HKSAR v. FUNG HOK CHEUNG

CACC 368/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 368 OF 2007

(ON APPEAL FROM HCCC NO. 58 of 2007)

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J U D G M E N T

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Hon Wright J (giving the judgment of the Court):

1.  The applicant was convicted  and sentenced to 21 months imprisonment in the District Court, after trial, by Deputy Judge Chainrai on one count of conspiracy to offer an advantage as an agent contrary to section 9(2)(a) of the Prevention of Bribery Ordinance, Cap. 201 [the Ordinance] as read with section 159A and 159C of the Crimes Ordinance, Cap 200.  He seeks leave to appeal that conviction. 

2.  The prosecution’s factual allegations, which the judge found to be proved, were straightforward.  No issue is taken with either her acceptance of the prosecution evidence or her actual findings on that evidence.

3.  The judge was satisfied beyond reasonable doubt that the applicant had entered into what she described as "a tips-for-bets arrangement" with the first prosecution witness [PW1] who was a senior investigator from the ICAC working under cover.  In short, the applicant had access to a corrupt jockey, one Munce, who was prepared to provide tips as to the prospects of success of horses in respect of which he had  peculiar information as a result of having ridden them at the request of various trainers; the applicant would pass this information on to PW1 who would place bets in his own name but on Munce’s behalf; if a bet were successful a proportion of the winnings would be paid over to Munce, via the applicant who would retain a share, whereas if it were unsuccessful the loss would be borne by, ostensibly, PW1.

4.  One reason for this elaborate arrangement was that a jockey is prohibited by Rule 59 of the Rules of Racing [the Rules] published by the Hong Kong Jockey Club [the Club] from placing bets in his own name or having any interest in a bet on any race.  Rule 151(14) of the Rules describes a person who "bets with or for a jockey... or gives or offers a jockey any pecuniary or other gift or consideration..." as being "... guilty of a corrupt, fraudulent or improper practice" and renders those involved subject to penalty by the Stewards of the Jockey Club.

5.  The Ordinance provides, in section 2:

"agent" includes a public servant or any person employed by or acting for another;

"principal" includes-

(a)    an employer;

(b)    …

and in section 9(2):

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) doing... or having done... any act in relation to his principal’s affairs or business; or

(b)...

shall be guilty of an offence.

6.  The particulars of the offence said to have been committed by the applicant read that he

... between 16 June 2006 and 3 July 2006... conspired with Ah Fei to without lawful authority or reasonable excuse, offer advantages, namely, services or favours consisting of placing bets on horse races on behalf of... Munce and gifts, loans, fees, rewards or commissions consisting of monetary dividends from horse races to the said... Munce who being an agent, namely a jockey acting for horse trainers, as an inducement to or reward for or otherwise on account of the said... Munce doing acts in relation to his principal's affairs or business, namely supplying horseracing tips and riding in horse races in a manner consistent with those racing tips.

7.  As the grounds of appeal correctly suggest, it was incumbent upon the judge to be satisfied beyond reasonable doubt that, first, Munce was an agent of the trainers for whom he rode horses and, secondly, that in acting as he did he was doing an act in relation to that trainer’s affairs or business. They assert that the judge erred in her findings in respect of each of these facets.

Interpretation of s 2

8.  It is necessary to appreciate that there are several different arrangements which may be entered into between, variously, the Club, an owner, a trainer, a jockey and, for the sake of completeness, an apprentice jockey and that those arrangements may have a fundamental effect upon the legal nature of the relationship that exists between them: in some instances, they may give rise to contracts of employment, in others to principal/agent relationships.  This is illustrated, for example, by the decisions in NG Siu Chau v HKSAR (2000) 3 HKCFAR 62, to which we shall return, and CHIN Kin-ming and Anor v HKSAR CACC540/1999.  In this appeal, we are concerned solely with the position of Munce in regard to the trainers for whom he rode but before turning to the evidence in that regard it is convenient to consider the approach to be adopted to the interpretation of s 2 of the Ordinance.

9.  The applicant contends for the application of a narrow, civil law style interpretation of the concept of agency.  The application of civil law concepts to criminal matters has often been held to be of no or limited application: see, for example, DPP v Brooks [1974] A.C. 862 cited with approval in HKSAR v YAU Kong-shing CACC276/1996; R v Sheppard (1980) 3 All E R 899 cited with approval in R v LI Wang-fat and Another CACC1100/1980; R v Manit Pheromanonta and Ors CACC152/1977 .

10.  Purposive construction of a statute is well established. Section 19 of the Interpretation and General Clauses Ordinance, Cap 1, provides:

An Ordinance shall be deemed to be remedial and shall receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Ordinance according to its true intent, meaning and spirit.

11.  The purpose of the Ordinance is expressed as being “To make further and better provision for the prevention of bribery and for purposes necessary thereto or connected therewith.” Ching PJ in NG Siu Chau v HKSAR described it as being incumbent upon the Club to ensure that racing is "... clean and clear of that corruption for which it is such a fertile ground". 

12.  The purposive approach was, in essence, adopted inR v CHONG Chui Ha & Another [1997] 4 HKC 518, a Magistracy Appeal in which the position of an estate agent who had been convicted of soliciting an advantage as an agent pursuant to the provisions of s 9(1) of the Ordinance was considered.  It was said, at 523F:

“It is important to note the definition of ‘agent’ and ‘principal’ for the purposes of the Ordinance...

Similarly, s 2 defines ‘principal’ by reference to persons included in the word ‘principal’.  However these definitions do not purport to be exhaustive.  For example, s 2 does not provide that “’agent means a public servant and any person employed by or acting for another’, which is the drafting device used elsewhere in this section if a definition is intended to be exhaustive. 

If the definitions of ‘agent’ and ‘principal’ in s 2 are not intended to be exhaustive, what is the test to be applied to determine whether a person was an agent or a principal when he or she acted in a particular way?  Mr Wong submitted that to be an agent or a principal for the purposes of s 9(1) of the Ordinance, it is not sufficient for a person merely to act for another person.  To be an agent for the purposes of the general law of agency, a person has "to be able to affect the principal’s legal position in respect of strangers to the relationship by the making of contracts or the disposition of property".  That is because it is "virtually impossible to define agency except in terms of its consequences.  A person is an agent only insofar as his acts can result in some alteration of the legal situation of the one for whom he acts or purports to act": Friedman The Law of Agency (6^th Ed) p9. ...

That is a bold submission.  If it was correct it would leave outside the scope of the law of principal and agent a type of intermediary frequently encountered in commercial life…

Moreover, the common law doctrine that an agent is a person who is able to affect his principal’s legal position was developed in relation to the law of contract.... It would, however, be a mistake to assume that principles of agency developed in the common law of contract should apply without modification to statutory offences relating to bribery and corruption....

As it is, I see no justification for making the assumption that the common law doctrine should be extended to the statutory offences of bribery and corruption.  I hold that for the purpose of section 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 consent so to act or so acts.  This definition... is taken from art 1(1) of Bowstead Agency (15^TH Ed) p 1, but I add a 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.”

13.  In our judgment there is no justification for simply applying, in an unmodified form, the principles of agency developed in the common law of contract for the purposes of s 9 of the Ordinance. In order to give effect to the intention of the Legislature it is necessary to apply a less restrictive approach to the concept of agency than that contended for by the applicant and to give the wording its ordinary and natural meaning..

14.  We do not accept that a principal/agent relationship will only arise, if that is what the judgment  in CHONG Chui Ha & Another suggests, when a fiduciary relationship exists between those two persons: to import such a requirement would have the effect of introducing into the criminal law aspects of the civil law against which that judgment correctly cautions. 

Was Munce an agent of the trainer/s?

15.  It follows, therefore, that there are a number of routes by which  the prosecution may prove that Munce was an agent of a trainer -  that he had been employed by a trainer, or acted for a trainer or that there existed between him and trainer a fiduciary relationship.  This list does not claim to be exhaustive: it applies to the present application.

16.  From the testimony of PW1, PW5 who is a stipendiary steward of the Club, the Agreed Facts and the exhibits placed before her the judge was able to find that:

(a)  the owner of a racehorse is required to nominate in writing, a specimen of which is Exhibit P7, a trainer to carry out various duties which includes authorising the trainer to enter horses in or withdraw horses from races, to declare a horse to start and "to engage jockeys as necessary";

(b) a licensed trainer may not be the owner of or have an interest in any racehorse, whether trained by him or not, Rule 52;

(c)  Munce was granted a licence to ride horses in Hong Kong during the 2005/2006 racing season as a “club retained jockey”;

(d) the Jockey club provided him with various benefits as well as a guarantee of a minimum income;

(e)   paragraph 4.2 of the agreement between them, Exhibit P2, specifically provided that that agreement would not constitute an employer/employee relationship and records that he is an independent contractor qua the Club[1];

(f)   it is a specific term of paragraph 5 of that agreement that it was the responsibility of Munce "to obtain engagements from trainers to ride horses at work and in races" [emphasis supplied];

(g)  the agreement went on to provide, paragraph 5.2, 5.3 and 5.4, that he was to fulfil work riding and race riding duties conscientiously and in accordance with the Club’s general instructions and the instructions given to him by the trainer, in respect of both categories of work and, additionally, by the owner in respect of race riding work;

(h)  the agreement also provided, in paragraph 11.1:

"The riding fee payable by an owner by whom the Jockey is engaged to ride in a race will be collected from the owner by the Club and the share of the prize money earned by a horse ridden by the Jockey in the race will be deducted from the payment to be made to the owner and both will be paid to the Jockey by the Club";

(i)    Munce was bound by the Rules of Racing;

(j)    there was no written agreement between Munce and any of the trainers for whom he rode, or any of the owners whom they represented;

(k)  Munce was able to ride horses for different trainers in different races on the same day;

(l)    Munce was not obliged to accept a mount offered by a trainer, whilst the final decision on the identity of the jockey was that of the owner;  

(m)   the amount of remuneration for race work and the percentage of prize money which Munce would receive was fixed by the Club;  and

(n)   Munce was not to give any information regarding the trial of a horse which he had ridden in a race or in work to any person other than the owner or trainer of that horse.

17.  It was against this factual background that the judge held:

“107.  Munce was the agent of each trainer he agreed to ride for from the time he agreed to ride a particular ride until the completion of the ride concerned.  Clauses in the agreement between Munce and the Club... make it clear that a Club-retained jockey... is engaged by trainers to ride horses in track work and in races.  He is obliged to fulfil his duties in accordance with the instructions of each horse's trainer and the general instructions set out in the agreement [between Munce and the club] and [to] do so in a conscientious manner in accordance with the specific instructions of the trainers.

108.  Although the trainer is not directly responsible for payment to the rider, both stand to win prize-money if the horse wins or is placed.  The jockey’s general advice is to follow the trainer’s instructions to get the best possible placing.  Since the trainer cannot ride the horse himself, he appoints the jockey to perform this task on his behalf.  The way in which a horse performs has a direct bearing on the reputation and standing of a trainer in the racing community.  He has been entrusted by the trainer and horse owner to get the best out of their very expensive racehorses.

109.  There is also clearly a relationship of trust between the trainer and jockey, a fiduciary relationship...which is… a relationship of one person to another when the former is bound to exercise rights and powers in good faith for the benefit of the latter.”

18.  The judge found, unequivocally and correctly in our view, that Munce was an agent of the trainers.  She appears to have based her finding to a substantial extent upon the existence of a fiduciary relationship between Munce and the trainers: in this respect, in our view, she erred in that the evidence before her did not justify the finding of such a relationship which, in any event, was not a prerequisite to a finding that a principal/agent relationship existed.

19.  In our judgment Munce was an agent because he fell within the definition which includes "... any person employed by... another", although we do not find it necessary to make the finding that Munce necessarily was an employee of the trainers.

20.  Section 2 of the Ordinance defines "public servant" as "…any prescribed officer and also any employee of a public body and..." as opposed to its definition of "agent" being a person "employed by another". There is consequently a change of language between the definition of "agent" and the definition of "public servant": such a change of language by the Legislature is an indication of a change of legislative intent. 

21.  In NG Siu Chau v HKSAR, supra, the Court of Final Appeal was required to consider whether apprentice jockeys were employees of the Club for the purposes of s 4 of the Ordinance and, consequently, employees of a public body, the Club being defined as such in the Ordinance. 

22.  The Court of Final Appeal noted, at p 69B, that

"Section 9 deals, generally, with agents.  It is not necessary to decide whether in the context of s 4, "employee" may include an agent." 

thereby itself recognizing the distinction to be found in the two definitions.

23.  Moreover, in the course of delivering his judgment in NG Siu Chau v HKSAR CACC118/1998 Mayo JA had said:

“... you can be an employee without the necessity of serving under a Service Agreement.  A good example of this is a solicitor and client relationship.  The client employs the services of the solicitor although usually there is no contract of employment.”

and the Court of Final Appeal recognized the distinction when it said, in regard to this analogy, p 67B:

“With respect, the example is inapt.  In common language a client employs or uses the services of a solicitor but the solicitor is not an employee of the client. To construe the word "employee" as including a person who is paid for providing his services is to blur or to obliterate the distinction between employees properly so called on the one hand and agents or independent contractors on the other.... “ [emphasis supplied]

24.  This substantially echoed the view expressed earlier in the Canadian decision of Carter v Great West Lumber Co [1919] 3 WWR 901 where, at p 902, the following appears:

“While, however, it is strictly correct to say that everyone who is an employee is employed by another I do not think it is equally true to say that everyone who is employed by another is his employee.  For instance, a solicitor who is engaged by a client to do certain work for him is employed by him for that purpose, as is a doctor who gives his professional skill to a patient, but no one would think of referring to either of these professional men as an employee of his client or patient.”

25.  In coming to its conclusion in NG Siu Chau the Court of Final Appeal noted that apprentice jockeys were entitled to a riding fee as well as prize money, just as with jockeys, and observed in regard to the fact of payment of those amounts by the Club to the jockey:

Payment by one person to another does not of itself mean that the latter is an employee of the former… (p 66 J) [emphasis supplied]

As a corollary, a lack of payment does not of itself mean that one person is  not employed by another.

26.  We respectfully agree with each of those propositions: merely because a person is "employed by another" does not necessarily mean that he is "an employee" of that other.  As the Court of Final Appeal noted:

"Both concepts involve an engagement to do something for the employer or principal" [p 69C].

27.  Once he had accepted an engagement to ride a horse in a race, Munce had been employed by the trainer: in the ordinary, commonsense meaning of that expression, he had been employed to ride that horse  and he was obligated to do so conscientiously and in accordance with the general instructions and the instructions given to him by the trainer and by the owner.

28.  It is, of course, arguable that, at the time he rode a horse, Munce was a party to three separate agreements in respect of each of which he enjoyed certain rights and was subject to certain obligations: between himself and the jockey club; between himself and the trainer; and between himself and the owner.  We see no difficulty in logic or in law with the coexistence of those agreements with differing rights and obligations and differing consequences. 

29.  The existence of more than one agreement simultaneously did not alter the principal/agent character of the relationship between Munce and the trainer.  An agent may have more than one principal simultaneously: see Morgan v DPP [1970] 3 All E. R. 1053.

Was Munce doing an act in relation to the trainer’s affairs or business?

30.  The judge addressed this issue in detail in paragraphs 114 to 117 inclusive of her Reasons for Verdict.  She found that the applicant and PW1 wanted to get tips from Munce on the horses that he would be riding so that they would be able to place winning bets on them; contrary to the applicant’s submissions those tips would have been "inside information" not available to the public at large, confidential information obtained only as a result of working with the horses and from discussions with others involved with those horses.

31.  The judge said:

“115.   ... there could be repercussions for the trainer's reputation, his stable and his income if it became known that inside information had been leaked by a jockey riding for a particular trainer...

116.   When Munce used his privileged position as an agent of the trainers to obtain information about the horses and their abilities and then passed them on in exchange for bets placed on his behalf, his acts were clearly aimed at his principal.  He improperly used the confidential information acquired by him in his capacity as the jockey and agent of the trainer for his own profit, well knowing that if his activities became common knowledge, it would adversely affect the trainers and their business.

117.   The [applicant] must have known that this was how Munce acquired his tips.  The agreement between the [applicant] and PW1 clearly envisaged this and thus they intended that Munce would affect his principal's affairs by providing tips based on inside information...”

32.  The Privy Council in Commissioner of the Independent Commission Against Corruption v Ch’ng Poh [1997] 1 HKLRD 652 considered the import of the requirement in s 9 that the action by the agent need be "in relation to his principal’s affairs" and adopted at p 656 the observation of the Court of Appeal that:

“Section 9(1)(a) criminalises corrupt transactions with agents: not dishonest acts by agents.”

saying, at page 657:

“... the act done... by the agent must be an act done... "in relation to his principal’s affairs"... [T]he... words... are clearly intended to be restrictive...

So what do the limiting words mean?  They mean that, for the section to apply, the person offering the bribe, must have intended the act... of the agent to influence or affect the principal’s affairs.... Thus it is an essential ingredient of the offence under s 9 that the action... of the agent should be aimed at the principal.  If it is sufficient for the purposes of the person offering the bribe that the agent should act on his own without involving his principal, then, whatever other offence may have been committed, it is not a corrupt transaction with an agent for the purposes of s 9.”

33.  The particulars of  the offence detailed Munce’s acts in relation to his principals’ affairs or business as being “…supplying horse racing tips and riding in horse races in a manner consistent with those racing tips.” : according to the evidence of PW5 there was nothing untoward observed in the manner in which Munce rode in any of the races in respect of which he had supplied tips. The applicant submits that Munce only did what he was required to do, that there was nothing sinister in riding to secure the best possible placing for the horse.

34.  However, given that the intention was that the tips would result in winning bets it was inevitable that Munce would have with a view to a win or a placing: that this was also consistent with other requirements imposed upon him to ride to the best of his/the horse’s ability is not germane, as the riding remains an act done in relation to his principal’s affairs or business.

35.  Munce, as we have indicated, was an agent of any particular trainer for whom he rode.  The agreement, the judge found, between PW1 and the applicant was that they would place bets from which Munce, as well as they, would profit if the bet proved to be successful and, to enhance the prospects of the bet being successful, Munce would provide them with "inside information" obtained as a consequence of the principal/agent relationship existing between him and the trainer and would ride in a manner consistent with the tips.

36.  It is plain from this analysis that the transactions which the applicant had with Munce were transactions with an agent, which, coincidentally, may also have involved a dishonest act by an agent.

37.  We see no distinction in principle between the present situation and that where a person employed by a commercial venture surreptitiously provides confidential information concerning his employer’s business to a third party in return for payment.

38.  We recognize, as was submitted on behalf of the applicant, that Munce acted in providing the confidential information without the knowledge or involvement of the trainer.  This may seem to be stating the obvious but the position here is no different from the situation where a person employed by, for example, a construction company takes a "kickback" from a supplier of materials without the knowledge of his principal: that conduct occurs without the knowledge or involvement of the agent's principal yet obviously "affects" or is "aimed at" the principal’s affairs or business.

39.  The section does not require, nor should the phrase “aimed at” in Ch’ng Poh be read as importing, any direct adverse proprietary consequence to the principal’s affairs or business. What it requires is that the person offering the inducement intended that the act to be carried out by the agent itself in some way would influence or affect the affairs or business of the principal.

40.  The judge was fully justified in finding on the evidence before her that the use by the applicant, for financial gain, of the confidential information obtained by Munce as jockey for and agent of the trainer, potentially would affect the trainer's reputation.  It requires nothing more than commonsense to appreciate that such a situation would affect the trainer’s affairs or business, from which it is self-evident that Munce 's conduct was an act in relation to his principal's affairs or business and that the applicant intended that consequence.

Conclusion

41.  In the circumstances, we grant leave: treating the hearing as the appeal, we dismiss the appeal.

[1] A statement of this nature contained in an agreement may not accurately record the legal relationship between the parties but it is relevant as an indication of their intentions: see, NG Siu Chau v HKSAR, supra, at p 65D