HKSAR v. YU PO LEUNG

[English Translation – 英譯本]
HCMA 130/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(APPELLATE JURISDICTIOIN)

MAGISTRACY APPEAL NO. 130 OF 2003

(ON APPEAL FROM KCCC NO. 12191 OF 2002)

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JUDGMENT

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Introduction

1. The Appellant was convicted after trial on one count of offering an advantage to an agent, contrary to section 9(2)(b) of the Prevention of Bribery Ordinance, Cap. 201, Laws of Hong Kong. He was sentenced to imprisonment for 6 months. He now appeals against conviction.

The charge and evidence

2. The particulars of charge stated that, on a certain date between 1 January and 4 February 1999 and in Hong Kong, the Appellant, without lawful authority or reasonable excuse, offered an advantage ― namely, paying for two “Turkey, Greece and Egypt 13-day tour” packages, the total cost of which was HK$39,880 ― to an agent ― namely, Liu Wan Yee (廖韻兒) (hereinafter “Liu”), Chairperson of the Owners Incorporation of Jubilee Garden, Shatin ― as an inducement to or reward for or otherwise on account of Liu showing favour to Antonfield Engineering Co Ltd (hereinafter “AECL”) in relation to her principal’s affairs or business, namely by awarding to AECL the contract for elevator maintenance work at Jubilee Garden.

3. The prosecution sought to adduce the following as evidence:

(i)      The Appellant’s oral admissions;

(ii)      The written record of interview of the Appellant (Exhibit P1), which recorded the said oral admissions; and

(iii)     The videotaped record of interview of the Appellant (Exhibit P4).

Following a voir dire, the magistrate ruled that the above items were admissible as evidence.

4. Some of the facts were dealt with as agreed facts, and the parties submitted the relevant documentary evidence.

5. The Appellant elected not to give evidence. Nor did he call any witness.

The magistrate’s findings

6. The magistrate pointed out that the prosecution bore the general burden of proving beyond reasonable doubt that, at the material time and place:

(i)      the Appellant offered an advantage ― namely, paying for two “Turkey, Greece and Egypt 13-day tour” packages, the total cost of which was HK$39,880 ― to Liu;

(ii)      Liu was an agent, being Chairperson of the Owners Incorporation of Jubilee Garden, Shatin, and the Owners Incorporation was Liu’s principal; and

(iii)     the Appellant offered the said advantage to Liu as an inducement to or reward for or otherwise on account of Liu showing favour to AECL in relation to her principal’s affairs or business, namely by awarding to AECL the contract for elevator maintenance work at Jubilee Garden.

7. Having considered the evidence and submissions as a whole, the magistrate was satisfied that the written record (Exhibit P1) was an accurate record which showed that the Appellant had clearly admitted the following matters:

(i)      that the Appellant knew Liu and had paid for tour expenses of Liu and her boyfriend Cheung Wah Kwan (張華坤) (hereinafter “Cheung”);

(ii)      that the Appellant paid for the tour expenses of Liu and Cheung in order to thank Liu for her assistance in securing for AECL a renewal of the contract for elevator maintenance work at Jubilee Garden;

(iii)     that the Appellant paid for the tour expenses as a token of appreciation and gratitude; and

(iv)     that the Appellant paid tour fees of approximately $40,000.

8. What the Appellant said at the videotaped interview (Exhibit P4) was essentially the same as what he had admitted in Exhibit P1, although he pointed out at the interview that, when he agreed to pay for the tour expenses of Liu and Cheung, his company AECL had already obtained a renewal of the maintenance contract. The Appellant also said that the wish to express gratitude to Liu was one of the reasons, but not the sole reason, for his agreeing to pay for the tour expenses of Liu and Cheung. At the videotaped interview, the Appellant also admitted his belief that, as Chairperson of the Owners Incorporation of Jubilee Garden, Liu should be able to exert considerable influence on whether the Owners Incorporation would renew the maintenance contract with AECL. He further admitted his belief that Liu had indeed assisted AECL in securing a renewal of the contract. Throughout the interview, the Appellant admitted that he had paid for the tour expenses of Liu and Cheung, the total sum of which was $39,880, and that one of the reasons for his doing so was to thank Liu for her assistance in securing for AECL a renewal of the maintenance contract.

9. On the prosecution evidence, the magistrate was satisfied that the prosecution had proved beyond reasonable doubt that, at the time and location as particularized in the charge:

(i)      the Appellant offered an advantage to Liu, Chairperson of the Owners Incorporation of Jubilee Garden, Shatin;

(ii)      the advantage was that the Appellant had paid for two “Turkey, Greece and Egypt 13-day tour” packages, the total cost of which was HK$39,880; in other words, the Appellant had paid for the tour expenses of Liu and her boyfriend Cheung;

(iii)     the Appellant paid for the tour expenses of Liu and Cheung in order to thank Liu for her assistance in securing for his company AECL a renewal of the contract for elevator maintenance work at Jubilee Garden;

(iv)     the Appellant had, in the record of videotaped interview, explained why he believed Liu had provided assistance in securing for AECL a renewal of the contract;

(v)     the grant and renewal of the contract of the elevator maintenance work at Jubilee Garden was a matter related to the affairs or business of the Owners Incorporation of Jubilee Garden;

(vi)     at the material time and place, a principal-and-agent relationship existed between the Owners Incorporation of Jubilee Garden and Liu;

(vii)    but for the fact that Liu was Chairperson of the Owners Incorporation of Jubilee Garden and the Appellant’s belief that Liu had provided assistance in securing the grant of the Jubilee Garden elevator maintenance contract to AECL, the Appellant would not have offered Liu the advantage specified in the charge as a token of gratitude to Liu; and

(viii)   the Appellant did not have lawful authority or reasonable excuse in offering the advantage to the agent as aforesaid.

Ground of appeal

10. Mr Ching Y. Wong SC and Ms Katty H.K. Tsang, Counsel for the Appellant, raised two grounds of appeal which can conveniently be consolidated as one: the magistrate erred in holding that a “principal and agent” relationship existed between the Owners Incorporation of Jubilee Garden and Liu, and as a result there is a lurking doubt that renders the conviction unsafe.

The Appellant’s arguments

11. It is argued on behalf of the Appellant that, on the agreed facts, the Appellant had never admitted that Liu was an agent. It was incumbent on the prosecution to prove beyond reasonable doubt that at the material time and place an “agent and principal” relationship existed between Liu and the Owners Incorporation.

12. The Appellant puts forward the following arguments on the relevant law.

13. The Building Management Ordinance, Cap. 344, Laws of Hong Kong, contains provisions governing the management of buildings, including the maintenance of elevators. The Building Management Ordinance confers on the owners’ corporation (hereinafter “corporation”) and the “management committee” (properly appointed by the corporation) the power to grant contracts, including contracts for the maintenance of elevators. However, the Building Management Ordinance does not expressly provide that such power is conferred on the chairman of the corporation as “an agent of the corporation or management committee”. Nor does the Ordinance specify the circumstances under which the chairman is “deemed” to be an agent of the corporation.

14. In Equal Property Management Ltd v The Incorporated Owners of San Po Kong Mansions, DCCJ 14835/2000, the court held as follows:

(1)   Pursuant to sections 14, 18 and 29 of the Building Management Ordinance, the owners’ incorporation of a multi-storey building is under collective leadership. The highest authority of decision-making is vested in the owners’ general meeting, and next in the management committee.

(2)   Under sections 14, 18 and 29 of and the Second and Third Schedules to the Building Management Ordinance, the management committee and individual committee members (including the chairman of the corporation) are not officers of the corporation and cannot be equated with directors of a limited company.

(3)   Nor is it desirable, as a matter of legal policy, to regard individual management committee members or the chairman of the corporation as being equal to company directors with administrative functions.

(4)   Accordingly, the chairman of the corporation does not have actual authority or ostensible authority to enter into a contract which is binding on the corporation, unless the chairman has been duly authorized to do so.

15. Relying on the above Ordinance and case law, the Appellant submits that the chairman of a corporation does not have any authority to enter into a contract which is binding on the corporation. This clearly indicates that the chairman is not an agent of the corporation and does not have actual or ostensible authority to bind the corporation. If the chairman is to be given such authority, he has to be “duly authorized”, which means that he must be duly and expressly appointed as an agent.

16. This means, Counsel for the Appellant submit, that at law it cannot be argued or assumed that a person will, by virtue of his being the chairman of a corporation, automatically become an agent of the corporation and hence possess the power and authority to bind the corporation on matters relating to its business or affairs.

17. In respect of the facts and evidence, the Appellant submits that the Appellant’s cautioned statement is irrelevant to the present appeal because, even if the Appellant believed that Liu was at the material time an agent of the Owners Incorporation, it would only serve to establish his mens rea and would not obviate the need for the prosecution to prove that Liu was in fact an agent of the Incorporation as far as the elevator contract was concerned. The “agency” was part of the actus reus and could not be established by relying on evidence of the Appellant’s belief.

18. The Appellant submits that the only item of prosecution evidence that might be relevant to this issue was the agreed fact that Liu was elected as Chairperson of the Owners Incorporation and was holding this capacity at the material time. Apart from this, there was no evidence pertaining to this issue of “agency”. The prosecution had never called any of the members of the Incorporation at the material time as witness in order to establish the following:

(i)      Whether the Chairperson of the Incorporation had been given any specific authority to bind the Incorporation;

(ii)      Whether the Incorporation had appointed any person as an agent in respect of the elevator contract, and if it had, details of the appointment including identity of the appointee, the time of appointment and the powers being conferred on the appointee;

(iii)     The number of meetings held in respect of the elevator contract, and whether Liu chaired these meetings or any of them, or whether she attended these meetings or any of them; and

(iv)     What happened at these meetings and how the decision to grant the elevator contract was arrived at.

19. Apart from the lack of sufficient evidence to show that Liu was an agent of the Owners Incorporation, the agreed facts (Exhibit P6) contained evidence which countered or refuted the prosecution’s allegation that Liu was an agent:

(i)      Paragraph 1: Liu “was elected” as Chairman of the Owners Incorporation in December 1994.

(ii)      Paragraph 3: In late 1997, the Incorporation conducted a “tender” exercise and awarded a one-year elevator maintenance contract to AECL (the Appellant’s company) with effect from 1 January 1998.

(iii)     Paragraph 4: Another tender exercise was conducted in late 1998 in respect of the elevator maintenance project. In the end, the Incorporation awarded to AECL a one-year contract in respect of Phase 1, Phase 2 and Jubilee Court.

(iv)     Paragraph 5: Although Goodwell was responsible for managing Jubilee Garden, the power to make decisions in respect of the elevator maintenance tender exercise was vested in the Incorporation.

(v)     Paragraph 9: “The Incorporation did not allow Liu or any individual member to accept any advantage from any contractor, including AECL and the defendant, in dealing with the Incorporation’s affairs.”

20. The Appellant also cites the judgment in the case of Yeung Kwok-kuen & Anor v R (Crim App 78/85) on the issue of “lurking doubt” and submits that, taken at its best, the prosecution evidence merely served to establish the following facts:

(i)      Liu was elected (as opposed to appointed) as Chairperson of the Incorporation, and this took place at the material time;

(ii)      The relevant contract was awarded to AECL by the Incorporation (and not by Liu as its agent);

(iii)     Only individual members of the Incorporation (as opposed to the Incorporation itself as Liu’s principal) did not allow Liu and other members to accept an advantage;

(iv)     The Appellant believed that Liu had assisted AECL in the award of the contract to AECL (and the evidence showed that this belief was mistaken); and

(v)     The Appellant had paid for a tour package for two persons, one of whom was Liu.

(vi)     Although Liu might have been an agent of the Incorporation in respect of the elevator contract, there was no direct evidence of it. Nor was there evidence to support a reasonable inference of agency. In other words, there was at least a reasonable doubt on this issue.

(vii)    Furthermore, some of the matters had been established as facts beyond reasonable doubt (because they had been adduced as admitted facts pursuant to section 65C of the Criminal Procedure Ordinance), and these facts refuted the allegation that Liu was an agent of the Incorporation in respect of the elevator contract.

(viii)   In the circumstances, the magistrate erred in failing to take into account such evidence and facts and hence erred in ruling that the prosecution had proved beyond reasonable doubt that Liu was an agent of the Incorporation in respect of the elevator contract.

The Respondent’s reply

21. Mr Alex Lee, Senior Government Counsel for the Respondent, submits in response that the definitions of “principal” and “agent” in section 2 of the Prevention of Bribery Ordinance are not exhaustive and that reference has to be made to the relevant case law. In support of this submission, Mr Lee relies on section 1 of the Prevention of Corruption Act 1906 of the UK, R v Barrett (1976) 63 Cr App R 174, a local case of R v Chong Chui-ha [1997] 4 HKC 518, and section 11(2) of the Prevention of Bribery Ordinance.

22. As regards the definition of “agent” in the Prevention of Bribery Ordinance, the Respondent raises the following points of law:

(1)   In determining whether a person is an “agent”, one must first understand the meaning of the term in the Prevention of Bribery Ordinance, and then consider whether the person in question comes within that meaning;

(2)   In the context of the Prevention of Bribery Ordinance, the term “agent” must be given a natural and ordinary meaning;

(3)   The main feature of a “principal and agent” relationship is the existence of a “fiduciary relationship” between the two persons, so that the principal expressly or impliedly consents to the agent acting for him, and the agent similarly agrees to act for the principal; and

(4)   The act of the agent does not need to take legal effect as being binding on the “principal”.

23. The Respondent submits that the central issue in the present appeal should be “whether Liu, being Chairperson of the Incorporation, was an agent of the Incorporation”. The focus is on whether Liu was a person acting on behalf of the Incorporation; and whether a fiduciary relationship existed between the Incorporation and Liu.

24. Mr Lee refers to the provisions of the Building Management Ordinance and points out that the chairman of a corporation is a person who acts on behalf of the corporation and is also a fiduciary vis-à-vis the corporation, and that the relationship between the corporation and its chairman is a fiduciary relationship. And in the present case, Point No. 9 of the agreed facts made it clear that the members of the Owners Incorporation of Jubilee Garden did not allow Liu or any member of the Incorporation to accept any advantage from any contractor, including AECL and the Appellant, in dealing with the Incorporation’s affairs. This particular fact, the Respondent argues, must be construed in the context of the Building Management Ordinance. The corporation is created on the basis of section 8 of that Ordinance. The “members of the Incorporation” referred to in the agreed facts undoubtedly meant all other members of the Incorporation (i.e. the owners) apart from Liu, including members of the management committee. The Respondent submits that the only reasonable inference was, given the other members of the Incorporation did not allow Liu to accept an advantage, the Incorporation itself would certainly not allow Liu to do so either. The Respondent further submits that, if Liu was not acting on behalf of the Incorporation, then the relationship between Liu and the contractor would be of no concern to other members of the Incorporation and there would be no question of the other members “allowing” or “disallowing” Liu to accept an advantage.

25. It can therefore be seen from the above that Liu, as Chairperson of the Incorporation, was a person who acted on behalf of the Incorporation, and there existed a fiduciary relationship between Liu and the Incorporation. On this basis, the magistrate’s ruling that Liu was an “agent” of the Incorporation was legitimate and amply supported by evidence.

26. As for the case of Equal Property Management Ltd v The Incorporated Owners of San Po Kong Mansions, the Respondent argues that it is inapplicable to the present case because:

(1)   That case was not concerned with the meaning of the term “agent” under the Prevention of Bribery Ordinance.

(2)   By virtue of section 11(2) of the Prevention of Bribery Ordinance, it was unnecessary for Liu to have the power, right or opportunity to show favour to AECL in relation to the Incorporation’s affairs or business. The crucial issue was whether the Appellant “believed or suspected” that Liu had such power, right or opportunity. The magistrate’s ruling was that “but for the fact that Liu was Chairperson of the Owners Incorporation of Jubilee Garden and the Appellant’s belief that Liu had provided assistance in securing the grant of the Jubilee Garden elevator maintenance contract to AECL, the Appellant would not have offered Liu the advantage specified in the charge as a token of gratitude to Liu”.

(3)   The case of R v Chong Chui Ha has made it clear that an “agent” does not need to have the power to enter into contracts or sign documents so as to bind his “principal”.

27. The Respondent argues that the Appellant’s submission that the agreed facts refuted the suggestion that Liu was an “agent” has been made on wrong footing that Liu must, in order to be an “agent” of the Incorporation, have power to bind the Incorporation in respect of the elevator maintenance.

28. The Respondent submits that the Incorporation’s acts as mentioned in the agreed facts merely showed that matters relating to the common areas of the building fell within the scope of the Incorporation’s powers and duties.

Findings

29. Section 9(2)(b) of the Prevention of Bribery Ordinance, Cap.201, Laws of Hong Kong, provides as follows:

Any person who, without lawful authority or reasonable excuse, offers any advantage to any agent as an inducement to or reward for or otherwise on account of the agent’s ―

(a)     …

(b)     showing or forbearing to show, or having shown or forborne to show, favour or disfavour to any person in relation to his principal’s affairs or business,

shall be guilty of an offence.

30. The prosecution bore the burden of proving beyond reasonable doubt that at the material time a “principal” and “agent” relationship existed between the Owners Incorporation and Liu.

31. The terms “principal” and “agent” are defined in section 2 of the Prevention of Bribery Ordinance as follows:

“principal” (主事人) includes ―

(a)     an employer;

(b)     a beneficiary under a trust;

(c)     a trust estate as though it were a person;

(d)     any person beneficially interested in the estate of a deceased person;

(e)     the estate of a deceased person as though it were a person; and

(f)      in the case of an employee of a public body, the public body.

“agent” (代理人) includes a public servant and any person employed by or acting for another.

It is not disputed, and I therefore rule, that the above definitions are not “exhaustive”.

32. In R v Chong Chui Ha, Keith J (as he then was) explained “principal” and “agent” in the following terms:

I hold that for the purpose of s. 9(1) of the Ordinance, the relationship of agent and principal arises where a fiduciary relationship exists between two persons, one of whom expressly or impliedly consents that the other should act on his behalf, and the other of whom similarly consents so to act or so acts.  This definition, I confess, is unashamedly taken from art 1(1) of Bowstead on Agency (15th Ed) p 1, but I add the gloss that the agent can act on behalf of the principal even if, in so acting, he is not able to affect the principal’s legal position, without depriving the relationship of its categorisation as a relationship of agency.

33. I respectfully agree with Keith J’s explanation, and the position regarding section 9(2) is in my view the same. In the present case, I have to consider whether there was sufficient evidence to establish a principal-and-agent relationship between the Owners Incorporation and Liu, in other words, whether a fiduciary relationship existed between them, with the Incorporation expressly or impliedly consenting that Liu should act on its behalf and with Liu similarly consenting so to act or so acted.

34. An owners corporation is a legal entity and, as such, has to act through a natural person. Its decision-making body is the management committee. The Building Management Ordinance provides for the creation of the committee and the duties of its members. Generally speaking, a management committee is created by an owners’ meeting, and the chairman of the corporation is a member of the committee. The functions of the chairman of a corporation include the following:

(i)      to convene meetings of the management committee;

(ii)      to chair meetings of the management committee;

(iii)     to use the casting vote at meetings of the management committee;

(iv)     to certify minutes of meetings of the management committee;

(v)     to co-sign the balance sheet of the corporation with the secretary or treasurer of the management committee;

(vi)     to sign a certificate showing the amount of contribution payable by each owner to the common fund and the date on which the sum is to be paid;

(vii)    to chair meetings of the corporation;

(viii)   to use the casting vote at meetings of the corporation;

(ix)     to have the power to allow proxy instruments to be delivered to the secretary of the management committee less than 24 hours before the meeting.

It can therefore be seen that the chairman of a corporation is a person acting on behalf of the corporation, and the position of chairman is a position of trust vis-à-vis the corporation.  I accept the Respondent’s submission that the relationship between a corporation and its chairman is a fiduciary relationship.

35. I hold that, for the purpose of section 9(2)(b), although Liu was “elected” as Chairman of the Owners Incorporation, a fiduciary relationship existed between Liu and the Incorporation. The Incorporation expressly or impliedly consented that Liu should act on its behalf, and Liu expressly or impliedly consented so to act. A “principal” and “agent” relationship did exist between them.

36. It is beyond dispute that the Incorporation and its management committee were empowered to award, inter alia, escalator maintenance contracts. There was indeed no direct evidence that Liu was in fact empowered to award elevator maintenance contracts. This, however, does not mean that she was not an agent of the Incorporation.

37. Furthermore, section 11(2) of the Prevention of Bribery Ordinance provides that:

If, in any proceedings for an offence under any section in this Part, it is proved that the accused offered any advantage to any other person as an inducement to or reward for or otherwise on account of that other person’s doing or forbearing to do, or having done or forborne to do, any act referred to in that section, believing or suspecting or having reason to believe or suspect that such other person had the power, right or opportunity so to do or forbear, it shall be no defence that such other person had no such power, right or opportunity.

It is therefore apparent that, for the purpose of the Prevention of Bribery Ordinance, it is not necessary for an “agent” to have the power, right or opportunity to bind his “principal” on a matter in relation to the affairs or business of the “principal”.

38. Having considered the case of Equal Property Management Ltd, I rule that the principles expounded in that case are inapplicable to the present case. That case was not concerned with the meaning of the term “agent” in the Prevention of Bribery Ordinance. Furthermore, it is clear from section 11(2) of that Ordinance that it was unnecessary for Liu to have the actual power to deal with matters relating to the elevator maintenance contract.

39. Having considered the Appellant’s case of “rebuttal”, I do not think that the circumstances referred to by the Appellant gave rise to a lurking doubt. I have ruled that, although Liu was “elected” as Chairperson of the Incorporation, a “principal” and “agent” relationship still existed between Liu and the Incorporation. I also agree with Mr Lee’s submission on Point No. 9 of the agreed facts (see paragraph 24 above).

40. In my judgment, the magistrate was correct in holding that a “principal” and “agent” relationship existed between Liu and the Incorporation at the material time. The conviction is not unsafe. The appeal is accordingly dismissed.