HKSAR v. TSE KAI CHEONG

HCMA791/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO. 791 OF 2011

(ON APPEAL FROM KCCC NO. 2112 OF 2011)

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REASONS FOR JUDGMENT

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1.  On 10 May 2012 I dismissed the appellant’s appeal against his convictions and indicated that I would hand down my reasons. These are my reasons.

2.  The appellant was charged with 12 offences namely :

(1)  three counts of being an agent using a document with intent to deceive his principal, contrary to section 9(3) of the Prevention of Bribery Ordinance, Cap. 201 (Charges 1 to 3); and

(2)  nine counts of using a false instrument, with intent, contrary to section 73 of the Crimes Ordinance, Cap. 200 (Charges 4 to 12).

3.  He pleaded not guilty.  On 21 September 2011 he was convicted of all charges and on 6 October 2011 was sentenced to total terms of 18 months’ imprisonment.

4.  The appellant originally appealed against conviction and sentence. His appeal against sentence was abandoned on 16 January 2012

Background

5.  Asia Animation Limited (“AAL”) and International Animation Limited (“IAL”) were companies incorporated by Kung Tak Man (“Kung”), Tse Yuen Ming (“Tse”), the appellant and another in 2001.  IAL is a wholly owned subsidiary of AAL.  By early 2005, Kung had left the companies having sold all of this shareholding to Chin Yiu Tong (“Chin”).  Chin became the majority shareholders of AAL and IAL.

6.  The annual returns of AAL and IAL filed in the company registry in 2004, 2005 and 2006 showed that the appellant was one of the directors of AAL and IAL in the period 2004 to 2006.

7.  It was the evidence of Kung (“PW2”) and Tse (“PW3”) that at all material times the appellant was in charge of the day to day operation of AAL and IAL.

8.  AAL and IAL each held a bank account with Hong Kong and Shanghai Banking Corporation Limited.  The appellant and Tse were the joint signatories of both accounts.

9.  Tsang Shiu Leung (“Tsang”) (“PW1”) was employed by AAL and IAL as an assistant accountant and described the practice for issuing cheques. He said that usually Tse would sign batches of blank cheques.  The appellant would then countersign the cheques in order to validate them.

10.  In 2004, AAL set out to produce an animated feature entitled “Storm Rider”.  The appellant was in charge of this project.  Lam Chi Yin Dante (Lam) (“PW8”) a film director, had discussions with the appellant acting, in respect of the production of Storm Rider.  Eventually Lam agreed on behalf of Blue Fiction Ltd (“Blue Fiction”) (a company established by Lam and his wife) for him to be appointed as the director of Storm Rider.

11.  Lam also introduced Wong Wai Fei (“Wong”) (“PW5”) and Kong Shun Hang Gideon (“Kong”) (“PW7”) to the appellant to work on the production of Storm Rider.  As a consequence Wong and Kong were engaged as martial arts director and art director respectively.

12.  Contracts were entered into between AAL and Blue Fiction Wong and Kong between October and December 2004.

13.  Lam, Wong and Kong confirmed when giving evidence that they had received all payments in full due under their respective contracts with AAL (save that as Kong did not receive one payment but nothing turned on this).

14.  Charge 1, 2 and 3 related to what were described in the trial as “additional contracts”.

15.  It was the evidence of Tsang that in April 2005, he received 3 “additional contracts” from the appellant and was told by him to effect payments pursuant to the terms of those contracts.  Those “additional contacts” purported to be contracts executed between AAL and Blue Fiction (Charge 1), AAL and Kong (Charge 2) and AAL and Wong (Charge 3).  The effect of the “additional contracts” was to extend the period of employment of Blue Fiction, Kong and Wong from April 2005 for a further 4 months.  Blue Fiction, Kong and Wong were to receive remuneration of HK$60,000 per month, HK $20,000 per month and HK$30,000 per month respectively for the term of the “additional contracts”.

16.  Tsang said that when he received the “additional contracts”, all 3 were unsigned.  He queried this with the appellant and was told that signed copies would be provided to the accounting department of AAL later.  He did not receive any signed copies.

17.  Tsang said that he had issued cheques for payment pursuant to the “additional contracts” to Lam, Wong and Kong as provided for in those contracts and those cheques were all cleared.  Tsang said he would not approve any payment, nor would he issue any cheque in respect of the “additional contracts” if he had known that they were not genuine contracts.

18.  Tsang explained that as the financial position of AAL and IAL was tenuous in 2005, monthly payments under the “additional contracts” to Lam, Wong and Kong had to be split into 2 cheques per month. Tsang said the appellant instructed him to issue uncrossed bearer cheques to Lam, Wong and Kong.  Signed cheques were then given to the appellant by Tsang for him to deliver to Lam, Wong and Kong.

19.  In total 9 cheques had been issued, by Tsang.  Each cheque relates to a specific (charge 4-12) :

20.  In respect of these cheques, Tsang said that having issued and handed the cheques to the appellant he subsequently received from the appellant photocopies of each cheque on which there were signatures which purported to be those of Lam, Kong and Wong to acknowledge receipt.  Those photocopies were then filed for accounting purposes.

21.  It was the evidence of Lam, Kong and Wong that they had not entered into the “additional contracts” with AAL and had ceased working on the project sometime before the dates of the “additional contracts”.  All three confirmed that there was no negotiation between them and AAL for any extension of their employment on the project.  They confirmed they had never seen or been shown the “additional contract” referable to them and had not received any payments from AAL and IAL in relation to them.  They knew nothing about the cheques issued pursuant to the terms of the “additional contracts” and had not signed on a photocopy of them.

22.  There was no issue in the trial that all of the cheques issued to Lam, Wong and Kong pursuant to the “additional contracts” were deposited into the appellant’s bank account.

23.  Kung had never seen the “additional contracts”.  He said that he would not allow payments to be made pursuant to those contracts if he had known that they were not genuine.  Chin and Tse both confirmed that they would not authorize or allow any payment to be made pursuant to the terms of contracts if the contracts were not genuine.

24.  In respect of counts 1-3.  It was alleged that the appellant in his capacity as director of AAL had submitted to it the “additional contracts” intending to deceive AAL.

25.  In respect of counts 4-12 it was alleged that the photocopy cheques returned to Tsang by the appellant were false instruments intended to deceive him in his capacity as the assistant accountant of AAL and IAL.  

26.  This was the prosecution’s case.

Defence case

27.  The magistrate found there was a case to answer in respect of all 12 charges.

28.  The appellant did not give evidence.  His defence which emerged during the course of the cross-examination of the prosecution witnesses was to the effect that the “additional contracts” did exist and that the appellant had personally made cash payments pursuant to them on behalf of himself and Lam, and Wong and Kong.  Those payments which were made on behalf of AAL were then re-imbursed to him when he deposited the cheques in question into his own account.  The evidence of Lam, Wong and Kong to the contrary was untruthful.

29.  Thus it can be seen that the primary issue in the trial was the truthfulness of Lam, Wong and Kong as to the existence of the “additional contracts” and the payments made pursuant to those contracts.

30.  The magistrate found all prosecution witnesses to be honest and credible.  In particular, as to Lam, Wong and Kong, he was satisfied that their evidence was truthful and consistent.

31.  The magistrate found that :

(1)  Lam, Wong and Kong did not agree with AAL/IAL to extend their original contracts;

(2)  the appellant had produced the 3 “additional contracts” to Tsang and requested Tsang to issue uncrossed bearer cheques pursuant to the terms of those “additional contracts”;

 (4)    The appellant, either by himself or through his secretary, produced photocopies of 9 cheques (3 for Lam, 3 for Wong and 3 for Kong) with signatures appended to Tsang; and

(5)  Lam, Wong and Kong did not sign on the photocopies of the cheques issued in respect of the payments made under the “additional contracts” nor had they received any payment, whether by cash or cheque, pursuant to “additional contracts”.

The magistrate found that the elements of each of the charges had been established to the requisite standard.

Grounds of appeal

32.  The appellant originally filed 3 perfected grounds of appeal.  Ground 1 was abandoned on the morning of the hearing of the appeal.

33.  Ground 2 and 3 can be taken together and are to the effect that the magistrate “failed to properly consider and/or show in his written statement of findings that he had considered that Lam was a reliable witness”.

34.  In support of this proposition there is reference in written submissions to specific parts of Lam’s evidence which it was said should have caused the magistrate to doubt his evidence.

35.  The criticisms now made of Lam and the magistrate must be considered in the context of the trial as a whole.  Lam was one of the three whose “additional contracts” – were at the heart of the prosecution’s case.  Kong and Wong also said there were no “additional contracts” entered into. Lam, Kong and Wong said there were no payments made to them beyond those made pursuant to the original contracts.

36.  The appellant’s counsel sought to establish not only that Lam was an unreliable witness but more particularly that he was untruthful.

37.  The magistrate was clearly alert to this but had no difficulty in rejecting the suggestions that Lam was unreliable and in particular untruthful.  Having considered his reasons I am satisfied that he was correct to do so.

38.  The cross-examination of Lam was unfocused and lurched from subject to subject. Allegations, eventually unsubstantiated were levelled at him in a clumsy attempt to discredit him.  The magistrate who was in the best position to evaluate his evidence was satisfied that such inconsistencies as emerged were the direct consequence of this style of cross-examination and not unreliability or untruthfulness on the part of the witness.

39.  There were discrepancies as between the evidence of Tsang and Tam which were not material to the matters in issue.  The magistrate was satisfied that these did not impact on his assessment of their truthfulness or reliability.

40.  Mr Boyton referred me to those parts of the cross-examination of Lam which dealt with alleged payments to him in cash by the appellant and an advance or loan of $400,000 by AAL made to him as being examples of the failure of the magistrate to properly evaluate Lam’s evidence.

41.  In so far as the first which related to alleged cash payments, Lam’s evidence was that he could remember receiving cash from the appellant on one occasion only, which was in respect of a payment under the original Blue Fiction contract.

42.  In furtherance of this line of cross examination.  The appellant’s counsel sought to establish that Lam had requested that the appellant pay him in cash right from the commencement of the contract – because he was in financial straits.  Lam denied this suggestion.  He accepted that there had been one such cash payment, before Chinese New Year but otherwise cheques had been paid either to Blue Fiction or to himself.

43.  This can be seen in part in the following exchanges :

Q :  He’d paid you cash in advance.

A :  Never.

Q :  Never paid you cash in advance?

A :  Yes, on my payment.

Q :  He paid you cash in advance, didn’t he?

A :  Yes, as I mentioned before, one payment for the production of Storm Rider; that payment is made before Chinese Lunar New Year.

Q :  So that would have been in March, February or January, right?

Court :   Before Chinese New Year.

Mr Boyton :    Yes.  Well, that would have been our – the Gregorian calendar would be in January, February or March, depending on which year it falls, right? Early part.

A :  Yes, it’s more or less, I believe so.

The appellant’s counsel then moved away from that payment and suggested that there were other occasions when payments were made to Lam in cash.

Q :  Well, I suggest to you that you were given cash on 26 May 2005 at the APM in Kwun Tong.

A :  I don’t remember.

Q :  It’s another matter and when I remind you, you remember.  And Mr Chan, Chan Shiu-chi, was there.  Chan shiu-chi’s outside, isn’t he, waiting?

A :  I do not remember.

Q :  No, he’s here today.

A :  He’s here today?

Q :  He’s outside court.  Didn’t you see him?

A :  I saw him.

Q :  He was present when that money, that cash, was handed over to you.

A :  I do not remember the location of the handing-over of the money and the persons.

Q :  Well, I’m suggesting to you you were seen collecting cash in May 2005, sometime, a long time, after Chinese New Year, and you’re denying it now.

A :  I don’t remember.

Q :  Well, there’s no other – we put it to you that that money was in respect of the additional contract Exhibit 5 at page 107.

A :  I did not sign that contract.

Q :  I know you didn’t sign it but you took the money for it.

A :  I did not.”

44.  The appellant’s counsel did not in these or other parts of his cross-examination provide particulars beyond the above.  Nor was the person named as being present when this payment was alleged to have been made called as a witness.  The magistrate observed that given that the amount and purpose of these alleged payments was never identified when the questions were put to Lam, that this did not cause him to doubt Lam’s evidence.  There is to my mind no valid criticism of the magistrate’s assessment.  Ultimately the only matter of any relevance that emerged from this cross-examination was a re-statement by Lam that he had not received any payment pursuant to the “additional contracts”.

45.  Counsel then changed tack and sought to establish that Lam was in urgent need of funds to pay for a debenture at a private school and to that end had asked the appellant for a loan.  Lam rejected this suggestion.  Counsel then sought to establish that Lam had been advanced funds for this purpose by Chin.  This appears at P118 Transcript :

“Mr Boyton : Yes. He paid you constantly cash in advance. Let’s do it one by one.

A : Disagree.

Q: And you demanded a large loan so that your – do you have any children in International School in Kowloon?

A :  Yes.”

46.  This cross-examination is unfair to the witness.  Counsel has asked two questions the witness has answered one – but which one, what then was the magistrate to make of the answer?

47.  It was integral to this line of questioning that this had occurred at or about the dates of the “additional contracts” ie April/May 2005.  Lam initially denied this suggestion but ultimately agreed that almost 12 months after the so-called “additional contracts” ie in May 2006 he had been advanced $400,000 by AAL/IAL.

48.  As to the $400,000 advance the magistrate considered that there was a discrepancy between what Lam had said in evidence in cross-examination and in re-examination, as to whether this was a loan or an advance but was of the view that this discrepancy was not material, and did not affect his assessment of Lam’s credibility.  It was clear whether this was a loan or an advance it took place in May 2006, nearly 12 months after the last cheque in relation to the payment made under the “additional contracts” was issued and deposited into the appellant’s bank accounts.

49.  The significance of Lam’s loan/advance from AAL in May 2006 was minimal.  It is little surprising that the magistrate considered that this exercise was unproductive.  It did not even begin to establish that Lam was untruthful let alone unreliable.

50.  There was no merit in the grounds of appeal individually and collectively.

51.  The appeal was dismissed.