HKSAR v. MAN YIU PUN

CACC 198/2018

[2020] HKCA 344

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 198 OF 2018

(ON APPEAL FROM DCCC 431 OF 2017)

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REASONS FOR JUDGMENT

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A. Introduction

1.  The applicant was tried in the District Court before District Judge Dufton (“the judge”) on two charges of conspiracy to deal with property known or believed to represent the proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455 and sections 159A and 159C of the Crimes Ordinance, Cap 200.  He was convicted of both charges and was sentenced to a total term of 4 years and 5 months’ imprisonment.  He now seeks leave to appeal against his convictions and his sentences.

2.  At the hearing of the applications I granted the applicant leave to appeal his convictions but refused him leave to appeal his sentences.  I said I would hand down my reasons for doing so at a later date.  These are my reasons.

B.  The Charge Sheet

3.  There were in total nine charges on the Charge Sheet but only Charges 5 and 9 concerned the applicant.  The applicant was tried with three other defendants and was D3 on the Charge Sheet.  All charges involved the offence of money laundering, either in its substantive form or in an inchoate form as a conspiracy. 

4.  D1 was charged alone in respect of Charges 1 and 2 and jointly with D2 in respect of Charges 3 and 4.  D2 was charged only with Charges 3 and 4 but Charge 4 was a substantive alternative to Charge 3 which was a conspiracy offence.  D2 was convicted of Charge 3.

5.  D4 was separately charged with 3 substantive charges of “money laundering”, Charges 6 to 8, which took place in a factual matrix that was not relevant to the case against the applicant. 

6.  The common link in all the charges was, in fact, D4.  In Charges 1-3 the unnamed and unindicted, co-conspirator was particularized simply as “a Nigerian male alias Joe”.  However, both D1 and D2 testified that this person was D4.  In the applicant’s charges his unindicted, co-conspirator was named as being D4.

7.  The duration of the conspiracy that is the subject of Charge 5 was particularized as being “between a date unknown in December 2012 and the 21^st day of January 2013”, whilst the duration of the conspiracy that is the subject of Charge 9 was particularized as being “on or about the 17^th day of September 2012.”

C.  The trial

8.  Most of the prosecution case was admitted.  Only one witness was called in relation to the applicant’s charges. The prosecution case was quite simple and straightforward.  In respect of Charge 5 it was that the applicant registered a business for D4 called Asia Supply Resources (“ASR”) and opened a business bank account for ASR which would enable D4 to receive monies into the account and then deal with these monies.  For Charge 9 it was that the applicant used his own bank account on one occasion to assist D4 in laundering a sum of money through it. 

9.  The defence was that the applicant trusted D4, was assisting him to set up and operate what he believed was a legitimate business and had no knowledge of any wrongdoing.  The applicant was a victim of D4, not his co-conspirator. 

10.  D1 died in the course of the trial but only after he had testified in his defence.  D4 also testified in the defence case and parts of his evidence and D1’s evidence were relevant to the applicant. 

C.1  The prosecution case

11.  It is important to note that the conduct the subject of Charge 9 took place on 17 September 2012, some six weeks before the business registration of ASR which occurred on 26 October 2012.  Furthermore, ASR’s bank account, which was the vehicle for the acts of money laundering that are the overt acts of the conspiracy that is the subject of Charge 5, was opened on 31 October 2012.  But, the conspiracy in Charge 5, rather curiously, was particularized as not commencing until December 2012.  This would suggest that, contrary to what the judge ultimately found, the prosecution was not presenting a case that the conspiracy was formed at the time ASR was registered and that its registration was one of the overt acts of the conspirators.

C.2  Charge 5

12.  It was an admitted fact that the applicant registered ASR as a sole proprietorship and commenced business on 26 October 2012.  Its business was declared as “Import & Export, Resources” with its registered address at “2/F, No. 550 Canton Road, Kowloon”.  ASR ceased business on 2 December 2013. It was also an admitted fact that the applicant opened a business bank account for ASR with Nanyang Commercial Bank on 31 October 2012.

13.  Between 1 December 2012 and 3 January 2013, a total sum of HK$7,653,697.40 was deposited into the ASR account.  Save for the initial deposit of HK$50,000 cash, the monies deposited were by way of eight overseas remittances.  Between 6 December 2012 and 20 January 2013, all the monies in this account, other than HK$22.38, were withdrawn by way of ATM and by multiple cheques being issued to various payees including 11 cheques payable to D1, which were deposited into his personal savings account.  Being the account holder, the applicant was the drawer of these cheques and he retained custody of the cheque book even though he had provided all the means for D4 to operate the account.  The ASR account was eventually closed on 21 January 2013. 

C.3  Charge 9

14.  In relation to Charge 9, the prosecution case was that the applicant conspired with D4 to deal with HK$523,382.67 that had been remitted to the applicant’s personal savings account with HSBC on 17 September 2012, knowing or having reasonable grounds to believe these monies represented the proceeds of an indictable offence.  On 19 September 2012, $560,000 was withdrawn from the HSBC account. 

15.  It was an admitted fact the applicant opened the HSBC account on 28 September 1987, and was the sole signatory of it.   

C.4  Arrest and cautioned interviews

16.  The applicant was arrested for the present offences when he was intercepted at Lo Wu Control Point.  The police conducted two cautioned interviews and two video-recorded interviews with him, the voluntariness of which were not challenged.  In these interviews the applicant admitted allowing D4 to use his bank account to receive the monies the subject of Charge 9 and registering ASR and opening a bank account for it.  He claimed he did all these things simply to help out a friend.  Though now retired, he said he used to trade in jade ornaments. 

D.  The defence case

D.1  The applicant’s testimony

17.  The applicant elected to testify and called one witness, his younger sister Ms Man.  Ms Man testified that the 2/F premises that was the registered address of ASR was owned by her and had been used as an office for the jade business of her husband and the applicant. 

18.  The applicant testified that before his retirement he was a jade merchant, trading free-of-rent at the premises on the 2/F which was owned by his sister Ms Man.  He said that a few years ago he became acquainted with D4 and they would often meet for meals and drinks. 

19.  He said D4 told him that he engaged in trading in Hong Kong and took him to a container depot at Kam Tin where he saw many black people were helping D4 pack goods into containers.  On one occasion D4 said he would like to establish a company in Hong Kong in order to engage in business and in shipping goods but would have to do so by himself as his friend who had been helping him was no longer available.  As D4 was a foreigner, and could not produce proof of residence for business registration, he asked the applicant to register the business and to open a bank account for him.  The applicant eventually did this in order to help his friend.  The applicant also explained that he used the 2/F premises as the business and correspondence address for ASR because he used to trade at those premises.  He said that after he opened the account he gave D4 the bank card and password so that he could make withdrawals whilst he kept the cheque book in the office.

20.  In relation to the ASR account, the applicant said the initial deposit of HK$50,000 was paid by D4.  For the eight overseas remittances amounting to HK$7,653,697.40, he said he was told by D4 after each remittance that the monies were for the payment of goods but he never made any enquiries of any of the companies making the remittances nor did he ask D4 about the companies or ask to see the goods.  He said he issued a total of 18 cheques on D4’s instructions and gave the cheques to him as he claimed the money was needed for the payment of goods.  He said he did not make any of the ATM withdrawals himself as he had previously given the bank card to D4.  He said he never had any suspicion about the legitimacy of the monies withdrawn from ASR account.      

21.  In relation to the HSBC account, the applicant added that D4 informed him that the single remittance of HK$523,382.67 was deposited by his customer and that the money had to be withdrawn for payment of goods. As a result, he went to the bank with D4 and withdrew HK$560,000. 

D.2  D1’s testimony

22.  In his evidence D1 said the applicant introduced D4 to him and he understood they were business partners.  At one point D1 agreed to do business with the applicant and D4, and knowing that D4 could not set up a business bank account without address proof he agreed to lend his personal account to D4.  The 11 cheques which the applicant had drawn on the ASR account were deposited into D1’s personal account from 10 December 2012 but D1 claimed that he did not know anything about ASR as they never told him about this company.  He was informed of the first deposit by the applicant in a phone call.  He denied knowing the actual sources of any of these cheques and maintained that he was told they were only for goods payments. 

D.3  D4’s testimony

23.  In his testimony D4 denied any involvement in Charges 5 and 9.  He denied ever asking the applicant to open a bank account for him and claimed he never had any ongoing business venture with him or with D1.

E.  The judge’s Reasons for Verdict on Charges 5 and 9

24.  The judge attached full weight to the admissions the applicant made in his testimony as well as his records of interview in respect of setting up ASR, opening the ASR bank account for D4 to receive funds into it, and allowing D4 to use his HSBC account to receive funds which he withdrew and gave to D4.  The judge rejected the applicant’s testimony that he had registered ASR and set up the ASR bank account to enable D4 to engage in genuine business trading, and that he had lent his HSBC account to him to receive payments from his customers, and that he had never had any suspicion about the legitimacy of all the remittances in question.  The judge also rejected the evidence of both D1 and D4.  

25.  In reaching the conclusion that the applicant had “reasonable grounds to believe”, the judge made the following findings in his Reasons for Verdict:

“Reasonable grounds to believe

278.  By registering Asia Supply Resources and opening the bank account for Joe (Okafor Joek Kingsley) to use, D3 concealed the true holder of the account and the recipient of the monies remitted to the account.

279.  I am satisfied so I am sure by transferring monies to the accounts of D1; Grace Garcia Casia (PW4); Julius Sendegeya and Chan Wai Kin, the only inference to draw is that these transfers were to conceal and disguise the true recipient of the monies passing through the account.

280.  By allowing D4 to use his personal savings account D3 concealed the true recipient of the monies deposited in the account.

281.  As the Court of Appeal observed in HKSAR v Wong Chor Wo & another at para 108:

‘In the normal course of events, if a man allows another person to use his bank accounts to deposit and withdraw funds, in the absence of evidence to the contrary, the inevitable inference will arise that the holder of the bank account has reasonable grounds to believe that the funds passing through the account represent the proceeds of an indictable offence.’

Asia Supply Resources

282. Having regard to all the circumstances, including:

(a)  D3 did not report to the Inland Revenue Department any income for himself or on behalf of Asia Supply Resources for the period 1 April 2011 to 31 March 2015;

(b)  D3 did not have any real property;

(c)  D3 registered Asia Supply Resources and opened the bank account for Joe to use thereby concealing the true holder of the account and the recipient of the monies remitted to the account;

(d)  shortly after the remittances were credited to the account D3, on the instructions of Joe, issued cheques transferring the monies; and

(e)  the inherent improbability that buyers of goods would in the normal course of business remit payment for goods to a company who they had no dealings with,

I am satisfied so I am sure the only inference to draw is that D3 together with Joe had reasonable grounds to believe the monies deposited in the account, in whole or in part, directly or indirectly, represented the proceeds of an indictable offence and that anyone looking at those grounds objectively would so believe.

…

Personal savings account

284. Having regard to all the circumstances, including:

(a)  D3 did not report to the Inland Revenue Department any income for himself or on behalf of Asia Supply Resources for the period 1 April 2011 to 31 March 2015;

(b)  D3 did not have any real property;

(c)  D3 allowed Joe to use the account thereby concealing the true recipient of the deposit of $523,382.67, which shortly after D3 withdrew and gave to Joe; and

(d)  the inherent improbability that a buyer of goods would in the normal course of business remit payment for goods to a personal savings account of someone they did not know and who they had no dealings with,

I am satisfied so I am sure the only inference to draw is that D3 together with Joe had reasonable grounds to believe the deposit of $523,382.67 in whole or in part, directly or indirectly, represented the proceeds of an indictable offence and that anyone looking at those grounds objectively would so believe.”[1]

F.  The judge’s Reasons for Sentence

26.  In his Reasons for Sentence the judge said: 

“Charge 5

23.  Taking into account:

(a)  the role of D3 in setting up Asia Supply Resources, opening the bank account and transferring the money;

(b)  the total amount credited to the account was $7,653,697.40; and

(c)  $7,403,697.38 was remitted from overseas thereby adding an international element to the charge,

I am satisfied the proper sentence after trial is 4 years and 6 months’ imprisonment.

Charge 9

24.  Taking into account:

(a)  the role of D3 in lending his personal savings account;

(b)  the amount involved was $523,382.67; and

(c)  that this was a single transaction,

I am satisfied the proper sentence after trial is 2 years and 6 months’ imprisonment. Taking into account totality of sentence to be served by D3, I am satisfied concurrent sentences are appropriate.”[2]

27.  The judge noted that there had been a delay in bringing the case to trial through no fault of the prosecution or the defence and took the view that some credit should be given to the defendants for this factor.  Accordingly, the sentences of each convicted defendant were reduced by 1 month.  The final sentence of the applicant was, therefore, 4 years and 5 months’ imprisonment.    

G.  The grounds of appeal

28.  The applicant was represented by Mr Trevor Beel in this appeal.  He relied on 3 grounds of appeal against conviction, namely Grounds 1B, 1C and 2. 

29.  Grounds 1B and 1C make the same complaint.  This complaint is that the judge “erred in law and or did not properly and safely determine when finding that the applicant had entered into a conspiracy, what if any, at the time of the applicant’s agreement with D4, were the grounds that were known and reasonable for the applicant to believe that any money was in whole or in part, directly or indirectly representing any persons proceeds of an indictable offence and thereby an agreement to do an unlawful act.”[3] 

30.  In respect of Charge 9 Mr Beel submitted that although, chronologically, this charge took place before Charge 5, nowhere in his Reasons for Verdict did the judge address what the grounds were that were known to the applicant at the time of the Charge 9 agreement, that would cause him to believe that the expected remittance was or would be the proceeds of an indictable offence.   

31.  Similarly, it was submitted in respect of Charge 5 that the judge again failed to set out the grounds that were known to the applicant when he entered into the agreement with D4 that caused him to have reasonable grounds to believe that any money entering the ASR account would be tainted. 

32.  It was also submitted in support of this ground of appeal that those matters set out by the judge at [282(a) and (b)] of his Reasons for Verdict are irrelevant or neutral in their effect in terms of establishing that the applicant had reasonable grounds to believe.  Furthermore, the matter at [282(e)] has no evidential foundation without which it has no weight.  After all, the reason why, in any fraud, a victim remits money to a fraudster’s bank account is because he has been lied to about that account or other matters enabling the fraud to take place.  Here, there was no evidence as to what the remitters of the monies knew or believed about the ASR account and even if they knew of the existence of the applicant and his association with it.  

33.  Ground 2 complains that the judge erred in “failing to evaluate in a safe and proper manner or if at all the applicant’s evidence and in particular the applicant’s belief and perceptions in conjunction with all the surrounding evidential circumstances and thereby wrongly rejected the applicant’s evidence on the basis of credibility and inherent improbabilities”[4]. 

34.  In respect of the application for leave to appeal against sentences, the applicant relied on only one ground of appeal which was composed of two complaints.  The first complaint is that the judge erred in failing to award the applicant a sentencing discount in recognition of the applicant, in effect, admitting the prosecution case and conducting his defence in a manner that saved considerable court time as only one prosecution witness was called. 

35.  The second complaint is that it is clear that D4 was the ringleader yet he had been dealt with more leniently than the applicant and so the applicant feels a sense of injustice at the disparity of treatment. In respect of this second complaint Mr Beel submitted that whilst the applicant’s total sentence on its own is not wrong or manifestly excessive, when compared to the sentences received by D4, it is.  D4 was sentenced to a total term of only 2 years and 11 months’ imprisonment for his three separate counts of money laundering.  Yet, D4 was the named co-conspirator of the applicant in relation to Charges 5 and 9 and was clearly the instigator of the offences.  In these circumstances the applicant was aggrieved at the inequity in their respective sentences. 

H.  Discussion: Conviction

36.  The judge analyzed at length why he did not accept the applicant’s evidence.  In particular, he set out in detail why he did not believe ASR was set up for a legitimate business purpose, and the applicant’s belief that he was only lending the HSBC account to D4 for him to receive payments for goods from overseas customers.  I did not agree with Mr Beel that there was no basis for the judge to find the applicant’s evidence incredible and/ or inherently improbable.  The judge saw and heard the applicant give evidence.  The thrust of the defence, by an experienced Hong Kong businessman, was that he allowed himself to be a party to a fraud on the Inland Revenue Department and the Nanyang Commercial Bank by a black African person with whom he occasionally socialized and about whom he harboured a certain amount of commercial distrust.  Yet, not knowing D4 well, and being commercially wary of him, the applicant did not query the underlying reasons for D4 needing his help and responded in a totally trusting and unquestioning way to all of D4’s requests.  I am not at all surprised that the judge found the applicant’s evidence unbelievable.  As I was not persuaded that it was reasonably arguable that the judge’s assessment of the applicant’s credibility was plainly wrong, I refused leave to appeal on this ground of appeal.

37.  However, I was of the view that Mr Beel was on stronger ground in respect of his submission that it is reasonably arguable that some of the matters listed in [282] and [284] of the judge’s Reasons for Verdict are not primary facts capable of supporting an inference that the applicant had reasonable grounds to believe.  Notwithstanding that Charge 9 occurred some six weeks before ASR was even set up, the judge repeated at [284(a)], in a “cut and paste” approach, the matter that he sets out at [282(a)] which, in its reference to ASR, can have no relevance to Charge 9.  Furthermore, the matter at [282(e)] and [284(d)] on which the judge relied was conceded by counsel for the respondent as being irrelevant. 

38.  I was, therefore, persuaded to grant the applicant leave to appeal his convictions on the ground that in determining that the applicant had reasonable grounds to believe the judge may have erred in the matters to which he had regard and in the weight which he gave to those matters.

I.  Discussion: Sentence

39.  No complaint was made against the starting points adopted by the judge in respect of the sentences.

40.  The complaint that the judge did not give credit for the way the defence was conducted was not advanced before the judge at the time of the mitigation address.  It should have been as the trial judge is in the best position to assess the merit of such a submission.  In any event the Court of Appeal in HKSAR v Chan Wai-hang[5] took the view that this factor, on its own, might not warrant a discount:

“39.  However, the mere fact that a material amount of the prosecution evidence has been agreed will not of itself, without more, warrant a discount when, in the opinion of the Trial Judge – as in the present case – that evidence, or the great majority of it, was not in any event amenable to any sensible challenge.

40.  Whatever may have been the case in the past, efficient case management is today an obligation placed on both counsel for the prosecution and the defence.  The fact therefore that defence counsel, while at all times safeguarding the interests of his client, is able to enter into a sensible arrangement with prosecuting counsel as to the disposition of non-contentious evidence is not to be seen, without more, as a basis for being granted a discount in sentence.”

41.  Given the fact that the prosecution case was confined to the receipt and dealing of remittances into bank accounts which were readily proven to be controlled by the applicant, the only issue was whether the applicant was able to provide credible exculpatory explanations of his conduct.  This being so, it is difficult to see that the prosecution case was amenable to any sensible challenge by the applicant. I am not persuaded that it is reasonably arguable that any additional discount was warranted on the facts of this case.

42.  Regarding the disparity between the sentences of the applicant and D4, I can well understand why the applicant might feel aggrieved as clearly on the facts of this case D4 was an instigator of all the criminality but his culpability was limited by the charges he was facing.  The question for me is not whether the applicant is aggrieved but whether he is justifiably aggrieved. 

43.  Because D4 was not charged with the applicant’s criminality this is not an issue of disparity of sentences.  The difference in charges explains why there was a difference in their culpability.  It is this difference which caused them to receive different sentences. 

44.  However, it is the decision of the prosecution, on the evidence available to it, to decide who should be charged and if so with what charges.  No challenge is made to the propriety of the prosecutorial decisions in respect of not charging D4 with the areas of criminality of which the applicant was convicted. 

45.  The applicant was sentenced on the basis of him being a co-conspirator with D4; that is, he knew the terms of the unlawful agreement, namely, to engage in money laundering, and intended to carry out that agreement.  His sentences are in line with the authorities and I was not satisfied that it is reasonably arguable that any grievance he harbours is a justifiable one for which he is entitled to a sentencing discount.

J.  Disposition

46.  For these reasons I granted the applicant leave to appeal his conviction but refused him leave to appeal his sentences.