The Queen v. Chu Cho Ham Lawrence

CACC000406/1988

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Coram: Silke, V.-P., Power & Penlington, JJ.A.

Date of Hearing: 1 February 1989

Date of Judgment: 1 February 1989

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J U D G M E N T

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Silke, V.-P.:

1. Lawrence Chu Cho Ham appeared for trial upon an indictment containing four counts of conspiracy to defraud contrary to common law. He was convicted and he now seeks leave to appeal against those convictions.

2. The first count in its particulars alleged, a conspiracy with the late Albert Kwok to defraud the Wing On Bank, its creditors and shareholders, by dishonestly causing or parmitting the bank to, make an advance of $5 million to an insubstantial company, Wintex Knitwear Company Limited, that company was controlled by the Applicant. It was. further alleged that the advance was not adequately secured; that no adequate provision was made for repayment of principal, or interest; that the company did not require the advance for any underlying commercial purpose and, finally, that it was made in order to facilitate the transfer of funds for the benefit of the Applicant or of Albert Kwok.

3. The second, third and fourth counts were in similar terms, the amounts differing, being $2 million, $1.5 million and $2 million respectively. The dates of the counts were different running from the 20th December 1984 to the 15th March 1985. The named insubstantial companies were also different. The second count involved a company Peakfield Developments Limited, the third Engrand Investment Limited and the fourth Tinwide Company Limited.

4. A great many of the necessary facts were, very sensibly, proved by agreement between the Crown, the Applicant and his legal advisors. This had the laudable effect of considerably shortening the trial.

5. It was the Crown's case that the Applicant was a successful business man engaged in commerce and business in Hong Kong. He was a friend of the Kwok family who controlled the Wing On Bank amongst other enterprises. He had a current account with the bank from 1969. He was in overdraft and that overdraft was secured. He owed the bank $10 million on a fixed loan account. He and Albert Kwok were co-directors and shareholders of a public company, Success Holdings Limited.

6. The insubstantial companies had accounts with the Bank - the advance to them was by way of overdraft or on loan accounts. Cheques were drawn on these accounts to channel funds into other accounts - those of Albert Kwok himself, Success Holdings and another, and throuth other companies with which the Applicant was associated.

7. Albert Kwok in his position in the Bank had wide power to himself to approve loans. Though there existed a Credit Review Committee Albert Kwok would appear to a large extent to have taken notice of it.

8. Those are, over simply and very briefly, the facts. There was a multitude of documents and references to the methods and companies which were used to effect that which the Crown sought: to prove was a fraud. It is not in the light of the attitude, a very proper attitude, adopted, by the Crown to this application, necessary to go into them in detail.

9. As Mr. Ridgway, in opening for the Crown put the matter:

"    The principal ingredient of a conspiracy to defraud, gentlemen, is dishonesty primarily. It is dishonesty. And the second element, probably no - less important, is a perception of risk - rather, let me express it this way, Knowledge that the acts contemplated, by the, agreement might cause loss or prejudice to the bank, in this case, to Wing On Bank, its creditors and shareholders. That, basically, is an agreement to defraud.

It is the law that an agreement to defraud, that is where the perceptions of dishonesty and risk are both established, is unlawful. His Lordship will tell you at the end of this trial how you approach your findings on dishonesty."

10. In his summing up at page 340, the judge said this:

" Now each of the counts, and I repeat those again, of conspiracy to defraud laid against the defendant alleges that he conspired with the late Albert Kwok Chi-hong to defraud the Wing On Bank limited by dishonestly employing the means detailed in the particulars of such count knowing - and mark this word knowing that such acts would or might cause financial loss to be suffered by the bank or to obtain for him and/or Albert Kwok an economic or financial gain or advantage.

The prosecution is not however in order to prove guilt to prove that the bank suffered any loss as a consequence of the acts done in pursuance of the conspiracy.?(Emphasis supplied)

11. Ground 1 in the Grounds of Appeal suggested that this direction of law was, erroneous in that, it must have led the jury to believe that, so long as the Applicant knew that the means employed would or might cause financial loss to the bank or that by the means employed there would be obtained for himself and/or Albert Kwok an economic gain, that^, was sufficient to constitute the offence of conspiracy to defraud. Furthermore such a direction was a departure from the terms of the indictment.

12. The particulars of the indictment to which we have made reference were not the particulars of the fraud itself but were intended to be particulars of the dishonesty which was attached to that, fraud. The third particular in order to facilitate the transfer of funds for the benefit of Albeit Kwok or the Applicant" was not contested at trial and was one of the Applicant's admitted fact.

13. The danger in this direction coupled with a direction at page 363, was that the jury might well think that if any one of those particulars were proved then they would be entitled to convict, and, given that one of those particulars was fact proved by agreement, the possibility was they might inevitably have thought that they should convict.

14. The law on conspiracy to defraud, and, consequently the directions a trial judge is required to give a jury,were described in another recent appeal in this Court as a minefield. For myself I would perhaps prefer the simile - a morass. For judges and juries frequently find themselves floundering in a pool of legal concepts which have become more and more difficult for a judge to frame in a manner intelligible for a jury to fully understand. And able and experienced judges do not escape these difficulties.

15. Mr. Findlay, and we are obliged to him for informing the Court of the position to be adopted by the Crown at an early stage thus avoiding the waste of hearing dates, finds himself in a position where he cannot support this conviction. There are, he accepts, errors, the fundamental one being, the use of the word "or" in the paragraph at page 340. There are other matter emerging from that direction which place him in, as he has described it, "an unhappy position".

16. We are not being asked here to apply the proviso. Quite properly so. It is, as Mr. Findlay said, impossible to say, with a properly directed jury, upon what basis they would have found the risk, in the Crown's case a risk of economic loss, given the defence case that there was no such risk at all. Nor are we asked to direct a re-trial.

17. In those circumstances, we would give leave, treat the hearing as the hearing of the appeal and allow the appeal, quash the convictions, set aside the sentences and discharge the Applicant from the bail upon which he presently is.

Representation:

Peter Nguyen, Esq. (Lo, Wong & Tsui) for Applicant

J.K. Findlay, Esq., Q.C. & P, Ridgway, Esq. for Crown/Respondent