Yan Suiling v. HKSAR

FAMC No. 84 of 2010

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 84 OF 2010 (CRIMINAL)

(ON APPLICATION FOR LEAVE TO APPEAL

FROM CACC NO. 435 OF 2009)

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Between:

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D E T E R M I N A T I O N

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Mr Justice Chan PJ:

1.The applicant was convicted in the District Court of money laundering under s.25(1) of the Organized and Serious Crimes Ordinance, Cap 455. Her conviction was upheld by the Court of Appeal. This is an application for leave to appeal to the Court of Final Appeal. At the end of the hearing, we reserved our decision which we now give.

2.In the particulars of the charge, it was alleged that the applicant dealt with a sum of $2,361,335, knowing or having reasonable grounds to believe that this sum “in whole or in part directly or indirectly represented the proceeds of an indictable offence, namely, fraud”.

3.The evidence adduced by the prosecution was that a person who was still at large had obtained from the Fubon Bank a loan of $8.6 million by means of a mortgage fraud, making use of another person’s lost identity card and some false title deeds. Shortly after the fraud, a sum of $2.3 million was transferred from the fraudster’s bank account to the bank account of the 1^st defendant in the case. On the following day, $2,361,335 was withdrawn from the 1^st defendant’s account and paid into the applicant’s account with the HSBC; and 3 days later, the applicant transferred $2 million from her own account to her sister’s account. Thus, the prosecution was able to trace the money so paid to the applicant as coming from the amount defrauded from Fubon Bank.

4.The applicant chose to give evidence. She said that she had a legitimate business and that she did not know the 1^st defendant and had nothing to do with the fraud. This was accepted by the judge. She sought to explain that the payment in question was in connection with her exchange of RMB into Hong Kong Dollars through a Madam Chu: she paid RMB through her mother’s account in the Mainland and received HK Dollars through her HSBC account in Hong Kong. She also said that she had done this before and after the payment in question and that since she trusted Madam Chu, she did not make any inquiry about the payment she received. This explanation was rejected by the judge who found her guilty of the charge.

5.Mr Wong Man Kit SC, leading Ms Amanda Li, for the applicant seeks leave to appeal on both the point of law and grave and substantial injustice grounds.

6.In respect of the point of law ground, the main arguments are as follows. As a matter of law, in respect of the mens rea (as opposed to the actus reus) of the offence, the prosecution is under a duty to state in the charge whether the alleged knowledge or reasonable grounds of belief of the accused relate to a specified indictable offence or an unspecified indictable offence or a combination of both. Once the prosecution has decided to rely on one of these three “categories”, this becomes an ingredient of the offence which the prosecution must prove. It is not open to the judge to convict the accused outside the ambit of the charge. Counsel submits that in the present case, the prosecution had chosen to rely on the mortgage fraud and the applicant had succeeded in showing that she had nothing to do with the fraud; and yet the judge convicted her on the basis that she had failed to make inquiry about the payment in question. 

7.There is nothing in this submission. It runs contrary to the plain wording of s.25(1). That subsection refers only to “an indictable offence”, not any particular or specified offence. The applicant is in effect inviting the Court to add to this provision words which are simply not there and to require proof of an additional ingredient in the offence which is clearly not required by the statute. Counsel’s submission also ignores the purpose for which this offence was created. This offence is targeted at the proceeds of crime (see the Preamble of the Ordinance) and is aimed at catching any person who deals with property which he knows or has reasonable grounds to believe represents the proceeds of an indictable offence, which simply means a serious crime. Section 25(1) does not require proof that the accused was connected with the commission of the crime. Nor does it require proof that he has actual belief that the property represents the proceeds of the criminal activities; it is sufficient to show that he has reasonable grounds for such belief.

8.Section 25 works in conjunction with s.25A. Any person who comes by property which he knows or has reasonable grounds to believe represents the proceeds of an indictable offence has a duty to disclose this to the authorities in accordance with s.25A. If he does not comply with s.25A and deals with the property, he may be guilty of an offence under s.25(1), although it is possible for him to avail himself of the defence in s.25(2) by offering a reasonable excuse for his failure to make disclosure. Bearing in mind the objective of s.25 and the related provisions, it is clear that the prosecution need not prove as part of the actus reus that the proceeds represent any particular indictable offence (as decided in Lam Hei Kit v HKSAR (unreported) FAMC No 27 of 2004, and applied in Oei Hengky Wiryo v HKSAR (2007) 10 HKCFAR 98). Nor is it necessary to specify or prove as part of the mens rea that the launderer knows or has reasonable grounds to believe that the property he is dealing with relates to any particular offence.

9.In the present case, the prosecution sought to prove that the payment in question was connected with the mortgage fraud and that the applicant had reasonable grounds to believe that it represented the proceeds of this fraud. This may of course be proved by showing that she was involved in the commission of the fraud. But this is not necessary: the prosecution need not allege or prove that she had anything to do with the fraud. From the evidence adduced by the prosecution, the judge was able to find and did find that there was indeed a mortgage fraud and that the money received by the applicant originated from that fraud. While accepting that she was not involved in the fraud, he rejected her explanation which purported to show her lack of knowledge and reasonable ground of belief. He then went on to find that in the circumstances of this case, a right thinking member of the community would have had reasonable grounds to believe that the money in question represented in whole or in part the proceeds of an indictable offence and that the applicant was aware of those grounds. That was the basis on which he convicted the applicant. As the Court of Appeal held, since it was not necessary as a matter of law for the prosecution to identify or prove what the indictable offence was, there is no question of the judge convicting the applicant on a basis which was outside the ambit of the charge.

10.In respect of the grave and substantial injustice ground, the applicant raises two main complaints. First, it is submitted that even if it was not necessary for the prosecution to prove or even to identify the indictable offence to which the laundered money related, it had chosen to rely on the mortgage fraud in the charge and in its opening. This, counsel submits, had misled the applicant into deciding to testify in court to refute the allegation that she was involved in the commission of the fraud. It is argued that she would have conducted her defence differently instead of going to the witness box and that it was unfair for the judge to accept part of her evidence and convict her based on the other parts of her evidence.

11.This submission cannot be sustained. It is trite law that a tribunal of fact is entitled to reject the exculpatory parts of the evidence of the accused and to rely on the incriminating parts. This is always a factor which an accused and his lawyer have to consider when deciding whether to testify or not. The applicant’s real complaint is that she had been led into testifying against herself when there was no need for her to do so, but for the way in which the charge was framed. We do not accept this argument. The prosecution evidence clearly showed that the 1^st defendant (whom the applicant did not know) withdrew a substantial sum of money which was then paid into the applicant’s account and that this money undoubtedly originated from the mortgage fraud. In the absence of any explanation, the judge would be entitled to draw the inference that she had reasonable grounds to believe that it represented the proceeds of the crime, even though she was not involved in its commission. We are not satisfied that the applicant had been prejudiced by the prosecution making a reference to the fraud in the charge.

12.It is the second argument which has caused us concern. In his Reasons for Verdict, the judge acknowledged that the applicant had a legitimate business; that her bank account had a consistently high level of balance which was an uncommon feature in a usual money laundering case; that she had also engaged in investing in stocks and shares and that all these were points in her favour. In paragraph 74, he said that if what the applicant said (about the currency exchange arrangement) was true or might be true or there existed a reasonable doubt, she must be acquitted.

13.In an attempt to show that the applicant was engaged in currency exchange activities, particularly at the time when the payment in question was paid into her account, counsel was able to point to various documents tending to demonstrate that (i) on 3 March 2009, a sum of RMB 3 million was withdrawn from her mother’s bank account in the Mainland; (ii) between 3 and 5 March 2009, there were 9 payments in the total sum of HK$ 3,511, 355 by way of cash and cheques (including the payment in question) deposited into the applicant’s HSBC account; (iii) some of these amounts were in odd figures but adopting the same RMB/HK$ exchange rate (which understandably would be different from the normal bank rates if done subject to the required restrictions); and (iv) at this exchange rate, the total amount paid into the applicant’s HSBC account was the equivalent of RMB 3 million withdrawn from her mother’s account in the Mainland. It is clearly arguable that since the figures matched, these documents support her evidence that she was in fact engaged in currency exchange activity.

14.The judge however rejected the applicant’s evidence. His reasons appear in paragraph 115: the operation as described (by the applicant) was unbelievable “since it will require an incredibly high degree of coincidence or a high degree of co-ordination or both for Madam Chu to be able to make arrangement with different parties to come up with the right amount to deposit.”

15.Two matters have caused us concern. First, the judge’s approach when assessing the applicant’s evidence on the currency exchange arrangement is arguably erroneous. The fact that the supporting documents matched with what she said might not be a matter of co-incidence, but rather evidence of the truth; it is clearly arguable that if it were not true, it would be difficult if not impossible to make up those figures after the event. Secondly, and this is the greater concern, it is also clearly arguable that the judge did not focus on the real issue in the case which is: whether the applicant had reasonable grounds to believe that the payment in question represented proceeds of an indictable offence, rather than whether she was genuinely engaged in currency exchange. The answer to the latter question does not necessarily solve the real issue. This is because even if she was really engaged in currency exchange, this does not exclude the possibility that the money received in her account represented the proceeds of crime. The applicant’s evidence that she had not asked any question about the crediting in her account with the relevant sum since she had done such currency exchange many times before and trusted Madam Chu would, if accepted by the judge, be relevant to the existence of any reasonable ground of belief on her part. The Court of Appeal merely accepted that the judge was entitled to reject her evidence but likewise arguably did not apply its mind to the real issue.

16.For the above reasons, we are satisfied that it is reasonable arguable that the judge had not fairly assessed the applicant’s evidence and had failed to focus on the correct issue resulting in an injustice to her. Accordingly, leave to appeal is granted on this ground but limited to this issue.

Mr Wong Man Kit SC and Ms Amanda Li (instructed by Messrs Cheung Fung & Hui) for the applicant

Mr Edmond Lee (of the Department of Justice) for the respondent