HKSAR v. LAI KAM YEE TERESA

[English Translation - 英譯本]
CACC 120/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 120 OF 2009

(ON APPEAL FROM DCCC NO. 655 OF 2008)

-----------------

-----------------

JUDGMENT

Hon Cheung JA (giving the judgment of the Court):

1. The Applicant was charged with one count of “Dealing with property known or believed to represent proceeds of an indictable offence”, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap. 455. After a trial before Deputy District Judge A. Wong (as he then was), the Applicant was convicted of the offence and sentenced to 2 years and 3 months imprisonment. She applies for leave to appeal against the conviction and the sentence.

The facts

2. The Applicant is a 40-year-old woman and her former husband is Fok Chi Ho (transliteration).

3. On 19 April 2007, the Hong Kong Police Force was informed that Fok was arrested by Shenzhen Public Security Bureau for trafficking in dangerous drugs. On the same day, the Hong Kong Police Force went to the Applicant’s residence to conduct investigations.

4. The Applicant had three bank accounts with the following banks:

(1) Hongkong and Shanghai Banking Corporation (an individual account) (Account A);

(2) Hongkong and Shanghai Banking Corporation (a joint account in the names of the Applicant and her son) (Account B);

(3) Bank of China (an individual account) (Account C).

5. On 16 April 2007, a sum of HK$2,500,000 was deposited into Account A. The Applicant admitted to the police that this sum was deposited by Fok.

6. On 17 April 2007, the Applicant withdrew HK$300,000 and US$120,000 from Account A.

7. On 18 April 2007, the Applicant withdrew HK$20,000 from Account A.

8. On 19 April 2007, the Applicant withdrew HK$800,000 from Account A. Pursuant to Fok’s instructions, the Applicant gave HK$800,000 and US$120,000 to Fok’s mother, and handed HK$300,000 to a male foreigner. She also brought HK$20,000 to Shenzhen for Fok.

9. The particulars of the offence are that between 1 January 2005 and 19 April 2007, the Applicant dealt with a total of HK$4,205,925.30 through her three bank accounts. The Prosecution alleged that within the period of 28 months specified in the charge and in addition to the HK$2,500,000 mentioned in paragraph 5, other deposits in the total sum of HK$2,626,900.53 were paid into her three bank accounts respectively. During this period, withdrawals amounting to HK$2,178,959.95 were made. Excluding the Applicant’s salaries, loans and money she obtained from other sources during the period, for which explanations had been offered, a total of HK$1,705,925.30 was paid into her bank accounts. This sum and the aforesaid HK$2,500,000.00 constitute the basis of the present charge.

10. Since the Applicant was investigated by the police, she made 9 records of interview to the police to explain the sources of the deposits into her accounts and the whereabouts of the withdrawals. She said all monies were connected with Fok and she only acted upon his instructions to deal with the monies. She had no idea that the monies represented proceeds of Fok’s illegal activities.

The Applicant's defence

11. The Applicant gave evidence in her own defence and called a witness. She said she got married with Fok in Canada in 1989 and settled there after their marriage. They got divorced in 1993 and the Applicant returned to work in Hong Kong in 1994. In 1996, the Applicant went back to Canada to help Fok with his restaurant business. Their son was born in 1997.

12. In 1998, Fok closed his restaurant business and the Applicant then returned to work in Hong Kong. Later Fok also returned to Hong Kong but they lived separately. Their son was looked after by Fok. The Applicant brought the son back to her home in 1999 to take care of him. Between 1999 and 2005, Fok returned to Canada again to run his restaurant business. In early 2005, the Applicant knew that Fok had come back to Hong Kong. Though they did not live together, they met at least twice a month as the Applicant wanted Fok to see his son.

13. The Applicant claimed that she did not know what Fok did for a living after his return to Hong Kong, except that she heard that he was engaged in investment business. The Applicant said that as Fok had to travel frequently to and fro Shenzhen, Macau and Hong Kong, she had to bring her son to different places to meet Fok. She witnessed Fok winning HK$600,000 in a Macau casino and heard him making money from soccer gambling.

14. In October 2005, the Applicant demanded that Fok should take up his responsibility as a father and assist her to buy a residential property for her and her son. Fok agreed to it. The Applicant bought a residential property worth about HK$2,100,000. Fok only agreed to pay 5% of the property price. The Applicant bought the property with the money Fok gave her and the mortgage loan she obtained from a bank. The monthly installment was HK$13,800. In 2005 and 2006, in an attempt to increase her odds of getting a property mortgage loan from the bank, she made a few substantial deposits into the account in order to increase the credit balance in her bank account. Later, the Applicant wanted to buy another property. But she was unable to complete the transaction and suffered the loss of a down payment of HK$200,000. During the period, Fok occasionally gave the Applicant HK$10,000 to HK$20,000 as household expenses.

15. The Applicant alleged that Fok started doing his own business when he was still a student. He had borrowed large sums of money from the Applicant and her relatives. The loans remained outstanding up to the present. In 1996, Fok put forward the proposal of running a restaurant in Canada. The Applicant and her family raised a capital of HK$1,000,000 in total and loaned it to Fok. However the restaurant was closed down in 1997. In 2003, Fok became the shareholder of three restaurants in Canada.

16. The Applicant emphasized in her evidence that she did not know the amounts were connected with illegal activities and she did not know that Fok had been arrested until the police went up to her premises. The Applicant admitted that most of the cash she withdrew from the bank accounts was handed over to Fok. In other words a substantial part of the deposits went eventually to Fok. As for the transfers, some were made to the account of the Applicant’s mother, some were to the personal accounts of the Applicant, and a few were made to the cousin of Fok and his current girlfriend. As for the majority of the remaining transfers, the payees of which remained unknown.

Legal principles

17. Neither the Prosecution nor the Defence disputed the legal principles relating to the charge. The Applicant’s acts in dealing with the monies clearly fulfilled the actus rea of “dealing” as alleged in the charge. The crux of the matter was the “mens rea”of the charge. It is stated therein that the Applicant “knew or had reasonable grounds to believe” that the monies in question represented proceeds of an indictable offence. In proving the charge, the prosecution did not have to prove that the property in question was in fact the proceeds of an indictable offence. See: Oei Hengky Wiryo v. HKSAR (No. 2) [2007] 1 HKLRD 568. The Prosecution in the present case did not adduce any evidence in this regard. As for the mens rea, the Prosecution’s case was not that the Applicant “knew” that the property was the proceeds of an indictable offence, but that the Applicant had “reasonable grounds to believe” the property to be the proceeds of an indictable offence.

18. When the court determines whether a defendant has the “reasonable grounds to believe”, it has to take into account two factors. The first factor is an objective one, namely whether a reasonable person with common sense and in his right thinking (“a reasonable man”) will think that the circumstances suffice to cause him to believe that the money is the proceeds of an indictable offence. The second factor is a subjective one, namely whether the defendant knows the existence of those circumstances that will cause him to believe that the money is the proceeds of an indictable offence.

19. If the Prosecution can prove the above two factors, the court is entitled to find that the defendant has the requisite mens rea for the charge. The Prosecution does not have to prove that the defendant “actually believes” that the money involved represents the proceeds of an indictable offence. See HKSAR v. Ma Hu Jiang [2007] 4 HKLRD 285. The court described the legal provision as “harsh”.

Reasons of findings

20. Deputy Judge Wong found the Applicant guilty of the charge for the following reasons:

(1) The Applicant dealt with Fok’s money transactions through her own personal bank accounts. Under the circumstances, why did Fok not open his own personal bank account? Any normal person in this contemporary world who needs to deal with a lot of money transactions and chooses not to open a bank account though he is in business, the reason must be to conceal his money transactions and how much money he has. A reasonable man will surely believe that the monies are the proceeds of an indictable offence.

(2) It will be highly unconvincing to suggest that the reason for not opening a bank account is due to the type of business involved, such as a restaurant business requiring its transactions to be settled in cash or the avoidance of debt collection by banks.

(3) The lending of blank cheques by the Applicant for Fok’s use would also cause a reasonable man to believe that the monies relating to the cheques were proceeds of an indictable offence.

(4) The Applicant claimed that she deposited large sums of money into the account to facilitate her loan application when she was buying a property. Her claim was unbelievable because the sums of money were withdrawn within a short of period which contradicted her purpose of making the deposits.

(5) The Applicant dealt with the monies in an irregular way. She neither withdrew cash in one go nor withdrew at the upper limit allowed for a single transaction. This showed that the reason why she had to make numerous withdrawals was not because of the regulatory restrictions imposed on her. Moreover, if the monies were simply to be handed back to Fok, why should she make the withdrawals and transfers in such a circuitous way?

(6) If a reasonable man believes that Fok has no bank account of his own, he will surely have reason to believe that the monies dealt with by the Applicant were proceeds of an indictable offence. If a reasonable man does not think that Fok has no bank account, then the reason why Fok did not use his own account to deal with the monies will lead the reasonable man to have reason to believe that Fok was trying to conceal the proceeds of an indictable offence. Deputy Judge Wong found that the fact that the Applicant followed Fok’s instructions to remit money to his ex-employee in August 2005 showed that she at that moment already had the belief that Fok lacked a bank account.

(7) Though the Applicant said that Fok was “poor one moment, rich the next” and that he would go his own way and behave unexpectedly, the obscure ways in which she dealt with large sums of money and the great risks that she took would lead a reasonable man to have the above belief. Even if Fok often had ups and downs in his finances, it would not stop a reasonable man from having some doubts on the way he made money.  

(8) Given the Applicant’s academic qualifications, experience and her relationship with Fok, she knew and realized that the amounts involved were proceeds of an indictable offence.

Grounds of appeal

Evidence of the Defence Witness

21. One of the amended grounds of appeal was that Deputy Judge Wong failed to consider the evidence of the first defence witness.

22. That witness was the younger sister of Fok who said in her testimony that Fok showed an interest in doing business since he was young and was so heavily in debts that he had to ask others to repay the debts for him. From 1996 to 1999, he borrowed money from his family members and he owed others HK$200,000. His indebtedness caused his family to be disturbed by a debt-collecting company. The Defence Witness said that in the early days Fok had a bank account in Canada but it was later cancelled. Transactions in his restaurant business were mostly settled in cash. In 2003 Fok invited his family members to a sightseeing trip in Canada and paid for all the expenses. He was then running three restaurants in Canada and appeared to lead an affluent life. In January 2003, Fok repaid HK$50,000 to her. But he later requested her to do shopping for him with the money and said that he would repay her in the future. In the same year, a sum of HK$201,000 was deposited into the bank account of the Defence Witness. She withdrew this sum of money and handed it to Fok. In February the same year, a sum of HK$260,000 was remitted into her account and Fok went to the bank with her to withdraw this sum of money. Fok told her that it was the capital for the restaurant and was remitted to him by his business partner. Later when Fok’s restaurant business faced a downturn, he borrowed money from his family. In November 2004, the Defence Witness and his elder brother remitted HK$160,000 to Fok. Meanwhile the Applicant also deposited HK$130,000 into the bank account of the Defence Witness and requested her to remit the money to Fok.  Later Fok frequently borrowed small amounts of money from his family. Fok owed his mother as much as HK$300,000. Since 2005, Fok only occasionally borrowed a few thousand dollars from his family. In 2007, his family made repayments to financial companies for him. Her mother repaid HK$110,000 for him this year.

23. Mr. Joseph Tse S.C. leading Mr. Osmond Lam represented the Applicant and they submitted that when the court considered the belief of a reasonable man, it should at the same time take into account the evidence of the Defence Witness. The Applicant’s Counsel submitted that the status and evidence of this witness was similar to that of the Applicant; both were not clear about Fok’s affairs. She said in her evidence that she had dealt with two large sums of money for Fok through her own bank accounts in Hong Kong. She knew that Fok had in early years set up a bank account in Canada but it was later cancelled. She also knew that the transactions of his restaurant business were settled mostly in cash and stated that she had no reason to suspect that Fok had cheated her or that he had been involved in illegal activities. The Applicant’s Counsel submitted that Deputy Judge Wong did not cite the evidence of this witness in his analysis of the evidence when determining the case.

24. When a reasonable man considers the belief in question, the Defence Witness’s and the Applicant’s similar evidence in this regard should surely be taken into account. But be that as it may, this Court does not consider that it is a sufficient ground of appeal. The reason is that the crux of the matter hinged on the frequent deposits and withdrawals of large sums of money into and from the Applicant’s accounts since April 2005. The irregular transactions were different from what occurred in 2003 when the Defence Witness allowed Fok to use her bank account.  A reasonable man could rely on the transactions after 2005 to determine the mens rea in question.

Applicant's records of interview

25. In addition, the Applicant argued that Deputy Judge Wong had not dealt with the evidence she gave in the 9^th Record of Interview where she claimed that she had helped Fok to deal with his monies in the 1990’s.

26. The Applicant alleged in her 9^th Record of Interview that since the 1990’s (i.e. between 1996 and 1998), she knew that Fok began to engage in business. She had started to help him to deal with his monies since then. Therefore when Fok asked her to deal with the amounts in the present case between 2005 and 2007, she did not notice anything wrong.

27. This Court does not consider that it is a valid ground of appeal either. The way that the Applicant helped Fok to deal with his monies included signing blank cheques for him in advance. But she admitted that in the 1990’s she never handed large sums of cash to strangers nor sent large amounts of remittance to strangers in other countries. She admitted that in between 2005 and 2007, she acted in accordance with Fok’s instructions to hand large sums of cash to strangers, to make out cheques for him in advance and to send remittances on numerous occasions to foreign countries to people unknown to her. She thought the amounts involved came from “capital raising, loans from friends, investments or gambling” by Fok. She never asked Fok why so much money was deposited into her accounts and why she had to help him to deal with the amounts until the aforesaid HK$2,500,000 was deposited into her bank accounts. She then questioned Fok why he had such a large amount of money, but Fok told her that it was his own money. She did not pursue the matter and thought it was money he obtained from “capital raising, loans, investments or gambling”.

28. When the Applicant gave evidence, she did not reiterate the point that she had helped Fok to deal with his monies since the 1990’s, and so when Fok asked her to help him to deal with his monies in 2005 to 2007, she did not find that there was anything wrong with what he said. It is not necessary for this Court to discuss whether this claim by the Applicant in her Record of Interview was admissible evidence or not because even if it was accepted and taken into account, it would not affect the safety of the conviction. As said above, the Applicant admitted in that Record of Interview of hers that the amounts that she had dealt with in the past were not as much as HK$4,200,000 that she dealt with between 2005 and 2007, and the number of deposits and withdrawals made was not so numerous either.

Gambling gains

29. Moreover, the Applicant’s Counsel submitted that Deputy Judge Wong had erred when he refused to accept the Applicant’s evidence that she had seen Fok winning HK$600,000 in a Macau casino. This evidence was not disputed by the Prosecution at trial and the Prosecution did not cross-examine the Applicant on this either. This Court thinks that the conviction would not be rendered less safe by it because it only served to prove that Fok had occasionally won large sums of money. But it could not explain why he had to make use of the Applicant’s accounts to deal with the money in such a circuitous way.

Facts as a whole

30. Taking the facts in the case as a whole, this Court considers that Deputy Judge Wong made the right inference. We consider that the strongest evidence in the case that would lead a reasonable man to conclude that the amounts in question were the proceeds of an indictable offence, and that would lead the Applicant to have such belief, was the irregular money transactions in her three bank accounts in that large sums of money were frequently deposited into or withdrawn from those accounts. The Applicant allowed Fok to make use of her three bank accounts to deal with his money transactions without even asking why. Within the relevant period, roughly a total of 70 transactions took place in Account A where a total of HK$4,200,000 was deposited into account A in cash, by cheques or ATM transfers. More than half of this amount was withdrawn in cash. During the aforesaid period, roughly 30 deposits were made into Account B, totaling HK$310,000, and then roughly 50 withdrawals were made to withdraw more than HK$280,000 of this amount. Most of the deposits and withdrawals were made in cash. As for Account C, more than HK$700,000 was deposited into the account and 90% of which was cash deposit. The majority part of this amount was withdrawn by cash cheques or transfers. Frequent deposits of large amounts of money, making deposits and withdrawals in a circuitous way, and regularly making deposits and withdrawals in cash were not normal business practices. There is a world of difference in what the Applicant and the Defence Witness did in the early years to help Fok to deal with the money transactions of his restaurant business and what was done to deal with the money over those 28 months. This Court also considers that the way she dealt with the HK$2,500,000, namely to hand HK$300,000 in cash to a stranger, was utterly against common sense. To do so would be troublesome, risky, and far from open and aboveboard. Furthermore, it was unreasonable, troublesome and risky for her to hand HK$800,000 and US$120,000 to Fok’s mother. The way she dealt with the amounts on both occasions seemed mysterious.

31. This Court is of the view that the above evidence would lead a reasonable man to believe that the amounts involved were proceeds of an indictable offence. The Applicant dealt with the transactions in person, so the circumstances involved would cause her to believe that the amounts were proceeds of an indictable offence. She was merely refusing to accept the reality when she denied her knowledge.

32. For the aforesaid reasons, this Court refuses her application for leave to appeal against conviction.

Appeal against sentence

33. Deputy Judge Wong took 3 years imprisonment as the sentencing starting point. Having considered the Applicant’s personal background and other facts such as that she was a first offender and that she had been troubled by the offence for 2 years, Deputy Judge Wong gave her a discount of 9 months. She was eventually sentenced to 2 years and 3 months.

34. After the appeal hearing, this Court allows the Applicant’s application for leave to appeal against her sentence. Taking this application as the formal appeal, this Court orders the immediate release of the Applicant. The difference between the present case and an ordinary case of dealing with property that represents the proceeds of an indictable offence is that, as Deputy Judge Wong agreed, there was no evidence in the present case to suggest that the Applicant made a profit by dealing with the monies in question. Deputy Judge Wong thought that the Applicant agreed to deal with the monies mainly because of her relationship with Fok. She did so to protect the interests of their 12-year-old son. Deputy Judge Wong also accepted that although the Applicant used a small portion of the money deposited into her accounts for her own purpose and towards the purchase of a residential property, she did not do so with the intention to make a profit. The emphasis was on Fok’s responsibility to provide for the Applicant and their son, he being her ex-husband and the father of the son. The Applicant did not go through complicated procedures to deal with the remittances on her own accord. She merely acted upon Fok’s instructions. Deputy Judge Wong thought that this offence was an isolated incident and that the Applicant had acted out of her character.

35. In view of the special circumstances in the present case, this Court considers that the Applicant should be given a higher discount in terms of her sentence.

36. Moreover, another mitigation factor that will allow this Court to give her a further discount is that although the Applicant did not plead guilty to the charge, she co-operated fully with the police since the police took over the case. When the police asked her to provide information, she immediately provided them with information and gave a total of 9 Records of Interviews to the police. In fact, the evidence that the Prosecution adduced against the Applicant came mostly from the information she had given to the police, and such information also formed the basis for the court’s determination on her mens rea.

37. In view of the special circumstances in the present case, this Court considers that the appropriate sentence should be imprisonment for about a year. On the day of hearing, the Applicant has served about 9 months imprisonment, and she is entitled to remission of sentence on the basis that she has behaved properly. In other words, she has served the 12 months term and this Court orders her immediate release accordingly.