HKSAR v. CHEON WAN KAM

CACC 445/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 445 OF 2001

(ON APPEAL FROM DCCC NO. 325 OF 2001)

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J U D G M E N T

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Hon Stock JA (giving the judgment of the Court):

Introduction

1 This applicant was convicted in September 2001 by HH Judge Line in the District Court of a letter of credit fraud, and sentenced to a term of three years' imprisonment. This is his application for leave to appeal against conviction, leave having been refused by the single judge. He has abandoned his application for leave in relation to sentence.

2 The history of this case originates in Thailand in late 1996. A Mrs Kanit, who was the prime prosecution witness, resides there; and she was the proprietor of a company that needed a machine to extract essences from herbs. She was introduced to the applicant who traded there as the Tong Ming Group (Thailand) Co. ("Tong Ming"). The prosecution case, which was accepted by the trial judge, was that he acted as broker for the purchase of such a machine from a Hong Kong company called Sunhill Technology Ltd. ("Sunhill"). Sunhill agreed to sell the machine to Mrs Kanit for the sum of HK$2.5 million. In late 1996 she paid a deposit to him by cheque in the sum of $1.05 million. According to her evidence, it was agreed that the balance would be paid to Sunhill through the vehicle of a letter of credit. The application for the letter of credit was made by her on 23 July 1997, and it was issued by the Thai Danu Bank in Thailand on 25 July, with Sunhill as beneficiary, and the Union Bank California in Hong Kong as the negotiating bank.

3 In August 1997, the documents required for payment under the letter of credit, were submitted by Sunhill to the Union Bank, and on 19 August 1997 the net proceeds of the discounted letter of credit and, namely, a sum of $1,297,512 were credited to Sunhill's account with the Standard Chartered Bank ("Standard Chartered"). One of the documents submitted was a bill of lading, and it transpired that the bill of lading was false. No machine had been, or ever has been, shipped to Mrs Kanit.

4 It was common ground that on the very date that the credit was effected to Sunhill's account with Standard Chartered in that sum of $1.297 m, a Mr Lam, acting on behalf of the applicant, attended the offices of Sunhill and was there given a cheque in the sum of $1,280,934. Mr Lam's bank account was credited with the proceeds of that cheque and, within a matter of days, those proceeds were channelled to the applicant and to the applicant's wife.

The charge

5 Save as to the initial role of the applicant, none of these facts was in issue. What was in issue was the part played by the applicant, for it was alleged by the prosecution that he and others conspired to secure payment under the letter of credit by use of a bogus bill of lading. The charge to which he pleaded not guilty alleged that he conspired with a person or persons unknown dishonestly and with a view to gain or to cause loss, to procure the making of a credit entry to the tune of $1.297 million to Sunhill's account with Standard Chartered by a deception, namely, by putting the Hong Kong branch of the Union Bank of California in possession of documents purporting to comply with the terms of the letter of credit, including the bill of lading, but knowing that the bill of lading was false. Procuring an entry in bank records by deception is an offence contrary to section 18D of the Theft Ordinance, Cap. 210.

The evidence at trial

6 Mrs Kanit's evidence was that when she discovered that the letter of credit had been honoured although she had not received the machine, she quite naturally raised inquiries or an investigation; and she was shown documents which had been sent by Union Bank to Thai Danu Bank, that is, the documents which had been presented for collection under the letter of credit, as well as a letter dated 18 August 1997 which had been sent to the bank. It purported to be signed by her, appointing the Tong Ming Group as her representative to negotiate settlement of the letter of credit with Sunhill. Her testimony was that the letter was a forgery. She had neither authorised Tong Ming to negotiate the instrument nor signed the letter. She came to Hong Kong and discovered that Sunhill had paid the proceeds to the applicant. She spoke to him, and in September 1997 she received a letter from him, or at least a letter purporting to come from him. The fact that she still possessed the letter emerged in cross-examination when she was challenged about the fact that she appeared no longer to have in her possession any documentation that supported her account. She happened to have the letter of 15 September in her handbag in court. The letter said that the writer would take responsibility for what had happened; that it was all due to a mistake on his colleague's part; and the letter offered compensation. She tried to contact the applicant thereafter, but could not, for he seemed to have disappeared, and his business in Thailand had ceased to operate.

7 The applicant's evidence at trial was to a completely different effect. He accepted that he had met Mrs Kanit and had put her in touch with Sunhill, but said that that was as far as his involvement in the whole matter went. He received no money from her, or from Sunhill for that matter. He had no further contact with her, had nothing to do with the letter of authorisation dated August 1997, and was not the author of the letter of 15 September 1997. He accepted that he had received from Sunhill the sum of $1.28 million immediately after Sunhill was paid under the letter of credit; but this, he said, was entirely coincidental, because one of the bosses of Sunhill, an old friend, had owed him money since 1993, and this was payment of that debt.

The Reasons for Verdict

8 Those, then, were the contending versions. In the event, the judge believed Mrs Kanit and disbelieved the applicant. His Reasons for Verdict are, in our opinion, especially notable for their common sense approach to assessment of truth: not by reference to minutiae or suggested minor inconsistencies, but rather to inherent indicia of truth; such as the powerful fact of the payment of the proceeds of the letter of credit to the applicant on the very day upon which they were credited to Sunhill's account; the fact that the applicant could produce no records of the debt which, according to his account, those payments satisfied; the fact that once he became aware of the allegations against him he took no steps, such as an innocent man might be expected to take, to ascertain the identity of the true culprit; the fact that the applicant's disappearance, or his distancing himself from Mrs Kanit, coincided with the fraud; the fact of the letter of apology and the unlikelihood that it would have been fabricated by another - in which particular regard we note that, shortly before she received this letter, Mrs Kanit had been involved in negotiations with the applicant in respect of the problems which had arisen. All matters of this kind, the judge addressed; and upon the inferences to be drawn from the primary facts, he convicted the applicant. Mrs Kanit's explanation about the lack of documents to support her testimony of the agreement originally made with the applicant was rational and wholly acceptable. It was that her business was in receivership and the documents were in the receiver's custody. The production of the letter of 15 September was entirely spontaneous in answer to a question in cross-examination.

This appeal

9 Mr Tam, who has appeared today for the applicant, has most conscientiously scrutinized the evidence, and has advanced every point that could be made on the applicant's behalf. Broadly, he says that the judge misapprehended the evidence, and has failed to address particular salient issues which required to be resolved.

10 The first and second grounds of appeal contend that the conviction was against the weight of the evidence, and that the judge has failed to take into account a number of factors.

11 It is said, for example, that it is odd to have an initial agreement and deposit in November 1996 but a written sales contract from Sunhill only in July 1997. We cannot determine whether that is odd or not. It was not a matter explored in cross-examination, and we dare say that if an issue had been made of it, the judge would have addressed it. There may be many a good reason for such a delay, such as the non-availability of a machine in late 1996; and the fact that the written contract with Sunhill emerged only in July 1997 may well be because the machine was then available and if the purchaser wished then to proceed, she was required to sign the contract, and to apply for a letter of credit. The judge commented that, having heard the testimony, he could see no reason why Mrs Kanit would invent a false case against the applicant; and, so it seems to us, no sound reason emerges.

12 It is further argued that there was no contemporaneous documentation produced, such as the initial agreement with Tong Ming. Yet the judge has expressly dealt with this. Mrs Kanit provided a ready and credible explanation. Those acting for the applicant at trial had no doubt been in possession of Mrs Kanit's witness statements, and could easily have asked, before trial, for the production of the documents, or for an adjournment so that they might be produced. They did not do so - no doubt for reasons which appeared to them to be sound - and Mrs Kanit cannot be criticized for arriving at trial without documents which had been seized by the Receiver, and for which the defence team had not called.

13 It is pointed out that the sales contract of July 1997, evidencing the agreement for the supply of the machine by Sunhill, mentions the sum of $2.5 million but not the deposit. The point is made in order to undermine Mrs Kanit credibility about payment of the deposit to the applicant. Yet it is not suggested that the machine was sold for less than $2.5 million; and it is accepted that in mid-August 1997 all that remained to be paid was $1.45 million by letter of credit. It is most unlikely that when Sunhill presented documents in support of payment, and purported to have sent the goods, the balance of $1.05 million had not been paid. There is no suggestion of a demand by Sunhill between 4 July, which is the date of the sales contract, and mid-August, for the balance; no doubt because that balance had been met. Quite why the deposit was not referred to in the sales contract we cannot say. But it is in the event unimportant.

14 Much is also made of the fact that in a witness statement admitted in evidence, a deposing officer of the Union Bank stated that in April 1998 his bank received a query from the Thai Danu Bank to the effect that the letter of credit applicant was refusing to reimburse the Thai Bank in respect of the letter of credit payments, because the goods had not been received. A query was in turn raised with Sunhill, who then forwarded to the Union Bank the authorisation letter of August 1997, which information was then further forwarded to the Thai Bank. The point Mr Tam makes is that Mrs Kanit's evidence was that it was already in August 1997 that the issuing bank in Thailand had shown her this letter; and it is therefore said that her evidence cannot be true. We do not, with respect, agree. It is most unlikely indeed that Mrs Kanit first raised queries about non-delivery of the machine only in April 1998. The effect of her testimony was that she raised queries at once. This is as one would expect; and it is supported by the receipt by her in September 1997 of the compensation proposal; by her conversation with the applicant in September to which she referred as negotiations; and by her visit to Hong Kong later in the year to pursue the matter. Her evidence was that she was shown the authorisation letter at the same time as she raised her queries with the Bank in August 1997 - that evidence is very likely to be accurate, and is well supported by the objective indicia. We note as well that the suggested difference between her version and that of the bank officer was never put to her in cross-examination. It may be that there was error in the bank officer's statement - it was not after all admitted as agreed fact; but that is, perhaps, unlikely. The queries with Sunhill may have been raised more than once. The real point, the real answer, is that there is no inconsistency between the two versions. The bank officer was not in his statement suggesting that the August authorisation letter had never surfaced until April 1998. He was merely saying that when in April 1998 the issuing bank was having trouble with reimbursement by the applicant, the relevant documents were then needed to answer questions which were then current; and the documents were produced. That does not mean that the document was never shown before that date to the applicant. It would have been odd indeed had it not been shown to Mrs Kanit before April 1998. We are satisfied in the event that there is insufficient in this point to undermine the judge's findings as to Mrs Kanit's credibility.

15 There are one or two other aspects of evidence which have been particularized as not having received the judge's proper attention. We intend no disrespect by not going into each in this judgment. It suffices to say that we are satisfied that there is nothing in them.

16 Ground 3 is that the judge erred in drawing the inference of guilt. The ground is in its essence and effect to much the same effect as Grounds 1 and 2 and we do not agree with the contention. In our judgment, the judge's reasoning was cogent. One particular complaint leveled at the judge's reasoning is in relation to the forged authorisation letter of August 1997 that if the forger was not the applicant himself but someone at Sunhill (and there must have been a co-conspirator involved at Sunhill) the forger would not in the letter choose the applicant as the designated agent for he would at once deny the agency. Mr Lam says this is not logical; that surely anyone named as agent would deny the agency. This misses the point which is that the one person who might not deny the agency is a co-conspirator who had had dealings with the victim and was prepared to say that the victim had made him his agent.

17 There was a fourth ground of appeal which attacked the judge's calculation of the percentage of the proceeds of the letter of credit which Sunhill retained. Mr Tam, wisely, does not pursue that point.

Conclusion

18 We are in the event satisfied that there is no merit in this application for leave to appeal against conviction and, accordingly, it is dismissed.