HKSAR v. MEREDITH GERALD SYDNEY

CACC 67 /2021

[2022] HKCA 1877

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 67 OF 2021

(ON APPEAL FROM DCCC NO 885 OF 2018)

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J U D G M E N T

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1.  The applicant was convicted after trial in the District Court before HH Judge Dufton (“the judge”) of two counts of dealing with property known or believed to represent the proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455; and sentenced to 5 years and 6 months’ imprisonment. Acting in person[1], the applicant seeks leave to appeal against his conviction and sentence.

2.  On 7 November 2022, the applicant wrote to the court to request that his application for leave to appeal be dealt with on paper.  Given the current circumstances in Hong Kong, I acceded to his request, the respondent having no objection to this course.  Accordingly, the hearing on 6 December 2022 was duly vacated.

3.  The particulars of the charges against the applicant were as follows:

Charge 1

“MEREDITH Gerald Sydney, between the 28^th day of January 2016 and the 29^th day of March 2016, both dates inclusive, in Hong Kong, knowing or having reasonable grounds to believe that property, namely a total sum of $3,348,613.17 Hong Kong currency, in whole or in part directly or indirectly represented any person’s proceeds of indictable offence, dealt with the said property.”

Charge 2

“MEREDITH Gerald Sydney, between the 22^nd day of August 2016 and the 31^st day of August 2016, both dates inclusive, in Hong Kong, knowing or having reasonable grounds to believe that property, namely a total sum of $5,333,151.15 United States currency, in whole or in part directly or indirectly represented any person’s proceeds of indictable offence, dealt with the said property.”

4.  The money concerned was deposited into the bank accounts of Jade Décor Painting and Decoration Company (“Jade Décor”), held with the Bank of China (Charge 1); and the Jade Group Trading (HK) Limited (“Jade Group”), held with the China Citic Bank (Charge 2).  The applicant was the sole director of both companies and the sole signatory to the bank accounts[2].

The prosecution case

5.  The prosecution alleged the monies deposited into the bank accounts were obtained by email fraud and that the applicant dealt with the monies having reasonable grounds to believe, and not that he knew, the monies, in whole or in part, directly or indirectly, represented the proceeds of an indictable offence[3].

6.  Most of the prosecution case was admitted pursuant to sections 65B and 65C of the Criminal Procedure Ordinance, Cap 221. This evidence included: witness statements relating to the email fraud; Business Registration documents; various Inland Revenue documents; Banker’s affirmations; and WhatsApp messages, emails and other documents seized from the applicant[4]. The prosecution called only one witness to prove the fund flow charts of the relevant bank accounts[5].

7.  Charge 1 concerned three payments made by New Foundation SA and Zeean Corporation to the bank account of Jade Décor: HK$18,662.58 on 28 January 2016; HK$488,408.70 on 1 February 2016 and HK$2,841,541.89 on 2 March 2016.  The evidence showed these monies had been remitted to the bank account of Jade Décor as the result of email fraud[6].

8.  Charge 2 concerned three payments made by Aruba Networks Incorporation (“Aruba”) into the bank account of Jade Group: US$761,788.32 and US$2,678,257.30 on 22 August 2016 and US$1,893,105.53 on 29 August 2016.  Again, the evidence presented at trial showed these payments were made as a result of email fraud[7]. In a subsequent video-recorded interview (“VRI”), the applicant told the police he was only aware of the first two payments and did not know anything about the third payment[8]. The judge found it was not credible for the applicant to have been unaware of this third payment given, amongst other considerations, that it was for a substantial sum[9].

9.  In cross examination, the applicant said he did not declare the commission he was due to be paid (allegedly some 2% - 3% commission on the incoming payments) to the Inland Revenue Department[10].

10.  No actual business was transacted in Hong Kong. Only the receipt of the funds and the disbursement of those funds were carried out in this jurisdiction[11].

The defence case^[12]

11.  The applicant testified but called no witnesses.  It was the applicant’s case that he was contacted by a Malaysian national called Razaq Awang (“Razaq”) in early 2015.  The applicant did not know this person.  Razaq was looking for a representative of his company to be based in Hong Kong, and asked the applicant to look into opening a new company so that his customers could make payments in Hong Kong.  To this proposal, the applicant agreed.

12.  Before this new company had been incorporated and a bank account opened, Razaq told the applicant he had some customers who needed to make urgent payments to the new company in Hong Kong.  Accordingly, the applicant agreed that payments could be remitted to the bank account of Jade Décor at the Bank of China.  Acting on the instructions of Razaq the applicant subsequently withdrew the monies, partly in cash and partly by making various transfers to different bank accounts (Charge 1).

13.  Once Jade Group had been incorporated and the China Citi Bank account opened, payments were made into the account, which the applicant, acting on the instructions of Razaq then withdrew, partly in cash, and partly by making various transfers to different bank accounts (Charge 2).

14.  The applicant believed all payments received were for legitimate business purposes.

Reasons for verdict

15.  Having reviewed the evidence, whilst accepting that the prosecution did not have to prove that the property concerned was the proceeds of an indictable offence, the judge was nevertheless satisfied that the monies were the proceeds of an indictable offence[13].

16.  In respect of Charge 1, the judge made the following findings[14]:

“(a) the defendant was contacted by someone called Razaq Awang (either by phone or email) who said he was looking for a representative for his trading company which would be based in Hong Kong;

(b) the defendant did not know Razaq Awang and prior to being contacted by Razaq Awang had never met Razaq Awang or encountered anybody Razaq Awang knew;

(c) the defendant did not know from whom Razaq Awang obtained his name, Razaq Awang telling the defendant he got his contact from a friend of a friend of a friend but could not remember who told him;

(d) the defendant was asked to be the Hong Kong representative;

(e) the defendant had no experience in trading;

(f) the defendant was told his duties were to receive payment in Hong Kong and to remit the payments out to Razaq Awang’s suppliers and agents;

(g) the defendant did not have to look for suppliers, source materials, find customers or organise shipping;

(h) the defendant would be paid on a commission basis, initially two to three percent of the incoming payments;

(i) Razaq Awang asked the defendant to look into opening a new limited company in Hong Kong because he was in the process of opening a new company in Hong Kong with a Hong Kong business address and wanted his new customers to start paying in Hong Kong;

(j) Razaq Awang said he travelled a lot getting new customers and was therefore unable to go to Hong Kong and asked the defendant to open the company on his behalf;

(k) no written agreement was entered into between Razaq Awang and the defendant;

(l) before a new company was set up Razaq Awang said he needed a bank account because he had some customers who he had already done business with and who needed to make urgent payments into the new company in Hong Kong;

(m) the defendant did not understand where this was going but because he was told it was quite urgent he gave Razaq Awang the bank account details of Jade Décor (the BOC account);

(n) the first two remittances made to the BOC account on 28 January 2016 ($18,662.58) and 1 February 2016 ($488,408.70) by New Foundation were all withdrawn in cash;

(o) $300,000 was withdrawn in cash from the third remittance made to the BOC account on 2 March 2016 ($2,841,541.89) by Zeean Corporation;

(p) the defendant made cash payments via Western Union because Razaq Awang said his agents did not have bank accounts which the defendant found a bit strange but nevertheless followed instructions;

(q) remittances were made from the BOC account including to Tana Singam in Malaysia, who Razaq Awang told the defendant was his own company;

(r) the defendant did not know anything about the payees except that they were agents of Razaq and did not conduct any checks on them;

(s) apart from looking for the address of Tana Singam the defendant had never really done proper research into Razaq Awang’s company Tana Singam;

(t) the defendant did not know why the money had to come through Hong Kong and did not ask Razaq why the money had to come through Hong Kong; and

(u) the defendant never met Razaq Awang or requested a video call.”

17.  Accordingly, the judge found that a reasonable person who shared the applicant’s knowledge was bound to believe the property was tainted[15]. He rejected the applicant’s explanation that he believed the monies were derived from legitimate business[16].

18.  In respect of Charge 2, the judge made the following findings[17]:

“(a) on 22 February 2016 the defendant incorporated Jade Group at the request of Razaq;

(b) Razaq Awang said he travelled a lot getting new customers and was therefore unable to go to Hong Kong to sign for the new company;

(c) the BOC account (Jade Décor) was suddenly closed by the bank after nearly six years operation;

(d) the defendant was scared when the bank clerk told him that there was an investigation;

(e) on 27 April 2016 the defendant opened the China Citic account (Jade Group);

(f) the defendant was arrested on 17 July 2016 and interviewed on 18 July 2016 (VRI-1) when he was specifically told that the investigation was a money laundering case in which the informant had not received payment from New Foundation and Zeean who instead had remitted the monies to the BOC account (Jade Décor) and that their email had been hacked;

(g) the defendant continued to deal with Razaq Awang, a person whom he had never met;

(h) the defendant’s duties remained to receive payment in Hong Kong and to remit the payments out to Razaq Awang’s suppliers and agents;

(i) the defendant did not have to look for suppliers, source materials, find customers or organise shipping;

(j) the defendant would be paid five per cent commission;

(k) no written agreement was entered into between Razaq Awang and the defendant;

(l) US$761,788.32 and US$2,678,257.30 was remitted to the China Citic account on 22 August 2016;

(m) US$2,984,100.57 was withdrawn on 25 August and 26 August 2016 including transfers to the Bank of Communications account and cash withdrawals;

(n) the defendant made further cash payments via Western Union;

(o) monies were remitted to China, United Arab Emirates and the United Kingdom;

(p) the defendant only checked about the companies he remitted money to later when he did a Google search on some of the companies and found they were official companies but did not do anymore searching after that;

(q) on 26 August 2016 the defendant remitted US$140,000 and US$160,000 to Tana Singam in Malaysia, who Razaq Awang told the defendant was his own company;

(r) apart from looking for the address of Tana Singam the defendant had never really done proper research into Razaq Awang’s company Tana Singam;

(s) after the closing of the BOC account and his arrest for money laundering, the defendant did not cause any further checks to be made on who Razaq was;

(t) the defendant did not know why the money had to come through Hong Kong and did not ask Razaq why the money had to come through Hong Kong; and

(u) the defendant never met Razaq Awang or requested a video call.”

19.  The judge was satisfied that a reasonable person who shared the applicant’s knowledge was bound to believe that the property was tainted.  Again, he rejected the applicant’s evidence that he believed the monies were derived from legitimate business[18].

The reasons for sentence

20.  It was submitted to the judge in mitigation that the applicant was a reliable building contractor with a clear record, who had been working as such for over 25 years in Hong Kong, having come originally from Ireland[19].

21.  For Charge 1, the judge adopted a starting point of 3 years and 6 months’ imprisonment.  This was arrived at by taking into account the following factors: the role of the applicant; the total sum of HK$3,348,613.17 that was remitted, all of which was withdrawn; the fact that no monies were recovered; the applicant’s (alleged) commission of between HK$66,972.26 and $100,458.40; and the international element, the monies having been remitted from overseas and distributed overseas by the applicant[20].

22.  For Charge 2, the judge adopted a starting point of 5 years and 6 months’ imprisonment.  This was arrived at having taken into account these matters: the role of the applicant; the total sum of US$5,333,151.15 that was remitted; the US$3,184,108.57 that was withdrawn by the applicant before the bank account was frozen; the loss to Aruba of over US$2,500,000; the applicant’s (alleged) commission on the full amount, namely, US$266,657.56; the international element, the monies having been remitted from overseas and distributed overseas by the applicant; and the fact that the applicant continued to launder funds even after he had been arrested for money laundering in connection with the three remittances to Jade Décor[21]. In respect of this latter matter, it may be noted that, subsequent to the applicant’s second VRI of 27 September 2016, the applicant was arrested and granted police bail, during which he was required to report monthly to a police station.  Nevertheless, the applicant continued to deal with Razaq thereafter[22].

23.  As a substantial amount of the evidence had been agreed, and, noting the time thereby saved at trial, the judge reduced the sentence on each charge by 1 month, resulting in 3 years and 5 months on Charge 1; and 5 years and 5 months on Charge 2[23].

24.  The applicant had agreed that sums of HK$110,003.70 and HK$60,882 should be paid as compensation.  Accordingly, the sentences on each charge were further reduced by 1 month to 3 years and 4 months’ imprisonment on Charge 1; and 5 years and 4 months’ imprisonment on Charge 2[24].

25.  Given that nearly 4½ years had elapsed since the applicant’s second arrest, the sentence was further reduced on each charge by 2 months to 3 years and 2 months’ imprisonment on Charge 1; and to 5 years and 2 months’ imprisonment on Charge 2[25].

26.  The judge concluded that a total sentence of 5 years and 6 months’ imprisonment properly reflected the applicant’s criminality on the two charges.  He arrived at this result by ordering 4 months of the sentence on Charge 1 to be served consecutively to the sentence on Charge 2; the remainder to be served concurrently[26].

The applicant’s submissions on conviction

27.  The applicant contends that the judge erred in his application of the test set out in HKSAR v Harjani Haresh Murlidhar (2019) 22 HKCFAR 446, by failing to consider and to make a finding as to how the WhatsApp messages passing between himself and Razaq might have affected his belief as to whether the money involved was clean or tainted.  The applicant also contends that the judge failed to consider his state of mind, in accordance with the test for recklessness enunciated in R v G [2004] 1 AC 1034.

The respondent’s submissions: conviction

28.  Ms Cheuk, acting for the respondent, submits that the evidence identified by the judge, including the WhatsApp messages, should be read collectively and not individually or separately; they were all relevant contextual matters, to which the judge was entitled to have regard when answering the second question posed in Harjani Haresh Murlidhar, namely, “Would any reasonable person who shared the defendant’s knowledge be bound to believe that the property was tainted?”.  Therefore, a separate finding pertaining only to the WhatsApp messages was not appropriate.  Furthermore, the WhatsApp messages did not strengthen the defence case, since they showed that the applicant had failed to make enquiries to satisfy himself that Razaq’s business was genuine.  The respondent also submits that judge has correctly adopted and applied the relevant legal test for “reasonable grounds to believe”, instead of the test for “recklessness”.

The applicant’s submissions: sentence

29.  The applicant complains that his sentence is manifestly excessive and/or wrong in principle, and argues that the judge failed to take into account that he had consistently maintained his story throughout the trial and also during the taking of the VRIs; and that he had been cooperative with the police investigation.

The respondent’s submissions: sentence

30.  The respondent submits that the judge identified the relevant considerations in sentencing the applicant and that the starting point is in line with the case law: see HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545.  The respondent further contends that the judge correctly identified the relevant factors to be considered in reducing the starting point.  Moreover, the judge’s application of the totality principle could not be faulted and there were no exceptional grounds to warrant a further discount to the applicant’s sentence.

Consideration

31.  The judge’s findings were carefully set out and considered and he addressed all relevant matters.  I cannot see any appellate court disagreeing with his findings of fact or credibility; particularly when he had the opportunity of seeing and hearing the applicant giving evidence before him.  I agree with Ms Cheuk that the judge has properly applied the relevant and applicable law.  Moreover, the evidence that the applicant must have had reasonable grounds to believe that the monies were tainted was compelling.

32.  Complaint is made that the judge did not make a finding as to how the WhatsApp messages might have affected the applicant’s belief about the complexion of the money he received.  However, the WhatsApp messages between the applicant and Razaq were admitted into evidence by way of admitted facts[27]. At the investigation stage, the applicant was asked about these messages in a VRI[28]. At trial, the applicant was referred to the WhatsApp messages by his own counsel[29] and sought to rely on them to show that Razaq had reassured him in the messages that he was an honest and legitimate businessman[30].  The judge set out the contents of these messages in great detail[31].  It cannot sensibly be said that the judge was not aware of the significance of the WhatsApp messages to the applicant’s case, or that he did not fully consider them on the question of the applicant’s state of mind, which was, after all, the essential point at issue in the trial.

33.  The applicant, in his most recent letter on 7 November 2022, draws attention to a part of the cross-examination of WDPC 10605 (“PW2”) in which the witness agreed with the proposition put to her by defence counsel that the applicant had, during the 1^st VRI, given her “the impression that he was reasonably satisfied that the business he had done with Raz (sic) was genuine”.  This, of course, was not strictly admissible evidence as to the applicant’s actual state of mind, since, apart from anything else, it was merely PW2’s opinion at an early stage of the investigation.  Moreover, the witness could not have known what was really inside the applicant’s mind.  In any event, the judge specifically dealt with the point at [239]-[243] of his Reasons for Verdict, and I cannot see any reasonably arguable complaint that the judge’s reasoning or finding miscarried.

34.  I should add that I have considered the applicant’s further point about the return of his bail money; it is a very small matter, which does not impact at all on the cogency of the conviction.

35.  In my judgment, the judge has sufficiently taken into account all proper factors in reaching his findings of fact under the applicable law.  I see no reasonably arguable grounds for appeal.

36.  Also in his most recent letter to the court, the applicant has cited the sentences passed on defendants in five unrelated first instance decisions of the District Court.  I do not find these decisions of any assistance in this case.  They are not appellate decisions.  Moreover, the facts of different cases can differ widely, particularly with money-laundering offences, as a result of which it is not often profitable to compare one case with another.  The amounts involved are certainly an important factor: they are not the only factor governing culpability.  The judge was, however, bound by the decisions of the Court of Appeal, which he correctly set out between [16] and [20] of his Reasons for Sentence.

37.  I bear in mind the points made by the applicant about his clear record and cooperation, unlike some of the defendants in the cases he has cited.  However, I see no reasonably arguable grounds of appeal against sentence.

38.  Accordingly, I refuse leave to appeal against both conviction and sentence.  The applicant is reminded that he has the right to renew his applications for leave to appeal against either conviction or sentence, or both, to the Court of Appeal.  However, he is also warned that the Court of Appeal has the power to order the loss of any time which the applicant has spent in custody pending his appeal, if it were to come to the conclusion that there was no justification for the renewal of the particular application.

[1]  The applicant was originally granted an appeal aid certificate on 2 August 2021, which was amended on 29 September 2021, but subsequently discharged on 8 October 2021.  The applicant then sought legal assistance from the Clinical Legal Education Unit of the University of Hong Kong Faculty of Law and the Bar Free Legal Service Scheme but his applications were rejected on 14 March 2022 and 25 July 2022 respectively.

[2]  Appeal Bundle (“AB”), p 25Q-U.

[3]  AB, p 26C-I.

[4]  AB, p 30C-G.

[5]  AB, p 31B-D.

[6]  AB, pp 38N-39N.

[7]  AB, pp 39P-41J.

[8]  AB, pp 85O-86B.

[9]  AB, pp 86L-87F.

[10]  AB, p 83M-R.

[11]  AB, p 92I-K, p 98D-G, and p 102Q-R.

[12]  AB, pp 26K-27K.

[13]  AB, p 87J-N.

[14]  AB, pp 87O-91O.

[15]  AB, p 92D-K.

[16]  AB, p 92P-Q.

[17]  AB, pp 98M-102H.

[18]  AB, pp 102K-103C.

[19]  AB, p 112E-H.

[20]  AB, p 116 A-L.

[21]  AB, pp 116O-117K.

[22]  AB, pp 103H-104Q; 99H-N. 

[23]  AB, p 117Q-S.

[24]  AB, p 118C-H.

[25]  AB, p 119K-N.

[26]  AB, p 119O-R.

[27]  AB, p 30F-G.

[28]  AB, p 38H-L.

[29]  AB, p 42B-C.

[30]  AB, pp 66L-67M.

[31]  AB, pp 70J-83K.