HKSAR v. CHAU CHI KEUNG

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO.275 OF 1997

(ON APPEAL FROM DCCC NO.1050 OF 1996)

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J U D G M E N T

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Chan, CJHC (delivering the judgment of the court) :

1. The applicant who was the 2nd defendant in the court below was convicted after trial in the District Court of one count of conspiracy to defraud, contrary to Common Law. He was sentenced to 3 years imprisonment. He applied for leave to appeal against conviction. At the end of the hearing, we refused the application saying that we would reduce our reasons into writing. This we now do.

2. The prosecution evidence was not seriously in dispute. It was alleged that between October 1993 and January 1994, the applicant and the 1st defendant in the court below together with other persons were involved in a scheme whereby various suppliers were induced to supply goods of different kinds to a company called DRA Investment Co. ("DRA") in return for postdated cheques which were later dishonoured.

3. The modus operandi of the scheme was alleged to be as follows. Ten suppliers were approached by the staff of DRA both by fax and by telephone for the purchase of various items of goods. After some negotiations, small purchase orders were placed by DRA with these suppliers. They were paid for. This was done apparently to keep suppliers interested in continuing to do business with DRA and to induce them to sell further goods to DRA on credit. Larger purchase orders were then placed with these suppliers. The total price for these goods amounted to approximately $1.8 million. Deliveries of these goods were made in early January 1994. These goods were to be paid for by postdated cheques maturing between 13th and 15th January 1994. These cheques were dishonoured on their due dates. The office was found to have been closed and the staff disappeared.

4. The 1st defendant was identified by some of the suppliers as one of the staff of the DRA.

5. A number of facts were also not in disupte. DRA was a business registered by the applicant as a sole proprietorship. The cheques in question were drawn on an account which was opened by the applicant with the Cheung Sha Wan Branch of the Kwangtung Provincial Bank in the name of DRA. The applicant was the sole signatory. The office of DRA in Tsimshatsui was leased under the name of DRA. The premises in Fo Tan where the goods were delivered to were also leased under the name of the applicant.

6. The applicant was arrested on 22nd January 1994 at the airport. Inside the brief case which he was carrying were some stationery of DRA, its company seal, some cheque books, the business registration certificate of DRA and the relevant tenancy agreements. There were also letters by DRA to the bank and the police dated 28th December 1993 and 9th January 1994 reporting the loss of certain cheque books of DRA. There was also a letter to the landlord of the office premises saying that the applicant had left DRA and that all matters would be carried out by a person called Chan Yuk Hung. Enclosed to the letter was an Agreement of Business Transfer dated 28 December 1994 naming Chan Yuk Hung as the transferee of the business together with his identity card number.

7. The applicant gave several statements to the police which were not challenged at the trial. In essence, he said that he was in partnership with Chan Yuk Hung. He left everything to Chan and hardly got involved in the business of DRA. Sometime in December 1994, because of a quarrel with Chan, they broke up and he transferred the whole business to Chan for $20,000. The applicant further said that during the partnership, on the request of Chan, he had signed about 50 blank cheques and 100 blank purchase orders. He denied any involvement in the alleged frauds. At the trial, the applicant did not give evidence.

8. The prosecution called a person by the name of Chan Yuk Hung whose identity card number matched the one appearing in the Agreement of Business Transfer. This person testified that he did not know the applicant or have any business dealing or partnership with the applicant. He never heard of a company called DRA. He admitted that his identity card and name card were no secrets because of his own business. It was also clear that the applicant could not recognize the person who testified in Court.

9. The trial judge rejected what the applicant said in his statements to the police. He found that the only reasonable inference which could be drawn from the evidence adduced by the prosecution was that the applicant was involved in the conspiracy alleged in the charge.

10. The applicant sent in two submissions in writing and at the hearing of the application made further submissions. He made a number of points which could be categorized into three main grounds. We should first of all deal with the point of law which was raised by him. He said that he was charged with conspiracy to defraud, contrary to Common Law. He did not know what that was since he could not found it in the statute book. However, he found that there was a statutory offence of conspiracy in the Crimes Ordinance, Cap.200. He said that the charge sheet referred to the conspiracy being punishable under section 101I(4) of the Criminal Procedure Ordinance, Cap.221 which he found had been repealed. Basically, he was alleging that he was charged with and convicted of an offence which did not exist or was punishable under the law and that the trial judge had made a wrong decision based on a wrong application of the law.

11. The offences in the present case were alleged to have been committed in October 1993 and January 1994 which was before the abolition of the Common Law offence of conspiracy and the creation of a statutory offence in its place in 1996. The applicant was therefore charged, and quite rightly so, with the Common Law offence of conspiracy to defraud. Section 101I(4) which dealt with the penalty of the Common Law offence of conspiracy had to be repealed because that was no longer applicable. There was a legal basis for the charge and his conviction. This complaint was totally unjustified.

12. The second main ground of appeal relied on by the applicant was that the judge had drawn the wrong inference from the evidence. He submitted that the trial judge had not fully considered all the evidence and had failed to place sufficient weight to the report which he had made to the bank and the police of the loss of the cheque books. During his oral submissions, it became clear that the applicant attached great significance to the reports which he had made. He alleged that they supported his story about his business relations with Chan Yuk Hung.

13. When his statements to the police were looked at, it is quite clear that what he said was not worthy of belief and that the trial judge was entitled to reject it. He said he met Chan Yuk Hung in China and later decided to do business with this person. He let his own company DRA be used to lease an office in Tsimshatsui for the business. He used his own name to lease a warehouse in Fo Tan. He contributed $50,000 towards the partnership. Yet he said he was not involved in the business at all. He hardly knew the staff or what they were doing. He was also willing to sign a large number of blank cheques and blank purchase orders. Such conduct was hardly consistent with entering into a partnership with another person.

14. His reports to the bank and police of the loss of cheque books were also quite suspicious. If he was telling the truth in his statements, then according to him, when the partnership was dissolved by agreement and he transferred the business to Chan, he knew that the cheque books were left in the office. Yet he chose to report the loss of the cheque books to the bank and the police. Such reports were also a red herring. He should be more concerned about the blank cheques which he had signed rather than the cheque books which were the property of the company which he had agreed to transfer to Chan. After all, he was the only signatory of the account and no doubt Chan as the transferee would either close the account or change the signatory. There was no need to report the loss of the company's cheque books.

15. The applicant's story was also completely demolished by the appearance of the witness Chan Yuk Hung who was apparently located by the police and who came forth to testify in Court. The applicant said that it was possible that the one who dealt with him in partnership was making use of another person's identity card and the judge had failed to consider this. This was contradicted by what he said in his statements. He said that when he signed the Agreement of Business Transfer with the person he dealt with, he had checked that person's identity card and found that the photograph in the card looked like the person in front of him. It is highly speculative to suggest that he entered into partnership with a person who could make use of another person's identity card.

16. In our view, the trial judge was entitled to disregard the reports the applicant made to the bank and the police. The evidence was overwhelming. The judge had carefully and thoroughly considered all the evidence. He was entitled to conclude that there must have been an agreement in the light of what happened which was taken obviously in furtherance and in pursuance of such an agreement. In our view, the inference of guilt was irresistible.

17. With regard to the third ground of appeal, the applicant submitted that the trial judge had failed to take into consideration certain matters. These matters included : it was not he who handed the cheques to the suppliers; there was no evidence of any direct or indirect contact made by him with the suppliers, the reasons for the dishonour of the cheques were that the cheque books were lost and there was a discrepancy in the signature and chop appearing the cheques from the specimen signature kept by the bank.

18. There is no substance in this ground as well. He was charged with conspiracy and not the actual fraud. It was not necessary to show that the cheques were given by the applicant to the suppliers or that there was any actual contact between them. There could be different possible reasons for the discrepancy between the signatures appearing in a cheque and the specimen signature. The defence did not canvass this point at the trial. It was quite clear that whoever signed those cheques knew full well that the cheque books were or would be reported lost. It is not surprising that there could be some differences in the signatures. It was quite obvious that the real Chan Yuk Hung and the applicant did not know each other. The allegation that the real culprits had made use of the identity card of Chan Yuk Hung who appeared in Court was amazing. There is nothing in the fact that Chan Yuk Hung's identity card number might have been accessible to others. In fact, this lends support to the inference that the applicant somehow managed to get to know Chan Yuk Hung's identity card number.

19. The applicant also complained that at the trial, the judge had wrongly stopped him from asking the police officers who arrested him about the presence of the stationery and seal of the company in his brief case. That, in our view, was a matter of no significance. This was never mentioned let alone relied on by the trial judge in coming to his conclusion of guilt.

20. At the hearing of his applicaiton before us, the applicant also alleged that there was a grave injustice because the trial judge mentioned even at the very beginning that the applicant was the registered proprietor of DRA. He said that this showed the judge was prejudiced against him. This is a groundless allegation. The judge's reference to the applicant as the registered proprietor of DRA and the sole signatory of the bank account showed the link between the applicant and what later happened in pursuance of an agreement to defraud. The judge was perfectly entitled to rely on such evidence. There cannot be any injustice or prejudice in doing so.

21. We have carefully considered all the submissions made by the applicant and the evidence before the trial judge. We cannot agree that the judge was in any way wrong. There was ample evidence against the applicant. We do not find the conviction to be in any way unsafe or unsatisfactory. The application for leave to appeal against conviction is refused.