HKSAR v LAU SIU MING

DCCC 245/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 245 OF 2012

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REASONS FOR VERDICT

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1.  The defendant is charged with 3 offences of "Using a copy of a false instrument" (Charges 1 to 3). He pleaded not guilty to all 3 charges.

The Prosecution Case

Background

2.  Taihan Electric Wire Co., Ltd. ("TEC") is a Korean company engaged in manufacturing copper and cable products.

3.  Taihan Global Holdings Limited ("TGH") is a company incorporated in Hong Kong in 2006.  TGH is a wholly-owned subsidiary of TEC.  It is a shelf company with no operating office or employees in Hong Kong.  It was set up for the purpose of developing and managing sales business for TEC in Southern China.

4.  TEC Leadings Co., Ltd. ("TEC Leadings") is also a company related to TEC.

5.  The defendant is the sole authorized agent of TGH responsible for dealing with sales of TEC copper rods in the South China region (see Exhibits P15 and P16).  As specified in both documents, the defendant has no authority to deal with any money transactions.

6.  TGH maintains a bank account (No.003-447-1-668056-7) with the Standard Chartered Bank (Hong Kong) Limited ("TGH Bank Account").  The defendant is not an authorized signatory to operate the account (see Exhibit P14).

7.  ECO Metal (Hong Kong) Limited ("ECO Metal") was a customer purchasing copper rods manufactured by TEC.

Purchase of TEC Copper Rods by ECO Metal

8.  In June and August 2011 respectively, ECO Metal ordered 300 metric tons and 100 metric tons of copper rods from TGH (see Exhibit P21, pp.114 and 119).  Payments for the said products were made in full by ECO Metal through remittance into TGH Bank Account respectively on 29 June and 1 September 2011 (see Exhibit P21, pp.115 and 120).

9.  On 2, 3 and 17 September 2011, ECO Metal received a total of 120 metric tons of copper rods (see Exhibit P21, pp.122 to 126 and 128).  The remaining 280 metric tons of copper rods ordered and paid for by ECO Metal were never delivered.

10.  Although not formally admitted, the defence did not dispute the facts stated above.

11.  The prosecution called a total of 5 witnesses (Mr. PARK Ha Young, Mr. PARK Jeong Ho, Mr. OH Dong Jin, Mr. YIP Yick Shing and Madam CHOW May Ling).  Mr. H.Y. PARK, Mr. J.H. PARK and Mr. OH are staff of TEC from Korea. Mr. YIP is a shareholder and director of ECO Metal.  Madam CHOW is Mr. YIP's secretary.

12.  After making full payment for the 400 metric tons of copper rods, Mr. YIP, in the course of waiting for delivery of the products, alleged that he received a total of 3 letters (Exhibits P3, P4 and P7) from the defendant.  The 3 letters were purportedly signed by a director of TEC named MOON Seok Rok.  According to the Mr. H.Y. PARK, the 3 letters are false because Mr. MOON had resigned from TEC on 31 December 2010.  Furthermore, the letterheads printed thereon do not belong to TEC.  Madam CHOW said the defendant personally presented the 3 letters to Mr. YIP in her presence on their respective dates.  She then interpreted the contents of the letter to Mr. YIP on each occasion.

13.  In gist, this is the prosecution case.  Each letter forms the subject matter of each charge.

14.  I need not repeat the evidence of each witness at this stage.  The key witnesses for the prosecution are Mr. YIP, Madam CHOW and Mr. H.Y. PARK.  I will discuss and analyze their evidence in the latter paragraphs.

The Defence Case

15.  The defendant elected not to give evidence but called a defence witness (Mr. MOK Yiu Cheung).  The defendant has a right to remain silent; I drew no adverse inference against him in this regard.

16.  Mr. MOK's daughter is the owner of Kar Yue, the transportation company which delivered a total of 100 metric tons of copper rods to ECO Metal on 2 and 3 September 2011 (see Exhibit P21, pp.122 to 126 and Exhibits P23 to P25).  Mr. MOK held no position in Kar Yue, but he claimed to be a subcontractor of Kar Yue, who arranged for drivers to drive and deliver goods for Kar Yue.

17.  Mr. MOK's evidence is mainly about the delivery procedures and whether his drivers would collect and return to him Cargo Receipts issued by ECO Metal[1] upon delivery.  The purpose of calling him is to rebut Mr. YIP's and Madam CHOW's claim that ECO Metal has a practice of issuing Cargo Receipts to the truck drivers upon delivery of goods.

Assessment and Analysis of Evidence

18.  The burden of proof is on the prosecution to prove each element of each offence beyond reasonable doubt.  The defendant has a clear record; I have directed myself on his good character accordingly.

19.  The evidence in this case seems lengthy and complex.  But it all boils down to 3 fairly straightforward issues :-

(i) Were the 3 letters (Exhibits P3, P4 and P7) genuine?

(ii) Did the defendant hand the 3 letters to Mr. YIP in the way described by Mr. YIP and Madam CHOW?

(iii) By accepting those 3 letters, did Mr. YIP do or not to do some act to his own or any other person's prejudice?

20.  I will deal with the 2^nd issue first.  It involves the credibility and reliability of the evidence of Mr. YIP and Madam CHOW.  I have carefully assessed their evidence and observed their demeanour in the witness box.  I find their office practice rather unusual and that it defies common sense.

21.  First, the total purchase price paid by ECO Metal for 400 metric tons of copper rods is US$3.71 million (close to HK$29 million), which is not a small amount by any standard.  On one hand, I would not be surprised to hear that even for deals of such magnitude, parties operate solely on the basis of trust and without any written agreement.  In other words, I accept that parties operate in a simple manner of placing order, issuing invoice, making payment and delivery of goods.  On the other hand, I also accept that it would be prudent for parties to a multi-million dollar deal to reduce everything into writing.  What troubles me is the half-way house approach adopted by Mr. YIP.  He saw the need to reduce his agreement with the defendant into writing, yet he chose a way which could afford him virtually nil protection – Meeting Minutes.  He claimed that it is a common trade practice to record the details of a deal by way of minutes.  He borrowed precedents from his friends in the trade and copied bits and pieces here and there to create his own format and style.  I do not know anything about the metal trading business, but I have grave doubts about this part of Mr. YIP's evidence.  A seasoned businessman like Mr. YIP should know all too well that meeting minutes such as Exhibit P21, pp.111-113 are only a set of unilateral self-serving document with no binding effect.  Needless to say, the minutes were not even signed by the defendant to signify his endorsement or approval of the contents.  Mr. YIP saw the need to send a copy of the minutes to the defendant, but did not bother to ask him to sign.

22.  Second, Madam CHOW claimed that all original minutes were given to the defendant; she only kept copies.  Again, such a practice plainly defies common sense.  The main purpose of creating meeting minutes was to protect the company. Regardless of Madam CHOW's or Mr. YIP's knowledge of the nature of those minutes being internal documents of ECO Metal, why would she or he allow her to give the original signed minutes to the defendant, who is an outside party? Someone like Mr. YIP ought to know better than that about the importance of retaining original documents.

23.  Third, the issuing of Cargo Receipts such as Exhibit P21, pp.122 to 126 to truck drivers are redundant and serves no real purpose.  According to Mr. YIP, TEC or TGH had never requested him to issue those Cargo Receipts.  As a juror, I am unable to appreciate the need to issue such documents.  If the goods delivered were in order, there is no need for the buyer to inform the seller.  If the goods delivered were not in order, the buyer would no doubt inform the seller.  It is plain common sense that the seller does not need the buyer to tell him how much goods he had sent.  If Mr. YIP must issue Cargo Receipts, why gave them to the truck drivers?  They belong to an independent transportation contractor and had no relation with TEC or TGH whatsoever.  Did the thought of giving the Cargo Receipts to the defendant ever occur to Mr. YIP or Madam CHOW?

24.  Based on the reasons stated above, I surely have doubts as to why the meeting minutes and Cargo Receipts were created.  Accordingly, I have doubts as to the truth in this part of the evidence of Mr. YIP and Madam CHOW.  I cannot be sure that the 3 letters (Exhibits P3, P4 and P7) were handed to Mr. YIP and Madam CHOW by the defendant.

25.  I will now deal with the 1^st issue.  The only evidence which can prove that the 3 letters are not genuine comes from Mr. H.Y. PARK.  There is no independent or agreed evidence that Mr. MOON had resigned from TEC on 31 December 2010.  Neither an authentic letterhead of TEC was produced as an exhibit. [2]

26.  I also note that the evidence of Mr. H.Y. PARK and Mr. YIP on the defendant's remuneration differs.  According to Mr. H.Y. PARK, the defendant received no salary or remuneration from TEC or TGH.  He said specifically that the defendant would receive commission from ECO Metal.  On the other hand, Mr. YIP said he would not give any commission to the defendant; the Koreans would give him commission instead.  Each month, the defendant would inform Mr. YIP to deduct a sum from the purchase price of a particular order as his aggregate commission for that month (see, for example, Exhibit P21, pp.3, 10 and 68).  Why would there be such a drastic difference in their evidence on such a simple and straightforward matter about the defendant's remuneration?  In my view, this inconsistency is fundamental and cannot be resolved.

27.  It is the evidence of Mr. OH that since there was money deposited into the TGH Bank Account, he knew, even back in the period between June and August 2011, about the order from ECO Metal buying 400 metric tons of copper rods.  If that is the case, I do not understand why the Korean party did not deliver the goods in full. 

28.  Based on the reasons stated above, I cannot help but to query if the Koreans have something to hide.  Hence, I am not sure that I can find Mr. H.Y. PARK completely trustworthy.

29.  Since I am not sure that I can answer the first 2 questions in the affirmative, I need not deal with the 3^rd issue.  But for the sake of completeness, I will.

30.  Section 70 of the Crimes Ordinance (Cap.200) gives a clear meaning of "prejudice" for the purpose of section 74, which is the offence provision in this case.  In my view, "prejudice" for the purpose of section 74 is confined to economic loss or someone's performance of any duty.

31.  Mr. YIP has been asked questions several times on the issue of "prejudice".  The relevant questions and answers are set out as follows (based on my notes) :-

At the end of examination-in-chief:

Q : What would you have done if you knew that these letters were false?

A : I would report to the Police.

At the end of cross-examination:

Q : Do you think these 3 letters have caused you or anyone any prejudice?

A : No prejudice. They just informed me that they have received the money. Issuing a receipt, I don't think there is any problem.

Beginning of re-examination :

A : [About Exhibit P3] If I knew that the production was not taking place, I would press the defendant.

A : [About Exhibit P7] If I knew that 100 tons had not been put under production and would not be loaded before 30/09/2011, I would also make payment. But it has to be a mutual trust and ask him to give me the goods as soon as possible. We have been dealing in a familiar way, so I would continue to make payment. I don't see any problem because Taihan is a big company.

Q : If you were told that these 3 letters were never issued by Taihan, what would your reaction be?

A : Ask Mr. LAU why.

Near the end of re-examination:

Q : Exhibits P4 and P7 both said the goods would be ready for loading before 30/09/2011. You don't see any prejudice?

A : I have been doing business with the Koreans for such a long time. No worry.

32.  Based on the evidence of Mr. YIP on this issue, which I believe and accept, I simply do not see, subjectively and objectively, what prejudice was caused or could have caused to Mr. YIP or anyone if the 3 letters were false.  Mr. YIP and the defendant had struck a deal before the 3 letters were presented.  Partial payment in the sum of US$2.76 million was paid before Exhibit P3 was allegedly presented.  The final payment in the sum of US$950,000 was paid before Exhibit P7 was allegedly presented.  Exhibit P4 was presented in between, but Mr. YIP has clearly stated in his evidence that even if he had known about the truth, he would continue to make payment for the goods.

33.  In my view, the 3 letters had nothing to do with TGH's failure to deliver all the goods to ECO Metal.  In other words, I see no causal link between the presentation of the letters and the failure to deliver goods.  Regarding the "lost opportunity to earn remuneration" as suggested by prosecuting counsel Mr Mayne, in my view, ECO Metal's inability to deliver the goods to its customers was caused by the non-delivery of goods by TGH, but not the presentation of the 3 letters.  Based on the reasons stated above, I am unable to answer the 3^rd question in the affirmative either.

34.  In conclusion, I am not satisfied that the prosecution has proved its case against the defendant beyond reasonable doubt.  Accordingly, I find him not guilty of Charges 1 to 3.