HKSAR v. MAN TSUI WAN

DCCC851/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 851 OF 2012

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Reasons for Verdict

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1.  Defendant, you pleaded not guilty to two offences of theft, each contrary to section 9 of the Theft Ordinance, Cap.210.

2.  The charges were amended twice before arriving at their ultimate wording. 

3.  The prosecution case is that as contained in the opening dated 23 November of this year, a document which too, as I say, had been amended.

4.  The prosecution opening was this.

5.  Since Chee On (Holding) Company Limited was incorporated in 1997, you and your husband, Mr Leung Ho-kwai, had been its directors.  You and your husband were also shareholders of Chee On at all material times.

6.  Between 7 September 2010 and 28 September 2011, you became its sole director.

7.  Chee On opened a Standard Chartered Bank account in 1999.  At all material times, you and your husband were the two authorised signatories of the bank account.

8.  I refer now to the agency agreement.

9.  On 5 June of 2008, you, on behalf of Chee On, entered into an agency agreement with Mr Eduard Romulus Goean, Consul General of the Ministry of Foreign Affairs/Consulate General of Romania in Hong Kong at that material time.  Ms Choi Choi-ling, solicitor of Li & Partners, was a witness of the agency agreement.

10.  Pursuant to the agency agreement, the Consulate General engaged Chee On as his agent to rent four properties, details of two of which are as follows:

(1) office premises situated at Office 1603, 1605, Floor 16, Lippo Tower, Tower II, No.89 Queensway, Hong Kong; and

(2) residential premises situated at Convention Plaza, No.1 Harbour Road, Hong Kong, Floor 27, Flat No.14, apartment tower on the western side (this will be referred to as “Flat 2714”).

11.  Pursuant to the agency agreement, the following sums were given to Chee On for payment to the landlords for the properties:

(1) US$182,499.70 and US$54,749.91 as the rental payment of 10 months’ rent for the period between
1 July 2008 and 30 June 2009 (that is the first year) and the three-month security deposit for the office; and

(2) US$99,890.40 and US$16,648.40 as the annual rental payment for the first year and two months’ security deposit for Flat 2714 respectively.

12.  Pursuant to the agency agreement:

(1) the monthly rental for Flat 2714 was US$8,324.20, inclusive of government rates, government rent and management fee;

(2) the monthly rental payment for the office was $18,249.97, inclusive of air-conditioning fee and management fee.

13.  A sum of US$49,710.40 was paid to Chee On as the commission for leasing the premises. 

14.  All the sums were paid to Chee On from the Consulate General’s bank account in June 2008. 

15.  Clause 6 of the agreement stipulates that starting from 1 July 2009, the Consulate General will pay Chee On the monthly rental payments for the agent’s onward transmission of this to the landlords.

Tenancy agreement - Flat 2714

16.  On 20 June 2008, the ex-Consulate General entered into a tenancy agreement with Beauti-Well Holdings Limited for the lease of Flat 2714 for a two-year term commencing on 1 July 2008 and expiring on 30 June 2010.

17.  Mr Shum Wing-kuen, the director and shareholder of Beauti, and you, on behalf of Chee On as the agent of the Consulate General, signed the agreement. 

18.  The monthly rent was HK$55,000.  An annual rent for the first year and two months’ security deposit amounting to HK$110,000 was paid to Beauti by Chee On when the tenancy agreement was signed.  Shum received the rental payment in the bank account designated by him. 

Tenancy agreement - the office

19.  On 17 July 2008, the Consulate General entered into a tenancy agreement with De Monsa Investments Limited for the lease of an office for three years commencing from 1 July 2009 and expiring on 30 June 2011.  Mr Law Wai, the manager of De Monsa, was responsible for handling this tenancy agreement. 

20.  The director of De Monsa and you, on behalf of Chee On as the agent for the consulate-general, signed on the agreement.

21.  The monthly rent was HK$114,372.  A three months’ security deposit amounting to HK$343,116 was paid to De Monsa when the tenancy agreement was signed. 

22.  Despite being bound by the term of the agency agreement that Chee On should pay an annual rental fee for the first year to De Monsa, De Monsa did not receive such payment from Chee On.  De Monsa received the rents on a monthly basis since September 2008.

23.  Mr Sorin Vasile became the new Consul General of the Consulate General and replaced Mr Eduard Romulus Goean’s duties on February 2009.

Rent reduction - Flat 2714

24.  In February 2009, the Consulate General requested you to approach the landlord of Flat 2714 to see if the rent could be reduced. You requested Mr Shum to do this and he agreed.

25.  You, on behalf of Chee On, and Shum agreed to reduce the monthly rent from HK$55,000 per month to $44,000 per month, starting on 1 July 2009.

26.  Chee On informed the Consulate General the rent was reduced and the Consul General agreed to pay Chee On US$7,325.50 as the monthly rental starting from 1 July 2009.

27.  A new tenancy agreement was signed between Shum and you on behalf of Chee On as the agent for the Consulate General.

28.  A refund of part of the security deposit, amounting to $22,000, was made to Chee On. 

29.  However, the said part of the security deposit which had been returned to Chee On was not given to the Consulate General nor was the Consulate General informed that the sum of the security deposit had been so returned.

30.  The remaining two months’ security deposit was reduced to HK$88,000.

Payments after the first year

31.  Starting from 1 July 2009, the Consulate General paid Chee On the monthly rental payments for the properties each month and Chee On would then onward transmit the same to the landlord in accordance with the agency agreement. 

32.  The Consulate General had never failed to make these payments.

Default payment - Flat 2714

33.  The Consulate General paid you, of Chee On, a total of $21,975.90 for paying the rents of Flat 2714 for the months from April to June, which amounted to HK$132,000, being $44,000 per month.  The sum of US$21,975.90 was transferred out of Chee On’s bank account on the same day when it was deposited.

34.  You failed to pay Shum rental payments for April to June in full.  The outstanding sum remained unpaid when the tenancy agreement expired on 30 June 2010.

35.  Between April and June 2010, Shum contacted you and asked for the rents.  You told Shum to forfeit the security deposit for the settlement for part of the rents.

36.  Shum forfeited the two months’ security deposit, which amounted to HK$88,000 accordingly, and also received two sums of HK$8,000 and HK$9,000 from you, but still suffered a loss of approximately HK$29,000.

37.  However, you did not tell the Consulate General that the security deposit had been forfeited. 

38.  In a written note to the Consulate General, you misrepresented to the Consulate General that you had collected the security deposit.  The Consulate General then instructed you to use the collected security deposit for the payment of the rent of the office for November 2010.

39.  The Consulate General did not receive from you any refund.

40.  You breached your agent’s duty by failing to pay Shum the rental payments amounting to HK$115,000 (that is, $132,000 - HK$17,000). You stole from the Consulate General.

Default payment for the office

41.  The Consulate General paid Chee On US$18,249.97 for paying the rental of the office from October, which amounted to HK$114,372. The sum of US$18,249.90 was transferred out of Chee On’s bank account on the same day when it was deposited. 

42.  The Consulate General also instructed you to use the security deposit of Flat 2714 and another property for paying the rents of the office for November and December 2010.

43.  However, you did not pay De Monsa the rent in October in full; you just paid De Monsa $50,000 in October 2010.  De Monsa also did not receive rents for the office for November and December 2010. 

44.  When Law pursued you for the outstanding payment, you claimed you had not received the payment from the Consulate General.

45.  In November 2010, you had issued five cheques to De Monsa for the rents, but all the cheques were bounced.

46.  Law pursued you for payments again.  You told Law that you had used the rental payments received from the Consulate General for your own investment and suffered loss.

47.  Law contacted the Consulate General in December 2010 and told them about the default rental payments.  After a negotiation, the Consulate General settled the rents with De Monsa directly.

48.  De Monsa just received HK$50,000 from you for the settlement of the October rent and did not receive the outstanding sum until the tenancy expired in June 2011. 

49.  The Consulate General did not receive from you any refund.

50.  You breached the agent’s duty by failing to pay De Monsa the rental payment which amounted to HK$64,370.  You stole the sum from the Consulate General.

Arrest and caution

51.  You were arrested on 8 February 2012. 

52.  In three video recorded interviews, you admitted under caution that:

(1) you were responsible for the business of Chee On;

(2) you were the agent of the Consulate General for the rental of four properties, including Flat 2714 and the office;

(3) the Consulate General had paid full rental payments to you;

(4) the rental payments were received by you only for the purpose of giving to the landlords.

53.  You failed to explain why the landlords could not receive the outstanding rental payments, and that was the prosecution case.

54.  The prosecution evidence comprised two sets of admitted facts, being P15 and P15A, and four live witnesses:

(1) Mr Sorin Vasile (PW1), Consul General of Romania;

(2) Mr Shum Wing-kuen (PW2);

(3) Mr Law Wai (PW3); and

(4) Miss Lisa Ho (PW4).

55.  PW15, the admitted facts, were put into evidence in accordance with the provisions of section 65C of the Criminal Procedure Ordinance, Cap.221. 

56.  They provide the following.

57.  On 5 June 2008, you, on behalf of Chee On (Holding) Company Limited, entered into an agency agreement with the Consulate General of Romania.  A copy of the agency agreement was produced as P1.

58.  Pursuant to this agreement, the Consulate General engaged Chee On to rent four properties, two of which were as follows:

(1) offices at 1603 and 1605, Lippo Centre, Tower II;

(2) a Flat 14, 27th Floor, Convention Plaza, 1 Harbour Road (Flat 2714).

59.  Under the agreement, Chee On received the following sums for payment to the landlord:

(1) US$182,499.70 and US$54,749.90 as rent for
10 months for 1 July 2008 to 30 June 2009 and three months’ security deposit for the office;

(2) US$99,890.40 and US$16,648.40 as annual rent for the first year and two months’ security deposit for Flat 2714.

60.  US$49,710.40 was paid to Chee On as commission for leasing the properties. 

61.  These sums were paid to Chee On in June 2008 from the Consul General of Romania’s bank account.

The tenancy agreement - Flat 2714

62.  On 20 June 2008, the Consulate General entered into a tenancy agreement with Beauti-Well Holdings Limited for the lease of Flat 2714 for two years, commencing 1 July 2008 and expiring on 30 June 2010.  Mr Shum Wing-kuen, Director of Beauti, and you, on behalf of Chee On, signed. 

63.  Copies of the provisional tenancy agreement and the tenancy agreement of Flat 2714 are provided as P2A and P2B. 

64.  The monthly rent was $55,000.  An annual rent for the first year and two months’ security deposit of $110,000 were paid to Beauti by Chee On on signing.

65.  In February 2009, the Consulate General requested Chee On to seek a rent reduction from the landlord.  Shum agreed to this reduction and the rent was reduced to HK$44,000 from 1 July 2009.

66.  $22,000 was refunded to Chee On as part of the security deposit.  The remaining two months’ security deposit was reduced to $88,000. 

67.  A new tenancy agreement was signed between Shum and you, as agent for the Consul General, and that is 2C.

Tenancy agreement - the office

68.  On 17 July 2008, the Consulate General entered into a tenancy agreement with De Monsa Investments Limited for a three-year lease of the office, commencing 1 July 2008 to 30 June 2011.

69.  Mr Law Wai, the manager of De Monsa, was responsible for handling this tenancy.  A director of De Monsa and you, on behalf of the Consul General of Romania, signed the agreement.

70.  The monthly rent was $114,372.  A three months’ security deposit of $343,116 was paid to De Monsa on signing.  The provisional agreement and the tenancy agreement are produced as P3A and P3B.

71.  In February 2009, Mr Sorin Vasile became the new Consul General, replacing Eduard Romulus Goean. 

72.  Starting from 1 July 2009, the Consulate General paid Chee On the monthly rents for the properties in full.

Bank accounts and transactions

73.  The Consulate General of Romania maintains a bank account with the Standard Chartered Bank, opened on 20 May 2008.  Since 29 July 2010, Mr Sorin Vasile was the sole signatory.

74.  Chee On maintains a savings account and two current accounts with the Standard Chartered Bank, opened in May 1999.  You and your husband, Mr Leung Ho-kwai, were the signatories.  An affirmation of Yip Yuen-duet, May, account investigation manager of Standard Chartered Bank, is produced to the court as P4.

75.  Police prepared a flowchart of the Chee On accounts for April, May, June and October 2010.  This is P14.

Rental payments for Flat 2714 (April to June 2010)

76.  The Consulate General paid Chee On US$21,975.90 for rent for Flat 2714 from April to June 2010.  That is, three months’ rent.

77.  The Consulate General received an acknowledged receipt, purportedly issued by you, dated 30 October 2010. 

Rental payments for the office (October 2010)

78.  The Consulate General paid Chee On US$18,249.97 for the office rent of October 2010. 

79.  On 22 November of 2010, De Monsa issued a letter to the Consulate General for outstanding rental payments (P11).

80.  De Monsa received five cheques from Chee On for rent, being:

(1) $60,000 drawn on the HSBC account, 24/11/2010;

(2) $114,372 drawn on the Standard Chartered Bank,
22 November 2010;

(3) $150,744, again, Standard Chartered Bank,
29 November 2010;

(4) $114,372 drawn on the Standard Chartered Bank,
30 November 2010; and

(5) $10,049 drawn on the Standard Chartered Bank account on 30 November 2010.

81.  These are produced as P12, A to E.

82.  On 4 January 2012, De Monsa issued a letter to the Consulate General for outstanding arrears (P13).

83.  Chee On was incorporated in 1997 and you and your husband, Leung, were its directors.  You were also the shareholders.

84.  On 7 September 2010, Leung resigned, leaving you as the sole director of Chee On.

85.  On 28 September 2011, you resigned your directorship and you were replaced by Leung.

Arrest and caution

86.  You were arrested on 8 February 2012. 

87.  On that day, you gave video recorded interviews, the discs, the transcripts and certified translations being produced as respectively 6A, B, C; 7A, B, C; and 8A, B, C.  Documents P9 were shown to you.

88.  You are a person of hitherto clear record.

89.  A second set of admitted facts, P15A, were admitted 65C under the Criminal Procedure Ordinance, Cap.221.

90.  A set of records kept by the Consulate General of Romania, including copies of their invoices purportedly issued by Chee On, copies of cheques issued in favour of Chee On in relation to the receipt of rental payments, is produced as P17.

Records of De Monsa

91.  A set of copies of the debit notes issued by De Monsa for the tenancy of the office (excluding October, November and December 2010) is produced as P18A.

92.  The debit notes issued by De Monsa for the rent of the office from October to December 2010 are now produced as Exhibit P18B, C and D.

93.  I do not intend to repeat the evidence of the prosecution witnesses.

94.  Suffice it to say that the admitted facts and live evidence show clearly the following:

(1) the Consulate General of Romania had indeed paid all rental sums due on all properties to the account of Chee On, albeit on occasions they had paid late;

(2) PW2 had required Chee On to replace missing electrical and furnishing items for the flat at Regent on the Park;

(3) the rent for Flat 2714 had not been paid in full for April nor paid at all for May and June 2010. (that is, HK$20,000, HK$44,000 and HK$44,000, making a total of HK$108,000 not being paid).

(4) in respect of the office, De Monsa had only received $50,000 for October 2010, leaving $64,372 outstanding and unpaid by Chee On.

95.  The rest of the evidence supports the prosecution brief facts, which was set out in the opening.

96.  PW1, the owner of Beauti-Well Holding Limited, said that you admitted using the capital for something else.  When taxed by him for non-payment, you said you could not pay at the moment.

97.  In re-examination, he agreed you did make payments of interest.  He agreed that in his witness statement, he never mentioned that the capital was used for something else so could not pay.

98.  PW2, the Consul General of Romania, Sorin Vasile, gave evidence consistent with the allegations, if somewhat rambling.

99.  PW3, Mr Law Wai, manager of De Monsa Investments, gave evidence.  He was unable to speak to the specifics, as it was PW4 who handled the rentals. 

100.  He had contacted you over non- or missed payments, and you gave three or four reasons:

(1) that your husband and a director took the money and left;

(2) the money was tied up in a failed red wine business in China;

(3) the Consulate General of Romania had failed to make payments;

(4) that on another occasion, you seemed to say you were in hospital.

101.  He also confirmed that De Monsa charged interest for payments over seven days late.

102.  PW4 gave direct evidence of your default.

103.  The prosecution was closed and, in the absence of any contrary submission, I did find that you had a case to answer and ruled accordingly in respect of both charges.

104.  Having had your rights explained by counsel, you elected to give evidence and called one defence witness. 

105.  You gave evidence and your basic version did not differ widely from the facts put forward by the prosecution, save that you attempted to explain why certain payments were not made.

106.  You produced D2, cheques and receipts for goods you said had been bought for the previous Consul General of Romania, Mr Eduard R Goean.  These were for furniture and electrical goods for the flat at Regent on the Park and the office.  These included three TVs, Blu-ray player, computer, fridge, washer, dryer, wine fridge, mobile phone, vacuum cleaner, maintenance payments and dehumidifiers.

107.  Also, you produced the bundle at page 10, a letter to PW2, offering to sell the $40,000 worth of electrical goods and furniture purchased at his request to him for a reduced fee of $20,000.

108.  You said, all in all, Chee On had spent $205,000 on these goods, including the $40,000 requested by PW2 for the goods in the flat.

109.  Mr Goean told you to take the money from the 10-month rent of the office that was supposed to be paid in advance.

110.  You also contended that when Mr Goean left Hong Kong, he took all the items from Regent on the Park and that is the reason they had to be replaced when PW2 replaced him. 

111.  You also explained that you had to pay interest for late payments. 

112.  You said in 2008 to 2010, Chee On had cash flow problems, but you did not complain to the Consulate General about this nor did you ask them for reimbursement of interest payments caused by late payment of rent. 

113.  There was also rent to be paid for office furniture and management fees and car park fees.  The former was to a company owned by your husband.  That was always paid on time and you were caught out lying on this point in that you said it was to avoid the furniture being taken, when in fact, it was not, and you went on to admit it was simply self-interest.

114.  You failed to press the Consul General of Romania for payment for Goean’s goods and interests for late payment, for fear of disturbing the relationship.  You felt it important to keep such a prestigious client.

115.  You flatly denied ever taking any money paid by the Consulate General of Romania for your own purposes.

116.  You also claimed that you owed no money to the Consulate General of Romania, having paid out all sums that you received for legitimate expenses.

117.  You were cross-examined and you claimed your husband did take part in dealing with the Consulate General of Romania as well, being present at the purchase of goods.  After PW2 came, he took no further part.

118.  You agreed the Consulate General of Romania always paid, if sometimes late. 

119.  You also agreed the missed payments for the Flat 2714 (April, May, June 2010) and the office (October 2010).  You said it was because they owed you money - that is, to Chee On. 

120.  You also agreed that you should have returned the security deposit to the Consulate General of Romania and should not have asked the landlord to forfeit without his consent. 

121.  You agreed you should have told him of this, but did not want to affect your relationship.

122.  You agreed the document was untrue when you acknowledged return of the deposit.

123.  You agreed the old Consul General owed $165,000 and PW2 $40,000 to Chee On. 

124.  You did go on to agree that the furniture belonged to Chee On but was bought on behalf of the Consulate General.

125.  You never told PW2 of the amount Mr Goean owed Chee On because you still wanted to maintain a good working relationship. 

126.  You also accepted that you had not told the police of this debt when interviewed.

127.  Mr Stanley Leung then gave evidence as DW1.  He is your husband and had been director of Chee On from 1997 until he resigned in September 2010. 

128.  He confirmed the purchases made on Mr Goean’s behalf.  Also, he confirmed that Mr Goean agreed to its cost being taken from the rent.

129.  He also contended that you never used Chee On’s account for your own purposes and that the Consul General of Romania still owed Chee On money.

130.  He denied that you and he had discussed the evidence between you.

131.  Mr Tsui, on behalf of the prosecution, and Mr Fong for the defence, made final written submissions which I have taken fully into account in reaching my verdict.

132.  I turn now to the verdict.

133.  That Chee On never paid the amounts referred to in the charge is irrefutable. 

134.  That the Consul General of Romania paid over those sums, expecting and, indeed, believing they would be passed on to two landlords involved, is equally clear, beyond the shadow of doubt.

135.  However, the prosecution case from the outset appeared to be somewhat in disarray.  This can be seen by the efforts to shore up the case. 

136.  The first set of charges and the facts bore absolutely no relationship to each other.  This led to amended charges and amended facts.

137.  That, however, was not the end, because the charges had to be further amended, as the amounts alleged to be stolen by you in view of what was said in evidence came to a different amount, a point maybe of purely academic interest, but nonetheless, indicative of the state of the case, as the ever-changing chose in action is expressed to be the property of Mr Sorin Vasile (PW2), whereas in fact, it appears to be the property of the government of Romania. I mention this only in passing.

138.  Another problem that the prosecution faced is that at the time of the first alleged defence, Chee On had two directors and two shareholders; that is, you and your husband. 

139.  I do not, again, propose to dwell on this point, as clearly from the evidence, both oral and documentary, it was you who almost exclusively dealt with the accounts of the Consulate General of Romania.

140.  It is, of course, stating the obvious, but in order to obtain a conviction, the onus is squarely on the prosecution to prove beyond all reasonable doubt that you stole the sums alleged.  That is, that you personally stole the sums alleged in respect of Charge 1, $108,000, and in respect of Charge 2, $64,372.  For clarity, these are both in Hong Kong dollars.

141.  You are a lady of hitherto good character.

142.  Therefore, I give myself the usual required warning as to your propensity to commit the crimes alleged and the credibility, as you did give evidence. 

143.  You, it has to be said, demonstrated both, in the events surrounding the allegations and in court, an irrefutable predisposition to tell patent and, indeed, at times, absurd lies, examples of which are the way in which the return of the security deposit was dealt with and the reasons why SUNMAX, your husband’s company, was paid on a preferential basis.

144.  However, whatever I may think of your propensity to dissemble, it does not logically, legally nor naturally lead to a situation that I can infer you committed the offences alleged beyond all reasonable doubt.

145.  Your explanation as to why the rents were not paid on Flat 2714 in April to June 2010 and on the office in October 2010, either in part or fully, relate back to a period prior to PW2’s tenure in office and partly due in PW2’s tenure in office.

146.  In a nutshell, you say you were required to furnish the various properties, mainly Regent on the Park and the office, with both electrical goods and furniture, firstly by Mr Eduard Goean, the previous Consul General, to whom Chee On supplied $165,000 worth of goods, and then PW2, for whom Chee On provided $40,000 worth of goods.

147.  You were never paid any extra monies to cover that amount, Mr Goean telling you to take the cost from the advance rent, and PW2 saying nothing.

148.  The second set of goods had to be purchased because Mr Goean had removed electric goods and furniture from the flat.

149.  You never demanded payment as you did not want to lose or create problems with such a prestigious client as the Consul General of Romania. 

150.  This appears rather odd. 

151.  This also took place against a backdrop of Chee On’s cash flow problems.  Hence, the result was insufficient funds to meet your rental obligations.

152.  According to you, the result of the cash flow problems caused largely by the outlay in electrical goods and furniture was that often the rents were paid late, made worse, as from time to time the Consul General of Romania too paid late, leading to interest being imposed for late payment and, towards the end, underpayment.

153.  Whilst I had some doubts about this, the one person who could have shed light on what was spent and how it was to be paid for was Mr E Goean.  Prosecution did not call him; perhaps prosecution could not call him. 

154.  Hence, while your version is somewhat questionable, it cannot be rebutted and remained unlikely but possible. 

155.  This is further exacerbated by lack of any real admissions and the inability of the prosecution to show that your extraction of funds from Chee On’s account was for anything other than apparently legitimate expenses.

156.  So, at the end of the day, one remains very suspicious of you, but the prosecution has failed to establish any dishonest dealings with the amounts beyond all reasonable doubt, it being a distinct possibility that this is all down to mismanagement and incompetence on the part of yourself and Chee On.  This is not dishonesty. 

157.  Therefore, there remains a very real doubt. 

158.  You have the benefit of the doubt and the two charges are dismissed.