The Queen v. Lai Chau-chuen (D.1) and Another

CACC000128/1986

Coram: Roberts, C.J., Fuad, J.A. & Clough, J.

Date: 13th June, 1986.

-----------------

JUDGMENT

-----------------

Roberts, C.J. -

1. Three defendants were charged with conspiring together to defraud Citibank between 1st December, 1981 and 13th January, 1982, by dishonestly causing the bank to make an excessive and inadequately secured mortgage advance of a quarter of a million dollars against Sheung Tsuen House, Lot 212, Yuen Long ("Lot 212") by representing that lot as being Sheung Tsuen House, Lot No. 101, Yuen Long (" Lot 101").

2. There is no dispute that in fact the bank was defrauded of a substantial sum of money because it lent $250,000 on the security of property which, according to the valuer and to the admission of D.3, was really worth $70,000 to $80,000.

3. Photographs of the two properties, Lot 212 and Lot 101, were produced in evidence. It is abundantly clear from them as well as from the evidence of the valuer, that Lot 101 is a modern three-storey house which was valued at $450,000 and that Lot 212 was the ruin of an old village house.

4. All three defendants were convicted of conspiracy to defraud at common law. D.1 was sentenced to twelve months' imprisonment, and D.2 and D.3 to twelve months' imprisonment suspended for three years. D.1 and D.3 seek leave to appeal against their conviction. They also seek leave to appeal against sentence, with which application we will deal as a separate matter later.

5. At the material times, D.1, TSANG Wan-cheong, was the owner of Lot 212, that is to say of the ruin. Lot 101 was owned by CHEUNG Sau-ling and LEUNG Kam-yuk. It is not disputed that they were not in any way connected with the transaction which is the subject of the charge.

6. D.1 was operating a real estate business called the Ming Li Estate and Enterprise Company. D.2 worked with him in that business and is his wife.

7. The principal prosecution witness was Mr. CHAN Man, the manager of the Yuen Long Branch of Citibank. According to his evidence, D.1 approached him about 14th December, 1981. D.1 was an old customer of the bank and had introduced a number of other customers to the bank on previous occasions. Although no note was kept of the conversation between Mr. Chan and D.1, there was some discussion about the possibility of a loan being advanced to D.2, on the security of Lot 212, which was registered in the name of D.3 as owner. D.1 also told him that it was a "village house of three stories".

8. There was a second meeting a few days' later on 22nd December, 1981, between Mr. CHAN Man and D.1 and D.2. On this occasion, a loan application form was filled out and signed by D.2 applying for a mortgage of $150,000 on the security of Lot 212, the ruined building. The application form, which was adduced in evidence as Ex. P4, described Lot 212 as "village house on Sheung Tsuen House Lot 212 Sheung Tsuen, Yuen Long."

9. On the second visit, D.1 in the presence of D.2, his wife, told Mr. Chan that the property offered as security was a new residential building, that it was built in 1981 and that he and his wife, D.2, were living in it. It was because of these assurances that the application form was ticked as showing the house as owner occupied by Mr. Chan, who said that he believed that they lived there and that it was owned by D.3. After that conversation, he took the necessary steps to have a mortgage prepared to secure a loan and overdraft facilities amounting in total to $250,000. D.1 asked him to let him know when the bank's assessor wanted to view the property.

10. Mr. Chan added that subsequently he received an assessment of the value of the lot, which was to act as security for the loan, as $470,000. If he had known the true value of Lot 212 he would never have advanced the money on behalf of the bank.

11. The surveyor, Mr. WONG Kwok-fai, who carried out the assessment, was taken by somebody, whom he could not identify when he gave evidence, to Lot 101, after he had been in touch with Ming Li Estate Agents, D.1's firm. He believed that he was assessing Lot 212, when he was taken to a modern three-storey building and not to the ruin of the village house which was the true Lot 212.

12. The arguments put forward by the applicants were directed at the finding of the judge that a conspiracy existed between the three defendants. The point was made, and of course it is a valid one, that a husband and wife are incapable, by themselves, of forming a conspiracy, somewhat artificially perhaps, because they are regarded as a single person in law. Therefore, the argument would run, if D.3 were acquitted, this would only leave the husband and wife as conspirators.

13. This situation, however, only arises with the difficulties which it presents, if the Crown has failed to establish the participation of D.3 in a conspiracy with D.l and D.2.

14. Mr. Remedios argued that the authorities require that the evidence against each defendant must be considered separately. This is, indeed, a fundamental principle. It is necessary for the Crown to establish, individually and separately, the participation in a conspiracy of all those charged before they can properly be convicted. But this does not mean that it is necessary, before a defendant can be convicted of conspiracy, for it to be proved that he was present throughout it. It is sufficient if a conspiracy is established and if each defendant is shown to have joined it at some stage.

15. In his reasons for sentence, though oddly enough not in his reasons for verdict, the judge comments that he had the impression that D.3 was used to some extent by D.1 and that D.3 "was not fully aware of what was going on, at least not at first".

16. It is possible that the early planning of what later became a conspiracy was carried out by D.1 and D.2 alone and that it was only somewhat later that they were joined by D.3, though it is difficult to see how D.1 and D.2 could have hoped to carry their intention to defraud the bank very far unless they were assured that D.3 would co-operate with them. However that may be, the judge based his finding of guilt against D.3 mainly on the participation of D.3 in, the signing of the mortgage by D.2 and D.3, under which D.3 received $100,000, and on the admission by D.3, in his statement to the police, which was produced in evidence, that he knew that Lot 212, the ruined lot, was worth $70,000-$80,000.

17. The crucial question before the judge was whether the only reasonable inference, from the participation of D.3 in that transaction which was, according to the evidence of a solicitor clerk, translated and explained to all three defendants, who agreed that they understood, was that D.3 knew that he was taking part in a scheme to defraud the bank, in the absence of any explanation by D.3.

18. It is to be noted that none of the three defendants chose to give evidence. When this happens, it must seriously inhibit those representing them on appeal, leaving counsel able only to show that the prosecution case is inadequate and that no reasonable judge on the basis of that evidence could have convicted the defendants, or to raise objections in law.

19. In our view, the evidence against D.3, in the absence of any explanation on his part, was such that the judge was fully entitled to conclude that the only reasonable inference from the evidence was that D.3 was a party to a conspiracy to defraud the bank, a conspiracy which was initially successful.

20. It is not necessary to consider in any detail the evidence against D.1 and D.2, which depends primarily upon the early interview with the bank manager and on their participation in the signing of the necessary papers thereafter.

21. Suffice it to say that, as in the case of D.3, there was evidence on which the judge was entitled to reach his conclusion.  The applications for leave to appeal against conviction of all three defendants are refused.

Representation:

Mr. L. Remedios (D.L.A.) for D.1 and D.3 in respect of conviction

D.1 and D.3 in person in respect of sentence

Mr. A.P. Duckett, Q.C., Deputy Crown Prosecutor, with Mr. W.S. Yip, Crown Counsel for Respondent/Crown Prosecutor.