HKSAR v. LO HOI CHUN

CACC 373/2017

[2018] HKCA 817

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 373 OF 2017

(ON APPEAL FROM DCCC NO 312 OF 2016)

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D E C I S I O N

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1.  The applicant applies for bail pending his appeal, having had bail previously refused by Yeung VP (as the acting Chief Judge then was) on 2 February 2018. The basis for this second application is that there has been a change of circumstances. It is submitted that the change of circumstances are that Perfected Grounds of Appeal against conviction have been filed, the transcript of evidence of certain witnesses has been made available and a hearing date has been fixed on 22 May 2019 for the application for leave to appeal against conviction.

2.  It is argued by Mr Marco Li, counsel for the applicant, that it can be shown that the appeal is likely to be successful on Grounds 2 and 3 of the Perfected Grounds of Appeal and that the applicant would have served more than half of his sentence by the time the appeal is heard.  As far as I can ascertain, the only change of circumstance is that a hearing date has been fixed for the appeal.  Otherwise, the two perfected grounds are a repeat of two of the initial grounds which were relied upon in argument before Yeung VP, as was the evidence of certain witnesses which was set out in the judge’s reasons for verdict.

3.  On 1 November 2017, following a trial in the District Court before Judge CP Pang, the applicant together with other defendants was convicted of conspiracy to defraud, contrary to common law and punishable under section 159C(6) of the Crimes Ordinance, Cap 200.  Three of the other defendants were also convicted of conspiracy to deal with property known or believed to represent 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.

4.  Under the conspiracy to defraud charge, it was alleged that the defendants, including the applicant, between 27 March 2014 and 27 March 2015, conspired together and with other persons unknown, to defraud the clients of Wincades International Accounting Affairs Limited (Wincades) by dishonestly, (a) falsely representing that (i) Wincades was entrusted by banks or financial institutions to handle the loan arrangements of their clients; (ii) Wincades could assist the clients to obtain a mortgage or personal loan with favourable terms; and (iii) that no consultancy fee would be charged by or payable to Wincades, or that fee would be refunded to the clients, unless the particular application for a mortgage or personal loan was successful, (b) thereby causing and inducing the clients to pay a consultancy fee to Wincades.

5.  Putting aside any issue in relation to the particulars of the charge and the evidence proving the alleged conspiracy, Mr Li for the applicant relies on two grounds, Grounds 2 and 3, in support of his application that the applicant’s appeal has a very good chance of success. Ground 2 states that the judge erred in ruling that the applicant had a case to answer to the charge “which avers a single, global conspiracy involving all defendants, and failed to give any reasons thereof.”  Ground 3 states that the judge failed to consider the implication of successful loan applications of PW36 and DW1-DW6 on the element of “dishonesty” for the charge, and again failed to give adequate reasons as to why those successful applications provide little assistance to the defence. 

6.  It was alleged that the defendants were variously involved in a conspiracy to defraud the complainants of payments that were described as a “consultancy fee”.  The complainants would receive “cold calls” from callers who claimed that they were staff or acting on behalf of a bank or financial institution.  The complainants were persons who had outstanding mortgage or personal loans and were experiencing financial difficulties.  The callers had sufficient information about the complainants’ financial situation to convince them that they were staff or acting on behalf of a bank or financial institution.  The callers would play on the financial situation of the complainants and refer them to Wincades purportedly for loan restructuring on very favourable terms.  The complainants would attend the office of Wincades and be interviewed by salespersons who would promise to apply for loans for them at a very low interest rate and in return they were to pay a “consultancy fee” which would be repaid if the loan was unsuccessful.

7.  It seems that the complainants were made to pay the consultancy fee with funds obtained from a moneylender arranged by Wincades at a very high interest rate.  The complainants were told that the high interest rate for the transitional loan would be offset by the favourable interest rate to be obtained under the proposed new loan and therefore the complainants would be better off financially.  The complainants did not obtain the loans as expected, and when they made inquiries they were ignored, and the consultancy fee was not repaid as agreed.  When the police raided the office of Wincades they found certain preamble scripts which appeared to have been used by the callers as conversation templates when cold calls were made to persons. The templates indicated that the callers would pretend to be staff members of banks or financial institutions.  There were also documents containing instructions on how to deal with persons who made inquiries.  Two of the complainants gave evidence at trial that the applicant was the salesperson who induced them to sign the consultancy agreement and pay the consultancy fee.

8.  The defence case was that the business of Wincades of arranging loans for clients and charging them a consultancy fee was a genuine business arrangement.  The defendants denied that there was a conspiracy to defraud as alleged against them.  It was also argued that there was not a single conspiracy, although there may have been individual conspiracies but not involving the defendants.

9.  The judge found that there was a scheme in Wincades to lure members of the public to pay them a substantial sum of money on the pretext of a consultancy fee for their service.  He found that the scheme was performed firstly by fraudulent cold calls to make the victims believe that Wincades was entrusted by a bank or financial institution to handle their loan arrangements.  When the victims approached Wincades as arranged, the salespersons continued the false representation of the status of Wincades and falsely represented that they could help the victims to obtain loans on much better terms.  He found that Wincades did not care at all whether the victims could succeed in obtaining a loan and that they did not intend to provide any genuine service to them.  They had no intention to refund the consultancy fee.  He found that the means used in the scheme were dishonest and that a single global conspiracy to defraud as alleged in the charge had been proven.  He found that the applicant and other defendants were a party to the conspiracy.  See paragraphs 162-166 and 224-231 of the reasons for verdict.

10.  The judge addressed the issue of the successful cases of PW36 and DW1-DW6 where it appears that loans were obtained by the clients.  He concluded that the fact that some clients did eventually obtain a loan or suffered no actual loss did not disprove the existence of the conspiracy as charged.  He noted that their evidence in fact confirmed the general modus operandi of the scheme of making cold calls and inducing the clients to sign a consultancy agreement and pay the consultancy fee.  See paragraphs 156-158 of the reasons for verdict which should be read together with the judge’s reasoning in addressing the elements of the alleged conspiracy to defraud.

11.  Mr Li submits that the applicant should be granted bail as he has a very good chance of success of overturning his conviction by reliance on Grounds 2 and 3.  As to Ground 2, he complains that the judge did not provide reasons for his decision that there was a case to answer in relation to a single global conspiracy.  This has to be viewed by taking into account all the circumstances, particularly the record of the proceedings dealing with the application of no case to answer, which I understand was dealt with by way of written submissions, and the judge’s reasons for verdict in which he addresses the prosecution evidence that he has obviously accepted in finding the defendants guilty of the charge.  Mr Li allied this ground with Ground 3 where it is complained that the judge failed to consider the successful loan applications when addressing the element of dishonesty for the charge.  He submits that the judge erred in finding a single global conspiracy for two reasons.  First, whilst the evidence may have supported individual conspiracies, it did not support a single global conspiracy.  He complains the judge failed to address this issue.  Secondly, because there were successful transactions, the element of dishonesty for a single global conspiracy had not been established.  He also complains that the judge failed to address this issue as well.

12.  As far as I can ascertain from a perusal of the papers, the judge did deal with these issues in his overall appraisal and analysis of the evidence in relation to the alleged conspiracy as charged.  He found that there was a single global conspiracy and that the successful transactions did not disprove the existence of the conspiracy as alleged in the charge.

13.  The applicant was sentenced to 4 years’ imprisonment and by the time his appeal is heard he will have served about 19 months. Mr Li submits that when you take into account the one third remission for good behaviour, the applicant would have served a substantial part of his sentence. Whether this is a basis for granting bail pending appeal will, in appropriate cases, depend on the merits of the appeal itself. 

14.  I do not find that there has been a significant change of circumstances since bail was refused on the previous occasion.  In any event, I am not satisfied that the requirements for bail pending appeal have been met in light of the circumstances of this case. Accordingly, the application for bail pending appeal is refused.