HCMA 355/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 355 OF 2010

(ON APPEAL FROM TWS 14668-14670 & 14680-14682 of 2009)

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REASONS FOR JUDGMENT

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1.  Each appellant was convicted by a magistrate, after trial, of three offences contrary to ss. 23 and 63C of the Employment Ordinance, Cap. 57. Each summons alleged that the respective appellant was a director of Perfecta Dyeing, Printing and Weaving Works Limited (the company) which had failed, willfully and without reasonable excuse, to pay, within seven days after the amount became due, to the same named employee, wages due to him in respect of three separate periods. Each summons further alleged that the offence was committed with the consent or connivance of the respective appellant or was attributable to neglect on his part.

2.  Each appellant were sentenced to undergo imprisonment for a period of six weeks on each summons, all periods of imprisonment to be served concurrently.

3.  Each appellant appealed both the convictions and sentences. At the conclusion of the hearing I dismissed the appeals against conviction but allowed the appeals against sentences to the extent that the sentences imposed by the magistrate were suspended for a period of 18 months. I indicated that I would provide my reasons in due course. These are they.

4.  The 2^nd appellant was represented at trial and Perfected Grounds of Appeal had been submitted on his behalf by his legal representatives.  At the hearing of the appeal he was unrepresented. Two days before the hearing he filed an affirmation to which was annexed a large number of supporting documents. At the commencement of the hearing of the appeal it was explained to him that before those documents could be before the court it was necessary for him to make a formal application for the admission of additional evidence: it appeared that the prosecution opposed such admission. The 2^nd appellant decided not to pursue that course and elected to proceed with the hearing of the appeal on the material which was before me, being the material which had been placed before the magistrate.

THE APPEALS AGAINST CONVICTION

5.  The prosecution case consisted of admitted facts and the evidence of the employee. There was no dispute that the appellants were directors of the company; that the employee had been employed by the company; that payment of the amounts stipulated in each of the summonses had not been made.

6.  Before the magistrate there was first an application for a permanent stay of proceedings which, unsurprisingly, was summarily rejected. At the close of the prosecution case there was a submission that there was no prima facie case for either appellant to answer: the magistrate found that there was a prima facie case for each appellant to answer on each summons. Mr Cheng Huan, SC, leading Ms Mabel Tsui, both of whom appeared below and in this appeal, confirmed that that submission had not been predicated on the interpretation of s. 63C of the Ordinance. The appellants elected neither to testify nor to adduce any evidence. The question of the interpretation to be placed on s. 63C arose for the first time in closing speeches: the magistrate indicated, clearly, his understanding of the law from which it was plain that he took the view that the appellants bore the persuasive burden of proof in regard to the question of lawful excuse. It would have been open to counsel to apply to reopen the appellants’ case and adduce evidence had the appellants potentially been prejudiced by the magistrate’s indication: that course was not followed.

7.  There were five substantive grounds of appeal plus the catchall ground that the convictions were unsafe and/or unsatisfactory. The first three grounds complained that the magistrate’s approach to the charge was fundamentally flawed in that he held that the phrase "and without reasonable excuse" was not an element of the offence upon which the prosecution bore the persuasive burden but, rather, constituted a negative averment thus shifting the burden, on a balance of probabilities, to the appellants. The fourth ground asserted that any evidential burden that there might have been on the appellants had been discharged by the evidence of the employee.

8.  The fifth ground complained of a factual finding by the magistrate of which it suffices to say, to dispose of it at this stage, that it was one which he was entitled to make on the evidence before him. Similarly, the sixth ground fails for none of the convictions was unsafe or unsatisfactory.

9.  The first question that needed to be considered was whether the magistrate was correct in his interpretation of s. 63C of the Ordinance which reads:

Any employer who wilfully and without reasonable excuse contravenes section 23, 24 or 25 commits an offence and is liable to a fine of $350000 and to imprisonment for 3 years.

s. 23 simply providing:

Wages shall become due on the expiry of the last day of the wage period and shall be paid as soon as is practicable but in any case not later than 7 days thereafter.

10.  The Court of Final Appeal in TONG Yiu Wah v HKSAR (2007) 10 HKCFAR 324, [2007] 3 HKLRD 565 §§10-11 emphasized:

10.... our first task is to construe section 20(1) in order to ascertain what are the ingredients of the offence which the prosecution must prove. In undertaking such task, one examines not only the form of the provision but also the substance and reality of its language. As Lord Woolf said in A-G of Hong Kong v LEE Kwong-kut and Others [1993] 2 HKCLR 189…at 197:

In deciding what are the essential ingredients, the language of the relevant statutory provision will be important. However, what will be decisive will be the substance and reality of the language creating the offence rather than its form.

11.  Much has been said in these proceedings about, and there has been extensive reference to, previously decided cases at different levels concerning the correct approach to interpretation of statutory provisions where reverse onus provisions are involved. The principles have been considered from time to time in respect of offences created under a number of different ordinances. I see nothing to be gained by repeating them particularly given the comprehensive summary which appears in the decision of the Court of Appeal in HKSAR v Gurung Krishna [2010] 4 HKLRD 456 at 466-469 §29. Applying those principles, I am satisfied that the legislation creates an evidential burden only on any accused person seeking to contend that there was a reasonable excuse for non-payment.

12.  Moreover, this appears clearly from the phrase “willfully and without reasonable excuse” itself. There is no dispute, nor could there be, between the parties that it is for the prosecution to prove that the conduct of an accused person was willful. By use of the conjunctive the inescapable conclusion must be that the legislature intended that the persuasive burden to establish that non-payment was without reasonable excuse would remain on the prosecution once the accused person had asserted the existence of a reasonable excuse and supported it by evidence before the court such as to create a reasonable doubt.

13.  Consequently, I accept that the magistrate erred in this regard. As this appeal is a rehearing on the material before the magistrate that error does not result in the appeal automatically being allowed. Mr Cheng submitted that, given such a fundamental error by the magistrate, it would be “unfair” for the appeal not to be allowed: that is to misunderstand the nature and purpose of magistracy appeals. The issue now is whether the evidence satisfies me beyond reasonable doubt of the guilt of each of the appellants.

14.  The fourth ground of appeal contended that there was sufficient evidence within the prosecution's own case, from the evidence of the employee, to have raised a reasonable doubt which the prosecution failed to address. It is, of course, trite that it is open to an accused person to pray in aid such evidence in the prosecution case as might assist his cause.

15.  Ribeiro PJ in giving the judgment of the Court of Final Appeal in HKSAR v NG Po-on (2008) 11 HKCFAR 91, [2008] 4 HKLRD 176 §27 explained an evidential burden in these terms:

An evidential burden arises where the defendant wishes to put in issue some matter that is potentially exculpatory while the prosecution continues to bear the persuasive burden throughout. In such cases, there must be evidence supporting exculpatory matter which is sufficiently substantial that it raises a reasonable doubt as to the defendant's guilt. Unless such reasonable doubt is removed, the prosecution fails to prove its case. If, on the other hand, the accused fails to adduce or point to any evidence on the relevant issue or if the evidence adduced is rejected or is not sufficiently substantial to raise a reasonable doubt, the potentially exculpatory matter places no obstacle in the way of the prosecution proving its case beyond a reasonable doubt.

16.  The appellants particularly relied upon the fact that the employee accepted that in September 2007 the company's factory in China was destroyed by fire which seriously disrupted production: he accepted, too, that this event was followed by the general severe economic downturn in early 2008. He said that from January 2008 onwards payment of his wages was delayed for approximately a month until November 2008 when payment of his wages was delayed for approximately 3 months and, even then, he only received part payment of the amount due to him for that month. It is to be noted that the summonses in respect of the employee alleged non-payment, in part, for the month of November 2008 and, in full, for the months of January and March 2009.

17.  He further testified that the 1^st appellant had spent a lot of time in China apparently trying to save the business and that there had been meetings in 2008 and early 2009 between the 2^nd appellant and staff members during which the 2^nd appellant claimed that, whilst the company was unable to pay salaries on time, it was trying to find new investors prepared to make fresh funds available and solve the company's financial problems. He accepted that there was nothing to suggest that the 2^nd appellant was being untruthful and noted that he, the 2^nd appellant, had apparently disposed of some of his personal assets in an attempt to assist the company. The employee spoke highly of his relationship with the appellants.

18.  At the beginning of May 2009 liquidators were appointed to the company and its winding up was commenced. The employee expressed himself as surprised by this turn of events. Both appellants were subsequently declared bankrupt.

19.  All of these are matters, it was submitted, which showed, or tended to show, the existence of a reasonable excuse. They were relevant to the issue of sentence but, with respect, went no way at all towards discharging the evidential burden on the appellants.

20.  The fundamental difficulty facing the appellants was simply that the evidence showed that, at the time when the amounts fell due for payment to the employee, the company's bank accounts were very substantially in credit with far and away more funds than could possibly be needed to effect those payments. Of course, the employee was in no position to testify as to why those funds had not been used to make payment. Entirely speculative submissions were advanced with various hypotheses being ventured on behalf of the appellants as to the fact that those funds were, or may not have been, available for the purpose of paying the employee but none was backed by any evidence whatsoever. Had there been any restraint on those funds it would have been simplicity itself for the appellants to place that evidence before the magistrate.

21.  I thus was satisfied that the prosecution had established that the only inference that could be drawn was that there was no reasonable excuse for non-payment. I further was satisfied that the non-payment was willful for the reasons expressed by the magistrate, upon which I could not improve and therefore adopted.  It followed that the convictions of the appellants were correct.

THE APPEALS AGAINST SENTENCE

22.  Deputy High Court Judge Line in HKSAR v LAM Leonor Chan HCMA125/2009 noted that since 1997 19 convictions for non-payment of wages resulted in imprisonment with the longest period being some two months but that in 13, or two thirds, of those instances the period of imprisonment was suspended.

23.  Before me, but not before the magistrate, was a letter signed by 67 former employees of the company in which they spoke highly of their relationship with the appellants over various extended periods of employment. In this sense they echoed much of the favourable tenor of the evidence of the employee concerning the appellants.

24.  The magistrate gave detailed and a valid reasons for imposing the sentences which he did. I do not think his assessment that there is nothing to choose between the two appellants when it comes to sentencing can be faulted. The appellants were remanded in custody whilst reports were obtained with a view to the imposition of a Community Service Order. Such an order was not recommended in respect of the 1^st appellant because of his age and state of health: plainly this was correct in the light of more recent medical reports which have been made available to me. Neither was it recommended for the 2^nd appellant because of the fact that he apparently spent a substantial part of his time in the Mainland in pursuit of income. The reports spoke of the stable and industrious backgrounds of the two appellants as well as their otherwise unblemished records.

25.  In the light of these circumstances I determined that suspension of the sentences for a period of 18 months was the proper course to follow.