THE QUEEN v. CHUTAT

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MAGISTRACY APPEAL NO. 277 OF 1993

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(On appeal from ESC 505920 of 1992)

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JUDGMENT

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1. This is an appeal against conviction from a magistrate who found the appellant guilty of two similar offences under s. 9(2)(b) of the Prevention of Bribery Ordinance, Cap. 201 of offering an advantage to PW2, Dicky Chan Tat-lo (“Dicky Chan”), as an inducement to or reward for or otherwise on account of Dicky Chan showing favour to the appellant in relation to Dicky Chan’s principal’s affairs or business. Dicky Chan was an employee of one Recio & Casas Limited, a design consultancy firm retained by the Bank of America. At the relevant time, Dicky Chan was the project manager of a renovation project in respect of the 2nd floor of the Bank of America Tower (“the BA project”) in which the appellant’s company was the contractor, and a subsidiary or department of the Bank of America was the client. I shall simply call the client “the Bank”. As the project manager, it is common ground that Dicky Chan had control over the work performed by the appellant’s company in the BA project and he could, if he wished, cause trouble to the appellant’s company in respect of the work performed as well as the timing and amount of payments to be received by it from the Bank.

2. The appellant raises two main grounds of appeal, namely,

(1)     the magistrate erred in allowing the amendment of the two original charges of offences under s. 9(2)(a) of the Prevention of Bribery Ordinance to offences under s. 9(2)(b) of the same Ordinance; and

(2)     the convictions are unsafe and unsatisfactory.

3. The main evidence against the appellant is from Dicky Chan, and it is common ground that Dicky Chan is an accomplice. He was granted an immunity to give evidence. He told the magistrate that he met with the appellant on two occasions in the Honolulu Restaurant. On each occasion, a sum of about $40,000 was paid in cash by the appellant to him. He was not specific as to the amount given, nor the date of each of the two occasions, save that it was during the time when the BA project work was proceeding. On both occasions, the appellant did not tell him the reason for the payment, but merely said “thank you very much”.

4. Apart from the record of the appellant’s interview with ICAC officers, in which he admitted he paid a sum of over $10,000 or maybe as much as $40,000 to Dicky Chan, there was no corroboration of Dicky Chan’s evidence, either in respect of the second payment, or the dates of both payments.

5. In convicting the appellant, the magistrate had apparently borne in mind the fact that Dicky Chan was an accomplice and that there was the lack of corroboration as aforesaid. In regard to the first payment, which was the only payment the appellant admitted, the appellant said that it was for design fee paid by him to Dicky Chan for his free-lance design work in respect of the renovation or decoration of a Japanese restaurant of which another of the appellant’s companies was the contractor. I shall return to this aspect later.

6. The basis of the convictions is that by reason of the position of control occupied by Dicky Chan over the work carried out by the appellant or his company in the BA project and of the fact that when the payments were made, the BA project was in progress, there was an irresistible inference that the appellant intended to pay the money as a sweetener to Dicky Chan so that should the occasion arise Dicky Chan would show favour to the the appellant or his company regarding such work.

7. The magistrate, however, as appears on the record, does not seem to have taken into account the following significant matters in the evidence:

(a)      the time when Dicky Chan performed his interior design work for the Japanese restaurant; and

(b)     what the appellant was supposed to have advised Dicky Chan to do regarding the money after the appellant made the first payment.

8. The appellant’s admission to the ICAC of a single payment of over $10,000 or maybe $40,000 to Dicky Chan was coupled with the explanation that he paid Dicky Chan for the purpose of the latter’s design work done in respect of the Japanese restaurant. Even Dicky Chan under cross-examination accepted that it was possible that the first payment was made by the appellant as a gift for his help rendered in respect of the Japanese restaurant. The timing of this payment is important. In chief, Dicky Chan told the court that he first knew of the BA project in about March 1991 and the work of this project started in April 1991. He also said that the assistance rendered by him to the appellant regarding the Japanese restaurant took place before the BA project, in about January or February 1991. He could not recall the exact date of either of the two payments made by the appellant: he only said the first payment was made after April 1991 and the second payment was made about 2 to 3 months thereafter. Nor could he recall the exact amount of each of the payments. The magistrate accepted the impreciseness of the time and amount of each of the payments as caused by the loss of memory and lapse of time. In cross-examination, however, Dicky Chan was compelled, but only after some hopeless quibbling, to admit that the work he did for the Japanese restaurant could not have been before March 1991. The significance, as I see it, is that Dicky Chan dissociated the first payment with the work he did in respect of the Japanese restaurant by originally telling the court a larger gap of time, between January or February 1991 when he did the work and after April 1991 when he received the first payment. The obvious purpose was to link the payment with the BA project. In his first statement to the ICAC, he did not disclose his rendering of assistance to the Japanese restaurant project. It was only after the appellant had been interviewed by the ICAC and let them know about this matter that Dicky Chan was asked about it in his second statement to the ICAC. He was even reluctant to tell the court about this matter, and he said it was not the appellant who discussed it with him, although in cross-examination, he admitted that the appellant telephoned him to introduce this matter to him. All these pieces of evidence, in my view, suggest that Dicky Chan wished to incriminate the appellant, and it does not appear to me that he did not remember this incident about the Japanese restaurant because of lapse of time or memory. My view is reinforced when one looks at how Dicky Chan implicated the appellant in his first statement to the ICAC given on 3/9/92 when he said:

“At that time I understood him (i.e., the appellant) to mean that he was tendering for the Bank of America job, because save and except this incident there was nothing else for him to say ‘thank you’ to me.”

9. The emphasis was that the payment was for Dicky Chan to assist the appellant in obtaining the contract in respect of the BA project, which was all along the Crown’s case until at the end of the examination in chief of Dicky Chan when the Crown applied to amend the charges so that the payments were instead alleged to be for the purpose of inducing Dicky Chan to show favour in respect of the progress of the appellant’s work in the BA project and his applications for payments therefor.

10. Mr. McWalters, for the Crown, points out to me that there might have been a very innocent reason for these pieces of evidence of Dicky Chan, which is that he genuinely did not remember the time when he rendered his services in respect of the Japanese restaurant project. Dicky Chan was not sure and did not remember about this timing when he gave evidence in chief and his memory was helped by the matters put to him in cross-examination But if that was the case, it would be difficult to explain why he had to quibble and beat about the bush for quite some time before he accepted eventually that his services could have not been rendered before March 1991. His attention was specifically drawn to the Japanese restaurant work by the ICAC in taking a second statement from him. Yet in examination in chief, when his attention was again directed to the Japanese restaurant project by a leading question, he dissociated that from the first payment by saying that his services in respect of that project was rendered in about January and February 1991, before the BA project.

11 In chief, Dicky Chan seemed not to be able to remember, apart from a casual chat, what, was said by the appellant after making the first payment to him. The Crown applied for allowing Dicky Chan to refresh his memory with his first statement to the ICAC. After admittedly reading carefully paragraph 12 of that statement, Dicky Chan said:

“He (i.e., the appellant) advised me not to deposit the money to (sic.) the bank if possible.”

12. If there was this advice given by the appellant, it would lend great weight to implicate the appellant that he knew there was something illegal in his payment and/or that he did not wish any evidence to be preserved through Dicky Chan’s bank records.

13. In cross-examination, it was put to Dicky Chan that the advice was not mentioned in any of his statements to the ICAC and he made it up when giving evidence. He said he mentioned it in paragraph 12 of his statement. But when he was referred to the statement, he was constrained to admit that it only stated “I accepted it (i.e., the money) and spent it and it was not deposited in bank account.” He said he made the mistake because of his misreading of the passage in the statement and he admitted that it was he who did not deposit the money into a bank account and that it was not the appellant who advised him not to deposit the money into the bank. Then he was asked whether he was usually paid cash in his free-lance work. He refused to answer the question when reminded by counsel that he had the right to do so. However, when the court told him to answer, he agreed to the proposition. He had formerly elected not to answer the question whether he disclosed his free-lance rewards for tax purposes after the magistrate warned him of his right not to incriminate himself. In re-examination, he was again asked by the Crown whether the appellant gave him that advice, and said the appellant did not. He further said that there was no special reason for him not to pay the money into the bank.

14. The explanation as to how he made the mistake is, in my view, totally unacceptable. How could he have misread his own statement which he just read before he gave the evidence that the appellant advised him not to put the money into his bank account? There is no evidence to show that he is illiterate; on the contrary he is an interior designer by profession and had been working with PW1, his boss, who is English speaking. The reasonable inference is that the motive for his making this unjustifiable mistake was to implicate the appellant.

15. Mr. McWalters submits, however, that the misreading of paragraph 12 of the first statement could very well have been genuine, or else Dicky Chan would not have been so stupid as to say something which can be contradicted by the document. This argument is based on the premise that Dicky Chan knew that the document was available to the Defence, but Mr. McWalters has to concede that there is no evidence to that effect. Nor could the misreading of the statement be fairly attributed to carelessness, for Dicky Chan accepted that he had carefully read paragraph 12 before he immediately related the alleged advice.

16. The Crown contends that the credibility of Dicky Chan was on the forefront of the magistrate’s mind and he must have considered these two points although he had not expressed such consideration when giving brief reasons for his verdicts and when writing his statements of findings. He had the advantage over the appellate court in observing the witnesses’ demeanour. Therefore, Mr. McWalters contends, it would be improper for the appellate court to interfere.

17. While accepting that the appellate court is at a disadvantage, this is a case, however, where the only witness implicating the appellant is Dicky Chan, and he is admittedly an accomplice giving uncorroborated evidence under an immunity. These two significant points, according to Mr. McWalters, could have been truthfully caused by the lapse of memory and genuine misreading of the paragraph. But the strange coincidence is that both pieces of evidence given in chief, if not corrected, would have gone a very long way to implicate the appellant. The magistrate said that he warned himself of the danger of acting on Dicky Chan’s evidence, but without expressly dealing with these two very significant points, which the Crown submits to be obvious ones, there is a real risk, at least as seen, that he had failed to consider them. It can therefore be perceived that although the magistrate warned himself of the danger, he did not fully consider all the matters to ensure that the danger was dissipated. It is trite that justice must not only be done but must be seen to be done, or else the public faith in our system of administration of justice would be seriously undermined.

18. I do not hazard a guess how the magistrate would have reacted had he taken these two significant points into account. To me, they demonstrate palpably that Dicky Chan was all out to implicate the appellant as much as he possibly could.

19. The magistrate had considered and rejected one of the motives from which Dicky Chan could have implicated the appellant, which was that Dicky Chan was troubled with his own domestic problems at the relevant time. The magistrate, however, did not deal with the question whether Dicky Chan had refrained from putting the cash he used to receive for his free-lance work in his bank account for the purpose of evading tax. Mr. Mayne has pointed out, and I think rightly, that accepting bribes, as opposed to not reporting the free-lance remunerations to the Inland Revenue Department, was an offence covered by the immunity granted to Dicky Chan. This is a very possible reason for Dicky Chan’s insistence that the appellant paid him on account of the BA project and not for his free-lance work in respect of the Japanese restaurant project, which the magistrate had failed to take into account.

20. There is Dicky Chan’s own admission that it was possible on reflection that the first payment was made as a gift for his assistance in the Japanese restaurant project, although this admission only came out late during his cross-examination. This admission was not made “readily" as stated in the magistrate’s findings. This would itself give rise to a reasonable doubt as to whether the appellant made the first payment for the purpose as charged or innocently for that assistance. The magistrate said that the irresistible inference under all the circumstances was that the first payment was made by the appellant as a sweetener. I am afraid that he is wrong. The intention of making the first payment as a gift or reward for Dicky Chan’s design in respect of the Japanese restaurant project is the other obvious reasonable alternative. It is a misuse of language to say that one of two reasonable inferences is the irresistible inference by rejecting the other alternative. This obvious alternative alone would suffice to acquit the appellant of the first charge.

21. In relation to the second payment, its existence is based on a bare allegation made by Dicky Chan in the witness box. The denial of it is shown in the appellant’s statement to the ICAC which was admitted in evidence. It is a situation of a bare allegation against a bare denial. Moreover, the bare allegation is the evidence of an accomplice, totally uncorroborated. In view of all these, and because of the unsatisfactory nature of Dicky Chan’s evidence, his evasive manner in answering questions and in particular, the aforesaid two matters, and the highly possible motive of evading tax, I come to the conclusion that there is a very grave doubt if the alleged second payment had in fact been made. Again the same reasoning applies to my evaluation of the veracity and reliability of the evidence concerning the purpose of the first payment. This is a case that after examining very carefully all the evidence on the record, the court is left with a serious lurking doubt whether justice has been done. In the circumstances, the convictions are too unsafe and unsatisfactory. I would allow the appeal and quash the convictions on both charges.

22. Let me hasten to add this. A conflict of interest situation was created by the appellant retaining Dicky Chan to work free-lance for the design in respect of the Japanese restaurant project while Dicky Chan was performing his duties as the project manager regarding the BA project. Such conflict of interest justifiably raises suspicion of corrupt practices and about the appellant’s true intentions and motives. I hope he has learned a good lesson, and will in future avoid putting himself in any similar situation.

23. As I have decided the matter by evaluating the evidence, I am relieved of the difficult task of having to deal with the very interesting submissions made in respect of ground 1 of the appeal, although I am inclined to agree with Mr. McWalters’ able arguments that the offences as charged are the same as those in the amended version, because an offer of a payment or an advantage to an agent is the crux of the offence, where it is for any one or more of the corrupt purposes collectively grouped under s. 9(2), albeit different mens rea is required. I think the division of the purposes by paragraphs (a) and (b) thereunder is merely for clearly setting them out, and the “or” linking (a) and (b) should be construed conjunctively instead of disjunctively.

24. In the result, the convictions are quashed and the sentences set aside.