HKSAR v. KHAN, MOHAMMAD SALEEM

HCMA 69/2025

[2025] HKCFI 5550

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO 69 OF 2025

(On appeal from WKCC 5576 OF 2023)

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J U D G M E N T

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1.  The Appellant was convicted after trial of one count of “evasion of liability by deception”, contrary to section 18B(1)(b) of the Theft Ordinance, Cap. 210.  The Appellant was sentenced to 4 months’ imprisonment.  The Appellant now appeals against his conviction. 

The Prosecution Case

2.  As briefly summarised by the Respondent, PW1 and the Appellant became acquainted around April or May 2017 through their common friend, Mustard.  The Appellant told PW1 about how to purchase slightly damaged vehicles from Japan, ship them to Hong Kong for sale, and make a profit.  Since the Appellant did not have funds, PW1 would invest and the Appellant would carry out the purchase.  The Appellant and PW1 would then share the profit.  PW1 then paid a total of HK$291,000 to the Appellant on various occasions.  PW1 had been chasing the Appellant for profit and the Appellant said he had purchased the vehicles and they were on their way. 

3.  PW1 then told the Appellant to sell the vehicles and return his initial investment first before they proceed to discuss the profit.  The Appellant gave PW1 a cheque, P3, in the amount of HK$291,000 with PW1 as the payee dated 4 July 2017.  The Appellant had never said to PW1 that he had no money nor did PW1 agree with the Appellant not to encash the cheque. 

4.  Thereafter, on 12 July 2017, PW1 deposited the cheque into his own account, but it was dishonoured and returned on 13 July 2017.  It transpired that the Appellant’s account from which the cheque was issued was account closed, as per P6.  Despite repeated attempts to contact the Appellant by phone or by visiting the Appellant’s address in Fanling, PW1 still could not reach the Appellant.  The Appellant had never repaid HK$291,000 to PW1. 

5.  Under caution in a video-recorded interview (“VRI”), P7, the Appellant admitted that he knew the account had no money, but he denied knowing that the account was closed. 

The Defence Case

6.  The Appellant gave evidence.  He has had his own trading business for over 30 years.  One day, the Appellant’s friend Mustard brought him along to meet PW1.  PW1 took down the Appellant’s phone number, and thereafter they met 10 to 15 times within three months and became good friends. 

7.  PW1 knew the Appellant was having a financial difficulty and thus had previously helped the Appellant.  For instance, the gold of the Appellant’s wife was in a pawn shop, and the deadline for payment was coming up, so PW1 lent the Appellant HK$20,000-odd so that the Appellant could take the gold back and to pay the interest.  The Appellant had promptly thereafter returned the money to PW1 within 48 hours. 

8.  PW1 later agreed to give the Appellant HK$86,000 to do business, and the Appellant purchased TV sets from Dubai to sell in Tanzania and earned a profit of HK$35,000.  Thereafter, PW1 received HK$121,000 in return.  There was no written agreement between PW1 and the Appellant.  According to the Appellant, PW1 did not want to have a written agreement because PW1 trusted the Appellant.

9.  PW1 and the Appellant then discussed a car business.  When the Appellant suggested purchasing cars from Japan and selling them to a buyer in Dubai, the Appellant and PW1 had never agreed to sell the cars in Hong Kong because they would need to find a garage to fix up the cars in Hong Kong first and the costs would be high.  PW1 suggested purchasing two to three containers of cars, but the Appellant doing one container of four cars first.  The Appellant bought cars, and since the person who sold the Appellant the cars had the customer interest at a good price, the Appellant then shipped the cars to Dubai on 25 May 2017.  The Appellant produced a bill of lading, D1.  The Appellant said PW1 gave him HK$195,000 as investment into the car business.  PW1 had also transferred HK$6,700 into the account of the Appellant’s son.  The cost of the cars was US$27,000, approximately about HK$210,000.  Thus, the Appellant put PW1’s HK$195,000 and HK$15,600 he borrowed from himself into the car business and bought four Honda hybrid cars. 

10.  As shown in D1, the consignee company was Zushan General Trading (“Zushan”).  This company found Ravi Motors as a customer, who would pay US$9,500 per car for the four cars.  Thus, the total would be US$38,000.  After the commission deducted by Zushan, Zushan would then owe the Appellant HK$291,000-odd. The Appellant produced D2, the invoice of Zushan to Ravi Motors. 

11.  The Appellant said PW1 had never given him HK$291,000 for this car deal.  PW1 gave him approximately HK$166,000 only, and also reinvested HK$35,000 profit from the previous TV deal they did together.  According to the Appellant, Zushan handed the shipping papers to Ravi Motors.  However, the responsible person of Ravi Motors died from a heart attack.  The Appellant informed PW1 of this matter, and therefore PW1 knew that there was no money received yet by the Appellant.  Zushan told the Appellant that they needed a week to talk to the family of Ravi Motors.  PW1 and the Appellant then waited for several days during which PW1 had communication with the Appellant. 

12.  The Appellant then went to see PW1 and explained the situation to him, and said to PW1 that since he had no evidence of the agreement in relation to the car business, the Appellant wrote on a piece of paper to PW1 that he owed PW1 money.  The Appellant wrote HK$195,000 because HK$67,000 was for his son’s personal matters, not for the business debt owed to PW1.

13.  The Appellant at the same time handed the cheque, P3, to PW1 since PW1 would be going on a trip to Pakistan soon.  Once he was back, he could cash it at the counter.  The Appellant said though the cheque was dated 4 July 2017, it was post-dated, as he had in fact handed the cheque to PW1 on 25 June 2017.  While PW1 did not want the cheque, the Appellant said, “No, you need evidence, take the cheque”.  At that time, PW1 knew clearly that there was no money received yet from the car sale and that he should simply keep the cheque first.  The Appellant said the purpose of giving PW1 the cheque was purely to show PW1 that the Appellant owed PW1 this money.  The amount HK$291,000 was for HK$195,000 PW1 invested, and the amount that should be coming from Dubai and for sharing between them. 

14.  The Appellant and PW1 kept in contact all along.  PW1 never told the Appellant that he would cash the cheque.  PW1 knew that there was no money in the account, but PW1 told the Appellant’s wife that PW1 would take the matter to the police. 

15.  The Appellant said it was only much later, about a few months ago, that he discovered that the bank had sent him a letter that the Appellant was required to contact the bank.  However, the Appellant had changed address and therefore he did not receive the letter.  The Appellant said if he knew the account was closed, there would have been no point to issue the cheque to PW1.

16.  The Appellant said he had wanted to pay back PW1, but the police told him not to communicate to PW1.  The Appellant stressed that he never had the intention to evade his liability to pay PW1. 

Magistrate’s findings

17.  The Magistrate found that PW1’s evidence was straightforward, clear, and direct.  His evidence was unshaken in cross-examination.  PW1 was an honest and reliable witness.  However, the Magistrate found the Appellant was not honest and reliable and his evidence was rejected. 

18.  The Magistrate highlighted the following.  First, the Appellant stated that he had no idea that his account was closed at the time when he gave the cheque to PW1.  However, as seen in P9, since September 2015, there were regular activities in his account by both e-banking transfer and cheque transaction.  The activities lasted until 30 April 2016, right before the account was closed by the bank on 3 May 2016.  If the Appellant had the habit of using his bank account habitually, as it could be seen as he did, the Appellant would definitely have known that the account was no longer in operation.  The cheque was dated 4 July 2017, and even if according to his version, it was post-dated to a few days later, the cheque was still written and issued over a year after his account had been closed by the bank.  It was unbelievable that the Appellant did not realise his bank account was closed when the cheque was issued. 

19.  Secondly, when the Appellant had said in his VRI that he did not really use cheques, it was pointed out to him during cross-examination that in P9, there were four transactions in relation to dishonoured cheques.  Further, P9 showed the last cheque used was cheque number 210, whereas P3 was cheque number 236.  The Appellant was also unable to provide a reasonable answer under cross‑examination as to where the cheques in between had gone. 

20.  Thirdly, the Appellant said the cheque was given to PW1 upon the understanding that there were no funds in the account.  The Appellant explained the purpose was to give PW1 protection and assurance that he would pay.  The Magistrate found this illogical.  Firstly, according to the Appellant, there was no money in the account and no firm reply of and when the money would come through.  A cheque issued from an account with no money and no certain date of when money would be deposited could hardly be considered as protection or assurance.  The Appellant had said that they needed to talk to Ravi’s family and it would perhaps take a few days.  The Appellant also said he had written him a note along with the cheque to say he owed PW1 this amount of money.  If such being the case, the IOU note would have been sufficient already, why would the Appellant need to give PW1 a cheque with no money in the account and post-date it to a date that he did not know for certain whether the funds would arrive or not? 

21.  Fourthly, the Appellant gave evidence in court that the amount PW1 transferred into his son’s bank account was for university fees that PW1 lent him.  However, in his VRI, the Appellant said this amount was shipping fees that PW1 paid for (see expert counter 866-867 in P7A).  The Appellant also gave evidence in court that the amount became HK$291,000 because there was a payment of commission, but this was never mentioned in the VRI. 

22.  Fifthly, the Appellant was 54 years old and had been running his own trade for over 30 years.  Clearly, the Appellant was an experienced businessman. Matters such as whether the bank account, especially one that he was issuing cheques with, was still in operation would not be matters that he was ignorant and careless about. 

23.  Based on the accepted evidence, the Appellant had owed PW1 a debt of HK$291,000. He had issued the cheque, P3, in that amount to PW1.  However, the account had not only no funds but in fact closed a year ago.  The cheque was subsequently dishonoured when PW1 attempted to deposit the cheque.  The Magistrate therefore found that the bank account was in regular use by the Appellant.  The bank account had been closed for over a year when the cheque was issued, the Appellant must have known that the account was closed, but yet still gave the cheque to PW1, holding out the cheque as good and valid for payment. 

24.  The Appellant’s action was dishonest as per the test of R v Ghosh [1982] 1 QB 1053.  The Appellant was certain that the Appellant, through his deception of giving PW1 a cheque for payment, that would have never been able to meet the payment, had dishonestly induced PW1 to wait for payment of that amount.  So, in the circumstances, the Appellant was convicted of the charge accordingly. 

Grounds of Appeal

25.  The Appellant said that he believed he did not commit any crime.  It was simply a business transaction between two friends and they both lost money.

26.  The Appellant said that he had been serving his Pakistani community for nearly 30 years as a good citizen.  There was no way that he would deceive the Appellant, PW1. 

27.  In court, the Appellant further stated that he had contacted the buyer in Dubai, saying that because of other charges, about HK$4,500, that there had been a delay in making payment.  So now, the Appellant needs about four to six weeks to pay back PW1.  He never intended to deceive PW1, but PW1 did spread the news saying that he is a cheater.  Therefore, he needs to appeal against his conviction accordingly. 

Respondent’s Reply

28.  The Respondent said that firstly, the prosecution case mainly rested upon the evidence of PW1, who had paid a total of HK$291,000 to the Appellant on various occasions for investment in the car business.  PW1 eventually requested a return of the amount because the Appellant failed to give the profit to PW1.  The Appellant then gave a dishonoured cheque in the amount of HK$291,000 to PW1 and then became out of reach. 

29.  The Magistrate had fully considered PW1’s evidence and found PW1 honest and reliable.  There is no basis to overturn the Magistrate’s decision. 

30.  As for the Appellant’s evidence, he gave evidence mainly to the effect that the present case was a commercial transaction that had gone wrong.  He had no intention to deceive PW1 and he had wanted to repay HK$291,000 to PW1.  The Magistrate had also considered the Appellant’s evidence carefully, but his version of facts was contrary to the bank statements and his VRI.  For example, even according to his version, it is completely illogical, unreasonable to give a cheque issued from an account with no money and no certain date of when money would be deposited to PW1 as protection or assurance that PW1 would be repaid. The Magistrate had sufficient basis to reject the Appellant’s evidence. 

31.  So according to the accepted evidence, the Magistrate was correct in holding that the Appellant’s action, issuing the cheque in the amount of HK$291,000, the debts that the Appellant owed to PW1, when the account had not only no funds but was in fact closed a year ago, was dishonest.  The Appellant, through this deception, giving PW1 a cheque for payment that would have never been able to meet payment, had dishonestly induced PW1 to wait for payment.  So the prosecution had already proven the charge beyond all reasonable doubt so that the conviction shall stand, the appeal should be dismissed accordingly. 

Consideration

32.  In the Court of Final Appeal case HKSAR v Hui Lai Ki [2024] HKCFA 7, it was stated that the Magistracy Appeal is conducted by way of rehearing on the evidence before the court.  The judge must be satisfied that the appellant’s guilt had been proven beyond reasonable doubt on the evidence, fair in which the appeal must be allowed.  On such rehearing, if the judge comes to a different view on the evidence before the court, that itself is an error which justifies appellate intervention to reverse the decision of the magistrate to convict. 

33.  The Court also recognised that an appellate court conducting a rehearing would be subject to limitations arising from the fact that it does not have the advantage of receiving witness evidence first hand.  Hence, it must exercise caution when considering findings of facts based on oral testimony.  Yet, despite those limitations, it remains the duty of the appellate court on an appeal by way of rehearing to come to its own conclusion on disputed issues of facts or law. 

34.  Firstly, concerning the present appeal, the prosecution case mainly rests upon the evidence of PW1.  The Magistrate had received his evidence first hand and after thorough analysis accepted his evidence.  There is no ground or basis to disturb its findings. 

35.  As to the Appellant’s evidence, he maintained that it was just a business transaction, suffering loss, and he had no intention to deceive PW1 at all.  However, the Magistrate had also gone through his evidence in detail and found the Appellant not honest and reliable, particularly stating out all the grounds for disbelieving the Appellant, including that the Appellant must have known his account had been closed a year ago yet still issuing the cheque to PW1. 

36.  According to his video-recorded interview, there had already been four transactions relating to dishonoured cheques before.  The cheque in question was with number 236, which the last cheque issued was 210, yet the Appellant also could not tell where all other cheques in between had gone.  Further, the Appellant’s version of purpose for protection and assurance was simply unsound, as the account had no money and the Appellant also did not know when the money would come. 

37.  So all in all, the Magistrate did not accept the Appellant’s evidence and there is nothing wrong in that conclusion.  Clearly, the Appellant when issuing the cheque to PW1, knowing full well that there was no money in the account and the account had been closed for a year, and he knew full well that he could not be able to meet payment, but simply dishonestly inducing PW1 to wait for payment. 

38.  For rehearing, I am also satisfied the Appellant’s guilt had been proven beyond all reasonable doubt.  Therefore, the conviction do stand and the appeal is dismissed accordingly.