Hong Kong’s justice department will consider an appeal after a court overturned pro-democracy media tycoon Jimmy Lai’s fraud conviction relating to an alleged lease violation at the now-shuttered Apple Daily newspaper headquarters.

His jail term stemming from the case was quashed on Thursday morning, though the 78-year-old media mogul still remains behind bars serving 20 years in jail under a separate national security conviction.

In a Thursday statement, a government spokesperson said the Department of Justice will study Thursday’s ruling and consider an appeal.

“Although the Court of Appeal considered that, in the factual context of this case, the breach in question did not reach the criminal conviction threshold for the offence of ‘fraud’, the objective fact remains that Lai Chee-ying has exploited public resources for private use,” the spokesperson said.

In December 2022, Lai was jailed for five years and nine months after being found guilty of letting a consultancy company, Dico, use a portion of office space at Apple Daily for his personal purposes, despite the premises being rented for the purposes of printing and publishing.

The land on which the headquarters stands was, itself, leased from the Hong Kong Science and Technology Parks Corporation, a public company set up by the authorities in 2001. The government spokesperson claimed Lai had “exploited valuable public resources of the HKSAR for over 20 years.”

In Thursday’s judgment, three Court of Appeal judges said Apple Daily did commit a breach of contract for 22 years, but added that Lai should not bear liability for his company’s failure to disclose the breach.

During an October 2022 hearing, Judge Stanley Chan dismissed arguments that Lai conducted a “trivial operation” occupying just 0.16 per cent of the premises. He said that the tenant remained responsible for applying for subsidiary licences irrespective of the area of occupancy.

Co-defendant Wong Wai-keung, a former Apple Daily executive, was sentenced to 21 months in jail. Wong had already served his sentence and the Court of Appeal quashed his conviction on Thursday.

Neither Lai nor Wong appeared in court on Thursday. Poon said he had approved their absence.

20 year sentence

Earlier this month, Lai was sentenced to 20 years in jail for foreign collusion and sedition – the heaviest sentence so far under the national security law Beijing imposed in 2020 following the 2019 protests and unrest.

“Although the appeal in this fraud case has been allowed, it does not alter the fact or outcome that Lai Chee-ying has to serve 20 years’ imprisonment for his offences endangering national security,” the government statement on Thursday said.

During that case, the judges ruled that two years of the 20-year jail term would overlap with Lai’s fraud jail term, meaning 18 years would be added to his prison stint. He was expected to complete his fraud sentence in June this year. It is unclear how Thursday’s ruling will affect his total prison terms.

Additional reporting: Hans Tse.