HKSAR v. DESMOND JAMES ALBERT CONWAY

CACC92/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 92 OF 2007

(ON APPEAL FROM DCCC 347A OF 2005)

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J U D G M E N T

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McMahon J (giving the judgment of the Court) :

1. The applicant was convicted after a trial in the District Court before Deputy Judge Mierczak of an offence of possession of false instruments contrary to section 75(2) of the Crimes Ordinance, Cap. 200 (“the Ordinance”).  He was sentenced to eight months’ imprisonment and now seeks leave to appeal his conviction. 

2. He had at trial faced a charge under section 75(1) of the Ordinance, that is of possessing false instruments with the intention they be used to induce another to accept them as genuine.  The judge however was not satisfied that the prosecution had established that intention on the part of the applicant and had instead convicted him of simple possession of the instruments contrary to section 75(2). 

The prosecution case

3. The prosecution case at trial was that on 20 December 2004 police had searched the applicant’s residence in Hong Kong and located a computer belonging to him.  On it were four files Exhibits P2, P3, P4 and P5, containing what purported to be documents issued by the HSBC bank in Makati, Philippines, and signed by senior officers of the bank certifying that the bank had held, since August 1999, a time deposit of US$500 million on behalf of a British Virgin Islands (“BVI”) registered company Evergreen Financial Services Inc. (“Evergreen”) of Wanchai in Hong Kong which was owned and controlled by the applicant.  Another company, Evergreen Financial Services Inc. (Hong Kong) Limited, had later been separately incorporated in Hong Kong by the applicant in April 2000 after these events and the applicant owned and controlled it.  It also occupied the Wanchai address stated in the documents. 

4. The prosecution called in evidence two of the HSBC bank’s senior Filipino executives whose signatures purportedly appeared on the documents contained in the applicant’s computer files.  They stated that those signatures were forgeries.  They also provided other evidence concerning the nature of the documents and their contents which established their falsity.  This evidence was not challenged in any way and it was accepted by the defence at trial that the information contained in the files on the applicant’s computers hard drive was false. 

The defence case

5. The applicant gave evidence and his case was as follows :  In late 1999 his BVI company Evergreen conducted, amongst other business activities, gold-trading.  A Thai company, Tiwanon, with which he was anxious to do business had required as a pre-condition that Evergreen provide a financial guarantee of US$500 million and that sum was to be transferred by way of a certificate of deposit to its bank in Bangkok. 

6. The applicant said that he found individuals in the Philippines who were willing to, as a consortium, provide the amount of the guarantee to Tiwanon.  After meeting those individuals, and various e-mail negotiations with them, it was agreed that the amount of the guarantee would be provided.  During those negotiations the consortium sent the applicant drafts of the documents it was to provide to Tiwanon’s bank in Bangkok.  Those documents were scanned and the data was stored by the applicant on his computer and comprised the information on its hard drive the prosecution said was false.  The applicant subsequently paid the consortium US$200,000 which he was told represented the consortiums bank charges for the transfer of the guaranteed sum to Tiwanon’s bank.  Before doing so he had received from Tiwanon confirmation that the guaranteed amount had been received by its bank and, from the consortium, SWIFT documents purporting to evidence the transfer of the money to the Thai bank. 

7. The applicant said that after he paid the bank charges of US$200,000 to the consortium he was informed by the Thai bank that the guarantee monies had not in fact been deposited with it and he, after some days of fruitlessly trying to find out what had happened, began to think he had been duped.  He then tried to contact the individuals in the consortium in an attempt to get his money back, and in the course of speaking to one of them in early 2000 was provided with P6, which he thought to be a sample of a HSBC bank document relating to an alternative deal the consortium had offered him and which he also scanned and stored on his computer together with the other, charged, documents.  He said after that last contact with the consortium he was never able to contact any one of them again.  By the time the police searched his home in December 2004 and found these files on the hard drive of his computer he had forgotten about them.  He had kept them merely in case the perpetrators of the fraud were caught and he was asked to give evidence. 

8. Accordingly it was the defence case that though the charged files on the hard drive of the applicant’s computer contained false information the applicant had himself been duped by them and had a lawful excuse for their retention. 

Grounds of appeal

9. Mr Egan advanced two grounds of appeal on behalf of the applicant which can be summarised as follows :

(1)	that the applicant was convicted of the lesser offence of simple possession of false instruments contrary to section 75(2) of the Ordinance without the defence being alerted in any way to that possibility, and the applicant was thereby deprived of the opportunity to mount a defence in that regard; and
(2)	the judge was wrong to find the documents found on the applicant’s computer files were original documents and not copies.

The conviction under section 75(2) of the Ordinance

10. The applicant was charged with an offence contrary to section 75(1) of the Ordinance but convicted of an offence contrary to section 75(2). 

11. Section 75 in its entirety is as follows :

“	75.	Offences of possessing a false instrument
		(1)	A person who has in his custody or under his control an instrument which is, and which he knows or believes to be, false, with the intention that he or another shall use it to induce somebody to accept it as genuine, and by reason of so accepting it to do or not to do some act to his own or any other person’s prejudice, commits an offence and is liable on conviction on indictment to imprisonment for 14 years.
		(2)	A person who, without lawful authority or excuse, has in his custody or under his control an instrument which is, and which he knows or believes to be, false, commits an offence and is liable on conviction on indictment to imprisonment for 3 years.”

12. The judge in his reasons for verdict concluded that while the prosecution had failed to prove the element of intention required by section 75(1), it had proven the applicant possessed the files stored in his computer knowing them to be false and had also proven he had no lawful authority or excuse to possess them.  He said this in that regard :

“	93.	In summary, what I am sure of is this : the defendant did on or about 20 December 2004 have in his custody and control instruments which were and which he knew or believed to be false.  They were of the four images on the computer and detailed in the charge, of that I have no doubt, but as suspicious as it is, the defendant must be given the benefit of the doubt I have on the intention aspect of inducing another to accept it as genuine, and by reason of acceptance, that other person intended to do or not to do an act to their own or another’s prejudice.
	94.	However, on what I have found, bearing again in mind I have rejected the defendant’s evidence, the defendant did without any reasonable excuse or lawful authority have custody or control of instruments which were and which he knew or believed to be false.  As such, I find that all the necessary elements of simple possession have been made out beyond a reasonable doubt and accordingly I find that the offence is proved under section 75(2).”

13. The judge did not specify the procedural principle which in his view allowed him to convict the applicant of an offence with which he was not charged.  But it is common ground for the purposes of this appeal that in the absence of any specific statutory provision making section 75(2) an alternative to the offence created by section 75(1) the only basis upon which he could have done so was pursuant to the general provisions of section 51(2) of the Criminal Procedure Ordinance, Cap. 221.  

14. That provision is as follows :

“	51.	Trial of offences
		…
		(2)	If on the trial of any information, charge or indictment for any offence other than treason it is proved that the accused is not guilty of that offence but the allegations in the information, charge or indictment amount to or include, whether expressly or by implication, an allegation of another offence falling within the jurisdiction of the court of trial, he may be found guilty of that other offence or of an offence of which he could be found guilty on an information, charge or indictment specifically charging that other offence. …”

15. Mr Egan does not dispute that section 51(2), properly applied, allowed the conviction of the applicant under the provisions of section 75(2) of the Ordinance.  We think he was quite right in making that concession : see Commissioner of Police of the Metropolis v. Wilson; R. v. Jenkins and Anor (1984) 1 A.C. 242.  We are satisfied that although the two subsections are expressed in different language as to the mental element, the ingredients of the section 75(2) offence are “expressly or by implication” included in the allegations contained in the charge laid contrary to section 75(1).

16. That leaves the question as to whether in the present case the defence at trial were provided with sufficient notice of the possibility of a conviction under the provisions of section 75(2).  In Wilson; Jenkins & Anor, Roskill LJ in dealing with the provisions of the English equivalent of section 51(2), namely section 6(3) of the Criminal Law Act 1967, and concluding that the convictions at trial for offences other than those charged were allowed by that provision said :

“

If it be said that this conclusion exposes the defendant to the risk of conviction on a charge which would not have been fully investigated at the trial on the count in the indictment, the answer is that a trial judge must always ensure, before deciding to leave the possibility of conviction of another offence to the jury under section 6(3), that that course will involve no risk of injustice to be the defendant and that he has had the opportunity of fully meeting that alternative in the course of his defence.” [Emphasis added]

17. In our view that must be so.  What degree of notice should be provided, and when, is of course a matter for the judge in the circumstances of the case and is decided by the fundamental consideration of fairness to the defendant.

18. In the present case we have been at pains to find in the material provided to us some indication as to whether and when the defence was alerted to the possibility of a conviction pursuant to section 75(2).  We say at the outset of what follows that we have been provided with only part of the transcript of the trial and that counsel for the respondent did not or was not able to indicate to us that in any other part of the trial any express notice was given to the defence that a conviction pursuant to section 75(2) was a matter the judge might come to consider.

19. Nevertheless from the materials available to us some reference was made to the provisions of section 75(2) during the course of counsel’s speeches.  The first such reference occurred in defence counsel’s submission that the applicant had no case to answer, made at the close of the prosecution evidence :

“

MR DELANEY:

And, your Honour, can I say right from the outset that this submission will focus just about entirely on the element of intention and the vexed question of double intention.  Your Honour will be familiar with the section.”

20. Counsel then dealt with section 75(2) in the following context :

“	Offences of possession of false instruments, 75(1) :
	‘	A person who has in his custody or under his control an instrument which is, and which he knows or believes to be, false ...(reads) and by reason of so accepting it to do or not to do some act to his own or any other person’s prejudice, commits an offence is liable,’ etc.
	It’s worthwhile, perhaps, just contrasting that with subsection 2, which is a separate lesser offence.
	‘	A person who, without lawful authority or excuse, had in his custody or under his control an instrument which is and which he knows or believes to be false, commits an offence and is liable on conviction on indictment to imprisonment for three years.’
	Your Honour, clearly the first thing that’s manifestly obvious is this : the section that we are dealing with is the section which deals with possession for intent.  It’s a future intent.  And clearly legislation says it’s a separate matter, separate offence if you are simply in possession of it without that intent. ...”

21. Counsel then went on at a later stage during the course of his submission to contrast section 73 of the Ordinance with the provisions of section 75(1) again to highlight, it seems to us, the requirement of a “double intention” to be proven in respect of section 75(1).  We accept Mr Egan’s suggestion that references made by defence counsel to section 75(2) during the course of his submission may well have been simply to emphasise the “double intention” required by section 75(1) which, as he had said, was central to his submission of no case to answer.

22. The next reference to section 75(2) in the materials before us is contained in the closing submissions of the prosecutor.  At the end of his written skeleton submissions the prosecutor sets out the following :

“	Section 75(1)
	If the defendant’s explanation is rejected it follows that on the 20th December 2004 he had P2-P5 in his possession and control knowing them to be false and that they were capable of giving a false impression about Evergreen and its financial worth, i.e. that in 1999 it was worth at least US$500,000,000, if produced to another.  If the defendant’s account is rejected the only reasonable inference is that he possessed P2-P5 with an intent to make use of them in the course of a dishonest activity aimed at inducing someone to rely on them as genuine.  Why otherwise retain them?
	Section 75(2)
	On his own account the defendant knew on the 20th December 2004 that he possessed P2-P5 which were false instruments.  If his account, his explanation is rejected then he can have had no reasonable excuse or lawful purpose for their possession.”

23. In referring to those written submissions in the course of his oral closing address, the prosecutor said :

“

Finally — I’ve endeavoured to deal very briefly with the position as it seems to the prosecution under both section 75(1) and section 75(2).  In respect of the first, the position is really as I had summarised it in response at the time of the defence submission of no case.  Although it’s to say there could be no other reasonable explanation for this defendant having P2 to P5 in his possession, albeit it as electronic false on computer, other than — knowing that they are false, of course — other than retaining them with an intention to make use of them in the course of a dishonest activity entered into and someone to rely on them as genuine.  Why otherwise retain them.

That’s the only reasonable inference, the prosecution say, that can be drawn in respect of which, of course — and this is mentioned under section75(2) — after all, if you reject the account he’s given in evidence — you’re concluding, of course, he’s lied about it — therefore the only reasonable inference from that is that he acknowledges, to himself at least, that he can have no reasonable excuse to have retained them — this is section 75(2) — or lawful purpose of so doing, and that same inference is capable of being drawn as to his possession and intent in respect of 75(1).  Those are the submissions I make.”

24. It seems to us probable that the prosecutor’s reference to section 75(2) came about as the result of an understanding arising during the trial, possibly after the no case submission, that section 75(2) was available to the court as an alternative basis for conviction.  We struggle to see any other utility or reason for the prosecutor’s reference, in the terms in which it was made, to the provisions of section 75(2) in his closing address.

25. Nevertheless we accept, that at least in the materials provided to us, there is no express statement by either the prosecutor or the court that a conviction pursuant to section 75(2) was possible or was to be considered.  Nor is there anything said by defence counsel, so far as we are aware, which could be taken as confirmatory of any such state of affairs.  For that reason, though we think it probable that notice of a possible conviction contrary to section 75(2) was at some stage provided to the defence at trial we cannot, on the materials before us, be satisfied as to that and we must assume in favour of the applicant that no such notice was given.  That being so, there was therefore a material irregularity in the court ultimately proceeding to convict the applicant of an offence with which he was not expressly charged. 

26. During the course of argument we heard Mr Egan as to what, supposing the defence had been properly given notice of the possibility of a conviction on the section 75(2) offence, would have been done further to that which had already been done in the defence case.  Mr Egan argued that a witness relevant to the issue of the applicant’s credibility could have been called.  That witness would have given expert evidence supporting the applicant’s version as to how the files containing the false information came to be on his computer, i.e. that it was simply stored on the computer’s hard drive after being received from another source.

27. But that aspect of the case was as relevant to the applicant’s defence to the charged section 75(1) offence as it was to his case relating to any section 75(2) offence.  The same issue arose as to the applicant’s knowledge or state of mind regarding the files found on his computer regardless of whether he had been charged with a section 75(1) or section 75(2) offence. 

28. In this regard it should be remembered that the applicant’s defence was quite simply that he had scanned the documents sent to him by the consortium in the Phillipines and stored that data on the hard drive of his computer; that he had thought the documents to be genuine and later, when he was disabused of that notion, had kept the files in the belief they may be required if the persons who defrauded him were caught.  Accordingly the applicant’s evidence as to how the files on the hard drive of his computer came into being was equally relevant to the intention expressed in section 75(1) and to the question of lawful excuse contained in the terms of section 75(2).  The issue of his credibility in respect of either provision’s mental element was the same. 

29. For that reason we do not see any basis for Mr Egan suggesting that a different course involving the calling of any expert witness may have been adopted by the defence at trial had they been alerted to the possibility of a section 75(2) conviction.  The same issue said to arise pursuant to section 75(2) was already before the court as a result of the allegations contained in the charge.

30. We might add that defence counsel at trial had apparently made a conscious decision not to call the evidence relied upon by Mr Egan because, in his view, “the admitted facts obviated the need to call any further witnesses”.  In saying that he was no doubt referring to the anticipated admitted facts which were provided to the court a few days later and which dealt with the dates the files first appeared on the applicant’s computer, and specifically referred to the possibility that the files may have been transmitted to the computer prior to the date they were recorded as first appearing. 

31. Mr Egan made a further point as to the calling of other witnesses from the Phillipines but again this related to the same issue of the applicant’s credibility as to how he came to receive these documents.  In short, nothing was suggested to us as to any new matters the defence would have had to countenance, or any matters which might have had to be reviewed had they been given notice as to the possibility of a conviction contrary to section 75(2), and in our judgment any such notice to the defence would not have had any effect on the course of the trial or of the matters put before the court.  We are satisfied therefore that there was no unfairness to the applicant at trial by the failure to bring the possibility of a conviction pursuant to section 75(2) to the notice of the defence as in any event no different course would have been taken and that as a consequence the judge would inevitably have come to the same conclusion.  We would accordingly apply the proviso to section 83(1) of the Criminal Procedure Ordinance to this ground.

The finding that the documents were original instruments

32. The judge in his reasons for verdict found, on this issue, as follows :

“	73.	It is admitted here that the defendant did have custody and control of the four computer files, that is the data on the hard disc.  There is no direct evidence that the files were constructed in the computer.  Further, it must be that the four files are instruments, but are the instruments false or, as the defence suggests, copies of false instruments and hence not covered under section 75?
		...
	76.	Since I have rejected the defendant’s evidence as to the source of the documents and them being copies of documents from that source, it must be and it is obvious that they are capable of being created on a computer even though there is no direct evidence of that.  The only inference from the evidence as accepted by me must be it can be done.  On the evidence as accepted, there is none to say that it was a copy of a false instrument.  They are complete with blanks filled in and the like.
	77.	Further to this is the presence in the computer of P6, [a ‘sample’ or template document without a HSBC letterhead].  The wording of this is essentially the same as the wording of two of the false documents purporting to have been produced by the HSBC.
	78.	The defendant had said in his evidence that the P6 template had been provided to him as effectively a template for a replacement or a further deal.  I do not believe this.
	79.	The defendant had said he received the P6 template much later than P2 to 5 [the charged files].  In fact, the agreed facts are that the earliest record of a computer file for P6 appearing on the computer is 21 April 2000, but of course that does not exclude the possibility that P6 and also P2 to 5 may have been transmitted to the defendant’s computer at an earlier date but not recorded on that earlier date.  That is another admitted fact.  But even on his own evidence the defendant had previously received some form of template anyway.
	80.	I do not agree that the stored data files, P2 to 5, were only copies of what might be a false instrument.  I am of the view that the only inference from the evidence as accepted by me is that the four files themselves are instruments which were false, not copies of such.
	81.	As I say, I do not believe the defendant scanned them in early 2000 and kept them as JPG copies.  They are not accurate copies but the false instruments themselves.  I so find.”

33. Mr Egan argues that the judge in arriving at this finding did not have available to him expert evidence which was required in the circumstances of this case to allow the court sensibly to determine whether the charged data files on the computer were “originals” or were “copies” in the sense that the information contained in the documents sent to the applicant had been scanned onto the computer from an outside source.  He says also that the judge did not give sufficient reasons for his finding in this regard, and that what reasons he did give were flawed.

34. The question as to whether the files on the applicant’s computer’s hard drive were originals or copies was important because, for perhaps outdated reasons, Part IX of the Ordinance, which deals with forgery and related offences, distinguishes in certain sections between using a false instrument as opposed to a copy of a false instrument.  Mr Egan’s point is that because of this and because section 75(1) and (2) in their terms do not make reference to a copy of a false instrument, that section 75 must refer only to original instruments and that there is no analogous offence of being in possession of a copy of a false instrument.  That proposition was not disputed by the respondent and we proceed on that basis. 

35. The judge approached the question on purely pragmatic grounds.  He inferred from all the circumstances that the applicant had himself created the information stored in the files on his computer’s hard drive.  In that regard he expressly considered that the files consisted of purported banking documents filled in with the name and on occasion the address of the applicant’s solely owned company Evergreen; that one of the files contained a template or sample HSBC document P6, though it may not have been recorded on the hard drive of the computer until after its receipt, and that the applicant had in his evidence admitted receiving other templates of the documents stored on his hard drive.  The judge concluded that the completed files were not copies. 

36. The judge’s reasons could be described as somewhat spartan, but in our view they were sufficient.  The applicant was found in possession, on files on a computer at his home, of information capable of reproducing false HSBC Philippines documentation purportedly evidencing a fictitious time deposit of US$500 million for a period of five years made by his wholly owned offshore company, with that bank.  The particulars of that company were correctly stated.  P6 related to a separate time deposit of US$723 million and while it had no letterhead of HSBC and was headed “sample” it contained exactly the same style of typeface format and terminology as one of the files relating to the time deposit of US$500 million.  It included the full name of the applicant and of his to be or recently incorporated Hong Kong company.  It was still incomplete in respect of other details and had the appearance of a document which could be described as a work in progress.  The applicant had admitted having had other such “samples” or templates in the past. 

37. The judge rejected the applicant’s defence, parts of which he justifiably described as being “in the realms of fantasy”.  That left the prosecution evidence.  On that evidence the judge was entitled to infer as he did that the files on the applicant’s computer had been created by him.  Though the judge’s conclusion in this regard was arrived at without the benefit of any expert evidence, we do not think any such evidence was necessary and that the judge’s approach to the resolution of the question as to whether the files, or the additions to them, on the applicant’s computer were originals or copies was sufficient.

38. In any event, on the evidence before the judge no other conclusion could reasonably have been reached.  The definition of an “instrument” is contained in section 68 of the Ordinance.  It is as follows :

“	... instrument” means —
	...
	(d)	any disc, card, tape, microchip, sound track or other device on or in which information is recorded or stored by mechanical, electronic, optical or other means; ...” [Emphasis added]

39. The words “disc” or indeed “other device” indicate a storage medium which would include the hard drive of a computer.  It was an admitted fact that the charged files containing false information were stored on the hard drive of the applicant’s computer. 

40. The particulars of the offence referred to the instruments possessed by the applicant as “… four images on the computer…” when, perhaps, more appropriately they should have referred to the storage medium together with the four images stored on it.  No issue, however, is taken with the charged description, nor does anything turn on it in the context of this case. 

41. Given the definition of “instrument” it must be that an instrument only comes into being when there is placed on the storage medium a file or files which contain false information.  The instrument is the combination of storage medium and the file or files. 

42. That being so it must in this case inevitably follow that whether the data in the files came to be placed on the hard drive of the applicant’s computer by scanning as he claimed or by storing a file which accompanied an email, to which he made passing reference in cross-examination or, as the judge found, by his own creativity, the instrument (storage medium and files) must be an original instrument.  Even if an external document had been scanned and the resulting file stored on the hard disk, the instrument newly created by that process cannot be said to be a copy of an external document in any sense consistent with the purpose of Part IX of the Ordinance.  They are quite simply different animals. 

43. For this reason also we can see no merit in Mr Egan’s complaint that expert evidence was required to establish that the files on the applicant’s computer’s hard drive created an original instrument.  None was needed as a matter of logic and common sense.  This ground fails. 

Conclusion

44. We grant leave, treat the hearing of the application as the appeal and upon the application of the proviso to section 81(3) of the Criminal Procedure Ordinance, dismiss the appeal.