R. v. CHAN CHI KEUNG

IN THE COURT OF APPEAL

1994, No. 562
(Criminal)

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J U D G M E N T

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Ching J.A. (giving the judgment of the Court) :

1. The Applicant, who was the first Defendant in the Court below, faced 17 charges for offences which were alleged to have occurred between 26th July, 1990, and 24th August, 1990. He was convicted of 16 of them. 15 of those were for dishonestly obtaining a pecuniary advantage by false representation contrary to section 18(1) of the Theft Ordinance, Cap.210, for each of which he was sentenced to a term of imprisonment for seven years. The other, charge 11, was for uttering a forged document knowing it to have been forged and with intent to defraud contrary to section 74(1) of the Crimes Ordinance, Cap.200, for which he was sentenced to a term of imprisonment of two and a half years. He was acquitted of charge 7 which was another charge of uttering a forged document under section 74(1) of the Crimes Ordinance, Cap.200. All of the terms of imprisonment imposed upon him were ordered to be served concurrently. He now seeks leave to appeal against both conviction and sentence.

2. The Applicant, a man called Wong Ping-lau and the second Defendant in the Court below, Yim Fat-hoi, were all employees of Messrs. Clifford Yeung & Co., a firm of solicitors practising in Hong Kong at the material time. They worked in the Kowloon branch where there was a solicitor, Ho Hung-chung. The applicant was the manager of the branch and after Ho Hung-chung he was its most senior employee. After him came Wong Ping-lau who was the personnel manager and the senior clerk. Then came the second Defendant, Yim Fat-hoi, who was a senior clerk handling criminal work. Clifford Yeung himself visited the branch to sign documents and cheques. He was the only authorised signatory of its bank accounts which included three client accounts, one each at the Hong Kong & Shanghai Banking Corporation, Ltd., the Security Pacific Asian Bank, Ltd., and the International Bank of Asia, Ltd. It was from one or another of these banks that it was alleged that the Applicant had obtained a pecuniary advantage and to whom it was alleged that he uttered forged documents.

3. Before sometime in July of 1990 the procedure for issuing branch cheques was that the Applicant would sign vouchers. These would be passed to the accounts department who would then draw up the cheques for the signature of Clifford Yeung. In July of 1990 the accountant of the branch left her employment. Thereafter she returned from time to time in August, 1990, only for the purposes of assisting in the preparation of tax returns. When she left, the Applicant and Wong Ping-lau took over the supervision of the accounts and thereafter the vouchers required the signatures of all three of the Applicant, Wong Ping-lau and Yim Fat-hoi. The applicant had custody of the cheque books and it was he or Wong Ping-lau who would draw up the cheques. In the same month Ho Hung-chung went on leave and in his absence the branch was run by the Applicant and Wong Ping-lau. One of the other duties of the Applicant was that he signed salary certificates for the other staff when required. His own certificate of salary would be signed by Clifford Yeung.

4. The Applicant first began to work in a solicitor's firm sometime in 1987. He joined Clifford Yeung & Co. sometime in 1989. The file on matters handled by him would bear the initials 'CK'. Matters handled by Wong Ping-lau would bear the initials 'SW', his first name being Stewart. Letters in relation to the matter would bear the initials 'CY' (for Clifford Yeung) followed by an oblique stroke and the initials 'CK' or 'SW' as the case may be. The fact that a file bore either of these initials did not mean that either of these two men necessarily attended to everything themselves. No doubt in the usual way members of the staff would help each other out in the office. In addition, the Applicant was in a position of authority in the branch and could instruct other employees to assist. For instance, on occasion, when loans from banks to clients were 'booked' both he and Wong Ping-lau would instruct staff members to contact the banks for the purpose.

5. The Applicant was active in the conveyancing practice of the branch on behalf of both vendors and purchasers. In either case he would need the particulars of the property and the personal particulars of the client including a copy of his identity card. In the case of a purchasing client who needed finance he would sometimes also act for the client for the purposes of obtaining a loan from a bank. For this purpose he would also need and be given details of the client's assets and income including a certificate of salary from his employer, tax returns and copies of bank statements or bank passbooks. These details would be entered upon a form for the application for a loan supplied by the bank to the Applicant. It would be signed by the client and returned to the bank by the Applicant with the documents mentioned. If the bank decided to offer a loan it would require that the client should have an account with it and if he did not he would have to open one. The necessary form would again be sent to the Applicant, the details would be inserted upon it and it would be signed by the client and returned to the bank. The bank would then send to the Applicant a letter containing an offer of a loan and setting out the conditions including the security required. The client would then countersign the letter and it would be returned to the bank. The client's signatures on the application for loan, the account opening form and the offer letter would all be witnessed. If the sale and purchase were to proceed the Applicant or someone on his instructions would 'book' the loan by informing the bank of this and confirming that the necessary security document had been executed. The bank would then credit the amount of the loan to the client account of the branch. Payments out of the various client accounts could only be made to the client or to the office account of the branch.

6. Notwithstanding the relatively short time for which the Applicant had worked for any solicitor's firm and the even shorter time for which he had worked for Clifford Yeung & Co., he had become familiar with the relevant officers at various banks who not unnaturally trusted him. This had consequences. Thus the Applicant was able to and sometimes did obtain informal valuations of properties from those officers over the telephone. The form for the application for the loan and the account opening form should have been signed by the client in the presence of an officer of the bank. Instead they allowed this to be done at the branch. So too, the acceptance of the offer should have been signed before an officer of the bank but this again was done at the branch. The bank contented itself with comparing the signatures on the various documents when received. Finally, the bank was content to act upon the assurance that the security document had been executed and, upon that assurance, to release the loan. The banks had no reason to suspect the genuineness of the position represented.

7. The case for the prosecution was that on 15 different occasions the Applicant made dishonest misrepresentations to one or other of the banks and thereby obtained a pecuniary advantage for himself or another. On eight of those occasions (charges 4, 5, 8, 10, 12 to 14 and 16) he is alleged to have done so alone. The representations began with the submission to the bank of applications for loans in which it was stated that he himself (charges 4, 5, 14 and 16) or clients of the branch (charges 8, 10, 12 and 13) was or were genuine purchasers of the property when they were not. On four of them (charges 1, 6, 9 and 15) he is alleged to have acted with Yim Fat-hoi. Those representations began with the submission to the bank of applications for loans in which it was stated that Yim Fat-hoi was a genuine purchaser of the property when he was not. On the remaining three (charges 2, 3 and 17) he is alleged to have acted with Wong Ping-lau. Those representations again began with the submission of applications for loans. In the first two it was stated that Wong Ping-lau was the genuine purchaser when he was not. As to the last, the representations were that (a) Wong Ping-lau and the other purchaser, Wong Siu-yu, were brothers and (b) the property was unencumbered. The first of these became irrelevant. It was agreed that Wong Ping-lau and Wong Siu-yu were not brothers but there appears to have been no evidence that the Applicant knew this and the Judge directed the jury that he may or may not have known.

8. A number of things are clear. First, the representations contained in the applications for loans were conveyed to the relevant officers of the banks. Secondly, those representations were false. Thirdly, the banks relied upon those representations when making the offers to extend the loans. Fourthly, the representations were continued by the signing of the offer letters and the confirmation that the security documents had been executed. Finally, all of the representations were relied upon when the banks released the loans. The questions which arose were (1) whether the Applicant was responsible for those representations, (2) if so, whether he made them dishonestly and (3) whether there was any material misdirection by the Judge to the jury.

9. There can be no doubt that the Applicant was responsible for making the representations. Some of the files relating to the transactions in question bore the initials 'CK'. With the exception of the transaction in charge 14, each of the owners of the properties had previously dealt with it through and only through the Applicant. He therefore had all the necessary details and documents such as copies of the identity card, certificate of salary and bank statements. With the possible exception of the transaction in charge 17, the officers of the banks making the loan dealt with and only with the Applicant. Some of the applications for loans contained a reference to the fact that the applicant was represented by Clifford Yeung & Co., the Applicant's name being added. Some of the letters to the banks confirming that the security document had been executed and so causing the loan to be credited to the client account of the bank were signed with a signature identified as one having been made by the Applicant. In addressing the jury, counsel for the Applicant said,

"In short, my client doesn't dispute that in a very large number of cases he was responsible for the application to the bank, but thereafter there's no saying it was anything to do with him."

The evidence on these matters was canvassed in detail by the Judge to the jury.

10. Nor can there be any doubt that the representations were made dishonestly. Three examples will suffice. In the transaction the subject of charge 1, a Mr. Tsang purchased the property and utilised the services of the branch for that purpose. On 17th June, 1990, Mr. Tsang applied to the Tai Wai branch of the Hong Kong Bank for a loan. The application was approved on 20th July, 1990, and on 31st July, 1990, the branch wrote to the bank confirming that the necessary mortgage had been executed and the loan was released on the same day. This was a genuine transaction. However, on 25th July, 1990, an application for a loan of $850,000 was made to the Tsui Lam branch of the same bank in the name of Yim Fat-hoi, he being represented as being the purchaser of the very same property which Mr. Tsang was in the course of buying. That application was approved and on 28th August, 1990, after Mr. Tsang had completed his purchase the amount of this loan was credited to the client account of the branch. Meanwhile on 23rd August, 1990, as charge 2 alleges, there had been another application for a loan of $600,000 to the International Bank of Asia Ltd., in the name of Wong Ping-lau as a purported purchaser of the same property. On 26th August, 1990, the same day upon which the Tsui Lam branch of the Hong Kong Bank had released its loan of $850,000, the International Bank of Asia, Ltd., released its loan of $600,000. Mr. Tsang never intended to sell the property which he had purchased. Yet there was a purported agreement of sale and purchase between Mr. Tsang and Wong Ping-lau. This agreement bore a signature of the Applicant as a witness. It also purported to bear the signature of another witness, Hui Kim-hung, which was not his. The last example may be found in charge 14. The property was owned by a couple who had purchased without the necessity of a mortgage. They knew nothing of Clifford Yeung & Co. or any of its staff and had had no dealings of any sort with that firm. Yet an application was made in the name of the Applicant to the Security Pacific Asian Bank, Ltd., for a loan of $1,020,000 representing that he was a genuine purchaser of the property. On 23rd August, 1990, a letter was written to the bank confirming that the mortgage had been executed. The signature on that letter was identified as having been made by the Applicant. It is unnecessary to traverse the details of the other transactions the subject of the other charges. It suffices to say that in each case the applications and the underlying transactions were sham. In each case the applications resulted in the release of the money by the banks. There were full directions by the Judge to the jury on these matters.

11. Complaint is made that in directing the jury, the Judge failed to indicate the degree of involvement on the part of the Applicant before they could find that he had had the necessary dishonest intent. Of the passages in the summing up which were cited perhaps the most important one was,

"In deciding whether he was deliberate or reckless, you have to consider all the circumstances of the case, including whether he knew that the representation was false, whether he was in a position to know that the representation was false; how much was he involved in the transaction in question, something like that."

The last three words particularly came under attack. They were unfortunately imprecise. However, this passage and the others cited cannot be read alone. Immediately before the passage set out the Judge had directed the jury to consider whether the Applicant had acted deliberately or recklessly in making the representations. There then followed an exhaustive analysis of the evidence on each charge.

12. There were also argued other grounds of misdirection the first of which may be compendiously put as a complaint that the Judge never put the case for the defence to the jury. The Applicant gave no evidence and called no witnesses. Such case that he had, apart from putting the prosecution to proof, could therefore only be constituted by agreed facts, admissions or other evidence extracted by cross-examination and inferences therefrom. There were no agreed facts helpful to the Applicant. There were no admissions helpful to the Applicant extracted in cross-examination. A number of authorities were cited for the proposition that the Judge must put the case for the defence to the jury however weak it may be. That proposition cannot be doubted. However, the Judge cannot be expected to direct the jury on matters which do not amount to a defence at law. Nor should the Judge embark upon or invite the jury to embark upon speculation especially when the evidence is wholly to the contrary.

13. The first matter put as the case for the defence was that the witnesses who had denied that they had made the applications for loans were lying for fear of becoming involved in liability for them. It is to be noted that the signatories on the application forms were the Applicant (charges 4, 5, 14 and 16), Yim Fat-hoi (charges 1, 6, 9 and 15) and Wong Ping-lau (charges 2, 3 and 17) none of whom gave evidence. Only the applications in charges 8, 10, 12 and 13 were ostensibly signed by others. The argument can only relate to these charges. Briefly,

(1) In charge 8, the purchasers had already made arrangements of their own for finance at a preferential rate of interest.

(2) In charge 10, a couple purchased the property with the assistance of a loan from the First Pacific Bank. They admitted that they had signed other application forms at the behest of the Applicant but not one addressed to the bank mentioned in the charge, the Security Pacific Bank. The Judge directly put to the jury the suggestion of the defence that they were lying because they were worried that they might become involved in liability for that loan.

(3) In charge 12, a couple needed finance of only $100,000 to enable them to purchase the property. This loan was obtained from Citibank and the purchase was completed. Nevertheless, there was an application purporting to have been made by them to the Hong Kong Bank for a total sum of $541,800 which was released to the client account of the branch.

(4) In charge 14, already mentioned, the couple had purchased their property without financial assistance. Why they should apply for a loan is unexplained. They did not know Clifford Yeung & Co. nor any of its staff. Why or how they should put an application for a loan through the Applicant is unexplained.

The Judge fully instructed the jury upon the evidence on those charges. There was nothing to support the suggestion of the defence. There was no explanation why the Applicant applied, successfully, for the release of the loans. There is nothing to this complaint.

14. The next line of defence was that in submitting the applications to the bank the Applicant could simply have been testing the market. This suggestion was wholly contrary to the evidence. The Applicant had been able to obtain informal valuations over the telephone. The application forms would have been and were taken seriously by the banks who acted upon them and the subsequent representations made by opening a bank account, where applicable, and confirming that the security document had been executed. No explanation is given as to why the banks should have been asked to release the loans if the applications were simply for the purposes of testing the market. In these circumstances the Judge was quite right in directing the jury that there was nothing in the point. It would have been at least unhelpful to the Applicant if he had analysed the evidence in this respect.

15. The next complaint is that the Judge failed to put the case of the Applicant in relation to Clifford Yeung. Clifford Yeung was named as a witness on the back of the indictment but by the time the trial commenced he had left the jurisdiction and could not be found. In the Court below counsel for the Applicant applied for a stay of the proceedings on the grounds that in the absence of this witness the Applicant could not have a fair trial. The Judge ruled against the applicant and the trial proceeded. The point was pleaded in the grounds of appeal but was abandoned. Instead, counsel now appearing for the Applicant argued that in all of the circumstances the Judge should have been but was not particularly careful in summing up on the part that Clifford Yeung might have played in these offences. Clifford Yeung was the sole authorised signatory to the bank accounts. By way of these offences about $13,000,000 had gone into those accounts. From those accounts a sum well in excess of $8,000,000 had gone into the account of the Applicant. It was said that there was at least a possibility that the Applicant as well as Yim Fat-hoi and Wong Ping-lau had been the nominees of Clifford Yeung into whose account the money may eventually have found its way. It is impossible to see how the Judge can be faulted for not having put this point to the jury. There was nothing to support it. Even if there had been, absent any explanation from the Applicant and in the face of all the evidence against him, this could not amount to a defence to the charges. It is not enough to say that the Applicant may well have been a nominee, whatever that may mean. The evidence of dishonesty against him was overwhelming.

16. There is nothing in the complaint that the Judge failed to put the defence to the jury. The Applicant then goes further and complains against the summing up in two other respects. The first was that the Judge was wrong to allow the jury, in effect, to act as handwriting experts. It is unnecessary to examine the many authorities in this respect. The evidence as to the Applicant's signature and to his signing of the firm's name came from persons who were familiar with both. In charge 10 there was a question of the signature of one of the purported applicants for the loan. The Judge referred to the signatures on the genuine sale and purchase agreement and directed the jury,

"The signatures were visibly different from the application form shown to you in Exh. 13."

The assertion that a handwriting expert is necessary and that juries cannot use their own intelligence when confronted by visibly different signatures is a remarkable one. In addition the first name of the signatory was 'Mandy' but the application form had been signed with the name 'Cindy'.

17. Finally, complaint is made about the evidence of the Treasury Accountant, Ms. Wong Mei-ling. She had been instructed to conduct an investigation into the client accounts of the branch as to payments in of the loans and payments out of sums into the accounts of the Applicant and Clifford Yeung. She had compiled a report and charts showing that. In essence that was an exercise needing no special expertise. Anyone given sufficient facilities could have done it. She did not therefore give expert evidence although no doubt her status as a Treasury Accountant lent weight to her findings. Her evidence was simply a matter of convenience in guiding all parties in Court through the details of the bank accounts. In short she demonstrated the payments into the client accounts of the amounts of the loans and the payments out of them into the Applicant's account. She did not say, for it was not the case, that on any occasion exactly the same sum the amount of any loan was paid into the Applicant's account. The Judge reminded the jury of this. It is not possible to understand how it is alleged that the Judge erred in his directions to the jury in this respect. In truth, the offences were committed when the banks acted upon the false representations and released the loans into the client accounts of the branch. The prosecution was fully justified in calling evidence to show that against the background of the transactions the Applicant received ostensibly irregular payments from those client accounts as being evidence of the dishonesty of the Applicant. Complaint is also made of her evidence that payments of only $1,000 or less had been paid to Clifford Yeung out of the client accounts for it is said that no examination of Clifford Yeung's accounts had been made so that it was not possible to see if he had received other large sums, possibly all or part of the loans by a circuitous route. That sort of evidence was irrelevant to the charges. In any event Ms. Wong Mei-ling never purported to say whether or not Clifford Yeung received any other sums. It was clear that she was dealing only with payments out from the client accounts.

18. The remaining conviction is that on charge 11, where it was found by the jury that the Applicant had knowingly uttered a forged document. This charge is connected with charge 12, of which the Applicant was also found guilty. It will be remembered that charge 12 was one where it was alleged that a couple had purchased a property needing only a loan of $100,000 which they obtained and with the assistance of which they completed the purchase. The document in charge 11 was the application form which they had purportedly signed. Two complaints are made. The first is that the Judge made no reference to the defence allegation that the couple were lying because they were afraid of incurring liability. It is unnecessary to deal with that argument further save to say that in relation to charge 12 the Judge posed a number of factors for the jury to consider. Each of those factors was relevant also to the question of whether or not the document was a forgery knowingly uttered by the Applicant. Included in them was the release of the loan by the bank consequent upon the assurance that the security document had been executed and the evidence of the relevant officer of the bank to the effect that he had telephoned the husband and had been told by him that he had never applied for the loan. The officer was told by the Applicant that the husband was simply afraid that his wife would find out about the loan. It is complained that that officer had given evidence that the couple had signed the application form but that the Judge had not reminded the jury of this. No doubt that was what the officer believed. The bank would not have released the loan otherwise. However, unless that officer had witnessed the signing or had been told by the couple that they had in fact signed, of neither of which there was any evidence, the belief of the officer is irrelevant.

19. There are no grounds for thinking that there was any misdirection by the Judge or that there is any reason to interfere with the verdict of the jury and the application for leave to appeal against conviction must be dismissed. There remains the question of the application for leave to appeal against sentence. It was accepted that the Applicant was in a position of great trust but it was argued that others in positions of greater trust and who had been found guilty of offences involving far greater sums of money had received more lenient sentences. Here the Applicant was in a position of trust in relation to his firm, his clients and the banks. His activities took place within a short space of time when the solicitor, Ho Hung-chung, was absent. He damaged the banks to the extent of nearly $13,000,000 and benefited personally to the extent of over $8,000,000 and there has been no restitution whatever. He fled the jurisdiction having withdrawn all the money in his accounts. He fled the jurisdiction one day after the day upon which the first instalment in repayment of any of the loans was to be made. It is true that he returned to Hong Kong from Taiwan but it is not known for what reason he did so. It was certainly not out of remorse for he pleaded not guilty to all charges and has prosecuted his case, such as it may be, to this Court. The sentences imposed upon him were proper having regard to the totality principle on the facts of this case and the application for leave to appeal against sentence is also dismissed.