HKSAR v. Chan Max Kwok Leung and Another
Read the full judgment text of HCMA 1101/2005 on BabelCite. This High Court CFI judgment was delivered on 24 March 2006.
1. Both appellants were convicted after trial of one count of conspiracy to defraud and the 1 st appellant was also convicted of two further counts of false accounting. They now appeal against their conviction.
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HCMA 1101/2005 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MAGISTRACY APPEAL NO. 1101 OF 2005 (ON APPEAL FROM ESCC 3116/2004) ____________ BETWEEN
____________ Before: Deputy High Court Judge E Toh in Court Date of Hearing: 6 February 2006 Date of Judgment: 24 March 2006 _______________ J U D G M E N T _______________ 1.Both appellants were convicted after trial of one count of conspiracy to defraud and the 1st appellant was also convicted of two further counts of false accounting. They now appeal against their conviction. Charge one 2.The prosecution alleged that the both defendants conspired with a man called Butler to defraud the Architect Services Department (hereinafter referred to as “ASD”) by submitting information to the Department purporting to show that the defendant’s company had supplied the required supervisory staff in accordance with the contract between the defendant’s company and the department. 3.At the material time, both defendants were employed by an architectural firm known as RMJM Hong Kong Limited (hereinafter referred to as “RMJM”). The 1st appellant was the senior architect in the firm and the 2nd appellant was a partner in the firm. Butler was the managing director of RMJM. 4.In May 2001, Butler on behalf of RMJM had signed the contract with ASD appointing RMJM as the architectural consultant in the final phase of the school improvement programme and RMJM was to be remunerated on the basis of a percentage of the eventual construction cost. The 1st appellant was appointed the project leader, working directly under the 2nd appellant who was appointed the project director. 5.Under section 16 of the contract (exhibit P1), RMJM was required to appoint three senior architects and three junior architects to work full time on the project. RMJM was also required to submit monthly time log sheet, detailing the hours the appointed persons had worked on the project. On 16 July 2001, the 1st appellant submitted an organisation chart naming the six persons who would be working full time on the project in accordance with section 16 of exhibit P1. These six persons were the 1st appellant himself, Ms Esther Chow and Mr Stephen Cheung, as senior architects. The junior architects were Mr Raymond Chan, Mr Pierre Tong and Ms Helen Leung. The 2nd appellant was named as the project director. 6.The first package of six time log sheet covering period May to October 2001 was submitted by the 1st defendant to ASD under cover of a letter signed by him (exhibit P6) on 22 October 2001. These time log sheets showed that the above named six persons had been working full time on the project during that six months period. Each of the log sheet was certified correct and signed by the 2nd appellant in his capacity as a director of RMJM. Subsequent time log sheet was submitted in a similar manner for the periods covering October 2001 to May 2002 was sent to the ASD (see exhibit P8 to P11). Total of 13 time log sheets were submitted to the ASD between October 2001 and June 2002 and these were prepared by PW4 from information and material given to her by the 1st appellant. Evidence was given that after PW4 had typed the documents, they were checked by the 1st appellant and then taken into the 2nd appellant’s office for his signature. The signatures of the 1st and 2nd appellant on the relevant documents were identified by PW5, the accountant of RMJM. 7.PW5 gave evidence that all employees of RMJM were required to keep time sheets and these time sheets were sent to the accountant who entered them into her computer when she checked her record for the period between May 2001 and May 2002. She discovered that Ms Esther Chow had logged only five hours on the ASD project and Ms Helen Leung had logged forty-six hours on this project while Mr Stephen Cheung, Mr Pierre Tong and Mr Raymond Chan had done old work whatsoever on this project (see exhibit P40). It is noted that the time log sheet submitted to the ASD had claimed that each of the architect had worked for a total of 2,340 hours during that period. 8.PW1, 2 and 3 who were personnel from the ASD involved in this project said that they accepted these documents from RMJM and believed that they were genuine. It was also the evidence of PW1 that had RMJM not allocated the necessary staff as required by section 16 of P1, she would have issued them an adverse report against RMJM which may have resulted in the suspension of the contract between RMJM and ASD. 9.In his statement to the ICAC under caution (see P177), the 1st appellant admitted that these organisation charts and time log sheets submitted to the ASD included names of architects who have not actually worked on the project. But he said this was done in order to comply with the ASD’s requirements. The 1st appellant also said in this interview that he did discuss with the 2nd appellant in August 2001 about this practice of submitting the fourth time log sheets to the ASD, which, of course, is not evidence against the 2nd appellant. 10.The 2nd appellant in his interview (see exhibit P170) had admitted that he had discussed submitting these inaccurate time log sheets to the ASD with the 1st appellant even though he knew that they were inaccurate and that he had signed them despite the fact that he knew that these were not true records and he did not like doing it. Charges 2 and 3 11.As part of this project, ASD had indicated that they would consider claims for work actually done on six of the schools in the project which had withdrawn from the project. In early November 2001, the 1st appellant had given instructions and the handwritten draft to PW5, the accountant, and told her to prepare an invoice for work done on four of the withdrawn schools. This draft contained a list of names of the architects who had purportedly worked on the schools which included Mr Stephen Cheung, Mr Raymond Chan and Mr Pierre Tong. The 1st appellant instructed PW5 to work out the hours they had spent on each of the schools by dividing a full working month by 33 and allocating the number of hours to each school on the list. PW5 did as she was told, and this document is produced as exhibit P12. This invoice was checked by the 1st appellant and sent to ASD under cover of a letter signed by Butler on 12 November 2001. PW5 gave evidence that she had asked the 1st appellant why the abovenamed three persons were included in the invoice when they had not done work, the actual work. And the 1st appellant told her that this was done so that ASD would raise no queries. This invoice was subsequently rejected by ASD. The 1st appellant again instructed PW5 to prepare a second invoice covering the same schools showing Mr Stephen Cheung and Mr Raymond Chan as having worked on these schools without allocating any working hours to Mr Pierre Tong. PW5 did so, and a second invoice (exhibit P14) was prepared together with supporting tables. Again, PW5 queried the 1st appellant about the staff involvement and she received the same explanation from the 1st appellant. This second invoice was subsequently sent to the ASD but had also been rejected by the ASD. Case of the 1st appellant 12.The 1st appellant elected to give evidence at the trial. He said that when he first started work on the project, he was not aware of the provision in sub-section 16 of exhibit P1 even though he was the project leader. The 1st appellant said that in October 2001, he had spoken to PW2 (Ms Rosaline Wai) about the time log sheets. He said he told PW2 that RMJM were not meeting the staffing requirements as required under section 16. The 1st appellant said that PW2 told him that although she sympathized with him, she had no power to change the requirements, and that he should just submit the time log sheets in accordance with the organisation chart. The 1st appellant alleged that PW2 also said to him that she would just file these time log sheets and that the most important thing was for them to do the job. As a result that this conversation the 1st appellant said he compiled the time log sheets as subsequently produced the trial, and gave them to the 2nd appellant to certify. However, when PW2 was cross-examined at the trial, PW2 said she did not recall the conversation. 13.The 1st appellant said that when he handed the first set of time log sheets (exhibit P6) to the 2nd appellant to certify, he had explained to the 2nd appellant that the time log sheets did not represent the true position. The 1st appellant said that the 2nd appellant told him that he would consult with Butler before he signed and subsequently the 2nd appellant certified the time log sheets and they were sent to ASD under cover of a letter from the 1st appellant. The 1st appellant said that the remaining three sets of time log sheets were compiled in a similar manner. 14.Basically, the 1st appellant’s defence was that he was not dishonest and he did not have the requisite intent to defraud the ASD, as the log sheets were merely a paper exercise to comply with the contractual requirement and the inaccuracy of such had been revealed to PW2, Ms Wai, who did not appear overly concerned about it. It was also submitted by the defence that the indifference displayed by the ASD personnel as to how the man hours were computed and to the absence of the relevant personnel at meetings between PW3 of the ASD and the 1st appellant on behalf of RMJM showed that the ASD did not place any importance on the accuracy of the submitted log sheets. Mr So on behalf of the 1st appellant had also submitted to the learned Magistrate that there was no reduction in staff requirements after certain schools had withdrawn from the project. According to the contract, if the number of schools in the project falls under 30, the consultant, that is RMJM, needed only to provide two senior architects and two project architects to work full time on the project. But despite the fact that the number of schools had fallen to below 30, the continuing submission of the full staff list covering over 30 schools is consistent with the appellant’s contention that it was merely a paper exercise regardless of the practical reality. And Mr So submitted that PW2 knew of the situation and therefore there was no discussion about the necessary reduction. 15.As for the invoice in the second charge, the 1st appellant alleged that he only prepared the tables showing the hours worked, by the staff members of RMJM, and he did not insert the hourly charges nor the total amount claimed. He also alleged that he had handed the chart to Butler and did not see them again and did not know that an invoice would be prepared from them. As noted by Mr Dunn, in his submissions, this evidence is contradicted by PW5 who said that it was the 1st appellant who gave her the information for her to prepare the tables and that they were shown to the 1st appellant after she had done them for his approval before she prepared the invoice based on the tables. 16.In relation to the third charge, the 1st appellant said that he did not prepare the tables nor the invoice though he did draft a covering letter for Butler’s signature. Again, as Mr Dunn pointed out, this is contradicted by PW5. 17.As accepted by Mr So, there is no dispute that the information relating to the personnel, in the invoices were inaccurate and that the real issue was whether the 1st appellant produced the invoices and whether he was dishonest. Mr So submitted that as the 1st appellant was only responsible for the technical aspects of the project, it was not his responsibility to deal with invoices and the person who dealt with such would be the managing director, Butler, and this, Mr So submitted, is according to the evidence of PW6, an associate architect in RMJM. Mr So also submitted that PW5 was a witness, giving evidence under immunity, so she was keen therefore to protect herself rather than to tell the truth. Mr So also submitted that PW5 had said in court that she had asked the 1st appellant to write a letter to ASD explaining the position regarding the second invoice and she claimed that she had told the ICAC in her statement, but as Mr So pointed out it is an admitted fact in exhibit P180 that PW5 did not in any of her statements supply this information to the ICAC. Mr So also pointed out that PW5 alleged that the hourly rates of individual staff was confidential and would not be shown to anyone without the permission of Butler. If that was so, Mr So said, there was no reason for PW5 to confirm with the 1st appellant before she passed the tables to Butler. Mr So also submitted that the 1st appellant had a clear record and the character reference letters submitted to the court showed that he had been a person of exemplary character and therefore would have less propensity to commit an offence and is therefore more credible in his evidence. There was also no personal financial advantage to the 1st appellant in committing these offences and, in relation to the first charge, Mr Yu also submitted that PW2 knew the full situation as 1st appellant had spoken to her about the staffing problems and therefore the 1st appellant had never been dishonest. Case for the 2nd appellant 18.The 2nd appellant also elected to give evidence at the trial. He basically said that although he had been informed that he had been appointed project director, he was only concerned with statutory compliance of the work and was unaware of the requirement of section 16. He said that when the 1st appellant asked him to certify the first batch of the time log sheets, the 1st appellant had assured him that this had been cleared by Butler and PW5, and therefore he did not check the contents but simply signed at the bottom of the sheet. The 2nd appellant denied that he had told the 1st appellant that he would speak to Butler before certifying them. The subsequent time log sheets were signed by him in a similar manner without further talking to the 1st appellant on the subject. Basically, the 2nd appellant denied that he was aware at the time that these log sheets had presented a false picture to the ASD and that the 1st appellant had told him this. Mr Dunn pointed out that in his interview with the ICAC, the 2nd appellant said that the 1st appellant had told him at the time when he was certified the first batch of time log sheets that the company could not possibly put all the people on the list to work on the project, because it was not cost efficient and the 2nd appellant then said he told the 1st appellant that there was no reason why RMJM could not just put down the people that he wanted to which would be the people that ASD wanted to see on the list. Mr Dunn therefore submitted that it was clear that the 2nd appellant knew when he certified the first set of time log sheets that they did not reflect a true picture of the number of people working on the project and therefore the 2nd appellant knew he was certifying a false return. It was submitted by Mr Boyton on behalf of the 2nd appellant that the evidence, for the prosecution witnesses who worked for RMJM, showed quite clearly that the 2nd appellant had little or limited involvement in the project. Mr Boyton also suggested that the 1st appellant’s evidence ought not to be believed because in the 1st appellant’s record of interview, he said he could not remember the details of his alleged discussion with the 2nd appellant. Mr Boyton submitted that there was no evidence that the 2nd appellant was ever dishonest, he was not privy to many of the information and he did not know the specific requirements of Clause 16 of the contract, and he had signed the log sheets as a result of the misrepresentations made by the 1st appellant. Mr Boyton also submitted that the appellant has a clear record and had worked for RMJM for over 38 years. Mr Boyton submitted that there was no evidence that the 2nd appellant knew what had been agreed between the 1st appellant and Butler in the conspiracy nor did he know what the true purpose of the log sheets were. Oral Verdict 19.The learned Magistrate delivered his oral verdict with, as he said “brief reasons”. After reciting the evidence for the prosecution and reminding himself that the burden of proof was on the prosecution, the learned Magistrate identified the issue in this case as being whether the prosecution had proved that the 1st and 2nd appellants had acted dishonestly when they submitted the documents to ASD and that in considering this, he had considered the case of Reg. v Ghosh, the learned Magistrate after dealing briefly with the evidence of the 1st and 2nd appellant went on to say that he found the 1st appellant to be an unimpressive witness and that certain aspects of his evidence in court were contradictory to the account he had provided to the ICAC, and that his evidence had an air of “inherent improbability about it” and he did not believe the evidence of the 1st appellant. The learned Magistrate also did not believe the evidence of the 2nd appellant as he found his evidence incredible and said that the evidence of the 2nd appellant given in court was not “in keeping” with the account he gave to the ICAC. So the learned Magistrate concluded that he did not believe the 2nd appellant’s evidence nor the exculpatory part of the mixed statements. 20.The learned Magistrate went on to find that the prosecution witnesses were honest and reliable and he noted that PW5 had given evidence under an immunity and after giving himself the proper warning, he found her evidence to be honest and reliable. And thus he convicted both appellants of Charge 1 and the 1st appellant of Charges 2 and 3 also. Statement of Findings 21.The learned Magistrate prepared a one page Statement of Findings in which he said that he had reviewed the evidence and the decision to convict given on 27 May 2005 and that he was “content to adopt the decision into the Statement of Findings, so that I will not repeat the details here. I have nothing further to add.” Grounds of appeal 22.Mr Lam on behalf of the 1st appellant submitted that the learned Magistrate had failed to sufficiently consider the evidence of the 1st appellant particularly in that he said he had spoken to PW2, Ms Rosaline Wai, about the staffing problem, and came away with the conclusion that it was merely a paper exercise. And that the learned Magistrate had not given reasons for rejecting the evidence of the 1st appellant nor did the learned Magistrate point out the contradictions between the evidence of the 1st appellant in court and what he had said to the ICAC which had led him to disbelieving the evidence of the 1st appellant. Mr Lam further submitted that no contradictions existed between the evidence of the 1st appellant in court and his statement to the ICAC in relation to charges two and three and the failure of the learned Magistrate to point out the reasons as to why he rejected the evidence of the 1st appellant had inevitably led to the conclusion that the learned Magistrate had not sufficiently considered all the evidence and had wrongly rejected the evidence of the 1st appellant, thus making the conviction of the 1st appellant unsafe and unsatisfactory. 23.Mr McGowan, on behalf of the 2nd appellant, submitted that there was excessive delay in this case causing the conviction against the 2nd appellant to be rendered unsafe and or unsatisfactory. It is pointed out that the learned Magistrate delivered his oral verdict on 27 May 2005 which was two months after closing submissions had been made. The notice of appeal was filed by the appellant on 23 June 2005 and the learned Magistrate did not provide his Statement of Findings until 25 October 2005. These delays, Mr McGowan suggested, is contrary to the 2nd appellant’s rights under article 11 of the Bill of Rights Ordinance, Cap. 383, which provides for an accused person to a “trial without undue delay”. Mr McGowan also submitted that the delay by the learned Magistrate in providing his Statement of Findings is contrary to section 114(b) of the Magistrate’s Ordinance, Cap. 227 which says:
24.Mr McGowan submitted that in view of the lack of reasons given by the learned Magistrate as to his finding in relation to the credibility of the prosecution witnesses and the defendant. The appellant is unable to prepare proper grounds of appeal not knowing how the learned Magistrate had arrived at his ultimate decision. Delay 25.Whilst it is appreciated that a magistrate has a very difficult task, as he has to deal with a large number of cases and all of them, upon conviction, call for reasons to be provided and, ultimately, Statement of Findings to be prepared, this court, however, has a duty, on appeal, to look at the delay and consider whether, in the circumstances, the delay was a reasonable one. As Mr McGowan pointed out the oral verdict was delivered two months after closing submissions and it was four months after the notice of appeal was filed that the learned Magistrate delivered his Statement of Findings. As Mr Man for the respondent pointed out article 11 of the Bill of Rights Ordinance provides for an accused to be tried without undue delay. The trial of the 2nd appellant had proceeded without undue delay. The only delay in this case was the learned Magistrate taking four months to prepare his Statement of Findings. The two months between the closing submissions and the oral reasons of verdict was not inordinate because, as Mr Man pointed out, this was a case which involved over a hundred and eighty documentary exhibits and all parties had submitted lengthy written submissions. I do agree with Mr Man that the time taken by the learned Magistrate to complete his Statement of Findings did not amount to a breach of Article 11 of the Bill of Rights Ordinance, and that the two months’ delay for the learned Magistrate to deliver his verdict was, in the circumstances, not an unreasonable one. However, what causes this court grave concern is the fact that, although the learned Magistrate took four months from the lodging of the notice of appeal to the filing of his Statement of Findings, the learned Magistrate provided no further findings on the facts or other grounds for his decision apart from saying that he adopted the brief reasons he had given back in May. So under those circumstances, there was no reason why the learned Magistrate had to take four months to prepare this rather insubstantial document. This very fact of itself lends some support to the argument of counsel that, by the time the learned Magistrate came to prepare his Statement of Findings, he had been unable to properly remember the evidence and therefore was not in a position to expand upon his “brief reasons” in the oral verdict he delivered back in May 2005. I must say that the learned trial Magistrate’s Statement of Findings is remarkable for its redundancy. Conclusion 26.Although the case involves many documentary exhibits, the issue is not a particularly difficult one. As I have noted above, the issue in the case of the 1st appellant was whether he was dishonest and had conspired with the others to defraud the ASD. Thus, a major part of the trial Magistrate’s consideration would be the credibility of the prosecution witnesses particularly PW2 and PW5 and the credibility of the 1st appellant. 27.In relation to PW2, in assessing her evidence, the learned Magistrate would have had to take into account, counsel’s submission that her evidence that she could not remember the conversation in which the 1st appellant had told her about the staffing problem of RMJM shows the indifference the ASD witnesses had to the requirement under section 16. Defence counsel had pointed out that if it was an important requirement then PW2 would have either said she remembered the conversation or deny categorically that it had ever happened. The learned trial Magistrate did not deal at all with this aspect of her evidence. 28.The other matter which gives rise to concern is the failure of the learned Magistrate to properly deal with the evidence of PW5, the accountant in the firm. Her evidence is crucial and it goes a long way to proving the knowledge of the 1st appellant both in the first charge and the second and third charges. Although the learned Magistrate did remind himself to be cautious about the evidence of PW5, in that she was a witness giving evidence under an immunity, he had failed to deal with the submission of counsel that her evidence in court was in direct contradiction to the admitted fact, exhibit P180, in that PW5 had said in court that she had asked the 1st defendant to write a letter explaining the curious position of the second invoice and that she had told the ICAC this in her statement, but this was contradicted by paragraph 2 of the admitted facts which certifies that she had never given the ICAC this information. It may be that the learned Magistrate had, at the time, considered this submission and decided that it was a mistake made on the part of PW5. I cannot second guess what may have been in his mind and it was important for the learned Magistrate to have dealt with this either in his oral reasons or in his Statement of Findings. Unfortunately, the learned Magistrate merely broad brushed it by saying that he found PW5 to be honest and reliable. 29.Another problem that also arises from this “broad brush” technique adopted by the learned Magistrate is that he had also failed to point out the cogent areas where he said that the 1st appellant had contradicted himself in court from what he said to the ICAC in the video recorded interview. This is particularly important because it is one of the factors which caused the learned Magistrate to find that the 1st appellant was not credible. Whilst it is true, as Mr Man for the respondent pointed out, a trial judge does not need to write out in great detail every fact that he had considered, yet he does have to deal with the important facts and issues in the case so that an accused person upon conviction would know just why he was convicted and why he was found to be an incredible witness. 30.In relation to the 2nd appellant, this “broad brush” technique of the learned Magistrate showed more starkly the unfairness of this method he had adopted. Again, in relation to the 2nd appellant, the issue is not a difficult one, it is his knowledge of what was going on and whether he was part of a conspiracy. 31.In the 2nd appellant’s case, he said that he was not actively involved in the project and did not even know that he was, purportedly, the project director nor did he know about the requirement of Clause 16. It would appear from defence counsel’s submissions that some of the prosecution witnesses had in some way supported the defence contention that he was not a key personnel involved in the project. 32.It is important in a conspiracy that the prosecution has to prove the agreement. Very often, the agreement and the intent or knowledge of each of the parties to the conspiracy can be proved indirectly by circumstantial evidence. It is therefore incumbent on a trial judge who, at the end of the day, has to decide if such an agreement exists and if there was such an agreement was a particular accused involved, to set out in his reasons, how he came to that conclusion. The fact that he did not believe the 2nd appellant does not mean that the prosecution has proved its case. It is for the learned Magistrate to set out on what evidence he believed showed that the 2nd appellant knew what was going on and had agreed to join in the conspiracy. Unfortunately, the learned Magistrate adopting the “broad brush” technique had failed to deal properly with the important evidence of the conversation the 1st appellant purportedly said he had with the 2nd appellant, which the 2nd appellant had denied. 33.The learned Magistrate in saying that he did not believe the evidence of the 1st appellant at all, means that he therefore did not believe that such a conversation took place between the 1st and 2nd appellants about the staffing inadequacy. If that is the case, then it lends credence to the evidence of the 2nd appellant that such a conversation never took place, if that is so, then the learned Magistrate had to deal with the credibility of the evidence of the 2nd appellant in light of his findings. The learned Magistrate in his oral reasons merely said that he found the 2nd appellant’s evidence incredible and that,
Again, as in the case of the 1st appellant, it was incumbent upon the learned Magistrate to indicate the important aspects of the evidence of the 2nd appellant which he found to have materially been contradicted by what he said in his interview with the ICAC. This was not done. 34.At the end of the day, this court is left with the distinct impression that the conviction by the learned Magistrate had not been properly considered and therefore the convictions are indeed unsafe and unsatisfactory. 35.Having come to that conclusion, I consider that the evidence in this case is of such a nature that this may be a proper case to be sent back to the Magistrates’ court for a re-trial. However, at this stage I will not make a decision on the matter of re-trial until I have heard counsel on this matter on the day when I deliver this judgment. So the appeal is allowed, the conviction of the appellants are set aside. The matter of the re-trial will be decided after counsel’s submissions.
Mr Jonathan Tak Ho MAN, Senior Government Council, for the Respondent Mr Osmond Lam, instructed by Messrs Pang, Wan & Choi, for the 1st Appellant Mr James HM McGowan, instructed by Messrs Lee & Chow, for the 2nd Appellant |