HKSAR v. CHUNG CHI-KIN

CACC 504/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 504 OF 2001

(ON APPEAL FROM DCCC 1184 OF 2000)

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J U D G M E N T

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Hon Lugar-Mawson J: (giving the judgment of the Court)

Background

1. The Applicant, who was the 3rd defendant at trial, and 10 others were jointly charged in the District Court with an offence of conspiracy to defraud, contrary to common law and punishable under s.159C(6) of the Crimes Ordinance. The offence was alleged to have been committed between 1 September 1998 and 16 March 1999 (Charge 1). Seven of the other defendants, but not the Applicant, also jointly faced a charge of failure to comply with an order of the Court of First Instance made under s.4(2) of the Organized & Serious Crimes Ordinance (Charge 2).

2. The trial, which lasted for 37 days, took place before His Honour Judge Christie. The 3rd to the 8th Defendants broke bail and absconded before trial; they were tried in their absence. Of the remaining defendants, the 10th Defendant pleaded guilty to the conspiracy charge. The 1st and 2nd Defendants were acquitted at the close of the prosecution case, when the judge upheld a no case to answer submission. The 11th Defendant was acquitted at the end of the trial. The Applicant and the 3rd to the 8th Defendants were convicted of the conspiracy charge after trial. The 3rd Defendant was also convicted after trial on the Organized & Serious Crimes Ordinance charge. The others who faced that charge were acquitted.

3. On conviction, the Applicant was sentenced to serve 3 years and 9 months' imprisonment. He now seeks to appeal against his conviction. Mr Bernard Chung of counsel, represents him.

Facts

4. The case involved a Loco-London gold and silver fraud. It was the prosecution's case that on 2 November 1998, the police, after having received complaints about its activities, raided Champion Market Ltd ("Champion"). Champion purported to be a genuine gold and silver bullion trading company. Champion recruited its victims as junior office employees through newspaper advertisements. Most were offered and took part-time employment. None had any experience in bullion trading and all appear to have been selected because of their apparent naivety. On their offer of employment by Champion, they were offered an attractive salary. The victim was placed to work in a room with two fellow workers who, needless to say, were both parties to the fraud. One claimed to be newly recruited; the other claimed to be more experienced in the Champion's work and to have opened his own trading account, trading in gold and silver successfully.

5. Under pressure from his newfound colleagues who spoke of the boundless opportunities for him to make easy money from a foolproof scheme, the victim was induced to open his own trading account, making investments in cash. His more experienced colleague claimed that he would teach the victim how to operate his account. To buoy his confidence the victim was given receipts for his investment. A few days later, Champion's manager would claim that the victim had made a trading mistake that had resulted in him making a loss. He was required to pay Champion further sums of money in order to recover his original investment. If he did so, a few days later still he was told that due to his further trading mistakes all of his money had been lost. The victim would then either leave Champion in desperation or was dismissed, being of no further use to the fraudsters.

6. In the course of the trial, the names of the 'colleagues' and 'teachers' appeared and reappeared in the evidence of 33 victims, who were called to give evidence of their experiences while with Champion over the period of conspiracy.

7. It is common ground that the Applicant was a staff member playing the role of colleague, teacher or market room clerk.

8. Expert evidence from a certified public accountant and a member of the Chinese Gold & Silver Society in Hong Kong supported the prosecution's case that Champion was not a genuine bullion trading company.

9. There was abundant evidence that Champion's activities carried on unabated after the day of the police raid.

10. At trial, none of the defendants, including the Applicant, elected either to give evidence, or to call defence witnesses.

11. The Applicant's case was that he was not party to the conspiracy, being an honest employee of Champion and unaware of its fraudulent nature.

Grounds of Appeal

12. It is said in the grounds of appeal that the judge erred in drawing from the primary facts he found proved an irresistible inference that the Applicant was a party to a conspiracy, when other inferences were as equally supportable (the first ground of appeal). It is also said that the judge erred in placing a burden of proof on the Applicant (the second ground of appeal) and that the above reasons, either taken individually or collectively, render the conviction unsafe or unsatisfactory (the third ground of appeal).

First Ground of Appeal

13. The judge summarized and dealt with the prosecution case against the Applicant in over 5 pages of his reasons. He prefaced his discussion by summarizing the evidence against the Applicant. This consisted of his presence at the time of the police raid on Champion's premises; his admission at that time that he was a member of Champion's staff; his possession in his trouser's pocket of a number of receipts that Champion had given to certain of the victims, and that he was the brother of, and shared accommodation with the 4th Defendant, who the judge found to be also implicated in the conspiracy. As the judge appreciated, the Applicant had never claimed that he was one of the Champion's senior staff and none of the 33 witnesses had spoken of him performing the role of either colleague or teacher. In fact it appears that no witness identified him, or spoke of his role within Champion. And other than his admission that he was a member of Champion's staff, he made no further admissions to the police.

14. In respect of the Applicant's role in the conspiracy, the judge said:

" ... if the Applicant was a party to the conspiracy, it was more likely that he carried out the role of market office staff receiving order forms from prosecution witnesses and any other victims, or answering the phone calls in the market room. By 'market room' or 'dealing room', I mean the window annexed to the manager's office shown on the plan. Such a room is a normal feature of a legitimate bullion trading company, so it was part of the charade presented to the victims ... Given the nature of the conspiracy the inference is there to be drawn that anyone who took part on a regular basis in receiving the order forms in the market room or answering the phone calls and quoting prices, must have known that he was handling forms and giving prices for the purposes of a deception."

15. It is Mr Chung's argument that not only did the judge fail to determine what he meant by the phrase "market office staff", he based his finding on what the Applicant's role in Champion was on the basis of the civil standard of proof, as may be seen by his use of the phrase " ... it was more likely".

16. We do not agree; although it is true that no witness was able to identify the Applicant, or was able to say what his purported role in Champion was - as the judge said just before the passage Mr Chung complains of " ... the prosecution case does not fix the 9th Defendant's role in scheme." - the evidence shows that he was probably not a manager or a teacher or a colleague. That being so, there was only one other role for him to play, that of one of the market office staff. It was in this context, the judge used the phrase "more likely". What he was assured of was that the Applicant was a full-time staff member active in Champion's dishonest business. It must be remembered that Champion conducted no legitimate business and the Applicant had no real job to do. His job - if it may be so dignified with that title - was to act the part of one of the staff members.

17. It must also remembered that the trial was conducted by an experienced District Court Judge. It is inconceivable that he would have committed the fundamental error of deciding an issue of fact on anything other than the criminal standard of proof. And if the matter were left in any doubt, that is resolved later in his reasons, where the judge said in clear terms:

"In the case of D9, I am satisfied so as to be sure beyond reasonable doubt, that he knew the fraudulent purpose of the enterprise and that he took part in it. I am also satisfied that he continued to do so, and to remain there, for some time after 2 November. I am satisfied that D9's role was either to speak to victims on the phone from the market room and to receive their written orders, or to be actively engaged in persuading them to pay cash to the company, or any combination of those roles, and that in so doing, he knew that he acted dishonestly by any standard."

18. Mr Chung further argues that in the later part of the passage previously quoted, the judge did not consider the inference of knowledge of the fraudulent nature of Champion to be the only irresistible inference, or that at least he did not put it in such a way. As we have said the judge has a very considerable judicial experience and he was not directing a jury. It was certainly not incumbent on him to use the formula "... the only reasonable (or irresistible) inference" whenever he made reference to the inferences he had drawn from the facts. For us to require him to do so would be no more than imposing a requirement on District Court Judges that they adhere to a catechism.

19. Mr Chung takes further exception to the following passage in the judge's reasons:

"The company had been operating at these premises since September and continued to do so after the police raid, unfortunately for several months. It is a reasonable inference that a person found to be working at a going concern on a given day was, in the absence of any evidence suggesting the contrary employed there before and after that day."

20. He argues that this inference of continuous employment was not the only irresistible inference that could be drawn, especially after the day of the police raid. In true context what the judge was saying was that he could infer that the day of the raid was, in the absence of contrary evidence, not the only day that the Applicant had worked at Champion's premises. That was a sensible conclusion for him to draw.

21. The judge analysed the Applicant's possession of the victims' receipts in this way in his reasons:

"D9's possession of the company's receipts in his trouser pocket is a circumstance supporting the inference of his knowledge of the scheme and his participation. They record payments of $831,800 in cash within 4 days and I am satisfied that the money was all paid by the people employed in response to the false job advertisements. There is no evidence to suggest that he did not know what the receipts signified. The fact that they were found in his pocket and not found in a part of the office where such records would normally be kept also supports the inference, and I so find, that he tried to conceal them and therefore had knowledge that they recorded payments obtained dishonestly."

22. It is Mr Chung's argument that there was no evidence to suggest that the Applicant knew the nature or content of these receipts. Neither was there evidence to prove where they were normally kept. He says that these receipts are not confidential documents, they are of the type given to the victims. And, given their non-confidential nature, the fact that they were found in the Applicant's trouser's pocket could not give rise to an irresistible inference that he was trying to conceal them. The Applicant could well have been carrying out dispatch work without knowing the true nature or extent of the scheme.

23. Again we do not agree; this was a fraudulent company, it had no confidential records. In fact on the day of the police raid, apart from these receipts, its only other records were some unused order forms for the purchase and sale of bullion, and the interview record forms of 27 applicants for work there. Had the company been a legitimate one, it would be expected that its receipts would be kept in a file and not in the pockets of one of its employee's trousers. Given the factual matrix of this case, the suggestion that the Applicant had them for dispatch work is a fatuous one. Given the evidence of where they were found and the circumstances under which they were found - in the course of a police raid - the judge was entitled to come to the conclusion that the Applicant was trying to hide them from the police and that this indicated that he knew they recorded payments obtained dishonestly.

24. The remaining primary fact relied on by the judge is that the Applicant is the younger brother of the 4th Defendant, a person whom the judge found to be implicated in the conspiracy, and who resided with the Applicant. The judge put it this way in his reasons:

"D9 lived at the same address as D4, who is his brother. This circumstance, too, supports the inference that D9 had knowledge of Champion market's true purpose."

25. Had this stood alone, we would have had no hesitation in agreeing with Mr Chung that it could hardly give rise to any adverse inference of guilt, let alone the only irresistible inference. There can be no such thing as guilt by association. But it did not stand alone, it stood along with three other primary facts and we agree with Mr Man for the prosecution where he says in his skeleton argument that, whereas each of the four pieces of circumstantial evidence may not have been sufficient in themselves for the judge to draw the only irresistible inference that the Applicant was a party to the conspiracy, when their cumulative effect is considered, it is not surprising that the judge concluded that the Applicant who:

• 'worked' in a bogus bullion trading company, which conducted no legitimate business;
• had a brother who played an active role in the long established fraudulent scheme carried out by that company;
• was not a victim of the conspiracy;
• was in possession of a number of receipts relating to various of that company's fraudulent transactions, stuffed into his trouser's pocket, which involved, in total, a very large amount of money; and
• tried to conceal those receipts when the police raided that company's premises;

knew the fraudulent purpose of the enterprise and participated in it.

26. As Lord Simon said in DPP v Kilbourne [1973] AC 729:

"circumstantial evidence works by cumulatively, in geometrical progression, eliminating other possibilities."

And as Pollock CB said, as long ago as 1866, in R v Exall [1866] 4 F&F 922:

"One strand of the cord might be insufficient to sustain the weight, but three stranded together might be quite of sufficient strength. Thus it may be in circumstantial evidence - there may be a combination of circumstances, no one of which would raise a reasonable conviction, or more than a strong suspicion, but the whole taken together, may create a strong conclusion of guilt, that is with as much certainty as human affairs can require or admit of."

Second Ground of Appeal

27. The second ground of appeal is a contention that the judge wrongly placed the burden of proof on the Applicant to prove that he did not know the nature of the receipts found in his possession, and that he had not worked in the Champion long enough to have sufficient knowledge of its fraudulent nature. In support of this contention, reliance is placed on the following passages in the reasons (they have been quoted before):

" ... there is no evidence to suggest that he did not know what receipts signified."

"... It is a reasonable inference that a person found to be at work at a going concern on a given day, was in the absence of any evidence suggesting the contrary, employed there before and after that day."

28. These words have been taken wholly out of context. In their true context they were merely general observations (and to our minds correct ones) that there was not one shred of evidence suggesting the contrary. In no way are they an indication that the judge erroneously reversed the onus of proof.

29. It must be borne in mind that the Applicant did not give evidence. In Li Defan & Anor v. HKSAR [2002] 1 HKLRD 527, the Court of Final Appeal approved (at page 538) the following passage in the judgment of Gleeson CJ in Azzopardi & Davies v. The Queen [2001] 119 A Crim R 8:

"The failure of the accused to give evidence is not of itself evidence. It is not an admission of guilt by conduct. It cannot be, because it is the exercise of a right which the accused has to put the prosecution to its proof ... But when an accused elects to remain silent in trial, the silence cannot amount to an implied admission. The accused is entitled to take that course and it is not evidence of either guilt or innocence. That is why silence on the part of the accused at his or her trial cannot fill in any gaps in the prosecution case; it cannot be used as a make-weight. It is only when the failure of the accused to give evidence is a circumstance which may bear upon the probative value of the evidence which has been given, and which the jury is required to consider, that they may take it into account, and they may take it into account only for the purpose of evaluating that evidence. The fact that the accused's failure to give evidence may have this consequence is something which no doubt, an accused should consider in determining whether to exercise the right to silence ... But it is not to deny the right; it is merely to recognize that the jury cannot, and cannot be required to, shut their eyes to the consequences of exercising the right."

Lord Hoffman NPJ saying, succinctly, also at page 538:

"This is in my opinion also represents the law of Hong Kong."

30. In the absence of an explanation from the Applicant on the issues in question, it does not lie with him to complain that these inferences were made and were reached more readily because of his decision not to give the judge the benefit of his explanations.

Third Ground of Appeal

31. The third ground of appeal is an unashamed invitation for us to find that there is a lurking doubt in this case. This we decline to do; we are satisfied that no doubt, whether lurking or otherwise, exists in this case

Decision

32. For the reasons we have given, we are satisfied that the Applicant's conviction is neither unsafe nor unsatisfactory, and his application for leave to appeal against his conviction is dismissed.

33. As the application was wholly unmeritorious, we, pursuant to s.83W, of the Criminal Procedure Ordinance, Cap. 221, order that three months of the time the Applicant has spent in custody pending the determination of this appeal shall not be reckoned as part of the term of his sentence.