HKSAR v. LI CHING

IN THE COURT OF APPEAL

1997, No. 436
(Criminal)

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J U D G M E N T

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Mayo, J.A. (giving the judgment of the Court):

1. The Applicant was charged in the alternative with theft under section 9 of the Theft Ordinance or dealing with property known or believed to represent proceeds of an indictable offence, contrary to section 25(1) of the Organised and Serious Crimes Ordinance, Cap. 455.

2. Particulars of the offences were:

"LI Ching, on or about the 24th day of December, 1996, at Hang Seng Bank Head Office, No. 83, Des Voeux Road Central, Central, in Hong Kong, stole a chose in action, namely, a debt in the sum of $2,800,000 Hong Kong currency owed by the Hang Seng Bank to the Luen Fung (Hop Kee) Garment Factory Limited, the property of the said Luen Fung (Hop Kee) Garment Factory Limited."

and

"LI Ching, on or about the 24th day of December, 1996, in Hong Kong, knowing or having reasonable grounds to believe that property, namely, the sum of $2,800,000 Hong Kong currency in whole or in part directly or indirectly represented proceeds of an indictable offence, dealt with the said property."

3. The case was heard in the District Court by Deputy Judge Lung. He summarised the prosecution case as follows:

"Luen Fung (Hop Kee) Garment Factory Limited (Luen Fung) has at all material times an account with the Hang Seng Bank. At about 2.30 p.m. on 24.12.1996 a male whose identity is unknown submitted a cashier order application form (Exh.P1) for HK$2.8 million in favour of Li Ching to a teller at the head office of Hang Seng Bank at 83, Des Voeux Road Central. This application form bore the company chop of Luen Fung and the signature of Madam Wong Pik-yi, the only authorised signatory of the account of Luen Fung. A cashier order (Exh.P2) for the amount of HK$2.8 million was issued according to the instructions and given to that male. Hang Seng Bank had debited the account of Luen Fung for the same amount of HK$2.8 million. At about 3.15 p.m. on 24.12.1996, the defendant presented the cashier order (Exh.P2) to a teller at the head office of Hang Seng Bank for cash. As the cashier order was paid to the account of the payee only, the defendant had opened an account in his own name with Hang Seng Bank. The money of the cashier order was paid into this new account thereupon the defendant had withdrawn the money of HK$2.8 million from this account. The defendant left Hong Kong at 8.19 p.m. on the same day, i.e. 24.12.1996 and returned from China on 27.2.1997 and he was arrested. He was interviewed by senior detective constable 12087 and 2 caution statements (Exh.P3 and Exh.P4) were given by the defendant voluntarily. The defendant had also led police to his residence for a search and the police had found the customer copy of the application form (Exh.P5). It was later confirmed that the company chop and the signature on Exh.P1 were forged."

4. One of the distinguishing features of this case was that all of the prosecution case was made out in a statement of facts which was admitted pursuant to section 65C of the Criminal Procedure Ordinance, Cap. 221.

5. The Judge's summary of the prosecution case accurately encapsulates the case.

6. The Applicant did not go into the witness box or call any witnesses. He had however made two voluntary statements to the police.

7. The Judge summarised the contents of the statements in his Reasons for Verdict:

"In the caution statements (Exh.P3 and Exh.P4) the defendant told the police officer that he had known a customer called Ma Tin when he was working in Tao Heung Restaurant in Granville Road as a waiter between October and November 1996. Ma Tin had told him that there would be tax-evaded money to be transferred to Hong Kong from China. At that time Ma Tin told him to open an account into which the money could be credited in future. He would have to withdraw the money from the account and he would be given $50,000.00 in cash as handling fee. He was given $100.00 by Ma Tin and he had opened an account with Po Sang Bank. But the bank pass book was taken by Ma Tin. On the night of 22.12.1996 Ma Tin called him and told him that there would be some money that needed to be collected by him. They arranged to meet each other at Golden City Restaurant, Nelson Street at 8.00 a.m. the next morning. At 9.00 a.m. on 23.12.1996 he meet Ma Tin and 3 other males at the restaurant. One of the other males was called Ah Keung, the other was called Ah Ming and the third man spoke Mandarin who was not introduced to him. Ah Keung told him that he was needed to collect some tax-evaded money and Ah Keung got his identity card and took down the particulars. Ah Keung also gave him $1,000.00 to open one more current account. This he did.

After he had opened the current account, they arranged to meet each other at 8.30 a.m. at Golden City Restaurant the next day, i.e. 24.12.1996. At the appointed time, he met Ah Keung, Ah Ming and the Mandarin speaking man at the restaurant. Ma Tin was not there. He and Ah Keung went to wait at Cafe de Coral in a side-street near Hang Seng Bank Head Office, Central. Ah Keung then went out for about 15 minutes and returned and gave him a cashier's order for $2.8 million in his name. Ah Keung told him to go to Hang Seng Head Office to get cash. This he did. He was required to open an account before getting the cash. After getting the cash, he took the money to Ah Keung who was waiting outside the bank all the time. They went to Cafe de Coral where Ah Ming and the Mandarin speaking man came to join them. Ah Keung left with the money and Ah Ming took him to a restaurant in Tsim Sha Tsui where he was given $50,000.00 cash. Ah Ming told him that there was something wrong and told him to go back to China. This he did and he had spent all his money in China. He had no idea of how Ah Keung got the cashier order for $2.8 million. He said that he did not know the meaning of the tax evasion and the transfer of money from mainland and it was only Ma Tin who had mentioned them to him. He had no idea of the office address of Ma Tin. They communicated with each by paging and he told Ma Tin his whereabouts for contract for handling the tax evasion affairs."

8. So far as the 1st charge was concerned the main problem encountered by the prosecution was connecting the Applicant with the male who presented himself at the Hang Seng Bank with the application for the draft. They attempted to surmount this problem by submitting that on the available evidence it could be inferred that the Applicant must have been a party to a joint enterprise to steal the moneys referred to in the application.

9. Perhaps surprisingly the Judge was not prepared to draw this inference. He was of the view that there was no evidence to contradict what the Applicant had said in his cautioned statements.

10. Accordingly he dismissed the 1st charge.

11. He did however convict the Applicant on the alternative charge and it is this conviction that the Applicant seeks leave to appeal against.

12. The judge accepted the admission against interest in the cautioned statement that the moneys represented the proceeds of tax evasion in China as true. He said: "I find that the admissions made by the defendant in Exh.P3 that he was told that the money he was going to collect for Ma Tin through his bank account was tax evasion money are true. I cannot think of any other reason for the defendant to make such admissions if they are not true."

13. As section 25 of the Organised and Serious Crimes Ordinance was framed in wide terms he accepted that the moneys were the proceeds of an indictable offence.

14. The rationale for this was that conduct which would amount to an indictable offence if committed in Hong Kong was deemed to be conduct contravening the section even though it occurred outside the jurisdiction. By virtue of section 82(1) of the Inland Revenue Ordinance, Cap. 112 tax evasion was an indictable offence.

15. The 1st and 2nd grounds of appeal can conveniently be dealt with together.

"1. The learned Deputy District Judge erred in convicting the Appellant of the offence of 'Dealing with property known or believed to represent proceeds of an indictable offence' contrary to S.25(1) Organised and Serious Crimes Ordinance, Cap. 455 ['the offence'] on the basis that the property in question, namely a sum of $2.8 million, represented 'tax evaded money' originated from China when

(a) uncontradicted evidence in the case showed that such sum of $2.8 million was money in the bank account of a genuine Hong Kong trading company which was dishonestly appropriated by people unconnected with the company by means of a forged application form presented to the bank for a cashier order

(b) there was no admissible evidence to show that the said sum of $2.8 million was in fact 'tax evaded money' originated from China as the only mention of the same was in two records of interview taken after the Appellant was arrested in which the Appellant claimed that he was told the same by someone

2. Alternatively to ground 1 herein, the learned Deputy District Judge erred in failing to consider the question and to make a finding thereof in respect of whether the property of the sum of $2.8 million in fact represented proceeds of an indictable offence in that it was 'tax evaded money' from China after holding that the Appellant had made admission of his knowledge or belief of the same. The learned judge thereby erred in forming the view that under S.25 of the Organized and Serious Crimes Ordinance, Cap. 455 the prosecution need only to prove that an accused person believed that the property he was dealing with represented proceeds of an indictable offence and does not have to prove by evidence that the property in fact represented proceeds of an indictable offence."

16. It is of course the case that the Judge was bound by the admitted facts. Other than the fact that the moneys were paid out from Luen Fung's account nothing more is known about them. It was not known as a fact whether or not the moneys were the proceeds of tax evasion in China.

17. What is known is that the Applicant made an admission against interest in his cautioned statement that it was his belief that the moneys were the proceeds of tax evasion in China. We are satisfied if the Organised and Serious Crimes Ordinance is read as a whole that it was the intention of the legislature to concern itself with the Applicant's belief. It is accordingly framed in wide terms. It is clear from the Reasons for Verdict that the Judge held the Applicant had such a belief. There is nothing in section 25 to indicate that there is a requirement for the prosecution to prove the commission of the indictable offence referred to. What is required is to prove that the defendant had reasonable grounds to believe that the property represented any person's proceeds of an indictable offence. It is not necessary to prove the commission of the offence. That would appear to dispose of the 1st and 2nd grounds of appeal.

18. The 3rd and 4th grounds of appeal are as follows:

"3. The learned Deputy District Judge erred in convicting the Appellant of the offence when there was no or no sufficient evidence that the property in question, namely the sum of $2.8 million, represented proceeds of an indictable offence in the manner held by the learned judge. The reference in the records of interview to "tax evaded money" does not constitute sufficient proof that 'tax evasion' was illegal in China and there is no evidence to show whose and what were the conduct in China which brought about the proceeds of $2.8 million or that such conduct constituted an offence either in China or in Hong Kong.

4. Alternatively to ground 3 herein the learned judge erred in holding, in relying on Section 25(4) of the Organized and Serious Crimes Ordinance, Cap. 455, that 'evasion of tax in China' is an indictable offence within the meaning of Section 25(1) of the same Ordinance."

19. It is obviously the case that tax evasion must be a crime in China.

20. Section 25 of the Organized and Serious Crimes Ordinance, Cap. 455 reads as follows:

"25. Dealing with property known or believed to represent proceeds of indictable offence

(1) Subject to section 25A, a person commits an offence if, knowing or having reasonable grounds to believe that any property in whole or in part directly or indirectly represents any person's proceeds of an indictable offence, he deals with that property.

(2) In proceedings against a person for an offence under subsection (1), it is a defence to prove that -

(a) he intended to disclose to an authorized officer such knowledge, suspicion or matter as is mentioned in section 25A(1) in relation to the act in contravention of subsection (1) concerned; and

(b) there is reasonable excuse for his failure to make disclosure in accordance with section 25A(2).

(3) A person who commits an offence under subsection (1) is liable -

(a) on conviction upon indictment to a fine of $5,000,000 and to imprisonment for 14 years; or

(b) on summary conviction to a fine of $500,000 and to imprisonment for 3 years.

(4) In this section and section 25A, references to an indictable offence include a reference to conduct which would constitute an indictable offence if it had occurred in Hong Kong.

(Replaced 90 of 1995 s.22)"

21. Section 82 of the Inland Revenue Ordinance, provides for penalties relating tax evasion. It is manifest from this section that tax evasion does constitute an indictable offence.

22. In this connection section 82(1)(g) is of assistance. This subsection is so widely framed that it is not possible to conceive of tax evasion in China which would not fall foul of the section. Mr. Wong who is representing the Applicant attempted to draw an analogy with handling stolen goods. This attempt was not convincing as it is clear that section 25 of the Organized and Serious Crimes Ordinance, Cap. 455 is framed in different terms to section 24 of the Theft Ordinance, Cap. 210. In particular under section 24 the prosecution must establish that goods in question have been stolen. There is no similar requirement concerning the proceeds of an indictable offence.

23. There can be no doubt that if section 82 of the Inland Revenue Ordinance and section 25 of the Organised and Serious Crimes Ordinance are read together and the Judge accepted that the Applicant believed that the moneys in question were the proceeds of tax evasion in China he was guilty as charged.

24. This conviction is neither unsafe nor unsatisfactory and the application is dismissed.