HKSAR v. LEUNG WAI KEI RICKY

CACC 544/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 544 OF 2003

(ON APPEAL FROM DCCC 650 /2003)

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REASONS FOR JUDGMENT

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Beeson J (giving the Reasons for Judgment of the Court):

1. The Applicant was tried in the District Court before Judge Chua on 2 charges. He was acquitted of the first, which was Conspiracy to Defraud and convicted of the second, which was Conspiracy to Forge Documents, contrary to sections 71, 159A and 159C of the Crimes Ordinance, Cap. 200.

2. The Applicant was sentenced to 16 months imprisonment. He sought leave to appeal against conviction, having abandoned an appeal against sentence, by Notice filed 8 March 2004.

3. The application was heard on 5 May 2004, at which time we announced that we would give leave and, treating the hearing as the appeal, we allowed the appeal. After hearing submissions from counsel, we ordered a retrial. We advised that we would hand down our reasons later and now do so.

BACKGROUND FACTS

4. The facts alleged by the prosecution were set out clearly, in detail, by the prosecutor in opening the trial and that opening was relied on in these proceedings as setting out accurately the background to the alleged offences.

5. At the date of the alleged offences the Applicant was the sole representative of 3Com Asia Pacific Rim Ltd (3Com Asia), the Hong Kong subsidiary of a network product manufacturer (3Com Corporation) based in the USA. His co-defendant (D2) was a Sales Director of Roctec Technology Ltd, an authorised distributor of 3Com Asia's products, which could sell only to "resellers" and through them to authorised "end-users". Special discounts were given through this approved distribution arrangement.

6. Put simply, it was the prosecution's case that the Applicant and D2 forged a purchase order for 3Com Asia computer parts, falsely naming the end-user as City University of Hong Kong, supported by an invoice and a delivery order in the name of Roctec Technology Ltd.

7. The purpose of the fraud was to enable the Applicant and D2 to circumvent a prohibition imposed by 3Com Corporation on a company known as Cobra Computer Tech. Ltd (Cobra) because it believed Cobra might sell 3Com Corporation products, which it had obtained at the special discount rates, at higher prices in the "grey" market in Europe, in breach of the distribution arrangements put in place by 3Com Corporation. In the present matter, Cobra was in fact the end-user.

8. It was alleged that the Applicant and D2 devised the fictitious purchase to obtain goods at a special price, which would not have been available to Cobra, if Cobra had been known to 3Com Corporation as the true end-user.

GROUNDS OF APPEAL

9. The appeal was based on two grounds:

Ground (1) "The trial judge erred in law in asserting as good law that, in considering a charge of conspiracy alleging only two parties, if she found on the balance of probabilities that one party was acting on his own (i.e. without guilty knowledge in the other party), she would have to acquit that latter party of the conspiracy. The raising of a reasonable doubt would itself require an acquittal".

10. The relevant part of the judge's findings appears at para. 21 of her Reasons for Verdict (B43S - B44G):

"As the 2nd charge accuses the defendants of conspiring together to make the false documents "with the intention that D1 or another use them to induce somebody to accept them as genuine, and by reason of so accepting them, to do or not to do some act to his or another person's prejudice",

then, if I found either that:

(1) on the balance of probability, the evidence shows D2 was acting on his own to deceive D1 and 3Com; or

(2) D1, to cover his role in the SPQ applications, convinced D2 to produce the false documents only for internal filing purpose, and D2 did not realise this was to cover up for D1;

then the prosecution has failed to prove the charge beyond reasonable doubt."

11. Ground 2 stated:

"Given that the Trial Judge disbelieved the evidence of the then 2nd Defendant as to the circumstances in which certain e-mails came into existence and that the 2nd defendant's statement under caution was not evidence against the Applicant, there was no or insufficient evidence from which the Trial Judge could properly draw an inference against the Applicant on this important issue."

12. The basis of Ground 2 appears at paragraph 36 of the judge's Reasons for Verdict (B47T to B48H):

"Nevertheless, the evidence points overwhelmingly to the fact that D1 went to D2, both on 12 and 27 April, and D2 agreed to D1's plan to cover up for him. D2 spoke the truth to the ICAC (see p. 18 and answers 18 to 125 in the first interview):

"It was Ricky (D1) who asked me to help ... I asked other colleagues where City U's file was kept. Then I myself took a PO out to do cut and paste because Ricky had used the name of City U for getting the goods released from the company much earlier ... to apply for special discount. Later, as the goods flowed to the itinerary market of Europe, 3Com (USA) checked out that the goods were released through Ricky. That was why Ricky asked me to make a PO to cover up this matter. He altered the telephone, that telephone beginning with the number 6, in case the Americans went up there to check it, when they called that person the phone would be answered by his friend.""

["PO" here stands for Purchase Order]

CONSIDERATION OF GROUND 1

13. In support of Ground 1, Mr Oderberg, counsel for the Applicant, submitted that the judge had considered the appropriate test whether D2 had the requisite knowledge of the alleged forgery for the purposes of conspiracy, and said inter alia that the appropriate test as to doubt leading to acquittal is the balance of probabilities and, presumably, the judge had applied the same test to the Applicant, or at least believed that to be the appropriate test.

14. This being so, if the judge had a reasonable doubt about the case against the Applicant, she would have convicted if she believed that the case (in particular the requisite knowledge) had been established on the balance of probabilities. It was submitted that the judge's reasoning was erroneous and was fatal to the conviction.

15. Mr Shiu, for the Respondent, submitted that the portion of the judge's reasons complained of, which he accepted had been very poorly expressed, did not reflect any error of reasoning. He submitted that the judge appeared to be identifying the issues pertaining to the 2nd charge and, in particular, that the evidence might point circumstantially to one or other of the accused creating false documents; but was reminding herself that she should be alive to any lack of evidence inferring a conspiracy with the other to create the same false documents.

16. Further, he submitted, for a judge with lengthy experience, this could not have been an error as to the burden of proof. Mr Shiu pointed out that the judge's comments were made after she had reviewed much of the evidence and found a strong substantive case against the Applicant.

17. It is precisely because this is a judge with significant trial experience that this ground has caused us some concern.

18. We have not attempted to speculate about the precise meaning of the passage quoted. The balance of probabilities was plainly wrongly referred to in the context and, more worryingly, it may have been relied on. We are puzzled why the judge departed from the standard phraseology which would, if she had adopted it, have ensured that her Reasons for Verdict spelt out clearly what she meant. We have concluded, therefore, that the judge may have applied the wrong standard in assessing the burden of proof.

CONSIDERATION OF GROUND 2

19. The 2nd ground of appeal, at first sight, appeared more difficult for the Applicant to sustain. However, having considered the juxtaposition of the comments at the beginning of the paragraph and the judge's quotation of the passage taken from D2's Video Interview, we have concluded that, as there was no other evidence, the judge must have relied on the answer given by D2 when deciding that the guilt of the Applicant had been established.

20. The Applicant's counsel submitted that the judge appeared to have confused material which could be used for or against him with that which could not. The evidence given by D2 during his interview with the ICAC was evidence both for and against the Applicant, although in court D2 purported to exonerate him. The trial judge wholly disbelieved D2's oral evidence, but accepted his cautioned statement.

21. In the passage quoted, the judge referred to the approach she should take to the evidence and referred to the guilt of both the Applicant and D2. She cited answers from the cautioned Video Interview of D2 in which he implicated the Applicant, but failed to make it plain that she had not used those passages in support of the case against him.

22. Mr Oderberg submitted that there was a real likelihood that the judge had convicted the Applicant, at least in part, on the basis that she had accepted the parts of D2's cautioned statement which inculpated the Applicant. None of the material in the Video Interview of D2 could, as Counsel accepted, be used against the Applicant.

23. The Respondent contended that the passage complained of did not positively suggest that the judge had used the cautioned statement of D2 against the Applicant. It was also submitted that it was not imperative that the judge should state she had not used portions of the cautioned statement against the Applicant.

24. Mr Shiu submitted further that the judge's conclusion was based not on improper use of D2's cautioned statement but on the whole of the evidence. The extract, he suggested, was being used only to encapsulate her overall conclusion based on all the evidence.

25. Having considered counsels' arguments, we found ourselves unable to agree with Mr Shiu. The judge referred to and relied on the truth of D2's information about two visits he made to the Applicant on 12 and 27 April and his agreement to assist the Applicant by creating false documents to cover up the true identity of the end-user of the goods. There was no other source from which this evidence could have come as the judge had rejected D2's oral evidence.

CONCLUSION

26. Overall, we could not be satisfied that the judge had applied her mind correctly to the burden of proof, or that her use of D2's statement vis-à-vis the Applicant had been proper. We could see no reason to use the passage from D2's interview unless it was for the purpose, as the Applicant's counsel contended, of bolstering the case against the Applicant.

27. Although it is possible, in respect of Ground 1, that the judge may have expressed herself infelicitously by departing from tried and tested forms of words, such departure raised the very real prospect that she had applied the wrong test in convicting the Applicant.

28. The uncertainty as to whether the judge had applied the correct standard of proof, coupled with what can only be seen as an improper use of D2's Video Interview convinced us that this was not a safe conviction. Accordingly, we gave leave to appeal and, treating the hearing on the appeal, we allowed the appeal.

29. Having heard the arguments of Counsel, we ordered a retrial.