HKSAR v. W.Y.L.M. AND ANOTHER

DCCC 241/2020

[2021] HKDC 1525

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 241 OF 2020

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Reasons for Verdict

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1.  The 1^st and 2^nd defendants face a joint charge of blackmail in respect of an unwarranted demand with menaces from X for HK$2 million. The 1^st defendant faces a further charge of fraud for inducing X to part with cash of $2 million. I will indicate now that both the defendants are convicted of the charges they face or they will be convicted of the charges they face for reasons as follows.

2.  The background to this case is that X is an entertainer in Hong Kong.  D1 is a Singaporean national and D2 is an Australian national.  Between December 2008 and July 2010, D1 and X had a relationship. They made recordings of their sexual activities both on video and by way of photographs.  The total of videos and photographs has been referred to in these proceedings as the materials.  The couple parted in July 2010.  They retained an occasional correspondence through Facebook.

3.  On 2 August 2019, the 2^nd defendant sent an email to X.  D2 said he represented D1 and offered to transfer the materials to X.  The contents of the email was that, as written by D2, the email was “intended for X’s immediate attention” and asked X to “Note the urgency of the matter, as time is of the essence and D1 may not be available or willing to further discuss this with you.”  That was underlined.

4.  The 2^nd defendant further stated he wrote on behalf of D1 and had been instructed to convey the following matters regarding X “for her immediate attention”:

That, “D1 had in his possession copyright works, including film and multiple photographs, which contain, inter alia, both D1 and X engaging in consensual acts of a sexual nature.

The copyright works were made with consent and knowledge of X using D1’s filming camera equipment.”

That, “D1 is willing to make available the subject copyright works for the purpose of verification of their existence, including the contents therein, only with the express written consent of X as personally signed by her in his presence.”

That, “D1 understands that under the law he enjoys first ownership of copyright as the author of the abovementioned copyright works.”

That, “D1 further wishes to discuss the transfer of his legal ownership and any rights thereof of the abovementioned copyright works exclusively to X so that she may deal with them as she sees fit, including to the effect of legally excluding D1’s possession of the copyright works and any derivative materials and copies.

D1 is willing to personally meet with X after she has sought legal advice regards the matter. As such, as per D1’s request, the place of meeting must be at her elected lawyer’s office, time and date of future arrangement.”

It concludes with,

“Thank you for your attention and I look forward to your reply. If you have any questions, please don’t hesitate to contact me on this email.”

And in the correspondence the 2^nd defendant addressed himself as “LLB/BCom”, presumably referring to his qualifications.

5.  X replied to D2 and also used Facebook to send a message to D1.

6.  On 5 August, D2 replied to X attaching a “Letter of Authorisation”.

7.  On 13 August 2019, X sent an email to D2 asking for a copy of the video and photographs.

8.  On 14 August, D2 replied by email, asking X to check her Facebook messages from D1.  Five minutes later, D1 messaged X asking her to refer future correspondence through D2.  D1 also sent three photographs and a video which were a sample of the material.  X asked D1 if he wanted money but received no reply from D1.

9.  D2 later sent further messages to X via the internet pressing for X’s response and threatening to cease communication.

10.  X applied for an injunction order which was granted on 19 September 2019.  The injunction from the High Court prohibited D1 and D2 from offering, exposing, supplying, publishing, disclosing or disposing of the materials.  The injunction was served both on D1 and D2.

11.  On 23 September 2019, D2 emailed X’s legal representatives.  D2 indicated that it was possible the materials could be lost or stolen.

12.  On 24 September, D2 sent a further email to X’s legal representatives saying that guarantees could not be given against unforeseeable events and indicating communication could be ended.

13.  X therefore authorised her legal representatives to institute negotiations for the purchase of the materials.  On 14 October 2019, a message was sent to D1 and D2 inviting them to negotiate the sale of the materials.

14.  The case was further reported to police on 28 October 2019.

15.  On 5 November 2019, a meeting occurred between X’s legal representative, a Mr Kim Min-ju, and D2.  The meeting was recorded. D2 indicated that D1 wished to purchase the materials and that again it was possible for the materials to be lost or stolen.  D2 also indicated figures of two or three million Hong Kong dollars for the sale of the materials.  D2 repeatedly mentioned the possibility of D1 accidentally losing the material, thus exposing them to the public.

16.  Subsequently, another meeting was arranged after correspondence whereby a sum of HK$2 million was to be incorporated into a Deed of Settlement whereby the materials would be transferred to X.

17.  A further meeting was arranged for 2 January 2020 at which the materials would be transferred to X’s legal representative in exchange for HK$2 million.

18.  Subsequently, the 1^st defendant came to Hong Kong on 26 December 2019 and the 2^nd defendant came to Hong Kong on 8 December 2019.

19.  On 2 January 2020, D1 and D2 attended the meeting with X’s legal representative.  The meeting was recorded. HK$2 million in cash was handed to D1 and D2.  D1 indicated he would delete the material from his computer.  The Deed of Settlement included the term that all the materials would be deleted or transferred and none would be retained by D1.  D2 purported to show that the folder containing the materials had been transferred from his computer and then deleted.  The money was given to D1.

20.  Police later conducted an arrest.  However, on a search of D1, a USB was found in his possession which still contained a part of the materials.

21.  The evidence was as follows.  At trial, X gave evidence.  Also, Mr Kim Min-ju gave evidence of his negotiation with D2 and the meetings on 5 November 2019 and 2 January 2020.

22.  As far as the defence case was, neither the 1^st or 2^nd defendants gave or called evidence.  Of course no adverse inference can be drawn from their decision.

23.  The majority of the prosecution case was established by way of Admitted Facts.  These facts included agreements in respect of X and D1’s relationship and the existence of the materials.  D1 admitted he used a particular Facebook account to communicate with X and also agreements as to the use of various WhatsApp accounts and phones.  D2 admitted his use of a Gmail account and a WhatsApp account to communicate with X and her legal representatives.  D2 admitted the use of various mobile phones.  He admitted the contents of communication with X and X’s legal representatives. D1 also admitted his use of a WhatsApp account and Kakao account to communicate with D2.  As to D2, their correspondence was in the evidence and admitted.

24.  D1 and D2 admitted the existence and content of the injunction orders of 19 September 2019.  The contents of the audio recordings of the meetings on 5 November and 2 January 2020 were also admitted.

25.  The arrests of D1 and D2 were admitted, as were items seized from them at the time of arrest.  The video-recorded statements of the 2^nd defendant were admitted to be voluntary.  There was no issue as to identification.

26.  The victim, PW1, gave evidence.  She is X.  She said that the 2^nd defendant had admitted he sent the email, subject: “Sexual film and photographs” to X on 2 August 2019.  X said she was very afraid as the email was sent to her company email and had gone through her agent.  As I indicated earlier, X is an entertainer.  She considered the disclosure of such material would damage her career.  She surmised that it had been sent in this way to show how easily the information and the materials could be disseminated.  She immediately felt threatened as the email was sent to somebody in her company on the company’s server.  She considered this to be a deliberate act.  She considered the email to be a huge threat to her career.  X replied to D2 asking if he represented D1.  X also called D1 on the phone and over Messenger.  X produced the Facebook Messenger correspondence with D1 and the photographs sent.  X emailed D2 to ask to see the film and photographs.  D2 told her to check her Facebook account where D1 sent three photographs and one video, and told X to correspond with D2.

27.  X was shocked on seeing the sample materials sent to her.  The materials, she said, were intensely personal and private. She thought, with good reason I might add, that if the materials went public, it would destroy her career and her livelihood.  The photographs from D1 were not redacted.  The later redactions were done by X when she sent them to the police.

28.  X then decided the matter should be reported to the police and also sought an injunction.  X became aware of the emails sent on 23 September by D2 to her legal representatives, at that time Damen Holmes.  X was copied into the message which spoke to D1 being, as far as D1 was concerned, impossible for him to guarantee against foreseeable circumstances beyond his control.  There were further references to the Edison Chen scandal and a further email was sent by D2 on 24 September in the same vein.  X considered that the reference to the Edison Chen scandal was deliberate, that the references to unforeseeable circumstances was a disguised threat to disseminate materials.  Although the email said that there would be compliance with the injunction, X saw this simply, to use her phrase, “as talking out of both sides of the mouth”.  X saw a clear implication that the materials would be leaked if she did not comply.  X felt threatened and in fear.  She did give instructions to her lawyers to negotiate a sale price of materials but this she said, she did this mainly to buy time.  She never offered or suggested a figure herself.

29.  On 5 November 2019, the meeting occurred between D2 and Kim Min-ju, her legal representative.  The audio recording was played to X.  X noted that the sum of HK$3 million was mentioned and there were further references to the Edison Chen scandal and also references to the risk of the materials being lost.  X felt given the way the matters were being presented and the references to the materials being lost, she had no alternative but to purchase the materials.

30.  PW2, Mr Kim Min-ju, met D2 on 5 November 2019 at his office where the proceedings between them were recorded.  D2 had said that payment would be made for all copies of the material.  Mr Kim confirmed through D2 that D1 was the only person in possession of the materials.  D2 went on to refer to a risk element and the Edison Chen scandal, of the materials being lost or stolen, that D1 was an emotional guy who might lose the materials.  D2 repeatedly mentioned the potential loss of the materials and their public exposure, and a ballpark figure of HK$3 million.  Mr Kim said that after the 5 November meeting that D2 sent a further email on 6 November 2019 and further WhatsApp communications.  In these, D2 referred to leaks beyond his, that is D2’s control, if X did not move forward to purchase the materials.

31.  Kim gave evidence of the controlled meeting on 6 January 2020.  X had already provided HK$2 million in marked notes.  A Deed of Settlement had been drawn up for the meeting.  During the meeting, Kim had presented the cash of HK$2 million to D1.  D1 and D2 had both counted the money, he said.  D1 and D2 had signed the Deed of Settlement.  The money is counted, then D1 took the money to put it in his backpack.  D1 had brought a laptop to the meeting, the laptop was used to transfer the materials.  Kim requested the materials to be transferred to a USB so he could show X.  Both D1 and D2 had done operations on the laptop.  D2 copied the files and transferred them to the USB.  D2 showed Kim the deletion of the file on the laptop.  D1 confirmed that the materials only existed in the folder on the computer.

The prosecution case

32.  They say that D1 and D2 acted jointly to make an unwarranted demand, that is to offer to sell the materials involving X and D1, and asked X initially to pay $3 million, later reduced to HK$2 million following negotiations.  That unwarranted demand was with menaces, namely the emails of 23 and 24 September to Damen Holmes copied to X, which threatened the unintentional leaking of the materials leading to an Edison Chen 2008 scandal reoccurring.  These menaces were reiterated in the meeting of Kim Min-ju and D2 on 5 November 2019 being, namely, the unintentional leaking of the materials, that while D1 had the materials, X always had an element of risk and that an Edison Chen scandal may occur with X suffering.  It was also said that D1 is emotional and that once purchased, X would not have to worry about anything happening in any way.

33.  In respect of the 2^nd charge, it was said that D1 had falsely represented to X that D1 provided all copies in existence of the material in any physical or digital form.  D1 would provide evidence of deletion of the material from all storage devices, physical and digital.  D1 would not retain any copies of the material, physical or digital, after the transfer.  For that, one can see the Deed of Settlement.  These, said to be false representations, were made by D1 to X through D2’s correspondence with X and her legal representative.  Those representations were false because, firstly, the Kakao Talk correspondence of D1 and D2 show D1 chose not to offer or disclose all the materials to X.  And secondly, at the time of D1’s arrest, D1 retained materials on the USB flash drive including photographs not previously disclosed.  By these false representations, X was induced to part with the HK$2 million resulting both of a benefit to D1 and prejudice or a substantial risk of prejudice to X, these actions being done, they say, with clear intent to defraud, there would be no other inference that can be drawn. And also, those acts themselves must be dishonestly done and dishonestly prejudicing of X’s rights.

34.  As far as the defence is concerned, it was said on behalf of the 1^st defendant that he did not effectively dispute the prosecution case or that, after communication with D2 and X’s lawyer, that X agreed to pay HK$2 million for transferring the materials to her.  D1 admits he messaged X after X had asked for a sample of the materials.  They were sent directly to her in her private Facebook Messenger account.  Following that, they say, D1 says, all communications between D2 and PW1, that is X’s lawyer, it had been clear that D2 had indicated that both he, D1, and D2, would abide by the injunction by not making the materials available to anyone else but PW1, that is X.  It was not until 14 September 2019 that D2 asked X’s solicitors if X would purchase the materials.  Only on 5 November did D2 mention a figure of HK$3 million and that a settlement could be made for HK$2 million.  However, the evidence, it is said, showed that no demand for money was made to X when she was approached, or ever made to her personally, that all communications occurred between D2 and X’s legal representatives.  D2 indicated D1 and D2 would abide by the injunction order, and D2, it is said, honestly believed that the transfer of the materials to X for money was legal and proper.  He said that no menaces were uttered by D1 or said in his presence, or that he agreed to use such words.  No emails between D2 and PW2 were copied to D1.

35.  As far as the 2^nd charge is concerned, that charge stems from the discovery of a USB, which is Exhibit P7, which contained video and photographs of PW1 which could be described as the remaining materials, and this was after the HK$2 million transaction had completed.  The transcript of that meeting shows D1 was still busy counting the money and signing the deed throughout the time that they were together.  It is said that D1 was still in the conference room when he was arrested and had not left the place of the transaction.  D1 had not put the money in his rucksack when he was arrested.  The transaction was not completed when the arrest was made.  D1 would not, it is said, take the USB to the office unless he had meant to hand it over.  He would have left it elsewhere if he did not intend to hand it over at that meting.

36.  As far as D2’s case is concerned, he said that X never met or spoke to D2, that the original email of 2 August sent by D2 was about the transfer of copyright.  There was never any threat that the photographs would be released to the public.  D1 was clear that the materials would only be made available to PW1, that is X, through her legal representatives.  The email shows the transaction would be arranged by lawyers, that the injunction would be strictly adhered to.  No threat was ever made to X.  The threats she articulated were imaginary, a product of her own imagination.

37.  In the audio recording of 5 November, D2 makes it clear, it is said, that he represents D1 in a personal capacity, that any agreement should be legitimate and within the injunctions.  D2 also referred to the exculpatory parts of the video-recorded interviews made by him that the demand was not unwarranted, it was a sale of materials, a simple contractual agreement, that PW1, X, initiated the negotiation for a sale price.  There were no clear or unambiguous menaces.  D2 communicated a desire to comply with the injunction and gave reassurances that materials would not be leaked.  The matters, it is said, referred to by X as threats could not be considered to be so when seen in the entire context of the emails of 23 and 24 September 2019; that D2 had no intent as far as the blackmail was concerned and that can be seen from the contents of the text messages between D1 and D2 when they are thoroughly analysed and seen in details.

38.  As far as the legal requirements of this case are concerned, and naturally the prosecution must prove the offence beyond all reasonable doubt, the burden of proof remains upon them at all times.  It is agreed the defendants are of clear record - this is relevant when considering their propensity to commit these kinds of offences or the offences with which they charged.  It is also relevant when considering the reliability and credibility of anything said by them in the course of the investigation and trial, including any records of interview given by them.  Generally issues such as intent cannot be proved by way of direct evidence and inferences of fact drawn from other circumstantial evidence must be made.  Where any such inference is to be drawn, it must satisfy the requirement of being a fact proved beyond reasonable doubt.  It must therefore be the only reasonable inference that can be drawn in the circumstances.

39.  The offence of blackmail requires the prosecution to prove a demand with menaces was made, that it was unwarranted, and that at the time of making the demand the defendant made it with a view to gain for himself with intent to cause loss to another.  A demand need not be explicit.  It need only be that the circumstances of the case were such that an ordinary reasonable person would understand that a demand was being made of them.  The demand does not need to be communicated to the person to whom it is made.  The demand must be made with menaces.  This is liberally construed and can include threats of any action detrimental to or unpleasant to the person addressed, or conduct of such a nature and extent that the mind of an ordinary person of normal stability and courage might be influenced or made apprehensive so as to accede unwillingly to the demand would be sufficient.  By section 23(1)  of the Ordinance, a demand made with menaces is unwarranted unless there are reasonable grounds for making the demand and that the use of menaces is a proper means of reinforcing the demand.

40.  For the offence of fraud, for which the 1^st defendant is charged under section 16A of Cap 210, it must be proved that by deceit, namely a false representation and with intent to defraud, a person is induced to commit an act or an omission that results in either (a)  in benefit to any person other than the second-named person; or (b)  in prejudice or a substantial risk of prejudice to any person other than the first-named person, and the first-named person commits an offence of fraud.

41.  I propose to resolve the issues in this case in the following way.  On Charge 1, this charge is posited as a joint enterprise although all the demands were made solely by the 2^nd defendant in meetings, or by emails, where D1 was not present or in emails which D1 was not in fact a copied recipient.

42.  The prosecution provided particulars of Charge 1 which occurred chronologically between the 1^st day of July 2019 and 2 January 2020.  The demand was made, it is said, by D1 and D2, and was contained, and they offered to sell the material of sexual nature involving X and D1.  D1 and D2 asked to pay 3 million initially, later negotiated 2 million for the material.  Such demand is unwarranted as the menaces would not be reasonable or a proper way of reinforcing such a demand.  The menaces are as follows: D2, it is said on D1’s behalf, sent emails on 23 September 2019 and 24 September 2019 to one Damen Holmes copying X.  The emails contained threats which were suggestions to the effect that the materials could be unintentionally leaked out and the Edison Chen 2008 scandal may occur again.  Also, in the meeting on 5 November 2019, D2 repeated the threat to Kim Min-ju, X’s legal representative, namely that (a)  the materials may be unintentionally lost or leaked out; (b)  that as long as D1 had the materials, risk existed for PW1; (c)  that Edison Chen’s scandal could occur again and PW1 would suffer; D1 may become emotional resulting in the materials unintentionally being leaked; and (e)  once the materials were sold to PW1, PW1 would not have anything to worry about of anything happening in any way.  Once PW1 gets it, D1 can, it is said, really lose it.  It is not disputed that the emails were sent, that the meeting of 5 November 2019 occurred, that the offending comments were made by D2 in the respective emails and meeting.

43.  In order to establish that D1 and D2 acted together in the blackmail and to show that they intended to blackmail PW1, the prosecution referred to various communications between the defendant on communication apps such as WhatsApp and Kakao, the contents being recovered from devices used and controlled by D1 and D2.  The Kakao Talks were recovered from D1’s phone and D2’s mobile phone.  They fell into three categories.  21 October 2019 to 24 December 2019, the messages overlapped.  Eight messages of 2 November 2019 were only found on D1’s phone as sent by D1.  And finally, on 29 May 2019 to October 2019, messages only found on D2’s mobile phone.  They were messages sent to D1.  It is said that the only available inference that can be drawn from the facts admitted that that is the case.  The Kakao Talks in Annex B show that D1 initially gave instructions to D2 and asked D2 to represent him, D2 was to report progress to D1 and seek his instructions, that D2 drafted the Letter of Authorisation for D1 to sign.  D1 and D2 targeted PW1’s agent and expected that PW1’s company would become aware of the sex tape.  D2 sought to receive D1’s approval for the first email sent to PW1.  The intention was to sell the material to PW1.  Initially D2 had suggested they use what he described as “a gangster method” and to revenge upon X.  D1 and D2 discussed sending the explicit photographs to X by way of Facebook Messenger.  In addition to the Kakao Talk messages, there were also WhatsApp messages between D1 and D2.  These can be found in Annex C of the matters produced.  The basis of the surrounding evidence in that Admitted Facts, in my view, lead to the only reasonable inference that this is a completed discussion between D1 and D2 and can be seen in that light.

44.  I find it is clearly proved that D1 and D2 had in their initial discussions targeted X for the payment of money for the materials at the end of July 2019.  This targeting envisaged the eventual use of threats is apparent from wordings such as “using a more gangster method” as proposed by D1 and to be evil as suggested by D1.  Following this, a decision is made to route the demand using the word “Sex tape” through X’s agent and X’s business address.  X clearly surmised properly that this was to indicate that distribution of materials was in the mind of D1.  It is not done directly, but the only reasonable inference in these circumstances is that it is done to engender fear in there may well be wider distribution of the materials and the fear that she felt was entirely justifiable and reasonable in the circumstances.

45.  In late July, on the 29^th, D2 raises the possibility of the laptop with the materials being stolen.  There is again a discussion of a covert threat.  The materials of this case have been buried for a number of years, some ten years.  Why now, when a demand of money is being made, should the issue of their loss become relevant?  The only reasonable inference is this possibility is considered as a threat of disclosure.  On the same day D2 was proposing, an aggressive part which will come in the meeting. It is therefore unsurprising the references to the leaking or loss of the materials surface in the emails written by D2 on 23/24 September and the meeting on 5 November 2019.  It is in my view, and finding the irresistible inference, these threats were always part of the game plan for the demand of the monies.  Although couched in references to complying with the injunction and D1’s desire to comply with it, as for D2, this is lip service anyway.  In any event, they are clear gangster-like threats.  I have no doubt that D2 issued these threats as particularised, that they were intended to be delivered as threats and perceived as such by the victim, and that D1 was clearly aware and part of the plan to issue those threats.  The victim’s response was entirely reasonable and rational, by feeling fear in these circumstances.  And I am also sure by way of irresistible inference that this must always have been D1’s and D2’s intention that such threats would be issued to accompany the demand for money.

46.  It is also clear to be the case, one can see from D1 when he says later on 20 November 2019, after such threats were issued, he uses an expression, “Fuck it.  She either pays or burns with Hong Kong.”  I am therefore sure beyond reasonable doubt the prosecution have proved all elements of the offence of blackmail against both the 1^st and 2^nd defendants and they will be convicted accordingly.

47.  As far as the 2^nd charge is concerned, I also resolve  that charge in this way.  D1 had agreed in the Deed of Settlement signed by him to provide to PW1 all the materials, also to delete all the materials from his own storage devices, and furthermore not to retain possession of any of the materials.  Were D1 to retain any of the materials, it would be a breach of the terms of the deed and the inference could clearly be drawn to a criminal standard of the representations contained in the Deed of Settlement were false ab initio.  X agreed with the payment of HK$2 million based on the representations contained in the Deed of Settlement and the purported transfer of all those materials and their deletion by D2 in the meeting of 2 January 2020

48.  D1 retained a part of the materials as can be seen from the USB seized from him by police on conclusion of the meeting.  It is said perhaps D1 forgot about the USB or that he did not have time to hand over the USB.  And finally, why would he bring the USB to the meeting if he proposed to retain it?  I find that D1 decided to retain the USB, thus making his earlier representations false.  There is some evidence for this in the Kakao messages as well.  X was induced to part with the money on the basis of those false representations.  The inference must be drawn that this was with intent to defraud as D1 had benefitted and X was certainly prejudiced by this action.

49.  It is, in my view, impossible that D1 would forget he had the USB given that is what they were there to hand over with the materials.  He was present and witnessed the deletion of the files drawn from the laptop by D2.  I find the 1^st defendant did commit a fraud by retaining part of the materials and of course he will be convicted accordingly.

50.  Those are my findings.