HKSAR v. Yu King Ming and Another
Read the full judgment text of CACC 313/2007 on BabelCite. This Court of Appeal judgment was delivered on 20 January 2009.
1. On 31 August 2007 the applicants (D1 & D2 respectively) together with Chan Ching Chung, D3 at trial, were convicted in the District Court by Judge D’Almada Remedios of an offence of conspiracy to defraud, contrary to common law and section 159C(6) of the Crime Ordinance, Cap. 200. D1 and D2 sought leave to appeal their convictions. Those applications were dismissed by us at the conclusion of the hearing on 20 January 2009 and we now give our reasons for doing so.
Cites 3 cases
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CACC313/2007 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CRIMINAL APPEAL NO. 313 OF 2007 (ON APPEAL FROM DCCC 783 OF 2006) --------------------- BETWEEN
---------------------- Before: Hon Stuart-Moore VP, McMahon & Wright JJ in Court Date of Hearing: 20 January 2009 Date of Judgment: 20 January 2009 Date of Reasons for Judgment: 5 February 2009 ------------------------------------------------------------------ REASONS FOR JUDGMENT ---------------------------------------------------------------- McMahon J (giving the reasons for judgment of the Court) : 1.On 31 August 2007 the applicants (D1 & D2 respectively) together with Chan Ching Chung, D3 at trial, were convicted in the District Court by Judge D’Almada Remedios of an offence of conspiracy to defraud, contrary to common law and section 159C(6) of the Crime Ordinance, Cap. 200. D1 and D2 sought leave to appeal their convictions. Those applications were dismissed by us at the conclusion of the hearing on 20 January 2009 and we now give our reasons for doing so. 2.The particulars of the offence were as follows :
3.The prosecution case was that D1 and D2 had, together with Chan Ching Hung (“Chan”), operated a “Ponzi” scheme using the company Perfect Life Global Limited (“Perfect Life”) as a vehicle to attract persons who believed they were investing in that company’s health products business by way of investment plans called “Star Plans”. Returns ranging from 170% to 12,000% per annum were represented as being feasible. In reality monies paid by the investors were invested in nothing but were used, in large part, to pay purported dividends to other, earlier, investors or distributed to unknown recipients. Eventually, as with all Ponzi schemes, the required number of new investors providing funds to enable payments of promised dividends to earlier investors, would become unrealistic and the scheme would collapse. Perfect Life had no real business, or at least no substantial business, and those who were deceived by the company’s literature and its promotional meetings and videos into believing otherwise so as to pay monies to the company under one of its investment plans were fated inevitably to lose all or most of the funds “invested”. 4.The authorised capital of Perfect Life was $10,000. Its paid up capital was $2.00 and it had been incorporated in Hong Kong on 27 March 2003. Its directors were an apparently insubstantial Hong Kong registered company and a person Li Kui Por, and its shareholders were that same company and another apparently insubstantial Hong Kong registered company. 5.The prosecution case was that D1 had acted as the person in charge of various gatherings or meetings to which members of the public were invited and which were designed to attract investors to Perfect Life. He had also appeared as the leading personality in videos made for the same purpose. His name card, in the name Sigmund Yu which was a name also used by him, had been found in a room rented by D2 in the Grand Plaza Apartments in Kornhill Road. In that room, after the investigation into these matters had commenced, $3,029,059 cash was found in a locked safe. D1’s handling of a large sum of money obtained from the fraud was further said to be established by a document dated 29 May 2004 (Exh. P16) found in the same rented room, which, inter alia, read “Today Sigmund took away three bags of cash totalling $3,676,665.” In that room was also found a suitcase containing documents of or relating to Perfect Life. There was also evidence that D1 had on occasion been seen at the Perfect Life office in Kowloon. 6.As to D2, as we have noted, she had rented the room in the Grand Plaza Apartments and had done so from 4 May to 4 August 2004. A rental receipt to this effect had been found there in her name. Chan had become an additional registered person authorised to occupy the room from 18 July 2004. It was in that room that the $3,029,059 had been found on 5 August 2004 in the locked combination safe, as well as the suitcase containing Perfect Life documentation. Additionally in Chan’s own room rented by him at the Island Harbour View Hotel in Tai Kok Tsui were found documents which connected D2 with Perfect Life. 7.The evidence the prosecution relied upon fell into three main categories : firstly, the evidence of a victim of the scheme who became PW1 at trial. She was the only “investor” who gave evidence. The second category comprised various documents and computer records seized from the office of Perfect Life in Tak Hing Street in Kowloon and from the two rooms rented by D2 and Chan at the Grand Plaza Apartments and the Island Harbour View Hotel respectively and, finally, the evidence of a treasury accountant PW11 who, on the basis of the exhibits produced at trial, gave evidence to the effect that the scheme conducted through the vehicle of Perfect Life was in fact a “Ponzi” scheme and that the company had little or no records relating to any other business. She said the risk of an “investment” in such a scheme being lost was huge. That was because the monies eventually needed to be paid in by new recruits to the scheme to enable Perfect Life’s obligation to existing investors to be met was, if the scheme reached maturity, in the region of thousands of billions of dollars. 8.PW11 presented two reports which were exhibited in evidence. The first, the “Financial Feasibility” Report, was exhibited as P34 and concluded that the structure of Perfect Life’s investment plans was such as to render them financially not feasible in any genuine commercial sense. The second report, the “Underlying Business” Report, was exhibited as P35 and concluded that Perfect Life had no records evidencing its carrying on of a business of sufficient substance to provide a source of profit to pay “investors” in the Star Plans their dividends. 9.Mr Ross, counsel for D1 and D2, advanced two grounds of appeal. They are expressed as follows :
10.During the course of the hearing it became obvious that the first ground had no life of its own but was simply a consequence of the assertion that the judge had taken into account inadmissible hearsay evidence. Accordingly the arguments advanced by Mr Ross dealt with both grounds together. 11.Firstly, it was asserted that in compiling her “Underlying Business” Report P35, PW11 had made use of computer records which had not been properly proven by way of the provisions of section 22A of the Evidence Ordinance, Cap. 8. That section, so far as it is said to be relevant, is as follows :
12.The fundamental complaint of Mr Ross is that the judge had relied upon PW11’s findings, as contained in P35, when those findings were based on inadmissible computer records. 13.We have examined P35. It is fair to say that the thrust of that report (and therefore of the evidence-in-chief of PW11) was simply to the effect that police searches and seizures of all the documents found at the Grand Plaza room rented by D2, at the Island Harbour View Hotel room rented by D3 and at Perfect Life’s office in Tak Hing Street, provided no evidence of Perfect Life conducting any business other than the sale of Star Plans. 14.At the location in Tak Hing Street were recovered various documents from the files of four of the five computers found in the premises. Nothing could be recovered from the fifth computer because, as stated in evidence by the police expert who had examined the computers, that computer’s hard drive was not operable and nothing could be retrieved from it. But no particular emphasis was placed on the truth of the contents of the recovered computer files by either PW11 or the judge. Their relevance was, as with the other documents seized, that they said nothing to suggest they were accounting records or other documents evidencing the carrying on of any business of any substance relating to health products. In other words, amongst the documents recovered were no journals, ledgers, financial statements or other records which it might be expected a company would make and keep if it carried on a substantial business. 15.It is true that some invoices and delivery notes were found relating to purchases made by Perfect Life for the year September 2003 to August 2004. They totalled $1,092,627 of which by far the largest stated components were ornaments, watches, jewellery, red wine and facial masks. But we are satisfied that at no stage did the prosecution rely on these documents (including the computer records) or anything contained in them as evidence that any statement therein was true. The use made of them by the prosecution was to show, consistently with the general thrust of its case, that there was nothing seized from the three locations associated with Perfect Life and the defendants at trial which was of a nature to suggest Perfect Life conducted any substantial business in health care products. 16.In that regard, the introduction to P35 set out its objectives as follows :
17.The findings of PW11 as set out in P35 then followed :
and
and the core findings of PW11 :
18.It is important to bear in mind that P35 was based on Perfect Life documents and computer records only in the sense that PW11 was attempting to determine whether the contents of those documents and records were indicative of whether any other substantial business was carried on by Perfect Life in addition to it obtaining funds through its sale of Star Plans. The relevance of that was to establish whether there was any independent source of income generated by Perfect Life which may have been able to fund payments to investors under the Star Plans other than the funds obtained from the recruitment of further investors. 19.The judge’s findings, we were satisfied, remained within those parameters. The judge approached this evidence in her reasons for verdict in the following manner :
and later :
and the judge then concluded :
20.As we say, it was the absence of Perfect Life financial and accounting records which was sought to be established by the production of the computer records and other documents found in Perfect Life’s office. Whether the entries in what was produced were true or not was irrelevant to that purpose. In arguing against that proposition Mr Ross relied upon, particularly, the following paragraph of the judge’s reasons for verdict :
21.Whilst the language of this paragraph may be more ambiguous as to the use made by the judge of the computer and other records, in the context of the other passages of the judge’s findings we were satisfied that there was nothing in any of the computer documents produced to the court which was relied upon by either the prosecution or the judge as evidence of the truth of what the document asserted. 22.In Secretary for Justice v. Lui Kin Hong [2000] 1 HKLRD 92 it was accepted by the Court of Final Appeal that computer records produced in that case had not been proven as admissible pursuant to section 22A of the Evidence Ordinance. Those records were produced however to prove that particular transactions of a company had been attributed to another company by being recorded in false ledgers designed to duplicate those transactions in the other company’s name. In other words the records (including computer records) were not produced to prove the truth of their contents. Lord Hoffman NPJ said at page 111 in delivering the judgment of the court (so far as it concerned the computer records) :
23.So it is with the present case. The computer records were not tendered in evidence so as to be admissible within the terms of section 22A, but were produced to show that in them there was nothing consistent with the sort of financial records which would be expected to be generated by a company conducting a business in health care products sufficient to support the levels of payments required under the Star Plans. 24.It is of assistance also to refer to the judgment of Litton PJ in Lui’s case at page 96 :
While those comments were directed at section 22 of the Evidence Ordinance they apply in our view also to section 22A, and section 22A(11) simply underlines the common law principle that makes that so. 25.Accordingly, in the present case, Mr Ross’s complaint that the computer records produced by the prosecution were inadmissible because the provisions of section 22A of the Evidence Ordinance were not satisfied was misconceived and this aspect of his grounds of appeal must fail. 26.Mr Ross’s argument proceeded, however, on this basis. Even if the computer records were properly in evidence so as to allow the judge to conclude that a fraudulent scheme was conducted through the vehicle of Perfect Life and its investment plans, there was no sufficient evidence to prove that D1 and D2 were participants in that scheme so as to allow the production of hearsay evidence against each in the form of a statement made in the course of and in furtherance of the conspiracy. That statement was contained in the document P16 found in the rented room in the Grand Plaza Apartments to which we have referred. 27.Mr Ross put it this way : he said that the judge, in determining whether each of D1 and D2 were participants in a conspiracy to defraud the “investors” in Perfect Life, simply lumped all of the evidence together, including that which comprised the P16 statement made in furtherance of the conspiracy. 28.It is plain that P16 was powerful evidence against D1. Mr Ross argued that its production adversely affected the case of D2 also. The connection between P16 and D2 is more tenuous and is based upon the argument that P16 established not only that D1 handled a large sum of money on or before 29 May 2004, but also that the money was, because of its amount, the same money found in the wall safe in the Grand Plaza Apartments room and connected with the Perfect Life scheme of fraud, and because P16 was found in that room and dated at a time when D2 was the occupant, it further connected her with that money and the fraud. Nevertheless, though as we say the connection is tenuous, we will deal with Mr Ross’s arguments in this regard on the basis that P16 was evidence against not only D1 but also D2. 29.It was not in issue between Mr Ross and Mr Delaney, for the respondent, that the judge found that the document P16 was something said, done or written by one conspirator in furtherance of the common purpose and was therefore potentially admissible against the other conspirators pursuant to the co-conspirators rule. However Mr Ross argued that before P16 could properly have been taken into account by the judge she “should have determined that there was reasonable evidence, or a prima facie case, against each defendant before accepting the truth of [P16]”. 30.That assertion is based upon the principle of law expressed in Oei Hengky Wiro v. HKSAR (No.2) (2007) 10 HKCFAR 98 at paragraph 30 per McHugh J where it was said :
In Ahern’s case it was said that the purpose of the rule was to exclude such hearsay evidence in circumstances where to admit it might be unfair to an accused. 31.We accept that the proper procedure is for a court to consider firstly, in the absence of the hearsay statement advanced against a co-conspirator, whether there is reasonable evidence, as referred to in Oei’s case, that the co-conspirator was a participant in the conspiracy charged. 32.We accept also that the judge in the present case did not expressly find in respect of either D1 or D2, prior to admitting P16 into evidence and taking it into account, that there was other reasonable evidence pointing to D1 or D2 being conspirators. 33.But we do not think that matters. While it may have been better for the judge to have spent the time and the few sentences required to state that was so, in the circumstances of this case, as Mr Ross concedes, the real issue is not that of the procedure adopted by the judge, who was sitting as the trier of fact, in approaching this evidence but whether, apart from P16, there was sufficient independent evidence of the participation of D1 and D2 in the charged conspiracy. In that regard we are firmly of the view that any consideration of the evidence independent of P16 must necessarily, contrary to Mr Ross’s submissions, arrive at the conclusion that there was independent and reasonable evidence against each of D1 and D2. At the risk of repetition it is worth referring again to that evidence. 34.It was accepted by the judge that D1, on a number of occasions, was in charge of public gatherings organised in the name of Perfect Life. His role in that regard was emphasised by his appearance on video recordings in which the details of the Perfect Life Star Plans were described. His business card, although in another name, was found in the Grand Plaza Apartments which D2 had rented and where subsequently over $ 3 million in cash was found. In that room was a suitcase containing literature and documents relating to the Perfect Life investment plans. Additionally D1 was seen at the offices of Perfect Life on more than one occasion. In our judgment, regardless of whether that evidence by itself was enough to prove that D1 was a participant in the conspiracy, it was certainly reasonable evidence of such participation. 35.So far as D2 is concerned, the same reasoning must apply. The evidence was that she rented the room in the Grand Plaza Apartments for a number of months. As we say, in that room was found a suitcase containing Perfect Life brochures and documents and, after she had been taken into custody, some $3 million cash. Chan was at one stage a registered occupant of the room together with her. Her name, or a portion of it, was found on documentation which was linked with Perfect Life in Chan’s room at the Island Harbour View Hotel. She had been present at various of the gatherings at which D1 was the person in-charge, and she was further associated with Perfect Life by way of using its office address as her address in banking documents she had completed. 36.This was ample evidence to link her with D1, Chan, Perfect Life and the gatherings designed to encourage “investment” in Perfect Life and with the monies obtained from those gatherings. There was plainly reasonable evidence of her participation in the charged conspiracy apart from the contents of P16, so far as they may have been relevant to her case. 37.In those circumstances we did not think there was merit in Mr Ross’s complaint that there was no independent evidence of D1 and D2’s participation in the charged conspiracy. It was an inevitable conclusion that there was, and the procedural omission by the judge was, in the circumstances, not material. P16 was fairly before the court as evidence. 38.We might add that P16 itself seems to be a document possibly obtained from a computer to which, at a late stage in the hearing, Mr Ross attempted to argue the strict provisions of section 22A therefore also applied. We did not think that to be so. P16 was clearly made by one of the conspirators during and for the purposes of the conspiracy and whether it was written by pen, or typed by way of a word processor or a computer matters not at all. Where a computer is used by a person as little more than a typewriter to produce a printed document which is then adopted for that person’s own purposes, that document is as admissible as if it had been handwritten. That is not a circumstance to which the section is intended to apply : see Lui Kin Hong (supra) per Lord Hoffmann at 111A-D. 39.Mr Ross made some final points. He argued that the judge was wrong to accept the hearsay evidence of PW1, one of the victims, of the fraud, so as to find that D1 was said to be the “boss” of the scheme to defraud. With respect that was neither the evidence of PW1, nor the finding of the judge. PW1 had simply said in her evidence that, at the gatherings she had attended, D1 was called “the boss” by others. She knew him as “the boss” and the judge in her reasons for verdict when summarising PW1’s evidence simply reiterated that statement. 40.The evidence of PW1 was not hearsay and in any event the judge did not use it to make any finding that D1 was in fact “the boss” of the scheme of fraud. Mr Ross also criticised the prosecution for calling only PW1 and suggested that other “investors” should have also been called. The number of witnesses called is neither here nor there, however, and the judge was perfectly entitled to rely on PW1’s evidence if she found it credible, as she did. 41.A further complaint was made that the judge did not apply the proper standard of proof in finding that D2 was “probably” in possession of the money found in the safe in the room she rented in the Grand Plaza Apartments. The judge had said this in her reasons for verdict :
42.Mr Ross says that is a finding which should not have been made against D2 unless it was a matter of which the judge was sure. 43.We do not agree. As a matter of principle, not every finding of fact made by a judge or jury has to be made beyond reasonable doubt. It is part of human experience that in deciding what occurred in the course of an event or events the decider of facts will be sure of some details and less so of others. What is important in a criminal trial is that the tribunal must be sure of the proof of the elements of the particular offence, but not necessarily of each and every fact alleged by the prosecution. 44.Mr Delaney relied in this regard upon HKSAR v. Lo Hung Kwong [2000] 3 HKC 474 at 480 where this court, applying R. v. Shepherd (No. 5) (1990) 51 A.Crim.R. 181 (HCA), said :
45.In our view the finding complained of was, as Mr Delaney asserts, quite clearly a “strand in the cable” rather than “a link in the chain”. It most certainly was not a fact indispensable to proof of the offence against D2 and we do not agree with Mr Ross’s assertion that this finding was critical to the case of D2. It was simply another aspect of the evidence which the judge adverted to in her overall appraisal of the case against D2. We might add that it certainly was not a fact indispensable to the findings of the judge in respect of D1 as Mr Ross had also submitted. 46.In any event the judge’s finding in the context in which it was made, bearing in mind that both D2 and Chan had occupied the room where the money was found, was that D2 was likely the principal possessor of the funds. But whether D2 or Chan was the principal possessor or whether they shared possession of the money in some way, there was no doubt that D2 had some connection with that money. 47.Complaint was also made of the judge’s finding that it was “reasonable to infer that this $3 million was part of the $3 million odd cash taken by D1” as evidenced by the note P16. 48.Again, in proper context, the judge was not making a finding of a fact which was necessary for proof of the prosecution’s case. Whether she had used the words “probable”, “likely” or “reasonable to infer” matters little and the principle enunciated in Lo Hung Kwong applies equally to this statement of the judge. She was, we were satisfied, in the context of her judgment as a whole, simply attempting to point out the likely connection between the money taken by D1 as evidenced by P16 and the slightly smaller sum found in the safe of D2’s and Chan’s room in the Grand Plaza Apartments. In any event, whether or not the two sums were related mattered little in terms of that which the judge had to resolve, and in this regard we do not think it was a fact indispensable to the conviction of either D1 or D2. The real point the judge accepted was that in the context of all the evidence the money found in the room safe was a part of the picture connecting D1 and D2 to the overall scheme of fraud. In this regard it must be remembered that the money found in the room safe formed only a part of the funds involved in this case. Some $28 million had been deposited, in large part in cash, in Perfect Life’s bank accounts during the period of the conspiracy and a large part of that had been disseminated to unknown end recipients. The judge put the evidence of the $3,029,059 found in the wall safe into the overall context of the case in this way :
49.There was nothing in this final complaint. 50.For these reasons the applications of D1 and D2 were dismissed.
Mr Michael Delaney, Counsel on fiat for the Department of Justice, for the Respondent Mr Phillip Ross, instructed by Messrs Reimer & Partners, for the Applicants |
Cases cited in this judgment
Further hearings and rulings under CACC 313/2007