HKSAR v. YIP CHI FUN AND ANOTHER

CACC 234/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 234 OF 2001

(ON APPEAL FROM HCCC 107 of 2000)

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J U D G M E N T

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

Introduction

1 These two applicants were tried before Deputy High Court Judge Whaley and a jury in the Court of First Instance upon an indictment containing three counts, all three counts against the second applicant (D2); and the first and third against the first applicant (D1), and upon each of which counts the jury returned guilty verdicts. The applicants now seek leave to appeal against those convictions.

2 The case is a letter of credit fraud, and it was asserted in each instance that applications were made to Nedcor Asia Limited ("Nedcor"), a bank, by Mansion Fire Engineering Company Limited ("Mansion Fire") for the issue of a letter of credit upon a representation that an invoice had been issued by a company called Philip Sy Contracting and Building and Materials Supply Company Limited ("PSL") for the supply by PSL to Mansion Fire of water pumps, cooling towers, heat extractors and the like, and that the goods were the subject of a genuine sale, whereas in truth the underlying transactions were not genuine. It was, in these circumstances, that the charge for each count was that of procuring the making of a debit entry in the bank's records by deception, contrary to section 18D of the Theft Ordinance, Cap. 210.

3 The first count was levelled against D1 and D2. The date of the alleged defence was 13 June 1997, and the application was for a letter of credit in the sum of $6,517,980.

4 The second count was against D2 alone; the date of the offence, 1 September 1997, and the letter of credit in the sum of $9,375,415.

5 The third count asserted an offence by both applicants on 5 November 1997, and the letter of credit in this instance was in the sum of $1,193,723.

6 In each instance, upon presentation of the invoice and other supporting documentation, Nedcor paid the sum covered by the letter of credit to the Overseas Trust Bank which in turn paid the sum to the beneficiary, PSL. The evidence established that PSL, although at the material times not trading, or at least not trading in goods of the type with which this case is concerned, nonetheless operated the bank account, and that the sum paid to PSL, or an amount very close to that sum, found its way directly back to Mansion Fire by cheque signed by D2 and another.

7 Mansion Fire was a subsidiary of a publicly listed company called Mansion Holdings Limited ("MHL"), whose business included the installation of fire fighting systems, and trade in associated pipes and fittings. D1 was Chairman and Managing Director of MHL, and D2 was Deputy Managing Director and Finance Director.

8 PSL was a subsidiary of a company named MPS Holdings Limited, a company which, as a result of a merger in 1994, was itself a subsidiary of MHL and to whom MHL provided finance. Whilst D2 held no post with PSL, he was an authorized signatory of PSL's account with the Overseas Trust Bank.

The evidence

9 The evidence of deception, and the scheme's operation, came primarily from two prosecution witnesses. One was Anita Wong who was personal assistant to D1 at MHL; the other, a Mr Ip who was manager of PSL. Anita Wong's evidence was that, from time to time, D2 gave instructions to her to open applications for letters of credit and to produce receipts at the same time for the goods referred to in the applications. In relation to each of the letters of credit which were the subject of this indictment, it was D2 who gave her instructions to make the applications and to prepare accompanying documentation. This method or system of direct instructions from D2 operated differently from the run-of-the-mill applications for letters of credit within the Group, and this second system involved, on each and every occasion, an application in relation to goods allegedly supplied by PSL, and related to no other company. There was cogent evidence from other staff at Mansion Fire that the goods mentioned were never supplied, and Mr Ip of PSL said that at the time the letters of credit PSL was not even trading. However D2, he said, periodically required him to issue documentation to support the applications, and D2 jointly signed PSL cheques which represented the payment to MHL of the sums drawn under the letters of credit.

10 D1 did not give evidence at trial, but D2 did. The evidence against D1 was that he signed the applications for the letters of credit which are the subject of the first and third counts, and also the cargo receipts for the goods to which those applications referred; and, further, trust receipts which were submitted with the applications. D2 had not signed any of the applications, nor the trust receipts, or cargo receipts, but he had signed the invoices issued for the supposedly sold goods, as well as the cheques to Mansion Fire; all on behalf of PSL. His evidence was that he attended a meeting in 1997 at which it was said that PSL could obtain fire fighting equipment on the Mainland at a discount and on credit terms, and that this equipment could then be used by MHL or resold. He denied that he had instructed Ms Wong to apply for any of the three letters of credit, but admitted that he had signed invoices in relation to these suggested transactions. It never occurred to him that anything he signed did not relate to genuine transactions. When he signed documents they were part of bundles to sign. As for the payments to MHL which tallied so closely with the amounts paid under the letters of credit, the fact that they tallied did not occur to him when he signed the cheques; and as for those payments to Mansion Fire by PSL, he assumed that they were repayments of loans to MHL. He found nothing suspicious in them, and signed what he saw Mr Ip had signed. In other words, he thought that all the transactions were genuine.

Suggested omissions in the summing up

11 The first ground of appeal goes to the case of D1 only. It is that the judge failed to direct the jury sufficiently, if at all, "on the evidence relating to the knowledge of D1 as to the false information in the letter of credit applications and cargo receipts."

12 It was not entirely clear from the grounds or from the written arguments, how the matter was put, and we rather assumed that it was suggested that the judge had failed to draw to the attention of the jury items of evidence which had emerged from the prosecution case - for there was no evidence led for D1 - which enured to the benefit of D1. In the event, Mr Kwong, who appeared on this application for D1, said that the complaint had two features: first, that there were matters which had emerged in the applicant's favour from the evidence which the judge had failed to mention; and, secondly, that even in respect of such matters not omitted, the judge had merely recounted the evidence, without telling the jury the significance of that evidence to the applicant's case.

13 In approaching this complaint, the starting point is the fact that no evidence was led for the defendant; nor had he made any statement to the investigating team (or, if he had, none was put before the jury), so that there was no defence, or suggested defence, before the jury emerging from the investigative stage. In such circumstances, the appropriate approach of a judge to summing-up, and to the rehearsal of a defence, or a suggested defence, will depend upon the case, but, as a general approach, the position has been summarised thus in R v Hillier & Farrar (1993) 97 Cr App R 349, 354, a case not drawn to our attention by either counsel, though referred to in standard texts:

"It is in our experience often, too often, we think, argued unavailingly almost always, in this Court that a judge has not presented properly in summing up a defendant's defence, after that person has not given evidence. We must make this clear yet again, namely that it is no part of a judge's duty to build up a defence for someone who has not chosen to give the jury the benefit of his version of material circumstances and events. The judge's obligation is limited to reminding the jury, in summary form, of what the defendant is said to have stated as to those matters at some time or another pre-trial and what assistance, if any, the Crown's witnesses have provided."

See also R v Briley (1991) Crim L R 444.

14 The question therefore in this case is not so much whether the judge has repeated argument advanced, or suggested or possible defences mentioned in defence counsel's speech, but whether the judge has fairly reviewed the essential features of the prosecution evidence which constituted particular assistance to the defence, or which might properly be said to undermine the prosecution case against D1 that not only had he signed the relevant documents, thereby making himself an instrument of the deceptions, but its case that he was fully aware that he was engaged upon deceptive conduct.

15 The judge emphasized to the jury on more than one occasion that before either defendant could be convicted, they had to be sure that the defendant was knowingly party to the deception:

"If you are sure that the applications ... were based on ... a deception ... then you go on to determine whether one or other or both of the defendants were knowingly party to the deception, to the false representation" (Tr p 23)

Then, a little later, he told them that if they were sure that a representation contained in a letter of credit was false "then the ultimate question was, what part, if any, the defendants played in making the representation." (tr p 26).

Then he said that the "last and the most vital of all the questions" was: "Has the prosecution proved against them that they were knowingly party to these false representations?" (tr p 28).

16 In the course of the summing-up, the judge told the jury that D1 had not given evidence, and that he was entitled not to do so. It meant, however, that there was no evidence to undermine or contradict to explain the evidence which the prosecution had led against him. He said that the first as well as the second defendant had a clear record; that the prosecution's case was that the applicants had committed the offences together; that in relation to Counts 1 and 3 if the jury were sure that the defendant committed the offence on his own or did an act as part of a joint plan to commit the offence, he was guilty. In relation to the first count, the jury was asked to consider whether the prosecution had satisfied themselves, so that they were sure, that D1 "dishonestly with a view to gain for himself or another procured the making of ...." the entries; similarly, in relation to the second and third counts; that they had to decide whether in doing what he did, a defendant knew it to be dishonest; and he told the jury, too, that they had, before convicting, to be sure that the defendant whose case they were considering had acted dishonestly.

17 As for the evidence itself, there was much said as to the evidence and activities of D2, but little about D1. That, no doubt, was a product of the fact that D1 had not given evidence and that D1's active participation in the events, according to the evidence, was limited merely to the signing of the documents in question. The judge reminded the jury that one witness from MHL had said that D1 and his brother took most of the major MHL decisions. He reminded the jury when reviewing the evidence of Anita Wong that she was D1's personal assistant and, as to the evidence of Mr Ip of PSL that he had said that he had never had contact with D1 in relation to any of the letters of credit. That, therefore, is what the judge covered in the case of D1.

18 We have transcripts of the speeches of counsel for the prosecution and for D1, and have read them, in so far as they are relevant to the present point.

19 Counsel for the prosecution put to the jury that although D1 was party to the application, the issue was whether he was knowingly party to the deception. He explained how the prosecution put its case against D1, and how it was said that that case was proved. What it amounted to was this: that D1 had signed the applications (Count 1 and Count 3) for facilities in the tune of millions of dollars, and that it was not conceivable that someone in D1's position would do so without inquiring, especially since by the date of these applications MHL was an ailing company. So, too, D1 signed the cargo receipts which were addressed to PSL, a company which was associated with MHL and he, Chairman of MHL, must have known that PSL was not trading in fire equipment with MHL. Furthermore, Anita Wong was D1's secretary, knew the applications were bogus, so that it was inconceivable that she would place bogus applications before her boss unless he too knew what was going on.

20 Defence counsel again crystallized the issue, which was whether it had been shown that his client was a knowing party to the bogus transaction. In this regard, he referred to evidence that MHL was a large company with more than forty-eight subsidiaries, and that D1 could not in such circumstances be expected to know of day to day matters; that Ms Ola Ng, one of the prosecution witnesses, said that the contracts in question would represent but small contracts for a company of MHL's size; that purchases were effected by the finance department and purchasing department over neither of which D1 had direct control; that two witnesses had said that D1 did not involve himself in daily operations and that his primary role was in public relations and in liaison with financial institutions; that there was nothing unusual in the nature and content of these contracts and, so counsel put it to the jury, there had been evidence from Anita Wong that her impression was that D1 had not bothered to look at the supporting documents provided with the applications and that even though the company made a loss in 1997, it made a profit in 1998.

21 We were, we confess, concerned by the reference in that speech to the suggested evidence of Ms Wong that D1 had not bothered to look at the relevant documents for, if that was the evidence, then it was clearly material in the applicant's favour, and would have deserved emphasis in the summing-up, yet in the summing-up there was no mention of it. Mr Kwong suggested much the same thing when he made his submissions on that limb of his case which rested upon suggested omissions by the judge of favourable material evidence. We have to say, studying the transcript at its relevant part, as we have, several times, that this was simply not the effect of the evidence of Ms Wong. We set it out here in full:

"Q. And there's all sorts of documents that not - don't need the LC application for him to sign, right?

A. Correct.

Q. And some of those documents are specially for him to sign because it bear his name; some documents simply is, if he was there, ask him to sign, if he was not there, ask somebody else to sign?

A. Correct.

Q. He simply signed it as a routine?

A. I suppose so, I have no idea about what he thought.

Q. I see. But what I mean is when you present the document for him to sign, you don't have to bring along the whole file for him to check the file before he sign the document, right?

A. If there was such information on my hand, I'll give them to him as well.

Q. Yes. And if you don't have the files, will you simply give him the document to sign?

A. Correct.

Q. Even on the occasion you bring him the file, whether he had looked into the file you have no idea?

A. Correct.

Q. Did he sign immediately or did he...

COURT: Sign what immediately? We're talking about all sorts of documents.

Q. Sorry. Take for example, when the document you present to him, you bring along the file to which the document relates. In that kind of situation, did he sign it immediately or did he ask you to wait?

A. Usually, that would be left with him unless it was urgent.

Q. Of course, again, you have no idea whether he will look into the files?

A. Correct." (Tr pp 93-94)

22 What emerged from the evidence was that the relevant documents were indeed placed before D1 and he signed them. Whether he studied them or not was a matter that Ms Wong could not say. The suggestion made in counsel's speech to the jury (Mr Kwong did not appear at trial) that her evidence had been that the applicant had not bothered to look at the supporting documentation is a suggestion that should not have been made, and we are surprised that it drew no correction.

23 The only other material omission suggested by Mr Kwong was the evidence that the company had made a profit in 1996 as well as in 1998, the relevance of which was that the prosecution had suggested that the company needed to 'cook its books', whereas in fact 1997 was not part of a set pattern. It emerged from Mr Kwong himself, in the course of Mr Goodman's submissions, that in fact the correct 1996 position had been mentioned in the summing-up by the judge. Since 1998 could hardly have been relevant in 1997, there is therefore no material omission in this regard with which we need any longer be concerned.

24 So what is it, in the case of D1, with which we are left? We are left with a complaint in relation to two matters: first, evidence that D1 was Chairman of a public company and not involved in day to day affairs of the company and, secondly, that in relation to all three letters of credit the instructions for their issue came from D2 and not D1, and that the judge did not tell the jury of the potential significance of these pieces of evidence.

25 We accept that the judge's summing-up does not contain the type of assistance to juries which is often to be found, whereby judges point out to what effect one side or the other - or indeed both - seeks to utilize evidence; and what evidence might be thought significant and for what reason, and so on. It might, perhaps, have been helpful in this case for the judge to say to the jury that they might wish to bear in mind that simply because someone is Chairman of a company he did not necessarily, by reason of that fact alone, know everything that was going on; and that it may be that someone who did not concern himself with day to day matters might not pay the detailed attention that an employee, to whom detail is designated, might; and it might, perhaps, have been helpful had the judge told the jury to bear in mind that the instructions to make the applications had not been conveyed to Ms Wong by D1 but rather by D2 thereby, perhaps, supporting the suggestion - and that is all that it was - that D1 might not necessarily have known of the detail of or background to the letters of credit.

26 The fact, however, that D2 gave the instructions, and not D1, was a fact well before the jury, and the judge reminded the jury of it. What is, and what is not, adequate in any case, depends on the case. It depends on the issues, and the evidence, and the way in which the case develops. In this case, we do not think that the failure of the judge to speak of the possible significance of the two matters to which we have now alluded amounts to a material non-direction. The central facts and the central issues were well before the jury, and the judge reminded the jury of them. The fact that D1 was not normally engaged in the day-to-day running of the business helps very little in reality, when we see that here, on any view, he actually signed the applications for letters of credit, and he actually signed the cargo receipts. There was no evidence that they were placed before him without him seeing them in full. These might be said to be day to day matters, yet here he was engaged in them. The cargo receipts were also addressed to PSL, one of the subsidiary companies of a subsidiary of MHL and about whose affairs the applicant could well be expected to know. In other words, the degree to which the evidence relied upon by Mr Kwong in fact assisted the applicant, D1, was in truth and in the absence of evidence by D1, minimal, and the judge's failure to deal with it as suggested was of no true consequence.

27 So, in the case of D1, we dismiss his application for leave to appeal against convictions.

Character

28 The next ground of appeal relates to the case of D2 only. The complaint is that the judge failed to direct the jury as to the relevance of the good character of D2. It was an agreed fact that the applicants were both of previous good character, in the sense that neither had previously been convicted of a criminal offence.

29 The judge, at an early stage, when dealing with the status of admitted facts said this:

"... that evidence only applied to the circumstances and date of the arrests of the defendants and the fact, an important fact that I shall come to in a moment - that they both have clear criminal records. Neither of them have any convictions against them. So those are the facts that you must take as conclusively proved."

30 It is unclear whether the judge was there saying that he would later return to the relevance of the evidence of good character, or whether, as Mr Goodman suggests, the phrase "I shall come to in a moment" was a mere introduction to that which immediately followed, namely, the fact that the defendants had clear records, and that, therefore, the judge had never intended to say more.

31 We do not think it necessary to decide what was intended, for the point which we must address is the judge's failure to explain to the jury the relevance of good character, that is, to the issues of credibility and propensity; for there is no question but that the judge failed to explain what the relevance was of the absence of previous convictions in relation to D2 who, at the date of the offences, was aged 45 years, and Finance Director of a company of some size. No point is taken on D1's behalf on this ground, no doubt because D1 did not give evidence, whereas D2 did.

32 Mr Goodman suggests that what the judge said was quite sufficient, and he relies on the decision in Tang Siu Man v HKSAR [1997-98] 1 HKCFAR 197 from which one sees that the essential question is whether in all the circumstances the summing-up has been fair and balanced. A failure to tell a jury of the significance of good character in the terms of the standard direction envisaged by R v Vye [1993] 1 WLR 471 may or may not, depending on the circumstances of the case, and of the applicant in the case, and on the terms of the summing-up as a whole, mean that the summing-up is unbalanced. Mr Goodman says that here was the judge telling the jury that the fact of good character was important and, later, telling them to use their common sense in the analysis of evidence; and that that sufficed.

33 We do not agree. The fact of the matter is that in this case, a case in which D2's credibility was relevant, the judge himself self-evidently took the view that the issue of good character was important to the case. He said so in terms. Where a judge obviously considers that a good character direction is important and that the defendant is entitled to one, then that is a view which this Court will respect. See R v Lee Kam Yuen [1995] 1 HKCLR 264, 267; a decision to which approving reference is made in Tang Siu Man, above, at page 125. We think that the way it was left was, in the circumstances of this particular case, not satisfactory and that, having said that the issue was important, the judge ought to have told the jury to what possible effect it was important. There has, therefore, been, in this regard, in the case of D2, a material omission in the summing-up. Accordingly, we give this applicant leave to appeal and, since his application was a few days out of time, that leave is given to appeal out of time. We treat the hearing of the application as the appeal.

34 The question, then, is whether this is a case in which it is appropriate to apply the proviso to section 83(1) of the Criminal Procedure Ordinance, Cap 221.

35 We are satisfied that it is. Putting to one side, for the moment, that part of the evidence of Anita Wong which was disputed, the case against D2 was overwhelming. It was common ground that this applicant signed invoices for the sale of goods, and it is clear that no such goods existed. It is common ground that the applicant signed all the cheques which ensured that the sums paid under the letters of credit went straight back to Mansion Fire. He also signed the relevant bills of exchange and collection instructions; all in respect of goods that did not exist. In so far as he spoke of a meeting at which the genesis of these goods was discussed, there was no (other) evidence at all to support the holding of such a meeting. There was no evidence to show orders of the goods by PSL, or payment by PSL for those goods. In so far as he said that he thought the cheques he wrote for amounts the same as were paid under the letters of credit, and very soon after those payments, were repayments of loans, no evidence was produced, documentary or otherwise, to support the existence of those loans. There was evidence that PSL was not even trading, or trading in such goods, at the material time and D2 was the Finance Director of MHL and was also connected with PSL. The defence was patently unbelievable, and the prosecution case, as we say, overwhelming. We have no doubt but that this is a case in which the failure of the judge to give the direction which was required has not resulted in any miscarriage of justice. That being so, D2's appeal against conviction is dismissed.