HKSAR v. LAI HON KWAN AND OTHERS

CACC 317/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 317 OF 2000

(ON APPEAL FROM DCCC 315 OF 2000)

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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):

Introduction

1. On 25 July 2000, the Applicants, D2, D3 and D4 respectively, were convicted on one or more of the 23 charges which the charge sheet originally contained. This followed a trial before Her Honour Judge M. Poon. D2 sought leave to appeal against his conviction for conspiracy to defraud (charge 1). D3 and D4 sought leave to appeal against conviction on charge 23 which alleged possession of equipment for making a false instrument, contrary to section 76(1) of the Crimes Ordinance, Cap. 200. Additionally, D4 sought leave to appeal against conviction on charge 13 (conspiracy to defraud), charges 14 and 18 (attempted theft) and charges 15 to 17 and 19 to 22 (theft).

2. During the course of the trial, the prosecution dropped all the charges against D1 and a number of those faced by D2. At the conclusion of the prosecution's case, the judge ruled that D2 had no case to answer in respect of charges 2 and 13. This left only charges 1 and 5 against D2 as to which he elected not to give evidence. There was no application for leave to appeal against conviction on charge 5 (theft) for which D2 received a sentence of eighteen months to run concurrently with a sentence of two years' imprisonment on charge 1 (conspiracy to defraud). Although D2 had sought leave on homemade grounds to appeal against his sentence, we dismissed this application when he indicated that this was no longer to be pursued.

3. D3 was sentenced to two years and three months' imprisonment and D4 received a total sentence of five years' imprisonment.

4. At the conclusion of each of the applications on 31 May 2001, we indicated that we would give leave to appeal and treat the hearing as the appeal.

5. In the case of D2, we quashed his conviction on charge 1 and the sentence imposed for it. This left him serving 18 months' imprisonment in respect of charge 5 and a consecutive term of eight months' imprisonment for his breach of a suspended sentence.

6. We also quashed D3's conviction and sentence on charge 23. This was the only charge on which he had been convicted. His application for costs, in this court and the court below, was refused.

7. In regard to D4, we quashed his conviction on charge 13 for which he had been sentenced to three years' imprisonment but dismissed his appeal against conviction on the other charges he faced. We did, however, despite D4's abandonment in December 2000 of his application relating to sentence, invite an application to treat his abandonment as a nullity in view of the course taken on charge 13. The application which was then made was granted. We had taken the view that although the remaining sentences left D4 still having to serve five years' imprisonment, some downward adjustment of the overall term was appropriate to take into account his successful appeal on charge 13. However, when D4 abandoned his application relating to sentence in December, he could not possibly have anticipated this turn of events. In order, therefore, to reflect the judge's intention, demonstrated by the sentences she imposed, we granted leave to appeal against sentence and, treating the hearing as the appeal, reduced his overall term of five years to four and a half years' imprisonment.

8. We stated, when the matter was last before the court, that we would give reasons for our judgment at a later date and we now do so.

Prosecution's case against D2 on charges 1 and 5

9. The background to the prosecution's allegations in the closely connected offences alleged in charges 1 and 5 was largely agreed. A cheque dated 27 April 1999 in the sum of $326.50, payable to L and C Office Appliances, and issued by Man Cheong Metals and Building Materials Company Limited, was stolen after it had been sent in the post.

10. The next event that is known about this cheque is that it was presented to the Kwangtung Provincial Bank in Kowloon City for deposit into the account of "Lee Kin-fook" with the Bank of China. By this stage, the sum on the cheque had been altered to $110,000 and the payee's name had been changed to Lee Kin-fook.

11. On 4 May 1999, a total of $110,000 was withdrawn from Lee Kin-fook's account in three instalments. The bank cashier who dealt with these withdrawals (PW11) testified that she was unable to identify the customer who represented himself to be Lee Kin-fook but she was able to say that every time she dealt with the same man.

12. D2 was linked to the cheque by his palm-print and, on this basis, he was charged with the theft of the debt in the sum of $110,000 owed by International Bank of Asia Limited to Man Cheong Metals and Building Materials Company Limited (charge 5). The prosecution alleged that this was an act in furtherance of a conspiracy (count 1) with Lee Kin-fook (D1) to defraud banks between 22 March 1999 and 4 August 1999. The false representations set out in the charge were that cheques showing the name of the drawee as Lee Kin-fook, or (in the alternative) being presented by someone holding himself out to be Lee Kin-fook, were good and valid orders for the payment of the sums shown thereon.

D2's application

13. We do not need to examine the extensive criticisms of the conviction of D2 on charge 1 at any length. D1, a named co-conspirator in this charge, was acquitted. Mr Mullick, on behalf of D2, complained, and in our view rightly so, that the conviction on charge 1 could not stand. The essence of his argument was that there was no evidence to prove that D2 conspired with anyone else, whether named or unnamed, to defraud banks in Hong Kong.

14. We immediately called upon Mr Ryan, on behalf of the Respondent, to deal with the matters which had been ably expressed in Mr Mullick's adopted written argument.

15. The Respondent accepted that the evidence we have summarised sets out the limits of D2's involvement. In such circumstances, therefore, Mr Ryan had to accept that the conviction for conspiracy to defraud could not stand. As this seems to have been the view taken on behalf of the Respondent before the commencement of the application, we express our disquiet at not having been informed of it before making our own views known to counsel.

16. There was no evidence of conspiracy once the judge had ruled the interviews of D1 and D2 to be inadmissible which was done following a voir dire. The way in which the judge approached count 1 in her Reasons for Verdict was to say that the circumstances "cried out" for explanation from D2. She concluded, understandably on the evidence, that it was D2 who tendered the cheque to PW11 and that it was D2 who had opened the account in D1's name, Lee Kin-fook. However, she went on to say:

"As I find that D2 had opened an account in Lee Kin-fook's name at the Bank of China and had presented an altered cheque to be paid into that account, I also find that the only irresistible and reasonable inference is that there existed a conspiracy to defraud the bank, the details of which are laid out in the particulars of charge 1, with other people." (Tr. pp. 13-14)

17. There was no basis that we have been able to discern for the judge's conclusion. Not only was there was no evidence of conspiracy with Lee Kin-fook (D1) but, as the judge remarked when passing sentence, there was also no evidential link between D2 and the other co-defendants (D3 and D4). There was, in fact, no evidence on count 1 of participation by anyone other than D2 himself. Accordingly, this conviction had to be quashed.

Case against D3 and D4 on charge 23

18. The particulars of charge 23 alleged that D3 and D4 had under their control:

"machines, implements, paper and material, namely : (a) 5 blank cheques of Standard Chartered Bank of which 3 were signed and 2 had the account numbers partly scraped off; (b) a white plastic card with magnetic stripe; (c) a pink plastic folder containing one pink paper with credit card account numbers; 2 pieces of white paper printed with credit card account numbers; (d) a pile of number stickers; (e) one big stick marked with "816"; (f) one small stick marked with "811"; (g) one craft knife; (h) tweezers; (i) an eraser pencil; (j) a drawing brush; (k) a drawing pencil; (l) a decoder; (m) a colour printer; (n) 3 computer floppy disks; (o) a computer unit; (p) an electronic typewriter; which to their knowledge were or had been specially designed or adapted for the making of any instrument, with the intention that they or other person or persons would make a false instrument and that they or other person or persons would use that false instrument to induce somebody to accept it as genuine, and by reason of so accepting it to do or not to do some act to his own or any other person's prejudice."

19. The prosecution adduced evidence that on 5 July 1999, a team of police officers raided D4's flat where they found the items listed in the charge. D3 and D4 were present at the time of the raid, with another man called "Chiu" and they remained during the search.

20. The judge set out in her Reasons for Verdict a summary of the testimony of PW4 and PW9 in relation to the computer equipment and decoder which had been found there. This was as follows:

"PW4, PC 47451, was a computer expert at present attached to the Computer Crimes Section of the CCB. He found that one of the floppy discs found placed inside a printer on the upper bunk bed of D4's flat was a driver disc of the decoder found. The programmes therein could read and write credit card data. He also found the label of that disc matched the name of a directory found in the hard disc of the computer seized. He further found a file named 'Frankie.doc' in the computer.

He set up the printer seized from the premises and caused a printout from that file, P186, and found that the contents looked like credit card data. He agreed in cross-examination that the computer was not password protected.

PW9, Mr Wu Fai-tak, is an expert in the development and supply of software and hardware for credit card transaction equipment to the banks. He assisted CCB enquiries by examining the computer and the decoder seized, P245 and P242. He found that the decoder could both read and write credit and debit card transactions. He confirmed that there was a file in the computer which was a driver software used to drive the decoder. He extracted the data from the document file 'Frankie.doc', made use of the driver software and successfully copied the first data onto a blank Standard Chartered Bank test card, P266.

PW9 also successfully used the duplicates made by PW4 from a programme in the hardware of the computer, P265, and copied encoded data on a card onto the magnetic stripe of a blank card, P273." (Tr. pp. 5-6)

21. Later, in her Reasons for Verdict, the judge expressed the view that PW4's evidence, coupled with PW9's, had made it clear that:

"the computer, the printer, the floppy discs, the white plastic card with magnetic stripe and the pink folder with the documents containing credit card account numbers, are all equipment for making false credit cards". (Tr. p. 14)

22. The pink folder to which the judge had referred contained a number of documents. On one of these, which was in the middle, there were entries which related to credit card numbers including two Canadian Mastercard accounts. D3's thumbprint was found on this document (Exhibit P.45).

Case against D4 on charges 13 to 22

23. Arising from the items which were seized by police in the raid on D4's flat, the prosecution was able to establish that three of the blank Standard Chartered Bank cheques had been issued to a person calling himself Tang Mak Kim-kong when he opened an account in that bank on 15 May 1999 using a Bolivian passport bearing that name to support his identity. PW3, who had dealt with this new customer, was unable positively to identify the remaining two cheques because of alterations which had been made to the account numbers and the cheque numbers. PW3 also testified that she had been instructed to close the account in the name of Tang Mak Kim-kong and that, in doing so, she sent a cashier order to the address in Granville Road which this customer had provided. The cashier order had, by the time of the police raid on D4's flat at Mei King Street, also found its way there. PW3 was able to identify it despite the deletion of the amount which had been entered onto it by her. An identification parade was held, but PW3 was unable to make any identification of the culprit who had posed as Tang Mak Kim-kong.

24. The prosecution called one other witness (PW2) who testified that while she was working as a teller in the Shatin Branch of the Bank of America she, too, had opened an account for a man with a Bolivian passport, calling himself Tang Mak Kim-kong. Nine days later, on 30 April 1999, the same customer came to the bank to collect the cash withdrawal card he had requested. Two and a half months later, she purported to identify D4 on an identification parade as the person who had opened this account, saying: "The chance is very high to be No. 8". When she was cross-examined, she said that she was "80 per cent sure while 20 per cent in doubt" about the correctness of her identification of D4.

25. Most importantly in this context, however, the passbook issued to Tang Mak Kim-kong, together with the cash withdrawal card he had collected were both found in the police raid at D4's flat.

26. The combination of the evidence from the banking witnesses and the property emanating from the two accounts which was found at D4's flat was the basis of the allegation in charge 13 alleging a conspiracy to defraud banks in Hong Kong against D4 with D2 (against whom the judge ruled there was no case to answer) and persons unknown, by falsely representing that cheques showing Tang Mak Kim-kong as the drawee were good and valid orders for the payment of the sums thereon.

27. Charges 14 to 18 all related to the theft or attempted theft of things in action, namely debts, owed by various banks to their customers. The method by which these thefts were committed was more or less the same in each case. Four of the five cheques had been stolen in the mail. All of the cheques had been altered to show Tang Mak Kim-kong as the payee. The cheques were in each case deposited into the newly opened accounts of Tang Mak Kim-kong at either the Standard Chartered Bank or the Bank of America. The amounts involved on the cheques varied from $295,695 to $4,958.

28. Charges 19 to 22 also involved items stolen from the mail. These were a cheque, two statements of account and a business registration penalty notice respectively. The items were all found in D4's flat when it was raided on 5 July 1999.

Defence case

29. D3 testified at his trial that he had come to know D4 during May 1999. Prior to 5 July 1999, he had only been to D4's flat once. During the police raid, D3 said that an officer showed him Exhibit P.45 from amongst the documents in the pink folder. He handled it in all innocence, before telling the officer that the documents were not his.

30. D4 also gave evidence. He laid the blame for the incriminating items found in his flat on a man he named as "Ah Chung" who he had allowed to stay there. D4 described Ah Chung as a "computer freak", and, as to himself, he said he knew little about computers. The computer at his address was, he stated, used by his parents and by Ah Chung.

31. D4's father, Leung Wai-tak, gave evidence that the owner of the flat was his wife. He had to make frequent visits to China and during his absence D4 would occupy the flat. He confirmed that he owned the computer which he had only bought in order to learn how to use one and that Ah Chung was a guest in his house who he had previously asked to fix the computer.

D3's application

32. It was submitted by Mr Egan, on behalf of D3, that D3's thumbprint on Exhibit P.45 was insufficient to justify a finding against D3 of joint control with D4 of the items particularised in charge 23. He submitted that as the evidence against D3 was confined to a single thumbprint on a piece of paper in the flat, albeit listing credit card numbers, the judge could not properly be said to have reached the only and irresistible inference to be drawn from all the facts. Mr Egan suggested, for example, that D3 could have been an innocent courier of the sheet of paper.

33. It is apparent from the judge's findings that she completely rejected the account given by D3 as to how his thumbprint came to be on Exhibit P.45. She noted in particular that D3 had given two stories about why he had found it necessary to touch the document.

34. We gave anxious consideration to the inference drawn by the judge from D3's thumbprint on the document (P.45) that this established D3's joint control over the machines and implements set out in the charge with the required intent. In doing so, we did not overlook D3's presence in the flat at the time of the police raid. Clearly, the picture presented against D3 was highly suspicious.

35. The way the judge approached the evidence concerning the thumbprint on P.45 was to say :

"...... I find that it could be inferred that (D3) was connected with the making of the forged credit cards". (Tr. p. 14)

36. Next, the judge correctly directed herself as to the ingredients of the offence before she went on to deal with the Canadian Visa Card numbers retrieved from the computer at D4's residence. She then said :

"I have no hesitation to infer D3 and D4 were in control of these (items of) equipment found in D4's flat and must have the necessary intention...." (Tr. p. 15)

37. We feel bound to say, despite Mr Ryan's token opposition to the submissions on behalf of D3, that the evidence, without more, fell short of establishing, to the required criminal standard, control by D3 over the machinery and other implements for making false instruments. Perhaps he did know about the equipment and perhaps he knew that his friend, D4, was engaged in fraudulent activity, but the circumstances of D3's involvement were insufficient to establish that the equipment was under his control. Accordingly, we acceded to the submission and quashed D3's conviction.

38. D3 had brought suspicion on himself not only by his conduct before trial but also by giving untruthful evidence at trial. We were not disposed to grant him the costs of this appeal or for his defence in the court below and the application for costs was therefore rejected.

D4's application

39. Mr Allan, on D4's behalf, advanced three substantive grounds of appeal. His overall theme was that whilst there was evidence on which D4 could properly have been convicted on some of the charges, the judge's process of reasoning was so flawed, and her Reasons for Verdict were so muddled, that the convictions were unsafe and unsatisfactory. In regard to the presentation of the Reasons for Verdict, we can say at the outset of our consideration of Mr Allan's grounds that this left a great deal to be desired. No coherent picture of the criminality of any of the defendants at trial emerged from the Reasons for Verdict. This was a relatively complicated series of offences and a large number of witnesses were involved. In the result, counsel found themselves in the same difficulty we had encountered in reconstructing the events although this was compounded, in Mr Ryan's case, by his failure to read the case papers in full. His skeleton argument in reply was utterly unhelpful and his inability to deal with the questions put to him by the court revealed that he had made little or no attempt to master the facts of the case. As the Reasons for Verdict failed to provide a clear picture of what the case issues were about, it was all the more important that the Respondent's counsel should have made himself conversant with the facts from the other papers in the appeal bundle.

40. In his first ground, Mr Allan submitted that the judge had adopted an erroneous approach to PW2's evidence relating to her purported identification of D4 as the person who had opened an account at the Shatin branch of the Bank of America in the name of Tang Mak Kim-kong. The evidence was relevant to charges 13 to 18. In particular, he complained that PW2's less than positive identification was used by the judge to support an inference of guilt on those charges. He contended also that the weak identification made by PW2 required a direction from the judge along the lines suggested in R v. Turnbull [1977] 1 QB 224. Mr Allan additionally pointed out that the identification evidence had revealed a number of shortcomings which, he submitted, created a doubt about the quality of the identification parade itself because there had not been full adherence to the proper procedure.

41. In relation to this last matter, the judge was aware of the criticisms which had been made about the parade and said, when assessing the propriety of the identification parade :

"It is not disputed that when PW2 entered into the identification parade room just before she viewed the parade, PW8 did not tell her that the culprit or suspect might not necessarily be in the parade. It is, however, the evidence of PW8 that when she first saw all witnesses inside the witness room, she did tell them that a suspect might not necessarily be in the parade.

In my view, although it is desirable that an officer in charge of ID parade should put down in the parade book what was explained to the witnesses inside the witness room as well as in her own statement, the lack of such does not amount to a breach of the normal procedure. Neither does that indicate anything sinister, or that PW8 had in any way misled the witnesses. Even if it does amount to a breach of procedures, it does not automatically invalidate the identification parade.

I am satisfied that PW8 had explained to the witnesses beforehand that the suspect might not necessarily be there and PW2 had not been misled in any way. In fact, PW2 had categorically denied the suggestion that when she was viewing the parade she was labouring under the impression that the suspect must be in the parade." (Tr. pp.10-11)

42. The judge then went on to deal with the quality of PW2's identification of D4 in these terms :

"PW2 saw the person who opened the Tang Mak Kim-kong account on two occasions, namely 21 and 30 April 1999. She said that on the first occasion she dealt with him for about 15 minutes and on the second occasion about 5 to 10 minutes. She could not remember the exact words said by her to PW8 when she picked out D4. Although according to PW8's record in the identification parade book, it is recorded down that PW2 told PW8 that, 'The chance is very high to be No. 8', it is clear from a reading of the Chinese transcript, as well as seeing the tape, what was in fact said by PW2 was that the chance of No. 8 is 'higher'.

When being cross-examined in court, PW2 said that at the time of the parade, she was 80 per cent sure whilst 20 per cent in doubt.

It is clear that on this piece of evidence alone a conviction cannot be safe and satisfactory at all and this is conceded by the prosecution. However, the prosecution submits that the identification evidence is supported by circumstantial evidence, namely, the exhibits as found in D4's flat." (Tr. p.11)

43. Earlier in her Reasons for Verdict, the judge had loosely referred to the identification parade as having taken place "four months" after PW2 had last seen the culprit responsible for opening the account at her branch in the name of Tang Mak Kim-kong, when in fact the lapse of time had been only two and a half months. PW2 last saw the culprit on 30 April 1999 when he came in to collect the cash withdrawal card (Exhibit P.227) which was found by police at D4's flat on 5 July 1999. The identification parade took place on 13 July 1999.

44. It is clear from the circumstances that PW2 had a good opportunity to view the man claiming to be Tang Mak Kim-kong. They met twice during bank business hours for a combined period of twenty to twenty-five minutes. Nevertheless, the evidence was far from satisfactory as the judge plainly recognised and whilst Turnbull was not specifically referred to in the Reasons for Verdict, it is apparent that the judge was alert to the weaknesses in PW2's evidence and had taken these into account. The evidence of identification was not on its own a satisfactory basis on which to convict, as the judge had recognised, but taken with the documents found in D4's flat relating to the "Tang Mak Kim-kong" accounts, the case against D4 on the substantive charges (14 to 18) was almost bound to succeed. Accordingly, this ground failed.

45. We do not need to dwell at any length on Mr Allan's second ground which complained that the judge had failed to make an assessment of D4's father who was called in support of the defence case in relation to charge 23.

46. D4 had given evidence about his complete lack of knowledge about computers. The judge rejected his evidence "in its entirety".

47. D4's father gave evidence that D4 knew very little about computers but he went on to say that he was to a large extent living in China. It was implicit in the judge's findings that his evidence about his son knowing little about computers was not a matter of any significance bearing in mind that he was largely living in China.

48. This ground was without any substance and it failed.

49. The third ground of appeal, in common with the first, related to charges 13 to 18. This complained that there was no evidence on count 13 of D4 having conspired with another person to defraud banks in Hong Kong and, on counts 14 to 18, that there was no evidence from which a reasonable inference could be drawn that D4 had opened the "Tang Mak Kim-kong" bank accounts.

50. This ground, in relation to charge 13, was virtually unanswerable as Mr Ryan almost brought himself to agree. The evidence relating to the opening of the accounts in the name of Tang Mak Kim-kong was only linked to D4 and so were the cheques and other banking documents in Tang Mak Kim-kong's name found at D4's address.

51. We have been unable to find any proper basis for the judge's finding, when she convicted D4 on count 13, that:

"Although PW2's identification on its own was not satisfactory, I find that with the state of the evidence before me and in the absence of credible explanation from D4, the only reasonable and irresistible inference is that the person who went to open the said accounts was D4 and that it was D4 together with other persons unknown (who) attempted to or did steal the choses in action in question and that there existed a prior agreement between D4 and others to defraud the banks by the method as laid out in the particulars of charge 13." (Tr. p.16) (Emphasis added)

52. There was, so far as we can see, no evidence of any prior agreement with others and no evidence from which it could be inferred. Accordingly, the conviction on count 13 had to be quashed.

53. There was, as we have said in the context of ground 1, ample evidence for the inference to be drawn that D4 had opened the false bank accounts. This evidence justified the convictions on charges 14 to 18.

54. However, why the prosecution sought to proceed to conviction on the conspiracy in charge 13 when they had charged the substantive offences (charges 14 to 18) which made up the whole of the criminality alleged in the conspiracy is difficult to understand. We were equally unable to follow why the judge had thought it right to convict of conspiracy and the substantive offences when they were effectively one and the same. We do not, however, need to consider this aspect of the case in the light of our decision that the conspiracy in charge 13 cannot stand.

55. Finally, arising from Mr Allan's submissions generally in regard to the charges against D4, Mr Allan alleged that because the evidence was largely circumstantial, the judge should have reminded herself of this. The point does not merit consideration. The circumstantial evidence against D4 was overwhelming on charges 14 to 23 and we were not persuaded that there was any reason to interfere with these convictions.

D4's sentence

56. The judge sentenced D4 to three years' imprisonment on charge 13. She made this concurrent with the sentences she imposed on counts 14 to 22. The longest of these other sentences was two years' imprisonment on count 14. The judge went on to impose a further three years on charge 23 but she considered that a total sentence of five years was appropriate for D4's overall criminality.

57. For the reasons given earlier, we felt that some downward adjustment of D4's sentence was necessary after the conviction on charge 13 had been quashed. Having heard representations from Mr Allan, we took the view that a total sentence of four and a half years was appropriate. We propose to achieve this result by saying that the sentence on charge 14 should be reduced from two years' imprisonment to eighteen months. The remaining sentences on charges 15 to 22 will, as before, all run concurrently, making 18 months in all. The sentence of three years on charge 23 will also remain unaltered and will run consecutively.

Conclusion

58. The appeal of D2 on charge 1 succeeded, and his conviction and sentence on that charge were quashed, leaving him to serve the remainder of his sentence on other matters.

59. The appeal of D3 on charge 23 succeeded and his conviction and sentence were quashed.

60. The appeal of D4 on charge 13 succeeded and his conviction and sentence on that charge were quashed. His appeal on other charges was dismissed. Leave to treat a previous abandonment of D4's application to appeal against sentence as a nullity was granted. His appeal against sentence was allowed to the extent that the total sentence to be served was reduced from five years to four and a half years' imprisonment.