HKSAR v. TSANG CHI SANG, RICKY AND OTHERS

CACC 430/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 430 OF 2007

(ON APPEAL FROM DCCC 551/2006 & 803 OF 2007)

----------------------

----------------------

----------------------------------------

REASONS FOR JUDGMENT

--------------------------------------

Hon Yeung JA (giving the judgment of the Court):

Overview

1.  On or about 23 September 2003, Revolution Production Co Ltd (“Revolution”), a modelling agency, and Sunshine Beauty Co Ltd (“Sunshine”), a beauty treatment company, were set up, each paying substantial rents for prestigious office premises in the Harbour City.

2.  Revolution and Sunshine were connected and operated by the same people, with a large part of the funds received by Revolution deposited into Sunshine’s accounts.

3.  In the subsequent two years, “talent shooters”, engaged by Revolution, approached young men (“the victims”) on the streets and invited them to be models. The unsuspecting victims who approached Revolution invariably passed the “casting tests” and, according to the prosecution, they were told that there would be lucrative modelling jobs for them.

4.  Each of the victims was asked to pay $19,980, being 12-month course fees for services to be provided by Revolution. Those who could not afford the high fees bargained, and a lesser sum was accepted.

5.  Some victims were asked to pay extra fees for special Composite Photo ID cards so that even higher-pay modelling jobs could be obtained for them.

6.  The victims also signed contracts stating that there would be no refund.

7.  The victims were taken for “facials” at Sunshine, and then “photo-shooting jobs” at Pink Colour Studio (“Pink Colour”).  On the basis of $1,200 an hour, each of the victims received $840 as remuneration for the “job”, with $360 to go to Revolution as “commission”.

8.  According to the prosecution, the victims were further promised high-paid modelling jobs, from prestigious local and international companies, in the near future.

9.  Between September 2003 and September 2005, over 50 known victims ended up paying fees, ranging from $5,000 to over $130,000, totalling over $1.3 million, to Revolution. Other than the “job” at Pink Colour, none of the victims got any other job.

10.  In September 2005, both Revolution and Sunshine abruptly closed down after a Cable TV documentary suggested that it was a “scam”.

11.  On 18 January 2006, another modelling company, Star’s City International Limited (“Star’s City”) was in operation.

12.  A police raid of Star’s City’s office on 19 January 2006 led to the arrest and subsequent prosecution of six defendants, including the four applicants.

13.  The six defendants appeared before Deputy Judge Anthony Kwok in the District Court on an indictment consisting of the 1^st charge of conspiracy to defraud, and the 2^nd to 5^th charges of “money laundering”.

14.  Two defendants, Chan Hang-mei (“Chan”) and Leung Sau-chun (“Leung”) were acquitted.

15.  The 1^st applicant (Tsang Chi-sang, Ricky), the 2^nd applicant (Hau Chung-kay), the 3^rd applicant (Woo Wing-yiu, Benny) and the 4^th applicant (Tang Wai-nei) were convicted of conspiracy to defraud. The 2^nd and 3^rd applicants were also convicted respectively of the 2^nd to 4^th charges, and the 5^th charge of “money laundering”.

16.  The 1^st and 2^nd applicants each received 4½ years’ imprisonment, and the 3^rd and 4^th applicants each received 4 years’ imprisonment.

17.  Represented by Mr Adrian Bell and Mr Oliver Davies, the applicants sought leave to appeal against both conviction and sentence.  We dismissed their applications and indicated that we would hand down the reasons in due course. These are the reasons.

The Prosecution Allegations and Evidence

18.  According to the prosecution, the 1^st applicant (known as Keith) was the boss of Revolution. He occupied a large room in Revolution’s office and gave instructions about where and when to recruit victims. He received over $2.5 million from Revolution and Sunshine during the relevant period. His mother, Leung, was a director of Sunshine and an authorised signatory of its bank accounts.

19.  The 2^nd applicant (known as Herman) was responsible for Revolution’s incorporation. He signed tenancy agreements for Revolution and Star’s City, and was the sole signatory to Revolution’s bank accounts. He hired Revolution staff, gave them instructions and paid their salaries. He interviewed and signed contracts with the victims, and told them about the modelling jobs. He arranged for the victims’ “jobs” at Pink Colour. He withdrew over $1.8 million from Revolution and Sunshine, and practically emptied Revolution’s accounts shortly before it closed down.

20.  The 3^rd applicant (known as Benson) was a director of Sunshine and its bank account signatory. He signed the tenancy agreement for Sunshine’s office. He approached victims in the streets and interviewed them. He withdrew over $1.7 million from Sunshine’s accounts, $400,000 shortly before it closed down.

21.  The 4^th applicant (known as Samantha) was a central figure in the management of Revolution. She took steps to ensure that the victims signed the contracts with Revolution, and accompanied them to ATM machines and banks to obtain money to pay Revolution. She faxed details of the victims to Pink Colour prior to their shooting sessions and she received a total of over $280,000 from Revolution.

22.  The prosecution alleged that the entire business of Revolution and Sunshine was a sham and they were set up solely to prey upon the victims’ aspiration to become models.

23.  Revolution never had any client that could provide any modelling job for the victims, yet the applicants made various misrepresentations as to job opportunities to the victims in order to secure their confidence and trust.

24.  The signing of the contracts was meant to create obstacles preventing the victims from getting refunds. The facial treatments for the victims and the shooting sessions at Pink Colour were just parts of the cynical ploy to gain the victims’ confidence. The photo taking sessions at Pink Colour were disguised as “jobs” for the victims when in fact Revolution paid Pink Colour for taking photos of the victims.

25.  A large number of victims gave evidence on how they were approached near MTR and KCR stations, and invited to go for casting tests. After certain video recordings or photos, they were told that they had passed the tests.

26.  The victims were told that Revolution had a large number of clients, including Hang Seng Bank, apm Shopping Centre, Toote Cone and Belding, Sun Hung Kai Real Estate Agency, and Harbour City Estates, who required models from Revolution. The victims were shown advertisements in a Hang Seng Bank leaflet with the photographs of Leon Williams as the model, and were told that Williams was Revolution’s model.

27.  The 4^th applicant told the victims of available modelling jobs and how they would be handsomely remunerated before demanding $19,980 course fees. When the victims indicated difficulties, lesser sums were accepted and the victims were invariably escorted to nearby ATM machines or banks to get money to pay Revolution.

28.  The 4^th applicant asked some victims for extra fees for composite cards which were said to have the effect of enhancing their model images, thus increasing their chances of getting high-paying modelling jobs.

29.  The victims were then taken to Sunshine for facial treatments and then to Colour Pink for shooting jobs, after which they were each given $840 purportedly as remuneration for the “job” with $360 to go to Revolution as “commission”.

30.  None of the victims was given any job as indicated. When they asked, they were just given various excuses.

31.  The 2^nd and 4^th applicants were most active in dealing with the victims and the 3^rd applicant was involved in recruiting some of the victims. In particular, the 4^th applicant repeatedly told the victims of lucrative jobs awaiting them.

32.  The 2^nd, 3^rd and 4^th applicants accompanied the victims for the shooting sessions at Pink Colour.

33.  Two witnesses recruited by Star’s City as models (PW 91 So Siu-lun and PW 92 Ko Chung-kwan) gave evidence. Just as the other victims, they were approached on the streets and subsequently told to go up to Star’s City for interviews and then casting tests. Having paid the course fees, they were taken to a beauty company – Eternity this time, for facials. They were told of the “good news” that there were modelling contracts for them in the near future.

34.  One of them was shown a folder containing newspaper clippings and advertising materials, which was similar to the Revolution file shown to the victims. Indeed a document in the folder showed, in no uncertain term, that Leon Williams was a model with Star’s City.

35.  They were told of available lucrative modelling jobs to persuade them to sign contracts and to pay the one-year course fees of $19,980. They were escorted to nearby ATM machines to withdraw money. They received receipts and told to sign the declaration. They were then taken to photo sessions and the facial treatments.

36.  They did not receive any job and failed to get back the money. In the end, they did not even get the facial treatments.

37.  It transpired during cross-examination that some of the victims had discussions at a website forum about their unpleasant experience. They also had meetings to discuss how to go about getting compensation from Revolution. A legal adviser told them that they should try to stick to their statements to avoid inconsistencies. One victim who attended an identification parade of the 4^th applicant also told a few other victims of his experience.

38.  It also transpired that when taking statements from the victims, the police officers used the “copy & paste” method because of the large number of victims involved and the similarities in their experience with Revolution.

39.  Apart from the victims, former staff members of Revolution also gave evidence. Mr Ho Ki-him (PW 54) said it was the 2^nd applicant who interviewed him for the job as a production assistant, and later he went out with the 3^rd applicant and another to recruit “models” at various places.

40.  Mr Ho said the 2^nd applicant had keys to the office, and the 1^st applicant, known as Keith, was the team leader and general manager who would give instruction. He said Keith had a big room with his own desk, and would make decisions as to the location and time for recruiting “models”, although he did not come back to the office every day. Mr Ho said having worked for four months, he was told to resign.

41.  Mr Ho identified the 1^st applicant as Keith at an identification parade.

42.  Miss Ng Chi-wai (PW 55) said the 2^nd applicant recruited her as Revolution’s receptionist, and that the 2^nd, 3^rd and 4^th applicants (known to her as Benson, Herman, and Samantha) were active in running Revolution’s business, whereas Keith was in charge. According to Miss Ng, whenever Keith called to speak to any staff, she needed to divert his call to that staff member immediately, a practice not adopted for other callers.

43.  In 2004, the 2^nd applicant recruited Miss Lam Fai-yuk (PW53) as a receptionist. According to Miss Lam, the 2^nd and 3^rd applicants were active in the management of Revolution whereas Keith was not usually in the office and she was not sure what he did.

44.  Miss Chow Yin-yi (PW 56) was recruited by the 2^nd applicant and worked for Revolution for just over one month in late 2003. Miss Chow said it was the 4^th applicant who gave her instruction.

45.  Miss Leung Ching-man (PW 57) worked for Revolution as a receptionist in July 2004. She confirmed that the 2^nd applicant and the 4^th applicant were active in dealing with the victims. Miss Leung said she had met the 1^st applicant (known as Keith) twice, first when the 4^th applicant introduced her to him, and then when the 1^st applicant told her that she was impolite, before teaching her how to answer phone calls properly.

46.  Miss Leung said the 1^st and the 3^rd applicant shared Room 168 in the office and she identified them at identification parades.

47.  Two photographers from Pink Colour said it was the 2^nd 3^rd or 4^th applicants who would accompany “models” to Pink Colour for photo takings.  Clothes to be worn by the “models” were provided by Revolution and they would be replaced every two months. They said Revolution paid an agreed price of $150 to Pink Colour for each session and records of payments by Revolution were produced.

48.  Statements from responsible officers of various companies said to be able to provide modelling jobs to Revolution were admitted. They all said they had no business dealing with Revolution at all. In particular, the manager for Leon Williams, Elite, confirmed that they had no dealing with Revolution.

49.  Madam Hui Sau-kuen (PW 58), an insurance agent of Prudential Insurance Company, said she visited Revolution’s office in connection with MPF plans. She said she had met two men, one claiming to be Herman and the other claiming to be Ricky Tsang. Madam Hui said Ricky Tang mentioned his name on the phone and repeated it when he gave her a cheque in his name.

50.  CIP Lau Kit-man (PW 83) and PC 58577 Cheung Dan-chung (PW 73) gave evidence on the identification parades in which the 1^st applicant took part. CIP Lau confirmed that both Mr Ho (PW 54) and Miss Leung (PW 57) positively identified the 1^st applicant. CIP Lau said that neither the 1^st applicant nor his lawyer raised any objection to the conduct of the parades, although it appeared that the same group of actors took part in more than one parade, which was not a regular practice.

51.  PC 58577 confirmed that the 1^st, 2^nd and 4^th applicants were arrested at the office of Star’s City where he also seized a large number of exhibits, including blank forms similar to those found in Revolution.

52.  PC 58577 also said a search warrant was executed at the 1^st applicant’s residence on 10 May 2006. In the presence of the 1^st to 3^rd applicants, the police seized, from the 1^st applicant’s room, an IBM desktop computer, which contained information about models of Revolution and documents of Revolution and Star’s City.

53.  There was no dispute that during the relevant period, the 1^st to 4^th applicants withdrew the respective sums of $2,558,000, $1,889,290, $1,739,200 and $284,591.60 from the accounts of Revolution and Sunshine.

The Defence Case

54.  The 1^st applicant said he had nothing to do with Revolution although he had been to its office several times, chatting with the 4^th applicant and Chan. He said he had met Mr Ho (PW 54) once or twice when he was looking for the 3^rd applicant at the office of Revolution. He also said he had had lunch with Mr Ho and had seen him on the street. The 1^st applicant said he had no impression of anyone else.

55.  The 1^st applicant admitted that the 2^nd applicant was his homosexual lover and that they had worked together for about 1 year at a subsidiary company of New Generation Image Company Ltd (“NG Image”).

56.  The 1^st applicant was questioned about a letter issued by the 2^nd applicant, in the name of Hugo Hau, as the administration manager of NG Image, to the effect that the 1^st applicant received a salary of $85,000 per month plus a housing allowance of $50,000 from NG Image. The 1^st applicant admitted that the contents of the letter were incorrect and that it was issued for the sole purpose of enabling him to rent a property.

57.  The 1^st applicant said he knew nothing about Revolution or Sunshine as the 2^nd applicant seldom talked to him about them.

58.  However, the 1^st applicant said he had lent loans totalling about $913,000 to the 2^nd applicant to enable him to set up Revolution and to acquire Sunshine.

59.  The 1^st applicant said the 2^nd applicant later repaid the loans, but never as much as $2.5 million despite the undisputed evidence that over $2.5 million, drawn upon the accounts of Revolution and Sunshine, was paid into his accounts. His explanation was he allowed the 2^nd applicant to use his current account because the 2^nd applicant did not have one himself.

60.  The 1^st applicant said he had no idea why the 2^nd applicant closed down Revolution and Sunshine, and then set up Star’s City. He said on the date of his arrest, he only went up to Star’s City to see the decoration. The 1^st applicant denied that he was behind Revolution or any model scam and claimed not to have heard any negative media report about it.

61.  The 1^st applicant also said that the IBM desktop computer seized from his bedroom belonged to the 2^nd applicant.

62.  The 2^nd applicant admitted that he set up Revolution with his own money and loans form the 1^st applicant, his homosexual lover, but claimed that they were both legitimate businesses.

63.  The 2^nd applicant said Revolution’s business was running at the loss at the beginning because they did not have their own model. He said there were only 5-6 employees, including the 4^th applicant and one Keith Liu.

64.  The business started to improve and there were photo jobs for TV commercials and promotional advertisements, and Revolution started to have its own models.

65.  The 2^nd applicant said Revolution’s revenue included course fees from models for services provided to them, including facial treatments and performance training. The 2^nd applicant said the agreements were fully explained to the models who were never promised any work. The 2^nd applicant said the one in charge of the casting department was called Keith, but the 1^st applicant was not Keith.

66.  The suggestion was that Mr Ho (PW 54) and Miss Leung (PW 57) had wrongly identified the 1^st applicant as “Keith”. However, the 2^nd applicant did not supply the particulars of “Keith” or call him to give evidence.

67.  The 2^nd applicant said he did not set up Sunshine, but only co-operated with its owner, Madam Sze Mei-wah so that Sunshine could provide facial treatments for models of Revolution at $9,000 for 12 months.

68.  The 2^nd applicant said in early 2005, he agreed to acquire Sunshine from Madam Sze for $1.34 million and as he did not have the money at the beginning, he only withdrew cash from Sunshine’s bank account on 29 June 2005 to pay Madam Sze.

69.  It was the 2^nd applicant’s evidence that Leung never took part in any decision-making and that the 1^st applicant was not involved in Revolution or Sunshine whereas the 3^rd, 4^th applicants and Chan were all his employees.

70.  The 2^nd applicant also said he had bad debt records and therefore did not have his own current account. He said he had to use the 1^st applicant’s account to issue cheques and that explained why over $2.5 million was deposited into the 1^st applicant’s account.

71.  The 2^nd applicant said he borrowed a total of $910,000 from the 1^st applicant. The 2^nd applicant also said he closed down Revolution and Sunshine because of the negative media reports, and set up Star’s City.

72.  The 2^nd applicant said neither he nor any of his staff made any promise to the victims about job opportunities. He said that the photo shooting at Colour Pink were mock or imitation jobs arranged for the models and as the jobs would take up the time of the models, Revolution paid them a nominal salary. He further explained that in order to make it look real, $360 was stated to be “commission” paid to Revolution.

73.  The 3^rd applicant claimed to have worked as an actor and a freelance model. He said his mother was a close friend of Leung and he therefore came to know the 1^st applicant when he was very young.

74.  The 3^rd applicant said in June 2003, his mother joined Madam Sze to set up Sunshine and he became a director and one of the account signatories as Madam Sze had financial trouble and it was not convenient for her to be a director.

75.  The 3^rd applicant said he only went to Sunshine’s office twice and was not involved in its daily operation. He said he knew nothing about its cash flow situation. He said he subsequently learnt that the 2^nd applicant took over Sunshine from Madam Sze, but said there was no need to change anything.

76.  The 3^rd applicant said he signed a cheque for $1.24 million on 29 June 2005 on the 2^nd applicant’s instruction, as he needed money to pay Madam Sze. He also said he withdrew $399,000 on 15 September 2005 on the 2^nd applicant’s instruction when Revolution was affected by adverse rumours.

77.  The 3^rd applicant described his job at Revolution, but denied that Revolution was involved in any fraudulent scheme.

78.  The 4^th applicant did not give evidence, but suggested through cross-examination that she had never promised the victims any job opportunities as they had alleged.

The Judge’s Findings

79.  In his 170-page judgment, the judge set out all the evidence and the relevant principles of law.

80.  The judge rejected the suggestion that the victims’ discussions on the internet and at meetings to share experiences, or the discussions about the identification parade of the 4^th applicant would taint their evidence such that he had to reject them. The judge also rejected the defence suggestion that those matters constituted witness training or coaching.

81.  The judge took the view that the way in which the police officers took statements from the victims would not render their evidence unreliable.

82.  The judge admitted the evidence of PWs 91 and 92, the two “models” recruited by Star’s City, as similar fact evidence against the 1^st, 2^nd and 4^th applicants for the purpose of showing the modus operandi or continuity of association, and for rebutting the defence suggestion of concoction and contamination of evidence.

83.  The judge accepted the evidence of the victims, including the evidence of PWs 91 and 92. In particular, the judge accepted that the victims were told of various job opportunities from prestigious companies.

84.  The judge pointed out that Revolution derived its income principally from the recruitment of models with no evidence of Revolution obtaining any profit from other business. The judge further pointed out that all the models who approached Revolution were accepted and then persuaded to sign agreements, yet none of them was called upon to take part in any modelling work. The judge referred to the falsity of the “jobs” at Pink Colour.

85.  The judge pointed out that there was no record to show that Revolution was able to earn any commission for referring their models, that Revolution had never filed any tax return and that payments by the victims were all cashed out, leaving zero or minimal balances at the relevant bank accounts.

86.  The judge concluded on the evidence that Revolution could not be a genuine business venture, but rather was a bogus model company set up for the sole purpose of defrauding unsuspecting youngsters. The judge concluded that there was a conspiracy to defraud the victims.

87.  The judge rejected the 1^st applicant’s evidence and his suggestion that because strict procedures were not followed, the identification evidence against him should be rejected.

88.  The judge took the view that there was no unfairness or injustice in the conduct of the identification parades and that Mr Ho (PW 54) and Miss Leung (PW 57) had correctly identified the 1^st applicant as Keith who held an important post in Revolution.

89.  The judge further took into consideration the amount of money withdrawn from the accounts of Revolution and Sunshine by the 1^st applicant, his mother’s position with Sunshine and his association with the other applicants and Star’s City. The judge concluded that the 1^st applicant was the Keith mentioned by the witnesses and that he was a party to the conspiracy.

90.  The judge rejected the evidence of the 2^nd and 3^rd applicants. The judge accepted the victims’ evidence that they took active part in the running of Revolution and Sunshine and that they were integral parts of the conspiracy.

91.  The judge, on the evidence accepted by him, concluded that the 4^th applicant was also a knowing participant in the fraud against the victims.

92.  In the end, the judge concluded the 1^st to the 4^th applicants were parties to the fraud and that they were acting dishonestly. The judge convicted them of the conspiracy to defraud charge.

93.  As there was no dispute about the withdrawals of the various sums by the 2^nd and 3^rd applicants from the accounts of Revolution and Sunshine, the judge also convicted them of respectively the 2^nd to 4^th charges and the 5^th charge of money laundering.

Grounds of Appeal

94.  Mr Bell suggested that the victims were not truthful and/or reliable witnesses and in so far as the judge accepted their evidence, the judge had erred.

95.  Mr Bell, in his submission, referred to the various matters that he claimed to have the effect of undermining the evidence of the victims, so that their evidence, on disputed matters, should be rejected in its entirety.

96.  Mr Bell referred to the victims’ discussion on the website, and the meetings in which some of the victims discussed how to obtain compensation from Revolution and that they should testify according to their statements.

97.  Mr Bell also referred to the telephone conversations between PW15 who, having just attended the identification parade of the 4^th applicant, told some other victims of his experience in the parade.

98.  Mr Bell emphasized that in taking statements from the victims, the police had adopted a “cut-and-paste” approach or “pro-forma” form designed to save time and effort. Such approach, Mr Bell argued, would have contaminated the evidence of the victims.

99.  The cumulative effect, Mr Bell suggested, was that the victims’ evidence, on disputed matters, should all be rejected, as they had all been “trained or coached” and their evidence was contaminated.

100.  Mr Bell argued that the judge had wrongly applied the principles as laid down in R v Momodou and Another [2005] 1 WLR 3442, and therefore, his conclusion, based on an erroneous approach, should be set aside.

101.  Mr Bell also took objection to the judge’s comment:

“The question for me is whether their account of experience were as a result of what really happened to them or as the defence suggested, were only as a result of collusion among themselves and a total fabrication.”

102.  Mr Bell suggested that he judge had erred by choosing between the prosecution case and the defence case and not proceeding on the basis that the victims’ allegations should only be acted upon if he could be sure that there was no collusion. Mr Bell emphasized that the burden was on the prosecution to prove the applicants’ guilt beyond a reasonable doubt.

103.  Mr Bell even suggested that by saying that counsel for the 4^th applicant “had an unenviable task to defend”, the judge had prejudged the case and proceeded on the assumption that the 4^th applicant was guilty.

104.  Mr Bell also suggested that the judge was wrong to have admitted the evidence of PWs 91 and 92, the two “models” recruited by Star’s City, saying that it was non-admissible similar fact evidence rather than rebuttal evidence, and that such evidence was presented even before the prosecution closed its case.

105.  Mr Bell suggested that the admission of the evidence had a seriously prejudicial impact on the applicants.

106.  In so far as the judge relied on the judgment in HKSAR v Li Sung-yue CACC 423/2000 to the effect that “it would be…almost impossible for any employee who worked there for the duration of the fraud, or even only for some weeks, not to know full well what was going on”, Mr Bell attacked the judge for not considering each case on its own facts.

107.  Separately and in support of the 1^st applicant’s application, Mr Bell argued that the judge had adopted an erroneous approach on the evidence of Mr Ho (PW 54) and Miss Leung (PW 57) when he said, “the possibility that any of the former staff could make a mistake in recognizing Keith was always there, but the possibility that both have made the same mistake by wrongly identified the 1^st Accused as Keith was unlikely in this case.”

108.  Mr Bell suggested that the judge had adopted a wrong test and in the circumstances, his reliance of the identification evidence against the 1^st applicant amounted to a material irregularity and should be set aside.

Discussion

109.  There were a large number of victims of similar background and age. Some of them chose to talk about their experience at a website on “model cheat” and came to know each other. They had meetings to discuss how to protect their interests. One of them shared his experience of the identification parade of the 4^th applicant with other victims.

110.  The police officers, because of the large number of victims and the similarities of their experience, made use of “pro-forma” forms to obtain statements from the victims.

111.  Those matters, individually and collectively, provided the defence with ample ammunition in its attack against the prosecution case, such that the cross-examination, by six counsel separately representing the six defendants, of each victim lasted not less than two days in a 75-day trial spread over a 6-month period.

112.  However, on proper analysis, the scope of the disputes relating to victims’ evidence was remarkably narrow.

113.  There was no dispute that the victims were approached on the streets and told that they were suitable to be models. They all passed the “casting tests” and were told to pay substantial fees after signing contracts stating that there would be no refund. Some of the victims ended up paying more and some ended up paying less, depending on their financial capabilities.

114.  The victims were then taken for facial treatments at Sunshine, and despite the complete lack of job opportunity, they were told to return to Sunshine for facial treatments.

115.  The victims were also taken to Pink Colour for photo-shooting sessions and there was no suggestion that those photo-shooting would serve any purpose. Yet the victims each got $840 as remuneration and were told that $360 would be paid to Revolution as commission. They were shown folders of advertising materials with the photograph of Leon Williams as the model.

116.  None of the victims ended up getting any modelling job. Their repeated inquiries only met various similar excuses from some of the applicants.

117.  The dispute was confined to whether in the course of their dealings with the victims, the applicants ever represented to the victims that Revolution had a large number of prestigious clients ready, willing and able to provide job opportunities to the victims.

118.  Was it conceivable that the victims told the truth in connection with the undisputed matters, but only lied about the misrepresentation as to job opportunities, when such misrepresentations were supported by the presence of the advertising materials, including the photograph of Leon Williams?

119.  We noted the undisputed evidence that the victims were shown promotion pamphlets of Hang Seng Bank bearing the photograph of Leon Williams. Plainly, this could only have been designed to have an impact on the victims.

120.  The suggestion that that the victims were each paid $840 as remuneration for the “jobs” at Pink Colour and that $360 was stated as “commission” to Revolution simply to make the mock or imitation jobs at Pink Colour look real was unconvincing. It was clearly part of the ploy to gain the victim’s confidence.

121.  Understandably, some of the victims shared their experience in the website and had meetings. One of them even talked to others about his experience on the identification parade. The police practice of adopting “pro-forma” statement forms was criticized and rightly deprecated, but it was a far cry from suggesting that such matters showed that the victims had colluded in their evidence and lied to fabricate a case against the applicants.

122.  There were victims who did not take part in the website discussion or the meetings, and only one victim mentioned his experience at the identification of the 4^th applicant to a few others. The identity of the 4^th applicant was never in issue.

123.  In any event, the victims who took part in the discussions and meetings only talked about their unpleasant experience, but denied concocting or fabricating a story against the applicants.

124.  Whether pre-trial discussion of evidence between witnesses would render it unsafe to leave any of the evidence of the witnesses to the jury depends on the facts of each case as rightly observed by the judge, who referred to R v Skinner [1994] 99 Cr App R 212 at p 217:

“It follows, in our judgment, that the fact that there has been a pre-trial discussion of evidence between potential witnesses cannot be said to render the evidence of such witnesses at the trial so unsafe that it ought always to be excluded. Each case has to be dealt with on its own facts. In some cases it may emerge in the course of the cross-examination at the trial of the witnesses concerned that such discussions may well have led to fabrication of the evidence in the sense which we have described. In such a case the court might properly take the view that it would be unsafe to leave any of the evidence of the witnesses concerned to the jury. There may however be other cases where the nature of such pre-trial discussions is such that it would be quite sufficient to draw to the jury’s attention in the course of summing up the implications which such conduct might have for the reliability of the evidence of the witnesses concerned. In each case it must be a matter for the judge.”

125.  The judge was fully apprised of the defence’s complaints and took those complaints into consideration in assessing the credibility and reliability of the victims and the weight to give to their evidence. The judge’s approach could not be faulted.

126.  The two witnesses recruited by Star’s City (PWs 91 and 92) gave evidence supporting the prosecution case. Mr Bell objected to such evidence, saying that there were important differences such that the evidence should not have been admitted as similar fact evidence.

127.  The general rule governing similar fact evidence is stated in Halsbury’s Laws of England, 4^th Edition Vol 11(2) at para 1091 as follows:

“The traditional statement of the rule regarding the admissibility of similar fact evidence is that the prosecution may not adduce evidence tending to show that the accused has been guilty of criminal acts other than those covered by the indictment for the purpose of leading to the conclusion that the accused is a person likely from his criminal conduct or character to have committed the offence for which he is being tried.

The mere fact that the evidence adduced tends to show the commission of other offences, however, does not render it inadmissible if it is relevant to an issue before the jury; and it may be so relevant if it bears upon the question whether the acts in question were designed or accidental, or to rebut a defence which would otherwise be open to the accused.

In modern times the principle underlying the rule has been shown to be that evidence that the accused has been guilty of other offences is admissible if those offences share with the offence which is the subject of the charge common features exhibiting such an underlying unity or striking similarity that it would be an affront to common sense to assert that these features could be explained away on the basis of coincidence. In each case the trial judge has to consider whether, in the light of the principles stated above, the similar fact evidence is of sufficient probative value to be admitted.”

128.  We also refer to para 1093, which states:

“The traditional view of similar fact evidence was that it was admissible, by way of exception to the general rule of exclusion, to rebut a defence reasonably open to the accused, including a defence of mistaken identity.

It is now clear that this does not preclude the introduction of similar fact evidence where the defence case consists of a general denial of all the facts alleged to constitute the offence charged. Because the admissibility of similar fact evidence is determined simply by reference to probative force, there can be no closed list of defences in relation to which such evidence is admissible. Thus the cases in which similar fact evidence has been admitted to rebut a defence, or to establish the identity of the accused, must be seen as illustrations of general principle rather than as fixed categories of admissible evidence.”

129.  The leading authority in this area is the decision of the House of Lords in DPP v P [1991] 2 AC 447 when Lord Mackay of Clashfern LC said at p 460,

“As this matter has been left in R v Boardman I am of the opinion that it is not appropriate to single out ‘striking similarity’ as an essential element in every case in allowing evidence of an offence against one victim to be heard in connection with an allegation against another…

From all that was said by the House in R v Boardman I would deduce the essential feature of evidence which is to be admitted is that its probative force in support of the allegation that an accused person committed a crime is sufficiently great to make it just to admit the evidence, notwithstanding that it is prejudicial to the accused in tending to show that he was guilty of another crime. Such probative force may be derived from striking similarities in the evidence about the manner in which the crime was committed and the authorities provide illustrations of that of which Reg v Straffen [1952] 2 QB 911 and Rex v Smith (1915) 11 Cr App R 229, provide notable examples.

But restricting the circumstances in which there is sufficient probative force to overcome prejudice of evidence relating to another crime to cases in which there is some striking similarity between them is to restrict the operation of the principle in a way which gives too much effect to a particular manner of stating it, and is not justified in principle. Hume on Crimes, 3^rd Ed (1884), Vol II p 384 said long ago:

‘the aptitude and coherence of the several circumstances often as fully confirm   the truth of the story, as if all the witnesses were deposing to the same facts.’

Once the principle is recognised, that what has to be assessed is the probative force of the evidence in question, the infinite variety of circumstances in which the question arises, demonstrates that there is no single manner in which this can be achieved. Whether the evidence has sufficient probative value to outweigh its prejudicial effect must in each case be a question of degree.”

130.  The admissibility of “similar fact” evidence was recently examined by the Court of Final Appeal in Hong Kong in HKSAR v Zabed Ali [2003] 2 HKLRD 849. It is only necessary to repeat the second holding in the head-notes, namely:

“It was fundamental to recognise that the common law had extensively developed since Makin v AG for New South Wales [1894] AC 57. The approach that should now be taken was to first consider the relevance of the evidence, and then apply the exclusionary rule. Relevance was the cardinal test in the law of evidence. On this approach, admissibility should be considered along the following lines:

(a)  the matters in issue which the prosecution had to prove to establish guilt, having regard to the charge, must first be identified. For this purpose, the defences open to, and any specific defence raised by, the accused would be taken into account. However, ‘the prosecution could credit the accused with fancy defences in order to rebut them at the outset with some damning piece of prejudice’ (R v Thompson [1918] AC 221 followed).

(b)  the evidence, the admissibility of which was in question, should be focused on;

(c)  the following questions should then be asked: what was the matter in issue to which the evidence was said to be relevant and what was the reason for saying that it was probative of the matter in issue?

(d)  if it was concluded that the evidence was relevant to a matter in issue for reasons other than to show mere propensity on the part of the accused to commit the crime in question, that is, it was not mere propensity evidence, then the exclusionary rule had to be applied as a matter of law, i.e. namely whether the probative force in support of an allegation against the accused was sufficiently great to make it just to admit it, notwithstanding that it was prejudicial to him. It was only where the test was satisfied that the evidence would be ruled admissible. Obviously, if it was concluded that the evidence was merely propensity evidence, then it would be inadmissible on the basis of the exclusionary rule.”

131.  There were clearly a lot of similarities between the experiences of the victims with Revolution and those of PWs 91 and 92 with Star’s City.

132.  Further, Star’s City was set up almost immediately after Revolution closed down and they were involved in the same business and, on the face of it, run by the same people. Three of the applicants were arrested in the office of Star’s City.

133.  Just as the other victims, PWs 91 and 92 were told of lucrative job opportunities, but they did not in fact get any. The evidence of PWs 91 and 92 had strong probative force to support the prosecution case against the applicants that both Revolution and Star’s City were not genuine businesses, but were only set up to defraud youngsters who aspired to become models.

134.  Their evidence, including the advertising materials with the pictures of Leon William shown to them, supported the victims’ evidence that they had been told of lucrative job opportunities, which never materialised, thus rebutted the defence case that no such representation was made, a defence made known well before the prosecution closed its case.

135.  The evidence of PWs 91 and 92 also supported the prosecution case that the 1^st, 2^nd and 4^th applicants were involved in the operation of Revolution, just as they were involved in Star’s City.

136.  Further, as R v M(T) and Others [2000] 1 WLR 421 shows, where it was necessary to place before the jury evidence of a continual background of history relevant to the offence charged in the indictment and without the totality of which the account placed before the jury would be incomplete or incomprehensible, then the fact that the whole account involved the inclusion of evidence establishing the commission of one or more offences with which the defendant was not charged was not itself a ground for excluding the evidence.

137.  The evidence of PWs 91 and 92, was clearly relevant to the matter in issue, was not mere propensity evidence, and had sufficient probative value to outweigh its prejudicial effect.

138.  The charge was a charge of conspiracy. The acts of individual conspirators in furtherance of the conspiracy were admissible against other conspirators.

139.  The judge was right to have ruled such evidence admissible against the 1^st, 2^nd and 4^th applicants, irrespective of the quantity of evidence linking each of them to Star’s City.

140.  When the judge stated in his reasons for verdict: “The question for me is whether their account of experience were as a result of what really happened to them or as the defence suggested, were only as a result of collusion among themselves and a total fabrication”, the judge was simply stating the main dispute in the case. Yet it was seized upon, quite unjustifiably in our view, to support the suggestion that the judge was choosing between the prosecution case and the defence case, and had thus erred in applying the wrong burden of proof.

141.  The judge had, at the outset of the reasons for verdict, set out the correct burden and standard of proof.

142.  On the defence case, the question identified by the judge was indeed the main issue that he had to resolve, although in his lengthy judgment the judge had also examined various pieces of circumstantial evidence advanced by the prosecution to support its case against the applicants.

143.  The judge had dealt with every point put forward by the defence. The suggestion that the judge had erred in applying the wrong burden of proof was, with respect, completely unjustified. Such a point should never have been made, just as the suggestion that the judge had failed to consider the case on its own facts or that he had prejudged the case against the 4^th applicant. Whilst Mr Bell stated that he did not wish to pursue these points vigorously, he should not have made them at all.

144.  As the judge had quite rightly pointed out, PW 54 and 57’s identifications of the 1^st applicant were not identifications of a stranger in a fleeting glance situation, but the recognition of someone they had met over a period of time when they were working at Revolution’s office.

145.  The 1^st applicant himself admitted that he regularly went up to the office of Revolution and had in fact met PW 54 on a number of occasions. He said he had had lunch with PW 54.

146.  PW 54 was able to say, having worked at Revolution for over four months, that the 1^st applicant had a big room with his own desk, that he was the general manager and he made decisions on the location and time for recruiting models although he only came to Revolution’s office a few times in a week.

147.  PW 57 worked at Revolution for just over a month, yet he was able to positively identify the 1^st applicant as Keith who shared a room with the 3^rd applicant. PW 57 remembered the particular occasion when the 1^st applicant said she was impolite before teaching her how to answer calls properly.

148.  The suggestion that PWs 54 and 57 had wrongly identified the 1^st applicant and mistook him as the other “Keith”, a Revolution’s employee, was unrealistic. The irregularities in the identification parade of the 1^st applicant were hardly relevant when the dispute related not so much to the identity of the 1^st applicant, but the role he played in Revolution.

149.  If the suggestion that PWs 54 and 57 had wrongly identified the 1^st applicant had any substance, the 1^st applicant could have easily supplied the particulars of “Keith” (allegedly a Revolution employee whom he said he had wrongly been identified as) to the prosecution or called him as a witness. The 1^st applicant did neither.

150.  By suggesting that it was unlikely that PWs 54 and 57 would have wrongly identified the 1^st applicant as Keith, the judge was simply discounting such a possibility.

151.  The judge had carefully analysed the evidence of PWs 54 and 57, and had properly warned himself in accordance with Turnbull guidelines, before concluding that he could accept and place full weight on their evidence that the 1^st applicant was Keith.

152.  There were of course other pieces of circumstantial evidence linking the 1^st applicant to Revolution and Sunshine.

153.  The 1^st applicant’s mother was the director of Sunshine and a signatory of its account. The 1^st applicant withdrew a total of $2.5 million from the accounts of Revolution and Sunshine. PW 58 said her contact at Revolution was someone called Ricky Tsang (the 1^st applicant’s real name) who not only spoke to her over the telephone, but also gave her a cheque, in the name also of Ricky Tsang.

154.  The police seized from the 1^st applicant’s bedroom a computer containing information about models of Revolution and documents relating to both Revolution and Star’s City. The 1^st applicant was arrested at the office of Star’s City with the 2^nd and 4^th applicants.

155.  The judge was perfectly entitled to conclude, as he did, that the 1^st applicant was the key man behind Revolution and a party to the conspiracy to defraud. The judge was entitled to accept that PWs 54 and 57 had both correctly identified the 1^st applicant as Keith, the person in charge of Revolution.

156.  Essentially the case turned on the credibility and reliability of the witnesses. The judge, who had the benefit of hearing and seeing the witnesses in court, was in the best position to resolve these issues. An appellate court will not, save in most exceptional circumstances, interfere with findings which depend on the assessment of the credibility and reliability of witnesses.

157.  The judge, in assessing the evidence of the victims, had taken into consideration the defence attack on the prosecution evidence.

158.  There was no conceivable reason for the victims to lie in their evidence about the applicants. There was no room for mistake on the 1^st applicant’s role in Revolution.

159.  The victims’ evidence was supported by undisputed and overwhelming circumstantial evidence showing the existence of a conspiracy to defraud the victims and that each of the applicants was a party to the conspiracy.

160.  There was no dispute about the involvement of the 2^nd, 3^rd and 4^th applicants in running of Revolution and Sunshine and once fraud was established, it must inevitably followed, in the absence of any acceptable evidence to the contrary, that each of them was a party to the fraud and that they were acting dishonestly.

161.  The undisputed evidence of the 2^nd and 3^rd applicants having withdrawn, from the accounts of Revolution and Sunshine, monies obtained from the victims, in the absence of any acceptable evidence to the contrary, also led to the only possible conclusion that they had dealt with monies, which they knew or had reasonable grounds to believe, to be proceeds of an indictable offence.

162.  We did not find any of the applicants’ convictions on the charges unsafe or unsatisfactory. The evidence against the applicants was overwhelming and they were rightly convicted.

163.  The applications for leave to appeal against conviction were therefore dismissed.

Sentence

164.  Mr Bell, relying on R v Cheung Lai Kuen & Others (unreported CACC 274/2001), suggested that the starting points for sentence should have ranged between 2 ½ and 3 ½ years’ imprisonment. Mr Bell pointed out the amount taken from the 21 victims who testified was about $600,000, and the total amount taken from the 51 known victims was less than $1.3 million.

165.  Mr Bell further suggested that for theft involving a breach of trust, on the tariffs laid down in R v Barrick [1985] 82 Cr App R 78 and HKSAR v Cheung Mee-kiu [2006] 4 HKLRD 776, the starting point should be 2-3 years or at most 3-4 years.

166.  We observe that although the total number of victims could never be ascertained with precision, the applicants withdrew the total sum of about $6.8 million from the accounts of Revolution and Sunshine during the relevant period. Such sum, on the judge’s finding that Revolution was not involved in any other business and derived its income principally from the recruitment of “models”, perhaps more accurately reflected the total loss to the victims targeted by the applicants.

167.  In any event, this was not a case of a dishonest employee/agent stealing from his employer/principal. Instead, it was an elaborate, sophisticated and carefully devised fraud targeted at members of the public.

168.  It was a case of unscrupulous criminals, over a prolonged period of time, preying upon the naivety and vanity of gullible and simple-minded youngsters who aspired to become models.

169.  Not unlike London gold or silver frauds, the applicants were aiming to “squeeze”, from the victims, as much money as possible. The victims were all youngsters and $19,980 was not as insignificant as Mr Bell sought to make out. Some of the victims were of course defrauded of much larger sums, including one of over $130,000, because they were financially more capable.

170.  The seriousness of what the applicants did lay not just in the amounts of money they had obtained from the victims but also in the nature and scope of their operation, the number of victims they targeted and the period of time over which they perpetrated the crime.

171.  Further, Star’s City was set up almost immediately after its predecessors were exposed as a “scam”. The applicants clearly intended to carry on this utterly despicable business in the name of another entity with a view to defrauding more victims. What the applicants did was an affront to law enforcement and an insult to all decent members of the community. 

172.  Cheung Lai Kuen (supra), involving a conspiracy that lasted three months and an amount of $700,000, was no authority for the assertion that every “model agency fraud” should attract a 3½-year starting point.

173.  As this court has repeatedly emphasized, frauds targeting members of the public, be they London gold/silver frauds, gold-planting frauds, pyramid selling frauds, or “street deception” frauds, have to be deterred as they target innocent and often less privileged members of society.

174.  The nature of the offences, the circumstances in which they were committed and the aggravating factors identified, were such that the total sentences of 4 to 4 ½ years’ imprisonment imposed on the applicants were not, in our view, a day too long.

Conclusion

175.  For the reasons we have given, all the applications for leave to appeal against conviction and sentence were dismissed.