HKSAR v. Cheung Chun Yuen Barry

Read the full judgment text of CACC 112/2020 on BabelCite. This Court of Appeal judgment was delivered on 16 February 2022.

1. On 17 July 2020, following a 25-day trial before HH Judge Woodcock (“the judge”) in the District Court, the applicant was convicted of Conspiracy to defraud, contrary to Common Law and punishable under section 159C(6) of the Crimes Ordinance, Cap 200 (Charge 1); and Fraud, contrary to section 16A of the Theft Ordinance, Cap 210 (Charge 2).  On 23 July 2020, he was sentenced to 4 years’ imprisonment [1] .

Cited by 1 case · Cites 2 cases

Case No.CACC 112/2020[2022] HKCA 247
Court
Court of Appeal
Date16 Feb 2022
Judge
Case Document
100%Judiciary

CACC 112/2020

[2022] HKCA 247

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 112 OF 2020

(ON APPEAL FROM DCCC NO 718 OF 2017)

________________________

BETWEEN    
  HKSAR Respondent
  and
  Cheung Chun Yuen Barry (張震遠) Applicant

________________________

Before: Hon Macrae VP in Court

Date of Hearing: 10 February 2022

Date of Judgment: 16 February 2022

________________________

J U D G M E N T

________________________

A. Introduction

1.On 17 July 2020, following a 25-day trial before HH Judge Woodcock (“the judge”) in the District Court, the applicant was convicted of Conspiracy to defraud, contrary to Common Law and punishable under section 159C(6) of the Crimes Ordinance, Cap 200 (Charge 1); and Fraud, contrary to section 16A of the Theft Ordinance, Cap 210 (Charge 2).  On 23 July 2020, he was sentenced to 4 years’ imprisonment[1].

2.By a Notice of Application for leave to appeal filed on 4 August 2020, the applicant originally sought to appeal against both conviction and sentence.  He subsequently filed a Notice of Abandonment of his application in respect of sentence, which was formally dismissed on 3 May 2021.  Accordingly, he now applies for leave to appeal against conviction only.

3.The applicant was represented before me by Mr Martin Hui SC, with him Mr Tony Li, neither of whom represented the applicant at trial; while Mr John Reading SC, with him Mr Jonathan Kwan, appeared for the respondent, as they did for the prosecution at trial.

B.     Prosecution case

B.1.  Charge 1

4.At all times encompassed by the charge, the applicant was the chairman, executive director and major shareholder[2] of the Hong Kong Mercantile Exchange (“HKMEx”); while Mr Choi Tat-ying, Jacky (“Jacky Choi”) PW7, was its chief financial officer.  By Charge 1, it was alleged that the applicant and Jacky Choi:

“…between May 2012 and May 2013, in Hong Kong, conspired together to defraud the Securities and Futures Commission [“SFC”] by dishonestly: -

(a)  concealing from or failing to disclose to [SFC] material information in relation to the financial position of [HKMEx];

(b)  causing and/or permitting false or misleading information in relation to the financial position of [HKMEx] to be supplied to [SFC]; and

(c)  causing and/or permitting [HKMEx’s] reports to [SFC] to be prepared in such a way as to show a false or misleading financial position of [HKMEx],

and thereby causing [SFC] not to withdraw the authorization it had granted to [HKMEx] for providing automated trading services in Hong Kong.”

5.In April 2011, SFC granted an authorisation (“the Authorisation”) to HKMEx to provide automated trading services subject to specified conditions[3]; in particular, that HKMEx should regularly report its financial position[4] and keep sufficient financial resources in its bank accounts[5].

6.In and from September 2011, SFC became concerned about HKMEx’s financial position and required HKMEx to submit monthly reports showing the cash balance at the close of each Friday, whilst relaxing the specified condition to keeping a cash balance equivalent to two months’ operating costs (the so-called two-month-critical-level (“TMCL”)[6].  If the cash balance fell below the TMCL, HKMEx had 7 days to rectify the position[7].

7.Amongst other events, SFC issued the first letter of mindedness (“LOM”) on 21 March 2012, followed by a second LOM on 25 April 2012, after which the applicant borrowed short-term loans to keep HKMEx afloat and SFC satisfied.  This included, inter alia, cashing in a $30M loan on 17 April 2013[8] (the subject matter of Charge 2), and depositing seven cheques as repayments between May 2012 and January 2013[9], all of which were subsequently dishonoured without SFC being informed[10].  The relevant details of the seven cheques were:

 
Amount
Date of issuing
Date of dishonouring
The 1st cheque
$10M
8 May 2012
10 May 2012
The 2nd cheque
$30M
18 June 2012
19 June 2012
The 3rd cheque
$10M
23 July 2012
25 July 2012
The 4th cheque
$15M
3 September 2012
4 September 2012
The 5th cheque
$35M
3 October 2012
5 October 2012
The 6th cheque
$35M
9 October 2012
10 October 2012
The 7th cheque
$7M
9 January 2013
11 January 2013

8.The prosecution alleged that the applicant (and Jacky Choi) dishonestly defrauded SFC through five categories of acts, namely: (a) the seven instances of dishonoured cheques (as detailed above); (b) seven instances of window-dressing (which included the $30M loan in Charge 2); (c) seven instances of false information; (d) six instances of misrepresentation or misleading information; and (e) five instances of favourable snapshots[11]. Notwithstanding the use of different expressions, and the fact that three were overlapping instances, the five categories of acts aimed to achieve a common purpose, that is, to give SFC a false or misleading picture of HKMEx’s financial position.  The prosecution’s position was that proof of some incidents was sufficient to establish an overall dishonest scheme[12].

9.As a result of HKMEx’s persistent failure to comply with the specified conditions (notwithstanding that various extensions for such compliance were granted), SFC issued a third LOM on 9 April 2013, but to no avail.  On 17 May 2013, HKMEx surrendered the Authorisation and SFC formally issued a Notice of Decision withdrawing the Authorisation[13].

10.At trial, Jacky Choi testified for the prosecution that, in mid-2012, he received general instructions from the applicant regarding the particularised acts in Charge 1, in order to create a false impression that HKMEx had sufficient cash levels over time[14]. Although, in cross-examination[15], Jacky Choi accepted that he did not believe SFC would revoke the Authorisation if HKMEx failed to rectify the financial position within the stipulated 7 days[16], PW1 and PW2, the former executive director and the then executive director of SFC respectively, both testified that SFC’s decisions to grant and extend the Authorisation were dependent upon the financial information provided by the grantee, the accuracy of which was important[17]. PW2 also explained why, given the known circumstances in the present case, SFC gave HKMEx various extensions and leeway to rectify its financial position[18].

11.It should also be noted, for the sake of that part of the argument in Ground 1 infra, which is concerned with motive, Jacky Choi testified that, in light of the voluminous cash inflow and outflow during the relevant period, if every transaction had been reported, SFC would have asked many questions which he wanted to avoid[19].

B.2.  Charge 2

12.In respect of Charge 2, it was alleged that the applicant:

“…between the 12th day of April 2013 and the 17th day of April 2013, both dates inclusive, in Hong Kong, by deceit, namely by falsely representing to Ng Ho-shuen that the entire shareholding in New Effort Holdings Limited had not been pledged to any other person or entity as security, and with intent to defraud, induced Sinomax Finance Limited to commit an act or a series of acts, namely to part with a total sum of $30,000,0000 Hong Kong currency, which resulted in benefit to the said New Effort Holdings Limited or prejudice or a substantial risk of prejudice to the said Sinomax Finance Limited.”

13.In April 2013, Mr Ng Hoi-shuen (“PW5”), the manager of Sinomax Finance Limited (a moneylending company), was approached by the applicant urgently requesting a $30M loan and offering to pledge his shares in New Effort Holdings Limited (“New Effort”), a BVI company of which he was the sole director and shareholder[20], as collateral.  The loan was granted on 17 April 2013[21], with its maturity date being extended twice, on 16 May 2013[22] and 21 June 2013[23] respectively, when the applicant was unable to repay the loan.  PW5 accepted that he had complete trust in the applicant[24], and therefore dispensed with the usual practice that the loan agreement be drafted by professional legal counsel[25].  That said, he was adamant that the collateral was an important factor in agreeing to the loan[26].  He was provided a certificate showing the applicant’s purported title to the New Effort shares (the “Share Certificate”)[27], whilst accepting that he could not tell whether the Share Certificate provided was the original or a photocopy.[28]  The terms of the borrowing also made reference to using/pledging the New Effort shares as collateral, viz.:

(a)  Pursuant to Clause 1.3 of the Loan Agreement dated 17 April 2013, “The Borrower is willing to use all the shares of New Effort Holdings Limited as collateral for this Loan.  Should the Borrower fail to carry out any stipulation in the Agreement, all the shares of New Effort Holdings Limited will be transferred to the Lender”[29] (although, originally, there was no such Clause 1.3 in the draft loan agreement[30]).

(b)  Pursuant to Clause 2.3 of the Extension Loan Agreement dated 15 May 2013, “the Borrower is willing to pledge all (its) shares of New Effort Holdings Limited as collateral and delivers the relevant original share certificate(s) and signed share transfer document(s) to the Lender for custody”[31].

14.It was not disputed that the New Effort shares had also been pledged as collateral to Fully Field Limited, from which New Effort borrowed a HK$80 million loan in November 2012, and that pledge remained extant as at April 2013[32].

C.     Defence case

15.The applicant elected to testify at trial and called one witness (DW1, whose evidence was related to the seven dishonoured cheques).  In respect of Charge 1, the applicant’s principal defence was that he held a strong belief that the specified conditions were not strictly enforced by SFC and that he had done nothing to occasion such non-enforcement[33]. Neither was he unaware of the fraudulent acts which were carried out by Jacky Choi or other employees[34] of their own volition without his instructions[35]; on the contrary, he had instructed them to report to SFC accurately and in a timely fashion[36].  The applicant also said that he was focused on raising funds for HKMEx, and not in preparing the weekly reports for which Jacky Choi was responsible[37].

16.In relation to Charge 2, the applicant testified that he met PW5 in April 2013 to discuss the amount, interest and duration of the loan and then left the loan agreement to be drafted by Jacky Choi[38]. He claimed that PW5 did not require any collateral until May 2013 when he had run into financial difficulties, whilst accepting that PW5 did request of him, as early as 17 April 2013 when he signed the loan agreement, a copy of the Share Certificate[39]; although PW5 was also informed that the shares had already been pledged to a third party[40].

D.     Reasons for Verdict

D.1.  Charge 1

17.The judge found that the applicant was “very hands-on” in running HKMEx and knew the conditions of the Authorisation[41]. She considered it “inconceivable that [the applicant] was not aware if [HKMEx] had sufficient funds to satisfy the SFC every Friday”; on the contrary, she found that “he was fully in control of the finances as his main priority”[42].

18.Whilst accepting that the applicant might be “justified in believing at the beginning that [SFC] would not withdraw the Authorisation just because the cash balance was not always in compliance”[43], the judge found that the matter became more critical over time, pointing out, by way of example, that “by mid-2012, the SFC’s concern grew as evidenced by the correspondence and growing demands”[44]; “from October 2012 the SFC put pressure on [HKMEx] to comply with the TMCL or risk losing the Authorisation”[45]; “by the end of the year 2012, the SFC indicated they wanted [HKMEx] compliant to the original financial terms…”[46]; and “by the 3rd LOM on 9 April 2013, it was clear the Authorisation was actually at risk”[47]. She also reasoned that the applicant “bore the brunt of the pressure”[48].

19.The judge found that the applicant, having given general instructions to Jacky Choi, knew that a false or misleading financial position of HKMEx would be presented to SFC.  She said[49]:

“I am sure the reason he could leave it to Jacky Choi to submit the weekly reports and be confident the SFC would be satisfied is because he had given general instructions to Jacky Choi to do what he needed to do to present an acceptable cash balance to the SFC. As a result, Jacky Choi did what he could to deliberately conceal, when it was necessary, the true financial position of the Exchange from the SFC.”

20.As regards the five categories of acts alleged by the prosecution, the judge remarked that[50]:

“The fact is the prosecution have demonstrated from the documentary evidence and the bank account statements that the Exchange did make misleading and/or false representations to the SFC at the material time. [Jacky Choi] admitted he was behind it. The defence did not put to Jacky Choi that those misleading and/or false representations were not made.”

21.The judge disbelieved the applicant’s evidence, which she said was “designed to distance himself from the dishonest means”[51] and was “tailor-made to exonerate himself”[52], bearing in mind “his stake was so high [and] he had the most to lose”[53], and hence a motive to lie to SFC[54]; whereas Jacky Choi was “a man who followed instructions”[55].

D.2.  Charge 2

22.In respect of Charge 2, the judge described PW5 as a “somewhat reluctant witness” and reminded herself that his “evidence must be analysed carefully”[56]. She had recourse to Clause 1.3 of Exhibit 120, and Clause 2.3 of Exhibit P121, and posed the question, “Why would he have 2 such documents [i.e. a copy of and a purported original share certificate] if not offered … as collateral and why would there be such clear reference to it in the agreement if it was not offered as collateral?”[57]

23.Accordingly, having considered the credibility of PW5, of whom she said[58]:

“[PW5] may have been confused at times during his evidence but when he said his company would need collateral for a $30 million loan, I believe him”,

she found that collateral was required for the agreement.

24.In finding that Charge 2 was proved, the judge held[59]:

“I find the oral evidence, the physical possession of a New Effort share certificate and its copy as well as the written terms of the loan referring to New Effort shares as collateral make me sure that the defendant, leading up to the signing of that loan on 17 April 2013, did offer the New Effort share as collateral when it had already been pledged to another. I suspect a second original share certificate was created because the New Effort share was offered as collateral. There is no other explanation and the defendant denied any knowledge of its creation or existence.”

E.     Grounds of appeal

25.Mr Hui has advanced two grounds of appeal, one in respect of each charge.

E.1.  Applicant’s submissions on Ground 1

26.By Ground 1, it is submitted that the judge failed sufficiently to consider the individual states of mind of the applicant and Jacky Choi at the time of the forming of the conspiracy; in particular, Jacky Choi’s own belief that SFC would not revoke the Authorisation, which undermined the prosecution case regarding any motive to deceive.  Mr Hui contended that participation in sharp practice in order to avoid being questioned by SFC was not dishonest and did not amount to a conspiratorial agreement to deceive. 

27.He further submitted that the prosecution evidence was inadequate to show with sufficient precision what the applicant had discussed with Jacky Choi, let alone that they had entered into a dishonest agreement causing SFC not to withdraw the Authorisation.  He complained that the judge failed to consider the credibility of Jacky Choi, who had decided to implicate the applicant only after the court asked whether he would[60]; and his reliability, since his answers to SFC when interviewed and his evidence to the court were different.

E.2.  Applicant’s submissions on Ground 2

28.By Ground 2, Mr Hui referred to seven matters which were said to demonstrate unreliable and inconsistent aspects of PW5’s evidence; in particular, that he was not absolutely sure whether he had received the Share Certificate within the charged period, quite apart from the issue of whether it was the original or a photocopy. 

29.Mr Hui also argued that, since the draft loan agreement made it clear that the shares were not then available to be pledged, and that when PW5 himself acknowledged there were problems with the shares he still agreed to extend the maturity of the loan, the loan was, logically, granted on a trust basis requiring no collateral in the first place.  It was inherently probable that the issue of collateral had nothing material to do with the granting of the loan at all, as distinct from its subsequent extensions.

30.The seven matters emphasised by Mr Hui were[61]:

(a)  The draft loan agreement did not contain Clause 1.3, which only appeared in the formal agreement.

(b)  PW5 stated when interviewed by SFC that he was aware of some unresolved problems with the shares, but insisted in court that he was only told of such problems “at the end”[62].

(c)  PW5 was not given the original share certificate at the time of the loan agreement, thereby supporting the notion that the issue of collateral had only arisen after the loan had been granted.

(d)  The loan was granted on a trust basis.

(e)  For the reason referred to at (c), Exhibit P121 mentioned the future delivery of the original Share Certificate.

(f)  For the reason referred to at (c) and (e), Exhibit P122 mentioned the inability to give the Share Certificate to PW5 during the charged period.

(g)  PW5 realised that there were some problems with the applicant’s shareholding, although the question remains when did so realise?

F.     Respondent’s submissions

F.1.  Respondent’s submissions on Ground 1

31.Mr Reading argued that the applicant must have been aware of HKMEx’s financial position at the relevant times and the importance of the conditions imposed on the Authorisation.  He pointed out that the defence had not challenged the five categories of acts, resulting in the financial positions of HKMEx being over-stated, thus providing a benefit to HKMEx[63]. His position was that the conspiratorial agreement was evidenced by the applicant’s standing instructions to Jacky Choi, who carried out the acts; and that agreeing to perform such acts was enough to constitute dishonest intent, the finding of which stood independently from what Jacky Choi’s motive may have been.

32.The respondent submitted that there was sufficient evidence to establish most, if not all, of the instances covered by the five categories of acts:

(a)  Dishonoured cheques – Jacky Choi was instructed by the applicant to conceal from SFC that at least 6 cheques had bounced.

(b)  Window-dressing – The true financial position on the reporting day, namely Friday, fell far below that on the day on which the cash level was actually reported.

(c)  False information – Jacky Choi knowingly provided false information to SFC on numerous occasions as instructed by the applicant[64]. He also explicitly confirmed the applicant’s involvement in two instances (namely, the second instance between 2 and 4 January 2013[65] and the fourth instance between 25 and 27 February[66]).

(d)  Misrepresentation or misleading information – Jacky Choi again acted as instructed, in particular, to await the money to remedy the shortfall in cash balance before he could report to SFC[67].

(e)  Favourable snapshots – Jacky Choi followed the applicant’s instructions, in particular, to doctor the financial reports so that the cash balance ‘snapshot’ shown to SFC was as great as possible[68].

33.In respect of the testimony of Jacky Choi, Mr Reading made the point that a person should not be taken as fabricating his evidence simply because he has testified against his co-accused in the hope of receiving a more lenient sentence.  It was submitted that Jacky Choi’s supposedly inconsistent answers were attributed to a lapse of memory, which improved with time and familiarity with the documentation so as to enable him to recall the events in question.

F.2.  Respondent’s submissions on Ground 2

34.Mr Reading pointed out that all seven matters[69] had been well traversed in the judge’s Reasons for Verdict.  A crucial aspect of PW5’s evidence, which was unchallenged at trial and accepted by the judge, was that collateral was required for the loan and the only collateral referred to in the agreements concerned was the shares in question.  Given the terms of enforcement stipulated, there must have been an understanding at the outset that the shares were available for transfer to the lender in case of default of payment. 

35.Mr Reading emphasised that the offence turned on the misrepresentation that the shares were available for security at the time of borrowing, not when the title document was effectively delivered.  He further maintained that the granting of the loan on a trust basis, when considered in its proper context, only meant that the engagement of legal counsel in drafting the loan agreement (as opposed to the requirement of collateral) could be dispensed with.

G.     Consideration

36.As Mr Hui acknowledged, both grounds of appeal are essentially factual complaints about the way the judge has resolved the evidence.  Although Ground 1 may be said to be a question of mixed law and fact, since the legal issue of whether there was a meeting of minds for a conspiracy depends upon the findings of fact as to what was done and why and the inferences to be drawn therefrom, Ground 2 is a pure question of fact. That is not to say that such an appeal on fact cannot be reasonably arguable: however, it does mean that unless an applicant can point to a misreading of the evidence by the tribunal of fact to the extent that the conclusions to which the tribunal came were either not properly based in, or were contrary to, the actual evidence so as to render the verdict unsafe and unsatisfactory, or unless one can say that no reasonable tribunal properly addressing itself to the evidence could have come to the conclusions it did, then it is difficult to upset the findings of a judge who has seen and heard the evidence. 

37.The judge’s comprehensive Reasons for Verdict, which, including annexes, run to 160 pages, have not been criticised for any factual error or misunderstanding of the evidence: rather, the complaint concerns her analysis or evaluation of that evidence.  Nevertheless, Mr Hui has put this application on the basis that there are a number of cogent matters which, even though factual, are sufficiently important when taken together to merit the examination of the full Court of Appeal.

G.1.  (Ground 1)

38.Central to his argument on Ground 1 is the complaint that aspects of Jacky Choi’s evidence were at best unclear and uncertain, at worst contradictory and confusing, so that it could not establish that there was a conspiracy between himself and the applicant; certainly not to the extent of establishing the case beyond reasonable doubt.  Mr Hui has taken me to various passages in the evidence where Jacky Choi had appeared to suggest there were no specific instructions from the applicant, only general instructions as to how to deal with SFC, which were not necessarily sinister, given the context that both knew SFC had in the past been flexible with the enforcement of their requirements in respect of HKMEx.

39.As a result of Mr Hui’s submissions on the evidence, I decided to reserve my judgment so that I could re-read the entirety of Jacky Choi’s evidence against the judge’s findings in relation to it.  In doing so, I noted in particular it was Jacky Choi’s evidence that, in order to make the cash level go above the TMCL, there “was an instruction from [the applicant] to make the balance as great as possible”, which he accepted “was misleading the SFC”[70]. Although Mr Hui was able to focus on other expressions from the witness which were said to be lacking in certainty, this piece of evidence was clear and explicit. As I have said, the defence did not challenge that the five categories of false or misleading representations were in fact made: the defence was effectively that they did not really matter or affect the way SFC would have treated HKMEx. However, the evidence of the SFC witnesses clearly was that they did matter, while it was Jacky Choi’s evidence that what he had done was not at his own initiative but at the behest of the applicant.  The judge found[71]:

“405. The credibility of the witness Jacky Choi pivots on whether he did this all by himself, on his own volition or whether he did it according to the instructions given to him by the defendant. Be it specific instructions like not to report those 7 dishonoured cheques to the SFC or less particularised instructions such as try your best to make the accounts look their best to satisfy the SFC or to keep the SFC in the dark as long as possible about the true position of the Exchange.

406. Having watched PW7 give evidence, I do not believe that he took it upon himself to manipulate the SFC so that they would not assess and scrutinise the financial position of the Exchange and consider withdrawing the Authorisation.  He said on numerous occasions that he followed the instructions given to him by the defendant.  The impression he gave me was one of a man who followed instructions.  I found him credible and truthful, there were no discrepancies or anomalies so serious that I could not rely on his evidence.”

40.I cannot see any reasonably arguable grounds of appeal which might unsettle these findings.  The evidence was there and the judge has given her reasons for why she interpreted it and found as she did. As for any differences between Jacky Choi’s evidence and what he told SFC in interview, it seems to me that these variations are rather more apparent than real.  In any event, the judge specifically addressed this issue but found it is one thing not to remember something during interview when “put on the spot” but to later recall the event in evidence having reviewed emails and documents: it is another to give contradictory accounts in an interview and to the court[72].  Ultimately, bearing this matter in mind, she accepted Jacky Choi’s evidence.  Again I do not think it is reasonably arguable that the judge’s conclusions were wrong.  It is after all the sort of evaluative exercise that judges are routinely called to make every time there are differences between what a witness says in evidence and what he has earlier said in a statement or interview to an investigating authority.

41.As for the legal argument in Ground 1, the problem for the applicant is that a benign motive (or hope) that SFC would not in fact be defrauded because it had shown flexibility and a relaxed attitude to enforcement in the past does not avail him if he nevertheless had the intention to put false or misleading information before SFC so that it would not withdraw the Authorisation.  This distinction was explained in the Privy Council decision of Wai Yu-tsang v The Queen[73], a judgment emanating from this jurisdiction which was approved and applied by the Court of Final Appeal in Mo Yuk Ping v HKSAR[74]:

“It is however important in such a case, as the Court of Appeal stressed in R v Allsop[75], to distinguish a conspirator’s intention (or immediate purpose) dishonestly to bring about a state of affairs from his motive (or underlying purpose). The latter may be benign to the extent that he does not wish the victim or potential victim to suffer harm; but the mere fact that it is benign will not in itself prevent the agreement from constituting a conspiracy to defraud. Of course, if the conspirators were not acting dishonestly, there will have been not conspiracy to defraud; and in any event their benign purpose (if it be such) is a matter which, if they prove to be guilty, can be taken into account at the stage of sentence.”

42.The judge was alive to this distinction but in any event found that the applicant did have the requisite intent, and that his motive was not benign[76]:

“401. I do not accept the evidence that he had no motive to give such an instruction because he knew and always believed that the SFC would not withdraw the Authorization because the Exchange sometimes failed to comply with the relaxed financial condition. He may at the beginning have hoped that this would be the case but with deadlines imposed, the evidence of the witnesses especially PW1 and PW2 as well as the plain and ordinary meaning of the SFC’s correspondence with him show that there could not have been any misunderstanding on his part. His evidence that he had no motive to conspire with Jacky Choi is designed to distance himself from the dishonest means use to defraud the SFC. His stake was so high in the exchange that he had the most to lose.”

43.I do not find Ground 1 to be reasonably arguable.

G.2.  (Ground 2)

44.As I have said, and as is accepted, Ground 2 is a pure question of fact.  Although Mr Hui has referred to seven matters which are said to undermine the evidence of PW5, the judge noted these issues and dealt with his evidence extensively.  Again, this ground does not complain that the judge misstated or misunderstood the evidence: the complaint is how she resolved it.  She was certainly aware of the shortcomings of PW5 as a “somewhat reluctant witness who was clearly in awe or somewhat star struck by the (applicant) after meeting him”[77]. However, she did not just rely on the evidence of PW5 but on the plain terms of the loan agreement and its extension.  Moreover, she did not believe the applicant.

45.Because of the judge’s comment that she accepted “enough of PW5’s evidence to find him reliable in his recollection that he was offered collateral at the time of the loan in the form of New Effort shares”[78], I have looked carefully at his evidence and the findings the judge made in relation to it.  I do not see that there are any reasonably arguable grounds of appeal in respect of the judge’s evaluation and assessment of the evidence of PW5 and her conviction of the applicant on Charge 2.

H.     Conclusion

46.Mr Hui has presented the application very attractively.  But an attractively put application for leave to appeal does not amount to a reasonably arguable one.  I do not find there are reasonably arguable grounds of appeal against conviction in this case justifying the grant of leave.  Accordingly, I must refuse leave to appeal.

47.The applicant is advised that he has the right to renew his application for leave to appeal to the Court of Appeal, but he should also be warned that the Court has the power to order the loss of any time which the applicant has spent in custody pending his appeal, if it were to come to the conclusion that there was no justification for the renewal of the application.

  (Andrew Macrae)
Vice President

Mr John Reading SC and Mr Jonathan Kwan, counsel on fiat, instructed by the Department of Justice, for the Respondent

Mr Martin Hui SC and Mr Tony C Y Li, instructed by Leung & Lau, Solicitors LLP, for the Applicant

[1] He was also disqualified from being a company director for 5 years.

[2] His initial shareholding was 56% (Reasons for Verdict, at [3]); at the time of Charge 2, his claimed shareholding was 61% (Reasons for Verdict, at [173]).

[3] Pursuant to section 95(2) of the Securities and Futures Ordinance, Cap 571 (“SFO”).

[4] Suffices it to point out that SFC initially required a monthly report only.

[5] Reasons for Verdict, at [7]-[8].

[6] Reasons for Verdict, at [48].

[7] Reasons for Verdict, at [53].

[8] The loan amount was included in the weekly report dated 19 April 2013 (Friday), whilst $32,265,000 in total was paid out by HKMEx to New Effort Holdings Limited (“New Effort”) by 19 April 2013: Appeal Bundle (“AB”), p 195.

[9] Six of which cheques were drawn by Perfect Legend Trading Limited, and one from Thunder House Electrical Appliance Co.

[10] The prosecution alleged that the applicant actively decided not to report the facts of the dishonoured cheques to SFC: Prosecution’s written closing submissions, at [27.2]: AB, p 1069.  When asked by Jacky Choi whether the events should be reported, the applicant answered on each occasion there was “no need”: Prosecution written Closing Submissions, at [31], [41], [47], [53], [64] and [69] (AB, pp 1070-1078), although the dishonouring of the 5th cheque was reported after 3 working days.  By contrast, the applicant’s evidence in court was that he did not instruct Jacky Choi not to disclose the events and nobody asked him if SFC should be informed: Reasons for Verdict, at [20], [299] and [314].

[11] Reasons for Verdict, at [13].  The date and detail of each incident were summarised in Annex B to the Reasons for Verdict.

[12] Prosecution’s written closing submissions, at [5.1]: AB, p 1061.

[13] Pursuant to section 98(1) of the SFO.

[14] Reasons for Verdict, at [234]-[235].

[15] Which lasted one and a half day, namely 20 April 2020 and 21 April 2020 (am).

[16] Reasons for Verdict, at [259].

[17] Reasons for Verdict, at [121], [122] and [157].

[18] Reasons for Verdict, at [148]-[149].

[19] Reasons for Verdict, at [241].

[20] Admitted Facts, at [9]-[10]; Reasons for Verdict, at [44].

[21] Loan agreement of $30M between Sinomax Finance Limited (“Sinomax”) and New Effort dated 17 April 2013 (Exhibit P120) (English translation): AB, pp 1203-1212.

[22] Extension loan agreement of $30M between Sinomax and New Effort dated 15 May 2013 (Exhibit P121) (English translation): AB, pp 1240-1248.

[23] Second extension loan agreement of $30M between Sinomax and New Effort dated 21 June 2013 (Exhibit P122) (English translation): AB, pp 1267-1286.

[24] Reasons for Verdict, at [188].

[25] Reasons for Verdict, at [176].

[26] Reasons for Verdict, at [175].

[27] AB, p 1197.

[28] Reasons for Verdict, at [179] and [193].  As a side note, it transpired when PW5 gave evidence in court that there were two original share certificates and the one produced by PW5 was the 2nd original share certificate, of which the applicant claimed to have no knowledge: Reasons for Verdict, at [195].

[29] AB, p 1205.

[30] Draft loan agreement of $30M between Sinomax and New Effort, undated (Exhibit P120[1]) (English translation): AB, pp 1221-1231.

[31] AB, p 1242.

[32] Reasons for Verdict, at [422].

[33] Reasons for Verdict, at [18].

[34] Including a Ms Ann Cresce, General Counsel and Head of Compliance of HKMEx, who was not charged due to insufficient evidence: Transcript of hearing on 6 November 2016 (AB, p 1366P-Q).

[35] Reasons for Verdict, at [296].

[36] Reasons for Verdict, at [300].

[37] Transcript of the applicant’s evidence: AB, p 989G-I.

[38] Reasons for Verdict, at [322].

[39] See AB, p 1197.

[40] Reasons for Verdict, at [323] and [325].

[41] Reasons for Verdict, at [383].

[42] Reasons for Verdict, at [385].

[43] Reasons for Verdict, at [386].

[44] Reasons for Verdict, at [386].

[45] Reasons for Verdict, at [396]

[46] Reasons for Verdict, at [387].

[47] Reasons for Verdict, at [389].

[48] Reasons for Verdict, at [396].

[49] Reasons for Verdict, at [398].

[50] Reasons for Verdict, at [404].

[51] Reasons for Verdict, at [401].

[52] Reasons for Verdict, at [412].

[53] Reasons for Verdict, at [401].

[54] Reasons for Verdict, at [409].

[55] Reasons for Verdict, at [406].

[56] Reasons for Verdict, at [423].

[57] Reasons for Verdict, at [426].

[58] Reasons for Verdict, at [427].

[59] Reasons for Verdict, at [433].

[60] Transcript of the hearing on 6 November 2018 before HH Judge Stanley Chan: AB, p 1369K-L.

[61] Applicant’s written submissions, at [30].

[62] Transcript of PW5’s evidence: AB, p 669C-K.

[63] AB, p 778L-Q.

[64] Transcript of Jacky Choi’s evidence: AB, p 788P-T.

[65] Transcript of Jacky Choi’s evidence: AB, pp 774Q-775H.

[66] Transcript of Jacky Choi’s evidence: AB, p 782H-N.

[67] Transcript of Jacky Choi’s evidence: AB, pp 747K-L; 753K-L and 755J-K.

[68] Transcript of Jacky Choi’s evidence: AB, p 761K-L.

[69] See [30] above.

[70] AB, p 761K-M.

[71] AB, pp 171-172, at [405]-[406].

[72] AB, p 172, at [407].

[73] Wai Yu-tsang v The Queen [1992] 1 AC 269, at 280A-C.

[74] Mo Yuk Ping v HKSAR (2007) 10 HKCFAR 386.

[75] R v Allsop (1976) 64 Cr App R 29.

[76] AB, p 170, at [401].

[77] AB, pp 176-177, at [423].

[78] AB, p 179, at [431].

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