FACC 11/2016

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION
CRIMINAL APPEAL NO. 11 OF 2016
(ON APPEAL FROM CACC NOS. 103 OF 2012 AND 183 OF 2014)
_______________________

SECRETARY FOR JUSTICE Respondent

and

CHAN CHI WAN STEPHEN ( 陳志雲 ) A p p e l l a n t

_______________________

FACC 18/2016

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION
CRIMINAL APPEAL NO. 18 OF 2016
(ON APPEAL FROM CACC NOS. 103 OF 2012 AND 183 OF 2014)
_______________________

SECRETARY FOR JUSTICE Respondent

and

TSENG PEI KUN ( 叢培崑 ) Appellant

_______________________

CONSOLIDATED RESPONDENT’S CASE

_______________________

Introduction
1. The Respondent in this Consolidated Case responds to the Case of
the Appellant of FACC 18/2016, Tseng Pei Kun (“TPK”) and makes
further submissions on the points of law to those that have already been
filed in the Respondent’s Case dated 7th September 2016 in reply to that
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of the Appellant of FACC 11/2016, Chan Chi Wan Stephen (“SC”).

2. The factual issues are not seriously in dispute.

3. There is no dispute that:-

a.) SC was the General Manager (Broadcasting) of TVB. His

employment contract was for administrative personnel and
it required him to obtain written consent from TVB before
he could engage in outside work. Such permission had been
granted to him on several previous occasions but never for
remuneration from a third party in relation to TVB’s
business (see judgment of Court of Appeal 26th October
2015 at paragraph 79 and its judgment dated 6th November
2015 at paragraphs 68-74 and 82-5). The evidence of Lee
Po-on (TVB’s General Manager) was that if SC had applied
to him for permission to accept remuneration for any
performance which was related to TVB’s business then he
definitely would have refused the application;

b.) SC had also hosted over 150 programmes for TVB called “Be
My Guest” without additional payment. His employment
contract did not expressly provide that he should appear in
front of the camera;

c.) TPK was the sole director of Idea Advertising and

Production Company Limited (“IEAP”) which, inter alia,
engaged TVB artistes to appear in promotional activities or
shows on behalf of third parties;

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 d.) Olympian City (“OC”) was a shopping complex which had
cooperated with TVB for several years in holding a New
Year’s Eve countdown show in its shopping mall. The show
in question was the countdown show for 31st December
2009. TVB and OC agreed a sponsorship fee of 1.3 million
Hong Kong dollars for the 2009 countdown show without
discussing the contents;

e.) OC paid IEAP 160,000 Hong Kong dollars and IEAP paid
112,000 to SC and 20,000 to Lai Yiu-cheung (a non-TVB
managed artiste). Both performed in the “Be My Guest”
segment in the countdown show;

f.) SC did not apply for written consent to receive the payment;
and

g.) at trial neither SC nor TPK gave evidence or called evidence.

4. The prosecution case was that hosting the segment of the show
was clearly in relation to TVB’s programmes and business and SC
never disclosed the payment he received to TVB despite his
contractual obligation to seek approval. The legislative intent is to
prohibit an employee/agent receiving a secret commission without
his employer’s knowledge and consent (see, for example, Ngan
Lun-yan v The Queen (1975) HKLR 369). In particular:-

a.) SC was an agent of TVB within section 2 of the Prevention of

Bribery Ordinance (“POBO”) (CAP 201);

b.) SC accepted the 112,000 Hong Kong dollars as an advantage

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 contrary to section 9(1) POBO and TPK offered it contrary
to section 9(2);

c.) the money was paid as an inducement or reward;

d.) the money was paid for an act in relation to TVB’s affairs or
business. There is no requirement to prove that the agent’s
act caused prejudice (HKSAR v Fung Hok Cheung (2008) 5
HKLRD 846) or that SC accepted the money in his capacity
as an agent;

e.) the burden of proving a defence of lawful authority or

reasonable excuse lies on the accused pursuant to section 24
pursuant to the balance of probabilities. SC never relied on
reasonable excuse at trial: his principal argument was that
the elements of the offence had not been proved and that
reasonable excuse did not arise. In his Case filed on 9th
August 2016, SC also raised the submission for the first time
to this Court that with an inchoate offence the prosecution
must prove (a) the absence of lawful authority or reasonable
excuse as an element of the offence and (b) that the accused
knew that there was no lawful authority or reasonable
excuse for his act of acceptance. No submissions were made
by SC as to lawful authority;

f.) section 12A(1) applies the same rules of evidence to a

conspiracy to commit an offence under POBO as apply to a
substantive offence;

g.) the mens rea was simply the intention to commit the

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 proscribed act. Accepting/offering a secret payment in the
circumstances of (a) to (d) above constituted the offence
without any need to prove dishonesty or a corrupt intention
or that the agent did the act in the capacity of an agent
(unlike section 4 POBO which requires proof that the public
servant was acting in his capacity as a public servant): see
Commissioner ICAC v Ch’ng Poh (1997 HKLRD 652 at page
656J-657A); and

h.) the acceptance of an advantage with the permission of the

agent’s principal in accordance with section 9(5) shall
constitute a defence for both the agent and the offeror. The
principal must be made adequately aware of the relevant
circumstances.

5. The case of SC was that:-

a.) he was not acting in the capacity of agent when he accepted

the 112,000 Hong Kong dollars as he did not host “Be My
Guest” pursuant to his contract of employment but rather
did so in his personal capacity as a celebrity. Money paid to
him in a personal capacity when unrelated to his principal’s
business is not a breach of section 9;

b.) he did not intend to influence, or affect, or aim at TVB’s

business or affairs in a prejudicial way. Quite the contrary.
Additionally, his act, in fact, was not prejudicial to TVB’s
business;

c.) TVB must have understood that OC had paid him for his

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 appearance. At worst, this was moonlighting and not
corruption. He was not dishonest; and

d.) he reasonably believed that TVB would have no objection to

him accepting the money and that there was no need to
apply for permission. These circumstances amounted to
reasonable excuse and/or lawful authority.

6. The case of TPK was that:-

a.) he was not an employee or agent of TVB and had no

knowledge of the contractual terms between TVB and SC.
There was a cooperative relationship between TVB and OC;

b.) SC’s defence of reasonable excuse also applied to him; and

c.) the payment to SC was not a bribe and was not aimed at
TVB’s affairs or business. It was simply a payment for SC’s
appearance who appeared as a guest of OC and not TVB.

7. The Respondent does not accept the criticisms made of the

Court of Appeal in CACS 1 or 2 by the Appellants (see SC’s Case
(paragraphs 17-24) and TPK’s Case (paragraphs 57-81)).

The First Point of Law

(a) What is the mens rea required of an agent to

constitute him guilty of an offence contrary to section
9 POBO? And

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 (b) How should the element “in relation to the
principal’s affairs or business” be interpreted having
regard to the determination of the Privy Council in
Commissioner of the ICAC v Ch’ng Poh ?

8. The Respondent has already made its submissions on these

questions in its Case dated 7th September 2016 in response to that
filed on behalf of SC (at paragraphs 10-26).

9. With regard to the requisite mens rea of an agent the

Respondent made the following principal points on 7th September:-

a.) that the word “corruptly “which appeared in section 4(a) of

the Prevention of Corruption Ordinance (CAP 215), which
was the forerunner of POBO, was omitted from section 9
POBO;

b.) the legislative intent behind the omission was to remove the
need to construe the word “corruptly” and to relieve the
prosecution of having to establish that the accused acted
with a corrupt intention;

c.) the mens rea required is simply an intention by the agent to

commit the act(s) proscribed in section 9(1): see R v Looi
Kim Lee (1985) 2 HKC 410. Accordingly, the offence is
complete if the agent:

* solicits/accepts an advantage
* as an inducement/reward

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 * on account of him doing/forbearing to do an act
or show favour/disfavour to any person in
relation to his principal’s affairs/business.

10. The Case on behalf of TPK makes several further points which
are unexceptional:-

a.) that the fault element lies in the agent accepting an

advantage knowing that it was intended as an
inducement/reward on account of doing/forbearing to do
an act that affects or influences or is aimed at his principal’s
affairs or business. For the offence of offering an
advantage the fault element lies in offering it with the
intention that it should be so accepted; and

b.) that section 11 POBO deals with certain specific situations

where the agent has a belief or suspicion that the advantage
was given as an inducement/reward but had no power or
intention to forbear, and/or did not in any event forbear;
none of these situations provide defences. Proof of an
intention to show favour or of actually showing favour is not
necessary.

11. The Court of Appeal in CACS 1 was correct in deciding that the
relevant mens rea did not require proof that, when accepting the
advantage, the agent must have the intention to influence or affect
his principal’s affairs or business (Judgment paragraphs 120-123).
Nor is there any requirement to prove that the agent’s act has to
cause prejudice (paragraphs 128-130 and HKSAR v Fung Hok
Cheung (2008) 5 HKLRD 846).

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12. TPK’s Case argues (at paragraph 59) that the conclusions of the
Court of Appeal in paragraph 11 above give "the offence an exorbitant
reach” (TPK’s Case paragraph 59) especially when combined with the
Court’s interpretation of the Privy Council’s decision in Ch’ng Poh.
TPK submits that Ch’ng Poh and the later case of HKSAR v Chan
Ngan Lau (2010) 1 HKLRD 472 make it clear that the act or
forbearance of the agent must be aimed at the principal’s
business/affairs such as to influence or affect it. The phrase “in
relation to his principal’s affairs or business” restricts the scope of
liability. It is argued that the Court of Appeal (at paragraph 122)
wrongly stated that the “intention with which Ch’ng Poh was
concerned is the intention in relation to the offering of the bribe, not
the intention of the agent who accepts the advantage”. The concern is
that this approach will “catch any genuine and legitimate
moonlighting activities as long as there is some connection to the
principal’s affairs or business, no matter how tenuous, and even
when the remuneration paid was not for an act aimed at the principal
in the sense enunciated by Ch’ng Poh” (paragraph 60).

13. TPK’s submission in paragraph 12 above is not correct. As the

Court of Appeal stated (at paragraph 122), whilst the offeror will no
doubt have a motive in offering the advantage to enlist the agent to
act/forbear in a way that influences or affects the principal, it is
perfectly possible that the agent will accept the advantage out of
greed whilst having no intention or capacity to act/forbear at all. It
would allow an agent who has accepted an advantage a defence (in
addition to lawful authority, reasonable excuse or permission) by
simply contending that he had no intention to do anything. The Privy
Council in Ch’ng Poh correctly referred only to the offeror in the

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following passage at page 657C: “So what do the limiting words
mean? They mean that, for the section to apply, the person offering
the bribe, must have intended the act or forbearance of the agent to
influence or affect the principal’s affairs.....Thus it is an essential
ingredient of the offence under section 9 that the action or
forbearance of the agent should be aimed at the principal. If it is
sufficient for the purposes of the person offering the bribe that the
agent should act on his own without involving his principal, then,
whatever other offence may have been committed, it is not a corrupt
transaction with an agent for the purpose of section 9”. In other
words, section 9 is only engaged if the offeror’s intention in offering
the advantage is to influence the affairs/business of the agent’s
principal. Once the agent has knowledge of that intention he commits
the offence if he accepts the advantage knowing that it is offered as
an inducement regardless of his intention or not to follow through
(subject only to one of the statutory defences applying). Section 11
POBO reinforces this approach.

14. With regard to the element “in relation to the principal’s

affairs or business” the Respondent made the following principal
points in its Case on 7th September:-

a.) that the words were restrictive in the manner set out by the
Privy Council at page 657 A-D in Ch’ng Poh;

b.) that no proof of any prejudicial consequence to the

principal’s affairs/business was required: HKSAR v Fung
Hok Cheung (supra);

c.) that whether the agent’s act is in relation to his principal’s

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 affairs/business is an evidential issue and should be “widely
construed” (Morgan v DPP (1970) 3 All ER 1053 at 1057).
The essential question is whether the person offering the
inducement intended that the act to be carried out by the
agent in some way would influence or affect the
affairs/business of the principal (Fung Hok Cheung supra);
and

d.) that CACS 1 was not per incuriam its own decision in
HKSAR v Chan Ngan Lau (2010) 1HKLRD 472 at 489. Both
decisions are consistent that in focusing on the
understanding of the agent it is necessary to consider
whether he knew or believed that the purpose of the
advantage was that it was being offered in relation to his
principal’s affairs/business (i.e. a causal relationship exists)
and thereby involved his principal.

15. TPK’s Case argues that CACS 1’s interpretation of this phrase
“will catch any genuine and legitimate moonlighting activities”
(TPK’s Case paragraph 59 supra).

16. TPK’s submission in paragraph 15 above is not correct. The

legislative purpose of section 9 (which is the only substantive offence
under POBO which regulates the conduct of agents in the private
sector) is to proscribe secret commissions by an agent in relation to
his principal’s business/affairs without his principal’s knowledge or
consent: see, for example, Ngan Lun Yan v R (1976) HKLR 369 at
372. Third parties should not be offering agents any advantage as
an inducement/reward for an act/forbearance in connection with the
business/affairs of the principal. It will be an evidential issue as to

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whether the advantage has that causal connection. If the offeror
intends the advantage to serve as an inducement or reward for so
acting/forbearing then the offence under section 9(2) will be made
out. If the agent solicits or accepts an advantage whilst being aware
that it is being offered as an inducement/reward for so
acting/forbearing then the offence under section 9(1) will be made
out.

The Second Point of Law:

In the context of a section 9 offence, what is the proper

approach that the Court should adopt when considering the
defence of reasonable excuse?

17. The Respondent has already made its submissions on this

question in its Case dated 7th September 2016 in response to that filed
on behalf of SC (at paragraphs 27-37).

18. The Respondent made the following principal points on 7th

September:-

a.) reasonable excuse is not an element of the offence under

section 9;

b.) it is a defence and the burden of proving it lies on the

defence on the balance of probabilities pursuant to section
24 POBO;

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c.) the burden is a persuasive burden and not an evidential
burden: HKSAR v Chan Tat Chung Danny (2010) 2 HKC
268. The Court of Appeal in HKSAR v Ng Po On (2008) 11
HKCFAR 91 is only authority for the proposition that with
regard to section 14(4) POBO the persuasive burden did not
satisfy the proportionality test (although it did satisfy the
rationality test). Section 14(4) is an ancillary offence and not
a corruption offence;

d.) a reverse onus satisfies the rationality test and on the

ground of the need to suppress corruption. A persuasive
burden is also proportionate in the context of a section 9
offence. An evidential burden would not suffice;

e.) it is for the defence to identify the matters said to constitute

reasonable excuse, for the court to examine whether the
excuse is genuine, and for the court to assess on an objective
basis whether the excuse is reasonable: HKSAR v Ho Loy
(2016) 19 HKCFAR 110;

f.) where conspiracy to commit a section 9 offence is charged,

“without reasonable excuse” does not become an element of
the offence and the prosecution is not required to prove that
the defendant knew that there was no reasonable excuse.
See too section 12A POBO; and

g.) sections 9(4) and (5) POBO establish stringent rules where
permission is relied on which were not met by the defence
here. The evidence did not support permission.

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19. The Court of Appeal in CACS 2 concurred with the above
(paragraphs 18(a)-(g) above). It also said that “when an agent claims
that his principal would “permit” or “allow” him to do certain things,
or “acquiesce in” his doing certain things, he must demonstrate that
he has done all he could to comply with what the law requires of him,
so as to legitimize his act of accepting an advantage; otherwise the
court will not find that he has a reasonable excuse to accept the
advantage which is related to his principal’s business” (at paragraph
88). Whether SC or TPK acted dishonestly, or whether SC sought to
conceal his acceptance of the advantage from TVB, are not elements
of the offence and the Court was not prepared ‘to delve” into these
issues (paragraph 90).

20. TPK’S Case argues (at paragraphs 66-8) that CACS 2 (at
paragraph 88) “reduced the permissible ambit” of reasonable excuse
and aligned it with the concept of lawful authority but that
reasonable excuse is a wider concept. His Case also argues that
CACS 2 wrongly concluded that dishonesty and concealment were
irrelevant when assessing reasonable excuse. Lawful authority
legitimizes what might otherwise be unlawful conduct whilst
reasonable excuse avoids liability. Reasonable excuse could only
arise if the elements of the offence were proven and the agent did not
have permission or lawful authority to solicit/accept. TPK complains
that CACS 2 implies/states that where an agent does not apply for
permission then reasonable excuse cannot apply. TPK argues that
the phrase “without lawful authority or reasonable excuse” is an
element of a section 9 offence and, in the context of statutory
conspiracy, the prosecution would need to prove that the accused was
a party to an agreed course of conduct which, if performed, would

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necessarily amount to the commission of an offence. Furthermore,
it is argued that section 24 POBO (the reverse burden of proof) does
not apply to a conspiracy charge as that is not “an offence under this
Ordinance:” it is an offence contrary to section 159A of the Crimes
Ordinance (CAP 200).

21. As to reasonable excuse, the Respondent’s position remains

that this is not an element of the offence that requires to be proved. It
is a defence which could only come into play once it had been shown
that an agent had solicited/accepted an advantage which was
provided as an inducement/reward for an act/forbearance in relation
to the principal’s affairs. Section 24 passes both the rationality and
proportionality tests principally because of the inherent difficulties in
investigating and prosecuting corruption offences and because the
existence of reasonable excuse is peculiarly within the defendant’s
knowledge. These are compelling reasons which justify the
abrogation of the presumption of innocence. Section 9 (like sections
4 and 5) is an offence of corruption and the provision should not be
read down so as simply to cast an evidential burden on the accused
(see NG Po On at paragraph 77) and thereafter to retain the
persuasive burden on the prosecution. (See, for example, HKSAR v
Diao Rui [2015] 4 HKLRD 187 and FU Kor Kuen Patrick v HKSAR
(2012) 15 HKCFAR 524)

22. It is a question of law for the judge as to whether particular

facts are capable of amounting to reasonable excuse and a question of
fact for the first instance fact finder as to whether those facts do
amount to the defence (R v Jones (1995) 2 WLR 64 at 69 A-C: R v
Tsang Chu-lun (1994) 1 HKC 769). The term “reasonable excuse” is
certainly vague but it is submitted that having regard to the

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legislative purpose behind section 9 the scope for its application will
be narrow. The approach in examining a defence of reasonable
excuse is as set out by this Court in HKSAR v Ho Loy (supra) at
paragraph 36. Firstly, what matters in the particular case are said to
constitute reasonable excuse? Secondly, is the excuse genuine?
Thirdly, is the excuse reasonable according to an objective standard
having regard to the particular circumstances? It is submitted that
the range of relevant circumstances will be narrow in this statutory
context. Reasonable excuse is likely to arise principally in cases
where it is contended that the principal’s consent could have been
obtained or where it was reasonably believed that it could have been.
CACS 2 was correct to state that where an agent has not taken any or
any proper steps to seek or confirm the consent then the defence will
not be made out.

23. TPK argues that the language of section 24 POBO makes it clear
that it does not apply to statutory conspiracy because that is not an
offence “under this Ordinance”. Certainly, in some other statutory
contexts the phrase “under this Act” has been construed to describe
substantive offences created by the Act in question and not to
common law or statutory conspiracy (see R v Cuthbertson (1981) AC
470 and the Misuse of Drugs Act 1971). That debate, however, is
otiose in this case with a conspiracy charge to breach section 9 POBO
because section 12A expressly provides that “any rules of evidence
which apply with respect to the proof of any such offence shall apply
in like manner to the proof of conspiracy to commit such offence”.
TPK’s submissions as to the legislative intention behind section 12A
and the later restatement of the offence of conspiracy in section 159A
in 1996 are not accepted (TPK’s Case paragraphs 96-106). The
rationality and proportionality of a reverse burden in the context of

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reasonable excuse and the solicitation/acceptance of a secret
commission by an agent apply equally to the substantive and
inchoate versions of the offence. In both instances, it will be
peculiarly within the knowledge of the agent if such circumstances
genuinely exist to substantiate the defence. Section 24 operates to
impose a persuasive burden on the defence in both substantive and
conspiracy offences to contravene POBO.

24. In the event that the Respondent’s submissions on the

application of the reverse burden in section 24 to the offence of
conspiracy are rejected, then it is submitted that the alternative
substantive charges in charge 2 (contrary to section 9(1)(a)) and
charge 3 (section 9(2)(a)) are proven on the evidence adduced in any
event.

Summary
25. With regard to the two Points of Law, therefore, an agent will
contravene section 9(1)(a) POBO if:-

a.) he solicits/accepts an advantage (as defined in section 2);

b.) whilst knowing that it is being offered as an inducement or

reward for doing an act/forbearing;

c.) in a manner which influences or affects the affairs/business

of his principal.

If he does act/forbear as above, or conspire to do so, then it will be

for him to prove on the balance of probabilities that he had lawful

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authority or reasonable excuse to do so. Reasonable excuse, whilst
wider than lawful authority, has a narrow application in the context
of section 9.

Substantial and Grave Injustice?

26. The Respondent relies on the matters and arguments advanced
above. The Appellants have suffered no substantial and grave
injustice.

Dated this 19th day of December 2016.

JONATHAN CAPLAN QC

ERIC KWOK SC

FELIX TAM SPP

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 FACC 11/2016
IN THE COURT OF FINAL APPEAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CRIMINAL APPEAL NO. 11 OF 2016
(ON LEAVE TO APPEAL FROM
CACC NOS. 103 OF 2012 AND 183 OF 2014)
_______________________

SECRETARY FOR JUSTICE Respondent

and

CHAN CHI WAN STEPHEN (陳志雲) Appellant

_______________________

FACC 18/2016
IN THE COURT OF FINAL APPEAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CRIMINAL APPEAL NO. 18 OF 2016
(ON LEAVE TO APPEAL FROM
CACC NOS. 103 OF 2012 AND 183 OF 2014)
_______________________

SECRETARY FOR JUSTICE Respondent

and

TSENG PEI KUN (叢培崑) Appellant

______________________

CONSOLIDATED RESPONDENT’S CASE

_______________________

Dated: 19th December 2016

Filed: 19th December 2016

Department of Justice
5th -7th Floor, High Block,
Queensway Government Office,
66 Queensway, Hong Kong
Tel: 2867 2383
Fax: 2869 0236
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