AU HANG AND ANOTHER v. CHOW CHI HUNG

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J U D G M E N T

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Penlington, J.A.:

1. This is the judgment of the Court.

2. This is an application for leave to appeal against conviction of charges of conspiracy to defraud the China Light and Power Co. Ltd. (CLP.). The applicants were respectively the 4th, 5th and 7th defendants in the court below and we shall refer to them by those numbers (i.e. D4, D5, D7) and each was the subject of a separate charge. Each of the applicants is the owner or shareholder of a factory in the Tuen Hun area in which was installed a meter to record consumption of electricity supplied by CLP, The first 2 defendants below (D1. D2.) were employees of CLP and the 3rd defendant (D3)had a small metal factory. They pleaded guilty to a joint charge of conspiracy to defraud. It was the case for the Crown that D1, D2 and D3 approached factory owners with an offer to alter their meters so that they gave a false reading and that the amount saved should be shared equally between the defendants and the Particular factory owner. This involved the meter being opened, its lead seal having been removed, the dials altered and another lead seal being put in place of the original with the use of crimping pliers.

3. Suspicion had fallen on D1 and D2 some time before they were eventually arrested by ICAC officers and selected meters had been read by those officers for a period of time which seemed to indicate that the meters were in fact being turned back. One of those meters was in D4's factory.

4. When arrested D2 had a handbag thrash contained various items such as a seal stamp, lead seals, several cheques and an address book. There was however also a black covered notebook (P1) the admissibility of which was very strongly disputed at the trial and which has been the subject of much of the argument before this Court. D3's factory premises were also searched and crimping pliers, lead seals and other tools and equipment, which clearly were for use in putting false seals, onto meters was found. D3 also had an address book which contained the names of D4 and D5.

5. None of them gave evidence for the Crown.

6. Following the arrest of D1, D2 and D3 some 68 factory owners were also arrested and were charged with conspiracy to defraud. The applicants were amongst them and they were interviewed by ICAC officers, D4 and D5 admitted that they knew D1-D3 but denied being involved in the alleged conspiracy. D7, in a cautioned statement, admitted his involvement. The admissibility of that statement was contested at the trial but it was received and Mr. Alderdice who appears for D7 does not seek to challenge that decision here. He does however say that even with the statement the case against his lay client depended so heavily on the contents of P1 that if it was wrongly admitted the evidence was not sufficient to make D7's conviction safe.

7. In their statement D4 and D5, while denying the offences, admitted that they were acquainted with D1, D2 and D3. D4 said he played mahjong with them and they came to his factory to arrange games. When he lost at these games he would pay by cheque, usually $2-3,000 whereas his winnings were paid in cash. D5 said that suggestions had been made to him by D1, D2 and D3 concerning his saving on power bills by them altering his meter but that he had never agreed to that being done.

8. The meter in each factory which was suspected of being tampered with was recovered and, together with its seal, was examined by Dr. Lau Chau-ming, a Forensic Scientist of the Government Laboratory. His evidence has been the subject of some attack before us by Mr. Sanguinetti for D5 on the basis that the chain of evidence relating to various exhibits was not complete in that there was not sufficient evidence to show for instance that the crimping pliers found on D3 were the ones examined by Dr. Lau. We do not consider that these grounds have been made out. As was submitted by Mr. Coghlan for the Crown who had the advantage of being the only counsel before us who also appeared in the trial, these were not exhibits such as packets of heroin which cannot be distinguished except by tags with names or numbers attached to them. In such a case there must be evidence to show that the particular packet seized was the one examined and then produced. Here the exhibits were identified in evidence as the ones seized and were sufficiently distinguishable for Dr. Lau to be able to say in Court that they were the ones he examined.

9. The evidence at the trial was that a factory owner who wished to have electricity supplied would apply to CLP for a Meter to be installed. When that had been done and the meter tested, a thin wire would be place in the meter to which was attached a lead seal bearing the CLP logo, its initials and a serial number which would be common to the district. The wire would not have to be removed unless the meter was to be examined or repaired at any time If that was done the wire would be cut and, when replaced, re-sealed. A meter could however function for quite a long time without being opened.

10. Dr. Lau's evidence in respect of the meter seals recovered from the meters of the 3 applicants here were that they differed in physical characteristics from the serial number and the CLP's initials and logo on the genuine seals as supplied to him. However In the case of D5 the evidence was that his meter was installed in 1976 and there was no direct evidence as to what tools had been used then to affix a seal. Nevertheless the trial judge was entitled to accept the evidence that all these recovered seals had however been manufactured using the combination of tools found on either D2 or D3.

11. Each of the applicants had been the person who had signed the application form for a meter in respect of his individual factory. D4 in his statement to the ICAC said he owned a 30% interest in his factory, the balance being held by his brother and sister-in-law. D5 said he was the sole proprietor and ran the factory with the help of his daughter, D6, who was charged with him but acquitted. D7 said he had partners, one Chau Tang and seldom came to the factory. Chow Tai was however active in the management of the factory. It was the Crown's case that in respect of each applicant, these being small family owned factories each was in such a position that if the meters were being tampered with so as to reduce the charges payable he must have known about it and agreed to that being done.

12. We turn now to what was the most important point argued and the evidence without which it was submitted the convictions, especially of D4 and D7, could not stand. This was the admissibility of the contents of P1.

13. This notebook was found in D2's Handbag but there was no evidence called that the in fact made it. There was no evidence that any of the applicants had ever seen it and they had therefore never had an opportunity to challenge the maker as to its contents. It was submitted for the applicants that, even if the authorship had been proved, there was nothing to show it was a statement "made in furtherance of the conspiracy" and therefore admissible. It was further argued on behalf of D7, a submission also adopted by counsel for D4 and D5, that the tools and other equipment for making false seals found in. D3's premises are similarly not as evidence against these applicants as there was no evidence directly connecting them with those tools. It was the Crown's case that it was not necessary to prove who had kept the record shown in the notebook. It was found in D2's possession but even if it had not been kept by him it clearly was a record made by one of the conspirators It was a necessary record showing the meter readings as taken by the official CLP meter reader on certain dates and the reading on other dates after the tampering had, been done. These records were needed in carry out the conspiracy so that the meters were not turned back in such a way as to arouse suspicion within CLP and to enable the conspirators to recover from the factory owners part of the savings in their electricity bills.

14. The applicants relied on the decision in R. v. Donat 1986 82 CAR 173 which was cited by the trial judge That was a case of conspiracy to import illegal drugs into the U.K. and a witness was called who was a fellow conspirator. He gave evidence in chief, as did his daughter, identifying the appellant Donat; both retracted that evidence in cross-examination. The jury were directed however that they might look for corroboration of the evidence in chief at certain records found on another conspirator, a co-defendant. These records were however not only found on the co-conspirator, they were made by him and he gave evidence. It is these Two later factors, absent here, on which reliance is placed.

15. At p.179 Lord Lane said that the problem of the admissibility of extra-judicial statements made in furtherance of the conspiracy by persons other than the defendant is not easy. He referred to the doctrine as set out in Cross on Evidence, 6th Ed. p.527 which points out the danger of a circular argument i.e. the statements are admissible only if there is a conspiracy, but you cannot show such a conspiracy without them. Lord Lane goes on however to cite with approval what was said in Cross about this problem "The answer is that the agency (between the fellow conspirators) may be proved partly by what A said in the absence of B and partly by the other evidence of common purpose. It makes no difference which is adduced first, but A's statement will have to be excluded if it transpires that there is no other evidence of common purpose; it is another instance of conditional admissibility. (Tripodi v. R. 1961 104 C.L.R. 1 applied and possibly extended in Zampoglione 1982 6 A.C.R. 287 306." Lord Lane went on to say in Donat there was ample other evidence of conspiracy.

16. That dicta was referred to by Yang V.P. (as he was then) in R. v. Hui Wai-bun C.A. 403/1986.There however the evidence was that although the records were kept by a fellow conspirator the appellant had access to them and in fact had checked the contents:

17. We were also referred to the New Zealand decision of Buckton 1985 2 N.Z.L.R. 257 heard before a very strong court of Woodhouse P and Cooke, Richardson, McMullin and Somers JJ. In approving the earlier decision in R.v. Humphries 1982 1 N.Z.L.R. 353, it was held that "before the words or actions of a fellow conspirator were admissible against a defendant there must be reasonable evidence of the existence of a common intention of the type referred to in the indictment". (Per Somers J. at 263.) It was also held that the existence of the requisite common intention must be established on the balance of probabilities i.e. it must be more than a mere possibility

18. Applying that test here, was there other evidence apart from the notebook, against each applicant showing that, on a balance of probabilities he was a member of a conspiracy to defraud CLP. As regards D4 and D7there was Ample such evidence. D4's meter had a false seal and observations carried out showed it had been turned back. D1, D2 and D3 were frequent visitors and D4 gave D2 substantial sums of money in the form of cheques. D7's meter also had a false seal and he had admitted the offence in a cautioned statement.

19. We turn now to the argument that, unlike Donat, the author of the notebook, whoever he was, was not a witness and there was no evidence of authorship .That however was the same position in R. v. Chau Sau-tai and Others 1969 H.K.L.R. 214. There the evidence against 3 of the accused (D2-D4) charged with conspiracy to deal in dangerous drugs was that they had been observed over a period of some 12 days to be closely associating with another accused (D1) who was found with a large consignment of drugs in the form of blocks of morphine. On the paper wrapping each block was a number. In a hotel room occupied by D2-D4, D4's passport was found in a drawer and in it was a piece of paper with numbers written on it corresponding to those on the morphine wrapping paper. There was no evidence as to who had written the numbers down on the piece of paper found in the hotel apart from the fact that it was found in D4's passport. At 233 Huggins J., having set out the relevant law generally as to the whole basis of criminal conspiracy in his characteristically clear and lucid manner, said in relation to how the paper should be considered as evidence against D2 and D3: "we think it would be a reasonable conclusion that it was a document prepared by one conspirator for the purpose of furthering the conspiracy in some and as such it was evidence which could properly be considered against the 2nd and 3rd appellants. The judge left it to the jury to decide what weight they could attach to it and we think that was enough".

20. It is noteworthy that in Chau Sau-tai the court did not consider that there had to be evidence as to what was the actual purpose of preparing the writing so long as it seemed to be in furtherance of the conspiracy. Here the purpose of the notebook is, we consider, very clear. It was an essential tool for achieving the purposes of the agreement in the same way as the crimping pliers and other equipment found. All those exhibits are admissible for the same reason. We are therefore satisfied that the trial judge was not in error in admitting P1 as an exhibit, even without evidence as to who had prepared it, having found it was made by a conspirator in furtherance of the agreement.

21. The final point taken by D7 in relation to the notebook is that evidence should not have been allowed from the ICAC officer who seized the notebook as to the relevance of its contents. This it was submitted "gave it life", something which could only be done by the maker of the document.

22. We agree that if the maker is not a witness the document admitted as being made in furtherance of the conspiracy must speak for itself-as did the list of numbers in Chau Sau-tai. Here however the ICAC officer did no more than point out how various numbers recorded on pages which had the applicant's name on them corresponded to their meter numbers and to the readings as shown in the CLP bills which were, produced. It is true that there were other numbers which were not at official meter readings and it was the crown's case that they represented the number to which the meter had been turned back and the date when it was done but all the witness did was to point out the figures and to compare them with the other relevant documents. It was for the judge to draw what conclusions she might from them, using of course the criminal standard of proof that such inference was the only reasonable one to come to. This she did.

23. One aspect of this evidence however did cause us some concern. The original notebook as produced in this Court contains some pencil notes in English which it would seem were made by the trial judge. Clearly it was wrong to do that and if she had wanted to make notes on the relevant pages- which was probably helpful-she should have had a copy made for her own use. In the event it does not seem to have done any harm but an original exhibit should never be altered in that way, if only to avoid later confusion.

24. There were other grounds of appeal argued for D4 and D7 which we do not find persuasive but we will briefly deal with.

25. There were references in P1 and other documents to "Au"or "Lo Au" and it was argued that Au being a common name those references did not necessarily refer to D4. We think that in the context of the evidence here the trial judge was quite entitled, in the absence of any evidence by D4, to conclude that those references in the documents were in relation to D4. His factory and meter number were clearly referred to in some of them.

26. It was also submitted for D7, who gave evidence, that the trial judge did not fully consider that evidence which was that he was only a shareholder of the company, Diablo Co. Ltd., who was the actual factory owner and consumer and that if there was a conspiracy with employees of CLP it was with Chow Tai, the son of his brother Chow Tang, a co-founder of the company. He said he made the confession statement purely to get Chow Tang and his son out of trouble while the trial judge did not deal specifically with this evidence, in her full and very careful Reasons for Verdict she did say that she had carefully considered all the evidence against each applicant, bearing in mind the criminal standard of proof and she had no doubt as to their guilt. We have also no doubt she included in that the evidence of D7 in relation to the statement and, not surprisingly, did not find it raised a doubt in her mind as regards D7's guilt.

27. We are satisfied that, once the contents of the notebook had been admitted as evidence against then, the case against both D4 and D7 was overwhelming their applications for leave to appeal against conviction are refused.

28. The evidence against D5 was clearly not as strong. There is only one page in the notebook relevant to him and one line of numbers, which do however correspond to readings of D5's meter as shown in his power bills as at 18/6/86. There is also some confusion as it seems the judge did not have a certified translation of P1 as it was seized but had a photocopy on which D2 had made some writing when being interviewed by ICAC officers. The characters and words "Ming Ya" and "first time" appear on the copy but not on the original.

29. It is clear that if the alleged conspiracy was to be carried out successfully the person turning the meter back had to know what the previous official reading had been. That for the 18th Jung as shown in D5's bill was 575920 as against the previous reading of 570356. There was evidence given at the trial that meter readers were rotated round so that the one man did not read the same meter in succession so the only source of information for whoever kept the notebook was either the account holder or CLP's accounts section. The improbability that the accounts section would give out that sort of information to a member of the public or one of the Company's own meter readers in view of the precautions taken to avoid malpractices was raised.

30. The notebook contained but one entry in respect of D5 - this on a page well separated from the rest. It was an unfortunate occurrence in this trial that the documents entitling themselves certified translations of the individual pages of the notebook were not what they purported to be. What happened was that the investigation officer caused those individual pages to be photostated. Then in the course of the investigation they were gone through with D2. The investigators and D2 made notes upon them and D2 initialed them. The notes made were such things as the full characters relative to the name appearing there, thus enlarging the single character which was actually on the page and, in the case of D5, a note in characters meaning "first time". There were also calculations.

31. It was these altered photostats that, through some inadvertence, were produced for certification. And it was these which came into the trial as the apparent translation of the contents of the notebook. This should not have happened.

32. Nothing turns on this in relation to D4 and D7 but D5 is, in our view, in a different category. The trial judge may have been misled in respect of him.

33. In coming to the conclusions she did, the trial judge placed reliance on six items as bearing evidential Weight leading to a certainty of guilt. These were: the application for his meter: his meter with a forged seal: the expert evidence: the page in the black notebook: a number of electricity bills: the appearance of his name in two address books but not in a third: a Record of Interview: and the Business Registration Certificate of his factory.

34. Of these the meter application and the Business Registration Certificate were essential proofs but were, by themselves, not probative of guilt. The expert evidence went to the tampering of the meter and was supportive of the Crown's case as was the forged seal on his meter. The electricity bills were, with respect, ambivalent. They were, higher after the supposed tampering than before. They showed no wide variations and they could only tell against D5 if it were to be inferred that they were not true bills because of a turning back of his meter The Record of Interview was exculpatory in nature and appears to have been brought into evidence by the Crown to show an association as between D5 and D1, D2 and D3.

35. The page in the black notebook was vital but it had to be viewed in the light of D5's other name, Mak Yin Chung, being added to it - his proper name was Mak Lam Po - in characters rather than the single character Mak, the notation "first time" and the forged seal. Further it had to be considered in the light of the contents of the Record of Interview and the electricity bills.

36. The trial judge made reference to the entry relating to D5 in the black notebook as being "obviously the commencement of a similar procedure" by which she clearly considered it to be the start of a course of meter tampering and consequent defrauding of the Electricity Company. She made no explicit reference to those passages in the Record of Interview where D5 expressly denied any wrong doing and, more importantly, the passage where he accepted that he had been approached to enter into the conspiracy and to which he stated his reply had been:

"I said to them at that time that the electricity consumed by my factory by was not much and that the alteration had little use so I didn't promise them. Afterwards they haven't mentioned this again."

37. While the single entry in the black notebook and the forged seal could be considered as showing the entry of D5 into the conspiracy, our concern is that the trial judge, by her apparent reliance on the possibly misleading certified translation, may have elevated that possibility into a certainty. The contents of the interview were before her for her consideration of the truth of the whole. Those contents raised the alternate possibility that the name in the address book was there because an approach had been made to D5 and that the entry in the black notebook was an indication of something done - the forging of a seal-without the knowledge of D5, to encourage him to participate. The tampering of meters and the defrauding of the Electricity Company was a course of conduct entered into by D1, D2 and D3 over a long period of time and for many other factory owners. They were accustomed to this work.

38. This possible defence which was only relevant to D5 should have been separately considered by the trial judge. It clearly was a defence which may well not have been found to have merit but it doer not appear to have been properly evaluated.

39. This was a difficult trial. The judge had, in all, ten defendants in front of her, seven of whom went  for trial each on separate conspiracy charges. We in this Court had considerable difficulty in appreciating what the case for the Crown was against each of the individuals and what was the evidence upon which it was sought to base guilt.

40. It may be that in the welter of exhibits and defendants, and by unintentionally misleading herself by reliance on the certified translation, the trial judge in the case of D5 did not, and was not seen, to give a proper evaluation to the issues before her in respect of him. In our judgment there does arise, and unresolved, such a possibility sufficient to cause us unease of such strength as to view the conviction as unsafe and unsatisfactory.

41. We therefore refuse the applications of D4 and D7 but would grant the application of D5, treat the hearing as the hearing of the appeal, allow the appeal and quash the conviction.