HKSAR v. LEUNG CHOR KI, BILLY AND OTHERS

CACC 242/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 242 OF 2003

(ON APPEAL FROM DCCC 136 OF 2003)

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J U D G M E N T

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Stuart-Moore, VP (giving the judgment of the Court):

Background

1. On 9 June 2003, the applicants (D1 to D4 respectively) were convicted following a trial in the District Court before Judge Chua on charges of conspiracy to defraud, contrary to Common Law and section 159C(6) of the Crimes Ordinance, Cap. 200. D1, D2 and D3, who were all convicted on three charges, were each sentenced to two years and eight months' imprisonment. D4, who was convicted on the two charges he faced (charges 2 and 3) received a term of imprisonment which was one month shorter than the others.

2. All of the applicants now seek leave to appeal against conviction and D1, D2 and D4 seek leave to appeal against sentence.

The charges

3. The conspiracies alleged in the three charges were in similar terms. In essence, the applicants were accused, on the three separate occasions specified in the charges, of being dishonest car dealers who, by a series of misrepresentations, dishonestly induced purchasers of cars either to pay more for them than the advertised price or to buy a different car at an inflated price.

4. The particulars of charge 1, which concerned D1 to D3 only, alleged that they:

".... between the 22nd day of March, 2002 and the 25th day of March, 2002, in Hong Kong, conspired together to defraud LAU Kwong-wing, John by dishonestly:-

(1) falsely representing that a motor vehicle with registration number EV 8369 ('the said motor vehicle') was to be sold at $35,000;

(2) falsely representing, after full payment of $35,000 by the said LAU Kwong-wing, John, that the said sum of $35,000 had only been paid as deposit for purchase of the said motor vehicle;

(3) inducing the said LAU Kwong-wing, John to pay an inflated price from $35,000 to $79,000 to complete the purchase of the said motor vehicle; and

thereby causing the said LAU Kwong-wing, John to purchase the said motor vehicle at the inflated price (of) $79,000."

5. The particulars in charge 2, against all the applicants, differed only slightly and alleged that they:

".... between the 1st day of April, 2002 and the 10th day of April, 2002, in Hong Kong, conspired together to defraud CHAN Wai-shing by dishonestly:-

(1) falsely representing that a motor vehicle was to be sold at $42,000;

(2) falsely representing, after full payment of $42,000 by the said CHAN Wai-shing, that the said motor vehicle was no longer available for sale;

(3) inducing the said CHAN Wai-shing to agree to purchase another motor vehicle ('the substituted motor vehicle') at an inflated price of $43,000; and

thereby causing the said CHAN Wai-shing to purchase the substituted motor vehicle at the inflated price of $43,000."

6. The last charge against all the applicants alleged that they:

".... between the 9th day of April, 2002 and the 22nd day of April, 2002, in Hong Kong, conspired together to defraud CHAN Ka-man by dishonestly:-

(1) falsely representing that a motor vehicle with registration number KM 2549 ('the said motor vehicle') was to be sold at $37,000;

(2) falsely representing, after full payment of $37,000 by the said CHAN Ka-man, that the said sum of $37,000 had only been paid as deposit for purchase of the said motor vehicle;

(3) inducing the said CHAN Ka-man to pay an inflated price from $37,000 to $91,000 to complete the purchase of the said motor vehicle; and

thereby causing the said CHAN Ka-man to purchase the said motor vehicle at the inflated price of $91,000."

The facts

7. The case presented by the prosecution entirely depended on the evidence given by each of the three customers who bought a car from the applicants whose business operation was known as Perfect Motor Company ("Perfect Motors").

8. None of the applicants gave evidence, and no witnesses were called on their behalf.

9. It suffices, for the purposes of these applications, to set out the way in which the judge described the evidence on charge 1 and to give a brief summary of the evidence on the other two charges which closely resembled the first. Describing the material events on charge 1, the judge said:

"2. On 23 March 2002, PW1 saw an advertisement in that day's Apple Daily to offer for sale a 2000 Toyota Echo Verso for $37,000 (Exhibit P1). He called Mr Cheng and an arrangement was made to meet. D3, calling himself Bobby Ma, arrived with an Echo Verso, registration number EV 8369, but its licence was for a 99 model. PW1 pointed to some dents and scratches to knock down the price. D3 agreed to accept $35,000. After PW1 paid $3,500, 10 per cent of the purchase price, a receipt was issued by Perfect Motors.

3. On 25 March 2002, PW1 saw D3 and D2 at Perfect Motors to conclude the purchase. D2 handed him a blurred copy of, ostensibly, an insurance application form. PW1 was told to write his name and sign on it. As the print was difficult to read, D2 told him all he had to do was sign the insurance form. After this, PW1 handed to him a cashier's order for the balance of the purchase price, his driving licence and his identity card. D2 gave him an agreement of purchase which said $31,500 had been received. D3 left with the documents to register the transfer of ownership with the Transport Department. While waiting, D2 pointed out another advertisement for an Echo Verso. He said the low price could not be right. It had to be a stolen car, for another advertisement by Perfect Motors for a similar model was shown to him where the asking price was over $79,000.

4. Shortly thereafter, D1 walked in. He said he was the manager and it was impossible for them to sell the car for such a low price. When PW1 protested and wanted his money back, D1 told him this was not possible. D2 showed him the second page of the document he had signed on which someone had written $50,000 and it turned out to be a hire-purchase agreement. D1 told him if this was submitted to the finance company, it would chase him for $10,000 a month till the $50,000 was all paid.

5. Having frightened PW1 by the prospect, D1 suggested he make a better offer for the car. Prompted by the advertisement he had been shown, he made an offer for $70,000. D2 would not budge. Feeling he had no choice in the matter for he would lose the money he had already paid, PW1 obtained $44,000 with his credit card to hand to D1 to pay for the car at $79,000. D1 issued him a new receipt (Exhibit PD1) dated 25 March. I note what is stated there:

'The Perfect Motors Company will seize the deposit if the executed documents or transactions have not been done within two days from the agreement.'

6. Under cross-examination by counsel for the defendants, Mr Mitchell-Heggs, PW1 denied it had been made clear to him from the start that the $35,000 was to be the down payment to purchase the car on hire-purchase. He denied it was to please his girlfriend, PW2, that he had been keen to buy the car at any price. I believe him." (Appeal bundle pp. 12-13)

10. The victim of the conspiracy alleged in charge 2 (PW3) also read an advertisement before approaching Perfect Motors about his interest in a 2001 Toyota Echo Verso for sale at $37,000. However, when he arranged to meet "Mr Tong", and duly met D2, he was shown a different car to the one advertised. Nevertheless, he agreed to buy the car he was shown at a price of $42,000 which was said to have included the cost of insurance and the transfer of ownership fee. He paid a $4,000 deposit and was given a receipt.

11. On the following day, PW3 was asked by D2 to sign a transfer of ownership form, an insurance form and a sale and purchase agreement. He did so without checking to see what was printed in these documents. He then gave D2 $38,000 which represented the balance of the purchase price. D2 then left, saying that he would transfer the ownership at the Transport Department. He also took away the receipt which had been issued the day before in respect of the deposit.

12. While he was waiting, D4 showed PW3 some published articles on frauds committed by car dealers who had tricked their customers into buying cars on hire purchase. After this, D1 appeared with a photocopy of the sale and purchase agreement PW3 had signed. At this stage PW3 discovered that the price of the vehicle was now being represented as $86,000. D1 told PW3 that he must have realised that this particular car could not be sold for $42,000 and, furthermore, if he did not complete the transaction he would have to forfeit his deposit in accordance with what was stated on the document he had signed. In addition, he was told that he could be chased by the finance company in a similar way to that described in the articles on fraud he had been shown. He was told that as they had their own lawyers, it would be no good going to the police.

13. D1 suggested, in due course, that PW3 should take a cheaper car of a similar style and stated that he happened to have a 1997 Daihatsu available. PW3 was put under added pressure to accept this offer as he was told he would lose his deposit if he did not proceed with it before the Transport Department closed at 4 pm. When PW3 accepted, a new receipt was issued and the old documents he had signed were burnt in front of him.

14. Similarly, on the facts accepted by the judge in relation to the third charge, PW4 read an advertisement for a 2000 Honda Civic VTI priced at $42,000. D2, this time calling himself "Kwok", arrived in a car which he agreed to sell for $37,000. PW4 paid $1,800 as a deposit and was given a receipt.

15. Three days later, on 19 April 2002, PW4 went to Perfect Motors with a friend where he signed a sale and purchase agreement and handed over his insurance policy for a new cover note to be issued. D2 then requested the earlier receipt which had been issued for the deposit and disappeared on the pretext that he would effect the transfer of ownership. While waiting, PW4 was shown articles about cases of deception involving motor vehicles. D1 then turned up and told PW4 and his friend that they, too, had become victims and that what they had signed was a hire purchase agreement for a car valued at $98,000. He was told that if he backed out he would lose his deposit.

16. Feeling forced into accepting a new deal, PW4 negotiated the price of the car down to $90,000 and a new agreement was signed. When D4 returned, he burnt the old documents which PW4 had signed.

17. On the following day, PW4 returned with cash he had had to borrow from a friend in order to pay the balance. D1 managed to extract an additional $1,000 from him as a penalty.

18. In respect of all of these charges, the principal part played by D3, who in common with all his alleged co-conspirators was involved in the operation of Perfect Motors, was to purchase the cars sold to the three victims. These were purchased for $45,000, $26,000 and $60,000 respectively. He was also identified by PW1 as having played a physical role with D1 and D2 in the deception which was practised on him.

19. In her Reasons for Verdict, the judge concluded that there was no doubt that the applicants had:

".... agreed to act together to dishonestly pursue steps in the course of selling cars to defraud interested buyers. They lured them by the placement of deceitful advertisements. Having tricked PW1, PW3 and PW4 into thinking they had concluded a sale at a reasonable price, got them to sign false documents and hand over the purchase price. They subsequently used the documents that had been signed to force them on pain of forfeiting the substantial sum already paid into paying out further sums of money.

22. Did the defendants know they were being dishonest? I am satisfied they did. Why else did they use false names?" (Appeal bundle pp. 16-17)

Grounds of appeal (D1, D2 and D4)

20. A number of grounds of appeal were advanced on behalf of D1, D2 and D4 by Mr Graham Harris who submitted that the convictions were against the weight of the evidence and unsafe or unsatisfactory.

21. In particular, it was argued that the judge had "erred in permitting the prosecution to proceed upon charges which were insufficiently particularised in that they failed to specify that the dishonest conduct included "tricking" the alleged victims into signing allegedly false documents". The reference to these victims having been "tricked", which arises from a consideration of this ground, first occurred in a passage (cited above) taken from the judge's Reasons for Verdict. This was described by Mr Harris as a "missing link" in the prosecution's case.

22. We have been left in no doubt that all the particulars of the charges made the nature of these allegations extremely clear to the applicants in terms which amply satisfied the requirements set out in R v Landy & Ors [1981] 72 Cr.App.R. 237. Indeed, it is not suggested that further particulars were requested by the defence at trial. We do not consider that the judge's reference to trickery added an element which was missing from the charges as they stand. This was, as Mr Zervos, SC, for the respondent expressed it, merely a "descriptive overview" of the applicants' conduct. The judge was well aware of what the prosecution had to prove. Having cited a passage taken from one leading authority, the judge went on to say:

"20. Put another way 'to defraud' or to act 'fraudulently' is dishonestly to prejudice or to take the risk of prejudicing another's rights knowing that you have no right to do so (Welham v DPP [1961] AC 103). This case also decided that that right need not be proprietary.....

23. Even if it were the case the buyers paid a fair price for the cars they ended up with, which I do not necessarily accept, the prosecution does not have to show economic loss. To cite Lord Radcliffe in Welham v DPP at page 124:

'There is nothing in any of this that suggests that to defraud is in ordinary speech confined to the idea of depriving a man by deceit of some economic advantage or inflicting upon him some economic loss.

Has the law ever so confined it? In my opinion, there is no warrant for saying that it has. What it has looked for in considering the effect of cheating upon another person and so in defining the criminal intent is the prejudice of that person: what Blackstone (Commentaries, 18th ed., Vol. 4 at p. 247) called 'to the prejudice of another man's right'". (Appeal bundle pp. 16-17)

23. Each of the particulars set out in the charges had been supported by evidence which the judge had accepted and each of these was sufficient to prove the conspiracies alleged by the prosecution.

24. This ground fails.

25. It was submitted in a further ground, which is set out in Mr Harris' written argument, that although there was a difference in price between the cars originally advertised and those ultimately purchased by the alleged victims, it could not be said that the purchasers were defrauded because all of them received the cars they had bought at the price which was eventually quoted to them and agreed by them.

26. However, this is not to the point. The object of these conspiracies was in each case to defraud the victim by deceiving him into believing that he had purchased a car at the price originally agreed before being assailed by a series of misrepresentations which made it difficult for him to refuse to pay a higher price for the same or a different car.

27. This was not, as Mr Harris suggested, merely a civil matter where a degree of duress had led the victims into signing contracts which they did not wish to enter into; by doing so, they were acting, potentially at least, to their prejudice having been put into this situation by the dishonest representations made to them.

28. This ground fails.

29. In one other ground which we need to consider, referred to by Mr Harris as being "very much a second string to (his) bow", it was alleged that the judge had misapplied the two-stage test for dishonesty laid down in R v Ghosh [1982] 75 Cr.App.R. 154. Mr Harris submitted that as the applicants had not testified, any finding of subjective dishonesty on their part would necessarily have been based on circumstantial facts. He suggested that the judge's conclusion that guilty intent was established by their use of false names was an insufficient basis to justify this inference.

30. It is, of course, true that the judge had remarked (in a passage cited above) when considering dishonesty and stating that she was satisfied it had been established: "Why else did they use false names?" However, it is plain from all the evidence accepted by the judge that she had considered the whole course of the applicants' conduct and that this remark was merely an illustration of their guilty minds at the time they were engaged in acts in furtherance of these conspiracies.

31. D1, D2 and D4 were each convicted on overwhelming evidence. There is nothing about their convictions which was unsafe or unsatisfactory.

Ground of appeal (D3)

32. There is no question that D3, on whose behalf Mr Richard Donald contended that the judge had drawn erroneous inferences against him on all the charges, was in a somewhat different category to the others so far as the evidence was concerned on charges 2 and 3.

33. However, on charge 1, using the name "Bobby Ma", D3 had agreed to the sale of a Toyota Echo Verso, EV 8369, for a price of $35,000 when it was an admitted fact that D3 had arranged to purchase that vehicle for $45,000 from its previous owner. On 25 March 2002, D3 was again present with D2 to conclude the sale with PW1. When the documents had been signed, D3 disappeared with them to complete the transfer of ownership formalities at the Transport Department. Whilst it is true that D3 was absent at the precise time when PW1 was persuaded to purchase the car for a price which was well over double the price originally agreed, there was in our opinion abundant evidence from which the judge could draw the inference on this charge that D3 was party to a conspiracy to defraud. It was highly unlikely that D3 or anyone else at Perfect Motors would have agreed to sell this car for $10,000 less than its cost price. Indeed, PW1 had testified to the effect that D1 had said it was impossible for the car to be sold at such a low price. The case against D3 on charge 1 was very strong.

34. On charges 2 and 3, D3 played no physical role in the sales to PW3 and PW4 and whilst he had bought the cars, the subject of those charges, and was one of the operators of this business, that is as far as the evidence went. There is no evidence of D3 having entered into specific conspiracies as regards these cars and the judge did not suggest that there was when arriving at her verdicts.

35. Accordingly, whilst D3's situation was one which gave rise to the gravest suspicion, we propose to quash the guilty verdicts returned against D3 on charges 2 and 3.

Conclusion - conviction

36. Having regard to the reasons we have set out, the applications of D1, D2 and D4 are dismissed. However, we shall grant D3 leave and, treating the hearing as the appeal, we allow the appeal to the extent of quashing the convictions on charges 2 and 3 and setting aside the sentences imposed on those charges. D3's conviction on charge 1 will stand.

Sentence

37. In passing sentence, the judge said:

"4. Dishonesty is not a new word or concept to D1, D2 and D3, all of whom have previous convictions (for) offences involving dishonesty. D1 has the worst record. He has been before the court nine times. Of relevance are the convictions for theft, uttering forged documents and forgery. D2 has several convictions for theft and one for burglary. D3 has one for theft. Only D4 has no conviction involving dishonesty but he does not have a clear record either.

5. (Defence counsel) pleads no pecuniary loss was suffered by these buyers. I do not agree. The defendants made handsome profit(s) (from) these sales which were pressed on unwilling buyers; $34,000, $16,000 and $31,000, respectively, although I recognise this is not, by this fraud, their main culpability. What I find abhorrent is the fact that they had deliberately set out to trick and force unwitting buyers to conclude an agreement they did not want on pain of losing their deposit, which was in fact the purchase price they had agreed to pay for the car.

6. It is not, I find, an excuse to say that these buyers are still driving the cars they had bought. I am sure they know that they would lose money if they tried to sell their unwanted cars and they were merely making the best of a bad situation. That similar modus operandi (have) been adopted before was, on the evidence, written up in the local press and in magazines. Indeed, the defendants showed these articles to the buyers.

7. To deter motor dealers from adopting the same tactics, I shall be sending a clear message: immediate jail terms can be expected....." (Appeal bundle p. 19)

38. The judge went on to adopt a starting point of thirty months for each offence. By a somewhat curious method of calculation, D1 and D2 each received two years and eight months by the imposition of consecutive periods of one month on charges 2 and 3 to be added to the sentence of two years and six months imposed on charge 1. D4's sentence of two years and seven months reflected the fact that he was not involved in the first conspiracy.

39. In our opinion, these sentences cannot, contrary to the submissions of counsel for D1, D2 and D4, be described as manifestly excessive.

40. These applications are dismissed.