HKSAR v. CHIM PUI CHUNG

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

1998, No.402
(Criminal)

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J U D G M E N T

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Power, V.-P. (giving the judgment of the Court):

1. This applicant faced three charges of conspiracy to defraud, one charge of offering an advantage and two charges of conspiracy to forge.

2. The first count alleged that the applicant and Chan Kai-fung (second defendant), between 1st April 1991 and 30th November 1992, conspired together and with other persons unknown to defraud any one or more of Mandarin Resources Corporation Limited ("Mandarin Resources"), its directors and shareholders by dishonestly:

(i) failing to disclose and concealing the increase in the plot ratio of the property known as Fairmount Terrace situated at 127 Repulse Bay Road (the said property), prior to or at the time of the sale of Mandarin Resources' subsidiary company Markle Land Limited ("Markle") to Lucky Man Properties Limited ("Lucky Man");

(ii) failing to disclose and concealing offers for the purchase of the said property prior to or at the time of sale of Markle to Lucky Man; and

(iii) failing to disclose and concealing the true commercial open market value of the said property."

3. The second count alleged that the same parties, between the same dates, conspired to defraud the directors and shareholders of Lucky Man by dishonestly:

(i) failing to disclose and concealing the increase in the plot ratio of Fairmount Terrace prior to or at the time of the Rights Issue of 146,580,000 new shares of Lucky Man;

(ii) failing to disclose and concealing offers for the purchase of the property prior to the Rights Issue; and

(iii) by understating the true commercial benefit available to Lucky Man and its directors and shareholders that would accrue from the intended purchase.

4. The third count, offering an advantage, alleged that the applicant, between 1st March 1991 and 1st May 1993, offered an advantage, namely a sum of $5,000,000 to James Lee, the director of Lucky Man and of Mandarin Resources, as a reward for procuring an increase of the plot ratio of Fairmount Terrace and arranging for the sale of the said property and forbearing to disclose to the shareholders and directors of Lucky Man the increase of plot ratio and the offers to purchase the property and the directors and shareholders of Mandarin the true commercial open market value of the property.

5. The fourth count against the applicant and the second defendant alleged that between 1st September 1992 and 17th April 1993, they conspired together with other persons unknown, to make false instruments, namely "Form of Transfer" documents and "Sold Note" and "Bought Note" documents, purporting to evidence the sale of shares in Lucky Man to named transferees, those shares having been held by Janyee Investments Limited ("Janyee") and Thai Yuen Investments Limited ("Thai Yuen"), with the intention that the false instruments be used to induce the Inland Revenue Department and Progressive Registration Limited to accept them as genuine and, by reason of so accepting them, in the case of the Inland Revenue Department, to accept payment of stamp duty in respect of the false documents to cause them to be stamped and endorsed and in the case of Progressive Registration Limited to enter the information contained in the "Form of Transfer" documents into the computer records of shares issued by Lucky Man and to cause the existing share certificates in the names of Thai Yuen and Janyee to be cancelled and to issue 6,000 new share certificates in the names of the 199 transferees named in the "Form of Transfer" documents.

6. The fifth count alleged that the applicant and the second defendant, between 1st September 1992 and 17th April 1993, conspired with persons unknown to defraud the Securities and Futures Commission by prejudicing it in the exercise of its public duty of administering the Hong Kong Codes on Takeovers and Mergers and Share Repurchases by dishonestly causing Janyee and Thai Yuen to appear each to sell 6,000,000 shares in Lucky Man by means of forged "Form of Transfer" documents and "Sold Note" and "Bought Note" documents enabling the applicant to acquire a controlling interest in Janyee and Thai Yuen without there being apparent the extent of his true beneficial interest or shareholding in Lucky Man and failing to disclose the Janyee and Thai Yuen held shares exceeding 35% in Lucky Man and to obey the requirement to make a cash offer to other shareholders of Lucky Man and failing to disclose the true beneficial interest of the applicant in Lucky Man and preventing the Securities and Futures Commission from taking proper steps in relation to the ownership of the 12,000,000 shares in Lucky Man.

7. The sixth count alleged that the applicant and Chan Kai Fung, between 1st July 1994 and 25th August 1994, conspired with persons unknown, to make false instruments of the type referred to in Count 4 purporting to evidence the sale of shares in Lucky Man by named transferors to Power Master Development Limited , with the intention that the documents be used to induce the Inland Revenue Department and Progressive Registration Limited to accept them as genuine and, by reason of so accepting them, in the case of the Inland Revenue Department, to accept payment of stamp duty in respect of the false documents and to cause them to be stamped and endorsed and, in the case of Progressive Registration Limited, to enter the information in the false documents into the computer records of shares issued by Lucky Man, thus causing the 6,000 share certificates in the names of 199 persons to be cancelled and one new share certificate to be issued in the name of Power Master Development Limited.

8. The applicant after trial before Pang J. and a jury was acquitted on the first five charges but found guilty of the sixth charge. The second defendant was acquitted on the charges he faced.

The Prosecution Case

1991

9. In December 1991, the applicant, through Day & Day, which was funded by his private company Silver Mountain, acquired two-thirds of the shares in Lucky Man. The total amount of shares was about 32,000,000 for which Day & Day paid $32,500,000. Day and Day had then to comply with the requirement to make a cash offer for the other Lucky Man shares. By November of that year, the applicant through Rich World had acquired 51% of the shares in another company known as Mandarin Resources ("Mandarin") and by an unconditional cash offer, which Rich World was required to make, to the remaining shareholders, Rich World increased its interest to 73% of the shares in that company. Lucky Man and Mandarin were closely linked as each owned separate halves of multi-storey residential blocks known as Fairmount Terrace at Repulse Bay. Mandarin, through an entity called Markle, owned Blocks A and B and Lucky Man owned Blocks C and D.

1992

10. In about February 1992, the applicant transferred his shareholding in Day and Day to a Mr. James Lee, thereby, on the face of it, divesting himself of his interest in Lucky Man. Day and Day, in due course, made the required offer and obtained a further 156,000 shares, bringing the total holding in Lucky Man to 67%. It was the prosecution case that Lee was a nominee of the applicant and that the sale was made to hide the applicant's beneficial interest in Lucky Man so as to avoid a conflict of interest in relation to the sale of Blocks C and D in Fairmount Terrace by Mandarin to Lucky Man. The applicant was acquitted of any wrongdoing in relation to these transactions.

11. In June 1992, Day and Day transferred 7.5 million shares in Lucky Man to a company known as Janyee and 7.6 million shares to a company known as Thai Yuen. The funding for both those companies came from Silver Mountain, the applicant's private company. The appointed directors and shareholders of those two companies were associates of the applicant and they authorized him to sign documents in their names.

12. The consideration was $9,000,000 for the shares transferred to Janyee and $9,120,000 for those transferred to Thai Yuen. However, no moneys were paid. It was accepted by the defence at trial that the directors and shareholders of the two companies were nominees of the applicant.

13. On 19th August 1992, Mandarin, of whose shares the applicant held 73%, agreed to sell its half of Fairmount Terrace, Blocks C and D, to Lucky Man. On 16th September 1992, a buyer offered $350 million for the site. On 8th and 12th September, Lucky Man issued circulars seeking the approval of its shareholders to the raising of funds for the purchase from Mandarin.

14. On 2nd October 1992, Mandarin issued a circular to seek the approval of its shareholders to sell its half of Fairmount Terrace. The shareholders approved on 19th October 1992.

15. None of the circulars mentioned the fact that, after an application by a Mr. Kai-lun Lee, the District Lands Office had offered to increase the plot ratio to 3.0 from 2.1, a fact which was known by Mr. James Lee, nor did they mention the offer to buy the whole site for $350 million.

16. On 26th October 1992, the applicant entered into a procurement agreement with agents for the sale of Fairmount Terrace for $350 million and a fee of $35 million was paid to him. These transactions were neither known by or authorized by Mandarin or Lucky Man.

17. In November 1992, Janyee and Thai Yuen were each allocated just over 27 million Lucky Man shares, making their combined holding 35.7% of the issued shares of Lucky Man. The interest of the applicant in these two companies was not revealed.

1993

18. In March 1993, 6 million shares of Lucky Man were transferred from Thai Yuen and the same number from Janyee into the names of 199 transferees and new share certificates were issued on 17th April 1993. This transaction was the subject of Count 4.

19. On 16th April 1993, the applicant acquired in his own name by allotment, 8 shares in Thai Yuen and 8 in Janyee. His nominees held the remaining 2 shares in each company.

20. On 19th April 1993, the applicant filed an SDI notice in which he claimed 80% interest in the shares of Thai Yuen and Janyee which, of course, gave him the same proportional interest in the shares of Lucky Man which were held by them.

21. In November 1993, the Securities and Futures Commission served notices on the applicant under section 33 of the Ordinance requiring him to supply details of his Lucky Man shares.

1994

22. In March and April 1994, further Section 33 notices were served on Thai Yuen and Janyee requiring details of their dealings in Lucky Man shares. The applicant responded on their behalf but made no mention of the transfer of 6 million Lucky Man shares by each of the two companies to the 199 transferees. In August 1994, the applicant acquired a company called Power Master and on 23rd of that month, all 12 million Lucky Man shares held by the 199 transferees were transferred to Power Master. This transaction was the subject of Count 6.

The Grounds of Appeal

Ground 1

23. The applicant's first ground of appeal was that the judge had failed to give a fair and balanced summing-up to the jury. It was submitted that the approach of the judge when summing up was unfair as he first read the count, then gave directions in law, then read a part of the evidence of the applicant, and then, and this is the complaint, almost verbatim, read to the jury the submission which the prosecution had made when contending that there was a case to answer. The applicant contends that the judge failed properly to analyse the relevant issues and to put before the jury the evidence of and arguments made by the defence and, in particular, failed to deal with the evidence of the applicant himself. It is submitted that a substantial defence was raised which was never, in any adequate way, put by the judge to the jury while, on the other hand, the prosecution case was dealt with at length and was underpinned by observations from the judge.

24. It was finally argued, in this ground, that the judge made an improper comment by saying that "the fact he was the owner of the shares still remained concealed from the SFC and the SEHK behind Power Master and why? But the risk of having them in the names of 199 transferees who were totally strangers was removed. Instead of holding the 199 risks, they are now with Wai Yiu-ki and Power Master."

25. Before dealing with this ground it is necessary to look with care at the summing-up. It must be remembered when so doing that the judge was dealing with six counts and with evidence that had been given from 5th January 1998 to 1st August 1998. No complaint is made of his outline of the factual matrix which occupied the first 10 pages of his summing-up. The judge then said:

"The prosecution said the entire series of events were orchestrated by the 1st and the 2nd defendants together with other persons unknown. During the material period, the 1st defendant was the true beneficial owner of the companies involved, and he stood to gain an enormous amount of money at the expense of the minority shareholders of Mandarin and Lucky Man.

The prosecution said that the 1st defendant is the mastermind behind an elaborate scheme which involved the defendants conspiring between themselves, and with others unknown, firstly to conceal the true open market value of Fairmount Terrace from the minority shareholders; second, to conceal the fact that the 1st defendant was in fact the beneficial owner of the shares in the companies involved. Thirdly, he offered to bribe James Lee to withhold such information from the other shareholders. Fourthly, in order to conceal the 1st defendant's beneficial ownership of the shares in Lucky Man, and to avoid having to make a general public offer to the minority shareholders under the Takeover and Mergers Code, the 1st and 2nd defendants had conspired together with other persons unknown, to forge instruments of transfer, and Bought and Sold Notes, in order to effect bogus transfers of shares to the 199 individuals, so as to create the impression that the combined holdings of Janyee and Thai Yuen of Lucky Man shares fall below the 35% mark.

Fifth, in 1994 the shares were transferred from the 199 individuals to Power Master Limited. The documents evidencing the transfer were again forged, and that was again a conspiracy between the 1st and 2nd defendants with other persons unknown in order to effect the transfer. The defendants were arrested in July 1996." (p.11)

26. He went on to say:

"Always bear in mind that when you draw an inference of guilt or an inference adverse to a defendant, you must be satisfied beyond reasonable doubt. That is, you must feel sure. If you have any doubt at all of the defendant's guilt, you must give the benefit of that doubt to the defendant. In that case, it is your duty to return a verdict of Not Guilty.

When you have decided what evidence you are sure is correct, it is for you to decide what conclusions you are sure, you should draw from it." (p.17)

The judge then set out the categories of witnesses who had given evidence: the expert witnesses, the police witnesses, the witnesses from the Securities and Futures Commission, the witnesses as to the "purchase of Fairmount", the witnesses who represented the present owners of Lucky Man, the government witnesses, from the Stamp Duty Office, the two witnesses from Progressive Registration, the witnesses who gave evidence as to the acquisition of Janyee and Thai Yuen, the witnesses who had worked for the applicant, Miss Blondie Lee and Miss Gloria Wong, the professional witnesses from the financial world, and finally the 7 directors of companies that had been mentioned in the trial. Having concluded what he described as his "very brief summary of the prosecution witnesses of this trial" he turned to the evidence of the applicant. He spent more than 13 pages setting out his evidence in which the applicant told how he came to know of the existence of Lucky Man and Mandarin; how he had come into association with Mr. James Lee and Mr. Kai-lun Lee; how he had acquired Lucky Man's shares from the liquidator; how he had transferred his interest in Lucky Man to James Lee; how he had come to transfer the Lucky Man shares to Janyee and Thai Yuen to protect his own interest; how Lucky Man had resolved to make a Rights Issue to acquire Markle Land from Mandarin Resources. It will be remembered that after the Rights Issue, Janyee and Thai Yuen had held 35.71% of Lucky Man shares, a figure which would have triggered the general offer provision under the Takeover and Merger Code. The applicant said that he had not been aware that the percentage had exceeded the 35% mark and how he would, had he been aware, have either sold the excess shares or made an application to the SFC or to the Stock Exchange for a waiver of the mandatory provisions. The applicant went on to say how he had not been aware of any offer to purchase the Fairmount Terrace property until about 24th October 1992; how the payment of $5 million to Mr. James Lee after the sale was an agency fee, project manager fee and a consultant fee but was never a bribe or a corrupt payment; how his negotiation for a joint venture in China required payment of $6 million by Lucky Man; how, in consequence of that, he had instructed his office staff to transfer 6 million shares in Lucky Man from Thai Yuen and 6 million from Janyee to make provision for the payment of $60,000,000 to Rong Shi Da, the joint venture partner; how it was agreed that the 12 million shares be broken into small lots so that they could be transferred to numerous units of Rong Shi Da, as requested; how he gave instructions to his office staff but was not aware of the exact mechanism by which the shares were to be broken up; how, because real estate development in China slowed to a halt, the transfers of shares from Thai Yuen and Janyee turned out to be a futile exercise; how some time in 1994, as a result of a meeting with Miss Judy Vas of the Securities and Futures Commission he became aware that the initial transfers of Lucky Man shares from Janyee and Thai Yuen were made without the authority of the transferees; how, when he learnt of this, he immediately instructed his employee Mr. Wai Yiu-ki to receive the shares back but was not involved in the preparation of the documents for the transfer of the shares to Power Master; how Chan Kai-fung, the second defendant, was a "hau san" in his office which indicates, so the judge told the jury, that he was a person occupying a very lowly position within the office. The judge summed up this evidence by saying that the applicant regarded the second defendant as a person who "did not have the experience, qualification, position, or calibre even to discuss business matters with him."

27. The judge finally detailed Mr. Chim's allegation that his arrest and trial was a conspiracy by the then British administration against him which had been carried over after the resumption of sovereignty. He said that the applicant stressed that he was a victim of his political views and that the present proceedings were the "culmination of deliberate political persecution by the British Administration".

28. The judge then set out five matters for the jury's consideration when assessing the credibility of the applicant's evidence. He then commented on the demeanour of the applicant reminding the jury of the way in which he had at times evaded giving direct answers to the questions asked in cross-examination.

29. After dealing with the second defendant, the judge directed the jury on the offence of conspiracy saying:

"When criminal conspiracies are formed, it may be that one or more of the conspirators is more deeply involved and has a greater knowledge of the overall plan than the others. It is not necessary for one member of the conspiracy to know who the other members of the conspiracy are, provided that they know that there is one or more other persons who are involved in it.

They don't need to know the full extent of the conspiracy to which they are attaching themselves, provided that they know the intent of the conspiracy. Once a conspiracy is in existence, then a person can join it after it has started, or a member of it can drop out but it nevertheless remains a single conspiracy. In the particulars of each count of the conspiracy in the indictment, it is stated that the 1st and 2nd defendants conspired together and with other persons unknown. In each of the conspiracy counts, there are the four following theoretical situations, provided of course all the elements of the offence is proved beyond reasonable doubt."

No complaint is made of this direction.

30. He then outlined four situations. At this point we need only refer to the third which was described in the following terms:

"There was a conspiracy between the 1st defendant and other person or persons unknown only. Then D1 is guilty and D2 is not guilty, provided of course all the other elements are proved." (Emphasis supplied.)

31. The judge, up to this point, had summarized the evidence, had set out the evidence of the defendant, had told the jury how they could properly draw inferences and had defined the law relating to conspiracy. The above directions occupied more than a third of the summing up. He then dealt with Count 1 and Count 2 giving a Ghosh direction as to "dishonesty" and saying, inter alia:

"Mr. Griffiths, in his final address to you, suggested that all the persons who could have been a party to the conspiracy in Counts 1 and 2 are known, so that the prosecution cannot properly charge the defendants for conspiring with other unknown persons. Don't you think that it begs the question? It is precisely the prosecution's case that there are other persons whose identity or name are not known and who were part of that conspiracy, and hence, the manner in which Counts 1 and 2 were drafted."

He later said, still referring Mr. Griffiths' suggestion:

"I pose this question. Don't you think it begs the question? It is precisely the prosecution's case that there are other persons whose identity or name are not known and who were parties to the conspiracy. This is precisely the way in which Counts 1 and 2 are drafted."

32. The judge devoted the next 23 pages of his summing-up to Counts 1 and 2.

33. He then turned to Count 3 devoting the next 19 pages of his summing-up to that count.

34. He then turned to Counts 4 and 6. These counts were, of course, interlocking. Count 4 was concerned with the false instruments whereby the shares were transferred to the 199 names and Count 6 was concerned with the false instruments whereby the shares were transferred by the 199 names to Power Master. The judge referred to section 69 of the Crimes Ordinance which deals with false instruments. When dealing with the evidence in relation to Count 4, he set out lengthy answers by the applicant explaining how it came about that he had entered into an arrangement to pay $60 million to Rong Shi Da, his partner in the joint China venture. He set out, in full, his answer explaining how this venture foundered. This evidence was, in part, as follows:

"Business men are different from lawyers, and about this in the beginning of March, I already had negotiations and came to agreement with Rong Shi Da. After I returned to Hong Kong, I informed my subordinates as to who these subordinates were. Mainly, they were Lee Ming-mie, Blondie Lee, and the other girl, Hui Lai-yuk - by that I mean to be Chui Lai-yuk. One of them was my personal secretary, and the other was responsible for my personal finance. I said take out 6 million shares from each of my two companies, namely, Thai Yuen and Janyee. 6 million shares from each of these two companies, changed them to nominee so that they would be ready for use. Therefore, they would be sort of standby, be ready for use in connection with Rong Shi Da. The reason why the number of nominees was 100-something or it's actually 200. It was exactly what Rong Shi Da requested." (p.99)

35. He then set out two exchanges which occurred in cross-examination:

(1)

"Q. Mr. Chim, it is an admitted fact proved in this case that 100 of those people didn't authorise anyone to sign those signatures. They didn't sign it themselves, they didn't know anything about the transaction. This is proved in this case. A. The same reason. None of these 100 individuals ever say they themselves saw with their own eyes who signed something, or who signed what anybody. Nor do they know who did it."

(2)

"Q. Mr. Chim, it follows, does it not, as day follows night, that someone forged these signatures? A. Because I did not see who did this, or which fokie of mine did it, I do not know. Yesterday, I already admitted it was their commercial mistake. In law, we must understand if anybody has already given authorization, then of course, it would be all right. As to that name - list, how from where the fokies obtained it or maybe they had a misunderstanding that because in the past have agreed to be the nominee, therefore, they got a misunderstanding that it could not be used again. That's why after that had happened when I realised that there was such a thing that had happened, I realised that it was a commercial mistake and I was already very angry because they never let - inform me or let me know what had happened during the course of it, because I never interfere with their work. As I have said, I had in the past 13 listed companies and 11 of them were sold. And a number of shares involved could amount to tens of millions or even hundreds of million shares, but I never looked at them or interfered with them. As I explained yesterday, when shares are transferred to person and such person really exists, then those shares would become other people's shares. If it was something intended to be false, false names could have been used. So this is definitely a technical and commercial mistake. And yesterday, as I also gave explanation as to why I didn't explain to the CCB, and I already told you in my - yesterday, that in fact, I even approached the top ranking officer of CCB, but they deliberately tried to make use of this to attack me. It was my fokies who had made mistakes and causing me loss and although I'm suffering from this, but still they prosecuted me."

36. As can be seen from the above, the judge had set out, in terms, the applicant's explanation as to how it was that he had no knowledge of the mechanics of the share transfer. He then set out the evidence of a Mr. Kwok from mainland China who said that Rong Shi Da had a lot of branches; that he wanted the shares to be broken up to about 200 parts for distribution to various branches spread across mainland China so that every branch would get some; that eventually the deal did not go through because of the economic downturn. The judge then said:

"In summary, Mr. Chim's evidence is that he only gave instructions to his two lady staff in his office to effect the transfer. He did not know how they had effected the transfer and he took no part in it whatsoever. Now let us look at the evidence which the prosecution says is relevant."

37. It cannot be said that the judge failed to detail the evidence of the applicant in relation to the fourth count. He went on over the next 7 pages to set out the evidence which the prosecution contended was relevant to that count.

38. He then turned to Count 6. He first told the jury that the law applicable to Count 6 was the same as that applicable to Count 4 but that they must consider each count separately and consider the evidence for and against each defendant separately. He then said:

"Let us go straight to look at Mr. Chim's evidence on Count 6."

39. He first set out the following passage in evidence-in-chief which was at the heart of the applicant's defence:

"Q. Now insofar as the transfer into Power Master was concerned, did you do that yourself or how was it achieved?

A. After the SFC had informed us - when I said 'us' I mean I and other people, I and financial adviser, Robert Lee. When we were informed, therefore, we realised that it was a technical and commercial mistake. It was because investigation was made. And I found out that it was a technical and commercial mistake. Therefore automatically had to be transferred back to me. I informed Wai Yiu-ki to get a company, i.e. to have the 12 million shares transferred back to Power Master. That was to hold them on my behalf, to own them on my behalf. I did not take part in nor did I know how that was achieved, what procedure's taken, what formalities went through. When the SFC asked me about the shares to whom Power Master belonged, very clear in answer, belong to me. They did not make any further enquiries or expressed any further doubt."

40. The judge's comment upon this passage was:

"So Mr. Chim said he did not take part nor did he know how that was achieved, and what procedure was taken, and what formalities had been gone through."

41. This clearly stated Mr. Chim's defence, i.e. that he knew a transfer was done but that he had no idea whatsoever how it was done. We pause to observe that, if that was so, he could not have had any intention of misleading anyone by using a particular method of transfer. The judge went on to underline this defence by referring to the following question which he had asked the applicant during cross-examination:

"Q. Did you tell your staff members actually what to do when you had spoken to Miss Judy Vas?

A. I only told Wai Yiu-ki to use Power Master to receive those shares. As to how he went about it, I did not know."

42. He then set out the following passage from cross-examination:

"Q. You didn't tell them to forge the signatures so that the shares could be transferred back?

A. Anyway, I wouldn't bother with them. With those people who had made mistake, they already knew themselves in their minds that they had made a mistake, and in fact I did not even know who'd done it. I did not watch who signed those instruments of transfers. In fact, I did not even look at the share certificates or the instruments of transfer.

Q. Did you know that necessarily, signature has to be forged to get these shares back?

A. If you ask me that now, you cannot say definitely that the names were forged ones. If it is a forged signature, it has to be something like this. You have to see and memorize how a person sign his name, how he writes out his name in the signature, and then you imitate it. Then it is forged signature. If you just put down a signature in any form you like, it is only appending your signature without authorization. I hope you being such a senior counsel, you must be, you have to understand very clearly what is a forged signature."

43. The judge then said:

"In summary, Mr. Chim told us that once he realized his staff had made a technical and commercial mistake, he instructed Wai Yiu-ki to take remedial actions to hold the shares on his behalf. Again, he said he did not take part or give directions as to how the mistake was to be corrected."

44. The judge, in the next four pages, set out the prosecution evidence on Count 6. He reminded the jury that it had been admitted that none of the transferors named in the instruments of transfer dated 23rd August 1994 were aware of the transactions and suggested that they should have no difficulty in finding that the documents were forged or false instruments. He reminded them that a person whose voice appeared to be that of the second defendant had instructed Daykin, Secretarial Services, to acquire Power Master; that Daykin was paid for their services by a cheque drawn on the account of Silver Mountain dated 7th September 1994 signed by the second defendant. He set out the evidence of Mr. Wai Yiu-ki that the applicant had told him that a company had to be set up to hold the batch of Lucky Man shares and that he was to be responsible for managing the business of the company; that he managed Power Master at the applicant's request and that the applicant always made it clear that Power Master belonged to him; that he identified his signature on the chop of Power Master as the transferor in all 199 instruments of transfer which he said had been given to him to sign by either Debbie Chui or Finny Tong; that he had obtained the chop of a mainland company called Tung Fong Metal Wire Company, which "he thought" he had affixed to the instruments of transfer at the same time that he signed them; that he was not involved and knew nothing of the negotiations to acquire Lucky Man's shares, the payment of consideration for them or the stamp duty or registration fee in relation to them; that he had been given the share certificates for the 12 million shares dated 6th September 1994 in the name of Power Master and that he had kept them. The judge pointed out that the stamp duty payable in respect of the instruments of transfer by both transferor and transferee was paid by a cheque drawn in favour of the Hong Kong Government dated 23rd August 1994 signed by the applicant in the amount of $180,995 and that a debit entry for that cheque appears in the Silver Mountain bank account on 24th August 1994; that a fee payable to Progressive for effecting the transfer of the 12 million shares into the name of Power Master was paid by cheque dated 19th September 1994 drawn on the account of Silver Mountain and signed by the applicant and that the payment is described in the Silver Mountain general ledger as a transfer fee and debited to the applicant's current account. The judge commented:

"It is clear that the 199 instruments of transfer and the matching Bought and Sold Notes were treated as genuine when, in fact, they were false instruments, by the office of the Inland Revenue Department when they affixed chops on them, evidencing the payment of stamp duty. The documents were also treated as genuine by the employees of Progressive, i.e. P.W.s 45 and 46, the two ladies when they cancelled the Lucky Man share certificate and issued one new share certificate in the name of Power Master."

He pointed out that, if the evidence of the witnesses from the Stamp Duty Office and Progressive was accepted, then the witnesses who worked in those offices were in fact induced to and did act upon the false instruments to their prejudice.

45. Having referred to the evidence that concerned the second defendant, he observed to the jury that

"the first transfer of the 12 million shares into the names of the 199 transferees made the forging of another set of instruments of transfer and bought notes inevitable if the shares were ever to be retrieved and the proof (truth) concealed".

46. He said finally:

"The admission that the 1st defendant was the owner of Power Master, the use of Power Master to hold the 12 million Lucky Man shares was for the benefit of the 1st defendant in that the fact he was the owner of the shares still remained concealed from the SFC and the SEHK behind Power Master and why? But the risk of having them in the names of the 199 transferees who were total strangers was removed. Instead of having 199 (risks), they are now with Mr. Wai Yiu-ki and Power Master."

47. We return to the consideration of this ground in which it is complained that the judge failed in his summing-up to refer to issues raised and points made in the final speech by counsel for the applicant. Mr. Griffiths S.C., with him Mr. Richard Wong and Mr. Richard Leung, referred to R. v. Lawrence, (1982) A.C. 510 at 519, where Banks J. said that it was the duty of a judge to

"include a succinct but accurate summary of the issues of fact ....., a correct but concise summary of the evidence and arguments on both sides, and a correct statement of the inferences which the jury are entitled to draw from their particular conclusions about primary facts."

We accept this correctly to state that it is the duty of the judge to give a balanced summing-up. Mr. Griffiths in particular complains of a failure by the judge to refer to eleven points which he made in his final speech.

48. We feel it necessary to say no more than that we are satisfied that all, except two, while quite proper observations to be made by Mr. Griffiths to the jury, were not such as required repetition by the judge when summing up.

49. We turn to deal with the remaining two points. In the first complaint is made that there was no mention by the judge of the following submission which was made in relation both to Count 4 and Count 6:

"In count 4, everyone who worked in Mr. Chim's office at that time was known - Finny Tong, Debbie Chui, Ng Fung-tai, Wai Yiu-ki, Belinda Mak, Blondie Lee and Gloria Wong. They were not named in the indictment. We haven't known what case we are to meet in respect of those particular people. If they had been named as co-conspirators, wouldn't you expect to find them giving evidence either because they were given immunity or because being named and not called by the prosecution, the defence decided to call them? But here is nothing like that because there is nobody named."

50. In the second, complaint is made that there was no mention of the following four possible scenarios to which counsel adverted in his address:

"(a) Mr. Chim was not involved at all, those documents were made without his knowledge, no offence;

(b) Mr. Chim asked other persons to prepare all the documents without telling him or her or them what the documents would be used for and afterwards he signed them himself, no offence;

(c) he and other persons were involved but they were told or led to believe by Mr. Chim or anyone else that authorization had been obtained for the 199 as had obviously had been in 1989, no offence;

(d) it is only if Mr. Chim and other persons were involved and they both knew that there was to be an unlawful use of the names, i.e. a forgery - that there could be any question (of the commission of an offence)."

The real complaint being advanced here is that the "other persons unknown" who were included in the count were never properly dealt with by the judge.

51. We will deal more fully with the words "other persons unknown" when we come to Ground 4. Suffice at this stage to say that the jury were told by the judge at the outset that it was the prosecution case "that the 1st defendant is the mastermind behind an elaborate scheme which involved the defendant's conspiring between themselves and with others unknown" to transfer the shares to the 199 names and then from them to Power Master.

52. When the judge was outlining the applicant's evidence, he said that the 12 million shares that were to be transferred to Rong Shi Da were to be broken up into small lots and that the applicant "gave instructions to his office staff but he was not aware of the exact mechanism of how the shares were to be broken up into small lots".

53. It seems unarguably clear, even on the evidence of the applicant, that some person or persons in his office staff, and it will be remembered that in his own evidence he exonerated the second defendant, had forged signatures or had so instructed others, who may, perhaps, unwittingly, have done so. What the jury had to decide was whether he had knowledge of and approved of what was being done. The prosecution were in no position to know who it was but it was their case that it was open to the jury to find that such person or persons existed, that he, she, or they acted knowing that the forged signatures would be used to mislead the authorities and that this was in pursuance to an agreement with the applicant.

54. The trial judge, when he came to deal with conspiracy, set out situation number 3 as "a conspiracy between the 1st defendant and other person or persons unknown only. Then D1 is guilty and D2 is not guilty provided, of course, all the other elements are proved." (Emphasis supplied.)

55. When dealing with Counts 1 and 2, the judge had said:

"It is precisely the prosecution's case that there are other persons whose identity or name are not known and who were parties to the conspiracy. This is precisely the way in which Counts 1 and 2 are drafted." (Emphasis supplied.)

56. This observation had equal application to Count 6.

57. Subject to what we have to say in relation to ground 4, we are satisfied that the defence was put squarely before the jury and that there was no failure by the judge to sum up the facts in a balanced way.

58. Finally, under Ground 1, complaint is made of the following passage which came at the end of the section of the summing-up which dealt with Count 6. The judge said:

"The admission that the 1st defendant was the owner of Power Master, the use of Power Master to hold the 12 million shares was for the benefit of the 1st defendant in that the fact he was still the owner of the shares still remained concealed from the SFC and the SEHK behind Power Master and why? But the risk of having them in the names of the 199 transferees who were total strangers was removed."

59. It is suggested that this ignored the defence which was that what had occurred was a "commercial mistake" and ignored the applicant's evidence that he had never intended to conceal his beneficial interest in the shares in Lucky Man or to mislead the authorities. We do not agree. The observation was a perfectly proper one. The jury were fully aware what the applicant had said in his own defence. It was a matter for them to decide whether he was acting in a continuing endeavour to conceal the true ownership of the shares or was acting, as he said, without any thought that the complicated manoeuvers in which he was indulging might have that effect.

Ground 2 - the judge's directions on intent

60. Mr. Griffiths S.C., contends that the judge's directions to the jury upon the necessary intent in conspiracy to forge (Count 6) were in the circumstances of this case inadequate. He focused first upon the directions relevant to the applicant as a defendant and then more generally upon the directions relevant to the guilt of "persons unknown" as co-conspirators.

61. He accepts that the directions upon the elements of the offence were correct as far as they went at p94F-L of the summing-up:

"The prosecution has to prove the following three elements in the offence. The first, there was an agreement between the 1st and 2nd defendants, and other persons unknown, on the dates specified in the count, to make false instruments. At the time of the agreement - that's element number 2 - at the time of the agreement, each defendant intended that the false instruments be used to induce another person or persons to accept it as genuine. And the third element is, each defendant intended by reason of that person so accepting, that person would do, or not (to) do, some act or acts to his own or to any other person's prejudice. You will be given a handout."

Indeed, these directions were repeated in a written handout which the judge provided for the jury's assistance.

62. However, Mr. Griffiths suggests that these directions do not go far enough. He points out that in this case as in almost every other the proof of intent depends upon inferences drawn from established facts. A standard direction was given upon the way in which the jury were to approach the drawing of inferences at 16K-17I:

"Most matters can be proved by direct evidence - like exhibits, photographs - that is what can be seen and what can be heard. But there are, however, some matters such as the knowledge or intention of a particular person which are not susceptible to direct proof. After all, unless a person tells you so, you cannot really look into the state of mind at the time of the alleged offence. So, it may be necessary to draw an inference with regards to these matters. That is to say, to draw a conclusion on the evidence.

Whenever you wish to draw any inference or conclusion, I ask you to bear in mind several matters. You can only draw an inference based on facts which have been admitted or proved to your satisfaction. You must not rely on mere suspicion. In criminal cases, the inference you wish to draw must be the only reasonable inference that can be drawn under the circumstances. It must be an inference which no reasonable person could fail to draw from the established facts. Again, you must not guess. You must not speculate, and you must use your common sense and everyday experience and draw a logical and reasonable inference from the established facts. It is not that you must draw inference.

In the course of this summing-up, I may use the expressions such as "conclude" or "decide" without repeating the expression, "satisfied beyond reasonable doubt" or "sure". Always bear in mind that when you draw an inference of guilt or an inference adverse to a defendant, you must be satisfied beyond reasonable doubt. That is, you must feel sure. If you have any doubt at all of a defendant's guilt, you must give the benefit of that doubt to the defendant. In that case, it is your duty to return a verdict of not guilty."

Mr. Griffiths does not suggest that standing on its own, this direction is other than impeccable, but contends that the defence advanced by the applicant required a further direction. The basis for the argument is that the necessary intent in forgery under s71 of the Crimes Ordinance (Cap. 200) is, as it was explained by P. Chan J (as he then was) in R v Chiu Sin-wai [1996]3 HKC 535. Therefore, he submits that the necessary intent is that the accused intended that he or another person:

(1) Should use the false instrument;

(2) That it was within his contemplation that he or another person would use it so as to induce a recipient to accept it as genuine; and

(3) Thereby cause the recipient to do something to the recipient's prejudice.

With respect, however, the introduction of the concept of what was within the accused's contemplation is unnecessary. On the necessary intent, the words of the Ordinance are clear. The section reads as follows:

"71. A person who makes a false instrument, 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 the offence of forgery and is liable on conviction on indictment to imprisonment for 14 years."

The same words appear in s1 of the Forgery and Counterfeiting Act 1981 in England and in R v Campbell (1985) 80 Cr.App.R. 47 at 48 Ackner LJ (as he then was) summarised the necessary intention as follows:

"It is common ground that the intention which the statute requires contains two ingredients. One is the intention that the false instrument shall be used to induce somebody to accept it as genuine and the other is the intention to induce somebody by reason of accepting it to do or not to do some act to his own or any other person's prejudice."

However, after reading to the jury the statutory definition of "false instrument", the judge added that:

"the term dishonesty does not appear ... It is not an element the prosecution has to prove."

Mr. Griffiths contends that this direction - which also appeared in the written directions handed to the jury - was wrong or at least so misleading as to render any verdict based upon it unsafe. We consider this submission later when dealing with the directions on intent related to "persons unknown". It suffices to say that for the reasons there set out, we reject the submission. A like point was rejected in R v Campbell (supra). The judge's directions on intent follow the words in the Ordinance. They are correct.

63. Nevertheless, Mr. Griffiths submits that the judge's directions failed to take account of s65A of the Criminal Procedure Ordinance (Cap. 221) which provides:

"65A. Proof of criminal intent

(1) A court or jury, in determining whether a person has committed an offence-

(a) shall not be bound in law to infer that he intended or foresaw a result of his acts or omissions by reason only of its being a natural and probable consequence of those acts or omissions; but

(b) shall decide whether he did intend or foresee that result by reference to all the evidence, drawing such inferences from the evidence as appear proper in the circumstances."

It is therefore suggested that the jury should have been directed that they should not consider an inference irresistible merely because it was a natural and probable consequence of an act which had been proved.

64. The need to give such a direction was related to a passage in the applicant's evidence at p1274E-1275p :

"Q. And I want to move on, next, to the 4th count. It's suggested that you and CHAN Kai-fung made an agreement together to forge documents. What do you say as to that?

A. No such a thing at all. As I have said in my evidence earlier, I informed my then secretary - Blondie LEE - and my accounting employee - Debbie CHUI. So, never did I mention or discuss anything concerning these with Nelson.

Q. And it's said that you two did that with the intention of causing the Inland Revenue Department to accept stamp duty. At the time that you gave the instruction to your secretary or to Debbie CHUI, did the thought of the Inland Revenue Department cross your mind at all?

A. In fact, there was a time that the prosecution allege me of deceiving ten-odd government departments. And then, finally, came down to the Inland Revenue and the shares registration company. So, in fact, this happened -- this did not happen at all. They could -- according to what they allege against me, they could simply say -- they might as well simply say I deceived the Hong Kong Government. I did not do anything as such.

Q. Yes. What we are concerned with is was it your intention when you instructed your staff ...

INTERPRETER: Sorry. Yes.

Q. ... to do what you told us - namely, to put them into 200 lots. Was it your intention to deceive the officers of the Inland Revenue or, if not, what was your intention when you gave her that instruction?

INTERPRETER: Witness also said, "Inland Revenue Department never occurred to my mind at that time."

A. Did not cross my mind at all.

Q. What about Progressive Registration? Did that cross your mind?

A. Did not cross my mind at all. I did not even know which was the registrar of -- a share registrar of the company because different companies have different share registrar.

Q. And what was your intention or reason for giving the instruction to one or other of these two staff members? Why did you do it?

A. As I have said earlier, so that nominees could be used. This would make it convenient that, in future, when needed be, the 12 million shares could be handed to the Rong Shi Da Laundry Factory in Hefei so that it could give them to their distribution offices.

Q. And did you make an agreement with anybody - you said you didn't with Nelson CHAN - did you with anyone else, to forge documents like this?

A. None at all. There wasn't anything like a forged document in my mind at all. Now, after what has happened, now I realise that because my 'fokies' have done something wrong, the person who suffer most is myself. So, it is a commercial mistake. Even when something has been done wrong, how could you just regard it and treat it as something criminal? I do not know how they go -- how they went about doing things, nor did I give them any instruction as to use whose -- use what people's names. I wasn't involved at all. Even when -- after things had happened, when they talk about name list of First City, I wasn't aware of that at all.

Q. And I'd like to go to the 6th count. That alleges that you and CHAN Kai-fung made an agreement together to make false instruments in respect of the transfer from the 199 to Power Master. First, did you have any such agreement with CHAN Kai-fung?

A. Did not have such an agreement at all.

Q. Did you have such an agreement with anyone else?

A. I did not.

Q. Do you recollect who you told to transfer into Power Master?

A. WAI Yiu-ki.

Q. And did you have any thought in your mind of the officers of the Inland Revenue Department at that time?

A. No.

Q. Or progressive registration?

A. No."

If proper weight is given to the judge's direction on inferences open to the jury in the passage cited earlier, there was no basis upon which the jury could have thought that they were bound to infer that the applicant intended the natural or probable consequences of his acts or omissions.

65. In these circumstances, a direction in accordance with s65A of the Criminal Procedure Ordinance was unnecessary and indeed could have been contrary to the applicant's interests. In order to balance the direction following the words of the section, it would be necessary for the jury to be told that although they were not bound to infer intent from the natural and probable consequences of an act, it was open to them to do so provided that all other evidence was taken into account.

Did the judge fail to leave to the jury a specific defence on intent raised by the applicant?

66. In his summing-up the judge did not refer to the passage in the applicant's evidence at p1274E-1275P (above) in which he said that the Inland Revenue Department and Progressive Registration never crossed his mind when giving his staff instructions to correct the "commercial mistake" and to transfer the shares into Power Master. It is suggested that this raised a further defence in law which the judge failed to leave to the jury thereby rendering the conviction unsafe. Reliance is placed upon a passage in the judgment of R v Hung Man Chit [1996] 3 HKC 25 at 28D:

"It is trite law that if an accused person raises a defence in law on the facts, however unlikely, however incredible or however fantastic, it must be squarely left for the jury's consideration and decision."

The defence to Count 6 was left to the jury in the summing-up by citing certain passages of the applicant's evidence and then summarising the defence. For example at p110A-O:

"Q: Now insofar as the transfer into Power Master was concerned, did you do that yourself or how was it achieved?

A: After the SFC had informed us - when I said 'us' I mean I and other people, I and financial adviser, Robert LEE. When we were informed, therefore, we realised that it was a technical and commercial mistake. It was because investigation was made. And I found out that it was a technical and commercial mistake. Therefore automatically had to be transferred back to me. I informed WAI Yiu-ki to get a company, i.e. to have the 12 million share transferred back to Power Master. That was to hold them on my behalf, to own them on my behalf. I did not take part in nor did I know how that was achieved, what procedure's taken, what formalities went through. When the SFC asked me about the shares to whom Power Master belonged, very clear in answer, belong to me. They did not make any further enquires or expressed any further doubt.

So Mr CHIM said he did not take part nor did he know how that was achieved, and what procedure was taken, and what formalities had been gone through.

In cross-examination by Mr Lunn, he had this to say. Remember I asked him a question. I asked Mr CHIM, 'Did you tell your staff members actually what to do when you had spoken to Miss Judy Vas?' The answer:

A: I only told WAI Yiu-ki to use Power Master to receive those shares. As to how he went about it, I did not know."

67. Later, the judge read a passage in which the applicant denied knowledge that any certificates or instruments of transfer were to be forged and he finally summarised the defence as follows at p111I-L:

"In summary, Mr CHIM told us that once he realised his staff had made a technical and commercial mistake, he instructed WAI Yiu-ki to take remedial actions to hold the shares on his behalf. Again, he said he did not take part or give directions as to how the mistake was to be corrected."

The question is whether the applicant's denial that he had the Inland Revenue or the Registrar in mind when asking for the "commercial mistake" to be rectified raised a separate defence to the count or whether this was a passage in which he advanced a detail of his overall defence which was that he gave orders for the shares to be transferred to Power Master without taking part in or knowing how this was to be achieved or what procedures or formalities were involved.

68. Whereas the judge must leave each defence raised to the jury so that they consider it, this does not involve the obligation to remind the jury of each facet or detail of the defence. The judge's duty is to direct the jury to fully consider the defence raised. Here the judge left the applicant's defence to the jury. In the circumstances of this case, it was unnecessary for the judge to specifically deal with this short passage of evidence. Clearly, if the jury took the view that the applicant did not, or may not, have known the procedure or formality undertaken by the witness Wai Yiu-ki for transferring the shares to Power Master and did not know that this involved forgery, the jury could not have imputed to him any intention to use false instruments to induce the Inland Revenue or the Registrar to accept them as genuine, or any intention that they should do any act to their prejudice.

The directions on intent relating to "persons unknown"

69. The final point taken on the judge's directions on intention is that they were misleading and inaccurate upon what had to be proved against co-conspirators who were "persons unknown". (We consider further submissions concerning "persons unknown" as co-conspirators under ground 4.)

70. As the second defendant was acquitted at trial, the conviction of the applicant depended upon the jury being satisfied that at least one person unknown - not the second defendant - was proved on the evidence to have been guilty of the conspiracy with the applicant. It is submitted on the applicant's behalf that even if the directions were sufficient to indicate what it was necessary to establish against a defendant, they left it open to the jury to convict on the basis of a conspiracy with another party who was innocently involved.

71. Mr. Griffiths invites an examination of both the written and oral directions. First, it is contended that no direction was given that it was necessary to prove an intention to play a part in furtherance of the agreed criminal purpose. This, it is said, taken together with the direction that no dishonest mens rea was necessary in forgery left it open to the jury to conclude erroneously on the evidence that a person working in the office on the documents which led to the transfer of shares was a co-conspirator even though that person may have thought that the documents were filled in with the authority of the persons whose names were used.

72. In evaluating this ground, it is necessary to consider the allegation in the indictment under Count 6 together with the oral and written directions of the judge.

73. The indictment clearly alleges that the two accused "conspired together and with other persons unknown".

74. The judge did not indicate to the jury that it would be possible to accept a verdict of guilty against one defendant alone unless he was found to have conspired either with his co-defendant or a person unknown. He left a number of hypothetical possibilities including that which he described as:

"Situation no. 3: there was a conspiracy between the 1st defendant and other person or persons unknown only. Then, the D1 is guilty and D2 is not guilty, provided of course all the other elements are proved."

The jury can have had little doubt that in order to convict the applicant they had to be sure of a conspiracy to forge between him and at least one person unknown. But, was it open to them on the other directions to conclude that the other person could be an innocent agent and yet be part of the conspiracy?

75. As to the suggestion that no sufficient direction was given that a conspirator must intend that the criminal purpose will be carried out, the jury were directed orally that:

"Persons do not commit a criminal offence merely by talking about the possibility of committing some unlawful act, but once they reach the stage that they have agreed to commit the act or to commit the act if it lies within their power to commit it, the agreement is complete. And if at the time of that agreement, they intended to take part in the offence, then a conspiracy is in place even if the details are not ironed out."

The written directions were to the same effect and contained the following passages:

"It is the agreement to commit the offence and the intention to take part that forms the offence of conspiracy.

... And if at the time of that agreement, they intended to take part in the offence, then a conspiracy is in place even if the details are not ironed out.

... a conspiracy does not come to an end with the making of the agreement, and it will continue as long as there are two or more parties to it, intending to carry out the common design."

When the judge came to deal with Counts 4 and 6, he gave more specific directions upon the intention required for those particular counts. On these, he said:

"The prosecution has to prove the following three elements in the offence. The first, there was an agreement between the 1st and 2nd defendants, and other persons unknown, on the dates specified in the count, to make false instruments. At the time of the agreement - that's element number 2 - at the time of the agreement, each defendant intended that the false instruments be used to induce another person or persons to accept it as genuine. And the third element is, each defendant intended by reason of that person so accepting, that person would do, or not (to) do, some act or acts to his own or to any other person's prejudice."

Then he read to the jury the definition of "false instrument" as defined in s.69 of the Crimes Ordinance (Cap. 200) about which there is no dispute but finally added the term "dishonestly does not appear in these two counts. It is not an element which the prosecution has to prove". In the written directions on Count 6 the same words appear but relate to "this count".

76. The essential point taken by Mr. Griffiths is that even if, contrary to his main submission, the directions were sufficient for a defendant as a co-conspirator, they were not adequate and not sufficiently focused upon "persons unknown". Inevitably the summing-up was directed primarily to the participation and guilt of the two defendants - but not exclusively so. The jury was specifically directed in "situation no. 3" that it was open to convict the applicant if the jury concluded that he conspired only with other persons unknown. Moreover, the judge made it clear that "the offence is committed when two or more persons agreed that they will do the unlawful act"; "it is the agreement to commit the offence and the intention to take part that forms the offence"; and, "It would be sufficient if the prosecution is able to prove beyond reasonable doubt that there has been a meeting of minds between more than one person that an offence will be committed by them".

77. These are examples only. The written directions were amplified by these oral directions. They include adequate directions upon intention in conspiracy as required in R v Anderson [1986]1 AC 27 and Yip Chiu-cheung v R (1994) 99 CrAppR 406 (PC) and clear directions that the agreement must be with a person who intends to participate in the crime.

78. But even if these directions were sufficient, could the jury have been misled by the judge's directions, both oral and in writing, that it was not necessary for the prosecution to prove dishonesty in this count when it came to consider persons unknown as co-conspirators? Mr. Griffiths took this point as a refinement of his general submission to which we have already referred. He submits that on these directions, it was open to the jury to be misled and to conclude that a person innocently taking part in the forgery of the documents or the submission of them to the Inland Revenue and the Registrar was a conspirator and therefore provide the basis for convicting the applicant. In brief, the point is that although the statutory definition of forgery does not specify dishonesty as an element, the making of a false instrument with the intention of using it to induce another to accept it as genuine, and the intention that by accepting it that person would act to his prejudice is, to any right-thinking person, dishonest. Therefore, it is said, the direction is conflicting, confusing and misleading when applied to other persons unknown.

79. Although some judges would not have given this direction because it is unnecessary, as we have already pointed out, the directions on intent were correct. They followed the Ordinance and are supported in R v Campbell (supra) in which a similar point was argued.

80. The prosecution do not have to prove dishonesty. It has to prove the falsity of the instrument and the two specific intentions to establish mens rea. The judge dealt with the elements both clearly and correctly. The jury had the elements of the substantive offence before them in writing. They must be taken to have followed those directions. Having regard to the clarity of those directions, there is no basis upon which the jury could have been misled or confused especially when the judge was contrasting these directions with the full R v Ghosh [1982] QB 1053 directions on dishonesty which he had given on Counts 1 and 2.

81. The final criticism of the directions concerning persons unknown as co-conspirators, contends that what the judge said about the specific inferences which the jury were entitled to draw from the primary facts was inadequate. Reliance is placed upon the combined effects of two much cited and well known passages. The first is in the speech of Lord Hailsham in R v Lawrence (H.L.(E)) [1982] AC 510 at 519G:

"A direction to a jury should be custom built to make the jury understand their task in relation to a particular case. Of course it must include references to the burden of proof and the respective roles of jury and judge. But it should also include a succinct but accurate summary of the issues of fact as to which a decision is required, a correct but concise summary of the evidence and arguments on both sides, and a correct statement of the inferences which the jury are entitled to draw from their particular conclusions about the primary facts."

The second appears in the speech of Lord Diplock in R v Kwan Ping Bong (PC) [1979] AC 609 at 615G:

"The requirement of proof beyond all reasonable doubt does not prevent a jury from inferring, from the facts that have been the subject of direct evidence before them, the existence of some further fact, such as the knowledge or intent of the accused, which constitutes an essential element of the offence; but the inference must be compelling - one (and the only one) that no reasonable man could fail to draw from the direct facts proved."

But in giving appropriate weight to these authorities and respect to the detailed submissions presented to us, we must also consider the relevant effect of all the directions in the summing-up. There were careful and accurate directions on the burden and standard of proof. The jury were reminded of the absence of direct evidence on state of mind and were correctly directed upon the approach to the drawing of inferences from established facts. They were correct directions upon the necessary elements and intent to be proved on Count 6 and correct directions upon the necessary involvement of "persons unknown" as co-conspirators. On these directions, it was not open to the jury to approach their task when considering "other persons" as co-conspirators other than correctly and in accordance with principle.

82. For these reasons, we are unable to accept that the judge's directions, relating to "other persons" as conspirators challenged in ground 2, were either wrong in law or were otherwise flawed or inadequate so as to render the conviction unsafe.

Ground 3

We turn next to ground 3. Mr. Griffiths has submitted that the trial judge failed to give a direction of the kind which is contemplated in R v Brown, (1984) 79 Cr.App.R. 115, when summing up to the jury on Count 6.

A so-called Brown direction in Hong Kong informs the jury that not only must a majority of the jury (in the sense of the minimum number needed to convict) be satisfied of each ingredient of the offence but also, where a number of matters are particularised as going to the proof of one ingredient, the jury must be satisfied by at least a majority of one of those particulars.

83. The prosecution alleged in Counts 4 and 6 that there were two intended victims of the conspiracy to forge false instruments, namely the Inland Revenue Department and Progressive Registrations Limited. Mr. Griffiths' contention has been that there was a discernible risk that the jury may not have been satisfied by the required majority that at least one of these separate and distinct bodies was induced to act to its prejudice having accepted the false instruments as genuine.

84. We do not need to dwell upon this ground in any depth. As Mr. Lunn has correctly pointed out, the prosecution's case could be established without identifying the particular party or parties who it was intended should be induced to accept the false instruments of transfer as genuine. However, in the particular circumstances of this case, it is abundantly apparent that officers of the Inland Revenue Department and employees of Progressive Registration Limited were the bodies (and in this sense the 'victims') to whom it was necessary to send the false instruments of transfer so that the directive given by the Applicant for shares to be transferred to Power Master could be carried out. Whilst, therefore, the victims did not have to be particularized, in reality they could only have been those two bodies. It was obviously desirable, in the interests of clarity, that they were identified in the charge.

85. Even if, as Mr. Griffiths contends, the prosecution only had to prove one of the particulars to succeed on this count, the fact of the matter is that the judge's directions indicated that both the particulars had to be established before a verdict of guilty could be reached. On the face of it, this was putting a higher burden on the prosecution than it was strictly necessary to do. The reason that the judge may well have done this is that there was no room for doubt as to the identity of the 'victims' for whom these false instruments were ultimately intended and Mr. Lunn was not overstating his argument when he said that it "beggars belief that this was ever an issue". Accordingly, the judge very sensibly did not give any special direction and summed up to the jury setting out the legal and factual matters of which proof was needed incorporating all the particulars set out in the charge.

86. It follows that there was not even the slightest risk that the jury, once they had found that the prosecution had established the double intent in forgery, would have then been unable to agree as to the intended victims of this conspiracy.

87. Finally, on this ground, Mr. Griffiths has argued that the jury may have been misled by directions which they had been given relating to other counts of the indictment which has aggravated the omission to give a Brown direction. As we have already indicated, such a direction was inappropriate in the present circumstances. The directions given on other counts of the indictment were irrelevant.

88. This ground fails.

Ground 4

89. In ground 4, it is submitted that the trial judge erred in leaving it open to the jury to convict on Count 6 on the basis that the applicant had conspired with 'other persons unknown'. When Mr. Lunn came to reply to this, it emerged that he relied to an extent upon evidence given by the applicant which, as he put it, caused the issue of the unknown conspirators to be crystallised. Mr. Griffiths then sought leave to amend this ground, which was unopposed, by adding that the judge had erred in his failure to withdraw from the jury the issue of 'persons unknown' when a submission of 'no case' was made.

90. Although Mr. Griffiths conveniently divided his argument into seven separately lettered aspects, there is considerable overlap between the points he made. Essentially, he made the following criticisms which give an overview of the arguments he later developed at length:

"(a) In the prosecution's opening speech, the applicant was alleged to have conspired with Nelson Chan, but the prosecution never identified or suggested there were in existence 'other persons unknown' who were involved and took part ... and whom the prosecution could not name though they could allege what they did; the defence case was conducted on the basis that the conspiracy was between the applicant and Nelson Chan;

(b) after the conclusion of the prosecution's case, the prosecution sought to amend the particulars of counts 1 and 2 by including another person as a named conspirator (namely James Lee), and the judge refused such application; the prosecution did not apply to amend the particulars in counts 4 and 6 at all at any stage;

(c) in its closing speech, the prosecution did not identify and suggest in respect of count 6 that there were in existence 'some persons unknown' who could not be identified, but who took a material part as co-conspirators ... although, in the (same) speech, in respect of count 4, the prosecution suggested that Debbie Chui signed the instrument of transfer of Janyee, and that the 'unknown person' had become known;

(d) the applicant's leading counsel submitted in his final speech .... that no unidentified person existed in relation to count 6, and that the case against the applicant and Nelson Chan depended entirely upon proof that they had conspired together, and he submitted that the trial judge would direct them on the facts of the case that, as a matter of law, it was not open to them to consider a conspiracy as existing between the applicant and any 'person unknown'; at no stage did the judge intervene to say that he intended to sum up on a different basis;

(e) at the end of the final speech by Nelson Chan's counsel, the judge asked the prosecution for their observations with regard to 'persons unknown'; in reply, counsel only referred to 'persons unknown' in connection with counts 4 and 6, saying that the name of Debbie Chui had only emerged in the applicant's evidence;

(f) the judge did not direct the jury how to approach the issue as to how the applicant could be held guilty of conspiracy with some 'person unknown'; and

(g) the judge failed to direct the jury at all as to what in law was required to found proof of the involvement of a 'person unknown' as a co-conspirator, what needed to be proved in law in relation to such person, or what evidence .... could justify such a conclusion and how the jury should consider such evidence, (of which it is submitted there was none), and he failed to identify what evidence was available in the case which, if accepted, was capable of affording such proof."

91. The main thrust of Mr. Griffiths' submissions was directed at there being no evidence at any stage, and in particular when it was submitted there was no case to answer, that there was any other person with whom the applicant could have conspired apart from Nelson Chan; if the conspiracy failed against Nelson Chan, it failed against both. He submitted that while there were what he called "mechanics" who may have physically carried out the work involved in typing and signing the false instruments of transfer, there was nothing to suggest that what was done was part of any criminal conspiracy, in the sense that there was any evidence that the "mechanics" had the necessary dual intent required to make what they were doing the forgery of documents. Time and again, Mr. Griffiths emphasised the vagueness of the prosecution's approach to "other persons unknown" in both their speeches, in the evidence called as part of their case and in the cross-examination of the applicant. As can be observed from the general criticisms made about the way the trial proceeded which have been set out already, Mr. Griffiths even went so far as to suggest that the defence were misled by the way the case was presented against them into thinking that all they needed to answer was the allegation of a conspiracy between the applicant and Nelson Chan.

92. We were, in the light of these submissions which Mr. Griffiths developed from his most helpful skeleton argument, particularly concerned to know what evidence the prosecution relied upon in order to present its case against the applicant that he had conspired with some other person or persons unknown. We were equally concerned to know whether the nature of the case against the applicant, put on the footing that he had conspired with at least one other person unknown, must have been apparent to the defence. On this basis we called upon Mr. Lunn to deal firstly with this ground of appeal.

93. In the course of his reply, Mr. Lunn drew our attention to the transcript of the proceedings at trial where, after the conclusion of the prosecution's case, and after the 'no case' submissions had been made, there was specific reference to the issue relating to unknown persons. After the judge had ruled that there was a case to answer, he was then requested by Mr. Griffiths (at page 1840 in the transcript) to give a separate indication as to whether any of the particulars should be removed from the indictment on the ground that they were not justified by evidence. The judge then ruled that "everything" was to go before the jury.

94. Insofar as the 'other persons unknown' in Count 6 were concerned, Mr. Lunn has submitted that there was every justification for the judge to have ruled in this way and no justification whatever for the defence to suggest that they were under any illusions as to how the case was being presented against them. Looking at the evidence in the broadest sense, it was clear beyond any doubt, he submits, that there were those on the applicant's staff who had at one time or another appended to no less than 398 false documents, signatures that in the majority of cases were proved to have been forgeries.

95. Equally clearly, as we have had demonstrated to us by the samples at enclosure '4' in the respondent's bundle of exhibits, the member or members of staff who were forging the signatures and appending other false details to those documents must have realised that they would mislead the relevant authorities to whom they would in due course be presented. In the event, they were used and they did mislead the authorities. In this sense, Mr. Lunn submits, there was overwhelming evidence that at least one and probably more members of staff, in view of the enormity of the task, knew that forgery on a grand scale was involved. The inference to be drawn by a jury that the person or persons unknown, with the necessary dual intent, had been deeply involved in the offence was practically not an issue. To this extent also, it was hardly surprising that the culprits were not keen to be identified. The real issue, says Mr. Lunn, was whether the applicant himself, with or without Nelson Chan, could be proved to have been invovled in a conspiracy to make forged documents with those who were beyond question making them.

96. As the prosecution were able to point out in the trial, the applicant was closely involved with these events and he had a strong motive to be associated with the scheme. Not only were his staff, from the relatively small open-plan office they occupied with the applicant, responsible for making the instruments of transfer, but the 12 million Lucky Man shares were transferred in August 1994 on the strength of these forgeries to Power Master which, although managed and run by Wai Yiu-ki, was owned by the applicant. The only sensible explanation for this is that it was done entirely for the applicant's benefit as his ownership, following the interest shown by the SFC in the share dealings of Lucky Man in March 1994, was now restored to a company under his control.

97. Whilst the applicant's defence, to which we shall shortly turn, may have served to confirm in the minds of the jury some of the inferences that must have been already plain to them, some material parts of his defence did not emerge until he gave evidence. As Mr. Lunn pointed out with considerable force, the prosecution was never alerted to what the applicant might say until he testified that Blondie Lee (PW18) and Debbie Chui were given instructions to effect the transfer of the 12 million shares out of Thai Yuen and Janyee in March 1993 into the names of nominees. He stated that he had taken no further part in this matter and did not know by what method his instructions were carried out. Whilst this evidence was principally relevant to Count 4, the applicant went on to give evidence in relation to Count 6 that when he became aware in about April 1994 that the 199 nominees were people who actually existed, he then told his staff members (as he agreed at page 1371G of the transcript) immediately to transfer the shares back to Power Master. He said that he took no part in what they did. His description of what had happened was that a "commercial mistake" had been made. When he found out about it he was angry which gave rise to his instructions immediately to change the shares back to Power Master.

98. Mr. Lunn uses this situation to illustrate that, while evidence existed of an undoubted conspiracy between the applicant and persons unknown, there was nothing at the end of the prosecution's case which enabled the prosecution to identify those persons with any confidence. He submits that the position was more or less exactly that which is conveniently set out in the 1998 edition of Archbold at para.33-42 which reads:

"Where the evidence discloses that the accused conspired with other persons who are not before the court, this should be averred in the indictment. Their names should be inserted, unless they cannot be identified, when it is sufficient to describe them as 'persons unknown'. Sometimes, although the Crown contends that the evidence discloses the conspiracy to have been with persons not before the court, the evidence may be unclear as to which identifiable persons were involved. In such circumstances, there can be no objection either to 'other persons unknown', or to 'other persons'. However, where during the course of the trial the uncertainty is resolved by evidence which is capable of founding the assertion that an identifiable person not before the court was a conspirator with the accused, then the indictment should be amended accordingly."

99. It was, in fact, this principle that had led the prosecution at the conclusion of their case, to apply in respect of the first and second counts on the indictment to have James Lee added as a named conspirator. Objection was taken to this by the defence and the judge refused the application.

100. Bearing in mind what has already been said about the applicant's evidence of the involvement of Blondie Lee and Debbie Chui, it might be thought that the prosecution would have made an application after his testimony had concluded to have them named as conspirators. The reason why this appears not to have been done is that the applicant, as Mr. Lunn put it, adopted a "hear no evil, see no evil" approach in his evidence about these two women. Putting no finer point on it, the applicant back-tracked on what he had said as the passage in the transcript at page 1368H illustrates:

"Q. Do you recall that Blondie Lee told us that she'd never signed documents of a commercial nature - she was your Legco assistant?

A. Listen to my answer clearly. Listen to my answer carefully. I informed Blondie Lee and/or Chui Lai-yuk. I never said that Blondie Lee signed anything. In fact, I did not even have any idea who did what, but what you are saying is implying - concerning Chui Lai-yuk and Blondie Lee, you are saying Blondie Lee said that she has not signed anything. And you are implying that I have said that she has signed something. In fact, I never said that."

101. A little later, at page 1370R, there is this further passage:

"Court: Mr. Chim, sorry. When did you first realise that your staff members, Blondie Lee and/or Debby Chui made a mistake, a commercial mistake?

A. I correct one thing first. And not necessarily it was these two. It is not necessarily be that it was Blondie Lee and/or Chui Lai-yuk who made the mistake because although I informed them to go about it , not necessarily be they were the persons who'd done it. Therefore, I must point it out as to your Lordship has just said, it was not necessarily be - these two persons who made the mistake.

Court: Well, sorry. I'll rephrase the question.

A. As to the time I realised my 'fokies' had made a mistake, it was in 1994. After the SFC has come to make enquiries, then she - 'by she' I mean Judy Vas, who informed me that, saying 'Hey, your fokies.' It was in 1994 on a day - I believe it was one day or approximately one day before the charges were transferred back to Power Master.

Court: Right, so did you inform your 'fokies' or staff members to immediately effect the transfer back to Power Master?

A. I did."

102. In our judgment, on any view there was evidence fit for the jury to consider at the end of the prosecution's case of a conspiracy between the applicant, with or without Nelson Chan, and 'other persons unknown'. By the time the applicant had finished giving evidence, the existence of others involved in a conspiracy to forge documents was abundantly clear and there was ample evidence from which the jury could irresistibly conclude that the applicant was a party to it even though no evidence of substance had been produced to show who the others were.

The applicant (at page 1125C of the transcript) described Nelson Chan at the material time relevant to Count 6 in this way:

".... he was a 'hau sang' of the company. By that I mean, he was only doing very trivial, unimportant things in the company."

103. The applicant later in his evidence portrayed Nelson Chan as someone who may not have known what was going on. This can only have given added force to the evidential distinction between the two defendants on trial.

104. None of these matters addresses the particular criticism levelled by Mr. Griffiths at the conduct of the prosecution and of the judge that the defence were led into believing that, despite the wording of the indictment, the case was being presented on the sole basis of a conspiracy with Nelson Chan.

105. The fallacy of this argument was quickly pointed out by Mr. Lunn so that we do not need to dwell long upon it. When the applicant gave evidence in chief, Mr. Griffiths specifically addressed the question of "persons unknown" relating to Counts 4 and 6 in a series of questions at page 1275E in the transcript. In particular, regarding Count 4, Mr. Griffiths enquired:

"Q. And did you make an agreement with anybody - you said you didn't with Nelson Chan - did you with anyone else, to forge documents like this?

A. None at all. There wasn't anything like a forged document in my mind at all. Now, after what has happened, now I realise that because my 'fokies' have one something wrong, the person who suffer most is myself. So, it is a commercial mistake. Even when something has been done wrong, how could you just regard it and treat it as something criminal? I do not know how they go - how they went about doing things, nor did I give them any instruction as to use whose - use what people's names. I wasn't involved at all. Even when - after things had happened, when they talk about name list of First City, I wasn't aware of that at all.

Q. And I'd like to go to the 6th count. That alleges that you and Chan Kai-fung made an agreement together to make false instruments in respect of the transfer from the 199 to Power Master. First, did you have any such agreement with Chan Kai-fung?

A. Did not have such an agreement at all.

Q. Did you have such an agreement with anyone else?

A. I did not."

106. Again, in his final speech Mr. Griffiths turned to this subject as one of the four issues he invited the jury to keep at the front of their minds. At page 387R in the appeal bundle he said this:

"And, fourthly, did Mr. Chim and/or Nelson Chan and/or some person unknown take some part in an agreed course of conduct in furtherance of the criminal purpose, i.e. did they both knowingly - whoever they were, Nelson Chan, or whatever - did they knowingly commit the offence of forgery. Or, might it have happened - when I say by accident, by mistake of one sort or another, and I'll deal with the details of that in a moment.

Now, in respect of these, there are four matters, I respectfully suggest, you want to keep in the front of your minds because the answers to them are very important."

107. Shortly after this, at page 388N, Mr. Griffiths said:

"Now, turning, therefore, to the first issue for you, does the evidence prove a conspiracy by Mr. Chim with Nelson Chan or with persons unknown? And again, ask yourselves, beyond reasonable doubt?"

108. At page 390L, Mr. Griffiths went on to tell the jury:

"And, if there is a possibility that there was a mistake by his staff in the way they went about it, if it is possible there was no conspiratorial agreement, i.e. an agreement with knowledge on the part of the staff of the dishonesty of what was being done, was it either the staff or Nelson Chan to forge the documents, then again he's innocent."

109. Mr. Griffiths then continued to remind the jury at page 411K:

"Count 6 ... what are the matters you have to there consider? The issues, we submit, are these. First, was there an agreement between Mr. Chim and Nelson Chan and/or persons unknown? ...."

110. At page 412C, Mr. Griffiths encapsulated the defence with these words to the jury:

"He (Chim) then realized the mistake made by his staff. He told Wai Yiu-ki to receive the 12 million charges into Power Master - Wai Yiu-ki being his nominee in Power Master - and he left it to his staff to follow how it was to be done. Now, if that evidence is true or may reasonably possibly be true, then there was no agreement to forge with the intention to induce Progressive or the Stamp Duty Office."

111. At page 413D, Mr. Griffiths went on to say:

"So we submit that, just as in Count 4, so in Count 6, there is no sufficient evidence to prove beyond reasonable doubt that Mr. Chim and/or Nelson Chan and/or anyone else had an agreement to forge the documents with the required intention to do that act of forgery."

112. With these passages in mind we have no hesitation in saying that the defence were made fully aware of the way in which the case was being put against the applicant, and that it was a potentially vital plank in the prosecution's case that 'other persons unknown' were alleged to be in a conspiracy with the applicant. This can be deduced not only from Mr. Griffiths' speech but also from the way in which Mr. Lunn had conducted his cross-examination of the applicant and the way in which he had addressed the jury in his final speech. In the course of the summing up, at page 110Q in the transcript, the judge reminded the jury of a passage in the cross-examination of the applicant where Mr. Lunn asked him:

"Q. You didn't tell them to forge the signatures so that the shares could be transferred back?

A. Anyway, I wouldn't bother with them. With those people who had made mistake, they already knew themselves in their minds that they had made a mistake, and in fact I did not even know who'd done it. I did not watch who signed those instruments of transfers. In fact, I did not even look at the share certificates or the instruments of transfer.

Q. Did you know that necessarily the signature has to be forged to get these shares back?

A. If you ask me that now, you cannot say definitely that the names were forged ones. If it is a forged signature, it has to be something like this. You have to see and memorise how a person sign his name, how he writes out his name in the signature, and then you imitate it. Then it is forged signature. If you just put down a signature in any form you like, it is only appending your signature without authorisation. I hope you being such a senior counsel, you must be, you have to understand very clearly what is a forged signature."

113. The judge then continued by saying at page 111I:

"In summary, Mr. Chim told us that once he realised his staff had made a technical and commercial mistake, he instructed Wai Yiu-ki to take remedial actions to hold the shares on his behalf. Again, he said he did not take part or give directions as to how the mistake was to be corrected."

114. Prior to this, regarding Count 4, Mr. Lunn had said in his closing address to the jury at page 652M in the transcript:

"But, in the course of his testimony, for the first time in the trial, there is evidence that others - that is, people other than the 1st and 2nd defendant - were involved in this transaction. And it comes from Mr. Chim's own mouth that those two persons were Blondie Lee and Debbie Chui. And we know that Debbie Chui's signature is to be found on one of - I think it's Janyee - one of the two company chops that is to be found on the instruments or transfer. So you have further evidence of her involvement. Mr. Chim tells the two of them to do something and you have further evidence of her involvement.

Well, the particulars of this account - this count, like the other counts, named an unknown or unknown persons. It may be that you feel that the unknown has become known as far as these two ladies are concerned. But that's a matter for you to consider."

No doubt, what Mr. Lunn had intended to convey was that for the first time there was not merely inferential but direct evidence that at least Blondie Lee and Debbie Chui were candidates for consideration as conspirators. This was not a remark that was confined only to the evidence on Count 4. It had relevance Count 6 as well. This was brought home to the jury when Mr. Lunn continued at page 657J, when he was specifically addressing the evidence on Count 6, by saying:

"Well, you'll ask yourself this question, of course, just like in Count 4, for whose benefit were the shares transferred to Power Master? As we have just indicated, the answer is obvious - it was for the benefit of the 1st defendant. He had the shares now under the control of a company - less risky than being in the name of real people. But the real benefit that he always wanted continued and that is that nobody knew that they were his shares. And that concealment continued even until the sale of the shares in September 1995 in the Irison circular, where the beneficial owners of the companies is set out - the beneficial owner of Power Master is Wai Yiu-ki. Sustained concealment of Mr. Chim's interest.

Again, the next question you must ask yourself is who was involved in all of this. And, again, the evidence points to the involvement of the 1st and 2nd defendants. Although you may feel that, in a transaction of this size in a small office, there's a probability that other persons were involved in the mechanics of what was happening. Even, perhaps, in the forgery of the signatures - you have so many signatures to forge."

Turning next to the criticism made by Mr. Griffiths that the judge did not interrupt him while he was making his final speech, to say that he proposed to sum up on a different basis than that which Mr. Griffiths appeared to be contending for in respect of a conspiracy with persons unknown, this is equally, in our judgment, without any foundation. Indeed, it was Mr. Lunn who very properly expressed concern at how far Mr. Griffiths was taking his speech from being a commentary on the evidence, within the framework of law, to what the jury might have perceived as an attempt by very experienced counsel to direct them on the law itself.

115. In this context, we observe with some dismay that leading counsel had not merely cited the names of decisions taken from several law reports when dealing with principles of law, but had (at page 317 of the transcript) quoted an isolated passage from R v To Kai-sui and others, (1980) HKC 112 at 119H:

"That would be in accordance with the principle that a conspirator whom the Crown can name ought not to be left in the indictment as a person unknown."

116. We take this opportunity to remind counsel of what was said by Lawton L.J. in R v Chandler, (1976) Cr.App.R. 1 at page 3:

"Reading passages from Law Reports to juries is becoming a forensic practice which would have been stopped by an earlier generation of judges. It is likely to confuse rather than help; and if, as in this case, the reading does not go as far as the judge thinks it should, he then has to read some more with a likelihood of making the confusion greater. The practice should stop."

117. In the jury's absence part way through Mr. Griffiths' lengthy speech, Mr. Lunn (at page 368H in the transcript) was sufficiently concerned to invite the judge to intervene in order to indicate that it was for him and not Mr. Griffiths to direct the jury on the law. At page 370E, Mr. Lunn went on to say:

"My Lord, what concerns us is that the jury are being given a lengthy dissertation on the law by my learned friend, Mr. Griffiths, and in due course, your Lordship will have to address the jury on the law, and given the length of what my learned friend was saying to the jury, your Lordship will perhaps find it necessary to deal with the points that my learned friend is raising, and tell them to ignore them if your Lordship takes that view of the law."

118. Mr. Griffiths' reply was that Mr. Lunn "is trying to ... shut me up in talking to the jury". He later went on at page 371P to say this:

"Your Lordship, is a 100 per cent right. If I have got the law wrong in some area then your Lordship will give a concrete direction. And your Lordship will have noticed that every time I have mentioned the law I've said to them, 'what I say is subject to what my Lord says at the end.' And I must say I have never in quite a long experience at the Bar heard a submission the like of that which Mr. Lunn has just made, that your Lordship should direct me how I should make my final speech and cut things out."

119. In these circumstances, given the stance adopted by Mr. Griffiths, we are satisfied that he cannot now be heard to complain that the judge did, in due course, direct the jury in a manner that amounts to a correction of the submissions he had been making on this aspect of the case. In other words, Mr. Griffiths had been addressing the jury on the footing that the prosecution had not presented a case where it was possible to rely on an unknown person as another conspirator, whereas the judge in due course directed the jury that this course was open to them.

120. This matter was re-visited at the end of counsel's speech on behalf of Nelson Chan. The judge, in a passage at page 566M, said that the expression 'persons unknown' was causing him concern and he went on to say:

"Court: Now, Mr. Griffiths has hinged on his case, not surprisingly, on that there were no persons unknown because all the persons who could have been part of the conspiracy - so the Crown alleges - the prosecution alleges - were known, right. Now, we have heard from Mr. Egan saying that there had been evidence, people saying, 'I can't really know who drafted the letter or the accounting practice, who actually was responsible for accounts'. Now, is there somewhere in the submission of Mr. Egan that somehow or another there could have been persons unknown who were part of the conspiracy?"

121. Following this, Mr. Griffiths invited the judge not to sum up on the basis that a conspiracy with others unknown could be established on the particular facts of this case.

There is much to commend in Mr. Lunn's response to this at page 570A in the transcript, and in the opinion of this court he was entirely right, when he concluded by simply saying that this was still a "live issue". It always had been.

122. The final criticisms made in the context of this ground are that the judge failed to give proper directions as to the jury's approach when considering whether the applicant had been proved to be in a conspiracy with other persons unknown.

123. The way in which the judge directed the jury on this aspect of the case is to be found in the transcript at pages 50-52, where the judge summarised the law of conspiracy, incorporating a direction as to the variety of possible verdicts open to the jury in the event that they found the ingredients of conspiracy proved. He said:

"What is a conspiracy in law? A conspiracy is an agreement by two or more persons to do an unlawful act or do a lawful act by unlawful means. The offences committed when two or more persons agree that they will do the unlawful act. Very often, there is no direct evidence of the agreement which the prosecution says was made. After all, when people make agreements to commit crimes, you would expect them to do so in private or in secrecy. You would not expect them to agree to commit the crime in front of others, or to put the agreement into writing.

That people may act in a way so as to bring about a particular result in such a way as to leave no doubt that they are carrying out an earlier agreement. You must therefore look at all the evidence, including the evidence of the behaviour of each defendant, to see if it has been proved beyond reasonable doubt that the defendants must have made the agreement as alleged by the prosecution in the indictment.

I want you to note the following points. First, it is not necessary to prove that the crime was carried out, or that an attempt was made to carry it out. It is the agreement to commit the offence and the intention to take part that forms the offence of conspiracy. I stress the word 'agreement' because the mere fact that there was a discussion or discussions about the possibilities to commit an offence is not sufficient to constitute a conspiracy. Persons do not commit a criminal offence merely by talking about the possibility of committing some unlawful act, but once they reach the stage that they have agreed to commit the act or to commit the act if it lies within the power to commit it, the agreement is complete. And if at the time of that agreement, they intended to take part in the offence, then a conspiracy is in place even if the details are not ironed out.

Point no. 2: a conspiracy does not come to an end with the making of the agreement, and it will continue as long as there are two or more parties to it, intending to carry out the common design. It is not necessary that it should be proved that the defendants and the other co-conspirators met to concoct the scheme which is the subject matter of the charges, or that they have originated. A co-conspirator or a conspirator may join at various times, attaching himself to the agreement that one or more of them would commit the unlawful act in question.

Point no. 3: the agreement can be expressed or implied or partly expressed or partly implied. It is not necessary to show some written agreement or the use of precise words. It would be sufficient if the prosecution is able to prove beyond reasonable doubt that there has been a meeting of minds between more than one person that an offence will be committed by them.

When criminal conspiracies are formed, it may be that one or more of the conspirator is more deeply involved and has a greater knowledge of the overall plan than the others. It is not necessary for one member of the conspiracy to know who the other members of the conspiracy are, provided that they know that there is one or more other persons who are involved in it.

They don't need to know the full extent of the conspiracy to which they are attaching themselves, provided that they know the intent of the conspiracy. Once a conspiracy is in existence, then a person can join it after it has started, or a member of it can drop out but it nevertheless remains a single conspiracy. In the particulars of each count of conspiracy in the indictment, it is stated that the 1st and 2nd defendants conspired together and with other persons unknown. In each of the conspiracy counts, there are the four following theoretical situations, provided of course all the elements of the offence are proved beyond reasonable doubt.

Situation 1: that there was a conspiracy between the 1st defendant, the 2nd defendant and person or persons unknown. Then, both are guilty.

Situation no. 2: there was a conspiracy between the 1st and 2nd defendants only. Then, again, both defendants are guilty, provided of course all the other elements are proved.

Situation no. 3: there was a conspiracy between the 1st defendant and other person or persons unknown only. Then, the D1 is guilty and D2 is not guilty, provided of course all the other elements are proved. I hate to repeat myself but this is the law.

The fourth situation: there was a conspiracy between the 2nd defendant and other persons unknown only, not the 1st defendant. Then, the 2nd defendant is guilty, and the 1st defendant is not guilty, provided of course all the other elements are proved."

124. Later on, turning to Counts 4 and 6 in particular, the judge said at page 94E in the transcript of the summing up:

"The law applicable to both counts is the same. The prosecution has to prove the following three elements in the offence. The first, there was an agreement between the 1st and 2nd defendants and other persons unknown, on the dates specified in the count, to make false instruments. At the time of the agreement - that's element number 2 - at the time of the agreement, each defendant intended that the false instruments be used to induce another person or persons to accept it as genuine. And the third element is, each defendant intended by reason of that person so accepting, that person would do, or not (to) do, some act or acts to his own or to any other person's prejudice."

125. At the end of the summing up the jury were handed a printed document (at pages 1064 to 1072 in the appeal bundle) setting out the ingredients of the offences to serve as a reminder of the salient points about which the jury had earlier been directed.

126. The judge gave a detailed summary of the evidence relating to Counts 4 and 6 between pages 96 and 115. It is not necessary to say much more than that the issues were placed fairly and squarely before the jury for their consideration. Summarizing the applicant's evidence on Count 4, the judge reminded the jury (at page 102H) with commendable clarity and conciseness that:

"... he only gave instructions to his two lady staff in his office to effect the transfer and he took no part in it whatsoever."

Similarly, with regard to the evidence on Count 6 given by the applicant, the judge said (at page 111 I):

"... once he realised his staff had made a technical and commercial mistake, he instructed Wai Yiu-ki to take remedial actions to hold the shares on his behalf. Again, he did not take part or give directions as to how the mistake was to be corrected."

127. We are satisfied that the jury could have been under no misapprehension, either legally or factually, as to the correct approach they should adopt towards Count 6. We have therefore concluded that no valid criticism of any kind has been established on this ground and that it must fail.

Ground 5 - Inconsistent Verdicts

128. There is no merit in this ground.

129. The evidence against Chan was clearly different from that against the applicant. Further the applicant gave evidence and Chan did not and the applicant, in his evidence, stated in emphatic terms that Chan did not hold a position of authority in his organization. The jury were entitled to acquit one and convict another.

Additional Ground - Apparent Bias

130. The applicant was allowed to argue an additional ground of apparent bias. It was submitted that the judge had failed to disclose to the parties his family connection with the Hong Kong Macau Development Company and with a Mr. Tsui Yiu-wah. Affidavit evidence, which was received de bene esse, indicated that the judge had once, in about 1968, worked for less than a year as an executive trainee in a company called Goodyear Investors Limited, which was ultimately and beneficially owned by his uncle, a Mr. Pang Kwok-chan. When Goodyear went into liquidation in about 1985, the applicant, through his private company, acquired one of Goodyear's subsidiaries, the Hong Kong Macau Development Company ("the Development Company") and 25% of the shares of its associated company Union V-techs Limited. It appears that The Development Company owned a building known as the HMD Building which was pledged by the applicant in 1992 to secure an overdraft facility which enabled him to issue cheques for certain transactions which the prosecution alleged during the trial were a "circulation of funds". During the trial, a feasibility report about the development of the site at Fairmount Terrace, prepared by Mr. Tsui Yiu-wah, a director of Lucky Man and of Mandarin, was produced in evidence. Mr. Tsui calculated that the value of the site per square foot was $3,500 and he consequently recommended to both companies that the development was not viable.

131. Mr. Tsui had formerly worked for Goodyear for more than 10 years. During the trial, the judge questioned many witnesses, including Mr. James Lee, in what Mr. Griffiths submitted was a sceptical way about the said report and the calculations therein.

132. It was the prosecution case that the applicant had conspired with other people to conceal the recommendation of an increased plot ratio of the said site by the District Land Office both from the shareholders of Lucky Man and Mandarin and had, by so doing, understated the true commercial value of the site and also that he had offered an advantage to the director and chairman of Lucky Man and a director of Mandarin for not disclosing the existence of the recommendation to the shareholders of the companies. It was submitted that the two companies acquired by the applicant from Goodyear were connected with the judge's family and that The Development Company was closely connected with the evidence in the case as it held an asset which was then pledged to finance transactions which the prosecution alleged was a "circulation of funds". It was submitted that the judge's connection with The Development Company and with Mr. Tsui Yiu-wah should have been made known to the parties.

133. Mr. Griffiths submitted that the law as set out in R. v. Sussex Justices ex parte McCarthy, (1924) 1 K.B. 256, which held that the test was whether "justice could be seen to be done" should be applied in Hong Kong. He contended that R. v. Gough, (1993) AC 646, would set out the test of apparent bias to be "whether in all the circumstances there appeared to be real danger of bias ... so that justice required that the decision should not stand" was not appropriate to the circumstances of Hong Kong and should not be applied. We are not sure what exactly was meant by this last submission. However that may be, we are satisfied that the test in Gough which has already been applied in Hong Kong is the proper one. We are satisfied, moreover, both that there was no real danger of bias and that, even if the earlier test was applied, the matters advanced not did begin to raise the possibility that justice might not be seen to be done.

Ground 6

134. We turn finally to Ground 6. We are satisfied that the conviction was neither unsafe nor unsatisfactory and the application is dismissed.

Sentence

135. When sentencing, the trial judge said:

"The present offence is not one which involves only one or two documents but it involves the forgery of over 100 signatures of the unsuspecting transferors. It could only be looked upon as a well-thought out and detailed scheme calculated to induce the intended victims to act to their prejudice. At the time of this offence, you were an elected Legislative Councillor, which position you had the privilege of retaining from 1991 until the present. Over the years, you have enjoyed the reputation of that of a successful company doctor and a golden banker.

It is suggested that what you have done is just a commercial mistake to rectify earlier errors made by your office staff, but from your wealth of experience in matters involving share investment and takeovers and mergers, no doubt, you could have taken a course to transfer the 12 million shares without having to resort to any form of criminality. Instead, you have conspired with others to commit the present offence. You have chosen to play the system with your knowledge and expertise.

When the offence was detected, you made accusations that these proceedings are the culmination of political persecution from the British administration. This is hardly a responsible remark to come from a Legislative Councillor. I consider this to be an insult, not only on my intelligence, but on those in your functional constituency who voted for you, on that of the past and present members of the Legislative Council who have served or are now serving with you, and on the general members of the public.

All of us in Hong Kong have been working very hard over the past two decades to build Hong Kong into the international financial services centre as it is today. This reputation has to be protected by the efforts of all and what you have done was something which had tarnished that hard-earned reputation. I have no sympathy for those who, in total disregard of this reputation, resort to committing the present offence as you did.

I consider the appropriate sentence for this offence to be one of immediate custodial sentence. I must make it clear that you are not being sentenced for the offences for which you have been acquitted or that of your disrespectful behaviour in court. I know that you have a clear record, and, as such, it is a mitigating factor. I shall not be making any order for disqualification from directorships pursuant to the Companies Ordinance.

I accept the appropriate sentence to be a term of three years' imprisonment and you will go to prison for three years."

136. It is submitted, firstly, that the judge was wrong not to have indicated a starting point. That criticism is correct. This court has indicated on a number of occasions that a starting point should be indicated when sentencing so that it can be seen on appeal whether credit given for mitigating factors was properly assessed. Mr. Griffiths goes on to submit that the sentence of three years was manifestly excessive as it was not calculated in accordance with the criminality involved. He points out, correctly, that the other offences on which the applicant was acquitted must be put wholly out of mind when sentence is being assessed and the offence did not involve any economic loss. He refers to the case of A.G. v. Tai Chin-wah, (1993) 1 HKC 1, suggesting that the criminality was much greater and continued over a very much longer period but the court, taking into account the loss of standing and reputation that the defendant suffered, was satisfied that 9 months' imprisonment was a proper sentence. He points to the applicant's past good character, to his public service and to the fact that he has lost his seat in the Legislative Council. He submits that the judge placed too much emphasis on the number of documents involved rather than upon the criminality and that he failed to remind himself that the applicant owned all the shares and that no third party suffered. He submits that the fact that the applicant was a Legislative Councillor at the time was in no way material as the offence was not connected with any duties that he had to carry out because of that office and, indeed, should have told in his favour because of the consequential loss of office that he has suffered. He suggests that the political accusations which the applicant made should not have played any part in the assessment of sentence. He finally asks that, whatever sentence be imposed, it should be suspended.

137. The matter must be dealt with upon the basis that the motive for this convoluted deception has not been established. This is known only to the applicant. There was however clearly an elaborate and calculated attempt to mislead the authorities which, given the effort and planning involved, must have been intended to achieve some substantial benefit.

138. We are satisfied that the judge was right when he said an immediate custodial sentence was called for. The judge must have started with a sentence of 3 1/2 years which, we are satisfied, was out of proportion to the criminality involved. We are satisfied that a sentence of 15 months would have been appropriate and this could properly be discounted for good character by three months, making a sentence of 12 months.

139. The application for leave to appeal against sentence is allowed. The hearing of the application is treated as the hearing of the appeal and the sentence is varied from one of three years to one of one year.