The Queen v. Lai Man-yau
Read the full judgment text of DCCC 243/1978 on BabelCite. This District Court judgment was delivered on 29 June 1979.
1. The Defendant, who entered government service in 1935, rose through the ranks of the police to become a Detective Staff Sergeant II by the time he retired from the Royal Hong Kong Police Force on 13th, August, 1969.
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DCCC000243/1978 IN THE DISTRICT COURT OF HONG KONG HOLDEN AT VICTORIA CRIMINAL JURISDICTION CASE NO. 243 OF 1978 -----------------
----------------- Coram: Judge Rhind, D.J. in Court. Date of Judgment: 29 June 1979 ----------------- JUDGMENT ----------------- 1. The Defendant, who entered government service in 1935, rose through the ranks of the police to become a Detective Staff Sergeant II by the time he retired from the Royal Hong Kong Police Force on 13th, August, 1969. 2. He has stood trial before me on a single charge of having been a Crown Servant in control of pecuniary resources and property disproportionate to his past official emoluments, contrary to S.10(1)(b) of the Prevention of Bribery Ordinance, Cap. 201, the particulars being that he, having been a Crown servant, namely a Detective Staff Sergeant Class II in the Royal Hong Kong Police Force was, on 15th May 1971 in this Colony, in control of pecuniary resources and property disproportionate to his past official emoluments. 3. As the Prevention of Bribery Ordinance did not receive the Governor's assent till 14th May 1971, it will be seen that the charge date selected is the day following the enactment of this legislation. 4. Up till the charge date, the Defendant had received a total sum of $228,073.98 from Government in respect of official emoluments, including pension. Details of the payments made by Government to the Defendant over the years are to be found in the Chief Secretary's Certificate (Exh. P412) put in evidence under S.21A of Cap. 201. 5. That the Defendant was in control of assets vastly disproportionate to his official emoluments at the charge date is, in principle, conceded by the Defence, but there is a dispute on the quantum of assets. 6. On the most favourable Defence case basis, the assets the Defendant controlled at the charge date were worth $3,200,239.72. Those assets consisted of all the items of land (with one exception) and the other properties (again with one exception) shown under the Defendant's name including his aliases in the Crown's Schedule of Assets (Exh. P413), together with two items of property which he conceded he controlled despite those two items being in the names of his children. 7. That one exception among the items of land in his name bears the reference T10 in Exh. P413. That land was bought by the Defendant and his wife, he having paid $4,000 towards it and she $8,000. The value of this land had increased to $82,000 by the charge date. I have taken it upon myself to apportion that value according to his and her respective contributions. Thus, his one third contribution results in $82,000 x 1/3 i.e. $27,333 being attributed to the Defendant. As will be apparent as this judgment develops, this is not the sort of case where anything turns on the odd few dollars here and there, so I have generally deemed it appropriate to take a robust attitude towards any figures involved. 8. The item of other property which the Defendant was not prepared to acknowledge in full was T15. That relates to First National City Bank New York Savings Account No. 3440326227 in the names of the Defendant and his wife. Of the money in that account, the Defendant is only prepared to concede that the equivalent of HK$50,000 is his. 9. Mention was made of the two items of property of his children the Defendant acknowledged he controlled. They are Item D2, five hundred shares in Fairyland Restaurant Limited, in the name of his daughter Lai Mei Mei. Their value at the charge date was $32,568. Item D4, comprising one thousand six hundred shares in Man Kee Woollen Garment Manufacturer Ltd., is the remaining one. They were in the name of Lai Mei Yee, the value at the charge date being $170,704. 10. Values at the charge date are derived from the list of valuations contained in Exh. P504. 11. It may be helpful just to set out the arithmetic leading to the figure of $3,200,239.72 for the assets the Defendant concedes he controlled.
12. Even on the basis that the assets the Defendant controlled at the charge date were limited to $3,200,239.72, the Defence does not dispute the element of disproportion between that figure and the Defendant's official emoluments of $228,073.98. A fortiori, if the Crown succeeds in proving that the Defendant controlled even larger assets than he admits, disproportion cannot be an issue. 13. According to the Crown, the Defendant controlled assets at the charge date to a value of $9,110,779.47. The details of the items making up that figure are to be found in the schedules Exh. P413 and P504. The difference between what the Defendant concedes he controls and what the Crown contends he controls consists of assets in the name of his wife or children. Thus, the quantum of the assets the Defendant controlled is one of the live issues in the case. 14. Apart from that, the only other live issue is whether the Defendant has given a satisfactory explanation to the Court as to how the assets came to be under his control. 15. Control of assets is an element of the charge where the Crown bears the burden of proof at the normal level of beyond reasonable doubt. As an aid to proof of this element, the Crown has the benefit of S.10(2) of Cap. 201. How S.10(2) operates has been explained by the Court of Appeal in Cheung Chee Kwong v. R.(1) Although this evidentiary provision in S.10(2) did not become law till 14th February 1974, I regard its operation as retrospective for reasons I stated in R. v. Li Ping Lun.(2) 16. Whilst the burden of proof of a satisfactory explanation rests with the Defence, the level is only that of balance of probability. The distribution of the burden of proof between the Crown and Defence on the present type of charge is explained in R. v. Li Ping Lun (ante) at page 44. 17. Although the elements of "control" and "satisfactory explanation" carry different standards of proof, much of the evidence in the present case is relevant to both elements. In particular, evidence adduced with a view to showing whether the Defendant's explanation of the assets he controls is satisfactory can have a bearing on whether "other circumstances" exist for the purposes of the presumption of control in S.10(2) of Cap. 201. All the evidence in a criminal case is interrelated, and the Court has to look at the whole of the evidence in reaching its decisions. Having looked at the whole of the evidence in the case, the Court, of course, applies the appropriate level of proof to particular issues. 18. For the purpose of analysis and exposition, it is convenient to deal with the element of "satisfactory explanation" first. This is undoubtedly the crucial issue in the whole case. Unless the Defendant can at least satisfactorily explain the assets he admits controlling, a conviction is inevitable. 19. In considering whether an accused's explanation is satisfactory, I do not think that the approach of Judge Addison (as he then was) in R. v. Li Pui Fun(3) can be improved upon. What has to be asked, according to that case, is "might the Defendant's story be more probably true than untrue? If a jury were empanelled they would be required to use plain, simple commonsense". I also agree that the defendant's explanation has to be looked at, "in the most benevolent way possible, taking a liberal view of it and giving credit for possible faulty recollection in appropriate cases, remembering that probability and not possibility is the key-stone". 20. Central to the determination of the present case is the credibility of the Defence witnesses, and to no witness does this apply more than to the Defendant himself. Whether the explanation of his assets the Defendant gave to the Court was satisfactory was inextricably bound up with the question of the Defendant's own credibility and that of his witnesses. 21. The Defendant's explanation of the assets he controlled at the charge date had two limbs. Firstly, he claimed that he and his wife, Au Yeung Yin (D.W.17), made a lot of money when they were in China doing business during the Second World War, and that they brought that money in the form of currencies and gold back with them to Hong Kong, immediately after the War. 22. Secondly, he claimed that the wealth they thus brought back from China was invested and re-invested in various businesses and properties in Hong Kong to produce their present fortune, as crystallised at the charge date. A neat summary of the history of the Defendant's and his wife's investments and consequent income since their return to Hong Kong after the War is to be found in what came to be termed "Defence Table C" (Exh. D62) during the trial. 23. By the end of the case, the Defence had satisfied me that the Defence version of the Defendant's and his wife's investments and consequent income, as embodied in Defence Table C (Exh. D62), was probably substantially true. Why I was prepared to accept the Defence evidence on this is a subject I will return to. 24. Defence Table C (Exh. D62) demonstrates what can be described as the "snow-ball" effect of wealth under our capitalist system. Once you can set the snow-ball rolling, it gets larger and larger as it gathers momentum. 25. The pivotal question in the present case has become whether the Defendant has satisfactorily explained where he got his initial pile of snow. This takes one back to a consideration of what I have already referred to as the first limb of the Defendant's explanation of his wealth, namely the money he claims he and his wife made in China during the War. As described by the Defendant, that was the foundation of his and his wife's fortune. 26. From the out set, the Court of Appeal in its seminal judgment in R. v. Hunt(4), which was the first case heard under S.10 of Cap. 201, made it clear (at page 52) that for an explanation to be satisfactory it has to relate to "....... money the ultimate source of which was untainted by any corruption on the part of the accused". Of course, Hunt was a Section 10(1)(a) case of maintaining a standard of living incommensurate with official emoluments, but there is no reason to suppose that, mutatis mutandis, differing principles of "satisfactory explanation" apply to S.10(1)(a) and S.10(1)b) charges. 27. In practical terms, the effect of this aspect of Hunt has been to deny to accused persons the benefit of any attempts on their part to "launder" corrupt monies. A process of transmuting dirty, corrupt monies into clean, legitimate investments can avail an accused person nothing so long as the courts can require an explanation that wealth has been derived from an ultimate source untainted by corruption. Much of the bite would go from this legislation if any other interpretation were adopted. 28. Crown Counsel gave the impression of being somewhat alarmed at what he thought might be a new development in the law evinced in the recent case of Sher Ka-kit v. R.(5) A superficial eading of the first paragraph on page 3 of the circulated judgment might seem to suggest that the Court of Appeal has taken a step away from the position it adopted in Hunt. The particular sentence from Sher Ka-kit causing the Crown consternation is, "Counsel are agreed that that cannot be entirely right and we are satisfied that winnings can be a sufficient explanation even though the initial stake may not have been satisfactorily explained". 29. I regard Sher Ka-kit as confined to its own peculiar facts and in no way casting doubt on the principles laid down in Hunt. I do not think I exaggerate when I say that trial courts regard Hunt as the leading case in this sphere, and I for one would be surprised if the Court of Appeal were to whittle away its authority without as much as a passing reference to it on this aspect (although Hunt was referred to for other purposes in Sher Ka-kit, both of them being S.10(1)(a) cases). 30. Many are the reasons which can be advanced why Sher Ka-kit in no way impairs the authority of the principles laid down in Hunt, and Crown Counsel ably advanced most of them e.g. Sher Ka-kit is based on a concession wrongfully made by the Crown, it is obiter on the aspect now under discussion, etc. The Defence did not try to argue to the contrary, but reserved their position. 31. Suffice it to say that I am going to follow Hunt unless and until it is expressly overruled. 32. What then was the Defendant's explanation of the wealth which he claimed he and his wife had made in China? 33. The Defendant and his wife each told of having money in Hong Kong before the War. The Defendant was supposed to have $4,000 from his mother's estate, and the wife about $40,000, most of which she said she got on the dissolution of a previous marriage. 34. Had Defendant and his wife otherwise been more credible witnesses, I would have accepted what they told me about their pre-war wealth. What they told on this is not really inherently improbable, although the wife's claim to have had as much as $40,000 at that time perhaps did stretch credulity somewhat. 35. Having at the end of the day formed a highly unfavourable impression of both the Defendant's and his wife's general credibility, I cannot say that I regard it as more probable than not that they told me the truth even about their pre-war wealth. Maybe they did, maybe not. They left me in a position where I just did not know. Where I had to rely principally on their word for anything, I finished up being very wary. Likewise, I ended up with feelings of less than confidence in what I heard from some of their witnesses, and on that I will have more to say in due course. 36. From the evidence as a whole I do accept that in about 1940, just before the War started, the Defendant invested in an enterprise with his brother-in-law, Tam Sham, to buy a Federal lorry in Hong Kong for about $7,000, and this lorry was sent to Shiu Kwan in China where Tam Sham used it for a transportation business, known as Man Kee, of which the Defendant was a partner. 37. There is no doubt that the Defendant and his wife left Hong Kong shortly after it fell to the invading Japanese, making their way to Shiu Kwan in early 1942. I accept that once they were there, the Defendant immediately involved himself in the operations of Man Kee Transportation Company's Federal lorry. I accept that the business flourished and that in 1943, a second lorry, a Chevrolet, was purchased. 38. I also accept that Wai Kee Grocery Store was operated in conjunction with Man Kee Transportation Company in Shiu Kwan, and that the Defendant's wife assisted in the operation of that store. 39. On the evidence, I believed that the Defendant owned land, a restaurant and a large houseboat at Shiu Kwan, as he claimed. 40. Where I found myself disbelieving the Defendant's and his wife's evidence was on the extent of the wealth allegedly accumulated from the wartime business and from the realization of assets. 41. No doubt, Defendant did very nicely out of the operation of the transport business in Shiu Kwan, and I am prepared to accept that he made money from his other businesses there too. 42. Also, it could well be that he made substantial money from the realization of assets, including the Chevrolet lorry, before he left Shiu Kwan. However, as it was mainly the Defendant's and his wife's word on the realization of the assets, I was apprehensive whether I was told the truth on this, and I tend to doubt whether they had wealth anything like on the scale they claimed before me. My reasons for this doubt will be amplified in due course. 43. After they left Shiu Kwan, which was in 1944, I accept that they next went to Hing Ling where the Defendant continued to operate the Man Kee Transportation Company profitably with just the Federal lorry, until the end of the War in August 1945. Also, there is a strong likelihood the Defendant made money by selling the lorry before leaving Hing Ling on route back to Hong Kong immediately after the War. 44. According to the Defendant and his wife, what they brought back with them to Hong Kong in about November 1945 from their business ventures in China out-lined above was about HK$550,000, US$60,000, 1 or 2 million C.N.C. (Chinese National Currency), and 400 taels of gold, besides 1 million CNC and 100 taels of gold the Defendant had left behind with Tam Sham in Canton. In total this was the equivalent of about one and three quarter million HK dollars. Of that amount, about one million HK dollars was supposed to be the Defendant's and the balance his wife's. The HK$, U.S.$ and C.N.C. were supposed to be in the form of bank notes. In the years immediately following the war, this wealth was supposed to have been kept either at home, or in the wife's safe deposit box with a bank where she had opened an account not long after the War. 45. Whilst I regard it as reasonable to suppose from the evidence as a whole, that the Defendant and his wife brought some wealth back with them from China, I do not think it was anything like on the scale they claim. 46. Several reasons will now be given on why I do not believe the Defendant on the magnitude of the wealth he brought from China. 47. Firstly, I suppose, the very size of the claim is sufficient to arouse incredulity. One and three quarter million HK$ must have been a veritable fortune in this part of the world in those days, and, lucrative through the ownership of a lorry might have been in the conditions of wartime, the mind does, nonetheless, boggle when the Defendant comes up with a tale of such wealth. 48. That first reason is not so very cogent. Maybe someone in the Defendant's position could have made all that money (and kept it), sharing it only with the people he said he did, and converting it so felicitously into the currencies he said he did. 49. The second reason is not so easily explained away. Why would someone with all that money and business flair go into the police? The Defendant gave several reasons: interest in the job, love of guns, desire for community service, hope of fame, the lack of suitable business opportunities in Hong Kong at the time of re-joining. Either singly or in combination, I do not find those reasons persuasive. Being a detective is as honourable a vocation as any other, but it is just very unlikely to be the sort of work that an already rich man would want to take up. The discipline would be too tiresome, the hours too irregular and long. 50. I do not believe the Defendant about the lack of suitable business opportunities at the time. For those with capital and enterprise - and the Defendant is highly enterprising - there are always business opportunities. Absence of business opportunities is belied by his own evidence about his ventures into a transport business with Kwong On Hing (DW8) (Item L2 on Defence Table C, Exh. D62 refers), and his investments in pharmaceuticals etc. through Chung Ping Keung (Item L3 on Defence Table C). Those ventures were not that long after the end of the War, and I find it hard to imagine that there were not other opportunities, too. 51. Thirdly, comes the most cogent circumstantial evidence of all tending to show that the Defendant is not to be believed on his story of the wealth brought from China. This is the pattern of his investment in the years following his return from China. Consider the period 1946 - 1950 which covers the first five years following the War. In that time, according to Defence Table A1 (Exh. D61), he laid out only $69,500. Is that the likely behaviour of an enterprising man like the Defendant who is supposed to be sitting on a million H.K. dollars? It also has to be remembered, too, that meanwhile he was accumulating more wealth even from the few investments he did make. The same can be said of the sum of approximately $80,000 which Table A shows him to have invested in the next five year period, 1951 - 1955. Also, look at the individual amounts he invested in the first ten years: the biggest sum is $30,000 (Item L14). I find it hard to imagine that the Defendant would have confined himself to such comparatively small deals, if he had the assets behind him he claims. 52. If the exercise is extended to as long as fifteen years after the War, the pattern is still surprising for someone with the wealth the Defendant is supposed to have had. By 1960. only approximately $400,000 has been invested, it being remembered too, that meanwhile, substantial new wealth was being created by those investments he had made. The largest single investment of the Defendant's within that 15 years period was $80,000 (Item L29), which was made as late as 1959. 53. Fourthly, there is the matter of the inconsistency between what the Defendant and his witnesses have told the Court and the Defendant's version in previous statements. If the Defendant's version in Court, or at least part of it, can be characterized as a recent invention, then obviously the weight to be attached to that version is likely to be diminished. 54. This fourth ground for disbelieving the Defendant's explanation will in due course be seen to be closely bound up with the fifth and sixth grounds which follow. They are all related to the general credibility of the Defendant and his witnesses, and there is considerable overlap among these grounds. 55. On this fourth ground which I have termed recent invention - and really it is only a species of inconsistency - it is necessary to remind oneself that the version given by the Defence in Court was that the Defendant made his money in China from the operation of two lorries, that he converted nearly all that money into HK$, US$ or gold before leaving China, that he brought those currencies and the gold with a total value of almost one and three quarter million HK$ to Hong Kong immediately after the War, and that on return to Hong Kong this wealth was kept either at home or in a safe deposit box his wife got with the Hong Kong and Shanghai Bank, where she opened a Savings Account, not so long after the War. 56. A somewhat different story is to be found, though, in the Defendant's earlier statements. 57. One of the two statements I have in mind is his interview with the former Anti-Corruption branch of the police on 18th December 1968. The transcript of that interview was admitted into evidence as Exh. P499C. My reasons for admitting that transcript into evidence are contained in a ruling which forms an annexure to this Judgment. 58. The other statement is Exh. P492 which embodies the Defendant's interview with ICAC on 6th January 1977 (For immediate purposes, it is not necessary to refer to Exh. P493, the record of the Defendant's interview with ICAC on 20th January 1977, though that too was admitted into evidence, and in due course will be seen to be relevant for other purposes). 59. At this point, it will be convenient to indicate the Court's attitude to two other documents which the Prosecution produced in evidence on the basis they contained statements attributable to the Defendant, so that they should be available for the purpose of revealing inconsistencies with what might be said elsewhere. 60. One of those documents is a set of accounts forming part of Exh. P152. I accept the Defence explanation of the circumstances in which those accounts came to be made, and have decided totally to disregard them. Likewise, I accept the Defence explanation of the circumstances in which the bail affidavit Exh. P503 came to be made, so, as requested by the Defence, I have decided completely to ignore the contents of that document. 61. Now to return to the reasons why what the Defendant told the Court appears to be a recent invention, when contrasted with his earlier statements Exh. P499 and P492. 62. For present purposes, the significant part of the Defendant's interview with the Anti-Corruption branch officers is to be found at page 80 of the transcript (Exh. P499C) through to page 85. 63. It was urged by the Defence that, by that stage of the interview, the Defendant must have been getting very tired, so not much significance should be attached to what he said. As the time from the beginning of the interview till its end was only just over two and a half hours, including a rest-break midway through, I find myself unimpressed by the "tiredness" argument. 64. Of all the Defendant's answers at the Anti-Corruption Branch interview, the one, perhaps, most undermining his account in Court is to be found at the top of page 82 of Exh. P499C. It is Item 2063: "....... I sold all the four or five vehicles, sold them all and brought all the money here." 65. What then is to be made of this discrepancy between four or five vehicles to produce the proceeds of sale in the 1968 version, and two vehicles in the more recent version? 66. According to the Defendant, maybe he mistakenly included hired vehicles in the 1968 version. Also there is the "tiredness" and consequent "slip-of-the tongue" argument. Also, arguments were advanced by the Defence as to why the Defendant told some admitted lies in that interview. I will deal with those arguments when I come back later to the topic of the lies he admits having told in that interview. Such arguments can also be borne in mind, in considering whether the Defendant might have had an innocent motive in wanting to misrepresent, in the Anti-Corruption interview, the number of lorries he had sold. For example, might he have exaggerates the number merely as an expedient device for more thoroughly satisfying his interrogators and getting them to leave him alone, even though really he had nothing to hide? Possible, I suppose, but, nonetheless, extremely unlikely I would have thought. A judge of fact, like a jury, has to keep his feet firmly anchored on the ground, and not fall for every fanciful suggestion. 67. The stark reality of the matter is that the Prosecution suggestion on why the Defendant said, in 1968, he had sold four or five lorries, makes infinitely more sense, particularly when the evidence in the case as a whole is considered: he must have thought that an amount equivalent to the proceeds of sale from China of four or five lorries was needed to explain the basis of his wealth. 68. Why, the Defence ask, did the Defendant not adhere throughout to his claim that he had sold four or five lorries, if that was what he had really meant to tell Anti-Corruption branch in 1968? People often have mixed motives or are not even aware of subconscious motives, so it would be no easy task for a court if it had to unravel precisely why someone adopted a particular line of conduct. Courts do not pretend to come up with hard and fast answers on this type of problem, and the best the court can do is to take note of the problem, consider how it affects the probabilities in the case, and take it into account with all the other evidence in the case. 69. It was certainly always in the Defendant's mind that he had been interviewed by the Anti-Corruption branch - for example, he made a reference to the fact of such a happening at the ICAC interview of 6th January 1977 (Exh. P492B, Question No.66 refers) - but I very much doubt whether, as the years went by, he recalled much of what he had actually said in 1968. 70. I think there must be a probability that when he came to prepare his defence to the ICAC charge, he had forgotten what he had told Anti-Corruption branch in 1968 about having sold four or five lorries. This could explain why he went ahead and instructed his lawyers on the basis that he sold just two lorries in China. By the time he came to refresh his memory on the contents of the 1968 interview, it may well have been that it was no longer practicable for him to re-model his defence. If, at that stage, he had attempted to change his instructions to his lawyers, that really he had sold four or five rather than two vehicles, he might have thought that his lawyers would have indicated they could no longer continue to act for a client who behaved like that. 71. Perhaps it is possible that, even if the Defendant never forgot that he told Anti-Corruption in 1968 that he sold four or five vehicles in China, he would, nonetheless, have still thought it better tactics to run his defence on the basis that he sold the Chevrolet and the Federal. It would be a calculated risk. He might have felt that some of the witnesses who could prove his undoubted connection with the Federal and the Chevrolet would no longer be available to him if he wanted to run a defence on the lines he owned two or three other lorries as well. He might have felt he would have no difficulty explaining away his answer to Anti-Corruption. 72. Assistance is sought separately by the Prosecution and the Defence from Item 2048 on page 81 of Exh. P499C (the transcript of the 1968 interview), which reads:
73. One fact proved virtually conclusively during the trial was that the Defendant was away in China during the Japanese Occupation. For him to say then, that he brought money to Hong Kong during the Japanese Occupation, is an indication that he was pretty confused by that stage of the interview, so the Defence argued. The general does not necessarily follow from the particular. Just because the Defendant undoubtedly must have been mistaken in that part of his answer relating to the time when he brought money to Hong Kong, it by no means follows that he was going generally hay-wire in the answers he was giving at that stage. It looks to me nothing more than an isolated slip of no great significance. 74. What the Defendant is saying in that answer is that he brought 1 or 2 million dollars in Chinese currency to Hong Kong. That is a very different story from what he came up with in the ICAC interviews and before the Court. 75. That answer, of having brought one or two million dollars in Chinese dollars to Hong Kong, has also to be considered in the context of the answers he had just given at page 80 of Exh. P499C and those he gave subsequently at page 82 and on the following pages about his savings account with the Hong Kong & Shanghai Bank. 76. The general impression his answers in that interview seem to give is that he sold off a few thousand dollars worth of his Chinese currency at a time and deposited the proceeds in his Hong Kong & Shanghai Bank Savings Account - a rather different story from what he told the Court. 77. No mention was made by the Defendant of bringing any currency other than Chinese dollars in his 1968 interview with Anti-Corruption. In the first interview with I.C.A.C. on 6th January 1977 (Exh. P492) we hear, for the first time, of the Defendant's having brought Hong Kong dollars here. His answers to Questions 106 and 119 seem to say quite explicitly that the wealth he brought to Hong Kong was in Hong Kong currency:
78. The Defendant says there is really no inconsistency between that and what he told the Court about part being in gold and part in US$. He says he was in effect merely expressing his total worth in terms of HK$. 79. My view is that, bearing in mind the way in which Q.106 and 119 were framed, it is reasonable to suppose that Defendant would have made reference to the US$ and the gold if he really had brought some back from China. The absence of reference to those items then tends to support the hypothesis that his story of his vast riches from China is an invention. 80. The fifth of the grounds contributing to my dissatisfaction with the Defendant's explanation of his wealth from China is his proven inclination to lie when it suits him. His answers (Exh. P499) to Anti-Corruption in 1968 and to ICAC in 1977 (Exh. P492 and 493) he now admits to have been full of lies. There are two interrelated aspects to that lying which can be significant for the purposes of the present trial. The first is that general credibility is important to anyone seeking to persuade the Court about the satisfactoriness of an explanation and, of course, if that person has to admit telling a lot of lies on related topics in the past it might not be unreasonable for that to have an effect on his general credibility. 81. Secondly the question will be asked why the lies were told previously. Were they indicative of a consciousness of some sort of guilty secret? 82. For a start, I will list some of the principal lies he told in the previous statements 83. A. Anti-Corruption Interview (Exh. P499) 18th December 1968
84. B. I.C.A.C. Interview (Exh. P492) 6th January 1977
85. One reason the Defendant gave for his lies on the occasion of the Anti-Corruption interview in 1968 while he was still in the police was that he feared disciplinary proceedings because he was aware that he was in breach of a departmental declaration (Exh. P408) he had made in 1960 that he had no investments. A perusal of that declaration shows that it is limited to investments in Hong Kong companies and undertakings, without any mention of investment in land. Maybe also, it could be suggested, the provisions about policemen controlling pecuniary resources in excess of official emoluments in the former S.36 of the Police Force Ordinance Cap. 232 (set out in my Ruling on the Voir Dire annexed to this judgment) could have played a part in his thinking. 86. On the matter of the Defendant's being in breach of the declaration (Exh. P408) he made in 1960, the question arises why he allowed himself to get in a position where he was in breach. 87. A principal reason given by the defence as to why Defendant lied in 1968 - and this also would apply to why he was in breach of the declaration (Exh. P408) - was that he was aware that his explanation of how he acquired his assets, true thought it was, would be greeted with scepticism. In other words, he is saying he knew what other people with their nasty minds might wrongfully be thinking, so he just took what he then thought was the easy way out by lying. Part of what prompted the Defendant in this line of conduct, so he explained to the Court, was the problem he faced of trying to prove events which even then had happened long ago - in 1968 the China episode was already some twenty five years previously. Because, according to the Defence, the Defendant foresaw that he would have difficulty persuading people of the truthfulness of his story, he also realized that there might be a lot of problems for his business while enquiries were being made. This could lead to disruption of his businesses and embarrassing enquiries made of his business associates. Hence, in a misguided attempt to forestall what looked like a lot of potential trouble, the Defence say he resorted to the lies of the 1968 interview. 88. Even isolated from the rest of the evidence in the case, this argument I find unpersuasive. A man of Defendant's intelligence, knowing full well the type of evil thoughts harboured about police officers with a lot of money, would surely, if his wealth had been from a legitimate source, have gone out of his way from the time of his re-joining the police in 1945 and consistently thereafter, to let it generally be known, particularly among his superiors, that he was a man of independent wealth. 89. Applying commonsense, Defendant's lies in his declaration (Exh. P408) and to the Anti-Corruption Branch point strongly towards Defendant having guilty secrets to hide. It looks very much as if he was scared of being investigated for corruption. 90. By the time ICAC interviewed Defendant in 1977, he was no longer in the police. The reasons he gave for his lies to ICAC in the statements Exh. P492 follow similar lines to those advanced in relation to his statement (Exh. P499) to Anti-Corruption. Suffice it to say that the more probable explanation of his lies to ICAC is that he wanted to cover his tracks because he was frightened of what investigations into his past might turn up. 91. Is not the Defendant entitled to some credit then for standing up in court and admitting that he told lies in the past? Yes, he is, and it is one element that goes into the scales of justice in his favour. However, this conduct of his has to be seen in the context of all the evidence in the case. Much of the credit that might have accrued to him is off-set by the fact that the prosecution would have had no difficulty in exposing those lies in any event. For him to tell the truth in Court on those matters was largely to bow to the inevitable - the evidence against him on those matters was generally overwhelming. Far from evincing a general conversion to the cause of truth, the Defendant's confession of past lying was explicable on the basis of nothing more laudable than tactical reasons on his part. 92. Sixth among the grounds leading me to the conclusion that Defendant's explanation was unsatisfactory was my disbelief of what he and some of his witnesses told me about some of the happenings in China and in Hong Kong immediately thereafter. This ground thus encompasses general credibility. 93. The Defendant in his evidence had told of purchasing Hong Kong and US$ and gold at money changers in Shiu Kwan; he told of purchasing HK$80,000 from Lau Moon Kee, a money-changer to whom he was introduced by Lai Sau Man (DW22) in Canton; he told of his sister, Lau Shui Ching (DW16) coming to see him at his hotel in Hong Kong shortly after his arrival back here from China with his suit case full of Hong Kong and US$ bank notes, Chinese paper currency and gold bars. 94. On all the points I have just out-lined he called witnesses who purported to corroborate material parts of what he told the Court. I will now deal with each of those witnesses in turn. My ultimate assessment was that I believed none of them. This part of the evidence reeked of fabrication. 95. Firstly there is Chan Lee (DW21). I was prepared to accept that he worked under Defendant as a mechanic with Man Kee Transportation Company in Shiu Kwan during the War. His claim, though, to have been with the Defendant on four occasions when the Defendant purchased foreign currency, and four when he purchased gold rang completely false to me. Both the tale and the manner of telling it left me with a poor impression of the veracity of this witness. Moreover, I did not consider the evidence of this witness in a vacuum but in the context of everything else that was before me in this case. 96. It was urged by the Defence that if false testimony was being served up to me it would have been larded with more peripheral detail. The answer to that is that whilst the fabrications in the present case were not as patently crude as some presented to the courts, they were fabrications nonetheless. 97. I wish I could believe that it was loyalty alone which had prompted DW21 to come along and say his piece for the Defendant, and I would have been happy, too, if I could have believed what he told me, but such, unfortunately, was not the case. 98. Where fabrication is at its most transparent is in the descriptions given by the Defendant, his wife and their old friend, Lai Shau Man (DW22), of their trip to the money-changer, Lau Moon Kee, in Canton immediately after the War. 99. Am I really expected to believe, that now, some thirty-three years after the event, each of those witnesses remembers the details that the money changer was Lau Moon Kee, and that they actually wanted to buy HK$100,000, but, as only HK$80,000 was available, they bought just that lesser amount, the Defendant getting HK$50,000 of it and his wife the balance of $30,000? 100. The Court is not unaware that, even among honest and well-intentioned lay witnesses who are relatives or friends, there is likely to be some mutual refreshing of memories and cross-fertilisation of minds before getting to court, so it is not necessarily sinister when witnesses mechanically grind out the same story. Making all due allowance for that, the court is, nonetheless, sure in the present case that what it heard from the Defendant, his wife and DW22 on this aspect of the case was a concoction. In arriving at that conclusion, the court took into account in the context of the evidence as a whole in the case, both the nature of what was recounted, and the manner in which the witnesses recounted it. 101. Lastly then, there is the evidence of Lai Shui Cheng (DW16) about the Defendant, her brother, revealing to her the fabulous contents of his suit-case. A highly convenient happening for the defence story, but just to facile, I thought. 102. In sum, having heard and observed those witnesses just referred to, and relating their evidence to the whole of the evidence in the case, I believed none of them on the matters I have just dealt with. 103. By contrast, though, I found DW12, the proprietor of a gold shop, and DW13, a money changer, to have been honest witnesses. Unfortunately, though, from the defence point of view, the effect of their evidence was to all intents and purposes nugatory. 104. DW13 bought some U.S. dollars from the Defendant in 1953, whilst DW12 bought gold from the Defendant in the early 1960's. In point of time those deals were too remote to have any real corroborative value for the defence story. That the Defendant had some U.S. dollars in 1953 and some gold in the early 1960's can only be regarded as of minimal evidentiary significance. There are countless ways in which he could have got hold of either U.S. dollars or gold by those dates, and the fact that he had them then does virtually nothing to buttress his story of having got them in China during the War. 105. This is a convenient point to return to the topic of the significance for the Defendant's credibility of the court having accepted the truthfulness of what I described earlier as the second limb of the Defendant's explanation of his wealth, i.e. the post-war investments with their consequent income, as listed in Defence Table C (Exh. D62). It is, of course, in the Defendant's favour that the court is satisfied that he told the truth on this aspect of the case. The same applies to the Defendant's wife, too. The properties and investments shown in her name in Table C were in fact bought, and produced the income claimed by the Defence. 106. That the Defendant and his wife did indeed tell me the truth on this aspect of the case does not, unfortunately, lead me to infer that they told me the truth on other parts of the case. No advantage was to be gained by any Defence witness telling lies on the second limb of the case. There, to tell the truth was not only the correct thing to do, but it was also the smart thing to do. The position was quite otherwise, though, in the circumstances relating to the first limb. It would be simplistic to argue that because a witness has told the truth on a point where the truth cannot prejudice him that he has therefore probably told the truth on everything else in the case. Whether a witness has told the truth on a particular point can only be determined by considering all the circumstances in the case. 107. As Section 10 cases do tend to be somewhat amorphous, it is not always so easy to recognize whether a piece of evidence is relevant to main issues or whether it belongs to the category of collateral issues. There are two incidents which I will touch upon briefly only because I think the evidence on them could have some bearing on the Defendant's credibility, but, apart from that, I think they can generally be ignored on the basis of being collateral. 108. The first of them is the Defendant's claim that he took HK$150,000 with him to Canton in April 1949, which, together with the proceeds of 100 taels of gold and some Chinese currency from a real estate deal there, he used to purchase a piece of land at West Embankment, Canton, for 50,000,000 Gold Yuan. An advantage to the Defendant flowing from this story would be that it shows he was not just sitting on his pile of wartime wealth brought back from Chian, but was actively investing it in the way one would normally expect a businessman to do. 109. This story of a Vast expenditure of wealth on that piece of land reflects adversely on the Defendant's credibility for two reasons. One is that it is difficult to imagine anyone in his right mind expending what was then the princely sum of HK$150,000 plus the other bits and pieces at a time when the Communists were overruning China, and secondly it is clear that 50,000,000 Gold Yuan at that time was a tiny fraction of the value of the HK$150,000 alone. I accepted the evidence of Professor King (PW93) that in April 1949 the official rate of exchange was 205,000 Gold Yuan to US$1 (Unofficial rate 800,000 Gold Yuan to US$1). With cross-rates of HK$16 to £1, and US$4 to£1 (later in 1949 that became US$2.8 to £1), it is a matter of simple arithmetic to see that nothing like HK$150,000 was needed to purchase 50,000,000 Gold Yuan. On the aspect of the exchange rate, the court would also have been justified, I think, in taking judicial notice of the fact that the HK$ has been a good, strong currency ever since the end of the War. The relative strength of the HK$ can also be inferred indirectly from items of evidence in the case showing, for example, how the Defendant's salary only increased gradually, what his investments in Hong Kong cost, what income they yielded, how much a bus driver like DW4 or a conductor like DW5 earned and similar matters. 110. The second of these peripheral matters where the Defendant was caught out obviously not telling the truth, was in his explanation of how it came about that he had shares in Fairyland Ltd., registered in his alias, Lai Shui Ying, with a Taiwan address in 1969 (while he was still in the police), instead of his usual name, Lai Man Yau, and his usual Hong Kong address, and why, and how he went through the strange manoeuvrings evidenced by Exh. P48 and P49 to get those shares transferred back into the name Lai Man Yau, with his usual Hong Kong address, in 1972 (after he had left the police). 111. The way that whole share transaction was carried out gave the impression that Lai Shui Ying and Lai Man Yau were two entirely separate individuals dealing with each other at arm's length. One even sells the shares to the other. 112. In his evidence the Defendant tried to give the impression that nothing could have been more natural than the way this transaction was carried out. 113. Far from normal behaviour on the Defendant's part, the overall impression created by the way of carrying out this transaction was that the Defendant was going to extraordinary lengths to conceal his identity. 114. As this effort to conceal his identity commenced in April 1969, some four months after he first knew that the Anti-Corruption Branch were taking an interest in his affairs, the inference is not unreasonable that the Defendant was trying to conceal his ownership of those shares from them. 115. My only interest in this particular matter for present purposes is that it illustrates how Defendant was less than frank with the court. 116. Weighing the evidence as a whole, the conclusion I reached with regard to the $3,200,239.92's worth of assets the Defendant conceded he controlled at the charge date, was that his explanation was not satisfactory. 117. In arriving at that conclusion, the Defendant's lack of credibility has of course been a highly relevant factor, but it is not the mere fact that he has been exposed as a liar which has resulted in the charge being proved against him. If, despite all the lies told by the Defendant and some of his witnesses, the court, nonetheless, thought it more probable than not that there was a satisfactory explanation for his assets, the court would still have held the charge to be unproved. Mok Chuen v. R.(6) is authority for that. 118. Attention can now be turned to the second of the two major live issues in the case - the quantum of the assets under the Defendant's control. 119. It will be useful for a start to clear the decks, as it were, by getting the few odds and ends of property in the names of the Defendant's children out of the way, so that it will then be possible to concentrate on the substantial assets in the Defendant's wife's name. 120. Already reference has been made to the fact that the Defendant concedes that he controlled some of the shares in Fairyland Restaurant Limited and Man Kee Woollen Garment Manufacturer Ltd. listed under his children's names in the prosecution Schedule of Assets Exh. P413, and it will be recalled that allowance has already been made for those particular items in the calculation made of the assets the Defendant admitted he controlled at the charge date. 121. Lai Mei Mei, the Defendant's daughter by his wife, Au Yeung Yin (DW17), had eight hundred shares (Item D1 in Exh. P413) in Man Kee Woollen Garment Manufacturer Limited registered in her name whilst David Lai, the Defendant's son by his concubine, Lau Yeuk Ling, had the same number of shares in that company (Item S1 in Exh. P413 refers) registered in his name. Each of those children's shares was a gift from his or her mother. 122. In the case of Lau Yeuk Ling, there is insufficient evidence to show that the Defendant controlled her property, and I see no reason to hold a gift she made to her child was really under the Defendant's control. Hence Item S1 is struck out. 123. Different considerations apply, though, in the case of the shares the Defendant's wife gave her daughter. For reasons stated later, I decided the Defendant controlled his wife's assets. I regard those shares (Item D1) as an indirect gift from the Defendant to Lai Mei Mei through his wife, and consider those shares also have to be treated as being under the Defendant's control at the charge date, their value at that date being $85,352 according to the agreed Valuation Schedule Exh. P504. 124. None of the money in the children's bank accounts Items D3, S2 and S3 and S4 (the reference S4 appears in Exh. P504 but not P413) was shown to the under the Defendant's control. The amounts are comparatively modest and likely to have emanated from such innocent sources as "laisee" in the way the Defence claimed. 125. In all, the prosecution Schedule of Assets Exh. P413 coupled with the Valuation Table Exh. P504 showed that there were assets worth $5,498,686.22 in the Defendant's wife's name at the charge date. According to the Defence, with one exception, she had acquired all those assets by investing with her own money. The one exception related to the three hundred shares in Fairyland Restaurant Limited she was shown as having acquired on 2.1.1969 as part of Item W21 in the Schedule of Assets Exh. P413. That was a somewhat mystifying transaction altogether, and Au Yeung Yin's explanation that this was a gift to her from the Defendant's concubine, Lau Yeuk Ling, by way of a peace offering, for having taken her husband being as likely as any other, I accepted it. 126. Having no reason to suppose that those shares, which were worth $19,540 on the charge date, were in the Defendant's control, I will begin by deducting that sum from the $5,498,686.22 worth of assets in the Defendant's wife's name, the result being $5,479,146.22. 127. To that figure there has to be added from the Schedule of Assets Exh. P413 two other items. 128. One is the part of Item T10 in the Defendant's wife's name. I touched upon this in dealing with the assets in the Defendant's name. The part of this item attributalbe to the wife's name is $54,667. 129. The other item is T15, the First National City Bank Joint Savings Account, of which $178,232.50 is attributable to the wife, according to the Defence. 130. Those last two items added to the figure of $5,479,146.22 already referred to give a total of: $5,712,045.72.
131. That is the total, then, the Defence claims as representing the value at the charge date of the assets stemming from the investments made in the Defendant's wife's name, with what she claims was her own money. As already indicated, that money of hers, according to the Defence, shares the same history as the Defendant's money: they made it in China together. 132. I no more believe his wife's story about making money on the scale she claims in China than I believed the Defendant's. Most of the reasons for my disbelief are common to both stories which were highly interdependent. 133. Not surprisingly, the pattern of investment of each of the Defendant and his wife was not identical in those post-war years, but neither's pattern is consistent with what one would expect from persons possessing wealth on the scale they claim. Bearing in mind that she was supposed to have brought back the equivalent of about three quarters of a million HK$ from China, is it credible that in the first five years she did not make a single investment, apart from sums of $5,000 and $10,000 in 1946 and 1947 respectively for key money for the accommodation she rented? The picture emerges from Defence Table A2 (Exh. D61). In the next five years (1951-1955 inclusive) she did out less than $200,000 of her own, it being borne in mind too that she was generating substantial income as she went along. 134. All this is leading into why it is I think the Crown has proved that the Defendant was in control of the assets in his wife's name. 135. To assist it in proving "control", the Crown can seek to pray in aid the presumption contained in S.10(2) of Cap. 201. The Defendant's wife certainly satisfies the "closeness of relationship" requirement. Has the Crown also proved, though, at the level required of it by Cheung Chee Kwong v. R. (already referred to), that "....... having regard to ....... other circumstances, there is reason to believe that any person was holding pecuniary resources or property in trust for or otherwise on behalf of the accused or acquired such resources or property as a gift from the accused ......."? 136. In the circumstances of the present case my disbelief of the wife's explanation about making money as she claimed in China is a highly cogent reason contributing towards my belief that she is holding her assets on behalf of the Defendant or acquired them as a gift from him. 137. She emerged from the evidence as a whole in the case as a virtually illiterate, somewhat passive, sort of person who lacked enterprise or business flair. On those points, there was a tremendous contrast between her and Defendant. If she did not make her money in China as she claimed, then where else can she be supposed to have got the funds for her investments? The answer to that is: From the Defendant in all probability. Where he got the money from takes us back to the very point on which a satisfactory explanation has no been forthcoming from him. 138. Whilst the Defence sought to highlight particular snippets of evidence tending to show how separate from each other the Defendant and his wife were, the Prosecution engaged in a similar exercise with other snippets pointing towards the wife being in effect a "front" for her husband in his investment activities. This evidence was duly taken into account and thrown into the scale on the appropriate side for the massive weighing operation that the court had to perform at the end of the day. 139. For the defence it was pointed out that even back in wartime China, when there could have been no conceivable reason why his wife should be a "front" for the Defendant, each of them had a separate bank account. I accept that each of them did have a separate bank account then. (Exh. D8 and Exh. P66, 68 and 69 refer) That is indicative, so the defence urges, of how the Defendant and his wife have always kept their financial affairs separate from each other, and militates against the suggestion that the Defendant subsequently controlled her assets. 140. It is one small piece of evidence which can go into the scales in the Defence's favour. As I understood the evidence, neither of them claims to have kept substantial sums of money in their bank accounts during the War, their preference being, if I understood them aright, maintaining private hordes of bank notes in various currencies and bars of gold. Because each of them then kept bank accounts with what have never been claimed to be other than fairly modest amounts in them does not lead on to that strong an inference of a tendency to independent financial activity on the part of each of them. 141. While on the topic of bank accounts, a piece of evidence pointing slightly in the direction of the Defendant controlling his wife's financial affairs is the fact that the closing balances of two of the wife's bank accounts (inter alia Exh. P287, P293, P361, P362, P363, P364 and P405 refer) were transferred to the Defendant. The wife explained this on the basis that she might sometimes owe him some money, so that, as she was going to close the account in any event, she would just pay him off with the final balance in the account, including all the odd few dollars and cents in the figure for the final balance. Possible, no doubt, but, nonetheless, strange. Transferring the final balances in that way does tend to suggest that she might have been just a "front" for him in the operation of those accounts, and that when the time came to close the accounts the odd sams left in them were finding their way back to the person who was the real beneficiary of the account. Not too much can be made of this but it is a slight pointer which can be taken into account. 142. Then there is the matter of their wills (Exh. P33 and P34). Whereas the wife is only due to get two twelfths of the Defendant's estate, he will get 55% of hers. Moreover, 30% of her estate goes to his two children by his concubine Lau Yeuk Ling. The Defence seek to play that down by saying she must have grown to like those two children but I regard it as a little odd that she should be leaving her own wealth to them. It is not so odd, though, if the wealth is not really hers. 143. As part of its endeavour to show that the Defendant's wife was not a mere front for him, the defence pointed out that in respect of both Commercial Sing Kee Transportation Company (Item LA5 in Exh. D61; Exh. D19 refer) and Ho Choy Mahjong School (Item LA49 in Exh. D61; Exh. D41 refer), the Defendant had substantially larger shares in those partnerships than his wife did. In the case of the former partnership, his share of the partnership capital was $35,000 compared with her $4,500, whereas, in the latter, his share was $38,500 to her $7,500. That the Defendant should have those larger shares was not consistent with his wife being a front, so the defence contended. As the defence described it, this did not fit in with a picture of the Defendant trying to hide behind his wife's skirt. To that, the Prosecution would have been entitled to reply that he did not need to take refuge behind his wife's skirt on either transaction because he was already sufficiently screened behind an alias in each case. In the Commercial Sing Kee Transportation Company's partnership book (Exh. D19) the Defendant had himself described as Lai Shun Ying, whereas in Ho Choy's partnership book (Exh. D41) he went under the name Lai Man. 144. Using your wife's name or resorting to an alias can be alternative modes of concealment. 145. That even a small share in those two partnership was in the Defendant's wife's name at the same time as he had a share under his aliases tends to point in the direction of the Defendant's and his wife's financial interests being separate, but it is, of course, only one small piece of evidence which falls to be weighed with all the other evidence. 146. A veritable welter of evidence was adduced by the Prosecution, directed towards showing that the Defendant collected rents and premiums from, and negotiated with tenants of some of the real estate in his wife's name. Likewise, there was evidence of his filling in Rating Forms for his wife. This was pretty inconclusive stuff. By itself, there is nothing significant in a husband helping his wife with her business affairs: spouses are normally expected to help each other. It is all a matter of degree and depends on the circumstances: assistance will only be significant if it goes beyond the normal. 147. Some individual items among the assets in the wife's name can now be scrutinised to see whether indicia of control, or the contrary, can be discerned. 148. With regard to the premises at 17, Irving Street (Item W1 in Exh. P413), purchased in 1951, it is slightly out of the usual that it should have been the wife rather than the Defendant who provided the matrimonial home. This she explained on the basis she needed somewhere for her relatives who had recently come from China, and were not supposed to stay with the Defendant and his wife in police quarters. Had this been the some occasion she provided the matrimonial residence perhaps more weight could have been given to that explanation of hers, but she continued to provide such a residence on future occasions, the purchases of 55, Patterson Street, Vienna Mansion (Item W6) in 1960 and 9, Kingston Street, Clarke Mansion (Item W15 and W16) in 1965 also being in her name. 149. Also with regard to the property Item W1, there is the circumstance that it is in the wife's maiden name Au Yeung Oi rather than her married name Au Yeung Yin. The same applies to Items W4, W5 and W9. It is clear that she lied to ICAC when asked who Au Yeung Oi was when they interviewed her on 5th January 1977, making out Au Yeung Oi was her sister. If the ICAC version of that interview was incorrect, Mr. Kwong of Counsel who was present throughout that interview would, no doubt, have informed the court of the true position. In court she said she got confused about the name when answering ICAC. I disbelieved her. Also I think it is no mere coincidence that the Defendant himself told lies to ICAC when asked who Au Yeung Oi was. That has already been touched upon earlier in this Judgment. 150. Why would the Defendant or his wife want to lie to ICAC about the name Au Yeung Oi if everything was above-board with regard to their use of that name? There is certainly a suggestion that the wife did not want ICAC to know she held property in that name and it is strange she should have that attitude if there was nothing untoward which needed hiding. 151. On the other hand, there is the point in the defence favour that there were far more occasions when the name Au Yeung Yin, rather than Au Yeung Oi, was used to purchase properties so it cannot be suggested there was any systematic attempt by the wife to conceal the properties in her name. 152. The properties 32A Ship Street (Item W2) and Yau Fook Building (Item W7) can conveniently be considered together because the evidence of PW22, Li Fook-ho, relates to both of them. They were both building development projects. The Defendant's involvement in those two projects can be seen from the fact that in relation to Item W2 the construction costs of $46,000 were paid by instalments to PW22 through the Defendant in cash and that with regard to Item W7 it was the Defendant who negotiated the overdraft for the building mortgage. Also there is the evidence of PW35, the contractor of Item 7: "In fact everything was handled by Lai Man Yau". I think here one can discern the Defendant being uncommonly active in his wife's affairs, and of course this evidence is not being considered in isolation but in the total context of what the evidence in the whole case showed was happening. 153. Item 7 (Yau Fook Mansion) finished up being transferred by Deed of Gift from his wife to the Defendant in 1971, subject to the Defendant taking over liability for the outstanding mortgage. According to the wife she did this out of natural love and affection for the Defendant, and because she felt she had already received enough rent for this property, her initial out-lay on this property having been comparatively small in relation to the handsome income it yielded her. The suggestion seemed to be that this gift was in part in the nature an expression of gratitude to Defendant for his assistance in helping his wife manage her property over the years. 154. To me, a more likely explanation looks to be that the Defendant was merely getting back what was his in any event. I find "natural love and affection" a highly unlikely explanation of this gift in view of the wife's own evidence about the damage done to the matrimonial relationship by his taking a concubine. Nor do I believe this assertion about gratitude for past services. Also it seems an odd sort of gift to make to an already rich husband. As for the claim about having received enough rent already, I find that disingenuous. 155. Fairyland Restaurant (Item W9) and Rose Garden Hotel (Item W19) can conveniently be considered together. With regard to both of them it can be seen that while the title to the land was in his wife's name, it was the Defendant who paid nearly all the construction costs running in total to a figure of around one million dollars. 156. For the Prosecution it is urged that the Defendant would not have been spending out money on that scale unless the land was really his. That is a strong point. 157. Ranged against that is a Defence explanation to the effect that the Defendant stepped in to undertake this construction work because his wife lacked the nerve to undertake projects of this magnitude. As the land would revert to government unless the development work was undertaken, the Defendant decided to step in, so the Defence contention ran, and conserve this asset for his family - the benefit of the land would in part be his if his wife died. This contention, lacking intrinsic likelihood, depended for its weight on the credibility enjoyed by the Defendant and his wife. My views on their credibility have already been stated. 158. Of greatest weight in their favour was the undoubted fact that the wife had leased out and received rent for each of Items 9 and 19 after the buildings were completed. I do not propose setting down the ins and outs of how she got rent for both the land and the building in respect of Item 9 but only for the land in respect of Item 19. It is all in the record for anyone interested. Suffice it to say that the rent she received from those two properties after they were developed was consistent with her being the beneficial owner of at least, the land, in both instances. This is but one piece of evidence in the midst of many, though. Just because the wife insists on receiving the rent, it does not mean that Defendant cannot be the real owner of the land. The wife with her mahjong and trips to Macau would have needed funds. It is not unreasonable in the circumstances of the present case to suppose that she might have insisted on the income from some properties being channelled her way. Often there is a process akin to negotiation between husband and wife as to who shall get which share of the cake. I am in no position to speculate on what actually happened between the Defendant and his wife regarding the income from Items 9 and 19, and all I can do is consider the evidence, the possibilities, and the probabilities relating to Item 9 and 19 along with all the other evidence in the case. 159. Of Man Kee Woollen Garment Manufactory Limited, in which Au Yeung Yin owned 800 shares (Item W20) from its incorporation in 1963, it can be remarked that her role was all along utterly passive whilst the Defendant, who did not even own any shares in the company till 1965, held himself out, from an early stage, as playing a leading part in the company. To gather this, one needs look no further than the Bank Authorisation (Exh. P367) dated 17th March 1963 which the Defendant signed as Managing Director of the company. This makes it look as if the Defendant was really the man with the power in the company, although there were no shares in his name to embarrass him. What more convenient for a serving police officer not wishing to attract attention to himself than for the shares to be in his wife's name? The same applies to the 800 shares (Item D1) in Lai Mei Mei's name. They purported to be a gift to Lai Mei Mei from her mother, but if, as I think, her mother's interest in this company was controlled by the Defendant then in effect Lai Mei Mei's holding is an indirect gift from her father. 160. As indicated previously, the investments in the Defendant's wife's name at the charge date are valued at $5,712,045.72, whilst the 800 shares (Item D1) in Lai Mei Mei's name had a value of $85,352 on that day. Adding those two figures together a total of $5,797,397.72 is reached. 161. Considering as a whole the circumstances surrounding that $5,797,397.72's worth of assets, I am satisfied at the level described in Cheung Chee Kwong v. R. (ante) that there is reason to believe that the wife (and the daughter in respect of Item D1) was holding those assets on behalf of the Defendant or acquired them as a gift from the Defendant. The Defence having failed to prove the contrary, the presumption of the Defendant controlling those assets remained unrebutted. 162. In the present case, where the Defendant's explanation of the assets in his own name fell short of being satisfactory, it follows inevitably that it becomes even less satisfactory when it has to extend to the additional assets in his wife's and daughter's name which he is presumed to control. 163. Next I will turn to a different aspect of the case on which I will make a few comments. This concerns what was known in the case as "Revised Table D" (Exh. D63) which shows month by month, from January 1946 till the charge date, the progressive balance, whether debit or credit, of capital expenditure in relation to income for the investments in the Defendant's and his wife's name. That "Revised Table D" is a convenient presentation of figures extracted from the highly detailed "Table C" (Exh. D62). 164. The question prompted in my mind by Revised Table D was the significance, if any, of its debit (i.e. minus) balances. In June 1946 there was a minus balance of $15,000. The next minus balance is not till 1958 when, for April, it is $89,129. From then till June 1960 there is a whole succession of minus balances, the greatest for any single month within that period being $177,413 for May 1958. Apart from an isolated minus balance of $110,837 for February 1961, the next minus balance is for May 1971, the month of the charge date, when it was $468,742. That minus balance for May 1971 was, it will be noted, the largest of the minus balances for any month. 165. According to the Defendant, the basis of his and his wife's fortune was the wealth worth HK$1,700,000 or thereabouts, they brought back to Hong Kong after the War. However, confining one's attention solely to the figures on which "Revised Table D" is based, a mere $468,742 would seem to have been sufficient original capital on which to have built the fortune they had amassed by the charge date. Did the Defence then really need only to explain where the Defendant got $468,742? Saying, too, that the Defence has overlooked some items of the Defendant's and his wife's legitimate post-war income, with the result that the minus balance for May 1971 should be reduced or even converted into a positive balance. That could easily have happened in the present case. Because of the extreme complexity of the Defendant's and his wife's financial affairs stretching back till the end of the War, and because of the vast amounts of money involved, I would not be surprised if even as much as $468,742 of legitimate income had been overlooked. After all, income receipts, according to Table C, totalled $6,058,992 so, expressed in percentage terms of that, $468,742 is not very much. Also, we do actually know some income which has been indisputably omitted. There is the Defendant's police pay and pension for a start. Then there is his insurance commission which DW25, a patently honest witness, told the court about. I also accept that the wife did some money-lending. 166. Taking a liberal approach to the figures, assume then that the balance for the month of the charge date in Table D was not minus. Would that mean then that the Defendant's explanation should be treated as satisfactory? 167. I do not think it would for two reasons. 168. Firstly, the court does not allow itself to be mesmerised by the arithmetic in this type of case, but looks at the evidence as a whole to see whether a satisfactory explanation has been forthcoming. 169. That approach is to be discerned from Sturgeon v. R.(7), a S.10(1)(b) case of unexplained assets, where the Court of Appeal stated,
and went on to demonstrate that the calculation is not merely arithmetical, but that other factors must be taken into consideration. As in any criminal case, the court looks at all the surrounding circumstances. 170. Secondly, the limitations of the material on which "Revised Table D" is based have to be recognized. Table C, from which Table D, is extracted, is based on the assumption that, apart from one or two specified items like the costs of educating their daughter, Mimi, in England, and the Defendant's travel expenses, all the Defendant's and his wife's investment income and capital gains were reinvested. That is totally unrealistic. Both the Defendant and his wife followed life styles which would have required the expenditure of money. For example, the Defendant had a mistress who bore him two children, ran a new car and liked to travel. The wife liked her mahjong, and trips to Macau, as well as travels elsewhere. She also kept a servant. They were clearly not a pair of misers, but people with a normal attitude to money - aware that it was there to be spent at times. That the Defendant was no small spender can be inferred from the amount he was prepared to lavish on the reconstruction and redecoration of Lau Yeuk Ling's flat at Dragon Villas,4½ Mile Stone, Tai Po Road. 171. If the Defendant's and his wife's spending had fully been taken into account in the figures leading to "Revised Table D", I have no doubt that both the size and frequency of the minus balances would have been much greater. 172. For the reasons stated above, I find the charge against the Defendant proved and enter a verdict of guilty. 173. It only remains for me to express an immense debt of gratitude to the Counsel on both sides for lightening the Court's burden by the extremely competent and totally ethical way in which they conducted this complex case.
(1) Criminal Appeal No. 492/77 (2) 1977 D.C.L.R. 32 at 36 (3) V.D.C. No.208/77 (4) 1974 HKLR 31 (5) Criminal Appeal 178/1978 (6) Cr. App. 251/77 (7) 1975 HKLR 677 IN THE DISTRICT COURT OF HONG KONG HOLDEN AT VICTORIA CRIMINAL JURISDICTION CASE NO. 243 OF 1978 -----------------
----------------- Coram: Judge Rhind in Court. Date of Judgment: --------------------------------------------------- RULING ON VOIR DIRE --------------------------------------------------- I. The Facts The facts I found for the purpose of my ruling on the voir dire were as follows. While on duty at about 11 a.m. on 18th December 1968, the Defendant, a Detective Staff Sergeant Class II with the Hong Kong Police, was suddenly told out of the blue by his superior, Superintendent Lam, that he was required to attend at the offices of the Anti-Corruption Branch that evening. No explanation was given then for this order. At that stage Defendant, who was then aged 51, had been a detective for over twenty years. His whole police service stretched back even further - to 1936 - and had been uninterrupted, save for the war years 1941 to 1945. At the end of his work that day, the Defendant duly presented himself at the offices of the Anti-Corruption Branch. Shortly after 5.30 p.m., he was shown into the office of the head of the Anti-Corruption Branch, where he found himself confronted by a board of police officers comprising a Superintendent, two Senior Inspectors and two Inspectors. On occasion, the head of the Anti-Corruption Branch, a Chief Superintendent, came into the room, but he was not a member of the board and asked no questions. Once in the presence of the board, Defendant was told that they wanted to ask him some questions about himself and his activities. The members of the board then addressed questions to the Defendant who responded to them all without hesitating. This question and answer session continued till shortly after 8.10 p.m., a short rest break having been taken in the middle. The whole proceedings were recorded on tape (Exh. P499A, certified transcript P499C). This interview was conducted by the Anti-Corruption Branch as part of an investigation it was pursuing into Defendant's mode of living and ownership of property. At the time of the interview, Defendant, as the owner of investments, was already aware that he had rendered himself liable to disciplinary action for failing to observe his department's internal regulations about government servants reporting their investments. What I have recounted so far can all be classified as primary facts. A secondary fact I found after considering all the primary facts and all the surrounding circumstances revealed by the evidence was that Defendant was not under orders to answer the board's questions and never at the time felt himself to be so. II. Reasons for Findings of Fact To enable me make my findings of fact I had to make an evaluation of the evidence I had heard up to the stage of giving my ruling, and that involved my making a provisional assessment of the credibility of witnesses I had heard. The primary facts as set out under heading I were either undisputed or common ground. By contrast, the sole secondary fact of which I made mention was hotly contested, for whether Defendant might have been obeying an order when answering the board's questions was obviously of crucial importance in the context of determining voluntariness. After I had weighed all the evidence at the end of the voir dire, I found that I just did not believe Defendant's claim that he regarded himself as forced to answer the board's questions because failure to answer would be tantamount to disobedience to an order from a senior officer. I bore in mind that on the issue of voluntariness the onus of proof was on the Crown at the level of beyond reasonable doubt. True, the Defendant was under orders to be present at that interview, and he was in no position to stand up and just walk out when it suited him, but it by no means follows that he regarded himself as under orders to answer the board's questions concerning his private life style and his private property. Certainly there is no hint of an explicit order, in the board's saying they wanted to ask him some questions about himself and his activities. Nor do I believe that Defendant ever imagined there was an order to answer, implicit in the circumstances in which he found himself. The Defendant impressed me as an intelligent man. I do not doubt that he would have had no difficulty in recognizing the type of question related to his work which he must answer if his superiors addressed it to him and questions relating to his private life which he need not answer unless it suited him. To anyone unfamiliar with the Hong Kong scene a line up of five officers of the rank of Inspector or above on the one side and a mere sergeant on the other might at first sight seem singularly unequal, and there might seem a risk that the lone sergeant might be bamboozled into imagining that any request from such apparently powerful persons was in reality an order. Actually, though, the old rank of Detective Staff Sergeant (now abolished) was one which carried considerable prestige in the community and they were not the sort of men anyone would dream of trying to push around any more than anyone would consider, say, trying to push around a sergeant-major in the army. As one would expect of a man who carried the rank he did, the Defendant is a man of considerable presence who certainly gave me the impression that he would be able to take good care of his own interests in virtually any circumstances. I am sure he knew full well at the time of the interview that he could decline to answer the board's questions on his personal affairs, and that nothing could happen to him on account of that refusal. I agree with the Defence's picturesque suggestion that in relation to the board he was not in the position of a civilian who can always turn to his questioners and say, "Get lost!" For a member of a disciplined force to do that would amount to punishable insolence. However, there was nothing to stop Defendant in the position in which he found himself from saying words to the effect of "I am sorry, Sir, I am not prepared to answer questions on my private affairs", and I am sure that Defendant was fully conscious of that at the time. He would have known there could be no come-back at him for such an answer. Why he answered the questions was that it suited his own purposes to answer them; it was not because he felt under orders to answer them. III The Law A perusal of the leading cases (Ibrahim v.R. 1914 AC 599; Commissioners of Customs & Excise v. Harz 1967 A.C. 760 and DPP v. Ping Lin 1976 A.C. 574) in this branch of the law shows that a simple test has been evolved to determine voluntariness. That test, and how it is to be applied, is encapsulated in the following extract from Lord Hailsham's speech in D.P.P. v. Ping Ling at p.600.
If the judge, having asked himself that question, finds that the answer is, "No", the contested statement is inadmissible as a matter of law. Even should the answer turn out to be, "Yes", the judge still has a discretion to exclude the statement from evidence if he considers there would be some unfairness to the accused to admit it. At the time of Defendant's interview with the board, there was no equivalent of S. 10 of Cap. 201, making it a criminal offence for a public servant to control unexplained assets disproportionate to his official emoluments. There was then, however, the following provision in the Police Force Ordinance, Cap.232:-
IV Application of the Law to the Facts Simply, it can be stated that the board, who undoubtedly were persons in authority, never excited any fear of prejudice in Defendant. The Defendant, no doubt, had motives of his own which prompted him to answer, but self-inspired motivations do not vitiate a statement. Any fears he might have harboured could only have been of the self-generated variety, stemming from his own knowledge of a factor or factors such as, for example, his failure to report his investments to his department, but the answers were not obtained through the board exciting any fears of prejudice in him. Besides inducements, statements can be rendered involuntary if "oppression" in the sense in which that word is used in such leading cases as R. v. Priestly 51 Cr. App. Report 1; R. v. Prager 1972 1 All E.R. 1114; and R. v. Clarke 1973 N.I.R. 45 is present. Even though defence counsel expressly conceded that oppression was not present, I, nonetheless, felt it my duty to consider whether the defence were in fact correct on that, because the Defendant himself did allude to one or two features of his situation on the day in question which might be taken as indicative of oppression. It was up to the Crown to eliminate any reasonable possibility of Defendant's answers resulting from oppression. As the material possibly suggestive of oppression was very slender I do not propose to dwell on it at any length. Defendant spoke of himself as having been escorted into the office where the board sat "as if he were a prisoner". Also some of his remarks could be taken to suggest that he thought of himself as under some form of detention. Also he referred to having had nothing to eat. I am sure he exaggerated with his reference to a "prisoner" and "detention". None of this, I am sure, played the slightest part in Defendant's decision to answer the board's questions. To use the language frequently used in the context of oppression, he was obviously not "overborne", and his will was in no way "sapped". There was nothing in the nature of an atmosphere of compulsion. Several of the Law Lords in their speeches in D.P.P. v. Ping Ling emphasize the desirability of confining previously decided cases on voluntariness to their own particular facts, for everything must depend on the surrounding circumstances in any given instance. Having borne that guidance firmly in mind, and as a matter of interest only, I will, nonetheless, take the liberty of naming three cases where the problem of whether answers given by a subordinate to a superior in a disciplined force has been before the courts in the context of voluntariness. They are R. v. Brown, Dunbar & Cowdrey reported in the Solicitors' Journal of December 12th 1903 at p.102, Ibrahim v. R. (already referred to) and R. v. Colpus and Boorman 1917 1 K.B. 574. It had been suggested to me in the submissions on the voir dire that an objection to voluntariness on the ground of compulsion attributable to superior orders might be novel. In fact, though, it is not even novel in Hong Kong, because Ibrahim's case was itself an appeal to the Privy Council from Hong Kong. Finally, I turn to the question of whether there was any unfairness which should have prompted the court to exercise its discretionary powers to exclude the contested answers. Sometimes a failure to caution will attract the exercise of the discretionary power. I saw nothing unfair in the board's failing to caution Defendant. In fact it would have been a very odd thing to do at the time, because there was then no conceivable suggestion he might be facing a criminal charge. Because the law has since been changed to make unexplained assets the basis of a criminal charge against a government servant does not produce the result that what the board did then has in some way become retroactively unfair. Nor do I regard it as unfair to use the results of that interview now. The defence has pointed out that some of his answers on that occasion were coloured by his knowledge that he was in breach of departmental regulations about declaring investments. Any explanation from Defendant on that score is something I can take into account in deciding what weight, if any, to give to his answers before the board. Nor do I see anything unfair in the board failing to utter any warning to Defendant that he need not answer any question without first of all consulting a lawyer. Perhaps if Defendant had raised an objection to answering without his lawyer present and had then been overriden by the board the position might have been different, but nothing of that sort occurred here. I saw nothing unfair in the board failing to take the initiative in advising Defendant to get a lawyer before answering their questions; nor do I see anything unfair in using those answers now. Eleven years later, at a time when the law has been changed by the enactment of S. 10 of the Prevention of Bribery Ordinance with retrospective effect, the Crown seeks to use Defendant's answers against him. Is that unfair? I think not, although I can appreciate any feeling on Defendant's part that it is unfortunate. V The Ruling In view of the foregoing I admitted the tape into evidence.
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