HKSAR v. YEUNG SUN CHOI ANDY

CACC 552/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 552 OF 1998

(ON APPEAL FROM DCCC 1388 OF 1997 and 601 OF 1998)

----------------------

J U D G M E N T

----------------------

Leong, J.A. (giving the judgment of the Court):

1. The applicant was convicted in the District Court before H.H. Judge Whaley of three charges of procuring an entry into a bank account by deception. He now applied for leave to appeal against conviction.

2. These charges alleged that he procured credit entries into the bank accounts of Grand Glory Company Limited ("Grand Glory") with the Standard Chartered Bank (Hong Kong) Limited and the Dao Heng Bank (Hong Kong) Limited on 11th December 1995, 29th December 1995 and 31st January 1996, three sums of $2,460,957.34, $2,352,452.05, and $1,680,224.51 respectively by deception. The deception alleged was that on each occasion the applicant put the relevant bank in possession of documents complying literally with the terms of the relevant letters of credit, knowing but not disclosing to either of these banks that the said documents were false.

3. The applicant and his former wife were directors of Grand Glory. The business of their company was export of general commodities to foreign countries, including Bangladesh. The company's turn over in 1995 together with another company of which the applicant was also a director was $100 million and the applicant had credit facilities from five banks.

4. In September, 1995, through one Mohamed Ali Bai, one Mohsin Ali and one Hussain Ali acting as middlemen, a Bangladesh company called M. Altaf and Company (Private) Limited ("Altaf") agreed to manufacture shirts for export to a Singapore company with fabric supplied by Grand Glory. The fabrics were manufactured in China. The Singapore company was to provide the necessary letter of credit to Altaf. On 19th September 1995, a letter of credit in favour of Altaf was duly opened by the Singapore company. The shipment date was specified to be 26th January 1996.

5. On 22nd September 1995, Altaf received a proforma invoice in respect of the fabrics from Grand Glory and as a result, Altaf caused a letter of credit to be opened on 15th October 1995 in favour of Grand Glory in the sum of US$319,000 for the fabric to be supplied. The shipment date specified in this letter of credit was 30th October 1995. On 19th October 1995, Grand Glory asked the shipment date to be amended to 15th November 1995 and the expiry date of the letter of credit to extend to 30th November 1995 and these were duly effected.

6. On 25th November 1995, Altaf received fax copy of the necessary shipment documents including inspection certificate, insurance certificate and the original of these were presented by the applicant to the relevant bank for payment under the letter of credit. As a result the sum specified in the letter of credit was credited into the account of Grand Glory. But in fact there was no inspection of goods and the shipment never existed. All the documents were false documents.

7. Round about this time, another Bangladesh company called Macro Garments Private Limited ("Macro Garments") was approached by one Islam. Through this person, Macro Garments signed a contract whereby Grand Glory was to supply fabric and Macro Garments to manufacture shirts for a buyer in Singapore. Islam then gave a proforma invoice of Grand Glory to Macro Garments in respect of the fabric to be supplied and on the basis of this invoice, the Hong Kong Bank in Singapore opened a letter of credit in favour of Macro Garments. Macro Garments then requested its bank to open a letter of credit in favour of Grand Glory the shipment date specified therein was not later than 20th November 1995. On 18th November 1995, the applicant requested an amendment of the shipment date to 30th November 1995 and the condition as to inspection. These were duly effected. As a result, on 29th December 1995, Grand Glory received the sum specified in the letter of credit on presentation to the Dao Heng Bank of the necessary documents. But in fact, these documents were false documents.

8. Round about the end of December, 1995, the applicant entered into a transaction with a third Bangladesh company, a Joya Trading Company Limited ("Joya") to supply to that company a quantity of polypropylene. A proforma invoice in respect of the goods to be supplied was then sent by Grand Glory to Joya. Joya then caused a letter of credit to be opened in favour of Grand Glory specifying the shipment date as 15th March 1996 and the documents required to effect payment. On 31st January 1996, the applicant presented the necessary documents and obtained payment and the sum was credited into the account of Grand Glory. The documents were in fact forgeries.

9. The applicant accepted that it was he who on all these three occasions presented the documents and obtained payments under the relevant letters of credit. He did so in order that the sums involved could be credited into the bank accounts of Grand Glory with the Standard Chartered Bank and the Dao Heng Bank. However, he denied any knowledge that these documents were false.

10. On such evidence, the charges would have been established against the applicant if he was found to have knowledge that the documents were false and to have acted dishonestly in presenting them to obtain payment on the letters of credit.

11. The applicant's defence was that he was a commission agent of Mohsin Ali and Grand Glory was there to arrange export of goods obtained from a supplier Gee Dai Trading in China. He was to receive letters of credit from buyers of Mohsin Ali and obtain payments thereon. After deducting his commission, he was to hold the balance on the instruction of the suppliers in China. It was Mohsin Ali who negotiated with Gee Dai Trading and arranged shipment of the goods to their destination, Chittagong in Bangladesh. The applicant said that he had left blank proforma invoices to Mohsin Ali to open letters of credit but he did not sign or make the proforma invoices in these charges. In other words, he said he was the middleman and had no knowledge of the false documents. There was evidence produced by him tending to show where the money had gone to. He claimed that he was a victim of the frauds of the middlemen.

12. The Judge put the issues as these: whether the applicant knew the documents were false at the time of presenting them to the bank for payment and whether he acted dishonestly.

13. The Judge referred to the events and the conduct of the applicant in the post-transaction period and found that he could infer from these events that the applicant knew that the documents were in fact false.

14. The shipment date on the letter of credit in Altaf's case was originally specified as 30th October 1995 but it was amended to 15th November 1995 at the instance of the applicant. On 14th November 1995, the applicant asked for a further delay of the shipment date to 25th November 1995 which was duly effected. On 25th December 1995, the applicant faxed two DHL airway bills to Altaf purporting to show that sample fabric and shipment documents had been delivered to him by special courier but in fact there was no such delivery. The documents the applicant presented to the Standard Chartered Bank on 11th December 1995 to obtain payment on the letter of credit in respect of the supply of fabric were signed by the applicant. These included the commercial invoice, the packing list, insurance advice, and inspection certificate when no inspection had in fact taken place in respect of the goods in question. The applicant also signed documents certifying that the fabrics were free from certain chemicals and that sample fabrics and shipment documents were sent to the buyer. Included in these documents were a forged letter from a China Ocean Shipping Agency and a bill of lading showing that the vessel MV Pacific Avatar had departed for Chittagong on 25th November 1995. This was in fact not true.

15. On 19th December 1995, the applicant faxed Altaf that the vessel MV Pacific Avatar of the Avatar Shipping Corporation had sailed on 25th November 1995 enclosing an invoice and a pre-shipment certificate signed by him and the false bill of lading. As there was no information as to when the vessel would arrive, Altaf asked the applicant for the local agent of the vessel. On 27th December 1995, the applicant provided the name of a local agent in Bangladesh but this agent confirmed that they were not so appointed. As the vessel if it had set sail on 25th November 1995, would have already arrived by that time, Altaf asked the applicant on 13th and 14th January 1996 for further information about the vessel. While these communications were taking place, on 1st December 1995 the applicant had communicated with Macro Garments and told them that the vessel MV Pacific Avatar set sail on 30th November 1995. After payment had been effected, Macro Garments found no trace of the local agent in Bangladesh for the vessel MV Pacific Avatar. The applicant then on 2nd January 1996 faxed to Macro Garments that Mariners Bangladesh was the local agent for the vessel, but this was found to be untrue. On 9th February 1996, the applicant faxed Altaf and Macro Garments that a new agent for the vessel called Momtaz Shipping Agency had been appointed but this again was found to be untrue and there was no information as to the whereabouts of the vessel. The applicant was asked to furnish information about the Avatar Shipping Corporation and he then provided a Panama address.

16. The applicant told the Judge that as a result of the information about the vessel, he suspected that there was something wrong and by 17th February 1996 after he was told by William Ho of the American Express Bank that the bill of lading was false, he realised there was fraud and that the Avatar Shipping Corporation and the vessel as well as the goods in fact did not exist. Nevertheless, on 29th February 1996, in his fax to Altaf he did not disclose that the bill of lading was false and the vessel and goods did not exist. On the contrary on 4th March 1996, he faxed Altaf enclosing a fax which purported to have come from Avatar Shipping Corporation giving the vessel's estimated time of arrival, and advised them to arrange clearance procedures with the Momtaz Shipping Agency. But there was no such vessel arriving at Chittagong.

17. The applicant gave four explanations for the way he continued the deception on the Bangladesh companies. Firstly he said that he gave the agent name of Momtaz Shipping Agency and Mr. Alam because he expected the company to find out from Mr. Alam about the fraud. Secondly, he said he did so because he was confused on being confronted with a false bill of lading the first time in twenty years. Then he told the Judge that because it was Chinese New Year time, he was unable to deal with the situation properly. And further he told the Judge another explanation that he continued the deceptions on the advice of his lawyer. All these explanations were rejected by the Judge as being either unreasonable or bizarre.

18. The Judge in his Reasons for Verdict said that precisely the same pattern emerged from an examination of the correspondence and the evidence relating to the other two charges and he found this:

19. In the end the Judge concluded:

20. The second ground of appeal is the main ground of appeal and it is that the Judge had used the applicant's "post-date of offence behaviour" as a primary fact to infer guilt. It is submitted that such behaviour could only throw light on the applicant's state of mind if, at the time of the offences, this amounted to, at the highest, an admission by conduct and for that purpose, the Judge must first eliminate all innocent reasons for the applicant's behaviour. Mr. Grounds for the applicant draws an analogy with the law in relation to lies told by the defendant and submits that the law relating to admission by conduct should be the same. It is submitted for the applicant that the trial Judge should be careful before relying on such behaviour of the applicant and the trial Judge must be seen in his Reasons for Verdict that he did direct himself to this end, i.e. there must be a proper warning to himself that the matter had received his proper consideration. It is submitted that the Judge did not do so because he merely concentrated on the objection made by the defence as to the relevance of the evidence. As a result, he submitted, this court cannot be sure that the conviction is safe.

21. Reference is made to authorities such as R. v. Sharp [1994] 2 WLR 984 at 90 B - C and R. v. Lucas (Ruth) [1981] 3 WLR 120 at 123 H. These authorities establish that before lies can be relied upon to support guilt, the court must be satisfied that the lies were told because of realisation of guilt and fear for the truth. However, in the recent case of HKSAR v. Mo Shiu-shing [1999] 1 HKC 43, the rule on lies in Hong Kong now appears to read that lies may be relied upon to support the prosecution case if the court were satisfied that the defendant did not lie for an innocent reason.

22. In the present case, what the Judge did was he rejected the explanations given by the applicant as to his post-offence behaviour and he found the applicant's continued deception after the date of the offences was inconsistent with his claim of lack of knowledge as to the documents being false documents. The Judge then inferred that the applicant knew the documents were false. This is different from relying on the untruth told by the applicant to the Bangladesh companies to find guilt. In any case, the Judge had considered what innocent reasons the applicant gave for his continued deception and in the end he found that these were not the reasons for the applicant's behaviour and that what he did was not done for an innocent reason. It was quite clear that the applicant was trying to stall as much as he could the Bangladesh buyers on the deliveries of the non-existent goods by making up a false shipping company and a vessel that had never set sail, after he had obtained the money on the letters of credit on the strength of a false bill of lading and other false documents. The Judge was entitled to infer from such evidence that the applicant knew the documents were false when he presented them for payment under the letters of credit.

23. The first ground of appeal is that the Judge failed to consider adequately if at all a number of aspects of the evidence at the trial. Among these are the Judge's failure to consider the role played by the middlemen and to consider if they were rogues and that the Judge had failed to resolve the conflict of the evidence between PW1, PW2 and PW3 and also failed to consider adequately the reliability and credibility of PW2. Suffice to say, these are factual matters which had been canvassed at the trial before the Judge and the Judge in his Reasons for Verdict had dealt with them and made findings of fact thereof. The Judge had considered the applicant's claim that he was a commission agent in the transactions and he considered that this claim was a red herring and in any case, the applicant had acted dishonestly in relation to the false documents presented for payment resulting in the credit entries in the Grand Glory bank accounts. This ground cannot stand.

24. Ground 3 relates to the applicant's good character. It was submitted that the applicant being a successful businessman, it would be unusual for him to have committed the offences. There were innocent explanations for his conduct and there is a lurking doubt as to the safe conviction of the applicant.

25. The Judge had indicated in his Reasons for Verdict that he had given due regard to the good character evidence given on the applicant's behalf, although the Judge did not say in so many words that he had considered whether a man of his character would have committed these offences. However, he being a Judge sitting alone, in the light of the judgment in R. v. Fok Tin-yau [1995] 1 HKCLR 351 that "where a Judge is sitting alone and evidence of good character has been given this court will, even if he makes no mention of it, unless there be some express or implied indication otherwise, act upon the basis that he was aware of the character evidence and that he gave it the weight which he thought it deserved.", we do not see anything in the circumstances of this case in this ground that would warrant us to interfere with the verdict of the trial Judge.

26. For the reasons given above, we refuse the application for leave to appeal against conviction.