HKSAR v. LIU HONGJIA

HCMA18/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO. 18 OF 2008

(ON APPEAL FROM ESCC 3504 OF 2007)

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J U D G M E N T

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1. On 23 November 2007 the appellant was convicted after a trial before Mrs Chainrai magistrate of one charge namely :

“Being a person who is not an authorized insurance broker held herself out to be an insurance broker.”

contrary to section 77(2) of the Insurance Companies Ordinance, Cap. 41 (“the Ordinance”).  She was in the trial represented by counsel but appears before me unrepresented. 

2. The appellant was first before me on 12 March 2008 and was likewise on that date unrepresented.  Having heard the gist of her grounds of appeal I considered that in fairness to her it was necessary to obtain a transcript of the evidence of the principal prosecution witness, a Mr Cheng Wai Kin (“PW1”) and also the evidence of the appellant herself.  Those transcripts have been prepared and made available to the appellant and the prosecutor. 

The legislation

3. It is an offence under section 77(2) of the Ordinance for any person to hold himself out to be an insurance broker when not licensed.  An “insurance broker” is defined in section 2 of the Ordinance to be as follows :

“‘Insurance broker’ means a person who carries on the business of negotiating or arranging contracts of insurance in or from Hong Kong as the agent of the policy holder or potential policy holder or advising on matters related to insurance.”

4. An insurance broker in Hong Kong has to be registered with the Hong Kong Federation of Insurance Brokers or directly licensed by the Commissioner of Insurance.  It was an admitted fact that the appellant was not a licensed insurance broker. 

5. What was at issue in the trial and in this appeal is what was the role of the appellant in the sale to the principal prosecution witness (PW1) of a policy of insurance described in the trial as a “Premier Plus Flexible Savings Plan” (“the policy”).  This was a policy of insurance offered by “Friends Provident International Ltd”, an insurance company. 

6. At the material time the appellant was employed by a company named Strategicap Ltd.  

7. A number of documents were exhibited in the course of the trial.  The most significant being :

(1) Ex P1 — “Account Information”;

(2) Ex P2 — “Application Form”; and

(3) Ex P3 — The appellant’s name card. 

In addition to these there was a record of interview conducted between a police officer and the appellant together with its certified translation (Ex P5 and P5A).  

8. There were admitted facts and finally the policy of insurance was produced (Ex P6 and P7).  

9. The prosecution case was that she had sold the policy to PW1 having first explained to him its terms and conditions.  She assisted him to complete the Account Information (Ex P1) and Application Form (Ex P2).  It was the prosecution case that all of the above amounted to the appellant holding herself out to be an insurance broker when neither she nor her employer were licensed. 

10. PW1 and the appellant gave evidence as to the events which led to the purchase by PW1 of the policy.  It suffices to say that there were material differences in the accounts that each gave.  If the account given by PW1 was correct then there could be no doubt that the appellant was acting as an insurance broker.  If the account given by the appellant was or may have been correct then the prosecution case was not established.  On her account she was at the relevant time an observer to the completion of an already negotiated agreement.  That agreement she said had been put in place by one Brian Lam Man Fung (“Brian Lam”). 

11. The magistrate accepted the evidence of PW1 and rejected the evidence of the appellant.  The issue in this appeal is : was she correct in this conclusion. 

The trial

12. PW1 said in evidence that he worked as a quality assurance inspector in a trading business.  In early June 2005, he received a telephone call from the appellant who was previously unknown to him.  She told him that she had been referred to him by his friend, Brian Lam.  The purpose of this call he said was to “introduce” an insurance saving plan to him.  They spoke in Cantonese and he had no difficulty understanding her. 

13. He said that he was interested in the plan which she described to him over several telephone conversations.  They arranged to meet so she could explain the plan to him in greater detail.  They met on 15 June 2005 at the Pacific Coffee House at Causeway Bay.  Only he and the appellant were present at that meeting.  She gave him her name card which described her as a “senior financial consultant”. 

14. The appellant explained to him the product that she was selling, was an “investment plan insurance policy”.  She showed him the brochure and the proposal form, and explained it to him.  She asked him how much he could invest each month; he told her $18,000.  She told him the term of the policy was 25 years, and she explained to him that he could quit at any time and he would get his money back. 

15. He confirmed that exhibit P2, the Application Form, was the one shown to him by the appellant.  He said that she went through this with him page by page and explained it to him.  The form was filled up, some parts by him and some parts by the appellant, and he signed in various places as required.  

16. His particulars in section 1 of that document were filled in by him, but the four boxes were ticked by the appellant after she had asked him the questions set out there.  In section 2, after the appellant had asked him what his monthly contribution would be and he told her, she filled in the amount of “$18,000”.  The appellant ticked the boxes for “By standing order” and “regular savings from salary” upon instructions from PW1. 

17. She also filled in his current salary and ticked at the “Valuation Currency” box, as well as filled in the “Option Date” upon information provided by him.  For the section “Choice of Funds”.  He filled in his choices after she explained the various types of funds to him. 

18. The next section, “Illustration of Surrender Values for Premier”, was explained to him by the appellant and he then signed on that page. 

19. On the next page, “Verification of Identity Check List”, he filled in his “Name”, “Identify Card Number”, “Issuing Office” and “Country”.  The rest of the form was left blank and filled in by the appellant.  He signed the next page, “Declaration”, after the appellant had explained it to him. 

20. He also provided her with a photocopy of his identify card and gave her a Citibank payment slip for verification of his address. 

21. He confirmed that exhibit P1, the “Account Information” form, was also completed at that meeting on 15 June 2005.  The appellant filled much of it in. 

22. On page 2 of exhibit P1, the appellant signed in the box “Signature of advisor” while PW1 signed on the form as the account holder.  

23. PW1 subsequently received a letter dated 21 June 2005 from Strategicap Limited, confirming receipt of his application.  The appellant was referred to as “his advisor” in that letter.  

24. PW1 decided not to go ahead with the policy apparently because (he said) he doubted the integrity of the appellant and StrategicapLimited and discontinued payments. 

25. He was cross-examined at length.  It was the appellant’s case which was suggested to him in cross-examination that in effect Brian Lam had negotiated the sale of the policy to PW1 and that she was to do no more than to bring the necessary documents to the meeting set up between PW1 and Brian Lam.  He rejected this suggestion.  It emerged in the course of his evidence that Brian Lam was known to PW1 as a motor vehicle salesman.  He denied knowing that he was an insurance agent.  It was suggested to him that Brian Lam was present at that meeting on 15 June, and that it was he who explained the policy to him.  He disagreed. 

26. It was suggested to him that the appellant did not say much at the meeting, and she wrote down the information after Brian Lam, asked the questions and that the appellant never explained anything to him.  He disagreed. 

27. PW2 was a police officer who interviewed the appellant under caution on 23 February 2007.  The interview was conducted in Cantonese and PW2 said that although the appellant spoke with a slight accent, he had no difficulty in understanding her, nor did she exhibit any difficulty in understanding him. 

28. PW2 confirmed that it was the appellant who had initially made a complaint of suspected fraud to the police in respect of 10 other policies referred to in that record of interview.  Each of these had been terminated within a month or two of being issued and after the commission had been paid and apportioned between those involved in the sale of the policy.  It was this report to the police that led to her being interviewed under caution and making an admission which was to the effect that :

“Now I have obtained the relevant licence.  I know that my behaviour was not completely reasonable at that time.”

In the course of her evidence the appellant sought to distance herself from this expression asserting that she had limited fluency in Cantonese.  She explained that she was there saying that she had been misled and should have checked out Brian Lam more carefully. 

29. It was the appellant’s evidence that she came to Hong Kong from Canada in 2002 and worked at the Sunlife Financial Limited as an actuarial analyst.  She joined Strategicap Limited in May 2005.  She was not a licensed broker or agent at that time.  She was to introduce business to Strategicap Limited until she obtained her licence.  When she came to know of customers that would be interested in the products offered by Strategicap Limited, she would introduce them to the consultants of the company.  In relation to the events of 15 June 2005 she said that she received a phone call from somebody called Brian Lam who told her that he could introduce prospective customers to her and her company.  These he said were interested to buy long-term products. 

30. They had a meeting, and Brian Lam gave her his namecard which showed that he was a senior unit manager with American Insurance Assurance Computer (Bermuda) Limited, (referred to as “AIA”).  He told her that he had a number of clients that he wanted to introduce to her company who wanted long-term investment policies not provided by AIA. 

31. They had two or three other meetings, and then he called to tell her about PW1.  They had agreed that if and when applications were approved, he would receive a part of the commission.  He was supposed to enter a written agreement with her.  She prepared the agreement and gave it to him, but he never signed or returned it, despite her chasing him up for it. 

32. She said that Brain Lam came to the meeting with PW1.  She had told Brian Lam that she could not explain the policy.  He told her that he had already explained it to PW1 who was ready to sign.  He had asked her to bring the application form with her for his signature.  She in turn asked him to bring along PW1’s copy of ID card and proof of address. 

33. At this meeting she gave her business card to PW1 where her title was “Wealth Management”, and not as shown on exhibit P3, which was printed about two months after that meeting.  She spoke to PW1 and he confirmed that Brian Lam had explained the policy to him. 

34. In her evidence the appellant confirmed that she had filled in various parts of the application form, that PW1 had testified had been filled in by her.  She said her role at the meeting was merely to witness the meeting, and she filled it in based on questions Brian Lam asked PW1 and his responses. 

35. In the course of her evidence the appellant said that a number of persons had been introduced to her or her employer over a period of time by Brian Lam.  Each in turn purchased policies of insurance but apparently reneged on the payments.  This happened after the commission had been paid by the insurance company and shared as per an earlier agreement with Brian Lam.  

36. The magistrate correctly, in my opinion, emphasized that in the proceedings before her she was concerned only with what happened at the meeting between PW1 and the appellant and her role at that time when the policy was sold to PW1.  She was alert to the fact that it was the appellant who had made the initial report to the police and yet she was the one who ultimately was charged with committing an offence.  Nevertheless the charge was focused on the sale of the policy to PW1 and none other. 

37. The magistrate accepted the evidence of PW1 in respect of what he said happened during his meeting with the appellant and the role that she played in selling the fund to him. 

38. The magistrate concluded that at the material time, the appellant was advising in matters related to insurance, and was holding herself out to be an insurance broker when she was not an authorized insurance broker. 

39. In the course of her submission to me the appellant asserts that the magistrate was in error in accepting the evidence of PW1.  As an example she refers to the fact that PW1 was lying when he said that his discussions with the appellant were conducted in Cantonese.  There was no suggestion in the cross-examination of PW1 by her counsel to this effect.  Both PW1 and PW2 said that her Cantonese language skills were sufficient. 

40. Similarly she submits that PW1 was involved together with Brian Lam and the magistrate was in error in not realizing this.  Again this was never suggested to PW1 in cross-examination.  At its highest her counsel submitted to the magistrate that :

“His relationship with Brian is dubious.”

And a little later she submitted :

“Another very important matter I would like to draw the court’s attention [to] is that PW1 is hiding the presence of Brian.”

She added :

“We have no evidence to say that PW1 is any party to a fraud.  However if we look at his behaviour as a whole, there’s really a motive for PW1 not to tell the whole truth to the court, to conceal the presence of Brian.”

41. The magistrate was thus alert to this matter albeit that it was never suggested to PW1 that he was a party to any agreement with Brian Lam.  

42. The magistrate  said the appellant was not a witness of the truth.  She was evasive when answering questions and clearly trying to minimise the role she played in selling the policy to PW1. 

43. I have considered the transcripts of the evidence of PW1 and the appellant and am satisfied that the magistrate’s conclusion as to the veracity of the appellant and PW1 are entirely correct. 

44. Whatever may have been the appellant’s arrangements with others and in particular Brian Lam, the fact remains that she was engaged in the sale of the policy to PW1 and in so doing was conducting herself as an insurance broker when not licensed. 

45. What was in issue in the trial was not what Brian Lam or others may or may not have done over a period of time.  What was in issue was whether in the course of the sale of the policy of insurance to PW1 the appellant was acting as an insurance broker.  The magistrate found that she was and in my opinion there was an abundance of evidence upon which this conclusion could be reached. 

46. In the circumstances this appeal must be dismissed.