HKSAR v. CHEN KEEN (alias JACK CHEN) AND OTHERS

CACC 228/2023, [2026] HKCA 937

On Appeal From [2024] HKCFI 327

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 228 OF 2023

(ON APPEAL FROM HCCC NO 309 OF 2019)

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J U D G M E N T

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Hon Macrae VP:

A.  Background

1.  This appeal has arisen from convictions entered after a 75-day trial[1] before Anna Lai J (“the judge”) and a jury of nine on an indictment containing four counts of conspiracy to defraud (namely, Counts 1 and 3, which were laid against D1 and D2; and Counts 2 and 4, which were laid against D1, D2 and D3), contrary to common law and punishable under section 159C(6) of the Crimes Ordinance, Cap 200. Verdicts of guilty were delivered on 30 November 2023. D1 was additionally charged, but acquitted at the same time by the jury, of one count of money laundering (Count 5), contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455.

2.  On 5 December 2023, the judge sentenced D1 to a term of 7 years and 3 months’ imprisonment; D2 to a term of 7 years and 9 months’ imprisonment; and D3 to a term of 4 years and 9 months’ imprisonment. A director’s disqualification order was made in respect of both D1 and D2, and is not the subject of this appeal. They have all sought leave to appeal against their convictions and sentences.  

3.  In light of the complex factual matrix of this appeal, when granting D1 and D2 bail pending appeal on 8 May 2024[2], the Single Judge ordered that the substantive leave applications of all applicants be heard at the same time as the hearing of the appeal proper by the Court of Appeal. As a matter of convenience, since some of the grounds of appeal advanced concern points of law only, on which leave is not required, the parties will hereinafter be referred to as appellants rather than applicants, or individually by their trial designations as D1, D2 and D3.

4.  Out of an abundance of caution, after the listing of the appeal proper, the Court enquired of the parties, by its directions dated 30 October 2024, whether the latest development in the appeal of HKSAR v Mak Kwong Yiu[3] would have, or would continue to have, any bearing on the present appeal, for that case was once said to provide “compelling and decisive support for the present appeal”[4] but was subject to an intended appeal to the Court of Final Appeal by the prosecution, for which a Notice of Hearing had not yet been issued and the grounds of appeal were unknown. The parties answered the Court’s enquiries in the negative and were content that the appeal hearing should proceed as fixed, notwithstanding that substantial reliance on the Court of Appeal’s decision in Mak Kwong Yiu was placed by the appellants in their written submissions filed on 26 November 2024[5]. Subsequently, on 27 February 2025, the prosecution in Mak Kwong Yiu was granted leave to appeal by the Appeal Committee of the Court of Final Appeal on both the “point of law of great and general importance” limb and the “substantial and grave injustice” limb. The appeal was listed to be heard by the Court of Final Appeal on 3 and 4 September 2025, as a result of which this Court as a matter of prudence and caution resolved to await the outcome of the prosecution’s appeal in Mak Kwong Yiu to the Court of Final Appeal. In the event, the Court of Final Appeal overturned the judgment of the Court of Appeal on 5 November 2025[6]. As will become clear, I have relied in one aspect of this appeal on the Court of Final Appeal’s decision.

B.  The indictment

5.  The four counts of conspiracy offences encompass one pair of counts in relation to the Hong Kong Stock Exchange (“SEHK”) (Counts 1 and 2) and another pair in relation to a listed company with stock code 462 (“462”) and its existing shareholders (Counts 3 and 4).

6.  Count 1 (with four particulars) and Count 3 (with five particulars) averred that D1 and D2 had acted dishonestly by:

(a)  Falsely representing that UBNZ Trustee Limited (“UBTL” also known as “UTCL”), UBNZ Funds Management Limited and their respective ultimate beneficial owners were independent third parties to [462] and its connected persons;

(b)  Falsely representing that there was no existing or prior relationship or understanding between [D1] and [D2] with respect to the acquisition of the entire issued share capital of UBNZ Assets Holdings Limited (“UBAH”) by [462] from UBTL;

(c)  Concealing or failing to declare that [D1] had an interest in the acquisition, in that [D1] and [D2] were parties to an agreement signed between them and Latitude Asia Limited dated the 8^th day of October 2008 to share the commission arising from or received through the sale and purchase of dairy farms owned by the Crafarms Group in New Zealand;

(d)  Causing SEHK to allow the publication by [462] of the announcement dated the 4^th day of June 2009 and the circular dated the 8^th day of September 2009 in relation to the acquisition which contained the false representations as aforesaid (as per Count 1) / Causing [462] and its existing shareholders to approve the agreement for the acquisition (as per Count 3);

(e)  Causing [462] to issue and release convertible notes and an optional bond for the payment of the acquisition (as per Count 3 only).

7.  As a result of the original particular (b)[7] being struck out from the indictment at the close of the prosecution case, Count 2 (with three particulars reduced to two) and Count 4 (with four particulars reduced to three) averred that D1, D2 and D3 acted dishonestly by:

(a)  Falsely representing that the gross profit of the properties and fixed assets relating to dairy farms owned by the Crafarms Group in New Zealand for the year ended the 31^st day of May 2009 was approximately HK$92,520,000;

(b)  Causing SEHK to allow the publication by [462] of the circular dated the 8^th day of September 2009 in relation to the acquisition of the entire issued share capital of [UBAH] by [462] from [UBTL] (as per Count 2) / Causing [462] and its existing shareholders to approve the agreement for the acquisition of the entire issued share capital of [UBAH] by [462] from [UBTL]] (as per Count 4);

(c)  Causing [462] to issue and release convertible notes and an optional bond for the payment of the acquisition (as per Count 4 only).

The conspiracies were alleged to have commenced on 7 May 2009[8] and concluded on 8 September 2009[9] (in respect of Counts 1 and 2) or 19 July 2010[10] (in respect of Counts 3 and 4) respectively.

C.  The essential facts and evidence

8.  The following facts and evidence are derived from two sets of documents headed Summary of Facts and Evidence, which have been helpfully agreed by counsel for the respective parties for the purposes of this appeal.

C.1.  The acquisition

9.  At all material times, D2 was the sole director and shareholder of UBTL, which owned UBAH. UBTL also owned, at first in part but from 8 May 2009 in full, UBNZ Funds Management Limited (“UBFM”)[11].

10.  In the middle of 2008, D2 learned through one Barry Fraser that the CraFarms Group (“CraFarms”)[12] was in financial difficulties and had decided to sell 6 farm companies, comprising 22 dairy farms, in New Zealand[13]. On 3 October 2008, CraFarms and UBFM entered into a confidentiality agreement, which enabled UBFM to receive confidential information about the farms[14]. Such confidentiality agreement also formed part of a commission sharing agreement (“CSA”)[15] entered into by D1, D2 and Latitude Asia Limited (represented by Barry Fraser) on 8 October 2008[16], although there was no evidence to show that steps to receive commissions were actually taken by any of the contracting parties[17].

11.  On 2 April 2009, Katherine Chan was appointed the Chairman of 462[18], which had no income stream at the time[19]. She had been told by D1 that he had no personal interest in the farms[20], and she was not aware of any prior business relationship between D1 and D2[21]. Since it appeared to her that the acquisition of the farms might be profitable for 462, D1 was appointed joint Chairman and CEO (in addition to being a director) of 462 on 7 May 2009[22] for the specific purposes of dealing with the acquisition[23].

12.  On 18 May 2009, UBFM entered into six sale and purchase agreements with CraFarms to purchase the farmlands and assets from CraFarms for a total price of NZ$259 million[24].

13.  On 22 May 2009, UBTL (or UTCL) and UBFM entered into a sale and purchase agreement[25], whereby UBFM would inject the farms into UBAH and 462 would then purchase UBAH from UBTL for NZ$500 million in two stages[26].

14.  On 4 June 2009, in accordance with the SEHK Listing Rules (“LR”) concerning very substantial acquisitions (“VSA”), 462 made an announcement[27] containing the following declarations[28]:

“To the best of the information, knowledge and belief of the Directors having made all reasonable enquiries, UTCL and UBFM and their respective ultimate beneficial owners are third parties independent of the Company and its connected persons”[29];

and

“Each of UTCL, UBFM, and the Target are third parties independent to the Company and its connected persons”.[30]

A similar statement, or statements, appeared in a circular dated 8 September 2009[31] (“the Circular”), which went on to declare that[32]:

“To the best of the information, knowledge and belief of the Directors having made all reasonable enquiries, the Vendor and the Warrantor and their respective ultimate beneficial owners are Independent Third Parties to the Company and its connected persons”[33];

and

“…each of the Target Company, the Vendor, the Warrantor, the ultimate beneficial owner of the Target Company, the Vendor and the Warrantor, the registered owners and the ultimate beneficial owners of the Properties and Fixed Assets are Independent Third Parties to the Company and its connected persons and in particular there is no existing or prior relationship or understanding between Mr. Jack Keen Chen and Ms. May Wang with respect to the Acquisition such that the Acquisition shall become a connected transaction under Chapter 14A of the Listing Rules.”[34]

15.  On 16 June 2009, 462 engaged ShineWing, an accounting firm in Hong Kong, to review the profit and loss statements of the target assets for the three years ending 31 May 2006, 2007, 2008 and then ten months ending 31 March 2009. As distinct from the usual audits, such review was based on a set of so-called “agreed upon procedures”[35], whereby ShineWing would not doubt the profit and loss figures, if they were generated by the clients’ system and shown in the ledgers provided[36].

16.  The accounts showing the loss-making nature of the 22 farms, in the 10 months ending 31 March 2009[37], prepared by the CraFarms’ accountant Mark King, were sent to D3[38] on 15 June 2009, who then assisted D2 in the preparation of the financial accounts in relation to the acquisition. Included in the financial information in respect of the farms provided to ShineWing were the management accounts ending 31 May 2009[39], which were emailed to ShineWing by D3 on 10 August 2009, showing a profit of NZ$18.5 million[40]. In the event, Appendix II of the Circular (“Appendix II”) stated that the gross profit for the year ending 31 May 2009 was HK$92,520,000.

17.  On or about 25 October 2009, the CraFarms went into receivership[41]. On 13 November 2009, the condition that UBAH would own the farmlands and assets of CraFarms before the Sale Shares Completion Date (i.e. on or before 1 March 2010[42], which was thereafter subject to further extensions[43]) was changed from a condition precedent to a condition subsequent[44].

18.  In order to demonstrate that the appellants agreed to make false representations on the financial position of 462, the prosecution relied on a large volume of emails (some of which were copied to D1) regarding the preparation of financial accounts[45], as a result of the instructions given by D2 to D3[46].

C.2.  SEHK’s enquiries

19.  Before the Circular was published, SEHK had made a number of comments (or enquiries), and received a letter of complaint, all concerning the relationship existing between D1 and D2. Extracts of the relevant content and corresponding replies are herein set out:

SEHK’s 1st comment (dated 27 May 2009)[47]	We note that as a matter of fact, there is a change in control (as defined in the Takeovers Code) of the Company in January 2008. Please provide a submission addressing whether the acquisition constitutes, or is part of a transaction or arrangement or series of transactions or arrangements which constitute, an attempt to achieve a listing of the assets to be acquired and a means to circumvent the requirements for the new applicants set out in Chapter 8 of the Listing Rules. In your submission, please provide, among others, the following information for our consideration: (a)  whether there is any existing/prior relationship between each of UTCL, UBFM (and/or any of its beneficial owners) with the substantial shareholders of the Company; (b)  when and how the Vendor was introduced to the Company;
462’s reply (dated 1 June 2009)[48]	Please refer to the disclosure in the announcement (with a draft attached thereto, which states that “Each of UTCL, UBFM and the Target are third parties independent to the Company and its connected persons”).
SEHK’s 3rd comment (dated 29 July 2009)[49]	You mentioned that the principal business of the Warrantor is holding and management of the production, sale and distribution…in New Zealand. Please state clearly whether the Warrantor is the party or one of the parties who currently own any of those assets… Please submit whether there is any existing/prior relationship between each of the Vendor, the Warrantor (and/or any of the beneficial owners) with any of the directors of the Company or his associates.
462’s reply (dated 7 August 2009)[50]	The Directors confirm that there is no existing/prior relationship between each of the Vendor, the Warrantor (and/or any of its beneficial owners) with any of the Directors or his associates.
Letter of complaint (dated 10 August 2009)[51]	The Listing Division has recently received complaints against the Company. The complaints relate to the Company’s very substantial acquisition (the “Acquisition”) announced on 27 May 2009… The complainant alleged the following: (i)  … (ii)  In respect of the Acquisition, Ms Wang is partnering with Mr Jack Keen Chen (“Mr Chen”), the executive director of the Company. They work together in New Zealand under the same office at Level 10, 175 Queen Street, Auckland, New Zealand, and the office is a property owned by Ms Wang; (iii)  … In view of the above allegations, we would like the Company to address the following: (1)  whether the above allegations are accurate; (2)  if Ms Wang is the beneficial owner of the Vendor, your confirmation whether there is any existing or prior relationship between Mr Chen and Ms Wang, or whether there is any prior arrangement(s) or understanding between Mr Chen and Ms Wang with respect to the Acquisition such that the Acquisition shall become a connected transaction under Chapter 14A… We note that the circular on the Acquisition will be dispatched by the Company in due course. Please ensure that all information relevant for shareholders to make an informed assessment on the Acquisition has been duly disclosed in such circular, including the information mentioned in the complaint above, where appropriate. … (Content of the “Section 384 Notice” omitted)
D1’s reply (undated)	(Re (ii)) I have met Ms Wang at a Buddhism event at Auckland largest Buddhist Temple few years ago. We have worked together on some major none business related events which are all for the society/communities… Ms Wang was planning to put this Dairy business through the normal IPO process at NZX at beginning. When Ms Wang discusses the opportunity with me, I suggested her also look at Hong Kong capital market as well. After our visit to HKSE in March 09, I have more confident [sic] to introduce this project to HK market. After I introduced the project to China Jinhui Mining corporation Limited, the Company had appoint [sic] me as the company’s director to assist and negotiate the acquisition. This was how the VSA with Ms Wang began. From all records, I am not party nor shareholder of any of UBNZ entities with Ms Wang. (Re (2)) There were no existing or prior relationship between myself and Ms Wang with respect to the Acquisition…
SEHK’s 4th comment (dated 13 August 2009)[52]	We note that new information has arisen during our review of the circular, including the following: …recent complaints in relation to the acquisition have been received by the Division. As such and given this very substantial acquisition involves an entirely new business to the Company, the Division would request the Company to provide, prior to clearance of the circular, a written confirmation from each director confirming that each has read the circular and consents to the content of the circular as being accurate and complete in all material aspects, and not be misleading or deceptive. (Content of the “Section 384 Notice” omitted)
462’s reply (dated 20 August 2009)[53]	The Company would reply as follows:- … Regarding allegation (ii), as confirmed by Ms. Wang and Mr. Chen, Ms. Wang and Mr. Chen was not partnering in any way in respect of the Acquisition[54], UBNZ Trustee Limited, UBNZ Assets Holding Limited or any of their associates. Mr. Chen was and is not a shareholder of UBNZ Trustee Limited, UBNZ Assets Holding Limited or any of their associates. … Ms. Wang and Mr. Chen have confirmed to the Company that there is no understanding between them with respect to the Acquisition such that the Acquisition shall become a connected transaction under Chapter 14A. Mr. Chen’s role in the Acquisition was the introducer of the subject project to the Company and after his being appointed as the director of the Company, responsible for assisting the Board of the Company for negotiating and executing the terms of the Acquisition. … Given the above information, response and clarification from Ms. Wang and Mr. Chen, which the Company does not have any valid reason to deny or doubt, the Company confirms that to its best knowledge and belief, there is no existing or prior relationship between Mr. Chen and Ms. Wang (save for non-business acquaintance as disclosed above) and there is no understanding between Mr. Chen and Ms. Wang with respect to the Acquisition such that the Acquisition shall become a connected transaction under Chapter 14A.
462’s reply (dated 21 August 2009)[55]	To the best of the information, knowledge and belief of the Directors having made all reasonable enquiries, the Vendor and/or its ultimate beneficial owners are Independent Third Parties to the registered owners and/or its ultimate beneficial owners of the Properties, Fixed Assets and Stocks. … Each of the Target Company, the Vendor, the Warrantor, the registered owners and the ultimate beneficial owners of the Properties, Fixed Assets and Stocks are Independent Third Parties to the Company and its connected persons.
SEHK’s 5th comment (dated 26 August 2009)[56]	We refer to the Company’s reply dated 20 August 2009 in response to our enquiry on a complaint. Please ensure all relevant information contained in the reply has been included in the circular, which should include, at least, the following: (a)  the identity of the ultimate beneficial owners of the Vendor, the Target and the Warrantor; (b)  the existing and prior relationship of (a) above with the Company and its connected persons, including relationship with Mr Jack Keen Chen; (c)  …
462’s reply (dated 28 August 2009)[57]	To the best of the information, knowledge and belief of the Directors having made all reasonable enquiries, each of the Target Company, the Vendor, the Warrantor, the ultimate beneficial owner of the Target Company, the Vendor and the Warrantor, the registered owners and the ultimate beneficial owners of the Properties, Fixed Assets and Stocks are Independent Third Parties to the Company and its connected persons and in particular there is no existing or prior relationship or understanding between Mr. Jack Keen Chen and Ms. May Wang with respect to the Acquisition such that the Acquisition shall become a connected transaction under Chapter 14A of the Listing Rules.

C.3.  The fund raising exercise

20.  Since 462 had no money to purchase the farmlands and assets, the two-stage acquisition, noted above at [13], involved an initial purchase of 20% of UBAH at a price of NZ$100 million, followed by a subsequent purchase of the remaining 80% of UBAH at NZ$400 million[58]. 462 would issue various batches of convertible notes (“CN”) and an optional bond as the payment for the acquisition.

21.  On 4 December 2009, SEHK granted approval for 462 to issue CN-A and CN-B to UBTL. On 21 December 2009, listing approval was also obtained for the issue of CN-C, CN-D and an optional bond. On 14 July 2010, listing approvals were obtained for the further issue of CN-C[59]. On 19 July 2010, the last batch of CN was issued[60].

22.  The prosecution alleged that, throughout the fund raising exercise, a sum of NZ$51.6 million, which represented the payment out from the CN-C money, was retained by D2 as shared profit pursuant to the conspiracy between herself and D1. (As a side note, the subject-matter of Count 5 was a sum of HK$85.287 million, which represented three payments out from the CN-C money (HK$73.7 million) and CN-B money (totalling NZ$2.2 million) respectively into a company account of Goldmate Securities (USA) Limited[61], of which D1 was the legal and beneficial owner[62]. Save where necessary, the facts, evidence and positions of the parties in relation to Count 5, on which D1 was acquitted and which is no longer the focus of this appeal, will not be elaborated upon further.)

D.  The trial

D.1.  Interim rulings

23.  In what were very lengthy proceedings, the judge was called upon to make a number of rulings, some of which are relevant to the grounds of appeal and I shall, therefore, briefly summarise below.

24.  On 17 March 2023, the judge refused (with reasons given on 29 June 2023[63]) the defence application for a permanent stay of proceedings on the bases of the impaired memories of prosecution witnesses and the resulting unfairness to the trial of the appellants. (In fact, it was the second application – the first application was made to, and refused by, Deputy Judge Bruce SC at the end of the first retrial[64].)

25.  On 13 June 2023, contrary to the defence contention that Count 1 and Count 3 lacked legal certainty and that particulars (a), (b) and (c) could only exist as dishonest means within the legal context of the LR, the judge ruled (with reasons given on 26 June 2023[65]) against the defence. She held, inter alia, that clarity and precision could be achieved by the phrase “working together on the same side” and that particulars (a), (b) and (c) should be given their plain, ordinary meaning.

26.  On 29 June 2023, the judge refused (with reasons given on 10 July 2023[66]) to reserve the questions arising from the 13 June 2023 ruling for the consideration of the Court of Appeal, pursuant to section 81 of the Criminal Procedure Ordinance, Cap 221. On 3 July 2023, on a further intended application to the Court of Final Appeal to re-open the concluded appeal, the Chief Justice directed that the Court was functus officio on the matter[67].

27.  On 15 September 2023, the judge ruled (with reasons given the same day[68]) that Clive Hudson (PW14), a forensic accountant, was permitted to tender two reports (dated 4 February and 25 March 2021[69]) and to give expert evidence on the differences between the Tab 11 accounts and Tab 91 accounts in relation to Count 2 and Count 4. (It may be noted that the same ruling had previously been made by Deputy Judge Bruce SC during the first retrial.)

28.  On 20 September 2023, the judge ruled (with reasons given the same day[70]) that, on the question of whether the CSA should have been disclosed under a duty of disclosure, William Wong (PW16), the Vice President (later Senior Vice President) of the Listing Division of SEHK, was allowed to testify both as an expert and as a factual witness. (When rejecting the previous appeal, the Court of Appeal had affirmed a similar ruling given in the original trial[71].)

29.  On 4 October 2023, the judge declined (with reasons given on the same day[72]) to certify the questions arising from both the 13 June 2023 ruling and the 29 June 2023 ruling under section 32(2) of the Hong Kong Court of Final Appeal Ordinance, Cap 484, since neither of those rulings should be regarded as a final decision.

D.2.  The defence case

30.  None of the appellants elected to testify or call evidence[73]. The principal contention of the defence at trial was that the particulars of the individual counts were defective and/or could not be established by evidence. Albeit not an exhaustive list, the defence arguments traversed the following matters:

(a)  Whilst the prosecution case was initially based on a breach of the LR (for example, Cindy Ngai, the Assistant Manager of the Listing Division of SEHK, confirmed in evidence that the representations and declarations made to her in the correspondence between SEHK and 462 were related to the concept of connected transaction[74]), the prosecution had “morphed” the prosecution basis into an allegation of working together[75];

(b)  No dishonest means were specifically alleged in particulars (a) and (b) of Count 1 and Count 3. Neither was it shown that any such means would risk prejudicing the economic interests of 462[76];

(c)  There was no evidence to show that D1 and D2 had personally made any false representations, or at least there was nothing to show that the content of any representation was false[77];

(d)  Certain matters relied on by the prosecution were not disclosable in law; the jury could not sensibly be directed as to how they should take those matters into account[78];

(e)  D1 and D2 had no interest in the acquisition, and the existence of the CSA did not constitute an interest as alleged by the prosecution[79]. In particular, Clause 11[80] of the sale and purchase agreements with CraFarms had been crossed out. Commission was also specifically excluded pursuant to Clause 10.3[81] of the sale and purchase agreement with 462;

(f)  It was unclear how the sharing of profits between D1 and D2 was relevant to the prosecution case insofar as it was not alleged to be an element of the conspiratorial agreement[82];

(g)  There was no evidence that the appellants intended to prejudice the public duty of SEHK and the requisite intent in a public duty fraud was not established[83]; 

(h)  There was no evidence that D3 conspired to conceal the Tab 11 accounts; on the contrary, there was evidence that he did not. Moreover, there was no evidence that he benefitted from the conspiracy in any way[84].

D.3.  Submissions of no case to answer

31.  Defence counsel at trial each advanced a submission of no case to answer on behalf of their respective clients, relying essentially upon the points set out above at [30].

32.  In response, prosecuting counsel’s principal contentions were as follows:

(a)  The particulars of the offence made no reference to, and the prosecution case was not based upon, any breach of the LR[85];

(b)  Particulars (a) and (b) of Count 1 and Count 3 were not disclosure-based. Instead, they focused on an agreement to falsely represent the state of affairs between D1 and D2[86]. In the premises, SEHK’s enquiries following a letter of complaint were accompanied by a warning in the Section 384 Notice which stated the consequences of making false representations[87]. The state of mind of the persons who made or agreed to make those representations and their understanding of the word “independence” would be a question for the jury[88];

(c)  Particular (c) of Count 1 and Count 3 related to an agreement to share not the existing but the expected commission upon the completion of the sale of the farms[89]. Whether the CSA was legally enforceable was not the issue, but it was a matter for the jury as to what D1 and D2 understood to be the significance of the CSA in relation to the VSA[90]. It should also be left for the jury to consider if the evidence was capable of showing that the division of profits was a common objective of the fraud and that there was wilful non-disclosure lest the fraud would be exposed at the outset[91]. As to the retention of NZ$51.6 million by D2, with one half shared by D1, it should be left to the jury to decide whether that sum of money represented the cash consideration of the VSA (as alleged by the defence) or financial assistance[92]; 

(d)  Regarding the position of 462, the jury should be permitted to consider whether there was, as the prosecution alleged, an obvious risk (which, it also emphasised, was not restricted to economic loss and actual detriment) so that, had the shareholders become aware that D1 and D2 were not actually independent, approval of the payment for VSA may be withheld or refused[93];

(e)  The vetting of the announcement and Circular was part of the public duty which the prosecution said SEHK was prevented from performing as a result of the appellants’ dishonest agreement[94], the evidence for which should be placed before the jury;  

(f)  Although part of the Tab 11 accounts was disclosed to the ShineWing witnesses, it did not necessarily mean that they had seen those accounts. Had they seen them, one might query why the figures in Appendix II were different from the Tab 11 accounts. It was therefore a matter for the jury as to what was known or not known by the witnesses[95].

33.  In the result, the judge ruled that there was a case to answer in respect of all the counts against all defendants. She also re-affirmed her decision not to order a permanent stay of the proceedings[96].

D.4.  The prosecution concession on original particular (b) of Counts 2 and 4[97]

34.  In closing its case, prosecuting counsel conceded, on the basis of the evidence of two ShineWing witnesses[98], that part, if not all, of the Tab 11 accounts were revealed to ShineWing, and he therefore felt unable to establish there was an actual concealment of the Tab 11 accounts; prosecuting counsel stressed, however, that the essence of the original particular (b) had been an agreement to conceal, rather than an actual concealment.

35.  As a result, the judge acceded to the prosecution’s request and ruled that the original particular (b) in Count 2 and Count 4 should be struck out[99].

D.5.  The judge’s summing-up

36.  The judge reminded the jury of the danger of real prejudice to the appellants which could potentially be occasioned by the delay in standing trial some 14 years after the events concerned, explaining that memories fade and the ability to remember becomes impaired with the passage of time. The jury were asked to take this into account when deciding whether the prosecution had made them sure of the appellants’ guilt[100].

37.  The judge explained to the jury that there was no direct evidence of any conspiracy and the prosecution were relying on circumstantial evidence to prove the guilt of each appellant[101].

38.  She pointed out that “this is not a Listing Rules case”, although 462 and SEHK would read the representations in question in the context of the LR[102]. She described the prosecution case in respect of Counts 1 and 3 for the jury in the following terms[103]:

“Now, in this case, the prosecution alleges that the 1^st accused and the 2^nd accused were working together on the same side to push the acquisition. So they said the phrase, ‘working together’ means that they were working together on the same side, as opposed to being on the opposite sides with May Wang as the vendor and Jack Chen as the director of 462. As such, ‘working together’ needs no further explanation. And that the prosecution also alleges that Mr Jack Chen and Ms May Wang had manoeuvred themselves to be on the opposite sides with May Wang as the vendor, and Jack Chen as a director and joint chair of 462. And, as a director, he was in a position to influence 462 in its decision about the acquisition.”

As to the purpose of working together, the judge explained[104]:

“So in respect of particulars (a) and (b) of this case, it is the prosecution’s case that Jack Chen and May Wang, they were working together on the same side of the acquisition secretly towards making a profit… There must be a purpose why they were working together. So the prosecution says they were working together secretly on the same side of the acquisition.”

39.  The judge reminded the jury of Katherine Chan’s evidence that if D1 had an interest in the VSA, he should have made disclosure and avoided becoming a director of 462[105]; and that a related disclosure was, to her understanding, also required to be made to SEHK[106]. The judge went on to explain SEHK’s perspective by reference to the evidence of William Wong, namely that D1 had a potential conflict of interest; the required disclosure of the relationship between the listed company and its connected persons (indeed, D1 as a director of 462 was clearly such a connected person[107]) was not confined to his current relationship but also to his past relationship[108]; and the CSA was not only disclosable but should be disclosed unless it was entirely unrelated to the VSA[109]. When reviewing his evidence, the judge referred to the meaning of “connected persons” and “connected transactions” in the relevant context[110]. She also cautioned the jury that they were not bound to accept any of the expert opinions expressed by William Wong[111]. With regard to the evidence of Cindy Ngai, she further explained the meaning of “fiduciary duties” and how such duties were owed by a company director such as D1[112].

40.  The judge directed the jury[113] (and subsequently repeated such direction[114]) that if they found the representations in particulars (a) and (b) of Counts 1 and 3 had been made in the context of the LR, then “it is the end of those two particulars”. She highlighted the evidence and numerous matters which were relevant to the jury’s consideration of whether “there was any relationship that is relevant to the prosecution’s allegation that D1 and D2 were working on the same side”[115], repeatedly stating that most of those matters were not disclosable in law[116].

41.  She told the jury on no less than three occasions that if they found the CSA was not made with respect to the VSA, “that is the end of particular (c)”[117]. She also directed them that interest was not confined to legal interest and it was a matter for them to consider if any interest arose out of the CSA[118]. She cautioned that if the jury decided that D1 and D2 honestly believed it was not necessary for them to disclose the CSA, they should be given the benefit of the doubt[119]. The judge further directed how to resolve the conflicting positions of the prosecution and defence as to the circumstances in which D2 received the NZ$51.6 million[120].

42.  The judge pointed to the common evidence between Katherine Chan[121], Cindy Ngai[122], Barry Yip (the Partner of ShineWing)[123] and Kevin Cheng[124] (the Assistant Manager of ShineWing) that the financial information presented in the Appendix II should be historical or actual, as opposed to assumed, figures.

43.  The judge guided the jury through the plethora of emails relied on by the prosecution in respect of Count 2 and Count 4[125], stating that they may convict only if they were sure that there was a conspiratorial agreement between the appellants to present the gross profit figure as the historical figure of the targeted asset[126]. In respect of D1, to whom some of those emails were copied, the judge reminded the jury of Katherine Chan’s evidence that D1 did not understand, converse in or write English[127]. The judge also told the jury that if they were to find that the Tab 91 accounts were actually prepared by D3 as assumed or pro-forma accounts, they should disregard the opinion evidence of Clive Hudson, since his analysis was based on the footing that those accounts would be presented in Appendix II as actual historical figures[128]. The judge further reminded the jury of the prosecution contention that “those were utterly false accounts”[129] and directed the jury that whereas “if you find that it was the case, or it might be the case that the accounts being prepared by Eric was indeed pro-forma assumed account, then it is the end of these two counts”[130]. She subsequently repeated such directions in similar words on at least two further occasions[131].

44.  In light of the fact that D3 had participated in two video recorded interviews, the judge instructed the jury that, although the prosecution sought to infer from D3’s appointment in August 2010 as vice-president responsible for liaising with SEHK[132] so as to conclude that he was familiar with the LR at the time of the offences, “there was no evidence in this case suggesting that the Listing Rules had been drawn to his attention”[133]. The judge also described the admitted relationship between D3 and the other two appellants as a “very vague business relationship” only[134] and went on to remind the jury that:

“…after you consider the whole of the evidence against Eric, if you consider that he was acting dishonestly himself on his own in the provision of the figures, the false figures about the new profit of the properties or the CraFarm target assets, and if you find that he was acting only on his own without Jack Chen and without May Wang, then of course there is no conspiracy.”[135]

45.  The judge directed the jury to consider each count, and the case for and against each appellant, separately[136].

E.  An overview of the Perfected Grounds of Appeal

46.  Nine identical grounds of appeal have been advanced on behalf of D1 and D2; to the extent relevant, some of those grounds are also relied upon by D3. Moreover, each of the appellants has advanced a single ground of appeal against sentence.

47.  The appellants were represented by their respective counsel at trial (save and except Ms Wong SC, who did not appear below); D1 by Mr Owen KC, Ms Wong SC and Mr Tsoi SC; D2 by Mr Winter KC and Ms Chiu; and D3 by Mr Khosa.

48.  The nine identical grounds of appeal against conviction are as follows:

Ground 1:  The judge erred in law in construing the true meaning of particulars (a) and (b) of Count 1 and Count 3.

Ground 2:  The judge erred in law in not sufficiently or correctly defining an “interest” in particular (c) of Count 1 and Count 3.

Ground 3:  The judge erred in law in finding that particular (a) of Count 2 and Count 4 could be sustained after striking-out the original particular (b).

Ground 4:  The judge erred in law in allowing William Wong to testify as both an expert and factual witness.

Ground 5:  The judge erred in law in allowing Clive Hudson to give expert evidence about the Tab 91 accounts created by D3.

Ground 6:  The judge erred in finding that there was a case to answer on all counts (or in the case of D3, Count 2 and Count 4).

Ground 7:  As a result of the purported errors above, the judge erred in her directions in summing-up on the essential elements of all counts (or in the case of D3, Count 2 and Count 4).

Ground 8:  The judge failed to order a permanent stay of proceedings.

Ground 9:  The jury’s verdicts are perverse and there is a lurking doubt about them.

E.1.  The appellants’ submissions

49.  Regarding particulars (a) and (b) of Count 1 and Count 3, it was submitted that the judge wrongly allowed the prosecution to proceed on an unclear basis of D1 and D2 “working together”, or “working together on the same side”, to defraud 462 and SEHK, by application of the plain and ordinary meaning of those words in English. It was complained that, whilst the misrepresentations in particulars (a) and (b) were made pursuant to LR 14.58(3)[137] and LR 14.63(3)[138], absent any specific allegations of breach of the LR, or commission of unlawful acts, the prosecution was simply alleging the concealment of a secret bond between D1 and D2 in pursuance of something that was not unlawful or criminal per se. It was submitted that, if there was no alleged non-compliance with the LR, the public duty of SEHK was not engaged or compromised for it had no duty or interest to look beyond the requirements of the LR. If, on the other hand, D1 and D2 were alleged to have breached the LR, the jury ought to have had sufficiently explained to them the true meaning of words such as “connected” and “relationship” in the relevant LR provisions. To some extent, the argument in Ground 1 relates to the first and second questions, or points[139], on which the Appeal Committee of the Court of Final Appeal granted leave to appeal and bail pending appeal in HKSAR v Chen Keen[140] (but did not ultimately resolve, since the substantive appeal before the Court of Final Appeal was allowed on a different basis).

50.  Concerning particular (c) of Count 1 and Count 3, it was argued (by Ground 2) that, since nothing in the evidence was capable of showing that D1 and D2 did, or could, receive any commission from the CSA, there was no basis to tell the jury that they had an “interest”, let alone concealed such “interest” in the VSA. It was also contended that the judge failed to explain to the jury what she meant by the ordinary meaning of “interest” and erred in equating a director’s duty to avoid a potential conflict of interest with the concealment of an actual interest. This argument is connected with the last point on which the Appeal Committee granted leave[141]. Related to that argument is also the impugned admission of the evidence of William Wong (Ground 4), which is said to be the result of the judge wrongly adopting the ruling and reasoning of Anthea Pang J from the original trial. It was argued that, as the real question was whether there was in law any duty to disclose the CSA, it would not matter whether the CSA was, in the opinion of William Wong, an “interest” that was disclosable to SEHK.

51.  As noted earlier, the decision of the Court of Appeal in Mak Kwong Yiu was heavily relied on by the appellants in support of the arguments in Grounds 1 and 2: it was submitted that the decision effectively affirmed the appellants’ suggestion that any allegation of conspiracy based on dishonest concealment require proof of a clear, ascertainable legal duty to make disclosure. It was also submitted that, absent any identified legal duty as such, or proof of a connected transaction within the meaning of the LR, the non-disclosure of the various matters in question could not constitute a conspiracy to defraud SEHK or 462, bearing in mind that D2 owed no fiduciary duty, since she was not a director of 462.

52.  It was further submitted that the judge should have ruled no case to answer in respect of Count 1 and Count 3, for there were no prima facie dishonest means agreed by the appellants. It was argued that, in her directions in her summing-up, the judge unfairly invited the jury to take into account certain matters, which themselves would require no disclosure under the law, in deciding whether D1 and D2 were working together. The judge also failed to tell the jury what an “interest” meant in law.

53.  In relation to the Tab 91 accounts, it was submitted (by Ground 3) that since the Tab 11 accounts and the loss-making nature therein were disclosed to ShineWing in the first place, it was not possible to lie about profit, and Counts 2 and 4 could not therefore be sustained. It was also argued (by Ground 5) that the real issue was not what changes had been made by D3 to the figures in the Tab 11 accounts, and how, so that they became the Tab 91 accounts, but whether the figures in the Tab 91 accounts were falsely invented by D3 with the intention to defraud 462. On this issue, it was submitted that the evidence of Clive Hudson should not have been admitted because it provided no assistance to the jury but only served to distract them from the core issue in relation to Count 2 and Count 4, in respect of which there was no prima facie evidence of any concealment or false representation of the true financial position of the properties in question. Such prima facie evidence was particularly lacking in the case of D1, who was not involved in the drafting of Appendix II and was merely a recipient of the relevant emails from the other two appellants.

54.  It was argued (by Ground 9) that the prosecution case thesis was unsubstantiated and the resultant convictions entered by the jury were not only unsafe but were sufficiently capable of leaving the Court of Appeal with a distinct feeling of unease as to their correctness. It was also submitted (Ground 8) that the judge should have acceded to the defence application for a stay of proceedings, since the appellants were seriously prejudiced by reason of the lapse of time in bringing them to trial (or retrial); thus, there was an infringement of their rights to be tried without undue delay as guaranteed under Article 11(2)(c) of the Hong Kong Bill of Rights (as set out in section 8 of the Hong Kong Bill of Rights Ordinance, Cap 383) and Article 87 of the Basic Law.

E.2.  The respondent’s submissions

55.  In response to Ground 1, Mr Mitchell, with him Ms Ng and Mr Li, for the respondent both here and at the trial, submitted that the mere reference to the term “connected person” in particular (a) of Counts 1 and 3 did not mean there was a breach of the related provisions of the LR in which the same term appears, pointing out also that LR 14.58(3) dealt with the contents of announcements for all, not merely connected, transactions and LR 14.63(3) was concerned with the “General Principles” for the contents of circulars. He emphasised that the meaning of “connected person” was not consistent throughout the provisions of the LR and depended very much on the context. As for the summing-up, the judge had unambiguously directed the jury that the relevant representations were not made in the context of the LR. He pointed out that, following a chain of enquiries by SEHK, D1 must have known the importance of his duty of disclosure, which was a fiduciary duty of a director prescribed under the common law, the repealed section 162 of the former Companies Ordinance (Cap 32)[142] and LR 3.08(e)[143]. Mr Mitchell submitted that there was no ambiguity in the allegation of D1 and D2 working together, which was a reference to them making a “backdoor arrangement” by pretending to act for opposite sides whilst in fact working on the same side as the vendor, and sharing in the profits.

56.  In relation to Ground 2, the respondent contended that, since the CSA had no end date and was operational at the time of the offences, an interest subsisted and should have been disclosed. Relying on his position advanced during the submission of no case to answer[144], Mr Mitchell urged the Court to adopt the analysis in respect of the CSA by Deputy Judge (now Recorder) Eva Sit SC in a consequential injunction application against D1, D2 and other defendants, and her conclusion that “there is plainly a prima facie entitlement to commission”[145], which was affirmed on appeal by a differently constituted Court of Appeal[146]. It was submitted that the duty of disclosure was the mirror, or corresponding duty, of the no-conflict rule, which any director must observe.

57.  In relation to Ground 3, the respondent sought to distinguish between the mere disclosure of Tab 11 accounts, or any parts thereof, to ShineWing and the subsequent acts resulting in the representation of the false gross profit figure in Appendix II. He noted that those acts were manifested in the chain of emails which were analysed at length by the Court of Appeal in the previous appeal: see HKSAR v Chen Keen (alias Jack Chen) and others at [97]-[104][147]. He submitted that the Court’s analysis on that previous occasion was equally applicable here and the jury had received proper directions on the issue from the judge.

58.  In relation to Ground 4 and the admissibility of William Wong’s evidence, Mr Mitchell pointed out that the same issue was disposed of by the Court of Appeal: see HKSAR v Chen Keen (alias Jack Chen) and others at [137]-[146]. He submitted that the evidence was correctly admitted at the retrial and the judge’s directions to the jury on the matter were comprehensive and fair.

59.  As for Ground 5, concerning the admissibility of Clive Hudson’s evidence, the respondent submitted that such evidence was relevant to show that deliberate changes had been made to the Tab 91 accounts to obtain a correct “bottom line”. In that regard, Clive Hudson made it clear in his evidence that whether the changes were dishonestly made was a matter for a court (or jury) but not himself[148]; in her summing-up, the judge further explained that Clive Hudson’s opinion would not apply if the jury accepted that the Tab 91 accounts were assumed accounts only.

60.  In respect of Grounds 6, 7 and 9, Mr Mitchell pointed to the prosecution evidence and the directions in the summing-up, which he submitted were fair in respect of all counts or offences. There was clearly a case to answer and it was not a case involving a lurking doubt.

61.  Of Ground 8, Mr Mitchell submitted that the appellants had failed to demonstrate any exceptional circumstances to warrant the judge’s exercise of the power to stay the case. He maintained that the judge was correct in not departing from the decision and reasoning given by Deputy Judge Bruce SC after a comprehensive consideration of a wide range of factors; in particular, the lapse of memory of prosecution witnesses was of limited relevance and had little or no impact on the fairness of these proceedings; moreover, the effects of any delay could be rectified by proper directions, which the judge appropriately gave the jury in her summing-up.

F.  Discussion

F.1.  Is this Court bound by its earlier decision in HKSAR v Chen Keen (alias Jack Chen) and others?

62.  Since the respondent is relying on the way certain issues have already been determined by the Court of Appeal in its judgment on appeal following the first, or original, trial, I should begin by addressing the very unusual, but nevertheless important, question of whether we are bound by the previous decision of this Court in the same case. I first raised this matter at the hearing of the application for bail pending appeal by D1 and D2 on 8 May 2024 when sitting as a Single Judge[149]. Whether this Court (as presently constituted) should be bound by the decision of a previous Court (differently constituted[150]) sitting on appeal from the first trial in relation to certain questions common to both appeals under the principle of stare decisis is a novel question for this jurisdiction; particularly when there has not been any determination or reasoning on those matters from the Court of Final Appeal, it having allowed the appeal from the first decision of the Court on an unrelated ground.

63.  At the outset of the appeal, and after reviewing the parties’ written arguments and authorities in support, we conveyed our view to the parties that we did not consider ourselves bound by the previous decision of this Court; although we also concluded that the previous Court’s reasoning would clearly be persuasive. Given the novelty of the issue, I should state our reasons for so concluding.

64.  Although the matter has not arisen in this jurisdiction before, it has arisen previously in the United Kingdom. In R v Home Secretary, Ex parte Al-Mehdawi[151], a deportation appeal, the Court of Appeal was called upon to determine whether a decision by that Court in an earlier deportation case in R v Diggines, Ex parte Rahmani[152] that there had been a breach of the rules of natural justice was binding on itself, in circumstances where the House of Lords had ultimately decided Ex parte Rahmani on a different ground. Taylor LJ, with whom Nicholls and O’Connor LJJ agreed, held that though of persuasive influence, the earlier decision was not binding. When the case reached the House of Lords, Lord Bridge, giving the only reasoned judgment in the case, held[153]:

“Your Lordships must now decide the question of principle and the question whether the reasoning of the Court of Appeal in Ex parte Rahmani was technically binding becomes academic. In these circumstances your Lordships did not find it necessary to hear argument on the point raised relating to the application of the doctrine of stare decisis.”

65.  In Gilham v Ministry of Justice[154], the Court of Appeal considered Al-Mehdawi, noting that the Court of Appeal’s decision in Al-Mehdawi[155]:

“…was itself the subject of an appeal to the House of Lords, which declined to consider the question (see the speech of Lord Bridge, at p 894B) and decided the case on another point. We are thus in the Gilbertian situation that the application of (the Court of Appeal’s) reasoning means that it is itself not authoritative. However, we believe that in the circumstances of this case we should reach a conclusion on the substantive issue and not duck it on the basis of nice questions of precedent of that kind.”

The Court went on to say that the Court of Appeal’s reasoning in such circumstances would be “no more than persuasive”.

66.  In Basfar v Wong[156], an appeal to the High Court from an employment tribunal, Soole J was required to decide whether a decision of the Court of Appeal on a point of construction in a similar case bound the court when there had been an appeal to the House of Lords in that case, which allowed the appeal on other grounds. If I may conveniently recite the holding in the headnote, the court decided, consistent with the view expressed in Gilham, although Gilham was not in fact cited to the court, that[157]:

“…a decision of the Court of Appeal on a particular issue ceased to bind that court when an appeal to the Supreme Court was allowed on other grounds and the issue did not fall for decision; that therefore, the Court of Appeal decision on similar assumed facts that a respondent diplomat was entitled to diplomatic immunity, while persuasive, did not bind that court or lower courts, since the true ratio was that on which the case was decided in the Supreme Court; …”.

In his judgment, Soole J relied, inter alia, on a statement in Cross and Harris, Precedent in English Law, 4^th ed (1991), at p 154, that[158]:

“The Court of Appeal is not bound by a decision of its own where the earlier decision was taken on appeal to the House of Lords and the House decided that the point on which the Court of Appeal had given a ruling did not arise for decision.”

67.  We took the view that the previous decision of the Court in the present case must be persuasive of our decision where the point is one of pure law or construction. However, we also recognised that even this approach must be tempered by the fact that this is a new trial where the evidence (general or expert), which bears on the construction and application of the law, may have emerged differently. Nevertheless, I wish to make clear that we did not see ourselves as bound by the decision of this Court or its reasoning in HKSAR v Chen Keen (alias Jack Chen) and others and, accordingly, the Court proceeded on that footing.

68.  A closer examination of the two trials reveals that not only were there material changes in the way the counts were framed and particularised in the two indictments, but the evidence called by the prosecution emerged rather differently. One of the more significant differences evidentially between the two trials concerned, for example, Count 2 and Count 4 and the allegation made by the prosecution in opening the case to the jury that the appellants had lied about the gross profits of the Crafarms and/or that they had concealed the Tab 11 accounts from the accountants, ShineWing, which compounded the lie. Having traversed extensively the evidence adduced at the first trial, the Court said in its judgment in HKSAR v Chen Keen (alias Jack Chen) and others, at [206]:

“Given that the judge directed the jury that if ‘you are not sure that the Tab 11 March accounts of the CraFarms Group were hidden from the ShineWing witnesses, in other words, you are not sure that the Tab 11 accounts were not given to them,’ and that they must give the benefit of the doubt to the defendants, it is clear that in convicting the appellants the jury was satisfied that those accounts were concealed from them. The resolution of that issue was very much a matter for the jury, having regard to all the evidence.”

69.  However, in the evidence with which we are concerned at this trial, Mr Mitchell felt compelled to make a concession during his closing address to the jury that “on the actual act of concealment there is evidence that the ShineWing witnesses were aware of the Tab 11 financial statements provided by Mark King”[159]. Following argument, as we have seen, the judge struck down particular (b) of the relevant counts.

70.  I merely cite this example at this stage to illustrate the difficulty, if not the danger, of this Court of Appeal finding itself bound by the conclusions of a previous Court of Appeal in the same case, where the evidence which shaped that Court’s findings may have differed or changed in the subsequent trial. This Court might find itself more easily persuaded by its predecessor on an issue of pure law rather than one of mixed fact and law where the evidence bearing on the legal issue has emerged differently.

71.  As to the argument in Ground 2, we bore in mind that it was decided in Natural Dairy (NZ) Holdings Limited (in provisional liquidation) v Chen Keen (alia Jack Chen) and 4 others by then Deputy Judge Eva Sit SC, whose reasoning was not disturbed on appeal to the Court of Appeal, although the Appeal Committee of the Court of Final Appeal did consider that it was reasonably arguable that substantial and grave injustice would result from a misdirection to the jury, that concealment or non‑disclosure of the CSA of October 2008 could constitute a conspiracy to defraud[160].

72.  With those remarks as to the status and effect of the previous decision of this Court, I would grant leave to appeal on Grounds 1 and 2 and turn to the appeal presented before us.

F.2.  What is the significance of disclosure or non-disclosure of the Tab 11 accounts on Counts 2 and 4

F.2.1.  Position in the first trial and appeal

73.  I shall deal firstly with the convictions in respect of Counts 2 and 4. As I have just pointed out, the evidence which emerged at the trial with which we are concerned was materially different from the evidence at the first trial before Anthea Pang J. To appreciate just how different, I will refer to the judgment of this Court at the first appeal, where Lunn VP summarised the essential dispute at the first trial under the section, “Were the Tab 11 accounts seen by ShineWing?”  The relevant parts of the Court’s judgment read:

“147. All of the appellants took issue with the adequacy of the judge’s directions in respect of the evidence as to whether Tab 11 prepared by Mark King, emailed to the 3^rd appellant and copied to David Wiltshire on 15 June 2009, had been shown to/seen by persons working for ShineWing, in particular the four witnesses who travelled to New Zealand to perform the ‘Agreed Upon Procedure’. They were in New Zealand in the period 7 to 27 June 2009. The 3^rd appellant submitted that the judge had downplayed the effect of the evidence of two of those four witnesses, William Li and Doris Yiu, such that she became an advocate rather than a judge.

148.  The importance of the issue lay in the fact that, although it was not stipulated as a particular of the dishonest means in the Particulars of Offence in Count 2, in her opening speech to the jury Ms Draycott said that it was the 3^rd appellant’s job ‘to stop ShineWing finding out about the real accounts, and put himself between the accountants and ShineWing.’  There was no dispute that the case advanced to the jury by the prosecution was that the 3^rd appellant had concealed from ShineWing the material encompassed in Tab 11. Although he received management accounts for 2009 from Mark King of Stretton’s on 15 June 2009, and although he was being pressed by ShineWing to provide management accounts for 2009, the 3^rd appellant did not provide those accounts to them. Rather, he provided them with his own version of the accounts, first on 25 and next on 29 June 2009. The consolidated statement of financial performance for the 10 months ending 31 March 2009 prepared by Mark King provided to the 3^rd appellant in the email of 15 June 2009 of the six companies constituting the CraFarms Group stipulated an overall deficit of NZ$5,420,975, whereas the statements of financial performance for that period for the same six companies provided by the 3^rd appellant to ShineWing dated 25 June 2009 stipulated an overall surplus of more than NZ$10 million while statements attached to the 3^rd appellant’s emails of 29 June 2009 stipulated an increased overall surplus.”

74.  Having then recited extensively the evidence on this issue, in particular the emails passing between ShineWing and D3 and between D3 and D1 and D2, the Court noted:

“202. On the one hand, as the judge reminded the jury, there was a series of emails from Kevin Cheng to, or copied to, the 3^rd appellant on and between 16 and 25 June 2009, in which he repeatedly complained that he had not been provided with the management accounts for the 10 months ended 31 March 2009. That of course begged the question: if the ShineWing team had been provided with Tab 11, why was Kevin Cheng complaining?”

75.  In dismissing the complaint at that appeal about the way the trial judge had dealt with the matter, the Court concluded with the passage I have already referred to at [68] supra. In other words, the jury at the first trial were effectively directed that unless they were sure the Tab 11 accounts were not given to ShineWing, they should acquit the appellants of Counts 2 and 4.

F.2.2.  Position in the present trial

76.  In the present trial, prosecuting counsel had opened the case to the jury on the matter of the concealment of the Tab 11 accounts by the appellants, contending[161]:

“…then Mark King sent these accounts out and it would have been a simple matter for the accounts to be simply passed onto ShineWing, but that was not done.” (Emphasis supplied)

A little later, after referring to an email from Kevin Cheng of ShineWing, which was copied to D2, prosecuting counsel suggested[162]:

“And then he goes on,

‘For your information, certain management accounts and books and records …(reads) are still outstanding, on which we will need to issue an audit opinion on it.’

And it says,

‘Neither ShineWing nor Eric has the Target companies management accounts at this moment.’

So clearly what had been sent out by Strettons, Mark King, has not been sent on to ShineWing.” (Emphasis supplied)

77.  This position, which the prosecution obviously hoped to establish in evidence during the trial seems to have unravelled when the witnesses gave their evidence, because the prosecution had to concede that there was evidence that ShineWing were aware of the Tab 11 accounts at the relevant time. As a result of the concession, the judge was called upon to make a ruling about the viability of particular (b) of the original Counts 2 and 4, during the currency of prosecuting counsel’s closing address, which was given in the following terms[163]:

“…in his closing submissions the prosecution considered in front of the jury that on the evidence it would appear that there was no actual concealment of tab 11. The prosecution accepted that it cannot identify whether the whole or part of tab 11 was not revealed so that the jury cannot be sure of the concealment particularised in B of counts 2 and 4. Therefore the prosecution is unable to prove there was an actual concealment of the tab 11 accounts. However, it is the prosecution’s case all along that there was actual concealment of the tab 11 accounts and the prosecution case always depend on the proof of the concealment of the tab 11 figures. It would be utterly unfair to allow the prosecution to depart from that position now.

Having taken into account parties’ submissions and the concession made by the prosecution that it is unable to prove there was actual concealment of the tab 11 figures, and its inability to identify whether the whole or parts of tab 11 was also revealed to the ShineWing witnesses, I now rule that particular B should be struck off from counts 2 and 4.”

78.  When the jury returned and they were directed to strike out particular (b) of Counts 2 and 4, Mr Mitchell continued with his closing address by suggesting that “the evidence the prosecution says shows that (D3) and (D2), together with (D1) were directing ShineWing to rely upon (D3’s doctored accounts) as the 2009 management accounts, for the purpose as was stated in the original requirements for due diligence as profit and loss statements to be published in the Appendix 2 of the Circular” (emphasis supplied). This has prompted a separate complaint before us that the basis of the allegation in Count 2 and Count 4 was changed at a very late stage, when the defence were obviously unable to challenge the prosecution’s assertion in evidence with the witnesses.

F.2.3.  Conclusion on Count 2 and Count 4

79.  Although our collective eyebrow has been raised by the apparent shift in the evidence of some of the ShineWing witnesses as between the first trial and the present trial, none of the accountants were indicted co-conspirators and it is unnecessary for us to draw any firm conclusion other than that forensic cross-examination had managed to shake the foundation of the prosecution case on Count 2 and Count 4. Be that as it may, it seemed to us that the appellants have a valid complaint that since the basis of the prosecution case had shifted from one of concealing the Tab 11 accounts from ShineWing to one of revealing the Tab 11 accounts to ShineWing but directing them to somehow sign off on estimated figures as historical accounts, the ShineWing witnesses could and should have been cross-examined on what was effectively a new allegation. That forensic advantage was lost because of the way matters developed.

80.  In our judgment, that was enough to dispose of the convictions on Count 2 and Count 4, without further consideration of whether the remaining particular (a) was viable and enough to sustain the charges. Suffice it to point out that, notwithstanding the shift in evidence on the disclosure of the Tab 11 accounts, all other relevant evidence was, at the time of the trial, correctly left to the jury in order for them to consider what to make of the appellants’ acts resulting in the representation in Appendix II of the false gross profit figures, which were entirely different from or inconsistent with those in the Tab 11 accounts, and why. Accordingly, I would refuse leave to appeal on Ground 3.

81.  Nevertheless, I would make this observation. There is a superficial attraction to the submission put on behalf of the appellants that it was not possible to lie about the profit if the truth had been told about the loss. However, in reality, the conduct of the appellants as expressed in their various emails as between themselves and with ShineWing reveal a marked reluctance on their part to give the accountants what they required, which together with the rather curious shift in the evidence of some of the ShineWing witnesses, left the Court highly suspicious of everyone’s conduct in this matter. To say that the appellants ‘told the truth’ about the loss when they were prepared to put forward what was, on any analysis, an absurd set of figures for gross profit for the year ending 31 May 2009, is a rather generous and benign assessment of what was really going on. Nevertheless, on that somewhat narrow basis, we would allow the appeals against conviction on Counts 2 and 4.

F.3.  Is there sufficient evidence to substantiate the convictions of the conspiracies in Counts 1 and 3

F.3.1.  Two distinct conspiracies

82.  Before embarking on an analysis of these two counts, I wish to make a general observation about the two allegations particularised in each count, which concerned two distinct types of fraud against two very different ‘victims’, with very different interests. Count 1 was a conspiracy to cause SEHK to act contrary to its public duty: Count 3 was a conspiracy to cause economic loss to a company 462 and its existing shareholders. This distinction was made clear by the judge early on in her summing-up[164]:

“As a result of their false representations and concealment of their interest in the acquisition, the Stock Exchange allowed the publication of the announcement and the circular in relation to this acquisition. Their dishonest means had prevented the Stock Exchange from carrying out the vetting process properly to ensure as far as reasonably practicable that the contents of the circular and the contents of the announcement are true and accurate, and to ensure that the market is fairly informed, contrary to the public duty of the Stock Exchange. So this is Count 1.

And also as a result of their false representation and concealment of their interest in the acquisition, 462 and/or its shareholders approved the agreement for the acquisition, and the issuance and the release of the convertible notes and option bond for the payment of the acquisition. Their dishonest means had put the economic interest of 462 and/or its shareholders at risk. So this is Count 3.”

It was repeated later when the judge went through the handout she had prepared on the offence of ‘conspiracy to defraud’ to be given to the jury[165]:

“The 1^st, 2^nd and 3^rd accused are charged with the offence of conspiracy to defraud. A conspiracy to defraud is an agreement by two or more persons to use dishonest means to bring about a state of affairs which they, for Counts 1 and 2, intend to cause the Stock Exchange Hong Kong into acting or failing to act contrary to its public duty. For Counts 3 and 4, (a), intend to cause economic loss to, or putting at risk the economic interest of 462 and/or its existing shareholders; or (b) with the realisation that the use of those means will or may cause 462 and/or its existing shareholders such loss or put such interests at risk.

For the purposes of Counts 1 and 2, it is alleged by the prosecution that there was an agreement between at least two of the accused referred to in the count to use the alleged dishonest means, namely false representation, concealment or failure to declare, to cause the Stock Exchange Hong Kong to act or fail to act with the intention that the Stock Exchange Hong Kong would act or fail to act contrary to its public duty. The prosecution further says that at the time of the agreement each of the accused intended that agreement to be carried out.

And then you see a small table setting out the respective alleged dishonest means and the state of affairs. For Count 1, the alleged dishonest means particularised in (a) to (c), and the state of affairs is particularised in (d). For Count 2, the alleged dishonest means is particularised in (a), and the state of affairs is that particularised in (b).

For the purposes of Counts 3 and 4, it is alleged by the prosecution that there was an agreement between at least two of the accused referred to in the count to use the alleged dishonest means, namely false representation, concealment or failure to declare, to bring about a state of affairs which they intended to, or realised might, cause 462 and/or its existing shareholders economic loss or risk to its/their economic interests. The prosecution further says that at the time of the agreement each of the accused intended that agreement to be carried out.

So another small table setting out the alleged dishonest means. For Count 3 it’s particularised in (a) to (c), and the state of affairs particularised in (d) to (e). Whereas for Count 4 the alleged dishonest means is particularised in (a), and state of affairs particularised in (b) and (c).

The defence disputes that there was such an agreement and says that, even if there was, the accused referred to in the count was not a party to it.

You may only find any of the 1^st, 2^nd or 3^rd accused guilty of the offence of conspiracy to defraud if you are sure, separately in respect of each count and each accused, of each of the following matters:

(a), there was in fact an agreement (conspiracy) between the accused whose case you are considering and one or more of the other accused referred to in the count to use at least one or more of the dishonest means particularised in the count to cause the named party or parties to bring about the state of affairs particularised in the count; and

(b), at the time of the agreement, the accused whose case you are considering intended that the agreement would be carried out; and

(c), he or she knew or believed that the means to be used were dishonest; and

(d), he or she and one or more of the accused referred to in the count: (i) for Counts 1 and 2, intended that as a result of those dishonest means, Stock Exchange Hong Kong would act or fail to act contrary to its public duty in that had it known the true situation it would not have so acted or failed to act; (ii) for Counts 3 and 4, intended that as a result of those dishonest means, 462 and/or its existing shareholders would suffer economic loss or risk to its/their economic interests or realised that such loss or risk would or may result.”

A little later, she explained[166]:

“For Counts 1 and 2, the prosecution does not have to prove that the Hong Kong Stock Exchange in fact acted or failed to act in accordance with its public duty as a result of the dishonest means. It suffices if the prosecution proves that that was intended by each of the accused in the agreement. So the prosecution is not required to prove that the Stock Exchange in fact acted or failed to act in accordance with its public duty as a result of the dishonest means. It is sufficient if the prosecution can prove that it was intended by each of the accused in the conspiracy, in the agreement.

Now, how about Counts 3 and 4? For Counts 3 and 4, the prosecution does not have to prove that 462 and/or its existing shareholders actually suffered economic loss or a risk to its or their economic loss. Nor is it necessary for the prosecution to prove that the accused intended 462 and/or its existing shareholders would suffer economic loss or the risk thereof. It is enough to show that each of the accused in the agreement intended such loss or risk or realised that it would or may result.

In other words, the prosecution does not have to prove that the conspirator had agreed to actually cause economic loss to 462 and/or its existing shareholders. It suffices if they realised that might cause 462 and/or its existing shareholders to suffer economic loss or might put their economic interests at risk. So actually what is being said here is, there is no need for 462 and/or its existing shareholders to suffer actual economic loss or to suffer an actual risk to their economic loss. It suffices if the conspirators realised that might cause 462 and/or the shareholders to suffer economic loss or might put their economic interests at risk, so there is a risk of economic loss.”

There are other references in the summing-up to the distinctive nature of the two counts[167], but I am content to rely on those I have cited.

83.  Given the obviously different nature of a public duty fraud and an economic interest fraud, the judge gave the necessary and required specimen directions that each count, and each defendant, had to be considered separately[168]:

“Now, although the false representations, and concealment or failure to declare particularised in (a) to (c) in both Counts 1 and 3 are the same, those were two separate conspiracies with different dates covered, and they aimed at defrauding different entities. For Count 1 it was the Stock Exchange. For Count 3 it was 462 and its existing shareholders. Therefore, while you may consider the evidence of William Wong and Cindy Ngai to be highly relevant to Count 1 concerning the Stock Exchange and the publication of the announcement and circular on the Stock Exchange website, such evidence may not have equal significance in respect of Count 3. That is the conspiracy to defraud 462 and its shareholders.

And you may recall that some of the alleged false representations made to the company were made by the 1^st accused, but those matters were unrelated to the eventual publication of the announcement and the circular on the Stock Exchange website. So those particular representations were made only to the company and not to the Stock Exchange through the company. So the evidence may be different in respect of those two counts.

Now, although the prosecution case is that the two counts of conspiracy goes hand in hand together so that the conspiracy to defraud 462 is linked with the money laundering count, you still have to consider that each count and each accused separately. Your verdicts in respect of each accused and each count need not be the same. In other words, if you were to conclude that an accused is guilty or not guilty of one charge, it would not necessarily follow that he or she is similarly guilty or not guilty of the other charge or charges.

The same applies to the individual accused. For example, for Counts 2 and 4 involving all three accused, even if you were to conclude that there was the conspiracy to defraud 462 or the Stock Exchange, that two of the named accused were parties to the conspiracy and, therefore, they are guilty of the conspiracy, it would not necessarily follow that the remaining accused is similarly guilty of that charge. Likewise, even if you were to find that in respect of Counts 2 and 4, one of the accused is not guilty, it would not necessarily follow that the two remaining accused are similarly not guilty.

However, you should understand that even if you were to convict Jack Chen of the conspiracy to defraud 462, you still have to separately consider whether he is or is not guilty of the money laundering charge in Count 5. The conviction of the conspiracy to defraud 462 simply provides a foundation or a basis for you to consider the money laundering charge, not that the conviction of the money laundering charge would necessarily follow from the conviction in relation to the conspiracy to defraud 462. So bear this firmly in mind. So even if you find Jack Chen guilty of the conspiracy to defraud 462, it does not necessarily mean that he is also guilty of the money laundering charge.

Now, these are the relationships among the different charges in the amended indictment which you should firmly note. But, as I have mentioned, you have to consider each count and the case for each and against each accused in respect of each count separately.”

She went on[169]:

“So what I have said about your obligation to consider each count against each accused separately on its merits does not mean that there is no evidence common to all the charges. The important points which you have to bear in mind are that these are separate accused, and the conspiracies put before you, they are separate conspiracies. Their purposes are not the same. You must, therefore, reach your verdict in respect of each accused on each charge, having focussed on each separately and having formed a separate decision about it.”

84.  This distinction between a public duty fraud conspiracy and an economic loss fraud conspiracy is important. Such distinction was explained by Lord Diplock in the House of Lords decision of Scott v Metropolitan Police Commissioner[170] (the leading speech being given by Viscount Dilhorne, with whom the other members of the Court, including Lord Diplock, agreed):

“(1) ……

(2) Where the intended victim of a ‘conspiracy to defraud’ is a private individual, the purpose of the conspirators must be to cause the victim economic loss by depriving him of some property or right corporeal or incorporeal, to which he is or would or might become entitled. The intended means by which the purpose is to be achieved must be dishonest. They need not involve fraudulent misrepresentation such as is needed to constitute the civil tort of deceit. Dishonesty of any kind is enough.

(3)   Where the intended victim of a ‘conspiracy to defraud’ is a person performing public duties as distinct from a private individual, it is sufficient if the purpose is to cause him to act contrary to his public duty, and the intended means of achieving this purpose are dishonest. The purpose need not involve causing economic loss to anyone.”

85.  The speech of Lord Diplock was considered in subsequent authorities, albeit more in relation to his categorisation of the offences of conspiracy to defraud than their diverse and distinctive natures. In Wai Yu-tsang v R[171], Lord Goff of Chieveley, giving the judgment of the Privy Council, said:

“…the cases concerned with persons performing public duties are not to be regarded as a special category in the manner described by Lord Diplock, but rather as exemplifying the general principle that conspiracies to defraud are not restricted to cases of intention to cause the victim economic loss.”

86.  Without attempting to categorise (narrowly or otherwise) or provide an exhaustive list of all the different forms of conspiracies to defraud, I wish to point out some of the more important differences in the two distinct conspiracies with which we are concerned in this case. Firstly, the underlying intention and dishonest means involved in a public duty fraud are invariably directed at causing or inducing a specific act which is contrary to a public duty, whereas the means and objective in an economic interest fraud are directed at a quite different ‘victim’, in this case, 462 and its existing shareholders, in respect of which the evidence of the SEHK witnesses was not particularly germane. Secondly, whilst an economic, or pecuniary, loss (or risk of loss) to an individual or entity is usually capable of representing a deceiver’s direct intention in an economic interest fraud, a nonfeasance or malfeasance of a public duty as intended in a public duty fraud may not be quantifiable in monetary terms. The loss might also be in an intangible form, such as the loss of reputation or trust in an organisation. Thirdly, in the case of a public duty fraud, the discharge of such duty by a public official may sometimes go beyond common understanding and knowledge. Depending on the particular circumstances of the case, factual or expert evidence on the ordinary performance of such duty and the system in which it operates may well assist a fact finder to decide whether the public duty has been compromised or not. That was presumably why the prosecution had sought to call William Wong to give evidence.

87.  Whilst the prosecution sought to present a case that Count 1 was not an LR case, the public duty to which the conspirators were alleged to have caused the SEHK to act contrary was, apart from enforcing their general compliance with the LR, their specific compliance with the LR with regard to a VSA. As the judge directed, the use of dishonest means “had prevented the Stock Exchange from carrying out the vetting process properly to ensure as far as reasonably practicable that the contents of the circular and the contents of the announcement are true and accurate, and to ensure that the market is fairly informed, contrary to the public duty of the Stock Exchange”[172].

F.3.2.  Is the conspiracy in Count 1 an LR case?

88.  Whilst it is true, of course, that terms such as “independent third parties” (Count 1(a)), “no existing or prior relationship or understanding” (Count 1(b)) or “interest” (Count 1(c)) are all ordinary English words, they would arguably have been seen to take their context and meaning from the LR and the resulting announcement and circular made in compliance with the LR. Although the term “connected transaction” (which may include a VSA under LR 14A.08) does not appear in the particulars of offence in Count 1, the term “connected persons” does, and it is not disputed that D1 was a connected person (under LR 14A.11(1)), while anyone who had entered into an “understanding” with D1 with respect to the VSA would be an “associate” of D1 and liable to be considered by the SEHK a “connected person” (under LR 14A.11(4)(a)).

89.  Moreover, LR 14A.02 stipulates that “where any connected transaction is proposed, the transaction must be announced publicly by means of an announcement published in accordance with rule 2.07C and a circular must be sent to shareholders giving information about the transaction”. It is from the enquiries from the SEHK for the purposes of the announcement and the circular, pursuant to the LR, that the specific terms in the two counts, namely, “independent third parties” (particular (a)), “no existing or prior relationship or understanding” (particular (b)) and “interest in the acquisition” (particular (c)) are derived.

90.  I am persuaded by the argument that Count 1 may well have been regarded by the appellants as an LR case, when all of the enquiries and ensuing representations must have been made, and must have been understood to have been made, pursuant to the LR, and when the fraud was one perpetrated on SEHK, who were caused to act contrary to their duty.

91.  Yet, the jury were specifically directed that if they believed that the answers made by either D1 or D2 in relation to SEHK enquiries were made in the context of the LR, in particular Chapter 14A, then particulars (a) and (b) of Counts 1 and 3 would not be made out[173]:

“So members of the jury, if you conclude that in making those representations and/or declarations, and in answering the questions posed by the Hong Kong Stock Exchange, Jack Chen and/or May Wang believed or might have believed that they were made in the context of the connected transaction rules in Chapter 14A of the Listing Rules, then the prosecution’s allegation that they had dishonestly made the false representations in particulars (a) and (b) of Counts 1 and 3 must fail.”

92.  The judge continued later in her summing-up[174]:

“Now, bearing all those matters in mind, of course, it is a matter for you to decide what the true situation is. But as I have told you in the beginning of the trial, that if you conclude that the 1^st accused, Jack Chen, or the 2^nd accused, May Wang, when the two of them were making those representations in particulars (a) and (b) of counts 1 and 3, or for Jack Chen, when he failed to declare anything about the commission sharing agreement, and in the answers that they provided to the Stock Exchange, if you conclude that at the time they believed, either one or both of them, at the time they believed or might have believed that they were made in the context of the connected transaction rule -- that means in the context of the 14A Listing Rules -- then the prosecution’s allegation in those particulars must fail.

If you are sure that those representations or failure to declare or concealment were not made in the context of the Listing Rules, then you should go on to consider whether the other elements of the offence which I have told you about, which you can see in the handout, are proved to determine whether that particular accused is guilty of the charge or not.

Even if you find that that particular defendant may have breached the Listing Rules, it is neither here nor there. They are not charged with the breaching of the Listing Rules. So whether the rules are actually breached or not you may think it is not that important. It is the state of mind that is more important. At the time when they were making those representations or non-disclosure, whether they believed or are you sure that they did not believe they were made in the context of the Listing Rules. It is for the prosecution to make you sure.

So it may be the first point that you would like to consider when you come to those particulars. Of course, for the commission sharing agreement I think the first step for you to consider is whether you find it is in relation or with respect to the acquisition. But in respect of (a) and (b), maybe the first thing you should consider is whether at the time that they believed or might have believed that all those representations were made in the context of the Listing Rules. If they do or they might have done so, then that is the end of those two particulars, and the prosecution must fail in respect of those particulars.”

F.3.3.  Conclusion on Count 1

93.  Following the above passages, it would seem from the jury’s conviction on Count 1 that they must have rejected the notion that D1 and D2’s representations were in fact made in the context of the LR and that D1 and D2 were thereby guilty on the more general basis of working together on the same side. That said, if the true position was concealed from SEHK in the answers they provided to their enquiries, then SEHK were prevented from making effective enquiries and properly discharging their public duty in processing the VSA (see Mak Kwong Yiu at [143]); in particular, as to whether or not to deem this a connected transaction, or D2 a connected person. However, in order to enable the jury to properly consider this matter, I consider, as indeed the Appeal Committee of the Court of Final Appeal must have thought was reasonably arguable[175], that the judge needed to direct them as a matter of law in the context of Count 1 on the meaning of ‘connected transaction’ and ‘connected person(s)’. Indeed, the Appeal Committee further considered it reasonably arguable that the failure to so direct the jury could amount to a misdirection, resulting in substantial and grave injustice[176]. Nevertheless, I see no reason why the jury should have been deprived of an opportunity to consider Count 1 based on the available evidence, and I consider it was correct for the judge to rule a case to answer on Count 1. The failure to direct the jury on the meaning of ‘connected transaction’ and ‘connected person(s)’ is a separate issue.

94.  Accordingly, whilst the judge’s direction to acquit if the jury thought the appellant’s answers were or may have been given in the context of the LR was a generous one, the jury needed to understand the full meaning and context of the terms ‘connected transaction’ and ‘connected person(s)’ before making such a determination so as to find how the SEHK’s duty was compromised in Count 1. The jury were therefore deprived of full and proper directions in order to arrive at a viable basis for a conviction on Count 1 where the appellants’ representations were alleged to have caused SEHK to act contrary to its public duty. Having granted leave on Ground 1, I would also grant leave on Ground 7, insofar as it relates to Count 1 only, and allow the appeals against conviction on Count 1.

F.4.  Did D1 and D2 conspire to defraud 462 and its existing shareholders?

95.  However, the same rationale does not apply to Count 3, which was a conspiracy to defraud, by causing economic loss, to 462 and its existing shareholders. The prosecution case on Count 3 was not about the breach of the LR, as indeed the prosecution had maintained throughout the case on both Counts 1 and 3. However, any breach of the LR was not irrelevant. As the judge explained[177]:

“… it does not mean that the Listing Rules are irrelevant to the issues that you have to consider in this case. The Listing Rules are significant in the sense that they define the public duty of the Hong Kong Stock Exchange, and also the director’s duties in a listed company. They explain the inquiries made by the Stock Exchange, and they provide an explanation as to why certain things were done, and why they were done in a certain manner. Nevertheless, they are only part of the background of the events surrounding the acquisition.”

96.  It is important to understand, as I have observed, that the judge instructed the jury that if they considered D1 and D2’s representations were made in the context of the LR, the prosecution’s allegation, at least in respect of particulars (a) and (b) of both Count 1 and Count 3, must fail. But she went on, correctly in my view, to explain how to approach the case if the jury were sure that D1 and D2’s representations were not made in the context of the LR[178]:

“If you are sure that those representations and/or declarations were not made in the context of the Listing Rules, then you should go on to consider whether the other elements of the offence, which I will direct you later on, are proved to determine whether the accused is guilty of the charge.

As for the failure to declare limb in particular (c) of Counts 1 and 3, the prosecution alleges that as a director of 462 Jack Chen failed to declare the commission sharing agreement, and he was in breach of a director’s duty under Chapter 3.08 of the Listing Rules. Also, he was in breach of a director’s fiduciary duty to his company, 462. That is the duty to act for the best interests of his company, and also to avoid any conflict or possible conflict of interest. I will tell you more about this matter later on in my summing-up.”

97.  The judge returned to this matter when summarising the evidence of Katherine Chan, who had been appointed executive director and Chief Executive Officer of 462 on 28 September 2007. The judge set out the evidence of how Katherine Chan came to meet D1, who had introduced the farms to her as being “owned by a very rich woman in New Zealand”; that he had “met this very wealthy Chinese lady at a Buddhism event about one or two years ago; and that “he did not say whether there was any business relationship between him and this lady”[179]. According to Katherine Chan, D1 “did not mention whether he had any actual interest in the farms”[180]; nor did he “mention anything about financial interest or reward that he might receive for arranging this matter”[181]. When in due course Katherine Chan was introduced to D2, she “said that she did not know that the two of them had any cooperation in business”[182]; as for the CSA, “she had no knowledge of this commission sharing agreement, and both (D1) and (D2), neither of them had mentioned to her that they had entered into this commission sharing agreement”[183].

98.  After D1 became the executive director and Chief Executive Officer of 462, the judge summed up his resulting duty to the company as follows[184]:

“And, in respect of his appointment, Ms Chan told us that as a director, he owed a duty to 462. That is, sometimes we heard -- like fiduciary duty of a director that you heard about in this trial. That is, the director of a company should act for the benefit of the company; and that if you are on the other side, that would create a conflict of interest. And it is the duty of a director to avoid any conflict of interest or possible conflict of interest.

In respect of Jack Chen’s interest in the acquisition, according to Ms Chan, all along he said he is the middleman because of his chairmanship of the Chinese Business Round Table organisation, meaning that he was the middleman between May Wang and also Ms Chan. According to Ms Chan, she said, ‘If Jack Chen did have an interest in the acquisition, then he became the vendor. Then I would not have asked him to become a director of 462 because I would not want to go through the procedure of a connected transaction. But if a director is involved, if he had an interest in the acquisition, then it would become a connected transaction.’ And she said that would be very troublesome to the company. She said, ‘If Jack Chen had any interest, he could well have told me. He does not need to come in as a director,’ because by then, if that is the situation, they can carry on the negotiation on different ends of the table. So, on that basis, Jack Chen could be on the side of the vendor and then 462 would be on the other side as the purchaser

And, to this, you may recall that it is the prosecution’s proposition to you, that they said what is the meaning of being independent, and they proposed that it is that they, the two of them - that is, Jack Chen and May Wang - working together on the same side of the acquisition. So, in respect of that particular matter, this is Ms Chan’s evidence.”

99.  Of the CSA, Katherine Chan stated that[185]:

“…if she had known about this commission sharing agreement at the time, then, in her view, that May Wang and Jack Chen would become the middlemen in this transaction. She would not have asked Jack Chen to become a director of 462, because if Jack Chen is going to have any interest such as getting commission, then it would make things very troublesome because, as a director of the company, you should not get any commission for buying something for the company. Then she said if that is the case, then there would be other options. For example, she herself or 462 could directly negotiate with the farm people, and that Jack Chen and May Wang, they can still get a commission as they wished. So she said there is no need to hide. And if Jack Chen just want to sell the farms to 462 and get the commission, there is no need for him to become a director of 462 with May Wang becoming a vendor in that acquisition.

Ms Chan said, even in that circumstances, if she had any knowledge of this commission sharing agreement, she would still go ahead with the transaction because the only thing that would change is that she would not have asked Jack Chen to become a director of the company. Nothing else would change. And, besides, she said that if she had known about this commission sharing agreement, she can negotiate directly with Crafarms and just let Jack Chen and May Wang and whoever is from the Latitude Asia Company to stay as the middlemen of this matter.”

100.  One of the issues contended for by the prosecution qua appellant before the Court of Final Appeal in Mak Kwong Yiu was whether “conflict of interest, associated with concealment and non-disclosure, provided a sufficient foundation for a charge of conspiracy to defraud”[186]. The Court found that such conflict could form the basis of a conspiracy to defraud, explaining[187]:

“145. … Where disclosure of a conflict of interest to the board of a company is required, non-disclosure has the tendency to deny the board of the opportunity to address the situation in the interests of the company, a denied opportunity that exposes the company to actual, or the risk of, loss.”

The Court later concluded[188]:

“170. In his reasons for verdict, the Judge was of the view that D2 and D3 were themselves in breach of personal duties of disclosure they owed to CFHL, including in relation to ‘deliberate concealment of information’. I do not have any difficulty with that conclusion, but I do not see it as necessary. That they facilitated breaches by D1 of his duties to CFHL is sufficient.

171.     In light of all of this, it was open to the Judge to infer that they were parties, along with D1, to conspiracies to defraud.”

101.  At the risk of oversimplification, what D1 and D2 conspired to do in this case was to use a Hong Kong listed company, which effectively did no business and had no “revenue stream”, to buy some farms in New Zealand at an overvalue in order to enrich themselves with the difference between the purchase price of the farms and the sale price to the company. In order to achieve their objective, D1 positioned himself in the company as executive director when in reality both he and D2 were secretly working together on the same side to purchase the farms and sell them to 462, pocketing a substantial profit for themselves in the process. The CSA, whether it was ever activated or not, and whether it was enforceable or not, would have been a red flag to 462 and its existing shareholders had it been disclosed, because it demonstrated how close the vendor and purchaser of the farms were and that D1 and D2 were working together effectively to defraud 462. It was plainly disclosable as a potential conflict of interest and the failure to disclose it not only tended to deny the board of 462 the opportunity to address the situation in the interests of the company and its existing shareholders – “a denied opportunity that exposes the company to actual, or the risk of, loss” – but it also spoke volumes for the true intentions of D1 and D2.

102.  It is true that D2 was not herself a director of 462, unlike D1. However, in the context of a conspiracy to defraud 462 by secretly working together on the same side to induce the company and its existing shareholders, of which D1 was a director, to buy farms in New Zealand which D2 ostensibly owned when the whole purpose was to get the company to buy the farms, thus generating an enormous profit for both herself and D1, the point is both artificial and superficial. The statement by 462 to SEHK, or what they had evidently been told by D2 in order for 462 to make such a response, namely, that she and D1 were “not partnering in any way”[189], was simply untrue. Had the company and its existing shareholders known of the CSA, Katherine Chan would never have invited D1 to be a director in the first place. Indeed, had the company and its existing shareholders known of the real relationship between D1 and D2, they would have had to decide whether, despite the obvious conflict of interest, they would proceed with the transaction. They were deprived of that opportunity and the economic interests of the company were put at risk.

103.  Finally, in deference to the judgment of G Lam JA, I do not with respect see that Count 1 and Count 3 stood or fell together, which is the necessary implication of his reasoning. It is perfectly possible to have two or more separate and distinct allegations arising out of the same factual matrix, which may be understood differently in the context of each distinct allegation. Were it not so, Count 3 would be redundant. I say that because of the way the judge directed the jury and the way that the jury must have convicted based on the instructions they received. The direction that if the jury were to find that the representations by the appellants were or may have been made in the context of the LR, they should find them not guilty, meant that the jury cannot have convicted on that basis and that they must have convicted on the more general basis of secretly working together on the same side in the transaction, on which basis the prosecution had been put throughout the proceedings. Whilst, for the reasons I have set out, the more general basis was not a sufficient basis for the public duty fraud alleged in Count 1, which was arguably concerned with the LR, it was a sufficient basis in my view for the defrauding of 462 in Count 3, which was not concerned with the LR.

104.  Accordingly, for the above reasons I would dismiss the appeal against conviction on Count 3 in respect of D1 and D2.

F.5.  Other issues

105.  For the sake of completeness, I should say that in respect of Ground 4 and the admissibility of William Wong’s testimony, his evidence has played no part in my reasoning, particularly having allowed the appeal on Count 1. In any event, this matter was the subject of a ruling by the judge with which I agree. Moreover, I would have found the decision of the previous Court of Appeal in HKSAR v Chen Keen (alias Jack Chen) & others on the admissibility of William Wong’s evidence not only highly persuasive but correct. However, as I have said, William Wong’s evidence has played no role in my decision. Leave is accordingly refused on this ground.

106.  As for Ground 5, in respect of the admissibility of Clive Hudson’s testimony, his evidence was of no utility nor did it have any impact on my decision in light of the decision to allow the appeals on Counts 2 and 4. Leave is also refused on this ground.

107.  In relation to Grounds 6, 8 and 9, I would refuse to grant leave and consider these grounds redundant, since I have allowed the appeals on Counts 1, 2 and 4. Suffice it to say that I agree with the judge’s ruling on the application for a permanent stay of proceedings, and that the threshold of lurking doubt is simply not satisfied in the present case. In this issue, it is perhaps relevant to remind ourselves of the passage in HKSAR v Ma Ka Kin[190] at [47]-[48]:

“47. The classic statement of what constitutes a ‘lurking doubt’ was given by Widgery LJ in Cooper (Sean):

‘That means that in cases of this kind the court must in the end ask itself a subjective question, whether we are content to let the matter stand as it is, or whether there is not some lurking doubt in our minds which makes us wonder whether an injustice has been done. This is a reaction which may not be based strictly on the evidence as such: it is a reaction which can be produced by the general feel of the case as the court experiences it.’

However, we wish to make clear that the term ‘lurking doubt’ is not an alternative test, but rather an aspect of the statutory test of ‘unsafe and unsatisfactory’. This was made clear in the Privy Council decision emanating from Hong Kong of Kwong Kin Hung v The Queen by Lord Steyn who, after referring to the above passage from Widgery LJ’s judgment in Cooper (Sean), held:

‘This guidance has, of course, been repeatedly recited and applied in the Courts of Appeal in England and Hong Kong. Pressed to explain, however, whether it poses a test different from the question whether the conviction is “unsafe or unsatisfactory” within the meaning of the statute, Lord Thomas rightly conceded that the “lurking doubt” test is simply a different and vivid way of expressing exactly the same idea. Thus in Stafford v Director of Public Prosecutions [1974] AC 878, at p.912, Lord Kilbrandon summarised the test to be applied by each member of the appellate court as follows:

Have I a reasonable doubt, or perhaps even a lurking doubt, that this conviction may be unsafe or unsatisfactory?

Ultimately, their Lordships conclude, the words of the statute must govern the position.’

48. Appellate courts must approach the question of a ‘lurking doubt’ in a particular case with great caution. As was held by this Court in Tang Wai-tong & Anor, the term means ‘not an insubstantial doubt but a substantial remaining doubt’ about the propriety of the conviction. On the suitably rare occasion when this Court may invoke the notion of a ‘lurking doubt’, the Court must be left with a distinct feeling of unease as to the correctness of the conviction or find there is a real danger that an injustice may have been done.”

G.  Disposition

108.  Accordingly, I would allow the appeals against conviction by D1 and D2 on Count 1; and by D1, D2 and D3 on Counts 2 and 4. I would dismiss the appeal against conviction by D1 and D2 on Count 3.

Hon M Poon JA:

109.  I agree with the reasoning, as well as the orders for disposal of this appeal, as explained in the judgment of Macrae VP.

Hon G Lam JA:

110.  I agree that the appeals by D1, D2 and D3 against conviction on Counts 2 and 4 should be allowed for the reasons given by the Vice President, and that the appeal by D1 and D2 against conviction on Count 1 should be allowed. With great respect, however, I consider that their appeal against conviction on Count 3 should also be allowed.

111.  My reasoning in relation to both Counts 1 and 3 concerns the need to prove the falsity of the representations indicted in particulars (a) and (b). It may be summarised as follows: (i) particulars (a) and (b) of both counts are ingredients of the conspiracy charged and not merely overt acts evidencing an unlawful agreement; (ii) the representations complained of in those two particulars were made in the context of the LR; (iii) there is no basis to assess their truth or falsity otherwise than by reference to their meaning in that context; (iv) since the prosecution did not contend that the representations were false in their LR meaning, there was no case for particulars (a) or (b) to go to the jury. It was further a misdirection that the phrases in particulars (a) and (b) could only bear the ordinary meaning of the words and not their LR meaning; (v) any conviction based on particulars (a) or (b) would therefore be unsafe; (vi) as the jury was given a Kevin Brown direction, the convictions on Counts 1 and 3 as a whole are necessarily unsafe and unsatisfactory. I shall briefly explain below each of these steps.

112.  The first step is uncontroversial. The particulars of unlawful means given under both Counts 1 and 3 ((a), (b) and (c)) constitute an ingredient of the conspiracy alleged, rather than mere overt acts relied on for inferring the existence of the conspiracy. As indicted, the dishonest means is an essential constituent element of the conspiracy alleged and, together with the object of the agreement, give the conspiracy its identity, and must be proved by the prosecution. This can be seen from HKSAR v Chen Keen[191]at [52]-[64] & [70]-[74], which concerned indictments similar in this respect and directions to the jury relevantly similar to those in this trial.

113.  Secondly, the impugned representations were made in the Announcement (4 June 2009) and the Circular (8 September 2009). The manner and circumstances in which they were made in earlier correspondence and declarations have been tabulated in Macrae VP’s judgment at 19 above. Within the series, those in the Announcement and the Circular are the critical ones. In the case of Count 1, it was the drafts of these documents, containing the representations, that caused SEHK to allow their publication, as pleaded in particular (d). In the case of Count 3, it was those representations in the Announcement and the Circular (particularly the latter) which were published to 462’s shareholders, causing them to approve the agreement for the Acquisition, as pleaded in particular (d), at the EGM on 2 October 2009 convened by the Circular. The same representations were indicted in Counts 1 and 3.

114.  As a matter of fact, as shown by the evidence, the representations in particulars (a) and (b) were made to SEHK and 462’s shareholders pursuant to and in the context of the LR. They were made in response to enquiries from SEHK raised by reference to specific rules including, in particular, LR 14.58(3), which requires an announcement for a very substantial acquisition to contain a confirmation that “the counterparty and the ultimate beneficial owner of the counterparty are third parties independent of the listed issuer and connected persons of the listed issuer”. This supplied the wording of the responses about “independent third parties”, the subject matter of particular (a). LR 14.63(3) similarly requires a circular for such an acquisition to contain the same confirmation.

115.  The phrase “no existing or prior relationship or understanding” – the subject matter of particular (b) – was likewise taken from that series of communications in which SEHK asked (by letter dated 10 August 2009) whether there was any existing or prior relationship or any prior arrangement or understanding between D1 and D2 with respect to the Acquisition “such that the Acquisition shall become a connected transaction under Chapter 14A” [192]. In reply, 462 informed SEHK, based on D1’s and D2’s responses, that there was “no existing or prior relationship … [or] understanding between [D1] and [D2] with respect to the Acquisition such that the Acquisition shall become a connected transaction under Chapter 14A” (italics added). This wording eventually found its way into the Circular as published to the shareholders.

116.  Both Cindy Ngai, the person in SEHK who handled all those enquiries with 462, and Katherine Chan, Chairman of 462, testified that they understood the representations in the LR context, essentially meaning that D1 and D2 did not have such a relationship that would render the Acquisition a connected transaction within the meaning of the LR[193]. The significance was that a connected transaction would trigger additional requirements under Chapter 14A of the LR such as the appointment of an independent financial adviser and approval by independent shareholders. There was no tenable basis for finding that the representations were made in any other context.

117.  The third step seems to me to follow. The representations as made have an actual objective meaning. That meaning is ascertained by interpreting them in the context in which they were made, that is to say, in the LR context. Whether they were true or false can only fairly be assessed by reference to their meaning in that context. That context is not rendered irrelevant by the prosecution’s decision to avoid making reference to the LR in the indictment. By extracting certain phrases and alleging the representations were false by reference to some general meaning of those phrases, the prosecution case was based on selective parts of the representations, omitting the clause “such that the Acquisition shall become a connected transaction under Chapter 14A”, took the indicted words out of the context in which they were used, and ascribed to them a meaning divorced from that context.

118.  Fourthly, since the prosecution disavowed any attempt to show that the representations were false in the LR context, it seems to me to follow that particulars (a) and (b) ought not to have been allowed to go before the jury. The error was compounded by the direction to the jury that as the prosecution chose not to base its case on the LR, the phrases “independent third parties” and “no existing or prior relationship or understanding” were as a matter of law to be given their ordinary meaning and not the LR meaning, and that the existence of a relationship that would trigger the connected transaction provisions in the LR was not required[194]. The judge’s directions erroneously instructed the jury to decide the truth or falsity of the indicted representations by reference to the meaning the prosecution ascribed to them. It is true that the judge repeatedly directed the jury that if they found that D1 and D2 believed or might have believed the representations were made in the context of the LR, then the prosecution case that they dishonestly made the representations would fail[195]. But this went to the separate issue of dishonesty, and its effect would have been distorted by the erroneous direction on the issue of meaning and falsity.

119.  The extraordinary consequence of allowing the prosecution to define the meaning of the representations in this way is that D1 and D2 could be convicted on particulars (a) and (b) even though the representations they were said to have agreed to make were true in the meaning they would convey to a reasonable person reading them against the factual matrix in which they were made, as well as in the meaning in which they were actually understood by the recipients including SEHK, 462 and its shareholders.

120.  This leads to the fifth step, which is simply the conclusion from the above that, in my respectful opinion, any conviction based on particular (a) or (b) would be unsafe.

121.  The sixth and last step is to note that a Kevin Brown direction[196] was given to the jury, instructing them that for Counts 1 and 3, each one of particulars (a), (b) and (c) would constitute a sufficient basis for conviction, provided the jury agreed on the same one[197]. It follows that one cannot be sure that the guilty verdicts returned on Counts 1 and 3 were not based solely on either or both of particulars (a) and (b). Accordingly, irrespective of particular (c), it seems to me that the convictions on Counts 1 and 3 as a whole are necessarily unsafe and unsatisfactory.

122.  Finally, I would add that assuming the indicted representations did bear simply the “ordinary meaning” of the words, I doubt whether the case advanced against D1 and D2 on particulars (a) and (b) was sufficiently clear to give the indicted offence the requisite certainty. The prosecution did not specify what connection, relationship or understanding was said to have existed in fact between them which falsified the representations. The case advanced was that they were in fact “working together on the same side” to push the Acquisition, as opposed to being on opposite sides with D2 as vendor and D1 as a director of 462[198]. Instead of identifying facts which are said to falsify the representations of “independent” and “no existing or prior relationship or understanding”, the prosecution introduced an artificial and, in my view, nebulous construct, which the jury was told could be viewed as the “core issue” on Counts 1 and 3[199]. The jury was further told they could take into account a host of matters, including[200]: (i) D1’s previous shareholding in UBFM; (ii) that D1 and D2 had previously worked at the same address in Auckland and had an aborted transaction relating to that property; (iii) that they were involved in a transaction relating to another property at Mission Bay; and (iv) that D2 subsequently paid part of the money from the CN-C fundraising exercise to D1. As the prosecution accepted, none of these was a matter D1 had a duty to disclose. It was also conceded that the subsequent payment to D1 was not unlawful and not alleged to be an element of the conspiracy. Whilst the prosecution relied on the cumulative effect of various matters, none of them was said to be essential, which only highlighted the vagueness of the construct “working together on the same side”. Faced with such a case, it seems a fair question to ask what acts are said to have deprived D1 and D2 of independence and given them some relationship or understanding that they then lied about in the representations. To my mind, far from being a sufficient answer, it is a matter of alarm that the prosecution responded: “The act which robbed the defendants of their independence was simply that they were not independent.”[201]  Given my reasoning above, however, it is not necessary for me to reach a firm conclusion on this additional point.

Hon Macrae VP:

123.  The appeals against conviction by D1 and D2 on Count 1, by D1, D2 and D3 on Count 2 and by D1, D2 and D3 on Count 4 are allowed, their convictions are thereby overturned and the sentences in respect of those counts set aside. The appeals against conviction by D1 and D2 on Count 3 are dismissed by a majority.

124.  That leaves outstanding the matter of sentence on D1 and D2 in relation to Count 3. The appeal against sentence was left, due to the exigencies of time at the 3-day hearing of the appeal, to be dealt with, if necessary, at a later date. We shall now hear submissions on sentence on 1 June 2026 at 10 am, for which purpose, further written submissions from counsel for D1 and D2 are invited to be filed with the Court by 15 May 2026, and from the respondent by 22 May 2026. D1 and D2 may remain on bail on existing terms until the hearing on 1 June 2026.