HKSAR v. JAIN SANDEEP

HCMA 291/2021

[2022] HKCFI 512

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO 291 OF 2021

(ON APPEAL FROM ESS 26649 OF 2020)

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REASONS FOR JUDGMENT

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Introduction

1.  The appellant was convicted after trial on 20 May 2021, before Mr Tsang Hing-tung, Deputy Magistrate (“the Magistrate”), of a single charge of using an irradiating apparatus other than in accordance with a license, contrary to s7(1)(c), 7(2), 22(1) and 23 of the Radiation Ordinance, Cap 303 (“the Ordinance”).  The appellant was fined $4,000.  By his Notice of Appeal, dated 3 June 2021, the appellant appealed against his conviction on the grounds that it was against the weight of the evidence.

The Prosecution Case

2.  The appellant is a director of Diestel & Partners (Dental Surgeons) Limited (“the Company”)[1] and has a majority shareholding[2]. On 21 November 2019, the appellant, on behalf of the Company, made an application to the Radiation Board for a licence to ‘possess’ an irradiating apparatus[3]. That application was for the purpose of the installation and testing of an x-ray machine to be situated at the Melbourne Plaza practice in order to prepare for an application to ‘possess in functional state’ in respect of that x-ray machine at the practice[4], once it was declared fit for use.  This was necessary because the appellant wished to move an existing x-ray machine between practices.  According to P4, the appellant was already holding a licence in respect of the same machine at its Clear Water Bay practice.  That licence was to ‘possess in functional state’, and was valid until 25 March 2020[5]. The application for new licences came about because the x-ray machine was to be transported between practices and would require testing and inspection before it could be used.  On 29 November 2019, the Company was granted a licence for the installation and possession of the x-ray machine[6] (“the Possess licence”) to be situated at Room 1914, Melbourne Plaza, 33 Queen’s Road Central.  At that stage, the Possess licence did not permit the use of the x-ray machine to produce ionising radiation.  It was a licence for the purposes of possession only.  The application to ‘possess in functional state’[7] was not submitted until 29 May 2020 and it was not until 13 July 2020, that a Functional State licence was granted[8]. In the interim however, on 21 April 2020, the x-ray machine was used by a Dr Tang[9] to take an x-ray image of a patient in contravention of the conditions of the Possess licence.

3.  It was admitted under s65C of the Criminal Procedure Ordinance, Cap 221, that the appellant was a registered dentist and director and shareholder of the Company.  There was no issue as to the effective dates of the ‘Possess’ and ‘Functional State’ licences nor that the Company could not use the irradiating apparatus until such time as it was in receipt of the ‘Functional State’ licence.  In addition, it was accepted that the Company was to exercise due diligence to ensure it was not so used.  The Company had already pleaded guilty to a summons under ESS 26647/2020 in like terms and had been fined $4,000.

The Defence Case

4.  The appellant gave evidence and also called a member of staff.  The partnership operated four clinics with 70 staff, 22 of whom were dentists.  None of the dentists played any management role in the Company[10]. The Company had approximately 20 x-ray machines across the four clinics[11].  They all had appropriate licences which had to be renewed annually.  This responsibility was that of Kristy Yuen (DW2), who was employed in the Century Square practice where Dr Jain worked.  Although he was required to sign all applications for licences, the appellant did not check whether each and every machine was covered by a licence, this was a matter for Kristy Yuen to ensure.  She had completed all the necessary applications for signature including renewal of licences each year but was not in the practice of showing the licences to the appellant after she had received them.  There had never been a problem in the past 20 years with the status of the licences.

5.  The x-ray machine in question had originally been located in a different practice but the appellant had requested it be relocated to the Melbourne Plaza practice, which took place on or about 24 March 2020[12]. The move and related licence applications would normally have been dealt with by DW2, the accounting and administration officer[13].  However, on 1 March 2020, DW2 went on maternity leave and her position was covered by another administrator, Cecilia Cheng.  Like DW2, Ms Cheng worked out of Century Square and not the Melbourne Plaza practice.  She had only been working for the practice for a short period of time.  DW2 left on 1 March, at which time it had not yet been finally decided to move the x-ray machine to Melbourne Plaza.  As a consequence, DW2 left a note on file for Cecilia Cheng to explain what she needed to do about the movement and licensing of the machine.  Cecilia Cheng failed to submit the application and, shortly after the offending came to light, failed to return to work.

6.  The appellant told the court that he practised out of Century Square.  He did not attend at Melbourne Plaza on a regular basis.  He visited once every one or two months[14] in order to check on the staff and to ensure everything was neat and tidy but he did not check equipment[15].  It was for Kristy Yuen (DW2) to check the radiation licences, which she did out of the Century Square practice.  When she left on maternity leave, she created a file for Cecilia Cheng.  This file was in hard copy in Century Square and on DW2’s computer in the same place.  That soft copy could not be accessed by other clinics.  Dr Tang saw patients at Melbourne Plaza and held her own licence to use machines such as this.  She used the x-ray machine on a patient on 21 April 2020.  The appellant gave evidence that he did not know about this nor did he consent to it[16].  He also said that he did not know the x-ray machine in question had no functional licence because he had never faced the situation before.  Licences had always been renewed for the last 20 years without any issue[17]. Because of this, he said he had assumed they all had the correct licences[18].  He stated that this was his belief at the time.  He accepted he had never personally told staff that they could not use the machine until it had a functional licence[19].  He relied upon his staff to do that because he operated out of a different clinic.  He did not therefore know whether anyone had been told not to use the machine at the material time.

The Statement of Findings

7.  The Magistrate noted that the appellant had accepted that it was the appellant’s decision to move the x-ray machine to Melbourne Plaza and that DW2 had made the arrangements for her stand-in to cover that move.  He had not personally informed the staff that the x-ray machine was not to be used as he had left that to the administrative staff on site.  He was unaware of any instructions to be given to the staff at Melbourne Plaza in relation to the x-ray machine and its conditions of use i.e. that it could not be used until a ‘Functional State’ licence had been obtained.  The obtaining of licences was carried out by DW2.  The appellant believed all x-ray machines had the relevant licences.  DW2 essentially blamed the stand in administrator, Cecilia Cheng, for not complying with instructions provided to her in a practice manual which she had prepared for Cecilia Cheng’s use whilst she was away on maternity leave.  As a consequence, she did not find out about the error until she returned from maternity leave.

8.  The Magistrate referred to the relevant legislation.  S22 of the Ordinance placed a burden upon the licensee (“the Company”) to establish that the offence had been committed without its knowledge and that it had exercised all due diligence to ensure that such an offence was not committed.  He correctly found that s22 was not applicable to the appellant[20]. As for the position of the appellant qua Director under s23, he found that the appellant needed to establish on a balance of probabilities that he had no knowledge of and had not consented to the use of the x-ray machine.  The Magistrate did not accept the evidence of the appellant[21].  He thought it to be inconsistent.  On the one hand the appellant stated that he had assumed all the proper licences were in place yet he also accepted that the ‘Functional State’ licence for the x-ray machine would take a matter of weeks to obtain.  There would therefore necessarily have been a period of time when the machine could not be used.  He had taken no measures personally to inform the staff at Melbourne Plaza and had believed that would be done by someone else.  The Magistrate also noted that, despite having ordered the move of the x-ray machine and having signed an application for a ‘Possess licence’ only, the appellant had said he nevertheless believed that all the machines had licenses at the material time.

The Grounds of Appeal

9.  By his Perfected Grounds of Appeal, the appellant submits:

Ground 1:  The trial Magistrate erred in finding that the Appellant had not proved that he did not know and did not consent to the relevant X-ray machine being used on 21 April 2020.

Ground 2:  The trial Magistrate delivered his verdict on 20 May 2021 and gave reasons “in brief” [“the Reasons for Verdict”] for rejecting the defence and convicting the Appellant. On 17 June 2021 the trial Magistrate prepared a Statement of Findings [“the Statement of Findings”] supporting his decision to convict the Appellant.  The reasons relied upon for convicting the Appellant in the Reasons for Verdict are at variance with the reasons provided in the Statement of Findings.

Ground 3:  The trial Magistrate erred in rejecting the evidence of the Appellant, and in any event provided insufficient or contradictory reasons for so doing, particularly in the light of the fact that the evidence of DW2 was accepted by him, and in general terms her evidence corroborated or supported the evidence of the Appellant.

Ground 4:  In particular, it was clear from the appellant’s evidence that whilst he accepted the dentists working in the practice were authorized to use the X-ray machines there, that evidence was conditional on the basis that the X-ray machines were properly licensed and it was not evidence, as the trial Magistrate found, that the appellant consented to an unlicensed X-ray machine being used, and the trial Magistrate erred in drawing an inference form the Appellant’s evidence to that effect.

Ground 5:  Having specifically ruled in the course of the trial that the due diligence provision in section 22 of the Ordinance did not apply to the Appellant, because the licensee was the company and not the Appellant and having repeated that finding in his Reasons for Verdict, the trial Magistrate, in his Statement of Findings used elements of the due diligence test to support his decision to convict the Appellant of the offence particularized in the summons

Ground 6:  In all the circumstances, the conviction of the Appellant was unsafe and unsatisfactory

Respondent’s Submissions  

10.  Mr Cheng, on behalf of the respondent has very neatly synthesised his submission into a speaking note, which I have found most helpful and indeed Mr Reading SC agrees has assisted all parties to narrow down the issues before this court on appeal.  In a nutshell, Mr Cheng submits:

(a)  The liability of the appellant is triggered by an offence committed by the Company under s22.

(b)  That offence is a breach of the conditions of the Possess License held by the Company.

(c)  The conditions which were breached were:

i)    Failure to prohibit the use of the machine; and

ii)   Failure to exercise all due diligence to prevent the use of the machine.

(d)  The company, through the appellant, pleaded guilty to that offence.

(e)  S23 was therefore triggered and the appellant qua Director had the burden to prove on a balance of probabilities:

i)    The appellant had no knowledge of both the failure by the Company to prevent the use of the machine AND failure by the Company to exercise due diligence to ensure the machine was not used, OR

ii)   The appellant had not consented to the Company’s failure to prohibit the use of the machine AND failure to exercise due diligence to ensure the machine was not used

11.  In reply, Mr Reading SC submits that test is not correct as to the first limb of (e)(i) and (ii), although he accepts the test as to the second limb of each is correct.

The Law

12.  The amended summons read as follows:

“Information has been laid that on 21 April 2020, at Room 1914, Melbourne Plaza, 33 Queen’s Road Central, in Hong Kong, an offence under section 7(1)(c) and (2) of the Radiation Ordinance (Cap.303) has been committed in respect of an irradiating apparatus, namely Sirona Orthophos XG 5 DS Panoramic Dental X-Ray System, Machine / Control Panel S/N 70531, Tube / Insert / Head / Housing S/N 27307, in that the said irradiating apparatus, was used other than under and in accordance with a license; Diestel & Partners (Dental Surgeons) Limited being the person holding a license issued under the said ordinance in respect of the said irradiating apparatus is liable by virtue of section 22 (1) of the said ordinance, and you being the director of Diestel & Partners (Dental Surgeons) Limited are guilty of the like offence under section 23 of the said Ordinance.

Contrary to s7(1)(c), 7(2), 22(1) and 23 of the Radiation Ordinance, Cap 303”

13.  On the face of it therefore the appellant was being proceeded against under three separate sections of the Ordinance, which is not the case.  He was proceeded against only under s23, however Mr Cheng submits that s7 and s22 form the basis of his liability under s23 and that is why they were included.  I have to say that the drafting of this summons is most unhelpful and most probably led to some of the circuitous thought processes which led to the misunderstanding of the Magistrate, albeit the outcome would have been the same.

14.  Section 7 of the Ordinance reads:

“7. Control of radiating substances and irradiating apparatus

(1) Subject to such exemptions as may be prescribed, no person shall, except under and in accordance with a licence issued under this Ordinance –

(a) ….

(b) ….

(c) have in his possession or use,

any radioactive substance or irradiating apparatus.

(2) Any person who contravenes any of the provisions of subsection (1) shall be guilty of an offence and shall be liable to a fine of $50,000 and to imprisonment of 2 years.”

15.  So far as it pertains to the matter at hand, s7(1)(c) can simply be construed as stating that a natural person or a company, must have a licence to possess such a machine and must also have a license to use such a machine.  It is the starting point upon which any proceedings under s23 is reliant.  For each person must not only hold the relevant licence but hold it in accordance with its conditions and it is for a breach of condition by the person holding the licence, that the appellant has been pursued.

16.  There is no question that a suitably qualified natural person may hold both a license to ‘possess’ and a licence to ‘use’ a machine.  An issue however arises as to whether a company can hold what I will refer to as a ‘User’ licence as opposed to simply a ‘Possess’ licence.  Does a Possess licence impliedly allow use by those who work within a company?  Does each and every individual user have to obtain a separate ‘User’ licence?  If they do, that may suggest that a company, not being a natural person, can never hold a ‘User’ licence and it may affect the test to be applied on these facts under s23.

17.  Section 2 of the Radiation (Control of Irradiating Apparatus) Regulations refers to four different types of license:

“1. A licence to possess an irradiating apparatus in a non-functional state or to possess an irradiating apparatus pending consideration of an application for a licence to possess the apparatus in a functional state.

2. A licence to possess, or to possess and use an irradiating apparatus in a functional state.

3. A licence to use any irradiating apparatus or apparatuses.

4. A licence to sell or deal in any irradiating apparatus or apparatuses or any licence other than a licence referred to in categories 1, 2, and 3.”

18.  At the time of offending the Company held a Possess licence under category 4, as it is stated that it was to “possess for installation” [P5].  P6, the application made after installation, was to “possess in functional state”.  That application appears to fall under category 2.  It is not an application to possess and use in functional state.  That would suggest that the appellant, representing as he did the Company, was of the view that additional and individual licences would be applied for by the relevant professionals for a ‘User’ licence.

19.  This issue goes to the core of Mr Reading SC’s argument on the test to be applied against the appellant under s23.  But in order to understand its import, we need first to consider the liability of the Company under s22, as the appellant can only be prosecuted under s23 when an offence has first been found to have been committed by a company under s22.

20.  Section 22 of the Radiation Ordinance, Cap 303 states:

“22. Liability of licensees

Where it is proved to the satisfaction of the court that an offence against this Ordinance has been committed in respect of a radioactive substance or irradiating apparatus, a person holding a licence issued under this Ordinance in respect thereof shall be liable for the offence and to the penalty provided for it, unless he proves that the offence was committed without his knowledge and that he had exercised all due diligence to prevent the commission of the offence.”

21.  There is no issue that either a human being or a body corporate can be the ‘person’ liable as a licence holder under s22[22] and we know that the relevant licence is a ‘Possess for installation’ licence [P5].  Corporations have a separate legal identity in law.  They are treated as having a distinct and separate legal personality from natural persons such as directors, shareholders, members, office holders or employees etc., who make up the corporation.  A company can therefore be criminally liable in its own right but this is in addition to those who operate it and not instead of those who operate it.  Where the defendant in criminal proceedings is a body corporate, the law seeks to identify[23] the person(s), who are said to be the controlling mind(s) of the company.  In such a case, the actions and intentions of the controlling mind are imputed to the Company.  There is no evidence to suggest that the controlling mind of the Company in this case was anyone but the appellant.  He was an 80% shareholder.  No other dentist was involved in the management.  That being the case, his acts and intentions stand in the shoes of the Company for the purpose of s22.

22.  The Company, through the appellant, pleaded guilty to a separate summons under s22 and was fined. The offence which it admitted that it had committed was a breach of the conditions of the ‘Possess’ licence.  The relevant conditions read:

“ 2. The licensee is not permitted to use the irradiating apparatus.

3. The licensee shall exercise due diligence to prevent any persons to use the irradiating apparatus to produce ionizing radiations.

…

5. The licensee will comply with the provisions of the Radiation Ordinance, Cap 303, Laws of Hong Kong.”

23.  There appears not to have been any discussion on the specifics of that plea and as a result, it is not until today that the parties have made submissions on whether or not a company can breach condition 2, although Mr Reading SC quite properly accepts that it must have breached condition 3 and that the Company, through the appellant, knew it had breached condition 3.  What Mr Reading SC goes on to submit however is that it is physically impossible for a licence holder who is a company, to breach condition 2 and therefore it is inapplicable and should not form part of the test under s23.  Mr Cheng on the other hand submits that where a company holds the licence it is implied that it is held by the controlling mind and by those operating the company including those with the implied authority through the Company.  I had been attracted to this argument initially but further research has shown that there is a difference between a ‘Possess’, a ‘Possess and Use’ and a ‘Use’ licence as outlined above[24]. And, I note that the application under P6 was for a ‘Possess’ licence only.  As a result, I am minded to accept Mr Reading SC’s submission that a company cannot breach condition 2.  It must therefore be the case that in pleading guilty under s22, it must be presumed that the condition breached was condition 3, that of a failure to exercise due diligence.

24.  These proceedings were however against the appellant in his personal capacity as a director of the Company under s23.  It reads:

“23. Liability of directors, etc., where offence committed by company

Where a person by whom an offence under this Ordinance has been committed is a company, every director and every officer concerned in the management of the company shall be guilty of the like offence unless he proves that the act constituting the offence took place without his knowledge or consent.”

25.  The respondent submits the act constituting the offence is the failure by the Company to ensure no one used the machine along with its failure to exercise due diligence.  With respect to Mr Cheng’s argument, I now am of the view that the offence which the Company committed and which the Company admitted by its plea, must be that it failed to exercise due diligence in breach of condition 3 and that it knew that it had failed to exercise due diligence, because the section evidences a conjunctive test.  If I am correct in that, then it follows that the controlling mind knew it had failed to exercise due diligence for to whom else can knowledge be imputed.  If it is the issue of due diligence under condition 3, which is the live issue before the Court then the correct test is therefore the second limb of the test proposed by Mr Cheng i.e. that the burden was on the appellant to show that:

(a)  he had no knowledge that the Company had failed to exercise due diligence to prevent any persons from using the machine; OR

(b)  he had not consented to that failure to exercise due diligence.

26.  The focus before the Court below by all parties was the act by Dr Tang.  No criticism is laid at the door of either party or the learned Deputy Magistrate for that.  It has not been a simple task to identify the correct approach and, for my part, it was made more confusing by the manner in which the amended summons was drafted.  Be that as it may, this appeal is by way of rehearing on the papers and neither party is prejudiced by applying the correct test to the facts before the court below.  Whilst the appellant gave evidence to the effect that he did not know of or consent to the act of Dr Tang^[25], he did also accept that he had personally directed that the machine be relocated to Melbourne Plaza and that he had assigned his administrative staff to handle the relocation and relevant licences as was the usual practice. Although he had not been involved in the delegation of that duty by DW2 to another member of staff when DW2 went on maternity leave, he accepted that he took no steps personally to ensure that the machine would not be used prior to the obtaining of the ‘Functional State’ licence as this had always been a matter for his staff in whom he clearly had the upmost confidence.  He therefore assumed that the proper licences were in place and had not known that such a licence was still required for the X-Ray machine in question^[26].

27.  As the authorised representative who entered a plea of guilty on behalf of the Company, and as the controlling mind of the Company, the appellant had accepted that proper systems were not in place at the material time to prevent the use of a machine which had not yet received its ‘functional state’ licence.  As such, Mr Reading SC accepts that he is in difficulty now on appeal under s23, for the appellant cannot meet the burden placed upon him to show that he did not know of the Company’s failure to exercise due diligence or that he did not consent to that failure, and in so doing, that concession, which was wholly proper to make, disposes of this appeal without more.

Conclusion 

28.  This was an unfortunate lapse in practice which occurred because a trusted member of staff was on maternity leave and her replacement was negligent in carrying out her instructions.  Nevertheless, there needed to be better checks and balances in place in this Company, which the appellant accepts could have been addressed had he realised the possibility of human error in this respect and I understand all such checks and balances have now been introduced and this difficulty will not recur.

29.  Accordingly, this appeal is dismissed.