HKSAR v. LO KIM TING

DCCC 464/2022 & DCCC 109/2023

(Consolidated)

[2026] HKDC 702

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 464 OF 2022 & 109 OF 2023

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REASONS FOR VERDICT

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1.  This is the consolidated trial of DCCC 464/2022 (Charge 3 to 6)  and DCCC 109/2023 (Charge 1 & 2).  The defendant (D)  was charged with 6 counts of “Fraud”, contrary to section 16A of the Theft Ordinance, Cap.210.

Prosecution case

2.  This is a straightforward case of fraud. Instead of a case of unfortunate business failure, the case is fundamentally about dishonest inducement and misuse of trust.   

3.  D held himself out as operating legitimate businesses and induced others to invest substantial sums.  However, D’s ventures were sustained not by genuine profit, but by investor funds, without proper books or transparent accounts. Promised returns never materialized, his explanations shifted when challenged, and the investors were left without clarity nor repayment.  Viewed against the commercial reality and the documentary record, this could not be a case of business failure, but a deliberate course of deceit.

4.  Between May 2015 and October 2015, D by false representations relating to the acquisition of 49% shareholding, working capital budget and reserve for stock replenishment, had deceived Wong Sing Yue Mark to invest in Chief International Group Limited “Chi Mei” for a total of $4,299,500. 

5.  Between July 2015 and August 2016, D by false representations that he had obtained the general dealership of Spanish COVAP iberico ham had deceived Choi Kin Sang Wallace to invest in Chief International (Hong Kong)  Limited “Chi Yat” for a sum of $500,000. 

6.  Between February 2018 and November 2018, D had by various false representations deceived Li Yim Ha Sherry to invest $210,362 for a booth of Food Expo 2018 that did not exist, to contribute $18,320 towards the registration of Chief International Management Limited “Chi Fung while the fee was only $5,880 and to invest $2 million in Chi Fung for business that D had no intention to proceed with.

7.  The funds from the respective investors were transferred to D’s control and dissipated by him.  Promised returns did not materialize.  When questioned, explanations were given to fob them off – commercial setbacks, temporary issues, misunderstandings.  Further assurances followed and eventually D could not be reached.  

8.  On or about 9 June 2018, D by false representation had deceived Sherry and her husband Dickson Cheung, to induce Dickson to reimburse him $20,600 for metaphysics service of Mr Yeo Tin-ming that was never engaged.

Defence case

9.  D did not deceive Mark, all the investment of Mark had been applied to the acquisition of 49% shareholding of Chi Mei, the operation and stock replenishment of Chi Mei and business projects agreed by Mark, e.g. acquisition of the dealership of Japanese Pork and shareholding of Akasaka (a Japanese restaurant in Macau).

10.  D did not deceive Wallace, Chi Yat was in operation.  Wallace was clear that only Chi Mei would deal with COVAP products.  D never presented any investment proposal to Wallace.

11.  D did not deceive Sherry, Sherry agreed to postpone the participation in Food Expo, the food products purchased for the Food Expo were with the supplier ready for delivery.   He had an intimate relationship with Sherry, the $2 million was a compensation for him to maintain the relationship and stay in Hong Kong.  Sherry knew the metaphysics service was provided by Sheung Foon, in any event the money has been returned to Dickson.  Apart from the $2 million compensation and the money for food products he had returned all the money received from Sherry and Dickson by a cheque in the sum of $115,000 in early August 2018.  

Background

12.  Chief Overseas Education Consultant Limited (Chi Yuet智越)  provided education consultant service for education in UK.  D had been providing voluntary education consultant services to the schools of Tung Wah Group of Hospitals for some time.

13.  D assisted Tsui Ngai to study in UK in 2014 and got acquainted with his father Tsui Kin Sang Tenny.  D and Tenny first met each other in January 2015.

14.  Tenny was a businessman in Macau, he was a dealer of various brands of food product via Polifit Trading Limited.  Polifit had the distributorship of COVAP in Hong Kong and Macau.  February 2015, D went to Macau to visit Tenny’s business and to dine at Akasaka (a restaurant that Tenny had a share).  Thereafter Tenny and D reached an agreement that D would incorporate a company to develop the Hong Kong market for COVAP in return for the distributorship of COVAP in Hong Kong.

15.  March 2015, a business trip to COVAP factory in Spain was arranged.  D, Lai Yuen Ting Rachel, Tenny of Polifit (authorized distributor of COVAP), Aken of Polygain International Limited (the authorized importer of COVAP), Kelly Chen of DLMG (the outsourced public relations company engaged by D)  were on the trip.  In the same month D set up Chief International Group Limited (Chi Mei 智味)  to take up the distributorship of COVAP and got Rachel to invest in the company. 

16.  Chi Mei was formally incorporated on 27 March 2015 for food wholesaling business.  In the beginning Chi Mei had 3 shareholders: D and Rachel each held 49% shareholding (14,700 shares)  and the remaining 2% (600 shares)  was held by Tenny. 

17.  At all material times the company documentation of Chi Mei was taken care by Kent Ho of Fidelity. 

18.  The office lease at 5C3, TML Tower, 3 Hoi Shing Road, Tsuen Wan (TML office)  was signed in the name of Chi Mei, but the office was used by D for all his business ventures.

19.  At all material times the marketing related matters were handled by Kelly Chan of DLMG, who stationed in the TML office.  The boss of DLMG was Kathy.

20.  Mark’s father was the family doctor of D’s family.  Mark’s father believed D was an experienced and successful education consultant and passed D’s contact to Mark. Mark was then a full-time postgraduate student studying LLM until July 2015.  Mark first met D in February 2015 and started to work at the TML office around April 2015 as legal consultant. 

21.  On 20 May 2015 D paid $500,000 to Tenny for the dealership of the Japanese Pork and other Japanese ingredient products (collectively referred to as the dealership of Japanese Pork).  D intended to set up a new company to deal with the Japanese food products.

22.  In May 2015, Rachel wanted to withdraw from Chi Mei and D invited Mark to take up the shareholding of Rachel.  By 26 May 2015 Mark agreed to take up Rachel’s shareholding and invest $2.8 million into Chi Mei.  On 26 May 2015 D paid Rachel $1.3 million for her 49% shareholding (14,700 shares), Mark contributed $550,000 out of that $1.3 million.  And Mark paid up the remaining of the $2.8 million to D by end of May 2015. 

23.  Shortly after Mark paid up the $2.8 million, D asked Mark to invest another $1.5 million, Mark agreed and paid $1 million to D by a cheque dated 30 June 2015, $100,000 cash in August 2015, $199,500 by a cheque dated 18 September 2015 and $200,000 by a cheque dated 30 September 2015.

24.  In the meantime, Choi Kin Sang Wallace of Imperial Wine Cellar Limited, a red wine wholesaler, got to know D in May 2015 via activities of wine/food Expo.  Chi Mei purchased a small batch of grape wine from Wallace after the Expo, and further sales were made between June to August 2015.

25.  Meanwhile, D told Mark and Wallace respectively that he intended to set up a new company Chief International (Hong Kong)  Limited (Chi Yat智逸).

26.  D applied bank account for Chi Mei on 1 September 2015.

27.  In October 2015, Mark decided to confront D for the whereabouts of his investment money and eventually made secret audio recording of the meetings with D on 6 October and 7 October 2015 and his meeting with Kent Ho on 9 October 2015. 

28.  Meanwhile, Mark made a report to the Police on 4 October 2015 and left Chi Mei in the same month.  Mark’s his first witness statement was dated 14 December 2015.

29.  Wallace agreed to take up 10% shareholding of Chi Yat and issued two cheques, each in the amount of $500,000, payable to the D in October 2015.

30.  Chi Yat was incorporated on 29 October 2015 for food wholesaling business.  The company registered address was also the TML office.

31.  Wallace became a registered share holder of Chi Yat on 3 November 2015.  One of the cheques issued to D was cashed out on 10 November 2015.

32.  D was arrested in relation to Charge 1 on 28 January 2016.

33.  Wallace was not able to contact D after March 2016.  TML office was vacated by June 2016.  Mark approached Wallace in August 2016.  Wallace met up Mark and Tenny in September 2016.

34.  In December 2017, Li Yim Ha Sherry encountered D in Penfold Park and they became close friends later.  In February 2018 Sherry upon D’s invitation, invested a total of $67,500 to participate in August 2018 Food Expo.  They had a trip to Taiwan together in April 2018. 

35.  In May 2018, D invited Sherry to become a shareholder of Chief International Management Limited (Chi Fung智豐)  and requested her to contribute more for Food Expo.  Chi Fung was incorporated on 19 May 2018.  The registered address of the company was also the TML office.  

36.  Around the same time, Sherry introduced Dickson Cheung to D.  Meanwhile, Sherry discovered her pregnancy and decided to marry Dickson.

37.  From June 2018 onward, Sherry was busy with matters related to her wedding and physically exhausted because of her pregnancy.  Sherry transferred $2 million to D on 22 June 2018.  Sherry and Dickson registered their marriage on 24 June 2018 and their wedding banquet was held on 31 August 2018.  D assisted in the betrothal ceremony, he was the best man in the wedding and was offered to be the godfather of the child to be born.

38.  Sherry was not able to locate D again after her wedding banquet held on 31 August 2018.  Sherry and Dickson made a report to Police on 16 November 2018.

39.  Around January 2019, Mark and Sherry went to Apple Daily to make a complaint about the defendant.  D was arrested for obtaining property by deception in relation to Charge 3 to 6 on 28 January 2019.

40.  Fung Lai (Hotel)  Cleaning Company Limited (Fung Lai)  was incorporated on 12 April 2019.  The annual return for 2020 and 2021 was overdue, an information sheet dated 6 July 2021 re striking off this company was filed.

41.  Wallace made a report to the Police on 30 April 2019.  

42.  D was arrested for fraud in relation to charges 3 to 6 on 20 April 2022. 

43.  No tax return was filed to the Inland Revenue Department in relation to Chi Mei, Chi Yat and Chi Fung.  No audit report was prepared for Chi Mei, Chi Yat and Chi Fung.  

44.  The consolidated trial was eventually scheduled to be heard on 13 June 2024 with 12 days reserved, but later adjourned to 17 July 2025 upon defence’s application on 6 June 2024. 

45.  The Return of Allotment of Fung Lai shares to Chi Fung dated 13 April 2019 and the Notice of Change of Address of Registered Office dated 12 April 2024 were submitted on 13 June 2024.  The Notice of Change of Company Secretary dated 12 April 2024 was submitted on 21 October 2024.

46.  An invoice dated 2 June 2018 (MFI-13, later became Exhibit P49)  presented by the defence during the prosecution case was in fact issued in June 2024.

47.  D was represented by Mr John Reading SC and Mr Henry Chung until the end of the prosecution case.  At the conclusion of the prosecution case Mr Reading SC made an application for leave to be excused.  Eventually, Mr Richie Lai took over the defence case.

The Law

The offence of Fraud

48.  Section 16A of the Theft Ordinance, Cap. 210, provides:

“(1)  If any person by any deceit (whether or not the deceit is the sole or main inducement)  and with intent to defraud induces another person to commit an act or make an omission, which results either –

(a)  in benefit to any person other than the second-mentioned person; or

(b)  in prejudice or a substantial risk of prejudice to any person other than the first-mentioned person,

the first-mentioned person commits the offence of fraud. …

(2)  For the purposes of subsection (1), a person shall be treated as having an intent to defraud if, at the time when he practises the deceit, he intends that he will by the deceit (whether or not the deceit is the sole or main inducement)  induce another person to commit an act or make an omission, which will result in either or both of the consequences referred to in paragraphs (a)  and (b)  of that subsection.

(3)  For the purposes of this section—

benefit	means any financial or proprietary gain, whether temporary or permanent;
deceit	means any deceit (whether deliberate or reckless)  by words or conduct (whether by any act or omission)  as to fact or as to law, including a deceit relating to the past, the present or the future and a deceit as to the intentions of the person practising the deceit or of any other person;
prejudice	means any financial or proprietary loss, whether temporary or permanent.”

49.  The offence of fraud does not incorporate an element of dishonest as part of the offence. In the context of “deceit”, to deceive is to induce a man to believe that a thing is true which is false, and which the person practising the deceit knows or believes to be false.

Findings

50.  I have reminded myself of the burden and standard of proof. It is for the prosecution to prove D’s guilt on each and every element of the charges beyond all reasonable doubt.  D has no burden of proof whatsoever.  D has a clear record; it is less likely that he would commit a crime and more likely that he is telling the truth in his evidence.  

51.  The parties have prepared detail summary of the evidence and made thorough analysis of the evidence and issues in their written submissions.   They also prepared a joint supplementary note to clarify certain parts of the evidence.  I have considered all the evidence in light of the defence case and the defence submission and each charge will be considered separately.  I have reminded myself the relevant principles in relation to the drawing of irresistible inference.  Where there is any reasonable doubt, the benefit should go to the defendant. 

Charge One

52.  It is alleged that between May 2015 and October 2015, D by deceit, namely by falsely representing to Mark that:

(i)  Mark would acquire 49% of shares in Chi Mei upon the payment of $1.3 million;

(ii)  6,000 shares in Chi Mei was equivalent to 49% of its shareholding;

(iii)  $600,000 was required to be paid for maintaining the liquidity of Chi Mei and for the payment of salary; and

(iv)  $2.4 million was required to be paid for Chi Mei’s stock replenishment.

with intend to defraud, induced Mark to make payments in a total sum of $4,299,500, which resulted in benefit to D, or in prejudice or a substantial risk of prejudice to Mark.

53.  Mark gave evidence that he met up D around February 2015.  Thereafter they got to know each other.  D said he was an education consultant for education in UK of Chi Yuet and he told D he studied law.  D invited him to join Chi Yuet as a legal consultant for a monthly salary of $50,000 and to invest $400,000 to be a shareholder.  After discussing with his parents, he took up the offer.  However, no document received for his investment for Chi Yuet, no employment contract signed and no salary paid for the work he did at the TML office around April 2015.  Mark agreed under cross-examination that he worked mainly for Chi Mei at the TML office.

Mark took up shares of Chi Mei

54.  Mark gave evidence that he knew Rachel after he worked at the TML office. Soon afterwards, D asked him if he was interested in taking up the shares of Rachel in Chi Mei.  He learnt from D that D and Rachel each had 49% shareholding while Tenny had 2%. D told him that Tenny was an agent of COVAP for Hong Kong and Macau.  D provided him with marketing materials (Exhibit P32), leaflet about COVAP and letter concerning the dealership of COVAP to Chi Mei, inviting him to take over Rachel’s shares, and to invest $2.8 million to Chi Mei.

55.  Exhibit P32 is dated September 2015.  Mark later identified Exhibit P35(page10-31)  to be part of the materials he received from D to convince him to be a shareholder.   Mark agreed the leaflets attached in an email dated 23 April 2015, was drafted by him (Exhibit D1), on the leaflets Chi Mei was described as the authorized distributor of COVAP in English and exclusive dealer “獨家代理商” of COVAP in Chinese.  Mark did not agree he drafted Exhibit P35, in any event, the primary materials for any drafting must be directly or indirectly from D.  Things happened 10 years ago, Mark overlooked the date and mixed-up Exhibit P32 as the material provided to him in April/May 2015 is understandable. 

56.  Mark gave evidence that D said the $1.3 million out of the $2.8 million was for the 49% shareholding acquisitions while the remaining was for stock replenishment and cash flow.   He believed in D and passed all the marketing materials received from D to his parents for consideration as the investment money ultimately came from his parents.  Time-being D needed to pay Rachel $1.3 million to buy back her 49% shareholding but D was in short of $550,000.  Upon D’s request and with the parents’ consent, he issued a cashier order to Rachel in the sum of $550,000 on 26 May 2015.  I consider and accept Mark’s evidence.

57.  Mark gave evidence that around the same time he decided to take up the offer and invested $2.8 million into Chi Mei.  He paid the remaining by two cheques in the sum of $850,000 (deposited into D’s Standard Chartered Bank account)  and $1.4 million (deposited into D’s HSBC account), cashed on 27 May 2015 and 29 May 2015 respectively.  However, despite the money he injected into the company, he was not given any shareholder’s agreement, had no access to the company bank account and pricing information of the stock.  To alleviate his concern, D told him the pricing involved confidential matters or things were not settled yet.  Time-being he received complaints from outsiders and own staff about overdue payment and salaries.  I consider and accept Mark’s evidence. 

58.  Mark gave evidence that D provided lots of excuses and shown him an invoice of COVAP products in the sum of $944,000 (Exhibit P35, page 56)  to get him invest another $1.5 million around June 2015.  Whoever suggested to issue the $944,000 is not material, the question is did D make use of it to induce Mark to make further contribution.

59.  The $944,000 invoice shown to Mark had a date 30 May 2015 stamped on the top right-hand corner (Exhibit P35, Trial Bundle page 1634).  According to the evidence of Mark, D showed him this invoice on 30 May 2015 and requested him to sign together with D on the top right-hand corner to acknowledge this invoice. Since the amount was huge, he believed D wanted him to confirm the invoice.  Should that be the case, it would mean D had requested for further contribution shortly after Mark paid up the $2.8 million.  Mark started to pay the further contribution by instalments about a month later in June.  I consider and accept Mark’s  evidence.

60.  It is noted that the $944,000 invoice was also included in the cheque register given to Mark by D in October 2015 with a corresponding cheque no. 335740 dated 30 May 2015 (Exhibit P35, Trial Bundle page 1636).   I consider and reject the D’s evidence that he did not produce the $944,000 invoice to Mark.

61.  Apart from the alleged $944,000 invoice, it is noted that from the cheque register the substitute invoice in the sum of $472,000 was paid by a cheque dated 25 May 2015 and cashed on 1 June 2015 out of the $2.8 million contribution (Exhibit P23, Trial Bundle page 804).  According to D, the particulars of invoice would be marked on the office window glass panel (Exhibit D6(2)), thus it created an impression around end of May 2015 that over $1.4 million would have been required for stock replenishment and the $2.8 million would soon be exhausted. 

62.  Mark gave evidence that for the further contribution, D said $1 million for stocks, $100,000 was for salary payment, and $400,000 for cash flow, i.e. a total of $500,000 was for company operation.  He believed what D said and paid D by 4 batches:

(i)  $1million by cheque dated 30 June 2015 deposited into D’s HSBC account and cashed on 2 July 2015,

(ii)  $100,000 cash in August 2015;

(iii)  $199,500 by cheque dated 18 September 2015 deposited into Chi Mei bank account and cashed on 21 September 2015;

(iv)  $200,000 by cheque dated 30 September 2015 deposited into Chi Mei bank account and cashed on 2 October 2015

D applied a bank account for Chi Mei on 1 September 2015, thereafter the cheques were payable to Chi Mei, whereas the cheques issued earlier were payable to D. The further contribution was $500 short of $1.5 million, herein after referred as the further $1.5 million contribution. The whole contribution from Mark hereinafter referred as the $4.3 million contribution.

63.  Mark gave evidence that he was only given the transfer documents concerning the 6,000 shares for his signature (Exhibit P2 & the sold note (the transfer documents))  in D’s room after he made the further investment and chased D in the office for the transfer.  He later corrected himself and said the transfer documents were signed in mid-June 2015.  Thus, according to Mark, after he committed to make further contribution, he was given the transfer documents to sign but he was not provided with any copy, and he continued to have no access to the company’s bank account and no involvement in business decision. 

64.  Mark gave evidence that D repeatedly made excuses to prevent him from becoming a bank signatory, stating that many things were yet to be fixed and it was not convenient (for him)  to handle bank matters.  D only continued to provide excuses to appease his dissatisfaction.  He was not treated as a partner and had no authority over bank account or petty cash.  After he found the operation of D more and more suspicious, he contacted Tenny directly.  He was given a different version as to Rachel’s withdrawal, matters related to the dealership (distributorship)  and stocks of Chi Mei.  I consider and accept Mark’s evidence.

Mark withdrew from Chi Mei

65.  Mark gave evidence that as he was given two different versions of matters related to Chi Mei, he planned to confront D with the matters in the coffee shop Bien Bistro, and decided to make a secret audio recording of the meeting on 6 October 2015, the subsequent confrontation with D at TML office on 7 October 2015 and his dialogue with Kent Ho on 9 October 2015.  Before the confrontation on 7 October, he did a company search and learnt that he was not a shareholder of Chi Mei. 

66.  Mark gave evidence that D emailed the cheque register prepared by Irene Yu (a staff of Chi Mei)  to him prior to the confrontation, D confirmed to him the cheque register was true and accurate (Exhibit P35, Trial Bundle page 1629-1631, 1636,1637)).  However, it is noted that some of the cheques listed either bounced or not shown in corresponding bank statements: for example, Cheque no. 326735, 326746 to 326748, 326749 all returned uncleared and Cheque no. 326740 not appeared in bank statement (Trial Bundle page 1631 vs page 808, 809). 

67.  Mark gave evidence that after the confrontation on 7 October and before he went to Fidelity on 9 October, he learnt from Tenny that the aforesaid invoice in the sum of $944,000 had in fact been cancelled and substituted by another invoice in the sum of $472,000.  He also verified with Tenny the entries on the cheque register related to Polifit and was told that the entry of the cheque no. 335740 related to stock purchased from Polifit in the amount of $944,000 was false (Exhibit P35, Trial Bundle page 1636).  Tenny confirmed in his evidence that the $944,000 invoice was cancelled and only half of the quantity was purchased by Chi Mei in due course.  In any event the evidence shows that D never had intention to proceed with the $944,000 invoice.

68.  I consider and accept Mark’s evidence that in convincing him to make further investment, D presented and asked Mark to sign together with him on the cancelled invoice to acknowledge the purchase.  This cancelled invoice with signature of Mark and D (Exhibit P35, Trial Bundle page 1634)  was kept in company’s file, Mark took it out and provide to the Police. 

69.  According to Mark’s evidence, he conducted a company search on 7 October and discovered that he was not a shareholder of Chi Mei and he learnt from the staff that Chi Mei was in debts, he considered D had lied to him, he mentioned to D that he felt called to report the matter to the Police.  After he learnt from Kent Ho that 6,000 shares represented 20% of the shareholding, he directed Kent Ho to halt the registration of the 6,000 shares in Chi Mei.  Eventually, he left Chi Mei in October 2015 and soon afterwards D blocked his phone number.  Mark agreed his first witness statement was dated 14 December 2015.

Mark was never registered as shareholder of Chi Mei

70.  It is note that Chi Mei was incorporated on 30 March 2015, Rachel became a registered shareholder on 4 May 2015 after 14,700 shares were allotted to her by D.  And D had arranged Wallace to be a registered shareholder within a month after he agreed to be a shareholder in October 2015.  However, Mark was never registered as a shareholder of Chi Mei after he paid up the $1.3 million in May 2015.  The transfer documents related to Mark’s 49% shareholding was only prepared and sent to D on 2 February 2016 by Kent Ho (Exhibit D83), more than three months after Mark had left Chi Mei.  And after D was arrested in relation to Charge 1 on 28 January 2016.

71.  D agreed Mark would acquire 49% of shares in Chi Mei upon the payment of $1.3 million and gave evidence that he had given instruction to Kent Ho to make arrangement for the transfer of 49% shares in Chi Mei to Mark.  It is noted that Chi Mei’s shares in fact did not have much value, it had limited assets and yet to generate any income, D wanted to get Mark to invest by offering shares of Chi Mei, transferring 20% or 49% to Mark made no difference to D. 

72.  Rachel’s shares were not sold directly to Mark but to D.  Evidence suggested that Mark only decided to take up Rachel’s shares after D agreed to buy back Rachel’s shares.  That being the case, D’s instruction to prepare transfer documents related to Rachel and Mark would have been given to Kent Ho at different times.

73.  As the initial $550,000 contributed by Mark represented to about 20% of the shareholding (i.e. 6,000 shares), that might be the cause why the “6,000 shares” transfer documents were prepared.  The evidence suggests that either D instructed Kent Ho to prepare the transfer of 6,000 shares or Kent Ho somehow learnt of the payment of $550,000 by Mark and taken D agreed to transfer 20% to Mark.  The benefit of doubt would be given to D, and it might be the case that Kent Ho had mistaken the situation and prepared the “6,000 shares” transfer documents. It is noted that both Mark and D were involved in the transfer of Rachel’s 49% shareholding, yet none of them raised any query as to the “6,000 shares” stated on the transfer documents prepared for Mark.  However, D being the transferor was obliged to affect the transfer of 49% shareholding to Mark.

74.  Evidence shows that D had made use of the distributorship of COVAP obtained from Tenny to create a positive company image for Chi Mei.  When Mark paid $1.3 million for the shares of Chi Mei, he did so not so much for the numbers of shares to be transferred but for the value of “the shares” to be transferred and would become a partner with same shareholding as D.  I consider and accept Mark’s evidence that when he was given the 6,000 shares transfer documents, he did not put his mind to the matter, was not aware 6,000 shares did not equivalent to 49% of the shareholding.  It is also noted that the transfer documents related to the 6,000 shares were not properly executed, the documents were yet to be acknowledged by a witness.

75.  D instructed Kent Ho to prepare documents for the transfer of Rachel’s shares, D should have knowledge that 49% shareholding meant 14,700 shares (Exhibit D3).  D was the person in control of Chi Mei after he bought back the shares from Rachel.  The collaboration between Mark and D had lasted for about five to six months before their relationship broke down around mid-October 2015.  Evidence shows that the registration of shareholding could be completed in about a month time.  Despite D repeatedly represented to Mark that he had 49% shareholding of Chi Mei, Mark was never registered as a shareholder of Chi Mei, be it 49% or 20% shareholding.   

76.  By inviting Mark to sign on the transfer papers, D was representing to Mark that 6,000 shares were equivalent to 49% of Chi Mei shareholding.  D might have instructed others to take care the matter but being the transferor received $1.3 million from Mark, he was under a duty to ensure the execution of the transfer and registration of Mark’s shares were properly done. 

77.  To the contrary, evidence shows that despite D repeatedly represented to Mark that he had 49% shareholding, D did not pay attention on the transfer, did not verify the accuracy of the documents and did not follow up the registration.  I consider and find D at the least had been reckless in making false representation that 6,000 shares were equivalent to 49% of Chi Mei shareholding and that Mark had acquired 49% shareholding of Chi Mei.

Working capital budget

78.  The evidence suggests that Mark was overwhelmed by the positive business prospect of Chi Mei represented by D in the beginning and took the words of D lightly. In fact, Chi Mei did not have any marketing strategy and did not keep any books of accounts.  Mark did not insist on an inspection of Chi Mei’s books to verify the true value of the shares when he acquired the shares.  When Mark noticed the suspicious of the company operation, and queried the value of his shares, D at one point tried to justify the value by saying that Chi Mei had paid $1.8 million for the distributorship of COVAP.  However, it is common ground that no money was ever required for the distributorship of COVAP, yet to secure the distributorship of COVAP Chi Mei was required to purchase $3.6 million COVAP products.

79.  According to Mark’s evidence, after deducting $1.3 million for 49% shareholding out his first investment $2.8 million, the balance of $1.5 million was for stocks and cash flow.  Though in the beginning Mark gave evidence that D told him part of the $2.8 million was for buying the COVAP dealership and agreed he has mentioned $1.4 million was for the COVAP dealership, it appears that he was referring to COVAP products instead.  The COVAP dealership had already been acquired before Mark agreed to take up the 49% shareholding, the value of the COVAP distributorship would have been included in the $1.3 million paid for the shareholding. 

80.  According to Mark’s evidence, shortly after D received the initial $2.8 million, D requested Mark for further a $1.5 million investment ($500,000 was for company operation and $1 million for stocks).  As mentioned above D had by conduct represented to Mark that Chi Mei had used up the $2.8 million and required further funds for operation and stock replenishment. 

81.  Mark did not have the books of the business but D gave evidence that the monthly operation expenses (including rent and salary payable to the staff)  of Chi Mei were about $100,000.  That being the case, when D asked for further investment shortly after he received $2.8 million, D had by his conduct represented to Mark that $100,000 of the 2.8 million had been applied towards the operation expenses before the first instalment of the further contribution was paid in June.   Thus, according to Mark’s evidence, D had represented to him a total of $600,000 out of the $4.3 million contribution was to be set aside for company operation ($100,000 out of $2.8 million and $500,000 out of $1.5 million).

82.  Setting aside $600,000 (representing about 6 months working capital)  for the liquidity of Chi Mei and the payment of salary is reasonable.  Whereas according to D’s evidence, out of the $2.8 million invested by Mark, $1.3 million was for 49% shareholding, $1million was for company operation, $500,000 was for dealership of Japanese Pork; and out of the $1.5 million invested by Mark, $400,000 was for Food Expo in August 2015 and $1.1 million was for the future operation of Chi Mei.

83.  The dealership of Japanese Pork was paid on 20 May 2015. Thus, it had become an asset of Chi Mei/business of D (just like the renovation of the TML office and stocks of the company)  before Mark joined Chi Mei as a shareholder/partner of D’s business.  The value of the company assets would have been reflected in the value of the shares Mark acquired after 20 May 2015.  I am of the view that D only made use of the dealership of Japanese Pork to cover up his dissipation of the company funds (I will refer to this later).  

84.  $1 million was equivalent to about 10 months working capital.  At the material time D was using Chi Mei to attract further potential investors, like Mark and Wallace. To make potential investors believe Chi Mei had a healthy financial situation was to the benefit of D.  In any event, according to D’s evidence, the operation expenses from May to October should not be more than $600,000, and Chi Mei should not have any liquidity problem.

85.  However, it is noted from the conversation between D and Mark in the Bien Bistro (Exhibit P29(1)  & P30(1)), D agreed the staff salary was not paid on time and there were overdue payments.  As mentioned below, despite there was available fund in the Chi Mei’s bank account, D did not settle the overdue salary and bills on time, but applied the fund at his will without notifying Mark.

86.  It is noted that D had started to order COVAP products since March 2015, two invoices in a total of $340,860 had been settled before Mark joined Chi Mei and only one invoice in the sum of $472,000 was settled on June 2015 after Mark invested $2.8 million by end of May 2015 (Exhibit P40).  As mentioned above, the monthly expenses of Chi Mei were $100,000, if $600,000 was set aside for working capital as D represented, Chi Mei should have sufficient cash for the operation and would not require further investment in June.  I consider and accept Mark’s evidence that D made use of a cancelled invoice in the amount of $944,000 together with other excuses to convince Mark to make further $1.5 million contribution on 30 May 2015.

87.  The last batch of Mark’s further contribution was a cheque in the sum of $200,000, it was cashed on 2 October 2015 (Exhibit P25, Trial Bundle page 981), on the same day $100,000 was transferred out and another $400,000 was transferred to Tenny via High End Catering Consultancy Ltd on 6 October 2015 (for Akasaka shares). In response to the overdue salary queried by Mark on 6 October 2015, D said his cheque in the sum of $200,000 was yet to cash (Exhibit P30(1)  Counter 183-184).  The answer of D suggested that apart from the $200,000, the contribution of Mark has been used up, and there was no available fund to meet the overdue payments of Chi Mei.  

88.  However, this was not the case, the total bank balance of Chi Mei as at 2 October 2015 was $560,468.88 but reduced to $27,807.35 as at 31 October 2015 (Trial Bundle page 980).  It appears that instead of settling overdue payments of Chi Mei, D transferred $400,000 out of Chi Mei’s bank account for the shares of Akasaka without obtaining the consent of Mark on 6 October 2015. 

89.  It appears that despite D represented to Mark that a substantial amount, i.e. $600,000 would be set aside for Chi Mei working capital (a much higher figure according to D), once he obtained the money from Mark, he did not commit to it but applied the money as his will against the interest of Mark.  I consider and find the only irresistible inference is that at all material times D had no intention to set aside any working capital budget for Chi Mei at all.

Stock replenishment

90.  Chi Mei had already paid $340,860 for COVAP products before Rachel withdrew from Chi Mei.  It is also common ground that Chi Mei had purchased COVAP products via Tenny of Polifit or Aken of Polygain, other products from Tenny and wine from Wallace.   The evidence shows that after Mark joined Chi Mei, only about $1 million was spent on stocks up to the end of October 2015.  That being the case, with the $4.3 million contribution from Mark, Chi Mei should not have any liquidity problem in October 2015.

91.  According to Mark’s evidence, D told him after setting aside a lump sum ($600,000)  for operation expenses, the rest (i.e. $2.4 million)  was for stock replenishment.  D, on the other hand, said Mark also agreed to invest $500,000 for the dealership of Japanese Pork and $1.2 million for the shareholding of Akasaka.  However, it was put to Mark under cross-examination that the arrangement related to shares of Akasaka was that he and D were to contribute $900,000 and $300,000 respectively, Mark disagreed and said D asked him to inject an extra $1.2 million of which he had not agreed.  I consider and reject D’s evidence that conflicts with Mark.  I consider and find the only irresistible inference is that D had dissipated the fund of Chi Mei as if his own without informing Mark.

92.  It is noted that on 22 June 2015, a draft marketing material of Chi Mei for Malaysia market was sent to Mark, apart from COVAP, Japanese pork was included. However, it is not disputed that D later decided to set up a new company Chi Yat to deal with the Japanese Pork (Exhibit D82)  and Mark was not a shareholder of Chi Yat.

93.  According to Mark’s evidence, his investment was for Chi Mei and he did not involve in other D’s wholesales or catering business. He learnt from D that D intended to set up another company to deal with Japanese Pork but he did not have any share of that other company.  He knew D wanted to take up shareholding of a Japanese restaurant Akasaka in Macau via Tenny but he was not involved in D’s dealing with Tenny.  Evidence shows that Mark was only eager to know the running of Chi Mei, the whereabouts of his investment money and did not commit to any other business suggested by D.  

Bien Bistro Meeting

❖  Part one (Exhibit P30(1))

94.  It is admitted by the parties that Mark reported to the Police on 4 October 2015 (Exhibit P1).  The meeting in Bien Bistro took place on 6 October 2015 after Mark had reported to the Police.  In the beginning there was only Mark and D. Mark expressed his concern that there were no proper books of accounts and he did not know where the money had gone.  D told Mark that $500,000 spent on renovation of new office, $1.8 million paid to Tenny for the purchase of the brand COVAP before Mark became a shareholder, he also paid for the dealership of Japanese Pork, the dealership was in his name and he would not pass the costs to others (我唔會將呢一樣嘢轉介落人哋度嘅，我寧願自己孭嘅 Counter 72)  and the distributorship of COVAP was given to him but he settled with COVAP to have it under the company name (Counter 49-74), i.e. the dealership of Japanese Pork and distributorship of COVAP were his contribution to Chi Mei, in a way justifying his 49% shareholding. 

95.  The aforesaid position presented by D was that he would not ask Mark to contribute to the dealership of Japanese Pork, and the $500,000 spent on the dealership of Japanese Pork and other assets of Chi Mei would have been reflected in the value of the shares, i.e. the $1.3 million paid by Mark for the 49% shareholding. 

96.  During the meeting, D said Mark’s initial investment was for the stocks Mark took over, the office renovation fee and the shares of Rachel, D was in fact referring to the assets of Chi Mei.   The money was also used to pay for Japanese Pork and COVAP (Counter 91-96).  No Japanese Pork had ever been purchased, so when D said money was used to pay for Japanese Pork and COVAP he must be referring to the right to deal with the Japanese Pork and COVAP. However, according to what he said at Counter 72, he would not pass on the costs of the purchase of the dealership to others.  In any event, the purchase of “dealership” was before Mark took up the shares of Chi Mei.

97.  Mark was very concerned how the money he invested was used and the liquidity of Chi Mei.  Mark asked D how he applied the $1.5 million (Counter 403,423)  and D said more than $1 million stock had been purchased.  Mark tried to verify the amount of money spent on stocks during the meeting but no clear figure was provided, at one point D said they had purchased over 4 tonnes of ham, almost $2 million was spent on the stocks (Counter 466-468). 

98.  Exhibit P40 shows that after Mark took up the shares of Chi Mei, about $900,000 was paid for the stocks purchased via Tenny/Aken, together with the payment to Wallace for the wine purchased, the total amount spent on stocks would be around $1 million by October.  That being the case, where only $1 million was spent on stocks, Chi Mei should not have any liquidity problem.

99.  During the meeting, Mark asked D why there were so many unsettled bills and D did not deny there were overdue payments.  For the staff salaries, D said the August and September overdue salaries mentioned by Mark had been settled today (6 October 2015), and only James’ September salary yet to be paid as they needed to control the cash flow (Counter 151-154).  This again shows Mark did not have access to the company’s bank account and D applied the company funds at his will.

100.  When being confronted about the use of the company funds, D made use of the $500,000 spent on the dealership of Japanese Pork and the $1.2 million spent on the purchase of the shares of Akasaka.  However, it appears from their conversation during the meeting, at no time Mark had agreed $500,000 out of the $2.8 million be used to reimburse D for the dealership of Japanese Pork.

•  Dealership of Japanese Pork

101.  D gave evidence that Mark agreed to use his investment money to reimburse the $500,000 he paid for the dealership of Japanese Pork.  However, from their WhatsApp text exchanges (Exhibit D14), after D forwarded the message and materials about the dealership of Japanese Pork obtained from Tenny on 15 May 2015, Mark only indicated his strong interest in the matter.  On 17 May2015 D said he would prepare the money tomorrow and asked Mark to confirm him, in return Mark asked for a few hours and only said 99.9% sure at 11:12:10 – 11:14:01.  And D did not provide the WhatsApp exchanges thereafter. 

102.  According to Mark’s evidence, D told him about an upcoming plan of Japanese Pork when the 49% shareholding was offered and he learnt after May 2015 that the company had paid for the dealership fee for Japanese Pork, Chi Mei did a bit marketing for it but D intended to set up a new company to deal with the Japanese products. Mark did not agree he had committed to the payment for the dealership of Japanese Pork.   Mark said as Exhibit 14 was only part of the WhatsApp exchanges, he could not recall what was actually discussed.  It is noted that in mid-May 2015, Mark had not even committed himself to the investment of Chi Mei.  According to the evidence of D, D out of his own money paid for the dealership of Japanese Pork on 20 May 2015. 

103.  It is also noted that D’s allegation that Mark agreed/knew his $2.8 million had been used to pay the dealership of Japanese Pork also contrary to what D said in response to Mark’s query during the meeting in Counter 66-68 :

D at 66. …我哋和豚都要畀錢㗎。

Mark at 67. 咁但係…咁我哋畀咗錢佢，點解我唔知嘅？

D at 68. 因為呢個嗰陣時喺啊Ashley (Rachel)  之前㗎啦，…你嗰時未join in 㗎。

104.  In accounting the use of Mark’s contribution, D told Mark the money spent on the stock was over $1 million, they had purchased more than 2 tonnes of stock, and only took delivery of 500kg (Counter 116-120).  And D said $800,000 was paid for Japanese Pork while Mark indicated he was unaware of that (Counter 132-138):  

D at 132 等我一陣。跟住唔係呀，我哋中途你記唔記得嗰陣時咪有

一次咪買和豚嘅？

Mark at 133 和豚嗰度呢

D at 134 和豚80萬

Mark at 135 80呀

D at 136 和豚除中國以外地方呀嘛，不個而家Tenny都俾埋我哋做啦

Mark at 137 但問題係阿Tenny冇同我哋講喎？Tenny冇同我講過，冇。

D at 138 佢冇同我哋講過㗎，嗰陣時係突然間佢衝上嚟要攞㗎，跟

住出返晒單，簽返晒嘢㗎咋，但係嗰陣時我哋如果唔咁做，

我哋亦都唔可以去take和豚

105.  No Japanese Pork had ever been purchased, the $800,000 could only be referring to money spent for the dealership.  It appears that, in accounting the application of the $4.3 million invested by Mark, D had made contradictory explanations during the meeting.  As noted at Counter 72 he said he had used his own money ($500,000)  to pay for the dealership of the Japanese Pork but he mentioned another figure $800,000 spent on Japanese Pork at Counter 134 to explain the application of Mark’s contribution.

106.  It is noted in the second part of the meeting, Mark agreed to add in the $800,000 spent on the dealership of Japanese pork (Exhibit P30(2)  Counter 22).  This suggests Mark has resignedly accepted whatever D told him during the meeting though D did not provide him with full and accurate information. 

107.  I consider and accept Mark’s evidence that he was not involved in getting the dealership of Japanese Pork from Tenny. The dealership was only transferred to him to complete the transaction after Tenny lost contact with D.  As mentioned above, in any event the value of the dealership of Japanese Pork should have been included in the value of the 49% shareholding Mark acquired according to the position presented by D during the meeting.

•  The Japanese restaurant AKASAKA (御和味)

108.  The Japanese restaurant Akasaka (御和味)  was mentioned during the meeting, their conversation suggested that Mark only shown interest but had not given any commitment to this matter because the accounts of Chi Mei was in a mess.  D on the other hand said he had settled the matter by himself and intended to have Chi Mei to hold the shareholding of the Japanese restaurant:

D at 156 我知道你有好多嘢想做，好多嘢都想搞，你自己問心，你自己唔係想去御和味嗰度發展呢啲咁嘅事業咩？

Mark at 157 我好想㗎

D at 158 我幫你sort out 咗呢件事

Mark at 159 點sort out 呀？

D at 160 你唔好理我，總之我幫你諗個辦法

Mark at 161 但係你知唔知，其實我daddy都講到出口啦，…

如果我哋2個智味嗰度搞得好好睇睇，雖然御和味嗰度

唔關事，係兩個唔同嘅嘢

D at 162 係呀

Mark at 163 但係呢度你都要搞得好好睇，佢係冇問題㗎，嗰120萬，

問題係我哋 .…. 點知我哋公司亂到七國咁亂，即係連

monthly report 我哋都冇準備

:

:

Mark at 181 御和味都係另一個回事啦，因為御和味即係我知道…我知道如果呢壇嘢搞得好嘅話，我即係投資落去御和味有幾簡單呀，問題係而家智味先至係舐嘢嗰pat吖嘛。

:

:

D at 252 …你知唔知我叫你去御和味赤板投資，其實你爸爸嗰次話投資飲食好危險，因為佢唔係話驚蝕，係澳門經濟差，但係你一定冇同佢講你後面係點。

Mark at 253 我有同佢講…，但係點解佢唔buy…問題係我哋智味搞到唔清唔楚，我又點畀信心人呢？

:

:

Mark at 283 但係乜唔係要搞掂晒公司所有嘢先至出面搞？

109.  While Mark showed concern over the whereabouts of the money he invested and the overdue salary payment, D diverted the conversation to the purchase of Akasaka shareholding and external investor.   D mentioned in Counter 180 that he told Tenny he “might” use Chi Mei to hold Akasaka while later in Counter 208 he said he “had decided” to take up Akasaka in the name of Chi Mei.  Mark, on the other hand, made no commitment to Akasaka but focused on problems related to the operation of Chi Mei (Counter 164-218, 237-257, 265-291). 

110.  D gave evidence that Mark agreed to purchase the shares of Akasaka and pay the $1.2 million out of the further $1.5 million he contributed.  However, this is contrary to what transpired in the above conversation, D at no time mentioned any of the $4.3 million been used to the purchase of the shares of Akasaka.  Mark was referred in cross-examination to their WhatsApp record which mentioned D needed help with $1.2 million on 21 September 2015 (Exhibit D10), the response of Mark, if any, was not provided.  Again, Mark said he could not recall what was discussed. 

111.  It is noted that Mark agreed to invest another $1.5 million, out of which $1 million for stocks, the rest for the operation expenses of Chi Mei, in June 2015 and had started to pay the sum by instalments since then.  D had already received $1.1 million by August 2015 and received another cheque dated 18 September 2015 in the sum of $199,000 (this cheque was cashed on 21 September 2015).  D only requested for help for another $1.2 million for the purchase of the shares of Akasaka on 21 September 2015. 

112.  It is noted that the available bank account balance of Chi Mei on 21 September 2015 was $201,805, thereafter two large sums were deposited into Chi Mei account leaving an overall available balance about $315,000 (Trial Bundle page 977-978). Mark’s last cheque in the sum of $200,000 was cashed on 2 October 2015, the overall available balance was about $460,000 on 2 October (Trial Bundle page 980-981).  There was simply not sufficient available balance in Chi Mei’s bank account to meet the purchase of the shares of Akasaka.  I consider and reject D’s evidence that Mark has agreed to make use of the $1.5 million contribution to pay for the $1.2 million purchase price.

113.  I consider and accept Mark’s evidence that he did not involve in the Japanese restaurant dealing between D and Tenny.  The shares of Akasaka were only transferred to Mark to complete the transaction after Tenny lost contact with D.

❖  Part Two (Exhibit P30(2))

114.  In the second part of the meeting, D told Mark Chi Mei had $2 million cash flow (Counter 5)  and changed his version that no license fee was required for COVAP.  When Mark raised query again, D said the money spent on the dealership of COVAP was before Mark joined in, not relevant to the deal between the two of them (Counter 6-49).   Mark tried to jot down the figures mentioned by D but it appears that D was not able to explain the whereabouts of the money contributed by Mark. 

115.  To account for the application of Mark’s contribution, D mentioned $800,000 had been spent on Japanese Pork (Counter 37-38).  When he acknowledged Chi Mei still had about $2 million available fund, Mark then asked D why he did not use it towards his contribution to Tenny’s share and D said he had done so, this must be referring to the shares of Akasaka (Counter 110-111).  As mentioned above D had been persuading Mark to get his parents to invest $1.2 million for the shares of Akasaka.  Mark appeared to be out of the loop:

Mark at 106 咁但係點解係400咁樣嘅？

D at 107 唔明？我哋係有錢剩㗎呢個。

Mark at 108 剩幾多呀？

D at 109 係有200嘅，我印象中。

Mark at 110 嘩，咁點解你有200你唔畀我？入Tenny個股呢嗰度。

D at 111 join 咗啦，今日已經join 咗啦，因為本身智味還智味㗎嘛、御和味還御和味㗎嘛，咁所以咪變咗掟你入去囉，…

116.  Apparently, Mark did not know D has already committed to purchase the shares and D at no time said explicitly that Mark’s $4.3 million contribution has been or would be used to purchase the share of Akasaka.  The evidence shows that D had failed to persuade Mark to get his parent to invest another $1.2 million for the Akasaka shares and D made use of the funds of Chi Mei without notifying Mark.  Mark could only resignedly accept whatever D told him.  As mentioned above, Chi Mei did not have sufficient available fund to meet the purchase of the shares of Akasaka.

❖  Part Three (Exhibit P30(3))

117.  During the meeting, D reiterated again a new company would be set up to deal with Japanese Pork, Mark was not required to contribute towards the new company.  D told Mark it was time to get new investor in to take up their investment, so that they could cash out their investment (Counter 1). 

118.  According to the evidence of D, no sales had ever been made for COVAP products except those arranged for the Food Expo.   It appears that D was not running a genuine business, instead of promoting the sale of the products Chi Mei has got the distributorship, he made use of the dealership/distributorship and participating in Food Expo to promote his persona as a successful young entrepreneur to attract investment from potential investors. 

119.  In the middle of their discussion, Tenny arrived. Mark said should he not able to account for the running of Chi Mei to his parents tonight, his parents would force him to withdraw from Chi Mei.  Tenny then joined in the discussion between Mark and D.

120.  During the meeting, D confirmed Mark has contributed $4.2 million (the actual figure should be $4.3 million)  represented half of the capital, D’s capital was yet to be counted, as he (D)  shared half/half with Mark (Counter 36-40).  Because of what D said, Tenny taken Chi Mei has a total of $8.4 million capital investment, of which D did not raise any objection.  It was not clear from the evidence how much D had invested into Chi Mei.   However, D said he had contributed at most $1 million in Chi Mei during the confrontation at TML office on 7 October 2015 (Exhibit P30(4), Counter 322).  It is noted that D had paid $500,000 for the dealership of Japanese Pork.

121.  Tenny said he received $500,000 for the dealership of Japanese Pork, nothing for the distributorship of COVAP, the COVAP products purchased was less than $1 million, a number of invoices remained outstanding, some of the cheques issued by D/Chi Mei had been bounced.  D raised no objection of what Tenny said (Counter 53-71, 244).  Tenny’s evidence is consistent to what he said during the meeting.

122.  Again, Mark asked D how he had applied the further $1.5 million he contributed recently. D said the money had been applied to settle payment of Expo, salaries and rent etc. (Counter 80-83).   At no time D said the contribution from Mark had been applied to the purchase of the shares of Akasaka.  I consider and accept Mark’s evidence in relation to the shares of Akasaka.

123.  Thereafter Tenny and D discussed the purchase of Akasaka shareholding among themselves, Tenny said he received a total of $900,000 from D and requested D to pay the remaining $300,000 by the deadline on Thursday (8 October 2015).  And they moved on to talk about Tenny’s 2 % in Chi Mei, Chi Mei only deal with COVAP products and Chi Yat would only deal with Japanese products (Counter 89-96).  D confirmed to Tenny he and Mark did not draw any salaries from Chi Mei (Counter 100).  D said the monthly operation expenses was about $100,000 (Counter 103)  then changed the figure to $120,000 (Counter 106).  D gave evidence that the monthly operation of Chi Mei was about $100,000. 

124.  It is, however, noted that only $400,000 was transferred to Tenny from Chi Mei bank account on 6 October 2015, the other sum of $500,000 and the remaining sum of $300,000 mentioned by Tenny during the meeting were only successfully transferred to Tenny on 8 October 2015 from two of D’s bank accounts (Exhibit P25, D12(1)-(3)). 

125.  It appears that the figures provided by D during the meeting could not explain the whereabouts of the money Mark contributed (Counter 271).   At the end of the meeting, D agreed to provide a report of the company’s transactions to Mark and would add Mark as authorized signatory of the company’s bank account (Counter 276-280).

Confrontation at TML office (Exhibit P30(4))

126.  Mark was provided with a cheque register and did a company search of Chi Mei after the Bien Bistro Meeting.  Mark was unhappy when he found out that he was not registered as a shareholder, and confronted D again on 7 October 2015.  In the beginning, Mark told D he did a company search and found the shares were still under the name of Rachel and he was not a shareholder yet and D said the transfer documents were still with Kent (Counter 11-28).  

127.  During the meeting, when D said Mark needed to participate in Chi Yat, Mark said he would only participate in Chi Mei and suggested to do all the business via Chi Mei of which D agreed (Counter 159-166).  D also confirmed Mark has invested $400,000 in Chi Yuet (Counter 175-182).

128.  After Mark learnt that D only contributed at most $1 million into Chi Mei, he continued to confront D about the whereabouts of the money he contributed and the operation of the company bank account.  Mark suspected D was participating a scam against him and misappropriated the money he invested.  D was unable to explain the whereabouts of the money Mark contributed during the confrontation and requested a week to sort out the matters at Counter 623.

129.  As mentioned above, D knowingly made use of a cancelled invoice to persuade Mark to contribute a further $1.5 million.  It appears that despite D hold out to Mark that $2.4 million of his investment contribution would be used for stock replenishment, once he obtained the money from Mark, he did not commit to it but applied the money at his will against the interest of Mark.  I consider and find the only irresistible inference is that at all material times D did not intend to apply the $2.4 million for stock replenishment as he represented but instead to take the sum as his own, regardless of the interest of Mark.

The $4.3 million contribution

130.  As mentioned above, since the monthly operation costs of Chi Mei were about $100,000, the monthly operation costs from end May to early October would be about $500,000, and about $1 million was spent on stocks after Mark joined Chi Mei.  Thus, even with only the contribution from Mark, Chi Mei should not have any liquidity problem.  D only made use of the $500,000 he spent on the dealership of Japanese Pork and the $1.2 million required for the purchase of Akasaka shareholding in his evidence to explain how the $3.4 million contribution from Mark was used up.  I consider and reject D’s evidence that conflicts with Mark.

131.  Evidence shows that D did not have any sale network for COVAP products and he did not tell Mark directly that they needed to purchase $3.6 million COVAP products to secure the distributorship of COVAP.  Apart from the sales made at Food Expo, D did not make much sales for the COVAP products, 2 tonnes COVAP products were paid but only 500kg were arranged for delivery, yet that 500kg were all stored at the TML office without any buyer.  D purchased large quantity of COVAP products only to maintain the distributorship of COVAP, and made use of this to induce others to invest in his business venture.

132.  As mentioned above D made false representations that Mark could acquire 49% shareholding of Chi Mei upon the payment of $1.3 million, 6000 shares was equivalent to 49% shareholding, $600,000 would be set aside for Chi Mei working capital and $2.4 million was required for Chi Mei stock replenishment.

133.  I consider and find the only irresistible inference is that D did so with intent to defraud and to induce Mark to make payments in a total sum of $4,299,500, which resulted in benefit to D and prejudice to Mark.

Charge Two

134.  It is alleged that between July 2015 and August 2016, D by deceit, namely by falsely representing to Wallace that he had obtained the general dealership of COVAP, with intent to defraud, induced Wallace to acquire 10% shares in Chi Yat and to make payment of $500,000 as deposit, which resulted in benefit to D or others, or in prejudice or a substantial risk of prejudice to Wallace.

Distributorship of COVAP Instead

135.  It is not disputed that at all material times Polygain was the authorized importer of COVAP in Hong Kong and Macau.   And from April 2015, Polifit was the authorized distributor in Macau while Chi Mei and Hop Lee Trading Limited were the authorized distributors in Hong Kong (Exhibit P38(1)  (2)).   

136.  Tenny gave evidence that he only assigned his distributorship related to Hong Kong area to Chi Mei.   D also gave evidence that he was provided with a letter issued by COVAP in April 2015, stating that both Chi Mei and Hop Lee Trading Limited were distributor of COVAP in Hong Kong (Exhibit P38(2))  while Polygain was the authorized importer.

137.  D/Chi Mei was not an agent of COVAP.   However, the marketing material of Chi Yat stated that Chi Yat was an agent of COVAP “智逸國際代理”  (Exhibit P32, Trial Bundle page 1507), this is a false statement.  In any event, Tenny could not assign something that he had not acquired. Chi Mei was required to pay for the COVAP products and bear the inventory risk. 

138.  Mark did not join on the trip to COVAP factory.  Though member of DLMG was present, she did not know Spanish and did not communicate directly with the COVAP representatives.  According to Mark, he was made to believe that Chi Mei was the only company authorized to handle COVAP in Hong Kong.  It is noted that the marketing material prepared by DLMG/ handled by Mark in April 2015 also described Chi Mei as COVAP “香港獨家代理商” (Exhibit P35, D1)  and sole distributor and 獨家代理 (Exhibit D35B, page 4-5); in June 2015 prepared marketing materials for use in Malaysia, and claimed Chi Mei “代理西班牙COVAP” and COVAP was Chi Mei “獨家代理品牌” (Exhibit D82). 

139.  The marketing material of Chi Mei also claimed the distributorship covered Hong Kong and Chinese markets “香港及大中華市場” and in Chinese claimed Chi Mei being “為COVAP於香港之授權代理商” (Exhibit D36), in Chi Mei.  I consider and find the only irresistible inference is that despite D knew he/Chi Mei was not an agent of COVAP and did not have exclusive distributorship in Hong Kong after he received Exhibit P38(2)  in April 2015, he did not take positive step to rectify the misunderstanding held by Mark and DLMG but continued to let people believe that he was the only agent of COVAP in Hong Kong.  

140.  By a letter dated 24 November 2015, Polygain terminated the authorized distributorship of Chi Mei with immediate effect allegedly on the ground that Chi Mei did not adhere to the terms of the distributorship granted (Exhibit D84).

141.  Evidence shows that Chi Mei purchased the COVAP products via Polygain or Polifit and with the distributorship assigned, Chi Mei could sell COVAP to retailers within Hong Kong whereas Chi Yat was not a dealer nor a distributor of COVAP products. Chi Mei only had distributorship of COVAP within Hong Kong.  Thus, at all material times, D did not purchase directly with COVAP.  I consider and find at the least D had been reckless in claiming himself to be an agent “代理商of COVAP” and had obtained the general dealership of Spanish COVAP iberico ham.   

Dealings between Wallace and D

142.  Wallace gave evidence that he started to have business dealings with D after the May 2015 Food Expo and their dealings continued between June and August 2015.  Since mid-May D had claimed on many occasions that he had a very extensive sale network and had the general dealership總代理權of COVAP.  When he visited Chi Mei’s TML office, he saw a lot of Spanish iberico ham.  From the conversation with D, he learnt that Chi Mei was the only one who could deal with COVAP in Hong Kong.  D kept sharing that he intended to set up a new company and would have more products under exclusive dealership.  D agreed in his evidence that all the COVAP products he took delivery were kept in the refrigerators at the TML office.  I consider and accept Wallace’s evidence.

143.  Wallace gave evidence that around September 2015, at a lunch meeting at the Peninsula Hotel, D provided him with proposals of restaurants and cafes.  D asked if he was interested in catering business.  As he had never been involved in the catering field, he declined this offer.  On the same occasion, D also provided him with a new company (Chi Yat)  investment proposal dated September 2015 (Exhibit P32)  which contained a list of products said to be under exclusive or sole dealership, including COVAP ham and sake, among others.  It is also noted that Section VIII of the investment proposal stated that the Food Sales Network covered 4-star to 5-star hotels, high-end Chinese, Western and Japanese restaurants and retail shops.

144.  D engaged DLMG in 2015 to prepare marketing materials for his business ventures to attract investment from potential investors.  Mark was provided with marketing materials of Chi Mei when he was offered 49% shareholding of Chi Mei.  Around September 2015, D directed DLMG to prepare investment proposal for Chi Yat, a draft was sent to him on 21 September 2015 (Exhibit D16), at that time D was in need of $1.2 million for the purchase of Akasaka shares.  It appears that Exhibit P32 dated September 2015 submitted by Wallace was a revised version of Exhibit D16.  I consider and accept Wallace that D provided him with Exhibit P32 and invited him to invest into Chi Yat.  I consider and reject the evidence of D that he did not produce Exhibit P32 to Wallace.

145.  According to Wallace, D presented himself as someone with solid background.  D drove a double door BMW race car.  When they had business buffet lunch at Peninsula Hotel, people working there all addressed D by his surname and their table was specially taken care of.  D’s TML office was stocked up on iberico ham and the invoices of wine sold to D were settled in good time.  With his dealings with D since May 2015, He trusted D.  I consider and accept the evidence of Wallace.

146.  Wallace gave evidence that he noted from the new company proposal that there were many news clippings about D as a founder of the company, and he has purchased the whole year production of the COVAP ham, i.e. 600 pieces.  Apart from COVAP, the proposal also contained other products that D got sole dealership.  It is also stated on the proposal that Chi Yat was an agent of COVAP (Trial Bundle page 1507)  and the proposal devoted a large portion for D’s involvement in COVAP products.  I consider and accept the evidence of Wallace.

147.  Wallace understood from his communication with D that the exclusive or sole agency over COVAP would be transferred from Chi Mei to Chi Yat, although no specific deadline was given.  According to Wallace, D’s representation that he had obtained the general dealership of COVAP and Chi Yat would be a dealer of COVAP products was one of the major reasons for him agreeing to contribute and took up shares of Chi Yat.  I consider and accept the evidence of Wallace.

148.  Wallace gave evidence that D also told him 8 people would be joining the new company, each would contribute $2.5 million, all of these were important people, including Mr Cheung from Telecom Digital.  D even shown him a photo he taken together with Mr Cheung on his phone.  D said the new company would have 10 investors, the remaining two quotas, one for D and one for him.  It is stated in the proposal that the total amount of fund to be raised was $25 million (Trial Bundle page 1527).  I consider and accept the evidence of Wallace.

149.  Wallace gave evidence that he did not have available fund to meet the $2.5 million investment of the new company but D gave him a special limited time offer, let him contribute $1 million and to settle the difference (i.e. the remaining $1.5 million)  by his share of profit for 10% shareholding when the new company generate profit and his wine products would be added into this new company.  D said this special offer would lapse by end of October 2015.  Since he only had one product, i.e. grape wine, while D had sales network and exclusive dealership of many products, especially COVAP products, he wanted to co-operate with D.

150.  The defence challenged the evidence related to the special offer in cross-examination.  D gave evidence that he offered 10% shareholding for $1 million only, it was Wallace who suggested to contribute another $1.5 million by deducting from his future share of profit.  Setting up Chi Yat was an idea initiated by D, D invited Wallace to invest, I see no reason for Wallace to increase his contribution without asking for more shares.  I consider and accept Wallace’s evidence. 

151.  Wallace gave evidence that he confirmed with D that he would take up the offer but he did not want to issue one cheque for the $1 million.  After discussion, it was agreed that he could contribute by two instalments: the first cheque would be cashed upon registration with the Companies Registry and the second cheque after the company has set up the office and in operation.  On 9 October 2015 D prepared an agreement for his signature (Exhibit P31)  and he issued two cheques for his contribution. Each cheque was in the amount of $500,000, as D told him the new company’s bank account was yet to set up, the cheque was issued to the name of D.  D said the money would transfer to the company account in due course.  No bank account had ever been applied for Chi Yat.  10% of the shares was allotted to Wallace after he handed over $1 million by two cheques.   I consider and accept Wallace’s evidence.

The Significance of False Representation related to COVAP Dealership

152.  Evidence shows that D was in control of Chi Mei and COVAP products was a significant part of Chi Mei’s business.  Outsider would not know the actual commercial relationship between COVAP and D.  Chi Yat was yet to incorporate in September 2015, but it was stated in the investment proposal that Chi Yat was an agent of COVAP and D was going to be a member of this company.   As aforesaid, D had at least been reckless in making the false representation that he had obtained the general dealership of COVAP.  

153.  As mentioned above Mark considered D has arrogated all the control of Chi Mei, he made a report to the Police on 4 October 2015 and held a meeting with D on 6 October 2015.   D was further confronted by Mark at TML office on the next day. Mark was very unhappy with the affairs of Chi Mei, he refused to contribute anymore and indicated he was called to report the matter to the Police.  D did not have any buyer for the 500kg COVAP ham stored at TML office, he had withdrawn a total of $1.2 million out of Chi Mei’s and his own bank accounts for the shares of Akasaka by 8 October 2015, without Mark’s further contribution, Chi Mei and the other of his business ventures would not be able to sustain.

154.  Wallace gave evidence that when he first met D, he was told COVAP was under Chi Mei.  On 9 October 2015, D told him a new company with new shareholders would be set up and the old one would no longer be in operation.  As the new company was yet to set up, from his conversation with D and the new company proposal, he understood that when Chi Yat was set up, the general dealership would be transferred to the Chi Yat.  I consider and accept Wallace’s evidence.

155.  It appears that after the confrontation from Mark on 7 October 2015, D had already anticipated his collaboration with Mark would soon come to an end.  Yet the evidence shows that D took no step to negotiate any transfer of the distributorship of COVAP to Chi Yat.  The orders for COVAP products were placed under the name of Chi Mei up to the termination of the distributorship in November 2015.

156.  I consider and find that by what D provided and said to Wallace in September/October 2015, he has represented to Wallace that he via Chi Mei had the general dealership of COVAP and he would affect the transfer of the general dealership to Chi Yat in due course.  However, as mentioned above D only had the distributorship of COVAP under the name of Chi Mei, D/Chi Mei was not an agent of COVAP, D did not deal directly with COVAP and D also did not have any intention to transfer the distributorship of COVAP to Chi Yat. 

157.  Apparently, as a businessman, Wallace had assessed all the relevant pros and cons in entering a new business venture with a new partner.  He wanted to promote his wine products via a new platform and at the same time minimized his risk by taking up the “special offer” and arranged payment by installments.   The Chi Yat investment proposal, the claimed extensive sales network and D’s apparent business success all related to D’s false representation that he held the general dealership of COVAP which was reinforced by the 500kg COVAP iberico ham stored at the TML office.  To Wallace, D being an agent of COVAP suggested D was a reliable and financially sound businessman.  The COVAP dealership (總代理權)  was central to his decision at time he was induced to invest in Chi Yat.

Cashing the Cheques

158.  According to Wallace, on 2 November 2015, D presented the document about the allotment of 1,000 shares (10% shareholding of the new company)  to him for his signature, the rests of the shares were in the name of D (Exhibit P36).  He raised query about the other 8 investors and D said things would be done step by step.  Later, on 9 November 2015 D said he would arrange to bank in the cheque.  He, however, received a call from the bank that both cheques were banked in and there was not sufficient fund to meet the cheques.  He then called D to verify the matter and D said his staff got it wrong.  Eventually only one cheque was cashed on 10 November 2015.  A copy of Exhibit P36 was only provided to him in middle or late December 2015. 

159.  According to Wallace, by then he and D already had in-depth exchange regarding COVAP products.  Thus, the subsequent discussion was focused on his wine and Japanese rice.  From November 2015, the new company Chi Yat started to order wine from his company and the subsequent invoice was addressed to Chi Yat.  Evidence shows that D failed to sell the large quantity of wine purchased from Wallace and the invoices remained unsettled.  D agreed he did not make much sale of the COVAP products he purchased, that being the case, the extensive sales network claimed by D did not exist at all.   I am of the view that D ordered wine products from Wallace was only to create a false impression that he was able to promote his wine. 

160.  According to Wallace, his company had a sponsorship activity in December 2015 in Shenzhen.  In the beginning of December, D introduced Cambodia rice to him, D claimed this rice was a Cambodian royal product.  To support his sponsorship activity, D brought the Cambodian royal member (the prince)  to the activity.  He and D also ran a booth together in the December Hong Kong Wine and Dine Festival.  They also participated in other events together with the prince in December (Exhibit D26).  He found D very supportive and he trusted D by end of 2015.  However, from January to March 2016, he felt that D no longer took initiative to follow up the set up and operation of the new company.  And that was the first time D said he encountered difficulties. 

161.  It is noted that Cambodian royal member was introduced to D by his defence witness, Mr Teh Chee-hau Gary.  Mr Teh came to know D through D’s mother in 2014 in Malaysia.  At that time Mr Teh was working for a company in Malaysia called MeritsCoS Sdn Bhd.  Upon D’s request, Mr Teh invited prince of Cambodia to attend the aforesaid events.

162.  D gave evidence that Chi Yat was in operation, Chi Yat participated in Food Expo, supported event sponsored by Wallace, acquired distributorship of Sunno Premium Virgin Coconut Oil in November 2015 (Exhibit D77), and worked on acquiring distributorship of other products, like Cambodian rice.   However, evidence shows that D was yet to create a market for the products he had acquired distributorship.  The extensive sales network claimed by D did not exist.  It appears that all D did was not running a business but only to promote his persona as a successful young entrepreneur to attract investment.

163.  According to Wallace, the other cheque of $500,000 was not cashed because it was agreed that Chi Yat was not in proper operation yet.  Around mid-January 2016 D said he had to deal with some issues in Macau.  In March 2016 D via email stated that he had an extraordinary difficulty and asked him to contact his staff for any business issue.  D was not in the TML office and did not respond to his request for a shareholder meeting via WhatsApp/email.  I consider and accept Wallace’s evidence.

164.  There is no dispute that in mid-June 2016 Wallace found the TML office was locked and D’s company name was removed from the directory at the lobby.  With reference to Exhibit D30, D last sent an email to Wallace on 6 April 2016 (asking Wallace to contact his staff for any issues)  and Wallace last sent an email to D on 12 April 2016 (indicating his concern of the operation of Chi Yat and the overdue payments for his wine products).

165.  According to the evidence of D, apart from the sales made during Expo, he did not make much sale.  Further, evidence shows that 2 tonnes COVAP products was paid but only 500kg was taken delivery, that 500kg ham together with the large quantity of wine purchased from Wallace were dead stock without a buyer.  Another large quantity of bottled water purchased from Tenny eventually disposed by Tenny to avoid storage costs.  D did not have any sale network, he was not able to generate revenue via sale, he simply needed the contribution from Wallace to maintain the operation of his business venture.  It is also noted that D did not provide Wallace with any books of accounts of Chi Yat.

166.  I consider and find the only irresistible inference is that D made false representation(s)  with intent to defraud and to induce Wallace to make payment of $500,000 which resulted in benefit to D and prejudice to Wallace. 

Charges Three to Five

167.  It is alleged that D with intent to defraud and to induce Sherry to make payment to him, falsely represented to Sherry that:

•  between early February 2018 and early November 2018, he would be genuinely investing with and/or on behalf of Sherry in a booth of August 2018 Food Expo, with intent to defraud, induced Sherry to pay D $210,362 (Charge three);

•  on or about 31 May 2018, the total fees for the registration of Chi Fung were $36,640 and the share of Sherry was $18,320, with intent to defraud, induced Sherry to pay D $18,320 (Charge four);

•  between 6 April 2018 and November 2018, D had secured and /or would secure cleaning businesses at various hotels; D intended to undertake various business (including hotel cleaning businesses, pet supplies trading and public relations)  with Sherry and Chi Fung was in operation and required $2 million to maintain its operation, with intent to defraud, induced Sherry to pay D $2 million (Charge five).

which resulted in the benefit to D or in prejudice or a substantial risk of prejudice to Sherry.

The Encounter

168.  D and Sherry were of similar age.  Sherry graduated around 2013/2014, and started to work after graduation.  Around end of 2017, they frequently came across each other when they walked their dogs in Penfold Park.  Eventually they got to know each other and became close friends.

169.  Sherry gave evidence that she and D had common interests (e.g. dog and cooking).  D had driven her home with his BMW.  She had been to D’s home, met his mother and a youth believed to be his younger brother.  She also introduced her boyfriend Dickson to D.  D gave her an impression that he received a decent income.

170.  According to Sherry, when they got to know each other deeper, D presented himself as a successful businessman, telling her about his profitable food products business, that he had made a lot of money, that he knew some famous people, that he knew a lot of different media/press and had a large social network.  I consider and accept Sherry’s evidence.

171.  Sherry gave evidence that D claimed himself to be an education consultant of Tung Wah Group.  D said he would organize overseas education class or English class for students in need, to help them to further their study overseas.  From her understanding, D knew a lot of different people and had certain experience in business.  That D cooperated with Tung Wah Group also enhanced her trust in him.  I consider and accept Sherry’s evidence.

The relationship between Sherry and D

172.  According to Sherry and Dickson, D was a good friend of Sherry.  Sherry and D participated in August 2018 Food Expo (held between 16 and 21 August 2018)  and they set up Chi Fung to do business together.  Sherry contributed substantial amount of money in the business ventures with D.  D was the best man of their wedding, D assisted in their betrothal ceremony and arranged metaphysics service of Yeo Tin-ming for their wedding, child birth and child’s name.

173.  Sherry’s evidence is consistent with the WhatsApp messages to D.  The WhatsApp record provided by Sherry to the Police (Exhibit D70)  shows that Sherry and D had frequent communication via WhatsApp since 25 December 2017.  Sherry first mentioned she learnt of her pregnancy in June, later agreed in cross-examination she learnt it in May or June, it appears that she did not have a good memory as to when she related the matter to D.  It is noted from the WhatsApp messages produced by D, Sherry shared her pregnancy with D on 4 June 2018 and sent the ultrasound scans of her baby in June, July and August (Exhibit D62-D64).  I consider and find Sherry had treated D as her friend and business partner at that time, and I do not consider the fact that she sent the ultrasound scans of her baby to D cast any doubt on the prosecution case. 

174.  D has been selective in producing the WhatsApp records, the earliest message about Sherry’s pregnancy that D produced was on 4 June (Exhibit D62).   It appears that WhatsApp exchanges before 4 June between Sherry and D did not touch upon Sherry’s pregnancy (Exhibit D70).  The first message on 4 June was Sherry provided the name, date and time of birth of hers and Dickson to D for the metaphysics services requested.  Later that day at 5:01pm she provided her estimated due date, and the first ultrasound scan was sent to D at 5:09pm.

175.  It is noted that the first ultrasound scan was taken at 1:51pm; Sherry sent the date and time of birth of hers and Dickson to D at 4:54pm; Sherry said she did not feel her pregnancy at 5:05pm (Exhibit D70, page 70).  This is consistent to Dickson’s evidence that he learnt of the pregnancy on 4 June and they made a quick decision to get marry.  Sherry told D at 5:04:44 pm that “I immediately feel more relaxed having you to help out”.  They had a few exchanges related to Sherry’s pregnancy, and D said at 5:07:40 pm that “After all, it’s my godson or goddaughter” and Sherry said at 5:08:12 pm that “Bb is very blessed to have you as his/her godfather” (Exhibit D62).  

176.  D, on the other hand, described his relationship with Sherry was a complicated toxic relationship.  Though Sherry decided to marry Dickson, she still requested him to remain around.  He did not want to be a homewrecker of their marriage but Sherry insisted to have him around and offered $2 million for him to remain around her.  He suspected himself to be the father of Sherry’s child and decided to apply the $2 million to Chi Fung for the benefit of the child and made Sherry to be a shareholder of the company.  

177.  This alleged complicated toxic relationship was not put to Sherry.  Mr Richie Lai representing the defendant, on the first day of the resumed trial indicated that he wished to recall Sherry.  However, at the end of the defence case, he confirmed the defence had no application to re-call Sherry.   Whether D gave instruction to re-call or not to re-call Sherry would not cause any adverse inference to D. 

178.  D appeared to be very emotional and broke into tears when he accounted for his relationship with Sherry.   However, the complicated toxic relationship alleged was inconsistent to contemporaneous documentation and contrary to what transpired in his WhatsApp and email exchanges with Sherry (Exhibit D70 and P43, P44, P45).  I consider and reject the evidence of D that the $2 million was offered by Sherry for him to remain around her.

Breakdown of trust

179.  Sherry gave evidence that the August Food Expo lasted for a few days.  D said he never suffered loss in Food Expo and promised to return the money she invested together with the revenue at the end of the Food Expo but she did not receive any money from D.  She met D on her wedding banquet on 31 August 2018 and pressed D for the capital and the profit of the Food Expo.  In response, D said would give the money back to her in September.  However, after the wedding banquet she was not able to meet up with D again.  She was also not shown any material or contract related to any business carried out by Chi Fung.  It is noted that no contract was signed in the name of Chi Fung.

180.  Evidence shows that Sherry’s income reduced significantly during her pregnancy, she expected to receive the profit together with the money she invested in Food Expo back at the end of the event on 21 August 2018.  She had planned for a C-section which costed her a huge sum of money.  It is noted that D forwarded a WhatsApp message about the proposed dates for the birth of the child with name of Yeo Tin-ming to Sherry (Exhibit P43(2))  while at the same time Sherry was chasing D for the return of the money related to Food Expo (Exhibit D70, page 122-125).

181.  Out of her expectation, Sherry did not get back any of her money as promised by D, this caused her grave financial stress.  She tried to contact D via WhatsApp and email to ask for the whereabouts of her money but she received no positive reply. She kept pressing D for the money, requesting to hold a shareholder meeting, eventually she received a transfer of $10,000 in November 2018 and no more afterward (Exhibit D70 and P44).   She was not able to contact D after November 2018. 

182.  By November 2018, Sherry believed all her money was scammed by someone she had trusted a lot.  She tried to find out how much money she was scammed by different channels.  She had made enquiry with the secretarial services company and Yeo Tin-ming, she tried to find out the amount of the lawyer’s fee and the owner of the booth of the Food Expo.   She was disappointed when she found out Mr Yeo was not engaged and believed the date of birth for her baby and the fee to the metaphysician was also fabricated.  Together with her husband, they made a report to Police on 16 November 2018.

183.  Evidence shows that Sherry was anxious, worried and disappointed.  Sherry stated in her last WhatsApp to D (Exhibit D70)  on 17 November 2018 that:

“ 如果你再吾覆機我真係我好懷疑你嘅誠信 ！完咗Food Expo 三個月我都未收得反自己個booth既錢 你一直話入返20萬支票俾我 俾咗去邊？ 入唔到支票咪戶口轉賬 又轉咗去邊？ 你叫我注資既200萬 又去咗邊？ anyway你比反220萬我 我當所有野無發生過！”

184.  Sherry has stated clearly to D that she wanted her $2.2 million back and terminated all the collaborations with D.  On the next day, 18 November 2018, D via email apologized for not reply to Sherry and could not attend the shareholders meeting, and stated there might be misunderstandings and she could communicate with him via email.  Despite what D stated in his email, D did not reply to Sherry’s subsequent emails (Exhibit P44).

185.  The defence case as revealed during the prosecution was that D was a young man with limited business experience, he did try his best to run the respective business/company invested by Mark, Wallace and Sherry.  Unfortunately, things did not go well and the business failed.  However, despite the $2 million contribution from Sherry in June 2018, no office was set up for Chi Fung.  Though the TML office was no longer available, the TML address was used as the company registered address.  

186.  No contract was signed in the name of Chi Fung.  D gave evidence that the $2 million was a compensation offered by Sherry to keep him remained in Hong Kong and gave up his study in UK.  This was contrary to the defence case put to Sherry that the investment injection was increased from $500,000 to $2 million by her to encourage D to participate in their business.  D evidence suggests that D was not obliged to return the $2 million compensation and the application of the $2 million to the benefit of the child was out of his generosity.  In substance, the defence changed from misunderstanding as revealed in cross-examination to fabrication as alleged by D under oath. 

Food Expo

187.  Sherry gave evidence that in January 2018, D told her investing in Food Expo was a good way to make money, not much money was required while the return was quite good.  D told her the media could help to report his participation in the Food Expo and participating in Food Expo also helped to enhance the publicity of his business.  She also searched online and found D’s photos taken together with famous people.   Therefore, she believed D that a rather good revenue could be earned from Food Expo.

188.  Sherry gave evidence that in February 2018, D invited her to invest in a booth of August 2018 Food Expo, and said it would take around $100,000.  D only told her the advantages of the investment, and did not mention the flip side.  D said he had never suffered a loss from Food Expo and she could get back the principal together with $60,000 to $70,000 and even more profit.  D said his philosophy was that one could never earn all the money, where money could be made, this should be shared among friends.  She believed what D said and invested as requested a total of $67,500 for the rent of the booth by three tranches:

(i)  7 February $50,000 by bank transfer

(ii)  9 February $12,000 by bank transfer

(iii)  9 February $ 5,500 by cash

189.  Sherry gave evidence that she trusted D though D did not relate any details concerning her investment in Food Expo to her.  She requested a receipt for her payment and D said would give her later.   She expected D would take care of the matter.  Sometime before June 2018 D said he had to get some luxury food products, including abalone and bird’s nest and requested further contribution.  She believed D and made a further payment of $142,862 to D by two tranches:

(i)  on 24 May $141,362 by bank transfer

(ii)  2 days later $1,500 in cash

190.  Sherry gave evidence that as the total investment was double of the original sum D told her, she raised her query and D explained it required more because of the luxury food products.  D said he would get about 200 catties of abalone.  Since she had already invested $67,500, she could just resignedly accept it. Meanwhile D appeared to be preparing for the Food Expo.  It is noted that Sherry has enquired on 22 May 2018 via WhatsApp the date of the August Food Expo and confirmed the payment of $1,500 cash on 1 June 2018 (Exhibit D70, page 66, 69).  I consider and accept Sherry’s evidence.

191.  D gave evidence that he had reached an agreement with a person called Ada who was associated with a restaurant Cheng Banzhang程班長to pay $67,500 for the use of the booth under the name of Cheng Banzhang.  However, they decided to postpone because Sherry got pregnant in May and the amount $67,500 contributed by Sherry has been returned to her on or about 8 August 2018 (MFI-14)  by a cheque dated 2 August 2018 to her husband Dickson.  Both Sherry and Dickson denied they had received the money as alleged by D.  It is noted that Sherry repeatedly demanded for the return of the money she invested for Expo via WhatsApp and email in October and November 2018.  I consider and reject D’s evidence. 

192.  D gave evidence that after he secured the use of the booth of Cheng Banzhang, in April 2018 he purchased 30kg bird nest for the August Food Expo.  Around 10 May 2018 he and Sherry decided not to go ahead with the August Food Expo but was not able to cancel the bird nests thus they decided to participate in future Food Expo.   According to the evidence D, though there was no release of any future Food Expo, he requested for more money from Sherry in May.  However, as mentioned above, Sherry enquired for the date of the August Food Expo on 22 May 2018.

193.  Further, according to the evidence of D, despite he wanted to end the complicated toxic relationship with Sherry and no idea when the next Food Expo would be held, he went to Malaysia in July and purchased another 152kg fish maw for the use of future Food Expo and for Sherry consumption.   D claimed as Sherry was pregnant, he considered that the goods purchased could also be consumed by Sherry during her pregnancy and after the birth of the baby, yet D did not give any instruction for delivery nor brought any of the bird nest or fish maw he purchased for Sherry when he returned to Hong Kong from Malaysia.  I consider and find D’s evidence unbelievable and defies common sense, I reject D’s evidence that conflicts with Sherry.

194.  According to the evidence of D and Mr Teh, D had paid substantial cash (equivalent to about HK$150,000)  for bird nests and fish maw (the goods)  before delivery was arranged while D could have paid upon delivery and after inspection (Clause 2 and 4 of the Purchase Agreement Exhibit D78).  Despite the goods fully paid up in April and July 2018 respectively, packed and ready for delivery since 2018, they were still in the possession of the seller at the time of the trial in 2026.  Further, though Mr Teh described it to be a FOB contract, Clause 6 of the agreement stated that “risk of loss or damage to the Product shall pass to the Seller upon delivery”.   I consider and find D and his witness’s evidence inherently improbable and rejected their evidence accordingly.  I consider and reject D’s evidence that he had used the money contributed by Sherry to purchase goods for her use.

195.  Sherry gave evidence that in June 2018, D came to her home and gave her a notification (Exhibit P8).  According to Sherry’s evidence, she did not pay attention on the date of the notification but focused on the content, she noticed that the rent she paid was not included, the booth was not in the name of D and how the profit would be paid to her was not mentioned.  D explained the notification only covered her contribution to the food products, her name would be used to participate as she was the one who made the payment, the profit in form of cash would be given to her in a zipped bag by the end of each business day and an updated notification with amendment would be provided to her.  However, there was no follow-up on the updated notification.

196.  D, on the other hand, said Exhibit P8 was signed on 6 August 2018 after they had a row.  The intent of signing Exhibit P8 was to evince D’s receipt of $142,862 with a view to take part in a Food Expo in the future.  However, according to the defence case, the $142,862 had all turned into bird’s nest and fish maw by July to be used in future Food Expo.  Should that document was to evince the latest intention of the parties in August why he made no mention of the luxury food products allegedly pending delivery in Malaysia.

197.  Sherry gave evidence that on the first day of the Food Expo she visited the booth she invested but did not see any abalone and bird’s nest.  She asked D about the matter and was told that her food products were in his other booth located in the special exhibition area.  D also said that other booth had to be suspended for some time due to power issue, he was too busy to take her over and it might be dangerous for her, being a pregnant woman, to stay too long.  Thus, she was not able to access to the other booth.  I consider and accept Sherry’s evidence.

198.  According to Sherry, contrary to what D promised, she did not receive any money from D, and was only told the money would be given to her later.  In respond to her query about the luxury food products, D said that would be used in Winter Food Festival.  It is noted that from June to August 2018, Sherry trusted D and they were in good terms, Food Expo was only a small part of their overall collaboration, Sherry was busy with her own wedding and expected to give birth to her first child in December.  That being the case, Sherry did not take a more active step before November 2018 to chase D for her money is understandable. 

199.  It is admitted that D had never established and/or operated any booth at Hong Kong Food Expo 2018 with or on behalf of Sherry.  Evidence shows that D by offering voluntary assistance/arrange free publicity to the Booth 3D-E14 of Monte Gourmet Limited, not only to gain publicity for himself but also to hold out to Sherry he was operating the booth with or on behalf of Sherry.

200.  D gave evidence that they decided to postpone the participation in Food Expo in May 2018 because of Sherry’s pregnancy.  However, the evidence shows that the arrangement proposed to Sherry by D was for D to take care of the operation of the booth, Sherry was only required to make monetary contribution upon request. Sherry’s pregnancy and wedding would not prevent her to make monetary contribution.  Indeed, Sherry had continued to make payments for the business ventures proposed by D after she confirmed her pregnancy.  There is no dispute that Sherry and her family had attended the August 2018 Food Expo.  Evidence shows that Sherry did not pay much attention to the lanyard given to her by D.  I consider and accept Sherry’s evidence that she was led to “her booth” by D on the first day of the Food Expo.

201.  I consider and find the only irresistible inference is that D had knowingly made false representation to Sherry that the money she paid to D would be/ had been used in “her booth” in August 2018 Food Expo.  D had falsely represented to Sherry that he would be genuinely investing with and/or on behalf of Sherry in a booth in the Hong Kong Food Expo 2018 to be held between 16 and 21 August 2018.   

202.  I consider and find the only irresistible inference is that D did so with intent to defraud and to induce Sherry to make payment in a total sum of $210,362, which resulted in benefit to D and prejudice to Sherry.  

Further Collaboration

203.  Sherry gave evidence that in April 2018 D claimed himself to be the godson of Mr Lui Che Woo of Galaxy Entertainment and he was close to Mr Lui.  D claimed that Mr Lui let him to manage his hotel cleaning business and family trust and he would receive inner news from Mr Lui.  D mentioned names of several different hotels: Intercontinental Hotel, Stanford Hillville Hotel, Harbour Plaza Hotel and Rosedale Hotel, and that the cleaning business would be started in mid-2018 to 2019.  D said they could also take part in other business, like pet supplies trading and public relations. D presented a very promising prospect and invited her to invest $2 million in Chi Fung for the operation of the business, and she would get back her money between September and December 2018.   I consider and accept the evidence of Sherry.

204.  It appears that on 18 May 2018 D told Sherry their company name was “Chief Hotel… Chief Pet” (Exhibit D70, page 65).  According to the evidence of Sherry, D had said a lot of beautiful words, she was made to believe that the business to be carried in the name of Chi Fung would be very profitable and very stable in long run.  She trusted the words of D, agreed to invest in Chi Fung and made the following payments to D:

(i)  $18,320 by a cheque dated 31 May 2018, for the incorporation and secretarial services (Trial Bundle page 246)

(ii)  $2 million by bank transfer on 22 June 2018 (Trial Bundle page 544)  (as mentioned above D told Sherry the cleaning business would be started in mid-2018 to 2019, $2 million was for the operation of Chi Fung)

(iii)  $19,530 by a cheque dated 24 July 2018, for lawyer’s fee (Trial Bundle page 545). Exhibit P11 was signed before 11 June 2018.

The Incorporation of Chi Fung

205.  Sherry gave evidence that D tried to persuade her to set up a company (Chi Fung)  to do business together with him.  Chi Fung was incorporated on 29 May 2018 (Exhibit P10(2)).  D asked her to pay half of the registration fee (i.e. half of $36,640), and she issued a cheque dated 31 May 2018 in the sum of $18,320 to D as requested (Trial Bundle page 246).  She asked for a receipt for the payment and D said the secretary (the secretarial company)  would send it back to her. She did not receive any receipt and made an enquiry with the secretarial company in November 2018.  She learnt from the secretarial company that the fee charged was much less that what D claimed.

206.  D, on the other hand, said Sherry told him about the pregnancy on 6 May 2018 and he believed he was the father of the child.  According to the evidence of D, at first, he thought Sherry want to marry him and they discussed about opening a company around 10 May, the company was later incorporated on 29 May.  It was his idea to set up a company for the benefit to Sherry’s child.  And Sherry wanted to bear half of the costs.  The 25% of the shares was allotted to Sherry’s child and held by Sherry on behalf of the child.  However, a company without working capital could not operate to generate revenue, the $2 million from Sherry only came in on 22 June 2018.  Why would D want to set up a company in haste?  I consider and reject D’s evidence that Chi Fung was set up for the benefit to Sherry’s child.  

207.  It is admitted that Mastercorp Services Limited which provided the company formation service for Chi Fung confirmed that Mastercorp only charged D $5,880 for the formation of Chi Fung and the provision of one year of Company secretarial service (Exhibit P1). 

208.  It appears on the Companies Registry record that CCA Secretarial Services Company Limited was responsible for the Company Registry documentation of Chi Fung in November 2018 (Exhibit P10(3)).  C & S Corporate Services Ltd (C&S)  only took over the matter in July 2019 (Exhibit D92), and submitted the 2019, 2020 and 2021 annual return of Chi Fung in one go on 9 July 2021 (Exhibit P10(4)-(6))  Trial Bundle page 43, 51, 59). 

209.  Ms Yiu of C&S gave rebuttal evidence that the incorporation of Chi Fung was not handled by C&S, they were only engaged in 2019 to take over the submission of annual return.  D had not settled their fees, there were about $50,000 to $60,000 outstanding fees on D’s account, the invoice dated 2 June 2018 (Exhibit P49 initially marked as MFI-13A)  was issued to D by her boss. All the invoices issued by C&S were in sequence, the date of Exhibit P49 was wrong, the invoice should be dated 2024 instead, she discovered and arranged to rectify the mistake in June 2024.  She prepared a copy of the amended invoice for D, however, she tried to contact D to follow up the matter without success. 

210.  According to the evidence of D, this wrong dated invoice was not relevant to his case but his then legal team has misunderstood his instruction.  His then solicitor obtained a copy of the wrong dated invoice (MFI-13A)  from C&S in 2025.  For reason(s)  unknown C&S has kept a wrong dated invoice in its file.  D said he did not pay attention to the date of the invoice.   

211.  D gave evidence that the $18,320 representing half of the invoice of Master Crop $2,940 ($5,880 ÷ 2)  and the remaining $15,380 was the sum received from Sherry for the betrothal gift, he returned these two sums to Sherry in August, this however, was not the case put to Sherry under cross-examination (MFI-14).  

212.  D gave evidence that he had spent over $200,000 on betrothal gift for Sherry’s wedding, $15,380 was the amount suggested by Sherry.  Betrothal gift is gift from the groom’s family to the bride’s family. According to D, in May he thought Sherry was going to marry him, if so, why would Sherry contribute to it.  Further, according to the defence case, the plan to participate in August Food Expo had already been postponed in May, should that be the case, even if Sherry wanted to contribute, the $67,500 that held by D could have been applied towards the incorporation fee of Chi Fung and betrothal gift instead of withholding the sum until August as alleged by D. 

213.  According to Dickson, he and Sherry decided to get marry shortly after he learnt of the pregnancy on 4 June 2018.  That being the case, the $18,320 paid to D in May should not have any bearing on the betrothal gift but only related to the incorporation and secretarial and accounting services of Chi Fung.  That was also the defence case presented during the prosecution case.  I consider and reject the evidence of D that related to the August Food Expo and the $18,320.

214.  It is noted that no secretarial and accounting services fees had ever paid to C&S in 2018.  MFI-14 was produced in cross-examination, the sum $15,380 was described as “Refund of Sherry’s half share of company secretarial and accounting services paid to C&S accounting” and a photo of the invoice dated 02/06/2018 in the sum of $30,760 (MFI-13)  was produced at the same time during the cross-examination of Sherry on 8 October 2015.  A copy of the invoice was later provided to Court on 22 Oct 2015 at the end of the prosecution case (MFI-13A).  It is not clear who obtained MFI-13, but it is the defence case that MFI-13A was obtained by D’s then solicitor from C&S.

215.  D said his then legal team has misunderstood his instruction and MFI-14 was not fully explained to him.  I noted D was present throughout the trial; he understood English and was assisted by the court interpreter.  D said he did pass a note to those representing him when he noticed anything put in cross-examination not in line to his instruction but he was not sure if the counsel got hold of his note.  D was represented by a senior counsel leading a second counsel.  MFI-13 and MFI-14 were produced before lunch on 8 October and the cross-examination of Sherry only concluded after the morning break on 9 October. I consider and find D’s evidence that his instruction related to item 3 of MFI-14 has been misunderstood despite his attempt to clarify during the trial was unbelievable.  

216.  It has been confirmed during rebuttal that C&S was not engaged in 2018 and that unpaid invoice was in fact issued in 2024.  C&S was only engaged by D in 2019 to handle Chi Fung’s matter, thus invoice issued by C&S is not relevant to the present case.  D did not arrange for the services stated in the wrong dated invoice in 2018.  I have reservation that the date on MFI-13 or MFI-13A was an inadvertent mistake.  In any event, D should be aware that any invoice related to Chi Fung issued by C&S should not be dated 2018 and not relevant to the present case.  I consider and find D attempted to mislead the court by MFI-13.

217.  D has attempted to make use of the invoice dated 2 June 2018 (MFI-13)  to support his case that a sum of $30,760 was required for the secretarial and accounting services of Chi Fung in 2018.  And that an amount $15,380 contributed by Sherry has been returned to her on or about 8 August 2018 (MFI-14)  by a cheque to her husband Dickson.  Both Sherry and Dickson denied they had received the “refund” as claimed by D.  I consider and accept Sherry and Dickson’s evidence.  I consider and find D knowingly made a false representation to Sherry as to the registration fees of Chi Fung.

218.  I consider and find the only irresistible inference is that D did so with intent to defraud and to induce Sherry to make payment of $18,320 which resulted in benefit to D and prejudice to Sherry.

The Contribution of $2 million

219.  According to Sherry, D said he needed to have the $2 million in a hurry but he did not remember the company’s bank account number and asked her to transfer $2 million to D’s personal account.  After she made the transfer, she was asked to sign Exhibit P13 around mid-July 2018.  Later, in August she was given Exhibit P12, she noted the content of Exhibit P12 referring the $2 million being consideration of the 2,500 shares instead of contribution to company operation.  She raised the discrepancy to D and was told that that was only a symbolic document, a formal document would be given to her later.  She kept chasing D but did not receive any follow-up document for the $2 million.  At that time, she believed D was busy with the August Food Expo.  

220.  Whereas according to D’s evidence, the $2 million was a compensation to him.  D said he wanted to return the $2 million to Sherry but Sherry took this meant he would leave her.  Sherry requested him to draft an undertaking that after he received the $2 million, he would not leave her.  Therefore, he drafted Exhibit 12 to undertake he would not leave Hong Kong.  However, it is noted that nothing in Exhibit 12 related to D not leaving Hong Kong, it was only an acknowledgement of the completion of the share transaction.  I consider and reject the evidence of D in relation to the $2 million.  

221.  It is noted from the transactions record of D’s Bank of China bank account, after the $2 million transferred into his account, more than $1.7 million remained in the account by 18 November 2018 (Trial Bundle page 469, 472).  D should have sufficient time to open a bank account for Chi Fung.  However, the evidence shows that no bank account had ever been applied for Chi Fung.  Should D have any difficulty in opening a bank account for Chi Fung, he could have requested Sherry to open the company account and made himself one of the authorized signatories or let Sherry operated the bank account.  I consider and find the only irresistible inference is that D intended to take the $2 million as his own.  

Chi Fung was not in operation?

222.  The company annual return dated 29 May 2019, 29 May 2020 and 29 May 2021 signed by D all stated that the registered office of Chi Fung was at the TML office (Exhibit P10(4)-(6), Trial Bundle pages 43, 51, 59).  However, as mentioned above D had moved out from the premises in 2016.  No tax return had ever been filed.  It was put to Sherry that due to her complaint to Apply Daily, D was not able to carry on the business in the name of Chi Fung.  Thus, Chi Fung was not in operation.  However, D gave evidence that Chi Fung was still in operation though it has very little business.  If Chi Fung was still able to carry on its business, D would not be required to let another company to take up the hotel cleaning contract he mentioned to Sherry.  Sherry could be made a director and sign the contract on behalf of Chi Fung.

223.  According to Sherry, D told her the $2 million contribution was for company operation and she would get it back between September and December 2018.  The net profit of Chi Fung would be around $200,000 to $300,000 per month.  She was told 2,500 shares would be allotted to her, representing 25% shareholding of Chi Fung but she was not asked to pay for the shares.  She was given Exhibit P11 and P12 for her signature.  D did not tell her about his share of the contribution.  I consider and accept the evidence of Sherry.

224.  According to Sherry, though she was not provided with receipt for the $2 million, she was told by D that thing was in operation.  She trusted D and as she was pregnant and needed to prepare for her wedding, she did not think too much about the receipt.  In mid-July 2018 she was given some documents to sign.   I consider and accept the evidence of Sherry that the $2 million was her investment to the business proposed by D to be carried out in the name of Chi Fung.

225.  According to D’s evidence, the $2 million was offered by Sherry to keep him around her in Hong Kong, as a compensation that he could not return UK to continue his degree course.  However, this is contrary to the defence case put to Sherry during cross-examination and contrary to what transpired in their WhatsApp and email exchanges, in which Sherry demanded explanation of her investment, demanded return of her monetary contribution, demanded shareholders meeting.  D again explained his then legal team has misunderstood his instruction.  I consider and reject the evidence that the $2 million was a compensation as he alleged.

226.  D gave evidence that at that time he got an idea to run a company for the benefit of Sherry’s child and invited Sherry to join.  The $2 million was deposited into his personal bank account. He applied $200,000 towards the business of education consultant and public relation undertook in the name of Chi Fung.  Should that be the case, the monthly operation costs of Chi Fung would not be more than $100,000.  D was arrested for obtaining property by deception on 28 January 2019 in relation to Charge 3 to 6.  It would have been clear to D that Sherry meant what she stated in the WhatsApp and email exchanges: she wanted her money back.   

227.  D repeatedly emphasized he wanted to end the complicated toxic relationship with Sherry.  Prosecution put to D that he could have refunded the money to Sherry should he want to end the alleged complicated toxic relationship.  D said he was willing to return the money to Sherry, he was yet to do so because they still had questions to be resolved including the child, the money had been invested for the benefit of the child.  For the reasons mentioned above, I reject the evidence of D that he had any intention to hold/apply the money for the benefit of Sherry’s child.

228.  In any event, the money was from Sherry, the child was with Sherry, Sherry has already indicated her financial difficulties in the text exchanges with D.  Should D be concerned for the child and wanted to return the money to Sherry as he alleged, why he did not return the $1.8 million or part of it when he knew the operation of Chi Fung did not require that large amount of money and Sherry needed money for her daily expenditure.   I consider the evidence of D unbelievable and defies common sense.  It is noted that a total of $1.4 million had been withdrawn from D’s bank account towards the end of January 2019 (Trial Bundle page 476).  I consider and reject the evidence of D that he had any intention to return the money to Sherry. 

229.  According to D, around $1.9 million was left by end of 2018 and around $1.8 million was left around March 2019. As he was not able to do any business due to the Apple Daily incident (i.e. some undesirable news about D came out)  in January 2019, he decided to carry out the business via a subsidiary company.  In March 2019 he handed over the remaining $1.8 million to Ms Yuen Mee Fong for her to incorporate Fung Lai to take up the hotel cleaning contracts.  However, Sherry had no idea of Fung Lai. 

230.  According to D, he believed Sherry reported to the Police because she had misunderstood the shareholding issue of Chi Fung, therefore, he engaged C&S to do the books/documentation work for Chi Fung to clarify the situation.  D’s evidence suggested that he believed the business should continue.  Should that be the case, why D did not reveal to Sherry that “their hotel cleaning contracts” would be taken up by their subsidiary company Fung Lai of which Chi Fung has 99% shareholding.  D did not produce any books of account of Chi Fung.  I consider and reject the evidence of D that he arranged a subsidiary company to take up the hotel cleaning contracts supposed to be signed in the name of Chi Fung.   

The Incorporation of Fung Lai

231.  Ms Yuen Mee Fong was D’s aunt, she was the founder member of Fung Lai.  When Fung Lai was incorporated on 12 April 2019, Ms Yuen and Miss Mok Wai Mei Susanna were the director and company secretary respectively.  The Incorporation Form was submitted on 12 April 2019.  Miss Mok resigned on 12 April 2024 (Exhibit P47, Trial Bundle page 1750)  and D said Ms Yuen passed away in 2025. 

232.  According to D, he handed over $1.8 million in March 2019 to Ms Yuen to set up Fung Lai to take up his hotel cleaning contracts.  Should that be the case why would the Return of Allotment not prepared in March but prepared on the day following the submission of the Incorporation Form on 13 April 2019.  Moreover, the Return of Allotment was only submitted three years later together with the Notice of Change of Address of Registered Office dated 12 April 2024 on 13 June 2024, after the original trial dates in 2024 were vacated upon defence’s application.

233.  It is also noted that C&S was engaged to submitted the 2019 to 2021 annual return of Chi Fung on 9 July 2021, while the 2020 and 2021 annual return of Fung Lai, a subsidiary of Chi Fung, remained outstanding, and caused the Companies Registry to file a Striking Off notice under section 744 on 6 July 2021.  Only an objection was filed before 7 October 2021 but no annual return and no return the allotment (which was dated 13 April 2019)  was submitted until 2024.  I consider and have reservation that the allotment was made in 2019.

234.  Apart from the “Return of Allotment” submitted by Ms Yuen on 13 June 2024, C&S was responsible for all other submission made in 2024 and 2025.  The parties have no objection for me to take judicial notice that “pending” matters are under process by the Companies Registry.   The annual return of 2025 submitted on 23 May 2025 was available, however, for reason(s)  unknown the annual returns of year 2020 to 2024 that submitted on 14 June 2024 were still under process by the Companies Registry as at 9 October 2025 (Exhibit P47). 

235.  Further, despite being a majority shareholder of Fung Lai, and allegedly contributed $1.8 million, D was not an authorized signatory of the company bank account and did not have access to the books of accounts.   There is also no evidence that Fung Lai has ever distributed any dividend to Chi Fung.  I consider and reject D’s evidence that he had handed over $1.8 million out of the $2 million from Sherry to Ms Yuen in March 2019 for the incorporation of Fung Lai and I reject D’s evidence that Chi Fung took up the shares of Fung Lai for the benefit of Sherry’s child.

The flow of the $2 million

236.  D had two Bank of China account.  It is noted that before Sherry transferred the $2 million into D’s Bank of China account (1)  on 22 June 2018, the balance of the account was less than $200 (Trial Bundle page 468).  Thereafter there were a numbers of withdrawal transaction, two days after Sherry had made a strong demand for her $2.2 million back as mentioned above, the balance was reduced to $1,746,949.84 by 3pm on 19 November 2018, at 3:38pm on the same day $1,746,000 was transferred to his joint account with Dicky Lam (Trial Bundle page 472). 

237.  Later, on 8 Jan 2019 $1,621,093 was transferred back to D’s Bank of China account (1)  from the joint account (Trial Bundle page 489).  D was arrested in the early hours of 28 January 2019, later that day D transferred $1,403,381.90 from his Bank of China account (1)  to his Bank of China account (2)  leaving a nil balance (Trial Bundle page 476, 536).   

238.  Two days later, on 30 January 2019 a sum of $1 million and a sum of $400,000 were withdrawn in cash from Bank of China account (2)  leaving a balance of $31,681.90 (Trial Bundle page 536).  Thereafter the balance of this account remained low, the highest was $51,021.85 on 15 April 2019. 

239.  D’s balance with Hang Seng Bank was less than $25,000 by end of December 2018 (Trial Bundle page 154).  According to the evidence of D, he was not able to do any business because of Apple Daily incident and decided to carry on the business via another company in March 2019.  Should that be the case, I fail to see any reason for him to withdraw $1.4 million from his account towards the end of January 2019.   I am of the view that D did so because he worried his bank accounts would be frozen due to police investigation and to evade the tracing of the fund.  D did not want to return the money to Sherry.

240.  Chi Fung was incorporated in May 2018, Sherry contributed $2 million in June 2018 for Chi Fung operation as requested by D.  D claimed he had tried to promote the business of education consultant and public relation.  However, it is noted that no office has ever been set up, no bank account applied, apart from a short commercial video and public relation work for Café UZUME done in June of which Sherry participated (Exhibit D66), no cleaning contract or any other business contract was signed in the name of Chi Fung.  Sherry gave evidence that Café UZUME belonged to the partner of her friend, she did not know D charged for the work done for Café UZUME.  I consider and accept Sherry’s evidence.

241.  I am of the view that the D’s limited business activities in 2018 were only to gain publicity for himself and to let Sherry’s guard down.   D did so only to impress Sherry that he would apply the $2 million received from her towards their collaboration.  I consider and find the only irresistible inference is that D had no intention to apply the $2 million invested by Sherry towards the operation of Chi Fung or to carry out any business in the name of Chi Fung or otherwise.

242.  I consider and find the only irresistible inference is that when D represented to Sherry that he had secured and/or would secure cleaning business at various hotels, that he intended to undertake other businesses with Sherry and that Chi Fung was in operation and required $2 million, he knew that all these representations were false.

243.  I consider and find the only irresistible inference is that D did so with intent to defraud and to induce Sherry to make a payment of $2 million, which resulted in benefit to D and prejudice to Sherry.

Charge Six

244.  It is alleged that on or about 9 June 2018, by falsely representing to Sherry and Dickson that he had paid $21,500 to Yeo Tin-ming on behalf of them, with intent to defraud, induced Dickson to pay D $20,600, which resulted in benefit to D or in prejudice or substantial risk of prejudice to Dickson.

245.  According to Mr Yeo Tin-ming, Sherry made an enquiry to verify if he had provided service in 2018, regarding choosing dates for wedding, childbirth and name of the baby via D.  Full name of Sherry and D were provided for the enquiry, he confirmed to Sherry that he did not receive this referral from D.  Following to Sherry’s enquiry, D and his mother came over to him on 9 January 2019 and requested for a prediction for the upcoming year.  He charged D $3,000 for the service.  He also took a photo together with D on that occasion upon his mother’s request.

Transactions between Dickson and D

246.  Dickson gave evidence that he had the following transaction with D:

(i)  $20,600 by a cheque dated 2 June 2018 to D for the fee of Yeo Ting Ming (Trial Bundle page 247)

(ii)  $115,000 a cheque dated 2 August 2018 from D, cashed on 8 August 2018 to create a transaction record (Trial Bundle page 426)

(iii)  $115,000 a cheque dated 29 July 2018 to D, cashed on 15 August 2018 to create a transaction record (Trial Bundle page 248)

247.  Dickson gave evidence that around the beginning of 2018 he got to know D via his wife Sherry.  He knew Sherry met D in Penfold Park while walking their dogs, Sherry and D became friends later and did business together.  In June 2018, Sherry got pregnant and they decided to get married.

248.  Dickson gave evidence that on 4 June 2018 he learnt of Sherry’s pregnancy.  They had to organize wedding in a rush.  Sherry believed in metaphysics and wanted to consult a metaphysician for the date of wedding, the date for C-section and the name for the baby.  Sherry was on very friendly terms with D and D said he knew Mr Yeo Tin-ming.  Sherry entrusted the matter to D.  Sherry told him D said the fee $20,600 for metaphysics should be paid by the male party, so he paid D accordingly. 

249.  However, according to Dickson, a different fee of $21,500 was quoted by D later, therefore, he communicated with D via WhatsApp to confirm the fee and they settled the amount at $20,600.  D should have learnt from his WhatsApp communication with Dickson that Sherry and Dickson had close discussion upon the arrangement and the fees of the metaphysics services and D knew whatever he told Dickson would be passed on to Sherry.

250.  According to Dickson, they registered the marriage and arranged the wedding banquet according to the dates provided by “Mr Yeo Tin-ming” via D.  They met D on their wedding banquet, and that was the last time they saw D.  They did not receive any name picked for the baby via D.  Thereafter, Sherry made enquiry and found out D had not engaged Mr Yeo Tin-ming.  Sherry went to the registered address of Chi Fung and there was no such company.  Sherry collaborated with D on various business, money had been paid but she was not able to get positive response from D for the return of her share of profit and capital investment. Therefore, they decided to make a report to the police.  He also obtained a default judgment in August 2019 against D for the money he paid him.  I consider and accept the evidence of Dickson.

Metaphysics services arranged by D

251.  Sherry was busy in preparing her wedding and entrusted D to arrange the metaphysics services for her.  It is noted that all the text messages between Sherry and D show that D had engaged Mr Yeo Tin-ming to provide the services to Sherry.   D explained the name of Master Yeo was used upon the request of Sherry as Sherry claimed Dickson liked Mr Yeo Tin-ming and Dickson would check her phone.  There is no dispute that Sherry made an enquiry to Mr Yeo Tin-ming.  I consider and reject D’s evidence.  I consider and accept Sherry’s evidence that D represented to her that he had arranged Mr Yeo Tin-ming to provide the services to her.

252.  There is no dispute that D did not engage Mr Yeo Tin-ming for the services.  D said he engaged Sheung Foon 常歡for the services instead. D admitted though he engaged Sheung Foon, he represented to Dickson that he had engaged Mr Yeo Tin-ming and tried to exonerate himself by saying that it was upon Sherry’s request.  Sherry denied she requested D to engage Sheung Foon.  In any event, D knowingly made a false representation to Dickson that he had paid $21,500 to Mr Yeo Tin-ming on behalf of them to induce Dickson to pay him $20,600.

253.  Sheung Foon gave evidence that D came up to her parlour with Sherry and requested for metaphysics services, asking for the auspicious dates for wedding, banquet, childbirth and naming.  That was the first time she met Sherry, and in the course, she knew Sherry was going to marry Dickson, that being the case, the time would be May or June 2018.  According to Sheung Foon, she had a deep memory of that occasion as that was the first time D came up with a girl, and she thought they were getting marry.  However, according to the evidence of D, he and Sherry first visit Sheung Foon’s parlour in February/March 2018, before their trip to Taiwan.

254.  Sheung Foon acknowledged and agreed the importance of privacy of her customers.  Should Sherry come up together with D, and provided the information of hers and Dickson’s date and time of birth to her face to face, why would Sherry need to pass the particulars of hers and Dickson’s to D via WhatsApp between 4:54pm and 4:58pm on 4 June 2015 as mentioned above.  It is noted that thereafter D passed on the information to Sheung Foon on the same day and Sheung Foon clarify the information with D on the following day (Exhibit D95).  Why would Sheung Foon chose to communicate via D and not directly with Sherry.  

255.  Sheung Foon explained she passed the information to D because D and Sherry appeared to be close to each other and D settled the payment.  Yet According to Sheung Foon, Sherry was right in front of her, she could have asked Sherry’s phone contact and added her on her customer list.  I consider the evidence of Sheung Foon unbelievable.  Sherry said she never came up to Sheung Foon’s parlour.  I consider and accept the evidence of Sherry.  That being the case, Sheung Foon would not have the necessary information and contact of Sherry and this explained why D was required to act as the middleman.  I consider and reject Sheung Foon’s evidence that Sherry had come up with D to request for her services.

256.  For reasons mentioned above, I consider and find Sherry did not know/direct D to engage Sheung Foon to provide the metaphysics services for the dates related to her wedding & child birth and the name for her child.  D had knowingly made false representation to Sherry and Dickson that he had paid $21,500 to Yeo Tin-ming on behalf of them to induce Dickson to pay him $20,600.

The two $115,000 cheques

257.  D attempted to make use of two cheques in the sum of $115,000 between himself and Dickson to allege that he had returned the $20,600 and therefore had no intention to induce Dickson to pay him any money.

258.  Dickson had a company called Adventure Harmonica Music Centre.  The business of the company was to teach harmonica, the clientele included both children and adults.  According to Dickson, he had arranged harmonica classes with Tung Wah before he met D.  In June 2018, D claimed himself a consultant to Tung Wah Group and volunteered to help him to arrange new harmonica classes with Tung Wah’s primary and secondary schools.  He was made to believe that D was influential in Tung Wah Group.

259.  Evidence shows that during that period, D was very close to Sherry, D and Sherry were doing business together, Sherry had invested over $2 million into the various business proposed by D.  D assisted in the preparation of Sherry and Dickson’s wedding, the betrothal ceremony and was Dickson’s best man.  I consider and accept Dickson’s evidence that he believed the words of D.  

260.  Dickson gave evidence that in July D said to implement the plan of arranging harmonica classes with Tung Wah Group, they needed to create a record of business transaction.  To furtherance the plan, D transferred a cheque of $115,000 to his company (Trial Bundle page 426).  And he also drawn a cheque from his company’s bank account in the same amount to D.   The two cheques were cashed on 8 August 2018 and 15 August 2018 respectively.

261.  It was put to Dickson that Sherry told him around February 2018 that she would run a booth together with D in the August 2018 Food Expo.  Dickson agreed he learnt this from Sherry before she found out her pregnancy but he could not recall when exactly he was told.  It is common ground that Sherry and Dickson attended the August 2018 Food Expo and on arrival they first met up with D.  Dickson said he did not remember if he was given a lanyard with the name Monte Gourmet on it for his entrance, he did not look at the lanyard.

262.  The defence put to Dickson that he knew the transfer of $115,000 was a refund to Sherry the fees she paid for booking a booth by D, Dickson denied.  And it was also put to Dickson that he did not tell D he had re-transferred the $115,000 by cheque back to D.  There was no mention of the return of the $20,600 when Dickson was first cross-examined on 8 August 2025.  Dickson completed his evidence on the same day. 

263.  It is noted that the $115,000 cheque issued by Dickson was deposited into D’s Hang Seng Bank account via Quick Cheque Deposit and cashed on 15 August 2018. Dickson could not remember if he notified D about the deposit but he was sure the cheque was cashed.  There were only 3 deposit transactions in D’s Hang Seng Bank account in August 2018, and Dickson’s cheque was the only cheque deposited in that month.  I have reservation that D was not aware of this transaction. 

264.  Further, according to the defence case, D was not close to Dickson, the money for Food Expo, Chi Fung and Taiwan trip had nothing to do with Dickson, why would D return the money to Dickson.  Should the $115,000 was a refund to Sherry and Dickson, I see no reason for Dickson to return the same to D.   Should Sherry know the plan to run a booth in August 2018 Food Expo had been postponed why would she attend “her booth” together with Dickson.  I consider and reject D’s evidence regarding to the two $115,000 cheques.

265.  The trial was adjourned on 8 August and resumed on 2 October for the testimony of Sherry; MFI-14 was presented to Sherry during cross-examination.  Dickson was recalled after Sherry completed her evidence.   He was reminded by defence that it has been suggested to him that the $115,000 was a refund to Sherry from D regarding various business dealing of which he disagreed.  Dickson confirmed his position, he was then shown MFI-14, the breakdown of $115,000.  Dickson was drawn to his attention that item 2 was $20,600, the refund of the fee for metaphysics.  Dickson disagreed.

266.  D gave evidence that the amount $20,600 received from Dickson has been returned to him on or about 8 August 2018 (MFI-14)  together with the refund to Sherry by a cheque to Dickson.  According to the evidence of D, he knew Dickson paid him $20,600 was because he told Sherry the metaphysics fee should be paid by the male party, he wanted to end the complicated and toxic relationship with Sherry and did not want to involve himself in their marriage.  Should that be the case, why would he not deal with Sherry directly with any “alleged refund”. 

267.  D attempted to explain the situation by the alleged complicated and toxic relationship and he was not able to communicate with Sherry for the “refund”. However, it is noted that he had frequent WhatsApp exchanges with Sherry in August 2018 as before, and Sherry even requested if the $2 million could be returned to her temporary for two weeks enabling her to settle BOC life on 6 August 2018 at 2:39:15 pm (Exhibit D70, page 107).  I consider and accept Dickson’s evidence related to the two cheques and that he did not receive any refund of $20,600.  I consider and reject D’s evidence that he had returned $20,600 to Dickson.

268.  I consider and find the only irresistible inference is that D knowingly made the aforesaid false representation that consultation fees had been paid to Mr Yeo Tin-ming with intent to defraud and to induce Dickson to make a payment of $20,600, which resulted in benefit to D and prejudice to Dickson.

Conclusion

269.  For reasons mentioned above, I agree with the Prosecution that D portrayed himself as operating genuine commercial ventures and invited others to invest substantial sums by false representations.  Evidence shows that the business cash flow relied on investor funds.  Revenue from Sales was negligible.  D did not keep proper books and accounts to substantiate revenue, expenditure or profit. 

270.  I consider and agree with the Prosecution that this was not a case of unfortunate business failure.  It was a course of conduct in which D obtained money through false representations, operated without proper financial accountability, and provided shifting explanations when challenged.  Instead of applying the money obtained as he promised, he took the money as his own.

271.  I consider and agree with the Prosecution that the pattern revealed by the evidence is consistent across the charges.  I consider and find Mark, Wallace and Sherry was persuaded by false representations to invest respectively.  Save the false representations related to the 49% shareholding / 6,000 shares of Chi Mei and COVAP dealership, D did so recklessly; D deliberately made the other false representations as mentioned above.  D did so with intend to defraud and to induce them to make payment as requested. 

272.  I consider and find the only irresistible inference is that funds were transferred to D’s control and he applied the funds as if his own, instead of wholly for the operation of Chi Mei, Chi Yat, Food Expo 2018 and registration and operation of Chi Fung as the case should be.  Thereby resulting in a benefit to D and causing prejudice, or a substantial risk of prejudice to Mark, Wallace and Sherry respectively.

273.  I consider and find D deliberately made a false representation to Sherry and Dickson that he had paid consultation fees in the sum of $21,500 to Mr Yeo Tin-ming on their behalf, with intent to defraud and to induce Dickson to pay him $20,600.  As a result, Dickson paid D $20,600.  Thereby resulting in a benefit to D and causing prejudice, or a substantial risk of prejudice to Dickson. 

274.  I consider and find the Prosecution has proved each and every element of the respective charges beyond all reasonable doubt.  D is convicted on all the charges accordingly.