HKSAR v. Hsu Ming Mei
Read the full judgment text of CACC 91/2011 on BabelCite. This Court of Appeal judgment was delivered on 16 November 2012.
1. The applicant sought leave to appeal against her convictions on 14 February 2011 on no less than 25 charges of theft, contrary to section 9 of the Theft Ordinance , Cap. 210 and 7 charges of unlawful access to a computer, contrary to section 161(1)(d) of the Crimes Ordinance , Cap. 200, following her trial before Deputy District Judge Ada Yim. In addition, she sought leave to appeal against the total sentence of imprisonment imposed upon her in consequence of those convictions, namely 42 mont
Cited by 11 cases · Cites 7 cases
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CACC 91/2011 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CRIMINAL APPEAL NO. 91 OF 2011 (ON APPEAL FROM DCCC No. 649 of 2010) ____________ BETWEEN
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________________________ J U D G M E N T ________________________ Hon Lunn JA (giving the judgment of the court): 1.The applicant sought leave to appeal against her convictions on 14 February 2011 on no less than 25 charges of theft, contrary to section 9 of the Theft Ordinance, Cap. 210 and 7 charges of unlawful access to a computer, contrary to section 161(1)(d) of the Crimes Ordinance, Cap. 200, following her trial before Deputy District Judge Ada Yim. In addition, she sought leave to appeal against the total sentence of imprisonment imposed upon her in consequence of those convictions, namely 42 months’ imprisonment. THE CHARGES 2.The charges alleged that the offences had occurred on stipulated dates in the period 20 September 2007 to 28 February 2008. The property alleged to have been stolen in the theft charges were either choses in action or shares of companies in the accounts of various clients of Merrill Lynch (Asia Pacific) Limited, of which the applicant was an employee. The theft of the choses in action occurred in allegedly unauthorised transactions conducted in the accounts of the applicant’s clients and arose in a number of different circumstances, namely:
The charges in respect of the applicant’s access to a computer arose out of her access of computers of Merrill Lynch (Asia Pacific) Limited in order to draw down unauthorised loans or the ‘rollover’ of such loans together with interest in the material accounts (charges 7, 10, 13, 17, 37, 44 and 45). THE TRIAL 3.There was no issue at trial that the applicant, a Taiwanese American, was a Private Wealth Manager employed by Merrill Lynch (Asia Pacific) Limited who was responsible at all material times for the client accounts in respect of which the alleged offences occurred. Although the applicant began her employment with the company in Hong Kong only on 1 September 2007, prior to that date she had been responsible for the accounts of those clients, occupying the same role, but for another company of the Merrill Lynch group, namely Merrill Lynch Pierce Fenner and Smith Inc. In the latter employment, she was based in California in the United States of America. The clients themselves were Taiwanese, who were resident in Taiwan, and whom the applicant met from time to time in Taiwan, but with whom she was otherwise in contact by telephone, fax and e-mail. All of the accounts the subject of the charges had been opened and operated prior to 1 September 2007. The first of the accounts had been opened in October 2003. When the accounts were operated in the United States of America they were given the prefix ‘1BR’. In Hong Kong that designation was changed to the prefix ‘16V’. 4.The following table, adapted from a table provided in the reasons for verdict, sets out information in respect of the accounts:
5.On a submission of no case to answer, at the close of the prosecution case, the applicant was acquitted of charges 20 - 31, 33 and 39. In her reasons for verdict, the judge acquitted the applicant of charge 3. THE PROSECUTION CASE 6.The prosecution case was that although all transactions conducted within the various client accounts required the authorisation of those clients and, notwithstanding the absence of such authorisation, nevertheless the applicant conducted transactions in the accounts of those clients. The prosecution alleged that without the knowledge, consent or authorisation of the clients the applicant acted dishonestly, by variously: drawing down loans with which to repay existing loans or interest or to finance the cost of the acquisition of products; buying and selling products in those accounts and transferring monies to and from those accounts. It was alleged that in so conducting herself the applicant assumed the rights of the clients in respect of those accounts and did so with an intention to treat the property as her own to dispose of regardless of their rights. From time to time, in order to facilitate the unauthorised transactions, the applicant accessed the computer system of Merrill Lynch (Asia-Pacific) Limited and did so dishonestly with the intent to cause loss to the particular client concerned. 7.The prosecution alleged that in order to conceal the true transactions conducted in the accounts of the clients the applicant provided them respectively with her own Chinese version of the account statements (“customise statements”), which purported to reflect activity in the respective accounts for a particular period. However, those customised statements were false and, in material particulars, at odds with the statements produced by Merrill Lynch (Asia-Pacific) Limited. It was an admitted fact that the latter statements of account constituted a “complete and accurate record of all transactions and activities” in each of the accounts for the period to which they related. Further, it was admitted that those transactions and activities had been effected by or carried out on the instructions of the applicant, save in respect of the ‘rollover’ of any loan for three days or less at the expiration of the particular loan period. Insofar as there were discrepancies between the Merrill Lynch account statements and the customised statements, the prosecution suggested that the applicant was deliberately presenting a false picture to her clients in order to cover up the true position in respect of transactions, assets and liabilities in their respective accounts. 8.In conducting herself as she did the prosecution alleged that the applicant took advantage of the fact that the clients concerned understood very little or no English and relied upon information that she supplied to them in the customised statements. 9.Although no less than six video recorded records of interview of the applicant conducted by police officers in the period on and between 18 and 20 November 2009 were adduced into evidence by way of admitted facts, the prosecution case was that the applicant’s version was “self-serving”. In particular, the prosecution said that the applicant’s explanation that all of the transactions the subject of the charges had been effected with authorisation was untrue. Of her assertion that the instructions for the transactions had been received in telephone conversations that had been recorded, as required by Merrill Lynch, the prosecution pointed to the absence of any single such conversation to be found on such recordings. Further, the prosecution pointed to the inability of the applicant to explain in those interviews the discrepancies between the Merrill Lynch statements of account and her own customised statements. THE DEFENCE CASE 10.The applicant did not give or call evidence in the defence case at trial. However, reliance was placed on behalf of the applicant by her counsel on the assertions that she had made in the video recorded records of interview, in particular that she had not conducted any transaction in the material accounts “without the knowledge, consent or authorisation of the account holders”. Further, it was submitted on her behalf in closing submissions that the discrepancies between the customised statements and the Merrill Lynch account statements could be explained on the basis of the applicant’s incompetent preparation of the customised statements. REASONS FOR VERDICT 11.In her reasons for verdict the judge identified as the “live issue” in the case, whether or not the transactions effected in the material accounts were “done with authorization and knowledge of clients”. 12.The judge acknowledged at the outset of her analysis under the rubric “Findings” that the five account holders called to give oral testimony “have an interest in the present case in one way or the other”, noting that they had suffered “huge losses in their respective accounts” and held the applicant responsible for the illnesses visited on Madam Hsia, an account holder of an account and operator of that and another account, who had been too ill to testify on behalf of the prosecution. Further, she noted that, apart from Mr Lin Ching Fu, not only was it the case they all knew each other but also some of them were close family friends and they had “come together to discuss the problem, to confront the defendant, to work out their loss and negotiate with Merrill Lynch”. In consequence, she determined that “care” had to be taken against “the risk that their memory be distorted or influenced by the other(s) inadvertently”. 13.The judge noted (page 101 N) that in supplying the clients with customised statements and in not using the Merrill Lynch office telephone lines, to confirm on audio recordings all orders before execution, the applicant was in breach of the compliance requirements of her employer, Merrill Lynch. 14.The judge found (page 101 E) that the applicant was aware that all the clients, the transactions in whose accounts were the subject of the charges, required that products acquired in their account be ‘principal protected’. Further, that the applicant knew that she had caused them to believe that the linked bonds purchased in their accounts were principal protected, whereas they were not. 15.In respect of the discrepancies as to the transactions effected and as to the resulting assets and liabilities in the respective accounts between, on the one hand, the Merrill Lynch account statements and, on the other hand, the customised statements, the judge examined multiple instances of such discrepancies. Save in respect of the transaction the subject of charge 3, the judge determined that the discrepancies were accounted for by the fact that the applicant was covering up the actual transactions and assets and liabilities from her clients. Conversely, she rejected the submissions made on behalf of the applicant that the discrepancies in specific instances were to be explained by the applicant’s incompetency in the preparation of the customised statements. GROUNDS OF APPEAL AGAINST CONVICTION Ground 1 : dishonesty 16.By ground 1, of the grounds of appeal against conviction, Mr Grossman SC submitted that the judge erred in finding the applicant to have been dishonest: whilst her conduct may have been contrary to internal rules and regulations of Merrill Lynch, it did not amount to the commission of criminal offences. The applicant had not derived any personal benefit as a result of her conduct and the prosecution had proved no dishonest motive in the applicant for her conduct. Further, it was suggested that the requirements of section 7 of the Theft Ordinance, Cap. 210, as to the appropriation of property belonging to another, were not made out. In respect of the theft charges it was suggested that, at its highest, the prosecution case proved that, without authorization, the applicant had effected transactions for the clients in question that were not principal-protected products. Similarly, the applicant had not accessed the Merrill Lynch computers with “intent to cause a loss”. Rather, she had done so to hide a loss or an unauthorised transaction. Ground 2 : the wrongful admission and use of evidence prejudicial to the applicant outside the period of time stipulated in the charges 17.It was submitted that the judge had erred in admitting and making use of evidence of customised statements supplied by the applicant to her clients, in respect of the time periodbeforethat reflected in the charges, namely commencing 20 September 2007. Further, the judge erred in taking into consideration the fact that those customised statements were inconsistent with the Merrill Lynch statements. Such a course “could have” led the judge to conclude that the applicant was involved in attempts, prior to the period of the charges, to produce and use statements containing false particulars. In turn, that could have prejudiced the judge in her assessment of the applicant’s conduct in the time period the subject of the charges. Further, the judge failed to state that she had disregarded any such analysis and conclusions in respect of the earlier customised statements, in particular, that the evidence was not ‘similar fact evidence’. The judge erred in having regard to that highly prejudicial evidence. Ground 3 : the failure to properly assess the credibility and reliability of the account holder witnesses 18.It was suggested that the judge had failed to properly assess the credibility and reliability of the account holder witnesses, in particular to have regard to the issue of whether or not they were motivated to give evidence implicating the applicant in order to seek compensation from Merrill Lynch. Then, it was contended that there were serious inconsistencies in the evidence of Madam Huang Yi Ting, Mr Lin, Madam Chen and Madam Huang Shu Shui. Finally, it was submitted that the judge had made “no, or very little, attempt to analyse the evidence or the inherent probabilities, in the prosecution evidence”. Ground 4 : the failure to properly consider the applicant’s account in the out-of-court video recorded interviews 19.It was submitted that, in considering the applicant’s accounts in the out-of-court video recorded interviews, the judge failed to give sufficient consideration to the exculpatory parts of those interviews. Further, she failed to provide sufficient reasons as to why she rejected the applicant’s account of events. Ground 5 : the failure to deal properly with the evidence in respect of an audio recorded conversations between the applicant and Ms Hsai 20.It was submitted that the judge erred in relying on the evidence of audio recorded telephone conversations between the applicant and Ms Hsia, in circumstances where the latter had not given evidence and, therefore, had not been subjected to cross-examination. THE SUBMISSIONS OF THE RESPONDENT 21.In his helpful written submissions Mr David Leung, on behalf of the respondent set out succinctly his arguments as to why this court should reject the applicant’s grounds of appeal against conviction. On the other hand, in his submissions in response to the applicant’s argument that the judge had erred in rejecting evidence in the defence case, he drew the court’s attention to the fact that, whilst the judge had given herself a character direction in favour of the applicant in respect of the propensity limb, the judge did not state that she gave a direction in respect of credibility. He pointed out that such a direction was relevant to the approach to be taken by the judge to the out-of-court statements made by the applicant in her various video recorded records of interview, which included both inculpatory and exculpatory statements. Nevertheless, he sought to persuade the court that the non-direction in respect of credibility did not render the conviction unsafe and unsatisfactory. 22.Having been invited by the court to make submissions on the issue, it was submitted on behalf of the applicant that the non-direction was material, in particular as to the exculpatory statements made by the applicant that she had the authorisation of her clients for the transactions conducted in the accounts. That issue was material, given that the applicant could not have been convicted of the offences unless her out-of-court exculpatory statements were rejected. Finally, it was submitted that, given that the judge’s approach was fundamentally flawed, the convictions fell to be quashed on that ground alone. A CONSIDERATION OF THE SUBMISSIONS 23.No issue was taken with what the judge described as “certain inaccuracies” in the customised statements provided by the applicant to her clients, namely the discrepancies between the Merrill Lynch statements of account and those customised statements, namely (appeal bundle page 100 F - M):
24.As noted earlier, the judge identified as the “live issue” whether or not the transactions that were effected in the accounts of the applicant were done with the authorisation and knowledge of her clients. Next, if that was the case : were the transactions effected dishonestly by the applicant? Relevant to those issues, was how it came about that the customised statements were inaccurate in the respects identified by the judge. Ground 2 : the wrongful admission of the customised statements, being prejudicial evidence of earlier misconduct 25.As Mr David Leung, counsel for the respondent pointed out, the evidence in respect of the customised statements for the period prior to 20 September 2007, to which objection is now made as having being wrongfully admitted and used, was admitted into evidence by way of admitted facts. In its opening speech, the prosecution asserted that the applicant (Appeal Bundle page 42, paragraph 42):
Clearly, that assertion was based upon the discrepancies evidenced by the earlier customised statements and the Merrill Lynch statements. 26.No objection was taken at that stage or indeed at any stage in the trial as to the admissibility of that evidence. Similarly, no objection was taken to the extensive use of those earlier customised statements, in respect of the examination-in-chief of the various former clients of the applicant called as witnesses for the prosecution at trial. In those circumstances, in the absence of an allegation of incompetence by counsel for the applicant to trial, it is surprising to see the issue being raised in the application for leave to appeal against conviction (see HKSAR v Chan Pui Mun CACC 14/2006; unreported-20 May 2008). 27.In its opening the prosecution did not articulate the basis upon which it invited the court to receive and act upon that evidence. However, in its closing speech the prosecution did address the basis upon which it asserted the evidence could and could not be used (page 2123 A - E):
28.Counsel for the respondent suggested that one reason that it was necessary to adduce evidence of the prior dealings in the accounts of various clients was that it was relevant to some of the charges of theft which related to the unauthorised settlement of principle and/or interest reflected in the charges that the applicant faced, which payments related to loans drawn prior to the period with which the charges were concerned. 29.As an example, he cited the circumstances relevant to charge 1, in which it was alleged that on 21 September 2007 the applicant had stolen a chose in action, namely US$101,098 from the joint account in the names of Mr Hsu Ching Hua and Madam Hsia Miao Hui. That transaction concerned the repayment of a loan together with interest in that amount. The loan had been drawn down in the account on 14 May 2007 in order to provide part of the financing necessary for the purchase of a product. However, whilst it was reflected in the Merrill Lynch account statements it was not described in the customised statements provided to Madam Chen Hui Fang and Madam Hsia by the applicant. The former testified that she, being not only a contributor to the capital invested but also a beneficiary and operator of the account, was unaware that such a loan had even been drawn down let alone settled. She believed that the purchase was funded with monies available in the account. The judge accepted her testimony (see appeal bundle page 124 D - F) and went on to find:
30.As a second example of the necessity to produce evidence in respect of transactions prior to the time period reflected in the charges, Mr Leung referred to charge 2 and related charges. Charges 2, 8, 11, 12 and 14 concerned the payments made by the applicant from the account in the names of Mr Hsu Ching Hua and Madam Hsia Miao Hui in respect of interest due on a loan drawn down in the account on 13 April 2007. Clearly, the loan was drawn down outside the period the subject of the charges, whereas the payments of interest were made within that period. As the judge noted (appeal bundle, page 125 C - E) the loan was drawn down in order to finance the purchase of a stipulated product. Ultimately, that product was sold on 12 February 2008, which transaction was the subject of charge 9. Neither the loan nor the product was reflected in the customised statements provided by the applicant to Madam Chen and Madam Hsia. However, they were to be found in the Merrill Lynch statements. 31.It was the evidence of Madam Chen, accepted by the judge (appeal bundle, page 126 C - D; and K) that she had not authorised the drawdown of the loan or the purchase of the product. 32.In her consideration of the customised statements provided to Madam Chen and Madam Hsia in the pre-charge period, the judge noted that whilst the stipulated product had not been detailed in the customised statement dated 1 May 2007 another product, namely ‘Japanese stock linked bond 2115 JP’ was described as having been purchased on 13 April 2007. Given that there had been no such purchase the judge described the entry the applicant made as (appeal bundle page 125 J) “plainly a misrepresentation”. The judge made the same determination in respect of the customised statement dated 30 July 2007 in which, whilst there was no reference to the product with the number ‘2115 JP’, there was reference for the first time to the product ‘Japanese stock linked bond 8267 JP’, described as having been purchased on 13 April 2007. Similarly, of the customised statements in respect of the period prior to the date stipulated in charge 1, namely 20 September 2007, the judge determined (appeal bundle, page 123 U) that the discrepancies between the information stipulated there and in the Merrill Lynch statements of account on evidenced the fact that the applicant was “trying to cover up”. 33.It follows that, in having regard to the applicant’s conduct in the pre-charge period, as evidenced by the customised statements, the judge was not only taking into account the discrepancies between the Merrill Lynch statements of account and the customised statements, as explaining conduct the subject of the charges, but also making findings adverse to the applicant in respect of that earlier period. In making those findings it is clear that the judge had moved beyond the concern expressed in the applicant’s written submissions, namely that the
Clearly, the judge found in respect of the applicant’s conduct in the pre-charge period not only that the applicant produced and used the customised statements but also that in doing so the applicant was variously making a misrepresentation and/or trying to cover up the true state of affairs. The fact that there was a ‘hole’ in the accounts, which had been covered up on an ongoing basis, put in context the conduct the subject of the charges. 34.As Mr Grossman pointed out, this court, differently constituted, considered the principles applicable to the admission and use of evidence in respect of ‘uncharged acts’ in a trial of other offences. In delivering the judgment of this Court in HKSAR v Kwok Hing, Tony [2010] 3 HKLRD 769 Yuen JA said (page 776-7, paragraph 16):
35.Although Yuen JA cited the judgment of the Court of England and Wales in R v Pettman with approval, she expressed disapproval of the description used in that case of the evidence as being “background” in nature. In R v M & Others [2000]2 Cr. App. R. 270Kennedy LJ, in the judgment of the Court of Appeal of England and Wales, quoted with approval from an article by Professor Birch in the Criminal Law Review [1995] 651 in which a distinction was drawn between similar fact evidence and evidence of other admissible uncharged acts. Of the latter, it was said (page 272 B - C):
36.As noted earlier, in its closing speech the prosecution invited the judge to have regard to the evidence of the pre-charge period customised statements as presenting “as full a picture as was practicable” of dealings between the applicant and her clients in the material accounts, in particular as evidencing the fact that her clients had been “...kept in ignorance of the true state of their accounts”. 37.In our judgment the evidence constituted by the pre-charge period customised statements was admissible in that it provided, “setting and context in which the offence occurred”. For example, it was relevant to the circumstances in which a product came to be sold, the purchase and sale of which was allegedly unauthorised and not known to the respective account holder. Clearly, it was relevant to the issues taken by the defence that the transactions were authorised by the account holders and, if there were discrepancies between the information stipulated in the customised statements with the Merrill Lynch account statements, the assertion that was to be explained by the applicant’s incompetence: if so, why were so many transactions over a considerable period of time inaccurately reflected in the customised statements? Furthermore, it was relevant to the issue of the delay of the account holders in making enquiries of the applicant as to transactions in their accounts and the limited ambit of those enquiries. 38.As noted earlier, the prosecution eschewed the admissibility or use of the evidence on the basis of similar fact. Although the judge did not advert specifically to that submission by the prosecution in her reasons for verdict, there is nothing in those reasons that in any way suggests that she had regard to the evidence as being similar fact evidence. Further, the judge stated specifically that she gave herself a warning that, having regard to the applicant’s good character, “it is less likely that she would commit a crime”. 39.Accordingly, we are satisfied that there is no merit in this ground of appeal against conviction. Ground 3: the failure to properly assess the credibility and reliability of the account holder witnesses 40.At the outset of her consideration under the rubric ‘Findings’ the judge stated that she reminded herself of the caution and care to be taken in her consideration of the evidence of the various account holders and the reasons that necessitated that approach. Of that she said (appeal bundle 100 M - R):
41.The specific matters alleged to be internal inconsistencies in the evidence of Madam Huang Yi Ting, Mr Lin Ching Fu, Madam Chen Hui Fang and Madam Huang Shu Hui are stipulated in almost eight pages of the written submissions advanced on behalf of the applicant. They are an almost verbatim repetition of the written and oral closing submissions made on this issue on behalf of the applicant to the judge at trial, although this court was not informed that was the case. 42.Needless to say, although the judge dealt with many of the alleged inconsistencies in her reasons for verdict she did not deal with all of them. Nor was she required to do so. A judge’s duty in analysing the evidence adduced at trial and making findings is to have regard to the submissions made on behalf of the parties and, where appropriate, to deal with specific, material points of significance, thereby evidencing the basis of her overall findings in respect of the credibility and reliability of witnesses. 43.The ambit of the duty of a District Court judge in setting out his analysis and determinations in respect of the evidence was addressed in the judgment of Blair-Kerr J, as he was then, in the Full Court in R v R. E. Low [1961] HKLR 13 at 82
That passage, has been cited with approval in the judgments of this court in The Queen v Sheikh Abdul Rahman Bux [1989] 1 HKLR 1 at page 4 H - 5 E and in HKSAR v Choi Gin Ngon & Others [1998] 1 HKLRD 902 at 909 E - 910 A. The judge’s duty is to, “… analyse in his judgment the material points in the evidence of the case and give reasons as to why he had reached a particular conclusion or decision” (see the judgment of Chan CJHC in this court in Zhou Cui Hao v Tung Fung Yee [1999] 3 HKC 634 at 639 C, cited with approval in the context of criminal proceedings in the judgment of Tang VP in this court in HKSAR v Poon Chun Kit [2007] 4 HKLRD 12 at 15, paragraph 11). 44.The thoroughness with which the judge discharged that duty is illustrated by reference to some of the specific alleged inconsistencies relied on by counsel at trial and repeated before this Court. Madam Huang Yi Ting (PW2) 45.The request of the applicant by Madam Huang Yi Ting in late January 2008 to transfer US$40,000 out of her account (A) was followed by the subsequent transfer of US$37,200 (charge 32) to that account from an account (D) in which the Hsu children were beneficiaries, in consequence of which the eventual transfer on 5 February 2008 of $40,000 was made out of the of account of Madam Huang Yi Ting. The discovery of that flow of funds between unconnected accounts by Madam Huang Yi Ting and Madam Chen clearly caused serious concerns in those parties, which were raised with the applicant. 46.It was contended on behalf of the applicant that Madam Huang Yi Ting had given evidence in respect of those matters that was inconsistent with her recorded telephone conversation on 23 January 2008 with the applicant. In the telephone conversation the applicant said that she was responding to a faxed request to transfer money, advising Madam Huang Yi Ting that cash in the account was required as collateral to avoid a margin call and that only $12,000 was available for transfer. In the result, Madam Huang Yi Ting said that she did not persist with her request to transfer monies. 47.The judge examined the evidence in great detail and rejected that submission. She noted (appeal bundle, page 106 A - D):
48.Of the telephone conversation of 23 January 2008, the judge noted (appeal bundle, pages 106 T - 107 J):
Lin Ching Fu (PW 6) 49.On 10 February 2008, US$274,000 was transferred from the account in the name of Lin Ching Fu to the account in the name of Madam Huang Shu Hui (charge 46). The transfer permitted payment to Madam Huang Shu Hui of monies due to her, for which she had been pressing. It was their evidence that neither knew each other. Mr Lin said that he had not authorised the transfer and Madam Huang said that she did not know about it. The transfer proceeded on the basis of a signed ‘Letter of Authorisation’ in the name of Lin together with an ‘Asset transfer request’. His evidence was that it was not his signature. It was submitted that his evidence was inconsistent with his out-of-court statement to the police. In the latter, he explained his reasons for rejecting the signature as being on the basis of differences in the strokes of the characters, whereas in evidence he said that, although he had changed his mind about that reasoning, nevertheless he asserted that the signature was a copy of his own signature. 50.In her reasons for verdict the judge considered the evidence of Mr Lin with which issue was taken in the overall context of the transfer of US$274,000. Of Mr Lin’s evidence in respect of the signature on the letter of authorisation, she noted (appeal bundle pages 151 T -152 O):
Madam Chen Hui Fang (PW 7) 51.It was submitted to the judge in the closing speech made on behalf of the applicant that there had been a delay from the time thatMadam Chen Hui Fang had discovered what she took to be suspicious transactions in her accounts and the time at which they were raised with the applicant. That the judge was aware of the issue and that she addressed it in her consequent analysis of the evidence and made findings is evident in her reasons for verdict. 52.The judge noted that Madam Chen had said that she had first noticed discrepancies between the customised statements and the online Merrill Lynch statements on 22 November 2007. Of that, the judge said Madam Chen testified that (appeal bundle page 116 A - P):
53.The judge went on to note (appeal bundle, pages 121 O – 122 S) that the issue of the discrepancies between the online Merrill Lynch statements and the customised statements was raised in two telephone conversations with the applicant on 19 December 2007. She determined that the applicant provided Madam Chen with information that was misleading. In the result, she determined:
54.There is no merit at all in this ground of appeal. Ground 4 : the failure to properly consider the applicant’s account in the out-of-court video recorded interviews Character direction: the credibility limb 55.As noted earlier, the judge stated specifically (appeal bundle, page 100 S - T) that the applicant had a “clear record”, in consequence of which she said that she “reminded myself that it is less likely that she would commit a crime.” The judge’s reference to the applicant having a “clear record” resonates with the admitted fact, in which that phrase was used (appeal bundle, page 95). No doubt, by the use of that phrase it was intended to convey the meaning that the applicant had no criminal convictions and, to that extent, was of good character. The judge gave herself no direction in respect of the second limb, namely credibility. Although this Court has the benefit of the transcript of the entire proceedings in the lower court, it is nowhere apparent from the transcript why the judge limited her direction in respect of the applicant’s character to the propensity limb only. 56.Although the parties had troubled to reflect the fact of the absence of any criminal conviction by the applicant by an admitted fact, counsel for the applicant did not make any reference to that evidence in his closing speech, either orally or in his written submission. For his part, in his closing speech counsel for the prosecution suggested that the evidence was relevant to a consideration of whether or not the evidence led by the prosecution had “overcome the inherent improbability that the defendant, a person of previous good character, would dishonestly resort to effecting unauthorised transactions…” Clearly, that was a reference to the propensity limb only of a good character direction in favour of the applicant. 57.Surprisingly, given the length of the trial, there was very little discussion between counsel and the bench as to matters of law at the conclusion of the trial and before closing speeches. In so far as there was any discussion, it was initiated by the judge and concerned only the averment of a “dishonest intent to cause loss” in the various charges of accessing a computer, contrary to section 161(1)(d) of the Crimes Ordinance, Cap. 200. The applicant’s out-of-court statements in video recorded interviews conducted by the police 58.Clearly, given that the applicant did not give or call evidence at her trial, the crux of the defence case lay in exculpatory statements made in her out-of-court video recorded interviews and in evidence elicited in cross-examination of prosecution witnesses. That the nub of her defence lay in the assertions in the out-of-court statements is reflected in the judge’s succinct summary of the defence case in her reasons for verdict, namely that (appeal bundle page 97 O - P):
59.Acknowledging that the crux of the nub of the defence case lay in the applicant’s out-of-court statements, in his closing speech counsel for the respondent said (appeal bundle page 2157 J - N):
60.The significance and relevance of the applicant’s explanations, in her out-of-court video recorded interview, for transactions in the material accounts is illustrated by the judge’s analysis and findings in her reasons for verdict in respect of charge 15 (appeal bundle page 135 L - U):
61.Although that account was in the name of Mr Hsu Ching Hua, there was no dispute that trading in the account was conducted by Madam Huang Shu Shui. Of the transaction described above by the judge, the applicant had said in her video recorded interview at counters 1086 - 94:
62.Clearly, the applicant’s credibility in respect of her out-of-court exculpatory statements was of great importance. As Mr David Leung pointed out in his written submissions, Specimen Direction 37.3 of the Judicial Studies Board’s Specimen Directions sets out a direction that may be appropriate in circumstances where a defendant at trial has not given evidence, but has given an out-of-court account of relevant events which has been adduced into evidence at the trial:
63.It is to be noted that the accompanying text advises (37.3):
64.Albeit that the Specimen Directions have been compiled for use by a judge in directing a jury, that advice is of similar merit in trial by judge alone, if there is any controversy as to the ambit of the appropriate direction. In such circumstances, the judge would be well advised to seek the submissions of counsel on the issue (see paragraph 58). Of course, in the absence of a jury the issue could be raised with counsel even after their closing speeches, in particular in the instant case, having regard to what has and has not been canvassed in those speeches. 65.In HKSAR v Soo Chun Sou, Dominic (CACC 262/2008; unreported 20 January 2010) this court, differently constituted, was seized of an appeal following a conviction for murder. The applicant had not given or called evidence. Rather, he relied upon exculpatory out-of-court statements he had made to the police, which were adduced in the prosecution case. Although the applicant was a good character, the judge gave the jury a good character direction in respect of the propensity limb only. At issue, was whether or not the judge had erred in failing to give the jury the direction in respect of the credibility limb. 66.In the judgment of the court, delivered by McMahon J, it was acknowledged that the judgment of the majority in the Court of Final Appeal in Tang Siu Man (No. 2) v HKSAR (1998) 1 HKLRD afforded a considerable discretion to a trial judge as to the scope and terms of any direction as to good character to be given to a jury. Of the exercise of that discretion in that case, it was said (page 7 F - L, paragraph 14):
McMahon J went on to conclude:
67.In determining that it was appropriate, notwithstanding the non-direction, to apply the proviso to section 83(1) of the Criminal Procedure Ordinance and to dismiss the appeal, the court had regard to the significance of the fact that the judge had directed the jury at least in respect of one limb of the good character direction, namely in respect of propensity. Of that, McMahon J said (page 8 H - T, paragraphs 15-16):
68.Given the fact that the judge troubled to state, in effect, that she gave herself the propensity direction, her non-direction in respect of credibility, in the circumstances of this case, was a material irregularity. Accordingly, it is necessary for the court to consider the applicability of the proviso to section 83(1) of the Criminal Procedure Ordinance, Cap. 221, having regard to how it was in fact that the judge approached the out-of-court statements of the applicant. The judge’s failure to give sufficient consideration to the applicant’s exculpatory out-of-court statements and to give sufficient reasons for rejecting them 69.There is no merit in the complaint that the judge failed to give sufficient consideration to the applicant's exculpatory out-of-court statements. Having noted that the applicant had not given evidence, clearly the judge’s repeated reference to the ‘defence case’ was a reference to the applicant’s out-of-court statements, together with suggestions accepted in cross-examination of prosecution witnesses. As noted earlier, the judge said of the defence case (appeal bundle, page 97 O - P) that, whilst the customised statements “may be inaccurate”, nevertheless it was the applicant’s case that she had “obtained consent and authorisation for all the transactions in question”. 70.It was the scheme of the judge’s reasons for verdict, in respect of the out-of-court statements, to have specific regard to them in the context of other evidence relevant to particular charges. Thus, the judge referred specifically to the exculpatory account of the applicant in that context in respect of the following charges: charge 32 - appeal bundle, pages 13 M - Q and 14 C - D; charges 2, 8, 9, 11, 12 and 14 - appeal bundle, page 126 M - Q; charges 10 and 13 - appeal bundle page 128 D - K; charge 15 - appeal bundle, page 135 Q - R; charges 16 to 18 - appeal bundle, page 136 H - Q; charge 19 - appeal bundle, page 137 K - Q and 138 H - L; and charge 46 - appeal bundle, pages 151 O - R and 152 - T. 71.Although the judge did not specifically advert to the matter, there is no dispute that she was entitled to treat the exculpatory parts of the mixed statements made out-of-court as of less weight than the inculpatory statements. The appropriate approach is described succinctly in Specimen Direction 40 of the Judicial Studies Board’s Specimen Directions namely:
72.There is no merit in the submission that the judge failed to give sufficient reasons for rejecting the applicant’s out-of-court exculpatory statements. In fact, she gave detailed reasons for so doing. 73.The judge’s analysis of the evidence, including the exculpatory account of the applicant, in respect of charge 32 illustrates her approach to the issue. As relevant background to that charge, the judge noted that (appeal bundle, page 106 A - C) towards the end of January 2008 Madam Huang Yi Ting requested the transfer of $40,000 from an account in her name. She was told by the applicant that there was a shortage of funds. That conflicted with information available to Madam Huang on the customised statements. However, the true position, as reflected in the Merrill Lynch statements of account, indicated that there was a shortage of about $37,000 with which to make the requested transfer. In telephone conversations with the applicant Madam Huang was informed that the shortage of funds available to transfer monies out of the account arose from the need to keep money in the account to avoid a margin call. The judge found that to be a “misleading representation” to “cover up” the loss and the fact that the product in the account was not “principal protected”. 74.There was no dispute that there was a transfer of the $37,200 into Madam Huang’s account at that time. As the judge noted, she knew nothing about its provenance: “this transfer was not requested by her and she did not arrange with Hsia, Hsia’s children or anyone to transfer money into account.” 75.Of the applicant’s explanation, the judge said (appeal bundle, page 108 M - Q):
The proviso 76.Notwithstanding the judge’s non-direction in respect of credibility in favour of the applicant in her consideration of the applicant’s out-of-court statements, it is clear that the judge considered the exculpatory assertions with care. On the occasions that she rejected the exculpatory assertions, she did so only having accepted the weight of contrary compelling evidence, which evidence she identified at length. We are satisfied that the evidence which was accepted to be, or which the judge found to be, true pointed inexorably and inevitably to the conclusion that the applicant was guilty of the charges of which the judge convicted the applicant. The sustained provision over a lengthy period of inaccurate customised statements to the account holders was utterly unexplained. There was no single audio recording, as required by Merrill Lynch, of any of the impugned transactions for which the applicant claimed she had received authorisation from her clients. The direct evidence of the applicant’s clients was thereby supported, as it was by the audio recorded conversations held by them with the applicant. Proviso 77.In the result, we are satisfied that notwithstanding the material irregularity, given the overwhelming strength of the evidence the judge would have inevitably convicted the applicant of the charges, so that no miscarriage of justice has actually occurred. Ground 1: dishonesty 78.At the end of her reasons for verdict the judge stated how it was that she had approached the averment, in each of the Particulars of Offence, that the applicant had acted dishonestly (appeal bundle page 154 N - P):
79.In that judgment of the Court of Appeal of England and Wales, delivered by Lord Lane CJ, the approach to be taken to the word “dishonestly” as used in section 1 of the Theft Act, 1968 was set out in the following terms (page 1064 D - G):
80.There is no dispute that the Ghosh test has been accepted and applied in Hong Kong, not only in respect of the offence of theft but also specifically in respect of the element of dishonesty in section 161 of the Crimes Ordinance, Cap. 200 (see the judgment of Chan CJHC, as he was then, in HKSAR v Tsui Shui Lun [1999] 3 HKLRD 215 at page 224 E - G). 81.Section 7 of the Theft Ordinance, Cap 210 provides, inter alia, that:
82.In R v Fernandes [1996] 1 Cr. App. R. 175 the Court of Appeal of England and Wales considered the ambit of the equivalent provision, section 6 of the Theft Act, 1968. The applicant had been convicted of theft, in circumstances in which the applicant had transferred money from a client account to his bookkeeper, for investment with a licensed firm of backstreet moneylenders of which the bookkeeper was a partner. The money disappeared. At issue in the appeal was whether or not, having regard to the provisions of section 6 of the Theft Act, it was proved that the applicant had an intention to permanently deprive the owner of the monies. In the judgment of the court Auld LJ said (page 188 E - F):
That passage was cited with approval by Pitchford LJ in the judgment of the Court of Appeal (Criminal Division) of England and Wales in R v Vinall [2011] EWCA Crim 6252 (unreported; 14 July 2011) at paragraph 16. With reference to the facts in Fernandes, Auld LJ said (page 188 F):
Motive 83.Although counsel for the respondent had opened the prosecution case on the basis that, whilst it was acknowledged that the applicant had not siphoned off monies from the accounts, it was alleged that the applicant had effected transactions “with a view to generating revenue for Merrill Lynch and commission for herself”, in his closing speech counsel said that the prosecution had not sought to lead “evidence to establish a motive that might explain to the full satisfaction of the court why the defendant” had conducted herself as she had done. Ultimately, the prosecution case was that in the period the subject of the charges the applicant was engaged in a cover-up. Counsel submitted (appeal bundle, pages 124 S - 125 C):
84.Certainly, it is clear that the judge understood that the nub of the prosecution case was that, in the period the subject of the charges, the applicant was engaged in a cover-up. In her short summary of the prosecution case the judge said (appeal bundle page 907 D - H):
85.In her consideration of the issue of whether or not the applicant had been dishonest in effecting the transactions the subject of the charges, the judge had regard to the related issues of how it came about that the transactions were described inaccurately in the customised statements and the central issue of whether or not the transactions were effected with the knowledge, consent and authorisation of her clients. 86.The provenance of the asserted explanation of inaccuracies in the customised statements, when compared to the Merrill Lynch account statements, as being in the applicant’s “incompetency” lies in the closing speech of the applicant’s counsel, rather than in anything that the applicant had said in her out-of-court video recorded records of interview (see the appeal bundle, page 2, 164-5). Nevertheless, the judge addressed the argument in respect of the specific occasions on which the point was taken. Thus, for example, in respect of charge 15, a charge of theft which arose from the repayment of a loan, which the judge found to be unauthorised as to the grant and repayment, the judge rejected the suggestion that the omission of references to actual transactions in the customised statements was due to the “incompetency” of the defendant (see appeal bundle, page 135 M - O and G - I). She observed that one of the alleged purposes of the customised statements was to show “the interest income and payment”. In that context, the judge posed the rhetorical question: “how could the defendant have missed that out?” 87.In the result, the judge determined that the transactions had been done without “authorisation and knowledge” of the account holders and that the applicant had “appropriated the chose in action with an intention to take the same as her own to dispose of regardless of the owner’s rights”. Clearly, that was a finding that the applicant was dishonest in that conduct. Accordingly, the judge found that the applicant had stolen that chose- in-action. 88.Several of the charges involved the alleged unauthorised transfer of monies from the account of one client to that of another (see charges 19, 32 and 46). In each case, the judge determined that the transfer was unauthorised and without the knowledge of the clients involved and that it was effected to cover-up deficiencies in one account by the transfer to it of monies from another account. In respect of the transfer of US$274,000 (charge 46) from the account of Mr Lin to the account in the name of Madam Chen and Madam Huang Shu Hui the judge said (appeal bundle page 154 I - M):
89.Obviously, in those circumstances there was compelling evidence to support the judge’s finding the applicant had acted dishonestly, in particular that in appropriating the monies she had done so, “with an intention to treat the same as her own to dispose of regardless of the owner’s rights”. 90.It was a constant refrain in the judge’s reasons for verdict that the applicant’s conduct, not only in respect of the particular events the subject of the charge but also in relation to relevant matters leading up to those events, was to be explained on the basis of a ‘cover-up’ of unauthorised transactions. Those findings extended to the charges in respect of the applicant’s access to a computer of Merrill Lynch as a result of which loans in those accounts were created, repaid, rolled over or interest paid. Thus, in respect of charge 7, by which it was alleged that the applicant had accessed a Merrill Lynch computer with dishonest intent to cause loss to the account holders, the judge found that, without the knowledge or authorisation of the account holder, the applicant had created a new loan in the account. The original purchase of the financial product had been financed by a loan in the account. The account holders were given to believe that the product was principal-protected. However, that was not the case. The product having lost half its value, the applicant effected an unauthorised exchange of the product for shares. Nevertheless, the reduced value of the collateral for the loan, which the original product and then in turn the shares represented, gave rise in the applicant to concerns of a ‘margin call’. That would have alerted the account holder to the transactions that had been effected in the account. 91.In those circumstances, the judge found that, having effected the partial repayment of a loan on the account, the applicant’s conduct in creating a new loan in the account, by accessing the computers of Merrill Lynch, to be dishonest. In particular, the judge found (appeal bundle, pages 129 S - 130 A):
92.Although, as the judge found in terms, in accessing the computer of the applicant was motivated to ‘cover up’ the exchange of the product for shares, in creating a new indebtedness in the account without authorisation the applicant clearly intended thereby to cause a loss to the account holders. Ground 5: the judge’s regard to the audio recordings of telephone conversation between the applicant and Madam Hsia, who was not called as a prosecution witness 93.As Mr Leung pointed out in his written submissions the audio recordings of telephone conversations between the applicant and Madam Hsia were adduced into evidence by way of admitted facts between the parties. Similarly, the audio recordings of the meeting of 21 February 2008 between the applicant and some of her account holders, including Madam Hsia, was the subject of an admitted fact. Although complaint was made before this court that the consequence of the absence of Madam Hsia as a witness at the trial was that she was not subjected to cross-examination, no such submission was made at trial nor was there any application that the admitted facts be withdrawn. Rather, reliance was placed on the absence of evidence from Madam Hsia. In his written closing submissions counsel for the applicant submitted:
94.It is apparent from that submission, that in fact counsel for the applicant sought to rely on the audio recording of 21 February 2008. As counsel for the respondent pointed out in his written submissions, in the absence of testimony from Madam Hsia, the respondent had conceded that there was no case to answer in respect of all but two of the charges (charges 19 and 32) relating to account D (charges 19 - 33). 95.As is apparent from the detailed analysis of the evidence by the judge in her reasons for verdict in respect of charge 19 (appeal bundle, pages 136 R - 140 F) and charge 32 (appeal bundle, pages 101 - 112 T) in convicting the applicant in respect of those charges the judge did so on the basis that, in the absence of evidence from Madam Hsia, there was nevertheless compelling independent evidence that the transactions were unauthorised. 96.Although the operator of account B was Madam Hsia, there was no dispute that Madam Huang Yi Ting and Madam Chen Hui Fang were not only contributors to the capital invested in the account but also actively concerned in its operation. As is apparent from the judge’s detailed analysis of the evidence (appeal bundle, pages 113 A - 132 O) in relation to the charges concerning account B (charges 1 - 14) the judge accepted the detailed evidence of Madam Chen of her involvement in and knowledge of the transactions in that account. Indeed, it was on her acceptance of Madam Chen’s evidence that the judge acquitted the applicant on charge 3 (appeal bundle, page 132 E - O). 97.There is no merit in this ground of appeal. Conclusion 98.In light of our determination that there was a material irregularity in the trial, we grant the application for leave to appeal against conviction and, treating the hearing of the application as the hearing of the appeal, applying the proviso to section 83(1) of the Criminal Procedure Ordinance, dismiss the appeal. Grounds of appeal against sentence 99.It was submitted on the part of the applicant that the total sentence of 42 months’ imprisonment imposed upon her following her convictions for the 31 charges was wrong in principle and manifestly excessive. In support of that submission it was suggested that the applicant had not transferred any assets from the account holders’ accounts for her own benefit. No benefit enured to the applicant. The judge had failed to take that into account in imposing sentence. On the contrary, “by constantly reciting that the offences were committed for her own benefit (which on any view they were not) the Deputy Judge appears to have imposed sentences more akin to actual theft, rather than the events recited”. Reasons for sentence 100.Having noted that the applicant had been the financial adviser to the clients, whose accounts were the subject of the charges, for two years for some clients and as much as seven years for other clients, the judge said that, knowing that her clients wished to invest in principle-protected products, she had invested in other products in which the principle was not protected and in which loss resulted. Of that, the judge said (appeal bundle, page 157 A):
Further, she found that, knowing that her clients trusted her and relied on the customised statements that she provided to them, she concealed those losses. Also, the judge noted that the conduct the subject of the charges had occurred over a period of about five months. Of that conduct, she determined that the applicant was culpable of a breach of trust (appeal bundle, page 157 B - D):
101.Of the charges involving a transfer of funds from the account of one account to another (charges 19, 32 and 46) the judge found that the applicant “had appropriated the property of innocent third party to cover up her fraud”. In respect of charges 19 and 32, the judge noted that there was no loss in respect of the former charge, given that Mr Hsu Ching Hua was the beneficial owner of both accounts, and that in respect of the latter the loss was negligible, since a similar sum of money was transferred into the account a month later. In the result, the judge stipulated a starting point for sentence of 24 months’ imprisonment, which for her previous good character she reduced by three months and a further three months for the conduct of the defence in admitting “most of the prosecution case”. Accordingly, the sentences she imposed in respect of those charges were 18 months’ imprisonment. 102.In respect of charge 46, a transfer of US$274,000 the judge noted that Mr Lin Ching Fu had been recompensed for his loss by Merrill Lynch. She stipulated the appropriate starting point for sentence as being 48 months’ imprisonment. For the reasons noted earlier, she afforded the same discountof six months’ imprisonment. Accordingly, she imposed a sentence of 42 months’ imprisonment in respect of that charge. 103.In respect of the remaining charges, the judge noted that the account holders had either reached a settlement with Merrill Lynch or had been offered compensation. She stipulated the appropriate starting point for sentence as being 18 months’ imprisonment, which she discounted by six months’ imprisonment for the reasons stated earlier. Totality 104.Noting that the conduct the subject of all the charges, “concerned a continuous course of conduct related to the practice of unauthorised trading” the judge ordered that all the sentences of imprisonment be served concurrently. A consideration of the submissions 105.Contrary to the submissions advanced on behalf of the applicant, nowhere in her reasons for verdict did the judge state that the applicant committed the offences “for her own benefit”. Rather, she made it clear that she found that, in ignoring her clients’ instructions and conducting unauthorised trading in products other than principle-protected products, the applicant had exposed her clients to the risk of loss, which eventuated. 106.Of the applicant’s culpability in respect of the conduct the subject of the charges, the judge said (appeal bundle, page 156):
Similarly, in respect of the charges relating to the applicant’s access of the Merrill Lynch computers the judge found that, “prevented them (her clients) to know the real situation of their account”. Of the unauthorised transfer of funds between accounts, the judge said that it had been done by the applicant, “...to cover up her unauthorised trading”. 107.The judge was correct in identifying the conduct the subject of charge 46, involving the transfer of US$274,000 from the account of Mr Lin to one in the joint names of Madam Huang Shu Hui and Madam Chen His Chen, as meriting the longest term of imprisonment imposed in respect of the various charges. The parties were unknown to one another. Given that he did not understand English his trust in the applicant to provide him with information relevant to his account was such that he did not discover the fact of the transfer of the money until 21 months after the event. The monies had been transferred beyond his control. His monies had been stolen and put beyond his control. The fact that ultimately Merrill Lynch reimbursed him is not a matter that enures to the benefit of the applicant. 108.Having afforded the applicant a generous discount of six months’ imprisonment from the starting point taken for sentence, we are satisfied that the resulting sentence of 42 months’ imprisonment imposed by the judge was entirely appropriate. 109.Similarly, we are satisfied that the other sentences imposed on the applicant reflected appropriately the applicant’s culpability. Conclusion 110.Accordingly, the application for leave to appeal against sentence is refused. Miscellaneous matters 111.In presenting the court with a charge sheet that encompassed no less than 46 charges the prosecution placed a heavy and unnecessary burden on both the defence and the court. The charges alleged misconduct by the applicant in a period of just less than five months. The resulting trial lasted 23 days. To the credit of the parties, a considerable amount of evidence was adduced by way of admitted facts. Nevertheless, no less than 41 box files of paginated (14,340 pages) documentary exhibits were presented to the court. That was a wholly unnecessary volume of material with which to inundate the court. In the event, in having regard to and in analysing that volume of evidence the judge’s reasons for verdict encompassed no less than 59 closely typed pages (more than 32,000 words). To put that in context, it is appropriate to note that, having ruled no case to answer on 13 charges, as conceded by the prosecution in the absence of the witness Madam Hsia, it was not necessary for those reasons to address more than one quarter of the charges that had been laid. 112.Quite obviously, the real nub of the culpability that the prosecution alleged against the applicant could have been appropriately reflected in a charge sheet of no more than one third of the number of charges actually presented. It is the duty of the prosecution to draft the charge sheet with that objective in mind, recognising that it is not necessary or desirable to reflect every element of possible misconduct by an accused in a charge.
Mr. David Leung, SADPP, of the Department of Justice, for the respondent Mr. Clive Grossman, SC and Mr. Edwin Choy, instructed by Betty Chan & Co., for the applicant |
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