HKSAR v. CHEUNG WAI CHUN

CACC 258/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 258 OF 2000

(ON APPEAL FROM HCCC 306 OF 1999)

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J U D G M E N T

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Hon Mayo Ag. CJHC (giving the judgment of the Court):

1. The applicant was convicted of 17 counts of procuring the making of an entry in a record of a bank by deception, contrary to section 18D of the Theft Ordinance, Cap. 210 ("the Ordinance") and 17 counts of furnishing false information, contrary to section 19(1)(b) of the Ordinance after a trial in the High Court before Deputy Judge Wong and a jury. She was sentenced to a total of 3 years imprisonment. She seeks leave to appeal against her convictions.

2. There were altogether 17 separate transactions. The odd numbered charges related to the section 18D offences and the even the section 19(1)(b) offences.

3. Particulars of the 1st charge were:

"CHEUNG Wai-chun, on or about the 28th day of July 1995, in Hong Kong, together with CHAN Ming-chor, dishonestly with a view to gain for herself or another or with intent to cause loss to another, procured the making of an entry in a record of Nanyang Commercial Bank Limited, namely a credit entry of $799,950.00 Hong Kong currency to the account of Wai Ho Trade Company, No. 043-474-00105369, with Nanyang Commercial Bank Limited by deception, namely by falsely representing to Nanyang Commercial Bank Limited that the information contained in documents submitted to Nanyang Commercial Bank Limited in order to obtain payment on a draft drawn under Letter of Credit No. 16873052 issued by Dao Heng Bank Limited were true and genuine documents, that the goods referred to therein, being the subject of the said Letter of Credit had been delivered and that Wai Ho Trade Company was thereby entitled to have its said account credited in the said sum."

and of the 2nd charge:

"CHEUNG Wai-chun, on or about the 28th day of July 1995, in Hong Kong, together with CHAN Ming-chor, dishonestly with a view to gain for herself or another or with intent to cause loss to another, in furnishing information to Nanyang Commercial Bank Limited, for the purpose of negotiating a draft drawn under Letter of Credit No. 16873052, issued by Dao Heng Bank Limited produced to Nanyang Commercial Bank Limited a document made or required for accounting purpose, namely an invoice of Wai Ho Trade Company dated 28th July 1995 which to her knowledge was misleading, false or deceptive in a material particular in that it purported to show that on or about the 28th day of July 1995, a quantity of cotton coat had been sold to Jing Hwa Trading Company."

4. All of the subsequent charges adopted a similar format save for the dates and amounts involved and the fact that the Hong Kong Shanghai Bank was the issuing bank for some of the letters of credit.

5. The offences covered the period from 28 July 1995 to 31 October 1997. Chan Ming-chor ("Mr Chan") absconded in November 1997. He did subsequently return to Hong Kong and was arrested but died prior to the trial. He managed the affairs of Jing Hwa Trading Company ("Jing Hwa") which was the trade name of a company called Polyork Trading Limited which was a subsidiary company of Luen Thai International Group Limited. Mr Henry Tan was the managing director of this company. He and a Ms Belinda Choi guaranteed the accounts of Jing Hwa held in the Dao Heng Bank and Hong Kong Shanghai Bank.

6. It was the prosecution case that Mr Chan applied to the banks to open letters of credit in favour of Wai Ho Trade Company ("Wai Ho") which was the sole proprietorship of the applicant. The letters of credit were negotiated through Nanyang Commercial Bank, Wai Ho's bankers. It was a fraudulent scheme in that false documentation was submitted in support of the application and there were no goods being sold.

7. It is pertinent to observe that shortly after the moneys had been credited to Wai Ho's bank account with Nanyang Commercial Bank they were paid out by cheques drawn on that account to either Jing Hwa or Mr Chan Chi-ming who operated an illegal gambling den which was frequented by Mr Chan. It will be appreciated from this that there was no evidence that the applicant ever received any discernible profit from these transactions.

8. It is significant to add that when Mr Chan was arrested two cheque books of Wai Ho were found in his briefcase. All but two of the cheques in question came from these cheque books. There were also a number of unused cheques which appeared to have been signed by the applicant and to have borne a Wai Ho chops. All these cheques were examined by the Government chemist who expressed the expert opinion that five out of twenty-three cheques were "probably" signed by the same hand as signed the control signature at the bank and that he was unable to make a determination concerning the remainder of the cheques. The Wai Ho chop had been used on all the cheques.

9. The prosecution case was presented on the basis of circumstantial evidence and there was no evidence that the applicant knew Mr Chan.

10. In addition to this there was evidence that the applicant had not been in Hong Kong at the time of commission of a number of the transactions. She had been in South Africa attending to business interests there.

11. There was a large body of admitted facts. So far as the trial was concerned the relevant witnesses were called to explain the nature of the transactions and to prove what had transpired. Much of this evidence was not in dispute. A number of witnesses were called to demonstrate that goods which had been referred to in the documentation had never in fact passed hands.

12. The applicant did not go into the witness box and did not call any witnesses. It was apparent that the defence that she was running was that there was no direct evidence implicating her in these offences.

13. From the evidence which was available the jury were able to draw an inference that the applicant had indeed been a party to these transactions.

14. The main thrust of Mr Macrae SC's submissions on this application was to argue that the Judge's summing-up had been defective in a number of respects and that this had resulted in the applicant not having received a fair trial.

15. Although it was not the subject of a specific ground of appeal Mr Macrae pointed out when the Judge was directing the jury on the law relating to the different counts at pp. 74 and 75 of the appeal bundle he failed to direct the jury that one of the requirements of section 19(1)(b) of the Ordinance was to prove that a defendant had knowledge of the false or deceptive material. He contended that the fact that the Judge had pointed out this requirement in relation to section 18D offences in no way absolved him from giving this direction for the section 19 offences. Mr Blanchflower's answer to this was that it was apparent from the record of the proceedings that everyone in the court below accepted that there was almost total overlap of these offences. It was clear that the burden placed upon the prosecution was similar in each case. There is much merit in this submission. It is also evident that if this had presented any confusion in the minds of jurors it would have been resolved by the further directions given by the Judge at p. 94:

"I will just take one out of the 17 transactions for you to see how you should approach your reasoning. So in respect of each of the 17 pairs of charges the prosecution must prove (1) that the entry in the bank record was made; most probably you have little problem about this, but then it is always a matter for you.

Then the second point which the prosecution has to prove is that the entry was brought about by deception; and (3) the deception was false in the sense that the description in the L/C was not true nor genuine; and (4) the documents supplied, that is the invoices in respect of the Dao Heng Bank transactions, the invoices and the cargo receipts in respect of the Hongkong & Shanghai Bank transactions were false; (5) the defendant was a party to the submission of those documents to the bank and she knew the documents were false at the time; (6) those documents were necessary documents for accounting purposes; (7) the defendant did that with a view to gaining for herself or another or with intent to cause loss to another; and (8) that she did this dishonestly."

16. As can be seen the Judge dealt with both types of offence together and made it manifest that knowledge of falsity of the documentation was an essential ingredient of the offences.

17. The way that Mr Macrae presented his perfected grounds of appeal was to outline the main complaints in ground 1 and then go on to elaborate upon each and every complaint in subsequent grounds.

Grounds 1(i) and 2

18. The Judge failed to give sufficient guidance on "dishonesty".

19. Mr Macrae submitted that the direction which had been given by the Judge at p. 75 of the appeal bundle did not conform with the directions given in R v. Ghosh [1982] 1 QB 1053.

20. The direction given by the Judge was in this form:

"The third point the prosecution has to prove is she is dishonest. It is dishonesty, by a standard of ordinary, decent, reasonable people that has to be applied. You must consider whether the defendant must have realised that what she was doing was by the standard of reasonable honest people, dishonest."

21. The question which has to be considered is whether in all the circumstances of this case this direction was sufficient.

22. What needs to be said immediately is there is no overall requirement that a Ghosh direction must be given in all cases involving issues of dishonesty. Everything depends upon the circumstances of each case.

23. In the instant case it was obvious that honesty was not a live issue. It is clear from the outline facts which had been given that the scheme by its very nature was fraudulent and accordingly anyone involved could have been in no doubt that what has been done was dishonest. It is to be noted that it was no part of the defence which was being put to witnesses that what was being done was not dishonest.

24. A further complaint made by Mr Macrae was that the directions on dishonesty were immediately followed by a definition "deception" where it was said this could come about deliberately or as a consequence of recklessness.

25. While he accepted that the Judge had never specifically stated that recklessness of itself could constitute dishonesty there might be confusion in the minds of the jurors on its point. He referred to the case of R v. Feeny [1992] 94 Crim. App. R. 1 where the Court of Appeal had set aside a conviction on account of possible confusion on this.

26. In that case a solicitor who had been charged with a similar offence had admitted that he had been careless and perhaps stupid but denied any dishonest intent. That was of far cry from the instant case. Here as has already been indicated the only issue was whether the applicant had been involved in some way in these transactions.

27. In the particular circumstances of this case the direction given was sufficient. This ground must fail.

Grounds 1(ii) and 3

28. The Judge failed to give any assistance on what was meant by "deception" "recklessness" or the expression "by word or conduct as to fact or as to law".

29. The directions given by the Judge at p. 75 of the appeal bundle were:

"To procure simply means to bring about, and deception means any deception, whether deliberate or reckless, by word or conduct as to fact or as to law".

30. It would appear that the provenance of this direction was the definition of deception in section 17(4) of the Theft Ordinance.

"(4) For the purposes of this section -

'deception' (欺騙手段) means any deception (whether deliberate or reckless) by words or conduct as to fact or as to law, including a deception relating to the past, the present or the future and a deception as to the intentions or opinions of the person using the deception or any other person."

31. It has to be accepted that this was not a very helpful direction. However, as with the observations made on the previous ground the question which has to be addressed is whether in the particular circumstances of the present case the direction was sufficient. In a similar manner it would appear that it was. The issue which had to be determined by the jury was the extent if any to which this lady was involved in these various transactions. If she was involved it was transparently clear that a deception was being practised upon the banks and that the conduct almost inevitably must have been deliberate.

Grounds 1(iii) and 4

32. The Judge failed to explain the significance of the standard of proof of the handwriting expert's findings which were inconclusive.

33. The results of the expert's evidence are summarised in the 1st and 2nd schedules to the admitted facts which appear at pp. 40 and 41 of the appeal bundle.

34. In the directions he gave the Judge was accurately summarising the evidence of the expert at the trial. He said at p. 86 of the appeal bundle:

"... And then there is this witness who is an expert in handwriting and chops, he is the 21st witness, Wong Kwai-hung. He is the government chemist, an expert in handwriting and forgery of chops. He examined various signatures of the defendant and chops of Wai Ho on cheques and the signatures and chops of Wai Ho on collection orders.

He was given a control specimen which was the opening mandate of the Wai Ho account bank record documents and has given his finding in the table set out in paragraph 17 of the Agreed Facts. As to the signatures, for some he is of the opinion that it was probable that the signatory on those documents and controlled specimen shared the same signatory, while others he cannot confirm nor disprove the signature on those documents share the signatory with that of the controlled specimen.

He compared the characteristics and spacing between to see if the line and quality are the same. He said due to the limited specimen if he found equal amount of similarities or more similarities than differences he would say -- he would make his finding that he could neither confirm nor disprove or that it was probable they share the same signatory. He also made findings as to signatures and chops on blank cheques of the two cheque-books of Wai Ho seized from the briefcase in the bedroom of Chan Ming-chor, and could neither confirm nor disprove those signatures came from the same signatory while the chops on those cheques originated from the company chop.

So in this case you have heard the evidence of this Wong Kwai-hung who has been called as an expert on behalf of the prosecution. Expert evidence is permitted in a criminal trial to provide you with scientific information and opinion which is within the witness' expertise but which is likely to be outside your experience and knowledge. It is by no means unusual for evidence of this nature to be called and it is important that you should see it in its proper perspective which is that it is before you as part of the evidence as a whole to assist you with regard to one particular aspect of the evidence, namely handwriting and chop impressions.

With regard to the handwriting aspect of the evidence you are not experts and it would be quite wrong for you as jurors to attempt to perform any tests or to compare specimens of handwriting and come to any conclusion on the basis of your own observations. However, you are entitled to come to a conclusion based on the whole of the evidence which you have heard and that of course includes the expert evidence.

A witness called as an expert is entitled to express an opinion in respect of his findings and you are entitled to and would no doubt wish to have regard to his evidence and when coming to your own conclusions about this aspect of the case you should bear in mind that if having given the matter careful consideration you do not accept the evidence of the expert, you do not have to act upon it."

35. As will be noted the latter part of the direction did provide some guidance upon the approach which should be adopted towards this evidence.

36. It has to be appreciated that this was part of the evidence as a whole and the more general directions including directions on inferences would also have been of assistance to the jury.

37. All of this was in conformity with the approach adopted by the Court of Appeal in HKSAR v. Lo Hung-kwong CACC 525/1999 (unreported) which held that the evidence must be considered as a whole.

Grounds 1(iv) and 1(v) and 7

38. The Judge wrongly suggested that "turning a blind eye to the obvious" was sufficient to establish the applicant's "mens rea" and erred in directing that the applicant could only be acquitted if "she had no knowledge of what was going on" and was "not in Hong Kong" at the relevant time.

39. Although reference is made to "mens rea" in this ground it might be slightly misleading unless the matter is considered in its correct context.

40. The passage which is complained of came almost at the end of the summing-up. The Judge had earlier given directions on "mens rea" which were adequate if it is borne in mind that this case was not directly concerned with the applicant's "mens rea". What the case was about was whether the applicant had been involved in this fraudulent scheme.

41. The passage which attempted to sum up the defendant's case read at p. 96 of the appeal bundle:

"There was no evidence that the defendant was the one who ran the business of Wai Ho. But though in respect of some charges, at the time of submitting the documents there was evidence that the defendant was not in Hong Kong, consider the fact that two cheque-books of Wai Ho were found in the briefcase of Chan Ming-chor and they were signed and then the chop of Wai Ho was printed on those cheques. And the expert said that the chop impressions had come from the chops. And that one cheque was used to pay for the ticket to South Africa and it is issued to Four Seas Travel Services. So did the defendant know of what was going on, or was she turning a blind eye to the obvious? Again it is a matter for you.

If you find that the defendant had no knowledge of what was going on, then she had not acted in concert with Chan Ming-chor and she must be acquitted in respect of all the charges, or at least in respect of the charges which show that she was not in Hong Kong. No doubt you will consider all the submissions by Mr Wong when you consider the case. You will also have to consider the evidence of Ng Chun-lap and the two cheque-books. The whole of the 34 charges are based on circumstantial evidence.

Reference has been made to the type of evidence which you have received in this case and it has been labelled circumstantial evidence and the point has been made that there is no direct evidence which proves the defendant guilty of this offence."

42. The summing-up then goes on to comment on the difference between direct evidence and circumstantial evidence and the fact that in some circumstances circumstantial evidence can be every bit as convincing as direct evidence.

43. The point of referring to all of this is to demonstrate the context in which the passage complained of arises. What seems to be reasonably clear is that the focus of the directions given is upon whether the applicant was in fact involved in these transactions. With respect this is an approach which was appropriate in the present case.

44. There is another matter arising out of this ground. In the second paragraph of the passage cited the Judge stated that if the applicant had no knowledge of "what was going on" she must be acquitted of all the charges or "at least in respect of the charges when she was not in Hong Kong". This clearly was a misdirection. If she had no knowledge of the various transactions she could not be convicted whether she was in Hong Kong or not.

45. This appears to have been an aberration on the Judge's part. If the summing-up is read as a whole it is quite clear that the applicant had to have knowledge of the transactions before she could be convicted. The jury would have been aware of this.

Grounds 1(vi) and 5

46. The Judge referred to certain documents introduced by the prosecution as "purely hearsay" without explaining the meaning of the term or how the jury should treat the documents in their deliberations.

47. The documents in question were Jing Hwa's records. The purpose of introducing the documents was to demonstrate that the transactions in question related to "phantom" goods. Having regard to the main issues which had to be determined by the jury this was a peripheral matter of secondary importance. It is unlikely that the failure to give guidance on the evidential status of the documents would have been in any way prejudicial.

Ground 1(vii) and ground 8

48. The Judge did not set out the issues relating to the defence but merely invited the jury to consider all submissions by defence counsel when they considered the case.

49. The important point to bear in mind on this ground is that the applicant did not give evidence nor did she call any witnesses. Throughout the summing-up, the Judge did balance his remarks so as to take into account any points which may be in the applicant's favour. More particularly, the Judge did summarise the point in her favour from the bottom of pp. 95 and 96 of the appeal bundle:

"Defence counsel submitted to you that the signatures on the cheques and collection orders were inconclusive. There was no evidence that the defendant knew Chan Ming-chor and the defendant did not manage Wai Ho as she was away most of the time in South Africa, and that according to Lap Ho's staff there was always someone going up to Lap Ho to collect documents."

50. There is no merit in this ground.

51. Mr Macrae informed us that he would not be pursuing ground 6.

52. For the reasons given we are of the view that the convictions were neither unsafe nor unsatisfactory. The application is accordingly dismissed.

53. In conclusion we would like to express our appreciation to counsel for the assistance we have received. This is particularly the case in relation to Mr Blanchflower's comprehensive skeleton argument and for the way in which he organised the treatment of each of the respective grounds.