HKSAR v. CHAN WAI MING

CACC 208/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 208 OF 2012

(On Appeal From District Court Criminal Case No. 137B of 2011)

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J U D G M E N T

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Hon Cheung JA (giving Judgment of the Court) :

1.  The applicant was convicted after trial by Deputy District Court Judge C P Pang (as he then was) of two counts (namely, charges 2 and 3) of ‘dealing with property known or reasonably believed to represent proceeds of an indictable offence’, contrary to section 25(1) and (3) of the Organized and Serious Crime Ordinance (‘OSCO’), Cap. 455. He was sentenced to a total term of 3 years and 9 months’ imprisonment. He applies for leave to appeal against conviction.

The prosecution case

2.  The two offences faced by the applicant are commonly known as money laundering offence.

3.  Chun Shing Investment Company (‘Chun Shing’) is a sole proprietorship registered in Hong Kong.  The original sole proprietor was Choi Chun Yin (‘Choi’), the 1^st defendant in the case below.  Choi retired on 13 May 2009 from Chun Shing and another person Lau Wai-kuen became the sole proprietor.  Chun Shing has two accounts in Bank of China (‘BOC’), one is a multi-currency account, the other is a Hong Kong dollar account.  The applicant and Choi are the authorised signatories of these two accounts.

4.  Choi gave evidence for the prosecution.  He set up Chun Shing and opened the bank accounts at the behest of his employer, surnamed Cheung (‘Cheung’) who told him he was to be involved in obtaining cross-border vehicle permits.  Chun Shing existed only on paper and had no premises or business.  Cheung later introduced the applicant to him.  Choi then handed all the documents of the two BOC accounts to the applicant for him to operate by internet banking.  He added the applicant as a signatory at his request.  Choi said he knew nothing about the process of applying for cross-border vehicle permit.

5.  Charge 2 relates to six transfer deposits totalling US$1,005,100 and six transfer withdrawals in the same total amount made between 23 September and 15 October 2008.  The money withdrawn was paid into the bank account of a company in Jiangmen in the Mainland.

6.  Charge 3 relates to a total of HK$16,000,000.  First, two transfer deposits totalling HK$8,000,200 on 1 November 2007, followed by a remittance out to a bank account in Shenzhen of HK$8,000,000 on the same day.  Second, three transfer deposits totalling HK$8,000,000 on 25 January 2008, followed by the remittance out to another account in Shenzhen of three sums totalling HK$8,000,000 on the same day.  All the withdrawals were made by the applicant.

The defence

7.  The applicant gave evidence at the trial.  His defence is that the monies deposited into and transferred out of the BOC accounts were related to a joint venture business (‘the scheme’) that he had with Cheung and a person from the Mainland surnamed Chan.  The business was to assist others to obtain cross-border vehicle permit.  According to the applicant, the Mainland has introduced a policy to encourage foreign investment and, if a foreign company (which includes a Hong Kong company) invests HK$8 million in a Mainland company, it will be eligible to a cross-border vehicle permit.

8.  The arrangement was that for each of the permit application carried out by the joint venture business, Chan would provide HK$8 million which would be deposited into one of the BOC accounts.  The money would then be transferred to the bank account of a Mainland company.  After the cross-border vehicle permit was issued, it would be sold at a profit.  As to the HK$8 million, it would be returned to Chan shortly afterwards.  Three applications were involved in the scheme.  The first application was to apply a permit for Lau Wai Kuen.  For each new application, a new Hong Kong company with the same English name as Chun Shing (but with a different Chinese name) would be registered so that the deposits and remittances could be done through the BOC accounts maintained by Chun Shing. The applicant claimed that he believed it is a legitimate business and that the monies provided by Chan for fulfilling the requirement of the Mainland policy came from legitimate sources as he had understood Chan to be a wealthy businessman.

The finding

9.  The Judge accepted the applicant’s evidence on the operation of the scheme. 

10.  The following is the specific findings by the Judge in respect of the scheme :

‘ 52. On the evidence of D2, the following features in his business are noted :

(1) At first, all his clients needed to establish a dummy company which, after registration with the Inland Revenue Department, had no business at all.

(2) All his clients used the same BOC account opened by Choi for channelling of the funds to prove the overseas investment.   

(3) The investment capital all came from the mainland, purportedly from a mainlander Chan.

(4) When money was deposited into the BOC account, it would be transferred out from the account on the same day and remitted back to a bank account in the mainland.

(5) As admitted by D2, the money remitted back to the bank account of the mainland company would be returned to Chan when an accountant’s Investment Verification Report had been prepared.  The report was used to prove that the stipulated 8 million overseas capital had been received.

(6) In other words, the 8 million capital money would only stay in the mainland company’s account for a few days before the money was returned to Chan.  Apparently, as the capital money went back to Chan after a few days, no money was invested in the mainland company.  

(7) The amount of money transferred back to the mainland company’s account was just enough to qualify for a cross-border vehicle permit.’

11.  The Judge found that it was a dishonest scheme to deceive the Mainland authorities into believing that there were genuine overseas investments and consequently to issue the cross-border vehicle permit.  He held that the applicant knew that it was a fraudulent scheme and he, together with his associates, intended to deceive the Mainland authorities.  The Judge held that this amounted to the common law offence of conspiracy to defraud the Mainland officials with acts done in Hong Kong.  He held that the monies deposited into the BOC accounts and transferred out by the applicant were proceeds of an indictable offence within the meaning of section 2(6)(a) of the OSCO.  Accordingly, he held that the applicant had dealt with the monies, knowing that they represented proceeds of an indictable offence.  The Judge further held that, the evidence shows that the applicant had reasonable grounds to believe that the monies he dealt with were partly the proceeds of an indictable offence, being the illicit profits from the previous fraudulent transactions.

Grounds of appeal

12.  We will deal with the grounds of appeal in the sequence as they were presented in the applicant’s written submission.  However, the focus of the appeal at the hearing before us was on the application of section 25(4) of OSCO.

1)   Material irregularity in the cross-examination of the applicant in breach of section 54(1)(f)(i) of the Criminal Procedure Ordinance (‘CPO’) (Cap. 221) [Ground 6]

13.  Section 54(1)(f)(i) of CPO provides that :

‘ (f) a person charged … shall not be asked, and if asked shall not be required to answer, any question tending to show that he has committed……any offence other than that wherewith he is then charged, or is of bad character, unless-

(i) the proof that he has committed ….. of such other offence is admissible evidence to show that he is guilty of the offence wherewith he is then charged;’

14.  Mr. Philip Wong for the applicant argued that the Judge was wrong to allow him to be cross-examined on whether he committed fraud in the Mainland and conspiracy to defraud in Hong Kong.  He argued that the exception provided by section 54(1)(f)(i) does not apply because the applicant was charged with the offence of dealing with proceeds of an indictable offence upon the basis as opened and pursued by the prosecution of ‘having reasonable grounds to believe the property he had dealt with represented proceeds of an indictable offence’.

15.  The prosecution had indeed proceeded in its opening on such a basis but it was then unaware of the defence’s case. Based on the applicant’s own evidence on the scheme, in our view, the cross-examination fell within the exception because the evidence of the applicant which pointed towards the fraud and conspiracy he had committed would establish his guilt in the offence of money laundering in respect of his knowledge and belief that the money he dealt with represented the proceeds of an indictable offence (which is defined by section 2(6) of the OSCO as ‘payment received by him in connection with the commission of that offence’).  The evidence therefore was admissible.  It is artificial to argue otherwise when the evidence was introduced by the applicant himself. 

16.  Mr. Wong complained that the applicant should not be asked by the prosecution about his opinion on the intention of the Mainland government which he was not competent to give.  What was put to the applicant in cross-examination was that the government in Guangdong was looking for real investment into real companies and he agreed with it.  In our view this was relevant and admissible on the true nature of the scheme and was directly related to the state of his mind concerning the offences charged. 

17.  There are other points raised by Mr. Wong about the cross-examination of the applicant with reference to the evidence of Choi who pleaded guilty to charges 1 and 3 and gave evidence for the prosecution.  We do not see the relevance of the cross-examination to the point now raised by Mr. Wong.

18.  Mr. Wong argued without elaboration in his written submission that the cross-examination was in breach of Article 11(2)(a) and (b) of the Bill of Rights (namely, to be informed promptly of the nature and cause of the charge and adequate time to prepare his defence).  We do not see how these provisions would assist the applicant.

2)   The Judge failed to apply two binding authorities requiring expert evidence on foreign law and wrongly held without any evidential or legal basis that fraud had been committed [Grounds 2 and 3]                              

19.  In HKSAR v Tam Hung CACC 127/2010 the defendant was convicted after trial of money laundering.  He had operated casinos in Kachin, Myanmar and huge amount of money were remitted to his bank accounts in Hong Kong.  The admitted facts showed that the defendant knew the moneys in the Hong Kong bank accounts came from his profits in the casinos. The prosecution called a government official of Myanmar (PW2), to prove that gambling was illegal there.  This Court first held that the trial judge was wrong to find gambling in Myanmar was illegal in the absence of proper expert evidence on Myanmar law.  PW2 could not be regarded as an expert on Myanmar law.  This Court then considered both limbs of knowledge and reasonable belief.  In respect of knowledge, this Court held that the defendant could not be so convicted in the absence of expert evidence on the illegality of gambling in Myanmar.

‘ 23. On the basis of PW2’s evidence the learned judge found that the activities of the casinos was illegal. Para. 148. The learned judge went on to find that the Defendant knew that the moneys in the relevant accounts were derived from the activities of the casinos, and since gambling in Myanmar was unlawful, the Defendant knew that the proceeds in the relevant accounts represented proceeds of an indictable offence.

…

28. Since we have no doubt that the learned judge’s finding that gambling was unlawful in Kachin could not be supported, insofar as he has convicted the Defendant on the first limb of section 25(1), the conviction must be quashed.’  (emphasis added)

20.  The Appeal Committee of the Court of Final Appeal (FAMC 43/2011) confirmed this principle and said this in paragraph 6 of its Determination :

‘ …Without evidence of illegality, the prosecution’s case on actual knowledge of illegality could not be sustained.’ (emphasis added)

21.  In respect of the issue of reasonable belief this Court in Tam Hung held that there was insufficient factual evidence for the Judge to find the defendant guilty on this limb of the charge :

‘ 29. However, the learned judge held, in the alternative, that, even if it was not proved that gambling was unlawful in Kachin, the Defendant had reasonable grounds to believe that the moneys were the proceeds of an indictable offence. ...

30.   With respect, we do not believe the learned judge had given the alternative basis adequate consideration.

…

39. … But in respect of the second limb of section 25(1), we believe the learned judge ought to have considered whether the fact that the casinos operated openly, displayed a licence on the premises, and paid taxes were such as would have led a reasonable person to believe that they were lawful establishments.  Furthermore, from the evidence, it is clear that Kachin is poor and underdeveloped.  The casinos buildings would have been some of the most substantial buildings in the area.  It is inconceivable that they could have been operated without the permission of the local authorities.  Bearing in mind that there is no admissible evidence of any Myanmar law prohibiting casinos, we believe the only reasonable or the more probable inference is that the casinos were lawful.’ 

Tam Hung was followed in HKSAR v. Mak Pui Cheong (CACC 185/2011).

22.  In this case, the Judge held that expert evidence on Mainland law is not necessary because he held that the common-law offence of conspiracy to defraud the Mainland officials with acts done in Hong Kong in pursuance of the agreement is itself an offence in Hong Kong.  It does not matter whether the agreed conduct can be proved to be an offence in the Mainland.  He further held that it would be too imaginative to suggest that the Chinese officials would still issue the permits had they known the truth.  Without evidence from the Mainland officials, the only reasonable and irresistible inference must be that they would not issue the permits had they known the truth.

23.  In our view this Court’s judgment in Tam Hung correctly stated the principle on how foreign law should be proved if the prosecution wishes to show conducts done in a foreign jurisdiction constitute illegal conducts in that jurisdiction.  In this case, the prosecution had not adduced such evidence. The Judge attempted to overcome this problem by his finding that the conduct of the applicant constituted conspiracy to defraud in Hong Kong.  However, what the Judge had overlooked (certainly there was no discussion by him) was the jurisdictional hurdles of such an offence when the fraud itself was to be committed in the Mainland and not in Hong Kong.  The principle which is affirmed in Attorney General’s Reference (No 1 of 1982) [1983] 2 All ER 721 is that a conspiracy to commit a crime abroad is not indictable at common law unless the contemplated crime is one for which an indictment would lie here : Board of Trade v Owen [1957] 1 All ER 411.  This will require proof of illegality committed overseas.  Section 6 of the Criminal Jurisdiction Ordinance (Cap. 461) ‘extends’ the jurisdiction in respect of conspiracy to defraud where the conditions provided for by section 7 are fulfilled with further procedural safeguards provided by section 8.  Again section 7(1) clearly contemplates proof of Mainland law on the illegality of the conduct in the Mainland.  Such evidence is lacking in this case.  The relevant parts of section 7(1) reads :

‘ 7(1) A person is guilty of an offence triable by virtue of section 6(1) only if the pursuit of the agreed course of conduct would at some stage involve-

(a) an act or omission by one or more of the parties; or

(b) the happening of some other event,

constituting an offence under the law in force where the act, omission or other event was intended to take place.’  (emphasis added)

24.  However, in our view the Judge’s finding on conspiracy to defraud being committed in Hong Kong can be grounded under section 25(4) of OSCO.  The Court drew the parties’ attention at the opening of the appeal to this section and the applicable authorities which were not canvassed in the parties’ written submission.  Section 25(4) provides that :

‘ … references to an indictable offence include a reference to conduct which would constitute an indictable offence if it had occurred in Hong Kong.’

25.  If section 25(4) is invoked, the Court will no longer be concerned with fraud being committed in the Mainland.  The conduct is to be treated as if it had occurred in Hong Kong.  The acts done pursuant to the scheme were clearly intended to defraud a public authority in issuing vehicle licence when there was no genuine investment.  The so-called investment was not provided by the investor and the fund was quickly withdrawn after the vehicle licence was granted.  These acts would clearly constitute the indictable offence in Hong Kong of conspiracy to defraud.  Section 25(4) caters for situations like the present one.

26.  In HKSAR v Lok Kar Win & Ors [1999] 4 HKC 783, Burrell J at 789 referred to section 25(4) and held that :

‘ ……Hong Kong is concerned with its own perception of what should be regarded as criminal activity, not the standard of foreign countries and therefore the section spells out in s 25(4) that the determining factor is the conduct complained of and not whether that conduct happened to be an offence in the foreign country. Section 25(4) is specific and unambiguous and caters exactly for the situation where there has been conduct abroad and not where there has been the commission of a foreign offence abroad.’

27.  The Appeal Committee of the Court of Final Appeal [1999] 4 HKC 796 refused to grant leave to appeal.  The relevant question of law that the Appeal Committee considered was :

‘ (2) Whether it is necessary, to establish an offence under the section, for the prosecution to prove that the property, the subject of the charge, represents the proceeds of conduct which, if occurring outside Hong Kong, was an offence where it occurred.’

28.  It held that :

‘ As to Question (2), it is plain from the wording of s 25 that the section aims at criminalising dealing in Hong Kong with property derived from conduct which is indictable here, regardless of where that conduct occurred. Subsection (4), as Burrell J rightly says, makes clear that the determining factor is the conduct complained of as judged by Hong Kong law, not whether that conduct is an offence in the foreign country where the conduct took place. In our view the answer to Question (2) must be No. The contrary is not arguable.’

29.  Lok Kar Win was referred to in Tam Hung but this Court did not consider it necessary to discuss it :

‘ 41. It is unnecessary for us to go on to consider Lok Kar Win, on which we have received no meaningful submission. Lok Kar Win is not concerned with a case where the defence is that the money was derived legitimately. Lok Kar Win throws little light on whether it is a defence under the second limb of section 25(1) that contrary to suspicious circumstances, the Defendant knew and could prove that the moneys were actually not the proceeds of any indictable offence, foreign or domestic. It is not necessary to go into this in the present case.’

30.  On the facts of this case, we are of the view that Lok Kar Win and section 25(4) are applicable.

31.  Section 25(4) and Lok Kar Win were referred to the Judge by the prosecution.  There is disagreement by the parties before us whether the Judge relied on section 25(4) in his finding on conspiracy to defraud.  Mr. Jonathan Man for the prosecution submitted ‘Yes’ while Mr. Wong submitted ‘No’.  On a proper reading of the judgment, our view is that the Judge did not rely on section 25(4).  The Judge actually held that he did not need to consider section 25(4) and Lok Kar Win. Mr. Wong submitted that we should not consider section 25(4) because it was not the basis upon which the conviction was based.  He further submitted that section 25(4) is still not applicable because of the principle set out in Attorney General’s Reference (No 1 of 1982) and the need to prove illegality of the conduct in the Mainland by proper expert evidence.

32.  In our view the two grounds relied upon by Mr. Wong do not render section 25(4) inapplicable for the reasons we have discussed.  Since the applicant’s own evidence provided the factual basis for a consideration of this section and since the application of this section was argued before the Judge, the applicant is not prejudiced in this appeal by a consideration of this section. We accept, however, that this issue is relevant for the application of the proviso, which we will later discuss.

3)   The Judge had wrongly considered the evidence of Choi and relied on his evidence to reject the applicant’s belief that he was doing a legitimate business[Grounds 8 and 11]

33.  The Judge found that Choi’s evidence ‘cannot help the prosecution much’.  After assessing his evidence, the Judge attached no weight to it.  This is what the Judge said :

‘ 41. However, as a result of the cross-examination, the court has raised the issue as to whether Choi’s plea of guilty is equivocal. Counsel for Choi has been alerted on this issue. Nevertheless, that is a separate issue to be resolved in due course but irrelevant insofar as D2’s trial is concerned. As I said before, the conflicts in evidence between Choi and D2 are immaterial. In whatever way the conflicts are resolved, the result of this case will not be affected. However, for what it is worth, I shall also deal with it.

42.     First, I note that Choi is an accomplice.  He may have his interest or motive to serve.  Apparently, he gives evidence, hoping to get a lenient sentence.  I warn myself to exercise special care in considering his honesty and reliability, and I remind myself that D2 has a clear record.  

43.     Choi gives me the impression that he is trying to minimise his role and benefit in the case.  Although pleading guilty to two charges of money laundering (Charge 1 and Charge 3), his evidence appears to be inconsistent with his plea to the two charges.

44.     On Charge 1, he says the moneys he received were reimbursement of expenses that he had paid in advance for his boss in social gathering and entertainment and expenses he had paid in advance in car insurance and repairs for his clients when he worked in a motor company.  He says the moneys were not proceeds of crime.  He only pleaded guilty because he did not have proof to prove his innocence.

45.     Charge 3, on which he was jointly charged with D2, involves about $1.6 million which should be, according to his evidence, related to two applications for cross-border vehicle permits.  However, his evidence is that he is not aware of the second and the third applications.  There may be the suggestion that he only dealt with half of the amount in Charge 3. D2 also says he received no reward at all.  However, his evidence is that he took all the troubles to establish a company, to open bank accounts for others to use it and, further, he went to Guangzhou Vehicle Permit Office to choose the vehicle permit number.

46.     I find it difficult to believe that he did all these for free.  I have doubts whether his evidence is credible.  I have doubt whether Choi is reliable on the part of the evidence challenged by D2 and I shall attach no weight to it.’

34.  Mr. Wong argued that the Judge should not have accepted Choi’s plea of guilty in the first place and should ­not have received his evidence at all.

35.  We fail to see the logic of this argument since the Judge expressly held that he would attach no weight to Choi’s evidence.  Mr. Wong argued that the Judge had in fact relied on the evidence of Choi when he posed the following rhetorical questions and found against the applicant :

‘ 54. D2 claims that he was honest, believing that it was a legitimate business. Mr Leung, counsel for D2, submits that D2 was only taking advantage of the loopholes in the Chinese legislature or policy which was not an offence. On the overwhelming evidence, in my judgment, it is inconceivable that D2 did not know what he was doing was a deception scheme. On his own evidence, he knew the Chinese policy was to attract overseas investment. He also knew that investment capital money would only stay in the mainland company’s account for a few days and had to be returned to Chan when the accountant’s verification report was ready.

55. It is clear that when sufficient evidence in support of the application had been fabricated, the money would be taken out from the mainland company’s account.  If D2 genuinely believed he was doing a legitimate business, one would ask these rhetorical questions : why did he not go into the Guangzhou Vehicle Permit Office with Choi but chose to remain outside the office to wait for Choi?  Why did he arrange three Hong Kong companies with the same English name?  Why did he use Choi’s accounts to channel the investment capital for the second and third licence applications when he must know the local companies in the second and third applications were not entitled to use the bank account not belonging to their companies?  Choi was his associate in the business.  Yet, why D2 said he had no relationship with him?

56. All these evidence, in my view, support the only reasonable inference that D2 knew he and his associates were operating a scheme to deceive.  They had the intention to deceive the Chinese authorities.’

36.  The relevant part of Choi’s evidence is in respect of the visit to the Guangzhou Vehicle Permit Office (which was confirmed by the applicant himself) and Choi being an associate in the scheme. But even without this evidence, there clearly was sufficient evidence, as outlined earlier, for the Judge to find that the applicant was involved in a fraudulent scheme.

37.  Mr. Wong referred to the following finding by the Judge and argued that the Judge was wrong to reject the applicant’s explanation that he thought the proceeds came from a legitimate source :

‘ 22. In late 2006, Lam made arrangements for D2 to meet Chan at Chan’s office in the mainland. D2 was impressed by Chan’s office and factory and believed that Chan was a rich man. He proposed to join the business but was declined by Chan. Later, as D2 offered help to Chan's wife to give birth to a baby in Hong Kong, D2 and Chan became good friends in 2007. They started their joint venture in the business of obtaining cross-border vehicle permits and Chan agreed to provide the investment capital of $8 million as a loan to D2 in each application for the permit.’

38.  As Mr. Man rightly submitted, it is hard to see how this general background information has any bearing on whether the objective test on the second limb is satisfied in this case.  There are ample grounds for the Judge to reject the applicant’s explanation.

4)   The applicant did not receive a fair trial because of the change of case by the prosecution [Grounds 1 and 5]    

39.  Mr. Wong complained that the prosecution had changed its case in the following respects :

(1)  from one of having reasonable grounds to believe to that of knowingly dealt with proceeds of an indictable offence, and

(2) from a case of laundering proceeds in Hong Kong to that of a conspiracy to defraud officials in the Mainland.

40.  Mr. Wong submitted that this might have rendered the parties not focusing sufficiently on the important issues which needed to be fully canvassed and argued in the trial below as now being argued in this appeal.

41.  As pointed out earlier, when the prosecution opened its case, it did not know the nature of the defence and it relied on the movement of the large sums to infer reasonable belief of the applicant that he was dealing with the proceeds of an indictable offence.  The applicant’s evidence, however, provided information on the nature of his activities under the scheme.  As the Court of Final Appeal stated in Hau Tung Ying & Ors v HKSAR (2011) 14 HKCFAR 453 per Chan PJ :

‘ 46 .... From a review of the authorities cited by counsel, I am satisfied that in appropriate cases, the judge does have the power to consider the case or direct the jury on the case on a basis different from that presented by the prosecution, provided that this is open on the indictment and the evidence and the parties are given an opportunity to address the judge before he takes that course ....’ (emphasis added)

42.  This authority is accepted by the applicant.  We disagree that the applicant had been prejudiced.  This was not so much a change of case by the prosecution as the applicant’s own evidence provided further support for the charges that he knew or had reasonable belief that he was dealing with proceeds of an indictable offence.  There was no change of charge from money laundering to conspiracy to defraud.  The applicant who was represented below had the opportunity and did address the Judge on the relevant issues.  We do not consider that there are merits on this point.

Other grounds

43.  Mr. Wong did not rely on the other grounds as identified in the re-amended perfected grounds of appeal.

Application of the proviso

44.  We are of the view that the Judge was wrong to find conspiracy to defraud in order to support his finding of the applicant’s knowledge and reasonable belief without relying on section 25(4) of OSCO.

45.  However, on the basis of our conclusion that the Judge’s finding on conspiracy to defraud can be properly grounded under section 25(4), then this is clearly a case for the application of the proviso.  Since the applicant himself took part in the conspiracy to defraud then clearly the prosecution can establish the requisite knowledge and also reasonable belief on the part of the applicant.

46.  In this case, in respect of reasonable belief, the Judge found reasonable belief by reference to, among other things, that :

‘ 81. …..

(5)   Because of the handsome profit, D2 and Chan would want to process cross-border vehicle permit applications as many as possible.

(6)   To support more fraudulent applications, large amount of money would be required to disguise as the overseas investment money.

(7)   Having derived handsome profits and believing that the business was a profitable one, the irresistible inference is that Chan would reinvest his illicit profits into the scheme.

(8)   The money would be recycled to provide more funds to support more transactions.

82. The $8 million disguised money therefore may have come at least partly from the illicit profits from previous fraudulent transactions. …’

47.  In our view it is not necessary for the Judge to base his decision on reasonable belief on such a narrow ground.

48.  Mr. Man further submitted that the Court’s decision in Tam Hung is fact-sensitive and it did not lay down a general principle that in the absence of evidence of illegality, the tribunal of facts cannot convict a defendant on the second limb of a section 25(1) offence.

49.  It is not necessary to address this argument in view of our finding.  It is sufficient to point out that this Court in Tam Hung did not hold that the requirement of proof of illegality committed overseas is not applicable to the second limb.  In fact this Court expressly referred to the absence of evidence on foreign law in the discussion on the second limb. 

50.  Before we conclude it is worth repeating what the Appeal Committee of the Court of Final Appeal said in HKSAR v Wong Ping Shui & Another (2001) 4 HKCFAR 29 at 32 :

‘ Quite apart from these points of construction, it is wholly implausible that the Legislature could have intended proof of money laundering offences to require proof of the underlying criminal offences that generated the money being sanitised. There is the obvious likelihood that such activities would be cloaked in secrecy and that they may well have taken place in one or more foreign jurisdictions.’

Where, as in this case, the prosecution seeks to rely on the underlining criminal offence, the proper approach (where there is no expert evidence on the foreign illegality) is to invoke section 25(4).

Further submissions

51.  After the hearing, the applicant’s legal representatives lodged a further written submission. Reliance was placed on HKSAR v. Wong Sau-fong [1998] 2 HKLRD 254 in which the Court of Final Appeal held that the Court of Appeal in considering an appeal by way of case stated under section 84(c) of the District Court Ordinance (Cap. 336) did not have the power to convict and sentence a defendant as this was contrary to the defendant’s right of appeal provided for by Article 11(4) of the Bill of Rights.  The applicant’s legal representatives argued that :

‘ …. if the Court is to construe Section 83 of the Criminal Procedure Ordinance to allow the Court to uphold the conviction of the Applicant on a basis different from that of the trial court would have curtailed the Applicant’s right of appeal under Article 11(4) to the Court and so bill inconsistent. And that it would only be bill consistent to construe Section 83 as not to allow the Court to uphold the conviction of the Applicant on a basis different from that of the trial court.’

52.  The applicant’s legal representatives should be reminded of what this Court said in R v Sheung Kwok-leung & Anor (1976) HKLR 742 about post-hearing submissions.  Pickering Ag. CJ at p.755 held that :

‘ There are no grounds for the assumption that this Court will permit further argument either orally or in writing after the conclusion of the hearing of the appeal. Were this to be allowed as a practice the task of the Clerk of Court in organizing the court’s calendars would be rendered unmanageable and that of the judges in hearing and deciding the appeals coming before the court, impossible. There may be cases in which something both cogent and urgent comes to counsel’s attention after the conclusion of the hearing of the appeal and in such circumstances – and they must be very rare – with the consent of the other side and, we emphasise, the approval of this Court, it may be permissible to allow a second bite at the cherry. In the present instance the exercise was unauthorised, unhelpful and unnecessary and therefore unwelcome.’ (emphasis added)

53.  In future the applicant must obtain the consent of the respondent first before lodging further submission after the hearing.  In this case this Court had asked Mr. Man to respond to the submission.  We are of the view that the new submission by the applicant is without merits.  Unlike an appeal by way of case stated where a defendant is acquitted of the offence, the applicant in the present case is already convicted of the offence and is appealing against the conviction.  The exercise of the proviso under section 83 of the Criminal Procedure Ordinance (Cap. 221) does not deprive him of his right of appeal which he has exercised.  There is no question of this Court ‘convicting’ the applicant because that had already taken place.  The exercise of the proviso is simply to dismiss the appeal which the applicant has exercised.

Conclusion

54.  Accordingly the application is dismissed.