HKSAR v. Fu Yuen Keung

CACC000200/1997

IN THE COURT OF APPEAL

1997, No. 200
(Criminal)

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Coram: Hon. Mortimer, V.-P., Mayo, J.A. and Stuart-Moore, J. in Court

Date of hearing: 30 October 1997

Date of delivery of judgment: 20 November 1997

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J U D G M E N T

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Mayo, J.A. (giving the judgment of the Court):

1. The Applicant was found guilty after a trial before Deputy Judge Wright on 30 counts of dishonestly and with a view to gain for himself or another or with intent to cause a loss to another concurred in the falsification of a record or document for an accounting purpose contrary to section 19 (1)(a) of the Theft Ordinance.

2. The charges covered a period from March 1992 to June 1995. The total amount involved is of the order of HK$2.5m.

3. The Applicant was sentenced to a total of 40 months' imprisonment. He now seeks leave to appeal against his convictions and the sentences imposed.

4. The Applicant was the manufacturing director of a company trading under the name of Shine Spot Garment and Knitting Factory Limited. (Shine Spot). Through another company he had a 20% interest in Shine Spot.

5. Employees of Shine Spot gave evidence to the effect that they had prepared the sales discount lists referred to in the charges.

6. One of the columns in the list was headed "Private" or "P". The information contained in this column was provided by the Applicant. He would inform staff of the percentage of discount applicable and calculations would then be made of the amount in monetary terms. The Applicant would approve this and then a journal entry would be prepared and initialed by the Applicant and a cheque for the stated amount would be prepared in favour of the Applicant which would be signed by him and one other authorized signatory. There was evidence that the vast majority of the cheques were paid either to the Applicant or credited to his account.

7. Other than the evidence of the Applicant there were no evidence of any payments being made to any third party. The discounts were calculated every month.

8. PW2 the lady in charge of accounts gave evidence that she had been told by the Applicant that the moneys he received would be passed on to customers or their employees and that the object of the exercise was to either reward them for past orders or to encourage them to place orders in the future.

9. The Applicant gave evidence at his trial. It would appear from the Judge's reasons for verdict that he did not regard him as either a truthful or reliable witness. He gave conflicting evidence concerning the discount. At one stage he claimed that the moneys had been expended upon entertaining customers or their employees. He claimed that his co directors were aware of the fact that he had been receiving the moneys for this purpose and that they had agreed to this.

10. There was some conflict between the contents of a cautioned statement he had made and his oral testimony.

11. It was an admitted fact that none of the money had been received by the customers or their employees referred to in the admitted facts. The Judge referred to conflicting evidence being given by the Applicant and the reasons he gave for this. At the end of the day the Judge did not accept the Applicant as credible witness.

12. He was satisfied at the appropriate level that all of the elements of the offence had been established by the prosecution and convicted him on all counts.

13. The 1st ground of appeal complains that the reasons given by the Judge for disbelieving the Applicant were flawed. It then goes on to give details. The 1st complaint is that the Judge was in error in stating that all the discounts paid to the Applicant were calculated by reference to orders not yet received. This is not so. It is evident from reading the reasons as a whole that the Judge was under no such illusion. What the Judge appears in effect to have been saying is that the whole system was illogical and unsatisfactory having regard to the fact that it was arbitrary and no safeguards appear to have been built into the system. He referred to the evidence of PW2 who stated that she simply based her calculations on the overall percentages given to her by the Applicant.

14. Complaint is also made that the Judge failed to realise that the customers referred to in the admitted facts were not comprehensive and that some customers had not been included.

15. What is significant however is that no direct evidence other than from the Applicant was forthcoming that any other person had received any payments or entertainment.

16. It remains a matter of pure speculation whether anyone else received these advantages.

17. It might also be thought that it was implicit from the agreed facts that the people referred to were in fact the people who had had dealings with the Applicant.

18. Taken overall it cannot be said that the Judge was labouring under any misapprehension. His reasoning was not flawed and this ground cannot be sustained.

19. The 2nd ground is in the alternative. On the basis that the Judge's findings referred to in ground 1 could not be impugned reference was made to other matters which should raise doubts which should be resolved in the Applicant's favour.

20. The main area in which this arose was the system of payments to the Applicant and the fact that over a period of five years no one had queried the payments which were being made to him. It was suggested that in such circumstances it could be inferred that the Applicant's co directors had approved the payments being made. In this connection none of the other directors had been called as witnesses for the prosecution.

21. Indeed, at one stage in his reasons for verdict the Judge states "in the light of the evidence of the witnesses who were called to testify, I can see no reason why the Crown should have called other directors or shareholders of the company".

22. This observation may have been germane while the prosecution was presenting its case. However after the Applicant had given specific evidence of a meeting of the directors when approval had been forthcoming to the Applicant to entertain customers in the manner he described it was clearly incumbent upon the prosecution to apply to call rebuttal evidence if they were able to do so.

23. In this connection we were informed by Mr. Bell for the Applicant that at least two of the directors were available in Hong Kong at the time of the trial and they were not called as witnesses. No explanation was forthcoming for this.

24. We cannot share the Judge's view that there was no reason why the directors should not have given evidence contradicting the Applicant's evidence assuming that they were prepared and able to do so.

25. This problem is in our view compounded by other evidence which was given before the Judge.

26. PW2 specifically gave evidence that she regarded the accounting system, whereby payments were made to the Applicant on his instructions for commissions on discounts to be paid to customers where no vouchers supported the ongoing payments, as unsatisfactory and irregular. She also gave evidence that she drew the other directors' attention to this and so far as she was aware no action was taken by them to remedy the situation.

27. This also has to be considered in conjunction with the fact that the cheques in question had to be countersigned by another person in a senior position. Indeed many of the cheques were countersigned by either Mr. Chan Siu Keung who was described as a bridge to the other directors or Mr. Chan Yiu Sing who was in fact a director and indirectly a 30% equity shareholder of the company.

28. No satisfactory or convincing reason was ever given as to why these gentlemen were prepared to countersign these numerous cheques and not obtain some explanation for substantial payments being made directly to the Applicant.

29. All of these matters must cast grave doubts upon the prosecution case that the directors had no knowledge of the arrangements and had not acquiesced in the scheme.

30. While we accept the Judge was fully entitled to reject the Applicant's testimony in its entirely it was still incumbent upon the prosecution to prove this case at the appropriate level.

31. Having regard the unsatisfactory nature of this evidence we do not see how the Judge could properly have been satisfied that the prosecution had proved its case on these charges beyond a reasonable doubt.

32. We consider that these convictions are unsafe or unsatisfactory.

33. We allow this application. Treating it as the appeal we allow the appeal and quash the convictions.

Representation:

Mr. Francis Lo, SADPP, Ag. (DPP) for Respondent

Mr. Adrian Bell instructed by M/S Haldanes for Applicant