HKSAR v. CHUNG CHUN KEUNG

HCMA 837/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 837 OF 1999

(ON APPEAL FROM TMCC 1192/1999)

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J U D G M E N T

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1. The appellant was convicted in the Magistracy on one charge of Accepting an Advantage as an Agent contrary to section 9(1)(a) of the Prevention of Bribery Ordinance, Cap. 201. I dismissed the appeal and said I would advise my reasons for such dismissal. I now advise those reasons.

2. The appellant was director, shareholder and manager of a company, Master Mind Industrial Limited (MMIL). The prosecution alleged that Mr Lam Ping-kai, who was in charge of a company, Alpha Chem Colours Ltd, which supplied MMIL with textile dyestuffs and colourings, paid the sum of $23,194.30 into the account of appellant's wife. This was alleged to be a corrupt payment being a reward or inducement for the appellant having placed purchase orders with Alpha Chem.

3. The first ground of appeal was that there was a material irregularity in the trial because the Magistrate erroneously admitted documentary hearsay evidence namely, documents to prove that the sum paid into the bank account of Appellant's wife was in fact rebates given to the Appellant.

4. In particular it was argued that the precondition for admissibility contained in section 22(1)(a) and section 22(1)(c) of the Evidence Ordinance, Cap.8 could not be complied with because Lam Ping-kai who was PW1,was a co-defendant in the same offence and was not a competent witness for the prosecution.

5. A similar argument was raised in respect of documents which had been compiled by one Kitty Lam, who was not called as a witness. It was submitted that she was potentially a co-defendant in the same offence and as such was not a competent witness for the prosecution.

6. A further argument in respect of section 22 (1)(b) was withdrawn by the appellant after considering the decision in the case of Secretary for Justice v. Jerry Lui Kin Hong FACC No. 3 of 1999, which was handed down on 14 December 1999.

7. The second ground was that in assessing the defence available to the appellant by virtue of section 9(5) of the Prevention of Bribery Ordinance, the Magistrate had failed sufficiently, or at all, to consider that the purpose of such permission to receive rebates(which the appellant contended had existed) was to enable him to pay for entertainment and gifts to officials in China. As such an arrangement had to be kept secret because of its improper or illegal nature the Magistrate was wrong to reject the defence simply because no written record was made of the general permission.

8. The precondition in section 22(a) and (c) which enables documentary hearsay to be adduced is that 'direct oral evidence of that fact would be admissible in the proceedings'. Thus the precondition is satisfied if the evidence is relevant and not excluded under common law principles or statutory provisions. The question of whether or not a witness is competent is a matter to be decided as a separate exercise.

9. The basis for appellant's complaint that Lam Ping-kai was an incompetent witness was that he was a co-defendant, as he had been charged originally with 23 charges, one of which, the 22nd charge, was the mirror charge to the charge the appellant faced in this trial.

10. At an earlier stage before the trial, for reasons which were not known to the Magistrate, defence counsel had applied for severance as a result of which the Appellant stood trial alone.

11. The evidence on which the prosecution wished to rely (and which was admitted by the Magistrate after an argument on admissibility) were documents compiled by an Alpha Chem employee, Miss Kitty Lam, who, at the time of trial, was no longer employed by Alpha Chem and was not in Hong Kong. Those documents allegedly showed the calculations of rebates or commissions on purchase orders placed with Alpha Chem by MMIL. It was those rebates or commissions which, the prosecution alleged, were paid eventually into the bank account of appellant's wife.

12. The Magistrate after hearing argument found that direct oral evidence of the contents of the documents could be given by Kitty Lam; that the documents formed part of a record (of Alpha Chem ); that they were compiled by a person acting under a duty (Miss Lam); supplied by a person who might reasonably be supposed to have had personal knowledge of the matters dealt with (Mr Lam Ping-kai who had day-to-day control of the company) and that the person who supplied such information, having regard to all the circumstances of the case, could not be called as a witness without undue delay or expense being incurred. On that basis he admitted the documents into evidence.

13. Counsel for the appellant relied on various authorities in support of his proposition that Mr Lam was not a competent witness because he stood in the position of a co-defendant.

R. v. Grant and Others [1944] 2 All ER 311

R. v. Sharrock and Others [1948] 1 All ER 145

R. v. Deacon [1973] 2 All ER 1145

R. v. Pipe [1966] 51 Cr. App. R. 17

14. Having considered those authorities I do not consider they are relevant to this case. The trial of the Appellant and that of Mr Lam had been severed. Further, appellant and Lam had never been jointly charged with the same offence. Lam's being charged with the mirror offence did not make him a co-defendant with the appellant. Even if the original trial of 23 offences had proceeded without being severed, appellant would not have been a co-defendant - it would have been the case that his trial and Lam's were proceeding in parallel for purposes of prosecutorial convenience.

15. Mr Lam could not have been an accomplice either, because he was covered by section 22 of the Prevention of Bribery Ordinance, which provides that no witness shall in any proceedings under Part II(which covers the charge appellant faced)be regarded as an accomplice by reason only of any payment or delivery by him or on his behalf of any advantage to the person accused, or, as the case may be, by reason only of any payment or delivery of any advantage by or on behalf of the person accused to him. (emphasis supplied)

16. A similar argument raised in respect of section 22 (1)(c) on behalf of the appellant must fail for the same reasons.

17. Counsel for the appellant also argued that because Kitty Lam was potentially a co-defendant in the same offence she was not a competent witness for the prosecution either. As the respondent pointed out, Miss Lam had never been charged with any offence in connection with this case. The Magistrate was aware from the evidence of Mr So, who was PW 6, a senior ICAC investigator, that Miss Lam had not been regarded as a suspect in the case and that there was no basis for considering her to have personal knowledge of the matters she was compiling. This argument was not sustainable. Miss Lam was clearly a competent witness for the prosecution.

18. The other basis on which the Magistrate's decision was attacked was that in assessing the defence of lawful authority or reasonable excuse, he had not considered adequately that the purpose of the permission to receive rebates ( which Appellant said was given to him by two directors of the company) was to pay improper or illegal entertainment expenses and gifts to officials in China and so had to be kept secret. It was submitted that the Magistrate rejected this defence simply because no written record had been made of this general permission.

19. The Magistrate spent some time considering this particular matter. The two directors were called as witnesses for the defence and gave evidence that to cover these dubious expenses they agreed to Appellant's suggestion that he be paid the rebates given by suppliers to the company in Hong Kong as compensation, those rebates being 5% to 10% of the value of the orders given by MMIL.

20. The directors said they mentioned this arrangement to a third director at a later date, but the evidence of that witness was that he did not recall being given such information. If such approval had been given by the two directors it would have been valid, because the agreement of 50% of the shareholders was enough for consent.

21. The permission of the two directors was the only basis put forward by the defence as the lawful authority or reasonable excuse for accepting the advantage. The Magistrate held, correctly, that the burden of establishing the existence of the lawful authority to accept the payment was on the Appellant and that the civil standard applied.

22. The rejection of this evidence was for many more reasons than that the permission was not recorded in writing and they are set out in the Magistrate's Statement of Findings at pages 51 and 52. They included, apart from the obvious lack of informal, or company, documentation, that the only other director said he had never been told of the grant of permission. Further the appellant had never been asked to give any account of the money he received. All those involved were very anxious to keep the matter secret which suggested the payments were other than a payment of a rebate.

23. The Magistrate also found that ACCL was still giving a trade discount of 2% per month to MMIL, which was unlikely to be necessary if larger rebates were already being paid to the appellant. The Magistrate considered all these matters and rejected the evidence of the two directors, feeling, with some justification, that the very informal circumstances of the alleged arrangement transcended even that high degree of informality which was acceptable in the everyday life of a Hong Kong private company.

24. The Appellant did not give evidence at the trial and there being no other evidence on this point than that of the two directors the defence was rightly rejected.

25. The Magistrate from an abundance of caution also considered this question in terms of section 9(4) and section 9(5) of the Prevention of Bribery Ordinance and concluded that even if there had been permission from the principal, as contemplated in section 9(4), that it was made subject to scrutiny by the court by section 9(5).

26. He considered that if any such permission was granted it should not have been unlimited in duration and amount received; that the permission should have been reviewed regularly; that it should have been recorded in writing and that the other director should have been properly notified of the arrangement. He also considered that when the purpose of the rebates effectively was to reimburse the Appellant for bribes paid, that such permission should never have been given in such a casual manner by the two directors concerned.

27. It is quite clear that the Magistrate was well aware of the issues raised by the Appellant's defence and that he examined them very carefully before reaching his verdict. There is no merit in this ground of appeal either.

28. Accordingly I dismiss the appeal against conviction.