HKSAR v. Chan Ka Wai

CACC 265/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 265 OF 2002

(ON APPEAL FROM DCCC NO. 1147 OF 2001)

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Coram: Hon Yeung JA, Gall J & Beeson J in Court

Date of Hearing: 19 June 2003

Date of Judgment: 19 June 2003

Date of handing down Reasons for Judgment: 26 June 2003

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REASONS FOR JUDGMENT

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Hon Yeung JA (giving reasons for judgment of the Court):

1.On 19 June 2003, we granted the applicant, Chan Ka-wai leave to appeal against conviction. We treated the leave application as the appeal proper and allowed the appeal. The conviction was quashed and the 4 years' imprisonment set aside. We indicated that the reasons would be handed down in due course. These are the reasons.

Background

2.The applicant was jointly charged with 3 others on a charge of conspiracy to defraud. He was convicted as charged by Deputy Judge Jenkins in the District Court.

3.The other defendants were also convicted. Two of them had sought leave to appeal against their convictions. They however abandoned their applications shortly before the hearing and we were therefore only concerned with the applicant.

4.The case was again a "Loco London Gold and Silver fraud". In or about March 1999, Triumph Will Holdings Limited (the company) was set up and in June 1999, its registered office moved to Unit 2006, 20/F., Shun Tak Centre, Sheung Wan, Hong Kong.

5.The company very soon put advertisements into newspapers recruiting cleaning workers and odd job workers. The 4 victims, who were of relatively low education level with no investment experience, were recruited between July and October 1999.

6.The victims were not provided with proper employment; instead they were persuaded to invest in Loco-London Gold and Silver transactions. The purported transactions were in fact all sham. The victims were deceived into making payments to the company and they were then told their money had all been lost. Over a period of 4-5 months, the victims lost a total of about $2 million.

7.The police raided the company on 1 December 1999 and documents and other exhibits were seized. The documents and exhibits were examined by experts who concluded that there was no genuine trading in London Gold and Silver at all.

8.Indeed it appeared not in dispute that there was a fraud perpetrated against the victims and the only issue was whether the applicant was involved in the fraud.

Prosecution Evidence

9.The 4 victims gave evidence as prosecution witnesses. They described how they responded to advertisements and became employees of the company. They were then persuaded to invest in sham transactions and as a result they lost significant sums of money. The other defendants all had direct dealings with the victims when they persuaded them to invest in Loco London gold or silver.

10.None of the victims identified the applicant and it was not suggested that he had any dealings with any of the victims. The prosecution case against the applicant rested entirely on certain documents of the company. Those documents had been lodged with the Registrar of Companies and retained by the Companies Registry in accordance with the provisions of the Companies Ordinance.

11.In a Notification of Situation of Registered Office, Chan Ka Wai's name appeared as the Director of the company and a signature purporting to be that of Chan Ka Wai also appeared. In a Notification of First Secretary and Directors, Chan Ka Wai's name appeared as the only director of the company. His address and Hong Kong Identity Card Number were put down as G/F., 10 Phoenix Tsuen, Kwu Tung, N.T. and XXXXXXX (X) respectively.

12.In another Notification of First Secretary and Directors, Cheng Siu Bun was put forward as another director of the company. The notification appeared to have been given by Chan Ka Wai and his signature also appeared on the document.

13.In a Return of Allotments dated 17 June 1999, Chan Ka Wai and Cheng Siu Bun were described as allottees of 9,899 shares and 99 shares of the company respectively. Chan Ka Wai's address was put down as G/F., 10 Phoenix Tsuen, Kwu Tung N.T. Chan Ka Wai's name and what appeared to be his signature also appeared in the document.

14.After his arrest on 18 August 2000, the applicant was served with a Production Order in connection with the affairs of the company in his capacity as the director of the company. He acknowledged receipt of the Production Order by signing on it with his identity card number. He did not disclaim responsibility, nor protest, nor offer any explanation.

Defence Case

15.The applicant did not give or call any evidence at the trial.

Findings by the Judge

16.The judge found that the company in fact conducted sham transactions and the entire scheme was an elaborate conspiracy to defraud unsuspecting customers.

17.The judge recognized the absence of any evidence suggesting that the applicant had any dealing with any of the victims. However, based on the documents of the company, in particular the Notification of First Secretary and Directors (P61) and the Return of Allotments (P64) which showed that Chan Ka Wai was one of the two directors and the major shareholder, the judge concluded the applicant "had an ongoing financial stake and executive role in the company's sham trading activities".

18.The judge concluded that the applicant was aware at the outset of the true nature of the company's business and he was part of it.

Grounds of Appeal

19.Mr. Dunn, on behalf of the applicant attacked the conclusion reached by the judge. He emphasized that there was no evidence to show that the signatures on the documents in question in fact belonged to the applicant. There was also no evidence to indicate that he was in any way involved in the running of the company. The suggestion was that there was not enough evidence to show that the applicant was a director or shareholder of the company.

20.It was also suggested that no one would use a genuine name to set up a company for the purpose of defrauding others.

21.The judge was therefore wrong in concluding as he did that the applicant had an executive role in the company's sham trading activities.

22.Mr. Turnbull on behalf of the respondent did not seek to uphold the conviction against the applicant. He conceded fairly that the charge against the applicant had not been established to the required standard.

23.In view of the issues involved in the appeal, we feel obliged to deal with it in a manner that otherwise may not be necessary.

24.The case against the applicant boils down to the questions of whether the company documents in question were admissible as to the truth of their contents; whether such contents were sufficient to show that the applicant was the director and major shareholder of the company, and if so, whether such capacity would have led to the only irresistible inference that the applicant was part of the conspiracy to defraud with knowledge of the fraudulent activities taking place at the company.

25.The admitted facts show that the company documents in question had been lodged with the Register of Companies and retained by the Companies Registry in accordance with the provisions of the Companies Ordinance.

26.As an exception to the hearsay rule, "a public document coming from the proper place or a certified copy of it is sufficient proof of every particular stated in it." (per Phillimore J. in Wilton & Co v Philips (1903) 19 TLR 390)

27.The company's documents were all filed with the Companies Registry.

28.Section 45 of the Companies Ordinance Cap 32 provides that any allotment of shares shall be delivered to the Company Registrar for registration within 8 weeks.

29.Section 102 further provides that "the register of members shall be prima facie evidence of any matters by this Ordinance directed or authorized to be inserted therein."

30.Section 158 also provides that every company shall keep a register of its directors and secretaries and shall send to the Registrar a return in the specified form containing the particulars specified in the register.

31.Clearly the documents showing Chan Ka Wai as a director and major shareholder of the company were required to be forwarded to the Registrar of Companies for them to be filed and be open to public inspection.

32.The conditions for those documents to be admitted as laid down in R v Halpin [1975] QB 907 have been met.

33.Indeed the admissibility of those documents was not in issue at the trial as they were admitted as part of the Admitted Facts.

34.When the Production Order, P72 was served on the applicant as a director of the company, he raised no objection and signed on it to acknowledge receipt. He also put down on the receipt his identity card number as K705738 (5), the same as that of Chan Ka Wai in the company documents.

35.In the absence of any suggestion to the contrary, the evidence was sufficient to prove that the applicant was the Chan Ka Wai named as the director and major shareholder of the company.

36.But apart from the company documents naming the applicant as a director and major shareholder, there was nothing else to link him to the company at all. None of the victims said the applicant did anything to any of them or had any connection with the company. In fact none of the victims had ever met the applicant.

37.There was no evidence that the applicant had received any money, directly or indirectly from any of the victims. There was no evidence that the applicant received any benefit from the operation of the company. He did not control the company in any way and did not take part in its operation.

38.There was insufficient evidence to justify the conclusion by the judge that the applicant had an ongoing financial stake and executive role in the company's sham trading activities.

39.Despite the overwhelming suspicions against the applicant, partly created by his own behaviour in the course of the investigation by the police, we agreed that the inference of guilt was not the only irresistible inference that could be drawn. The evidence was not sufficient to establish guilty knowledge to make the applicant a party to the conspiracy to defraud, a point fairly conceded by Mr. Turnbull for the respondent. Simply, someone else could have made use of his name in the perpetration of the crime.

40.We were left with a lurking doubt as to the guilt of the applicant and he must be given the benefit of it. We therefore allowed the appeal and quashed the conviction.

Representation:

Mr R G Turnbull, DDPP(Ag) of the Department of Justice for the Respondent.

Mr John Dunn assigned by DLA for the Applicant.