HKSAR v Luk and Yu
Court of Final Appeal
Ma CJ, Ribeiro, Tang and Fok PJs, Hoffman NPJ
8 December 2016

Corruption and bribery offences – meaning of “agent” and “other document” for the purpose of s. 9(3) of the Prevention of Bribery Ordinance – deception on company by sole directors of that company

Company X owned Company Y, which, in turn, owned Company Z. The Defendants were sole directors of Company Y. Company A, controlled by Luk’s wife, purchased Company Z for HK$15 million. The Defendants signed Board Minutes authorising the transaction stating that none of the directors of Company Y had an interest in Company A. At trial, it was found that Luk was the ultimate beneficial owner of Company A, and as such the transaction required disclosure and voting restrictions under the Stock Exchange Rules. It was argued that the Defendants could not be agents of Company X; that Board Minutes could not be a “document” for the purposes of s. 9(3) of the Prevention of Bribery Ordinance (Cap. 201) (the “POBO”) as the section should be interpreted eiusdem generis with the rest of s. 9(3) and thereby confined to documents such as receipts and accounts, the genus being “financial documents”; and that the directors of Company Y could not deceive Company Y as they were the mind and will of Company Y.

Held, dismissing the appeal that:

  • To become an agent of another for the purpose of s. 9(3), it was not necessary to have some pre-existing legal, contractual or fiduciary obligation to act in relation to that person’s affairs or business.  Luk had created a reasonable expectation that he would act in the interest of Company X and to the exclusion of his own interest.  More specifically, he assumed a duty to act in good faith and not deceive Company X into making a false statement to the Stock Exchange about his having no interest in the transaction. Therefore, the lower courts were right to hold that Luk was an agent of Company X. Yu, aware of the basis upon which Luk had put forward Company A as a buyer had participated in his deception.
  • Board Minutes were a “document” for the purpose of s. 9(3) of the POBO.  There was no need to confine the meaning of “document” to documents of the same type as receipts and accounts. However, it must be a document in respect of which the principal is interested and which contains a false or erroneous statement intended to mislead.
  • Company Y was indeed capable of being deceived by Luk and Yu notwithstanding they were sole directors. To be liable under s. 9(3) of the POBO, the deceiver need not have in mind the particular person whose state of mind will count as that of the principal.  In the present case, the false statement in the Board Minutes deceived an authorised officer of Company X into thinking the buyer was an independent party and he thereby executed the sale agreement on behalf of Company Y.  That was an act of Company Y and that officer’s deceived state of mind could be attributed to Company Y.
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