HKSAR v. MA CHUN KIT

CACC 224/2020

[2024] HKCA 191

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 224 OF 2020

(ON APPEAL FROM HCCC NO 20 OF 2018)

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J U D G M E N T

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1.  On 16 December 2020, following a trial before D’Almada Remedios J (the Judge)  and a jury, the applicant was convicted of four counts of theft, contrary to s. 9 of the Theft Ordinance (Cap 210). He was found guilty of having stolen a total sum of about $380 million from his employer company over a period of nearly 7 years. He was sentenced to a total term of 15 years’ imprisonment.

2.  On 29 December 2020, the applicant filed an application for leave to appeal against conviction in which he set out a series of complaints about his trial.  On 28 March 2023, Mr Simon Young was assigned by the Legal Aid Department as counsel to represent the applicant.  On 12 July 2023, Mr Young filed Perfected Grounds of Appeal on the applicant’s behalf.  On 29 September 2023, Mr Young filed Amended Perfected Grounds of Appeal listing the following three grounds of appeal.  Ground 1: the jury was invited to convict the applicant on all four counts on a basis (i.e. later assumption of rights in property)  not open on the indictment; Ground 2: the jury was misdirected on the essential element of dishonesty; and Ground 3: the jury was misdirected on what they needed to be satisfied of before they could use the confession evidence to convict the applicant.

3.  During the hearing of the leave application, Mr Young amended the second ground by contending that the objective limb of the test in R v Ghosh [1] required the jury to consider the defendant’s knowledge and beliefs that bear on the matter in deciding whether he or she acted dishonestly.  After the hearing, he filed a Re-Amended Perfected Grounds of Appeal, in which Ground 2 was appropriately amended.

The prosecution case

4.  On 15 July 1992, the applicant commenced employment as an accounts clerk in the Accounting Department of Hyundai Merchant Marine (Hong Kong)  Limited (Hyundai HK), a subsidiary of Hyundai Korea Group Holding Limited (Hyundai Korea), a shipping company.  He had a starting salary of HK$6,000 per month.  He eventually attained the position of Deputy General Manager in the Accounting Department on 1 April 2010 with a salary of HK$35,600, which was increased to HK$37,900 on 1 April 2015.  During the tax years from 1 April 2010 to 31 March 2016, his annual salary was in the range of about HK$500,000.

5.  The prosecution case, as reflected by the four counts of theft, was that the applicant stole HK$386,955,303.70 from his employer, Hyundai HK, over a period of nearly 7 years from 20 April 2009 to 18 February 2016, by transferring the amounts of money in 260 transactions on the Internet banking online system of the company using security tokens in the name of the Korean managers or managing directors without their knowledge. 

6.  The applicant was the system administrator of the online banking system since 2007.  In that position of trust, he stole the money from the company’s bank account that was earmarked to pay the company’s vendors or service providers.  It appears that the payments to the applicant were not seen on the internal electronic accounting system which showed the payments had been effected to the vendors or service providers.  Once the money was deposited into the applicant’s personal accounts, he transferred the money to other bank accounts or to pay credit card expenses amounting to over $200 million.  The credit card expenses were related to spending money at casinos in Macau and buying luxury goods.  He also purchased three properties in Hong Kong and another property in Australia.  On 3 November 2011, the applicant purchased a flat in Shatin for HK$8,389,000 with a mortgage of HK$4 million.  On 7 November 2013, the applicant purchased an apartment in Kowloon for HK$19,800,000 without a mortgage.  On 17 December 2013, the applicant purchased a flat on Hong Kong Island for HK$11,875,000 without a mortgage.  The applicant also transferred money to mainland China under different companies during this period.

7.  Hyundai HK rented terminals from Hong Kong International Terminal (HIT)  and served as Hyundai Korea’s shipping agency.  The case came to light when HIT contacted Hyundai HK for the overdue payments, which triggered an internal audit.[2]

8.  Hyundai HK used two HSBC bank accounts (Account 1 and Account 2)  for payments to vendors such as HIT, and the only source of funds in those two accounts came from Hyundai Korea.  Hyundai HK used Account 1 (the subject account of Charge 1)  until 2011, when it switched to Account 2 (the subject account of Charges 2, 3 and 4).[3]

9.  The prosecution case was that the applicant abused the trust of the senior management and authorized transfers of the money from Account 1 and Account 2 by using tokens for use by specified managing directors or general managers to his own account without their knowledge.[4]  The break up of Charges 2, 3 and 4 is based on different tokens used to make the bank transfers.[5]  Altogether, 260 transfers were made from Hyundai HK’s account to the applicant’s accounts[6], and the amount involved was about HK$380 million in total[7].

10.  According to the account clerks of Hyundai HK, the money supposedly to be paid to the vendors was paid to the applicant instead, and no entry was made into Hyundai HK’s electronic accounting system.[8]

11.  The general managers of Hyundai HK conducted four interviews with the applicant, in which he admitted stealing money from Hyundai HK’s accounts to his own accounts through Internet banking by using managing directors’ security devices, and he used the money for his benefit, including to buy property in Hong Kong, Australia and mainland China.[9]  The applicant kept all the managing directors’ security devices so that he could change the authorization levels, which made his plan feasible.[10]

12.  A treasury accountant analysed the transactions of 17 bank accounts, 7 were the applicant’s bank accounts, 9 were his credit card accounts, and the remaining one was his girlfriend’s bank account.  It was discovered that 52.7% of the funds in the accounts came from Hyundai HK.[11]  Furthermore, the deposits from Hyundai HK were almost immediately transferred to 3 other accounts of the applicant, either his own accounts, his credit cards or his girlfriend’s credit cards, to make payments.[12]

The defence case

13.  The applicant elected not to give evidence and did not call any defence witnesses.[13]  From the case put to the prosecution witnesses by defence counsel, the applicant’s case was that he did not steal the money deposited into his bank account.  All his superiors in Hong Kong and the management in Korea knew about the transfer of funds into his personal account, and it was for the purpose of channelling the funds to North Korea.[14] 

Ground 1 - Error in leaving later assumption of rights as a basis of liability for theft

14.  Mr Young argues that the Judge erred in law and misdirected the jury by instructing them that they could convict the applicant on the four counts of theft based on conduct constituting a “later assumption of rights” in property.

15.  Consequently, the jury may have convicted the applicant on a basis (i.e. dealing with the money as his own)  outside the scope of the charges as particularised (i.e. stealing debts owed to Hyundai HK by HSBC).  Thus, the misdirection was a material irregularity that resulted in convictions which were neither safe nor satisfactory.  

16.  Mr Derek Wong, for the respondent, submits that the prosecution case was that all the transfers of money from the company’s bank accounts to the applicant’s personal bank accounts were unauthorised and the element of “appropriation” in the theft charges referred to these unauthorised transfers, which is characterised as the first basis for proving the thefts. The applicant complains that the Judge opened a new and alternative basis for convicting the applicant on a later assumption of right, which is characterised as the second basis for proving the thefts.  This occurred when the Judge made the following remarks in her summing-up:[15]

“Now, if you are not sure the prosecution has proved that the money deposited was unauthorised, or you are not sure that the defendant was the one who used the tokens to transfer the money, then you still consider the following: that is, whether the defendant appropriated the money; that is after Hyundai Hong Kong’s money was transferred, did he deal with the money as if he were the owner? Now, I have told you at the very beginning there is no dispute in this case that the money belongs to Hyundai. So did he appropriate, in law, this money that belongs to Hyundai?

‘Appropriation’ means any assumption by a person of the rights of an owner, which amounts to an appropriation. And this includes where he has come by the property - in this case, the money - innocently or not, without stealing it, and later, there is an assumption of a right to it by keeping it, or dealing with it as owner.” (Emphasis added)

17.  The Judge went on to explain how a person may receive the money innocently but misappropriate the money by using it for their own use.  She then reminded the jury:[16]

“If you conclude, members of the jury, that the defendant had treated the money – Hyundai’s money - that is owned by spending the money or treating it as his own, to the benefit of his own or others, then you should have no difficulty in finding the defendant guilty of the four counts of theft. The dishonesty is clearly spending monies which were deposited, knowing full well that he was not entitled to the monies; the money belonged to Hyundai.”

18.  Mr Wong argues that the Judge was entitled to put the case on a different basis from that presented by the prosecution, provided that it was open on the indictment and the evidence, and the parties were given an opportunity to address the Judge before she took that course: Hau Tung Ying v HKSAR [17]. He accepts, however, that there is an argument as to whether the second basis was open on the indictment because the charge was in relation to the misappropriation of the choses in action owed to the company by HSBC (i.e. the money in the company’s bank account), as opposed to the misappropriation of the money in the applicant’s bank account.  He also accepts that the parties were not informed of the second basis before the Judge addressed it in her summing-up.[18]  Nevertheless, he contends that even if it might be considered a misdirection by the Judge it was not a material irregularity as it did not affect the safety of the applicant’s convictions in the circumstances of the case. 

19.  Mr Wong also adds that the evidence against the applicant was overwhelming on the first basis.  Hence it was “virtually impossible” for the jury to take the alternative route as suggested by the Judge.[19]

20.  Whilst I am satisfied there is a reasonably arguable ground of appeal, it is a matter for debate whether the Judge, by her impugned remarks, which was the only time she made them, provided a second basis on which the jury could convict the applicant for the theft offences.  It is arguable that the Judge was directing her comments to the applicant’s use of the money to evidence his misappropriation and dishonest use of the money from the company’s accounts.  This may explain why defence counsel raised no objection to the Judge’s impugned remarks.

21.  In summary, this ground raises for consideration whether there was a second basis, and if so, whether it was outside the scope of the charges on the elements of “appropriation” and “dishonesty”.  As a consequence of the argument regarding the second basis in finding “appropriation”, this may also require consideration of whether this impacted on the question of “dishonesty” as submitted in subparagraph (a)  of Ground 2, which has been removed from that ground.

Ground 2 - Misdirection on the element of dishonesty

22.  This ground in the Amended Perfected Grounds of Appeal states that:

“In relation to the element of dishonesty, the jurors were told they could convict the applicant if they found the money transfers to his bank accounts were unauthorised, but the Judge erred:

(a)  In further directing them that, if they were not sure of this, they could still convict him of theft if he dishonestly spent the money as his own; and

(b)  In failing to direct the jury to consider the defendant’s actual state of knowledge and belief before deciding if his conduct was dishonest.

If the jury received a properly focused direction on dishonesty (i.e. focused on the correct actus reus)  and told to consider fully the applicant’s knowledge and beliefs, there is a greater chance for the jury to find reasonable doubt on this central issue.  Thus, with the directions given, the convictions were rendered neither safe nor satisfactory.”

23.  During the hearing, Mr Young re-amended the ground, which he later reflected in a Re-Amended Perfected Grounds of Appeal, by deleting subparagraph (a)  and removing the statement in parenthesis regarding the actus reus.  He has included the following question of law that he states arises in this case:

“In giving the Ghosh direction in relation to the objective limb, must the jury be directed to consider the defendant’s knowledge and beliefs that bear on the matter in deciding whether he or she acted dishonestly?”

24.  Mr Young argues that the Judge directed the jury that they could find dishonesty on two bases.  The first basis was both the use of the tokens of the senior management of the company and the transfer of money from the company’s accounts to the applicant’s accounts were unauthorised.  The second basis was the later assumption of rights on the money in the applicant’s accounts. 

25.  Mr Wong makes two points on the question of dishonesty. First, it was extremely unlikely for the jury to go down the route put forward by the Judge on the second basis.  Therefore, the alleged misdirection on dishonesty on that basis would have little if any bearing on the safety of the convictions.  Secondly, in light of the wording of the second basis, dishonesty was not an issue at all, and he points to the Judge’s following remarks: [20]  

“If you conclude, members of the jury, that the defendant had treated the money - Hyundai’s money - as his own by spending the money or treating it as his own, to the benefit of his own or others, then you should have no difficulty in finding the defendant guilty of the four counts of theft. The dishonesty is clearly spending monies which were deposited, knowing full well that he was not entitled to the monies; the money belonged to Hyundai.”

26.  Mr Wong contends that the Judge qualified the direction on dishonesty by limiting it to the scenario when the applicant treated the money in his accounts as his own, knowing full well that he was not entitled to the money as it belonged to the company.  He argues that this qualification by the Judge incorporated the subjective limb of the Ghosh test in her direction.  He further argues that there was no requirement that a Ghosh direction must be given in all cases involving issues of dishonesty, which will be case and fact specific: HKSAR v Cheung Wai Chun [21].

27.  As for the first basis, it was clear that the unauthorised bank transfers of money to the applicant’s accounts were fraudulent in nature and anyone involved could have been in no doubt that what had been done was dishonest.  As for the second basis, if the applicant knew he was not entitled to use the company’s money as qualified by the Judge, the issue of dishonesty also did not arise.  Mr Wong submits that the direction given by the Judge on the element of dishonesty was clear and sufficient, and there was no misdirection as alleged.

28.  Mr Young acknowledges that the argument he is propounding in respect of the Ghosh test has not been previously argued in this or any other jurisdiction. 

29.  The Ghosh test consists of two questions in Specimen Direction 33.1: Dishonesty and the ‘Ghosh’ direction.  The first question is: Was what the defendant did dishonest by the ordinary standards of reasonable and honest people? (the objective limb).  The instruction in the specimen direction in respect of the objective limb is that the tribunal of fact must form its own judgment of what those standards are.  The second question is: Must the defendant himself have realised that what he was doing would be regarded as dishonest by those standards? (the subjective limb).  The instruction in the specimen direction in respect of subjective limb is that in deciding this the tribunal of fact must consider the defendant’s own state of mind at the time. 

30.  Importantly, the specimen direction provides the following initial instruction:

“Normally it is not necessary to attempt to define dishonesty as an ingredient of an offence. It will suffice simply to tell the jury that the word bears its ordinary meaning, which will be well known and understood by all of them.”

31.  It seems, in the factual circumstances of this case, that once the prosecution had established that the applicant misappropriated the funds for his own purposes, he knew he was acting dishonestly. It may be argued that this was what the Judge was addressing when she made her comments that have been characterised as the second basis for finding that the applicant misappropriated the funds as argued under the first ground.

32.  Mr Young relies on the departure from the Ghosh test by the English courts in Ivey v Genting Casinos (UK)  Ltd (trading as Crockfords Club) [22] and R v Barton and Booth [23], which now apply a two-stage test: (a)  what was the defendant’s actual state of knowledge or belief as to the facts; and (b)  was his conduct dishonest by the standards of ordinary decent people.  The difficulty with Mr Young’s argument is that the English decisions were not reinterpreting the objective limb of Ghosh to include a consideration of the defendant’s knowledge and beliefs as he proposes but were replacing the Ghosh test with emphasis on the defendant’s state of mind.  The application of the Ghosh test in Hong Kong was endorsed by the Court of Final Appeal in Mo Yuk Ping v HKSAR [24].  Mr Young argues that the reasoning in Mo Yuk Ping provides support for his argument. 

33.  Mr Wong’s response to this aspect of Mr Young’s argument is that incorporating a subjective element in the objective limb makes the subjective limb redundant.  He submits that the argument is without merit.

34.  I am doubtful about Mr Young’s argument because Sir Anthony Mason NPJ, with whom the other judges agreed, in Mo Yuk Ping, acknowledged that Ghosh represented the law in Hong Kong, although noting the academic and other criticisms of the test.  However, the replacement of the Ghosh test is a different argument to the one that is now being advanced by Mr Young, who submits that the objective limb of Ghosh incorporates consideration of a defendant’s knowledge and beliefs.

35.  At first, I treated the ground as a question of law alone, but after further consideration, it seems clear that it is a question of mixed law and fact for which leave is required.[25]  The interpretation of the first limb of Ghosh that Mr Young is advancing is tied up with the facts of the case.  Defence counsel did not raise this argument before the Judge.  He contended that the applicant was a conduit in transferring the money to North Korea and therefore there was no dishonesty.[26]  On the other hand, the prosecution argued that there was no question that the applicant acted dishonestly once it was established that he had misappropriated company funds and used those funds for his own use.

36.  I do not see how Mr Young’s argument arises in light of the evidence in this case.  As I have already noted, the applicant did not give evidence or call evidence on his behalf, so there was no testimony from him as to his knowledge and beliefs.  Moreover, it was accepted by defence counsel that there was no evidence to show a transfer of funds to North Korea, the essence of the defence case.[27]

37.  I am not satisfied that this ground is reasonably arguable as the issue of dishonesty was not in doubt once the prosecution had established its case to the requisite standard.

Ground 3 - Misdirection on the preconditions to using the confession evidence as the basis for convicting the applicant

38.  On this ground, Mr Young argues that the Judge erred in directing the jury at two critical points in the summing-up that if they were sure the applicant made the alleged confession statements and that those statements were true this would be sufficient for the jury to convict him on all four counts of theft.  The Judge had omitted the precondition of being sure the confession statements were voluntarily made, though a full Mushtaq direction had been separately given elsewhere in the summing-up.

39.  Mr Young contends that the misdirection on the prerequisite conditions to using the confession evidence to convict the applicant constituted a material irregularity.  He argues that there was a real risk that some jurors may have determined the applicant to be guilty, being satisfied with the truth of the confessions he had made, but without necessarily being sure he had not been induced to confess with the hope of advantage of settling the matter without going to the police.  Thus, the risk he may have been convicted on this basis renders the convictions unsafe and unsatisfactory.

40.  This ground concerns the second, third and fourth interviews of the applicant by the company’s senior management.  After discussing the matter with counsel, the Judge gave a Mushtaq direction in relation to the confessions made in those interviews.[28] 

41.  Mr Wong submits that the Judge gave a very detailed Mushtaq direction[29], which was supplemental to her introductory remarks and subsequent reminder regarding the confession statements.

42.  At the commencement of her summing-up, the Judge gave the jury an overview of the case, in which she made brief remarks regarding the applicant’s confessions that he stole the company’s money in four meetings with members of the company’s senior management.  She said:[30]

“If you are sure that there were these meetings, then you must consider if the defendant had confessed to stealing the money from Hyundai Hong Kong and had used it for his own benefit, such as to buy properties and make investments in China. And if you are sure he said those things, are you sure that those confessions are true? I will give you much more detailed directions on confessions later, but if you find the defendant made the confession or confessions and that they are true, you should have no difficulty in finding the defendant guilty of the four counts of theft.” (Emphasis added)

43.  It is important to note that at this stage the Judge made these brief remarks regarding the confessions, subject to providing more detailed directions to the jury later in her summing-up. 

44.  Later in her summing-up, the Judge addressed the issue of the confessions.  She provided a comprehensive analysis of the facts and issues in respect of the four meetings in which it was alleged the applicant had confessed to stealing the company’s money.[31]  She commenced by addressing the defence challenge that there were no such meetings with the applicant and then providing the following introductory remarks:[32]

“Members of the jury, it is for you to decide where the truth lies. If you conclude there were these four meetings with the defendant, you will consider then if the defendant has made the confessions; and if he did, were they true? If you are not sure the defendant was at the meeting, then you do not need to follow the directions I am about to give you on confessions. So if you conclude that the defendant was at the meetings, the prosecution say he made confessions or admissions to the offences.

  Let me turn to directions on the alleged confession is made by the defendant.” 

45.  The Judge proceeded to provide a brief overview of the four occasions where it was alleged the applicant made confessions.  She then gives a direction in relation to the first confession statement which was agreed between the parties should be treated differently from the other three confession statements.  Next, she addressed the other three confession statements in considerable detail, in which she gave a Mushtaq direction in the following terms:[33]

“… So in deciding whether you can safely rely on these admissions, you must decide still the following issues: Did the defendant in fact make the confessions? If you are not sure he did, you ignore them – same as the previous. If you are sure the defendant made the admissions and statements, you need to decide whether they were or may have been made or given as a result of inducement or oppression; that is something said or done which will make it unsafe to rely on what was said.

So if you conclude that the admissions or confession statements were or may have been obtained by Park or Kim or BS Kim or as a result of the inducement or hope of advantage, and oppression, or something said or done which may make it unsafe to rely on what was said, then you must disregard those admissions.

So in this case, the defence alleges that if you find that he did say those things in the two meetings and to Park at 6.30, they were said as a result of hope that the matter would not be reported to the police, if he discussed a way to pay back and this hope was present when he said those things to Park at 6.30, after the first meeting, and this hope continued through to the second meeting. Additionally, those things said in the second meeting were said as a result of the oppression related to his ID card being taken away from him, and not to be able to do the things like go and see the doctor. So if this is true, or may be true, you must disregard the admissions or confessions altogether, and you must treat the defendant as not having said anything in the hotel meetings or to Park at 6.30 pm on 29 February. Remember, this does not include the oral admission in the morning in Park’s office.

  Finally, if you are sure the defendant made these admissions and they were not obtained as a result of inducement, hope of advantage, or oppression, or something said or done which may render them unreliable, you must then consider whether when he said those things, they were true.  If you are not sure what he said was true, you must ignore it altogether.  On the other hand, if you are sure it was true, you may treat it as evidence which supports the prosecution case.”

46.  The Judge then addressed the elements of theft and the prosecution case and it was at the end of this exercise that she made the following comments:[34]

“So, in summary, if you find the defendant made the confession or confessions and they are true, you will find the defendant guilty of the four counts of theft.”

47.  Immediately after she made these comments, the Judge addressed the defence case.[35]

48.  As pointed out by Mr Wong, the Judge had made it clear in her remarks that it was only a summary of what she had said previously about the confessions.

49.  Before the Judge gave her directions in respect of the confessions, she discussed the matter with counsel.[36]  This resulted in the Judge carefully addressing the issue of the confessions, ensuring that a Mushtaq direction was given in respect of the second, third and fourth confession statements.  It was accepted that a Mushtaq direction was not required for the first confession statements.  Mr Young does not take issue with the terms of the Mushtaq direction that the Judge gave, nor that it was directed to the second, third and fourth confession statements, not the first.  His complaint is that the Judge did not repeat the Mushtaq direction when she gave her final remarks on the matter.  It needs to be appreciated that the Judge’s remarks were not meant to repeat what she had previously said and had been given as part of an overview of the prosecution case and evidence.  The Judge was merely stating the obvious if the jury accepted the confession or confessions, in which the applicant stated he stole the money from the company’s account, they would find him guilty of the thefts. 

50.  I am satisfied that the specific comments made in respect of the three confession statements, in the context of the summing-up as a whole, that the jury would have understood and applied the Mushtaq direction when considering the three confession statements.  It follows that I am not persuaded that this ground of appeal is reasonably arguable.

Conclusion

51.  I have found Ground 1 to be reasonably arguable, and leave is granted.  However, that is not the case with Grounds 2 and 3, which are not reasonably arguable and leave is refused.

52.  The applicant is reminded of his right to renew his application for leave to the Court of Appeal on the refused grounds, but he is also informed of the consequences of doing so, which may include a direction for any loss of time spent in custody pending his appeal if the Court were to come to the view that there was no justification for the renewal of his application.