HKSAR v. HON MING KONG AND OTHERS

CAC C 272/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 272 OF 2011

(ON APPEAL FROM DCCC NO. 661B OF 2006)

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INDEX

CACC 272/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 272 OF 2011

(ON APPEAL FROM DCCC NO. 661B OF 2006)

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BETWEEN

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J U D G M E N T

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Hon Stock VP:

Introduction

1. This is an application by three applicants for leave to appeal against conviction and sentence.

2. On 22 June 2011 each was convicted by Judge Stanley Chan upon various charges arising from an indictment containing 14 charges of conspiracy to steal and conspiracy to defraud.

3. The Court’s judgment is divided into four parts:

(1)  a preamble which comments upon the conduct of the case in the court below and the urgent need, which it illustrates, for criminal justice procedural reform in this jurisdiction;

(2)  a judgment of Yeung VP which reveals the nature of the charges, the factual background, the grounds of appeal and the decision of the Court in respect of that which may be termed the factual grounds;

(3)  a judgment which addresses the letters of request issue and the grounds in connection therewith which contend that the trial judge erred in refusing a stay of proceedings; and

(4)  a judgment by Line J which addresses the applications in relation to sentence.

Preamble: The conduct of the case and the need for procedural reform

4. This preamble addresses the conduct of this case and the urgent need, which it illustrates, for criminal justice procedure reform in this jurisdiction.  Whilst it stands alone, separate from the judgment on the merits of the appeals, I insert it at the outset, for the issue requires emphasis.

5. The waste of public funds in this case was extraordinary.  That waste is, however, in our long and combined experience, not unique to this case.  It is particularly typical of the waste occasioned in commercial crime and corruption trials in the District Court.  And the justification by practitioners who are party to unwarranted delays and disruption is always that the defendant is entitled to a fair trial and, as happened in this case, the assertion of that right is seen as a justification for constant procedural distractions, satellite litigation, adjournments, ill definition of issues, prolix cross-examination and recusal applications bereft of merit. 

6. The entitlement to a fair trial is and must always be the paramount consideration.  But the point which is constantly missed and which must now be brought home, is that effective case management and the duty upon counsel and solicitors proactively to assist in the smooth running of criminal litigation are not inconsistent with the right to a fair trial.  It is – and this is encapsulated in statutory rules in a jurisdiction where the right to a fair trial is no less sacrosanct than in this[1] – not merely the duty of the court to discourage delay and to encourage participants to cooperate in the progression of a criminal case but the duty of the parties actively to assist the court in fulfilling that duty.

7. And it is not merely a question of substantial waste of funds.  The public and, importantly, accused persons awaiting trial are entitled to expect justice to be administered without unnecessary delay.  What is happening in this jurisdiction, particularly in the present category of case, pays wholly inadequate attention to these imperatives.

8. Criminal justice is administered in the public interest and the public is entitled to expect this Court to draw attention to matters which fundamentally affect that interest.  The public is entitled as well to expect justifiable concerns of the Court to be addressed proactively by all those who play a part in the criminal justice system.  It is far too easy, as has happened in this case, to point a finger at the trial judge for the lamentable procedural history of the trial but to do so is, in this instance certainly, unfair to the trial judge and is, in this instance as well as in others, too easy an escape from the truth that there is a professional duty upon counsel and solicitors – a duty which is not at all at odds with their duty to the client – to ensure that the wheels of justice run smoothly.  I respectfully endorse the comments of Lord Chief Justice Judge in R v Chaaban[2] that:

“Time is not unlimited. No one should assume that trials can continue to take as long or use up as much time as either or both sides may wish, or think, or assert, they need. The entitlement to a fair trial is not inconsistent with proper judicial control over the use of time. At the risk of stating the obvious, every trial which takes longer than it reasonably should is wasteful of limited resources. It also results in delays to justice in cases still waiting to be tried, adding to the tension and distress of victims, defendants, particularly those in custody awaiting trial, and witnesses. Most important of all it does nothing to assist the jury to reach a true verdict on the evidence.” (Emphasis added).

9. In R v Ejaz Butt[3], Lord Justice Dyson (as he then was) said this in relation to the suggested justification of conduct of the defence in the court of trial:

“Miss McIntosh would emphasise the duty to present the defence fearlessly. That is obviously very important. But so too is the obligation to avoid waste of time, repetition and prolixity. It is no part of the duty of counsel to put every point of the defendant’s case (however peripheral) to a witness or to embark on lengthy cross-examination on matters which are not really an issue. It is the duty of counsel to discriminate between important and relevant features of the defence case which must be put to a witness and minor and/or unnecessary matters which do not need to be put – see Kalia 60 Cr App Rep 200. ”

10. This theme is at the core of the Criminal Procedure Rules 2013 (England and Wales).  The overriding objective of the new code promulgated by the Rules is that criminal cases be dealt with justly[4]; an objective “which includes dealing with the case efficiently and expeditiously”[5]; which requires the court actively to manage the case to achieve that objective[6] by, for example, discouraging delay[7] and encouraging participants in the case to cooperate in the progression of it[8]; and which requires as well that each party “must actively assist the court in fulfilling its duty”[9] of active and effective case management.

11. The present case and many others like it proceed on an assumption that the duty to present a defence fearlessly is justification for any procedural step or application and that to expect counsel and solicitors to assist the court in running a trial efficiently and expeditiously is an expectation too far.  It is time now for this misconception to be addressed not merely by giving lip service to the principles emphasised in other jurisdictions and which should be emphasised in this jurisdiction, but by encouraging judges to follow the principles encapsulated by the authorities and Rules to which I have referred, by insisting that practitioners assist in the administration of criminal justice by embracing the spirit of those authorities and Rules and by according serious consideration to the introduction of like rules to this jurisdiction.

12. I started by saying that the waste of public funds in this case was extraordinary; and indeed it was.  Many, though not all, of the long and numerous delays were symptomatic of a culture in which the convenience of counsel rules the day.  Satellite proceedings were launched which should never have seen the light of day.  Teams of counsel were changed time and again.  The first applicant has to date enjoyed the benefit of now fewer than eight different leading counsel and, despite the ability which seems apparent therefrom to afford that kind of representation (which is of course his right), no application was made upon conviction of the applicants for the costs of the prosecution, costs which must have been enormous; a lack of action which we were told accords with standard policy – if that be so, it is a policy about which taxpayers should be concerned.  The extraordinary length of the cross-examination of the main prosecution witness by one counsel alone – about 33 days of 41 days of cross-examination of one witness – seems to me on its face self-evidently well beyond anything that can reasonably be justified.[10] I will, by reference to judgments and practice elsewhere, have more to say later in this preamble about prolix cross-examination generally but in so far as counsel at trial sought, in response to objections by prosecuting counsel, to justify continuing to cross-examine by reference to a fundamental right, I say emphatically that the right to cross-examine is not a right to cross-examine unnecessarily; and that the ultimate arbiter of how long is, in the circumstances of a particular case, reasonably justifiable is the judge.

13. The case was originally set down for 50 days.  In the event, the court sat for 128 days.  Those 128 sitting days were, by reason of frequent and prolonged adjournments, stretched out over an available 752 sitting days.  The defendants were arrested in 2005, and charged in February 2006; that is to say, almost 8 years ago.  The case was first transferred to the District Court in July 2006 and the verdict was delivered a full 5 years later.  At the second pre-trial review which took place in March 2007, the start of the trial was adjourned for over one year to enable those acting for the first applicant to explore the matter of taking evidence from witnesses on the Mainland; yet, when one year had elapsed, those who had sought the adjournment had not even made the long promised application for a letter of request to secure that evidence.

14. The trial started in April 2008 but a couple of weeks later, for reasons which were subsequently held to be unjustified, there was an application for the judge to recuse himself.  When he refused to recuse himself, satellite litigation was commenced by way of an application for leave to apply for judicial review.  Leave was granted.  In my respectful judgment, it should not have been.  The application for judicial review was dismissed months later, towards the end of July 2008.  The trial was resumed not, as one might have hoped, immediately thereafter, but six months later in January 2009, that is three full years after the applicants had been arrested.  And even then, the case was still at the stage of examination in-chief of the very first prosecution witness.

15. And so on it went with lengthy adjournments, spasmodic hearings and prolonged interlocutory applications.

16. In February 2011, the first applicant was represented by yet another newly engaged leading counsel who, in circumstances which I will later describe with strong disapproval, asked for the trial to be aborted.  When, in April 2011, the judge refused an application for the case to be re-opened, there was a threat of a judicial review of that decision.

17. The closing submissions of counsel for the first applicant (not the advocate who cross-examined the main prosecution witness for 33 days – the teams had once more changed by then) were constituted by 223 pages of single space small font type.

18. This is far from the entire history of the matter and the delays occasioned by the letter of request issue forms another part of this judgment; but I have stated enough to provide the flavour of it.

19. The length of the judgment on the abuse issue, which follows that of Yeung VP, is partly attributable to the need to reveal where the abuse in fact lay and partly to bring home the state of affairs in District Court commercial crime cases, for otherwise the complaints of this Court are devalued by mere repetition.  It seems to me necessary, by reference to the detail of one case, to illustrate the degree to which reliance on the interests of a defendant can be abused to the gross detriment of the administration of justice.

20. It is to be said at once that none of the leading counsel now before us contributed to the prolix and unsatisfactory conduct of the trial.  Indeed, it is obvious from comments made in the course of the trial that none divorces himself from this Court’s periodic expressions, during the appeal hearing, of our dismay.

21. We acknowledge at once that there was more than one cause of this hyper-expensive mess and that, although the judge was faced with real difficulties occasioned by regular attempts on D1’s behalf to derail the case, sterner case management was called for and that some of the adjournments were occasioned by the court’s diary rather than by the diaries of counsel.  These are matters that require urgent and constructive examination to see what may be done to assist judges in more effective case management; and also to change the culture by which counsel’s diaries too often dictate the progress of a case.

22. Yet ‒ and this is the key point ‒ there is a responsibility upon counsel the failure to fulfil which is apt to be brushed aside on the premise that counsel have a duty to carry out instructions and to represent their clients’ interests.

23. It cannot be too emphatically stated that there is no inconsonance between doing one’s duty to one’s client, on the one hand and, on the other, executing that duty within proper and responsible bounds.

24. In the context of prolix cross-examination – though the point is valid about the conduct of proceedings generally – Roskill LJ in R v Daya Kalia and others:

“It is very distasteful to this Court to have to criticise counsel, but from time to time situations arise in which this Court would be failing in its duty if it did not do so.”[11]

25. I pause there to comment that this is a particularly important reminder in a geographically confined jurisdiction where familiar faces regularly appear before the courts below and before the appellate courts.  It is indeed distasteful to have to criticise counsel, or to criticise a section of the Bar, but at the end of the day it is – or should be – entirely clear where the positive duty of this Court (and of the Judiciary as a whole) lies: it is a duty owed to the public interest in the administration of justice and when, as in this case, this Court sees large sums of public money wasted, the Court abnegates that duty to the public if it does not say so, and say so publicly, in a judgment such as this.  A productively courteous relationship between Bench and Bar is desirable in itself as well as in the interests of the effective administration of justice but it is not a relationship which can properly be permitted to cloister itself from the world outside; to the contrary, the courts’ overarching duty is to the proper administration of justice for the benefit, not of the profession, but of the public.  That requires a certain judicial detachment and a resolve whenever necessary to be firm in case management and to speak out where the process has been pushed out of hand by the conduct of the advocates or by the lack of firm case management. 

26. Roskill LJ went on:

“ … No one doubts for one single moment and let this be said as clearly as possible, that nothing must be allowed to deter counsel from carrying out their instructions and doing their duty to their clients. But if I may borrow some language used in Simmonds and others (1967) 51 Cr App R 316, 326… by Fenton Atkinson J., as he then was, giving the judgment of the Court. ‘Whilst in no way detracting from counsel’s duty to his client, he can and should exercise in the interests of justice as a whole a proper discretion so as not to prolong cases unnecessarily. It is no part of his duty to raise untenable points at length or to embark on lengthy cross-examination on matters that are not in truth in issue.’”

27. He cited a passage by Lord Hanworth in Mechanical and General Invention Co Ltd v Austin:

“Cross-examination is a powerful and valuable weapon for the purpose of testing the veracity of a witness and the accuracy and completeness of his story. It is entrusted to the hands of counsel in the confidence that it will be used with discretion; and with due regard to the assessments to be rendered by it to the court, not forgetting at the same time the burden that is imposed upon the witness. We desire to say that in our opinion the cross-examination in the present case did not conform to the above conditions and at times it failed to display that measure of courtesy to the witness which is by no means inconsistent with a skilful, yet powerful, cross-examination.”[12]

28. Lord Justice Roskill mentioned the costs to the public of the trial in the particular case with which the Court was there concerned and said:

“This Court has thought it right in the present case to remind those concerned that public funds are involved on a very large scale. As I mentioned earlier, the costs of this trial to the public in terms of fees are over £60,000. That makes no allowance for the judge's salary, the court time, staff time and all the rest of the expenses involved at the Central Criminal Court. It is not easy for a trial judge to intervene where this sort of thing happens. If he does so, he is apt to be criticised in this Court taking sides of one side or the other, depending on whether the protracted cross-examination is on behalf of the Crown or on behalf of the defence.

What we are saying, though of course in immediate relation to the present case, applies at all times. The trial judge can and should do his utmost to restrain unnecessary, prolonged cross-examination, and this Court will unhesitatingly support him when he does … .”[13]

29. Those passages concentrate upon prolix cross-examination.  But the same goes for unnecessary prolongation of the case whatever the cause, including adjournments for the mere convenience of counsel’s diaries and submissions and applications which have no prospect of success.  Too often it is forgotten in cases of this kind that, whether the defendants have been accorded legal aid or are privately represented, public funds are involved on a very large scale; and that the wasteful use of the time of a court postpones the time when other cases can be heard.

30. The Rules in force in England and Wales, to which I have earlier referred, empower the court of trial to set a timetable which may limit the duration of any stage of the hearing and empower the court to limit the examination, cross-examination or re-examination of a witness and the duration of any stage of the hearing[14]. We have no such Rules but it seems to me that since a trial court has an inherent jurisdiction to control its process, that power is exercisable in any event and should, where warranted, be exercised; with the cooperation, hopefully, of the advocates.  It is, however, a power to be exercised with due regard to the interests and rights of every affected party, which obviously includes the right of the defendant to a fair trial.  Lord Dyson pointed out in Elizah Butt[15] that:

“We are not saying that it should become a routine feature of trial management that judges should impose time limits for evidence in chief or cross-examination of witnesses. If counsel perform their duty properly this should rarely be necessary, but where, as unfortunately happened in this case, counsel indulges in prolix and repetitious questioning, judges are fully entitled and indeed we would say obliged, to impose reasonable time limits.”

31. And in relation to case management of criminal trials generally, I respectfully endorse the comments of Lord Chief Justice Judge in Chaaban[16] that:

“35. … The trial judge has always been responsible for managing the trial. That is one of his most important functions. To perform it he has to be alert to the needs of everyone involved in the case. That obviously includes, but it is not limited to, the interests of the defendant. It extends to the prosecution, the complainant, to every witness (whichever side is to call the witness) to the jury, or if the jury has not been sworn, to jurors in waiting. Finally the judge should not overlook the community’s interest that justice should be done without unnecessary delay. A fair balance has to be struck between all these interests.

36.  Virtually any adjournment produces inconvenience for someone.  What used to be described as an adjournment culture, if it ever existed, is a thing of the past.  Adjournments have to be justified.  If at all possible, they must be avoided.  Proper case preparation is required from both sides.  When asked to consider an adjournment, the judge must closely scrutinise the application, and, unless satisfied that it is indeed necessary and justified, should refuse it.  The decision whether to adjourn or not is preeminently a decision for the trial judge.  Sitting in this court we should not, indeed we must not, interfere with it unless it can be demonstrated that the decision to refuse an adjournment was wholly unreasonable and caused real as opposed to fanciful prejudice to the defendant, undermining the safety of the conviction.”

32. Unfortunately, the comment that the adjournment culture, if it ever existed, is a thing of the past is not a comment which is entirely safe to make in this jurisdiction.  The roots of that culture in this jurisdiction, in so far as that culture prevails, is not easy to identify: it is, I suspect, a mosaic of causes, including insufficiently rigorous case management, sometimes insufficient preparation by the parties, and sometimes too great a readiness to accommodate the convenience of the advocate’s diary.  The present case is an instance of far too many adjournments.

33. The point has been made before us that, ultimately, it was the duty of the judge to put a stop to unnecessary prolongation of the trial.  That is true, but one needs to examine that proposition realistically and with an understanding of the real difficulties in which teams of counsel place a first instance judge, not least a conscientious, courteous and patient first instance judge such as the judge in this case.  In a case which is complex enough at the outset – complex as to detail, novel issues of law, and several defendants – the ability efficiently to manage the case requires the cooperation of counsel; it is an ability that is inevitably undermined if the judge – sitting alone – is bombarded with over 40 days of cross-examination of the first witness, with the unattractive expressed threat of an appeal if he does not allow it to continue[17], with unmeritorious satellite litigation, with change of team after change of team, with inconclusive and prolonged activity off-stage of which he is made aware and which threatens to derail everything, and with long adjournments.  It is a counsel of perfection, and a mite unrealistic, to expect a judge to withstand all this with the efficiency that a mechanistic world might demand.  Counsel have a duty, concomitant with that of the judge, to enable the wheels of justice to move smoothly.  And the cardinal point is then this – that there is no tension whatsoever between that duty and their duty to their clients.

34. A change in criminal procedure culture in this jurisdiction is, therefore, long overdue.  Judges must manage, and must be assisted, to manage cases more strictly and advocates must help in that task.  The judge’s task is, in reality, not much aided by mere encouragement in a judgment such as this. It is all well and good to encourage and expect judicial officers to case manage effectively but, in truth, encouragement is an exercise in futility absent a framework of clear and enforceable rules, appropriate case management training, and a realisation by practitioners that they bear a professional duty to assist in the efficiency of the process and that that duty is not at odds with their duty fearlessly to represent the interest of their clients.  The public is entitled to expect no less, for a continuing failure to embrace the principles to which I have referred – none of which is a new or conjured principle – will remain a source of injustice to those awaiting trial and is a recipe for extremely expensive procedural chaos.

Hon Yeung VP:

Introduction

35. The three applicants were arrested in September 2005 and charged in February 2006.  They appeared before Judge Stanley Chan in the District Court on an indictment consisting of 14 charges relating to offences alleged to have been committed in 2004 and 2005.

36. The charges, in broad terms, were as follows:

Defendants	Date	Charge
1. D2 + D3	May 2004	Conspiracy to steal a chose in action in the sum of $1.5m
2. D3	September 2004	Conspiracy to steal a chose in action in the sum of $1m
3. D1, D2 + D3	January 2005	Conspiracy to steal a chose in action in the sum of $4m
4. D1 + D3	March 2005	Conspiracy to steal a chose in action in the sum of $1m
5. D1 + D3	May 2005	Conspiracy to steal a chose in action in the sum of $1.1m
6. D1 + D2	September 2004	Conspiracy to steal a chose in action in the sum of $3m
7. D2	October 2004	Conspiracy to steal a chose in action in the sum of $2.4m
8. D1 + D2	December 2004 – April 2005	Conspiracy to defraud a public company CSCP by falsely representing the making of a loan of $25m for a project in Guilin
9. D1 + D2	December 2004 – April 2005	Conspiracy to defraud the same company by falsely representing $8m was required for a project in Meizhou
10. D1 + D2	April 2005	Conspiracy to defraud the same company by falsely representing the making of a $5m loan to Sino Profit International Ltd
11. D1, D2 + D3	December 2004	Conspiracy to defraud that company by consisting a subsidiary to part with $5m on the pretext of a loan
12. D1 + D2	December 2004	Conspiracy to defraud the company by causing a subsidiary to part with $8m on the pretext of a loan
13. D1 + D2	April 2005	Publishing a false statement in the company’s Annual Report
14. D1	April to May 2005	Conspiracy to defraud the company by certain false representations

37. The applicants pleaded not guilty to all charges.

38. After a 128-day trial spreading over a period of about 39 months between April 2008 and June 2011, all charges, except charge 14 against D1, were held to be proved.

Procedural History

39. The procedural history is addressed in detail in the judgment of Stock VP which follows this judgment.  It suffices for present purposes to say that the trial commenced on 7 April 2008 and there were numerous interruptions. The prosecution closed its case in July 2009. 

40. In November 2009, D1 elected not to testify or call witnesses (save for experts as to Chinese law).

41. D2 testified and also tendered a handwriting expert’s report.

42. D3 did not testify or call witnesses.

43. The verdict was delivered in June 2011.

The Background Facts

44. In February 2002, D1, through a private company, acquired 28% of the shares of a public listed company, China Conservational Power Holdings Ltd (CCPHL) and became its executive director and Chairman.

45. On 29 October 2003, Abba Chan Tat-chee (Abba Chan) was appointed Chairman of another public listed company, China Sciences Conservational Power Ltd (CSCP), formerly known as Central China Enterprises Ltd and in February 2004, through a company (Aimstar) jointly owned with his wife, acquired by way of placement 52.6% of the shares of CSCP for $18 million. 

46. According to Abba Chan, he had spent a further $20 million to acquire 20% shares of CSCP from D1’s friends as D1 told him he had to acquire two-third of its shares to gain complete control of the company.  D1 promised Abba Chan he would buy back the CSCP shares from Abba Chan at a later stage and should he suffer any loss, D1 would compensate him in full.

47. Abba Chan said despite his shareholding and position in CSCP, D1 was still in charge of CSCP and made decisions in relation to Mainland projects he handled.

48. D1 was appointed an executive director of CSCP on 20 September 2004 and in November 2004 he acquired 38% of the shares of Aimstar.

49. On 11 November 2004, D1 replaced Abba Chan as chairman of CSCP and Abba Chan remained as one of the executive directors.  On 26 November 2004, Abba Chan replaced D1 as chairman of CCPHL.  In June 2005, D1 acquired the remaining 62% shares of Aimstar and became a major shareholder of CSCP, holding 28.75% of its shares.

50. One of D1’s brothers (Hon Yik-kong) was a director of CSCP and CCPHL. D1 also held a joint account in HSBC with another brother (Hon Wing-kong) (the joint account).

51. D2, a certified public accountant, was the chief financial controller of CSCP and was responsible for its financial affairs.  On 10 February 2004, D2 was appointed an executive director of CSCP.

52. Soon after their arrest, D1, D2 and Abba Chan resigned from their respective posts from CSCP.

53. D3, said to be close to D1, was a salaried employee of Sharpo (a BVI company wholly owned by CSCP) between July 2003 and May 2004.  Abba Chan and D2 were Sharpo’s directors.

54. D3 ceased to receive a salary from Sharpo after May 2004, but maintained an office in the company.  The evidence suggested that 40% of Sharpo’s profit would go to CSCP and 60% would be shared by Pang King-pong (Michael Pang), D3 and her younger brother.

55. Michael Pang was the sales manager of Sharpo.  He was assisted by his brother and work colleague, Alexander Pang.  It appeared that Sharpo was run by D3 and Michael Pang.

56. D3 was said to be a contact point between CSCP and Sharpo and whenever money was needed for Sharpo, application would be made to CSCP through D3 who would also give instruction as to how the money would be distributed.

57. Apart from the three applicants and Michael Pang, other participants in the alleged fraud included Abba Chan, Chan Kwai-fan (Cannie Chan) and Chow Ching-man (Queenie Chow).

58. Cannie Chan was the accountant of CSCP and Queenie Chow was Abba Chan’s secretary.  Kent Fung and Kenji Chan were respectively the financial controller/ company secretary of CSCP and CCPHL.

59. In addition to CSCP, CCPHL and Sharpo, other companies involved included Hong Tong Hai Capital Ltd (HTH) (a subsidiary of CCPHL),  Abba Holdings Ltd (Abba Holdings) (a subsidiary of CSCP), Sino Profit International Ltd (Sino Profit), California Telecom Co (California Telecom) owned by Eric Leung, Well Glory Ltd (Well Glory) (controlled by Abba Chan’s old friend and business associate), Telegoal Ltd (Telegoal), and Guilin China Sciences Conservational Power Ltd (GCSCP).

60. Sino-Push Ltd (Sino-Push) and Abba International Garment Limited (Abba International), companies owned and controlled by Abba Chan, were also involved.

61. Abba Chan originally faced 15 charges, 6 on his own and 9 together with D1, D2 and/or D3.  Abba Chan pleaded guilty to 6 of the charges against him, including charges 3, 8, 9 and 11 of the indictment against the applicants.  Abba Chan was sentenced to 3 years’ imprisonment after pleading guilty and after giving evidence for the prosecution against the applicants.

62. Abba Chan admitted that he was a co-conspirator in 8 out of the 14 charges against the applicants.  In one of the 6 charges that he had pleaded guilty to, Abba Chan admitted misappropriating $10 million from CSCP via Telegoal and using the money to pay off his personal debt.  He said when he told D1 and D2 that he was in need of money, D1 said he had sent $10 million to a Mainland company (Yuk Chak) in Beijing and CSCP had not repaid him.  D1 suggested that $10 million from CSCP should go to Abba Chan as partial repayment of his debt.

63. Apart from Abba Chan, Cannie Chan, Michael Pang and Queenie Chow also gave evidence for the prosecution under immunity.  Other prosecution witnesses included Alexander Pang, Kent Fung and Kenji Chan.

The Prosecution Case

64. The prosecution case was along the following lines.

65. Abba Chan, nicknamed “Wong Tai Sin” (a Deity said to grant worshippers all their wishes), said he met D1 in 1994, but only got to know him well in 1997.

66. In 1999 and 2000, D1 was in control of CSCP and CCPHL and Abba Chan regarded him as a capable and talented businessman, particularly in doing business in the Mainland.

67. In 2003 and 2004, Abba Chan lent $20 million to D1 and arranged to lend him another $10 million.  At the suggestion of D1 and D2, Abba Chan also spent $14 million to acquire shares in CSCP.  D1 agreed to repurchase those shares from Abba Chan and to compensate him in full should the price of the CSCP share drop.

68. The $20 million loan for a period of 166 days came from Skywide Finance Ltd and the security for the loan was 12,000,000 shares of Yew Sang Hong (Holding) Ltd.  The total interest payable for the loan was $727,000 payable by 6 payments. D1 paid the interest in accordance with the interest repayment schedule by 6 personal cheques.  D1 also gave a $20 million cheque to Abba Chan as security for the loan.

69. Abba Chan acted as D1’s guarantor in respect of another $10 million loan taken out by D1 from Planetic International Ltd. 

70. Abba Chan said D1 was heavily indebted to him, but he did not repay any money.  D1 told Abba Chan that CSCP had RMB$100 million in Henan Cable TV and suggested that when the money was available he would repay him first.  D1 further said that he would subsequently repay CSCP the money and sort the matter out.

71. By the time Abba Chan became the chairman of CSCP, he was heavily indebted to his friends, having himself borrowed $12.4 million and having used Sino Push to borrow another $20 million.

72. Beginning in mid-2004, Abba Chan chased D1 for repayment of the loans. D1 told Abba Chan he would arrange to get some money from CSCP and he would discuss with D2 about it.  He also told Abba Chan that $20 million would come from Henan Cable TV in three instalments.

73. The prosecution alleged that the applicants and others conspired to defraud CSCP and CCPHL.  The suggestion was that large sums of money had been unlawfully taken from CSCP and that by July 2004, $50 million had to be accounted for.

74. Bogus transactions were created to justify the payment of large sums of money from CSCP and bogus loans were said to have been created supposedly from HTH to borrowers, whereas in truth, the money paid out by CSCP and HTH would find its way back to the account of CSCP to plug the gaps in its coffers left by earlier thefts.

75. The prosecution also alleged the Annual Report of CSCP for 2004 published in April 2005 contained false statements to defraud members and creditors of CSCP.

The Charges in chronological order and the Prosecution Evidence

Charge 1 against D2 and D3 (1.5.2004 – 11.5.2004)

76. On 11 May 2004, Abba Chan and Cannie Chan authorized the payment of $1.5 million from CSCP to Sharpo and on 12 May 2004, Sharpo paid $1.5 million to Sino-Push.

77. The prosecution alleged that D2 and D3 conspired with Abba Chan and Michael Pang to steal $1.5 million from CSCP by falsely representing that it was a fund transfer to Sharpo as deposit payment to California Telecom for the purchase of mobile phones.  The $1.5 million was paid to Sino-Push purportedly as California Telecom’s agent when in fact it was used to discharge Abba Chan’s personal liabilities.

Prosecution evidence on charge 1

78. Abba Chan said he had borrowed heavily from friends and was in serious financial difficulties.  In May 2004, he told D2 he was in urgent need of $1.5 million.  According to Abba Chan, D2 suggested to him that he could pretend to have ordered goods from a company through Sharpo and that a deposit of $1.5 million had to be paid.

79. In fact no goods would be involved and the $1.5 million deposit would go to Abba Chan.  When D2 said proper accounting documents were required, Abba Chan, through Queenie Chow, contacted a friend who ran California Telecom and documents were prepared to show, ostensibly, the purchase of $3 million worth of telephones by Sharpo and the payment of the $1.5 million deposit.

80. Queenie Chow told D3 to pass on the name card of California Telecom to Michael Pang and wrote “As per tel-conversation with (D3), please find the name card for your information.”  Queenie Chow said she regarded D3 as the person in charge of Sharpo because she was able to make arrangement for the transfer of money although she had not met D3.

81. The prosecution suggested after the bogus purchase order was prepared, D3 asked Abba Chan to sign the purchase order for telephones from California Telecom.  According to Abba Chan, D3 knew that the transaction was a bogus one.

82. Queenie Chow also prepared a letter authorizing Sino Push to accept the $1.5 million as the agent of California Telecom.  The letter, having been checked by Michael Pang, was signed by Abba Chan.

83. A receipt from California Telecom acknowledging the $1.5 million payment and a warehouse certificate showing telephones were stored in the warehouse were also prepared.  The $1.5 million in fact went to Sino Push and was used by Abba Chan for his own purposes.

84. Cannie Chan said she prepared a CSCP cheque and had it signed by Abba Chan for the payment of $1.5 million to Sharpo.  She also prepared the payment voucher which was signed by Abba Chan and D2, possibly afterwards.  Cannie Chan said in cross-examination that it was Abba Chan who told her to write out the cheque and it was for the purchase of telephones.  Abba Chan also told her to arrange the transfer of money to Sharpo.

85. When Cannie Chan noticed the absence of supporting documents, she discussed with D2 before asking Michael Pang to prepare the necessary documents.  Michael Pang subsequently faxed the purchase order to her.

86. Michael Pang confirmed that D3 had told him that $1.5 million would be transferred to Sharpo from CSCP purportedly as payment for goods ordered by Sharpo when in fact the money would go to Abba Chan.  Michael Pang also said based on the information and the California Telecom name card given to him by Queenie Chow as well as the instructions from D3, that he prepared the false purchase order.

87. After receiving the draft letter from Queenie Chow authorising Sino-Push to accept the $1.5 million, Michael Pang confirmed with D3 that the money should be sent to Sino-Push.  He and Alexander Pang then signed a Sharpo cheque paying the $1.5 million to Sino-Push.  Michael Pang confirmed that there was no genuine transaction between Sharpo and California Telecom.

88. When auditors wished to check the stock for the transaction with California Telecom, Cannie Chan contacted D2 and spoke to Michael Pang. Michael Pang told her the goods did not exist.  Cannie Chan relayed the information to D2 who said that the $1.5 million should be treated as a “deposit” and the auditors should be told that there was no need for a stocktake until the end of the year.

89. Cannie Chan received two letters from Pacific King Technology (Pacific King) showing they held telephones in stock on behalf of Sharpo for the purpose of convincing the auditors that $1.5 million had been legitimately paid out and that a stock check was unnecessary.

90. Eric Leung (of California Telecom and its subsidiary Pacific King) confirmed in evidence that he had not done any serious business with Abba Chan.  In fact California Telecom’s business in Shamshuipo ceased in 2001 and Pacific King did not sell mobile phones at all.  Eric Leung said he did not sign the two letters purportedly from Pacific King and had never seen them.

91. The $1.5 million was never repaid to CSCP and the account was made up with the money from the $5 million “loan” purportedly made to D3 under Charge 11.

Charge 6 against D1 and D2 (1.9.2004 – 7.9.2004)

92. On 7 September 2004, a $3 million cheque, signed by D3 and Abba Chan’s wife for CSCP, was cashed by Wong Kwun-wai.  When making the cash withdrawal with the cheque, Wong Kwun-wai was accompanied by Cannie Chan, acting on D2’s instruction. 

93. The prosecution alleged that D1 and D2 conspired with Abba Chan and Cannie Chan to steal $3 million from CSCP by falsely representing that it was a loan to Wong Kwun-wai.  In fact, the $3 million was handed over to D2 by Cannie Chan.

Prosecution evidence on charge 6

94. According to Abba Chan, D1 told him in early September 2004 that Wong Kwun-wai would borrow $3 million from CSCP, but the money would be for D1’s use.  On 7 September 2004, D2 approached Abba Chan’s wife and they signed a CSCP cheque for $3 million.  The relevant payment voucher and loan agreement were signed by Abba Chan.  CSCP’s board approved the loan.

95. The minutes of the board meeting dated 6 September 2004 suggested that Wong Kwun-wai was actively engaging in business development in the PRC market and that in recognition of his contribution towards the company, a $3 million loan would be granted to him without security for one month with the repayment of principle and 8.5% interest on 6 October 2004.  The meeting was attended by Abba Chan, his wife and D2 (by phone).

96. Abba Chan said because of concern shown by Kent Fung as to the nature of the unsecured loan, he transferred $3 million back to the account of CSCP on 7 September 2004.

97. Abba Chan said a personal cheque for $3 million, issued by his wife on 8 September 2004 and made payable to Kingston Finance, had nothing to do with the withdrawal of the $3 million from CSCP.

98. Cannie Chan said D2 had instructed her to make out the cheque for $3 million and told her that it would be collected.  Cannie Chan said she recognised Wong Kwun-wai as D1’s friend, but by a different name when he came up to CSCP’s office to execute the relevant documents. 

99. When Kent Fung asked Wong Kwun-wai for his identity card, he said, “Are you scared about the cheque?”  Kent Fung simply told Wong Kwun-wai that if he was scared, he should contact D1.

100. After the execution of the relevant documents, Cannie Chan said she accompanied Wong Kwun-wai, on D2’s instruction, to withdraw $3 million.  The money was given to D2 and Wong Kwun-wai received nothing.

101. The $3 million “loan” was never repaid and CSCP’s account was subsequently made up with the money, the subject matter of the 8^th charge of conspiracy to defraud and a receipt voucher of $3,049,600 was prepared.  In a spreadsheet seized from D1, the “loan” to Wong Kwun-wai was listed as “withdrawal of money at CSCP for Mr Hon”.

Charge 2 against D3 (10.9.2004)

102. On 10 September 2004, Abba Chan and D2 authorized the payment of $1 million from CSCP to D3 and D3 withdrew the $1 million in cash immediately.

103. The prosecution alleged that D3 had stolen the $1 million from CSCP by falsely representing it was a deposit payment for computer equipment purchased on behalf of Sharpo.

Prosecution evidence on charge 2

104. Abba Chan said that in early September 2004, D2 told him D3 had spent $1 million to purchase goods for Sharpo and wanted to be reimbursed.  Abba Chan, believing what he was told, signed a payment voucher approved by D2 authorizing the accounts department to issue a $1 million CSCP cheque in favour of D3.

105. The payment was listed as a payment to D3 and accounts were made good with the money from the $5 million “loan” made to D3 in December 2004 under Charge 11.

106. Cannie Chan said Abba Chan had accepted responsibility for the $1 million. Michael Pang said he had never seen the invoice, signed by D3, showing the payment of $1 million as deposit for the purchase of computer equipment. He said there was never such a purchase and the invoice was not genuine as it did not bear the name of the supplier.  He also said D3 had never purchased goods for Sharpo and she had no knowledge of computer equipment.

Charge 7 against D2 (1.10.2004 – 7.10.2004)

107. On 7 October 2004, Abba Chan and D2 authorized a $2 million payment to Chan Chun-kuen and a cheque for $400,000 drawn on CSCP’s account was cashed on the same day.  On 9 October 2004, Chan Chun-kuen withdrew $2 million in cash from his account and the money was paid to Abba Chan.

108. The prosecution alleged that D2 conspired with Abba Chan and Cannie Chan to steal the $2.4 million from CSCP by falsely representing that the monies were loans to Chan Chun-kuen.  In fact $400,000 was returned to CSCP and $2 million was used to meet Abba Chan’s personal liabilities.

Prosecution evidence on charge 7

109. In early October 2004, Abba Chan asked D1 to repay some money owed to him and D1 said he would arrange for a friend to obtain a loan from CSCP and that the money so obtained would be paid to Abba Chan.  Abba Chan and D2 signed two cheques, one for $2 million payable to Chan Chun-kuen and one for $400,000 cash.

110. On D2’s instruction, Cannie Chan prepared the two cheques and the payment vouchers.  Cannie Chan said that she recognized Chan Chun-kuen as D1’s friend who had visited CSCP office before.

111. Cannie Chan withdrew $400,000 with the cash cheque, but she could not remember to whom she gave the cash except the receipt voucher dated 29 December 2004 was signed by D2.

112. After the $2 million cheque was deposited, Chan Chun-kuen immediately withdrew and paid the money to Abba Chan.

113. Queenie Chow confirmed that $2 million was paid into Abba Chan’s account and she made a note that the money came from D1’s friend surnamed “Chan”.  She also noted, in the payment slip, that the money came from CSCP.

114. The $2 million “loan” was not repaid and it was subsequently made up with money from the $8 million, the subject matter of the 9^th charge.

Charge 8 against D1 and D2 (1.12.2004 – 30.4.2005)

115. On 22 December 2004, D1 and his wife authorised the transfer of $25,000,000 from CSCP to Wong Kim-chung’s Bank of China (BOC) account.  On 23 December 2004, Wong Kim-chung transferred $24,828,760 into BOC accounts of 12 different parties (the 12 parties).

116. The prosecution alleged that in an attempt to cover up earlier fraud, D1 and D2 conspired with Abba Chan, Cannie Chan, Hon Yik Kong and others to defraud CSCP of the $25 million by falsely representing that the $25 million was a short-term loan to GCSCP.  In fact the $25 million was paid to a remittance agent, Wong Kim-chung.  Wong Kim-chung, on D2’s instruction, transferred the $24.9 million back to CSCP through the 12 parties.

Prosecution evidence on charge 8

117. According to Abba Chan, there was a discussion with D1 and D2 on how to repay CSCP funds that had been misappropriated.  D1 came up with the idea that $25 million would be paid to Guangxi First Construction Company (GFCC) purportedly under a joint venture project with GCSCP (the Guilin project).  The $25 million would appear on CSCP’s books as an advanced payment to GFCC, but the money would be routed through a remittance agent back to CSCP to cover money that had been misappropriated.

118. Abba Chan agreed and the board meeting held on 21 December 2004, attended by Abba Chan, D1, D2, Hon Yik Kong and others, approved the payment of $25 million (RMB26.5 million) to GFCC as a short term loan in connection with the Guilin project.  D1 signed the minutes of the meeting as the Chairman.

119. The $25 million was paid to Wong Kim-chung, a remittance agent who then arranged to return the money through other remittance agents to CSCP.

120. According to Cannie Chan, D2 instructed her to complete the bank transfer form for the $25 million payment to GFCC together with the payment voucher, but at the same time gave her Wong Kim-chung’s account details and told her to pay the money to Wong Kim-chung.

121. Cannie Chan said D2 explicitly told her the money was not really going to GCSCP, but would be returned to CSCP to make up for the shortfall caused by funds misappropriated on earlier occasions.  Cannie Chan said D2 instructed her to pay Wong Kim-chung $30,000 as commission.

122. The bank statements of one of CSCP’s accounts for the month of December 2004 showed the payments of $25 million to Wong Kim-chung on 22^nd and $8 million to Chan Chun-kuen (the subject matter of charge 9) on 24^th. They also recorded the deposits of over $33 million.

123. None of the deposits was accompanied by any documentation and there was no indication where the money came from.  In a spreadsheet, the $24.9 million was described as “Ways of capital inflow”.

124. D2 signed the receipt vouchers for the $24.9 million.  Cannie Chan said she did not initial the deposit slips as she was concerned that such transactions were getting more frequent.  She also said she had a discussion with D2 on how the money should be used and it was decided that $16.9 million would be used to offset money from Henan TV but taken by Abba Chan.  Of the remaining $8 million, $3 million was used to offset the “loan” to Wong Kwun-wai (Charge 6) and the balance would be retained for future use.  The remaining $100,000 was used to pay off sundry amounts, including the $30,000-commision to Wong Kim-chung.

125. Cannie Chan also prepared, on D2’s instruction, two letters purportedly came from GFCC asking for the advanced payment of $25 million.  When Cannie Chan noticed that there was no mention of the $25 million payment in the accounts of GFCC, she informed D2 and D2 asked her to alter GFCC’s account to show the receipt of the $25 million.

126. The altered documents, checked by D2, were given to Hon Yik Kong so that he could make changes to the documents kept by GFCC.  Cannie Chan subsequently received the altered documents from Hon Yik Kong.  She faxed a draft receipt to Hon Yik Kong and she later received back the draft purportedly coming from GFCC.

127. Cannie Chan also said she prepared a spreadsheet which indicated that the $25 million was the responsibility of Abba Chan and D1.

Charge 9 against D1 and D2 (1.12.2004 – 30.4.2005)

128. On 24 December 2004, Abba Chan and D2 authorized the payment of $8 million from CSCP to Chan Chun-kuen who withdrew $4 million from his account on the same day.  On 28 December 2004, Chan Chun-kuen withdrew $1.57 million in cash from his account.  On 29 December 2004, Chan Chun-kuen deposited a cheque of $2,426,300 and paid cash of $1.32 million into CSCP’s account.

129. The prosecution alleged that in another attempt to cover the funds misappropriated from CSCP, D1 and D2 conspired with Abba Chan, Cannie Chan and others to defraud CSCP of the $8 million by falsely representing the money was earnest money paid to Chan Chun-kuen, the purported representative of Sino Profit, in respect of a joint project between Abba Holdings and Sino Profit in Meizhou PRC (the Meizhou project).  In fact Chan Chun-kuen returned $3.74 million to CSCP and the remaining $4.23 million was, according to D2, being temporarily retained by “some people”.

Prosecution evidence on charge 9

130. Abba Chan, in meetings with D1 and D2, agreed to another scheme to plug the gaps in CSCP’s account books.  D1 suggested $8 million would be paid to Chan Chun-kuen as introduction fee in connection with the Meizhou project when in fact the money would be paid back to CSCP.

131. At a meeting of the board of Abba Holdings on 22 December 2004 attended by Abba Chan and D2, it was resolved that Abba Holdings would deposit $8 million with Sino Profit as earnest money in connection with the Meizhou project.  The resolution was endorsed by the board of CSCP at a meeting also on 22 December 2004 and attended by Abba Chan, D1, D2, Hon Yik Kong and others.

132. Under a memorandum of understanding (MOU) dated 24 December 2004, signed by Abba Chan on behalf of Abba Holdings and Chan Chun-kuen on behalf of Sino Profit, Abba Holdings would pay $8 million “earnest money” to Sino Profit.

133. Cannie Chan said she was instructed probably by D2 to make out a cheque signed by Abba Chan and D2 for $8 million payable to Chan Chun-kuen.  D2 signed on the back of the cheque indicating that he took the cheque to the bank himself.  The payment voucher showed the payment was made to Sino Profit as earnest money for the Meizhou project.

134. On 29 December 2004, Chan Chun-kuen deposited a cheque for $2,426,300 and cash of $1.32 million into CSCP’s account.  D2 signed the receipt vouchers for the two payments.  The $2,426,300 was said to be the repayment of the $2.4 million loan granted to Chan Chun-kuen in October 2004 (the 7^th charge) plus interest.  The $1.32 million was said to be repayment of an advance to D1.  In fact both sums came from the $8 million paid to Chan Chun-kuen allegedly for the Meizhou project.

135. When Cannie Chan discovered Chan Chun-kuen was not in a position to represent Sino Profit, she informed D2.  D2 said he would arrange for the preparation of a MOU showing it was executed by Pang Kwok-chung.  In January 2005, Cannie Chan received a new MOU signed by D1 and Pang Kwok-chung, backdated to 6 December 2004 and in it, Abba Holdings would deposit $8 million with Pang Kwok-chung as “earnest money”.

Charge 11 against D1, D2 and D3 (28.12.2004)

136. On 29 December 2004, HTH transferred $5 million to D3.  D3 immediately transferred $4,450,000 to CSCP and paid $550,000 cash to D2 via Cannie Chan.

137. The prosecution alleged as another attempt to cover up funds misappropriated from CSCP involving Sharpo, D1, D2 and D3 conspired with Abba Chan and Cannie Chan to defraud CCPHL by dishonestly causing its subsidiary HTH to pay $5 million to D3 purportedly as a loan without any security or guarantee.  The $4,450,000 was used to cover up funds previously misappropriated from CSCP and the $550,000 was paid to D2.

Prosecution evidence on charge 11

138. According to Abba Chan, at meetings he had with D1 and D2, D1 suggested false loans could be granted through HTH to people they could trust so that the money could be channelled back to CSCP to balance its books.

139. Abba Chan and D1 approved a $5 million loan to D3 and the accounts department of CCPHL was authorized to make the payment.  $5 million was paid to D3 on 29 December 2004 and she signed a receipt.  Having received the money, D3 transferred $4.45 million to CSCP and withdrew $550,000 in cash.

140. According to Cannie Chan, D2 told her that two loans totalling $13 million (the subject matters of charges 11 and 12) would be made to people by HTH and that the money would be returned to CSCP to cover the unauthorized withdrawals made by Abba Chan and D1.  D2 also gave Cannie Chan a copy of the loan agreement signed by D1 for HTH and D3.  D1 also signed the bank transfer paying $5 million to D3.

141. On D2’s instruction, Cannie Chan told D3 to make out a cheque for $4.45 million and deposit it into CSCP’s account and to bring back the remaining $550,000 in cash.  D3 gave Cannie Chan the deposit slip for $4.45 million and cash $550,000.  The $550,000 cash was given to D2 who also signed the receipt voucher for the bank deposit.

142. According to Kenji Chan, when he learned of the unsecured loan to D3, he wrote a letter to the board of CCPHL pointing out it was risky to do so. Nevertheless the loan was approved and the money was paid to D3.  The “loan” had not been repaid.

Charge 12 against D1 and D2 (28.12.2004)

143. On 29 December 2004, HTH transferred $8 million to Wong Chi-keung, who, on the same day, transferred $8 million to Wong Kim-chung.

144. The prosecution alleged as the fourth and final attempt to cover up funds misappropriated from CSCP, D1 and D2 conspired with Abba Chan, Cannie Chan and Wong Chi-keung to defraud CCPHL of $8 million by falsely representing that the $8 million was a loan to Wong Chi-keung (an employee of Abba Chan’s friend) without any security or guarantee when the parties knew that the $8 million would go to CSCP.

Prosecution evidence on charge 12

145. According to Abba Chan, he got hold of Wong Chi-keung and sent him to D2 for the purpose of obtaining $8 million loan from CSCP.  A loan agreement was executed by D1 on behalf of HTH and Wong Chi-keung after the loan was approved by the board of CCPHL.  A cheque for $8 million was given to Wong Chi-keung who signed a receipt.

146. After the cheque was paid into Wong Chi-keung’s account on 29 December 2004, the money was immediately transferred to the account of Wong Kim-chung, the remittance agent and on the same day, $8 million was transferred back to the account CSCP by four cheques.

147. Cannie Chan confirmed Wong Chi-keung was the second of the two people mentioned by D2 who would come up for loans.  She said she received a copy of the loan agreement from D2 for record purposes.  She also confirmed that after paying the money into Wong Chi-keung’s account, the $8 million was returned to CSCP on the same day and D2 signed the receipt vouchers.

148. Kenji Chan said he had warned CCPHL’s board of the danger of making the unsecured loan to Wong Chi-keung.  However his warning was ignored.  The $8 million, described as “ways of capital inflow” in CSCP’s account, remained “outstanding”.

Charge 3 against D1, D2 and D3 (1.1.2005 – 7.1.2005)

149. On 7 January 2005, Abba Chan and D1 authorized the payment of $4 million from CSCP to Sharpo and Sharpo in turn paid $4 million to Well Glory. Well Glory withdrew the $4 million in cash and paid $3.9 million to Sino-Push and $100,000 to Abba International.  Sino-Push and Abba International then immediately withdrew and paid the respective sums of $3.9 million and $100,000 to Abba Chan.

150. The prosecution alleged D1, D2 and D3 conspired with Abba Chan, Cannie Chan, Chow Suk-fan and Michael Pang to steal the $4 million by falsely representing it was a deposit payment for computer equipment purchased from Well Glory when in fact it was shared between Abba Chan ($2.35 million) and D1 ($1.65 million).

Prosecution evidence on charge 3

151. In early 2005, Abba Chan approached D1, asking him for the return of several million dollars.  D1 said he too was in need of money and suggested D2 should be approached to discuss a possible solution.

152. According to Abba Chan, at a discussion with D1 and D2, D2 suggested they should repeat the same trick by pretending to have ordered goods from Sharpo.  It was agreed, of the $4 million that would be raised, $2.35 million and $1.65 million would go to Abba Chan and D1 respectively.

153. Abba Chan then arranged with Chow Suk-fan of Well Glory for its account to be used to receive money from Sharpo and to repay the money to Abba Chan. 

154. Subsequently $4 million was transferred from CSCP to Sharpo as “working capital” by means of a payment voucher signed by Abba Chan.  A cheque for $4 million was signed by Abba Chan and D1 after the transfer of funds was approved by the board, the minutes of which was signed by Abba Chan, D1 and D2.

155. The $4 million received by Sharpo was transferred to Well Glory whose receipt was sent to Abba Chan and then to D3.  D3 suggested the receipt must bear the name of Well Glory and a copy of a composite document comprising the receipt and Well Glory’s letterhead was given to Abba Chan by D3.

156. The $4 million received by Well Glory immediately went to Abba Chan’s bank account.  Abba Chan confirmed that the transaction was not genuine and he had paid $1.65 million to D1.  The $4 million was still listed in CSCP’s books as “outstanding matters” in September 2005.

157. Cannie Chan confirmed that D2 told her Abba Chan needed money and on D2’s instructions, she made out the $4 million cheque payable to Sharpo. D2 told her that Abba Chan would repay the money in a few days and she made a note to that effect.  The letter from Sharpo asking for the $4 million “working capital” was drafted by Cannie Chan, approved by D2 and signed by Michael Pang.

158. Chow Suk-fan confirmed Abba Chan’s request to use Well Glory’s bank account to deposit money.  She obtained the permission of Mr Fu, Abba Chan’s old friend and business associate, and complied with Abba Chan’s request.  She then faxed the bank details and letterhead of Well Glory to Sharpo in accordance with Abba Chan’s instruction.

159. Chow Suk-fan also signed a bogus agreement between Sharpo and Well Glory for the supply of $4 million worth of computer components.  After confirming $4 million had been deposited by Sharpo, she issued an official receipt and returned it with the signed agreement.

160. On Abba Chan’s instruction, Chow Suk-fan withdrew the money in cash, then deposited $100,000 and $3.9 million into the account of Abba International and Sino-Push respectively, before faxing the deposit slips to Abba International.

161. Queenie Chow confirmed $4 million was paid into Abba Chan’s bank account in two payments, one from Sino-Push and the other from Abba International.  She confirmed she had been in contact with Chow Suk-fan and had obtained details of Well Glory from her.  She also confirmed the receipt of two deposit slips, showing the deposits of $3.9 million and $100,000.

162. Queenie Chow said Abba Chan initially told her to draft the purchase order from Sharpo ostensibly for the purchase of $4 million worth of computer parts from Well Glory.  She refused and told him to get someone in Sharpo to do it.

163. In a spreadsheet prepared by Cannie Chan, of the $4 million sent to Sharpo, Abba Chan was responsible for $2.35 million and D1 was responsible for $1.65 million.  Cannie Chan confirmed that she had earlier sent out a document showing Abba Chan was responsible for the whole sum, but subsequently in the presence of D2, Abba Chan said he was only responsible for $2.35 million and D1 was responsible for $1.65 million.  D2 then amended the record.

164. Michael Pang confirmed that D3 had told him the $4 million was for Abba Chan’s use.  He then signed the request letter drafted by Cannie Chan asking for a $4 million loan from CSCP to Sharpo.  After D3 told Michael Pang the money would be sent to Well Glory, Michael Pang made out a false Sharpo purchase order to justify the payment.  Michael Pang said he was acting on D3’s instruction.

165. The minutes of a board meeting of CSCP dated January 2005 attended by Abba Chan, D1, D2 and a Ms Wong recorded that Sharpo had requested $4 million as working capital in connection with the computer software market and it was resolved that Sharpo’s request would be acceded to.  The minutes were signed by D1 as Chairman.

Charge 4 against D1 and D3 (17.3 2005 – 22.3.2005)

166. On 17 March 2005, Abba Chan and D1 authorized the payment of $1 million from CSCP to Sharpo.  On the same day, Sharpo withdrew $800,000 in cash from its account and paid $780,000 into the joint account of D1 and his brother and $20,000 to D3.  On 22 March 2005, Sharpo further withdrew $210,000 in cash from its account.

167. The prosecution alleged D1 and D3 conspired to steal the $1 million from CSCP by falsely representing that it was a fund transfer from CSCP to Sharpo when in fact the money was shared between D1 ($780,000) and D3 ($220,000).

Prosecution evidence on charge 4

168. According to Cannie Chan, in March 2005, on the instruction of D1, she prepared a CSCP cheque for $1 million payable to Sharpo and the cheque was signed by Abba Chan and D1.  The money was still listed as an “outstanding matter” in September 2005.

169. Michael Pang said D3 told him in March 2005 that $1 million would be deposited by CSCP into the account of Sharpo and $800,000 should be withdrawn immediately and deposited into the joint account.  Subsequently the instruction was modified.  Alexander Pang withdrew $800,000 and deposited $780,000 into the joint account and the remaining $20,000, less bank charges, was given to D3.

170. On 22 March 2005, Michael Pang, again acting on D3’s instruction, issued cash cheque drawn on Sharpo’s account for $210,000 to ensure D1 would receive the entire $1 million.  The counterfoil for the cheque was stated “cash–Hon Ming Kong”.

171. Michael Pang denied the suggestion that the $780,000 had anything to do with the alleged ransom to get him and his brother released.  He accepted he and his brother had been detained and D1 had paid some money to get them released, but he was never asked to pay any money to D1 for his effort.

172. Alexander Pang said the false detention incident related to the repair and warranty of computer components when they were employed by their former company, Techcom Company Ltd.  He said the culprits expected compensation of about $100,000 for which he and Michael Pang were liable.  The matter was reported to the Public Security Bureau in PRC and the culprits were arrested. Alexander Pang said if necessary, his family could raise $780,000.

Charge 10 against D1 and D2 (4.2005)

173. On 18 April 2005, D1 and D2 signed a CSCP cheque for $5 million to pay to D1.  On the same day, D1 transferred $5 million from his account to Chan Chun-kuen’s account.

174. The prosecution alleged D1 and D2 conspired with Cannie Chan to defraud CSCP by falsely representing the $5 million was an interest free loan to Sino Profit in connection with the Meizhou project.  The money was paid to D1 who then transferred the money to Chan Chun-kuen.

Prosecution evidence on charge 10

175. CSCP’s board, in a meeting on 18 April 2005, approved a loan of $5 million to Abba Holdings as working capital in connection with the Meizhou project.

176. The meeting, presided by D1, was attended by Abba Chan, D1, D2, Hon Yik Kong and others.  D1 signed the minutes as Chairman.

177. According to Cannie Chan, she received instruction from either D1 or D2 to issue a cheque for $5 million payable to D1 as “working capital for the Meizhou project”.  The cheque was paid into D1’s account.  She subsequently received a receipt for $5 million signed by Pang Kwok-chung on behalf of Sino Profit showing the payment was “working capital for the Meizhou project”. There was only a journal voucher confirming the ostensible purpose of the payment.  As of 27 September 2005, the payment was outstanding and D1 was said to be responsible for it.

Charge 5 against D1 and D3 (17.5.2005)

178. On 17 May 2005, Abba Chan and D1 authorized the transfer of $2 million from CSCP to Sharpo.  Michael Pang, on behalf of Sharpo, withdrew $1.1 million in cash on the same day.

179. The prosecution alleged D1 and D3 conspired with Michael Pang to steal $1.1 million from Sharpo by falsely representing the $1.1 million was required to make purchase when in fact the money was for D1’s personal use.

Prosecution evidence on charge 5

180. Cannie Chan said that she was instructed by D1 to prepare and send a cheque of $2 million to Sharpo.  The payment voucher was signed by D1 and the payment was listed as having been transferred on D1’s instruction and was still, as of September 2005, shown as “outstanding”.

181. Michael Pang confirmed that Sharpo had received $2 million.  When he asked D3 of its disposal, he was told to deposit $1.1 million into Hon Wing-kong’s account urgently.  Michael Pang contacted Hon Wing-kong and after he was told how the money was to be paid, he withdrew $1.1 million cash from Sharpo’s account and gave the money to Hon Wing-kong.

182. Michael Pang created a false purchase order to show the purchase of computer components valued at over $2 million from “Asia Pacific Cash Chan” for which a deposit of $1.1 million had been paid.  Michael Pang confirmed there was no such transaction.  The $1.1 million was never returned and the balance of $900,000 remained in Sharpo’s account.

Charge 13 against D1 and D2 (28.4.2005) and the prosecution evidence

183. The prosecution alleged that D1 and D2, as officers of CSCP, had published a false statement in the Annual Report of CSCP that there was a “Trade and Receivables” amounting to $107,575,000 in its account.

184. CSCP’s Annual Report for 2004 was published on 28 April 2005 in accordance with the requirement of Stock Exchange of Hong Kong.  The Consolidated Balance Sheet in the report, signed by D1 and D2, contained a statement that “Trade and Receivables” under “current assets” of CSCP amounted to $107,575,000.

185. In so far as the suggestion that the “current assets” of CSCP included the payments of $33 million in connection with the Guilin and Meizhou projects, it was false or deceptive in a material particular when the entire $33 million returned to CSCP.

186. It was the prosecution contention that on the evidence, both D1 and D2 were responsible for the publication of the false statement in the Annual Report of CSCP to defraud members and creditors of CSCP.

The Spreadsheets

187. In the course of her evidence, Cannie Chan produced and referred to a numbers of spreadsheets recording the unauthorised withdrawals of funds from CSCP, their nature and the identities of persons who should take follow-up actions.

188. Cannie Chan said that in or about July 2004, D2 instructed her to make a list of unauthorized withdrawal of funds from CSCP so that they could be properly addressed.  She then prepared the spreadsheets setting out the unauthorised withdrawals and the persons responsible for such unauthorised withdrawals.  The spreadsheets, approved by D2, were checked by Abba Chan and D1 before being circulated amongst the three of them.  The spreadsheets would be regularly updated and would be discussed at meetings between Abba Chan, D1 and D2.

189. The spreadsheets referred to the $25 million towards the Guilin project (charge 8), the $8 million towards the Meizhou project (charge 9), the $5 million “loan” to D3 (charge 11), the $8 million “loan” to Wong Chi-keung (charge 12), the $3 million “loan” to Wong Kwun-wai (charge 6), and the $2.4 million “loan” to Chan Chun-kuen (charge 7).

190. The spreadsheets also referred to the repayment by D3 of $1.5 million (charge 1), the transfer of $1 million to D3 for the purpose of purchasing goods (charge 2).

191. A copy of the spreadsheet recording the aforesaid items (P56) was seized from D1.  Another copy of a spreadsheet (P54) which recorded “withdrawal of money at CSCP” referred to the $3 million loan to Wong Kwun-wai (P54) was also seized from D1. 

192. In other spreadsheets, the $3 million loan to Wong Kwun-wai consistently referred to D1 as the person responsible for the “following up” action.  A spreadsheet (P41) referred to a $3 million loan to D3 which was to be followed up by D1, and other spreadsheets were found on D2’s desk and in his briefcase.

193. Similar spreadsheets were found in the possession of Cannie Chan and Queenie Chow.

The Notebook

194. In giving evidence, Michael Pang referred to his notebook which contained entries relevant to some of the charges and the notebook was produced as evidence.

195. The relevant entries in the notebook stated:

“Loan: [company paid in HK$1,000,000]

(1) @HK800,000 paid into Hon Ming-kong’s A/C 17-March-05.

[Actually paid in HK$780,000.  The balance, with Bank-in handling fee deducted, was paid to Ah Ken in cash]

(2) @HK$210,000 paid into Hon Ming-kong’s A/C 22-March-05.

Total: HK$1,010,000

[Totally lent out, not in the company]

Loan: [Company paid in HK$2,000,000]

(3) @HK$1,100,000 given to Hon Ming-kong’s elder brother Michael (cash) in the morning 17-May 2005 [Company name “Asia Pacific” was used] – p0039259

(4) @HK$900,000 still retained in the company for use 17-May-2005

(5) @HK$200,000 – borrowed by Ken [cash] already returned CHK references

7 June 2005 used deposit (Company’s name Top Global was used)

Total: HK$2,000,000 (HK$1,100,000 lent out, HK$200,000 lent out, HK$700,000 retained in the company)

Loan: [Company paid in HK$4,000,000]

(6) @ HK$4,000,000 lent to Uncle Ba [Company name Well Glory was used] 7 January 2005 – p0038545

Total: HK$4,000,000 (totally lent out)

(7) @ HK30,000 paid into Sun Hung Kai Securities in the morning

Mr. Lau A/C 357-10359711 [Ah Kan’s instruction]

8/7.2005 (Using Tais. PO. No p0039523)

(8) @ HK50,000 cash taken from bank for Ah Kan (Using Tais Cash Chan PO. No. p0039577) Personal use to be deducted from year-end profit

(9) @ HK50,000 cash taken from bank for Ah Kan (Using Cash Chan) PO No. p0039577 *Personal use to be deducted from year-end profit

Repayments:

(5)  @HK200,000 Ken repaid in cash, company current A/C <20/June.2005>”

196. Michael Pang accepted that entry (6) could not have been made contemporaneously as it was dated 7 January 2005, yet it follows (5) which was made in June 2005.  He was unsure when he made entries (3) to (5), but admitted that they could have been made much later than May 2005.  He was unable to say when he made the first entries.

197. The defence raised no objection to Michael Pang referring to his notebook when he gave evidence although objection was taken in final submissions on the basis that the notebook was not a contemporaneous record and could not be used as a memory refreshing document.

The Defence Case

198. The defence did not dispute the identities of the various parties and the companies concerned.  The movements of the funds in various bank accounts were admitted.

199. D1 and D3 agreed the evidence of the seizures of various documents in relation to the transactions in questions.  D2, however, suggested that the spreadsheet was not found in his possession, but was planted on him by ICAC officers.

200. The applicants suggested that he/she was not involved in and had no knowledge about the fraud, if any, committed against CSCP and/or CCPHL.  The suggestion was that Abba Chan and/or Cannie Chan and/or Michael Pang could have committed the fraud themselves, but put the blame on the applicants.

201. D1 did not give or call any evidence.  However he suggested through cross-examination that Abba Chan, having gained control of CSCP in February 2004, packed its board with his associates including his wife and his confidant (Jimmy Kwong) and then started to steal from CSCP on his own without D1’s knowledge.

202. D1 pointed out that Abba Chan had admitted stealing $11.83 million from the Henan TV deal in April 2004 and misappropriating $10 million from CSCP in August 2004 before D1 became the executive director of CSCP.

203. D1 alleged Abba Chan had lied against him and he was not a truthful or reliable witness.  It was pointed out Abba Chan’s evidence was contradicted by other prosecution witnesses.  D1’s case was that he had no reason to be involved in the alleged “cover-up” since he was not involved in the earlier misappropriations.

204. D1 further suggested that the spreadsheets in question, in so far as they might have incriminating contents against him, were inadmissible as they were hearsay documents.

205. D3 also did not give or call any evidence.  Her case was also that Abba Chan and Cannie Chan had both lied against her.  She denied giving any instruction to anyone in connection with the fraudulent transactions in question.  D3 admitted to have taken out a loan of $5 million from HTH (the subject matter of charge 11), but denied knowing that the money was misappropriated from CCPHL for the purpose of covering up earlier fraud.

206. D3 accepted that $1 million (the subject matter of charge 1) was paid into her account on 10 September 2004, but suggested she immediately paid back the money into Abba Chan’s account having been told that the money had been deposited by mistake and had to be returned.

207. D3 accepted that she had signed on what was, on its face, a bogus invoice showing that she had sold computer equipment to CSCP, but claimed to have been misled by Michael Pang who told her that she had to sign the bogus invoice to rectify the mistake in connection with the payment of $1 million into her account.

208. On charge 4, D1 and D3 both suggested that the payment of $780,000 into the joint account was a repayment by the Pang brothers to Hon Wing-kong because Hon Wing-kong had incurred over $1 million expenses for their release after they were kidnapped in the Mainland in 2002.  The suggestion was that Michael Pang stole from Sharpo to discharge his liability towards Hon Wing-kong.

209. On charge 6, D1 suggested that Abba Chan had asked Wong Kwun-wai to obtain the $3 million loan from CSCP and he was not involved in it.

210. On charges 8 and 9, D1 suggested that the Guilin and Meizhou projects were genuine and that the $25 million and $8 million payments were genuine payments towards the projects.  On charge 10, D1 suggested that the $5 million was a loan to Pang Kwok-chung and $4.5 million had been returned in 2006.

211. On charge 11, D1 denied knowing anything about the bogus nature of the $5 million loan to D3 as it was Abba Chan who was in control of the company.  D3 did not dispute the payment of $5 million into her account, but suggested that it was a genuine loan to her and that the loan was not yet due for repayment at the time of her arrest.

212. On charge 12, D1 again suggested that it was a bogus loan arranged by Abba Chan without his knowledge.

213. On charge 13, D1 said the statements in CSCP’s annual report for 2004 in relation to the “Trade and Receivables” from the Guilin and Meizhou projects, to his belief, were not false. 

214. D2 gave evidence to the effect that the alleged frauds, if any, were perpetrated without his involvement or knowledge.  He said he was only carrying out resolutions of the board and his initials on the questioned documents were forged.

215. D2 suggested that Cannie Chan had lied against him to help Abba Chan and that she herself was involved in the fraud, but sought to put the blame on him.

216. D2 alleged that his initials on board minutes, payment/receipt vouchers relevant to the charges were forged.  D2 further alleged that no spreadsheet was found in his possession, but was planted on him by ICAC officers.

217. On charge 1, D2 said he had no reason to participate in stealing $1.5 million from CSCP.  He said he initialled the payment voucher because he believed it was a genuine transaction.  Similarly on charge 3, D2 said he believed the $4 million was a genuine internal transfer from CSCP to Sharpo.

218. D2 denied attending the board meeting approving the bogus transaction with Well Glory.  He said he was not in Hong Kong at that time and he only signed the minutes when he returned to Hong Kong.

219. On charge 1, D2 said he left Hong Kong at 1754 hours on 10 May 2004, returned at 0139 hours on 11 May 2004 and left at 0843 hours again on the same day.  He denied signing the relevant documents.

220. On charge 3, D2 pointed out the unusual feature that the payment voucher was signed by Abba Chan and not the person who prepared the supporting documents.  He denied knowledge of the document titled “Request for additional funds”.

221. On charge 6, D2 denied knowledge of the fraud and said he signed the cheque for the $3 million payment to Wong Kwun-wai in blank.  D2 said he had never come across the loan agreement between Wong Kwun-wai and CSCP and his initial on the board minutes approving the loan was forged.

222. On charges 7 and 9, D2 said his initials on the payment vouchers and the receipt vouchers dated 29 December 2004 were forged.  It was D2’s case that he signed the cheque for the $2 million payment to Chan Chun-kuen in blank.  He emphasized that he was in Canada between 8 and 15 of October 2004 after his father died on 6 October 2004.  He said the payment voucher was not initialled by him, but prepared and signed by Cannie Chan and checked by Abba Chan.  He also said if he was in the office, he would be required to sign the cheque and the corresponding payment voucher at the same time.

223. D2 denied being involved in the conspiracies, the subject matters of charges 8, 9, 10 and 11.  He said he was acting on the board’s authority and direction, and his initials on the receipt vouchers showing the return of the money were forged.

224. D2 tendered, under s65B of the Criminal Procedure Ordinance, a handwriting expert report by Mr Shum Lau.

225. Mr Shum Lau, a retired Government Scientific Evidence Officer, had examined 51 authenticated specimen initials of D2 and 16 questioned initials of D2 that appeared on the relevant receipt/payment vouchers and/or board minutes.

226. Mr Lau reached the following conclusion in his report:

“Referring to the annexure 1 attached, my examination of the 51 authenticated specimen initials of (D2) and the 16 questioned initials has revealed that :

1. They were all composed of the English letters ‘A’ and ‘c’.

2. (The) difference between initials of individual set was extensive.

The simple designing and the extensive difference would, by comparing the difference of the structural lines between the two sets of initials, permit a document examiner in favour of given instruction of negativity, in claiming different authorship of the two sets of initials.

It also permits a document examiner in favour of given instruction of positivity by applying the common term ‘Natural Variation’ in text books of document examination in claiming a common authorship of the two sets of initials.

I am of the opinion, taking into consideration of the simple structure of the initials, that the set of questioned initials could have been written by any person who has the knowledge of these two English letters.”

The Mainland Witnesses

227. It was the contention of D1 and D2 that their defence on charges 6, 8, 9 and 10 could be supported by a number of witnesses on the Mainland particularly Wong Kwun-wai, Liao Jiasheng (Liao) and Pang Kwok-chung.

228. D3 suggested that the evidence of her Mainland witnesses (two Shenzhen Security Bureau officers and Qi Da-yue (Qi)) could confirmed her case that the $1 million, the subject matter of charge 4, was connected to the kidnap of Michael and Alexander Pang.

229. The issues relating to the Mainland witnesses is addressed in the judgment of Stock VP which follows this judgment.

The Judge’s Findings

(1)  As to credibility generally

230. On factual issues, the judge found Abba Chan, Cannie Chan, Queenie Chow and Michael Pang to be reliable witnesses.  The judge took the view that whilst Abba Chan gave evidence because he hoped to have his sentence reduced, he had also wanted to redeem his culpability as he treasured his reputation and integrity.

231. The judge accepted Abba Chan might have been untruthful or dishonest on certain aspect, but concluded that he was honest and truthful in his allegation against the applicants.

232. The judge in his reasons for verdict said:

“In this context, the credibility and reliability of these witnesses is fundamental in this trial. It is apparent that (Abba Chan) was the important witness. Understandable, (Abba Chan’s) character and evidence was under severe attack and challenge. Counsel for (D1) remarked that (Abba Chan) is a fraudster of immense proportion. Many issues were covered by the witnesses during the course of the trial. It is simply not practical for me to spell out every aspect of events covered by every witness and to identify and analyse every discrepancy, be it real or perceived…

That said, I have to emphasise that I have carefully borne in mind all the evidence given by the witnesses, the strengths, the weaknesses, the contradictions and the corroborations that could be found amongst the evidence. The fact that I do not mention a particular piece of evidence or issue does not mean that I have not considered it in the long journey of my decision-making process. To this end, I have had the benefit of the comprehensive and helpful closing submissions made by counsel for the prosecution and of the three defendants…

The length of time (Abba Chan) spent in the witness-box and the depth of his examination and cross-examination inevitably gave me a long period over which to observe and assess him. He might not be able to give sharp and focused answers. I have no doubt that (Abba Chan), who has pleaded guilty to those charges… Of course, I do bear in mind his reluctance or even evasiveness in answering those questions concerning the purchase of shares in (CSCP), the involvement of Jimmy Kwong prior to (his) acquisition of the substantial shares in (CSCP), the use of his subordinate or friends’ securities account to purchase shares, and also the means of using remittance agents probably to circumvent the exchange control imposed by the authorities in the Mainland. That, in my view, is understandable to a certain extent, but in my judgment, in no way was his evidence against the defendants and his narration of the incidents as particularised in the charges be tainted…

…

I noticed that at times, (Abba Chan) acted temperamentally but was eager to speak out. On many occasions, I had to remind (Abba Chan) that he needed to listen to the questions and to give answers succinctly. In my view, (Abba Chan) was telling as much as he could remember. Just take once incident as an illustration. On day 93 when (Abba Chan) was recalled and he might well lose temper in making replies to questions put by Mr Pow SC, he said, ‘I’m sorry. That is my temperament. I sometimes have spoken more that I should have said. I am sorry.’ Then he further said, ‘Please don’t make wild guess of what I said. I am simply telling the truth.’

Of course, I noticed that there were some areas that (Abba Chan) tried to avoid to give direct answer, for example, as I mentioned earlier, that transaction in shares of (CSCP) through his secretary and friends, and other shares arrangement with other directors like Jimmy Kwong. But I take the view that merely because a witness was shown to have been untruthful or dishonest on one or some particular aspect does not necessarily mean all his or her evidence must be rejected automatically and totally. This approach applies to other witnesses. In my judgment, on occasions, (Abba Chan) was exploited by both D1 and D2 who knew how to take advantage of the easygoing character of (Abba Chan) who is also eager to help his friends.

It is true to say that (Abba Chan’s) testimony arose partly from the expectation of having his sentence reduced, but in my view, it is also out of the desire to redeem his culpability. (Abba Chan) treasured high on his reputation and integrity, and to some extent, took pride to be regarded as ‘Wong Tai Sin’.” I would consider (Abba Chan) a reliable witness and give full weight to his evidence on matters relating to the charges.”

233. The judge also accepted Cannie Chan might try to exonerate herself from the wrongdoings, but pointed out her evidence was straightforward and at time she was prepared to say things favourable to D2, her boss whom she would talk to directly by means of long-distance calls when he was in Canada.

234. The judge concluded Queenie Chow gave her evidence cautiously and her evidence remained un-shattered.  The judge said it was understandable for Michael Pang not to talk about the kidnapping incident too willingly, but such matter did not taint his evidence.  The judge took the view Queenie Chow and Michael Pang were reliable and honest witnesses.

235. The judge then set out extensively the evidence of each of the prosecution witnesses.  The judge also set out the detailed evidence of D2.

As to charge 1

236. On charge 1, the judge accepted Abba Chan’s evidence that he was in need of money and on the advice of D2, the scheme to obtain $1.5 million from CSCP by falsely representing the money was a deposit by Sharpo paid to California Telecom.

237. The judge pointed out the relevant voucher was signed by Abba Chan and D2.  He found Cannie Chan did communicate with D2 about the transaction and would act according to his instruction.

238. The judge accepted Michael Pang’s evidence that he often contacted D3 and sought advice or confirmation from her as to what action to take.  The judge pointed out that Michael Pang, in order to protect himself, would make records in his notebook (the notebook) about what he considered to be fishy transactions and the judge said he placed full weight on the notebook.

239. The judge accepted Michael Pang’s evidence that D3 told him about the plot as a large sum was involved and he did confirm with D3 before signing the cheque with his brother.

240. The judge referred to the evidence of Eric Leung of California Telecom and Pacific King Technology that the purported transaction did not exist, but bogus receipt and stock list were prepared.  The judge concluded that without the input and advice of D2 and D3, the whole plot could not be carried out.

241. The judge found both D2 and D3 acting dishonestly and found them both guilty of charge 1.

As to charge 2

242. On charge 2, the judge pointed out $1 million was withdrawn from D3’s account shortly after the cheque was deposited and the same amount of cash was deposited into Abba Chan’s account on the same day.  The judge opined that D3 must know about the withdrawal of $1 million from her account and that if there was a mis-transfer of funds, there was no need to withdraw such a large sum of money in cash.

243. The judge found D3 had misappropriated the $1 million by falsely representing that it was a deposit payment and that she was acting dishonestly.  He therefore convicted D3 of the 2^nd charge.

As to charge 3

244. On charge 3, the judge pointed out Abba Chan was not close to D3 and she had no role to play in CSCP, CCPHL or Sharpo, and therefore Abba Chan could have no motive to implicate D3.

245. The judge emphasized Abba Chan had in fact admitted to have embezzled from CSCP the total sum of $5.5 million, the subject matter of charges 1 and 3 for his own benefit.  The judge said Abba Chan’s evidence was supported by documentary evidence and the evidence of Cannie Chan and Michael Pang who took instruction from D3 and were able to detail her role in the fraud.  The judge found D1, D2 and D3 acted dishonestly and therefore found them guilty of charge 3.

As to charge 4

246. On charge 4, the judge rejected the defence case that the money was paid in connection with the release of Alexander Pang.  The judge pointed out that the Pang brothers were detained in 2002 or 2003 and that the ransom demanded was only $100,000 while the transfer of $1 million took place in March 2005.

247. The judge also emphasized the unusual feature that the money was first paid to Sharpo before it was paid into the joint account of D1 and Hon Wing-kong.  The judge pointed out that Michael Pang kept a record of the funds coming in and out of Sharpo’s account and he accepted his evidence that part of the money was paid to D3 in cash.

248. The judge found that D1 and D3 had conspired to steal the $1 million from CSCP and they had acted dishonestly.  He therefore convicted D1 and D3 of charge 4.

As to charge 5

249. On charge 5, the judge pointed out that the cheque and the payment voucher were signed by D1, and in the spreadsheet, it was stated $1.1 million was transferred on D1’s instruction and was his responsibility.

250. The judge accepted Michael Pang’s evidence and concluded that the entries in his notebook were reliable since he had made them when he felt something fishy was going on.

251. The judge took the view if the transaction was genuine, there was no need for the money to be withdrawn in cash.  The judge rejected the suggestion that D1 was tricked by Michael Pang to send the cheque for $2 million to him.

252. The judge found that D1’s brother received $1.1 million and D3 was instrumental in the embezzlement; and they were acting dishonestly.  The judge found charge 5 against D1 and D3 proved.

As to charge 6

253. On charge 6, the judge accepted the evidence of Cannie Chan and Kent Fung on how they encountered Wong Kwun-wai and how the cash was withdrawn and given to D2.

254. The judge rejected D2’s evidence that it was Cannie Chan who asked him to sign the blank cheques and then kept two of them for future fraud.  The judge referred to the minutes of the board which stated “should negotiation fail, Mr (Abba Chan) will return the whole sum to the company”, and opined if the money was spent genuinely on the negotiation process and related matters, Abba Chan had no reason to return the money to CSCP even if the negotiation failed.

255. The judge concluded Wong Kwun-wai was a conduit to act as a borrower for the $3 million loan when it was D1 who needed the money urgently.  The judge took the view it could not have been a genuine loan to Wong Kwun-wai when he had no income proof and when there was no security for the loan.

256. The judge found D1 and D2 had conspired with others to steal $3 million from CSCP and that they were acting dishonestly.  The judge convicted D1 and D2 on charge 6.

As to charge 7

257. On charge 7, the judge rejected the suggestion that D2 had resigned in October 2004 and he was asked to sign five blank cheques before his departure when there were other signatories to the account.

258. The judge was satisfied that there was a conspiracy to steal $2.4 million from CSCP and the sham arrangement of having Chan Chun-kuen as a borrower was orchestrated by D2.  The judge inferred $400,000 cash was pocketed by D2 when he signed the receipt voucher as required by Cannie Chan for her own protection.  The judge found D2 a party to the conspiracy and he was acting dishonestly.  He therefore convicted D2 of charge 7.

As to charge 8

259. On charge 8, the judge said that looking at the activities and the documentations, it was clear that it was some kind of accounting trick to generate liquidity.

260. The judge emphasized when the amount was $25 million, Guilin China would have made the request to China Holdings and not CSCP for the money and would not have asked for the money to be deposited into the account of Wong Kim-chung.  The judge took the view the accounts and money were manipulated with no regard to the actual interest of the companies involved or their shareholders.

261. The judge found the conspirators had generated all the forged documents to conceal or camouflage the embezzlements that had been perpetrated.  The judge pointed out the suspicious nature of the project agreement, and in particular the reference to “the total consideration of the project was to cover ‘everything’.

262. The judge concluded the incident was a large scale accounting fraud to cover the accounting gaps and the stamp-chop of Guilin China was forged by Cannie Chan on D2’s instruction.

263. The judge found D1 and D2 acting dishonestly in the conspiracy to defraud CSCP of $25 million and he therefore convicted them of charge 8.

As to charge 9

264. On charge 9, the judge emphasized the fact that the MOU was signed twice, first by Chan Chun-kuen and then by Pang Kwok-chung.  He said that that supported the evidence of Cannie Chan.  The judge accepted the prosecution contention and found D1 and D2 had conspired with others to defraud CSCP of $8 million which did not go to the Meizhou project at all.

265. The judge found that D1 and D2 were acting dishonestly and he convicted them of charge 9.

As to charge 10

266. On charge 10, the judge took the view that the existence of a Meizhou project or otherwise had nothing to do with the embezzlement of the $5 million under charge 10.

267. The judge found that pursuant to the agreement between Abba Chan, D1 and D2, a plot to use Sino Profit as a conduit to embezzle the money was orchestrated and Cannie Chan had prepared all the documents after discussion with D2.

268. The judge accepted that there might well be a Meizhou project but that it was used as a cover for the misappropriation of funds belonging to CSCP.

269. The judge concluded that D1 and D2 were parties to the conspiracy to defraud CSCP of $5 million and they were acting dishonestly.  In convicting D1 and D2 of charge 10, the judge said:

“I accept the version put forward by (Abba Chan) that he discussed with D1 and D2 to orchestrate the plot and used Sino Profit as a conduit to embezzle the money.”

270. In fact, however, Abba Chan had not given any evidence in relation to charge 10 and Mr Caplan QC, for the respondent, informed this Court that as the judge mistakenly included Abba Chan’s testimony in his analysis, he did not seek to support the conviction on charge 10.

As to charge 11

271. On charge 11, the judge pointed out the undisputed evidence that $5 million was deposited into D3’s account and D3 transferred $4.45 million back to CSCP and withdrew $550,000 in cash.  The money was then given to Cannie Chan with the bank-slip and Cannie Chan said she gave the cash to D2 who had signed the receipt voucher.  The judge concluded:

“Prima facie, the loan agreement between D3 and HTH was lawful, but one has to look at the background of the loan as to why the fund flow was made. D3 did not have a substantial income, and without any security she was able to obtain a loan of $5 million for no apparent substantiated reason. The loan was approved even though the financial controller made a written warning, and such a warning was recorded in the minutes of meeting. The way the money was used is relevant to show the motive and design of the whole scheme. It is apparent that the money was used urgently as it was done on 29 December 2004.

In substance, it was not a personal loan as D3 gave all the money back to (CSCP) and the cash of $550,000 was given to D2. There is no clue as to why $550,000 cash was required. The loan was arranged and approved by D1. All these factors pointed to the direction that it was a sham. Whether the loan was eventually written off for whatever reasons and whether D3 was aware of the demand letters are not relevant to the issue of the charge. It is clear that D1, D2 and D3 conspired together.

Without any income proof and security and despite the objection from the financial controller, it defied any commercial sense for the board to approve the loan. D1 was the one who signed the relevant documents. I would not accept that D1 had no knowledge of the two loans totalled $13 million on one single day. He must be a party to the conspiracy to materialise the plot.

D2 disclaimed any knowledge of an involvement in this loan.  I do not accept that.  He was the one who personally received a large sum of money, at least in cash, totalled $550,000 on the day, and he signed the receipt voucher.”

As to charge 12

272. On charge 12, the judge again pointed out that Wong Chi-keung did not have any income proof or security, yet $8 million was transferred to his account as a loan in the face of objection by the financial controller.  It was D1 who signed the relevant documents and D2 who signed the receipt vouchers when $8 million was returned to CSCP on the same day.

273. The judge said that he could find no plausible reason for the transaction except that it was another sham to manipulate fund flows in order to cover up previous misappropriation of money.  The judge concluded that what D1 and D2 did would cause economic loss to CSCP or put its economic interests at risks and that they were acting dishonestly.  The judge therefore convicted D1 and D2 of charge 12.

As to charge 13

274. On charge 13, the judge rejected D2’s evidence that he was not responsible for the financial matters of the Annual Reports and found that both he and D1were responsible.

275. The judge referred to the roles of D1 and D2 in connection with charges 8 and 9 and concluded the purported deposit of $28.5 million with the PRC construction company was a sham.

276. The judge further found that the MOU between Abba Holdings and Pang Kwok-chung that he would receive earnest money of $8 million in connection with the Meizhou project was also a sham.

277. The judge therefore convicted D1 and D2 relating to particulars (a) and (c) on charge 13.

As to the handwriting report

278. On D2’s handwriting expert’s report, the judge said: “Counsel for D2 then tendered Mr Shum Lau, the handwriting examiner’s report under section 65B...but the examiner gave no conclusive findings”.

279. The judge’s comment was probably prompted by D2’s then counsel who informed the judge the expert had not made any conclusion and the purpose of putting in the documents was to make it known that the examination was inconclusive; that D2 was not hiding anything and that the examination was in fact not favourable to him.

As to the notebook

280. The judge referred to Michael Pang’s notebook in his reasons for verdict on charges 3, 4 and 5 and concluded in respect of charges 4 and 5:

“I place full weight on the record kept by (Michael Pang) who understandably used notebook to keep track of those suspicious funds coming in and going out from the account of Sharpo. I accept (Michael Pang’s) evidence as to how he handled this money transfer and that part of the money was given to D3 in cash.

…

I am satisfied that the notebook prepared by (Michael Pang) is a reliable document.”

As to the spreadsheets

281. The judge referred extensively to the spreadsheets in his reasons for verdict and relied on them as support of the prosecution case.  When Cannie Chan produced and referred to the spreadsheets in the course of her evidence, no objection was taken and the judge did not deal with the issue of their admissibility.

Grounds of Appeal

282. The application for leave to appeal against conviction is mounted on two fronts, one which attacks the failure of the judge to stay the proceedings because of suggested difficulties in securing evidence on the Mainland; the other relating to the factual findings of the judge.  Stock VP addresses the former; I address the latter.

The General and Factual Issues

D1’s arguments

283. In the written submissions, counsel for D1 complains that the judge had not considered the inherent probabilities of the case.  He suggests D1 had no reason to conspire with other to steal money from CSCP and had no reason to be involved in the “cover up” to plug the gaps in the coffers of CSCP left by the earlier thefts when it was not suggested that he was involved in them at all with the exception of charge 6 that concerned $3 million.

284. It was further emphasized that if D1 was a party to the fraud, he would have known about the dents in the coffers of CSCP and he would not have proceeded to complete his acquisition of Aimstar in June 2005.

285. Mr Pang SC argues that the judge’s acceptance of Abba Chan’s evidence and his findings of guilt against D1 were wholly unreasonable and if some of the convictions against D1 are set aside because of doubts about Abba Chan’s credibility, all the convictions which relied on his evidence should also be set aside.

286. Mr Pang complains the judge had not given sufficient reasons for his findings.  He points out that despite the very lengthy final submissions put forward for D1, the judge had failed to grapple with issues raised in those submissions, but simply concluded that Abba Chan had all along tried to give a truthful account of events in relation to the charges.

287. Mr Pang then mounts a lengthy attack on the way in which the judge made his findings of fact.  He suggests the judge started from a position as if all the charges were proved, “starting from the winning post” as he puts it and the judge had lumped all the charges together and had convicted D1 as a result of “circular reasoning”.

288. In so far as the judge referred to the spreadsheets and the notebook, as supportive of the prosecution case, Mr Pang’s submission is that the judge had not spelt out clearly the basis upon which those documents were admitted.

289. Mr Pang says the judge, having said that “the spreadsheets were just an aid to refresh the memories of the respective witnesses whom in fact, got the information from either D1, D2 or Abba Chan”, appeared also to rely on them as evidence of the truth of their contents.

290. Mr Pang argues that if the spreadsheets were admitted under the co-conspirator’s rule, it was incumbent on him to say so and to identify how the co-conspirator’s rule was applied, otherwise it will be unfair to the applicants as they would not know the case they had to meet.

291. Mr Pang suggests that the notebook could not be admitted as evidence of the truth of its contents as the entries were at best post-records and not made in furtherance of the alleged conspiracies. 

292. Mr Pang then deals with the charges against D1 one by one and suggests the evidence on each of those charges was insufficient to support a finding of guilt against D1. 

293. When confronted with the undisputed evidence that the $5 million under charge 11 and the $8 million under charge 12 were returned to CSCP after the same sums were paid out as loans, Mr Pang appears to concede that there was indeed fraud committed against CCPHL, but argues that D1 was not involved.  He also suggests that the loans could be genuine and it mattered not how D3 and Wong Chi-keung chose to deal with the money after obtaining the loans from CCPHL.

D2’s arguments

294. Mr Blanchflower SC suggests that Cannie Chan was trying to protect Abba Chan.  He further suggests that Cannie Chan was herself involved in stealing money from CSCP together with Abba Chan and then tried to put the blame on D2.

295. Mr Blanchflower mounts an extensive attack on what he claimed to be the judge’s failure properly to consider D2’s case of forgery.  He points out D2’s case of forgery was throughout the trial a live issue.

296. Mr Blanchflower emphasizes D2’s evidence was that his initials on the relevant documents were forged and that Cannie Chan, in her evidence, also said there were differences in D2’s questioned initials although she denied they were forged.

297. Mr Blanchflower points to Eric Leung’s evidence that his initials on the two letters purportedly from Pacific King were forged.  He also emphasized that D2 was not in Hong Kong on an occasion when it was said that he had initialled the voucher in connection with payment of $1 million, the subject matter of the 2^nd charge.  The immigration records showed that D2 left Hong Kong on 3 September 2004 and returned on 7 September 2004.

298. Mr Blanchflower argues that the judge had erred, firstly in his failure to recognise the significance of the expert evidence and secondly in his failure to consider other evidence of forgery.

299. Mr Blanchflower even suggests that the dissimilarities between the questioned initials and D2’s authenticated initials were so obvious that a visual comparison could determine that the questioned initials were forged. The suggestion is that the judge should have found that the questioned initials of D2 were forged.

300. Mr Blanchflower complains the judge had failed to consider all the evidence relating to the issue of forgery and his failure to make a specific finding on the issue rendered the conviction against D2 unsafe and unsatisfactory.

301. On charge 6, Mr Blanchflower suggests the judge relied on hearsay evidence to convict D2.  The hearsay evidence referred to by Mr Blanchflower came from Abba Chan who said his wife had called him to ask if it was all right to give somebody $3 million and to say that it was D2 who had her to sign the cheque for the payment.

302. Mr Blanchflower emphasizes that the judge, in his reasons for verdict, specifically stated that he accepted the evidence of the prosecution witness, including the reason why Abba Chan had signed the cheques.  The suggestion is the judge had wrongfully relied on hearsay evidence to convict D2 on charge 6.

303. On charge 10, Mr Blanchflower argues that the judge relied on Abba Chan’s evidence against D2 when in fact Abba Chan had given no evidence against D2.

304. Mr Blanchflower suggests that the judge misunderstood the evidence when he said that Cannie Chan’s evidence was that she had received instructions from either D1 or D2 to issue the cheque for $5 million when in fact she only said that it was either D1 or D2 who told her the identity of the payee.

305. Mr Blanchflower submits that Cannie Chan did not have any discussion with D2 about the issue of the $5 million cheque.  Mr Blanchflower suggests that in so far as the judge believed Abba Chan had testified against D1 and D2 as to how they should orchestrate the plot to steal from CSCP, the judge was in error.

306. On charge 13, Mr Blanchflower accepted D2 had participated in the issue of CSCP’s Annual Report, but argues the prosecution had failed to prove D2 knew the Annual Report contained misleading, false or deceptive statements.

307. Mr Blanchflower emphasizes that D2 was seldom in the office, he was busy with various projects at the material time and did not deal with the normal financial and bookkeeping matters of CSCP.  Mr Blanchflower points out that the financial statements in the Annual Report was drafted by Cannie Chan, checked by the auditor before she and the company secretary would proofread them and D2 only had a look at them.

308. Mr Blanchflower argues D2 only approved the Annual Report with a macro view as a director and signed off the Consolidated Balance Sheet in the Annual Report with D1 on behalf of the Board.

309. Mr Blanchflower suggests that the judge did not deal with the issue of whether D2 knew that the statements in the Annual Report were false and thus the conviction against D2 on charge 13 is unsafe and unsatisfactory.

310. Mr Blanchflower associates himself with the submissions of Mr Owen and Mr Fitzgerald on the Mainland witness issue.  He suggests the judge erred in failing to order a permanent stay of proceedings and/or to grant D1 his application for an adjournment to secure the evidence of the Mainland witnesses in order to show the Guilin and Meizhou projects were genuine and that the payments, the subject matters of the relevant charges, were in fact made.

D3’s argument

311. On factual issues, Mr Fitzgerald did not dispute the existence of the conspiracies, the subject matters of charges 1, 3, 4, 5 and 11 against D3.  D3’s case (though she did not testify) was that she had no knowledge of those conspiracies.

312. On charge 2, Mr Fitzgerald points out that the transactions were orchestrated by Abba Chan himself and that the $1 million was for his own benefit and not for that of D3.

313. Mr Fitzgerald emphasizes that, contrary to the position taken at trial, the respondent now accepts that the $1 million, paid into Abba Chan’s account shortly after D3 withdrawn the same amount, was in fact the $1 million paid to D3.

314. The suggestion is that as the prosecution had not proved that the $1 million was for D3’s benefit, charge 2 was not proved.  He contended that Abba Chan was lying when he refused to accept, contrary to documentary evidence, that the $1 million deposited into his account came from D3.

315. Mr Fitzgerald argues that Abba Chan and Michael Pang were untruthful and unreliable witnesses and as they were heavily involved in the bogus transactions relevant to the charges, they had an agenda of their own in giving evidence against D3.

316. Mr Fitzgerald, in his written submissions, carefully analysed the evidence of the prosecution witnesses relating to the charges against D3 and suggests that the evidence did not support the following prosecution contentions; that D3 had knowledge of the bogus nature of the transactions relevant to charges 1, 3, 4 and 5; that she knew at the time when she signed the relevant invoice in relation to the $1 million, the subject matter of charge 2 that the funds were being transferred out of CSCP for her benefit; that D3 had knowledge of the conspiracies under charges 1, 3, 4 and 5 and that the $5 million loan from HTH (the subject matter of charge 11) were to pass back to CSCP to cover funds misappropriated by Abba Chan and D1.

317. Mr Fitzgerald suggests that the judge had misunderstood part of the evidence relating to charge 4 and had failed to resolve material inconsistencies in the evidence of the witnesses.  He emphasized $780,000 was a repayment to the Hon brothers for the assistance rendered to the Pang brothers and not for the release of Alexander Pang as the judge seemed to suggest.

318. Mr Fitzgerald points out suggested discrepancies in the evidence of the witnesses and the documentary evidence.

319. With particular reference to the notebook, Mr Fitzgerald argues that the judge was wrong to place any reliance on it at all.  He suggests that the prosecution had not established the contemporaneous nature of the notebook and there was therefore no basis upon which it could be used as a memory refreshing document.

320. It is Mr Fitzgerald’s contention that the conviction against D3 in respect of each of the charges against her is unsafe and unsatisfactory.

Discussion

The admissibility of the spreadsheets

321. Cannie Chan testified that she commenced creating spreadsheets in July 2004.  This was upon the instructions of D2 who had asked for a list to be kept of the unauthorised withdrawal of funds from CSCP based on the account records, so that a record could be kept of whose responsibility it was to make good each set or item of “missing” money.  These were lists of matters to follow up and which were in fact followed up by the commission of further offences.  Her evidence was that D2 told her who was the responsible person for the missing money and the spreadsheets were regularly updated to this end.

322. Objection was taken, not before the trial judge, but before this Court, as to the admissibility of the spreadsheets on the basis that they were not created by the applicants and in so far as they were relied upon for the truth of that which they purported to contain, they constituted inadmissible hearsay.  They could not be said, so the argument ran, to have been created in the course of and in furtherance of the conspiracies because they were records made after each alleged conspiracy had been put into effect.

323. It is important to note that these were not documents found in a vacuum or merely produced by the maker without more.  A substantial number of the spreadsheets covering different time periods were found by the investigators when they conducted searches after the applicants’ arrests.  The prosecution evidence, which the judge accepted, was that five spreadsheets were found in the office of Abba Chan’s secretary, Queenie Chow; no fewer than 19 in D1’s home; and 45 in D2’s office and in his briefcase.

324. The fact that these spreadsheets were found in the possession of D1 and D2 and Abba Chan was support for the testimony at trial that D2 had circulated or caused to be circulated the spreadsheets created by Cannie Chan, to Abba Chan, D1 and D2.  And beyond that, the evidence was that the spreadsheets were discussed at meetings attended by Abba Chan, D1 and D2.

325. As for the notion that they were documents produced after the event and therefore could not be said to be made in the course of and in furtherance of the conspiracies, that may be so in respect of the first or first few of the offences in time, but from October 2004 onwards the record was not merely a record of past events but a template or record on the basis of which future offences were planned and committed; and there is merit in Mr Caplan’s suggestion that there is a degree of artificiality in the notion advanced, because had the conduct reflected by all the charges being encapsulated in one charge of an overarching conspiracy, it is difficult to see how it could justifiably be said that the spreadsheets were other than “so closely connected in time and place to the execution of the conspiracy as to be other than an incident of it” (a phrase borrowed from R v Louden (1995) 37 NSWLR 683, 697; it is the phrase for which I make use of Louden, since I recognise that the facts there were quite different).

326. I think that Mr Caplan was correct in saying that he did not need to rely on the co-conspirators’ rule, directed in general at matters said or written by a co-conspirator to a third party which attaches, by reason of the concept of agency, to a defendant conspirator.  That is because by keeping the schedules, attending the meetings, discussing the contents, and (save for the offence in charge 1) using the documents in order to plan the offences charged, D1 and D2 are shown to have endorsed, adopted and acted upon the contents of the documents; so that the documents were in effect theirs.  They were instruments used by them in the planning and commission of the offences.  In that light, they were admissible as against those two applicants.

327. The spreadsheets and the circumstances in which they were created, distributed, discussed and found served as a direct acknowledgement by D1 and D2 of the conduct in which they had engaged and of the conduct in which they intended to engage.  It is trite that possession of a document by a suspect may be circumstantial evidence upon which it can be inferred that he had knowledge of its contents and had adopted it.  In R v Partridge (1973) 15 CCC (2d) 434, it was said:

“The general rule is that documents found in possession of an accused are admissible against him as original (circumstantial) evidence to show his knowledge of their contents or his connection with the transactions to which they relate. They will also be receivable against him as admissions to prove the truth of their contents if he has in any way recognized, adopted or acted upon them.”

328. The fact that the judge did not thus analyse the point is hardly surprising, given that no objection was taken to the admissibility of the spreadsheets.  But I am nonetheless satisfied that the spreadsheets were admissible as truth of their contents and in the circumstances, I am of the view that this ground of appeal must fail.

The admissibility of the notebook

329. The notebook entries concerned what according to Michael Pang were the movements of funds, some relating to some of the charges, but others not.  It was Michael Pang’s evidence that he was worried about the “fishy transactions” and he found it necessary to make a record of them.

330. In the absence of any suggestion of recent fabrication, a previous statement is inadmissible if the sole purpose of seeking to put it in is to support a chain of reasoning to the effect that the statement showed that the maker had knowledge of certain facts at the time of the statement.  The evidence of a witness cannot be corroborated by his previous consistent statement.

331. A witness, when giving evidence, can of course refresh his memory of the event by referring to a previous statement made contemporaneously, a copy of a deposition taken at committal proceedings, as well as to evidence given in a voir dire. (See The Queen v Keung Sai-chung and others [1986] HKLR 833)

332. The notebook does not fall within any of the permissible categories to make it admissible.  It was never established when the entries were made and there was certainly no evidence to show that they were made contemporaneously. Indeed, in so far as entry (6) was entered only after June 2005 when the event occurred in January 2005, it was clearly not a contemporaneous record.

333. Mr Caplan sought to rely on R v South Ribble Magistrates, ex p Cochrane [1996] 2 Cr App R 544 and Michael Reginald Da Silva (1990) 90 Cr App R 233 to support his contention that a judge has a discretion as to whether to permit a witness to refresh his memory from a non-contemporaneous document applying the requirements of fairness and justice.

334. As pointed out by Mr Fitzgerald, Cochrane and Da Silva dealt with witnesses’ statements which are obviously accurately dated and taken under police supervision, and are more reliable.

335. The notebook entries are not dated and the circumstances of their creation are not known.  The judge was not in a position to decide if it was just and fair for Michael Pang to refresh his memory from them and in any event there was no application to the judge to allow Michael Pang to refresh his memory from the notebook.

336. Further, the judge appeared to have relied on the notebook as an independent piece of evidence supporting the prosecution case by saying “that provides a solid foundation for the evidence” (para 15 of the reasons for verdict) and “I place full weight on the record kept by (Michael Pang) who understandably used the notebook to keep track of those suspicious funds coming in and going out from the account of Sharpo” (para 467 of the reasons for verdict).

337. In my view, the judge should not have admitted the notebook as evidence and in so far as he had relied on the notebook as an independent piece of evidence supporting the prosecution case, he was clearly in error and Mr Caplan did not seek to argue otherwise.  In so far as any of the convictions depended principally on the notebook, those convictions are unsafe and unsatisfactory.

The credibility of the main prosecution witnesses

338. Abba Chan was a fraudster of a massive scale.  On the charges he admitted, he had embezzled over $30 million belonging to CSCP.  He may well have embezzled more.  But was he able to do that without the knowledge, connivance or participation of D1, the chairman of CSCP and D2, its chief financial controller?

339. Abba Chan was a co-conspirator and he gave evidence under immunity against the applicants.  He no doubt had his interest to serve.  The extent of his “misconduct” possibly exceeded what he was prepared to admit.  His lengthy cross-examination might have revealed contradictions and inconsistencies.  But did the judge err in finding that he nevertheless gave truthful evidence against the applicants on the charges they faced and that his evidence was reliable?

340. The 128-day trial was broken up into many sessions.  The evidence was massive and complicated.  The modus operandi of the schemes underlying many of the charges was similar.  The way the defence was conducted could have misled the judge when objection to certain evidence was not made and/or was not formally made until the final submission.  The judge did make a few factual mistakes as accepted by Mr Caplan.  But did the judge come to a correct decision when he convicted the applicants of the respective charges on the prosecution evidence or are any of the convictions unsafe or unsatisfactory?

341. Contrary to the submissions advanced for D1, there were clear reasons for D1 to take part in the misappropriation of funds from CSCP.  He was deeply indebted to Abba Chan who was chasing him for repayment to the extent of millions of dollars and he himself appeared to be in financial difficulties.

342. D1 had in fact been implicated when he allowed Abba Chan unlawfully to take money from CSCP and he had to sort out the account of CSCP.  D1 had to pacify Abba Chan and on the prosecution case, he also pocketed the $3 million, the subject matter of charge 6.

343. Having been instrumental and/or involved in stealing money from CSCP, it would be natural for D1 to try to plug the gaps in the coffers of CSCP left by the earlier thefts.  The submission that it was inherently improbable for D1 to be involved in the conspiracies does not hold water.

344. The judge was fully aware that Abba Chan was an accomplice and reminded himself that his evidence had to be approached with considerable circumspection.  Abba Chan was cross-examined for forty-two days and then twice recalled for further questioning by defence counsel.  Abba Chan had to answer questions on minute matters that had happened many years earlier, and he was able to produce documents to support his testimony.  The judge therefore had an unusually long time in which to glean the veracity or otherwise of this witness as to material issues.  That is not determinative of the matter but it is a cogent consideration.

345. I see no proper basis for concluding that the judge erred in finding that Abba Chan “had tried his very best to provide a truthful account of the events in relation to the present charges”.

346. It must be remembered that Abba Chan’s evidence against D1 and D2 was supported by Cannie Chan and Michael Pang who had no apparent reason to lie against the applicants.  After all, they were mere employees of CSCP and derived no personal gain from the fraud.  It should be pointed out as well that D1 did not challenge Cannie Chan’s evidence at all.

347. If the defence suggestion was correct that the payments, the subject matters of charges 8 and 9, were genuine payments towards the Guilin and Meizhou projects, one is bound to wonder why Abba Chan would lie and say they were not, for in so doing he was for no apparent reason implicating himself in serious criminal offences which he had not committed.

348. Further, as the judge had correctly pointed out, there was no good reason for CSCP to advance millions of dollars to Wong Kwun-wai, Chan Chun-kuen, Wong Chi-keung and D3 in the absence of any collateral when none of them was of any substantial means.

349. If D1 and D2 were not involved in the fraud, it is inherently unlikely that they would have approved the loans against objections raised by the company secretaries and financial controllers of CSCP and CCPHL.  No one in their position was likely not to notice the fraud committed against the companies over such a long period of time.

350. The evidence of Abba Chan, Cannie Chan and Michael Pang was consistent with the company records kept for accounting purposes, particularly the spreadsheets prepared by Cannie Chan on D2’s instructions.

351. The spreadsheets recorded the unlawful withdrawals of money from CSCP, the ostensible and real purposes of the withdrawals and how they were to be covered up.

352. The evidence was that the spreadsheets were records prepared on D2’s instruction, checked and approved by him, and agreed by D1 and Abba Chan; and were regularly updated and made available to D1 and D2 for use in their discussion with Abba Chan.  When Abba Chan, D1 and D2 had decided on how the money should be handled, D2 would according to this evidence instruct Cannie Chan how to allocate the funds so as to cover up the earlier thefts.  There was no reason apparent to the judge (or to this Court) for Cannie Chan to lie in this regard and to create forged documents to hand to D1 and D2 in case it transpired at some future date that she might have to implicate them and tell lies.

353. The suggestion that someone would prepare forged documents with a view to make false allegations against any of the applicants at a future date should that prove necessary, is an unrealistic suggestion.  The suggestion that someone would forge D2’s initial in case it proved necessary to implicate him at a future date is similarly unrealistic.  Mr Blanchflower could not identify anyone who would have the motive to do so.

354. The suggestion that D1, as the Chairman and/or Executive Director of CSCP and CCPHL, and D2 as the chief financial controller of CSCP, were unaware of the fraudulent scheme that had lasted many months to misappropriate funds of the companies is also inherently most unlikely and it is hardly surprising that the judge rejected it.

355. What is perhaps more revealing are the sums involved and their movement.  It is easy in a case with so much detail to lose sight of the elephants in the room.  If $25 million was a genuine payment in connection with the Guilin project, why, one is bound to ask, was it paid into the account of Wong Kim-chung rather than directly to the Guilin party and why would Wong Kim-chung then transfer $24,828,760 into the accounts of 12 different parties with $24.9 million paid back to CSCP within a few days?  The incriminating answer seems to be obvious.

356. Similarly, the suggestion that the payment of $8 million (charge 9) was a genuine payment towards the Meizhou project, sits ill with its payment to Chan Chun-kuen individually and his repayment of close to $4 million to CSCP allegedly to cover earlier loans when repayment of those loans could readily have been dealt with by way of a partial set-off.

357. Further, there was no apparent reason for HTH to grant loans of $5 million and $8 million (charges 11 and 12) to D3 and Wong Chi-keung respectively without any security and contrary to the warning of Kenji Chan. And if they were genuine loans, why did D3 and Wong Chi-keung return the whole sums to CSCP immediately?

358. Mr Blanchflower complains that the judge failed to recognise the significance of the expert evidence and failed to make any finding on the issue of forgery.  With respect, the judge made no such error.  The judge was fully aware of D2’s case that his initials on the board minutes/vouchers relevant to charges 6, 7, 8, 9, 19, 11, and 12 were forged.  The judge referred to D2’s case repeatedly in his reasons for verdict.

359. Mr Caplan refers us to a number of cases in which Mr Shum Lau has been the subject of severe criticism and his expertise on handwriting questioned.  I do not find it necessary to go into details of those matters.

360. Experts give evidence and do not decide the issue.  It is for the judge and not for the expert of whatever eminence to determine the issue.

361. The judge was aware of the report of Mr Shum Lau, but was entitled, in the circumstances of the case and in particular the way in which counsel for D2 chose to present such evidence, to place no weight to it by simply saying “but the examiner gave no conclusive findings”.  Indeed, it was counsel of D2 who had invited the judge not to place any weight on Lau’s report.  Against this background and concession, the complaint about not placing weight on the expert’s report is one that ought not to have been advanced.

362. The judge expressly found Abba Chan, Cannie Chan, Queenie Chow and Michael Pang to be honest and reliable witnesses and he accepted their evidence on the charges against the applicants.  That must necessarily imply that the judge had rejected D2’s contention that his initials on the relevant vouchers were forged.  The judge was fully entitled to do so.

363. Cannie Chan said that she had known D2 for about 5 years and had worked closely with him as she was his direct subordinate in the accounts department of CSCP.  She said she was able to recognise D2’s initials which she saw on a regular basis.  She was adamant that D2’s initials on the questioned documents were genuine.

364. Cannie Chan was closely cross-examined on the issue.  She was shown the specimen signature sheet of CSCP and invited to compare it with D2’s initials on the documents in question.  Cannie Chan did not change her mind on her identification of D2’s initials on the relevant documents.

365. The judge expressly found on charge 7 that Cannie Chan asked the recipient (D2) to sign the receipt voucher; on charge 8 that the evidence of Abba Chan and Cannie Chan should be accepted; on charge 9 that D2 “even claimed that his initials appeared on the relevant vouchers were forged”; on charge 11 that “D2 was the one who personally received a large sum of money…and he signed the receipt voucher; and on charge 12 that it was D2 who signed the receipt voucher.

366. The judge was right to reject the submission that the relevant documents carried the forged initials of D2.  The fact that there were forged letters from Pacific King in connection with charge 1 did not in any way support D2’s contention that his initials on the relevant documents were forged.

367. In my view, there is no valid basis for Mr Blanchflower’s complaint on the forgery issue.

368. Counsel for the applicants all complain about the credibility of the prosecution witnesses, particularly Abba Chan, Cannie Chan and Michael Pang. They say that the judge had not dealt with the evidence sufficiently and had not made findings of fact on all the points raised by them.  They complain that the judge had not given sufficient reasons for his findings.

369. The judge was well aware of the importance of the credibility and reliability of the prosecution witnesses and he treated their evidence with caution.  The judge had warned himself of the danger of convicting on any uncorroborated evidence of an accomplice.

370. The judge was aware that there were inconsistencies in the evidence of the prosecution witnesses.  The judge, having “lived’ with the case for over three years and observed the witnesses, particularly Abba Chan and Cannie Chan for days, concluded that their evidence in support of the charges against the applicants were truthful and reliable and he accepted those evidence.

371. A District Court Judge is not obliged to deal with each and every point raised by the parties in the reasons for verdict.  In a case such as the present, it would be an impossible task to perform.  A District Court Judge needs only to refer to those parts of the evidence which bear upon the issues that have to be decided.  As observed by Blair-Kerr J in R v R E Low [1961] HKLR 12 at p 82:

“But it must be remembered that the District Judge is himself the jury. He has heard the whole of the evidence and he is not duty bound to set down precisely what he accepts, what he rejects and what weight he attaches to every piece of evidence, or the arguments of counsel on the evidence, or the whole of the workings of his mind in arriving at his conclusion.

… I think an appellate court should act with the greatest caution before interfering with the District Judge’s findings if, having regard to the whole of the evidence, such findings appear reasonable.”

372. Whilst the aforesaid comment approved in The Queen v Sheik A.R. Bux [1989] 1 HKLR 1 was made in connection with s30 of the District Court Ordinance which has now been replaced, it is still applicable when considering the general duty of a judge sitting alone in the District Court. 

373. As a general guiding principle, a professional judge is under a duty to give adequate reasons for any decision which he has made.  (See Zhuo Cui Hao v Ting Fung Yee [1999] 3 HKC 634, Oriental Daily Publisher Ltd v Commissioner for Television and Entertainment Licensing Authority [1998] 4 HKC 505):

“What would amount to adequate reasons for a decision would depend on the context in which the decision maker is operating and the circumstances of the case in question [(per Li CJ in Oriental Daily Publisher (supra)].”

374. The case turned on the credibility of the prosecution witnesses and that of D2 only, when D1 and D3 elected not to give evidence or to call any witness.

375. The judge heard evidence from Abba Chan, Cannie Chan Queenie Chow and Michael Pang for days. (Abba Chan was cross-examined by counsel for 42 days and by counsel for D1 alone for over 30 days).

376. The judge had carefully analysed the evidence of Cannie Chan, Queenie Chow and Michael Pang.  The judge pointed out that Cannie Chan was cautious but straightforward and she was prepared to say things favourable to D2.  The judge pointed out that Queenie Chow and Michael Pang gave their replies cautiously and their answers remained un-shattered.

377. The judge further pointed out that the company records and the movement of funds, the subject matters of the charges were consistent with the prosecution case.  The judge then dealt with each of charges and made the findings as indicated.

378. In considering the charges against the applicants, it has to be remembered that on the evidence accepted by the judge, the whole thing started off when Abba Chan was in financial difficulties and he was chasing D1 for the repayment of the debts owed by him.  There was then a consensus to take money from CSCP and the subsequent conspiracies to “steal” from CSCP and CCPHL were steps taken towards the earlier consensus.  It was reasonable for the judge to look at all the charges as part of a process and not as isolated incidents.

379. It is true that on charge 6, the judge mentioned the hearsay evidence objected to by Mr Blanchflower.  However I am of the view that it was not a significant factor.  As rightly emphasized by Mr Caplan, the important issue was whether the evidence of Cannie Chan that it was D2 who asked her to accompany Wong Kwun-wai to withdraw $3 million and then give the money to him was true.  The suggestion that it was D2 who had asked Abba Chan’s wife to sign the cheque had little probative value on whether D2 was guilty of charge 6.

380. D2, a certified public accountant, an executive director of CSCP and its chief financial officer, was in charge of its financial matters.  According to Abba Chan, D2 was heavily involved in the cover-up operation in making use of the Guilin and Meizhou projects to explain the missing funds.

381. Abba Chan said D2 was present at meetings when the schemes were agreed and he carried out the instructions from Abba Chan and D1 on the cover-up operation.

382. D2, on the prosecution evidence, gave Cannie Chan the account details of the remittance agent for the $25 million to be remitted to him and then to make out the relevant documents.  D2 explicitly told Cannie Chan that the money would be returned to CSCP to make up for the shortfall caused by the misappropriated funds on earlier occasions.

383. When the money did return to CSCP, D2 signed the receipt vouchers and gave instructions on the deployment of the money in the cover-up operation.  D2 told Cannie Chan to alter the account of GCSC to reflect the bogus payment of $25 million.

384. D2 gave instruction to Cannie Chan on the payment of $8 million to Chan Chun-kuen.  He banked in the cheque and signed the receipt vouchers in respect of the partial repayments by Chan Chun-kuen.  When it was discovered that Chan Chun-kuen was not in a position to represent Sino Profit, D2 said he would arrange a mew MOU to rectify the problem.

385. D2 was in control of the financial matters of CSCP throughout the relevant time and he must be well aware that the “$33 million assets” listed as payments in connection with the Guilin and Meizhou projects were non-existent.

386. I accept Mr Caplan’s submission that D2 must have been aware that the auditors would be deceived by the statements prepared by D2 and would assume that the $33 million had been used in connection with the Guilin and Meizhou projects and would appear in the Annual Report as “assets”.

387. As a certified public accountant and the chief financial controller of CSCP, and in the light of his deep involvement in the “cover-up” operation, D2’s evidence that he was unaware of the fraud and had been misled by Abba Chan and Cannie Chan was inherently not believable.

388. D2 signed the Annual Report as the director with “responsibility…for financial matters of the group”.  On the evidence accepted by the judge, the $33 million ostensibly paid out by CSCP in connection with the Guilin and Meizhou projects in fact did not exist.  The statement that $33 million had been paid out by CSCP in connection with those project was a false and deceptive one and that D2 must be aware of such falsity.  By signing the Annual Report, D2 had deliberately set out to deceive the Hong Kong Stock Exhange as well as the shareholders and creditors of CSCP.

389. I have considered the suggested discrepancies in the evidence of Abba Chan, Cannie Chan, Queenie Chow and Michael Pang and I am not persuaded that there were significant discrepancies in their evidence.

390. They gave evidence on complicated matters that happened many years before and the minor discrepancies in their evidence were to be expected.  In fact bearing in mind the way Abba Chan had been cross-examined, his evidence on the basis of the record before us came out well.  His evidence was supported by that of Cannie Chan, Queenie Chow and Michael Pang, and was consistent with the documentary evidence.  The judge was entitled to accept his evidence.

391. On charge 1 against D2 and D3, the bogus nature of the purchase from California Telecom was not disputed.  Abba Chan was adamant that D2 was involved and was in fact instrumental in bringing about the fraudulent scheme including the preparation of the forged documents.

392. According to Queenie Chow, D3 was involved in the preparation of the forged purchase order and she asked Abba Chan to sign it.  D2 signed the payment voucher for the payment of $1.5 million to Sharpo and gave instruction to Cannie Chan on how to enter the $1.5 million payment in the accounts.

393. Michael Pang’s evidence was consistent with the prosecution case that both D2 and D3 were involved in the conspiracy to steal $1.5 million from CSCP.  The $1.5 million was not repaid to CSCP and was made up with the $5 million “loan” purportedly made to D3 (the subject matter of charge 11).

394. On the evidence, I do not find the conviction against D2 and D3 on charge 1 unsafe or unsatisfactory.

395. On charge 2, the evidence against D3 came solely from Abba Chan. There was evidence of a $1 million deposit into Abba Chan’s account shortly after the payment of the same amount into D3’s account.  Abba Chan denied the suggestion that the $1 million deposited came from D3.

396. Mr Caplan fairly accepted that Abba Chan was probably wrong and conceded that the $1 million was likely the same sum paid to D3.  Mr Caplan’s concession was supported by the spreadsheet which stated that the $1 million was Abba Chan’s liability.  Accordingly the conviction of D3 in relation to charge 2 cannot stand.

397. On charge 3, the judge found that $4 million was paid to Well Glory under a sham agreement and the money went to Abba Chan.  On the evidence of Abba Chan and Cannie Chan, D1 and D2 who attended the board meeting which approved the payment, must have been aware of the nature of the payment and agreed to the scheme to steal the money from CSCO.

398. The spreadsheets supported the prosecution case and in my view the notebook had no bearing on the safety of the conviction against D1 and D2 on charge 3.  Abba Chan’s evidence, accepted by the judge, was that he had agreed with D1 and D2 that $4 million was paid to Sharpo for goods supplied when in fact there was no underlying transaction and the $4 million was shared between him and D1.

399. Whilst D3 had also taken part in the preparation of the forged receipt issued by Well Glory, the evidence of her knowledge on the fraudulent scheme came mainly from Michael Pang who said D3 instructed him to prepare a forged purchase order and told him that the $4 million was for Abba Chan’s use.  Abba Chan’s evidence did not implicate D3 on charge 3.

400. In accepting Michael Pang’s evidence relating to charge 3, the judge had wrongly relied on the notebook which contained prejudicial material against D3.  In the circumstances, the conviction on charge 3 against D3 is unsafe and falls, therefore, to be quashed.

401. Charges 4 and 5 depended mainly on the evidence of Michael Pang. The judge placed full weight on the notebook which he said “was a reliable document” and “was used to keep track of those suspicious funds coming in and going out from the account of Sharpo”.

402. In view of our findings relating to the admissibility of the notebook, the convictions against D1 and D3 on charges 4 and 5 is not a safe one, and they too fall to be quashed.

403. On the prosecution evidence as accepted by the judge, I am satisfied that the conviction against D1 and/or D2 on charges 6, 7, 8 and 9 are safe.

404. Mr Caplan had conceded that because of the factual mistake made by the judge, the conviction of D1 and D2 of charge 10 is not a safe one.  I agree.

405. I am surprised by the submission of Mr Fitzgerald that the loan of $5 million to D3 (the subject matter of charge 11) was genuine; that it was irrelevant as to how D3 used the proceed, that the loan was not secured and that no repayment was made did not mean that the loan was a sham one.

406. Mr Owen’s support for Mr Fitzgerald’s submission and his reliance on it as a ground to support D1’s application for leave to appeal against conviction on charges 11 and 12 are equally surprising.

407. The undisputed evidence on charges 11 and 12 showed that after the two sums of money were paid into the account of D3 and Wong Chi-keung pursuant to the loan agreements that they had with HTH, they were immediately returned to CSCP.  On such evidence, no reasonable person would fail to infer that the purported loans to D3 and Wong Chi-keung were sham, particularly in the absence of any evidence from D1 and D3 to explain, undermine or challenge the prosecution case against them.

408. On Cannie Chan’s evidence, D2 was fully aware of the bogus nature of the two loans.  Anyone who participated in such a sham agreement must be acting dishonestly.

409. The conviction of D1, D2 and D3 on charge 11 and the conviction of D1 and D2 on charge 12 are fully justified.

410. On charge 13, there was no dispute that D1 and D2, as officers of CSCP, were responsible for the publication of the Annual Report of CSCP, which contained the statement that the “Trade and Receivables” of CSCP included a current asset of $33 million representing CSCP’s investment in the Guilin and Meizhou projects.

411. On the judge’s findings under charges 8 and 9 which I confirm, the purported injection of the $25 million into the Guilin project and the purported injection of $8 million into the Meizhou project were both false and deceptive.  D1 and D2 were aware of the falsity of the statements and they were acting dishonestly in allowing them to be published.  The conviction of D1 and D2 on charge 13 was inescapable.

Conclusion on the facts-based grounds

D1

412. On the facts-based grounds, I would grant D1 leave to appeal against conviction on charges 4, 5 and 10, treat his application as the appeal proper, and allow his appeal and set aside the convictions and sentences on charges 4, 5, and 10.  I would dismiss D1’s application for leave to appeal against conviction on charges 3, 6, 8, 9, 11, 12 and 13.

D2

413. I would grant D2 leave to appeal against conviction on charge 10, treat the hearing of the application as the appeal, allow his appeal and set aside his conviction and sentence on charge 10, but I would dismiss his application for leave to appeal against conviction on charges 1, 3, 6, 7, 8, 9, 11, 12 and 13.

D3

414. I would grant D3 leave to appeal against conviction on charges 2, 3, 4 and 5, treat the hearing of the applications as the appeal, allow her appeal and set aside her convictions and sentences on those charges.  I would dismiss her application for leave to appeal against conviction on charges 1 and 11.

The abuse ground

415. I agree with the judgment of Stock VP in relation to the issue of abuse of process.  I also endorse his comments in that part of the judgment entitled “Preamble”.

Hon Stock VP:

Introduction

416. This judgment addresses a discrete ground of appeal, namely, the decision of the trial judge by which he refused an application made on behalf of D1 and D3 to stay the proceedings as an abuse of process.

417. The application was made on 16 and 17 August 2010, two and a half years after the trial commenced, after D2 had testified and D1 and D3 had elected not to testify.  The ruling was delivered on 27 September 2010.

418. The application had its genesis in letters of request issued in December 2008, March and June 2009 by Wright J.  The letter of request applications were made by D1 and D3 to secure evidence from named witnesses in the Mainland who were said to be in a position to offer evidence material to their defence.

419. The application was based upon an assertion that it had proved impossible to give effect to the letters of request.  That impossibility was attributed in argument to the absence of mutual legal assistance arrangements between Hong Kong and the Mainland, to the difficulty in the way of litigants, by themselves or their legal advisers, to secure the attendance of witnesses before judicial organs in the Mainland, and to a suggested failure on behalf of the Hong Kong authorities to assist the defence teams in obtaining the evidence on the Mainland.

420. The result, according to the submissions, was that, absent the evidence of the witnesses whose testimony was sought, it was not possible to have a fair trial; and, further, that the conduct of the Hong Kong authorities in failing to render assistance or, even worse, in deliberately obstructing the facilitation of the Mainland process, was such that a continuation of the trial would constituted an affront to the conscience of the Court or to the public’s confidence in the administration of justice.  For these reasons, the proceedings should be stayed.

421. The judge did not agree; and he refused the application.

422. The complaint upon appeal is that the judge wrongly declined to grant a permanent stay.  It is said that:

(1)  there is in place no scheme for mutual legal assistance in criminal matters as between the Hong Kong Special Administrative Region and the Mainland, yet such a scheme is required by Article 95 of the Basic Law;

(2)  there is no mechanism on the Mainland by which compulsorily to secure the attendance of witnesses before judicial organs, which is a failure by the PRC to comply with its obligations under the International Covenant on Civil and Political Rights (ICCPR) and that the inability to secure the testimony of witnesses on behalf of the defence constituted a breach of that right upon which right protection is conferred by Article 14 of the ICCPR, reflected in Article 11(2)(e) of the Hong Kong Bill of Rights Ordinance, and to which right constitutional protection is conferred by Article 39 of the Basic Law;

(3)  the failure of the Hong Kong and Mainland authorities properly to action requests for assistance frustrated the orders of Wright J by which he issued the letters of request;

(4)  there was on the part of the Hong Kong authorities a failure to understand that they were under a legal duty to facilitate execution of the letters of request and that the judge himself wrongly proceeded on the footing that there was no such duty; and

(5)  there was a failure by the court below to ensure that all practical measures were accorded to the defence to secure the evidence they sought;

for which reasons the applicants were materially prejudiced in the conduct of their respective cases wherefore the application for a stay should have been allowed; and it is further said that :

(6)  in his approach to the stay application, the judge erred in that he assumed that proof of bad faith was a condition precedent to a finding of abuse of process;

(7)  there was a failure by the judge to make any or proper allowance in his reasoning as to proof of the charges, for the absence of the evidence of the Mainland witnesses; in other words, the judge failed to direct his mind to the effect, upon the factual issues he had to decide, of the unavailability of the witnesses;

(8)  the judge erred in regarding the absence of statements from the absent witnesses under section 65B of the Criminal Procedure Ordinance Cap. 221 as a failure by the defence to mitigate prejudice; and

(9)  the judge failed to make a finding as to the weight he attached to a summary of the absent witnesses’ statements (albeit not in section 65B form) produced for his consideration.

The Letters of Request

423. There were several orders made by Wright J pursuant to the provisions of section 77E of the Evidence Ordinance, Cap. 8:

(1)  on 9 December 2008, on the application ex parte of D1, that a letter of request be issued to the Supreme People’s Court of the PRC (the SPC) “for an order that the following persons shall give evidence and testify with respect to the criminal proceedings on the following matters.. .”  There is then set out a list of nine persons each with a Mainland address and a column headed “Nature of evidence”, with a description in the broadest of terms of the nature of the evidence each was expected to give.[18]  The order goes on to direct that Judge Stanley Chan be appointed to sit as examiner for the purpose of taking evidence at such time and place as the SPC may direct.

(2)  on 16 March 2009, again on the ex parte application of D1, this time in respect of one witness.

(3)  on 16 March 2009, on the application of D3 for the examination of one witness; and

(4)  on 3 July 2009, on the application of D1 for the attendance of one witness.

424. The letters of request were issued under the hand of the Registrar of the High Court and addressed to the SPC.  Each recited the fact of the order made by the judge and requested the SPC to summon the witness or witnesses, as the case may be, to attend for “examination at such time and at such place as you shall appoint before such person appointed by you according to your procedure who is competent to take the testimony of witnesses, together with His Honour Judge Stanley Chan and that you shall require such witness or witnesses to be examined viva voce touching the said matters in question in the presence of [the defendant] and/or his legal representatives, Counsel for the Prosecution and Counsel for other named accused or such of them as shall, on due notice given, attend the examination” and made such further requests as are normally made in letters rogatory for the taking and communication of evidence.

The witnesses

425. Although the letters of request embraced a total of 12 witnesses, counsel before us have concentrated on four of them.  There is no need to address the proposed testimony or relevance of the others, for if the applicants cannot persuade us to their cause in relation to one or more of these four, the others add nothing material.

426. Counsel for D1 focuses on three witnesses:

(1) Wong Kwun Wai

427. It will be remembered from the summary by Yeung VP[19] that Wong features in the evidence relevant to Charge 6; the charge of conspiracy to steal $3 million for the benefit of D1.  Wong is said to have been an acquaintance of D1 and that a cheque for $3 million was given by Cannie Chan to Wong on the instructions of D2.  Cannie Chan’s evidence was that she accompanied Wong to the bank where the $3 million was withdrawn, but Wong did not keep this money but that Ms Chan handed it to D2.

428. D1’s case (although he did not testify) was that it was Abbas Chan, not he, who asked Wong to obtain the money.  However, Abbas Chan said in evidence that he did not even know Wong.

429. The suggestion is that had Wong testified, he would have said that he had known Abbas Chan for at least ten years and had acted as a liaison person in connection with CSCP’s business in Henan, wherefore Chan had told him to go CSCP’s offices to collect $3 million for reimbursement of past expenses and in consideration of future liaison work in Henan.  Although he went to that office and obtained $3 million with Cannie Chan’s assistance, he did not keep the money but left it for Abbas Chan to remit to the Mainland for him.  Save for $100,000 the promise was never kept; he never received $3 million.

430. Had this evidence been given and accepted, it would have made a material dent in the credibility of the testimony of Abbas Chan.

(2) Liao Jiasheng

431. Liao’s proposed testimony was said to be relevant to Charge 8 (and, consequentially, to Charge 13).

432. Charge 8 was an assertion of a conspiracy to defraud CSCP of $25 million by pretending to send that sum to a joint project in Guilin.  The prosecution case was that instead of going as an advance payment to Guilin China Sciences (the joint-venture partner), the money was given to a remittance agent, K C Wong, on 22 December 2004 and found its way, minus a modest commission to K C Wong, back to CSCP on 23 and 24 December 2004 in the form of 11 separate deposits.  The prosecution case was that on the instructions of D2, Cannie Chan prepared two letters, purportedly from Guilin China Sciences, asking CSCP for an advance of RMB26.5miliion (HK$25 million) for the project.  The letters were said to have been given to Hon Yik-kong, one of D1’s brothers, a Hong Kong resident, who represented Guilin China Sciences in Hong Kong; and the case went on to allege that the letters were subsequently returned bearing the signature of someone called Sun, plus two false chops over his signature (the chops were arranged by Cannie Chan), all to give authenticity to the letters. Consequential alterations were made to the accounts of Guilin China Sciences and the altered accounts were given to D1’s brother so that he could secure corresponding changes to documents kept by Guilin China Sciences.  With the assistance of Hon Yik-kong, a receipt purporting to come from Guilin China Sciences was produced.

433. D1’s case was that the payment was a genuine payment in fact made for the Gulin project.

434. Liao is said to have been the person in charge of a construction company which undertook work on the Guilin project and it is said that his proposed testimony was to the effect that he had received RMB 30.21 million from the joint-venture company and issued a receipt, a receipt which the prosecution had alleged to be false but which was in fact genuine.

(3) Pang Kwok-chung (Peng Guozhang)

435. Pang’s proposed evidence was said to be relevant to Charges 9 and 10.

436. Charge 9 alleged a conspiracy to defraud CSCP through a pretence to pay $8 million to a joint venture project at Meizhou; and Charge 10 alleged a conspiracy to defraud CSCP by pretending that CSCP had made a loan of $5 million to Sino Profit, the joint venture partner.  Pang was the proprietor of Sino Profit.

437. On 24 December 2004, a cheque in the sum of $8 million was paid by CSCP into the account of Chan Chun-kuen[20] and on 29 December he deposited into the account of CSCP a cheque in the sum of $2.426 million, and cash in the sum $1.32 million.  The evidence of Cannie Chan was that the balance of the $8 million went in cash to D2.

438. The prosecution case was that D1 proposed the payment to C. K. Chan under the guise of an introduction fee but with the intention that the money should be returned to CSCP to cover earlier defalcations.  To confer verisimilitude upon the proposed introduction fee, a memorandum of understanding between Abba China (a subsidiary of CSCP) and Sino Profit was signed, with C. K. Chan signing on behalf of Sino Profit, to the effect that Abba China would pay $8 million earnest money to Sino Profit.  A replacement memorandum of understanding was required after it was discovered that Pang was the appropriate representative of Sino Profit, and not C. K. Chan.

439. D1’s case was that the sum of $8 million was indeed paid to C. K. Chan and Pang for the Meizhou project; and it is said that Pang would testify that that sum was received by C. K. Chan on his behalf.

440. Charge 10 alleged a conspiracy to defraud CSCP by falsely pretending that that company had made a loan of $5 million to Sino Profit.  A cheque for $5 million was paid into D1’s account; and a spreadsheet found in D1’s possession after his arrest attributed that sum to the responsibility of D1.  There was a receipt signed by Pang on behalf of Sino Profit which said that the payment was working capital for the project.  According to Cannie Chan, the documentation designed to give credence to the suggestion of a payment to Sino Profit was created at the suggestion of D2.

441. It is said that Pang would testify that C. K. Chan had received the sum of $5 million on his, Pang’s, behalf and that a substantial part of the sum, namely $4.5 million, was returned to CSCP in early 2006 when the Meizhou project failed.

442. The third applicant (D3) wished to adduced evidence from three Mainland witnesses, two Shenzhen Security Bureau officers and a civilian named Qi Da-yue. Counsel for D3 has concentrated on Qi.

(4) Qi Da-yue

443. Qi’s proposed evidence, if accepted as true, would have been relevant to Charge 4 and the credibility generally of Michael Pang (PW4).

444. Charge 4, it will be remembered, was a charge of conspiracy to steal $1 million from CSCP through Sharpo.  The allegation was that in March 2005 a CSCP cheque for $1 million was signed by D1 and D2 in favour of Sharpo and that D3 told Michael Pang to secure the transfer of $800,000 of that sum to the joint account of D1 and D1’s brother Hon Wing-kong (Michael Hon).  That instruction was subsequently modified to require the withdrawal of only $780,000 to be paid thereafter into that joint account, with $20,000 in cash to be given to D3.  The evidence was that on 17 March 2005, Michael Pang went to the bank with his brother Alexander, another Sharpo employee, withdrew $800,000 from the Sharpo account and immediately deposited $780,000 into the designated joint account, the details of which account had been provided by D3.

445. The defence case centred upon an incident in Shenzhen in late 2002 or early 2003 in which, in the context of some business dispute, Michael and Alexander Pang were forcibly detained by some men; Michael Pang was released, whilst his brother was still held, in order to raise, so it was suggested, ransom money.  The account of the Pang brothers at this trial was that Michael Pang was released because the Public Service officials intervened and arrested the kidnappers; whereas the defence case was that ransom in the sum of $800,000 was paid by or upon the instructions of Michael Hon and that the Pang brothers had agreed that at some stage in the future that ransom money would be repaid to the Hon brothers.  The $780,000 payment in the joint account of the Hon brothers was that repayment.  Whilst the Pang brothers accepted that D3, whom they knew at the material time, had been instrumental in securing Michael Pang’s release, perhaps with the assistance of D1, they denied knowledge of a ransom of $800,000, let alone any agreement for its repayment.  They said that if that sum had ever been mentioned to them, their parents could have paid.  Qi is said to have come into the picture because he was personal assistant to a businessman of whom Michael Hon was a friend.  Michael Hon is said to have recruited Qi as a middleman to conduct negotiations with the kidnappers and Qi would be able to speak of Michael Hon’s instructions and the agreement of the Pang brothers to repay the debt.  It was the defence case that the ransom was paid by Michael Hon.

The expert evidence

446. In support of the stay application, D1 adduced the expert testimony of Professor Zhang Xianchu.  Professor Zhang is a professor of law at the University of Hong Kong, is (or was at the material time) co-director of the Hong Kong University – Beijing University Legal Research Centre and is a guest professor at Fudan University Shanghai.  He is an expert in Chinese law.

447. It was submitted before us that his evidence established, amongst other matters, that:

(1)  the authorities in Mainland China have entered upon general arrangements to provide assistance to HKSAR authorities in non-criminal proceedings so that, for example, in the realm of arbitral awards, the holder of such an award in Hong Kong may approach the SPC to secure its enforcement, a contrast, it is said, to  the absence of such arrangements in criminal proceedings;

(2)  the authorities in the PRC have entered into ad hoc as well as general arrangements to provide assistance in criminal matters at the request of certain foreign states, again in contrast to the absence of such arrangements with Hong Kong;

(3)  a defence witness in Mainland China cannot be compelled to provide evidence there for use in criminal proceedings in Hong Kong;

(4)  a Mainland lawyer is not permitted to take witness statements for the purpose of a defence case, whether for Mainland or Hong Kong proceedings; and

(5)  there is no mechanism for direct communication between a litigant in Hong Kong and the SPC for the purpose of facilitating that litigant’s ability to secure testimony, and that the only permissible vehicle for communication to that objective is between the Hong Kong authorities and the SPC.

448. Professor Zhang’s report included the following assertions, none of which appears to be in dispute:

(1)  No mutual legal assistance arrangements have been made between the Mainland and the HKSAR in criminal matters.

(2)  There are however ad hoc arrangements by which assistance is rendered to prosecutorial authorities in Hong Kong, for example, a memorandum between the Supreme People’s Procuratorate and the ICAC; but such arrangements are limited to individual cases.

(3)  The PRC has concluded many bilateral judicial assistance agreements with foreign countries, most of which include assistance in criminal matters.

(4)  “…The extent to which a witness [in the Mainland] may be compelled to give evidence before Mainland courts for the purpose of criminal proceedings in Hong Kong is not established under mainland law since these are proceedings of a foreign jurisdiction under the one country two systems principle.”[21]

(5)  The Law of Criminal Procedure does not stipulate any compulsory measures against a witness who refuses to testify in domestic proceedings so that save for those already in custody “it would be more difficult to compel the mainland resident … to give evidence in a Hong Kong criminal proceeding.”[22]

(6)  In domestic criminal proceedings the taking of evidence by defence lawyers “is subject to serious difficulties caused by” a conflict in rules.  “For example, Art 37 of the Law of Criminal Procedures stipulates that taking evidence by a lawyer in criminal proceedings may be subject to the consent of the relevant individuals or entity; moreover, the collection must be relevant to the Mainland criminal proceedings and necessary to the case concerned, which will be determined by the People’s Court.  The lawyer may also have to apply to the People’s Court for permission with an investigation outline in writing.  Although the Lawyers’ Law amended in 2007 has deleted the requirement of the witnesses’ consent to give evidence, lawyers’ evidence taking may still be subject to the approval of the People’s Court and the People’s Procuracy… .  As such, under the current laws, taking evidence in criminal proceedings by lawyers in China will be not only subject to the permission of the People’s Court and the People’s Procuracy under the necessary test, but also the willingness and cooperation of the witnesses concerned.  Moreover, the obligation to faithfully answer investigation enquiries under Art 45 of the Law of Criminal Procedures may only be applied to the investigation of the state organs, not the lawyers. … From the technical perspective, taking evidence shall be made by at least two lawyers present in the timely manner.  The place to take evidence should be convenient to the witnesses concerned as much as possible.”  He goes on to conclude in this regard that “ … a legal mechanism … by which a lawyer representing a criminal defendant in Hong Kong SAR may obtain evidence from persons who are unwilling to travel to Hong Kong for that purpose, has not been established.  There is no provision of Mainland law that would permit the evidence to be obtained directly by the lawyer.”[23]

449. The question of the power of lawyers in the Mainland to take statements from witnesses was pursued when Professor Zhang testified.  A significant part of that testimony was that which addressed the interviewing of a witness on the Mainland for the purpose of a criminal case in Hong Kong.  The effect of it appears to me to be that a Mainland lawyer could, without official permission, interview a witness for that purpose: so long as the subject matter of the interview did not touch upon “sensitive information or sensitivity to the state … that probably is okay”[24] though the utility of that evidence was another question.  There had been some instances in which lawyers had got into trouble if they dealt with sensitive matters without state approval and collected evidence: in what context that had happened is not made clear.  So, although the long and the short of it is not crystal clear, it seems entirely clear at least that statements could be taken with official permission.  We shall see in due course that interviews were, apparently, in fact conducted on the Mainland and that approaches to the authorities had not been thought necessary to that end.

The ruling

450. The ruling with which this aspect of the appeal is concerned is that delivered on 27 September 2010 in relation to the application by D1 and D3 for a permanent stay of proceedings.  There was an allied application in March 2010, that the Hong Kong authorities disclose such correspondence as had taken place between them and the Mainland authorities pursuant to and in relation to the letters of request.  That disclosure application was refused.  I refer to it as an allied application because it was a precursor to the stay application.  The ruling on disclosure has in argument before us fallen somewhat into the background and argument has concentrated on the September 2010 ruling.

451. The judge noted that a stay of proceedings was a measure that was justified only in very rare circumstances.  He rejected the notion that the Central authorities had an obligation under international law or otherwise to compel the attendance of witnesses on the Mainland for the purposes of proceedings in Hong Kong.  He then said this:

“I consider that article 95 of the Basic Law in fact does not touch on this very issue [compulsory process] specifically. There is no duty on prosecution or any other government body or any judicial organ in the other parts of the country to prepare the defence case for the defendants. On the other hand I take the view that equality of arms cannot and should not be taken in absolute terms. No countervailing factors need to be weighed and considered.

In the present trial efforts have been made and various remedial measures have been adopted by this Court in order to do fairness to the defendants. However, I need to make it clear that by taking remedial measures does not necessarily mean that certain degree of unfairness did occur. In fact I found none.

I could not see any substantial grounds that the trial proper or the present case is not fair in any respect. Various adjournments were granted so that the defence legal team will have more time to orchestrate their approach. I am not convinced that counsel for the D1 and D3 have established that there is an unfair trial under the first limb of abuse. On the other hand, I am also not convinced that the second limb of abuse is established by defence counsel.

I find there are no positive acts of the prosecution or the executive government which were so horrendous that it would be an affront to public conscience as being contrary to the rule of law and an affront to the integrity of the justice system and which would constitute an intolerable abuse of the court’s process. There are no allegations of the acts by the ICAC or the government being illegal, disgraceful, in bad faith, shameful or even intolerable. There is no evidence to show that the prosecution and/or the executive organ in Hong Kong interfered and manipulated the calling of those potential defence witnesses in China. Some of the defence witnesses are not willing to give evidence on behalf of the defence.

I find that despite the absence of any precedent, the Director of Administration has made every endeavour to accommodate the demands made by D1 and D3. There could be many reasons why the requisitions made by the defendants could not be entertained expeditiously, bearing in mind that 14 potential defence witnesses are involved and they are located in various province[s] in Mainland China.”[25]

452. He concluded that the absence of the suggested defence witnesses would not prejudice the defendants to the extent that a fair trial could not be held. He added that he was not convinced that it was not viable to have witness statements tendered under section 65B of the Criminal Procedure Ordinance. Further, it was illogical to suggest that because “the defendant cannot have certain potential defence witnesses to give evidence the defendant was then forced to elect not to give evidence and, hence, close his or her defence case.”[26]

453. He noted that Mainland lawyers had been engaged by D1 and D3 and that some of the witnesses were willing to testify; yet as far as he could see, no attempt had been made to ask those potential witnesses to come to Hong Kong, nor any attempt to reduce the evidence into any kind of statement.  All there was was a bare claim that there were a number of witnesses spread over a number of provinces and an assertion that it was the responsibility of the Hong Kong authorities and of the SPC to secure the evidence under compulsory process.

The submissions on appeal

454. It is by now trite that there are two possible bases that will require a stay of proceedings on the ground of an abuse: the first is that the circumstances are such as to preclude an accused from enjoying a fair trial; the second, where the circumstances are such that the court’s sense of justice and propriety, or public confidence in the criminal justice system, would be offended by the prospect of bringing the accused to trial or of continuing with a trial already commenced.

455. The starting point of the argument is that the evidence of the Mainland witnesses was relevant and material.  So much is evident from the mere fact of the orders made by Wright J.

456. It is acknowledged, on the other hand, that the mere fact of unavailable evidence – unavailable in the sense that it exists but cannot be brought before the court – is an occasional incident of criminal and civil litigation which does not of itself preclude a fair trial.  All depends upon the nature of the evidence, its place within the case-specific factual matrix, the reason for the inability to adduce it, and the degree to which remedial measures and the analytical approach by the court can fairly counteract such disadvantage to which the accused may be placed by the absence of the evidence.

457. The thrust of the submission is that the aggrieved applicants did all in their power to expedite and assist the process to secure the evidence of the PRC witnesses[27] whereas, conversely, the blame for the disadvantage which accrued to the accused lies squarely at the door of the Hong Kong and Mainland authorities by reason of the absence of effective arrangements for mutual legal assistance between the Mainland and this Region; and an unwillingness on the part of the Hong Kong authorities to render effective assistance in this case, the overall result of which was the frustration of the letters of request.

458. The case is put in strong terms, a fact which of itself matters not, for if there has been cavalier or obstructive conduct, then that is clearly relevant to, though not necessarily decisive of, the merits of the stay application.  

459. The submissions on behalf of D1 are replete with accusations that the Hong Kong authorities failed to provide effective assistance; that requests for assistance in executing the letters of request were met with simmering resentment; that the failure to assist was encouraged by a misapprehension on the part of the authorities that they had no obligation in law to assist; that the authorities adopted a particularly obstructive attitude to attempts by the first applicant to obtain the evidence he required; indeed, that their approach represented an interference with D1’s ability to call witnesses and a manipulation of the process; and that there exists no effective mechanism for defendants in criminal proceedings in Hong Kong to obtain evidence from the Mainland, whereas there is an informal mechanism whereby cooperation between respective law enforcement agencies readily results in the securing of evidence for the prosecution; all of which circumstances and conduct are said to offend the principle of equality of arms.

460. It is further contended that “at the international law level as well as being a requirement of HKSAR law, the Chinese state has an obligation to secure for a defendant on trial in HKSAR a legal mechanism that provides for compulsory process to secure the attendance of witnesses within the single territorial jurisdiction of the Chinese state.”[28] In a non-unitary state, the mechanisms engaged to fulfil the fair trial obligations of that state are arrangements for providing for mutual legal assistance, whereas there is no mutual legal assistance in place as between the HKSAR and the Central Government as envisaged, it is said, by the Basic Law.  There has, it is argued, been a failure to fulfil these obligations, a failure not recognised by the trial judge and a failure which enured to the disadvantage of the applicants.

461. The submissions on behalf of D3 are in the same vein, that D3 was deprived of the opportunity to present potentially crucial evidence; a deprivation occasioned “by the deliberate actions of the state in failing to give effect to the letters of request, or otherwise provide for the relevant witnesses to be compelled to give evidence.  In those circumstances,” the submissions continue, “it was an abuse of process to continue with the prosecution in the absence of their evidence or any realistic opportunity of presenting it.  The third applicant could not in the circumstances receive a fair trial and the continuation of the prosecution was an abuse of process… .”[29]

462. The submissions on behalf of both these applicants go on to contend that the judge failed to assess the extent to which the defence were handicapped by the absence of the evidence of the Mainland witnesses.  At the behest of the prosecutor, a summary of their evidence was prepared, to which summary the judge alluded in his Reasons for Verdict but said nothing as to what impact that summary had on his reasoning, a flaw in approach which lay at the root of the decision in R v Holgate (No. 1)[30].

463. It is said as well that the judge concluded[31] that the absence of malice on the part of the authorities was fatal to the abuse application and that in so finding he erred in law in that whilst the absence of malice is a relevant consideration relevant, its establishment is not a condition precedent to a finding of abuse of process.

Malice

464. I can say at once that in so far as the judge below did or may have placed decisive weight upon the absence of malice, he erred, for either limb of abuse may be established without it.  If a fair trial cannot be provided then the cause does not matter.  In a case where a fair trial can be provided, it will be a rare case indeed in which a stay will be justified under the second limb, absent a finding of bad faith.[32]

465. It is however relevant to examine just why it was that the letters of request did not bear fruit, for were it to transpire that the accused themselves caused or materially contributed to the failure of the crop, it would fall ill from their mouths to suggest an abuse of process.  That, so it seems to me, is a key issue in this case.

The Law

(1) Abuse

466. The circumstances in which a stay of criminal proceedings will be justified are exceptional.[33]

467. The burden of showing that there can be no fair trial lies on the accused.[34] The burden of establishing a “limb 2” abuse also lies on the accused.[35]

468. If the prejudice alleged is the inability to adduce existing material evidence, the burden is on the accused to show that that it lies outwith his control to adduce that evidence or evidence of similar weight from an alternative source or that otherwise he is not in a position so to mitigate the prejudice so as to enable him to secure a fair trial.  That much seems to me to be self evident but is in any event implicit in the judgment of Yang CJ in R v Holgate (no 1)[36].

(2) Equality of arms

469. An integral aspect of a fair trial is equality of arms and in the context of witnesses “the right [of an accused] to call, obtain the attendance of or examine witnesses under the same conditions as the prosecutor is an essential element of equality of arms.”[37] It is a right to the same opportunities as are available to the prosecutor[38].  It is not an absolute right of a defendant to obtain the examination of witnesses on his or her behalf, so a court remains free to determine the relevance and admissibility of the proposed evidence and deny the opportunity of having a witness called if such conditions are not met.  It is, rather, a right to obtain the attendance and examination of witnesses under the same conditions as witnesses against him.[39]  It is a procedural right and in so far as it is within the power of the court to do so, it is the duty of the court to ensure against such procedural disadvantage.[40]  The ICCPR applies to States Parties with a variety of judicial systems so Art 14(3)(c) applies to inquisitorial as well as to accusatorial systems, the present relevance of which point is that in its application to inquisitorial systems, the requirement necessarily recognises that it is the court which determines who should testify and it is the court which examines the witnesses.[41] 

470. It follows that the unavailability of a witness does not of itself constitute a breach of the right to call witnesses.  The fact that a witness is beyond reach does not avail an argument that seeks to establish a breach so long as the witness has not been put beyond reach by the actions of the prosecutor or of the State in some other manifestation.  Difficulties in securing the attendance of witnesses may face prosecutors as well as defendants but in so far as the prosecutor is in a position to alleviate the difficulties encountered by an accused in a particular case in locating or securing the attendance of a material witness, it seems clear to me that the prosecutor has a duty to assist.  It is a duty which lies on the authorities of the Region generally, in relation to all fair trial rights, diligently to ensure that the rights guaranteed by Article 14 of the ICCPR (Article 11 of the Bill Of Rights Ordinance) are enjoyed in an effective manner[42]. It is a duty which I would hold to apply regardless of the ICCPR, because it flows, so it seems to me, from the imperative role of the prosecuting authority as a minister of justice.  Therefore, if by the comment in his ruling that there was no duty on the prosecution (or any other arm of the Government of the Region) to prepare the case for the defendants for them[43], the judge meant that the prosecuting authority or the HKSAR was under no obligation to assist as far as was reasonably practicable to ensure the enjoyment of those rights, he erred.  Similarly, in so far as, in the correspondence to which I will later turn, the Hong Kong authorities contended against such a duty, they too erred.

471. On the other hand, the primary burden of action must lie on the accused: it is for him to establish that the evidence sought is relevant; to locate the witness (if necessary with the assistance of the prosecutor and the court) and to take timely and proactive measures to ensure, in so far as it is within his power to do so, the collation of evidence and the attendance of the witness or witnesses at a convenient location.  And if such steps prove fruitless, then it is incumbent upon him to seek to present the same evidence by an alternative route (for example by video link, where available) or through a different witness, if one exists.  Courts must be astute to satisfy themselves that attempts to secure the evidence are conscientious and genuine; in other words, that the process is not half-hearted or tactical with an eye to a stay application.  That will especially be so where the case already carries hallmarks of tactics disruptive of the process.  This is not to encourage or countenance a starting point which makes an assumption adverse to a defendant.  To the contrary, the abiding theme of a court’s approach is one which recognises that “[t]he public interest in ensuring that all relevant and admissible evidence that bears on the guilt or innocence of a person charged with a serious crime must be regarded as of great importance,”[44] although I would qualify that remark by emphasising that that should be the approach even where the crime charged is not a serious crime.  Rather, it is to recognise the reality that delaying tactics and unwarranted stay applications have become an unfortunate incident of too many commercial crime cases in this jurisdiction.

472. The right to have witnesses attend embraces the right to compulsory process.  It is a right long established by the common law and “is so basic and important aspect of our criminal procedure that a trial in which the right is denied cannot be, in my opinion, a trial according to law.”[45]  But the right to compulsory process is circumscribed in the sense that, absent an international or inter-jurisdictional agreement, compulsory process cannot extend beyond the jurisdiction of the court.[46]

(3) Constitutional and statutory instruments

473. The provisions of the Basic Law said to be relevant to the issues at hand are:

(i)  Art 39 by which the provisions of the ICCPR are given domestic effect;

(ii)  Art 95 which stipulates that –

“The Hong Kong Special Administrative Region may, through consultations and in accordance with law, maintain juridical relations with the judicial organs of other parts of the country, and they may render assistance to each other.”

(iii)  Art 96 which provides –

“With the assistance or authorization of the Central People’s Government, the Government of the Hong Kong Special Administrative Region may make appropriate arrangements with foreign states for reciprocal juridical assistance.”

(iv)  Art 87 is prayed in aid for its intention, in the context of this case, to preserve the common law power of compulsory process –

“In criminal or civil proceedings in the Hong Kong Special Administrative Region, the principles previously applied in Hong Kong and the rights previously enjoyed by parties to proceedings shall be maintained.”

(v)  For the proposition that the concept of one country, two systems (which lies at the core of the constitutional dispensation evidenced by the Basic Law) envisages two entirely separate legal systems – one for the Mainland and the other for this Region – the respondent refers to Articles 8 (the laws previously in force in Hong Kong shall be maintained) and 18, which provides that, save as listed in Annex III, national laws shall not be applied in the HKSAR.

474. Art 14(3) of the ICCPR[47] in so far as is relevant to this case, provides:

“In the determination of any criminal charge against him, everyone shall be entitled to the following minimum guarantees, in full equality:

…

(b) to have adequate time and facilities for the preparation of his defence …;

…

(e) to examine, or have examined, the witnesses against him and to obtain the attendance and examination of witnesses on his behalf under the same conditions as witnesses against him.”

475. The Mutual Legal Assistance in Criminal Matters Ordinance Cap. 525 is, as its preamble signifies, “an Ordinance to regulate the provision and obtaining of assistance in criminal matters between Hong Kong and places outside Hong Kong; and for matters incidental thereto or connected therewith.”  It provides a procedure by which the Government of the HKSAR may give effect to arrangements for mutual legal assistance which have been concluded between the Government of the HKSAR and the government of a place outside Hong Kong, other than the Central People’s Government or the government of any other part of the PRC.  It is specifically provided by section 3 that the Ordinance “shall not apply to the provision or obtaining of assistance in criminal matters between Hong Kong and any other part of the People’s Republic of China.”

476. Section 77E of the Evidence Ordinance Cap. 8 is the provision pursuant to which the letters of request in this case were issued.  It provides for applications either by the Secretary for Justice or any person charged with an offence:

“(1) Where it appears to the Court of First Instance that any criminal proceedings-

(a) have been instituted in Hong Kong; or

(b) are likely to be instituted in Hong Kong if evidence is obtained for the purposes of those criminal proceedings by virtue of an order made under this section,

the Court of First Instance may order that a letter of request shall be issued and transmitted in such manner as the Court of First Instance may direct to a court or tribunal specified in the order and exercising jurisdiction in a place outside Hong Kong, requesting such court or tribunal to assist in obtaining evidence for the purposes of those criminal proceedings.

(2) An order under this section shall specify the evidence to be obtained and, in the case of evidence to be obtained-

(a) by the examination of any person as a witness, the name and particulars of such person or such other particulars by reference to his office or employment as may be sufficient to ascertain his identity; or

(b) by the production of any document or thing, the nature of such document or thing or a description thereof.

(3) An application to the Court of First Instance for an order under this section may be made ex parte supported by affidavit-

(a) in respect of criminal proceedings referred to in subsection (1)(a), by the Secretary for Justice or any person charged with an offence to which such criminal proceedings relate; or

(b) in respect of criminal proceedings referred to in subsection (1)(b), by the Secretary for Justice.

(4) A letter of request ordered to be issued by the Court of First Instance under this section shall be issued by the Registrar of the High Court (in this Part referred to as “the Registrar”) under the seal of the High Court in such form as may be prescribed by rules of court, or if no such form is prescribed in such form as the Court of First Instance may direct.”

477. We will see that suggestions were made in this case that, absent oral testimony by the Mainland witnesses, statements might be provided pursuant to the provisions of section 65B of the Criminal Procedure Ordinance, Cap. 221. None was provided.  The section provides that :

“(1) In any criminal proceedings, other than committal proceedings, a written statement by any person shall, subject to the conditions contained in subsection (2), be admissible as evidence to the like extent as oral evidence to the like effect by that person.

(2) A statement may be tendered in evidence under subsection (1) if-

(a) the statement purports to be signed by the person who made it;

(b) the statement contains a declaration by that person to the effect that it is true to the best of his knowledge and belief;

(c) before the hearing at which the statement is tendered in evidence, a copy of the statement is served, by or on behalf of the party proposing to tender it, on each of the other parties to the proceedings; and

(d) none of the other parties or their solicitors, within 14 days from the service of the copy of the statement, serves a notice on the party so proposing objecting to the statement being tendered in evidence under this section:

Provided that paragraphs (c) and (d) shall not apply if the parties agree before or during the hearing that the statement shall be so tendered.

…

(4) Notwithstanding that a written statement made by any person may be admissible as evidence by virtue of this section-

(a) the party by whom or on whose behalf a copy of the statement was served may call the person making the statement to give evidence; and

(b) the court may, of its own motion or on the application of any party to the proceedings either before or during the hearing, require the person making the statement to attend before the court and give evidence.

…

(6) Any document or object referred to as an exhibit and identified in a written statement admitted in evidence under this section shall be treated as if it had been produced as an exhibit and identified in court by the maker of the statement.”

An introductory conclusion

478. I have earlier intimated that if and in so far as the judge concluded that establishing malice was a condition precedent to establishing an abuse of process and that if and in so far as he concluded that there was no burden upon the prosecutorial authorities to assist the applicants in their efforts, such as they were, to secure testimony from the Mainland witnesses, he erred.  It is open to this Court, therefore, to look at the matter afresh in order to determine whether despite those errors, he was wrong to order a stay of proceedings.

479. The same error of approach is evident on the part of the HKSAR authorities in so far as they seemed to deny any duty to assist.  The real question, though, is whether, despite that error, they did in fact assist to the extent reasonably to be expected of them.

480. The history of the proceedings, spread as it was over three years, is very detailed.  Given the basis of the application for a stay of the proceedings, that history is highly relevant and must therefore be traversed for its full flavour to be appreciated.  A bare summary of the correspondence and of the proceedings will not convey that which a detailed study conveys, namely, the unattractive tactics deployed by D1 ‒ and I adjudge that D3 followed his lead ‒ to prolong and derail the trial; in the context of which one may better judge whether D1 himself exercised due diligence to secure Mainland evidence or alternatively available evidence and by which one may better assess the reasonableness or otherwise of developing scepticism on the part of the Hong Kong authorities as the history progressed, the scepticism which led them to suggest preconditions for further assistance, preconditions which were never met.

481. I think it would assist if I prefaced that exercise by the conclusions which I have reached from it, so that the reader may better appreciate the relevance of particular parts of that history.

482. I am satisfied that:

(1)  there was in fact no inequality of arms – the prosecution had themselves sought to secure evidence on commission from the Mainland and had failed and in that the applicants chose to use section 77E of the Evidence Ordinance as their avenue for securing evidence, that was equally an avenue open to the prosecution and an avenue which could have proved effective;

(2)  the applicants and their advisers did not use their best endeavours to secure the evidence from the Mainland witnesses – their utilisation of the process was markedly tardy and the eagerness on paper to secure assistance was not matched by proactivity in practice;

(3)  serious questions are raised as to the true availability of the evidence: no adequate evidence was presented from Hong Kong lawyers or their Mainland counterparts as to the reason or reasons for the non-production of a single signed statement from any one of the Mainland witnesses; no request was made from the Mainland authorities for the Mainland lawyers to take witness statements; insufficient action was taken to arrange for the witnesses to be present at a particular time and place for the taking of evidence pursuant to the letters of request; the reasons given for not coming to Hong Kong to give evidence were on their face unconvincing bare assertions; no adequate documentary evidence in support of the proposed witnesses’ testimony was forthcoming; there were alternative sources for some of the evidence, the failure to produce which was not explained; and the offer of video link evidence was never pursued by those acting for the applicants;

(4)  the assertions of deliberate obstructionism on the part of the HKSAR and the Mainland authority is not made out.  Although there were unexplained and therefore unsatisfactory delays on the part of the Mainland authorities, the Hong Kong authorities did much to assist;

(5)  the judge did a great deal to accommodate the defence by according them ample time to secure the evidence;

(6)  the failure by the judge to assess or, if he did assess, to say what weight he accorded the summary of evidence of the Mainland witnesses’ proposed testimony, a summary prepared by the prosecutor is, in the event, of no consequence because it was a summary that merited no weight; and

(7)  the absence of compulsory process on the Mainland is a non-issue in this case because the witnesses upon which the appeal concentrates were asserted by the defence to be willing witnesses.

The history; with comments

483. The applicants were arrested on 28 September 2005.  They were charged in February 2006.  The case was transferred to the District Court in July 2006.  They first appeared in the District Court in August 2006.  Abba Chan pleaded guilty in early September 2006.  In November 2006, the first pre-trial review for the applicants was fixed for 7 February 2007.

2007

484. At the pre-trial review on 7 February 2007, each applicant was represented by counsel and solicitors.  An amended charge sheet was tendered.  Mr Harris of counsel, for the first applicant, told the court that his client had three or four potential defence witnesses who resided in the Mainland but he did not have final instructions as to whether or not they were prepared to come to Hong Kong to testify “or whether we are going to be driven to make an application that their evidence be taken on commission in China.  I do not have any experience of taking evidence on commission in China when the application is made by the defence and that’s something we are going to have to look into to see how it’s done.  We will get on with it as soon as we can.” (Emphasis added).  And he asked for a few weeks by which time they would be in a better position to know definitely “whether those witnesses are going to come or not.” The time estimate given for the trial was 50 days and Mr Harris asked for a starting date in the first week of November 2007.  Prosecuting counsel noted that the defendants had first appeared in the District Court as long ago as August 2006 and was anxious that the matter should proceed but accepted that the defence were entitled to seek the evidence.  As for the witnesses on the Mainland and the possibility of them coming to Hong Kong, Mr Harris said: “At the moment they are talking to us and we anticipate that they are not totally keen to come to Hong Kong to testify…. But I am happy to say that this is not a never ending problem to commit us to an indication to this court by 16^th March as to whether or not this is going to be necessary.  Part of the problem … is that [D1] is not permitted to leave Hong Kong at the moment … so …. of course he hasn’t been able to deal with these people face to face, we’re having to do it as best we can in another way.”[48]

·  I pause to comment that this exchange illustrates that prior to 7 February 2007 those acting for D1 had been in contact with the Mainland witnesses or some of them, and that the witnesses (or some of them) were persons known to and by D1.

485. At the hearing on 16 March 2007, Mr Harris informed the judge as follows:

(1)  “Since we were last together, those instructing me have been into China and they have examined the most important of the 15 or so witnesses in that jurisdiction who may give relevant evidence.  It is almost a certainty that we will have to take defence evidence on commission in China at least from that witness and possibly from two or three others in relation to the balance of the 15 or so potential defence witnesses.  Some of them will come to Hong Kong and to testify and then there is the final category of witnesses who won’t come but witnesses perhaps who I will be happy to deal with that at the end of the day.  But there are certainly some important witnesses who will not come and so it is that we shall be making arrangements and we shall be making the relevant applications to have their evidence heard on commission in China.”[49]

(2)  He predicted that the prosecution case would take six or seven weeks to present whereafter the defence would seek an adjournment to take the evidence on commission on the Mainland.

(3)  It was contemplated that there were one or two defence witnesses whose evidence would have to be taken on the Mainland.

(4)  No enquiries had at that date been initiated as to whether the Mainland authorities were amenable to the proposed arrangement.

(5)  The witnesses were in several different locations: one in Hainan, one in Shenzhen and one in Guanzhou.

(6)  After the court expressed the hope that once the prosecution case was finished, there would be no undue delay, Mr Harris said (in a discussion as to the appropriate starting date) that he had been in the case for well over a year.

(7)  In response to a specific question by the court: “We have the CCTV court available in the High Court, would that be of any help?”, Mr Harris clarified that the judge had in mind the video link facilities and said: “Certainly I’m very happy to explore that.  And, your honour, I can tell you that I’ve used the procedure in one other criminal case in taking evidence, live evidence from Japan.”

(8)  He said that if the judge wanted an uninterrupted trial, the consensus was that the most appropriate starting date for the trial was April 2008.  “I know that sounds an awfully long time away but it does give us perhaps the time that we are going to need in order to put in place the evidence gathering exercise in China which is going to be I anticipate not without problems and it’s going to take a great deal of patience on everyone’s part to get it properly on that.”

(9)  The Court agreed to fix the trial for 7 April 2008 but directed a pre-trial review in September 2007 so that progress in relation to the Mainland witnesses could be disclosed.

·  Let us note therefore that as early as March 2007, a year before the trial started, the Mainland witnesses had been interviewed by the defence team of D1.  There was no suggestion that there had been any difficulty in locating them or that there was any barrier to the examination of witnesses by Mainland or Hong Kong lawyers.  The suggestion was that some material witnesses would come to Hong Kong.  No-one has told us who they were, what they had to say, and why in the event they did not come to Hong Kong.  Let us also note that one year before the trial commenced and 2 years and 5 months before the prosecution closed its case, the suggestion was made, and met with approval by the defence team for D1, that video link facilities might be used.

486. At the hearing on 10 September 2007, Mr Harris informed the court that the logistics of taking evidence were not proving easy although “I have had very helpful discussion with colleagues, my friend Mr Lee and the Department of Justice who have put us in the right direction.  We are in the throes of enlisting the services of a very reputable firm of lawyers in Beijing.  We have taken proofs of evidence from three witnesses and there is a possibility that we may require the evidence of about seven or eight other witnesses. … The procedures that we envisage are that very, very soon we will be making an application to a judge in the Court of First Instance for an order under section 77E of the Evidence Ordinance that a letter of request issued to China.  We hope that our lawyers to be appointed in Beijing will smoothen the way in both of those locations [Meizhou and Beijing] to allow for the actual evidence itself to be gathered, probably I suspect in the early part of the New Year. … There is a great deal of goodwill on all sides and I think with a little bit of give and take, this is an exercise that will come to fruition.  And if it doesn’t, of course, then we will have to consider whether or not there can be a fair trial in Hong Kong in the absence of these witnesses.”  (Emphasis added)

·  Here was a representation that an application for the issue of a letter of request was likely to be made “very very soon”.  Yet none was made for another 15 months.  Indeed, none was made until 8 months after the trial had started.  Here, further, was information that actual proofs of evidence had been taken; and there was no suggestion of any Mainland prohibition on the taking of such proofs. 

·  And here was an acknowledgement that the prosecuting authorities were being cooperative.  The later assertions of deliberate hindrance therefore beg a significant question: What could possibly be the reason for a change of attitude?  None has been suggested, a fact which undermines the validity of the assertions.  Not a single letter has been presented to us flowing from those acting for the applicants on the one hand and those acting for the prosecution on the other by which any assistance from the Mainland is sought at this stage. And here was the first reference to the possibility of a stay application.

2008

487. The case was next mentioned on 14 February 2008.  Nothing to this date had been suggested on behalf of D3 that any Mainland witnesses were required for her defence.  Mr Harris said that the team for D1 had reduced the number of Mainland witnesses to six; they were located in five different provinces.  He said that given the non-applicability to the Mainland of the Mutual Legal Assistance in Criminal Matters Ordinance, the route open to the defence was section 77E of the Evidence Ordinance and that there was no reason at all why the defence could not avail themselves of that provision.[50]  He said that: “We have been in very useful discussion with the International Law Department of the Department of Justice and I’m very grateful to them, they have rendered a lot of assistance and advice and guidance.  The bottom line [however] is that it looks as though it’s going to be impossible to take this evidence pre-trial. … in the absence of a commissioner from the requested state, the logistics are just insurmountable.  It follows that our present line will be to ask your honour … to relocate the court when it comes to the defence case and we will take the evidence in China with the trial judge as the Commissioner and we will do it in a way that was done very recently in a case that is ongoing before his Honour Judge Browne.  We are about to enter discussions with the Hong Kong and Macao Affairs Office who in turn will go into collaboration with those in Beijing who in turn will pass it on to the chief judge of the various municipal courts in the various jurisdictions where the witnesses are located. … It’s a huge task. … If at the end of the day this proves to be an impossibility and … we simply can’t do it, it’s only right that I put the court on notice that we will consider an application to stay, if not the whole trial then certainly those charges where we are disadvantaged in the way I have described.” (Emphasis added).  Mr Harris added that two of the witnesses would not come to Hong Kong but “we have statements from them”.  An attempt would be made, he said, to shepherd them all to one court – the possibility of Shenzhen had been explored with the Mainland lawyers.  Two witnesses would not come to Hong Kong – for reasons he would rather not give.  All the witnesses had made statements concerning the case.  The statements Mr Harris had seen impacted specifically on four charges.  Counsel for D3 indicated he was ready to proceed; no suggestion was made by him of the need for Mainland witnesses.

·  There was no suggestion to this date that the witnesses located were unwilling to testify; indeed proofs had been taken.  Once again there was specific acknowledgement of full co-operation by the Department of Justice.

488. The trial commenced on 7 April 2008, 14 months since the fixing of that date to enable the defence to pursue the securing of evidence from the Mainland and 7 months after it was said that there would be an application for a letter of request “very, very soon.”  Yet still no application had been made.  The trial judge expressed concern lest the case overrun and Mr Harris said he saw no prospect of a significant overrun.  He said that no progress had been made in relation to obtaining Mainland evidence: “We’re banging our heads against brick wall after brick wall.”  What the brick wall was he did not reveal nor did he venture to explain why no application had yet been made for issue of a letter of request.  

489. On the same day, D3 applied for an adjournment having dispensed with the services of her counsel.

490. On 16 April 2008, there was another change of counsel by D3 which occasioned an adjournment to 28 April 2008.  

491. At the hearing on 16 April, Mr Harris told the court that he, on behalf of D1, was ready to proceed.  This must, he suggested, be the last adjournment and he saw no difficulty “in the case finishing by the end of June, certainly”.  In that confidence, he was – through no fault of his own – off the mark by three years.  He reminded the judge that at the February 2008 hearing he had told the court that there would be no application to adjourn the trial.

·  It is remarkable that still there was no move to apply for letters of request or to formulate any proposal for the taking of evidence by video link.  Neither was it suggested that witnesses on the Mainland had expressed reluctance to testify or that the Mainland lawyers had had any difficulty in obtaining signed statements.

492. On 28 April 2008, the trial resumed.  By this stage, D1 had instructed Mr Lee SC, in addition to Mr Harris.  

493. No sooner had the trial resumed than D1 applied for the trial judge to recuse himself.  So two days were devoted to an unmeritorious application to the judge to recuse himelf.  The judge delivered a ruling on 8 May 2008 by which he refused the application.

494. This refusal triggered satellite proceedings which should never have been launched.  An application for leave to apply for judicial review was made and ‒ despite the repeated strictures of this Court against satellite proceedings in criminal cases – leave was given.  So the trial was adjourned pending determination of the application for judicial review.  The basis of the recusal application was the fact that years previously, when the judge was a counsel in the Department of Justice, he had been involved in determining whether a person called Lai should be given immunity from prosecution.  The defence thought that they might call this witness; yet he had not even been approached by the defence with a request for information nor had he agreed to testify and his testimony, if given, was peripheral in any event.  The judge had scant recollection of the case and in any event noted how remote was the possibility of Lai being a witness.  On 22 July 2008 the application for judicial review was dismissed.[51]  Lai was never called to testify.

495. Then there was a mention hearing before the trial judge, at which the trial judge was told that the earliest date upon which all counsel then engaged in the trial would be available was 12 January 2009.  And that is the date which was fixed.  65 days were reserved for the renewed hearing.

496. Four further months passed before anything of relevance happened.  Then, on 4 December 2008 an originating summons was filed on behalf of D1 for the issue of a letter of request in respect of nine witnesses including Pang (with details of his Hong Kong identity card) and Liao.  The order was made on 9 December 2009.  The application was presented by Mr Lee and Mr Harris for D1.  There was talk again about the considerable assistance given by the Department of Justice.  Wright J said that the defence team was going to be dependent upon the Department of Justice “setting the whole thing up for you.”  Mr Lee referred to the possibility that it would all have to be done by video.

2009

497. The trial resumed on 12 January 2009.

498. Those acting for D1, Messrs Philip Lee & Co (PL) could not sensibly seek the assistance of the prosecutors in the case in advancing the efficacy of the letters of request for, understandably, they took the view that the governmental agency which did assist should be independent of the prosecuting authority, since it was not for the defendant prematurely to disclose his defence.  So, on 29 January 2009 PL wrote to the Chief Secretary for Administration asking him to forward the letter of request to the Hong Kong and Macao Affairs Office so that it could be transmitted to the appropriate PRC authorities.  From that point on, responses came from the Government Secretariat (GS).  A holding reply was sent in February and in early March, GS told PL that it would transmit the letter of request but added that “this proposal is a stand-alone arrangement proposed in the special circumstances of this case including the urgency. … it should not be treated as providing a precedent for future cases.”

·  Although the letter from GS implied that there was no general duty to assist, assistance was in fact offered.

499. By originating summons filed on 11 March 2009, D1 applied for a further letter of request in relation to a witness named Tao.  The order was made on 16 March 2009.

500. By an originating summons dated 12 March 2009, D3 applied for a letter of request in relation to witnesses said to be relevant to the kidnapping in early 2003 (the Charge 4 defence) including the witness Qi.  The schedule of anticipated evidence annexed to the summons provided details of the evidence which Qi was expected to give, in a form which clearly suggests that the applicant’s solicitor was in possession of a statement from the witness.  It suggests that Michael Hon, D1’s brother, was at all material times in touch with the ransom negotiations; that he himself provided Qi with funds for the rescue of Alexander Pang; that Hon was not repaid at the time in question; and that Qi was not in a position to say whether subsequent repayment had been made.  The affirmation in support of the application said that the three witnesses able to speak about the kidnap incident (of whom Qi was one) had been interviewed by the Mainland lawyers instructed on behalf of D3; and that although they were able to testify they were not able to travel to Hong Kong to do so.  The order for the issue of this letter of request was made on 24 March 2009.

·  There are three points to note:

(i)  There is no suggestion of any hindrance in taking witness statements;

(ii)  No reason is given as to why the witness Qi was not able to travel to Hong Kong; and

(iii)  The person best in a position to say what sums were paid, whether he was repaid, whether he chased for payment between the years 2003 and 2007 and, if so, with what result, was, according to these very summaries, Michael Hon; as far as we are aware, a Hong Kong resident and brother of D1.  Hon was not called to testify at trial.

501. In April 2009, PL supplied certified translations of documents which GS had requested in March.  The same month, PL told GS that they had stopped acting for D1 in the trial but continued to act for him in relation to the letters of request and asked for the latest letter of request to be sent to the appropriate PRC authorities.

502. In early May 2009, GS wrote to PL saying that there was no established arrangement for the transmission of letters of request between Hong Kong and the Mainland but that GS was “now liaising with the relevant Mainland authorities with a view to taking matters forward as early as practicable. …. I should be most grateful if you could advise whether the examination of witness[es] can take place on premises other than court premises if SPC so wishes.”  The reply consented to any venue selected by the SPC provided that there was power in Chinese law for the SPC to summons the relevant witnesses to attend the selected venue, that the giving of deliberately false evidence would attract penal sanction under Chinese law even though not in a courtroom and that provision could be made for transmission to Hong Kong of the evidence by video or audio link.

503. At the end of May 2009, PL wrote to GS saying that since the prosecution case was likely to close in the second week of July, arrangements for the Mainland-based evidence was now a matter of extreme urgency.  The reply of 8 June 2009 was that discussions had taken place with the Mainland authorities, including the SPC and the Mainland and Macao Affairs Office and that “we understand that the present case gives rise to some difficulty since multiple witnesses spread across different provinces and cities are involved.”  GS would inform the Mainland authorities of the progress of the trial.  By reply in early June 2009, PL pressed for information as to progress and what steps had already been taken.  GS answered that the HKSAR authorities had been in follow-up contact with the Mainland but maintained the assertion that “the HKSAR Government is not under any legal obligation to take steps to ‘facilitate the taking of evidence from the said defence witnesses in the Mainland.’”  The author of the letter undertook to relay the time concern to the Mainland authorities.  In further correspondence later that month, GS summarised steps that the authorities in Hong Kong had taken to transmit the letters of request to the Mainland and in relaying the time concern to the Mainland authorities and asserted that it was for the defendants to carry the “primary responsibility to gather its own evidence.”  Although there were no current mutual legal assistance arrangements for criminal proceedings between the Mainland and the HKSAR, the Evidence Ordinance provided machinery for both the prosecution and defence, for which reason GS rejected assertions of inequality of arms.[52]

504. By summons dated 24 June 2009 – over one year after the trial hearing had commenced and about three weeks before the close of the prosecution case – D1 filed an application for a letter of request in relation to the witness Wong Kwun-wai, with a Hong Kong identity number; the order was issued by Wright J on 30 June 2009.

505. In early July, the prosecution, at the request of the defence team, disclosed the fact that with the cooperation of the Mainland authorities they had interviewed a number of potential prosecution witnesses on the Mainland.  This led to assertions of an inequality of arms; although, as we have seen, those acting for two of the defendants had by then interviewed a number of potential defence witnesses on the Mainland.

506. Very close to the end of the prosecution case, there was a hearing on 10 July 2009.  D1 had changed his counsel.  Counsel newly engaged applied for the recall of six prosecution witnesses and for the prosecution to tender two additional witnesses.  There was also a request that at the end of the prosecution case there should be an hiatus in the proceedings until such time as the letter of request situation was resolved although at that stage Mr Pow SC (then for D1) seemed to accept that since this was the first time a letter of request in relation to defence witnesses had been issued to the Mainland authorities and transmitted only recently, time may not have been sufficient for a response.[53]  

507. Prosecuting counsel complained bitterly about what he submitted were delaying tactics which had evidenced themselves from the very start of the trial.  Included his submissions was the following:

“You will recall that this case first came before the District Court in August 2006. That is almost 3 years ago. At that time all the papers were served, including the witness statements and the copies of the exhibits. And of course the witness statements included the witness statements from the Mainland witnesses whom the prosecution intended to call. It also included the fact that those witnesses had been interviewed … in the Mainland by ICAC officers. And it included, by implication, that there had been cooperation between the ICAC and the Mainland authorities.”[54]

508. He continued by pointing out that the commencement of the trial had been delayed for a year at the request of the defence so that the defence could explore obtaining evidence from the Mainland.  He pointed out that D3 had thereafter changed her counsel three times within two weeks causing further delay.  Then there had been an application for judicial review.  There must, he suggested, be a “ very strong suspicion  … that this latest move [by D1] to dismiss his counsel – counsel who have been, some of them, with him over three years – to dismiss his counsel and appoint new counsel …only… three days ago, not even at the beginning of our three-week adjournment. … And now, of course, he claims that he wishes to virtually reopen the prosecution case, he wishes to call witnesses from China, he wishes to call witnesses from Hong Kong.  He is considering … that there may be other prosecution witnesses he wants.  It is all more delay, delay and delay.”[55] He noted that attempts to secure the attendance of prosecution witnesses from the Mainland had been thwarted, witnesses whose testimony was expected to be detrimental to the defence case; a request by the Department of Justice to take evidence on commission on the Mainland had been refused; had been turned down by the authorities there.  As for a request just made by the defence for disclosure of Alexander Pang’s movement records, that was an issue well known to the defence three years ago – why was D1 only now asking for those records?  Now there was a request for a delay for the purpose of giving effect to the letters of request, a suggestion made against the background of years in which the defence had had to pursue that line of inquiry.

509. Defence counsel did not accept the submissions and as for the letters of request pointed out the novelty of the procedure and that it was too early to say whether the letters of request would be ineffective.

·  The point of rehearsing in such detail submissions made by prosecuting counsel on 10 July 2009 relates to the response by Mr Owen QC when this Court intimated, during the course of the hearing of the appeal, its misgivings as to the conscientiousness of defence attempts to secure evidence on the Mainland.  The effect of that response, as I understood it, was that it had not been suggested at trial that the process had been a manipulative one.  The passages to which I have alluded, though not directed specifically at the letters of request, are redolent with suggestions by the prosecutor that the entire process was the subject of manipulation by D1, to play it long, to derail the trial and to create groundwork for a stay application.

510. The defence request for the recall of prosecution witnesses was successful.

511. On 17 July 2009, the prosecution closed its case.  The defence team secured an adjournment for two months because they did not wish to open the defence case without knowing whether evidence was to be taken from the Mainland witnesses.  The suggestion was made that if it proved impossible to secure that, a fair trial would not be possible.  Mr Dunn, counsel for the prosecution, pointed out that until late 2008 nothing at all had been done to secure evidence from them.  Be that as it may, the trial was adjourned to 1 September 2009.  By that stage, there had been 94 days of hearing.

512. On 24 July 2009, GS wrote to PL stating that : “Recently, the SPC has advised that before rendering assistance to the HKSAR court in the above case, they wish to have discussion on practical procedures for taking evidence. We are now liaising with the Judiciary on the SPC’s suggestion.”  Following that letter, the Registrar of the High Court wrote to all the parties requesting them “to consult between themselves to put forward available dates and a list of proposed participants for meeting with the representatives of the SPC.”  He suggested further that to expedite the matter, the parties should consider corresponding directly with the SPC to finalise the logistic arrangements.  There appears to be enclosed a letter from the SPC through the Hong Kong and Macao Affairs Office to the Government Secretariat dated 14 July 2009 stating that the SPC “agrees to communicate and negotiate with the relevant party in the SAR regarding related matters such as substantive procedures in providing assistance in relation to this case.”

513. Correspondence followed about practical arrangements, GS at one stage pointing out to PL that “the onus is on you to make positive contributions to the discussions at the meeting, including identifying the specific procedures and requirements for taking the evidence which your client wishes to obtain.”[56] Proposals were made by PL for a meeting with the SPC authorities.[57]  GS responded with a request for further details such as the location of the witnesses, which court and which place it was proposed the witness should be examined, requirements for translation and transcription and video recording, evidence taking procedure, witness expenses and expenses incurred by the Mainland court.  The reply from PL provided whereabouts of witnesses but only in relation to the provinces and made the suggestion that each be examined in the area in which he lived.

514. On 1 September 2009, the trial court was brought up to date with developments and the trial was adjourned to 2 November; 19 months, that is, after the trial had commenced.

·  No evidence had by this date been put before the court as to why any of the witnesses (save for those in official positions) were unable or unwilling to come to Hong Kong.  No reason had been given why evidence from an alternative source or sources was not available.  Ostensibly, proofs had been taken from the key witnesses long before this date.  No suggestion had been made that any one of the witnesses was unwilling to testify.

515. A letter was written on 18 September 2009 by the Department of Justice to PL stating that because the letter of request applications were, understandably, made ex parte, the prosecution did not know where the witnesses were and why they were not available to give evidence.  Accordingly, the prosecution was hardly in a position to ensure that the evidence to be obtained would meet the evidentiary and procedural requirements of Hong Kong law.  Be that as it may: “as to the venue of witnesses examination, the prosecution is of the view that, if possible, all the witnesses should be gathered in one place and depose in one go.”  The author made the suggestion that the testimony of the Mainland witnesses be taken after the evidence of the first defendant.  The response from PL again suggested an inequality of arms and added that “any requirement that logistical and practical arrangements should be subject to scrutiny or objection by the prosecution is … a breach of the principle of equality of arms and impedes the fair trial rights of the defence without any proper justification.  We object in particular to any suggestion that the examination of witnesses on the Mainland can take place only after the first defendant has given evidence.  The availability of arrangements to provide assistance to defence in this case is relevant to the decision as to the nature and scope of the defence case as well as any possible abuse of process application.”[58]

·  In my view, there was nothing objectionable in the letter or proposals from the Department of Justice.  It was, self-evidently, intended to be constructive and did not warrant the tone of the reply.  I note as well the repetition of the threat of an abuse of process application – a threat which had peppered earlier hearings in the case.

516. In late September 2009, GS told PL that it was still awaiting a jointly agreed outline and detailed proposal concerning the logistics and practical arrangements for taking evidence.

517. There then followed correspondence in which PL asked for details of communications between GS and the Mainland authorities, to which the reply was that they had already been informed of the transmission of the letters of requests and the SPC’s response.  That was met with another threat of an abuse of process based application for a stay; which was followed by a response emphasising the need for an agreed detail proposal for evidence taking, meaning one which was agreed by the all the parties.  An attempt to seek a deadline by which such proposals were to be forwarded was met with strong objection and an assertion that GS was seeking to dictate the terms of communications made on D1’s behalf to the SPC.[59] Nonetheless, in late October 2009 GS forwarded to the SPC the proposals hitherto made.  The letter to the SPC asked for a date and venue for holding a meeting to discuss the proposals.

·  There was nothing untoward or obstructionist in the proposals made by GS, proposals which were no doubt advanced pursuant to legal advice.  As all parties recognised, this was the first time a letter of request had been made on behalf of defendants to give effect on the Mainland to a letter of request issued in Hong Kong; and there appears to have been only one occasion when an evidence gathering exercise in the form of taking testimony on commission for Hong Kong proceedings had been made for the prosecution.  The Mainland’s present legal system spans many provinces and is, as everyone involved well knew, a system in its relevant infancy and, furthermore, the exercise related to something in the order of 14 witnesses spread over a number of provinces.  The request for an agreed meaningful programme was sensible and the notion that GS was impinging on the fundamental rights of defendants, such that an abuse of process was constituted was entirely unwarranted.  One might add that, on any view, the number of witnesses put forward for the purpose of the exercise was unusually large; and that, as has become obvious in the course of presentation of the appeal, only a handful of whom were necessary to cover the points intended.  Had the numbers been sensibly restricted, the entire exercise may well have been simpler. 

518. On 2 November 2009, the matter came again before Judge Chan. Counsel for D1 asked for another two months.  However, if the adjournment was to be refused, D1 had already applied for the admission of Ms Montgomery QC to make a stay application.  The judge, quite understandably, was less than impressed by the fact that before he had decided whether to grant an adjournment, a threat was made that in the event of not granting an adjournment, there would be a stay application.

·  This was the second time in the course of the proceedings that counsel (two different counsel) had made submissions in terrorem, a practice to be deprecated.  We commend the courteously firm way in which the judge responded on both occasions.

519. Counsel went on to intimate that until his client knew whether he was or was not in a position to call defence witnesses to support his case, he should not be forced to make his election whether himself to testify.  Counsel for the prosecution did not object to the proposed adjournment.  But he did say that the proposals put forward by the defence for the taking of evidence was “going to cause massive problems both for the Mainland authorities and for everyone in this court,” because there were 14 witnesses in 12 different locations and “this will involve the Mainland authorities in finding 12 different locations, courtrooms if you like, supporting staff and presumably 12 different judges to sit in with your honour, each of whom may have a different idea on procedures.”  He went on: “This frankly is an application made which has inbuilt difficulties and, as I say, I don’t wish to sound cynical but it looks very much like an application which has been made with a view to being refused.”  Counsel for the first applicant responded by saying there was no insistence on 12 different locations: it was for the SPC to arrange for witnesses and “it is beyond our scope to know whether this witness is able to be arranged to give evidence here or there.  It is for the SPC to approach them and to liaise with them.”[60] The judge complained at the fact that no notice had been given of this intention to seek an adjournment.

·  I pause here to note once again the expression of deep cynicism on behalf of the prosecution; the reasonableness of his worry as to the absence of any proposal put forward by the defence team for a single location for the taking of evidence; and the suggestion that it was merely for the SPC itself to make arrangements with the witnesses.  It is as clear as can be that the Mainland lawyers at all material times had access, if they wished to exercise it, to the witnesses yet there remains no evidence on their part of any attempt to ask the witnesses whether they could collect at a particular named place and when it would be convenient for them so to collect.  Nor is there a shred of evidence of any approach by the lawyers to any one of the provincial courts to see what might be arranged for the witness or witnesses resident in those provinces.  There was at this stage of the history of the matter no reasonable basis upon which to found an abuse of process argument and, combined with the periodic threat of an application for a stay on that basis, the earlier wholly unmeritorious application for a judicial review, the number of changes of counsel, the fact that overseas counsel was already instructed to make a stay application if an adjournment was refused, the latest development adds to the uneasy sense of an early decision by D1 to take every conceivable opportunity to derail the trial regardless of merit.  It is open to a defendant to take whatever points he wishes; but the trial and appellate courts are entitled to bring to bear their experience in the light of the history of a case so as to distinguish meritorious applications from tactical unmeritorious ones.

520. In his ruling on the application for a further adjournment[61], the judge noted how long it had been since the trial commenced; how many interruptions there had been since that commencement and that even though the prosecution had closed its case in July there was, four months later, still “no clue as to when the defence case will commence, not even the issue of the election of giving evidence.”  The judge was not prepared further to delay matters and ordered the case to proceed.  Having taken instructions, counsel for D1 said that D1 wished, before he decided whether to testify, to hear Ms Montgomery's advice overnight on the question of a stay application before making up his mind; so the matter was adjourned until the following morning.  The following morning he elected not to give evidence or call witnesses.  D2 said he would give evidence and to that end the case was adjourned to 16 November 2009.

521. By letter dated 13 November 2009 GS informed those acting for D1 and D3 that they had heard from the SPC.  The SPC asked for particulars of D1 and D3, a summary of the case and means by which the 14 witnesses could be contacted.  Answers were provided: the 14 witnesses were contactable, it was said, via three different Mainland law firms: two in Guandong and one in Beijing.

522. On 20 November 2009, D2 completed his testimony.  Counsel for D2 disclosed his expert’s evidence about handwriting which he described as a report that was inconclusive; the exchange in respect of which merits examination when considering the complaint in this appeal that the judge failed properly or at all to analyse the effect of that testimony.[62]

523. Counsel for D3 said that unless D3 knew whether the testimony of her Mainland witnesses could be secured she was not in a position to decide whether herself to testify.  Counsel for D1 joined in the application for a two months adjournment, an application which was granted; so the hearing was adjourned to 25 January 2010.  In the course of addressing the judge, counsel for D3 said that the SPC no longer requested a meeting to discuss how the matter should be dealt with, rather “they have already initiated the mechanism.  They have drafted the notification to the provincial courts in all areas [concerning helping the SAR to get these people to testify].  What they are asking is for us to provide them with some more material so that the provincial Court would have a better understanding of the case before they can make the necessary arrangement.”  The judge at that stage refused the adjournment at which point counsel said that D3 elected not to testify.  But his client still wanted to call three witnesses.  He asked for a two month adjournment and if by the expiry of that time nothing material had transpired, “we have to decide what to do, whether there’s any other application … . ”[63]

524. Mr Pow SC for D1 joined in the application for an adjournment saying that “we have been rushing to comply with [the SPC’s request for information] and that [of the four items requested] two of them require cooperation from the prosecution, firstly, is an abridged summary of facts of the prosecution case.  Of course that was done with the confirmation and agreement of the ICAC.  And also there would be a Chinese version of the charge sheet to be sent to the SPC.  So those two documents have been prepared with the help of the prosecution.”[64]  As to the next available date, that depended on the availability of counsel and 25 January was suggested.  If matters turned out negatively “then again your honour would be expecting us to make an appropriate application for stay.”

·  None of this sits at all comfortably with the recurrent theme of the submissions before us, that there was simmering resentment and a particularly destructive attitude on the part of the Hong Kong authorities in relation to requests for assistance.

2010

525. In January 2010, GS informed the parties that the SPC had asked the local courts to locate and contact the witnesses named in the letters of request.[65]

526. The response by PL to that letter is interesting.  It is a letter written five days before the scheduled resumption of the hearing.  It complains of the fact that no details have been provided of communications between the HKSAR Government and the SPC; and goes on as follows: “It is evident from your letter dated 20 January 2010 that HKSARG is not conducting effective negotiation with the SPC for the taking of evidence in the PRC whilst preventing us from having any direct input.”

·  This was, in my opinion, a strange yet revealing letter.  It was strange given the reasonableness of the step to locate 14 different witnesses in different provinces and the suggestion that the Hong Kong Government was preventing any direct input had no foundation whatsoever given earlier repeated requests by PL that arrangements be made through official channels.[66]  Its tone stands in contrast to acknowledgments which had recently been made in court of a cooperative attitude.  It is revealing because, against that background, it smacks of laying the groundwork for an abuse application.  There was merit in the robust reply from GS dated 22 January 2010 to which I next turn.

527. In its reply dated 22 January 2010 GS, although asserting that there was no duty on the HKSAR Government actively to pursue the matter on behalf of a party seeking evidence (an erroneous assertion if it meant there was no duty to assist), reminded those acting for the parties that the 14 witnesses named in no fewer than four letters of request were spread across seven different provinces or municipalities and 12 cities, that all information provided had been transmitted to the SPC and, furthermore, “your client had initially nominated three law firms … through whom the witnesses could be contacted.  Presumably these firms are in a position to provide necessary legal advice and assistance to your client in the Mainland. … It is clear that you/your client have the necessary information and means to ascertain the current status of the matter in Mainland China and/or to assist the Mainland court in considering and processing the letters of request, were your client minded to do so… …Notwithstanding the fact that we only received your letter of the 22 January 2010 by close of business of the even date, we have tried to contact the SPC on the date suitable to the SPC for a meeting with the parties concerned.  However, we were unable to contact the officer in charge and could not relay your request to the SPC.”

·  Despite the fact that there were Mainland lawyers acting for the applicants, there was no evidence of any correspondence, by the time of these allegations of obstruction, between them and the Mainland witnesses or of any response by any witness saying whether he was or was not willing to come to Hong Kong; if not, why not; whether willing to testify on the Mainland; or asking him to present himself to the provincial court to intimate his willingness to attend there or anywhere else if asked, and no evidence of any telephone calls with the witnesses.  And to this day, there is no such evidence.  It is noteworthy too that there was no reply to this letter stating what, if any, difficulties were thought to be in the way of contacting the witnesses or of taking evidence from them or of contacting the municipal authorities.

528. 22 months after the trial began, there was the adjourned hearing on 25 January 2010.  Counsel for D1 and D3 asked for a further adjournment citing the apparent willingness of the SPC to assist and the fact that it was contacting the local courts.  Counsel for D1 and D3 said that statements had been taken from or records made of interviews with the witnesses, although D1 was prepared to show the judge only a summary of the proposed evidence.  The application for a further adjournment was refused and this was followed by notice that a stay application would be made and by an application for disclosure of contact details between the Hong Kong authorities and the Mainland.

·  The point to note at this stage was the absence of a complaint of obstruction by the HKSAR authorities and the absence as well of any suggestion that the taking of statements on the Mainland posed a problem.

529. There was then launched an application on behalf of the applicants for disclosure of communications between the Hong Kong authorities and the Mainland authorities.  That was set for hearing in late March.  In late March, PL asked GS for a progress report but there was none to report.  On 30 March GS wrote saying that they had heard from the SPC to the effect that “it has received reports from the provincial courts and … will send us a letter informing the results of the court’s work and proposing the way forward which includes calling a meeting with the parties.”  In mid-April, GS reported again in response to a request for information, that GS had “contacted the [SPC] and were advised that the SPC is still having internal discussions on this matter and as such, is not yet in a position to let us have a substantive reply.”  In late May, there was further correspondence much to the same effect.  The SPC was “still processing the matter.”  By this stage, the disclosure application had been heard and refused.  There was then a notification that there would be a stay application and that was set for a hearing on 16 and 17 August 2010.

·  On the face of matters, the lack of progress between March and late June 2010 was entirely unsatisfactory and, absent explanation, is a factor in respect of which the complaints by the applicants are justified.

530. By letter dated 29 June 2010, PL enclosed a letter written by D1 to the SPC and asked for that letter to be forwarded.  The letter to the SPC summarised the background to the case, including the issue of the letters of request and mentioned the forthcoming stay application.  D1 requested the SPC to take speedy action “to implement my requests to call the PRC witnesses to give evidence in the PRC.  In particular, I seek the SPC’s assistance before 16 August 2010 – the date of my stay application – to obviate the need for my legal representatives to ask the trial judge to stay the trial permanently on the ground the trial will become unfair absent the testimony of the 11 PRC witnesses.  I trust the parties are ready to attend a meeting with the SPC if the SPC deem it necessary to direct discussion with the parties as to how the evidence of the 11 PRC witnesses should be taken in the PRC.”

531. A letter dated 9 July 2010 was sent by GS to the solicitors for D1 and D3 enclosing a letter dated 8 July 2010 from the SPC.  The letter from the SPC to the Secretary for Administration in Hong Kong stated as follows:

“Regarding your request in seeking PRC’s assistance to the High Court of Hong Kong Special Administrative Region investigation of taking of evidence, our Court had begun relevant work in July 2009 and issued notice to the Higher People’s Courts located in Guandong, Zhejiang, Henan, Liaoning, Beijing Guangxi, Zhuang Autonomous Region, Shanghai, where the 14 witnesses were situated, in order to assist in searching for the witnesses as soon as possible and confirm their willingness to give evidence. The Higher People’s Courts of the above-mentioned 7 Provinces, Municipalities and Autonomous Region has attached great importance to the matter after receiving our Court’s notice, and has conducted search for the witnesses by various means, e.g., field investigation, telephone contacts, enlisting the help from lower courts and public security organizations etc. Recently, the above-mentioned 7 Higher People’s Courts reported to our Court about the situation of locating the witnesses and the witnesses’ willingness to give evidence. In those 14 witnesses, only 5 witnesses. Li Ai Xuan, Li Yang, Yin Li, Tao Qin Hai and Qi Da Yue had been located. Among the 5 located witnesses, only Li Ai Xuan, who was requested by the 1^st Defendant Hon Ming Kong, was willing to give evidence in court.”

·  There was and is no suggestion that the information thus presented was inaccurate.  Of the five witnesses located, none of the three upon whom those acting for the first applicant now concentrate is included; whereas Qi, named by D3 as vital to her case on the kidnapping issue, is included but is said in that letter to be an unwilling witness.  At this stage, the stay application had yet to be heard.

532. The next stage in the saga was a letter of 23 July 2010 from PL to GS saying, in relation to the witness Li, that a meeting to discuss arrangements for his evidence “can only take place and the proposed arrangements be put into effect if the District Court … is willing to adjourn the trial to permit the evidence to be taken”, a suggestion of some significance when we come to consider the reaction of this firm of solicitors to a later request by GS for similar assurance that proposed steps would accord with progress of the case and the trial court’s approval.  The letter goes on to ask, in relation to the witnesses Yin and Tao, that the SPC confirm the nature of their objection to providing testimony and what steps would be taken to compel them to do so . “In the event that it is asserted that no compulsory measures are available please confirm this fact.”  Then this: “We note that eight further witnesses identified on behalf of [D1] are said not to be capable of being located.  Since receiving your letter dated 9 July 2010 [D1’s] lawyers in the Mainland have managed to locate three of these eight witnesses.  [Mr Gu; Mr Luo and Mr Pang[67].] All of these three witnesses have indicated to [D1’s] lawyers in the Mainland that they are willing to give evidence on behalf of [D1].  We note that the present contact details of Mr Luo and Mr Pang … are different from those stated in the relevant letter of request and that may be the reason the SPC was unable to contact those two witnesses.  We would be grateful if the SPC could make renewed attempts to contact these two witnesses using their current contact details.  …. As for the remaining five of the eight witnesses which the SPC was unable to contact, we would invite you to make appropriate enquiries of the SPC as to what attempts were made to contact the five witnesses and to invite it to take further steps to establish the location and testimonial willingness of these witnesses.”  By a further letter dated 27 July 2010, PL notified GS that they had contacted a further witness, Jiang, who said he was willing to give evidence on behalf of D1 and they asked that the SPC renew its attempts to contact the witness.

·  No one, it seems, had notified the SPC of changes in the addresses of some of the witnesses but, that apart, this letter is clear evidence – as one might have assumed anyway – that the Mainland lawyers were readily and well able at all material times to contact their witnesses and to instruct them to present themselves at their local provincial courts.  The suggestion is that some of the witnesses said by the SPC to be unwilling to give evidence were, to the contrary, in fact willing; and yet there is not an iota of evidence produced by those acting for D1 and D3 of any inquiry made of any one of their proposed witnesses as to how such a misunderstanding, if that is what it was, came to pass.  Nor is there any suggestion, despite the ongoing contact which the Mainland lawyers had with the willing witnesses, that officials had not in fact contacted them.  Nor does the letter – or any evidence filed in proceedings – contain any indication as to why the Mainland lawyers were unable to contact the remaining witnesses, if that indeed was the case; what attempts they made to do so; and whether it is accepted that the suggested difficulty on the part of the SPC and its agents in making contact with witnesses was a genuine difficulty, for if so, where is the abuse?  Despite the fact that the letter suggests that present contact details of two witnesses are different from those stated in the letter of request, the letter seeks to thrust the burden upon the SPC to make renewed attempts to contact them.  Why?  Why not the other way round?  Why not instructions, in other words, to Pang and Luo to contact their local court(s) or public security organisation(s)?

533. Small wonder then that in the reply dated 30 July 2010, GS said that the letters of 23 and 27 July from PL providing revised contact details and stating that the witnesses were willing to testify “confirm that your client and/or his Mainland lawyers have all along had the means and avenue to contact at least some of the Mainland witnesses.  It also appears that your client and/or his lawyers are in a position to secure the consent of the said witnesses to testify for the Hong Kong trial.  However, such additional/revised contact details are not made available to this Office for onward transmission to the [SPC] until your letters dated 23 July and 27 July 2010.  Nor does it appear that your client’s Mainland lawyers have made any effort in contacting witnesses to secure that consent to testify until after receiving the SPC’s letter dated 8 July 2010.” 

534. These points are well made.  

535. The letter goes on: “In any case, as you pointed out in your letter of 23 July 2010, the proposed taking of evidence can only be put into effect if the District Court is willing to adjourn the trial to permit the evidence to be taken.  In such circumstances, we would await your confirmation that the District Court has allowed your client’s application for adjournment … before considering taking the matter further with the SPC.  As regards your request for enquiries with the SPC regarding the nature of the objections of the two witnesses [Yin and Tao] to testify, we do not consider it appropriate to make such enquiries. … Your client is at liberty to take up the enquiries at his end.”

·  That, too, was a point well made and there is no evidence that such further enquiries were pursued on D1’s behalf.  Moreover, the response from GS evidences a growing suggestion on its part that those acting for D1 were intent upon a tactical approach rather than one which did all in their power to ensure the securing of the evidence.

536. The response from PL was to the effect that the contact details had changed only because of the tardiness in executing the letters of request.  How this excuses the failure to notify GS of those changed details is not explained.  The solicitors go on to disagree with the notion that the matter be taken forward only after the judge indicates that he is prepared to grant an adjournment.  Then they reveal the fact that they have contacted another of the witnesses, Mr Jiang, who is willing to testify: the SPC should “renew attempts to contact this witness… . ”

·  All of this is to be read against the backdrop of an assertion of cynical disregard of the rights to a fair trial; of deliberate manipulation of the process by the Hong Kong authorities and of an unacceptable dragging of feet by the SPC.  It may very well be that matters could have proceeded with greater urgency on the part of the SPC; but that they pursued matters seems beyond doubt.  The explanation of steps taken in many provinces is not disputed and we are not in a position to assess how difficult that tracing exercise was.  I am satisfied however that there is material fault on the part of those acting for the applicants and that in light of the history of the case, developments disclosed by the correspondence and the stage at which the trial had reached, it was entirely reasonable for GS to seek some indication that further steps would not be for naught.

537. Correspondence thereafter became more combative in tone.  On 6 August 2010, GS repeated its assertion that “execution of the letters of request is entirely a matter for the requested jurisdiction.  We strongly object to your continuous attempt to take advantage of our goodwill and trying to impose upon this Office/HKSARG or the Mainland authorities an obligation to gather and secure evidence for your client, a matter which clearly falls within your client’s competence and responsibility.”  The letter rehearsed the history of the matter, pointing out that the “the terms of reference for the transmission of the last letter of request were only agreed by your firm on 26 August 2009 [and that] the SPC started working on the letters of request since July 2009.” It went on :

“It is now apparent from your letters … that in fact your client’s Mainland lawyers have ready access to the witnesses whom your client wishes to examine and capable of contacting them and ascertaining/securing their consent to testify within a short period after receiving SPC’s letter of 8 July 2010. It shows that your client is all along in a position to suggest that the SPC/Mainland courts could contact some or all of the witnesses through his Mainland lawyers, thereby facilitating and expediting the processing of the letters of request. … Against this background, it seems to us that the Mainland authorities should only be asked to take further steps in relation to this case if they are indeed needed for purposes of the criminal proceedings in the HKSAR. It is therefore both reasonable and appropriate for the court and the parties to be put on notice of your client’s proposed further enquiries and assistance to be asked from the SPC, so that the court may make an informed decision as to whether to proceed with evidence-taking from the five specified witnesses … before asking us to revert to the SPC. If the HKSAR court decides for whatever reason not to proceed with the evidence taking … the work which we now ask the SPC/Mainland courts to undertake will be abortive. On the other hand, if the court allows the taking of evidence from the … witnesses please provide us with written confirmation from the said witnesses of their agreement to testify for the subject criminal proceedings in the HKSAR, for onward transmission to the SPC, in order to facilitate the SPC and the relevant courts in taking the matter up further with the witnesses. … Your letters [show] that your client’s Mainland lawyers are able to contact the five witnesses … recently and they have indicated their willingness to testify. According to your letters, availability of witnesses to testify is apparently not an issue. .. Regarding the enquiries about the refusal of Yin and Tao… to testify, your client is well capable of making such enquiries at his end, given the ready access of Mainland lawyers to the witnesses.”

·  Given the fact that the results of the SPC inquiries as to the contactability and willingness of witnesses did not match the assertions of those acting for the applicants as to contactability and willingness, the request by GS for written confirmation from the witnesses themselves as to their willingness to testify was not unreasonable.  As we shall see, it is a request which was regularly repeated.  Yet no such written confirmation was ever forthcoming.

538. The reply from PL dated 9 August took exception to a suggestion that contact details had been removed from a letter in November 2009, pointing out that that was simply not accurate and that “our client’s lawyers in the Mainland were instructed to contact the witnesses again only recently after we were advised by the letter from the SPC dated 8 July 2010 that most of the witnesses were incapable of being contacted.  It was only then that we became aware of the contact details of some witnesses are no longer valid.  The trial judge has directed that the stay hearing will commence as scheduled on 16 August 2010.  As such, no useful purpose will be served in further debating the issues raised in your letter.”

539. The stay hearing was heard in mid-August and the judge reserved his decision.

540. On 26 August 2010, PL wrote to GS saying that at the recent hearing, prosecuting counsel had suggested that statements might be made under section 65B of the Criminal Procedure, a concession, so the letter suggested, that the absence of evidence from the Mainland defence witnesses constituted unfairness; so “in order to minimise any delay in reopening the defence case in taking evidence from witnesses in the PRC, we request that your Office shall transmit forthwith [earlier requests in July and August 2010] to the SPC to renew attempts to locate the witnesses”.  And they advised that the Mainland lawyers had located the witness Wong kun-wai, confirmed that he was willing to give evidence for D1 in the PRC and that a witness Yin Li who had not indicated his willingness to the SPC to testify had confirmed to the Mainland lawyers that he was indeed willing to give evidence in the PRC.

·  Even so, at this stage, there was still not a single signed statement from any one of the witnesses.  Neither was there any explanation why it was that previously uncontactable witnesses were now contactable; nor any suggestion that the witness Yin Li had not told the SPC that he was unwilling to testify.

541. The reply, written when the stay ruling was awaited, said that GS was willing to ask the Mainland to take the matter further provided that the court of trial intimated that it was even then prepared to countenance the proposed further or renewed pursuit of Mainland evidence and that there was “written consent by the said [seven] witnesses confirming their agreement to testify in the Mainland court… .”  The seven witnesses included Wong and Pang.

542. Letters were written by PL to three separate law firms on the Mainland, asking in each instance, “if your firm could ascertain once again whether these… witnesses would be willing to testify in this case in Hong Kong.  Should they indicate that they are unwilling to do so, please make enquiries with them to ascertain why they are unwilling.  Further, we would be grateful if your firm could also make enquiries with the … witnesses to ascertain their willingness to testify in PRC courts.”

·  It is noticeable that the one thing each firm was not asked to do was to secure written consent from the witnesses of their agreement to testify or any signed statement from any one of them that he was not.

543. The responses from the law firms are, for a number of reasons, interesting.  First, in contrast to the experience of the SPC, every single witness was, it seems, contactable and contacted and every single one apparently, said that, whilst not able to come to Hong Kong, he was willing to testify on the Mainland.  Second, the reasons for not coming to Hong Kong fell into three categories: either the witness was a civil servant for which reason it was not possible to come – why permission could not be sought was not explained – or there were “time constraints” making it difficult to come; and one witness could not be certain about coming because he had visa problems.  None signed a statement verifying what was reported by the Mainland firms.  In relation to this last point, the Beijing law firm said in relation to four separate witnesses – one of whom was Wong Kwun-wai, a witness said to be of considerable importance for the defence, seriously undermining the credibility of Abba Chan – that each was “ … unwilling to provide written statements: they are of the view that giving evidence in court is more conducive to clarifying the relevant facts.”[68]

·  It follows, if these were accurate reports of what the witnesses had said, that there was no need for compulsory process.  Every single one of the required witnesses was willing to attend court.  The absence of any written statements signed by any one of them is however remarkable, the more so given the coincidence of reasons therefor from four of them that it was “more conducive” to testify orally.  No doubt there is merit in the point that oral testimony is better than written testimony, but it entirely fails to explain the unwillingness to provide written statements.

544. This was followed by a letter dated 8 October 2010 to the court from (different) solicitors, Michael Cheuk, Wong and Kee (MCWK), acting for D1 in the trial proper, as opposed to those acting for him in relation to the collation of evidence from the Mainland (PL).  They wanted the defence case to be reopened to permit defence witness evidence to be called on behalf of D1.  “There may,” they added, “be an issue whether the defence case for D1 should only be reopened for the limited purpose of admitting statements under section 65B. We consider that such a limited reopening of the case would not be appropriate given the significant change in circumstances that has occurred since the defence case was closed.  As you know, in July 2010, the SPC for the first time indicated a willingness on the part of the Mainland authorities to take evidence from defence witnesses on the Mainland.  Given that viva voce evidence would constitute the best evidence, it would be most appropriate if the defence case for D1 were to be reopened for a sufficient period to allow defence evidence to be taken before the Mainland courts.”  They then listed the nine witnesses who had been contacted, each one of whom was, in addition to the only one who the SPC had advised was willing to testify, willing to give evidence for D1.

·  It was not accurate to assert that it was only in July 2010 that the SPC indicated a willingness to take evidence from defence witnesses.  True it is that the defence assert that the delays evidenced an unwillingness but it remains the fact that inquiries were pursued over a number of provinces with largely fruitless results, the fault for which is not shown to lie at the door of the SPC.

545. The ruling refusing to stay the proceedings had been delivered on 27 September 2010.  Since the appeal in relation to the Mainland witnesses is an appeal from this ruling, it is strictly speaking not necessary to go beyond this stage; but the events beyond this stage assist in the analysis of the attitudes of the respective parties, relevant because of the applicants’ assertions of deliberate unhelpfulness on the part of the authorities and the counter assertions of a tactical charade.

546. Following the letter to the trial court dated 8 October 2010, there was a mention hearing on 11 October 2010; that is to say, two and half years after the one year delayed start of the trial.  The application on behalf of D1 and D3 was that the defence case be re-opened so that live evidence be taken in the Mainland from 10 witnesses on behalf of D1 and that section 65B statements be taken from three witnesses on the Mainland on behalf of D3.

547. Counsel for D1 said that whereas back in July 2010 only one Mainland witness had indicated his willingness to testify “in fact nine other witnesses whom the SPC said either they could not locate or that they were not willing to give evidence have now come forward to say to the 1^st defendant’s lawyers in PRC that they are in fact willing to give evidence in China.”[69]

·  There was no suggestion that any one of the witnesses denied having been approached by the SPC or its provincial agents or denied having expressed reluctance to testify.  Indeed, there was no evidence that any one of them was asked whether and when he had been approached by or on behalf of the SPC; or that the Hong Kong lawyers had asked their Mainland counterparts to ask those questions of the witnesses – rather important questions, one would have thought, given that at the time they were contacted anew there was pending an application for stay of proceedings based upon the suggested obstructiveness of the Mainland authorities.  Neither was any reason given for such change of heart as had taken place in those who had told the SPC that they were unwilling to give evidence.  Nor was any explanation given as to what contact the Mainland lawyers had maintained with these witnesses over the years, or what steps had been taken to keep the Hong Kong authorities up-to-date with their current addresses, or whether any steps had been taken to persuade them to present themselves to the authorities in their provinces.

548. The judge asked whether these 10 witnesses (the original willing one plus the nine who were now willing) were willing to give statements to the police.  It is not altogether clear from the submissions which follow how many were or were not but the thrust of it, it seems to me, was that they were not.  It was suggested that Professor Zhang had testified that there was no legal basis for taking signed statements, a suggestion which was corrected by the judge and which was in any event not a reason provided by the Mainland lawyers in any of their letters for the absence of statements.  Counsel continued that whilst four were not willing to give a signed statement, there had been no response from the others to the question posed by the Mainland lawyers whether they were willing to give statements and if not why not.  There were three witnesses who were not willing to give a signed statement “because they fear that they cannot explain themselves clearly in writing,” a profoundly lame reason, I suggest, if ever there was one, given that such accounts as they might wish to proffer could readily be reduced into readable and clear form by the Mainland lawyers.  In the circumstances, said counsel, the only available practical manner “in order to minimise unfairness in these proceedings” was to take viva voce evidence on the Mainland.[70]

·  It is a strange thing, in my view, for a lawyer acting on behalf of a defendant to ask a willing witness whether he is prepared to give a written statement and in the same breath to say if you are not willing please state why not.  Why was an assumption made in these letters that the willing witnesses, some of whom were known to and by the D1, may not wish to make a statement?  Why were they simply not asked to call in to the offices of the Mainland lawyers or their provincial agents to provide their account? Furthermore, if it was thought that Mainland law precluded the taking of a statement, why were they asked to provide statements in the first place?  And if, as was the effect of the Professor’s evidence, statements could be taken if official consent were given, why was such consent not sought?  Where was a single written explanation forthcoming from any one of these witnesses why he was not willing to provide a written statement?

549. Counsel for D3 asked for the case of his client to be reopened “for the purpose of reading section 65B statements of three witnesses that we have in mind.”  He said that such statements as they had from these three witnesses – no suggestion, mark you, that they were precluded by law from taking statements – had not been prepared in proper form and “up to now we have no information whether these people are willing to do that.”[71]

·  What was not explained was why there was no information “whether these people are willing to do that.”  If the Mainland lawyers were in contact with these supposedly important and willing witnesses, why had they not been asked; and why were the Hong Kong lawyers not in a position to say?

550. Prosecuting counsel protested at what he called “… attempts by my learned friends to further adjourn under the pretext of obtaining live evidence from China [being] nothing more than an attempt to challenge a ruling by the back door, to say they cannot have a fair trial without this live evidence.”[72]

·  Here was another occasion upon which counsel for the prosecution was expressing scepticism as to what in truth was going on.  That was not to suggest that defence counsel was misleading the court: counsel were no doubt providing the court with accounts that had been conveyed to them; but it is to cast doubt on the genuineness of the attempts to secure the evidence.

551. The judge asked counsel for D1 how many of the extra 10 defence witnesses who had indicated a willingness to testify were willing to give a statement; as to which the answer was “at the moment, none of them, because four expressly said they aren’t willing and the other six have simply not responded or their lawyers haven’t responded.”  “Have you,” asked the judge “tried to locate or approach them … ?”  “This is really out of my hands,” answered counsel, “because in relation to the six witnesses we rely on the response from the PRC lawyer and by their non-response it is not clear to us whether the witnesses are not willing or he hasn’t approached them with the inquiry or whether the lawyer is of the view that is not possible to take a statement.  So I cannot give a commitment to the court whether we will in fact be able to procure these witnesses to make signed statements and, if so, the time it will take.”[73]  She emphasised however that it was oral testimony that was sought.

·  This, in my judgment, was quite extraordinary.  It had at all material times been open, indeed incumbent, on the Hong Kong solicitors acting for D1 to pick up a telephone receiver and speak to their Mainland counterparts to ensure that proper witness statements, signed by the witnesses – even if not for section 65B purposes – were taken and to find out, in the event that they could not be taken, why not; and, if necessary, given the importance of the case to their client, to fly to Guandong or Beijing or wherever proactively to push matters forward.

552. The judge, showing remarkable patience – though his wholly understandable irritation is evident from a reading of the record – extended to the defence further latitude by granting them leave to reopen the case for the limited purpose of obtaining and reading out section 65B statements.  He concluded that “no further adjournment will be granted.  I will not accept any kind of delaying tactics, if any, in this respect”;[74] yet another revelation of the misgivings he held as to tactics.  The case was adjourned to 1 December 2010.

553. There was then a lengthy letter from PL to the SPC dated 12 November 2010 informing that Court that 10 witnesses were available and willing to give evidence “but the HKSARG is unwilling to transmit the information of such witnesses to the SPC for the SPC’s further action in calling such witnesses.”  This was not a fair representation of the HKSAR’s position.  The history of the matter was broadly rehearsed and the SPC was asked to contact the witnesses and commence a procedure for taking their evidence on the Mainland.

554. There is a letter dated 15 November 2010 from a Guandong law firm saying that the firm had had contact in the past two days with six witnesses (including the witness Pang) as to whether they were willing to give written and signed statements.  All witnesses indicated that they could give evidence of facts known to them in a Mainland court but “as the case concerned a criminal proceedings in Hong Kong, there are no specific rules in Mainland in respect of taking statements from Mainland witnesses for the purpose of giving evidence for the HKSAR Court yet.  There has been no judicial assistance arrangement in this regard either.  The undersigned is therefore of the view that it is more appropriate for the witnesses to testify in a Mainland court.  If your firm requires written documents, please refer to our previous written record of investigation.”

·  If indeed Mainland law precluded the taking of statements from Mainland witnesses, why were the witnesses ever asked if they were willing to provide written statements?  It is noticeable, too, that in none of the lengthy letters on behalf of D1 to the SPC was the suggested difficulty mentioned or clarified or permission sought to take written statements.

555. MCWK then asked prosecuting counsel if he was willing to admit facts in the crucial evidence (none signed) ostensibly from the Mainland witnesses under section 65C of the Criminal Procedural Ordinance and “to consent to the defence case of D1 being reopened for the purpose of permitting him to deploy the evidence admitted in his defence.”[75] As for the prosecution suggestion that section 65B statements be secured and produced, the answer was that “… the absence of such statements is not a matter of choice.  We have, both before and since the hearing in August 2010, sought to secure the evidence of defence witnesses in an admissible form.  In particular we have since August 2010 attempted to obtain witness statements in conformity with the requirements of section 65B of the Criminal Procedural Ordinance.  We have been unable to arrange for this to be done.”

·  Here is an intimation that had it been possible to secure section 65B statements, that route would have been followed.  Whilst I accept that section 65B was hardly a preferred option, I do not accept that it was not possible to secure such statements, either as a matter of law or as a matter of practicality.  My earlier comments on the wholly unsatisfactory nature of the explanations given illustrate why I do not accept this.  And if my conclusion be correct, that it was obviously possible for written statements to be taken, the unsatisfactory reasons provided for not taking them speak volumes for the realities of this case.

556. Hardly surprisingly, counsel for the prosecution was not prepared to accept “statements” under section 65C since many of the facts asserted in them ran directly contrary to the prosecution case.  MCWK replied saying that “the first defendant’s PRC witnesses decline to sign section 65B statements.”[76]

557. At the adjourned hearing of 1 December 2010, D1 successfully applied for an adjournment because on 3 December 2010 there was scheduled an appeal in an entirely different case which was said to have a possible bearing on the instant case.  We do not have a transcript of the hearing of 1 December 2010 but the appeal in question concerned coaching of witnesses by ICAC officers.  The trial of the present case was adjourned to 13 December 2010.

558. On 10 December 2010, MCWK wrote to the judge’s clerk to update the judge as to progress thus far, by informing the court that PL had communicated with the SPC but had been told on 8 December that the SPC would only communicate with the HKSARG and only via official organs (the Hong Kong and Macau Affairs Office).  In that letter, the judge was told that whilst D1 “had sought assistance of the HKSARG to transmit information requests to the SPC to renew attempts to contact nine of the witnesses said by the SPC to be incapable of being located or unwilling to give evidence.  No assistance was provided.”  The same assertion was made in an enclosed affirmation by the solicitor who was or is the sole proprietor of PL, namely, an assertion that “the Office of the Chief Secretary declined to accede to the request of the defendant.”[77]

·  I take a dim view of these representations to the court below.  The solicitor ought to have disclosed the fact that the Office of the Chief Secretary had been willing to assist but only on an assurance that the exercise would not be pointless, an assurance to be provided upon two events: first, an indication from the District Court that it was at this late stage amenable to an evidence taking exercise and, second, proof in the form of written statements from the witnesses themselves that they would testify.  The blunt and unqualified assertion in the letter and in the affirmation that the Office of the Chief Secretary declined to assist was a misleading assertion.  And it was particularly unfortunate to make that unqualified assertion given that the judge had already specifically declined the request of D1 to re-open the defence case for oral testimony to be taken, which was precisely the issue upon which GS had said they wanted a ruling before assistance was given.  This is the very point which the judge, evidently and understandably exasperated by this stage, took up at the hearing on 13 December 2010.

559. The hearing[78] opened with counsel for D1 seeking to refer to the recent affirmation, the purpose of which, she said, was “to update the court about the issue of the PRC witnesses”; at which point the judge interrupted to say: “Didn’t I make it quite clear that if there is any application to reopen D1’s case it’s only for a limited scope … to [the question of] section 65B statement[s]?”.  The purpose of the affirmation, answered counsel, was “just to update the court”.  But, insisted the judge, to what end?  “You are asking” he suggested “this Court to consider certain information through the back door.  I am very doubtful why.”  Counsel told the judge that the “section 65B statements issue has been closed and there is no application to reopen the defence case on that issue.”  Well, then, asked the judge “without my leave to reopen the case for D1, what is the purpose of sending this additional information to this Court?”  Answered counsel: “Your Honour might consider that this is relevant to the issue of a stay, for which a ruling has been delivered.”  “What stay are you talking about?” asked the judge, as well he might.  “The stay of proceedings in relation to the issue of the PRC witnesses,” answered counsel, “and … this is just a continuation.  It is.  But inevitably, things keep happening … . ” the judge asked : “And you’re now asking this court to reconsider the stay application, am I correct?”  “Not at all,” counsel assured him.  She just wanted to put the matter on record.

·  Again, I rehearse these passages so that the feel, the sense of the conduct of the case, might be gleaned as well as to show the judge’s firm scepticism as to that conduct.

560. The hearing then moved to an application on behalf of D1 and D3 for disclosure or further disclosure of material relating to the other ICAC case on the basis that two ICAC officers in that case had been involved to one degree or another in the interviewing of prosecution witnesses in the current case.  Counsel for D3 cast forth the possibility of recalling those prosecution witnesses for further cross-examination.  Prosecuting counsel contended that the defence were engaged upon a fishing expedition and “again this is simply another means of delaying this trial further.”[79]

561. The judge, quite rightly, would have none of it.  He had had enough and directed that the next stage was the making of closing submissions in the case. Counsel could not then agree on dates convenient to all of them, an example of the extent to which, in criminal cases, the convenience of counsel tends to dictate the calendars of the courts to a degree that would not be countenanced in other common law jurisdictions.  The suggestion was made of a date in May 2011; five months hence, a suggestion which the judge described as “totally unacceptable.”[80] He set the date for 7 February 2011.

·  I pause at this stage to remark once again[81] upon the submission made to us in the course of the appeal hearing that it was for the judge more firmly to manage the case.  The events of December 2010 provided a good example of what the judge had to put up with – the filing of an affirmation annexing a lengthy letter to the SPC, with an expectation that he would read it without any indication of its purpose and the placing of an affirmation before him at the hearing, absent any application in relation to it.  What was he supposed to do, other than listen to what counsel had to say, meaningless though the exercise transpired to be?  The fact is that it was counsel’s duty not to place material before the judge and not to make submissions to the judge without a sound reason for doing so.

2011

562. Not to be put off by the judge’s ruling and strictures, PL wrote to GS on 12 January 2011 saying that since PL had been told by the SPC that communication had to be through official channels “please let us know the progress of the follow-up work since the date of the said contact.  We look forward to your prompt reply.”

·  This was an extraordinary letter to write.  Given the recent hearing and the judge’s ruling and given, more particularly, the repeated previous insistence of GS that it would take no steps unless it could be sure that such steps were likely to be efficacious and, if so, would be used in the proceedings – court approval to proceed and the written consent by the witnesses to testify – the solicitors must have been as sure as they were that night follows day what the reaction was going to be.  What then was the point of writing the letter if it was not to create the illusion, for future use, of one-sided proactivity?

563. On 17 January 2011, GS told PL that since it had not been provided with the information it had requested, as long ago as 10 August 2010, it had not reverted to the SPC.  There was a reply dated 18 January 2011 stating that the schedule of arrangements for the taking of evidence had been forwarded in July and November 2009, that D1 remained intent on securing the assistance of the SPC and that had GS been minded to transmit D1’s various requests to the SPC and secured SPC’s assistance “our client and the court would not have had to wait indefinitely for the matter to be resolved.”  Given the imminence of the date fixed for closing submissions, the request was renewed “to transmit all our requests … to the SPC, for the SPC to render assistance prior to the date of closing submissions.”

564. The reply from GS on 27 January 2011 was lengthy and took objection to the suggestion that it had contributed to the failure of the request to take evidence.  Whilst continuing to deny any obligation to transmit requests to the SPC in order to secure the SPC’s assistance – a stance which I have already indicated was misplaced – GS said that it “has also repeatedly sought confirmation that your proposed taking of evidence from the said additional witnesses has been approved by the Court and agreed to by the parties, and your provision of the written consent by the previously unwilling witnesses.  You last informed this office by letter dated 26 August 2010 that you would seek the parties’ agreement to the proposed arrangements for the taking of the evidence [of eight witnesses].  Other than being copied a letter from your firm to the parties seeking their agreement … this office has not received any further correspondence from you or the other parties until your letter dated 12 January 2011.”  They pointed to the fact that “… your client’s Mainland lawyers have ready access to quite a number of witnesses whom your client wishes to examine and capable of contacting them and ascertaining/securing their consent to testify.  However such information had not been provided until the SPC provided it’s finding about the witnesses concerned even while, all the time, you alleged slow progress on the letters dated request.”  GS pointed out further that the firm had itself, in a letter dated 23 July 2010, stated that the proposed meeting to discuss arrangements and the arrangements themselves could only be put into effect “if the District Court of Hong Kong is willing to adjourn the trial to permit the evidence to be taken.”  GS referred to the trial judge’s decision of 11 October 2010 “not to reopen the defence case for the purpose of taking live evidence in the Mainland ” a fact which “casts serious doubts as to whether your client’s current request for taking evidence from [the witnesses] at this stage is indeed required for the criminal proceedings ….  Against the above background, in respect of the proposed taking of evidence from Li … please confirm that the court and the other parties have agreed to (notwithstanding the court’s decision made in October 2010) your client’s proposed evidence taking and the terms of 23 July proposed arrangements respected.”  A similar request was made in relation to the other witnesses.

565. There appears to have been no reply to this letter.

566. So we come to the hearing on 7 February 2011.  D1 had a new team of counsel in the persons of Mr Dykes SC and Mr Alexander King SC.  The applications at that hearing – certainly the application by Mr King SC – almost beggar belief.

567. Without any prior notice and nothing in writing to support the application[82], Mr King advanced an application “to stop this trial, put it before another judge of the District Court and for the trial to start afresh.”  The basis of the submission was that the trial had been the subject of so many delays that a fair trial was no longer possible.[83] The applicants, he said, had been charged five years ago and there had been a two year delay between charging and the commencement of the trial on 7 April 2008.  “And we say that as far as pre-trial delay goes that is inordinate delay, even in the case of this complexity that from the date of charging … there should be a delay of two years in that matter.”

·  Now, Mr King was quite new to the case but the same solicitors as previously acting in the case for D1 instructed him on the application and they must have been well aware how impertinent was this submission, given that it was at their client’s request that the commencement of the trial had been delayed from early 2007 to April 2008; that in April 2008 it was their client who had, for no sound reason whatsoever, launched judicial review proceedings to secure the judge’s recusal; that there had been long delays to accommodate the convenience of counsel; that their client had changed counsel more than once – even before this latest change – and that lengthy delays were thereafter occasioned by reason of the Mainland witness issue.

568. The complaint went on that the evidence of one of the major witnesses took about 60 days.  Indeed, the judge might have retorted, it had, at the hands of leading counsel for D1.  It was impossible, Mr King contended, for the judge properly to recall and adjudicate upon the evidence, although he was wise enough to say “we’re not here to pick out or lay blame.”

569. Neither D2 nor D3 joined in the application.

570. Mr Dunn for the prosecution reminded the judge of the history of the matter, the three months of cross-examination of Abba Chan, the importation of leading counsel from the United Kingdom to conduct the discovery application and then a separate application advanced by leading counsel from United Kingdom for a stay.  All the delay, he suggested, had been occasioned at the hands of the defence and, he contended, the latest application was part of a pattern which had been “going on for so long that there is a grave suspicion that this is a deliberate tactic of the first defendant to delay this trial for as long as possible.”[84]

571. There is no doubt in my mind that that suspicion was justified.

572. The trial judge firmly rejected this latest in the long string of unmeritorious applications.

573. But that was far from the end of the matter.  Mr King was not in a position, because he had only been instructed on or about 13 January, to advance the final submissions for which this hearing had been fixed.  He asked for a three-month adjournment[85]. That would take matters into May, the date for which D1 had originally asked, in order to suit the convenience of leading counsel previously acting for him, Mr Pow; a date which the judge had originally rejected as being far too late.  No one had then suggested that such a delay would render the trial unfair.  When Mr King asked for the three months the judge pointed out: “But then Mr Pow [will be] available…. So what’s the point of having a new counsel?”  A good question.  The answer, however, was not so good: “The client can make the choice between Mr Pow and myself.”

574. Yet there was still more.  Mr Dykes was there to make a different application for D1.  He asked for an adjournment until after the hearing of the trial of the ICAC officers in the other commercial crime case.  The judge made no ruling in relation to that application, content to state that if there was any material development arising from that trial, the court could be informed.

575. The judge ordered final submissions to take place from 4 to 12 April 2011.

·  The events of early February 2011 speak for themselves.  The hearing for 7 February 2011 had been fixed in the second week of December 2010 and here everybody was, two months later, on 7 February 2011, with yet another set of counsel, recently instructed, having to consider what in my judgment was, on the history known to those instructing Mr King, an impertinent application with counsel not in a position to advance closing submissions.  It ought, though, to have taken no-one by surprise because it was, as prosecuting counsel correctly submitted, but part of a familiar and distasteful pattern on D1’s behalf.  It is a pattern which makes all the more astonishing the fact that no application for costs was made by the prosecution upon delivery of the judge’s verdict.

576. On 4 April 2011, the date set for the delivery of final submissions, applications were made by D1 for the recall of eight prosecution witnesses and by D3 for the recall of 3 prosecution witnesses, so that they could be cross-examined; on D1’s behalf, arising from the trial of ICAC officers ongoing at the date of the application and for D3, because of information recently to hand about the Pang brothers.

577. On 6 April the judge gave his ruling, refusing the applications.  We do not have the transcript of the hearing on 6 April but we are informed that on that date counsel for D1 said that D1 wanted to seek a judicial review of the ruling and wanted an adjournment to secure a transcript of the proceedings to which the ruling was relevant.  The judge refused that application.  No judicial review was launched and the ruling is not under attack in this appeal.

·  This was the second time during the trial that satellite proceedings were threatened: the first time – in May 2008 – they were actually launched and now, three years later, when the verdict was due, the suggestion was made again of a judicial review; an effrontery to common sense and further cogent support for the prosecutor’s repeated complaints of D1’s intent upon any conceivable measure to derail the progress of the case.

578. Closing submissions were made from 6 to 13 April 2011, three years after the adjourned commencement of the trial.

579. The verdict was delivered over a period of two days in late June 2011; with no fewer than nine counsel sitting there throughout, listening to it all at the expense of their clients and the public; a change in the practice of which I am glad to say is heralded by a Bill presently before the legislature.

580. But after final submissions and before delivery of verdict, there was more correspondence between PL and GS.  On 31 May 2011, there was yet another letter – a remarkable letter – from PL to GS asking “whether the HKSAR Government has followed up on our client’s request to take evidence of potential defence witnesses in the PRC… and whether the SPC has contacted the HKSAR Government in relation to the captioned matter since then.  … Whilst we understand from your letters to us that the HKSAR Government is unwilling to take steps itself to secure the provision of defence evidence through the SPC, we fail to understand why the HKSAR Government is unable or unwilling to facilitate direct communications between the defence and the SPC, if, as you have stated, it is the responsibility of the defence to make arrangements to secure the provision of defence evidence.”  Since, however, the SPC had indicated that communications had to be through official channels there was, according to PL, “a legitimate expectation that the HKSAR Government will continue the practice of the United Kingdom Government in providing assistance to citizens of Hong Kong facing the risk of injustice as a result of decisions taken on the Mainland.  … In the circumstances, the HKSAR Government should at least consider making representations on behalf of the defence to facilitate direct communication between the defence and the SPC.  Since such a decision may be susceptible to judicial review the HKSAR Government must explain why (if it be the case) it is unwilling to provide even this minimal level of assistance.”

·  Tiresome though the refrain becomes, one is bound again to ask what the point was of this letter, when the solicitors knew full well the reasons which had been provided by GS for not taking matters further since the summer of 2010 and that none of the conditions precedent which GS had stipulated had been met and that the prospect of fulfilling those conditions precedent were, at this stage, nil.  The correspondence had become a charade.  

581. The next step was a long letter from PL to the Chief Executive dated 8 June 2011 by which they asked the Chief Executive to “take the initiative to see to it that the unfairness caused by the HKSARG is eliminated at once so that the SPC could renew its attempt to contact these witnesses and commence the procedure for taking evidence of these witnesses in the PRC.  If the Office of the Chief Executive is willing to assist, the trial judge may be willing to reopen the defence case and take evidence from these witnesses … .  We must inform you that in the event of a conviction being recorded against [D1] we may rely on this correspondence in proceedings in the Court of Appeal as evidencing the grounds which the Court may admit the evidence of the PRC witnesses as fresh evidence.”[86] The letter referred to the suggested unwillingness of the Hong Kong Government to transmit the information for the SPC’s further action in calling witnesses.  “In the event that any verdict in the District Court is adverse to [D1] he will seek to rely upon the evidence of the PRC witnesses in support of his appeal as fresh evidence.  He will also rely on the fact that but for the conduct of the HKSARG he may have been able to call the witnesses at his trial.”[87]  The letter went on to assert that whereas GS had stated it would only take the matter further when it had confirmation that the trial judge would allow an adjournment of the case: “This was plainly irrational since it placed [D1] in an impossible position.  The trial judge was unlikely to grant any adjournment without some concrete confirmation that witnesses were able and willing to testify on the Mainland; yet no concrete confirmation would be provided without an adjournment.[88] … 10 PRC witnesses had been located and had indicated and confirmed their willingness to testify in the PRC.”[89]

·  The suggestion that no concrete confirmation could be provided without an adjournment is itself, with respect, an irrational suggestion.  The SPC had said that all but one of the witnesses who had been located had said that they were unwilling to testify; whereas lawyers acting for D1 had said that they were willing to testify.  GS had, against that background, and in the absence of a single signed statement from any of the witnesses, quite reasonably asked for written confirmation from the witnesses themselves.  That was an easy step for those acting on behalf of D1 to take.  It was never taken.

582. The reply from GS (to whom the Chief Executive referred the letter) disputed the assertions of unwillingness to transmit requests or information and repeated the fact that the conditions precedent for doing so had not been met.  The response from PL was that “the information confirmation requested by you [in earlier correspondence] cannot be provided by reason of the refusal of the District Court and the prosecution to permit or further the process of obtaining defence evidence through the courts of the PRC since the closing of the defence case in 2009.”  How this had prevented written confirmation from the witnesses themselves is not explained.

583. In relation to D3, there was also correspondence between solicitors for her and GS, although not as extensive.  The SPC said that it had located two of the three witnesses whom D3 wished to testify on the Mainland, Qi and Li Yang, but both had said they were unwilling to testify.  But within days, according to the solicitors for D3, their Mainland lawyers had contacted those two who said they were considering giving evidence.  In so far as GS then insisted on concrete proof of their willingness and on concrete agreed arrangements by all parties and on knowing that the District Court would entertain further adjournments for Mainland evidence taking, the history is much the same as the history of D1’s case although one gleans the strong impression from the transcripts and correspondence that the delaying tactics to which I have referred were those of D1 and not D3.

The “statements”

584. The suggested statements of the witnesses for D1 are each entitled “Proof of Evidence”, are none of them signed; indeed, the accounts in them are not even in the first person singular but are reports by the Mainland law firm of what the witness is alleged to have told them.  Some are dated according to the date upon which the witness is said to have attended an interview; some are not.

585. The proof of evidence attributed to Wong Kwun-wai[90] commences as follows:

“Beijing Yanyuan Law Firm (PRC) is instructed by Messrs Philip K Y Lee & Co … to assist Mr Hon Ming-kong… in the criminal proceedings brought against him and 2 others in Hong Kong. Lawyers of Beijing Yanyuan Law Firm are responsible for taking evidence from Mr Wong Kwun-wai.

Mr Wong made the following statements of facts –

1. Wong Kwui-wai (Wong) male also known as Wong Man-kwan.

2.  Wong and Hon knew each other …”

and so on in reported form.

586. It goes on to allege that he borrowed $3 million from the company in September 2004 but was cheated by Abbas Chan.  He had socialized for the benefit of Chan’s business in Henan in connection with which he had spent tens of thousands of dollars, over $1 million in fact.  So the $3 million given to Wong, the subject of Charge 6, was for money already spent and for future spending.  Abbas Chan said that since he, Chan, was close to an underground money remittance shop and it was unsafe for Wong to handle such a large sum of money, Chan would remit it for him to the Mainland.  After talking to Chan, Wong went to get the money and was shocked when he was handed a loan agreement to sign.  In the event Chan never remitted the money as promised.  The document concludes with the following statement: “Wong is not willing to testify in Hong Kong as a defence witness.  Even if the Trial Judge and other relevant parties go to a Mainland court and conduct the trial of part of the criminal case, he would still be unsure whether he is willing to testify in court.”

·  The document does not refer to any records kept by Wong; does not explain why he collected the money at all once Chan had already promised to remit it to him directly to the Mainland or why he signed a loan agreement.  I recognise that this is a comment made in the absence of oral testimony or cross-examination but, as part of the whole picture, the prima facie weakness of the account is a relevant consideration.

·  The very fact of this document sits ill with any suggestion that was or may be advanced that the Mainland lawyers considered themselves precluded from taking evidence from witnesses.

587. The “Proof of Evidence” of Liao Jiasheng[91] is undated.  There is mention of a construction agreement with Guilin China and that RMB 30 million was due and received by end December 2004.  “Liao did not know through what channels did Guilin China remit the money to his company but according to his company’s bank record, his company received that sum of money in December 2004 and his company issued written receipt too.  … After the receipt had been issued … Gulin China said the construction project had to be delayed to wait for the issuance of a permit … and requested Liao’s company to return part of the deposit to Guilin China. … The receipt … was issued by his company … only after he had received confirmation from the account department.  Liao said it is inconvenient for him to travel so he is not willing to testify in Hong Kong as a defence witness.  If the trial judge and other relevant parties go to Mainland court and conduct the trial of part of the criminal case there, Liao is willing to testify in court.”

·  No bank accounts are produced, and no reason is given for reluctance by this witness to travel to Hong Kong.  The document is not signed by Liao.  And there is no statement from the Hong Kong representative of Guilin China Science, one of D1’s brothers, or a reason provided why he could not testify in Hong Kong or at all.

588. The “Proof of Evidence” in relation to Pang Kwok Chung (Peng Guozhang)[92] is from a different firm of Mainland lawyers in almost identical format.  It refers to the fact that Pang is a Hong Kong resident but “rarely returns to Hong Kong”.  It speaks of his good friendship with Chan Chun-kuen and of the Meizhou project and of his and Chan’s company, Sino Profit; of the signing of the memoranda of understanding and of the agreement by Abba China to pay $8 million earnest money.  Chen received $8 million for Pang but Pang kept only $5 million of that, giving $3 million to Chan for expenses he had incurred.  It provides an explanation for why two memoranda of understanding were signed.  He also addresses a suggested loan to Sino Profit for $5 million, and the return of the loan in June 2006 as a result of a Government order for the closure of coal mines in Guandong Province.

·  Nothing is said in the document as to Pang’s willingness or otherwise to testify.  The statement that he rarely comes to Hong Kong suggests that there are occasions when he does, yet no explanation is given as to why he ought not on one such occasion testify in Hong Kong.  I note as well that Chan is a Hong Kong resident.

589. There is a document in the form of a record of interview from a firm of lawyers in Shenzhen.  It purports to record an interview with Qi Da-yue.[93] Although it has the word “signed” at the foot of the document, it is not signed.  In the course of the interview, Qi relates the fact of the kidnapping of the Pang brothers in February 2003 in Shenzhen and of D3 contacting D1’s younger brother to help.  The younger brother, Hon Mong-kong, “co-ordinated the rescue through his friends from the Public Security Bureau… .  The kidnappers were arrested when the ransom was paid. … Fearing that the kidnappers would retaliate after their release, the Pang brothers asked Mr Hon to talk to the kidnappers through me.  The result of the negotiations was that the matter would be settled by pain than 80% of the total debt.”

“Question: How much in total were spent in the whole course of rescue and who paid the money?

Answer: It was probably Mr Hon who paid the money. All the expenses for the matter was given to me by Mr Hon. The total amount was at least 1 million odd, so 80% of the debt was more or less eight hundred thousand whereas the other fees for investigation, entertainment and mediation were more or less several hundred thousand.

Question: You have just mentioned the expenses for the rescue, namely fees for investigation, mediation and entertainment, who undertook (the payments)?

Answer: Mr Hon undertook all (payments).

Question : Did the Pang brothers return the expenses for the rescue to Mr Hon?

Answer: (They) did not (pay) at the time.  After reaching an agreement of (paying) 80% of the debt with the kidnappers, I told Pang King-pong good news and set up the total amount for the rescue for the two brothers.  Pang King-pong said (they) would repay Mr Hon in the future and two brothers at the time were very grateful to Mr Hon for getting them out of trouble.  They even asked me to pass on a message to Mr Hon saying that they would definitely repay the money as soon as possible when their business became better in the future.  However I have no idea whether or not they have repaid later.”

·  There is no indication why Qi could not come to Hong Kong to testify.  But, that aside, what was to prevent Hon Ming-kong himself from testifying as to the amount paid by him; when that was paid; to whom, how and from what source (with documentary evidence of the withdrawal of the requisite sum) – as to all of which Qi could give no admissible evidence; what contact he, Hon, had with the Pang brothers after payment; what promises if any were made by them for repayment; and why it was that the Pang brothers had to pass their message of gratitude to Hon through Qi rather than thank him directly themselves?  The absence of D1’s brother to give this evidence and the fact that the only person suggestedly available to testify was on the Mainland seemingly unable to come to Hong Kong to give the same evidence about a matter in which he played a wholly innocent and helpful role is passing strange and, on its face, undermines the apparent reliability of the proposed testimony.

Analysis

590. Much of the argument deployed in the court below upon the stay application and before us transpires to be contextually irrelevant.  By that I mean that, although some of the points raised are as a matter of constitutional law interesting, they do not fall for determination in this case because the facts of the case render it unnecessary to determine them.  So, for example, the concentration in the court below on the suggested absence of compulsory process in criminal proceedings on the Mainland is of little relevance to the present case because all the witnesses whom the defence asserted to be available to testify, were willing witnesses, so they said, so that the stage was never reached whereby compulsory process became necessary to ensure the enjoyment of the right to a fair trial; this quite apart from the important fact that it was outwith the powers of the courts within this jurisdiction to enforce attendance at the courts of another, and despite the fact that the other courts in question are part of the unitary one country of which this Region is but a part, and it is a core theme of the Basic law that the jurisdictions are and are intended to be entirely separate in reach and in the nature of their powers.

591. I am furthermore satisfied that Art 95 of the Basic Law does not impose an obligation on the HKSAR to “maintain relations with the judicial organs of other parts of [the PRC]” or to “render assistance to each other.”  It is an enabling provision and is, no doubt for good reason, not couched in mandatory terms.  The Basic Law was promulgated in 1990 when the Criminal Law and Criminal Procedure Law of the PRC was in its infancy[94] and it was no doubt envisaged that it would take time for the system to mature, region by region, towards and beyond 1997 to a stage when the separate systems would sufficiently understand how each other worked and could commence and then develop cooperation one with the other, with safeguards satisfactory to each separate entity.  Effective cooperation in many areas have developed but not yet in the realm of mutual legal assistance in criminal matters.

592. Yet that is not to say that no avenues are open and the avenue which is open is the one which was used in this case and at which the Mainland authorities did not in principle baulk.  It may be said with some justification that progress was slow – indeed, much slower than one might have hoped – and there were periods when questions were raised by GS of the SPC to which there was unexplained delay in response.  But there was no suggestion by the Mainland authorities that they were not prepared to activate the requests and their efforts in seeking to locate the witnesses belie contentions to the contrary.

593. By reason of the Mainland requirement that all communications in relation to the letters of request had to flow through official channels, it seems to me that the HKSAR had indeed a duty, consonant with its duty to ensure a fair trial for those accused of crimes within this jurisdiction, to render such practical assistance as was reasonably possible to the applicants in giving effect to the requests.  Thus, in so far as the Government Secretariat disputed that duty, it erred.  In so far as the judge held that there was no such duty, he too erred.

594. But, in my judgment, these errors have no material impact upon the validity of the resulting refusal to stay the proceedings.  That is because GS, despite its denial of a duty to cooperate, in fact co-operated and because, despite the judge’s emphasis on the significance of an absence of malice, he was, in the light of all the facts, correct to conclude that the applicants had failed to lay a sufficient foundation for a stay of proceedings.

595. The submissions, which the judge has recorded in his ruling, that the suggested inequality of arms occasioned to the applicants was “deliberately produced by reason of the approach of the authorities in Hong Kong” and that they manipulated the process were, as the judge correctly concluded, wholly unfounded.  The Director of Administration assisted D1 and D3, transmitted the letters of request to the SPC, liaised with the SPC, notified the SPC of time pressures, contacted the relevant Mainland authorities from time to time when no response was received, kept the applicants’ lawyers in Hong Kong informed whenever there was a response from the SPC and offered to renew correspondence with the SPC, after the lawyers said that they had made fresh contact with the witnesses who (now) said that they were willing to testify, albeit that the GS offer was made with preconditions which, in my judgment, were entirely reasonable. The SPC for its part was put to the task of contacting an unusual number of witnesses for a letter of request – no fewer than 14 – spread over various provinces and it reported back on the result of those attempts.  There is no basis upon which to conclude that those attempts were not made; no suggestion by any of the witnesses who were said by the SPC to have been contacted but were unwilling to testify, that they had not been contacted or, when contacted, had said otherwise; and there was no suggestion by those whom the SPC said could not be found that they had all along been at the addresses originally provided to the SPC.

596. As against that, on the part of the applicants D1 and D3:

(1)  The suggested efforts by the applicants to secure the evidence from the Mainland needs to be viewed through a prism coloured by conduct throughout the trial (especially by D1) which bears all the hallmarks of repeated attempts to derail the proceedings.

(2)  There was a one-year delay of the commencement of the trial at the request of D1 specifically for the purpose of enabling D1 to secure evidence of these supposedly important witnesses.  But at the end of that whole year, no application had been made for the issue of a single letter of request – indeed, none was made until December 2008, a fact to be viewed against the representations made in September 2007 by counsel for D1 that “we envisage very very soon making an application for a section 77E order.”  I am not impressed by the suggestion that this tardiness is irrelevant to what happened after the letter of request was issue; for the tardiness is but part of the history from which the court is entitled to doubt the commitment of D1 to securing evidence as part of a trial which he was content to see run to its proper conclusion.

(3)  In relation to most of the Mainland witnesses, no satisfactory explanation has been forthcoming, why they could not come to Hong Kong.  None of the Mainland regions in which they are said to have resided is at the other end of the planet and we can take it as obvious from the history of this case that D1 was in a position readily to fund their travel and accommodation expenses.  Some of the witnesses were in any event well connected with Hong Kong.  It was hinted in the course of submissions that some might not wish to come because of the fear of bringing proceedings upon their heads in Hong Kong. That may be so, but it is difficult in the case of certain of the witnesses – for example the man Qi – to see whence such a fear derived.

(4)  There were other witnesses in Hong Kong, for example one of the Hon brothers in relation to the kidnap story and the other Hon brother who represented Guilin China Science in Hong Kong, in respect of whom no explanation has been advanced as to why they could not cover the same ground as one or more of the Mainland witnesses.

(5)  The repeated suggestion in argument that it was not possible for Mainland lawyers to take statements from witnesses on the Mainland is contradicted by the fact that they say they did just that; and in any event if there were such difficulties, there is no suggestion of any request by them from the authorities to do so.

(6)  Some of the reasons for not giving section 65B statements are, on their face, nonsensical; for example, that the giving of evidence is more conducive to explaining themselves.

(7)  There is no evidence whatsoever of attempts by the Mainland lawyers or by their Hong Kong counterparts to keep in touch with their witnesses to ensure that if there was a change of address or contact number, the SPC could be notified; and no suggestion that any one of them was asked to present himself to a provincial court or other authority.

(8)  No suggestion was made by the Hong Kong lawyers that the witnesses might present themselves at a particular venue for examination via a video link.

(9)  It is a remarkable fact that none of the proofs of evidence of D1’s witnesses, all in like form albeit from different firms of lawyers, is in the first person singular and none is signed.

(10)  It is a further remarkable fact that despite repeated GS requests for personal confirmation from the witnesses themselves that they were prepared to give evidence (given, in some cases, their suggested change of heart from when they were seen by SPC agents), not a single such confirmation was forthcoming and no reason for that failure was ever provided.

(11)  Some of the accounts given in the proofs of evidence – I have in mind the accounts given by Wong and by Qi – do not ring true (Wong) or are not supported by direct available testimony (Qi).

Conclusion

597. A stay of criminal trial will be justified only in the clearest of cases; and the burden of establishing an abuse of process lies squarely on the defendant who makes the application.  In the light of that principle and the history of the case which I have deliberately addressed in considerable detail, I nurture no unease whatsoever in this case about the judge’s refusal to stay these proceedings.  It would in my judgment have been perverse had he ruled otherwise.  Indeed, I come away from the case with the opinion that there was indeed an abuse of the court’s process but that the abuse was at the hands of the first applicant.

Hon Line J:

598. I agree with the judgments of Stock VP and Yeung VP.

Sentence

599. This is the judgment of the Court as to sentence.

600. D1 and D2 were each sentenced to five years and nine months’ imprisonment on the charges of conspiracy to steal and conspiracy to defraud concurrently and to three years’ imprisonment for publishing a false statement.  Three months of the latter was ordered to run consecutively to the former.  Thus each was sentenced to six years’ imprisonment.

601. D3 was sentenced to concurrent terms of three years and nine months’ imprisonment for the five conspiracies to steal and the one conspiracy to defraud.

602. In relation to D1 and D2 the judge had taken a starting point of six years for the conspiracies and reduced that by three months to reflect the mitigation.

603. The four conspiracies to steal of which D1 was convicted (charges 3, 4, 5 & 6) involved a total of $9.1 million.  Given that we have quashed the convictions on counts 4 and 5, the total sum adjusts to $7 million.

604. The four conspiracies to steal of which D2 was convicted (charges 1, 3, 6 & 7) involved a total of $10.9 million.

605. These sums were stolen from a listed company.  They were stolen in breach of trust by conspirators who were able to do so as D1 and D2 were respectively the chairman/director and financial controller of that company.

606. Guidelines exist for sentencing breach of trust theft cases.  Following the latest refinement in HKSAR v Ng Kwok-wing [2008] 4 HKLRD 1018 the cases of D1 and D2 fall in the category involving the theft of $3 to $15 million, attracting a starting point of 5 to 10 years.

607. By reason of their positions and the extent of their thefts a starting point towards the top of the bracket was to be expected.  As it was the judge took one towards the bottom.  We are of the view that the defendants were lucky.

608. They were also leniently treated as the starting point taken by the judge only reflected the conspiracies to steal.  There was no reflection in their sentences of the conspiracies to defraud in charges 8,9,11 & 12. Whilst the monies involved in these charges, $46 million, went back to the company to cover up the previous thefts significant dishonesty was involved.

609. The overall sentences of six years cannot begin to be attacked on the basis that they were manifestly excessive.  If anything they were too lenient.  They were low vis a vis the guideline and did not reflect the full extent of the criminality.

610. It follows in relation to D1 and D2 the arguments advanced concerning discrete items of mitigation simply fall away; most particularly in relation to D1 and delay.  Given his responsibility for the extraordinary length of the trial, delay is hardly a matter which he can validly pray in aid.

611. Putting aside for the moment the fact that as a result of the appeals against conviction, D2 now stands convicted of nine of the offences and D1 of seven, one question which concerned us was whether the judge was right to treat them equally.  The respondent suggested that he was, relying on the responsible position of D2, without whose complicity the offences could not have taken place.  The judge said that D1 and D2 were “the masterminds who orchestrated the schemes.  In practical terms, I consider that there might well be a slightly different level of involvement.  But I found that the original initiative came from D1 and D2.  I take the view that both D1 and D2 provided the overall fraudulent strategy …. .”.

612. There were three factors which, in treating D1 and D2 equally, the judge, in our respectful opinion failed to take into account.  The first is that D2 is not shown to have benefited financially from the offences, whereas D1 clearly did.  The second is that D1’s relationship with D3 put the latter in an invidious position.  That does not excuse her criminality but it aggravates his; an aggravating factor not expressed as such by the judge.  The third is that a trial spread over three years is bound to be a source of unusual stress to a defendant.  That is not a stress which D1 is entitled to pray in aid for he was the author of it; but by and large it was not a prolongation of proceedings which lay at D2’s door.

613. Against that background, although the number of offences of which D2 remains convicted (and the total amount reflected in the theft counts) is greater than the number of offences (and the total thefts) in the case of D1, we are of the view that the justice of the matter requires the overall sentence imposed on D2 to be less than that on D1.  We emphasise that that reduction is not because we judge the sentences imposed on D2 to be too long but because principle demands that differences in culpability be recognized.

614. PW1 received an overall sentence of three years.  The judge took a seven year starting point for some of the charges.  He made the sentences concurrent. He granted a 50% discount for plea and assistance and a further reduction of six months for delay.  Argument was addressed to us on the basis of his greater involvement in thefts from the company ($14 million) commencing earlier than those concerning D1 and D2.  All we need say is that we regarded the starting points taken in his case as being too low.

615. It was the case that all the defendants had been granted bail pending appeal.  On the bail applications it would not have been easy to form a sensible view of the merits in a case of this nature.  The hearing date for the appeal was always going to be far off.  It was right that they had bail.  What is not right is that we heard it prayed in aid of the appeals against sentence that it would be hard to be returned to custody, justifying a reduction in an otherwise proper sentence.  The experience of this court is that it has long been the understanding that this is a submission that is untenable and should not be made.  As long ago as 1974 Roskill LJ, in R v Daya Kalia 60 Cr App Rep 200 at 209, said:

“This Court desires to say as plainly as possible that where (exceptionally) intending appellants or applicants are released on bail and delay follows in the hearing of the appeal, that delay cannot and must not be relied upon, whenever the appeal or application fails, as a reason for their not being sent back to prison to serve their sentence. That is usually made plain when bail is granted, and it must be clearly understood that this is so.”

616. Those words were repeated and were said to apply in Hong Kong in the case of R v To Luen-shun [1995] 1 HKCLR 318.

617. Whilst it follows from the result of the appeals against conviction that the sentences imposed on D1 on charges 4, 5 and 10 are set aside, the application by D1 for leave to appeal against sentence on the remaining charges is dismissed, a dismissal which includes affirmation of the order that these remaining sentences are to run concurrently.  That means a total in his case of six years’ imprisonment.

618. In the case of D2, we grant him leave to appeal sentence, treat the hearing of the application as the appeal, set aside the sentences imposed in the court below and substitute in relation to each charge a sentence of 5 years 4 months’ imprisonment, which we order to run concurrently, making a total in his case of 5 years 4 months’ imprisonment.

619. Turning to D3, she now falls to be sentenced in relation to charges 1 and 11 only, the convictions on charges 2, 3, 4 and 5 being quashed.  The picture of her involvement and criminality is thus significantly different from that which faced the judge.

620. Charge 1 involved PW1 stealing $1.5 million by pretending the money was to pay for telephones ordered by CSCP through Sharpo.  A false purchase order was prepared on the instructions of D3, although D2 organised the theft and its documentation.

621. Charge 11 involved her in a conspiracy to defraud.  She pretended to borrow $5 million from a subsidiary of Sharpo and returned it immediately to CSCP.  It was used to cover up the sums previously taken from CSCP.  The idea had been discussed and agreed upon at meetings where she was not present and she acted on the instructions of both D1 and D2.  It was accepted that she received no personal benefit from either conspiracy.  She worked at Sharpo for less than a year and was paid $4900 per month.

622. D3 had a close personal relationship with D1.  The judge found at paragraph 49 of the reasons for sentence that D1 exercised considerable influence over her.

623. D3 is a lady with a long history of depressive episodes.  She has been living with this case for eight years since her arrest in September 2005.  We accept the submission that the protraction of the proceedings was not her fault.

624. We have reports that indicate that over these years she has been suffering from serious anxiety, depression, insomnia and migraines and was suicidal.  She takes significant medication for both her physical and mental problems, and attends psychiatric consultation.

625. We have a probation report that tells of her humble origins, a difficult early life, and a long standing claustrophobia.  Other than for driving with excess alcohol she has a clear criminal record.  We have evidence that suggests she is both a kind and decent person.

626. Whilst in no way seeking to lose sight of the seriousness of fraud in public companies, we do think it right to focus on the role of any particular individual involved.  Her involvement can fairly be described as peripheral.  Her conduct is substantially mitigated by the fact that she was in no position of trust and did what she did under the powerful influence of another with no eye to personal gain but a disposition to help.  There is no reason to infer that she had any idea of the overall state of affairs at CSCP.

627. In the ordinary course of events, an overall sentence in the region of 2½ years was warranted for the offences disclosed by charges 1 and 11 for the culpability of a person in the applicant’s position at the time of the offences; but this is a case where we think it just at this stage to take an exceptional course.  Whilst the prolongation of the trial was partly at her hands, the reality in our view is that the conduct of her case was subservient to the conduct of D1’s.  She has spent 198 days in custody, and given her physical and mental condition and the eight years since her arrest, we are persuaded that it is not necessary to send her back to prison.  We emphasise that this decision is based on the very particular facts of the case.

628. Accordingly, we grant her leave to appeal against sentence in relation to charges 1 and 11, treat the hearing of her application as the appeal, allow the appeal, set aside the sentences imposed on those charges in the court below and substitute such sentences as permit her immediate release.

Hon Stock VP:

Result

629. The result of these applications against conviction and sentence is therefore as follows:

(a)  Conviction:

(i)  D1 is granted leave to appeal against conviction in respect of charges 4, 5 and 10.  The hearing of the applications in respect of those charges is treated as the hearing of the appeals, the appeals allowed, and the convictions in respect of charges 4, 5 and 10 are set aside.  The applications for leave against conviction in relation to charges 3, 6, 8, 9, 11, 12 and 13 are dismissed.

(ii)  D2 is granted leave to appeal against conviction in relation to charges 10, the hearing of the application is treated as the hearing of the appeal, the appeal is allowed and the conviction in respect of charge 10 is set aside.  The application for leave to appeal the remaining convictions is dismissed.

(iii)  D3 is granted leave to appeal the convictions upon charges 2, 3, 4, and 5 in respect of which we treat the hearing of the applications as the appeals, and set aside those convictions but the applications in respect of charges 1 and 11 are dismissed.

(b)Sentence

(1)  The sentences imposed on D1 on charges 4, 5 and 10 are set aside.  The applications for leave to appeal the sentences imposed on the remaining charges of which he was convicted are dismissed, which dismissal includes the order that those sentences be served concurrently.  The result in his case remains a total of 6 years’ imprisonment.

(2)  As for D2, the sentence imposed in relation to charge 10 is set aside.  In relation to the sentences imposed for the offences of which the remains convicted, we grant leave to appeal those sentences, treat the hearing of the application as the hearing of the appeals, allow the appeals and substitute for each such remaining offence a sentence of 5 years 4 months’ imprisonment, to run concurrently, resulting in a total term of 5 years 4 months’ imprisonment.

(3)  In D3’s case the sentences imposed in respect of charges 2, 3, 4 and 5 are set aside.  In relation to charges 1 and 11 we grant leave to appeal sentence, treat the hearing of the applications as the appeal, allow the appeal, set aside the sentences imposed and substitute such sentences as permit her immediate release.

Costs

630. We make an order nisi that the Respondent’s costs of the applications (save as to D2’s and D3’s applications as to sentence) be paid by the applicants, to be taxed if not agreed.  In relation to D2 and D3’s applications as to sentence there is an order nisi that there be no order as to costs.

631. We wish to be addressed on the question whether this Court is empowered now to make an order in respect of the costs of the trial and if the Court is so empowered why an order in favour of the Respondent in respect of those costs should not be made.  We will give directions for the filing of written submissions in this regard.

[1] Criminal Procedure Rules 2013, England and Wales

[2] [2003] EWCA Crim 1012 at para 37.

[3] [2005] EWCA Crim 805 at para 10.

[4] Rule 1.1

[5] Rule 1.1(2)(e)

[6] Rule 3.2(1)

[7] Rule 3.2(2)(f)

[8] Rule 3.2(2)(g)

[9] Rule 3.3(a)

[10] Leading counsel in question has at the Court’s invitation written a detailed explanation for the length of this cross-examination.  That explanation explains, amongst other matters, that the figure of 33 days is misleading in that a total of about 7½ days of the 33 days were in fact not taken up by cross-examination but was time occasioned by adjournments; that almost 6 days of cross-examination were added because of the production by the main prosecution witness of new documents in the course of the trial and that about five days of cross-examination were added because of an allegation by that witness, for the first time in the course of the trial, of a sizeable loan.  But for these matters, he says, cross-examination would have lasted about 15 days.  We are not in a position to conduct a detailed analysis of the merits of this explanation which is why, in fairness to counsel, we have used the phrase “on its face”.  Prima facie, however, I still fail to see how such a long cross-examination could conceivably be justified. None of the experienced counsel before us had ever previously encountered such lengthy cross-examination or anything close to it; neither have we.

[11] (1974) 60 Cr App Rep 200 at 209.

[12] [1935] AC 346 at 359.

[13] at 210-211.

[14] Rule 3.10(b) and (d)

[15] at para 11.

[16] at paras 35 and 36.

[17] Leading counsel has responsibly acknowledged that the comment by him was inappropriate; a heat of the moment reaction for which he has, very properly, apologised.

[18] e.g. “Transactions and dealings relating to the acquisition of the waste incineration and processing business in Meizhou by #351”.

[19] paras 94-101 above.

[20] He features also in the facts surrounding Charge 7; see para 384 above.

[21] Report para 4.7 (b).

[22] ibid page 8.

[23] ibid pages 8 - 10.

[24] transcript page 3328.

[25] page 618 appeal bundle.

[26] ibid 619.

[27] Written submissions (on the absent witness issue) to this Court on behalf of D1 para 108.

[28] Written submissions for D1 para 87.

[29] Written submissions para 5(iii).

[30] [1996] 3 HKC 315.

[31] This assertion stems, first, from comments made in the ruling on the discovery application (page 489 appeal bundle); and, second, his finding in the stay ruling of no malice or manipulation (page 618, appeal bundle).

[32] HKSAR v Lee Ming Tee and Securities and Futures Commission (Intervener) (2003)  6 HKCFAR 336 at 395.

[33] See HKSAR v Lee Ming-tee (2001) 4 HKCFAR 133.

[34] A-G’s Reference (No 1 of 1990) [1992] QB 630 at 644.

[35] “limb 2” refers to that limb which dictates a stay where a trial or continuation of a trial would offend the conscience of the court.

[36] [1996] 3 HKC 315 at 321E.

[37] U.N. Covenant on Civil and Political Rights: CCPR Commentary, Manfred Nowak, 2^nd revised edition  p 341 para 65.

[38] Noor Muhammad : Due Process of Law for Persons Accused of a Crime in Louis Henkin: The International Bill of Rights p 138 at 146.

[39] Nowak, above, p 341 para 65.

[40] Prosecutor v Dusko Tadic, International Criminal Tribunal for the former Yugoslavia 15 July 1999 para 48, with reference to the jurisprudence of the European Court of Human Rights.

[41] Noor Muhammad, above, p 154.

[42] Caka v Albania [2009] ECHR 44023/ 02 at para 108 in relation to Article 6 of the European Convention on Human Rights.

[43] Ruling at page 618 appeal bundle.

[44] Alister v The Queen [1984] 154 CLR 404 at 437-8.

[45] per Brennan J in Alister at 451.

[46] United States v Greco 298 F 2d 247, 251; United States v Moussaoui 382 F 3d 453, 458.

[47] See also Art 11(2)(b) & (e) of the Hong Kong Bill of Rights Ordinance.

[48] Transcript bundle page 62 et seq.

[49] pages 88-89 of the transcript bundle.

[50] pages 123-124.

[51] See Hon Ming Kong v Secretary for Justice HCAL 47 of 2008, unreported, 23 July 2008.

[52] Letter 30 June 2009.

[53] Transcript page 2861.

[54] ibid page 2864.

[55] ibid page 2865.

[56] Letter 10 August 2009.

[57] Letter 26 August 2009.

[58] Letter 21 September 2009.

[59] Letter 15 October 2009.

[60] Transcript pages 3009 – 3010.

[61] ibid page 3016.

[62] See transcript pages 3132 – 3133.

[63] ibid pages 3134 – 3136.

[64] ibid page 3137.

[65] Letter 20 January 2010.

[66] See, for example, the letter from PL to GS dated 10 August 2009 in response to a suggestion by GS that there be direct communication between those acting for the defendants and the SPC.

[67] Pang of the Meizhou project, said to be an important witness in relation to Charges 9 and 10 – see paras 435– 442 above.

[68] Letter from Beijing Yanyuan Law Firm 8 October 2010.

[69] Transcript page 3430.

[70] ibid page 3432.

[71] ibid page 3433.

[72] ibid page 3435.

[73] ibid page 3436.

[74] ibid page 3440.

[75] Letter 24 November 2010.

[76] Letter 30 November 2010.

[77] Affirmation dated 10 December 2010, para 4(4).

[78] See transcript pages 3455 to 3472.

[79] ibid page 3461.

[80] ibid page 3465.

[81] See para 33 above.

[82] Nothing at the outset: the judge required him to produce a skeleton submission later in the day.

[83] Transcript page 3477.

[84] Transcript page 3485.

[85] ibid page 3497.

[86] Paras 47 and 48 of the letter.

[87] Para 4.

[88] Para 32.

[89] Para 39.

[90] See paras 427 - 430 above.

[91] See paras 431 – 434 above.

[92] See paras 435– 442 above.

[93] See paras 443 – 445 above.

[94] See Law in the People’s Republic of China, Folsom and Minan Chapter X1.