HKSAR v. IP CHIN KEI AND OTHERS

HCMA 301/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 301 OF 2011

(ON APPEAL FROM STCC NO. 6553 OF 2009)

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BETWEEN

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J U D G M E N T

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Introduction

1.  The appellants were convicted after trial by Deputy Magistrate Mr David Cheung Chi-wai on 23 March 2011 of the offence of conspiracy to defraud.  The first appellant (A1) was sentenced to 5 months 1 week imprisonment.  The second appellant (A2) to 5 months imprisonment and the third appellant (A3) to 4 months 3 weeks imprisonment.  In addition all three appellants were ordered to pay $12,700 compensation to the company that was the victim of the fraud. The appellants appeal their convictions only.

The Charge

2.  The particulars of the charge were amended at trial and their final form was as follows:

“(A1 – A3) between the 31^st day of August 2007 and around the 8^th day of October 2007 , in Hong Kong conspired together with Cheng Chi-Shing Chris to defraud Jumbo Harvest Engineering Limited by dishonestly and falsely representing the number of workers who had been on duty at the construction site of Sausalito for the period between 17^th day of August 2007 and the 15^th day of September 2007 to the said Jumbo Harvest Engineering Limited, and thereby inducing the said Jumbo Harvest Engineering Limited to make payments in settlement of the project fees as claimed by the said Ho Ngai-man Kenny (ie A2).”

3.  In essence what is being alleged is a ghost worker fraud involving the following key elements and personalities:

Sausalito:    This is the name of a private residential construction project at Ma On Shan.

Jumbo Harvest Engineering Limited (“JHEL”).  This company was a sub‑contractor working on the Sausalito site.

Cheng Chi-Shing Chris was a prosecution witness (PW3) at trial who testified under immunity as an accomplice.  For all intents and purposes he was the partner of A2 in the painting work sub-contracted at the Sausalito site and helped A2 to recruit workers.

A1 was a site foreman of JHEL.

A2 was a painting sub‑contractor of JHEL and was in a partnership‑like relationship with PW3.  He was sub‑contracted the painting work for towers 1 & 3 of the Sausalito development.

A3 was a painting worker working for PW3.

4.  Under the sub-contract JHEL paid A2 $700 per worker per day.  The difference between $700 and what A2 paid the worker was A2’s profit.  A2 informed JHEL of the number of workers for each day and JHEL paid A2 fortnightly.  One of A1’s duties for JHEL was to count the number of workers that A2 employed at the site so that A2’s claim of how many painters he employed was verified.

5.  The painting work commenced in mid-August 2007 and finished at the end of September 2007.  The fraud was alleged to have operated in respect of two wage periods, namely the period 15 August to 31 August 2007 and the period 1 September to 15 September 2007, with the result that inflated amounts of monies due were submitted to JHEL.

6.  Clearly such a method of payment allows for the opportunity of a ghost worker fraud but equally clearly any such fraud could not be successfully implemented unless A1 negligently failed to properly perform his duties or was complicit in the fraud.

The Prosecution Case

7.  The prosecution case consisted of some admitted facts, video recorded interviews of each of the appellants in which they denied any criminality and three witnesses.  PW1 was a shareholder of JHEL, PW2 was an Assistant Safety Officer at the Sausalito site and PW3 was the accomplice witness.

8.  The only witness whose evidence was seriously contested was PW3 and he was the only source of evidence that inculpated the appellants.

9.  PW1 set the scene and described how his company was awarded a painting and waterproofing sub-contract at Sausalito and how it came to further sub-contract work to A2.  He explained how he required A1 to verify the number of workers that A2 employed at the site and how on two occasions, one for August and one for September, there were discrepancies between what A2 claimed and A1 verified.  On both occasions A1 explained that he had made a mistake because he had been so busy and that A2’s figures were correct.  PW1 suspected there were problems at the site and so he sent another member of his staff, Mr Yuen, to check, but no problems were reported by Mr Yuen.  PW1 did not himself regularly visit the Sausalito site and in fact had only been there once.  PW1 also testified that in around November 2007 PW3 approached him and confessed that he, PW3, had assisted A2 to defraud him and PW3 supported his claim with documents.  In the course of his evidence PW1 agreed that he had regarded A1 as an honest and diligent worker which is why he promoted him to the position of foreman at the Sausalito site.  He also agreed that A1 was very busy at work because of the pressure to get work completed within a certain time frame.

10.  PW2 was a safety officer at the site and he gave what appears to have been non‑contentious evidence in respect of the policy of the main contractor not to provide sub-contractors with the electronic record generated by workers entering and exiting the site.

The evidence of PW3

11.  PW3 testified that around the end of August 2007 he had a conversation with A1 in which A1 said to him that if money was made “don’t forget him”.  PW3 said that he understood this to mean that if money was to be made it had to be shared.  PW3 did not think that A1 was serious but was astute enough to realize that the only way to make money was to inflate the number of workers.  He said that around 31 August he saw A1 at the JHEL office and A1 asked him by how much he had overstated the number of workers.  When PW3 said he had not inflated the claim A1 queried why he had not.  PW3 then contacted A2 and told him of his conversation with A1.  In response A2 told PW3 to do as A1 wished as A1 “was one of us and would do the work together”.  PW3 then agreed to the proposal but said he would not overstate the claim by much.

12.  PW3 said the four of them (ie A1 – A3 and himself) started overstating the attendance record from the 1^st September.  He said he handed attendance records to A1 every day as JHEL required a daily record of the number of employees.  PW3 said that he emailed the inflated figure of the number of workers so that A1 knew what to submit to PW1 but he could not explain why there were no copies of these emails or why they were deleted from his computer.  PW1 had said that the torn pages of the attendance book had been handed to him by PW3 but PW3 denied this.  PW3 said there was no forgery of the signatures of ghost workers after 15 September 2007.

The Defence Case

13.  At the end of the prosecution case the magistrate ruled a case to answer.  Neither A1 nor A2 gave or called evidence.  A3 gave evidence but did not call any witness.  The essence of his testimony was a denial of being involved in the conspiracy.

The Appeal

14.  The perfected grounds of appeal were drafted as though the appeal was not a rehearing and focussed on errors in and generally the inadequacy of the magistrate’s Statement of Findings.  The main criticism was of the magistrate’s treatment of PW3 but there was also an attack on his treatment of certain records produced by PW2 and his asserted failure to take into account the conduct of A1 which it was said was wholly inconsistent with him being a co-conspirator.

15.  However at the hearing of the appeal I queried whether such an approach was appropriate for a magistracy appeal given that it was a rehearing and I called for further submissions from the parties on how this appeal should proceed as a rehearing.  This prompted the appellants to revise their submission and file a new submission on 7 February 2012.  The respondent filed a revised submission on 29 February 2012 and on 15 March 2012 the appellants confirmed that they did not intend to file a reply.

16.  Before I discuss the grounds of appeal in detail I shall set out my understanding of the legal principles relevant to a rehearing.

Appeals Under Section 113 of the Magistrates Ordinance, Cap 227

17.  The submissions that I received from counsel on the legal principles underlying a rehearing have been very helpful and I am grateful to counsel for their thorough research.  I have reached certain views, some more tentatively than others, on different aspects of magistracy appeals and it is only right that I set them out as they explain why, later in this judgment, I have adopted the approach that I have to the determination of this appeal.

18.  Since the Court of Final Appeal’s judgment in Chou Shih Bin v I (2005) 8 HKCFAR 70 it is clearly established that an appeal under section 113 of the Magistrates Ordinance “is by way of rehearing on the evidence before the trial court supplemented by such further evidence as the intermediate appellate court may admit under its statutory power to do so.”[1]

19.  In order to appreciate what is involved in an appeal by way of rehearing it is necessary to understand the distinctions between this form of appeal and other forms of appeal.  The description of these distinctions that was adopted by the Court of Appeal in Chou Shih Bin was the following statement by Dawson J of the High Court of Australia in Harris v Caladine (1991) 172 CLR 84 at 125:

“A hearing de novo may be contrasted with an appeal stricto sensu and an appeal by way of rehearing. In an appeal stricto sensu the question is whether, upon the material before the tribunal below, the conclusion which was reached was correct. An appeal by way of rehearing involves the rehearing of the matter as at the date of the appeal but upon the evidence called before the tribunal below, subject to a power to receive further evidence. On an appeal by way of rehearing the rights of the parties must be determined by reference to the circumstances, including the law, as they exist at the time of the rehearing. But an appeal by way of rehearing does not call for a fresh hearing as does a hearing de novo; the appeal court does not hear the witnesses again: ….”

20.  To translate these classes of appeal into our own jurisdiction would result in the following categorizations.  Magistracy appeals in the Court of First Instance are appeals by way of rehearing.  Civil appeals in the Court of Appeal are appeals by way of rehearing.  But when the Court of Appeal is hearing criminal appeals emanating from the District Court or Court of First Instance it is hearing an appeal stricto sensu, what I shall refer to as appeals in the strict sense.  The Court of Final Appeal, it seems to me, is hearing appeals in the strict senseeven when it is determining them on the “substantial and grave injustice” ground for in examining whether there is evident a departure from accepted norms, it is in fact considering whether there is an error on the record.

The distinction between the different forms of appeal

21.  The difference in the nature of an appeal in the strict sense, appeal by way of rehearing and appeal by hearing de novo extends to the way in which each appeal is determined.

22.  The simplest is the hearing de novo as that is a retrial and so being a retrial the first trial magistrate’s Statement of Findings is irrelevant.  Of course as in any trial, live evidence is called, findings of fact are made, credibility of witnesses determined and issues of law resolved, all culminating in a determination of the guilt or innocence of the defendant; except this time these trial duties are performed by an appellate tribunal.

23.  In an appeal conducted by way of rehearing the process is the same except that in place of live evidence the appeal is conducted on the transcript and as a result of this and other limitations inherent in the rehearing process there are constraints on the appellate court in respect of the discharge of its duties to make findings of fact and determinations in respect of the credibility of witnesses.  These I shall discuss later.  Another feature of an appeal by way of rehearing that distinguishes it from an appeal by way of hearing de novo is that the appellate court is permitted to have regard to the magistrate’s Statement of Findings.  One of the uses to which the appeal court will put the Statement of Findings is to inform itself of what determinations the magistrate made in respect of the credibility of witnesses and why the magistrate made these determinations.  Such a use helps the appeal court to lessen the impact of the disadvantage it faces from having to conduct the appeal only on the transcript.

24.  The duties that are performed on an appeal by way of a hearing de novo and an appeal by way of rehearing are very much trial duties and are quite different from the duties performed by an appellate court hearing an appeal in the strict sense.  An appeal in the strict sense requires that an error be demonstrated before the appellate court can act.  The appeal court, acting as a court of error, is not concerned with whether it agrees with the trial judge’s findings, even less with whether it would have made those same findings.  It cannot substitute what it would have found for what the trial judge found unless and only unless it has been demonstrated to it that the trial judge erred.

The appellate duty on a rehearing

25.  On a rehearing the appellate court is required to assess the evidence and come to its own conclusion as to whether that evidence proves the essential elements of the offence beyond reasonable doubt.  This is evident from what the Court of Final Appeal said in Chou Shih Bin.  There the appellant had been convicted in the magistrates’ court of possession of firearms and ammunition in respect of an anti-riot handgun detected in a bag he presented for security screening prior to boarding a flight at Hong Kong airport.  He denied knowledge of the presence of this firearm in his bag.  The Court of Final Appeal described the role of the Court of First Instance appellate judge at page 78 F – G as follows:

“…. While he had to bear in mind that he did not enjoy the advantage of having received the evidence at first-hand, he was entitled, indeed bound, to come to his own conclusion about the appellant’s knowledge of the existence of the gun and cartridge in his bag when he presented it for security X-ray screening. This Court must now determine that question for itself.”

26.  This decision makes clear that the key distinguishing feature of an appeal by way of rehearing is that the appellate court is required to make up its own mind on contested issues of fact and law, having regard to the evidence given in the court below.

27.  This is in marked contrast to an appeal in the strict sense.  The difference between the functions performed on a criminal appeal by an appellate court hearing an appeal in the strict sense and an appellate court conducting an appeal by way of rehearing was described by Greg James J in Histollo Pty Ltd v Director-General National Parks & Wildlife (1998) 45 NSWLR 661. In comparing a rehearing with an appeal to the New South Wales Court of Criminal Appeal he said at page 678 B – D:

“The function performed by this Court[2] on such a re-hearing appeal is different to and the test less strict than that on appeals on the “unsafe and unsatisfactory” ground under s 5 of the Criminal Appeal Act….. Nonetheless, where as here, there is a challenge to the correctness of the trial judge’s ultimate conclusion, it is not incumbent upon the appellant to show that such conclusion was not open to the trial court in the sense of being a conclusion to which on the evidence, it should not have come. It is merely necessary to persuade this Court on a review of the evidence that guilt is not, to the necessary standard, proved by the prosecutor. If, as at trial, on the rehearing there is a reasonable doubt of guilt the appeal must be upheld.”

28.  In its decisions of Ching Kwok Yin (2000) 3 HKCFAR 387 and Chou Shih Bin the Court of Final Appeal referred to the Court of First Instance determining whether a magistrate’s conviction was unsafe.  This, it seems to me, is more the language of an appeal in the strict sense and distracts attention away from the only issue before the Court of First Instance, namely whether it can be satisfied beyond reasonable doubt that on the evidence adduced by the prosecution the appellant is guilty as charged.

The Limitations of an Appeal by Way of Rehearing

29.  Notwithstanding that an appellate court conducting an appeal by way of rehearing and an appellate court conducting an appeal by way of a hearing de novo are performing essentially the same function, namely determining whether the evidence adduced by the prosecution establishes the guilt of the appellant beyond reasonable doubt, the former suffers disadvantages that the latter does not.  These disadvantages are the natural consequence of the different characteristics of each of these forms of appeal.

30.  There are two limitations to an appeal by way of rehearing on the papers. The first is the obvious one that it is only on the papers and the court conducting the rehearing “does not enjoy the advantage of having received the evidence at first-hand which the magistrate enjoyed” (Chou Shih Bin at page 78 E – F).

31.  The second limitation is that the appellate court does not usually conduct the rehearing on the whole of the evidence that was before the magistrate.  It is thus deprived of the advantages:

“… that derive from the obligation at trial to receive and consider the entirety of the evidence and the opportunity, normally over a longer interval, to reflect upon that evidence and to draw conclusions from it, received as a whole.” (per Gleeson CJ, Gummow and Kirby JJ in Fox v Percy (2003) 214 CLR 118 at 126, para 23)[3]

I shall now discuss each of these in turn.

The limitation of not having seen and heard the witnesses

32.  The limitation that an appeal court suffers on a rehearing from not having seen and heard the witnesses was discussed by Bokhary PJ in Ting Kwok Keung v Tam Dick Yuen & Others (2002) 5 HKCFAR 336.  In this civil appeal Bokhary PJ said that when dealing with a first instance judgment that turns on an issue of fact “the Court of Appeal must have regard to the nature of that issue of fact and it must have regard to the advantages enjoyed by a trial judge who received the evidence on such an issue at first-hand, in other words in whose presence the whole of the evidence unfolded in its living state”.[4] For a description of these advantages he turned to a passage from Lord Reid’s judgment in Benmax v Austin Motor Co. Ltd [1955]AC 370 at 375.  The same passage was quoted with approval by Ribeiro PJ when dealing with a criminal appeal in I v Egan (2010) 13 HKCFAR 314 at 382, [194].  Lord Reid said:

“But the advantage of seeing and hearing a witness goes beyond that: the trial judge may be led to a conclusion about the reliability of a witness’s memory or his powers of observation by material not available to an appeal court. Evidence may read well in print but may be rightly discounted by the trial judge or, on the other hand, he may rightly attach importance to evidence which reads badly in print. Of course, the weight of the other evidence may be such as to show that the judge must have formed a wrong impression, but an appeal court is and should be slow to reverse any finding which appears to be based on any such considerations.”

33.  The points made by Lord Reid are well made but he does not explain what the material not available to an appeal court is and why evidence that reads well in print may be lightly discounted by the trial judge or why he may rightly attach importance to evidence which reads badly in print.  For an explanation of these matters I believe the eloquent passage of Lord Wright in Powell v Streatham Manor Nursing Home [1935] AC 243 at 267 is particularly helpful:

“But where the evidence is conflicting and the issue is one of fact depending on evidence, any judge who has had experience of trying cases with witnesses cannot fail to realize the truth of what Lord Sumner says: as the evidence proceeds through examination, cross-examination and re-examination the judge is gradually imbibing almost instinctively, but in fact as a result of close attention and of long experience, an impression of the personality of the witness and of his trust-worthiness and of the accuracy of his observation and memory or the reverse. He will not necessarily distrust a witness simply because he finds him inaccurate in some details: he can give such inaccuracy its proper place, particularly if he sees that the witness is tired, or antagonized, or confused, or perhaps impatient, and especially if the matter of the inaccuracy is of minor or collateral importance. But such inaccuracies may appear in a very different light when pointed to as isolated passages in the shorthand notes and abstracted from the human atmosphere of the trial and from the totality of the evidence. The judge will form his impression from the whole personality of the witness: he can allow for the nervous witness, standing up in a crowded Court or worried by the strain of cross-examination. The judge may be deceived by an adroit and plausible knave or by apparent innocence: for no man is infallible; but in the main a careful and conscientious judge with his experience of Courts is as likely to be correct in his impressions as any tribunal, unless perhaps, as some would say, a jury of twelve members is preferable.”

The limitation of not having the whole of the evidence

34.  This being a rehearing it is the appellants’ task to persuade me that on the evidence adduced by the prosecution they should have been acquitted and the prosecution to persuade me to the contrary.  As long ago as 1962 in the magistracy appeal of Lam Kau v R [1962] HKLR 234, the Full Court emphasised each party’s respective role when it said at page 245 of the report:

“It is as much for the Crown to sustain as for the appellant to seek to disturb the conviction.”

It is knowledge of the need to discharge this burden that informs the parties’ decisions as to what should be in the appeal bundle, for a rehearing is not a rehearing of all the evidence but only so much of the evidence as the parties determine is necessary for them to discharge their respective burdens.

35.  Even then the parties must obtain the agreement of the Registrar for it is he who decides what should be included in the appeal bundle. (See section 116(1) of the Magistrates Ordinance Cap 227 and I v Chow Yuen Han [2000] 2 HKC 183).  The practical implementation of section 116 is regulated by Practice Direction 9.6 issued by the Chief Justice and entitled “Magistracy Appeals in the Court of First Instance”.  Paragraph 5 of the Practice Direction sets out what the appeal bundle shall consist of and excludes the transcript of the testimony of witnesses.  However the parties can apply to the Registrar under paragraph 8 for any part of the trial transcript to be included in the appeal bundle.

36.  Consequently for this appeal I have not been provided with the complete transcript of the trial.  I have been provided with the admitted facts and the evidence of only PW1 & 3, in respect of the prosecution case, and the evidence of A3.  I have not been provided with the evidence of PW2, the records of interview of A1 – A3 or any documentary exhibits.

37.  I have been provided with other non-evidential materials such as the prosecutor’s opening and closing address, the defence closing address and of course the magistrate’s Statement of Findings.

Performing the Appellate Duty

38.  The constraints or disadvantages under which the appellate court operates in conducting the rehearing may limit the ability of the Court of First Instance Judge to perform his appellate function.  In this respect it is necessary to distinguish between those situations where the complaint is that the magistrate has erred in law from those situations where the complaint is that he has erred in fact.

Errors of law

39.  The appellate court applies the law as it is at the time of rehearing and if the law has changed then the appellate court applies the correct legal principles to the evidence before it.  The fact that the law has changed does not automatically mean that the appeal must be allowed.  Much depends upon the nature of the legal change and its impact upon the proceedings below.  If the appellate court can make allowance for that error and still discharge its function of determining whether on the evidence adduced at trial the prosecution has proven the guilt of the defendant beyond reasonable doubt then it should do so.  This was certainly the view of McMahon J in I v Sherlock HCMA 73/2009 at paragraph 11:

“I might add that it naturally must follow that, because this appeal is in the nature of a re-hearing, any error of law by the magistrate must also be a matter which can be re-addressed on the re-hearing. In other words rather than any error of law vitiating a conviction and requiring the conviction to be quashed, the appellate court for the purposes of the re-hearing should apply the correct principles of law as part of the re‑hearing process and assess the evidence on that basis.”

40.  However this approach must now be reviewed in light of the judgment of the Court of Final Appeal in Raymond Chen v I (2010) 13 HKCFAR 728.  In this case the Court of Final Appeal was answering two certified questions of law which are set out at page 732 [7] of the judgment of Litton NPJ:[5]

“(a) Is it appropriate for a trial court to launch an inquiry into whether or not an accused person had made an out-of-court statement helpful to him?

(b) Whether the appeal judge was right in his view that there exists what he called “modern jurisprudence” pursuant to which credibility can be dealt with on the transcript in the way he did?”

41.  In dealing with the first question Litton NPJ commented on a statement made by the appellate judge in rejecting submissions that there was an irregularity when the magistrate enquired into the statements the defendant made to the police and that in his reasoning in convicting the defendant the magistrate had reversed the burden of proof.  The comment of the appellate judge in rejecting these submissions is quoted at paragraph [51] and was:

“Suppose I was wrong in the judgments I have made so far, what would the result be?

To this Litton NPJ responded:

“The answer surely is: The appeal must be allowed; the conviction quashed.[6] The appellant’s main complaint, as identified by the Judge, was that the magistrate had, in effect, reversed the burden of proof …. This would have been a material irregularity if established. So, if the Judge were “wrong” in rejecting the submission then that ground of appeal succeeded. Full Stop.”

42.  This passage from Litton NPJ’s judgment suggests that if the appellate court concludes that the magistrate has misdirected himself on the law or applied the law erroneously and that what he has done constitutes a material irregularity then the appeal must be allowed.  Such an approach would appear to be more appropriate to an appeal in the strict sense ratherthan an appeal by way of rehearing and whether every legal error constituting a material irregularity must result in the appeal being allowed and the conviction quashed is a matter that may have to be addressed by the Court of Final Appeal on another occasion.  My own view is that it should not and the appeal court should be slow to conclude that it cannot fulfil its statutory duty to rehear the case.

Errors of fact

43.  Because the advantages enjoyed by the trial court are so great, appellate courts are exhorted to exercise caution before concluding that the trial court formed an erroneous view of the credibility of a witness.  Nevertheless when convinced of such error the appellate court must act.  But what legal principles underlie the approach that an appellate court should take in reviewing findings on credibility and do those legal principles differ accordingly to the nature of the appeal?

44.  The approach that an appellate court should adopt when invited to interfere with a trial court’s assessment of credibility was set out by the English Court of Appeal in R v Turnbull (1977) QB 224.  At pages 231 D – E Lord Widgery CJ in giving the judgment of the court emphasized that the court was not retrying the case.  In so saying he was, in effect, distinguishing between an appeal in the strict sense and an appeal by way of hearing de novo. He said:

“Having regard to public disquiet about the possibility of miscarriages of justice in this class of case[7], some explanation of the jurisdiction of this court may be opportune. That jurisdiction is statutory: we can do no more than the Criminal Appeal Act 1968 authorises us to do. It does not authorise us to re-try cases. On matters of credibility this court will only interfere in three circumstances: first, if the jury has been misdirected as to how to assess the evidence; secondly, if there has been no direction at all when there should have been one; and thirdly, if on the whole of the evidence the jury must have taken a perverse view of a witness, but this is rare.”

45.  This decision has been applied in Hong Kong courts, by both the Court of Appeal[8], hearing criminal appeals in the strict sense, and by the Court of First Instance, determining magistracy appeals by way of rehearing.  In respect of the Court of First Instance it has been applied in appeals both pre- and post-Chou Shih Bin.[9]

46.  However that position may now have to be reviewed in the light of two other Court of Final Appeal decisions.  Although there is no decision by the Court of Final Appeal on the approach to be taken by an appellate court to a magistrate’s assessment of a witness’ credibility when conducting an appeal in the nature of a rehearing, this issue has been addressed by the court in respect of the rehearing conducted by the Court of Appeal in its civil jurisdiction.

47.  The nature of the rehearing conducted by the Court of Appeal in its civil jurisdiction and the nature of the rehearing of a Court of First Instance judge are, to all intents and purposes, the same.  They are both based on statutory provisions which allow each to admit fresh evidence and require each to determine for itself the merits of each party’s case.  In my view once it is determined that the nature of the appellate court’s role and duty are the same the fact that one is rehearing a civil as opposed to a criminal trial is irrelevant to the approach the appellate court should take to the findings of fact and assessments of credibility of the trial court.

48.  The civil appeal judgment of the Court of Final Appeal is the decision by Bokhary PJ in the Ting Kwok Keung case, which decision was adopted and applied by Ribeiro PJ in the criminal case of Egan.  In Ting Kwok Keung Bokhary PJ said at page 350 E – G:

“The question for the Court of Appeal is whether, even though it does not enjoy the advantages enjoyed by the trial judge who received the evidence at first-hand, it is nevertheless satisfied that his conclusion on the facts is plainly wrong. The Court of Appeal should intervene if so satisfied. But if not so satisfied, the Court of Appeal should defer to the trial judge’s conclusion even if in some doubt as to its correctness.”

49.  Even though this test enunciated by Bokhary PJ is a test to be applied by an intermediate appellate court conducting an appeal by way of rehearing, it was nevertheless adopted by Ribeiro PJ as the appropriate test to be applied by a final appellate court when not conducting a rehearing (his was an appeal from the District Court via the Court of Appeal) but, an appeal in the strict sense. The decision by Ribeiro PJ would appear to have impliedly overruled previous decisions by the Court of Appeal and the Court of First Instance following the Turnbull test and in so doing eliminated any distinction between an appeal by way of rehearing and an appeal in the strict sense when reviewing issues of fact and credibility.

50.  If, in applying the “plainly wrong” test laid down by Bokhary PJ in the Ting Kwok Keung case for civil appellate rehearings and adopted by Riberio PJ in the Egan case for criminal appeals, the appellate court concludes that the magistrate has erred, what should it do?

51.  In answering this question it is again necessary to have regard to the Raymond Chen case.  In addressing the second certified question in this case Litton NPJ said at page 743 [53]:

“The judge then, as it were, shed his appellate gown, took on a fact finding role, looked at all the evidence as appeared in the transcript and in effect re-convicted the defendant: solely on the basis of the transcript. This is simply impermissible.”

52.  This passage has given me considerable difficulty.  At first blush it appears to succinctly state what the Court of Final Appeal described in Chou Shih Bin is the nature of a rehearing.  But I believe assistance in understanding what was of concern to Litton NPJ can be gained from the joint judgment of Bokhary and Chan PPJ in the same case.  At page 731 [1] they said:

“Secondly, the way in which the High Court judge dealt with credibility on the transcript went beyond what is permissible in an appeal by way of rehearing.”

53.  This passage is a reminder that on a rehearing an appellate court is operating under the limitations I have described earlier and when it comes to forming its own view on the credibility of witnesses it must recognize those limitations which may, depending on the circumstances of the case, make it impermissible for the appellate court to form a view on credibility in substitution for the view of the magistrate.

54.  That this is what was of concern to Bokhary and Chan PJJ is made clear when one goes to the judgment under appeal.  The passage of the appellate judge that Litton NPJ quotes at paragraph 52 of his judgment is preceded by the sentence:

“But again supposing I am wrong in that judgment I have made, let me look at the case and disregard the findings on credibility that the magistrate made.”[10] (Emphasis added)

55.  In the circumstances of this particular case the Court of Final Appeal concluded that on a rehearing where the magistrate’s determinations of witness’ credibility were being challenged this was taking a step too far by the appellate court.

56.  Another situation would be in my view, the typical accomplice witness case, of which the present appeal is an example.  That is, a trial where the prosecution evidence consists solely of an accomplice witness whose character is clearly flawed and credibility highly suspect and there is little, if any, independent evidence to support his accusations.  Were the appellate court to find that the magistrate’s reasoning in his assessment of this witness was defective in some way rendering his assessment unreliable then it would be inappropriate for the appellate court to make its own assessment of such a witness just on the transcript.  The appeal would then have to be allowed with or without an order for retrial.

Conclusion

57.  Ultimately the appropriate response of the appellate court to an error made by the magistrate, be it legal or factual, may be that laid down by the Court of Final Appeal in the pre-Chou Shih Bin case of Chung Kwok Yin v I (2000) 3 HKCFAR 387 where in commenting on the absence in the Magistrates Ordinance Cap 227 of an equivalent to the proviso in section 83 of the Criminal Procedure Ordinance, Cap 221, said that the effect of the dispositive power in section 119(1)(d) of the Magistrates Ordinance imposed the duty on the appellate judge “to decide whether there has been in the Magistrates’ Court an error which makes it just that the appeal should be allowed and the conviction set aside.”[11]

Conducting the Rehearing

58.  There are two aspects of a rehearing which I wish to discuss as both of these aspects can have the effect of distracting the appellate court from its duty of conducting a rehearing and tempt it into discharging its appellate duty as though it was hearing an appeal in the strict sense.

The magistrate’s Statement of Findings

59.  Because the appeal is an appeal by way of rehearing rather than an appeal in the strict sense the question is raised of what, if any, relevance the magistrate’s Statement of Findings continues to have. First I should say that I am satisfied that the statutory scheme clearly contemplates that the appellate court when conducting the rehearing will and should have regard to the trial magistrate’s Statement of Findings.  So much is clear in my view from section 116(1) of the Magistrates Ordinance.

60.  However because the focus of the rehearing is the appellate court’s view of the law and the evidence, the finding of an error by the magistrate should not necessarily result in the appeal being allowed.  I say this because the duty of the court is not to determine whether error has been made and if so what the consequence of such error should be, as in an appeal in the strict sense, but rather whether any error that has been identified prevents the appeal court from performing its statutory duty of conducting a rehearing.  If it can conduct a rehearing then it should do so. If it cannot then it should allow the appeal, making such order or orders as seem to it, in the circumstances, to be just.  Likewise even if no error has been identified and no ground of appeal made out that is not the end of the matter.  The duty is on the appellate court to conduct a rehearing and that is what it must do for its ultimate duty is to determine whether it is satisfied beyond reasonable doubt of the guilt of the appellant.  Responding to the grounds of appeal is only an intermediate step in that process.

61.  However because of the comments of Litton NPJ in the Raymond Chen case greater caution must now be exercised before marginalizing the significance of the magistrate’s Statement of Findings or ignoring any identifiable error in them.

The relevance of grounds of appeal

62.  In I v Sherlock HCMA 73/2009 McMahon J at paragraph [7] expressed the view that in the light of Chou Shih Bin:

“…. It may well be that …. Grounds of appeal now serve little more purpose than to alert the appellate court and of course the respondent as to the areas of evidence or the aspects of the case which the appellant says were wrongly dealt with or analysed by the magistrate and which are particularly relevant to the re‑hearing on appeal.”

63.  I would go a little further and relate the purpose of grounds of appeal to the role of the appellate court.  As the appellate court is rehearing the case the appellant is, by his grounds of appeals, effectively asking the appellate court to depart from the determination of issues of fact and law made by the magistrate.  As to what are the consequences of the appellate court finding that a ground of appeal has been made out I have addressed earlier in this judgment.

64.  Consequently it seems to me that the grounds of appeal should not just focus on errors that the appellant complains the magistrate has made; it should also set out the arguments why, on the evidence or the law, it is said, the prosecution has not established the guilt of the appellant beyond reasonable doubt.  The appeal document should, therefore, contain elements of a Notice of Appeal for an appeal in the strict sense and a defence counsel’s trial final submission, but expressed only in the form of particulars of why it is said the prosecution has not proven the guilt of the appellant.  Though, again, I have to add the rider that my views are expressed with only a limited appreciation of the full import of the Court of Final Appeal’s decision in the Raymond Chen case.

Summary

65.  I would summarise the relevant legal principles as follows:

(1)  An appeal under section 113 of the Magistrates Ordinance is conducted by way of rehearing on the evidence before the trial court supplemented by such further evidence as the appellate court might admit under its statutory power to do so.

(2)  Each party bears their respective burdens – the appellant to uphold the appeal and the respondent to uphold the conviction – and the parties, subject to the overriding supervision of the Registrar, or ultimately the appellate judge, will determine the contents of the appeal bundle bearing in mind the burdens they have to discharge.

(3)  The magistrate’s Statement of Findings will form part of the appeal bundle.

(4)  The grounds of appeal will inform the appellate court of those areas where the appellant will seek to persuade the appellate court to depart from the magistrate on findings of fact or law when conducting the rehearing.

(5)  The appellate court will only depart from a magistrate’s finding of fact or determination of a witness’ credibility if satisfied that it is plainly wrong.

(6)  Error by the magistrate, especially an error constituting a material irregularity, may lead to the appellate court allowing the appeal and quashing the conviction.

(7)  The test in determining whether an error by the magistrate should lead to the appeal being allowed and the conviction quashed is whether it is just for such an order to be made.

(8)  Absent the appellate court identifying any error by the magistrate and absent any of the grounds of appeal succeeding, the appellate court must still perform its statutory duty of conducting a rehearing.  This requires the appellate court to be satisfied that on the evidence adduced by the prosecution the guilt of the appellant has been proven beyond reasonable doubt, failing which the appeal must be allowed.

The Grounds of Appeal

66.  The perfected grounds of appeal assert that the conviction of each appellant is unsafe because of failings in the magistrate’s Statement of Findings in four different respects.  They are:

(1)  a failure to deal with specific and detailed criticisms of the evidence in the case and in particular:

(a)  the veracity of PW3; and

(b)  the absence of evidence supporting PW3;

(2)  a failure to adequately evaluate the veracity of PW3;

(3)  an error in relation to certain records produced by PW2; and

(4)  a failure to adequately take into account the conduct of A1 which was inconsistent with him being a co-conspirator.

67.  Grounds 1 and 2 are effectively the same and Ground 3 was not pursued at the hearing of the appeal.  The submissions advanced in support of these grounds complained of a number of inadequacies in the magistrate’s Statement of Findings.  The inadequacies of which complaint is made are:

(1)  the treatment by the magistrate of the evidence in relation to the formation and execution of the conspiracy which, it is said, contained a number of inherent improbabilities in respect of the conversations which led to the conspiracy’s initiation and the lack of independent evidence of receipt of any money and PW3’s inability to explain many aspects of documents with which he should have been familiar;

(2)  the treatment by the magistrate of the evidence that statements of both the correct and inflated number of workers were found in A2’s house and the adverse inference that the magistrate drew from this piece of evidence;

(3)  the treatment by the magistrate of the evidence of A3 and his reasons for rejecting it;

(4)  the failure by the magistrate to take into account the fact that emails no longer existed and could not be produced;

(5)  the treatment by the magistrate of the undisputed fact that A1 provided worker figures to JHEL that were inconsistent with those provided by A2.  It is said that the magistrate’s discussion of this evidence suggests he may have misunderstood it and its significance to the defence case;

(6)  the treatment by the magistrate of the evidence of the conduct of PW3 and of the appellants in relation to each other in the lead-up to PW3 reporting A1 - A3;

(7)  the treatment by the magistrate of the records of interview of A1 and A2;

(8)  the treatment by the magistrate of the mistakes made by PW3 in the documents and of his inability to remember some matters.

68.  From the revised submissions it is clear that the attack of the appellant is still focussed on the way the magistrate treated the evidence of PW3 and his assessment of PW3’s credibility.  It is clear that the case depends almost entirely upon PW3.  If his evidence is accepted then there is sufficient evidence to justify the conviction of A1 - A3; conversely if his evidence is rejected there is insufficient evidence to justify their conviction.

69.  PW3 was by his own admission, a dishonest person who had been involved in fraudulent conduct.  He presented as a person with serious credibility issues surrounding him and the appellants say that should I find inadequacies in the magistrate’s treatment of him then it would be inappropriate for me to reach a view, only on the papers, of his credibility and reliability.  This explains why, notwithstanding that this is a rehearing, so much prominence is still given to the magistrate’s Statement of Findings and why the submissions on appeal concentrate upon a critical analysis of them.

70.  It is because the focus of the appeal is an attack on the magistrate’s Statement of Findings that Mr Bruce argues that should I be persuaded that the magistrate erred in any of the ways he asserts then the only proper appellate response is to quash the convictions.  Thus, Mr Bruce for the appellants says in his written submission:

“In the event that the court is persuaded that the analysis of the Magistrate is sufficiently flawed so as to come to the conclusion that all of the appellants should not have been convicted or, putting the matter another way that the court could not be satisfied beyond reasonable doubt that the convictions were justified then the appeals must be allowed. The notion that, in the circumstances, the High Court, treating the matter as a re‑hearing on paper, could say that PW3 was sufficiently credible to persuade the court to the correct standard that the appeal should be dismissed is unsupportable. PW3, was at the heart of the conspiracy. In many respects he was its prime mover and each and every document produced in the case depended on him for its life and meaning as a document produced in furtherance of the conspiracy.”

The Magistrate’s Statement of Findings

71.  Before I address the particular complaints of the appellants I wish to give an overview of the Statement of Findings of the magistrate.  It is no ordinary Statement of Findings.  It runs to twenty-three typewritten pages containing one hundred paragraphs, much of which are concerned with PW3 and his evidence in one way or another.

72.  He introduces PW3 with these comments at paragraph 28:

“Other than PW1 and PW2, in fact the prosecution case rests mainly on the evidence of PW3, and the evidence of PW3 requires special care in this case. It is true that PW3 had pleaded guilty, and he had admitted that he had overstated the wages of workers. However, that does not imply that there must be a conspiracy among D1 - 3 and PW3.”

73.  These comments very much set the tenor of the magistrate’s treatment of the evidence of PW3 that followed.  The magistrate carefully sets out all the various complaints about PW3 from his being an accomplice, his admitted dishonest conduct, the unreliability of his evidence and, under the heading of demeanour his alleged casual and insincere attitude to the proceeding.  This latter attack upon PW3 is a reference to the many adjournments and interruption to the trial caused by PW3’s personal matters.  This included the frequent need for PW3 to take long breaks or pauses before answering questions.  The magistrate addressed this issue and concluded PW3’s conduct did not manifest any lack of sincerity, disrespect for the proceedings or unwillingness to take his evidence seriously.

74.  The magistrate addressed the issue of PW3’s dishonesty and status as an accomplice witness but nevertheless concluded that when PW3 decided to reveal everything to PW1 “he was mentally prepared to bear the responsibility”.  After considering the appellants’ submission the magistrate gave his reasons for concluding that PW3 had been frank in implicating himself and that he had not shrunk from fully revealing his own criminal conduct.  Recognizing that there might have been many motivations operating on PW3’s mind, including being worried about the prospect of the appellants putting the blame on him, the magistrate nevertheless concluded that this was not inconsistent with him also being motivated by a guilty conscience.  The magistrate felt that what PW3 did took a lot of courage and notwithstanding the attacks made upon his character by the appellants he was clearly impressed by him as a witness.

75.  After canvassing all the complaints advanced by the appellants against PW3 the magistrate concluded:

“After considering all the evidence including the documentary evidence, I found that on matters material to the offence charged, PW3 has been accurate, clear and consistent and credible and supported by other evidence …. I therefore found that PW3 was honest and reliable and is telling the truth.”

76.  The magistrate also made it clear that he had considered all the points made by defence counsel in his final written and oral submissions and that after having done so he was still sure that there were no material and significant discrepancies, improbabilities or omissions in the evidence which caused him to doubt his findings.

Discussion

77.  One of the major planks in the appellants’ attack upon the magistrate’s Statement of Findings is his consideration and treatment of PW3’s evidence as to how the conspiracy was formed.  The assertion is that PW3’s evidence on this issue is simply implausible and the magistrate’s inadequate treatment of his evidence on this issue impacted upon his assessment of PW3’s credibility.  The implausibility of the way the conspiracy was formed is, it is further said, linked with PW3’s inability to explain many of the documents which, had there been a conspiracy as claimed, he should have known about.

78.  The implausibility, it is said, flows from the fact that there was no apparent planning to the conspiracy, with it just emanating from an off‑the-cuff remark by A1.  Normal people, it is submitted, do not agree to become criminals in this way and do not embark upon a criminal enterprise without further discussion of it, including how it will be carried out and the allocation of roles and responsibilities for its implementation.  At trial the magistrate analysed the evidence and concluded that the very nature of the conspiracy precluded any detailed preparation of it.  Once agreement in principle was reached then implementing it would be done reactively, rather than proactively, in response to the changing daily circumstances at the site.  He said at paragraph 59:

“…. so it was not surprised that there was no discussion about how many workers were to be inflated or any proper planning at all because everything would depend on how many workers they had recruited from time to time and also the progress of the work so as to consider how many workers they could inflate from time to time.”

79.  Like the magistrate, I do not find anything particularly implausible about the way PW3 says the conspiracy was formed.  There is no inflexible rule as to how criminal conspiracies come into being.  Here it had its origins in A1 recognizing what was obvious – namely that the circumstances surrounding the reporting of workers to JHEL allowed for the opportunity to make some extra money on the side.  It was motivated by greed and fuelled by opportunity.

80.  It is not unusual in the circumstance of this conspiracy that it should have its origins in statements which are deliberately vague.  PW3 was not well known to A1 and in such a situation the maker of a criminal suggestion may not know how the person hearing it will receive it so he deliberately leaves it vague to see what kind of response he gets.  The statement is left to germinate in the mind of the receiver of it but the maker of the statement or others associated with him may advance the proposal by further statements along the same lines.  In this way a proposal is put forward, considered by the potential co-conspirators and finally an agreement may be reached, at which time the offence of conspiracy is committed.  Here A1 made the suggestion to PW3 who discussed it with A2 who lent his encouragement to it.  It was then left to PW3 to work out how it should be implemented.

81.  Another major plank in the appellants’ attack upon the implausibility of PW3’s evidence was the failure by A1 to submit to PW1 records of workers matching those submitted by A2 and PW3.  This is also the major plank of the 4^th ground of appeal.  Again the magistrate anlaysed the evidence and concluded there were reasonable explanations for this.  Likewise in respect of other claimed anomalies in the documents, and PW3’s evidence about them, including the inability to retrieve emails from the computers of PW3 and the appellants.

82.  There is no doubt that the magistrate was aware of the significance of PW3’s evidence and of the caution with which it needed to be approached.  He was also fully aware of the obligation on him to give proper reasons for the findings of fact he made and for any view he might reach on the credibility of PW3.  These reasons would have to contain an analysis of the evidence and a resolution of significant inconsistencies and conflicts in the evidence.  That the magistrate has done.

83.  It is true that there are matters the magistrate has not specifically addressed.  But that is not to say that he has not considered them.  One must be careful in not imposing too heavy a burden on magistrates and if they say that they have had regard to all the matters submitted to them and taken those matters into account before reaching their view on the credibility of witnesses and making findings of fact then, absent an indication to the contrary, one must assume that that is what they have done.

84.  I can find nothing evidencing any inadequacy or insufficiency in the reasons or a failure by the magistrate to properly perform the duty that the law requires of him.  Nor can I find any error by the magistrate in his treatment of the evidence and in his resolution of any inconsistencies or conflicts in it.

85.  But this is a rehearing and I must review the evidence to see that it satisfies me beyond reasonable doubt of the guilt of the appellants.  For this purpose I am not reviewing the whole of the evidence but only that much of it as the parties have placed before me.  In reviewing that evidence I pay particular regard to the alleged insufficiencies and inadequacies in regard to it that are asserted by the appellants in their perfected grounds of appeal and their counsel’s written and oral submissions.

86.  Firstly in respect of PW3 I should say that having carefully considered the magistrate’s findings and reasons in respect of PW3’s demeanour I can find no reason to fault them.  I accept that PW3 impressed the magistrate as an honest and truthful witness.  If I am to depart from the magistrate on the credibility and reliability of PW3’s evidence it will have to be on the inherent implausibility of his evidence.

87.  After reading the evidence of PW3 I found myself, like the magistrate, viewing him as a person trying to be helpful and trying to recollect events as well as he could.  He was conscious of the need to answer questions accurately and if he could not do this he would say so.  He did have trouble remembering what was said or done on certain occasions, and the sequence of events but I did not gain the impression that he was prevaricating or being deliberately evasive or unhelpful.  The confusion he at times displayed also did not convey the impression of a person deliberately lying but rather as a person who had difficulty remembering all the fine detail.

88.  Much was made in cross-examination of apparent mistakes or contradictions in the records – even the records which were kept as an accurate reflection of the number and identity of workers on a particular day.  It is clear that mistakes were made by PW3 but this does not necessarily mean that he was lying.  That a conspiracy is poorly executed does not mean that no conspiracy existed.

89.  From the transcript PW3 impressed me as a tradesman who was not particularly bright and who was not comfortable with paperwork and record-keeping and not particularly good at it.  This is evident from the fact that he was limited in his computer skills and had to rely on his wife to assist him.  He was, perhaps, an inappropriate person to carry out a fraud which was based almost entirely upon the falsification of records and the keeping of two sets of records.  As a ghost worker fraud this was, conceptually, a simple enough and straightforward fraud.  But in its implementation it was quite a complex fraud.  I believe that a more likely explanation for the problems that bedeviled it is that PW3 is a person of limited administrative abilities who was simply out of his depth in performing the various tasks required of him in order to carry out a fraud of this nature.

90.  As regards A1, perhaps the strongest evidence against him is that this conspiracy depended for its success on A1 being a party to it.  Without his involvement it was doomed to failure.  He was JHEL’s representative on the site and one of his responsibilities was to check the figures presented to JHEL by A2 for the calculation of the wages it owed.  Persons do not embark upon a criminal enterprise unless they are confident that it can be carried out successfully and in this case this means without JHEL becoming aware that it was being provided with false figures.  Even if A1 was known to be overworked or lazy or for whatever reason not overly diligent in checking the worker figures, person’s contemplating criminal conduct would never just assume this state of affairs would continue or that A1 would never be a threat to them. Given A1’s work responsibilities for JHEL he had to be compromised in order for the conspiracy to succeed.

91.  The fact that A1 at times passed the wrong figures to JHEL does not mean that he was not a member of the conspiracy.  When tasked about the wrong figure his responses on two occasions were to disavow his own figures and lend his support to those created by PW3 and presented by A2.  Had he not been a co-conspirator one would have expected him to respond differently.  Once alerted to the anomaly he should have realised something was not right and delved further.  His responses were in fact consistent with someone who was a member of the conspiracy.

92.  I have read the evidence presented to me and have done so bearing in mind the various attacks made upon it by the appellants.  I can find no reason to depart from the magistrate’s assessment of the credibility of PW3 and no reason not to rely on his evidence.  Giving that evidence full weight I am satisfied beyond reasonable doubt of the guilt of each of the appellants and therefore dismiss their appeals and confirm the magistrate’s decision.