HKSAR v. YAM HO KEUNG

CACC 555/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 555 OF 2001

(ON APPEAL FROM DCCC 621 OF 2001)

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J U D G M E N T

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Hon Mayo VP (giving the judgment of the Court):

1. The applicant (D4 at trial), aged 34, was convicted after a trial in the District Court before His Honour Judge Line of dealing with property knowing or having reasonable grounds to believe in whole or in part directly or indirectly represented any person's proceeds of an indictable offence contrary to section 25(1) of the Organised and Serious Crimes Ordinance, Cap. 455 (the Ordinance).

2. He seeks leave to appeal against his conviction.

3. There were three other defendants in his trial. They were charged with two conspiracies and D1 was additionally charged with two counts of being in unauthorised possession of other people's identity cards.

4. The first conspiracy referred to a conspiracy to lend money at excessive interest rates contrary to section 24(1) of the Money Lenders Ordinance, Cap. 163. The second was a conspiracy to deal with property in a similar manner to the charge which faced the applicant.

5. On the evidence which was before him the Judge convicted the applicant's co-defendants as charged.

6. The Judge made a finding of fact that during the relevant period, namely from August 1998 to April 2000, a criminal enterprise was conducted at premises at Kwai Fong Court which took the form of money lending where grossly excessive interest rates were charged.

7. Part of the modus operandi was to open bank accounts in the names of Miranda Chan and Yiu Yuk-lan into which payments made by borrowers would be paid. Withdrawals of moneys from these accounts would be made from ATM machines. Between July 1999 and April 2000 a total of $2,701,600 was withdrawn from these accounts.

8. The Judge made a finding of fact that $500,000 which had been in D1's account No. 132-30-07197-7 at the Bank of East Asia had come from the accounts of Miranda Chan and Eva Yiu Yuk-lan and that the applicant had dealt with these moneys. This fact had not been disputed and the applicant did not give evidence at the trial.

9. In a cautioned statement dated 27 April 2000 the applicant stated: "Ah Sir, it really is the case that my friend Ho Sui-yan (D1) told me to keep this sum of money temporarily for her. When required, I would return the money to her. However, I don't know how she has obtained the money".

10. The Judge was satisfied, having regard to the provisions contained in section 25 of the Ordinance, that there was sufficient evidence for the applicant to be found guilty as charged.

11. Section 25 provides:

"25. Dealing with property known or believed to represent proceeds of indictable offence.

(1) Subject to section 25A, a person commits an offence if, knowing or having reasonable grounds to believe that any property in whole or in part directly or indirectly represents any person's proceeds of an indictable offence, he deals with that property.

(2) In proceedings against a person for an offence under subsection (1), it is a defence to prove that-

(a) he intended to disclose to an authorized officer such knowledge, suspicion or matter as is mentioned in section 25A(1) in relation to the act in contravention of subsection (1) concerned; and

(b) there is reasonable excuse for his failure to make disclosure in accordance with section 25A(2).

(3) A person who commits an offence under subsection (1) is liable-

(a) on conviction upon indictment to a fine of $5,000,000 and to imprisonment for 14 years; or

(b) on summary conviction to a fine of $500,000 and to imprisonment for 3 years.

(4) In this section and section 25A, references to an indictable offence include a reference to conduct which would constitute an indictable offence if it had occurred in Hong Kong."

12. This application is fairly narrowly circumscribed. Although there are three separate grounds it is convenient to deal with them all together. They are as follows:

"1. The Learned Judge erred in determining that the offence under Section 25 of Cap. 455 is proved if the Prosecution only establish that a Defendant may have believed he 'may be dealing in the proceeds of an indictable offence'.

2. The Learned Judge erred in deciding in circumstances where there were a number of potential sources and/or explanations for the provenance and/or intended use of the money that he could safely infer that a reasonable man must inevitably have concluded that it was indeed the proceeds of an indictable crime.

3. The Learned Judge erred in concluding that a 'suspicion' was the same as a 'belief'."

13. The Judge proceeded upon the basis that there was insufficient evidence to prove at the appropriate level that the applicant knew that he was dealing with the proceeds of an indictable offence.

14. He considered, therefore, that what he had to determine was whether the prosecution had proved that the applicant had reasonable grounds to believe that he was dealing with such proceeds.

15. In his Reasons for Verdict, he said:

"50. To answer the question involves two stages. Firstly one asks objectively whether reasonable grounds existed for the belief. If they did then one goes on, secondly, to ask subjectively whether the defendant was aware of the existence of those reasonable grounds.

51. To be given a sum as large as $500,000 in cash and to be asked to keep it temporarily, without further explanation, when you do not know how the money was obtained would prompt a reasonable man to ask himself what was going on. I further judged that a reasonable man would, after only a little thought, come to the conclusion that:

^. It was the proceeds of crime.

^. It was for investment in crime.

^. It was to be hidden from creditors.

^. It was to be hidden from the taxman.

^. It was to be hidden from a spouse.

There is some overlap in these categories and it may be that greater imagination may add further categories. However, I judged that in the absence of an explanation (and I stress that) these are the matters that must come to the mind of a reasonable man.

52. The fourth defendant did not give evidence. I thus have no direct evidence of what was in his mind at the time. I am obliged to infer it. He appears to be an adult of sound mind. There is no suggestion or evidence that there is anything wrong with him. In those circumstances I naturally inferred that his state of mind was the same as that of a reasonable man.

53. I thus inferred that he was aware that the explanation for his being asked to deal with so much cash had to be one or more of the above listed matters. That is because there were reasonable grounds to infer so.

54. Does the fact that there were reasonable grounds to believe a limited number of scenarios mean that the defendant did not have reasonable ground to believe in any one of them? To pose the question is really to answer it. It seems clear to me that when an event can reasonably be explained on the basis of a few grounds, the man contemplating the issue holds reasonable ground for belief in them all. By using the term 'having reasonable grounds to believe' the draftsman and the legislature clearly made a conscious departure from the old phrase 'knowing or believing'. The effect is to make the offence a wide one. It means that people who deal in cash in circumstances which produce the limited list of inferred explanations as arises here are caught by the section. Another way of putting it is that the words of the section are aimed at condemning the man who reasonably foresees that he may be dealing in the proceeds of an indictable offence yet nonetheless goes on to do it. I do not consider that such a man was not within the sights of those who promoted the Organised and Serious Crimes Ordinance." (Appeal bundle pp. 42-43)

16. The issue on this application is whether this analysis by the Judge was well founded.

17. Mr McGowan contended that it was not.

18. He submitted that when the Judge was, near the conclusion of the passage cited, referring to what a reasonable man might foresee he used the word "may" rather than the word "would". This would indicate that what the Judge had in mind was only a suspicion rather than a belief in the state of affairs.

19. Mr McGowan submitted that this was insufficient if the approach which was adopted by the High Court of Australia in George v Rockett 93 ALR 483 at 490 was followed:

"3. The facts to be established.

In considering the sufficiency of a sworn complaint to show reasonable grounds for the suspicion and belief to which s 679 refers, it is necessary to bear in mind that suspicion and belief are different states of mind (Homes v Thorpe [1925] SASR 286 at 291; Seven Seas Publishing Pty Ltd v Sullivan [1968] NZLR 663 at 666) and the section prescribes distinct subject matters of suspicion on the one hand and belief on the other. The justice must be satisfied that there there are reasonable grounds for suspecting that 'there is in any house, vessel, vehicle, aircraft, or place - Anything' and that there are reasonable grounds for believing that the thing 'will ... afford evidence as to the commission of any offence'.

Suspicion, as Lord Devlin said in Hussien v Chong Fook Kam [1970] AC 942 at 948, 'in its ordinary meaning is a state of conjecture or surmise where proof is lacking: "I suspect but I cannot prove."' The facts which can reasonably ground a suspicion may be quite insufficient reasonably to ground a belief, yet some factual basis for the suspicion must be shown. In Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266, a question was raised as to whether a payee had reason to suspect that the payer, a debtor, 'was unable to pay [its] debts as they became due' as that phrase was used in s 95(4) of the Bankruptcy Act 1924 (Cth). Kitto J said (at 303):

'A suspicion that something exists is more than a mere idle wondering whether it exists or not; it is a positive feeling of actual apprehension or mistrust, amounting to "a slight opinion, but without sufficient evidence", as Chambers' Dictionary expresses it. Consequently, a reason to suspect that a fact exists is more than a reason to consider or look into the possibility of its existence. The notion which "reason to suspect" expresses in sub-s (4) is, I think, of something which in all the circumstances would create in the mind of a reasonable person in the position of the payee an actual apprehension or fear that the situation of the payer is in actual fact that which the sub-section describes - a mistrust of the payer's ability to pay his debts as they become due and of the effect which acceptance of the payment would have as between the payee and the other creditors.'

The objective circumstances sufficient to show a reason to believe something need to point more clearly to the subject matter of the belief, but that is not to say that the objective circumstances must establish on the balance of probabilities that the subject matter in fact occurred or exists: the assent of belief is given on more slender evidence than proof. Belief is an inclination of the mind towards assenting to, rather than rejecting, a proposition and the grounds which can reasonably induce that inclination of the mind may, depending on the circumstances, leave something to surmise or conjecture."

20. Here, the court was pointing out the difference between, on the one hand, reasonable grounds to suspect, and on the other, reasonable grounds to believe. Mr McGowan's argument was that the Judge had found evidence supporting grounds for suspicion falling short of reasonable grounds to believe. There are two things which can be said about Mr McGowan's assumption that the Judge's phraseology in the passage which reads: ".... the words of the section are aimed at condemning the man who reasonably foresees that he may be dealing in the proceeds of an indictable offence ....", revealed that suspicion, in the Judge's mind, was enough.

21. Firstly, grounds can exist to support a reasonable belief that X has happened even though X has not in fact happened. In such a situation the person who has reasonable grounds to believe that, for example, goods are stolen but who does not know that they are, may well say to himself: "I believe that I may well be dealing in goods that have been stolen, as there are good grounds for such a belief. I cannot say that I believe I am in fact dealing in stolen goods, as there are other possibilities. Yet the grounds for believing they are stolen are present." The use of the word 'may' in such a context is not inconsistent with the correct test.

22. Secondly, the criticized passage in the Reasons for Verdict must be taken in its full and proper context. We see that the Judge has correctly stated the question, namely whether there were reasonable grounds to believe. He went on correctly to specify the two questions to be asked, namely whether, objectively, reasonable grounds existed for the belief and, if so, whether subjectively the defendant was aware of the existence of those reasonable grounds. When addressing the first of these two questions the Judge concluded that a reasonable man would conclude, after only a little thought, that there were several inferences which could be drawn for which there was a reasonable factual basis. As such, the Judge was merely, again rightly in our view, saying that for each inference drawn there was a reasonable ground. It is not without importance that the Judge never used a phrase which implied that the applicant had grounds for mere suspicion and we can see no justification in Mr McGowan's concern that this is what the Judge was really saying.

23. The next question is whether the evidence supported the finding that there was a reasonable ground to believe, rather than, as Mr McGowan contended, to suspect that the $500,000 represented the proceeds of an indictable offence. What we have in this case is the handing over of a very large sum in cash. According to the applicant's statement to the police, no explanation was given to him as to the provenance of this sum or why it was that D1 was asking him to hold onto the money temporarily. If this was correct, then either the applicant asked no questions when questions would in innocent circumstances be asked, or if he did ask, D1 declined to answer when in innocent circumstances an answer would be given. It is also apparent from the Judge's Reasons for Verdict that within two days of the delivery of this cash to the applicant, he handed over half of it ($250,000) to the wife of D2. Applying common sense to these facts, the finding that, objectively, there were reasonable grounds for a belief that these funds were tainted by criminality of some significance cannot in our judgment be criticized, nor the finding that the applicant was aware of those grounds.

24. Plainly, if the applicant had been the custodian of this money in innocent circumstances or felt the need to transfer some of the cash to D2, he would have been able to provide the reasons, but none emerged at the trial. The Judge was, in such circumstances, as the court said in Li Defan and Anor v HKSAR [2002] 1 HKLRD 527, at 540:

"perfectly entitled to regard the failure of the accused to give any explanation on oath as strengthening the inference to be drawn from the prosecution case."

In fact, as the passage cited from the Reasons for Verdict shows, the Judge felt able to draw an inference which was adverse to the applicant without using his failure to give evidence to add strength to the inference he had drawn.

25. Applying common sense to the facts of this case, the Judge's findings were not open to valid criticism.

26. The application is dismissed.