HKSAR v. HA WAI SHING

CACC 110/2019

[2023] HKCA 478

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 110 OF 2019

(ON APPEAL FROM HCCC NO 348 OF 2017)

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REASONS FOR JUDGMENT

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Hon Macrae VP (giving the Reasons for Judgment of the Court):

1.  The applicant, who was D3 at trial, together with his wife and their son, who were respectively D1 and D2 at trial, were charged with two offences of fraud (Counts 1 and 2)[1]; and three offences of what is commonly referred to as ‘money laundering’ (Counts 3, 4 and 5)[2]. All of the defendants pleaded not guilty to the counts they each faced and stood trial in the High Court before Deputy Judge Lunn (“the judge”) and a jury. On 25 March 2019, at the conclusion of the trial, the three defendants were each convicted of the various counts they faced. The applicant was unanimously convicted of Counts 4 and 5 and sentenced to a total term of 6½ years’ imprisonment.

2.  On 9 April 2019, the applicant filed a notice of application for leave to appeal against both conviction and sentence. While the applicant abandoned his application for leave to appeal against sentence and the same was dismissed, the Single Judge[3] refused the applicant leave to appeal on any of the grounds advanced by his counsel at the leave hearing on 21 April 2021[4].

3.  On 3 May 2021, the applicant filed a Notice of Renewal of Application and sought to renew his application for leave to appeal against conviction. He appeared in person at the hearing of his renewed application before us.

Particulars of the counts on the indictment

4.  There were five counts on the indictment. Counts 1 and 2 were allegations of fraud; Count 1 being against D1 only, and Count 2 being against D1 and D2 jointly. Counts 3, 4 and 5 were allegations of money laundering, with Count 3 being against D1 and D2 jointly, and Counts 4 and 5 being against D1 and the applicant jointly[5].

5.  The particulars of Count 4 alleged that, between 30 June 2004 and 3 January 2011, D1 and the applicant[6]:

“knowing or having reasonable grounds to believe that property, namely a total sum of $10,586,616.66 Hong Kong currency, in whole or in part directly or indirectly represented any persons proceeds of an indictable offence, namely the frauds averred in the first and the second counts herein above, dealt with the said property by causing or allowing bank accounts held in the name of the said Ha Wai Shing to receive or acquire the said property.”

6.  The money allegedly laundered in Count 4 concerned bank accounts held by the applicant (referred to as “D3-account 1” and “D3‑account 2”). The particulars of Count 5 were in the same terms as in Count 4, but the period of the offence was between 20 October 2004 and 18 March 2011 and involved a sum of $16,468,193.65[7].

The prosecution case

7.  Counts 4 and 5 concerned monies variously deposited into the applicant’s two bank accounts, D3-account1 and D3-account 2. The prosecution case against the applicant was that he had reasonable grounds to believe that the monies deposited into these two accounts in Counts 4 and 5, were the proceeds of an indictable offence, namely the frauds alleged in Counts 1 and 2 perpetrated by D1 and D2 against their then employer, Bonjour Cosmetic Wholesale Center Limited (“Bonjour”).

8.  Bonjour is a publicly listed company in Hong Kong, which retails cosmetic products and operates a beauty parlour. At the relevant times, Mr Wilson Ip (“Ip”) was the Chief Executive Officer and Chairman of Bonjour, while Mr Alan Chan (“Chan”) was its Executive Officer.

9.  On 24 May 2004, D1 was employed as the Manager of the Human Resources and Administration Department (“HR Department”) of Bonjour. On 23 August 2004, D2 was employed as a clerk in the HR Department, although, on 1 June 2009, he was promoted to Assistant Manager of the HR Department. D1 and D2 remained in their respective positions until their dismissal on 22 March 2011.

10.  The HR Department was responsible for the calculation of the payroll of all staff at Bonjour. The salaries of office staff were paid once a month, while the salaries of retail staff were paid several times during a month, since their salaries were commission based.

11.  The period of the fraud counts coincided with the duties which D1 and D2 respectively performed in respect of the payment of salaries at Bonjour. Both D1 and D2 (when he was promoted to the position of Assistant Manager of the HR Department) were responsible for the calculation of salaries on the company’s payroll online system. The payroll details on the online system were edited so that payments or overpayments (payments in excess of D1 and D2’s salaries) to the stipulated payees who were current employees or ex-employees or a third party company[8] were received into bank accounts held in the names of D1, D2 or the applicant or names of others as appointed by D1. The edited payroll details were then stored in a USB drive, which was given to Ms Vanky Chung (“Vanky Chung”), the Manager of the Accounting Department of Bonjour. D1 or D2, as the case may be, falsely represented to Vanky Chung that the salary payment information they presented was true and accurate, and that the management of the company had agreed and approved the overall payroll amounts. As a result, Vanky Chung sent the edited payroll details to the company’s bank to effect payment by way of autopay, in accordance with the uploaded information.

12.  It was an admitted fact that between 2004 and 2011 the total monies transferred to the applicant’s accounts was $27,054,810.31[9]. It was also an admitted fact that the applicant had never been employed by Bonjour in any capacity, nor had he had any kind of business dealings with the company[10]. However, the applicant was recorded as an employee of Bonjour on the payroll data and purportedly received a monthly salary.

13.  The admitted facts also set out transfers by Bonjour between September 2004 and March 2011, in which 35 persons were named as payees of salary payments in the total sum of $14,862,438.42, which were paid to various bank accounts in the names of D1, D2 and the applicant, the bulk of which were paid into D3-account 1 and D3-account 2[11]. Also included were tables of the method of withdrawal of the monies deposited into the bank accounts held by D1, D2 and the applicant, which were mainly ATM cash withdrawals and some credit card and other payments[12].

14.  Ip[13] and Chan[14] both testified for the prosecution and denied the claims put to them that they had instructed D1 to manipulate the online payroll system and obtain for them company funds in cash. Vanky Chung also testified for the prosecution and denied knowledge of, or involvement in, the arrangement claimed by D1[15].

The defence case

15.  The applicant elected not to testify and called no defence witnesses. His case, as advanced on his behalf, was mainly presented through the evidence of D1[16], who did elect to testify.

16.  D1 accepted that she effected the transfers of the monies to the bank accounts of the applicant as alleged by the prosecution through the electronic payroll system, stipulating the name of the payee as an employee or former employee of Bonjour or the applicant (even though he was not an employee)[17]. She also used other names. However, she said that she did this on the instructions of Ip or Chan. She acknowledged that, having effected the transfers, she withdrew the monies in cash, which she then paid to Ip or Chan. There were other payments as well, which she claimed she made for the company. She accepted that she used the two bank accounts of the applicant and the bank accounts of D2 to receive the monies.

17.  D1 further admitted that on occasion, she had transferred monies between those accounts. She claimed that Vanky Chung was not only aware of the arrangement, in which monies were paid by Bonjour to the applicant’s accounts and withdrawn as cash, and then paid to Ip, but that she also participated in the arrangement. It was submitted, as part of the defence case, that Vanky Chung could not therefore have been deceived, as alleged by the prosecution.

18.  In respect of the case of the applicant, D1 said that she had operated and controlled the D3-account 1 and D3-account 2 for over 30 years[18] and possessed the only bankcard for them, which she used exclusively to operate withdrawals of money at ATM machines in order to make payments and transfers[19]. The applicant would sign blank cheques for her use[20], but she did not tell him anything about the payments she was making[21]. She said that she had never let the applicant see the bank statements of his two accounts[22], and the applicant knew nothing of the activities that went on within the accounts[23].

The relevant parts of the summing-up

19.  At the beginning of the summing-up, the judge summarised the prosecution case on Counts 4 and 5 for the jury, which was based on the ‘reasonable grounds to believe’ limb of the money laundering charge, in the following terms[24]:

“Count 4, this involves the 1^st and 3^rd defendant. By Count 4, the prosecution alleges that on and between 30 June 2004 and 3 January 2011, the 1^st and 3^rd defendants dealt with the total sum of $10,586,616.66 knowing or having reasonable grounds to believe -- that is the phrase, knowing or having reasonable grounds to believe that, in whole or in part, directly or indirectly, they represented the proceeds of an indictable offence, namely, the frauds alleged in the 1^st and 2^nd counts, by causing or allowing, that is the phrase again, causing or allowing, a bank account in the name of the 3^rd defendant to receive or acquire those moneys. That sum of money is stipulated in paragraph 4 of Mr Lee Ho-cheung’s table as the amount received from the bank account of Bonjour by a bank account of Ha Wai-shing, the account we called D3 account 2. That is addressed in paragraph 4 under the heading ‘Charge 4’.

By Count 5, the prosecution alleges that on and between 20 October 2004 and 18 March 2011, the 1^st and 3^rd defendants dealt with the total sum of $16,468,193.65 knowing or having reasonable grounds to believe that, in whole or in part, directly or indirectly, those moneys represented the proceeds of an indictable offence, namely, the frauds alleged in the 1^st and 2^nd counts, by causing or allowing a bank account in the name of the 3^rd defendant to receive or acquire those moneys. That amount of money is stipulated in paragraph 4 of the tables of Mr Lee Ho-cheung as the amount of money received from the bank account of Bonjour by the bank account of Ha Wai-shing, the account we call D3 account 1. That is dealt with in Lee Ho-cheung’s tables, paragraph 4, Charge 5.

…

The prosecution case against the 3^rd defendant was that he had reasonable grounds to believe that the moneys deposited into his accounts, D3 account 1 and D3 account 2, were the proceeds of an indictable offence, that he had reasonable grounds to believe that.”

20.  The judge also directed the jury as to the applicant’s election not to testify as follows[25]:

“Ha Ting-pong and Ha Wai-shing have not testified. A defendant does not have to give evidence. He is entitled to sit in the dock and require the prosecution to prove its case. You must not assume that either one of them is guilty because he has not given evidence. The fact that he has not given evidence proves nothing one way or the other. It does nothing to establish his guilt. On the other hand, it means that there is no evidence from the defendant to undermine, contradict or, importantly, explain the evidence put before you by the prosecution. In the context of Count 3 against the 2^nd defendant and Counts 4 and 5 against the 3^rd defendant, there is no evidence from them of their belief, perception or prejudice, if any, in respect of Kiu Mei-ling.”

The applicant’s grounds of appeal and submissions

21.  The applicant was unrepresented before us. By his letter, dated 9 October 2021, he has advanced two grounds of appeal, one of which is a new ground and was not argued before the Single Judge. By Ground 1, the applicant asserted that it was concluded or established at trial that the senior management of Bonjour, namely Ip, Chan and Vanky Chung, had instructed D1 to defraud Bonjour and use the bank accounts of D2 and the applicant to launder the money and channel it back to themselves. The fraud counts should, therefore, have been amended to a count of conspiracy to defraud against Ip, Chan and Vanky Chung. The prosecution’s failure to amend the indictment misled the jury into believing that D1 and D2 had committed fraud between themselves rather than perpetrated a fraud together with Ip, Chan and Vanky Chung. This was unfair to D1, D2 and the applicant.

22.  By Ground 2, the applicant claimed that he did not understand English and required translation of the proceedings at trial into punti. However, he was not able to listen to most of the translated proceedings. The problem was only fixed towards the end of the trial. Since he did not know much about the proceedings, he decided not to testify in court for fear that he would say something wrong or give irrelevant answers. He complained that the judge should have dealt with the translation problem earlier and should have told him the consequences of not testifying in court.

23.  In a further letter, dated 16 July 2022, the applicant maintained that he had identified from the audio-recording of the trial proceedings that the problem of not being able to hear the translation had occurred between 9:31 and 9:35 hours on 25 February 2019, during the testimony of PW5. The judge was informed by the technician of the court that there was a problem with the “infra-red device”. The applicant said that he is unable to establish when the issue was resolved and cannot otherwise substantiate his complaint that he was not able to hear the trial proceedings.

The respondent’s submissions

24.  In respect of Ground 1, Mr Kelvin Tang, on behalf of the respondent, disagreed that it had been conceded, or concluded, that the senior management of Bonjour was complicit in the way the applicant has asserted: indeed, the convictions of D1 and D2 gave the lie to the assertion. Mr Tang stressed that the prosecution case against the applicant was throughout based on the ‘reasonable grounds to believe’ limb and there was never any allegation that he had participated in the fraud. Evidence substantiating the prosecution case came from the sums of monies deposited into his bank accounts at a time when he had no other substantial sources of income. Various credit card and EPS transactions were indicative of the applicant’s personal involvement in the transactions. The applicant’s defence was the absence of exclusive control of his bank accounts and his lack of knowledge as to how the sums were deposited and various payments were made out of the sums deposited. His position was clear throughout the proceedings that however the fraud was perpetrated was irrelevant to his defence. Hence, it was difficult to understand how he could now rely on a ground that alleges that he has been disadvantaged or prejudiced.

25.  In respect of Ground 2, Mr Tang submitted that the ground was totally devoid of merit. He pointed out that the judge had never blamed the applicant for not testifying. On the contrary, the judge had directed the jury, in accordance with the relevant Specimen Direction, namely, that the applicant was entitled not to testify and to require the prosecution to prove its case. Furthermore, the jury had been reminded not to assume he was guilty because he had elected not to testify. In respect of the asserted non-interpretation issue, Mr Tang maintained that none of the prosecution team present during the trial could recollect, or had made any record of, any interpretation issue arising at any stage of the trial proceedings. The prosecution team could only recall a single instance where the earphones used by the applicant to listen to the interpretation ran out of battery. This occurred on one morning prior to the jury coming into court. The earphones were duly fixed and the trial only continued after the applicant’s counsel had confirmed the same with the judge. Mr Tang pointed out that the applicant was represented by competent counsel throughout the trial and there was no basis now for him to criticise the judge for not advising him as to his right to give evidence.

26.  The respondent submitted that the applicant’s grounds of appeal were without merit. His convictions were neither unsafe nor unsatisfactory, nor was there any material irregularity in the course or conduct of the trial.

Discussion

27.  We agreed entirely with Mr Tang’s submissions. In respect of the applicant’s first ground of appeal, it was never the prosecution case that Ip, Chan and Vanky Chung or any of them were co-conspirators or party to the fraud or money-laundering. It was D1’s case, not the prosecution’s, that she was acting with their knowledge and connivance. However, the jury rejected this defence and unanimously convicted both D1 and D2 of their respective counts. We do not accept there was any warrant for amending the indictment to include Ip, Chan or Vanky Chung as co-conspirators. The jury convicted on the basis of the case presented before them and we do not accept that the applicant was in any way prejudiced or disadvantaged by the failure to include them as co-conspirators, when the prosecution had never contended that they were. As Mr Tang has argued, it is inconceivable that the applicant could have been prejudiced, even if what he was alleging was correct, when his defence was that he knew nothing of any fraud or money-laundering through his accounts, and when he had never been charged with fraud.

28.  In respect of Ground 2, the only incidence of any malfunction or problem with the applicant’s listening device took place on 25 February 2019, yet nothing is recorded at all in the log of the judge’s clerk; probably because it occurred before the jury came into court at about 9:30 am. There is no basis in these circumstances for any concern that the applicant did not hear some of the evidence. Certainly, no complaint was ever raised with the judge about such a matter when the applicant was throughout represented by experienced counsel, who one would have expected to raise the matter if it had taken place.

29.  As for the applicant not giving evidence, we see nothing whatsoever in the trial to suggest this was anything other than a fully informed decision on the applicant’s part. Furthermore, nowhere in the summing-up did the judge voice any criticism of the applicant’s decision not to give evidence: instead, the judge gave the standard Specimen Direction[26], as one would expect in such circumstances.

30.  There was no merit whatsoever in any of the grounds of appeal argued before us. Accordingly, we refused the application for leave to appeal and dismissed the appeal.

Order for loss of time

31.  At the commencement of the appeal, we explained to the applicant that he was renewing one ground of appeal and arguing a further new ground (Ground 2), which had not been argued before. We reminded him that the Single Judge had delivered a 60-page judgment dealing with the arguments in the applications for leave to appeal mounted by applicant, as well as by D1 and D2 who had since not renewed their applications. We satisfied ourselves as to the various warnings the applicant had been given about loss of time, including at [135] of the judgment of the Single Judge.

32.  We pointed out that the new ground of appeal was added some 2½ years after conviction, which had required the Court and the respondent to examine the court record and listen to the relevant part of the transcript. This was a voluminous appeal which had obliged three judges of the Court of Appeal to read into it in preparation for the appeal. In these circumstances, we advised the applicant of the Court’s power to order loss of time pursuant to section 83W(1) of the Criminal Procedure Ordinance, Cap 211, if the Court ultimately came to the view that there was no merit in his appeal and no justification for renewing his application for leave. The applicant said he understood but nevertheless wished to pursue his appeal.

33.  Having listened to the arguments and dismissed the appeal, we invited the applicant to address us as to why we should not make an order for loss of time. The applicant responded that he considered his grounds very reasonable, that what the prosecution had done was wrong and had affected the verdict against him. He pleaded with the Court to examine his intention.

34.  We were satisfied that there was no merit whatsoever in any of the applicant’s complaints and there was no justification for renewing his application and, in particular, for arguing a further ground of appeal which was demonstrably untrue. In the circumstances, we made an order under section 83W(1) of the Criminal Procedure Ordinance that 2 months of the sentence to which the applicant was subject should not be reckoned as part of the term to which he was subject.