HKSAR v. WAT YIU KWONG CARDIFF

CACC 237/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 237 OF 2001

(ON APPEAL FROM DCCC 189 of 2001)

__________________

______________

______________

J U D G M E N T

______________

Hon Stock JA (giving the reasons of the Court):

Introduction

1 This applicant sought leave to appeal against conviction. He also sought a determination that his abandonment of an application for leave to appeal against sentence was a nullity. On 11 September we rejected both applications and said that we would give reasons in due course. This we now do.

CONVICTION

The first issue

2 The first issue in this case was whether there was sufficient evidence to warrant the applicant's conviction upon the charge of conspiracy to defraud for which he was convicted by HH Judge Sweeney in the District Court on 5 July 2001. The assertion was that he was party to a long firm fraud, that is, a fraud by which a company was established to place orders with several suppliers on the Mainland with the intention ultimately to avoid payment for goods provided.

3 There were five defendants in the trial. The charge alleged conspiracy to defraud and the particulars of offence ran as follows:

LUM Chi-ching, WAT Yiu-kwong, Cardiff, CHANG Chi-nang, KWONG Fook-cheung, Benny and YEUNG Ping-fai, on divers dates between the 1st day of August 1998 and the 30th day of September 1999, in Hong Kong, conspired together with SIT Ho-kai and other unknown persons, to defraud such companies firms and persons as might deliver goods to Dragon East International Company by dishonestly and falsely representing to such companies firms or persons that:-

(a)	they were then conducting a genuine and honest business in the name of Dragon East International Company at Flat B, 23/F., Fu Tak Industrial Building, No. 17, Sheung Hei Street, San Po Kong, Kowloon, and
(b)	cheques drawn on the bank account number 014-692-00012594 with The Yien Yieh Commercial Bank Limited in the name of Dragon East International Company in payment of goods delivered would be good and valid orders for payment on or after the said cheques becoming due.

The evidence

4 The evidence was that Sit Ho-kai was the person in charge of Dragon East Company Ltd ("Dragon East"), which was incorporated in 1998. There were three Mainland companies targeted as suppliers, and from the end of 1998 to the summer of 1999 their trust in Dragon East was cultivated by Lum (D1) and others by the placing of orders for the supply of garments, and by the meeting of initial payment obligations. We abbreviate the lengthy names of those companies to Huafang Clothing, Shenzhen Chemicals, and Shunde Garment respectively.

5 The evidence was of introductory calls to the companies, visits by more than one defendant to the companies on the Mainland, and, at the suggestion of D1, reciprocal visits to Dragon East's company premises in San Po Kong. In the summer of 1999, the orders increased very significantly and settlement was proffered by post-dated cheques. D5 was the sole signatory for Dragon East's bank accounts. It was significant that the bank statements showed that large cheques emanating from Dragon East were in favour of three companies only, namely, the three Mainland companies which were ultimately defrauded.

6 In September 1999, cheques issued in July and August to those three companies were dishonoured. The companies pressed urgently for payment. Fresh arrangements were made to keep them happy, whereby cheques were issued for presentation in late September 1999, coinciding with the National Day holiday when the banks on the Mainland were to be shut for about seven days. These later cheques were not met and on 30 September 1999, it became apparent that Dragon East had closed its offices permanently. Thereafter those with whom the companies had dealt were not contactable. D1, the applicant (D2), D3 and D4 had, prior to this date, regularly visited the Mainland, but they then stopped doing so, although the applicant visited twice in October and once in November.

The judge's findings

7 The judge held there to be an irresistible inference that Dragon East was run as a long firm fraud, with Sit as its head. That inference, he said, was to be drawn from a series of facts, including the fact that the sole proprietor, D5, was not involved in the day-to-day operation of the company; the slow build up of business and, latterly, of credit, with a culminating rush of large orders to be settled by post-dated cheques, all of which were dishonoured; the sudden closing of the business; and the disappearance of those who had worked there. The drawing of this inference was, in our judgment, unimpeachable.

8 D1 played a significant role in contacting the Mainland companies and in dealing with them and introducing Sit to them. In his dealings with them he used a bogus name, and described himself as Executive Manager. He, with D3 and D4, visited the companies on the Mainland. D5 was acquitted at the close of the prosecution stage, for the prosecution conceded that he had been used to sign documentation, and that there was no evidence against him further than that. D3 and D4 were also acquitted; the judge commenting that the mere fact of ordering and taking delivery of goods was not inherently unlawful, and that it appeared to him that those two defendants were each lower down the chain of command than the others. D3 had a clear record, and neither he nor D4 had used false identities in their dealings with any of the Mainland companies.

9 The evidence against this applicant was that of a Mr Wu, the manager of Huafang. After regular contact with D1, Wu and his boss (a Mr So) were invited to come to Hong Kong to meet personnel of Dragon East at the San Po Kong office. There, in May 1999, Wu was introduced to the applicant. The applicant produced his name card, but the name was false. The name provided was Mok Wai Keung, and he was introduced as a manager, and the card which he presented described him as 'Business Manager'.

10 Mr Wu next met the applicant in August 1999. This time, the applicant went to the Mainland factory of Huafang in the company of D1, and there was a conversation in which the applicant sought to encourage more business with Dragon East, saying that the company dealt with big business and had much capital.

11 The applicant's evidence at trial was that he was a bird enthusiast, and that he accompanied D1 on his August trip to Zhong Shan only because he, the applicant, wanted to acquire bird club members there. Since he thus happened to be with D1, he accompanied D1 to the factory. He never presented a false card, or used a false name, and he had nothing to do with Dragon East. He did not discuss the company's business with Mr Wu.

12 The judge did not believe him. He believed Mr Wu, to whom, incidentally, the applicant's account of the factory visit was not put. The judge concluded that the applicant had assumed a managerial role in the company, and had made false representations about the company's financial position, and had used a false name. The only reasonable inference, he said, was that the applicant was aware that Dragon East was the vehicle for a long firm fraud, and had assisted in that endeavour. So he convicted the applicant, who then sought leave to appeal against conviction.

The argument

13 The grounds of the application were that there was insufficient evidence against the applicant to sustain the conviction, and that the judge did not show how the applicant was guilty of the wide conspiracy with which he was charged, so that the verdict was unsafe and unsatisfactory.

14 Mr Marash SC who appeared for the applicant, said that there was no evidence that the applicant had anything to do with the setting up of the company; nothing to show that he knew that his representations about the company's financial position in August were false; that the introduction of the applicant as a manager was consistent with as little knowledge as one might expect of a sales manager or a purchasing manager; and, so it was put in written argument although not advanced orally before us, that the use of the false name in May 1999 was well before any cheques were dishonoured.

Analysis

15 The presentation of the false name card cannot be wished away. It is a fact shortly stated, but an immensely telling one for which no innocent explanation was or, in truth, could be, advanced. The card was presented on an occasion when Huafang personnel were brought to Hong Kong especially to meet Dragon East personnel, and to lend credibility to the affairs of Dragon East. The applicant was introduced as a manager, and did not seek to dissociate himself from that description. The point that the false name was used well before Dragon East was shown to be dishonouring cheques is not a strong point, for it does not explain why a false name was used at all and, in any event, May is not to be pictured in isolation, for the applicant presented himself again in August and must, by the very continuity of events, have been doing so as the same person whom Mr Wu had met in May; the same Mr Mok; the same business manager; and, on this later occasion, 'puffing' the company's prospects in his supposed capacity of business manager of Dragon East. We fail to see at what other realistic conclusion the judge could have arrived.

16 This leaves the second ground. It was put in the original argument, as we understood it, that the width of the conspiracy charge went beyond the demonstrated involvement of the applicant. It was said that, assuming against the applicant that there was sufficient evidence to show that the applicant was involved in defrauding Huafang, there was none that he was involved in defrauding Shenzhen Chemical, or Shunde Garment. The judge, it was said, erred in concluding that the applicant was aware that Sit was operating a long firm fraud and that he, the applicant, was assisting him to do that. As Mr Marash put the case in oral argument, he emphasized the significantly active role of D1 suggested by the evidence, and the more limited activity of the applicant, and pointed to the second particular of the alleged conspiracy, namely, a conspiracy to represent that cheques would not be honoured. How was it shown, asked Mr Marash, that the applicant was, in August, aware of the parlous financial state of the company when, on any view, cheques were dishonoured later than the August visit to the Mainland to which visit the applicant was a party?

17 The evidence and its context are to be viewed realistically. The operation of the scam was conducted from Dragon East's offices in San Po Kong. The company had no other offices. The purpose of establishing Dragon East was to conduct a long firm fraud. Sit appears to have been in charge, and the evidence shows D1 as active in relation to all three targeted companies. The applicant was, according to the evidence accepted by the judge, in the offices of Dragon East in May when Huafang officers were asked to come to meet Dragon East personnel. Sit was there and Mr Wu was introduced to Sit, and was then introduced to the applicant. In other words, the applicant was at the offices at the same time as Sit. The applicant was introduced as a manager, and held himself out as the business manager. The applicant appeared again as the business manager in August during the visit to the Mainland, and he traveled there with D1; D1 who was so active in the frauds against all three companies. When there, the applicant took it upon himself to impress Mr Wu about Dragon East's state of business, and the extent of its operations. Against this background and the evidence as a whole, it is unrealistic to conclude that this applicant could have been ignorant of the fact that he was other than assisting a group of men engaged in a long firm fraud which went beyond the particular acts which he was shown to have committed. That being so, he was party to the conspiracy charged. In so far as it has been contended that he may have been kept in the dark, despite being in the company of D1 and others, as one might keep in the dark a "dummy" employee, this is an explanation which might conceivably have run were it not for the applicant's false representations about his identity.

18 For these reasons, the application for leave to appeal against conviction was dismissed.

SENTENCE

The application

19 We turn next to the question of sentence. We were presented with an application dated 9 September 2002 which sought leave to withdraw the applicant's notice of abandonment of his application for leave to appeal against sentence, and sought to be allowed to proceed with an appeal against sentence. Although the application was one seeking 'leave to withdraw' the abandonment, a label that is commonly applied, it is not in such cases a question of withdrawal of a notice. It is a question whether the notice of abandonment is a nullity. If such a notice is a nullity, there is nothing to withdraw. The point is not one of mere accuracy, but is also made because the regular use of a notice entitled "application for leave to withdraw" encourages the notion, perhaps, that there is at large some residual discretion in the Court to permit withdrawal if the apparent merits of the underlying proposed appeal so warrants.

History

20 The procedural history is this. The applicant was convicted on 5 July 2001, and on 10 July 2001 he gave notice of application for leave to appeal against conviction and against sentence. He supported those applications with home-made grounds and, in relation to sentence, he set out clearly what he suggested those grounds were, including the nature of his role in the offence, and a comparison with the sentence imposed on D1. Then, on 10 September 2001, that is one year ago, he gave notice of abandonment of his application, but he selected what it was that he wished to abandon, namely, only the application for leave to appeal against sentence.

21 In October 2001, he wrote to the court at length complaining of the Legal Aid Department's refusal of legal aid in relation to his appeal against conviction, and he set out his complaints about the trial and, in doing so, he presented a point-by-point analysis.

22 On 16 April 2002, eight days before the single judge was to hear his application for leave to appeal against conviction, solicitors came on to the record; so that hearing was vacated. In May 2002 that application was listed to be heard on 11 September, and the day before that hearing the Court received this application to treat the abandonment as a nullity.

The basis of the application

23 The application is supported by affirmation. In it, the applicant says that when his application for legal aid was refused, he spoke to a welfare officer at the prison to ask him what he should do; and the welfare officer suggested that he should engage a lawyer privately and that if he could not do so, he should pursue his appeal in person, and he was also reminded, he says, of the power of the Court to make an order which has the effect of increasing the term served. He says that he has no legal knowledge, and had no money to engage a lawyer, and that he felt frustrated, and decided to abandon the application in relation to sentence. He thought that since he had been refused legal aid on the merits, his application against sentence must be hopeless, and he worried about the risk of an increase in his sentence. The matter is then couched in a way intended, perhaps, to touch upon the true issue which the court has to address, that of nullity: he says that his decision was uninformed. He now has a lawyer, and has been told that he has an arguable ground of appeal against sentence.

Analysis

24 One starts from the fact that, in consequence of the abandonment, the application for leave to appeal against sentence has been dismissed. The only lawful way in which it can be restored is if it be shown that the notice of abandonment was a nullity.

25 It is apparent from the applicant's own evidence that he made a deliberate decision to abandon his appeal against sentence; that he knew the nature of that act; that he was not acting under any material mistake of fact when he took that step; and that he did not misunderstand the consequences of what he was doing. In so far as he thought that he had no chance of success in relation to appeal against sentence but now he thinks, upon advice, that he has, that does not constitute a mistake of fact such as to render his decision a nullity. It is a mistake, if it be a mistake at all, as to his prospects of success, and the distinction between the two is one to which reference was made by Lord Goddard in R v Healey (1956) 40 Cr App R 40, where at page 44 he said:

"I am quite certain that misapprehension or mistake of fact does not arise if the prisoner has been weighing up his chances and decided it would be more advantageous to him to abandon his appeal and he is then advised that was an unfortunate decision to make."

It is a distinction to which further reference was made by Lawton LJ in R v Peters [1973] 58 Cr App R 328, 332 when he commented that:

"The applicant was not making a mistake as to his act. He was making a mistake as to his prospect of success in his application, which is another matter altogether."

See also Chan Tak-kwong v R [1983] HKLR 391.

26 Mr Marash argued that there was a distinction between, on the one hand, a judgement or assessment, perhaps erroneous, that a ground advanced is not meritorious and, on the other, an assessment that there exists no possible ground of appeal at all, when in fact one does. This is, for present purposes at least, a distinction without a difference, for both conclusions flow from a judgement as to the merits which cannot, as is well established, found a nullity.

27 The cases upon which he relied as suggesting support for his proposition - R v Nui Hei Yuk Cr App No 242 of 1991, unreported; and R v Munisamy (1974) 60 Cr App R 289 - were unusual on their facts and far removed from an abandonment following a mere assessment of the merits. In Nui Hei Yuk there had been no appeal at all against one of three sentences imposed, and it was only the combination of all three which showed that the judge had made orders which he had no power to make; a fact which was revealed by the prosecutor after the abandonment of the appeal against the two sentences which viewed in isolation did not reveal the ultra vires order made. In Munisamy, the applicant was quite erroneously led to believe by his legal advisers that an attack upon a compensation order was an exercise in futility if pursued at a stage when most of his prison term had been served; whereas in truth, the one depended not in the slightest upon the other. It is not surprising that the court was there able to construct a nullity out of the abandonment.

28 The type of circumstance in which abandonments may be treated as a nullity are helpfully rehearsed in a recent decision of the Court of Criminal Appeal in Western Australia, R v Bridges 104 A Crim R 322; and a study of the cases there cited demonstrates how wholly removed from a nullity was the abandonment in this case. By contrast this applicant fully intended to do what he did. He intended to abandon his appeal against sentence, and he knew when he signed the notice of abandonment that that is what he was doing. Nor was he under any misapprehension as to the consequences of what he was doing, in other words, as to the effect of the notice. We note, in passing, that his suggestion that he abandoned the application in relation to sentence because he feared that the legal aid decision meant that he had little chance of success sits ill with his decision nonetheless to pursue his application against conviction; but, for the reasons we have explained, this in any event is not to the point.

Conclusion

29 For these reasons we dismissed the application to treat the abandonment as a nullity.