HKSAR v. JOSE OSCARITO T. BAUTISTA

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

1997, No. 406
(Criminal)

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J U D G M E N T

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Mayo, J.A. (giving the judgment of the Court):

1. The Applicant was originally charged with 34 counts. These counts related to issuing invitations to the public to invest in securities without authority contrary to Section 4 (1) of the Protection of Investors Ordinance, Cap. 335, obtaining property by deception, contrary to Section 17 (1) of the Theft Ordinance, Cap. 210, and theft contrary to Section 9 of the Ordinance.

2. The Applicant who is a Filipino set up an investment company called "The Indio International Hong Kong Ltd." (Indio) and claimed to represent the Filipino Company called "Professional Academic Plans Inc." (PAP).

3. He invited members of the public to invest in funds offered by these companies. His main target was Filipino maids. Under these schemes instalments of HK$200.00 per month were required for the so-called Indio Pension Fund and HK$580.00 per month for the PAP plan. Investors were "guaranteed" 5% minimum annual interest, free life insurance and various travel concessions.

4. There were altogether 48 victims who made payments to the Applicant. The total amount received by him was HK$166,100.

5. Deputy Judge Duggan dismissed a number of charges on the basis that there was insufficient evidence to prove all the necessary ingredients of the charges.

6. So far as the Section 17 (1) charges were concerned the Judge was not satisfied beyond a reasonable doubt that the court could come a conclusion that the Applicant never intended to invest the moneys he received in the Indio Pension Fund and that he was dishonestly deceiving the victims. This being the case he went on to consider alternative theft charges.

7. He was satisfied that there had been an appropriation of the moneys. He reached this conclusion on the basis that the moneys had not been applied as was required by the victims in the Indio Pension Fund. On the Applicant's own evidence the moneys had been paid into his company's general account and had been applied towards general business expenses.

8. In this connection the Judge rejected the Applicant's testimony to the effect that he had set aside a Trust Fund in the Philippines to safeguard the investors' money.

9. So far as the question of dishonesty was concerned he applied the Ghosh test and was satisfied that by the standards of reasonable and honest people the Applicant had acted dishonestly.

10. On this basis he convicted the Applicant on charges 3 to 6 inclusive and 8 to 10 inclusive.

11. The only defence which was run for the issuing of invitation to members of the public to invest the securities contrary to Section 4 (1) was that he had sought legal advice from Filipino lawyers and been told that there was no necessity for him to do more than he had done.

12. Clearly the Judge was right in rejecting such a defence and convicted the Applicant on charges 1, 2, 11 and 12.

13. In his grounds of appeal, the Applicant repeats the defence he attempted to run on charges 3 to 6 and 8 to 10 inclusive. He gives particulars of the lawyer he consulted in the Philippines and the advice he received to the effect that all that was required of him was to register under the business names registration requirements. There is no merit in this ground of appeal.

14. He also comments upon the theft convictions. He provides a background to his setting up the scheme and states that all persons contributing to it were fully appraised of developments. He goes on to refer to the so-called parallel fund whose purpose it was to "service the needs of all members who wished to withdraw". No convincing reason is given as to why the Judge was wrong to conclude that no such fund existed.

15. This is what the Judge had to say about it:

"In banking the money in the accounts of his company and thereafter using it to pay for his operations to run the company, he has appropriated it. I note in section 6(3):

'Where a person receives property for or on account of another and is under an obligation to the other to retain and deal with that property or its proceeds in a particular way, the property or its proceeds shall be regarded as against him as belonging to the other.'

Clearly, in the circumstances of this case, defendant was under an obligation to hold the monies on behalf of each complainant, namely, to place it in a pension fund. He failed to do so. In section 7 (1):

'A person appropriating property belonging to another without meaning the other permanently to lose the thing itself is nevertheless to be regarded as having the intention of permanently depriving the other of it, if his intention is to treat the thing as his own to dispose of regardless of the other's rights.'

This is precisely what the defendant did in the present case. He placed the monies into a general account of his company and thereupon used the monies in the account to run his company. The remaining issue is whether the defendant acted dishonestly.

The first thing to be said is that I found as altogether lacking a ring of truth, the claim by the defendant to have set aside a trust fund in the Philippines to safeguard, as it was, the monies of the complainants which he was using to run his company. I reject that evidence as false."

16. We can see no reason to disagree with the observations made by the Judge.

17. There was more than sufficient evidence before the Judge to enable him to convict the Applicant on these charges. Nothing which has been advanced by the Applicant persuades us that these convictions were in any way unsafe or unsatisfactory and this application is dismissed.