HKSAR v. Tam Ho Nang

CACC 34/2021

[2022] HKCA 1852

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 34 OF 2021

(ON APPEAL FROM HCCC NO. 116 OF 2018)

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Before:  Hon Anthea Pang JA in Court

Date of Hearing: 9 December 2022

Date of Judgment: 9 December 2022

Date of Reasons for Judgment: 14 December 2022

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R E A S O N S  F O R  J U D G M E N T

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Introduction

1.The applicant was D1 at trial.  He and D2 faced one count of “conspiracy to defraud”[1](“count 1”).  Each of the other two defendants, D3 and D4, faced one count of what is usually referred to as “money laundering offences”[2](counts 2 and 3 respectively).  As alternatives to count 1, the applicant was also charged with 3 counts of “money laundering” (counts 4 to 6).  All the defendants pleaded not guilty and were tried before Andrew Chan J (“the judge”) and a jury.  The trial lasted 38 days at the end of which the applicant was convicted of count 1 on 14 January 2021 by a unanimous verdict.  He was sentenced to a term of imprisonment of 8½ years on 19 January 2021.  

2.Mr Grounds, who appeared for the applicant in this leave application but not in the proceedings below, sought leave to appeal against conviction on 5 grounds. Grounds 1 to 3 relate to the judge’s directions on hearsay evidence.  Ground 4 concerns his directions on circumstantial and inferential evidence whereas Ground 5 is a general ground. 

3.At the conclusion of the hearing, I refused leave on all the grounds, saying that I would give my reasons in due course.  This I now do. 

The prosecution case

4.In a nutshell, the prosecution alleged that the applicant, D2 and others, between 1 February 2014 and 30 April 2015, agreed to induce Britestone Limited (“Britestone”) to accept false purchase orders purportedly coming from six Mainland-related companies (“the 6 ML purchasers”) with intent to cause economic loss to Britestone. 

5.At the material time, the applicant was an employee of Arrow Components Agent Limited (“Arrow”) which was an electronic parts distributor.  D2 was the sales manager of Britestone.  The prosecution averred that the applicant and D2 were pivotal in persuading Britestone to accept orders for electronic parts from the 6 ML purchasers and to allow a credit period of 60 days.  The applicant and D2 also told Britestone that, as part of the deal, the goods ordered by the 6 ML purchasers had to be obtained from a designated company, Cohome (Hong Kong) International Trade Co., Ltd (“Cohome”), which the prosecution contended was controlled by D1 and Chen Zhimin.  Apparently, Cohome would source the goods from Arrow and Britestone would then sell the same to the 6 ML purchasers with a marked-up price. 

6.According to the prosecution, the goods ordered, however, were not sent to the Mainland but were sent to warehouses in Hong Kong controlled by the applicant and his co-conspirators.  In this way, the goods could be re-circulated as supplies from Cohome when fresh orders were made by the 6 ML purchasers.  In addition, the prosecution said that as Britestone would first need to pay Cohome before the company would get paid by the 6 ML purchasers, the time gap in payments facilitated the re-circulation of funds so that the conspirators could make payments to Britestone from the money originated from the latter. 

7.When Britestone was made aware of the re-circulation of goods, they rejected the supplies from Cohome in April 2015 which then brought the scam to an end.  By that stage, because of defaults in payment in 10 out of 31 transactions with the 6 ML purchasers, Britestone had suffered a loss of US$3.57 million. 

8.From the fund flow analysis conducted by the prosecution, the applicant had received a total of about HK$24 million. 

The defence case

9.The applicant did not testify.  In gist, his defence was that the 6 ML purchasers did exist and the purchase orders were genuine.  Further, it was denied that Cohome was an engine of fraud nor controlled by the applicant as Chen Zhimin was the sole signatory of the Cohome Account.  While the applicant did not dispute that the goods delivered to Britestone were subsequently ‘reused’, the suggestion was that it could be done for the purpose of price speculation (referred to as “stir-frying” of the goods at trial). 

Discussion

Grounds 1-3 (hearsay evidence)

10.Mr Grounds’ complaints on the issue of hearsay evidence are two-fold: firstly, the “unpaid sandwich” example given by the judge was incorrect and when taken together with the other directions on the topic, it would render the subject matter of hearsay both confusing and incomprehensible to the jury.  Secondly, the direction on documentary hearsay was inadequate given the jury’s specific question. 

11.When examining these complaints, I need first to highlight the relevant procedural history. 

12.Evidence in this case was closed on 24 December 2020.  Between 30 and 31 December 2020, prosecuting counsel delivered his closing address.  Between 31 December 2020 and 4 January 2021, it was the turn of trial counsel for the applicant to address the jury.  Closing speeches of the other defence counsel took place between 4 and 5 January 2021. The jury was then given reading days between 6 and 8 January 2021.  On 8 January 2021 and before the judge’s summing-up, the jury raised the following two questions:

“(1) Please clarify what heresay (sic) evidence is.

(2) If we have found some information from the exhibits, but these information were not discussed during the court hearing, can these information be taken into consideration for deciding on the verdict?”[3]

13.Pausing here, if it is wondered why the jury would use the specific term “hearsay evidence” in their question 1, then perhaps the answer was because both prosecuting counsel and counsel for the applicant had addressed the jury by using such a term. 

14.In his closing speech, prosecuting counsel sought to rely on the change of email addresses to support the prosecution case that the purchase orders were false and he told the jury:

“Now, whether or not the reply is the truth of the matter is not the issue, and I emphasise that. And, indeed, you may or you probably will in due course be given some directions as to what is called hearsay. But the fact is that there is a sudden change of email address used by the 2^nd defendant to follow up this outstanding payment. … It’s totally at odds. So as I said, whether or not the contents of the email is correct is not the issue, the fact is that it was -- on the face of it it’s totally at odds with the previous email supposedly entering into these purchase orders.”[4]

15.Similarly, when the applicant’s trial counsel addressed the jury, he said:

“Now, the next topic is a very important topic because the examples of which can be found in the evidence presented to you in this case. This is a topic what we call about hearsay evidence. Hearsay evidence, you might have heard about this expression or you might not have. By way of an example -- I beg your pardon. There are two forms of hearsay evidence.

First, hearsay evidence may come from the evidence, the oral testimony given by a witness. The second form of hearsay evidence may come in a form of a document. Now, what hearsay evidence means … ”[5]

16.Apart from explaining what hearsay evidence meant and why it was objectionable, the applicant’s counsel gave “real examples in this case”, to use his words, to illustrate why relying on the assertions as true would infringe the hearsay rule. 

17.Therefore, it is pertinent to note that the judge’s directions on hearsay evidence were given in these circumstances.  When the judge dealt with the topic, he first explained in detail what hearsay evidence was and the reasons for objecting to the evidence, as well as the applicable legal principles, which took up one full page of the transcript[6].  He then gave the example now criticised by Mr Grounds:

“Let me give you an example, right. If I tell my clerk that I have forgotten to pay for my sandwich because of a WhatsApp message, I was about to pay for my sandwich, but I forgot. I in fact left the 7-Eleven without paying it. And then when I returned to court to my chambers, my office, I tell my clerk that I have forgotten to pay for my sandwich because of a WhatsApp message. When my clerk comes to testify in court - say, for example, I’m charged with theft, right, stealing the sandwich - he can say that I have told him that I have forgotten to pay for my sandwich because of a WhatsApp message. What he cannot say is that, as a matter of fact, I have forgotten to pay for my sandwich because of a WhatsApp message, right. The fact that I had said such words is admissible. The fact that as a matter of fact I had forgotten to pay is inadmissible, right. So it may be used to prove that I have said those words or it may be used to prove my state of mind, such as I did not intend to steal the sandwich but simply forgot to pay.” (“the impugned example”)[7]

18.Before I say anything further about the impugned example which in any event was just an example, Mr Grounds fairly accepted that, the impugned example apart, the judge’s directions on hearsay evidence were correct.  With this acceptance as to correct legal directions on the topic being given, what was said by the judge after the impugned example was of significance because the judge then immediately told the jury:

“Now, I have asked the prosecution, as well as the defence, what evidence they have in mind that they say is infringing the rule against hearsay. They have told me that you should be careful in relation to the following pieces of evidence or exhibits …”[8]

19.Thereafter, the judge itemised three pieces of evidence which were said would infringe the hearsay rule.  In fact, the same had already been specifically dealt with by the applicant’s trial counsel in his closing speech. 

20.Therefore, the first observation I make is this: the present trial took 38 days to conclude.  Trial counsel must have been very familiar with the evidence adduced and must be taken to have fully considered what risk there would be in relation to the possible infringement of the hearsay rule.  Yet, after the question as to hearsay evidence was raised by the jury and when being specifically asked by the judge as to their views, counsel only came up with the three pieces of evidence with which they considered the jury should be careful. 

21.In my view, this is important because defence counsel’s then response reflected their assessment made at trial, which assessment would have taken into account the defendants’ interest and the real issues in dispute, as well as whether any prejudice or harm would likely be caused to the defendants. 

22.Before me, Mr Grounds confirmed that he was neither alleging flagrant incompetence on the part of trial counsel, nor that he was able to identify any particular matter which had infringed the hearsay rule in this case.  Mr Grounds’ complaint was more of a general concern and he submitted that the judge should have given a clear direction on documentary hearsay when the jury had found “some information from the exhibits” which had not been discussed at the hearing (“question 2”).  Moreover, Mr Grounds took issue with the judge’s sayings that the jury could “use whatever information was in the exhibit”[9] or that what the jury “make of the exhibits was entirely up to (them)”, including the reliability of the exhibits[10]. 

23.However, it should be remembered that when question 2 was raised, the judge had not provided to the jury his directions on hearsay which, when subsequently given, were in these terms:

“…Any assertion or statement, whether made verbally or in writing, other than one made by a person giving evidence in court proceedings is not admissible as evidence of any fact asserted or stated, right. Any assertion or statement, whether made verbally or in writing, other than one made by a person giving evidence in court proceedings is not admissible as evidence of any fact asserted or stated. (“emphasis added”)[11]

24.In other words, the jury had then been told that assertions made in a document might also offend the hearsay rule. 

25.Moreover, the specific parts of the directions quoted in Ground 2(1) of the Perfected Grounds of Appeal were partly in relation to a particular exhibit obtained from the Hong Kong Births Registry and partly as a general direction concerning the oral evidence and the exhibits produced before the jury. 

26.As submitted by Ms Chan for the respondent, the documentary exhibits in the present case were mostly bank documents, business records, public records, immigration records and computer records which are admissible as prima facie evidence of any fact stated therein under the Evidence Ordinance, Cap. 8. 

27.Further, the fact that a document had been produced either through the Admitted Facts or without objection from any party would have reflected the stance taken by the parties at trial, that is, there was no hearsay concern.  Therefore, while the general rule is that an assertion made in a document is not evidence of the fact so asserted, parties may well accept, because of other evidence or material, that the matter asserted is in fact true and they therefore do not take issue with the production of the document. 

28.For example, Mr Grounds complained in his Ground 2(1)(g) that an email produced by D2 purportedly relating to entertainment expenses having been incurred by Mr Jacky Chen of Britestone with one of the 6 ML purchasers infringed the hearsay rule “when the document only proved that there was such a record.”  The position, however, was that the applicant’s trial counsel and counsel for D2 relied on the email to support their case that there were dealings between Britestone and Honghua and so, the purchase orders were genuine.[12] 

29.As pointed out at the leave hearing, it would appear that if any objection were to be raised as to the hearsay nature of this document, the party raising it should be the prosecution because, as a matter of legal principle, the email could not be proof that expenses were indeed incurred by Jacky Chen in the circumstances asserted in the email or as suggested by the defence.  When no objection was taken by the prosecution at the time, it could well be because the prosecution accepted that the assertion was true or the matter was not a real issue in the case. 

30.The short point I wish to make is that for a trial like this involving “tons of documents”[13] produced without objection from the parties, it would not be helpful to speak in terms of a “possible hearsay problem” at the appeal stage.  Trial counsel should know best the reason and the purpose for the production of the particular documents and if they had any concern as to the hearsay danger, no doubt, they would raise it with the judge, especially when specifically asked about it.[14] 

31.Therefore, I do not see any problems with the judge’s directions when they were read in context.  There was simply nothing which would raise an alarm and, with respect, I am not persuaded that there is any merit in Mr Grounds’ suggestion that the jury might have misused the evidence in a way which would infringe the hearsay rule. 

32.As to the impugned example, given the judge’s correct directions on the law, and given that the real contentions on the topic had been addressed by counsel in their closing speeches and in the judge’s summing-up with the identification of the three pieces of evidence, I do not consider the impugned example to have played any part, not to mention a significant part, in the jury’s deliberation.  After all, it was just an example using an incident in daily life and not focussing on any actual dispute in the case. 

Ground 4 (circumstantial/inferential evidence)

33.Ground 4 complains that the judge erred in law when directing the jury on circumstantial and inferential evidence in that the direction placed a burden on the defence to adduce “reliable evidence” or evidence “of sufficient reliability and strength” in order to cast doubt on or destroy the prosecution case. 

34.Mr Grounds, however, accepted that the judge’s direction on circumstantial evidence very much followed Specimen Direction 21 of the Specimen Directions in Jury Trial and he responsibly informed the court that the argument in Ground 4 had been rejected in HKSAR v Khaw Kim Sun^[15] by the Court of Appeal which had also, on 25 October 2022, refused to grant leave to the applicant in the Khaw case to appeal to the Court of Final Appeal on the same point^[16]. 

35.This ground could be dealt with shortly.  The observations made by the Court of Appeal at paragraphs 183-188 in the Khaw case are equally applicable here and I do not see this ground being reasonably arguable. 

Ground 5 (the general ground)

36.There being no merits in Grounds 1 to 4, this general ground would also fail. 

Conclusion

37.For the reasons given above, I refused leave on all the grounds.

38.The applicant could renew his application before the Court of Appeal but a warning has been given to him that should he do so, and should the Court of Appeal find no merit in respect of the renewal application, the Court of Appeal may order loss of time which the applicant has spent in custody pending his appeal. 

Ms Alice Chan, SADPP, of the Department of Justice, for the Respondent

Mr Christopher Grounds and Mr Joseph Tope, instructed by M/s Cheung & Liu, for the Applicant