Hong Kong's New Mediation Ordinance
by Karen Dicks
In our October 2011 newsletter, we reported on the establishment of a cross-sector working party on mediation, whose remit was to review the development and provision of mediation services in Hong Kong and make recommendations on ways to facilitate and encourage the wider use of mediation and ensure the quality and standard of such. The Working Party, published its report on 8 February 2010, containing 48 recommendations, one of which was the enactment of a stand alone Mediation Ordinance, to provide a regulatory framework in respect of certain aspects of mediation, including (amongst other things) confidentiality and privilege.
The Mediation Bill was introduced into LegCo on 18 November 2011 and passed on 15 June 2012. On 16 October 2012, the Secretary for Justice announced that the Mediation Ordinance ("the Ordinance") will come into effect on 1 January 2013.
Purpose of the Ordinance
The Ordinance states it objects as:-
to promote, encourage and facilitate the resolution of disputes by mediation; and
to protect the confidential nature of mediation communications.
For the purpose of the Ordinance, "mediation" is defined as:
..." a structured process comprising one or more sessions in which one or more impartial individuals, without adjudicating a dispute or any aspect of it, assist the parties to the dispute to do any or all of the following:-
identify the issues in dispute;
explore and generate options;
communicate with one another;
reach an agreement regarding the resolution of the whole, or part, of the dispute".
A "session" is a meeting between a mediator and one or more of the parties to the dispute and includes any activity undertaken in respect of arranging or preparing for it (whether or not it takes place ) and follow up of issues raised at it.
What mediations does the Ordinance apply to?
The Ordinance applies to any mediation conducted under an agreement to mediate if either of the following circumstances apply:-
the mediation is wholly or partly conducted in Hong Kong; or
the agreement provides that the Ordinance or the law of Hong Kong is to apply to the mediation.
The Ordinance does not apply to those processes listed in Schedule 1 of the Ordinance. These include, for example, mediation proceedings under sections 32(3) and 33 of the Arbitration Ordinance (Cap 609), mediation under Part IIA of the Labour Relations Ordinance (Cap 55) or under section 11B of the Ombudsman Ordinance (Cap 397) and conciliation under, for example, the Labour Tribunal, Minor Employment Claims Adjudication Board Ordinance and Sex Discrimination Ordinance (for a full list, click here : Schedule 1 of Mediation Ordinance)
The Ordinance applies to:-
agreements to mediate made before, on or after 1 January 2013 i.e. the date when the Ordinance will come into effect;
mediations conducted before, on or after 1 January 2013.
mediation agreements entered into in Hong Kong or elsewhere.
What mediation communications does the Ordinance apply to?
The Ordinance applies to any mediation communication (made before, on or after 1 January 2013) relating to any mediation to which the Ordinance applies. A "mediation communication" means:-
anything said or done;
any document prepared; or
any information provided
for the purpose of or in the course of mediation, but does not include:
an agreement to mediate; or
a mediated settlement agreement.
Confidentiality of mediation communications
The Ordinance prohibits a person from disclosing a mediation communication, except in the following circumstances:-
with the consent of the parties to the mediation, the mediator(s), and the person who made the communication (in those cases where s/he is not a party to the mediation);
information that is already in the public domain (apart from that put in the public domain unlawfully);
information which is otherwise subject to discovery in civil proceedings or similar procedures;
there are reasonable grounds to believe that disclosure is necessary to prevent/minimise danger of injury to any person or of serious harm to a child's well-being;
disclosure is made for research, evaluation or educational purposes, without revealing the identity of the person to whom the mediation communication relates;
disclosure if made for the purpose of seeking legal advice; or
disclosure is required by law.
A mediation communication can be disclosed, with the court's or tribunal's leave, for the following purposes-
enforcing or challenging a mediated settlement agreement;
establishing or disputing an allegation or complaint of professional misconduct made against a mediator, or any other person who participated in the mediation in a professional capacity;
any other purpose that the court or tribunal considers justifiable in the circumstances of the case.
Admissibility of mediation communications in evidence
A mediation communication can only be admitted in evidence in proceedings with the court's leave.
Leave for disclosure or admission into evidence of a mediation communication
The Ordinance specifies the matters to be taken into account by the court or tribunal when deciding whether to grant leave for disclosure of a mediation communication or its admission into evidence, namely whether the mediation communication may be or has been disclosed i.e. whether it falls within one of the categories, referred to at (a) to (g) above, whether it is the public interest or interests of the administration of justice and any other circumstances or matters the court or tribunal considers relevant.
Defamatory statements by someone with poor credibility do less harm to a Plaintiff's reputation and are therefore an important reason for lowering general damages for libel
by Robert Clark
In Oriental Daily Publisher Ltd & Anor v Ming Pao Holdings Ltd & Ors, FACV 1/2012, 26 September 2012, the Court of Final Appeal examined the principles concerning the assessment of damages for libel, in a case involving a newspaper reporting on defamatory statements and where the person making the original defamatory statements was of low credibility. The question of whether a corporation can be awarded aggravated damages for libel was also addressed.
The 1st Plaintiff ("Oriental") is the publisher of the Oriental Daily News and the 2nd Plaintiff ("CK Ma"),the honorary chairman of its parent company, the Oriental Press Group. The Defendants are the proprietor, publisher and chief editor of Ming Pao Daily ("Ming Pao").
In 2008 Ming Pao published an article reporting on a demonstration by Ma Chiu Sing ("Chiu Sing"), which said that Chiu Sing had been imprisoned for criminal intimidation against Oriental and referred to himself as "The Hong Kong Bin Laden". Although not stated in the article, in 2002 Chiu Sing had been found guilty of poisoning food in a supermarket and making terrorist threats, for which he was imprisoned. On his release, he had sent threatening letters to the Oriental Daily News, leading to his conviction for criminal intimidation. His original crime and conviction had been widely covered in the press at the relevant time.
While demonstrating, Chiu Sing displayed a banner, which the Mao Ping article included a photograph of, so that the words on it were legible. The Plaintiffs sued for libel based on the words appearing on the banner, which they contended were repeated by the Defendants' publication of the photograph. They claimed that the words meant that they had forged evidence in order to falsely incriminate Chiu Sing, conspired with a prosecution witness by bribing him to give false evidence against Chiu Sing, and perverted the course of justice, resulting in Chiu Sing's imprisonment for criminal intimidation.
The Court of First Instance ruled that the Defendants were liable for having defamed the Plaintiffs, by repeating Chiu Sing's defamatory accusations and awarded Oriental HK$150,000 and CK Ma HK$1.5million plus an additional $75,000 each in aggravated damages.
The Defendants appealed and the Court of Appeal upheld the judgment on liability, holding that Ming Pao's defence could only succeed, if the article was so incredible that no reasonable reader could believe it. While the Court of Appeal was prepared to accept that very few people would believe the allegations in the article, it was unable to conclude that no reasonable reader of the article could possibly believe Chiu Sing's allegations. However, the content of and background to the article and an examination of previous libel awards, led the Court of Appeal to conclude that the awards of general damages of HK$150,000 and HK$1.5million were "manifestly excessive". The Court of Appeal described the case as one involving "repetition of accusations by a notorious criminal, which many would regard as incredible" and concluded that only very few of Ming Pao's readers would have given credence to the accusations. Accordingly, they reduced the awards for general damages to HK$50,000 and HK$150,000 respectively. The awards of aggravated damages were set aside entirely.
The Plaintiffs appealed to the Court of Final Appeal, seeking to restore the original awards for damages. The Court of Final Appeal unanimously dismissed the appeal, holding as follows:-
Damages in libel actions are compensatory in nature and, accordingly, in order to compensate the injured party, the effect and extent of the relevant statement must be considered. Poor credibility of an accuser ought to be regarded as relevant in assessing general damages. Defamatory accusations originating from someone whose credibility is doubted is likely, as matter of commonsense, to do less harm to the Plaintiff's reputation, cause less distress and require less to vindicate his reputation, than the same accusations originating from an authoritative and credible source. On the facts, the Court of Appeal had been entitled to find that the "low credence" argument was made out, both by reference to the content of the article itself and to the facts of Chiu Sing's original conviction, which were sufficiently notorious for the court to be entitled to attribute knowledge of them to a segment of Ming Pao's readers.
The Court of First Instance's awards were manifestly excessive on the facts of this case. Although arguable that in the light of Ming Pao's publication to its much wider readership and of the awards in the media cases listed by the Court of Appeal, the damages substituted were on the low side, they were not so low as to justify the Court of Final Appeal's interference.
Aggravated damages are part of the compensatory award and may be granted to compensate for additional injury to a plaintiff's feelings caused by a defendant's conduct. A corporation cannot be regarded as having feelings capable of being injured and, accordingly, Oriental, being a company, was not entitled to aggravated damages.
In respect of CK Ma, two matters were relied on as a source of aggravation, namely, "stubborn persistence" in defending the action and failure to apologize. Persisting in an unjustifiable defence of justification may justify an award of aggravated damages, but the defence in the present case was qualitatively different. Far from Ming Pao saying that Chiu Sing's allegations were true, it was saying that no-one could possibly take them seriously. In respect of the absence of an apology, although generally accepted that this can result in aggravated damages, maintenance of a particular defence may leave no room for an apology. This applied here because the Defendants were entitled to contend (even though they were eventually to fail) that Chiu Sing's low credibility deprived Ming Pao's republication of any defamatory effect. To penalize them in aggravated damages for not apologizing would unjustifiably imply that they were in effect required to admit liability.
Cathay Pilots lose appeal against decrease in damages for defamation
by Robert Clark
This Court of Final Appeal decision of Campbell Richard Blakeney-Williams & Ors v Cathay Pacific Airways Ltd & Ors, FACV 13/2011, 26 September 2012, involved the dismissal from employment of a number of airline pilots and their claims against Cathay Pacific for damages for breach of contract and fiduciary duty and defamation. This article examines the latter claim.
The dispute concerned Cathay's approach to pilots' rostering practices and contract entitlement, which in the view of the Hong Kong Aircrew Officers Association ("the Union") imposed unreasonably long flying hours on and granted unreasonably short breaks to pilots. The dispute escalated and Union members adopted a "contract compliance" regime, involving rigid adherence to the pilots' employment contracts, which seriously disrupted Cathay's business. The Union also threatened industrial action, which led to Cathay setting up an internal review team to identify pilots who had "an attendance problem", "had a warning letter on file in connection with a disciplinary matter" or were considered "unhelpful and uncooperative". 49 pilots ("the 49ers") were selected for dismissal. Following their dismissal, public statements were issued by Cathay, including a press statement, which referred to the dismissals and described the pilots as employees "who we feel cannot be relied upon to act in the best interests of the company in future" and in whom "we have lost confidence" and that "Hong Kong was tired of being "held to ransom". Cathay also publically stated that it would not allow the 49ers to disrupt the airline, its employees and customers or reputation of Hong Kong and could not allow them to let much larger numbers of flight crews, who were showing the total professionalism Cathay required, to suffer.
In 2006, the majority of the 49ers commenced legal proceedings against Cathay. The Court of First Instance held that Cathay had defamed each Plaintiff by the statements (referred to above) and awarded each of them general damages of HK$3million plus aggravated damages of HK$300,000.
Cathay appealed to the Court of Appeal who upheld the Court of First Instance's finding on liability, but reduced general damages to HK$700,000 for each Plaintiff and overturned the awards for aggravated damages.
The Plaintiffs appealed to the Court of Final Appeal in respect of general damages and for reinstatement of the award of aggravated damages. The Court of Final Appeal dismissed the Plaintiffs' appeals, holding as follows:-
Only if the appellate court decides that the trial judge adopted a wrong reason which vitiates his award, or that he went outside the permissible range of general damages will it go on to consider for itself what damages to award. This issue was also fully considered in the Oriental Daily Publisher case above.
The Court of Appeal was right to conclude that the award of HK$3 million to each Plaintiff could not stand. The Court of First Instance had wrongly compared the damage caused to each Plaintiff to the damage suffered by the Plaintiff in another case, involving a solicitor awarded HK$3 million for wholly inaccurate reports that she had absconded with clients' funds. The Court of Appeal had been correct in finding that the libel in that case was inherently far more serious than the libel in this case. By contrast, the statements in this case did not question the Plaintiffs' character or their competence as pilots: they amounted, as the Court of Appeal said, to implied allegations of disloyalty, disruptiveness and being poor employees. Further, the great majority of readers of the statements would have appreciated that they had been made by an employer in the context of a long-running and bitter dispute.
Although an appellate court should be slow to interfere with a trial judge's award of general damages for defamation, given that the damages awarded in this case were arrived at on a wrong basis, and were anyway plainly too high, the Court of Appeal was justified in stepping in and assessing damages themselves and the HK$700,000 awarded by the Court of Appeal was plainly within permissible bounds. Although understandable that some of the Plaintiffs may have felt that this was on the low side, it was not a figure with which an appellate court should interfere.
Having rejected the award of HK$3 million and before deciding on the figure of HK$700,000, the Court of Appeal had made reference to the level of general damages in personal injury cases and said that having regard to such, the award of HK$3 million in this case was manifestly excessive. There was nothing wrong with the court referring to the level of personal injury damages, at least as a sort of cross-check, as it was offensive to public opinion that a defamation plaintiff should recover damages for injury to reputation greater, perhaps by a significant factor, than if that same plaintiff had been rendered a helpless cripple.
The Court of Appeal was right in finding the Court of First Instance wrong in awarding aggravated damages. As the Court of Appeal had said, although a plea of justification was advanced, it was advanced in respect of a meaning other than the one for which the court ultimately held Cathay liable. At no stage was there an attempt to justify the wider meaning for which Cathay was held liable. The defence failed because the Judge rejected the Defendants' case on interpretation. However, that case, although rejected by the Court of First Instance and Court of Appeal, was not cynical or hopeless, even if some may regard it as weak. It was wrong in principle to award aggravated damages to a plaintiff in a defamation case, solely because the defendant had decided in good faith to raise a defence of justification, which was then run in a reasonable way. The fact that the defence fails, is not enough, on its own, to bring aggravated damages into play. An unsuccessful plea of justification is per se evidence of malice and a ground for increasing damages, but only if the plea was completely unsupportable in the circumstances.
So far as the absence of an apology was concerned, it could not take matters any further in a case such as this, where the Defendant had decided in good faith to raise a defence of justification, which was then run in a reasonable way. After all, it was scarcely consistent for a defendant to apologise if he was running a defence of justification: it would positively undermine the defence.
Although, the statements had remained on Cathay's website for eight years, (i) they were not easily accessible in relation to any particular Plaintiff; (ii) there was no suggestion that the statements were deliberately left on the website; (iii) as soon as the Plaintiffs asked for the statements to be removed, they were; (iv) it was not put to the Defendants' witnesses that there was any malice in the maintenance of the statements on the website; (v) there was no evidence that damage of any nature, over and above that for which general damages were sought, had been caused to the Plaintiffs by the retention of the statements on the website. Accordingly, the award for aggravated damages would not be reinstated.
VST Holdings chairman convicted of price rigging
by Joseph Kwan
On 22 October 2012 (following an 8 day trial in the District Court, in September 2012), the chairman of VST Holdings Limited (VST), Mr Li Jialin ("Li"), was convicted of 10 counts of price rigging and 16 counts of failing to disclose his interest in VST shares.
Li had pleaded not guilty to the 11 counts of price rigging and was acquitted of one count. He pleaded guilty to 16 charges of failing to disclose the extent of his interest in VST shares, as required by the Securities and Futures Ordinance ("the SFO"). Li had been charged under sections 296 and 341 of the SFO.
Under section 296 of the SFO, price rigging arises when a transaction of sale or purchase of securities does not involve a change in beneficial ownership of those securities and has the effect of maintaining, increasing, reducing, stabilizing, or causing fluctuations in the price of securities traded. The transaction does not have to be intentional and recklessness as to the effect of the transaction is sufficient. It is a defence for the defendant to prove that the purpose for which the securities were sold or purchased was not (or where there was more than one purpose, the purposes did not include) the purpose of creating a false or misleading appearance with respect to the price of securities. The maximum penalties for price rigging are a fine of HK$10,000,000 and 10 years imprisonment on indictment or a fine of HK$1,000,000 and 3 years imprisonment on summary conviction.
Under section 341 of the SFO, a director or chief executive of a listed corporation comes under a duty of disclosure upon the occurrence of certain events, including any change in his interests in shares in the listed corporation or any associated corporation. Maximum penalties for failing to comply with this section are a fine of HK$100,000 and 2 years imprisonment on indictment or a fine of HK$10,000 and 6 months imprisonment on summary conviction, under section 351 of the SFO.
In Li's case, the Court heard that, between August 2007 and January 2008, Li operated three different accounts, one in his own name, another jointly with his wife and a third in his brother's name, through which he bought and sold VST shares, in transactions that involved no change in the beneficial ownership of those shares. The Court found that these transactions had the consequence of increasing the price of VST shares.
On 31 October 2012, the District Court sentenced Li to six months imprisonment and fined him HK$240,000 for price rigging and failing to disclose his interest in VST shares. He was also ordered to pay HK$168,282 investigation costs to the Securities and Futures Commission. Li was also disqualified from being a director of a listed company for one year and, as a result, will have to relinquish his positions as chairman and director of VST.
This is the first time that a listed company chairman has been convicted of a market manipulation offence since the SFO came into effect on 1 April 2003. If you would like to know more about what constitutes price rigging or other market misconduct, please feel free to contact us.
SFC's Consultation Service on Statutory Disclosure Regime available from 1 December 2012
by Joseph Kwan
The statutory disclosure regime whereby listed corporations will be required to disclose price sensitive information in a timely manner (backed by civil sanctions for non-disclosure) and the SFC's Guidelines on Disclosure of Inside Information, will come into effect on 1 January 2013.
On 29 November 2012, the SFC announced that, with effect from 1 December 2012, it will provide a consultation service to listed corporations, to assist them understand and comply with the disclosure provisions. Consultations will take the form of verbal discussions and the views expressed by the SFC will be preliminary and non-binding.
Contact details for the consultation service are on the SFC's website:
Hong Kong's New Competition Ordinance - Commencement Notice issued in Government Gazette
by Karen Dicks
As reported in our August 2012 newsletter, the Competition Bill was passed on 14 June 2012 and will come into effect on a day to be appointed by the Secretary for Commerce and Economic Development.
On 23 November 2012, a commencement notice was published in the Government Gazette, stating that certain sections and parts of the new Competition Ordinance will come into effect on 18 January 2013 and others on 1 August 2013. The sections and parts in question mostly relate to guidelines to be issued by the Competition Commission, its constitution, powers and procedures.
The following is a brief summary of those provisions to come into effect on 18 January 2013 and 1 August 2013.
Provisions to come into effect on 18 January 2013
Section 1: Short Title and Commencement.
Section 2: Interpretation.
Section 35: Guidelines: These are guidelines issued by the Competition Commission (i) indicating the manner in which it expects to interpret and give effect to the conduct rules; (ii) the manner and form in which it will receive applications for a decision or block exemption order; and (iii) indicating how it expects to exercise its power to make a decision or grant block exemption orders.
Section 38: Guidelines regarding complaints: These are guidelines issued by the Competition Commission indicating the manner and form in which complaints are to be made. Under section 37, any person can lodge a complaint with the Commission (in accordance with the guidelines) alleging that an undertaking has contravened, is contravening or is about to contravene a competition rule.
Section 40: Guidelines regarding investigations: These are guidelines issued by the Competition Commission indicating (i) the procedure it will follow in deciding whether or not to conduct an investigation; and (ii) the procedures it will follow in conducting an investigation.
Section 59: Guidelines: This section relates to the Competition Commission's power to amend any guidelines and publication of the amendments.
Part 8: Disclosure of Information: This Part covers the disclosure of confidential information provided or obtained by the Competition Commission in the course of or in connection with the performance of its functions under the Ordinance, including the Competition Commission's duty to establish and maintain safeguards to prevent unauthorized disclosure, the circumstances in which it can be disclosed and obligations of third parties not to disclose.
Part 9: This part deals with the establishment, functions and powers of the Competition Commission and its relationship to the Government, the latter provisions stating that the Commission is not a servant or agent of the Government and does not enjoy any status, immunity or privilege of the Government. It also provides for personal immunity for members of the Competition Commission for anything done or omitted to be done, in good faith, in performance of the Commission's functions.
Divisions 1 and 2 of Part 12: Division 1 deals with miscellaneous provisions including (i) Mergers (this simply states "Schedule 7 (Mergers) has effect"; (ii) Determination of turnover of an undertaking; (iii) the Competition Commission's fees; and (iv) Personal immunity of public officers. Division 2 deals with the service of documents on and by the Competition Commission.
Section 176: This relates to consequential and related amendments to other enactments, which are set out in Schedule 8 and includes amendments to the Companies (Disqualification Orders) Regulations, Judicial Officers Recommendation Commission Ordinance, Telecommunications Ordinance, Prevention of Bribery Ordinance, Broadcasting (Miscellaneous provisions) Ordinance, Ombudsman Ordinance, Broadcasting Ordinance and Communications Authority Ordinance.
Schedule 5: This relates to the Competition Commission-its composition, terms of appointment, resignation of members, removal from office, etc, procedures for its meetings, financial provisions and keeping of accounts by the Commission, disclosure of interest by its members, delegation of the Commission's functions, and its seal.
Part 6 of Schedule 7: This provides that the Competition Commission must issue guidelines indicating the manner in which it expects to interpret and give effect to the provisions in Schedule 7 (Schedule 7 relates to Mergers).
Parts 5 & 7 and section 32 of Schedule 8: Schedule 8 contains the consequential and related amendments to other Ordinances (as referred to above under Section 176). Part 5 relates to amendments to the Prevention of Bribery Ordinance and Part 7 to Amendments to the Ombudsman Ordinance. Section 32 of Schedule 8 relates to "confidential matter to be safeguarded" under the Broadcasting Ordinance.
Provisions to come into effect on 1 August 2013
Part 10: Competition Tribunal: This part relates to the constitution of the Competition Tribunal, its jurisdiction and powers, its practice and procedure and the rules.
Part 3 of Schedule 8: This relates to the amendments to the Judicial Officers Recommendation Commission Ordinance.
The provisions coming into effect on 18 January and 1 August 2013 relate to the ground work that needs to be done before the main provisions of the Ordinance can come into effect and full implementation of the Ordinance will follow. It is therefore very important for businesses to :-
1) familiarize themselves with the provisions of the Competition Ordinance and identify any potential areas of risk in respect of their current activities;
2) promote in-house awareness and training to ensure that key decision-makers know what:-
types of agreements and practices may breach the Ordinance;
types of agreements and practices are exempt from the Ordinance, or could be exempt, upon application to the Commission;
the extra-territorial reach of the Ordinance and implications of such;
3) devise and implement internal policies and procedures to ensure compliance with the Ordinance.
Court of Final Appeal rules that Section 14(4) of the Prevention of Bribery Ordinance (Cap. 201) ("POBO") overrides the common law privilege against self incrimination in respect of persons served with notices under section 14 of the POBO
by Joseph Kwan
The issue before the Court of Final Appeal
A v The Commissioner of the ICAC, FACC 9/2011 concerned a key feature of the ICAC's investigative powers, namely, notices issued under s.14 of the POBO. The question before the Court of Final Appeal was whether a person served with a s.14 notice ("Notice") could lawfully invoke privilege against self-incrimination to justify refusing to comply with it.
Under section 14 of the POBO, the ICAC's Commissioner ("the Commissioner") or investigating officer may (for the purpose of an investigation into or proceedings related to a suspected offence under the POBO), apply ex parte to the Court of First Instance, for an order authorizing the Commissioner to serve a Notice on a person, requiring him to provide specified information and/or documents.
The appellant A, had been served with a Notice under s.14(1)(d) of the POBO. A Notice under that sub-section can be authorized by the Court where it is satisfied that there are reasonable grounds for suspecting that an offence under the POBO has been committed, and the Commissioner believes that the person to be served is acquainted with any facts relevant to an investigation or proceedings. The Notice requires the recipient to furnish the investigating officer with all information in his possession or to which he may reasonably have access, in respect of such matters specified in the Notice, appear before the investigating officer to answer any questions or produce documents in his possession or under his control or to which he may reasonably have access.
The Notice served on A stated that an investigation was being carried out into offences suspected to have been committed by a named person, contrary to the POBO (conspiracy to offer advantages to a named public officer, contrary to s.9(2) of the POBO and s.159A of the Crimes Ordinance, Cap.200) and that the Commissioner believed A to have information relevant to the investigation. The Notice required A to appear before a named ICAC investigating officer ("the named investigator") at ICAC headquarters to answer orally, on oath or affirmation, questions relevant to the investigation. The Notice also stated that A was required, on demand by the named investigator, to furnish such documents as the investigator considered relevant to the investigation.
The Notice also specified the period within which A had to comply with its terms and that failure or neglect to comply, without reasonable excuse, was an offence under s.14(4) and that the wilful making of any false statement in answer to the Notice was an offence under s.14(5), with liability to a fine of HK$20,000 and one year's imprisonment.
A issued a summons under the Rules of High Court, Order 32, rule 6 and Order 119 and under the Court's inherent jurisdiction seeking a declaration that he was entitled to assert privilege against self-incrimination, whether at common law and/or under Articles 10 and 11 of the Hong Kong Bill of Rights and/or Article 39 of the Basic Law, as a lawful basis for resisting disclosure of any document(s), information and/or any other material(s) sought. Further or alternatively, A sought an Order setting aside the Notice and Court's Order on the basis that sections 14(1), 14(4), and/or 20 of the POBO violate Articles 10 and 11 of the Hong Kong Bill of Rights and Article 39 of the Basic Law, by depriving a respondent of privilege against self-incrimination.
A's summons was dismissed. The Appeal Committee granted A leave to appeal to the Court of Final Appeal by reason of the points of law of great general or public importance involved.
The Court of Final Appeal's Ruling
On 13 November 2012, the Court of Final Appeal dismissed A's appeal and ruled as follows:-
Section 14(4) of the POBO states that:
"Every person on whom a notice under subsection (1) is served shall, notwithstanding the provisions of other Ordinance or rule of law to the contrary save only the provisions of section 4 of the Inland Revenue Ordinance (Cap.112), comply with the terms of that notice.....and any person on whom such a notice has been served, who, without reasonable excuse, neglects or fails so to comply shall be guilty of an offence and shall be liable on conviction to a fine of $20,000 and to imprisonment for 1 year."
The language of section 14(4) was clear enough when taken in its historical context of the advent of the ICAC as a vital body vested with extraordinary investigative powers. Just about every person in Hong Kong knew that the choice had been made to invest the ICAC with investigative powers that impacted upon fundamental rights. The intent to be imputed to the legislature, from the words it used and context in which those words were used, was an intent to abrogate privilege against self-incrimination in regard to compliance with s.14 notices.
The obligation to provide such information is imposed "notwithstanding the provisions of other Ordinance or rule of law to the contrary save only the provisions of section 4 of the Inland Revenue Ordinance (Cap 112)." In this context, a rule of law "to the contrary" can only mean a rule of law which would otherwise contradict or relieve the subject of the obligation imposed by section 14(4) to comply with the terms of the Notice. The common law privilege against self-incrimination is obviously such a rule of law. It is a general immunity which every person has against being compelled to answer questions which may incriminate them. It followed that in compelling compliance with a section 14 Notice, notwithstanding other Ordinances or rules of law to the contrary, section 14(4) necessarily removed the immunity from answering questions, which the privilege against self-incrimination would otherwise provide. Section 14(4) makes it clear that its exclusion of contrary rules of law is general â€“ therefore encompassing the privilege against self-incrimination â€“ by providing as its "only" exception, section 4 of the Inland Revenue Ordinance.
Such abrogation was not unconstitutional.
Where an Ordinance abrogates the privilege against self-incrimination, the person concerned is required to provide the information sought even though it may have a tendency to incriminate him if such information should later be used against him as a defendant in criminal proceedings. However, the legislative objective of such abrogating provisions is generally to facilitate investigation of suspected criminal or other prohibited conduct and not to enable self-incriminating evidence to be collected by compulsory means for use in criminal proceedings against the subject of the compulsion. Accordingly, legislation which excludes the privilege against self-incrimination usually also regulates the admissibility and use that can be made of the compelled information i.e. prohibits/restricts "direct use" i.e. use of the compelled answers in criminal proceedings as evidence against the person from whom they were extracted. Such prohibition therefore excludes potentially self-incriminating evidence form being used in court.
Such statutes generally do not seek to prohibit and do not have the effect of prohibiting "derivative use" of the compelled answers. Thus, there is usually no prohibition against using the compulsorily obtained answers to develop new lines of inquiry; to identify sources of independent evidence; to assist in formulating applications for search warrants; and so forth. Such derivative use of the compelled answers does not raise any issue concerning self-incrimination or admissibility since it is use which does not involve any attempt to adduce the answers in evidence in any curial setting. The law has always drawn a distinction between (inadmissible) compelled answers themselves and (admissible) derivative evidence independently developed from indications contained in the compelled answers. Against that background, section 20(a) of the POBO should be construed. The question was whether it operated as a provision which restricts the admissibility and use that can be made of the compulsorily obtained material.
Section 20(a) provides:
"In any proceedings against a person for an offence under this Ordinance - (a) if such person tenders himself as a witness then any statutory declaration or statement in writing furnished by him in compliance or purported compliance with the terms of a notice served on him under section 14 shall be regarded as a former statement made by him relative to the subject-matter of the proceedings and sections 13 and 14 of the Evidence Ordinance (Cap 8) shall apply with respect to that witness;..."
Section 20(a) imposes a general direct use prohibition in respect of all information provided by the subject in compliance with a section 14 Notice, subject to the exception that direct use may be made of a statutory declaration or statement in writing obtained pursuant to section 14(1)(a), (b) or (c) for the limited purposes specified in section 20(a). There is a complete direct use prohibition in relation to answers given in response to a notice issued under section 14(1)(d). Thus A was not at risk of his responses given in compliance with the Notice being used directly as evidence to incriminate him if he should ever become a defendant in a criminal trial. This was because the direct use which continues to be permitted under section 20(a) is confined to the use of any "statutory declaration or statement in writing furnished by [the subject of the notice] in compliance or purported compliance with the terms of the notice served on him under section 14â€¦" Section 14(1)(d) does not mention and is not concerned with notices requiring the subject to furnish statutory declarations or statements in writing.