HKSAR v. Lam Hin Fai

[English Translation – 英譯本]
HCMA 220/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL JURISDICTION

APPEAL AGAINST CONVICTION

MAGISTRACY APPEAL NO 220 OF 2012

(ON APPEAL FROM ESCC 1948/2011)

_____________________

_____________________

J U D G M E N T

Hon Poon Shiu-chor J hands down the judgment of this Court:

A. Introduction

1.The appellant was charged with five charges of fraud, contrary to s 16A of the Theft Ordinance[1]. Magistrate LI Kwok-wai, Esq. found the appellant guilty after trial on all five charges on 16 December 2011 and sentenced him to imprisonment for six months on 6 January 2012.

2.The appellant appealed against conviction and was given bail pending appeal.

3.Hon Andrew Chan J reserved this appeal for the consideration of the Court of Appeal on 27 June 2013 by virtue of s 118(1)(d) of the Magistrates Ordinance[2] on the ground that the question whether “dishonesty” was an element of fraud needed further investigation.

B. Particulars of offences

4.The particulars of the five charges faced by the appellant are as follows:

4.1The first charge states that the appellant from a day in August 2008 to 31 December 2008 in Hong Kong together with Fung Hing Fai Joseph 馮慶輝 (“PW1”) by deceit, i.e. falsely:

(1) indicated to Fortis Insurance Company (Asia) Limited (“Fortis”) that Wong Chau Wai 黃周偉, Leung Man Yee 梁敏儀, Ting Yuet Nin 丁越年 and Hung Kam Ying 洪錦英 (“PW3 to PW6”) really were the proposers of life insurance policies (“the first batch of insurance policies”) to be underwritten by Fortis; and

(2) indicated to Fortis that PW1 was the agent who was responsible for the handling the first batch of insurance policies;

and with intent to defraud induces Fortis to issue insurance policies to PW3 to PW6, and pay the appellant and PW1 the commission, bonus and other monies relating to the first batch of insurance policies, which resulted in benefit to the appellant and PW1, and/or in prejudice or a substantial risk of prejudice to Fortis.

4.2The second charge states that the appellant from 1 September 2008 to 31 December 2008 in Hong Kong together with PW1 by deceit, i.e. falsely:

(1) indicated to Fortis that Lee Ho Yum 李浩鑫, Lee Kam Chuen 李金泉, Cheng Wai Chung 鄭偉中 and Lee Wai 李蔚 (“PW7 to PW10”) really were the proposers of life insurance policies (“the second batch of insurance policies”) to be underwritten by Fortis; and

(2) indicated to Fortis that PW1 was the agent who was responsible for the handling the second batch of insurance policies;

and with intent to defraud induces Fortis to issue insurance policies to PW7 to PW10, and pay the appellant and PW1 the commission, bonus and other monies relating to the second batch of insurance policies, which resulted in benefit to the appellant and PW1, and/or in prejudice or a substantial risk of prejudice to Fortis.

4.3The third charge states that the appellant from 1 September 2008 to 31 December 2008 in Hong Kong together with PW1 by deceit, i.e. falsely:

(1) indicated to Fortis that Leung Yan 梁昕 (“PW11”) really was the proposer of a life insurance policy (“the third insurance policy”) to be underwritten by Fortis; and

(2) indicated to Fortis that PW1 was the agent who was responsible for the handling the third insurance policy;

and with intent to defraud induces Fortis to issue an insurance policy to PW11, and pay the appellant and PW1 the commission, bonus and other monies relating to the third insurance policy, which resulted in benefit to the appellant and PW1, and/or in prejudice or a substantial risk of prejudice to Fortis.

4.4The fourth charge states that the appellant from 1 September 2008 to 30 June 2009 in Hong Kong together with Lau Yee Kuen 劉倚娟 (“PW2”) by deceit, i.e. falsely:

(1) indicated to Fortis that Chan Siu Po 陳筱寶 (“PW12”) really was the proposer of a life insurance policy (“the fourth insurance policy”) to be underwritten by Fortis; and

(2) indicated to Fortis that PW2 was the agent who was responsible for the handling the fourth insurance policy;

and with intent to defraud induces Fortis to issue an insurance policy to PW12, and pay the appellant and PW2 the commission, bonus and other monies relating to the fourth insurance policy, which resulted in benefit to the appellant and PW2, and/or in prejudice or a substantial risk of prejudice to Fortis.

4.5The fifth charge states that the appellant from 1 September 2008 to 30 June 2009 in Hong Kong together with PW2 by deceit, i.e. falsely:

(1) indicated to Fortis that Chu Kai Cheung 朱繼鏘 (“PW13”) really was the proposer of a life insurance policy (“the fifth insurance policy”) to be underwritten by Fortis; and

(2) indicated to Fortis that PW2 was the agent who was responsible for the handling the fifth insurance policy;

and with intent to defraud induces Fortis to issue an insurance policy to PW13, and pay the appellant and PW2 the commission, bonus and other monies relating to the fifth insurance policy, which resulted in benefit to the appellant and PW2, and/or in prejudice or a substantial risk of prejudice to Fortis.

C. The prosecution case

C1. Agreed facts

5.At trial, the prosecution and the defence agreed to the following facts[3].

5.1Fortis, an underwriter approved in Hong Kong under the Insurance Companies Ordinance, sells various insurance products, most of which are sold by its insurance agents[4].

5.2In 2000, the appellant joined Pacific Century Insurance Company Limited, which later merged with Fortis, as sales manager. He was promoted to district manager in early 2008[5].

5.3Fortis believed, handled and accepted the proposal for insurance of every insurance policy involved in the present case as genuine. It therefore issued an insurance policy to the purported proposer in every policy. However, the purported proposer in every policy involved in the present case never agreed or knew he or she had proposed to Fortis for insurance[6].

5.4Fortis believed PW3 to PW11 really had proposed for insurance through PW1. On this basis, Fortis issued an insurance policy to every one of them and paid PW1 commissions of $15,670.00 in total[7].

5.5Similarly, Fortis believed PW12 and PW13 really had proposed for insurance through PW2. On this basis, Fortis issued an insurance policy to them respectively and paid PW2 commissions of $30,769.00 in total[8].

C2. PW1’s evidence

6.The salient points of PW1’s evidence can be summarised as follows:

C2a. Ricky method

7.In 2007, PW1 signed a contract and became a broker of Fortis. The appellant recruited him to join Paul Lam Region. He officially reported for duty in March 2008.

8.The appellant emphasized in monthly routine meetings that every broker had to sell at least one insurance policy each month. To achieve this target, the appellant suggested that brokers could use the Ricky method, meaning insurance policies could be issued in the name of relatives and friends while premiums for those policies would be paid by the brokers themselves. The appellant said this method was particularly advantageous to newly recruited brokers because they would get both basic salary as well as commission in the first year, which should be enough to offset the premiums they paid for others. Sometimes they could even make a small profit.

C2b. The first charge

9.PW1 ran into difficulties in obtaining business from the end of August to the beginning of September 2008 and was a little worried. The appellant on the one hand warned him if he was not able to sell insurance policies successfully, he would be fired very soon. On the other hand, the appellant encouraged PW1 saying that there was no reason PW1 should just give up so easily since he had recruited his own team. The appellant therefore brought up the Ricky method and retrieved documents containing personal data of PW3 to PW6, including copies of identity cards, from a cabinet to the right of his work desk. The appellant handed them to PW1 saying that these people were his friends and relatives. PW1 then made use of the personal data and his own imagination to fill in life insurance proposals. When he encountered information that he was not able to fill in, such as address, occupation, body height and weight etc, he left them blank for the appellant to fill them in for him. The appellant even instructed PW1 to impersonate the proposer by signing in the space for “Applicant”. The appellant signed in “Witness/Insurance Consultant”. In the report by salespeople, the appellant signed in the space for “manager”. The premiums in question  were paid by PW1.

C2c.  The second charge

10.The making of the false insurance proposal was similar to that of the first count. The appellant told PW1 to use the Ricky method again but this time round PW1 was a little hesitant. In persuading PW1, the appellant said that since the friends and relatives did not obtain any advantage from PW1, there was no problem. They therefore used the same methods to prepare documents for the life insurance proposals. This time round, the personal data provided by the appellant were those of PW7 to PW10.

C2d.  The third charge

11.Having obtained a copy of PW11’s identity card from the appellant, PW1 recognise that PW11 was once a colleague at Fortis, who had worked at the Fortis office for one or two days. The appellant told PW1 that the Ricky method would be used one last time. PW1 reluctantly agreed to do it in the old ways as in the past.

C2e.  Important points of cross-examination

12.The defence put a lot of effort in questioning the integrity and credibility of PW1. It emphasized that PW1 was shifting responsibility on the appellant and the relevant matters did not happen at all. The important points of the cross-examination included the following:

12.1PW1 agreed that PW3 to PW11 were interviewed and recruited by him into Fortis. However, other than PW11, he only recognised the rest of them when he later mentioned these people to other colleagues. It came to his knowledge that PW3 to PW10 were not the appellant’s friends and relatives only after a long period of time.

12.2The defence pointed out that during the recruitment process, PW1 already had the possession of copies of identity cards of PW3 to PW11. There was no need for the appellant to supply them.

12.3Given PWI’s admission that some information in the life insurance proposals was his own creations, there was therefore no reason why the appellant needed to fill out the forms for PW1.

12.4Why did PW1 fabricate four insurance policies at the same time if his purpose of making false insurance proposals was to keep his job? The defence pointed out that PW1 was only greedy and not, as he claimed, innocent and under pressure from the appellant when he fabricated false insurance policies.

12.5In his video-recorded interviews, non-prejudicial statements and in court, PW1 had given inconsistent accounts of certain events. PW1’s explanation was that he had sometimes mixed up events and was nervous occasionally.

C3. PW2’s evidence

13.PW2’s evidence can be summarised as follows.

C3a.  Ricky approach

14.PW2 was recruited by PW1 into Fortis. She was a broker at the time and was Unit Manager when she left her job.

15.The appellant mentioned the Ricky method in routine meetings. At the beginning PW2 thought the Ricky method was a proper method. She only realised that it was not until during a training session, an instructor told her that it was not a proper method. The reason was that the insurance company needed to pay more in commission. Since then, PW2 stopped using the Ricky method.

C3b.  The fourth charge

16.There was a competition during the period mentioned in the fourth charge. The appellant asked PW2 if she would like to participate in it, and if she did, she would need to sell more insurance policies. The appellant said that PW2 could use his “credits” or privileges, and those credits were possessed solely by the appellant. The appellant took out a copy of PW12’s identity card and asked her to fill in the sales representative’s report in the proposal in question. PW2 forged the signature of PW12 when filling in the form and she never asked PW12 to verify whether he agreed to apply for an insurance policy. At the time, she still thought the Ricky method was a proper approach. Moreover, she was of the view that everybody in Fortis did the same so she did not raise any doubt about it. When PW2 encountered difficulties in filling in the analysis of client, the appellant asked her to seek help from his mother, i.e. DW2.

C3c.  The fifth charge

17.PW2 met PW13 in an interview and they did not know each other. On a certain day in September 2008, PW2 gave the examination documents of interview candidates to the appellant for his perusal, and made a report to him about the details. The appellant urged PW2 to sell more insurance policies because the competition held in Fortis had not ended yet. He also said that if PW2 did not do as she was told, she would be fired and even the commissions and basic salaries she had been paid before would need to be returned. The appellant took out the personal data of PW13 and urged PW2 to sell one more policy. PW2 said that she had telephoned PW13 but PW13 refused to buy insurance policy. In spite of that, PW2 fabricated the insurance proposal on her own and witnessed the appellant sign on the relevant sales representative’s report.

C3d.  Important points of cross-examination

18.The defence doubted PW2’s motive the same way it doubted PW1’s motive in his cross-examination and alleged that PW2 had a motive to falsely accuse the appellant by making up her evidence. The purpose for her doing so was that she hoped to obtain a reduction in sentence and wished in exchange the prosecution would reduce the number of charges laid against her. The defence said she committed the offences alone. The appellant did not participate in them and had no knowledge of them. The important points of the defence’s cross-examination included the following:

18.1PW2 claimed that she only learned on the day she gave evidence that the prosecution offered no evidence against her with regard to some of the charges. The defence was of the view that that was absolutely not possible. Moreover, it was not possible that PW2 did not know what form of assistance that she would give to ICAC.

18.2PW2 admitted that the fourth charge and the fifth charge were not the first time she used the same method to fabricate false insurance proposals. She had fabricated several others before. The earliest one was in August 2008. She explained she did that to obtain the maximum benefit.

18.3Since PW2 was familiar with the procedure, she filled in her own address in those false proposals so that she could conceal what happened from the company when she later dealt with them. The defence pointed out that she did not need the appellant to teach her how to do it at all.

18.4PW2 said that other than the appellant, there were also other managers who talked about the Ricky method. But she had forgotten their names.

C4. Other prosecution witnesses

19.The evidence of PW3 to PW13 as well as PW14 and PW15 (managers of Fortis) basically were produced in the form of written statements under s 65B of the Criminal Procedures Ordinance[9].

20.PW6 confirmed that in the summer of 2008, a district manager talked about sales methods that were similar to the Ricky method. Since she felt that the relevant sales method was problematic, she finally turned down the job offer by Fortis. She confirmed that there were 60 to 70 participants in that routine meeting, but did not agree with the defence’s suggestion that that routine meeting only introduced selling insurance policies to friends and relatives.

21.PW11 had also taken part in routine meetings but could not remember the details. All that he remembered was that there usually was sharing of experience. He said when PW1 interviewed him, PW1 took away his identity card for photocopying. PW11’s evidence is at variance with PW1’s in this respect.

D. The defence case

22.The appellant elected not to give evidence but it can be seen from the cross-examinations of PW1 and PW2 that the defence put up by the appellant is that PW1 and PW2 arranged all the “false” insurance policies on their own, the appellant never took part in them, and that the two prosecution witnesses lied in their false accusations against the appellant for the sake of obtaining personal benefits such as a reduction in sentence and in exchange for the prosecution not to offer evidence against them.

23.The appellant called two witnesses.

23.1DW1 was a broker recruited by PW1. His evidence mainly served to try and cast doubts on the prosecution case, e.g. the appellant only gave a speech at the beginning of the routine meeting, and DW1 had never heard of the Ricky method in routine meetings.

23.2DW2 is the mother of the appellant as well as a broker at Fortis. Her evidence was that she had never heard of the Ricky method in routine meetings, either. She also had never witnessed or heard of the appellant forcing his subordinates to do business. She also gave evidence about the character of the appellant.

E. The magistrate’s findings

24.Having analysed their evidence respectively, the trial magistrate found PW1 and PW2 to be honest and reliable[10], but rejected the evidence of the two defence witnesses[11]. At the very end, the trial magistrate said:

“33. Even though this Court does not accept the evidence adduced by the defence, that does not mean that the appellant will be convicted immediately. The court still needs to consider whether the prosecution’s evidence has proved beyond a reasonable doubt all the elements of an offence. Having considered carefully all the evidence and the submissions from both sides, the court accepts and relies on the evidence of PW1 and PW2. I am satisfied that the appellant is guilty on all charges.”

F. Grounds of Appeal

25.Mr Wong Man Kit, senior counsel for the appellant, raised four grounds of appeal:

(1) the magistrate erred in totally disregarding dishonesty as an element of the first count to the fifth count, and did not make findings whether the appellant had been dishonest or not;

(2) the convictions of the first charge to the fifth charge were not supported by evidence. The magistrate did not state the bases of convictions of the first charge to the fifth charge. And the magistrate’s bases of conviction exceed the scope of the first charge to the fifth charge;

(3) the magistrate erred in not ruling that PW1 and PW2 lied when they said they did not know giving evidence against the appellant could lead to reduction of their sentences. For this reason, the magistrate did not have a correct basis to assess the credibility of PW1 and PW2; and

(4) for the above reasons, the convictions of the first charge to the fifth charge were unsafe and unsatisfactory.

26.This court now examines each ground one by one.

F1. The 1^st Ground of Appeal

27.The 1^st ground of appeal is about the elements of s 16A of the Theft Ordinance. S 16A reads:

“(1) If any person by any deceit (whether or not the deceit is the sole or main inducement) and with intent to defraud induces another person to commit an act or make an omission, which results either –

(a) in benefit to any person other than the second-mentioned person; or

(b) in prejudice or a substantial risk of prejudice to any person other than the first-mentioned person, the first-mentioned person commits the offence of fraud and is liable on conviction upon indictment to imprisonment for 14 years.

(2) For the purposes of subsection (1), a person shall be treated as having an intent to defraud if, at the time when he practises the deceit, he intends that he will by the deceit (whether or not the deceit is the sole or main inducement) induce another person to commit an act or make an omission, which will result in either or both of the consequences referred to in paragraphs (a) and (b) of that subsection.

(3) For the purposes of this section –

“act”（作為）and “omission”（不作為）include respectively a series of acts and a series of omissions;

“benefit”（利益）means any financial or proprietary gain, whether temporary or permanent;

“deceit”（欺騙）means any deceit (whether deliberate or reckless) by words or conduct (whether by any act or omission) as to fact or as to law, including a deceit relating to the past, the present or the future and a deceit as to the intentions of the person practising the deceit or of any other person;

“gain”（獲益）includes a gain by keeping what one has, as well as a gain by getting what one has not;

“loss”（損失）includes a loss by not getting what one might get, as well as a loss by parting with what one has;

“prejudice”（不利）means any financial or proprietary loss, whether temporary or permanent.

……”

28.Mr Wong raises three points of argument.

29.Firstly, Mr Wong submits dishonesty is an element of an offence of fraud under s 16A.

29.1Mr Wong in his written submissions wrote at length on this point. But as Mr Edmond Lee, Senior Assistant Director of Public Prosecutions, for the respondent, said, this point was in fact undisputed.

29.2In HKSAR v Ho Ka Keung[12], Hon Yuen JA in discussing the elements of s 16A listed the four elements of the offence of fraud. They are[13]:

(1) a deceit practised by the defendant;

(2) with intent to defraud;

(3) which induced another person (the victim) to do or not do something; and

(4) resulting in benefit to any person other than the victim; or in prejudice or a substantial risk of prejudice to any person other than the defendant.

Hon Yuen JA specifically pointed out that even though the word “dishonestly” did not appear as a specific element in s 16A, “deceit” incorporated the implicit element of dishonesty.

29.3In other words, the prosecution must prove the implicit element that the defendant had been dishonest when the s 16A offence of defraud was brought.

30.The second argument put forward by Mr Wong is that since the word “dishonestly” is not used in s 16A, even if the magistrate had considered the wording of s 16A, it cannot be assumed that he knew that “dishonesty” was an element of that offence. Mr Wong also criticises the trial magistrate for not having stated the elements of each offence ever. The magistrate also did not say that an element of offence included the prosecution having to prove the appellant had been dishonest. He also did not analyse the evidence of the present case in order to consider whether the appellant had been dishonest or not, and did not reach a conclusion that the appellant had been dishonest.

31.This court does not agree with Mr Wong’s view.

31.1The applicable legal principle is that where the judge is a professional judge sitting alone, it can be assumed, unless there are clear indications to the contrary, that the judge is well aware of the elements of the offence charged: see HKSAR v Kwok Chi Wah[14]; and Li Defan & Another v HKSAR[15].

31.2In HKSAR v LKS[16], Hon Yeung JA (as he then was) restated:

“40. Generally, a judge does not need to say in his judgment that he has reminded and directed himself in questions of law. The judge is a professional judge. The Court of Appeal must assume that the judge is aware of the relevant legal principles and acts accordingly, especially the fundamental principle that each offence must be dealt with independently. The law does not require the trial judge of a criminal case to describe in detail in his judgment the relevant legal principles and his thought process in making his decisions. Blair-Kerr J pointed out in R v R E Low [1961] HKLR 13:

‘Mr How strongly argued that the analogy between a judgment made by a District Judge under s 30 of the District Court Ordinance and a direction given to a jury by a judge was appropriate. I disagree with it. The statutory duty of a District Judge is to make a record of the brief reasons for judgment, rather than list all the legal principles relevant to a case or reconsider all the evidence.’

41. In R v Chan Shiu-sing [1980] HKLR 310, the Court of Appeal held that there is no need for a District Judge in a criminal case to expressly indicate that he has reminded himself of certain fundamental legal principles, e.g. the burden of proof and the standard of proof, etc.

42. Unless there is material showing that a trial judge errs in points of law, a trial judge not listing the relevant legal principles in his judgment cannot amount to a valid ground of appeal against conviction.

……”

What Hon Yeung JA said also applies to magistrates.

31.3The findings in the present case of the trial magistrate no doubt were relatively short, but it cannot be said because of that the magistrate was not aware that “dishonesty” was an element of the offence. On the contrary, counsel for the defence in his final submissions gave the trial magistrate a copy of the section in Archbold Hong Kong, Criminal Law Pleadings, Evidence and Practice, 2011 on s 16A fraud offences for his reference[17]. The relevant section clearly lists the elements of fraud offences, and the connection between “dishonesty”, the Ghosh test etc with those charges. The trial magistrate therefore must have been clear about the elements of the offences charged in the present case as well as the relevant law.

31.4This court takes the view that although the trial magistrate’s findings were brief and could have been written in more detail, his reasons for verdict were still apparent, i.e. he was satisfied with the evidence of the prosecution witnesses and determined that the prosecution had proved every element of every offence successfully.

32.The third argument raised by Mr Wong is that according to R v Ghosh[18], the definition of dishonesty is (1) whether according to the ordinary standards of reasonable and honest people what was done by the defendant was dishonest; and (2) whether the defendant himself must have realised that what he was doing was by those standards dishonest. In his oral submissions, Mr Wong said the test in Ghosh was applicable to every case that involves “dishonesty”.

33.Mr Wong argued vehemently that there was evidence to show the appellant was not dishonest, and emphasizes the following factors:

33.1The premium arising from the use of the Ricky method will have to be paid by the brokers themselves. As a result, Fortis will not receive fewer insurance premiums than it should otherwise have done. In the eyes of many people (including managers of Fortis) the company does not suffer any losses. Nor will they consider it as dishonest. The appellant mentioned the Ricky method openly in routine meetings of the company. It could be seen that the appellant did not think that reasonable and honest people would consider it dishonest.

33.2Regarding the first charge, the appellant’s intention of mentioning the Ricky method to PW1 again was to ask PW1 to pay premiums in order to secure PW1’s job. The appellant would not think that reasonable and honest people would consider his conduct dishonest.

33.3Regarding the second charge, the appellant asked PW1 to use the Ricky method again but this time round PW1 showed he was somewhat hesitant. The appellant tried to persuade PW1 by saying because those friends and relatives did not receive any advantage from PW1, as a result there would not be any problem. This shows all the more that the appellant did not think that reasonable and honest people would consider his conduct dishonest.

33.4PW2 said that the appellant did mention the Ricky method in routine meetings. At the beginning she thought the Ricky method was a proper method. She only realised that it was not until during a training session, an instructor told her that it was not a proper method. The reason was that the insurance company needed to pay more in commission. Since then, PW2 stopped using the Ricky method. It can be seen from her evidence that it is just a matter of opinion regarding the legality of the Ricky method. It also depends on one’s emphasis when one analyses that method. The prosecution case is that the appellant publicly mentioned the Ricky method in routine meetings. Reasonable and honest people will not consider that dishonest.

33.5PW2 at the beginning thought that the Ricky method was proper and she also mentioned that “there were also other managers who talked about the Ricky method”. On top of that, everyone in Fortis used the Ricky method. Considering that, the appellant would not have thought that Reasonable and honest people would consider the Ricky method to be dishonest.

34.This court is of the view that the Ghosh test is not necessary and not applicable in the present case.

34.1As Mr Lee points out, as a matter of legal principle, it is by no means in every case involving “dishonesty” that a Ghosh test is necessary. See R v Roberts[19] and R v Price[20]. In the case of Price, the Lord Chief Justice of the Court of Appeal in England said in paragraph 3 on page 411[21]:

“It has been said more than once in this Court, and in particular in Roberts (William) (1987) 84 Cr App R 117, that it is by no means in every case involving dishonesty that a Ghosh direction is necessary. Indeed in the majority of such cases, of which this was one, it is unnecessary and potentially misleading to give such a direction. It need only be given in cases where the defendant might have believed that what he is alleged to have done was in accordance with the ordinary person’s idea of honesty.”

34.2In the present case, the appellant did not give evidence in his trial. His defence was that PW1 and PW2 falsely accused him and that he had never taken part in their “false insurance policies” dealings. His defence has never been that he had done what the prosecution witnesses alleged he did, but he probably believed what he had done was honest. For this reason, the Ghosh test is not necessary and not applicable in the present case.

35.In any event, even if the Ghosh test were applicable in the present case, this court took the view that the appellant did participate in arranging the false insurance policies on the basis of PW1 and PW2’s evidence, the appellant’s conduct must have been “dishonest”, and that the Ghosh test must pass. As pointed out above, Mr Wong submitted vehemently that there was evidence in the present case to prove that the appellant was not dishonest. This court does not accept his submissions. We do not need to analyse the evidence relied on by Mr Wong one by one. We need only point out that using the Ricky method apparently involves inducing Fortis by misrepresentation to issue insurance policies. It is common sense and very obvious that this is a dishonest act. Even the mention of the Ricky method in routine company meetings and its use by other brokers will not alter this unarguable fact. The appellant was a district manager of Fortis and an experienced insurance worker. He must have realised that according to the ordinary standards of reasonable and honest people what was done by him was dishonest.

36.The 1^st Ground of Appeal therefore cannot stand.

F2. The 2^nd Ground of Appeal

37.In his submissions, Mr Wong argued that all the particulars of the first to the fifth charge included that the appellant with intent to defraud induced Fortis to issue insurance policies to those insured persons, and to pay the appellant and PW1 or PW2 the commission, bonus and other monies relating to those insurance policies. However, these were not their evidence.

37.1Both PW1 and PW2 did not say that the appellant committed the offence with intent to induce Fortis to pay the appellant the commission, bonus and other monies relating to those insurance policies, and the magistrate did not make such a finding, either. On the contrary, PW1 said that the appellant warned him that he would be fired very soon if he was not able to sell insurance policies successfully. That was to say the purpose of the appellant’s act was to cause PW1 not to be fired. PW2 also said that the appellant said to her that if she wanted to take part in a Fortis competition, she needed to sell more insurance policies, but if she was not able to sell more insurance policies, she would be fired. That was to say the purpose of the appellant’s act was to cause PW1 to take part in the Fortis competition and not to be fired.

37.2The particulars of the first to the fifth charges did not include the abovementioned intent. The magistrate convicted the appellant on the evidence of PW1 and PW2 but did not state the conviction was based on what evidence of PW1 and PW2. The abovementioned evidence of PW1 and PW2 exceeded the scope of the first to the fifth charges. It contravened legal principles.

38.We do not accept the proposition of Mr Wong.

38.1As pointed out by Mr Lee, the 2^nd ground of appeal is self-contradictory. It’s because on the one hand, it alleged that the trial magistrate had not stated the basis for conviction, while on the other hand, it also alleged that the trial magistrate’s basis for conviction exceeded the scope of the offences.

38.2In fact, the prosecution in the present case all along did not rely on more than one basis to prosecute the appellant. The prosecutions’ only basis for prosecution was in accordance with the particulars of offence as listed in the offences, i.e. “the appellant with intent to defraud induced Fortis to issue insurance policies to those insured persons, and to pay the appellant and PW1 or PW2 the commission, bonus and other monies relating to those insurance policies”.

38.3Regarding the above particulars of offence, the prosecution must prove that the appellant and PW1 and PW2 induced Fortis (1) to issue insurance policies to those “fake” insured persons; and (2) to pay the appellant and PW1 and PW2 the commission, bonus and other monies relating to those insurance policies. And the evidence adduced by the prosecution to prove these two matters not only was sufficient, but also cogent and irrebuttable.

38.4In making the convictions in respect of the first to the fifth charges, the trial magistrate must have accepted the prosecution’s evidence.

39.The 2^nd ground of appeal therefore cannot stand.

F3. The 3^rd Ground of Appeal

40.Mr Wong in his submissions says both PW1 and PW2 stated that they did not know giving evidence against the appellant could lead to reduction of their sentences.

40.1PW1 denied having knowledge that his giving evidence in the present case was linked to his own sentence[22]. He also denied that one of his purposes of becoming a prosecution witness was the reduction of sentence[23].

40.2PW2 denied that communicating with the prosecution would strengthen her mitigation[24], giving evidence was for the purpose of getting a reduction in sentence, and that she knew she would obtain extra reduction in sentence by giving evidence[25]. She even indicated clearly that she did not know that her giving evidence would have an effect on her own sentence[26].

41.Mr Wong submits that according to transcripts of proceedings of ESCC 3049/2010 and ESCC 3050/2010, the sentence hearings regarding PW1 and PW2 had to be postponed many times due to the fact that they needed to give evidence in court against the appellant. The transcript also showed that both the magistrates and the lawyers pointed out that their giving evidence against the appellant would have an impact on their sentences and that was the reason why sentencing would have to wait until they finished giving evidence. Mr Wong also suggests that their lawyers must have also informed them about the matter. PW1 and PW2 therefore could not possibly be unaware that their giving evidence against the appellant could reduce their sentences[27].

42.Mr Wong relies on the case of HKSAR v Ngie Hon Miu[28] in support of his argument. That case involves a tainted witness who has pleaded guilty and will testify against the accused. His sentencing will wait until he finishes testifying in court. In his oral testimony, he denies knowing that by giving evidence, his sentence can be reduced. The Court of Appeal took the view[29] that it was rather surprised by the answer given by the prosecution’s tainted witness in court that he was unaware that he would get a reduced sentence by testifying against the accused. The Court of Appeal went on to point out that in the circumstances, it might seem rather unlikely that the tainted witness had not been made aware at least by his own lawyers of the potential benefit of getting a reduction in sentence by testifying against the accused.

43.Mr Wong argues vehemently that one of the major defences put forward by the defence was that PW1 and PW2 decided to testify against the appellant in the hope of getting a reduction in their sentences, and that they were lying when they said in their evidence that they were not aware of the potential benefit of getting a reduction in sentence by testifying against the appellant[30]. The defence also pointed that out clearly in its written submissions[31]. However, the magistrate wrongly failed to make a finding that PW1 and PW2 were lying when they said in court that they were not aware of the potential benefit of getting a reduction in sentence by testifying against the appellant. The magistrate also failed to consider their credibility on such a basis and whether they gave false evidence against the appellant expecting to get a reduced sentence in return.

44.Moreover, Mr Wong criticises the trial magistrate for telling PW1 that the reason given by his lawyer for the adjournment was subject to legal professional privilege so PW1 did not need to answer the questions in this respect put by the defence lawyer during cross-examination. Mr Wong submits that the trial magistrate erred in giving that warning because the reason given to PW1 by his lawyer for the adjournment of sentencing involved the occurrence of an objective event but not the lawyer’s legal advice to PW1. The magistrate by so doing deprived the defence of its right to learn whether PW1 knew he could get a reduction in sentence by testifying against the appellant.

45.We do not accept such submissions by Mr Wong.

45.1The dispute in the present case is about the credibility of PW1 and PW2. Their evidence was that the appellant was the instigator of this case of fraud, while the defence said they falsely accused the appellant for their own interests such as a reduction of sentence.

45.2Both the prosecution and the defence made submissions on this dispute. Written submissions and oral supplement by the prosecution reminded the trial magistrate of PW1 and PW2’s accomplice status, and that since they were not sentenced at the time of the appellant’s trial, they had an interest in the appellant’s case. The defence put up by the defence was exactly that the two of them falsely accused the appellant for their personal gain[32]. And the attacks levelled against the two prosecution witnesses by the defence were also recorded in detail in its final submissions[33].

45.3Without a doubt, the trial magistrate was well aware of this issue. In paragraph 2 of his Statement of Findings, the trial magistrate made clear at the outset:

“2. The five offences the appellant was convicted of can be divided into two groups: the first charge to the third charge in one group while the fourth charge and the fifth charge into another. The evidence of the first group mainly came from PW1, while that of the second group from PW2. Both of them were listed as an accomplice in the particulars of offences in the present case. At the time they gave evidence, they had already pleaded guilty to certain offences against them in separate legal proceedings and were awaiting sentencing. The prosecution had granted the two of them certificates of exemption from prosecution: P18 and P32, so that they could testify against the appellant under such exemption from criminal prosecutions. Whether or not PW1 and PW2 knew it, if their evidence could lead to the conviction of the appellant, their final sentences would benefit. This was exactly the biggest challenge to their integrity by the defence. Another battle line of the defence was that there could have been under-the-table dealings between the prosecution and PW1 and PW2 because the prosecution offered no evidence against them in respect of some charges against them personally. And that affected the performance of the PW1 and PW2 when they gave evidence in court.”

The trial magistrate when repeating the evidence of both prosecution witnesses reminded himself again the criticisms levelled against the two of them respectively by the defence:

“13. The defence strongly questioned PW1’s integrity and credibility. It argued vehemently that his purpose was to put the blame on the appellant and the events in question had in fact never happened.”

“17. As with PW1, the defence raised the question that PW2 had a motive to give false evidence against the appellant. Her purpose was to obtain a reduction in her sentence and exchange for the reduction of number of charges against her by the prosecution. The defence submitted that she committed the crimes alone and the appellant did not take part in them at all and was completely unaware of them.”

Finally, before accepting the evidence of the two prosecution witnesses, the trial magistrate reminded himself the third time, giving himself the relevant guidance:

“29. I have carefully considered the evidence of PW1. I have noted that he is an accomplice. An accomplice usually would shift the blame to other fellow offenders and exonerate himself or herself. He or she would even lie to win the court’s trust …”

45.4It is unquestionable that the trial magistrate must have considered the accomplice status of PW1 and PW2, the possibility of telling lies, their motives of falsely accusing the appellant, etc., and come to the conclusion that all these did not damage the credibility of their testimony that the appellant had committed the offences in question before accepting their evidence.

45.5We must emphasize that the crucial issue in the present case is only about the credibility of PW1 and PW2. When the crux of the matter revolves around the credibility of a witness, the responsibility of analysing the evidence and issues rests with the trial judge and an appellate court ought not to usurp his function. We need to restate that an appellate court would not, except in the most exceptional circumstances, interfere with a finding which depended upon the credibility of a witness: see HKSAR v Lee Hon Shun[34]. The Court of Final Appeal also restated in HKSAR v Egan[35] that an appellate court should rarely interfere with credibility findings made by the primary judge unless it could be shown that the findings were plainly wrong. In the present case, we do not see any reason to interfere with the trial magistrate’s findings on the credibility of PW1 and PW2.

45.6The case of Ngie Hon Miu relied on by the appellant is of no assistance to him. As pointed out by the Court of Appeal in HKSAR v Wong Lin Hung & Others[36], Ngie Hon Miu is only applicable to the unique circumstances of that case. Both Ngie Hon Miu and Wong Lin Hung were jury trials. If the trial judge does not direct the jury properly on the question of law, the jury may not know that an accomplice giving evidence for the prosecution could get a sentence reduction and that may affect the credibility of the accomplice. But the present case is tried by a professional magistrate. He must have known the relevant principles and circumstances, and would have taken those into account.

45.7Regarding the complaint by the appellant that the trial magistrate stopped the defence from cross-examining PW1 whether he knew the reason for the adjournment of his sentencing hearing, we think that this argument does not stand. As pointed out by the trial magistrate to the defence lawyer, the witness had replied that he knew the reason for the adjournment which his lawyer had told him, and it was his right if he chose not to disclose the relevant content. Whatever happened, that would not constitute any unfair treatment of the appellant, because the trial magistrate must have known and would have considered the motive possibly harboured by an accomplice when he or she testified before receiving sentence.

46.The 3^rd ground of appeal therefore cannot stand, either.

F4. The 4^th Ground of Appeal

47.Since the 1^st to the 3^rd grounds of appeal above cannot stand, the 4^th ground of appeal cannot stand, either.

G. Conclusion

48.Due to the reasons given above, the appellant’s appeal is dismissed.

Mr Edmond Lee, Senior Assistant Director of Public Prosecutions, of the Department of Justice, for the respondent

Mr Wong Man Kit SC and Mr Charles Chan, instructed by Ivan Tang & Co, for the appellant

Translated by the Judgment Translation Unit of the Judiciary and vetted by Mr. Patrick W.S. Cheung, Barrister-at-law.