HKSAR v. HO KUN WING

CACC 22/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 22 OF 2000

(ON APPEAL FROM DCCC 770/1999)

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J U D G M E N T

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Hon Mayo VP (giving the judgment of the Court):

1. The applicant was convicted after a trial in the District Court before H H Judge Wright of two counts of conspiracy to defraud.

2. Particulars of the charges read:

"1st Charge (against D1 & D2)

Particulars of Offence

WONG Kwok-keung and HO Kun-wing, on divers days between February 1996 and 1 August 1996, in Hong Kong, conspired together, to defraud Belimo Automation (Hong Kong) Limited ('BAL'), by dishonestly:-

(i) causing BAL to sell its goods to China Electronics Trading Company ('CETC'), Favour Tech Industrial Limited ('Favour Tech') and Preo Industries Far East Limited ('Preo') at substantially discounted prices which these companies are not entitled to,

(ii) concealing from BAL that CETC, Favour Tech and Preo had purchased the said goods for and on behalf of Belimo Company, a company which was wholly owned by WONG Kwok-keung, and

(iii) facilitating Belimo Company to sell the said goods to customers who were led to believe that they were purchasing the said goods from BAL."

"2nd Charge (against D1 & D2)

Particulars of Offence

(Similar to 1st charge save period
from 2 August 1996 to December 1997)"

3. He was sentenced to 9 months imprisonment on each charge to run concurrently with each other. He now seeks leave to appeal against his convictions and the sentences which were imposed. It should be noted that the two charges were the same conspiracy. The charges had to be framed as two separate conspiracies due to a change in law of conspiracy which took effect in August 1996.

4. As can be seen from the charges he was jointly charged with D1 (Mr Wong) in the trial below. Mr Wong was a longstanding friend of the applicant. He was also convicted of these conspiracies.

5. Mr Wong was an employee of Belimo Automation (Hong Kong) Limited ("BAL") which was in effect a subsidiary company of Belimo Automation AG a Swiss company which manufactures air-conditioning equipment. For the purposes of this application it is sufficient to state that Mr Wong was a director of BAL and was effectively the person in charge of the company in Hong Kong and his responsibility was to sell the company's equipment in Hong Kong. He had authority to sell the company's products at discounts which had been agreed for different classes of purchaser. However it was accepted that in exceptional cases Mr Wong could depart from the tariff which had been agreed.

6. It is common ground that Mr Wong approached the applicant for the arrangements which the prosecution contended made up the conspiracies charged.

7. The scheme was that Mr Wong would on behalf of BAL sell goods to the three companies referred to in the charge which the applicant had access to at heavily discounted prices which were not in conformity with the agreed tariff. The applicant would then cause these companies to sell the goods back to another company called Belimo Company which was owned and controlled by Mr Wong and in turn Belimo Company would then sell the goods to third parties at the agreed discount tariff. The difference between the heavily discounted prices and the price at the agreed discount tariff would then be shared between the applicant and Mr Wong. It will be appreciated from all of this that the loser in these transactions was BAL who lost the difference between these prices.

8. Mr Macrae SC for the applicant accepts that there was essentially no dispute that the companies used by the applicant as vehicles to purchase the heavily discounted goods had in fact done so and that this had been at the instigation of Mr Wong. Mr Wong had dictated the discount price and the price which the goods had been sold back to Belimo Company. Mr Macrae also submitted that the live issue at the trial had been whether the applicant had been a knowing party to the conspiracy alleged and whether by assuming the role he did he was dishonest.

9. The Judge summarised the evidence which was before him at some length. This consisted of the evidence of Mr Wong's superiors in the Swiss company, the officers of the Independent Commission Against Corruption ("ICAC") who had been dealing with this case and customers who had bought relevant goods. There was also evidence in the form of statements made by Mr Wong and the applicant.

10. The admissibility of the statements made by the applicant was contested. A statement was made by the applicant at his home when ICAC officers visited him. He was then invited to attend at ICAC Headquarters to assist with inquiries. It should be noted that the applicant was not at that time under arrest. At the ICAC Headquarters he took part in two videotaped interviews. It was only after the first interview had commenced that the applicant was cautioned in this way:

"013 A	And we arranged to interview you. The reason for interviewing you today, er, is the same as what I explained to you earlier. Yeah. It's because we, the ICAC, are looking into a complaint on corruption.
014 C	Huh-uh.
015 A	That is, a company called Belimo Automation (original in English).
016 C	Hm.
017 A	We have reason to believe that you are involved in, er, this complaint. That is, (you) may have offered some advantages to the staff member(s) of Belimo Automation (original in English) in return for, yeah, some cargo discounts on those, er, products of Belimo Automation (original in English), contrary to Section 9 of the Prevention of Bribery Ordinance. Er, I have some questions to ask you to clarify this matter. But when I ask you questions, er, before you answer any questions, I caution you first. That is, you are not obliged to say anything unless you wish to do so, but whatever you say will be videotaped and may be given in evidence. Do you understand?
018 C	(I) understand."

11. The Judge ruled that the statement made by applicant at his home was inadmissible but was satisfied that the two statements which were videotaped at ICAC Headquarters were admissible.

12. The first two grounds of appeal are concerned with these statements:

"1. The learned Judge exercised his discretion to exclude the Applicant's answers to questions by ICAC officers at his home on the grounds that they had been obtained 'unfairly' (p.21 Appeal Bundle). However, he ruled as admissible the Applicant's subsequent interviews at ICAC headquarters, finding that 'the situation changed radically once back at ICAC headquarters' (p.22 Appeal Bundle). The learned Judge erred in admitting the two interviews (Exh. P.329 at p.40 - 133 and Exh. P.330 at p.134 - 400 Appeal Bundle) for the following reasons, inter alia:

(i) the Applicant was misled as to the true purpose of his being taken to the ICAC headquarters;

(ii) although the Applicant was cautioned at the beginning of Exh. P.329 at p.44, he was merely told that the officers were 'looking into a complaint on corruption' in relation to Steven Wong in which they had reason to believe the Applicant was 'involved' and for which they were seeking his clarification (p.43 Appeal Bundle);

(iii) the reason for interviewing the Applicant was said to be 'the same as what I explained to you earlier' (p.43 Appeal Bundle) which was the very reason which founded the learned Judge's exclusion of the Applicant's earlier admissions;

(iv) the Applicant was subjected to unfair cross-examination, leading questions which went to the heart of the allegation of conspiracy, and interrogation which, in its effect, if not design, could only sap the Applicant's will.

2. Alternatively, the learned Judge failed to exclude Exh. P.329 and P.330 in the exercise of his discretion as having been obtained unfairly."

13. The main complaint which is made is that as a result of the conduct of the ICAC officers who were conducting the interviews the applicant was lulled into a sense of false security in making the admissions he did. One of the officers specifically admitted that the reason why the applicant had not been arrested and cautioned at the outset was that he feared that if this course was adopted the applicant might decline to make any statement.

14. What is clear from the reasons for verdict is that the Judge was fully mindful of this when considering how he would exercise his discretion.

15. At p. 12 and p. 13 of his reasons for verdict, he states:

"The position was very different, however, in regard to the Second Accused. He was only informed in the vaguest of terms as to the real purpose behind the visit. He was told to sit down and asked a wide-ranging series of questions far more in the form of a formal interview - even to the extent of having him sign the record of questions and answers and having it witnessed by another ICAC officer - than in the case of the First Accused. What is even more worrying is that even when it was decided to escort him back to ICAC headquarters he was only 'invited' to go there and was not arrested. I accept that this occurred ex post facto but it demonstrates the attitude prevailing when in his residence. Although even the Second Accused accepted that the answers were provided voluntarily, this matter highlights just how often it is a question of degree that will trigger the exercise of a Court's discretion. It is not up to me to discipline the ICAC officers concerned for this lapse: the simple fact is that the responses were obtained from the Second Accused unfairly. As a consequence they should not be admitted in evidence.

The situation changed radically once back at ICAC headquarters. Despite Miss Cheng's skilful argument, I was satisfied that there was not a knock-on effect resulting in the failure to caution in the flat tainting the subsequent interviews.

There were material conflicts between the evidence of PW21 and 22: examples are what was said immediately on entry into the Second Accused's residence; how the various documents retrieved from the residence had actually been located and where the various persons were at various stages; whether or not PW22 explained the notice to a person in custody to the Second Accused or simply presented him with it; whether PW21 had spoken in English to PW22 when he returned to the interview room after seeking his superior's instructions; and their respective impressions of the demeanour of the Second Accused. In this context I am able to do no better than reiterate the words of Macdougall, J.A,

'Simply because the judge thinks that some detail or details testified to by the relevant officer is or are inaccurate, it by no means follows that the statement must be rejected. It is only where the testimony of the officer or officers concerning these matters leads the judge to have a reasonable doubt that the statement was given voluntarily that they are of material significance.'

I am satisfied that on the most important issue of whether the Second Accused was induced to participate in the two interviews or pressured into providing answers they were truthful in their denials."

16. It would appear that the Judge was fully justified in the criticisms he makes of the officers in question.

17. These criticisms were directed at the devious approach adopted by the officers.

18. It will be appreciated that what was involved in this voir dire was the exercise of the Judge's residual discretion to exclude evidence which had been unfairly obtained. The principles governing this were considered by the House of Lords in R v Sang [1980] AC 402. The observations made by Lord Diplock at p. 436 are of particular assistance:

"My Lords, I propose to exclude, as the certified question does, detailed consideration of the role of the trial judge in relation to confessions and evidence obtained from the defendant after commission of the offence that is tantamount to a confession. It has a long history dating back to the days before the existence of a disciplined police force, when a prisoner on a charge of felony could not be represented by counsel and was not entitled to give evidence in his own defence either to deny that he had made the confession, which was generally oral, or to deny that its contents were true. The underlying rationale of this branch of the criminal law, though it may originally have been based upon ensuring the reliability of confessions is, in my view, now to be found in the maxim nemo debet prodere se ipsum, no one can be required to be his own betrayer or in its popular English mistranslation 'the right to silence.' That is why there is no discretion to exclude evidence discovered as the result of an illegal search but there is discretion to exclude evidence which the accused has been induced to produce voluntarily if the method of inducement was unfair.

Outside this limited field in which for historical reasons the function of the trial judge extended to imposing sanctions for improper conduct on the part of the prosecution before the commencement of the proceedings in inducing the accused by threats, favour or trickery to provide evidence against himself, your Lordships should, I think, make it clear that the function of the judge at a criminal trial as respects the admission of evidence is to ensure that the accused has a fair trial according to law. It is no part of a judge's function to exercise disciplinary powers over the police or prosecution as respects the way in which evidence to be used at the trial is obtained by them. If it was obtained illegally there will be a remedy in civil law; if it was obtained legally but in breach of the rules of conduct for the police, this is a matter for the appropriate disciplinary authority to deal with. What the judge at the trial is concerned with is not how the evidence sought to be adduced by the prosecution has been obtained, but with how it is used by the prosecution at the trial."

19. The essential question which has to be considered in this application is whether the Judge was right in his assessment of the position that when the applicant arrived at ICAC Headquarters the position dramatically changed. Mr Macrae submitted that it did not. He pointed out that the applicant only went into the interview room as a consequence of trickery on the part of PW21 and PW22 which caused the applicant to believe that he was not a suspect, simply a potential witness. That may have been so, but the critical question is whether, once the interview got under way the applicant had appreciated that the position had changed.

20. In our view the Judge was fully justified in coming to the conclusion he did that the applicant had appreciated that the situation at ICAC Headquarters was radically different from the situation obtaining when the applicant was interviewed at his residence. We have already referred to the way the applicant was cautioned. In addition, he had signed a form Exh. P.327 which set out in some detail his rights including his right to have legal representation. It would have been very clear to the applicant that he was a target of the on-going investigation.

21. The allegations of oppression are a separate matter. It is not satisfactory to consider the complaints in isolation. They have to be considered in the overall context of the interviews as a whole. In considering all of the material in this way it cannot be said that the interviews were conducted in such a way as to sap the will of the applicant.

22. Mr Macrae contended that the officers conducting the interviews had proceeded by asking searching questions many times of a leading nature. There is nothing wrong with that, provided that the questioning of the applicant did not become so oppressive and overbearing that he felt unable to refuse to answer the questions or to bring the interview to an end. The Judge who watched the videotapes was impressed with the confident way in which the applicant answered the questions which were put to him. He was satisfied that this was not a man whose will had been overborne.

23. The court is slow to interfere with the exercise of a Judge's discretion to admit evidence in a trial. He has had the advantage of seeing and hearing all the relevant witnesses as well as seeing the videotape of the applicant's interviews. As he states he was satisfied that the applicant made the statements at ICAC Headquarters voluntarily and we consider that this finding should not be impugned.

24. The main importance of the statements was that when the applicant gave evidence in the trial itself he was cross-examined at some length on inconsistencies between the evidence he gave and the contents of the statements. It is true that he did also make some damaging admissions which will be considered later.

25. The first two grounds of appeal cannot be sustained.

26. The third ground is that:

"3. In relation to the specific allegations set out in the charges (p.1 - 3 Appeal Bundle):

(i) the learned Judge accepted that the Applicant 'was not told of any particular discount applying to the transactions' and that 'he was told by the First Accused what products to order at what prices' (p. 30 Appeal Bundle);

(ii) there was no evidence that the Applicant had knowingly concealed any of the transactions from Belimo Automation (Hong Kong) Limited ('BAL') in circumstances where he was told by the First Accused and believed that the First Accused was a director of both companies (Exh. P.329 at p. 54 - 55 and p. 83 - 84 Appeal Bundle);

(iii) there was no basis to find that the Applicant had facilitated Belimo Company to sell the goods to customers or that the Applicant had knowingly misled such customers to purchase such goods or that such customers would not have bought such goods had they known that Belimo Company was not 'BAL' (p. 19 Appeal Bundle).

In the circumstances, there was insufficient evidence to prove the specific allegation in the charges."

27. Rather than dealing with each of these complaints in detail it is perhaps more constructive to attempt to analyse the evidence which was not seriously in dispute.

28. What did the applicant imagine was going on? Companies under his control were purchasing goods at a low price and then at the instigation of the seller of the goods being bought back at a significantly higher price. The proceeds arising from this were shared between himself and Mr Wong. It must have been obvious to the applicant that he was a participant in a dishonest scheme.

29. Mr Zervos in a very helpful skeleton has referred to extracts from the applicant's statements which establish beyond any doubt the applicant's dishonest intentions.

30. They are as follows:

"1. Ex. P330, entry 944 p.341 - He did not tell the directors of Favour Tech or Preo what he was doing, nor did he seek their permission to use the company names.

2. Ex. P330, entry 921 p.337 - He used these companies at the suggestion of the 1st Applicant who said that it was not convenient to use CETC all the time.

3. Ex. P330, entry 645 p.279 - He knew the whole thing was a sham and no one else was meant to know it.

4. Ex. P330, entry 519 p.247 - He admitted that the transactions were not normal and that he thought it strange that the 1st Applicant was selling goods to him in one guise and buying them back at an increased price in another.

5. He retained 10-15 percent of the money and gave the balance in cash to the 1st Applicant."

31. A further point was made by Mr Macrae relating to the particulars specified in the charges. He referred to the fact that the Judge was not satisfied that the first particular had been brought home against the applicant, and he pointed out that the Judge made no finding that the applicant was aware of the allegations contained in the third particular. This related to customers believing that they were purchasing goods from BAL when in fact they were purchasing from Belimo Company.

32. The applicant was charged jointly with Mr Wong. No doubt this was an aspect of the matter which was more the province of Mr Wong than it was the applicant's.

33. What is important is the agreement which is entered into between conspirators. It is not essential that every detail should be known to every conspirator, see R v Hancock [1996] 2 Cr. App. R 554.

34. Having regard to the evidence as a whole there can be no doubt whatever that the conspiracy embraced the matters referred to in all three particulars in the charges, and that even if the applicant had not knowingly participated in the conduct to which the first and third particulars related, it cannot be said that he had not knowingly participated in the second.

35. In the fourth ground it is contended that the applicant's conduct was not such as to meet the test for establishing dishonesty laid down in R v Ghosh [1982] 75 Cr. App. R. 154 and particulars are given.

36. It is necessary to consider this ground in conjunction with ground three. There can be no doubt having regard to the observations already made in this judgment that there was more than ample material to meet this test.

37. There is also no merit in either of these grounds.

38. The convictions were in no way unsafe or unsatisfactory and this application is dismissed.