HKSAR v. TSE FEI TSZ

CACC 83/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 83 OF 2002

(ON APPEAL FROM DCCC 848 OF 2001)

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J U D G M E N T

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Stuart-Moore V-P (giving the judgment of the Court):

Introduction

1. On 1 February 2002, following a trial in the District Court before Deputy Judge Wyeth, the Appellant, aged fifty-one, was convicted on two charges of procuring the execution of a valuable security, contrary to section 22(2) of the Theft Ordinance, Cap 210. The Appellant sought leave to appeal against conviction.

2. At the conclusion of proceedings on 30 October 2002, we gave leave, and having treated the hearing as the appeal, we allowed the appeal. We stated that we would give our reasons for so doing at a later date which we now do.

Prosecution's case

3. The essence of the case presented against the Appellant at trial has been usefully condensed from the judge's Reasons for Verdict by Mr Chapman, on behalf of the Respondent, and we propose therefore to adopt it in large measure.

4. The prosecution alleged that the Appellant was the sole proprietor of a registered business known as Trento and Company (Trento) which she operated from her residential address in Taikooshing. The business operated an account with the Hua Chiao Commercial Bank Limited (the Bank). Their banking relationship had been one of long-standing.

5. By way of a notice of admitted facts, pursuant to section 65C of the Criminal Procedure Ordinance, Cap. 221, it was admitted by the Appellant that:

(a) on 3 April 2000, she signed and submitted an application (Exhibit P1) to the Bank for an irrevocable documentary credit bearing also her company chop.

(b) On 10 May 2000, she submitted a signed application (Exhibit P3) to the Bank for an amendment to the existing letter of credit.

(c) On 22 June 2000, she submitted a further application (Exhibit P5), also bearing her signature, for and on behalf of Trento, to amend the letter of credit in regard to the date of delivery of the goods.

6. The prosecution were able to demonstrate that, on 5 April 2000, the Appellant obtained the execution of a letter of credit from the Bank in the sum of US$232,000 in favour of a mainland company, Zhejiang Jeans Garments Group Company (Zhejiang Jeans). This activity was the subject of the first charge which alleged that, on 5 April 2000, the Appellant had:

"with a view to gain for herself or another or with intent to cause loss to another, dishonestly procured from the Hua Chiao Commercial Bank Limited, the execution of a letter of credit serial number M-01-S-10418 dated the 5th day of April, 2000 in the sum of US$232,000 by deception, namely, by falsely representing that the said letter of credit was to be used to finance a business sale and purchase contract entered into between Zhejiang Jeans Garments Group Company and Trento and Company in respect of 2,000 pieces of leather jackets whilst the said Trento and Company had in fact no such direct contractual relationship with the said Zhejiang Jeans Garments Group Company."

7. On 10 May 2000, after the Appellant had again approached the Bank and provided further information, the amount of credit was increased to US$580,000 in respect of the production of 5,000 leather jackets. This second letter of credit superseded the first one and constituted the second charge which was otherwise in precisely the same terms as the first charge.

8. In respect of both applications for letters of credit, the Appellant represented to the Bank, the prosecution alleged, that Trento had a direct business relationship with Zhejiang Jeans, that on the first application for a letter of credit Trento was the actual buyer of 2,000 leather jackets from Zhejiang Jeans and, later when applying for the second letter of credit, that Trento had increased its order to 5,000 leather jackets. The prosecution case was that the Appellant had no such business relationship or dealings with Zhejiang Jeans.

9. The prosecution was able to produce in evidence the Appellant's statement to the police, dated 20 July 2000, after its admissibility had been challenged in a voire dire to determine whether it had been made voluntarily.

10. During the voire dire, the Appellant gave evidence on the special issue relating to admissibility albeit, for reasons which are not clear, she was allowed also to meander through evidence only relevant to the general issue. Her complaint on the special issue of admissibility was that because she was of Shanghainese origin she had not fully understood the caution and that, because of communication problems, the contents of her statement did not provide a true and accurate record. These claims were rejected by the judge.

11. In her statement, the Appellant admitted, amongst other things, that:

(a) she was the sole operator of Trento, a business which she had operated from her home in Taikooshing for about ten years and that Trento mainly dealt in the transshipment of goods between China and Taiwan. Trento employed no other staff.

(b) During this ten-year period, she had used the Bank for various financial transactions involving Trento's operations.

(c) She had a friend called Hui Siu-wah (Hui) and some three months earlier, in about April 2000, Hui had approached her and asked her to obtain a letter of credit from the Bank in the name of Trento in the sum of US$580,000, in favour of Zhejiang Jeans.

(d) Trento had no business relationship with Zhejiang Jeans. She claimed that the goods would be delivered to a company in the U.S.A. which would then make payment in full for the goods to Zhejiang Jeans by telegraphic transfer.

(e) She had only applied for a letter of credit because she "just wanted to help (her) friend". Furthermore, she would receive no benefit from this arrangement and she would be protected, if anything went wrong, because the Bank would not cash the letter of credit before receiving an inspection certificate endorsed by her.

(f) She was familiar with letters of credit issued by the Bank as she had often obtained them in relation to her own business affairs.

Defence case

12. The Appellant elected not to give evidence in her own defence on the general issue and she called no witnesses. However, the defence case was presented at trial on the footing that there were, contrary to her crucially important admission in her statement to police, dealings between the Appellant (and/or Trento) and Zhejiang Jeans, either directly or because "others may have been her principal or agent" in those dealings, and that in the practical world of commercial dealings, the Appellant's actions did not involve any deception, false representations and, most importantly, dishonesty.

Grounds of appeal

13. The seventeen perfected grounds of appeal advanced on the Appellant's behalf provided a dense smokescreen, virtually obscuring from view the only real issue in this appeal which was not specifically identified in any of the grounds.

14. However, on 23 October 2002, the perfected grounds were amended to include a further ground (Ground 8A) which related to the omission on the judge's part to make any reference at all to the Appellant's previous good character in a case where, as a reputable businesswoman of long-standing, the Appellant, now middle-aged, was alleged to have deceived the Bank and acted dishonestly. The evidence of her clear record was given during the voire dire proceedings concerned with the admissibility of the Appellant's statement to police. It was never reduced to a formal admission for the purposes of the general issue.

15. We do not need to decide whether the omission on the part of the judge in his Reasons for Verdict to give any acknowledgement that he was aware of the Appellant's good character would have been fatal to the integrity of the conviction although it is unfortunate that he did not invite counsel to admit this fact on a formal basis.

16. Its relevance in the present context was that this gave rise to added concern about how the Appellant's evidence in the voire dire was regarded by defence counsel in the trial. We had, in this respect, seen an affirmation from the trial defence counsel in which he stated that at the end of the voire dire he had reached what, on the face of it, was a most unlikely agreement with prosecuting counsel. He had understood that all the evidence called in the voire dire proceedings would be admitted as evidence on the general issue as a time-saving device to avoid repetition. He stated that he had agreed to this arrangement in the belief that this included the evidence given by the Appellant.

The hearing

17. At the commencement of the present proceedings, we immediately focused on trial defence counsel's apparent understanding that it had been agreed by the prosecution that all the evidence, including the Appellant's, given in the voire dire would be admitted on the general issue. Mr Mullick, on the Appellant's behalf, then informed us, on the Appellant's instructions, that trial defence counsel had advised the Appellant, at the close of the prosecution's case, that she did not need to give evidence because the testimony she had given in the voire dire would effectively be taken into account in the trial proceedings.

18. This important announcement raised a wholly new issue in the appeal. Nowhere in the papers relating to this appeal had this been mentioned before. We adjourned to consider its impact and to give Mr Mullick time to consider what course of action he proposed to take.

19. Fortunately, trial counsel on both sides, neither of whom were counsel in these proceedings, were in attendance.

20. When we recommenced, trial defence counsel went into the witness box and frankly admitted that he had not realised that defence evidence called in voire dire proceedings could not (see: HKSAR v Ma Yee-keung [2000] 4 HKC 713) be used in the trial proper. With refreshing candour, he admitted also that he had realised, with the benefit of hindsight, that he must have misunderstood the agreement prosecuting counsel had in mind, namely that the evidence which would not have to be called again was restricted to the testimony of prosecution witnesses in the voire dire.

21. Trial defence counsel was adamant, however, that he did not inform the Appellant that there was no need for her to give evidence for the reason which had been advanced by Mr Mullick in court although, significantly, this reason, fundamental though it was, had not featured in the grounds of appeal.

22. Trial defence counsel, after it had been established that the Appellant waived her privilege to the right of legal confidentiality which would normally attach to communications between herself and her advisers, went on to inform us that he had taken the view at the time that it was not necessary for the Appellant to give evidence on the general issue as her defence basically turned on what he considered, rightly or wrongly, to be a question of law. He commented to the Appellant, when advising her about whether she should give evidence on the general issue, that she had not impressed the judge in the voire dire and that if she gave evidence in the trial itself she would be subjected to further cross-examination. He agreed that he had not informed the Appellant that the evidence she had given in the voire dire could not be regarded as evidence which the judge could take into account when arriving at his verdict.

23. We did not need to hear from prosecuting counsel at trial in the light of the evidence given by defence counsel who had openly admitted that this was a misunderstanding of his own making. We then adjourned again to allow Mr Mullick to re-amend his grounds of appeal and to allow Mr Chapman to consider his position.

24. Later, we invited Mr Chapman to say whether, in the light of trial defence counsel's mistake, he wished to maintain that the conviction should be upheld. In making this enquiry, we had in mind that amongst the matters canvassed during the hearing before us, trial defence counsel may have been influenced in his own mind, when advising his client that her defence was a legal and technical one, by his personal belief that the Appellant's evidence in the voire dire, which included an assertion that Trento was, in effect, the actual buyer of the jackets, could be utilized in building the necessary factual foundation for such a defence. We had observed also that the defence speech was brief in the extreme, occupying less than four pages of transcript. Brevity is not a criticism in itself but nowhere in the speech was any reference made to the defence evidence called in the voire dire, including the Appellant's previous good character, beyond the mere adoption of his earlier submission of no case to answer.

25. Mr Chapman very properly and responsibly took the view, all things considered, that it might well be that the Appellant's conviction was unsafe and unsatisfactory.

Conclusion

26. This was a sentiment which we shared as we could not be sure that the defence case had been properly developed.

27. Accordingly, for the reasons we have given, which do not reflect adversely on the judge's handling of this trial, the appeal was allowed.

28. We ordered that there should be a re-trial on these charges.