THE QUEEN v. TAM CHUNG SHING AND OTHERS

Headnote

Conspiracy to defraud: was a Kevin Brown ((1984) 79 Crim. App. R. 115) direction necessary: previous conviction put later quashed - effect: lies.

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JUDGMENT

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Yang, C.J.:

1. I have had the opportunity to read in draft the judgment about to be delivered by Silke, V.P. I am in agreement with the conclusions and the reasoning therefor. There is nothing I can usefully add.

Silke, V.-P.:   

2. Tam Chung Shing - "D1" -, Tony Wong Kai Wai - "D2" - and David Lo Tai Wai - "D3" - appeared for trial before Wong, J. and a jury on a single court of conspiracy to defraud. There was also tried with them Alfred Kwong Hing Wing - "D4" - on 10 counts of false accounting.

3. After a difficult trial which took three and a half months - initially two juries were discharged - D1, D2 and D3 were convicted. D4 was also convicted with him we are not concerned. D1, D2 and D3 now seek leave to appeal against conviction and, if it be necessary, the sentences passed on them of 6 years' imprisonment, 5 years' imprisonment and 2 years' imprisonment respectively.

4. As matters of law are involved I would give leave to all to appeal against conviction.

5. The particulars of the conspiracy count were that: between 1st May 1983 and 31st July 1984 they conspired together dishonestly to defraud Cony Electronic Products Limited - "Cony" - by (i) concealing sale of goods belonging to Cony to Alfa International Hong Kong Limited - "Alfa"; (ii) by failing to make any proper record of sales in the books of account of Cony, and (iii) by appropriating payment made to Cony by Alfa in respect of the goods.

6. It was the case for the Crown that D1 ran Cony; D2 was his second in command and was the Marketing Director; and D3 was in charge of the Shipping Department which dealt with the arrangements for goods to come to and be removed from the godowns and was responsible for the making of records in respect of those goods. The relevant godowns were the Cony Godown and the Sailco Godown - the godown keepers being respectively Yau Kai (PW4) and Chan Wing Tong (PW6).

7. It was the Crown's case that the normal procedure was that the Shipping Department received a sales confirmation; it then issues a Delivery Note (DN), signed by D3, and, for the Cony Godown, a gate pass also signed by him. The Sailco Godown gate pass was signed either by D3 or D1. The gate pass listed the quantity of goods which the customer was to collect from the godown. Upon collection the customer signed the DN and handed over the gate pass. Entries were then made in the Stock Cards of Cony. Each godown keeper kept his own records: a record book, a receipt book and a dispatch book. These books recorded the movement of goods in and out of the godowns.

8. Each month a report was made up based on the stock cards and sent to D3 and to the Marketing Department. At times D2 received weekly shipping reports. D1 accepted that he got a Furnished Goods Godown Report (FGGR). After the customer had collected his goods, an invoice was issued by the Shipping Department which kept an invoice registration book containing all the details of the invoice and the DN number. Copies of this invoice were sent to the Marketing Department and to the Accounts Department. For deals between Cony and Alfa a special account book was kept. Alfa had a credit limit of up to $7 million, but which was sometimes exceeded, and the special account book showed the day to day position.

9. When payments from Alfa were received they were banked and pay-in slips were made out, appropriate entries were made in the books of Cony and receipts were issued. There were monthly general reports sent to Marketing in respect of each of the customers of Cony.

10. Annual stock taking took place. Instructions on this were issued from the accounts department and went to D1 and to D2 in Marketing. D3 was in charge of, in particular, the 1983 stock taking exercise. The usual procedure was to check all relevant documents, check the stock cards and check the actual contents of the godown. They should coincide.

11. In May 1983, those normal procedures were altered. The Marketing Department was told by D2 that there were to be no further sale confirmations made out in respect of orders by Alfa. There were, from then on, no records of the goods which went out from the godown to Alfa. A junior employee in the Marketing Department, Cheng Yiu Ming (PW1), kept his own private note of the transactions after May 1983. This note was not available at trial. D2 stated that the note was kept on his instructions. Cheng Yiu Ming denied this.

12. The result was that the Accounts Department received no documentation from Marketing, the Shipping Department had no delivery notes. No invoices were issued. D3 accepted that he gave the instructions not to issue invoices but that this was done on the orders of D2. Further, when delivery workers signed pieces of paper acknowledging the acceptance of goods, these memoranda were, on the orders of D3, sent to Miss Tse Po Tai (PW3), his secretary. It was suggested D3 had taken them. The Crown said that, if they existed at all, there were not the proper records of the company. There were no stock card entries, no monthly reports, no Finished Goods Godown Reports. An inspection of the stock cards would, therefore, not show the true position.

13. When Mr. Yau Kai, the Cony godown keeper, told D3 that no records could now be properly kept, D3 told him not to mind as "the people in higher management know of it".

14. Chan Wing Tong, the keeper of the Sailco Godown, gave evidence that in December 1983 D3 told him to overstate the amount of goods, described as the 8080-2s, in the godown. When the audit took place there was deliberate concealment, and a misleading of the auditors, by the erecting of a square of the 8080-2s goods which square was hollow in the centre thus giving the impression that the full quantity was present when it was not. It is accepted that D3 lied to the auditors as to the quantity of goods in the godown.

15. It was further the Crown's case, and this through the evidence of Mr. Leung Chi Keung (PW15) - the Crown being given liberty in the course of the trial to treat him as hostile - and through Miss Leung Yee Fung (PW16) both of Alfa, that Alfa paid cheques, bank drafts and cash to D2. Some of the cheques were blank, some of them made payable directly to D1. D2 transferred these monies either directly to D1's bank accounts or paid them on to other people on the directions of D1.

16. Much was made at trial of two cheque stubs which had the word "suspense" on them and of marks which had been made on a schedule of Alfa payments kept by Miss Leung. It was suggested that this was an indication of loans of money by Alfa to D1. It was accepted by D1 that he did receive substantial amounts of money from Mr. Leung Chi Keung. Various schedules were produced which showed a total of $13.34 million on D1's part and the same sum, less $700,000, on D2's part. There was also a schedule produced which suggested $15.45 million paid by Alfa. Whatever the exact figure may be, it was the Crown's case that at least $14 million had changed hands. It is D1's case all these monies were loans asked for and given because he was in financial difficulties, had pledged some shares in relation to other financial transactions and, with the market falling, his margins were being called in. There was no direct documentation for these loans and no reference to them was made by Leung Chi Keung (PW15) until the actual trial itself. Hence, one of the reasons for the application to treat him as hostile.

17. Close to the end of the conspiracy period an I.O.U., dated 13th June 1984 in the sum of $12.5 million, was given to Mr. Leung by D1 and was said to be evidence of loans of greater than that amount. It was the Crown's case that this was a mere farce. There was evidence that during the period of the payments that D4 would issue to Alfa, on the instructions of D1, Cony receipts for the payments which never came into Cony's books. It was accepted at trial that D3 received no direct financial gain. Counsel has been unable to indicate evidence in the massive transcript which indicated that D2 obtained direct financial gain.

18. In a period between April and July of 1984 Mainland China interests were negotiating the taking of an interest in Conic of which Cony was a part. This, says the Crown, made it necessary for the affairs of Cony to be put in order, D1 having to show either the actual goods said to be in stock or the money that was paid for them. A cover up was attempted. Compensating memos to cover 60,000 of the machines referred to were made up and D3 prepared delivery notes.

19. It was the case for D2 that any missing goods were sold on consignment and that the change in the usual procedures was because no proper entries could be made in the Cony books until the sales of those goods had taken place and payments had been made. No payments had been made over the relevant period. He was not a party to anything dishonest and did not defraud Cony.

20. It was the case for D3 that he was a mere unknowing pawn in what was going on. Everything he did was under instructions and as an employee.

21. Evidence was led of a conversation between Ho Hon Yin, (PW22) and D3 well outside the conspiracy period. In the course of this conversation, some of which was indeed, as counsel suggested, hearsay in the sense that D3 was retelling what somebody else told him, D3 said certain things which the jury would have been entitled to construe as admissions.

22. All the defendants left Hong Kong immediately after the end of the conspiracy period, three of them going to Taiwan with D3 going to Singapore. He later joined the others in Taiwan and shortly thereafter they all returned to Hong Kong. D1 offered to repay $16 million of which $3 million was paid. It was the contention of D1 that this offer was because "something wrong had been done" but not because there was any defrauding of Cony.

23. I would interpolate here that the evidence before the jury was such as to entitle them, should they disbelieve the explanations given by the appellants, to come to the conclusions they did. In this appeal, it is unnecessary to go further.

24. Here the jury were properly directed on the elements of conspiracy, on the definition of "to defraud" and, despite Mr. Sanguinetti's suggestions to the contrary, on dishonesty. On that last the judge repeated, almost word for word, the directions set out and approved of in R. v. Tam Chung Shing and others [1990] 1 HKLR 718 mirroring, though not using the ipsissima verba, that which was said in R. v. Ghosh [1982] 2 QB 1053. However the use of the precise formulae in Ghosh avoids any challenge on the basis of ambiguity or inadequacy and is to be recommended.

25. The defendants were charged in 1985 and tried in 1988. Part of the reason for the delay between charge and trial was that there was another long trial in which D1 and D3 were involved and which concerned offences of a very similar nature. They, and others, were convicted. When they appeared for trial before Wong, J. they were both convicted persons though those convictions were, leave having been given by the trial judge, pending an appellate hearing.

26. The hearing of this appeal was delayed pending the outcome of the appeal against the first set of convictions and the preparation of the transcript which extends to, with the exhibits, 4314 pages. Further D2, having abandoned his application for leave to appeal against conviction, petitioned the Governor under the provisions of section 83P of the Criminal Procedure Ordinance, Cap.221. This resulted in a Reference, dated 27th April 1990, by His Excellency referring "the whole of the appeal" to this Court.

27. On behalf of the three appellants, a multitude of grounds have been advanced.

28. There is, common to all, the allegation that the trial judge erred in not giving what has come to be called a "Kevin Brown direction": (Kevin Brown [1984] 79 Cr. App. R. 115). Also common to all is the new ground, raised in the course of the hearing, that the trial judge misdirected the jury on the question of lies - and it being the Crown's case at trial that all three appellants had lied at some stage. Also common, the direction to the jury on the use they could make of a cautioned statement made in 1985 by D3 - of the three appellants only D3 remained silent at trial. Particular to D1 and D3 is the entry into evidence of their previous convictions which no longer exist the earlier appeals having been allowed (Tam Chung Shing & Others). This has indirect relevance to D2.

29. Two further grounds were argued: one, that the trial judge did not have sufficient matter before him to entitle him to permit the Crown to treat PW15, Leung Chi Keung, as hostile; second, that the evidence of Ho Hon Yin (PW22) should not have been permitted to be led as it was inadmissible, it was hearsay and its prejudicial effect far outweighed its probative value. I would touch on these but lightly. There was, in my judgment, sufficient before the trial judge for him to permit Leung, PW15, to be treated as hostile. I accept that thereafter the lengthy cross-examination by the Crown of Leung went further than was necessary. It seemed to contain a strong element of rehabilitation - particularly as substantial portions of his previous statements were introduced into evidence by way of question and answer. That the entire of those statements stretching over a period from 1984 to 1986 (Ex.137) were before the jury, when the only issue was his credibility, surprises me. But, that having been said, they were placed before the jury at the instance of counsel then appearing for D2 and without any objection from the other counsel at trial - none of the counsel appearing in this Court were at trial. It may be they had their own tactical reasons for raising no objection. I do not know. It is now a little late in the day to raise objections not taken at trial through the mouth of different counsel.

30. While the evidence of Ho could relate only to D3 it was clearly admissible in respect of him and the jury received the careful directions which were necessary in those circumstances.

31. "Kevin Brown"

32. I turn first to the Kevin Brown issue. This ground, as drafted by Mr. McCoy and argued by him on behalf of all the appellants, reads:

"The trial judge misdirected the jury by failing to give the jury a direction that at least a majority of the jurors, (not less than 5), was required to agree in respect of the same one of the three particulars alleged in the first count of the indictment in order to convict a particular accused."

 

Kevin Brown had its genesis in R. v. Agbim [1979] Cr. L. Rev. 171 and the commentary thereto. Agbim had been charged with six counts, each alleging the procuring of the execution of a valuable security by deception. It had been submitted that the jury could have returned a verdict of guilty on a count without there being unanimity upon any one piece of the evidence even if in the end the jury, for differing reasons, were all sure that Agbim had made a false claim.

33. The English Court of Appeal, in rejecting a submission that the trial judge had wrongly refused to take special verdicts from the jury as to which piece of the evidence they had accepted, held, and I rely on the necessarily truncated version in the Criminal Law Review which is the only report of Agbim of which I am aware, that each juror had the responsibility of giving a true verdict according to the evidence. An individual juror did not have to take the same view about the details of the evidence as that of every other juror, the jury had to be agreed unanimously (leaving aside a majority verdict) that the prosecution had proved the charge or charges.

34. In the commentary the author begged to differ and suggested that the decision in Agbim "violates the principles of proof in a fundamental respect". He went on to test this proposition by applying it to an indictment which alleged 12 separate false statements positing a situation where a juror is satisfied in respect of the one statement and that a different statement from the one which satisfies another juror. He drew a distinction between this individual juror being satisfied of guilt because of his acceptance of one fact and the collective jury making a finding of guilt, and without the Courts being aware of how that conclusion was reached. If so, the author submitted, the prosecution failed to satisfy a jury beyond reasonable doubt if they merely satisfy each juror that a case has been made out and that case is not the same evidential case accepted by the majority of the jurors.

35. I have referred simply to the "author" of the commentary as no initials are appended to it. But having been referred to the article by Professor J.C. Smith in [1988] Crim. Law. Rev. p.334 I have little doubt that they are one and the same person.

In Kevin Brown it was said of Agbim at p.117:

 

"However, that case is not an authority for the proposition that the jury need not be agreed as to an essential element of the offence, but only that they need not be agreed as to the parts of the evidence which lead them to the conclusion that the ingredient of the offence have been made out."

 

36. That follows the line taken in McGreevy v. Director of Public Prosecution [1973] 1 WLR 276 (H.L.) - followed in this jurisdiction in a number of cases all referred to in R. v. Pang Shun Yee [1988] 2 HKLR 146 at 157 - that no special directions were needed where the case for the prosecution depended wholly or substantially on circumstantial evidence: it was sufficient for the judge to direct the jury that they had to be satisfied of the guilt of the accused beyond reasonable doubt this being the basic necessity before guilt on a criminal charge can be pronounced.

37. In Kevin Brown the appellant had been convicted on four counts charging him with fraudulently inducing the investment of money, and one count of attempting to do so, contrary to section 13(1)(a) of the Prevention of Fraud (Investments) Act 1958. Each count contained particulars of a number of different statements relied on by the prosecution as constituting the inducement. The section, so far as it is relevant, reads:

(1) Any person who, by any statement, .... which he knows to be misleading, false or deceptive .... induces or attempts to induce another person -

 

(a)    to enter into or offer to enter into -

 

 

shall be guilty of an offence ....."

 

At p.117 Eveleigh L.J. said:

 

"    The jury had asked the judge two questions. He dealt with these in summing up. He said: 'There were two questions. The first one was: 'If the jury find the defendant guilty of only one part of the count, is he guilty on the whole count?' I have answered that already by saying that if you are satisfied that, with the necessary state of mind, the defendant made the statements or representations which are alleged in the indictment in relation to each count, it is sufficient if you find that he made one or some or all of them but you do not have to find that he made them all. The second question was: 'If the individual members of the jury find him guilty of different parts of the count, is he guilty on the whole count, and is the verdict of guilty unanimous?' Members of the jury, the answer to that is this: what you have to be satisfied of in relation to each of the counts is that the defendant dishonestly made the statements and by making them induced the victim concerned to act in the way set out in the count.'

 

        He then gave an example, taking count 6, and continued: 'It does not matter that some of you are satisfied that one of the various statements is made out, and others of you are satisfied not about that statement being made out but that another is made out. It is sufficient if you are all agreed that there was a dishonest inducement. So if you find some of you are satisfied that representation A was made out, some of you are not satisfied about that but are satisfied that representation B was made out, then it does not matter, provided that you are all satisfied that there was the dishonest inducement made and that it operated upon the mind of the person to whom it was made and caused him to act in the way that he did.'

 

        It is said that in answering the second question the learned judge misdirected the jury. It is said that the direction made it possible for the jury to convict without there being unanimity upon any particular statement relied upon as constituting the inducement."

 

38. Then comes the passage concerning Agbim already referred to. Eveleigh L.J. continued:

"Counsel for the appellant was correct in his submission that it is a fundamental principle that in arriving at their verdict the jury must be agreed that every single ingredient necessary to constitute the offence has been established. The false statement is an essential ingredient."

 

39. The Court went on - in contrast to a case such as Agbim where but one false statement was relied upon as the ingredient of the offence and other statements were matters which, on investigation, would help to prove the falsity of that one statement and go on to prove knowledge and dishonesty - that in Kevin Brown the principles applied that (p.119):

"1. Each ingredient of the offence must be proved to the satisfaction of each and every member of the jury (subject to the majority direction). 2. However, where a number of matters are specified in the charge as together constituting one ingredient in the offence, and anyone is capable of doing so, then it is enough to establish the ingredient that any one of them is proved; but (because of the first principle above) any such matter must be proved to the satisfaction of the whole jury"

 

40. As the jury were not so directed the appeal was allowed.

41. In the wide ranging article in the Criminal Law Review Professor Smith sought to extend the parameters of Kevin Brown to all criminal trials and suggested that Kevin Brown was wrong to distinguish Agbim.

42. The issue of the correctness of the decision in Kevin Brown arose in the House of Lords in R. v. More [1988] 86 Crim. App. Rep. 234. The appellant sought to argue that the Court of Appeal was wrong in concluding that a Kevin Brown direction should be given only when it appears to be really necessary. The Crown sought to argue that the decision in Kevin Brown was wrong.

43. Lord Ackner, in delivering the opinion of the House, held that the issue was irrelevant to the determination of that appeal and it was therefore left undecided. But he went on at p.252 to say this:

"Clearly each ingredient of an offence must be proved to the satisfaction of each and every member of the jury (subject to the majority direction). It is equally essential that a jury be directed in a manner that is easily comprehensible and devoid of unnecessary complications. Whether or not a particular direction adequately expressed to the jury the obligation of the prosecution to prove to the jury's satisfaction each ingredient of the offence must depend essentially upon the precise nature of the charge, the nature of the prosecution case and the defence and what are the live issues at the conclusion of the evidence."

 

44. For the sake of completion the decision in Philips [1988] 86 Crim. App. R. 18, which had distinguished Kevin Brown, was cited in argument in More but not referred to by Lord Ackner.

45. Professor Smith in his article would appear to draw what, with respect, I view as an untenable distinction between the individual jurors and the collective jury. It is the verdict of the jury, as a consensus of sober and reasonable persons properly directed, which every trial requires. Without polling the jury, a procedure foreign to our system, it is not possible to know how the jury arrived at the verdict it rendered. I accept, however, that this, to an extent, begs the question as to whether judges should direct juries on the lines suggested by Mr. McCoy so that they are aware of the manner in which they should approach their duty.

46. But the ingredient - I, with respect, prefer the term "essential element" to the term "ingredient" of Eveleigh L.J. and Lord Ackher or the term "essential ingredient" used by Woolfe L.J. in Philips - in Kevin Brown was a statement. The count set out a number of such statements which the prosecution individually would have to prove were false or misleading. The reality is that each statement could have been the subject of a separate count. In those circumstances clearly the jury would have to be unanimous on the same statement before they could come to a finding of guilt.

47. In this instant case the essential element was dishonesty, this bound up with the knowledge that each of the appellants had, if the jury were so to find, of the conspiracy charged and the participation of each of them in it. The overt acts which had application to different defendants went to evidence these matters. As in McGreevy the jury would have been entitled, for here none of the acts themselves were seriously disputed - it was the connotation to be placed on them that was in controversy - to consider whether they accepted them as applying to the individual appellant in such a way as to entitle them to draw the irresistible inference of the appellants knowledge of and participation in the conspiracy alleged by the Crown. In so doing the jury would have to bear in mind all of the evidence including that of D1 as to loans, D2 as to consignment and the implicit denial of knowledge by D3 in his cautioned statement. In my judgment a Kevin Brown direction would only be necessary, and it should be confined to this, where the count comprises a number of essential elements which require proof positive and upon which the jury are required to be unanimous. In conspiracy charges there may be evidential particulars set out, following Landy [1981] 1 WLR 355, in the count and there may be further and better particulars furnished on request, so that an accused person and his advisors know the case they have to meet. Which of those evidential facts is proved, and their effect, is a matter for the jury but this does not absolve the jury from being unanimous as to guilt in respect of the essential element. If the count did contain more than one essential element then there might well be an application to hold it bad for duplicity as setting out different conspiracies. Duplicity is a matter of form not evidence: (cf In Re Attorney Generals Reference [1988] 1 HKLR 375).

48. Professor Smith ended his review of the principles he suggests exist by concluding, bearing in mind Stapylton v. O'Callaghan [1973] 2 All ER 782, that Kevin Brown was right and of general application.

49. For the reasons given I am unable to agree. This ground fails.

The previous convictions.

50. Re D1: In the course of his very lengthy cross-examination on behalf of D1, counsel attacked the prosecution withesses - in particular, Miss Leung (PW16) - and emphasised, in the course of the evidence given by Mr. Ho (PW22) the respect in which Mr. Ho said he held D1; a dangerous course of conduct given the known fact that D1 was a person with a serious previous conviction for an offence on precisely the same lines as that with which he stood charged Defore the jury.

51. One of Miss Leung's answers counsel stigmatised as "a lie, a lie and a lie". This was indicative of the line he was taking but was, of itself, a perhaps over emphatic assertion of innocence on behalf of his client. But he then went on to impute dishonesty to Miss Leung by her putting a "cy" into a debit note (p.1735), to accuse her of telling lies to the police and, finally, to suggest the possibility that she herself had dishonestly misappropriated some of the money Alfa paid to D2. On that last when the trial judge asked counsel if he were making an allegation counsel replied "That is a possibility I'm asking" (p.1745). When the judge asked him to hail his colors to the mast by inguiring "Are you making any allegation?" he made no reply.

52. In opening his cross-examination of Mr. Ho Hon Yin (PW22) counsel elicited, by his first question, that Mr. Ho had a grudge against D1. He then proceeded to worry away at this evidence over several pages of transcript. When Mr. Ho made reference to the respect in which he held D1 this was emphasised in subsequent questions asked of him leading up to the question at p.1989 which reads:

"Q. You respect him not because so much of his know how, but also because of his integrity. Is that what you are saying? You see you keep on saying you respect him."

 

Which received the answer:

 

"I am talking about his working ability, his working ability in this particular field. He knows now to solve problems."

 

This could easily have led, although it did not, to the answer for both or for his integrity alone. As D1 had no integrity at the time of trial, again a dangerous ploy.

53. The trial judge was clearly troubled by what he considered to be an attempt to give D1 a spurious form of respectability to which he was not entitled.

54. It was in those circumstances that counsel for the Crown sought to introduce into evidence D1's previous conviction. In the light of the pending appeal against that conviction, for which leave had been granted, this might be considered an illadvised application, but I can understand his feelings he seeing no reason why D1 should be given a gloss of a character which he did not possess nor why a Crown withess should be accused of deliberate dishonesty and this without the jury being aware of the proven dishonesty, as it stood at that time, of the person on whose behalf the allegation was being made.

55. It is clear that a previous conviction for an offence so similar to the one at trial would be of a highly prejudicial nature. It has been suggested that in the ruling he gave permitting this course to be taken the trial judge was not seen, on its race, to have fully considered this aspect. We have been referred to the decision in R. v. Powell [1985] 1 WLR 1364 in which the English Court of Appeal at p.1369 adopted and approved that which Ackner, L.J. (as he then was) said in R. v. Burke, then unreported but now to be found in [1985] 82 Crim. App. R. 156. This passage contains useful guidelines relating to applications of this nature. Here there were grounds for holding the conviction to be technically admissible. Its gravely prejudicial nature, while not of itself necessarily sufficient to refuse the application, was coupled with the pendency of an appeal. Those circumstances should have given counsel for the Crown, and indeed the trial judge, considerable pause for thought: the one before the making of the application: the other before acceding to it. Counsel for D1, who must have known of the situation, in my view, pressed his cross-examination too far in the circumstances.

56. The question which a judge may well think it right to ask himself when such application is make is: Given the nature of the conviction will the putting of questions as to the character of an accused be fraught with results which immeasurably outweigh the result of questions put by the defence and which may make a fair trial of the accused almost impossible.

57. However, it is not for this Court to substitute its discretion for that of the trial judge unless his exercise of it has been shown to be wholly wrong. In the hurly burly of a trial - and this was an unduly protracted one - it is all too easy to concentrate to the exclusion of all else on the case in hand. Unfortunately, immediately after the conviction was put - there had been passages in the Crown's cross-examination prior to this of which Mr. Sanguinetti complains but which were quite unexceptional - there was asked a series of questions the connotation of which appears to have been that, because he had been convicted of the previous very similar offence, he was therefore guilty of this one also. With respect to the trial judge, that line should not have been allowed. But that is not the end of the matter.

58. We now know - it is a matter of public record which I accept - that the convictions in the previous trial were overturned. The proposition which we have to consider having stated the background is this:

"The conviction has subsequently been set aside by the Court of Appeal and the appellant's trial was therefore gravely prejudiced by evidence that he was not of good character and his credibility was seriously impaired thereby."

 

59. As my Lord Power said in the course of argument to state this proposition is to answer it. The credibility of D1 was heavily in issde. The jury may well have thought that here is a man convicted of a mirror offence, therefore without good character, whose evidence to us we are not prepared to believe. Despite the argument of Mr. Lugar-Mawson that an acquittal only becomes an acquittal when a conviction is upset - and that at the conclusion of the appellate hearing - and therefore the conviction existed at the time of this trial in its full flower, the fact remains that it no longer does exist. Mr. Lugar-Mawson further suggests, if I understand him properly, that being unable to place before the Court the previous conviction of an accused who indiscriminately, or selectively, attacks the character of prosecution withesses simply because that previous conviction is the subject of a subsequent appeal, would inhibit the Crown in placing before the jury matters of which they are entitled to be informed. If this Court so rules it could provide a licence for counsel to make on behalf of an accused with impunity allegations in respect of prosecution withesses or to imply that he was a man of good character when he was not - the floodgates argument. The answer may well be that in the rare case, and this must be the rarest of the rare, where this arises the trial judge would have two courses open to him: either to refuse the application or to adjourn the trial until such time as the appeal has been determined. If counsel whose cross-examination leads to an application is made aware of this he no doubt would think long and hard before embarking on a line of questions which could lead to the second result. Consideration would have to be given to the period of delay involved and to the interests of any co-defendant before any adjournment took place.

60. The conviction of D1 must in these circumstances be held to be unsafe and unsatisfactory.

61. Re D3. For tactical reasons which, as he did not give evidence, I personally find difficult to understand, his conviction at the previous trial was placed before the jury by consent at the conclusion of the prosecution case. This arose because there had been a hint by counsel then appearing for D2, given in the absence of the jury, that he would apply to cross-examine D3, whom he considered to have put character in issue, should he give evidence. For myself I would have thought it preferable to wait until the decision has been made as to whether or not D3 would give evidence and then, if he did and it was thought necessary to avoid surprise, that the jury be acquainted with his record in the course of examination-in-chief. However, be that as it may, his conviction was before the jury. The jury's view of the exculpatory portions of his cautioned statement may well have been coloured by the fact of that conviction. That renders his conviction also unsafe and unsatisfactory.

62. Re D2. The matter does not, as I have earlier indicated, impinge directly on him but there must be borne in mind the danger, in the particular circumstances of this case, that a form of guilt by association may have crept into the mind of the jury. However, this is not the only matter which relates to the conviction of D2 for, as I have said, common to him and to the others are the directions given by the trial judge on the use to which the jury could put D3's out of court statement and, further, the direction as to lies.

63. Use of the statement

64. At pages 13 and 14 of the summing up the trial judge properly and correctly directed the jury that a statement made by an accused to the police is only evidence against the accused who made it and is not evidence against other person or persons mentioned in it. Specifically he instructed the jury that, when D3 spoke of the issue of memos as being done on the instructions of D1 and that he saw D1 ask Leung Chi Keung to sign them in a coffee shop in Central, this was evidence only against D3 and not against D1. He also instructed the jury that the evidence given by Ho Hon Yin (PW22) as to what D3 had said to him at a time well outside the conspiracy period was not something to be considered as evidence against the other appellants. But he then went on at page 17 in relation to this conversation to say this:

"If it were said and you have to be satisfied so that you are sure that it was said, it certainly becomes evidence against the 3rd accused and goes to show that he was party to the conspiracy and privy to an important and confidential confirmation, provided of course if you find that there was a conspiracy." (Empnasis supplied)

 

Again at page 51, having made reference to the evidence of Tse Po Tai, PW3, as to D3's asking her to type invoices and memos saying that they were to replace those signed by D1 and D2:

"         I have told you that the statement of one accused is not evidence against another accused. It is only evidence against the maker of that statement.

 

        But it is nevertheless evidence, supportive of evidence given by another withess in this trial. In this case, what the 3rd accused said in a statement to the police would strengthen the evidence of Leung Fung Yee on this aspect if you believed that the 3rd accused was, in fact, talking about two different occasions." (Emphasis supplied)

 

65. The danger in those two passages which I have cited - and in one to which I shall come - is that while the jury was, at first, properly directed nevertheless the trial judge seems to have suggested that what D3 said impinged on the general issue of whether there was or was not a conspiracy which, of course, affected both D1 and D2. They were, with respect, directions which were capable of confusing the jury.

66. There was a further reference to D3's statement and this related to the defence of "consignment" and of the "loans". At page 63, having made reference to those two defences, the judge drew to the attention of the jury what Leung Fung Yee (PW16) had said about consignment. He made reference to the evidence of Chan Yiu Wan (PW8) from the accounts department of Cony on the same issue and then went on, at page 64:

"In his statement, the 3rd accused did not mention sale on consignment to Alfa or (sic) he was informed by the 2nd accused that there was such an arrangement."

 

67. With great respect, this last taken with the other two must have placed the jury in a difficult position. The correct directions first given were vitiated. It was inadmissible in respect of D2 as to what D3 did or did not say in his statement.

68. As to lies.

69. There were allegations that all three appellants had in effect lied. If anything at all was to be said then the jury needed a clear Broadnurst direction (R. v. Broadhurst [1964] 2 WLR 38). As was said by this Court in R. v. Harris, Criminal Appeal No.70/90 (as yet unreported), lies can be treated as going towards credibility, they can be supportive of other evidence indicative of guilt but they cannot of themselves be probative of guilt.

70. What the trial judge said at p.13 was this, and this was all he said on the subject:

"Members of the jury the mere fact that an accused tells a lie is not in itself evidence of guilt. But you are entitled to ask yourselves why he did so and what prompted him to do it. An accused may tell a lie for various reasons, for example, to protect some one else, to save himself embarrassment, out of panic or confusion or other matters of that kind. If you think that there is, or may be, some innocent explanation of his lies, then you should pay no attention to them. On the other hand, if you are sure that his lies were relevant to the allegations made against him and were not prompted by any innocent motive of that kind, then those lies would be evidence going to prove his guilt." (Empnasis supplied)

 

71. Again while the passage started out with a perfectly proper direction that portion of it emphasised is, at best, ambiguous. On its face it is in direct contrast to the passage's opening. It was not open to the jury to find that lies by themselves would be evidence going to prove guilt and it is possible that they may have been misled.

72. There are three further matters: first is that which both Mr. Sanguinetti and Mr. McCoy referred to as the "Judge's hypothesis". This is contained at pages 65 and 66 of the summing up. The trial judge at page 66 line G put to the jury that if they thought D1 intended to fiddle the company's funds he might have made some comment to Leung Chi Keung that he pay for the goods to him rather than to Cony. I accept that there was no evidence that D1 did make such a direct suggestion but that is not the point for from then on the directions were inherently confused. The trial judge said:

"You may think but it is a matter for you that under the pretext of asking for a loan, it was in fact the 1st accused's preconceived plan to pocket the payments for goods belonging to the company. You may think also that at the beginning Leung Chi Keung in fact thought it was a loan and that was why the cheque stubs relating to the first two payments there was the word 'suspense' written on them. He was perhaps less sure after the first two payments and that is why you had those marks or initials. As time went on, he realised what it was all about and therefore even those marks or initials disappeared and he treated all the payments as payments for goods and you may think, that is a matter for you, that was what the 1st accused had wanted from the very beginning."

 

The above referred to the fact that the word "suspense" did appear on two cheques stubs relating to payments from Leung Chi Keung to D1 through D2 and that Miss Leung Fung Yee (PW15) had given evidence, described by the trial judge as unconvincing and unacceptable, how marks which appear in the account ledger of Alfa - a total of nine marks or initials - came to be made. A further 15 payments entered as having been made by Alfa to Cony between May 1983 and May 1984 bore no marks.

73. It is a little difficult to understand precisely what the trial judge was driving at when he made these remarks. I do not think the passage quoted was a departure from the Crown case but this was a long and difficult trial and the jury needed clear and precise directions. I have some doubt if, in this particular passage, they were given them.

74. The second is an attack on the summing up at p.20 where in the same passage, having read the particulars of the count a few pages earlier, the trial judge made reference to "prove to you all the particulars set out in the indictment to the standard that you are sure" and then went on "it is not necessary to prove all the particulars against each and every accused". Further he said that the jury must be satisfied that "all the ingredients of the offence have been proved". It is suggested that these amount at worst to misdirection, or at best could cause confusion in the mind of the jury. With respect this passage could have been more happily phrased. More precise language would have been of assistance. Had this ground stood alone I would, however, not have thought it sufficient for the setting aside of the conviction.

75. The third is Mr. Eddis submission that, the contents of D3's statement being mixed, a Sharpe ([1988] 1 WLR p.11) direction was necessary. For myself, I doubt this statement to be mixed but in the event the point is not determinate of the appeal and I do not think it necessary to consider it further.

76. In the event in all the circumstances of this case I have come, with considerable reluctance, to the view that these convictions are unsafe and unsatisfactory. I would therefore allow the appeals, set aside the convictions and quash the sentences.

77. I do however wish to hear counsel on the issue of a retrial.

Power, J.A.:

78. I have had the opportunity of reading in draft the judgment just delivered and am in agreement with its reasoning and conclusions. I too would allow the appeals.

                 (Mr. Lugar-Mawson having advised the Court that he had express, written instructions not to seek a retrial that issue was not argued.)