Case Detail

HCCC 98 /2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CRIMINAL CASE NO. 98 OF 2013

________________________

BETWEEN

	HKSAR	Respondent
	and
	HUI Rafael Junior, also known as HUI Si-yan Rafael	1^st Defendant
	KWOK Ping-kwong Thomas	2^nd Defendant
	KWOK Ping-luen Raymond	3^rd Defendant
	CHAN Kui-yuen, also known as Thomas CHAN	4^th Defendant
	KWAN Francis Hung-sang, also known as Francis KWAN	5^th Defendant

________________________

Before:

Hon Macrae JA (sitting as an additional Judge of the Court of First Instance) in Chambers

Date of Hearing: 15 July 2014

Date of Ruling: 15 July 2014

________________________

R U L I N G

________________________

1. On 26 June 2014, I received a letter from the Legal Editor of Bloomberg News stating as follows:

“I write in relation to the above case to submit a request on behalf of Bloomberg News.
The case has, as you will be aware, generated significant public interest, and we are providing regular coverage of developments and the arguments put forward by all parties.
Mr David Perry QC, lead counsel for the prosecution, has given two ‘fund flow charts’ to the jury to assist them in understanding evidence being adduced.
Further to the principle of open justice and in the interests of accurate reporting on the case, we respectfully seek the Court’s permission to be granted access to copies of the same.
We strive for the highest level of accuracy in our reporting and believe this would assist our understanding of the arguments being put forward by the prosecution.”

The letter was signed by Mr Douglas Wong, the Asia Legal Editor of Bloomberg News.

2. I brought this letter to the attention of counsel and have invited submissions on the issue raised, which I have heard this morning. Mr Kelsey-Fry QC on behalf of D3 did not wish to engage in the argument since his client’s name and account details were absent from the flow charts, while Ms Montgomery QC for D2 was effectively neutral. The remaining counsel for the other defendants objected to the material being provided with varying degrees of emphasis. Mr Perry QC on behalf of the prosecution made it clear that he was adopting a position of acceding to the request in order that the issue could be tested by the adversarial process. In so doing, he explained by authority the position in England and Wales.

3. The issue is a novel one so far as criminal trials in Hong Kong are concerned and may well in an appropriate case require a consideration by the appellate courts of the scope and application of the open justice principle in relation to press access to documents referred to in criminal trials.

4. There is no relevant Hong Kong authority on the matter raised by the press so far as the issue of open justice is concerned in criminal trials. There is, however, some recent persuasive authority from the English Court of Appeal in R (Guardian News and Media Ltd) v City of Westminster Magistrates’ Court [2013] QB 618, as applied in R v Marine A; In re Guardian; R (A) v Judge Advocate [2014] 1 Cr App R 26. But, as Toulson LJ (as he then was) acknowledged in Guardian News and Media Ltd, the Court’s decision was breaking new ground in the application of the open justice principle[1].

5. In essence, the Court in Guardian News and Media Ltd determined that where a claimant has a serious journalistic purpose in seeking access to documents, the courts should assist the exercise of informing the public on matters of public interest unless there were strong countervailing arguments; that the principle of open justice was not necessarily satisfied by holding the proceedings in public and permitting the reporting of the proceedings, since the purpose of the principle was not merely to allow the judge’s conduct of the case to be monitored, but to enable the public to understand and scrutinize the justice system of which the courts were the administrators; that the fact that the claimant’s application went further than the courts had considered necessary in the past was not decisive since the practice of the courts was capable of changing; that in the face of credible evidence from the claimant the courts should be cautious about deciding upon the adequacy of material already available to the claimant for its journalistic purpose; and that since the claimant had put forward good reasons for having access to the documents it sought, and since it had not been suggested that access would give rise to any risk of harm to any other party or place any great burden on the court, the claimant should be granted access to the documents sought on the basis of the common law principle of open justice.

6. I regret to say that I am not greatly persuaded by the reasoning in this judgment. Nor am I confident that the decision, and the reasons underlying it, will be followed in this jurisdiction in the context of criminal cases.

7. Although it is not strictly necessary to explain why I have reservations about the reasoning in the English authorities, Guardian News and Media Ltd in particular, I should nevertheless briefly say something about how I view the principle in deference to the entirely proper and courteous request made by a member of the press and lest reliance be placed on my decision by another trial court without any reasons having been articulated by me.

8. The English Court asked itself whether there were strong countervailing arguments against allowing the press access to the documents, assuming the press has a serious journalistic purpose for seeking access, and identified four main arguments, which it then rejected.

9. The first countervailing argument which it identified was that open justice was satisfied if the proceedings were held in public and reporting of proceedings was permitted. This objection was said by the Court to be based on too narrow a view of the purpose of the open justice system. The Court went on to say that the purpose was not simply to deter impropriety or sloppiness by the judge hearing the case. It was wider and enabled the public to understand and scrutinize the justice system of which the courts are administrators[2].

10. With respect, open justice is justice that is not hidden. I cannot see how allowing the press physical access to a document produced and referred to in the presence of all parties to a criminal cause as well as the public has much to do with enhancing an understanding and scrutiny of the justice system, any more than denying the press access to it has much to do with impeding an understanding and scrutiny of the justice system. Arguably, on this basis, a member of the press who wished to see the statement of a witness who has been extensively cross-examined on inconsistencies in his statement would have a respectable if not strong argument for applying for access to the statement so that the public might better understand and scrutinize a justice system which holds that a jury may take an inconsistency in his statement into account when considering whether he is a believable witness, but that the statement is not itself evidence of the truth of its contents except for those parts the witness accepts are true. To paraphrase Sir Humphrey Appleby in ‘Doing the Honours’: “Where will it all end?” once a respectable journalistic reason for better understanding the criminal justice system through the material concerned is mounted.

11. In relation to the second countervailing argument, that to allow access would be to go further than the courts have considered necessary in the past[3], I would agree that the practice of the courts is not frozen, if by “practice” is meant the application of the principle. But nor in the context of a common law principle, does the fact that R v Waterfield [1975] 1 WLR 711 was decided more than 35 years ago weaken its authority, particularly on the issue of whether the press is entitled to view exhibits in a trial; which is essentially the issue I face, although of course the flow charts are not exhibits themselves but seek to make sense of the exhibits. In my view, to say as the Court in Guardian News and Media Ltd did, that “[i]n a case where documents have been placed before a judge and referred to in the course of proceedings, … the default position should be that access should be permitted on the open justice principle; and where access is sought for a proper journalistic purpose, the case for allowing it will be particularly strong”[4] is to put the matter too high. In my judgment, the default position is that the press are not entitled to look at exhibits or other material which have been referred to but not read out in full in open court, unless there are compelling reasons for a judge to exercise his discretion in favour of a press application to see the material: R v Waterfield (supra).

12. So far as the third countervailing argument is concerned, namely that there was no necessity for the press to have the documents to report the proceedings properly, the issues having been ventilated very fully in open court, the Court accepted that there was credible evidence that the Guardian newspaper was hampered in its ability to report the case as fully as it wished[5]. That being so, the Court said it should be cautious about what would really be an editorial judgment concerning the adequacy of the material already available to the paper for its journalistic purpose[6].

13. Frankly, I cannot see how one can escape making an editorial judgment if one is to exercise the sort of discretion, which the Court appears to have accepted must be exercised. Indeed, the Court later went on to consider that “[c]entral to the court’s evaluation will be … the potential value of the material in advancing that purpose”[7], which sounds to me like the very language of editorial judgment. The Court may have thought that by accepting that the Guardian had “a serious journalistic purpose in seeking access to the documents”[8], it had sidestepped the prosecution’s argument about satellite litigation on proportionality and the protection of private rights to confidential and sensitive information[9]. Yet, a “serious journalistic purpose” is itself a value judgment, which, where it is disputed, may well lead to endless satellite litigation involving third parties during a trial.

14. The fourth countervailing argument was that to allow the application would create a precedent, which would give rise to serious practical problems for the courts[10]. The English Court was not impressed by this objection citing certain Criminal Procedure Rules in England, which it said provided a sensible and practical procedure where a member of the public, including a reporter, wanted to obtain information about a case or to inspect a document. The applicant may be required to pay an appropriate fee; it must specify what it wants; and it must explain for what purpose the information is required[11].

15. With respect, I am more impressed by this objection than was the English Court of Appeal. Indeed, I have considerable sympathy with the reasoning of the district judge at first instance[12]. In Hong Kong we do not have, so far as I am aware, the equivalent of rule 5.8 of the English Criminal Procedure Rules 2011. The application of this authority to our criminal justice system would have considerable ramifications on the way our courts are operated, not to mention the practicalities and resources for dealing with such applications. Who is to provide the documents? Is it the court through the court staff? If so, who pays and how much? The problem is perhaps obviated in this case by the prosecution indicating its willingness to provide the documents in question upon request. Yet that is hardly a satisfactory or long term solution to the problem; particularly where the prosecution might oppose the application.

16. Accordingly, I am doubtful whether the reasoning in these recent English cases will ultimately be accepted and, if so, how it will be applied to our criminal jurisdiction.

17. In my judgment, the matter is readily susceptible of judicial discretion on time-hallowed principles. I would agree with Lord Bingham of Cornhill CJ in SmithKline Beecham Biologicals SA vConnaughtLaboratories Inc [1999] 4 All ER 498 at 512:

“Public access to documents referred to in open court (but not in fact read aloud and comprehensively in open court) may be necessary, with suitable safeguards, to avoid too wide a gap between what has in theory, and what has in practice, passed into the public domain.”

18. The argument is finely balanced. On the one hand, the flow charts were admitted for the purpose of rendering intelligible to a jury and the court the evidence of intricate financial transactions, without which a proper understanding of the prosecution allegations would have been extremely difficult. Indeed, such a practice is to be encouraged. That difficulty is even more pronounced for the press or the public who do not have access to the flow charts, or the documents underlying the transactions, or the bankers’ affirmations proving the bank entries. There is an obvious, sensible and important journalistic purpose involved, which hardly needs to be stated, and which the flow charts will undoubtedly enhance, namely, the accurate reporting of the evidence in a case of considerable intricacy as the case continues to unfold.

19. On the other hand, as counsel have correctly observed, these documents are not in fact exhibits and they essentially present the prosecution view of the evidence in order to assist the jury in understanding the alleged underlying transactions. They are aids for the jury which depict the prosecution allegations: they do not present the entire picture and, as with all statements as to what the prosecution case is, they may require to be qualified or corrected. Yet, how is that sensibly to be done once the documents have been placed in the public domain?

20. Furthermore, the charts will be disseminated in the public domain without the public knowing of the conditions which I attached to their reception by the jury or the limits on the use to which the material may be put. There is an obvious danger that the public might perceive the flow charts to be the beginning and end of the evidence.

21. I am also concerned that the flow charts contain references to personal bank account details, including the bank account details of individuals such as PW16, Madam Mabel Chan, who on the prosecution’s own evidence is entirely blameless in this matter. Of course, such details could be suitably redacted in some way so as to protect the integrity of the banks and the bank accounts concerned.

22. In the result, I have come down on the side of refusing the request. I am satisfied that a careful following of the questions and evidence so far from the prosecution by reference to the flow charts will sufficiently explain the matter for the press or anyone else present in open court. I am further satisfied that open justice is not compromised by my declining in the circumstances to permit the flow charts to be provided to the press in this matter.

	(Andrew Macrae)
	Justice of Appeal

Mr David Perry QC, Mr Joseph Tse SC, Ms Maggie Wong and Mr Louis Mably, Counsel on fiat, Ms Winnie Ho SADPP, Ms Betty Fu Ag SPP and Mr Carter Chim PP, for the Director of Public Prosecutions

Mr Edwin Choy, instructed by Tang, Lai & Leung, for the 1^st defendant

Ms Clare Montgomery QC, Mr Lawrence Lok SC and Mr Benson Tsoi, instructed by Boase, Cohen & Collins, for the 2^nd defendant

Mr John Kelsey-Fry QC, Mr Gerard McCoy SC and Mr Steven Kwan, instructed by Sit, Fung, Kwong & Shum, for the 3^rd defendant

Mr Ian Winter QC, Mr Daniel Marash SC, Mr Bernard Chung, Mr Isaac Chan and Mr Adrian Wong, instructed by Tsang, Chan & Wong, for the 4^th defendant

Mr Charles J Chan and Mr Billy Kwan, instructed by Simon Ho & Co., for the 5^th defendant

[1]R (Guardian News and Media Ltd) v City of Westminster Magistrates’ Court [2013] QB 618 at §90.

[2]ibid. at §79.

[3]ibid. at §78.

[4]ibid. at §85.

[5]ibid. at §§78 and 82.

[6]ibid. at §82.

[7]ibid. at §85.

[8]ibid. at §76.

[9]ibid. at page 625G-H.

[10]ibid. at §78.

[11]ibid. at §84.

[12]ibid. at §11.

Subject to reporting restrictions as per paragraph 33 of the judgment

HCCC 98 /2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CRIMINAL CASE NO. 98 OF 2013

________________________

BETWEEN

	HKSAR	Respondent
	and
	HUI Rafael Junior, also known as HUI Si-yan Rafael	1^st Defendant
	KWOK Ping-kwong Thomas	2^nd Defendant
	KWOK Ping-luen Raymond	3^rd Defendant
	CHAN Kui-yuen, also known as Thomas CHAN	4^th Defendant
	KWAN Francis Hung-sang, also known as Francis KWAN	5^th Defendant

________________________

Before:

Hon Macrae JA (sitting as an additional Judge of the Court of First Instance) in Court

Date of Hearing: 11 June 2014

Date of Ruling: 12 June 2014

________________________

R U L I N G

________________________

1. Following the prosecution opening which began at midday on Thursday, 5 June 2014 and ended shortly before 4 o’clock on Tuesday 10 June, and prior to the calling of evidence scheduled for 10 o’clock on Wednesday 11 June, application was made by all counsel for the defence that the jury should be discharged on the basis of prejudicial statements made by Mr Perry QC during the course of his opening address.

2. Since the jury had duly assembled in their jury room by 10 o’clock yesterday morning and given that the arguments of all parties were obviously likely to last some time, I decided to send the jury away until today at 2.30 pm so as to be able properly to consider this application without keeping the jury waiting indefinitely. I indicated that I would give my ruling at midday today. It so happened that the jury were not due to sit today for the morning session in any event due to a personal commitment of one of the jurors. As it turned out, the arguments did not conclude until 1 o’clock yesterday afternoon and I was not in a position to complete my ruling until a few minutes ago. During that time and for the purposes of this ruling, I have re-read the arguments of counsel, the entirety of the prosecution opening as well as various other parts of the transcript concerned with previous applications, and certain authorities.

3. Before I address the arguments, I wish to make certain general observations about the nature of the complaint in this application. First, the object of the defence concern is the opening address of prosecuting counsel, Mr Perry. If one proceeds, as I think one must, on the basis that a jury will follow faithfully the instructions and directions they are given by a judge in a criminal case, then they were told by me in my opening remarks and instructions, and before Mr Perry began his opening, as follows:

“Counsel for the prosecution will open … the case by giving you an opening address of what the case is about, so far as the prosecution is concerned, and what evidence the prosecution intends to present to you in support of that case. The sole purpose of an opening is to assist you to understand what the case is going to be about, so far as they are concerned, and to understand the evidence that they are going to call. However, you must remember that what counsel for the prosecution says in his opening address is not proof of anything. It is only a statement of what he hopes to prove.” (My emphasis)

4. The statement that Mr Perry would be telling the jury “what this case is about so far as the prosecution is concerned” was later reiterated just before the break which immediately preceded Mr Perry’s opening address.

5. Secondly, I am told that this is likely to be a very lengthy case lasting three, perhaps four, months. However thorough and instructive Mr Perry may feel his opening address may have been, the reality is that in three weeks’ time, let alone three months’ time, much if not most of what he has said will have yielded to the far more significant and influential imperative of the evidence upon which the jury have already been told repeatedly and emphatically by me that they must decide this case. And far more significant and influential if I may say than an opening address three or four months previously will be the more recent closing addresses of all parties based upon the evidence which the jury will have heard over the course of those three or four months and the judge’s summing up and judicial directions and instructions as to the application of the law in relation to that evidence.

6. That is not to say that there are not cases where something blatantly prejudicial in a prosecutor’s opening can carry forward and risk colouring the jury’s view of evidence in such a way that a judge cannot realistically exorcise the prejudice by judicial direction. The inadvertent reference to a defendant’s inadmissible confession is perhaps an obvious example. I am merely making the point that prejudice from a prosecutor’s opening address, assuming it exists, is likely to be far less potent in a long and complex trial than in a short, simple one.

7. In R v Letizia [2006] EWCA Crim 315, the English Court of Appeal were concerned, at paragraph 19, with a ground of appeal in which prosecuting counsel had

“… in opening mentioned that Swales [a prospective prosecution witness] would testify to the appellant having deliberately caused or contributed to the damage at the premises by smashing sprinklers and turning off the water supply. That reference by counsel in his opening took place on 5 September 2002. On 2 October 2002, roughly a month later, the Crown indicated that they were not now proposing to call Swales. The defence then applied for the jury to be discharged because of the prejudice caused by the Crown’s opening. The judge however rejected that application. He distinguished between cases where the jury hears evidence which they should not have heard from the situation where there is an unjustified comment by counsel in opening. He concluded that the jury was capable of concentrating on the evidence which they heard. If necessary there could be a direction to the jury. The judge no doubt was bearing in mind also the anticipated length of time that the trial was clearly going to last.”

8. As it turned out, the trial lasted more than three months. The Court went on, at paragraph 25, to hold that the trial judge’s refusal to discharge the jury was a reasonable one. It held:

“This was a very long trial, 15 weeks in all. It was most unlikely that in its deliberations on 16 December and the following days the jury would have had much clear recollection of what Crown counsel had said about Swales on 5 September, over three months earlier. In any event they were expressly told by the judge to decide the case on the evidence. The situation which arose was in our judgment very different from that where a jury hears evidence which it should be kept unaware of, such as a defendant’s previous convictions which have not been admitted in evidence. This was only a statement by counsel. It seems to us that the judge’s decision not to discharge the jury was one well within his discretion.”

9. Thirdly, one must not devalue the importance and force of judicial directions and instructions on the minds of jurors who receive them. Just as juries are told in a summing-up how they may use certain evidence, they are also sometimes told how they must not use it. The experience of the courts, and certainly my own experience of almost 32 years in this jurisdiction, is that juries in Hong Kong do faithfully follow such instructions. In Montgomery v HM Advocate [2003] 1 AC 641, Lord Hope of Craighead described it as an “assumption” underlying the whole system of trial by jury that juries will abide by judicial instructions. He said, at 674A:

“The judges in the courts below relied on their own experience, both as counsel and as judges, of the way in which juries behave and of the way in which criminal trials are conducted. [Counsel for the appellant] submitted that there was no basis upon which one could assess the likely effect of any directions by the trial judge. He said that this was something that was incapable of being proved. But the entire system of trial by jury is based upon the assumption that the jury will follow the instructions which they receive from the trial judge and that they will return a true verdict in accordance with the evidence.”

10. To this assumption, the High Court of Australia in Dupas v The Queen (2010) 267 ALR 1 added this gloss, at para 28:

“The assumed efficacy of the jury system of which Windeyer J spoke, whereby the law proceeds on the basis that the jury acts on the evidence and in accordance with the directions of the judge, represents the policy of the common law and is more akin to a species of “constitutional fact”, in the sense of that term explained by Haydon J in Thomas.”

11. Having made these general points, none of which individually or collectively is definitive of the application before me, I would accept that there can be matters in an opening that are so prejudicial for the jury to hear that a judge has no alternative but to discharge that jury and start again. The question is whether this is such a case. I, therefore, turn to the individual arguments of counsel in this application.

12. It has been a consistent theme of Mr Kelsey-Fry QC’s submissions, fully articulated in the severance application before me in March of this year, that there is a serious risk that the jury will elide the receipt by D1 of benefits which are not said to be corrupt with the acceptance of advantages which are said to be corrupt; and that no judicial direction or instruction will be able to prevent the jury from using the evidence on Counts 1 and 6 (in particular), which do not allege corrupt dealings, in their assessment of the other counts with which his client D3 is charged, which do allege corrupt dealings. The argument has now been renewed in the wake of Mr Perry’s opening, which it is argued, has resulted in the press falling into the very trap that he forecast.

13. I have already given explicit and emphatic directions to the jury shortly after they were sworn as the jurors in this case on the vital importance of ignoring what they may have read or what may have appeared, or what may from now on appear on the radio, the television, in newspapers, magazines, or on the Internet, about this case or about the defendants. I have no reason to think they will have read the particular material to which Mr Kelsey-Fry has referred or, even if they had, that it will be any substitute for what the prosecution have in fact alleged in their opening or what the prosecution will endeavour to prove in their case or during the evidence.

14. Furthermore, I have already dealt with the relevance of the background evidence on Counts 1 and 6 and the elision argument in my judgment on severance on 7 April 2014: see, in particular, para’s 32-35 and 42.

15. Nevertheless, I have looked to see whether on a fair and proper reading of the structure and context of the entire opening, Mr Perry has gone beyond the limits of his own allegations in the Indictment in such a way that any prejudice cannot be cured unless the jury are discharged.

16. Having done so, I do not see that the criticisms levelled at the opening are justified. The point which Mr Perry made time and again, and which I understood him to be making, is that D1 is alleged to have misconducted himself in relation to Counts 1 and 6 (and 8) by not disclosing, or concealing, certain matters when he was operating under a conflict of interest as a public official, whether as Chairman of the MPFA (Count 1), Chief Secretary for Administration (Count 6) or a Non-official member of the Executive Council (Count 8). The conflict of interest in Count 1 was said by Mr Perry to arise when D1 engaged in negotiations leading to the renewal of the lease of MPFA premises when SHKP, with whom D1 was at the time having private dealings which he did not reveal, had an interest in the renewal of that lease. The conflict of interest in Count 6 was said to arise when D1 was allegedly dealing with matters of Government involving SHKP when he was asking for and receiving extensions of a sizeable unsecured loan from a subsidiary of SHKP. I had myself commented at para 32 of my judgment of 7 April 2014 that “as a matter of common sense, loans, especially substantial, unsecured or unpaid loans (even perfectly proper ones), create indebtedness and a sense of obligation between the grantee and the grantor”. Mr Perry put the same matter rather more graphically in his opening when he said

“ … the significance of this is at the very point in time at which the first defendant is assuming chairmanship of the West Kowloon cultural development committee, and at the very time he is the Chief Secretary dealing with matters in government, he is seeking a favour from SHKP: ‘Don’t ask for the loan to be repaid; give me an extension.’ Suppose SHKP had said, ‘No, you’ve got to give us $3 million.’ That might have placed him in a degree of financial embarrassment.
But, members of the jury, you can see the problem about a senior government official being under an obligation to a property developer when he is dealing with matters in government that touch and concern that property developer’s interests. This was not known. There’s nothing wrong about getting loans. There’s nothing wrong about getting extensions of loans. People do it all the time. It’s part of our daily lives. But there is something wrong if you’re the Chief Secretary and you’re seeking a favour from the people whose interests you’re also expected to adjudicate upon in your role as the second-most senior member of government; and quite apart from anything else, from whom you had already received $17 million.”

17. The defence complaint assumes that the word ‘favour’ in this passage (which was also later repeated in relation to further annual extensions) should be interpreted as a corrupt advantage. But it is clearly not being used in that sense. Mr Perry later used the word “indulgence”, which perhaps less controversially conveys what I have understood Mr Perry to mean, albeit in relation to D1’s request not to pay interest on the second loan, the subject of Count 1:

“There is nothing wrong with lending people money. There is nothing wrong with people seeking indulgences and not seeking to pay interest. But if you’re a public official and you’re seeking a favour, that creates an obligation. You are under an obligation to someone else. Your destiny can be dictated by them: pay the loan, move out of the property, don’t use the office. You are under a sense of obligation, because you have gone to someone else for a favour. That is why, in public service, there are important rules in relation to disclosure of information in relation to conflicts of interest.”

18. I am aware that on one occasion before the above references to ‘favour’, Mr Perry did use the word ‘advantage’ (Day 18, p 35, line 17 of the Live Note record) to describe the $3 million loan. But, in its overall context and the way this issue was dealt with generally throughout almost four days of opening address, I do not consider this is either irreparable by way of judicial direction at the appropriate time when all the evidence has been heard, nor does it justify discharging this jury.

19. In relation to Count 8, Mr Perry made the same point about D1’s conflict of interest:

“The significance of his concealment is obvious, because, having received $11.182 million from the other defendants, that payment was wholly at odds with the first defendant’s overriding duty as a member of the Executive Council to serve the public honourably and with impartiality, so as not to be under an obligation to a privileged few who had made sure that he had money to live the life to which he had become accustomed.”

20. Again, I do not see, when looked at as a whole and in context, that Mr Perry was suggesting any more than that, in respect of Counts 1, 6 and 8 against D1, he was misconducting himself in public office because the conflict of interest under which he was secretly operating in relation to SHKP compromised the proper carrying out of his functions as a public officer. I have read the other passages to which I was taken in the context and scheme of what Mr Perry was saying and I do not accept that, properly understood, he went outside the terms of the counts on the Indictment, so as to suggest that the “benefits” in question, as I will call them, were corrupt advantages or that they establish any more than relevant background evidence of the relationship between the parties, without which an understanding of other counts would be incoherent and incomplete.

21. So far as the complaint about Mr Perry’s example of a juror (and later a judge) being bribed, I can certainly agree that other examples might have been used which would not have caused the “sharp intake of breath” which Mr Kelsey-Fry suggested. As I understood him, Mr Perry was making a point about those making decisions in the exercise or performance of a public duty, who are operating under a conflict of interest. He said this:

“The reason I say whatever the merits of the decision being utterly beside the point is if you are a public official and you labour under a conflict of interest, and you conceal the conflict of interest, and you act regardless of the conflict of interest in your own benefit, then you undermine integrity in public life, and that is why we have an offence of misconduct in public office. It doesn’t matter about the merits of the decision. Let me give you an example. Suppose a juror accepts a benefit from one of the litigants involved in a case. I don’t imagine that would happen, but suppose it did. Suppose it were to happen. A juror accepts a benefit, is sitting on a case -- no one else knows about it -- and the juror keeps it a secret, and the juror decides the case, still true to the oath: “On the evidence, I have decided the case as the way the evidence worked”, but what would anyone say? What would anyone say if they knew a juror had received a payment from one of the litigants? Would people have confidence in the jury system? You can answer that question for yourselves, because you are jurors and you know the importance of independence and impartiality and fairness which you will bring to this case.”

22. I note that in that passage Mr Perry used the word ‘benefit’ rather than corrupt advantage and, when he later returned to this point three days later, he said

“ … the example I gave you when you first sat was of a juror accepting gifts. Perhaps there’s nothing wrong with the gifts, but if you don’t reveal it, people can’t have confidence in you anymore.”

23. He was simply making the point, as I understood it, that even if a decision-maker exercising a public duty receives a benefit of any kind but does not disclose it and nevertheless decides a case on its merits “still true to the oath”, it is still misconduct in public office because of the conflict of interest under which he is operating. No doubt Mr Perry was using the example to translate the point to the experience of a juror, who may have had no experience of exercising any public function or duty and for whom jury service would seem analogous. I do not see the mischief which it is asserted this example conveys. Sensitivity is no reason to discharge a jury.

24. In relation the points made by Mr Winter QC, I do not accept that the prosecution have put their case any differently from that which they indicated in submissions on 14 April 2014. The prosecution position is that it is not necessary for the prosecution to prove that D1 did any specific act in favour of D2, D3 or SHKP. The fact that the prosecution allege that D1 was in receipt of large sums of corrupt money and was thereby allegedly SHKP’s man on the inside of government is not incompatible with that position. Nor is it a “confusing” position as suggested.

25. I do not see the prejudice for which Mr Winter contends. Understandably, perhaps, he would like the prosecution to concede that there has never been any favouring of SHKP by D1; especially as that appears to be what D4 is contending. I have never understood the prosecution were willing to make that concession in those terms. Nor on their view of the law do the prosecution need to do so. Their position is that the merits or otherwise of D1’s decisions and comments in meetings concerning SHKP are not necessary in order to prove the charges: what is necessary for their allegation is that having allegedly and secretly been paid by D2 and D3, he participated as Chief Secretary in meetings which concerned SHKP.

26. I do agree, however, that Mr Perry appears to have shifted his position as to the signing and purpose of the Longally agreement; but only because, as he has made clear to the jury, he cannot say when or why it was signed. What he has firmly declared before the jury is that whatever the reason for it coming into being, it is a sham. That, with respect, is not an improper position to take nor is it one which prejudices D4, certainly not so as to justify discharging a jury who hears it. On the contrary, I would have thought it is just the sort of matter which Mr Winter will no doubt vigorously suggest to the jury in argument is illustrative of the weakness or diffidence of the prosecution case.

27. In respect of Mr Chan’s submissions on behalf of D5, I do not accept his argument in relation to Count 2 which does not, for that matter, even relate to D5. Nor do I agree that Mr Perry has failed to distinguish between the offences of misconduct in public office and section 4 bribery offences. In any event, that is a matter for me when all the evidence has been heard. It does not begin to amount to a reason for the discharge of this jury. Finally, whether Mr Perry is right to say in opening that it can be inferred that D5 was rewarded for his alleged services is a matter of evidence and is unmistakeably one for the jury to decide.

28. Of all the matters that have been raised, Mr Choy’s arguments on behalf of D1 engaged an interesting point of law. That being the case, I am somewhat surprised, since the point of concern arose before lunchtime on Monday of this week, that it was not until the hearing yesterday (on Wednesday morning) that the matter was brought to the prosecution’s attention and raised in court. And even then, it was not argued fully or properly by either side; a copy of the case of Lee Fuk Hing v HKSAR (2004) 7 HKCFAR 600 being produced by Mr Choy in his reply, which in turn caused Mr Perry to have to fumble with the Internet to refer to another case in which Lee Fuk Hing had been cited. That in turn resulted in me having to find the cases mentioned viva voce in argument, as well research others on the subject; for example, HKSAR v Cheung Oi Hin [2008] 6 HKC 107.

29. I am not in a position on the current state of argument to determine this issue, which may have to be properly addressed later. What I am quite satisfied about is that even if Mr Choy is right, that is not something which is so prejudicial as to warrant the discharge of this jury. This is precisely the sort of issue which, even if the jury were to remember the point in three or four months’ time, is perfectly susceptible of judicial direction.

30. Accordingly, the application to discharge the jury is refused. The evidence will commence as scheduled at 2.30 pm this afternoon.

Postscript

31. Following what I have just said in relation to the argument advanced by Mr Choy, I wish to add this postscript. Although I have singled out Mr Choy for comment on the way the matter was launched on the prosecution and the court yesterday, it might seem to the impartial observer that there was a concerted effort by all parties to ambush the prosecution with arguments that had been well prepared with page citations in both these and earlier proceedings, and which they must have known they were going to make rather earlier than yesterday at 10 o’clock. The tactic, if that is what it was, succeeded because, with all due respect to Mr Perry, the prosecution were not in a position to give me the assistance that I needed and it was left to me, with very little sleep as a result, to read volumes of argument and transcript, research authority and come up with a judgment (partly typed and partly in manuscript form when delivered) by 12 o’clock today so that the jury would not be further inconvenienced. No doubt the parties will be able to point to errors that I have made in this judgment which does not pretend to be complete or to address every issue raised, save for the more important ones. That would hardly be surprising given the way the arguments were launched upon the court with five minutes’ notice yesterday and with a jury waiting to get on with the case; arguments, as I have said, which took the whole of the morning to argue.

32. This sort of tactic may well be acceptable in other jurisdictions. It is not acceptable in this jurisdiction and it will not happen again in this court. If it does, the matter will simply be adjourned at my convenience so that the party affected, be it the prosecution or the defence, has the time to meet the arguments advanced in a comprehensive and presentable form so that I can be properly assisted by all parties and justice properly achieved.

Reporting of this judgment

33. The content of this judgment including my ruling may not be reported until the conclusion of the trial.

	(Andrew Macrae)
	Justice of Appeal

Mr David Perry QC, Mr Joseph Tse SC, Ms Maggie Wong and Mr Louis Mably, Counsel on fiat, Ms Winnie Ho SADPP, Ms Betty Fu Ag SPP and Mr Carter Chim PP, for the Director of Public Prosecutions

Mr Edwin Choy, instructed by Tang, Lai & Leung, for the 1^st defendant

Ms Clare Montgomery QC, Mr Lawrence Lok SC and Mr Benson Tsoi, instructed by Boase, Cohen & Collins, for the 2^nd defendant

Mr John Kelsey-Fry QC, Mr Gerard McCoy SC and Mr Steven Kwan, instructed by Sit, Fung, Kwong & Shum, for the 3^rd defendant

Mr Ian Winter QC, Mr Daniel Marash SC, Mr Bernard Chung and Mr Adrian Wong, instructed by Tsang, Chan & Wong, for the 4^th defendant

Mr Charles J Chan and Mr Billy Kwan, instructed by Simon Ho & Co., for the 5^th defendant

Subject to reporting restrictions as per paragraph 79 of the judgment

HCCC 98 /2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CRIMINAL CASE NO. 98 OF 2013

________________________

BETWEEN

	HKSAR	Respondent
	and
	HUI Rafael Junior, also known as HUI Si-yan Rafael	1^st Defendant
	KWOK Ping-kwong Thomas	2^nd Defendant
	KWOK Ping-luen Raymond	3^rd Defendant
	CHAN Kui-yuen, also known as Thomas CHAN	4^th Defendant
	KWAN Francis Hung-sang, also known as Francis KWAN	5^th Defendant

________________________

Before:

Hon Macrae JA (sitting as an additional Judge of the Court of First Instance) in Court

Dates of Hearing: 8, 9, 12, 13, 14, 15, 16, 19, 20, 21 and 22 May 2014

Date of Ruling: 23 May 2014

Date of Reasons for Ruling: 26 May 2014

________________________

REASONS FOR RULING

________________________

1. There were five separate applications made before me after arraignment but prior to the empanelment of the jury. The first three were concerned with D1, the remaining two with D5. All five applications related to the admissibility of evidence proposed to be introduced at trial by the prosecution.

2. The first application concerned the admissibility of (i) a witness statement made by D1 on 13 January 2010; and (ii) a written record of interview under caution with D1 made on 14 November 2011. The second application concerned the admissibility of the journalistic material which the prosecution intend to produce as part of their case. The third application related to the admissibility of D1’s tax records which the prosecution also seek to adduce as part of their case.

3. The fourth application concerned the admissibility of the oral statements made by D5 to two ICAC officers, Hazel Law Pui-man (“Hazel Law”) and Bernard Kam Wing-cheong (“Bernard Kam”) on 13 December 2011. The fifth application concerned the admissibility of two documents seized at D5’s home address on 19 March 2012, namely a document in D5’s handwriting (“the handwritten note”) and two typed documents (“the Part A/Part B documents”).

4. In the event, it became unnecessary for me to give any ruling on the issue engaged by the fourth application. Having voiced my misgivings about the way certain statements attributed to D5 were recorded, Mr Tse SC for the prosecution and Mr Chan for D5 indicated before final submissions were made on the matter that a ruling would not be necessary since the prosecution have indicated that they will now be limiting the evidence of the two witnesses to certain factual matters concerning the interview of 13 December 2011 which are not disputed.

5. I conducted voir dire proceedings in relation to the first application and a separate voir dire in relation to the fourth and fifth applications, but delayed ruling on each issue of admissibility until all the evidence had been heard. Since two of the witnesses were common to both D1’s and D5’s voir dires, and since their credibility was in issue, I considered it prudent to reserve judgment until all the evidence had been heard.

6. I shall deal first with my ruling on the voir dire conducted in respect of D1’s witness statement and record of interview.

The admissibility of the witness statement dated 13 January 2010

7. The principal argument engaged as to admissibility concerning D1’s witness statement is whether D1 ought to have been cautioned before his interview with ICAC officers on 22 December 2009, which interview elicited the responses later included in the witness statement signed by D1 on 13 January 2010. It is submitted by Mr Choy on behalf of D1 that there was a flagrant and deliberate failure on the part of ICAC to caution his client when the ICAC had long regarded, and had sufficient reason to regard D1 as a suspect. It is argued that D1 was thereby tricked into providing evidence he might not otherwise have provided. Therefore, there must be a reasonable doubt as to the voluntariness of the witness statement. Even if voluntary, it is urged that I should exercise my residual discretion to exclude the statement on the grounds of unfairness.

8. It is necessary to set out certain relevant facts by way of background so as to understand the objection.

9. On 18 July 2008, a firm of solicitors (“Firm A”) had written to the ICAC lodging a complaint against D1 on behalf of an unnamed client who had reason to believe that D1 was in breach of the Prevention of Bribery Ordinance, Cap 201 (the POBO) and/or the Mandatory Provident Fund Schemes Ordinance, Cap 485. It is not necessary for me to set out in full the breaches alleged against D1or the argument advanced by the solicitors concerned, which are contained in Exh VDD4. Suffice it to say, it was alleged inter alia that D1 had occupied rent-free, at a time when he was both managing director of the Mandatory Provident Fund Schemes Authority (“MPFA”) and later a non-official member of the Executive Council, two identified adjoining units at The Leighton Hill in Happy Valley which belonged to two companies associated with Sun Hung Kai Properties Ltd (“SHK”). It was alleged that not only had D1 accepted an advantage as a public servant but he had breached various provisions of the Code of Conduct of the MPFA including the acceptance of advantages and the avoidance of conflicts of interest.

10. Almost three months later on 10 October 2008, a different firm of solicitors (“Firm B”) wrote to the ICAC to say that they had replaced Firm A but repeating the allegations made by Firm A and providing what they described as “further information” including certain documents. Paragraph 2 of the letter from Firm B (Exh VDD5) contains this sentence: “While we respect your earlier decision in this matter, we are of the opinion that there is solid evidence to support a prima facie case of corruption against (D1) as a public servant and/or his wife … as a prescribed officer and/or the relevant senior staff of Sun Hung Kai Properties (“SHKP”) contrary to sections 3, 4(1)(2), 5(1)(2) and/or 8(2) of the (POBO) and certain common law offences relating to public servants” (original emphasis). Among the documents supplied was a “Service Agreement believed to be signed by (D1)”.

11. Although I have not seen the letter from ICAC which prompted the opening adverbial clause in paragraph 2 of Exh VDD5, it would seem that ICAC had not thought enough of the original complaint by Firm A to pursue it very far. Whether it was the production of the new documents or the persistence of the complainant and/or persuasiveness of the new solicitors or other material, the ICAC obviously decided to pursue the matter and conduct an investigation. Thus, by the time of the interview with D1 in December 2009, various staff members of SHK and MPFA had made witness statements which had established certain matters supporting the essential framework of the complaint. These included the fact that, in early 2003, the administrative committee of MPFA, of which D1 was a member, was considering various options for the leasing of premises; that D1 had voted for a proposal to renew the lease for MFPA’s premises at One IFC; that One IFC was partly owned by SHK; that D1 had begun occupying the units at the Leighton Hill, which were connected with SHK, from March 2003 onwards; and that D1 did not pay any rent for the units from April 2003 to June 2005.

12. On behalf of D1, Mr Choy submits that, since by the time of the interview in December 2009, the ICAC had obtained signed witness statements confirming D1’s rent-free occupation of domestic premises linked to SHK at a time when he was a public official having dealings with SHK, there was in their possession by that time sufficient evidence which would have afforded reasonable grounds for suspecting that he had committed an offence (or offences) so as to warrant his cautioning under Rule II of the Rules and Directions for the Questioning of Suspects and the Taking of Statements (“Rule II”). Accordingly, by not cautioning D1 when they should have done, ICAC officers embarked upon a deliberate trick to mislead D1 as to the state of their enquiries and to ensure that he would speak and subsequently sign a statement rather than avail himself of his right of silence.

13. The intention to trick and mislead D1 is further said to be evidenced by the fact that the ICAC had repeatedly applied for search warrants on the basis that there was “reasonable cause to believe that offences under section 4 of the Prevention of the POBO might have been committed by (D1) and unidentified member(s) of SHK”: see Exh VDD1, affirmed on 18 March 2009, and Exh VDD2, affirmed on 13 August 2009. The information in support of each application for a search warrant, was affirmed by Lam Cheung-ching of the ICAC, who was a member of the investigating team as well as present at the interview with D1 of 22 December 2009 and the subsequent interview under caution on 14 November 2011.

14. Had the evidence and other information to which I have just referred been the only material in the possession of ICAC by December 2009, there might have been a persuasive argument in favour of the need for a caution to be administered prior to the interview of D1 by Yu Chun-cheong, Ricky (“Ricky Yu”) and Hazel Law on 22 December 2009. However, the position when viewed through the eyes of ICAC officers investigating this matter in 2009 was rather more complex and less clear cut. One must obviously be careful to judge the state of mind of the ICAC, in what was obviously a developing investigation, as the facts presented themselves to the investigators in December 2009, rather than with the benefit of hindsight in 2014.

15. The Service Agreement signed between D1 on behalf of Top Faith Enterprises Limited (“Top Faith”) and D2 on behalf of Sun Hung Kai Real Estate Agency Limited on 1 March 2004 (which has also been referred to in argument as the “consultancy agreement”) made no mention of rental payments in respect of the two Leighton Hill units or any other quarters being provided as part of the agreement. However, on 14 July 2009, Messrs Mayer Brown JSM (“JSM”) forwarded to the ICAC a copy of a letter of the same date from JSM to the Secretary for Justice attaching two documents: (i) a signed statement of Madam Kwong Siu-hing, the Chairman of SHK, who has also been described as the matriarch of the Kwok family, dated 11 July 2009, and (ii) a Joint Opinion from two Senior Counsel and a junior counsel dated 13 July 2009. One of the matters which these documents essentially sought to explain was that the management of SHK were at first unable to agree on the question of whether the two Leighton Hill units should be provided to D1 as part of the arrangements under the consultancy agreement. It was not until 2004 that the matter was finally resolved. It was asserted that while Top Faith was under a legal liability to pay the rent for both units as from 2003, it was eventually resolved in 2004 to waive rent, by which time D1 was no longer a “public servant”. Accordingly, no offence was committed.

16. Also on 14 July 2009, ICAC made requests to interview Walter Kwok and D3. Walter Kwok agreed to be interviewed and was subsequently seen by ICAC officers, although it did not result in any written statement. D3, on the other hand, declined to be interviewed. Some time thereafter, D2 was asked by ICAC if he would agree to be interviewed. He must have consented because on 15 October 2009, D2 attended for interview together with his counsel and solicitor. However, no written statement was taken on that occasion. On 29 October 2009, D2’s then instructing solicitor furnished ICAC with a written statement signed by D2 on 28 October. In the statement, D2 confirmed that the two Leighton Hill units were provided to D1 “as consultant’s quarters” but that they “were totally unrelated to the IFC lease renewal which was a completely separate matter”.

17. Although Ricky Yu said of D2’s statement that “for the first time, it was at that time that we came to know that these two flats that were provided to (D1) as accommodation (were) connected to the terms of the consultancy agreement”, it is clear that he must have known of the contended connection as at the receipt of the JSM letter and submissions on 14 July 2009. He later clarified in cross-examination that it was not until D2’s statement was provided that confirmation of the connection was obtained from one of the actual signatories to the agreement.

18. So far as the reason for not cautioning D1 is concerned, Ricky Yu explained that the reason he wished to obtain a witness statement from D1 on 22 December 2009 was that:

“… at that time, we were dealing with a very serious allegation. The persons being complained of were the ex-Chief Secretary, the number 2 person in the Hong Kong SAR, and also Sun Hung Kai, a major developer in Hong Kong. We had received various representations, and we had also interviewed the Kwok Brothers, who had made representation on the matter. As a fair and just law enforcement agent, I thought we ought to offer (D1) an opportunity to give comments or representations on the investigation.”

19. As to the method of interview and whether it would be by way of witness statement or statement under caution, he maintained:

“It was a very difficult decision to make. Based on the evidence that we had at that time, and the information gathered from the investigation, we did not have a reasonable reason to suspect that (D1) contravened any offence. So we interviewed him as a witness.”

20. He went on subsequently to explain that not only did ICAC believe “that what D1 said to us was the truth” and that “at that time, we did not have anything to prove that he had said something inaccurate” but that since he “believed that the information provided by (D1) was true and accurate. Therefore, we did not do any verification”. Hazel Law expressed similar sentiments, considering that “[a]fter the interview, basically we (were) inclined to believe what (D1) had told us, and we were not anxious to check the information that he provided to us”.

21. I might observe that if the officers really did believe before this interview that they had at that stage sufficient evidence which would have afforded reasonable grounds for suspecting D1 of committing an offence but refrained from cautioning him in order that he would speak when he might not otherwise have done so, they would seem to have rather meekly accepted what they were told. In my judgment, their reaction after the interview is more consistent with a state of mind falling short of the requirement stipulated in Rule II prior to the interview.

22. It is clear that both officers who gave evidence were acutely conscious of the fact that they were going to be asking questions of an extremely prominent citizen. Whilst that fact could never justify the raising of the threshold of suspicion to such a level so as to deprive such a citizen of the protection afforded by the caution, which protection might have operated earlier had the citizen been less prominent, it does nevertheless help to explain what each officer actually believed both before and after the interview.

23. ICAC had received an anonymous complaint, the essential framework of which had been confirmed by statements from both MPFA and SHK. However, they also had in their possession a copy of a consultancy agreement, which on the face of it showed a bona fide business relationship as from March 2004 and which was being strenuously contended, as from July 2009, by SHK, its legal advisers, two Senior Counsel and the equally prominent signatory to the agreement itself, namely D2, to be a perfectly proper business arrangement unconnected with D1’s position as a public officer. At the same time, it was also being asserted that the decision to waive any rental payments was related to the consultancy arrangement but was made later when D1 was no longer a public officer.

24. Of his own state of mind upon the receipt of D2’s statement of 28 October 2009, Ricky Yu gave what I considered a rather guileless and ingenuous explanation: “Maybe I should put it this way. We did not believe that Mr Kwok would tell us a lie without any reason. As far as he said what he said to us, we would take it as the truth.”

25. That is why I say that the matter must have appeared to ICAC, as at December 2009 when the decision to interview D1 was made, to be rather more complex and less clear cut than the anonymous complaint asserted. Faced with explanations from extremely prominent individuals, which could not be lightly disregarded, it would have been a bold move on ICAC’s part to have arrested or cautioned D1 on the strength of an anonymous complaint, even if the framework of that complaint had been confirmed, without a clearer understanding of the consultancy agreement and its ramifications on the issue.

26. Although a suspect’s prominence or standing in the community might affect the view that an investigating officer actually forms of his complicity in an offence, such a suspect should not be disadvantaged by the fact that the officer consequently raises the threshold of suspicion before he is prepared to arrest or caution a prominent citizen, if objectively there are reasonable grounds for suspicion of his complicity in an offence. Equally, an investigating officer cannot deliberately close his eyes to the obvious and refuse to arrest or caution a suspect in order that he can continue gathering evidence from him when, on an objective basis, there are reasonable grounds to suspect that he has committed an offence which would justify his arrest and caution. If, notwithstanding a genuinely held subjective belief on the part of an investigating officer that the threshold at which a caution should be administered has not been reached, there are reasonable grounds to suspect a citizen (prominent or not) of committing an offence on an objective basis, then he should proceed to arrest and caution him. In this regard, section 10(1) of the Independent Commission Against Corruption Ordinance, Cap 204, by which an authorized officer may arrest “if he reasonably suspects that (a) person is guilty of an offence”, is in pari materia with section 50(1) of the Police Force Ordinance, Cap 232, of which the standard of reasonable suspicion was said by the Court of Final Appeal in Yeung May Wan & Others v HKSAR (2005) 8 HKCFAR 137, at para 82, to be:

“… one requiring the arresting officer to have formed, at the time of arrest, a genuine suspicion of guilt held on grounds which are objectively reasonable. What is needed to meet that standard in any particular case is a question of fact and degree.”

27. Such questions of fact and degree are, however, not always easy to determine. If three judges of the English Court of Appeal were unable to agree on whether the need for a caution had been triggered on the facts in R v James [1996] Crim LR 650; (Unreported) 8 March 1996 (Court of Appeal), the answer would have been even less obvious to the investigating officers concerned. However, in considering whether, and if so when, a caution should be administered during an ongoing investigation, the Court in James made two important points, at p 17:

“First this: the concept of reasonable grounds for suspicion is not an absolute one; it is, indeed, singularly imprecise. This is particularly so where, as here, there exists at the relevant time the real possibility that no crime at all has been committed. That clearly complicates the position, enlarging the area of doubt and delaying the point at which logically an investigating officer’s initial uncertainties about an interviewee’s innocence (perhaps even a hunch of his guilt) turn instead into an objectively well-founded suspicion of guilt.
Second, the court must guard against the risk of judging the officers’ evidence unfairly with the benefit of hindsight. By the date of trial the mere passage of time itself had inevitably hardened suspicions, eliminating, as realistically it had, all prospect of an alternative innocent explanation for Martin’s disappearance. By then, moreover, it was known, as at the time of these interviews it was not, that the appellant was never going to offer any remotely plausible explanation for his doings in the late afternoon of 29 December. The disputed interviews, by contrast, took place within a week of Martin’s disappearance, at a time when no overall position presented itself and when, indeed, many crucial evidential findings had still to be made. This was in short a developing situation …”

28. These comments are rather apposite to the present case. Not only would the consultancy agreement have complicated, and did indeed complicate, the investigating officers’ thinking in relation to the complaint, but the whole process of enquiry was clearly a developing one.

29. It is perhaps appropriate for me to deal here with the argument that if the ICAC investigation team considered that search warrants should be applied for under section 17(1) of the Prevention of Bribery Ordinance, Cap 201 (“POBO”) on 18 March and 13 August 2009 (there was another apparently applied for on 14 May 2009), they must have had reasonable grounds for suspecting that D1 had committed an offence requiring a caution to be administered under Rule II.

30. As I have pointed out, this was a developing enquiry. In many complex cases, where the investigation takes months if not years, the allegation may not become clear or crystallize for some considerable time, particularly where there are conflicting accounts of what went on and why. Those tasked with investigating complex cases involving intricate transactions among unknown or apparently unrelated individuals may well go through various states of mind about the case they are investigating from initial scepticism, to an instinctive hunch, to a more reasoned conjecture, to suspicion that an offence might have been committed based on doubtful or equivocal or conflicting information or evidence, to a suspicion or belief that an offence might have been committed based on credible information or evidence, to a firm belief based on credible evidence that an offence has indeed been committed; with various shades of suspicion or belief in between. One would also hope (as the representations from JSM and D2 presumably hoped) that sometimes investigators change their minds during that process and retreat from a suspicion or belief they might otherwise have formed.

31. During this process of investigation, evidence is obtained to see whether it confirms or advances or dispels suspicion. Search warrants in order to try and find evidence are instrumental in this process. Under section 17(1) of the POBO:

“Any investigating officer may, for the purposes of an investigation into, or proceedings relating to, an offence suspected to have been committed under this Ordinance, make an ex parte application to a court for the issue of a warrant under subsection (1A).”

32. Rule II, on the other hand, requires that:

“As soon as (an investigating officer) has evidence which would afford reasonable grounds for suspecting that a person has committed an offence…”,

the officer shall caution that person before putting any questions, or further questions, relating to that offence.

33. It seems to me that the state of mind contemplated by the application for a search warrant is less than the state of mind required for the administering of a caution. They are not perhaps far apart: but they are nevertheless different. I note interestingly that in both applications for search warrants which have been placed before me (Exh’s VDD1 and VDD2), the affirming officer declared:

“There is reasonable cause to believe that offences under Section 4 of the POBO might have been committed by (D1) and unidentified member(s) of SHK.” (emphasis supplied)

34. He did not affirm that he had evidence which would afford reasonable grounds for suspecting that D1 and others had committed an offence, even accepting one should give a liberal interpretation to the word “evidence”. In many cases, investigators apply for search warrants in order to find evidence which advances the investigation before any arrests are made.

35. But even if there were no appreciable or valid distinction between the state of mind which applies for a search warrant and the state of mind at which the administering of a caution is triggered, the fact is that the applications for the search warrants came before D2’s statement of 28 October 2009 was received. That statement, in conjunction with the earlier representations from SHK, Senior Counsel and JSM clearly affected the way Ricky Yu, in particular, looked at the allegation, even though the initial suspicion may have subsisted.

36. Having heard the evidence in the voir dire, I find as a fact that at the time Ricky Yu and Hazel Law decided to interview D1 and up to the time the resulting statement was signed, they did not themselves believe that the evidence (and information) in their possession was sufficient to afford reasonable grounds for suspecting that he had committed an offence, so as to warrant a caution being administered under Rule II. Furthermore, I do not consider for the reasons I have given that such evidence (and information) as they had in their possession during the same time frame, including the evidence (and information) which had been supplied by SHK, various lawyers and D2 himself in relation to the consultancy agreement, afforded reasonable grounds on an objective basis for suspecting that D1 had committed an offence so as to warrant a caution being administered. Accordingly, I do not consider that D1 should have been cautioned either at the commencement of the interview on 22 December 2009, or up to his signing the statement on 13 January 2010.

37. If I am wrong on the question of whether all of the evidence (and information) in ICAC possession (both in support of and against the assertions contained in the anonymous complaint) was sufficient to afford reasonable grounds to suspect D1 of committing an offence when objectively viewed, and that the requirement for a caution had been triggered, whatever Ricky Yu and Hazel Law subjectively thought, I would not have exercised my discretion to exclude the evidence by virtue of the breach of Rule II.

38. I have already described the evolution of this developing investigation, against what Mr Tse termed the “mixed messages” that were being received by ICAC.

39. It is further clear beyond peradventure that when D1 signed the statement on 13 January 2010, he must have been entirely satisfied that the statement properly reflected what he had said and what he wanted to convey at the interview on 22 December 2009. Not only had Hazel Law made a full note of everything that had transpired but the statement which resulted was sent to D1 for his approval. He made certain alterations and additions, as a result of which the statement was revised to incorporate his amendments. When he came up to ICAC offices to sign the revised statement on 13 January, he made yet further amendments before appending his signature to the document.

40. I am therefore entirely satisfied that there is an accurate and reliable record of the interview, incorporating whatever amendments D1 wished to make, before he confirmed that record with his signature three weeks later.

41. As I have just observed, the Court in James was apparently divided as to whether the appellant should have been cautioned before the interview of 5 January (or the third occasion the appellant was seen by the police on day 7 of the police investigation). By this time, borrowing the analysis in the Criminal Law Review at 651, the police had established that the appellant had earlier told them a pack of lies about his movements on the day in question and the purpose of questioning him was to confront him with a version of events disclosed by a witness which was at variance with his earlier claims. On this occasion, the appellant produced another story, which subsequently turned out to be yet another lie.

42. Notwithstanding its division on the issue of whether the appellant should have been cautioned, the Court was unanimous in saying that it would not have used its discretion under section 78 of Police and Criminal Evidence Act, 1984 to exclude the interview of 5 January, even if a caution should have been administered. It held:

“A further major consideration with regard to the exercise of the section 78 discretion here is that, as stated, the accuracy of these interviews has never been disputed, nor is there any question of the police eliciting unreliable confessions; there were, indeed, no confessions at all. We recognise, of course, that this consideration is not determinative: if the accused should have been cautioned and offered a solicitor and wrongly was not, he is entitled to protest of thereby losing the advantage of staying silent instead of further incriminating himself by lies. But such a protest will not invariably prevail.”

43. I would agree that a failure to caution a suspect is a potent factor in favour of the exclusion of a subsequent interview where the interviewee should have been, but was not, cautioned. Indeed, the absence of a caution may by itself lead to the exclusion of what follows. But exclusion is not invariable or automatic. I am quite sure that the record of interview which D1 amended and eventually signed on 13 January 2010 accurately reflected what he wanted to say. He had three weeks to think about what he had said and yet was still prepared to make further amendments to this statement on the day he signed the statement.

44. I digress for a moment to contrast the position of the use of the residual discretion with the interview of D5. I do so simply to illustrate how different facts might lead to a different exercise of the discretion in the same case. The interview of D5 had taken place on 13 December 2011. No written statement of what had been said at this interview was prepared until 23 October 2013, more than 22 months from the date of the interview, after which it was served as additional evidence on D5; who by then had already been committed to the High Court for trial. The statement could obviously in those circumstances never have been shown to or signed by D5. The first he would have seen of the statement and the significance the prosecution attached to it was when it surfaced as additional evidence late last year. More importantly, what D5 had apparently said at this interview was never put to him when he was formally interviewed by way of video recorded interview on either 19 or 20 March 2012. That would at least have afforded him the opportunity of saying that he had not said what was alleged or, rather, that he had not said it in the way it was alleged; the latter being Mr Chan’s main complaint.

45. Moreover, the single page of notes kept by Bernard Kam of a one hour interview, from which his witness statement was subsequently made 22 months later, is somewhat rudimentary when compared with the detailed notes of D1’s interview kept by Hazel Law. Mr Choy was able to point to a few omissions from D1’s witness statement, which I have to say I did not consider of any moment, simply because Hazel Law had kept such detailed notes of the interview. Whilst my concerns about the interview of D5 could well have engaged the exercise of my residual discretion on the basis of the reliability of the record of what was said at that interview, I have no such concerns about D1’s interview of 22 December 2009, as recorded in his signed statement of 13 January 2010.

46. Returning to the taking of D1’s written statement, I should deal with the question of the alleged trickery by the investigating officers who it is argued deliberately and flagrantly chose not to caution him when they should have done. The point, which derives from the case of R v Payne [1963] 1 WLR 637 is also relevant to the cautioned statement which I shall deal with shortly.

47. It has been made clear by the Court of Final Appeal in Secretary for Justice v Lam Tat-ming & Another (2000) 3 HKCFAR 168, at 179G-I, that the use of evidence obtained in the circumstances of Payne imperils the principle that no man is to be compelled to incriminate himself; his right of silence should be safeguarded.

48. It has been suggested in argument that Payne is a case of deliberate trickery. With respect, I do not think that it is so or that the defence need go as far as to suggest deliberate trickery in the Machiavellian sense. The police officer who told the appellant Payne that a doctor would examine him to see if he was suffering from any illness or disability, and would not be giving his opinion as to his fitness to drive, no doubt did so in good faith pursuant to a policy in existence at the time. He would have had no idea what would later happen at court when the doctor gave evidence. Nor is there any suggestion that prosecuting counsel at trial acted in bad faith.

49. I see no reference to deliberate trickery in Payne: indeed, the word ‘trickery’ is not mentioned. In my view, if evidence which is properly obtained is misused, so that the defendant is effectively, but unintentionally, misled into saying something he would or might not otherwise have said, that could also engage the exclusionary discretion. Bad faith does not seem to me to be a pre-condition for Payne-type exclusion. One can mislead in good faith.

50. However, for the reasons I have given, I do not accept that there was any trickery involved in the taking of the statement in either sense of the word.

51. I find beyond reasonable doubt that the witness statement of D1 dated 13 January 2010 was a voluntary statement. Furthermore, I decline to exercise my discretion to exclude it.

The admissibility of the statement under caution of 14 November 2011

52. I can dispose of this matter relatively quickly. The argument is that by virtue of the way in which the officer, Ricky Yu, structured the interview with D1, he was effectively tricked into confirming his previous witness statement before the details of the allegations were properly explained to him and before Ricky Yu took issue with certain matters referred to in that statement.

53. I wholly reject this somewhat ingenious argument. Nor do I accept that that was, or might conceivably have been, either the deliberate intention of Ricky Yu or the unwitting effect of what he did in the two senses of trickery I have just discussed. There is no single, established method for conducting a statement under caution, except that the rights of the person under interrogation must be properly explained at the outset and the Rules and Directions issued by the Secretary for Security should be complied with. Here, in the presence of a solicitor, the defendant was cautioned in relation to certain specified offences which the officer said he would detail in due course (Q1). D1 said he understood and made a confirmation to that effect by signing the document. After establishing that D1 understood various other rights (Q5), the officer said he would be asking questions based on the witness statement D1 had earlier given on 13 January 2010 and asked whether D1 needed “to refer to the contents of (the) statement now before continuing with the interview”(Q8). D1 said there was no need to do so (A8).

54. He was then asked whether he could “confirm that all the contents in the said statement are true” (Q9), to which D1 answered “Yes” (A9). Thereafter, he remained silent as he had indeed earlier indicated through his lawyer he would do to any questions (Q and A7), save for one or two formal questions as to whether he understood or wished to remain silent to which he made a response.

55. When the record of interview was complete, D1 spent seven minutes reading the record after which he was asked if, having read the record, he had anything to alter, correct or add (Q28). He was then asked to initial each answer, sign each page and write a concluding caption confirming the accuracy of the record. These later seemingly inconsequential formalities are not perhaps without significance. Had D1 wished to qualify his answer confirming the contents of the witness statement at A9, it was still not too late to do so. Instead, he proceeded to confirm the correctness of A9 by appending his signature to the answer and writing the final caption.

56. The structure of the formal interview under caution of D2 (Exh VDD3) was, as Mr Choy correctly observes, different from D1’s interview. Mr Choy submits that D1 ought to have been interviewed in the same way as D2. On the other hand, as Mr Tse also correctly points out, the way in which D3 was formally interviewed under caution (Exh VDP8) was very similar to the way D1 was interviewed. Yet D3 had made no earlier witness statement. As I have said, there is no single, unswerving format for conducting an interview under caution.

57. I see nothing whatsoever involuntary about D1’s interview under caution of 14 November 2011. Nor do I accept any form of trickery as suggested was used during the interview. I find beyond reasonable doubt that the interview under caution was voluntary. I further see no reason to exercise my discretion to exclude the evidence.

The admissibility of the press material

58. It is argued on behalf of D1 that the press material sought to be introduced by the prosecution should be excluded as hearsay evidence and that, assuming it has some limited relevance, the sheer volume of material is more prejudicial than probative since it could never be known how the jury will treat the hearsay narration by a newspaper reporter of what somebody else has said. He submits that what relevance the evidence might have can be reduced to formal admissions under section 65C of the Criminal Procedure Ordinance, Cap 221 without running the risk of prejudicing either the prosecution or D1’s position. He further argues that those newspaper reports which suggest that D1 was an “extravagant and profligate” person with close ties to SHK are prejudicial and far outweigh their probative value.

59. The fact that Mr Choy is prepared to concede, by way of formal admission, that (i) there were rumours in early March 2005 that D1 one would be appointed Chief Secretary; and (ii) there was speculation around the end of June 2005 that the government would announce D1’s appointment as Chief Secretary on 30 June 2005, suggests to me that he accepts that there is some relevance to this material at least on those bases.

60. Mr Perry submits, however, that the notoriety of certain events reported in the press goes rather further than that. For example, the widespread concern that D1’s links with SHK might call into question his independence and impartiality as Chief Secretary would, he says, have been well known to D1 and other defendants and could explain, at least in part, some of the events that were taking place contemporaneously and subsequently to disguise D1’s links with SHK and the alleged payments to him.

61. I accept Mr Choy’s submission that the contents of the press reports are hearsay if the purpose of introducing them is to rely on the truth of what they assert. However, that is not and could not sensibly be the purpose of the prosecution. Nor in my judgment is there any danger that the jury will see it as such. The jury will be given explicit instructions as to the relevance of this evidence and how they may use it and how they must not use it. I do not accept that a jury properly directed runs any risk of misusing such evidence, which is otherwise relevant and admissible for the purpose for which it is tendered.

62. Finally, I do not accept there is any danger that what Mr Choy suggests is unflattering material renders the press material more prejudicial than probative. With respect, I do not even accept that Mr Choy’s description of “extravagant and profligate” is a fair characterisation of the material in question. Even if it were, jurors in Hong Kong look beyond these things and do not try cases on press tittle tattle.

63. The evidence of the press material is plainly relevant and admissible, but will be subject to explicit judicial direction in due course as to the use to which the material may be put and how it must not be used.

The application to exclude D1’s tax records

64. It is submitted by Mr Choy that the evidence of D1’s tax records and employer’s return is irrelevant and should be excluded as being more prejudicial than probative. The basis of the application is that the evidence does not directly or indirectly point to any offence with which D1 is charged. Therefore, it is said, that the jury might find him guilty of that with which he is charged because he has not paid his taxes.

65. The argument is totally devoid of substance and wholly unrealistic. Wisely, Mr Choy did not advance oral argument on the matter beyond adopting his written argument.

66. The fact that D1 did not report certain payments goes to the heart of the issue which the jury will have to ask itself on the central counts on the Indictment so far as D1 is concerned. Were the payments corrupt payments or might they have been legitimate? The prosecution will be inviting the jury to consider whether the fact that they were not anywhere recorded in the defendant’s tax records helps to show that they were not legitimate payments.

67. The prosecution are plainly entitled to do so and I am surprised this submission was advanced. The evidence is clearly relevant, probative and admissible and I decline to exclude it.

The application to exclude the handwritten note (Exh VDP29) and the Part A/Part B documents (Exh VDP30)

68. Since I am not required to give a ruling on the first of Mr Chan’s two applications, I turn finally to D5’s application to exclude the evidence of Exh’s VDP29 and VDP30 on the basis that they are protected by legal professional privilege (“LPP”). It is submitted that since the documents in question were brought into being for the purpose of obtaining legal advice, they are protected by LPP and the prosecution is thereby unable to make any use of them at this trial.

69. I have been taken in the course of very comprehensive submissions from both parties to a substantial body of case law on the issue of waiver of LPP and the law which it is said should apply in Hong Kong. Much as I would enjoy the intellectual challenge of analysing the authorities on this subject, there is a primary issue I must resolve first; namely, whether as a matter of fact these two documents were or might have been prepared for the purpose of obtaining legal advice. Only if I find that they were or might have been so prepared does the issue of waiver arise.

70. In examining the factual issue, I should set out certain facts by way of background:

(i)   on 19 March 2012, the documents in question were seized from D5’s home in the presence of D5’s solicitor;
(ii)   on 20 March 2012, during an interview with the ICAC in the presence of his solicitor (Exh VDP16), the two documents were specifically produced and questions asked as to their meaning and contents;
(iii)   on 26 March 2012, D5 was served by ICAC with a copy of the documents seized on 19 March 2012;
(iv)   by 28 February 2013, Exh VDP29 was served by the prosecution on all defendants and the Court as committal evidence (with its certified translation being served on D5’s solicitor on 15 August 2013);
(v)   on 18 March 2013, Exh VDP30 was disclosed in a seizure list served on all parties by the prosecution (thereby becoming available for inspection);
(vi)   on 31 October 2013, the prosecution referred specifically to Exh VDP29 in its written case summary, at paragraph 284;
(vii) on 9 January 2014, Exh VDP30 was served by the prosecution on all parties and the Court as additional evidence;
(viii) on 21 January 2014, Exh VDP30 was referred to in open court by prosecuting counsel during submissions;
(ix)   on 13 February 2014, Exh VDP30 was specifically referred to in a pre-trial ruling by the Court;
(x)   on 11 April 2014, the Court was notified for the first time by letter from D5’s solicitors (copied to all parties) that D5 would be objecting to the production and/or use of the two documents in question on the basis that they were covered by LPP.

71. It will be seen from this chronology that the claim that the documents in question were covered by LPP took more than two years to make, notwithstanding that D5 has been represented since his arrest and notwithstanding that his legal representatives have known about the seizure of these documents since 19 March 2012. Remarkably, the documents were specifically examined during the ICAC interview of 20 March 2012 conducted in the presence of D5’s solicitor. In particular, at Entries 114 and 116, the officer conducting the interview referred to one part of Exh VDP29 dealing with what was recorded on the document as “legal advice”. Yet neither then, nor until 11 April 2014, has there been any suggestion from either D5’s solicitor or counsel that the document is covered by LPP.

72. Similarly, between Entries 100 – 112, D5 was specifically asked, again in the presence of his solicitor, about the entries on Exh VDP30. Again there was no demur or issue raised by any lawyer until 11 April 2014, notwithstanding the significance that has been attached to this document by the prosecution in open court and by myself in my judgment of 13 February 2014.

73. I readily accept that a lay client may not himself see the significance or importance of LPP, but I cannot accept that a solicitor would have sat through an interview, in which a document with the words “legal advice” was specifically used to confront his client, without raising the matter with his client at the time in interview or immediately thereafter. Even if that solicitor was succeeded by another, no legal practitioner coming into the papers in this case could conceivably have allowed a matter which is so obvious to be ignored for so long, if indeed there were the slightest hint that the documents might be covered by LPP.

74. Nor can I accept, if Exh VDP30 was shown by D5 to his solicitor at the Dynasty Club coffee shop meeting on 17 March 2012 for the purpose of legal advice, that the solicitor, who did not give evidence, would not have gone on high alert when that same document was produced by an ICAC officer at the interview with D5 three days later, on 20 March 2012. Yet nothing was ever said or done about it by any solicitor until 11 April 2014.

75. It is true that errors do get made and I would be anxious not to hold such a mistake as not claiming LPP against the interests of a defendant, if I thought there was a possibility that a genuine mistake or misunderstanding might have occurred. However, solicitors in Hong Kong are highly sensitive and rightly so to one of the very foundations of legal practice in this territory, namely the privilege that attaches to their dealings with their clients. I cannot conceive in this particular case that any solicitor could have overlooked this matter for two years during which time the documents have been disclosed, commented upon in open court and incorporated (at least so far as one of them is concerned) in a legal judgment, if in truth there was the slightest possibility of the documents being covered by LPP.

76. I regret to say that I must unequivocally reject D5’s evidence that these two documents were prepared or used for the purpose of legal advice. The chronology to which I have referred is rather devastating evidence that the documents never were what it is now belatedly asserted they are.

77. Accordingly, I find as a fact beyond reasonable doubt that the documents in question are not covered by LPP and can be adduced and referred to at this trial.

78. The rather interesting issues of waiver and partial waiver, therefore, simply do not arise and it is otiose for me to say how I would decide them.

Reporting restriction

79. The content of this judgment including my ruling may not be reported until the conclusion of the trial or further Order.

	(Andrew Macrae)
	Justice of Appeal

Mr David Perry QC, Mr Joseph Tse SC, Mr Louis Mably, Ms Maggie Wong, Counsel on fiat, Ms Winnie Ho SADPP & Ms Betty Fu SPP, Mr Carter Chim PP, for the Director of Public Prosecutions

Mr Edwin Choy, instructed by Tang, Lai & Leung, for the 1^st defendant

Ms Clare Montgomery QC, Mr Lawrence Lok SC and Mr Benson Tsoi, instructed by Boase, Cohen & Collins, for the 2^nd defendant

Mr John Kelsey-Fry QC, Mr Gerard McCoy SC and Mr Steven Kwan, instructed by Sit, Fung, Kwong & Shum, for the 3^rd defendant

Mr Ian Winter QC, Mr Daniel Marash SC, Mr Bernard Chung and Mr Adrian Wong, instructed by Tsang, Chan & Wong, for the 4^th defendant

Mr Charles J Chan and Mr Billy Kwan, instructed by Chan & Tsu, for the 5^th defendant

Subject to reporting restrictions as per paragraph 19 of the judgment

HCCC 98 /2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CRIMINAL CASE NO. 98 OF 2013

________________________

BETWEEN

	HKSAR	Respondent
	and
	HUI Rafael Junior, also known as HUI Si-yan Rafael	1^st Defendant
	KWOK Ping-kwong Thomas	2^nd Defendant
	KWOK Ping-luen Raymond	3^rd Defendant
	CHAN Kui-yuen, also known as Thomas CHAN	4^th Defendant
	KWAN Francis Hung-sang, also known as Francis KWAN	5^th Defendant

________________________

Before:

Hon Macrae JA (sitting as an additional Judge of the Court of First Instance) in Court

Date of Hearing: 22 May 2014

Date of Ruling and Reasons for Ruling: 23 May 2014

________________________

R U L I N G

________________________

1. I am asked to rule in principle on the question of whether certain chronologies and flowcharts should be given to the jury before the contents of the documents are established by admissible evidence. Although the objection to this course by the prosecution is shared by all defendants, the argument has been presented primarily by Mr Lok SC on behalf of D2.

2. For the prosecution, Mr Perry QC argues that in a case such as this, it is necessary for the efficient presentation and comprehension of the case, and the evidence to be called in support of it, that the jury be assisted by the material in question at the earliest opportunity, namely during his opening address. He submits that the material will be of real benefit to all parties concerned (which, apart from the jury, would include the advocates and myself as judge). He suggests that if one asks the fundamental question ‘Do these documents on their face make this case easier to understand and present to the jury?’, the answer is ‘Of course they do, and it is essential that they be used’. He readily acknowledges that if any of the entries, each of which can be proved by admissible evidence, is ultimately found to be wrong, the document can be amended or modified. Finally, he suggests that it is unrealistic to think that a Hong Kong jury would misunderstand their duty and decide the case on the basis of a prosecution chart rather than on the actual evidence.

3. Mr Lok, on behalf of the defence, does not take issue with the notion of chronologies or flowcharts being provided to juries in complex cases per se: the question is when that should be done.

4. It is argued that it would cause substantial prejudice to the defence if the prosecution were permitted to provide the jury with such material because the jury would be unable to check any of the contents of the material when the evidence has not yet been heard and/or tested. The placing of it prematurely in their hands, particularly in a lengthy case when the defence case will not be reached for several weeks or months, will give the prosecution an unfair advantage and risk contaminating the jury’s mind with (at that stage) unproven, untested and inadmissible evidence. Furthermore, should any aspect of the material prove to be unfounded or incorrect, it will be very difficult for the jury to put those aspects out of their mind. Mr Winter QC made a similar submission arguing that the way the material had been prepared and selected was designed to give the prosecution a perceived forensic advantage in advance of the defence.

5. Mr Lok further submits that there is no duty on the prosecution to produce such material where such a course would engender the type of unfairness and prejudice I have just described. In respect of the authorities cited by the prosecution, Mr Lok suggests that none of them support the notion of giving the jury copious, untested material in advance of its contents being properly established by admissible evidence.

6. It is clear from such authorities as there are on the use of such material as chronologies and fund flow charts that the matter is ultimately one of judicial discretion. In R v Sharon Lilley [2003] EWCA Crim 1789, prosecuting counsel produced what was described (at para 12) as “an abstract chronology which would highlight the important and significant events and personalities in a way which would be helpful to the jury”. In respect of a ground of appeal concerning the use of such a schedule, the Court held as follows, at para 20:

“We turn to the ground of appeal relating to the use of the schedule provided by the prosecution. We have no hesitation in rejecting the argument that the judge in any way wrongly exercised what is undoubtedly a discretion in the circumstances of such cases, which is to determine the extent to which it may be sensible to permit the jury to be provided with some help by way of a tool, aide memoir, whatever one would like to call it, with which to grapple with and deal with some of the arguments in relation to matters of detail, such as those which undoubtedly arose in the course of the cross-examination by appellant’s counsel in the course of this case. There is nothing in the submissions that we have heard which convinces us that the particular way in which the schedule was drawn or the fact that it undoubtedly contained some matters of contention should in any way suggest to us that the judge should for any particular reason relating to the content of the schedule have prevented the prosecution from using it.”

7. It is true that the schedule in Sharon Lilley was not placed before the jury by the prosecution in its opening nor prior to the contested evidence being heard. But nor was it put forward in “an uncontroversial form or in a way which provided for the appellant’s case to be identified as well as the prosecution case” (para 12). To that extent, the circumstances in Sharon Lilley were similar to those in R v Vaughn Bennet, New Zealand Court of Appeal Case No. CA 457/2003 (Unreported), to which Mr Lok drew my attention. Of the timeline schedule produced by the prosecution in Vaughn Bennet, the Court held, at para 55:

“We see no unfairness in the provision of the timeline by the Crown to the jury. While the detailed defence evidence which had supported its case was not included in the timeline, it was clearly noted in the timeline where there was a dispute over the evidence. The jury had the ability to check all of the matters in the timeline against the evidential transcript and there would have been nothing to stop the defence putting in its own chronology if it had considered that this would have assisted the case.”

8. I was not, however, referred to an earlier New Zealand Court of Appeal decision dealing more relevantly and specifically with the provision of flowcharts to the jury during the prosecution opening. In R v R, New Zealand Court of Appeal Case No’s 181 and 182/1999 (Unreported), the Court, which included one member who later formed part of the Court in Vaughn Bennet, held, at para’s 9-11:

“The second ground is even less tenable. It is that the Judge allowed the prosecution when opening the case to place a flowchart before the jury. This was a fairly simple document which amounted to no more than a chronology of some events which are not in dispute, such as the birth dates of the complainants, and of the dates of the alleged offending. In each case the annotation referring to an offence made it clear that this was simply an allegation, and there was a cross-reference to the count in the indictment. The Judge gave the jury an entirely appropriate instruction on the use of a flowchart when he summed up and we understand that he had given a similar instruction when the chart was put before the jury at the commencement of the trial. He clearly told the jury that it was not proof of the entries shown in it and that proof must come from the evidence. He asked them to consider whether the entries on the flowchart were accurate and told them that they were free to use it as they wished “so long as you are satisfied that the information on the schedule has been proven or confirmed by the actual evidence, or that it is simply regarded by you … as a tool to assist you without itself of course being taken to prove anything.”
Mr Weir [counsel for the appellant] accepted the appropriateness of this direction but argued that a jury should not be supplied with a flowchart, and certainly not at the beginning of the case, unless the trial will be lengthy or of great complexity. However, we see nothing untoward in the practice adopted in this case. Indeed, it is to be commended. The flowchart will have been helpful to the jury as a chronological context for expected evidence. Furthermore, as Mr Weir accepted, there could have been no objection if prosecuting counsel had orally taken the jury through a chronology, suggesting to them that they should take notes of relevant events and indicating which matters remained in dispute and which would have to be the subject of proof. The flowchart did no more than that. Importantly, of course, it was not put before the witnesses and so did not act as a prompt for them, which would have been quite wrong.
This second ground also fails.”

9. I cite this case for no other reason than because it deals directly with the issue of the propriety of producing and referring to flowcharts by a prosecutor during his opening address. Of course every case will be different. Some cases, usually simple straightforward cases, will not justify the production of any such material at all at any stage of proceedings: others will warrant schedules in varying degrees of detail and complexity, commensurate with the case and the issues with which they deal. And as to flowcharts dealing with the movement of money, how much detail they contain will obviously depend on the length, complexity and intricacy of the evidence concerned. I note that the facts in R were relatively straightforward and that the trial lasted 7 days from beginning to end. It did not involve the convoluted channelling of funds through various accounts in a trial expected to last more than 70 days.

10. In respect of the Hong Kong authority of HKSAR v Sin Wing Yi [2008] 3 HKLRD 352, it was submitted by Mr Lok that it is not authority for schedules or chronologies being provided before the contents are established by admissible evidence. I am not sure, with respect, that that is a correct assessment of this judgment. The district judge was apparently dismayed by what he discovered of the state of the evidence at what was effectively a pre-trial review before the trial had got under way. His frustration was then said to be “further heightened when having perused the prosecution’s written opening (he) asked the prosecutor to explain the relevance of various witnesses to that which the prosecution was trying to establish and, at least in (his) view, the prosecutor was unable sufficiently to do so” (para 14).

11. It might be observed that a district court judge is in a similar position to a jury in a criminal trial to the extent that he will not have had (as a judge of the High Court would have had) the benefit of reading the witness statements and evidence in a particular case prior to trial. All he will generally have to go on is the Charge Sheet, the prosecution’s written Summary of Facts (supplemented as it often is by a written opening), a list of witnesses and any record of pre-trial review proceedings.

12. The Court in Sin Wing Yi had this to say of that particular judge’s actions, at para’s 42-43:

“It is a judge’s positive duty to manage trials. His function is to adjudicate cases and that means adjudication upon evidence properly and efficiently presented. If that requires a vigorous management, then he must manage vigorously. And if counsel, whether for the prosecution or the defence, are not presenting their respective cases in an intelligible and economical manner, the judge must ensure that they do so. Firm skilled management by the court is not inconsistent with the interests of a defendant for no one is hereby advocating the exclusion of relevant evidence, or the inclusion against him of inadmissible evidence, or the use of a biased procedure. Not only did the Judge in the present case not err in his approach or intervene inappropriately, he performed the judicial task in a complex commercial crime case in precisely the way it should be performed.
The Judge by his urgings eventually succeeded in having the prosecutor provide various schedules of exhibits and what amounted to core bundles of exhibits. The trial then in fact took 11 days as compared with the prosecution’s estimate of 40 days given at its commencement. That is a reflection of the effect the provision of materials such as schedules, flowcharts and other such summaries of evidence have in the presentation of commercial crime or other complex criminal cases. The days of such cases being prosecuted by the step-by-step production of documents are long gone. It is a fundamental necessity for the prosecutor of such cases to have prepared well in advance materials such as schedules, bundles and affirmations and draft or signed factual admissions which allow inter alia the formal production of the exhibits the subject of those schedules. The commencement of such a trial without that being done would in most cases be wholly unacceptable whether before a single judge or a jury.”

13. It seems to me that the Court was indeed urging the provision of materials such as chronologies and flow charts, amongst other types of schedules and summaries, prior to the commencement of evidence, so that a complex case can be properly and efficiently presented; whether it be to a district judge or a jury, neither of whom will know what the case is about.

14. But even if I am wrong in interpreting this authority as permitting, indeed requiring in appropriate cases, such schedules to be presented by the prosecution in opening a complex case to a single judge or jury, and if the New Zealand authority of R on this point is ignored and laid to one side, it is clear that it is my duty to see that the prosecution (as well as the defence) present their case in an intelligible and economical manner. How I achieve that objective is within my discretion.

15. Unlike a district judge or a jury, I have had the advantage of reading all of the papers in the case before me and of hearing no less than 10 substantive applications relating to the Indictment, the evidence and the imminent trial. The evidence in this case will certainly be lengthy and it will at times be complex. I would not necessarily describe this case as one of undue complexity on its essential facts but it is undoubtedly a case, so far as the prosecution allegation is concerned, of considerable intricacy and subtlety; not merely because of the extremely convoluted mechanism and timing by which funds were allegedly channelled through various accounts, some of them outside this jurisdiction, but also because of the relationship of numerous and seemingly disparate events.

16. In my judgment, the prosecution could not conceivably do justice to their allegations in explaining to a jury what this particular case is about (and the interests of justice are not all one way) without the sort of chronological schedules and flowcharts with which I am presently concerned. Whether the jury accept the prosecution allegations will be a matter for them in due course having heard and relied upon the evidence which will be produced through witnesses or agreed in some way. I am not prepared to have them grasping and groping for what this intricate case is about in a contextual vacuum without the assistance that these schedules and flowcharts will afford. That such material will assist the jury in understanding the prosecution allegation, is in my view, undeniable and obvious.

17. However, I wish to make clear that Mr Perry must explain to the jury in opening his case the limited use to which this material may be put and I shall reinforce that warning before any evidence is called. The matter will be revisited with appropriate directions during my summing-up and at any other time I deem it necessary during the currency of the evidence.

18. Accordingly, I can see no objection in principle to detailed chronologies and flow charts being produced or referred to by the prosecution in opening their case to the jury or thereafter during the currency of the proceedings.

Reporting restriction

19. The content of this judgment including my ruling may not be reported until the conclusion of the trial or further Order.

	(Andrew Macrae)
	Justice of Appeal

Mr David Perry QC, Mr Joseph Tse SC, Mr Louis Mably, Ms Maggie Wong, Counsel on fiat, Ms Winnie Ho SADPP & Ms Betty Fu SPP, Mr Carter Chim PP, for the Director of Public Prosecutions

Mr Edwin Choy, instructed by Tang, Lai & Leung, for the 1^st defendant

Ms Clare Montgomery QC, Mr Lawrence Lok SC and Mr Benson Tsoi, instructed by Boase, Cohen & Collins, for the 2^nd defendant

Mr John Kelsey-Fry QC, Mr Gerard McCoy SC and Mr Steven Kwan, instructed by Sit, Fung, Kwong & Shum, for the 3^rd defendant

Mr Ian Winter QC, Mr Daniel Marash SC, Mr Bernard Chung and Mr Adrian Wong, instructed by Tsang, Chan & Wong, for the 4^th defendant

Mr Charles J Chan and Mr Billy Kwan, instructed by Chan & Tsu, for the 5^th defendant

Subject to reporting restrictions as per paragraph 46 of the judgment

HCCC 98/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CRIMINAL CASE NO. 98 OF 2013

________________________

BETWEEN

	HKSAR	Respondent
	and
	HUI Rafael Junior, also known as HUI Si-yan Rafael	1^st Defendant
	KWOK Ping-kwong Thomas	2^nd Defendant
	KWOK Ping-luen Raymond	3^rd Defendant
	CHAN Kui-yuen, also known as Thomas CHAN	4^th Defendant
	KWAN Francis Hung-sang, also known as Francis KWAN	5^th Defendant

________________________

Before:

Hon Macrae JA (sitting as an additional Judge of the Court of First Instance) in Court

Dates of Hearing: 25 & 26 March 2014

Date of Ruling: 7 April 2014

________________________

R U L I N G

________________________

1. Application is made on behalf of D2, D3, D4 and D5 that Counts 1, 6 and 8 be severed from the indictment and tried separately from the remaining counts. The prosecution oppose the application. D1 remains neutral.

2. Counts 1, 6 and 8 have these features in common. Each count is laid solely against D1 and alleges his misconduct in public office by failing to disclose certain matters, contrary to common law and section 101I(1) of the Criminal Procedure Ordinance, Cap 221 (the Ordinance); at a time when he was Managing Director of the Mandatory Provident Fund Schemes Authority (MPFA) (Count 1), Chief Secretary for Administration of the Government of the Hong Kong Special Administrative Region (the Government) (Count 6) and a Non-Official Member of the Executive Council of the Government (Count 8).

A summary of the parties’ positions

3. It is argued on behalf of D2, D3, D4 and D5 that, even if the evidence in relation to non-disclosure by D1 may have some marginal relevance to certain other counts on the indictment by way of contextual background evidence, there is a danger that the jury might use it (or misuse it) as relevant, admissible evidence against the defendants on the other more serious counts. This will oblige the defendants to deal with evidence that is both marginal and unnecessary, and that will inevitably occasion prejudice which this court cannot by direction realistically dispel. Furthermore, such evidence, and the measures necessary to deal with it, will unnecessarily complicate the issues for the jury and lengthen an already difficult case, which will also prejudice the interests of a fair trial. Therefore, it is incumbent on me to step in and ensure that the case placed before the jury is fairly presented in terms of relevant, discernible issues, is manageable in terms of its length and complexity and is rendered amenable to a proper understanding by the jury of the issues and the legal directions applicable to them. To achieve these objectives, I should sever the identified counts from the indictment.

4. Although I have summarised the essential arguments advanced before me by the defence, it is fair to point out that the approach taken by Mr Kelsey-Fry QC on behalf of D3 (supported by Mr Winter QC for D4) is slightly different from that argued by Ms Montgomery QC on behalf of D2 and Mr Chan on behalf of D5.

5. Mr Perry QC, on behalf of the prosecution, in essence contends that not only is there a factual nexus between the allegations made in Counts 1, 6 and 8 on the one hand and the remaining counts in the indictment on the other, but the evidence on the non-disclosure counts is clearly relevant and admissible as providing the background context, without which an appreciation of those other counts would be incoherent and incomplete. He submits that the evidence on Counts 1, 6, and 8 goes to explain why D2, D3, D4 and D5 made the payments, or were involved in the payments, to D1. Further, that the evidence on the non-disclosure counts goes to explain the relationship and its history between D1 and, in particular, D2 and D3, and the context in which the payments were made.

6. The prosecution do not accept that the length and complexity of this trial will be unduly aggravated by evidence to be called on Counts 1, 6 and 8, so as to warrant severance, or that their inclusion in the indictment presents any particular prejudice by way of forensic or logistical difficulties for the defence, beyond those invariably encountered in complex trials involving a number of defendants charged with multiple counts, which cannot be effectively dealt with by judicial instruction.

7. Before addressing these competing arguments, which I shall address in more detail later, I should identify the applicable legal principles relevant to this application. Those principles are not in dispute.

The relevant law

8. Section 23(3) of the Ordinance, which mirrors in exact terms section 5(3) of the Indictments Act, 1915 in England, is as follows:

“Where, before trial, or at any stage of a trial, the court is of opinion that a person accused may be prejudiced or embarrassed in his defence by reason of being charged with more than one offence in the same indictment, or that for any other reason it is desirable to direct that the person should be tried separately for any one or more offences charged in an indictment, the court may order a separate trial of any count or counts of such indictment.”

9. Of this section in the English Act, Lord Pearson, giving the judgment of the House of Lords in Ludlow v Metropolitan Police Commissioner [1971] AC 29, said at 41F:

“The judge has no duty to direct separate trials under section 5(3) unless in his opinion there is some special feature of the case which would make a joint trial of the several counts prejudicial or embarrassing to the accused and separate trials are required in the interests of justice. In some cases the offences charged may be too numerous and complicated…, or too difficult to disentangle…, so that a joint trial of all the counts is likely to cause confusion and the defence may be embarrassed or prejudiced. In other cases objection may be taken to the inclusion of a count on the ground that it is of a scandalous nature and likely to arouse in the minds of the jury hostile feelings against the accused…”

10. It is clear, therefore, that severance of an indictment is a matter of discretion for the presiding judge in applying the above principles to the facts and circumstances of the particular case before him. Of this discretion, it was said by Lord Lane CJ in R v Cannon (1991) 92 Cr App R 16, at 23:

“…the fact remains that the Indictments Act 1915 gives the judge a discretion, and it is a well-known fact, and a well-known principle, as Salmon LJ in his usual clear language sets out in the case of Flack[1969] 1 WLR 937, that that is not a matter with which this Court will interfere, unless it is shown that the judge has failed to exercise his discretion upon the usual and proper principles, namely, taking into account all things he should, and not taking into account anything which he should not.” (Emphasis added)

11. In R v Christou [1997] AC 117, at 129 D-F, Lord Taylor of Gosforth, giving the principal judgment of the House of Lords, sought to address some of the factors which would be engaged by the words emphasised in Cannon(supra):

“They will vary from case to case, but the essential criterion is the achievement of a fair resolution of the issues. That requires fairness to the accused but also to the prosecution of those involved in it. Some, but by no means an exhaustive list, of the factors which may need to be considered are: -- how discrete or inter-related are the facts giving rise to the counts; the impact of ordering two or more trials on the defendant and his family, on the victims and their families, on press publicity; and importantly, whether directions the judge can give to the jury will suffice to secure a fair trial if the counts are tried together. In regard to that last factor, jury trials are conducted on the basis that the judge’s directions of law are to be applied faithfully.”

12. It is clear from the authorities placed before me that in some cases where the evidence on one charge in an indictment is inadmissible on another, it would be asking too much of a jury to disregard the inadmissible evidence, and the prejudice arising would be too great for any judicial direction to overcome: R v Sims [1946] 1 KB 531. However, there are also cases where the evidence may be legally admissible as between different charges but, by virtue of the nature of the particular charges joined in an indictment, its probative value is outweighed by its prejudicial effect so that the only proper way of avoiding such prejudice is to order separate trials: see R v Fitzpatrick [1963] 1 WLR 7.

13. Where the case is lengthy and complex, the difficulties for the jury in giving effect to judicial directions, particularly, perhaps, in those cases where the jury must distinguish between evidence which is admissible on one particular charge but inadmissible on another, are potentially rendered even greater. It has been said in R v Novac and Others (1977) 65 Cr App R 107, a trial involving an indictment containing 19 counts, which had lasted 47 working days, at 118:

“A trial of such dimensions puts an immense burden on both judge and jury. In the course of a four or five day summing-up the most careful and conscientious judge may so easily overlook some essential matter. Even if the summing-up is faultless, it is by no means cynical to doubt whether the average juror can be expected to take it all in and apply all the directions given. Some criminal prosecutions involve consideration of matters so plainly inextricable and indivisible that a long and complex trial is an ineluctable necessity. But we are convinced that nothing short of the criterion of absolute necessity can justify the imposition of the burdens of a very long trial on the court.”

14. The Court went on to observe that it would be “quite wrong” for the prosecution to join different defendants and counts in a single indictment “simply because some nexus may be discoverable between them”, and then leave it to the court to resolve the question of severance.

15. The principles and strictures to be derived from these cases, and others to which I have been referred, are that there is imposed upon the prosecution, and ultimately the court, a duty to ensure, particularly in lengthy or complex cases, that a trial is manageable and that an indictment is not overloaded. Even where there is a clear nexus between the allegations, the court must ensure that the defendant’s interests will not be prejudiced or embarrassed by the length and complexity of the resulting trial, or for any other reason; and that the jury will properly and fairly be able to discharge their duty in applying the directions of law they receive to the evidence they hear.

16. With these considerations in mind, I turn to the particular case before me.

Count 8

17. I propose to deal with Count 8 first, since its relationship to Count 7 is obvious and clear-cut. A simple examination of the particulars of Counts 7 and 8 (stripping the elements down to their essentials for present purposes) quickly reveals that D1 is charged with wilfully misconducting himself in public office by failing to declare or disclose to, or by concealing from, the Government his receipt of HK$11.182 million through a series of payments (Count 8), which payments D2, D3, D4 and D5 had conspired to offer him as a corrupt advantage (Count 7).

18. The nexus between the two counts is plain from their particulars alone. Moreover, symptomatic of each allegation is the secrecy attached to the making and receipt of the payments. A convoluted structure was allegedly devised to disguise and channel the payments (and later reimbursements), the receipt of which D1 did not disclose to the Government. On the prosecution case, he did not (and could not) make such a disclosure because the payment was a corrupt one. Such clandestine secrecy on his part is thereby both relevant and admissible in relation to all defendants on Count 7 and highly probative, in particular, of the case against D1 on that count.

19. Furthermore, since the fact that D1’s alleged failure to disclose is both relevant and admissible on Count 7, and given the close nexus between the facts of Count 8 and the facts and circumstances of Count 7, I cannot see that even if there were severance, the prosecution could be prevented from leading the evidence in relation to Count 8. In such circumstances, I can see little or no benefit in the length and complexity argument so far as the inclusion of Count 8 is concerned.

20. I am mindful of Ms Montgomery’s argument that, if the jury were to conclude that the relevant payments in Count 7 emanated from D2, she may be handicapped as to whether, and if so how, she deals with the prejudicial effect of D1’s non-disclosure on Count 8. However, in my judgment, the purported prejudice for which she contends does not override the clear probative value of the evidence in relation to D1 and the other defendants on Count 7. Moreover, such concerns can in my view be met by appropriate judicial directions.

21. Nevertheless, there could still be merit in Mr Kelsey-Fry’s submission that, if I were persuaded to sever Counts 1 and 6 from the indictment, Count 8 might likewise be severed in the interests of simplifying the indictment in an otherwise complex case. Mr Chan, on behalf of D5, makes a similar point on the basis that the jury should not be unnecessarily troubled by a charge (or charges) which in the normal course would be dealt with by a single judge sitting alone.

22. Accordingly, I turn to consider the application in relation to Counts 1 and 6.

Counts 1 and 6

23. It appears to be accepted on behalf of the defendants that there is a nexus between the facts and circumstances giving rise to Counts 1 and 6 and the facts and circumstances relevant to Counts 2, 3, 5 and 7; albeit not in the obvious way in which Counts 7 and 8 are connected. It also seems to be accepted that the evidence on Counts 1 and 6 may be relevant and admissible, if only marginally, as contextual background evidence. However, it is submitted that the evidence on Counts 1 and 6, even if arguably admissible on that limited basis, is not logically probative of the other counts. Therefore, the admission of such evidence would be more prejudicial than probative, a problem which can be avoided by severance.

24. Ms Montgomery and Mr Chan further submit that it would be prejudicial to expect the defence to have to deal with the fact and reasons for D1’s non-disclosure when the evidence on Counts 1 and 6 is at best marginally admissible in relation to Counts 2, 3, 5 and 7, and when any prejudice could readily be met by severing Counts 1 and 6 and the parties agreeing suitable admissions covering the fact of the negotiation of the consultancy agreement; the provision of the two Leighton Hill units without a formal lease being in place and without rent being paid; and the fact of the making of the three loans. This would have the added advantage of reducing the volume of evidence and lessening the burden on the jury (and the Court) in identifying that evidence which is relevant and admissible in respect of the non-disclosure counts but not admissible in proof of the other counts.

25. Mr Kelsey-Fry (with whose submissions Mr Winter agrees) similarly argues that the evidence in relation to Counts 1 and 6, even assuming it is legally admissible in the limited way I have described, proves nothing that cannot be incorporated in suitably worded formal admissions, which would thereby prevent the jury from regarding the failure of D1 to disclose advantages which are not alleged to be corrupt as somehow questionable and thereby probative of the other counts. It is this error of thinking into which he suggests the prosecution and this Court (by its judgment of 13 February 2014) have already fallen, and which no judicial direction can effectively prevent the jury from likewise falling into the same ‘trap’. Severing the three counts would also obviate the difficulty of the other defendants having to deal with D1’s non-disclosure.

26. Mr Perry for the prosecution does not accept that the evidence going to proof of Counts 1 and 6 is of mere marginal relevance to the other counts. He submits that such evidence is important background evidence, which has a direct bearing on the relationships and dealings between D1 and the other defendants, in particular D2 and D3, and helps to answer the critical question of why the defendants concerned should have made the payments they did to D1. In simple terms, the prosecution contends that if a substantial payment is made by one person to another, the jury will need to understand the background to the transaction and the relationship between the parties to determine why it was made. By way of an example, which was much traversed in the earlier application for discharge on Count 3, the jury will have to ask themselves whether the HK$4.125 million payment to D1 in Count 3 was a corrupt payment for future services, as alleged by the prosecution, or could it have been a bonus for past services, as contended by D3? The jury can only sensibly answer that question by looking at the context and background to the payment, the nature of the relationship between the parties and any other relevant dealings which shed light on that relationship.

27. Furthermore, the fact that D1 did not make disclosure of the matters particularised in Counts 1 and 6 (and 8) is relevant and admissible evidence which goes to D1’s state of mind qua conspirator in Counts 2, 3, 5 and 7, which is an issue in the case.

28. So far as the length and complexity of the trial and the difficulties for the jury associated with such a trial are concerned, Mr Perry does not accept that the inclusion of Counts 1 and 6 (and 8) renders the trial unfair or unmanageable or will result in a trial of such length and complexity as to provide a legitimate basis for severance. Nor does he consider, assuming the evidence he seeks to introduce is relevant and admissible, that the interests of justice warrant restrictions by way of limited admissions, which may be suitable to the defence, being imposed upon the prosecution.

29. In my judgment, as a starting point, there is a clear and sufficient nexus between the facts giving rise to Counts 1 and 6 (and 8) and the facts and circumstances relevant to Counts 2, 3, 5 and 7 to warrant their joinder in the same indictment.

30. Count 1 alleges, among other things, that D1 failed to disclose his acceptance of two unsecured loans of HK$0.9 million and HK$1.5 million from Honour Finance Company Limited, a wholly-owned subsidiary of Sun Hung Kai Properties Limited (SHKP) concerned mainly with providing mortgage loans to purchasers of properties from SHKP. Count 6 alleges that D1 failed to disclose the provision to him, and annual extensions, of a third unsecured loan of HK$3 million, also from Honour Finance Company Limited.

31. Although the loans referred to in Count 1 were accepted when D1 was a public official (as Managing Director of the MPFA), whereas the extensions of the loan referred to in Count 6 were granted when he was a different public official (as Chief Secretary to the Government), the original loan having been advanced on 31 May 2004 at a time when he was not a public official, all three of them were granted by Honour Finance Company Limited and all were approved by D3; with the approval of the HK$3 million loan being copied to D2.

32. The character and nature of Counts 1 and 6 are clearly connected as between themselves so far as the subject-matter of the loans and the failure to disclose them are concerned. However, the advancing of the loans and the extensions of the third loan are also relevant to show the relationship and dealings between D1 on the one hand and D2 and D3 on the other, at the time when D1 was a public official. The jury would surely be entitled to know when assessing allegations of conspiracy to provide a public official with substantial corrupt payments by the senior directors/executives of a publicly listed company, what the relationship between the parties was and what the nature of any other dealings between them was at the time the recipient was a public official. Such evidence may help them determine the true complexion of the payments which are alleged to be corrupt. For example, and as a matter of common sense, loans, especially substantial, unsecured or unpaid loans (even perfectly proper ones), create indebtedness and a sense of obligation between the grantee and the grantor. Whether that has any bearing on the purpose and complexion of the other alleged payments may be a matter for the jury to consider. It would give a somewhat distorted picture if the jury were to know nothing about such loans when assessing the alleged corrupt payments and the context in which they were made.

33. I appreciate that the background and relationship between the parties does not answer the specific defence concern about the jury knowing of D1’s non-disclosure of the loans and extensions. I am merely making the general point, by way of an obvious example, that juries cannot look at the payments alleged by Counts 2, 3, 5 and 7 in a vacuum without knowing something of the background relationship and dealings between the parties.

34. In relation to the allegation in Count 1 of D1’s non-disclosure of his acceptance of the provision and rent-free use of units 20A and 20B, Tower 6 at the Leighton Hill, the prosecution contend that not only did D1 never pay anything for his occupation of the two units but that HK$4.8 million of the payment of HK$8.5 million particularised in Count 5 to D1, from or through D2, D3, D4 and D5, was in respect of 30 months’ rental for the two units from 1 July 2005. Common to both allegations is the provision of rent-free accommodation for which D1 did not pay anything and was not expected to pay anything, at a time when he was a public official, albeit Managing Director of MFPA in Count 1 and Chief Secretary to the Government in Count 5.

35. The jury are surely entitled to know by way of relevant background evidence, in assessing the prosecution allegation in Count 5, that D1 had occupied the same units rent-free between at least 1 April 2003 and 13 August 2003 (although he had been given the keys to them on 13 February 2003), at a time when D1 was Managing Director of MPFA and when he was in negotiations with D2 and D3 concerning a consultancy agreement with SHKP and/or Sun Hung Kai Real Estate Agency Limited.

36. It will be a matter for the jury in due course whether they accept the prosecution case that the HK$4.8 million was part of a “package” to keep D1 sweet while he was Chief Secretary to the Government or whether there may have been some innocent reason for the payment(s) in Count 5 unconnected with D1’s office. To make that assessment, the jury are entitled to know the background of D1’s occupation of the two units, which would include issues such as when his occupation began; whether anything was ever paid by him in respect of his occupation; the fact that HK$1.375 million had been settled by D1 and D2 in respect of one of the units; and the way in which payment for the other unit was dealt with.

37. In his submissions before me, Mr Kelsey-Fry spent some time referring to documents which he said demonstrated that the provision of rent-free accommodation to D1 dated back to 2003 and that what happened, at around the same time as the events concerned in Count 3, was the making good on an arrangement between a family company called Harsco Limited and D2 and D3, in respect of rent they had undertaken to pay at least a year before and which was never owed by D1. It seems to me that in making those submissions, Mr Kelsey-Fry was doing the very same thing which Mr Perry wishes to do, namely to examine the background relationship and dealings between the parties in order to explain the payment. These are areas both parties are clearly entitled to explore and which the jury must be allowed to know.

38. I should add that Mr Kelsey-Fry appeared to be proceeding on the assumption that I had not looked at these same documents, which he had mentioned at the earlier hearing dealing with the amendment of the indictment and D3’s application for discharge, having declared in the course of that hearing that I would look at them myself. Accordingly, he took issue with the reference in my judgment to a background of “already fulsome generosity” shown by D3 to D1, when I was dealing with D3’s application for discharge in respect of Count 3. I might point out that the explanation which Mr Kelsey-Fry wrongly assumed I had denied myself (and which derives in particular from four documents made between 17 April 2004 and 12 January 2005) was in fact set out in considerable detail in the written representation to the Director of Public Prosecutions by Mr McCoy SC on behalf of D3 dated 9 July 2012[1], which I had been obliged to read in preparation for the earlier hearing, since it formed part of the material relied upon in Mr Perry’s written submissions. Whilst Mr Kelsey-Fry was perfectly entitled to point to the difficulties of applying a decision of this Court with which he may not agree, the imputation that in arriving at its decision this Court might not have done what it said it would do was, with respect, not one that should have been made.

39. I had at one time in the course of argument wondered whether the allegation in Count 5 concerning the HK$4.8 million payment, which the prosecution say represents a secret re-imbursement of 30 months’ rental in respect of the two units at Leighton Hill, does not derive evidential support from the fact of D1’s non-disclosure of his acceptance of the provision and rent free use of the two units during the relevant period in 2003; at least so far as the case against D3 (and D2) is concerned. For it is asserted in the written representation made on behalf of D3, to which I have just made reference, that by the end of 2003 D3 had learned that D1 had already moved into the two units at Leighton Hill[2], although he had earlier been told by D2 in October 2002 that one of the units would be used either for investment or to provide D1 with residential accommodation upon his becoming a consultant for the SHKP Group[3]. The draft consultancy agreement dated 22 July 2002 also refers to the provision of accommodation to D1 at Leighton Hill.

40. If the jury did not accept that D3, as a senior director of SHKP, only came to know that someone as prominent as D1 was occupying two units at the recently completed Leighton Hill development by the end of 2003, and if the jury were to find that someone in D3’s equally prominent position at the head of a publicly listed company in Hong Kong must have realised that such a substantial advantage (as rent-free accommodation of two units up until 13 August 2003) could not in the circumstances be disclosed by D1, I wondered whether such non-disclosure could support the clandestine nature of the arrangement alleged by the HK$4.8 million part of the payment in Count 5, and the fact that the payment was designed to effect a continuation of the provision of rent-free accommodation which had begun in 2003.

41. However, I am persuaded by Ms Montgomery’s answer to the point that, as the anticipated evidence presently stands, this process of reasoning is difficult to sustain. Nevertheless, I mention this matter for two reasons. First, I wish to make it clear that my initial thinking on this aspect of Counts 1 and 5 forms no part of my decision on this application for severance. The only basis upon which I consider the relevance and admissibility of the evidence on Count 1 is as contextual background evidence that is necessary for a proper understanding and appreciation of other counts on the indictment, with which, as I have found, it has a sufficient nexus.

42. Secondly, if this process of reasoning demonstrates what Mr Kelsey-Fry described as “the trap of equating the non-disclosure on the corruption charge with the non-disclosure in respect of a benefit which is not said to have been corrupt”, then the non-disclosure issue is, in my view, perfectly susceptible to judicial direction at the appropriate time. The fact that I am alive to it means that it will be dealt with if, when all the evidence including any evidence from the defence has been heard, it is not a permissible way of looking at the evidence.

43. Finally, I do not accept that the inclusion of Counts 1, 6 and 8 adds significant or sufficient length or complexity to the trial such as to justify severance on that basis. Although a comparison of trial statistics is not a particularly useful exercise, this case is not in the league of difficulty for either a court or a jury as were the facts and issues in, for example, the cases of R v Cohen and others (1992) 142 NLJ 1267, R v Kellard (1995) 2 Cr App R 134 or R v Novac (supra).

Conclusion

44. Having reviewed the arguments of counsel in the light of the evidence as I apprehend it to be, the nature of the counts, the expected length of the trial and the issues which are likely to emerge, I do not consider that there is a special feature of this case sufficient to make a joint trial of Counts 1, 6 and 8 with Counts 2, 3 (and 4), 5 and 7 prejudicial or embarrassing to the defendants and which, in the interests of justice, calls for me to sever the indictment in the exercise of my discretion. Nor do I consider that the perceived dangers of trying the non-disclosure counts together with the other counts on the indictment are such that they cannot be met by proper and, if necessary, emphatic judicial directions to the jury. And nor do I regard their inclusion in the indictment as rendering the trial unmanageable or unduly complex for the jury.

45. In all the circumstances, I decline to order severance.

Reporting of this judgment

46. The content of this judgment including my ruling may not be reported until the conclusion of the trial in accordance with the Order made by the Court on 25 March 2014.

	(Andrew Macrae)
	Justice of Appeal

Mr David Perry QC, Mr Joseph Tse SC, Mr Louis Mably, Ms Maggie Wong, Counsel on fiat, Ms Winnie Ho SADPP & Ms Betty Fu Ag SPP, for the Director of Public Prosecutions

Mr Danny Chan, instructed by Tang, Lai & Leung, for the 1^st defendant

Ms Clare Montgomery QC, Mr Lawrence Lok SC and Mr Benson Tsoi, instructed by Boase, Cohen & Collins, for the 2^nd defendant

Mr John Kelsey-Fry QC, Mr Gerard McCoy SC and Mr Steven Kwan, instructed by Sit, Fung, Kwong & Shum, for the 3^rd defendant

Mr Ian Winter QC, Mr Daniel Marash SC, Mr Bernard Chung and Mr Adrian Wong, instructed by Tsang, Chan & Wong, for the 4^th defendant

Mr Charles J Chan and Mr Billy Kwan, instructed by Chan & Tsu, for the 5^th defendant

[1] Paragraphs 55 - 63

[2] Paragraph 83

[3] Paragraph 52, footnote¹¹

Subject to reporting restrictions as per paragraph 73 of the judgment

HCCC 98 /2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CRIMINAL CASE NO. 98 OF 2013

________________________

BETWEEN

	HKSAR	Respondent
	and
	HUI Rafael Junior, also known as HUI Si-yan Rafael	1^st Defendant
	KWOK Ping-kwong Thomas	2^nd Defendant
	KWOK Ping-luen Raymond	3^rd Defendant
	CHAN Kui-yuen, also known as Thomas CHAN	4^th Defendant
	KWAN Francis Hung-sang, also known as Francis KWAN	5^th Defendant

________________________

Before:

Hon Macrae JA (sitting as an additional Judge of the Court of First Instance) in Court

Dates of Hearing: 20 & 21 January 2014

Date of Judgment/Ruling: 13 February 2014

________________________

JUDGMENT / RULING

________________________

1. I have before me two separate applications. The first is an application by the prosecution, pursuant to section 23(1) of the Criminal Procedure Ordinance, Cap 221 (the Ordinance), to amend the indictment currently before the court and upon which the five defendants have already been committed for trial to the High Court, so as to add the third defendant (D3) to Count 5, and the second defendant (D2) and D3 to Count 7, with consequent necessary amendments to the particulars of Counts 5, 7 and 8.

2. The second is an application that D3 be discharged on Counts 3 and 4, pursuant to section 16 of the Ordinance, on the basis that the evidence disclosed in the trial papers or sought to be admitted at the trial is insufficient to establish a prima facie case against him on those counts.

3. The first application is opposed by leading counsel, Ms Montgomery QC on behalf of D2, by Mr Kelsey-Fry QC on behalf of D3 and by Mr Winter QC on behalf of the fourth defendant (D4). The second application is opposed by Mr Perry QC on behalf of the prosecution.

4. Although Mr Choy on behalf of the first defendant (D1) initially signalled his neutrality on the second application, he subsequently allied himself with Mr Kelsey-Fry’s arguments on behalf of D3. Mr Chan on behalf of the fifth defendant (D5) has remained neutral on the first application.

5. Whilst both applications are technically separate and distinct, it was agreed between the parties that they could conveniently be dealt with at the same hearing. Not only is there a measure of overlap in the evidence traversed by each application but the test applicable to any amendment of the indictment so as to allege an additional offence on the evidence disclosed and the test applicable to an application for discharge is essentially the same; in so far as the prosecution must show in the first application that there is a prima facie case on the evidence to justify the amendment sought, while the defence must show in the second application that the evidence is insufficient to establish a prima facie case against D3. Both applications are ultimately concerned, therefore, with whether or not there is prima facie evidence of the offence concerned sufficient to be left to the jury.

6. Thus the tests applicable to the prosecution in seeking the proposed amendments, and to D3 in seeking a discharge, ultimately involve an assessment of the evidence and the inferences which flow from that evidence on paper. A submission of no case to answer at the close of the prosecution case, albeit concerned with the same test, will of course have the advantage of being based upon the actual evidence, which might either weaken or strengthen the inferences which may appear to derive from it on paper.

The applicable law

7. There has been some discussion as to how one should determine a prima facie case for the purposes of an application to amend an indictment, an application for discharge or a submission of no case to answer, arising from a line of recent authorities from the English Court of Appeal, culminating in R v G, R v F [2012] EWCA Crim 1756; [2013] Crim LR 678. Whilst I have expressed my own reservations during that discussion as to certain aspects of the reasoning in R v G, R v F, which so far as I am aware has not been considered in the appellate courts of Hong Kong, my concerns are more with the way the Court has expressed itself than with its ultimate conclusion. I am certainly prepared to accept that if one has decided that there is no case to answer under the time-hallowed test in R v Galbraith [1981] 1 WLR 1039 at 1042, one will necessarily have also concluded that a reasonable jury properly directed could not exclude all reasonable possibilities consistent with innocence. If one finds that there is a case to answer, one will necessarily have found that a reasonable jury properly directed could exclude all reasonable possibilities consistent with innocence.

8. Thus put, the Court’s statement in R v G, R v F, at para 36, that “[w]here a key issue in the submission of no case is whether there is sufficient evidence on which a reasonable jury could be entitled to draw an adverse inference against the defendant from a combination of factual circumstances based upon evidence adduced by the prosecution, the exercise of deciding that there is a case to answer does involve the rejection of all realistic possibilities consistent with innocence”, is somewhat difficult to understand. With respect, “the exercise of deciding that there is a case to answer” by a judge at the close of the prosecution case involves at that stage not a “rejection of all realistic possibilities consistent with innocence” but an acknowledgment that a jury may ultimately reject all realistic possibilities consistent with innocence. The Court’s attempt to refine the approach where the prosecution case rests upon circumstantial evidence and the inferences a jury would (or would not) be entitled to draw therefrom within the “classic” or “traditional” test in Galbraith, coupled with the fine distinction it draws between a reasonable jury and all reasonable juries, runs the risk, with respect, of sowing semantic confusion by introducing nice distinctions into a well-understood and time-honoured test. To use a Cantonese expression, it is rather like drilling into the tip of a bull’s horn.

9. In terms of clarity of expression, I prefer the way the matter has been put by the English Court in R v Morgan (Unrep) Court of Appeal, 29 March 1993; R v Morgan [1993] Crim LR 870, which authority was not referred to in R v G, R v F:

“If there is an inference of guilt which is reasonably open to the jury to draw then the case can be properly left to the jury, notwithstanding that there may be another inference, or other inferences, consistent with innocence. It is the jury’s task to see whether the inference of guilt is one which they are sure can properly be drawn. For the judge to withdraw the case from the jury simply because at the close of the prosecution case all other inferences have not been excluded, would be to usurp the jury’s task and to ignore the very stern warning given to judges in the case of Galbraith.”

10. However, it seems to me that the argument, such as it is, does not ultimately much matter; not least because both Ms Montgomery and Mr Kelsey-Fry have pitched their submissions primarily under the first limb of Galbraith. The test which I apply as to whether there is a prima facie case is that set out in Galbraith, while the test applicable to the application for discharge is that set out in Attorney General v Li Fook-shiu [1990] 1 HKC 1, as applied in Attorney General v Phung Van Toan and Others [1992] 1 HKCLR 56, at 62:

“Kempster JA, in delivering the judgment of the court, having considered the authorities including R v Galbraith [1981] 1 WLR 1039, Attorney General v Yau Ka-ping [1977] HKLR 76 and Attorney General v Li Nai-ho and Others [1980] HKLR 792 said of the judge hearing such an application:
‘In relation equally to primary facts and to inferences to be drawn from such facts his concern is not with present proof to his satisfaction but with potential future proof to that of a jury. Both primary facts and the inferences therefrom are ‘matters generally speaking within the province of the jury’ in the language of Galbraith. Both can critically be affected by later evidence or lack of evidence from the defence. Assuming all proper directions the test is not what the judge thinks that jury, still less he, ‘must’ conclude at that moment but what a jury ‘could, may or might’ properly conclude in the future.’
At the time of this type of application no word of oral evidence has yet been heard. A court faced with such an application is not enjoined to consider the quality of the evidence. To do so would be to usurp the function of the jury.”

11. I shall deal, as did counsel before me, with the application for discharge first.

D3’s application for discharge on Counts 3 and 4

12. D3 is charged under Count 3 with conspiracy to commit misconduct in public office with D1. The allegation centres on a payment of HK$4.125 million, authorised by D3 and made by D3’s company Sun Hung Kai Properties Ltd (SHKP) to D1’s company Top Faith Enterprises Ltd (Top Faith) at the end of April 2005, which was about two months before D1 was formally appointed Chief Secretary of the Hong Kong Special Administrative Region. The prosecution allege that this payment was dressed up as a ‘bonus’ when it was in fact a bribe; more accurately characterised as a general sweetener made to someone about to be appointed to high office within the Government of the Hong Kong Special Administrative Region.

13. On the invoice, dated 25 April 2005, submitted by D1 to Sun Hung Kai Real Estate Agency Ltd (SHKREAL) for the sum of HK$4.125 million, representing 11 months of the remaining period of the consultancy agreement entered into between SHKREAL and Top Faith on 1 March 2004, D3 has endorsed these words: “OK. In view of his (Mr Hui’s) excellent performance during his consultancy work with us for the past 13 months” (original underlining). The endorsement has been signed by D3 and addressed to his subordinate, Mr Tang Chak Hin. The resulting payment was thereafter openly accounted for by both parties.

14. On the face of it, therefore, what was to have been a ‘consultancy fee’ for the remainder of the term of the agreement became a ‘bonus’ for past service. The prosecution case is that the change in description was a sham designed to obscure a substantial, gratuitous payment which D1 was not entitled to receive and which D3 was not obliged to pay under the agreement. They say that the context of the payment is all important and will determine its true complexion.

15. By the end of February and into early March 2005, comment had appeared in the media that the then Chief Executive, Mr Tung Chee Wah, was about to resign. In fact, the announcement of his resignation was made on 10 March 2005. Considerable speculation attended these events, particularly concerning the candidatures for both the new Chief Executive and the Chief Secretary. The prosecution say that it is an obvious inference to draw that D3 must have known that D1 was in the running to be appointed Chief Secretary, hence the early termination of the consultancy agreement. In this regard, they point to certain entries in D3’s diary which indicate a keen interest in these events. On 9 March 2005, for example, D3 noted in his diary: “Call Rafael Hui re CE, CS”.

16. The decision to terminate the consultancy agreement underlines the fact, say the prosecution, that both D1 and D3 must have readily appreciated that the provision of consultancy services to a private developer in return for a substantial fee would clearly be incompatible with the holding of the office of Chief Secretary. Since D3 must have known of D1’s imminent appointment as Chief Secretary, the payment of consultancy fees during the period of D1’s tenure of office would have been unconscionable; particularly when SHKREAL were under no obligation to pay such fees upon termination of the agreement.

17. Accordingly, the prosecution case is that the invoice was endorsed by D3 so as to give apparent justification for a payment he was not required to make and, in the light of D1’s imminent change of circumstances, should not have been made. They point to other internal documentation which on its face appears to be inconsistent with the reason endorsed by D3 for the payment.

18. The cheque by which payment was advanced to D1 was dated 29 April 2005. The prosecution say that earlier in that same month, D2 and D3 had already arranged to make a lump sum settlement of HK$1.375 million in respect of D1’s rental of Flat 20B at Tower 6 of The Leighton Hill, Happy Valley for the period 1 April 2003 to 30 April 2005. In effect, the arrangement was that the payment would be borne equally by the two brothers. As for the tenancy of Flat 20A, the adjacent premises which D1 had also occupied with his wife, no payment was ever made for rental due on this property, which appears to have been written off. In effect and as a result of these arrangements, the prosecution allege that D1 was able to occupy two SHKREAL properties rent free, notwithstanding that such a benefit was not included in the consultancy agreement signed on 1 March 2004.

19. As a matter of chronology, the payment voucher for the HK$1.375 million was dated 6 April 2005, the cheque was dated 11 April 2005 and the payment made on 30 April 2005.

20. The prosecution further point out that the rental payments for the months of May and June 2005 were also paid in part by D3. It was not in fact until July 2005 that D1 paid any rent, or was ever asked to pay any rent, for the two adjacent properties he occupied at Leighton Hill. As to the apparent payments of rent by D1 from July 2005 onwards, I shall come back to them when I consider Count 5.

21. The point the prosecution make about the payment or forgoing of rent on two properties occupied by D1 when it was never a benefit under the consultancy agreement is that the true purpose of the so-called ‘bonus’ of HK$4.125 million will have to be assessed by the jury against a background of already considerable generosity extended to D1 by D3 at around the same time.

22. The prosecution further rely, in making the same point, on the three unsecured loans extended to D1 on the approval of D3. Whilst they accept that the first two were fully repaid (albeit the second one not until January 2006, when D1 was already Chief Secretary), the last one for HK$3 million advanced on 31 May 2004 was not repaid.

23. Accordingly, the prosecution say that, when viewed in context with events going on at the same time and either side of the HK$4.125 million payment, as well as against the already fulsome generosity of D3 towards D1, such payment was not a bonus at all but part of a financial arrangement by which D3 (and D2) were intending to keep D1 sweet during what was anticipated to be his powerful and influential tenure as Chief Secretary of the Government of the Hong Kong Special Administrative Region.

24. The defence for their part contrast the payments of HK$5 million in Count 2, HK$8.5 million in Count 5 and HK$11.182 million in Count 7 with the payment in Count 3. Unlike the other payments which are as yet unexplained, there was no secret as to what the payment for HK$4.125 million represented. Its purpose was spelt out on the face of the invoice as a ‘bonus’ which D3 was perfectly entitled to authorise: moreover, there were sound reasons why D1 would have merited such a bonus. None of the hallmarks of secrecy were present in this payment which was openly documented in the business records of both parties.

25. Mr Kelsey-Fry further points to the evidence of Mr Tang Chak Hin, a prosecution witness, who had encountered similar discretionary bonuses being paid in the past to other consultants, even though there was no such provision stipulated in the relevant consultancy agreements. Accordingly, it is submitted that the fact that the payment was gratuitous and not due under the terms of the consultancy agreement does not help the prosecution: that is, after all, the nature of a discretionary bonus.

26. As for the payments of rent on the two properties in Leighton Hill, I note that, whilst no provision for rental payment of the two residential premises was made in the consultancy agreement, it had obviously been the subject of discussion at some stage, since it was referred to in an earlier unsigned draft of the agreement.

27. It was submitted that the fact that the payment was openly described as a ‘bonus’ with reference to D1’s past efforts for the company, which D1 was entitled to render as a consultant, and openly accounted for, cannot advance the prosecution case on Count 3. No reasonable jury could properly reject as incredible the explanation contemporaneously recorded on the document and conclude that the only reasonable explanation was that the payment represented a sweetener by D3 to D1 for the role he was about to assume.

28. It is not for me to come to any decided conclusion as to the veracity or integrity of evidence (which I have not yet, of course, had the advantage of hearing), or to decide what inferences I myself would draw from the evidence where there are competing inferences to be drawn; unless the one contended for by the prosecution is fanciful or one which no reasonable jury could properly draw. It is not what I think about the evidence and the inferences which flow from it but what a reasonable jury properly directed could, may, or might conclude on the basis of that evidence.

29. In my judgment, there is on the papers sufficient evidence to justify a prima facie case on Count 3; and, it would follow, Count 4. The points which Mr Kelsey-Fry has argued are certainly matters which the jury would be entitled to consider in deciding whether at the end of the day the prosecution have proved beyond reasonable doubt that the HK$4.125 million payment was not a ‘bonus’ at all but a sweetener paid to D1 to ensure his loyalty to D3 and his companies during his time as Chief Secretary. It would be open to the jury to conclude that D3 must have intended the payment for that purpose and to exclude the possibility that the payment was made for the purpose stated by D3 on the invoice.

30. If I ask myself at this stage whether a reasonable jury properly directed could, may or might conclude, in the context of the events and evidence on which the prosecution rely, some of which I have earlier detailed, that the linking of the payment to the consultancy agreement was a device designed to clothe it with legitimacy when in reality it was a corrupt payment, then my answer is that the jury could. Whether the jury ultimately does so conclude is another matter.

31. I accordingly refuse D3’s application for discharge under section 16 of the Ordinance.

32. I turn next to the prosecution’s application to amend Counts 5 and 7 (with consequent amendments to Count 8) on the indictment under section 23(1) of the Ordinance. I shall deal first with Count 5 and the application to join D3 to this alleged conspiracy.

The prosecution application to amend Count 5

33. I have already rehearsed some of the context and background in which the prosecution contend that the payment of HK$4.125 million was corruptly made to D1. I shall not repeat that evidence. Leaving to one side for the moment the disputed complexion of that payment, the one thing which is reasonably clear is that D3 was personally involved with discussions concerning the termination of the consultancy agreement with D1’s company. That much may be inferred from the statement of Mr Tang Chak Hin (dated 24 November 2009, para 11), D3’s written representation dated 9 July 2012, para’s 90-91, and the diary entry of D3 for 13 April 2005, viz “CH Tang re Rafael Hui” followed on the next line by “Call Rafael Hui”.

34. Shortly after the authorisation of the HK$4.125 million payment, an entry appears in D3’s diary for 5 May 2005, which the prosecution contend is of particular significance. The entry reads: “TK (D2) re Rafael Hui’s package.” Given its timing in the run-up to D1’s appointment as Chief Secretary, the prosecution invite the inference that the reference to “package” was a reference to the financial package being put together for D1.

35. The prosecution also rely on other diary entries to show, for example, that during June 2005, D3 was speaking to D2 about D1 (21 June 2005) and meeting with D1 himself (22 June 2005), having earlier seen D4 about D1 and thereafter called D1 (14 June 2005); whilst in July 2005, he was meeting with D2 about D1 (12 and 14 July 2005).

36. The prosecution allege that the first payment made to D1 under Count 5 began its journey on 20 June 2005 with a cheque for HK$4 million leaving D2’s HSBC account and entering the account of a company called Villalta Inc, said to be controlled by D4, for onward transmission through D5 ultimately to D1.

37. On 24 June 2005, tenancy agreements were executed in relation to the two premises at Leighton Hill which D1 and his wife were still occupying and had been occupying since 2003. D4 signed one of the agreements on behalf of the landlord. They were revised so as to ensure that as from 1 July 2005, the day following D1’s swearing in as Chief Secretary, the monthly rental for the two premises would be fixed at the going market rate of HK$80,000 per unit for a period of 30 months. As has already been described, D3 was (with D2) personally involved with the payment of D1’s rent in respect of one of the units up until then, and with payment of rent (again with D2) for the months of May and June 2005. Accordingly, the prosecution say that D3 was clearly privy to, and concerned with, the arrangements for payment of D1’s rent up until he became Chief Secretary.

38. The point of the reference to the tenancy agreements signed on 24 June 2005, is that four days later on 28 June 2005, a second payment of HK$4.8 million also left D2’s account en route for D4’s company Villalta Inc account (albeit via D4 and his wife’s Hang Seng joint bank account first, from which account HK$4.9 million was almost immediately transferred to the Villalta Inc account). The money, together with the earlier HK$4 million and other funds, subsequently entered D5’s Hang Seng bank account, from which it was ultimately transferred or routed via several payments into D1’s Standard Chartered bank account; the final tranche of HK$4.7 million reaching D1’s account a matter of hours before D1 was sworn in as Chief Secretary.

39. Against that background of D3’s (and D2’s) involvement in taking care of D1’s entire rental of the two units at Leighton Hill up until 30 June 2005 and the execution of the new tenancy agreements on 24 June 2005, the prosecution point out that 30 months’ rent as from 1 July 2005 at HK$80,000 per month per unit totals HK$4.8 million, the exact same amount which left D2’s account en route for D1’s account on 28 June 2005.

40. For the defence, it is submitted that nowhere in the transmission of the HK$8.8 million from D2 through D4 and D5 (and others) to the arrival of HK$8.5 million in D1’s account is D3 implicated or even mentioned. In that respect, the allegation is said to be no different from Count 2, where again the money particularised can be shown to come from D2, and yet D3 is not charged together with D2. Simply because D3 has close blood and business connections with D2 does not mean that he must be connected with the payments in Count 5.

41. So far as D3’s diary entries are concerned, the defence contend that it would be inappropriate for a jury to draw an inference from the reference to “package” in D3’s diary entry for 5 May 2005 that it must have related to the June transactions, when D3 is not connected in any way with or to those payments. Besides, “package” is a word more apt in common parlance to describe the benefits and emoluments relating to a service contract (and its termination); as it seems to have been in a diary entry made exactly three years later in relation to another named individual.

42. Mr Kelsey-Fry has argued that when one looks at the diary entries as a whole, rather than picking and choosing particular entries to suit a prosecution theory, there is nothing sinister or nefarious about meetings which D3 has recorded having either with D2 about D1, or with D1 himself. He has identified various entries during this period where D3 was speaking with D1 on what would appear to be perfectly legitimate or innocuous matters.

43. I have to decide whether there is prima facie evidence sufficient to justify D3’s joinder to Count 5.

44. Given, in particular, D3’s personal involvement with the termination of the consultancy agreement, his settlement (together with D2) of D1’s rental payments for the Leighton Hill premises up until the end of June when D1 became Chief Secretary, the apparent link between the second payment of HK$4.8 million by D2 on 28 June 2005 and the total rental which would be payable for the duration of the new tenancy agreements executed on 24 June 2005 (one of which was signed by D4 on behalf of the landlord), his discussion on 5 May 2005 with D2 about D1’s “package”, his ongoing meetings and/or discussions (as documented in his diary) with D2 and D4 about D1 and with D1 himself, and the fact that the business relationship between D1 and SHKP had been managed by D1 on the one side and D2 and D3 on the other, it is an inference that a reasonable jury properly directed could draw that D3 was part of the conspiracy to pay D1 HK$8.5 million, so that D1 would remain favourably disposed towards SHKP in his capacity as a senior Government official.

45. I have for the purpose of this analysis endeavoured to put the payment of the HK$4.125 million by D3 to D1 under Count 3 to one side. I wished to isolate that payment from the rest of the evidence which I have just canvassed in order to better test whether there is a prima facie case of D3’s complicity on Count 5 without the “building block”, as Mr Kelsey-Fry termed it, of the allegedly corrupt payment in Count 3. That may be a somewhat artificial way of looking at the evidence since, although Counts 3 and 5 will require to be considered separately by the jury, the facts and circumstances relevant to Count 3 may also be relevant to the jury’s consideration of Count 5. Both counts are concerned with relatively proximate payments made during the unravelling of the consultancy agreement and in the run-up to D1’s appointment as Chief Secretary, in both of which contextual events D3 can be shown to have displayed a lively interest.

46. Nevertheless, even approaching the evidence in this way, I am quite satisfied that a reasonable jury properly directed could find on the available evidence that D3 was party to the conspiracy alleged in Count 5. Accordingly, I allow the amendment of Count 5 in the terms sought by the prosecution.

47. I turn now to the application to amend Charge 7 by joining D2 and D3 to the Count, with the consequent amendments to the particulars of Count 7 and Count 8.

The prosecution application to amend Counts 7 and 8

48. On 30 June 2007, D1 relinquished the office of Chief Secretary and on the following day became a Non-Official Member of the Executive Council (Exco). Between 9 November and 12 December 2007, a series of banking transactions took place which resulted in D1 receiving HK$11,182,000 from D5. I have not found it necessary at this stage to examine the intricate transactions which resulted in money entering D5’s account from D4’s company Villalta Inc, via Wedingley Ltd, a company controlled by one Tommy Kow. Suffice it to say, the prosecution are able to show that on 9 November 2007, the equivalent of about HK$12 million entered the Wedingley Ltd account from the Villalta Inc account and on 20 November 2007, a similar (but slightly higher) amount left the Wedingley Ltd account for one of D5’s DBS accounts.

49. For present purposes, the prosecution point to the fact that some time later, on 21 April 2008, D2 signed a cheque for HK$5 million drawn on the account of Sanfield (Management) Ltd, a SHKP subsidiary, and made out to D4. On 22 April 2008, that cheque was deposited into D4’s Hang Seng joint bank account with his wife. On 30 April 2008, HK$6 million was transferred from D4’s Hang Seng joint bank account into the Villalta Inc account.

50. Meanwhile, on 28 April 2008, a cheque for HK$7 million made out to D2 was issued on the account of Honour Finance Co Ltd, also a subsidiary of SHKP, with the money being debited from D2’s SHKP (Employee Services) Ltd account. On the same day, that cheque was deposited in D2’s HSBC account. On 30 April 2008, a personal cheque for HK$7 million drawn on D2’s HSBC account was deposited in D4’s UBS account; and, on the same day, HK$7 million was transferred to D4’s Villalta Inc account.

51. On 7 November 2008, a further cheque for HK$6 million drawn on the Sanfield (Management) Ltd account was deposited into D4’s Hang Seng joint bank account with his wife. In a memorandum dated 17 October 2008, D2 had asked Mr Tang Chak Hin to pay D4 a bonus of HK$6 million “for his contribution to SHKP”. The bonus was properly accounted for. This memorandum was copied to D3. I shall return to the significance (if any) of this payment and the associated memorandum later.

52. The effect of the two earlier transactions (the HK$5 million and HK$7 million) is that, between 22 and 30 April 2008, HK$12 million was transferred by D2 to D4, all of which found its way on 30 April 2008 into D4’s Villalta Inc account.

53. Thus far, the flow of money going from D2 to D4’s Villalta Inc account and from the Villalta Inc account to D5 is, according to the prosecution, similar to the pattern encountered in Count 5. There are, however, a number of differences, the most obvious being that the payments began their journey from D2 several months after D5 had in fact been placed in funds so as to be able to pay HK$11,182,000 over to D1. The prosecution contend that this was an elaborate attempt, consonant with the intricate routing of the money, to distance D2 even further from the ultimate payments, by reimbursing D5 for funds he had already given to D1.

54. I shall deal with the position of each defendant in turn in this application, and with D2 first.

The application to amend in relation to D2

55. Ms Montgomery submits that if the prosecution are seeking to draw parallels with the flow of funds in Count 5, their argument falls down in terms of the timing, amount, purpose and pattern of the payments. As to timing, unlike Count 5, the prosecution claim the funds were reimbursed several months after money had been paid over to D1. As to amount, what D1 received does not match what D2 allegedly paid out, making it more difficult properly to infer that the money is the same. As to purpose, it is said the prosecution have effectively appropriated D4’s annual bonus to fit in with their theory of a corrupt payment. As to pattern, there is nothing in the point that because bonuses were normally paid in certain months during a three year period, a payment to D4 in another month could not also be a bonus.

56. Finally, it is argued that if the similarities between the payment scheme under Count 7 and Count 5 are so significant, then so are their dissimilarities.

57. Many of the points which Ms Montgomery has submitted are no doubt matters the jury will want to consider. However, the jury will also want to consider why D4 and D5 would be involved in the payment of HK$11,182,000 to D1 unless at someone else’s behest and for someone else’s benefit. In examining that question, the jury would obviously be entitled to examine the source of funds which were used in the alleged reimbursement.

58. At this stage, the fact remains that, even allowing for a possible explanation in relation to the HK$5 million transfer from D2 to D4, which the jury will obviously in due course have to consider, there is as yet no explanation of the HK$7 million transfer eight days later. Furthermore, to the extent that the two payments said to provide for the corrupt monies in Count 5 and Count 7 were each transferred by D2 to D4 eight days apart, there is similarity and proximity of payment method, as there is in the alleged use of Villalta Inc as a vehicle for the payments through D4 to D5.

59. In my judgment, there is sufficient evidence to ground a prima facie case so as to permit the prosecution to amend Count 7 on the indictment so far as D2 is concerned, with consequent amendments to Count 8.

The application to amend in relation to D3

60. The prosecution place much reliance on D3’s diary entries in the relevant period. In the course of July, August and September 2007, D3 recorded in his diaries meetings or conversations with D1 (14 August and 24 August 2007), with D1 and D2 (16 July and 22 September 2007) or with D2 about D1 (3 September 2007). They attach particular significance to a further diary entry on 1 September 2007 which reads: “See T Chan (D4) re R Hui (D1).” (There was, as I have already noted, a similar meeting between D3 and D4 concerning D1 recorded on 14 June 2005, which the prosecution rely on in respect of Count 5: see para 35 supra.)

61. So far as D4 is concerned, the prosecution argue that in being the conduit for money passing from D2 to D5, he cannot have been acting on his own behalf. D4 was a senior and trusted officer of SHKP, who worked closely with D2 and D3, although Mr Perry has accepted that he worked more closely with D2 than D3. In 2005, he had been involved in a similarly structured scheme using his company Villalta Inc as a vehicle for payments to D1 on behalf, according to the prosecution, of D2 and D3. They invite the inference that in 2007, D4 was again acting as one of the executive directors of SHKP and, in particular, on behalf of the two individuals who controlled SHKP’s dealings with D1, namely D2 and D3. In that regard, the particular diary entry of 1 September 2007, after D1 had ceased to be Chief Secretary and become a Non-Executive Member of Exco, raises an obvious question of why he would be talking to D4 about D1 at all, if not in relation to a perpetuation of the scheme.

62. I am conscious of Mr Kelsey-Fry’s concern about taking single entries out of context and using them to support a prosecution theory that D3 must have been involved because of his contacts and links with D1, D2 and D4. Indeed, he has been able to point to a number of occasions which seem on the face of it to be perfectly legitimate, social contacts between D1 and D3 and others.

63. It is also right to say that, as with Count 5, nowhere is D3 referred to in, or linked with, the flow of funds and payments to D1, and subsequently to D4. I should perhaps at this stage deal with a matter that I said I would return to, namely the 17 October 2008 memorandum authorising a HK$6 million ‘bonus’ payment to D4 sent by D2 to Mr Tang Chak Hin, which memorandum was copied to D3. If this amount formed part of the reimbursement to D4 under the scheme, then the fact that the memorandum describing it as a ‘bonus’ was copied to D3 could be evidence of D3’s knowledge of the reimbursement. However, I am not entirely clear whether, and if so how, this payment is relevant to the prosecution allegation in Count 7; although I understand the tenor of the prosecution point that D4 received no less than HK$18 million over the course of eight months in 2008. Mr Perry seemed to accept, if I understood him correctly, that the HK$6 million may have been the actual bonus paid to D4 in 2008; which, as Mr Kelsey-Fry pointed out, was properly accounted for in the 2008/2009 Annual Report for SHKP. If that be right, there would presumably be nothing unusual in D3 being informed about it. Conscious, therefore, of Mr Kelsey-Fry’s concern about the prosecution using the memorandum to “reach for D3”, the safest course is for me to ignore it for present purposes in my analysis of the evidence in relation to Count 7.

64. It is true to say that the time frame of the payments to D1 and the subsequent payments of HK$5 million and HK$7 million from D2 to D4 are significantly down the road from the alleged payments in 2005, at a time when D1’s position had materially changed; although I note that the prosecution allege that the preparations for the payment to D5 (in US dollars) began in May 2007, while D1 was still Chief Secretary.

65. However, it would be fanciful to suggest that D4 (still less D5) would be paying over HK$11 million of his own money for his own private purposes to D1 in what appears to be such an elaborate way. D4 was obviously an important and trusted executive of SHKP, answerable to both D2 and D3. The prosecution case is that this was a continuation of an intricate scheme of corrupt payments to D1 begun in 2005, by which the money was provided by D2 and routed through D4’s Villalta Inc account. They will invite the jury to infer that, as with the scheme of payments allegedly made by D2 and D3 to D1 under Count 5, D4 was again the trusted conduit of the payments made for the same purpose under Count 7. And, as also with Count 5 (save for the HK$650,000 which came from D5’s sister-in-law’s Hang Seng bank account), D5 was the one from whom D1 actually received the money. In this latter regard, the Part A / Part B documents found in D5’s possession tend to support the prosecution allegation of a continuation (or, perhaps, the completion) of a scheme of corrupt payments, albeit that the payments under each Part were described as ‘loans’.

66. I bear in mind the change in D1’s circumstances, the distance from the 2005 payments and their immediate context, and the general point, made in D3’s written representation dated 9 July 2012 at para 116, that D2 and D3 had their own substantial and independent means; by which they were obviously capable of acting unilaterally with considerable sums of money at their disposal. In due course, the jury will want to consider, assuming there was indeed a corrupt scheme in existence to route substantial payments to D1, whether D2 or D3 or both or neither was involved in that scheme.

67. I am prepared to accept that the evidence against D3 on Count 7 may be more limited than against D2 on the same count, to the extent that D3 cannot be linked to the source or flow of funds. However, in my judgment, a jury properly directed could find that D3 must have been party to the HK$11.125 million payment to D1, bearing in mind his involvement in the events which led to the earlier payments and his shared interest with D2, which he would have continued to have in and after 2007, in retaining D1’s favourable disposition towards SHKP and its associated companies.

68. The diary entry of 1 September 2007 concerning a meeting between D3 and D4 about D1 is clearly of some significance in this regard because it is suggestive of D3’s continued business (as distinct from social) interest in D1. Two days later, he was arranging to see or speak with D2 about D1. The jury could find that these two events are not only connected but concern arrangements for further illicit payments to D1. For there is, say the prosecution, an immediate context to these events. A few days earlier, on 27 August 2007 at 2:35 pm, D5 had emailed Tommy Kow to say that he had just had lunch with the “Trustee Manager” concerning the future transfer of funds, which was not expected to be made to Wedingley Ltd “before the third week of September”: on the same day at 1 pm, an entry in D1’s diary records that he was seeing D5 and his business partner. Thereafter, on 9 November 2007, US$1,542,961.45 left D4’s Villalta Inc account for Tommy Kow’s Wedingley Ltd account for onward transmission on 20 November 2007 to D5.

69. Unlike the position at a submission of no case to answer at the conclusion of the prosecution case, I must necessarily resolve these issues on the papers before me without the benefit of hearing live evidence which might either strengthen or weaken the available inferences. Nevertheless, there is in my judgment sufficient prima facie evidence on the papers against D3 on which a jury properly directed could convict to warrant his joinder to Count 7.

70. Accordingly, I allow the amendment of Count 7 on the indictment so far as D3 is concerned, with consequent amendments to Count 8.

Conclusion

71. In the result, the application by D3 for discharge on Counts 3 and 4 is refused. The application by the prosecution to amend Counts 5, 7 and 8 is allowed.

72. I should add, for the sake of completeness and in deference to Mr Winter’s submission on behalf of D4, that whilst he also objected to the amendments sought by the prosecution, and allied himself with the arguments of Ms Montgomery and Mr Kelsey-Fry, his particular concern was with a possible reading of the amended particulars of Counts 5 and 7, which left room for the possibility of a conviction for conspiracy upon an alternative basis, namely, that the payments were made so that D1 might remain favourably disposed towards D4. It has been made clear by Mr Perry that it is no part of the prosecution case that payments were made to secure D1’s favourable disposition to the personal interests of D4 unconnected with his involvement with SHKP. I believe Mr Winter is content with that assurance.

Post-script

73. This judgment and its contents are not to be reported until the conclusion of the trial. Furthermore, no mention should be made by the press of the nature of the proceedings which has led to the rulings in this judgment. However, in accordance with para 2(3) of the Court’s ‘Order in relation to restrictions on reporting’, the press may publish the offence or offences, or a summary of them, with which the defendants are charged, which will now include those on the amended indictment.

	(Andrew Macrae)
	Justice of Appeal

Mr David Perry QC, Mr Joseph Tse SC, Mr Louis Mably, Ms Maggie Wong, Counsel on fiat, Ms Winnie Ho Ag SADPP & Ms Betty Fu PP, for the Director of Public Prosecutions

Mr Edwin Choy, instructed by Tang, Lai & Leung, for the 1^st defendant

Ms Clare Montgomery QC, Mr Lawrence Lok SC and Mr Benson Tsoi, instructed by Boase, Cohen & Collins, for the 2^nd defendant

Mr John Kelsey-Fry QC, Mr Gerard McCoy SC and Mr Steven Kwan, instructed by Sit, Fung, Kwong & Shum, for the 3^rd defendant

Mr Ian Winter QC, Mr Daniel Marash SC, Mr Bernard Chung and Mr Adrian Wong, instructed by Tsang, Chan & Wong, for the 4^th defendant

Mr Charles J Chan, instructed by Chan & Tsu, for the 5^th defendant

HKSAR v. HUI RAFAEL JUNIOR , also known as HUI SI-YAN RAFAEL AND OTHERS

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