HKSAR v. NG SHUK HA, STONEY

HCMA 1229/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 1229 OF 2005

(ON APPEAL FROM ESCC 3648/2004)

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J U D G M E N T

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1.  The appellant was convicted after a two-day trial in the magistracy of a single offence of conspiracy to defraud.  Two witnesses, the two co-conspirators named in the charge, testified on behalf of the prosecution.  The first of these witnesses testified under an immunity from prosecution.  The second witness had previously been the second accused on the charge faced by the appellant:  he had pleaded guilty to that charge shortly before the commencement of the appellant’s trial and then gave evidence against her.

2.  Banking records were produced, by way of admitted facts.

3.  No complaint is made concerning the magistrate’s summary of the nature of the allegations made against the appellant.  It reads

5. The prosecution case, put very shortly, was that in 1999 the appellant and PW1 became acquainted through PW1 being a customer of a business called Pro Nail, which business was operated by the appellant.

6. Aside from running that business the appellant was also one of a number of senior distributors for a multi-layer marketing company called Lampe Berger (L.B.).  L.B. sold perfumes and similar products.  Senior distributors recruited junior distributors to act as sales agents.  The junior distributors bought product from the senior distributors for sale to the public or anyone they could recruit to L.B.

7. The structure of the company was such that senior distributors received commissions on the sales made to their junior distributors and the junior distributors made commissions on sales they made to the public or any distributors they recruited.

8. The more senior in the company structure one was the more money one earned.  The way to progress from being a junior distributor was to buy $64,000 worth of product from a senior distributor and thereby be given the rank of “Earl” and earn higher commission on product subsequently sold.  The senior distributor would also financially benefit from sales made by their junior distributors and “Earls”.

9. The appellant recruited her acquaintance, PW1, to be a junior distributor in September 2000 and then in November 2000 persuaded PW1 to attain the rank of “Earl” by buying $64,000 worth of product, which product was said to have been discounted from $80,000.

10. PW1 did not have the means to make such a purchase and told the appellant so.  The appellant responded by sending PW1 out with one of the appellant’s colleague’s, D2, to try and raise loans from a financial institution to enable PW1 to make the $64,000 purchase.

11. This attempt failed as PW1 had been unable to produce evidence of employment or income.  Upon PW1 telling the appellant of this the appellant said she would prepare a letter for PW1 to produce to financial institutions she approached for loans.  The letter would be from the appellant’s company Pro Nail and would falsely claim PW1 to be an employee of Pro Nail earning $9,000 per month.  Such a letter was handed to PW1 by the appellant in the presence of D2.

12. The appellant also instructed PW1 to open a saving account into which the appellant would pay the “salary”.

13. Such fabricated “salary” payments were made to PW1’s savings account by the appellant and PW1 later presented the Pro Nail employment letter and the supporting savings bank record to two finance companies PW1 went to in the company of D2 and loans were made to PW1 on the basis of this false and contrived documentation.

14. Upon the setting up of the savings account for the “salary” to go into, a mechanism was also arranged whereby the sums paid in “salary” very soon were repaid to the appellant.  These movements of money between the appellant and PW1 and back again are shown in the Admitted Facts, exhibits P.13, and the Bankers Affirmations exhibits P.11 and P.12.

4.  This is the factual basis upon which the magistrate eventually convicted the appellant.

5.  The appellant elected not to give evidence at trial but called two witnesses.  The first was an insurance agent who had enjoyed business dealings with the appellant over the years from which she, the witness, had benefited financially.  The magistrate rejected her evidence.  The evidence of the second witness was of passing relevance:  he was a representative of the company Lampe Berger.

6.  The magistrate indicated in his economical oral reasons given at the conclusion of the trial that he convicted the appellant after accepting the evidence of the two prosecution witnesses as well as the evidence of the banking transactions and rejecting the evidence of, specifically, the first defence witness.  In his subsequent, equally terse, statement of findings the magistrate essentially adopted what he had said previously.

7.  The grounds of appeal are threefold:

1. The Learned magistrate when convicting the appellant had failed to give adequate reasons.

2. When disbelieving the evidence of DW1 and believing the evidence of PW1, the Learned magistrate failed to give reasons for so doing.

3. The Learned magistrate failed to evaluate and account for the discrepancies between the evidence of PW1 and PW2 to which had been raised in the defence closing submission, namely, the number of letters handed to PW1 by the appellant and where did the appellant took out the letters. (sic)

8.  The first ground is misconceived.  The learned magistrate gave perfectly adequate reasons for convicting the appellant, namely that he had accepted the prosecution evidence and was satisfied that it established the essential elements of the offence.

9.  The second and third grounds essentially raise the same point - the sufficiency of the reasons given by the magistrate.  I have been referred to the decisions in three previous magistracy appeals HKSAR v SIN Chi Yin [1999] 2 HKC 403; HKSAR v LEE Siu Wo [2002] 3 HKLRD 283; HKSAR v CHAN Max Kwok Leung and Another HCMA1101/2005 (unreported).

10.  It is worth observing that in SIN Chi Yin the appellate judge found that the magistrate had failed to address himself on “... a vital question of law - in this case the quality of the identification evidence...”; in LEE Siu Wo it seems that all that the magistrate said in convicting that appellant was “... simply that the prosecution had proved its case... beyond a reasonable doubt.  Therefore he is guilty...”; in CHAN, Max Kwok Leung the appellate judge took the view that the magistrate had erred in adopting what she referred to as a “broad brush approach”:  Each of these three matters is distinguishable from this appeal.

11.  In respect of the second ground of appeal, Mr Tze who appears in this appeal, but not in the court below, says that the magistrate should have done more other than say that he simply did not believe the first defence witness.  I have had the benefit of a full transcript of the proceedings.  Her evidence related to a discrete issue, namely whether or not PW1 was an employee of Pro Nail as asserted in the letter which PW1 used to secure financing. 

12.  PW1 had been cross-examined at length by the appellant’s leading counsel during trial but had firmly stood her ground which was to the effect that at no stage had she been an employee of Pro Nail.  She accepted that she had completed and signed a form (Exhibit D1) which had the effect of enrolling her in an insurance scheme which provided her with certain medical scheme benefits.  That enrolment form indicates that the policyholder is Pro Nail.  During her evidence PW1 testified that insofar as she was concerned this was a benefit which she was receiving as a result of her involvement with Lampe Berger however that might have been expressed.

13.  The evidence of the first defence witness was to the contrary:  she said that she had seen PW1 providing beauty services in the premises occupied by Pro Nail on “two or three” occasions prior to the signature of the enrolment form.  In cross-examination she accepted that she had interviewed “four or five hundred” people in respect of the issue of insurance policies over the intervening period yet this particular incident stuck in her memory.  Her evidence, both in chief and in cross-examination, occupied only a matter of minutes.

14.  This was a matter in which cross-examining counsel could do little other than to put to the witness that she was being dishonest in the evidence and was colouring the evidence to favour a particular party.  Obviously, the witness denied this. 

15.  It is necessary for a magistrate to look at the evidence of each witness both in its own right and also as to how that evidence fits in against the overall evidence which he has heard.  That is precisely what the magistrate did:  he contrasted the diverging evidence of PW1 and the first defence witness in the Statement of Findings and indicated that he accepted that of PW1 but rejected that of the first defence witness.

16.  It is accepted that there are instances where it is artificial to expect a magistrate to articulate in detail just why it is that he accepts or rejects the evidence of a particular witness.  I am satisfied that this is a matter in which the magistrate was fully entitled simply to say that he did not accept the evidence of that witness.  I do not see what else he can sensibly be expected to have said – nor was Mr Tze able to suggest anything when invited to assist this court.

17.  The third ground of appeal relates to but one discrepancy between the evidence of PW1 and PW2.  Mr Tze confirmed that this was the only discrepancy which was to be regarded as material and about which complaint was made.  In essence, PW1 testified that she had been given one letter by the appellant which the appellant had taken from her handbag to hand to PW1 whilst PW2 testified that the appellant had obtained a letter from a pile of documents lying on her desk and indeed had handed more than one document to PW1.

18.  The complaint which is made about the approach of the magistrate is that at the time of delivering his oral reasons he said “Having warned myself as indicated earlier and having borne in mind the criticisms of the evidence and credibility of PW1 and 2 as submitted by Mr Kwok for the defendant, I found both PW1 and 2 to have given honest, reliable evidence which in each case I believe”. 

19.  The argument runs that as there was a conflict in their evidence the magistrate was unable to accept the evidence “in each case”;  that by expressing himself in this manner as he fell into error;  that he erred further by not making specific reference in his oral reasons or statement of findings to this one conflict.

20.  I disagree, although I accept that the passage could have been more deftly phrased.  It is abundantly apparent from the passage to which I referred that the magistrate was fully aware of the criticisms which had been made of the two witnesses – particularly this aspect.  Indeed, leading counsel who appeared for the appellant at trial dwelt at some length on this particular issue in his closing address.  That plainly would have been fresh in the magistrate’s mind when he came to consider his verdict:  he specifically said that he did bear it in mind.

21.  Any sensible reading of the oral reasons and Statement of Findings can only result in the conclusion that that discrepancy was insufficient to cause the magistrate any concern.  On the facts of this matter, to require the magistrate to have gone any further than he did would be another triumph of form over substance.

22.  The submission was made that this matter was solely about the credibility of the witnesses and that it was this fact that made the manner in which the magistrate had expressed himself fatal to the conviction.  With respect, that is an oversimplistic view.  Whilst the credibility of the witnesses was an issue, that submission ignores the presence of the banking evidence to which the magistrate made specific reference.

23.  In cross-examination it was suggested on behalf of the appellant to PW1 that the payments which she had made to the appellant were in fact repayments of a loan.  PW1 denied there had been such a loan and asserted that these were simply repayments of the moneys that had been paid into her account by the appellant to create the impression of payment of a salary.  There was no evidence of the supposed loan, of course, for the appellant elected not to testify.  It was suggested that the magistrate should have considered the possibility of the payments being made for some other reason:  had the magistrate pursued that line he would have entered the realm of speculation which is not his function.

24.  What the magistrate had to decide upon was the truthfulness and reliability of the assertion by PW1 as to the nature of the payment she was making.  He had to decide that in the absence of any evidence to the contrary from the appellant.  He accepted PW1’s evidence generally and thus on this issue.

25.  The coincidence of the payments was singular.  It is hardly surprising, therefore, that he found that the banking evidence was supportive of the prosecution version.  He was fully justified in doing so on the evidence before him.

26.  The Appellant was correctly convicted.  The appeal is dismissed and the magistrate’s decision is confirmed.