HKSAR v. FU CHU KAN AND OTHERS

cacC 104/2007

in the high court of the

hong kong special administrative region

court of appeal

criminal appeal no. 104 of 2007

(on appeal from HCCC NO. 134 of 2004)

________________________

________________________

J U D G M E N T

________________________

Hon Stock VP (giving the judgment of the Court):

Introduction

1.  There are six applicants.  Each seeks leave to appeal against conviction and sentence.

2.  In relation to conviction there are two main issues for our determination:

(1) whether the summing up adequately put to the jury the defence advanced in the case of each applicant and the indicia said to support that defence; and

(2) whether remarks in the judge’s summing-up placed the jury under undue pressure to reach a verdict.

3.  We consider each of these two issues to be reasonably arguable, for which reason we grant each applicant leave to appeal and treat the hearing of the applications as the appeal.

4.  The trial took place before Tong J and a jury from March 2006 to March 2007.  It was the second trial upon the same indictment, the first having been aborted in 2005 by the discharge of a jury.

Background facts

5.  The case concerns a company Gold Wo International Holdings Limited (Gold Wo) of which the first appellant Fu (D1 at trial) was the Chairman and, through a company called Top Master Development Limited (Top Master), the majority shareholder.  He was also a director of Gold Wo’s wholly-owned subsidiary Richlink International Holdings Limited (RHL) and of RHL’s two subsidiaries, Gold Wo Melamine Product Company Limited (Melamine) and Richlink Asia Limited (Richlink) and of Richlink’s subsidiary, Top Executive Developments Ltd (Top Executive).

6.  Gold Wo’s principal business, through Melamine and Richlink, was the manufacture and sale of household products made of melamine, and silicon rubber keypads.

7.  D1’s elder sister, Ms Fu, was D5 at trial.  She held 10% of Top Master, was a director and Deputy Chairman of Gold Wo and a director of Richlink.  Her husband, Mr Lo, was D2 at trial.He was company secretary and a director of Melamine.

8.  The other three defendants were not related to the Fu family.  They were engaged as advisers.  Mr Ricky Li was D3: he holds a masters degree in business administration and is a chartered accountant.Ms Connie Kwok, who was D4, was at the material times a self-employed financial consultant.  The prosecution case was that these two were brought in by D1 to ‘fix’ the accounts of Gold Wo to facilitate its listing on the Hong Kong Stock Exchange.

9.  Finally, Mr Roger Wan, D6, is a certified public accountant and was brought in by D3 or D4 to assist in auditing the accounts of Gold Wo, although the prosecution asserted that his role was wider.  

10.  For the purpose of the listing exercise, the audited accounts were forwarded to the reporting accountants, Ernst & Young.The sponsor for the listing was a company called Kim Eng.

11.  Also featuring in the case were two brothers with whom the Fu family were well acquainted, the Lee brothers.  They were the key officers and shareholders of a public company called Yue Fung International Group Holding Limited (Yue Fung).  Before the listing of Gold Wo, 25% of its shares were held by Yue Fung which manufactured calculators and other electronic products.  After the listing of Gold Wo its holding was in the region of 20%.  Yue Fung had itself been listed in October 1997 and Gold Wo wanted to follow suit.  The prosecution case was that D1 and the Lee brothers decided that Gold Wo should be listed and that that listing would be achieved with Yue Fung’s assistance.

12.  D3 had provided Yue Fung with his professional assistance in Yue Fung’s listing process and was engaged by Gold Wo in June 2000 to provide the same service for it.  D4 was also engaged in June 2000 to assist in the listing process and, in September, a person called Michael Young Chi-shan was engaged as financial controller.  Young was the main prosecution witness at trial and gave evidence under an immunity from prosecution.

The indictment

(1) Count 1

13.  The first count on the indictment was levelled at D1 and D2 only.  

14.  It alleged a conspiracy between November 1998 and January 2002 with a number of others, including Michael Young, to defraud a number of banks by securing the issue of 27 letters of credit to Yue Fung (as the applicant for the letters of credit) and Gold Wo companies (as the purported beneficiaries), ostensibly for the supply of goods by the beneficiaries, causing the banks to part with a sum in excess of $58 million, when there were in fact no genuine underlying commercial transactions.  However, the funds issued by the banks to Gold Wo or its subsidiaries upon presentation of the documents required by the letters of credit were routed back to Yue Fung through a company called Blooming Sky International Ltd (Blooming Sky) in whose favour cheques were signed by D2 and D5.  For the purpose of this fraud, false documentation was created to reflect the (non-existent) underlying transactions.

15.  The object of the exercise was said to be twofold: the generation of cash for the benefit of Yue Fung; and the furtherance of the listing objective, in that Gold Wo’s supposed sales as represented by the letters of credit were reflected in Gold Wo’s accounts thereby inflating Gold Wo’s suggested turnover.

(2) Count 2

16.  The second count on the indictment was directly referable to the listing application.  It was levelled against D1, D2, D3, D4 and D6 and charged a conspiracy between January 1999 and April 2001 to defraud the Stock Exchange of Hong Kong by dishonestly falsifying sales invoices and accounting records to inflate the turnover and profit figures of Gold Wo and its subsidiaries for the financial years 1997-98, 1998-99 and 1999-2000 so as to satisfy the listing requirements of the Stock Exchange and thereby to induce the Stock Exchange to approve the listing application.

17.  An audit report in respect of Melamine and Richlink had shown losses for those companies for the financial year 1997-98.  That was a problem for the listing applicant since a requirement for listing was a profit aggregating $50 million for the three years prior to listing: an aggregate of $30 million for the first two years and a profit of $20 million for the third year.  When, in early 2000, D1 planned to use Gold Wo to apply for listing, that criterion could not be met and the prosecution case was that D1 engaged D3 and D4 to create bogus profits.

18.  The device allegedly used to turn the loss into significant profit was one whereby it was suggested that there had been substantial sales of products manufactured by Gold Wo’s factory on the Mainland (referred to at trial as ‘Mainland sales’, though the supposed sales were not to customers on the Mainland) in the year in question which had not been included in the accounts for that year.  The contention was that the four defendants charged in Count 2 conspired with Michael Young and others to concoct invoices showing supposed sales by the Group’s factory on the Mainland thereby grossly exaggerating the sales.

19.  By the time the listing plans were in hand, the accounts for the 1997-98 year had already been audited so it was not possible to alter those accounts to cater for the ‘missing’ sales.  Something had therefore to be done within Gold Wo’s group accounts to reflect the missing sales thereby in turn to augment the profits for the two years 1997-98 and 1998-1999 to $30 million.  A suggestion was made to do that by a prior year adjustment, in other words, to reflect the supposed 1997-98 sales in the accounts for 1998-1999.  But the reporting accountants, Ernst & Young, disapproved this suggestion, so the idea was abandoned.

20.  The prosecution case was that D3 and D4 promoted the alternative idea of purchasing an aged but previously dormant BVI company that would be used to reflect the 1997-1998 Mainland ‘sales’ and that a letter would then be written to the Inland Revenue Department explaining that no tax returns had hitherto been filed for the BVI company because it had erroneously been thought that an overseas company need not file such a return.  Accordingly, Top Executive (a BVI company) was acquired in December 2000, but it was falsely represented that Top Executive was acquired in 1994 and that it was an overseas associate of Gold Wo that had made profits for the Group in the year 1997-98.  An audit report for the financial year ending March 1998, signed by D6, showed, falsely, that in that year Top Executive had made a profit of $15 million from Mainland sales.  So the loss originally shown for the year 1997-98 was thus converted into a profit.  Top Executive was used solely for the purpose of the 1997-98 accounts, the audit report for which was signed by D6, although the sales turnover by the Gold Wo Group for the years ending March 1999 and March 2000 were also exaggerated by the machinery of false documentation.

21.  For the three financial years 1997-98, 1998-99 and 1999-2000 the exaggeration of turnover was $29.8 million, $52.2 million and $59.2 million respectively and the profits were overstated so as to meet the listing requirements.  All these figures were published in the prospectus and, on the basis of these false representations, Gold Wo’s listing was approved on 12 April 2001.

22.  The allegation was that in order to support the inflated accounts for these three accounting years, false invoices were created using the names of local and overseas companies.Some of the companies agreed to act as customers, knowing that they had not been customers, but most companies used were used without their knowledge.  The contention was that the conspirators arranged for staff in the Mainland factory to forge the invoices and to deliver them to Hong Kong.

23.  The jury was taken to a number of features of the false invoices that were thus produced which, on their face, distinguished them from invoices for genuine sales that originated in Hong Kong.  In this regard, there was important evidence from officers of a company called Synergy Limited (Synergy), a customer of Melamine: invoices sent by Melamine for goods in fact ordered by Synergy bore a “Synergy Ltd” stamp affixed by Synergy upon its receipt and, furthermore, each such invoice was matched by a purchase order that had been issued by Synergy.  Both features were absent in the cases of the bogus invoices: no Synergy stamp and no corresponding purchase order issued by Synergy.  Instead, what the conspirators did was to produce documents supposedly from two forwarding companies purportedly showing the receipt of goods manufactured by Melamine for onward transmission to the purchaser.  In addition, the prosecution adduced evidence that the ICAC had seized a file of invoices from Gold Wo’s premises which had never been entered into any Gold Wo account because the particular products which were represented by the invoices as having been sold were not produced by the companies issuing the invoices.

(3) Count 3 

24.  Count 3 alleged against D1, D3, D4 and D5 that between April 2000 and March 2001 they conspired with Young and others to defraud the shareholders, investors and creditors of Gold Wo as well as the Stock Exchange by dishonestly falsifying documentation to inflate the turnover and profits for the purpose of compiling and publishing a misleading annual report for the financial year ended 2001.

25.  Count 3 was intended to reflect conduct that the alleged fraudsters deemed necessary to perpetuate the false picture presented to secure the listing.  For the purpose of the listing a profit forecast had to be made for the year 2000-01.  The forecast had falsely to be inflated if it were to sit comfortably with the massaged profit figures for the previous years and then, after listing, the sales figures had broadly to be consonant with that forecast.  Therefore, according to the allegation, the conspirators continued the creation of false Mainland sales, backed by false documentation, for reflection in the annual report for 2000-01, a report that was signed by D1 and D2.  Through the use of bogus invoices produced primarily by staff in Gold Wo’s Mainland factory, the turnover of the Group was overstated by more than $100 million for the financial year ended March 2001.

(4) Count 4

26.  Count 4 alleged another letter of credit fraud, between November 2001 and December 2002.

27.  In the spring of 2001, according to the testimony of Young, Gold Wo’s cash flow was in a parlous state which could not be alleviated by the generation of letters of credit by Yue Fung because Gold Wo was by then listed and Yue Fung was an associated company; the generation of cash through Yue Fung letters of credit was likely to attract unwelcome attention.  The contention was that D1 therefore suggested the utilisation of shell companies in whose favour letters of credit would be issued but the proceeds of which would be returned by those companies to Gold Wo, hence increasing its apparent cash flow.

28.  Four companies were acquired for this purpose: Peace Honour, Smart Star Enterprise (Smart Star), Central Rise Development (Central Rise) and Win Linkage.  One of the two directors and shareholders of Central Rise was a man called Desmond Cheng; the other director and shareholder was D2.  Cheng and D2 were also the directors and shareholders of Win Linkage.  One of the two directors of Smart Star was related to the Fu family.  A person closely connected to D1 was a director of Peace Honour.

29.  Against this background, Melamine applied for 29 letters of credit in favour of these shell companies, supposedly for the purchase of goods from them.In consequence, the banks released an amount exceeding $27 million.The monies found their way back through the shell companies to Melamine, though in one or two instances to Richlink, to D1 or to accounts of acquaintances.

30.  Count 4 alleged that D1, D2 and D5 conspired to defraud the banks by procuring them to issue letters of credit in favour of the shell companies by submitting false documents to the banks purportedly evidencing genuine underlying transactions when there were in fact no such transactions.

(5) Count 5

31.  Count 5 alleged, as against D1 and D3, a conspiracy between 12 April 2001 and 31 May 2001 to steal a sum of $23.66 million from Gold Wo.

32.  The prosecution asserted that because he feared under-subscription of the shares offered to the public in the listing, D1 secured ‘dummy’ subscribers to purchase public shares on his behalf.  To fund these purchases, he used Top Master (owned by D1 and D5) to borrow $50 million from AG Capital Limited (AG Capital) which sum was then transmitted to the Lee brothers for them to fund the dummy subscribers.

33.  As a result of the placing of, and public subscription for, shares, Gold Wo’s account was credited with a sum slightly in excess of $40 million, in respect of which $11 million was due to D1 for his shares, leaving a balance in the Gold Wo account of a sum of almost $29 million.

34.  Under the loan agreement, a sum of $30 million was due to be paid to AG Capital by 23 April 2001.  The evidence was that D1 wanted to use a cheque or bank transfer to remit the sum from Gold Wo’s account to AG Capital but he was dissuaded from doing so.  Instead, a back-to-back loan was arranged with the Standard Chartered Bank.  It worked in this way: of the sum of almost $29 million in Gold Wo’s Placing and Public Offer Account, $20 million was transferred to a fixed deposit account against which Standard Chartered lent the company $20 million.  Young’s testimony was that D1 then required that sum to be split into different portions and credited to various bank accounts of Gold Wo and Richlink.  The evidence showed that sums from these accounts were drawn between 19 and 23 April 2001 by cash cheques in favour of D1 and D2 respectively, totaling $23.616 million.At about the same time, namely, between 19 April and 23 April 2001 cash deposits in a sum totaling $17.4 million were made to accounts held by the Lee brothers and a sum totaling $6 million to an account held by D1; a total of $23.4 million, of which $23 million was then paid to AG Capital.The evidence was that D1 instructed Young to falsify accounting records to show that the monies were used for normal expenses.An additional sum of $6 million was paid by a separate cheque to AG Capital to make up $30 million then due.  The provenance of that cheque was of no proven relevance to the case.

The trial

35.  The prosecution case rested primarily on two sources of evidence: the evidence of Michael Young; and confessions allegedly made by all defendants save D5 (whose statement was ruled inadmissible) and D6 (whose statement was exculpatory).  Michael Young, engaged in September 2000 as the Group’s financial controller, and hired for the purpose of steering and effecting the listing, had participated in the frauds.

36.  Other evidence called by the prosecution included:

(1) officers and staff of Synergy to the effect that D1 had requested them to provide bogus purchase orders, a request they declined.  They identified 86 bogus invoices purportedly issued by Gold Wo and others purportedly issued by Richlink;

(2) staff members of various shipping companies, whose evidence showed that shipping details on letter of credit applications were false;

(3) an engineer employed by Melamine and Richlink to say that the Group did not have business transactions with a number of companies that appeared in the accounting records as purported clients or buyers and that, in respect of count 4, the Group had never purchased raw materials from the companies named as beneficiaries in the letter of credit applications;

(4) evidence of Desmond Cheng, of Melamine, that he was told by D1 to borrow $30 million from AG Capital so that shares of the Group could be acquired;

(5) evidence of the acquisition of Top Executive in 2000, until then a dormant company;

(6) evidence from Clement Chan, the auditor of Melamine and Richlink’s accounts in 1999, of the losses recorded for the year ending March 1998;

(7) evidence from senior officers of the Listing Division of the Stock Exchange of Hong Kong; and

(8) evidence of ICAC officers who had taken statements from the appellants.

37.  None of the applicants gave evidence at trial; nor was any evidence called on their behalf.

38.  The defence approach was to admit almost nothing and to put the prosecution to proof of its case.  In consequence, no fewer than 84 witnesses were called in a trial that, unfortunately, lasted about one year.  In very large part the evidence of those witnesses was not in any real sense challenged and in no way demonstrated to us advanced the case of any applicant.

39.  Closing submissions by counsel for the prosecution were made over a period of several days from 10 to 16 February 2007.Closing speeches for the defence took place between 5 and 14 March 2007.  Summing-up commenced on 21 March 2007 and continued into the following day.  The jury retired shortly after 1 p.m. on Thursday 22 March and returned their verdicts at 2:15 p.m. on Sunday 25 March 2007.

40.  All appellants were convicted upon the counts they faced.  D1 was convicted unanimously in respect of all counts; the others by a majority save in relation to D5 who in respect of count 4 was convicted by a unanimous verdict and by a majority in relation to count 3.

The summing up and the defences

41.  The first ground of appeal common to all appellants is that the summing-up did not adequately place before the jury the issues and the defences.  

42.  The approach by all appellants to this ground has been twofold: first, that the summing-up is on its face self-evidently inadequate (‘general inadequacy’); second, that there were matters specific to each appellant’s defence that ought to have been referred to by the judge in the summing-up but which were omitted (‘specific inadequacies’).

43.  The general inadequacy complaint runs along the following lines: that for a trial that lasted one year, in which over 80 witnesses were called to testify, a summing-up that took no more than one day (albeit spread over two) was self-evidently inadequate; that the judge summed up the evidence of one witness only, namely, that of Michael Young and even then only his examination in chief, barely touching upon the evidence of other witnesses; that the judge failed to remind the jury of such cross-examination that had assisted the appellants or of such documentation as had supported their respective cases.  One counsel argued that it was unnecessary to point to specific omissions in the case of particular appellants because a summing-up of this brevity in a case of this length and complexity was necessarily inadequate.  In relation to the complaint of general inadequacy, there was developed a further argument which emerged from a concern expressed by this Court: that argument was that the judge failed to assist the jury in identifying what evidence in relation to each appellant was relevant to which count on the indictment.

44.  It is unrealistic, because it is non-contextual, to assess the general inadequacy complaint without considering the case for and against each appellant, identifying what was truly in issue in the case of each appellant and the extent to which the judge has addressed those issues.  There is not much mileage in arguing that documents were not referred to in the summing-up, or that cross-examination was not summarized, unless counsel can point to documents or cross-examination relevant and helpful to his client’s case.  Nor is there mileage in saying that the judge failed in his summing-up to deal with the testimony of dozens of witnesses unless it can be shown that the evidence of those witnesses assisted the defence case or that a reminder of their evidence would assist the jury in understanding what they might not otherwise understand.  It is furthermore no answer to say that the evidence of 80 or so witnesses must have been relevant otherwise they would not have been called by the prosecution because such an answer is non-contextual, particularly in a case in which the prosecution was forced to call 80 or so witnesses because the defence was not prepared to admit anything save for a minimum of facts relating to company structures.

45.  We have both in the preparation of this appeal and in the course of the hearing, been much exercised by the brevity of the summing-up and by the judge’s concentration on the examination in-chief, rather than upon cross-examination, of Michael Young.  Yet we have at the same time been struck by the absence of particularisation of what it was in the omitted cross-examination and in the evidence of those witnesses whose testimony was not summarized that was important to the defences suggested.  It is the attempt at particularisation which occupied most of the appeal hearing.  Apart from understanding the case and the issues, an exercise in which unfortunately we were given inadequate assistance, the greater part of our function has been an attempt to draw such particulars from counsel.  As will be seen, it is the failure on the appellants’ part to demonstrate material omissions that has resulted in the failure of their appeals.

46.  In any event the cupboard was not entirely bare.  The judge, though in an admittedly Spartan way, did remind the jury of some aspects of the evidence of witnesses other than Michael Young.  He referred also, though minimally, to certain areas of Michael Young’s evidence in cross-examination.  He did so in the course of dealing with particular issues relating to the case for and against a number of the appellants.  It is true that the method adopted by the judge for doing this was by way of reminding the jury of particular facets of defence counsel’s submissions on behalf of an appellant and of what counsel had said in that regard about the evidence.  That is a less than ideal approach to a judge’s duty to remind the jury of the salient points of evidence bearing upon the issues in respect of a particular defendant’s case.  Nevertheless it is not right to say, as individual counsel on occasion did, that the only evidence referred to by the judge was that contained in the evidence-in-chief of Michael Young.

D1’s appeal

The evidence against D1

(1) Count 1

47.  The evidence implicating D1 in the first count may be summarized as follows:

(i) D1 was the Chairman of Gold Wo, not a large company in terms of the staff engaged, a person closely associated with the Lee brothers, and the sums generated by the letters of credit were substantial.  The prosecution contended that it is hardly likely that these transactions were conducted without D1’s knowledge and involvement.

(ii) D1 was arrested on 16 December 2002 and four interviews of him were conducted by officers of the ICAC, in the course of which he admitted that he knew that some of the letters of credit transactions with Yue Fung were bogus and that the proceeds would be returned to Yue Fung.  He stated that the purpose of this exercise was to inflate the business turnover of his companies.

(iii) Michael Young testified that after the listing, one of the Lee brothers contacted him asking why certain monies from a letter of credit issued by Yue Fung had not been returned to Yue Fung.  Young was puzzled by this and put the matter to D2 who told him to ask D1.  When he did so, D1 said: “The LC money that we have received are not the proceeds arising from Mainland local sales,” but that the purpose of issuing the documentary credits in favour of Gold Wo had been to exaggerate turnover.

(2) Count 2

48.  The testimony implicating D1 in the second count, apart from the point made that it was unrealistic to imagine a person in D1’s position not knowing and approving what was going on, may be summarised as follows:

(i) admissions made by D1 during his interviews, that he knew that the profits of the Group did not meet the listing requirements; that purchase orders and other documents were falsified to inflate profits; and that the Stock Exchange had been deceived into approving the listing;

(ii) the testimony of Michael Young that:

(a) D1 was in practice, as well as in name, the person in charge of the Group and that D1 attended the first two meetings with professional advisers who were involved in the listing application;

(b) in December 2000 when some of the sales documentation was queried by Ernst & Young, D1 said he would ask friends to sign sales confirmations which would be forwarded to Ernst & Young as evidence of the purchase of goods represented by the invoices.  D1 then asked D4 to contact staff from the Mainland factory to prepare sales confirmations that would match figures that had been submitted; and

(c) he was present when D1 discussed with the Lee brothers the profit forecast for the year 2000-01, at which discussion it was decided that the original target for the forecast, namely, $32 million, was not enough and should be increased to $40 million; it being obvious from the circumstances that false documentation would have to be produced to support the new forecast;

(iii) the documentation filed upon the acquisition of Top Executive purporting to show D1 as that company’s first director from 6 October 1994, a document that must have been placed before D1 and which he must have known to be false;

(iv) evidence of Clement Chan who had audited reports for the year 1997-98 showing a loss for Gold Wo and Richlink, which he discussed with D1 whom he asked for an undertaking for continuous financial support.  D1 signed such an undertaking for Richlink but not for Gold Wo.  The relevance of this is that it showed D1’s knowledge of the true financial state of these two companies.

(3) Count 3

49.  The annual report at which this suggested conspiracy was directed was signed by D1.  Moreover, in his interviews, D1 admitted that false Mainland sales had to be stated in the annual report and submitted to the Stock Exchange.

(4) Count 4

50.  There was considerable evidence to show D1’s connection with this conspiracy:

(1) the fact that the shell companies were owned and directed by persons closely connected to D1;

(2) D1’s own admission in an interview that the letter of credit proceeds were intended to be returned to Gold Wo;

(3) Michael Young’s evidence that the suggestion of setting up the shell companies to generate cash flow through letters of credit was D1’s and that D1 directed D4 to acquire the companies;

(4) the testimony of Desmond Cheng that he was asked by D1 to become a director and shareholder of Win Linkage and Central Rise and was instructed by him to open bank accounts for those companies and become their authorised signatory.

(5) Count 5

51.  The evidence against D1 in relation to this count was, if accurate, established by bankers records that showed the movements of funds and also the testimony of Michael Young, including his testimony that D1 instructed him to fly the accounting records to show that the money is removed from the Gold Wo accounts had been used for normal expenses.

The adequacy of the summing-up 

52.  D1’s first ground of appeal is that the judge failed to sum up his case “as was advanced to the jury” adequately or at all.

53.  The complaint commences with a recitation of something the judge said early in his summing-up:

“Members of the jury, at this juncture, I would usually give the jury a summary of what each witness has said in the trial, but I am not going to do that for this case.  We had many witnesses coming to court to testify and you have heard so much detail.  You have also heard the analysis of those details in the speeches given by counsel on both sides.  Their speeches alone took about three weeks and the evidence almost a year.  It would take a very long time indeed if the evidence of each witness is to be mentioned again, even in summary form.  There is no point for me to do that.  I believe now is the time when you should rise above the details and look at the larger picture, the relationship between the different issues and look at the main points in deciding on the case. 

Of course, I am not suggesting that the details are not important.  They form the foundation of the case.  What I will do is simply remind you of the main points and the overall case as presented by the prosecution and the defence.  Then at the end, I shall try to assist you to find a way through the details in order to reach decision for those five counts.”

54.  The suggestion advanced and repeated by counsel on behalf of all appellants – this is the general complaint to which we have earlier referred – is that this prefaced an unacceptable approach in which the judge, it is said, summed up the prosecution case in its entirety but the appellants’ case only in a very general way whereas “it is imperative” says the written submission, “that the learned judge must sum up D1’s case as was advanced and focus the jury’s attention on the issues.  This unfortunately was what the learned judge has failed to do.”

55.  In response to directions issued by the Court to all counsel before the hearing – directions necessitated by the paucity of particulars – counsel for D1 provided the Court with a table of matters allegedly omitted by the judge which ought to have been included in the summing-up.

56.  What is required for a summing-up is always case sensitive and largely a matter of common sense.  All counsel have referred this court to R v Amado –Taylor [2000] Crim L R 618 for the proposition, with which no one could properly take issue, that counsel’s speeches are no substitute for a summing-up. 

57.  But that is not what happened in this case.  As was pointed out in Amado-Taylor, the judge’s function is to focus the jury’s attention on the issues and to place before the jury such defence as has been advanced.  But, as the judgment makes clear, the suggestion that it is necessary for a judge to remind the jury of every salient point in the case is not an accurate description of the judge’s task.  The fact that a summing-up is short, compared to the length of the trial, affords of itself no ground for legitimate complaint.  As was said in Farr [1999] Crim L R 506 :

‘… on the contrary, brevity in summing up, as in examination or cross-examination of witnesses and in counsel’s speeches, was a virtue not a vice.  It could not be too strongly emphasised that the judge is under no obligation, when summing up, to rehearse all the evidence or all the arguments. 

As Lord Morris of Borth-Y-Gest said in McGreevy 57 Cr App R 424 at 430 quoting Lord Lowry, Chief Justice of Northern Ireland:

“It is not essential that the trial judge should make every point that can be made for the defence .… The fundamental requirements are correct directions in points of law, an accurate review of the main facts and alleged facts, and a general impression of fairness.”’

58.  On its face, the summing-up is considerably shorter than one might expect in the case of a trial that had lasted for so long and in which so many witnesses were called.  That of itself is not conclusive in an appellant’s favour because it is an observation made without regard to the issues in the particular case.  Since most of the witnesses were called to prove matters not in issue or matters of a formal kind, a summing-up that rehearsed their evidence would have been tedious and unhelpful.  Whilst speeches of counsel are no substitute for a summing-up, it is idle to ignore the fact that by the time the judge came to sum up this case up to the jury, the jury must have been thoroughly immersed in the material facts and allegations not least because the very lengthy closing speeches by counsel – in particular that of prosecuting counsel – rehearsed the evidence in the greatest detail.  Whilst this did not absolve the judge from identifying the issues and from reminding the jury of the salient evidence, in particular such evidence as shed light on the issues they had to decide, it would have been counterproductive, had the judge traversed in detail the evidence called for over a year.  It must also be remembered that in this particular case no defence evidence was offered, save for the little help which could be extracted from prosecution witnesses.  There was an overwhelming case that the conspiracies asserted by the indictment had taken place and, in relation to most of the appellants, strong evidence of their complicity in the conspiracies with which each was charged.  A detailed reminder of the evidence from a host of witnesses additional to the accomplice Young, most of whom were not accomplices, would in any event have served merely to drive home that picture.

59.  That said, the organisation of the judge’s summing-up was not as helpful to the jury as it might have been.  What the judge did, having directed them as to the law in relation to each count and as to those facts of which they had to be sure in relation to each defendant on each count before they were entitled to convict, was to summarise, in some detail, the evidence-in-chief of Michael Young and then summarise the contentions which counsel on behalf of each appellant had put to the jury in their respective closing submissions.  We would much have preferred the judge, once finished with the directions as to law, and in moving to the evidence, to deal with the case for and against each defendant separately and, in doing so, to tell them what in respect of each count affecting that defendant the issue was, what the opposing contentions were and what evidence there was that was said to support those respective contentions.  That would have been the orthodox and more helpful way to proceed.  Nothing in this judgment is to be taken as a green light in other cases for the approach adopted by the judge in this case, for the setting of this case is unique in the vast amount of evidence not in issue, the absence of witnesses for the defence and the paucity of evidential indicia favourable to the appellants, indicia which counsel have not been able to identify.

60.  Further the generalist nature of the defences offered, all of which amounted to a claim in one format or another that the appellants whatever their acts did not know of and did not participate in the underlying conspiracy or conspiracies with which they were charged, meant that there were no specific defences applicable to particular conspiracies.  Each appellant’s defence was a “coverall” which applied to all the charges he or she faced, and the judge in those circumstances could not be said to be at material fault in dealing with each appellant’s case in the same general terms.

61.  In other words, whilst we do not endorse the judge’s failure to follow the orthodox approach, we do not think that that failure amounted in this case to a material irregularity, whether in relation to D1 or to the other appellants.  

62.  There is no complaint about the judge’s directions as to law in relation to the specific offences charged, the elements of them, and as to what it was in the case of each appellant of which the jury had to be sure before convicting.

63.  The judge made clear in an early part of his summing-up that before an accused could be convicted of conspiracy to defraud, the jury had to be sure that there was in fact an agreement to commit the crime in question, that that accused had agreed to commit the crime and had intended at the time of that agreement that the crime should be carried out.  The jury had to be sure that the defendant was a party to the conspiracy and, if they were not sure of that, it was their duty to acquit.  He stated that the main issue raised in respect of the defendants was whether each “had been a knowing party to the conspiracy, acted dishonestly and had the intention to defraud.”  The prosecution had to make the jury sure that the defendant was acting dishonestly.  So, for example, “if the defendants knowingly submitted or intended to submit to the Hong Kong Stock Exchange documents which contained the false information as particularised, then you would have to consider, in the light of the definition [the Ghosh definition of dishonesty which had been explained], whether the respective defendants had acted dishonestly or not.” 

64.  Once the judge had provided his directions as to law, he told the jury that it was his intention to remind them “of the main points and the overall cases presented by the prosecution and the defence.” (emphasis added).  That is what he did.  The suggestion that this case was analogous to Amado-Taylor in the failure to deal with the defence case is therefore not supportable.

65.  As counsel for D1 himself emphasised to the jury in his closing submissions, the prosecution case rested on three aspects of evidence: the evidence of Michael Young, the Synergy evidence and the alleged admissions by the appellants, including D1.  Those are the facets of the prosecution evidence upon which the judge concentrated when summarising the prosecution case.

66.  In the event, we do not agree that in the case of D1 this was an unbalanced or unfair summing-up or that the judge failed sufficiently to delineate the issues or summarise the defence put forward.

67.  The judge dealt in some detail with the evidence of Michael Young.  It is suggested that the judge did not tell the jury of evidence that emerged in cross-examination which assisted D1; yet counsel was unable to point to anything that emerged from that cross-examination that was of such significance to the defence case that it ought to have had been referred to and was not when the judge summarised the defence case.  

68.  Having summarised the testimony of Michael Young, the judge then said:

“Now I come to the defence’s analyses of the evidence and how counsel put their respective cases.  I shall go through them one by one.”

That is what the judge did.

69.  In the case of D1, we have read the judge’s summary of the points made on behalf of D1 and we have also read the lengthy closing submission made by counsel on behalf of D1.  It is our conclusion that the judge has accurately and adequately summarised the case presented on D1’s behalf.  We have read as well the table provided by Mr Wong of the several points which he says ought to have been mentioned by the judge but were not mentioned.  Some of the points are of little consequence, so much so that counsel for D1 evidently did not think the points worth making in his closing address to the jury; in other instances, some are of dubious help since they are double-edged in their effect; and in respect of others, the judge did refer to matters to which Mr Wong says he ought to have referred.

70.  Accordingly, we are satisfied that there is nothing in this first ground in the case of D1.

71.  The second ground is in part an extension of the first in so far as it alleges that the judge did not deal with the cross-examination of Michael Young.  We have already addressed this point.

(4) A suggestion of imbalance

72.  There is a contention that the judge made comments about D1’s case which were unfair and unbalanced.  We do not propose to set them out in detail.  They were rhetorical questions posed by the judge, to the effect that who but the boss of this company would best know whether the company had or had not made profits and approximately what they were?  This was an obvious point to make and we do not think that the judge’s comments exceeded acceptable boundaries.

D2’s appeal

73.  D2 was interviewed on a number of occasions.  In the course of those interviews he made full confessions to his own participation in the offences which reflected in Counts 1, 2 and 4.

74.  Upon his arrest, he said that he and others were taught by the Lee brothers how to falsify the accounts of Gold Wo, and that he participated in the construction of bogus letters of credit.  In relation to the letters of credit opened by Yue Fung, a major part of them were false in that most of them were not supported by underlying transactions.He knew this.  The purpose of the letters of credit was to inflate the business turnover and cash flow for Gold Wo.  He himself caused the funds to be redirected to Yue Fung through Blooming Sky and another company.  As for the listing of Gold Wo, the company itself simply did not have the capital to satisfy listing requirements; indeed the company was, he said, “in the red in 1998”.Yue Fung provided capital in return for which it acquired 20% of the shares of Gold Wo.  After the listing, Gold Wo needed cash and this was achieved by the establishment of four companies and the generation of cash by the use of letters of credit albeit not supported by underlying transactions.  Cash from the letters of credit was used to inflate the business volume of the company.  He himself was directly engaged in this exercise.

75.  It was proved that D2 signed cheques to Blooming Sky which formed part of the cycle of cash in Count 1.It was admitted that D2 was a director and shareholder of Central Rise and Win Linkage, two of the shell companies used for the perpetration of the offence covered by Count 4.The monies from those letters of credit were returned to Gold Wo through a company called China Lucky and there was evidence, in the form of admissions by him, that D2 delivered documents to China Lucky for signature; that D2 and D5 signed the letter of credit applications and prepared cargo receipts and invoices issued by the shell companies; and that D2 opened bank accounts for the shell companies.Desmond Cheng testified how, upon the request of D2, he, Cheng, pre-signed a number of blank bank forms and a cheque book, all for the purpose of collecting the proceeds of letters of credit and that D2 told him to sign them and treat the matter as if he knew nothing.  There was evidence also from two accounts clerks that implicated this appellant in the giving of instructions for the preparation of bogus documents.

76.  In this appeal, D2 acts in person.  Perfected grounds of appeal against conviction were originally drawn by counsel.  The single assertion in relation to conviction was that “the learned the judge erred in law in failing to place fairly before the jury such defence as was advanced.”  We granted this appellant leave to add a ground alleging that directions by the judge exerted improper pressure upon the jury to reach a verdict.  To that we later return.

77.  The appellant has advanced written submissions by a letter dated 12 April 2009.  That letter includes the following submissions:

(i) that in his summing-up the judge neglected the evidence of more than 80 prosecution witnesses as well as the results of cross-examination on his behalf;

(ii) that the judge so summed up the case to the jury as to give rise to the danger that D2 would be convicted by reason of his family association with D1 and D5;

(iii) that the admissions made by him to the ICAC were demonstrably untrue;

(iv) that one witness, Lee Kit-ching, agreed in cross-examination that he, D2, did not know “the details of how things come and go with these [letters of credit] of Yue Fung”;

(v) that an ICAC officer agreed that the Yue Fung letters of credit had not been booked prior to the listing of Gold Wo;

(vi) that it was self-evident that D2 was a mere employee who was not involved in financial accounting or in anything to do with the listing of the company.  Rather, he was a warehouse supervisor in charge of routine matters such as the import and export of goods, customs declarations, daily transportation of goods, to the extent that he would have had no time to have contact with financial accounting or the listing; and

(vii) that he had no motive to join in the suggested deceptions and that there was no contention that he had gained financially from his alleged dishonest conduct.

78.  In his summing-up, the judge reminded the jury that the main issue in D2’s case was the question of dishonesty and that D2’s case was that he had never been dishonest.  The judge emphasised this appellant’s contention, made through counsel, that D2 “really belonged to the category of workers and therefore could not have full knowledge of what was going on in the company.”  He reminded them of the submission that there was no evidence of the appellant’s involvement in the accounting work, that this appellant did not know English and that even Michael Young, a chartered accountant, had said that he, Young, was not familiar with letters of credit.  He reminded the jury of the attack on the credibility of Michael Young.  He specifically directed them that they were not to infer guilt by association with family members; and he reminded them of the contention that the contents of the interviews could not be true and the judge referred to specific indicia said by the defence to have demonstrated this.  He reminded them as well of the contention that there was no evidence that this appellant was told that what he was doing was wrong.

79.  In relation to the asserted concessions by Lee Kit-ching and the ICAC officer, we have the benefit of a transcript of the cross-examination of these witnesses for which we called having heard the appellant, but the transcript does not support the appellant’s case.

80.  We are satisfied in the circumstances that this particular complaint made by D2 is not made out.  In relation to D2’s suggestion of general inadequacy of the summing-up, our conclusion is the same as in the case of the other appellants’, that material omissions have not been demonstrated.

D3’s appeal

81.  We received from Mr Egan, on behalf of D3, no fewer than four sets of written submissions; this because the first three did not particularize the appellant’s complaints, despite a direction by the Court.

82.  The first two grounds of appeal advanced on behalf of D3 are in the same vein as each other, namely, an alleged failure by the judge adequately to summarise the evidence and to deal with the defence case.

83.  There is a third ground, common to the other appellants (save for D1) which is to the effect that the judge left the jury with the impression that it was impermissible for them to disagree, in other words to arrive at a conclusion which did not represent a unanimous verdict or a majority verdict upon which at least six of them had agreed.  We will return to this ground.

84.  It will be recalled that D3 faced 3 counts, namely, Count 2, Count 3 and Count 5; in other words, all counts save those that alleged letter of credit conspiracies.

The evidence against D3

85.  The evidence against D3 was constituted primarily by the testimony of Michael Young and by admissions allegedly made by D3 in the course of an interview with the ICAC.

86.  This appellant featured prominently in the account provided by Michael Young.  It was D3 who interviewed Young for the job.  He informed him that he, Young, was there to assist with the listing and that he would be working with D4, Connie Kwok, who, together with D3, had already compiled the accounts for the listing application.  The effect of Young’s testimony was to place D3 at the centre of the listing exercise, giving Young and D4 directions and insisting that key documents be approved by him.

87.  Young’s testimony was that he noticed that the audited accounts for the year 1997-98 showed losses (D3’s knowledge of which was confirmed by the previous auditor, Clement Chan) and since he knew that $50 million cumulative profit was required for listing, he spoke to D3 who told him that Mainland sales had taken place which did not appear in the accounts and would now have to be included in the 1998-99 accounts which D4 and D6 were preparing.  In due course those accounts, unsigned, were handed to Ernst & Young, who raised a number of questions about them.  There were missing invoices and it was said that staff on the Mainland would be asked to find them.  D3 told Young that there were products on the Mainland that were sold from godowns for cash, in respect of which sales invoices had not been issued but that the Mainland would produce invoices purporting to be issued by companies owned by D1’s friends.  D3 said that monies for these sales were remitted to Gold Wo in Hong Kong, through Yue Fung, because Yue Fung were entitled to transmit monies from the Mainland since they were authorised to conduct Mainland transactions.  Young noticed, when the invoices came, that they were not of the usual kind issued by Gold Wo in Hong Kong and, in any event, Ernst & Young raised queries about the invoices and D3 suggested that a list of sales be sent to customers to confirm the sales for Ernst & Young’s benefit.  D1 informed friends of his to sign confirmations to tally with invoices produced on the Mainland.

88.  In December 2000, D3 told Young to prepare a profit forecast for the year ending March 2001 and that the target was to be $32 million.  Young informed D1 that there were inadequate sales and profits to warrant that forecast but was nonetheless told by one of the Lee brothers that the forecast had to be augmented to $40 million in order to ensure that an underwriter would be found.

89.  In the meantime, it was necessary to cater for the shortfall in the 1997-98 profits, the audited accounts for which year had shown a loss.  So, Top Executive was established for the purpose we have earlier described.  The idea of forming this company was D3’s.  D3, according to this testimony, asked D4 to pass to D6 such information as was necessary to enable D6 to make a set of company accounts and a letter was then written to the Inland Revenue Department explaining that this overseas company had, by oversight, failed to file a tax return.

90.  There came a time when Michael Young took over much of D4’s work and he noticed credit entries in a suspense account and asked D4 about this.  She told him that these were remittances from Yue Fung, through letters of credit.  According to the story offered to Young by D4, Yue Fung was authorised to do business on the Mainland and was in a position to remit monies to Gold Wo in Hong Kong in respect of sales of Gold Wo’s Mainland factory products.  The remittances were placed in suspense accounts until such time as the matching invoices had been received from the Mainland.

91.  However – and this is when and how the fraud first came to Young’s attention – the story provided by D4 was undermined when shortly after the listing, one of the Lee brothers asked Young why money that had been sent by Yue Fung under a letter of credit had not been returned to Yue Fung.  Young spoke to D1 about this; and D1 expressed surprise that the matter had not been explained to Young by D3 and D4, namely, that the monies did not represent the proceeds of Mainland sales and had been used to exaggerate Gold Wo’s turnover.  In the course of his evidence, Young identified a number of Mainland invoices which, he said, D3 had himself identified as fabricated.

92.  There was then a meeting of some importance.  It was between Young, a person called Chris (a friend of Young) and D3, in the course of which D3 invited Chris to become financial controller of a particular company.  Young, by then aware of the continuing fraud, challenged D3 about this invitation: “The accounts of Gold Wo are so bogus”, he said to D3, “I don’t expect that other company could be good, then how could you invite my friend to be the financial controller?” D3 answered that “the other company” was better than Gold Wo and had about half a million net cash coming in.

93.  The admissions made by D3 in his interview included an admission that he knew that some of the letters of credit were unsupported by genuine business; that he knew that Gold Wo’s true profits were not such as to meet the listing requirements; that “we constructed some accounting records so it could meet the listing requirement”; and that false information would be used to “fix” the accounting records accordingly.

94.  As for the complicity of D3 in the conspiracy which was the subject of Count 3, the testimony of Michael Young was that in May 2001 a problem presented itself in the compilation of the accounts for the year ending March 2001 in that there was an odd sum of $5 million for which no home could be found.  Michael Young discussed this problem with D4 who suggested that D3 be contacted for a solution.She told Young that D3’s engagement included “maintenance”, in other words an agreement to help maintain the picture that had been painted for the purpose of the listing exercise.  D3 was called and he suggested that the sum be treated as a deposit for purchasing fixed assets, with a delivery date after the year’s end, the advantage of which would be to boost the account; and D3 further urged Young to approach D1 to suggest that D1 contact a friend who would produce the requisite purchasing agreement.  This was done.  The relevance of this evidence was to demonstrate a prior agreement whereby D3 continued after the listing to assist in the perpetuation of the false picture.

95.  The evidence against D3 in relation to Count 5 was Young’s testimony that it was D3 who advised against the idea of a bank transfer or cheque to repay the sum due to AG Capital and that it was D3 who suggested the back-to-back loan with the bank.  Implicit was D3’s knowledge that money would be taken from the company.

D3’s grounds

96.  Mr Egan’s submission on behalf of D3 was that the prosecution notion that D3 was the guiding force behind organization of the Stock Exchange fraud was not supported and, more particularly, that he was “a non-entity-unknown to the central players in the listing drama – someone without power or influence.”  The appeal on his behalf was put on the basis that the evidential indicia in support of that defence were not placed before the jury by the judge in his summing-up.

97.  First, it is said that the listing process involved a large number of professional advisers over whose appointment D3 had no control; that he participated in none of the professional meetings in the listing process; that none of the key documents relevant for the purpose of listing was shown to have been circulated to him; that the appellant was not involved in the verification process; and that “not a single reply to [queries raised by] the Stock Exchange was ever amended or commented upon by” this appellant.

98.  The suggestion is that the interview of D3 contained statements made by him which supported the defence that was put on his behalf to the effect that “… they claimed that (they) had earned (the profit of) 50 million and that it had so many assets, so many machinery facilities, so many moulds, so many mould tools in the factory up there … well we had to explain how it got the money … well, then, by their explanation to us, we made those accounts.  [I] agree [that those accounts are actually false] [b]ecause no one knew where the genuine set was”: in other words, that the false documentation was, he believed, a reconstruction of actual transactions.  This passage and others to the same effect ought, Mr Egan argues, have specifically been referred to by the judge but were not.

99.  D3 was a consultant engaged by the accounting firm HLB.  It was, formally at least, HLB that was appointed as consultant by Gold Wo for the listing exercise although it is common ground that the consultancy work was carried by D3 himself.  Be that as it may, HLB’s appointment ceased after the successful listing in April 2001.  It is suggested, therefore, that D3 was not available, not on the scene, to commit the overt acts alleged in Count 3, an important point not addressed by the judge.

100.  As for Count 5, the argument is that there was no criminal meeting of minds between D3 and D1 as to the object of the exercise; D3 simply offered advice.

101.  Mr Egan joins in the general complaint about the summing-up, namely, that it was self-evidently inadequate merely to sum up the evidence-in-chief of the main prosecution witness and to refer in broad terms to the suggested defences of each defendant.  So, for example, Mr Egan complains that in his summing-up the judge said that:

“… the defence produced many documents to support their cases and the points that counsel raised in the cross examination of the prosecution witnesses.  You may wish to take account of the arguments analysis raised in the speeches that you have heard from counsel, but of course, you are not bound to accept any of the matters of views raised.” 

This, argues Mr Egan was not good enough.It is, he says, incumbent on a judge in any trial to remind the jury of such documents that support the defence case but the judge did not do so in this instance.

102.  In his summing-up, the judge said that counsel for D3:

“… pointed to … many aspects of [Michael Young’s] testimony having been contradicted by other witnesses or documentary records.  Counsel expanded on all these details to illustrate his points.”

Yet, says Mr Egan, the judge failed to remind the jury of the evidence that undermined Young’s credibility.

Analysis

103.  Once again, though, the problem with these submissions is that counsel has been unable to demonstrate to us material aspects of the appellant’s defence, or evidence in support of it, about which the judge failed adequately to remind the jury.  It is not a question whether the judge might have done so in greater detail or by reading out this passage or that: it is, rather, a question of whether it is demonstrated that the case was not fairly put.  It is not so demonstrated.  We have not been taken to one significant aspect of the defence of which the jury was not specifically reminded, nor have we been taken to any evidence of which the jury was not specifically reminded that served materially to underpin the suggested defence.

104.  The judge reminded the jury of the essence of D3’s defence, namely, that he had not acted dishonestly and that he understood no more and no less than the many other professional advisers who had been engaged by Gold Wo for the listing application and that the mere fact that someone assists another in an act which transpires to be unlawful does not render the assistant a member of a conspiracy.

105.  In so far as Mr Egan places emphasis on the fact that D3 had no control over the appointment of professional advisers and that the appellant participated in none of the professional meetings in the listing process, it is difficult to see how, in the context of the way the case was put against D3, those facts assisted his client.As with so much else in this case, both below and in the appeal, this was a red herring.  The prosecution case was not that D3 was directly involved in the listing process, or in the meetings of professional advisers or in negotiations with the Stock Exchange.  It was, rather, the prosecution case that D3’s role was to prepare for that listing process, to prepare or orchestrate the compilation of false accounts that would go forward for examination by the professionals for presentation to the Stock Exchange.  But in any event the judge reminded the jury of the point that had been made, namely, that the listing process had been conducted openly and had “gone through the hands of many independent professionals who had comprehensively sorted out and verified the accounts and information at different stages and at different levels”; and of the contention that “there was no evidence that D3 was involved in the listing process and questions from the Stock Exchange were not circulated to him at all [and that] he had never attended any professional meetings.”

106.  The contention that D3’s own hand was not placed on any of the key documents relevant for the purpose of listing is a contention that needs to be qualified.  The idea of using an old BVI company as a cure for the loss shown in the 1997-98 accounts was said by Young to have been D3’s and evidence was adduced to show D3’s manuscript suggestions all over the draft letter to the Inland Revenue Department, a letter that was integral to the conspiracy.

107.  The judge reminded the jury that Michael Young had been attacked as a dangerous witness upon whom to rely; of the fact that Michael Young had shredded incriminating papers; of the lack of any record of conversations said to have taken place between D3 and others; of the suggestion “about asking D6 to sign the accounts: and many aspects of his testimony having been contradicted by other witnesses or documentary records.  Counsel expanded on all these details to illustrate his points.”[1]

108.  He reminded the jury that there was evidence to show that the factory on the Mainland had conducted sales which, according to this appellant’s case, were “rather substantial”, and that the staff of Ernst & Young had visited the factory and were apparently satisfied with the invoices: why then, should not the appellant similarly have been satisfied?

109.  In relation to the defence that the invoices were thought to be but a mere reconstruction in relation to actual sales, the judge reminded the jury of the appellant’s contention that there was no evidence that actual goods were not sold and of the testimony of Young to the effect that it was acceptable for invoices to be made in such circumstances after the event.  In this same regard, when the judge reviewed the attack made on the appellant’s behalf on the reliability of his suggested admissions to the ICAC he went on to say to the jury that:

“… even if you accept that D3 gave the interview voluntarily, you may still find that his replies did not actually disclose any admissions as he was mainly relying on information given by other people.  His belief of the state of affairs demonstrated, according to counsel, that D3 was not dishonest and never a member of any conspiracy…Counsel said that the replies in the interview indicated that D3’s understanding of the problem he had to deal with in relation to the Gold Wo business was simply the account records of the company being incomplete, in that the original records could not be found.”

110.  The judge turned to the issue of Top Executive, reminding the jury that the appellant’s case was that its acquisition “… came as a result of a company restructuring process [that] was done openly and with the knowledge of the professionals… [and that] … [s]uch kind of old BVI company had been used for corporate restructuring.”

111.  The judge reminded the jury that in relation to Count 3, this appellant “was part of HLB and would have ceased his work with Gold Wo since March 2001,” and that Michael Young had never said that D3 had any knowledge of the contents, compilation and publication of the annual reports.  The judge referred to the prosecution’s answer to this contention, namely, that D3 had been called then for a solution to the $5 million problem, but he reminded the jury as well of the defence answer to that point.

112.  In relation to Count 5, the judge reminded the jury that the only evidence of this appellant’s involvement was the unsupported evidence of Young of his telephone conversation with D3, of the defence contention that D3 had merely floated an idea, and the judge added this:

“Members of the jury, you may also wish to consider this point.  There seems to be no evidence that D3 had followed up on this and asked Michael Young about the situation of the back-to-back loan or the whereabouts of the money.  You may think that he was only making a suggestion earlier and whether you could really infer he had therefore made an agreement with D1 and/or Michael Young to commit the theft, well, that would be a matter for you.”

113.  This was a relatively full summary of the defence advanced on D3’s behalf.  We see no omission of sufficient significance to lead us to the conclusion that in D3’s case the summing-up of the defence was inadequate or unfair. 

D4’s appeal

114.  In the case of D4, statements made by her in interviews were clearly inculpatory.  

115.  She said that when she first started working at Gold Wo, it was not very clear to her what was happening but then there came a time when she knew.  She knew that the net profit for the Group fell short of the amount required by the listing regulations and there was a meeting at the office of Mr Lee of Yue Fung at which was discussed the way to solve the problem.  Her function was to produce the figures that were required to make up the shortfall, whilst it was then up to others to produce the documents necessary to support those figures.  It was decided that false invoices and documents would be made out on the Mainland because it was less risky to do it that way.She was aware of the fact that letters of credit were used to augment the cash flow picture even though the proceeds were redirected to Yue Fung.  She was aware that there were no goods involved.  She said that the sales that in fact took place on the Mainland amounted to about 10% to 20% of the total volume represented by the invoices that were produced on the Mainland.  As for the letters of credit which were the subject of Counts 1 and 4, “we knew that they were certainly all false.”  It was put to her that she knew very well that the figures were fabricated yet she still helped D1 to consolidate the figures and submit them to the Hong Kong Stock Exchange.  She did not deny this and she was asked why, if she knew it was not lawful, she did it and the effect of her answer was that it was done to make the company successful in securing a listing and she would have an additional consultancy fee.

116.  These admissions were supported by the evidence of Michael Young.  He said that when Ernst & Young commenced auditing the accounts, they asked for invoices regarding sales.  A number were missing.  Michael Young asked D4 if she knew where they were and she said that they were kept on the Mainland but could not be fetched easily.  There came a time when D3 told Michael Young, according to this evidence, that figures to be put on Mainland invoices were provided by D4 who would check them.  Queries were raised about the invoices and it was decided that it was necessary to have “customers” confirm the sales.  D3 and D4 went to see D1 who said that he would secure friends to sign the confirmations and D4 was told to inform staff of the Mainland factory to prepare the confirmations.  He also testified that D4 was the one who was asked to purchase a BVI company and that she had to acquire one that was some years old because that company was intended to be used to reflect accounts for 1997-98.  D4 did as she was asked.  She and Young compiled the false Top Executive accounts.  

117.  Michael Young also said that there came a time when he noticed that this appellant had been putting credit entries into a suspense account.  He asked her about this and she said that in respect of goods sold on the Mainland, the money received would go to Yue Fung on the Mainland and that they would return the money by means of letters of credit.  However, when one of the Lee brothers said in respect of one particular letter of credit that it had been issued but the money not returned to Yue Fung, Young asked D1 about this and was told that the letter of credit money had nothing to do with the proceeds of Mainland sales but had, rather, to do with an exercise in exaggerating Gold Wo’s turnover.  The money belonged to Yue Fung and had to be returned to them.  There were, said D1, some Mainland sales but not that much.  Young then spoke to D4 asking why she had not told him about these things earlier and, according to this testimony, she said: “How can these things be said to you?” 

118.  In relation to Count 3, there is the evidence to which we have earlier referred of the odd sum of $5 million in the accounts and of D4’s suggestion to Young that D3 be called in for a solution.

119.  Although D4 did not testify, nor was any evidence called on her behalf, her case put through cross-examination and in closing submissions was that she was effectively no more than a clerk carrying out her employer’s instructions and unaware that anything unlawful was occurring.  It was further contended that the evidence of Michael Young was so flawed and unreliable and at odds with other evidence as to make it unsafe for the jury to rely upon it.

120.  Mr McNamara’s prime complaint on behalf of D4 is the sparsity of the summing-up as a whole.  His contention is that for a trial that lasted for 12 months, a summing-up as short as this summing-up was self- evidently inadequate.  It was, he said, incumbent upon the judge to compartmentalise the case of each defendant under each charge and that the failure so to do gave rise to a real risk that the jury would “lump everything together,” a risk augmented by the judge’s exhortation to the jury to “look at the larger picture”.  How, asks Mr McNamara, can this Court be satisfied that the jury looked at the correct evidence in respect of the respective counts, absent directions as to what evidence was relevant to which counts?

121.  In relation to suggested specific omissions concerning the case of D4, Mr McNamara points to four matters.

122.  The first of the specific complaints is a suggested contradiction in evidence that is said to reflect adversely on the credibility of Michael Young, but to which no reference was made by the trial judge.  The contradiction that is said to arise is in respect of the testimony of Michael Young, on the one hand, and of Lee Kit-ching, the accounts clerk, on the other, about the stage at which D4 was engaged in matching invoices with the monies received through Yue Fung from the Mainland.  One of the problems with this submission is that it commenced with a concession made by Mr McNamara that he was somewhat in the dark as to the detail of the testimony of the accounts clerk in this respect, since he did not have a transcript of her evidence.  Given that the respondent does not accept the interpretation of the evidence which Mr McNamara has managed to glean from a closing submission by counsel (a submission which Mr McNamara has himself categorised as less than clear), it seems to us impossible for this appellant to make headway on this point without a transcript, for which no application has been made.

123.  That said, the point is in any event of limited value to the appellant.  What it seems to amount to is this: that in his testimony Michael Young said that when he started work in September 2000, D4 was engaged in checking funds received from Yue Fung and whether invoices produced on the Mainland matched them; whereas the testimony of Ms Lee was said to be to the effect that in late 2000 it was she, Ms Lee, who was doing the matching.  Given that it is common ground that at some material stage D4 was doing the matching, that there was evidence from Ms Lee that from time to time she acted under D4’s instructions[2] and, further, that the judge reminded the jury in the course of the summing-up[3] that one of the bases upon which Michael Young’s credibility had been attacked on behalf of D4 was a suggested contradiction by Ms Lee of his testimony on the question of matching the invoices, we are not persuaded that the point carries the significance attached to it by Mr McNamara.

124.  Next is a complaint that the judge failed to remind the jury of a specific piece of evidence from Ms Lee to the effect that there came a time when Michael Young told her not to show the suspense account to Ernst & Young.  The suggestion is that this shows a culpable mind in Michael Young at a date earlier than the date upon which he asserted he came to know of the dishonest acts within the company.  Since Mr McNamara concedes that the date to which Ms Lee was referring is unclear, the point is a difficult one for him to elevate and in any event is of marginal significance given Michael Young’s ample concession that there came a time when not only did he discover the dishonesty but that he himself joined with it.  Furthermore, the judge reminded the jury of counsel’s contention that the effect of Ms Lee’s testimony generally was to undermine Michael Young’s account that he only came to discover the dishonesty “bit by bit”.

125.  Then Mr McNamara points to the suggestion that Ms Lee said that it was in November 2000 that she had dealings with Michael Young in relation to the suspense account whereas Michael Young said that until January 2001 his dealings had been with D4.  It is difficult to see this as a point of any significance in the context of this case and of a situation in which both D4 and Ms Lee were working in this company, with its very limited staff, at the same time.

126.  Finally, on specifics, Mr McNamara emphasises that professional accountants and lawyers against whom no accusations of crime have been levelled knew about Top Executive, a fact hidden from none of them, and which, apparently, raised the eyebrows of none.This misses the point.There was nothing unlawful in itself about the acquisition of this BVI company.  What was unlawful was the use to which, allegedly to D4’s knowledge, the company was put.  The prosecution case was that she and Michael Young compiled an audited account of Top Executive which showed that in the financial year 1997-98 Top Executive had made a profit of $15 million; yet she also knew that Top Executive had been acquired after that financial year.  That was not known to the (other) professional advisers.

127.  Although the judge’s summary of D4’s defence was brief, he reminded the jury that counsel had said that they were to consider the evidence against D4 in isolation and not to make assumptions based on a relationship which she had formed with D3.  He emphasized towards the end of his summing-up that they were not to judge the case on some such moral basis but, rather, according to the evidence.  

128.  “Counsel raised the question,” said the judge “as to whether D4 needed to know about what was going on at the higher level of the company.”  He reminded them of counsel’s point that the acquisition of Top Executive had been executed in an open manner and then said that “Counsel also went through the evidence of Michael Young at length and gave you his reason why he was not a credible witness.”  He reminded them of an example of this unreliability, which was the contradiction with Lee Kit-ching’s testimony as to who was matching the invoices from the Mainland.  He reminded them of counsel’s suggestion that the idea of using a BVI company was the result of discussion amongst the professional advisers and could not have come from D3 and D4.  He reminded them that counsel had compared D4’s role to that of a library assistant, that she had never attended any professional meetings nor the celebration dinner after the successful listing.  He reminded the jury of the main points of attack mounted by counsel against the conduct of the interview of D4 by the ICAC.

129.  We have earlier stated our opinion that it would have been preferable had the summing-up been differently constructed, so as to compartmentalise the evidence for and against each defendant on each count.  The failure of the judge to construct his summing-up in this way and, more particularly, his failure to remind the jury of the specific issue in D4’s case, whether it was proved in each count against her that she was a knowing and dishonest party and to tell them that if her suggested role as unwitting assistant might have been the case they were to acquit, would be significant only if we were to conclude that, in the event, the case was not fairly put, or that the jury might have been under some misapprehension as to the issues it had to decide.  In this particular case, we are satisfied that the failure to construct the summing-up in the orthodox manner has not rendered the convictions unsafe or unsatisfactory.  Nor, in the context of the summing-up as a whole could this jury have been under a misapprehension as to the issues to be decided in the case of each defendant.  Further, we are satisfied that the judge adequately reminded the jury of the main features of the defence case as it had been put.

130.  As we have already indicated, the judge had at an early stage of the summing-up told the jury what were the essential issues for determination in the case of each defendant and he returned towards the close of his summing-up to the key points that the defence had been trying to establish in cross-examination; in particular that the defendants did not know of the falsities in the accounts; D2 and D5 saying that they were mere workers; D1 that he was relying on professional advisers; D3, D4 and D5 that they relied on clients for basic information and on professional advisers to check the truthfulness of the accounts; that Michael Young was an unreliable witness; and that the interviews were conducted in a way that rendered inculpatory statements unreliable.

D5’s appeal

131.  D5 was indicted upon Counts 3 and 4.

132.  The evidence against her did not include any admissions made to the ICAC.  A statement allegedly made by her was ruled inadmissible.  Although she was said to be complicit in the offences covered by Counts 1 and 2 and the evidence in relation to that complicity is said to be relevant to her guilt of the offence covered by Count 3, she was not indicted upon Counts 1 and 2 because, so we are told, it was thought easier because of the admissions which she had made to prove Count 3 rather than Counts 1 and 2 as well.  The relevance of this background is, first, the suggestion that the jury may have been puzzled by the limitation of the charges against D5 and, secondly, because it is argued that the evidence against D5 should have been, but was not, compartmentalized by the judge according to the specific charges against D5.

133.  D5’s complicity in the offence alleged in Count 3 is said to have been proved by the following evidence:

(a) that she was in charge of the Group’s banking: in other words, she kept banking records and gave out cheques and must, therefore, have known, for example, that monies paid to the shell companies were coming straight back;

(b)  that she signed the annual report dated 26 July 2001. Although the date of that report falls outside the period of the Count 3 conspiracy, Michael Young testified that in May 2001 he noticed that the cash flow situation was becoming critical and when he examined the bank statements he noticed that Gold Wo was remitting money to the Mainland to pay for their factory expenses.This puzzled Young because his understanding was that sales on the Mainland amounted to about $2 million a month.  So he spoke to D5 about this and she said: “If we don’t remit money to the Mainland factory, how can they sustain the production?”  Young answered that the Mainland sales should be more than enough to sustain them but she answered: “How could the local sales be adequate to settle the bill?” and made it clear that the suggestion that the turnover on the Mainland was $2 million a month was inaccurate;

(c) that although this appellant was not indicted upon Count 1, there was evidence that she knew of the falsification of invoices to match the applications and was party to the repayments to Yue Fung.  There was evidence of accounting clerks that D5 had said that the very purpose of the Yue Fung letters of credit were for “getting cash” and that D5 signed cheques to Blooming Sky that matched the proceeds of the Yue Fung letters of credit.  There was evidence too that it was D5 who gave the accounting clerks instructions to use a suspense account into which to book the Yue Fung proceeds until such time as invoices had been prepared; and

(d)  the relevance to Count 3 of D5’s complicity in the Yue Fung letter of credit fraud, involving the making of false invoices, was, so the argument ran before us, that that letter of credit fraud was perpetrated between November 1998 and the end of January 2002, a period that incorporated that covered by the events which were the subject of Counts 2 and 3.It is said by the respondent that her complicity in the lengthy Yue Fung letter of credit fraud, which itself was perpetrated in order to falsify the accounts for the purpose of the listing exercise, was relevant to show her culpability on Count 3 because that complicity well illustrated her knowledge of the true financial situation of Gold Wo and because the presentation of a continuing false picture in the annual report was imperative, as she must have known, to perpetuate the false representations made to secure the listing.

134.  The evidence against D5 in relation to Count 4 was, in summary, as follows:

(a) D5 signed many of the letter of credit applications;

(b)  bank records showing the circular flow of letter of credit funds between Gold Wo companies, on the one hand, and the shell companies on the other.  Given that D5 was in charge of the banking, these figures must have been well known to her;

(c) D5 was said by Michael Young to have been party to the discussion in which the conclusion was reached to set up the shell companies to generate cash flow through false letters of credit;

(d)  Michael Young testified that he and D5 were responsible for tracking the receipt of letter of credit proceeds, for arranging the return of the proceeds to the shell companies and for instructing staff to update Gold Wo’s suspense account.  His testimony was that once Gold Wo had purchased companies with a view to issuing letters of credit with them as beneficiaries, separate files or boxes created for each of the new companies were kept by D5.  All money going in and out was handled by D5, and it would be obvious to her when a sum intended for a beneficiary company found its way back to Gold Wo: indeed, she gave Young deposit slips in respect of sums that had been returned; and

(e) there was evidence from Desmond Cheng (who assisted the Count 4 scheme through his directorship of two of the shell companies) that to enable D2 and D5 to effect the scheme, he signed, upon the request of those two defendants, blank bank forms and cheques in an entire cheque-book and that D5 told him that to avoid suspicion, cheques would not be issued in sequential numbers. 

135.  Cross-examination on behalf of D5 was relatively brief.  Counsel established that D5 did not know English, so was unlikely to have understood anything at such meetings which she may have attended with professional advisers and that she had no accounting qualifications.  Young accepted that D5 depended on D1 for a living and that D1 was something of a male chauvinist, the implication being that D5 would do as she was told.  She did not know how to operate a computer and enjoyed no fringe benefits and only a modest salary.Young accepted that the idea of listing Gold Wo came from the Lee brothers of Yue Fung, and that D5 had little or no contact with them and did not like them.  She had limited authority to sign cheques on her own suggesting, according to this cross-examination, that the extent of the independence or authority afforded her by D1 was limited.Many of the relevant documents, such as balance sheets, were signed by this appellant but only in addition to a signature affixed by D1.

(1) The suggested failure to put the defence

136.  The first ground of appeal advanced on behalf of this appellant is, again, that the judge failed “to place fairly before the jury such defence as was advanced.”  This was originally put by Mr Choy on the basis of specifics: in other words, on the basis that there were specific facts that emerged from the evidence that assisted this appellant’s case of which the jury was not reminded in the summing-up.  Given the fact that all other appellants had added to their attack a wider basis, namely, the suggested general inadequacy of the summing-up, Mr Choy sought the court’s indulgence to ally himself to this general point and we allowed him to do so.  But, for the moment, we restrict ourselves to the specifics in the case of D5.

137.  The essence of the defence approach at trial in the case of D5 was what Mr Choy has referred to as a distancing exercise; in other words, an exercise designed to show that D5 was removed from the planning of the company’s affairs to which others were central.  He does not suggest that the judge failed entirely to put this appellant’s case to the jury but rather, that the judge failed to marry that defence to such indicia as emerged from the evidence as supported it, in particular:

(a) evidence that two accounting clerks opened the suspense account of their own motion, a matter of some importance in respect of which, the evidence allegedly established, D5 played no part;

(b)  evidence from one of the accounting clerks that when she spoke to this appellant about the Yue Fung letters of credit, the subject of Count 1, D5 said that they were a mechanism for Yue Fung to transfer money, the suggestion being that this evidenced a simplistic understanding by the appellant of the nature of letters of credit;

(c) evidence from Michael Wong that the two accounting clerks worked wholly independently with no-one overseeing them;

(d)  evidence from the accounting clerks that they produced the vouchers supporting the entries to the accounts without going through this appellant and that they liaised directly with the auditors;

(e) evidence that when Mr Joseph Yip, who was assigned at the end of 1999 by D3 to organise the accounting records of Melamine and Richlink, first started work, the accounting clerks were told to follow his instructions; 

(f)  evidence that in respect of a decision to alter the year-end date for the accounts, D1 told the accounting clerks to follow the instructions of D3 and D4 and, again, this appellant was by-passed;

(g) evidence that for the purpose of checks made to the suspense account summary the accounting clerks went, not to D5, but rather to Michael Young;

(h) evidence that enquiries raised by the accounting clerks and by Ernst & Young were directed to Michael Young; and

(i) evidence that D5 was only rarely, if ever, present at meetings with professional advisers.

138.  The judge’s approach to the case of D5 was the same as in respect of the other defendants; namely, a summary of the points that had been made on her behalf by counsel in counsel’s closing submissions.  In D5’s case the summary was relatively extensive.

139.  The judge told the jury that:

“The main point made was that D5’s function in the company business and management was always limited and her knowledge of what was going on would also be limited.  She was never instrumental to any of the significant changes, and the coming and going of accountants, auditors or consultants.  Her views were never sought.  She was not involved in the accounting area or the listing application, or the AG Capital loan … and her focus was only on the cash and cheques; that was, small things.  Counsel invited you to reach the conclusion that the prosecution has failed to establish the elements of dishonesty in the charges against D5.  Counsel invited you to consider the situation from the perspective of D5 … and not from hindsight when it was always easy to find fault and lay blame.”

140.  The judge reminded the jury of the following particular points made on D5’s behalf:

(a) the limitation on her authority to issue company cheques;

(b)  the evidence that D1 was a male chauvinist and that D5 was not a sociable person and merely followed instructions;

(c) that D5’s salary was small, much smaller than that of Michael Young;

(d)  that D5 had no accountancy training and her qualifications were even less than those of the accounting clerks;

(e) that D5 “was not involved in the matter of the suspense account which was started by [the accounting clerks]” and that Michael Young had said that she was unlikely to have understood the meaning of a suspense account;

(f)  that D5 had dealt with the letter of credit documents in an open way, suggesting that she did not see anything amiss with them;

(g) that even Young had said that at the beginning of his employment he was not aware that letters of credit had to have underlying goods but had thought, rather, that they were in the nature of short-term loans; so why would somebody as unqualified in financial matters as was D5 think differently?

(h) that D5 seldom went to the Mainland and so was unlikely to know what the volume of sales there were;

(i) that D5, although she signed the annual report for the year ended March 2001, was not involved in the listing process and would not necessarily know the content of what she signed, a fact supported by a consideration of the large number of documents that were routinely signed by her;

(j) that if D5 knew that she had acted dishonestly, she would have destroyed documents in the same way as had Michael Young;

(k) that D5’s role was merely dutifully to make records;

(l) that in relation to the allegedly incriminating conversation with Michael Young, there were no third-party witnesses; and

(m) that her family relationship with D1 and D2 should not be taken as an indicator of culpability.

141.  Towards the close of the summing up, the judge suggested, correctly in our view, that although the case was long and apparently complicated, they might think that in truth most of the evidence was common ground and that the case was “not so difficult after all.”  They had to decide whether the prosecution had proved the charges beyond a reasonable doubt or whether there was a reasonable doubt in relation to one or more of the charges.  He reminded them that the defence case was that even if there was falsity in the accounts D2 and D5 “were just workers …not knowing what was going on,” and that there was no admission evidence in relation to D5.

142.  The judge added:

“You will have to … consider what is the knowledge and intent of each defendant about the particulars and then decide whether there was an agreement and, if so, who was in it, for all these counts.  For those whom you have a doubt whether he is or is not a party to the conspiracy, you have to acquit that particular party.”

143.  We are of the opinion that the failure of the trial judge to mention one or two specific items of evidence to which counsel for this appellant has alluded does not render the over-all effect of the summing-up unfair.  The judge quite comprehensively reminded the jury of the salient points and evidence said to support the possibility, indeed the probability, that D5 was insufficiently “in the loop” and insufficiently qualified or astute to appreciate that she was part of a machinery of fraud, such that the prosecution case that she was dishonest was undermined.  We are satisfied that the jury’s attention was adequately drawn to the key indicia in her favour.

144.  In any event, the specific items identified are of much less significance in full context than has been suggested.  Whilst in the course of their work the accounts clerks did take certain instructions from persons other than D5 and whilst in some instances they took steps of their own initiative, that did not mean that the effect of their evidence excluded D5 from oversight of their work or from the giving of instructions.  Although we do not have a transcript of their testimony, we have been referred to counsel’s speeches and we see from the detailed speech of prosecuting counsel when he referred the jury to passages of evidence – the accuracy of which references are not challenged – that one of the clerks said that she was interviewed for her job by D5, and that she took her instructions from D5.  Another clerk testified that when monies came in from the Yue Fung letters of credit she, the clerk, credited the suspense account and she then said, according to counsel, that: “the first of the suspense account entries I did of my own initiative, I did it myself.Later both [D5] and Michael Young told me to use the suspense account,” that it was D5 who instructed her to prepare a suspense account summary each month and that D5 then faxed that summary to the Mainland factory.

145.  The complaint is made that the judge failed to direct the jury that the evidence in relation to Counts 1 and 2 were not, in D5’s case, to be taken into account in relation to Counts 3 and 4.Had he so directed them, he would have been in error, for that evidence was admissible.

146.  Accordingly, in the case of D5, this ground fails.

(2) R v Myers

147.  The second ground of appeal advanced on behalf of this appellant is that the judge failed to direct the jury that whilst they were not entitled to use records of interview of other defendants against the appellant, they could and should take into account what the defendants had said in those interviews in so far as what was said was favourable to the appellant.

148.  This contention is founded upon the decision of the House of Lords in R v Myers [1998] AC 124 in which Lord Slynn said, at 137:

“A confession may be relevant both as to credibility and as to the facts in issue and it does not cease to be admissible because it is so.  Indeed so long as it is relevant to establish his defence or to undermine the prosecution case against him a defendant should in my view be allowed to cross-examine a co-defendant as to his confession which goes to the facts in issue rather than only to the credibility of the maker of the statement.  He should not less be allowed to cross-examine the person to whom the statement is made as to the terms of the confession even though, since the co-defendant has not given evidence, the question of credibility has not arisen.”

149.  In the course of an ICAC interview with D1 on 16 December 2002, D1 was asked who else in the company knew of the arrangement whereby monies were returned to Yue Fung.There occurred the following exchange between questioner and interviewee:

“[Q]: You did know that the actual aim, the purpose of such an arrangement [to return the monies] was to inflate the profit.

[A]: Um, yes.

[Q]: Okay.  Look all right then, apart from your company, just now you mentioned … [D2] was there any other … members of your company who knows about such an arrangement?

[A]: Don’t know, not even my brother-in-law knew about it, it was because … my brother-in-law, my elder sister knew nothing at all.  The reason why - - that is because, if this company belongs to me myself, for things that could be done, since I have come to Hong Kong for the things I want to do, I wouldn’t go … to tell him .. it’s just that … I hire you to work (for me), you should do something for me, … just do something, and that it.”

150.  So it can be seen that in those passages D1 was seeking to distance D2 and D5 from knowledge of the “arrangement”.  This, says Mr Choy, was an important piece of evidence to which the judge should have drawn the jury’s attention.

151.  We note that shortly after the passage to which we have been taken, D1 said that it was D5 who was responsible for the company’s accounting matters.  It may be for this reason and because of the brevity of the statement itself and the absence of any testing of it in the course of the interview, that counsel for D5 at trial saw fit to make no mention of this point in her extensive closing submissions.  It may be that she thought the point was not worth making because the evidence established overwhelmingly that D5 knew of the arrangement to return funds to Yue Fung – indeed it was not denied that she had a hand in their return – and that the only issue was whether her part in that return was dishonest.  It is no surprise to us that this ground did not find its way into the original grounds of appeal dated 26 July 2007 but only by an amendment two years later, dated 27 April 2009.  It is not a point that carries weight.

152.  D5 joins in the attack on the judge’s direction about reaching a verdict, to which ground we turn later.

D6’s appeal

153.  D6 faced only one count on the indictment, namely, Count 2.

154.  The prosecution case was that D6 was engaged as an auditor but also as a consultant for the purpose of the public offering; that he helped to prepare false accounts which he then audited and that it was he who submitted letters to the Inland Revenue Department that explained how the profit had suddenly come to light and was reflected in the operation of the BVI company.

155.  D6 was responsible for the presentation of two sets of accounts to Ernst & Young for the year 1998-99.  This was the set of accounts to which was attached the proposed prior year adjustment.  This first set of accounts made no reference to Top Executive, not surprisingly since at the date of their compilation and submission, Top Executive had not been acquired.  Once the device of a prior year adjustment was rejected by Ernst & Young, a second set of accounts for the same financial year was prepared, again by D6.  This second set of accounts, unlike the first, brought in the assets and liabilities of Top Executive.  It will be remembered that the loss for the year 1997-98 was transformed into a substantial profit by the pretence that those profits had been earned by Top Executive which, it was represented, had been in operation as part of the Group.  Once that pretence had had its intended effect, Top Executive went dormant and its supposed assets and liabilities were acquired by Gold Wo and Richlink.  So the second set of accounts prepared by D6 for the year 1998-99 showed the acquisition of the assets and liabilities of Top Executive, a company to which no reference had been made in the first set of accounts; thus demonstrating, said the prosecution, that D6 was well aware that Top Executive was a fiction.

156.  His participation in the fraud was allegedly further evidenced by the fact that it was he who signed the letter dated 18 January 2001 to the Inland Revenue Department suggesting that Top Executive had been operating as part of the Group’s business since 1994, a representation that was obviously false and which, given the first set of 1998-99 accounts which he had submitted, he must have known to be false.

157.  Then, there is a letter dated 27 February 2001 from D6’s company to the Board of Directors of Gold Wo suggesting answers to various questions raised by the Stock Exchange.  The letter, it was said by the prosecution, contained a number of misrepresentations including the suggestion that D6 had commenced his audit work in 1999 whereas D6 did not start working for the Group until mid-2000.

158.  There is a further letter, this one dated 1 November 2000, referred to by counsel as “a professional clearance letter” which was addressed to Ernst & Young for the purpose of their audit.  The accounts to which it refers include Top Executive.  The letter is obviously backdated because Top Executive was not by that date acquired and the audit had not by then been carried out by D6.

159.  There was evidence designed to countermand the suggestion that D6 conducted himself as an independent auditor.  This included the fact that he attended two meetings concerned with the listing application and that, according to Michael Young, D6 said that he, D6, and D4 were engaged in compiling accounts; a function inconsistent with that of mere auditing.

160.  D6 signed the audited accounts for Top Executive and dated them 30 April 2000, whereas Top Executive had not been acquired until December 2000.

161.  D6’s case was that he was not engaged as a consultant for the company but merely as an auditor and tax representative; and that he was never engaged in the compilation of false management accounts and that he was not aware of, and therefore not a party to, any conspiracy to defraud the Stock Exchange.

162.  The defence first attacked the credibility of Young, most particularly in relation to Young’s evidence, damning if it were true, that D6 refused to sign four audit financial statements until he was paid extra fees.  Michael Young said, at first, that three post-dated cheques were then given to the appellant but it is contended that when cheque stubs were shown to Michael Young, he was forced to agree that he had been mistaken about the handing over of these cheques.

163.  In the written submissions on behalf of this appellant, the assertion was that there was overwhelming evidence to contradict the contention that D6 was at any stage a listing consultant for Gold Wo; that no expert witness had suggested that the accounting work performed by this appellant was unacceptable from a professional standpoint; that there was evidence from one James Chiu, a member of D6’s staff, that the work he carried out on behalf of D6 was a routine audit and that he saw no evidence of any false documentation and that other witnesses also understood D6’s role to be that of a mere auditor; that when Michael Young was first interviewed by the ICAC, he did not mention D6 as a co-conspirator; that a resolution dated 30 October 2000 which evidenced the appellant’s resignation, stated that he was resigning as the auditor to make way for Ernst & Young who were coming in as the reporting accountant, with no reference in the resolution to any consultancy; that documentation suggested that the appellant was paid as an auditor with no reference to payment for consultancy work; that there was documentation pre-dating the appellant’ s employment by the company that showed sales on the Mainland, illustrating therefore that adjustments made to the accounts to show those sales were not made by the appellant; that there was evidence that in about September 1999 others, not this appellant, had come to the company’s office to conduct an audit, the effect of which evidence, it is contended, was to show that it could not have been D6 who was involved in the preparation of false accounting documents; that such documents as the appellant had signed, such as the financial statements of Top Executive and letters to the Inland Revenue Department were all drafted by others; that there was evidence that the use of Top Executive and of prior year accounting was an open process; and that the appellant cooperated fully with the ICAC investigation.  The appellant’s contention is that these matters were not fairly placed by the judge before the jury in the summing-up.

164.  We do not agree with the suggestion that the judge failed sufficiently to remind the jury of D6’s defence or of the main factors said to lie in support of that defence.

165.  The judge reminded the jury that the evidence was said to be against the suggestion that this appellant was a consultant in the company; that cheque records were said not to support the allegation that he had refused to sign financial reports until he was paid an extra fee, a suggestion never made by Michael Young in his statements to the ICAC; that Michael Young had only had a few dealings with D6, so that any impression that D6 had been a consultant was unsafe; that counsel had correctly reminded the jury that professional witnesses who did not give evidence as expert witnesses could not be treated as providing expert evidence about this appellant’s professional performance and that the appellant had been in no better position to discover falsity of accounts than Ernst & Young or other professional advisers; that the appellant was said to have been fully co-operative with the ICAC in its investigation; that the jury was to have regard to the appellant’s statements in his interviews that he had trusted fellow professionals, a trust that was understandable given the pressure of time for the listing; and that Michael Young himself had said that the vehicle of prior year adjustment was appropriate to incorporate the profits of the company, so that Ernst & Young’s disagreement with the use of that device was simply a matter of different professional opinion.

166.  It is not a judge’s function to remind the jury of each and every matter advanced on behalf of a defendant or of every piece of evidence that might be construed as being in his favour.  Whether an omission of one or more items is or is not significant will depend on the case and the nature of the evidence in question.  We are unable in this particular case to say that the judge’s summing-up did not fairly place before the jury the key contentions made on behalf of this appellant.

167.  In his oral submissions, Mr Percy on behalf of D6, suggested that there were material contradictions between the testimony of Michael Young and statements made by him in interviews with the ICAC: contradictions in the sense that certain assertions in relation to D6 were not mentioned by Michael Young in the interviews.  Yet none of those interview records was placed before us to enable us to assess whether, in the light of the questions posed and the nature of the answers given, the omissions were sufficiently significant, if significant at all, to demand reference to them in the summing-up.

168.  In his oral submissions, Mr Percy suggested that the judge had failed to summarise the effect of the appellant’s interviews with the ICAC and that the contents of the interviews were “really key” to his client’s case.  Yet no request had been made for their inclusion in the appeal bundle.  When we stated the obvious, that we could not be expected to assess their importance without seeing them, the answer provided by counsel was that in the correspondence from the Court to counsel which required proper particularisation of the defences and of the suggested material omissions in the summing-up, the Court had not asked for the inclusion of these records, a rather strange view, it might be said, of the respective roles of counsel and the Court.

169.  In any event, the point of the interviews upon which counsel concentrated seems to us to miss the issue in the case as far as it concerned D6.  Counsel spent much time seeking to impress upon us the fact that certain accountancy devices used by his client, in particular the prior year adjustment, and the bringing into the accounts of overseas profits, were legitimate devices and that there were Inland Revenue circulars referred to by his client which support such devices.  Yet none of this was to the point.  The point was not whether these were legitimate accountancy devices in given circumstances.  The point in this case was whether those devices had dishonestly been used and, if so, whether this appellant was party to that dishonesty.  In any event, the judge expressly reminded the jury of the concession by Michael Young that “the prior year adjustment method was appropriate to incorporate the profits of a company.”

170.  Many of the points contended by Mr Percy to be points of importance, were, with respect, points of little validity.  For example, he said it was important that there was no suggestion that James Chiu was aware that D6 was a consultant.  But given the fact that James Chiu was not himself an auditor and that he saw D6 only periodically, there was no reason presented to us why James Chiu should have been aware of the extent of D6’s engagement and or of D6’s knowledge of such dishonesty as was afoot.  Then Mr Percy emphasised that there was no evidence of D6’s participation in the preparation of false accounting documents; yet it was never part of the prosecution case that he had thus participated.

171.  It follows, therefore, that in so far as D6’s appeal relies on allegedly material specific pieces of evidence said to have been omitted from the summing-up, it fails.

The direction as to verdicts

172.  There were eight jurors.  Towards the very end of his summing-up, the judge said this to the jury:

“There are only two types of verdict in law.  One is “guilty” and the other one is, obviously, “not guilty”.  You should try to reach a unanimous decision on all counts, whether guilty or not guilty, but the law does recognize that sometimes not all jurors can agree, so majority verdicts are acceptable, a seven to one, or six to two verdict of either guilty or not guilty is a good verdict in law, but please do your very best to reach a unanimous verdict on each of these counts separately.  If however you cannot reach a verdict on which all of you can agree, then you can reach a verdict of either seven to one or six to two, as I said.  Anything lower than that ratio will not be a valid verdict.  If you find that you are unable to achieve this ratio, you must try to discuss it further in order to reach a verdict on all the counts. 

After you have reached your verdicts and when you come back, your foreman will give the verdicts on your behalf and it will be done in this way.  The clerk, Mr Chan, will ask a series of questions in order to bring out the verdicts from the foreman.  Please make sure that there is no misunderstanding about the questions and answers.  A list of those questions will now be handed out to for your reference and to assist you in giving the verdict.  It may help if each of you note against these questions on this paper the answers which have been agreed between you and will be given by the foreman on your behalf.”

173.  The questionnaire, to which the judge there referred, was headed with a note which read:

“Your verdict(s) of either guilty or not guilty may, if not unanimous be by a majority of seven-to-one or six-to-two.  But five to three is not a verdict.  It must be unanimous or seven-to-one or six-to-two.” (The emphasis is in the original).

174.  Each question in the form then follows a set order, thus:

“Question 1  On the 1^st count of conspiracy to defraud against [accused X] have you reached a verdict?

The answer will be either “Yes” or “No”.

If “No”, the judge will deal with the matter.

If “Yes”, then Question 2:

Question 2 Is the verdict unanimous? …”

And the form then goes on to ask if unanimous, what is the verdict and if not unanimous, by what majority and what is the verdict.  This was the form and sequence of questions in relation to each appellant and each subsequent count on the indictment.

175.  What the judge failed to do is to follow the form of direction prescribed by the Judicial Studies Board, to the effect that whilst a split decision short of the requisite majority, in this case at least 6-2, did not constitute a verdict in law, ‘should that position arise, I shall direct you further.’

176.  The contention advanced on behalf of all the appellants in this case (save for D1) is that by utilising the formula he did and by failing to indicate to the jury that it was open to them, after all proper efforts had been made to reach a verdict, nonetheless to disagree and come to a final position that was less than the requisite majority, he left them – or that there was a real danger that he left them – with the impression that there was no alternative but for at least six to agree in respect of each count and each defendant, thereby placing upon them impermissible pressure.  

177.  In so far as the first appellant is concerned, this ground was not advanced by counsel – no doubt because of the unanimous verdicts in D1’s case – and we did not allow D1 to argue in person a ground that his counsel was not prepared to advance, though we intimated that should the ground enure to the benefit of the other appellants, we would consider it in his case too.

178.  Regrettably, this is far from the only case in which a trial judge has failed expressly to tell the jury that it is open to them, after all due deliberation, to arrive at a conclusion that is less than the majority which is prescribed to constitute a verdict in law.  The matter has been the subject of a series of decisions by this Court, differently constituted, and, more particularly, by the Court of Final Appeal; decisions going back to 2004, well before the summing-up in this particular case.

179.  In Kwok Chi Wai [2004] 3 HKLRD 185, this Court, differently constituted, dealt with a situation in which the judge told the jury that “a verdict of four-to-three either way does not constitute a verdict.  It has to be either six-to-one or five-to-two,” and a little later: “I repeat that your verdict of either guilty or not guilty may, if not unanimous, be a majority of six-to-one or five-to-two.  But four-to-three is not a verdict.  It has got to be unanimous, or six-to-one or five-to-two.”  The jury retired for over 8 hours and the judge then recalled them and told them that if by 8:30 p.m. they were not able to return a verdict they would be kept in overnight facilities and she added: “I think that you should be given until 8.30 tonight to see if you can reach a verdict of either ‘guilty’ or ‘not guilty’ unanimously if possible, but by a majority of six-to-one or five-to-two if you cannot be unanimous.”

180.  The ground of appeal was that undue pressure was, by these various directions, placed upon the jury and the Court agreed with that suggestion.  At no stage, not even when the jury returned 8 hours later, was there any reference to the fact that if at the end of their deliberations the jury’s settled view revealed a four-to-three split, they were entitled to say so.  In the combination of circumstances that presented themselves in that case, the Court concluded that “one or more jurors might have felt compelled to a course which resulted in the verdict reached,” and the appeal was allowed.

181.  The Court, again differently constituted, addressed a similar question in HKSAR v Chan Ka Man [2005] 1 HKC 162.  That case had the added complication that the trial charge had invited the jury to approach its task as if it were a board of directors, thereby importing the danger that one or more jurors might change his or her mind merely for the sake of conformity.  In that particular case the judge, in relation to what constituted a verdict, told the jury that if they were not unanimous, a majority verdict was acceptable but that the majority had to be either six-one or five-two.  “Anything less would not be acceptable, so four-three would not be acceptable.”  The jury later posed a question specifically directed at a four-three possibility asking whether such a vote could be defined as a verdict and the judge, instead of telling the jury that it was open to them to vote that way, even though such a vote did not constitute a verdict, told them that a four-three conclusion, was “not acceptable, which means that you have to carry on discussing until you reach either unanimous verdict or a verdict of six-one or five-two.  If, after a very long discussion, you are still, as it were, deadlocked and it is still four-three then you will have to report the progress to me and I will have to decide what to do.”

182.  In that case, it was the combination of the two impugned directions that led the Court to allow the appeal but it is to be noted in relation to the majority verdict direction in that case, in contra-distinction to the present case, that the jury came back with a specific question related to a four-to-three split and, even then, the judge did not tell them that they were entitled so to conclude, leaving the jury with the impression that disagreement was in no circumstances permissible.

183.  Next in time was Tam King Hon v HKSAR (2006) 9 HKCFAR 206, a decision at the Court of Final Appeal in which case, again, the trial judge had drawn an analogy between a jury and a board of directors.  In that case, he had also told the jury that a split of four-to-three would not constitute a valid verdict and that anything less “would not be acceptable; so four-to-three will not be acceptable.”  The Court criticised this direction, though it was not necessary for the Court to decide the appeal on the basis of this inappropriate phraseology alone since the analogy with the function of a board of directors was itself wholly inappropriate and the Court expressed the view, at 219, that “considering the summing up in the present case as a whole [including the unsatisfactory direction of the unacceptability of a four-to-three split] it should be concluded that the jury was misdirected as to how they should go about deliberating as a jury.”

184.  There then followed the Court of Final Appeal’s decision in Chan Kar Leung v HKSAR (2006) 9 HKCFAR 827.In that case, yet again, the judge had drawn the inappropriate analogy with the function of a board of directors but had also said that a verdict of “anything less than 7-2 would not be acceptable.”  In relation to that specific direction the Court said, at 831, that:

“In the present case the Court of Appeal considered – and then rejected – the argument that the trial judge’s statement to the jury that “anything less than 7-2 would not be acceptable” would or might have given them the impression that they had to go on deliberating indefinitely.  In our view, there was no real danger of the jury getting that impression.  While not ideal, the trial judge’s directions to the jury on the position if they could not achieve the majority that constitutes a verdict were not fatally flawed.”

185.  Next is Pun Luen Pan v HKSAR [2008] 2 HKLRD 404, another decision of the Court of Final Appeal.  In that case, the judge said to the jury:

“A verdict of four: three is not good enough so if you are locked in at four:three then you must continue your discussion until you reach it least five:two.  But as I said, you must try to reach a unanimous verdict if you can.” 

And later:

“Now, as I have told you, you have to stay together until you reach a verdict.  You have to be kept without communication with the outside world so, just before you go into the jury room, can you please leave your mobile telephones and pagers with my usher.”

186.  The Court, at 413, crystallised the question to be answered in that case, namely, whether the directions:

“ … may have left the jury with the impression that disagreement was not an option open to them and that they must continue until they reached a five:two verdict.  Put another way it must be asked whether there was a realistic possibility that the alleged misdirections, particularly the first, might have brought improper pressure to bear on the jury to reach a verdict.”

187.  The Court held, at 415, that:

“The judge’s statement to the jury that they must continue their deliberations until they reached at least five: two should not have been made.  It was of such a nature as to put jurors under pressure to agree, was not cured by anything else said in the summing up and gave rise to a substantial and grave injustice.  The conviction had therefore to be quashed.”

188.  In Lam Chi-kwong v  HKSAR FACC No 2 of 2008, 5 December 2008, unreported, the trial judge had said that: “A verdict of 4:3 is not acceptable, so it has to be either unanimous, or 6:1 or 5:2.”  In that case, the trial judge had read out, as part of his directions, the questionnaire which, as in the present case, contained the statement that if the jury had not reached a verdict, the judge would “deal with the matter.”  The Court of Final Appeal did not address the impact, if any, of that statement in the questionnaire; but we note, in passing, that in Pun there was a like statement in the questionnaire and the conviction was nonetheless quashed, although, again, the Court did not expressly address the impact of the statement in the questionnaire, no doubt because the judge in that case had said in terms that “if you are locked in at four:three, then you must continue you discussion until you reach it least five:two.”

189.  In Lam Chi Kwong, the Court concluded in relation to the particular direction under attack that

“Unlike the jurors in Pun’s case, the jurors in the present case were not told that they must continue their deliberations until they reached the requisite majority.  The position directions in the present case, while not ideal, were not fatally flawed.”

190.  Cai Zong Gang v HKSAR FACC No 4 of 2008 9 March 2009, as yet unreported, was a case in which the jury had purported to acquit by a majority of 4:3 but even then they were not told that, if that were their final position, that was acceptable as their final position, even though not as a verdict in law.  Instead, they were told that such a verdict could not be accepted and that they had to retire to the jury room and reconsider the matter.  The Court in allowing the appeal said, at paragraph 14, that:

“This jury having purported to return verdicts by an inoperative majority, we think that there is a real danger that the failure to give them the standard direction that they would be directed further if they were unable to achieve the requisite majority put them under undue pressure to return verdicts if not unanimously then it least by an operative majority.”

191.  Finally there is the decision of the Court of Final Appeal, in Cheung Chi Keung v HKSAR FACC No. 9 of 2008 9 March 2009 as yet unreported.In that case, there was a direction to the jury to approach its task as if it were a board of directors, in itself a fatal misdirection.  In relation to the position if the requisite majority were not achieved, the jury was instructed that a majority verdict was either 6-1 or 5-2, guilty or not guilty “but nothing less.  So four three and anything less will not be acceptable.  So it is hoped that you can be unanimous but if you cannot be unanimous, then five two or six one, all right?”

192.  The Court summarised the effect of a number of cases, including some of those to which we have earlier referred.  The Court concluded, at para 16, that:

“Telling the jury that anything less than the requisite majority is unacceptable is not necessarily fatal to a conviction.  But it is fatal to a conviction if there is a real danger that the jury were put under undue pressure to reach a verdict.  That happened in Pun’s case because the jury were told that they must continue their deliberations until they achieved the requisite majority. And it happened as in Cai’s case because of special circumstances contributing to the creation of such a danger.

17. Unlike the jury in Pun’s case, the jury in the present case were not told that they must continue their deliberations until they reached the requisite majority.  The jury in Cai’s case had, prior to convicting by the acceptable majority of 6 to 1, purported to acquit by the inoperative majority of 4 to 3.  Nothing like that or equivalent to it happened in the present case.  The position directions in the present case, while not ideal, were not fatally flawed in themselves.  Nor were there in this case in the particular circumstances which combined with them to create a real danger that the jury were under undue pressure to reach a verdict.”

193.  The question that we have to pose, therefore, is whether the directions combined with the contents of the questionnaire may have created a real danger that the jury were under undue pressure to reach a verdict.

194.  It his oral submissions, Mr Egan placed emphasis on a passage which had formed no part of any of the written submissions hitherto, namely, the passage when the trial court adjourned on 21 March 2007 at 11.22 am: “Members of the jury, that concludes this part for this morning.  We will start at 9.30 tomorrow.  Remember, tomorrow, after I finish, you will have to start your deliberations until you reach a verdict.”

195.  We note that none of the perfected grounds of appeal submitted on behalf of the appellants complained of this passage.  Every appellant who advanced the ground of appeal relating to the judge’s position directions included in the perfected grounds specific reference to the passage or passages said to have placed the jury under undue pressure.  Not one referred to this particular passage.  It was an afterthought that emerged in oral submissions on the fifth and last day of this appeal.  That, we have no doubt, is because no one at trial or thereafter, reading that passage in context, construed it as anything other than a reminder by the judge of the programme ahead.  That, in our judgment, is the only sensible way in which to read it.  It was an aside, a day’s closing comment, which formed no part of the directions as to the jury’s deliberations and voting options.  So we put this particular complaint aside and address the passages to which we refer at paragraph 170 above.

196.  The failure of counsel at the time of, and after, a summing-up to put a judge right if counsel thinks that there has been a material omission which may lie to the disadvantage of his or her client does not absolve an appellate court from determining whether there has been a material misdirection.  But there are occasions when the failure of all counsel – and in this case there were seven – to suggest to the trial judge that the jury may, by some formula in the directions, have been led to misapprehend their function or been put under undue pressure, may be an indication that the way in which the judge has framed and articulated a direction left no one feeling uneasy and that the formula in fact created no real danger of a misunderstanding.

197.  In this case, the jury retired at 1:06 p.m. on Thursday 22 March 2007.  They had been engaged in a trial lasting one year and were duty bound to consider a range of counts against six defendants.The judge had told them at the end of his summing-up that it was open to them to ask for exhibits or to be reminded of evidence or to ask questions which, if they were forthcoming, should be reduced to writing.  They were told not to feel the pressure of time but to take as much time as was necessary in order to reach their decisions.  They were brought back to court shortly before 8 p.m. that evening and the judge told them that it was time for them to have a rest and to resume in the morning.  Nothing was said by him at that stage that might be construed as any form of pressure upon them.

198.  When they were brought back the following morning, 23 March 2007, they were provided with the suggested schedule for their deliberations for that day and reminded again that there was no pressure of time and that they were to make sure that they gave the cases full consideration and full deliberation. “ We thank you,” said the judge “very much for your time and your efforts.”

199.  At 7:12 p.m. the jury returned after the court had received a request from them for the video interviews of D3 and D4.  The judge dealt with that request.  He told them that that they should take a good rest and resume in the morning and reminded them once again that there was no pressure of time and that they should consider the matters and issues carefully.  All counsel were, of course, present.  The transcript makes it clear that there was courteous and easy communication during these stages between counsel and the court.  No one hinted at any concern either that the jury might be struggling or might be under some misapprehension as to their option to disagree.

200.  The jury returned the following morning, 24 March 2007, and the day’s timetable was again discussed.  At 2:29 p.m. that day the court notified counsel, in the absence of the jury, of a question which the jury had raised as to whether professional conduct was a criminal act.  The judge discussed the question and his proposed answer with counsel.Counsel, who included one leading counsel, addressed the judge at some length on his proposed answer and shortly after 3 p.m. the judge provided an answer to the jury and the jury retired.  It is evident from this question that the jury was still engaged in substantive discussions.  That remained the position at 7 p.m. that evening when the judge addressed the jury about a further request that they had made, this time for sight of another video interview.

201.  The following morning, 25 March, the jury was given a suggested timetable for its deliberations and after the jury retired, there was a housekeeping discussion between the court and leading counsel without a hint of concern that the jury might be in some difficulty and with no suggestion that the jury should be asked whether there was a particular matter troubling them.

202.  The verdicts were delivered at 2:15 p.m. that day.

203.  We are satisfied that the formula used by the judge in his summing up in which he said: “Anything lower than that ratio would not be a valid verdict.  If you find that you are unable to achieve this ratio, you must try to discuss it further in order to reach a verdict on all counts”, whilst not ideal, did not create a real danger that the jury were under undue pressure to reach a verdict.  The phrase “you must try” constituted an exhortation to reach a verdict if it was at all possible.  There was no direction, as in Pun, that even if they were ‘locked in’ at less than the requisite majority they had to continue until they reached the requisite majority; no hint, as in Cai, that they were stuck at less than the requisite majority; and no added complication such as a board of directors analogy.

204.  Accordingly, this ground fails.  

205.  That said, we confess to a degree of frustration that the formula in the directions suggested to judges by the Judicial Studies Board and referred to in the judgments that preceded this summing-up was not used.  We would add that there is a duty on prosecuting counsel to be alert during a summing-up to omissions such as these.

Convictions: result

206.  In the result, the appeal of each appellant against conviction is dismissed.

Sentence

207.  The judge remarked that in his view the offences were very serious, particularly those that were the subject of Counts 2 and 3.He emphasised the potential harm caused to the credibility of the Stock Exchange, and to the investing public, by offences such as these.

208.  The judge noted that none of the defendants had shown any remorse and that they had challenged every aspect of the prosecution case, major or minor.

209.  He expressed the view that the sentences to be imposed should reflect the seriousness of the offences and act as a deterrent to those who were minded to use similar schemes to secure listing.

210.  He said that the defendants were equal parties to the respective conspiracies but, “in practical terms they appeared to have slightly different levels of involvement.”  He regarded D1 and D3 as “the core persons in the scheme”, for D3, he said, was the one who provided the overall fraudulent strategy and D1 made the final decision to give effect to the scheme devised.  That said, he acknowledged that in relation to Count 5, D3 had not benefited from the theft.

211.  He was of the opinion that the involvement of D4 and D6 was slightly less than that of D1 and D3 but that that involvement was not insignificant.  Their assistance was crucial to the efficacy of the fraudulent strategies.

212.  As for D2 and D5, he acknowledged that they were somewhat under the shadow of D1 but had nonetheless provided material assistance.

213.  The judge noted that one of the appellants had prior criminal convictions.  We have been told by prosecuting counsel that D3 and D4 have been convicted in other proceedings for similar offences, but that those sentences were imposed after the sentences imposed in the present case.  We have called for the transcript of those sentences imposed by Lunn J in August 2007 on D4 (on her plea of guilty to a similar Stock Exchange fraud, albeit not a timely plea) and in February 2008 on D3 (on conviction after trial for the similar Stock Exchange fraud).D3 received a sentence of 9 years imprisonment, one year of which was ordered to run consecutively to the term of 10 years imposed in this case; D4 a term of 6 years and 9 months’ imprisonment.

214.  In this case, the judge imposed the following sentences:

(1) Count 1: in respect of D1, a term of 8 years’ imprisonment;

in respect of D2, a term of 6 years’ imprisonment.

(2) Count 2: in respect of D1, a term of 10 years’ imprisonment;

in respect of D2, a term of 8 years’ imprisonment;

in respect of D3, a term of 10 years’ imprisonment;

in respect of D4, a term of 9 years’ imprisonment; and

in respect of D6, a term of 9 years’ imprisonment.

(3) Count 3: in respect of D1, a term of 10 years’ imprisonment;

in respect of D3, a term of 10 years’ imprisonment;

in respect of D4, a term of 8 years’ imprisonment; and

in respect of D5, a term of 8 years’ imprisonment.

(4) Count 4: in respect of D1, a term of 8 years’ imprisonment;

in respect of D2, a term of 6 years’ imprisonment; and

in respect of D5, a term of 6 years’ imprisonment.

(5) Count 5: in respect of D1, a term of 6 years’ imprisonment;

in respect of D3, a term of 5 years’ imprisonment.

215.  In the case of those defendants convicted upon more than one count, the judge ordered the sentences to run concurrently.  Therefore the total sentence imposed on each appellant was as follows:

D1: 10 years’ imprisonment;

D2: 8 years’ imprisonment;

D3: 10 years’ imprisonment;

D4: 9 years’ imprisonment;

D5: 8 years’ imprisonment; and

D6: 9 years’ imprisonment.

216.  The judge also ordered each defendant to be disqualified from being a director, liquidator, receiver or manager of a company for terms ranging between 8 and 10 years; but no application is made in respect of the disqualification orders.

D1’s sentence

217.  D1, who was aged 49 years at the date of conviction, acts in person in relation to the application for leave to appeal against sentence.

218.  He has advanced written submissions dated 15 May 2009.

219.  He commences his written submissions by suggesting that the length of the trial was the fault of the prosecution and seeks also to argue the merits of the appeal against his conviction.  If ever palpable demonstration were needed for lack of remorse, this submissions is it.  The notion that the length of the trial lay at the door of the prosecution has no connection with the truth of the matter.  The length of the trial was occasioned by the defendants putting the prosecution to strict proof in a case in which little was in issue, save the knowledge of the respective defendants.  D1 further complains that the sentences imposed upon him are substantially in excess of sentences imposed in other fraud cases including a sentence imposed on one of the (Yue Fung) Lee brothers.

220.  We are informed by counsel for the respondent that this was the first case to come before the courts in this jurisdiction of conspiracy of this particular nature, namely, where the objective of the fraud was to secure a listing on the Stock Exchange.  We do not know the facts of the case in which one of the Lee brothers was sentenced save that it is said by D1 to have been a letter of credit conspiracy.  We are prepared to assume that the case was the other side, as it were, of the Count 1 conspiracy in the present case.  The sentence imposed was, D1 says, one of four and a half years’ imprisonment.  There are two comments to make: the first is that the letter of credit fraud in this particular case was, as far as D1 was concerned, part of his attempt to secure a listing for his own company, not for Yue Fung.  The second is that we are concerned with whether the sentence imposed by this judge was or was not on its facts manifestly excessive and not with whether the sentence imposed upon another defendant by another judge in a separate case was or was not appropriate.  A comparison of sentences imposed would only avail D1 if another defendant in the same case as his had been sentenced by the same judge to an extent that would give rise to a justifiable sense of grievance.

221.  The maximum term of imprisonment available at law for the common law offence of conspiracy to defraud is 14 years: s. 90(4) of the Interpretation and General Clauses Ordinance, Cap. 1.  In Attorney General v Dominic Cheung Kai-man [1987] HKLR 788, it was suggested that within the broad band of fraud of the worst kind would be a case that involved a breach of trust in the multi-million dollar range by a person in a senior and responsible position and with an element of public impact. In such a case, it would be appropriate for a court to start from a point at or near the statutory maximum.  The Court went on to say, at 794, that:

“For other serious fraud, not quite up to that level, we would in future expect a starting point in the region of 10 years, that is, for a single offence and after conviction following trial.”

The Court noted however that:

“By the very nature of things commercial crime is unlikely to be limited to a single or simple piece of conduct.  Indictments on charge sheets commonly contain more than one count.  In passing sentence it is then necessary to consider whether the sentences should be made consecutive or concurrent.”

222.  The trial judge in this case was referred to that judgment and it would seem from the sentences that he imposed that he took the view that these offences were not within the broad band of the worst of their kind but, rather, constituted fraud of a serious kind not quite up to that level.

223.  The factors to which the Dominic Cheung judgment referred do not purport to have exhausted such aggravating factors to which a court might properly have regard.  One such aggravating feature not mentioned is the period over which the fraud has been perpetrated (see, for example, Barrick (1985) 81 Cr App R 78) and another is the number of persons, both within the company and outside it, which the prime mover has drawn into dishonest activity.

224.  D1 was Chairman of Gold Wo.  He was the prime mover in these frauds that went on for three years and involved many millions of dollars giving rise to a real risk of losses to investors who had been tricked into subscribing for shares.  He recruited people to engineer the fraud.  He deceived professional advisers and the Stock Exchange and drew in acquaintances to assist with false representations and documentation.  He drew in members of his family who, in effect, worked for him in the company, in particular, his elder sister, D5.

225.  A study of this case discloses that he created, let alone took part in, a prolonged culture of dishonesty; daily dishonesty in which the company stewed on.  We are satisfied that the sentences imposed upon D1 were not a day too long.  If anything, the sentences imposed upon D1 on Counts 2 and 3 were on the side of leniency: had they been longer by a year or two, we would not have upset them.  Furthermore, the offence which was the subject of Count 5 on the indictment merited, in our view, a partly consecutive sentence.  

226.  D1’s application for leave to appeal against sentence is dismissed.

The others

227.  The single matter that has concerned us in relation to the other appellants is whether, given the sentences in fact imposed upon D1, the judge has reflected in the sentences on the others a sufficient distinction in the roles they played and the positions they occupied when compared to D1.

228.  D3 was the operational strategist and whilst he played a leading role over an extended period, we fail to see why the judge did not draw a distinction in sentence between him and the prime culprit, D1.  For this reason alone we grant D3 leave to appeal against sentence, treat the hearing of the application as the appeal, set aside the sentences of 10 years’ imprisonment in his case on Counts 2 and 3 and substitute therefore in each instance a sentence of 9 years’ imprisonment.  Those sentences will run concurrently to each other and with the sentence of 5 years’ imprisonment in relation to Count 5, which 5-year term remains undisturbed.  This makes a total of 9 years’ imprisonment.  It follows that the consecutive term of one year’s imprisonment imposed upon D3 by Lunn J in the other case will run consecutively to this nine-year total.

229.  It is convenient next to address the case of D4, whom, we are prepared to assume, because of their relationship and her younger age, was under the influence of D3.  That said, she is a lady who had acquired professional qualifications and did not act as a mere underling.  Yet her culpability was not as great as that of D3 and we are of the view, as was the judge, that a distinction in overall effect of one year should be made.  Accordingly in her case, we grant her leave to appeal against sentence, treat the hearing of the application as the appeal, set aside the sentence of 9 years’ imprisonment imposed in relation to Count 2 and substitute therefore a term of 8 years’ imprisonment.  In relation to Count 3, the certificate of sentence reflects a sentence imposed on this appellant of 8 years’ imprisonment.  That does not accord with the transcript of the judge’s sentencing remarks, which state that on that count he imposed a sentence of 9 years’ imprisonment.  There would appear to be no logic in distinguishing the sentences merited for the two offences and although we presume that it is the certificate of sentence that is the final word on the matter we have decided, for the avoidance of doubt, to set aside the order made by the judge in relation to Count 3 and substitute a fresh sentence on that count of 8 years’ imprisonment.  The two sentences are ordered to run concurrently, making a total in the case of D4 of 8 years’ imprisonment.

230.  We turn next to D2.  He has taken us to a decision in an entirely unconnected case which, he says, shows that the sentence imposed upon him is manifestly excessive, but the case and its facts are of no assistance to him.  The judge evidently that took the view that his overall role was less culpable than that of D3 and D4.  We think that may be a generous view, for D2 played a very active role in the overall fraud and was found guilty upon Count 1, in respect of which D4 was not indicted.He was not only the company secretary of Gold Wo but was also the director and shareholder of the shell companies used for the perpetration of the crime covered by Count 4.  However, the judge had the advantage of living with this case for one year and we are loath to second-guess that assessment when to do so would enure to the disadvantage of the applicant.  Accordingly, we grant this applicant leave to appeal against sentence and, treating the hearing of the application as the appeal, we allow the appeal and set aside the sentence of 8 years’ imprisonment in relation to Count 2 and substitute therefore a term of 7 years’ imprisonment.  The sentences in relation to Counts 1 and 4 will stand and we order them to run concurrently to each other and with the sentence of 7 years on Count 2, making a total of 7 years’ imprisonment.

231.  We are satisfied as well that the difference between the overall sentence imposed on D1 and D5 does not adequately reflect their respective roles and culpability.  While D5 played a significant part in the continuing fraud, she was clearly under the substantial influence of her strong-minded brother and she was not indicted, as was he, on all five counts.  To reflect these factors, we grant her leave to appeal against sentence and, treating the hearing of the application as the appeal, we allow her appeal, set aside the term of 8 years’ imprisonment in her case on Count 3 and substitute a term of 7 years’ imprisonment.  The term of 6 years’ imprisonment in relation to Count 4 remains undisturbed.  The two terms will run concurrently making a total of 7 years’ imprisonment.

232.  This brings us to D6.  He was convicted, it will be remembered, upon Count 2.His involvement in the fraud was, by comparison with the other appellants, relatively brief, although this consideration, pressed upon us by counsel, is likely to be misleading because the role of the fraudulent auditor was indispensable to the scheme as a whole and was, given the nature of the function envisaged, necessarily restricted in time.  Nonetheless, the sentence of 9 years’ imprisonment in his case on Count 2 does not, in our judgment, adequately reflect the difference between his culpability and that of D1.  Accordingly, we grant this applicant leave to appeal against sentence and treating the hearing of the application as the appeal, we allow the appeal, set aside the sentence of 9 years’ imprisonment upon Count 2 and substitute therefore a sentence of 8 years’ imprisonment.

Presentation of the appeal

233.  We regret to say that the presentation of this appeal has not been satisfactory.  This is not the place for particularisation of the failures which made the Court’s task in preparing for this appeal and in hearing submissions so difficult.  It suffices to say by way of example that in the original written submissions on behalf of the appellants, the standard complaint was that the trial judge had failed adequately to place the appellant’s case before the jury and to deal adequately with cross-examination and documentation.  Yet we were not told what the defences were and in the original submissions not one particular was provided to the Court of what evidence was not referred to that should have been.

234.  Given that this was a complex commercial crime case that lasted for one year and that none of the appellants gave evidence at trial, the failure to take the trouble of telling the court what the issues were, what was being suggested on behalf of each appellant, what evidence there was in support of the defence cases, as they had been put, and how the cross-examination was said to have assisted the appellants, was a remarkable omission.  Rather than vacate the case, at considerable public expense, the Court caused letters to be written to counsel asking for particulars.  In the case of counsel for D3, it took four written submissions before sufficient particulars were provided.

235.  The inadequacy of the original written submissions was not restricted to those acting for the appellants.  It must have been apparent in the course of the hearing itself that much of what was advanced to the Court by counsel for the respondent was difficult for the Court to put into context, because the story had not adequately been placed before it prior to the hearing.  

236.  Furthermore, no attempt had been made to compile an agreed bundle of authorities, so we had several bundles with many of the authorities replicated; and the hearing was itself pockmarked by applications to add grounds of appeal.

237.  It should be self-evident that it is not a court’s function to do counsel’s work for him.  The complaint we make is not new to the presentation of criminal appeals.  We made the same point in HKSAR v Kwok Chi Wai [2004] 3 HKLRD 185 at 186-187, an authority cited by one counsel in this case though, unsurprisingly, not for the point we now make.

238.  We therefore take this opportunity to press upon counsel the importance of a disciplined, conscientious and helpful approach to the preparation of criminal appeals.To do otherwise is to place a burden on the courts which should not be there, and to run the risk of a significant waste of public funds.