HKSAR v. FOOK WOO ENVIRONMENTAL TECHNOLOGIES LTD

HCMA628/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO. 628 OF 2009

(ON APPEAL FROM STS 3352 OF 2009)

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J U D G M E N T

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1. The appellant company, Fook Woo Environmental Technologies Limited, appeals against its conviction after trial on 18 June 2009 of a single summons of aiding, abetting, counselling or procuring the breach of a condition of stay, contrary to section 89 of the Criminal Procedure Ordinance, Cap. 221 and section 41 of the Immigration Ordinance, Cap. 115, namely in respect of Mr Liu Yu Lin (“Mr Liu”).  There is no appeal against the sentence of a fine of $5,000 imposed in consequence of that conviction.

THE SUMMONS

2. The summons, as amended, alleged that on 17 January 2008 the appellant company had “aided, abetted, counselled or procured” Mr Liu, a person permitted to remain in Hong Kong for employment subject to a condition of stay that he should only take such employment as approved by the Director of Immigration, namely as a waste disposal worker under a contract of employment with Fook Woo Environmental Technologies Limited :

“… to perform odd jobs at Fook Woo Environmental Technologies Limited located at Fook Woo Environmental Recovery Park, Wai Lok Street, Cha Kwo Ling in Kowloon other than approved by the Director of Immigration.”

3. There was no dispute that the contract of employment between the appellant company and Mr Liu, he being an employee recruited from outside Hong Kong under the ‘Supplementary Labour Scheme’, required that he worked at a stipulated address of his employer, namely G/F, 1/F and 3/F of the Fook Woo Group building, Kui Sik Street, Fanling.

THE PROSECUTION CASE

4. The nub of the prosecution case lay in the testimony of Ms Cheung Yuk Hang (“Ms Cheung”), a Labour inspector of the Labour department.  She testified that on the afternoon of 28 March 2008 she had attended premises at Fook Woo Environmental Recovery Park, Wai Lok Street, Cha Kwo Ling in Kowloon at 4:55 p.m.  She observed about 10 workers, some of whom were operating machines to deliver waste from one place to another at which place packaging of the waste took place.  She observed Mr Liu for about three minutes in the middle of the working area, at a place at which different kinds waste, namely paper, metal and cans, were located choosing some waste.  At her request Mr Liu presented a document of identification, namely a Hong Kong identity card and a China entry/exit permit.  Whilst on the premises she met the person in charge, namely Mr Chu Chu Kwong (“Mr Chu”).  She told him that Mr Liu was not permitted to work at that place.  She said that Mr Chu had said that :

“…. he was not aware of the addresses stated in the contract.  He was just doing according to the company instruction approve him to work there.”

She left the Wai Lok Street premises at 5:20 p.m.  Whilst she was on the premises she observed that all the workers were working busily.  She added that even after she had spoken to Mr Liu he resumed his work.

5. Ms Cheung said that earlier that afternoon she and a colleague had visited premises of Fook Woo Environmental Technologies Limited at G/F, 1/F and 3/F of the Fook Woo Group Building, Kui Sik Street, Fanling.  In advance of that inspection she had checked the records of the Labour Department and come to learn that there were three employees authorised under the ‘scheme’ to work at those premises, one of whom was Mr Liu.  However, on that day none of those persons was present at the Fanling address.  As a result, she was alert as to whether or not he was present on the premises at Wai Lok Street.

THE DEFENCE CASE

6. In its defence at trial, the appellant company called three witnesses, namely Ms Cheung Ah Suen, an Executive Assistant to the Directors, Mr So Wing On, who testified that he was responsible for the operations of the company and a superior of Mr Chu, and Mr Chu himself.

7. Ms Cheung Ah Suen testified that Fook Woo Environmental Technologies Limited was one of four companies in the Fook Woo Group.  The Group employed around 170 employees.  There were four directors of Fook Woo Environmental Technologies Limited, which operated six re-cycling sites.  The company had been a participant in the imported Labour scheme since 2003.  She was aware that such an employee was not permitted to work at a site other than the one stipulated in the contract of employment.  The company’s internal working guidelines required compliance with the Immigration Ordinance.

8. Mr So testified that he was responsible for the operations of Fook Woo Environmental Technologies Limited.  On 28 March 2008, Mr Liu had worked at the Fanling premises until 2:30 p.m. when he left work after he was invited to go home following his complaint of feeling unwell.  On the following day, at Mr So’s request and in his presence he had signed an application for leave, although he did not supply a medical certificate.

9. Mr Chu testified that there were 12 employees under his control at the company’s premises at Wai Lok Street on 28 March 2008 when two Labour inspectors had visited those premises.  He answered in the affirmative an enquiry from them as to whether not there were any “imported” workers on the premises.  At their request that he bring to them any “imported” workers on the site to them, he brought Mr Liu to the office to meet the Labour inspectors.  Mr Chu denied that he had allowed Mr Liu to work on the premises.  He knew that he was not permitted to work at those premises.  He explained that he was there taking a rest and visiting clansman.  He denied that he had told Ms Cheung that he allowed Mr Liu to work there “according to the company’s instructions”.

REASONS FOR VERDICT

10. The magistrate summarised the defence advanced by the company thus :

“… that Mr Liu was not, in fact, performing any work at the location in Cha Kwo Ling, that the observation of the Labour officer is flawed and, in any event, the company itself could not be said to have aided and abetted whatever Mr Liu did at that location, because it could not be proved that it ever formed the intent required to the offence of aiding and abetting..”

11. Of the credibility and reliability of Ms Cheung, the magistrate said :

“… I found her to be a completely reliable witness.  She was obviously truthful, and she was obviously credible and she was, to the best of her ability, trying to recall exactly what she said happened that day.

   I bore in mind the criticism of her evidence, but I have no doubt at all that she saw what she said she saw, namely, that Mr Liu was performing work at the Cha Kwo Ling site.  He was one of about 10 workers who were working continuously in and around that waste disposal sorting area.”

12. Of Mr Chu’s evidence, the magistrate found :

“I found that there were issues of reliability in respect of Mr Chu as to what he actually said and what he recalls having said.  I said (that) what was seen was a person working there.  So, I do not accept what Mr Chu says about him visiting Mr Yeung …I found that what Mr Chu said about Mr Liu’s presence does not, in any way, cast doubt upon what PW1 has told me about what he was doing there.”

13. Of Mr So’s evidence that Mr Liu had been given sick leave on 28 March 2008, the magistrate said:

“I also had some difficulties with the evidence of Mr So.  Mr So has told me that there was a sick leave application given to him on the 29^th, and he had given leave to the man on the 28^th.  But the man was seen to be working in the site, and that is not consistent with him being given sick leave, or being on sick leave.  So, again, I find that the evidence of Mr So does not cast doubt on the observation of PW1, that Mr Liu was actually working there.”

14. In the result, the magistrate determined, in reliance on the evidence of Ms Cheung, that Mr Liu was “performing work at the site involving the sorting of the waste”.  He said that it followed that Mr Liu was in breach of his condition of stay.

15. Of the issue of whether or not the appellant company was culpable in consequence of that finding, the magistrate analysed the available evidence in a series of sequential steps.  First, of Mr Liu’s work, he said :

“… the work he was performing is simply the kind of work you do if you are told to do it and (are) obliged to do it.  Nobody does such work out of charity or friendliness.  They do it because they are told to do it.  I formed the view from the observation that Mr Liu must have been under instruction to be performing that work.”

16. Second, he found that it was well known in the company, and known to the workers, that :

“… the imported workers have to work at the location they are designated to work at, and I believe that knowledge can be attributed to the company and its officers.”

17. Third, he determined that :

“… it is also clear that, Mr Liu must have been working there at the direction of the company.  I can think of no other explanation for him to work at that location-to do the work he was seen to be doing at the location.”

18. In the result, the magistrate concluded that the appellant company “… did aid and abet the breach of condition of stay by Mr Liu”.  Accordingly, he convicted the appellant company of the amended summons.

Grounds of appeal against conviction

19. On behalf of the appellant company Mr Cheng Huan, SC advanced several grounds of appeal against conviction.  Firstly, it was contended that the period of about three minutes, in which Ms Cheung had observed Mr Liu working, was of such brevity that it was wrong of the magistrate to have determined that he must have been acting under instructions to perform that work. 

20. Secondly, it was submitted that there was no or no sufficient evidence that Mr Liu was working under the instructions of the appellant company.  Even if there was such evidence, there was no or no sufficient evidence to prove that the instructions were given by someone in the company who had the authority to give such instructions.  The magistrate made no specific finding that the liability of the appellant company arose from the conduct of either Mr Chu or Mr So.  Of the former, it was submitted that that was insufficient evidence that he occupied a position within the appellant company to attribute liability in the company by his conduct. 

21. Thirdly, it was submitted that there was a material error in the trial that the magistrate had not only allowed but also joined in cross-examination of Mr So by the prosecution to discredit him for having failed to bring to the attention of the Immigration authorities at an interview conducted of him by them on 6 January 2009 evidence that he had granted Mr Liu sick leave on the afternoon of 28 March 2008 prior to the visit by Ms Cheung and her colleague to the Wai Lok Street premises.  That questioning was impermissible since the out-of-court interview was conducted under caution and Mr So availing was merely availing himself of his rights.

THE SUBMISSIONS OF THE RESPONDENT

22. Ms Agnes Chan submitted on behalf of the respondent that Mr So, as the person responsible for the six recycling sites including the Wai Lok Street site, represented the directing mind and will of the appellant.  She submitted that the evidence established that either Mr Liu was working at the Wai Lok Street site on the instruction of Mr So or with his knowledge, so that liability was attributable to the company.

23. Of the challenge to the magistrate’s finding of fact that Mr Liu was working at the Wai Lok Street site, Ms Chan submitted that that was a finding open to him on the evidence.  Further, that in his analysis the magistrate demonstrated that he was alive to the challenge to the reliability of the evidence of Ms Cheung.

24. Of the issue taken in cross-examination of Mr So, namely as to why it was that he had not revealed to the Immigration authorities when interviewed under caution that Mr Liu had been granted sick leave for the afternoon of 28 March 2008, Ms Chan pointed to the fact that Mr So had said that, having been cautioned, he had chosen not to give that explanation.  Further, that the magistrate had not relied on that cross-examination in any way in his findings in respect of Mr So or the defence case.

A CONSIDERATION OF THE SUBMISSIONS

Was Mr Liu working at the Wai Lok Street premises?

25. There is no dispute that the purpose of the visit of Ms Cheung and her colleague to the Wai Lok Street premises was to conduct an inspection to determine whether or not employees employed under the ‘scheme’ were working at a place at which they were not permitted to work.  It follows that the whole basis of the observation of the conduct of such persons was to determine whether or not they were working.  Indeed, in her evidence in chief she said:

“So when I … arrived at that working site, I paid special attention to that sort of work, that is the waste disposal.”

26. Notwithstanding the short period of time in which she viewed Mr view, namely three minutes, her evidence in respect of her observations of Mr Liu was unambiguous: he was working sorting waste.  Indeed, notwithstanding that she warned Mr Liu that he was working at the place at which he was not permitted to work after the conversation ended Mr Liu resumed working.

27. Clearly, the magistrate was entitled to accept that evidence, as he did, and to reject the evidence of Mr Chu, as he did, that Mr Liu was on the premises taking a rest and/or visiting a clansman.

Were the restrictions on the place at which Mr Liu was permitted to work known in the company

28. On the evidence of Ms Cheung Ah Suen, Mr So and that of Mr Chu the magistrate was entitled to find that it was well known in the company that employees employed under the scheme had to work at the location stipulated in their contracts of employment.  Mr So said that Mr Liu was employed to work at the Fanling site.  For his part, Mr Chu acknowledged that Mr Liu was not permitted to work at the Wai Lok Street premises.

Was Mr Liu working there under instructions?

29. In reaching his conclusion that Mr Liu was working there under the instructions on the afternoon of 28 March 2008 the magistrate applied realistic and commonsense logic.  Why else would someone sort out different categories of rubbish, if he was not doing so under instructions?

Was Mr Liu working there under instructions from the company?

30. In answering in the affirmative the question as to whether or not Mr Liu was working there under instructions from the company again the magistrate applied realistic commonsense logic :

“It is also clear that Mr Liu must have been working there at the direction of the company.  I can think of no other explanation for him to work at that location-to do the work he was seen to be doing at that location.”

Were such instructions given to Mr Liu to work there by someone in the company who had authority to give such instructions on behalf of the company?

31. Although the magistrate determined that Mr Liu was working there, “at the direction of the company”, he did not identify an employee or employees as having given those directions.  In convicting the appellant company, the magistrate said :

“It seems clear to me that the prosecution have established on the basis of PW1’s evidence the inferences I can draw from that, that the Defendant company did, in fact, aid and abet the breach of condition of stay by Mr Liu, and I so convict it of that offence.”

The magistrate reached that unparticularised determination notwithstanding that it had been submitted by counsel representing the appellant company that not every member of staff employee of the company could be regarded as the “directing mind” of the company and, in particular, having had his attention drawn to the judgment of the House of Lords in Tesco Supermarkets v Nattrass [1972] AC 153.

32. It was Mr So’s evidence that he was the person who directed where Mr Liu worked and that at about 2:30 p.m. on the afternoon of 28 March 2006 he had granted him sick leave.  Having made the cryptic observation that he “had some difficulties with the evidence of Mr So” the magistrate adverted to his finding that Mr Liu had been found working on the Wai Lok Street site.  Of that, he noted :

“That is not consistent with him being given sick leave-or being on sick leave.  So, again, I find that the evidence of Mr So does not cast doubt on the observation of PW1 that Mr Liu was actually working there.”

There is nothing to suggest that in reaching that conclusion the magistrate had drawn an adverse inference against Mr So for not having disclosed the issue of the grant of sick leave to Mr Liu on 28 March 2008 during his interview under caution by an immigration officer.  Indeed, at the time of the cross-examination of Mr So the magistrate had agreed in terms with the suggestion of counsel for the appellant company that in the circumstances Mr So was entitled to exercise his right of silence.

33. Whilst that determination of the magistrate was a clear rejection of Mr So’s testimony that he had granted Mr Liu sick leave on the afternoon of 28 March 2008, it was not a determination that he knew contemporaneously that Mr Liu was working at the Wai Lok Street site let alone that he had instructed him to do so.

34. There was no dispute that Mr Chu was the person in charge of the Wai Lok Street premises on 28 March 2008.  Indeed, he was called as a witness at trial in the appellant company’s defence and testified to that effect.  He said that there were 12 employees under his control at those premises that day.  Clearly, he was aware of Mr Liu’s presence there that day since he asserted that he was there taking a rest and visiting a clansman.  In his evidence-in-chief, Mr Chu said that he had not allowed Mr Liu to work on the premises that day.  In cross-examination, he accepted in terms that he knew that Mr Liu was not permitted to work at those premises. 

35. As noted earlier, clearly the magistrate was entitled to reject his evidence that the Mr Liu was present merely resting or visiting a clansman and accept the evidence of Ms Cheung that he was working on the premises.  It was her evidence that she had observed Mr Liu “… standing in the middle of the working site choosing some waste”.  She described the premises as being an open space of 10,000 feet.  In those circumstances, given the undisputed evidence that Mr Chu knew that Mr Liu was not permitted to work on those premises, that he was in charge of those premises and the persons working there were under his control clearly Mr Chu was aiding and abetting Mr Liu to breach a condition of his stay.

Was Mr Chu’s conduct attributable to the appellant company?

36. The remaining issue is whether or not Mr Chu’s conduct was attributable to the appellant company.  It was Mr So’s evidence that at the material time he was responsible for all six re-cycling sites operated by the appellant company.  He was Mr Chu’s superior.  They had telephone conversations everyday.  For his part, as noted earlier Mr Chu was in charge of the Wai Lok Street premises and those persons who worked there were under his control.

37. In his reasons for verdict the magistrate considered an aspect of Mr Chu’s status within the company, in the context of his oral response to Ms Cheung when informed that Mr Liu was not permitted to work at the premises, namely in asserting that Mr Liu was doing so according to the “instruction” and “approval” of the company.  Of that, the magistrate determined :

“… it seems to me that whatever Mr Chu said would not be capable of binding the company.  He is not in a position to do that by way of admission.”

The magistrate determined that the issue was relevant only to a determination of Mr Chu’s credibility, in light of the contradictory evidence of Ms Cheung as to that conversation.

38. The magistrate did not articulate any reasoning for his conclusion that Mr Chu was not in a position to bind the company by way of admissions in his conversation with Ms Cheung.  Mr Chu was the person in charge of the site and spoke to Ms Cheung in that capacity. Certainly, the magistrate did not refer to the line authorities relating to the issue of apparent authority referred to in the Attorney-General v Harold Houseware Limited [1996] 4 HKC 787 and, in particular, Edwards v Brookes (Milk) Ltd [1963] 3 All ER 62.  Be that as it may, the magistrate’s determination that Mr Chu was not in a position to bind the appellant company by way of admissions is not determining of the issue of whether liability is attributable to the company by his conduct in aiding and abetting Mr Liu to breach his condition of stay in Hong Kong.

39. In addressing the issue of the attribution of liability to a company, in his speech in the Privy Council in Meridian Global Funds Management Asia Limited v Securities Commission [1995] 2 AC 500 Lord Hoffmann said (page 507 D-F) :

“  One possibility is that the court may come to the conclusion that the rule was not intended to apply to companies at all; for example, a law which created an offence for which the only penalty was community service.  Another possibility is that the court might interpret the law as meaning that it could apply to a company only on the basis of its primary rules of attribution, ie. if the act giving rise to liability was specifically authorised by resolution of the board or an unanimous agreement of the shareholders.  But there will be many cases in which neither of these solutions are satisfactory; in which the court considers that the law was intended to apply to companies and that, although it excludes ordinary vicarious liability, insistence on the primary rules of attribution would in practice defeat that intention.  In such a case, the court must fashion a special rule of attribution for the particular substantive rule.  This is always a matter of interpretation: given that it was intended to apply to a company, how was it intended to apply?  Whose act (or knowledge, or state of mind) was for this purpose intended to count as the act etc of the company?  One finds the answer to this question by applying the usual canons of interpretation, taking into account the language of the rule (if it is a statute) and its content and policy.”

40. It is clear from the evidence led at trial that compliance with conditions imposed in employment contracts made under the ‘Supplementary Labour Scheme’ is policed by inspectors of the Labour Department.  The parties to the employment contract were the appellant company and Mr Liu.  As Ms Cheung testified, armed with information from her Department’s records as to the identity of the workers employed under the scheme who were permitted to work at the appellant company’s Fanling site, she attended that site.  It being a Saturday and the workers busily engaged in their work at the site she said that she was surprised not to find Mr Liu and the other two workers permitted to work at the site under the scheme.  It was in those circumstances that, when she inspected the Wai Lok Street site that she was alert to whether not Mr Liu was working there.  Having declared loudly that she was an inspector from the Labour Department Ms Cheung was attended by Mr Chu, as the person in charge of the site.

41. Clearly, the effective implementation of the scheme, in particular the stipulation that a worker work at one site only, requires the company to have in place systems that ensure that a worker employed under the scheme works only at the site stipulated in his contract of employment.  No doubt, the appellant company had a number of measures in place to seek to ensure compliance, including its internal working guidelines about which Ms Cheung Ah Chuen testified.  However, clearly the primary ‘gatekeeper’ of compliance was the man in charge of each of the respective sites.  In the case of the Wai Lok Street site that was Mr Chu.  He was in charge of who worked at that site.

42. Of course, it is necessary to be mindful of the warning sounded by Lord Hoffmann in his speech in Meridian Global of the attribution of liability to a company through the knowledge or acts of one of its servants (see page 511 G-H) :

“But their Lordships would wish to guard themselves against being understood to mean that whenever a servant of a company has authority to do an act on its behalf, knowledge of the act will for all purposes be attributed to the company.  It is a question of construction in each case as to whether the particular rule requires that the knowledge that an act has been done, or state of mind which it was done, should be attributed to the company.”

CONCLUSION

43. In the result, I am satisfied that the magistrate was correct in determining that the appellant company “… did, in fact aid and abet the breach of condition of stay by Mr Liu”.  Mr Chu’s conduct in aiding and abetting Mr Liu to do so is attributable to the appellant company.  Accordingly, I dismiss the appeal against conviction.