HKSAR v. KIU MEI LING AND OTHERS

CACC 110/2019

[2021] HKCA 78

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 110 OF 2019

(ON APPEAL FROM HCCC NO 348 OF 2017)

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J U D G M E N T

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Introduction

1.  The 1^st, 2^nd and 3^rd applicants are members of the one family. They were D1, D2 and D3 respectively at trial and I will refer to them by their trial designations.  D1 is the wife of D3, and D2 is their son.

2.  On 14 January 2019, the applicants stood trial before Deputy High Court Judge Lunn (the judge) and a jury variously charged with two offences of fraud (Counts 1 and 2)[1] and three offences of money laundering (Counts 3, 4 and 5).[2]  On 25 March 2019, at the conclusion of the trial the applicants were convicted of the counts they each faced.  D1 was convicted of all five counts on the indictment and sentenced to a total term of 11 years’ imprisonment.  D2 was convicted of Counts 2 and 3 and sentenced to a total term of 7 years’ imprisonment.  D3 was convicted of Counts 4 and 5 and sentenced to a total term of 6 years and 6 months’ imprisonment.

3.  On 8 April 2019, D1 filed a notice of application for leave to appeal against conviction and sentence.  On 16 April 2019, D2 filed a notice of application for leave to appeal against conviction only.  On 9 April 2019, D3 filed a notice of application for leave to appeal against conviction and sentence. 

4.  The applicants were granted legal aid in respect of their applications for leave to appeal against conviction and were legally represented at the leave hearing.  However, D1 and D3 appeared in person in respect of their applications for leave to appeal against sentence.  At the leave hearing, D1 and D3 abandoned their leave applications against sentence and their sentence appeals were dismissed.

The counts on the indictment

5.  There were five counts on the indictment.  Counts 1 and 2 concerned allegations of fraud, with Count 1 against D1 only, and Count 2 jointly against D1 and D2.  Counts 3, 4 and 5 concerned allegations of money laundering, with Count 3 jointly against D1 and D2, and Counts 4 and 5 jointly against D1 and D3.[3]

6.  The particulars of Count 1 alleged that, between 24 May 2004 and 31 May 2009, D1:

“by deceit, namely by falsely representing to Bonjour Cosmetic Wholesale Center Limited (‘Bonjour’) that:

(1) the salary payment information (‘the Information’) produced by Kiu Mei-ling for Bonjour was true and accurate; and

(2) the management of Bonjour had agreed and approved the overall payroll amounts,

with intent to defraud, induced Bonjour to make payments and overpayments of salary in the total sum of $28,123,360.71 Hong Kong currency according to the Information, which resulted in benefit to Kiu Mei-ling and/or any other person(s), or in prejudice or a substantial risk of prejudice to Bonjour.”[4]

7.  The particulars of Count 2 against D1 and D2 were expressed in the same terms as in Count 1, except the offence period was between 1 June 2009 and 31 March 2011; the Information was produced by “Kiu Mei-ling and/or Ha Ting-pong”; and the sum involved was $12,368,388.81.[5]

8.  The particulars of Count 3 alleged that, between 30 September 2004 and 18 March 2011, D1 and D2:

“knowing or having reasonable grounds to believe that property, namely a total sum of $10,644,958.10 Hong Kong currency, in whole or in part directly or indirectly represented any persons proceeds of an indictable offence, namely the frauds averred in the first and the second counts herein above, dealt with the said property by causing or allowing bank accounts held in the name of the said Ha Ting-pong to receive or acquire the said property.”[6]

9.  The money allegedly laundered in Count 3 concerned four bank accounts held by D2 (referred to as “D2-account 1, 2, 3 and 4”).  The particulars of Counts 4 and 5 against D1 and D3 were in the same terms as in Count 3, except the money allegedly laundered in each count concerned a single bank account held by D3 (referred to as “D3-account 1 and D3-account 2”).  In Count 4, the offence period was between 30 June 2004 and 3 January 2011, involving a total sum of $10,586,616.66; while in Count 5 the offence period was between 20 October 2004 and 18 March 2011, involving a total sum of $16,468,193.65.[7]

The prosecution case

10.  Bonjour Cosmetic Wholesale Center Limited (Bonjour) is a publicly listed company in Hong Kong that retails in cosmetic products and operates a beauty parlour.  At the material times, Mr Wilson Ip (Mr Ip) was the Chief Executive Officer and Chairman of Bonjour, and Mr Alan Chan (Mr Chan) was its Executive Officer. 

11.  On 24 May 2004, D1 was employed as the Manager of the Human Resources and Administration Department (HR Department) of Bonjour.  On 23 August 2004, D2 was employed as a HR clerk in the HR Department and on 1 June 2009 he was promoted to Assistant HR Manager of the HR Department.  D1 and D2 remained in their respective positions until their dismissal on 22 March 2011.

12.  The HR Department was responsible for the calculation of the payroll of all staff of Bonjour.  The salaries of office staff was paid once a month, while the salaries of retail staff was paid multiple times in a month because their salaries consisted of commissions.

13.  The period of the fraud counts coincided with the duties that D1 and D2 respectively performed in respect of the payment of salaries at Bonjour.  Both D1 and D2 (when he was promoted to the position of Assistant HR Manager) were responsible for the calculation of salaries on the company’s payroll online system.  The payroll details on the online system were edited so that payments or overpayments (payments in excess of D1 and D2’s salaries) were received into bank accounts held in the names of D1, D2 or D3 or names of others as appointed by D1.  The edited payroll details were then stored in a USB drive which was given to Ms Vanky Chung, the Manager of the Accounting Department of Bonjour. 

14.  The procedure that took place was that D1 or D2 would login to Ms Vanky Chung’s computer and insert the USB drive to upload the payroll details onto the computer.  D1 or D2, as the case may be, falsely represented to Ms Vanky Chung that the salary payment information they presented was true and accurate, and that the management of the company had agreed and approved the overall payroll amounts.  As a result, Ms Vanky Chung entered the password which enabled the payroll details to be sent to the company’s bank to effect payment by autopay in accordance with the uploaded information.

15.  It was alleged that as a result of the fraud perpetrated by D1 and D2, they successfully misappropriated funds of Bonjour in the sum of $28,123,360.71 in Count 1 and $12,368,388.81 in Count 2.  It was further alleged that the proceeds of the frauds were paid into the bank accounts variously held or controlled by D1, D2 and D3, which after having been deposited would be withdrawn in cash or used to pay personal bills.

16.  On 22 March 2011, a query was raised by Ms Doris Ho (Ms Ho), the Manager of the Beauty Department of Bonjour, with Mr Chan about the level of salary that was paid to one of the company’s employees, a Ms Michelle Hong (Ms Hong).  Ms Ho was concerned that the salary purportedly paid to Ms Hong was too high for her position.  As a result, Mr Chan asked D1 to ascertain from Ms Hong’s personal file what was her salary entitlement. She advised Mr Chan that Ms Hong had remembered the figures incorrectly and had made a mistake.  After further inquiries, it was revealed that an overpayment had been made of Ms Hong’s salary.  Mr Chan approached D1 again, but she gave no explanation for the discrepancy.  He considered the issue to be “very serious” and reported the matter to Mr Ip.  As a consequence, Mr Chan terminated the employment of D1 and D2 on the same day. 

17.  The incident with Ms Hong’s salary generated concern within the company and inquiries were made about salary payments generally.  The company then engaged Mr Lee Ho Cheung, an accountant, to check if there were any problems with Bonjour’s payroll.  As a result of his findings, the matter was reported to the police on 6 April 2011.

18.  In respect of Count 1, it was the prosecution case that D1 committed fraud against Bonjour by falsely representing to Bonjour that (1) the salary payment information that she produced for Bonjour was “true and accurate”(referred to as “the 1^st particular”); and (2) “the management of Bonjour had agreed and approved the overall payroll amounts” (referred to as “the 2^nd particular”), and thereby induced Bonjour to make payments and overpayments of salary in the period between 24 May 2004 and 31 May 2009, in a total sum of $28,123,360.71, which she misappropriated.

19.  It was alleged that D1 made the false representations to Ms Vanky Chung on each and every occasion she presented to her the Bonjour payroll data in the USB drive to be uploaded to the EasyPay Online and HR Lite payment systems for transmission to the company’s account, at the Hongkong and Shanghai Banking Corporation (HSBC).  The explicit representation that was made to Ms Vanky Chung was that Mr Ip had been informed of the payroll, agreed to it and approved the amount (the 2^nd particular). The implied representation was that Mr Ip having approved it, the salary payment information was “true and correct” (the 1^st particular).

20.  In respect of Count 2, it was the prosecution case that both D1 and D2 committed fraud against Bonjour by making the same false representations as particularised in Count 1, and thereby induced Bonjour to make payments and overpayments of salary in the period between 1 June 2009 and 31 March 2011, in a total sum of $12,368,388.81, which they misappropriated.  The commencement date of Count 2, coincided with D2’s appointment as Assistant HR Manager, and during the period D1 and D2 were responsible for the payment of the payroll.

21.  It was alleged that D1 and D2 made the false representations, in the same manner as alleged in Count 1, to Ms Vanky Chung on each and every occasion when either of them presented the Bonjour payroll to be uploaded to the EasyPay Online and HR Lite payment systems for transmission to the company’s account. 

22.  In respect of the money laundering counts, the prosecution case against D1 was that she knew that the property the subject of Counts 3, 4 and 5 was the proceeds of the indictable offence that she committed, namely, the frauds alleged in Counts 1 and 2. 

23.  Count 3 concerned monies variously deposited into D2’s four bank account (D2-accounts 1 to 4).  The prosecution case against D2 was that after he was appointed Assistant HR Manager on 1 June 2009, he knew that the property in Count 3 was the proceeds of the indictable offence, namely the proceeds of the fraud that he allegedly committed together with D1 in Count 2.  However, prior to 1 June 2009, the case against D2 was that he had reasonable grounds to believe that the property in Count 3 was the proceeds of an indictable offence. 

24.  Counts 4 and 5 concerned monies variously deposited into D3’s two bank accounts (D3-accounts 1 and 2).  The prosecution case against D3 was that he had reasonable grounds to believe that the monies deposited into his accounts in Counts 4 and 5, were the proceeds of an indictable offence. 

25.  It was not in dispute at trial that the basic monthly salary of D1 commenced at $15,000 in 2004 and ended at $25,100 in 2011.[8]  In August 2004, D2 commenced employment with Bonjour as a HR clerk with a basic monthly salary of $6,500.[9]

26.  It was an admitted fact that between 2004 and 2011 the total monies received by D1 from Bonjour was $2,995,683.05, and the total monies transferred to D2’s accounts was $11,524,690.36 and to D3’s accounts was $27,054,810.31.[10]  It was also an admitted fact that “D3 has never been employed by Bonjour in any way, nor had he had any kind of business dealings with Bonjour.”[11]  D3 was recorded as an employee of Bonjour on the payroll data and purportedly received a monthly salary.

27.  The admitted facts set out transfers by Bonjour between September 2004 and March 2011, in which 35 persons were named as payees of salary payments in the total sum of $14,862,438.42, which was paid to various bank accounts in the names of D1, D2 and D3, the bulk of which was paid into D3’s bank accounts.[12] Also included were tables of the method of withdrawal of the monies deposited into the bank accounts held by D1, D2 and D3, which were mainly ATM cash withdrawals and some credit card and other payments.[13]

The defence case

28.  The defence case advanced on behalf of D1, D2 and D3 was mainly presented through the evidence of D1.[14]  She was the only one who gave evidence and no other witnesses were called by the applicants. 

29.  D1 accepted that she effected the transfers of the monies to the bank accounts to D2 and D3 (the Ha bank accounts) alleged by the prosecution through the Bonjour EasyPay Online and HR Lite payment systems, stipulating the name of the payee as an employee or former employee of Bonjour or D3 (even though he was not an employee).  She also used other names. However, she said she did this on the instructions of Mr Ip or Mr Chan.  She acknowledged that, having effected the transfers, she withdrew the monies in cash, which she said she paid to Mr Ip or Mr Chan.  There were as well other payments that she claimed she made for the company.  She accepted that she used two bank accounts of D3 (D3-accounts 1 and 2) and four bank accounts of D2 (D2-accounts 1 to 4) to receive the monies.  She further admitted that on occasion, she had transferred monies between those accounts. 

30.  D1 additionally claimed that on occasion Ms Vanky Chung was involved in providing her with information from Mr Ip as to the amount of money to be deposited in the Ha bank accounts to be withdrawn as cash and then paid either to Mr Ip or Mr Chan.  She said that on occasions she gave Ms Vanky Chung cash that she had withdrawn from the Ha bank accounts under the arrangement, which monies were to be conveyed to Mr Ip.  It was her case that Ms Vanky Chung was not only aware of the arrangement in which monies were paid by Bonjour to the Ha bank accounts and withdrawn as cash, and then paid to Mr Ip, but that she also participated in the arrangement.  It was submitted as part of the defence case that Ms Vanky Chung could not therefore be deceived as alleged by the prosecution.

31.  D1 testified that after she joined the company in about June 2004, Mr Ip approached her and asked her to reimburse him on the next payroll as he had tipped employees at the retail shops.  When she asked for Mr Ip’s bank account details, he said there was no need to go to such trouble, and asked her to pay herself first and give the money back to him.  D1 then told him that she was a bankrupt and could not use her bank account.  Mr Ip then told her to use a family member’s bank account and as he was the boss it was “okay”.[15] The amount she arranged on this first occasion was $6,000.  She did this by using the payroll online system.  She said she used the available bank account particulars of an existing employee and edited the account by deleting the bank account number and replacing it with the bank account number of D2-account 4.  From the financial records, D1 had not made the transfer in another employee’s name but rather in D2’s name and to his bank account, even though at the time he was not an employee of the company.  When queried about this, she said it was also possible to simply add an additional bank account number to the payroll data.  Having withdrawn the money from D2 or D3’s bank account, she then put the cash in Mr Ip’s office drawer.[16] 

32.  D1 said that Mr Ip would indicate to her how much he wanted and she would then transfer the monies from Bonjour to the Ha bank accounts, which she would withdraw in cash and provide to him.  She said that Mr Ip also gave her specific names of persons he wanted to tip and asked her to arrange transfers to them in the same way.  She followed these instructions and changed the bank account details on the payroll online system and made transfers to D2 and D3’s bank accounts.  She continued placing the money inside Mr Ip’s office drawer, and if necessary, she asked Ms Vanky Chung for the key to his office to do so.[17]

33.  After 2005, D1 said that an understanding developed between her and Mr Ip so that she did not need his express instructions about the deposit of monies into the accounts.  She said she would record the monies paid in a red and black book and sometimes Mr Ip would sign it.  She claimed that when she was dismissed she was not permitted to take the book with her.[18]

34.  In early 2005, D1 said that Mr Chan requested her to make similar payments to him and he told her to do the same as she did for Mr Ip.  She said that subsequently Mr Ip instructed her to do as Mr Chan requested and from then on she effected transfers on Mr Chan’s instructions and paid him cash as well.[19] She said on occasions, Ms Vanky Chung was involved in providing her with information from Mr Ip as to the amount of money to be deposited into the Ha bank accounts to be paid back either to Mr Ip or Mr Chan in cash.  There were also occasions when she gave the cash to Ms Vanky Chung.[20] 

35.  There were also some smaller odd sums of money that were used by D1 to reimburse colleagues who had made upfront payments to other colleagues who had left the company.[21]

36.  D1 claimed that in 2005 as a result of her good performance, she was given a housing allowance of $35,000, which was increased in 2007 to $45,000 and then to $50,000.  She also claimed that Mr Ip said to her that she should enjoy a higher salary and that at the expiry of her bankruptcy order, he would compensate her with additional payments.  She said that Mr Ip would stipulate a figure and told her that it was compensation.  She estimated she had received on this basis over $300,000.[22] 

37.  D1 testified that on 22 March 2011, Mr Chan came and saw her and said that if Mr Ip asked her why Ms Hong received such a high salary, she should tell Mr Ip that he knew about it.  She then attended a meeting with Mr Ip and Mr Chan, and said what she was told to say.  This erupted into an argument between them about the increase of salaries, at which point Mr Chan stated that he had nothing to do with the high salary received by Ms Hong and that it had been done by D1.  Later in the afternoon, Mr Chan informed D1 that she was suspended for one month and that she and her son were to leave the office.[23]

38.  On 24 March 2011, D1 returned to the office at the request of Mr Chan.  She said that Mr Chan asked her to admit the case and she would be paid $15 million in return.  In response, she denied stealing money from the company, and said that her son had nothing to do with the matter.  Mr Chan then took her to another room to meet a lawyer.  The lawyer repeated the allegation that she had taken money from the company, and the offer that if she admitted the matter she would be paid $15 million.  In response, she repeated her denial and her assertion that the matter had nothing to do with her son.  She said that Mr Chan threatened her that if she did not admit it, he would implicate her son.[24]

39.  In respect of the cases of D2 and D3, it was D1’s evidence that she controlled the bank accounts of D2 and D3 and that they knew nothing about the transactions that were taking place in their bank accounts.

40.  D1 said that she controlled both of the HSBC bank accounts in the name of D3 and possessed the only bankcard for them, which she used exclusively to operate withdrawals of money at ATM machines to make payments and transfers.  D3 would sign blank cheques for her use, and she did not tell him anything about the payments she made.  She said that she operated and controlled those accounts and D3 knew nothing of the activities that went on in them.[25]  

41.  D1 said that she controlled and used exclusively the Hang Seng Bank account of D2 (D2-account 4).  She said she possessed the only bankcard for the account, which she used to make withdrawals of money at ATM machines and to make payments and transfers.  She said that she had possessed the bankcard since 2000, which coincided with the acquisition of a property by D2.  She said that she told D2 nothing of the activities that went on in the bank account.  As to the other bank accounts of D2, she said that she received transfers of monies from Bonjour into those accounts and she never told D2 that the monies had come from Bonjour.  On occasion, she explained to D2 that she made a deposit into one of those bank accounts to pay a credit card bill that had been incurred for spending that he had made on her behalf.  On other occasions, she did not reply to inquiries from D2 about activities in the accounts.  Sometimes, she told him that it was the payment of a housing allowance or that it was her own salary.  She also testified that D2 was not involved in editing payroll data on the online payroll system.[26]

Denial of the defence case

42.  Mr Ip[27] and Mr Chan[28] both testified for the prosecution and denied the claims put to them that they had instructed D1 to manipulate the online payroll system and obtain for them company funds in cash.  Ms Vanky Chung also testified for the prosecution and she denied knowledge of or involvement in the arrangement as claimed by D1.[29] 

43.  Mr Ip denied that he told D1 to pay money into her own account and then given him the money.  He also denied that he told her that she could pay the money into the bank accounts of her family members.[30]  He added that there was no reason why D3 should receive a salary from Bonjour.  He was unaware at the time that, between 2004 and 2011, D3’s bank accounts had received over $26 million in payments from Bonjour.  He had not authorised such payments.[31]  He was also unaware that during this period D2’s bank accounts had received over $11 million in payments from Bonjour.  He had not authorised such payments.  As for the salary payments by Bonjour to named payees into the bank accounts of others, he said he had not authorised D1 to make such payments.  He was unaware that it was being done in the period from 2004 to 2011.[32]  He also denied that D1 was entitled to a housing allowance.[33]

44.  Mr Chan rejected the suggestion that in early 2005, he had asked D1 about payments that had been made by Bonjour to D3’s bank account.  He disagreed he had discovered payments arranged by D1 from Bonjour’s accounts to bank accounts of her family.  He also disagreed that D1 told him that Mr Ip instructed her to make those payments and that D1 was receiving those monies.  Similarly, he rejected the suggestion that he had requested D1 to make payments from Bonjour through the bank accounts of her family and to pay him in cash in the same way as Mr Ip was paid.  He further rejected the suggestion he had asked D1 to use the name of his wife to effect such transactions.[34] 

45.  Mr Chan testified that on 22 March 2011, he made inquiries with D1 about the discrepancy with Ms Hong’s salary and she offered no explanation.  He considered that the matter was “very serious”.  He denied D1’s claims that he met her and told her what to say about Ms Hong’s salary at a meeting with Mr Ip.  He also denied that on 24 March 2011, he told D1 that she would be paid $15 million if she took up all responsibility for the matter.[35]

46.  Ms Vanky Chung testified that she trusted D1 when she uploaded the password to permit access and transmission of the USB data to the EasyPay Online system.[36] Of the representations made to her by D1 and D2, her evidence as summarised by the judge was as follows:

“Of the process by which the information on the USB was uploaded to the HSBC online payment system, Ms Vanky Chung said that either he or she, namely Ha Ting-pong or Madam Kiu, told her that Mr Ip had been told of the total sum and that he had approved and agreed. She said that before the online procedure commenced, she had to confirm that to be the case. She said ‘Either I asked them or I was told by either of them’. And then as to how this practice had begun, she said this: ‘At the very beginning, Madam Kiu took the initiative in providing her with that information’. She said, this is Madam Kiu speaking to Vanky Chung: ‘Today is the payday. Mr Ip has been informed of it. He agreed to do so and has already approved the amount.’ That is how it all started.

As a result, she said that she realised that authorisation was required and on occasions she had to ask Madam Kiu and when she did she received confirmation that authorisation of Mr Ip had been obtained. Sometimes, Madam Kiu told her that she had obtained the confirmation by telephone. At other times, she said that it had been obtained by a face-to-face meeting with Mr Ip in the office.”[37]

47.  Ms Vanky Chung testified that she did not know that Bonjour had deposited from its bank account over $27 million into the bank accounts of D3, whom she knew to be the husband of D1, in the period from June 2004 to March 2011.  She said that if she had known of those payments she would not have allowed instructions to be given to the bank.  Similarly, she did not know that over $11 million had been deposited into the bank accounts of D2, in the same period.  She said had she known that those payments included payments in excess of those to which D2 was entitled to receive from Bonjour as salary, she would not have allowed instructions to have been given to the bank for those payments to be made.  This additionally included payments in excess of the amounts of salary to which staff were entitled to receive from Bonjour.[38] 

48.  It is noteworthy that there were a number of significant matters that D1 had testified about which had not been put to relevant witnesses, nor was there independent evidence of certain records that D1 said existed or of certain events and conversations that D1 said took place.[39]  As far as the latter matters were concerned, the judge reminded the jury that they should take into account the delay in investigating and prosecuting the case against the applicants.[40]

An overview of the case

49.  This is a rather unusual case because the defence substantially admitted the prosecution case. Nonetheless, the trial ran for 48 days and as already noted the key prosecution witnesses were extensively challenged, with Mr Ip and Mr Chan being accused of perpetrating the frauds on Bonjour.  The judge when sentencing the applicants noted that the company was defrauded of the total sum of $40,491,749 in the period from May 2004 to March 2011 and none of the monies was recovered.  It was also revealed that D1 had convictions for 43 charges of theft and 2 charges of false accounting in the District Court on 28 April 1983, for which she was sentenced to a total of 18 months imprisonment.[41] 

50.  The principal of the alleged frauds on Bonjour was D1.  She accepted that she falsified payroll data and transferred company funds to the bank accounts of D2 and D3.  However, she claimed that she did this on instructions from members of senior management of the company, to whom she would provide the funds in cash.  She also claimed that D2 and D3 knew nothing of the transfers of the company funds into their respective bank accounts.  The jury found the applicants guilty of the counts that they faced and in so doing rejected the defence case.

51.  Before the salary payment data contained on the USB drive could be transmitted to HSBC through the EasyPay Online and HR Lite payment systems, it was necessary for Ms Vanky Chung to input a password.  She inputted the password on numerous occasions in consequence of the dishonest and false representations that were made by D1 (Count 1) and D1 and D2 (Count2).  She testified that she did so because she trusted D1 as she was the Manager of the HR Department.  In that capacity, D1 was trusted to check and collate the calculations of salary payments of both office and retail staff as well as commission payments to retail staff and present them to Ms Vanky Chung in the USB drive to be uploaded to the EasyPay Online system. 

52.  On 24 May 2004, D1 commenced her employment with Bonjour as the Manager of the HR Department.  D1 discovered that it was possible to change the information in respect of the bank account details of a particular payee as well as changing the name of the payee and the details of the staff code of the employee but still effect payment without detection.  D1 admitted in evidence that she caused the payment made on 30 June 2004 of $15,000 to the account of D3 (D3-account 1), thereby making her husband as payee using her own staff code number of 01669.  She did this by editing her own payment details.  She deleted her own name and bank account and inserted those of D3.  Those monies represented D1’s salary at the time.  She diverted the monies to her husband’s account because she was about to be made the subject of a bankruptcy order.[42] She repeated this exercise with her salary payment on 31 July 2004, which was diverted into the bank account of D3.  

53.  In August 2004, D1 made five payments to the same account in which D3 was named as the payee but the payments were not her salary and clearly not a salary to her husband because he was never employed by Bonjour.  Those payments totalled over $121,000 although there was a payment of $14,000 into D1’s own newly opened bank account, which may have been her salary. 

54.  Thereafter, D1 used the names of other employees or former employees as the payee in the salary payment instructions to HSBC but stipulated the bank account of D2 or D3 to which the transfer of monies were made.  On occasion, she transferred the monies to her own account. In the period from 2004 to 2011, D1 received from Bonjour the total sum of $2,995,683.05, D2 received from Bonjour in his bank accounts the total sum of $11,524,690.36 and D3 received from Bonjour in his bank accounts the total sum of $27,054,810.31.[43]  The monies were mostly withdrawn in cash or on other occasions were used to make credit card and other payments.[44] 

55.  D1’s son, D2, joined D1 in defrauding Bonjour when he was appointed Assistant HR Manager on 1 June 2009.  D2 in his position had access to the confidential information of salary payments made to office and retail staff.  As a result, he would sometimes accompany D1 to Ms Vanky Chung’s office and together with D1 made representations to Ms Vanky Chung about the propriety nature of the data contained on the USB drive that she was asked to uploaded on the EasyPay Online system. 

The grounds of appeal

56.  There is considerable common ground between the applicants in their respective applications and it would therefore be useful to briefly describe the issues they raise. 

57.  Mr Selwyn Yu, SC, together with Mr CK Leung (who was also trial counsel) and Mr Ryan Law, for D1, advance three grounds of appeal.[45] Ground 1 complains that the judge erred in directing the jury that they could convict D1 on Counts 1 and 2 on an alternative basis.  Ground 2 complains that the judge erred in directing the jury that they could convict D1 on Counts 1 and 2 on the basis of explicit and implied representations which were not part of the prosecution case, and in failing to give a Kevin Brown direction to the jury (this was not particularised in the ground but was contained in D1’s written submission).  Ground 3 provides that in the event the appeal by D1 against conviction on Counts 1 and 2 is allowed, then the jury could not have been sure that D1 knew the property with which she dealt in Counts 3, 4 and 5 represented the proceeds of an indictable offence, namely the frauds averred in Counts 1 and 2.

58.  Mr Adonis Cheung (who was also trial counsel), for D2, advances three grounds of appeal.[46] Ground 1 complains that the judge wrongly allowed the prosecution to shift its case to allege an alternative basis and as a result left open to the jury to improperly convict D1 and D2 on Count 2.  Ground 2 complains that the judge failed to give proper direction to the jury about the implicit and explicit nature of the false representations particularised in Count 2.  Ground 3 provides that in the event the appeal of D1 and D2 against conviction on Counts 1 and 2 is allowed, the conviction on Count 3 is unsustainable because the money laundering offences were linked to the fraud alleged in those counts.

59.  Mr Dick Lee, for D3, advances three grounds of appeal.[47] Ground 1 complains that the judge erroneously allowed the prosecution to proceed on a different and alternative basis at the conclusion of the trial which resulted in an unfair trial.  Ground 2 complains that the judge failed to properly sum up the evidence of D1 that supported D3’s case and this resulted in an unfair and unbalanced summing-up to the prejudice of D3.  Ground 3 complains that D3’s convictions on Counts 4 and 5 were unsafe and unsatisfactory.

60.  As is apparent, all three applicants complain that the judge improperly allowed the jury to consider an alternative basis to variously convict D1 and D2 on Counts 1 and 2.  D1 and D2 essentially complain that the alternative basis was materially different from the prosecution case that was opened to the jury and as a consequence they were denied the opportunity to contest the alternative basis when defending themselves against Counts 1 and 2.  D3’s complaint is different because he was not charged with Counts 1 and 2.  His complaint is that he decided not to give evidence on the basis of the prosecution case that was opened to the jury, and if he had known the alternative basis was to be relied on by the prosecution, he might have elected to give evidence.  He argues that the alternative basis was not particularised in the relevant counts and was not part of the prosecution case, and was never put to D1 when she testified at trial.  He contends that as he was relying on the credibility and reliability of D1, the failure to put the alternative basis to D1 also acted to his disadvantage.

61.  These combined grounds of appeal can be distilled into the following issues.  The prosecution shifted its case and the jury were improperly invited to convict D1 and D2 of Counts 1 and 2 on an alternative basis.  As a consequence, D1, D2 and D3 received an unfair trial (The alternative basis).  The judge erred in directing the jury on the false representations in Counts 1 and 2 by referring to their explicit and implicit nature and failing to give a Kevin Brown direction (The directions on the false representations).  The money laundering convictions are unsustainable if the appeals against the convictions on Counts 1 and 2 are allowed (The unsustainability of the money laundering convictions).  The judge failed to sum up the evidence in favour of D3, particularly from D1, and with appropriate reference to the test in relation to the second limb of “reasonable grounds to believe” (The failure to sum up evidence in favour of D3).

62.  I turn now to address the grounds of appeal under the headings that I have just described.

The alternative basis

63.  It is complained by Mr Yu, for D1, that the prosecution during the course of the trial, or more particularly in its closing address to the jury, sought to depart from its original case and seek a conviction on an alternative basis.  He contends that in discussion between the judge and counsel as to the directions to be given to the jury if they accepted that the defence case was or might be true, the prosecution submitted that the applicants could be convicted of the fraud counts “subject to the element of dishonesty and the other things for it was still a fraud practice on Bonjour.”  He further contends that this was repeated by the prosecution in its closing address to the jury, when prosecuting counsel said that if what D1 said was true it still would be stealing from and practicing a fraud on the company.  It will be important therefore to ascertain exactly what was said by prosecuting counsel and the context in which it was said.[48]

64.  Before addressing this argument, it is necessary to recall that the two fraud counts alleged that the relevant applicants falsely represented that the salary payment information was true and accurate (the 1^st particular), and the management of the company had agreed and approved the overall payroll amounts (the 2^nd particular). During the course of the trial, it emerged that the 2^nd particular was explicitly represented whilst the 1^st particular was implicit in the 2^nd particular. 

65.  In supporting his argument under this ground, Mr Yu makes three points. 

66.  The first point is that the alternative basis was not open to the jury on the indictment and on the evidence.  It is argued that if it was true or might be true that Mr Ip and Mr Chan had agreed and approved the overall payroll amounts, then the 2^nd particular would not be false, and as the 1^st particular is derived from the 2^nd particular then that would need to be addressed with appropriate directions.  It is further argued that if it was true or might be true that Ms Vanky Chung was a knowing participant in the alternative basis, then she could not be deceived by the false representations. 

67.  The second point is that it was made known to the prosecution that the defence case would be presented on the alternative basis, but it chose not to incorporate this aspect of the defence case as part of the prosecution case.  It is complained that the judge should not have left open to the jury the alternative basis and so widened the scope of the prosecution case. 

68.  The third point is that the original prosecution case and the alternative basis were starkly different and could have given rise to a different defence to D1.  As a result, D1 was not given the opportunity to put forward a defence against the alternative basis.  It is argued that under the alternative basis there was a potential defence available to D1 to challenge the element of dishonesty.  It is submitted that Ms Vanky Chung, to whom it was alleged the false representations were made, was not cross-examined by the applicants on the elements of “dishonesty”, “intent to defraud” or “inducement” in the context of the alternative basis. Nor was D1 cross-examined by the prosecution on these elements in order to address the state of mind of the applicants.

69.  Mr Cheung, for D2, echoes the arguments advanced on behalf of D1 in relation to Count 2, on which D2 was convicted.  He complains that the prosecution in its closing address was allowed to leave to the jury to consider a verdict on the fraud counts on a different basis to the one on which it had opened.  He submits that this was “an important change of the factual basis of the prosecution case.”[49]  It was acknowledged by Mr Cheung that a trial judge has power to direct a jury on a basis different from that presented by the prosecution, but that such power must not be exercised unless the different basis is open on the indictment and the evidence; the parties have been given the opportunity to address the trial judge before that course is taken; and there is no disadvantage or prejudice caused to the accused.  In support of these principles, he cites the case of Hau Tung Ying v HKSAR.[50]

70.  Mr Cheung further submits that the prosecution position at the conclusion of the trial was that it would not seek a conviction on the alternative basis, but prosecuting counsel in his closing address, while not accepting the different basis that Mr Ip and Mr Chan were involved, said that a fraud was still practiced on a public company.  It is complained that the prosecution invited the jury to convict the applicants on the alternative basis and the judge gave directions to the jury to that effect. 

71.  Mr Cheung finally submits that D1 was not asked questions about her state of mind as to the involvement of Mr Ip and Mr Chan in addressing the element of dishonesty.

72.  It is complained by Mr Lee, for D3, that D3’s decision not to give evidence might have been different if the prosecution case was allowed to proceed on the alternative basis, and as D3’s case relied on the credibility of D1, any disadvantage caused to D1 would have also affected D3.

73.  The first thing to note in addressing this ground is that D1’s evidence essentially amounted to her admitting that over a period of many years she edited the payroll details on the online payroll system of Bonjour and obtained funds from Bonjour that were deposited into the Ha bank accounts, which she then withdrew in cash.  She claimed, however, that she did this on the instructions of Mr Ip and Mr Chan, members of senior management of Bonjour, who would receive the cash, and that Ms Vanky Chung, the Accounts Manager of Bonjour, was also involved in this scheme.  All three denied D1’s claims.

(a)     The discussion between the judge and counsel

74.  In seeking to support this ground, Mr Yu relies heavily on the discussions that took place between counsel and the judge about the directions he was to give to the jury.

75.  In light of the nature of the prosecution case, it was of significance that D1’s defence at trial amounted to admitting she falsified payroll data of Bonjour and misappropriated company funds, albeit on the instructions of members of the senior management of the company.  Naturally, this became the subject of discussion in terms of the directions to be given to the jury, particularly in respect of the money laundering counts.  It is apparent from the following exchange between Mr Leung and the judge, that Mr Leung fully understood that the prosecution case was that D1 was the sole culprit of the frauds (together with D2 during the period of Count 2) and it was Mr Leung who raised the notion of the prosecution relying on an alternative basis for conviction of the money laundering counts because the misappropriated monies belonged to a public company and were therefore the proceeds of an indictable offence. 

76.  The discussion between Mr Leung and the judge was as follows:

“MR LEUNG: Yes, I have given some thought to it and I have to say that although Charges 3, 4, and 5 would bring this to include ‘knowing or having reasonable grounds to believe’...

COURT:  Yes.

MR LEUNG:  ...however, we all know that in respect of the 1st and the 2nd charge, the prosecution case against my client is that she was the culprit, she knew what she was doing.

COURT:  Yes.

MR LEUNG:  So as I said yesterday, that in case the jury acquit the 1st defendant in respect of the 1st and the 2nd charge, it is very likely they are not satisfied that the transactions were not approved by the senior ‑‑ was not approved by the management of Bonjour.  In other words, they have doubt...

COURT:  Yes.

MR LEUNG:  ...that in fact the transactions were -- in fact might have been authorised by the ‑‑ by Mr Ip and Mr Alan Chan. 

COURT:  Sorry, they might have doubt that?

MR LEUNG:  If the 1st defendant is acquitted of the charges...

COURT:  Yes.

MR LEUNG:  ...it is very likely that the jury has doubts about ‑‑ that they may consider that each transaction might well have been instructed by Alan Chan or the more important person, Mr Ip.  So if...

COURT:  Just a moment.

MR LEUNG:  Yes. 

COURT:  Yes.

MR LEUNG:  Because it is a major challenge by the defence...

COURT:  Yes.

MR LEUNG:  ...in respect of the 1st and the 2nd charges.

COURT:  But these were moneys that belonged to a publicly owned company.

MR LEUNG:  Yes, that’s the...

COURT:  Not a ‑‑ they didn’t belong to Mr Ip. 

MR LEUNG:  Yes, right.  In fact ‑‑ so as I mentioned yesterday, the prosecution framed Charges 3 to 5 with reference to Charges 1 and 2.

COURT:  Yes.

MR LEUNG:  So the prosecution should not be allowed to have an alternative basis that the money still could be proceeds of indictable offence because the ‑‑ the money we are talking about, even if they ‑‑ even if Madam Kiu got the approval of Mr Ip, they still can be proceeds; because this is a theft against a public company.

COURT:  But it would still be fraud against the public company, would it not?

MR LEUNG:  That’s right.  That’s right.  But as I say...

COURT:  Not just theft.

MR LEUNG:  Yes. 

COURT:  Yes.

MR LEUNG:  Whatever the exact offence.  The important...

COURT:  So if the jury were to be satisfied that Mr Ip and/or Mr Chan had directed these transactions to take place, what’s the consequence?  And Madam Kiu had joined that agreement.

MR LEUNG:  Yes.  And -- but this is not a(the?) very basis the prosecution has put their case in respect of the 1st and the 2nd charges, and with...

COURT: No.  No, it’s not, but where are you ‑‑ where is one left if what she’d done was joined with Mr Ip and/or Mr Chan to defraud the company -- there were other people involved.

MR LEUNG:  As I say, the importance of my argument is, of course, is a reference to Charges 1 and 2, the fraud...

COURT:  Yes.

MR LEUNG:  ... as named in Charges 1 and 2, in all three counts of money laundering.  That’s the most important part which I rely on because by stipulating that the proceeds is referable to Charges 1 and 2, then the basis the prosecution could put their case is limited by that reference to Charges 1 and 2, the fraud. 

COURT:  Well, obviously, it’s limited but is it precluded from including an agreement where Madam Kiu joined with Mr Ip and/or Mr Chan to do the fraud together? 

MR LEUNG:  In my respectful submission, yes.

COURT:  Just a moment.  Yes.

MR LEUNG:  Otherwise, the reference to Charges 1 and 2 in Counts 3, 4, and 5 has no meaning at all.  And...

COURT:  Well, the moneys would still be the proceeds of an indictable offence but the indictable offence would have been committed by Mr Ip and/or Mr Chan with Madam Kiu.  Would they not?

MR LEUNG:  I do agree that this is a possibility, but however, the prosecution all along ‑ all along has maintained that there is no conspiracy between the three of them.  If...

COURT:  Yes.

MR LEUNG:  If the prosecution did ‑‑ do have this alternative in mind, first of all, they have to take ‑‑ still rely on the evidence of PW1 and PW2.  And furthermore...

COURT:  Yes.

MR LEUNG:  ...furthermore, this is ‑‑ in fact, this is inconsistent. The two grounds they are trying to adopt, if they were trying to adopt, are both ‑‑ right.

COURT:  Just pause there, Mr Leung. 

MR LEUNG:  Yes.

COURT:  I’m going to ask that the jury be informed that the court is engaged in legal discussion.

MR LEUNG:  Yes, the time, I...

COURT:  Madam Ho, could you do that for me.  Just a moment.

             Yes, thank you, Mr Leung.

MR LEUNG:  Yes.  I think I would just repeat myself for one thing, that is, all along, the prosecution is not working along this alternative at all.

COURT:  Yes.

MR LEUNG:  So at...

COURT:  I have that point.

MR LEUNG:  Yes.  If now, although the charges ‑‑ I would -- it is my -- in my respectful opinion, in fact, Count 3, 4, and 5 can’t read as your Lordship suggests.  In fact, by stipulating that it is referable to Charge -- to Count 1 and 2, in all three counts, it limit, in fact it forbid the prosecution now to say it is nothing to do with Count 1 and 2.  It is, in fact, proceeds as a result of stealing money from Bonjour.

COURT:  Right.  No, I...

MR LEUNG:  That is the major argument I have.

COURT:  Yes, yes.  I follow, yes, thank you. 

MR LEUNG:  And, my Lord, in...

COURT:  Yes.

MR LEUNG:  ...in fact, if prosecution do try to have this alternative, they need not rely on the alternative of having reasonable grounds to believe.  In fact, they can still rely on the limb, ‘knowing’.

COURT:  Yes.

MR LEUNG:  So in fact, the alternative grounds, as stated, having reasonable grounds to believe is, as in respect of the 1st defendant’s case, is inconsistent with the way how the prosecution put their case. 

COURT:  Yes.

MR LEUNG:  So in my respectful (submission?), there should only be one limb against my client, that is the ‘knowing’ limb.” [51] (Emphasis added)

77.  Mr Cheung, trial counsel for D2, endorsed Mr Leung’s submission.  He said:

“MR CHEUNG: Right, my Lord, I do apologise for being confusing to you. I think, because my learned friend Mr Leung has been bringing in the 4th charge into the money laundering charge for consideration in the overall direction to the jury. The issue being raised just now, that if there is a possibility the jury find that Mr Ip and/or Mr Chan were involved, whether that would sustain or substantiate the prosecution case on the charge, the first point I would take is that it’s never the prosecution case, as I will endorse what Mr Leung says.” [52]

He went on to explain:

“MR CHEUNG: My Lord, therefore, the jury may be directed to consider if, when they were considering the knowledge limb, they have to be satisfied the relevant defendant they know...

COURT: Yes.

MR CHEUNG: ...that a fraud - the fraud charge had been committed.

COURT: Well, let’s just deal with your lay client.

MR CHEUNG: Yes.

COURT: Yes.

MR CHEUNG: And that would mean that the 2nd defendant would have committed the 2nd charge.

COURT: Yes.

MR CHEUNG: But your Lordship is correct; we cannot exclude the second limb because the jury, from the outset, have been invited by the prosecution to consider the reasonable grounds to believe limb. But for that ground, I would invite your Lordship to consider, if after they consider the first limb...

COURT: Yes.

MR CHEUNG: ...when they consider the second limb, they have to be satisfied the defendant, in particular the 2nd defendant’s case ‑ in my case ‑ that the 2nd defendant have reason to believe that his mother was stealing money from the company.

COURT: Yes.

MR CHEUNG: Or the mother had committed fraud against the company.

COURT: Yes.

MR CHEUNG: So what I will require -- I would invite -- I say this word again, but I do apologise, my Lord -- I would invite your Lordship to consider giving more direction as to when it was in the second limb, what has to be satisfied; which is the belief of the 2nd defendant that there is circumstances the 2nd defendant can form the belief that his mother...” [53]

78.  Trial counsel for D3, extrapolated from this discussion that D1 had admitted a crime but had not been given the opportunity to plead guilty to it.  He said: 

“MR LO: Just to follow up on Mr Leung’s point on the four charges, if it’s the prosecution case that this will include conspiracy of Madam Kiu, together with Mr Ip and other people, then at least, 1st accused should be given the opportunity to consider whether to plead guilty, if that’s an alternative basis of the prosecution case.

COURT: Yes.

MR LO: But that wasn’t done. So to that extent, I support Mr Leung...

COURT: But your real point is that that’s not how the prosecution have particularised the allegation in the 1^st count.

MR LO: Precisely, my Lord.

COURT: There’s no mention of ‘conspiracy’, there’s no mention of the ‘fraud taking part, together with others.’

MR LO: Yes, indeed.”[54]

79.  Clearly, from this discussion, the issue of an alternative basis was first raised by Mr Leung and specifically in respect of a conviction on the money laundering counts.  It was noted that the monies that had been misappropriated belonged to a publicly listed company, so in that sense the monies were the proceeds of an indictable offence.  However, Mr Leung argued that the monies were the proceeds of a theft against a public company and not the fraud as stipulated in Counts 1 and 2.  He sought to rely on this distinction to contend that the wrong criminal offence had been particularised as the predicate offence of the money laundering counts.  He complained that the prosecution should not be allowed to rely on this alternative basis in respect of the money laundering counts. 

80.  This led to a general discussion about the fraud counts and how the judge should direct the jury in light of the defence case. 

81.  The issue arose whether the jury could convict on the alternative basis if the jury did not believe Mr Ip and Mr Chan.  Prosecuting counsel pointed out that he had not opened the case on that basis and he seemed to suggest that a conviction on the fraud counts would not be available although he qualified his position after further discussion.[55]

82.  The judge questioned prosecuting counsel as to what would follow if D1’s evidence was accepted about the role of Mr Ip and Mr Chan directing the transactions to take place. In response, prosecuting counsel said that there was still a false representation that the payroll information was true and correct and would involve dishonest approval from management.[56] It was in this context, the judge asked what direction should be given to the jury.

“COURT: So what do you say is the direction that one would have to give to the jury if you are satisfied that it may -- it was or may be true that Madam Kiu acted on the instructions of Mr Ip and/or Mr Chan, you would have to consider whether in doing so, she was dishonest …

MR WONG: Yes.

COURT: … and that she, with dishonesty, made false representations to Miss Vankie Chung, and that resulted in these payments being made.

MR WONG: That’s right.”[57]

83.  After the above exchange, Mr Leung asked the judge for time to take instructions from D1 as to whether there was a change of plea, and raised the question that if the jury found Ms Vanky Chung knew about the fraud, the representation could not be false.  The judge responded that it could still be a false representation but it would be difficult to prove that the inducement had effect.[58]

84.  After further discussion, the judge informed counsel that he proposed to direct the jury on this narrow issue as follows:

“COURT: … I propose directing the jury that, having considered the way the prosecution puts its case, if they find it necessary to consider the defendant’s case, that is to say, as articulated by Madam Kiu, they are to consider whether or not her evidence of acting on the instructions of Mr Ip and/or Mr Alan Chan is true or might be true, they would then go on to consider whether in acting as she did, nevertheless, Madam Kiu is dishonest in making the representations that she did to Miss Vankie Chung.” [59]

85.  Later that morning, Mr Leung informed the judge that the prosecution had rejected the offer for D1 to plead guilty on the alternative basis, and that instructions had to be taken as to whether or not the element of dishonesty would be challenged.[60] The case was then adjourned to the afternoon.

86.  Mr Leung noted that an offer by D1 to plead to the offences on the basis that she was instructed to do what she did had been rejected by the prosecution.  Mr Leung then acknowledged that bearing in mind the directions of the court he accepted that if the jury were to find that what D1 said “may be true, it still amount to an offence and that is -- we would not dispute it would be dishonest.”  He immediately added that on this alternative basis he needed to take instructions from his client as to whether he should challenge the element of dishonesty.[61] 

(b)     The closing addresses

87.  Central to the complaint under this ground is what prosecuting counsel said in his closing address:

“Now, for these two counts, the last thing I want to say is this. In considering what Madam Kiu was telling you, you may want to remember, in fact, that even if -- and it’s a big ‘if’ that we emphasise because the prosecution doesn’t accept that for one moment -- but even if what she is telling you was true, that she was asked by Mr Ip and Alan Chan to do all that channelling, she would in effect still be stealing from the company, wouldn’t she? A fraud would have been practised still on the company given that the company was a publicly listed company. That’s a matter for you. Therefore, charges 3 to 4, as I said, are dealing, it seems to be clear.”[62]

88.  It is complained that by these remarks, prosecuting counsel had shifted his case and was inviting the jury to convict on an alternative basis.  These remarks have to be read in context.  Immediately before prosecuting counsel made them, he said:

“Now, if I could invite you to come back to the indictment which we have all actually looked at in it. As I was saying, for the first two counts, in fact, for all these counts -- sorry, if I may be allowed actually to generalise -- there is never any question that the moneys were received. So insofar as the 1st and the 2nd counts are concerned, but the payments and overpayments of salaries were made could never be -- has never been in dispute. The same goes for the moneys named -- stated in the 3rd, 4th and the 5th count. That the accounts had received these moneys again has never been disputed. So these moneys had in fact been received by the accounts.

And we also know as a fact, as I have just said about 10 minutes ago, that D1 never, in fact, disputed that she is the one who took the steps for the payments to be made. The only difference between us, between the prosecution and D1, is that there were also occasions when we say D2 took that step as well. It’s a matter for you, members of the jury. Vankie Chung said that there were the rare occasions. Now, for the 1st and the 2nd count there is the question, there is the element of inducing by deceit and the deceit was particularised, as you could see, in the -- in each of the counts. Vankie Chung has testified of this, hasn’t she?

The only question, therefore, in a way, insofar as the first two counts are concerned, in our respectful submission, is that -- is whether -- you may think whether D1 and for the purpose of the 2nd count, D1 and D2, were being dishonest when they did it. Deceit, as you can easily imagine, but definition would have meant that’s done with dishonesty. Now, I am not going to take up any more of your time on this because, as you’ll remember, when we first started his Lordship told you that insofar as the law is concerned, his Lordship will be giving you directions and that’s the only source insofar as the law is concerned.

So when dealing with this point, all that I think I need to say is that, yes, dishonesty is clearly a required element. But we say that on the evidence before you, if you have come to the view that there is really no truth whatsoever in what the defendant was saying, if you are sure, let me put it the other way around, that Mr Ip had not given instructions as the defendants are suggesting for the moneys to be channelled in the way as we have seen and the representation made to Vankie Chung must have false and D1 and/or D2 must have been deceitful in doing so. That they have benefited hugely, I do not think I need to repeat. That the company had suffered tremendous loss as a result, again, is more than obvious.”[63]

89.  Prosecuting counsel in his closing address invited the jury to find that D1 and later together with D2 defrauded Bonjour through the false representations alleged in the fraud counts.  The impugned remarks of prosecuting counsel were very general and related to the fact on D1’s own admission she was dishonest.  The closing addresses of D1 and D2 overshadowed the remarks of prosecuting counsel and went considerably further.  

90.  In light of the evidence of D1, having essentially admitted she had misappropriated funds of the company, Mr Leung, for D1, addressed the matter as follows:

“In the opening of the prosecution case, if I recall it correctly, the case against Madam Kiu is this, that -- is that she was the one who stole money from Bonjour under no instruction at all from Mr Ip or Mr Alan Chan. In fact, or her putting up that Mr Ip or Mr Alan Chan was involved is just only an excuse. It was just an excuse which put up in this trial and during the whole trial, of course, I was trying to show to you that, in fact, Mr Ip and Mr Chan and, in fact, Vankie Chung also have knowledge about that. Mr Ip and Mr Chan, in fact, was the one who start the transactions, as I say, that Madam Kiu was just acting at the beginning under the instruction of Mr Ip to transfer money as she did during the seven years.

But now it seems that the prosecution also suggests to you that even if you find that this allegation by the defendants is true or may be true, they still also amount to the offences as stated in the charge sheet. But, in any event, so be it. …”[64]

91.  As best as I can understand the comments of Mr Leung, it was he who highlighted to the jury that D1, on her own case, raised for consideration whether she was stealing from the company, stating to them that the prosecution case was being put on an alternative basis.  He said:

“The question would be: why, if Madam Kiu is really stealing money from Bonjour, why use this way to steal money? That is using an office staff name to channel money and fail -- and at the same time fail to pay him on that payroll? Would it -- because that person who failed to receive his salary in that month would cry out and say, ‘I didn’t receive any money,’ and the things would -- the stealing might well be disclosed for this simple reason.[65]

…

Right. In the present case, Madam Kiu, as I say before a lot -- a few times, was asked by Mr Ip to channel money is the defence case. And, of course, the way how it developed -- but, remember, this stealing as alleged by the prosecution lasts for seven years without being discovered, according to the prosecution witnesses, during that seven years. I would say that, in fact, if the management -- I must say that this is impossible unless there is some co-operation within the management of Bonjour. If without this co-operation within Bonjour, this could not happen in -- happen.

And I would say, finally, I will come to the final part, right. I will be end, I think, within 10 minutes. I now go to the charge. The charge, yes. The prosecution is now inviting you to return a verdict of guilty even if you are sure that -- perhaps I put it this way. I’ll let -- I’ll start again.

The prosecution is inviting you to return a verdict of guilty. That’s why you have doubt that -- even if you find that Madam Kiu’s -- what was said by Madam Kiu is true or may be true - that is, she was instructed by Mr Ip or later Mr Chan to channel money for them - the prosecution is asking you to still return a guilty verdict because, according to the prosecution, this is still a stealing by the three of them of the money of Bonjour.

The charge, the first two charge are fraud. They contain an element of deceit. In other words, deception. Someone must be cheated and it seems that the prosecution is still saying that, in order to convict someone with a charge of fraud, you need to be satisfied that someone of the company was being cheated and it seems that what the prosecution is alleging, having in mind that if you accept that, in fact, what Madam Kiu had done was possibly under the instruction of Mr Ip and/or Mr Chan, supposing that’s the case, the prosecution still say that Madam Kiu is guilty because she cheated the accounting department when she was presenting the payroll, the USB, the data, to the accounting department because they -- their records are not accurate because it contains money to be transferred to people who were not entitled to.”[66]

92.  From the latter comments of Mr Leung in this passage, it is clear that he understood that the prosecution were maintaining that D1 through her false representations to Ms Vanky Chung, committed a fraud on Bonjour.  It was simply not correct to assert that the alternative basis was the prosecution case.

93.  Mr Cheung, for D2, made similar remarks to the jury in his closing address:

“As I said, that I represent the 2^nd defendant, Ha Ting-pong. He didn’t join the company at that time and we don’t know what happened between Madam Kiu and the company, save and except later on I will address you as to what that as in his position he knew, but in here, for here, 2004, the boss come and say that ‘I have been doing this. You have to make arrangement for me.’

Well, maybe if, on that occasion, if Madam Kiu had been conscious enough, careful enough and have an alarm, then she may reject, then what? And then what? Maybe she cannot continue her employment with Bonjour. I don’t know. We don’t know. But the thing is that she chose to comply. She did it. And once after this very first time, things developed. When things developed, when things developed, what the company or Mr Ip has to do or Mr Chan has to do to Madam Kiu, maybe just give Madam Kiu some candy, some sweetener, some sweet. Then Madam Kiu continued to do it, listening to the management, the boss.

What are the possible candles, sweetener, sweet? Housing allowance is one. Yes, we heard that prosecution also comment why the housing allowance is not channelled in the normal way, properly recorded? ‘Well, what if I also make you a beneficiary to this arrangement of mine so that you are one of us.’ Now, I’m not saying at this stage that Madam Kiu commit any crime because, as a matter of fact, no one had asked in this trial what is the state of mind of Madam Kiu when he agreed to the boss arrangement of doing this money arrangement. Has she been dishonest? What she think?

Well, if you look at it, maybe we have our way of looking at it. But what Madam Kiu, her explanation, no one had ever asked in the trial in this alternative, in the defence of Madam Kiu. Coming back here, coming back here, also the low salary compensation, Madam Kiu said. All these explain why, why Madam Kiu need to be involved and she was involved and she carried on until 22^nd March 2011, which I say a day with event happening, we do not know in full detail.

What if Madam Kiu was thinking that these are the instruction of the boss. Of course the boss, they represent the company. They in fact being a symbol of the company, so I honestly believe or I believe that the company allowed this to happen. And then she carried on.

The prosecution, the mentality, the ability and competence, the high competence and quality of the Hong Kong Police, the high quality, competence of my learned friend for the prosecution, of course, they will think more careful, that if you do this you might have troubles. One day that, you see, you should know that your boss is asking you to do something illegal and you have to be careful. Now, but it’s like it’s the aftermath comment. We -- in Chinese history we talk about this 孔明. It’s the aftermath事後孔明, meaning that, after what happened, then now you go back and then criticise: ‘You should not allow this to happen.’

When I heard Mr Leung’s submission, the beginning, he raised an example about how the secretary and the staff work for the company. If you do something right, no problem. Then it carry on, continue to happen. If you do something wrong, your boss will come to you, maybe come to you, saying, ‘I never authorised to do this, why do you do it?’ and you take the blame.[67]

…

Did Mr Chan, Mr Ip involved? If they were not involved, of course, it’s simple. But does the evidence generally support that this was the scenario without their blessing, use the description -- didn’t use the word -- Mr Leung didn’t use the word ‘blessing’. But it’s like Mr Leung had already submitted to you, without the knowledge of the management, how could this happen for so many years? You see. And these are the charge that I wanted to examine with you and submit that when you are considering the prosecution case and -- right, remember we have been talking about that the prosecution’s opening, the prosecution’s closing.

I see there is different in the prosecution opening and closing because in the opening there is no reference to the scenario if Mr Chan and Mr Ip were involved. Remember this is not mentioned in the opening, but in the closing, after listening to the evidence, maybe after Madam Kiu she went to the box and after cross-examination the prosecution also makes a submission addressed to you that even if Mr Chan and Mr Ip were involved, then still you have to consider whether Madam Kiu and/or the other defendant, they were guilty.

Now, whatever the prosecute saying, because they have their position, I would address you that if you convict the defendant, particularly the 2^nd defendant, on that basis, that would be extremely unfair because the 2^nd defendant, if his case is proven in this case that Mr Ip and Mr Lip(?) been proven, the mental element of dishonesty had never been examined, I mean, at least in the part of Madam Kiu.

  And then when we look at the situation of the 2^nd defendant you have to -- also have to find whether the 2^nd defendant knew all this so as to infer the 2^nd defendant would have the necessary mental element of dishonesty deceiving the company together or he was just following the instruction or listen to what -- ‘mummy’s explanation as to why money was paid into my Hong Kong bank account, not the Hang Seng Bank’.[68]”

94.  Whatever may have been said by counsel in their closing addresses, the judge made sure the jury were put on course and not distracted by this somewhat artificial point about the alternative basis.

(c)      The judge’s summing-up

95.  Mr Yu and Mr Cheung complain that the judge’s comments in relation to D1’s evidence presented an alternative basis on which the jury could convict them of Counts 1 and 2.  When examining what the judge actually said, it is clear that he did not direct the jury that they could convict D1 and D2 on a basis other than as particularised in the two counts.  The judge’s comments were as follows:

“In this case the 1^st defendant, Madam Kiu, has testified. If you accept the 1^st defendant’s evidence that in acting as she did in transferring money from Bonjour’s bank account to the Ha family bank accounts, not only did she act on the instructions of Mr Ip and Mr Alan Chan, but also Ms Vanky Chung was involved in passing on instructions from Mr Ip in respect of the amounts of money to be transferred, and secondly, in receiving cash from Madam Kiu to pass on to Mr Ip, if you accept that evidence is or might be true -- that is the expression, is or might be true -- subject to the directions that I will give you in due course, you would then consider whether or not you are sure that Madam Kiu, Count 1, and Madam Kiu and Ha Ting-pong, Count 2, by deceit dishonestly made false representations as particularised in Counts 1 and 2 to Ms Vanky Chung with intent to defraud Bonjour.[69]

…

As I reminded you earlier, the first defendant testified that in acting as she did in transferring money from Bonjour’s bank account to the Ha family bank account, not only did she act on the instructions of Mr Ip and Mr Alan Chan, but also Ms Vanky Chung was involved in passing on instructions to her from Mr Ip in respect of the amounts of money is to be transferred and in receiving cash from her to pass on to Mr Ip. It is the first defendant’s case that Ms Vanky Chung knew the nature of those transactions.

If you accept that evidence is or might be true, you would consider whether or not you are sure Kiu Mei-ling, Count 1, and Kiu Mai-ling and Ha Ting-pong, Count 2, by deceit dishonestly made false representations as particularised in Counts 1 and 2 to Ms Vanky Chung with intent to defraud Bonjour. As I shall remind you in due course, when it was put to Ms Vanky Chung in cross-examination by Mr Leung that sometimes she had informed Madam Kiu of the amount she should pay Mr Wilson Ip through her family account she responded, ‘Disagree. It never happened.’ It was never put in cross-examination of Ms Vanky Chung by Mr Leung that she had received monies from Madam Kiu to be passed on to Mr Ip. That was never put in cross-examination of Vanky Chung.[70]

…

If, on the other hand, you find that Madam Kiu’s evidence ‘is or might be true’ -- that is the test, is or might be true -- not only of Mr Ip’s and Mr Alan Chan’s role in informing her of monies that they wanted sent from Bonjour through the Ha family account to be withdrawn in cash and given to them in cash, not only about that, but also of Ms Vanky Chung’s involvement in the transactions in which, at Mr Ip’s, Mr Chan’s directions, monies were channelled in the way that I have just described and you are satisfied -- rather, it is or might be true that Ms Vanky Chung knew of the transactions, knew of the nature of the transaction, you would consider -- even if you accepted that this representation was made to Ms Vanky Chung about Mr Ip having agreed and approved it, even if you accepted that, you would consider whether or not in making that representation Madam Kiu did so dishonestly with intent to defraud Bonjour.

The question really would be this: well, if Ms Vanky Chung -- if it is or might be the case that Ms Vanky Chung was involved and you these transactions, how could Madam Kiu be making a false representation with the intention to defraud Bonjour? It might be in those circumstances you would conclude that there was no such intention. That is a matter for you.”[71] (Emphasis added)

96.  There is nothing in what the judge said to the jury that amounted to putting an alternative basis for conviction of D1 and D2 in respect of  Counts 1 and 2.  All that he said to the jury was that they should take into account D1’s evidence in determining whether she had made the false representations alleged in Counts 1 and 2. I should add that throughout his summing-up, the judge emphasised with the jury that they had to be satisfied of the ingredients of the two fraud counts, and that is evident even from the passages complained about by D1 and D2.

(d)     No alternative basis

97.  It is complained that prosecuting counsel in his closing address sought to depart from the original prosecution case and seek a conviction against the defendants on an alternative basis.  The alternative basis arose from D1 admitting that she falsified the payroll data and misappropriated funds of the company, although claiming she did so on the instructions of senior members of management.  It is complained that the prosecution shifted its case and sought a conviction against D1 and D2 in respect of the two fraud counts on the basis that D1 admitted to stealing monies from the company.  In my view, there is no substance to these complaints.  

98.  As the case developed, principally by D1’s evidence, the issue for the jury was whether Mr Ip and Mr Chan were involved as claimed by D1.  The jury by its verdict clearly rejected the evidence of D1 as to the involvement of Mr Ip and Mr Chan, and were satisfied that she perpetrated this fraud together with the involvement of her family members.

99.  The discussion that took place and the comments made by the prosecution in its closing address simply related to the fact that D1 had given evidence in which she acknowledged that she had falsely transferred company funds to the Ha bank accounts. 

100.  Prosecuting counsel’s remarks in his closing speech need to be considered in their proper context.  First, prosecuting counsel emphasised throughout his closing address that a conviction should be found based on the evidence and satisfying the ingredients of the offence as particularised in Counts 1 and 2.  The impugned comments were in essence an acknowledgement that D1 accepted the monies had been misappropriated from the company.  Secondly, prosecuting counsel’s comments should also be considered in light of the comments made by defence counsel for D1 and D2 in their closing addresses.  Both counsel went considerably further in what they said on this subject, highlighting that D1’s admission related to Counts 1 and 2 and that the prosecution were inviting the jury to convict on an alternative basis when that was not the case. 

101.  It is contended by D1 and D2 that the judge allowed the prosecution to invite the jury to consider a verdict on Counts 1 and 2 on a different factual basis from the one the prosecution opened to the jury.  It is submitted that in discussion with the judge about his directions to the jury his proposed remarks were inviting the jury to consider two different bases on which they could return a verdict in respect of Counts 1 and 2.  The judge’s proposed remarks and what he told the jury in his summing-up did nothing of the sort.  He simply invited the jury to consider D1’s evidence in respect of the prosecution case as particularised in the two counts.  He did not direct the jury to convict D1 and D2 of Counts 1 and 2 on an alternative basis.

102.  The key issue in this ground of appeal is what the judge told the jury in relation to this matter in his summing-up.  There is nothing inappropriate or inaccurate in what the judge said to the jury about taking into account D1’s evidence when they considered the particulars alleged in Counts 1 and 2.  D1 had given evidence that she had edited the payroll data and the monies derived from this falsification of the records was transferred into her family’s bank accounts, which she would withdraw in cash.  She claimed she did this on the instructions of Mr Ip and Mr Chan and after she withdrew the cash she would pass it on to them.  She also said that Ms Vanky Chung was a party to this arrangement.  They all gave evidence denying any knowledge or involvement in the arrangement as alleged by D1.  This was the key issue for the jury to decide.

103.  The judge emphasised throughout his summing-up to the jury that they had to be sure that D1 falsely represented to Ms Vanky Chung that the salary payment information was true and accurate and the management had agreed and approved the overall payroll amounts.  The judge’s direction met no resistance from counsel when it was suggested to them.  On this key issue the judge was simply telling the jury that they could take into account D1’s evidence, which was a correct direction to the jury in the circumstances. 

104.  It was D1’s case that members of senior management were behind the arrangement and Ms Vanky Chung was also involved and therefore she did not commit the fraud as alleged against her.  On the other hand, it was the prosecution case that the members of senior management and Ms Vanky Chung were not involved and it was D1 who orchestrated the fraud and involved D2 and D3 in the process.  The prosecution did not shift its case, it simply accommodated the evidence that emerged from D1, who essentially admitted that she falsified payroll records and misappropriated company funds.  It was obviously not something that took the defence by surprise as it came from D1 herself.  The complaint that D1, D2 and D3 were disadvantaged by the alternative basis is unsubstantiated.

(e)      The element of dishonesty

105.  It is difficult to understand the submission by both Mr Leung and Mr Cheung that D1 had not been examined as to whether she was dishonest.  By D1’s evidence, she admitted that she falsified payroll data and effected the misappropriation of company funds.  Of course, there was no reference by the prosecution in its opening address to the jury of the involvement of Mr Ip and Mr Chan in the alleged frauds, because it was not their case that they were involved.  The prosecution response to the defence accusation that members of senior management were involved was that it was false.  Mr Ip and Mr Chan refuted any involvement in the frauds as claimed by D1.  In cross-examination of D1, prosecuting counsel challenged her evidence that she committed the frauds at the behest of Mr Ip and Mr Chan.[72] It was put to D1 that the monies from the fraudulent scheme went to her benefit and that of her family.[73]

106.  In addition, the judge gave clear and precise directions to the jury that they had to consider the element of dishonesty and explained the test they had to apply.  When addressing the element of deceit in the fraud counts, he said:

“… You must be satisfied that in making those false representations Kiu Mei-ling did so deceitfully. In particular, that Kiu Mei-ling was acting dishonestly. You might want to underline that word. That is the key element of deceit. False representation made dishonestly. With intent to defraud, namely, to induce Bonjour to make those payments and overpayments of salary.

In deciding whether you are sure that Kiu Mei-ling or Ha Ting-pong was acting dishonestly, you must decide two questions. (1) Was what Kiu Mei-ling or Ha Ting-pong did dishonest by the ordinary standards of reasonable and honest people? (2) Must Kiu Mei-ling or Ha Ting-pong have realised that what she or he was doing would be regarded as dishonest by those standards? In deciding this you must consider Kiu Mei-ling’s or Ha Ting-pong’s own state of mind at the time of these events.”[74]

107.  I am not persuaded that this ground of appeal is reasonably arguable.

The directions on the false representations

108.  It is complained by D1 and D2 that it was not the prosecution’s case that the false representation that the management of Bonjour had agreed and approved the overall payroll amounts (the 2^nd particular) was explicit, or that the false representation that the salary payment information produced by D1 for Bonjour was true and accurate (the 1^st particular) was an implied representation derived from the previous representation.

109.  D1 further complains that this matter was only raised by counsel in discussion with the judge prior to closing speeches.  The judge noted the 1^st particular was implied by the relevant applicant handing over the USB drive with the payroll information to Ms Vanky Chung and representing it had been agreed and approved by management (the 2^nd particular).  However, when the judge directed the jury that the 1^st particular was implied from the 2^nd particular, he did so without mentioning the handing over of the USB drive to Ms Vanky Chung.  It is complained that this resulted in prejudice to D1 because Ms Vanky Chung was not cross-examined on the basis that the 1^st particular was an implied false representation.

110.  It is also complained by D1 that the judge’s directions on the false representations were insufficient and that he failed to include a Kevin Brown direction in dealing with the two particulars.

111.  The complaint that the 1^st particular was said to be explicit and the 2^nd particular implicit is fatuous.  It did not matter whether they were explicit or implicit, the issue was whether D1 and D2 made false representations as alleged.

112.  D1’s evidence was that the salary information was not true and accurate.  The judge summarised the evidence to the jury in respect of D1 and D2 representing to Ms Vanky Chung that Mr Ip had approved the payroll data:

“ It is the prosecution case that the false representations were made to Ms Vanky Chung by Madam Kiu on each and every occasion that she presented the Bonjour payroll data in the USB stick to be uploaded to the EasyPay Online or HR Lite system to be transmitted to HSBC. The explicit representation that was made to Ms Vanky Chung was that Mr Wilson Ip had been informed of the payroll and agreed to it and approved the amount. The implied representation was that in those circumstances, Mr Ip having approved it, the salary payment information was ‘true and accurate’.[75]

…

It was Ms Vanky Chung’s evidence that on most occasions on her own initiative Madam Kiu made the representation that Mr Ip had agreed and approved payment of the payroll, but that on occasions when she did not do so of her own initiative, Madam Kiu confirmed that to be the case in answer to Ms Vanky Chung’s question to that effect. Well, either Madam Kiu volunteered her or she confirmed it when Ms Vanky Chung asked her.

In falsely representing that Mr Wilson Ip had approved the overall payments that were sought, the prosecution alleges that Madam Kiu made the implied representation that the salary payment information in the USB stick was true and accurate. Prosecution say that was not the case because some of the payments were to persons not entitled to any payment. Ha Wai-shing, not even employed. And others were excessive payments to such persons who were entitled to some payment but not the excessive payment.[76]

…

Of the process by which the information on the USB was uploaded to the HSB online payment system, Ms Vanky Chung said that either he or she, namely Ha Ting-pong or Madam Kiu told her that Mr Ip had been told of the total sum and that he had approved and agreed. She said that before the online procedure commenced, she had to confirm that to be the case. She said ‘Either I asked them or I was told by either of them’. And then as to how this practice had begun, she said this: ‘At the very beginning, Madam Kiu took the initiative in providing her with that information’. She said, this is Madam Kiu speaking to Vanky Chung: ‘Today is the payday. Mr Ip has been informed of it. He agreed to do so and has already approved the amount.’ That is how it all started.

As a result, she said that she realized that authorization was required and on occasions she had to ask Madam Kiu and when she did she received confirmation that authorization of Mr Ip had been obtained. Sometimes, Madam Kiu told her that she had obtained the confirmation by telephone. At other times, she said that it had been obtained by a face-to-face meeting with Mr Ip in the office.

          Members of the jury, it is these representations made to Ms Vanky Chung that the prosecution rely on, as I have told you, on being the false representation stipulated in the particular of offence of Counts 1 and 2.  Again, as I have told you, the prosecution accept that there was no explicit representation that the salary payment information was ‘true and accurate’, but you are invited to conclude that that was implicit or implied in the representation made explicitly, namely that Mr Wilson Ip had approved and agreed the particular report.[77]”

113.  The jury would have undoubtedly understood that the 1^st particular was implicit from the 2^nd particular.  The 2^nd particular on its own proved the offence if the jury had accepted the evidence of Mr Ip, Mr Chan and Ms Vanky Chung.  The jury obviously accepted their evidence as indicated by their verdicts.

114.  The eponymously named Kevin Brown[78] direction simply does not arise.  It has been held that where several false representations are alleged and it is clear from the manner in which the trial has been presented that all the representations stand or fall together, a Kevin Brown direction will not be necessary.[79]  It was neither here nor there that the 1^st particular was implicit, instead of explicit, and clearly the two particulars stood and fell together.

115.  I am not persuaded that this ground of appeal is reasonably arguable.

The unsustainability of the money laundering convictions

116.  It is submitted by D1 and D2 that in the event their appeals against conviction in respect of the fraud counts are allowed, the jury could not have been sure that D1 knew, and in the case of D2, knew or had reasonable grounds to believe, that the property with which they dealt with in the money laundering counts represented the proceeds of an indictable offence.  It would therefore follow that their appeals against conviction on the money laundering counts must also be allowed.  

117.  Given that the prosecution conducted its case on the basis that the proceeds in the money laundering counts originated from the frauds as alleged in Counts 1 and 2, the respondent accepts that the case against D1 was that she knew the nature of those monies and should the appeal against conviction in relation to the fraud counts be allowed, D1’s conviction of the money laundering counts should also be allowed.[80]

118.  The respondent also accepts that the same applies to D2 in respect of Count 2, because that was the period during which D2 had attained the position of Assistant HR Manager and together with D1 submitted the USB drive to Ms Vanky Chung and made the false representations as alleged.  It is acknowledged that for this period, the prosecution case proceeded on the basis that D2 knew the monies deposited had originated from the fraud that he and D1 committed.[81]  However, the same did not apply to the period of Count 1 because the prosecution relied on the limb of reasonable grounds to believe in proving the money laundering count based on the substantial aggregate sums of monies deposited into his bank accounts, the modest increases in his and D1’s salaries during that period, and the several bank accounts of D2 that were involved.[82]

119.  The respondent’s response to this ground of appeal, in my view, is correct.  However, this ground is purely academic, as I do not consider the ground challenging the convictions on the fraud counts to be reasonably arguable.  It follows that this ground too is not reasonably arguable.

The failure to sum up evidence in favour of D3

120.  Mr Dick Lee, on behalf of D3, complains that the judge failed to summarise the evidence of D1 that was relevant to D3’s case, and failed to direct the jury on how D1’s evidence was to be used in respect of D3’s “belief, perception or prejudice”, when considering the mental element of reasonable grounds to believe in respect of the money laundering counts. 

121.  The respondent disagrees that the judge failed to summarise the evidence relevant to D3’s case, and submits that the references to the summing-up by Mr Lee in his written submission are incomplete.[83]  The respondent points to numerous other instances where the judge addressed the jury on the evidence that was relevant to D3, such as D3’s age and work history; how D3 came to part with his bankcard that operated his two bank accounts to D1; how D1 exclusively controlled and used those two bank accounts without telling D3; and how D1 explained certain deposits, transfers, use of cheques and credit card payments that took place in D3’s bank accounts.[84]  

122.  In my view, the judge gave a very detailed summary of D1’s evidence and appropriately addressed that part of her evidence that concerned D3.

123.  In his summing-up to the jury, the judge explained to them that he would remind them of those parts of the evidence which appeared to him to be significant, but added that they could disregard evidence he had mentioned or emphasized and take into account evidence they considered important.[85]  He also reminded them when considering the case against the applicants to take into account the whole of the evidence, particularly the evidence concerning each of them.[86]  

124.  In respect of the facts and circumstances known to D3 that might have affected his belief whether the money in his bank accounts were the proceeds of crime, his defence was that he knew nothing about the monies transferred into the accounts.  D3 did not give evidence and therefore no account was given by him about his personal belief. The judge explained to the jury: 

“ Ha Ting-pong and Ha Wai-shing have not testified. A defendant does not have to give evidence. He is entitled to sit in the dock and require the prosecution to prove its case. You must not assume that either one of them is guilty because he has not given evidence. The fact that he has not given evidence proves nothing one way or the other. It does nothing to establish his guilt. On the other hand, it means that there is no evidence from the defendant to undermine, contradict or, importantly, explain the evidence put before you by the prosecution. In the context of Count 3 against the 2^nd defendant and Counts 4 and 5 against the 3^rd defendant, there is no evidence from them of their belief, perception or prejudice, if any, in respect of Kiu Mei-ling.”[87]

125.  Whilst the judge noted that D2 and D3 did not testify and there was “no evidence from them of their belief, perception or prejudice, if any,” in respect of D1, he went on to summarise the evidence that was before the court in respect of their good character and personal circumstances.[88]  He also pointed out to the jury that in relation to the money laundering counts, they were entitled to take into account everything they had heard about D2 and D3.[89] 

126.  The judge continued his directions to the jury by comprehensively addressing the individual counts and the evidence.  He provided to the jury written directions in respect of the fraud counts and the money laundering counts.[90] In the written directions the judge drew the jury’s attention to the mental element of “knowing or having reasonable grounds to believe”.  After explaining the element of “knowing”, he went on to address “reasonable grounds to believe” and stated:

“5. Alternatively, it may be proved that when the defendant dealt with the property the defendant had ‘reasonable grounds to believe’ that the property represented the proceeds of an indictable offence. It must be proved that the defendant had grounds for so believing and that the grounds were reasonable: that is anyone looking at those grounds objectively would so believe. Have regard to all the evidence when determining what weight to give to a defendant’s belief or perception when determining whether or not that defendant had reasonable grounds to believe that the monies were the proceeds of the fraud is alleged.”

127.  In the course of addressing the jury on the written directions in respect of the case against D3, the judge emphasised that they should take into account D3’s “beliefs, perceptions or prejudices” when considering the alternative mental element of “reasonable grounds to believe”.  He said:

“ … it may be proved that when the defendant dealt with the property the defendant had reasonable grounds to believe that the property represented the proceeds of an indictable offence. It must be proved that the defendant had grounds for so believing and that the grounds were reasonable. That is, anyone looking at those grounds objectively would so believe.

Have regard to all the evidence when determining what weight to give to a defendant’s belief -- and I am going to add a word here, members of the jury -- belief, perception or prejudices. ‘Prejudices’ is a third word I would invite you to write in. Another way of looking at that word ‘prejudices’ because we think of prejudice as being a negative thing -- you are prejudiced because she is a woman, you are prejudiced because you come from another country. Another way of looking at that is bias. Bias in favour perhaps is what is relevant here. But that is the phrase the courts have used. The Court of Final Appeal have used this phrase. It is belief, perception and prejudices when determining whether or not the defendant had reasonable grounds to believe that the moneys were the proceeds of the frauds alleged.

For proof of the alternative way of committing the offence, namely, having reasonable grounds to believe, is not necessary for the prosecution to prove as an element of the offence that the property received or acquired in the respective bank accounts were the proceeds of an indictable offence, namely, the frauds alleged in Count 1 and 2.”[91]

128.  The judge set out the respective cases of the prosecution and the defence in relation to Counts 4 and 5 as follows:

“Of Counts 4 and 5 involving the 1^st and the 3^rd defendant, Mr Wong said it was the prosecution case that the 3^rd defendant had reasonable grounds to believe that the monies he allowed to be deposited into his two HSBC bank accounts were the proceeds of an indictable offence. Mr Wong suggested that the evidence that Madam Kiu had given of exercising exclusive use and control of the Hang Seng bank account of Ha Ting-pong, that is D2-account 4, and of the two HSBC bank accounts of Ha Wai-shing, that is D3-account 1 and D3-account 2, that evidence of Madam Kiu were lies. They were lies told to protect her son and husband respectively. Of the two HSBC bank accounts of the 3^rd defendant, the prosecution said that the use of the monies in the account to pay the 3^rd defendant’s credit card bills and the use of EPS pointed strongly to the 3^rd defendant’s involvement in that account.

…

It was the 3^rd defendant’s case, as put in cross-examination and relied upon in the closing speech by Mr Lo, that the 3^rd defendant had surrendered exclusive control and use of the two HSBC accounts, D3-account 1 and D3-account 2, to the 1^st defendant. It was suggested on his behalf that the evidence of the 1^st defendant that he was not informed by her that moneys from Bonjour were deposited into those accounts, nor given sight of the bank statements over those many years and her evidence that payments of credit card bills were in respect of expenses incurred for Bonjour, it was contended on behalf of the 3^rd defendant that that evidence of Madam Kiu was to be accepted.”[92]

129.  Having explained to the jury the notions of belief, perception and prejudice, the judge made it clear to them that they were to take into account D3’s “belief, perception and prejudices”, when determining whether or not he had reasonable grounds to believe that the monies were the proceeds of crime. 

130.  When the judge made reference to the Court of Final Appeal decision in his summing-up, he was referring to HKSAR v Pang Hung Fai (2014) 17 HKCFAR 778, in which the Court said that the personal beliefs, perceptions and prejudices of an accused could be taken into account when applying the words of the statutory formulation of “having reasonable grounds to believe”.  The Court added that when assessing the whole of the evidence the judge or jury can give such weight to an accused’s belief, perception or prejudice as she or he believes is warranted.[93]  The judge correctly applied the law as stated at the time but since then the test for “having reasonable grounds to believe” has been reformulated in HKSAR v Harjani Haresh Murlidhar (2019) 22 HKCFAR 446, as follows: (i) What facts or circumstances, including those personal to the defendant, were known to the defendant that may have affected his belief as to whether the property was the proceeds of crime (“tainted”)?  (ii) Would any reasonable person who shared the defendant’s knowledge be bound to believe that the property was tainted? (iii)  If the answer to question (ii) is “yes” the defendant is guilty. If it is “no” the defendant is not guilty. 

131.  The subjective element of the test focuses on what facts and circumstances were known to the defendant that might have affected his belief as to whether the property was the proceeds of crime.  It is clear from the judge’s summing-up that he directed the jury’s attention to the subjective element of the test and emphasised that they should take into account the facts and circumstances that were known to D3 when determining whether he had “reasonable grounds to believe”.  D3 did not give evidence, and instead relied on the evidence of D1 that he knew nothing about the funds deposited in his bank accounts.  To this extent, D3’s case depended on whether D1’s evidence was accepted by the jury.

132.  There is no substance to the criticism that the judge did not adequately address this issue in the circumstances of the case.  I consider this ground of appeal not to be reasonably arguable.

133.  D3 also complains that his convictions on Counts 4 and 5 are unsafe and unsatisfactory but with the rejection of his other grounds of appeal there is no basis to submit that this ground is reasonably arguable.

Conclusion

134.  For the reasons I have given, I do not consider that the grounds of appeal are reasonably arguable and leave is therefore refused to D1, D2 and D3.

135.  The applicants are reminded of their right to renew their applications for leave to the Court of Appeal, but they are also informed of the consequences of doing so, which may include a direction for any loss of time spent in custody pending their appeal, if the Court were to come to the view that there was no justification for the renewal of their applications.

[1] Fraud, contrary to section 16A of the Theft Ordinance, Cap 210.

[2] Dealing with property known or believed to represent proceeds of an indictable offence, contrary to sections 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455.

[3] See the judge’s overview on Counts 1 and 2 at Appeal Bundle (AB), 182I-185B and on Counts 3, 4 and 5 at AB, 187J-189B.

[4] AB, 1 and 2.

[5] AB, 2.

[6] AB, 2 and 3.

[7] AB, 3 and 4.

[8] AB, 15, Admitted Facts, at [3]-[5].

[9] AB, 16, Admitted Facts, at [6] and [7].

[10] AB, 23-55, Admitted Facts, at [37]-[39].

[11] AB, 16, Admitted Facts, at [8].

[12] AB, 22 and 23, Admitted Facts, at [36].  See also Annexure 14, AB, 125-134.

[13] AB, 29-97, Annexures 1 to 9.  See also AB, 164J-165F.

[14] AB, 177T-180A.

[15] AB, 246A-I. 

[16] AB, 247B-248O. 

[17] AB, 250M-252D.

[18] AB, 252D-R.

[19] AB, 255E-256G. 

[20] AB, 260Q-261C.

[21] AB, 261I-J and 273N-Q.

[22] AB, 259K-260O.

[23] AB, 269A-U.

[24] AB, 270A-271D.

[25] AB, 274S-277G.

[26] AB, 271M-274R.

[27] AB, 189L-202T.

[28] AB, 203C-215E.

[29] AB, 215G-230Q.

[30] AB, 194M-S.  

[31] AB, 192B-E. 

[32] AB, 189L-202T.

[33] AB, 200K-201C.

[34] AB, 208M-U. 

[35] AB, 212B-J.

[36] AB, 224A-C and 226U. 

[37] AB, 224N-225E.

[38] AB, 227R-228H.

[39] For example, it was not put to Ms Vanky Chung that D1 had given cash to her and told her it was for Mr Ip (AB, 230H-K, 249C-H and 261A-C).  It was not put to Mr Ip that he had signed the “red and black book” reflecting the transactions that he asked D1 to do, or to Mr Chan that D1 had inquired about the “red and black book” (AB, 252N-R); D1 said she made a written record of the housing allowance signed by Mr Ip but did not make a copy – she showed it to an auditor but could no longer recall who it was – it was not put to Mr Ip that he had signed such a document (AB, 260B-I); it was not put to Mr Ip that he offered to compensate D1 for her low salary once her bankruptcy order had been discharged and that he made such payments (AB, 260P-Q); it was not put to Chau Kam-chee that a wrongful payment of $79,000 to him was returned to the company by him making a $50,000 cash payment to Ms Vanky Chung in D1’s presence (AB, 271E-K).

[40] AB, 176H-177A.

[41] AB, 284-299, the judge’s reasons for sentence.

[42] AB, 1838D-1839B.

[43] AB, 22-25, Admitted Facts, at [37]-[39].

[44] AB, 164J-165F.

[45] D1’s Amended Perfected Grounds of Appeal dated 2 June 2020.

[46] D2’s Amended Perfected Grounds of Appeal dated 16 July 2020.

[47] D3’s Amended Perfected Grounds of Appeal dated 4 May 2020.

[48] D1’s Amended Perfected Grounds of Appeal, at [6]-[8].  This is how the “alternative basis” was described by D1 in the Amended Perfected Grounds of Appeal but was not articulated in D1’s Written Submissions dated 16 July 2020.

[49] D2’s Written Submission, at [17].

[50] [2011] 2 HKLRD 782, at [42]-[46] and [53].

[51] AB, 1876S-1880K.

[52] AB, 1880T-1881C.

[53] AB, 1883Q-1884O.

[54] AB, 1885A-J.

[55] AB, 1886A-1887H.

[56] AB, 1887G-1889K.

[57] AB, 1886D-P, 1889M-R.

[58] AB, 1890Q-1891H.

[59] AB, 1902L-Q.

[60] AB, 1903S-1904S.

[61] AB, 1904D-S.

[62] AB, 439B-F

[63] AB 438C-439A.

[64] AB, 443J-Q.

[65] AB, 486H-K.

[66] AB, 486N-487J.

[67] AB, 534E-535I.

[68] AB, 546B-P.

[69] AB, 177T-178G.

[70] AB, 183D-P.

[71] AB, 184A-L.

[72] AB, 1684Q-1843F.

[73] AB, 1843B-G.

[74] AB, 181K-S.

[75] AB, 156F-K.

[76] AB, 182O-183C.

[77] AB, 224O-225J.

[78] R v Kevin Brown (1984) 79 Cr App R 115, 119.  See also HKSAR v Chen Keen (2019) 22 HKCFAR 248.

[79] R v More (1988) 86 Cr App R 234.

[80] AB, 439I.

[81] AB, 160A-H, 279G-L (summing-up), 439G-U (prosecution closing speech).

[82] AB, 277P-279F.

[83] See D3’s Written Submissions at [31] and [32], which delineates a considerable body of evidence in respect of D3, even though it is incomplete.

[84] AB, 178T-179H, 249K-250E, 274S-276U.

[85] AB, 173A-H.

[86] AB, 173J and 178U.

[87] AB, 178G-N.

[88] AB, 178G-179S.

[89] AB, 178U.

[90] AB, 180J-K. The money laundering written directions were marked MFI-2.  They were not included in the Appeal Bundle. 

[91] AB, 186F-T.

[92] AB,188A-189B.

[93] At [83]-[85].