The Queen v. Fung Si Tsou

CACC000317/1988

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Coram: Yang, C.J., Silke, V.-P. & Bewley, J.

Date of Hearing: 3 & 4 October 1989

Date of Judgment: 4 October 1989

Date of Delivery of Reasons: 24 October 1989

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JUDGMENT OF THE COURT

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Silke, V.-P.:

1. Fung Si Tsou - "the Applicant" - appeared for trial before Miss C.B. Chan, sitting as a Deputy Judge of the District Court, on an amended charge of conspiracy to defraud. He was jointly tried with a 2nd Defendant, Au Ying Duen. Au was acquitted in the course of the trial. The Applicant was convicted and now seeks leave to appeal against that conviction.

2. The particulars of the charge were that the two defendants, between 16th December 1983 and 17th January 1984, conspired with Lo Siu Wai, Yung Kai Tai and Wong May Yuen to defraud the inland Revenue Department of the Hong Kong Government of $11,225 by dishonestly understating, in the indenture, the sale and purchase price of a landed property at Flat B, Tung Shan Mansions, 25th floor, Tai Koo Shing, from $590,000 to $500,000, causing the Inland Revenue Department to charge a lower stamp duty.

3. The original Charge Sheet upon which the Applicant appeared for trial contained ten charges of which the conspiracy to defraud was the tenth. A successful application was made for severance and there were two trials, the conspiracy charge being tried first and the other nine charges being tried separately at a later date. The second trial concerned the making of false declarations which resulted in the obtaining of a private tenancy allowance first of all for a flat at Telford Gardens- "the Telford Gardens flat" - and secondly for the flat at Tai Koo Shing - "the Tai Koo Shing flat". One of the named conspirators Lo Siu Wai, a solicitor's clerk, had appeared as a defendant to the original charge. No evidence was offered against him and he became a Crown witness in both trials. The other named co-conspirators, Yung Kai Tai and Wong May Yuen, were the vendors of the Tai Koo Shing flat and gave evidence under immunity.

4. Mr. Sanguinetti, with him Mr. B.W. Fung, who appeared for the Applicant in this Court has argued four grounds of appeal. The fourth ground was the all embracing one of unsafe and unsatisfactory.

5. His first ground alleged that the conviction on the conspiracy charge was "violently at odds" with the acquittal of the Applicant in the second trial, inasmuch as the conviction was substantially based, and depended upon, the same facts, evidence and law as those canvassed in the trial in which he was acquitted. The second ground was that the trial judge in her Reasons for Verdict made no specific finding that the Applicant had acted dishonestly, dishonesty being the prime ingredient of a conspiracy to defraud. The third ground related to corroboration.

6. At the conclusion of the hearing we stated that we would allow the appeal and give our reasons later, this we now do.

7. A great deal of the argument during this two-day hearing related to inconsistency. It is accepted that the onus on an applicant, where he alleges differing verdicts rendered by two different tribunals to be inconsistent, is a high one. He must them show not merely inconsistency in the sense of differing verdicts but that the verdicts are violently inconsistent one with the other.

8. Of this ground, in the light of the conclusions to which we have come, it is sufficient to say that Mr. Sanguinetti's detailed arguments have not persuaded us that such inconsistency has been shown here. The charges were different and while the evidence overlapped and was given by some of the same witnesses, in particular the solicitor's clerk and the vendors who were accomplices in both trials, the evidence in the second trial was at variance with that given in the first. Further, certain witnesses who were called in the first trial were not called in the second.

9. While it is correct that in the course of her careful and well set out Reasons for Verdict the trial judge made no specific reference to or use the word "dishonesty", nevertheless it is clearly implicit from her findings, conclusions justified by the evidence if believed, that the Applicant was dishonest. It is preferable if judges sitting alone trying conspiracy to defraud charges make reference to the test of dishonesty in Ghosh [1982] 1 QB 1053. Were such reference to be omitted in a summing up to a jury, then it would be, almost inevitably given the essential element of dishonesty in a conspiracy to defraud, fatal.

10. The evidence from the solicitor's clerk and from the Vendors, being that of accomplices and named co-conspirators, necessitated the trial judge giving herself, the classic warning which she clearly did.

11. She would have been entitled, given that she believed their evidence to be the truth, to have gone on to accept it even in the absence of corroboration. However, that was not a course she, took. She looked for and found corroboration of Yung in Exhibits P1, P4 and D2 of Yung's wife, Madam Wong, in Exhibits P4 and D2; and of the solicitor's clerk in Exhibits P1, P3 and P4: all in relation to the issue of dishonesty.

12. Exhibit P1 was a provisional agreement for sale and purchase signed by both the vendors and by the Applicant personally on 13th December 1983. It stated the purchase price to be $590,000. Exhibit P3 was a copy of a tenancy agreement dated 1st December 1983. Exhibit P4 was a Sale and Purchase Agreement dated 16th December 1983 which stated the purchase price to be $500,000 and was signed by the vendors and the representative of Muxwin Limited. Exhibit P2 was the assignment, dated 17th February 1984, which also stated the purchase price to be $500,000 and signed by the same parties as Exhibit P4. Exhibit D2 was a receipt dated 17th February 1984 for payment of $814 property tax and signed by Madam Wong alone and had relevance to the tenancy agreement.

13. The contents of none of these documents was disputed. It was the Crown's case that the difference in purchase price was, relying for this purpose on the evidence of the accomplice witnesses, an attempt to understate the consideration for the purpose of reducing stamp duty payment. The Applicant proffered an explanation for the difference of $90,000 which involved the tenancy agreement, Exhibit P3. He sought to say that the changed price was reflected particularly by that tenancy agreement which was for a period of one year at $4,800 per month which sum was paid in full, together with two months rent deposit, to the vendors, and further by payment for some furniture and paintings, all this by agreement.

14. While the Applicant himself signed the provisional sale and purchase agreement, Exhibit P1, the sale and purchase agreement and the assignment were both signed as we have said for and on behalf of a limited company, Muxwin Limited, by the 2nd Defendant, Au Ying Duen. It was also part of the Crown's case that Muxwin Limited was controlled by the Applicant though he was not shareholder and held no office in it. Au was his brother-in-law and the other shareholder, a Mr. Ho, was also a relative.

15. Exhibit D2 was an accepted payment of $814 property tax relevant to the first two months of the tenancy said to have been created by the tenancy agreement. The trial judge, not surprisingly, in the course of her considerations posed to herself the question: Why should the Applicant pay to the vendors rent for a one-year tenancy when, once the assignment was completed, as it was on 17th February even if somewhat late, it became something to which they were not entitled?

16. The issue before the trial judge was whether or not there was an dishonest agreement between the Applicant and one or other of the alleged co-conspirators to defraud a government agency.

17. Mr. Sanguinetti argued this ground on the basis that, because the signatures of the persons whose evidence required corroboration appeared on those documents, the documents were not independent documents and therefore did not fall within the Baskerville [1916) 2 KB 658 test. Be that as it may, an issue was raised by the Court at a late stage in the hearing as to whether or not the documents upon which the trial judge relied could be considered to be ones which tended to show that the crime alleged here was committed and that the Applicant committed it.

18. With great respect to the trial judge, we do not think that they did. The fact that they supported the Crown case is undeniable. But they did not go onto show that the change in price was dishonest and made for the purpose alleged-that depended solely upon the truth of evidence given by the accomplice witnesses.

19. Mr. Ryan who appeared for the Crown here, accepted that he had no real answer to the issue raised.

20. Once the trial judge formed her belief in the evidence of the "suspect' witnesses by virtue of its being corroborated, which we hold to have been an error, this Court was not in a position to say that she would have formed the save view had it stood alone.

21. In those circumstances, the application for leave to appeal was granted, the hearing treated as the hearing of the appeal, the appeal allowed and the conviction quashed. In consequence, the sentence of six months' imprisonment suspended for two years was set aside.

22. There was, as we understand it, a form of compensation order made upon which we have not yet been, addressed and we wish to hear counsel as to the effect of our decision upon that order.

Representation:

A.J.J. Sanguinetti, Esq. & D.W. Fung, Esq. (Arthur Au & Co.) for Applicant

B.M. Ryan, Esq. for Crown/Respondent