CALTEX OIL HONG KONG LTD. v. DEPUTY DISTRICT JUDGE CHRISTIE AND ANOTHER

1994, No. MP 1542

HEADNOTE

Administrative Law - Judicial Review

X, an employee of Caltex, over a long period accepted bribes for the sale of diesel oil. He was convicted of an offence contrary to s. 9 of the Prevention of Bribes Ordinance. The penalty on conviction, provided in s. 12, includes: -

"and shall be ordered to pay to such person or public body and in such manner as the Court directs the amount or value of any advantages received by him."

The Deputy Judge ordered the Defendant to pay $656,513 to the Crown, although Caltex had sought such payment.

Held

Granting 'certiorari' and 'mandamus', the provisions of section 12 were an amalgam of earlier separate Ordinances dealing with corruption of both public and private servants or agents. The words "as the Court directs" refer to the manner of payment. As the corrupted person here was not a servant of a public body the only person to be repaid would be the employer, Caltex, A.G. for Hong Kong v. Reid [1994] 1 NZLR 1 - accountability of fiduciary for bribes.

1994, No. MP 1542

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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J U D G M E N T

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1. Mr. Wong, on behalf of Caltex Oil Hong Kong Limited, (Caltex), moves for an order of judicial review pursuant to leave granted by Rhind J. to review a decision of Deputy Judge Christie sitting in the District Court.

2. Might I say at the outset, that although the argument has not taken long, the court has been considerably assisted by both counsel who have prepared written submissions, bundles of authorities and delivered them to me in time so that I could spend time out of court reading them and understanding what the points were; this has saved considerable time. Both firms of solicitor are to be commended and I am grateful to Miss Shine who has put forward in her written and in oral submissions all the points that she says justifies the court in not granting this judicial review.

3. The brief facts are that Mr. Leung Siu-ping was a Senior Marketing Executive with Caltex in Hong Kong. His responsibilities were within the Supply and Trading Unit, to handle the business of Caltex with marine dealers, including the negotiation of the selling of diesel oil. He was entitled to recommend discounts to the dealers and receive purchase orders. As an employee, he was prohibited from soliciting or accepting advantages in relation to his company's affairs or businesses.

4. Leung met a man, Mr. Fan, who operated a marine dealership called "Tai Hing Hong". There was discussion over the purchase of diesel oil and Mr. Fan was told that if he purchased diesel oil in greater quantities he would get lower prices.

5. It was April 1991 when the corrupt practices of Leung started; he told Fan that as the amount of oil had been lowered, he should get a commission of 3 cents per litre, and in all he corruptibly obtained some $656,000.00 as a result of obtaining kick-backs or bribes for the sale of this diesel oil in the course of his employment.

6. It was a serious corruption by a person who held a position of trust, and was continued over long period of time. It is not necessary for me to go into the criminal matters other than to say, by way of passing, that it seems to me that the sentence of twelve months' imprisonment was on the low side, albeit he was a man of good character. It was on any view a serious matter of corruption.

7. The offence is created by Section 9 of the Prevention of Bribes Ordinance and deals with corrupt transactions with agents. An agent is defined as including "a public servant and any person employed by or acting for another".

8. The penalty for the offence is provided by Section 12. At the end of Section 12(1) are these words:

"and shall be ordered to pay to such person or public body and in such manner as the Court directs the amount or value of any advantages received by him."

In offences, contrary to Section 3 (corruption by Crown servants), the payment is solely to the Crown. Mr. Wong very helpfully, has traced the legislative history of this Ordinance and in my judgment it is important to examine it.

9. The power to order a repayment of corrupt money derived, as far as corruption of public officers, from Section 2 of the Public Bribes Corrupt Practices Act 1889. In Hong Kong, the Prevention of Corruption Ordinance (Cap. 215), was promulgated in 1947, and was a substantial copy of the Prevention of Corruption Act 1906. The Court was empowered to order a repayment of the corrupt money to the "principal" of the agent. However, in the 1889 Act the power of repayment was mandatory - in the 1948 Ordinance it was discretionary.

10. Cap. 201 was promulgated in 1970 and in Clause 12 of the Explanatory Memorandum for the Bill is found "... The provisions in Cap. 215 for compelling an accused ... to pay up the same are retained, save that under this clause the power of the Court to order him to do so will be mandatory and no longer discretionary".

11. Section 12(1) of Cap. 201 was therefore enacted with the words "and shall be ordered". The statutory position reached was that there was now one Ordinance dealing with corruption of and by public and private servants.

12. The words "public body" is a result of the combination of the former separated offences. Further the definition of "principal" in Cap. 215 was "includes an employer" and in Cap. 201, it was defined as 5 types of person and (b) "in the case of an employee of a public body, the public body".

13. It follows, therefore, in my judgment that in Section 12(1) of Cap. 201 the Court has a mandatory obligation to order the convicted person to pay either to "such person" or "public body". "Such person" will cover the 5 categories of person found in the definition section and "public body" will be the sixth, that is when the employee corrupted is the employee of the public body.

14. The words "as the Court directs" refer to the manner of payment - they do not give the Court a choice as to whom the repayment is made.

15. In this case the person corrupted was an employee of a private company and the payment could only be made to that company.

16. The unusual feature of this case is that the solicitors acting for Caltex, had written prior to the trial a letter dated 25th April. This is an important letter because it sets out the provisions of Section 12, and asks Crown Counsel to apply to the Court "if the defendant is convicted for advantages that he had received to be paid to our client". However, Crown Counsel is recorded as saying "For restitution. It is normal under Section 12. To the Crown as another party. Requested by Caltex, which regards itself as a victim, to tender a letter claiming financial damage. It seeks an order for payment to Caltex. The Crown takes no position. Simply tender this letter."

17. The Judge said "Will order in favour of Crown. Matters put forward in letter inconsistent with facts Court has applied to sentence."

18. It may be the Judge was misled, as it appeared from the correspondence that Caltex had to demonstrate they had suffered financial loss, and the Judge had sentenced on the basis that they had not.

19. I consider that the corrupt practice here, albeit there was a general power to negotiate prices, was the fact that the company might have sold at a higher price. The intention always by the Defendant had been to act corruptly and, if he sold at a discount he could obtain his bribe money. The company therefore did suffer financial loss, but for the purposes of repayment under Section 12, it is not necessary to decide that. The judge, in my judgment, should have adjourned the matter if he was troubled and sought guidance as to the law. He should have been referred to relevant authorities and the construction of Section 12.

20. The liability of an agent or servant to his principal for unlawful acts is well settled - see e.g. Reading v. Attorney-General [1951] AC 507 and most recently, the Attorney-General for Hong Kong v. Reid [1994] IN ZLR 1 where the Privy Council said, "A bribe is a gift accepted by a fiduciary as inducement to him to betray his trust. A fiduciary is not always accountable for a secret benefit, but he is undoubtedly accountable for a secret benefit which consists of a bribe."

21. In my judgment, the bribe money here belonged to the company. It could not belong to anybody else. It was not necessary, as Miss Shine has sought to persuade me, for civil proceedings to be brought. I can see no justification why the Crown itself made an application for restitution. There is no suggestion the Crown has lost any money. The Crown submitted that it is a public body, as is the Urban Council amongst other people, and the Judge appeared to think that he had some selection to make between the Crown and the employer. In my judgment, he did not. The decision of the Judge was flawed by his failure to appreciate the position in law.

22. Even were this a case of discretion, in other words, that he had to balance competing claims, which in my judgment it was not, then the discretion must be exercised in a judicial manner. I can see no justification why the discretion would be exercised on behalf of the Crown. This has nothing at all to do with the Crown. This was a private corruption, if I may call it that, between a Caltex employee and a private marine company.

23. Such discretion could only have been exercised in one way, namely, to give the money to Caltex. I, therefore, have come to the conclusion that this decision was based on an error of law. It is not necessary for me to decide whether it was unreasonable. I am satisfied that even if it was a case of discretion that it was fundamentally flawed.

24. Certiorari will go to quash the decision. I do not consider it appropriate to send the matter back to the Judge for reconsideration and therefore mandamus will go directing him to make an order in favour of Caltex for $656,513 payable as to $328,265 within 28 days and the balance payable by monthly instalments of $13,677.