HKSAR v. YEUNG CHOR-WAH & ANOTHER

HCMA 467/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 467 OF 2001

(ON APPEAL FROM KTCC 4565/2000)

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J U D G M E N T

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1. Both Appellants were convicted after trial of one charge of conspiracy to defraud, contrary to Common Law and punishable under Section 159(c)(6) of the Crimes Ordinance, Cap. 200. The particulars of the charge were that the 1st and 2nd Appellants together with Mr Ng Kwok-leung between 19th day of September 1999 and 21st day of October 1999, both days inclusive in Hong Kong, conspired together to defraud Ching Yuk-wan by dishonestly, falsely representing to Ching Yuk-wan, that she would be given a rebate of an equivalent to 1.5% of the value of any property she purchases through Hong Kong Property Services (Agency) Ltd ("Hong Kong Property"). Mr Ng Kwok-leung was the 3rd Defendant at the trial but the learned Magistrate acquitted him after finding that he had no case to answer.

2. The 1st and 2nd Appellants were also jointly charged with two other offences of being an agent soliciting an advantage, contrary to Section 9(1)(a) of the Prevention of Bribery Ordinance, Cap. 201, and being an agent accepting an advantage, contrary to Section 9(1)(a) of the Prevention of Bribery Ordinance, Cap. 201, and the 1st Appellant was also charged with a 4th charge of blackmail, contrary to Section 23(1) of the Theft Ordinance, Cap. 210. At the conclusion of the trial, the learned Magistrate acquitted both Appellants of these charges.

Facts

3. Both Appellants and Mr Ng Kwok-leung were employees of Hong Kong Property Services (Agency) Ltd (hereinafter referred to as HKP). The 1st and 2nd Appellants were property consultants and Mr Ng was the Branch Sales Manager, thus he was the immediate boss of both Appellants. In September 1999, HKP was one of the property agencies appointed by Henderson Real Estate Agency Ltd (hereinafter referred to as Henderson) to promote the sale of flats in La Cite Noble. There was an agreement between Henderson and HKP that for each successful referral, Henderson would pay HKP 1.5% of the sale price of the property.

4. PW3, Madam Ching Yuk-wan, and her husband Mr Fung Chi-wah, PW4, went to view La Cite Noble on 18th September 1999 accompanied by the 1st and 2nd Appellants. On that day, the 1st Appellant told PW3 that if they were to buy a flat through HKP, then HKP would give them a rebate of $30,000.00 and coupons worth $20,000.00 subject to certain conditions. When this was said by the 1st Appellant, the 2nd Appellant was present at the time but did not say anything. PW3 understood from what was said that the rebate would be paid after the sale and purchase agreement had been signed. On the evening of 19th September, the 2nd Appellant telephoned PW3 at her home. PW3 told the 2nd Appellant that they had been offered a rebate by another property agency. In a subsequent call, the 2nd Appellant told PW3 that her superior had authorised an offer of 1.5% rebate to be given to PW3 if she was to buy the property through HKP, and PW3 said that she would speak to her husband before making a decision on the matter. Subsequently, in a later telephone conversation, PW3 told the 2nd Appellant that they had decided to accept HKP's offer and would buy the property through HKP. In the course of this telephone conversation, the 2nd Appellant asked PW3 if she would give "lai see" to them, and PW3 understood from that, that the 2nd Appellant was referring to herself and the 1st Appellant.

5. On 20th of September, an appointment was made for later that afternoon, for the purchasers, i.e. PW3 and PW4, to attend at Henderson's office for the signing of the provisional sale and purchase agreement. Prior to that the 2nd Appellant had telephoned PW3 and asked her how much "lai see" she was going to give to the 2nd Appellant and her "partner". PW3 informed the 2nd Appellant that she intended to give them $3,000.00. Later that day the parties went to Henderson's office where the provisional sale and purchase agreement was signed, but there was no mention at that time of the rebate or "lai see". After the signing of the provisional sale and purchase agreement, PW3 and PW4 went to HKP's office in the same car as the 1st and 2nd Appellants. During this journey there was a discussion regarding the obtaining of the rebate agreement and the post-dated cheque. On arrival at HKP's office, the 1st and 2nd Appellants introduced Mr Ng, who was the 3rd Defendant in the trial, as the Branch Manager to PW3 and PW4. PW3 and PW4 then went into D3's office and they discussed the question of the rebate agreement with him in the absence of the 1st and 2nd Appellants. PW3 and PW4 were told by D3 that HKP did not give cash rebate agreements after a provisional sale and purchase agreement and that this would only be given after the signing of the formal sale and purchase agreement. An argument then ensued and the result was that the 3rd Defendant took out a blank cash rebate agreement form and filled in the relevant details. D3 signed the form and also filled in the payment date as "before 5th November 1999". D3 also wrote in the amount of $52,274.00 which would be the amount due to PW3 and PW4 from HKP being 1.5% rebate of the purchase price. This document is exhibited as Exh. P22 (at p. 97 of the Bundle). D3 also told PW3 and PW4 that he was not prepared to give them a post-dated cheque. PW3 later telephoned the 1st Appellant to ask for an explanation about what the 3rd Defendant had said. The 1st Appellant told PW3 that the 3rd Defendant did not understand the issues concerning the documents and he also told PW3 that the rebate would probably take about 6 months to be settled.

6. On 22 September, PW3 and PW4 signed the formal sale and purchase agreement. On that day, PW3 had tried unsuccessfully to contact the 3rd Defendant, so she telephoned the 1st Appellant and told him that she was going to the HKP's office to collect the formal rebate agreement which the 3rd Defendant had told her on the 20th of September that she would be entitled to obtain. The 1st Appellant told her that this was not necessary as the rebate agreement that had been signed by the 3rd Defendant was the same anyway. She was also further told by the 1st Appellant that the cash rebate agreement involved bribery, and that she should not disclose this matter, otherwise they would both be in trouble.

7. On 27th September, PW3 went with her husband to the HKP's branch office and met the 1st Appellant who told her that the company was only prepared to give them $30,000.00 and the coupons. He also informed them that he was in trouble with HKP about the "lai see" matter. In this conversation the 1st Appellant also said to PW3 and her husband that if the matter was disclosed, she and her husband would also be in trouble and PW3 felt at that time that they were being threatened. PW3 ultimately refused to take the $30,000.00 and left HKP. On 27th September, the 1st Appellant informed PW3 that if she did not accept the $30,000.00, the whole matter would be handed over to Henderson and she would not even get 10 cents. Subsequently, PW3 reported the matter to the ICAC and on 29th September, PW3 had a telephone conversation with the 1st and 2nd Appellants which were taped by the ICAC and produced at the trial as Exh. P23. I will deal more with the content of this taped telephone conversation when I come to deal with the grounds of appeal.

8. At the conclusion of the prosecution evidence, both Appellants elected not to give evidence but called a defence witness, Mr Wong. Mr Wong was the District Manager of HKP since 1996. He was at the material time the immediate supervisor of the 3rd Defendant. His evidence was that on 19th September 1999, he had received a telephone call from the 3rd Defendant concerning the rebate to be given to a purchaser. He could not remember the details but said that Mr Ng asked for his approval to give 1.5% rebate to the purchaser. He said he told D3 to go ahead and that he subsequently reported the matter to Mr Chiu, who was at the material time the Chief District Manager and his superior. He said Mr Chiu approved the 1.5% rebate that was to be given. Mr Wong also said that the Company approved of its employees accepting "lai see" from purchasers but the full amount of the "lai see" had to be paid into the account of HKP. He also explained that, the reason that HKP may in certain situations give the full 1.5% rebate to the purchaser, was, because HKP wanted to improve its sales turnover in order that the developer would re-appoint HKP as sales agent for other properties. On cross-examination he agreed that the salesstaff in HKP was told that they could offer rebates up to 1.5% for the La Cite Noble site. In cross-examination counsel for the prosecution mainly cross-examined Mr Wong about the 'lai see" matter. It was only towards the end of the cross-examination that he challenged Mr Wong's evidence that he could authorise the full rebate of 1.5% to be paid to the purchaser. Mr Wong insisted that he had authority to do so and that he did not need to seek approval from his superior, who was Mr Chiu but he merely needed to report the matter to him. Mr Lo then finally suggested to the witness that he had no authority to approve the 1.5% rebate and Mr Wong disagreed.

Grounds of Appeal

9. The grounds of appeal of both Appellants are that the learned Magistrate:

a. had failed to consider each charge against each Appellant separately;

b. had failed to give to each Appellant the benefit of any doubt in the evidence;

c. had drawn an adverse inference from the silence of the Appellants in respect of evidence from the prosecution which required undermining, contradicting or explaining when in fact no such evidence upon the essential elements of the offence existed;

d. had drawn inferences from direct and indirect facts such inferences not being irresistible, there being another reasonable explanation before the court and therefore an adverse inference should not be drawn;

e. had misdirected himself by making findings of fact unsupported by the evidence and had failed to give appropriate weight to the evidence before him;

f. had misdirected himself upon the essential elements of the offence;

g. had shown bias against the Appellants in his Statement of Findings and in his oral verdict.

 

Defraud

10. The prosecution had to prove in a charge of conspiracy to defraud at Common Law "an agreement dishonestly to do something which will or may cause loss or prejudice to another." The prosecution therefore must prove an agreement and that agreement must be prior to the unlawful act intended to be pursued. An agreement can be proved by inference but the inference must be drawn from primary or circumstantial evidence either of which must be proved beyond a reasonable doubt. So the prosecution had to prove that each Appellant agreed dishonestly to do an act which will or may cause loss or prejudice to another.

Magistrate's Findings

11. One of the main issues in the case is whether both Appellants acted dishonestly in offering 1.5% rebate to PW3. The evidence of the prosecution witnesses called from HKP was that it would be difficult to obtain HKP's approval to give 1.5% rebate to any customer but it has been done before at other sites.

12. The defence called as their witness, a Mr Wong, who was, at the material time, the immediate superior of the 3rd Defendant. His evidence was that the 3rd Defendant did telephone him on 20th May and he approved the 1.5% rebate to be given to PW3. Not only did he approve, but he reported the matter to his superior, a Mr Chiu, who also agreed with this. Mr Chiu was listed as a prosecution witness, I am told, but he was not called by the prosecution in chief or in rebuttal.

13. This is an important issue in the case. If Mr Wong is to be believed, then neither Defendants could be said to have acted dishonestly. The evidence of Mr Wong has also to be considered together with PW3's evidence about the 3rd Defendant seeing her and her husband alone in the room where after some argument, the 3rd Defendant signed a document which confirmed the 1.5% rebate to be given to them. The learned Magistrate at the close of the prosecution case acquitted the 3rd Defendant and found that he had no case to answer. Surprisingly, after the acquittal of the 3rd Defendant, the learned Magistrate at page 517 of the Appeal Bundle, at the second last paragraph, referred to the cash rebate agreement that the 3rd Defendant had signed in his office on 20th May. He said that he had a strong suspicion that the chop on the cash rebate agreement was false, and that he strongly suspected that the 3rd Defendant was allowing such a chop and printed form without the Company heading to be used by sales agents and he knew what the agents were doing in the field. However, on the evidence before him, he, by acquitting the 3rd Defendant, must have been satisfied that the prosecution had failed to prove that the 3rd Defendant was part of the conspiracy to defraud.

14. In looking at Mr Wong's evidence, the learned Magistrate was keen to stress that he did not find him to be an impressive or honest witness. He did not believe Mr Wong's evidence that he had given authority to the 3rd Defendant to give a 1.5% rebate to PW3, and this was despite the fact that the prosecution did not challenge Mr Wong on this point which they could have done because the immediate superior of Mr Wong was Mr Chiu who was listed as a prosecution witness and obviously the prosecution would have his statement in hand. Furthermore, had the prosecution wished to challenge this evidence, they could have called Mr Chiu on this point.

15. The learned Magistrate in dismissing the evidence of DW1 also said that he preferred the evidence of PW2, who was in a management position in HKP, but was not in direct charge of the 1st and 2nd Defendants' area. The learned Magistrate chose to accept his evidence over that of Mr Wong, despite the fact that Mr Wong was in direct supervision of the 3rd Defendant and therefore, the 1st and 2nd Defendants. As it had been pointed out to me by counsel for the Appellants, PW2 initially had said it is difficult for the Company to approve a 100% rebate but when pressed on this point by the defence and when he was shown certain documents signed by him, he accepted that 100% rebate had been given before by HKP for other sites. He also accepted that the area that the Appellants were working in, i.e. Metro City, was not under his direct supervision but under the supervision of Mr Chiu.

16. The learned Magistrate erred when he used the difficulty that PW3 had in obtaining her rebate to bolster his reasons that he found Mr Wong's evidence about the authorisation to be untrue. The learned Magistrate criticised Mr Wong for not explaining why PW3 had difficulty in obtaining the rebate if an authorisation had been given, but this matter was never raised with Mr Wong and therefore it was unfair for the learned Magistrate to even have considered this point as a factor in disbelieving him.

17. It is of course trite to say that the learned Magistrate has complete discretion as to whether to accept or reject the evidence in part or in total of a particular witness, but he has to do so with cogent reasons. It has been said many a time that demeanour is not a reliable guide as to the reliability of a witness's evidence.

18. The learned Magistrate in his Statement of Findings, at page 524 of the Appeal Bundle, had reminded himself that he could not draw any inference of guilt from the Appellants' silence but he noted that their silence left him without any explanation to undermine, contradict or explain the prosecution evidence against them. But in his oral reasons for verdict at page 518, letter L, he said this:

"I drew an irresistible inference from the evidence in the absence of any explanation from the 1st Defendant and/or the 2nd Defendant that the 2nd Defendant agreed to this cause of action at a time when both the 1st and 2nd Defendants each knew from their employment experience that such a high rebate was extremely difficult to get approved by their company and they both knew it was not so approved at the time."

There was no evidence about their employment experience, or that they knew that it was extremely difficult to obtain approval from the Company for such a high rebate, or that they knew it was not approved at the time, because D3 had confirmed the rebate to PW3 and PW4 in his office. The learned Magistrate had relied quite heavily on the subsequent taped telephone conversations taped by the ICAC on 29th September between the Appellants and PW3. Whilst it is true that the words of the 1st Defendant and subsequently the 2nd Defendant gave rise to the suspicion that they did not feel comfortable that PW3 may get the full 100% rebate at the time this conversation happened. That does not prove that on 19th or 20th September, either or both Defendants knew that the Company would not give the 100% rebate and they had dishonestly offered it to PW3 with the intent to defraud her.

19. Although the learned Magistrate, at the end of his oral reasons for verdict at page 524 of the Appeal Bundle, did remind himself correctly of how to draw inferences from proven facts, unfortunately a reading of his oral reasons for verdict and of the Statement of Findings show that he did not have this in mind when he was assessing the evidence. Furthermore, the learned Magistrate have also failed to consider each Appellant's case separately. I am therefore left with the conclusion that the learned Magistrate had failed to properly assess the evidence and there is a lurking doubt in this case. There are other grounds of appeal but I need not refer to them because the matter of the evidence of Mr Wong, the defence witness, and the correct inferences to be drawn from the evidence are the crux of the case against both Appellants. I am therefore compelled to the conclusion that for both Appellants their convictions are unsafe and unsatisfactory and therefore their appeals are allowed and their convictions are quashed.

20. Finally I would like to express the gratitude of the court to Miss Campbell Moffat for her well-prepared written arguments and submissions.