HKSAR v. Shiu Chi Ming

CAC C 453/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 453 OF 2010

(ON APPEAL FROM DCCC NO. 289 OF 2010)

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BETWEEN

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Before: Hon Stock VP, Yeung VP and Hartmann JA in Court

Date of Hearing: 16 September 2011

Date of Handing Down Judgment: 24 October 2011

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J U D G M E N T

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

Introduction

1.On 12 November 2010, following a trial in the District Court before Judge Albert Wong, the applicant was convicted of the offence of conspiracy to defraud, contrary to common law and punishable under s. 159C(6) of the Crimes Ordinance, Cap. 200.  The applicant was sentenced to 21 months’ imprisonment.

2.The applicant sought leave to appeal his conviction.

Background

3.The charge of which the applicant was convicted alleged that in August and September 2005 he had conspired with a man by the name of Wong Wing Kei (‘Wong’) and other persons unknown to defraud the Wing Lung Bank of a sum of $350,000.  The $350,000 was obtained from the bank by way of a loan obtained by the applicant to purchase a property in Mongkok, the loan being secured by a mortgage over that property.  The charge alleged that the applicant had conspired with the others to defraud the bank by dishonestly and falsely representing that he had purchased the property from the true owner and that accordingly title had been passed to him. 

4.At trial, the following matters were not in dispute:

i.     The property in question was at all times owned by a man by the name of Lau Man Loon (‘Lau’) who did not at any time seek to sell the property to the applicant.  That being the case, whoever it was who purported to be the vendor of the property was, to use the description of the trial judge, an ‘impostor’.

ii.    On 15 August 2005 the applicant, as purchaser, signed a provisional agreement for the sale and purchase of the property, the purchase price being the sum of $700,000. 

iii.   In compliance with the terms of purchase, the applicant made out a cheque in the sum of $50,000 payable to the vendor by way of the initial deposit.  That cheque was never presented.

iv.   The provisional agreement together with the cheque for $50,000 was forwarded to a firm of solicitors by a man named Sam Lai who held himself out to be the real estate agent handling the sale.  The solicitors drew up an agreement for the sale and purchase of the property which the applicant signed on 31 August 2005.

v.    The agreement was also signed by the ‘imposter’ purporting to be the true owner.  At the same time, the ‘impostor’ signed a power of attorney appointing the applicant’s co-accused, Wong, to act as his agent for all further matters related to the transfer of the property.

vi.   On or about 5 September 2005, the applicant went to the Wing Lung Bank.  He did so in order to apply for a loan of $400,000 to purchase the property.  In seeking the loan, the applicant informed the bank that he intended personally to occupy the property.  A loan of $350,000 was granted by the bank, that sum being paid to the solicitors.

vii.  Completion took place on 30 September 2005.  On that date, Wong, representing the supposed vendor under power of attorney, signed a deed of assignment in favour of the applicant, the applicant signed as purchaser.  The applicant further signed a mortgage deed in favour of the Wing Lung Bank.

viii. On completion, the applicant made out a further cheque in the sum of $280,000 in favour of the vendor for the balance of the purchase price due by him.  This cheque was never presented.

5.Although at trial the applicant chose not to testify, after his arrest he made a video-recorded cautioned statement which went into evidence unchallenged.  In that statement, the applicant explained how it was, he said, that he came to be involved in the purchase of the property.

6.The applicant said that he and Wong had worked together for a good many years, seemingly in the debt collecting business, and were friends.  He said that it was through Wong that he came to know the man named Sam Lai.

7.The applicant said that Wong and Lai told him that they knew of a man named Lau who wished to raise money on a property that he owned.  The applicant confirmed that he had never met Lau and knew nothing about him.

8.In the ordinary course of events, the obvious method to raise money on a property would be to approach a financial institution to seek a loan secured by a mortgage over the property.  In Hong Kong that is well understood.  According to the applicant, however, the scheme that was suggested to him by Wong and Lai, and to which he agreed, was altogether different and more devious.

9.According to the applicant, he was told that Lau would execute the necessary documents to sell the property to the applicant who would himself execute those documents as purchaser.  Thereafter, as purchaser, the applicant would approach a financial institution in order to raise a loan to purchase the property.  The money raised by means of that loan would then be passed to Lau.

10.In order for the money to be released to Lau via the conveyancing solicitors, all the appearances of a genuine sale would have to be met.  This meant that the applicant would have to make out cheques to pay the balance of the purchase price.  The applicant said that he was assured however that those cheques would not be presented for payment.

11.Nor would the applicant himself be required to repay any of the loan.  The applicant said that Wong and Lai assured him that they would attend to repayment, the money to be paid into the applicant’s bank account each month.

12.According to the applicant, it was part of the scheme that, as and when the loan – it being a 10-year loan – had been repaid in full, he would then sign the necessary documents to transfer the property back to Lau.

13.The applicant made no mention of any side agreement to protect the interests of either Lau or himself.  In the circumstances, if the applicant was to be believed, in order to raise a sum of $400,000 or less, the true owner of the property was relinquishing full title to the applicant, a complete stranger to him, on the basis that, when the loan was eventually repaid in full, the applicant could be trusted to transfer the property back to him.  Equally, if the applicant was to be believed, he was prepared to take on direct responsibility to meet all the obligations under the mortgage loan on the basis that he could trust Wong and Lai to arrange regular payments, the ultimate payer of course being Lau.

14.The applicant said that he agreed to participate in the scheme as a favour to his friends.  He said that he never saw the property and knew nothing about it.

15.The evidence revealed that loan repayments were made regularly through the applicant’s bank account from late 2005 until February 2010 when there was default, the balance of the loan at that time being in excess of $230,000.

The central issue at trial

16.The charge of conspiracy to defraud alleged that the applicant conspired with Wong and other persons unknown to defraud the Wing Lung Bank by dishonestly and falsely representing a number of matters including the following:

i.      that the applicant was “the genuine purchaser in a transaction for the sale and purchase” of the property;

ii.     that Lau, the man named on the provisional agreement for sale and purchase of the property, was “the genuine vendor in the said transaction of the property”, and

iii.    that the signature of Lau put on the provisional agreement was his genuine signature.

17.It was at all times integral to the prosecution case that the applicant knew that the property was transferred to him without the knowledge or consent of the true owner.  This was acknowledged by the judge when he said in paragraph 282 of his Reasons for Verdict:

“The prosecution accepts that proving of such knowledge is essential in proving the guilt of the defendant.”

18.The judge further acknowledged that there was no direct evidence of such knowledge on the part of the applicant, the issue being whether, on a consideration of the primary facts, the only reasonable inference to be drawn was that he must have had such knowledge.

19.The judge was drawn to the conclusion that the only reasonable inference to be drawn from the relevant primary facts was that the applicant did have such knowledge.

The grounds of appeal

20.It was submitted that the conviction was unsafe and unsatisfactory, the principal reason being that the relevant primary facts did not allow for the only reasonable inference to be drawn that the applicant must have known that the purported vendor was not the true owner of the property.

21.In support of this ground, the applicant’s counsel, Mr Delaney, submitted that the judge’s reasoning was equivocal in the sense that it was equally consistent with the applicant entering into the scheme on the basis that he believed he was assisting the true owner to raise a loan on his property.

22.It was further submitted that the judge failed to give due consideration to the inherent implausibility of the applicant, a man with a clear record, accepting the risk of the mortgage debt knowing that he was not acquiring true title or that the genuine owner of the property may at any time choose to sell and thereby discover the scheme.

The judge’s reasoning

23.In reaching his decision that the applicant must have known that the purported vendor was not the true owner of the property, the judge went through an extensive consideration of the facts as he found them to be, recognising that, while certain of the facts, taken on their own, were not sufficient to give rise to the inference, he was to consider the facts as a whole.

24.As the judge observed, if the applicant was to be believed, he had agreed to participate in a scheme to enable the true owner, a total stranger to him, to raise money.  As the judge put it, he had agreed to participate in order to ‘facilitate financing’ for the true owner.  In doing so, however, he had agreed to take on the responsibility of a substantial mortgage loan.  The judge observed that the events took place in 2005 when “Hong Kong people had just had a very bad experience in the property market”.  If there was to be a default in repayment, particularly if the property did not offer sufficient security (and it is to be remembered that the applicant said he knew nothing about the property), the applicant would find himself in dire financial circumstances.  Yet, if he was to be believed, he was prepared to take on this risk on nothing more than a verbal undertaking that arrangements would be made to ensure repayment.  The judge found that to be incredible, that is, unworthy of belief.

25.As the judge further observed, if the applicant was to be believed, the true owner was also exposing himself to ‘great risk’.  He was relinquishing full title in the property to the applicant, a man unknown to him, and doing so on the basis of some ‘understanding’, for that is all it was, that when the loan was eventually repaid in full – notwithstanding whether the property had by then increased in value and was thereby worth more to the applicant – the applicant would nevertheless execute all necessary papers to transfer the property back to him.  The judge noted that, if the applicant was to be believed, the owner was prepared to put himself to this risk in order to raise a sum of money which at best could have represented no more than 70% of the value of the property.  As the judge concluded:

“Although [the applicant] had only received little education, it only required average intelligence and experience to have realised that a real owner would not act in a manner [the applicant] described. It was just impossible that a real owner would pass his title to the property to him for such a low percentage of the value of the property and exposing himself to such a high degree of risk of losing his property or [of incurring] costs in recovering it.”

26.The judge further took into account that, if the applicant was to be believed, even though he was doing no more than helping a person unknown to him to raise money, he was nevertheless prepared from the outset to engage in deceitful conduct, playing his full part in what was clearly a sham.  In this regard, he was prepared to lie outright to the bank and was prepared to deceive the solicitors who were attending to the transfer by making out cheques, particularly the second cheque for $280,000, which he knew would not be presented and, even if presented, would not be honoured as there were insufficient funds in his account.  As the judge concluded:

“In my judgment, taking into account the non-presentation of the cheque [for $280,000] and the position of [the applicant’s] account at the material time, and the whole course of conduct of the parties in question, the whole of the relevant evidence supports only one reasonable inference, that is, [the applicant] must be aware that it was not a genuine transaction, the vendor did not hold good title and, of course, he himself was not to obtain the title of the property.”

27.When taken together, and considered in the context of the evidence as a whole, we are satisfied that the relevant primary facts provided more than a sufficient basis upon which the judge was able to draw the inference he did.

28.In setting out in detail how it was that the relevant primary facts allowed for only one reasonable inference, the judge at the same time set out why it was that he rejected the defence contention that the applicant at all times believed that he was doing no more than assisting the true owner to raise finance.  There was nothing equivocal about the judge’s reasoning.

29.We find no substance in the contention that the judge failed to give due consideration to the implausibility of a man such as the applicant, a man with a clear record, involving himself in such a scheme.  The judge stated in clear terms that, in assessing the evidence and what was capable of being inferred from it, he took into account that the applicant was a person with a clear record.  He further took into account that the applicant, in making the loan application to the bank, had given his true particulars.  Importantly, the judge also looked to matters particular to the applicant such as his low level of education and the fact that he had no previous experience of purchasing property.  These last matters presented the possibility that the applicant may have been duped in some way, a possibility considered by the judge but, in the context of the evidence as a whole, rejected by him.

30.For the reasons given, we are satisfied that the conviction was neither unsafe nor unsatisfactory.  The application for leave to appeal against conviction is dismissed.

Mr Tam Sze-lok, ADPP (Ag), of the Department of Justice, for the Respondent

Mr Michael Delaney, instructed by Messrs Lau, Chan & Ko, assigned by Director of Legal Aid, for the Applicant