HKSAR v. Lau Sui Hing and Another

CACC 111/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL 

CRIMINAL APPEAL NO. 111 OF 2008 

(ON APPEAL FROM DCCC 784/2007)

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Before: Hon Yeung JA, Suffiad and Reyes JJ in Court

Date of Hearing:   9 October 2008

Date of Judgment:  21 October 2008

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J U D G M E N T

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Hon Yeung JA (giving the judgment of the Court):

The Facts

1.On 18 March 2005, Mr Wan Yuen-lam went to Macau to gamble in a casino and lost all his money. Someone approached him and lend him $200,000 in chips, which Mr Wan also lost. He was escorted back to Hong Kong and told to repay $250,000.

2.In the next few days and on the instruction of the lender, Mr Wan and his family members paid $120,000 into account number 586-6-018988 (“Account A”) and $130,000 into account number 109-9-04175 (“Account B”), both of HK Bank, in settlement of the $200,000 loan.

3.The $250,000 repayment represented an effective interest rate of over 2,200% per annum, far exceeding the 60% permitted under the Money Lenders Ordinance Cap 163.

4.On 12 April 2005, another gambler - Mr Raymond Tang, having lost several thousand dollars in a Macau casino, was invited to join a VIP Club to obtain a $30,000 loan, which he also lost.

5.Mr Tang was escorted back to Hong Kong and handed over to the lender’s associates who demanded repayment of the loan. Between 12 April and 4 May 2005, Mr Tang had to repay not less than $60,000 in settlement of the $30,000 loan by bank transfers and cash deposits into Account A or Account B.

6.The effective interest rate on the $30,000 loan was also many times over the permitted 60%.

7.The 1^st applicant Lau Sui-hing, and the 2^nd applicant Lau Sui-cheong are brothers, and they were respectively the holders of Account A and Account B, opened separately in 1996 and 2004.

8.The bank statements showed that between 17 March and 11 May 2005, there were 33 deposits of $954,100 into Account A, of which $953,900 was withdrawn in 37 transactions shortly after the deposits were made. Between 12 March and 17 May 2005, there were 56 deposits of $1,554,000 into Account B, which sums were completely withdrawn in 69 transactions, again shortly after the deposits were made.

9.HK Bank closed both accounts on 18 May 2005 because of abnormal transactions. Neither applicant went to the bank to make inquiry about such closures.

10.The applicants did not register any business or file any tax return between 2003 and 2005.

11.The applicants were arrested on 7 June 2006 at Room 904, Hang Lai House, Cheung Hang Estate, Tsing Yi.

12.In subsequent interviews by police officers, the 1^st applicant said he first met Ah Chi, whose full name he did not know, in late 2004. Ah Chi told him at a dinner in early 2005 that his friend would lend him some money and he needed an account to receive the money. He said as he was hurrying back to the Mainland, he asked the 1^st applicant to lend him his account for two days.

13.The 1^st applicant said that he had not used Account A, opened when he was about 10 years old, for a long time and had lost the passbook. However, he still retained the bankcard and remembered the password, and was therefore able to give them to Ah Chi.

14.The 1^st applicant said he was just helping a friend and he did not ask why money had to be deposited into his account. The 1^st applicant said he subsequently telephoned Ah Chi to try to get back the bankcard, but on the occasions that he was able to contact him, Ah Chi said he would return it at the next meeting.

15.In the end, the 1^st applicant failed to get back the bankcard and had not seen Ah Chi again, saying that he had no means to find him.

16.The 1^st applicant admitted that when Ah Chi asked to use his account to deposit money, he found it questionable and he was slightly worried that he might be held liable. He said that subsequently he did think of going to the bank to enquire, but was deterred by the $300 fee required to get the monthly statements when he had lost the passbook.

17.The 1^st applicant further said when he was told that his account was closed because of questionable transactions, he asked Ah Chi and was told that the bank had probably found that  “the account was not used in the usual times and therefore when money was suddenly deposited they closed the account.”

18.The 1^st applicant denied knowing anything about the transactions in his account between 12 March and 17 May 2005.

19.The 2^nd applicant, in interviews by the police, also claimed to have met Ah Chi, whose full name he did not know, in late 2004. The 2^nd applicant said he last saw Ah Chi at a dinner when Ah Chi asked to use his bank account and that of his brother for a few days, saying that he needed them urgently.

20.The 2^nd applicant said Ah Chi did not return the bankcard to him and he was unable to get in touch with him. He also said that he was busy preparing for an examination, and therefore did not further look for him.

21.The 2^nd applicant said he had no reason to suspect that Ah Chi would use his account to do anything wrong and, as he had no money in his account, he was not worried. The 2^nd applicant admitted that he had not made any enquiry after being informed of the closure of his account and he did not report the matter to the police.

22.The 2^nd applicant denied knowing anything about the transactions in his account between 12 March and 17 May 2005.

23.A witness, Mr Ho Man-kit (“Ho”), claimed to be present at a restaurant in Tsuen Wan with the applicants when Ah Chi and another joined them for dinner. He said he witnessed each of the applicants gave a bankcard to Ah Chi.

24.Ho attended an identification parade on 6 August 2007 when he identified Shiu Hong-chi as Ah Chi.

The Charges and The Conviction

25.Each of the applicants was charged with an offence of dealing with property knowing or having reasonable grounds to believe that the property represented proceeds of an indictable offence.

26.The prosecution alleged that the applicants dealt with the monies in their accounts and that they had reasonable grounds to believe that the monies were proceeds of an indictable offence, namely an offence of lending money at an excessive rate under the Money Lenders Ordinance Cap 163.

27.The applicants pleaded not guilty to the charges before Deputy Judge Dufton in the District Court. They were, however, convicted as charged. The 1^st applicant was sentenced to 18 months’ imprisonment and the 2^nd applicant was sentenced to detention in a Rehabilitation Centre.

28.The 1^st applicant sought leave to appeal against both conviction and sentence, and the 2^nd applicant sought leave to appeal against conviction only.

29.At the beginning of the hearing, the 1^st applicant, through his counsel, Mr Tong Ming, informed the court that he would not pursue his application for leave to appeal against sentence, which was dismissed. The remaining issue is their application for leave to appeal against conviction.

The Evidence And The Defence

30.The evidence of Mr Wan and Mr Tang of how they borrowed money in Macau and then repaid the loans at excessive interest rates was not disputed. The relevant bankers’ affirmations relating to the activities of accounts were admitted. So was the evidence that neither applicants had registered any business or filed any tax return between 2003 and 2005.

31.The defence was that the applicants did not deal with the monies in their respective accounts as they had lent those accounts to Ah Chi. The applicants’ case was that they were not aware of the transactions in their accounts and had no reason to believe that those transactions related to proceeds of an indictable offence.

32.The 1^st applicant gave evidence and repeated basically what he told the police during the interviews.

33.The 1^st applicant said he knew where Ah Chi lived and that he worked as a vehicle attendant/delivery worker, but he did not know the name of his company.

34.When asked why he still kept the bankcard, he said he did not use the account himself but would sometimes use it for clients to pay their insurance premiums, and therefore he still kept the bankcard in the wallet.

35.The 1^st applicant said that he did not tell the police all the details because he was not asked. He insisted that Ah Chi told him that he needed the bank accounts urgently as his friend was giving him money. He said he did not ask Ah Chi details of why he needed his account as he was just trying to help a friend to solve a problem.

36.The 1^st applicant admitted that he did not actually find out why his account was closed because there were too many people in the bank and a fee was required, although he did go to the bank to try to find out what was happening to his account and what Ah Chi was doing with it.

37.The 1^st applicant said he was not concerned when informed of the undesirable transactions as the account was of no use to him and whatever money therein did not belong to him.

38.The 2^nd applicant did not give evidence, but relied on what he told the police in the interviews.

39.The applicants called Ho to give evidence to confirm that at the dinner when the applicants and Ah Chi were present, Ah Chi asked to borrow cash withdrawal cards. He later learnt that both applicants had lent their bankcards to Ah Chi.

40.Ho said he had only met Ah Chi twice, the first being a short meeting in a BBQ with a large group and the other being the dinner when Ah Chi borrowed the bankcards from the applicants. Ho also said that the 1^st applicant had told him that he did not ask Ah Chi to return the bankcard because his bank account had no money and he seldom used it.

The Judge’s Findings

41.The judge rejected the 1^st applicant’s explanation that he had lent his bankcard to Ah Chi, saying that there were discrepancies between his evidence and what he told the police.

42.The judge found it improbable that anyone would lend a bank account to another person in the circumstances as suggested by the applicants, or that a Hong Kong company would carry on business in the way Ah Chi said it would.

43.The judge rejected the 1^st applicant’s evidence that he had the bankcard with him because he occasionally used the card to help his clients to pay insurance premiums; after pointing out his story to the police was that he had not used the account since 1997.

44.The judge also rejected the 1^st applicant’s explanation of why he did not make proper enquiries despite being told that there were undesirable transactions in his account.

45.The judge dismissed the 2^nd applicant’s explanation to the police that he lent his bankcard to Ah Chi in the manner he described, pointing out that he did not know Ah Chi well and that his explanation had not been made or repeated on oath, and had not been tested by cross-examination.

46.The judge dismissed Ho’s evidence, pointing out that he had only met Ah Chi twice and that his evidence, in parts, conflicted with what he told the police.

47.The judge concluded that lending someone a bank account to deposit and withdraw monies is an essential part of money laundering and amounted to dealing with property.

48.The judge also concluded that both applicants believed (as any reasonable man would believe) that their bank accounts would be used to launder proceeds of an indictable offence when they both gave their account numbers and their bankcards to Ah Chi.

49.The judge found that even if Ah Chi did tell the applicants that he needed their accounts for use by his company, such explanation would still lead a reasonable man to conclude that the accounts would be used to launder proceeds of an indictable offence, when the request was made in a restaurant and when the applicants knew little about Ah Chi and did not even know the name of his company.

50.In the end, the judge found that when allowing monies from loan sharking business to be deposited and withdrawn from their accounts, the applicants knew or had reason to believe that the monies were proceeds of an indictable offence. The judge therefore convicted both applicants.

Grounds of Appeal

51.Mr Tong Ming, on behalf of the applicants, suggests that the judge was wrong to reject the applicants’ explanation, pointing out both applicants were young, inexperienced and had limited education.

52.Mr Tong further suggests that even if the applicants’ explanations were rejected, the prosecution evidence, as accepted by the judge, should not have led to the only reasonable inference that the applicant had dealt with monies in their accounts, believing that they were proceeds of an indictable offence.

53.Mr Tong suggests that it was not uncommon for people of the applicants’ social stratum to consider Ah Chi a friend even though they did not know him well.

54.Mr Tong further suggests that lending a bank account to someone else does not lead a reasonable man to the only reasonable conclusion that the lender knows or believes that the bank account would be used to launder proceeds of an indictable offence.

55.Mr Tong emphasizes that when they gave their bankcards to Ah Chi, their accounts had no money and they would not suffer any financial loss. Mr Tong further submits that the 2^nd applicant simply followed his elder brother in lending Ah Chi his bank account.

56.Mr Tong points out that there was no evidence that the applicant knew that Ah Chi was engaged in any illegal activities such as book-making or loan sharking.

57.Mr Tong suggests that there was no evidence that the applicants ever exercised any personal control over their accounts nor was there any evidence to show that they knew what as going on with their accounts.

58.Mr Tong suggests that the applicants’ behaviour, albeit suspicious, did not lead to the only irresistible inference that they were dealing with the monies in their accounts, believing that they were proceeds of an indictable offence as the subjective element.

Discussion

59.There were two issues, both issues of facts, namely (1) whether the applicants had dealt with the monies in their accounts and, (2) whether they had reasonable grounds to believe that the monies were proceeds of an indictable offence.

60.The prosecution must prove both issues against the applicants before they could be convicted of the charge.

61.If the defence, that the applicants had lent their accounts to Ah Chi and thereafter had paid no attention to them, and therefore had no knowledge about them, was true or could be true, the applicants could not be guilty of the charge as they had not dealt with the monies in their accounts and they could have no reason to believe that the monies were proceeds of an indictable offence when they were not even aware of the existence of the monies.

62.However, the judge had completely rejected the applicants’ explanations, both in their statements to the police and in the 1^st applicant’s evidence.

63.What was left was the undisputed or indisputable evidence that the applicants were respectively the holders of Account A and Account B, and that large sums of monies from a loan-sharking business were deposited into and withdrawn from their accounts.

64.As the holders of the accounts in question and in the absence of any acceptable evidence to the contrary, the only reasonable and irresistible inference must be that the applicants knew the transactions in their accounts and had dealt with monies in those accounts.

65.In the light of the transaction records of those accounts, anyone who dealt with the monies in those accounts must have reasonable grounds to believe that the monies represented proceeds of an indictable offence. It was an inference that no reasonable person could have failed to draw.

66.Mr Tong’s only real complaint is that the judge should not have rejected the applicants’ explanations. Mr Tong suggests that in rejecting the applicants’ explanation and in deciding if they had reason to believe that monies in their accounts were proceeds of an indictable offence, the judge had overlooked the fact that the applicants were young, inexperienced and had little education.

67.Mr Tong suggests that it is not uncommon for people of the applicants background to lend their bank accounts to friends even thought they did not know each other well.

68.We do not find Mr Tong’s suggestion convincing.

69.Bank accounts are valuable personal properties. Irrespective of one’s background, cogent evidence and persuasive reasoning are required to support a story of the lending of one’s account to another in the manner as the applicants had suggested.

70.We do not find the applicants’ explanation convincing. They hardly knew Ah Chi and had no means to contact him, yet for over two years, they allowed him to manipulate their bank accounts.  The 1^st applicant initially said he had no use of the account and then said he used it for clients to pay their insurance premiums.

71.If the applicants had no use of their accounts and in fact had not used them for a long time, there was no reason for both of them to be carrying the bankcards on the same occasion, such that they could gave them to Ah Chi at the same time.

72.If Ah Chi required a bank account for whatever purpose, why did both applicants have to give gave him their two accounts? Why did they still trust Ah Chi when Ah Chi avoided them and did not keep the promise of returning the bankcards to them?

73.What was even more astonishing was that after being informed that their accounts had been closed because of abnormal transactions, neither applicant took active steps to try to find out what was happening to their accounts and they did not report the matter to the police.

74.In our view, the only explanation for such inactivity was because they were aware of the nature of the abnormal transactions.

75.The judge rejected the defence’s case based on his assessment of the credibility of the witnesses. A trial judge, who has the benefit of hearing and seeing the witnesses in court, is in the best position to resolve the issue of credibility. An appellate court should not, save in the most exceptional circumstances, interfere with findings, which depend on the credibility of a witness.

76.The 2^nd applicant did not give evidence to explain, challenge or contradict the prosecution’s allegation against him and, in such circumstances, he could have no legitimate complaint when the court drew an adverse inference against him when such an inference was the only reasonable inference to be drawn. There was no evidential basis to support Mr Tong’s submission that the 2^nd applicant simply followed his elder brother to lend Ah Chi his bank account.

77.In rejecting the applicants’ explanation, the judge said he had carefully considered the submission of Mr Tong, in particular as to the age, education and life experience of the (applicants).

78.A judge, in deciding a criminal case, is obliged to give adequate reasons for his verdict. The judge should state those reasons so as to inform the parties how and why the particular verdict was arrived at and in such detail as will enable an appellate court to properly perform its duty.

79.What are adequate reasons will of course depend on the facts of the case, as well as the nature and extent of the dispute. In our view, the judge had given adequate reasons for rejecting the applicants’ explanation and we cannot find any good reason to say that the judge erred in doing so.

80.Once the applicants’ explanation that they knew nothing about their accounts was rejected, and in our view, rightly rejected, convicting them as charged was inevitable.

81.As the Court of Appeal said in HKSAR v Wong Chor Wo & Another (unreported CACC 314/2006) at para 108 onwards of the judgment:

“In the normal course of events, if a man allows another person to use his bank accounts to deposit and withdraw funds, in the absence of evidence to the contrary, the inevitable inference will arise that the holder of the bank account has reasonable grounds to believe that the funds passing through the account represent the proceeds of an indictable offence.

The judge was quite right to rely upon this proposition,…

That the account is used to conceal the transactions is an inference which inevitably arises from the fact that a person uses another’s bank account to undertake transactions without any explanation to the holder of the bank account.

From the fact that the transactions are concealed, in the absence to the contrary, the inference inevitably arises that some offence has been committed in relation to the transactions that requires to be concealed. When the funds are of the magnitude as in this case, the inference is that that offence will be an indictable offence.”

82.With respect, we fully adopt the aforesaid approach. We do not find the conviction against the applicants unsafe or unsatisfactory. The application for leave to appeal against conviction is dismissed.

Mr William Tam, SADPP of the Department of Justice for the Respondent.

Mr Tong Ming instructed by Messrs Jennifer Lee & Co assigned by the Director of Legal Aid for the 1^st and 2^nd Applicants.