HKSAR v. HAU LOK MAN

DCCC 881/2023

[2024] HKDC 1319

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 881 OF 2023

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REASONS FOR VERDICT

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Charges

1.  D1 was jointly charged with D2 for one count conspiracy to defraud, contrary to Common Law and punishable under section 159C(6)  of the Crimes Ordinance (“Charge 1”)  and an alternative count of attempting to deal 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 and sections 159G and 159J of the Crimes Ordinance (“Charge 2”).

2.  The particulars of offence of Charge 1 alleged that on 27 April 2023, D1 and D2 conspired together with other person(s)  unknown to defraud CHAN Kwok-Hoi (“PW1”)  by dishonestly falsely representing that PW1’s son was in need of money, thereby to induce PW1 to part with a total sum of HK$200,000.

3.  The particulars of offence of Charge 2 alleged that on the same day, D1 and D2, together with other persons unknown, knowing or have reasonable grounds to believe that property, namely, a sum of HK$200,000 in cash, in whole or in part, directly or indirectly, represented any person’s proceeds of an indictable offence, attempted to deal with the said property.

4.  D1 pleaded not guilty to both charges.

Evidence

Admitted Facts

5.  It was agreed between the prosecution and the defence that D1 was arrested by DPC 14071 (“PW2”)  at 1150 hours on 27 April 2023.

6.  It was also a piece of admitted fact that D1 voluntarily participated in a video record interview (“the VRI”)  with the VRI disc and translation of the transcript being marked as Exhibits P2 and P2a respectively.

Prosecution Witnesses

7.  Two witnesses were called by the prosecution, namely PW1 and PW2.

PW1

8.  It was the testimony of PW1 that he lives together with his wife in Tsuen Wan.  Their son is living abroad in the USA.

9.  On 26 April 2023, PW1 received a telephone call.  The caller, who purported to be PW1’s son, told PW1 that he (the caller)  has bought a new mobile phone and wanted to test that phone.  They chatted for several minutes.  PW1 believed at the time that he was talking to his own son.

10.  On the next day, PW1 received another phone call. PW1 again thought it was from his son.  The caller told PW1 that: the husband of an University classmate of his suspected them having a relationship; the husband and the caller got into a fight during which the caller accidentally injured the husband and the caller was arrested by the police; and the mobile phone of the caller was seized by the police.

11.  PW1 then enquired from the caller as to how he was able to help him.

12.  The caller replied by saying that the family of the injured person had demanded $200,000 in compensation and if such sum was paid, the caller would not be charged.

13.  The caller went on to ask PW1 how much money PW1 got. PW1 replied that he had $100,000 at home and need to draw the remaining $100,000 from the bank.

14.  The caller requested PW1 to withdraw such sum from the bank, to that PW1 agreed.

15.  After PW1 hung up the phone, he felt suspicious and discussed the matter with his wife.  They felt that it was a scam. PW1 then made a phone call to his son and confirmed that it was indeed a scam.

16.  PW1 reported the matter to the police.  Arrangement was that made for PW1 to go along with the scam and hand over the money.

17.  Later the same day, the caller called again and requested to meet PW1 at the Wellcome Supermarket at Lo Tak Court for handing over of the money.  The caller told PW1 that: “Ming Jai” would contact you to take the money.

18.  At around 1140 hours, PW1 received a phone call with the person on other side claiming to be “Ming Jai”.  This person told PW1 that he (the caller)  was at the Wellcome Supermarket and asked PW1 what he was wearing.  PW1 replied accordingly.

19.  Shortly afterwards PW1 was approached by a male who claimed to be “Ming Jai”.

20.  PW1 then asked this person how he could prove himself to be “Ming Jai”.  This person then used his phone and made a call, then handed the mobile phone to PW1.

21.  PW1 received the phone and was told by the person on the other side of the phone to hand over the money to “Ming Jai”, then “Ming Jai” would arrange all the things.

22.  Thereafter PW1 passed an envelope to “Ming Jai”.  “Ming Jai” received the same without saying anything.

23.  The police then turned up and arrested “Ming Jai”.

24.  During cross-examination, PW1 confirmed that prior to 27 April 2023, he never met “Ming Jai” nor had any kind of communication with him.

25.  PW1 also confirmed that when he was talking over the phone to the other person at Lo Tak Court, the phone was not put on speaker function. PW1 thought “Ming Jai” was able to hear what he (PW1)  said but probably not what was said by the person on the other side of the line.

26.  PW1 identified “Ming Jai” was D1.

PW2

27.  PW2 was tasked to lay ambush nearby the Wellcome Supermarket at Lo Tak Court and to make arrest on the person who were to collect money from PW1.

28.  At around 1146 hours on 27 April 2023, he saw D1 appeared at Lo Tak Court.  He saw D1 made contact with PW1 and shown his (D1’s)  mobile phone to PW1.

29.  PW2 then approached D1 and arrested him for the offence of deception.  Under caution D1 said a female WhatsApped him, asking him to collect the money for her, and after that, he would get paid.’

Exhibit P2

30.  D1 revealed in the VRI that a female had contacted him via WhatsApp and asked him to collect money for her, after that, he would get paid.’ (at #73 & 78 of Exh P2a); that same female told D1 to go to Mong Kok at 9:30 am on 27 April 2023 to look for a ‘Ko Lo’, and then meet up with him (at # 102 of Exh P2a); he and ‘Ko Lo’ got onboard a taxi and went to Lo Tak Court (at #104 of Exh P2a); D1 was asked by this female to take the money to another place for her (at # 120 of Exh P2a); whilst at Lo Tak Court, “Ko Lo” called D1 via Telegram and told D1 that a phone number would be sent to him, D1 was instructed to look for and approach a middle-aged man in a grey top outside Wellcome Supermarket and claim himself to be ‘Ming Jai’, dial the phone number given by “Ko Lo” and let the middle-aged man take the call (# 130 of Exh P2a); D1 eventually did walk over to that person and told him that he (D1)  was “Ming Jai”, dialed the number sent to him by “Ko Lo” and let the middle-aged man take the call (#138 of Exh P2a).

Half-way

31.  After the conclusion of the prosecution case, I ruled that there is a case to answer for D1 in respect of both charges.

Defence Case

32.  D1 elected to testify and call no defence witness.

33.  D1 is now aged 16, he was 15 years of age at the time of the offence. He attained the education level of Form 3.

34.  D1 told this court that he was acquainted with a person called “Hei Chai” whilst playing casual basketball games at basketball court.  To D1, “Hei Chai” was about the same age as him.

35.  In March 2023, during a conversation between D1 and “Hei Chai”, D1 expressed to “Hei Chai” about his wish to purchase some new basketball shoes, which D1 could not afford.  “Hei Chai” then asked D1 whether he wished to earn some money, to which D1 responded by asking about the nature of the work, and whether it involved any unlawful activity.  To that “Hei Chai” replied that the job opportunity came from his friend and it did not involve any unlawful activity.

36.  D1 expressed his interest for the job.  “Hei Chai” told D1 that he would pass on D1's contact to his friend.

37.  About a week later, in late-March 2023, a female (with the name of “Yin”)  contacted D1 by WhatsApp message, informing him that she would contact him when a job opportunity came along.

38.  On 26 April 2023, Yin called D1 and asked whether he would be free to go to Mongkok the following day to collect money for her.  D1 then enquired from Yin what kind of money it was and whether it involve any illegal activity.  To that Yin responded that the job did not involve anything illegal, it only involved collecting money which belonged to Yin herself.  Yin also said that as she was worry D1 might flee after collecting the money, she would arrange someone to come over to D1’s place to shoot a photo of D1’s identity card. To that D1 agreed.  Eventually a male did come and took photo of D1’s identity card.

39.  Yin also said that she would arrange a person to accompany D1 in the process.

40.  Yin did not tell D1 how much he would be paid for doing so and D1 did not ask.  D1 explained that as he thought that he did not stand to lose much anyway, even if he was not paid in the end.  He also thought that “Hei Chai” would help to ensure that he was paid.

41.  D1 described that although “Hei Chai” had assured him the work did not involve any unlawful activity, D1 thought it prudent to ask Yin again, to which she responded that the job did not involve anything illegal, it only involved collecting money which belonged to Yin herself.

42.  D1 did not ask about the amount of money he would be collecting.  D1 explained that as he thought his role was a mere courier, the amount of money in which he was asked to collect was not important to him.

43.  Yin also told D1 that she would arrange another person to accompany him in the morning.

44.  D1 agreed to take up the job.

45.  In the morning of 27 April 2023, D1 contacted Yin via WhatsApp upon his arrival at Mongkok.  Yin then asked for D1’s Telegram account contact.  Shortly thereafter, a person contacted D1 by Telegram call, asking D1 to wait at the MTR station exit next to Langham Place.

46.  Around 30 minutes later, D1 was contacted by the same person via Telegram, asking about D1’s appearances.  This person then showed himself to D1.  He was in fact D2.

47.  D2 then brought D1 to Cheung Shan Estate (in Tsuen Wan)  by taxi. D1 described that he had no idea at the time as to where they were going.  It was D2 who communicated with the taxi driver and paid the taxi fare.

48.  After alighting from the taxi, D2 instructed D1 to wait at the podium of a building while he walked into a nearby building.  After approximately 10 minutes, D2 came back out and brought D1 onboard another taxi.

49.  D2 first instructed the driver to go to Lai Chi Kok and told D1 that he would bring D1 to a nearby place to eat, but shortly thereafter D2 instructed the taxi driver to go to Lo Tak Court in Tsuen Wan instead. D1 noticed that D2 changed the destination immediately after receiving a text message on his phone but did not know who the message was sent by.

50.  After alighting at approximately 11:45 hours, D2 told D1 to wait nearby while D2 walked around the nearby carpark and subsequently left.  D1 did not know where D2 went.

51.  After approximately 5 minutes, D1 received a Telegram call from an unknown male who asked D1 whether he could see an elderly male wearing a grey top (ie PW1)  near the entrance of the Wellcome supermarket.  D1 answered to the affirmative.  From the voice of the caller, D1 suspects that the caller could be D2.

52.  The caller told D1 that he would send a telephone number to him via Telegram message.  He instructed D1 to introduce himself to the elderly male as “Ming Jai”, to call the aforesaid telephone number, and to hand his mobile phone to the elderly male.  The caller then abruptly hung up the call.

53.  D1 did as he was told. He walked up to PW1 and introduced himself as “Ming Jai”.  When D1 was handing his mobile phone to PW1, the police appeared and arrested D1.

54.  D1 expressly stated that he did not know of any fraud or other wrongdoing, and did not know or have any reason to suspect that the money he would be collecting from PW1 was the proceeds of any offence.

55.  During cross-examination, D1 was challenged that he deliberately turned a blind eye to the illegality of the casual job he took on.  To that D1 disagreed.

56.  When asked as to whether the taking of photo of D1’s identity card and having someone to escort him in collecting the money arouse suspicion that he was dealing with something connected with illegal activities, D1 replied that he did not feel suspicious at the time.

57.  When asked as to why Yin needed D1 (a stranger to her)  to collect money on her behalf and not ask her own friends to do so, D1 replied that he did not ascertain such from her and he himself did not think about such matter either.

58.  D1 admitted that he felt suspicious when he was asked to collect the money by claiming himself to be “Ming Jai”.  When the prosecution pressed on by asking him why he still went through with the process, D1 replied that he thought the caller who called him was “Ming Jai” and so he was going through the process on behalf of “Ming Jai”. Prosecution further pressed by asking: “If it was not illegal, why go through such complicated process?”  To that D1 said: “I did not think so at the time”.

Directions

59.  I reminded myself that the prosecution bring this case and are required to prove the guilt of the defendant beyond reasonable doubt.

60.  I am required to consider the evidence for and against the defendant on each charge separately.  I reminded myself that the prosecution had to establish each element of each offence to the required standard.

61.  I reminded myself that before a court may draw an inference from facts, the facts must be proved beyond reasonable doubt and the inference must be the only reasonable inference to be drawn from those facts.

62.  The VRI of D1 (Exhibit P2)  was admitted into evidence.  There was no issue as to their voluntariness and I was not invited to use my residuary discretion to exclude the same.  I reminded myself that the statements were mixed and that exculpatory statements made by him.

63.  I reminded myself that if I rejected matters asserted by the defendant in evidence or in his record of interview, that did not mean he was guilty of any of the offences with which he was charged.  I had to consider the evidence which I did accept and decide whether or not that evidence established the guilt of the defendant to the requisite standard.

The Law

Conspiracy to defraud

64.  The law relating to the offence of conspiracy to defraud is settled.  The offence is constituted by becoming a party to an agreement with another or others to use dishonest means, inter alia, with the purpose of causing economic loss to or putting at risk the economic interests of another.

65.  The Court of Final Appeal HKSAR v Chen Keen [2019] HKCFA 32 stated (at paragraphs 40-43 of the Judgment)  that the essential ingredients of conspiracy to defraud are:

40. The agreement which is essential to a conspiracy to defraud is an agreement to use dishonest means to defraud someone. As Sir Anthony Mason NPJ (with whom the other members of the Court agreed)  held in Mo Yuk Ping v HKSAR, a conspiracy to defraud:

“... is constituted by becoming a party to an agreement with another or others to use dishonest means: (a)  with the purpose of causing economic loss to, or putting at risk the economic interests of, another; or (b)  with the realization that the use of those means may cause such loss or put such interests at risk. The offence extends also to cases in which the dishonest means cause a person to act contrary to his public duty ...”

41. Turning to the mental element, his Lordship endorsed the statement of Lord Goff of Chieveley in Wai Yu-Tsang v The Queen, to the following effect:

“The question whether particular facts reveal a conspiracy to defraud depends upon what the conspirators have dishonestly agreed to do, and in particular whether they have agreed to practise a fraud on somebody. For this purpose it is enough for example that, as in Reg v Allsop [(1976)  64 Cr App R 29] and in the present case, the conspirators have dishonestly agreed to bring about a state of affairs which they realise will or may deceive the victim into so acting, or failing to act, that he will suffer economic loss or his economic interests will be put at risk.”

42. In HKSAR v Chan Wai Yip, applying Mo Yuk Ping, Sir Anthony Mason NPJ stated:

“In Mo Yuk Ping v HKSAR, this Court held that the essence of the offence of conspiracy to defraud was becoming a party to an agreement with another or others to use dishonest means (i)  with the purpose of causing economic loss to, or putting at risk the economic interests of another; or (ii)  with the realisation that the use of those means might cause such loss or put such interests at risk. In stating the elements of conspiracy to defraud in this way, this Court adopted earlier formulations of the offence in both the House of Lords (Welham v DPP [1961] AC 103; R v Scott [1975] AC 819)  and the Privy Council on appeal from Hong Kong(Wai Yu Tsang v R [1992] 1 AC 269).”

43. It is therefore authoritatively established that the essence of a conspiracy to defraud is an agreement to use dishonest means by which the co-conspirators intend to bring about a state of affairs intending or in the realisation that someone will be defrauded either by having their economic interests injured or imperilled or by being deflected from performing their public duty.”

66.  The Ghosh two-stage should be applied to determine whether the means agreed upon are dishonest. While an intention to defraud is necessary, actual detriment need not be shown.  The act or declaration must be in furtherance of the conspiracy, and it must be made by a conspirator, although it matters not whether the maker is present or absent at the trial.

Dealing with the proceeds of an indictable offence

67.  Section 25(1)  of the Organized and Serious Crimes Ordinance, Cap 455, provides:

“a person commits an offence if, knowing or having reasonable grounds to believe that any property in whole or in part directly or indirectly represents any person’s proceeds of an indictable offence, he deals with that property".

68.  With regard to the meaning of “having reasonable grounds to believe that any property … represents any person’s proceeds of an indictable offence” (abbreviated to “the property is tainted”)  in section 25(1)  of OSCO and the relevance of the defendant’s actual belief in determining whether the statutory test is satisfied, the Court of Final Appeal stated in HKSAR v Harjani Haresh Murlidhar (2019)  22 HKCFAR 446 (at paragraphs 25-28 of the Judgment)  as follow:

25. In Pang Hung Fai, in a judgment with which all members of this Court agreed, Spigelman NPJ said that on most occasions the test propounded by the Appeal Committee in Seng Yuet Fong v HKSAR would suffice:

“To convict, the jury had to find that the accused had grounds for believing; and there was the additional requirement that the grounds must be reasonable: That is, that anyone looking at those grounds objectively would so believe.”

26. In Carson Yeung, this Court endorsed that proposition. We remain of the view that the Seng Yuet Fong test correctly represents the law. In the interests of clarity, however, we would reformulate the test as follows:

(i)  What facts or circumstances, including those personal to the defendant, were known to the defendant that may have affected his belief as to whether the property was the proceeds of crime (“tainted”)?

(ii)  Would any reasonable person who shared the defendant’s knowledge be bound to believe that the property was tainted?

(iii)  If the answer to question (ii)  is “yes” the defendant is guilty. If it is “no” the defendant is not guilty.

27. Thus the first issue that the judge or jury (“the court”)  must address is what matters the defendant knew of that might have affected his belief as to whether the property was clean or tainted. This question is subjective only in as much as it requires the tribunal to make findings as to the knowledge of the defendant at the time of the relevant transaction. Where the defendant gives evidence of facts and matters that affected his belief about the nature of the property, the court has to decide whether he is, or may be, telling the truth about the existence of these facts and matters.

28. The second issue is whether any reasonable person who shared the defendant’s knowledge would have been bound to believe that the property was tainted. This question is objective. Where the court finds that the defendant was, or may have been, telling the truth about the existence of facts and matters that he claims affected his belief, the court must take those facts and matters into account when answering the question, would any reasonable person with knowledge of those facts and matters have believed that the property was tainted? If the answer to the question is “yes” the defendant is guilty. If it is “no” the defendant is not guilty.

Evaluation of Evidence

69.  The defence invited the Court to consider D1’s evidence against the background of his age and naivety.  He was 15 at the time of the alleged offence, and educated to Form 3 standard.

70.  The defence submitted that D1 had done all that he could think of to ensure that what he was being asked to do was not unlawful.

71.  The defence submitted that it is far more likely that the fraudsters took advantage of D1's gullibility to carry out their criminal enterprise, than D1 being a party to the same.  To this extent, the fraudsters have succeeded in shielding themselves from the consequences of the law by hiding behind D1 and D2.

72.  The defence submitted that the evidence against D1 is far from capable of proving beyond reasonable doubt that D1 was aware of such a plan to defraud PW1, let alone proving that he was a party to the plan.

73.  I have taken into account the age of D1 at the time of the offence. I am however unable to accept his assertions that when he was dealing with Yin, the caller who spoke to him whilst he was at Lo Tak Court, and D2, he did not find what they were doing to be suspicious. D1 was asked by Yin to collect money.  Yin was a stranger to him. To collect money on behalf of a complete stranger in return of monetary reward would suggest that the dealing was, at the very least, suspicious.  This must be obvious even to a 15-years-old, D1, at the time.  I therefore rejected his evidence in that regard.

74.  It was D1’s response in the VRI that he agreed to collect money for Yin.  He also adhered to the instructions given to him by the person over the phone to approach PW1 by claiming himself to be “Ming Jai”.

75.  The act of pretending to be someone whom he was not was clearly fraudulent on the part of D1.

76.  I reminded myself where a court relies on circumstantial evidence, it has to be satisfied that the facts on which the court relies have been established beyond reasonable doubt and that inferences drawn from such facts are irresistible, that no other inferences could reasonably be drawn from such facts.

77.  Notwithstanding the young age of D1 at the time of the offence, the totality of the evidence left me in no doubt whatsoever, that D1 was a party to the conspiracy. I was satisfied that this was an irresistible inference and that no other reasonable inference could be drawn.

78.  I was sure that D1 conspired with D2 and other persons unknown to defraud PW1 as alleged.  I am satisfied that the prosecution had proved all the elements of the offence of Charge 1 beyond reasonable doubt.

79.  An alternative charge, Charge 2, had been preferred against D1 alleging an inchoate charge of dealing with the proceeds of an indictable offence.  From my findings I was sure that this charge had been proved beyond reasonable doubt and had I had any doubts about his participation in the conspiracy with D1 as alleged in charge 1, I would have convicted him on Charge 2.

80.  In view of the aforesaid, I find D1 guilty of Charge 1 and I convict him accordingly.