THE QUEEN v. LO PIK CHU

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JUDGMENT OF THE COURT

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Macdougall, J.A.:

1. Three co-defendants were convicted after trial before Judge Pang in the District Court on a charge of conspiracy to defraud. The applicant was D3 at trial and her brother-in-law and sister were D1 and D2 respectively. She how applies for leave to appeal against conviction.

2. The particulars of offence alleged that between September 1987 and July 1989 the three defendants conspired together to defraud Cathay Pacific Airways Ltd ("Cathay") by dishonestly representing to that company the invoices of Express delivery service Company ("Express") were genuine invoices stating the actual transportation charges incurred for transportation services to which they related and were the best possible prices for those services, when in fact the best possible prices had not been obtained because all transactions had been diverted through Express.

3. The case for the prosecution was that D1 had been employed by Cathay as a communication administrator since February 1984. Until his resignation in 1989 his duties included the placing of orders for the removal and relocation of communications equipment from and at various buildings and offices occupied by Cathay and its associated companies.

4. On 1 May 1984 Express was registered as a business name with D2 as the sole proprietor. At that time its address was stated to be the same as the residential address of D1 and D2. The address was later Changed to a post office box number in Kowloon City. By 1987 Express had become the only company to receive transportation orders placed by Dl's section at Cathay. Express, however, possessed no vehicles nor employed any labourers, and the actual carrying out of the transportation orders was performed by Wing Tat Company operated by a Mr. Chan.

5. The initial negotiation for Wing Tat's services were conducted by D1 and the applicant with Mr. Chan in a restaurant in Kowloon City. Mr. Chan testified that he met the applicant for the first time outside the restaurant the result of the telephone appointment which had been made by D1. The applicant led him inside and introduced him to D1 who produced his Cathay business card and stated that he was responsible for transportation at Cathay. She told Mr. Chan that she was working for Express and said that Express was carrying out transportation services for Cathay. She told him about the terms and conditions on which the services of his company would be required and proposed an hourly charge of $35 plus labour costs of around $100 daily. Mr Chan accepted this proposal. D1 then explained that as he was responsible for the transportation orders for Cathay he was present at the meeting to ensure that Mr. Chan was an honest person. Thenceforwards Wing Tat performed on almost a daily basis transportation services for Express involving the movement of communications equipment from one Cathay building to another. The instructions however came from D1 who would contact Mr. Chan of a morning through his paging device and give him details of the jobs he wanted done.

6. In due course Mr. Chan would prepare bills under Wing Tat's letterhead for the work performed and present them to D1 in person. This was usually done on a two weekly basis. D1 explained to Mr. Chan that he wanted it to be handled in this way because he was in frequent contact with the applicant and it would therefore be more convenient for him to pass the bills on to her.

7. However on at least one occasion Mr. Chan handed the bills to the applicant. This arrangement continued for almost two years, and throughout that time Mr. Chan received no instruction from Express. Indeed he was given neither its address nor its telephone number. All the work orders issued by Cathay to Express were certified by D1. Likewise he was the signatory for Cathay for the receipt of invoices froth Express.

8. There came a time when Mr. Chan complained to D1 that he was having difficulty making ends meet and that therefore the rates that had been agreed upon should be revised. Subsequently the applicant contacted Mr. Chan through his paging device and arranged a meeting with him. On this occasion, however, she attended not with D1 but with another man. Mr. Chan discussed his problem with the applicant, and it was as a result of this meeting that his charges were increased.

9. The evidence showed that there had been a consistent marking up of between 300 and 500 per cent by Express on Wing Tat's invoices and that no services had been provided by Express for Cathay. The applicant made a lengthy statement in question and answer form to an ICAC officer in the presence of her solicitor in which she denied that she had had anything to do with the management of Express and asserted that she had merely prepared the invoices for her sister D2 and was paid $600 monthly for her services. She admitted that she had attended the initial meeting with Mr. Chan, but said that she had done so at her sister's request because her sister had been too busy to attend personally. None of the defendants gave evidence.

10. The judge found Mr. Chan to be "a truthful, honest and generally accurate witness". He formed the view from a reading of the applicant's statement that she had been at great pains to dissociate herself from the management of Express and had been unable to say how the figures on the invoices issued by Express and Cathay were arrived at. He rejected her assertion of lack of involvement in the running of Express and found she was far more deeply involved than she was prepared to admit. He concluded that the defendants had agreed to defraud Cathay and had done so by operating Express as a vehicle by which inflated charges for transportation services purported to have been incurred by Express were rendered to and paid by Cathay.

11. Mr. Lok, who appeared on behalf of the applicant in this court but not in the court below, submitted that Mr. Chan's evidence did not implicate the applicant. He further submitted that although the judge was justified in finding that the applicant had been deliberately vague and circuitous in her response to questions by the ICAC officer, that she had been at great pains to dissociate herself from the management of Express and had displayed a remarkable ignorance of how the figures oh the invoices from Express were calculated, he was in error and had engaged in mere speculation in finding that she was involved in the running of Express to a much greater extent then she had admitted.

12. As a consequence of this alleged error the judge had wrongly concluded that there was sufficient evidence that the applicant had either inflated the prices on Express invoices or had known that they had been inflated.

13. We do not agree that the judge was in error. The company, as the judge properly found, was a mere shell and the persons concerned with its bogus operations were all closely related. It was the applicant who had both initially and at a much later stage discussed with Mr. Chan the rates that he should charge. Not only did she make the calculations on the invoices that were sent to Cathay in respect of the transportation services affected by Wing Tat - calculations which she must have known were gross inflations of the charges levied by Wing Tat - but when given the opportunity to explain to the ICAC how she had arrived at these calculations she resorted to manifest evasion and took refuge in totally unconvincing lapses of memory.

14. In our view the judge was entirely justified in finding that the applicant was a member of the conspiracy to defraud Cathay. The application for leave to appeal is therefore refused.

K.T. Fuad, V.-P.:

15. I merely wish to add that D2, LO Pik-lan, had also appealed against her conviction and sentence. We have a letter before us dated 1 July 1991 addressed to the Registrar from her husband, D1, informing us that his wife would not appear today as she was absent from Hong Kong. In his letter he added "you may treat her case as abandoned". Plainly we cannot treat this as an abandonment made by D2. However, since she was aware of the date of the hearing of her application and has chosen not to attend, we dismiss her application for want for prosecution.