HKSAR v. CHEUNG WAI

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

1997, No.558
(Criminal)

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J U D G M E N T

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Stuart-Moore, J.A. (giving the judgment of the Court):

1. On 22nd August 1997, this Applicant was convicted of attempting to procure an entry into a bank record by deception, contrary to section 18D(1) of the Theft Ordinance Cap.210, following a trial in the District Court before Deputy Judge Wright. He was sentenced on 8th September 1997 to 30 months' imprisonment. He now seeks leave to appeal against his conviction and sentence.

2. The Particulars of the Offence were that on 10th October 1996, this Applicant:

"dishonestly, with a view to gain for himself or another or with intent to cause loss to another, attempted to procure the making of an entry in a bank record, namely a debit entry in the sum of ￡406,225.28 sterling in the account of Flying Dragon (Intl) Plants and Machineries Company with Chiyu Banking Corporation Limited numbered 039-731-920 254-30 by deception, namely by falsely representing that he was entitled to convert the aforesaid sum of ￡406,225.28 into Hong Kong currency and transfer the converted sum to another account in the said Chiyu Banking Corporation Limited."

3. The case against the Applicant was that on 10th October 1996, towards the end of banking hours, he made an attempt to transfer ￡406,225.28 from one of his company accounts (Flying Dragon) into another account by that name at the Chiyu Bank, which was a Hong Kong currency account, knowing that he had no entitlement whatsoever to these funds.

4. The background to this allegation was largely agreed. On 9th October 1996, this large sum in sterling was credited to the Flying Dragon foreign currency account. Flying Dragon was a company in which the Applicant was sole proprietor. He and his mother were the only authorised signatories for the account. The sterling amount was telegraphically transferred from a bank in England and was brought about on what purported to be the instructions of authorised signatories on that account. These instructions turned out to be false and a stop was placed on the funds when the fraud was discovered. Word reached the Chiyu Bank on the morning of 10th October, and the money was then frozen in the Flying Dragon account.

5. At about 4.30 p.m. on that same day, the Applicant went into the foreign currency section of the Chiyu Bank and spoke to a bank teller (PW2). He enquired about the sterling exchange rate and expressed dissatisfaction at the reply he received. PW2 then said that a "privilege" rate could be given where a customer was changing a large sum. PW2 was shown the Applicant's bank passbook and saw that it contained a large sum in sterling. She then offered a better rate of exchange into Hong Kong dollars which the Applicant agreed to accept. He wished to have the money credited to his Hong Kong currency company account.

6. PW2 asked the Applicant to complete his signature and to apply the company chop to a transfer document. However, when PW2 tried to process the arrangement through the computer, the transaction was rejected.

7. PW2 had been previously unaware of the freezing instruction on the money. She then approached her Department Manager (PW3) for authorisation and only then discovered that it was not possible to carry out the Applicant's instructions. PW2 tried to explain to the Applicant but an argument developed and PW3 then joined the conversation.

8. It seems that the Applicant eventually left the bank taking the money transfer forms with him.

9. The Applicant was first questioned about this incident on 30th December 1996 and gave a witness statement. He told a police officer that he had gone to the bank to ask if the bank could check who had sent the money to his account. He then signed a letter handed to him by a male member of the bank staff. The letter gave consent for the return of this sum of money which he signed because he had become aware that the money should not have been deposited in his account.

10. Nothing further seems to have happened regarding the Applicant until he was arrested on 13th March 1997. Effectively, he stood by what he had said in his earlier statement. At his trial, the Applicant gave evidence in accordance with his earlier statements. In particular, he denied that he had made any attempt to transfer these funds which had been credited to his account. This was the central and crucial issue at his trial.

11. The judge summarised the background to the defence case in this way:

"The defendant called his mother as a witness. Her evidence relates to events on 9 October and I shall deal with that first. She says that on 9 October she went to a bank to withdraw cash to enable her to pay a gas bill on 10 October. Because it was part of her duties to update savings account books from time to time and because this had not been done in recent times, she took with her a number of savings account books including that relating to the account. She went to a bank which is a member of the Bank of China group, withdrew her cash and updated the other passbooks at a machine available for that purpose. That the passbook for the account was so updated is confirmed by PW2.

When she updated the passbooks she noticed that a substantial amount of money in sterling appeared as a credit in the account. She returned to the Defendant and pointed this out to him. He denied knowledge of why or how the credit arose and said he would have to make enquiries.

I see no reason not to accept her evidence. It may be said that this is a material factor in the Defendant's defence as it shows that he first came to know of the existence of the funds through the medium of his mother. In reality what it shows is that his mother discovered the presence of the funds on 9 October 1996 and told him about it - nothing more.

The defendant says that when his mother told him around noon of the presence of the funds he was too busy about other matters to give it his attention. Thus the rest of 9 October 1996 passed with the funds languishing in the account and no enquiries made. On 10 October 1996 the Defendant was still busy about his affairs: too busy, he says, to make early enquiries of the bank yet, on his version, not too busy to enjoy a protracted meal with a female acquaintance who was not a particularly good friend nor too busy to agree to accompany her on a visit to a flat which she was contemplating acquiring. So busy was he, so little attention did he pay to the fortuitous acquisition of over ￡400,000.00 in his bank account that he did not even telephone the bank to make enquiries."

12. Mr. Grossman S.C. has submitted, as his first ground of appeal, that the Applicant was deprived of his right to a fair trial because the long delay in the investigation had resulted in the destruction of a video tape which might have established the Applicant's innocence. It is correctly pointed out that eight days before trial the defence wrote to the prosecution requesting a copy of the security video. The tape was not forthcoming and, in correspondence after the trial, it emerged that the video recording had been destroyed three months after the events in the bank as it was not considered necessary.

13. Mr. Grossman has drawn to our attention a number of cases in which the loss of evidence, non-disclosure of material and, in one case, [R v Holgate (No.1) 1996, 3 HKC 315 ] the failure by a judge to consider how the defendant might have been handicapped in his defence by the absence of a crucial witness, have all proved fatal to the prosecution. Necessarily, every case must be decided on its own facts.

14. We should say at the outset that we are satisfied that what has emerged during the hearing of this application shows that no fault lies with the prosecution for allowing the tape to be destroyed. It is apparent that no one had ever given consideration to any significance it might have.

15. The first witness statement to be taken was from PW3 on 25th October 1996. This gave brief details of the events of the 10th October and would have alerted no one to the possible importance of the video tape. On 30th December 1996, the Applicant himself gave a witness statement and once again there is nothing contained therein which might have alerted anyone to the possible significance of the bank's security video tape. By the time PW2 gave her statement of events on 15th January 1997, which might have alerted an investigator to the possibility of its importance, it had already been destroyed or recycled. In the result, therefore, no one was ever made aware of its contents. The defence and the prosecution are each left saying that it might well have assisted their respective cases. Mr. Schapel, for the Respondent, has very fairly conceded that a camera was positioned in such a position as to give a view of the counter where PW2 worked and where she says a transfer form was signed and chopped by the Applicant.

16. A few days prior to trial, the solicitors then acting for the Applicant wrote to the prosecution, in a letter dated 12th August 1997, enquiring whether they could be shown the bank's tape if one existed. Obviously, no tape was forthcoming and, at the trial, no mention was made of this correspondence or the absence of the tape. Defence counsel, whose affirmation we have read, for reasons which no one has criticised, took the view that the tape was not a matter he would pursue.

17. The matter, therefore, now raises itself before us for the first time. If this issue had been heard before the District Court as an application to stay the proceedings, in those circumstances, as Yang C.J. said in the Holgate case at page 319:

"An applicant must show on a balance of probabilities that his trial is so prejudiced by the matter of which he complains that it is beyond the power of the judge to preside over and hold a fair trial."

18. Whilst this court is not considering a stay application, we feel that this is the correct test to apply when considering our approach to this ground of appeal.

19. What distinguishes Holgate's case (above) to the present one is that the nature of the evidence which might have been given by a witness (Holgate's wife) who was missing, was known to the court and could be demonstrated to be material and relevant to the defence case which was being put forward. To this extent the trial judge in Holgate misdirected himself where he said that "unfortunately there is no indication as to what Mrs. Holgate would have said if called to give evidence". That appeal was allowed on the basis that the judge had failed to demonstrate that he had fairly evaluated Holgate's evidence.

20. We have been referred by Mr. Grossman to three other cases. Taking these in turn, in The Queen v Lau Yuk-wan, Cr. App. 389/1996, the appeal was allowed where an important witness was permitted to leave this jurisdiction without having made any statement about the material events to which he had been a party. When the applicant in that case later stated that the missing witness would be able to substantiate a vital claim he was making in his defence, even then the prosecution had made no attempt to find out if the claim was well-founded.

21. Whilst we feel able notionally to accept that the missing tape in the present application is equivalent to a missing witness, there is an important distinction between the circumstances in the present case and those in Holgate and Lau. In those cases there was sworn evidence as to what the missing witnesses would say if they were called. In the present case, no one ever saw the tape and no one is, therefore, able to say what it actually recorded.

22. Mr. Grossman referred us to a decision at first instance in H.C.C. 117/1996 where a police officer had viewed a video tape of events and made what he termed "no discoveries". The video was then erased. The judge held that this non-disclosure of evidence had prejudiced a fair trial and he stayed the proceedings. The judgment unfortunately does not explain what was meant by "no discoveries" because, if the tape was blank or indecipherable, it is difficult to imagine why this was not simply an issue for the jury to assess in common with any other issue calling for their determination.

23. The last case to which Mr. Grossman has referred us, which is again at first instance, was R v Chu Kam-to and Another (1994) 1 HKC 778. In that case, the prosecution was unable, when called upon to do so, to produce for inspection the drugs which were the subject-matter of the charge. It transpired that this was because "an imposter" had gone to the police station where the drugs were being kept and took them away. Yam J. found that this had the result that a fair trial could not take place because the absence of the exhibits impaired the defendants' "ability to make full answer and defence". One of the features of that case was that both defendants were alleged to have signed the envelope attached to the bag containing the drugs. This allegation was denied.

24. With the greatest respect to the judge, we have the gravest doubts that this case was properly decided. There was an overwhelming inference to be drawn that whoever removed the drugs was intent upon helping the alleged perpetrators of this crime. We are unable to follow from the judgment why this case should not simply have proceeded with all these issues placed fairly and squarely before the jury for them to decide. In any event, unlike the present application, once again the nature of the "missing" evidence was known.

25. In the present case, bearing in mind that no one knows whether the evidence would have assisted the defence or merely have confirmed the prosecution's case, and that no fault can be laid at the door of the prosecution for having failed to realise the potential importance of the tape before it was too late, we have concluded that its absence has not deprived the Applicant of a fair trial.

26. We should add that, while the strength of the case against the Applicant has not been a factor we have needed to consider, we were impressed by the argument advanced by Mr. Schapel that it is something which we might have taken into account.

27. Mr. Schapel took, by way of example, a street fight that is witnessed by a large number of people who point the finger afterwards at a particular culprit. Mr. Schapel suggests that if a television camera crew were filming the fight and the film for some reason went missing, so that it could not be produced, it would be unrealistic to suggest that a fair trial could not take place in the absence of the missing exhibit even though the contents of the film in his example would be known. We feel bound to agree although this merely serves to illustrate that every situation must be judged on its own merits.

28. In the present case the judge had strong and unequivocal evidence from two bank witnesses (PW's 2 and 3) that the Applicant had signed the form which is used to transfer funds from one account into another. He accepted that evidence for a number of cogent reasons:

"..... the evidence of PW2 establishes that she only became aware of the status of the funds in the account when she was attempting to process a transaction and not simply when she was updating the balances in the passbook. Her evidence also establishes that she would process the transaction only once the withdrawal or transfer form (of which Exhibit P8 is a specimen) had been completed: she was quite unequivocal on this aspect. It follows that if, as she obviously did, she had sought to effect a transaction, the requisite document would already have been signed and the chop affixed by the Defendant. Secondly, I am satisfied that PW3's recollection of having both the passbook and the signed withdrawal or transfer form is correct. He was a good, honest and reliable witness and I accept his evidence that not only did he have those documents in his possession but that they were taken back by the Defendant.

It seems to me that once I find as a fact, as I do, that the Defendant had signed and affixed a chop to the withdrawal or transfer form it is somewhat academic to go into any detail on the rest of the evidence of PW2 and PW3. However, I would indicate that I accept the evidence of PW2 to the effect that the Defendant enquired of exchange rates, obtained a favourable rate and then sought to have the funds transferred to another account with the bank which he operated."

29. The overwhelming strength of the case against the Applicant from these points and others which emerged from the trial, serves to reinforce the view that no injustice of any kind has been done to him as the result of the absent tape.

30. There is no substance to ground 1.

31. The second ground of appeal relates to what Mr. Grossman submits were errors in the judge's assessment of PW's 2 and 3. The evidence of both witnesses was crucially important against the Applicant and it follows that their reliability had to be closely scrutinised. Mr. Grossman has submitted that the judge's consideration of the honesty of PW's 2 and 3 was practically an irrelevance and that the judge confused this with the separate question of the reliability of those witnesses, given the long passage of time between the events in the bank and the date when they testified.

32. It is readily apparent that the judge was alive to this distinction. In particular, he observed in his Reasons that PW3 had good cause to be far more aware of the importance of events in the bank as they developed because it was that witness who had received and acted upon the telephone call from England during the morning. The judge went on to say:

"When, later in the day, these events occurred he associated them with the earlier telephone call. On that basis alone, given the events, there is every reason to accept his evidence that he remembers the important aspects of the incident. In addition, he said, and I accept, that this was the first time such a matter had occurred which also made it significant for him.

I do not propose to go through the conflicts which do exist between the evidence of PW2 and PW3. With the one exception where I interjected they were fairly summarised by Mr. Chau. Certainly, there are aspects to the evidence of these two witnesses which are irreconcilable. I bear that in mind. However, there seems to me to be one issue which does emerge from their evidence with absolute clarity - and that is that the Defendant had signed the withdrawal slip and affixed the chop to it."

33. Despite this last passage in the Reasons for Verdict, Mr. Grossman has nevertheless submitted that the judge failed to take into account a multitude of discrepancies between the evidence given by PW3 when compared to the testimony of PW2. He submits that this exercise provides a means of judging whether their memories were reliable. We are not able to agree with him. It seems to us that none of the discrepancies could have affected the central and crucial finding that decided the outcome of the trial. PW2 gave evidence that the Applicant had signed and chopped the transfer form, and PW3 gave evidence that he had seen this form which had been signed and chopped.

34. It is further submitted in this ground that the judge wrongly concluded, from aspects of the Applicant's own evidence, that he was a witness not worthy of belief.

35. It is unnecessary to take every example which has arisen in argument but one of these was that the Applicant had made no attempt to check his account when first made aware by his mother of this "fortuitous acquisition". The judge described this as "preposterous" and gave as his reasons for saying this that the Applicant was not expecting a sterling transfer to his account. In fact, there had been an abortive negotiation with an English company and the Applicant was well aware these funds were not his property. As an additional factor, the Applicant's own company had become "stagnant" at that time and its premises had been "sold or bought out that month".

36. The judge was fully entitled to describe the failure to make an earlier check on his account in the way he did.

37. One other example of the judge's assessment of the Applicant which is criticised is the finding that the Applicant was "evasive". The judge gave as his reason for saying this that the Applicant was "almost incapable of answering a simple question with a simple answer". Mr. Grossman invites us to conclude that this may only show a nervous person desperately doing his utmost to convince the Court of his innocence.

38. Matters concerned with the assessment of witnesses were for the judge who had seen and heard the witnesses. In no sense, so far as we can detect, did the judge fall into error by taking into account evidence that had not been given, or omit to take into account important evidence, or draw inferences which were not open for him to draw. There are certainly, in our judgment, no grounds whatsoever for substituting any different views to those reached by the trial judge. In any event, this could only occur if the conclusions he drew were without foundation.

39. This ground, like the first, is devoid any merit.

40. The third and final ground of appeal is that:-

"The learned Judge erred in finding that the ingredients of Sec.18(D)(1) of the Theft Ordinance had been made out in that the evidence seemed to indicate that the Applicant was simply intending to transfer money from one account to another."

There was no evidence, Mr. Grossman submits, of an attempt to transfer these funds with a view to gain for himself.

41. Other aspects of this ground have now been abandoned.

42. As to this submission, all that we need to say is that there was an abundance of evidence from which an inference could properly be drawn that the intention was to transfer the sterling sum in the account with a view to gain. Any alternative inference would have been in the circumstances patently absurd.

43. On any view, the Applicant was only in the bank because of the sterling sum that had been credited to his company account. The Applicant knew that he had no entitlement whatever to that sum, whether he withdrew it from the bank or simply transferred it to another account. This was a blatant attempt to do the latter having first ascertained the exchange rate. The charge, in our opinion, was amply made out.

44. For the reasons we have given, we can find no substance in any of the points which have been raised.

45. Accordingly leave to appeal against conviction is refused and the application is dismissed.

46. The Applicant also seeks leave to appeal against his sentence of 30 months' imprisonment. This was imposed on 8th September 1997 after a background report from a probation officer had been obtained.

47. In passing sentence, the trial judge observed that the Applicant's foreign currency account had been singled out for the reception of these moneys. He went on to say:

"It seems to me to defy common sense to suggest that the Defendant was not fully aware of the fact that the funds would be transferred to his account and the role that he was to play in their removal. Whether he knew those funds were transferred as a result of a forgery is, I agree, not established. However, I do not think that it can be seriously suggested that he did not believe them to be illicit moneys of one form or another. I do not accept that this was a situation where a person suddenly found a large sum deposited into his account, was momentarily overcome by greed and sought to take quick advantage.

The offence, of course, is that of attempting to procure an entry by deception. I would have thought it self-evident that it is vital that the integrity of bankers' records be maintained. This is particularly so in a commercially vibrant centre such as Hong Kong. As a consequence, offences of this nature should attract suitably firm sentences."

48. Mr. Grossman complains in his written argument that the judge erred in taking into account that the Applicant had been involved in the transfer of illicit funds from England, when he had not been charged with complicity in those offences.

49. Leaving aside obvious considerations of jurisdiction, which would in all probability have prevented the prosecution from pursuing charges such as forgery, in the unlikely event that they ever thought to do so, this submission is groundless.

50. The judge was perfectly entitled to use common sense in drawing this inference. Any other conclusion would have been unrealistic. All the evidence pointed to this being a well-planned fraud with the Applicant being one of the intended beneficiaries if it succeeded. In the event, he was caught in the act and he richly merited the sentence he received.

51. This application is dismissed.