The Hong Kong Court of Appeal quashed the fraud convictions against Apple Daily newspaper founder Jimmy Lai Chee-ying and its administrative director, Wong Wai Keung, on Thursday.

The appellate court rejected the reasoning of District Judge Stanley Chan, who convicted Lai and Wong of fraud in 2022. Judge Chan found that Lai operated a consultancy firm, in violation of a term in the government tenancy that limits the premises’ usage to the printing of newspapers and magazines only. The judge held that the failure to disclose the breach to the government amounted to fraud under Section 16A of the Theft Ordinance.

The court on Thursday, however, held that the defendant owed no duty to disclose to the government the breach. This is premised on the commercial landlord-tenant relationship between Apple Daily and the government, which attracts no duty of disclosure on the tenant regarding their breach under well-established common law contractual principles. Judge Chan also erred in law in attributing the criminal liability of Apple Daily, if any, to Lai and Wong, according to the court.

The court further concluded that the prosecution failed to prove beyond a reasonable doubt that Lai made a false representation regarding the use of the premises in question.

In response to the ruling, the government maintained that Lai has been exploiting public resources for personal purposes for more than 20 years. The government spokesperson also highlighted that the ruling represents how Hong Kong courts have been operating independently and transparently. The Department of Justice stated that it will consider lodging an appeal after a careful study of the judgment.

In 2021, Lai was convicted of taking part in an unauthorized assembly. In another trial, the Court of First Instance convicted Lai of sedition and two counts of conspiracy to collude with a foreign country or external elements to endanger national security. The court sentenced Lai to 20 years of imprisonment on February 10. According to The Witness HK, Lai’s sentence will end in 2042, when he reaches 95 years old.