HKSAR v. CHEUNG TING BONG

CACC 89/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 89 OF 2003

(ON APPEAL FROM DCCC 929 OF 2002)

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J U D G M E N T

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Hon Stock JA (giving the judgment of the Court):

Introduction

1. On 28 February 2003, the applicant was convicted by Deputy Judge Woodcock in the District Court of conspiracy to offer an advantage to a public servant, contrary to section 4(1)(c) of the Prevention of Bribery Ordinance, Cap 201, and was sentenced to a term of four years' imprisonment. This is his application for leave to appeal against conviction.

2. The public servant to whom the bribe was said to have been paid was Chan Kau-tai (Chan) a Chief Building Services Engineeer with the Building Services Section of the Housing Department. Putting the matter very broadly, the allegation was that the applicant, a director and general manager of a company called Tridant Engineering Company Limited (Tridant) managed to secure a contract for the supply of electrical equipment for a project at Upper Wong Tai Sin, although Tridant's tender for the supply of the electrical equipment was not the lowest, and that he conspired with lowest bidder, a Mr S S Lai (Lai) the proprietor of Yew Sang Hong Limited (YSH), who wanted to withdraw from the process, to pay Chan the sum of $1.5 million and that that sum was paid to Chan.

The charge

3. The particulars of the offence read as follows:

"CHEUNG Ting-bong, on divers days between the 1st day of March 1998 and the 31st day of August 2000, in Hong Kong, conspired with LAI Sai-sang to, without lawful authority or reasonable excuse, offer an advantage, namely, a gift, loan, fee, reward or commission consisting of $1,500,000.00 Hong Kong currency, to CHAN Kau-tai, a public servant, namely, a Chief Building Services Engineer of the Housing Department of the Hong Kong Special Administrative Region, as an inducement to or reward for or otherwise on account of the said CHAN Kau-tai assisting, favouring or having assisted or favoured the said CHEUNG Ting-bong and/or Tridant Engineering Company Limited in the transaction of business with the Hong Kong Housing Authority and/or the Housing Department, namely, the installation of electrical materials in the building project at the Re-development of Upper Wong Tai Sin Estate Phase I."

The prosecution case

(1) Withdrawing the tender

4. Tridant, YSH and a company called Hing Yip Electrical Engineering Ltd (Hing Yip), run by Lai but the proprietor of which was YS Lai, Lai's brother, were all subcontractors on a list approved by the Housing Department. At the material time, Chan was in charge of that Department's Building Services (New Works) section 1.

5. In January 1998, YSH submitted a tender for electrical installation works for a building project at Upper Wong Tai Sin Estate but before long Lai came to learn that the bid made by YSH was the lowest, lower than any others by some $8 million. But not only that, he came to realise that his company had made an error by which it had grossly underestimated costs and would suffer a substantial loss were its tender to be accepted.

6. The evidence was that Lai was concerned about the consequences of a withdrawal of his company's tender, thinking that it might prejudice the company in future bidding, not least because he had previously withdrawn a Housing Authority tender. According to the testimony, he received a telephone call from Chan who asked if an error had been made. Then the two met in late February 1998. Lai said to Chan that he was worried and wanted to withdraw but was concerned whether his licence would be revoked by the Housing Authority; in other words, whether his company would be removed from the list of contractors approved by that Authority, and Chan told him that anyone who withdrew a tender twice within two years would indeed be removed.

7. At the same meeting, Chan asked Lai whether he knew the applicant, Cheung of Tridant; but Lai did not know him. According to this testimony, Chan said that he had contacted the applicant and told him that the contract would be awarded to Tridant and then said that Lai was to approach the applicant "to ask them to play along ... they would know what to do". Lai's evidence was that by that he understood that Chan was asking the applicant "to give him a reward for Tridant to be able to obtain this project". Then YSH's tender was withdrawn and this was followed by a letter from the Housing Authority warning YSH against a repeat of conduct by which a tender was withdrawn.

(2) The coffee shop meeting

8. In March, it was said, Chan asked Lai to contact the applicant. Chan gave the applicant's telephone number to Lai and Lai telephoned the applicant who suggested a meeting at a coffee shop in the New World Hotel. This was the only occasion upon which they met. They met there on 30 March 1998 and it was agreed that Chan would be paid a sum of $2 million as a bribe. The method by which the sum was to be secured was somewhat circular but explicable on the basis of a need to avoid suspicion. Tridant itself could not raise the extra sums directly from its accounts without attracting suspicion, and the idea was struck whereby Tridant would purchase generator sets from Hing Yip, and Hing Yip would in turn acquire them from a company called Brongham Park Ltd (Brongham Park) in which YSH held a majority of shares. Hing Yip, YSH and Brongham Park all occupied premises on different floors of the same building in Tai Kok Tsui. This equipment would be invoiced by Hing Yip at a price increased, in comparison with Brongham's price, by the sum of the bribe. Lai would then pass the bribe to Chan. The testimony was that the applicant agreed to this proposal, and that as between Lai and Chan, it was agreed that Chan would retain $1.5 million and that $500,000 would be retained by Lai for payment of taxes on the machines and also in case the purchasing department of Tridant asked for a reduction in the price after it had been agreed.

9. Given the thrust of one of the grounds of appeal, it is worth recounting Lai's testimony as to what transpired at the March meeting in the coffee shop:

"A. When I walked in there, Mr Cheung had already sat there. I came later than him.

Q. Yes?

A.	I said 'Mr Chan asked me to approach you about the matter of Wong tai Sin Upper Estate'. I asked him he had talked to you. He said 'Yes'.

Q. Yes, what else?

A.	I said 'Mr Chan said that this contract would be awarded to you instead of us' and asked him to give him some reward. Because Mr Chan did not mention an amount that he wanted, so personally I felt that if given too little he would not be happy so I gave him an amount.

Q. And what amount did you give him?

A. 2 million.

Q.	Tell me this: you already knew, you've told us, through trade talk that Tridant was the second tender. Second lowest tender.

A. Yes.

Q. And you had already by this stage withdrawn your tender.

A. Yes.

Q. Did you have any idea who might then be awarded the job as a matter of course?

A. Should be Tridant.

Q. Well, why in those circumstances did you think that Chan should be paid some money?

A. Because before that I knew that he had wanted money. I heard it.

Q. All right. Now, what happened when you suggested some $2 million to James Cheung?

A. At that time Mr Cheung said 'Too much, too much. Can it be a million?'

Q. Tell us how the conversation was thereafter?

A.	At that time I said to Mr Cheung that I emphasized that the money was not for me. I only asked on his behalf. It was for him.

 

Q.	Did you have any view as to what might happen if you, for example, refused to ask James Cheung for money?

A. I believe that it will be difficult for me to proceed with other jobs. There were some ongoing jobs.

Q.	Now, you told us that you said 2 million and James Cheung said a million. During that meeting, was there any agreement at a figure arrived at?

A. Yes, I emphasized that the money was not for me and Mr Cheung agreed to pay 2 million.

Q. Was there any discussion as to how the money might be paid?

A.	Mr Cheung said that the amount was too large for Tridant to account for and he asked whether it would be possible to raise that money through the purchase of materials from us.

Q. Tell us how the discussion went then.

A. We discussed and then I suggested that Hing Yip should sell some gen sets to you.

Q. Yes?

A. He said that he would place orders with Hing Yip but the money could only be paid a year later.

Q. And how was him placing orders with Hing Yip going to realise $2 million worth of bribe money?

A.	When he placed order for the gen sets the 2 million would be added to the original price. It would be reflected on the purchase order.

Q. So in other words, you'd sell them to him at an inflated price, is that right?

A. Yes.

Q. Now, when he paid the inflated price, what were you going to do with the amount it was inflated by?

A.	Maybe I add something. After Tridant agreed to pay the 2 million through purchases, a few days later I told Mr Chan that Mr Cheung and I agree on this amount.

Q.	Well, I think you misunderstand me. You see, I've got a fairly simple mind and I don't understand the way some people do business but you told us that part of the proposal was that Tridant would buy these generator sets and pay $2 million more than they were worth. Do you remember telling us that?

A. Yes.

Q. Now, what were you going to do with that $2 million?

A.

1.5 million out of the $2 million would be given to Mr Chan and 500,000 would be for Hing Yip to pay the tax because it had sold the gen sets. In the conversation with Mr Chan, I told him that the 500,000 would be for Hing Yip to pay the tax and also because Tridant wants to get the material as low price as possible. I don't know how low they want it but they have to purchase the material through the purchasing department.

...

Q.	... Was there any discussion between you and Mr Cheung as to what would happen with that $2 million that was being overcharged for the generator sets?

A. It was agreed that it would be paid to Mr Chan.

Q. Was there any discussion as to who would pay it to Mr Chan?

A. By me.

Q.	Yes. Now, you mentioned to us in the discussion something about Hing Yip supplying the generator sets, do you remember that?

A. Yes.

Q. Who was it that suggested that Hing Yip should supply the generator sets?

A. By me.

Q. You told us before that Brongham Park was in fact the agent for the generator sets.

A. Yes.

Q. Well, why would you then want Hing Yip to supply them rather than Brongham Park?

A. Because I did not want the staff of Brongham Park to know about such unusual transactions.

Q.	Was there any discussion about when the bribe money could be paid? This is with Mr Cheung at the coffee shop.

A. Mr Cheung said that it would be at least a year later.

Q. Were the generator sets in fact required for this redevelopment of Phase I of the Wong Tai Sin Estate?

A. Yes.

Q. So do I understand it then that that meant that the $2 million couldn't be paid for a year or so?

A. Yes, at different times, not at one go.

Q. Now, was there any further discussion about this with Mr Cheung at that meeting.

COURT: About this or any further discussion full stop?

Q. Any further discussion about this scheme, this scheme to raise $2 million, at this meeting?

A. That's all.

Q. Did you then leave separately?

A. Yes.

Q. How long did that meeting last?

A. About 30 minutes.";

(Appeal bundle pp 62-65).

(3) Creating the extra $2 million

10. Hing Yip quoted a price of $8,337,760 to Tridant for the generator sets but that sum was lowered when it was appreciated that other contractors quoted prices that were much less, and a Mr Chan from Tridant informed Lai that a much lower quote was required, a quote of $7.226 million, if Hing Yip was to secure the contract. That is what happened. Hing Yip then ordered generators from Brongham who sold the generators, the trade name of which was Vibropower, to Hing Yip for $5.872 million. Tridant's order from Hing Yip is dated 1 September 1998 and the order by Hing Yip from Brongham Park August 1998, although the evidence before us suggests that Tridant's acceptance of the quote came earlier than September. Hing Yip sold the sets to Tridant for $7.226 million, a mark-up of $1.394 million. To make up the remaining sum then required for the $2 million bribe, there was a further similar arrangement for the purchase of generators from Brongham Park via Hing Yip for another project (the Sau Mau Ping project) at a mark-up of $650,000. Hing Yip placed this order with Brongham in November 1998, Tridant having accepted Hing Yip's quote in October 1998.

11. In this way, Hing Yip received more than $2 million in excess of the sum paid to Brongham for the machines, and Lai then paid the sum of $1.5 million to Chan between April 1999, when Chan started to chase for his money, and August 2000. Lai's testimony was that he paid Chan in twelve instalments, each time in cash. Indeed he started to pay Chan even before the generator sets were delivered to Tridant and before Tridant had paid for them, because Chan was chasing.

12. To cover for the payments made by YSH, Lai created false invoices from a bogus Macau company. He made no record of the payments to Chan. So, for example, Lai gave evidence that the first payment was made in cash in a vehicle in Happy Valley and this was for the sum of $350,000 and that this was covered by two cheques drawn by YSH totalling $354,950 in favour of a fictional company called Tai Pang whose bogus invoices for electrical equipment he, Lai, caused to be issued. The invoices and vouchers were produced in evidence. Then there was produced a bank statement showing the withdrawal of cash from YSH's account in the relevant sums. Lai gave evidence of spasmodic payments, each time in round figures, usually paid in the course of a motor car journey near Chan's office or on the way to a luncheon. Sometimes the cash came from Lai's personal bank accounts but he could reimburse himself from payments to the bogus company Tai Pang. In support of his testimony about these payments, he produced the bogus invoices from Tai Pang and payment vouchers, as well as bank statements showing the withdrawals which he said went as cash payments to Chan, and he also produced credit card slips to show the lunches for which he had paid which preceded or followed some of the payment incidents. Sometimes the figures thus withdrawn did not quite tally with the suggested cash payments, he, Lai, keeping some cash for himself from the withdrawals. So too the sums paid on each occasion to Chan differed, ranging from $50,000 to $350,000.

13. The evidence was also that in the normal course of its business Hing Yip did not supply or sell generators and had never before purchased generator sets from Brongham Park. Brongham Park's practice hitherto had always been to sell directly to the contractors as sole agent and distributor so that what happened in this instance was, to that extent, unique. Since, according to the evidence, Lai was to pay the bribes to Chan there had to be a mechanism by which the sums paid by Tridant to Hing Yip which made up the bribe sum was to be channelled to the applicant. This, said Lai in his testimony, was effected by sales from YSH to Hing Yip of electrical switchboards at inflated prices.

The applicant's case

14. The applicant did not give evidence himself but he called as a witness an expert, a Mr Battersby, the effect of whose testimony was that the prices paid for the generators were reasonable. The argument was that if indeed the evidence that the prices had been inflated was not correct or was suspect, then the fabric of the prosecution case fell apart. It was contended as well on behalf of the applicant that there was no apparent benefit to the applicant or to his company in paying the bribe and, further yet, that the testimony of Lai was unreliable especially as to the detail of his payments to Chan.

Reasons for Verdict

15. The applicant was a person of previous good character and the judge reminded herself of the significance of that fact. She noted too that Lai was an accomplice witness and that, accordingly, his testimony was to be treated with caution.

16. The judge noted that although the case rested upon the reliability of the evidence of Lai, there were pointers, his oral assertions aside, which lent strength to his testimony. In particular, it was established that the course adopted in this case, namely, the order of generators from Hing Yip rather than from Brongham Park directly was unusual and she noted too that in relation to other projects Tridant had obtained quotes for Vibropower generators directly from Brongham Park. Furthermore the original tender by Tridant had not included Vibropower generators, a factor in support of the evidence of Lai that the idea came after the tenders were submitted. So too there was documentary evidence in support of Lai's accounts, namely, the false invoices and bank statements to show withdrawals of the instalments which Lai said he had paid.

17. She noted the submissions made by defence counsel, in particular the suggestion that Lai was unreliable and that the bank statements which were said to support his evidence of bribes on the applicant's behalf to Chan disclosed other large withdrawals, with the contention that there was no basis upon which to distinguish between withdrawals for supposed bribes to Chan and for other purposes.

18. The judge found the records to be compelling evidence in support of Lai's story. He had not only relied on his personal bank accounts but also on the accounts of YSH from which moneys were taken to pay the bribes, and on the corresponding false invoices which he had produced. So, for example, there was exhibit P16 which related to a payment, the first payment, of $350,000 on 1 April 1999 and a supporting false invoice from the Macau company which corresponded with that amount and that payment.

19. Reliance had been placed by defence counsel upon the testimony of the expert to the effect that the transaction between Hing Yip and Tridant appeared above board and in accordance with trade practice and that Hing Yip's tender had in fact been the lowest. The judge noted however that the appearance of normality was precisely what was necessary in order to detract suspicion, and that although in the event the tender was the lowest, the original tender of $8.537 million was substantially higher than the others and that the lowering of the tender came only after a call from Mr Chan of Tridant in which he suggested a reduction to the sum of $7.266 million in order to secure the contract. The suggestion made by the expert that there was no evidence of an inflation of the price was, in the event, said the judge, neither here nor there because Lai's evidence in court was not that the invoice had been inflated but that matters had been so organised that there would be a profit from the difference between Brongham Park's price and Hing Yip's price and that the profit would be utilised to pay the bribe.

20. As to why Lai asked the applicant to pay Chan a sum of $2 million, the judge said that Lai's explanation was not entirely satisfactory but that nonetheless his evidence had the ring of truth and was supported by the indicia to which we have referred. She found that money was paid to a senior Housing Department officer whose function was directly connected with the type of business conducted by YSH and by Tridant and that there must have been envisaged some benefit to the applicant or his company. She was sure that the applicant was party to the conspiracy charged and, accordingly, she convicted him.

The Immunity

21. Lai was arrested on 4 August 2001 and released on bail the following day. On 11 August, his lawyers offered on his behalf that he should make a non-prejudicial statement, in other words a statement made on condition that it not be used against him. This offer was accepted. That statement was provided on 29 August 2001, and between September 2001 and March 2002 they supplied to the ICAC documents in Lai's possession relevant to the case. Three further statements were provided by Lai: on 19 November 2001, and on 6 September 2002; and on 15 January 2003, shortly before the commencement of the trial of the applicant in the District Court.

22. On 22 January 2003, Lai was provided with an immunity from prosecution which was in the following terms and signed by a Senior Assistant Director of Public Prosecutions on behalf of the Secretary for Justice:

"I hereby inform you that on condition that you give full and true evidence at the trial or trials of Wong Chi-leung and Cheung Kwok-chung (DCCC 928/2002) and Cheung Ting-bong [the applicant](DCCC 929/2002), in connection with the alleged offences of offering advantages to the public servant Chan Kau-tai and conspiracy to offer advantages to him ... such offences being alleged to have occurred between 1 March 1998 and 7 February 2001 in Hong Kong, no prosecution will be instituted against you in respect of the said offences or any other offences connected with the said offences which have been disclosed by you or which may be disclosed by you in the course of your testimony during any of the said proceedings.

Should you fail to give full and true evidence at the aforesaid trial or trials, the Secretary for Justice shall not be bound by any undertaking given in this document and you may be prosecuted for the said offences or any other offences connected with the said offences.

This immunity does not apply to any offence of perjury or any other offence or offences involving the making of false or contradictory statements under the provisions of Part V of the Crimes Ordinance, Cap. 200 committed by you in the course of your testimony during any of the said proceedings."

23. On 29 January 2003 Lai made a further statement to the ICAC, and on 12 February 2003 he commenced his testimony at trial.

24. Cross-examination by leading counsel for the applicant, Mr Cheng Huan SC, commenced with an exploration of the immunity which the witness had been granted. Lai said that when interviewed by the ICAC he had been asked questions about a suggested bribe to Samuel Wong, the manager of Brongham Park, a sum of $200,000, and about a sum of $60,000 to Chan of the Housing Department for a project at Lai Chi Kok. Then questioning turned to a sum of $230,000 about which he had been questioned by the ICAC. The witness said that he had met Chan first in 1991 and then again in 1994, and he was asked whether he had met Chan between 1994 and February 1998 and the witness said it was only "chatting". But counsel pressed the matter:

"Q. But nothing about corruption matters ever between 1994 and end of February 1998.

COURT:

I'm not really sure how far - I haven't had a chance to look at his immunity and I don't know how far it goes.

MR CHENG: I see. I think in relation to any ...

COURT: I don't know whether I should be giving him a warning to ...

MR CHENG: I do apologise.

COURT; ... against self-incrimination.

MR CHENG: Yes. Sorry. Yes, I'm sorry.

COURT: Well, it says in the trials of ...

MR CHENG: Yes.

COURT:

... this defendant and Mr Wong in connection with, so if you ask him out of the ambit of this case, I will have to ...

MR CHENG : Yes, your Honour's absolutely right.

COURT: ... give him a self ...

MR CHENG:

Can I perhaps - perhaps I can tell him that he's not obliged to answer the question. Or your Honour like to ...

COURT: Yes, I'll - perhaps I should ...

MR CHENG: Yes, thank you.

COURT: ... give him the appropriate warning.

MR CHENG: Thank you. Thank you, your Honour.

COURT:

Mr Lai, the terms of your immunity are confined to evidence in this trial and the evidence in Mr Wong Chi-leung and those bribery charges.

A. Yes.

COURT:

You've been asked whether between 94 and 98 you met Mr Chan in relation to any other corruption.

A. No.

COURT:

Well, I'm just warning you that if there are, those matters would not be included in this immunity so you do not have to incriminate yourself whilst giving evidence. You've got the right not to answer those questions.

A. Then I won't answer.

Q. Well, you just answered "no".

COURT: So is your answer in any event no?

Q. Correct? All right. So let me get it absolutely correct. You know ...

A. Can you stop answering?

INTERPRETER: Asking, sorry. Stop asking me.

COURT:

Mr Cheng has a right to answer but you also have the right not to answer. Sorry, he has the right to ask but you have the right not to answer.

A. Then I won't answer.

Q. But you just answered no, remember that?

A. I did not know before ...

Q. Was it a convenient no or is it a matter of fact no? Or you don't wish to answer this question.

A. You're still asking me. I have the right to not answer you.

COURT:

You don't have the right not to answer anything. He is now clarifying - Mr Cheng is now clarifying your answer. You did answer "no" and then you've said you're not answering so Mr Cheng's question is, as I understand, "no" you're not answering or "no" there was no corruption in the meetings?

MR CHENG: Yes, thank you, your Honour.

A. So I've stopped after giving this answer, no.

Q.	But there was no corrupt dealings between you and Mr Chan during that period, is that right? The "no" was to that .

A. Correct."

(Appeal bundle pp 101-102).

25. Then Mr Cheng wanted to pursue the question whether there had been corrupt dealings between the two during the period of the charge (1998 to 2001) other than in respect of the Sau Mau Ping and Wong Tai Sin projects. Mr Cheng explained why this was important. He said that:

"... both in the unused materials and in addition to other materials supplied to us ... Mr Lai has admitted in addition to these particular corruption matters, during this period of time, the relevant period of time, at least seven other payments he made to Mr Chan Kau-tai ....

... it's a very important part of the defence in the sense that he is now saying the payments made were in specific relation to the agreement of 1.5 million but in fact there are many, many other payments during the period of time. And one of the areas I'm going to tackle is how on earth is he going to say which payment was for whom or for what particular project?"

(Appeal bundle pp 104-105).

Then this exchange:

"COURT: The terms of the immunity are restricted to this trial and the other trial.

MR CHENG: Yes, yes.

COURT: These payments and perhaps those payments, whatever they were.

MR CHENG:

Yes, yes. But at least I put it on record, your Honour, that I find it difficult to the extent when it forms such an important plank of the defence case. My learned friend's nodding, I don't know if he's agreeing with me.

 

COURT:

I don't think it's an important plank because he's giving evidence under immunity. We know he's as culpable but he's under immunity.

MR CHENG: Yes, but, your Honour, what I'm saying ...

COURT: I don't know how it furthers your case. You're going to try and use it to discredit him.

MR CHENG:

Your Honour, what we are saying is that there have been so many payments made to different parties, always specifically to Mr Chan. All these payments to Mr Chan.

COURT: Right.

MR CHENG: In this period of time. We are saying in fact there was no agreement with our client ...

COURT: Yes.

MR CHENG: ... and the money paid could be in relation to other matters, corruption matters.

...

COURT: You want to know how he can be so specific about those 12 payments.

MR CHENG:

Precisely, yes. Because, for example, you go into the bank's record, for example, the record will mention a lot of - because he has selected out those items, your Honour. I have not interrupted my learned friend but he has selected according to his case. But we're saying on a further reading of it, looking at, for example, even the bank accounts, it doesn't support his version. With respect, it is a very important area. Perhaps, your Honour, looking at the time, we can reflect upon that."

(Appeal bundle pp 105-106).

26. Counsel for the prosecution then asked to be permitted to consider the matter overnight and forecast that a further immunity might be the answer. And that is what happened. The following morning, 13 February 2003, a further immunity was presented to the witness and the court suggested that the witness might want to seek further legal advice about it. Mr Cheng said:

"I must confess, I hadn't thought about that, your Honour. I think you're absolutely right." (Emphasis added).

And later:

"... your Honour should tell him about his rights to have legal advice after he has been served with the immunity";

although Mr Cheng expressed some concern about the prospect of that taking place whilst in the middle of his testimony. In the event, Lai said that he wanted to discuss the immunity with his lawyers and the court told him that he could do so but that he was not to discuss his testimony with anyone.

27. The witness saw his lawyers for about an hour that morning at court and then resumed his testimony.

28. The immunity, dated 13 February 2003, and issued by a Deputy Director of Public Prosecutions was in the following terms:

"I hereby inform you that on condition that you give full and true evidence at the trial or trials of Wong Chi-leung and Cheung Kwok-chung (DCCC 928/2002) Cheung Ting-bong (DCCC 929/2002) and Chan Kau-tai (HCCC 333/2002) in connection with the alleged offences described in District Court charge sheets DCCC 928 and 929/2002 and High Court Indictment HCCC 333/2002, copies of which are annexed hereto, no prosecution will be instituted against you in respect of the said offences or any other offences connected with the said offences which have been disclosed by you in the course of your testimony during any of the said proceedings ...."

The balance of the immunity document is in the same terms as in the first.

29. It will be seen that the difference between the two immunities is that in addition to evidence in connection with the offences charged in the District Court case or offences connected therewith, the second immunity covers as well testimony given in the proceedings against Chan in the High Court and any offences connected therewith.

30. So it follows that what was not covered by these immunities was evidence of any criminal activity by the witness other than that charged in the three sets of proceedings particularized in the immunities and criminal conduct connected with that criminal activity. Mr McNamara, for the prosecution, described it as an immunity "which in fact covers the whole of the corruption." (Appeal bundle p 108).

31. Cross-examination then continued and the witness confirmed that there had been no corrupt dealing with Chan before February 1998. However, he said, after February 1998 there were four occasions other than those involving the applicant but involving Chan in which there had been corrupt dealings and that these involved a sum of $400,000. Then this:

"Q. Apart from Mr Chan Kau-tai, any other corrupt dealing with anyone else after February 1998?

A. I want to say that because this immunity covers three cases, therefore I don't want to answer it.

MR CHENG:

Your Honour, can I perhaps ask your Honour's permission to ask him to answer 'Yes' or 'no' without going into details?

COURT: No. If he says 'yes', he incriminates himself.

MR CHENG:

But without any specific details. I'm very much in your Honour's hands, I just want to see whether ...

COURT: I'm very reluctant, no.

MR CHENG: As your Honour pleases.

COURT: No, yes.

Q. So you refuse to answer the question, correct - exercise your right rather?

A. Correct.

Q.	So apart from the specific terms of the immunity here, you're exercising your right in relation to any other possible corrupt dealings you had with Mr Chan Kau-tai, am I correct?

A. Correct, yes.

Q.	And apart from the terms of this immunity in relation to the three specific trials, you've been exercising your right in relation to any other corrupt dealings with any other persons.

COURT: Is that the same question?

MR CHENG: Apart from Mr Chan, apart from these three trials, your Honour.

COURT: So that is ...

MR McNAMARA: You just said that.

MR CHENG: I see.

COURT: Yes.

MR CHENG; All right, so be it.

COURT: Yes." (Appeal bundle pp 115-116)

32. Much of the cross-examination of Lai was directed at showing that he could not, without the benefit of a contemporaneous record, recollect, as he suggested, the payments he had made and that the payments had been made for the purposes he suggested. The witness accepted in cross-examination that he had used the bank accounts - his personal bank accounts with Standard Chartered and with Dao Heng Bank - to pay bribes to Chan in addition to those covered by this charge; and that he had used bogus invoices for bribes in addition to those covered by the 1.5 million paid to Chan; and the witness further identified sums other than those he said he paid to Chan as a result of the agreement with the applicant which were also for bribes and paid at about the same time as the instalments he had identified. He said in re-examination that those bank accounts were used for the passage of mortgage payments, ATM card withdrawals, and payments made to him by the company, YSH.

33. When Mr Cheng asked the witness:

"Have you used this kind of [bogus] invoices in relation to any other matters other than this 1.5 million?",

The answer came:

"Yes, but the immunity does not cover that matter, I don't want to answer."

And Mr Cheng said to the court that:

"... naturally your Honour appreciates that my cross-examination will be inhibited to that extent for obvious reasons."

(Appeal bundle p 151).

34. We see a little later that Mr Cheng put to the witness that he had told the ICAC that he had been involved in a price cartel in 1999 in relation to miniature circuit breakers and the witness said:

"The immunity does not cover this area; it's not a good idea that I tell you about it".

Mr Cheng informed the court that according to a statement made by Lai to the ICAC, Lai had been involved in an MCB cartel bribery escapade with Chan and that in respect of that affair, the witness had paid Chan $180,000 "which is the same period as the third payment".

This appeal

(1) Immunities

35. Much of this appeal turns upon the question of the immunities. It is said that:

(1) the witness Lai ought not to have been granted an immunity;

(2) the calling of Lai as a witness was, by reason of the fact that he was giving evidence under immunity, an infringement of articles 10 and 11(2)(e) of the Bill of Rights Ordinance;

(3) the testimony was, by reason of the immunity, so tainted that the applicant's right to a fair trial was prejudiced;

(4) the limits upon the breadth of the immunity were such that the witness Lai was protected from answering certain questions so that the conduct of the defence at trial was materially inhibited; and

(5) there was a further irregularity in that the witness was permitted before he had completed his evidence to discuss the terms of an immunity with his legal advisers.

Some of these grounds overlap.

(a) The policy argument

36. The first limb of the argument presented to us was in the nature of a broad ranging attack upon the frequency with which immunities are granted in Hong Kong for the purposes of prosecutions in the courts. The argument took us to well-trodden sentiments which treat the practice with distaste, going back at least as far as Hale CJ in the 17th Century when he said, at page 226, Vol II "The History of the Pleas of the Crown" that:

"... more mischief hath come to good men by these kind of approvements by false accusations of desparate villains, than benefit to the public by the discovery and convicting of real offenders ....";

sentiments of a tenor to which we referred in HKSAR v Leung Kai-chung [2002] 1 HKLRD 771, 787.

37. Counsel points as well to several more recent judicial expressions of distaste, for example to R v Turner and others (1975) 61 Cr App R 67, a case in which the English Court of Appeal suggested that immunities should be given most sparingly, a case in which, we note, the form of immunity was one which expected the accomplice to give testimony in accordance with a statement he had given to police, rather than in accordance with the truth, which may or may not in a particular case be the same thing; and a case where the circumstances of the immunity and the rewards to be conferred on the accomplice were unusual and the facts complex.

38. These concerns are said to have resulted in the adoption in the United Kingdom of an approach that is reflected in a document entitled "Legal Guidance on Witness Immunities and Undertakings" issued by the Crown Prosecution Service, where the general principle is stated that:

"Only in the most exceptional cases however will it be appropriate to offer an immunity rather than a witness undertaking."

A witness undertaking is a written agreement to refrain from using statements, or documents or other information provided by a person against that person in criminal proceedings, so that that person may nonetheless be prosecuted if evidence other than that referred to in the undertaking becomes available.

39. In New South Wales, the policy of the Director of Public Prosecutions is stated as one that grants immunities only as a last resort.

40. By contrast, the policy document issued by the Director of Public Prosecutions in Hong Kong does not speak of the immunity in such limited terms. Even though it requires the prosecutor to be ever cognizant of his special responsibility to ensure that "the processes of justice do not miscarry when an informer is used". It is said in this policy statement that an accomplice will only be given an immunity in certain circumstances, which are then listed, one of which is where the evidence is not available from an alternative source and where the accomplice can reasonably be regarded as significantly less culpable than the accused, a directive which is said by the applicant to have been breached in this case.

41. It is argued further that the usual course, or the usual desirable course, when accomplice testimony is to be used is to require the accomplice to plead guilty and to testify thereafter, leaving it to the sentencing judge to reward the accomplice according to the assistance which it is decided he has properly rendered. That is said to be a process which, unlike the immunity process, is transparent.

(b) Analysis

42. Where then does all this lead? It leads, so it seems, to the contention that the immunity ought never to have been granted in this particular case.

43. In so far as the submission is directed at the court, rather than at the law enforcement authority in some argument as to policy, it is a submission for which it is difficult to find a peg. We accept that "there may, in exceptional circumstances, be a right to review the exercise of" the powers of the Secretary for Justice and of the Director: see R v Tsui Lai-ying and others [1987] HKLR 857, 874; and we accept too that a judge always has a discretion to exclude evidence the admission of which will adversely affect the fairness of the trial. Yet statements of the dangers of accomplice evidence given under immunity and reference to the rarity of such devices elsewhere, and to suggested departures from local guidelines, are of little use in the context of a particular case, for in a particular case when one comes to the question of a judge's discretion to exclude evidence, the issue will invariably be that of the fairness of the trial in that case. Any suggestion that the grant of an immunity of itself inevitably runs contrary to the imperative of a fair trial is not, it seems to us, logical. The complaint that immunities are granted too frequently in this jurisdiction may or may not be true; but even if true cannot affect the case-specific issue that a trial court, and an appellate court, must in each instance ask, which is whether the instant trial has been rendered unfair by the use of the testimony of an accomplice who has been granted an immunity.

44. Just as it is recognized that the grant of an immunity to an accomplice is of itself a distasteful exercise and that it carries dangers too well recognized to require repetition in this judgment, so there is another side to that coin, to which we referred in Leung Kai-chung at page 788, which is the need to bring criminals to justice where the use of an immunity is openly engaged and where it provides a key, perhaps the only, source of doing so; and in so far as emphasis has been placed in argument upon the highly critical comments made in Turner, it is worth noting the more recent comments of the Privy Council in Chan Wai-keung v R [1995] 2 Cr App R 194, 200:

"It has been recognised for centuries that the practice of allowing one co-defendant to "turn Queen's evidence" and obtain an immunity from further process by giving evidence against another was a powerful weapon for bringing criminals to justice, and although this practice 'has been distasteful for at least 300 years to judges, lawyers and members of the public', and although it brings with it an obvious risk that the defendant will give false evidence under this 'most powerful inducement', the same very experienced court which so stigmatised this practice was willing to accept that it was in accordance with the law: Turner (Bryan) (1975) 61 Cr.App.R.67, 79."

45. It is not for the courts to direct prosecution policy, either generally or in a particular case, although a change in policy may result from a decision that the application of a policy has been incompatible with a fair trial in a particular case. Nor do the courts exercise a disciplinary function. Their function is to ensure the proper application of such procedures as the law, with the benefit of long experience, has designed to ensure a fair trial and to devise, where necessary, such mechanisms as are available and lawful to meet whatever problems in a specific case arise so as to ensure that they do not stand in the way of a fair trial.

46. There is nothing, as a generalization, unlawful about the use of accomplice evidence given under an immunity. If relevant, such evidence is admissible. Whether, as a matter of discretion, there stands in the way of its admission some consideration or another is always a matter for the case and the context. So, for example, it was said in Tsui Lai-ying at page 874:

"The issue here is: Were the witnesses so inherently incredible and was the background of the granting of the immunities to them so much against the public interest that the trial judge, in permitting their evidence to go before the jury, was wrong in the exercise of his discretion.

It is not for us to substitute our discretion for that of the trial judge unless we think that he took into consideration matters which he should not, failed to consider matters which he should or was plainly wrong.

Exclusion should be viewed in the light of all the known facts. The court does not act as a disciplinary tribunal in respect of either the Attorney General or, for that matter, the police. Exclusion should not be treated as a sanction unless the evidence called or to be called is of so unconscionable a nature that it should not be admitted."

47. That the function is case-specific and that the question in this case is whether the use of the immunity precluded a fair trial, and whether this Court should by reason of the matters here advanced say that the judge was wrong to admit the testimony of Lai, is emphasized by the following passages from HKSAR v Lee Ming-tee [2001] 1 HKLRD 599, 614-615:

"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 :-

'A power to ensure a fair trial is not a power to stop a trial before it starts. It is a power to mould the procedures of the trial to avoid or minimize prejudice to either party.' (Jago v District Court of New South Wales (1989) 168 CLR 23 at p.46)

His Honour continued :-

'Obstacles in the way of a fair trial are often encountered in administering criminal justice. Adverse publicity in the reporting of notorious crimes (Murphy v The Queen (1989) 63 ALJR 422; 86 ALR 35), adverse revelations in a public inquiry (Victoria v Australian Building Construction Employees' and Builders Labourers' Federation (1982) 152 CLR 25), absence of competent representation (McInnis v The Queen (1979) 143 CLR 575; MacPherson v The Queen (1981) 147 CLR 512), or the death or unavailability of a witness, may present obstacles to a fair trial; but they do not cause the proceedings to be permanently stayed. Unfairness occasioned by circumstances outside the court's control does not make the trial a source of unfairness. When an obstacle to a fair trial is encountered, the responsibility cast on a trial judge to avoid unfairness to either party but particularly to the accused is burdensome, but the responsibility is not discharged by refusing to exercise the jurisdiction to hear and determine the issues. The responsibility is discharged by controlling the procedures of the trial by adjournments or other interlocutory orders, by rulings on evidence and, especially, by directions to the jury designed to counteract any prejudice which the accused might otherwise suffer.' (at 47)

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 R v Horseferry Road Magistrates Court, ex p Bennett (at 74-75) :-

'The discretion to stay is not a disciplinary jurisdiction and ought not to be exercised in order to express the court's disapproval of official conduct. Accordingly, if the prosecuting authorities have been guilty of culpable delay but the prospect of a fair trial has not been prejudiced, the court ought not to stay the proceedings merely 'pour encourager les autres.'

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."

48. And in Secretary for Justice v Lam Tat-ming and another (2000) 3 HKCFAR 168, 178-179, the Chief Justice pointed out that:

"The judge has the overriding duty to ensure a fair trial for the accused according to law. For this purpose, he has what should be regarded as a single discretion to exclude admissible evidence, including a voluntary confession, whenever he considers it necessary to secure a fair trial for the accused. The essential question is not whether the law enforcement agency has acted unfairly in a general sense. It is no part of the court's function to exercise disciplinary powers over the law enforcement agencies or the prosecution as regards the way in which evidence they seek to adduce at trial was obtained by them. See R v. Sang at 436G (Lord Diplock); R v. Cheung Ka-fai [1995] 2 HKCLR 184 at 195 ? 40 (Litton VP). The court's function is to consider whether it would be unfair to the accused to use the confession though voluntary against him at his trial.

The test of unfairness is not that of a game governed by a sportsman's code of fair play. See R v. Sang at 456D - E; R v. Swaffield (1997-8) 192 CLR 159, 185-6, para. 35 (Brennan CJ). Unfairness in this respect is to be judged against and only against what is required to secure a fair trial for the accused. R v. Sang at 453C (Lord Scarman); R v. Scott [1989] AC 1242, 1256A-B. However, it is important to observe that in a just society, the conviction of the guilty is in the public interest, as is the acquittal of the innocent. See R v. Sang at 437B (Lord Diplock), 456E - F (Lord Scarman); Attorney-General v. Lam Man-wah (No. 2) [1992] 2 HKC 70 at 72C.

The requirement of a fair trial for the accused involves the observance of principles including the following which are relevant in this appeal: (1) No man is to be compelled to incriminate himself; his right of silence should be safeguarded. (2) No one can be convicted except upon the probative effect of admissible evidence. To ensure a fair trial for the accused, the court will exclude admissible evidence the reception of which will compromise these principles. R v. Sang at 436H - 437D (Lord Diplock) and 455C - E (Lord Scarman)."

49. So we turn to the question whether there was some feature of the use of the testimony of Lai by reason of which the judge ought, in order to ensure a fair trial for the applicant, have excluded the evidence of that accomplice.

50. Putting aside for the moment the Bill of Rights point, as well as the issue raised in the fourth and fifth points under this head (namely the suggested inhibition of cross-examination, and the question of the accomplice's consultation with his legal advisers), no ground of substance for exclusion of this testimony has been made out. There is no suggestion in this case, nor was there any suggestion at trial, that the grant of the immunity or immunities to Lai was tainted by improper conduct on the part of the investigating or prosecuting authorities, or that any material fact relating to that grant was hidden from those acting for the applicant. There was no request made for further particulars of the circumstances attending that grant; and the applicant was cross-examined about those circumstances. A summary of a briefing record taken when first the approach was made by those acting for the applicant to the police was disclosed to the defence team. There was no application made that the proceedings should for some reasons be stayed. There was not even an application made before or at the time that the testimony was to be adduced, that it should be excluded. We were informed in the course of this hearing by Mr Macrae SC that, during closing submissions, leading counsel at trial invited the judge to exclude the evidence, by which we assume that she was asked to ignore it, although we have no transcript of those submissions.

51. What the judge said about this was as follows:

"I also warned myself as to the fact that PW1 was a man giving evidence under immunity.

50. On his own admission, PW1 was the middle man of this bribe and involved in others. The prosecution admitted he has been treated favourably, but obviously felt this was the best way to obtain evidence against other co-conspirators. I treated his evidence as accomplice evidence with great caution and scrutiny.

51. There was a suggestion that, according to the authority of R v Tsui Lai Ying [1987] HKLR 857, if the evidence of an immunity witness is so incredible and the background of the immunity granted to them is so much against public interest, then the trial judge should exercise discretion and exclude that evidence. I do not believe that applies here, nor do I exclude his evidence on that ground.

52. This case does entirely rely on the credibility of PW1. The prosecution says there are pieces of very relevant evidence that, when considered together with PW1's oral evidence, support his version of events";

(Appeal bundle p 25).

and the judge then addressed in detail the evidence that bolstered the story given by Lai, evidence to which we shall turn when we assess the further grounds of this appeal.

52. We see nothing unconscionable in the use of Lai as a witness against the applicant. In this regard, it was argued that the Director's stated policy that immunities should not as a rule be granted to those who are more culpable than the accused against whom the accomplice evidence is to be used was breached in this case, since it is self-evident that Lai was more culpable, his corruption on a wider scale, than was the applicant. But that is to view but one compartment of the whole. Lai was the accomplice used to expose, as a witness, the corruption of the entire scheme at the centre of which was Chan, a civil servant occupying a post ripe for those who would be corrupt. It was clearly in the public interest that he be brought to justice. By its very nature corruption is difficult to uncover and prove without evidence from accomplices and where an accomplice is used against the central figure, and a civil servant to boot, the fact that the accomplice is then used in separate trials against satellites, as it were, is perfectly sensible.

53. In the circumstances, we see no proper basis upon which we could properly disturb the exercise of the judge's discretion.

(2) The Bill of Rights point

54. Article 10 of the Bill of Rights Ordinance, Cap. 383 provides, in so far as may be relevant to the issue taken in this appeal, as follows:

"All persons shall be equal before the courts and tribunals. In the determination of any criminal charge against him, or of his rights and obligations in a suit at law, everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law."

55. Article 11(2)(e), which is said to be engaged in this appeal, stipulates that:

"(2) In the determination of any criminal charge against him, everyone shall be entitled to the following minimum guarantees, in full equality ─

....

(e) to examine, or have examined, the witnesses against him and to obtain the attendance and examination of witnesses on his behalf under the same conditions as witnesses against him;

...."

The contention is that the use of an "immunised" witness unlawfully disturbs the equality guaranteed by these articles in that it causes an inequality of arms, since the prosecution can induce a witness to give evidence under an immunity, an option not realistically available to the defence.

56. The point taken is in our judgment artificial in two senses. It is artificial in that it does not for practical purposes arise in this case; and it is artificial in the sense that it places an artificial gloss on the Articles and their intent.

57. Article 10 and article 11(2)(e) are each but an aspect of the right to a fair trial. The equality of which article 10 speaks, and "the same conditions" to which article 11(2)(e) refers, are not inconsistent with such differentiations as necessarily and reasonably arise in natural consequence of the intrinsically different functions of the parties and for which there is a legitimate purpose. The articles are to be read in the context of the criminal trial processes for which they are designed. That is a context which must recognise that the roles performed by, and the burdens upon, each party to criminal proceedings are different. The articles must be taken to recognise differences inherent to those roles of each party and there is nothing, so far as we are aware, in the decisions of the Human Rights Committee of the United Nations or in the judgments of international courts, that suggest that of themselves the use of immunities as a vehicle for enabling accomplice evidence to be given is inimical to a fair trial or otherwise in breach of the rights that secure due process of law for those accused of crime; for it is no doubt recognised that such a tool is intrinsic to the role of law enforcement. Whether the right to proper and fair process is or is not undermined will depend in such cases on the circumstances of the immunity, whether all material facts have been disclosed and whether, in the round, its use has deprived the accused of a fair trial. So much is evident from the decision of the Human Rights Commission to which counsel for the applicants has drawn our attention in this case, X v United Kingdom (1976) 7 DR 115, a decision not of the European Court but of the Commission, a decision that arose out of the immunities granted to accomplices in the robberies which are the subject matter of the Turner case. The Commission pointed out that:

"The Commission notes that, in the present case there are numerous elements in the proceedings as a whole and concerning S.' evidence in particular which indicate that the applicant had a fair hearing:

a. Before the trial, prosecuting counsel disclosed to applicant's counsel the agreement with the Director of Public Prosecutions;

b. The jury were told of the agreement and everything that was known of S.;

c. Applicant's counsel did not object to S. giving evidence;

d. The applicant did not himself give evidence or call any witnesses;

e. The Judge made it plain to the jury that unless they were satisfied that S. was to be believed they could not convict;

f. The jury convicted the applicant by a majority of 10 to 1 on one count only; on two other counts they disagreed as to their verdict.

As regard the complaint that the trial was not fair because S. in giving evidence was influenced by the inducements contained in the letter of ... April 1973, from the Director of Public Prosecutions to S.' solicitors, the Commission observes that:

a. At the time he gave evidence, there was no possibility of S being prosecuted because

(i) he had been acquitted of certain charges at the Central Criminal Court before the proceedings against the applicant were commenced at the Magistrates Court,

(ii) if other charges were later brought against S., his statements could not have been given in evidence against him because they had been obtained from him as a result of inducements;

b. It is true that if S. refused to give evidence or absconded without giving evidence, police protection might have been withdrawn and he and his wife and family might not have been conducted to a place of safety.

The Commission observes in this connection that the use at the trial of evidence obtained from an accomplice by granting him immunity from prosecution may put in question the fairness of the hearing granted to an accused person and thus raise an issue under Art. 6(1) of the Convention.

In the present case, however, the manner in which the evidence given by S. was obtained was openly discussed with counsel for the defence and before the jury. Furthermore the Court of Appeal examined carefully whether due account was taken of these circumstances in the assessment of the evidence and whether thee was corroboration."

58. Article 11(2)(e) is a reproduction of article 14(3)(e) of the International Covenant on Civil and Political Rights, (to which Covenant constitutional domestic effect is given by article 39 of the Basic Law), and is an article intended for implementation by a host of countries each with its own legal system and is an article "designed to guarantee to the accused the same legal powers of compelling the attendance of witnesses and of examining or cross-examining any witnesses as are available to the prosecution". (See General Comment of the Human Rights Committee 13/21, referred to in 'The Human Rights Committee' McGoldrick, 409.) There was and is no suggestion in this case that the applicant was deprived of any power to call whatever testimony he wished, or that there was placed in his way any impediment to the realization of such a wish. In our judgment the issue did not arise in this case.

59. We therefore adjudge that the Bill of Rights point is not well taken.

(3) The Immunity and Cross-examination

60. At [21] to [34] above, we have set out the history of the immunities granted to Lai, the circumstances in which a further immunity was granted in the course of Lai's testimony, and then the circumstances in which the witness came to refuse to answer certain questions in cross-examination on the grounds that the subject matter of those questions was not covered by the immunities granted thus far. It is in this context that it is contended that there was a material irregularity in the conduct of the trial in that, whilst Lai was afforded an immunity, he was nonetheless permitted not to answer questions which he, the witness, considered fell outside the terms of the immunity, and that thereby the defence was unfairly prejudiced in the conduct of its case.

61. The decision of this Court in Leung Kai-chung is prayed in aid, a case, it so happens, in which leading counsel for the accused was the same counsel as appeared for this applicant at the trial that is the subject of this appeal. There are two material differences between that case and this, namely, that in Leung Kai-chung the witness was prompted to refuse to answer questions in respect of precisely the conduct that was the subject of the immunity; and, second, the form of the immunity was one that encouraged him to give evidence in accordance with the contents of a statement, rather than in accordance with the truth, which as we say earlier, may or may not have been the same thing. Neither flaw tainted the proceedings with which we are presently concerned.

62. The more arguable point, however, that we have to address, is that the immunities granted were not so wide as to cover the entire area of cross-examination which Mr Cheng Huan apparently wished to explore; and he said that this placed him at a disadvantage. Mr Macrae who addressed us on this particular aspect of the appeal, was hard put to identify the prejudice occasioned to the defence, save to say that one could not predict how matters may have turned out had Mr Cheng been able to pursue the issue of payments to persons other than Chan during the period in question.

63. It is noteworthy that when the witness refused to answer questions about corrupt payments to persons other than Chan, counsel for the applicant at trial made no application for a stay of proceedings. Nor did he make any suggestion (as well he might, given the events of the previous day), that a further immunity be granted to cover the matters that he wished to canvass. Nor is there any hint that he sought an adjournment to discuss such a course with counsel for the prosecution. There is no suggestion before us that in his closing submissions counsel for the applicant pressed any suggested material disadvantage in the presentation of the defence case as a result of these refusals to answer questions. We do not have the benefit of the transcript of counsel's closing submissions, but we note that in the judge's comprehensive Reasons for Verdict, she does not touch upon this issue now raised. Mr Zervos SC puts to this Court as a proposition that in the context of the trial as a whole and the facts which emerged, there was in truth no material disadvantage and we are, in the event, disposed to agree.

64. Lai listed twelve corrupt payments to Chan in the course of 1999 which, he said, flowed directly from the agreement with the applicant to pay Chan a bribe. In the course of cross-examination, Lai said that before 1998 there were no corrupt dealings between Chan and himself. He was then asked whether there were corrupt dealings with Chan up to 2001 apart from the Wong Tai Sin and Sau Mau Ping projects, and Mr Cheng Huan told the court that the material in his possession showed at least seven other payments made to Chan during that period and that it was these payments that he wished to explore. After the grant of the further immunity on 13 February 2003, questions were indeed put about further payments to Chan and the answer was that the further payments numbered four. Let us see, then, how the issue of those four payments was in fact pursued:

"Q.	Was there any corrupt dealings subsequent to February 1998 apart from what you have given to this court in relation to the defendant, Mr Cheung?

A. Yes.

Q. How many occasions?

A. Several.

Q. How many occasions, since you have a good memory, Mr Lai? The precise number, please.

A. Four - about four.

Q. And what was the total amount of money involved in these four occasions?

A. So this four occasions excluding those related to Mr Chan.

Q. Yes, yes. Please, the four occasions.

A. Give me some time.

Q. Yes.

A. 400,000.

Q. Are you sure that's all?

A. Yes."

(Appeal bundle page 115).

65. There was no further pursuit of this issue as far as payments to Chan were concerned, and no attempt whatsoever to show that the witness must have confused the twelve payments which he said related to the applicant with these other corrupt payments to Chan for other purposes.

66. It was an accepted fact in the case, as is obvious from a reading of the transcript, that Lai made corrupt payments to Chan other than those which involved the applicant, and that such corrupt payments were made at or around the same time as the payments with which the applicant was concerned. The judge was, in other words, aware of the point made, that the list of twelve payments may be unreliable because there were others; that there was also a payment of $180,000 to Chan in July 1999, the time of the third payment on Lai's list, through Michael Wong of Brongham Park, a matter with which the applicant was in no way connected; and that the use of false invoices was not restricted to the listed payments. Indeed, it was put in terms to the witness that the first payment of $350,000 was "in all probability ... in relation to other corrupt matter you had with Mr Chan", an assertion which the witness denied, explaining that he well remembered the first payment on the applicant's behalf because "it was the first time in my lifetime that I gave such a big amount of money, that's why I remember it." (p. 152, appeal bundle). But what told particularly with the judge in support of Lai's testimony were undisputed factors that supported in material aspects the account he gave. There was no question but that Tridant Engineering obtained a contract that had once been awarded to YSH. There was no question but that Brongham Park sold the generators not directly to Tridant but to Hing Yip, and that those generators found their way to the applicant's company at a price substantially in excess of the price paid by Hing Yip to Brongham, a company also owned by Lai. There was no question but that the original tender by Tridant did not include the generators by that were sold Brongham Park through Hing Yip to Tridant; and there was no question but that Tridant obtained its quote or tender not from Brongham Park as it might easily have done but through an intermediary, a company with which Lai was so closely associated. These were the matters to which the judge expressly referred in his Reasons for Verdict as underpinning in essential regards the story given by Lai.

67. In all these circumstances, we are satisfied that the events to which we have been taken as suggesting difficulties for counsel for the applicant at trial did not, when viewed in full context, cause the applicant true prejudice in the conduct of his defence.

68. The complaint about the access that Lai was afforded to his legal advisers in the course of his testimony was a surprising one to put forward as a discrete ground, when one considers that it was a course described by the applicant's counsel at trial, once suggested by the judge, as "absolutely right". That may be why Mr Caplan QC conceded that it was a point which by itself was not sufficient to warrant upsetting the conviction but was merely illustrative of the problem that can be caused by the grant of an immunity which is limited in its scope. The point does not therefore require to be addressed further.

(4) The strength of the evidence

69. Grounds 3 and 4 go together. They assert, in essence, that the evidence of Lai so lacked credibility and reliability that the judge ought not to have relied upon it. The complaints and suggested indicia of unreliability are several.

70. The evidence of Lai was that it was he who chose and suggested the figure of $2 million. It was, he said in evidence, a random figure. As to this, the judge said in her Reasons for Verdict:

"80. I did consider at length the explanation as to why he asked the defendant to pay Mr Chan the sum of $2 million. It was not entirely satisfactory, his explanation, but nor do I have to accept all his evidence in its entirety to find it reliable." (Appeal bundle p 31).

71. It is argued that the judge did not resolve her disquiet as to this aspect of the evidence which impinged upon the general credibility of the witness Lai. It is said that it is inherently incredible that Lai should have played any part in the approach to the applicant whom he did not then know, for the idea was Chan's, and that Lai's company had by the time of the suggested bribe nothing further to gain. It is argued further that it is inherently not credible that Lai fixed the amount of the bribe, and not credible that he or his company should have been involved in the payments themselves. These are matters which the judge, it is contended, has failed to address, and failed also to address the motive for Lai's involvement since his company had succeeded in securing withdrawal of its tender. It is argued as well that the evidence upon which the trial judge relied as supportive of Lai's account was not truly supported in that it was self-generated evidence.

72. We do not have a transcript of the closing speeches advanced by counsel at trial. We would be surprised indeed if these particular points had not all been made by leading counsel for the applicant and we see from the Reasons for Verdict that points of this ilk were advanced and that the judge had them in mind. She said in terms:

"82. I had to address the question of whether the elements of the charge had been substantiated. The defence submit there is no motive for Tridant to pay the large bribe when its profit margin would only be a few million dollars. Also, what specific benefit resulted from paying the bribe has not been proved." (Appeal bundle p. 31).

and at para 83 of those Reasons she shows that she was cognizant of the fact that the man to whom the bribe was alleged to have been paid was:

"... a man very senior in the Housing Department, directly connected with the livelihood of all these companies involved; here, Tridant being a specific company."

73. This Court is all too familiar with cases of corruption in the construction industry and the powerful influence for commercial benefit that officials and supervisors of various categories are perceived, in the eyes of contractors, to wield. The fact is that the companies in this case were all going concerns, destined to have further contact with the Housing Department. Lai's evidence was that this bout of corruption to which the applicant was said to be a party was not the only corruption in which he engaged with Chan. Quite how that corrupt relationship commenced, we are not in a position to say, but it is evident that Lai and Chan were at one in their willingness to immerse themselves in the stew of corruption to their long-term mutual benefit. Viewed in that light, Chan's request that Lai approach the applicant, and Lai's suggestion of the bribe figure, is not as odd as is made out. Furthermore, whilst in this particular instance Tridant, as the second lowest bidder, seemed destined to obtain the particular contract once YSH withdrew, that was not, according to Lai's testimony, inevitable: see Appeal bundle, p 117.

74. Lai gave evidence before this judge for a full two and a half days and the judge had the benefit, as we have not, of hearing that evidence in all its detail, at the end of which she said (para 81 Reasons for Verdict) that :

"There was a very real ring of truth when considering the oral and supporting evidence together."

75. The testimony of Lai as to why he did what was suggested by Chan - and we should not forget that Chan had told Lai that the applicant already knew what to do, and that we have heard neither from Chan nor the applicant - was revealed in this passage of evidence:

"Q.	So how could you possibly tell the defendant that this money was on behalf of Mr Chan when Mr Chan never mentioned a sum of money to you according to your evidence?

A.	In the statement I said that if I asked for a little, I was afraid that he would not be happy. That amount was suggested by me and I dare not offend him.

Q.	And the reason you told us you asked the defendant for this sum of money was to protect your own interest, otherwise it would be difficult to proceed with other ongoing jobs.

MR CHENG: Your Honour will remember that.

Q.	To protect your company's own interest, not to protect Mr Cheung's own interest, do you agree? Do you agree?

A. I felt that it was for both.

Q.	It's not what you felt, Mr Lai, it's what you said in this court. You said that if you did not ask James Cheung for the money, it will be difficult to proceed with your ongoing jobs. Do you agree that's what you say?

A.	I stated that Mr Chan told me to approach Mr Cheung. He told me that he had contacted Mr Cheung. I just did things on his behalf. About whether I was protecting my interest, there was a little bit. I didn't even know Mr Cheung. Why would I approach him? What would I approach him for?"

(Appeal bundle p 141).

76. As for the figure of $2 million, whilst Lai did at one stage say that he chose the figure randomly, the following passages are relevant:

"Q. Mr Lai, thee must be a reason why you suggested 2 million without any suggestion from Mr Chan.

A. There was no reason, I just say it randomly. That's the truth.

COURT:

Sorry, you've already said you had in mind the contract was worth 100 million. Did this 2 million have any relation to this final figure of 100 million?

A.	There was some relation because as I saw that this contract was worth such a large amount, so I asked 2 million.

Q.	But you know - it's normally known in the trade that the profit margin for Housing Authority's projects is very small, perhaps 2 per cent profit.

A. Yes, the marginal profit was very low, but I did not pay attention to it."

(Appeal bundle pp 135-136).

As Mr Zervos pointed out, there was no evidence as to what the profit margin in fact was.

77. As for supporting indicia, we think that the judge's approach cannot be faulted. It was an admitted fact that for other Housing Authority projects Tridant had obtained quotes directly from Brongham Park and not from Hing Yip. It was also common ground that the original tender was amended; which though not in itself an extraordinary or unusual fact, it was amended to include Vibropower generators for which the sole agent and distributor in Hong Kong was none other than Brongham Park. Beyond that, the testimony of Lai that his company YSH had never before purchased from a subsidiary, an assertion that could readily have been tested, was never challenged.

78. Leaving quite aside the bank documents and the invoices from the bogus company, these indicia in themselves were indeed supportive of the witness's testimony.

(5) The Expert Evidence

79. The fifth and final ground of appeal against conviction is an attack on the judge's findings about the expert (and only) testimony adduced on behalf of the applicant at trial.

80. The applicant put into evidence a report, which was unchallenged, by Mr John Battersby, a Chartered Quantity Surveyor, who has been employed in the construction industry in Hong Kong for twenty years. Mr Battersby concluded that there was no inflation of the price of the generator sets and that "Mr SS Lai's suggestion of such inflation would seem rather bizarre".

81. What the judge said was this:

"71. The expert addressed the question as to whether there was any inflation of the price of the generator sets in Exhibit D14 at page 29 paragraph 4.4.3. I quote the expert:

'I note Mr S S Lai says that he arranged for BPL to sell the generator sets at an inflated price to Hing Yip If this is the case, then it would mean the prices quoted by Seaview and Jardine must have also been drastically inflated in order to be more expensive than those of Hing Yip. It does not make sense in what Mr S S Lai has to say about inflation.'

72. However, PW1 never said this in evidence, whether in chief or under cross-examination. He may have said it in his statement, but I rely on what he said in court; the statement is not before me.

73. It is clear from the report that the expert was looking for evidence that the price had been artificially raised, selling at a much higher price than normal. That would be what to inflate the price would mean in the true sense of the word. When one compares the prices to other quotes, it is clear that Hing Yip did not inflate the price artificially. The expert is correct in this conclusion, but PW1's evidence was not that he would inflate the price artificially but that the bribe money would come out of the purchase price. There is a difference.

74. PW1 said he suggested Hing Yip would sell some generator sets to Tridant and he, the defendant, said that he would place orders with Hing Yip, and that the money could only be paid one year later. PW1 said when Tridant placed orders for generator sets, the $2 million would be added to the purchase price and it will be reflected in the purchase order. These are his words. PW1 never used the word "inflate" or "inflation".

75. It is clear from the evidence that the $2 million bribe was to come from the difference between the purchase price paid to Brongham Park and the selling price to Tridant. There was never an intention to inflate the price.

76. It can be seen from the original quote for Wong Tin Sin to Tridant, being $8-odd million, the need to drastically lower it to get the contract and the subsequent need to sell to Tridant, for the Sau Mau Ping project as well, to get to a figure of at least $2 million.

77. The mathematics of it I have been through already. The difference between the two prices, the purchase price paid to Brongham Park and the selling price to Tridant, is $2.044 million. I find that this was the method used to raise the $2 million bribe.

78. In short, what would have been profit in a normal transaction was used as bribe money, as agreed in the first meeting before the defendant and PW1. There was no inflation of the price in the sense that the expert defined or concentrated on in his report. The submission that the report and conclusions neutralises the prosecution's case is not founded."

(Appeal bundle pp 29-30).

82. The argument is that the judge erred in that the prosecution opened its case on the footing that prices had been inflated to cater for the bribe and that it had been Lai's testimony that prices had been inflated.

83. The sense in which the word "inflate" was used in testimony, and the manner in which the word was introduced, is important. The judge recognised, quite correctly in our view, that the price ultimately charged by Hing Yip was not inflated in the sense of a comparison with prices quoted by others. The fact, seemingly ignored by the expert, is that the original tender by Hing Yip to Tridant was very significantly higher than the tenders by others, and the tender was accordingly lowered; a matter says the expert of "horse trading", as evidenced by a lowering of a competitor's tender from $7.98 million to $7.581 million. That scale of reduction may be horse trading, but the reduction by Hing Yip was, at one swoop, down from $8.537 million to $7.226 million, a difference of $1.394 million. It is noteworthy that Hing Yip's first tender was, in its difference with the price paid to Brongham Park, sufficient in itself to cover this suggested bribe, whereas the second tender was not.

84. The manner and context in which the phrase "inflated price" was introduced into evidence is seen from a passage which we have recited at [9] above, part of which we now reproduce:

"Q. And how was him placing orders with Hing Yip going to realise $2 million worth of bribe money?

A.	When he placed order for the gen sets the 2 million would be added to the original price. It would be reflected on the purchase order.

Q. So in other words, you'd sell them to him at an inflated price, is that right?

A. Yes.

Q. Now, when he paid the inflated price, what were you going to do with the amount it was inflated by?

A.	Maybe I add something. After Tridant agreed to pay the 2 million through purchases, a few days later I told Mr Chan that Mr Cheung and I agree on this amount.

Q.	Well, I think you misunderstand me. You see, I've got a fairly simple mind and I don't understand the way some people do business but you told us that part of the proposal was that Tridant would buy these generator sets and pay $2 million more than they were worth. Do you remember telling us that?

A. Yes."

(Appeal bundle p 63)

85. It was counsel who first used the phrase "inflated price". Although there is reference, again by counsel, to a sale at a price more than the goods are worth, it seems clear enough to us in context that the witness was concentrating on an inflation of price as between Brongham Park (a subsidiary of Hing Yip, be it remembered), and Hing Yip, a company which the witness controlled. In the context of the issue here raised, Mr Battersby's report is remarkable for its lack of any reference whatsoever to the suggested sale by Brongham Park to its parent company Hing Yip of these generators for the sum of $5.872 million. That is not a criticism of Mr Battersby, for we do not know what facts were placed before him. But the issue placed before him seems clear enough, which was to examine, in a vacuum, the tenders forwarded by Hing Yip and how they stood in relation to other tenders and to market prices to end users. At the outset of his report, he stated that:

"It is alleged that monies were passed from Tridant to Mr SS Lai's brother's company Hing Yip ... by way of inflated prices for diesel driven emergency generator sets supplied and installed by Hing Yip for Tridant ... in order for Mr SS Lai to collect sufficient funds to pay to Mr Chan";

and that his opinion had been sought:

"... as to whether there was any inflation of the price of generator sets quoted by Hing Yip or any of the tenderers to Tridant ...."

The problem with this remit is that it is but part of the picture, in the sense to which the judge has correctly referred. It omits the key factor, namely, the price charged by Brongham Park to Hing Yip.

86. In the circumstances, we have described, it is not demonstrated that the judge has erred as suggested.

Conclusion

87. We find that the grounds of appeal are not made out. Since the issue of answers refused because of the limited immunities was reasonably arguable, we grant the applicant leave to appeal against conviction and treat the hearing of the application as the appeal. But, for the reasons we have given, the appeal against conviction is dismissed.

88. There is outstanding an application for leave to appeal against sentence which we shall hear on a date to be fixed in consultation with counsel's diaries.