HKSAR v. HO CHING WAH

[English Translation – 英譯本]
CACC 106/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 106 OF 2008

(ON APPEAL FROM DCCC NO. 642 OF 2007)

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J U D G M E N T

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

The charges

1. The Applicant was charged with 38 counts of “theft”, contrary to section 9 of the Theft Ordinance (Cap. 210 of the Laws of Hong Kong), and one count of “furnishing false information”, contrary to section 19(1)(b) of the Theft Ordinance.

2. The other defendant to the case (D2) was charged with 4 counts of “dealing with property known or believed to represent proceeds of an indictable offence”, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance (Cap. 455 of the Laws of Hong Kong).

3. After trial before District Judge Stanley Chan, the Applicant and D2 were convicted and sentenced to imprisonment for 5 years and 3 months and 12 months respectively. They both applied for leave to appeal against conviction. D2 filed a “notice of abandonment” on the day before the hearing of the present application, and D2’s application was dismissed accordingly. We now deal with the Applicant’s application.

Facts of the case

4. From March 2003 to late 2004 or early 2005, the Applicant was employed as an accounting clerk by one Silverart (Hong Kong) Limited (“Silverart HK”). Silverart HK was established by Wong Tuen Hung (王端雄) (PW1) who had also formed a company named Silverart (Quan Zhou) Handicraft Company (“Silverart QZ”) in Mainland China. Silverart QZ was engaged in manufacturing handicraft products whereas Silverart HK was responsible for selling those products. Whenever Silverart HK received payment for the goods, it would retain approximately 20% thereof for itself and then remit the remaining amount to Silverart QZ to enable that company to pay its workers’ wages and purchase materials.

5. The 38 counts of “theft” alleged that between 27 March 2003 and 6 December 2004, without permission from her employer, the Applicant made out company cheques and withdrew funds from the company’s bank accounts, thereby appropriating for her personal use large sums of money that belonged to the company.

6. The 39^th count alleged that the Applicant provided false accounting documents to Silverart’s accountant with intent to conceal her misconduct.

7. After the Applicant took up employment with PW1, she suggested to PW1 that the company should find ways to broaden the source of profit and economize on expenditure, and also offered to help the company reduce expenses. For this reason, she gained the trust of PW1. In October 2003, PW1 set up two other companies, namely Hong Kong Wing Kam (香港榮鑫) and Shenzhen Wing Kam (深圳榮鑫) respectively. PW1’s wife (i.e. PW2) held 99% of the shares of Wing Kam, and the remaining 1% was gifted to the Applicant as a token of appreciation of her contribution to the company.

8. Silverart had three major bank accounts. As PW1 had to go to the Mainland frequently for business, he would from time to time sign four or five crossed cheques which were then kept by the accounts department. Whenever the accounts department issued a cheque, it would retain a photocopy of the cheque, the payment request form and the cheque stub, and would also make a record of the purpose of issuing the cheque. Furthermore, Silverart would carry out transactions via internet accounts held by the company with two of the banks. For each transaction, the accounting staff would input data on the webpage of the bank and PW1 would then key in the password. When PW1 was out of Hong Kong, he would tell a staff member of the company (e.g. the secretary) the password over the phone, and the staff member would then take steps to complete the banking transaction on the internet.

9. In December 2003, the Applicant told PW1 that the company was short of funds. She offered to help the company with her own money, saying that her ex-husband was very rich. She neither imposed any condition for helping the company nor asked PW1 to pay interest on the sums that she might disburse on behalf of the company.

10. In early 2004, the Applicant was admitted into hospital and suggested to PW1 that he did not have to pay her salary for the period between March and June 2004. From July 2004 onwards, the Applicant worked only a day or two per week and an hour or two per day. In November 2004, the Applicant told PW1 that the company did not have sufficient funds to pay the factory and suppliers. PW1 became suspicious of this apparent shortage of funds because Silverart should enjoy a business turnover of as much as USD 2 to 3 million per year. He requested the Applicant to check the books with the accounting staff of Silverart QZ. As a result of this exercise, PW1 became aware that Silverart HK was indebted to the Mainland factory for at least HK$ 2 million.

11. From December 2004 to early 2005, the Applicant seldom went to work. During that period, debt collectors sought repayment from Silverart HK. PW1 tried to find out why the funds of the company became so tight, and in the course of his investigations he discovered that large sums of money had gone into the bank accounts of the Applicant and D2. PW1 made a report to the police on 31 January 2005. Subsequently, from the information provided by the banks and the documents supplied by the accountant, PW1 realized that the companies suffered losses of approximately HK$9,350,000 (Silverart suffered losses of approximately HK$8,355,000 and Wing Kam approximately HK$995,000) in respect of a number of cheque payments and internet transactions handled by the Applicant. The amounts involved in the charges laid against the Applicant and D2 were HK$3,700,000 and HK$420,000 respectively.

The Applicant’s case

12. The Applicant and D2 elected not to give evidence in court.

DW1’s testimony

13. The Applicant called Zhuang Xiao Hui (莊曉輝) (DW1) to give evidence. DW1 used to work in Silverart QZ and Shenzhen Wing Kam and came to know the Applicant in 2003. PW1 had told DW1 that the Applicant was in charge of the finances of the company and had provided funds to help him (PW1). DW1 said that he and the staff of Shenzhen Wing Kam regarded the Applicant as the boss. DW1 said that the Applicant had provided funds to help Wing Kam and paid the rentals, electricity fees and water charges when Wing Kam was established. DW1 also said that the Applicant had lent money to PW1 and that PW1 had requested him to persuade the Applicant to lend him money.

The contents of the Applicant’s cautioned statements

14. The police took statements from the Applicant on two occasions. In brief, the Applicant made the following statements under caution:

1) Since November 2003, the Applicant had lent money to PW1 on many occasions, and following each loan PW1 had made repayment. The largest loan amount was approximately $3,000,000.

2) The Applicant granted loans to PW1 in the following ways:

(1) She made repayments to creditors on behalf of PW1,

(2) She made payments to suppliers of goods and materials on behalf of PW1,

(3) She made deposits into the bank accounts of Silverart,

(4) She provided Silverart QZ with funds to enable it to operate,

(5) Upon PW1’s requests, she lent money to others on his behalf.

3) The Applicant said that the reason for lending money to PW1 was that she had provided two to three million dollars to help Wing Kam, and that the factory of Silverart QZ was responsible for manufacturing Wing Kam’s products. Furthermore, PW1 agreed to Silverart and Wing Kam doing business together, and the Applicant and PW1 were business partners. As they were both the proprietors of Silverart, she kept lending money to PW1 and Silverart in order to support the company’s business.

4) The Applicant’s loans to PW1 and Silverart were recorded in a computer. However, the computer broke down in 2004 and those records were therefore lost.

5) As to the fact that the Applicant’s ex-husband (i.e. Lam Wai Keung (林偉強)) was named the payee on cheques made out by PW1 in repayment of the loans, the Applicant explained that her ex-husband’s name was put down as the payee because she wanted to press PW1 for repayment ― she hoped that PW1 would think that it was her ex-husband who pressed him for repayment and hence would make repayments promptly.

6) The Applicant said that Exhibit P143 (a list showing the breakdown of loans from Idy) was an accounting form used in the past, and that this kind of form was no longer used because it did not allow detailed and clear accounting records to be made.

D2’s record of interview by the police

15. The cautioned statements made by D2 at the interview with the police can be summarized as follows:

1) The Applicant had obtained a loan of $350,000 from D2 in order to assist PW1 and the operation of his company.

2) The Applicant had repaid credit card debts for PW1 and lent money to PW1 so that he could pay the suppliers. PW1 and PW2 had repeatedly said that they were grateful to the Applicant for lending money to them in order to help them.

3) D2 and his friends had lent $1,100,000 to the Applicant and PW1. PW1 and PW2 had requested the Applicant to ask her ex-husband to lend money to PW1.

4) When D2 was asked whether there was any record showing deposits made by PW1’s company into D2’s bank accounts, he replied that the money represented repayment from the Applicant and PW1 to him. The Applicant had asked him to deliver a sum of money to Shenzhen for the purpose of paying the expenses of Shenzhen Wing Kam.

5) The funds of Silverart QZ over the past few years were provided by the Applicant.

6) The Applicant provided funds to PW1’s two companies. The Applicant was the top leader of the company, and the Applicant and PW1 were both bosses of the companies. The Applicant and PW1 were emotionally attached to each other in a special way.

7) He had viewed the computer record of a loan of $7 million granted by the Applicant to PW1. Subsequently, the Applicant told him that the relevant record was lost because the computer had broken down.

8) D2 granted the loan to PW1 by giving him, face-to-face, banknotes in Hong Kong currency. PW1 would then give cash in Renminbi to Silverart QZ.

Our views on the first ground of appeal

30. In support of her first ground of appeal, the Applicant relies on the principle set out in DPP v. Myer [1998] AC 124, HKSAR v. Lai Man Choi and Ng Shui Lun (CACC 628/2002, at paragraph 24) and HKSAR v. Ho Kin Hang Kenneth (CACC 152/2005, at paragraph 32), namely that the contents in defendant A’s cautioned statement which are unfavourable to defendant B cannot be used as evidence against defendant B, but the contents in defendant A’s cautioned statement which are favourable to defendant B can be used in support of defendant B’s defence. The prosecution has not taken issue with this principle.

31. In our view, when Judge Chan said he would consider the cautioned statements of the two defendants separately and individually, he did not want any unfavourable evidence given by one defendant against the other to influence him into making a ruling adverse to that defendant.

32. When Judge Chan was dealing with the Applicant’s case, he did not indicate that he had to consider such evidence from D2 that was favourable to the Applicant. Nevertheless, on the facts of the case, in particular the fact that the money involved in the charge against D2 also came from PW1’s company, the prosecution’s case against the Applicant had a close connection with that against D2. In our view, Judge Chan had in fact considered the evidence concerning D2, but in the end he did not accept the evidence in D2’s record of interview. D2, like the Applicant, said in a sweeping manner that the Applicant had lent money to PW1. In the absence of any solid evidence to support this statement, the prosecution’s allegation would not have been undermined even if another person had made the same statement. As D2 did not testify in court, his confession was nothing more than an exculpatory statement that he made outside the court, that statement being unsworn and not having been cross-examined or challenged. Judge Chan did not err when he decided not to attach any weight to that statement.

33. More importantly, in our view, it is clear from Judge Chan’s refusal to accept D2’s defence when considering the charge against D2 that he regarded D2 as an unreliable witness. This being the case, there was nothing wrong even if Judge Chan did not consider such evidence from D2 that was favourable to the Applicant.

34. It is quite obvious that D2 was not an independent witness and what he said in his record of interview showed that he was protecting the Applicant. Their relationship was apparent from the following facts: the lease of the company of which D2 was the proprietor was signed by the Applicant, and the Applicant was a signatory to that company’s bank account. The Applicant had persuaded the staff of PW1’s company to switch over to D2’s new company. Judge Chan ruled that they were close friends before the Applicant became an employee of Silverart. The Applicant even parked a car that she had purchased at a location owned by D2. The Applicant recommended D2 to understudy in Silverart Shenzhen. The business of D2’s new company was also happened to be the same as that of PW1’s company, namely gift manufacturing. Judge Chan ruled that the Applicant and D2 were not simply casual acquaintances.

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The fourth ground of appeal

45. The Applicant contends that Judge Chan did not properly analyze or deal with the evidence from DW1 that was favourable to the Applicant.

46. Judge Chan’s finding that DW1 was not a reliable witness is a finding of fact. Judge Chan did not err when he refused to accept DW1’s testimony. PW1 and PW3 had both accused DW1 of having disclosed to the Applicant and D2 information on the company. There was ample evidence in the present case to support Judge Chan’s finding.

The fifth ground of appeal

47. The Applicant submits that Judge Chan erred in ruling that the Applicant’s failure to give evidence in her own defence served to strengthen the prosecution’s case.

48. In Li Defan v. HKSAR (2002) 5 HKCFAR 320, the Court of Final Appeal held that:

1) In an appropriate case, the judge is entitled to point out that the jury may, but need not, consider that the prosecution case on a particular issue relevant to guilt is strengthened by the absence of the defendant from the witness box.

2) However, the cases in which such comment is permissible or even necessary will be exceptional, and each case must depend upon its own facts. The kind of case in which the judge may feel that the jury need additional comment is where the defence case involved alleged facts which:

(1) are exculpatory and at variance with the prosecution evidence or additional to it;

(2) must, if true, be within the defendant’s knowledge; and

(3)    the defence is relying on some extra-judicial explanation which is neither supported by any document nor established by defence evidence.

3) Such comment should identify the issue to which the defendant’s election not to give evidence may be relevant, and the nature and strength of such comment must not be such as to contradict or nullify the essentials of the standard direction.

49. In HKSAR v. Leung Chi Wah Earnest and another (CACC 275/2007), the Court of Appeal elaborated on the issue of whether the prosecution case can be strengthened by the defendant’s election not to testify in court, as follows:

1) Even though the defendant does not testify in court, where he calls other witnesses or evidence and such evidence tends to support his defence, the court cannot regard the defendant’s absence from the witness box as a fact which strengthens the prosecution case. (paragraphs 102 to 108)

2) Similarly, where the defendant relies on inherent deficiencies in the prosecution case as his defence, and such prima facie deficiencies do exist at trial, the court cannot regard the absence of the defendant from the witness box as a fact which strengthens the prosecution case. (paragraphs 115 to 124)

3) The court cannot, on the basis that it has rejected evidence favourable to the defence, regard the defendant’s absence from the witness box as something which strengthens the prosecution case. Whether the defendant’s absence from the witness box can be regarded as strengthening the prosecution case is to be determined at the conclusion of both the prosecution and defence cases and does not depend on what evidence is eventually accepted by the court. (paragraphs 109 to 114)

50. Mr Wong, SC and Mr Chan for the Applicant submit that Judge Chan had erroneously applied the legal principles in Li Defan. Judge Chan ruled that the prosecution case was sufficient to establish the Applicant’s guilt because, it is submitted, the Applicant had not given evidence in her own defence and Judge Chan had refused to accept the exculpatory evidence given by the two defendants in their cautioned statements.

51. We need not discuss whether the principles laid down in Li Defan are applicable to the present case. This is because, in our view, in the circumstances of the case, there was sufficient basis for Judge Chan to reject the exculpatory evidence given by the Applicant and D2 in their cautioned statement as well as DW1’s evidence. Furthermore, the prosecution case contained no reasonable doubts, and the Applicant had elected not to give any explanation for matters within her knowledge, e.g. the source of funds with which she allegedly made payments for PW1 or the flow of the funds. In light of these, the evidence was sufficient so that, even without resorting to the principles in Li Defan, Judge Chan could have concluded that the Applicant was guilty and convicted her accordingly.

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Conclusion

54. For the above reasons, the application is dismissed.