HKSAR v. CHAN YIN YAT KEN

CACC 331/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

criminal APPEAL NO. 331 OF 2005

(ON APPEAL FROM DCCC NO. 748 of 2004)

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REASONS  FOR  JUDGMENT

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Stuart-Moore, VP (giving the reasons for judgment of the Court):

General background

1.  On 20 July 2005, the applicant was convicted on 8 charges and sentenced to a total of 7 years’ imprisonment.  This followed a trial in the District Court before Judge Sweeney.  The applicant sought leave to appeal against conviction and sentence.  At the conclusion of the proceedings on 1 June 2006, we dismissed both applications and now give our reasons for so doing.

2.  The particulars of the 1^st charge, conspiracy to defraud, contrary to Common Law and punishable under section 159C(6) of the Crimes Ordinance, Cap. 200, were that the applicant:

“… on divers days between 1^st November 2002 and 31^st July 2003, in Hong Kong, conspired together with Leung Suet-wing, Cheng Koon-wah, Yu Kwok-wah, a person known as ‘Ka Lam’ and other unknown persons to defraud The Hongkong and Shanghai Banking Corporation Limited (‘the Bank’) by dishonestly supplying and submitting to the Bank false information and false supporting documents as to Leung Suet-wing’s income and financial position for the purpose of applications for a mortgage loan, knowing that such information and supporting documents were false.”

3.  Charges 2 to 6 were in similar terms, relating to conspiracies of the same kind between 1 October 2002 and 31 July 2003.  The precise details of those conspiracies are, for present purposes, unimportant.

4.  Originally, seventeen defendants (including the applicant) faced charges arising from a connected series of fraudulent mortgage applications where in each case the banks were presented with false supporting documentation.  Ultimately, the applicant, who the prosecution alleged was a ringleader, was left as the sole person on trial after the others had all pleaded guilty to one or more charges.  Six accomplice witnesses who were named in some or all of charges 1 to 7 were called to give evidence about the role played by the applicant in those offences.

5.  The 7^th charge differed only slightly in that it alleged that a pecuniary advantage, namely a mortgage loan, was obtained from the Bank of Communications by deception, contrary to section 18(1) of the Theft Ordinance, Cap. 210.  In common with the conspiracy charges, fake documentation relating to a certain individual’s income and financial position was submitted to the bank for the purpose of obtaining a mortgage loan.

6.  The judge, when giving his Reasons for Verdict, briefly set out the economic climate at the time when the offences in charges 1 to 7 were said to have been committed, saying:

“1. In 2002 and 2003 the Hong Kong property market was in the doldrums. Both volume of sale and price were down as property no longer looked a sure fire investment to the general public. The commercial banks in Hong Kong were awash with money that few people wished to borrow. Eventually some banks put their heads together with some large property developers and devised a scheme to lure reluctant borrowers back into the market. Traditionally in Hong Kong the banks would only advance some 70 or 80 per cent of the purchase price of a new or second-hand home. The borrower was expected to have the balance of 20 or 30 per cent, both as a sign of his or her financial well-being and to protect the bank from a fall in property prices.

2. These traditions of financial prudence were greatly relaxed in 2002/2003. Now a first mortgage became readily available for, say, 70 per cent of the purchase price. A second mortgage was equally available for the balance of 30 per cent and, as if that were not enough, to sweeten the cake a ‘rebate’ of between 5 and 10 per cent of the purchase price was given in cash to the lucky purchaser by the bank and/or the developer. I say ‘rebate’ because that is what the banks called it. However, the word ‘rebate’ implies paying back an overpayment. In this scenario, however, there had been no overpayment by the purchaser. Rather, the banks and the developers were giving free money to customers to use their services/purchase their flats.

3. All the typical customer had to do at this time was to provide some rudimentary proof of income, put up a cash deposit of $10,000 and soon 100 per cent financing was available to him. He then picked up the keys and title deeds, as well as tens of thousands, sometimes hundreds of thousands of dollars in cash rebates.

4. As always in Hong Kong, where an opportunity for easy cash presents itself criminals are quickest to seize the opportunity. Men who held no regular jobs and had no known credit history suddenly appeared out of the woodwork waving fake employment letters, bank statements and tax demand notices from the Inland Revenue Department.  No real attempts were made by banks to verify any of these documents.”

7.  There were two methods used by the conspirators to obtain fake documentation with which to attempt to defraud the banks.  By the first method, the potential applicant for a mortgage would have a bank account opened in his name and for about the next three months a paper company controlled by the gang would pay in sums of about $60,000 showing this as “salary”.  A tax return would be sent to the Inland Revenue Department resulting in that department sending out a tax assessment notice claiming tax on the declared income.  The fraudsters would also prepare an “employment letter” from one of the paper companies they controlled.  By way of alternative, the conspirators devised a method of producing blank copies of the fake documentation they needed and then, using their computer, they printed onto these documents all the necessary details.

8.  It was not disputed at trial that the gang of six men, who were the applicant’s alleged co-conspirators, either purchased or attempted to do so, thirteen properties worth $38 million.  The so-called “rebates” on these properties would have been worth $2.4 million.  As some of the mortgages were refused, the actual rebates they managed to obtain amounted to $844,000.

9.  There was one further offence (charge 8) included in the charge sheet against the applicant.  This alleged that the applicant had done acts tending and intended to pervert the course of public justice, contrary to Common Law.  The particulars of this charge were that he:

“… between the 4^th day of October 2004 and the 24^th day of December 2004, in Hong Kong, with intent to pervert the course of public justice, did a series of acts which had a tendency to pervert the course of public justice in that he incited and instructed Lau King-man (1) to write for him three letters to be sent to Lau Ting-tung, Tsang Kar-keung and Chan Yuk-sing, Wilson respectively; and (2) to make a false statement or provide false information to the Hong Kong Police Force.”

10.  This charge related firstly to letters which the applicant caused to be sent to three prosecution witnesses while the applicant was in custody awaiting trial at Lai Chi Kok Reception Centre.  Allegedly, the applicant incited a fellow inmate, Lau King-man (Lau), not only to write the letters but also, secondly, to provide false information to the police.  This was done after the applicant came to realise that a number of his alleged co-conspirators had agreed to give evidence for the prosecution.  The purpose behind this offence was said to have been an attempt to weaken or destroy the accomplices’ credibility by making it appear that some or all of those witnesses had threatened to give false testimony against the applicant unless he paid them a large sum of money.

11.  The applicant gave evidence at trial.  His defence was that some of the accomplice witnesses had worked with him in the past.  He was aware that Yu Kwok-wah (Yu) and Cheng Koon-wah were working with the others to perpetrate mortgage frauds but he asserted that he had played no part in these himself.  He alleged that Yu had accused him at one stage of taking away some of his (Yu’s) business and of demanding $200,000 in compensation.  Then, according to the applicant, he was blackmailed in prison by the accomplice witnesses who had said they would testify against him if that money was not forthcoming.  His former cellmate, Lau, who gave evidence against the applicant on the 8^th charge, was said by the applicant to have been part of a conspiracy against him with all the others.

Grounds of appeal against conviction

12.  In a host of grounds covered by an 80-page document (in the English translation), followed by over 100 pages of written submissions (in the translated version), the applicant complained about various aspects of the judge’s handling of the case and about his own counsel’s conduct.

(i) Judge’s handling of the case

13.  We do not need to go through the many criticisms made about the judge concerning his assessment of the evidence or his decisions on the law.  Nothing which the applicant has submitted on these aspects of the judge’s handling of the case can be faulted.  Indeed, many of the applicant’s submissions amounted simply to a reiteration of his own case at trial.

14.  In a further complaint, the applicant submitted that the judge had interrupted the proceedings to such an extent that he had effectively “entered the arena” revealing, in the process, a bias against the defence which was being run.

15.  We have been provided with 468 pages of transcript from which it is plain that the applicant has failed to make out his contention on this ground.  On occasions, the judge quite properly interrupted to enable him better to understand the purpose of the evidence being led, the exact nature of what was being suggested by counsel in cross-examination and to prevent either leading questions from being asked or the introduction of inadmissible evidence.  Although some comments displayed some impatience with prolixity, the judge’s conduct overall did not cross any impermissible boundary.

16.  There was, however, one moment in this comparatively lengthy trial when one of the accomplice witnesses (PW5), who had admitted having nine previous convictions to his name prior to his plea of guilty to conspiracy to defraud in the present case, was told by the judge that he (the judge) did not believe the evidence PW5 was giving.  PW5 had exhibited considerable hostility to the prosecution in many of the answers he had given by that stage and, shortly before the prosecutor applied for him to be made hostile, the judge said to PW5:

“Right.  And I will remember your face when I come to sentencing, because I am sentencing in this case too.” (Appeal bundle p. 263)

17.  With respect, this was not an appropriate remark to have made in the circumstances.  In our opinion, however, this did not cast a shadow over the way in which this trial was conducted insofar as the applicant is concerned.  It is quite apparent that the judge was well aware of the issues raised in evidence and, in his assessment of that evidence, he provided convincing reasons for his acceptance of most of the testimony given by the accomplices despite the unsavoury and criminal background from which each of them appears to have come.

18.  The applicant also pointed out that when, as part of the defence case, the applicant’s witness (DW2) had made the allegation in his evidence that there had been a conspiracy to frame the applicant to which he (DW2) had been a party, the judge interrupted to say that on DW2’s own admission he recommended that DW2 should be prosecuted and the judge asked prosecuting counsel to make sure his recommendation was passed on.  This could have been done at the conclusion of the trial and in our view it was not appropriate to do so at this stage of proceedings.  However, this did not, in our view, affect the fairness of the trial as a whole and, as such, this is not a ground of any substance.

19.  The applicant made one further criticism of the judge’s approach with which we consider we should deal.  This related to one of the accomplices (PW3) being allowed to carry out a dock-identification of the applicant despite the fact that PW3 (who knew the applicant by the name ‘Chan Chi-kwan’) had earlier failed to identify the applicant at a formal identification parade.  However, the judge explained why he had permitted this to happen in the following way:

“23.   This witness [PW3] conceded that he had not picked out the defendant as ‘Chan Chi-kwan’ at an identity parade organised by the police in February 2004.  However, he did recognise him on subsequent remands at Lai Chi Kok and at the magistrates’ court and he recognised him in court.

24.     I would not normally allow a dock identification in court where there had been no identification at the ID parade.  However, the witness testified:

‘I could not recognise him at the identity parade because they all wore shower caps.  I was nervous and was not allowed to approach them.  I could only view them from behind glass.’

25.     I then allowed a dock identification.”

This extract from the judge’s Reasons for Verdict was preceded by a short account of the way in which the applicant had alleged that PW3 had been blackmailing him while the two of them were together in Lai Chi Kok.

20.  There was no substance to the applicant’s complaint that the judge had adopted a prejudiced approach to this case and we are equally satisfied that the judge gave no impression of bias against the applicant.

(ii) Conduct of defence counsel

21.  In a lengthy submission criticising the way in which counsel for the defence had presented the applicant’s case, the applicant complained principally that a number of important questions were never asked either of prosecution witnesses in cross-examination or of himself when giving evidence in-chief.  In addition, the applicant alleged that counsel had persuaded him not to call three material witnesses who were available for the defence.

22.  In response to these allegations, the applicant’s trial counsel made an affidavit setting out how he had viewed as “irrelevant and immaterial” the majority of the questions the applicant had suggested should be asked.  As to decisions of this kind, counsel for the defence has a wide discretion and nothing which has been urged upon us by the applicant has led us to consider that counsel failed in his duty in any way.

23.  When counsel dealt with the way he had conducted the questioning of the applicant in-chief, he said that the applicant had been given every opportunity to express himself.  The transcript bears this out.

24.  As it so happens, the applicant, who has shown himself to be unusually voluble, wrote to defence counsel on 13 March 2006 stating:

“… after I read the transcript, I feel respectful for you and thank your authoritatively defending during the trial … You worked so hard for me to defend … I won’t be here all my life.  Some day I can actually thank you in person …”

Now, in the cold light of day, the applicant has turned against his counsel and made up what we are satisfied were false allegations against him in an endeavour to find a basis for criticising the fairness of his trial.

25.  Lastly, with regard to counsel’s decision not to call a number of potential witnesses, all of whom were serving prisoners on apparently friendly terms with the applicant, the applicant signed a written agreement to this course being taken.  The document is dated 13 July 2005 and we are satisfied that the applicant had been properly advised before agreeing to this decision.

26.  There is no substance to this ground.

Conclusion

27.  The evidence against the applicant was overwhelming.  There being no merit in the grounds raised by the applicant, his application was dismissed.

Sentence

28.  The applicant was sentenced to concurrent terms of 3 years’ imprisonment on the 1^st and 2^nd charges.  On the 3^rd charge, the sentence was 3 years’ imprisonment but the judge made an order that 2 years of that term should run consecutively to the sentences on charges 1 and 2.  Concurrent terms of 3 years’ imprisonment were imposed on charges 4 to 7.  On the 8^th charge, the applicant was sentenced to a consecutive term of 2 years’ imprisonment, making 7 years in all.

29.  The judge, in his Reasons for Sentence, referred to the potential gain of $2.4 million in terms of the cash rebates which were payable if the gang had successfully managed to purchase the 13 properties, at a total cost of $38 million, using false documentation.  In the event, only $844,000 was advanced.  This was because, as the judge expressed it:

“… some mortgage applications fell through, especially once the police had started to make arrests.”

The judge indicated, however, that he would sentence on the higher figure having regard to the fact that this was “what the conspirators attempted to obtain by their deception”.

30.  The judge referred also to the applicant’s previous conviction in November 2000 when he was sentenced to 2½ years’ imprisonment for conspiracy to defraud.

31.  The applicant’s complaint about his sentence was mainly centred on a comparison between his 7-year term and the prison terms given to his co-conspirators whose sentences ranged from 6 to 28 months.  However, as the applicant is well aware, all of the others pleaded guilty and would have received discounts of at least a third for so doing.  In addition, some had given evidence for the prosecution and would have earned an enhanced discount.  Significantly, also, none of the others had been involved to the same extent as the applicant in this series of offences most of them having pleaded guilty to either one or two offences.  The applicant’s sentence, without any discount, of 5 years’ imprisonment in total for the offences in charges 1 to 7 seems to us to have been appropriate in all the circumstances.

32.  Lastly, the applicant received an additional 2 years’ imprisonment on the 8^th charge which the judge described as “a pernicious offence that goes to the root of our system of justice”.  The judge also observed that the applicant had shown:

“… not the slightest degree of remorse.  On the contrary, he has made strenuous attempts throughout his time in custody and indeed throughout this trial to turn justice on its head to suit his own needs.”

33.  We are satisfied that the judge had properly reflected the gravity of the last offence and that he had been correct to have made this sentence wholly consecutive to the totality of the terms imposed on the other charges.

34.  Accordingly, this application was dismissed.