HKSAR v. HE JIA JIN

CACC383/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. CACC 383 OF 2007

(ON APPEAL FROM DCCC NO. 213 OF 2007)

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J U D G M E N T

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Hon McMahon J (giving the judgment of the Court) :

1. On 9 October 2007, the applicant was convicted after trial of three offences of dealing with property which he knew or had reasonable grounds to believe represented proceeds of an indictable offence, contrary to section 25(1) of the Organised and Serious Crimes Ordinance, Cap. 455.  He was fined $1,500,000 in respect of each offence, making a total fine of $4,500,000.

2. He now seeks leave to appeal his convictions.

3. The prosecution case at trial was that the applicant owned a company, Futsing Finance Limited (“Futsing”) in the United Kingdom which conducted the business of remitting monies between the United Kingdom and China.  To facilitate this process, the applicant retained remittance agents in Fujian province in China and in Hong Kong to operate bank accounts in those places on his behalf.  One of those accounts (“the Cheong account”) was opened with the HSBC in Hong Kong and was operated by two women, Cheong Lai Keen (PW4) and Yung Hung Chiu (PW3) who were joint signatories of the account, although PW3 was the one primarily involved in its operation.

4. On 11 December 2001, the applicant issued instructions to his bank in the United Kingdom, Halifax Plc (“Halifax”), to transfer ₤91,000 from Futsing’s account at Halifax to the Cheong account.  At that time, the account had effectively a zero balance.

5. Due to an error by Halifax or by HSBC Plc, its remitting agent in London, a sum of Eur€1,015,878.50 was transferred to the Cheong account at HSBC on 12 December 2001, which represented something in the vicinity of a 7-fold overpayment.  The applicant became aware of the error shortly after the remittance had been credited to the Cheong account and nevertheless proceeded to treat the funds as his own.  Over the next few days, on the applicant’s instructions, three withdrawals were effected which resulted in all of the Eur€1,015,878.50 credited into the Cheong account being disbursed to other bank accounts under the applicant’s control or under the control of those acting on his behalf.  On 13 December Eur€350,000 was withdrawn; on 15 December Eur€50,000 was withdrawn, and shortly afterwards a withdrawal of Eur€615,878.50 exhausted the remaining balance.  The applicant’s subsequent dealings with the sums withdrawn were the basis of each of the three charged offences.

6. The applicant did not give evidence or call any witnesses.  There was agreement at trial concerning the flow of funds, and the only real issue was whether the prosecution had proven to the requisite standard the applicant’s knowledge that the monies withdrawn from the Cheong account and disbursed had been credited into the account in error.

7. The evidence relied upon by the prosecution to establish the applicant’s knowledge, or his possession of reasonable grounds to believe, that the funds credited to the account were not his to deal with came from PW3, Yung Hung Chiu.  Given the nature of the applicant’s grounds of appeal, it is desirable to summarise her evidence in some detail.

8. Her evidence was given under immunity and was to the effect that she had been approached by a relative of her husband called Tse Chok Kwok (“Tse”) in March 2001 to open an account in Hong Kong for the purposes of receiving funds remitted from the United Kingdom.  She opened a bank account with the Kincheng Banking Corporation together with her sister-in-law, PW4, Cheong Lai Keen for that purpose, and both of them registered as remittance agents with the Hong Kong Police Force.  Various remittances were received into that account from the United Kingdom.

9. In August and September 2001, she and PW4 opened two accounts with the HSBC (one being the Cheong account).  She and PW4 were joint signatories for each account, but both accounts were operated by PW3.  Over the following weeks, money was remitted into those accounts from the United Kingdom.  She received instructions as to how to deal with those funds from Tse.  Occasionally the applicant would contact her by telephone as to her dealing with the monies remitted into the accounts and she understood he was the source of those monies.

10. On 11 December 2001, she received a telephone call from Tse who informed her that a sum of ₤91,000 was to be remitted to the Cheong account.  She checked with the bank and found it had not arrived.  She reported that to Tse, and on the following day, 12 December 2001, she received a telephone call from the applicant.  He informed her that a sum of Eur€1,015,878.50 should have been credited to the Cheong account.  She checked and found that to be so and called Tse to confirm it.  On 13 December 2001, Tse gave her instructions as to converting part of the remitted amount (a sum of Eur€350,000) into Hong Kong currency and then transferring it or depositing it into various other bank accounts.  Tse also told her that the applicant would arrive in Hong Kong the following day, 14 December 2001.

11. At this point, one further aspect of the prosecution case should be mentioned.  On 12 December 2001, 7:44 p.m., HSBC in Hong Kong received a telex communication from HSBC Plc in the United Kingdom, informing it that the Cheong account had been wrongly credited with Eur€1,015,878.50. 

12. PW3 went on to say that after the telephone call from Tse, on 13 December 2001, she received a telephone call on the same day from a staff member of the HSBC who told her that “there were some problems concerning this sum of money” which had been credited into the Cheong account.  She then telephoned Tse and informed him of the matter.  She later contacted the “hotline” number of the HSBC and enquired what the problem was with the remittance.  She was then told, perhaps somewhat surprisingly in view of the earlier telex, that there appeared to be nothing wrong.

13. On 14 December 2001, the applicant arrived in Hong Kong and he, PW3 and PW4 met and went to a restaurant in Tokwawan.  This was the first time PW3 or PW4 had met the applicant and he provided them with various documents as proof of his identity.  He also showed PW3 what he said was a remittance slip in the name of Futsing in the amount of ₤910,000.  In doing so, he explained that it reflected the amount which had been remitted in Euros to the HSBC account.  He explained his staff had wrongly filled in the currency as sterling and that the amount should have been US$910,000.  That sum approximated the Eur€1,015,878.50 remitted into the Cheong account.

14. PW3 then, in the presence of the applicant and at his suggestion, telephoned HSBC to again confirm the remittance particulars.  That confirmation was again given by a staff member of the bank.  PW3 later photocopied the documents shown to her by the applicant and the copy of the Futsing remittance slip was produced as an exhibit during her evidence.

15. The applicant arranged to meet PW3 the following morning, 15 December 2001, at the HSBC headquarters in Central to transfer the balance of the remittance, a sum of Eur€615,878, from the Cheong account into his own account.  She made the transfer in the presence of the applicant.  PW3 did not see the applicant again.

16. On 17 December 2001, she was contacted by the HSBC Security Department who informed her the sum of Eur€1,015,878.50 had been wrongly remitted into the Cheong account.  She telephoned the applicant in the United Kingdom, and he said he would take responsibility for the matter.  That substantially concluded PW3’s involvement in these matters.

17. Finally, and as a matter of completeness, it was an agreed fact at trial that, following civil proceedings in the United Kingdom, the applicant was ordered to repay HSBC the sum of ₤536,000 together with interest.  But the judgment was settled by the payment of ₤400,000 in full and final settlement of HSBC’s claim.

18. Mr Neville Sarony SC, with Ms Angel W.Y. Lau, on behalf of the applicant, advanced a number of grounds of appeal, but they can be fairly summarised as follows :

(1) The judge misunderstood the evidence of PW3 and as a consequence wrongly concluded the applicant was aware that the remittance of Eur€1,015,878.50 into the Cheong account had been made in error (the evidence of PW3).

(2) That there was in any event no sufficient evidence to establish the applicant knew or had reasonable grounds to believe the credit of Eur€1,015,878.50 to the Cheong account was in error (insufficient evidence).

The evidence of PW3

19. The judge, as stated in his Reasons for Verdict, was aware that the prosecution case depended to a very large degree on PW3 being accepted as a credible witness.  He accepted that there were deficiencies in her evidence, particularly as to the course of subsequent disbursements of the Eur€1,015,878.50 originally remitted to the Cheong account.  It was, however, no part of either the prosecution or defence case that PW3 or PW4 had obtained any benefit for themselves from the monies (apart from their charged commission).

20. The judge said generally as to PW3’s evidence :

“… It may be that if the case depended wholly and completely on the evidence given orally by Ms Yung, then equally the prosecution would fail.  But there are other matters, and in my judgment important matters, that assist the prosecution case other than relying entirely on the evidence of Ms Yung.”

21. An important matter which the judge regarded as supportive of the prosecution case was the remittance order form under the letterhead of Futsing Finance Limited (the Futsing remittance order) purporting to direct Barclays Bank in the United Kingdom to remit ₤910,000 to the Cheong account in Hong Kong, which the applicant showed PW3 and which PW3 photocopied when she met the applicant on 14 December 2001.

22. Regarding that document and its production by the applicant to PW3, the judge concluded that the only purpose for the applicant to have brought the document with him to Hong Kong was to show it to PW3 and to allay any fears she might have had regarding a “problem” with the remittance.

23. Mr Sarony complained that the judge misunderstood a crucial area of evidence in forming that view, and that his misunderstanding seriously prejudiced the applicant’s case.

24. It is common ground that the judge did misunderstand one aspect of PW3’s evidence.  PW3 had said that on 12 December 2001, in the afternoon, the applicant had telephoned her and told her that the Eur€1,015,878.50 had been sent to the Cheong account she controlled in Hong Kong.  Her evidence was as follows :

“Q.  On the afternoon of the following day did you receive another phone call?  That will be the 12^th.

A.    Right, the 12^th day.

Q.   And who was that from?

A.    It was made by Ho Ka-kam [the applicant].

Q.   And what was the substance of that phone call?

A.    He said that a sum of €1 million-odd – I can’t tell you the exact figure.  He gave us the figure for us to have a check.  He said that this sum of money had been – was credited into the account.  That means this sum of money should have been in the account.

Q.   Sorry, which account are we talking about?  The account in the name of Ms Cheong or the account in your name?

A.    Cheong Lai-keen’s.

Q.   Yes, was there anything else said in the phone call?

A.    Nothing further.  He mentioned this figure.”

[Emphasis added]

25. That remained PW2’s evidence.  She was quite clear that during that telephone call with the applicant she had not told him of any problem with the remittance of the Eur€1,015,878.50 into the Cheong account.

26. Indeed her evidence was to the effect she was only informed of there being a “problem” with the remittance by a HSBC staff member the following day, 13 December 2001, and she only then told Tse of the problem.  Her evidence in this regard was entirely consistent with the telex sent by HSBC Plc in London to HSBC Hong Kong, informing the latter that there had been an incorrect remittance of the Euro amount into the Cheong account.  That telex as we have said was sent at 7:44 p.m. on 12 December 2001.

27. However, on two occasions in his Reasons for Verdict, the judge incorrectly referred to PW3 having told the applicant that there was a problem with the remittance during the telephone conversation on 12 December 2001. 

28. On the first occasion, that error was instrumental in his conclusion that the applicant, having been forewarned by PW3 about there being a problem with the remittance, then brought with him to Hong Kong on 14 December 2001 the Futsing remittance order.  He said :

“… It is abundantly clear to me that the only explanation for the production of the Futsing Finance Limited instruction to Barclays was to impress Ms Yung with the figure of ₤910,000.  Again, I point out that Mr Dunn invites me to move from that to say that that was clearly intended to persuade Ms Yung to do all sorts of things, including carrying on the transfer of the moneys.

116.    I am not prepared to say anything as to what that was intended to do, but I can allow myself to say that it was clearly intended to meet Ms Yung’s complaint that the bank had raised the query of overpayment.  That also would be explained by the fact that Ms Yung had actually spoken to the defendant.  That would clearly have resulted in him bringing that document, on her evidence, to show her.  That would have tied up with the overpayment, at least it would have done had not Ms Yung pointed out that the figures did not, in fact, match.  It does, however, in my judgment corroborate what she says was that phone call on 12 December with the defendant, in which she clearly raised with the defendant the question of the problems with the bank.”  [Emphasis added]

Later, he said :

“133.  But as to the fact that the defendant knew that there was an overpayment, I am in no doubt whatsoever.  For the reasons I have given, I am entirely satisfied so that I am sure beyond a reasonable doubt that the defendant was in contact with Ms Yung directly by way of the phone call on 12 December, and that Ms Yung clearly brought to his attention the matters that were troubling the Hongkong Bank.”  [Emphasis added]

29. It is quite clear the judge confused the contents of the conversation between PW3 and the applicant on 12 December 2001 with what had been said during the conversation she had with Tse on 13 December 2001.  This was, in our view, a material irregularity.  The conclusion the judge arrived at due, at least in part, to his misapprehension of the evidence was fundamental; it was that the applicant was made aware by PW3 on 12 December 2001 that there were “matters troubling the bank” concerning the remittance to the Cheong account.

30. For that reason we have considered the application of the proviso to section 83(1) of the Criminal Procedure Ordinance, Cap. 221.

31. On the evidence at trial the balance in the Cheong account was effectively zero before the Eur€1,015,878.50 was credited to it.  That must have meant that when the applicant, through Tse, issued his instruction to withdraw the sum of Eur€350,000 he was at that time, on 13 December 2001, aware that substantially more than ₤91,000 had been credited to the account.

32. In a similar vein, before us Mr Robert Lee SC for the respondent pointed out that the whole of the Eur€1,015,878.50 was withdrawn on three separate occasions.  In that regard, the judge said this :

“132.  … what I can do is to accept the logic of the figures in the banker’s affidavits which have introduced the accounts into evidence, to show that the withdrawals made, and as represented by the three charges, exactly mirror the amounts that were sent in error from London via the Hongkong Bank and into the Cheong account in Hong Kong.  This, in my judgment, simply cannot be described as coincidence.  The fact that the figures so exactly match cannot be explained by coincidence and, in my judgment, shows that there was a deliberate intention to take exactly the money that had been sent in error.  I repeat, should it be necessary, that I go no further than that, and the speculation in Mr Dunn’s final submissions to me remain that.”

33. Finally, agreed evidence established that on 15 December 2001 Eur€615,878.50 (representing the balance in the Cheong account after the earlier withdrawals) was transferred to the applicant’s personal account and converted into the equivalent HK$4,282,871.  Over the next two weeks, virtually all of that sum was transferred out of that account.  Significantly the applicant was the sole signatory of that account.

34. We agree with Mr Lee that this was strong evidence that the applicant was aware of the overpayment into PW3’s account and had personally dealt with the largest part of the overpaid sum.  It should be borne in mind that it was an agreed fact that the applicant himself had instructed Halifax in the United Kingdom to remit only ₤91,000 to the Cheong account.  When the applicant received Eur€615,878.50 from that account into his own, and then further disbursed that money he must have been aware that much more than ₤91,000 had been remitted.

35. Mr Sarony argued that the error of fact made by the judge was fundamental.  It provided the basis for the judge’s conclusion that the applicant had been warned by PW3 on 12 December 2001 that there was a problem with the remittance to the Cheong account.  It also provided support for PW3’s credibility, in that it explained the applicant’s having brought the Futsing remittance order to Hong Kong, i.e. to show it to PW3 to set her concerns over the remittance at rest.

36. We bear in mind, however, that the judge’s error simply confused what PW3 had said to the applicant on 12 December 2001 with what she had said to his agent Tse on 13 December 2001.  We do not think, in the context of the evidence in the case as a whole, that whether she informed the applicant directly of the HSBC’s concern with the remittance on 12 December 2001 or informed his agent Tse on 13 December 2001 is of the fundamental importance Mr Sarony asserted.  On either basis, the applicant’s bringing of the Futsing remittance order to Hong Kong, on the judge’s reasoning, was supportive of PW3’s evidence in this regard, and although her informing Tse of the problems with the remittance on 13 December 2001 was not such direct evidence as to the applicant being made aware of the HSBC’s concerns about the remittance as was the judge’s mistaken view that PW3 had personally told the applicant of them, it was evidence that went some considerable way to the same conclusion.

37. Taken in conjunction with the other evidence against the applicant which was accepted by the judge and which we have referred to, we are satisfied that had the judge not made the error of fact which he did, his verdict on each charge would inevitably have been the same.

38. We accordingly apply the proviso to section 83(1) under this ground.

Insufficient evidence

39. There is no merit to this ground.  In our view, once the evidence of PW3 was accepted and bearing in mind the context of the applicant having been present while she transferred to his personal account in Hong Kong the balance of Eur€615,878.50 of the remittance to the Cheong account, and that that took place after the applicant had shown PW3 the quite plainly bogus Futsing remittance order, the evidence against the applicant was overwhelming.

40. Mr Sarony raised a further complaint under this ground.  He argued that the Futsing remittance order was hearsay evidence and should not have been admitted into evidence.  It is sufficient to dispose of this argument by saying that the only purpose of the prosecution in producing that document in evidence was to establish that the applicant was aware that the remittance to the Cheong account was in error, and that his showing the Futsing remittance order to PW3 was to mislead her into thinking all was well with the remittance.  In no way, therefore, was the document intended to speak as to the truth of its contents.

41. This ground must fail also.

Conclusion

42. We grant leave to appeal, treat the hearing of the application as the appeal and dismiss the appeal.

43. There is one further matter.  The offence in this case could more sensibly have been charged as theft.  We wish to say that it is undesirable that section 25(1) of the Organised and Serious Crimes Ordinance be used as a general “catchall” because of any perception on the part of prosecutors that an offence so charged is more easily proven than a charge which more accurately goes to the gravamen of a defendant’s acts.  We might add that where necessary, a charge under section 25(1) could be laid in the alternative.