HKSAR v. AKIRA SUGIYANA

IN THE COURT OF APPEAL

1996, No.61
(Criminal)

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J U D G M E N T

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Stuart-Moore, J. (giving the judgment of the Court):

1. The Applicant was convicted on 5th January 1996 of two charges following a trial in the District Court before Her Honour Judge Chu. The first charge, contrary to s.9 of the Theft Ordinance Cap.210, related to the theft on 15th October 1990 of a chose in action, namely a debt of $12,800,000 owed by Sanwa Bank Ltd. to Kosei Securities Company (Asia) Limited ("Kosei Asia"). The second charge of false accounting contrary to s.19(1)(a) of the same Ordinance alleged that the Applicant had, on or about 15th November 1990, dishonestly and with a view to gain for himself or another or with intent to cause loss to another, falsified a record or document made or required for an accounting purpose, namely a slip entry No.0137 of Kosei Asia dated 31st October 1990, which was or may have been misleading, false or deceptive in a material particular in that it purported to show that 211,500,330 Japanese yen had been received by Kosei Asia from Vast Profit.

2. The Applicant was a director of Kosei Asia in charge of accounts and finance. He was under a duty to make a monthly report to Mr. Fukunaga, the General Manager of the parent company known as Kosei Securities Company Limited in Japan ("Kosei Japan"). In this regard, monthly balance sheets of Kosei Asia were faxed to Kosei Japan in Tokyo. Kosei Asia was a securities dealer and investment advisor registered under the Securities Ordinance Cap.333, which provides that the funds of customers must be kept separate from those of the dealer company. In this case customers funds were kept in trust accounts at the Sanwa Bank. Kosei Asia had different accounts at the same bank for the keeping of its own funds. The Applicant was one of the authorized signatories on the accounts at the Sanwa Bank.

3. The allegation made by the prosecution comes to this. In May 1991 after a report by Mr. Fujita, the Managing Director of Kosei Asia, to the Tokyo office that this Applicant had frequently absented himself from the office, an investigation was carried out into the Kosei Asia accounts that were the Applicant's responsibility. It was then discovered that on 15th October 1990, as a result of instructions given by the Applicant, the account balances of 14 Kosei Asia customers had been transferred into Kosei Asia's yen savings account which had the effect of mixing the trust fund money with funds held by Kosei Asia. Following this 211,500,330 yen were withdrawn and exchanged for HK$12.8m made payable on a cashier's order to a company known as Kaisei Securities Asia Limited ("Kaisei") and paid into their account at the Mitsui Bank. This money was then paid into the accounts of various companies which were controlled by the Applicant.

4. The false accounting charge relates to the way in which the Applicant sought to cover up the deficiencies in these accounts by causing other members of the accounting staff to create a slip entry dated, as we have seen during today's proceedings, 31st October 1990 purporting to record the receipt by Kosei of the sum of 211,500330 yen from a company called Vast Profit on 15th October 1990. No such payment had been made although the Applicant's initials were allegedly to be found on the document giving an apparent seal of authenticity to it. These matters were reported to the Commercial Crime Bureau in August 1991 and, at about the same time as a report was made to them, the Applicant left Hong Kong. He was not arrested until 16th December 1994. He was extradited from Switzerland to Hong Kong on 10th March 1995.

5. At the trial, the Applicant accepted that the transactions of 15th October 1990 were carried out on his instructions. He denied, however, that dishonesty was involved because he said he was acting in consultation with his superiors in Tokyo and for the general benefit of Kosei Japan. He gave evidence in court that he had consulted with Mr. Fukunaga before utilizing trust money and that if money was not forthcoming to replace the $12.8m, either bank loans or similar facilities would be obtained to meet the shortfall. So far as the false accounting allegation was concerned, the Applicant testified that he had not initialed that slip entry with the number 0137. His explanation about his failure to return to Hong Kong was that whilst he had wanted to return to clarify matters, he had been instructed not to do so. Clearly all of these issues were largely dependent upon which witnesses were believed by the trial judge. It is clear from the Reasons for Verdict that she looked with meticulous care at the issue of credibility when reaching the conclusion that the Applicant was not to be believed on the crucial issues which were raised on his behalf.

6. The Perfected Grounds of Appeal raise a number of matters for our consideration. The first ground reads that:

"there was in the trial a material irregularity in that the learned Judge declined to accede to an application to adjourn the trial to enable defence counsel, instructed at extraordinarily short notice and after the commencement of the trial, fully and properly to prepare the case. This resulted in prejudice for the conduct of the Applicant's defence in a case that involved difficult issues of fact, complicated further because of communication problems arising between the Applicant and his legal advisors by reason of his being required to give instructions to them in the English language which is not the first language of the Applicant."

7. We observe that although the trial began with the Applicant being unrepresented, he had had eight months since his arrest and extradition to organize legal representation if he so wished. His legal representatives assigned to him under legal aid were discharged by him a few days before the trial was due to begin. There had been four pre-trial reviews and yet it was not until the first day of the trial that he requested to be served with a very large body of additional evidence that had not previously been mentioned. When the trial was ordered to proceed despite this request, the Applicant then re-applied for legal aid and a few days later he appeared with representation. The evidence of an overseas witness was then taken before the case was once again adjourned to give the Applicant's representatives time in which to prepare. The Applicant at his own request was also provided under legal aid with the assistance of an accountant to help him throughout the trial. In fact every possible assistance has been given to this Applicant. We accept the Respondent's arguments that no prejudice resulted from these events. Counsel originally representing the Applicant on legal aid had announced in the month before the trial began that the defence were ready to proceed, and the new counsel assigned under legal aid made no complaint that the eight-day adjournment he was given was insufficient for him to prepare the case.

8. We also accept Mr. Turnbull's written submission, and it was he who conducted the prosecution's case in the court below, that the issues to be decided at trial were not particularly complex in the light of the Applicant's defence. Effectively, on the first charge the question to be decided was whether or not, even on the defence account, a realistic defence was raised to the charge of theft merely because he had done the acts alleged with the knowledge and consent of superiors. As for the second charge, two witnesses testified that they had received instructions from the Applicant to make out the false entry slip which they had requested him to initial. That evidence was challenged.

9. The last issue which is raised in the first ground of appeal is that there were communication problems with his legal advisers. Mr. Harris continues to maintain this. Although he has not attached much importance to it during the course of his arguments today, he continues to attach some significance to this as he has not abandoned this particular ground of appeal.

10. A glance at the antecedent history reveals that the Applicant attended Essex University for a post-graduate course in Political Behaviour. The evidence at trial established that the Applicant was sent to Hong Kong to work for a Japanese company because of his ability to speak English. On his arrest, there were no communication problems with Detective Senior Inspector Butler who has been in charge of the inquiry, and the Applicant requested to be interviewed in English. At the trial itself the Applicant declined the use of a Japanese interpreter although, throughout the trial apparently, such an interpreter was available and remained in court. There are numerous other indications from which it is possible to say that this Applicant was well able to communicate with his lawyers and, during this hearing, we have on frequent occasions seen him writing notes to his legal advisers as the points were dealt with in court. There is no substance whatsoever in any of the matters raised in the first ground of this application, and it seems that Mr. Harris did not dwell on this ground because it may be that he appreciates that it does not, as he put it, carry the matter much further. But he did draft it and he has not abandoned it, so that we have had to deal with it.

11. We can deal with the second ground of appeal very quickly. It reads that:

"There was in the trial a material irregularity in that the prosecution failed to disclose to the defence and declined to make available documents in the possession of the Commercial Crimes Bureau which would have assisted the Applicant's case notwithstanding requests by the Applicant for production of the same both oral and written made both before the commencement and during the course of the trial. In this regard the Applicant will apply to the Court of Appeal for an order pursuant to s.83B for the receipt by the Court of Appeal of the evidence of the Applicant by way of an affirmation to be filed in these proceedings."

12. It is apparent that requests for documents were made by the Applicant both before and during the trial but it seems that those requests were complied with as and when they occurred. So far as most of the documents in the possession of the prosecution are concerned, they were provided to the defence. The defence were then granted adjournments so that they had time to take instructions upon the new documents. We fully accept what Mr. Turnbull has told us in the extremely helpful and detailed response that he has made to the submissions advanced on behalf of the Respondent. We venture to suggest that it is most unlikely that any further documents would have borne any relevance to the defence being advanced on these two charges. We do not need to speculate about that because we were shown by Mr. Harris today three documents which were not before the trial court. We can say with confidence having seen them that there was no material irregularity relating to non-disclosure of documents, and it is for this reason that we have already refused an application for receipt of further evidence in the form of the Applicant's affirmation.

13. The three documents we were shown in court are all of them innocuous. The point that is raised is without any substance because these documents appeared only to advance the case for the prosecution. In any event they were of no possible assistance to the defence and that ground fails.

14. The third ground of appeal is put in this way:

"In her Reasons for Verdict the learned judge failed to take sufficiently into account the way in which and the extent to which the Applicant may have been disadvantaged by missing documents which may well have supported the Applicant's case."

15. We are not able to agree. The passage which we were shown in her Reasons for Verdict at p.11 between lines E and P demonstrates very clearly how the learned judge was aware of the Applicant's complaint that some documents which might have been helpful to him were not in his possession. She points out that:

"Although he complained that he did not possess all the material to aid his memory, he was able to give quite a meticulous account of the background leading to the activities on 15th October 1990 and the subsequent events. Notwithstanding that he gave good details of the names of people, corporations and stock and quantity and values of shares in some instances ....."

16. The learned judge went on to demonstrate how, by contrast, the Applicant became extremely vague and non-committal on matters directly relevant to the two charges. Again there is no merit in the argument advanced on behalf of the Applicant.

17. Turning now to the fourth ground of appeal. This states:

"In her Reasons for Verdict the learned judge focused upon what she appeared to think was the improbability of the Applicant's version of events and the Applicant's credibility. In dealing with discrepancies in the evidence of some of the prosecution witnesses, allowances were made for lapses of memory caused by the passing of time. The Applicant was not given the benefit of the same allowances. In her approach the learned judge, in effect, placed upon the Applicant an onus of proof which he did not have to bear."

18. We need only say that the issue of credibility was central to the defence raised on both charges, and we have read the learned judge's careful appraisal of all the material witnesses. We repeat what has so often been said before by this court, namely that when a District Court judge has heard all of the evidence and the submissions of counsel, there is neither a duty a set out with precision everything which is or is not accepted, nor is there a duty to set out all of the many reasons there may have been for arriving at a particular conclusion. In this case we are entirely satisfied that a proper evaluation of the evidence has been made, particularly in the light of a long delay between the events that gave rise to the allegation and the trial. There is no substance in the point taken.

19. The fifth ground of appeal reads:

"In her Reasons for Verdict the learned judge failed to direct herself fully or properly as to the issue of the Applicant's good character, amongst other things by confining her direction and the application of such direction to the matter of the Applicant's credibility only."

20. Judges who sit alone are not required to give a full direction to themselves as to credibility and propensity and this ground appears to demonstrate that there exists a lack of understanding of the position on the part of counsel for the Applicant. (See The Queen v. Wong Yun-tsan, C.A. 436/93 and The Queen v. Fok Tin-yau (1995) 2 HKC 450) It is apparent that the Applicant's good character was in the mind of the trial judge for her to have made specific reference to it. There is no merit in the argument advanced on this point.

21. We turn now to the sixth ground of appeal that states:

"In her Reasons for Verdict the learned Judge, having directed herself as to the issue of dishonesty in accordance with the case of R. v. Ghosh 75 Cr.App.R. 154 and (1982) 1 Q.B. 1053, failed to apply that direction properly in that she did not address the question of whether the Applicant realized or must have realized that his conduct fell below the ordinary standards of reasonable and honest people."

22. Today Mr. Harris has concentrated on a passage at p.14 of the Reasons for Verdict:

"The other issue that I have to decide is whether the appropriation was dishonest and done with the intention of permanently depriving Kosei Asia of such property. The element of dishonesty has both objective and subjective aspects. R. v. Ghosh 75 Cr.App.R. 154. Objectively speaking, I have no hesitation that any reasonable and honest man would consider the dealings by the Defendant of the funds that made up the cashier order was dishonest. Subjectively speaking, it is not open to the Defendant to say that he did not realize what he did was dishonest in the eyes of a reasonable man. It is his own evidence that he knew that he should not tamper with the money, being trust money, but that he was intending to use it as 'rescue money' because that was the only available cash."

We see the question being answered by the learned judge as having been a rhetorical one when she referred to it not being open to the Defendant to say that "he did not realize what he did was dishonest in the eyes of a reasonable man." Not, as Mr. Harris seemed to be suggesting at one time at any rate, that the judge was effectively shutting out the Applicant's defence.

23. The Respondent has submitted in reply that the trial judge properly directed herself on the second limb of the test for dishonesty outlined in Ghosh. In that case the court outlined the test for dishonesty at 75 Cr.App.R. 162 in the following way:

"In determining whether the prosecution has proved whether the Defendant was acting dishonestly, a jury must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest........ If it was dishonest by those standards, then the jury must consider whether the defendant himself must have realized that what he was doing was by those standards dishonest."

In his characteristically carefully expressed written submissions, Mr. Turnbull says that the trial Judge did not use the exact words of the subjective second limb of Ghosh in her reasons for Verdict. What she did say in relation to the subjective second limb of the Ghosh test was the quotation at page 14 that I have just read out from the Reasons for Verdict. The Respondent has submitted that the trial judge in using those words was addressing her mind to the subjective test. Furthermore, the trial judge went on to apply that test to the Applicant's state of mind. Mr. Tunbull draws our attention to the passage at p.14 in the Reasons for Verdict which reads:

"Again his assertion that Mr.Fukunaga and other senior executives of Kosei Japan were appraised of the appropriation and had condoned it does not absolve his dishonesty. In R. v. Ghosh at p.162, the Court of Appeal observed that 'It is dishonest for a defendant to act in a way he knows ordinary people consider to be dishonest, even if he asserts or genuinely believes that he is morally justified in acting as he did.'"

Later, again as Mr. Turnbull reminds us, it was said in the course of the judgment:

"It therefore follows that even if all the directors of Kosei Asia or even of Kosei Japan were parties to the conspiracy alleged by the Defendant, the Defendant is not entitled to say that he was not dishonest because he in fact had or he believed he had the consent of the company. The consent could not have been a true and honestly obtained consent. Likewise, the Defendant's belief could not have been a honest one."

We accept the submission that in these passages the trial judge was clearly aware of the subjective second limb of the Ghosh test and was applying that limb in relation to the Defendant's own state of mind on the question of dishonesty. Ground 6 fails.

24. On the seventh ground of appeal it is said that:

"In her Reasons for Verdict the learned judge erred in drawing inferences adverse to the Applicant when she could and should have drawn inferences which were favourable to and supported his case. The learned judge failed to apply the proper test, namely that such adverse inferences should be compelling and inferences that no reasonable man would fail to draw."

25. This is a point without any substance, and we have already effectively dealt with it in our assessment of the fourth ground.

26. We cannot find the slightest merit in any of the grounds which had been raised and we are satisfied that these convictions are safe and satisfactory. Accordingly we refuse leave to appeal.

Application for Review No. 4 of 1996

27. We now turn to the application which was originally filed on 2nd February 1996 by the Attorney General for a review of sentence under s.81A of the Criminal Procedure Ordinance Cap.221.

28. The matter is placed before us on the basis that the sentences imposed were wrong in principle and manifestly inadequate.

29. In our view the trial judge very properly took into account the following matters relating to sentence.

(1) The theft and false accounting related to moneys stolen by the Defendant at a time when he was the director in charge of the company's accounts and finances. This was therefore a clear breach of trust for which a custodial sentence was inevitable.

We can add that there is an aggravating feature to this because the learned judge must also have had in mind, and she said so in as many words, that the moneys that have funded this theft were taken from the clients' trust fund in the bank.

(2) The HK$12.8m has never been repaid, so that the entire loss has had to be absorbed by the parent company in Tokyo.

(3) The second offence was an attempt to cover up for the first offence and, therefore, a concurrent sentence was appropriate for this.

(4) The Defendant was a 49 year old Japanese National who had a clear record. Little weight, however, could be attached to the difficulties which he might encounter within the prison regime due to language.

30. The learned judge then took a three year starting point. She then reduced this by nine months to take account of the mitigation and the three months which was spent in custody whilst he awaited extradition from Switzerland.

31. Mr. Turnbull's contention on behalf of the Secretary for Justice is that for a breach of trust of this magnitude without restitution or remorse of any kind, the starting point was totally inappropriate. The Applicant had to be extradited from Switzerland and has given no cooperation since that time to the authorities. Mr. Turnbull says, therefore, that some of the matters to be considered by the trial judge following decision in R. v. Barrack (1985) 81 Cr.App.R. 79 were not given sufficient weight.

32. In our judgment, for the reasons that we have already given, this was a very serious case of breach of trust. We have no hesitation whatever in expressing our agreement with Mr. Turnbull's submissions. The sentence fell far below the accepted tariffs for crimes of this gravity. A sentence as low as this provides no deterrent effect at all. Further, the Defendant, having been given a starting point of three years by the trial judge, was then given a 25% discount on this where he had offered nothing to the authorities by way of any form of cooperation at all.

33. We consider that the appropriate starting point would have been six years' imprisonment. We shall not interfere with the discretionary allowance of three months which the Defendant was generously given in respect of the period that he awaited extradition, but this application must succeed. The original sentence on count 1 is quashed. We bear in mind that this is an application for review of sentence and that some allowance to the Defendant ought to be made as he has already served the sentence imposed in the District Court. We shall impose, therefore, a sentence of five years' imprisonment.

34. The sentence on count 2 is academic and we do not propose to interfere with it, but it does mean that the increase in sentence is one of two years and nine months in total, and that is a sentence that he must now serve.

Seagroatt, J.:

35. I would like to add only this. At the last minute, and that is no criticism, Mr. Graham Harris on behalf of the Appellant, informed the court on instructions that in or about March 1991, the equivalent of HK$95m had been repaid by the Applicant to Kosei in respect of the affairs of the Simka Group which were a number of companies under his control. These repayments may well be those referred to by the learned judge in her Reasons for Sentence in the following terms:

"... the Defendant had subsequently caused large sums of money to be repaid to Kosei Asia by the companies under his control. This does not amount to mitigation in that the payments were to settle the advances made by Kosei Asia to the companies, which were authorized by the Defendant but in contravention of the company policy and practice."

Mr. Harris does not seek to suggest that these repayments had anything to do with the HK$12.8 which had been removed from the trust funds held on behalf of customers and which sum was eventually restored by Kosei (Japan) to their customers' accounts. These are clearly two different circumstances, as Mr. Turnbull for the Respondent confirmed. Such repayments to Kosei do not constitute mitigation of sentence in respect of these convictions, as the learned judge made clear.