HKSAR v. CHIU TAI SUN TAYLOR

HCMA 277/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO. 277 OF 2008

(ON APPEAL FROM TWCC 3393 OF 2007)

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J U D G M E N T

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1.  The appellant was charged with two offences, namely :

(1)  Engaging in bookmaking, contrary to section 7(1)(a) of the Gambling Ordinance, Cap. 148 (“the bookmaking charge”). 

(2)  Dealing with property known or reasonably believed to represent the proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap. 455 (“the money laundering charge”). 

2.  On 30 January 2008, before Mr John Glass, magistrate, the appellant pleaded guilty to Charge 1 and not guilty to Charge 2.  On 29 February, he was convicted after trial of Charge 2.  He was sentenced to be imprisoned for 2 months on Charge 1 and 12 months on Charge 2.  Those terms were to be served concurrently.  In addition to this, he was fined $10,000 on Charge 2. 

3.  Initially he filed grounds of appeal against his conviction on Charge 2 and sentence on both charges.  However I am advised today that he has abandoned his appeal against sentence.  

4.  This is his appeal against conviction on Charge 2.  

5.  The admitted facts in respect of Charge 1 were that on 1 January 2006, police officers who were investigating allegations of illegal bookmaking executed a search warrant at the appellant’s premises in Tsing Yi.  Betting records were seized at that time and the appellant admitted under caution that he had been receiving bets on soccer matches over the telephone.  An examination of the betting records revealed that in the period 23 June 2006 up to and including 1 July 2006 betting turnover was $213,500. 

6.  The substances of charge 2 was that in the period 1 January 2005 and 1 July 2006 sums of money totalling $1,777,771 had passed through the appellant’s Hang Seng Bank savings account (I pause here to indicate that the original charge specified that the amount was $2,284,430, but this was amended by the magistrate on his own initiative and no issue was taken in the trial or in this appeal in that regard). 

7.  It was the prosecution case that those sums were in the whole or in part, directly or indirectly, the proceeds of an indictable offence and that the appellant knew or had reasonable grounds to believe that this was the case.  That is to say the appellant was laundering the proceeds of crime. 

8.  A significant part of the prosecution case was not in issue.  One of the sets of agreed facts confirmed that a record of interview between the appellant and the police was voluntary.  In this the appellant sought to explain the various transactions in his bank account.  Likewise a banker’s affirmation was produced pursuant to section 65B of the Criminal Procedure Ordinance, Cap. 221.  That document traced the movement of funds in and out of the appellant’s bank account over the relevant period. 

9.  All of the documentary exhibits referred to in that affirmation were admitted into evidence by consent. 

10.  The magistrate in his Statement of Findings said this :

“4.   The main issue in the trial was whether the prosecution could prove the elements of the charge in relation to the transactions that passed through the defendant’s Hang Seng Bank Saving Account.  The defendant’s case was that the funds passing through his savings account were, apart from his successful gambling, payments made in relation to, inter alia, his chit fund activities, his loans to customers at his nightclub for payment of their bills and the repayments, his payments made for social activities enjoyed by himself and friends and repayments to him, and his income from introducing business to a Chinese karaoke.”

11.  The matters in issue were as the magistrate found straightforward.  The appellant had given some explanation when interviewed by the police but many of his responses to questions about transactions to and from the named accounts of others were vague and non-specific.  In the case of many of the named accounts, he denied knowledge of the account holders and at no time did he mention the fact that the transactions were in the main part referable to “chit funds” that he was involved in. 

12.  However, by the time he gave evidence at the trial he was able to describe with some degree of particularity, the nature of the payments into and out of the account and was able then to recall the specific account holders who were both the sources of and the destination of the fund movements from his account.  His earlier inability to recall these, he said, was directly referable to the fact that he knew these persons by their nicknames. 

13.  In the circumstances of this case, absent a credible or possibly credible explanation as to the fund movements, the magistrate could properly infer that the fund movements were the proceeds of an indictable offence.  The explanations given in the record of interview by the appellant could not, in the circumstances of this case, suffice.  It was for all practical purposes incumbent upon the appellant to give evidence and this he did. 

14.  The appellant gave evidence but the magistrate rejected his evidence.  He found that the appellant was not a truthful witness. 

15.  In his Reasons for Verdict the magistrate gave a detailed account of why it was that he rejected the appellant’s explanation.  It will be necessary to address this in due course. 

16.  Mr Alex Ng has filed 4 perfected grounds of appeal on behalf of the appellant.  However, it will be unnecessary to consider these grounds of appeal in any detail.  The trial of this matter miscarried and should have been discontinued and ordered to be reheard by a different magistrate. 

17.  What happened was this : On 30 January 2008 the charges were read and the appellant :

(1)  pleaded guilty to the bookmaking charge; and

(2)  pleaded not guilty to the money laundering charge. 

18.  A summary of facts with respect to the bookmaking charge was read and admitted by the appellant.  The magistrate then convicted the appellant of the bookmaking charge and the trial on the money laundering charge proceeded. 

19.  The prosecution case on the money laundering charge proceeded upon the premise that the underlying indictable offence was also bookmaking.  That much was apparent from the cross-examination of the appellant. 

20.  The admitted facts for the bookmaking charge were to the effect that the appellant admitted that he was taking bets, over the telephone, in the period 23 June 2006 up to and including 1 July 2006 and that he accepted that his betting turnover for that period was, also as I have already indicated, something in the order $213,500. 

21.  Betting records had been seized from the appellant’s home when searched by the police on 1 July 2006.  It was these betting records which were used to establish the total amounts being wagered in that period. 

22.  The majority of the evidence concluded on 30 January 2007.  The proceedings were adjourned to 14 February 2007.  On that day the appellant’s counsel completed his final submissions and the matter was adjourned to 29 February 2007 for verdict.  On 29 February 2007 the magistrate delivered a lengthy judgment in which he considered and rejected the appellant’s evidence. 

23.  Towards the end of that judgment, he said this (I quote from the transcript of the proceedings on that day as this exchange is not reflected in the written reasons which were subsequently provided by the magistrate) :

“The defendant, as I said above, was found to have some equipment that could relate to gambling in his flat.  But there was, I found, no evidence to connect those items with the transactions between January 2005 and the day before the search of his flat; even though I found that the total sum of $352,500 was paid into the defendant’s Hang Seng savings account by the Hong Kong Jockey Club, and $523,500 was paid out to the same account by the Hong Kong Jockey Club. 

Even on the date of the search on 1 July 2006, there was insufficient evidence in my view to connect the items found to bookmaking, such that I could draw an irresistible inference that the defendant was bookmaking on that day.  I found that there was no recorded bank transactions on that day, no evidence that he had been receiving bets on telephone calls or by other means that day, and the meaning of the paper chits was unexplained in the trial. 

I therefore found the prosecution had failed to prove Charge 1 beyond reasonable doubt and I dismiss it.”

24.  At this point in time, the trial had miscarried.  The magistrate had given his reasons for his decision to acquit the appellant of the charge of bookmaking.  He said he was not satisfied that the elements of the offence were established.  This was despite the fact that the appellant had accepted in the summary of facts that indeed he had been bookmaking on 1 July 2006. 

25.  As a consequence, Mr Yip, the solicitor who then acted for the appellant, rose to speak and indicated to the magistrate that he had purported to acquit the appellant of the charge that he had pleaded guilty to.  The court’s response was as follows :

“COURT:   No, no.

MR YIP:  In respect of the money laundering charge.  This is Charge 2.  Charge 1 is bookmaking and we have admitted.  

COURT:  That has …

MR YIP:  Yes. 

COURT:  Yes, yes.  Sorry. 

MR YIP:  In respect of Charge 2.  

COURT:  I cancel that then, yes.  Yes, sorry.”

26.  This was not simply a slip of the tongue.  Once it had been brought to his attention that he had purported to dismiss the charge that the appellant had pleaded guilty to, (and had also given detailed reasons for doing this), it was incumbent upon the magistrate to terminate the proceedings.  There had then been a material irregularity in the trial which could not be remedied by him saying as he did : “I cancel that.”  

27.  When the magistrate then proceeded to convict the appellant on Count 2, he purported to incorporate into his findings his earlier conclusion that the appellant was not engaged in bookmaking on the day of his arrest. 

28.  The whole premise of the money laundering charge was that it was inextricably linked to the appellant’s admitted bookmaking.  To find as the magistrate purported to do that he was not engaged in bookmaking but was nevertheless guilty of money laundering was not in the circumstances of this case open to him. 

29.  The appeal against conviction on the money laundering charge (Count 2) must be allowed.  

30.  The trial should not have continued after the above took place.  Whilst it is true to say that there was no application to stop the trial, it was incumbent upon the magistrate to do so of his own motion. 

31.  Irrespective of this, the appeal would have to have been allowed for the following reasons. 

32.  The process by which the magistrate determined that the appellant was not a witness of truth and rejected the explanation he gave for the transactions in his Hang Seng Bank savings account was flawed.  The prosecution case was that an examination of the appellant’s two bank accounts over an 18-month period revealed a large number of transactions, sometimes in large amounts.  This was at a time when the appellant was allegedly working as a “Captain” at a nightclub earning not more than $28,000 per month.  The banker’s affirmation admitted into evidence established that on many occasions money went into and out of the appellant’s bank account to the bank accounts of other persons. 

33.  When interviewed by the police, and asked about the transactions the appellant told the interviewing officers that he did not know the persons whose accounts were involved.  Given the sums that were involved, on the face of it, that explanation seemed highly improbable. 

34.  As I have said earlier, when he gave evidence in the trial the situation was different in two respects. 

35.  The first was that the appellant told the magistrate that many of the transactions represented in part the proceeds of an illegal “chit fund” in which he was involved.  He told the magistrate that when he mentioned this to the police officer who conducted the interview he was told by the officer not to mention matters about the “chit fund” because this would be a reference to other illegal activities and, as such, would possibly render him liable to yet further criminal charges. 

36.  The officer who conducted the interview and to whom this allegation was directed did not give evidence in the trial.  Another person who was present during the course of the interview who was described as PW1 was present. 

37.  The second thing that had changed by the time the matter went to trial was that the appellant told the magistrate that in the case of some of the accounts to which funds had been paid and from which he had been paid, he now realised that he knew the names of the account holders.  He had not, when interviewed by the police officer realised that the names he was being referred to were in fact persons he only knew by their nicknames.  It was only after the interview had been conducted that he realised this.  He had not recognised the names when shown the relevant documents by the police officer conducting the interview.  One of the examples he gave of these persons was a person who have been referred to in the interview as Lee Wai Yi.  The appellant did not recognise that name when he was interviewed.  However he subsequently realised that this was the person known to him as “Wai Yee”.  Similarly a person referred to in the interview as Ng Pui Hung was known to him as “Ngau Hung”.  Having realised this he told the magistrate that he then appreciated that these were the accounts to which the officers were referring.  He was then able to recall the nature of the transactions that were referable to those accounts. 

38.  The magistrate did not find the appellant to be a witness of truth.  He said in his Reasons for Verdict : “I found that I was not impressed with his evidence and found that he was not telling the truth.” 

39.  As part of the reasoning for coming to his conclusion, the magistrate dealt with the allegation made by the appellant that the police officer who conducted the record of interview had told him not to mention the illegal “chit funds” as being part of the transactions in his accounts. 

40.  The police officer, as I have earlier indicated, who conducted the record of interview did not give evidence in the trial. 

41.  Another police officer, PW1, who was present during the course of the interview did.  Of PW1, the magistrate said this :

“In relation to the interview at which I found she was present all the time, she told the court that there was no discussion before the interview about what would be talked about during the interview, but then she agreed in cross-examination that there was a mention before the interview began that the defendant would be asked about transactions.  She further said that she was not clear if the defendant had mentioned that the transactions were related to chit funds and she was not clear whether the Sergeant (who conducted the interview) had thereafter told the defendant not to mention the same in the interview on the basis that he may be charged with other offences.  In re-examination she said that she meant that she had not heard such things said.”

42.  How the magistrate dealt with this matter and, in so doing, determined that the appellant was telling lies was to state that it was “inconceivable that a police officer would do as the defendant had suggested” and because of this he rejected the evidence of the appellant.  This was, as I have indicated, notwithstanding that the police officer who was present during the interview appeared to accept, at least in the course of cross-examination, that it was theoretically possible for this conversation to have taken place.  The magistrate found that it did not, because the officer did not hear it and, more importantly :

“I did not believe that a police Sergeant [the officer who conducted the interview with the appellant] would tell a defendant to do such just before a criminal investigation was about to begin into the numerous suspicious transactions in the defendant’s account.  I found the police sergeant was looking for answers to the money transactions.  I also believed the police sergeant knew that he could easily and simply deal with the matter of any illegal chit fund in the interview by rendering another caution to the defendant.  Secondly I found it inconceivable that the police sergeant would have encouraged the defendant to cover up the truth and give false answers in front of PW1 who was also another police officer present.  Thirdly I found that this position was supported by the police sergeant starting the interview at point 37 by telling the defendant the purpose of the interview which I found he would not have done if there had been a full discussion before the interview began as the defendant said in his evidence.” 

43.  The allegations of misconduct on the part of a witness not called to give evidence, were resolved against the appellant by concluding that it was inconceivable that an officer would do as the appellant alleged.  By this process, the magistrate found the appellant to be an untruthful witness. 

44.  This was not permissible in the circumstances of this case. 

45.  The subjective views of the magistrate may have improperly caused him to reject the appellant’s evidence.  This in turn may have coloured the magistrate’s approach to the other explanations given by the appellant.  The fact that he had earlier deemed him to be an untruthful witness cannot be discounted as being integral to the magistrate’s rejection of the other explanations given by the appellant. 

46.  Thus when the magistrate rejected the appellant’s evidence that some of the accounts into which and from which moneys were paid were known to him not by the names used by the police officer conducting the record of interview but by their nicknames, he did so having already decided, by an improper process of reasoning that the appellant was an untruthful witness.  It is not then possible to be satisfied that the magistrate’s earlier conclusion that the appellant was not a witness of truth had not permeated the whole of his assessment of the appellant’s explanation of the sources of the funds going into and out of his account. 

47.  In the circumstances, as I have indicated earlier, the conviction of the appellant on Count 2, the money laundering charge, cannot stand.  The appeal is allowed and the conviction is set aside.  The fine, if paid, should be repaid to the appellant. 

48.  I will make an order that the appellant be re-tried on Count 2 and that the appellant’s costs of the appeal be paid by the respondent.  That amount if not agreed is to be taxed.