R. v. FUNG HING WAH AND ANOTHER

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J U D G M E N T

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Silke V.-P.:

1. This is the judgment of the court.

2. Eight men appeared for trial before His Honour Judge Whaley on a charge sheet containing 22 charges. These were , variously, conspiracy to defraud contrary to common law and false accounting contrary to section 19 (1) (a) of the the Theft Ordinance, Cap. 210. we are now concerned only with the 1st defendant at trial, Fung Hing Wah, and the 2nd, Chow Sung Lung. Fung was convicted on two charges of conspiracy to defraud - Charges 1 and 2 - and Chow was also convicted of two charges of conspiracy to defraud - Charges 5 and 6. They were both sentenced to a fine of $500 on each of the charges. They now seek leave to appeal against only their conviction.

3. At the conclusion of the hearing we indicated that we would refuse these applications for leave to appeal and would hand down our reasons later. These are those reasons.

4. Charge 1 related to a conspiracy laid against Fung and D8 - Ng Chun Ping - and naming a person, Leung Yiu Nang, as a co-conspirator. The period of the conspiracy was between 1st May and 26th May 1989 and alleged that they conspired to defraud Wide Land Purchasing Centre Limited - "Wide Land" - by dishonestly inducing Wide Land to enter into a hire purchase agreement, No. 116067, with Fung in respect of a "General" AFX18 air conditioner. The false representation was that Fung would take and remain in possession of the air conditioner throughout the period stipulated in the hire purchase agreement.

5. The 2nd charge was also laid against Fung and D8 and also named Leung Yiu Nang as a co-conspirator. It related to the same dishonesty and false representation. The hire purchase agreement was No. 116068 in respect of a "Sharp" VC790 video cassette recorder.

6. The 5th charge was laid against Chow and D8 and again named Leung Yiu Nang as a co-conspirator. The same dishonesty and false representation was alleged and it concerned a hire purchase agreement No. 116167 for a "National" B21 BCH refrigerator.

7. The 6th charge was also laid against Chow and D8 and also named Leung as a co-conspirator. The same dishonesty and false representation was alleged and it related to a hire purchase agreement No. 116168 in respect of a "General" AFX18 air conditioner. The periods of the alleged conspiracies differ slightly but nothing turns on that.

8. At the conclusion of the Crown's case at trial false accounting charges relating to Fung and Chow, and other , were not proceeded with and they were acquitted. Neither of the applicants gave evidence or called any witnesses and the issue was, as the trial judge put it at page 31:

"whether the evidence produced by the Crown establishes beyond a reasonable doubt that the Defendants did. commit the offences charged."

9. The named co-conspirator, Leung Yiu Nang, had appeared on an original charge sheet as D9. Before the trial started we are informed, though it does not clearly appear from the transcript, that no evidence was offered in respect of him. The judge then made an order which we find a lit le difficult to understand for he "formally discharged witho t acquitting" Leung. At the conclusion of the trial Leung was properly acquitted. Nothing turns on this for Leung was not called by the Crown in the course of the trial itself but had he been then some difficulty might have arisen because of the nature of the order made at the outset.

10. There had also been named ,as D10 on an original charge sheet, Yang Wai Ching. No evidence had also been offered in respect of him and he was, and properly, acquitted which is the order which should have been made initially in relation to Leung.

11. Other defendants at trial, that is D5, D6, D7 and D8, all pleaded not guilty to conspiracy to defraud charges but guilty to false accounting charges. The conspiracy charges were not proceeded with. Of the other defendants, D3 and D4, D4 was found guilty on two charges of conspiracy to defraud but he has not filed any application in respect of thise convictions. D3, who was charged solely with a false accounting offence, was acquitted.

12. The applicants, who were government servants, required loans. They answered advertisements in newspapers which on the face of them did not concern loans but were obviously taken by them to indicate that loans were available. The advertisement was generally in terms of: ""electrical appliances on hire purchase, the interest is exceptional (sic) low", then "amount", a monthly renayment basis and a pager number.

13. Each called the paging number, each received a telephone call in return. Each were asked to go to the Yat Yuen Electrical Company in Tokawan. Each stated they wanted to borrow money, Fung mentioning the sum of $5,000. Each individually went to the electrical company. "Mr. Lee" was said to be the name of the man who had returned their telephone calls. The Mr. Lee was accepted as being Ng, D8. then each individually was at the electrical company they had explained to them the method of borrowing money. Each was told at some stage during these proceedings that they had to "pretend" to buy electrical appliances. This they accepted and they then went to Wide Land to arrange hire purchase. They each promised to pay the required instalment and each promised to retain the goods during the period of the hire purchase. They each gave their home address and an employee of Wide Land came to verify their particulars. Fung was asked if he wanted to buy two electrical appliances on hire purchase to which he replied that he did. He then contacted Yat Yuen and was told that he would be given his money only after he had signed a delivery note.

14. Each had, at the time they were visited by the employee of Wide Land, signed the relevant hire purchase agreements.

15. Chow said he was told by someone from Yat Yuen that his "loan application" had been approved and he was asked to go there to complete the arrangement.

16. Fung was given a delivery note which he signed. It indicted that the two appliances he was pretending to buy on hire purchase had been collected by him. He was then brought away from the company and given the sum of $5,400 in cash. He was told to deposit $950 each month into an account in the Kwangtung Provincial Bank on 11 occasions. That account was said to be that of the man from Yat Yuen. Fung in fact paid $2,490 to Wide Land but was unable to pay the remaining instalments. Wide Land attempted to repossess but, of course, the electrical goods were not in the possession of Fung and this came to nothing.

17. Chow, on going to Yat Yuen, was taken out to a bank and there the ;person who took him withdrew cash and gave Chow $4,135 out of the $5,000 he required. Chow was told that there would be a deduction from the $5,000 of $865 for a down payment to Yat Yuen. He then was brought back to Yat Yuen here he signed the relevant delivery note and was told that it t was to "pretend" that the goods had been delivered to him. Chow also repaid some of the instalments but was upable to pay others and again Wide Land attempted to repossess but without success.

18. A good deal of that which appears above was contained in their cautioned statements which they made to the police about one year after the event and which were admitted as an annexure to a statement of admitted facts. There was no contest as to voluntary nature of the statements or that they were a true record of the questions asked and the answers given. They both separately admitted that hey had signed the hire-purchase agreements.

19. In those cautioned statements they both indicated that they did not know that, as Fung said, it was "unlawful to pretend buying the electrical appliances on hire p urchase", or, as Chow put it, "I don't know that it was unlawful to borrow money in such a way".

20. The only witness called at trial was Mr. Chow Hing, the Deputy General Manager of Wide Land. He explained the workings of the hire purchase agreement; that he would pay Yat Yuen the full amount of the appliance bought; he would expect repayments from the buyer; if he had been aware that the buyer was not to either receive or to retain the goods during the period of the agreement then no agreement would have been entered into.

21. On the whole of the evidence the judge was entitled to find that there was dishonesty, and indeed Mr. Raffell, who appeared for the applicants both here and below, does not seriously seek to contend that that did not exist. The trial judge was also entitled, in our judgment, to find that there was a risk of economic loss to Wide Land sufficient to ground a conviction for conspiracy to defraud given that the necessary mens rea of those charged had been proved.

22. Mr. Raffell has suggested, in the grounds upon which he has made submission to us, that: (1) the trial failed to consider or to make any reference to the Ghosh test of dishonesty; (2) that he failed to consider undisputed matters in the evidence which would indicate that the appellants did not have the dishonest intent necessary to found a conviction for conspiracy to defraud; (3) that he wrongly treated deception as synonymous with fraud, or at the least appeared to do so; (4) that the trial judge wrongly placed or appeared to place a burden of proof upon the appellants to disprove the accuracy of their respective cautioned statements; (5) that the judge failed to warn himself on the dangers of convicting upon the cautioned statements; (6) that the trial of the appellants was an abuse of process; and (7) the general roll up ground that the convictions were unsafe and unsatisfactory.

23. To deal first with ground 6, that the trial was an abuse of process. It is Mr. Raffell's submission that where several defendants are on trial and some plead to the less serious counts, in this case the false accounting, and those pleas are accepted by the prosecution, then the Crown should proceed only with those less serious charges in respect of those defendants who plead not guilty. He suggests thats this is the normal practice and the only fair procedure in case where there is no distinction between defendants as far as culpability is concerned or, as in this case, where the fendants who were permitted to plead were more culpable than the appellants who pleaded not guilty. He further suggests that if this is not the normal practice then it should be

"because a guilty defendant will be prepared to plead to a less serious count in his own interest. Conversely an innocent defendant who pleads not guilty is at risk of conviction on the core serious count or counts. This is a situation of potential injustice which should be discouraged by this court."

24. Mr. Raffell was unable to produce any authority to establish what he suggests the "normal practice" to be. He made reference to two cases in the past year in which the course he suggests has in fact been taken. But Mr. Grossman, who appeared for the Crown in  this course - and that which he says, we might add, is also the experience of all members of this court - emphatically stressed that there is no such thing as the "normal practice" that Mr. Raffell seeks to show exists. It may on occasions, be a matter for comment that the more culpable man is permitted to plead and is then used as a Crown witness against his possibly less culpable co-offenders. But comment is as far as the matter can go. For this to happen is not, nor can it be, an abuse of process.

25. To turn to ground 1: it is true that the trial judge made no reference to the test in R. v. Ghosh [1982] 1 QB 1053. But in this case, where it had been admitted that the applicants knew this method of hiring to be a pretence in order to obtain loans we can see no necessity whatsoever for the judge to have directed hi mself on the lines of Ghosh. Such direction is not, in any event, required in all cases of conspiracy to defraud. It should be used only in those cases in which it has moment.

26. Taking grounds 2., 3 and 4 together: the cautioned statements of the two applicants quite clearly indicated   their dishonest compliance with the Yat Yuen people in affecting these hire purchase arrangements. The specified items in his ground 2, upon which Mr. Raffell relies as undisputed matters, do not in any way go to show a lack of dishonesty intent on the part of the applicants. It is correct, as we have indicated, that each said they did not know it was "unlawful" to borrow money in this fashion. But clearly to do so was to involve themselves fully in the agreement and, in the end result, to cause a real risk of economic loss to Wide Land. They must have been aware that if they could not pay all the instalments, and each was in financial difficulties, then Wide Land would immediately attempt to repossess the electrical goods to repossess electrical goods which they had never received though they had stated themselves to have done so.

27. There clearly was a deception practiced on Wide Land but the trial judge was in no way under the illusion that that deception was synonymous with fraud. It was part and parcel of the fraudulent agreement.

28. Mr. Raffell suggests that the trial judge in saying, when he rejected a somewhat similar submission made to him at trial, (p.36):

"In the absence of any suggestion by the Defendants themselves, either in their cautioned statements or otherwise in evidence, that their statements should not be accepted at face value or might be misleading or inaccurate for any reason, such statements should in my view be given due weight as reflecting what the Defendants did and their respective states of mind when they did so."

was placing a burden of proof on the applicants to disprove the accuracy of their statements. We do not agree. This was simply a statement of fact. There was no suggestion that the statements should not be accepted at face value or were misleading or inaccurate. The statements themselves were admitted without any reservation as to their evidential value.

29. In respect of ground 5: it, of course, was for the trial judge to place what weight he considered proper upon the statements. It is suggested by Mr. Raffell that, and this again was a submitted to the trial judge, the applicants were in possession of much greater knowledge of the machinations of Yat Yuen at the time when they made their statements some one year after the conspiracy ended than they were at the time they became part of the agreements. That may well be. But it in no way derogates from their factual exposition of that which they had done. It may be they were duped by the Yat Yuen personnel to enter into this agreement in order to obtain money for the benefit of Yat Yuen. However they knew full well the part they were playing in what did take place. Any difference in role relates to the sentences to be imposed upon them as opposed to their guilt.

30. The judge found that there was a conspiracy between each of the applicants and D8 and the person he referred to as Mr. X, who may or may not be Leung, to agree to defraud, in the manner indicated in the charges, the Wide Land Company. He was perfectly entitled to come to this conclusion.