Hong Kong courts should not blur the line between criminal and civil cases, the District Court heard as the prosecution and defence presented their closing statements during the fraud trial against Jimmy Lai.

Apple Daily
Apple Daily headquarters in Tseung Kwan O. File photo: Studio Incendo.

The 74-year-old founder of the pro-democracy tabloid and Wong Wai-keung, the former director of administration of Apple Daily’s parent company Next Digital, appeared in front of District Judge Stanley Chan on Wednesday.

The duo stand accused of violating the terms of Apple Daily’s lease with Hong Kong Science and Technology Parks Corporation (HKSTP) by concealing that a consultancy firm operated from the newspaper’s headquarters.

Lai faces two charges of fraud over two periods – from April 1, 1998, to December 31, 2015, and from January 1, 2016, to May 19, 2020 – while Wong faces one charge for the latter period.

Both defendants earlier pleaded not guilty to all charges and did not make any testimonies.

In his closing statement, Lai’s lawyer Derek Chan argued that the media tycoon did not need to disclose the alleged lease violation to the HKSTP. Such a responsibility was neither written into the contract nor had it raised in any previous cases involving breaches of contracts in common law countries, he said.

Even if there had been a violation of the lease, Derek Chan said it should have been considered a civil matter rather than a criminal matter.

District Court
District Court. File photo: Candice Chau/HKFP.

“How can [the prosecution] turn a breach of contract – something that occurs tens of thousands of times a day – into a fraud charge?” he asked.

Wong Wai-keung’s legal representative, Maggie Wong, echoed Derek Chan and said the boundary between civil and criminal cases should not be blurred.

The prosecution, however, said the case should be considered a criminal matter as Dico – Lai’s consultancy firm – had changed its registered address to the premises in question even before Lai signed the lease with HKSTP in 1999.

Director of Public Prosecutions Maggie Yang said thay Lai should have revealed that Dico was operating from Apple Daily’s headquarters as it was a “significant change of circumstance” but instead he had intentionally concealed it.

Wong Wai-keung was the one who liaised with the HKSTP on behalf of Apple Daily and had applied for licences for other subsidiaries to be run from the newspaper’s headquarters with the permission of the land owner, Yang said.

Both Lai and Wong had allowed Dico to operate without a license in the premises and obscured the information from the HKSTP.

However, Derek Chan said that when Lai formally signed the contract with the land owner, Dico held 49 per cent of Apple Daily Printing Limited’s shares but was not involved with Lai’s personal affairs until years later.

Chan, Stanley 陳廣池.jpg
Stanley Chan. File photo: Judiciary.

Meanwhile, Maggie Wong said there was no evidence to suggest that her client knew about Dico’s situation. None of the more than 260 text messages exchanged between Lai and Wong which were collected by the prosecution mentioned the company.

“Being employed at Next Digital does not mean that he knew everything,” Maggie Wong said.

Although a letter claiming Dico had not operated in Apple Daily’s headquarters was sent under Wong Wai-keung’s name to the HKSTP on April 1, 2020, Maggie Wong said there was no proof that her client knew of its content.

Maggie Wong said the letter had been written by an external team of lawyers, reviewed by the company’s legal advisor, and approved by her client’s superior.

Breach of contract?

Next Digital and the HKSTP enjoyed a “special relationship,” the prosecution said, meaning that the premises were rented at a discounted price.

In return, the premises were to be used for “the publishing and printing of newspaper and magazines” only.

However, much of Dico’s business was unrelated to the publishing of newspapers, Yang said. Dico offered secretarial services to 22 independent firms and private services for the media tycoon himself, she added.

Jimmy Lai
Jimmy Lai. File photo: Supplied.

The alleged concealment of Dico’s operations deprived HKSTP of its rights to ask its tenant to remedy, pay a premium or evacuate from the premise, according to the prosecution.

Meanwhile, Derek Chan argued that Dico’s operations from Apple Daily’s headquarters did not constitute a breach of contract.

While Dico did handle some of Lai’s investments, as well as car and yacht ownership, Lai’s lawyer said the company’s other operations fell under the exemptions in the lease, as they were “incidental to the lessee’s operation of business.”

For example, Derek Chan said Dico had managed Lai’s residence, which was a matter of his welfare, and provided accountancy and liaison services to Next Animation Studio Limited, which was also of journalistic nature.

The lawyer said the court should only consider if there had been “substantial compliance” with the lease by Lai and his companies. “How can it be possible for [Lai] to tell the HKSTP that every inch is used for the specified purpose?” he asked.

Apple Daily
Apple Daily’s final edition on June 23, 2021. File photo: Kelly Ho/HKFP.

Maggie Wong later added that Dico had only used 0.26 per cent of the total floor area of the headquarters of Apple Daily.

In addition, Derek Chan said it was unnecessary to apply for licences for Dico since it was not “occupying” space at the concerned premises, because there was no evidence to suggest that Dico could exclude others in the office complex from accessing that space.

He added that Lai had no intention of concealing Dico’s presence, as it had been paying rent to Apple Daily and the transactions were publicised in annual reports.

After listening to the closing statements from both sides, the judge adjourned the handing down of his judgement until October 25.

Apple Daily shuttered last June after Lai and six other top figures of the publication and its parent firm were charged under the Beijing-imposed national security law.

On Monday, a court case management hearing revealed that Lai is set to plead not guilty to the collusion and sedition charges he faces, while his six co-defendants are set to plead guilty.

On Wednesday, the High Court allocated 30 days from December 1 for a national security case involving Jimmy Lai and Apple Daily.

The media tycoon has been kept in remand since December 2020 and is currently serving time in jail for other protest-related cases.

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Peter Lee is a reporter for HKFP. He was previously a freelance journalist at Initium, covering political and court news. He holds a Global Communication bachelor degree from CUHK.