HKSAR v. CHAN SHEK WAI

CACC 472/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 472 OF 2001

(ON APPEAL FROM HCCC 375 OF 2000)

______________

______________

_______________

J U D G M E N T

_______________

Stuart-Moore Ag CJHC (giving the judgment of the Court):

Introduction

1. On 20 September 2001, following a trial in the Court of First Instance before Deputy Judge McMahon and a jury, the Applicant was convicted of the thefts alleged in counts 2 and 8, contrary to section 9 of the Theft Ordinance, Cap. 210, and on counts 7 and 9 of obtaining property by deception, contrary to section 17 of the same Ordinance. Concurrent sentences of twenty months and twenty-two months' imprisonment respectively were imposed for each pair of offences and these were ordered to run concurrently to each other.

2. Originally, the indictment had contained twenty counts but the prosecution accepted, at the conclusion of their case, that there was no case to answer on most of the remaining counts. However, counts 3, 4 and 5, on which the jury acquitted, were left for the jury's consideration with the counts where guilty verdicts were returned.

3. The Applicant now seeks leave to appeal against conviction.

The charges

4. The two counts of theft on which the Applicant was convicted were very similar. They also bore a close resemblance to the theft in count 3 on which the Applicant was acquitted. Count 2 alleged that on or about 16 June 1995, the Applicant stole a Hong Kong Vehicle Registration Document (VRD) relating to a taxi with the registration mark EU 1161, the property of Poon Kin-sang. Count 8 related to the theft, on or about 4 July 1995, of the VRD of a public light bus, FC 2130, belonging to Lau Kit-bing.

5. Counts 7 and 9 were also very similar to each other and to counts 4 and 5 on which the Applicant was acquitted.

6. The particulars of count 7 alleged that the Applicant:

"....on or about the 5th day of July 1995, in Hong Kong, dishonestly obtained from Standard Chartered Finance Limited, a Hong Kong Vehicle Registration Document bearing registration mark GK 5841, with the intention of permanently depriving the said Standard Chartered Finance Limited thereof by deception, namely, by falsely representing that:

(a) the said Vehicle Registration Document would be used for arranging the signature by the registered owner;

(b) the said Vehicle Registration Document would be returned within 14 days from the date of the obtaining of the same ("the said period"); and

(c) the deposit of a cheque bearing No. 660791 drawn on the account of Wai Fat Motors Company Limited with Hang Seng Bank Limited, would be a good and valid security if the said Vehicle Registration Document was not returned within the said period."

7. Count 9 differed only as to the registration mark and the number of the cheque drawn on the Hang Seng account.

Prosecution's case

8. The Applicant, at all material times, was the director of two closely related companies, Wai Fat Motors (Holdings) Limited and Wai Fat Motors Company Limited. He had direct control over the business activities of both companies (Wai Fat) which dealt in the sale and purchase of taxis and public light buses, together with their respective VRDs. They were considered to be amongst the most active dealers in this business. At that time, a taxi's VRD was worth on the open market just over $2 million and was regarded as an acceptable security for a loan.

9. Both the Applicant's companies had accounts at Standard Chartered Bank and Hang Seng Bank. When loans were required to finance the companies, the Applicant dealt with Standard Chartered Finance (SCF), a subsidiary of Standard Chartered Bank. In addition, if owners of taxis or public light buses needed to raise finance by using their existing VRDs as security, they would need to approach the Applicant or some other dealer in order to do so.

10. Such loans, whether to Wai Fat or to individual vehicle owners, were either 'short term' loans in sums of less than $1 million or, alternatively, they took the form of hire purchase agreements, usually for ten years in sums of just over $2 million. In either situation, SCF took possession of the relevant VRD as security for the loan.

11. In practice, where loans were applied for by Wai Fat, the VRD could be released to Wai Fat either by repayment of the loan in full or, on a temporary basis for not more than fourteen days, for the purposes of dealing with procedural matters connected with the VRD, such as recording changes of ownership or registration particulars.

12. When Wai Fat obtained temporary possession of a VRD being used as security by SCF, the Applicant, often through the agency of his staff, was required to deposit an undated, but signed, cheque as security for the release of the document.

13. Turning to the evidence on count 2, Poon Kin-sang (PW14), a taxi driver, approached the Applicant on 16 June 1995 requesting a loan of $500,000, using his VRD as security. He spoke with the Applicant and was given documents to sign. He did this without reading them. He then gave the Applicant his VRD and shortly thereafter the Applicant gave him $500,000.

14. However, on 1 July 1995, the Applicant, using PW14's VRD, then obtained on behalf of Wai Fat a short-term loan from SCF of $1.6 million. This was not something which PW14 had authorised the Applicant to do. After that, the Applicant arranged for a cheque, dated 3 July 1995, to be paid to SCF in what purported to be full repayment of this loan. This cheque was dishonoured on 5 July 1995. In the meantime, the Applicant had arranged for a loan from SCF of $500,000 in PW14's name again using his VRD as security.

15. After the Wai Fat cheque was dishonoured on 5 July 1995, this was replaced by another, dated 6 July 1995. Wai Fat next deposited a further cheque with SCF which was blank, but signed, in order to regain possession of the VRD which was then used by the Applicant, through a member of his staff, to obtain a loan for $1.6 million from Winton Finance, a company which was not connected to SCF.

16. Turning next to count 8, Chan Sik-yim (PW10) gave evidence that his VRD was registered in the name of his wife, Lau Kit-bing. He went to Wai Fat to borrow $500,000 using his VRD as security. After speaking to the Applicant, he was in due course given $500,000 in return for his VRD. He, like PW14 before him, was unaware that the Applicant was going to use his VRD to raise $1.6 million for Wai Fat, and he did not give the Applicant permission to do so. In fact, the Applicant did precisely this, pledging PW10's VRD with SCF for a $1.6 million short-term loan. Thereafter, the Applicant, with the aid of members of his staff, purported to repay the loan in full by a cheque which, on later presentation, was dishonoured. Meanwhile, using the VRD which had been returned to the Applicant, he arranged a $500,000 hire purchase agreement with SCF in the name of Lau Kit-bing again using the VRD as security.

17. A similar allegation was made in count 3, on which the Applicant was acquitted.

18. The case presented against the Applicant on the deception counts, 7 and 9, related to two instances where SCF parted with possession of VRDs, which were being used as security for loans, as the result of false representations allegedly made by the Applicant about why they were needed by him, how long he would keep them and the validity of cheques he deposited as security for their temporary possession. The picture disclosed by the evidence on these counts revealed a similar pattern of events to that which related to the thefts.

19. Count 7 concerned a VRD for a taxi with the registration number GK 5841 which was owned by Wai Fat.

20. On 1 July 1995, the Applicant, through the staff of Wai Fat, applied to SCF for a short-term loan in the sum of $1.6 million pledging this document as security.

21. Two days later, Wai Fat purported to repay the short-term loan in full with a cheque dated 3 July 1995. The VRD was then returned to Wai Fat. However, on the same day, Wai Fat obtained a loan from SCF using the same registration document as security.

22. On 5 July 1995, the cheque which had been deposited as full repayment of the short-term loan was dishonoured. A further cheque dated 6 July 1995, was then issued by Wai Fat to replace the one which had been dishonoured.

23. On the same day, the Applicant, by giving instructions to his staff, deposited a signed Wai Fat cheque with SCF for the release of the VRD by SCF, making the representations set out in the particulars of this count shown in paragraph 6.

24. The Applicant then gave possession of the VRD to Winton Finance as security for a short-term loan in the sum of $1.6 million.

25. On 8 July 1995, the second cheque in relation to this transaction was dishonoured.

26. Dealing next with the allegation made in count 9, using another VRD owned by Wai Fat, the Applicant obtained a loan from SCF in the sum of $500,000. On 5 July 1995, Grace Diana (PW18), on the Applicant's instructions, regained possession of this VRD from SCF by depositing a blank, signed cheque drawn on the Wai Fat account at Hang Seng Bank as security.

27. The representations made to SCF to obtain the release of the document to Wai Fat were the same as those in count 7.

28. On the same day, the Applicant instructed a member of the Wai Fat staff to use this VRD as security for a further short-term loan of $1.6 million from Winton Finance Limited.

Defence case

29. The Applicant's defence to the theft counts, taken from the judge's summary of his evidence, was that Helen Poon (PW17) ran Wai Fat while the Applicant was away on trips to New Zealand. In order to facilitate this arrangement, the Applicant would sign a variety of documents in advance. He trusted Helen Poon to run Wai Fat while he was away.

30. Importantly, however, the Applicant accepted that he had dealt with the two vehicle owners referred to in counts 2 and 8 but he said that as far as count 3 was concerned, this was a matter which must have been carried out by Helen Poon entirely without his knowledge. The judge expressed the overall effect of the defence to theft in these terms:

".... it was the practice of Wai Fat to use customers' VRDs for the purposes of generating these loans and that the customers were told that Wai Fat was going to use their VRDs for Wai Fat's own purposes, and for that reason, he did not think there was anything dishonest in using a customer's VRD to get a $1.6 million (loan) for Wai Fat." (Tr. p. 99)

31. As to the deception counts, the judge summarised the Applicant's defence in this way:

"... he said the arrangement to be able to borrow VRDs from SCF started around about 1990 also, and this arrangement was made with a person called Hermes Lui. He said Hermes Lui gave him permission to borrow VRDs. Originally it was only two at a time, but eventually it became extended up to five at a time. But Hermes Lui said that he, the defendant or Wai Fat, had to provide a blank cheque. The defendant said he told Hermes Lui that the blank cheques he provided as security should not be banked. You may think if that conversation occurred that is a pretty direct way of saying they were not worth anything.

The defendant said that Hermes Lui said they should still be lodged anyway. So effectively, the defendant is saying in respect of these cheques referred to in the obtaining property by deception count(s), that Hermes Lui knew on behalf of SCF ...... that these cheques were worthless. The defendant agreed that the limit of keeping a borrowed VRD was 14 days and you might be happy there is no issue about that.

The defendant said that he signed these borrowing letters in advance, and therefore, they were available for Helen Poon to use for the purposes of these borrowing transactions in Counts 4, 5, 7 and 9. He said he did not know those VRDs in fact had been borrowed, and that he first found out that the VRDs in Counts 4, 5, 7 and 9 had been borrowed on 11 July when he was negotiating the sale of vehicles to Winton Finance. He said that on that day Helen Poon told him those four VRDs had been borrowed back from SCF. You might recollect that Helen Poon was asked about a particular occasion when the defendant spoke to her about VRDs from Winton Finance and asked her to fax information to him and she said she didn't remember that. The defendant specifically said that so far as Count 5 was concerned, when he pledged that VRD to Mr Lau Chor of Tin Sing Motors, he did not realise it had been borrowed from SCF." (Tr. pp. 99-100)

Grounds of appeal

32. With this background, Mr Paul Wu, on the Applicant's behalf, has submitted on three grounds that these convictions were unsafe or unsatisfactory.

(1) The Ghosh direction

33. In the first of these grounds, Mr Wu contended that the judge gave an inadequate direction as to the approach the jury should take to the element of dishonesty in all the counts they were considering.

34. In the course of summing up, the judge had directed the jury about 'dishonesty' in terms which were derived from R v Ghosh [1982] QB 1053 at 1064. He said:

"Before you can find the defendant to have been dishonest, so far as any count in this case is concerned, you must be sure of two things: firstly, that what the defendant did was dishonest according to the ordinary standards of reasonable and honest people; and secondly, that the defendant himself must have realised that what he was doing was dishonest by those standards." (Tr. p. 82)

35. We do not need to consider whether on each and every count, a Ghosh direction was strictly necessary. However, in Mr Wu's submission, a full Ghosh direction was needed which had not been in any way abbreviated.

36. We have looked at the decision in Ghosh itself and it is apparent, in our opinion, that the judge had taken great care to summarise the effect of Lord Lane CJ's judgment leaving out nothing which could have disadvantaged the Applicant. Furthermore, Mr Wu, who also defended in the court below, had made a closing speech to the jury in which he had addressed this very issue. If he had perceived some disadvantage in the judge's directions to the jury, he would no doubt have pointed this out to the judge. He did not do so.

37. This ground fails.

(2) Inconsistent verdicts

38. Grounds 2 and 3 can be dealt with together. Each complained that there was inconsistency in the verdicts. Mr Wu submitted that the convictions for theft returned on counts 2 and 8 were inconsistent with the acquittal on count 3. Similarly, he contended that the convictions for obtaining property by deception on counts 7 and 9 were inconsistent with the acquittals of the Applicant on counts 4 and 5.

39. So far as general principle is concerned, the burden of showing that verdicts are inconsistent falls squarely upon an appellant. Furthermore, not only must inconsistency be established but this must be shown to have been such as to call for interference by an appellate court. In R v Durante [1972] 56 Cr App R 708 at 714, the court adopted a passage taken from R v Hunt [1968] 52 Cr App R 580, which cited the words of Devlin J (as he then was) in the unreported case of Stone, namely:

"When an appellant seeks to persuade this Court as his ground of appeal that the jury has returned a repugnant or inconsistent verdict, the burden is plainly on him. He must satisfy the court that the two verdicts cannot stand together, meaning thereby that no reasonable jury who had applied their mind properly to the facts in the case could have arrived at the conclusion, and once one assumes that they were an unreasonable jury, or that they could not have reasonably come to the conclusion, then the convictions cannot stand. But the burden is on the defence to establish that."

40. The court in Durante went on to conclude that "no reasonable jury who had applied their minds reasonably to the facts in the case could have arrived at the two differing conclusions at which (the jury in that case) had arrived."

41. In the present case, it is plain that Mr Wu has not established that the verdicts of guilty on counts 2 and 8 were inconsistent with the acquittal recorded on count 3. The theft counts, 2 and 8, were concerned with events of which the Applicant had admitted knowledge. However, on count 3, he made no such admission, saying that Helen Poon was responsible for the transaction and that he had no knowledge of it at all. This provided what was obviously a materially different background to the other count of theft which, in turn, may well have provided the jury with some cause for finding a doubt about the allegation in count 3. This court had to search the papers for itself to see what answer, if any, there might be to the suggested inconsistency. The considerable time spent doing so would have been saved if Mr Cahill, who prosecuted at trial, had pointed to this answer in his written argument.

42. So far as the deception counts were concerned, it appeared at first as if Mr Wu was on stronger ground. The Applicant's defence was the same to all of the deception counts. He had denied being involved in any of these transactions, saying that he had only found out about them after the event. On the other hand, Helen Poon had stated that the VRDs had been obtained from SCF because she had been working on the instructions of the Applicant. In response, the Applicant had alleged that Helen Poon may have played a sinister role in deceiving SCF in an effort to protect her well-paid job after becoming aware that Wai Fat was in financial difficulty.

43. On the face of these counts, it appeared at first as if this was an 'all or nothing' situation where, unusually, the judge would have been duty-bound to have directed the jury that if they acquitted on any of the counts of deception they should follow suit on all the others.

44. Mr Peter Cahill, on the Respondent's behalf, had provided a written argument in reply to this ground of appeal which once again did not answer the point being made by Mr Wu that the deception verdicts were inconsistent. He merely stated that the demeanour of witnesses may have played some part in the jury's deliberations bearing in mind the direction they had been given that they could accept some parts of a witness' evidence while rejecting other parts. Mr Cahill also commented that the loan documents in relation to each of the deception charges contained details, the responsibility for which Wai Fat witnesses were not always able to confirm.

45. These considerations were largely irrelevant to this ground of appeal. Essentially, on each of the deception counts, it was Helen Poon's credibility which mattered. The jury had to be satisfied that she had been telling the truth when she claimed that she had acted on the Applicant's instructions. Failing this, an acquittal would inevitably follow.

46. Initially, we did not call upon Mr Wu to argue the point. Instead, we invited Mr Cahill to answer what had seemed to be an irresistible submission. Mr Cahill announced that there was a simple explanation. He then launched into argument which depended on a knowledge of exhibits which he had never before sought to have had included in the appeal bundle. In essence he was saying that there was an obvious distinction between the deception counts where the jury convicted and those where they acquitted. He said that the documents to which he was then referring demonstrated that the Applicant had known about the transactions in counts 7 and 9 well before 11 July 1995 which the Applicant, in his defence, had said was the first he had known about these events.

47. It became apparent that the whole of Mr Cahill's argument in reply to the third ground of appeal was built upon documentation which had never been part of the appeal bundle and had received no mention in his written submissions.

48. The Practice Directions for appeals to the Court of Appeal are designed to allow for the smooth running of appeals which, in the vast majority of appeals, is achieved. Invariably, a time limit is set for an appellant's counsel to provide a written argument for service on the court and on the Respondent. Similarly, a time limit is given to the Respondent for a written reply to be served. Plainly, the whole object of providing time for the parties to consider the other side's arguments, and for the court to prepare the case based on the written submissions of both sides, is defeated when the argument is inadequately addressed in the preparation of the case.

49. Mr Cahill was no doubt instructed to conduct these proceedings on the Respondent's behalf because he had prosecuted in the court below. The trial had occupied twenty-nine days and nothing in the comparatively small bundle of papers before this court could possibly have alerted us to the points being made by Mr Cahill when he began to refer to documentation which he had never previously mentioned. Furthermore, although it was by no means fatal to his new argument, the judge had not referred to this particular evidence in his summing up so that there was no reason why we should have been alerted to the point Mr Cahill was making.

50. Clearly, Mr Wu, who had defended in the court below and should have been alive to the point, seemed to have been taken a little by surprise at this unexpected turn of events. He requested, and was granted, an adjournment until today, 2 August 2002. In the meantime, copies of the documents relevant to the third ground of appeal, together with further written arguments, have been served.

51. It is now apparent that there were valid and sensible reasons for the jury to have concluded that the Applicant was guilty of some of the counts of deception while being unsure about others. The documents are clear evidence of the Applicant's involvement in the events concerned with the deceptions practised on 5 July 1995 in counts 7 and 9. In both cases, on 5 July 1995, the Applicant signed receipts for the $1.6 million loans from Winton Finance together with promissory notes undertaking to repay these monies. By contrast, on counts 4 and 5 the receipts and promissory notes were signed by Ms Ada Wong, a member of the staff at Wai Fat. There was no cogent documentary link to the Applicant on the other deception counts where the jury acquitted.

52. This simple, but important, factual difference which no doubt caused the jury to differentiate between counts 4 and 5, on the one hand, and counts 7 and 9 on the other, could have been demonstrated long ago. Instead, this court had to embark on its own enquiry as to the apparent strength of this ground of appeal, having searched in vain and at length for a possible answer well in advance of the hearing on 30 July 2002.

53. For the reasons we have set out, grounds 2 and 3 fail.

Conclusion

54. This application is dismissed.