HKSAR v. Nanik Dayaram

CACC 274/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 274 OF 2015

(ON APPEAL FROM HCCC NO. 2 OF 2014)

____________

____________

_______________________

J U D G M E N T

_______________________

Hon Lunn VP (giving the Judgment of the Court) :

1.Each member of this Court has contributed to this judgment. The 1^st and 2^nd applicants, the 1^st and 2^nd defendants at trial,[1] sought leave to appeal against their convictions, on 6 August 2015, after trial by Andrew Chan J and a jury, of nine counts of conspiracy to defraud, contrary to Common Law and punishable under section 159C(6) of the Crimes Ordinance, Cap. 200, and against the sentences totalling 10 years’ imprisonment, imposed on each of them on 11 August 2015. At the end of the second day of the hearing, Mr Marash SC informed the Court that the applicants abandoned their applications in respect of sentence. At the conclusion of the hearing we reserved our judgment in respect of the applications for leave to appeal against conviction and refused the applications for leave to appeal against sentence.

2.On 24 August 2016, McWalters JA granted the applicants bail pending the hearing of their appeals against conviction and sentence.  The grounds of appeal against conviction that were advanced in this Court were those relied on before McWalters JA.  In his Reasons for Decision handed down on 5 September 2016, McWalters JA said that he was not persuaded that grounds 1 and 2 would be successful before this Court.  Of ground 3, he said that he was troubled by the judge’s directions to the jury in respect of conspiracy, but that on its own that matter would not lead him to grant bail.  However, of ground 4, he said that he was persuaded to grant bail having regard to the arguments advanced in respect of judicial interventions in the course of evidence.

The trial

3.The counts on the indictment related to import and export loans obtained by Days Impex Limited (“Days Impex”) and Days International Limited (“Days International”) from a number of banks in 2011.  Those companies were part of a group of companies (“Days”), controlled by the Dayaram family businesses, of which the 1^st applicant was the head and the 2^nd applicant, his son, was in charge of the finances.

4.Applications for import loans were made to:

•   Hongkong and Shanghai Banking Corporation Limited[2] (“HSBC”);

•   Hang Seng Bank Limited [3] (“HSB”); and

•   Bank of Baroda [4].

Purportedly, the monies were to fund the purchase of goods by Days Impex[5] or Days International[6] from Oscoda Electronics Limited (“Oscoda”).  After each successful application, the funds were released to Oscoda.  In support of such applications, sales invoices from Oscoda were submitted to the defrauded banks.

5.Applications for export loans were made to:

•   HSBC [7];

•   Bank of Baroda [8]; and

•   UCO Bank [9].

Purportedly, the monies were to fund the sale of products by Days Impex to Priya International LCC (“Priya”) and Sadrudin Sumar (“Sadrudin”).  Bills of lading issued by Opus Container Lines S.A. (“Opus”) and sales invoices between Days Impex and Priya/Sadrudin were submitted to the banks in support of the export loan applications.

6.FTI Consulting were appointed as provisional liquidators and took over the Days’ offices in Hong Kong on 14 September 2011.  Days Impex and Days International were wound up on 12 December 2011.

Count 1

7.Count 1 is illustrative of the averments made in the Particulars of Offence, in respect of import loans, in Counts 1 to 6:

“ Particulars of Offence

Nanik Dayaram, Mahesh Nanik Dayaram and Kwok Kwai-wah, between the 24th day of March 2011 and 16th day of July 2011, in Hong Kong, conspired together and with other persons unknown to defraud The Hongkong and Shanghai Banking Corporation Limited (“the said Bank”), by dishonestly:

(i) falsely representing in the “Applications for Import Loan” (“the said import loan Applications”) that Oscoda Electronics Limited (“the Drawer”) was the genuine supplier;

(ii) submitting false sales invoices which purported to show that there were genuine underlying sale and purchase transactions between the Drawer and Days Impex Limited;

thereby inducing the said Bank to approve the said import loan Applications and to release funds in the total sum of $15,950,103 United States currency to the Drawer.”

Count 7

8.Count 7 is illustrative of the averments made in the Particulars of Offence, in respect of export loans, in Counts 7 to 9:

“ Particulars of Offence

Nanik Dayaram, Mahesh Nanik Dayaram and Kwok Kwai-wah, between the 10th day of March 2011 and the 18th day of July 2011, in Hong Kong, conspired together and with other persons unknown to defraud the Hongkong and Shanghai Banking Corporation Limited (“the said Bank”) by dishonestly:

(i) falsely representing in the “export trade collection/negotiation instructions” that priya international lcc was the genuine drawee under the bills of lading stated therein;

(ii) falsely representing in the “export trade collection/negotiation instructions” ((i) and (ii) collectively called “the said export loan instructions”) that Sadrudin Sumar was the genuine drawee under the bills of lading stated therein;

(iii) submitting false bills of lading which purported to show that they were genuinely issued by the shipper named therein;

(iv) submitting false sales invoices which purported to show that there were genuine underlying sales and purchase transactions between Days Impex Limited (“the Drawer”) and Priya International LCC;

(v) submitting false sales invoices which purported to show that there were genuine underlying sales and purchase transactions between the Drawer and Sadrudin Sumar;

thereby inducing the said Bank to approve the said export loan Instructions and to release funds in the total sum of $2,416,885 United States currency to the Drawer.”

THE PROSECUTION CASE

9.IT WAS THE PROSECUTION CASE THAT THE UNDERLYING SALE AND PURCHASE TRANSACTIONS WERE FICTITIOUS, AND THE INVOICES, BILLS OF LADING AND OTHER DOCUMENTS SUBMITTED TO THE BANKS IN SUPPORT OF THE LOAN APPLICATIONS, WERE FALSE.  OSCODA WAS NOT A GENUINE SUPPLIER AND PRIYA AND SADRUDIN SUMARWERE NOT GENUINE PURCHASERS.  OPUS DID NOT EXIST AND THE RELATED OPUS BILLS OF LADING WERE FALSE.  LIMITED EVIDENCE OF TRANSACTIONS RELATING TO THESE COMPANIES, INCLUDING BLANK OPUS BILLS OF LADING, WAS FOUND IN DAYS’ OFFICES.  AS A RESULT OF THE FRAUDS, THE NET LOSS TO THE BANKS WAS ESTIMATED TO BE IN THE REGION OF $200 -$250 MILLION. 

10.Ms Yiu Suet Wing, a Treasury forensic accountant, testified that monies raised in import loans in respect of Oscoda were used to repay previous loans, in a circular fund-flow [10].  It was the prosecution case that the monies were transferred by Oscoda to Wall Street Exchange Limited (“Wall Street”), so that it could not be traced back to Priya and Sadrudin.  Ms Yiu testified that monies transferred from Oscoda to Wall Street and then to Days also went through a number of transfers between the Days’ companies, which served no commercial purpose, before being used to repay previous import loans.

Oscoda

11.The prosecution relied upon the following evidence to invite the jury to conclude that Oscoda was a sham:

(i)   Oscoda was a BVI company[11] with only a corporate secretarial company address in Hong Kong; it was not registered in Hong Kong for incorporation or tax purposes; Mr Foreky Wong, of the liquidators FTI testified that a search of the Days’ offices premises on 14 September 2011 had revealed 121 file jackets containing documentation relating to trading with Oscoda but, absent from the documentation was material he expected to find, such as packing lists, shipping advices, bills of lading and correspondence between Oscoda and Days and between Days and its customers;[12] Mr Foreky Wong said that from the material discovered he could not even find out Oscoda’s place of manufacture; by contrast, the documentation in relation to other suppliers was “rather complete.” [13]

(ii)   Jerome D’Silva, an employee of Wall Street, testified that, in response to his enquiry as to the relationship between Days and Oscoda, the 2^nd applicant had told him “It is our own group” and “It is one of my own”.  That was confirmation of what he understood to be the case, given dealings he had with the 2^nd applicant minutes before the banks closed in which the 2^nd applicant said that money would be remitted from Oscoda to Wall Street.

(iii)   Mr Howard Li of HSB testified that, as part of a credit risk management requirement, he had asked the 2^nd applicant to visit Oscoda but had been told by the 2^nd applicant that the principal of Oscoda was fully occupied or not in Hong Kong and that, in the event, no such visit ever occurred.

Priya and Sadrudin Sumar

12.Similarly,inrespectofPriyaandSadrudin Sumar,Mr Foreky WongsaidthatinthesearchoftheDays’officespremises,apartfromthedocumentationprovidedtothebanksforbankloans,hedidnotfindthedocumentationthathe expected to find, namely: invoices; correspondence between the parties; bills of lading; packing lists or information about bank transactions.[14]

13.It was the prosecution case that the banks were defrauded if Oscoda was under the control of Days, because they were either never informed of the relationship, or had been told outright that Days had no interest in Oscoda. 

Opus

14.In support of its case that Opus did not exist, the prosecution relied on the following evidence:

(i)   It was not registered under the Business Registration Office [15] or the Inland Revenue Department [16];

(ii)   Representatives from shipping companies and manufacturers testified that container numbers listed on the Opus’ bills of lading were in fact used by their companies [17] and that they had never heard of Opus.  As a result, it was submitted that the ‘containers’ did not carry anything sold by Days Impex, Sadrudin Sumar or Priya [18]; and

(iii)   Blank bills of lading and handwritten instructions as to how to prepare them were found in Days’ offices.

15.In consequence, the prosecution invited the jury to conclude that the ‘containers’ were not used to transport any goods purportedly sold by Days Impex, Sadrudin Sumar or Priya.

16.It was the prosecution case that the absence of evidence in respect of Priya was suspicious.  The defence evidence that the person in charge of Priya, Mr Vangani, could not be called to testify because he had returned to India with a heart condition was too much of a coincidence.  Also, there was no evidence from Sadrudin Sumar, it being said that they were no longer on speaking terms with Days.  Further, the prosecution pointed to the testimony of Jerome D’Silva that Wall Street had been asked to transfer funds to repay the banks for previous export loans and that the 2^nd applicant instructed him to state on the request for those remittances that they were made by Priya and Sadrudin.

Meeting of 30 August 2011

17.Ms Shannon Lau, on behalf of HSBC, and Ms Kitty Cheng, on behalf of HSB, testified of a meeting held with the 1^st and 2^nd applicants in the presence of their lawyers on 31 August 2011.  The purpose of the meeting was to discuss the banks’ concerns with Days’ accounts.

18.Ms Kitty Cheng said that the 2^nd applicant explained to them that the export bills had nothing to do with the two Days’ companies and that he bought the bills from HSBC.  She said that she understood the 2^nd applicant to mean that he treated them as their export bills and that he had asked HSBC to prepare export bills for the goods.  The 2^nd applicant said that he had done so on instructions on the basis that he would receive a commission.

19.Ms Shannon Lau said that following the meeting, she had written up a credit proposal and memo [19] based on her understanding of what the 2^nd applicant had said at the meeting.  Her record stated that:

“ At the last meeting held on 31 August, the Dayarams attributed their ignorance of the details of questionable B/Ls to the fact that these shipping documents were in fact not theirs, but instead were provided by their customers as a form of payment in lieu. Although the Group had no knowledge of the details of these shipments, the Group would assumed (sic) the status as the shipper of these shipments, created their own invoices and pretended these were the Group’s genuine sale transactions. The Group submitted their own invoices and the B/Ls as D/P bills to obtain financing from us to repay CILs. The Group charged their customers a premium of 9.5% for this form of settlement arrangement.”

20.The prosecution relied on this evidence as being an admission by the 2^nd applicant that the invoices submitted in relation to the export loans were created as a pretence.

The defence case

21.The 1^st and 2^nd applicants gave evidence at their trial.  Days was a successful company, established in the 1960s.  It had around 40 members of staff and had offices in Tsim Sha Tsui.  It relied on bank financingofimportandexportloans.  Variousbankshadgranted creditfacilitiesformanyyears.  InMarch2011,ithadcreditfacilities of $447 million.  The bank loan applications were not fraudulent.  Certainly, they were not known to the applicants to be fraudulent.

22.Priya and Sadrudhin Sumar entered into direct buying arrangements with Days, in which the former two companies ordered goods from Oscoda directly.  Days’ role was to provide finance.  It through export loans raised with its banks.

23.Of the alleged circular flow of funds, the 1^st and 2^nd applicants did not know that monies were going from Oscoda to Wall Street.[20]  They did not have control of Oscoda.[21]

24.Although the prosecution had called a number of witnesses involved in the shipping and logistics business who testified that they had never heard of Opus Container Lines SA, the prosecution had not proved that it did not exist.[22]  Mistakes could happen in documentation describing container numbers.

25.It was contended that Mr D’Silva of Wall Street and Ms Shannon Lau were unreliable witnesses.  Mr D’Silva’s evidence that the 2^nd applicant had told him that Oscoda was a company that was “one of my own” was of a conversation which he said had occurred in the period 2004-2006.  He had no record to remind himself of what had been said.[23]  Further, his evidence that he had received remittance instructions by telephone from the 2^nd applicant at 4:25 p.m., five minutes before the banks closed, was not credible: he acknowledged that he had no control over when a CHATS remittance would be received; all but six of the 161 remittances to the Wall Street Standard Chartered bank account had been made prior to 4 p.m. and it was an admitted fact that the Bank of East Asia’s CHATS Counter service terminated at 2:00 p.m.[24]

26.Ms Shannon Lau’s evidence of what the 2^nd applicant had saidatameetingbetweenbankers,lawyersandthe1^stand2^nd applicantson　31　August　2011　was　unreliable.  She　made　no contemporaneous note of those events, making a note only eight days after the meeting.[25]  She accepted that in making it she had used her own words to describe some of what the 2^nd applicant had said, and that she could not remember what the position was in respect of other phrases.[26]

Grounds of appeal against conviction

27.Mr Marash SC, advanced four grounds of appeal against conviction on behalf of the 1^st and 2^nd applicants.

Dishonesty

28.By Ground 1, it was submitted that the judge erred in his directions to the jury in respect of the element of dishonesty in the offence of conspiracy to defraud.[27]  He did so by inviting the jury to have regard to matters outside the period of the conspiracies, which were neither proved nor attributable to the applicants: namely, the death of Ms Miranda Law; the departure from Hong Kong of Mr Mhaske; and the illness of Mr Vangani.  The error in that direction was not remedied by the judge’s subsequent further directions.[28]

Inadmissible banking record

29.By Ground 2, it was argued that the internal report of the 31 August 2011 meeting made by Ms Shannon Lau was inadmissible and it was submitted that the judge erred in admitting that evidence.[29] Neither of the applicants had confirmed or had the opportunity to correct its contents.   Ms Shannon Lau did not make notes during the meeting and her record was compiled from what she understood the 2^nd applicant to have meant.  The judge was in error to rule that the record fell within section 20 of the Evidence Ordinance.  The judgments of the Court of Appeal of England and Wales in R v. Dadson [30] and Re Howglen Ltd, [31] in the context of the Bankers’ Books Evidence Act 1879, were relevant to an interpretation of section 20.  In that regard, the court was invited to note the dissenting judgment of Keith J, as he was then, in this court in R v. Law Ka Fu [32].

Conspiracy

30.By Ground 3, it was submitted that the judge erred in his directions on conspiracy, leaving it open to the jury to convict on a general conspiracy to defraud, rather than directing the jury that they must be sure on each specific count.[33]  That was important, since there was evidence of other loan applications with the same banks involving Oscoda, or other suppliers, that were not alleged to be fraudulent.  The judge failed to direct the jury that they must be satisfied that each of the applicants was a party to the conspiracy alleged in each respective count.

Judicial interventions in the course of testimony

31.By Ground 4, it was submitted that the judge intervened impermissibly during the testimony of witnesses in the course of the trial.  In consequence, it was contended that the applicants had been deprived of a fair trial.  The Court was invited to have regard to its judgment in HKSAR v. Lai Oi Yan [34], which reaffirmed the legal principles to which regard was to be had in examining complaints of judicial intervention during the course of a trial, namely:

(i)   the purpose of the interventions;

(ii)   the effect of the interventions; and

(iii)   whether the defendant received a fair trial. 

32.It was submitted that the judge’s interventions in the instant appeal was more intrusive and impermissible than in the circumstances obtaining in HKSAR v. Lai Oi Yan or in the circumstances described in the judgment of the court in HKSAR v. Ye Xin Yuan,[35] in which the judge was also the trial judge.  In consequence of the judge’s interventions in those cases, this Court quashed the convictions of the applicants.

Judicial interventions in the evidence of the 2^nd applicant

33.It was contended that the judge had intervened impermissibly in the evidence-in-chief of the 2^nd applicant, confronting him with the testimony of Mr D’Silva, to the effect that the 2^nd applicant had told him that Oscoda was one of the Days Group companies, and was under its control.  The judge suggested to the 2^nd applicant that the effect of his evidence was that Mr D’Silva was making up or fabricating his evidence [36]. It was the defence case that Mr D’Silva was simply an unreliable witness, given that he was testifying about events which had occurred many years ago.[37]  The judge’s intervention and his final dismissive remark to the 2^nd applicant that the Court “had the transcripts” was inappropriate and partisan.

34.Itwassubmittedthatinaskingquestionsofthe2^ndapplicant,bothinexamination-in-chiefandin cross-examination, the judge mis-described the evidence of Mr Wan Wai Yuen in relation to his examination of the computers and the servers found at Days. [38]  The judge wrongly dismissed counsel’s objection to the questions.[39]  In effect, the judge’s questions invited the jury to infer that the 2^nd applicant had physically removed the hard disc.  In so conducting himself, the judge was acting as a second prosecutor.

35.Next, complaint was made that questioning the 2^nd applicant during his evidence-in-chief concerning his evidence of having physically moved monies between the Days’ companies, rather than doing so on paper only, gave the jury the impression that the judge supported the prosecution allegation that the applicants were trying to conceal the funds by ‘layering’.  The judge wrongly dismissed the 2^nd applicant’s evidence that “layers generally mean when money is going between different parties, to disguise where they are going or where they are coming from, not when you are within a group” by asserting “...not necessarily, in my experience sitting here” [40].

36.Then, it was submitted that the judge had erred in displaying scepticism, by the questions he asked of the 2^nd applicant during examination-in-chief, of his evidence that trade volume was affected by peak seasons, so that the increased use of credit facilities was due to increased trading and not financial difficulties.[41]  Further, in respect of the 2^nd applicant’s evidence-in-chief that Mr Howard Li of HSB had requested only contact details of Oscoda, rather than asking that a meeting with them be arranged,[42] the judge was wrong to suggest to the 2^nd applicant during cross-examination that Mr Howard Li could have obtained contact details of Oscoda from the invoices.[43]  Similarly, in respect of the 2^nd applicant’s evidence, that Hyundai were not interested in Days making reports of their sales figures, the judge was wrong to suggest to the 2^nd applicant during cross-examination, in effect, that his evidence was illogical, since without those sales figures Hyundai would not know how much Days fell short of the sales target.[44]

37.Also, complaint was made that the judge had stopped counsel for the 1^st and 2^nd applicants from asking questions during examination-in-chief of the 2^nd applicant in respect of the difficulties they had in locating documents, which were in the possession of FTI, to support their case.[45]

Judicial interventions in the evidence of prosecution witnesses

38.Mr Marash submitted that the judge had erred in questioning prosecution witnesses in the course of their evidence.

Howard Li

39.Mr Marash complained that in the course of cross-examination of Mr Howard Li the judge had wrongly intervened in an attempt to establish that less detailed information was contained in invoices in the name of Oscoda than was to be found in the invoices of other suppliers.[46]  However,heacceptedthatthewitnesshadsaidthathedidnotfindthedetailintheinvoicesinthenameofOscodaas being unusual.  Furthermore, complaint was made that in the cross-examination of that witness, as to the efforts to which the bank went in compiling credit reports, the judge had undermined the objective pursued on behalf of the applicants, by inviting the witness to confirm that it was his evidence that the reports were a “cut and paste” effort from previous reports.[47]

Larry Kwong

40.Next, complaint was made that after the re-examination of Mr Larry Kwong, the judge had elicited evidence from the witness that the bank required that the drawer be the genuine applicant and the supporting documentation be genuine before a loan would be approved.  The Court was asked to note that objection had been taken to the judge’s questions, it being contended that those were questions that came more properly from the prosecution.  

Ms Shannon Lau

41.Then, complaint was made that, in the course of cross-examination of Ms Shannon Lau, when it was suggested that it was “possible” that her written reports reflecting the meeting of 31 August 2011 contained mistakes and was inaccurate, the judge was in error to have stated “anything is possible under the sun...we’re not talking about possibilities, probabilities.” [48]

Jerome D’Silva

42.Also, complaint was made that the judge had erred in interrupting the evidence of Jerome D’Silva in cross-examination, in engaging in a dispute with counsel for the applicants as to the witness’s evidence-in-chief, and then in asking questions of the witness of his earlier testimony that the 2^nd applicant had told him that Oscoda was one of the Days’ group of companies.  It was submitted that the questions were designed impermissibly to bolster that evidence.[49]

The respondent’s submissions

Dishonesty

43.Mr Choy submitted that if it was proved that the applicants knew that they were making false statements to bankers in order to obtain credit from them, realistically the question of their dishonesty cannot have been in issue.  The judge did make it clear that the jury had to be satisfied as to the intention of the applicants at the time of the alleged offences.

Banking record

44.Mr Choy contended that the judge was correct to admit into evidence, pursuant to section 20 of the Evidence Ordinance, the credit report and memorandum of Ms Shannon Lau.  The document was recorded in the ordinary course of business of HSBC and was in its custody and control.

Conspiracy to defraud

45.Mr Choy submitted that, having regard to the summing up as a whole, the jury was directed correctly that before they could convict the applicants on any of the counts they had to be satisfied so that they were sure that the prosecution had proved that the particular applicant was guilty of that count.  The judge did not leave it open to the jury to convict on a general conspiracy to defraud.  Rather, the jury was directed to consider the specific allegations stipulated in the various counts on the indictment.

Judicial interventions in the course of evidence

46.Of the judicial interventions in the course of the evidence of the applicants, Mr Choy invited the court to have regard to the length of time over which the applicants had testified.  The 1^st applicant gave evidence over a period of five days, three days of which were his evidence-in-chief and two of which were cross-examination and re-examination.  For his part, the 2^nd applicant gave evidence over a period of six days, 3½ days of which were evidence-in-chief and the balance was cross-examination and re-examination.  In that context, he submitted that the judge’s interventions were isolated and relatively infrequent events.

A consideration of the submissions

Judicial interventions

47.In dismissing an application for leave to appeal against conviction in the judgment of the majority in the Appeal Committee of the Court of Final Appeal in Chan Kam Keung v HKSAR, Li CJ said of complaints of judicial intervention in the course of the trial: [50]

“ ...the test generally applied where curial interventions are alleged to be such as to call into question the fairness of the trial is that enunciated by the Court of Appeal in R v Yeung Mau Lam [1991] 2 HKLR 468 at 473. While the Court was there dealing mainly with judges descending into the arena by asking too many questions, the broad principle is stated in the following terms:

“The ultimate question for the consideration of an appellate court is whether the judge’s conduct was such that it would have caused the informed bystander listening to the case to say that the defendant had not had a fair trial.”

The Court of Appeal added:

“We think it appropriate also to emphasize that a court, when considering the propriety of interventions by a judge, must bear in mind that it is the judge’s duty throughout to ensure that a trial is properly and coherently conducted.” ”

48.In the judgment of this Court in R v Yeung Mau Lam [51], in respect of a submission that the District Court judge had asked an excessive number of questions of the applicant in his testimony [52], Power JA said:[53]

“ As we have said it is desirable that a judge, if he needs to clarify matters, should do so at the conclusion of either cross examination or re-examination.”

49.However, Power JA went on to say of the particular circumstances of the case:[54]

“ The judge was, however, in some difficulty in this regard in the present case...we have no doubt that if the judge had let all the matters about which he asked questions rest until what is normally considered to be the appropriate time, satisfactory elucidation thereof would have been difficult and protracted, if not impossible.”

50.In the result, the Court concluded:[55]

“ ...there was nothing in the questioning of the applicant by the judge which either indicated bias or prevented the applicant from giving evidence in his own way, nor do we think that he interfered with the applicant in placing his defence before the court. It is plain to us that there was an attempt by the applicant to obfuscate and confuse...”

Obviously, those are highly germane considerations, in particular in respect of interruptions of the evidence of a defendant.

51.Of the judicial interventions during the evidence of two defence witnesses, the Court concluded:[56]

“ We are satisfied that the judge when questioning this witness gave the appearance of having taken over the cross-examination and of having entered the arena. The fact that the witness was asking the court to give credence to a convoluted and contradictory tale, which was, on its own face, implausible, explains, but cannot justify, such questions.”

52.Nevertheless, the Court went on to dismiss the appeal determining that:[57]

“ ...the evidence against the applicant was overwhelming and no miscarriage of justice has been occasioned by the crossing of the borderline by the trial judge. That which he did did not render the applicant’s trial unfair...”

53.In the Privy Council’s advice in Michel v The Queen [58], that the appellant’s convictions be quashed having regard to the number and character of the interventions of the Commissioner during the evidence of prosecution witnesses, as well as that of the appellant, both in evidence-in-chief [59] and in cross-examination, reference was made to the authorities on the issue of judicial intervention in the course of a trial.  Lord Brown said:[60]

“ Many take as their starting point the decision of the Court of Appeal in R v Hulusi (1973) 58 Cr. App. R 378, 382, adopting as it did Lord Parker CJ’s statement of principle in R v Hamilton [1967] Crim LR 486 :

“Of course it has been recognised always that it is wrong for a judge to descend into the arena and give the impression of acting as advocate... Whether his interventions in any case give ground for quashing a conviction is not only a matter of degree, but depends to what the interventions are directed and what their effect may be. Interventions to clear up ambiguities, interventions to enable the judge to make certain that he is making an accurate note, are of course perfectly justified. But the interventions which give rise to a quashing of a conviction are really three-fold; those which invite the jury to disbelieve the evidence for the defence which is put to the jury in such strong terms that it cannot be cured by the common formula that the facts are for the jury.... The second ground giving rise to a quashing of a conviction is where the interventions have made it really impossible for counsel for the defence to do his or her duty in properly presenting the defence, and thirdly, cases where the interventions have had the effect of preventing the prisoner himself from doing himself justice in telling the story in his own way.” ”

54.Nevertheless, Lord Brown said that “If the three Hamilton grounds were indeed the only grounds on which convictions fall to be set aside for excessive judicial intervention in the trial process, the Board might be disinclined” to allow the appeal.[61]  However, he went on to say:[62]

“ There is, however, a wider principle in play in these cases merely than the safety, in terms of the correctness, of the conviction.  Put shortly, there comes a point when, however obviously guilty an accused person may appear to be, the appeal court reviewing his conviction cannot escape the conclusion that he has simply not been fairly tried: so far from the judge having umpired the contest, rather he has acted effectively as a second prosecutor.  This wider principle is not in doubt.  Perhaps its clearest enunciation is to be found in the opinion of Lord Bingham of Cornhill speaking for the Board in Randall v R [2002] 2 1 WLR 2237, 2251 para 28 where, after remarking that “it is not every departure from good practice which renders a trial unfair” and that public confidence in the administration of criminal justice would be undermined “if a standard of perfection were imposed that was incapable of attainment in practice,” Lord Bingham of Cornhill continued:

“But the right of a criminal defendant to a fair trial is absolute. There will come a point when the departure from good practice is so gross, or so persistent, or so prejudicial, or so irremediable that an appellate court will have no choice but to condemn a trial as unfair and quash a conviction as unsafe, however strong the grounds for believing the defendant to be guilty. The right to a fair trial is one to be enjoyed by the guilty as well as the innocent, for a defendant is presumed to be innocent until proved to be otherwise in a fairly conducted trial.”

Lord Bingham was, of course, right to recognise that by no means all departures from good practice render a trial unfair.  So much, indeed, was plainly implicit in the judgment of the European Court of Human Rights in CG v United Kingdom (2001) 34 EHRR 31, 789 which rejected the complaint that the trial proceedings as a whole were unfair notwithstanding the court’s finding that the judicial interventions had been “excessive and undesirable”.  Ultimately the question is one of degree.  Rarely will the impropriety be so extreme as to require a conviction, however safe in other respects, to be quashed for want of a fairly conducted trial process.”

55.Those authorities were cited with approval by McWalters JA in the judgment of this Court in HKSAR v Lai Oi Yan, in which the applicant’s convictions, after trial by the same judge and a jury, of two counts of conspiracy to steal were quashed, having regard to the judge’s interruptions of the evidence of the appellant in evidence-in-chief and in cross-examination. [63]  This Court was critical of the judge’s intervention in examination-in-chief in asking questions “...not in clarification but simply pursuing a line of cross-examination of his own.” [64]  Similarly, this Court was critical of comments made by the judge during evidence-in-chief of the applicant to the effect that he did not understand her evidence or that it made no sense to him. Of the latter comment, McWalters JA said:[65]

“ Denigrating the applicant’s evidence in this way in front of the jury is completely unjustified and should not have happened”

56.Of considerable significance in that case was the judge’s intervention in cross-examination of the applicant in which, “...he conveyed the impression that an unauthorised accessing of a computer, even if done for a proper motive, may be dishonest.” [66]  Of that, McWalters JA said:[67]

“ The judge’s comments were damaging to the applicant’s credibility and were wrong as a matter of law; motive for a person’s conduct can be highly relevant to the assessment of whether that conduct is dishonest. And, of course, the applicant’s motive for possessing these computer printouts was key to the probative value of the evidence of her possession of them. In these circumstances it was highly prejudicial to the applicant for the Judge to leave the jury with the impression that the applicant’s conduct, irrespective of her motive, may have been dishonest.”

Judicial interventions in the evidence of the 2^nd applicant

57.It is to be noted that the complaint made in respect of the judge’s interventions in the course of the evidence of the applicants was not as to the number of those interventions.  Rather, it was as to their character. 

58.In the course of the evidence of the 2^nd applicant, in which he responded to questions posed by his own counsel in respect of Mr D’Silva’s evidence, the judge intervened, posing questions.  The context of the intervention is highly relevant.[68]

“ Q. The next matter Mr D’Silva in his evidence said that he presumed that you had control over Oscoda as Days would send a fax, the transfers were made five minutes before 1630, 4.25 pm.

A. To that I would say that he is grossly incorrect, because I have checked on the committal bundle on the transactions that have been sent out of Bank of East Asia and those transactions never went out at 4 o'clock or after.”  [Italics added.]

59.It is to be noted that, in cross-examination of Mr D’Silva, it had not been suggested that there was documentary evidence that contradicted his evidence in the way in which the 2^nd applicant asserted.

60.Of the context of Mr D’Silva’s evidence, the judge in effect reminded the 2^nd applicant that Mr D’Silva’s evidence on that matter was not only in respect of the narrow period of March to September 2011, but of an earlier period.  The judge said:[69]

“ COURT: Well, he wasn’t talking about exclusively, only those payments relating to, say, Charge 1 to 6, he was talking a sort of, it was generally, that’s his impressions.”

61.Then, as he requested, the 2^nd applicant continued with his response:[70]

“ A. I went down to the Bank of East Asia recently to confirm with them what time in fact is their cut-off time for making payments and they advised that, although it is currently at 4 pm, during the charge period in 2011 counter transactions that were delivered to the bank after 2 pm would not be processed until the next business day and any transactions processed through their internet banking system cut off at 2.30 pm. So therefore there was a physical impossibility of any transaction going out after 2.30. I would like to add further that if, in fact, I had the control over the Oscoda bank account and if I was able to direct payments from that account, I certainly would not have sent a certain amount at 2 pm or before and then change the instruction with Wall Street at 3 o’clock and advise them to hold an overpayment or under-payment. Therefore, if I had control over the account, I would have sent the exact amount that I wanted to send to Wall Street.”

62.Next, the following interchange ensued, which is the subject of complaint by the 2^nd applicant:[71]

“ Q. Now, Mr D’Silva’s allegation that you would call him at 4.25 pm, what do you say to that?

A. That didn’t happen. If I wanted to have money in the account to use to pay import loans and if I called him at 4.25, it wouldn’t reach my bank in time for me. At 4.25, the wire has to go to him. He has to send his messenger to deposit money into Days’ bank account and then...

Q. Just slow down, please.

A. ...by the time he would have received the money in his account and send someone down to the bank, the bank would have been closed. And then if I had to move the money to another bank to pay an import loan somewhere, I too wouldn’t be able to move the funds, so he is grossly incorrect.

Q. Did you...

COURT: Well, if you are right then he was not grossly incorrect, in fact he was making up evidence.

A. My Lord, I believe that when he was referring to this, this was his belief as to why he believed Oscoda was controlled by me.

COURT: I think he also mentioned in his evidence that you had mentioned to him on occasions that Oscoda was part of your company.

Q. Now, Mr Dayaram, you have heard..

COURT: So what do you want to say about that?

A. I have never said that to him.

COURT: Right, so again, this part of the evidence was made up by him, fabricated by him?

A. In the beginning of his evidence I believe he said that he asked me this question and I said it was part of my group. And later on in the evidence he was asked that, “What made you think that Mahesh was in control of Oscoda?” and he gave a different answer at that point.

COURT: No, no, he said two different things. He said first of all you have mentioned that, and secondly, because you were able to say, ‘I transfer money’ at say, 4.25, etc, just prior to the bank closed.

A. Well, to that I would say it is a physical...

COURT: No, I don’t want to go into a discussion...

Q. Mr Dayaram...

COURT: ...because we have the transcripts actually.”  [Italics added.]

63.We accept that there is force in Mr Marash’s complaint that the judge ought not to have intervened on this issue, most particularly during the evidence-in-chief of the 2^nd applicant.  As noted earlier, generally a defendant ought to be afforded the opportunity to give an uninterrupted account of events in evidence-in-chief.  Although, the 2^nd applicant’s counsel had raised the issue of what the 2^nd applicant had to say about Mr D’Silva’s evidence about receiving telephone calls from the 2^nd applicant shortly before the banks closed at 4:30 p.m., he had not reached the issue of what it was the 2^nd applicant had to say about Mr D’Silva’s testimony that he had said of Oscoda that “It was one of our group”.

64.For his part, Mr Choy accepted that the judge ought not to have suggested to the 2^nd applicant that the effect of his evidence was to characterise Mr D’Silva’s evidence as made up or fabricated.  We are satisfied that the judge’s intervention was unwarranted.  There was no need or justification for the intervention of the judge at that point, let alone one in which he characterised the evidence as having that effect.  It was an argumentative manner of raising the issue.  Moreover, it led to, and was calculated to lead to, an affirmative response from the 2^nd applicant to the proposition of fabrication by Mr D’Silva.  What was required from the witness was his evidence on the point.  It was for the jury to determine which, if any, of the evidence was to be accepted.

65.In the event, immediately after the judge’s intervention, counsel for the applicants posed a series of questions to the 2^nd applicant, which addressed the remaining issues that arose:[72]

“ Q. ...can I just ask you this, just did you or Days have any control over Oscoda, yes or no?

A. No, it did not.

Q. Did Days’ companies have control over Oscoda?

A. No, we did not.

Q. Did you make any remittance on behalf or controlled remittance on behalf of Oscoda to Wall Street Exchange?

A. No, we did not.”

Mr D’Silva

66.In his evidence, Mr D’Silva said that he had been the operations manager of Wall Street from 2002 to September 2014.  It was in the business of money exchange and remittances.  He began to deal with the Days’ companies in 2002-2003.  In doing so, he dealt with the 2^nd applicant, representing the Days’ companies.  Wall Street received remittances from Oscoda, of which he was forewarned by the 2^nd applicant.  In that context, he had conversations with the 2^nd applicant both before and after he received faxes addressed to him on the letterhead of Days Impex.  As an example, he testified that by such a fax dated 27 April 2011 he was advised:

“ We today have sent through CHATS [a stipulated amount of US dollars] to your Standard Chartered Bank account.”

There then followed remittance instructions, in which sometimes he was directed to state that the remittance was “By Order Of: PRIYA INTERNATIONAL”.[73]  His Standard Chartered Bank documentation stated that the payment had been made by Oscoda.[74]

67.It is to be noted that, although the remittance was made by Oscoda, the 2^nd applicant had asserted to Mr D’Silva of the remittance to Wall Street “We today have sent through CHATS”.

68.Of what he knew of Oscoda, the following interchange ensued in Mr D’Silva’s evidence-in-chief:[75]

“A.    Oscoda Electronics Limited actually where I used to work with Wall Street in the course of dealing with Mahesh I did ask him -- I remember asking him the relationship and he said, “It is our own group.”

COURT:  Sorry, he said, “It is our own group”?

A.   Yes.

A.   And how do I know that it is his own group, basically whenever he used to call me, say around 4.30 the bank is closed, bank...

COURT:  4.30, yes.

A.   4.30 in the afternoon.  So in case sometimes if he is not in the office, if he comes late, even at 4.25 if he calls me I have to remit out some payment, “I will remit to you immediately now.”  He used to do even five minutes before the bank closed, he used to remit the money.  So I -- basically, he had the whole control of this company called Oscoda Electronics Limited because if he doesn’t then it will be impossible to transfer funds within five minutes before the bank closed.  So many times I asked him, he said, “It’s one of my own.”

Q.   Mr D’Silva, we have to go a little bit slower here.

A.   Yes.

Q.   You said you have spoken to Mr Mahesh and asked him about Oscoda.

A.   Yes.

Q.   When did that happen?

A.   It’s very difficult because the span, time limit was, I mean the span was almost 12 years, so probably maybe in somewhere in 2004, 5, 6.

Q.   And did you speak to him about this more than once?

A.   Probably once, twice, not every time, but yes, but as far as I knew he had the whole control of this company.

Q.   And may I ask you this, why were you interested in who was controlling Oscoda?  Why did you ask Mr Mahesh Dayaram about this?

A.   Well, we are in the money exchange business, so our -- we don’t lend nor borrow, so basically we need to check sometimes where the money, like who the controlling.  We come to know only by like, you know, when he talks he sends out...

A.   ...I mean basically, in the course of business we happen to know basically where the funds can come immediately by talking to him, so there is -- I mean I have no basically like who is the controlling or what I don’t know about it, but I knew one thing.  If he says, “I am sending the funds,” even just about bank to be closed, I know, yes, the money is going to come from Oscoda.  They know -- like I have no what we call interest as such, like who is controlling or not, but I know the funds will come when he speaks to me, even before the bank can get closed at 4.30.”  [Italics added.]

69.In cross-examination of Mr D’Silva, Mr Blanchflower said:[76]

“ I (have) just one last question is that, Mr D’Silva, in your evidence this morning when you spoke about Oscoda you said that Mr Dayaram said it was one of his companies.”

70.Following an interchange between the judge and Mr Blanchflower as to the accuracy of that question in the context of Mr D’Silva’s testimony, Mr Blanchflower resumed his cross-examination:[77]

“ Q. Mr D’Silva, I just suggest to you, and I will just put the case that Mr Mahesh Dayaram did not say that he controlled the whole thing, or controlled Oscoda. I just suggest that to you that you are -- he didn’t say that.

COURT: Do you agree or disagree with the suggestion?

A.   No, I disagree.”

71.Then, there being no questions in re-examination, after a short adjournment to allow the judge to listen to the audio tape recording of his evidence, the following interchange ensued between the judge and Mr D’Silva:[78]

“ Q. Now, let me just clarify with you the position. So tell me if I am correct or not. Now, first of all you disagree with the suggestion made by Mr Blanchflower that Mr Mahesh Dayaram did not tell you that he had the whole control of the company. So in short your evidence is that Mr Mahesh Dayaram did inform you more than once that he had the whole control of the company, correct or incorrect?

A. He did mention to me that it is one of the group.

Q. Yes, but your evidence is that that’s what he said, but whether he actually had the control of the company you do not know.

A.   Paper-wise I do not know.”

72.Of Mr D’Silva’s evidence of the 2^nd applicant’s practice of informing him about the remittance of monies, the following interchange ensued:[79]

“ Q. ...All you know is that he can sometimes call you five minutes before the banks closed.

A. Oh, yes.

Q. And then he would call you and he would tell you that he had to remit some payment and that he would remit the money to you.

A. Yes, sir.

Q. So you say if he doesn’t have the control it was not possible for him to transfer funds within five minutes.

A.   Yes, sir.”

73.Subsequently, he concluded by saying:[80]

“ Basically, I presume that he has full control of the...

Q. Of the company?

A. Basically, you see what happened in our type of business even you cannot remit funds...

Q. You could not remit funds.

A.   ...without having full control of all that, what do you call, the company.”

74.In his closing speech for the 2^nd applicant, Mr Blanchflower invited the jury to conclude that Mr D’Silva had changed his evidence and that at the end of the day it was a presumption on his part that Oscoda was a company controlled by Days:[81]

“ Presume is not evidence. I’m not going to leave it at that. You may find that D’Silva is not reliable, or you may find that you reject his evidence entirely as not credible for three reasons:” [Italics added.]

75.Of the reasons advanced for inviting the jury to conclude that Mr D’Silva was not credible, Mr Blanchflower suggested, first that Mr D’Silva acknowledged that he had no control over when a CHATS remittance would be received.  So, what was the point of making a telephone call five minutes before close of banking?  Secondly, he said that all but six of the 161 remittances to the Wall Street Standard Chartered bank account had been made prior to 4 p.m.  Thirdly, it was an admitted fact that the Bank of East Asia’s CHATS Counter service terminated at 2:00 p.m.

76.In result, the Mr Blanchflower said:[82]

“ So what does that tell you of D’Silva’s evidence that he was so, so sure of and that he said, and the prosecution has relied on? So I don’t want to pre-empt you but I would say, and it’s a matter entirely for you, that there is compelling evidence to put at the very least a strong question mark between either accept D’Silva or reject his evidence on that.”

77.So contrary to Mr Marash’s written submissions, issue was taken with Mr D’Silva not only with his reliability but also with his credibility.

78.In his summing up, the judge reminded the jury of the 2^nd applicant’s evidence in respect of Mr D’Silva:[83]

“ D2 also claimed that he had never told Mr D’Silva that Oscoda was part of the group or company. D2 had also never called up Mr D’Silva, say, at 4.25, five minutes before the bank closed, to inform him that money had arrived. Not only Mr D’Silva was grossly incorrect, he also made up this part of his evidence.”

79.Of the defence case in respect of the late remittance of monies to Wall Street by the 2^nd applicant, the judge reminded the jury:[84]

“ ...from bank records one can see that in respect of the 161 import loans that the forensic accountant had examined, in only 10 cases money was remitted into Wall Street’s Standard Chartered Bank account on or after 4 pm ...because you can see that in MFI-7.”

80.Although, as we have said, it was a wholly unwarranted intervention of the judge to interrupt examination-in-chief of the 2^nd applicant and to suggest to him that the effect of his evidence was that Mr D’Silva’s evidence was made up or fabricated, nevertheless it is clear that was a part of the 2^nd applicant’s case, in particular in respect of Mr D’Silva’s evidence of transactions with the 2^nd applicant at 4:25 p.m.  We are satisfied that this intervention did not in any way undermine the defence case or prevent the 2^nd appellant from adducing the evidence he wished to put before the jury.  Moreover, it did not misrepresent the defence case.

Forensic examination of the Days’ computers

81.In examination-in-chief, MrBlanchflower drew the attention of the 2^nd applicant to the evidence of Mr Josh Wong of FTI, in particular “...his evidence of finding an empty server.” [85] [Italics added.]  Counsel then referred the 2^nd applicant to a quotation and an invoice from Macro Systems, the former dated 20 October 2010 and the latter dated 16 December 2010 [86].  The 2^nd applicant testified that the documents related to the purchase of a new server for Days Impex, which was delivered on 16 December 2010.[87]

82.Then, the following interchange ensued between Mr Blanchflower and the 2^nd applicant:[88]

“ Q. So what was Days purchasing from Macro Systems?

A. Well, amongst other things on the invoice, they were buying a new server. The servers that are purchased, they have a three year warranty, and after 3 years, the cost of the warranty on an annual basis, if multiplied by three come very close to the cost of a new server. So when three years are complete on any server, I ask Oshok to check what the price of a new server is, versus the cost of an annual maintenance for 3 years. If it is fairly close to the cost of a new server, I will instruct him to buy a new server.

Q. So this is the Days purchase of a new server in late October 2010.

A. That’s correct. Actually, in the evidence that was given previously, it was noted that the server in the office was newly installed but in fact, the server was installed in December 2010.

Q. So moving forward, if we could...” [Italics added.]

83.On its face, the 2^nd applicant’s reference to “evidence that was given previously”, was to the evidence of Mr Josh Wan to the effect that a server in the Days’ offices was installed a few days before 14 September 2011, when he examined that server. It is to be noted that, in cross-examination of Mr Josh Wan, there was no challenge to that evidence.  Certainly, it had never been suggested to him that the server had been installed in December 2010.  No request was made of the judge to have Mr Wan recalled to give evidence on the issue of whether or not as at 14 September 2011, a server was newly installed or in fact had been installed in December 2010.

84.In face of that evidence of the 2^nd applicant, the judge intervened:[89]

“ COURT: I think that’s not his evidence. I think his evidence is that, in fact, he was talking about a new server, rather than this server, Mr Wan. So that’s the implications of his evidence.

A. This was the server he was referring...

COURT: This was the new server, according to you, but according to him, some of the contents here have been emptied. So your new server is not his new server.

MR BLANCHFLOWER: My Lord, can we just have a moment, in the absence of the jury?

COURT: Yes.  Could you excuse us, please?”  [Italics added.]

85.The judge’s reference, in the passive past tense, to the server, namely that “...some of the contents here have been emptied” was inaccurate.  Similarly, earlier in examination-in-chief of the 2^nd applicant Mr Blanchflower was inaccurate in describing Mr Wan’s evidence as being that the server was “empty”.  As is noted subsequently, Mr Josh Wan had said that one server had been partitioned and that no data found to be stored on it, other than in partition C.  He gave no evidence as to whether or not at some earlier time data had been stored on the other partitions.

86.Although complaint was made in this Court of the judge’s inaccurate statement in that respect, no objection was taken at trial.  Indeed, in his closing speech Mr Blanchflower said that neither the 1^st nor 2^nd applicants knew “...how the server became empty and that was not challenged”.[90]  That submission resonated with the evidence-in-chief of the 1^st applicant, who testified that he had “no knowledge” in response to being asked “...you have heard the evidence of Josh Wan, do you have any knowledge as to how the server came to be empty when it was inspected?” [91]  Finally, in his closing speech Mr Blanchflower reminded the jury that Mr Wan “...did not say when, why or how the server became empty.” [92]  Clearly, albeit strictly inconsistent with the evidence, there was no issue that the server became empty.  There was no direct evidence of how and when that had happened.  In those circumstances, we are satisfied that the judge’s intervention was of no significance to the fairness of the trial.

87.In the absence of the jury, the following interchange ensued between the judge and Mr Blanchflower:[93]

“ MR BLANCHFLOWER: I am concerned, Mr Dayaram is doing his best to try and recount what...

COURT: I understand that, yes of course.

MR BLANCHFLOWER: ...he understands the witness says.

COURT: Yes.

MR BLANCHFLOWER: I am concerned with when your Lordship gets into a discussion or a disagreement with him and what impression that is upon the...

COURT: I’m simply pointing out the evidence of Mr Wan.

MR BLANCHFLOWER: Mr Dayaram is obviously trying his best, to recount what he understood or remembers Mr Wan to say. And if there is needs to be correction, I’m sure that my learned friend would correct it in cross-examination, but...

COURT: Well, I can correct it any time, can I not?

MR BLANCHFLOWER: Well, I think we need to put it in context. He said “This is the server”...

COURT: I’m giving him a chance to explain. I’m not cross-examining him as such.

MR BLANCHFLOWER: Well, with respect, the way, and my impression is that there was leaning to be a contradiction with Mr Dayaram, and it may leave a very harmful impression upon the jury.

COURT: No, no, that happens all the time in my trials. In any of my trials.

MR BLANCHFLOWER: Very well.

COURT: So you see, sometimes you ask the witness, whether it’s a prosecution or whether it’s a defence witness, the allegation made by the prosecutions and then see the explanation given. Somehow, you know, he has to confront this, I think.

MR BLANCHFLOWER: Very well. I’m just wondering whether it could be done in a much more gentle fashion, if there is.

COURT: Well, there’s no such thing as gentler fashion, all right.

MR BLANCHFLOWER: Very well. I’ll leave it to your Lordship.

COURT: All right, thank you. If you wish, you can ask Mr Dayaram the questions, you know. But it seems to me, that’s the evidence. There’s no point in sort of painting a sort of a softer version of Mr Wan’s evidence. That’s his evidence.

MR BLANCHFLOWER: I realise that.

COURT: Yes.

MR BLANCHFLOWER: It was just the impression in the period that your Lordship was confronting and cross-examining this witness.

COURT: This is the only question I ask of today really, isn’t it? I mean, I have kept my mouth shut for a very long time, honestly speaking.

MR BLANCHFLOWER: Very well. Thank you.

COURT: Yes, thank you.  This is something he has to explain anyway, right?   Yes, let’s have the jury back, please.”

88.Given that the 2^nd applicant was testifying in his evidence-in-chief, it is difficult to understand what imperative it was that the judge felt required him to intervene at that stage.  There was no such need.  If the apparent conflict between the evidence of the 2^nd applicant and Mr Josh Wan remained unresolved at the conclusion of cross-examination and re-examination, it might have been appropriate for the judge to raise the matter with the 2^nd applicant then.

89.The judge’s statement “...that happens all the time in my trials” appears to have been explained by what he said immediately afterwards, namely:

“ ...sometimes you ask the witness, whether it’s a prosecution or whether it’s a defence witness, the allegation made by the prosecutions and then see the explanation given. Somehow, you know, he has to confront this, I think.”

If by that, the judge is to be taken to have meant that it was his practice to confront a defendant in his evidence with the contradictory accounts of prosecution witnesses, the judge was in error.  It was not for him to abrogate to himself a practice different from that to which the authorities, which we have cited, establish and which obtains in all courts.  On the other hand, if he meant that in any trial at some stage a defendant has to deal with the material evidence adduced by the prosecution, the judge was stating the obvious.  He was correct to invite Mr Blanchflower, if he wished to do so, to pose questions going to those issues.

90.On the return of the jury, and the 2^nd applicant insisted on giving further testimony on the issue:[94]

“ Q. Moving ahead...

A. Can I -- sorry, can I just complete that one item to his Lordship?

COURT: Yes.

A.   There was no new server purchased in September 2011.”  [Italics added.]

91.Clearly, notwithstanding the judge’s intervention, the 2^nd applicant was in no way daunted in giving the evidence on the issue that he wished the jury to hear.

92.Subsequently, in the course of cross-examination the judge intervened again on the same subject, as counsel for the prosecution put his case that the 2^nd applicant had instructed Ashok Masati, a Days’ employee, to wipe out all the data on the servers.  As is apparent from the interchange between the judge and the 2^nd applicant, the latter instigated that dialogue:[95]

“ Q. Now, following 31 August, I suggest to you that in anticipation of HSBC and Hang Seng Bank appointing provisional liquidators did you instruct Ashok Mesati(?) to wipe out all the data on your servers?

A. I did no such thing. In fact, in yesterday’s discussion, your Lordship asked about me querying about the servers and whether the server that was on the invoice was actually the server that was examined.

COURT: No. In fact, that’s not what I meant. I understand the invoice produced from you, right? That’s the -- I forgot the date now. It’s some time in 2010.

A. December 2010.

COURT: Yes. But when I asked you that particular question, I was in mind of Mr Wan’s...

A. Josh Wan, yes.

COURT: Mr Wan’s evidence. Because he said that on 14 September he went down to the office and then when he examined the servers, there were four servers but he said he examined probably three or four but definitely more than one, and there was one server, the name was labelled ‘dayshongkong’ one word. That’s his evidence. Then when he examined this particular server there were, inside, a number of different partitions or compartments.

A. Correct.

COURT: He notes that in one of these partitions which has the alphabet of C, local C drive, local C disk, when he examined that, when he examined the installation date of that particular hard disk, he notes that the installation date was only a few days before 14 September. So that is what exactly I meant. The server that you were talking is not the server that Mr Wan was looking at. Now I put everything in context.

A. Yes.” [Italics added.]

93.Given that the 2^nd applicant was being cross-examined by counsel for the prosecution and had been cross-examined for more than a day and a half, notwithstanding the invitation of the 2^nd applicant to do so, it is difficult to understand why the judge engaged the applicant again.  That was a matter for counsel.

94.It is to be noted that Mr Wan had never testified that he had “examined probably three or four” servers.  Initially, he said that he had carried out an imaging exercise on servers, “I think three or four.” [96] 　However, in cross-examination, having said of the number of servers at Days’ offices that “It seemed there were four”, Mr Wan said that he had not “looked at” all four servers.　 He agreed that his colleagues, Patrick Ma and Leslie Leung had looked at some of the four servers. 　Neither of those persons was called to give evidence. 　But, when it was suggested that he had “looked at one” server only, Mr Wan said “More than that”, but he could not remember how many.[97]  So, the judge’s reference to that evidence was correct.  Equally, he was correct to refer to Mr Wan as having said that the server had been installed a few days before 14 September 2011.

95.Having indicated that he understood what the judge had said and having said “I did understand it yesterday and I would like to explain” the 2^nd applicant went on to say:[98]

“ A. ...that basically there were actually two invoices of two purchases of server. One was in December 2010 and one was in April 2011. For some reason, in the defence bundle only one has been produced but both were located when we were at FTI and both of them, when delivered, were installed immediately by Macro Systems. Yesterday, after examination, I contacted Macro Systems and requested them for delivery notes indicating the serial numbers of the servers, and once received, it can be compared with the serial number of the machine that was examined by Josh Wan, and that would be the only way to explain that the servers were the servers that were purchased in those invoices and not purchased a few days earlier to September 14th. To that I want to add one more thing. When we purchased from Macro, we had credit terms from them and if you note on the invoice the payment was made several months later. If there was a brand new server purchased in September of 2011, this invoice would have been outstanding and Macro would have been on the creditors’ list.

COURT: That’s not the allegation. I am afraid the allegation is that this new server, this particular one - that with the dayshongkong - in fact is not the original one and it has been replaced. That is the allegation.

A. Yes, my Lord, but what I am saying is if it was replaced the invoice would be outstanding.”  [Italics added.]

96.Again, it is clear that, far from being hindered in giving the testimony that he wished to place before the jury, the 2^nd applicant was proactive in advancing that evidence.  It is to be noted that, notwithstanding the 2^nd applicant’s assertion that the defence had located a second invoice at FTI relating to the purchase of a second server in April 2011 and that he had requested Macro Systems to provide him with copies of the related delivery note, no such evidence was adduced at the trial.

97.Having been referred by the judge to references in the Macro Systems’ invoice and quotation to “SYMC BACKUP EXEC 2010 SERVER”, the 2^nd applicant said:[99]

“ A. Yes. This is a software, Symantec backup executive server windows per server bundle standard licence express etc basic 12. So it’s a licence for 12 months. This software would have been installed, yes.

COURT: Right, fine. So your company has had no backup server whatsoever.

A. No, there was a backup.

COURT: Let me ask you. Files etc, messages, emails, correspondence, if they could not be found in the main server, they should be there in the backup server.

A. Absolutely.

COURT: Where are they?

A. They are in the custody of FTI. In fact, my Lord, if you look at this invoice on point No. 1, that’s the backup server, $32,000.

COURT: Well, you see, FTI say they tried to look for all these documents, correspondence, etc. They examined all the servers, Mr Wan and his team, and they were not able to find any.

A. My Lord, I actually have also spoken to some experts and they have told me that data can never be wiped off a hard disk.

COURT: Exactly. Unless the hard disk is taken out and then put away somewhere.

MR BLANCHFLOWER: My Lord, can we have a moment in the absence of the jury?

COURT: No, thank you. Sit down please.

A. The servers were there with all the hard disks.”  [Italics added.]

98.The judge was in error to suggest to the 2^nd applicant that there was evidence that Mr Wan and his team had examined “all the servers” and “were unable to find any documents such as files, messages, e-mails and correspondence”.  The evidence adduced by the prosecution at trial presented an incomplete picture of the examination and analysis of the computers and servers.  Mr Wan spoke to what he had done personally.  There was no evidence of the results of the examinations performed by Patrick Ma and Leslie Leung.  Given that he was in error, it is all the more regrettable that the judge declined Mr Blanchflower’s request that the jury be asked to retire and that he resorted to directing leading counsel, “Sit down please”.  On the other hand, the 2^nd applicant had the last word.  In the context of the agreement between the judge and the 2^nd applicant as to the removal of data on the hard disk, the 2^nd applicant asserted that “the servers were there with all the hard disks.”

Mr Josh Wan

99.Mr Josh Wan Wai Yuen testified that he was employed as a consultant in the forensic examination of computers by FTI and together with colleagues examined the computers and servers at Days’ offices on 14 September 2011 and subsequently.  Among other things, the purpose of the examination was to image the computer hard disk and to establish when the server was installed.

100.Mr Wan said that he examined a server which was described as “dayshongkong”.[100]  Of the date of installation of that server, he said it “...should be installed several days before I went there, that is September 14th.”  It was partitioned with the labels “C, A, I, M, U and V” respectively.  Of his analysis, he said:[101]

“ A. For C the label is called local disc.

Q. And the description for A, partition A?

A. A is finance.

Q. And how about I?

A. I is IT retail.

Q. And then M?

A. MES.

Q. And then U?

A. U is users.

Q. And then V?

A. V is visitors.

Q. Now, when you carried out your analysis what did you find in these partitions?

A.   I discover that apart from C, for the remainders, that is A, I, M, U and V, the data storage was zero...That means there is no information inside.”

101.In his summing up, the judge said of the evidence of Mr Josh Wan in respect of the ambit of his examination of the computers and servers at Days:[102]

“ There were four servers in the office. He did look at more than one. As to the exact number, he could not remember, probably three to four. Now, once he saw these servers, not only -- sorry. Information on these servers were then captured, copied and analysed. Installation date of hard disk was also noted, made a record. Mr Wan noticed that one of the servers with a host name of “dayshongkong” was installed only several days before 14 September 2011. There were several partitions within that server, namely, C, A, I, M, U, V. “C” was labelled as the local disk. The remaining partitions were respectively described as, I think “A” for finance; “I” for IT retail; “M” for MES, I think that means message; “U” for user and “V” for visitors. Mr Wan discovered that apart from the “C” partition, the remaining partitions had no information stored inside. Their storage was zero. There was no information.” [Italics added.]

102.As noted earlier, Mr Wan had not testified that he had “probably” looked at three or four servers in the Days’ offices.   He had said that he thought there were four servers in the office.  On the other hand, the judge directed the jury correctly that it was only in respect of one server, of the three or four servers in the Days’ offices, that Mr Josh Wan gave evidence as to its contents or lack of content.

103.Subsequently, in his summing up, the judge said that it was the prosecution case that Oscoda was “a sham put up by the defendants” and that the prosecution suggested:[103]

“ no documentary record of any sort concerning Oscoda could be found physically inside Days office, or digitally on Days servers.”

104.It is to be noted, as the judge stated, that he was attempting to summarise the prosecution case, not stating what evidence had been adduced.  Nevertheless, it is clear that the judge was in error in stating that it was the prosecution case that no physical documentary record of Oscoda had been found in the Days’ offices.  That, was contrary to the way that prosecution had closed its case.  In his closing speech, Mr Choy acknowledged in terms that 121 file jackets “...in relation to Oscoda trades” had been found in the Days’ offices.[104]  That was a reference to the evidence led in cross-examination of Mr Forekey Wong.[105] There was no dispute that the file jackets contained, in an apparently appropriate chronological sequence, purchase orders from Days to Oscoda, related invoices from Oscoda to Days and confirmation notes and invoices from Days to its customers for the sale of the same goods.  However, the point made in the prosecution closing speech was:[106]

“ There was no record of the goods being packed, no records of the goods being shipped, there was no bill of lading, there was no correspondence between Oscoda and Days, there was no correspondence between Days and its customers.”

Further, that it was Mr Forekey Wong’s evidence that he had expected to find such documentation at the Days’ offices, but did not.[107]

105.In his closing speech for the prosecution, although Mr Choy did not assert specifically that no digital records relating to Oscoda had been found on Days’ servers, he did assert in respect of Oscoda that it was the prosecution case that “the computer records disappeared into thin air”.[108]  Whilst that was what the prosecution asserted, it was not reflected by the evidence adduced at trial.  As noted earlier, the judge reminded the jury correctly that the evidence in respect of the content or lack of content of the four servers came in respect of one server only in the evidence from Mr Wan.

106.Aswehavesaid,wearesatisfiedthatthejudgeought not to have intervened, either in examination-in-chief or in cross-examination, during the 2^nd applicant’s testimony relevant to the issue of Days’ computers.  He ought to have waited to see if the matter was resolved by questioning by counsel.  That was their role, not his role.  Further,hecompoundedtheerrorofmakingsuch interventions by asserting, incorrectly on occasions, the effect of the evidence.  Nevertheless, we are satisfied the 2^nd applicant was not impeded in his ability to present his defence case.  Also, we are satisfied that the judge’s interventions did not have the effect of evidencing disbelief in the defence case.  Finally, we are satisfied that they did not render the trial unfair.

Other judicial interventions during the evidence of the applicants

Intra-group transfers of monies

107.Complaint was made that in intervening in the 2^nd applicant’s evidence-in-chief in respect of the intra-group transfers of monies the judge was expressing disbelief in respect of his evidence, which questions supported the prosecution case of “layering”, namely concealment by unnecessary transactions.  The judge’s intervention occurred in face of the 2^nd applicant’s explanation that the transfer of monies between companies within the group occurred because Days International BVI did not have a current account on the ledger for either Days Impex Hong Kong or Days International Hong Kong.  The judge said, “This is I don’t understand.  What exactly do you mean?” [109]  The 2^nd applicant, having explained to the judge that money was physically transferred between the bank accounts of the companies, said:[110]

“ There is another way. I could directly transfer the money from Days International BVI to Days International Hong Kong and then book it through the current account of Days Impex Liberia. But the problem with that is that when you balance the bank account you are unable to balance and match the ledger account. This way, if you balance the bank at the end of every month, you always will know that your inter-company balance is balanced.”

108.In face of the judge’s statement that he did not follow the evidence, the following exchange ensued:[111]

“ A. But if you finish your entries at the end of every month and you want to ensure that all the entries are posted in the right ledger account, in accounting, once the bank balances then you know that all the other accounts are also balanced. But if you depend on journal entries then you have to balance the journal entries between two separate ledgers to ensure that they do balance. And if you are dealing with three companies then you have to balance all three ledgers in order to make sure that the balance is accurate. Is that clearer?

COURT: Well, you see from my understanding of your explanation is that not only that you have to make a balance on the ledger but -- well, put it this way, not only that you -- well, in order for you to make a ledger balance you actually move physically the money as well, because according to you, it will be much easier.

A. Clearer.

COURT: Clearer.

A. Yes.

COURT: But my question in fact is still the same. Why you have to physically move the money where you can actually do it on papers?

A. Well, because accounts are generally behind and then when you do it through the banks, using the banking system to keep your transactions very, very clear.  I mean to put it simply you can do it either way, but this is the way that was adopted by myself to ensure that the transactions were clearly being posted in the correct accounts.”

109.It was in the context of those explanations, that the judge reminded the 2^nd applicant of the prosecution’s general allegation in respect of transactions within the Days’ group that “...money had been moved through different layers.” [112] Of that, the judge said “...if you are right then, you know, paper transfers would be sufficient for the purpose of balancing the ledgers.”  The following exchange ensued:[113]

“ A. I was just going to respond about the layers. Layers generally mean when money is going between different parties to disguise where they are going or where they are coming from, not when you are within a group.

COURT: Not necessarily, in my experience sitting here.

A. But the treasury accountant uses...

Q. Mr Dayaram...

A.   Just one second, uses layers for accounts which are in the same company, so if I had my salary received in my savings account and then I issued a cheque from my personal account, for her that would be a layer.”

110.It is clear that the judge intervened to invite the 2^nd applicant to clarify the explanation that he was giving to the jury.  It is to be noted that in the course of the interchange between the judge and the 2^nd applicant, the 2^nd applicant acknowledged “It is slightly difficult to understand”.[114]  Again, it is clear from the transcript that the 2^nd applicant insisted in responding to the issue of layering.  Of course, he was entitled to do so.  We are satisfied that on this occasion the judge was entitled to intervene as he did and that no unfairness resulted to the trial.

111.It is to be noted that, when Mr Choy cross-examined the 2^nd applicant on that issue, the following exchange ensued:[115]

“ Q. ...when you were being examined in-chief you gave a long justification as to why that is done. I want to simply put to you that your explanation is no more than a desperate attempt to use accounting jargon to disguise the truth that you wanted the money to flow through different companies so as to conceal from the banks the real source of the money. Do you agree?

A. I disagree.

A.   ...I could not disguise that with HSBC because all the money was transferred within HSBC, so HSBC, in fact, could see where the money flowed from when it entered Days Impex or Days International and when it first entered the group in Days International BVI the bank could clearly see the money was coming from Wall Street.  So there was nothing hidden from anybody.”

112.In his summing up, the judge reminded the jury of the 2^nd applicant’s explanation:[116]

“ Since Days International BVI did not have a current account on the ledger with either Days International or Days Impex, Days International BVI only maintained a current account on the ledger with Days Impex Liberia, so funds had to flow to Days Impex Liberia before any subsequent onward transfer to Days International or Days Impex.

Days Impex Liberia were in fact the parent of Days Impex Hong Kong and de facto parent of Days International Hong Kong. Any funds flow between the parent and subsidiaries should have come from the parent and not from a third party.

According to D2, he could directly transfer money from Days International BVI to Days International and booked it through the current account of Days Impex Liberia, but the problem was that when one balanced the bank account, one would not be able to balance and match the ledger account.  According to D2, this accounting practice had been put in place for over decades and that all the transfers and deposits could be traced by bank entries and bank statements.  Auditors of Days could also see all these transfers.”

DIFFICULTIES IN PREPARING FOR THE DEFENCE BECAUSE OF THE ABSENCE OF DOCUMENTATION

113.COMPLAINT WAS MADE THAT THE JUDGE ERRED IN PREVENTING THE 2^ND APPLICANT FROM ELABORATING IN HIS TESTIMONY ON THE DIFFICULTIES FOR THE DEFENCE ARISING FROM THE ABSENCE OF DOCUMENTATION ON THE SERVERS AND FROM HIS INSPECTION OF THE VOLUMINOUS PHYSICAL DOCUMENTS.

114.IN INTRODUCING THE TOPIC OF THE ABSENCE OF DOCUMENTATION IN EXAMINATION-IN-CHIEF, MR BLANCHFLOWER ASKED THE 2^ND APPLICANT IF HE KNEW “...HOW THAT SERVER BECAME EMPTY”.[117]  THE QUESTION ELICITED A NEGATIVE ANSWER.  THEN, THE FOLLOWING EXCHANGE ENSUED WITH COUNSEL:[118]

“ Q. Now, what effect or impact did the empty server have upon you or your father for the defence, in preparing for your defence?

A.   There were thousands and thousands of documents stored on the server and on the emails as well.  So with the missing PDF files and the emails, it was very difficult for us to be able to provide documentation for this defence.  In addition to that, our accounting software, our general ledger and all the vouchers were also on the server.”

115.Of the 2^nd applicant’s inspection of the physical documents, the following interchange ensued between Mr Blanchflower and the 2^nd applicant:

“ Q. And over about a six-week period, you and your father looked through those boxes in FTI’s possession.

A. Yes, there were 524 boxes and we had to look at them in a very tight timeframe in constrained conditions. We had to move five times to a different location. We started off in FTI’s offices. We went to CCB’s headquarters, then we went back to FTI’s offices and then to Allen & Overy’s office.

Q. That was the solicitors for FTI?

A. Yes, correct. And then we went back to CCB headquarters again.

Q. Did you, at any time, request an inventory list to be provided by FTI?

COURT:  What’s the relevance of all this?  I don’t see any relevance at all.  Thank you.”

116.A request for the provision of “...an inventory of all documents, IT equipment, and other items, seized” by FTI from the Days offices was made in a letter dated 22 January 2015 from the applicant’s solicitors to FTI.  The request was repeated by Mr Blanchflower before the judge in a pre-trial review on 6 February 2015.  On that occasion, counsel representing FTI opposed the application on the basis that the inventory had been prepared for internal use, and contained material relevant to internal use.  It was the product of the liquidators working in the liquidation.  In the result, the judge refused the application for provision of the inventory.  So, the question posed by Mr Blanchflower in respect of the inventory was an indirect challenge to the judge’s ruling.

117.Next, the 2^nd applicant addressed the difficulties that had been encountered in inspecting the physical documents:[119]

“ Yes, we did have difficulty. The boxes had a lot of paper in them. Yes, some of them were box files, but some of them were paper files and just stacks of paper sometimes. We had constant pressure from FTI. If we were not moving through documents fast enough, they would keep reminding us that there was only a limited amount of time that we could spend looking at the documents. And if we didn’t clear through the documents that were in front of us, they brought us 50 boxes at a time. We wouldn’t be able to move to the next 50 boxes.” [Italics added.]

118.Then, the following exchange ensued between the judge and Mr Blanchflower:[120]

“ COURT: Excuse me, what’s all this relevance? What’s that got to do?

MR BLANCHFLOWER: Well, your Lordship will recall in the cross-examination of the 1st defendant about why didn’t you find this or why didn’t you locate this.

COURT: I know that, yes.

MR BLANCHFLOWER:  And this just puts into perspective the difficulties that these defendants...”

119.Next, the jury having retired at the direction of the judge, a further exchange ensued between the judge and Mr Blanchflower:[121]

“ COURT: Well, I understand that they were given a period of time to look for the documents. Are you suggesting that there is an impropriety on the part of FTI?

MR BLANCHFLOWER: No. And nor do I have to. It was put...

COURT: Well...

MR BLANCHFLOWER: If I may say, it was put and raised by the prosecution with the 1st defendant as to why this document wasn’t found or why this document wasn’t brought. Mr Dayaram is explaining the conditions in which they had to go through 524 boxes. That puts it into perspective, the difficulties they had.

COURT: Well this were never put to the staff of FTI.

MR BLANCHFLOWER: Because Mr Foreky Wong wasn’t present at the day-to-day.

COURT:  Well, they were in charge of the winding-up procedures.”

In the result, the judge directed there was to be no further questions on the subject.

120.The context in which the issue arose was that the issue of inspection of material in the possession of FTI had been addressed in pre-trial reviews.  On 6 February 2015, counsel for FTI informed the judge that FTI would facilitate inspection of that material.  Further pre-trial reviews were held on 27 March and 4 May 2015.  At the former hearing, Mr Blanchflower informed the judge that the 1^st and 2^nd applicants had not completed the task of scanning documents that they had been inspecting on a daily basis for about six weeks at FTI.  The judge was informed that the target date for completion of that task was 1 April 2015.  At the pre-trial review of 4 May 2015, Mr Blanchflower informed the judge that new documents had been served on the defence by the prosecution, in consequence of which he asked for and was granted a delay in the commencement of the trial from 11 to 18 May 2015, on which date the trial commenced.

121.No complaint was made to the judge in those pre-trial reviews or at the commencement of the trial of any difficulties encountered by the applicants in inspecting material in the possession of FTI, in particular difficulties caused by the conduct of the staff of FTI.

122.In his evidence, the 1^st applicant answered in the negative questions asked of him in cross-examination as to whether or not in the course of his inspection of material at FTI he had found specific documents.[122]  In answer to one such question, the 1^st applicant said:[123]

“ A. Let me explain to you. When we were doing the inspection at FTI, I was looking for documents, correspondence related to the business side of it, which is, that means with communication with Priya customers, catalogues and merchandising and all that. And there were thousands and thousands and thousands of papers and I just took a brief glance of each paper that I managed to look at - not that I saw all - and selected whether it was suitable or it felt what the direction I had been given by the counsel to look for the papers. And among what I saw, the papers, no, I didn’t find it.”

123.It is to be noted that, for his part, the 1^st applicant made no complaint of the defence being under “constant pressure from FTI” in the course of the inspection of the material in the possession of FTI.  As Mr Blanchflower acknowledged, the alleged pressure from FTI was not a matter that was canvassed with either of the two witnesses called from FTI, nor were they asked if they were aware of the mechanics of the inspection process.  So, the issue of pressure being exerted on the defence by the staff of FTI in the inspection process was raised for the first time towards the end of the cross-examination of the 2^nd applicant.  It was clearly that issue that prompted the judge to rule that there was to be no more questioning on the matter.  It was a collateral matter never even hinted at in the defence case hitherto.  We are satisfied that the judge was entitled to rule as he did.

124.It is to be noted that at the stage the judge ruled, evidence from both the 1^st and 2^nd applicants of their difficulties in dealing with mountains of documentary records had been put squarely before the jury.

Seasonal peaks in trading

125.Next, complaint was made that the judge had displayed scepticism in the face of the 2^nd applicant’s evidence that there were seasonal peaks of trading, which explained the request by Days for increased credit facilities.  The following exchange ensued in the evidence-in-chief of the 2^nd applicant:[124]

“ Q. You told us yesterday about the needs for seasonal trade lines in your business.

A. That’s correct.

COURT: Well, your father told us that there were seasonals up and down for the Chinese New Year, for the Mother’s Day and for Christmas.

A. That’s correct.

COURT: And he told us that in March/April there was the increase of volume because of the Mother’s Day....

A. That’s correct.

COURT: But how would that affect -- say, you are trading on electronic goods, you know home appliance, how would the Mother’s Day affect that?

A. Sales during Mother’s Day is a key sales period specifically in Brazil. I mean home appliances are things for the kitchen, blenders and we sell hairdryers, we sell irons, all these products have very high sales during Mother’s Day. And honestly people need excuses to buy things during, you know, any holiday, Christmas or Mother’s Day they might buy a new television, a new home theatre, it’s something that the stores would like to put up as a promotion during these periods because they want to push product out.

COURT: I understand Chinese New Year and Christmas, but say for example, Mother’s Day if I purchase an iron or blender for my wife she may be furious. Diamond, maybe, gold ring, yes, possible, but not blender or iron.

A.   My Lord, the Chinese New Year is not in fact for the customer.  The Chinese New Year seasonal excess is because factories are shutting down and all of the factories require payments and they want to ship cargo out and pay their employees.  So in fact when we are making shipments just before Chinese New Year they don’t reach the stores.”

126.The judge’s reference to the evidence of the 1^st applicant appears to have been to his short description in his evidence-in-chief of orders that were based on seasons:[125]

“ the orders were based on seasons. And that -- and they were more and high -- more value or volume of orders during Chinese New Year and also during the time between March and April when the goods are high season required for Mother’s Day in South America. Then in between August, September and October, for Christmas.”

127.It would appear that the judge’s intervention in respect of any peak season of trading as a result of Mother’s Day was to afford the 2^nd applicant an opportunity to explain something that was less than obvious, as on its face was the fact of increased trading at Christmas and Lunar New Year.  In the result, the 2^nd applicant provided a less than immediately obvious explanation for increased trading at Lunar New Year.  Very obviously the judge’s reference to his wife’s reaction to being presented with a blender on Mother’s Day was an attempt at humour, in a very long, relatively complicated case.  We are satisfied that there was nothing improper at all in the judge’s intervention.

The judge’s questioning of the 1^st applicant: “I give up”

128.In the course of the 1^st applicant’s testimony that Days made a profit on both import and export loans, the judge said “I don’t quite follow” and there ensued an exchange between the two of them culminating with the following exchange:[126]

“ COURT: ..... for export ... you don’t make any profit by purchase goods from your supplier.

A. Yes, I agree with you. And I’m not talking - this is not talking about purchase, this is talking about sales, both are sales, where there is a buyer, by way of export bills or by way of open account. So they are both sales.

COURT: I think we are talking on two different things. I give up.

A. Perhaps I can clarify is a little bit more.

COURT: move back to you, Mr Blanchflower.

Q. ... on import loans with the direct buying relationship you’ve calculated 5% profit.

A. That’s correct.

Q. And we'll come to it but we might as well address it now. On the export loan, did Days also make a profit?

A. Yes, it did.

Q. And what was the amount of that profit?

A.  That was 9½%.”  [Italics added.]

129.As Mr Choy pointed out in his written submissions, on the following day Mr Blanchflower adduced further evidence from the 1^st applicant on that same issue.[127]

130.We are satisfied that there is no substance in this complaint.  Having failed quite obviously to understand the 1^st applicant’s explanation, very sensibly the judge invited Mr Blanchflower to deal with the matter.  He did so succinctly, establishing in a few questions the 1^st applicant’s case that profit was made on both import and export loans.

The 2^nd applicant: Howard Li’s requests in respect of Oscoda

131.Complaint was made that in cross-examination of the 2^nd applicant in response to the 2^nd applicant reiterating the evidence that he had given in evidence-in-chief that Mr Howard Li had asked only for contact information with Oscoda, not that arrangements be made for him to visit the Oscoda factory, the judge had intervened impermissibly:[128]

“ COURT: But do you accept that if that’s all Hang Seng Bank want, the contact details etc, that the Hang Seng Bank can easily find out from the Oscoda invoice, because it’s got the office address, it’s got the telephone number and it’s got the fax numbers?

A.  My Lord, you are absolutely correct.  In fact, I took the information from invoice and typed it to them.  But sometimes I feel that bankers can be quite lazy.  Instead of asking their trade services to provide them the information, they ask the customer.”

132.Given the response of the 2^nd applicant to the question, it beggars belief that it was advanced as an illustration of an impermissible intervention by the judge.

The 2^nd applicant: Hyundai

133.In cross-examination of the 2^nd applicant by the prosecution, issue was taken [129] in respect of the enforcement of the provisions of the Distributorship Agreement dated 15 April 2008 between Hyundai Corporation and Days International Limited,[130] to which he had referred in his evidence-in-chief.[131]  Of Article 10 of the Agreement, which required Days to provide Hyundai with a Monthly Report of the purchases of Products, together with copies of letters of credit and pro forma invoices, the 2^nd applicant said that Hyundai no longer required compliance with the provisions.  Of the provision of the Monthly Report, the 2^nd applicant said of the Managing Director of Hyundai in Hong Kong, given that it was known that Days did not meet any of the “minimum numbers” [132] of sales required in the agreement:[133]

“ He said that all he was concerned about was collecting the royalty under the minimum and was not concerned about any running royalty thereafter. That’s why this reporting was unnecessary to him. As far as he was concerned, all he wanted to collect was the quarterly payments.”

134.In the face of that evidence, the following interchange ensued between the judge and the 2^nd applicant:[134]

“ COURT: Yes. Can I ask you this? But surely, Hyundai would like to see yourselves grow, whatever figures that may be.

A. They didn’t enforce it. In fact, during the...

COURT: Well, if they do not have your sales number, how would they now, say next year, how much to collect for the royalties...

A.  Over the years, we had many, many negotiations with them.  Their target(s) were always very aggressive and much higher than what we could possibly achieve.  The best we could do was to continue to ask them to reduce the numbers but the people at the lower level wanted to show their seniors that they were able to increase their revenue, year-on-year.  So year-on-year, regardless of what we performed, they just wanted to make a number.  We had many negotiations with them to cut the number down which they disagreed to....”

135.IN THE FACE OF THE JUDGE’S STATEMENT “...WHAT I DO NOT UNDERSTAND IS THE FACT THAT THEY’RE NOT INTERESTED IN ANY OF YOUR MONTHLY SALES REPORTS” THE 2^ND APPLICANT SAID:[135]

“ They didn’t show any interest in having those type of reports. They were just happy that the products were able to be listed in Brazil. They had an office in Brazil that dealt with other parts of the Hyundai group. They would ask them to make reports about the fact that the goods were in the stores, that they could see them on the shelves and they took -- their senior executives took a trip to Brazil once a year and went to have meetings with the customers and to see the products on the shelves and that’s all they really wanted to have.”

136.The judge’s intervention concluded with the following dialogue:

“ COURT: You see, as an executive of Hyundai, I would have thought it would be much easier for say the distributors to provide say the monthly sales report. It’s much easier, you see what I mean?

A. I understand.

COURT: Instead of going round to different shops in Brazil.

A. But in practicality, it didn’t happen.”

137.We do not accept that, in asking the questions posed of the 2^nd applicant, the judge was in any way confronting him on the issue of the lack of implementation of the provisions of the Distributorship Agreement. In responding to the judge’s questions, the 2^nd applicant amplified his explanation for why the agreement was not enforced. That much was reflected in the reminder that the judge gave the jury of that evidence in his summing up:[136]

“ D2 also told us that the terms and conditions of the Hyundai distributorship agreement, such as “Article 9 -Procedure, Article 10 - Report and Audit”, were not followed after 2008.”

138.We are satisfied that in all the circumstances, the several questions that the judge asked the 2^nd applicant on the matter were entirely proper.

Judicial interventions during the evidence of prosecution witnesses

Mr Howard Li (i) Oscoda invoices

139.Complaint was made on the part of the 2^nd applicant that in the course of the evidence of a prosecution witness, Mr Howard Li, the judge had asked questions designed to suggest that there were anomalies on the face of invoices submitted by Days said to be issued by Oscoda that suggested the invoices were not genuine.

140.First, it is to be noted that the judge’s questions came only after the completion of cross-examination by Mr Blanchflower and after counsel for the prosecution had indicated that there was no re examination. Secondly, the questions arose from questions asked towards the end of cross examination of Mr Howard Li, during which he had been taken to a series of import loan applications attached to which were the related invoices. In particular, having been referred to loan applications where Oscoda was said to be the supplier, Mr Howard Li had been referred to a “non-Oscoda loan application by Days International where Nanjing Wanlida Technology was the supplier.” In that context, the following interchange ensued  :[137]

“ Q. Now, if you look at these two invoices, one from supplier other than Oscoda, at the time did you - did it appear to you that invoices from other suppliers, other than Oscoda’s, contained more information in their invoices?

...

A. You can say that.

Q. You see in the one that I just used, 12620 [138], there is no country of origin, there’s no country of destination, nothing, very, very few details.

A. That’s right.

Q. Did... the Oscoda Electronics Limited invoice, did - did they appear to be unusual to Hang Seng Bank at the time?

A. No.

Q. Right, that’s all I wish to ask, thank you.

COURT: Any follow-up questions?

MR BLANCHFLOWER: No, my Lord.

MR CHOY:  Not from me.”

141.Given that the witness had been taken to these invoices only minutes earlier, the differences in detail were striking and obvious and begged the questions asked of the witness by the judge.  No doubt, those were questions that would have been in the minds of the jurors.  Under the rubric ‘Description’ the Oscoda invoice stated only “2.1 CHANNEL DVD HI-FI SYSTEM”, whereas the ‘Item Code’ was left blank.  By contrast, the Nanjing Wanlida Technology Co. Ltd. invoice provided an alphanumeric code under the rubric ‘Item Reference’ and provided multiple details under the rubric ‘Product Description’.  Furthermore, the latter invoice described the ‘Destination’ as Brazil, whereas the Oscoda invoice was left blank as to that detail.

142.In the event, Mr Howard Li confirmed that, as far as Hang Seng Bank was concerned, the differences in detail between the two invoices did not render the Oscoda invoice unusual.  So, any concerns that the jury might have had as to the significance of differences in detail between the two classes of invoices, non-Oscoda and Oscoda invoices, was resolved in favour of the defence case.  We are satisfied that the questions posed by the judge were perfectly proper questions.

Howard Li (ii) credit review proposals

143.Complaint was made that the judge intervened in the cross-examination of Mr Howard Li effectively neutralising the effect of cross-examination in relation to the steps taken by Hang Seng Bank to obtain information upon which the credit review proposal was based in February 2011.  In the course of cross-examination, Mr Howard Li was taken to e-mails dated April 2009 between his predecessor as relationship manager with Days and the 2^nd applicant.  In an e-mail dated 15 April 2009, the 2^nd applicant responded to a request for information as to the place of incorporation of Oscoda and as to their relationship with Days by stating that Days was “...unaware of their company registration details however their bankers, Bank of East Asia would not have opened an account without the (sic) first receiving company incorporation documents and going thru all the other regular formalities (sic).”  Also, the 2^nd applicant provided details of Oscoda:[139]

“ The person behind Oscoda Electronics is W Y Suen, who is a small trader with excellent contacts in China. They deal with more than one factory in China in which they do not have ownership interest. I believe that they actually work from their home or China but maintain an address in a corporate services company in Mongkok, perhaps just to show a professional image.

We have had a relationship with them for over 5 years and they are very reliable. The prices that they obtain for us in some cases are better than if we go directly to the factory. We never give them a deposit payment or any type of advance and they get paid only at the time of loading of the goods.

The products that we have purchased from them are DVD players, CD players, AM/FM portable radios, home-theatre systems, speakers, boom boxes, hi-fi systems, cassette recorders, car radios, CD, car CD players, etc.”

144.Then, Mr Howard Li was taken to a credit proposal review dated 16 February 2011.[140] Mr Howard Li answered in the affirmative the suggestion that “with the information provided by Days the bank will also make its own enquiries and due diligence.”  Next, Mr Blanchflower drew the witnesses attention to a short paragraph under the rubric ‘Information of the assembler-Teikon Amazonas’:[141]

“ Teikon was founded on 1996 and focused on providing service and assembly of electronic circuits. The group has three manufacturing plants which located in Porto Alergre, San Jose dos Pinhais and Manaus. The total area of those manufacturing parks reached 13,500 m² with over 1350 staffs in Brazil. Current customer base of this group includes Gigabyte, Ericsson, Philco, Carrier, PadTec and etc.”

145.Of that information, the following exchange ensued between Mr Blanchflower, Mr Howard Li and the judge :[142]

“ Q. Now, my - my question, Mr Li, is that is some very detailed information, would you have or your colleagues at the bank had done your own research by website or other information providers?

A. I think I copied the information from last year’s paper.

Q. I don’t - I don’t pretend to be exhaustive but a lot of the information in your credit proposal is information either you or other colleagues at - at the bank obtained on your own.

COURT: Or supplied to you by the customers.

MR BLANCHFLOWER: Well, I - I...

COURT: Well, I note that, yes.

MR BLANCHFLOWER: No, I - I’m making a distinction, I’m -- there’s information supplied by the customers...

COURT: Yes.

MR BLANCHFLOWER: ...and there’s also information...

COURT: Yes, I understand that, yes. So it’s a mixture of two.

MR BLANCHFLOWER: Yes.

COURT: Yes.

Q. So some of the information within here is what the bank obtained on its own.

A. You can say so, yes.

Q. And with the financial information, you would do analysis of that and do ratios, debt-equity ratios, to sort of, I’ll call it, crunch the numbers.

A. Yes.”

146.Then, the following exchange ensued between the judge and Mr Howard Li :[143]

“ COURT: Yes. Before we leave to 1359, now, this - this information on -- of the assembler on page 1362, now, you say -- essentially what you’re saying is that you cut and paste, right, from previous reports?

A. Yes.

COURT: Do you know as a matter of fact that the origins of this - this particular piece of information, whether it’s conducted by your colleagues within the bank or whether it is supplied to your bank by the customers?

A. I have no idea.

COURT:  Thank you.”

147.The context of the judge’s interruption of Mr Blanchflower’s questions of Mr Howard Li was the latter’s answer that he thought that he had copied the passage in respect of Teikon from “last year’s report”.  Also relevant was the earlier e-mail from the 2^nd applicant in which he had asserted information about Oscoda without providing any documentary support.  The cautious nature of the approach of the judge in respect of the provenance of that particular information in the report was vindicated by the answer of Mr Howard Li that he did not know its provenance.

148.We are satisfied that the judge’s intervention was perfectly proper.  It ensured that the testimony had a proper evidential basis and was not built on speculative answers.

Larry Kwong - export loan application requirements

149.Complaint was made that at the conclusion of the testimony of Mr Larry Kwong, counsel for the prosecution having indicated at the conclusion of cross-examination that he had no questions in re-examination, the judge erred in eliciting evidence from Mr Larry Kwong that in processing export loan applications the bank required that the documentation and the statements made therein were true and the underlying transaction genuine.  In doing so, the judge was adopting the role of a prosecutor.

150.At the outset of the evidence-in-chief Mr Larry Kwong confirmed that he had made Bankers affirmations.[144]  They had been read to the jury at an earlier stage of the hearing.  Then, counsel for the prosecution adduced evidence from the witness in respect of two categories of loan applications.  First, applications for a ‘Clean Import Loan’ [145] and, secondly for an ‘Export Trade Collection’ loan.[146]

151.Two banker’s affirmations made by Mr Larry Kwong on 5 December 2013 were adduced into evidence.[147]  Both of the affirmations addressed the procedure for Clean Import Loan (“CIL”) applications.  In both of the affirmations, it was asserted:[148]

“ In processing a CIL application the Bank will examine the supporting documentation submitted with the loan application and check the details on the application and supporting documentation to see if they accord with what is required in order to utilise the credit facility extended by the Bank to the client. If the Bank knew that the CIL application or the supporting documentation was false, or the underlying transaction was false that would not proceed with the transaction.”

152.One of the Banker’s affirmations also adduced into evidence Export Trade Collection instructions, together with related supporting documentation.[149]  However, that affirmation did not condescend to a description of the procedure, in particular that it was a requirement the documents be genuine and the underlying transaction real, as had been done in respect of the CIL applications.

153.At the commencement of the hearing in the afternoon of 11 June 2015, during the cross-examination of Mr Larry Kwong, the judge raised that issue with counsel for the prosecution:[150]

“ COURT: Where can I find the procedures about export loans in his affirmations?

MR CHOY:  I don’t think he gave details on export loans.  That’s why I took him through the documents step by step this morning.”

Notwithstanding counsel’s answer, in fact no evidence had been led from the witness that it was a requirement that the documents be genuine and the underlying transaction real.

154.At the conclusion of his evidence, Mr Larry Kwong confirmed the judge’s suggestion to him that he had not dealt with “...procedures on export loans in your affirmation.”[151]  Then, having caused the affirmation to be placed before the witness, the witness confirmed the judge’s suggestion that paragraph 5 stated that “...if the bank knew that the clean import loan application or the supporting documentations was false or the underlying transactions was false it would not proceed with the transaction.”  Next, the following exchange ensued between the judge and the witness:[152]

“ Q. Right. Now, I just wish to confirm with you that for HSBC to approve to grant these export loans the drawee stated on the export loan must be the genuine drawee?

A. Yes.

Q. So the bill of lading that used to support the applications must also be genuine bills of lading.

A. Correct.

Q. And the invoices support the applications must also be genuine invoices.

A. Correct.

Q. And there must be genuine underlying transactions regarding these invoices.

A. Correct.

Q. Right, thank you, that’s all I wish to ask.”

155.In response to the judge’s enquiry of counsel, as to whether or not any questions arose from his questions, Mr Blanchflower indicated that he wished to raise a matter in the absence of the jury.  The jury having retired, the following interchange ensued between the judge and Mr Blanchflower:[153]

“ MR BLANCHFLOWER: Yes, I just wish to note, my Lord, that that questions I think would have been more properly made by the prosecution.

COURT: So?

MR BLANCHFLOWER: It brings -- it can have no other effect but bring attention to the jury about the invoices, bills of lading, etc, and I would respectfully submit that those are matters which the prosecution should bring its witnesses attention to...

MR BLANCHFLOWER: Yes, and I -- because it has much difference and greater significance when those questions are asked by your Lordship. We have a very competent prosecution...

COURT: It’s in the particulars of the offence.”

156.The judge’s reference to the Particulars of Offence appears to have been a reference to items (i) to (v) of the Particulars of Offence of Count 7, which concerned HSBC, which stipulated the genuine/false documentation alleged to have been submitted to HSBC and which were the foundation of his questions of the witness.

157.In response to the judge’s repeated enquiry as to whether or not he wished to ask any further questions arising from the judge’s questions, the following interchange ensued between the judge and Mr Blanchflower:

“ MR BLANCHFLOWER: I don’t think that in view of the answers that this witness has given that there’s any questions to be asked. There’s nothing that can be done to repair the impression given to the jury by your Lordship’s questions.

COURT: What -- so do you wish me to discharge the jury?

MR BLANCHFLOWER: No, I’m not asking that.

COURT: Do you wish me to ask the jury to forget the questions I asked and then the answers given?

MR BLANCHFLOWER: Sometimes it’s best left unsaid...but I would ask your Lordship in the future that if those types of questions are going to be asked that go to the core of the prosecution’s case that perhaps they could first be raised with counsel in the absence of the jury and then we could have an opportunity to make submissions or -- I think that would be the appropriate manner but...

COURT: Well, I..

MR BLANCHFLOWER: ...I have nothing more to say, my Lord.

COURT:   Well, I think the questions I asked are not controversial at all.  I note your objection or your observation, thank you.”

158.It is to be noted that Mr Blanchflower in no way sought to particularise what he said was the irreparable impression given to the jury as a result of the judge’s questions.  Of all the statements and assertions made in the various interchanges on this issue, one matter was undoubtedly “uncontroversial”, as the judge stated, namely that the bank would not loan money for exports if it knew that the documentation was false and the underlying transaction was not genuine.  No one suggested otherwise.

159.What was made controversial, by Mr Blanchflower’s objection, was the manner in which the evidence had been elicited.  Clearly, there had been an oversight in the drafting of the Mr Larry Kwong’s affirmation.  That lacuna ought to have been resolved by counsel for the prosecution with the witness in evidence-in-chief.  Although the judge drew attention to the lacuna during the cross-examination of the witness, no resulting application to re-open examination-in-chief was made by counsel for the prosecution nor was any indication given as to how the prosecution proposed addressing the issue.

160.The judge having determined to deal with the matter at the end of Mr Larry Kwong’s evidence, and having drawn the attention of the witness to the manner in which the affirmation addressed the issue in respect of import loans, it would have been better if he had dealt with the matter by a single, non-leading question as to the relevance of those considerations to the bank granting export loans.  Nevertheless, as we have said, we are satisfied that the matter was in truth not controversial.  There is no substance in this complaint.

Jerome D’Silva

161.Complaintwasmadethatthejudge’sinterventioninthe cross-examination of Mr D’Silva prevented proper cross-examination.  In cross-examination, Mr Blanchflower suggested to the witness “...in your evidence this morning when you spoke about Oscoda you said that Mr Dayaram said it was one of his companies.”  Before the witness could answer, the judge interrupted and the following exchange ensued between the judge and Mr Blanchflower:[154]

“ COURT: Well, he didn't say that.

MR BLANCHFLOWER: Well, a control...

COURT:  The whole control of the -- he said, “It is our own group.”

Q. And then later on you qualified that.

COURT: He had the whole control of Oscoda.

MR BLANCHFLOWER: Yes, and then he qualified that later on.

COURT: He qualified what?

MR BLANCHFLOWER: That Mr D’Silva said, “I have no -- basically I have no recall of interest who controlled...” ”

162.In fact, in his evidence-in-chief, Mr D’Silva had said:[155]

“ ...in the course of dealing with Mahesh I did ask him -- I remember asking him the relationship and he said, “It is our own group.” “

Mr D’Silva went on to say:[156]

“ ...he had the whole control of this company called Oscoda Electronics Limited because if he doesn’t then it will be impossible to transfer funds within five minutes before the bank closed.  So many times I asked him, he said, “It’s one of my own.” ”

163.Of Mr Blanchflower’s final point about the testimony of the witness, it is to be noted that Mr D’Silva had said in evidence-in-chief:[157]

“ ...if he says, “I’m sending the funds,” even just about bank to be close, I know, yes, the money is going to come from Oscoda.  They know -- like I have no what we call interest as such, like who is controlling or not, but I know the funds will come when he speaks to me, even before the bank can get closed at 4.30.”

164.The judge having indicated that he would check the audio tape of the evidence, Mr Blanchflower finally put his case on this issue:[158]

“ Q. Mr D’Silva, I just suggest to you, and I will just put the case that Mr Mahesh Dayaram did not say that he controlled the whole thing, or controlled Oscoda. I just suggest that to you that you are -- he didn’t say that.

COURT: Do you agree or disagree with the suggestion?

A.    No, I disagree.”

165.That brought Mr D’Silva’s evidence to a conclusion.  However, having told the jury that he proposed to listen to the audio tape of the disputed parts of the evidence of Mr D’Silva, the judge adjourned for 20 minutes, after which the following dialogue ensued between the judge and the witness:[159]

“ Q. ... Now, first of all you disagree with the suggestion made by Mr Blanchflower that Mr Mahesh Dayaram did not tell you that he had the whole control of the company. So in short your evidence is that Mr Mahesh Dayaram did inform you more than once that he had the whole control of the company, correct or incorrect?

A. He did mention to me that it is one of the group.

Q. Yes, but your evidence is that that’s what he said, but whether he actually had the control of the company you do not know.

A. Paper-wise I do not know.”

166.Of the “impression” that Mr D’Silva said he had drawn from the fact that the 2^nd applicant was able to remit the funds in the period of five minutes before the banks closed, Mr D’Silva explained in answer to the judge’s question:[160]

“ A. The impression the same. Basically, I presume that he has full control of the...

Basically, you see what happened in our type of business even you cannot remit funds....

...without having full control of all that, what do you call, the company.”

167.It is clear that the judge’s intervention was justified and that his recollection of what the witness had said was accurate.  The questions that the judge asked the witness after the short adjournment were clearly designed to clarify for the jury exactly what was the evidence of Mr D’Silva.  There is no merit in this complaint.

168.The judge summarised the effect of that evidence on those issues in his summing up:[161]

“ In relation to Oscoda, Mr D’Silva told us that he had asked D2, probably once or twice, their relationship with Oscoda.  They took place probably sometime between 2004 and 2006.  D2 told Mr D’Silva, “It is our own group”.  ... When D2 called him 5 minutes before the close of the bank and asked Mr D’Silva to remit out payment, money would come.  He therefore knew that D2 had whole control of Oscoda. 

According to Mr D’Silva, unless D2 had whole control of Oscoda, it was impossible for Oscoda to transfer funds within 5 minutes before the close of the bank.”

Shannon Lau

169.Complaint was made that in the cross-examination of Ms Shannon Lau in respect of her notes of the meeting of 31 August 2014, the judge had prevented Mr Blanchflower from pursuing a line of questioning of the witness that it was “possible” that the 2^nd applicant had not used the expression “DP”, which it was accepted meant document against payment, but rather had said “DA” or documents against acceptance.

170.There was no dispute that the document had not been compiled until 8 September 2014.  The context of the use of the term was in a description of an account given by the 2^nd applicant in which he said:[162]

“ ...the shipping documents were in fact not theirs but instead were provided by their customers as a form of payment in lieu. Although the Group had no knowledge of the details of the shipments, the Group would assume that the status of the shipper of the shipments, created their own invoices and pretended these were the Group's genuine sale transactions. The Group submitted their invoices and the B/Ls as D/P bills to obtain financing from US to repay CIL’s.”

171.In dealing with this document in her evidence-in-chief, Ms Shannon Lau said that the reference ‘DP’ meant document against payment.  Of that term, the following exchange ensued:[163]

“ Q. Now, again, I just want to know whether anyone said this in the meeting.

A. No.

Q. And so that’s an interpretation by you.

A. Right.”

172.In cross-examination on the document, Ms Shannon Lau said that she did not quite remember or did not remember whether some of the phrases used in the text had been her choice of words, including: “form of payment in lieu”, “group would have assumed the status of the shipper”, “group had no knowledge of the details” and “created their own invoices and pretended these were the goods, genuine sale transactions”.  Similarly, she said that she did not remember if the term “DP” was her choice of words.  Then, the following exchange ensued:[164]

“ Q. As I say, I know it’s a very long time ago Ms Lau but can I suggest that Mr Dayaram would not have said “DP” but if anything would have said “DA” or documents against acceptance?

A. I don’t remember.

Q. Is it possible – and I’m not wishing to embarrass you at all, Ms Lau – is it possible you might have made a mistake and put “DP” instead of “DA”?

A. I’m not sure.

Q. Is it possible?

COURT: I don’t think so. Anything is possible under the sun.

MR BLANCHFLOWER:  Quite right.”

173.Given that the witness had already answered that question by saying that she did not remember and was not sure of what had actually been said, the judge’s intervention was appropriate and justified.  It is to be noted that it appears that Mr Blanchflower accepted that to be the case.  There is no merit in this complaint.

174.In his summing up of Ms Shannon Lau’s witnesses evidence on this issue the judge said:[165]

“ In this meeting it was D2 who did the talking.  As to the words and sentences appearing in paragraph 2 of 1358E, according to her, D2 did say in the meeting “These shipping documents were in fact not theirs, but instead were provided by their customers”.  But as to the rest, it was based on words of D2 and documents provided by them that she had written down. She had written down those words and sentences based on her interpretation of what D2 said during the meeting.”

Mr Josh Wan

175.Complaint was made by Mr Marash that, after the completion of the evidence of Mr Wan, the judge questioned him further in an attempt to adduce evidence from him as to exactly how many computers he had examined.  However, as is apparent from the transcript the judge desisted in that attempt in face of the fact that the witness was not the author of the documents from which it was sought to refresh his memory.[166]  In those circumstances, there is nothing in this complaint.

Conclusion

176.For the reasons that we have set out, we are satisfied that the judge’s interventions in the testimony of the 1^st and 2^nd applicants were not such as to impede their ability to put forward their defence properly before the jury, or to cast doubt or call into question their evidence.  Similarly, the interventions of the judge in the course of the testimony of prosecution witnesses were not such as to cast him as having adopted the role of the prosecutor.  Finally, we are satisfied that, having regard to all the judicial interventions, that the trial of the applicants was not rendered unfair.  There is no merit in this ground of appeal.

Ground 1

177.Under this ground of appeal, it was argued that there was a misdirection by the judge in relation to the jury’s approach to the subjective element of dishonesty, namely the second question of the test set out in R v Ghosh [167]. The judge directed the jury that:[168]

“ In respect of the first question it is a question for you. In respect of the second question, you may like to take into account all the circumstances of the case to come to the answer, circumstances such as the missing or death of various important people, for example, the death of Miranda Law. Miranda Law may have passed away, but again, was she being used as a vehicle, namely, that all the handling, all the works was now put on her; the disappearance of Ashok Mhaske; the sudden onset of illness of Mr Mahesh Vangani, that’s Priya’s boss; and the missing of computer records and the destruction of all of the relevant physical papers and documentary records. These may assist you – well, you have to give consideration to the prosecution’s as well as the defence’s argument on these topics. That may assist you in answering the second question.

When you consider these circumstances again the circumstances I used are by no means exhaustive, all right?  If there are more circumstances that you think are relevant, consider them.  If again some of what I have just mentioned are irrelevant, forget them.”

178.Complaint was made that none of the circumstances cited by the judge were relevant to the second question in Ghosh, since all of them occurred after the carrying out of the alleged conspiracies, and none of them could therefore be acts in furtherance of the conspiracies or matters that were proven to be attributable to the 1^st or 2^nd applicant.

179.The correctness of the judge’s direction was raised by Mr Blanchflower at the conclusion of the summing up.  He pointed out that what was relevant was the state of mind of the applicants at the time of the making of the applications and that, since all of the matters cited had occurred after the conclusion of the conspiracy period, they could not impact on the subjective element of the Ghosh test.  The judge accepted the argument as to the applicants’ state of mind at the time of the applications but considered the matters he cited as not irrelevant:

“ ...because the state of mind of the (applicants) must be inferred from all the surrounding circumstances, otherwise why would one destroy all the documents? ” [169]

180.Accordingly, he redirected the jury as follows:[170]

“ The prosecution must make you sure that the defendant was acting dishonestly. In this case you must decide two questions: (1) was what the defendant did or agreed to do dishonest by the ordinary standards of reasonable and honest people? In this regard you the jury must form your own judgment of what those standards are; (2) must the defendant himself have realised that what he was doing or agreeing to do would be regarded as dishonest by those standards. In deciding this, you must consider the defendant’s own state of mind at the time. And then if after taking into account of all the evidence you are sure that the answers to both of these questions are ‘yes’ then the element of dishonesty is proved. If you are not sure of that then the element of dishonesty is not proved.” (Emphasis supplied)

181.Clearly the judge did properly make clear to the jury that they must be satisfied as to the applicants’ intentions at the time of the alleged offences.  But, even if the argument be correct that he should have gone further and reminded the jury that the circumstances he had earlier outlined had all occurred after the periods specified in each allegation, we cannot think that it would have made the slightest difference to a question that cannot realistically have been in issue.  We agree with Mr Choy that if the applicants knew that they were making false statements to their bankers in order to obtain huge bank loans from them, the applicants must have realised that their actions were plainly and obviously dishonest.  Indeed, the judge had said as much earlier in his summing up:[171]

“ I do not think anyone would dispute in this case that applying for import loans to banks on a false basis that the loans were in respect of true or genuine transactions whereby goods were purchased and submitting false invoices would not constitute the banks at economic risk by dishonest means.”

182.Neither counsel at trial nor at this appeal took issue with this rather obvious proposition.  Whilst Mr Marash may technically be correct that the circumstances cited by the judge were not strictly relevant to the second question under the Ghosh test, they were certainly relevant generally to the existence of the conspiracies.  If they were misapplied to the test for dishonesty, we cannot think it was of any moment at all, given the obvious dishonesty involved in the falsity of the representations made and documents furnished by or on behalf of the applicants, about which there cannot have been any sensible issue.

183.This ground must fail.

Ground 2

184.By ground 2, complaint was made that the judge erred in admitting into evidence, pursuant to section 20 of the Evidence Ordinance, an HSBC report of a meeting on 31 August 2011 between the applicants and their bankers[172]. The complaint was that although prepared by HSBC employees, the report does not fall within the definition of “banker’s records” and was inadmissible. In the alternative, it was said that the report was neither contemporaneous nor a verbatim record of the meeting, so it was wrong for the judge to have reminded the jury of its content in his summing up without giving them a proper warning.

185.In support of their first contention, the applicants relied on the dissenting judgment of Keith J in the judgment of this Court in R v Law Ka Fu[173], where the 1984 amendment of section 20 was considered.  Based on the speech of the Attorney General in LegCo when introducing the amendment bill, Keith J concluded that the adoption of the term “banker’s records”, defined in the new section 2 as “any document or record used in the ordinary business of a bank”, was but a move to reflect the multiplicity of ways in which in modern times banking transactions could be recorded.  Drawing support from the displaced terminology of various kinds of “banker’s books”, Keith J concluded that the new definition must still be restrictively construed as pointing to records of banking transactions and not, according to the facts of R v Law Ka Fu, credit card sales slips that retailers submitted to the bank for payment.  By analogy, the applicants argued that, unless there be a concurrent banking transaction, such as the making of a deposit, section 20 is not wide enough to cover a record of a meeting between the bank and its customer.

186.However, in the judgment of the majority in R v Law Ka Fu, it was clearly the position of Power and Litton VPP, as Litton PJ and Power NPJ were then, that the credit card sales slips, the underlying transactions of which were no doubt not a concern of the bank, nevertheless fell to be regarded as “banker’s records”, and were admissible in evidence.  The fact that these credit card sales slips were received, collated for information and thereafter recorded in microfilm all indicated that they were “documents used in the ordinary business of a bank.” [174]

187.By parity of reasoning, absent any concern for a concurrent banking transaction, we are unable to see why Exhibit P123A should not fall under section 20.  On this last point, it is wrong to describe the exhibit as a record of a meeting.  It was not.  It was a 5-page “credit proposal”, in which the meeting with the applicants featured in only three, albeit important, paragraphs.  It was prepared by members of staff of the bank and, having reviewed the entire situation, it made recommendations to the bank as to the next step forward.  As such, clearly it was “a document or record used in the ordinary business of a bank”.  The judgments of the Court of Appeal of England and Wales to which the applicants referred the Court are of no assistance.[175]  In England and Wales, the statutory provisions still speak of “banker’s books”, which phrase is subject to a narrower interpretation than section 20 of the Evidence Ordinance.

188.Similarly, the alternative arguments advanced on behalf of the applicants are of no merit.  Notwithstanding that the “credit proposal” was drawn up eight days after the meeting [176], we are satisfied that the document falls to be regarded as contemporaneous in all the circumstances of the case. Secondly, notwithstanding the concession of one of its author’s, Ms Shannon Lau,[177] that part of the document relating to the meeting of 31 August 2011 was not a verbatim record of what was said by the applicants, the gist of it was corroborated by Ms Kitty Cheng, a Heng Sang Bank employee, who was present at the meeting.  Given the startling comments made by the 2^nd applicant, it is not surprising that Ms Cheng should have a clear memory of that meeting.  Of her evidence, the judge said: [178]

“ In this meeting, HSBC expressed their concern about the export bills. D2 gave an explanation. There came a shock as D2 said that the bills had nothing to do with the two companies and that he just took over bills and bought the bills from HSBC. To Madam Cheng’s understanding D2 was telling them that he treated these bills as their export bills and asked HSBC to prepare export bills for the goods.

Madam Cheng then asked the Dayaram lawyer, who also attended the meeting, if D2 was suggesting that he took over others’ bills and went to HSBC, bought some bills which he did not know anything about the goods.  The lawyer did not answer.  D2 did not see any problem with the answer and went on to talk about something else.”  [Italics added.]

189.Thirdly, both defence counsel [179] and the judge [180] had dealt extensively with why the content of Exhibit P123A may or may not be reliable.  It cannot be realistically argued that the jury was not fully apprised of the danger of placing weight on the document, if there be any such danger.

190.We are satisfied that there is no merit in the submissions made under ground 2.

Ground 3

191.By this ground it was averred that the judge misdirected the jury as to the ambit of each conspiracy count, by leaving it open to them to convict if they were satisfied that there was a general conspiracy to defraud rather than a specific agreement in relation to the particular bank or loan cited in each count.  Mr Marash submitted that each count was concerned with a particular import or export loan application and it was therefore incumbent upon the prosecution to prove a specific intention to defraud the particular bank to whom the application was made.  He pointed to the following passage as suggesting that the jury were being encouraged to find one over-arching conspiracy, instead of individual conspiracies in respect of each offence:[181]

“The prosecution did not have to prove that any defendant thought about defrauding any particular bank or that they even knew the names of the bank.  What you have to be sure of is that they knew that the agreed course of conduct carried out by themselves or by others involved exposing any banks to the risk of economic loss.  That is why you see towards the end of the particulars of the offence the wording “inducing the said bank to approve the said import or export loan applications and to release funds”.”

192.We say at once that it is not entirely clear what this passage means.  It could be that the judge, by reference now to the Particulars of the Offence, was referring back to the part of his summing up immediately before this passage where he had dealt with the meaning of the word “defraud”.[182]  Certainly, one of the distinctions he drew was between thinking of defrauding a bank and agreeing on a course of conduct which exposes a bank to the risk of economic loss.  However, we must accept that, viewed in isolation, it is an odd passage which provides some comfort for the complaint being advanced.

193.Nevertheless, as Mr Choy rightly submitted, in a summing up spanning almost 100 pages of transcript, it cannot be viewed in isolation.  Early on in his summing up, and well before the passage impugned, the judge gave a very full direction to the jury in relation to their separate consideration of counts and separate verdicts:[183]

“You must consider each of the defendants and each of the counts separately. They do not stand or fall together. The fact that you may find one of the defendants guilty does not mean that you must find the other defendant to be guilty. And the fact that you find one defendant to be not guilty on a count does not mean that you must find the other defendants not guilty on that or any other count. The fact that you find a defendant guilty on one count does not mean that you must find him or her or indeed any other defendant guilty on any other counts and vice versa.

Now, of course that does not mean that you must consider each count in isolation from the other counts.  There is quite a lot of common ground between the different counts in this indictment because they cover a course of business dealings over a long period of time and there are common features between the different counts.  You are entitled to use your decision in relation to the facts of one count to assist you in reaching a conclusion on the facts of another count.  But I emphasise that you must determine the verdict in relation to each count and each defendant separately to ensure that if you are to convict a defendant of an offence, the prosecution have proved that charge or count.”

194.The jury can have been under no illusion, therefore, that they had to approach each defendant and each count separately.  Indeed, we note that the 1^st and 2^nd applicants were convicted on Counts 1-6 by a majority of 6-1 but unanimously on Counts 7-9, while the 3^rd defendant was acquitted on all counts by a majority of 5-2.  It seems to us that the jury must have been faithful to the direction they received.

195.The judge in due course turned to the indictment, prefacing his examination of the elements of each offence with these remarks:[184]

“ Members of the jury, we must turn to the indictment, to the offences or charges which the defendants face and which I must give you directions on so that you know what it is that the prosecution seek to prove and what must be proven before you could find either defendant guilty on any count. So can you please take up your copy of the indictment.”

196.He then dealt with the concept of conspiracy and the meaning of “defraud”.  Shortly before the passage to which we have already referred (at para 191 supra), the judge said:[185]

“ So the issue in relation to each of the defendants is whether the prosecution have proved for sure that there existed fictitious transactions with no underlying goods and that they were party to the agreement and that they intended the agreement to be carried out and they acted dishonestly.”

197.It seems to us clear from the scheme of the summing up that the judge was endeavouring to impress upon the jury what needed to be proved in respect of each count against each defendant.  We do not think that it is realistic to suggest that the jury would have divined from the passage complained about that they were only concerned with one conspiracy, which if proved must inevitably lead to the guilt of the applicants.

198.With respect, Mr Marash’s reference to Gerakiteys v R [186]  is not to the point.  There, “the jury were told that they might convict the applicant of the conspiracy to defraud a number of insurance companies if there was evidence of an agreement between Harrison and the applicant to defraud one insurance company” [187], where on the facts there were a number of separate conspiracies involving different defendants and different insurance companies but no arrangement to which all of the defendants were parties to defraud all of the insurance companies.  That is not the position here, where the jury were told to examine the particulars of each conspiracy offence and the case of each defendant separately.

199.Ultimately, there is no real substance in this ground of appeal.

Conclusion

200.We grant the applicants leave to appeal against conviction on ground 4 only and, treating the hearing of the applications as the hearing of the appeal, we dismiss the appeals.

Mr Edwin Choy, on fiat and Miss Claudia KO, SPP (Ag), of the Department of Justice, for the respondent

Mr Daniel Marash, SC and Mr Benson Tsoi, instructed by Haldanes, for the 1^st applicant and the 2^nd applicant