-define his role under paragraph (e) of his terms of reference, which required him "to obtain evidence in a form admissible in criminal or civil proceedings in respect of any matter which may constitute fraud or other offence against Hong Kong law that is identified in the course of the investigation".

28. He wrote to Mr Tam on 25 March 1993, indicating that he would limit himself to directing the attention of the Financial Secretary to

He explained that this was to avoid any "criticism that I have been abusing the powers accorded to me under the [Ordinance]" and cited legal authority distinguishing the Inspector's role from that of the police.

29. In the meantime, a debate had developed in the Steering Group as to whether, and if so, to what extent, the Inspector's report should be made public. This was discussed at Steering Group meetings starting in February 1993. The Financial Secretary and the SFC were both strongly in favour of publication. The former wanted to be able to show that the large sums (eventually totalling $46 million) spent on the inspection had resulted in a worthwhile product and to be seen to be adopting a policy of governmental transparency. The SFC wished to publicise to the market the Inspector's concerns regarding the probity of the Allied Group's management and to demonstrate that corporate misconduct would be pursued and uncovered. On the other hand, the Inspector's solicitors and representatives of the Attorney General's Chambers were both against publication on the ground that it might jeopardise a prosecution since such publicity might make a fair trial impossible.

30. A compromise solution suggested was that the report should be drafted so that an abridged version could be published, with the most prejudicial parts excised. A draft chapter in that format was circulated to elicit the comments of the Steering Group. On 12 February 1993, Mr Gerard McMahon ("Mr McMahon"), the SFC's representative, returned his draft with handwritten annotations and comments.

31. On 11 May 1993, having discovered the existence of the Steering Group, Messrs Lovell White Durrant ("LWD"), solicitors for the 1st respondent, wrote to the Financial Secretary asking for information as to its composition and functions and received certain responses in correspondence.

32. On 21 May 1993, a fresh challenge by way of judicial review was mounted, this time by the 1st respondent, AGL and APL. This was based on the contention that the Steering Group's involvement had compromised the Inspector's independence or meant at least that he could no longer be seen to be independent, requiring the inspection to be stayed. Kaplan J dismissed the application, holding that there was no evidence whatsoever of bias or of any matters giving rise to a perception of bias: In re Allied Group Limited [1994] 1 HKLR 299. This conclusion was upheld by the Court of Appeal: R v Attorney General and another, Ex parte Allied Group Ltd and others (1993) 3 HKPLR 404.

33. Since part of the respondents' abuse of process allegations arose in connection with those judicial review proceedings against the backdrop of Mr McMahon's comments on the draft chapter and the answers given to LWD's inquiry, it will be necessary to return to some of the details of what transpired.

34. By the end of August 1993, the final report was ready and copies were submitted to the Financial Secretary, the police and the Prosecutions Division of the Attorney General's Chambers. The divided opinion as to whether general publication should take place had persisted, but at the Steering Group meeting on 11 September 1993, the Crown Prosecutor, Mr Grossman QC, appears to have agreed that publication of the report in its edited form could go ahead.

35. On the same day, informations were laid by the police to obtain search warrants to seize Allied Group documents. Those informations had been prepared on the basis of materials obtained from the Inspector. They resulted in the issue of the necessary search warrants.

36. On 15 September 1993, the police commenced a series of raids on the offices Allied Group companies, the searches continuing until 19 September.

37. On 18 September, two days after the Court of Appeal dismissed the 1st respondent's appeal against Kaplan J's decision, the Financial Secretary, accompanied by Mr Tam and government lawyers, held a press conference where the abridged report was publicised. The police raids, the press conference and the report received widespread press coverage. The appellant does not dispute that such publicity was adverse and prejudicial to the prospects of a fair trial of the respondents.

38. The police established an extensive task force to work on the seized materials in preparation of a case against the respondents. Meanwhile, the 2nd respondent had left the jurisdiction and, on 7 May 1997, over three and a half years after publication of the report, he was arrested in Australia. He subsequently agreed to come back to Hong Kong without an extradition hearing and returned on 26 August 1998, when he was arrested. The 1st respondent, who had continued to reside in Hong Kong throughout, had been arrested on the previous day. On 16 June 1999, both were committed for trial in the Court of First Instance. Their application for a stay came before Pang J on 27 April 2000, leading to the abovementioned order for a permanent stay dated 21 July 2000.

C. The jurisdiction to stay criminal proceedings

39. 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. As Lord Morris (quoting with approval the ruling of the trial judge in that case) stated in Connelly v DPP [1964] AC 1254 at 1304 :-

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: Connelly v DPP (1964) AC 1254 at 1354, 1361.

40. 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. In Jago v The District Court of New South Wales (1989) 168 CLR 23 at 30, Mason CJ put it as follows :-

His Honour formulated the question arising on such applications for a stay as follows :-

This approach is demonstrated in cases where the accused seeks a stay on the ground of delay. Lord Lane CJ described this as "the most usual ground" for such applications and held that :-

This was endorsed by the Privy Council in Tan v Cameron [1992] 2 AC 205 at 224, an appeal from Hong Kong.

41. Other matters, apart from delay, have sometimes been relied on in attempts to stay proceedings. Lord Lane CJ gave examples :-

One may add to the list the ground relied on in the present appeal, namely prejudicial pre-trial publicity, considered more fully below. However, the common thread in these authorities is the requirement that a fair trial has become impossible, making continuance of the prosecution an abuse of the court's process.

42. A second line of stay cases, also relied on in the present appeal, 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. The leading authority is the decision of the House of Lords in R v Horseferry Road Magistrates' Court, Ex parte Bennett [1994] 1 AC 42, where, although the fairness of the trial was not in question, 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.

43. While the jurisdiction on this dual basis clearly exists, it is only most sparingly exercised: Tan v Cameron [1992] 2 AC 205 at 221; Jago v The District Court of New South Wales (1989) 168 CLR 23 at 31; Ex parte Bennett [1994] 1 AC 42 at 74.

44. There are cogent reasons why in principle and in practice such stays are highly exceptional.

45. 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. As Brennan J pointed out in Jago v The District Court of New South Wales (1989) 168 CLR 23 at 49 :-

46. 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. To quote Brennan J again :-

His Honour continued :-

Secondly, in cases where a fair trial remains possible even though official misconduct may be involved in the bringing of the prosecution, the court does not exercise the jurisdiction to stay proceedings as a means of disciplining the police or prosecuting authorities. As Lord Lowry put it in Ex parte Bennett (at 74-75) :-

The public interest lies in the guilt or innocence of the accused being fairly and openly determined at trial. For this to be displaced, powerful reasons must exist for concluding that such a trial, although fair, would nonetheless constitute an intolerable abuse of the court's process. The instances where such an argument has any prospects of success must necessarily be very rare.

47. Thirdly, in cases where the ground on which a stay is sought concerns alleged unfairness in the use of particular classes or items of evidence, the courts, for procedural reasons, are extremely reluctant to determine the evidential questions on a stay application. This is because the fairness of using the evidence may be incapable of evaluation prior to the trial itself. The impact of such evidence on the fairness of the trial may need to be considered in the context of the evidence as a whole so that the question may best be dealt with as a question of admissibility to be determined by the trial judge and possibly made subject to his residual discretion to exclude the same: R v Hertfordshire County Council, Ex parte Green Environmental Industries Ltd [2000] AC 412; Clinton v Bradley [2000] NIECA 8 at para 17.

48. It is with the foregoing principles in mind that the judge's decision falls to be considered.

D. Was the prosecution an abuse of process because of use made of materials derived from the inspection?

D(i) Pang J's conclusions

49. The judge found that the Inspector had handed over to the police materials obtained in the course of the inspection and held that this was an abuse of his powers under the Ordinance. Accordingly, he held that a prosecution brought in reliance on such tainted evidence was an abuse of the court's process. Disclosure to the police was found to be an abuse of the Inspector's powers because :-

D(ii) The respondents' position on appeal

50. The judge's conclusions appear to have been urged upon him by the respondents at the hearing below. However, while the judge was right to hold that the provisions of the Ordinance, and in particular s 146, in combination with his terms of reference, restricted the Inspector to supplying information and reports only to the Financial Secretary, this is a point which factually does not avail the respondents.

51. On appeal, the respondents did not seek to dispute the appellant's contention that the Inspector had not in fact handed any information directly to the police acting in his own capacity, but that he had only done so on the express instructions and acting on behalf of the Financial Secretary.

52. As indicated above, the Financial Secretary had appointed the Steering Group to help him monitor the inspection and directed Mr Tam to chair it on his behalf. In the Inspector's terms of reference, he was instructed by the Financial Secretary to confer with Mr Tam on matters relating to the inspection. The first contact with the police was by Mr Tam (and not the Inspector) on 22 October 1992. When, in January 1993 and thereafter, the police were given access to the documents and information, this was done by the Inspector pursuant to the written instructions of Mr Tam, conveying the Financial Secretary's view as to the desirability of this course.

53. Mr Jonathan Caplan QC, leading for the 1st respondent (whose submissions on these matters were adopted by Mr Gary Plowman SC, leading for the 2nd respondent) did not dispute the correctness of regarding Mr Tam as the Financial Secretary's representative in these circumstances. He was clearly right not to do so. Under what has become known as the Carltona principle, the courts have recognized that :-

This is applicable to a Secretary in the HKSAR government and the principle has been adopted in Hong Kong: Commissioner for Labour v Jetex HVAC Equipments Ltd [1994] 3 HKC 42.

54. It follows that insofar as Pang J's conclusion rested on the narrow ground that the Inspector had impermissibly handed documents and information directly to the police, that conclusion is contrary to the evidence or based upon a misconception of the capacity in which the Inspector provided the police with the materials and cannot be sustained.

55. The respondents however continued to dispute the power of the Financial Secretary himself handing over inspection materials to the police. They continued to espouse the "gateway" argument and to argue that such conduct exceeded the statutory purposes of a company inspection.

D(iii) The provisions of the Ordinance

56. Whether the respondents' contentions are correct depends in the first place on the proper construction of the relevant provisions of the Ordinance.

57. Section 143 sets out the circumstances in which the Financial Secretary may appoint an Inspector, as follows :-

An Inspector is given compulsory powers to obtain documents and information from, among others, the officers and agents of the companies in question. For example, s 145(1) makes it :-

Section 145(2) gives the Inspector power to examine such persons under oath, and if cooperation is refused, he can have the person brought before the court under s 145(3) to be punished for contempt.

58. Section 145(3A) is particularly important and is in the following terms :-

Also important is s 146 which materially provides as follows :-

Provisions bearing on what may be the consequences of an inspection include the following :-

D(iv) These provisions and abrogation of the privilege against self-incrimination

59. It is undoubtedly true that, like everyone else in Hong Kong, the respondents enjoyed a privilege against self-incrimination at common law. This is a deep-rooted privilege, having been established in England since at least the sixteenth century: Lam Chi-Ming v R [1991] 2 AC 212. It entitles a person :-

However, it is equally beyond doubt (leaving aside for the moment any possible consequences of the Bill of Rights) that such common law rights can be overridden by legislation: R v Scott (1856) Dears & B 47. As Lord Mustill stated :-

It is clear (and was not disputed by any of the parties on appeal) that s 145(3A) is such an enactment. It takes effect in two ways. First, it abrogates the privilege against self-incrimination by providing that a person is not excused from answering a question put to him by an inspector on the ground that the answer might tend to incriminate him. Secondly, if the person claims the privilege before answering, then although an answer must nevertheless be given, s 145(3A) replaces the privilege with a statutory prohibition on how the answer can be used. It prescribes that "neither the question nor the answer shall be admissible in evidence against [the person answering] in criminal proceedings." Such a provision may be referred to as a "direct use prohibition" (sometimes called a "use immunity" or "direct use immunity").

60. Assuming (although this is subject to challenge by the appellant) that some of the answers were self-incriminating, once the respondents gave them to the Inspector, their privilege against self-incrimination was extinguished in relation to the answers given. This is because the essence of the privilege is the withholding of answers. Having given the answers, the respondents were left with the protection afforded by the prohibition against use of the answers in evidence against them.

61. The prosecution have tendered a unilateral undertaking to the Court that they will respect the prohibition and will not seek to rely on any of the oral interviews with the respondents or on the correspondence with them, save where it involved the production of company documents. Both sides agree that no privilege against self-incrimination protects such documents. The prosecution also stated that they will not rely on any comments made by the respondents on draft transcripts or on the draft report, subject to the same exception concerning non-privileged company documents. Furthermore, they will not seek to cross-examine on the basis of such materials.

62. It may very well be that the use prohibition would in any case prevent such use of the materials. However, what is clear is that any applicable privilege against self-incrimination was overridden by the Ordinance years before any charges were laid against the respondents and before the start of any criminal trial. On the stay application and on this appeal, the issues engendered by the company inspection did not relate to the respondents' entitlement to refuse to answer questions that might be put at the trial on the ground of privilege. They concerned the prosecution's entitlement, if any, to use evidence obtained by the police separately (particularly by execution of search warrants), having been assisted in obtaining that evidence by use of the Inspector's materials.

63. The issue, carried over to this appeal, is in other words neither about the availability of the abrogated privilege against self-incrimination nor about enforcement of the direct use prohibition. It is about the permissibility of "derivative use" by the prosecution of the compelled testimony and information. Was the Financial Secretary entitled to hand over the compulsorily obtained materials to the prosecuting authorities and were the latter entitled to use them to help acquire evidence for the prosecution from other sources?

64. These questions of principle are before the Court although Mr Michael Thomas QC, leading for the appellant, points out that the respondents have been unable at this stage to identify any matters to be used at the trial specifically derived from any answers they may have given to the Inspector.

D(v) Whether the statutory purposes were exceeded

65. The judge rightly concluded that, having obtained what may have been self-incriminating materials, it was not open to the Inspector or Financial Secretary to do whatever they liked with them. They were bound to use such materials only in accordance with the statutory purposes of company inspections instituted under the Ordinance.

66. Thus, in Marcel v Commissioner of Police [1992] Ch 225 at 255-6, dealing with the use that the English police could properly make of materials seized in the context of the Police and Criminal Evidence Act 1984, Dillon LJ cited with approval the following passage from the judgment of Sir Nicholas Browne-Wilkinson V-C in the court below :-

The question which therefore falls to be considered (before considering any Bill of Rights implications) is whether, in instructing the Inspector to hand over the compulsorily obtained materials to the police for their use in aid of a contemplated prosecution of the respondents, the Financial Secretary was acting within the statutory purposes of the inspection.

67. This is a question with several facets. It involves asking :-

D(vi) An inspector's role in general

68. In Re Pergamon Press Ltd [1971] Ch 388, the leading authority on the inspector's duty to act fairly, the English Court of Appeal considered the role of a company inspector when operating under rules very similar to those applicable in the present case. Having pointed out that inspectors do not play a judicial or quasi-judicial role but "only investigate and report", Lord Denning MR continued as follows (at 399) :-

Sachs LJ stated :-

Buckley LJ added :-

In Maxwell v DTI [1974] QB 523, a later case concerned with the same company inspection, Lord Denning reiterated that an inspection "is simply an investigation, without anyone being accused" and added :-

This is an approach which accords with the views of the European Court of Human Rights :-

The inspector's role has therefore been seen in other jurisdictions with similar laws as involving the investigation and reporting of the facts regarding the companies under inspection. It is not his job to investigate the criminal liability of any individuals involved nor to collect evidence to establish such liability. However, in carrying out his task he may well come across evidence of criminal activity. Where this occurs, he may disclose such evidence to the appropriate authorities, leaving it to them to consider what, if any, action to take in consequence.

D(vii) The statutory purposes: the provisions of the Ordinance

69. In Hong Kong, the relevant provisions of the Ordinance support that general approach. As indicated above, s 145(3A) abrogates the privilege and replaces it with a direct use prohibition. That prohibition is framed in limited terms. It only applies to the questions asked and the answers given. The prohibited use is the use of such questions and answers as evidence in criminal proceedings against the person giving the answers. It says nothing about prohibiting any other use. Therefore, on its face (and subject to there being any free-standing derivative use immunity at common law or pursuant to the Bill of Rights), s 145(3A) abrogates the privilege and then forbids only direct use, inferentially permitting derivative use of the questions and answers obtained in the course of an inspection.

70. In Regina v Director of Serious Fraud Office, Ex Parte Smith [1993] AC 1 at 40, Lord Mustill gives some support to such a construction. In his discussion of similarly structured provisions, that is, provisions which override the privilege (which he refers to as an "immunity") and leave in its place a statutory use prohibition, he stated as follows :-

The other relevant provisions of the Ordinance also favour a construction opposed to the existence of any derivative use immunity.

71. Thus, s 143 includes as instances when an inspector may be appointed the existence of circumstances suggesting (i) "that the business of the company has been or is being conducted with intent to defraud its creditors or the creditors of any other person or otherwise for a fraudulent or unlawful purpose ......" or (ii) "that persons concerned with its formation or the management of its affairs have in connection therewith been guilty of fraud ......".

72. The conduct envisaged in these provisions is obviously conduct likely to give rise to criminal (and other) liability. Where the concerns which led to the Inspector's appointment prove justified, it is hard to accept, in the absence of any express restriction, that the Ordinance should be construed as requiring him to keep the evidence of wrongdoing from the Financial Secretary or to require the Financial Secretary not to disclose it to the appropriate authorities. The public interest would certainly favour a construction enabling the Financial Secretary to inform all public authorities charged with duties which may be relevant to the misconduct uncovered, whether they be "prosecuting, regulatory, disciplinary or even legislative" authorities, to quote from Saunders v United Kingdom (above). It would then be for such authorities to decide on any appropriate course of action.

73. Section 146(4) expressly authorises the inspector, at any time in the course of his investigation, "to inform the Financial Secretary of matters coming to his knowledge as a result of the investigation tending to show that an offence has been committed". These are wide words apt to cover not merely an expression of the inspector's opinion, but his relaying to the Financial Secretary the evidence in support of his conclusion. In the absence of any express restriction, there is nothing to suggest that the Financial Secretary should be precluded from passing on such information to the appropriate authorities.

74. That the sanctioning of disclosure by the Financial Secretary to the Secretary for Justice was intended is evident from s 147. That section envisages prosecutions "arising from" a report or information supplied by the inspector and in such cases, it places a duty on all officers and agents of the relevant company (other than the defendant in the proceedings) "to give to the Secretary for Justice all assistance in connexion with the prosecution that they are reasonably able to give". The prosecution could hardly "arise from" such information if its disclosure by the Financial Secretary was forbidden.

75. Further support for allowing such disclosure can be derived from s 148. This creates a liability for the expenses of a company inspection on the part of "any person who is convicted by a court or magistrate on a prosecution instituted as a result of the investigation ......". A prosecution resulting from an inspection is very likely to include one where the authorities were provided with material to mount such a prosecution.

76. It follows that as a matter of statutory construction, the Financial Secretary (in the present case, acting through the Steering Group) was acting within the statutory purposes and not exceeding or abusing his powers in directing the Inspector to give the police access to testimony and information compulsorily obtained from the respondents.

77. Indeed, it appears that this was the Court of Appeal's view in the judicial review proceedings involving the Allied Group and the 1st respondent (R v Attorney General Ex parte Allied Group Ltd (1993) 3 HKPLR 404) and that the contrary had not been argued. Penlington JA stated (at 411) :-

Similarly, Bokhary JA stated (at 416) :-

78. These statements must be read in the light of the fact that in this case the Financial Secretary was acting as aforesaid after the Inspector had informed him, pursuant to s 146(4), that there was strong evidence of fraud.

D(viii) Paragraph (e) of the terms of reference

79. The respondents took a new point on appeal. This was the contention that paragraph (e) of the Inspector's terms of reference (requiring him "to obtain evidence in a form admissible in criminal or civil proceedings in respect of any matter which may constitute fraud or other offence against Hong Kong law that is identified in the course of the investigation") was ultra vires.

80. In the light of the foregoing discussion of a company inspector's role and the statutory purposes of an inspection, there is plainly considerable force in that contention. A direction to "obtain" evidence for possible use in criminal proceedings should not have featured in the Inspector's terms of reference.

81. It is, however, a point that the appellant was able to meet on the facts. As mentioned above, on 25 March 1993, obviously worried about this very matter, the Inspector indicated (and the Financial Secretary apparently accepted) that he would confine his activities under paragraph (e) in the manner referred to above. So limited, his conduct fell within proper bounds, consonant with the statutory purposes identified above.

D(ix) A free-standing derivative use immunity at common law?

82. Having found from a survey of certain authorities that a derivative use immunity as a free-standing doctrine was not well-established, Pang J nevertheless held that he was "prepared to recognize that the privilege of derivative use immunity should be enjoyed by a person within [Hong Kong] and this right is to be treated as an extension of his right to use immunity."

83. It would appear that the judge was treating derivative use immunity as an immunity which exists independently at common law and is capable of surviving a statutory abrogation of the privilege against self-incrimination. Accordingly, in our case, although s 145(3A) abrogated the privilege and replaced it only with a direct use prohibition, saying nothing about any derivative use immunity, such an immunity nevertheless continued to exist "as an extension of" the respondents' "right to use immunity".

84. With respect, such a conclusion cannot be supported. The "use immunity" upon which the judge proposed to graft a derivative use immunity "as an extension", can only be the direct use prohibition provided by s 145(3A) in place of the abrogated privilege. That "use immunity" or direct use prohibition does not arise as a matter of common law but by statute, and its scope is a matter of statutory construction. Any "extension" must be justified as a matter of construction. As discussed above, on their true construction, far from supporting the existence of any wider derivative use immunity, the relevant provisions of the Ordinance strongly indicate that the Financial Secretary was at liberty to pass on compelled materials to the prosecuting authorities for their use in any contemplated prosecution.

85. Lord Mustill's dictum giving support has already been mentioned. His Lordship suggested that a statute which expressly provides that compelled evidence may not be used for certain purposes, inferentially permits its use for other, hence, derivative, purposes: Regina v Director of Serious Fraud Office, Ex Parte Smith [1993] AC 1 at 40.

86. There is, in addition, strong persuasive authority from the Australian High Court against the survival of any derivative use immunity in cases where the privilege has been abrogated by statute. In Hamilton v Oades (1988-89) 166 CLR 486, when construing s 541(12) of the Companies (New South Wales) Code, a provision materially similar to s 145(3A), Mason CJ stated as follows :-

Dawson J's judgment was to similar effect :-

87. The respondents sought to rely on Sorby v The Commonwealth (1983) 152 CLR 281, referred to in these quotations, as authority for the existence of a common law derivative use immunity which survives statutory abrogation of the privilege. At first sight, it may appear that passages in some of the judgments in that case support such a proposition. Thus, in the course of his analysis of United States constitutional jurisprudence on the privilege, Gibbs CJ appears to suggest that the common law reflects his description of the United States position as follows :-

However in their joint judgment, Mason, Wilson and Dawson JJ expressed the effect of the privilege in rather different terms. They said :-

In my judgment, properly understood, Sorby is not authority for the proposition advanced by the respondents. It was a case concerned with the effect of s 6DD of the Royal Commissions Act 1902 (Cth), as amended. That section provided as follows :-

It will be noted that, unlike our s 145(3A) (or s 541(12) of the Companies (New South Wales) Code), s 6DD says nothing about the privilege against self-incrimination or its abrogation. It merely imposes a general restriction on direct use against a witness of evidence given by him before a Royal Commission.

88. The High Court was therefore being asked to determine whether s 6DD had impliedly abrogated the privilege and it was in that context that the passages quoted above are to be found. Put at its highest, as expressed by Gibbs CJ, what the judges were pointing out was that an unabrogated privilege against self-incrimination, that is, a privilege to decline to answer questions, necessarily carried with it not only protection against direct but also derivative use of any self-incriminating answer. Accordingly, since the protection conferred by the direct use restriction imposed by s 6DD was not co-extensive with the protection conferred by an unabrogated privilege, the contents of s 6DD did not, without more, necessarily imply a legislative intention to abrogate the privilege. As Gibbs CJ put it (at 295) :-

Where, as in the present case, the words of the statute clearly abrogate the privilege and substitute for it a limited direct use prohibition, the privilege is abrogated in its entirety and the scope of the substituted protections, if any, becomes a matter of statutory construction. Sorby is not authority for saying that a clear abrogation of the privilege coupled with an express direct use prohibition leaves intact a derivative use immunity at common law. Hamilton v Oades is authority to the contrary.

89. Support in principle for the absence of any common law derivative use immunity can also be found in the cases concerning the admissibility of evidence derived from an inadmissible confession. Confessions are by definition self-incriminating and they are excluded where involuntary, being regarded as unreliable or unfair: Lam Chi-ming v The Queen [1991] 2 AC 212 at 218. Lord Griffiths, giving the advice of the Board in that case stated :-

Yet, even in cases where a confession is ruled to have been involuntary and inadmissible, evidence derived by the police from the knowledge acquired through that confession is admissible provided that the derivative evidence can be adduced without any reliance on the excluded confession. Lord Scarman in R v Sang [1980] AC 402, stated the principle in these terms :-

That principle was acknowledged in Lam Chi-ming.

90. The common law in this area of the law of evidence is therefore dealing with the situation where (i) an accused's privilege against self-incrimination has been unlawfully abrogated by a confession being improperly obtained from him; (ii) the common law imposes a direct use prohibition by excluding the involuntary confession as inadmissible; but (iii) the common law admits independent evidence against the accused even though it is derivative evidence obtained by using the excluded confession (subject always to the court's general residual discretion to exclude evidence where this is necessary to secure a fair trial for the accused: HKSAR v Lam Tat Ming [2000] 2 HKLRD 431 at 440).

91. These common law principles are quite inconsistent with the existence of any derivative use immunity surviving abrogation of the privilege. This conclusion appears to accord with the views of Lord Hoffmann in R v Hertfordshire County Council, Ex parte Green Environmental Industries Ltd [2000] 2 AC 412 where, discussing certain compulsory powers to obtain information conferred on a local authority, his Lordship stated :-

92. The respondents finally rely on a line of civil cases in support of their argument in favour of a common law derivative use immunity. These are cases decided in the course of the judicial development of the Anton Piller and Mareva jurisdictions. The respondents relied in particular on the following passage in the speech of Lord Wilberforce in Rank Film Distributors Ltd v Video Information Centre [1982] AC 380 :-

In my judgment, properly read in context, this is a passage that does not assist, but militates against the respondents' argument. In developing the Anton Piller jurisdiction the courts, particularly in intellectual property cases, had been granting orders made ex parte requiring the defendant to give immediate answers to interrogatories relating to the supply and sale of copyright or patent infringing goods. Some such infringements constituted criminal offences so that the question before the House of Lords was whether, when faced during an Anton Piller raid with an order of the court requiring an immediate and potentially self-incriminating answer to an interrogatory, the defendant was entitled to assert his privilege against self-incrimination and refuse compliance. The question was, in other words, whether the judicial order abrogated the privilege. The answer given by the House of Lords was that it did not do so and that, if factually justified, the defendant was entitled to assert the privilege and decline to answer.

93. In the quotation cited, Lord Wilberforce was answering a submission by the plaintiff in favour of treating the privilege as abrogated on the basis that the order for interrogatories could be made subject to an undertaking that the information would not be used in criminal proceedings. It was in rejecting that suggestion that Lord Wilberforce spoke of the need to protect a party from derivative use of the information. The words preceding the quoted passage are as follows :-

It follows that what Lord Wilberforce was saying was that if the privilege were to be abrogated so as to require answers to the interrogatories on the terms of an undertaking approximating to a direct use prohibition, this would not give the defendant sufficient protection since it would not prevent "a process which may lead to incrimination or may lead to the discovery of real evidence of an incriminating character" - in other words, derivative use. In principle, this is contrary to the respondents' argument because it shows that, if the privilege were to be abrogated by judicial order, there would be no residual common law derivative use immunity. The House of Lords decided in Rank v Video that the privilege should not be abrogated at all, thus protecting the defendant from both direct and derivative use of any answer.

94. Some ten years later, in ATT Istel Ltd v Tully [1993] AC 45, the House of Lords retreated from such absolutist protection of the privilege in civil cases. They decided that where sufficient alternative protection could be devised, the order requiring disclosure had to be complied with notwithstanding a claim of privilege against self-incrimination. In that case, an undertaking given by the plaintiff in conjunction with a letter from the Crown Prosecution Service were taken to be sufficient alternative protection. Significantly, this was on the footing that the letter was construed as an undertaking by the potential prosecutor to make no use whatsoever, whether direct or derivative, of disclosures made in obedience to the court's order. This is made clear in the speech of Lord Lowry who stated :-

95. The underlying assumption as to the absence of any derivative use immunity at common law therefore remained unchanged. It is implicit in Istel v Tully, as much as it was in Rank v Video, that an abrogation of the privilege against self-incrimination, even if accompanied by an undertaking against direct use, would not prevent derivative use. Protection against such derivative use had to be achieved by a form of order and an undertaking tailored for this purpose.

96. The conclusion that the foregoing analysis leads to is therefore that a "derivative use immunity" does not exist as a free-standing common law concept or doctrine. Where the privilege against self-incrimination is overridden, in the absence of any binding restriction on use (whether statutory, by judicial order, by undertaking or otherwise), self-incriminating answers thereby obtained are subject to unrestricted use. Where the use prohibition or restriction conferred in place of an abrogated privilege is limited, other use is inferentially permitted. Accordingly, in the present case, as a matter of statute and common law, the prosecution was entitled to make derivative use of the company inspection materials handed to the police by the Financial Secretary.

D(x) The effect of Article 11(2)(g) of the Bill of Rights

97. Article 11(2)(g) of the Bill of Rights appears under the heading "Rights of persons charged with or convicted of criminal offence" and provides as follows :-

98. Pang J held that the Inspector's activities were "a blatant violation of the respondents' rights under Article 11(2)(g)" which, he appears to have held, became activated after the respondents were charged. He reached that conclusion by the following reasoning :-

With respect, that reasoning cannot be supported. Indeed, the respondents did not seek to support it on appeal.

99. It is necessary to identify the precise nature of the immunity conferred by Article 11(2)(g). As Lord Mustill pointed out in R v Director of Serious Fraud Office, Ex parte Smith [1993] AC 1 at 30, the general entitlement of every citizen "to tell another person to mind his own business", recognized as a starting point by the common law, has been subject to encroachment by common law doctrines and statutes so that the "right of silence" is more properly regarded as a disparate group of immunities which differ in scope and effect. For our purposes, the relevant starting point is the common law privilege against self-incrimination which, in Lord Mustill's words is :-

100. It is self-evidently of a broad application, protecting every person against any questioner. It is, however, subject to statutory abrogation and was, as already discussed, abrogated by s 145(3A) of the Ordinance.

101. Article 11(2)(g), on the other hand, only applies to persons who face a criminal charge and the immunity then conferred is only a testimonial immunity, namely, the right "not to be compelled to testify against himself or to confess guilt". It is therefore of a much narrower scope than the common law privilege against self-incrimination and had no application at the time of the company inspection since neither respondent had been charged at that time.

102. Accordingly, when the Inspector interviewed the respondents in 1993, by operation of s 145(3A), their common law privilege was abrogated, and questions and answers, including possibly self-incriminating answers were elicited, thereafter being subject to the direct use prohibition imposed by the section.

103. When the respondents were charged, some years later, the privilege in relation to those questions and answers had long since disappeared and could not be revived. Having answered the Inspector's questions in 1993, there remained no relevant information for Article 11(2)(g) to protect. Accordingly, there was no breach of the Article by the Inspector, "blatant" or otherwise.

104. As mentioned above, the real issues concern the lawfulness or otherwise of the prosecution's derivative use of the materials obtained from the Financial Secretary. Direct use is both prohibited and foresworn by the prosecution. Derivative use of independently obtained evidence, even if obtained pursuant to clues provided by the compelled testimony falls outside the purview of Article 11(2)(g) since, in adducing such independent, albeit derivative, evidence, the prosecution does not seek to compel either respondent to testify against himself or to confess guilt.

105. That Article 11(2)(g) is inapplicable was indeed the conclusion reached by Jones J against the 2nd respondent in In re Tse Chu-fai, Ronald [1993] 2 HKLR 453. The appeal against that decision was dismissed without argument on this point. The judge's decision on the basis of Article 11(2)(g) cannot stand.

D(xi) A derivative use immunity based on Articles 10 and 11(1) of the Bill of Rights?

106. Given that no derivative use immunity avails them either under the Ordinance, at common law or under Article 11(2)(g), the respondents sought to argue that it was possible to deduce such an immunity as an indispensable part of the right to a fair trial and/or the presumption of innocence which are given constitutional protection by Articles 10 and 11(1) of the Bill of Rights.

(a) Articles 10 and 11(1)

107. Those Articles materially provide as follows :-

(b) Saunders v United Kingdom

108. The respondents' argument appears to be inspired by the jurisprudence being developed by the European Court of Human Rights ("ECHR") in respect of the European Convention for the Protection of Human Rights and Fundamental Freedoms, Rome, 4 November 1950; Cmd 8969 ("the Convention") and in particular by that court's decision in Saunders v United Kingdom (1993) 23 EHRR 313.

109. The Convention (now scheduled to the UK Human Rights Act 1998) confers the right to a fair trial in its Article 6 which is relevantly in the following terms :-

110. Two features may immediately be noted. First, the fair trial and presumption of innocence provisions in Articles 6(1) and 6(2) are not substantially different from Articles 10 and 11(1) of our Bill of Rights. Secondly, the Convention does not have an equivalent of our Article 11(2)(g) and contains no express provision regarding any privilege against self-incrimination.

111. In the absence of such an express provision, the ECHR has felt able to deduce the existence of such a privilege as an integral part of the Article 6 rights: see the cases cited at Halsbury, 4th Ed, Vol 8(2), §142 n13. Saunders v United Kingdom is one such case, and is relied on by the respondents for the following passage in the judgment :-

It is, however, important to grasp what the issues in Saunders v United Kingdom were. The applicant had been tried and convicted in connection with unlawful share support dealings during a contested takeover of a public company. Those criminal proceedings had been brought after a company inspection by inspectors appointed by the United Kingdom Department of Trade and Industry. The prosecution relied heavily on materials compulsorily obtained by the inspectors by way of direct use against the accused at the trial, a course which was then permitted under s 434(5) of the Companies Act 1985. Not only were the transcripts of his interviews referred to in opening and closing submissions, prosecuting counsel actually spent three full days reading the questions and answers to the jury.

112. Accordingly, in holding that such proceedings violated the right to a fair trial under Article 6(1) by infringing the accused's right not to incriminate himself, the ECHR was dealing with a case involving a statutory abrogation of the accused's common law privilege coupled with an express statutory permission for the resulting questions and answers to be directly used against the accused at his criminal trial.

113. Plainly, the respondents cannot succeed in their attempt to deduce a derivative use immunity solely on the basis of Article 6(1) and Saunders v United Kingdom. The use made by the prosecution of the compelled testimony in that case is expressly excluded by the direct use prohibition in s 145(3A) of our Ordinance. Accordingly, there is no need to deduce protection against such use in our case. So the exercise which the ECHR had to undertake is irrelevant in our legislative context. In any event, Saunders v United Kingdom does not purport to rule on whether a derivative use immunity is an essential part of a fair trial. The ECHR was careful to make clear the limits of its decision. As the court pointed out :-

It was, moreover, anxious to indicate the limits of the right against self-incrimination which it was deducing, excluding at least certain forms of compulsorily obtained evidence from its ambit :-

In these circumstances it is not surprising that in Brown v Stott [2001] SLT 59, the Privy Council, on an appeal from the High Court of Justiciary in Scotland, emphasised the limits of the privilege against self-incrimination deduced from Article 6(1), stressing that it was not absolute in its operation.

114. This was a case involving a statutory power given to the Scottish police under the Road Traffic Act 1988, s 172(2)(a) to require someone to name the person driving a particular car at a stated time. An answer was potentially self-incriminating where, for instance, the person asked would have to name himself, thereby making it obvious that he had committed the offence of drunken driving. Such an answer had been given in Brown v Stott and the procurator fiscal made it clear that it was intended at the forthcoming trial of the respondent to lead evidence of the respondent's admission made under s 172(2)(a). It was therefore another direct use case.

115. The Privy Council held that even direct use of compulsorily obtained self-incriminating materials was not absolutely prohibited by Article 6(1) but could be justified if it was not a disproportionate response to a serious social problem and did not undermine the accused's right to a fair trial viewed in the round. This was explained by Lord Hope as follows :-

116. See also the recent Privy Council decision in HM Advocate v Robert McIntosh (unreported, 5 February 2001) which applied this approach in relation to the presumption of innocence protected by Article 6(2) of the Convention.

(c) Is use of derivative evidence unfair?

117. Although it is clear that Saunders v United Kingdom cannot get the respondents home, the issues in that case implicitly pose the fundamental question whether use of derivative evidence is inimical to the concept of a fair trial and/or the presumption of innocence. Is it not true that the direct use prohibition in the present case was enacted because such use of compulsorily obtained evidence would be unfair? If so, does it not logically follow that derivative use of that excluded self-incriminating evidence is also unfair?

118. The Privy Council in Brown v Stott decided that in some situations direct use of compulsorily obtained evidence will not be unfair for Article 6(1) purposes. It concluded that, without impairing a fair trial, the privilege against self incrimination may be legislatively modified so as to permit the direct use of evidence compelled pursuant to legislative authority, where the legislation is directed to meeting a serious social evil and the modification satisfies the test of compatibility stated by Lord Hope. The proportionality test, which is part of the compatibility test, raises the question whether a fair balance has been struck between the general interest of the community in realising the legislative aim and the protection of the fundamental rights of the individual. The Privy Council's conclusion must be viewed against the broad requirement of Article 6 of the Convention that the trial process in any given case has not been rendered unfair and the further requirement that the accused is not called upon to disprove his guilt.

119. Adopting this approach, which, in my view, is the correct approach, a similar conclusion should be reached in relation to a derivative use inferentially permitted by an abrogating statute in attempting to meet a genuine social evil.

120. Corporate fraud is to-day a matter of major concern which calls for strong regulation of the kind found in ss 142 to 152F of the Ordinance, particularly s 145(3A). Moreover, those who hold corporate office and are engaged in corporate activities, especially activities which impinge upon the public, are well aware of the existence of the legislative regulatory régime and that compliance with its provisions is a necessary condition of participation in those activities.

121. No one could seriously argue that it is wrong or unfair for the legislature to empower an inspector to investigate the facts where circumstances suggest that a company's affairs may be conducted with intent to defraud others. As discussed above, where the investigation confirms such fears, the public interest in protecting the public from fraud strongly suggests in principle that the product of the investigation should be made available to the appropriate public authorities. Balancing against that public interest the important countervailing public interest in an accused being assured of a fair trial, the solution adopted by s 145(3A) appears to be entirely acceptable and consistent with the purposes of Articles 10 and 11(1). The Legislature has struck a balance which allows the Inspector to abrogate the privilege but subjects the elicited evidence to a direct use prohibition, inferentially permitting derivative use.

122. In evaluating this balance, it is important to bear in mind that the purpose of the privilege is to respect the will of the accused to remain silent, thereby ensuring that the accused is not compelled to provide proof of his or her guilt. The privilege has no application to evidence which exists independently of the will of the accused. This proposition was expressly recognised in Saunders v United Kingdom at para 69. Indeed, in my judgment, there is much to be said for the general proposition that there is no inherent unfairness in establishing a person's guilt by the use of reliable objective evidence obtained from an independent source, even if the acquisition of that evidence was facilitated by clues contained in the excluded admissions. This view accords with common law doctrine based on Rex v Warickshall and the cases approving it, cited above.

123. Taken in the foregoing context and also in the context of our trial procedures as a whole (including the court's residual discretion to exclude evidence to secure the fairness of the trial), the absence of a derivative use immunity does not mean that an accused will not receive a fair trial. Nor does it undermine the presumption of innocence.

(d) The respondents' reliance on the Canadian cases

124. In an attempt to bridge the obvious gap in their argument based on Saunders v United Kingdom, the respondents invited the court to follow the approach adopted in a series of Canadian decisions which arose in the context of the Canadian Charter of Rights and Freedoms ("the Charter"): Thomson Newspaper Ltd v Director of Investigation and Research (1990) 67 DLR (4th) 161; RJS v The Queen (1995) 121 DLR (4th) 589; and British Columbia Securities Commission v Branch (1995) 123 DLR (4th) 462.

125. The effect of these complex decisions may (hopefully without doing them too much injustice) be summarised as follows.

126. The Canadian Charter contains in its section 13, protection against self-incrimination in the following terms :-

It follows that, unlike the position under the Convention, the Charter makes some express provision for protection against self-incrimination. However, it will also be noted that this is a provision which is much narrower in scope than the direct use prohibition contained in s 145(3A). It only avails a witness who testifies in proceedings and operates only by prohibiting adverse use of his testimony in any other proceedings.

127. It is therefore perhaps unsurprising that the Canadian Supreme Court (like the ECHR) took steps to broaden the use protection available where the privilege is abrogated. The vehicle for doing so was s 7 of the Charter which provides as follows :-

The Court held that the privilege against self-incrimination had the status of "a principle of fundamental justice" and so was entitled under s 7 to constitutional protection extending beyond the narrow confines of s 13. However, such protection was not absolute (in contrast with the approach under the Fifth Amendment of the United States Constitution). Therefore it was constitutionally possible for a statute to abrogate that privilege provided that any such abrogation was accompanied by alternative measures providing protection co-extensive with that which a citizen would enjoy with his privilege against self-incrimination still intact. After initial doubts as to the nature and extent of the alternative protection required, the Court appears to have settled on it taking the form of a direct use prohibition plus a "partial derivative use immunity".

128. Such a derivative use immunity was held only to arise where first, the accused discharged an evidential burden of showing that "but for" reliance on his compelled testimony, the derived evidence could not, as a matter of logical probability, have been obtained by the prosecution; and, secondly, where the prosecution failed to discharge its consequential burden of showing that it had acquired that evidence independently and without reliance on the compelled testimony. In such cases, the judge was given a discretion as to whether to exclude the derived evidence.

129. This much simplified account of the relevant Canadian decisions is sufficient to demonstrate the magnitude, indeed, the impossibility, of the task facing the respondents. The Canadian jurisprudence does not provide any basis for deducing a derivative use immunity in the HKSAR.

130. The Canadian case-law developed in a highly specific context, responding to the peculiar statutory and constitutional needs and values of that jurisdiction. As with the ECHR, the Canadian Supreme Court was moved to deduce or imply rights against self-incrimination in response to protection which was evidently considered too narrow. Given the width of the existing direct use prohibition in our case and the protection generally available under Article 11(2)(g), no similar exercise is called for in Hong Kong. Echoing the comment of Lord Hope in a different context in Brown v Stott, it is appropriate to say that the questions which the Supreme Court of Canada was asking itself are not the same as those arising in this case and there are differences in detail.

131. In any event, in the constitutional, legislative and common law context of the HKSAR, and in line with the approach adopted in Brown v Stott, the impact of directly or derivatively using compulsorily obtained evidence on the fairness of a trial and on the presumption of innocence must be assessed, not in absolute terms, but by balancing the competing public interests, and not by focussing on one aspect, such as the absence of any derivative use immunity, in isolation, but by taking the trial process as a whole.

132. There is accordingly no basis for contending, in the present case, that Articles 10 and 11(1) of the Bill of Rights require the court to deduce a derivative use immunity in favour of the respondents.

E. Was the prosecution an abuse of process because of official misconduct in connection with the judicial review applications?

133. Having concluded that neither the handing over of the materials to the police nor its derivative use by the prosecution involved any abuse of power nor any abuse of the court's process, the question that now falls to be considered concerns two discrete, but related incidents alleged by the respondents to constitute an independent abuse of the court's process. These were incidents connected with the judicial review proceedings initiated against the Inspector in May 1993.

E(i) Mr McMahon's affidavit

134. As indicated above, Mr McMahon was the SFC's representative on the Steering Group and on 12 February 1993, he returned his copy of a draft chapter of the report to the Inspector containing his handwritten annotations and comments. He, along with other members of the Steering Group, had been asked to comment on the format of the draft in view of the suggestion that an abridged report might be published to meet concerns about the publicity jeopardising the contemplated prosecution.

135. However, apart from some editing points, Mr McMahon offered comments which were plainly of substance. Thus, where the draft stated that the Inspector thought a particular explanation from the 1st respondent was implausible, Mr McMahon commented :-

Where in the draft, the Inspector stated that a certain matter represented "a genuine error and that no individuals were culpable in this regard", Mr McMahon wrote :-

Where the Inspector's draft stated: "I am satisfied that Paul Ng was not aware of [a criticised] scheme I have described", Mr McMahon commented :-

At the end of the draft chapter, Mr McMahon wrote :-

The argument advanced on appeal did not focus on whether comments of this nature should have been made at all. It is therefore unnecessary to decide that question. The respondents' complaint centred on what happened in May 1993, some 3 1/2 months later, when the 1st respondent, AGL and APL sought leave to apply for judicial review contending that the Steering Group's involvement had compromised the Inspector's independence or the perception of his independence and seeking a stay of the inspection.

136. Faced squarely with the issue of the Inspector's independence and of his relationship with persons on the Steering Group, Mr McMahon swore an affidavit on 2 June 1993 in which, among other things, he stated :-

Kaplan J dismissed the application, holding that there was no evidence whatsoever of bias or of any matters giving rise to a perception of bias: In re Allied Group Limited [1994] 1 HKLR 299, this ruling being upheld by the Court of Appeal: R v Attorney General and another, Ex parte Allied Group Ltd and others (1993) 3 HKPLR 404.

137. Pang J was severely critical of Mr McMahon's affidavit and of the fact that it had been put forward to the court on the Inspector's behalf. The judge's criticism was entirely justified. There is no doubt that it was inaccurate and highly misleading of Mr McMahon to state that he had not offered his opinions or sought to influence the Inspector's views. He clearly had. The draft chapter and comments by members of the Steering Group had not been forgotten as they were mentioned (in anodyne terms) by the Inspector in his own affidavit filed contemporaneously. When faced with the respondents' complaints before Pang J, the prosecution had considered calling Mr McMahon and had ample opportunity of doing so. But he was never called and has never tendered any explanation to the court about the contents of his affidavit.

138. The respondents point out that in the final report, certain changes along the lines suggested by Mr McMahon were in fact made. One is obviously unable to say why this occurred or whether the changes resulted from Mr McMahon's comments, particularly since the Inspector swore an affidavit saying that he had reached his conclusions independently. That, however, is not the point. The court is entitled to expect candour and honesty in evidence presented to it by public officials acting as regulators and guardians of the public interest. Mr McMahon's affidavit fell far short of what was required.

E(ii) The reply to the LWD inquiry

139. In May 1993, LWD, the respondents' solicitors, wrote asking the Financial Secretary for information about the Steering Group in the context of the same proceedings, describing the involvement of the Steering Group as a matter with "serious implications for the on-going investigation."

140. A draft letter responding to LWD's queries was prepared for the Financial Secretary and shown to the Inspector. It stated that no formal individual appointments to the group had been made but indicated that representatives of the Financial Services Branch, the Attorney General's Chambers and the SFC, regularly attended, adding: "Other persons have attended, from time to time, as appropriate" but declining to name them.

141. The letter was re-drafted by the Inspector's solicitors, Herbert Smith, deleting the reference to others attending the Steering Group meetings on the ground that :-

In consequence, when Mr Tam's letter went back to LWD, it identified the members of the Steering Group as himself, Mr McMahon and Mr J T Allen of the Attorney General's Chambers, saying nothing about any other persons attending and declining further answers to the queries received.

142. The letter represents a regrettable misjudgment on the part of the Inspector and his solicitors. Viewed in context, it was a less than candid reply likely to have been misleading. By identifying three members and saying nothing about anyone else, it naturally suggests that there was no one else on the Steering Group.

143. While the explanation for this exceedingly guarded behaviour is evident from the advice given by the solicitors, it was not the right approach to take. Of course the work of such a group requires and is entitled to the protection of confidentiality. However, when it was clear that the respondents' solicitors were expressing what were plainly legitimate concerns about having a Steering Group "steer" a company inspection in which their clients were principally involved - these being concerns that the Inspector had himself been advised about from the outset - it was incumbent on the Inspector and his advisers to be candid to such properly interested parties about the arrangements. The advice to the Inspector throughout had been that, subject to the precautions taken, the arrangements involving the police were quite proper. It is therefore regrettable that these arrangements were not simply disclosed and defended.

E(iii) A stay on the basis of these complaints?

144. Without in any way diluting the force of the criticisms which it has been unfortunately necessary to voice, it does not follow that these matters justify a stay of the prosecution.

145. The incidents complained of do not themselves pose any threat to the possibility of a fair trial for the respondents. Nor, in the event, did they result in any unfairness to them. Mr Caplan submitted that but for the concealment of the facts, Kaplan J was likely to have given leave to proceed with the judicial review and that, in consequence, the respondents had been deprived of the chance to challenge the Inspector's arrangements with the police and in the Steering Group. Such deprivation was temporary. The Inspector's arrangements eventually came to light when the prosecution provided the respondents with "unused material", leading to the stay application where all such challenges to the inspection were fully canvassed.

146. The rarity of situations where a stay is justified even though the fairness of the trial is not in doubt has been mentioned in section C of this judgment. In R v Horseferry Road Magistrates' Court Ex parte Bennett [1994] 1 AC 42, where such a stay was granted, the abuse was (on assumed facts) extreme. Lord Bridge described it in the following terms :-

It was an abuse which his Lordship described as calling into question "the maintenance of the rule of law itself" (at 67). Moreover, but for such abuse, the accused would not have been brought within the court's jurisdiction at all, plainly a reason for suggesting that the court should decline to exercise jurisdiction so unacceptably acquired. As Lord Lowry described it, the case was one in which :-

147. In R v Latif [1996] 1 WLR 104, the House of Lords gave valuable guidance as to how such applications should be approached. Lord Steyn, with whom the other Law Lords agreed, pointed out that where some form of official misconduct was involved in the alleged abuse of process, the court is faced with a "perennial dilemma" :-

The solution adopted was as follows :-

Lord Steyn added :-

148. In R v Latif itself, the House of Lords, applying these principles, upheld the lower courts' refusals of a stay. The case involved two men convicted of offences concerning a scheme for the smuggling of 20 kg of heroin into the United Kingdom from Pakistan. The scheme had been worked out with an undercover agent of the customs and excise authorities. The defendants contended, and the trial judge found, that that undercover agent had lured them into the United Kingdom by trickery and deception. However, they had travelled there voluntarily, having been willing participants in the scheme which had always been aimed at importing the heroin into the country.

149. On such facts, it is easy to see why the discretion was exercised against any stay. The men were international drug-traffickers who had targeted the United Kingdom. Deceptive subterfuges of the kind used were not in any sense disproportionate to the seriousness of the dangers they posed. They were also, in practical terms, necessary if such drug-traffickers were to be apprehended. As Lord Steyn pointed out, Lord Griffiths had made this observation in Somchai Liangsiriprasert v Government of the United States of America [1991] 1 AC 225 where he stated :-

There can be no doubt that the official misconduct complained of in the present case, while to be deprecated, falls very far short of "an abuse of process, which amounts to an affront to the public conscience and requires the criminal proceedings to be stayed". For the trial to go ahead despite the incidents attending the judicial review proceedings would not "be contrary to the public interest in the integrity of the criminal justice system".

150. It seems clear that Pang J did not base his decision to stay the proceedings on the abuse of process ground solely or even substantially on the judicial review incidents. He did so on the footing that the arrangements for supply of information to the police were unlawful and a blatant breach of the respondents' rights. As he put it in his judgment :-

The premise on which the judge exercised his discretion was therefore his finding of unlawfulness on the Inspector's part. For the reasons stated above, the finding was wrong in law so that such exercise of discretion on the abuse of process ground cannot stand. Nor do the judicial review complaints provide any independent basis for a stay.

F. Prejudicial publicity as the ground for a stay

151. Before embarking on a discussion of the merits of the stay granted on the prejudicial publicity ground, it is necessary to consider the objections raised by Mr Caplan and Mr Plowman against the attack mounted by Mr Thomas on the judge's decision on publicity. They contended that it was an attack on the judge's exercise of discretion and on his approach to the facts which fell outside the scope of the appeal and was therefore not open to the appellant.

F(i) The scope of the appeal

152. Section 31 of the Hong Kong Court of Final Appeal Ordinance, Cap. 484 ("the Court's statute") provides that :-

The words "in any criminal cause or matter" are wide enough to embrace :-

153. The present appeal, being an appeal by the Government against a trial judge's decision ordering a permanent stay of a prosecution, is rare among those appeals which come to this Court via the s 31(b) route, such appeals usually being those from the Court of First Instance as a court hearing appeals from the Magistrates Court.

154. There are two bases on which leave can be obtained to bring a criminal appeal to this Court. Both are contained in s 32 of the Court's statute which provides that leave to appeal in a criminal cause or matter to this Court from the Court of Appeal or the Court of First Instance shall not be granted unless :-

The "point of law" and the "substantial and grave injustice" limbs are two distinct limbs. Under the "point of law" limb, leave to appeal is to be sought by showing that such a point is involved and is at least reasonably arguable in favour of the applicant.

155. Under the "substantial and grave injustice" limb, leave to appeal is to be sought by showing that it is at least reasonably arguable that such injustice has been done to the applicant. The difference between these two limbs was explained thus by this Court in So Yiu Fung v HKSAR (1999) 2 HKCFAR 539 :-

If an applicant wishes to rely upon both limbs, application for leave to appeal should be sought on both bases (Zeng Liang Xin v HKSAR (1997-1998) 1 HKCFAR 12 at 22, per Li CJ).

156. Although it is not necessary to decide the point, there appears to be no reason why the Government cannot obtain leave to appeal under the second limb against the grant of a permanent stay of a prosecution.

157. In the present case, the judge certified pursuant to s 32(2) that six questions of law (which he identified) involved in his decision were of great and general importance. When granting leave to appeal, the Appeal Committee refined these six questions into the five certified questions set out in section A of this judgment. Leave was neither sought nor granted on the "substantial and grave injustice" limb.

158. The respondents submit that, in these circumstances, the scope of the appeal is limited to a determination of the five certified questions and that the Court cannot review the trial judge's findings of fact or generally review his exercise of discretion "in all the circumstances". This limitation, so the argument runs, arises from the grant of leave on the "point of law" limb alone and from the absence of any intermediate appeal to the Court of Appeal from a final decision of the Court of First Instance (s 31(b)). The jurisdiction of the Court of Appeal does not extend to entertaining an appeal from a stay order imposed by the Court of First Instance. Its criminal jurisdiction is restricted to the matters set out in the High Court Ordinance, Cap. 4, s 13(3).

159. In relation to the provisions relating to certifying points of law of general public importance in s 1 of the Administration of Justice Act 1960, governing appeals to the House of Lords in a criminal cause or matter, Lord Denning considered that all points are open on an appeal to the House of Lords as well as the point stated (Attorney-General for Northern Ireland v Gallagher [1963] AC 349 at 383). Lord Goddard (at 369) seemed to be of a similar opinion as was Lord Reid who stated (at 368) that "the section does not limit this House to the question certified and matters consequential on its decision of that question". But his Lordship expressly reserved the question whether it was open to an appellant to raise matters wholly unrelated to the question certified. Lord Tucker considered (at 370) that once the lower court certified that a point of law of general public importance was involved in the decision and leave to appeal was granted, there was nothing to limit the jurisdiction, though it was a matter for the House of Lords' discretion whether to allow a point wholly unrelated to the certified point of law to be argued.

160. The views expressed by their Lordships against an appeal restricted to the question certified were based on two propositions. The first was that the certificate provision in s 1 simply defined the conditions on which leave could be granted and that once leave was granted its purpose was spent. The question, as with s 32(2) of the Court's statute, was certified as being involved in the decision to be appealed from. It was not certified as a question for the opinion of the House of Lords.

161. The second proposition was that the section authorised the House of Lords, in dealing with the appeal, to exercise any of the powers of the court below. The same comments may be made about the legislation in the present case: see s 17 of the Court's statute.

162. The one distinguishing feature in the present case is the absence of an intermediate appeal to the Court of Appeal. This circumstance as well as the Privy Council's unique position as an ultimate court of appeal dealing with appeals by special leave from various jurisdictions led to the statement made by Lord Woolf in Attorney-General of Hong Kong v Charles Cheung Wai-Bun [1994] 1 AC 1 at 5 that the Privy Council does not act as a court of appeal in relation to findings of fact made by a trial judge on an application for a stay order. See also Sattar Buxoo v The Queen [1988] 1 WLR 820.

163. Like the Privy Council, this Court does not usually act as a general Court of Appeal in relation to findings of fact on an appeal from an order granting or refusing a stay of a prosecution. However, in accordance with the approach taken in Gallagher, this Court has jurisdiction to determine all questions which are related to the points which have been certified. The Court therefore has jurisdiction to review findings of fact in exceptional cases when those findings are related to the certified points.

164. In determining whether to grant or refuse a stay of prosecution, the trial judge exercises a judicial discretion. The discretion will be reviewed on appeal, if the judge acts on a wrong principle (as Pang J has been held to have done in relation to the alleged abuse of power by the Inspector), if he mistakes the facts, if he is influenced by extraneous considerations or fails to take account of relevant considerations. And if it should appear that on the facts the order made is unreasonable or plainly unjust, even if the nature of the error is not discoverable, the order made will be reviewed. See House v The King (1936) 55 CLR 499 at 505; see also Evans v Bartlam [1937] AC 473; Wade and Forsyth, Administrative Law 8th ed 926 et seq.

165. Failure to give weight or sufficient weight to relevant considerations will also vitiate the exercise of a judicial discretion but only if that failure is central to the exercise of the discretion: Charles Osenton & Co v Johnston [1942] AC 130 at 138, 142 and 147; or in other words, where it amounts to a failure to exercise the discretion entrusted to the court (Mallet v Mallet (1984) 156 CLR 605 at 614, 622).

166. It is never enough to justify the review that the appellate court itself would have exercised the discretion differently. Error on the part of the primary judge is an indispensable condition of review.

167. Question 5 is specifically directed to the principles according to which the judicial discretion to stay a prosecution was to be exercised in the circumstances of this case. The other questions relate to other matters relevant to the exercise of the discretion.

168. It follows that in this appeal against the trial judge's order for a permanent stay, the Court has jurisdiction to determine whether the judge's discretion was exercised in accordance with law and this jurisdiction extends to deciding whether the trial judge misapprehended the facts.

F(ii) The approach to prejudicial pre-trial publicity

169. As pointed out in section C of this judgment, the court approaches stay applications where a fair trial is said to be impossible regarding "fairness" in practical rather than absolute terms and placing its faith primarily in the efficacy of measures available to overcome any potential unfairness. It will only consider granting a permanent stay as a last resort.

170. This approach very much applies to stay applications based on prejudicial pre-trial publicity. In a society where the press is free it is inevitable that the reporting of crime will, in some sections of the media, be lurid and sensationalist, sometimes even at the risk of punishment for contempt. The more heinous or shocking a particular crime, the more it is likely to be given notoriety and to receive potentially prejudicial reporting. Jurors will therefore almost certainly have been exposed to some degree to such media coverage, prejudicial to the accused. Plainly, it is not in the public interest to permit this in itself to abort the prosecution of a person accused of such serious crimes.

171. This was dramatically illustrated in R v Rosemary Pauline West [1996] 2 Cr App R 374, a case of alleged serial murders which stimulated intensive and repeated sensationalist press reports which were highly prejudicial to the applicant and to her deceased husband (who had committed suicide whilst in prison awaiting trial). Lord Taylor LCJ stated :-

172. In some cases, adverse publicity may require an adjournment of the trial or a change of venue (possibly, on the prosecution's application, to the District Court) or, on appeal after conviction, it may lead the appellate court to order a re-trial. However, a permanent stay, leading to the accused being discharged, is exceedingly rare. In most cases, while acknowledging that special care must be taken to counteract the possible effects of prejudicial publicity, the court places its faith in the jury, properly directed, to secure a fair trial for the accused.

173. This was the approach of the Court of Appeal in R v West (at 386) and also the approach adopted by the Australian High Court in The Queen v Glennon (1992) 173 CLR 592 :-

174. In the Scottish case of Stuurman v H M Advocate (1980) J C 111, a trial was allowed to continue and leave to appeal against that ruling refused, notwithstanding the fact that a newspaper and a radio station had pleaded guilty to and been punished for contempt of the "gravest character" in relation to their prejudicial reporting of the case. The test applied, similar to that applied in many of the cases and in many jurisdictions, was as follows :-

175. Reliance on the integrity of the jury and its ability to try the case fairly on the evidence, to put aside extraneous prejudice and to follow the directions of the judge is fundamental to the jury system itself. This was emphasised by Mason CJ and Toohey J in The Queen v Glennon :-

This also reflected Lord Avonside's views in Stuurman v HM Advocate (at 117) :-

176. There is good sense in regarding a jury, properly directed, as able to overcome prejudicial publicity in the vast majority of cases. First, with the passage of time, any recollection that a juror may have of adverse publicity can be expected to fade, lessening its prejudicial effect. This was a factor taken into account, for example, in Stuurman v H M Advocate, where the publications occurred less than four months before the start of the trial. Lord Justice Justice-General Emslie stated :-

177. The curative properties of a lapse of time were acknowledged by Lord Hope in the recent decision of the Privy Council in Montgomery v H M Lord Advocate (unreported, 19 October 2000), where he stated :-

178. Secondly, the jury may sensibly be credited with the ability to overcome any pre-trial prejudice because of the nature and atmosphere of the trial process itself. Whatever impression of the case members of the jury may have gained beforehand, at the trial, they are given direct, first-hand access to the actual evidence in the case, presented systematically and in detail, with live witnesses tested by cross-examination and exhibits tendered for inspection. They are addressed as to the significance of such evidence by counsel on both sides and guided by the impartial summing-up of the judge. Many jurors will already harbour a healthy scepticism about certain kinds of press reporting. They can be credited with the intelligence to realise that whatever may have been reported, they are far better placed at the trial to make up their own minds on the evidence, with the help of the judge's direction. It is well-recognised that in such circumstances, immersed in what Lawton J called "the drama of a trial" (R v Kray [1969] 53 Cr App R 412 at 415), the residual effects of any prejudicial pre-trial publicity on the minds of the jury are likely to be minimal.

179. This view accords with that expressed by Lord Hope in Montgomery v H M Lord Advocate :-

A similar approach was adopted by the Court of Appeal in HKSAR v Yip Kai Foon [1999] 1 HKLRD 277.

180. Mr Caplan placed considerable emphasis on the fact that here, the source of the prejudicial publicity was not the media, but a high public official whose views were likely to be more influential. Whether or not a potential juror would draw such a distinction, the point does not make any significant difference.

F(iii) The judge's exercise of discretion vitiated

181. The judge quite rightly criticised the Financial Secretary's decision to publish the report. It was unprecedented both in Hong Kong and in the United Kingdom and had, until the last moment, faced persistent objection from the Attorney General's Chambers and the Inspector's solicitors.

182. As is accepted by Mr Thomas, even in its abridged version, the report was prejudicial to the respondents, especially the 1st respondent. It would have been clear, for example, to all concerned that the issues at trial would include the question whether and to what extent the 1st respondent had known and approved of certain unlawful transactions. In several places, the abridged report expressed the Inspector's opinion attributing relevant knowledge to him. As Pang J pointed out :-

183. The spectacle of a Financial Secretary pressing for publication and calling a press conference to publicise the report, knowing that a prosecution was intended but willingly taking the risk that the trial might be prejudiced is unedifying. This is all the more so since his decision to publish appears to have been almost wholly driven by the politically-motivated desire of deflecting criticism by members of the Legislative Council as to the cost of the inspection directed at himself. The notion that this was in aid of governmental transparency does not bear examination. Such transparency is laudable, but no one could reasonably suggest that it should be pursued at the risk of prejudicing a person's criminal trial on a serious charge. Publication could in any event have taken place after the trial.

184. The reasons given by the SFC for publication do not bear scrutiny either. Prior to publication, the police raids on Allied Group offices had received widespread publicity. The Group's shareholders and creditors, the Stock Exchange and the investing public in general were already fully aware that suspicion of wrongdoing had fallen on the Group's management. They did not need the abridged report to tell them of that fact or to show that suspected financial wrongdoing would be pursued.

185. The report should never have been published before the trial was over.

186. However, despite all these considerations justifying his criticism of the authorities, it does not follow that the judge was right to stay the prosecution on the ground of the report's publication. The power to stay does not involve the court's exercising any disciplinary jurisdiction over public officials who may have provided the grounds for the stay application.

187. Bearing in mind the principles governing stay applications in general and pre-trial prejudicial publicity in particular, it is clear, with respect, that the judge erred in his decision to grant a permanent stay on the prejudicial publicity ground.

188. Having considered the facts, Pang J stated his conclusion on the abuse of power ground as follows :-

This led to his view that :-

He stressed the seriousness of the fact that the prejudice emanated, not from the press, but by the conduct of publication "with the sanction of top government officials", concluding as follows :-

The judge mentioned submissions made about the efficacy of the judge's directions to counteract prejudice. However, he did not indicate why such measures might not be effective in the present case. He merely focussed on the suggestion that, if necessary, potential jurors could be individually questioned and vetted to ensure that they had not been prejudiced and rejected it stating :-

189. It was fundamental to the correct exercise of the judge's discretion that he should not only assess the seriousness of the prejudice that might weigh on a jury at the time of the trial but also give full consideration to whether, with proper direction by the jury, any residual prejudice could be overcome.

190. Unfortunately, the judge evidently took his statement that "indelible" prejudice had been caused as his starting point. That prejudice is "indelible" is not a finding of fact but a conclusionary judgment which cannot justifiably be made unless and until all relevant factors bearing on the possibility of a fair trial have been given full consideration.

191. It appears, however, that the judge's approach to the possibility of a fair trial was heavily coloured by his finding that there had been a deliberate abuse of power by the Inspector and the Financial Secretary, resulting in a failure properly to exercise his discretion. He also found that there had been deliberate "orchestration" of the police raids and the report's publication to maximise the adverse publicity against the respondents. While it is true that the events overlapped in time, there was no evidence to justify any finding of "orchestration" and Mr Caplan did not seek to support it. That finding, however, led the judge into regarding the publicity itself as the intended result of a further abuse of power, making him further disinclined to rescue the officials from what he saw as the consequences of their own misconduct.

192. In the result, the judge did not approach, in conformity with principle, the question of whether a fair trial was still possible. What is most striking in the present case is the fact that the relevant adverse publicity was generated in January 1993 which meant that if the trial was allowed to proceed after the stay application, it would not take place until more than seven years later. Yet Pang J did not address the critical question whether, given such a substantial lapse of time in a case that had not attracted lurid or sensational coverage, the residual prejudice from that publicity would necessarily deprive the respondents of a fair trial notwithstanding proper direction by the judge. Instead, he commented dismissively that it would be "ironical" for the blameworthy officials now to try to rely on such an argument.

193. Pang J's comments on jury-vetting and his failure to consider the general curative role of proper direction by the trial judge are in the same vein. They also reflect the dim view that he had taken of the official behaviour concerned. His suggestion that, because the prejudice was caused by the officials, the prosecution "should not be permitted to invoke the exceptional remedies" of jury-vetting suggests that he was applying a "disciplinary" approach and giving wholly inadequate weight to the importance of curative measures to any decision regarding the impossibility of fairness at the trial.

194. In these circumstances, the judge's exercise of discretion was vitiated. Bearing in mind the facts and circumstances already discussed above, I would exercise my discretion against a stay on either the abuse of power or prejudicial publicity ground. There is every reason to believe that the respondents will be able to receive a fair trial by an unprejudiced jury properly directed.

G. Conclusion

195. I would in the circumstances allow the appeal, set aside the judge's order for a permanent stay and remit the matter to the Court of First Instance for the respondents to be tried before a different judge.

196. I would also make an order nisi that the respondents pay the appellant's costs in the Court of Final Appeal and give leave to any party wishing to address submissions to the Court on the question of costs, to do so in writing, such submissions to be served on the other parties and filed with the Registrar of the Court of Final Appeal within 14 days after the date when this judgment is handed down. If such submissions are served and filed, I would grant the other parties liberty within 14 days thereafter to serve and file written submissions in reply. If no submissions are filed with the Registrar within 14 days as aforesaid, I would order that the costs order nisi thereupon take effect as an order absolute.

Sir Anthony Mason NPJ:

197. I agree with the judgment of Mr Justice Ribeiro PJ.

Chief Justice Li:

198. The Court unanimously allows the appeal, sets aside the judge's order for a permanent stay and remits the matter to the Court of First Instance for the respondents to be tried before a different judge. Further, the Court unanimously makes the order nisi and gives the directions referred to at the conclusion of Mr Justice Ribeiro's judgment.