HKSAR v. LO CHI CHUNG

HCMA767/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO. 767 OF 2008

(ON APPEAL FROM TMCC 2128 OF 2008)

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J U D G M E N T

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1. On 27 August 2008, the appellant was convicted after trial of one charge of “aiding and abetting dealing with property known or believed to represent the proceeds of indictable offences”, contrary to sections 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap. 455 and section 89 of the Criminal Procedure Ordinance, Cap. 221.

2. He was sentenced to be imprisoned for 5 months.

3. On 2 September 2008, he filed a Notice of Appeal against his conviction. 

4. On 16 September 2008, he was granted bail pending appeal.

5. On 30 April 2010 I heard his appeal against conviction and reserved my decision.  This is my decision. 

Background

6. The trial in the lower court was conducted in Chinese.  On 15 December 2008, Master Ko granted an application by the appellant’s solicitors that the language for the appeal hearing be English.  Orders were made that the appellant’s solicitors file and a served certified English translation of all Chinese documents for the purposes of this appeal.  That has been done. 

7. Simply stated it was the prosecution’s case that the appellant, had between 7 and 9 August 2007, permitted his bank account (with the Bank of China) to be used by another to launder the proceeds of indictable offences.  Those indictable offences were deceptions and the total amount involved was $10,000.

8. The evidence in the prosecution case was not in issue.  No witnesses were called.  The relevant parts of the admitted facts pursuant to section 65C of the Criminal Procedure Ordinance, Cap. 221 were to the effect that the appellant had opened a bank account at the Bank of China in September 2006.  That account could be accessed by the use of a money withdrawal card (“ATM card”) provided that the person in possession of the ATM card had the PIN number.

9. Between 7 August and 9 August 2007 $10,000 was paid into this account and immediately withdrawn.  This money was the proceeds of deceptions. 

10. The victims of the deceptions had each received a telephone call from a man claiming to be a friend.  The caller asked the victims in turn to lend him money.  In each case it was said that the money was needed urgently and when the victims agreed they were instructed to pay the money into a specified bank account.  That was the appellant’s bank account.  There were two victims and the total sum paid into the appellant’s bank account was $10,000.

11. Needless to say that the amounts paid into the bank account were almost immediately withdrawn in cash.

12. The appellant gave evidence.  He confirmed that he had on 27 October 2007 told the police that on two occasions he had lent his ATM card and PIN number to a customer at the bar where he was the manager.  That person was known to him “Ah Tung”.

13. The appellant’s evidence was that he knew nothing of the deceptions which had taken place.  He did not know that the proceeds of those deceptions had gone into and out of his bank account in the period 7 to 9 August 2008.  The bank account in question was in the main part used by him to receive his monthly salary which was usually paid directly into the account and then withdrawn in cash as required.  That was the reason the account was opened. 

14. He told the police and confirmed in evidence that Ah Tung had been a regular customer at the bar for 3 months before August 2007 and would be there 4-5 times per week.  His then girl friend also worked there part-time.  Some time in July 2008, Ah Tung had asked to borrow his ATM card and PIN number so that a relative could transfer funds into the account.  He explained that he did not have sufficient cash with him to pay his bar bill.  He had no bank account of his own and once the relative had transferred the funds into the account he would withdraw the cash, pay his bar bill and return the ATM card.

15. This he did.  Nothing untoward occurred.  Ah Tung returned his ATM card to him within half an hour and paid his bar bill.  Therefore he saw no reason to suspect on the 2^nd occasion that Ah Tung’s motives were other than reputable.  As with the 1^st occasion he expected the ATM card to be returned to him within a very short time.  This time however it was not.  It was only 2-3 days later that it was returned to him.

16. He was not concerned that Ah Tung would withdraw his own funds because he always withdrew the entire balance in cash after each payment of his salary.  There would be no money of his there to withdraw.

17. On the 2^nd occasion when Ah Tung had not promptly returned the ATM card he called him and he explained that he was stuck in traffic.  Other excuses followed until he ultimately got the card back 2-3 days later.

18. It was his evidence that it was not his normal practice to check the balance in the account and after he eventually recovered the ATM card he was not aware that $10,000 had gone into and out of the account on those dates in August 2008.  He only became aware of this when the police questioned him later that month.

19. In the course of giving evidence he produced a document which was admitted into evidence as Ex.D2.  This was a bank statement for his account between 21 September 2006 to 23 July 2007 (1 page).  He said it had been posted to him by the bank and he had given a copy of it to the police.

20. It was produced to demonstrate that in the normal course of events he would almost immediately withdraw his salary in cash after it had been credited.  It was also to support his evidence that there was from his point of view little risk that Ah Tung could withdraw any of his money from the account as there was usually very little there.

21. In the course of cross-examination the prosecutor suggested to him that this bank statement Ex.D2 would only be sent by the bank if the account holders namely himself requested same.  Whilst he agreed with this as a general proposition he maintained that he had not requested the document to be sent to him.

22. As it transpires his evidence was correct.  Pursuant to section 83V of the Criminal Procedure Ordinance, Cap. 221, I have admitted into evidence, unopposed, an affirmation of an officer of the appellant’s bank which confirmed that this document had not been requested by the appellant and was automatically sent by the bank to its customer after a certain number of transactions had taken place in the account.  In the case of Ex.D2 it had in fact been issued by the bank on 23 July 2007—at least two weeks before the payments by the victims of the deceptions were made into the account.

23. It was the thrust of the prosecution’s cross-examination that the appellant had requested the bank to issue this statement after the 1^st occasion he had lent his ATM card to Ah Tung and this would indicate that he suspected Ah Tung’s use of his ATM was illegitimate.  He did not agree with this suggestion but as will be seen the magistrate considered the erroneous proposition that he had requested the bank to prepare this statement was relevant to his assessment of his credibility.

24. It was suggested by the prosecutor in cross-examination that he had actually opened this account was that he could lend it to others to conduct illegal transactions.  He did not agree.

25. What did emerge in the course of the cross-examination of the appellant with respect to Ex.D2 was that on 18 July 2007 there had been a transfer of $10,000 into the appellant’s bank account.  Those funds were almost immediately withdrawn.

26. The appellant accepted that this could have been the transaction conducted by Ah Tung on the first occasion when he borrowed the ATM card and paid his bar bill.

27. The magistrate correctly identified the principle issue in the trial namely whether it had been established that the appellant knew or had grounds to believe that his bank account would be used for dealing with the proceeds of indictable offences.

28. The magistrate rejected the evidence of the appellant.  He concluded from the evidence in the prosecution case that all of the elements of the offence had been established.  Therefore he proceeded to convict.

The appeal

29. It was part of the defence case in the trial to introduce into evidence Ex.D2 .  The magistrate said this :

           “The Appellant said that he had lost the passbook and he did not know the status of the account.  Under detailed cross-examination, he admitted that D2 was a statement which he took the initiatives to ask the bank to issue but not the routine bank statement which he mentioned in the examination-in-chief.  The Appellant agreed that the amount of $10,000 which was deposited on 18 July 2007 and withdrawn on the same day, as shown in D2, was neither his salary nor his money.  The Prosecution challenged that the date shown on D2 was a week later, therefore the Appellant in fact had already known that the account was involved in criminal act.  Soon after the money mentioned in the offence was deposited into the account, he took his initiatives to ask the bank for the ‘Consolidated Back Items Advice’ in order to know the status of the account.  The Appellant said that the key of the letter box at home was kept by his elder sister.  Therefore sometimes he did not know whether letter has been received.  He found D2, namely, the Advice, only after his arrest, and only after reading if did he come to know for the first time about the movement of that sum of $10,000.” [Emphasis added]

30. This is not correct.  It is clear that the appellant did not request this statement from the bank.  In which case the prosecutor’s premise that he had done so because he suspected Ah Tung was up to no good is without foundation.  Likewise the passage emphasized is incorrect.  The transactions with reference to the deceptions did not appear in this document.  They took place two weeks after it had been prepared.

31. In his assessment of the evidence the magistrate said this :

“14.   … the date shown on D2 is 23 July 2007.  It must have taken 3 to 5 days after the 23^rd in order for D2 to have arrived at the Appellant’s home.  The Appellant said that in fact he did not read the contents of D2 until after arrest (which was 20^th August).  In my view, this version is very contradictory and unacceptable.  The Appellant agreed that D2 would only be issued by the bank upon his request.  By common sense, the Appellant would not have paid no attention to whether or not he had received a document which was requested by him on his own initiatives.  In my view, even the key of the letter box was kept by his elder sister, that still would not affect the matter.  He himself requested a letter from the bank, and he had no knowledge that the letter was put aside at home by his elder sister and it was only after his arrest did he find D2.  In my view, such a version in fact is self-contradictory.”

32. This conclusion is erroneous.  The evidence of the appellant has been misquoted.  More importantly the evidence admitted by me pursuant to section 83V, Criminal Procedure Ordinance which is unchallenged is that the document had not been requested by the appellant.  It was generated automatically and there had never been a request made.  The conclusion by the magistrate that the appellant’s evidence was “contradictory” is unsustainable.  Having not requested the preparation of the account statement it is not then unreasonable that he did not look at it.  If he did not look at it how can it be said that he was alerted to Ah Tung’s earlier transaction.  It must be borne in mind that it was his evidence that on the 1^st occasion he lent the ATM card to Ah Tung he had been told he was going to arrange for a friend to transfer some money into the account which he would then withdraw.

33. Complaint is made of the conclusions drawn by the magistrate from two transactions which appear in Ex.D2.  The magistrate said this :

“15.   D2 can also show that the Appellant has made use of this account for making purchase by using ‘EPS’.  When he used this account, there was not much balance left.  However, he could still make the purchase successfully and did not exceed the amount of balance.  This indicates two things: firstly, the account was not merely used for the purpose of receiving the payment of salary but it would be used in his actual daily life.  Therefore, the Appellant should keep his card and password more properly.  Secondly, he could be careful enough to make use of such a small amount of balance to make purchase without exceeding the amount of balance.  This indicates that in fact he often knew the status of the balance of his account.  It is a pack of lies when he said that he did not read D2, nor did he pay any attention to the account, and he knew nothing about the transaction of the account after he had lent it to ‘Ah Tung’.  I totally reject what the Appellant has said in his explanation.”

34. This was not a matter touched upon in evidence-in-chef or cross-examination.

35. The magistrate was saying that he would not be able to make the EPS purchases he did without checking the balance in the account.  This is common sense.  However it was critical to the magistrate’s finding that the appellant was alert to the amount of funds that were in his account from time to time by reason of this.  Thus he would be aware of the payments from the deceptions.  Complaint is made that the appellant was neither asked questions nor cross-examined about this particular aspect of the use of his account.

36. This may be so.  However the fact that the magistrate was considering whether he should draw such an inference from the use of the account in this way emerged in the course of the closing submissions by the appellant’s counsel.  There was an exchange between the court and the appellant’s counsel as follows :

“COURT :  He has made EPS transaction twice.  By common sense, we know that EPS means cash transaction for making purchase.

MR CHUM :  Yes.

COURT :  At that time, for example, say on 30 October 2006, there was $70.4 in his account, and he spent $69.9 on making purchase by using EPS.  That means it did not exceed the amount (in the account) and it was just enough to cover.

MR CHUM :  That means we can see that he has really tried his best to spend all the money.

COURT :  That means …

MR CHUM :  We can only say this as I am not in a position to give evidence …

COURT :  May I have a moment.

MR CHUM :  Yes.

COURT :  It is because by looking at another record dated 21 July 2007, there was $62.7 in his account and he spent $61.1 on making purchase.

MR CHUM :  Yes.

COURT :  Can an inference be drawn that in fact all along he has been aware of the amount of balance in his account, and therefore (when he used) EPS (to make purchase), he would not spend more than the balance.  He knew very well the amount of balance in his account.

MR CHUM :  I can draw this inference.  There can be another inference, which is that he has done—that is, he has done some other things to minimize the amount of balance in the account, that is, just a few dollars.  I believe that this is a reasonable inference.

COURT :  That means, would it be the case that if a person all along has been paying no attention to his account without updating his passbook and reading the bank statement, then it will be very difficult to be a coincidence that I have $70 and I spend $69.9 by using EPS on making purchase.  It is very unreasonable that on one hand he did not know the amount of balance in his account, but on the other hand on those two occasions the amount of balance was just enough to cover the amount spent by using EPS.  On the contrary, he could do so because he must have checked his account very often.  He could do so only because he often knew the amount of balance.

MR CHUM :  Your Worship …

COURT :  Therefore, this—this inference will be very unfavorable to the Defendant.

MR CHUM :  I know that.  However, Your Worship, concerning such phenomenon, in fact, we can find only it in two EPS transactions, which, in my submission, did not take place very often.  We can see from the record that there are a lot of transactions, and for these two, one of them took place in October while the other one in February.  For the remaining occasions, he withdrew all the money in one lump sum.

          Of course, Your Worship, under these circumstances, I would not say anything as to why he did that, nor can I explain that because there is no evidence in this regard.  However, I would submit that we can draw an inference that the Defendant knew how much there was in the account, but this inference is based on the fact that he tried his best to minimize such amount in the account and it does not necessarily mean that he would check the amount in his account every day.  Your Worship, in my view, these are two different things.  That means we can believe that the Defendant tried his best to make the account empty by withdrawing all the money, and therefore only a few dollars were left in the account.  However, we cannot just base on the records of those two EPS transactions to say that the Defendant had been all along checking the amount of balance in his account.”

37. It is apparent from the above passages that the appellant’s counsel was alert to the fact that the magistrate was inclined to draw this inference.  Indeed he went so far to accept such an inference if drawn would be very unfavourable to the appellant.  Having been alerted to this in the course of this exchange, it is somewhat strange that the appellant’s counsel did not attempt in those circumstances to re-open the defence case to allow the appellant to give evidence about these matters.  It was incumbent upon the appellant’s counsel to remind the magistrate that the appellant had not been asked about these matters in evidence-in-chief or in cross-examination.  Notwithstanding the clear indication from the magistrate that this was an inference adverse to the appellant which he was prepared to draw, counsel made no attempt to enable his client to give evidence on the matters. 

38. In his Statement of Findings the magistrate said :

“… the account was not merely used for the purpose of receiving the payment of salary but it would be used in his actual daily life.  Therefore, the Appellant should keep his card and password more properly. …”

and further :

“… he could be careful enough to make use of such a small amount of balance to make purchase without exceeding the amount of balance.  This indicates that in fact he often knew the balance of his account.”

39. Criticism is made of this conclusion for the following reasons.  The magistrate was not aware of the circumstances in which the EPS payments were made, how often they were made and whether or not the two EPS payments referred to in exhibit Ex.D2 were typical of the frequency or nature of such transaction.  The critism being that the magistrate by reference to two only transactions in the account draws the irresistible inference that the appellant was at all times conscious and alert to the amounts going into and coming out of his account.

40. These are valid critisms.

41. The magistrate, has to my mind, fallen into error.  He has determined that the appellant was an untruthful witness.  His reasons for coming to this conclusion are unsustainable. 

42. Considering this appeal, as I must, as a rehearing, I am satisfied that the circumstances in which the appellant lent his card to “Ah Tung” and the consequent payments into that account give rise to suspicions.  The whole of the circumstances surrounding the appellant’s provision of his card to another and its use are suspicious. 

43. Having considered the evidence afresh I am not satisfied that the elements of the offence are established.  In particular whilst it is correct to say that the lending of one’s ATM card and PIN number to another, a mere acquaintaine, can properly in certain circumstances give rise to a charge of aiding and abetting money laundering, in the circumstances of this case the evidence falls short.  The appellant had previously lend his ATM card to Ah Tung who had returned it to him as requested.  The circumstances as described were not so far fetched and fanciful as to warrant rejection.  The period of time in which Ah Tung had his ATM card on the 2^nd occasion was 2-3 days and it was in this time that the relevant deceptions took place.  The appellant’s evidence that he was attempting to get his card back from Ah Tung over this period but being thwarted is not unreasonable in the circumstances.

44. I will allow the appeal, quash the conviction and set aside the sentence.