HKSAR v. CHONG CHI HO

CACC 259/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 259 OF 2008

(ON APPEAL FROM DCCC NO. 1207 OF 2006 )

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REASONS  FOR  JUDGMENT

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Hon Hartmann JA (giving the Reasons of the Court):

Introduction

1.  On 19 June 2008, following a trial in the district Court before Deputy Judge Woodcock, the applicant was convicted of 10 counts of false accounting, contrary to s.19(1)(a) of the Theft Ordinance, Cap. 210, and five counts of procuring the making of an entry in certain records of a bank by deception, contrary to s.18D of the same Ordinance.  The applicant was sentenced to a total of two years and 10 months’ imprisonment.

2.  At the hearing on 28 April 2009, the applicant sought leave to appeal against conviction only.  At the conclusion of the hearing, we refused leave, ordering that the applicant meet the respondent’s costs of appeal, to be taxed if not agreed.  We now give our reasons for dismissing the application.

Background

3.  When the applicant came to trial in the District Court, he faced 21 charges of false accounting and/or procuring the making of bank records by deception.  All of the charges related to a series of successful applications made in or about 1995 by various private companies to the Hang Seng Bank for credit advances secured against the sale and export of merchandise.  Banking facilities which allow for this form of advance are known as DP facilities.

4.  The applicant had been arrested in respect of the charges in May 1996.  However, in 1997, while on bail, he had fled to North America where he remained until 2006 when he was extradited to Hong Kong.  When the matter came to trial therefore in May 2008 the events which were the subject of the trial were more than 10 years old.

5.  There was no dispute at trial that the documentation supporting each of applications to the Hang Seng Bank for DP facilities had been fictitious.  There had been no sale of merchandise in 1995, no goods exported (in each instance, purportedly, to the United States) and no buyers.  The clear design had been to obtain credit advances from the Hang Seng Bank by fraud.

6.  The first 12 counts of which the applicant was convicted related to applications made to the Hang Seng Bank by two companies, Grand Youth Company and Ever Brilliant Enterprise.  In a series of four applications, these companies secured credit advances from the Hang Seng Bank in a sum of about $7 million.  Both companies were run by a man named Chong Ching Yuen (“Chong”) who, through his companies, presented the application papers to the Bank.

7.  While Chong ran the companies, his wife and mother-in-law were the shareholders and directors.  It was therefore necessary for the wife to sign cheques, legal documents and the like.

8.  Chong was cited as a co-defendant with the applicant in each of the 12 counts but testified for the prosecution under a conditional immunity, one that could be taken from him if, once affirmed as a witness, it was held that he had failed to tell the truth.

9.  Chong testified that in 1995 he came to know the applicant and also a manager at Hang Seng Bank by the name of Yeung who was acquainted with the applicant.  Later that year, he experienced financial difficulties and approached the applicant for help.  The applicant suggested a scheme in terms of which certain export sales secured by his own company, Kenking, could be processed through Chong’s companies, enabling those companies to obtain credit advances from their bank, the Hang Seng Bank.  In this way, both the applicant and Chong would have the benefit of substantial cash advances.  According to Chong, the bank manager, Yeung, saw no difficulties with an arrangement of this kind.

10.  Chong testified that the four applications made to the Hang Seng Bank were arranged by the applicant in the sense that all the documentation was put together by him.  Equally, the funds obtained from the Bank were controlled by the applicant.  Chong said that he believed the applications represented genuine transactions and, when, after a period of time, the bank sought repayment from him on the basis that no buyer in the United States had claimed any merchandise or made any payment, he turned to the applicant to solve the problem.

11.  In respect of Chong’s testimony, the judge found that it was “to an extent” corroborated by documents which had been seized at the offices of both Chong’s companies and the applicant’s company, Kenking.  These documents, said the judge, demonstrated that there had been a close relationship between Chong and the applicant in matters pertaining to the DP applications.  In particular, the judge was satisfied that certain of the documents concerned instructions from the applicant to Chong in respect of the distribution of funds obtained from the successful DP applications.

12.  The remaining three counts of which the applicant was convicted related to a further application made to the Hang Seng Bank, this time by a company called Mag-Glitter which was run by a man named Au Che Keung and his brother.  It was Au who, through his company, submitted the application.

13.  Au too was cited as a co-defendant with the applicant in each of the three counts but gave evidence for the prosecution under a conditional immunity.

14.  Au testified that both he and the applicant were in the garment industry and did business together.  It was Au’s understanding that the applicant’s company, Kenking, negotiated contracts for the manufacture and export of garments, distributing the work of manufacture to various factories in the Delta region.  During the time they had worked together, he had taken over certain of the distribution work.

15.  Au said that it was the applicant who suggested setting up the DP facility with the Hang Seng Bank and it was the applicant who supplied the necessary documentation for the application which was the subject of the three counts.  When the advance was received, said Au, it was the applicant who gave instructions concerning its distribution.  It was Au’s stated belief that the transaction was genuine.  He also testified that, when the Bank pursued him for repayment on the basis that no buyer had made payment, he turned to the applicant to solve the problem.

16.  It was the defence case that the applicant had no knowledge of any fraudulent schemes to abuse the DP facilities provided by the Hang Seng Bank and did not participate in such schemes.

17.  While the applicant himself did not give evidence, Edwin Lai, an employee of Kenking, testified that a man by the name of Robert Lo, who was often in Hong Kong and used the offices of Kenking, was the one who had dealt with Chong and Au in respect of the fictitious applications.  It was put to Chong and Au in cross-examination that their dealings to exploit the DP facilities had been conducted at the instigation of, or in conjunction with, Robert Lo.  This was denied.

18.  With the applications made to the Hang Seng Bank undisputedly fraudulent and with the greater part of the documentary evidence agreed, a single issue fell for determination by the judge.  That issue was whether she could rely on the testimony of the prosecution witnesses, principally the evidence of Chong and Au, so as to be sure that the applicant had been a knowing party to the true nature of the applications and had played some role in their making.

19.  In her Reasons for Verdict, the judge recognised that the testimony of the principal prosecution witnesses, who testified under immunity, demanded close scrutiny.  In her Reasons for Verdict, within the context of all the evidence, the judge was therefore painstaking in her analysis of their evidence.

20.  Indeed, in acquitting the applicant of six of the charges, the judge held that the evidence of the principal prosecution witness who spoke to those charges was not sufficiently reliable.

21.  As to the credit of Chong, his wife (a witness of limited materiality) and Au, all testifying under conditional immunity, the judge had certain reservations.  It was her finding that they had not told “ the whole truth”.  Expanding on this, she said:

“I feel that they are distancing themselves from the scam and proclaiming innocence.  They claim to be victims of the scam.  They give evidence that describes their role in the scam but deny any dishonest intent or knowledge that it was a scam.  They say they believed the transactions were genuine.  If they ... did not know for a fact that they [the transactions] were fabricated, then they turned a blind eye to the possibility of shady wrong-doings.  Although they are witnesses under immunity, they steer clear of any admission of guilt or knowledge.”

22.  However, the judge went on to qualify these findings by saying:

“even though I suspect the whole truth was not told, the omissions do not render their evidence unreliable per se.”

In respect of Chong, having considered his testimony in the context of all the relevant evidence, the judge said:

“I find [Chong’s] evidence truthful, even though I am sure he has tried to distance himself from being implicated as a co-defendant.  It is much easier to accept his evidence where it is corroborated by a paper trail of correspondence that I am sure [the applicant] was a party to.”

23.  The judge concluded:

“Despite [the applicant’s] criminal record and his status as an immunity witness, I accepted his evidence.”

In respect of Au, the judge said:

“the financial transactions I have reviewed above, I am sure are not transactions controlled by [Au].  I am sure he is telling the truth when he says it was [the applicant] who gave such instructions.  As the prosecution has said in submissions, “follow the money”.  I am sure it does lead to and implicates without question [the applicant].”

24.  At the end of her Reasons for Verdict, the judge confirmed what she had determined earlier in respect of both Chong and Au:

“I accept [their] evidence and do believe that it was [the applicant] who instigated the scam, carried it through via their company DP accounts and made use of or disposed of the credits advanced by the Hang Seng Bank.  Knowledge and participation [on the part of the applicant] is proved beyond reasonable doubt.”

The grounds of appeal

25.  There were originally five grounds of appeal but Mr Philip Wong, counsel for the applicant, abandoned two of those grounds.

26.  In respect of the remaining three grounds, Mr Wong accepted that the central issue at trial had been the credibility of the prosecution witnesses who had testified under conditional immunity.  In this respect, he said, there had been a number of discrete issues which the judge had been required to take into account in reaching her determination.  However, she had failed to do so or failed to do so in the correct manner and in the circumstances the conviction had been rendered unsafe and unsatisfactory.

The first ground

27.  Under this ground, it was asserted that the judge had failed fully and properly to direct herself in assessing the credibility of the prosecution witnesses who gave evidence under immunity, especially Chong and Au.  This assertion arose out of the judge’s finding that Chong and Au had denied any dishonest knowledge or intent on their part in respect of the applications and had thereby failed to tell “the whole truth”.

28.  As we understand counsel’s submission, this finding by the judge should have led her to consider a number of consequential issues essential to a full and proper assessment of the credibility of the witnesses.

29.  First, so it was said, the judge was obliged to consider whether the witnesses had departed from their oaths or affirmations to tell the truth and were thereby guilty of perjury.  She failed, however, to take into account the issue of possible perjury.

30.  Second, the judge was obliged to consider whether, by failing to tell the whole truth, the witnesses were in danger of losing the protection of their conditional immunities.  In this second regard, the judge was then obliged to warn the witnesses of this danger and to advise them of their privilege against self-incrimination.  The judge, however, failed to do so.

31.  These failures, so we understand counsel’s argument, were compounded by the fact that the judge considered the failure of the witnesses to tell the whole truth as merely an “omission” thereby failing to differentiate between a refusal to tell the whole truth and a mere oversight in doing so.

32.  There was nothing in any of the submissions advanced under this first ground of appeal.  In our view, the submissions were fundamentally misconceived.

33.  First, all witnesses, whether protected by immunity or not, are obliged in law to tell the whole truth.  Whether they do so is a matter for the tribunal of fact tasked with assessing their evidence.  In the present case, as in all cases, the judge, as the tribunal of fact, was entitled to reject outright the evidence of the witnesses or to accept all or part of what they said.

34.  As Mr Wong accepted, the judge came to her conclusions concerning the extent to which she could accept the evidence of Chong and Au only after an extensive analysis of their testimony considered in the context of all the evidence presented during the trial, including the issue of whether or not there was corroborating evidence.

35.  Nor can it be said that the judge misdirected herself by classifying the failure of the witnesses to tell the whole truth as a mere “omission”.  That is to misread her Reasons for Verdict.  We take it that the offending word is to be found in the following statement by the judge:

“even though I suspect the whole truth was not told, the omissions do not render their evidence unreliable per se.”

36.  Reading that statement in context, it is plain that the judge was saying no more than that the failure of the witnesses to be entirely candid did not thereby in her opinion render all of their evidence unreliable.  To the contrary, she was satisfied that she could safely rely on the evidence that they did give as proof of the applicant’s active and knowing participation in the applications made to the Hang Seng Bank.

37.  The fact that Chong and Au testified under immunity was taken into account by the judge who warned herself in specific terms that, as named accomplices, she must approach their evidence with caution. 

38.  Looking to the manner in which the trial proceeded and to the nature and extent of her observations in respect of the failure of the witnesses to be fully forthcoming, there was no obligation whatsoever on the judge to enunciate in her Reasons for Verdict that she had taken into account that the witnesses may have committed perjury.

39.  Nor in the present case can we find any basis upon which it can be said that the judge was, at any particular moment during the course of the proceedings, obliged to remind Chong, Au or any of the prosecution witnesses of their privilege against self-incrimination.  No evidential issue of sufficient moment arose during the course of the trial to warrant such an unusual step.  In any event, invariably a judge’s assessment of a prosecution witness’ credibility is not made until all the evidence has been heard, well after the witness has finished his testimony.

The second ground

40.  It was Mr Wong’s submission that, in seeking corroborative support for Chong’s evidence, the judge erred in law by relying upon the hearsay contents of certain documents.

41.  All of the documents identified by Mr Wong were original documents seized from Chong’s offices.

42.  Clearly, Chong was entitled to speak to the content of documents which he recognised as being composed by himself.  As to the other documents, Chong testified as to who provided the information contained in them, who supplied the documents to him and the fact that, in respect of documents supplied to the bank in support of the applications for DP facilities, it was he himself who gave those documents to the bank.  Concerning documents filed with the bank, Chong’s wife testified that the signatures appearing on those documents were her signatures.

43.  Chong and his wife therefore had personal knowledge of how the documents seized from their offices came into being and how they were employed.  Both were subject to cross-examination in respect of those issues.  The hearsay rule never makes a document as such inadmissible.  It is only inadmissible for a particular purpose, namely, as evidence that a statement which is contained in the document is true.  But Chong and his wife did not seek to testify to the truth of what was contained in the documents, only to how it was that the information, plain on the face of the documents, came to be there.

44.  In any event, in so far as documents filed with the bank were concerned, that is, documents used in support of applications for DP facilities, it was never disputed that the information they contained was false.  That the export transactions which they purported to record were bogus was admitted as a fact at trial under s.65C of the Criminal Procedure Ordinance, Cap. 221, and, as such, was evidence upon which the judge could rely.  In addition, as Mr Turnbull, counsel for the respondent pointed out, those documents were also produced into evidence by way of bankers’ affirmations made pursuant to s.20 of the Evidence Ordinance, Cap. 8, and, in terms of that statute, constituted prima facie evidence of the matters contained in them.

45.  A number of documents were seized from Chong’s offices and from the applicant’s offices which had not been used to support applications to the bank.  Certain of those documents contained instructions on, or discussion concerning, the distribution of funds obtained from successful applications.  Chong was able to testify as to how these documents came into existence: they were either faxed by Chong to the applicant, being the creation of Chong himself therefore, or, on the face of it, faxed from the applicant’s offices to Chong.

46.  In respect of communications faxed to Chong, he was able to testify to what he did in respect of them, making transfers and the like.  In this latter respect, his testimony found support in the banker’s affirmations which set out the movement of funds.

47.  Other documents came from Chong himself at a time when, as the judge put it, things “had turned bad” and the bank was seeking repayment from Chong.  These documents consist of requests by Chong made to the applicant to put matters right.

48.  But, as Mr Turnbull noted, even if certain of these documents did contain hearsay, it did not prevent the judge from relying upon them, as she did, for a non-hearsay purpose, not to prove the truth of their contents but instead to evidence the fact that Chong and the applicant were in close contact at the relevant time.  As the judge put it, they constituted a “ paper trail” identifying the fact that there was “relationship” between Chong and the applicant at the material time in matters concerning the DP facilities.

49.  For the reasons given, therefore, we are satisfied that the judge did not impermissibly rely on the hearsay contents of any of the documents which in her Reasons for Verdict she found to be of material relevance.

The third ground

50.  It was Mr Wong’s submission that the judge failed fully and correctly to take into account the failure of the prosecution witnesses to provide adequate information concerning the circumstances in which Chong and Au agreed to testify for the prosecution under provisional immunities.  It was his contention that the judge erred in classifying the failure as essentially one going to credibility, omitting to take into consideration, as she was obliged to do, the prejudice that the prosecution failure may have caused the applicant.

51.  It is well settled that a prosecution witness who gives evidence as an accomplice should be presented to the court “warts and all”.  The reasons are self-evident.  For example, the manner in which he came to agree to give accomplice evidence may reveal that he was more interested in protecting himself than giving evidence as to the truth.  It may also be that the agreement entered into was so much against the public interest that the judge, in the exercise of his discretion, should exclude the testimony of the accomplice witness entirely.  In this regard, in R v Tsui Lai Ying and Others [1987] HKLRD 857, at 873, Silke JA said:

“The defence is entitled to know everything about [the accomplice], the terms of the immunity and any matters surrounding it which could affect the credibility of his evidence.”

52.  But, as Silke JA noted:

“Credibility is clearly a jury question.  The issue here is: were the witnesses so inherently incredible and was the background of the granting of the immunities to them so much against the public interest that the trial judge, in permitting their evidence to go before the jury, was wrong in the exercise of his discretion?”

53.  In the present case, while the evidential detail given concerning the provisional immunities of Chong, his wife and Au may not have been exhaustive, it cannot be said that there was a failure on the part of the prosecution to provide all the evidence that was available.

54.  The applicant had copies of all the immunities.  All three immunised witnesses were cross-examined as to the circumstances in which they came to agree to testify under immunity and in which they made their non-prejudicial statements.

55.  Of course, due to the long lapse of time, the witnesses no longer had a detailed memory of events.

56.  The police sergeant who dealt with Chong, his wife and Au in respect of their agreement to give evidence under provisional immunity was cross-examined.  However, as with the three witnesses, due to the long lapse of time, and the fact that he had not kept contemporaneous notes, that officer too was handicapped as to his recollection of events.

57.  It is to be emphasised that the delay in bringing the case to trial was not to be attributed to the police or prosecuting authorities.  As we said earlier, the applicant left Hong Kong in 1997 for North America and only returned by way of extradition in 2006.

58.  Nevertheless, the issue of delay, was a material issue to be taken into account by the judge.

59.  The judge was plainly correct, in our view, in recognising that, in this case, issues concerning the circumstances in which the witnesses agreed to testify under conditional immunity, were issues going to the credit of those witnesses, that is, to what weight, if any, she could give to their evidence.  She noted that no application had been made during the trial to exclude the evidence of the three witnesses, an application that would have been made if it was advocated that the granting of conditional immunities had constituted an abuse of the criminal process.

60.  On her assessment of the evidence, the judge was satisfied, as a matter of fact, that the three witnesses under immunity were informed that, if they gave non-prejudicial statements, it was possible that they would not be prosecuted.  However, no promise of an immunity was given to them before the taking of the non-prejudicial statements.  

61.  In coming to her determination, the judge did take into account the issue of delay.  She acknowledged that the evidence of the prosecution witnesses lacked detail as the witnesses were unable to recall “exact conversations”.  This, she said, was understandable as the non-prejudicial statements had been taken several years earlier.  She continued: 

“I am sure there was a lead-up and an explanation to these prosecution witnesses of what a non-prejudicial statements and immunity from prosecution means.  The fact that they are not able to give the court the exact details behind the circumstances does not render their evidence of no probative value.”

62.  Mr Wong contended, however, that the judge had failed to state that she had taken into account the difficulties faced or prejudice suffered, possible or real, by the applicant because the prosecution witnesses were unable to give detailed evidence of what had occurred.  There may be appropriate cases where a judge is obliged to record the fact that such a difficulty has been taken into account.  But there is nothing to suggest that the present case was such a case.

63.  While the evidence of the prosecution witnesses may not have been detailed, it was of sufficient substance to enable the judge to come to a determination.  The immunities themselves were available to applicant’s counsel and counsel was able to cross-examine not only the three witnesses who were testifying under immunity but also the police officers who had been involved in the process of granting the provisional immunities.

64.  In our view, the judge was not in error in her approach to assessing the evidence of the prosecution witnesses.  Indeed, her findings, it seems to us, were well in accordance with the evidence.

65.  The applicant’s conviction was neither unsafe nor unsatisfactory.  The appeal had no merit.