HKSAR v. CHONG KO LAN AND ANOTHER

HCMA 693/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 693 OF 2009

(ON APPEAL FROM TWCC 1140/2009)

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BETWEEN

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J U D G M E N T

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1.  On 17 July 2009 the 1^st appellant was convicted after trial in the magistracy, before Magistrate, John Glass Esq., of one count of handling stolen goods and the 2^nd appellant was convicted of one count of theft. Each appellant was sentenced to 12 months’ imprisonment on 5 August 2009. Both appellants appealed against conviction only.

2.  Some time between the late afternoon of 18 June 2008 and the early morning of 19 June 2008, iron construction materials were reported stolen from a construction site operated by Geotech Engineering Company Ltd (Geotech) at South Lantau Road, near San Shek Wan Village, Lantau Island.

3.  PW1, a crane truck driver, received a job order in the afternoon of 18 June 2008. He went as instructed to a rendezvous in the Tung Chung restricted area at 5:15 pm. A Mercedes car appeared and PW1 followed it into the restricted area to a site where there was a pile of construction material. A man at the site told him to load a quantity of iron on his crane. PW1 loaded 20 pieces of iron slab, six pieces of ‘I’ beam steel and 12 pieces of grooved steel. The Mercedes car had already left by the time PW1 finished loading; he received a telephone call telling him to bring the materials to Fairview Garden roundabout in Yuen Long. It was the prosecution case that A2 gave the instruction to collect the iron, although he was not identified by PW1.

4.  At the roundabout, PW1 saw the Mercedes car again and followed it to Cheung Fat Metal Trading Company (CF) at Pok Wai Village in Yuen Long where he unloaded the iron. It was 7:25 pm and the company had closed for the day, however PW8 who worked at the company had been told by his boss to open the company to attend to a customer. PW8 bought the iron for $17,458 from the people in the Mercedes car. He paid $1,500 to the seller and told him to return to CF to collect the balance of the money the next day.

5.  About noon on 19 June 2008,A1 arrived at the company to collect the money. The clerk gave him the money and recorded his name, identity card number and the registration number of his car.

6.  On the same day police recovered the iron from CF and PW2, who worked for Geotech, purported to identify the iron as the property of Geotech which had been stolen from the construction site in Lantau.

Appellant 1

7.  A1 was arrested on 20 June 2008. Under caution, he confirmed that he owned a Mercedes car registration number MG 5773, which had not yet been registered in his name, that he was a construction contractor and A2 was his subcontractor, with whom he was about to start a contract to remove and replace window frames. A2 would do the hardware work for the project. Iron construction materials would be needed.

8.  On 18 June 2008, A2 telephoned him to say that his friend had some surplus iron for sale at $20,000. A1 asked A2 to look at the iron and lent him his car in order to go and inspect it. A2 had to pick up the car from Kwun Tong; he did not know at that time where the iron was. At 2 pm, A2 telephoned A1 to say the iron was not worth buying. Al told A2 to buy the iron if he found it good and the price was right. It was A1’s view that as it was A2 who was doing the job, he should choose the material.

9.  Al returned home to Tin Shui Wai from Kwun Tong. At about 6 pm, he asked his wife to deposit $3,000 into his bank account to fund the possible purchase of the iron. A2 called him again after 6 pm to say the iron was not fit for their purpose, so A1 told A2 to tell his friend that they would not buy the iron and to suggest the friend sold the iron himself.

10.  A2 telephoned after 7 pm to say that his friend would like to sell the iron at $12,000 as he needed to have the money quickly, but the recycling depot was closed. A2 estimated the iron was worth $17,000 and suggested to A1 that he buy the iron and pay his friend $12,000. He could then get $17,000 from the scrap dealer the next day, thus making a quick profit.

11.  A1 arrived at the Cheung Fat depot at about 8 pm and saw A2’s friend, subsequently identified to A1 as Chan To-keung and a staff member of the depot. A2 gave him a receipt saying the iron had been sold for $17,000 to CF. A1 did not see the iron at the time. The staff at the depot gave Chan $1,500 to pay for the crane truck hire and the remainder was to be paid out by CF the following day.

12.  A1, A2 and Chan left the depot in A1’s car and went to the railway station ATM where A1 withdrew $2,000; he paid that sum plus $8,000 cash to Chan and asked him for a receipt which A2 signed as witness. Chan gave A1 a photocopy of an identity card in the name of Chan To-keung.

13.  The next day, A1 went to collect the sale proceeds. A2 did not ask for a share of the profit that he made, nor did he tell him at any time how or from where the iron was obtained. A1 said he had never seen Chan To-keung before this encounter.

Appellant 2

14.  A2 was arrested on 8 July 2008. In a cautioned interview, he confirmed that he owned a light goods vehicle and said that in June 2008 he met an unknown man, referred to as ‘Tai Jek Lo’ who made enquiries about the work he was doing and examined a sketch of proposed construction work that A2 was studying. On 18 June 2009 A2 met Tai again, asked if there was any used construction material for sale and was told that there was a quantity of material left behind which would be fit for his use. Tai left him his contact telephone number by calling A2’s telephone.

15.  A2 reported the offer to A1 who asked him to go and look at the material using A1’s Mercedes. A2 parked his own vehicle and collected A1’s. Around midday, Tai directed him to Lantau as he was unfamiliar with the island. Eventually, he stopped as directed at a roundabout, around 2 to 3 pm.

16.  Tai pointed to a heap of iron in an open space and said that was the material for sale. As it was raining heavily, A2 did not get out of the car to examine the material. He telephoned Al to say the iron was valued at about $20,000-$30,000 and thereafter Tai spoke to Al on phone. After that Al spoke to A2 and reached an agreement with Tai at around $20,000, and then drove to Tai Po to collect the purchase money. Tai called for a crane truck. (Tai was referred to as Chan by A1).

17.  Chan then asked A2 to drive back to a petrol station to wait for the crane truck. He gave A2 a red fruit bag containing papers telling him to give it the driver in due course. A2 drove off alone to meet the crane truck and Chan stayed at the site.

18.  Some time after 5 pm A2 met the crane truck driver, gave him the papers and led the truck back to the site where Chan and the driver loaded the iron onto the truck. After loading, Chan spoke to Al on the phone. Then A1 spoke to A2 telling him that the iron was not fit for their purpose and he did not want it. Chan asked A2 and the crane truck driver to go to Fairview Park to a metal works, CF.

19.  About 30 minutes later, a staff member of CF arrived and opened the shop. A2 stayed in the car. Ten minutes later, Chan returned saying that he needed $12,000 urgently but the scrap shop did not have the money available. A2 believed that the iron was worth more than $12,000 and telephoned Al telling him a quick profit was possible. A1 arrived by taxi 20 minutes later. Chan was given $1,500 and A1 drove the Mercedes to the railway station to withdraw money from the ATM. A2 signed as witness on the receipt for the payment made by A1 to Chan.

20.  A2 could not provide police with the name and address or contact number of Tai. He said he knew that there were two bundles of the iron including one bundle of iron ‘I’ beams and grooved iron and one bundle of iron slabs.

21.  At trial both appellants elected to remain silent; they called no witnesses. The prosecution relied on the contents of the Video Interviews which were mixed statements, the voluntariness of which was not disputed. Originally, both A1 and A2 faced a handling charge. At the end of the trial, the Magistrate amended the particulars of the charge against Al as to the place where the police found the iron. The charge against A2 was amended to theft. The amended charges were put to the appellants who maintained their pleas of not guilty. No request was made by defence counsel to recall witnesses or seek an adjournment as a result of the amended charges.

22.  The Magistrate accepted the evidence of the 9 prosecution witnesses and rejected the exculpatory content of the accounts given by each of the appellants.

Grounds of Appeal - A1

23.  Overall it was contended on behalf of Al that the Magistrate erred by rejecting his account as given in the Video Interview (Ground 1).

24.  Particular complaint about the Magistrate’s findings were: his finding that A1 had an element of control over the iron when it was unloaded at the scrapyard (Ground 2); his finding that there was no explanation who the third person at the scrapyard was (Ground 3); his finding that A1 had applied for bankruptcy (Ground 4); his rejecting A1’s account that he had no knowledge of the source of the iron (Ground 5) and his finding that A1 knew or believed the iron to be stolen and in that knowledge or belief had received stolen goods (Grounds 6 and 7).

Consideration of grounds for A1

25.  Counsel for Al complained that although Al gave a detailed account of what had happened that day, the Magistrate dismissed it out of hand without giving any explanations or reasons why he should do so. The court was referred to HKSAR v. Yip Wai-kee HCMA 1003/2001 which confirms a defendant’s entitlement to know, why his case and evidence has been rejected. There Deputy High Court Judge McMahon stated:

“8.  Any acceptance of one witness’s evidence over another’s cannot be arbitrary.  It must be based on reasons and those reasons must be stated by the convicting magistrate.  Simply saying that an appellant’s evidence was disbelieved when it was given in the court below is not enough:  HKSAR v. Wong Lap Chi, HCMA 325 of 1999; R. v. Chang Siu Ming, HCMA 833 of 1995 and HKSAR v. Mak Kwok Kong, HCMA 956 of 1999.

14.  … It may well be that on occasion it is difficult to express any reason for rejecting a defendant’s evidence.  But if it is rejected there must, in fact, have been some reason for the court to have done so.  For one thing a court cannot reject a defendant’s evidence unless it is sure it is right to do so.

15.  Whether the rejection occurs because of some inherent implausibility or contradiction in a defendant’s case or the strength of the prosecution witnesses’ evidence or by way perhaps of a number of reasons in combination a defendant in a criminal trial is entitled to know, even if very briefly, why his case and evidence was rejected and how the issues arising therefrom were resolved.”

26.  The Magistrate drew inferences from what he considered were facts he found proved. Despite his stating he rejected A1’s explanation of certain matters he then appeared to take them into account. In some instances he attached too much significance to matters which, even collectively, could not amount to proof of guilty knowledge. For example the following findings from para. 23 did not establish that A1 knew or must have known that the iron he was purchasing was stolen.

“(c)  A1’s car had been used to go to the site.

(f)  A1 admitted being at CF near the time the iron was unloaded.

(g)  A1 agreed to pay Chan for the iron.

(h)  A1 claimed he had no knowledge of the origin of the iron but was prepared to accept money for it without knowing anything about Chan or the origin of the iron.

(j)  Al had knowledge of the origin of the iron, because he made advance payment to Chan for the iron.

(k)  A1 was the person who was to collect the money next day after the iron had been stolen from the site.

(m)  Al knew he was to make a large profit from Chan’s deal when the iron was received at CF.”

At their highest those matters might have been indicative of suspicious coincidence.

Ground 2

27.  There was no evidence that A1 was present at CF when the iron was unloaded. The Magistrate had specifically rejected the identification by PW7 and PW8. He stated that his acceptance of the identification of A1 was drawn from admissions, irresistible inferences and admitted facts. However on A1’s account of events, the iron had already been sold by the time he arrived at CF and he had not seen the iron or the crane truck.

Ground 4

28.  The Magistrate rejected the account given by A1 as untrue without explaining why he had done so. At para. 8 of his Statement of Findings he considered that as A1 had no work for the time being except the work he had planned with A2 and because he had applied for bankruptcy, it was unlikely that A1 would assist A2 to purchase the iron.

29.  In fact, as A1’s counsel complained, A1 had applied for bankruptcy 4 years before, so it was hardly a current problem and unlikely to preclude him from assisting A2 with the purchase of the iron.

30.  Ground 5 was that there was no evidence that A1 had knowledge of the source of the iron, except that it was coming from a friend of Lau. From this the Magistrate appeared able to infer guilty knowledge. The Magistrate did not explain why he rejected the exculpatory content of the Video Interviews, but listed what he rejected without further explanation.

31.  Suspicion, whether mere or strong, is insufficient to establish beyond reasonable doubt that Al knew or must have known that the iron was stolen. The circumstances of the transactions insofar as they related to A1, might have been unusual, but were not so strange or lacking in commercial precedent, as to be improbable as the Magistrate thought.

32.  There was no cogent evidence that A1 knew the iron he purchased was stolen. The matters listed in para. 23 from which the Magistrate purported to draw inferences, even if proved, were not sufficient to establish the elements of the receiving charge beyond reasonable doubt.

33.  A1 had rejected the original purchase transaction – it was some time later that the second deal was proposed by A2 and agreed to by him. He did not avoid using his own identity card – he went in his distinctive car to a nearby ATM machine and took out the money in the presence of witnesses, A2 and Chan. He was not registered as the owner of the Mercedes at the time, but there would be little difficulty in tracing his connection to the car. He could have asked A2, but did not, to use his light goods vehicle – which would have helped to obscure any connection A1 might have to an illicit deal.

34.  The onus of proving guilty knowledge or belief that the goods were stolen is on the prosecution. In the absence of direct admissions or evidence that the goods were stolen, such guilty knowledge can be inferred if the accused has not offered any explanation to account for his handling of the goods, or if any explanations consistent with innocence are clearly untrue. Where an explanation has been given which leaves the tribunal in reasonable doubt as to whether the explanation offered by the accused is true the offence has not been proved. It is not sufficient to show that A1 suspected the goods were stolen, or that he should have been suspicious of the circumstances or even that he turned a blind eye to the circumstances, although those matters may be taken into account in deciding whether or not the necessary knowledge or belief existed.

35.  There does not appear to have been anything so improbable in A1’s behaviour that his account should have been rejected out of hand. He was to engage in a project with A2 as subcontractor and knew materials were required. A2, with whom he was familiar, had suggested a possible source of iron and was sent by A1 to examine it. A2 reported it was not suitable so A1 told A2 not to proceed with the purchase. He had arranged funds against a possible purchase. He was not aware of the source of the metal but relied on A2’s expertise. When the deal for the purchase of iron for scrap was suggested, he paid Chan and obtained from him a receipt and copy of his identity card. When he collected the funds for the iron sold to CF, he gave his own identity card details and his car registration number.

36.  Neither his own account nor the circumstances reveal that Al subjectively knew or believed the goods to have been stolen. He had made no attempt to distance himself from the transaction or to deflect evidence of his involvement.

37.  I cannot be satisfied that A1’s conviction is safe or satisfactory. I allow his appeal against conviction.

Grounds of Appeal - A2

38.  A2’s conviction was said to be unsafe and unsatisfactory because:

(a)  the magistrate erred in finding that A2 had stolen the iron when he had not been identified by any witnesses whether at the scene of the theft or of the disposal;

(b)  there was insufficient evidence to show that;

(i)  the stolen items belonged to Geotech;

(ii)  A2 had instructed the crane driver to remove the iron from the site;

(iii)  A2 had given the crane driver the permit to enter the restricted area;

(iv)  it was A2 who had stolen the items;

(c)  the magistrate erred in finding that A2 had the necessary mens rea for theft;

(d)  the magistrate erred in his understanding, treatment, assessment and interpretation of A2’s cautioned statement.

39.  The Magistrate convicted A2 of theft on the basis of his having instructed the driver of the crane truck to remove the iron from the site. However, A2 made no admission in his Record of Interview that he supplied a permit to the driver or that he had told him to follow the Mercedes. Nor was there evidence that A2 had identified the iron for PW1 or told him to remove it.

40.  The crane driver, PW1, had not identified A2, nor did his statements reveal that it was A2 who pointed out the iron. The prosecution evidence included CCTV footage showing 3 men alighting from the car at the site. The Magistrate simply found that ‘one occupant’ instructed the crane driver to pick up the iron and later instructed him to unload it at the scrapyard. He drew an inference that the ‘one occupant’ was A2, but did not explain why he was able to exclude the other 2 occupants.

41.  There was no clear evidence to establish A2 as the thief. The prosecution at trial had relied on their evidence as showing that “Tai Jek Lo”/Chan had been the actual thief and that it was A2’s role only to realise the proceeds. The receipt for the sale was made out to Chan, not to A2.

42.  Nor was there any cogent evidence to show that the iron allegedly stolen was the property of Geotech, or that the iron from the site was the same iron as later recovered by the police. To say as the Magistrate did on several occasions that it was similar was insufficient. There was no witness from Geotech who could identify the allegedly stolen property satisfactorily.

43.  There were no marks on the iron which identified the pieces as Geotech’s property. They were metal items of types which were not uncommonly used on construction sites. The most that could be said about them was that they were similar in type to those ordered by Geotech and delivered to the Geotech site, that according to PW6 they were not scrap metal and that the number of items delivered, as stated by PW6, was not accepted by the Magistrate as accurate. Despite the inaccuracy he was able to accept his evidence of ‘the general nature’ of the iron. He marked the different descriptions given by PW1 and PW6 about whether the site was marked with cones and speculated that the cones PW6 claimed were there could have been removed before PW1 arrived.

44.  The Magistrate in his Statement of Findings declared himself satisfied that PW2, one of Geotech’s staff, when leaving work, had seen the same iron as that collected later by PW1. He did not explain how he was able to be so satisfied when PW2 gave evidence that he did not inspect the iron except in a very cursory fashion. There was no evidence to show that the materials eventually recovered by the police from the scrapyard were those purchased by Geotech and reportedly stolen.

45.  The prosecution were relying on inferences being drawn from proved facts to establish that the iron was one and the same – the Magistrate obliged by drawing such inferences, but, they were based on inadequately proven facts.

46.  Overall, I cannot be satisfied that the inferences drawn by the Magistrate on which he relied to establish that A2 was guilty of theft were the only reasonable inferences which could be drawn from the evidence.

47.  Further the Magistrate rejected A2’s account of his involvement and his meeting with Tai as untrue (Para. 9 Statement of Findings) without explaining why he did so.

48.  Accordingly, I allow the appeal of A2 and quash the conviction.

49.  I make an order nisi for costs of the appeal in favour of the appellants, to be taxed if not agreed.