HKSAR v. CHAN SAU HING AND ANOTHER

CACC 211/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 211 OF 2001

(ON APPEAL FROM DCCC NO. 748 OF 2000)

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J U D G M E N T

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Hon. Cheung J.A. : (giving the judgment of the court)

The appeals

1. There are two appeals before us. The first is an appeal by the 1st appellant against sentence. The second is an appeal by the 2nd appellant against conviction. Leave to appeal was previously granted by a single judge of this Court.

2. The 1st appellant was previously one of the defendants in District Court Criminal No. 748 of 2000 from which her appeal lies. She pleaded guilty and gave evidence for the prosecution. She was sentenced to 32 months' imprisonment, 24 months of which were to be served consecutively to another sentence of three years and eight months imposed on her in another criminal case.

3. The 2nd appellant was also one of the defendants in the same case. She pleaded not guilty but was convicted after trial.

Appeal against conviction

4. We will deal with the appeal by the 2nd appellant first. She was convicted of the offence of conspiracy to defraud. A firm was set up purportedly for the purpose of trading in Loco London Gold or Loco London Silver. The firm advertised for employees. The victims who answered the advertisement were hired by the firm. They were then tricked by the staff of the firm to invest in the firm in Loco London Gold or Loco London Silver transactions. These were fictitious transactions and the victims lost their investment.

5. The method used by the firm was to pair a new recruit with a partner who in fact was an actor of the firm. He posed as a new recruit and showed enthusiasm in investment. Other staff of the firm would then leave some documents in the office of the firm showing that they had made profits from investments through the firm. Eventually the victim would be persuaded by the partner to share an account together. The victims parted with their money. The total loss was $2.45 million.

Evidence against the 2nd appellant

6. The prosecution's case against the 2nd appellant was that she was a staff of the firm and was involved with the conspiracy. The prosecution's evidence against her consisted of three matters :

1. PW2 was another victim of the fraud. 17 January 2000, was his first day of work. He was brought into a room and later on three persons came in. One became his partner. The two others were someone who called himself Peter and the 2nd appellant respectively. They introduced themselves to PW2. The 2nd appellant said that she previously worked in the cosmetic trade.

2. According to the Admitted Facts, when the police raided the premises of the firm on 21 January 2000, PW2 identified the 2nd appellant. She was identified as a staff of the firm.

3. The police had raided the premises five times between 26 November 1999 and 22 March 2000. 20 January 2000 was one of the raids. Another raid was held on 22 March 2000. Among the documents found in this raid were documents bearing the name, personal particulars and the purported signature of 2nd appellant.

7. The documents were :

(i) Four "Customer Agreements" in Chinese in which the customer agreed with the firm that an account would be opened with the firm to trade in Loco London Gold and Loco London Silver and the firm would carry out the trading instructions of the customer. The agreements were dated 28 February 2000 (for Account No. 8302), 7 March 2000 (for Account No. 8333), 7 March 2000 (for Account No. 8335) and 30 March 2000 (for Account No. 8351). Each of the agreements contained the 2nd Appellant's name, address, telephone number and what purported to be her signature. The firm's authorized signatures also appeared on these documents.

(ii) Four "Overtrade Authorization" of the same dates. Again the name of the 2nd appellant and her purported signature appeared.

(iii) Four "Notices of Appointment" of the same dates in which the customer appointed someone to be his authorized agent in carrying out the transaction. These documents purported to show the 2nd appellant appointed herself to be the authorized agent. The purported signature of the 2nd appellant appeared on the documents.

(iv) Four "Personal Particulars of Client" of the same dates. They contained the particulars of the 2nd appellant and her purported signature.

(v) Five "Withdrawal Request/Paying Instruction" addressed by the customer to the firm to forward various sums of money said to be "From profit". The first was dated 3 March 2000 for $100,000. The second was dated 6 March 2000 for $40,000. The third was dated 9 March 2000 for $40,000, the fourth and the fifth were both dated 17 March 2000 for $150,000. Again the name of the 2nd appellant and her purported signature appeared.

(vi) Three signature specimen cards, two of which were dated 7 March 2000 and the other dated 28 February 2000. Again the name and address of the 2nd appellant and her purported signature appeared on the cards.

8. The 2nd appellant did not give evidence or call evidence.

The finding

9. Having referred to the evidence, the learned judge held that "... in the absence of any credible explanation forthcoming from her (i.e. the 2nd appellant) coupled with the evidence above mentioned the court is entitled to come to the conclusion that the only reasonable and irresistible inference is that she was just another actor in the company. I am satisfied that she was aware of the existence of the conspiracy and her role as another new recruit was acts done by her in furtherance of the conspiracy."

The ground of appeal

10. The ground of appeal is that the learned judge had erred in coming to the conclusion that the 2nd appellant was aware of the existence of the conspiracy in that :

1. She erred in finding that the 2nd appellant was a staff member of the firm when there was no or insufficient evidence to support such a finding; and

2. She erred in coming to the view that the fact that the 2nd appellant's name was on a number of documents found in the premises of the firm cried out for an explanation when there was no evidence that the 2nd appellant was the author of those documents or that she had any knowledge of the existence of those documents.

3. Alternatively, the judge had erred in shifting the burden of proof to the 2nd appellant.

The 2nd appellant said that in the circumstances the verdict was unsafe and unsatisfactory.

Was there evidence to convict?

11. At the outset it has to be pointed out that, apart from the evidence as summarized above, there was no further evidence showing that the 2nd appellant was a staff of the firm. It was submitted on behalf of the 2nd appellant that she might well be an innocent victim as well. We are not convinced that notwithstanding the absence of further evidence, the existing evidence did not support the learned judge's finding that the 2nd appellant was part of the conspiracy to defraud the victims.

12. The period of the conspiracy as stated in the first charge was between 2 June 1999 and 12 April 2000. At the first meeting on 17 January 2000, the 2nd appellant was not introduced to PW2 as a staff of the firm. While this was not conclusive evidence of the position of the 2nd appellant, this was a piece of evidence which, when considered together with other evidence in this case, the learned judge was entitled to take into account when reaching her finding.

13. The mode of operation of the fraud is clearly one factor to be taken into account. It is clear from the evidence that the approach of the fraudsters was to induce the victims to part with their money as soon as possible. To achieve this goal a staff of the firm would be "working on" the victim all the time. He would be assisted by some other staff of the fraud in order to add some realism to the operation. In the circumstances it would be extremely odd and foolish for the conspirators to allow another victim to be introduced to the victim that the fraudsters were working upon. In the circumstances, the submission of Mr. Leung, counsel for the 2nd appellant, that the 2nd appellant might well be only a victim and Peter "was her partner" simply ignored the reality of the situation.

14. Apart from her presence on 17 January 2000, the 2nd appellant was also present when the police raided the firm on 21 January 2000. The evidence of PW2 is as follows :

" Q. On the 21st you were present when there was this police raid and later that day, the same day, on the premises did you go with a police officer to look round the premises?

A. Yes.

Q. What was the purpose of doing that?

A. To identify the staff member inside the office - inside the firm I had seen earlier on.

Q. And did you point out any people?

A. Yes.

Q. Who was that?

A. Ah Ying. (i.e. the 2nd appellant) "

There was no cross-examination by the 2nd appellant's counsel on PW2's evidence.

15. Again, although this is not conclusive evidence, the presence of the 2nd appellant on that day when considered together with other evidence in this case clearly entitled the learned judge to come to her finding.

16. The documents which bore the name, personal particulars and the purported signature of the 2nd appellant were seized by the police in the raid on 22 March 2000. This falls within the period of the conspiracy. These are incriminating documents. The mode of operation of the fraudsters was to leave documents in the firm purportedly showing the investment and profits that the actors had made from the transactions. The various documents bearing the 2nd appellant's name and purported signature could clearly be used for such purpose. If the 2nd appellant was merely a victim herself and having seen the police raid on 21 January 2000 why were these documents found two months later in the police raid of 22 March 2000?

17. In Myers v. DPP [1965] A.C. 1001, the House of Lords emphasized the common law principle that documents had to be proved and where it was sought to establish the truth of the facts related in them, the maker had to be called, unless the document falls within a recognized exception to the hearsay rule.

18. In the present case, of course, there was no evidence that the 2nd appellant had completed or signed the documents herself. However, the absence of this evidence does not mean that the documents could not be used if their reliance is not to establish the truth of the facts related in them. The truth of facts related in them would be that the 2nd appellant completed and signed her name herself in these documents for the purported purpose stated in the documents. It contained a statement as to the identity of the person whose name appeared on the documents. If the truth of this assertion had to be assumed in order to link the 2nd appellant with the conspiracy, then the documents were inadmissible.

19. However, that was not the only way the documents could be used to prove that the 2nd appellant was involved with the conspiracy. They could also be used as circumstantial evidence of her involvement. The relevance of the documents was the inherent likelihood that documents bearing the name and signature of a person were made by that person and used by that person for a certain purpose. It is the coincidence which made the evidence relevant. The 2nd appellant had been identified to be present twice in premises in which fraud had been practiced. There was evidence that the fraudsters would leave documents for the purpose of inducing the victims to part with their money. These clearly established a connection between the 2nd appellant and the documents : see a discussion on the ambit of the hearsay rule in Phipson on Evidence 15th Ed. para. 25-16 to 25-18 and also the judgment of this court in HKSAR v. Or Suen Hong C.A.C.C. No. 270 of 2000.

20. The learned judge stated that the 2nd appellant had not given any credible explanation to the allegations relied upon by the prosecution.

21. We do not consider that the learned judge had reversed the burden of proof. Clearly, there are situations where the existence of the evidence adduced by the prosecution called for an explanation by the accused if he wished to put forward an innocent explanation to the accusation. In the present case, the firm existed solely for the purpose of the fraud. Apart from the victims, the only other persons involved with the fraud were the actors. Their role was to carry out the fraud. If the 2nd appellant was merely an innocent victim herself, the simplest way is for her to come forward to protest her innocence.

22. There are clearly cases in which the absence of an explanation by the accused would strengthen the prosecution's case. In Li Defan and another v. HKSAR [2002] 1 HKLRD 527, the Court of Final Appeal's decision on the circumstances in which the judge may comment to the jury that they may consider that the prosecution's case on a particular issue relevant to guilt was strengthened by the absence of the accused giving evidence is the best illustration of this principle. Lord Hoffman at page 538 of the judgment stated that :

“ Not every case calls for explanation or contradiction in the form of evidence from the accused. There may be no facts peculiarly within the accused's knowledge. Even if there are facts peculiarly within the accused's knowledge the deficiencies in the prosecution case may be sufficient to account for the accused remaining silent and relying upon the burden of proof cast upon the prosecution. Much depends upon the circumstances of the particular case and a jury should not be invited to take into account the failure of the accused to give evidence unless that failure is clearly capable of assisting them in the evaluation of the evidence before them."

In our view, the present case is one of those cases in which an explanation is definitely called for from the 2nd appellant.

Conclusion

23. In our view the learned judge was correct in her decision. Accordingly, we will dismiss the appeal by the 2nd appellant.

Appeal against sentence by the 1st appellant

24. We will now deal with the appeal against sentence by the 1st appellant. The 1st appellant was sentenced to 32 months' imprisonment. The learned judge used a starting point of 4 years. She gave a discount of one-third because the 1st appellant had pleaded guilty. However, she refused to give a further discount notwithstanding that she had given evidence in court for the prosecution. In her Reasons for Sentence she stated that :

“ As I have said in my reasons for verdict, D5 (i.e. another defendant who gave evidence for the prosecution) is much more forthcoming and has expressed readiness to tell the court that the company was a sham and she had knowledge about it. D8 (i.e. the 1st appellant), however, was reluctant to tell the court expressly about that, although it is noted that the facts she admitted when she pleaded guilty included the fact that she had knowledge of the company being a sham."

25. The transcript of the evidence of the 1st appellant is before us. When asked whether to her knowledge the firm traded in London Gold, her answer was

“ Well, I don't know. The customer did trade in London Gold in the company, but whether or not the company did trade for them, I don't know."

26. There was this further exchange :

“ Q. Did you form the belief that the money was genuinely invested?

A. No.

Q. What did you think?

A. That this firm cheats people."

27. Under cross-examination she said that it was only after she worked for the firm that she came to realize that the firm's purpose was to cheat people of their money.

28. It is accepted by Mr. Shiu, counsel for the respondent, that the testimony of the 1st appellant could be described as "up to proof" of her witness statement. While there may be some prevarications, they were insufficient to merit a nil discount.

29. In our view, it is not appropriate to analyse at this stage in detail her evidence and her witness statement. What is clear is that the 1st appellant had given evidence as promised. The crux of the matter was that she confirmed that the firm operated for the purpose of cheating people of their money. There is no indication in the Reasons for Sentence that the 1st appellant's evidence was at variance with the rest of the prosecution's case against the defendants or that it had in any way affected the prosecution's case.

30. In our view, witnesses should be encouraged to come forward and give evidence. In the case of a defendant who wishes to do so, he is entitled to expect that his sentence would attract a further discount because of his willingness to give evidence against the co-defendants. Unless it can be demonstrated clearly that a certain aspect of his evidence is totally different from what is contained in his witness statement, we are of the view that the usual 45% to 50% discount should be given. Judges should be circumspect in disallowing the proper discount. An accomplice who had given evidence in this case was given a full 50% discount. In our view the 1st appellant should be given the same discount as well.

31. Accordingly, the appeal by the 1st appellant is allowed and her sentence is reduced to 2 years, 18 months of which are to be served consecutively to the sentence of 3 years and 8 months which she is serving in another offence for which she was sentenced before the present offence.