What is an agent under the Prevention of Bribery Ordinance?

HKSAR v CHU ANG (趙鶯)[2020] HKCFA 18
Before: Chief Justice Ma, Mr Justice Ribeiro PJ, Mr Justice Fok PJ, Mr Justice Chan NPJ and Mr Justice Stock NPJ
1 June 2020

Procedural History

Ms. Chu (the Respondent in this appeal) was charged with accepting an advantage as an agent contrary to section 9(1)(a) of the Prevention of Bribery Ordinance (“POBO”). At the trial, the Magistrate ruled that Ms. Chu had no case to answer as she was not an agent for the purposes of that section. This ruling was upheld by Deputy High Court Judge Gary Lam on the prosecution’s appeal by way of Case Stated.

The prosecution then sought leave to appeal from the Appeal Committee on a reformulated question and on the substantial and grave injustice basis, submitting that guidance was needed as to the proper approach to the status of “agent”. Leave to appeal was granted on the basis that it was reasonably arguable that there was a substantial and grave injustice in that the law had been misapplied in the decisions below.

Facts and Previous Decisions

Since 2009 or 2010, Ms. Chu, had been engaged by Ms. Law (“PW1”) to give private violin lessons to PW1’s son. In May 2013, PW1 asked Ms. Chu to assist her in the purchase of a new violin for PW1’s son. On 25th June 2013, Ms. Chu accompanied PW1 and PW1’s son to shop for a violin at CITL (an instrument shop). After PW1’s son and Ms. Chu had tried out the violins, Ms. Chu indicated that one of them was preferable and it was chosen for purchase.

The listed price of the violin was HK$99,000 but Ms. Chu helped PW1 to negotiate the price down to HK$80,000. About two weeks later, CITL paid Ms. Chu HK$20,000 which was the commission for the above transaction. Ms. Chu never informed PW1 about the commission.

PW2, an accounts clerk at CITL, testified that it was an established practice at CITL to provide a rebate to a teacher for the purchase of an instrument by a student referred by the teacher. PW2 also testified that the higher the discount that the teacher succeeded in negotiating for the student, the lesser the rebate the teacher would get.

The Magistrate ruled that Ms. Chu had no case to answer and found that:-

    • The prosecution had not established a prima facie case of any agent-principal relationship between the defendant and the witness for the purposes of POBO.
    • Whilst the teaching relationship was based on an independent contract for services, assistance provided by Ms. Chu in the purchase of the violin was purely voluntary and fell outside of that contract.
    • An agent-principal relationship has to be already in existence at the time when an offence was committed under section 9(1)(a), and that accordingly Ms. Chu was not an “agent” for the purposes of the statutory offence in relation to the violin acquisition.
    • Focusing on the violin acquisition, Ms. Chu was not an “agent” because she was not in a “special relationship” and did not come under an enforceable duty of trust and loyalty sufficient to constitute PW1 as Ms Chu’s “principal”.

    DHCJ Gary Lam upheld the Magistrate’s approach of requiring the impugned act to be performed pursuant to a pre-existing legal relationship.

    The CFA held, in unanimously allowing the appeal, that:

    • A person is an “agent” for the purposes of section 9(1)(a) where he or she “acts for another”, having agreed or chosen so to act in circumstances giving rise to a reasonable expectation, and hence a duty, to act honestly and in the interests of that other person to the exclusion of his or her own interests.
    • There is no need for any pre-existing legal relationship between the agent and the principal. Acceptance of a request to act may suffice and it may even be sufficient for the agent to choose to act for another without a request to do so.
    • The relevant act done or not done must be “aimed at the principal’s affairs or business” which subverts the integrity of the agency relationship to the detriment of the principal’s interests.
    • Economic loss suffered by the principal is not an element of the offence.
    • One cannot escape liability under section 9(1)(a) by relying on the fact that the commissions received were “normal practice” as section 19 of the POBO provides that “ … it shall not be a defence to show that any such advantage … is customary in any profession, trade, vocation or calling.”
    • The course of conduct taken by Ms. Chu in relation to the violin acquisition involved Ms. Chu acting for PW1. The purchase constituted the relevant “affairs or business” of PW1 as the principal. Ms. Chu’s conduct created a reasonable expectation that she would act honestly and in good faith in the interest of PW1, to the exclusion of her own interest in connection with such purchase. Acceptance of the secret commission placed Ms. Chu in a conflict of interest situation (as the lower she negotiated the price, the smaller her commission would have been), which was a scenario where the integrity of the material agency relationship would be subverted. Accordingly, the Magistrate and the Judge erred in their decisions.
    • The rulings that Ms. Chu had no case to answer be set aside.
    • The orders for costs made in Ms. Chu’s favour be set aside.
    • In light of the prosecution’s concession that they treated this as a test case and would not be seeking an order for resumption of the trial before the Magistrate in the event their appeal was successful, Ms. Chu’s verdict of acquittal was to stand.

This article by MCS originally appeared in Hong Kong Lawyer, the Official Journal of the Law Society of Hong Kong: HKSAR v CHU Ang