R. v. HUNG CHIU-FAI

IN THE COURT OF APPEAL

1995, No.253

(Criminal)

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J U D G M E N T

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Power, V.-P.(giving the judgment of the Court):

1. The applicant in this matter faced one count of conspiracy to defraud, two of procuring the making of an entry in the record of a bank by deception, two of obtaining property by deception, one of forgery, one of uttering with intent to defraud and one of evasion of liability by deception. He was acquitted after trial before Judge Kilgour in the District Court on the charge of forgery but was convicted on each of the other charges.

2. As to the first three counts, the conspiracy charge and to the two charges of procuring the making of an entry in the record of a bank by deception, the principal witness and the victim is Savio Lam of Win Win Industrial Company. He was an acquaintance, if not a friend, of the applicant who had done business with him over a number of years. In November 1991 the applicant, who ran a company named Pricomson, went to him saying that he was short of funds to purchase cloth from the Golden Inn Company, the proprietor of which was a Mr. Chiang Wei-chou ("Mr. Chiang"). He showed the victim two invoices from the Golden Inn Company which he said had been sent to his company Pricomson and purchase orders which were issued by a company called Countex Enterprises which was to be the eventual purchaser of the cloth. The victim agreed to open two letters of credit in favour of Golden Inn in sums of $1,025,152 and $848,700 (a total of $1,873,852) which were to be negotiated upon production of the bills of lading and packing clauses. There was a further stipulation that the goods were to be shipped by 30th November 1991. Towards the end of November the applicant approached the victim and asked him to honour the letters of credit producing two photocopies of cargo receipts which had been issued by Countex to Pricomson.

3. On 30th November the Bank of Communication sent a communication to the victim's company, the Win Win Company, informing it that the conditions of the letters of credit had not been met, as there was no bills of lading or packing clauses. The victim was, however, prepared to trust the applicant and agreed that the letters could be negotiated and the proceeds were paid on 4th December into the account of the Golden Inn Company.

4. Mr. Hung Hing-fat, the proprietor of the Wah Fat Industrial Company, gave evidence that prior to December 1991 the applicant had asked him for a cheque so that he could purchase goods. Mr. Hung gave him a blank cheque and in return he issued a Pricomson cheque in the amount of $2,154,929.80. This cheque was, however, post-dated until 6th February 1992.

5. Early in December 1991 the applicant gave the victim a cheque post-dated to 7th February 1992 which was drawn on the Wah Fat account and was in the amount of the cheque which he issued to Mr. Hung Hing-fat, i.e. $2,154,929.80. This was the same account as what was said to be owed by Countex to Pricomson for the cloth.

6. On 7th February the victim presented his Wah Fat cheque but it was dishonoured.

7. In May there was a meeting between the applicant, Mr. Hung and the victim in which an attempt was made to resolve the matter of the outstanding $2.1m. That was the evidence with regard to the first three counts.

8. As to Count 4, the first of the obtaining property by deception charges, the applicant in December had asked the victim to finance a purchase by him on behalf of a company called County Seat of a Macau garment export quota which was owned by the Merit Garment Manufacturing Company. The applicant told the victim that County Seat would issue a letter of credit in the sum of $1,320,000 in favour of the victim and that the profit that accrued from the transaction would be equally shared. The victim then issued a Win Win cheque in the sum of $1.01m payable to Pricomson. The applicant gave the victim two Pricomson cheques, one in the sum of $600,000 and the other in the sum of $720,000 which were post-dated to 31st January and 29th February 1992. The understanding was that if no letter of credit was issued the victim was to be at liberty to cash the cheques.

9. On 18th December the applicant gave a fax to the victim purporting to come from the Merit Company accepting the sum of $1.01m for the quotas. The victim was, it seems, not happy with this document and on 20th December the applicant produced a confirmatory letter from Merit which was signed by a Mr. Lin Man and which bore the company chop. The two cheques for $600,00 and $700,000 were in due course presented and dishonoured.

10. As to Count 5, the second charge of obtaining property by deception, on 23rd December another request was made by the applicant to the victim to finance the purchase of a quota worth $844,000 from Merit again for County Seat who, it was said, would pay $1.08m. Again the proposal was that the profit would be shared. On 28th December the wife of the applicant gave the victim a Pricomson cheque in the sum of $1.08m and this was post-dated until 31st March 1992. It was to be the victim's security for the transaction and the victim issued a cheque in the sum of $844,000 post-dated to 6th January 1992. The victim, however, apparently uneasy about this whole series of transactions, put a stop order on that cheque and, when it was presented, it was not paid. However, on 6th January, the victim, at the pleading of the applicant, issued another cheque in the same sum which was to cover this transaction. That was the evidence on that charge.

11. The remaining charges of forgery, uttering and evasion of liability by deception arose out of the following facts. On 24th January the victim asked the applicant why County Seat did not issue letters of credit. The applicant said everything was alright and faxed the letter dated 22nd January 1992 purportedly from County Seat saying it would issue 3 US dollar cheques to Win Win in lieu of the letters of credit which would settle the payment for quota. At the same time the applicant gave three post-dated US dollar cheques signed by Mr. Kan Tang ("Mr. Kan"), who he said was the owner of County Seat, and asked the victim to return the three cheques given earlier for $600,000, $700,000 and $1.08m. The victim however was not prepared to return those cheques. On 3rd February the cheque for $600,000 was presented and dishonoured. In February Mr. Kan, who, the victim had, by then, discovered was an employee of Pricomson, went to Taiwan where he has remained. The victim during this period was actively pursuing the applicant in an endeavour to get his money back. He went to the applicant's office every day and the applicant agreed to work to pay his debt. Eventually in July of 1992, the matter was reported to the Commercial Crime Bureau. Inquiries revealed that Countex had no knowledge of any of the alleged transaction and that they had no staff member named Lam Kwan. Likewise Merit had no knowledge of any transactions and they did not issue the letters which purported to have come from them.

12. Inquiries with the banks concerned showed that the amounts which he had paid had been withdrawn and that the victim had in all lost $3.72m. Of particular importance was the account of Golden Inn with the Shanghai Commercial Bank. This showed that on 4th December 1991 proceeds of two letters of credit totalling $1.873m were deposited into the account and that between 4th and 6th December cheques were drawn on that account made payable to Pricomson in the sum of $560,869 to the applicant's wife and a female acquaintance, a Madam Chan Po Chun, each in the sum of $300,000, and the defendant's son and his daughter in the sums of $100,000 and $200,000.

13. The applicant gave evidence saying that Mr. Kan was the sales manager of his company Pricomson and it was Mr. Kan who had introduced him to Mr. Chiang the owner of the Golden Inn Company. He said that Mr. Chiang approached him asking could he get financial support to buy cloth and to buy quota and that he had asked Mr. Kan to handle the matter on behalf of his company. He said that Mr. Kan was responsible thereafter for the transactions and that he trusted both Mr. Kan and Mr. Chiang. He said that it was Mr. Kan who gave him the false Merit receipts and that the money which he received from the victim was set off against business transactions with Mr. Chiang and that the balance was given to him to pay for the quotas. In short he maintained that he was innocent of any wrong doing and was duped by Mr. Kan and Mr. Chiang. There was of course no evidence from Kan and Mr. Chiang as both had fled the jurisdiction.

14. The trial judge said, having examined the evidence of the applicant:

"Generally, the primary facts appeared not to be disputed. It consisted essentially of challenging whether the defendant was a knowing party to defraud and whether he knew the dishonest transactions had taken place.

It was submitted that there was no evidence to show that the accused knew that the transactions were not genuine and it was suggested on his behalf that he was completely taken in by both Chiang and Kan and that his behaviour was not that of a guilty person. Indeed that he had acted with the conscience of an innocent."

That clearly was the case of the applicant and it was fully comprehended by the trial judge. What he was really required to decide was a question of credibility. Did he believe the applicant or did the applicant's evidence create a doubt as to his guilt. The judge went on to make these comments about that evidence:

"Without going further than those few examples, as I've said, I do not think he was telling the court the truth and I find him evasive and implausible. I found, his evidence riddled with inconsistencies and repeatedly prolix and more evasive on important issues. Yet again, I warned myself that he didn't have to prove anything, however and even though he may have been telling lies that did not necessarily mean that he was guilty."

When dealing with the conspiracy count, the said:

"It will be quite clear by now that I have taken the view that he was acting dishonestly in all these matters, in viewing his relationship with Kan Tang and Chiang and his conduct and their conduct in the matter, I was more than satisfied having accepted Mr. Lam's evidence that defendant had acted in an agreement with Kan Tang and that he was guilty as charged.

With regard to Counts 2 & 3, the procuring counts, I have set out the definition of procure but the prosecution also have to show that the transactions were with a view to the gain of the defendant or another and looking at the flow charts and the ultimate recipients of the cash, I am quite satisfied that they were for the benefit of this defendant.

With regard to the deception charges, as I've earlier said, that the Ghosh test is relevant and I have found that he was acting dishonestly. The Crown also have to show that the defendant permanently intended to deprive Lam of the money. I am quite satisfied that on the evidence that I've heard that he well knew that there was no underlying quota transaction and that his relationship with Kan and his conduct with the post-dated cheques support the fact that is the only and irresistible inference to be drawn.

The judge then indicated that he was not satisfied as to the origin of the false document and so he acquitted on that charge but he said that he was in no doubt that the applicant knew the document was false and had produced it trying to authenticate the quota deal. He therefore convicted him on the 7th count of uttering.

15. As to the final count of evasion of liability he said:

"There is no doubt that Pricomson and the defendant had an existing liability to Lam for the $1.854 million. As has earlier been set out, whole series of cheques were presented in an effort to delay payment. The debt was stalled and in fact has never been paid. I am satisfied beyond reasonable doubt for this charge is made out."

16. The applicant comes before us today arguing that he did not have a fair trial and that there was insufficient evidence to support the convictions. He states that the trial could not be a satisfactory one in the absence of Mr. Chiang and Mr. Kan. We have no doubt at all that there was ample evidence upon which the judge could properly act in coming to his conclusion as a conclusion of guilt. The applicant also suggests that the trial judge failed to give proper consideration to the evidence and that, had he done so, he would have had to have given him the benefit of the doubt. We reject this submission. The judge clearly gave careful consideration to all of the evidence and his conclusion as to guilt was squarely grounded in that evidence.

17. Today a suggestion is made that the trial judge was unable properly to deal with the matter because he was unable to understand business jargon. We are not sure exactly what is meant by that submission. The trial judge clearly understood the evidence. It was a strong case. Nothing has been demonstrated to show that he misinterpreted anything. We find no merit in the suggestion that the trial judge failed to understand business jargon.

18. It is finally suggested that the judge refused to allow the applicant to go back to China to collect more evidence. This offence occurred some years before the trial. There was ample time for the applicant to prepare his defence and he was represented at trial. There is nothing in this final ground.

19. The applications for leave to appeal against conviction are refused.