R. v. YAU HO-MING

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J U D G M E N T

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Hon. Yang, C.J.:

1. The applicant (D1), together with two other co-accused (D2 and D3), was charged with conspiracy to defraud. He was convicted after trial and sentenced to one year's imprisonment suspended for two years. His two co-accused were acquitted. He sought leave to appeal against his conviction.

2. At the conclusion of the hearing, being in agreement with the Crown that the conviction could not stand, we granted leave, treated the hearing of the application as the hearing of the appeal, allowed the appeal, quashed the conviction and set aside the sentence. We stated we would hand down our reasons later. These are those reasons.

3. The appellant was the first named of three defendants at trial. The other defendants were Tony TAI Yan-shu - "D2" - and Dickson LI Tik-sang - "D3".

4. The particulars of the joint charge read:

    YAU Ho-ming, Tony TAI Yan-shu and Dickson LI Tik-sang, between the 16th day of June, 1989 and the 18th day of June, 1989, in Hong Kong, conspired together to defraud CHUNG Ho-yuen and KONG Tat-cheung (the victims) by dishonestly: - (i) causing and permitting the credit balances of the victims accounts held within Fairyet Investments Limited (the Company) to be reduced from $188,680.81 and $182,395.36 Hong Kong currency to $9,354.70 and $3,069.25 Hong Kong currency (ii) causing and permitting the victims accounts with the company to be prepared in such a way as to show that thirty two orders had been placed relating to foreign currency matters which have resulted in a loss to the victims.

5. Fairyet Investment Limited - "the Comany" - was set up in 1988 by Dl and two other shareholders as an investment company dealing in the speculation of gold prices and foreign currencies. It is authorised to accept deposits from clients and invest on their behalf. A team of sales agents, employed by the Company, would introduce clients to open accounts with it and deposit money into such accounts. The clients then entered into transactions with the Company through the sales agents.

6. The management of the Company was left entirely to Dl who is its managing director. D2 and D3 were two of the several marketing managers it employed.

7. The mode of dealing is as follows. A client's order for the buying or selling of gold or foreign currency will be relayed by the sales agent to a dealer of the Company. The dealer will quote to the sales agent the price. Upon the transaction being confirmed by the dealer, the dealer will make out an order slip and enter the details of such transaction into the computer. As trading on the U.S. currency market takes place at night by Hong Kong time, on the following morning the accountant of the Company will personally check all the buying and selling orders against the computer records. The accountant will then issue statements to the respective clients informing them of the balance of their accounts with the Company.

8. On different days in May 1989 the two victims each opened an account with the Company with an initial deposit of $30,000. The Company's agent who transacted on their behalf was one Nicky Chan.

9. Between 8 p.m. on the 15th June 1989 and 3 a.m. on the 16th, Nicky Chan placed certain orders on behalf of the two victims. There was confirmation that the orders were in fact transacted.On the morning of the 16th after the U.S. market had closed, the balance of the two accounts stood at HK$188,680.81 and HK$182,395.36 respectively.

10. At 4 a. m. on the 16th, Dl returned to the Company having been informed that Nicky Chan had made a lot of money for his two clients during the session the previous night. Dl then told two of his employees, Chris Tam and Alan Tse, to alter the records so as to show a loss instead of a gain to the two victims. Tam and Tse refused and resigned. Another employee, Antonio Yuen, who also refused to carry out Dl's instructions, resigned with them.

11. Later in the morning the Company's accountant, Wong Sau-chu, arrived at her office. In the normal course of events, she should have on her desk all the buying and selling order slips relating to the trading session the night before for checking. However on the morning of the 16th, she could not find the buying and selling orders for the trading session the night before. She then found those orders on Dl's desk divided into two piles. The first pile related to the orders of the two victims, and the other pile to other orders. Dl instructed her to ignore all the transactions in the first pile and to erase the computer records in relation to them. She then erased from the computer records all transactions relating to the previous night's trading session and fed into the computer only those transactions covered by the second pile of orders, i.e., with the exception of the transactions relating to the two victims.

12. Some time after 3 p.m. on the 17th, D3 gave Chiu Man-ho, an assistant dealer of the Company 32 blank buying and selling order forms which had only the date and time stamped on it, that is to say, various times and dates between 8.30 p.m. on the 16th to 12.44 a.m. on the 17th. D3 at the same time gave Chiu Man-ho a piece of paper with quotation prices written on it, and he told Chiu to copy those quotation prices onto the blank order forms. D1 told Chiu to do as instructed. Chiu then did as instructed and signed the order forms. Those forms related to the two victims' accounts.

13. On the 22nd, Dl told Chiu to enter the bogus transactions as represented by those quotation prices into the computer in respect of the two victims' accounts. On the same morning Nicky Chan and the two victims arrived at the Company and asked to be shown an updated statement of the two victims' accounts. This request was turned down. The police was then summoned. After the arrival of the police, and after further discussion, in the afternoon of the same day, the updated statements of those two accounts were given to the two victims, showing $9,354.70 and $3,069.25 respectively. In the same evening and after another police visit, D1 tried to persuade Nicky Chan to put his signature on the 32 order slips which had earlier been made out by Chiu Man-ho. Nicky Chan refused. Those 32 slips were later found in the Company's office and seized.

14. In the course of the trial both D2 and D3 were acquitted and these were the only two persons with whom the appellant was said to have conspired.

15. The learned trial judge went on to conclude that the only inference he could draw was that D1 was guilty of directing his employees to carry out acts, and himself carrying out acts, which amounted to nothing else but a conspiracy to defraud as alleged in the charge. The acts upon which the judge found D1 guilty were not the acts charged.

16. Put shortly, the two grounds of appeal are (1) that there was no evidence that D2 and D3 were parties to the conspiracy, and (2) that Dl's conviction is incompatible with the acquittal of D2 and D3 upon the same charge.

17. Mr. McMahon for the Crown, quite fairly, did not seek to support the conviction, and submitted that there was lack of evidence of a combination with any other persons to embark on an act of dishonesty.

18. We did not feel it necessary to call upon Mr. Adams to address us on behalf of the applicant.

19. We accordingly allowed the appeal. The conviction was quashed and the sentence set aside .The orders for compensation and costs were also set aside and payments made in pursuance of those orders are to be returned.