SECRETARY FOR JUSTICE v. SIN KAM WAH AND OTHERS

HCMA443/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO.443 OF 2004

(ON APPEAL FROM ESCC1026 OF 2003)

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JUDGMENT

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Background

1. On 13 September 2002, the Commissioner of the ICAC (“the Commissioner”) made an ex parte application to Deputy High Court Judge Day in the Court of First Instance of the High Court pursuant to section 14(1A) of the Prevention of Bribery Ordinance, Cap. 201 (“the Ordinance”) for an order under section 14(1)(a) of the Ordinance authorizing the Commissioner to issue notices (“Notices”) in writing requiring the respondents to furnish to the investigating officer of the ICAC specified in the Notices, statutory declarations enumerating certain information covering the period commencing three years prior to and ending on the date of the Notices, namely 16 September 2002.

2. Upon being satisfied that there were reasonable grounds for suspecting that offences under the Ordinance had been committed by the respondents, Deputy High Court Judge Day granted the Order (“Order”) in terms of the application.

The Notices

3. On the authority of the Order, the Commissioner issued the Notices to each of the respondents on 16 September 2002 and effected personal service of these Notices on them on the same day.

4. Pursuant to the Notices, each respondent was required to furnish a statutory declaration enumerating particulars in eight areas from (a) to (h).  All respondents had subsequently made their replies through their solicitors, Messrs K.Y. Lo & Co.  However, the appellant alleged that the manner in which the particulars were given constituted a failure to comply with the Notices.  Hence the decision to prosecute the respondents under the Ordinance, for “Failing to comply with a Notice issued under section 14(1)”.  The information was preferred on 28 March 2003.

5. The particulars of the charges, which had been amended once, were as follows :

“Charge 1 (Against the First Respondent)

‘SIN Kam-wah, on the 11^th day of October, 2002, in Hong Kong having been served with a notice issued under section 14(1) of the Prevention of Bribery Ordinance, Cap.201 on the 16^th day of September, 2002, without reasonable excuse, failed to comply with the terms of the said notice in the answers provided by him in paragraphs 2(a), (b), (c), (f), (g) and (h) of his statutory declaration dated the 9^thday of October, 2002.’

Charge 2 (Against the Second Respondent)

‘NG Po-on, on the 11^th day of October, 2002, in Hong Kong, having been served with a notice issued under section 14(1) of the Prevention of Bribery Ordinance, Cap.201 on the 16^th day of September, 2002, without reasonable excuse, failed to comply with the terms of the said notice in the answers provided by him in paragraphs 2(d), (f) and (h) of his statutory declaration dated the 9^th day of October, 2002.’

Charge 3 (Against the Third Respondent)

‘CHAN Chun-keung, Eddy, on the 11^th day of October, 2002, in Hong Kong, having been served with a notice issued under section 14(1) of the Prevention of Bribery Ordinance, Cap.201 on the 16^th day of September, 2002, without reasonable excuse, failed to comply with the terms of the said notice in the answers provided by him in paragraphs 2(c), (d), (f), (g) [mistakenly typed as (h)] and (h) of his statutory declaration dated the 9^th day of October, 2002.’

Charge 4 (Against the Fourth Respondent)

‘CHE Kwai-wing, on the 11^th day of October, 2002, in Hong Kong, having been served with a notice issued under section 14(1) of the Prevention of Bribery Ordinance, Cap.201 on the 16^th day of September, 2002, without reasonable excuse, failed to comply with the terms of the said notice in the answers provided by her in paragraphs 2(c), (f) and (h) of her statutory declaration dated the 10^th day of October, 2002.’

Charge 5 (Against the Fifth Respondent)

‘LAM Chuen-ip, on the 11^th day of October, 2002, in Hong Kong, having been served with a notice issued under section 14(1) of the Prevention of Bribery Ordinance, Cap.201 on the 16^th day of September, 2002, without reasonable excuse, failed to comply with the terms of the said notice in the answers provided by her in paragraphs 2(c), (d), (f) and (h) of her statutory declaration dated the 8^th day of October, 2002.’ ”

6. At the end of the prosecution case and after hearing the submissions, learned the magistrate ruled that there was no case to answer and she dismissed the charges accordingly.  Being aggrieved by the decision, the appellant applied to the magistrate to state the case pursuant to section 105 of the Magistrate’s Ordinance, Cap.227 for consideration by the Court of First Instance.  

7. What counsel for the respondents contended in their no case submissions were basically that :

—	the statute only requires the recipient of a Notice to act honestly and diligently according to the standards of an average reasonable man;
—	substantial compliance with the Notice would be sufficient and in the circumstances;
—	the respondents had sufficiently compiled with the Notices by their replies;
—	there was no need for the respondents to go through each entry in the bank and credit card accounts in detail, they had done all that could be done;
—	supplying the ‘keys’ to locate the information would constitute sufficient compliance;
—	the answer of ‘I cannot recall’ is compliance if the respondents genuinely cannot recall the specific details;
—	there was no evidence adduced by the prosecution that the respondent had deliberately omitted any details;
—	there were enormous difficulties to keep detailed records of each and every expenditure over a three year period and nobody would be expected to do that; and
—	failure to comply meant total failure as opposed to partial failure, and the prosecution had failed to prove total failure on the part of the respondents.

8. The prosecution took a different view.  It was submitted that compliance must mean strict compliance, and the replies by the respondents, if found prima facie acceptable, would defeat the object of the Ordinance.  The appellant had relied on similar grounds in their appeal.

9. The reasons for the ruling by the magistrate could be found at paragraph 38 of the case stated and the particulars were as follows :

“My Ruling on the No Case Submission
38.	Upon hearing submissions from the Appellant and the Respondents I ruled that each Respondent had no case to answer on the charge for the reason that there was no evidence of non-compliance by the Respondents in that insufficient materials for me to draw any adverse inference against them.  In making this ruling I took the following matters into account :
	(i)	Save for paragraph 2(a) of the Notice, there was no guideline or direction anywhere in the Notice or in the Ordinance in relation to the manner in which the information should be enumerated.  There was nothing in the Ordinance that prevented the Respondents from relying on their memories in enumerating the information as required.  If a recipient of the Notice relied solely on his or her memory in replying, then he or she would run the risk of being prosecuted under section 14(5) for making false statements in answer to a Notice.
	(ii)	There were no guidelines or directions in the Ordinance or the notice as to what type of information was required to be listed and there was nothing in the Ordinance or the Notices to prevent the Respondents from enumerating the expenses by reference to other documents.
	(iii)	In providing some of their answers to certain of the questions the Respondents stated that the information sought could be obtained from certain documents such as bank statements, credit card statements, stock accounts, demands for rates, company search and mortgage documents, but did not produce those documents as part of their statutory declarations.
	(iv)	In relation to the school fees incurred in respect of the First Respondent’s son SIN Wai-hei, since they were deducted from the First Respondent’s salary before the salary was credited into the First Respondent’s account, one could not say that such expenditure was not reflected in the bank statements.
	(v)	As regards the Third Respondent’s failure to enumerate the purchase price of 3 watches, it did not amount to non-compliance because the Third Respondent had already explained that the relevant receipts had been seized by the ICAC.”

And it is in relation to the ruling that the prosecution sought to appeal against.

10. Based on the circumstances, there were six questions of law being posed for the opinion of this court.  They were :

“	(i)	Does a recipient of a notice (‘Notice’) issued by the Commissioner of the ICAC pursuant to section 14(1)(a) of the Ordinance have to comply with the Notice strictly or is it sufficient if there is substantial compliance thereof?
	(ii)	If strict compliance is required by the Ordinance can any non-compliance by a recipient of a Notice be reasonably excused only if that recipient has taken all steps that he/she can reasonably be expected to take in the circumstances in order to comply with the Notice;
	(iii)	Whether I erred in law in holding that a recipient of a Notice complies with the obligation to enumerate the information required by each paragraph of the Notice by disclosing in his/her statutory declaration where the information that he/she is required to enumerate can be obtained and need not enumerate the information itself?
	(iv)	Whether I erred in law in holding that where a recipient of a Notice wishes to enumerate the information required by the Notice by referring to specific documents, it is unnecessary for him/her to exhibit those documents to his/her statutory declaration?
	(v)	Whether I erred in law in holding that there is nothing in the Ordinance or in the Notices to prevent the Respondents from relying on their memory when enumerating the information.
	(vi)	Whether I erred in law in finding no case to answer in the light of the prosecution’s concession that there is no non-disclosure or misrepresentation by the Respondents.”

11. At the hearing before me, I was ably assisted by all counsel involved and they had provided me with full written submissions. 

12. Mr McWalters, for the appellant, analysed the issues in the following manner :

a.	The rationale for the existence of the special powers of investigation that are contained in Part III of the Ordinance must be appreciated as corruption activities are difficult to investigate.  This is recognized by the Court of Appeal in cases such as Attorney General v. Hui Kin Hong [1995] 1 HKCLR 227 and HKSAR v. Chan Sze Ting, HCMA106/1997.
b.	Section 14 has two roles to perform : to facilitate investigation and as an aid in prosecution, if any.  Base on the wording of sections 14(4), (5) and section 24, section 14(4) must be a strict liability offence and the compliance must be strict.  The section had already provided the defence with reasonable excuse, so the interests of the recipient of the Notice would be adequately protected.
c.	The ICAC requires complete and precise information in order to conduct its investigation and the recipients are obliged to provide such information under the Notices.  There can be no waiver from anyone, including the ICAC, of the non-compliance, save and except the time in furnishing the information.  If a recipient of the Notice is permitted to provide inadequate answers to the ICAC, then the whole purpose of section 14 would be defeated.
e.	The recipient’s obligation is to enumerate.  This obligation could not be discharged by providing just the so-called “key” which the recipients believe would enable the ICAC to obtain the information requested by conducting further enquiries on their own.  Furthermore, if the recipient chose to satisfy the obligation by exhibiting the relevant records to the statutory declaration, he or she would be expected to take the necessary step to identify the precise entries, otherwise, there is still no enumeration.
f.	As to what amounts to a reasonable excuse for non-compliance, it is proposed that a recipient must, at the very least, take the following steps :
	(i)	search for, locate and have recourse to any records he may have relating to the information sought;
	(ii)	seek the assistance of the recollection of any persons who may have relevant information and who are reasonably contactable;
	(iii)	make recourse to the records of other persons where those records are reasonably accessible;
	(iv)	take such other steps as are reasonable in the circumstances.
g.	What is reasonable must be judged in the circumstances of each case.  The circumstances will include the nature of the information sought, the availability of the records or sources of information, if accessed by the recipient, would enable him to comply.

13. For the questions of law posed, Mr McWalters submitted that the answers should be the following :

question (i)	the law requires strict compliance,
question (ii)	the recipient must make reasonable efforts to obtain the information required to be remunerated,
question (iii)	revealing of location of information does not satisfy the obligation to enumerate,
question (iv)	reference to documents could be a way to satisfy the obligation to enumerate but there must be clear identification of the specific entries,
question (v)	a recipient may rely on his memory but not to the exclusion of it, where the recipient’s memory is deficient, he must take such further steps as may be reasonable in the circumstances to enable compliance with the obligation to enumerate.
question (vi)	the ruling of no case to answer on the charges was an error.

14. However, Mr Marshall, SC, for the 1^st and 4^th respondents, and Mr Bruce, SC, acting for the 2^nd, 3^rd and 5^th respondents disagreed and they gave different answers to the posed questions.  Essentially they pointed out that this draconian offence should not be interpreted as a strict liability offence and the magistrate’s finding of no case to answer should be upheld.  The principle submissions by the defence in the no case hearing were reiterated.  As the details of counsel’s submissions were clearly stated in their skeletons, I shall not rehearse them here. 

15. Apart from the analysis of the nature of the offence and the proper method of compliance, Mr Bruce raised a preliminary issue.  He pointed out that :

“	4.	The scope of any appeal under section 105 of the Magistrates Ordinance, Cap 227 is that a conviction order or determination is erroneous in law.  Clearly, there is a conviction order or determination in this matter.  However the fundamental difficulty faced by the appellant is the finding of fact in paragraph 38 of the Case Stated.  In that paragraph the learned Magistrate holds ‘I ruled that each respondent had no case to answer on the charge for the reason that there was no evidence of non—compliance by the respondents in that there were insufficient materials for me to draw any adverse inference against them.’ [Emphases added]
	5.	This statement by the learned Magistrate is unequivocal.  She does not say, for example, that this finding was on the basis of the position of law held by the respondents.  The language of the passage quoted above could easily apply to the position of law advocated by the appellant.  None of the sub-paragraphs which follow the statement qualify in any way the finding of the learned Magistrate.  On this basis, the questions of law stated in the Case Stated simply do not arise.”

16. In a way, I agree with Mr Bruce that there seems to be a gap between the ruling of no case and the specific questions posed for the consideration of this court.  There did not seem to be a clear connexion between the two.  As I see it, the primary question for this appeal is simply whether the learned magistrate had erred in law as to whether there should be a case to answer.  If these questions need to be answered because they relate to issues lurking in the background, I am prepared to deal with them as far as I could but I have to be cautious so that I would not traverse into areas which require findings to be made by the magistrate herself. 

The nature of the Notices

17. The Notices involved were issued under section 14(1).  But it is not a power that can be exercised by the ICAC directly.  They have to apply to the Court of First Instance.

18. When such an application is made, the judge of the Court of First Instance has to be satisfied that there are reasonable grounds for suspecting that an offence under the POBO has been committed, then he or she may make an Order authorizing the commissioner to issue the Notice to require the respondent to furnish the information asked for either in a statutory declaration or a statement in writing, and to enumerate the matters specified in section 14(1)(a)(i), (ii) and (iii).

19. Hence the authority of the Notice comes from the Court of First Instance, in exercise of the specific statutory power.  Clearly such a Notice requires a solemn response.  One quick look at the relevant section could tell that the legislature demand details, not just general or cursory replies.  Section 14(a)(i) reads :

“

(i)

the property, being property in such categories or classes of property, movable or immovable, as may be specified in such notice, belonging to or possessed by, or which at any time during the 3 years immediately preceding the date of such notice or during such shorter period as may be specified in such notice belonged to or was possessed by, such person, his agents or trustees, specifying in respect of each property enumerated whether it is or was possessed jointly (and, if so, with whom) or severally; and specifying the date upon which, and the person from whom, each such property was acquired and whether by purchase, gift, bequest, inheritance or otherwise, and, where it was acquired by purchase, specifying the consideration paid therefor; and in respect of any property enumerated which has been disposed of, whether by sale, gift or otherwise, at any time during the 3 years immediately preceding the date of the notice or such shorter period as aforesaid, specifying how and to whom the same was disposed of and, where it was disposed of by sale, specifying the consideration given therefor;

20. The respondent had submitted forcefully that this was a very draconian section.  I agree and I do not think the appellant would dispute that.  I further agree that this provision has removed expressly, the sacred common law right regarding self-incrimination (section 14(4)).  Perhaps that was why the learned magistrate appeared to be reluctant to give full effect to the natural meaning of the section. 

21. I agree also that most people do not usually have a complete record regarding the particulars of their income and expenditures.  If asked to account for the details in the past few years, it would be a very difficult and tedious exercise for anyone to have to trace, locate and to organize the information into a meaningful package.  But this is exactly what the section is seeking to obtain. 

22. Whether the need to combat corruption justifies this very harsh law is not for this Court to comment.  But how can this section be draconian if the recipient could simply say ‘I can’t recall’ or ‘go see the documents yourselves’?  And then if the prosecution could not prove that the recipient has deliberately failed to remember, then the ICAC could not bring a charge under this section.  If that could be the case, I wonder how many people would choose to disclose the information even if they can remember the details.

23. One must not ignore that the section has some built-in safeguards : a recipient is only required to provide the information within three years immediately preceding the date of the Notice; the time required to comply may be extended by the ICAC Commissioner; and if the recipient could not comply because of excuses that are reasonable, then he would have a defence.  Furthermore, it has to be remembered that a judge has already decided that there are reasonable grounds to suspect an offence under POBO has been committed.  Under these circumstances, I would have thought that once the Notice is issued, the only proper way for the recipient to comply is a strict compliance.  

24. There was much argument regarding the nature of the offence, whether it was a strict liability or not.  If it has to be answered in order to dispose of this case, then the conclusion must be the one proposed by the appellant, that it is a strict liability offence.  Apart from the points made by Mr McWalters in this regard, one may consider this section together with the other section, i.e. 14(5).  The scenario would be that the recipient must strictly comply with the terms of the Notice issued under section 14(1), and if he fails or neglects to do so, and there is no reasonable excuse for the failure or neglect, then he shall be prosecuted under section 14(4); and if it is found that the recipient willfully makes a false statement in answer to a Notice, he shall be prosecuted under section 14(5).  The legislature have provided a defence of reasonable excuse for section 14(4) but not in section 14(5); but then for section 14(5), the prosecution have to prove the element of willfulness.  From the scheme of things, it is clear that the legislature had intended section 14(4) to be a strict liability offence and no mens rea is required.

25. Whatever the nature of the offence, one has to go back to the questions asked and the answers given by the recipients.  The Notice contained eight sets of questions and there was no dispute as to the validity of these questions.  They do fall within the ambit of section 14(1)(a).  I would not go into all of the questions and answers and let us examine, just as an example, the question and answers for (a) :

Question :

“(a)	All property in the form of choses in action as evidenced by any bank account belonging to or possessed by, or which at any time during the three years immediately preceding the date of this notice belonged to or was possessed by, you, your agents or trustees, including every such choses in action owed to you by any bank situated inside or outside Hong Kong, specifying :
	(i)	whether each property mentioned in 2(a) above is or was possessed jointly or severally, and if possessed jointly, the person with whom it is or was possessed;
	(ii)	the date upon which such property was acquired; and
	(iii)	if the property has been disposed of, the date upon which it was disposed.”

Answer :

“Paragraph 2(a)
I wish to discharge my obligation by revealing my bank accounts details which are as follows :
Hong Kong Bank:	162-235949-833
Standard Chartered Bank:	5898-5640-0083-8887
Hang Seng Bank:	225-075829-888
Nangyang Commercial Bank:	043-475-11807057
Hong Kong Bank:	018-9-105828 (joint account with my wife Che Kwai Wing) This account was opened on a date I cannot recall and was closed on 4th May 2002.
In addition to the above accounts, there could have been some other accounts held under my name which have been closed during the past three years.  If there were any, I cannot now recall the details of the same.”

26. On the face of it, the answers provided could not be said to be complete answers.  Similarly, on the face of it, the answer to question (c) was also incomplete.  The issue here is perhaps not so much whether substantial compliance is compliance, but whether there is compliance at all.  Of course, there may be reasonable excuses for the incomplete answers or the failure to recall and therefore no information can be provided.  But apart from what counsel had said in their submissions, I could not see any evidential basis which could support the defence’s suggestion.

27. In reaching her conclusions for the ruling, the learned magistrate said she had taken into consideration a number of factors and the main point appears to be the lack of guideline as to what and how the required information was to be listed.  But I wonder what guideline is really required.  The recipients are ordered by the statute to provide the information as requested and they have to answer the specific questions.  The answers should be self-contained.  The situation is perhaps not unlike an examination.  If the examinee writes down in the answer sheet “you can find the answer in the lecture notes or in the textbook” or “I don’t recall”, I suspect no one would regard that as a proper answer, although there was no specific “guideline” on how to give an answer. 

28. I believe it is very unlikely for a person to have a totally blank memory regarding things such as whether he has a certain bank account and when.  There must be hints and pointers a person could rely on to verify such matters.  Of course, there may be an explanation about why the answer is given in a certain way or why complete answers could not be given.  That is a matter of evidence either from the prosecution or the defence.  At the end, the magistrate would have to decide whether the explanations can amount to reasonable excuses in the particular circumstances of the case.

29. Having taken time to consider the submissions carefully, I have come to the following conclusion.  I found that the magistrate had erred in law in ruling that the respondents had no case to answer on the respective charges.  This conclusion alone could have disposed of this appeal, but if I am obliged to state my opinion on the questions posed, I would say that for the first question, recipients of a Notice under section 14(1)(a) of POBO have to comply with the Notice strictly, in the sense that there must be a full compliance.  If “substantial compliance” means less than full compliance, then it is not sufficient.

30. As to the other questions, being mindful of the order I am about to make, I would answer them in the following manner :

(ii)	Yes.  But what is reasonable and whether the steps taken amount to reasonable excuse would be a matter for the magistrate to decide based on the evidence of the case.
(iii)	Yes.  But whether there is reasonable excuse for the recipient not to do so in the particular circumstances is a matter for the magistrate to decide based on the evidence of the case.
(iv)	Yes.  But whether there is reasonable excuse to do so in the particular circumstances is a matter for the magistrate to decide based on the evidence of the case.  It should be noted here that the appellant accepts that enumeration by reference to documents is acceptable but the specific entries to be adopted by the recipient should be clearly identified in order to satisfy the requirement to enumerate.
(v)	The answer is ‘Yes’ if the ruling means that the recipient need not do anything further if his or her memory is deficient.  I would approve the proposed answer by the appellant for this question that a recipient may rely on his memory but not to its exclusion; where the recipient’s memory is deficient, he shall take such further steps as may be reasonable in the circumstances in order to comply with the obligation to enumerate.  And whether the steps taken are reasonable is a matter for the magistrate to decide based on the evidence of the case.
(vi)	Yes.  The issue of misrepresentation is not relevant to the present charge and the concession of no non-disclosure is neither here nor there as the obligation to enumerate has not been complied with.

31. In the premises, I shall allow the appeal and quash the order of acquittal and costs made by the learned magistrate.  I shall further order that the case be remitted back to the magistrate for the continuation of the trial.