HKSAR v. LEUNG OI YIN SCARLETTE

[English Translation — 英譯本]
CACC 137/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 137 OF 2014

(ON APPEAL FROM DCCC 914/2013)

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

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

REASONS FOR JUDGEMENT

Hon Poon J (giving the Reasons for Judgment of the Court):

Introduction

1.  The applicant (Leung Oi Yin Scarlette) was charged with 16 charges of theft (Charges 1 to 6), 11 charges of using a false instrument (Charges 17 to 27) and one count of possessing a false instrument (Charge 28).  She pleaded guilty to Charges 17 to 28 but not guilty to Charges 1 to 16.  On 27 March 2014, she was convicted after trial by H.H. Judge Eddie Yip (trial judge) of all 16 charges of theft.  On 15 April 2014, she was sentenced to imprisonment for 5 years and 6 months in total.  The applicant, represented by Mr Robert Pang SC, applied for leave to appeal the conviction of all charges of theft.

2.  10 February 2015, this court refused the application after the hearing.  Here are the reasons.

Prosecution case

3.  The prosecution case may be summarised as follows:

4.  Gainford International Limited (“Gainford”) was set up on 17 August 1993 and mainly engaged in sales of machinery and material of circuit boards.  At the material time of the present case, Gainford had three shareholders who were also directors.  The major shareholder-cum-director was Tse Chun Yip[1] (“Tse”) who owned 80% of the shares; and the other two shareholders-cum-directors were Tse Chun Kei (transliteration)[2] and Chu Wing Yin (transliteration).  Tse returned to Gainford to deal with its matters only two days a week and mostly remained in the Mainland for the rest of the time.

5.  Wong Chi Kit[3] (“Wong”) joined and started to work in Gainford in 1994, and his job title at the material time was Information Technology and Accounting Manager.

6.  In late 1999, the applicant through Wong’s introduction joined Gainford to work as a part-time accounting officer, and after a few months, she changed to work on a full-time basis and was appointed the Financial Controller, responsible for the financial arrangements of Gainford and dealing with the bank accounts of Gainford and Tse, including the main bank account that Gainford used for the payments in and out in the course of business (“Hang Seng current account”) and the account that Tse had opened with Dah Sing Bank under his own name for keeping the reserve fund of Gainford (“Dah Sing fixed deposit account”).

7.  In 2001, Tse in his own name opened an account for forex margin trading with an account for settlement of forex margin transactions (“Dah Sing forex account”).  All the funds used for forex margin trading came from the reserve fund of Gainford.  The applicant was authorized by Tse to operate the Dah Sing forex account on behalf of Gainford, and she was only required to provide the account number and the operation code and then she could place orders directly by phone with the Finance Department of Dah Sing Bank to do forex margin trading.  The orders in respect of all 41 transactions done after the Dah Sing forex account had been opened were placed by the applicant in person.

8.  The information of the transactions of forex margin [trading] done by the applicant on behalf of Gainford would be given to Wong to do the accounts, and Wong compiled a Gainford Cash Position Report for Tse’s reference.

9.  In mid-2004, Tse looked at the Cash Position Reports of the company, which showed a decrease in free cash.  Wong explained to him that there had been a deficit of over two million dollars because of the forex margin transactions done by the applicant.  Tse therefore instructed the applicant not to trade forex on [margin] anymore.  Being busy at work, Tse did not closely follow up the above instruction.

10.  In late November 2004, Tse noticed that the updated Cash Position Report showed a continuous decrease in the free cash of Gainford, which amounted to over one hundred thousand dollars each month.  He learnt from Wong that the applicant had not stopped forex margin trading.  Thus he dressed the applicant down and repeated the instruction, telling her that she must immediately stop and close the forex margin trading account (ie Dah Sing forex account), and then transfer the money to other accounts for fixed deposit.

11.  Although having been instructed by Tse to stop twice, the applicant still continued to trade forex on margin through the Dah Sing forex account, and between January 2005 and October 2008, she had transferred the property of Gainford and choses in action under Tse’s name to the Dah Sing forex account for 16 times in order to settle the deficit resulted from forex margin transactions, which involved a total amount of $11,468,449.79:

(1) Between 3 and 31 January 2005, the applicant continued to do forex margin trading through the Dah Sing forex account, and opened 33 new forex margin contracts;

(2) By 31 January 2005, there were still 14 open forex margin contracts;

(3) 31 January 2005, the applicant transferred $6,353,661.84 from the Dah Sing forex account to the Dah Sing fixed deposit account for fixed deposit of one month;

(4) After 31 January 2005, the applicant continued to trade forex on margin through the Dah Sing forex account, and the monthly ledger report she submitted to Gainford did not reveal any of these subsequent forex margin transactions but showed only the renewal of one mature fixed deposit;

(5)     Between 2 March 2005 and 27 October 2008, when money was needed for closing positions because deficit incurred by forex margin transactions was recorded in the Dah Sing forex account, the applicant transferred money from the Dah Sing fixed deposit account to the Dah Sing forex account.  Sometimes when time was tight, the applicant even terminated some fixed deposit contracts in the Dah Sing fixed deposit account before maturity and transferred the money so made available to the Dah Sing forex account in order to close positions;

(6) Between 2 March 2005 and 27 October 2008, the applicant transferred 14 sums of money from Tse’s Dah Sing fixed deposit account into the Dah Sing forex account so as to close positions;

(7) 7 November 2005, the applicant transferred two sums in a total of $1,500,000.00 from the Hang Seng current account of Gainford to the Dah Sing forex account for closing positions.

12.  The details of the 16 transfers mentioned in items (6) and (7) above are set out as follows:

Charge	Date (dd.mm.yy)	Amount transferred (HK$) (HK$)	Money was transferred from
1	02.03.2005	160,783.16	Dah Sing fixed deposit account
2	08.06.2005	190,000	Dah Sing fixed deposit account
3	07.11.2005	500,000	Gainford’s Hang Seng current account
4	07.11.2005	1,000,000	Gainford’s Hang Seng current account
5	09.01.2006	650,695.80	Dah Sing fixed deposit account
6	10.01.2006	2,579,767.40	Dah Sing fixed deposit account
7	16.10.2006	1,043,000	Dah Sing fixed deposit account
8	31.10.2006	570,267.98	Dah Sing fixed deposit account
9	30.04.2007	2,218,382.53	Dah Sing fixed deposit account
10	04.09.2007	31,000	Dah Sing fixed deposit account
11	27.09.2007	2,050,000	Dah Sing fixed deposit account
12	23.10.2007	47,000	Dah Sing fixed deposit account
13	30.10.2007	13,000	Dah Sing fixed deposit account
14	11.01.2008	54,635	Dah Sing fixed deposit account
15	18.01.2008	52,000	Dah Sing fixed deposit account
16	27.10.2008	307,917.92	Dah Sing fixed deposit account
Total：		11,468,449.79

These 16 transfers are the respective thefts referred to in Charges 1 to 16.

13.  On 18 November 2006, the applicant covertly completed and submitted a form to instruct Dah Sing Bank to change the correspondence address from the office of Gainford to her personal address for receiving documents issued by the bank, such as monthly statements and Renewal Confirmations of fixed deposits.  After that, Gainford could not receive those bank documents or know about the actual situation and the balance in the accounts with Dah Sing Bank.

14.  On 30 April 2009, being not satisfied with the applicant’s working performance, Tse Chun Kei instructed her to pass his personal affairs and bank accounts in his name to Fan Sheung Moon, the Administrative Assistant of the Marketing Department.  Fan Sheung Moon asked the applicant for those bank documents but she failed to produce them even after stalling for a long time.

15.  From June 2009 onwards, over a period of several months, the applicant gave Fan Sheung Moon four false Renewal Confirmations and seven false monthly Consolidated Statements.  The period in question was from June to December 2009, ie the period involved in Charges 17 to 27.  Subsequently, Fan Sheung Moon came to know that the applicant had covertly changed the correspondence address.  He checked a batch of replacement Renewal Confirmations of fixed deposits and monthly Consolidated Statements issued by Dah Sing Bank and discovered that the actual balance should be four million odd dollars instead of twelve million as shown by the documents provided the applicant.  The applicant was also in possession of a false Consolidated Statement purportedly issued by Dah Sing Bank, which is the subject matter in Charge 28.

16.  On 28^th May, 2010 Tse dismissed the applicant.  Around 8:30 pm on the same day, Tse, Tse Chun Kei, Wong, Fan Sheung Moon, the applicant and her husband discussed in a meeting about discovering false bank documents and missing of company funds.  The applicant admitted at the meeting that there had been a deficit of about eight million Hong Kong dollars but denied having got any personal gain.  Tse Chun Kei took an audio-record during the meeting and the two audio recordings were produced to the court by consent of both parties as prosecution exhibits[4].  On 20 October 2010, PC6256 Fung Shu Pui (transliteration) arrested the applicant in her residence for the offence of using a false instrument.  The applicant said under caution, “I understand.  The things were done by me, which have nothing to do with Mr Wong.”

17.  The forensic accountant of the Hong Kong Police Force has given expert opinion[5], pointing out that between 1 February 2005 and 31 May 2009, the actual loss incurred by the unauthorised forex transactions done by the applicant was HK$7,521,686.00[6].

Defence case

18.  At the trial, the applicant elected [not] to give evidence or call any witness.

19.  In the cross-examination of Tse by Mr Charles Chan of Counsel representing the applicant, it was the defence’s allegation that all things done by the applicant had been done on his instructions, that he had never told the applicant to stop forex margin trading and that on the contrary had told her to continue in the hope of making up for the loss.  Tse denied all such suggestions put by the defence.

Main issue in dispute

20.  The main issue in dispute was whether Tse had twice told the applicant to stop trading margin and she just ignored his instructions, or not only had Tse given no such instruction, but he even told her to continue to trade on margin in the hope of making up for the loss.  The determination of this issue wholly depended on the credibility and reliability of Tse’s testimony.

Trial judge’s reasons for verdict

21.  The trial judge first dealt with the defence challenges on Tse’s testimony point by point:

“Challenges to the victim’s credibility and reliability

20. According to para 12 of the Submissions, the victim had twice instructed the accused to stop margin trading, which was in mid and late 2004 respectively, and Wong Chi Kit was also present on the occasion in late 2004, however, para 15 stated that Wong Chi Kit in his testimony did not mention such instructions or his presence. I find that Wong Chi Kit does not have a clear memory on the details and his testimony is not satisfactory.

21. According to paras 16 and 17 of the Submissions, there has been seven times that the victim was unwilling to give an answer when being asked why he did not request the accused to explain the reason for not complying with his first instruction of stopping forex margin trading when he instructed her on the second occasion. The victim has repeatedly emphasized in court that he had forgiven the accused. I understand that he has not been prudent in financial management or handled matters systematically. The accused did not earn much. Her non-compliance of his first instruction had already incurred a loss of several hundred-thousand dollars. Whatever explanation she gave simply could not help. He, though being unwilling, could only accept the reality. That he continued to employ the accused meant that he still accepted the accused’s overall working performance. I think the way in which he responded in court was not completely unreasonable.

22. Para 18(1) of the Submissions queries why the victim has not asked the accused the profit and loss in forex margin trading. I understand that he was busy at work and just did not stay long at Gainford, and forex margin trading was definitely not what he was most concerned with. Had he paid more attention on this matter, it would have been discovered before the deficit reached two million odd.

23. Para 18(2) of the Submissions queries why the victim first said that he had not mentioned to other shareholders about using the reserve fund of the company on forex margin trading, but subsequently changed and said that he had told them. I understand that he owned 80% of the shares and could decide by himself what Gainford was going to do. He might not remember if other shareholders had been informed or take it seriously.

24. Paras 18(3) and (4) of the Submissions recount Wong Chi Kit’s testimony and query if there was a ‘meeting of three’ and if the victim had instructed her to stop forex margin trading. I find that [Wong] Chi Kit does not have a clear memory on the details and his testimony is not satisfactory.

25. Paras 18(5) and (7) of the Submissions respectively query that the victim, solely by reading P16 (61) or the Cash Position Report, could not possibly know that deficit had been resulted in forex margin trading and hence he probably had looked at other materials and might have known about the deficit privately but did not give an account to the court frankly. I understand that he sometimes requested Wong Chi Kit to provide him other documents or explain some details that were not set out in the documents, which might enable him to know about the deficit incurred by forex margin trading.

26. Para 18(7) of the Submissions also suggests that the wording used by Wong Chi Kit in describing these documents, eg ‘monthly investment portfilo’, ‘monthly portiolo’, ‘investment result’, ‘FX settlement’, etc, may carry different meanings, and it would be difficult for the victim to fully understand if there was any deficit with the forex margin trading. I find that Wong Chi Kit does not have a clear memory on the details and his testimony is not satisfactory.

27. Para 18(8) of the Submissions mentions that the accused placed a fixed deposit in the amount of $6,353,661.84 by using fund of Gainford on 31 January 2005. Defence argues this does not show that the accused was carrying out part of the victim’s instructions given on the second occasion (namely transferring money into another account and making it fixed deposit) because the accused probably would not have been trading forex on margin and placing a fixed deposit at the same time. I find that the accused did trade forex on margin and place a fixed deposit at the same time by way of privately withholding the record of forex margin transactions and providing untrue material to Wong Chi Kit at appropriate moments, giving a false impression that she had carried out the instructions.

28. Paras 18(8) and (9) of the Submissions mention that a balance in the sum of $412,607.00 has remained in the Dah Sing forex account from 31 January 2005 to 30 January 2007, which can be seen in the Ledge Report compiled by Wong Chi Kit in relation to the period from 1 January 2001 to 1 June 2010 (printed on 1 June 2010). As I interpret the meaning of this part of the submissions, the defence seems to be suggesting that if the accused had tried to create a false impression of having placed a fixed deposit as instructed, there would not have been a balance of $412,607.00 remaining in the Dah Sing forex account because the victim might learn from the computer system that this account had not been closed and then discovered her non-compliance.

29. The facts admitted by the accused include that Dah Sing Bank informed and confirmed with her on 20 November 2006 that the bank had acceded to her request made on 18 November 2006 and changed the correspondence address of the victim to her personal address. Nevertheless, it was only on 1 June 2010 that the above Ledge Report was printed out. In other words, between 20 November 2006 and 1 June 2010, the genuine record of the Dah Sing forex account was in the accused’s hand, and it was up to her to decide what information was to be provided to Wong Chi Kit for making accounts record. The report compiled by Wong Chi Kit could only rely on the oral or documentary data provided by her.

30. I have seen from the affidavit of the staff of Dah Sing Bank that there was no such balance in the sum of “$412,607.00” in the Dah Sing forex account. As I understand, this is probably the total sum obtained by adding up various smaller amounts over the period from 31 January 2005 to 30 January 2007. Had the victim directly checked each item of the breakdown and given some thought, it might have been very clear. However, he was not even able to tell how many and what accounts he had with Dah Sing Bank when being asked. Having taken care of his financial matters for years, the accused definitely knew full well of his carefree attitude towards financial matters. There was simply no need to worry that he would check the accounts on the computer.

31. Para 18(10) of the Submissions suggests that the bank record showed that the fixed deposit of $6,355,611.44 remained unchanged for months while there should at least be some interest, and it was impossible that the victim did not notice this. I think that the victim might not notice this given the small amount of the interest.

32. Para 18(11) of the Submissions argues it is impossible that the victim has not noticed that he had signed a form to apply to Dah Sing Bank for change of correspondence address. I find that he might not notice this document when he signed.

33.       Para 18(12) of the Submissions contends that it was impossible that the victim did not ask anything about the result of the litigations in the Mainland.  As I understand, Gainford was well financed, and given that those litigations did not involve much money, there was no need for the victim to be over-concerned.”

22.  And then trial judge dealt with five different issues:

“Why was it not until November 2006 that the accused instructed Dah Sing Bank to change the correspondence address

34. Para 19 of the Submissions suggests that the accused was not trying to hide from the victim the truth of continuing trading forex on margin by changing the correspondence address kept by Dah Sing Bank to her personal address. In my view, changing the address could indeed effectively prevent her colleagues from opening bank documents and discovering records of ongoing margin trading. Nevertheless, before the address was changed on 18 November 2006, she might not have thought of or dared to use this method. As time went by, she has straightened out her thought and come around to it, which then becomes useful.

The accused had no motive to steal money to continue with forex margin trading

35. According to para 20 of the Submissions, there is no evidence showing that she could get any benefit by hiding from the victim the truth of continuing with forex margin trading. In my view, the fact that within one year she managed to get her job changed from a part-time basis to a full time one and then be promoted to a post above Wong Chi Kit showed that apart from daily routine work, the victim must have appreciated her knowledge on investment very much and hence entrusted her with the forex trading on margin. In mid-2004, after she had caused Gainford a loss of two odd million dollars, the victim instructed her to stop but she just covertly disregarded him with overt pretence of compliance. All these simply reflect her reluctance to admit failure. She hoped to win back the loss but things just went against her wish.

The victim exercised his right and did not answer questions

36. Para 21 of the Submissions states that the victim has elected not to answer some questions which may be self-discriminating. I understand that those questions are related to other litigations and are put for the sole purpose of testing the credibility of his testimony. His election of not to answering in my view, does not affect the credibility of his testimony.

Challenge the victim’s testimony with PW2’s testimony

37. Paras 23 and 24 of the Submissions challenge the victim’s credibility and reliability on the basis of Wong Chi Kit’s testimony. I am of the view that Wong Chi Kit does not have a clear memory on the details and his testimony is not satisfactory.

The victim and others confronted the accused afterwards

38.       Para 25 of the Submissions states that on 28 May 2010, when the victim and Tse Chun Kei confronted the accused, the victim pretended not to know anything in the attempt to deceive other shareholders.  I have listened to the two audio recordings but do not agree with this part of the submission.  On the contrary, the accused admitted that the deficit was eight million dollars and expressed willingness to compensate.  In my view, if it had only been on the victim’s instructions that the accused traded on margin and he had never told her to stop, she would have definitely blamed the victim for being a bad loser and capricious, not to mention willing to pay the victim and other shareholders eight million as compensation.”

23.  Finally, the trial judge gave the verdict:

“Verdict

39. The accused has a clear record, for which I have adopted views more favourable to her in considering her propensity of committing the crime in this case. In light of the above analyses, I find that the victim had instructed the accused to stop trading forex on margin back in mid-2004, and in late 2004, in addition to reiterating such instruction, he also instructed her to close the forex margin account and place fixed deposits with the money. The accused did not comply with the instructions given on these two occasions, and, while knowing full well that she had no authority from Gainford, privately appropriated the funds of Gainford in the total amount of $11,468.449.79, and traded forex on margin while keeping the victim and other shareholders of Gainford in the dark.

40.       In my view, a reasonable man would consider the accused act as dishonest, and the accused also knew that she would be considered by a reasonable as dishonest.  The prosecution has proved Charges 1 to 16 beyond reasonable doubt.  The accused is convicted as charged.”

Grounds of appeal

24.  Mr Robert Pang SC, advanced four grounds of appeal on behalf of the applicant, which have been considered by us one by one.

Ground 1

25.  Ground 1 criticises the trial judge for wrongfully overlooking or failing to accord sufficient weight to a number of matters in considering the credibility of Tse’s testimony.  Mr Pang put forward five arguments to support this first ground.

                   Argument 1

26.  First, Mr Pang commented that the evidence in the present case have inherent improbability in the following three regards potentially:

26.1   Firstly, Mr Pang said that after Tse had requested the applicant to stop forex speculation and she ignored, he again gave specific instructions to tell her to stop but did not take any step to ensure her compliance.  Mr Pang criticised Tse’s act for being not only at variance with what a normal and reasonable superior would do but also illogical.  On the face of it, Mr Pang’s point seems reasonable, however, it just cannot stand if Tse’s evidence is considered thoroughly in its entirety.  The reasonable inference to be drawn from the undisputed part of Tse’s testimony was that Tse had trusted the applicant very much, otherwise, he would not have authorized her to deal with the Hang Seng current [account], Dah Sing fixed deposit accounts and Dah Sing forex account; and that he knew nothing whatsoever about margin trading and it was the applicant who suggested trading on margin and he wholly relied on her in operating the Dah Sing forex account.  In 2004, when he discovered the deficit of two million odd dollars resulting from margin trading, he still forgave the applicant and only told her twice to stop trading but did not withdraw the authorization given to her for handling the bank accounts, showing that he still trusted her.  Under such circumstances, it is understandable that Tse did not at that time take any step to ensure the applicant’s compliance with his instructions.

26.2   Secondly, [according to] Mr Pang, it was illogical that the applicant, while having no personal benefit, still continued with forex speculation despite Tse having already instructed her to stop on two separate occasions.  On the face of it, it seems that the applicant had not got any personal financial benefit by contravening Tse’s instructions and continuing with margin trading, but this does not necessarily mean that her behaviour was illogical.  As pointed out by trial judge, Tse highly appreciated the applicant’s knowledge in investment, and it might be due to her reluctance to accept failure that she disregarded Tse’s instructions.

26.3   Thirdly, Mr Pang said that Tse could not have signed the form of applying to the bank for changing the address of his personal account from the Gainford address to the applicant’s residential address without noticing the nature of the document, and that the applicant would not have put herself at risk by [asking Tse] to sign the form in the hope that he would not notice its content.  Mr Pang criticized trial judge for being unreasonable in accepting Tse’s claim of having no knowledge about the change of the address of the account because when he signed the “address amendment form”[7], he might not notice that it was an application made to the bank for changing address.  Mr Pang further said that Tse had testified that his staff would put all the documents to be signed on his desk but would not explain the contents to him one by one, and he would read them by himself.  Moreover, given that an application for changing address was not a document of daily routine, the applicant’s act could have been revealed as long as Tse had paid a little attention to the content of the form before signing it, hence it did not make sense that the applicant would have taken such a big risk to ask Tse to sign that form.  In our view, there is nothing wrong for trial judge to accept Tse’s testimony.  According to his testimony, he did not necessarily know the content of the documents that he signed, thus it was not impossible that the applicant would have taken such risk.  Mr Pang argued in his oral submission that the applicant made the application for changing address on 18 November 2006 which was almost two years after Tse had given the applicant the instruction, and if the applicant had really contravened the instructions, she should have the address changed as soon as possible so as to disguise the truth.  Nevertheless, conversely, why did the applicant have to change the address if it was not for disguising the truth?  Even if the applicant’s version, namely Tse had told her to help hiding from other shareholders the loss in margin trading, was accepted, there was just no need to change the address because it sufficed that he simply told her to keep the monthly statements and renewal confirmations of fixed deposits away from them.  Making a change from the company address to the applicant’s personal residential address aroused suspicion even more easily.

27.  We find all the above points put forward by Mr Pang to support the inherently unreliability of the testimony fail.

                   Argument 2

28.  Mr Pang said in the second argument that the applicant had continued forex speculation with loss incurred could be easily seen on the contemporaneous documents, such as bank statements, which Tse all along could have obtained readily.  Tse, however has explained this in detail in his testimony.  He said that it was never his practice to personally open and read the mails sent directly from the banks to his company or those forwarded to his company by his “company secretary”, and the mails sent to his company would first be received by the Accounts Department and then passed to the applicant for her to open and read.  The applicant should pass documents required to be put into the accounts record to Wong.  Not only did Tse never open letters by himself, he just did not even know what mails he got.  The applicant had the authority to open and read all bank documents.  In our view, as pointed out by trial judge, had Tse directly checked each item of the breakdown in the Dah Sing forex account and given some thought, he might have been very clear of the real situation. However, he was not even able to tell how many and what accounts he had with Dah Sing Bank when being asked.  Having taken care of his financial matters for years, the applicant definitely knew full well of his carefree attitude towards financial matters, and there was simply no need to worry that he would check the accounts on the computer by himself.

29.  Therefore, Mr Pang’s second argument fails.

                   Argument 3

30.  Mr Pang’s third argument is that Tse has refused to answer some possibly self-incriminating questions in respect of certain offences, which must have an impact on the credibility of his testimony.  Mr Pang submitted as follow:

30.1   Firstly, when a witness is asked some questions during cross-examination for his credibility to be assessed, which may be “self-incriminating”, the witness is entitled to exercise the right against self-incrimination and refuse to answer.  If that witness so decides, the court is entitled to draw adverse inferences against him: para 25 in the judgment of HKSAR v Smith, Ma Theresa Sanggalang, HCMA 246/2012, 18 January 2013 (unreported).

30.2   Further, that a person exercises the right to refuse to answer questions certainly affects the overall evidence of the case, in the sense that the completeness of the evidence is hampered.  In analyzing the credibility and reliability of a witness, the court needs to consider the evidence of the case in its entirety, and such analysis is therefore affected by the witness’s refusal to answer: para 72 in the judgment of HKSAR v Ying Jim Ming, Jimmy & Ors, HCMA 432/2009, dated 6 May 2010 (unreported).

30.3   As far as the present case is concerned, Tse exercised his right when being asked a series of questions involving falsifying documents in civil litigations and refused to answer all such questions for seven times.  Although he was entitled to do so, the refusal definitely affected the analysis made by the court on the credibility and reliability of his evidence. First, Tse has refused to answer some questions relevant to his credibility, thereby deprived the court of the whole picture of the issue concerned.  Second, Tse gave evidence selectively, revealing his purposeful selective and calculating character and showing that he is one of those witnesses who prefer not telling the court the whole truth to carefully protecting himself.

30.4   After the court has given a witness warning against self-incrimination, if the witness elects to answer, he may face subsequent criminal prosecution; if the witness elects not to answer, he would certainly have to face criticism of the court for his election and accept being regarded by the court as an uncooperative witness withholding something, which would have an impact on the overall evidence of the party he is testifying for.

30.5   In fact, trial judge mentioned the following point when giving the warning against self-incrimination:

“Of course, whether you answer or not answer has its respective advantages; and that means whether you answer or not has its respective disadvantages … What are the pros and cons of giving an answer, and what are the pros and cons of not answering? Or what may be the implication in future, for example, I ── ‘Would the development of my matter as a whole be affected, or would I personally be affected?’ You may discuss with your lawyer.”

The above warning given by trial judge told us that election of not to answer had its disadvantages.  Among what trial judge said, “would the development of my matter as a whole be affected” must be referring to whether the prosecution case as a whole would be affected by a refusal to answer; and “I personally be affected” must be referring to whether giving an answer would be self-incriminating.  Nevertheless, trial judge in giving the verdict did not analyze how Tse’s credibility and reliability and the prosecution case as a whole were affected by his election of not to answer, and on the contrary, he said that Tse’s election of not to answer did not affect his credibility.

31.  In response to Mr Pang’s suggestions in the above paras 30.1 and 30.2, the respondent said that the court could not draw any adverse inference against a witness who has refused to answer possibly self-incriminating questions and cited Wentworth v Lloyd (1864) 10 HL Case 589 in support.

32.  In the course of testifying in court, a witness may exercise the common law privilege to refuse to answer possibly self-discriminating questions, which is a deep-rooted legal principle established for a long time: see Riberio PJ’s judgment at p156D-F in HKSAR v Lee Ming Tee & Another (2001) 4 HKCFAR 133.  This privilege is not only a principle of the law of evidence, but also the fundamental and substantial right of a witness, of which the importance is obvious.  When a witness testifies under oath in court, he must answer questions raised by the judge and both the prosecution and the defence, or he may be held in contempt of court; and in facing possibly self-incriminating questions, if he does not have the privilege to refuse to answer them, he would be put in a trilemma: (1) if the answer must be true, it might be self-incriminating; (2) it would be perjury if the answer is false; and (3) refusal to answer may lead to accusation of being in contempt of court.  This privilege not only protects the witness from criminal liability arising from his own testimony, but also ensures that he would not give false evidence or be held in contempt of court because of refusing to answer relevant questions.

33.  Since this is the essence of this important privilege, the court cannot, solely on the basis of the witness’s refusal to answer potentially self-incriminating questions, infer that his evidence is incredible or unreliable for the reason that his evidence is incomplete, otherwise the actual function of the privilege would be undermined.  If the court were bound to find a witness’s evidence incredible or unreliable because of his refusal to answer possibly self-incriminating questions, the witness might then choose to answer those self-incriminating questions (regardless of the truthfulness of the answers) in order to ensure the credibility of his evidence; and if he does so, he just cannot be protected by the privilege.  I therefore cannot accept Mr Pang’s proposition.

34.  Both cases cited by Mr Pang are of the Court of First Instance, which do not bind this court.  In any event, in those two cases, the Court of First Instance only held that trial judge may assess the credibility of a witness’s overall evidence by considering his refusal to answer possibly self-incriminating questions, however, this does not mean that the court has to infer a witness’s evidence to be incredible because he has refused to answer.

35.  On the other hand, we agree that when a witness refuses to answer possibly self-incriminating questions, his evidence may be incomplete as a whole, and therefore the court cannot be barred from drawing adverse inferences against him solely because he has exercised his privilege under common law. In the case of Wentworth v Lloyd cited by the respondent, what is involved, inter alia, is legal profession privilege.  The House of Lord held the view that the court could not draw any adverse inference against the credibility of a witness who has exercised this privilege, or otherwise no one would dare to seek legal advice, as Lord Westbury has said:

“ As Lord Brougham says, when speaking, in Bolton v The Corporation of Liverpool (1 Myl and K 94, 95), of the supposed right to compel the disclosure of such communications, ‘It is plain that the course of justice must stop if such a right exist. No man will dare to consult a professional adviser with a view to his defence, or to the enforcement of his rights.’ The exclusion of such evidence is for the general interest of the community, and therefore to say that when a party refuses to permit professional confidence to be broken, everything must be taken most strongly against him, what is it but to deny him the protection which, for public purposes, the law affords him, and utterly to take away a privilege which can thus only be asserted to his prejudice. I have been drawn aside from considering the facts of this case through an apprehension that the authority of the Master of the Rolls might be hereafter asserted as establishing what appears to me to be a most serious departure from the principles of the law of evidence applicable to professional confidence.”

Wentworth v Lloyddid not have the so-called legal principle laid down as suggested by the respondent.  Therefore, we cannot accept the respondent’s proposition either.

36.  In our view, when a witness declines to answer possibly self-incriminating questions, the court may consider and determine if his overall evidence would be affected by looking at the actual situation of the case.  On one hand, the court has to recognise that the witness is perfectly entitled to enjoy such privilege and cannot infer that he is untrustworthy or unreliable solely because he has declined to answer those questions; on the other hand, the court has to realise that the witness’s testimony may be incomplete to a certain extent and this may affect the analysis and assessment made by the court on his evidence as a whole.  It all depends on the actual situation of the case.  In general, if the questions concerned are irrelevant to the dispute(s) in the case, the court would be slow in drawing adverse inference against the witness, however, if the questions are relevant, then the court may consider and determine whether this would affect the credibility of his evidence as a whole by looking at the actual situation.

37.  In the present case, the questions that Tse refused to answer were only related to other civil litigations, which, although were relevant to his honesty, were asked merely for testing the credibility of his testimony.  It was the trial judge’s view that Tse’s election of not to answer those questions did not affect the credibility of his testimony.  We find that trial judge as the judge of facts was perfectly entitled to make such a finding.

38.  Therefore, Mr Pang’s third argument fails.

                   Argument 4

39.  Mr Pang’s fourth argument was that when Tse was asked why he did not request the applicant to explain after discovering the applicant had ignored his instructions and continued with forex speculation, he repeatedly avoided the questions and beat around the bush, indicating that he must be untrustworthy.  When Tse was being cross-examined by the trial judge, the trial judge obviously found those questions important and pertinent and that Tse deliberately refused to answer them, however, in his reasons for verdict, he found “the way how [Tse] responded in court was not completely unreasonable”.

40.  Tse’s evidence is in fact very clear.  When Tse first found out the applicant had not complied with his instructions, he did dress her down but did not request her to explain why she had “disobeyed the order”.  When being asked if he had requested for any explanation, he was not evasive.  His answer was “No”. As to why no explanation was requested, he also responded spontaneously.  He said he at that time thought that the loss could not be reverted and that he himself should also be held responsible because he had at the beginning given the applicant the “power to place orders”.  At that time, he forgave the applicant.

41.  Therefore, Mr Pang’s fourth argument fails.

                   Argument 5

42.  Mr Pang’s fifth argument was the obvious difference between the testimonies of Tse and Wong on the issue of whether there had been a meeting of three in late November 2004.  The former said the applicant was requested to stop speculating in the market in that meeting of three, but the latter said there was no such meeting.

43.  In our view, trial judge must have his reasons for accepting Tse’s evidence[8], and we are in no position to intervene.  Therefore, Mr Pang’s fifth argument fails.

44.  In light of the above reasons, Ground 1 fails.

Ground 2

45.  Ground 2 criticises trial judge for wrongfully suggesting that Wong did not have a clear memory on the issue of whether there had been any meeting of three while in fact Wong clearly specified in his testimony that there had been no such meeting.

46.  Actually, in the cross-examination of Wong, he was never asked if, as he could remember, there had been any “meeting of three”. Instead, he was only asked about the circumstances under which Tse told him about the Dah Sing forex account.  Wong never said that it was a meeting.  He could not even remember if there was any colleague near him.  The trial judge thought that since Wong no longer had any clear recollection of the details of the event, it was not unsafe to say so.

47.  Ground 2 fails.

Ground 3

48.  Ground 3 criticises the trial judge for wrongfully justifying the deficiencies of or inherent improbabilities in the prosecution case or Tse’s evidence and those justifications lacked evidential basis.

49.  Mr Pang puts forward four points:

49.1   In his testimony, Tse first said he had not mentioned to other shareholders about using Gainford’s reserve to trade forex on margin, and subsequently changed to say that he had.  As to the defence’s attack on such contradiction in this part of the testimony, the trial judge said that Tse who had a shareholding of 80% did not necessarily remember or concern if other shareholders had been informed, which in fact has never been PW1’s explanation.

49.2   Tse claimed that by looking at exhibit P16(61) or P27 (Cash Position Report), one would know Gainford’s forex account  had suffered loss in the speculation in the market, but in fact, these two documents alone could tell no detail of the forex account.  The defence suggested this showed that Tse had other materials which enabled him to privately know the loss in speculation through the forex account.  However, the trial judge just by conjecture said that Tse “sometimes would ask [Wong] to provide other documents or explain some of the details which were not set out in the documents” without specifying what documents Wong had provided or what factual basis he relied on.

49.3   When Tse was being asked about his litigations in the mainland, he said he did not care if he won or lose or had any memory.  The defence contended that it was unreasonable to say so, and in the absence of any evidential support, the trial judge found that Gainford was well financed and those litigations in the mainland did not involve much money, and thus Tse did not need to be over-concerned.

49.4   As to why the applicant had hidden the ongoing forex speculation from Tse without any benefit, the trial judge said the applicant was “unwilling to admit failure and hoped that she could win back the loss” but in fact there was never any evidence in this regard.

50.  In our view, these challenges on Tse’s evidence are in such bits and pieces that we are not going to deal with them one by one.  There is overwhelming evidence in the present case, which has never been disputed by the applicant and is sufficient to support the truthfulness of what Tse has said.

51.  On 28 May 2010, Tse, Tse Chun Kei, Wong, the applicant and her husband, five of them, had a meeting, and Tse Chun Kei made an audio recording.  According to the transcript of the audio recording, Tse said that back in late 2004, he had already told the applicant to stop speculation and also requested her to give an account for the serious loss caused to the company, and the applicant and her husband agreed to consider making compensation, which is consistent with Tse’s testimony in court.  Furthermore, it would be unreasonable that the applicant did not explain or clarify in the meeting if the applicant’s version was true, and it would make no sense at all that the applicant had to help Tse continue to hide the truth when Tse criticised her for not complying with his instructions of stopping speculation in the market and requested her to give an account and compensation.  The only irresistible inference is that Tse’s version is true and the applicant’s false.

52.  Ground 3 fails.

Ground 4

53.  Ground 4 is a consolidated ground and cannot help bringing the applicant’s case any further.  In our view, the conviction of the applicant is neither unsafe nor unsatisfactory.

54.  Ground 4 fails.

Conclusion

55.  With none of the grounds of appeal established, the application is refused.

Translated by the Judgment Translation Unit of the Judiciary and vetted by Mr. Patrick W.S. Cheung, Barrister-at-law.

[1] PW1.

[2] Tse Chun Yip’s younger brother.

[3] PW2.

[4] Prosecution exhibits P146 and 147 respectively.

[5] PW9, and his report was marked as prosecution exhibit P129.

[6] See para 22 of P129.  In imposing prison sentence on the applicant, trial judge also took this amount as the actual loss suffered by Gainford in sentencing.

[7] Prosecution exhibit P99.

[8] See para 46 below.