HKSAR v. YUEN KWOK FUNG

CACC 184/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO.184 OF 2002

(ON APPEAL FROM DCCC NO. 1133 OF 2001)

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REASONS FOR JUDGMENT

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Hon Yeung JA (giving reasons for judgment of the Court):

Background

1. On 20 September 2002, we dismissed the application for leave to appeal against conviction. We indicated that we would give our reasons in writing and this we now do.

2. The applicant, Yuen Kwok Fung was arrested in New Zealand on 29 February 2000 and extradited to Hong Kong in November 2001. He was then charged with three charges of theft and one charge of evasion of liability by deception.

3. The applicant was convicted on one of the theft charges and acquitted of all other charges. The application related to the sole conviction.

Prosecution Case

4. The prosecution alleged that the applicant defrauded the victim Chan Wai-ming (PW2) over the sales of 200 sets of Canon photocopiers Model No. NP 3050 (Canon photocopiers).

5. At the material times, the applicant and his brother were shareholders of Jimmy Vicent Company Ltd. (JV). JV dealt with office appliances including fax machines and photocopiers. PW2 was a partner of Yuet Kai Company (Yuet Kai), an agent for Mainland buyers of office appliances.

6. In January 1995, PW2, acting for his Mainland principal, Jin Run Company (Jin Run) placed an order for 200 sets of Canon photocopiers from JV for the total price of HK$5.1 million. A deposit of HK$1.5 million was required and the full balance had to be paid before delivery on 20 March 1995.

7. Jin Run paid a deposit of RMB 1.5 million to a Mainland company nominated by the applicant. The exchange rate difference between HK$1.5 million and RMB1.5 million meant a short payment of HK$125,000. The applicant asked PW2 to pay the said sum of HK$125,000 into his personal account in Hong Kong which PW2 did on 24 February 1995.

8. Jin Run was unable to remit the balance of the purchase price in time and the scheduled delivery date could not be met. However the applicant chased PW2 for further payments and said the Canon photocopiers had already arrived in Hong Kong.

9. On 31 March 1995, PW2, as instructed by the applicant, paid a further sum of HK$2 million into an account nominated by the applicant. The balance in the sum of HK$1.65 million was paid on 10 April 1995 and the delivery date was amended to "on or about 20 April 1995".

10. Before PW2 made the final payment of HK$1.65 million, the applicant showed some documents to convince PW2 that he did have the Cannon photocopiers. PW2 said he was unsure if the applicant had the goods, so he asked the applicant to go to his office with documents. He said he had looked at the delivery orders relating to the Cannon photocopiers.

11. PW2 then gave a cash cheque for $1.65 million to the applicant because the applicant told him he needed the money to redeem the goods.

12. As the goods needed to be dismantled into parts to get around formalities before they could be shipped into the Mainland, there was an additional charge of $30,000, which PW2 also paid.

13. On 17 April 1995, the applicant informed PW2 by means of a fax that the dismantling process would begin soon and it would take a few days to complete the works.

14. PW2's evidence that he gave a cash cheque for $1.65 million to the applicant was not challenged. It was also agreed that a sum of $1.65 million in cash was deposited into the applicant's account on 10 April 1995.

15. On the other hand in the affirmation of the bank officer (PW6) of the China State Bank, it was stated that, "According to this document, the said cheque was cashed by Chan Wai-ming, the account's authorized signatory."

16. The applicant did not make the delivery as agreed. PW2 chased him. Initially PW2 had difficulty locating the applicant. After he did, the applicant said the Canon photocopiers had been sold to someone else but he had already placed the order for another batch of goods, which would arrive at the end of April 1995.

17. PW2 said he could not trust the applicant. The applicant then issued a cheque post dated to 15 May 1995 for $5.5 million as a mark of confidence that delivery could be made at the end of April 1995.

18. The applicant did not deliver by the end of April 1995. In early May the applicant took PW2 to Kwai Chung Terminal where he showed PW2 some goods inside trucks and said 50 sets could be delivered first with the balance to be delivered later.

19. A few days later, the applicant gave PW2 what purported to be godown delivery orders so that PW2 could collect some goods. PW2 noticed that the delivery orders only related to 50 sets of Canon photocopiers and the others were all Model 1215. PW2 nevertheless took the delivery orders, thinking that taking something with value was better than having nothing at all. Those delivery orders were all invalid. The post-dated cheque for $5.1 million also bounced.

20. When asked for an explanation, the applicant admitted that the batch of goods under the invalid delivery orders in fact belonged to Jardines.

21. Both PW2 and his Mainland principal chased the applicant. They eventually located the applicant at the office of JV on 29 May 1995. As a result of discussion and argument, the parties signed a memorandum in the presence of a Mr. Wong whom the applicant introduced as from HSBC.

22. Under the memorandum, the applicant agreed (1) to pay $1.4 million to PW2 on 1 June 1995; (2) to deliver photocopiers worth $ 2 million on 5 June 1995; (3) to pay another sum of $1.73 million on 30 June 1995 and (4) to pay a further sum of $1.1 million to PW2 as compensation.

23. On 1 June 1995 when the $1.4 million was due, PW2 looked for the applicant and was having difficulty in locating him. PW2 could not find the applicant in the Central office of JV. Eventually at the head office of JV in Cheung Sha Wan and through its sales manager Chiu Sai Ping (PW4), PW2 was told that the applicant had deposited a cheque for $1.4 million into his account. PW2 was even shown a deposit slip. PW2 phoned his bank manager and found out the cheque deposited was a personal cheque. As PW2 did not trust the applicant, he insisted to wait for him.

24. Eventually, PW2 met the applicant when he returned to the office at 6 p.m. The applicant then signed a memorandum to the effect that $1.4 million had been remitted to Yuet Kai's account.

25. The cheque payment of $1.4 million bounced. The cheque was a personal cheque of PW4.

26. When PW2 again confronted the applicant, he was then taken to a solicitor's office where the applicant signed an agreement setting out the timetable and the ways to settle the matter. The applicant agreed inter alia, (1) to pledge some of JV's goods in the Mainland with PW2's Mainland principal. The proceeds would be used to set-off the debt with a 5% agency fees; and (2) to pay PW2 $300,000 the same day.

27. The applicant then put a cheque into an envelope and sealed it. He told PW2 to take it to PW7 who would then give him $300,000 as PW7 had promised to lend the applicant $300,000.

28. PW2 did not get $300,000 as PW7 said it had nothing with him. In fact PW7 had on another occasion lent $300,000 to the applicant. The applicant agreed to repay $312,000 and offered a post-dated cheque as security. The cheque was however dishonoured.

29. Neither PW2 nor his Mainland principal got any payment from JV's pledged goods as the Mainland authorities had confiscated them all.

30. The applicant then avoided PW2 and could not be located.

31. According to PW4, the applicant told him to give him a signed blank cheque on 1 June 1995 or else the company might encounter difficulties and would have to dismiss him. PW4 told the applicant that he must deposit money into his account as he had insufficient money to meet any cheque. The applicant said he would sort out the matter. PW4 then gave the blank cheque to the applicant and he later saw a deposit slip for $1.4 million on his desk.

32. When PW2 came in the afternoon and made a scene, he got in touch with the applicant who told him to give the paid in slip to PW2.

33. The payments to the applicant of the respective sums of HK$125,000 on 24 February 1995, HK$2 million on 31 March 1995 and HK$1.65 million on 10 April 1995 formed the subject matters of the 1st, 2nd and 3rd charges of theft.

34. The prosecution alleged that the applicant stole a thing in action, namely the said three sums owed by the China State Bank Limited to PW2 trading as Yuet Kai, the property belonging to PW2.

35. The 4th charge related to the purported deposit into PW2's account of HK$1.4 million on 1 June 1995. The prosecution alleged that the applicant dishonestly induced PW2 to wait for payments by falsely representing to PW2 that the cheque drawn on PW4's account on 1st June 1995 was a good and valid order for the payment.

36. It was not disputed that in July 1995, a Receiver was appointed by HSBC to take over JV's affairs and a petition to wind up JV was presented by its employees in September 1995. JV was wound up in November 1995.

37. It was agreed that PW4's cheque, the subject matter of the 4th charge was deposited on 1 June 1995 after 3.30 p.m. and that the 2nd of June 1995 was a public holiday. It was also agreed that it takes 5 minutes to walk from JV's head office to the bank where PW4's cheque was deposited.

Defence Case

38. The applicant agreed that he had received the payments of HK125,000, HK2 million and HK$1.65 million. But as PW2 did not make the full payment before the stipulated date, the Canon photocopiers intended for PW2 were no longer available and he told PW2 that another order had be placed. The applicant said he had placed order from another supplier and the goods were expected to arrive on or about 20 April 1995.

39. The applicant admitted that he had issued the post-dated cheque for HK$5.5 million but the understanding was that PW2 would use it to show his principal and would not cash it.

40. When PW2 told him that the cheque would be cashed, he stopped payment on it although with the OD facilities of $8.1 million, the cheque could be paid.

41. The applicant denied giving the godown delivery orders to PW2. He said PW2 went up to his office and complained about the non-delivery of goods to him while others were able to obtain goods from the applicant. They then had an argument and at the heat of the moment, PW2 simply took the delivery orders, which were unrelated to him. He denied showing the delivery orders to PW2 nor taking him to Kwai Chung terminal.

42. The applicant also denied that the fax document dated 17 April 1995 related to the Cannon photocopiers. He said it in fact related to another transaction concerning Model 2020 only.

43. The applicant said he had reconfirmed the order for the 200 set of Cannon photocopiers intended for PW2 and they were actually ready in Hamburg, Germany. He had to open letters of credit in late April 1995. However, he was having a dispute with HSBC and his credit facilities were being reviewed. HSBC asked for details of his stock and the cash-flow projection as well as his strategy for the following year.

44. When PW2 and his Mainland principal went up to the applicant's office on 29 May 1995, he was actually having a meeting with officers of HSBC and Coopers and Lybrand to discuss the matters raised by HSBC.

45. As PW2 and his principal were making a scene, the applicant agreed to execute the memorandum. He however said he never agreed to give a cashier order for $1.4 million on 1 June 1995.

46. The applicant said he was aware that he had to pay $1.4 million to PW2 on 1 June 1995. He said he arranged to meet someone in the morning to raise the money. He learnt in the afternoon between 3 to 4 p.m. that PW2 was in his office making a scene and he therefore told PW4 to try to make PW2 to leave his office.

47. The applicant returned to his office at 6 p.m. and PW2 was still there. He told PW2 that he was unable to raise sufficient funds and offered to deliver some other goods to PW2 to replace those he had ordered.

48. The applicant said he only learnt at 8 to 9 p.m. that the cheque for $1.4 million had been given to PW2 earlier in order to make him leave. His suggestion was that it was PW4 who gave the cheque to PW2 without him knowing about it and it was PW2 who deposited the cheque.

49. Eventually the parties resolved the matter. A new memorandum was executed before PW2 left the applicant's office.

50. The applicant alleged that PW2's Mainland principal had taken delivery of $1.2 million worth of office appliance on 4 June 1995 and another batch of $5 million odd worth of Sharp products on 12 June 1995. The applicant considered the dealing with PW2 settled.

51. As the Sharp products would take 4 to 5 months to be sold and in order to regulate the arrangement, the applicant invited PW2 to go to a solicitor's office to execute the agreement. The applicant also agreed to pay PW2 $300,000 to cover the high interest rate. It was arranged that PW7 would lend the sum to the applicant and pay it direct to PW2. The applicant would then give the cheque for $312,000 to PW2 to hand it to PW7. The $12,000 was meant to be interest.

52. The applicant suggested that in his business, he had entrusted senior staffs, including PW4 to collect payments from purchasers and deposit them into their own personal accounts. The money would then be deposited into the company accounts. He also said when he was not in Hong Kong; those senior staffs would issue personal cheques to suppliers on their own initiative if the needs arose. When the applicant returned to Hong Kong, he would either make payment into the accounts of the staffs to meet the cheques issued by the staffs or issue fresh cheques to exchange for them.

53. It appeared to be the applicant's suggestion that it was PW4 who gave the cheque for $1.4 million to PW2 on 1 June 1995 on his own initiative and such act was consistent with the usual practice.

54. The applicant said he left Hong Kong to join his family in New Zealand because of fear of the loan shark from whom he had borrowed money in July 1995.

Findings By the Trial Judge

55. Perhaps not surprisingly, the judge did not accept the applicant's evidence at all. The judge found his evidence unreasonable, unbelievable and defied common sense.

56. The judge did not accept the evidence of PW 4 and PW7. The judge concluded that the cheque for $1.4 million was issued by PW4 and it was possible for him to put the blame on the applicant. The judge also rejected the evidence of PW7, as some of his evidence was unreasonable.

57. On the other hand, the judge accepted the evidence of PW2 and those of the other prosecution witnesses whose evidence were not in substantial dispute anyway.

58. In particular, the judge accepted the following facts as proved:

（1） Before the $1.65 million was paid, the applicant had shown some documents to PW2 indicating that he had the goods;

（2） The delivery date was amended from 20 March to 'on or about 20 April 1995';

（3） Extra $30,000 was required for dismantling service, and that sum was also paid;

（4） The faxed letter dated 17 April about dismantling would be carried out after the holidays related to the 200 sets of model 3050 (the Cannon photocopiers);

（5） The applicant issued the $5.5 million cheque to PW2 for the purpose as alleged by PW2;

（6） The applicant took PW2 to Kwai Chung and showed him some goods, as alleged by PW2;

（7） By showing PW2 the documents, it was a representation by conduct that the applicant had those goods;

（8） The applicant also give PW2 godown delivery orders in the manner as alleged by PW2; and

（9） PW2 could not retrieve the goods from the godown. The applicant then admitted that the goods belonged to Jardines.

59. The judge acquitted the applicant on the 1st and 2nd charges on the basis that it was too dangerous to conclude that the applicant did not have the Cannon photocopiers to supply to PW2 when he received the payments of $125,000 on 24 February 1995 and $2 million on 31 March 1995. The judge said there was no evidence from the prosecution to show that the applicant did not have the goods at the time of the payment.

60. The original delivery date was 20 March 1995 subject to full payment before delivery. It was PW2 who was initially at fault for failing to make full payment in time. The agreement was just sale by description and it was therefore not unreasonable for the applicant to dispose of those goods intended for PW2 and then try to place fresh orders to meet his demand.

61. In the circumstances, the judge could not be sure that the applicant was acting dishonestly when the accepted the two payments, the subject matters of the 1st and 2nd charges.

62. As for the 4th charge, the judge took the view that to constitute deception, it must operate on the mind of PW2. The judge said prior to 1 June 1995, PW2 had already lost confidence with the applicant and he would not accept personal cheque from him. PW2 also said he left the applicant's office not because of the memorandum executed by the applicant but because it was too late in the day

63. The judge could not be sure that the deposit of $1.4 million operated on PW2's mind and hence the 4th charge was not proved.

64. As for the 3rd charge, the judge found that on 10 April 1995, PW2 had made full payment and the applicant had represented to him that the goods were available and could be delivered on 20 April 1995.

65. The judge took into consideration the applicant's conduct, including the issue of the $5.5 million dishonoured cheque, the taking of PW2 to Kwai Chung, the applicant's admission that the goods that he agreed to deliver to PW2 in fact belonged to Jardines and the signing of the subsequent agreement.

66. The judge concluded that the applicant did not have the Cannon photocopiers on 10 April 1995 and he had no intention to obtain them from an alternative supplier. He lied to PW2 who relied on his false representation to pay him the $1.65 million.

67. The judge concluded that the applicant had the intention of permanently depriving PW2 of the $1.65 million and that he was acting dishonestly. His subsequent conducts were just sham and delaying tactics.

Grounds of Application

68. In this application, Mr. Ma, on behalf of the applicant raises basically three grounds:

（1） The dispute between the evidence of PW2 and PW6 as to who cashed the cheque for $1.65 was not resolved; and

（2） The conviction on the 3rd charge was inconsistent with the acquittal on the 1st and 2nd charges;

（3） On the evidence presented by the prosecution, the applicant did not steal a chose in action, namely the debt owed by The China State Bank Limited to PW2. The suggestion was that it was PW2 who cashed the cheque and in so doing, the chose of action belonging to him was extinguished by his own act. Mr. Ma relies on R v Preddy [1996] 3 WLR 255.

69. Mr. Ma suggested that the judge found both PW2 and PW6 to be honest and truthful witnesses, yet their evidence contradicted one another. In the circumstances, the conviction on the 3rd charge was faulted.

70. On the premises that it was PW2 who obtained the $1.65 million on 10 April 1995, there was no chose in action capable of being stolen by the applicant and therefore the elements of "appropriation" and "property belong to another" had not been proved. The suggestion by Mr. Ma is that it was PW2 who obtained the chose in action by his own acts.

Analysis of the Evidence (Grounds 1 and 3)

71. PW2 said he gave the cash cheque to the applicant in his office. He was never asked how the cheque was cashed. It was never suggested to him that he himself cashed the cheque. The applicant, in his evidence did not make that suggestion either.

72. Instead it was agreed that the applicant acknowledged the receipt of the cheque by making the following endorsement on the sales agreement:

"Received payment HK$1,650,000 by cheque No. 500471, the China State Bank Ltd."

73. It was also agreed that a cash sum of HK1.65 million was deposited into the applicant's account with the bank passport on 10 April 1995.

74. Mr. Ma suggests that there was evidence to show that it was PW2 who cashed the cheque. He rests his argument of the evidence of PW6 and the facts that PW2 had endorsed at the back of the cheque.

75. It must be borne in mind that PW6 was a bank officer who gave her evidence only with reference to the bank documents. She was not a bank teller and therefore could not have personal knowledge as to who actually presented the cheque for payment.

76. PW6's evidence on this aspect was ambiguous and equivocal. What was stated in her affirmation was "According to this document, the said cheque was cashed by Chan Wai-ming, the account's authorized signatory."

77. The evidence of PW6 under cross-examination and the fact that PW2 had endorsed on the back of the cheque did not advance the matter. PW2 could have made the endorsement before giving the cheque to the applicant.

78. Mr. Ma says he has the written submission of counsel for the applicant at the trial which submission indicates that counsel relied on the suggestion that it was PW2 who physically cashed the cheque for $1.65 million.

79. We have not been provided with the transcript of counsel's submission. If counsel did make that submission, it was one for which a proper and open foundation should have been laid first.

80. If it was the applicant's case that PW2 himself presented the cheque for payment and Preddy's case (supra) somehow provided a defence to the charge, that should have been put in terms to PW2 and the applicant, when he gave evidence, should have put forward that case. Instead, what we have is counsel for the applicant at trial putting questions to PW6, who had no personal knowledge of the matter, and from the answers given to those questions - which in themselves each contained several parts - seeking to construct a case that had never been put to those who did have personal knowledge. Such approach is to be much deprecated.

81. The judge did find that it was the applicant who withdrew the $1.65 million from PW2's account. There is ample evidence to support such findings.

82. Preddy's case (supra) was decided on the premises that a payee of a cheque deposited the cheque into his own account before withdrawing the money. It was said that in such circumstances, the payee did not obtain the payer's chose of action and hence there was no "obtaining property belonging to another".

83. Lord Goff of Chieveley stated at page 264 of the judgment:

"The crucial question, as I see it, is whether the defendant obtained (or attempt to obtain) property belonging to another. Let it be assumed that the lending institution's bank account is in credit, and that there is therefore no difficulty in identifying a credit balance standing in the account as representing property, i.e. a chose in action, belonging to the lending institution. The question remains however whether the debiting of the lending institution's bank account, and the corresponding crediting of the bank account of the defendant or his solicitor, constitutes obtaining of that property. The difficulty in the way of that conclusion is simply that, when the bank account of the defendant (or his solicitor) is credited, he does not obtain the lending institution's chose in action. On the contrary that chose of action is extinguished or reduced pro tanto, and a chose of action is brought into existence representing a debt in an equivalent sum owed by a different bank to the defendant or his solicitor. In these circumstances, it is difficult to see how the defendant thereby obtained property belonging to another, i.e. to the lending institution."

84. Preddy's case (supra) does not assist the applicant's case at all as it was the applicant who used the cheque to withdraw the money from PW2's account.

85. In so far as Mr. Ma seeks to rely on the suggestion that there was contradiction in the evidence of PW2 and PW6 and that it was PW2 who withdrew the $1.65 million from his own account, the suggestion has absolutely no merit.

86. There is no substance in Mr. Ma's grounds 1 and 3.

Ground 2

87. The situations pertaining to the issue of the 3rd cheque (subject matter of the 3rd charge) was clearly different from those pertaining to the issue of the 1st and 2nd cheque as identified by the judge.

88. The first payment of $125,000 on 24 February 1995 was meant to cover the difference in the exchange rate. There were then no designated goods to meet the order of PW2 who was only told that a letter of credit had been opened.

89. When PW2 failed to make full payment before the original scheduled delivery date on 20 March 1995, the applicant was not obliged to make any delivery. As the judge observed "it would be unreasonable and too demanding to expect the defendant would keep the goods or take steps to place order from overseas supplier in order to suit the needs of PW2."

90. When the applicant asked for the 2nd payment of $2 million, he made no further representation to PW2. He simply asked him to deposit the money into a nominated account.

91. On the other hand, when the applicant asked for the payment of $1.65 million, he expressly said that the Cannon photocopiers could be delivered on or about 20 April 1995.

92. The applicant produced delivery orders to convince PW2 that he did have those goods. He even asked for a further sum of $30,000 for the dismantling services and said the dismantling process would start shortly thereafter.

93. When the applicant failed to deliver as promised, he tried to avoid PW2. When located, he said the goods had been sold to someone else and that he had placed order for another batch of goods which would arrive at the end of April 1995.

94. The applicant even issued a dishonoured cheque for $5.5 million to gain the confidence of PW2.

95. When the applicant again failed to deliver as agreed, he then took PW2 to Kwai Chung and told him that at least some goods could be delivered. He even gave invalid delivery orders to PW2 in a clear attempt to deceive him.

96. The applicant admitted to have lied to PW2 when confronted with the invalid delivery orders. He also admitted to have lied about the goods in the trucks in Kwai Chung.

97. Three days before delivery, he still represented to PW2 that the goods were available and were being dismantled as agreed.

98. Irrespective of how the judge decided on the 1st and 2nd charges, he was justified in concluding as he did that when the payment of $1.65 million was made, there were in fact no goods available and that the applicant lied with a view to obtain the money. The judge was entitled to conclude that he was acting dishonestly.

99. We are not persuaded there was any inconsistency in the verdicts as alleged. In any event, the applicant has to show that the verdicts were so inconsistent that no reasonable tribunal who had applied their minds properly to the facts of the case could have arrived. (see the judgment of this Court in HKSAR v Sham Ying-kit [2000] 4 HKC 380 per Keith JA at pp. 389-391)

100. We can only interfere with the judge's conclusion if there is no valid basis upon which he could have reached the decision as he did. We are simply unable to reach such conclusion.

101. On the findings of the judge, the applicant did obtain PW2's chose in action, namely the credit balance of $1.65 million in his account and that he was acting dishonestly.

102. The judge's conclusion that the defendant "not only withdrew money from PW2's account, but had done a series of acts leading PW2 to lose this thing in action." is fully justified.

Conclusion

103. We see no merit in any of the grounds raised by Mr. Ma.

104. The application for leave to appeal against conviction is refused.