HKSAR v. HAO MAY (alias MAY WANG) (formerly known as WANG MAY YAN) (alias MAY WANG)

CACC 172/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 172 OF 2016

(ON APPEAL FROM HCCC 83 OF 2014)

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D E C I S I O N

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1.  I dismiss D2’s application for bail pending appeal. The reasons that follow are not meant to be self-contained. They are brief and focussed and are intended mainly for the benefit of the parties. For more background, it may be helpful to refer to my decision dated 6.3.17 dismissing D1’s application for bail.

Ground 1

2.  Under this ground, it is argued that, as a matter of law, SEHK has no public duty to allow or prevent the publication of announcements or circulars.  Count 1 (see particular (f)) was therefore bad and should have been quashed.

3.  I do not, at this point, think that this ground has merit :

(a) Section 21(1)(a) of the SFO provides that “It shall be the duty of [SEHK] to ensure, so far as reasonably practicable, an orderly, informed and fair market”.  This necessarily includes the duty to ensure, so far as reasonably practicable, that the announcements and circulars of publicly listed companies are true and accurate.

(b) SEHK discharges its duty generally through promulgating (section 23, SFO) and enforcing the Listing Rules (Rule 2.01).

(c) Where circulars are concerned, it is specifically provided in Rule 13.52(1) that (i) before it is issued, a circular must be submitted to SEHK for review, and (ii) the circular shall not be issued until SEHK has confirmed that it has no further comments on it.  When a circular eventually goes public, it does so through being published on SEHK’s website.

(d) Similar provisions are in place as regards announcements.  See Rule 13.52(2).  Where there is a VSA, the rule at the time of the alleged offence was certainly that the relevant announcement must be submitted to SEHK for vetting.  See the evidence of William Wong (PW17).

(e) This system of pre-vetting is, therefore, an important means by which SEHK does its reasonable and practicable best to ensure that the market is “fair” and “informed”.  Its efficacy depends on the full and frank disclosure of company directors, not least when there is probing from SEHK.  If company directors lie, or insist on forming their own views on matters which, under the Listing Rules, SEHK is the final arbiter, SEHK will be impeded in performing its duty.

(f) Put differently, “if the defendants’ dishonesty in withholding information and submitting false information impeded the means by which SEHK carries out its public duty …. they dishonestly risked causing SEHK to act contrary to that duty.”[1] Whether there are sanctions for such dishonest misinformation is irrelevant.

(g) Admittedly, there is no mention of section 21 in Count 1 by name. But, as said, the pre-vetting and determination of whether a circular/announcement should go public is an important part of SEHK’s duty.  I, therefore, agree with the respondent that the prosecution had identified with sufficient precision the public duty that was held by SEHK, and the way in which SEHK was alleged to have been defrauded as regards the performance of that duty.

Ground 2

4.  Under this ground, it is complained that the judge had erred in law in directing the jury that, for Count 1, it was sufficient if they were sure that D2 “had agreed to use dishonest means to bring about a state of affairs which [she] intended to, or realized might, cause [SEHK] into acting or failing to act ….”  It is contended that the jury must be sure that D2 had intended to cause SEHK to act contrary to its public duty; it is not enough for D2 to have realized that SEHK might be caused to so act.

5.  The substance of D2’s argument goes as follows :

(a) Whilst there can be sufficient mens rea in economic loss cases if the conspirators realize that their conduct may cause the victim to act or fail to act in a certain way, the same cannot be said of public duty cases unless the conspirators intend their victim to act or fail to act in a certain way.

(b) This is so because, in public duty cases, there is “no question ever of a benign intent existing”.  Common sense dictates that there is either an intent to cause someone to act contrary to his public duty or there can be no criminal conspiracy to defraud under this category of cases.[2]  They are unlike economic loss cases where the intention can be benign in that the conspirators do not wish for someone else to suffer losses.

6.  I am not persuaded that this ground is likely to make out:

(a) This ground draws support from multiple yet brief excerpts of judgments none of which was actually devoted to the discussion on this point.[3]

(b) On the contrary, it is clearly stated in Mo Yuk Ping v HKSAR (2007) 10 HKCFAR 386, at paragraph 40 of the judgment, that “the offence [of conspiracy to defraud] is constituted by becoming a party to an agreement with another or others to use dishonest means: (a) with the purpose of causing economic loss to, or putting at risk the economic interests of, another; or (b) with the realization that the use of those means may cause such loss or put such interests at risk.”

(c) Likewise, it was observed in Wai Yu Tsang v R (1992) 94 Cr App R 264, at 272, that “it is enough for example that …. the conspirators have dishonestly agreed to bring about a state of affairs which they realize will or may deceive the victim into so acting, or failing to act, that he will suffer economic loss or his economic interests will be put at risk.”

(d) The italicized words in the above two passages put it beyond doubt that, in economic loss cases at least, an element of contingency is permitted in respect of the purposes of the fraud as well as the consequences of the fraud.  This former contingency has nothing to do with the motive of the conspirators which, in some cases, may be benign in the sense that D2 has pointed out.  In mentioning “benign intent”, D2 is confusing the issue.

(e) The correct position is traceable back to the case of Allsop (1976) 64 Cr App R 29, where the English Court of Appeal observed at page 31 that, “Generally the primary objective of fraudsmen is to advantage themselves.  The detriment that results to their victims is secondary to that purpose and incidental.  It is ‘intended’ only in the sense that it is a contemplated outcome of the fraud that is perpetrated.”

(f) I fail to see why the contingency of purpose has no application in public duty cases.  For example, it is not beyond one’s imagination that two or more persons may agree on a dishonest course of action which does not only satisfy an immediate purpose, but which would also deflect the authorities should they happen to look into the matter, both of which being within their contemplation.

(g) The conspiracy alleged in Count 1 was for SEHK to rely on the various representations – and so pass the relevant circular and announcement. That was the one and only objective.  It admitted no contingency of purpose.  It follows that, as against the factual matrix of the case, what the judge said about “realize might cause” was otiose, assuming for the moment that it was wrong.  The jury could not have convicted D2 and did not find her to have “intended” to mislead SEHK into allowing the publication of the circular and announcement.

Ground 3 & 7

7.  These grounds pertain to both Count 1 and Count 2.  They are argued together as follows :

(a) The substance of the prosecution’s case (their “actual case”) was made up of four components all of which were related to the alleged conspiracy to defraud 462.[4]  The alleged conspiracy to defraud SEHK was but a necessary part of defrauding 462.

(b) Count 2 (conspiracy to defraud 462) should have been particularized according to the prosecution’s actual case.  Instead, it was premised on particulars that were copied directly from Count 1 (conspiracy to defraud SEHK).  As a result, the same fraud was prosecuted twice.

(c) This offended the doctrine of autrefois acquit or convict, and the judge should have either compelled the prosecution to amend its allegations to show two separate conspiracies or withdrawn one or the other of Counts 1 and 2 from the jury.

(d) The judge did neither.  Instead, she wrongly directed the jury that the frauds in Counts 1 and 2 were effectively the same, the only differences being the dates, the identity of the alleged victim and the consequences that were intended (particulars (f) and (g)).

(e) The upshot of that is “conviction on one count was possible from evidence actually only relevant to the other”.  An example is given.

8.  I do not, at this stage, think there is merit in these grounds :

(a) D2 has, in the main, correctly identified the four factual areas on which the prosecution had called evidence to support their case.  (For component (iv) – see footnote 4, the respondent argues that the prosecution’s case was not that the farms were worth much less than what they were sold, but that the farms were portrayed as making profits when in fact there were going bankrupt.)

(b) These four areas of evidential focus were, nevertheless, properly encompassed by particulars (a) to (c) of Counts 1 and 2 which addressed the broader issues of (i) the supposed independence of D1 and D2 from each other and (ii) D1’s non-disclosure of the CSA.  Being deliberately untruthful on these issues, the defendants were out to mislead SEHK, and they were out to mislead 462 – that was how the prosecution had pitched their case.

(c) I am not persuaded that, as a result, the same fraud was prosecuted twice.  Although the evidence was the same, and the two conspiracies were both aimed at achieving a certain end result, Count 1 and Count 2 were obviously separate offences.  The degree of the lies told, the means through which these lies were told, their intended victims, their immediate objectives, not to mention the nature of their harm done, were all different.

(d) Once that is established, D2’s point on the impermissible use of evidence will also fall away.  On the example given, however, it is worth mentioning that, as is repeatedly emphasized by the prosecution, judge and now the respondent, particulars (a) to (c) were not so much about whether D1 and D2 were involved in a “connected transaction” than whether D1 and D2 were dishonest in asserting that they were independent, and that there was no past or present relationship in respect of the VSA between them.

GROUNDS 4, 8 & 9( i)-(iii)

9.  Concerning both Count 1 and Count 2, these grounds presuppose that the prosecution’s case was, and must be, premised on the allegation that, under the Listing Rules, D1 and D2 were both “connected persons”, and that the VSA was a “connected transaction”.[5] It is argued that that was not in fact the position,[6] so the judge should have quashed particulars (a) to (c).

10.  Again, I do not think that is a correct characterization of, and legitimate constraint on, the prosecution’s case – see paragraph 8(d) above.  See also my decision dated 6.3.17 dismissing D1’s bail application, where the same issues were explored.

11.  I note the wording in 462’s circular (see Company Matters, Pt 1, Tab 10, at page 100),[7] but do not think it lends support to D2’s contention.  What that wording connotes is 462’s assurance to SEHK regarding its concern about connected transactions.  It does not therefore pin the prosecution’s case down to one alleging connected transaction.  It remains open for the prosecution to question why, given their CSA and other dealings, D1 and D2 should insist that they were independent of each other, when the rules were that they should disclose anything remotely doubtful, so that SEHK and not anyone else could decide (see paragraph 15(d) below).  The query from SEHK was, after all, very broadly worded and all-embracing (see Company Matters, Pt 1, Tab 10, at page 45).  It is not unreasonable for the prosecution to say that they had lied.

Grounds 5 & 8

12.  These grounds criticize the judge for failing to quash particulars (d) and (e), common to Count 1 and Count 2, when there was evidence that (i) D3 had sent the “true financial information” to ShineWing and (ii) D2 had apprised Barry Ip of ShineWing (PW18) of the basis upon which the VSA accounts had been prepared. It was ShineWing’s decision not to clarify in the circular and announcement that the figures contained therein were non-historical and based on predictions.

13.  In my preliminary judgment, these grounds are unlikely to succeed because :

(a) Whether ShineWing was in fact given the true financial information was a contested issue, of which the judge had properly directed the jury that, should they have any doubt regarding the issue, they should accord the benefit of that doubt to D3.[8]  That disposes of D2’s first point.

(b) As regards D2’s second point, Barry Ip’s evidence was far from conclusive.  In sum, he said (i) only if D2 insisted on making assumptions in the accounts should ShineWing insert a note in the circular and announcement; (ii) in any event, adjustments based on predictions should only be shown in certain parts of the accounts and not the others, where the figures must by nature be historical; and (iii) he believed that, in the end, 462 had not adopted D2’s proposal to base the figures on predictions.[9]

(c) To varying degrees, the other ShineWing witnesses were equally non-conclusive on this point.  This is true particularly of Andy Wong (PW14) who took over from Barry Ip.

(d) Either way, the prosecution’s case did not stand or fall on whether ShineWing was made aware of the supposed fact that the VSA accounts were based on predictions. Rather, the prosecution’s case was that “the changes made had nothing to do with such assumptions rather the changes were made in response to successive instances of bad news regarding the original figures and to cover the losses”.[10]  In other words, the accounts were without basis and plainly false.[11]

(e) Accordingly, the judge had directed the jury that if it might be the case that D3 was providing genuine adjustments based on predictions, they should acquit the defendants on particulars (d) and (e).[12]  It was down to the jury what to make of it.

Ground 6

14.  This ground attacks the judge’s ruling that William Wong, Assistant Vice President of the Listing Division of SEHK, was an expert witness (PW17).  It criticizes the judge for wrongly permitting William Wong to give expert opinion evidence on the Listing Rules.

15.  I am not persuaded that this ground is a good prospect :

(a) This ground is premised on the presuppositions that (i) the prosecution’s case depended on the correct interpretation of the Listing Rules, namely whether D2 was a “connected person” and whether the VSA was a “connected transaction”, and (ii) the prosecution ought to have but nevertheless failed to identify the public duty contrary to which SEHK was said to have been misled into acting.

(b) Based on those presuppositions, it is submitted that the interpretation of the Listing Rules is a matter of Hong Kong law which accords no place for expert opinion. It is submitted that, given the non-identification of the relevant public duty, William Wong’s evidence was too general, hence irrelevant, hence inadmissible and/or prejudicial.

(c) The point is, for reasons I have explained, I find the said presuppositions questionable.  On the contrary, because of how they had pleaded their case, it seems clear that the prosecution was entitled to lead evidence on “how in fact SEHK would perform its role in certain scenarios”.[13]

(d) On that last point, I note it was William Wong’s evidence that not all cases were open and shut cases, that a company may disagree with the interpretation of the Listing Division and that, in cases of disagreement, the matter would be referred to the Listing Committee for final determination. That evidence is relevant to the jury question as to why D1 and D2 were so adamant on prejudging the matter for themselves.

Grounds 9, 11 & 12

16.  These grounds are all directed at the judge’s summing-up.  In a nutshell, the judge is criticized for failing to (a) adequately and fairly sum up critical elements of the evidence that were favourable to D2, (b) redress the unfairness with which the prosecution had opened their case, and (c) give fair and proper treatment to D2’s case, which includes her failure to adequately rectify the situation when the same was pointed out to her by D2’s counsel.

17.  As this is not the appeal proper, I will not give detailed reasons for rejecting these grounds as having good prospects.  Suffice it to say that I have given due consideration to everything D2 has said; and, although I can understand why some of the questions raised are considered to be problematic, I do not think they will ultimately affect the safety of D2’s conviction.  I say this because (a) these grounds do not involve positive bias on the part of the judge; (b) D2 accepts that her defence had been fully brought out by experienced trial counsel during his closing speech (the respondent would say “over six months of evidence” as well) and (c) concerning the one or two evidential problems that were not detected and/or dealt with at trial, the respondent does seem to have a ready and respectable counter-argument.

Ground 10

18.  This ground, which criticizes the judge for admitting the depositions of Frank Sing, Nick Cross, Barry Fraser and David Wiltshire (the New Zealand witnesses), is not particularized and not argued.

Conclusion

19.  None of the above grounds being, in my view, prima facie likely to be successful, I dismiss D2’s application for bail pending appeal.