HKSAR v. POELAKATTAI ABDUL, R. MOHAMED FAHIM

HCMA 328/2023

[2025] HKCFI 3666

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO 328 OF 2023

(ON APPEAL FROM ESCC 1849 OF 2022)

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BETWEEN

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JUDGMENT

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1.  The Appellant was convicted after trial by the Magistrate of one count of “dealing with property known or believed to represent proceeds of indictable offence”, contrary to Section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap. 455.

2.  The particulars of the offence were that the Appellant had between 8 and 21 December 2018 dealt with a total sum of HK$634,800 in his personal Hang Seng Bank Limited account numbered 369-398524-882 (“Bank Account”), together with a person alias Khan, knowing or having reasonable grounds to believe the said property represent proceeds of an indictable offence. The Appellant was sentenced to 10 months and 2 weeks’ imprisonment. He now appeals against the conviction.

Prosecution Case

3.  As briefly summarised by the Respondent, it was firstly admitted between the parties that the Appellant opened the personal Bank Account at Hang Seng Bank on 12 September 2018. The Appellant was the sole holder of the Bank Account, which was opened for saving and deposit purposes. The Appellant was also the owner of Traco Company (“Traco”), as principal and its sole employee. There were altogether 16 deposits totalling HK$634,800 and nine withdrawals totalling HK$560,950 made between 8 and 21 December 2018 in the Bank Account. Traco also had a Hang Seng Bank saving and current account since June 2013. The Appellant reported employment income of HK$216,000 in 2018/19 and its assessable profits were HK$158,960.

4.  The Appellant was arrested on 29 December 2019. He had no movement record of leaving Hong Kong since 8 March 2018 to 24 January 2022. The Appellant has a clear criminal record in Hong Kong.

5.  Prosecution called two prosecution witnesses. WDPC20489 (“PW1”), who interviewed the Appellant in December 2019, and the Tamil interpreter (“PW2”), who was the interpreter during the interview. The admissibility of the Appellant’s record of interview, exhibit P5, was opposed and alternative procedure was adopted. The Appellant gave evidence on special issue, essentially saying that the police misled him, as he was also the victim of the case and the police would go into and enquire about these. The Appellant answered as he did in the interview as he thought the police would get his money back if he assists.

6.  After consideration, the Magistrate ruled that the Appellant voluntarily took part in the record of interview and gave answers therein.

Defence case

7.  The Appellant gave evidence that he had opened different accounts for himself and Traco. For the business account, he did trades on items such as luxury watches, used mobile phones, handling charges of commission agency for trading, sundry and merchandised goods which were being traded and he earned some commission as well. The Appellant did both selling and buying of goods. Once he received demand, he sourced the product and bought the product. Customer paid deposit and the Appellant usually obtained in advance. He ordered from the supplier, some suppliers gave him credit as well.

8.  From 4 December 2018 onwards, the Appellant was unable to operate Traco’s bank account as it was under bank review. From 5 or 6 December 2018 onwards, he started using his Bank Account to honour his business commitment. The Appellant particularly stated that a person named “Khan” was a person of his native town and distant relative whom he met in India in February 2018 at his cousin’s wedding. But previously in the university, the Appellant had already met Khan twice. Khan is a resident of Malaysia. During the wedding, the Appellant and Khan talked along the line of doing business together.

9.  In September 2018, Khan contacted the Appellant, saying he had certain demands for such as Pampers and some other sundry items. He wanted to procure them. First, Khan ordered a used watch. The Appellant requested deposit in advance. Khan deposited into the Bank Account of the Appellant’s company. The Appellant then ordered from the merchant and sent the item to a third person directed by Khan. The second deal was a new watch but did not go through at the end. Also in 2018, after doing a few transactions, Khan asked the Appellant to lend him some money. The amount requested was very large. The Appellant refused. Instead, the Appellant offered a lesser amount, which Khan accepted.

10.  Khan told the Appellant he was asking some business contacts he had in Hong Kong for financial help and if they were willing to help, he would come back to the Appellant and also take the money the Appellant offered him. After some days, Khan wanted the Appellant to collect the funds from these people and add his money and send them to Khan. Khan asked the Appellant for his Bank Account number so they could deposit the amount to it. After the Appellant received the money, he would take the money from the bank in cash when Khan told him to give the money to the person.

11.  The Appellant confirmed there were altogether three sums he received in the Bank Account. First, cash deposit HK$13,000 on 11 December 2018. Second, cash deposit HK$20,500 on December 2018. On the same day, also receiving the cash deposit of HK$296,000. Khan told him to keep the money for the time being. After a day or two later, Khan told him to give HK$190,000 to a person. The Appellant therefore withdrew the money in two lots. The Appellant said Khan designated the place and time that the recipient would be there and the particulars that the Appellant had to verify. The Appellant remembered it was a restaurant in Nathan Road, that person was a South Asian man. He provided the money to him after verification.

12.  For the balance of the money, Khan asked the Appellant to keep it and would tell him later and the Appellant to add whatever amount he can. Then Khan later told the Appellant the same way. The Appellant also agreed to pay HK$17,000 from his money to Khan.

13.  The second person was a different Southeast Asian person who was standing on the street. The Appellant gave him the balance together with his own money, HK$156,500, also consisting of balance of HK$139,500 plus the loan from the Appellant to Khan, HK$17,000.

14.  For the other cash deposits between the material period, the Appellant provided various invoices from Traco to support his case. However, most amount as stated in the Traco invoice, except the HK$19,800 cash deposit on 18 December 2018 and the HK$10,000 cash deposit on 21 December 2018 differed from the deposit amounts. The Appellant explained the other side could not deposit HK$80 in the ATM. Some people would pay less because they would like to check the goods first, the differences would be paid later as used phone had grading and price differs accordingly, so they would give him a particular amount and took delivery. Sometimes they bargained as well.

15.  For other withdrawals, the Appellant explained that all ATM transfers were to his HSBC account, as HSBC had more counters to withdraw money to avoid the crowd for queuing up in Hang Seng Bank. The Appellant also relied on various invoices purportedly issued by Shamas Trading Company (“Shamas”) to support his case. Various cash withdrawals been shown had been paid to Shamas accordingly.

16.  The Appellant said he had no doubt what Khan said in December 2018 and he did not know the money deposit in the Bank Account on behalf of Khan were proceeds of crime and he had no reason to suspect the source.

Magistrate’s Findings

17.  Firstly, on PW1’s evidence, PW1 admitted she saw the document D2, which was a copy of passport ID page purported to be of Khan, with a mobile number written thereon and some handwriting at the bottom left. PW1 said it was her own handwriting on the bottom left. She disagreed that they let go of Khan or they took no action to follow up after the D2 was given. The Magistrate considered that PW1 was not evasive and her evidence was reasonable and logical. So the Magistrate accepted her evidence and treated her an honest and reliable witness and gave full weight to her evidence.

18.  As to the admissibility of the invoices issued by Shamas, the Magistrate ruled the invoices could be tendered but not the truth of the content.

19.  Concerning the Appellant’s evidence of deposits from customer of Traco, the Magistrate had the following observation. There are nine Traco invoices from exhibit D3, bore no information of any customer, recipient or agent. The invoices bore nothing such as name, contact number or address whatsoever on the part of the buyer, so it was difficult, if not impossible, for one to tell which invoice went to which buyer or agent. The Magistrate considered that did not make any commercial sense. Without any single trace of information of the contact of the buyer on the invoice, no distinctive indication on which used iPhone they purchased, one could not follow up matters.

20.  The Magistrate also considered that the Appellant’s version did not sit comfortably with the fact that there could be names stated in the Traco invoices while the Appellant’s evidence was that he only treats them as walk-in customers.

21.  As to the Appellant’s evidence of the withdrawals, relying on the Shamas invoices, the Magistrate found that the corresponding items, figures and dates in buying and selling did not match or make business sense. For example, Traco purchased iPhone 8 at the unit price of $3,000 but later sell them at the unit price of $1,980 or $2,000, and that Traco sold 10 iPhone X on 17 December 2018 but Traco purchased 10 same models on the next day, indicating that those sold by Traco did not come from Shamas.

22.  The Appellant also explained that he would sometimes transfer the amount to his HSBC account for withdrawal of money since HSBC had more counters. However, based on the Appellant’s evidence, he had on 11, 13 and 14 December 2018 waited at Hang Seng Bank for withdrawal, yet again on 13 and also on 18 and 20 December 2018, he instead transferred money to HSBC to withdraw therefrom.

23.  The Magistrate considered that the behaviour of withdrawing and transferring money did not sit well with a trading businessman being the principal and the sole employee of Traco with the alleged various business going around in such short period of time. So the Magistrate did not accept the Appellant’s explanation in relation to the invoices he produced and the deposit and withdrawals as alleged by him.

24.  As to the Appellant’s evidence on the 3 deposits received for Khan, the Magistrate had the following observation. First, the Appellant firstly admitted in the record of interview concerning 3 deposits were from Khan’s friend in Hong Kong. The Appellant withdrew the money for Khan and passed to others whom he did not contact and meet thereafter. The Appellant was trying to help Khan and he was a victim as well, and he was cheated by Khan. The Magistrate considered the record of interview a mixed statement.

25.  Second, defence counsel submitted in trial concerning the personal knowledge, the relationship between the Appellant and Khan and the previous trading relationship, Khan was seeking loan, and for the informality of the South Asian merchandising system. The Magistrate considered that she was aware that the Appellant gave evidence on matter affecting his belief about the nature of the property and the request to the Appellant to assist in dealing with money. The Appellant asked Khan to inform him in advance for withdrawal of money, the Appellant had to verify the recipient is Khan. Before passing the money to the recipient, the Appellant knew Khan and they were from the same locality and Khan was seeking financial help from him as well.

26.  Third, under cross-examination, the Appellant insisted there was nothing suspicious to him. However, when being asked why the money could not be directly given by himself instead of asking the Appellant to give it to the third party, the Appellant said the person who helped Khan would deposit on, say for example, 11^th or 12^th of the month. The person who would receive the money from the Appellant was a supplier of Khan who would only come to Hong Kong on, say for example, 14^th or 15^th, the Appellant would give the money that he had deposited into the Bank Account to that supplier. The Appellant also mentioned that he asked Khan why they could not be paid directly. So the Magistrate considered that it is obvious that the Appellant himself also realised the suspicion in getting himself involved in such handling of money.

27.  Fourth, when further cross-examined the Appellant’s role was unnecessary, the Appellant added that because they were from the same place, he agreed to help. He only gave the money to two suppliers as Khan instructed. He did not know more than that.

28.  Fifth, the Appellant alleged he also provide HK$17,000 out of his money to Khan with no financial benefit to himself, and that he was being cheated by Khan as well.

29.  The Appellant confirmed that the money could be easily transferred from Hong Kong to Malaysia and Khan did not need a bank account in Hong Kong to receive money from Hong Kong. The court considered it was impossible for the Appellant to believe that Khan, who also did trading business as the Appellant said, did not have bank account or other method to receive the sums, and it was not necessary for the Appellant to borrow his personal Bank Account to assist Khan as alleged. There was simply no need for the Appellant to be involved. It was impossible for the Appellant, as an educated businessman in trading with a Bachelor of Commerce degree, who had no relation at all with the unknown people who deposited amounts into the Bank Account and Khan’s suppliers, to believe in Khan so as the Appellant alleged, to lend the Bank Account for the alleged purpose, to deal with the deposits, and to pay money in cash to people unknown to himself.

30.  Further, as to the volume of the Appellant’s large sum of deposits and withdrawals within the material period in December 2018, that was not in line with his source of income or turnover or net profit as he reported to Inland Revenue Department (“IRD”). The Magistrate did not find the Appellant being an honest and reliable witness and did not believe the Appellant was telling the truth.

31.  The Magistrate was satisfied the only reasonable and irresistible inference to be drawn was that the Appellant must have had reasonable grounds to believe that the money charged represent the proceeds of an indictable crime. So the Appellant was convicted accordingly.

Grounds of Appeal

32.  Mr Shah put forward the following grounds of appeal. First ground concerning the Magistrate’s evaluation of the Appellant’s evidence, which the Appellant said the Magistrate was wrong in fact or in principle in convicted the Appellant as a matter of conjecture or being contradictory to the evidence or by finding erroneously and by placing undue weight or undermining the Appellant’s evidence.

33.  In particular, the Magistrate found that it was impossible for the Appellant, as an educated businessman in trading with a Bachelor of Commerce degree, who had no relationship at all with the unknown people who deposited the amounts into the Bank Account and Khan’s suppliers, to believe in Khan. By finding the volume of the Appellant’s large sum of deposits and withdrawals repeatedly within the material period was not in line with his source of income, and for wants of names, telephone numbers and address on Traco invoice, it does not make any business sense.

34.  The Appellant also said the Magistrate erred in failing to take into account the established relationship between the Appellant and Khan, and also the Magistrate failed to address and understand the impact of significance of the evidence of PW1. Even she, as the police herself, only believed that only three lots of money out of all the transactions were suspicious.

35.  All in all, the Magistrate misconstrued, erred in relation in drawing the inference that the offence of “money laundering” based on unjust and unfair prosecutory and insufficiency of any direct evidence against the Appellant.

36.  Second ground concerned the flagrant incompetence of the trial counsel and instructing solicitors. The Appellant was therefore unable to receive a fair trial due to the flagrant incompetence of the legal team, particularly failing to produce WhatsApp communication record in full between the Appellant and Khan while that was still exist doing the trial. The trial counsel also wrongfully and misleadingly represented that the WhatsApp message had been deleted while they still exist. So the legal team also failed to take instruction and address the case of the Appellant as to the WhatsApp message with Khan in a professional and competent way, so that will render the conviction unsafe and unsatisfactory.

37.  Mr Shah further submitted a very detailed and thorough written submissions up to 100 pages, detailing the grounds of appeal. On the first ground of appeal, essentially the Appellant was saying that the Magistrate failed to consider the background and relationship between the Appellant and Khan, and failed to acknowledge that the Appellant had already made inquiries with Khan prior to agreeing to helping him, and the Appellant accepting the explanation as to why Khan was seeking his assistance. Therefore, the Appellant was not turning a blind eye or being wilfully blind to the request for assistance from Khan.

38.  Particularly, the Appellant and Khan had a pre-existing personal and commercial bond that they already shared being from the same native place and going back to being together at university, and in between February to March 2018, when they met at the Appellant’s cousin’s wedding and thereafter WhatsApp communication with Khan as from September 2018. Regarding the time they first started to commence commercial deals, it is also to be stressed that the Appellant in his record of interview back on 29 December 2019, informing PW1 as to his connection with Khan and the assistance he provided him with regards to the three lots of money in the same consistent manner of providing assistance. Finally, the Appellant was not even shaken during cross-examination as well.

39.  It is also submitted by the Appellant that the Appellant went unchallenged of his relationship with Khan, there had been record of WhatsApp communication with Khan, been provided with the Malaysian ID card and phone number of Khan. Applying to the Court of Final Appeal case of HKSAR v Harjani Haresh Murlidhar [2019] 22 HKCFAR 446, giving the fact that the Appellant and Khan are distant relatives from the same native place in India, they had a business relationship between them, and the Appellant had made inquiries, there had been established relationship. Viewed both subjectively and objectively, that would apply to a reasonable person holding the same belief. It is not surprising that the Appellant would have no suspicion concerning the arrangement made by Khan and requesting the Appellant to help him.

40.  The Appellant also referred to the case of HKSAR v Yan Suiling [2012] 15 HKCFAR 146 at paragraph 117 in that case:

“…However, given the evidence of his long and particularly close friendship with Kwok described above, if there had been a retrial, Pang might have been able plausibly to claim that he had asked no questions because he trusted Kwok implicitly, believing him to be an honourable and substantial businessman and that had no reason to suspect that the funds were the proceeds of crime….”

So that would be the same situation in the present case.  The Appellant’s case is quite straightforward. First, he had made inquiries. He did not suspect the monies to be tainted, and he was admittedly unaware of the identity of the depositors. That would be in the same case as in Yan Suiling as stated above. There was nothing raising suspicion in the circumstances, and particularly the Appellant and Khan had an established personal and business relationship. And also as to the HK$17,000 that the Appellant loaned Khan, which was also left unchallenged by the prosecution, that would be a factor relevant to considering the relationship between the parties.

41.  Referring to the WhatsApp communication with Khan, as produced by the Appellant in his affirmation, the WhatsApp image showing the photos of deposits slips had commenced, taken place in other Traco account with Hang Seng Bank prior to 8 December 2018 from 26 September 2018 up to 3 December 2018, those 23 deposits amount to HK$694,100. The Appellant emphasised that none of the above deposits have resulted in any form of investigation. There was no suggestion that these amounts were for the purpose of money laundering. The failure to deal with them was detrimental to the way the Appellant’s defence was run at trial. They go to the nature of the relationship between the Appellant and Khan. So the Appellant was unfairly deprived of his right to explain his WhatsApp message and that would be a matter going to the second grounds of gross and flagrant incompetence by his legal team.

42.  The Appellant also commented on the Magistrate’s finding that concerning the finding that the Appellant’s large sum of deposit and withdrawal repeatedly within the material period in December 2018 was not in line with his source of income or turnover or net profit, as he reported to the IRD. Evidence has been quoted in the written submissions concerning the question asked in Lower Court at page 321 to 323 of the transcript:

“Question: That is a figure after calculation or deduction from the gross profits of the expenses, is that correct?

Answer: That is correct.

Question: And it does not actually reflect the turnover?

Answer: Yes, turnover is not here.

Question: Right. So the turnover would be a much larger figure?

Answer: Yes, it will be much higher than this. ”

So the Appellant’s case was simply that his profit margins are small and come from “turnover” rather than individual items. One cannot simply relate volume to “income” particularly when using the Tax Returns or Annual Income Figures produced after deduction of Expenses.

43.  Moreover, there was no particular case put to the Appellant by the prosecution as regard to his IRD tax return and also his approach and manner of a lower calculation based on the Appellant’s evidence and that the turnover would be higher than stated in the IRD tax return for his gross profit and gross income.

44.  And concerning the sum of Traco deposits totalling HK$306,288, actually falls within the stated gross profit amount of the P2A, HK$377,210. There was also no evidence of any audit or balance sheet produced as to the calculation for the respective year of tax or 2018/19. So the Magistrate erred by adopting P2A merely on face value without a clear and proper evaluation as to how the Appellant formulated the reported amounts to the IRD.

45.  Further, it was never alleged that the Traco or Shamas invoices were self-serving assertions or falsity or forgery, and there was nothing saying that the Appellant was running a sham business. His running of his Traco business is clear, not fanciful nor farfetched. The Appellant was running a second-hand mobile phone business at the relevant time, supported by the invoices or primary facts.

46.  As to Shamas invoices, they are supportive and circumstantial, given the context of mobile phone purchase and sale that occurred during the relevant period and correlations between payments in and out of the Appellant’s Hang Seng Bank Account for the Traco and Shamas invoices. So the probability that the Shamas’ and Traco’s invoices are so connected, that the only reasonable conclusion is that they were inferentially supportive.

47.  The Appellant also relied on the Court of Final Appeal case Oei Hengky Wiryo v HKSAR [2007] 1 HKLRD 568, the Court of Final Appeal hled that the out-of-court statements may be admissible in evidence, and to show that inferences may properly be drawn from those statements both to prove the fact in issue or to provide a factual foundation of inferring a fact in issue.

48.  As to the manner in which the Appellant conducted his business transaction under Traco, the Magistrate drew an erred inference due to the absence of customer names and particulars in full. However, the Appellant would say that the prosecution was not saying that the Appellant was conducting a sham business. The Appellant gave evidence to explain all the entries of deposits and withdrawals, the small differences between the invoices entry, and to the effect that some customers made payment in advance and some would pay the remaining outstanding balance after examining the products. So the absence of name, contact numbers or addresses for the time being is a known common practice in the retail sector with walk-in customers and nothing unusual in that circumstances.

49.  The Appellant also said that the Magistrate also based on conjecture on the erroneous assumption that the Appellant was buying high and selling low, premised on the false finding that Traco and Shamas invoices were mutually inclusive. There was a significant difference of Traco sales and Shamas purchase amounts: Traco sales of HK$306,288; Shamas purchase by Traco, HK$225,950. That there was a difference of HK$80,338, significant of the well-established business and commercial practice. Given the clear difference of sales and purchases, it is clear that Traco and Shamas deals are mutually inclusive as an inference unsupported by primary facts.

50.  There is nothing to undermine or ignore that, as a business, as a matter of inference, there is a chance or likelihood that the owner being in possession of pre-existing stock, whether sales were successfully concluded or not, delays of payment purchases and the need to replenish stock must be an implied factor relevant to the drawing of an inference.

51.  As to the transferred funds from his Hang Seng Bank Account to HSBC account, the Appellant was using his own account with HSBC and the reason given by the Appellant that he did so to save time is a reasonable and acceptable way of doing business. So the Magistrate erred in applying the case of HKSAR v Wong Chor Wo and another CACC 314/2006, it was not a case that the Appellant was trying to simply turn a blind eye in the circumstances.

52.  As to the evidence of PW1, the Appellant was also never given the opportunity to make any timely explanation as to the deposits and withdrawals other than the 3 deposits as mentioned as suspicious. So it deprived the Appellant’s right to explain the entirety of the deposit and withdrawal relevant to the charge. Particularly, PW1 also mentioned that there was no suspicions arising other than the three lots of deposits mentioned.

53.  Second ground concerning the flagrant incompetence of trial counsel and instructing solicitors. The Appellant was saying that the trial counsel, Mr McGowan, had made a false representation that the WhatsApp message with Khan had been deleted while it is obvious that there had been existing at that time, still exist the WhatsApp message with Khan, inclusive of the detailed commercial and relationship. It was directly in relation to assessing the relationship between the parties and applied to the test in Harjarni and the question of mens rea. That would result in a miscarriage of justice without those WhatsApp messages to be considered by the Magistrate.

54.  And the Appellant also referred to the affidavit of the trial counsel saying that:

“… is it fair to say that there should be WhatsApp and text messages two years, two-and-a-half years later? It is unrealistic. … that might be valid if he was using the same phone or the same computer.

… I’m not very good at it but people do go through their telephones, and they delete messages and WhatsApp messages and so on because they’re no longer relevant, the business is over. …

WhatsApp (particularly if Voice Mail) are understandably deleted there is nothing sinister in this.”

So clearly the trial counsel also admitted making a wrongful assumption that those messages had been deleted.

55.  Applying the case of Chong Ching Yuen v HKSAR FACC 7/2003, concerning the test of “flagrantly incompetent”:

“The expression ‘flagrant incompetence’ rightly underlines an Appellant’s need to show much more than a mistake, an error of judgment, or a decision to follow one course when in hindsight another would have been preferable. … the general principle requires the court to focus on the impact of the faulty conduct. … the ultimate question for the court is whether the conduct complained of has resulted in the accused not getting a fair trial so that the conviction is unsafe or there is a miscarriage of justice.”

56.  While from the Appellant’s affirmation, he said that even before trial, during the trial, that had been raised, the message of the “WhatsApp with Khan” had been raised with the instructing solicitors already. Date back in 28 February 2023, the Appellant, by WhatsApp sent four sales and purchase invoices of Traco, including ‘Gold Luxury LLC’ and ‘Swiss Seconds Luxury Timepieces’ as well his bank statement to instructing solicitors.

57.  And also the day before the trial, when the Appellant attended the office and asked his instructing solicitors Mr Chaudhry as to when the said “WhatsApp with Khan” would be required, the Appellant further said to the instructing solicitors that there were a number of voice messages in Tamil dialect which may require translation. Mr McGowan then asked the Appellant if he had the “WhatsApp with Khan” in his phone. The Appellant took out his phone and showed Mr McGowan the “WhatsApp with Khan” record.

58.  During the trial, the Appellant also replied and asked “What about the WhatsApp conversation?” to the trial counsel, and the trial counsel Mr McGowan also replied, “We need an IT for the voice messages.” The Appellant recalled that that was the last time he raised the issue with his legal team, and believing that at that time his legal team must have a strategy as they were qualified, and moreover the trial counsel had been a practising barrister for such a long time and told the Appellant “not to worry”.

59.  Other than the three lots of deposits relating to Khan, the other 13 entries of deposits into the Appellant’s Hang Seng Bank Account for Traco and Shamas, which were part of the charge, were totally be ignored. The Appellant said that it illustrated the eleventh-hour preparation, resulting in gross oversight and lack of material details and instructions concerning the cumulative effect, resulting in flagrant incompetence of the legal team.

60.  The Appellant also saying that the instructing solicitors had significantly altered his position as to the four WhatsApp screenshot images as being sent to him by the Appellant during the conference with Mr McGowan that the Appellant had explained and agreed that the four WhatsApp screenshot images were irrelevant.

61.  It is altogether respectively submitted by the Appellant that the legal team representing the Appellant had laid the argument about obtaining instruction from the Appellant that they were irrelevant is, respectively, a falsity and unsustainable. The inherent implausibility and falsehood are quite obvious, given that the instructing solicitor’s own account of the fact that “Given that the defendant understood, agreed and explicitly confirmed by advice that those four WhatsApp screenshots were irrelevant, hence, we did not raise this issue with the counsel in the meeting.”

62.  However, in fact, the instructing solicitors had been well informed unequivocally and he knew about the existence of this message in Appellant’s phone in full and in hand. The entire legal team had a copy of those four WhatsApp image screenshots and by subsequently handling over four screenshot images to the trial counsel, that would completely contradict the assertion that they were not to be raised with counsel in the meeting.

63.  So it is submitted that various significant acts of omissions by the legal team after assessing the context of our criminal justice system, after objectively assessing the matter, had caused a significant and material irregularity during the trial. More importantly, the trial counsel also admitted that making a raw assumption that those messages had been deleted, which is not the truth in this case.

64.  It is clear that the trial counsel did not take forward the matter of the instructing solicitors to follow through of the WhatsApp message and including getting a full set of record. So it would be a professional negligence of the legal team representing the Appellant. The overall effect would be that that would render the trial be unfair. In these circumstances, the appeal against conviction shall be allowed in the circumstances.

Respondent’s reply

65.  For ground one, the Respondent said the Magistrate did understand the Appellant’s evidence full well. As from paragraph 72 to 84 of the statement of finding, the Magistrate was fully aware the Appellant’s evidence on his relationship with Khan and his explanation on why he had lent $17,000 to Khan and assisted Khan in dealing with the deposits. The Magistrate was fully alive to the matters affecting the Appellant’s belief about the nature of the property.

66.  However, under cross-examination, the Appellant agreed that the money could easily transfer from Hong Kong to Malaysia and that Khan did not need a bank account in Hong Kong to receive money. So the Respondent submitted that the Appellant had failed to provide any reasonable explanation as to the necessity of his involvement in the transactions.

67.  The Magistrate had carefully considered and analysed the Appellant’s evidence, properly entitled to conclude that the Appellant’s evidence was improbable and his role were not necessary. As his evidence was properly rejected, the Magistrate was entitled to apply Wong Chor Wo and drew the inevitable inference that the Appellant had grounds to believe the property was tainted.

68.  The Respondent also saying that the Yan Suiling case referred by the Appellant, the facts were very different from the present case and could not assist the Appellant at all. Yan Suiling case concerned the very large sum of deposit into the Appellant’s account and the Appellant was able to provide a reasonable explanation with the support of documents. But in the present case, the present case involved 16 cash deposits, 15 of which were cash deposits and nine withdrawals, all of which were subsequently withdrawn in cash made within the two weeks period. The fact that the origin and designation of these funds could not be traced are strong indication of money laundering.

69.  Concerning the large sum of deposits, which the Magistrate found were not in line with the Appellant’s source of income, the Respondent noted that during examination-in-chief, the trial counsel had specifically referred the Appellant to the profit figure reported in the IRD record and the leading question was asked why the figure did not actually refer to the turnover. The Appellant gave his answer in quite a broad brush way that had been mentioned earlier on.

70.  It is submitted by the Respondent that the Appellant’s evidence in this area was just bare assertion, not supported by details. No further elaboration could be made by the trial counsel that how the reported figures in IRD record differ from the actual turnover. There is nothing equivocal about the meaning of the term “gross income”, “turnover” and “net profit”. The Respondent would say that it would be farfetched to suggest that one could report these figures based on his own understanding, not to mention that the Appellant’s own evidence that he held a bachelor degree in commerce and had worked as an accountant with bookkeeping and accounting knowledge.

71.  So the deposit totalling HK$634,800 during 14 days far exceeded the reported turnover of HK$377,201 for the whole assessment year of 2018/19. The Magistrate was perfectly entitled to come to his finding in saying that the volume of which was not in line with his source of income.

72.  As to the Traco invoices, there was no customer of Traco who gave evidence on the genuineness of the purported transactions in the invoices. And as for Shamas invoices, there were no evidence from the issuer of these invoices to tell the court the genuineness of the purported transactions. There was lack of any information in these invoices. The lack of information showing that the customer had deposited money into his account and the Appellant was unable to provide any reasonable explanation. Because of all of these lack of information of contact of buyer, the Magistrate was invited to find that these invoices lack business sense.

73.  On the Shamas invoices, it cannot be used as evidence of the truth. The issuer had not been able to give evidence in the court. There was no evidence at all to support the inference that they were records made by Shamas in the course of business dealing. The Magistrate was invited not attaching any weight to the Shamas invoices.

74.  The Magistrate also illustrated to the lack of business sense of Traco and Shamas invoices in his statement of finding. The Appellant relied on the differences between the total amounts stated in both invoices to show that there was a net gain of $80,338. The Respondent submitted that to do so would be to rely on the truth of the figures stated in the Shamas invoices, which is prohibited by the hearsay rule.

75.  As to the transfer to the HSBC account, the Magistrate’s finding was that the Appellant’s frequent behaviour of withdrawing cash from the Bank Account, waiting at Hang Seng Bank for at least an hour or so, and transferring of money from the Bank Account to HSBC account for withdrawing at the same counter did not sit well with a trading businessman allegedly with various business going around in such short period of time. The Respondent also noted that on 13 December 2018, the Appellant withdrew cash from Hang Seng Bank once and from HSBC twice. This also did not tally with the Appellant’s explanation that he transferred funds to HSBC for the sake of convenience.

76.  Concerning the application of Wong Chor Wo case, the Respondent submitted that the Appellant’s act of receiving deposit and withdrawing funds for Khan is no different from lending his Bank Account to others. The Magistrate had properly rejected the Appellant’s exculpatory explanation on the deposits received for Khan and his explanation on the deposit and withdrawals. The Magistrate properly found that the Appellant was not telling the truth and that he said that he did not believe the property was tainted. Given that the Appellant’s explanation are rejected, the Magistrate was entitled to rely on the proposition of Wong Chor Wo case.

77.  Now, concerning the PW1’s evidence that she considered only three lots of money were suspicious but the Respondent would say that whether PW1’s consideration of what sums in the Bank Account were suspicious is irrelevant and has no bearing in considering mens rea of the Applicant.

78.  Furthermore, concerning the Appellant’s contention that there was only caution on the three lots of deposits and never given the opportunity to make any timely explanation on other deposit and withdrawals. The Respondent would say that it was clear from PW1’s way of questioning the Appellant that the police was investigating a case of money laundering against him in respect of three sums in the Bank Account. In such circumstances, the Respondent would say that the Appellant should be more than vigilant to preserve the business records and communications to defend his case. It did not make sense for the Appellant to assert that because he was cautioned only for three specific sums only, that he would not be prosecuted for other sums in the circumstances.

79.  On the other ground that concerning the flagrant incompetence of the legal team, the Respondent did not agree with the Appellant’s contention and the non-production of the subject WhatsApp communications would not simply advance the Appellant’s case at all.

80.  Also, concerning the relevant legal principles, the Appellant bore the burden of proof to prove and demonstrate the legal team had acted in a way that was flagrantly incompetent, to the extent that the Appellant was deprived of a fair trial. The Appellant required to show much more than a mistake and error of judgment or decision to follow one course when in hindsight another would have been preferred. That would be the gist of Chong Ching Yuen case.

81.  First, the allegation of incompetence can only be made if the court accepts the evidence of the Appellant in preference to those of the legal team. Second, the conduct of the legal team is to be assessed by their reasonableness, see the case of HKSAR v Lo Pui Yi Cat [2018] 2 HKLRD 1176. Third, it is not sufficient for the Appellant to show that his legal representatives have fallen below the required standard in a particular aspect of proceedings. It must also be shown what had happened had resulted in unfairness or injustice, see the case of Chan Fat Chu Raymond v HKSAR [2009] 12 HKCFAR 775. Fourth, in considering whether an alleged negligence conduct had resulted in unfairness, it is necessary for the court to form a judgment as to how likely the Appellant’s position might have been improved had the proposed course of conduct had been taken.

82.  Concerning the affirmations filed by the legal team of the Appellant, the Respondent would say that they are reasonable and more plausible and invite the court to accept their evidence. The Appellant’s version was that despite he had told his legal team of the existence of some WhatsApp messages with Khan, the legal team failed to take proper instructions from him in this regard.

83.  But the instructing solicitors’ version was that he was only provided four screenshots of the WhatsApp messages between Khan, and since these messages were sent months after the charge period and they did not contain any reference to the transaction relating to the charge, and having taken into consideration the Appellant was being investigated for other transactions which were not the subject of the charge and keeping in view of his proof of evidence, the instructing solicitor advised the Appellant that they were irrelevant to the subject matters as they did not demonstrate the inflow and outflow of the transaction in question. Also, there was no message which collaborated with the Appellant’s instruction and even showed that his friend had asked him to receive money into his account. The Appellant understood, agreed and instructed the instructing solicitors to disregard the message.

84.  And as to Mr McGowan’s version was that the Appellant mentioned that he had some WhatsApp messages during the conference. He was provided with only four pages of screenshots at court the next day. Mr McGowan did not consider them to be relevant as their date post-dated the tainted transactions. Mr McGowan accepted that he had made a wrong assumption that the WhatsApp messages between the Appellant and Khan had been deleted based on the materials presented and written instructions supplied to him.

85.  However, the Respondent observed that the Appellant had reviewed the first draft of proof of evidence. There was no mention of any WhatsApp communication with Khan. That also applied to the second proof of evidence. And the Appellant had been sending a number of documents to the instructing solicitors. Yet, there was not a hint about the presence of the WhatsApp communications with Khan. With the fact that the Appellant also got the prosecution and defence closing submissions and he did not raise any issue about the WhatsApp messages with Khan.

86.  So it can be seen that the Appellant fully understood the nature and extent of the evidence required from him in order to formulate the defence case. If the Appellant considered the full record WhatsApp messages to be crucial and important, and also bearing in mind that the Appellant is a businessman with a bachelor degree in commerce, it would be inconceivable for him not to bring the same to the attention of his legal team. Yet, no action had been taken by him to the attention of the legal team.

87.  The Appellant’s assertion that the instructing solicitors were given the opportunity to scroll thorough the messages themselves, but common sense dictates that he would have looked at those screenshots of messages made between the charge period instead of making screenshots which post-dated the charge period. So it is inherently more probable that it was a conscious decision of the Appellant only to provide the four screenshots to the legal team. The Appellant had deliberately chosen not to provide to his legal team other WhatsApp messages with Khan because they were inconsistent with his own instructions on the circumstance which he received the three sums from Khan.

88.  The instructing solicitor, Mr Chaudhry, also pointed out these messages were made months after the charge period and did not contain any reference to the transaction.

89.  Moreover, the Appellant alleged enquiry with instructing solicitors on 13 March 2023 that a number of voice messages requiring translation so the Appellant knew full well that preparatory work had to be done before these messages could be adduced. It is inherently more probable that the Appellant only provide the four screenshots to Mr Chaudhry and that the Appellant had been properly advised by the legal team on the irrelevance of those messages and he therefore agreed to the non-production of them. Therefore, the Respondent considered that the legal team’s professional judgment on not producing these four screenshots unimpeachable.

90.  On the crucialness of the WhatsApp messages in communications with Khan, firstly, the Respondent objected to the admission as fresh evidence because there had not been unfairness caused by the absence of the document in the trial, and the Respondent also failed to see how could they assist or advance the Appellant’s case at all. It should be noted in these messages, the Appellant had allowed Khan to use his bank account to receive monies from unknown source on 26 occasions (22 occasions between 24 September 2018 and 3 December 2018 using Traco account, and four occasions between 6 and 28 December 2018 using the Bank Account until it was frozen.) In all those occasions, somebody would inform Khan a certain amount of deposit would be forthcoming. Yet, Khan would not be told from whom the money came from or where the money would be deposit. Thereafter, Khan would receive bank deposit advices which he would forward to the Appellant.

91.  On 12 December 2018, Khan forwarded three deposit advices to the Appellant, the amount of which tallied with the Appellant’s evidence during the trial that the sums were received from Khan. Yet, these messages do not support the Appellant’s contention that he was told such deposits were known from Khan’s contact in Hong Kong. If such were the case, Khan would not have on 13 December 2018 asked, “he … has deposited two ninety, explain to me what and how is it. Also told me that he will give a 40. Inform the details about it to me as well.” And again on 14 December 2018, Khan asked similar question, “send me more details about what and how it is.”

92.  Further, there was no instruction on how the three sums were to be handed over in these messages. The circumstances were that the three sums received from Khan were no different from the prior 22 occasions which Khan did not know the details and which Khan had made known to the Appellant and he did not know who deposited the sums and when. There was no messages which support the Appellant’s evidence during the trial that Khan was in need of money and requested to borrow money from the Appellant. These were no message which support the Appellant’s evidence during the trial that he had a personal bond and trading relationship with Khan before he dealt with the three sums for Khan.

93.  In light of the above, it is submitted that these messages could not in any way advance the Appellant’s case further. Instead, it showed that the Appellant was fully aware that Khan had no idea about the sources of these three deposits. The non-production of these messages would not in any way deprive the Appellant of a fair trial.

94.  As Mr McGowan also pointed out in his affirmation that these messages painted a very different story from the Appellant’s instruction and that there is no information at all about the onward movement of sums from Khan: No “who / how / when / where”. And the effect of Mr McGowan accepting that he had made a wrongful assumption that the messages had been deleted. Now, given the existence of the other WhatsApp communications with Khan was not made known to Mr McGowan, it is understandable why he had made the representation in response to the prosecution’s closing submissions. The Appellant was unable to produce any evidence in relation to his transactions with Khan. The effect of the Mr McGowan’s wrongful submissions on deletion could not and had not influenced the Magistrate’s drawing of inference against the Appellant at all. No adverse comment had been made by the Magistrate on the lack of evidence to support his explanation on the three deposits from Khan.

95.  Lastly, on the eleventh-hour preparation that the Appellant criticised the legal team had totally ignored the other 13 deposits, the Respondent was saying that is without any basis because there was a message between the legal assistant and the Appellant, so the legal team had been asking the Appellant to look for documentary proof. These messages also tallied with Mr McGowan’s explanation that he had on 1 March 2023 requested the Appellant’s explanation of relevant “in and out HSBC transactions”.

96.  So it is submitted that the legal team had properly discharged their duties and conducted the Appellant’s case in a manner consistent with the proof of evidence. The Appellant only disclosed the four screenshots of WhatsApp messages to the legal team in support of his case, which the legal team had already properly advised the Appellant to be irrelevant. The deletion could not in any way affect the Magistrate’s finding in this case. So it could hardly result in any unfairness or injustice to the Appellant in these circumstances. Therefore, the appeal against conviction should be dismissed accordingly.

Consideration

97.  In the Court of Final Appeal case HKSAR v Hui Lai Ki [2024] HKCFA 7, it was stated that the Magistracy Appeal is conducted by way of rehearing on the evidence before the trial court. The judge must be satisfied that the Appellant’s guilt had been proven beyond reasonable doubt on the evidence, failing which the appeal must be allowed. On such rehearing, if the judge comes to a different view on the evidence before the court, that itself is an error which justified Appellant intervention to reverse the decision of the Magistrate to convict.

98.  The Court recognised that an appellate court conducting a rehearing would be subject to limitations arising from the fact that it does not have the advantage of receiving witnesses evidence first-hand. Hence, it must exercise caution when considering findings of fact based on oral testimony. Yet, despite those limitations, it remains the duty of the appellate court on appeal by way of rehearing to come to its own conclusion on disputed issues of fact or law.

99.  On the first ground concerning the Magistrate’s evaluation of the Appellant’s evidence, no doubt from the statement of finding, the Magistrate had well understood and analysed the Appellant’s evidence comprehensively. For paragraphs 43 to 60 of the Appellant’s evidence and paragraphs 61 to 81 as to her analysis, the Magistrate knew all the background and their relationship and also the Appellant’s explanation of helping Khan.

100.  However, as stated by the Magistrate, the circumstances were that it was not necessary for the Appellant to use his own personal account to assist Khan, particularly given that the Appellant also acknowledged that money can be easily transferred from Hong Kong to Malaysia, and Khan also did not need a bank account to receive money from Hong Kong.

101.  In fact, it was also more than suspicious that the Appellant was directed by Khan to give significant sum of money, that is $190,000, to an unknown person in a restaurant, and then giving $156,500 to another unknown person on the street instead of by Khan himself, not to mention that cash deposit of significant sum up to about $300,000 were firstly deposited to the Appellant’s account. One cannot even trace where the money has come from. Clearly, the Appellant would have no clue who and where these sums of money came or sourced from, nor was he able to tell the personal particulars of any unknown person that Khan directed him to pay to.

102.  All the circumstances considered, subjectively and objectively, one would of course bound to find that the property must have been tainted and are the proceeds of crime. Therefore, the Magistrate was quite entitled to find the Appellant’s explanation unbelievable and rejected his evidence accordingly.

103.  The Magistrate also went further to analyse in details as to the volume of turnover of about $377,000 comparing to the total deposits of more than $600,000, which was not in line with the Appellant’s source of income. And also for the Traco and Shamas invoices respectively, the Magistrate had also duly reviewed in details and find that there were lack of customers’ information and that the content of Shamas invoices could not even be relied upon. Likewise, the analysis could not be faulted.

104.  As to the transfer from personal Hang Seng Bank Account to HSBC account, it should also be noted that, as stated by the Respondent, the Appellant did on the same day withdraw cash from Hang Seng Bank Account while also from HSBC twice. These clearly did not reflect as what the Appellant said, that he simply transferred to HSBC to save his waiting time.

105.  Lastly, on the evidence of PW1 that only concerned three lots of deposit raised her suspicion but not others, surely it was just her own opinion and that now the charge clearly concerned a total sum of about $634,800, which was far more than the three deposits mentioned. The Appellant chose to give evidence and he had ample opportunity to address all these sums and there was indeed nothing unjust to the Appellant at all. And the Magistrate did fully analyse the Appellant’s evidence thoroughly and there was nothing improper nor inappropriate. The findings shall be upheld and this ground of appeal must fail.

106.  On the second ground concerning the missing WhatsApp communications with Khan, I have the opportunity to go through all the relevant affirmations filed by the Appellant and also from Mr McGowan and Mr Chaudhry, the legal representative acting for the Appellant for the trial. Clearly, the version given by the legal representative was more believable. If there had already been full WhatsApp communications disclosed and supplied, there was no reason at all why the legal team would simply ignore and did not go through them to find support therefrom for the preparation of trial. Instead, as what the Respondent observed, only four pages of screenshots had been supplied and no doubt the legal team would consider them irrelevant.

107.  Moreover, even that Mr McGowan had admitted having made mistake as to the assumption that all messages had been deleted, this however did not really matter and it appeared the messages did not even support the Appellant’s contention that those deposits were the financial help from Khan’s contact. Instead, the Respondent also pointed out from the messages, otherwise Khan would not have asked for more details of what and how it is in the messages. Thus, the WhatsApp messages simply did not support the Appellant’s case at all and may be even contradicting his own version.

108.  Moreover, the Magistrate did not mention anything at all concerning the absence of proven communication between the Appellant and Khan. This was clearly not the reason of not believing the Appellant in these circumstances. So, from all the surrounding circumstances, it could not be said that the legal team was flagrantly incompetent. This ground also failed.

109.  On rehearing of all the evidence, I am also satisfied that the Appellant’s guilt had been proven beyond all reasonable doubt. Therefore, the appeal is dismissed. Conviction do stand and the Appellant had to serve the sentence immediately.