HKSAR v. Wan Hon Hung Johnny and Others

DCCC 722/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 722 OF 2013

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Reasons for Verdict

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1.On 9 July 2010 at 0117 am, Wan Sing-hon, the deceased, died at Queen Elizabeth Hospital.

2.At the time of his death, the deceased had a sum of over $16 million in his account at the Hang Seng Bank.  Following the deceased’s death, between 9 July to 12 July 2010, a total of $16 million was removed from the savings account of the deceased.  The money was transferred to his current account, and thereafter by nine cheques to the accounts of the 1st defendant, 2nd defendant and 3rd defendant. Subsequently this money was transferred on by way of cashier’s order to the 4th defendant as well as by entry into the accounts of companies called Mass Profit and Pepson.

3.As a result of this, the 1st defendant and 2nd defendant are charged with conspiracy to steal the nine choses in action from the estate of the deceased with a total value of $16 million.

4.The 3rd and 4th defendants are charged separately with dealing in property known or believed to represent the proceeds of an indictable offence.  D3 faces two charges in respect of sums of $3 million and $2 million.  D4 faces one charge in respect of a sum of $2.3 million.

Background

5.The deceased married Wong Chak-wing, PW1, on 27 April 1992.  They have four children:  two elder twin girls; one older and younger son.  The youngest boy is Wan Yin-sum, who is PW2 in this case.

6.The 1st defendant, D1, is the elder brother of the deceased.  The 2nd defendant, D2, is the deceased’s elder sister.  D3 is the wife of D1, and D4 is the son of D2.

7.The company Mass Profit (Hong Kong) Limited was incorporated in Hong Kong on 28 June 1999.  It trades in computer accessories at the Golden Arcade at Sham Shui Po at Shop Nos 66 and 68.  At the time of his death, the deceased and PW1 were the only and equal shareholders and directors of Mass Profit.  Mass Profit held an account at the Hang Seng Bank of which PW1 and the deceased are joint holders and the deceased is the sole authorised signatory.

8.D1 and D2 were employed to work at the shop in Golden Arcade.  The deceased and PW1 had lived together with their four children at Albion Gardens in La Salle Road in Kowloon Tong since 2006.  It was their matrimonial home.  PW1 had moved out of that home in 2009 to live with her brother.  This was in order to deal with her drug addiction.  The deceased was also addicted to drugs at the time of his death.

9.At the time of his death the deceased held an integrated account at the Hang Seng Bank, HSB.  It consisted of a savings account and current account and foreign currency saving account.  The deceased was the sole authorised signatory for the integrated account.  The integrated account had a registered telephone banking service with the number 92277189, the deceased’s mobile phone number, the mobile phone being P26, and 23351846, the residential telephone number at Albion Gardens.

10.In the late evening of 9 July 2010, the deceased suddenly collapsed at the matrimonial home and was sent to Queen Elizabeth Hospital.  At 0117 hours on 9 July 2010 he was certified death because of death due to cocaine consumption.

11.D1, D2, PW1 and her children had gone to the hospital and thereafter returned to Albion Gardens.  PW1 eventually left.  At some point, PW2 said, after his mother had left, D2 requested to obtain the deceased’s mobile phone and wallet.  PW2 also said that when he gave the items to her, he told her there was a chequebook.  He had then given all those items - the mobile phone, the wallet and the chequebook - to D1.

12.After this, the transfers of the deceased’s account began, the first transfer being at 0455 hours on 9 July, when a sum was transferred from the savings account to the current account.  At the time of his death the deceased maintained a balance of about $15.6 million in his savings account.  From 9 to 12 July a total of HK$16 million was transferred from the deceased’s savings account via telecom transfers.  On 9 July, between 0455 hours and 1302 hours, $10 million was transferred to the current account from the savings account.  At 1301 hours, US$138,909.46 in the deceased’s foreign currency savings account was converted to HK$1,080.576.69 and deposited in the savings account.  On 11 and 12 July there were two further transfers of $3 million each from the savings account to the current account.  Furthermore, between 9 and 12 July, nine HSB cheques purportedly to be signed by the deceased were presented and drawn against the deceased’s current account.  As a result, HK$16 million was withdrawn from the deceased’s current account.

13.All of this money was placed in the bank accounts of D1 to D3 and also Mass Profit.  D1 received 3.5 million; D2 received 4 million; and D3 received 5 million; Mass Profit received 3.5 million.  There were numerous subsequent movements of the funds between accounts held by D1, D2, D3 and Mass Profit.  On 27 August 2010, D2 deposited by way of a cashier’s order HK$2.3 million to the account of D4.

14.On 30 July 2010, PW1 informed the bank of the deceased’s death, and the deceased’s accounts were frozen.  On 17 August 2010, PW1 instituted civil proceedings under HCMP 1554/2010 for a grant of letters of administration to her.  On 24 August 2010 and 17 September 2010, two injunction orders were granted by the Court of First Instance against D1 and D2.  In compliance with the injunction, by 3 September 2010 a total of 16.5 million was deposited to the High Court account by way of a cashier’s order issued from the accounts of D1 to D4 and Pepson, a company owned by D1.

15.The prosecution say that D1 and D2 agreed to take away the personal items of the deceased on 9 July.  This includes his mobile phone, chequebook and identity card, and they used those items to impersonate the deceased to create the impression he was still alive so they could transfer the funds in the deceased’s account with the Hang Seng Bank to their own and D3’s and Mass Profit’s accounts for their own use.  Thereafter, subsequent funds were transferred to D4’s account and also that of Pepson, a company wholly owned by the 1st defendant.

16.The prosecution relied upon the evidence of PW1 and PW2, the witness statements of PW3 and PW4, two bank employees who dealt with two of the cheques purportedly issued by the deceased, and the body of the written evidence that proved matters relating to the movement of the funds that were encapsulated into a diagram produced, marked and agreed as Exhibit 23.

17.Produced by agreement were also records of interview made by the 3rd and 4th defendants.

18.PW1 said at the time of his death, she was no longer living with the deceased and her children at Albion Gardens.  She had moved to live with her younger brother in order to quit drugs.  She was informed of the deceased’s death by her second daughter.  At the hospital, her four children, D1 and D2 were present.  PW1’s younger sister and her husband arrived later.

19.PW1 said she argued with the 2nd defendant at the hospital over who should identify the body.  PW1 eventually ceded the issue to the 2nd defendant.  After that they returned to Albion Gardens.  PW1 had intended to stay with the children, but needed to go to her brother’s house to collect her medication and clothing.  Subsequently, the younger daughter later called PW1, telling her that she need not return that evening.  When she left, D1 and D2 were still present at Albion Gardens.

20.PW1 returned the next day.  She took the children out to Sham Shui Po.  PW1 later that evening had a meeting with D1 and D2 at Shop 68, Golden Arcade.  At that meeting, PW1 said that D1 had told PW1 that he knew there was 10 million in the deceased’s account.  D1 had asked PW1 to give her the HK$10 million so he could handle it together with his elder sister and D2.  PW1 said she disagreed.  D1 had told her that he needed the money for the living expenses for the four children and running the business.

21.PW1 had said she objected, saying money could not be moved; as her husband was dead, it was illegal for D1 to do so.  PW1 said D1 had replied if it was illegal, it was his own matter.  PW1 had also said that she had informed D1 about the illegality of his moving the money on 10 July in a telephone call.  It had been then that he had commented about the illegality being his own matter.

22.PW1 had called D1 on 10 July after hearing, she said, that documents had been removed from the house at Albion Gardens.  She said that she had asked D1 if he had dealt with the money in the deceased’s account, and D1 had told her he had transferred 10 million. PW1 had told him that it was illegal, and not to move any money from the deceased’s account again.

23.On 13 July she had attempted to go to Shop 68 to see if there were any business documents of her husband.  She said D1 had prevented her entering the shop and the police had been called.  D1 had claimed he had a will and had shown the document to the police, and PW1 had eventually left.

24.On 13 July, PW1 went to the bank to check her husband’s account, and found the removal of the money.  She had told the bank of her husband’s death.  The deceased’s bank account had then been frozen.  PW1 had denied, when put in cross‑examination to her, that on 9 July D1 had told her that the deceased had issued the cheques to him, D2 and others, and the deceased had wished 10 million to be paid to the four children and 6 million to be held to pay for their future education and living expenses.  PW1 said these things had not been said.  PW1 also denied that at the meeting at the Shop 68 on 9 July, D1 had said that 10 million should go to the four children and an account should be opened in the children’s name.

25.As far as PW2’s evidence is concerned, PW2 had been 10 years old at the time of his father’s death.  He was 14 years old at the time of giving evidence.  He was the youngest of the deceased’s four children.  D1 is his uncle; D2 is his aunt.  His evidence is particularly relevant to the early hours of 9 July.  PW2 had said that when they returned to Albion Gardens, his mother and his maternal aunt had left, then D2 had asked him to get his Dad’s wallet and mobile phone.  D1 was standing next to D2 at that time.  He obtained the wallet and mobile phone and gave them to D1.  PW2 had told her - that is, D2 - that there was another chequebook in the room, and D2 told him to go into and take it.  He had given the wallet, mobile phone and chequebook to D1.  He had checked the wallet.  Inside there was $10,000 cash, ID card of the deceased, Bank of China credit card in his father’s name.  He identified the mobile phone as being P26, a Nokia mobile phone of his father.  He was told the items were to be kept temporarily.

26.PW3 is a staff member of HSB.  He called the deceased’s phone to confirm the first cheque payable to D1.  A male purporting to be the deceased answered the call.  The male provided the deceased’s Hong Kong identity card number, date of birth and address needed for the clearance of the cheque.

27.PW4, also of HSB, called the deceased’s mobile phone on the same day in order to clear the second cheque payable to D2.  A male purporting to be the deceased answered.  He asked for the personal particulars of the deceased to verify the transaction, and the cheque cleared. The person alleged to be the deceased told PW4 the cheques were for his elder brother’s wife and his elder brother.

The Admitted Facts

28.The Admitted Facts dealt with the banking evidence and also other evidence showing the movement of the money.  This proved that on 8 July 2010, the deceased’s account maintained a balance of around 15.6 million.  From 9 to 12 July 2010, totally 16 million was transferred out from the deceased’s savings account by telecom within hours of the deceased’s death.

29.This showed that at 0117 hours on 9 July 2010, HK10 million was transferred from the savings account to the current account; at 0455 hours, 2 million; 1008 hours, 3 million; 1302 hours, 5 million; at 1301 hours on the same day, all of the US$138,909.46 in the deceased’s foreign currency account was converted to HK$1,080,576.69, wholly deposited to the Hong Kong savings account, leaving no balance in the former; between 11 and 12 July 2010, a further 6 million was transferred from the deceased’s savings account to his current account; on 11 July 2010 at 0544 hours, 3 million was transferred; on 12 July 2010 at 1838 hours, 3 million was transferred; between 9 and 12 July 2010, nine HSB cheques purportedly signed by the deceased were presented and drawn against his current account, cheques 1 to 9.  As a result, a total of 16 million was withdrawn from the deceased’s current account and dissipated to the respective bank accounts of Mass Profit and D1 to D3.

The Cheques

30.Cheque 1 was for 1.5 million to D1.  It was cleared at 1007 hours on 9 July 2010.  Cheque 2, for the sum of 1.6 million, for D3, was cleared at 1120 hours.  On 9 July 2010, cheque 3, for 1.5 million with D2 as the recipient was cleared.  On 9 July 2010, cheque 4, for 1.4 million to D3, was cleared.  On 9 July 2010, cheque 5, for 3.5 million to Mass Profit, was cleared.  On 9 July 2010, cheque 6, for 500,000 to D1, was cleared.  Cheque 7, for 1.5 million to D1, was cleared on 12 July.  Cheque 8, for 2.5 million to D2, was cleared on 12 July 2010.  Cheque 9, for 2 million to D3, was cleared on 12 July 2010.  Cheques 1 to 9 can be seen and were respectively cleared between 9 and 12 July 2010.  Five out of the nine cheques were payable and directly credited to the accounts of D1 and D2; one was payable to Mass Profit; whereas three were payable and credited to D3’s accounts.  Funds deposited to Mass Profit’s account were thereafter deposited by cheques 10 and 11 to the accounts of D1 and D2.

31.P23 shows that the remaining destinations of the money, which was subsequently routed through different accounts belonging to D1 to D3 and subsequently transferred by way of cashier’s order to D4 and Pepson’s account and also cashier’s order for the three children and also the opening of an account for one of the children.

32.It is also agreed on 28 March, on the arrest of the 1st and 2nd defendants at Shop 68, Golden Arcade, the 1st defendant unlocked the safe there, and inside the safe the Nokia phone, P26, was found; Mass Profit’s company cheques were found; the deceased’s chequebooks were found; Mass Profit’s chequebooks were found as well.  Also found were copies of the deceased’s Hong Kong ID card, home visit permit, and the bank passbook of the third son of the deceased, Wan Yik-yiu.

33.The SIM card contained in the Nokia phone, P26, has the mobile phone number of 92277189.  This is also the number PW4 referred to when she called the deceased’s phone on the morning of 9 July 2010.

34.The prosecution also relied upon records of interview made by the 3rd and 4th defendants which were produced by agreement.

35.By cheques 2 and 4, a total of $3 million had been deposited to the 3rd defendant’s Hang Seng Bank account on 9 July 2010.  On 14 July 2010, that 3 million was transferred first to Wan Yik-yiu’s account, then to Pepson.  By cheque 9, $2 million was deposited into D3’s HSBC account on 12 July 2010.  On 14 July 2010, D3 issued a cashier’s order in the sum of $2 million payable to Wan Yin-sum, the deceased’s second child.  The cashier’s order was never cashed; the sum later repurchased into a cashier’s order payable to the High Court account.

36.D3 was arrested on 28 March 2011, and under caution, she said, “I know nothing about it.  I am a housewife.”  Subsequently in video-recorded interviews, D3 said the following.  Firstly, she was the 1st defendant’s wife, and the deceased was her brother-in-law, but she is a housewife, whilst the 1st defendant was employed by the deceased to run the latter’s computer accessories trading business.  She was notified by the 1st defendant of the deceased’s death at around 0500 hours on 9 July 2010.  D1 told her the deceased had died of cocaine consumption.  She thought the deceased’s death was sudden.

37.After the deceased’s death, the 1st defendant, D1, showed her cheques 2 and 4 and asked her to deposit them.  D1 told her the cheques were from the deceased.  As the deceased had already passed away by that time, the 3rd defendant felt strange to inquire with D1.  However, D1 said the money was to be kept in her account temporarily.  She did not question further, and cashed the cheques as per his instruction.  She never saw cheque 9, but knew that D1 had cashed it into an HSBC account.  D1 did not tell her the source or the purpose of that cheque.  She was the sole authorised signatory of her accounts, and she purchased two cashier’s orders of 3 million and 2 million to Yik-yiu and Yin-sum respectively, the children of the deceased.

38.For the 4th defendant’s record of interview, the 4th defendant is the son of the 2nd defendant.  His Bank of China account remained dormant since it was opened on 27 February 2009 to 26 August 2010.  D4 was the sole signatory of that account. 

39.On 27 August 2010, D2 deposited 2.3 million into D4’s Bank of China account by way of a cashier’s order.  Thereafter, throughout 30 August and 17 September 2010, most of the money was transferred out from D4’s bank account, with only $14.57 remaining.  1 million was deposited into the High Court account of HCMP 1554/2010 and 0.2 million was transferred back to D2.

40.D4 was arrested on 28 December 2011.  In his record of interview he said the following.  Despite not having seen the actual instrument, he was informed by his mother, D2, that the latter had deposited $2.3 million into his account by way of a cashier’s order.  Before that, D2 had never issued any cashier’s order exceeding $1 million to him.  He confirmed the receipt of the money was by looking at his own passbook after the deposit had been made by D2.  When he asked D2 about that, she told him not to bother as the money would only be kept in his account for a short time.  He thus did not ask any questions.  After the 2.3 million was deposited as per the 2nd defendant’s instructions, he issued the cashier’s order to the High Court in the sum of 2 million and withdrew 50,300 cash to D2 and transferred 0.2 million to D2’s bank account.  He did not ask D2 of her purpose for such arrangement because that was her money.

The Defence Case

41.D1, D3 and D4 did not give evidence or call any witnesses.  D2 gave evidence.  D2, D3 and D4 are of clear record.  D1 has some convictions for gambling offences which were not relevant to any issues in this case.  I disregarded D1’s convictions when assessing his case.

42.D1’s case was advanced by cross-examination.  He was also assisted by the 2nd defendant in the evidence which she gave which directly related to issues raised by the 1st defendant in his cross-examination.  D1’s case advanced by cross‑examination was that Mass Profit was a family affair with business run by the deceased and D1; that the deceased was a highly superstitious man; PW1 left the deceased to have an affair with employee of Mass Profit called Roy; PW1 was a drug addict and a poor mother; that following the deceased’s death, D1 and PW1 returned to Albion Gardens, where a discussion between them had taken place over what to do in relation to the children.  D1 had told PW1 that the deceased had issued cheques to him and D2 and others.  D1 told PW1 that the deceased had wanted that 10 million would be paid in for the four children and $6 million would be held to pay for the future education and living expenses of the four children, and PW1 had agreed to that.

43.On the evening of 9 July at the shop at Golden Arcade D1 had a further discussion with PW1.  D1 had suggested that they should open the accounts in the children’s names into which the 10 million money could be deposited.  PW1 had wanted the accounts to be in the joint names of herself and the children.  On 10 and 11 July, PW1 had talked to D1 on the phone and D1 had told PW1 he had made a transfer of the money from the deceased’s account.  On 13 July PW1 had come to the shop with Roy.  D1 had again repeated that the deceased had decided that the money should go to the children and not PW1.

The 2nd Defendant’s Case

44.D2 gave evidence.  She is a person of clear record, and the elder sister of the deceased.  Her elder son is D4.  She said the deceased had started to take drugs at the year 2007.  PW1 had also become addicted to drugs.  PW1 and the deceased argued frequently over trivial matters.  At one time PW2 had suffered a head injury and had been hospitalised while the deceased and PW1 argued.  PW1 had had an extramarital affair, then cohabited with her boyfriend.  After PW1 had left Albion Gardens in April 2009, the 2nd defendant had gone to Albion Gardens almost every day until a male cousin had been asked by the deceased to help with the children.

45.The deceased had been very superstitious.  He had a large shrine on the rooftop at Albion Gardens.  He believed in astrology, and he was also the reincarnation of a man called Hung Yiu from ancient times.  He would change the names of the children to improve their luck.  He bought coffins and graves for himself in China.  On one occasion he had asked all the employees of the shop to gather at the shop at midnight and distributed money to them.  The purpose of this was to improve his luck.  There were other examples of superstitious fervour that the 2nd defendant found strange.

46.On 6 July 2010, the deceased had called D1 and D2 to join him on the rooftop of Albion Gardens some time after 6 pm. The deceased had said there was something wrong with him.  He had made a calculation, and he would encounter a disaster and would not escape from it.  He said his wife had clearly stated that she would not care for the children.  His wife was only concerned with money and liked to have money.  He asked D1 and D2 to look after the four children.  He said there was a balance of HK$16 million in his bank account.  He would issue some cheques.  He said if he encountered the disaster, he wanted the money from his account to care for the four children. He said $10 million was to be deposited into the bank account for the four children and the remaining 6 million would be their living expenses and education.

47.When the deceased passed the cheques over, they were already filled out with signatures and payees and dated.  There was a stack of cheques.  D2 received three cheques, one for 1.5 million, one for 2 million and one for 2.5 million.  D2 passed the cheques to D1 for custody.  D2 said the current and personal account of the deceased was managed by D1, as was the company account, so she passed the cheques to D1 for him to keep.  D1 kept all the cheques.

48.On 9 July she attended the hospital with PW1, D1 and the four children.  After the deceased had died, D2 identified the body and PW1 was present.  She said she told the body of the deceased the HK$16 million was for the four children.  “I will do according to the wish to give it back to the children.”  PW1 heard this and became emotional, and they had argued.  Eventually they returned to Albion Gardens.

49.D2 had told PW1 and D1 she would attend to the funeral matters.  At that time D2 said that D1 told PW1 that a few days before the deceased had died, he knew he was going to die, and he had issued the stack of cheques.  He said he had 16 million in the account to be used for the living expenses and education of the children.  PW1 had said that as the money was for the children, he could deposit the cheques tomorrow.  After this, PW1 left with her younger sister.

50.D2 said she knew that D1 had made the transfer of the funds from the savings account to the current account as he knew the passwords of the current account and savings account.  She said that the deceased had given D1 the password after PW1 had left Albion Gardens so that he could help in running the account.  D1 had then made all the transfers on 9 and 12 July.  She said the first six cheques were banked by D1 and D3 and the remaining three on 12 July were banked by D1 and herself.

51.D2 had moved into Albion Gardens on 9 July at the request of the second elder daughter.  She agreed to stay for one month. On the evening of 9 July at Albion Gardens, PW1 asked D2 how the $16 million was to be handled.  D2 said she would wait until D1 was present.  They had later met at Golden Arcade inside the office after having dinner at Sham Shui Po.  D1 told PW1 that it was the deceased’s wish to deposit 10 million into the four children’s accounts and the other 6 million for living and education expenses.  PW1 had then agreed with this arrangement.

52.Later, D2 had bought some shoes for the children.  PW1 had told D2 to pay as she had made the arrangement for the children’s money.  Eventually there was a falling out with PW1 over the opening of bank accounts for the children.  PW1 had wanted them to be in the joint names of her and the children.  D2 said the children expressed the desire not to have joint accounts with PW1.  There was also an argument over D2’s occupancy at Albion Gardens after PW1 had returned there on two occasions, and on one occasion the dispute had led to the police being called.  D2 said that the decision was made initially to open a separate bank account for the children.  The second elder daughter did not want to share the account with PW1, so the accounts would have to be in the children’s names.

53.On 12 July, D1 and D2 went to the bank to deposit the cheques and to open the accounts for the children.  For a child’s account under 11, the child’s mother was needed to open the account together with the proof of address.  If there was no address proof, they could issue a cashier’s order before opening the account and deposit the money into the account.  A proof of address existed for the two sons, but not for the daughters.  As there was no address proof, the two daughters agreed to the issue of cashier’s order.  The address proof could be obtained later.  The younger son did not want to open an account with his mother and asked for a cashier’s order.  However, the cashier’s order could not be issued to a child under 11.  D2 then suggested that his 2 million could be created by a cashier’s order and placed into the account of his elder sister.  The third son, the elder son, was able to open an account as he was over 11 and had a proof of address.

54.Three cashier’s orders were issued: 3 million for the first eldest daughter; 2 million for the second elder daughter; 2 million for the eldest daughter on behalf of the younger child.  An account was also opened in respect of the elder son.  The cashier’s orders were obtained on 14 July and shown to the children.  They were later kept by D1.  The remaining 6 million was kept for the children’s education and living expenses.

55.On 27 August 2010, she was told by D1 that his account was frozen and her account would be frozen soon.  D2 was told she should withdraw the money as soon as possible as there would be no money with which to look after the four children.  It came to her mind to ask D4 if he had an inactive bank account.  He said he did.  He said he had a document in a drawer at his home.  She went home and took D4’s Bank of China passbook.  She obtained a cashier’s order of 2.3 million from her account and deposited it into D4’s account.

56.She did not tell D4 in advance that she would obtain the cashier’s order of 2.3 million payable to him.  D4 eventually asked why so much money was paid.  D2 told him not to pay heed to it as the money was for the expenses of the children.  She did not explain the matter to him any further.

57.D2 said she never took the mobile phone, wallet and chequebook as alleged by PW2.  She said that the elder daughter had given them to D1 on the morning of 9 July and no chequebook had been given.

The Issues

58.It can be seen that most of the evidence is admitted; neither do any of the defendants have any dispute as to the flow of funds exhibited in P23.

59.In respect of the 1st and 2nd defendants, the issue raised in submission was whether when they were dealing with the money in question, were they acting dishonestly?  Clearly there had been an appropriation of the choses in action alleged in the first charge and the 16 million balance in the deceased’s account by them, and that they were properties of another, that being the estate, is not disputed.  Furthermore, there must have been an intention to permanently deprive the estate even on the cases presented by them.

60.Both the 1st and 2nd defendants claim when they dealt with the money, or specifically when they agreed to appropriate the nine choses in action, that constituted the 16 million in the estate of the deceased, they did so with the honest belief that they were authorised by the deceased to do so; and in any event, they were not acting dishonestly; that they were carrying out the express wishes of the deceased to be brought into effect at the time of his death.  Therefore, they could not be considered to be acting dishonestly.

61.Once the issue was raised, it was necessary for the prosecution to prove beyond a reasonable doubt that the defendants were not acting under such an honest belief, or dishonestly.

62.In respect of Charges 2, 3 and 4 against D3 and D4, the issue is common to both defendants.  Did they, when they dealt with the money, do so with any reasonable grounds to believe that the money set out in the charges against them represented the proceeds of an indictable offence?  It is not alleged that they knew it was.  The defence of both D3 and D4 is no such grounds existed to believe that the money given to them by their brother-in-law or mother would in any way represent the proceeds of an indictable offence.

63.The prosecution must prove the case against each defendant on each charge beyond reasonable doubt.  Each defendant’s case is different and must be considered separately.

64.In the first charge, the 1st and 2nd defendants are charged with conspiracy to steal.  Accordingly, it must be proved they each agreed with each other to commit the unlawful act of theft.  This requires an appropriation of property belonging to another, the intention to permanently deprive that other of it.  Those elements are not disputed.  As already adverted to, dishonesty is disputed.  Sections 3A and 3B of the Theft Ordinance specifically refer to it.  They state:

“A person is not to be treated as dishonest if he appropriates the property in the belief that:

(a) he has in law the right to deprive the other of it; or

(b) he would have the other’s consent if the other knew of the appropriation and the circumstances of it.”

Furthermore, in order to establish dishonesty, the prosecution must prove that D1 and D2 did not act in accordance with the beliefs set out in either of those subsections of section 3. Furthermore, the prosecution must prove in respect of these defendants that what the defendants agreed to do was dishonest by the ordinary standards of reasonable and honest people and the defendants themselves realised this.

65.This is a case where inferences may be required to be drawn from the facts proved in evidence.  For an inference to be drawn it must be grounded on clear findings of primary fact, must be a logical consequence of those facts, must be irresistible in that it must be the only inference that can be reasonably drawn on the basis of those facts.

66.In respect of Charges 2, 3 and 4, the prosecution need not prove that the property was in fact the proceeds of crime.  The prosecution must prove beyond reasonable doubt at the time of the defendants dealing with the property, the facts and objective circumstances known to them would be considered by a commonsense wise-thinking member of the community to be sufficient in such a person to believe that the property in question constituted the proceeds of an indictable offence.

67.In order to approach these matters fully, it is of course necessary to resolve any issues of credibility that have been raised by the evidence.  The witness evidence of PW1 and PW2 was subject to dispute by the defence.  The cross‑examination conducted on behalf of the 1st and 2nd defendants and the evidence of the 2nd defendant disputed the bulk of matters raised by PW1 and PW2.  Furthermore, the prosecution said that the evidence of the 2nd defendant herself should not be considered to be truthful and is not credible.  It is therefore necessary to resolve issues of credibility and reliability of the evidence of PW1, PW2 and the 2nd defendant.

68.PW1’s evidence was subject to comprehensive challenge.  The defence insisted her evidence was unreliable.  It was said on any view of the evidence, PW1 had a very poor relationship with the 1st and 2nd defendants, suspecting both of them of trying to turn their children against her.  She has attributed difficulties with her own children to the undue influence of the 2nd defendant.  Of some relevance to this is a letter produced on behalf of the defence, and this was signed by the four children and made various derogatory remarks about the 1st prosecution witness.  The 2nd defendant said it was the children who had prevailed upon her to let them write this letter to PW1.  The letter itself makes many criticisms of PW1 and her behaviour in the case, especially saying her only interest was that of money. PW1’s evidence on this was that the children had been taught to write the letter by D1.  She was supported in this by PW2.  He said the same thing as PW1, and so it can be seen that the children themselves were a stumbling block between PW1 and the defendants, the other stumbling block being the deceased’s money contained in the savings account and the property at Albion Gardens.

69.The 2nd defendant has said that PW1 had been informed of the existence of the cheques at an early stage, and also the desire of the deceased to provide for the children with the $16 million.  It was D2’s evidence that PW1 had only formed the disagreement with this policy when it was made clear to her that were such accounts opened on the children’s behalf, they would not be joint accounts with PW1.  It is only after this they say she went to the bank and froze the accounts.  PW1 denied this from the outset.  It was also said that PW1’s evidence was fraught with prejudice and could not be relied on.  References made to her previous history of drug addiction were fully covered.  References made to the fact the children may have had access to drugs, which she denied, was also denied by PW2.  Reference was made to injury on PW2 as a result of a dispute between PW1 and the deceased.  PW2’s evidence on this was that the accident was caused by himself playing with his brother.

70.The court could also not disregard the fact that PW1 also had a financial interest in her evidence against the defendants in this case.  It was said she wished to gain an advantage in civil proceedings being conducted between the parties.  It was said that it was PW1’s intention to show from an early stage that the 1st and 2nd defendants had planned to steal from the deceased’s estate, but she had kept from the court the efforts the 1st and 2nd defendants had made to keep her in the loop, as it were, by informing her about the deceased’s wishes on 9 July.

71.In considering PW1’s evidence I bore in mind the matters raised in submission by all the defendants, especially those having regard to what they say had been caused by the difficult family relationships surrounding the civil case.  In summary, it was said that the evidence of PW1 was unreliable; she was giving evidence because she had a grudge between herself and the 2nd defendant, especially with respect to the occupancy of Albion Gardens; the letter that had been signed by the children was support for the proposition that she was only interested in the money, and that was from her own children; PW1 had delayed in reporting these matters to the police and making statements; and it was said that PW1 had lied to the court in maintaining she had a good relationship with the deceased.

72.However, it was also her evidence that the separation notice had been prepared but not acted upon.  It was said that she was prepared in her evidence to omit evidence favourable to the defence, eg when discussing in the meeting at the Golden Arcade on 9 July in examination-in-chief, she had not made any mention of the fact that the 1st defendant had said the purpose of the money was for the children’s living and education expenses.  She had only agreed with that in cross‑examination.

73.I examined the evidence of PW1 in the light of all the evidence.  It was clear that she was trying her best to recall matters relating to events that had occurred a number of years before, and it was no doubt deeply distressing to her.  However, the evidence was clear that she had said that she had not been consulted about the transfer of the estate money from the foreign currency account and the savings account of the deceased to his current account and thereafter to the accounts of D1, D2, D3 and Mass Profit.  There was no discussion of this on the early morning of 9 July or at any other time.  Her evidence was that D1 had told her on 9 July that the deceased had 10 million in the account.  D1 said himself and the 2nd defendant, the elder sister, were to look after that and keep it for the children’s living and education expenses.

74.This had not emerged in evidence-in-chief, but it was clearly eventually referred to by PW1 in cross-examination.  PW1 was not hiding anything.  That on 10 July, D1 admitted to her the transfer was not in dispute.  We know on 13 July PW1 froze the account.  Clearly the fact that PW1 was concerned about the disposal of the estate does not in any way impeach her testimony.  Such details as were omitted by her in her examination‑in‑chief were clearly the sort of things that would happen when a person is trying to recall events that occurred many years previously.  PW1 was able to give a clear and largely consistent account in her evidence.  She did not dispute she was having a difficult time with her marriage or she had a problem of drug addiction and that the children would be harmed by this.  In all these matters she was open and forthcoming.  Overall, I found PW1’s evidence to be both consistent and truthful, and I found the evidence to be a good account of her dealings with D1 and D2 over that period; that is, 9 and 12 July and beyond.

75.It is clear to me that she was not told of the position of the money in the deceased’s account or the issuing of cheques 1 to 11.  She found these out from the bank later, and her reaction was to immediately freeze the account.  I have no doubt that had she been told what was proposed by the 1st and 2nd defendants on 9 July, she would have taken steps instead to inform the bank of the deceased’s death and have the account frozen immediately as she did when she found out on 13 July.

76.The evidence of PW2 was also challenged on the basis of lack of truthfulness.  It was said this witness had colluded with his mother, and that accordingly his evidence was unreliable.  It was said he had a clear motive to lie - he wanted to keep in with PW1 and had been brainwashed by her.  All he wanted to do was assist PW1 in her case.  He now lived with her, and it was said that he had discussed the evidence with PW1 so they could agree with the position to be taken.  It was said he had lied about the letter which was signed by the four children; that he had deliberately mentioned that Maggie - that is, the maternal aunt - and PW1 had left before D2 had asked him to get the deceased’s possessions, whereas in his statement he had not said this.  He had done this so that his evidence agreed with PW1’s in order to support her evidence that there had been no discussion about the money on the evening of 9 July 2010, and it was said this clearly showed collusion between himself and PW1.

77.I bore in mind the criticism raised of PW2’s evidence.  He was at the time of giving evidence only 14, and he had been only 10 years old at the time when the events occurred which he was giving evidence about.  Nevertheless, I found him to be a good witness, clear and thoughtful, careful in what he said, and determined to put before the court a clear account.  He was supportive of his mother’s case, but adamant this was not as a result of influence by his mother, but simply a determination to put matters clearly.  I accepted him as a clear witness of truth.  I accept also what he said about the letter that I have referred to and how it came into being.  I consider that the language in the letter is clearly an adult’s creation. 

78.I now turn to the evidence of the 2nd defendant.  Looking at the evidence of the 2nd defendant, I do bear in mind she has a clear record.  That is clearly relevant to her propensity to commit an offence of this nature and also the weight to be attached to her testimony. D2’s evidence, in summary, was that both herself and the 1st defendant were honestly trying to carry out the deceased’s wishes to provide for the children, that all the subsequent actions they did arose out of the rooftop meeting with the deceased on 6 July, when his instructions were given to D1 and D2, together with the cheques.  The subsequent actions were simply that they were trying to bring into effect the deceased’s express wishes in the most efficient way possible.

79.I considered the 2nd defendant’s evidence together with the other evidence, including the Admitted Facts showing the distribution of the money up to the time when they were paid back all the money and some extra to the High Court by way of the cashier’s order.  I would say simply I found the 2nd defendant’s evidence not worthy of belief.  Her evidence was not credible or reliable.  In making this determination I examined the totality of her evidence.  Nevertheless, an examination of what she said occurred on 6 July shows that the evidence is inherently not credible.

80.Her evidence is the deceased was so stricken with a looming sense of crisis and disaster and acting in the way he did because of his superstitious belief.  This is meant to justify what clearly would be on the deceased’s part an irrational and ad hoc attempt to provide for the children after his death.  To do so by issuing cheques dated with a number of different dates, giving them to different people, at a time when the account would normally be frozen is not rational.  Clearly if one wishes to provide for one’s children on death, there are many other ways that it can be done.  It is common ground the deceased was a successful businessman, yet the 2nd defendant tells me he acted in this very important area solely on superstitious belief.

81.I find this simply just to be not credible.  I found on its face it is a transparent falsehood designed to justify the way in which the 1st and 2nd defendants proceeded.  They were limited in that the only way the deceased’s money could be removed was by the issue of these cheques. The story had to be crafted around the facts that could not be denied.  Given, for the sake of argument, that the deceased had acted in this way, the 1st and 2nd defendants should have taken the cheques to the bank, informed the bank of the deceased’s death, and waited to see if the bank would honour the cheques. 

82.I consider that the action here was clearly designed to prevent PW1 having access to the 16 million in the deceased’s account.

83.The account given by the 2nd defendant of the events of 6 July, where the deceased purported to deal with large sums of money in an incomplete and incomprehensive manner I found to be untrue. Following the deceased’s death, it can be seen that the disposition of the money gives lie to the fact that this was simply being held for the children. It is only after PW1 takes action to freeze the account on 13 July that the cashier’s orders are made for the children on the next day and the account opened for the son on 14 July. 

84.That deals with 10 million of the money.  The remaining moneys are further distributed and are on the move around different accounts, ending with the 4th defendant and Pepson and other accounts of D1 and D2.  The only reason why this is done is nothing to do with providing for the living and education expenses of the children.  It is simply to confuse anyone who is trying to chase the movements of the money.

85.In summary, I found the 2nd defendant’s evidence to be incredible and untruthful, and I rejected it.

86.Herewith is a summary of the facts that have been established in the evidence to a criminal standard of proof; that is, beyond a reasonable doubt.  The banking evidence summarised in P23 is not disputed.  It shows the first transfers on 9 July 2010 from the deceased’s savings account to his current account occurred at 0455 hours; following that, the issue and cashing of the totally 11 cheques; the issue of the cheques; the banking of the money in the accounts of D1, D2, D3 and Mass Profit.

87.P23 also shows the accounts were opened after the deceased’s death for the accommodation of sums of money.  The 2nd defendant opened accounts with HSBC, Bank of China, and an account was opened also for Wan Yik-yiu.  The 1st defendant opened a Bank of China account number 2.  The company Pepson controlled by the 1st defendant opened a Bank of China account and HBS account.  The money was eventually distributed to 14 separate accounts.

88.From the evidence of PW1 it can be seen that the first mention of the money in the deceased estate and the disposition of those moneys was made by D1 on the evening of 9 July at Shop 68 when he mentioned to PW1 the deceased had over 10 million in his account and asked PW1 to let himself and D2, the elder sister, deal with those moneys.  He later said that was for the children’s living and education expenses.  No mention was made of the cheques issued on the bank account.

89.On 10 July, the defendant admitted transferring 10 million from the deceased’s account.  It was also established in the evidence on 9 July the 2nd defendant asked PW2 for the deceased’s identity card, wallet and mobile phone.  PW2 also handed over the chequebook as well. PW2 handed over the deceased’s identity card, wallet, chequebook and mobile phone, P26, later recovered at Golden Arcade.  These were handed to D1.  D1 left Albion Gardens with those items that evening before the first transfer was made from the savings account to the current account just before 5 am that morning.

The Evidence of PW3 and PW4

90.It was submitted by the defence that the words used by the unidentified person who spoke to these two bank employees were hearsay.  I admitted the words into evidence.  Clearly the bank employees, PW3 and PW4, were reporting words made or said to them by a person they could not identify, but who they identified as being the deceased.  The prosecution sought to put into the evidence the words spoken by that person in order to establish the basis on which the bank employees were prepared to cash the cheques.

91.Clearly the prosecution was not seeking to prove the testimonial fact that the person who claimed to be the deceased was the deceased.  The prosecution witnesses are not capable of directly identifying the person who spoke to these two bank employees.  Nevertheless, it is relevant evidence that this person was in a position to be in possession of the deceased’s mobile phone, to know his account number and his address and identity card number.

92.The prosecution did not seek to prove the truth of the words reported by the witnesses.  They merely wished to provide the evidence that the words were said.  I found that these words were admissible even though the identity of the person saying the words was not capable of being identified by either PW3 or PW4.  I consider that these words were admissible to prove they were said and not the testimonial facts contained in them.  I also found that the words were admissible as being part of the res gestae of the agreement to steal alleged in Charge 1, the operative period of that charge between 9 and 12 July, the words spoken being part of the act of stealing of the choses in action on 9 July, the fact being that without them there would have been no transfer of the moneys contained in those cheques.

93.Furthermore, I found that the inference could be drawn that the 1st defendant was the author of the words spoken to PW4.  Firstly, the evidence of PW2 establishes that D1 was in possession of the number of the mobile phone which PW4 called; that D1 had taken specific possession of this phone earlier; that the 1st defendant later admitted to the first prosecution witness that he had made the transfers from the deceased’s account, something which the 2nd defendant also said in her evidence; that the transfers were made by the 1st defendant into his own account by way of the cheques into his own account and the 2nd defendant’s account.

94.I consider that these facts, taken together, in the absence of any other explanation, permits that in respect of the words said to PW4, that I can draw the irresistible inference that when this witness spoke to the person alleging to be the deceased, he was in fact speaking to the 1st defendant.  Having drawn the inference that the 1st defendant spoke the words in question to PW4, they are admissible clearly as an admission against his own interest, and were said in the furtherance of the conspiracy alleged in the 1st charge.  They would form part of an overt act of agreement allegedly between the 1st and 2nd defendants.  They are admissible against the 1st defendant as such and also admissible against the 2nd defendant provided that independent evidence of her part in the conspiracy exists.

95.In the 1st charge, the 1st and 2nd defendants are jointly charged, although the cases against them are distinct.  There are a number of common factors.  The evidence of the movement of the money in P23 is common to both defendants.  Also in common is the evidence of the first and second prosecution witnesses.  It is also the case that the prosecution has established in respect of the evidence of the 2nd defendant there was no meeting with the deceased by the 1st and 2nd defendant on the evening of 6 July 2010 and no instructions given to them by the deceased.

96.Nevertheless, it is submitted that even if the prosecution case is taken at its highest and all the evidence of the prosecution witnesses is accepted that the deceased’s personal items were taken by the 1st and 2nd defendants and they effected the relevant transfers and cashed the cheques, that they impersonated the deceased and were warned by PW1 that it was illegal, that despite all this it is still possible they were only acting in accordance with what they honestly believed were the wishes of the deceased.

Common Submissions of Both Defendants

97.In respect of this matter, both the 1st and 2nd defendants and the deceased were blood relatives.  They were, on the evidence, on good terms with the deceased.  They were employees of the deceased.  D2 was trusted with the care of the children at times after PW1 had left the home.  It was also submitted that the prosecution’s theory of the case that the 1st and 2nd defendants had decided to steal the money for their own use was subject to a number of problems on the evidence.  Why would D1 tell PW1 on 10 July that he had transferred $10 million, surely alerting her to the plan?  Why would D1 tell PW1 about his knowledge of the money in the account on the evening of 9 July?  Why, by 14 July, would $10 million have been allocated to the children by the opening of bank accounts and the issuing of cashier orders?  Would not the defendants have taken all the money in the early hours of 9 July?  And why have two tranches on 9 and 12 July?

98.They say this clearly shows they believed they were authorised to move the money in a particular way.  Why was the money left in the account?  The defendants’ case is they were authorised to move 16 million, and that is the exact amount of money they eventually moved. It is also common ground that they moved none of the money.  They spent none of the money on themselves; that as early as 9 July they told PW1 that the money was for the children, their education and living expenses; that to effect the transfers they must have known the password for the telecom account and the amount of money in the account.  This could only have been done if the deceased had given them this information.

99.Furthermore, on the 2nd defendant’s case, she remained with the children for some one month after the money had been allegedly stolen.  Even if the court finds there was no meeting between the 1st and 2nd defendants and the deceased on 6 July, it does not, they say, mean itself that the 1st and 2nd defendants might not still have honestly considered they were carrying out the deceased’s wishes.  The 2nd defendant had responsibility to the children and to maintain the household in Albion Gardens.  It also involved carrying on the conduct of the business through Mass Profit at the Golden Arcade.  Money was required for the children.  Money was required for the maintenance of that business.  They might still honestly have believed that the deceased’s wishes could be that the money should go to these two necessities and not to the first prosecution witness.  It is necessary to evaluate these arguments in considering whether the 1st and 2nd defendants were acting dishonestly in relation to their activities in relation to the money represented by the choses in action.

100.I have considered all these arguments.  My conclusion on the evidence is as follows:  that the deceased, D1 and D2 never met on 6 July 2010 to discuss the disposition of money contained in the deceased’s savings account and US foreign currency account; that no cheques were prepared by the deceased for the 1st, 2nd, 3rd defendants and Mass Profit; that the deceased was unaware of the fact he would die, and the deceased’s death was not expected by anybody.  I rejected the evidence of D2 that said contrary.

101.The deceased died early in the morning of 9 July 2010.  When he died he was intestate.  All his assets became the assets of his estate to be held by the Office of the Administrator until the letters of administration be granted.

102.Some time after the deceased died, D1 and D2 agreed that the money contained in the savings account and US foreign currency account would be taken by them.  Evidence to show this is provided by the fact of their joint request to the second prosecution witness that he would provide them with those items of the deceased’s property which would enable them to easily conduct the transfer of the deceased’s monetary assets in the account to their own accounts.  I can think of no other explanation as to why would they request those of the deceased’s belongings to be placed into their own possession.

103.I believe the only and irresistible inference from these facts, when combined with the evidence of transfers and P23, is that D1 and D2 had reached the agreement to divert the contents of the accounts of the deceased into accounts that they could control; that they then carried out this agreement between 9 and 12 July.  On the evening of 9 July 2010, D1 raised the question of the money in the deceased’s account with PW1. At that stage he had already removed 10 million.

104.PW1 evidenced that he stated there was 10 million in the deceased’s account and it should be placed under the 1st defendant’s, 2nd defendant’s and the elder sister’s control.  He did mention that the money was for the children’s living and education expenses and also for the running of Mass Profit.  PW1 was not prepared to concede the transfer of any money at this stage.

105.On Monday, 12 July, further transfers of cheques were used by which the balance of the 16 million was removed from the deceased’s bank account at HSB.  This occurred notwithstanding that PW1 had voiced her objection and her perceived illegality of such transfers to D1 on 12 July.  On 13 July, PW1 froze the account.  Subsequent to this, D1 and D2 transferred money between their accounts and set up new accounts to accommodate these funds.

106.The irresistible inference to be drawn is that the creation of further accounts was simply to make the further freezing of further money transfers more difficult.

107.The alleged conspiracy to steal by the 1st and 2nd defendants occurred between 9 and 12 July and was to steal nine choses in action of the total sum value of $16 million.  The prosecution rely on this evidence to establish that there was an agreement.  The agreement is evidenced by the overt acts of the conspiracy, the overt acts being, firstly, the request to PW2 for possession of the deceased’s ID card, bank chequebook and mobile phone, all items needed to effect the transfers of funds from the deceased’s account; the creation of the cheques and their presentation to the bank; the representation made to the bank to witnesses PW3 and 4 that the deceased was still alive, capable of dealing with his affairs and effected the presentation and cashing of the first two cheques; the depositing of the cheques into the accounts of the 1st and 2nd defendant and also the 3rd defendant, who is the 1st defendant’s wife; and then the subsequent movements of the money, although outside the period of the conspiracy alleged, in an attempt to disguise the existence of such funds or to prevent them from being frozen.

108.I find all these overt acts to be proved.  They clearly prove an agreement between the 1st and 2nd defendants to take the nine cheques, or choses in action, representing the 16 million in the account, and by doing so to permanently deprive the estate of the deceased of those funds.  Clearly, even if such an agreement is proved, and it is proved, such an appropriation requires dishonest intent.

109.I firstly need to consider section 3(1) of Cap 210, which provides in that section that:  “A person’s appropriation of property belonging to another is not to be regarded as dishonest if (a) he appropriates the property in the belief he has in law the right to deprive the other of it on behalf of himself or a third person; (b) if he appropriates the property in the belief that he would have the consent of the other person if the other person knew of the appropriation and the circumstances of it.”

110.Both the 1st and the 2nd defendants’ case is that they believed they had in law the right to deprive the estate of the HK$16 million because of the express instructions of the deceased.  The existence of such a belief clearly initially relies upon the evidence of the meeting between the deceased and the 1st and 2nd defendants on the rooftop on the evening of 6 July 2010.  It would appear that should such meeting not have occurred, then neither the 1st nor 2nd defendants could argue that they had such a belief based on that meeting, and in any event, such a belief as a result of a meeting with the deceased.

111.It is my finding on the facts proved that no part of section 3 can apply to the 1st and 2nd defendants’ agreement to take the deceased’s property from the estate.  There was no meeting between them on 6 July.  I find there were no instructions given to them by the deceased. There were no cheques.

112.In reaching this conclusion, I do also bear in mind the argument of the defendants that there is no evidence that the cheques themselves were forged; no evidence that the deceased’s signature is forged. The prosecution have argued that they can be regarded as not genuine.

113.I have rejected the evidence of the 2nd defendant as to how she says the cheques were created.  I also find that the court cannot regard any of the cheques to be authored by the deceased.  I find that the only independent evidence of their existence is their receipt by the bank.  This occurs after the death of the deceased.  I also bear in mind in respect of the first and second cheques, false representations were made to establish their bona fides.  I find that despite the writing and signatures on the cheques, I cannot find the cheques to be anything other than non-genuine, ie not written or signed by the deceased.

114.The 1st and 2nd defendants had no basis on which to believe that they had a right in law to appropriate the $16 million. Notwithstanding this, the prosecution must still prove that the 1st and 2nd defendants, when they made the agreement, acted dishonestly within its meaning as defined.  The two-stage process is still applicable.  Was what they did dishonest by the standards of ordinary, reasonable, honest people; and if so, did they realise themselves that it was dishonest by those standards?

115.I believe the first question is easily answered.  It is clearly dishonest by those standards to use the nine cheques in this way to remove the $16 million from the estate without either informing the bank or the potential administrator of the estate.

116.I note at this stage that the 1st and 2nd defendants may well have anxiously considered that the first prosecution witness may have squandered the assets in the estate, and wished to protect the money for the future of the children.  This goes to motivation.  It does not provide an excuse to act in a dishonest manner when appropriating moneys.  It is clearly dishonest to create a state of affairs whereby it appears the deceased is still alive and capable of dealing with his assets, which is what the overt acts of the agreement between the 1st and 2nd defendants endeavoured to do.

117.I must also ask the question did the 1st and 2nd defendants realise that their acts were dishonest by those standards?  I have to bear in mind that the evidence is that they did not personally use any of the money taken for any nefarious purpose.

118.However, in this exercise I am simply asked to determine did they realise that what they were doing was dishonest.  My answer to this question is as follows.  Clearly, it was dishonest, and clearly, they understood it to be so.  Evidence for this is the underhand way in which the issue of the cheques was done; the speed or the alacrity with which the transfers were carried out.  The first 10 million was transferred and removed within a day of the deceased’s death; the balance removed as soon as it was clear that PW1 would not agree to their method of dealing with the money.

119.Furthermore, the overt acts clearly show a clear realisation that were the deceased’s death to become known, then the cheques would not be honoured.  D1 and D2 may have thought they were acting expediently, but they could not have and did not believe they were acting honestly, and clearly, dishonest means were used in respect of PW3 and PW4 to facilitate the honouring of the cheques. 

120.I have no hesitation in finding both the 1st and 2nd defendants were dishonest in their agreement to appropriate the nine cheques and $16 million in the deceased’s account, and having reached that finding, I must convict them accordingly of that offence.

121.I deal with the other charges.  The 3rd defendant faces two charges.  Charge 2 relates to the 3 million transferred on 9 July and Charge 3 relates to the 2 million on 12 July.  The case against the 3rd defendant involves no dispute on the evidence.  The existence of the relevant cheques in D3’s possession in dealing with the 5 million is set out in P23.  There is undisputed evidence that D3 was the recipient of the three cheques made out in her favour purportedly by the deceased, two on 9 July and one on 12 July.

122.The 3rd defendant has said she was aware of the cheques’ existence; that the cheques were by the deceased, and in her favour. She was made aware the deceased had died.  She was aware of the clearance of the cheques and the fact that the account was in funds.  In her record of interview, the 3rd defendant said she was never involved in the business of Mass Profit, and her husband was an employee of that company.  She was informed on 9 July at 5 am by the 1st defendant the deceased had died.  She was told the money was from D1 and was to be placed in her account for a while.

123.Irrespective of the dealings in D3’s account, we know it is all agreed that as of 5 July her account had a balance of $13,318.19.  That is an HSB account.  Cheques 2 and 4 were deposited on 9 July, a total of 3 million.  The 3 million was transferred to Yik-yiu’s account on 14 July.  On 11 July, D3’s HSBC account had $5,000‑odd in it.  Cheque 9 was deposited on 12 July for 2 million. On 14 July, a cashier’s order was issued payable to Yin-sum.

124.A summary of what the 3rd defendant told the police is that she was a housewife, never involved in the business of Mass Profit.  She had not seen the deceased for a year and had no particular relationship with him.  She knew after 5 am on 9 July the deceased had died.  D1 gave her cheques 2 and 4 after this.  D1 told her the deceased issued the cheques.  They were to be placed in her account for a while.  D3 felt suspicious, as the deceased had already passed away.  She asked D1 to explain, but he did not do so.  She never saw cheque 9, and D1 told her he had deposited it into her HSBC account.  She reckoned the 5 million did not belong to her and that it was unnecessary.

125.The prosecution do not allege that the deceased knew the property was the proceeds of an indictable offence.  They rely on the second part of section 25(1), that there were reasonable grounds to believe that fact.

126.The law is clear.  It is not necessary for the prosecution to prove that a property was in fact the proceeds of crime, nor that the accused believed that the property represented the proceeds of an indictable offence.  The prosecution must show that at the time of D3’s dealing with the property, that the facts and objective factual circumstances known to her would be considered by a commonsense, right‑thinking member of the community to consider them sufficient to lead such a person to believe that the property in question constituted the proceeds of an indictable offence.

127.What are the relevant facts and objective circumstances?  The presentation of the three cheques on two separate dates; your being told - D3’s case - that the deceased authored the cheques in your favour and you are to hold them, or the money.  Now, of significance to the 3rd defendant’s case is that she, as I perceive it, has no basis on which to question the cheques.  She is not alleged to know anything as to what had occurred at Albion Gardens on 9 July.  There is no evidence she was aware of the 1st and 2nd defendants’ agreement or what had been said to the third or fourth prosecution witness.

128.Those are the facts that render the money in question to be the proceeds of an indictable offence.  Until the transfer by the cheques takes place, of course there is no indictable offence committed in respect of this money.  She has cheques in her favour from her brother-in-law. She knows he runs Mass Profit.  We know this is a legitimate business; that the deceased was a legitimate businessman; that any money he had one would presume was the proceeds of legitimate trading.  The objective observer would clearly have no reason to assume that the cheques referred to would be the proceeds of an indictable offence, or certainly that the money that they represent would be such.

129.The prosecution say there are other surrounding circumstances which could lead the objective observer to the belief that these sums of money represented by the cheques were the proceeds of an indictable offence.  There is the knowledge that the deceased was dead; that her holding of the money was to be temporary.  This appears to me to create a conflict. Firstly, there is the clear perceived legitimate origin of the money in the deceased’s accounts.  There is no question that the deceased’s business was questionable or that his assets were the proceeds of crime.  One could assume that any cheque that he had written, appeared to write, would be legitimate. There is the 3rd defendant’s lack of knowledge of the way in which the cheques were in fact procured.

130.Set against this is the unusual circumstances in which D3 is asked to put the cheques into her account.  This, in my view, creates what I would describe as the suspicion of untoward behaviour, but that is not the same as the formation in the mind of an objective observer of an objective belief in the criminal origin of the funds.

131.D3 is simply not, on the evidence, in a position to know the methods used to procure the cheques.  The objective observer in D3’s position would need to know the cheques were not genuine or legitimate to be able to form the objective conclusion that the property represented by the cheques was the proceeds of crime.

132.I find that D3 was not in a position to reach that conclusion.  The case against her is not proved on the two charges she faces. She will be acquitted.

133.The 4th defendant faces a similar charge to the 3rd defendant.  Similar arguments apply.  The evidence in respect of him is all agreed.  On 27 August 2010 the 4th defendant’s Bank of China account received one sum of $2.3 million from the 2nd defendant by way of a cashier’s order.  A total of $2,299,550 was eventually withdrawn by 17 September 2010.  200,000 and 49,550 were transferred back to D2’s account in September 2010.  Prior to the receipt of the 2.3 million, D4’s Bank of China account was dormant.  D4 was the sole account signatory.

134.D4 made a record of interview.  In summary, he said one day he was informed by his mother that she had taken away his bank passbook for the deposit of 2.3 million to his account.  D4 did not know the source or purpose of it.  He asked D2 about it.  He was told not to bother, as the money would only be held temporarily.  As instructed by D2, D4 withdrew most funds.  Some was transferred back to D2.  Before this, D2 had never purchased a cashier’s order exceeding $1 million for the 4th defendant.

135.The prosecution say the unprecedented and sudden deposit of a large sum of money without inquiring why D2 would do this would create in the mind of the objective observer the belief that the money in the cashier’s order was the proceeds of an indictable offence.

136.I must of course examine the actual facts and circumstances in which D4 found himself.  I must look at the nature of the transfer and what D4 knows about the surrounding circumstances. 

137.The 4th defendant presumably knows his mother, that she is an employee of the deceased; that she has a clear record, never been involved in any criminality.  Why would he have reason to assume that money accrued in her account was the proceeds of indictable offences?  He has no knowledge, on the evidence, objectively or subjectively of the means by which the 2nd defendant came into the possession of that money.  Even if he knew it was the deceased’s money, he would presumably have no reason to consider that the money had been procured by way of an indictable offence or by way of some illegitimate means.

138.The prosecution say that here there is a lack of explanation as to the origin of the funds by the 2nd defendant and a lack of inquiry by the 4th defendant which would give a reasonable person in his position the objective belief that the moneys were the proceeds of an indictable offence.

139.Nevertheless, the degree of inquiry expected in a person must be in some way proportionate to the confidence one has in the unimpeachability of the source of the funds.  The 4th defendant had certainly no basis on which to conclude that any money that the 2nd defendant had acquired would be the proceeds of a crime, and has no basis on which to conclude that any funds D4 has which were transferred to him would be impeachable.  The lack of explanation again would create a suspicion of untoward behaviour as I earlier stated with the 3rd defendant, but on the facts and circumstances of this case, it is still some way away from the position where a reasonable observer could reach the conclusion that the money itself is the proceeds of crime.

140.I consider the 4th charge has not been proved against the 4th defendant, and he is acquitted.