HKSAR v. CHENG MAN TO

CACC 423/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 423 OF 2002

(ON APPEAL FROM DCCC 7 OF 2002)

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J U D G M E N T

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Hon Stock JA (giving the judgment of the Court):

Introduction

1 The applicant was charged with another, Chan Chin, in the District Court with conspiracy to defraud. The particulars of the charge read as follows:

Cheng Man-to ... and Chan Chin between the 1st day of April 1997 and the 31st day of October 1998, in Hong Kong conspired together and with other persons unknown, to defraud the Nanyang Commercial Bank Limited and The National Commercial Bank Limited ("the Bank") by dishonestly: (a) causing Oriental Hero Industries Limited ("the Company") to apply for and utilise credit facilities from the Banks in the form of letters of credit; (b) submitting or causing to be submitted false documents to the Banks purportedly evidencing genuine underlying commercial transactions between the Company and Post Metal Works; (c) procuring or causing to procure the issue by the Banks of the said letters of credit in favour of the said Post Metal Works; and (d) causing the Banks to release funds to the said Post Metal Works under the said letters of credit.

2 Both defendants at trial were convicted by HH Judge Wesley Wong. The applicant, alone of the two defendants, applies for leave to appeal against conviction. There is no application in relation to his sentence which was one of two years' imprisonment.

3 As is evident from the particulars of the charge, this was a letter of credit fraud, and the fact that the fraud was perpetrated was not in issue. The applicant was a director and shareholder of Oriental Hero Industries Ltd ("Oriental Hero"). That company enjoyed facilities with two banks, Nanyang Commercial Bank ("Nanyang") and National Commercial Bank ("National"). Between April 1997 and October 1998, Oriental Hero applied for, and was granted, six letters of credit by Nanyang and two by National, each in favour of Post Metal Works ("Post Metal"), a firm wholly owned by Chan Chin. The prosecution rested on the fact that there were no genuine underlying transactions and, further, on the fact that once payment was made by the banks to Post Metal upon the production of the documents required by the letters of credit, cheques were made out by Post Metal to Oriental Hero for the self-same amounts, less bank charges. The allegation by the prosecutor was that all this was done pursuant to arrangements made between the applicant and Chan, and that the applications for the letters of credit were each signed by the applicant.

Ms Ng's testimony

4 The case turned heavily on the testimony of a lady named Ng Sin Wah, who worked for Mr Chan in a secretarial or clerical capacity. Her function was to prepare paper work for him. She knew the applicant. Before the events in question she had, she said, seen him five or six times. About two or three weeks before the issue of the first letter of credit in this case, he telephoned her. She said that she recognized his voice, he saying that there was something, some documents, in respect of which he needed Mr Chan's help, and that when she questioned him further about it, he said that he would speak to Mr Chan. She then telephoned Chan about the matter, who said that he would ascertain what it was all about, and he telephoned her back a while later telling her that whatever help the applicant wanted he was to receive. The applicant then, according to her oral testimony, telephoned her again, and said that the matter was about a letter of credit, and that he needed information about the company, that is, about Post Metal. She again recognized his voice in that conversation. She called him "Mr Cheng" in the conversation; and no suggestion was made that he was not Mr Cheng; nor was evidence contrary to her assertions adduced, because the applicant gave no evidence at trial. Information about Post Metal was duly supplied to Oriental Hero, and this was done by fax. In due course, a bank telephoned Post Metal, and asked the staff of Post Metal to collect a letter of credit. Ms Ng then prepared documents necessary for the presentation of the letter of credit, including an invoice for the goods, which she sent for Chan's signature. She received a cargo receipt from Oriental Hero; and she prepared an application for collection under the letter of credit. Then, sometime later, she received an advice from the bank that the funds were available for collection. Then there was a call from Oriental Hero, in which the caller said that once the funds had been received from the bank, Post Metal were to issue a cheque in Oriental Hero's favour for the same amount. She consulted Mr Chan about that, and he agreed to that, save for the deduction of bank charges incurred by Post Metal. The same pattern or history was repeated in relation to the other letters of credit which are the subject to the charge. We should add that there was evidence by Ms Ng that the relevant documents were copied to the applicant, and that she did so because it was he, the applicant, who had given her the instructions.

Cross-examination by Leading Counsel

5 Ms Ng was at the commencement of her evidence given an immunity from prosecution in relation to her role in preparing documentation for the letters of credit. The thrust of cross-examination directed at her - aggressive cross-examination by Leading Counsel for the applicant - was to compare various statements she had made to the ICAC, and those statements with her oral testimony. She had provided a statement in April 2001; and it was put to her that she had only mentioned the applicant once in that statement. Great emphasis was placed by Leading Counsel for this applicant at trial (not Mr Macrae who appears for the applicant on this appeal), on the comment in that statement that: "Starting from April 1997 Chan Chin or the boss of Oriental, Cheng Man-to, informed me now and then that Oriental was going to issue an LC to Post Metal". "Was that a truthful answer?" she was asked, with the rather threatening aside by leading counsel for the applicant, repeated more than once in cross-examination, that she should be aware that her immunity did not cover contradictory statements: "Was it a truthful answer? I remind you because immunity may not cover contradictory statements. Remembering that. That's why I asked you whether you seeked independent legal advice. Your immunity may not cover that." Quite what a lay witness was to make of such a threat, unexplained and the way it was put, we know not, and it is one that we find unattractive.

6 A great deal was made of this statement, this one sentence, as if it was somehow contradictory to the oral testimony that the applicant was the first to speak to her about the letter of credit. It was not contradictory at all; and its sense seems to us to be obvious. What the witness was saying was that there were several letters of credit, and that sometimes the applicant spoke to her on the subject, and that sometimes it was Chan. Later, after cross-examination in an atmosphere wholly hostile, she said that only the applicant's name should have been in the statement, but there she clearly meant only his name should be present as to the first conversation or request. So long as one reads evidence with some common sense and understanding of the way people actually speak, rather than as a statutory instrument to be dissected as such - and in this case, to be dissected unrealistically - that sense should have been obvious to all; instead of which this lay witness was cross-examined up hill and down dale, at length and aggressively, on a premise - a false premise - of a contradiction which did not exist; turned into cross-examination which was made to sound damaging only by its persistence and incredulous tone, rather than by substance, which remains the only true test of effective cross-examination. Be that as it may, the witness insisted that she had told the ICAC that, in the beginning, it was the applicant who had spoken to her. There was cross-examination also about the fact that, at first, only Chan's name was there in the statement, but that the applicant's had been added.

7 Her next ICAC statement was made in June 2002. She was taken to a passage in it in which she asserted that in her first statement she had said that Chan had notified her that the applicant would issue a letter of credit to Metal Works, and had asked her to work according to the applicant's instruction. Yet, she was told by Leading Counsel, she had said no such thing in that first statement. It was put to her, inaccurately, that "You just told us earlier that Chan Chin never gave you any instructions. It was Cheng Man-to who did it." She repeated her evidence that there were conversations with both. She was challenged, further, that there was no mention in her second statement of a telephone conversation with the applicant. She said that it was the applicant or somebody called Amy or Ms Lau who had telephoned her to prepare the related documents. She insisted, though, that the applicant had told her that he would instruct his subordinates to get in touch with her.

8 As to a third statement, the following was put: "The highest you ever say it [i.e. put your case or account] was in your second statement when you say it was Cheng Man-to or Amy or Miss Lau who telephoned you. That's the highest. Agree or disagree?" and the witness agreed. This proposition put to her was also inaccurate. She had said in her first statement that the first applicant had contacted her; and, in any event, her use of the word "or" ["Cheng ... or Amy or Miss Lau"] was, in context and in truth, self-evidently not to intimate uncertainty as to the identity of those who spoke to her, but merely to intimate different persons in relation to different letters of credit.

9 We have read her evidence with care, and we have been taken through part of it again today by Mr Macrae. We would not, in the circumstances which we have described and given the atmosphere which prevailed at this trial, have been at all surprised had she succumbed to this confusing, unrealistic, and sometimes inaccurately based, cross-examination. But, in reality - and it is reality with which we deal - what she said made sense, and was generally consistent.

10 Much is made in this appeal of a passage in re-examination in which she gave the following answer.

"A. In the beginning it was Mr Cheng Man-to who mentioned the first time.

Q. And then why - yes, and then why 'either'?

A. And then subsequently it was not Cheng Man-to who made phone call to me. Instead, it was his staff who made the phone call."

This is said to be a concession that there were not two telephone calls by the applicant at the outset. We do not agree. The evidence is to be looked at as a whole. The subsequent calls to which she referred relate to subsequent letters of credit. This is not a retraction of the oral evidence given at the outset in chief, that the applicant made an initial inquiry before letters of credit were ever mentioned, and that the first letter of credit request was thereafter made by the applicant.

Grounds of Appeal

11 In his Reasons for Verdict the trial judge rehearsed this evidence, especially the suggested contradictions. He recorded the fact that neither the applicant nor Chan had elected to give evidence. He said, correctly, that the only issue in this case was whether the applicant and Chan had themselves been party to the fraud. He obviously did not think the suggested inconsistencies in her evidence to be significant, and he accepted the witness' explanation for them, such as they were. He found that she was a truthful witness. He found as a fact that the applicant told her that he wanted Chan to help with documents and that, later, he told her over the telephone that the matter was about letters of credit.

12 There were signatures on the letter of credit applications and on the cargo receipts purporting on their face to be the signatures of the applicant; although no expert evidence was called to establish that fact. In this regard, the judge said that: "Although there is no strict proof that the applicant did sign on those documents, for the reasons above I am satisfied that the only irresistible inference to be drawn is that D1 signed on those documents." (Emphasis added). Accordingly he convicted the applicant.

13 The first ground of appeal is that the judge did not properly resolve the inconsistencies in Ms Ng's evidence. We do not intend further to go through this. The judge was aware of the suggested inconsistencies, such as they were, and he took the view that there was little in them, and that they had been well explained. We are not surprised by this finding.

14 Then it is said that the judge failed to have regard to - indeed he did not even mention - the evidence of a Ms Lau (PW3 at trial) who worked for the applicant. She too had prepared documents, such as the letter of credit applications, but could not recall on whose instructions; whether on the instructions of the applicant, or of another person called Li. This, too, is not altogether surprising given that the events in question were some years before the trial. The fact that she did not recall this detail did little, in reality, to assist the applicant. She had named him several times as one of the two whom she thought had given instructions. It is said, in the written argument presented to us, that as the applicant's secretary, she ought to have been able to say whether the signatures on relevant documents were his or not; yet she could not do so. It was not established that she was his secretary; nor was there established the basis that, because of her contact with the applicant, she would have been able to say one way or the other what was and what was not his signature. Reading her evidence, it becomes clear to any seasoned assessor of fact, that her evidence was not to be relied upon, one way or the other, and that so far as it was uncertain, it did not assist the applicant, though it did not harm him either. The judge's failure to deal with her evidence was, in the circumstances, wholly understandable.

15 It is then said that the judge erred in his approach to the signatures on the documents which were said to be those of the applicant. It is argued that it was not for that tribunal, unaided by the evidence of experts, to find that the signatures were those of the applicant. This ignores the fact that the judge did not make his own comparison of signatures on the documents with specimens and on that basis come to the conclusion that the signatures were those of the applicant. To the contrary, he acknowledged, in terms, the absence of expert evidence, and said that the inference that he drew that the signatures were those of the applicant was one based on the other evidence upon which he relied, namely, the evidence of Ms Ng, and the inferences to be drawn from it.

16 Finally, it is argued that there was insufficient evidence to establish the applicant's participation in the fraud, not least because the prosecution relied on voice identification by the witness Ng. We do not agree. The witness had met the applicant on several occasions, and spoken to him. She spoke to him as Mr Cheng and the speaker did not gainsay what was said. The text of the conversation, as well as the text of conversations with Chan in the course of the conspiracy, all supported the applicant's participation. There is nothing in this ground. The evidence against this applicant was strong. He was one of only two directors in the company. He was described as the boss of the company. The letters of credit were for substantial sums, and the evidence of the witness, unchallenged by any oral testimony of the applicant, was that it was he who spoke to her about one of the letters of credit, and that that happened at the very beginning of the entire saga. Sums went straight back to Oriental Hero.

17 For the reasons we have given, this application for leave to appeal against conviction is dismissed.

Counsel's duty

18 We have commented already, in the course of this judgment, about the intimidating nature of cross-examination of Ms Ng, and the inaccurate basis of some of it. We wish to add a comment about the way in which the trial was conducted, although we say at once that none of the counsel who appear before us today appeared as counsel at the trial.

19 We have read with concern the transcript in this case. Contending arguments will take place in many a trial, and there is no reason why counsel should be precluded from making his points forcefully. Yet we would remind counsel that there is no inconsistency between, on the one hand, strength in forensic battle and, on the other, courtesy. This case was marked by unseemly bickering and sniping between two counsel who appeared at trial, at the provocation, it seems to us, by Leading Counsel for this applicant, who adopted a sarcastic and strident tone which permeates too much of that part of the evidence which we have read. Quite whom conduct of this kind is intended to impress we know not. If it is intended to impress the judge, it will not, certainly should not, work; and it is emphatically the duty of tribunals to prevent it. It achieves nothing, save to demean counsel who engage upon it, as well as the profession as a whole. From experienced counsel, especially, it is a poor lesson to new practitioners.