HKSAR v. ARTHUR JOHN PAYMER AND ANOTHER

CACC3/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO.3 OF 2004

(ON APPEAL FROM DCCC 898 OF 2003)

--------------------------

-----------------------------

-----------------------

J U D G M E N T

-----------------------

Hon Pang J (giving the judgment of the court) :

1. After their trial in the District Court before HH Judge Line, the 1st applicant was convicted of one charge of tendering counterfeit currency notes, contrary to section 99(1)(a) of the Crimes Ordinance, Cap.200, and the 2nd applicant was convicted of one charge of attempting to tender counterfeit currency notes. Each applicant was sentenced to 18 months' imprisonment. This is their application for leave to appeal against their convictions. The counterfeit currency notes involved in each count was 1,000 numbers of 500 Indian Rupees denomination.

2. The prosecution case which is basically not in dispute was that on 31 July 2003 the applicants arrived Hong Kong from Thailand in the early afternoon and they proceeded to the main branch of the HSBC located in Central. The 1st applicant produced 1,000 numbers of 500 Indian Rupee bank notes and received a sum of HK$73,500 less a HK$50 handling charge in exchange. After the transaction the 2nd applicant produced a further 1,000 bank notes of similar denomination for exchange. While the bank notes of the first transaction was being processed, the bank staff noticed something suspicious about the bank notes. Both applicants were then invited into a room at the bank and the police was summoned. The activities of the two applicants at the bank's counter were recorded on video tape.

3. The applicants were subsequently arrested by the police on suspicion of tendering forged bank notes. They were interviewed on 1 August and their records of interview were produced unopposed as exhibits at the trial. The admissibility of the two records of interview was not challenged. Subsequent examination by the authorities revealed that the notes seized were counterfeit money.

4. At the trial, after an unsuccessful submission of no case to answer, both applicants elected not to give evidence. No other witnesses were called. Both applicants relied on their statements under caution, the contents of which were essentially exculpatory. During the cautioned interview they explained that they believed the currencies they had with them were genuine bank notes. They were given to them by a friend of the 2nd applicant. This friend told them that the Indian currency could not be exchanged in a bank in Thailand so that they had to bring the notes to Hong Kong for them to be exchanged. For their efforts they were given a free trip and free accommodation in Hong Kong. Had the bank notes been exchanged in Bangkok, it would have attracted a discount of some 50%. Having been given the bank notes the 1st applicant then consulted an Indian businessman in Pattaya in Thailand who assured him that the notes were genuine. The 2nd applicant consulted the Siam Commercial Bank in Pattaya which gave similar assurances.

5. The only issue before the judge at the trial was whether the applicants knew or believed at the time the bank notes were counterfeit currency.

6. In his reasons the judge rejected the explanation given by the applicants as contained in their cautioned interviews and proceeded to infer from the evidence before him that each had the requisite guilty knowledge.

7. Mr Macrae, SC who did not appear in the court below advanced a total of eight grounds of appeal. Grounds 1, 3, 4, 5, 6 and 8 are directed at the judge's approach to the evidence and criticise the basis upon which he drew the inferences of guilt. Ground 2 alleges that the judge had misapplied the burden of proof. Ground 7 is directed at the reasons which the judge gave in rejecting the explanations offered by the applicants in their cautioned interviews. We think it is appropriate to deal with Ground 7 of the appeal first.

8. In this ground, Mr Macrae submits that the judge gave unjustifiable reasons for rejecting the explanations given by the applicants in their cautioned interviews. The respective records of interviews were produced unchallenged as part of the prosecution case. Insofar as neither applicant gave evidence at the trial, both relied on their answers supplied to the police during the cautioned interviews to explain how each came into possession of the bank notes in question and the steps they had taken to ascertain if they were genuine. This is how the judge approached the issue of the cautioned interviews at paragraph 9 of his Reasons for Verdict :

".... He [counsel for the defence] rightly pointed out that they were mixed statements and thus both the incriminating parts and the explanations must be considered in deciding where the truth lies. It goes without saying that the weight to be attached to the excuses is less. It goes also without saying that such excuses do not have the force of sworn evidence that can be tested by cross examination. ..."

9. The judge then dealt with the salient points in the explanations given by the applicants in paragraphs 13 to 24 of his Reasons for Verdict and properly gave weight to the applicants' good character. At paragraph 17, he said :

"The central finding I made here is that I simply did not believe that these out of court, untested statements revealed material of sufficient weight or strength to support the suggestion that a bank and merchants familiar with such notes may have bona fide vouched for their authenticity and that the defendants may have believed the notes to be genuine."

He went on to say at paragraph 24 :

"It was thus that I rejected the exculpatory element of their interviews and drew the inference that they believed the notes that they produced at the bank to be counterfeit."

10. In his submission, senior counsel stressed that there was nothing in the prosecution's evidence at the trial to contradict the applicants' explanations. Against this background senior counsel highlighted the fact that Indian Rupees could not be exchanged in the banks in Thailand and the high degree of sophistication and quality of the counterfeit bank notes. That being the case, it was said, it was unreasonable for the judge to find that the applicants' accounts were untrue.

11. Despite senior counsel's persuasive argument, we find, as did the judge, that the steps taken by the applicants to ascertain whether the bank notes were genuine to be inherently improbable and their story carries with it an air of unreality. The very fact that both had sought to verify the bank notes would have meant that they were suspicious of the exact nature of the money given to them. It makes no sense at all that whilst the 2nd applicant took his lot of bank notes to the bank in Pattaya to have them examined, yet nothing was done along the same lines in respect of the 1st applicant's quantity of bank notes. One cannot help but ask whether these accounts to the police were inventions by the applicants to satisfy the police's enquiry.

12. We find that the judge was justified in rejecting the exculpatory accounts proffered by the applicants in their cautioned interviews. The criticism levelled against the judge in Ground 7 is unfounded.

13. Ground 2 of the appeal is directed at the following passage in the Reasons for Verdict. Towards the end of paragraph 12, the judge said :

".... Thus if there is no innocent explanation forthcoming from the men, who had to be aware of it if it existed, human reason can do nothing but require the inference to be drawn."

By this, it is said, the judge had effectively placed the burden of proof on the applicants.

14. With respect to senior counsel, this passage must be looked at in its proper context. At paragraph 10 of the Reasons for Verdict, the judge had reminded himself the onus of proof and identified the issues to be tried in this case. In paragraph 11, the judge said :

"Firstly, leaving aside excuses and explanations, was there enough evidence to infer for sure that the defendants had the requisite state of mind? ...."

15. The judge proceeded to give detailed reasons as to why he rejected the explanations contained in the cautioned statements. The passage must therefore be read in the context where the judge had rejected the exculpatory statements, what evidence was there before him to enable him to determine the issue of knowledge, belief and guilt of the applicants. The fact remains there were no other innocent explanations forthcoming by way of evidence as the applicants did not give evidence nor did they call any witnesses. That is the context in which the passage above must be read. The judge did not reverse the burden of proof. We see no merits in this ground.

16. Ground 4 of this appeal is directed at the judge's handling of the evidence of the 3rd prosecution witness. PW3 was a female bank staff who had brought along to court with her two genuine 500 Indian Rupee bank notes. She was asked by the prosecution, without objection from the defence, to conduct a comparison between the genuine bank notes and the forged bank notes seized from the applicants. She was able to spot six differences between those notes which the judge said in his Reasons for Verdict that they should have been apparent to the applicants had they chosen to examine the bank notes themselves. Her evidence was not in dispute, the differences must have been accepted by the defence. This witness was not tendered as an expert nor was she treated as such by the judge. The judge was in fact saying that the differences between the genuine and counterfeit bank notes were apparent even to the bank staff who was not an expert in this field. Some of the differences would therefore have been apparent to the Indian businessman who had allegedly examined the bank notes at the request of the 1st applicant. The evidence of PW3 has the effect of undermining the 1st applicant's explanation to the police that he believed the notes were genuine because he was reassured by the Indian businessman. PW3 was never called as an expert witness and her evidence was never received and acted upon as such. This ground of appeal must therefore fail.

17. The remaining grounds of appeal are directed at the judge's approach to the evidence and the inference he had drawn thereon. Once the judge rejected the applicant's explanation in the cautioned interviews, the undisputed facts before him at the trial were that the two applicants had with them a substantial quantity of counterfeit Indian currency notes; they travelled from Thailand to Hong Kong to exchange the counterfeit notes into Hong Kong dollars; they were given a free trip and free accommodation the cost of which is equivalent to 30% of the value of the exchange rate had the notes been genuine, they proceeded to the HSBC main branch in Central immediately upon arrival in Hong Kong and they proffered the counterfeit notes to the bank staff as recorded in the video security camera. There was no evidence before the judge to contradict these undisputed facts. It is based upon these facts that the judge proceeded to draw his inference on guilty knowledge.

18. The judge did not, as suggested in Ground 3 of this appeal, infer guilty knowledge based on the applicants' possession of the counterfeit notes simpliciter. He reduced into writing in detail his mental process of examining the evidence and how he proceeded to draw the inferences as he did. The criticism levelled at the judge in saying what a reasonable man might have done in the circumstances is unfounded because it was no more than an entirely objective and fair evaluation of the evidence by the judge who had correctly reminded himself in paragraph 15 that he had to decide what was actually in the minds of the applicants and not what a reasonable man would have thought under the circumstances. His finding was :

".... I was sure that the circumstances were such that they subjectively believed the notes to be counterfeit. ...."

The judge was aware that the test was subjective and he found such belief proved. We see no merit in the remaining grounds of appeal.

19. For the reasons given, the applications for leave to appeal against the applicants' convictions are dismissed.