HKSAR v. HO SIU PO

CAC C460/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 460OF 2009

(ON APPEAL FROM DCCC NO. 676OF 2009)

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J U D G M E N T

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Hon Hartmann JA (giving the judgment of the Court):

Introduction

1.  On 16 November 2009, following a trial in the District Court before his Honour Judge Tellentire, the applicant was convicted of a single charge of conspiracy to defraud, contrary to Common Law and punishable under section 159C (6) of the Crimes Ordinance, Cap. 200.  On 7 December 2009, the applicant was sentenced to a term of imprisonment of 21 months.

2.  The prosecution case, which the judge found proved, was that between 16 October 2003 and 25 February 2004 the applicant conspired with a man called Andy Wong to defraud the creditors of a company at a time when that company was the subject of court proceedings for its winding-up.  The name of the company was Cheery City Contractors Limited (‘the Hong Kong company’).  The petition for its winding-up had been presented to the court in August 2003 with a final order being made in March of the following year.

3.  The judge found that the creditors had been defrauded in the following way.  First, a company was incorporated in Macau bearing the same name as the Hong Kong company which enabled a bank account to be opened with a bank in Macau in the name of that company.  Second, a series of cheques was collected from a company called Chevalier (Civil Engineering) Limited.  The cheques represented a legitimate debt in excess of $1.32 million due by Chevalier to the Hong Kong company and were made out in the name of the Hong Kong company.  Those cheques, however, were not paid into the bank account of the Hong Kong company or in some other way held for the benefit of the company and therefore, in the winding-up proceedings, for the benefit of its creditors.  They were instead paid into the bank account of the Macanese company bearing the same name.  Once cleared, the funds were then withdrawn in cash, the moneys going to the applicant and his co-conspirator.

4.  It is against his conviction that the applicant now seeks leave to appeal.

Background

5.  The Hong Kong company, Cheery City Contractors, was incorporated in 1991.  Its principal business was construction.  The applicant held all but one of the shares in the company, his wife holding the remaining share.  The two of them were the sole directors.

6.  In 2003, the company ran into severe financial difficulties and in August of that year a petition for its winding-up was filed with the Court of First Instance.  It was an agreed fact at trial that, as a result of the petition, the bank accounts of the Hong Kong company were effectively frozen, the applicant being deprived of the ability to operate the accounts as he wished.  An order of winding-up pursuant to the petition was made some seven months later on 23 March 2004.

7.  At the time the winding-up order was made, it was estimated that the Hong Kong company was indebted to creditors in the sum of about $15 million.  The applicant was himself an unsecured creditor, claiming something in the region of $6 million. 

8.  The Hong Kong company was itself owed moneys.  In this regard, one of its debtors was Chevalier which owed $1,320,571 for machinery hire and work done.

9.  At trial, the principal witness for the prosecution was Andy Wong, the applicant’s alleged co-conspirator, who gave evidence under immunity.

10.  Wong testified that he had come to know the applicant when he had worked at a major construction site at which the applicant’s company was one of the contractors.  Subsequently, he had worked as an agent for nightclubs in Shenzhen, earning commissions by introducing customers, and during that time he recalled meeting the applicant socially.

11.  Wong said that he agreed to assist the applicant in his scheme after he had approached him to try to borrow money to pay off gambling debts and had learnt that the applicant too, far from being a wealthy contractor, was himself in financial difficulties.  He said that he agreed to assist the applicant for a reward equivalent to 0.5% of the funds that he was asked to handle.

12.  Wong testified that it was the applicant who created the fraudulent scheme in terms of which a company bearing the same name as the applicant’s Hong Kong company would be incorporated in Macau with its own bank account.  His function was to assist the applicant to put the scheme into operation.

13.  Wong testified that, to this end, on 17 November 2003 he travelled to Macau together with the applicant and his then girlfriend, a woman named Alinda Chia.  The purpose of the visit was to instruct a firm of lawyers in Macau to incorporate the company.  He said that it was just he and his girlfriend who signed the necessary documents.  The applicant did not sign any documents himself but did pay the legal fees.

14.  Wong further testified that the three of them returned to Macau on 9 December 2003 in order to open the bank account of the mirror company, opening that account with the Banco Commercial de Macau.

15.  In support of Wong’s evidence that the applicant had travelled together with him and his girlfriend on both 17 November and 9 December 2003, immigration records were put into evidence.  These revealed that the three travelled both to and from Macau on the two dates at effectively the same time.  By way of illustration, all three departed from the Macau Ferry Terminal on 9 December 2003 – the day the bank account was opened in Macau – at 12:29 hours, the records showing that the applicant and Alinda Chia returned at 16:55 hours, Wong returning one minute later at 16:56 hours.

16.  Concerning the funds paid into the Macau bank account, the evidence revealed that these came from Chevalier.  Chevalier’s debt to the Hong Kong company was discharged by means of six cheques which, according to the admitted facts, were paid on the following dates: two cheques were dated 16 October 2003, one was dated 13 January 2004, two were dated 16 January 2004 and the final cheque was dated 23 February 2004.

17.  Wong testified that, to the best of his memory, he collected “six to seven” cheques from Chevalier, on each occasion handing over a form of receipt duly chopped in the name of the Hong Kong company given to him by the applicant.  On receipt of the cheques he would then, on each occasion, journey to Macau to pay them into the account with Banco Commercial de Macau.

18.  While there was no independent evidence that it was Wong who collected the cheques, Chevalier’s managing director gave important evidence as to the practice adopted by the company in paying its creditors.  It was to the following effect.  Once an invoice had been verified and a cheque in payment made out, the creditor would be informed that the cheque was ready and could be collected upon presentation of a duly stamped receipt.  On the basis of that practice, therefore, staff at Chevalier would have informed staff of the Hong Kong company, Cheery City Construction, that cheques in payment were ready and that somebody should be sent down to collect them upon presentation of the necessary receipt.

19.  In respect of the cheques made out by Chevalier to the Hong Kong company, formal receipts bearing the chop of the Hong Kong company were produced in respect of each of the six cheques.

20.  Chevalier’s Hong Kong bank, the Shanghai Commercial Bank, confirmed that all six cheques were paid into the account of the Macanese company bearing the same name as the Hong Kong company, the last cheque being deposited on 25 February 2004.

21.  Wong testified that, some three to four days after he had deposited each cheque, time being allowed for their clearance, he would be instructed by the applicant to return to Macau to draw out the funds in cash.  In order to do this, he said that he was given the cheque book and chop of the Macau mirror company.  He would enter his name as the payee on each cheque and would make out an amount in round figures, roughly equivalent to the amount paid in three or four days earlier.

22.  With cash in hand, Wong testified that either he would telephone the applicant or the applicant would telephone him and arrangements would be made to meet when Wong returned to Hong Kong.  Wong said that “most of the time” they would meet in a restaurant but it might sometimes be at the pier itself.

23.  When they met, said Wong, he would hand over the cash to the applicant and would be given the cash due to him.  Wong said that, to the best of his memory, he received a reward in total of “around $60,000 to $70,000” from the applicant.

The challenge to Wong’s evidence

24.  When the diversion of the cheques made out by Chevalier was discovered by the liquidator of the Hong Kong company, he reported the matter to the police.  Investigations revealed that the cheques had been paid into the account of the mirror company in Macau and that it was Wong and his then girlfriend who had set up the mirror company and were the signatories of that company’s bank account.  Both were arrested.

25.  It was after his arrest that Wong implicated the applicant as his co-conspirator and the force behind the criminal scheme.

26.  The applicant did not himself give evidence.  However, it was put to Wong by the applicant’s counsel that he had implicated the applicant solely to avoid his own criminal culpability by gaining an immunity.  The assertion was made on behalf of the applicant that he had had nothing to do with the creation and operation of the fraudulent scheme and had been entirely ignorant of it.

27.  As to how it was that Wong was in a position to set up a mirror company and bank account in Macau and able to divert a legitimate debt due by Chevalier to the applicant’s Hong Kong company into that mirror bank account, it was suggested to Wong that that at the material time he had been employed as a debt collector by a company called Consultant Associates Limited which the applicant had employed in 2003 to collect debts for his Hong Kong company.  It was further suggested that one of the debts mandated to be collected was the debt due by Chevalier: hence Wong’s access to relevant invoices and the like.

28.  Wong denied that he had ever been employed by Consultant Associates.  That denial was supported by the evidence of Wong Kwong On, a prosecution witness, who was himself an ex-employee of Consultant Associates.

29.  Wong Kwong On agreed that in 2003 the applicant had approached Consultant Associates to seek assistance with his company’s financial problems and that he had had dealings with the applicant in this regard.  He said that he was aware at the time that the applicant’s company was deeply in debt and recommended that the applicant seek the assistance of a company called Ferrier Hodgson that specialised in debt restructuring.

30.  He further testified that, while he had had some dealings in the past with Chevalier and its various subsidiary companies, he had not been instructed by the applicant to collect any debts from Chevalier.  He further denied any knowledge of Andy Wong.  The judge accepted his evidence as being truthful.

31.  In this regard, it should be recorded that the manager of Ferrier Hodgson, Leung Chung Yin, was called as a prosecution witness.  He confirmed that he had attempted to assist the Hong Kong company in a debt restructuring exercise.  He further confirmed that he had advised the applicant of the duties imposed on the director of a company when a petition for winding-up was filed in respect of that company.

The findings of the judge concerning Wong

32.  The judge recognised that the prosecution case was dependent on the testimony of Wong.  In assessing Wong’s testimony, he bore in mind that, as an accomplice, Wong had an obvious incentive not to tell the truth and that accordingly his testimony must be approached with “circumspection and caution”.

33.  However, he also bore in mind that the events in question had happened some five to six years earlier and that in such circumstances it was inevitable that “memories fade and recollections become distorted”.

34.  While the judge accepted that there had been a number of inconsistencies in Wong’s testimony, he nevertheless concluded that he was a witness whose testimony – “on important issues” – was truthful.  He said (paras. 90 and 91):

“I believe what he told me. For sure there are inconsistencies and points that cannot be correct. However, there are no major fundamental areas to cast doubt on the main thrust of his evidence.

I do accept and I do believe that he did act on [the applicant’s] behalf in the establishment of the bogus company, the opening of the bogus bank account, and the general dealing and the payments received from Chevalier.  This was all done to enable [the applicant] to circumvent the freezing of the bank account of Cheery City Contractors Limited and gain a portion of what was owed before the other creditors.”

The grounds of appeal

35.  There are two grounds of appeal.

36.  First, that, in making a finding that the evidence of Wong, an accomplice could be relied upon, the judge fell into error by failing to conduct a sufficiently careful analysis of that evidence.  Had the judge conducted such an analysis, he would, or should, have concluded that Wong’s evidence was not capable of founding a conviction.  In the result, the verdict of guilty was unsafe and unsatisfactory.

37.  Second, the judge fell into error by taking into account evidence that was irrelevant, inadmissible and prejudicial to the applicant, namely, evidence of an event that fell outside of the period of the conspiracy.  This event was Wong’s withdrawal of $500,000 from the Macau bank account on 28 February 2004 and the alleged giving of that money to the applicant on that date.

38.  In respect of this second ground, the indictment charged that the applicant and Wong had conspired between 16 October 2003 and 25 February 2004, both dates inclusive, to defraud the creditors of the Hong Kong company by dishonestly setting up the mirror company and bank account in Macau, diverting the payments from Chevalier into the Macau bank account and withdrawing the cash from that account in a sum of about $1,300,000.

The first ground of appeal

39.  On the behalf of the applicant, it is submitted that, if the judge had conducted a sufficiently careful analysis of Wong’s evidence, he would, or should, have appreciated that there were four respects in which that evidence was shown to be unsatisfactory, being either internally materially inconsistent or inconsistent with other evidence.  These unsatisfactory elements, considered cumulatively, would or should, have led the judge to reject Wong’s evidence as a whole.

40.  In our view, the submissions made in respect of two of the four instances are of no weight.

41.  It is argued that an internal inconsistency arose out of Wong’s initial statement that his remuneration for participating in the conspiracy was set at 0.5% of the total funds handled while later, in the course of his testimony, the actual figure he gave of the remuneration he received – a sum of between $60,000 and $70,000 – was closer to 5% of the total funds handled.  The judge was alive to this inconsistency but saw nothing in it.  We agree.  The expression of 0.5% used by Wong may not have been mathematically correct but it goes no further than that.  As the judge noted, it was hardly likely that Wong would have participated for a reward of just 0.5%: a figure of only some $6,500.

42.  The other inconsistency is said to concern differences between the evidence of Wong and his girlfriend, Alinda Chia.  These inconsistencies relate to such issues as the number of people who accompanied them to the lawyer’s office in Macau and to the offices of Banco Commercial de Macau.  In this regard, it is clear that the judge did conduct an analysis.  The result of that analysis was that, considered in its entirety, he could give no weight to the girlfriend’s evidence.  The judge described her evidence as being “extremely vague and of little assistance”.  Having made that assessment, he made no further reference to it.  For all practical purposes, therefore, the girlfriend’s evidence was evidence to which the judge was prepared to give no credit.  Insofar as it suggested that there were material discrepancies between the two witnesses, the basis for the suggestion has not been established to our satisfaction.

43.  Of the four alleged unsatisfactory elements of Wong’s evidence, the final two, when read together, are of greater weight.  Both arise out of Wong’s evidence that, on each occasion when he withdrew cash from the Macau bank account, there would be a telephone conversation with the applicant and arrangements would be made to meet that same day after Wong had returned to Hong Kong so that the money could be paid over to the applicant and so that Wong could receive his remuneration.

44.  First, there was evidence that on 26 January 2004 Wong withdrew $230,000 from the bank account in Macau.  It was submitted that on that date, despite Wong’s refusal to accept the proposition, immigration movement records proved that it would not have been possible for Wong to have met the applicant on his return to Hong Kong in order to hand over the cash.

45.  Immigration movement records showed that, in respect of Wong, he had left Hong Kong for Macau at 13:00 hours, returning to Hong Kong and landing at the China Ferry terminal in Tsim Sha Tsui at 18:23 hours.  In respect of the applicant, the records showed that he had landed in Hong Kong at 11:14 hours and had left again at 18:51 hours from the Macau Ferry Terminal on Hong Kong Island, only returning to Hong Kong on 28 January 2004.  There was therefore, on that day, a period of just 28 minutes between Wong’s arrival in Tsim Sha Tsui and the applicant’s departure from Hong Kong Island for the two men to meet and effect the transfer of funds.

46.  In his Reasons for Verdict (paras. 79 and 80), the judge mistook the applicant’s departure from Hong Kong for his arrival.  Hence his finding that –

“Arriving 20 minutes apart, you [the applicant and Wong] could easily have met up in a restaurant shortly thereafter.”

47.  It is difficult to see how that finding of fact can be sustained, but for reasons we shall provide, it does not affect the validity of the judge’s overall conclusion.

48.  There was further evidence that on 28 February 2004, Wong withdrew $500,000 from the bank account in Macau.  In respect of that day, immigration movement records showed that Wong left Hong Kong at 10:11 hours, returning at 16:58 hours while the applicant left for Macau at 12:17 hours, only returning in the early hours of the following day.  On the basis of those records, it would not have been possible for the two men to have met that same day in Hong Kong to effect the transfer after Wong had withdrawn the $500,000.

49.  When, during cross-examination, Wong was appraised of this, he said that he remembered that, when he telephoned the applicant, he was told by him that he was coming to Macau and that they should meet there.  Accordingly, on that occasion the money transfer took place not in Hong Kong but in Macau.

50.  In giving his Reasons for Verdict, the judge recognised that this constituted a departure from Wong’s earlier evidence.

51.  However, the judge did not consider the inconsistencies concerning the transfer of cash undermined Wong’s credibility to the extent that it was not possible to rely on his evidence even in respect of other important issues, issues, that is, central to the conspiracy.  In this regard, having spoken of the fact that the events that happened five to six years earlier, he observed (para. 82):

“I have to say, given the time span, this seems to me to be … of little real importance and very understandable. In my opinion, neither of the two events operate to cast doubt on his veracity on important issues.” [Our emphasis]

52.  In light of the submission that the judge failed in his duty to sufficiently analyse the evidence, this finding needs to be read in the context of his findings generally.

53.  First, as the judge noted, there was independent evidence that, on or about the day when instructions were given to register the mirror company in Macau, Wong and his girlfriend and the applicant travelled together to Macau, passing through immigration control at effectively the same time.  They then returned together later that same day, again passing through immigration control at effectively the same time.

54.  Second, some three weeks later, on the day that the bank account in Macau was opened, again the three of them travelled together to Macau and also returned together; again immigration movement records put them passing through immigration control (both on the outward leg and the return leg) at effectively the same time.

55.  In respect of these journeys it was never accepted on behalf of the applicant that he had knowingly journeyed to and from Macau in the company of Wong and his girlfriend. 

56.  One such journey may be put down to coincidence but when two such journeys take place, in the absence of some explanatory evidence, and there was none in this case, the irresistible inference must be that the group of three travelled together on those two occasions because they intended to be together; in short, that there was some purpose in them being together.  The coincidence goes even further.  It is common ground that on the occasion of those journeys the mirror company and bank accounts were established.

57.  Third, there was the evidence, accepted by the judge, of the procedures adopted by Chevalier in making payments by cheque to creditors such as the applicant’s Hong Kong company.  When the cheques were ready, the staff of the creditor company would be contacted and asked to collect the cheque upon presentation of a receipt for the amount in question bearing the creditor’s company chop.  Six receipts bearing the chop of the Hong Kong company were presented in evidence.

58.  That evidence raised two questions.  First, if Wong had no contact with the Hong Kong company, how would he know when to collect the cheques?  Second, if he had no contact how was he able to present receipts bearing the company chop?  Wong testified that he was able to act as he did in respect of Chevalier because he received directions from the applicant.

59.  This was denied by the applicant, it being suggested on his behalf that Wong was able to collect the cheques from Chevalier because he must have been employed as a debt collector for the company, Consultant Associates, which the applicant had employed to collect various debts on behalf of his company including the debt due by Chevalier.  This suggestion, however, was not only denied by Wong himself but was denied by the employee of Consultant Associates with whom the applicant had dealt at the time.  It was his evidence that, although he had been consulted in respect of the Hong Kong company’s financial difficulties by the applicant, and although he knew of Chevalier and its various subsidiaries, he had not been instructed to collect the debt due to the Hong Kong company by Chevalier.  His advice had been to refer the applicant to an organisation which specialised in debt restructuring.  More than that, he denied any knowledge of Wong, refuting any suggestion therefore that Wong had been employed at about that time as a debt collector for Consultant Associates.

60.  When viewed in the light of these broader findings, it cannot be said that the judge failed properly to analyse the evidence of Wong.  It is to be remembered that the judge at all times recognised that there were inconsistencies in Wong’s evidence, hardly surprising given the lapse of time, and allegations made by him that, on a consideration of the evidence as a whole, could not be correct.  That was why he restricted his reliance to the more important issues raised by Wong in the course of his testimony, those that were central to the conspiracy, for example, the setting up of the mirror company and bank account in Macau and the manner in which Wong was able to collect all six cheques from Chevalier, on each occasion presenting Chevalier with a receipt bearing the chop of the Hong Kong company.

61.  The prosecution case in this matter was a strong one.  We do not accept that the judge failed properly to analyse the evidence nor are we of the view that the verdict reached was in any way unsafe and unsatisfactory.

The second ground of appeal

62.  The second ground is to the effect that, by taking into account evidence that Wong withdrew $500,000 from the Macau bank account on 28 February 2004, giving it to the applicant on that same day, the judge took into account evidence that was irrelevant, inadmissible and highly prejudicial to the applicant.  This ground is based on the fact that the indictment alleges that the applicant and Wong conspired together between 16 October 2003 and 25 February 2004, both dates inclusive, and that the day on which the withdrawal and distribution of the $500,000 took place therefore fell outside of the period of the conspiracy, if only by three days.

63.  In our view, there is no substance in this complaint and it is noteworthy that it was not suggested to the judge that the evidence inadmissible.

64.  There is no rule of evidence that, to prove a conspiracy – the offence being the criminal agreement itself – only evidence that arose during the period of the conspiracy is admissible.  Depending on the factual circumstances, evidence of what took place both before the creation of a criminal agreement and after it may be employed to prove that agreement.

65.  As we have said earlier, the indictment charged that between 16 October 2003 and 25 February 2004 the applicant and Wong conspired to defraud creditors of the Hong Kong company by setting up a fraudulent scheme, that is, by setting up the mirror company and bank account in Macau, by diverting the cheque payments from Chevalier into the Macau bank account and thereafter by withdrawing the proceeds of those cheques for their personal benefit.  That was the criminal agreement.

66.  Evidence going to prove a material element of that criminal agreement is clearly relevant.  The evidence to which objection is taken is evidence of the final withdrawal and distribution of funds, that being an integral part of what was agreed.  No issue can therefore arise as to relevance, relevant evidence being prima facie the admissible.

67.  The final cheque obtained in pursuance of that conspiracy was paid into the Macau bank account on 25 February 2004.  At that point, so the indictment states, the criminal agreement came to an end, there being no further payments due by Chevalier.

68.  It had been part of the conspiracy alleged that the proceeds of all moneys obtained would be withdrawn and distributed.  There were a number of ways in which that element of the criminal agreement was capable of being proved.

69.  One way, the way adopted in the present case, was to demonstrate that, even though the conspiracy had come to an end, the applicant and Wong did proceed to make the final distribution.

70.  It is in any event noteworthy that Mr Bell is hardpressed to contend that the evidence said to have been incorrectly admitted could have made a difference to the result.

Conclusion

71.  For the reasons given, the application for leave to appeal against conviction is dismissed.