HKSAR v. FOO KING YIN

CACC 387/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 387 OF 1999

(ON APPEAL FROM DCCC 306 OF 1996)

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J U D G M E N T

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Stuart-Moore Ag CJHC (giving the judgment of the Court):

1. On 8 June 1999, the Applicant was convicted of two offences of evading liability by deception, contrary to section 18B(1)(b) of the Theft Ordinance, Cap. 210, following a trial before Judge Wilson in the District Court. The Applicant now seeks leave to appeal against conviction out of time. The fact that the application was about two days out of time was due to a technical error on the part of the solicitor then acting for the Applicant in July 1999, and we have indicated already that we propose to entertain the application.

2. The particulars of charge 1 were that the Applicant

"on the 18th day of February, 1998, in Hong Kong, with intent to make default in whole or in part on an existing liability by himself to make payment of $2,200,000 Hong Kong currency to Li Siu-hung in respect of a debt owed to the said Li Siu-hung, dishonestly induced the said Li Siu-hung to wait for payment by deception, namely, by falsely representing that three cheques bearing number 934317, 934318 and 934319, dated the 1st day of March, 1998, the 1st day of April, 1998 and the 1st day of May, 1998 respectively, all drawn on the account of Foo King-yin with the Hongkong Chinese Bank Limited would be good and valid orders for the payment of the respective sums of $100,000 and $100,000 and $2,000,000 Hong Kong currency if presented for payment on or after the dates thereon."

3. The second charge related to 10 March 1998 and was in similar terms save that the liability evaded was in the sum of $2,000,000.

4. Li Siu-hung (PW1) was a director of an investment company who had known the Applicant since 1996. The Applicant was then working for Lippo Securities, a broking firm, and he advised PW1 on stock market investments.

5. Eventually, the time came when PW1 and the Applicant began to invest jointly in the stock market, with an agreement that they would share equally the profits and losses. All went well to begin with but later, with the stock market fall in prices in late 1997, they suffered losses and the Applicant was left owing millions of dollars to PW1. On 7 December 1997, and again on 10 December 1997, the Applicant gave PW1 cheques for $1.2 m. Both in turn were dishonoured. As to the latter, the Applicant told PW1 that his bank account had been frozen by the Inland Revenue Department (IRD).

6. On 18 February 1998, PW1 met the Applicant in a restaurant where the Applicant handed over an acknowledgement of liability for $2.2 m, having earlier settled a number of accounts in part at least. The Applicant again spoke of his problem with the IRD and, for this reason, gave three post-dated cheques which are the three cheques referred to in the first charge.

7. The first of the cheques was dishonoured on presentation and this led to the meeting which took place on 10 March 1998. More accounts were settled and the Applicant then signed an acknowledgement of his debts which altogether amounted to $4.2 m. He issued three more post-dated cheques on the same bank account. Meanwhile, PW1 presented the earlier post-dated cheques on the due dates but again they were dishonoured. At about this time, in May 1998, the Applicant began not to respond to messages. Furthermore, as the judge expressed it in his Reasons for Verdict:

".... (the Applicant) could not be located when he visited his work place. He visited also the only residential address he had for the defendant, his mother's address, and learned that he no longer lived there."

8. PW1 then sought legal advice and took civil proceedings to recover his money. It was at this stage that PW1 discovered that the account, on which all the cheques had been drawn, had been closed since October 1997.

9. In June 1998, PW1 reported the matter to police and, following this, the Applicant voluntarily surrendered to police and gave two statements in which he admitted all the facts relating to the extent of his indebtedness and the cheques which had bounced. He said that he had not realised until December 1997 that his account had been closed. In particular, he admitted that there was always insufficient money in his account. His explanation to the police for having told PW1 that the IRD had frozen his account was that he wished to delay repayment in order to give himself time to borrow from friends.

10. The prosecution, during the course of the trial, adduced evidence that the Applicant had been sent warning letters in April and in May 1997 regarding the possible closure of his bank account, and he was sent a further letter in September 1997 which informed him of the actual closure of his account. The letters were sent to the Applicant's mother's address where the Applicant admitted he lived for a time and, thereafter, would visit in order to see his mother.

11. At trial, the Applicant's defence was at variance with the story he had told the police. He said that PW1 and another man by the name of Li Boon-gun ("Li") started an investment syndicate. When Li left the syndicate, he joined PW1. The Applicant said that he knew a Malaysian-Chinese broker, named Leong, who would secretly supply him with inside information. The Applicant said that eventually he introduced Leong to PW1 who, as the judge put it, enthusiastically embraced what was termed the "market-making". He said that PW1 and Leong entered into various deals of a nefarious kind and contrary to SFC regulations. The Applicant agreed that he had met PW1 on 18 February 1998 and 10 March 1998, the dates referred to in the two charges, and had signed acknowledgements of the debts which he owed PW1.

12. The nub of the defence that the Applicant put forward during his trial was summarised by the judge in these terms:

" Part of the scheme had been that Leong was to buy back shares on which he had given illegal inside information, a 'put' option. But things came unstuck when the market fell and Leong failed to honour this. There was nothing the defendant or PW1 could do to make him because they all knew that they had been acting illegally. Then Leong disappeared, first from Lippo, and now, apparently, from Hong Kong altogether.

The defendant says that when he wrote out the post-dated cheques, he was expecting funds from Leong and had first checked with Leong if there would be sufficient funds. Unfortunately, only after Leong had failed him many times, did he realise that Leong was duping him. He claimed he did not know his bank account had been closed in October and only realised this about December.

He admitted lying to PW1 about the account being frozen by the Inland Revenue Department, but he was desperate for some excuse to cover his duping by Leong.

He signed the two acknowledgements of debt and gave the three associated post-dated cheques in each case. By then he knew his bank account was closed, so he asked PW1 not to cash the cheques and PW1 reassured him he just wanted the IOU with the cheques 'to show to people'. Leong was still making promises and the defendant was hopeful Leong would pay.

As to the second acknowledgement of debt of 10 March 1998 and its accompanying three cheques, the defendant said he had signed these four papers because there was another man, Chan, with PW1, and the pair had 'sandwiched him', thus rendering him nervous. PW1 pressed for something to show people. He even felt that maybe Chan and PW1 might detain him. PW1 said he would continue to pursue Leong for him anyway and, furthermore, PW1 would not actually present the cheques.

He had admitted to the police signing the two debt acknowledgements and all the cheques, but did not tell the police the full circumstances because he did not want to attract their enquiry, nor that of the SFC, to the 'price fixing and market making'. At least by the time of the later cheques, he admitted he knew the account was closed but wrote them because PW1 had pressured him for something to show to others and he had no intention of banking them. He agreed he never had any money in the bank, agreed he had lied about the freezing by the Inland Revenue Department. But all along had a hope, an expectation that Leong would pay him.

Finally, he pointed out that his signature on the original bank specimen card and his signatures on the cheques varied very slightly. This, he said, was because when signing the cheques he deliberately adopted a rapid, shortened signature to indicate the inhibited state of his mind, with the intention of referring to it should any subsequent litigation arise."

13. All in all, as the judge's findings disclosed, the Applicant attempted to depict PW1 as a rather shady share investor who had become involved in share price-fixing and other improper practices contrary to SFC regulations. PW1, for his part, conceded that the Applicant had spoken of Leong, but he denied any communication with that person himself. The judge also noted that the Applicant had never mentioned Leong to the police in either of the statements he had made to them. The second of those statements was made a month after his arrest.

14. The judge's assessment of PW1 was that he appeared to be:

"a substantial, legitimate and orthodox investor who at first prospered but who, like many others, had his fingers burnt in the '1997 crash'. Mr Li's account that he supplied the money and the defendant made the investment choice, was entirely plausible. The defendant's account that Mr Li supplied the money and Leong did the price fixing, made no sense insofar as it meant the defendant was contributing nothing.

I reject the assertion that Mr Li was involved in any illegal price fixing. In fact, I had a distinct impression that if anyone was involved or tried to get involved in such an activity, it was the defendant himself."

15. The judge concluded by rejecting the Applicant's evidence that he had an expectation that the "mysterious" Leong, as the judge described him, was at all times about to produce funds. He concluded that when the cheques were written, the Applicant knew there was no prospect of them being met and that he had no intention that they should be met.

16. With this background, the Applicant has put forward a single ground of appeal in which he says that the judge erred in holding that:

"Mr Li (PW1) presented the cheques of 1 April and 1 May 1998 and they too 'bounced' on their respective due dates. At this point he was losing hope that any of the defendant's cheques would be honoured. He found the defendant did not respond to messages at all and he could not be located when he visited his work place. He visited also the only residential address he had for the defendant, his mother's address, and learned that he no longer lived there as the learned judge was under misapprehension of primary facts in that he overlooked the evidence of PW1, Mr Li Siu-hung that:-

(a) PW1 did not go to the residential address of the defendant after 1 May 1998 but prior to 18 February 1998, the date of the first IOU; and

(b) PW1 did not go to Lippo Tower, the alleged work place of the defendant, after 1 May but shortly after Chinese New Year in 1998."

17. The Applicant submitted that the conviction was one which was both unsafe and unsatisfactory for the reason set out in this ground of appeal.

18. As Mr Madigan pointed out, on behalf of the Respondent, the issue raised by the Applicant was entirely peripheral to the central allegation against the Applicant. In our view also, the ground of appeal is wholly irrelevant to the reasons which were given for convicting the Applicant. There was an abundance of evidence about the Applicant's involvement and, whenever it was that PW1 sought to find the Applicant, it is clear that he had been unable to do so. There is an example of this to be found in the evidence at page 94 in the bundle where PW1 said:

"... I tried to look for Foo King-yin, I paged him, and he did not reply to my call. I visited his home at City Garden but his mother said that he was not there, and I took the cheques to there. His mother also said that she was not able to locate Foo King-yin. Therefore, I took the cheques to the solicitor firm and to sue him for the $100,000 first."

19. If there was any misapprehension by the judge of any of the primary facts as to the dates that the judge recited, it was a matter of very small moment, and an unimportant detail in a catalogue of evidence which cumulatively provided an overwhelming case against the Applicant on these charges.

20. The Applicant sought to raise other minor points and he confirmed that these were in the nature of an afterthought, coming more than six months after trial and after his settled ground of appeal which I have read in its entirety, dated 27 January 2000. In effect, the Applicant complained that DW2, who was an expert witness called on his behalf, had not sufficiently been taken into account by the trial judge. This is clearly not so. The Reasons for Verdict deal with that witness in a manner which indicates that the judge had taken into account the testimony he had provided.

21. The application has not the slightest merit and it is dismissed.

22. Costs in the sum of $10,000 are awarded to the Respondent.