HKSAR v. YEE WENJYE (also known as Yu Wenjie) (alias Eric Yee)

CACC 172/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 172 OF 2016

(ON APPEAL FROM HCCC NO. 83 OF 2014)

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J U D G M E N T

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1.  The 3^rd applicant seeks leave to appeal against his conviction on 29 April 2016, after trial by A Pang J and a jury, of two counts of conspiracy to defraud, contrary to Common Law and against the sentences of 5 years’ imprisonment, imposed on him by the judge on 6 June 2016. Also, the 3^rd applicant seeks the grant of bail pending the hearing of the applications/appeals.

Grounds of appeal against conviction

2.  For the 3^rd applicant, Mr Fitzgerald QC seeks leave to advance no fewer than 11 grounds of appeal, which are encompassed in 11 pages of those grounds.

Ground 1: the admissibility of the evidence of David Wiltshire

3.  By ground 1, it was submitted that the judge erred in admitting into evidence at trial parts of the deposition of David Wiltshire obtained in proceedings conducted in New Zealand in October 2013.  It was contended that she was culpable of multiple errors, namely:

(i)   in ruling, on 17 March 2015, that the deposition was admissible in respect of his evidence of the production of records and the records exhibited thereto; in so ruling, she misdirected herself as to the scope of sections 77F(1)(b) and 77(2) of the Evidence Ordinance, Cap. 8 and in finding that preconditions set out in the latter were met; and, she erred in finding that no unfairness would result to the 3^rd applicant from the admission of the evidence, notwithstanding that the 3^rd applicant had no opportunity to cross-examine the witness;

(ii)   in ruling, on 2 October 2015, the reasons for which she gave on 6 October 2015, that the remaining part of the deposition was admissible, having erred in finding that it was not reasonably practicable to secure the attendance of the witness at the trial; and in ruling that no unfairness would result to the 3^rd applicant, notwithstanding that the 3^rd applicant had no opportunity to cross-examine the witness.

4.  Mr Fitzgerald submitted that proof that it was not reasonably practicable to secure the attendance of the witness at trial was “...a key condition precedent”.[1]  If the witness was “persuadable”, then it was reasonably practicable to secure his attendance at the trial.  Of the opportunity to cross-examine David Wiltshire on behalf of the 3^rd applicant, Mr Fitzgerald said that the offer made by the prosecution to defray the expenses of the 3^rd applicant and/or his legal representatives of travel to and accommodation in New Zealand, after an initial refusal to do so, was made too late.  By then, Mr Douglas Kwok, counsel representing the 3^rd applicant, had another court commitment in Hong Kong.  Further, the earlier statement of Ms Draycott in the course of the Preliminary Inquiry in the magistracy[2], that the prosecution intended to apply to take the evidence of David Wiltshire in New Zealand was only to the effect that the evidence “might be used at trial.”  In any event, Mr Douglas Kwok was not present at that particular hearing.

Ground 2: ‘no case to answer’

5.  By ground 2(i), it was contended that the judge erred in rejecting a submission made on behalf of the 3^rd applicant that he had had no case to answer on both counts.  It was submitted that there was no evidence/reliable evidence that the 3^rd applicant had falsely represented or agreed to falsely represent that the gross profits of the dairy farms of the CraFarms Group, for the year ended 31 May 2009, was about HK$92,520,000, (Particular (d) of Counts 1 and 2) as stipulated in Appendix II of the Circular issued by 462 on 8 September 2009.  Shine Wing drafted Appendix II, which was approved by 462.  The 3^rd applicant played no part in making any representations to the Stock Exchange of Hong Kong (“SEHK”) or to 462.  There was no expert evidence as to what the gross profit should have been correctly stated to be.

6.  It was the evidence of Andy Wong, an accountant at Shine Wing, that not only had the 3^rd applicant disclosed that the information that he provided Shine Wing were based on assumptions but also he, Andy Wong, was satisfied that was a reasonable basis on which to proceed and that he had consented to that approach being taken.  It was submitted that grounds 6 and 9 were relevant to this ground.

7.  By ground 2(ii), it was submitted there was no evidence/reliable evidence that the 3^rd applicant had conspired to conceal or failed to disclose the true financial position of the dairy farms of the CraFarms Group.  On the contrary, Mr William Li and Ms Doris Yiu testified that they had seen the documents described trial as ‘Tab 11’ and had been made aware that the dairy farms of the CraFarms Group had made a loss in 2009.  It was submitted that grounds 4, 5 and 9 were relevant to this ground.

Ground 3

8.  By ground 3, it was submitted that the judge had failed to direct the jury properly as to the limited role that the 3^rd applicant played in preparing the profit and loss figures of the dairy farms of the CraFarms Group.  The judge failed to direct the jury that the 3^rd applicant had not made any representations to the SEHK or that he was familiar with their requirements as to the statement of historical accounts.

Grounds 4, 5 and 6

9.  By grounds 4 and 6 it was submitted that the judge had failed to direct the jury as to the significance of the evidence of William Wong, Doris Yiu and William Li.  The evidence of William Wong that the stipulation in the Circular requires a statement of the historical accounts and not accounts based on assumptions was contradicted by Andy Wong.  The significance of the evidence of Doris Yiu and William Li was that the 3^rd applicant had shown them the very documents (Tab 11) which the prosecution alleged he had concealed or failed to disclose.  By ground 5, it was submitted that the judge had failed to direct the jury of the significance of the absence in the prosecution case of expert evidence as to what the gross profits of the dairy farms of the CraFarms Group should have been stipulated to be.  In the absence of such evidence there was no basis to establish the allegation of falsity of the information provided by the 3^rd applicant to Shine Wing.

Ground 7

10.  By ground 7, it was submitted that the judge failed to leave to the jury the issue of whether or not there was a causative link between the publishing of the Announcement by 462 on 4 June 2009 and of the Circular on 8 September 2009 [Count 1, particular (f)] and the allegedly false representation as to the gross profits of the dairy farms of the CraFarms Group in the year ended 2009 and the concealment or failure to disclose its true financial position [Count 1, particulars (d) and (e)]; and, the approval by 462 and its shareholders of the agreement for the Acquisition and the issue and release of convertible notes and an optional bond by 462 and the allegedly false [Count 2, particulars (f) and (g)] and the allegedly false representation as to the gross profits of the dairy farms of the CraFarms Group in the year ended 2009 and the concealment or failure to disclose its true financial position [Count 2, particulars (d) and (e)].

11.  Also, it was submitted that the judge failed to direct the jury to consider whether the 3^rd applicant intended those consequences and, in doing so, to have regard to the evidence; namely, that he occupied no position in 462 and that he stood to gain nothing from the acquisition; and that the 3^rd applicant was not involved in the submission of documents to the SEHK, that was the role of Shine Wing with the approval of 462 and its directors.

Ground 8

12.  By ground 8, it was submitted that the judge had failed to direct the jury that they must consider whether the 3^rd applicant had the intent to cause the particular consequences averred in the two counts.

Ground 9

13.  By ground 9, it was submitted that the judge failed to give the jury a fair and balanced summing up.  It was contended that the failure included: Andy Wong’s testimony that the accounts need not reflect the historical position only but could include assumptions and reasonable adjustments; the absence of expert evidence as to the correct stipulation of gross profits; the significance of the evidence of William Li and Doris Yiu that they had been shown the documents contained in Tab 11 and were made aware that the dairy farms of the CraFarms Group had made a loss in the year ended 2009; and the significance the evidence of Carl Kwok that Shine Wing was in possession of a contact list of owners and staff of the dairy farms of the CraFarms Group.

Ground 10: ‘assumed’ accounts

14.  By ground 10, it was submitted that the judge failed to draw the attention of the jury to the exhibits[3] that supported the 3^rd applicant’s testimony that he intended that the accounts that he provided were ‘assumed’ accounts, compiled on assumptions that the dairy farms of the CraFarms Group were operated by UBAH.

Ground 11: good character direction

15.  By ground 11, it was submitted that the judge erred in refusing to give the jury a good character direction in respect of the 3^rd applicant.  Although the 3^rd applicant had been convicted of criminal offences in Singapore when he was 17 years and 11 months old, about 30 years earlier, given that no conviction was recorded and he was ordered to be the subject of a probation order on condition that he received psychiatric treatment, the judge ought to have treated the 3^rd applicant as a man of “effective good character”.  So, the judge had erred in the exercise of her discretion.  In any event, given that the criminal offence was not one of dishonesty, the judge ought to have given the jury a good character direction in respect of the 3^rd applicant’s credibility.

Grounds of appeal against sentence

16.  It was submitted on behalf of the 3^rd applicant that the sentence of 5 years’ imprisonment imposed on him for each of the two counts of which he was convicted was manifestly excessive, having regard to the fact that:

(i)   the allegations made against the 3^rd applicant were in respect of particulars (d) and (e) only of Counts 1 and 2;

(ii)   the 3^rd applicant performed a lesser role and acted under the influence of the 1^st and 2^nd defendants; and

(iii)   in contrast to the 1^st and 2^nd defendants, the 3^rd applicant made no profit out of the conspiracies.

17.  In those circumstances, the sentences of 5 years’ imprisonment imposed on the 3^rd applicant did not adequately distinguish him from the 1^st and 2^nd defendants, who were sentenced to 7 years and 9 months’ and 8 years and 3 months’ imprisonment respectively.

The respondent’s submissions

18.  For the respondent, Ms Draycott SC opposed the grant of leave to appeal on any of the grounds of appeal against conviction and against the grounds of appeal advanced in respect of sentence.  Further, she opposed the grant of bail pending appeal.

Ground 1

19.  In respect of ground 1, Ms Draycott contended that the 3^rd applicant had declined to attend the hearing at which the evidence leading to the deposition of David Wiltshire was taken, notwithstanding that the prosecution had offered to defray his expenses. She submitted that in the judge’s ruling of 17 March 2015, admitting documents produced by David Wiltshire that were business records and the related parts of the deposition, the judge relied on section 77F(1)(b) and section 77F(2)(c) and (d) only.  As the judge determined, there was no requirement to consider the “no unfairness” provision of section 77F(1)(d).  The judge also stated that she refused to exercise her discretion to exclude the otherwise admissible evidence.

20.  Ms Draycott invited the Court to note that, in her subsequent [4] reasons for ruling admissible the remaining part of David Wiltshire’s deposition, the judge determined that she was sure that it was not “reasonably practicable” to secure his attendance at the trial in Hong Kong and that she was satisfied that no unfairness was likely to occur to the defendants at trial.  Ms Draycott submitted that the judge was correct to do so.  Moreover, having regard to the fact that David Wiltshire had not been cross-examined on behalf of the 3^rd applicant, the judge said that she did not find it likely that unfairness would result to the 3^rd applicant.  In making that determination the judge said that, apart from a few references to the introduction of the 3^rd applicant to David Wiltshire and how information was given to the 3^rd applicant, that part of the deposition dealt with matters not touching on the 3^rd applicant.

21.  Of issue of the understanding of the 3^rd applicant and his counsel in respect of the use to be made of the evidence obtained in New Zealand, including evidence from David Wiltshire, and the fact that the 3^rd applicant did not attend nor was he represented in New Zealand at the hearing at which David Wiltshire gave evidence, Ms Draycott pointed to the fact that the judge noted that Ms Draycott had said in open court in the Magistracy on 9 January 2013 that the evidence would be available at trial.  Of the issue of the 3^rd applicant’s ability to understand the significance of that statement, Ms Draycott said that it was to be noted that the 3^rd applicant had given evidence in English at the trial.

22.  Of the financial circumstances of the 3^rd applicant, Ms Draycott invited the Court to note that by a letter dated 17 July 2013, more than two months prior to the time at which the evidence was taken in New Zealand, the respondent offered to make a reasonable contribution to the costs of the 3^rd applicant and his legal representative participating in those proceedings.  By a letter dated 12 September 2013, the respondent advised, inter-alia, the 3^rd applicant of the limits of their offer to defray the costs of travel and accommodation of the 3^rd applicant, his solicitor and counsel to attend the proceedings.

23.  Of the fact that counsel for the 3^rd applicant was appearing as junior counsel in the trial of the 1^st defendant’s wife at the time that the evidence was taken in New Zealand, Ms Draycott submitted that no attempt was made by him to be excused from attending the trial in Hong Kong.  In that context, she said it was to be noted that David Wiltshire’s evidence occupied two days only.

Ground 2: no case to answer

Ground 2(i)

24.  Whilst Ms Draycott accepted that Andy Wong had testified that it was permissible to make adjustments to historical figures in accounts, if that was done on a reasonable and appropriate basis, she pointed out that all the other witnesses called by the prosecution who testified on the issue had given evidence to the contrary,[5] namely that it was required that the figures presented in the accounts reflect what had actually happened in the accounting period.  William Wong and Cindy Ngai of the SEHK testified that they would not have permitted the publication of the Circular by 462 if they had known that the actual historic figures of the dairy farms of the CraFarms Group were not there reflected in Appendix II.

25.  Ms Draycott submitted that such conflict as there was in the evidence of Andy Wong and the other prosecution witnesses was a matter for the jury to resolve.  It did not mean that the 3^rd applicant had no case to answer.

26.  Finally, Ms Draycott submitted that the intention of the 3^rd applicant to defraud, the SEHK, 462 and its shareholders was to be inferred from the 3^rd applicant’s knowledge that the accounts which he provided would be used as the basis for the statements in Appendix II of the Circular, in particular having regard to the 3^rd applicant’s knowledge that the duties and the role of Shine Wing did not extend to checking the accuracy and reasonableness of the accounts which he provided.

Ground 2(ii)

27.  Ms Draycott acknowledged that the prosecution had opened its case on the basis that the 3^rd applicant had concealed the draft financial statements for 2009 for the 6 farm owning companies prepared by Mark King, Tab 11, from the members of the Shine Wing team in New Zealand.  She submitted that the evidence of William Li and Doris Yiu that they had seen Tab 11 was at odds with the evidence of the other members of the Shine Wing team and contrary to the contemporary emails between the 3^rd applicant and the 2^nd defendant and the 3^rd applicant and Kevin Cheng.   In any event, whether or not the junior members at Shine Wing had seen the figures was not determinative.  At issue was whether SEHK, 462 and its shareholders were deceived.

28.  Such conflict as there was in the evidence between Andy Wong, on the one hand, and the other prosecution witnesses, on the other hand, was a matter for the jury to resolve. It did not mean that the 3^rd applicant had no case to answer.

29.  Ms Draycott submitted that it was incorrect to say that Shine Wing drafted Appendix II of the Circular.  The 3^rd applicant knew that the figures that appeared in the accounts that he made would be used in Appendix II.  The judge did remind the jury that the 3^rd applicant testified that he had not done any work for Hong Kong listed companies before and did not know how to prepare a Circular or what the Listing Rules were.

Grounds 4, 5, 6 and 9

30.  Ms Draycott submitted that it was immaterial that Reid Panaho could not testify as to the reasonableness of the figures in Appendix II of the Circular. That was not an issue before the jury.  William Wong and Cindy Ngai testified that the SEHK required historical accounts.  Andy Wong was alone in testifying that adjustments could be made on a reasonable and appropriate basis to historical figures.  The aide memoire demonstrated that the 3^rd applicant had made changes to the accounts in response to bad news in the figures in the accounts, not as predictions of what could be achieved under different management.

31.  Ms Draycott submitted that the judge gave a fair and balanced summing up.  For example, she had directed them that, if they were not sure that the Tab 11 accounts had been hidden from the Shine Wing witnesses, to give the benefit of the doubt to the defendants in respect of the Particular which alleged “concealment of the true financial position of the target assets.” [6]  Also, she reminded the jury that the 3^rd applicant testified that the losses shown in the Tab 11 accounts were “no big deal and he had nothing to hide” [7] and that he testified that no one had told him that the accounts should contain historical figures only.[8]  Further, the judge said that the 3^rd applicant testified that he did not know the figures in his accounts were reflected in Appendix II.[9]

Grounds 7 and 8

32.  Ms Draycott said that the judge had directed the jury that they could only convict a defendant if they were sure that he intended to cause the consequences stated in the Particulars. In particular, the judge directed the jury that they must be sure that the particular defendant was a party to an agreement, which he intended to be carried out, and that:[10]

“ ....they had agreed to use dishonest means to bring about a state of affairs which they intended to, or realised might, cause the party or one of the parties named in the count, into acting, or failing to act ...”

33.  Of Count 2, the judge directed the jury:[11]

“ …if you go to subparagraphs (f) and (g) you would find ‘causing 462 and its existing shareholders to approve the agreement’ and ‘causing 462 to issue and release convertible notes and an optional bond for the payment of the acquisition’.

So these two were the results, the intended results, or the state of affairs which the conspiracy was aimed at according to the prosecution.”

34.  Ms Draycott submitted that the ingredient of intent in a conspiracy to defraud was satisfied if it was proved that the defendant foresaw the risk that someone will be deceived into acting contrary to their public duty.  It did not have to be proved that the outcome was his purpose.

Ground 10

35.  Ms Draycott contended that the judge had directed the jury’s attention to documents which tended to support the 3^rd applicant’s evidence that he intended the accounts that he prepared to reflect an assumed position, not an historical one.  The judge reminded the jury that in an email to Kevin Cheng, dated 11 June 2009 the 2^nd defendant, May Wang, said:[12]

“ I understood the Pro Forma is to Assume the businesses of those related Assets were trade under UBNZ AH in the past, and if it is assumed then the previous financials are not relevant.” [13]

36.  Further, in an email from the 2^nd defendant to Barry Ip of Shine Wing, dated 2 July 2009, May Wang asserted:[14]

“ The previous accounts you have before 08 represents the older management and operation structures. The March 2009 accounts represent the current and future operations and structures and business models. It would be more relevant to the future business operation. And the target is only started in June 2009. All the accounts are assumed if they were in UBNZAHL.” [15]

37.  Finally, the judge reminded the jury of what the 3^rd applicant had asserted as to the proposed future business model in an email to Kevin Cheng dated 30 June 2009:[16]

“ As confirmed with UBNZ director May WONG and JingHui director Jack CHEN.

Livestock will not form a regular trading/income generation activities for the UBNZ farming Group.

To UBNZ and JingHui these cattle livestock are merely serve as milk producing machine like any other machine in any factory floor.” [17]

Ground 11

38.  Ms Draycott submitted that the judge was entitled to decline to give the jury a good character direction in respect of the 3^rd applicant.  There was no positive evidence about the 3^rd applicant’s character.  The summing up was fair and balanced.

Sentence

39.  In inviting the Court to refuse the application for leave to appeal against sentence, Ms Draycott submitted that the sentence of 5 years’ imprisonment imposed on the 3^rd applicant was appropriate.  The 3^rd applicant played an active and essential role in the conspiracies.  He had been recruited to and paid for falsifying the accounts, which lay at the core of the dishonesty.  Very substantial monies had been put at risk by the conspiracies.

A consideration of the submissions

40.  At the conclusion of the hearing on 24 March 2017 I refused the application for the grant of bail pending appeal.  Although, for the reasons that appear subsequently, I was satisfied that there were some reasonably arguable grounds of appeal against conviction, I was not satisfied that the 3^rd applicant’s prospects of success in the appeal was such as merited the grant of bail pending appeal.

The New Zealand deposition of David Wiltshire

41.  It is to be noted, as Mr Fitzgerald pointed out in his written submissions, having regard to Practice Direction 4.2 ‘Criminal Appeals to the Court of Appeal,’ that the 1^st and 2^nd defendants are able to advance their grounds of appeal without the requirement that they require leave from the single judge.  Of relevance to that fact, is that by ground 5 it is submitted on behalf of the 1^st defendant that the judge erred in admitting into the trial “depositions (with documentary evidence, which had been taken in New Zealand)”.  Similarly, by ground 10, it is submitted on behalf of the 2^nd applicant that the judge “…erred in exercising her discretion in admitting the depositions of Frank Sing, Nick Cross, Barry Fraser and David Wiltshire.”

42.  In determining to admit the deposition of David Wiltshire taken in New Zealand in 2013 the judge proceeded cautiously, giving three separate rulings over a period of six months.

43.  First, on 17 March 2015, she did so in a ruling which addressed the objections of all three applicants in respect of the evidence of a total of five witnesses who had given evidence and made depositions in New Zealand.  In respect of David Wiltshire, she ruled admissible the documents he adduced, as being the business records of the CraFarms Group, together with the part of his deposition which dealt with the production of those documents.  Stating that she was not sure, on the evidence then before her, that it was not reasonably practicable to secure David Wiltshire’s attendance in Hong Kong she declined to admit the other parts of his deposition.  Secondly, in a ruling that she gave on 11 August 2015, she ruled inadmissible that part of his deposition in which David Wiltshire testified as to the correctness of the figures appearing in the Circular together with his testimony as to the abilities in English of the 1^st defendant. Again, not being sure that it was not reasonably practicable to secure David Wiltshire’s attendance in Hong Kong, she declined to admit the remaining part of his deposition.  Thirdly, in a ruling she gave on 2 October 2015, the reasons for which she delivered on 6 October 2015, having determined now that it was not reasonably practicable to secure David Wiltshire’s attendance in Hong Kong and being satisfied that no unfairness was likely to occur, notwithstanding that David Wiltshire was not cross-examined by or on behalf of the 3^rd applicant, the judge admitted the remaining part of David Wiltshire’s deposition.

Ruling: 17 March 2015

44.  As the judge noted in her ruling of 17 March 2015, the request for mutual legal assistance in respect of evidence to be taken from David Wiltshire was made of the New Zealand authorities by the Department of Justice on 31 January 2013.[18]  That was during the Preliminary Inquiry proceedings in the Magistracy which, having begun in January 2013, resulted in the three applicants being committed for trial by the magistrate on 13 February 2014.  As the judge noted, the 3^rd applicant’s counsel, Mr Douglas Kwok, was not present during all of the Preliminary Inquiry hearing, although the judge said that in his absence Mr Khosa, who appeared for a 4^th defendant who was discharged by the magistrate, “…would be holding papers for Mr Kwok”.[19]

45.  The judge noted that the 1^st and 2^nd defendants were represented in the proceedings in New Zealand by the late Mr Alexander King SC and Mr Graham Harris SC respectively, but that neither the 3^rd applicant nor the 4^th defendant attended nor were represented at those proceedings.[20]  Finally, she said that when the prosecution sought to place the evidence obtained in New Zealand before the Preliminary Inquiry, the magistrate ruled it inadmissible.  Nevertheless, the magistrate committed the three applicants for trial in the Court of First Instance but discharged the 4^th defendant.[21]

46.  Under the rubric “Purpose of the New Zealand Hearing”, the judge rejected the submission that the 1^st and 2^nd defendants had never understood that the evidence obtained in New Zealand might be used in the trial, rather than only in the Preliminary Inquiry.  She did so in light of Mr Harris’s concession to the contrary and having watched an audio/video recording of proceedings in New Zealand in which Mr King, representing the 1^st defendant, asked that the camera be directed at the face of the witness “for the purposes of the jury in Hong Kong”.[22]

47.  Of the assertion made by Mr Khosa on behalf of the 3^rd applicant that his former counsel Mr Douglas Kwok understood that the New Zealand hearing was for use in the Preliminary Inquiry only, the judge said:[23]

“ When asked whether he intended to adduce evidence to support this claim, Mr Khosa submitted that the burden was on the prosecution. In the end, other than relying on the letters in the core bundle [24] (‘the Letters’) to which I shall return, no evidence was placed before me by Mr Khosa regarding the claim he made in court.”[Italics added.]

48.  The judge noted that Ms Draycott had drawn her attention to a statement that she had made in the Preliminary Inquiry on 9 January 2013.  Having told the magistrate that David Wiltshire had informed the prosecution overnight “…that he does not wish to come to Hong Kong to give evidence because he’s starting a new business and cannot spend the time”, Ms Draycott had said that she proposed to obtain a letter of request to obtain his evidence and that of two other witnesses in New Zealand.  The judge noted that Ms Draycott went on to say:[25]

“ … it will form part of these proceedings and, if successful, the evidence so collected would be available for the trial in the same form and there wouldn’t have to be a second trip.” [Italics added.]

49.  The judge went on to note that in the Preliminary Inquiry proceedings on 22 February 2013, in the context of the prosecution informing the magistrate of the steps being taken to take evidence in New Zealand, Ms Draycott informed the magistrate that [26]:

“ The only other stipulation I’ve made is that I want the proceedings to be video recorded in order that a video can be played to the jury in due course should we succeed in these proceedings.” [Italics added.]

50.  No doubt, Ms Draycott’s reference to her stipulation in that regard was to paragraph 32 of the Fourth Supplemental Request for Mutual Legal Assistance, in which it was requested that the evidence, inter-alia, of David Wiltshire “be recorded under video or audio and reduced to writing”.  There is no dispute that the proceedings were video/audio recorded and, in the event, played to the jury in the trial.

51.  It is clear that on 9 January 2013, Mr Douglas Kwok was not present at the Preliminary Inquiry.  On that occasion, after Ms Draycott had stated that she proposed to obtain a letter of request to obtain the evidence, inter-alia, of David Wiltshire in New Zealand, the following interchange ensued between Mr Khosa and the magistrate:

“ COURT: ... Mr Kwok is not here but perhaps I will hear Mr Khosa, if you have anything to say?

MR KHOSA:  although I hold papers for Mr Kwok, I don’t think I can talk on his behalf to developments that just happened this morning.”

52.  By contrast, it is clear that Mr Kwok was present at the Preliminary Inquiry on 22 February 2013, because almost immediately after Ms Draycott informed the magistrate that she had stipulated that she wished to have the proceedings video recorded “in order that a video can be played to the jury in due course”, the transcript reflects the fact that Mr Kwok intervened and addressed the magistrate on the ancillary suggestion made by Ms Draycott that a video link be provided, if that would be of assistance to the defence.  Quite obviously, as was to be expected, Mr Kwok had been attentive to what Ms Draycott had to say to the magistrate.

53.  In the absence of any evidence from the defence on the issue, the judge said:[27]

“ Plainly, without any direct evidence from Mr Kwok as to what his understanding actually was, all that I could do is to glean from the transcript and the Letters as to the likely position at the time.”

54.  Of Ms Draycott’s submission that she had informed the parties in open court of the use to which the evidence given in New Zealand was to be put, the judge said:[28]

“No doubt, as recorded in the transcript, Ms Draycott had made known the prosecution’s intention that the New Zealand evidence so obtained might be used for the trial proper in the same form.”

55.  Having already said that the letters to and from the 3^rd applicant and his representatives and the Department of Justice were “…of some concern”, in respect of the statements of Ms Draycott as to the use of the evidence obtained in New Zealand in the trial, the judge said:[29]

“ However, one would expect the prosecution, in order to make things even clearer, to reiterate this in writing, especially when advising the accused whether his presence would or would not be required at the New Zealand hearing. Nothing to that effect was said in the letter of 17 July 2013.”

56.  The letter of 17 July 2013 from the Department of Justice to the 3^rd applicant’s solicitors informed them that the taking of evidence in New Zealand was to take place for 10 days commencing on 30 September 2013 and, as the judge noted, advised the recipients that:[30]

“ … your client is entitled, but is not required, to be present at the hearing for the taking of evidence in New Zealand…”

57.  It is to be noted, that the letter also contained an offer by the Department of Justice of a “… to consider making a reasonable amount of contribution to economy class airfares and accommodation expenses reasonably incurred”, if the 3^rd applicant availed himself of his right to be present and/or legally represented at the hearing in New Zealand.

58.  In the course of submissions, the judge had been taken to the transcript of proceedings in the Preliminary Inquiry on 1 August 2013 in which the magistrate’s attention was drawn to the letter of 17 July 2013, in which context Ms Draycott said of the 3^rd applicant:[31]

“ …but it’s absolutely clear that his funds are limited and for that reason we have made the offer that we would give consideration to providing reasonable expenses should he make such an application. That offer was made on 17 July, 14 days ago, and we asked that the application be made as soon as practicable. We haven’t even heard from him. It will very soon become too late, too late to arrange something, but we have made the offer.”

59.  The judge was informed [32] that by a letter dated 13 August 2013, the Department of Justice reminded the 3^rd applicant’s solicitors of the dates fixed for the hearing in New Zealand and their offer to contribute to the travelling and accommodation expenses to be incurred if the 3^rd applicant and/or his legal representatives wished to participate in the hearing, noting:

“ The request should have been made by the end of July. Until now, we have not heard from your client. Should your client wishes (sic) to be entertained, please make the request within 14 days of this letter.”

60.  Then, the judge went on to note that the 3^rd applicant’s letter in person to the Department of Justice, dated 27 August 2013, set out the approaches that he had made to the Duty Lawyer Service and the Legal Aid Department “about getting assistance for the New Zealand trip.”  However, as the judge noted, the 3^rd applicant said that he had been told:[33]

“ …the Duty Lawyer Service did not extend to cover committal proceedings in New Zealand while the latter said that legal aid would only be available if a trial date had been set down in a Hong Kong court and as the New Zealand hearing was a PI in the committal proceedings, not a trial, no assistance could be offered.”

61.  In the letter dated 27 August 2013, the 3^rd applicant asserted that the prosecution’s offer to defray expenses of travel to and accommodation in New Zealand was “limited to consider financial assistance to myself ”.  He said that justice required that he be represented in New Zealand by a solicitor and a barrister.  He contended “…but that would incur significant legal costs unaffordable by me.  Next the travel, accommodation, communication and working costs of these legal counsels representing me.”

62.  In the result, the 3^rd applicant said “…a rough estimation of this financial contribution I would seeking (sic) approximate to NZ$50,000 equivalent to at least HK$300,000 or more.”  Having stated that he had been paid a limited salary of $40,000 only by 462 in the financial year 2012/2013, he said that he had debts to the Inland Revenue Department and to his credit card company.  In consequence, he claimed “… thus my monetary leverage resources were curtailed to none.  Hence, my present financial position could not afford‑mentioned potential legal/travel expense to pay in advance by myself, and such incurred expenses to be claimed and reimbursed from DOJ a month later.”  Finally, he asked for money to be remitted in advance to his solicitors “…only for above specific disbursement”.

63.  The judge’s attention was drawn to the Department of Justice’s letter in reply [34], dated 5 September 2013, which clarified that the offer to make a contribution to the costs of airfares and accommodation extended not only to the 3^rd applicant, but also to his solicitor and counsel.  However, the 3^rd applicant’s requests, that the Department of Justice contribute to the expenses of engaging New Zealand lawyers and that monies advanced in anticipation of prospective expenses, were refused.

64.  Of that letter, the judge said:[35]

“ …one would expect the prosecution to remind the 3^rd Accused once more that the New Zealand evidence was not only for the purpose of the PI, but might also be used for the trial proper so that the 3^rd Accused might liaise further with the Legal Aid Department. Nothing like that happened.”

65.  In letters to the 3^rd applicant’s solicitors, dated 12 and 24 September 2013, the Department of Justice repeated their offer to contribute to the expenses of the 3^rd applicant attending and/or being represented at the proceedings in New Zealand.  In the latter letter, they sought a response from those representing the 3^rd applicant by 26 September 2013.  By letter of that date, the 3^rd applicant’s then solicitors informed the Department of Justice:

“ Having fully advised our client in regard to the New Zealand Hearing including but not limited to his legal rights and all the legal consequences of not attending the said hearing, we have instructions from our client that our firm would not send any legal representatives (including both solicitor and counsel) to attend the New Zealand Hearing.”

66.  Notwithstanding her earlier determination, that Ms Draycott had made known the prosecution’s intention that “…the New Zealand evidence so obtained might be used for the trial proper in the same form”, the judge said:[36]

“As the matters now stand and in the absence of any concrete evidence to the contrary, I am prepared to accept that the 3^rd Accused might not have understood clearly that the New Zealand evidence might also be used for the trial proper when he made up his mind not to attend the hearing either by himself or by his legal representative.” [Italics added.]

67.  In the context of a consideration of the admissibility of documents produced, inter-alia, by David Wiltshire the judge determined that section 77F was to be construed in the following way:[37]

“section 77F(1)(b): if the documents exhibited deal with business records only, then insofar as the conditions specified in section 77F(2)(c) are satisfied, the deposition and the documents shall be admitted. There is no further requirement about there being ‘no unfairness’;

section 77F (4): if the deposition itself contains matter other than averments made in respect of the ‘record type’ documents exhibited thereto, then such other matter is subject to the ‘no unfairness’ requirement under section 77F(1)(d).”

68.  Earlier, the judge had set out the provisions of section 77F(1)(d):

“in the case of any other deposition, the court is satisfied that any document (if any) exhibited or annexed thereto is the original thereof, or a copy thereof made by any photographic process, and that, having regard to the following matters-

(i) whether it is reasonably practicable to secure the attendance of the deponent, taking into account for that purpose his bodily or mental condition or the delay or expense likely to be caused in securing his attendance;

(ii) whether the deponent was cross-examined before such court or tribunal; and

(iii) any other matter which, in the circumstances, appears to the court to be relevant,

no unfairness is likely to occur in those criminal proceedings consequent upon the deposition and any document (if any) exhibited or annexed thereto being admitted in evidence under this section.” [Italics added.]

The judge’s determinations

69.  Of the issue of determining whether or not it was not reasonably practicable to secure the attendance of the witness, the judge said “…the prosecution have to make me sure about it, although ‘reasonably practicable’ does not mean doing everything possible.” [38]

70.  In the result, the judge determined that the documents produced in the evidence of David Wiltshire were “…the business records of the CraFarms Group.” [39]  Of her reasoning in reaching that conclusion, the judge said:[40]

“ …I have examined the parts of Wiltshire’s evidence which dealt with his responsibility in the Group which comprised 22 farms at the time when Wiltshire left the Group, in particular, that he was the ‘finance and administration manager’ of the Group.[41] I have also taken into account the parts which set out how the information was collected from the individual farms or from Fonterra; how he himself received the information and then consolidated it; how the individual farms, and Wiltshire in turn, were under a duty to supply such information to the Group’s accountant for accounting purposes; how Fonterra was under a duty to supply/compile the number of ‘milk solids’ for settlement of payments to the individual farms, etc.[42] ”

71.  The judge went on to determine:[43]

“ Nor do I accept that there is only sketchy evidence as to how these documents have met the statutory conditions specified in section 77F(2)(c).

Given the nature of the information, the fact that it was originally supplied by the individual farms or by Fonterra, the lapse of time and all the relevant circumstances, I am also satisfied that those persons involved cannot reasonably be expected to have any recollection of the matters dealt with in the information.

As outlined above, if the documents exhibited are of the ‘record type’, then the court is not required to consider the ‘no unfairness’ requirement specified in section 77F(1)(d).  In other words, once the documents satisfy the conditions, they are admissible.”

Exclusion of the otherwise admissible evidence in the exercise of the judge’s discretion

72.  Of Mr Khosa’s submission for the 3^rd applicant that, nevertheless, the judge should rule inadmissible otherwise admissible evidence in the exercise of her discretion to ensure a fair trial, the judge noted that the request for mutual legal assistance specified the ambit of the  evidence to be obtained from David Wiltshir,e who had:[44]

“ …confirmed that in the 10 months to 31 March 2009, the farms suffered a loss of around NZ$31.5 million. Wiltshire also confirmed that the material presented to YEE by KING and himself reflected the true financial position of the farms.” ^[45]

73.  The judge went on to note that, in appendices attached to the request for mutual legal assistance, there was:[46]

“ …a list of the questions proposed to be asked of Wiltshire and a list of the documents sought to be produced by Wiltshire were respectively provided.”

74.  It is to be noted that many of the questions stipulated in the appendix were to be addressed to David Wiltshire in respect of his contact with the 3^rd applicant, in particular in respect of “Financial Information supplied to YEE”.  He was to be asked:

“ 89. Did he supply any financial information of CraFarms to King… and other persons? If positive, please elaborate the details of each occasion.

90. Did the information he provided to Yee or anyone else represent the genuine financial position of CraFarms?”

75.  Then, questions were to be posed in respect of “Comparison of Financial Information”, under which rubric it was proposed that he be shown the Circular of 462, dated 8 September 2009, and that he be asked:

“ 91. How was the restated financial information different from the financial information you provide to YEE earlier on?

92. Did the restated financial information reflect the true financial position of the CraFarms?

93. How was the financial information he supplied YEE different from the financial information published in the circular…on 8 September 2009?

95. Did the financial information published in circular reflect the true financial position of CraFarms?”

76.  Of that, the judge said:[47]

“ In other words, it was clear to the parties what the prosecution sought to do with Wiltshire. Now, given that the 3^rd Accused had opted for the PI, it would have been his intention to test whether there was a prima facie case against him. If so, and even accepting that the 3^rd Accused might not have been fully aware that the New Zealand hearing might also be used for the trial proper, one would have thought that the 3^rd Accused would seek to cross-examine Wiltshire (despite the suggested shortage of funds) if Wiltshire’s evidence is contentious and important to the extent which Mr Khosa now submits before me.” [Italics added.]

77.  The judge went on to note that David Wiltshire had testified that the financial information that he had provided to Mark King, the CraFarms group accountant, was accurate.[48]  Also, she observed that in cross-examination by Mr Kwok of Mark King in the Preliminary Inquiry it had never been suggested to him that the information he received from David Wiltshire was defective and thereby the accounts that he in turn provided to the 3^rd applicant were inaccurate.  Rather, the judge observed “…the main thrust of Mr Kwok’s cross-examination was that the 3^rd Accused was preparing the accounts on the basis of asset acquisition, not business acquisition.” [49]  Also, the judge noted that it had never been suggested to Mark King that “the 3^rd accused was merely presenting ‘corrected accounts’ since the figures supplied were inaccurate.”

78.  In the result, having noted that the business records produced by David Wiltshire were admissible as being compliant with the provisions of section77F and having regard to all the circumstances, the judge said:[50]

“ ...I have come to the view that I should not exercise the discretion in the 3^rd Accused’s favour to exclude the ‘record type’ documents and that part of Wiltshire’s deposition which dealt with such production.” [Italics added.[51]]

The other parts of David Wiltshire’s deposition

79.  Having reviewed some of the evidence relevant to the issue of David Wiltshire’s unwillingness to come to Hong Kong to testify, the judge noted that in an e-mail to Mr Leung, an ICAC officer, dated 18 February 2015, David Wiltshire had explained his negative response to the request of the officer, by telephone on 21 January 2015, that he come to Hong Kong to testify and that, if he did so, a subsistence allowance and cost of the airline tickets would be paid to him:[52]

“ I have considered your request and given it further thought following your recent phone call to me and do not think I can assist you any further.

I cannot afford to be away from my business at this time of the year as it is the busiest time and totally governed by spring seasonal conditions for crop planting.

I am also not prepared to come all that way to sit in a basic Hotel to wait for you to need me as I have limited funds and would not be able to enjoy the opportunity of visiting Hong Kong.

…

I trust you understand and can move forward without my further input. I, of course would like to see them brought to justice and will help if I can, so if you have any other suggestions I would consider them with an open mind.” [Italics added.]

80.  Having regard to the last sentence of the e-mail, the judge said that the impression given was “…that the matter had not been concluded”.[53]  It was in those circumstances that she determined that she could not be sure that it was not reasonably practicable to secure David Wiltshire’s attendance in Hong Kong.  In the result, she determined to “refuse to admit that part of Wiltshire’s deposition and any documents exhibited thereto which have nothing to do with the production of records.” [54]

Ruling: 11 August 2015

81.  On 11 August 2015, having received submissions earlier, on the application of all 3 defendants at trial, the judge ruled inadmissible that part of his deposition in which David Wiltshire testified in respect of the issue of the correctness of the figures appearing in the Circular, together with his testimony as to the abilities in English of the 1^st defendant.  On the other hand, the judge refused the prosecution’s renewed application to admit into evidence the remaining part of David Wiltshire’s deposition on the basis that it was clear now that it was not reasonably practicable to secure the attendance of David Wiltshire at the prospective trial.  In support of their submission, the prosecution put before the judge an e-mail dated 24 July 2015 by ICAC officer Leung to David Wiltshire in which he responded to the suggestion by David Wiltshire in the e-mail to that officer, dated 18 February 2015, in which whilst he had declined to come to Hong Kong to give evidence he had concluded by saying “…if you have any other suggestions I would consider them with an open mind.”  In context, given the fact that the prosecution had offered to pay his airfare, accommodation and a subsistence allowance, that appears to have been an implied suggestion by David Wiltshire that he be recompensed for his loss of income whilst he was away from New Zealand.

82.  ICAC officer Leung said in the e-mail “…we have no other suggestions to make” and asked for a final decision as to whether or not David Wiltshire was prepared to come to Hong Kong.  The officer said that he had made two telephone calls unsuccessfully to contact David Wiltshire on 24 and 27 July 2015.  Although he had left a message, no response would have been forthcoming.

83.  In those circumstances, given the relatively short period during which no response had been forthcoming from David Wiltshire, the judge said “I cannot be sure that it is not reasonably practicable to secure Wiltshire’s attendance in Hong Kong.” [55]

Reasons for Ruling: 6 October 2015

84.  On 6 October 2015, the judge gave her reasons for ruling on 2 October 2015 allowing the prosecution’s further renewed application to admit the remaining part of the deposition of David Wiltshire.  The judge ruled that “…the remaining part of Wiltshire’s deposition and the related documents exhibited thereto are admissible.” [56] At the hearing, the judge received an Investigation Diary of ICAC officer Leung, in which he described, inter-alia, having spoken by telephone on 24 August 2015 to David Wiltshire who had confirmed having received the e-mail of 24 July 2015.  Of David Wiltshire’s final decision as to whether or not he was prepared to travel to Hong Kong to give evidence at the trial, officer Leung noted that David Wiltshire “confirmed that he was unable to travel to Hong Kong to give evidence and he stated that the reasons had already been given to us in his last e-mail.”  Clearly, there was a reference to David Wiltshire’s e-mail of 18 February 2015.

85.  In her ruling, the judge noted that Mr Fitzgerald submitted that “the prosecution had not done enough to try persuading Wiltshire to come and testify in Hong Kong.”  Of that submission, the judge said:[57]

“ ...it was said by the defence on an earlier occasion that ‘financial inconvenience is not the same as impossibility’ and that it is for the DoJ ‘to alleviate any financial loss to the witness’ ” [58].

86.  Of that submission, the judge noted that in her ruling of 17 March 2015 she had already determined “…that the test is not whether it is ‘possible’ to secure the attendance of the witness ‘at all costs’, but whether it is reasonably practicable to do so having regard to a number of factors, including the delay and expense likely to be caused.” [59]  In her ruling of 17 March 2015 the judge noted that section 77F required the Court to have regard, inter-alia, to “the delay or expense likely to be caused in securing his attendance.” [60]

87.  Of her determination that it was not reasonably practicable to secure David Wiltshire’s attendance at the trial in Hong Kong, the judge said that she:[61]

“ …considered the efforts taken by the prosecution to secure his attendance; the offer made regarding the provision of flight tickets, hotel accommodation and subsistence allowance; Wiltshire’s replies (including the one dated 18 February 2015 in which he stated that he could not afford to be away from his business at this time of the year as it is the busiest time for crop planting) and his latest confirmation made on 24 August 2015 that he would not be able to travel to Hong Kong for the reasons already given...”

88.  Having noted that David Wiltshire had explained his refusal in January 2013 to come to Hong Kong to give evidence as arising from the need to attend to his business in New Zealand the judge said:[62]

“ Moreover, during the New Zealand hearing, the prosecution had also to interpose Wiltshire in view of his difficulties concerning court attendance and Wiltshire himself had raised his concern with the court about the time he spent in giving evidence [63]. More recently, as recorded above, Wiltshire had reiterated his difficulties in coming to testify in Hong Kong in his email dated 18 February 2015 and had reconfirmed his position on 24 August 2015.

Clearly, at the forefront of Wiltshire’s mind is the inability to attend to his farm business if he has to testify in Hong Kong.  This is his prime concern and this is what prevents him from coming to Hong Kong…”

89.  It is to be noted that at the end of examination-in-chief in the New Zealand hearing the following exchange ensued between Ms Draycott and David Wiltshire:[64]

“ Q. Would you be willing to come to Hong Kong to give evidence?

A. I don’t know. I suppose, I know it sounds quite mercenary but I’ve lost a lot out of all of this, ever (since?) this Crafar(m) went down. It’s cost me nearly my farm or my family. If people want to pay for me to be there I’d come but I can’t just do it for nothing, and sorry.

Q. Well they’d certainly pay your expenses.

A.   Well yeah, but it’s my time isn’t it. I’m going to lose three days now and I’m just a single businessman now I need to be where I’m earning my keep for my family and it’s just purely reality not mercenary at all.”

90.  Then, as required by the provisions of section 77F(1)(d)(i), (ii) and (iii) together with section 77F(4), the judge had regard to the issue of whether or not unfairness was likely to occur if that evidence was admitted in the trial.  In determining that no unfairness was likely to occur to the defendants by the admission of the evidence at trial, the judge said that she had regard to: the fact of and ambit of the cross-examination of David Wiltshire by the 1^st and 2^nd defendants; that in his evidence-in-chief he had said that he might not attend the trial in Hong Kong; and that “Wiltshire’s evidence is not of the be-all and end-all type.”

91.  It is to be noted that in her ruling of 17 March 2015, the judge said that Mr Khosa had asserted the 3^rd applicant’s case was that “…the accounting records were not accurate and the profits were understated.”  Further, he had submitted that, given that the 3^rd applicant had not attended the proceedings in New Zealand and had not cross-examined David Wiltshire “…there is bound to be unfairness if the deposition and the accounting records are admitted.” [65]

92.  Having acknowledged that David Wiltshire had not been cross‑examined on behalf of the 3^rd applicant, in determining that no unfairness was likely to occur to the 3^rd applicant, the judge said:[66]

“ … this part of Wiltshire’s deposition dealt with matters not touching upon the 3^rd Accused (apart from a few references as to how the 3^rd Accused was introduced to Wiltshire and how information was given to the 3^rd Accused)”.

93.  With respect to the judge, David Wiltshire’s evidence went beyond the matters to which she referred.  First, he testified as to the accuracy of the information of deferred payments due from Fonterra to CraFarms stipulated in an e-mail, dated 15 June 2009,[67] from Mark King to the 3^rd applicant and himself.  David Wiltshire said that it had come from Fonterra and from his own office, concluding “I’m sure it will be correct.” [68]  Secondly, in respect of the accuracy of the figures included in the draft Statement of Financial Performance attached to the e-mail, dated 24 June 2009, sent by Mark King to the 3^rd applicant and himself, David Wiltshire answered in the affirmative the question as to whether or not they accurately represented the financial performance of the various farms in the years 2007, 2008 and 2009.  In that context, he said “I would have gone through these and given them a good cursory check, but probably not a detailed check because of the relationship I had with Mark over previous years”.[69]  Thirdly, David Wiltshire was referred to the emails of 24 June 2009 from Mark King to the 3^rd applicant and copied to David Wiltshire attached to which were financial statements of the various farms.[70]  Again, he said that those accounts of Mark King accounts were accurate to the best of his knowledge.[71]

94.  At the hearing, Ms Draycott acknowledged that the accounts prepared by Mark King and sent to the 3^rd applicant and David Wiltshire were not part of the business records produced in the evidence of David Wiltshire.  Rather, they were the business records of Mark King and Strettons.  She said that those records had been produced by Mark King in his evidence in Hong Kong in the Preliminary Inquiry prior to the evidence taken from David Wiltshire in New Zealand.

95.  As noted earlier, in her ruling of 17 March 2015, in her consideration of whether or not to exercise her discretion to exclude otherwise admissible evidence, the judge said that she had regard to the cross-examination of Mark King by Mr Kwok on behalf of the 3^rd applicant in the Preliminary Inquiry.  She noted that it had been suggested to Mark King that “he would not know the accuracy of the information provided by Wiltshire”.  Mark King said that it was “fair to say” that his accounts were unverified by him.[72]  He received the raw data from David Wiltshire in electronic form and processed it.[73]

96.  On the other hand, the judge was correct to say that it had never been suggested to Mark King by Mr Kwok in cross-examination that the information that he had received from David Wiltshire was “defective”, as a result of which the accounts he presented to the 3^rd applicant were “inaccurate”.  Similarly, the judge was entitled to find that the “main thrust” of his cross-examination was that the 3^rd applicant was preparing accounts on the basis of an “asset acquisition” rather than a “business acquisition.”  In context, it is to be noted that the judge went on to acknowledge that there was no obligation on the defence to put its case at the Preliminary Inquiry.[74]

97.  No doubt, when the judge said in her reasons for her ruling, dated 6 October 2015, that she had regard to “all the relevant circumstances”, those were matters to which she had regard.

98.  One of the matters relevant to a consideration of “all the relevant circumstances” was the contention on behalf of the 3^rd applicant that one of the reasons that he had not attended the taking of the deposition from David Wiltshire in New Zealand was that he did not have the monies available to incur the expenses of travel and accommodation for himself and his lawyers, albeit that subsequently he was to be reimbursed, nor did he have the monies to pay lawyers for those services.  That was the first matter canvassed by Mr Khosa in his submissions to the judge which led to the ruling of 17 March 2015:[75]

“ My Lady, I will now deal with D3’s absence from the proceedings in New Zealand. Before I proceed, my instructions from D3 very clearly are that part of the consideration he had of course was financial considerations, he couldn’t afford the trip. And I will come to that in a bit more detail in a moment. [Italics added.]

But the other part was the advice given by his counsel at that time that these were merely committal proceedings, even if he didn’t go, there would be a second opportunity to cross-examine those New Zealand witnesses because the prosecution has to bring them back at the trial.” 

99.  Subsequently, Mr Khosa addressed the judge at some length in respect of the correspondence which supported the contemporaneous assertions made by the 3^rd applicant that he was unable to raise the monies to participate in the proceedings in New Zealand at which David Wiltshire’s deposition was taken.  As noted earlier, the judge described those assertions as the “suggested shortage of funds”, although nevertheless she went on to say that “one would have thought that the 3^rd accused would seek to cross‑examine Wiltshire … if Wiltshire’s evidence is contentious.”  Perhaps, although the judge did not state it to be the case, the fact that she used the term “suggested” is to be explained by the fact that there was no dispute that the 3^rd applicant had been represented privately on a number of the hearing dates in the preliminary inquiry both before and after the taking of evidence from David Wiltshire in New Zealand. 

100.  Although it was one of the two reasons advanced to explain the 3^rd applicant’s failure to participate in those proceedings in New Zealand, the judge did not deal with the matter any further.  One of the unresolved issues was the need to raise what the 3^rd applicant contended was $300,000 to be represented in the New Zealand proceedings, before there was any question of reimbursement to him by the Department of Justice of the element of travel to and accommodation costs in New Zealand.

Conclusion

101.  I am not satisfied that it is reasonably arguable that the judge erred in admitting into evidence the documents produced by David Wiltshire as business records.  Similarly, I am not satisfied that it is reasonably arguable the judge erred in determining that it was not reasonably practical to secure the attendance of David Wiltshire at the trial in Hong Kong.  However, given her determination that the 3^rd applicant’s non-participation in the evidence-taking proceedings in New Zealand was to be viewed against the fact that he “…might not have understood clearly that the New Zealand evidence might be used for the trial proper”, together with the unresolved issue of the alleged impecuniosity of the 3^rd applicant, it seems to me that it is reasonably arguable that the judge erred in admitting the deposition of David Wiltshire other than that limited to the production of his business records as exhibits.

Ground 3

102.  In reminding the jury of the 3^rd applicant’s case, the judge directed the jury of his evidence in respect of the information provided in Appendix II of the Circular:[76]

“ As for the figures in appendix 2 and the notes there, Eric said he did not write those and nobody asked him to even read those. He said he had not done any work for Hong Kong listed companies before and did not know how to prepare a circular or what the Listing Rules were. At the time when the draft circular was being circulated Eric said he did not know that his figures were contained at appendix 2 because they were presented in a different format and were in Hong Kong dollars.”

103.  Earlier, the judge had reminded the jury of the evidence of Kevin Cheng of his role working with the 3^rd applicant:[77]

“ For appendix 2, Kevin said he was the one who drafted part 1 of that appendix and the figures were for the past financial performance of the target assets. In preparing the appendix he mainly had discussions with Eric. However, as Shine Wing was only to perform a limited procedure, Shine Wing would not be able to assure the accuracy of the figures. As to the suggestion that appendix 2 could present figures assuming that the target assets were run by UBAH in a different mode, Kevin said that was not his understanding. However, as he was not involved in the final stage when the circular was published, he could not say whether the figures now appearing in appendix 2 were pure historical figures or with adjustments.”

104.  Later, the judge said:[78]

“ As to the use to be put to Eric’s figures, Kevin told you that from the very beginning Eric knew that the figures would be put into the circular. If there were questions from the stock exchange which Kevin could not answer he would ask Eric. But Kevin accepted it might be the case that Eric was not familiar with the Listing Rules and the stock exchange requirements.”

105.  Of Ms Cindy Ngai’s evidence, the judge said:[79]

“ Lastly, the prosecution called Cindy Ngai of the stock exchange. Cindy was the officer directly dealing with the acquisition of 462 and the publication of the announcement and the circular. She said there were altogether nine drafts of the circular before it was published and such a number was more than the normal case. When asked about the pre-vetting process Cindy agreed that professionals like 462’s lawyers, accountants and 462’s company secretary were involved.

In respect of the financial information, the stock exchange presumed that such had been read by 462 and by the reporting accountant.”

Conclusion

106.  I am not satisfied that reasonably arguable grounds of appeal have been advanced that the judge had failed to make clear to the jury the 3^rd applicant’s case as to the lack of role he played in the inclusion of the figures in Appendix II of the Circular in contrast to the role of Shine Wing.

Ground 10

107.  By ground 10, complaint was made that the judge failed “…to put fairly to the jury the contemporaneous documentary evidence that the accounts provided by D3 were intended by him to be assumed accounts based on the assumption that the target assets were owned and operated by UBAH.”  Specific documentary exhibits were identified in the ground of appeal.[80]

108.  In her summing up the judge did refer to most of the stipulated documentary exhibits in respect of which complaint was made.  Exhibit D3‑6 was the description given to an email dated 11June 2009 between Kevin Cheng, of Shine Wing, and May Wang, the 2^nd defendant.  Of the relevance of the email, the judge said “D 3-6 is where you can find the reference, the previous financials are not relevant.”

109.  The judge reminded the jury of May Wang’s assertion in the email:[81]

“ I understood the Pro Forma is to Assume the businesses of those related Assets were trade under UBNZ AH in the past, and if it is assumed then the previous financials are not relevant.”

110.  Subsequently, the judge reminded the jury of the 3^rd applicant’s evidence in respect of the email:[82]

“ According to Eric, this saying about the previous financials not being relevant and that the accounts were assumed accorded entirely with what his understanding was about the UBAH accounts that he had to prepare. Eric reiterated that although the accounts he prepared did not have invoices and the like to support those, he prepared the accounts in good faith and he considered the adjustments to be fair and reasonable.”

111.  Of the relevance of Exhibit D3-9, an email exchange dated 2 July 2009 between the 2^nd defendant and Barry Ip, the judge said:[83]

“ Now, while we are on this topic of the previous financials not being relevant, let us also look at D3-9. … There May Wang told Barry:

‘The previous accounts you have before 08 represents the older management and operation structures.  The March 2009 accounts represent the current and future operations and structures and business models.  It would be more relevant to the future business operation. And the target is only started in June 2009.  All the accounts are assumed if they were in UBNZAHL.’ ”

112.  The judge went on to remind the jury that in response in the email Barry Ip had stated:[84]

“ Noted, maybe we need to state the note in the circular to state the fact as mentioned by you.”

113.  Of Barry Ip’s evidence, the judge said:[85]

“ ...Barry Ip - said from the beginning till the end in his email he was talking about management accounts and management accounts were historical figures.

He said, therefore, it could not be the case that the accounts from June 2008 to May 2009 were based on assumptions.  That was why Barry, he said, he himself had put down in the email that if they were going to make assumptions then ShineWing would put a note.”

114.  The judge did remind the jury of the relevance of the e-mail described at trial as Tab 63, dated 30 June 2009 from the 3^rd applicant to Kevin Cheng.  The judge said that the 3^rd applicant had asserted:[86]

“ As confirmed with UBNZ director May Wong and Jin Hui director, Jack Chen, livestock will not form a regular trading/income generation activities within the UBNZ farming group.

To the UBNZ and JingHui these cattle livestock are merely serve as milk producing machine alike any other machine in any factory floor.”

115.  Having reminded the jury of the suggestions made by the prosecution in respect of the email, the judge went on to remind them of the relevance of the evidence of Andy Wong as to the permissibility of adjustments to the accounts:[87]

“ Now when deciding whether to accept or reject this prosecution suggestion, you may perhaps wish to consider that when Andy gave evidence he told you that the adjustments to the accounts should be the results of discussion between the management of UBAH and that of 462.”

116.  The judge did remind the jury of the relevance of the e-mail exchange (Tab 96) between the 3^rd applicant and Andy Wong on 11 August 2009 in respect of Appendix II of the Circular.  The 3^rd applicant had asserted “As discuss in regard to question (1) there are various factors underpinning the 2009 results the main contributor is efficiency and change of management focus.”  The judge reminded the jury that the 3^rd applicant stated:[88]

“ The UBNZ is more production focused, emphasis on present production, consolidation and expense, rational controls.”

117.  Also, she reminded the jury that Andy Wong had responded:

“ Dear May and Eric,

Many thanks for your advice.  Question 1 is fine for me.”

118.  Of the relevance of that evidence, the judge reminded the jury:[89]

“ ...Andy accepted that it was reasonable to assume that there would be savings under the new management and he thought - he thought - he was aware of the adjustments made at the time.”

119.  In reminding the jury of the 3^rd applicant’s evidence, the judge adverted to the e-mail (Tab 97) from the 3^rd applicant to Kevin Cheng, dated 12 August 2009.  The subject of the email was described as “re question 1-details”.  Of the 3^rd applicant’s evidence, the judge said:[90]

“ ...Eric said at the time May reminded him of the 7 million kilograms milk solid production saying that the farmland she bought was quality Fonterra farmland and with the improvement on the milk sheds, etc, the productivity should be closer to the national average. Eric said he had examined the figures and found it reasonable to make adjustments to bring the overall production from 6.7 million kilograms to 7 million kilograms as it was still below the national average. He therefore made the adjustments at tab 91. In the end, in reply to question 1 at tab 97 which we have looked at previously, Eric listed out the items which he said contributed to the increase in the milk solid production.”

120.  The judge did not refer to the exhibit at Tab 66 B, namely an e‑mail, dated 2 July 2009, from the 3^rd applicant to Sandra Lau and copied to Kevin Cheng nor did she refer to the e-mail and its attachments, dated 7 July 2009, from the 3^rd applicant to Kevin Cheng, referred to as Exhibit D3-4.  However, is to be noted that no reference was made to the latter exhibit in the closing speech of Mr Khosa for the 3^rd applicant. On the other hand, Mr Khosa did make reference to the e-mail dated 2 July 2009 at Tab 66B.  Although, at the end of the summing up, Mr Khosa did raise some matters arising from the judge’s summing up, which were concerned with the Tab 11 accounts, not surprisingly he did not mention the email dated 2 July 2009 at Tab 66B. In the result, the judge re‑emphasised the 3^rd applicant’s case:[91]

“ In respect of particular (d), it is said that Eric’s accounts were projected accounts based on the UBAH operation model and were never meant to represent any profit of the target assets.”

121.  In response to concerns expressed by Mr Fitzgerald, then for the 1^st defendant, of the 1^st defendant’s case, namely that May Wang’s mindset at the time was “that the figures were to be assumed” and after her attention have been drawn specifically to Exhibits D3-6 and D3-9 the judge provided the jury with further directions:[92]

“ In respect of particular (d), it is her case that her mind‑set about the accounts being assumed accounts and that the previous financials were not relevant were made known to ShineWing and to those concerned openly at the very beginning: D3-6; and it was repeated, D3-9.

More importantly, it is said that Barry, and in fact not any person from ShineWing, had (not) pointed out to her that her approach was incorrect or unacceptable, but instead Barry gave the reply at D3-9 that ‘Noted’, ‘Maybe we need to state a note in the circular to state the fact as mentioned by you.’ ”

Conclusion

122.  In all the circumstances, I am not satisfied that reasonably arguable grounds of appeal have been advanced in this Court in support of ground 10.

Other grounds of appeal against conviction

123.  Albeit with hesitation in respect of ground 11, I am satisfied that reasonablyarguable grounds have been advanced in support of the remaining grounds of appeal against conviction.

Conclusion

124.  In the result, I refuse the 3^rd applicant’s leave to appeal against conviction in respect of grounds 3, 10 and ground 1, save in respect of ground 1 on the limited basis set out earlier in this decision.

The application for leave to appeal against sentence

125.  Having noted that both the 1^st and 2^nd defendants had benefited from the monies raised from the acquisition of the farms and having determined that each of them played a leading role in the criminal scheme, the judge stipulated starting point for sentence of 8 years and 3 months’ imprisonment for them in respect of counts 1 and 2 on the indictment.

126.  Of the benefit accruing to the 1^st defendant, the judge said:[93]

“ …out of the money raised for the acquisition, about NZ $10 million was used to purchase two New Zealand properties which were then put under the name of the 1^st accused company, and that at least another some of HK $73.7 was paid into the bank account controlled by the 1^st accused.”

127.  Of the benefit accruing to the 2^nd defendant, the judge said:[94]

“ …significant amounts in the region of tens and hundreds of millions of Hong Kong dollars out of the sale proceeds of CNA and CNB were paid into the 2^nd accused’s UB companies and to the 2^nd accused.”

128.  Of the roles of the 1^st and 2^nd defendants, the judge said:[95]

“ The 1^st and 2^nd accused’s role…must have been that of the prime movers.”

129.  Of the role of the 1^st defendant, the judge said:[96]

“ For instance, the 1^st accused was the one who approached PW1 in the 1^st place. He was also the one who is active, and succeeded, in introducing or getting quite a number of investors for the acquisition. Further, it was not disputed that even after his resignation from 462, the 1^st accused was the one who asked PW1 to cease occupying the position of 462’s chairman and finding PW3 to replace her.”

130.  The judge went on to determine of the 1^st defendant:

“ Overall, given the 1^st accused conduct throughout the period concerned, it is appropriate to describe him as the mastermind of the conspiracies. He was there from the beginning till the very end overseeing how things developed and arranging for actions to be taken in order to have their criminal plan coming into fruition.”

131.  Of the role of the 2^nd defendant, the judge said:[97]

“ …she too was a prime mover of the conspiracies. She was the one who asked Barry Fraser to sign the confidentiality agreement with the CraFarms, and she was the one who then sign the commission sharing agreement with the 1^st accused and Barry Fraser. She was also the one who signed to purchase the CraFarms just a few days before 462’s acquisition.

At trial, it was not disputed that the 2^nd accused was the one actively participating in the roadshow, no doubt intending to get as many investors as possible for the acquisition, and no doubt with the purpose that there would be money for them to pocket.

In addition, the financial information of the CraFarms assets was either provided to 462 by the 2^nd accused direct, although the 3^rd accused who, it was again not disputed, was, on the face of things, the agent acting on the 2^nd accused behalf.”

132.  In the result, the judge concluded of the 2^nd defendant’s role that she was:[98]

“ …together with the 1^st accused at the centre of the conspiracies and she played a pivotal role in carrying out their criminal plan.”

133.  Of the seriousness of the offences of conspiracy to defraud, the judge said that the aim of the 1^st and 2^nd defendants was “to take advantage of the well-developed stock-market of Hong Kong” and to take advantage of 462’s status as a listed company to raise a significant amount of money through the criminal plan.  Such conduct “…is one which should be deterred” given that it “…may well destroy the confidence of potential investors and that of the general public in our stock-market.” [99]

134.  Having afforded the 1^st defendant a discount of 6 months from that taken for the starting point for sentence for his positive good character, arising out of his charitable contributions, the judge sentenced the 1^st defendant to 7 years and 9 months’ imprisonment.  There being no such mitigating factor in respect of the 2^nd defendant, the judge sentenced her to 8 years and 3 months’ imprisonment.  In addition, in respect of the 1^st defendant only, the judge stipulated a starting point for sentence of 6 years’ imprisonment in respect of Count 3. He ordered that sentence to be served concurrently with the other sentences of imprisonment.

135.  Of the role of the 3^rd applicant, the judge said:[100]

“ … He was involved in the CraFarm accounts. Whether the jury convicted him because of the concealment of the true financial information, or on the basis of the provision of accounts, his role was relatively speaking, not as major as that of the 1^st and 2^nd accused. Not only did he come into picture at later stage, the degree of his involvement not as extensive as that of the 1^st and the 2^nd accused.

However, having said this, I have to point out that he was the one dealing with the accounts, and he was the one handling the ShineWing people.  He was also the one to whom ShineWing directed their queries on the accounts and from whom answers were provided.”

136.  Subsequently, the judge said of the role of the 3^rd applicant:[101]

“ I should mention that although his role was not that of a prime mover, it should not be forgotten that he joined the conspiracies at a critical time, that is, when the financial due diligence was being carried out.

Needless to say, if financial information was provided, or if the true financial position of the target assets was not revealed, 462 and its shareholders would not be able to make an informed decision as to whether the acquisition.

Equally, if false information was provided to the Stock Exchange, that would no doubt mislead the general public and the potential investors as to the profitability and the potential of the acquisition.” 

137.  Having noted that it was acknowledged on behalf of the 3^rd applicant that he had played a part in the provision of the accounts and drafting of the MD & A, the judge said that, in addition:[102]

“ …it was the undisputed evidence of PW3 that the 3^rd accused, indeed, went on the roadshow with the 2^nd accused to Singapore and that he was one explaining the financial data to the potential investors there.” [103]

138.  Then, the judge said:[104]

“ While I accept that in terms of culpability, the 3^rd accused’s role was less than that of the 1^st and the 2^nd accused, and that he apparently acted under instructions rather than on his own, nonetheless, the 3^rd accused was a willing participant, and anyone joining a criminal agreement intending that be carried out is a culpable party irrespective of how significant or less significant the part he intends to play in the actual enterprise.”

139.  The judge made it abundantly clear that she distinguished on the one hand between the culpability of the 1^st and 2^nd defendants and on the other hand that of the 3^rd applicant.  The former two defendants were the “prime movers”.  The 1^st defendant was the “mastermind” of the conspiracies.  The 2^nd defendant played a “pivotal role” in carrying out the criminal plan.  Each of them derived monetary benefit from the criminal scheme.  The culpability was marked by the starting point for each of the 2 counts of conspiracy to defraud of 8 years and 3 months’ imprisonment stipulated by the judge.

140.  By contrast, the judge stipulated a starting point for sentence for the 3^rd applicant of 5 years’ imprisonment for each of the 2 counts of conspiracy to defraud.  In stipulating the significantly lower starting point for the 3^rd applicant, the judge acknowledged that his role in the conspiracies was “not as major” as that of the 1^st and 2^nd defendants, that he had become involved at a “later stage” and his involvement was not “as extensive” as that of the 1^st and 2^nd defendants.  On the other hand, the judge found that the 3^rd applicant had joined the conspiracies at a “critical time…when the financial due diligence was being carried out.”  Moreover, he was the “front man dealing with the accounts, and he was the one handling the Shine Wing people.”  Notwithstanding the fact that he acted under the instructions of the 2^nd defendant, he was a “willing participant” in the criminal agreement.  He performed that role for a sustained period.  The provision of false financial information or the concealment of the true financial position served to mislead the company, its shareholders, the SEHK and the investing public.

141.  Clearly, the offences of which the 3^rd applicant was convicted were serious offences.  As the judge noted, they strike at the heart of the confidence reposed in the SEHK and its publicly listed companies.  Nevertheless, in stipulating a starting point for sentence for the 3^rd applicant of 5 years’ imprisonment, the judge gave effect to her determination of his lesser culpability.

Conclusion

142.  I am not satisfied that reasonably arguable grounds of appeal against sentence have been advanced in this Court.  Accordingly, I refuse the application for leave to appeal against sentence.

143.  Pursuant to Rule 42 of the Criminal Appeal Rules, Cap. 221 the 3^rd applicant may, if he wishes, renew his applications for leave to appeal against conviction and sentence on the grounds in respect of which he has been refused leave.  However, if he does so, and the full Court determines that he did so without justification, it may order that some of the time that the 3^rd applicant has spent in custody pending the determination of the applications shall not be reckoned as part of the term of imprisonment to which he is subject.