HKSAR v. Chan Ka Po and Another

CACC000354/2000

CACC 354/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 354 OF 2000

(ON APPEAL FROM DCCC NO. 173 OF 2000)

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Coram: Stuart-Moore V-P, Keith JA and Stock JA in Court

Date of Hearing: 11 April 2001

Date of Judgment: 7 May 2001

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J U D G M E N T

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Keith JA (giving the judgment of the Court):

Introduction

1. On 14 August 2000, following a trial spanning a number of days, the Applicants were convicted by Judge Saunders in the District Court on various charges. They had both pleaded not guilty. The 1st Applicant was sentenced to terms of imprisonment totalling 20 months, and the 2nd Applicant to terms of imprisonment totalling 12 months. The 1st Applicant applied for leave to appeal against his convictions and sentences, and the 2nd Applicant applied for leave to appeal against his convictions. We trust that we shall be forgiven for the impersonal way we propose to refer to the Applicants, but for convenience we shall refer to them as A1 and A2 respectively.

The abandonment of A1's application

2. Some months ago, A1 filed a notice with the Registrar of the High Court abandoning his application for leave to appeal against his convictions and sentences. It was dated 1 December 2000. No formal order was made dismissing his application on its abandonment, but the fact that he had abandoned his application was recorded on the court file.

3. However, within a few months, A1 decided that he wanted to apply for leave to appeal against his convictions after all. Accordingly, he made a new application for leave to appeal against his convictions, seeking an extension of time for doing so. This application was rightly treated as an application for leave to treat his notice of abandonment as a nullity. A1 was informed of that. Fortunately, the reasons which he gave for seeking an extension of time for his new application for leave to appeal explained why he says that the earlier notice of abandonment should be treated as a nullity.

4. Those reasons are as follows. Following his trial, he applied for legal aid. In November, he was informed that his application for legal aid had been refused. Although he had himself written the grounds of appeal, he was under the impression, so he claims, that he could not argue those grounds in court himself. He thought that only a lawyer could argue his case in court. What caused him to think that was that when he had appeared in court, he had been told that "a lawyer was required". Since he could not afford a lawyer himself, he thought that his appeal would be dealt with by the court without the benefit of argument from anyone. We confess that we are extremely sceptical about whether this is the truth. We think that he would almost certainly have learned on the prison grapevine that if he did not have a lawyer he could nevertheless represent himself.

5. However, A1 went on to tell us that the prison welfare officer had told him that he could submit a petition to the Chief Executive for a reduction in his sentence, but that that petition could only be presented after the appeal process had been completed. It was for that reason that he decided to abandon his application for leave to appeal, and to present a petition to the Chief Executive instead. In due course, he was interviewed in connection with his petition, and he was informed that the chance of having his sentence reduced on the basis of executive clemency was very remote. That was when he discovered for the first time that he would be able to present his appeal himself, and it resulted in him deciding to try to resurrect his application for leave to appeal. We are very sceptical about much of that as well. We think it unlikely that the prison welfare officer would have told him of his right to petition the Chief Executive without at the same time telling him how unlikely it would be for his petition to meet with success.

6. The principles governing applications to treat a notice of abandonment as a nullity were considered in R. v. Medway [1976] 1 QB 779. After an exhaustive review of the authorities, Lawson J, giving the judgment of the court, concluded that it was not open to the court to treat a notice of abandonment as a nullity simply because, in the light of the special circumstances of the case, that was what justice required. At p. 798G-H, he said that what the court has to be satisfied about

"... is that ... the abandonment was not the result of a deliberate and informed decision; in other words that the mind of the applicant did not go with his act of abandonment. In the nature of things it is impossible to foresee when and how such a state of affairs may come about; therefore it would be quite wrong to make a list, under such headings as mistake, fraud, wrong advice, misapprehension and such like, which purports to be exhaustive of the types of case where this jurisdiction can be exercised. Such headings can only be regarded as guidelines, the presence of which may justify its exercise."

In R. v. Chan Tak Kwong (CA 134/83), the Court of Appeal in Hong Kong regarded itself as bound by the principles in Medway, and they have been frequently followed since then: see, for example, HKSAR v. Wong Wai Yip (CA 287/95) and HKSAR v. Chau Kwok Hung (CACC 67/96). However, in Chau Kwok Hung, the court decided to hear argument on the merits of the appeal de bene esse in order to determine whether any basis existed for contending that the notice of abandonment in that case should be treated as a nullity. Whether such an approach lies easily with Medway is debatable, but we decided to take a similar course. Accordingly, we gave A1 the opportunity to address us on the merits of his application for leave to appeal.

7. However, A1 told us that he had only prepared for his application to treat the notice of abandonment as a nullity. He claimed not to be in a position to do justice to the arguments which he wanted to canvass in support of his application for leave to appeal. In any event, he had not brought to court with him the notes he had prepared in connection with his application for leave to appeal. Although we said at the conclusion of the hearing that we would decide first the question of whether the notice of abandonment should be treated as a nullity, we have decided that to do that would be going back on what we originally wanted to do, namely to consider the merits of the application for leave to appeal in order to determine the effect of the notice of abandonment. Thus, the course which we propose to take in A1's case is to make no order for the time being, save to order that a date for the adjourned hearing of the application to treat the notice of abandonment as a nullity be fixed, on which occasion A1 will have the opportunity to address us on the merits of the application for leave to appeal. If we decide to treat the notice of abandonment as a nullity, we shall treat the hearing as the hearing of the application for leave to appeal.

The charges which A2 faced

8. The charges which A2 faced arose from his alleged dealings with A1. A1 was the sales manager of Expert System Co. Ltd. ("Expert"), a supplier of computers and computer-related equipment. One of Expert's customers was Gap International Sourcing Ltd. ("Gap"), a clothing manufacturer which had extensive requirements for computers and computer-related equipment. A2 worked for Gap in its management information services department. In a sentence, the prosecution's case was that A2 had dishonestly assisted A1 in obtaining orders from Gap for the supply of products by Expert, and that A2 was rewarded for his efforts by being supplied with products for his own use.

9. The charges which A2 faced fell into three categories:

(i) in charges 1-3, he and A1 were both charged with false accounting;

(ii) in charge 4, they were both charged with conspiracy to defraud; and

(iii) in charges 19-24, A2 was charged with accepting advantages as an agent.

It will be necessary to consider these sets of charges in turn, but we propose to consider the charge of conspiracy to defraud first, because that was the charge relating to the assistance which A2 was alleged to have given to A1 in relation to the placing by Gap of orders with Expert.

The charge of conspiracy to defraud (charge 4)

10. Gap's internal purchasing controls required at least two quotations to be obtained before a purchase order could be given. Presumably Gap wanted to be sure that it was getting the best value for its money. In special circumstances, a single quotation was enough, but that was exceptional, and the reason for seeking only one quotation had to be given. In explaining the system in his Reasons for Verdict, the judge added:

"Of course the lowest price would not always dictate which quote was accepted. Issues of quality, maintenance and service were also relevant. In reality, despite the requirement for at least two quotations, the situation had been reached by late 1996 whereby Expert was in effect the sole supplier of computer equipment and software to Gap. The evidence was that the standard of service from Expert was such that they always received the contract. But the requirement that two quotations should be obtained remained."

11. One of the companies which purported to issue quotations to Gap was Microware Computer Systems Ltd. ("Microware"). The evidence which the judge accepted was that quotations which purported to have been issued by Microware but which were in fact forgeries were used as the second quotation which had to be obtained. The prosecution's case was that these false quotations had been obtained by A1 and that they had been submitted to Gap at the request of A2. In that way, the rule which required two competitive quotations to be obtained, though apparently being complied with, could be circumvented, and Expert could be sure of getting the orders. Thus, the charge of conspiracy to defraud against A1 and A2 (charge 4) alleged that they "had conspired together to defraud Gap by dishonestly

(i) submitting or causing to be submitted to Gap quotations for goods which were purportedly issued by Microware .... and which, to the knowledge of [A1] and [A2], were false, and

(ii) thereby causing Gap to place purchase orders with Expert .... through [A1]."

The judge convicted both A1 and A2 on this charge.

12. Mr H. Y. Wong for A2 did not challenge the judge's findings of fact that (a) the quotations purportedly issued by Microware were submitted to Gap on A1's instructions, (b) they were intended to be the second quotation under Gap's purchasing control rules, (c) they were in fact false, and (d) they resulted in Expert getting orders for products otherwise than in accordance with Gap's purchasing control rules. Nor did he challenge the judge's finding that A2 had asked A1 for quotations from Microware. Indeed, when A2 was interviewed by ICAC officers, he admitted doing just that. The only point taken by Mr Wong was that it had not been open to the judge on the evidence to find that A2 had known that the Microware quotations were false, and therefore that A2's request for the quotations had been dishonest.

13. We disagree. In the course of his interview, A2 was asked about a particular Microware quotation. A2 admitted that he thought that A1 had "made" it for him, and he acknowledged that "similar cases" had occurred. And in the absence of an explanation from A2 as to why he had asked A1 for quotations from Microware, the judge was entitled to conclude that A2 must have known that any Microware quotations submitted to him by A1 were false. How would A1 have obtained genuine quotations from a competitor for the supply of products to Gap if that competitor was not submitting such quotations to Gap itself?

14. Even though A2 did not give evidence at his trial, Mr Wong pointed out that A2 had indeed given an explanation in his interviews as to why he had asked A1 for quotations from Microware. That explanation had been that he had asked another company for competitive quotations, but since he had not received any, he had asked A1 to obtain competitive quotations for him. The judge placed no reliance on this exculpatory explanation in the absence of any evidence from A2 that this explanation had been true. If that had been the only basis on which the judge had placed no reliance on the explanation, there might have been grounds for criticising the judge's approach as being inconsistent with the principle (established in R. v. Sharp [1988] 1 WLR 7) that where the exculpatory out-of-court statement of a defendant also contains admissions and the defendant does not give evidence, the exculpatory material is admissible and should be considered along with the rest of the evidence. However, it was not simply because A2 had not given evidence that the judge placed no weight on A2's explanation. The judge also said that A2's exculpatory answers in the interview had been "inconsistent with the established facts and the overwhelming inferences to be drawn from those facts and the answers in the interview against his interest". We cannot say that it was not open to the judge to reach that conclusion.

15. Mr Wong pointed out that, by the time when Expert had become in effect the sole supplier of computers and computer-related equipment to Gap, the requirement for two competitive quotations had become little more than a formality. He showed us the evidence of A2's supervisor to the effect that it had sometimes been difficult to get quotations from suppliers other than Expert. He referred us to the evidence which suggested that a colleague of A2 had also been asking A1 for Microware quotations, even more frequently than A2. But once the judge's conclusion that A2 had known that the Microware quotations were false cannot be faulted, we do not think that any of these considerations can undermine his view that A2's request for Microware quotations which he had known were going to be false had been dishonest. Not as dishonest as they might have been in other circumstances - for example, if Expert's products had been thought to be unreliable - but still dishonest nevertheless. It follows that A2's conviction on the charge of conspiracy to defraud cannot be disturbed.

The corruption charges (charges 19-24)

16. When A2 was arrested, nine items of computer equipment were found at his home. Three of those items related to the false accounting charges. The other six items formed the basis of the corruption charges. There is no challenge to the judge's finding that these six items had come from Expert. The prosecution's case was that they had been offered to A2 by A1, and accepted by A2, as rewards for acts done, or as inducements for acts to be done, in relation to Gap's affairs, namely to assist Expert to obtain purchase orders from Gap. The judge convicted A2 on all these charges.

17. Early on in his analysis of these charges, the judge made an important point which it is worth repeating verbatim:

"It is important to bear in mind when dealing with charges such as these that the making of gifts by a salesman in a company to a purchaser of goods, to encourage him to deal further, or to thank him for his patronage is not inherently wrong. What is wrong is to make or receive such gifts without lawful authority or reasonable excuse. In most cases lawful authority can be established by showing that the permission of the employer was given, prior to the transaction, to both give and receive the gifts."

It was against that background that the judge described A2's case as follows:

"The case for [A2] is twofold. First it is said that the items were not given to him but to Gap. Second it is said that he had them in his home purely for the purpose of carrying out tests on the items as part of his work and that at all times they remained the property of Gap. Consequently, no issue of permission arises as he was merely using company property for legitimate company purposes."

18. The judge found that these six items had been taken to A2's home either directly from Expert's warehouse or from Gap's office shortly after they had been delivered to Gap. Five of the items (a scanner, a printer, a router, a switch hub and a CD-writer) had been in his home for about 2 years, and one item (a projector) had been there for about 8 months. Mr Wong did not challenge these findings of fact. The only point which he took was that it had not been open to the judge on the evidence to exclude the possibility that A2 had kept the items at his home because he was testing whether they worked properly and evaluating their suitability for Gap.

19. Again, we disagree. We accept that the evidence before the judge showed that A2's duties had included the testing and evaluation of computer-related equipment for Gap, and that A2 had been entitled to take equipment home for that purpose, provided that he had obtained permission to do so from his supervisor. However, the following findings of fact which the judge made entitled the judge, in our view, to reject the suggestion that A2 had in fact taken them home for that purpose:

(i) With the exception of the projector, no charge had been made by Expert for any of the six items. They had been supplied by Expert free of charge so that Gap could evaluate their suitability. In his interview, A2 admitted that the five items had been kept by him for his own use and that he had had no intention of returning them to Gap.

(ii) A2's supervisor did not know that A2 had any Gap equipment at his home, and did not know about any ongoing tests which A2 was supposedly conducting on the suitability of the six items of equipment.

(iii) Three of the six items (the scanner, the printer and the CD-writer) were mundane items which did not need to be tested. To the extent that it was necessary to check that they were either in good working order or suitable for Gap's requirements, no more than an hour's testing for each would have been necessary.

(iv) The other three items (the router, the switch hub and the projector) required a longer period for testing and evaluation. But even then, the time needed to test the router would have been 2-3 days "depending on resources", the time needed to test the switch hub would have been 2-3 days, and the time needed to test the projector would have been 1 week.

It follows from (iii) and (iv) that even if A2 had taken the items home to check that they were in good working order and to evaluate their suitability for Gap's requirements, he did not need to have them at his home for anything like as long as they were there.

20. The evidence about the projector was particularly significant. Expert had supplied the projector early in 1998. The evidence of A2's supervisor, which the judge accepted, was that Gap had not needed a new projector then. When its existing projector had to be replaced that summer, a new projector was purchased. If the projector which Expert had supplied earlier in 1998 had been intended for Gap, a new projector would not have had to be purchased. In addition, the judge pointed to the absence of any evidence that A2 had told his supervisor that he had been testing a projector which had already been supplied to Gap.

21. Mr Wong made the point that in his evidence A2's supervisor had accepted that some of the projects on which A2 had been engaged could take months, or even years, to complete. We do not think that that in any way undermines the conclusion which the judge reached. There is a considerable difference between (a) the evaluation of the suitability of individual items of equipment to be used in an ongoing project and (b) the establishment of the management information system to which a particular project relates. The latter may take a long time to complete, but the former will not. The explanation given by A2 in interview for having the equipment at his home was not that he was working at home on the establishment of the management information system to which a particular project related, but that he wanted to test the suitability of the individual items of equipment.

22. We have already referred to the admission which A2 made in his interview that he had had no intention to return to Gap the items which had been supplied by Expert free of charge and which were at his home. However, he made exculpatory statements as well to the effect that they were only at his home so that he could test them and evaluate their suitability. As with charge 4, the judge placed no weight on this exculpatory explanation in the absence of any evidence from A2 that the explanation had been true. However, like charge 4, the judge also said that A2's exculpatory answers were "inconsistent with the established facts and the overwhelming inferences to be drawn from those facts and the answers in the interview against his interest". Again, we cannot say that it was not open to the judge to reach that conclusion.

23. Finally, Mr Wong argued that the judge should not have relied on two particular admissions made by A2 in his interview:

(i) A2 admitted that Gap's chop which he had used when he had collected the items of equipment from Expert's warehouse and which had been found in the drawer of his desk had been invalid. Despite that, the effect of the evidence of A2's supervisor was that the chops which had been used on the relevant delivery notes had not been invalid.

(ii) A2 admitted that, with the exception of the projector, all the items of equipment found at his home had been collected by him from Expert's warehouse. Despite that, the evidence was that the items of equipment were either delivered to Gap or collected from Expert's warehouse by other employees of Gap.

In our view, neither of these features of the case can be said to undermine the judge's conclusion, because nowhere in his Reasons for Verdict is there any indication that the judge relied on A2's "incorrect" admissions about the invalidity of the chop or his collection of the items from Expert's warehouse. Indeed, A2's "incorrect" admissions are not referred to in the Reasons for Verdict at all. It follows that A2's conviction on the corruption charges cannot be disturbed either.

The false accounting charges (charges 1-3)

24. The false accounting charges related to the other three items of computer equipment found at A2's home. There is no challenge to the judge's finding that these three items, like the other six items to which the corruption charges related, had come from Expert's stock. The prosecution's case was that they had been supplied by Expert through A1 to A2, and that Gap had been deceived into paying Expert for them.

25. The form which that deception took was the manipulation of Gap's accounting controls. Those controls required a document known as a payment approval form to be raised before payment to a supplier of the supplier's invoice could be made. Presumably Gap wanted to be sure that supply had been effected before payment was made. Thus, the prosecution's case was that A1 had caused invoices for these three items to be submitted by Expert to Gap (when the items had in fact been supplied to A2), and that A1 and A2 had caused Gap to pay Expert for them by causing three payment approval forms to be raised (which purported to sanction those payments). This allegation was reflected in the false accounting charges. Each charge related to a different payment approval form, and the particulars of the charges were that A1 and A2 "dishonestly with a view to gain for themselves or another or with intent to cause loss to another, falsified a document made or required for an accounting purpose, namely [the relevant payment approval form], by making or concurring in the making of an entry thereon which was or may have been misleading, false or deceptive in a material particular in that it purported to show that the computer equipment stated therein had been sold to and received by .... Gap ...". The three items of equipment were a hard drive (charge 1), a monitor (charge 2) and a processor (charge 3).

26. It will be noted that the respect in which the payment approval forms were said to be misleading, false or deceptive was that they had purported to show that Gap had bought and received the equipment referred to in the forms. The judge was not satisfied that the hard drive and the processor found in A2's flat had been the hard drive and the processor to which the payment approval forms related. Thus, it was possible that the payment approval forms related to another hard drive and processor which Gap had bought and received. Accordingly, he was not satisfied that the payment approval forms to which charges 1 and 3 related had been misleading, false or deceptive, and he acquitted both A1 and A2 on those charges. However, the judge convicted A1 and A2 on charge 2.

27. The monitor found at A2's home was a Sony Trinitron monitor. The documentary evidence which was relevant to charge 2 showed the sequence of events to have been as follows:

(i) On 1 November 1996, Expert faxed a quotation for the supply of equipment to Gap for A2's attention. The quotation was for four sets of computer equipment. Three of the sets were for AST computers, computer-related equipment and monitors, and one set was for an AST computer, computer-related equipment and a Sony Trinitron monitor. The total cost of the equipment was $115,200.00.

(ii) On 4 November 1996, A2 prepared the necessary documents to enable Gap to purchase the equipment. One of those documents was Gap's purchase order. However, this order was for four sets of AST computers, computer-related equipment and monitors. No mention was made that one of the monitors was to be a Sony Trinitron monitor. The total price which Gap would be paying for the equipment was $115,200.00.

(iii) In due course, Expert submitted an invoice (no. EH961122480) dated 11 November 1996 to Gap for A2's attention. The invoice was for four sets of AST computers, computer-related equipment and monitors. It did not state that one of the monitors which had been supplied was a Sony Trinitron monitor. The invoice was for $115,200.00. This invoice was in Gap's records, and it bore a chop indicating that it had been paid by Gap on 6 January 1997.

(iv) On 10 December 1996, A2 completed a payment approval form giving his approval for the payment of Expert's invoice. The payment approval form described the invoices as relating to AST equipment. It did not refer to any of the equipment as Sony equipment.

(v) Although just one invoice was submitted to Gap - i.e. invoice no. EH961122480 for four sets of AST computers, computer-related equipment and monitors for $115,200.00 - two other invoices addressed to Gap had been prepared on Expert's stationery. Those two invoices were not in Gap's files. One of them, invoice no. EH961122481, was dated 9 November 1996, and related to a Sony Trinitron monitor. This invoice was for $8,600.00. The other invoice - which bore the same number as the invoice submitted to Gap, i.e. EH961122480 - was dated 11 November 1996, and was for three sets of AST computers, computer-related equipment and monitors, and one set consisting of an AST computer and computer-related equipment, but no monitor. This invoice was for $106,600.00. Copies of two sets of these two invoices were found. One set was found at A2's home, and the other set was in Expert's files. The set in Expert's files bore Gap's chops purporting to acknowledge receipt of the equipment to which the invoices related.

28. The inferences which the judge must be treated as having drawn from these documents, and from the presence of a Sony Trinitron monitor and of one set of the invoices referred to in (v) above at A2's home, are that

(a) the fourth monitor which Expert supplied had been a Sony Trinitron monitor,

(b) A1 and A2 had caused that fact to be concealed from Gap by ensuring that Gap's purchase order and the invoice which had been submitted to Gap had referred to four AST monitors, and by ensuring that the accurate invoices (which referred separately to AST equipment and to the Sony Trinitron monitor) had never been submitted to Gap,

(c) the Sony Trinitron monitor had never been ordered by Gap, and it had either never been received by Gap or (if it had been received by Gap) it had been taken home by A2 for his own use, and

(d) in these circumstances, the preparation of the payment approval form had been dishonest.

29. Two points were taken by Mr Wong. The first point was that it had not been open to the judge on the evidence to infer that the Sony Trinitron monitor had not been received by Gap. After all, the copy of invoice no. EH961122481 in Expert's files bore an acknowledgment of the receipt by Gap of the Sony Trinitron monitor. The prosecution's case was that A2 had himself been responsible for this acknowledgement of receipt by signing the acknowledgment himself (though not using his own name) and by applying to it Gap's chop (which the prosecution claimed was no longer in use and which the judge found had been kept in A2's office). The judge made no finding as to whether A2 had been responsible for this acknowledgement of receipt, but the critical point as we see it is that, whether or not Gap had initially received the Sony Trinitron monitor, Gap had never ordered it. What it had ordered, inter alia, were four AST monitors, and since the invoice submitted to Gap (i.e. the document referred to in (iii) above) was, inter alia, for four AST monitors, that was the payment which the payment approval form sanctioned. Thus, the payment approval form was false in a material particular in that it purported to show that four AST monitors had been received, when only three had been.

30. Mr Wong's second point was that it had not been open to the judge on the evidence to infer that the preparation of the payment approval form had been dishonest. He pointed to the fact that there had been evidence that the Sony Trinitron monitor was technically a better product than the AST monitor. He also referred us to the evidence that in December 1996 A2 had been engaged on a particular project for which he would have had tacit, if not express, approval to take the Sony Trinitron monitor home. But leaving aside the fact that that would not have explained why he still had the Sony Trinitron monitor at his home almost two years later, these points do not address the critical inference to be drawn from the deliberate attempts to conceal from Gap that the fourth monitor which Expert had supplied was a Sony Trinitron monitor rather than an AST monitor. The judge was entitled to infer that that had been done to make Gap pay for a monitor which it was either not going to receive or was not going to keep. It cannot be said that the preparation of the payment approval form in these circumstances would not have been dishonest. It follows that A2's conviction on the single false accounting charge which the judge found proved cannot be disturbed either.

Conclusion

31. For these reasons, A2's application for leave to appeal against his convictions must be dismissed. As we have said, the only order we make in relation to the case of A1 is that a date be fixed for the adjourned hearing of his application to treat his notice of abandonment as a nullity.

Representation:

1st Applicant in person.

Mr H. Y. Wong, instructed by the Director of Legal Aid, for the 2nd Applicant.

Mr Kevin Zervos, of the Department of Justice, for the Respondent.