RE VIVIAN ROBINSON, QC

HCMP723/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 723 of 2005

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J U D G M E N T

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1. The Applicant seeks admission under section 27(4) of the Legal Practitioners Ordinance, Cap.159 to represent three persons in an appeal in a criminal matter.  On 19 July 2004, the three persons were each convicted in the District Court of an offence of conspiracy to defraud and sentenced to 3 years’ imprisonment.  All three defendants have applied for leave to appeal against both conviction and sentence.  The applications are, I understand, due to be heard by the Court of Appeal on 24 May 2005.

2. The charge to which the convictions related allege that the defendants conspired to defraud persons who might be induced to invest in various plans operated by a company called Team Power Enterprise Limited (“Team Power”).  The charge involved in short a pyramid scheme type of fraud.  The dishonesty alleged in the charge was as follows : -

“	(a)	falsely representing to those payers that if they paid specific amount of money for certain plans, and/or recruit other people to pay money for such plans, they would be paid specific sums of money thereafter;
	(b)	inducing, causing or allowing such payers to pay money to Team Power Enterprise Limited, knowing that Team Power Enterprise Limited could not meet the payments due to all the payers as represented to those payers;
	(c)	failing to pay all payers the money owed to them under the plans.”

3. The allegedly fraudulent scheme involved financial investment plans in which investors were asked to pay sums of money, wait a period of time and then at the end of the period enjoy very substantial returns (to the order of about 1,500%).  The Judge referred to one of these plans (called Plan A at the trial or The Gold Planting Plan) in which for an outlay of $10,500, would-be investors (or payers as they were referred to in the charge) might expect after the requisite period of time, a return of $166,300.  The prosecution alleged that Team Power had no business other than the financial plans offered to its investors, so that the only way in which the substantial returns could be paid to investors would be from the monies generated by payments made by other investors down the line.  All existing investors were encouraged to attract other people to invest and there were different types of incentives which were offered to them to do this.  Eventually, no returns could be paid to investors so that they lost whatever initial payments they had made.  In summary, the prosecution alleged a classic pyramid scheme fraud, preying on the temptation to many people of extraordinarily high returns.

4. At trial, the Court heard evidence from a number of prosecution witnesses, six in all : one expert witness and five former participants in the scheme.  Evidence was given of presentations made to investors, lucky draw incentives and when one of the investors questioned the ability of Team Power to achieve such impressive results, she was told of investments in the Mainland and Japan with teams of lawyers and auditors to back up.

5. One piece of evidence that assumed some importance was the fact that investors would be provided with documents setting out various contractual terms.  One such term (called clause 18) stated that if Team Power did not reach its sales targets, no bonuses (that is, returns) would be paid.  It appears that this clause featured prominently in the defence submissions at trial.  As I understand it, the point was that investors were subject, as a matter of contract, to clause 18 and would therefore have realized or ought to have realized that there could be no guaranteed returns, since any bonuses or returns paid to investors would be dependent on Team Power meeting its sales targets.  No evidence existed that Team Power’s sales targets had not been reached.  For all these reasons, the defence submitted, no fraud or fraudulent intention could be proved.

6. The Judge described clause 18 as a “side-issue”.  However, he said this at paragraph 63 of the Reasons for Verdict : -

"Whilst I do not challenge counsel’s interpretation of the law of contract, I do not with respect accept that his approach answers the case here.  This has not been an action for breach of contract, it has been a criminal trial alleging conspiracy to defraud and the question in this trial has not been whether in contract a person would be bound by a document he signed whether or not he read it, but whether the customers were dishonestly induced to sign the documents by fraud."

And in relation to the business of Team Power, the Judge remarked at paragraph 56 : -

"… In particular, on all evidence before me I was satisfied that Team Power carried on no other business than the sales of plans, that the income of the company came solely from the sales of plans, that the sale of each plan necessarily involved the company in a considerable loss, that the continued operation of the company entailed the recruitment of evermore participants and that the schemes were doomed to collapse from the outset."

7. I have now set out some of the details of the case and some parts of the Reasons for Verdict.  This is not to comment on the appeal which is due to be heard next month but to provide the background to the present application.

8. Mr Andrew Bruce SC (who appears for the Applicant) lays emphasis on the aspect of the terms and conditions of the contract to which the investors of Team Power were subject.  He said this was the aspect (and in particular clause 18) the Judge ignored by calling it a “side-issue”.  This point represented the essence of the complaint on appeal.  In the appeal, he submitted the Court of Appeal will have to deal with the question of how the law of contract impacts on the criminal liability of the three defendants.

9. However, as became clear in the submissions of Mr Bruce today, what will be sought to be argued on appeal is not whether principles of criminal law are somehow affected by the law of contract.  Rather, the point is simply the extent to which contractual terms and conditions ought to have been taken into account as part of the overall circumstances in the present case.  The defendants say the Judge has insufficiently (or not at all) taken into account the contractual terms to which the investors were subject.

10. I do not regard this issue as being one either involving a determination of a legal point that will have a significant impact on the development of Hong Kong law or one that is of unusual difficulty or complexity.  It is, as Mr Robert Pang (who appears for the Hong Kong Bar Association) puts it, a fact sensitive issue.  There is evidence before me of the fact that a number of leading counsel (both here and London) have given opinions on the merits of the defendants’ applications for leave to appeal.  Some of the opinions are even exhibited in the supporting affirmation.  They do not alter my view of the matter.  The appeal will involve matters that are fairly routinely dealt with in the Court of Appeal and by what I perceive to be a fairly large pool of counsel who would be more than capable of handling such matters.  There is no doubt of the Applicant’s ability and his reputation precedes him, but even if the present appeal can be said to involve the determination of a legal issue that might well impact substantially on the development of Hong Kong law or involve issues of unusual difficulty or complexity, I am not convinced that the Applicant’s experience and expertise would add a significant dimension to the case.

11. For these reasons, I dismiss the application.