HKSAR v. Chan Chung Leung

CACC000143/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

1998, No.143
(Criminal)

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Coram: Power, V.-P., Mayo and Stuart-Moore, JJ.A.

Date of Hearing: 18 September 1998

Date of Delivery of Judgment: 27 October 1998

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J U D G M E N T

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Stuart-Moore, J.A. (giving the judgment of the Court):

1. On 13th February 1998, this Applicant was convicted on charges, firstly, of trafficking in dangerous drugs and, secondly, possession of Part I poisons listed in the Pharmacy and Poisons Ordinance, Cap.138, contrary to sections 23(1) and 33(1). This followed a trial in the District Court before Judge Chua. The Applicant now seeks leave to appeal against both convictions.

2. The charge of trafficking is particularized in the following way:

"On or about 17th June 1997, at Flat D, Cotton Tree Mansion, 2nd Floor, Block 1, Site 7, Whampoa Garden, Hung Hom, Kowloon, in Hong Kong, unlawfully trafficked in dangerous drugs, namely 329 tablets containing a total of 1.9945 grammes of diazepam, 100 tablets containing a total of 0.47 grammes of nitrazepam, 133 capsules containing a total of 2.26 grammes of flurazepam hydrochloride, 500 tablets containing a total of 0.52 grammes of lorazepam, 40 tablets containing a total of 0.17 grammes of chlordiazepoxide, 200 tablets containing a total of 47 milligrammes of triazolam, 200 tablets containing a total of 95 milligrammes of alprazolam, 200 tablets containing a total of 3.81 grammes of midazolam maleate, 500 tablets containing a total of 1.49 grammes of bromazepam, 50 tablets containing a total of 0.10 gramme of flunitrazepam, and 28 capsules containing a total of 0.85 gramme of phentermine hydrochloride."

The second charge of possession of Part I poisons is particularized in this way:

"On or about 17th June, 1997, at Flat D, Cotton Tree Mansion, 2nd Floor, Block 1, Site 7, Whampao Garden, Hung Hom, Kowloon, in Hong Kong, had in his possession poisons included in Part I of the Poisons List, namely 150 tablets containing lovastatin, 60 tablets containing zopiclone, 161 tablets containing prochlorperazine maleate, 100 tablets containing propoxyphene hydrochloride and 300 ampoules containing a total of about 300 millilitres of a liquid containing nalbuphine hydrochloride, otherwise than in accordance with the provisions of the Pharmacy and Poisons Ordinance."

3. This should have been a case of the utmost simplicity. This large quantity of dangerous drugs and Part I poisons were found in the Applicant's possession. He is a licensed pharmacist. The defence at trial recognized that the Applicant was in unlawful possession of some of the drugs referred to in the first charge and, at least so far as these were concerned, the only issue to be decided was whether the Applicant was trafficking in those drugs or merely in unlawful possession of them.

4. Although there was an issue as to the voluntariness of the statements made by the Applicant, once these had been admitted as having been obtained voluntarily, there were the clearest admissions made by the Applicant to trafficking in these drugs. He admitted to the police that he had on occasions supplied "old customers" with dangerous drugs. These customers lived overseas.

5. In her Reasons for Verdict the judge listed the five evidential matters which the prosecution had relied on against the Applicant. These were:

"1) The variety and quantity of the prohibited drugs and Part I poisons found. These were in the main tranquillisers .

2) Two faxes:

a) CL28, which Mr. Macrae calls the 'Simo' fax dated 3 June 1997 (after the name of the sender).

b) CL40, the 'Caniza' fax, dated 15 June 1997.

3) The assorted bank books showing the defendant's numerous bank accounts and evidence that he was in possession of $8 million.

4) Three postal package receipts found in a green file in the defendant's home. These are P15(a),( b) and (c).

5) The admissions contained in P7 and P9."

6. This conveniently leads to the third and fourth grounds in this application relied upon by Mr. McCoy, S.C., who did not appear in the court below. Indeed, Mr. Macrae, who did appear for the defence at the trial, drafted what is now ground 3 of the Amended Perfected Grounds of Appeal. This reads:

"The judge had declared during the course of both prosecution and defence submissions that she would not place any weight on the possession by the Applicant of various passbooks, yet did so in her Reasons for Verdict."

7. The fourth ground, which is closely related to the third, states:

"The judge erred in law in ruling that assorted bank books in the possession of the Applicant, demonstrating a total of $8 million credit balances, were admissible as evidence of drug trafficking. In the alternative the evidence was more prejudicial than probative."

8. The subject of both these complaints is the third item in the list of principal matters relied upon by the prosecution which the judge had itemized. The judge said about these assorted bank books ("the bank books"):

"A number of bank savings books, deposit certificates and cheque books were seized which indicate the defendant had accounts with a number of banks. Asked in cross-examination how many, he said: 'So many I cannot remember.' Of those produced that I have examined, the accounts are in the name of the defendant or his wife or Peter Drugs & Gifts/Peter Pacific Company Limited. Asked how much money in total he had in his accounts, the defendant first asked, 'Those seized by you?', then said, 'Around $8 million.'

The prosecution inexplicably did not produce CL48, a property document to prove the flat is owned by the defendant. The defendant gave an extremely long and rambling answer as to why he had so many accounts. This may have put the prosecutor off his stride and there was no more cross-examination as to how this large amount was earned by someone who is employed as a pharmacist by a pharmacy in the Peninsula Hotel. It is not known what his salary was nor what income was derived from his side mail-order business of selling Chinese herbal medicine, cosmetics, Royal Jelly and perfume. Quite rightly, Mr. Macrae did not object to the admissibility of this evidence."

9. These passages, and others later on in the Reasons for Verdict, illustrate that the judge had taken the view that the Applicant's bank books were justifiably to be regarded as evidence against him on the charge of trafficking. This may not, at least superficially, be surprising for what, after all, was an employed pharmacist doing with such large sums of money in his savings?

10. We have firstly looked at the specific complaint in ground 3 to see whether there is any substance in it. Prosecuting counsel made an address to the judge that was less than impressive and the transcript reads as follows:

"Your Honour I also make another comment as regards the documentary evidence that the defendant does have a large number of bank accounts which could be ....

Court: What's the law on that?

Mr. Marray: There is no law on that, your Honour.

Court: What?

Mr. Marray: Well, sorry, I just say it's circumstantial evidence, your Honour, it's just circumstantial evidence. I haven't got any authority on the law on this.

Court: I don't think you've looked up much law on this at all, Mr. Marray. Do you make any point on the amount that he said he had?

Mr. Marray: He said he had about 8 million.

Court: Yes, so? What's the law on that?

Mr. Marray: Your Honour, I don't know, I haven't looked up the law on that.

Court: I'm extremely disappointed, Mr. Marray. I think I've bent over backwards last year, you know very well which case it was and this time .... I don't think you will find me so accommodating next time. Yes, anything else you want to say?"

11. Counsel for the prosecution then went on to another topic. It should be said in fairness to the judge that it is apparent, as Mr. McCoy fully recognises, that prosecuting counsel throughout the trial had been less than effective and extremely unhelpful.

12. Of course, the subject of the bank books was referred to once more during the final address made by Mr. Macrae. He addressed the court in the following terms:

"I want to go on to the bankbooks because you've raised the very point, I think, that concerns me. I submit that this evidence should be resolutely dismissed from the court's mind. Had prosecuting counsel sought to demonstrate how the proceeds of sale entered the defendant's accounts or sought to link the defendant's activities with his income, he might have been justified in cross-examination of the bankbook. As it was, he stopped short and the court was effectively invited to speculate that a man with $8 million in his accounts must have been a drug trafficker. Such evidence is more prejudicial than probative and once again, counsel has invited a conclusion to be drawn without actually asking the defendant how he made his money.

Court: He didn't ask, that's the whole point.

Mr. Macrae: Nobody asked.

Court: Yes. Well, of course, you wouldn't ask.

Mr. Macrae: Well, I mean, for all we know ...

Court: You wouldn't ask.

Mr. Macrae: ... the income may be partly his wife's. He may have won the Mark Six, he may have sold a flat, we don't know. It stopped short. What does it prove?

Court: It stopped short. Of course, you wouldn't have asked the question, Mr. Marray didn't ask, that's the point.

Mr. Macrae: That's my point.

Court: Yes, and he only cross-examined on the fact that there were many bank accounts.

Mr. Macrae: And I know Mr. Marray has been ...

Court: But the fact is all the bank accounts were in his name.

Mr. Macrae: Yes, has been given a difficult time but nevertheless it is not appropriate to ...

Court: He's been given a difficult time?

Mr. Macrae: ... throw something up - no, I've given him a difficult time quite apart from anybody else. But it's not enough ...

Court: If I'm giving him a difficult time this morning, it's because he deserved it.

Mr. Macrae: It's not to throw something up in submission which is not founded on evidence and I think it is a dangerous argument to say that somebody who has a lot of money in his account is a drug trafficker."

13. Here, the subject was closed. These passages are relied upon by Mr. McCoy to demonstrate that the judge had made her intention clear that she was not relying upon the bank books as providing any evidence against the Applicant.

14. We have not been able to discern what the judge was meaning to say. However, a careful scrutiny of the prosecutor's cross-examination does reveal that, whatever he may have intended he, in fact, failed to make any link of any kind whatsoever between trafficking in dangerous drugs and the money held in the Applicant's various accounts. Mr. Macrae is a highly experienced advocate and he obviously took the view, wrongly as it turned out, that the judge had decided that there was no evidential value to the account books. Whilst we do not think that this is what the judge had meant to indicate, we have no doubt that this is what Mr. Macrae thought was in her mind. He never addressed the subject again as he might have done if he had realized the way the judge's mind was working.

15. Turning now to ground 4, where Mr. McCoy complains that the Applicant's credit balances of $8 million should not have been admitted as evidence in the trial, the judge was relying upon the judgment of Lord Taylor C.J. in R v Grant, (1996) 1 Cr.App.R. 73 at 78:

"In our judgment, the finding of money, whether in the home of the appellant or perhaps, more cogently, in the possession of the appellant when away from his home, and in conjunction with a substantial quantity of drugs, is capable of being relevant to the issue of whether there was proved an intent to supply. It is a matter for the jury to decide whether the presence of money, in all the circumstances, is indicative of an ongoing trading in the drugs so that the presence of the drugs at the time of arrest is capable of being construed as possession with intent to supply ...

In our judgment it is necessary ... to indicate that any explanation for the money which has been put forward by way of an innocent explanation by the accused would have to be rejected by the jury before they could regard the finding of the money as relevant to the offence. Again, the jury should be directed that if there was any possibility of the money being in the accused's possession for reasons other than drug dealing, then the evidence would not be probative. If, on the other hand, the jury were to come to the conclusion that the presence of the money indicated not merely past dealing, but an ongoing dealing in drugs, then finding the money, together with the drugs in question would be a matter which the jury could take into account in considering whether the necessary intent had been proved."

16. Following from what we have already said regarding ground 3, there does appear to have been no link made between any of the moneys found in the bank accounts and drug trafficking. The Applicant gave evidence at some length when dealing with his savings. Amongst other things, he explained that he had worked as a pharmacist for many years and not only had his regular job at the Peninsula Hotel but had moonlighted for six years to run another shop business which was also involved in drugs that were lawfully supplied to the public.

17. It may well be that in a case of this kind, heard in the District Court, the evidence of finances will be admitted subject to its relevance to the charges being established in due course. In the High Court, the position may be different because a voir dire in all likelihood will have to be heard in order to determine the admissibility of that evidence before it is put in front of the jury.

18. In this particular case, the evidence of the bank books, which the prosecution clearly had intended to link with trafficking in drugs, was simply not forthcoming. Indeed, prosecuting counsel seemed, for a reason which is not apparent to us, to be content not to pursue the matter. In such circumstances, defence counsel was correct in saying that the evidence should have been put out of mind. The judge, with respect to her, should not in our opinion have relied upon the evidence of the Applicant's savings as forming any part of the case against him. The conditions set by Lord Taylor in Grant were simply not met, and the probative value of the bank books was nil.

19. Accordingly, we find that there is substance in grounds 3 and 4.

20. The first and second grounds can also be dealt with together, and they are very closely related to the grounds we have already considered. The first ground reads:

"The judge had privately noticed during the course of the Applicant's cross-examination that prosecution counsel had failed to ask questions of the Applicant in relation to a) his finances b) the quantity in round numbers, of the pills found. In the absence of the prosecution counsel making an issue of these matters the judge was obliged, as a function of fairness and natural justice, to raise these issues with the Applicant, before relying upon these matters to convict. The Applicant was never confronted with this evidence. The judge gave no notice of its importance. The prosecution never referred to it."

21. Ground 2 reads:

"Further or in the alternative to (1), the judge erred in law in further ruling that an inference could be drawn against the Applicant because he had not testified in relation to the 2 identified issues. The reliance upon the case of R v Sharmpal Singh, [1962] AC 188, 198, is completely erroneous and wrong in law. The Applicant did give evidence. The learned judge's ruling in her Reasons for Verdict that the Court could and would draw an inference against a defendant who does not give evidence in chief on all matters that the judge considers important (but who never alerts the defendant or prosecution to what those matters are) is an erroneous basis from which to draw an inference adverse to the defendant."

22. The passages which are criticized in particular are to be found in the Reasons for Verdict at page 24G to 25H and they read as follows:

"(Mr. Macrae) makes a further submission to an enquiry I put to him at that time. I asked if he could think of an explanation for the fact that the quantities of the drugs found were in round numbers. In his characteristic creditable manner, Mr. Macrae said he could not think of one and is still unable to provide one but he does submit it would be wrong to rely on something 'not canvassed in the defendant's evidence-in-chief nor in cross-examination nor in questions from the court. The prosecution has not mentioned it as a matter it relies on. I submit it would be wrong in the circumstances to draw an adverse inference from matters which might have been but were not canvassed or answered in evidence.'

I take the view it is often necessary in the interests of justice to ask questions. There are several reasons when I might ask questions, one of which might be to confirm that my understanding of what a witness has said is correct. I did notice Mr. Marray's omission to ask the defendant questions regarding his finances and the omission of both counsel to ask the defendant about the quantity in round numbers of each substance found, but felt any questions on my part, on these matters, would amount to descending into the arena.

It is not unusual for a good defence counsel to decide, in his wisdom, to leave a subject well alone, in the hope that its significance will be missed by the prosecution and the jury, or in this case, the judge. In my opinion, this does not prevent the judge or jury making a proper inference of fact from another fact or set of facts proved in evidence. What happens if the defendant had elected not to give evidence? I quote from Lord Devlin's judgment in R v Sharmpal Singh, [1962] AC 188 at 198, which seems to me to be apposite to this submission:

'The court must not be deterred by the incompleteness of the tale from drawing the inferences that properly flow from the evidence it has got, nor dissuaded from reaching a firm conclusion by speculation upon what the accused might have said if he had testified.'

And adding my own words 'on the subject'."

23. Whilst the neutrality of a judge is of paramount importance, so that "entering the arena" as it is often described is severely discouraged, there are occasions when judges must interrupt the proceedings in order properly to fulfil their judicial function. Indeed, a failure to do so may, on occasions, be extremely unfair to one side or the other. One obvious example amongst many, is where important admissible evidence has been led to establish a point that is intended to be adverse to a defendant's case but where the judge perceives that no questions, or insufficient questions, have been asked to establish whether or not there exists an innocent explanation before the leap is made towards a conclusion that it necessarily supports the prosecution's case. In these circumstances, whether the judge is sitting alone or with a jury, it is only right that an ambiguity of this sort is clarified before such evidence is, without warning, treated as if it can be relied upon as a pointer towards guilt. Either counsel should be invited to deal with the points arising or the judge may seek clarification, if it is appropriate to conduct that exercise without counsel's assistance.

24. The criticism in these two grounds of appeal is that the judge never attempted to find out the answers through questions asked by herself or by alerting counsel for the defence before the completion of the Applicant's evidence, even though these were crucial matters that were troubling her. By the time she raised these issues with Mr. Macrae in his final address to the court it was, short of recalling the Applicant, too late for them to be remedied. This was not a situation, unlike that in Sharmpal Singh, where the defendant did not give evidence. In this trial, the Applicant did give evidence when he could and, in fairness, should have been asked other questions about his finances based upon the judge's concern that these were still relevant to drug trafficking.

25. The same applies to the topic of the pills which had been found mainly in "round numbers". This appears to have arisen as an issue of any importance only in the course of defence counsel's final speech, when the judge inquired as to what the reason for this might be. If counsel had been alerted to the concerns of the judge, this would have enabled the defence to put evidence before the court dealing with those topics. As it is, counsel was never put on notice as he should have been and the Applicant was deprived of the opportunity of providing some explanation.

26. Accordingly, there is also substance in both these grounds.

27. Ground 5 complains that the judge should not have permitted Exhs. P15(a) and (c) to be introduced in the evidence or, alternatively, that she should have ruled them to be more prejudicial than probative.

28. These exhibits were certificates of posting in respect of parcels. The certificates were introduced late in the trial because the prosecutor had inadvertently forgotten to produce them through the proper witness earlier on, and had also apparently totally failed to appreciate their significance.

29. We need not say more than that we consider it was proper to have permitted the introduction of this evidence. The Applicant had admitted to police that he had in the past posted drugs overseas to certain old clients. These certificates bore false details of the sender so that, in the event of discovery in the course of posting, there could be no way to trace the sender. They were clearly relevant to the intent of the sender, whoever he may have been, because they demonstrated an anxiety to avoid any comebacks.

30. This ground fails.

31. Grounds 6 and 7 are minor complaints in comparison to the earlier matters which have been raised.

32. Mr. McCoy submitted, in ground 6, that in relation to the Zopiclone (CL5), no finding was made by the judge at all, although reference is made to it in a full paragraph in the Reasons for Verdict.

33. As to ground 7, there was independent evidence that the flunitrazepam (CL19) had been prescribed for the Applicant in a size that had not been manufactured since 1995, and it is submitted that the conviction relating to at least this drug must be in error.

34. These grounds may both have some substance to them but we do not need to decide them bearing in mind our findings on other grounds, and because, even if these two grounds were alone to succeed, the charges would otherwise remain intact.

35. Having regard to the substantial matters raised in grounds 1 to 4, we are satisfied that the convictions on these charges cannot be regarded as safe or satisfactory.

36. We have anxiously considered the application of the proviso. Indeed, Mr. Saw, S.C., on behalf of the Respondent, has not addressed us on any other basis. He submitted that the Reasons for Verdict should be "reconstructed" altogether and that by this process it could be seen that the verdict would inevitably have been the same, despite the errors which he conceded were made by the judge. He pointed in particular to the overwhelming nature of the case in terms of the large quantity of tablets found in the unlawful possession of the Applicant, the admissions to having supplied old customers, faxes found at the Applicant's address in which there are orders for the tablets and the very nature of the packaging and quantity of the drugs from which the obvious inference could be drawn that these were not prescribed either for him or for immediate members of his family.

37. Mr. Saw is no doubt correct in much of what he says. However, apart from the direct admissions, this was a case built upon circumstantial evidence and the properly drawn inferences which flowed from it. The judge found that "even with the most sympathetic approach, it was not possible to believe most of what (the defendant) said". In coming to that conclusion, we note the view taken by the judge of the evidence contained in the account books which is set out at page 23 of the appeal bundle:

"The defendant did not provide explicitly an innocent explanation for his possession of $8 million. I do not know his salary but it cannot be very much. I think the many bank accounts he had was to escape detection of his activity and make it difficult to trace all the proceeds from drug trafficking. He has told PW1 (answer 48, P9) the margin for profits was 80 per cent from drugs. He had no overheads. I infer from this evidence much of the $8 million was derived from drug trafficking."

38. A little later, the judge also made clear that she adopted the view that the fact that these drugs were found generally in "round numbers" was also something from which an adverse conclusion could be drawn.

39. We cannot say, nor can we speculate, as to the extent to which the Applicant's credibility was destroyed by these findings. Clearly, however, these were crucial and central issues in the judge's mind, especially insofar as the accounts were concerned.

40. Despite the force of Mr. Saw's argument, therefore, in a simple case such as this, where the Applicant may not have received a fair trial because the judge has misdirected herself upon two crucial issues, we do not feel it right to apply the proviso.

41. Accordingly, we grant leave and, treating the hearing as the appeal, we shall allow the appeal and quash the conviction on the first charge of trafficking in dangerous drugs.

42. On the facts of this case, we have been invited by Mr. Saw S.C., on behalf of the Respondent, to substitute under section 83A of the Criminal Procedure Ordinance a conviction for the possession of the dangerous drugs in charge 1. Mr. McCoy S.C. did not, having reflected upon that application, oppose this course. We think it would be appropriate to make the substitution.

43. Accordingly, we substitute for trafficking on charge 1 a conviction for the offence of possession of the dangerous drugs listed in that charge. We feel that justice would be done, having been told by Mr. McCoy that the Applicant's career as a pharmacist is effectively at an end, by the imposition of a fine of $50,000.

44. The conviction on charge 2, as Mr. Saw, S.C., has today pointed out, was never addressed in argument by either side so that the conviction for possession of Part I poisons, and the sentence imposed for it, will stand.

Representation:

Mr. D.G. Saw, S.C., S.A.D.P.P., and Miss Agnes Chan for D.P.P./Respondent

Mr. Gerard McCoy, S.C., and Mr. Sher Hon-piu, instructed by Messrs. Ivan Tang & Co for Applicant.