R. v. Jacky Wong Chai Chung

CACC000419/1991

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Coram: Fuad, V.-P., Penlington & Macdougall, JJ.A.

Dates of Hearing: 1, 2, 3, 6, 7, 8, 9 and 10 July 1992

Date of Judgment: 4 September 1992

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J U D G M E N T

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Fuad, V.-P. (giving the judgment of the court) :

1. On 21st August 1991 the applicant, Jacky Wong Chai Chung, was convicted upon unanimous verdicts after a nine week trial in the High Court before Bewley, J. and a jury on two counts of the indictment (count 1 and count 9) both charging him with conspiracy to defraud, contrary to common law. He was sentenced to concurrent sentences of two and four years' imprisonment. He now seeks leave to appeal against the convictions. During the hearing, he abandoned his application for leave to appeal against sentence.

2. The applicant was the 2nd accused at the trial. His co-accused were Charles Pong Sz Tsun (D1) and Liu Yan Wai (D3). The three men had been jointly charged in counts 1 and 9. D1 was found not guilty on count 1, while D3 was convicted on that count. On count 9, D1 was convicted and D3 acquitted. The three accused were all acquitted on a directed verdict of the offence of conspiracy to procure the execution of valuable securities by deception (count 2). D1 was convicted on three counts of obtaining property by deception in respect of which he had been charged alone (counts 4, 6 and 8). The jury was not required to give verdicts in relation to the alternative charges against D1 of theft (counts 3, 5 and 7). D1 and D3 have abandoned their applications for leave to appeal against their convictions.

3. The Particulars of Offence of count 1 averred that the three accused, between 20th September 1985 and 31st October 1985 conspired together to defraud the Hang Lung Bank Ltd. by dishonestly:

"(i) causing Hang Lung Bank ('HLB') to issue a performance bond dated 24th September 1985 and a performance bond dated 17th October 1985, both in the form of letters of credit and both in the sum of US$544,750 on behalf of Continental King Lung (Holdings) Ltd. ('CKL') when:

(a) no appropriate credit facility had been granted by HLB to CKL for the issue thereof in breach of HLB rules; and

(b) there was no letter of indemnity, adequate security or guarantee held by HLB in respect thereof.

(ii) concealing the improper issuance of the said performance bonds from HLB."

4. The particulars of the conspiracy charged in count 9 were that the three accused, between 17th September 1985 and 30th November 1985 conspired together to defraud the Hang Lung Bank, or other negotiating banks, by dishonestly representing to the Hang Lung Bank and the other banks that:

"(i) documents, submitted to the HLB and the other negotiating banks in support of applications by CKL for the negotiation of sixteen drafts, presented under thirteen letters of credit opened by various banks in the Republic of Korea on behalf of the Korea Feed Association or its associated companies, and payment in the sums thereof, were true and genuine;

(ii) the goods, which were the subject of the said letters of credit, had been loaded on board vessels in Qingdao, Peoples' Republic of China, for shipment to the purchasers in the Republic of Korea in accordance with the terms of the said letter of credit; and

(iii) CKL was lawfully entitled to the,proceeds of the drafts drawn under the said letters of credit."

5. The applicant, who is aged 42, is a director and shareholder of Continental King Lung (Holdings) Ltd. ("CKL"). He and his family effectively own and control this company. CKL is part of a larger group of companies also owned and controlled by the family. CKL has some 17 subsidiaries including Portent International Ltd. ("Portent") and Keihin Transport (HK) Ltd. which share the same office premises with CKL. D1 was a director of CKL and D3 was the supervisor of the Bills Department of the San Po Kong Branch ("the SPK Branch") of the Hang Lung Bank ("HLB"). CKL banked with this branch of the Bank. They had a US dollar savings account there as well as a HK dollar cheque account. Portent also had an account at that branch. As a result of some import/export credit facilities which the Bank had made available to Portent, Portent was overdrawn to the extent of HK$7.8 million.

6. The prosecution is based on the facts surrounding a transaction between CKL and the Korean Feed Association ("KFA") in September 1985 which had to do with the supply of maize. But this was not the first such transaction between the parties. In April 1985, CKL through its Korean agents, had agreed to supply KFA with 20,000 metric tons of maize of Chinese origin. Under the contractual arrangements, CKL had to open an irrevocable documentary credit equivalent to 5% of the contract value - US$129,500. The prosecution's case was that D3 opened such a credit in favour of KFA on HLB's letterhead without informing Head Office. This was contrary to the rules which required adequate security to be furnished before HLB assumed such an obligation - and that such guarantees were only to be issued by Head Office.

7. Since shipment was duly effected, KFA did not need to draw down on the guarantee. The maize had been shipped from Qinhuangdao to Korea. The three letters of credit in relation to this contract were negotiated by CKL through the Bank of Credit and Commerce where they also had an account. According to the prosecution, this was not the normal banking practice (a letter of credit was ordinarily expected to be negotiated through the bank which had opened it) and it was contended that this was done to reduce the risk of the improper issuance of the guarantee coming to light.

8. The relevant Bills of Lading had been issued on their face by a Japanese Shipping Company, Yasukuni Kaiun Ltd. ("Yasukuni"), on their forms, to Keihin. The prosecution led evidence that these were forged; as were other supporting documents. It was contended that the only persons who stood to gain from these forgeries were the applicant and D1 through CKL whom they represented.

9. The case for the prosecution in respect of count 1 may be summarised thus. On 20th September 1985 CKL, through Dae Neung, was successful in its bid by tender to supply KFA 50,000 metric tons of Chinese maize by two shipments - 20,000 metric tons by 30th October and the balance by 20th November 1985. Payment was to be by letters of credit opened by KFA in favour of CKL. The total contract price was US$5,447,500.

10. In October 1985 16 letters of credit were duly opened by KFA in various combinations. Under the contract CKL was required to open an irrevocable performance guarantee bond in favour of KFA for 5% of the contract price (US$544,750) within five days of being awarded the contract. Among the documents found at HLB was an application by CKL dated 20th September 1985 for an irrevocable documentary credit to be drawn in favour of KFA for that sum. A special condition sought by the application was that KFA would be able to draw down on the credit merely by stating that CKL had not fulfilled its contract with KFA to supply 50,000 metric tons of maize. This special condition, said the prosecution, had the effect of turning the letter of credit into a performance guarantee under which the Bank would be liable. The letter of credit was in fact issued as a revocable one (on 24th September 1985) and was signed by D3 and Chan Chi Wang who was called by the prosecution as a witness at the trial. Mr. Chan, now working for an export/import company, had been employed by HLB since 1977. He was posted to the SPK Branch of HLB in the summer of 1983 as assistant manager. He was promoted to manager of the branch in May 1985 and was transferred back to Head Office in September of that year. The application form for the document bore the initials of the General Manager of HLB at Head Office (Mr. Desmond Marron) in the "Approved" box. He told the jury that he had no recollection of the particular document - he would have assumed that his staff had made proper inquiries and would not have given his approval if he had known that CKL had no facilities to cover the exposure his Bank would be assuming under the letter of credit.

11. The prosecution sought to establish that there were a number of unusual things about this letter of credit which was, in effect, a performance bond. An outdated form had been used; an irregular service number had been typed in; there was no record of it in the head office registers; there was no letter of indemnity given by CKL as HLB's rules required; and the loans department knew nothing about it - they would normally process performance bonds.

12. A correspondent bank in Seoul for HLB for letters of credit informed KFA of the receipt of the performance bond and, for reasons into which it is not necessary to go, KFA exercised their right on 14th October 1985 to draw down on the performance bond and the necessary documents were sent to the SPK Branch of HLB.

13. The position, according to the prosecution, was then that HLB were liable to pay out US$544,750 and CKL had no money. D3 wrote to the Seoul bank protesting the draw down and saying that the allegation that CKL had not fulfilled their contract was not justified since the latest shipment date (31st October 1985) had not been reached, asserting that this discrepancy would entitle HLB not to pay.

14. According to the prosecution case, contrary to normal banking practice, D3 returned the documents presented by the Seoul bank with their letter. Instead the opening bank should have kept the documents and told the remitting bank that they were being held to its order.

15. D1 had gone to Korea to speak to the Bills Manager, Mr. Um Eui-shik, of the Seoul bank (the Crocker National Bank) about the matter and to try and stop the draw down taking place. Mr. Um rejected the protest by telex and returned the documents.

16. Shortly afterwards, the Seoul bank received a telex from HLB saying that CKL had agreed to pay the sum secured by the performance bond by taking over and settling HLB's liability. The funds which enabled CKL to do this came from the proceeds of some of the other letters of credit, negotiated through HLB supported by documents (which turned out to be forged) to establish that shipment of the maize had been made on 22nd October whereas it had not.

17. In the meantime, on 17th October a second letter of credit was prepared, signed by D3 and purported to be signed as well by Chan Chi Wang, and was sent to CKL's agent in Seoul - Co-Prosperity Ltd. - by fax. The agent sent it to Dae Neung who presented to KFA. The prosecution's case was that the senior management of HLB knew nothing about this letter of credit and no credit facility had been approved in relation to it. Since KFA had been paid under the first letter of credit they made no claim under the second. This was an irrevocable documentary credit and left HLB exposed to the risk of having to pay out the US$544,750.

18. When D3 was interviewed by the ICAC on 26th March 1987 in relation to the 24th September performance bond, he made various admissions: that he had issued it knowing that CKL had no funds at the time to pay; that this was the first time he had issued one; that he was not abiding by the rules of his bank; that CKL had no money to pay when the Seoul bank drew down on the performance bond; that he was concerned about his own position and, in order to play for time, had written to the Seoul bank claiming discrepancies on the draw down; that he knew there was something wrong with the contract and had tried to keep the whole matter secret because of the irregularities; that he had deliberately kept no copies of relevant letters and that he had done all this because it was his nature to help people.

19. As regards count 9, it was common ground that no maize, the subject of the 13 relevant letters of credit, had been loaded on board any ships in Qingdao or anywhere else for shipment to KFA in Korea at the material time and that the documents submitted to HLB and the other negotiating banks in support of CKL's applications for the negotiation of 16 drafts, under 13 letters of credit opened by eight banks in Korea on behalf of KFA, were false and had been forged. Thus, CKL was not entitled to the proceeds of the drafts drawn down under those letters of credit. On 2nd November 1985 HK$12 million of the proceeds of the letters of credit was withdrawn from CKL's accounts with HLB, by means of three cashier orders on D1's application.

20. It was the case for the prosecution that the applicant and D1 had either prepared the relevant bills of lading themselves or caused them to be prepared and that they had themselves forged (or had caused to be forged) the false certificates of origin, quality and weight certificates, beneficiary statements and other documents submitted to HLN. Some of those documents stated that the loaded vessels had sailed on 22nd October 1985 from Qingdao to Inchon in Korea.

21. It was the defence case that CKL had built up a close business relationship with HLB. Regular meetings had been held from April 1985 onwards between the applicant and senior officers of HLB. These meetings, which were to discuss the growing business of CKL and the group of . companies to which it belonged, were attended by Mr. Marron the General Manager of HLB, (and later by his successor Mr. David Beath), Mr. Johnny Ho Pui Sun, the head of HLB's Branches' Department and very occasionally by Mr. Fleming, HLB's Chief Executive.

22. Great reliance was placed on the existence of a contract entered into in April 1985 whereby CKL had agreed to supply Dae Neung Trading Co. Ltd. ("DNT") of Korea one million metric tons of Chinese maize between July 1985 and July 1986. The contract required CKL to open a performance bond in favour of DNT. A copy of this contract was, said the defence, shown to HLB's senior officers at one of the regular meetings and HLB agreed in principle to support "a package" which would include the opening of the performance bond. At the time it was envisaged that there would be a series of subordinate contracts under the main one million metric ton contract. Indeed, when that contract had been signed the parties had signed a subcontract for the supply of 20,000 metric tons of Chinese maize to Korea before the end of June 1985. CKL contracted with China National Cereals, Oil & Foodstuff Import and Export Corporation ("China National") to buy the maize to fulfil the subcontract.

23. Yasukuni were to ship the one million metric tons of maize and they were paid US$300,000 so that they could procure a ship for that purpose. Yasukuni duly chartered the "York Gate" and shipped 20,000 metric tons of maize from Qinhuangdao in July 1985. This transaction was financed by a back-to-back letter of credit in favour of China National. KFA received the 20,000 metric tons of maize in early August 1985.

24. The defence said that since CKL was expecting further instalments of maize under the main one million metric ton contract, they had agreed with the Dalian Douglian Developing and Commerce Corporation ("Dalian") to supply them with 400,000 metric tons of maize by the end of February 1986. In August 1985 CKL contracted to buy 50,000 metric tons of maize from Dalian to be shipped from Qingdao. When the September 1985 contract was signed between CKL and KFA in respect of 50,000 metric tons of maize for the contract price of US$5,447,500, arrangements for the shipping of the maize which was the subject of the August 1985 contract had been discussed between CKL, Dalian and Yasukuni.

25. It was the defendants' case that the issue of the performance bond referred to in count 1 was a routine matter once the top management of HLB had agreed in principle that it should be opened. The application for the bond had been made on a HLB form and there was no cause for the applicant to conspire with a junior officer (D3) to get the bond issued. HLB was fully aware that CKL was not providing any security'save for the letters of credit which the Korean buyers would supply. When HLB bought CKL's drafts and gave value for them to CKL, they did this with their eyes open. The internal documents showed plainly that CKL had no facilities at the time.

26. It was also the defence case that the Koreans had acted "disgracefully" in drawing down on the performance bond on 14th October 1985 (using what the defence say was an "excuse" that the letter of credit was a revocable letter of credit and not an irrevocable one) since the time for performance by CKL had not yet been passed. There was thus no basis for the assertion that CKL had not fulfilled the contract.

27. The defence placed emphasis on the fact that D1 had been sent to Korea on 14th October 1985 to try to sort things out and to persuade the Koreans not to draw down on the performance bond. By the time he returned on 23rd October, CKL had gone a long way in the process of preparing the documents for negotiation under the 13 letters of credit and two sets of documents had been presented to the Hang Lung Bank on the following day. It was suggested to the jury that D1 could not possibly have conspired with the applicant and D3 to manufacture the originals of so many Chinese documents, with the necessary "chops", seals etc. between 14th and 24th October, consistent with the case for the prosecution - the documents involved were 27 quality and weight certificates; 19 phytosanitary certificates, five certificates of origin; two grain inspection certificates and 46 bills of lading. It was suggested that all this would have involved a most elaborate exercise, needing the services of printers, chop makers etc. who were conversant with both English and Chinese - thus, it was said, the inherent probabilities were wholly against the prosecution's case.

28. Mr. Litton, who represented D1 and the applicant at the trial, submitted to us that in view of the defence case raised (that the defendants were themselves the victims of fraud and that all the documents were negotiated in good faith) a very careful summing up by the judge was required. The prosecution had set out to prove the dishonesty required by the indictment by circumstantial evidence alone.

29. What the defence said about the withdrawal of HK$12 million on 31st October 1985 was that HLB had acted in a very irregular manner a few days before by freezing the whole of CKL's account contrary to an agreement whereby only US$ one million was to be set off against the liability of another member in the group. Mr. Beath had been frank enough to admit that HLB had "probably" acted "unfairly". It was the defence case that the applicant and D1 knew that the supplier of the Chinese maize had to be paid shortly and CKL did not want to run the risk of further high-handed action by HLB.

30. The defence complains generally that the judge failed in his duty to sum up their case fairly and accurately.

31. The first specific ground of appeal relates to the following passage in the summing up (at p.9) where the judge is directing the jury on the meaning of dishonesty:

"Now, an important ingredient of all these counts, members of the jury, is dishonesty. If you find that a defendant did all or any of the things alleged against him but did so honestly, you will acquit him. In deciding whether he was dishonest you should apply the standards of ordinary, reasonable people: yourselves. In other words do you think he was dishonest? It is a common English word and you must give it the meaning that you think it should have. Use your commonsense but bear in mind that where any deception is used you should take this into account in deciding whether that defendant was dishonest."

32. It is contended that these directions wrongly indicated that the jury could convict on their objective view of a particular defendant's mind, rather than what was in fact in his mind. Mr. Litton submitted that the full direction approved in R. v. Ghosh [1982] 1 QB 1053 should have been given. The well-known passage from the judgment of Lord Lane, C.J. on which Mr. Litton relies is to be found at p.1064.

"     In determining whether the prosecution has proved that the defendant was acting dishonestly, a jury must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest. If it was not dishonest by those standards, that is the end of the matter and the prosecution fails.

If it was dishonest by those standards, then the jury must consider whether the defendant himself must have realised that what he was doing was by those standards dishonest. In most cases, where the actions are obviously dishonest by ordinary standards, there will be no doubt about it. It will be obvious that the defendant himself knew that he was acting dishonestly. It is dishonest for a defendant to act in a way which he knows ordinary people consider to be dishonest, even if he asserts or genuinely believes that he is morally justified in acting as he did."

33. Mr. Litton submitted that the judge, by giving what was in effect the first half of the Ghosh direction and omitting the second, had failed to make it clear to the jury that they had to be satisfied that the defendant himself realised that his actions were, according to the relevant standards, dishonest. He suggested that the course adopted by the judge was more likely to mislead the jury as to the proper test than if the judge had not said anything to the jury about the meaning of dishonesty.

34. There is no doubt that Ghosh decided that the test of dishonesty is subjective in relation to any offence, including conspiracy to defraud, but that the standard of honesty to be applied is that of reasonable and honest men and not the accused if his standards differ.

35. But as the cases show (R. v. Roberts (1987) 84 Cr App R 117 and R. v. Price (1990) 90 Cr App R 409) it is not necessary to give a direction on the meaning of dishonesty on the lines of that approved in Ghosh unless the defendant raises the issue that he did not realise that his actions were, according to ordinary standards, dishonest. This line of authority has been followed in Hong Kong: The Queen v. Sze Sing Ming and Others [1991] 2 HKLR 482 and R. v. Fung Hing Wah and Another, Criminal Appeal No. 219 of 1991 (unreported) 14th February 1992.

36. In Sze Sing Ming, part of the direction impugned was in these terms:

"And finally it must be proved that the accused did all this dishonestly. Members of the jury, I needn't direct you in this case about what dishonesty means.. It is dishonesty by the standards of ordinary decent, reasonable people that has to be applied and if the other matters are proved, I doubt whether you would have great problems in relation to dishonesty. Again that is a matter entirely for you."

37. After referring to the English authorities, Power, J.A. (giving the judgment of the Court) said this, at p.491:

" In view of a suggestion made in the course of the argument before us, we think it proper before going further, to state explicitly that the Court of Appeal in Hong Kong has never held that a Ghosh direction is necessary in all cases involving commercial dishonesty. Nor, as far as we are aware, has any practice grown up in Hong Kong which requires that a full Ghosh direction be given in such cases. We have no hesitation in respectfully agreeing that the law in Hong Kong is the same as that stated in Price.

It was Mr. McCoy's argument that the third applicant's defence was that she was never more than a secretary and that whatever she did was done innocently while acting in that capacity. He submitted that the thrust of the Crown case against her rested upon her handling of the proceeds of the frauds. He submitted that her answer to this, although not explicitly stated, was 'whatever I did, I did without any knowledge of fraud and in the belief that I was acting honestly'. This being so, he submitted that a Ghosh direction should have been given. The third applicant never at any time conceded any awareness that she was handling the proceeds of fraud and never suggested that if she had had any such an awareness, given her position as an employee, no ordinary person could have considered that she was acting dishonestly. The Crown case was that she was deeply involved in the whole transaction and that what she did was by any standards dishonest. Her defence was that she knew nothing of any fraud and had never done anything dishonest. The trial judge was, in our view, correctly satisfied that there was nothing which required the giving of a Ghosh direction and the direction which he gave was a perfectly proper one."

38. In Roberts, at p.123, O'Connor, L.J. remarked: "So we start with the proposition that for the subjective test to arise, somewhere along the line the defendant has to say 'I did not know that anybody would regard what I was doing is dishonest'". In our case, the appellant did not raise or imply such an issue in respect of count 1 or count 9. But we recognise that opinions might differ as to whether a Ghosh direction was required in relation to count 1.

39. However that may be, the criticised passage of the summing up must not be looked at in isolation. As the opening sentence of that passage makes plain, the judge had just referred to the gist of the two conspiracy counts and the six counts charging substantive offences, the common element of all of which was dishonesty. When dealing with the conspiracy counts, the judge said, at p.7:

"Now, members of the jury, to defraud is dishonestly to prejudice or take the risk of prejudicing another person's right knowing that you have no right to do so; in this case knowing that the particulars alleged would or might involve the banks in financial loss." [Emphasis supplied]

In our view this direction emphasised the subjective nature of the test of dishonesty and made it plain to the jury that in order to convict the applicant they must be satisfied that he knew that what he was doing was wrong. In the passage of which complaint is made, the judge gave an accurate explanation of the complementary standard of honesty to be applied, namely that of reasonable and decent people and not the applicant.

40. In view of the wording employed by the judge, we assume that he was guided in what he said by the Ghosh direction. Therefore we would respectfully draw his attention to R. v. Vosper, The Times, February 26 1990 and R. v. Ravenshad [1990] Crim L R 398 where the English Court of Appeal advised that when a Ghosh direction is given it is wise to use Lord Lane's ipsissima verba.

41. We have concluded that the directions given here were perfectly adequate. We do not think that the accurate explanation which the judge gave about the standard of honesty to be applied had the effect of negativing his clear and correct direction that, to act dishonesty in the context of defrauding, the applicant must not only have prejudiced (or have taken the risk of prejudicing) another person's right but that he must have known that he had no right to do so. We are not persuaded that the jury could possibly have been misled into believing that the actual state of mind of the applicant was irrelevant so that the test they had to apply to determine whether or not to convict was purely objective.

42. Mr. Litton submitted that the judge had misdirected the jury in two places on the issue of the economic risk that HLB would not have taken but for the alleged deception. As a foundation of his submissions he pointed out that, on the facts proved, the contract required KFA to have opened the letters of credit before the performance bond was issued; that CKL pressed KFA to issue the letters of credit after the performance bond had been issued on 24th September 1985; that these would have constituted security for HLB in respect of their liability under the performance bond, and that CKL had no reason to believe that the letters of credit would be delayed so that HLB would be exposed to real risk. Moreover, no one could have expected KFA to draw down on the performance bond before the date by which the contract had to be performed.

43. Mr. Litton's complaints are made in respect of the following passages in the summing up:

(a) [p.7]

"Now, if the fraud imperils the economic interest of the person deceived, this is sufficient to constitute a fraud, even though in the event no actual loss is suffered and notwithstanding that the deceiver did not intend to bring about the actual loss. So, it is the risk of possible injury that concerns you, members of the jury."

(b) [p.24 after the judge had reviewed the evidence of Johnny Ho of the Hang Lung Bank who had said that senior management had agreed in principle that the Bank would negotiate bills under the letters of credit and would issue a performance bond; that they had been shown the million metric ton agreement, and that it was known that CKL had no facilities]

"And Johnny Ho says that the letters of credit would be security for the performance bond. But, members of the jury, that would only be the case once they arrived. There was a period of some four weeks when the Hang Lung Bank had no security in the event of a draw down."

44. With respect to the first passage, Mr. Litton submitted that the judge had put forward a circular argument which begged the question. With respect, we see nothing in this point because it must not be overlooked that the matter was amplified a few pages later on in the summing up, at p.13:

"So in this case the conspiracy alleged is the agreement to expose Hang Lung Bank to the risk of economic loss by dishonestly issuing the performance bonds. It does not matter whether the Hang Lung Bank actually had to pay out on the performance bonds or was ultimately somehow reimbursed. It is the exposure to risk of loss by the defendants doing things dishonestly which is the core of the defrauding element to the defence. Further, the defendants do not have to intend the Hang Lung Bank to suffer loss at the time they agreed to do the dishonest acts to be found guilty. They must merely intend, at that time, that Hang Lung Bank be exposed to the risk of loss."

45. Mr. Marash, who appeared for the Crown both at the trial and before us, drew our attention to the decision of the Privy Council in The Queen v. Wai Yu Tsang [1992] 1 HKLR 26, on appeal from this court. He submitted that on the authority of that decision (the opinion of the Board was given by Lord Goff) Bewley, J.'s directions could not be faulted. Indeed, he suggested, that when the judge said: "They must merely intend ... that HLB be exposed to the risk of loss" that that part of the direction was unduly favourable to the defendants. We agree with this submission and cite two passages from the judgment. At p.30 Lord Goff said:

"This authority [Welham] establishes that the expression 'intent to defraud' is not to be given a narrow meaning, involving an intention to cause economic loss to another. In broad terms, it means simply an intention to practise a fraud on another, or an intention to act to the prejudice of another man's right."

And at p.11:

"The question whether particular facts reveal a conspiracy to defraud depends upon what the conspirators have dishonestly agreed to do, and in particular whether they have agreed to practise a fraud on somebody. For this purpose it is enough for example that, as in Allsop and in the present case, the conspirators have dishonestly agreed to bring about a state of affairs which they realise will or may deceive the victim into so acting, or failing to act, that he will suffer economic loss or his economic interests will be put at risk. It is however important in such a case, as the Court of Appeal stressed in Allsop, to distinguish a conspirator's intention (or immediate purpose) dishonestly to bring about such a state of affairs from his motive (or underlying purpose). The latter may be benign to the extent that he does not wish the victim or potential victim to suffer harm; but the mere fact that it is benign will not of itself prevent the agreement from constituting a conspiracy to defraud. Of course, if the conspirators were not acting dishonestly, there will have been no conspiracy to defraud; and in any event their benign purpose (if it be such) is a matter which, if they prove to be guilty, can be taken into account at the stage of sentence."

46. As regards the factual matters raised by Mr. Litton there was evidence that under the bidding rules of the KFA under which CKL made their bid on 20 September 1985 in relation to the 50,000 metric ton shipment, CKL were required to open the performance bond before KFA and its subsidiaries were required to issue any letters of credit. But whatever was the true position, even if the letters of credit had been issued before the performance bond, they would not have given HLB unconditional security because CKL would have had to present conforming documents acceptable to the opening/negotiating banks. Mr. Marron told the jury that if no facilities were in place, his bank would be "completely" at risk between the time that any export letters were lodged with the bank and the time that the performance guarantee was issued. There was ample evidence to show that KFA were entitled to draw down on the performance bond before the final date provided for shipment simply on the ground that CKL had not provided an irrevocable performance bond as anticipated.

47. We find no misdirection in relation to the issue of economic risk.

48. Mr. Litton submitted that the judge misdirected the jury about the one million metric ton contract which, he contends, lay at the heart of the applicant's case. He drew attention to the fact that a prosecution witness, the General Manager of KFA, Mr. Chi Kil Jung had demonstrated his knowledge of the existence of that contract and had not expressed any doubt as to its genuineness. He had, indeed, identified the photographs of the Chairman of Dae Neung which had been taken at the signing ceremony of that contract on 29th April 1985 at CKL's office.

49. Moreover, Mr. Litton pointed out, the proven shipment of 20,000 metric tons of maize by the "York Gate" had been made pursuant to a contract with CKL. The only contract produced in evidence (dated 29th April 1985) recited that it was "the first shipment", made reference to the one million metric ton contract and had been signed on the same occasion as that contract.

50. When the judge referred to the one million metric ton contract he said, at pp.13-14:

"On 24 April, 1985 Dae Neung and CKL signed a contract for a million tons of PRC maize. There was a monthly delivery schedule from August. This contract was not approved by the KFA board, according to Mr. CHI, as you have heard, and the prosecution suggested this was not a genuine contract, it may have been produced in order to assist CKL to obtain finance."

Mr. Litton complained about the following passage in the summing up at the foot of p.14:

"You, of course, will wonder, if the million was a genuine contract, why were CKL bidding in competition, for example with PHD in Bangkok?"

51. As regards the first part of that comment, Mr. Litton says that whether or not KFA had properly authorised Dae Neung to contract on their behalf was a different matter altogether. No evidence had been led which cast a doubt on the genuineness of that one million metric ton contract and there was no basis for the judge to express a doubt about it. What the judge had said was highly damaging and had undermined the credibility of the entire case for the defence.

52. In respect of the second part of that passage, Mr. Litton suggested that CKL could not have been bidding in competition with PHD because the evidence showed that Grade A Thai maize was of a commercially different description from the Chinese maize which was to be supplied under the one million metric ton contract, and that Thai maize was not suitable for human consumption. Moreover, the fact that PHD, through Dae Neung, was offering to supply Thai maize to the Koreans could not cast doubt on the genuineness of the one million metric ton contract.

53. In respect of these complaints and others which have been voiced on behalf of the applicant in relation to comments made, and views expressed, by the judge, we make reference to the following passage from p.2 of the summing up:

"     Now, members of the jury, my duty is to set out the issues in the case and the principles of law that you must apply. Your job is to come to a conclusion on the facts of the case, to find out where the truth lies and then apply the law as I give it to you to those facts in order to come to a verdict in respect of each defendant on each count. Please do not come to your decision on any view of the evidence put before you by counsel or by me. If you agree with any view expressed by us then it becomes your view and you will act on it. If you disagree with what we say about the facts, that is your privilege, and you are the sole judges of fact.

Likewise, just because counsel have not mentioned a particular piece of evidence or I have not mentioned some evidence, that does not mean that it is unimportant because it is your view that counts. Please use your commonsense in coming to your conclusion as to whether a witness is telling the truth or telling lies or partly the truth and partly lies. When you have decided what evidence you are sure is correct, it is for you to decide what conclusions you are sure you should draw from it. Note I use the word 'sure'."

54. In our view this is a clear and helpful explanation of the respective functions of judge and jury which a Hong Kong jury would understand and apply.

55. To return to the complaint, the prosecution sought to show, not that the contractual documents relating to the million metric tons of maize had been forged, but that the parties to the contract never envisaged its terms being implemented. The suggestion was that the contractual documents must have been drawn up to enable CKL to obtain finance from the bank; they were in fact shown to HLB and another bank (Standard Chartered) when CKL were seeking to obtain credit. The prosecution pointed out that no deliveries had ever been made in accordance with the shipping schedule and asked the jury to consider whether there would have been any need for CKL to make the open bid for 50,000 metric tons of maize in September 1985 if the million metric ton contract had been regarded as live and operative.

56. We entertain no doubt that the judge used the word "genuine" in the sense of a contractual arrangement which was, from its inception, intended to be carried out. When the relevant part of the summing up is read as a whole, it seems clear to us that the jury could not have been misled into thinking that the judge was suggesting that such a contract had never been signed and ostensibly entered into.

57. As to the other point raised by Mr. Litton, there was no evidence to suggest that KFA were interested in maize intended for human consumption. KFA was interested in animal feed. Certainly PRC maize and Thai maize were "different" in that oil for human consumption can be extracted from the former but not from the latter. However, this immaterial fact did not make the judge's comment ill founded.

58. There were certainly problems about the million metric ton contract, as Mr. Chi Kil Jung, the General Manager of the KFA, realised and pointed out.

59. We have not been persuaded that the judge can legitimately be criticised about what he told the jury in respect of this matter.

60. Mr. Litton argued that the judge had misdirected the jury when he said (at p.16):

"CHAN Chi-wang says that he signed the bond, together with the third defendant. He says this was done in the offices of CKL. The second defendant says this is a lie. If CHAN Chi-wang is right, it is a matter for you whether you think this was an attempt at concealment and therefore evidence of fraud."

The applicant complains that this was a misdirection because it equated evidence from which fraud might be inferred with proof of fraud. In his submission, where the performance bond was signed was a neutral fact. Once senior management had agreed that HLB should issue a performance bond for 10% of the contract value of the goods, everything else was mere mechanics. The applicant's evidence to this effect had not been challenged. There was no legitimate suggestion of criminality in such circumstances for the customer to approach the branch manager and ask him to issue the bond. Even if the bond had been signed in CKL's offices, contrary to the applicant's evidence, this fact was not evidence of fraud impliciting the applicant.

61. Thus, one of the main planks in the prosecution case relating to the "concealment" averred in paragraph (ii) of the particulars of count 1 had not been established.

62. We are unable to accept these submissions. It seems to us that the judge's comment was perfectly reasonable on the evidence led at the trial.

63. Immediately after the passage of which complaint is made, the judge summarised Chan Chi Wang's evidence about the circumstances in which he signed the bond, in this way (at p.16):

"     CHAN Chi-wang says that the second defendant rang him in head office, where he was working, and asked him to sign a new performance bond. He said he would consider it. The third defendant also rang him and they eventually agreed that they would sign the bond. CHAN said that he was doing the second defendant and CKL a favour, because they were not bad customers.

He then got a call from the third defendant and he went to Peninsula Court after office hours. The bond had already been prepared. The second defendant and the third defendant were present. He was aware that he had no authority to sign, and in fact he told the third defendant that he would sign no more documents. He was, of course, out of the branch by this time. He was working in head office. He said the customer should not be involved in the issuing procedure. He thinks that the third defendant prepared the bond, no one else was involved. He says he did not sign the October performance bond, although you will notice that the signature is in the same place, and it may be that this is a photo-copy of the first signature that has been transposed."

64. After reminding the jury of part of Mr. Marron's evidence to the effect that the particular application form used implied that there was a facility in place and that in the instant case:

"... there should have been a facility in place for an application like this and if there wasn't, then that should have been brought to the attention of senior management and an application put up by the account manager to consider approving this."

The judge, at pp.25 and 26, said this:

"     The defence says that since senior management had agreed to support CKL in the one million ton contract and had agreed in principle to issue a performance bond and had approved the application form by virtue of Marron's signature, the prosecution cannot now say that the performance bond was issued without approval. It is up to you, members of the jury, whether you accept that argument.

There is evidence that the application did not comply with the usual requirements, but this evidence was contradictory and I will refer you to Mr. WONG's speech at page 4 where he points these matters out. I do not think it is necessary for me to repeat them now.

There is also contradictory evidence as to what the proper procedure was. There were no formal rules, and evidence has been given that it was an unusual application. And counsel have pointed out that there was no complaint from Dae Neung or from the KFA as to the form of the September performance bond.

But the defendants have not been charged with failure to follow the proper procedure. In itself you may think that this does not matter very much The question is whether a fraudulent intention is revealed by the way the application was made. Were the defendants trying to avoid inquiry into the absence of security?

The senior management knew that CKL had no facilities, but they knew that CKL was part of the 2nd defendant's group with which Hang Lung Bank did much business. There were monthly meetings and the big maize deal was out in the open and had the support of the bank.

Now there is evidence that such applications could succeed without a specific facility, but Mr. Marron says that such applications should be looked at. But there was no looking at or focusing on this particular application by those job it was to do so. Mr. Marron assumed that that had been done.

Now if it had been done, if it had gone through the loans department, we would surely have heard about it, would we not? Mr. HO says that he did not see it. So it is up to you to decide whether it was the intention of the defendants, perhaps because of CKL's financial situation, that such focusing should be avoided by arranging a direct approval by Mr. Marron.

In this connection you will also have regard to the absence of a letter of indemnity. Johnnie HO said that a customer must sign this whether there is security or not.

And, members of the jury, have regard please to the evidence as a whole in deciding if also there was an agreement to conceal the issue of the performance and from the senior staff of Hang Lung Bank." [Emphasis supplied]

65. The grounds of appeal state that the first passage emphasised above is a misdirection because it may have misled the jury into equating procedural irregularity with proof of the offence charged.

66. As regards the second passage emphasised, it is said that since there was no evidence as to how the application for the performance bond had been processed internally, it could not reasonably have led to the conclusion that D1 and the applicant had agreed with D3 that there should be no focusing on that application. It was also contended that the third passage emphasised was a misdirection because there the judge was suggesting, contrary to the factual position, that there was evidence capable of proving the intention of D1 and the applicant that the application form should not be properly processed.

67. The final passage emphasised was also a misdirection, it is said, because there was no evidence to suggest that D1 and the applicant had (or could have) taken any part in the internal processing of CKL's application for the performance bond.

68. Mr. Litton also submitted that the judge had contradicted himself by asking the question whether the defendants were trying to avoid inquiry into the absence of security when immediately afterwards he said that the senior management of HLB knew that CKL had no facilities. He also argued that since the judge had noted that there was contradictory evidence about what was the proper procedure, such irregularities as there might have been concerning the issuing of the performance bond could not be evidence implicating the applicant unless he knew of them, that and no evidence had been led to establish this. Mr. Litton asked how, therefore, could the applicant have been a party to an agreement to "avoid inquiry into the absence of security"?

69. While it was common ground that the senior management of HLB had agreed to purchase inward bills drawn in favour of CKL to reduce Portent's past overdue bills (Portent is an associated company) there was a conflict of evidence about whether HLB had agreed to issue any particular performance bond on CKL's behalf. Parts of the evidence of Mr. Marron and Mr. Johnny Ho are irreconcilable on important aspects of this issue.

70. Mr. Johnny Ho testified, in cross-examination, that in the presence of Mr. Marron and Mr. Beath HLB had agreed in principle to issue the performance bond for the 50,000 metric tons contract and to purchase CKL's bills. However, he agreed in re-examination that there would normally have to be a facility in place before a performance bond could be issued, but that each case was treated on its own merits. There could be a "one off" application without any facility at all, but HLB would have to consider the amount involved, the financial strength of the company and what collateral was put up. Moreover, whatever the situation, before a performance bond was issued, there had to be a letter of indemnity signed by the customer. And according to Mr. Ho, CKL were told to apply for the bond to the SKP Branch of HLB and that such an application would be submitted to Head office through the manager.

71. Mr. Marron said that he recollected discussions with CKL about maize shipments and that he was told that CKL had already got facilities in place with the Standard Chartered Bank "to do with that grain business". Thus the discussions amounted to a general conversation as to CKL's plans for the future. He could not recall the circumstances in which he had placed his signature in the "approved" box of the application form. He would not himself check to see if a facility had been in place. There should have been one in place "for an application like this" and if there were not, the fact should have been brought to the attention of senior management. Moreover, he said, it should have been the Head Office of his bank which issued the performance bond unless it was within the branch manager's authority to issue as regards the amount. There was evidence that the performance bond in question, being in respect of the sum of US$544,754, was beyond the branch manager's monetary limit.

72. Mr. Marron also told the jury that since CKL had no facility in place, Head Office should have been informed of the drawdown on the performance bond but it was not. This would not have been necessary if a facility in place had covered the amount drawndown.

73. We have to say, with due respect, that we find that there were no misdirections of the kind contended for by Mr. Litton. We find nothing untoward about any of the passages criticised. The judge's observations were legitimate in the light of the evidence as a whole and the matters discussed were fairly left to the jury. We mention that the judge made it absolutely clear (at p.25) that the defendants were not charged with procedural irregularities. The prosecution, on evidence which the jury were free to accept or reject, were seeking to establish that although it appeared that HLB had approved the issue of the performance bond, it was not an informed approval.

74. On the fifth day of the hearing of the appeal, a new ground of appeal was allowed, by leave, to be argued:

"There was no evidence from which an inference of guilt on count 1 could have been drawn against the appellant and the learned judge should have directed an acquittal on count 1."

75. Despite the fact that at the trial, counsel for D3 made a submission of no case to answer on his behalf, no such submission was made by Mr. Litton on behalf of the applicant. If we may say so, not to make such a submission was obviously a deliberate and carefully considered decision by experienced counsel. However, of course, whether or not such a submission was made at the trial, we are now bound to consider the contentions put forward. We do not propose to review all the evidence. The branch manager who would normally have been contacted (Mr. Li Ping Choi) was not approached. Instead, Mr. Chan Chi Wang was asked to "sign the bond" for the applicant. Not only was he not then the manager of the SPK Branch, but he had, by this time, been posted to Head Office. According to Mr. Chan, he told the applicant as soon as he telephoned him asking him to sign the bond, that "it was not in accordance with proper procedure as I had left the branch." He added that he had said he would think about it. He had doubts whether the applicant or CKL could readily meet a liability of US$544,740. He eventually agreed to sign the bond because I thought I might as well do him a favour for the last time, as the customer was not too bad." He said that he was aware that he had no authority to sign this document issued out of the SPK Branch of HLB. He said that the applicant had asked him to go to his (the applicant's) office in the Peninsula Centre; and that the applicant had telephoned again about the bond in the meantime. He thought it was after office hours that he had gone to CKL's office. There, he and D3 had signed the bond. He then told the applicant: "I will not sign any more after this bond." He had said that because he was afraid that there might have been a third and fourth bond ... "as it was not legal". It did not comply with normal procedure. The following exchange then took place between the witness and Mr. Marash:

"Q. Did you say that in front of the 3rd defendant?

A. I think we were together and after I have signed the bond, I said these words.

Q. Did Mr. WONG make any comment about that?

A. I don't think he responded by saying anything.

Q. And was it proper and in accordance with the bank's practice, Mr. CHAN, for you to go to a customer's office to sign up a performance bond?

A. It was improper according to bank procedure.

Q. And you had never done this before, had you?

A. Never.

Q. And should the process of issuing the performance bond, the actual issue of the document, involve the customer in any way?

A. The customer shouldn't be involved.

Q. Am I correct in my understanding that a performance bond is in fact a bank to bank agreement once the facility is properly. approved, and therefore that is the reason the customer shouldn't be involved.

A. Right.

Q. And is it further correct that at the Hang Lung Bank customers did not have access to the type of form that this document was typed on in the normal course of business.

INTERPRETER: Customers did not have ...

MR. MARASH: Did not have access. It is not a document that a customer could get from the bank.

A. Right."

We remark in passing that defence counsel did not object to what were clearly leading questions, and the judge did not intervene.

76. The prosecution also relied on the fact that a copy of the performance bond, dated 17th October 1985, bearing a different number, was faxed from the Regent Hotel to Co-Prosperity, CKL's agent in Korea. This related to the same sum as that shown on the September performance bond but was this time in the form of an irrevocable undertaking. Chan Chi Wang said that he had not signed this bond, although it appeared to bear his signature. The prosecution suggested that if senior management had really approved the issue of the bond in irrevocable form, all this would have been unnecessary.

77. Our own review of the evidence convinces us that the applicant indeed had a case to answer on count 1 and that Mr. Litton's original judgment was right. Reading the summing up as a whole against that evidence, we do not accept that the judge erred in failing to direct the jury specifically as to the alleged acts and declarations of the applicant which could constitute evidence of his participation in the conspiracy alleged.

78. In relation to D3, and his out of court statement, the judge gave a proper direction at p.9. D3 did not give evidence at the trial. The judge also properly directed the jury that there was no corroboration of the evidence given by Mr. Chan Chi Wang in respect of the applicant.

79. The applicant also makes complaint about the manner in which the judge dealt with the evidence of Mr. Um Eui-shik who was the officer of the Crocker National Bank who testified about D1's visit to him on 14th October 1985 when they discussed the instructions Mr. Um had received from KFA to draw down on the performance bond. This is what the judge said at pp.18-19 of the summing up:

"     Meanwhile, the first defendant was in Korea. Mr CHI of KFA was unhappy about CKL's request to extend the shipping date. He looked at the performance bond, which was revocable - contrary to the agreement - so he instructed Mr UM of the Crocker National Bank to draw it down.

On 14 October, Mr UM told you that the first defendant and Co-Prosperity were concerned about the drawdown; that he told them that the documents had already gone to Hong Kong. He said that the first defendant wanted to amend the performance bond to an irrevocable one in order to avoid the drawdown, but time was the problem. UM suggested that he contact Raymond CHAN of the Hang Lung Bank head office, who was known to him personally, in order to arrange the amendment and he said that he would accept what CHAN told him on the telephone. UM says that the first defendant then rang Hong Kong from his office but, not understanding Chinese, he didn't know what the first defendant had said or who he had spoken to. At any rate, UM never heard from Mr CHAN in the Hang Lung Bank, and CHAN did not hear from CKL.

You may think it is a mystery why a revocable performance bond was issued on an application for an irrevocable documentary credit. If the bank was at fault, you may think that this was an opportunity for CKL to get them to put things right, but that opportunity was not taken.

It is a matter for you, members of the jury, whether you believe Mr UM's evidence that he gave the first defendant a life-line via Raymond CHAN in the Hang Lung Bank.

Since the avoidance of the drawdown was the first defendant's main purpose in the visit to Korea between 14 and 23 October, you may think it is astonishing that he does not remember this - as he says. Yet, he remembers phoning Hong Kong from Mr UM's office.

Both the first defendant and the second defendant say that they think that a Korean bank would not have acted on a telephone call from Mr CHAN in those circumstances. On the other hand, members of the jury, you may think that it was their best chance. It has been suggested that it is irrelevant because Mr CHAN was not concerned with this business, but you may think it would have been worth their while, at least, to have asked his help."

80. Mr. Litton contended that Mr. Um's evidence was entirely neutral and so did not assist the prosecution case. There was no evidence that Raymond Chan had any authority to amend a letter of credit (or a performance bond issued in the form of one) which had been issued not by his own Bills Department but by the Bills Department of one of the branches of HLB. Nor was there any evidence that Raymond Chan, if he had been contacted, would or could have helped in the way suggested by Mr. Um or in any other way. Raymond Chan himself had given no evidence to such effect. The evidence showed that HLB had, at that time, two Bills Departments - one at the Head Office and the other at the SPK Branch. No suggestion had been made that one was subordinate to the other.

81. In these circumstances, suggested Mr. Litton, the judge's reference to a "life-line via Raymond Chan", his expression of astonishment that D2 had said that he did not remember "this" and his reference to the applicant's and D1's "best chance", were serious misdirections, as was the judge's formulation at the end of his summing up of the following question in the list of questions he drew up to assist the jury: "... is Mr. Um's evidence concerning Raymond Chan reliable" (pp. 63-64 of the summing up).

82. The burden of the case for the prosecution on this point was that all that Mr. Um required when approached was for HLB to issue an amendment to convert the original performance bond from a revocable to an irrevocable one (and the applicant's case was that Head Office had properly approved an irrevocable bond). And since Mr. Um was prepared to advise KFA to reverse the drawdown upon a mere verbal assurance from Mr. Raymond Chan that a written amendment would follow, all D1 had to do was to get the applicant, who was in Hong Kong, to speak to Mr. Chan so that the matter could easily and quickly be resolved. The prosecution suggested that the failure to take these obvious and simple steps was capable to giving rise to a reasonable inference that the applicant did not want to bring the existence of the September performance bond to the attention of Head Office in view of the fact that no proper and informed approval had been given to its issue.

83. In our judgment, the judge properly left the evidence for the jury to consider for what it was worth, and we do not accept that there were any misdirections or unfair comments on this aspect of the case.

84. In relation to count 9, Mr. Litton submitted that the allegation that at the material time there was a shortage of maize in China (and this fact had been relied upon to provide a motive for the alleged dishonesty of the defendants in attempting to substitute Thai maize for Chinese maize and in not shipping any maize at all until October 1985) had not been borne out by the evidence. All the prosecution had been able to establish was that the Beijing branch of China National had dispatched a telex on 12th August 1985 to the effect that they (by this was meant the Beijing branch) were in "short supply". The judge had been wrong, therefore, to direct the jury (at the foot of p.29) as follows: "So there was a shortage of maize in China at this time."

85. As we read the evidence led by the prosecution and the submissions made by Mr. Marash at the trial, it was not their case that there was a general shortage of maize in China at the material time. Rather, an attempt was made to show that CKL did not have access to maize from the PRC to meet their obligations under the September 1989 contract. Nor was it suggested that this shortage was the only motive for the applicant and D1 to attempt to substitute Thai maize for PRC maize and later to present the shipping documents to HLB without any maize being shipped. The prosecution's case was, however, that the unexpected drawdown of the performance bond by KFA necessitated the presentation of the false documents to HLB on 24th and 25th October since KFA, through their bank in Seoul, was pressing for payment under the bond, and that D1 and the applicant had to conceal the issue of the bond from the Head Office of HLB, and CKL did not have ready money to pay for the drawdown.

86. We do not accept that the judge misdirected the jury on this point. The jury heard the evidence and could not have misunderstood what the judge said.

87. It was also submitted on behalf of the applicant that the judge misdirected the jury when he said at p.34:

"Then on the 8th October CKL asked Dae Neung for a later shipping date because they had to provide a letter of credit to a third party. Of course, members of the jury, as I have said, they do not need a letter of credit this time to pay for the PRC maize. So do you think he is referring to PHD for the Thai maize. PHD at this time are pressing for payment from CKL but they are never paid."

It had been argued by the prosecution that the suggestion about a "letter of credit to a third party" in the telex dated 8th October 1985 to Dae Neung added weight to the Crown's suggestion that the applicant intended dishonestly to substitute Thai maize for PRC maize. The judge, argued Mr. Litton, had failed to remind the jury of the applicant's explanation which was to the effect that he did not want the Korean buyers to find out that he had secured very favourable payment terms with CKL's supplier Dalian Donglian. This had been done merely as a device to put pressure on the Korean buyers to extend the validity date of the letter of credit to 20th November 1985. Mr. Litton suggested that the judge should also have told the jury that there was no basis of fact for the Crown's theory that the defendants had intended to substitute Thai maize for PRC maize. He should further have reminded them of the evidence given by Mr. Chi Kil Jung that Grade A Thai maize was commercially a different product from the PRC maize which was the subject of the contract.

88. Mr. Litton also criticises the judge's comment at the top of p.60 of his summing up: "But you may wonder why all the money - some $30 million - was withdrawn while Dalian Donglian still had to be paid." He says that this was highly prejudicial unless the judge had reminded the jury of the evidence that the Hang Lung Bank had acted in a highly irregular and unfair manner by placing a stop order on all the proceeds of the bills, contrary to the previous arrangement made by the senior management of the Bank with CKL that only the equivalent of US$ one million was to be set-off by the Bank against the liability of the sister company Portent. Mr. Litton suggests that this misdirection was aggravated by the fact that, on the applicant's evidence, the reason for the withdrawal was at least partly to ensure that Dalian Donglian would be paid without delay; the money was withdrawn from Hang Lung Bank and placed on short term deposit with BCC to enable US dollars to be withdrawn in cash at short notice.

89. In our view, reading the summing up as a whole, the judge dealt with the defence case fairly. He could not have reminded the jury of every bit of evidence on both sides in this long and difficult case. In Regina v. Wallace, The Times 19 February 1982, Ackner, L.J. (as he then was) sitting with Stocker and Hirst, JJ., is reported to have said "that it was wrong for counsel to treat a jury as a computer expected to absorb highly complex evidence but then to consider them totally incapable of retaining any point of importance and in need of reminder not only in the defence closing speech but also by the judge in his summing up. A judge was entitled, and should normally assume, that a jury had a grasp of a case." This observation was adopted, without citation, by Sir Alan Huggins, V.P. in Wong Kam Tong and Others v. The Queen, Criminal Appeal No. 666 of 1981, 12th March 1982 (unreported) at p.8 of the transcript of the judgment. In R. v. Mackenney and Another (1983) 76 Cr.App.R. 271 Ackner, L.J. returned to the same point at p.277: "We frequently hear complaints by counsel that the trial judge has not rehearsed all the arguments which they addressed to the jury. He is of course under no such obligation."

90. We think that the judge left the defence to the jury in a way which the jury would understand so that they could do full justice to it.

91. The judge decided to give the jury an accomplice direction in regard to the evidence of Mr. Chan Chi Wang. The judge first said this:

"Now, it is not alleged in the indictment that the witness CHAN Chi-wang is an accomplice. He was arrested but he was not charged. An accomplice is a person who also takes part in the particular crime charged; but CHAN's evidence was such that you may think that he was a participant in the first count. Now, members of the jury, I direct you that it is dangerous to convict on the evidence of such a person without corroboration, that is confirmation, of his evidence and my job is to point out to you that he may be an accomplice but it is for you to decide if he actually is one. You ought not to convict on uncorroborated evidence given by an accomplice unless you are convinced of its truth."

He then directed the jury that, notwithstanding the absence of corroboration, they were entitled to convict if, having given full weight to the warning that it was dangerous to convict, they were sure the accomplice was telling the truth. It is argued on behalf of the applicant that the judge misdirected the jury "by misapplying the 'accomplice evidence' rule concerning the testimony of Chan Chi Wang and suggesting to the jury that the evidence was capable of establishing Chan Chi Wang as a 'participant in the crime' charged in count 1 when there was no such evidence before the court." Mr. Litton submitted that this amounted to an assertion by the judge that the crime had been committed when there was no evidence to that effect and that the applicant was therefore prejudiced.

92. We think that the judge was right to leave the question of accomplice vel non to the jury in respect of Mr. Chan. So far as he was concerned, on his own testimony, if the offence charged in count 1 was proved to have been committed, he was deeply involved in the activities which led to the indictment of the applicant and the other defendants. Indeed, Mr. Litton himself submitted to the jury that Mr. Chan had lied. We do not find any misdirection on this matter. On the contrary, had the judge not given that direction, the applicant would have had cause for complaint.

93. One of the witnesses called by the prosecution was Miss Shirley Fung. We do not find it necessary to summarise her evidence in order to address another ground of appeal which was added, by leave, during the hearing. The new ground was: "The judge erroneously permitted the prosecution to cast aspersions on the credit of a Crown witness [Shirley Fung] without correcting the same in his summing up". This is what Mr. Marash said during his closing address to the jury:

"Now, Kaneyoshi was never blamed until this trial for anything, not in the first defendant's statements, not in the second defendant's statements or in the civil affidavits. Do you think that the defendants have conveniently tried to pass this off on the missing Kaneyoshi? What do you think about Kaneyoshi's chances of taking a Filipino name and having a different passport? Do you think that's really likely, or was the situation that once it was shown that Shirley FUNG's story of meeting this Japanese man in the Regal Meridien Hotel, who at that stage the defence were clearly suggesting might have been Kaneyoshi, was impossible, because the immigration records show that Kaneyoshi wasn't here, so this fantastic story was hashed to get around that insuperable difficulty? Even the first defendant didn't agree with Shirley FUNG's story that he gave her a Japanese man's name in the Regal Meridien Hotel, and I would suggest to you that you should discount her evidence on that point. She was an ex-employee. It was rather amazing how, on being asked about that laytime statement some five years after the event, she suddenly had this extraordinary recollection of what had occurred, and you might well regard her evidence with some considerable suspicion. Certainly her superior, Winnie FUNG, seemed to know absolutely nothing about it."

94. In this context, we draw attention to the observations of Lord Parker, C.J. in Reg. v. Oliva [1965] 1 WLR 1028, where he said, at p.1035: "the prosecution do not, of course, put forward every witness as a witness of truth ...". Whether or not Mr. Marash was entitled to disparage his own witness in this way (and, no doubt, he was placed in a difficult position because he had no idea from her witness statements that Miss Fung would say what she did say about the Japanese man) we do not think that it was an irregularity that the judge did not "correct" Mr. Marash's submissions at the time or later in the summing up. At p.5 the judge gave it as his opinion that Miss Fung was a good witness and at pp.47-48 summarised her evidence fairly and without disparagement:

"The documents that CKL had to produce for presentation to the bank were the commercial invoice, beneficial statement, laytime statement, packing list, drafts and the application forms, and this was all done between the 22nd and the 24th. Shirley FUNG says that the first defendant rang from Korea when she rang him up because she could not get information to fill in the laytime statement, and he told her to ring a man in China with a similar name to HON, which she cannot remember, or a Japanese man, whose name she has also forgotten, at the Regal Meridien Hotel. She got the information from a Japanese man in the Regal Meridien Hotel on 23rd October. This man met her in the lobby after she had telephoned him, and he gave her the information for the laytime statement in a handwritten draft which she typed out into JRM/49/4 and threw away the draft. But the first defendant does not agree with this evidence. He says he told her firstly to telephone Kaneyoshi or to telephone HON Ming-tak, and the numbers she could get from Regina TAM.

So, members of the jury, you may wonder who benefits from this evidence. If Shirley FUNG is right, it tends to prove that Kaneyoshi or a colleague was in Hong Kong to deliver the shipping documents to CKL, but if the first defendant is right, it really takes the matter no further."

95. While it must be said that precisely what the judge meant by the concluding words of that passage is obscure, we are not persuaded that the applicant was in any way prejudiced by anything that Mr. Marash might improperly have said about Miss Fung.

96. This was a complex case and the learned judge had a difficult task. Against the background of the evidence led at the trial (and during the eight day hearing of this application we were taken through the most material parts of the transcript) in our judgment the summing up was fair and adequate. None of the grounds of appeal advanced has caused us any concern that either of the verdicts of guilty might be unsafe or unsatisfactory.

97. For the reasons we have given, the application is refused

Representation:

Mr. Henry Litton, Q.C. and Mr. A. Mak (Iu, Lai & Li) for the applicant

Mr. Daniel Marash and Mr. I. McWalters (Crown Prosecutor) for the Crown