HKSAR v. LEONORA YUNG, the personal representative of the estate of CHENG CHEE-TOCK THEODORE, Deceased

FACC No. 7 of 2014

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 7 OF 2014 (CRIMINAL)

(ON APPEAL FROM CACC NO. 460 OF 2012)

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(By order to carry on)

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JUDGMENT ON COSTS

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Mr Justice Ribeiro PJ :

1. On 21 March 2016, the Court handed down judgment allowing the appeal and quashing the conviction of Mr Theodore Cheng Chee-Tok (“TC”), deceased, whose widow and personal representative Leonora Yung (“LY”) had been given leave by the Court to carry on the appeal.[1]  This is the judgment of the Court as to costs after considering the parties’ written submissions. 

2. The costs in question include the costs of the trial; of TC’s unsuccessful appeal before the Court of Appeal; of his unsuccessful application to the Court of Appeal for leave to appeal; of his leave application to the Appeal Committee (where costs were ordered to be in the appeal); of LY’s (successful) application to carry on (where costs were reserved); and finally, the costs of the successful appeal before this Court.

3. LY submits that she should have the costs of all those proceedings, certified fit for three counsel.  The respondent submits that LY should be deprived of all or some of her costs because TC had brought suspicion on himself.

4. TC had been convicted of conspiring to defraud the board and shareholders of a listed company, CY Foundation Group Limited (“CYF”), by concealing his beneficial or financial interests in a property sold to CYF and hence concealing a connected transaction. 

5. The respondent submits that TC brought suspicion on himself.  It relies on (i) an e-mail of 2 April 2007 which suggested that he was hatching a plan for a connected transaction; (ii) the sale being rushed with a view to meeting Sino Strategic International Limited (“SSI”)’s serious liquidity problems; (iii) TC’s failure to tell CYF of his indirect interest in the transaction even though he was not legally required to inform them; (iv) the evidence noted by Spigelman NPJ that Kenny Nam was used to “warehouse” the property until it could be bought by CYF; (v) TC allegedly having told certain lies at the investigation stage to distance himself from the transaction; and (vi) TC not having taken at trial the point raised on appeal in the certified question.

6. TC’s success on appeal is not inconsistent with his having brought suspicion on himself.  The appeal was allowed because a “connected transaction” was not established on the various bases put forward by the prosecution and accepted in the Courts below.  But this does not mean that TC’s conduct was not of such a suspicious nature (on one or more of the grounds indicated above) as to justify the decision to prosecute. 

7. As was pointed out in the judgment:

“The case might of course have been quite differently presented. The intervening share disposals might have been differently characterised and reliance might have been placed on other Listing Rules, including those involving ‘associates’ of the connected person. Differently approached in a future case, the context might call for particular concepts used in the Rules to be given a wider or narrower meaning.”[2]

8. Spigelman NPJ also held that there was a considerable body of evidence to support the conclusion that TC had been involved in “warehousing” the property in question:

“There was a considerable body of evidence to support that conclusion. The email of 2 April 2007 was in my opinion, an indication that Cheng had in mind a warehouse arrangement. As the majority shareholder of SSI he was able to ensure that Sino Joy was sold, eventually to Nam’s company Mansion Gains. The inference that the property was always intended to be passed on to the CYF group is reinforced by the fact, that when Nam became ill and the complication of the estate becoming involved arose, the property was passed on to a straw corporation, Beauford. The messy financial transactions involving Sino Gain, Mansion Gains, Nam, Cheng and Mrs Yung, set out in detail by the trial judge, are consistent with a warehousing arrangement on the occasion in question.”[3]

9. In all the circumstances, we conclude that the bringing of the prosecution was justified because TC, by his conduct, had brought suspicion on himself.  We decline to order that the costs of the trial be paid to LY.  However, we make an order in her favour in respect of all the post-trial costs. 

10. The practice of this Court regarding certificates for three counsel was recently reviewed in Tsit Wing (Hong Kong) Co Ltd v TWG Tea Company Pte Ltd.[4] We do not consider that the issues in the present were of sufficient importance and complexity to justify such a certificate.  In accordance with our usual practice,[5] LY is entitled to a certificate for two counsel.