HKSAR v. Wong Lai Man and Others

[English Translation － 英譯本]

CACC 56/2020

[2022] HKCA 88

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 56 OF 2020

(ON APPEAL FROM DCCC NO 252 OF 2019)

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JUDGMENT

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Hon A Pang JA (giving the Judgment of the Court):

A.  Introduction

1.The four applicants were jointly charged with one count of conspiracy to defraud[1] to which they pleaded not guilty. They were convicted after trial before District Court Judge Sham (the trial judge) on 21 January 2020. Subsequently, the four were each sentenced to 240 hours of Community Service Order.

2.The four lodged an application for leave to appeal against their conviction and the case was transferred to this Court by a single judge of the Court of Appeal.

B.  Prosecution Case

3.The property in question is a residential unit situated in Sai Kung of the New Territories (the property). The original owner of the property passed away and repayments for the mortgage loan were thus discontinued. The money lender Ego Finance Ltd (Ego) then obtained the ownership of the property and engaged AA Property Auctioneers Ltd. (AA) with its disposal by public auction.

4.The 1^st and 2^nd applicants were respectively a clerk and a manager of Ego, and the 2^nd applicant was also the representative of Ego who signed the auction agreement with AA. It was specified in the agreement that the reserve price of the property was HK$4 million. The 2^nd applicant was both the 1^st applicant’s superior and fiancé. The 3^rd applicant was AA’s sole director and shareholder, and he signed the agreement with Ego on behalf of AA. The 4^th applicant was the former assistant general manager of Ego and a friend of the 1^st and 2^nd applicants.

5.On 15 February 2017, AA conducted a public auction in which the property was the first lot on the auction list. The 3^rd applicant was the auctioneer and the venue of the auction was at Prudential Hotel.

6.The conspiracy to defraud alleged by the prosecution involved an agreement between the four applicants and other persons to fix the bidding at the public auction such that the 1^st applicant’s bid for the property at HK$4 million would be successful, and in order to achieve this, to prevent other interested purchasers from winning the bid through dishonest means, i.e. (i) falsely representing to other interested purchasers that the price they offered did not meet the reserve; and/or (ii) inducing them to give up bidding.

7.On the day of the auction, Ms Lau, a prosecution witness, made a bid of HK$4.05 million. Although it was above the reserve and was the highest bid in the first round of bidding, the 3^rd applicant withdrew the property on the ground that it was below the reserve. After Ms Lau had left the venue of the auction, the property was once again put up for sale on the same day and in the end, it was knocked down to the 1^st applicant at the reserve price of HK$4 million. The 1^st applicant thereupon entered into a memorandum of agreement with the vendor and paid the deposit of HK$400,000 by cheque. The prosecution produced the affidavit of a bank employee which shows that the 1^st applicant opened a new account on 14 February 2017 (i.e. one day before the auction) and on that very day, there was a transfer of HK$400,000 into the account.

8.Ms Lau testified that before the auction officially started, when a female staff member of the auction came to know that Ms Lau and others were interested in the property, she immediately said that there might be some problem with the title deeds of the property. However, Ms Chak, an estate agent, carried out a land search and found that there was no problem.

9.At the auction, the opening price of the property was HK$3.8 million. After a round of bidding, Ms Lau made a bid of HK$4.05 million. The 3^rd applicant chanted the bid three times. Nobody else made any other bid, but the 3^rd applicant announced that the property was withdrawn as the reserve price was not reached. Ms Lau learnt subsequently that after she had left the auction venue, the property was once again put up for a second round of bidding and was sold at HK$4 million. Ms Lau felt aggrieved and said that had she known that the property would be put up for sale again in the same auction, she would have stayed behind to take part in it.

10.Ms Chak’s account was largely similar to Ms Lau’s. She said that after the auctioneer announced that the bid had failed to reach the reserve and withdrew the property, she did ask Ms Wong, a staff member of the auction house, how she could follow it up. Ms Wong told her that she could simply leave and wait for the next auction; therefore, she and Ms Lau and others left the auction venue.

11.At the trial, the prosecution also relied on a witness, Mr Poon, to prove that the 4^th applicant had physically attended the auction on the day in question. Mr Poon testified that on the day of the auction, the 4^th applicant had instructed him to go to the hotel where the auction was held to deliver a bag of something to her, but Mr Poon also said that he only contacted the 4^th applicant on the telephone number 6188-6133.

12.Officers of the Independent Commission Against Corruption seized the mobile phones of the 1^st and the 2^nd applicants and found that the two of them had communicated with each other via WhatsApp on the day the property was auctioned and that they had respectively communicated on WhatsApp with the user of another mobile phone number 6123-3233 (the 4^th applicant according to the prosecution). The WhatsApp messages among the three people included the following:

(a) Messages sent to the 1^st applicant by the user of 6123-3233: “The one in front of you is an agent. We must be careful about what we say”; “If she goes away, we can auction it again in a while”; and “If she doesn’t go away, don’t auction it today”;

(b) Messages sent by the 1^st applicant to the 2^nd applicant: “Someone’s hand is up”; “It’s an agent”; “Stopped at $405”; “If that person goes away, it can be auctioned again on the same day”; “If not leaving, do it another day”; and “The agent who raised her hand seems to have left”; and

(c) Messages sent to the 2^nd Applicant by the user of 6123-3233: “Some housewives are taking part in the first round”; “Withdrawn”; “The housewives have gone now”; “We’ll auction it again shortly”; and “We’re the only purchaser now”.

13.According to the bank records produced in court, from 2004 to 2012, the 4^th applicant had opened accounts with three banks, and the contact number provided on all the occasions was mobile phone number 6123-3233.

14.Separately, the 2^nd applicant admitted under arrest in his record of interview that he had signed the auction agreement with AA on behalf of Ego, that he himself was interested in bidding for the property, and that he had discussed the price he was willing to offer with the 1^st applicant. The 2^nd applicant said that the deposit of HK$400,000 paid by the 1^st applicant was from him.

15.As for the 3^rd applicant, in an interview under caution, he described the usual process of an auction but indicated that he no longer had any memory of the auction of the property, and he did not give a definitive answer as to whether he knew about the reserve price at that time.

C.  The Defence Case

16.The four applicants elected not to give evidence. The 2^nd applicant called Ego’s staff member, Mr Kong, as a witness. There was no other defence witness.

17.Mr Kong said in his evidence that the property’s reserve price was set by Ego’s Chief Executive Officer (Mr Wong). Mr Kong said that during an auction, the auction house would usually ring up and inform Ego about the prices offered, and when it comes to the highest bid, they would also stop briefly and call to take instructions.

18.On the day in question, when the property was being auctioned, Mr Kong received a phone call from Amanda, a staff member of AA, who told him that someone had made an offer of HK$4 million. Mr Kong relayed that to Mr Wong who then said, “Tell her to wait first”. Mr Kong informed Amanda accordingly. About half an hour later, Mr Wong gave further instructions by saying, “If it is over 4 million, just take the deposit and go ahead”. Mr Kong explained that it meant “It’s fine to take the deposit when it reaches 4 million”. Mr Kong again informed Amanda.

D.  Reasons for Conviction

19.As to whether there was an internal agreement to make sure that during the auction, the 1^st applicant’s bid on the property would be successful, the trial judge analysed the evidence against each applicant.

D.1  The 1^st Applicant

20.Regarding the new account opened by the 1^st applicant one day before the auction, the trial judge was of the view that the HK$400,000 transferred into the account on that day was for the purpose of paying the deposit once the bid for the property became successful. The trial judge pointed out the following:

‘47. But the question is, how did [the 1^st applicant] know precisely beforehand that when her bid on [the property] succeeded, she only had to get HK$400,000 ready, not any more or any less? ...

48. …This could not have been coincidental…in a normal auction…the highest bidder would succeed. [The property] had but one chance to reach HK$4 million, and even if the price would stop at HK$4 million, it does not mean that [the 1^st applicant] would be the one offering the last bid and becoming the final buyer of [the property]. This is something beyond her control. Another thing beyond [the 1^st applicant]’s control was that even if she was the one who bid HK$4 million, other bidders would still be able to make higher offers. Ms Lau is a very good example. I believe that [the 1^st applicant] knew very well that all these were not within her control.

49. Considering the matter with reference to what happened that day, when the offer went up to HK$4.05 million, the auctioneer withdrew the property on the ground that [the reserve was not reached]. At that juncture, [the 1^st applicant] did not leave. Instead, she chose to stay behind when she had prepared HK$400,000 only. What was it that made her so confident to stay and believe that she would be able to win the bid on the property with HK$4 million? The fact is, when the property was again offered for sale, she was able to successfully bid for [the property] by only offering HK$4 million.’

21.The trial judge reckoned that it was not a coincidence that the 1^st applicant had prepared HK$400,000 and chose to stay in the venue to continue taking part in the auction when the property was withdrawn at the bid of HK$4.05 million for allegedly failing to reach the reserve price:

‘50. … [The 1^st applicant] had entered into an internal agreement with someone beforehand that irrespective of the bids made by others, [the property] would be knocked down to [the 1^st applicant] at the price of HK$4 million. That is the only reasonable conclusion. Turning up at the auction was simply the action taken by [the 1^st applicant] to carry out the agreement.’

D.2  The 2^nd Applicant

22.The trial judge pointed out that the 2^nd applicant admitted that he intended to make a successful bid for the property and drew a cheque for HK$400,000 beforehand. The trial judge’s analysis is as follows:

‘55. ...How come [the 2^nd applicant] only deposited HK$400,000 into the new account opened by [the 1^st applicant]? No doubt, he likewise knew beforehand that the amount needed was just HK$400,000. Otherwise, that would never have happened. …

56. It is an indisputable fact that he was the representative of Ego who signed the auction agreement with the boss of AA ([the 3^rd applicant]). It was clearly stipulated in the agreement that the reserve price of the property was HK$4 million. Without a doubt, he was privy to the reserve of HK$4 million set by Ego as the vendor. I believe that it was not imagined at random but rather a deliberate plan that [the property] would be sold at HK$4 million in the end. [The 2^nd applicant] set it as the predetermined price as he well understood that HK$4 million was the lowest price acceptable to the vendor and the most advantageous price to him.

57. But the problem is, [the 2^nd applicant] was aware that he had to compete with other bidders for the property in a public auction. I believe that [the 2^nd applicant] knew very well that if he was willing to offer only the lowest price, the chances of him successfully bidding for the property would be limited.’

23.The trial judge then held that there was an internal agreement between the 1^st and 2^nd applicants:

‘59. Looking at the case as a whole, if [the 1^st and 2^nd applicants] were prepared to bid only HK$4 million for [the property], they would simply have no chance of success as someone had indeed made a higher bid. However, the objective fact is that prior to the auction, they had prepared only HK$400,000 as deposit. In other words, they were confident in making a successful bid for the village house at HK$4 million. Under the circumstances, what took place could not have been coincidental but prearranged. Without a doubt, there is at least an internal agreement between [the 1^st and 2^nd applicants].’

24.Regarding the WhatsApp messages between the 1^st and 2^nd applicants, the trial judge made the following analysis:

‘63. … [The 1^st applicant] informed [the 2^nd applicant] that “It stopped at 405”. The facts accepted by this court show that Ms Lau was the one who had made the last bid of HK$4.05 million. The auction then stopped as the auctioneer withdrew the property, saying that “the reserve was not reached”. The message of [the 1^st applicant] that “It stopped at 405” is consistent with the facts accepted by this court. From that this court inferred that [the 1^st applicant] and [the 2^nd applicant] were not just having a chat. Instead, [the 1^st applicant] was telling [the 2^nd applicant] about the progress of the auction.

64. … [The 1^st applicant] informed [the 2^nd applicant] that “If that person goes away, it can be auctioned again on the same day” and that “If not leaving, do it another day”. The facts accepted by this court show that Ms Lau and her group left the auction venue having been told that there was nothing much they could do. After that, [the property] was put up for auction again, and [the 1^st applicant] made a successful bid at HK$4 million. The message of [the 1^st applicant] that “If that person goes away, it can be auctioned again on the same day” is consistent with the facts accepted by this court. After Ms Lau and her group had left, [the property] was indeed put up for sale again, and [the 2^nd applicant]’s reply was… “okok”. The [1^st applicant]’s message together with [the 2^nd applicant]’s response explained why [the 1^st applicant] chose to stay behind with the intention of bidding for [the property] at a lower price after the property had been withdrawn, the reason being that they had made an internal agreement and they both took part in it.’

D.3  The 3^rd Applicant

25.The trial judge mentioned that the eventual sale of the property at HK$4 million entailed the question of whether the auctioneer (i.e. the 3^rd applicant) was involved.

26.Although the 3^rd applicant stated in his record of interview that he no longer had memories of the auction of the property, and he refused to commit himself when asked whether he was privy to the reserve price, the trial judge pointed out that in the auction agreement, the reserve price was clearly set out and it was an important piece of information that the auctioneer had to know. Therefore, the inference was that the 3^rd applicant knew very well at the time that the reserve price was HK$4 million.

27.The trial judge did not accept as true that the 3^rd applicant withdrew the property on the vendor’s instructions:

“78. The defence’s contention appears at first glance to be reasonable, but upon deeper consideration, one would easily find that it does not accord with what actually happened at the auction.

…

80. Looking back at what transpired then, there were two to three bidders competing and the bids were going up all the way. When they went up to HK$4.05 million, it basically reached the sellable level…

81. …From the vendor’s point of view…, there was no reason at all to call a halt to the ongoing auction, as the price had been climbing up, which matched perfectly with the purpose of auctioning the property—for the highest bidder to succeed.

82. To analyse the situation from a different perspective, let us assume that [the 3^rd applicant] did receive the vendor’s instructions to withdraw the property. As the auction was brought to a halt while the price was going up, the vendor must have thought that the property was capable of fetching a better price. Therefore, when the property was later put up for bidding again, one would reasonably expect that the vendor would raise the reserve price to at least HK$4.05 million, or else it would be pointless to call a halt to the auction.

83. Strangely, when the property was put up for bidding again, it was sold to [the 1^st applicant] at a lower price of HK$4 million…. That would simply be impossible because when it was auctioned for the second time, the reserve price set by the vendor should not be lower than HK$4.05 million, and under normal circumstances, the auctioneer would not accept a selling price which is below the reserve…. However, the [1^st applicant] managed to bid successfully for the property at HK$4 million, which is just as unimaginable as the above two scenarios and must have resulted from some other reason.”

28.The trial judge pointed out that after the property was withdrawn, contrary to the usual procedure which the 3^rd applicant described in his record of interview, none of AA’s staff tried to contact Ms Lau to inquire whether she was able to offer a higher price. In fact, some staff members had even told Ms Lau and her group before the auction that the title deeds of the property were defective. All these were signs showing that there were people who did not want them to take part in the bidding.

29.Regarding Mr Kong, the defence witness, although the trial judge did not reject the possibility that during an auction, a vendor could give instructions to the auctioneer through employees of the auction house, it was the trial judge’s view that Mr Kong’s story about AA’s Amanda and Mr Wong was a fabrication:

“126. …Mr Kong’s description, when viewed against what occurred on the day of the auction, would seem like a square peg that does not fit in a round hole, and the two were not compatible. Therefore, the only conclusion is that Mr Kong’s version of events was fabricated.

…

128. It was said that Amanda rang him up, indicating… someone had offered HK$4 million. In view of the circumstances on that day, one can see that it was not what happened. Actually someone had offered to buy at HK$4.05 million and it was impossible that Amanda would have called Mr Kong and said something to that effect…

129. …The auction was on-going. When the final bid was made, the auctioneer would have to decide within a very short time either to withdraw the item or to knock the gavel for the deal. However, according to Mr Kong, the auctioneer had to wait while the staff member of the auction house was getting in touch with the vendor for his instructions and the waiting time could be as long as half an hour.

130. …when there was a bid at HK$4.05 million, given the agreed reserve price, it was unreasonable for the auctioneer to withdraw the item, yet the auctioneer could not stall for long… If Amanda was to ring up Mr Kong, and Mr Kong was to call Mr Wong and wait for his instructions before calling Amanda back, and Amanda was then to relate the answer to the auctioneer, the whole process would take time and nobody can tell how long it would take… This is yet another point to prove that Mr Kong’s account was fabricated.”

30.Mr Kong explained that when Mr Wong said “If it is over HK$4 million, just take the deposit and go ahead”, he really meant “Once it reaches HK$4 million, it’s fine to take the deposit”. The trial judge found that his explanation was merely an invention to fit in with the fact that the 1^st applicant’s bid for the property at HK$4 million had succeeded.[2] The trial judge also queried how Mr Kong managed to remember what all the people had said when there was no written record of what had transpired that day.

31.Therefore, the trial judge held that the only reasonable conclusion was that the 3^rd applicant took part in the conspiracy.

D.4  The 4^th Applicant

32.The trial judge inferred from the 4^th applicant’s bank information and other evidence that the 4^th applicant was the person who used 6123-3233 and that she was then present at the venue of the auction.

33.Concerning the WhatsApp messages that the 1^st applicant and 2^nd applicant respectively sent to and received from the user of phone number 6123-3233, the trial judge’s analysis was as follows:

“110. …Things said by the user of 6123-3233 are consistent with the facts accepted by the court, which shows that the particular person was at the venue of the auction at the time and witnessed the process in which [the property] was sold by auction. I have no difficulty at all in inferring that after Ms Lau and her group had left, this person did stay behind at the auction venue. The above WhatsApp messages help explain the action this person was going to take after saying those things, i.e. staying behind.

111. The objective fact is that [the property] was relisted for auction after Ms Lau and her group had left, and that [the 1^st applicant]’s bid at HK$4 million succeeded. I have no difficulty whatsoever in inferring that this person chose to stay behind for the same purpose as that of [the 1^st applicant]—to enable [the 1^st applicant] to successfully bid for [the property] at HK$4 million. No doubt, this person was involved in the internal agreement and was there participating in the auction.”

D.5  Loss of Chance of Obtaining Property at an Undervalue

34.The defence contended at trial that even if all the applicants did enter into an agreement to make sure that the 1^st applicant would succeed in bidding for the property, their conduct would not constitute the subject offence. However, the trial judge pointed out that HKSAR v Chan Wai Yip[3], cited by the defence, is not applicable. The trial judge’s view was that as the instant case involved a public auction, should the participants find out that the auctioneer was colluding with some people taking part in the bidding to let a certain person succeed in bidding for a lot under auction, they would surely feel deceived. Moreover, according to the ordinary objective standards of reasonable and honest people, the four applicants were acting dishonestly, and they also knew that their internal agreement was dishonest, and therefore their conduct was unlawful[4].

35.Regarding the proposition that the vendor was entitled to withdraw the property, the trial judge’s view was that had there been no internal agreement, Ms Lau in the ordinary course of events would have been the last bidder and the auctioneer would have knocked the gavel to confirm the deal. The withdrawal of the property in this case was simply the result of the unlawful internal agreement[5], rather than something that happened in the ordinary course of events.

36.According to the evidence of the Principal Property Valuation Officer of the Rating and Valuation Department called by the Prosecution, the property was valued at HK$5 million in March 2017. It was later revalued as a result of the owner’s objection and the valuation was adjusted downward to HK$4.5 million. It was the trial judge’s opinion that no matter if the valuation was HK$5 million or HK$4.5 million, Ms Lau was obviously deprived of a chance at the auction to get hold of the property at an undervalue, and thus the element necessary to prove the offence was established[6].

E.  Grounds of Appeal

E.1  The Grounds of Appeal of the 1^st, 2^nd and 4^th Applicants

37.Mr Edwin Choy, S.C., together with Mr Foster Yim, raised five grounds of appeal for the 1^st, 2^nd and 4^th applicants, and among them, the 5^th one only relates to the 4^th applicant:

(1)  The case does not involve any economic interests, and therefore the charge was not established;

(2)  There is an erroneous inference that an internal agreement exists;

(3)  The exculpatory evidence was not taken into consideration;

(4)  There is no evidence to prove “inducement to give up bidding”; and

(5)  It was erroneously held that the 4^th applicant was the user of phone number 6123-3233.

E.2  The 3^rd Applicant’s Grounds of Appeal

38.Mr Charles Chan put forward three grounds of appeal on behalf of the 3^rd applicant:

(1)  He had no knowledge of and did not participate in the conspiracy;

(2)  There was no economic loss, and therefore the charge was not established; and

(3)  The conviction is unsafe and unsatisfactory.

F.  Particulars of Offence

39.In response to the concern of this Court expressed at the hearing on 10 November 2021, the applicants and the respondent respectively filed with the Court further written submissions after the hearing.

40.The applicants submitted that since Mo Yuk Ping v HKSAR[7], it has been a standard requirement for the prosecution to set out in the charge the relevant “economic loss” or “economic interest” put at risk under the “particulars of offence”. The applicants submitted that as no relevant loss or interests were set out in the particulars of offence in the present case, the charge in question was therefore defective.

41.On the other hand, Mr Bernard Chung who represented the respondent submitted that according to the “Indictment Rules”, the prosecution is not required to set out all the elements of the offence in the charge. Moreover, although it is true that the element of “economic loss” or “economic interest” were not specified in the instant case, by referring to the witness statements, relevant documents and the prosecution’s opening submissions, the applicants would be able to have a good grasp of the prosecution’s allegations against each of the applicants. Mr Chung also submitted that the phrase “inducing the interested purchasers to give up bidding for the property” in the particulars of offence incorporates the element of “economic loss” or “economic interest”. Therefore, no unfairness was caused to the applicants.

42.The respondent also submitted that as none of the applicants had raised any allegation at trial (or during this hearing of appeal) that the charge was flawed, and none of them had ever asked during the trial for further particulars, it can be seen that the charge was not flawed. In any event, even if the element of “economic loss” or “economic interest” was absent from the charge, at most it only showed that the charge was imperfect, not that the conviction was in any way unsafe or unsatisfactory.

G.  Discussion

43.The grounds of appeal of the applicants can be summed up into the following two categories:

G.1  Charge-related Issues

44.Mr Choy and Mr Chan cited Mo Yuk Ping v HKSAR and submitted that one of the elements of the offence of conspiracy to defraud is to cause economic loss to another person or to put another person’s economic interest at risk. They submitted that it has still not been decided whether the offence can be extended to non-economic losses, such as the loss of a chance to acquire a property at an undervalue[8].

45.They contended that as the present case is about an auction of property, legal principles related to auctions are applicable. The applicants submitted that according to those principles, all a bidder does is make an offer to buy at a certain price; the auction is not completed until the auctioneer announces its completion by the fall of the hammer or by another customary manner, and it is only then that the vendor and the buyer enter into a contract of sale.

46.At the same time, it is up to the property owner to put other conditions in the bidding document, e.g. a requirement that the highest bidder must sign certain documents and pay the deposit before a contract of sale is taken to be formed[9]. The applicants stressed that such additional requirements happened to have been included among the terms and conditions of the auction in question[10]. The applicants also cited Item 5 of the “Bidder / Purchaser Notice” and section 60(b) of the Sale of Goods Ordinance[11], pointing out that before an auction is completed, the vendor may withdraw the property and the bidder may retract his bid.

47.In summary, the applicants submitted that, in the instant case, the prospective buyer who had offered the highest price did not have the right to demand the vendor to sell the property, and since Ms Lau’s offer had not been recognised by the auctioneer with the fall of the hammer, and Ms Lau had never paid the deposit and commission or signed any contract, Ms Lau thus simply had not obtained any “proprietary interest” in this case. Therefore, even though Ms Lau had offered the highest bid in the first round of bidding for the property and yet failed to succeed, the purpose of the applicant’s so-called conspiracy could not possibly be to cause any actual economic loss to Ms Lau or to put her economic interest at risk. In other words, according to the applicants, there were a number of variables affecting the property’s sale by auction, and when the interested purchaser had not closed a deal or entered into a contract with the vendor yet, no “economic loss” or “economic interest” whatsoever was involved.

48.For the above reason, the applicants submitted that the trial judge erred in holding that Ms Lau losing her chance to acquire a property at an undervalue was enough to constitute the “prejudice” in the charge.

49.In respect of the applicants’ submissions above, Mr Chung for the respondent agreed that before the auctioneer brings down the hammer to confirm the deal, the bidder does not have any “proprietary interest”. Mr Chung also agreed that should there be any additional requirement on the terms and conditions of the auction which has not been met, the vendor and the bidder would not be taken to have made a contract of sale. However, Mr Chung submitted that “proprietary interest” is not the same thing as the economic interest referred to in the offence of conspiracy to defraud.

50.First of all, it is worth mentioning that it seems the terms “economic interest” and “economic loss” were not defined in the cases concerning conspiracy to defraud. The terms appear to be just everyday expressions, and the applicants were unable to convince this court that they only refer to “proprietary interest”.

51.The present case involves sale of real property by auction. According to the relevant case law and principles[12], an auction is a public sale of property (including real property and personal property), normally sold to the highest bidder. In the law of contract, “offer and acceptance” are essential elements in the formation of a contract. An auction is an “invitation to treat”, according to the principles of the contract law applicable to sale by auction. The bid made by a bidder for a lot is an “offer”. The act of the auctioneer taking the bid is an “acceptance”. Only with both will a legally binding contract be formed. Nevertheless, where the mode of the auction is one with a reserve price and where the highest bidder is to succeed, if the seller has not withdrawn the lot, the auctioneer is obliged, subject to all the relevant conditions being met, to knock down the lot to the highest bona fide bidder. Otherwise, the bidder is entitled to sue the auctioneer. The right of action does not fall within “proprietary interest”, but it is a “chose in action” which is obviously a type of “economic interest”.

52.In R v H[13] where the defendants were alleged to have conspired to manipulate the London Interbank Offered Rate (LIBOR), the English Court of Appeal pointed out that the contractual rights involved in the case constituted a “chose in action”, which is a form of property, and the element of “economic interest” in terms of the offence of conspiracy to defraud was thus substantiated:

“35. Self-evidently, the rights and interests of the counter-parties—potential losers—were ‘proprietary’ in nature for the purposes of what Viscount Dilhorne had in mind. That suffices. But in any event, the counter-parties’ rights under the relevant trading contracts constituted a chose in action: a form of property. Those rights again self-evidently stood to be injured: in that the value of the contractual rights during the period of the contract, and therefore the value of the chose in action which they represented, stood to be diminished to the counter-party by reason of the consequences of the alleged dishonest conspiracy. It seems to us, therefore, that the judge was right to rule as he did.” (Emphasis added.)

53.Furthermore, if one refers to McGregor on Damages[14]; Clerk & Lindsell on Torts[15] and the relevant cases, one can see that if someone has lost the chance of making a financial gain on account of another person’s (fraudulent) conduct, he may commence proceedings against that person in contract and/or in tort for pecuniary or economic loss.

54.In other words, if someone has damaged another person’s “chose in action” or the chance of making a financial gain, the loss involved will properly be categorised as “economic loss” or “economic interest”.

55.For that reason, let us assume that the trial judge’s finding of facts is correct, in that, the applicants’ conspiracy to defraud in the instant case was obviously intended to deceive Ms Lau in the capacity of a bidder, depriving her of the right to acquire the property (or prejudicing her chance of acquiring the property) when she was the highest bidder and her bid was above the reserve; and that the applicants’ conduct was obviously intended to mislead Ms Lau into believing that her bid was below the reserve, so that she would not follow it up, thereby losing her chance to exercise her right of action to demand the auctioneer, who is the 3^rd applicant, to knock down the property to her.

56.Under the circumstances, this court is of the view that the element of the offence of conspiracy to defraud, namely “the intention of causing economic loss to, or putting at risk the economic interest of, another; or the realisation that the use of those means may cause such loss or put such interests at risk” has already been established in this case.

57.As to Chan Wai Yip, the case on which Mr Chan for the 3^rd applicant relied, our view is that it is not comparable with the present case in terms of both facts and issues in dispute. In fact, at the outset of that case, the Court of Final Appeal stated that the prosecution’s case was that the appellants’ secret agreement on not competing against one another in bidding was to deceive the Food and Environmental Hygiene Department into believing that there was only one bid offered for each stall, but at the hearing of the final appeal, the prosecution admitted that the alleged deception could not be substantiated on the evidence and that the charge was defective. Moreover, the Court of Final Appeal emphasised that as long as the secret agreement did not have any deceptive element in it, and it did not infringe the rights of others or was not intended to do them harm, the agreement would be treated as legitimate[16]. In contrast, the prosecution’s allegation in the present case was obviously that the applicants had engaged in deception, intending to cause others economic loss or to put others’ economic interests at risk. Therefore, the trial judge was right in holding that Chan Wai Yip was not applicable.

58.We have also carefully considered the particulars of offence of the instant case and the relevant principles, and have found nothing wrong with what the prosecution has put in the charge. In our view, paragraph 17 of the Court of Final Appeal case HKSAR v Cheng Chee Tock Theodore (No. 2)[17] supports the respondent’s submissions in paragraphs 41 and 42 above. In fact, the focus of the applicants, both at trial and in this appeal hearing, was whether the loss suffered by Ms Lau was sufficient to satisfy the requirements of the charge. Therefore, this court accepts the respondent’s submission that the lack of specific reference to “economic loss” or “economic interest” in the charge did not do the applicants any injustice. Nevertheless, we take the view that as the Court of Final Appeal had already confirmed in Mo Yuk Ping v HKSAR that causing the victim “economic loss” or “risk to economic interest” was an element of the offence of “conspiracy to defraud” and such an element was specified in the indictment of that case, it will help avoid similar contentions about the issue if the prosecution can make this element clear in future indictments.

G.2  Trial Judge’s Analysis of Evidence and Findings

59.The applicants complained that the trial judge neglected the evidence of the 5^th to 7^th prosecution witnesses and that of the defence witness Mr Kong. They also submitted that the judge failed to fully consider the possible scenario which the 3^rd applicant raised in his record of interview. Moreover, Mr Choy criticised the trial judge’s partial acceptance and rejection of the rest of Mr Kong’s evidence, saying that it was wrong and unfair.

60.On the other hand, Mr Chung submitted that the 5^th prosecution witness, who was on leave that day, did not take part in the auction, and the 6^th and 7^th prosecution witnesses were there in the auction venue, but both said that they had no recollection of the actual circumstances in which the property was auctioned. In other words, the evidence of the AA employees was only about what usually and normally would take place in an auction, rather than what actually happened during the auction of the property in question. The trial judge had twice mentioned the relevant evidence in paragraphs 77 and 125 of his Reasons for Verdict. There was no neglect or misunderstanding on his part at all.

61.As far as the evidence of the defence witness, Mr Kong, is concerned, the trial judge had explained in paragraphs 118 to 132 of his Reasons for Verdict why he rejected Mr Kong’s version of events, and Mr Chung submitted that his analysis was free from any mistakes. Moreover, it has been a long-established practice that a tribunal of facts may choose to accept the evidence of a witness in full or in part. The key point is whether there is any basis for the tribunal of facts to do so. Concerning the instant case, Mr Chung submitted that there was nothing wrong with the trial judge reaching the relevant decision upon proper analysis.

62.As to the 3^rd applicant’s narrative in the record of interview, it shows basically just the situation of a normal auction. We agree that it was reasonable and sensible for the trial judge to use a normal auction as a basis of comparison to examine the objective circumstances of the property’s auction and draw inferences relating to the applicants after considering the evidence as a whole.

63.Although Mr Chan criticised the trial judge for failing to thoroughly consider the important role Amanda played in the case, such criticism seems to have neglected the fact that the trial judge had already considered the matter and (correctly) rejected Mr Kong’s account about the day of the auction. In other words, it was the trial judge’s finding that the so-called dialogues between Mr Kong, Mr Wong and Amanda simply did not take place.

64.Mr Choy contended that the female staff member at the auction surnamed Wong did not cause Ms Lau to give up bidding for the property, nor had she done anything to mislead her. Therefore, there was no evidence to support the allegation that the four applicants “induced interested purchasers to give up bidding for the property”. This court is of the view that such an analysis is unbalanced, and did not consider all the evidence as a whole.

65.Lastly, Mr Choy contended that the trial judge wrongly inferred that on the day of the auction, the 4^th applicant was the user of mobile phone number 6123-3233, and that Mr Poon’s evidence was only able to prove that the 4^th applicant had shown up at the hotel where the auction was held, but not sufficient to prove that the 4^th applicant had attended the auction. The relevant contentions are far-fetched and do not stand to reason. In contrast, we find that the inference drawn by the trial judge was the only reasonable inference that could be drawn from the evidence as a whole, and there is no fault in it.

66.It can be seen when the Reasons for Verdict is considered as a whole that the trial judge had spent an extensive part of it analysing in detail the relevant evidence and issues in dispute from different perspectives. We find his analysis logical and substantiated with evidence. Although the applicants did emphasise that theoretically a lot of sudden on-site changes could take place during an auction, it does not mean that there was no solid basis upon which the trial judge could rule out all the other possibilities, nor does it mean that there was no sufficient evidence upon which the trial judge could find that the only reasonable inference was that the relevant conspiracy to defraud did exist and that all the applicants were co-conspirators.

67.Based on the above analysis, it is our view that all the grounds of appeal put forward by the applicants on the findings of fact, either standing alone or taken together, are unsubstantiated.

H.  Conclusion

68.The four applicants’ convictions are neither unsafe nor unsatisfactory. The four applicants’ respective applications for leave to appeal against conviction are dismissed, and the original decision is upheld.

Mr Bernard Chung, Counsel on fiat, for the Respondent

Mr Edwin W.B. Choy, S.C., together with Mr Foster H.C. Yim, instructed by CLY Lawyers, for the 1^st Applicant

Mr Edwin W.B. Choy, S.C., together with Mr Foster H.C. Yim, instructed by CLY Lawyers, for the 2^nd Applicant

Mr Charles J. Chan, together with Mr Brian W.Y. Yu, instructed by Ho and Associates, for the 3^rd Applicant

Mr Edwin W.B. Choy, S.C., together with Mr Foster H.C. Yim, instructed by CLY Lawyers, for the 4^th Applicant

Translated by the Judgment Translation Unit of the Judiciary and vetted by Ms. Jenny Chung, Solicitor.