HKSAR v. Salim, Majed and Another

CACC 184/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 184 OF 2013

(ON APPEAL FROM DCCC NO. 646 OF 2012)

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Before: Hon Lunn VP, McWalters JA and D. Pang J in Court

Date of Hearing: 29 May 2014

Date of Judgment: 14 November 2014

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J U D G M E N T

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

Introduction

1.The applicants were charged together with one other in a Charge Sheet containing a total of ten charges.  The applicants were respectively the 2^nd and 3^rd defendants on the Charge Sheet and they both separately faced a number of charges of dealing with property known or reasonably believed to represent the proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized And Serious Crimes Ordinance, Cap 455 (“OSCO”).  This offence is commonly known as money laundering.

2.The 1^st defendant (D1) pleaded guilty to an offence of conspiracy to deal with property known or reasonably believed to represent the proceeds of an indictable offence and was sentenced to 2 years and 4 months’ imprisonment.  His particularized co-conspirator was not either of the applicants.

3.The applicants were tried in the District Court before District Court Judge Johnny Chan (“the judge”) and on 8 May 2013 the 1^st applicant was convicted of Charges 4 to 7 and the 2^nd applicant of Charges 8 to 10 on the Charge Sheet.

4.On 23 May 2013 the 1^st applicant was sentenced to a total term of 5 years’ imprisonment and the 2^nd applicant to a total term of 42 months’ imprisonment.

5.Both applicants filed a notice of application for leave to appeal against their respective convictions and sentences.  The 1^st applicant appears by counsel, Mr Robert Andrews, in respect of his application for leave to appeal against conviction but in respect of his application for leave to appeal against sentence, he acts in person.  Prior to the hearing of the application, the 2^nd applicant abandoned his application for leave to appeal against sentence.

6.At the hearing of the applications we reserved our judgment which we said we would hand down at a later date.  This we now do.

The Charges

7.The substantive money laundering charges faced by the 1^st applicant were Charges 4 to 7 on the Charge Sheet and they all related to bank accounts held in the name of Day Leader Limited (“Day Leader”).  The substantive money laundering offences with which the 2^nd applicant was charged were Charges 8 to 10 on the Charge Sheet and they all related to bank accounts held in the name of Charmsky Rich Limited (“Charmsky”).

8.The particulars of the charges can be summarised as follows:

Charges involving the 1^st applicant

Charge No.	Date of Offence	Amount Laundered	Bank Involved
4	2 December 2011 -  21 February 2012	HK$8,609.72	Bank of China (1st BOC account)
5	2 December 2011 -  21 February 2012	US$1,998.52	BOC (2nd BOC account)
6	1 December 2011 - 22 February 2012	HK$266,495.22 €30,566.10 £25,750 & US$677,578.30	Hang Seng Bank (HSB account)
7	1 December 2011 - 22 February 2012	HK$141,153.98 US$219,278.36	HSBC

Charges involving the 2^nd applicant

Charge No.	Date of Offence	Amount Laundered	Bank Involved
8	2 December 2011 - 21 February 2012	HK$2,000	BOC
9	1 December 2011 - 22 February 2012	HK$1,548.80 US$109,146.26	HSB
10	1 December 2011 - 21 February 2012	HK$186,664.50 US$277,103.84	HSBC

9.It is important to understand that the amounts of currency referred to in the charges were the aggregate of deposits received in those currencies over the charge period.  In addition to the deposits there were also withdrawals from the accounts in the charge period and for each account there were different levels of activity.  For example, for Day Leader’s BOC account for Charge 5 there were only two deposits and no withdrawals but for its HSB account in respect of Charge 6 there were thirty deposits and forty seven withdrawals.

10.As part of its case the prosecution adduced evidence by bankers’ affirmations not just of the deposits but of all the transactions involving the various accounts.  This was done in order to show the activity in the accounts and that the accounts were being used for a money laundering purpose.  But, and this is especially important, the charges were drafted to cover a period of time, the amounts particularized in the charges were aggregate amounts representing a number of different transactions during that period of time and finally the different transactions they represented were all deposits into the accounts.  The applicants were not charged in respect of any withdrawal of monies from the account.

The Prosecution Case

11.The 1^st applicant is an Iraqui man who holds a Dutch passport.  The 2^nd applicant is a Syrian man who holds a United Kingdom passport.

12.The prosecution case was that the incidents of money laundering stemmed from an international e-mail and mail fraud.  All but one of the victims, whose evidence was adduced at trial, were induced to deposit monies into a designated bank account in Hong Kong thinking that they were following the instructions of companies with whom they had a business relationship.  The other victim was the subject of an inheritance fraud.  The bank accounts in which the fraudulently obtained monies were deposited were connected to the 1^st and 2^nd applicants but it was not the prosecution case that either of the applicants was involved in the commission of the predicate offences.  The 1^st applicant was connected to the Day Leader account and the 2^nd applicant to the Charmsky account.

13.The prosecution adduced as evidence in its case the witness statements of PW1 to PW7.  These were admitted into evidence under section 65B of the Criminal Procedure Ordinance, Cap 221.  The persons giving these statements were the victims of the international fraud and their statements reveal how they were induced to make the deposits via the internet into the bank accounts of either Day Leader and Charmsky.  Their statements established that particular amounts were paid by them in particular months in relation to each of the two accounts and these amounts related to particular charges.  The contents of their statements can be summarized as follows:

Day Leader

PW No.	Amount Deposited	Month Deposited	Bank account into which deposit made	Charge to which deposit Relates
6 (from the USA)	US$105,391.55	January 2012	HSB	6
7 (from Qatar)	US$72,409.47	January 2012	HSB	6
1 (from the Mainland)	US$40,000	February 2012	HSBC	7

Charmsky

2 (from the Mainland)	US$29,000	January 2012	HSBC	10
3 & 4 (from the Mainland and the USA)	US$48,313.	January 2012	HSBC	10
5 (from Russia)	US$31,910.	January 2012	HSBC	10

15.Addresses in Sheung Wan and London were used respectively as the registered address and business address of Day Leader and Charmsky on the application forms for the opening of the bank accounts.  Both used the same address in Sheung Wan as their registered address but different London addresses were recorded as their business addresses.

16.Once they had opened the accounts and received all the bank account operating materials relating to each account they passed them to other persons so as to enable those other persons to operate the accounts, including operating them remotely such as by over the internet.  Moreover, all the correspondence from the bank, such as bank statements, would not be received by them but would be sent by the banks, as they well knew, to the Sheung Wan address.

17.The prosecution called four witnesses, all bank staff, to testify as to the 1^st and 2^nd applicants’ opening of the bank accounts in Hong Kong.  One such witness was Miss Lai of BOC who was PW8 at trial.  She testified that as part of the package of materials given to Day Leader and Charmsky there was a unique e-banking PIN number.  The bank also sent by registered mail the e-banking operation documents together with the assigned e-banking PIN number and login password.  These materials were sent to the Sheung Wan address of the two companies.  The bank subsequently received an acknowledgement of receipt from Day Leader and Charmsky.  However, it was noticed by bank staff that the signatures on each of these two receipts did not match the respective authorized signatures of Day Leader and Charmsky. Consequently, the bank did not activate the e-banking facilities for both companies.

18.Mr Kwok of HSB, PW10 at trial, testified as to the 1^st and 2^nd applicants coming to the bank to open accounts for Day Leader and Charmsky.  After processing their request, Mr Kwok provided to the 1^st and 2^nd applicants one ATM card, one debit card, one password for e‑banking, a password for telephone banking, a password for the ATM card and a device for e-banking.

19.Miss Lee of HSBC, PW11 at trial, gave evidence that on 1 December 2011 the 1^st and 2^nd applicants went to her bank to open accounts for Day Leader and Charmsky.  Miss Lee handed them an ATM card, password and bank security devices.

20.PW8, PW10 and PW11 all testified that the 1^st and 2^nd applicants were accompanied by a third person when they opened accounts for Day Leader and Charmsky.

21.PW8 said that she had been contacted by Rainbow Wong of a secretarial company who had made an appointment with her for the purpose of opening accounts for Day Leader and Charmsky.  Ms Wong had provided PW8 with the corporate documents needed by the bank and assisted the two applicants when she accompanied them to the bank.  Ms Lai said Ms Wong worked with her boyfriend, a Pakistani male.  A defence exhibit, marked D1, was a photograph of an East Asian man who PW8 said looked like Mr Wong’s boyfriend and whom Mr Kwok of HSB, PW10, said looked like the person claiming to be Mr Yaser.  Ms Lee of HSBC, PW11, said the person in exhibit D1 looked liked a non-Chinese male called Ah Shing who worked for a secretarial company.  Ms Lee had previously seen this person in the company of Rainbow Wong, assisting others to open bank accounts.

22.The 1^st and 2^nd applicants both returned to Hong Kong on 21 February 2012.  On that day they both attended the respective banks where the accounts of Day Leader and Charmsky were maintained and withdrew monies from them.  The 1^st applicant withdrew HK$8,000 from the first BOC account, HK$260,000 from the HSB and HK$140,000 from the HSBC account.  It was an admitted fact that the 1^st applicant’s over‑the-counter cash withdrawals amounted to a total of around HK$408,000.  It was asserted by the prosecution that the reason for the 1^st applicant to come to Hong Kong in February 2012 was to raid the accounts in order to benefit himself.

23.On 21 and 22 February 2012 the 2^nd applicant withdrew from Charmsky’s accounts HK$2,000 from the BOC account, HK$1,548.80 and US$1,000 from the HSB account and US$900 from the HSBC account.  It was an admitted fact that the withdrawals amounted in total to around HK$19,117.60.

24.At around 11 p.m. on 22 February 2012 police officers entered Room 2222 of the Langham Place Hotel in Mongkok and arrested both applicants for the offence of conspiracy to defraud.

25.At the time of their arrests both applicants were found to be in possession of the various amounts of currency and the 2^nd applicant was also found to be in possession of various bank documents in relation to the accounts of Charmsky with BOC, HSB and HSBC.

26.It was the prosecution case that, contrary to claims made by both applicants to the police of being legitimate businessmen intending to trade with the Mainland, both applicants had no intention of trading via their respective companies and that they knew all along that they would not be using the accounts personally, would not receive the bank account operating materials and never expected to receive correspondence relating to their respective companies from the banks.  The prosecution invited the inference that by conducting themselves in the way they did, the applicants were being paid to open accounts for others to operate and must have realized that the monies that went through these bank accounts came from illegal transactions.  They were effectively allowing others to use the accounts with their permission, hence they had dealt with the proceeds when the accounts were used to receive monies, including those monies that were obtained from the victims of the e-mail frauds.

27.Banker’s affirmations proved that during the charge period total deposits of approximately HK$8.1 million were made to the three accounts of Day Leader.  For Charmsky the total deposits in the charge period amounted to approximately HK$3.2 million.

The Defence Case

28.Both applicants elected to testify.  In a nutshell their case was that they were the victims of deception and that they were genuine businessmen who wanted to set up companies in Hong Kong for genuine reasons.  They said they worked and lived in the United Kingdom and that they each wanted to buy furniture from China for their respective businesses.  They were both told to set up a company in Hong Kong for this purpose.

29.The 1^st applicant said he came to know a Mr Yaser, an accountant in Hong Kong, through a Palestinian gentleman who helped him in London with accounts work.  The 2^nd applicant said that in November 2011 when he came to Hong Kong he was greeted by Mr Yaser and by his wife Rainbow Wong at the airport.  On the same day, Mr Yaser also received D1 and the 2^nd applicant at the airport and took them all to a hotel in Kowloon.  The next day Mr Yaser took them all to his office where the 1^st applicant said that with the assistance of Mr Yaser he completed the documents necessary for setting up Day Leader.  The 1^st applicant said he paid Mr Yaser £1,000 for setting up the company but he received no receipt from him for this amount.  The 1^st applicant said that Mr Yaser told him that the documents he had signed in respect of the company would be sent to his London address subsequently.

30.The 1^st applicant said that he only wanted to open a company in Hong Kong but on 1 December 2011 he said Mr Yaser came to him in the morning and suggested that he, the 1^st applicant, should open a bank account at HSBC.  Mr Yaser told the 1^st applicant that the manager was a friend of his and that there would be no problems.

31.Mr Yaser then took all three of them to the HSBC and HSB where he assisted them to open accounts.  The 1^st applicant said he queried Mr Yaser, through D1, why it was necessary to go to HSB after their visit to HSBC and that Mr Yaser said the 1^st applicant should leave the matter to him and that they went to HSB just in case HSBC declined to open an account for Day Leader.

32.The next day, 2 December 2011, Rainbow Wong took all of them to BOC where accounts were similarly opened.

33.He said that Mr Yaser told him to deposit HK$6,000 in each bank account but as he only had HK$17,000 on him he paid this amount to Mr Yaser.

34.The 1^st applicant maintained that he did not provide any Hong Kong address when he opened the bank accounts and received no banking materials such as ATM cards, passwords, PINs and security devices from any of the three banks.

35.The 1^st applicant said that on his return to London he had not been able to contact Mr Yaser and had not received any documents from the banks in Hong Kong.  Consequently, he decided to return to Hong Kong to find out what had been happening.  He had originally planned to travel to Hong Kong on his own but he said that on 19 February 2012 D1 contacted him and told him that he knew of a travel agent who would offer a better discounted price if more than one ticket was bought.  So, the 1^st applicant agreed to D1’s suggestion and he, D1 and the 2^nd applicant all flew together to Hong Kong on the same flight on 21 February 2011.  However, after their arrival in Hong Kong they had still been unable to get in contact with Mr Yaser.

36.The 1^st applicant said that he tried to call Mr Yaser in the early hours of 21 February 2012 but he did not answer his phone.  He went that morning to HSB in Mongkok to check Day Leader’s account.  He said he queried with the bank staff why he had not received anything from the bank and was told that everything had been sent to his address.  He was then informed by the staff that there was a balance in the sum of HK$266,000 and was given a printout of this balance.  He maintained that he told the bank staff that he had no idea as to the source of this money.  He was told to return to the bank at 3.30 p.m. that day.

37.The 1^st applicant said that he then went to the Mongkok branch of the HSBC where he was told that there was only €14 in the account. When the told the bank staff he wanted to close the account, he was given a bank form to do so.  He said that as he could not read English he went looking for the 2^nd applicant.

38.Having found the 2^nd applicant the two of them went to another branch of HSB in Mongkok.  The 2^nd applicant acted as interpreter for the 1^st applicant.  When the 1^st applicant complained to a staff member that he had not received anything from the bank, he was told to return in an hour’s time.  They left this bank at about 11.30 a.m. and returned to it at 12.30 p.m.  The bank staff told them that there had been no complaint about the money and when the 1^st applicant asked if he could withdraw the money, he was told that he could.  He, thereupon, withdrew HK$260,000 from the Day Leader account, leaving a balance of HK$6,000 in the account.

39.Shortly thereafter, the 1^st applicant returned to the Mongkok branch of HSBC with the 2^nd applicant acting as his interpreter.  There, he was informed by the bank staff that an amount of HK$141,000 was in the Day Leader account and that there was no problem with the money.  He said that he told the staff he did not know the origin of this money and wanted to close the account.  He said the manager told him he could not close the account unless he withdrew all the money.  The 1^st applicant then withdrew HK$140,000 leaving a balance in the account of HK$1,000.  He said he withdrew the money as he wanted to contact Mr Yaser and find out the origin of the money.

40.At 3 p.m. he went to the Mongkok branch of BOC and was informed that there was HK$8,000 in the account.  He reckoned he had given Mr Yaser HK$6,000 as a deposit during his last visit and then he withdrew the full amount.

41.The 1^st applicant then returned to the Mongkok branch of HSB at 3.30 p.m. and was told that there were €22,000 in the account.  It was his evidence that he told the bank staff that he did not know the source of these monies.  Whilst he was talking to this staff member he said that this person noticed that someone was changing the Euros in Day Leader’s account into US$.  He said that he then complained to a bank manager that someone was playing with his account.  He asked the manager to call Mr Yaser as he was the only other person who knew about the account.  The bank manager called the number the 1^st applicant gave him but only a person claiming to be a Mr Salim answered the phone.  The 1^st applicant asked the manager to call the police or the consulate but he refused.  The 1^st applicant says he left the bank at about 5.30 p.m.

42.The 1^st applicant said that he then went by himself to make a report at the Mongkok Police Station.  However, he had difficulty in communicating with the police officers and he failed to get the police to open any complaint file for him.  He said he was given a piece of paper on which a telephone number was written and was told to contact the Hong Kong Police Station.[1] He said he then did some shopping and entered a casino in which he gambled and lost around US$5,000 before returning to the Langham Place Hotel.

43.The 1^st applicant also said that he went to the Tsimshatsui branch of HSB on 22 February 2012 as he wanted to close the Day Leader account and spoke to Mr Kwok there.  He said he complained to Mr Kwok that he, Mr Kwok, had caused him trouble by using Mr Yaser’s address as the address for Day Leader.  After telling Mr Kwok he wanted to close the account, Mr Kwok referred him to another counter.  However, he was unable to communicate with the bank staff and so he left the bank.

44.The reason why we have gone into such detail of the 1^st applicant’s dealings with the banks is because the 1^st applicant’s counsel conceded that the over-the-counter cash withdrawals of money from the account of Day Leader constituted dealings with those monies and that at the time the 1^st applicant dealt with them he had reasonable grounds to believe that they “in whole or in part, directly or indirectly represented the proceeds of an indictable offence”.  The 1^st applicant’s counsel conceded that his client could be convicted in respect of these dealings.  However, in respect of all the other transaction involving the Day Leader accounts the 1^st applicant maintained that he had no knowledge of those transactions and as he had no banking account materials he had no ability to access the accounts and gain knowledge of what use was being made of them.

45.The 2^nd applicant testified that he is 37 years old, was born in Syria but came to England in 2000.  He said he was working with his brother-in-law in renovating two hotels in the UK and part of the project involved the purchase of furniture for the hotels.  He said he came to Hong Kong in November 2011 in order to set up a company which he could use to import furniture from China for the hotel project.

46.He said that he received advice from his friend, Mr Hassan, and a Pakistani accountant in the UK, who provided him with the contact details in Hong Kong of a Mr Mohammed Yaser Arafat.  He called Mr Yaser who told him what documentary records he needed to bring with him to Hong Kong.

47.The 2^nd applicant said that when he arrived in Hong Kong he saw Mr Yaser holding a banner with his, the 2^nd applicant’s, name on it.  A lady called Rainbow Wong was also present.  They were joined by D1 and the 1^st applicant and Mr Yaser took them all to a hotel.

48.The following morning Mr Yaser came and took all three of them to his office.  He explained to the 2^nd applicant the process of setting up a company, asked for HK$8,500 for doing so and recommended opening up bank accounts for the company.  The 2^nd applicant purchased Charmsky as an off-the-shelf company.  He said Mr Yaser explained to him that HSBC, the 2^nd applicant’s first choice, might not accept the 2^nd applicant as a customer and so if the 2^nd applicant chose three banks, at least one of them should agree to open an account for him.  If more than one account could be opened then so much the better for the new company.

49.When at the banks, the 2^nd applicant said he answered the questions with Mr Yaser’s help.  The 2^nd applicant confirmed that the Sheung Wan address was Mr Yaser’s address and the London address was his business address.  He also confirmed that he never received any banking materials from any of the banks.

50.The 2^nd applicant also admitted that for the last few days of his first visit to Hong Kong in 2011, he stayed in a room at Langham Place Hotel together with D1 and the 1^st applicant as no single room was available.  He had also gone to Macau with them together.

51.The 2^nd applicant said he paid a total of £1,000 made up of HK$8,500 for setting up Charmsky; HK$2,000 for company registration and HK$2,000 for opening the bank accounts.  He also paid HK$17,000 as deposits for the bank accounts – HK$6,000 each for the HSBC and HSB accounts and HK$5,000 for the BOC account.

52.The 2^nd applicant said he found Mr Yaser to be a nice, trustworthy person.  However, after he returned to the UK he received nothing from the banks had found he could not contact Mr Yaser.  He called D1 and found he had also been unable to contact Mr Yaser.  They met, talked about what they should do and decided to travel to Hong Kong to sort out matters.  The 2^nd applicant said he also wanted to go to Hong Kong in order to source T-shirts and Syrian flags.  Once he arrived in Hong Kong he tried, unsuccessfully to locate Mr Yaser.

53.The 2^nd applicant said that he withdrew HK$2,000 from Charmsky’s account with the BOC, HK$1,548.80 and US$1,000 from the HSB account and US$900 from the HSBC account of Charmsky on 21 February 2012.  He said the cash withdrawals he made from the accounts were simply the monies he had deposited into the accounts to open them.

The Reasons for Verdict

54.The judge reminded himself that the prosecution had to prove that each of the applicants dealt with the property the subject of the charge and that at the time they dealt with it they knew or had reasonable grounds to believe that the property represented the proceeds of an indictable offence.

55.The judged noted that it was not in dispute that the 1st applicant dealt in property amounting to HK$408,000 and the 2nd applicant in property amounting to HK$19,116.60.  The 1st applicant admitted that his dealings were in breach of section 25(1) of OSCO but the 2nd applicant denied that his dealings breached the law.

56.However, apart from these dealings the applicants denied ever being a party to any transaction involving these accounts and thus denied having dealt with the monies deposited into and transferred out of these accounts.  On the actus reus of dealings, it was the prosecution case that by allowing others to use the accounts with their permission, they had dealt with the proceeds when the accounts were used to receive monies, including those from the victims of the e-mail fraud that were PW1-7.

57.On the mens rea element of the offence, it was the prosecution case that, based on the conduct of the applicants, it was proven beyond reasonable doubt that they had reasonable grounds to believe that the property represented the proceeds of an indictable offence or that the applicants had ‘shut their eyes to the obvious’.[2]

58.The judge accepted the evidence of all the bank officials to be credible and reliable.  He found that Mr Yaser existed and had a role to play in the laundering activities.  He accepted the evidence of PW10 of HSB who said he gave all bank account materials to the 1^st and 2^nd applicants and that he subsequently saw Mr Yaser carrying the bag used to contain all these materials.  From this the judge inferred that the applicants had given them to Mr Yaser.

59.The judge analysed the evidence of both applicants and found them to be dishonest and unreliable witnesses and rejected their evidence.

60.The judge found that each of the withdrawals by them, to which they admitted, constituted a dealing with property and then went on to consider whether they could be liable for the other dealings that took place by others with respect to the accounts.

61.On this question the judge found that the applicants came from the UK to Hong Kong for the primary purpose of opening bank accounts, and that setting up companies was not the main purpose of their visit.  In this regard they were assisted by Mr Yaser, Rainbow and others.  He said the only irresistible inference was that before they left Hong Kong the applicants handed over the bank account operating materials, including the controlling devices, PINs and passwords of the accounts, to Mr Yaser and/or Rainbow Wong so that they could be operated by others.

62.The judge found that the only irresistible inference he could draw from evidence was that the first trip to Hong Kong made by the applicants must have been paid for by others as they would not use their own monies to fly to Hong Kong to set up companies that they did not intend to use and to open bank accounts that they intended to allow others to operate.  He further inferred from the evidence that they must have been remunerated for their actions or been promised some form of monetary reward.

63.Having found that the applicants were recruited to fly to Hong Kong from the United Kingdom to open bank accounts, and given the expense involved in so doing and the number of accounts that were opened, the judge went on to infer that both applicants were aware that the bank accounts should be used to deal with substantial sums of monies.

64.The prosecution relied on the judgment of the Court of Appeal in HKSAR v Lau Sui Hing & Anor CACC 111/2008; unreported, 21 October 2008, to argue that it was authority for the proposition that lending one’s account to others was itself a dealing with property.  The judge said that this was a misreading of that judgment and said that it involved defendants whom the prosecution had proved knew of the transactions in the accounts in question and had themselves dealt with the monies in the accounts.

65.The judge then referred to section 89 of the Criminal Procedure Ordinance, Cap 221 which makes aiders, abettors, counsellors and procurers guilty of the offence to whose commission they have lent their support.  The judge said that the conduct of these applicants amounted to aiding and abetting another person to deal with the monies in the bank accounts, ie the transactions by third parties during the charge period, as opposed to the cash withdrawals made by the applicants on 21 February 2012, albeit they were not the persons who conducted these transactions.  In this way the judge found the actus reus of dealing with property proven by the prosecution.

66.He then turned to the mens rea of the offence and said that the way Day Leader and Charmsky was set up, the nature and method of opening the bank accounts, the handing over and permitting all controlling devices of the accounts to be used by a third party, making withdrawals from the accounts of monies that they knew were not theirs, were grounds that a commonsense, right-thinking member of the community would consider sufficient to lead a person to believe that the cash withdrawals made by them on 21 February 2011 and other transactions conducted by others in whole or in part represented the proceeds of an indictable offence.

67.The judge found that on Charge 4, the 1^st applicant dealt with HK$8,000 himself but that he had aided and abetted another to deal with the rest of the property that was particularized in this charge.  In respect of Charge 5 he said that the 1^st applicant aided and abetted another person to deal with the particularized property and in respect of Charge 6 that the 1^st applicant dealt with HK$260,000 himself and that he aided and abetted another to deal with the rest of the property particularized.  He said that in respect of Charge 7 the 1^st applicant dealt with HK$140,000 himself and that he had aided and abetted another person to deal with the rest of the particularized property.  Thus, in respect of all of the 1^st applicant’s charges his convictions were based on accessorial liability and in respect of Charges 4, 6 and 7 this basis for conviction was supplemented by his withdrawals from the accounts of Day Leader.

68.In respect of the charges faced by the 2^nd applicant the judge said that in Charge 8 the 2^nd applicant dealt with the whole sum of HK$2,000 but on Charge 9 he dealt with HK$1,548.80 and US$1,000 himself and that he aided and abetted another person to deal with the rest of the particularized property.  As to Charge 10 he said that the 2^nd applicant dealt with US$900 himself but he aided and abetted another person to deal with the rest of the property that had been particularized in the charge.  In respect of the 2^nd applicant’s charges, his convictions on Charges 9 and 10 were based on accessorial liability, supplemented by his withdrawals from the Charmsky accounts.  Charge 8 was based entirely on an act of withdrawal by the 2^nd applicant on 21 February 2012.

69.The judge thereupon convicted both applicants of their respective charges.

The Reasons for Sentence

70.In sentencing the judge said that both applicants were of clear record and were convicted on the basis that they had reasonable grounds to believe that the monies they dealt with and helped to deal with in whole or in part, directly or indirectly represented the proceeds of an indictable offence, not that they had knowledge of the predicate offences.

71.The judge went on to say that the operation involved an international dimension with overseas victims being involved.  Each applicant played a pivotal role in the operation which involved sophisticated and careful planning.  He further said that the offences involved an organized syndicate and although the offence period was less than 3 months there were many transactions in that time.

72.In respect of the 1^st applicant the judge adopted a starting point of 18 months’ imprisonment for Charges 4 and 5 which he discounted by 1 month for the 1^st applicant’s clear record.  He allowed a further 1 month discount from the starting point to allow for the fact that the 1^st applicant had admitted most of the prosecution case and his final sentence for these charges was 16 months’ imprisonment.

73.In respect of Charge 6 he adopted a starting point of 5 years which he then discounted by 3 months to allow for the 1^st applicant’s clear record and a further 2 months for him admitting most of the prosecution case. He then imposed on the 1^st applicant a sentence of 55 months’ imprisonment.

74.In respect of Charge 7 he adopted a starting point of 3 years’ imprisonment which he then discounted by 2 months to allow for the 1^st applicant’s clear record and a further 2 months for him admitting most of the prosecution case.  He then imposed on the 1^st applicant a sentence of 32 months’ imprisonment.

75.Having considered the totality principle the judge ordered that the sentences for Charges 4, 5 and 7 were to run concurrently with each other but that 5 months of the sentences for Charges 4, 5 and 7 would run consecutively to the sentence for Charge 6, making a total sentence of 5 years’ imprisonment (60 months).

The Grounds of Appeal Against Conviction

76.The 1^st applicant advances two grounds of appeal.  The first is that the judge erred in respect of Charges 4, 6 and 7 in failing to exclude evidence relating to the alleged commission of more than one offence within the period specified in each charge and that the judge erred in convicting the 1^st applicant in effect twice for the same charge, namely once for money laundering and once for aiding and abetting money laundering, when the section 25(1) OSCO offence is not a continuing offence.  Under this ground it is also said that in convicting the applicants in respect of their withdrawals of monies from the accounts the judge was convicting them of dealings with property with which they had not been charged.

77.The second ground of appeal is that the judge erred in convicting the 1^st applicant of Charges 4, 5, 6 and 7 by virtue of aiding and abetting another person to deal with property when there was  insufficient evidence that the 1^st applicant was present at the time that the person dealt with the property.

78.The 2^nd applicant advances four grounds of appeal.  The first is that the judge erred in finding that the 2^nd applicant was a dishonest and unreliable witness when reasonable inferences could be drawn from the evidence that were exculpatory of the 2^nd applicant.

79.The second ground of appeal is the same as the first ground of appeal of the 1^st applicant and relates to Charges 9 and 10.

80.The third ground of appeal also relates to only Charges 9 and 10 and is the same as the 1^st applicant’s second ground of appeal.

81.The final ground of appeal being advanced on behalf of the 2^nd applicant is that in respect of Charge 8, the judge erred in failing to take account of the evidence from which it could be inferred that the 2^nd applicant had no reason to believe that a HK$2,000 cash deposit made on 28 December 2011 in Charmsky’s BOC account represented the proceeds of an indictable offence.

Discussion

82.The first ground of appeal of the 2^nd applicant concerns the judge’s analysis of the evidence of this applicant and, unlike all the other grounds of appeal, is solely evidence based.  As it can quite quickly be disposed of we shall deal with it first.  Under this ground it is said that the judge, in assessing the credibility of the 2^nd applicant, erred in placing weight on the fact that the 2^nd applicant withdrew from Charmsky’s bank account more than he deposited into it; that he opened bank accounts only because Mr Yaser persuaded him to do so, the applicant came to Hong Kong to import furniture into United Kingdom, that he returned to Hong Kong for the additional reason of placing orders for Syrian flags, banners and T-shirts and a number of other matters of which it is said the judge either failed to consider or take into account the 2^nd applicant’s evidence and which influenced his assessment of the 2^nd applicant’s credibility.

83.The judge’s assessment of the 2^nd applicant’s credibility took 1 ½ pages of his Reasons for Verdict and commenced with the statement:

“Some of my criticisms of D2’s evidence are also applicable to D3.” [3]

84.His assessment of the 1^st applicant’s (ie D2’s) credibility took up a further 3 pages of his Reasons for Verdict.  It is clear that his rejection of both applicants’ evidence was essentially because he found their evidence inherently incredible.  All the matters of which he complains were only of peripheral relevance to the judge’s assessment.

85.Their forensic significance can be readily appreciated from the first point made.  The judge “noted’ that the 2^nd applicant withdrew more from the Charmsky account that he had deposited into it.  It is clear from the fact that the judge only noted this point in passing that he regarded it of only relatively minor significance; essentially a small point, but a point nonetheless.  Counsel for the complainant tried to demonstrate that the difference was small and asserted that the two figures “roughly tallied”, namely HK$19,117.60 being around the amount withdrawn and HK$18,282.35 being the amount deposited.  However, no matter how hard counsel may try there is still a difference and the point noted by the judge remains valid.

86.The point that the judge could not convict of the withdrawals is a stand-alone point and can be quickly dealt with.  There is no doubt that the applicants were not charged with any withdrawal of monies as a dealing with property. This is not disputed by counsel for the respondent who accepts that evidence of their non-charged transactions was adduced in order to provide a complete picture of the activity in the accounts in this period and of the conduct of the applicants on their return to Hong Kong so as to enable adverse inferences to be drawn in respect of the purpose for which these bank accounts were set up, the use which was made of them and the knowledge of the applicants.

87.However, notwithstanding this error by the judge counsel for the respondent invites us to apply the proviso.  That, it seems to us would not be an appropriate course in respect of conduct for which a defendant has not been charged.  The only way a conviction for these transactions could he upheld would be for the charges to be amended and for this Court to substitute a conviction for the amended charges in place of the existing convictions.  The problem with such a course is that the substituted conviction would not reflect the basis upon which the applicants were tried and would, therefore, unfairly prejudice them.  The amendment could not be made without injustice.[4]

88.Consequently, those parts of the convictions relating to the withdrawals cannot stand.  This is sufficient to cause us to quash the conviction of the 2^nd applicant on Charge 8 which is based solely upon an act of withdrawal as constituting the requisite dealing with property.  There is a separate ground of appeal in relation to this charge relating to the evidence of the provenance of this money, which does not appear to be from any of the e-mail frauds, but given our conclusion in respect of Charge 8 it is not necessary to deal with this other ground.

89.All the other grounds of appeal require an understanding of how the prosecution presented its case, the issues it identified as arising from the evidence and how it sought to prove those issues.

90.The prosecution’s closing written submission makes it clear that the prosecution saw the key issue in the case as being proof of the applicant’s knowledge.  Under the heading “Issues at trial” the prosecuting counsel wrote:

“20. Did the Defendant set up the Companies and Bank accounts (to be used by themselves only) in order to genuinely buy/trade in furniture in China as they claimed in evidence?

Or, as is the stance of the Prosecution, did they open up the Bank accounts so that those Bank accounts could be used primarily to deal with the proceeds of fraudulent activities.

21. Further, if the latter were the case, did they know that the accounts would be used for such purposes, or did they have such a reasonable belief that they would.

22. In short, the issue is one of Knowledge.” [5]

91.Though describing the issue as one of knowledge, the prosecuting counsel is really describing two issues.  The first is the purpose or reason for the applicants opening the accounts.  Assuming the prosecution was able to prove that the purpose was to allow others to operate the accounts then the second issue arises of whether the prosecution has proven that the applicants knew what use those others would make of the accounts.  Thus, the prosecution case was, factually, based upon asking the Court to find that the applicants had come to Hong Kong to set up bank accounts for the purpose of enabling others to use them in order to deal with the proceeds of indictable offences.

92.But, of course, this factual scenario had to be brought within the legal elements of the section 25(1) offence.  In terms of proof of the actus reus of this offence the prosecution contended that each time money was deposited into the bank accounts, as proven by the banker’s affirmations, a separate act of dealing with property took place for part of the definition of “dealing”, in relation to property, in section 2(1) of OSCO is “receiving or acquiring the property”.

93.The only legal problem with this factual scenario was that it was an integral part of the prosecution case that every deposit of monies into these accounts must necessarily have been by victims, such as PW1-7, or by these others to whom the applicants had lent their accounts.  How do the applicants, as a matter of law, become criminally liable for the acts of dealing with property by these other persons?

94.For the prosecution the answer to this question lay in the decision of this Court in HKSAR v Lau Sui Hing & Anor CACC 111/2008; unreported, 21 October 2008.  It was the prosecution’s submission that in this judgment the Court of Appeal endorsed the proposition of the trial judge that “lending someone a bank account to deposit and withdraw money is an essential part of money laundering and amounted to dealing with property”.  Thus, from the prosecution’s point of view, proof of the actus reus of the offence depended entirely upon the legal validity of this proposition.

95.The prosecution submitted that the Court of Appeal endorsed this proposition when, in the course of its judgment it noted that bank accounts are valuable personal properties and then went on to say:

“64. As the holders of the accounts in question and in the absence of any acceptable evidence to the contrary, the only reasonably and irresistible inference must be that the applicants knew the transactions in their accounts and had dealt with monies in those accounts.

65. In the light of the transaction records of those accounts, anyone who dealt with the monies in those accounts must have reasonable grounds to believe that the monies represented proceeds of an indictable offence.  It was an inference that no reasonable person could have failed to draw.”

96.Thus, it is quite apparent from the prosecution’s written closing submission that it relied for proof of the actus reus of the offence on its perceived endorsement by the Court of Appeal in Lau Sui Hing of the proposition that lending someone a bank account to enable that person to use it for a money laundering purpose is itself an act of dealing with property.  As we have mentioned the judge rejected this submission and, in our view, he was undoubtedly right to do so.  He readily demonstrated the fallacy of the prosecution’s submission when he quoted a further part of the Court of Appeal’s judgment which placed the Court’s comments in their proper context and more accurately revealed their reasoning in upholding the conviction.  We can do no better than allow the judge to speak for us.  He said:

“189. … My understanding of the judgment is different from the view of Mr. Parry.

190. It is true that the trial judge in Lau Sui Hing concluded that lending someone a bank account to deposit and withdraw monies is an essential part of money laundering and amounted to dealing with property (see paragraph 47 of the judgment).

191. Paragraph 61 to paragraph 64 of the judgment are all relevant:

‘61. If the defence that the applicants had lent their accounts to Ah Chi and thereafter had paid no attention to them and, therefore, had no knowledge about them, was true or could be true, the applicants could not be guilty of the charge as they had not dealt with the monies in their accounts and they could have no reason to believe that the monies were proceeds of an indictable offence when they were not even aware of the existence of the monies.

62. However, the judge had completely rejected the applicant’s explanations, both in their statements to the police and in the first applicant’s evidence.

63. What was left was the undisputed or indisputable evidence that the applicants were respectively the holders of account A and account B and that large sums of monies from a loansharking business were deposited into and withdrawn from their accounts.

64. As the holders of the accounts in question and, in the absence of any acceptable evidence to the contrary, the only reasonable and irresistible inference must be that the applicants knew the transactions in their accounts and had dealt with monies in those accounts.’

192. From the above, one can see that the convictions in Lau Sui Hing were upheld on the basis that the Court of Appeal had come to the conclusion that the only inference was that the applicants had dealt with the monies in the accounts themselves, not that they had lent the accounts to Ah Chi.

193. In paragraph 61 of the judgment the Court of Appeal pointed out that if a person had lent his account to another person, he had not dealt with the monies in the account, proof of mens rea apart.” [6]

97.In a nutshell the Court of Appeal in Lau Sui Hing said:

(1) the defence was that they lent their accounts to another and had no knowledge of what that other had done with them.

(2) If this was true then the defendants could not be guilty as they did not deal with the monies in the accounts;

BUT

(3) once the defence evidence of the lending of their accounts was rejected, then the evidence was that the defendants were the account holders and, in the absence of any evidence to the contrary, that fact would allow certain adverse inferences to be drawn that they were responsible for the transactions in the accounts.

98.However, this was not the factual situation in the present case.  In respect of these applicants it was actually the prosecution case that there was in fact a lending of the accounts to persons in Hong Kong and that the applicants were out of the jurisdiction and back in the United Kingdom when the money laundering dealings involving these accounts took place.  Thus, from the very start, the prosecution case was based on a flawed understanding of the law relating to the actus reus of the offence.

99.In her written submissions on this appeal Ms Alice Chan, counsel for the respondent, submitted:

“The essence of the prosecution case against the applicants’ ‘dealing’ related to their core conduct of lending of the bank accounts for use by others. This conduct entailed different aspects such as deposits, making withdrawals and the concealing of funds. The culpable conduct was the handing over of control of the accounts thus facilitating the movement of funds through the accounts.”

100.The respondent’s position on appeal, as at trial, was that the mere allowing of others to use the account satisfied the actus reus element of the offence and there was no need for the judge to have recourse to accessorial liability.  In support of this submission the respondent relied not just on Lau Sui Hing but also on another judgment of the Court of Appeal, namely the decision in HKSAR v Wong Chor Wo and anor CACC 314/2006; unreported, 16 June 2008.  At paragraph 108 of its judgment in the case the Court said:

“108. In the normal course of events, if a man allows another person to use his bank accounts to deposit and withdraw funds, in the absence of evidence to the contrary, the inevitable inference will arise that the holder of the bank account has reasonable grounds to believe that the funds passing through the account represent the proceeds of an indictable offence.”

101.But, this passage should not be read on its own.  In context, it is clear that it is not authority for the proposition advanced by counsel for the respondent.  In a nutshell the prosecution in this case alleged that Wong Chor-wo stole HK$20.8 million from the wholly-owned subsidiary of a publicly listed company, Wealthmark International (Holdings) Limited (“Wealthmark”) of which he was chairman and majority shareholder.  Subsequently, in order to cover up the theft, Wong Chor-wo used a number of false documents.  His co-accused Wong Chun-ping faced two charges of dealing with the property known or believed to represent the proceeds of an indictable offence, being the monies stolen from Wealthmark by Wong Chor-wo.  Wong Chun-ping is Wong Chor-wo’s paternal cousin and was the sole proprietor of C K Trading Company (“CKTC”).  Wong Chor Wo had physical possession of the cheque books of both CKTC and Wong Chun-ping’s personal account.

102.Of the HK$20.8 million stolen, HK$4 million was deposited into CKTC’s bank account and HK$16.8 million into Wong Chun-ping’s personal bank account. These monies were subsequently withdrawn from these accounts by means of cheques signed by Wong Chun-ping.  Thus, in terms of the actus reus of the offence the prosecution had evidence of dealings with property by Wong Chun-ping in the form of his signing the cheques.

103.The only issues were whether the prosecution had proven firstly that Wong Chun-ping must have known of the fact of the transactions through his accounts and secondly that he must have known or had reasonable grounds to believe that the sums were the proceeds of an indictable offence.  It was in relation to these two issues of knowledge that the court went on to discuss what inferences could be drawn from Wong Chun-ping’s conduct, especially in light of the fact that he did not give evidence.

104.Paragraph 108, quoted above, is preceded at paragraph 107 in which the Court of Appeal by way of introductory observations on Wong Chun-ping’s appeal made the following comment:

“107. The two charges against Wong Chun-ping relied upon an assertion by the prosecution that he must have known of, and participated in, the transactions through the bank account of C K Trading Company, and his personal account, and that he knew or had reasonable grounds to believe that the funds passing through his account represented the proceeds of an indictable offence.”

105.In understanding this case it is most important to recognise that this is not a case where an account holder completely surrendered to a third party the operation of his bank account.  Wong Chun-ping had to have a continued involvement with his account as his signature was needed on cheques in order to deal with the criminal proceeds deposited into his account.  That is why the Court of Appeal at paragraph 107 referred two aspects of Wong Chun-ping’s knowledge, the first of which went to his knowing participation in the dealings with property (the actus reus) and the second which went to proof of the mens rea of the offence.

106.But, at paragraph 108 the Court was focusing on the mens rea element of the offence, rather than the actus reus act of dealing and this is quite apparent from the discussion by the Court in the paragraphs which followed where the Court said:

“109. The judge was quite right to rely upon this proposition, as she did in paragraph 490 of the reasons for verdict.

110. That the account is used to conceal the transactions is an inference which inevitably arises from the fact that a person uses another’s bank account to undertake transactions without any explanation to the holder of the bank account.

111. From the fact that the transactions are concealed, in the absence of evidence to the contrary, the inference inevitably arises that some offence has been committed in relation to the transactions that requires to be concealed. When the funds are of the magnitude as in this case, the inference is that that offence will be an indictable offence.

112. It may well be that an innocent explanation may also arise, when a bank account holder permits another person to conduct transactions, quite unrelated to the account holder, through his bank account, but for the reasons set out in paragraphs 110 and 111, at the same time the inference will arise that the transactions involved the proceeds of an indictable offence.

…

117. In the present case it is clear that, objectively, reasonable grounds existed for the belief. Those grounds arose from the mere fact that Wong Chun-ping had given unlimited access to the two bank accounts to Wong Chor-wo. Equally clearly, Wong Chun-ping knew of the existence of those facts, and consequently, the reasonable grounds which existed for the belief that money transacted through the accounts by Wong Chor-wo may be the proceeds of an indictable offence.

118. That was where the evidence stood. There was nothing in the evidence to dispel those inferences, and the fact that an inference of innocent transactions also arose, in the absence of evidence to the contrary, does not assist Wong Chun-ping to say that he could not have believed that the transactions were the proceeds of an indictable offence.

119. That must be all the more so in the absence of any evidence from Wong Chun-ping. If there were some innocent explanation for the transactions, Wong Chun-ping would have been able to provide the reasons, but none emerged at the trial. The Judge was, in such circumstances, as the Court said in Li Defan and Anor v HKSAR [2002] 1 HKLRD 527, at 540:

‘… perfectly entitled to regard the failure of the accused to give any explanation on oath as strengthening the inference to be drawn from the prosecution case.’”

107.Nowhere in this judgment does the Court say that the lending by an account holder of the use of his account to a third party constitutes, by itself, a dealing with property for the purposes of section 25(1) of OSCO.  Nor would it be required, on the facts of this case, to ever consider such a legal issue as this case was not about the actus reus of the section 25 offence but only about the mens rea element of it.

108.We do not dissent from any of the comments in these two cases.  That a person lends the use of their account to another is clearly a very important primary fact from which inferences may be drawn, both as to the account holder’s joint participation with the third party in any subsequent criminal use of the account and as to his state of mind in respect of the transactions involved in that subsequent use.  However, what inferences can be drawn, and what inferences should be drawn will always be a fact sensitive matter which will vary from case to case.

109.It follows from what we have said that we reject the proposition of the respondent that simply lending one’s bank account to another to use is itself a dealing with property for the purposes of section 25(1) of OSCO.  The judge was right to reject this proposition and was right to conclude that it could not form a basis of criminal liability.  Consequently, we are not surprised that he looked to an alternative basis of criminal liability or that he settled upon accessorial liability as providing this basis.

110.However, at no stage prior to the delivery by the judge of his Reasons for Verdict did he ever reveal to the parties that he was contemplating convicting the applicants on a different form of criminal liability from that on which the prosecution was seeking their conviction.  The first the parties ever heard of the use of the principles of accessorial liability to found the conviction of the applicants was when the judge delivered his Reasons for Verdict.  Consequently, they never had an opportunity to address the judge on this basis of criminal liability.

111.A similar situation was addressed by the Court of Appeal in HKSAR v Tam Chi Choi [2009] 5 HKLRD 212.  In this case the defendant was charged with burglary on the basis that he entered the premises as a trespasser “with intent to do unlawful damage” to property inside.  However, the judge convicted the defendant on the basis that he entered the premises as a trespasser “with intent to steal”. In refusing to amend the charge on appeal the Court of Appeal said at pages 218, paragraphs 22-23:

“22. What the Deputy Judge had done was in effect to amend the charge and convict on the amended charge without notifying the parties of his intention to do so and without giving the appellant an opportunity to respond to his intended action.

…

23. As the Court of Appeal stated in HKSAR v Mo Yuk Ping [2007] 1 HKC 255 at page 272 that:

‘… where a prosecutor chooses to invite a conviction on a specific factual basis, it is wrong in principle for the tribunal to convict on a different basis of which a defendant has not been notified and which he has not had the chance to address in defence to the charge.’”

112.The Court went on to discuss whether it should exercise it power to amend the charge and in concluding that it should not said at pages 218-219, paragraph 25 said:

“… The appellant was entitled to know what charge he had to meet and he was entitled to be provided with the opportunity to respond to a newly-amended charge. The prejudice to the appellant at this stage is a substantial one. Hence we would not amend the charge.”

113.In respect of the present applicants the prejudice, it seems to us, is just as great, if not even greater.  The convictions cannot stand and must be quashed.

114.Since the hearing of the applications the Court of Final Appeal delivered its judgment in HKSAR v Pang Hung Fai [7] on 10 November 2014.  It may be that arguable grounds of appeal against conviction for the applicants arise from that judgment.  However, since we have not had the benefit of argument from counsel and given the disposal of the applications that is a matter that we need not address.

Retrial

115.This brings us to the issue of retrial.  The 2^nd applicant has served his sentence and the respondent does not seek an order for his retrial.  However, it does in respect of the 1^st applicant who will complete his current sentences on 26 June 2015.  The remaining grounds of appeal raise questions of law which are relevant to the issue of retrial.  One is whether the charges are defective because they are duplicitous in that they cover a period of time encompassing multiple separate dealings.  This latter ground of appeal raises the question of whether the section 25(1) OSCO offence is a continuing offence and, if not, whether on the facts of this case the charges can, nevertheless, be said not to be duplicitous.  The other is whether accessorial liability based upon the applicants aiding and abetting the third parties using the accounts is available as a matter of law if the applicants were not present at the scene of the crime they are alleged to have aided and abetted when that crime was committed.

116.There would be no point ordering a retrial if the 1^st applicant could not be convicted of an amended charge pleading his accessorial liability or if such an amended charge was, nevertheless, defective for being duplicitous.

117.The power of this Court to order a retrial is contained in section 83E of the Criminal Procedure Ordinance, Cap 221.  That section provides as follows:

“(1) Where the Court of Appeal allows an appeal against conviction and it appears to the Court of Appeal that the interests of justice so require, it may order the appellant to be retried.

(2) A person shall not under this section be ordered to be retried for any offence other than –

(a) the offence of which he was convicted at the original trial and in respect of which his appeal is allowed as mentioned in subsection (1);

(b) an offence of which he could have been convicted at the original trial on an indictment for the first-mentioned offence; or

(c) an offence charged in an alternative count of the indictment in respect of which the jury were discharged from giving a verdict in consequences of convicting him of the first-mentioned offence.”

118.In his judgment in the Court of Final Appeal in Ting James Henry v HKSAR (2007) 10 HKCFAR 632, with which the other judges agreed, Lord Woolf NPJ addressed the construction of section 83E at page 648 F-G:

“… “offence” in s.83E is a reference to an offence that appears in an indictment, the parameters of which are set by the statement of offence and the particulars of the offence set out in the indictment. This appears to be the interpretation most in accord with the language of s.83E(2). It provides a test which will enable what is the “offence” to be readily determined.”

The submission advanced on behalf of the appellant was that in determining whether it was the same offence on which the appellant was tried that it was proposed he be retried “it is not sufficient to consider the indictment.  It is necessary, … to identify the manner in which the prosecution had developed its case at trial ..”  In rejecting that proposition, and formulating the test set out above, Lord Woolf acknowledged that if the judge had ordered the provision of particulars to be delivered by the prosecution, pursuant to Rule 3(3) of the Indictment Rules and those particulars fell within the ambit of Rule 3(1), namely providing reasonable information as to the nature of the charge “the particulars should be taken into account in determining what is the offence for s.83E”.[8]

Duplicitous Charge

119.The general rule is that no one count in the indictment should charge a defendant with having committed two or more separate offences.  A charge that reveals more than one offence will be regarded as duplicitous and unless amended, will be quashed.  But duplicity is a matter of form, that is, of the drafting of the charge, not of evidence.  Thus, if the particulars allege one offence, the fact that the evidence at the trial may reveal two offences does not invalidate the count.[9] The rule of course does not apply to continuing offences.

120.The first question, therefore, is whether the drafting of the charge is duplicitous. By referring to the offence as occurring between two dates but not specifying “on a date unknown” the charge certainly appears on its face to be potentially duplicitous. That it is duplicitous is confirmed by the prosecution further particularizing the “dealing” and revealing that what was being alleged was not one dealing with property of the amount particularized but rather were multiple dealings of smaller amounts which by the end of the charge period totalled the amount particularized.  This further particularization was provided by the prosecution as an annexure to its written opening.  This annexure specifies in relation to each count the number of deposits made and the total amount of those deposits. We are of the view that in these circumstances unless the charge can be saved by one of the common law exceptions it is bad for duplicity.

121.The common law has recognized that too strict an application of the rule that no one count should charge more than one offence can lead to absurdity and may even cause practical difficulties to the prosecution of certain conduct.  A practical approach to the operation of the rule was needed in order to balance the competing considerations of the right of the defendant to a fair trial and the public interest in offenders being punished for the full extent of their culpability.

122.At first the response of the common law was to allow the prosecutor to lead evidence of the full extent of the defendants offending and to treat the counts he faced as specimen or sample counts.  If convicted of these specimen or sample counts the court would then sentence the defendant for the full range of his offending as revealed by the evidence.[10] However, the courts subsequently recognized that such a practice fell foul of the fundamental principle that a person cannot be punished for criminal conduct of which he has not been convicted.[11]

123.Once it was no longer possible to sentence on the basis of specimen counts, the only way of placing a person’s complete offending before the court was by a large number of separate counts.  But that then created the possibility of indictments containing thirty, fifty or even more individual counts.  This not only gave rise to practical problems for judges and juries, it is also ran the risk of the trial becoming oppressive to the defendant.[12]

124.That is why the common law in its efforts to balance the right of an accused to a fair trial with the demands of justice has adopted a practical rather that strictly legalistic approach to the issue of duplicity.

125.However, the extent to which a court was willing to be flexible in the application of the rule necessarily depended upon the facts of the case before it.  It being such a fact sensitive issue it can, at times, be difficult to reconcile one case outcome with another.  On the occasions that the issue is before the appellate court the tendency is to consider, with the benefit of hindsight that the appellate court enjoys, whether the appellant has been embarrassed or prejudiced in the conduct of his defence.  If he has not then the appellate court is likely to look more favourably upon the charge.

126.In considering whether a defendant might be embarrassed or prejudiced in his defence to a charge based upon a number of different acts at different times the court focuses on the defence being advanced and especially whether there might be a different defence in respect of the different acts.[13]

127.Archbold Hong Kong 2014 at chapter 1-123 to 1-138 discusses duplicity and refers to three situations where charges based upon a number of different criminal acts have been allowed.  The first is where the different acts, viewed realistically, form only one transaction.  This exception applies to all offences.  The two further situations which it mentions are peculiar to theft and fraud offences.  These latter two exceptions it describes as acts chargeable as a general deficiency and acts constituting a continuous offence.

128.In respect of acts forming one transaction the case law requires that the Court examine the criminal conduct and determine whether, in reality, only one offence has been committed even though that offence is made up of a number of separate criminal acts.  The courts have recognized that where separate criminal acts occur they may be so linked by time, place or other circumstances that they should be regarded as one offence only.  In this situation the courts regard only one offence as having been committed.

129.The exception derives from the House of Lords decision in DPP v Merriman [1973] AC 584 where at page 607C-D Lord Diplock said:

“The rule against duplicity, viz. that only one offence should be charged in any count of an indictment … has always been applied in a practical, rather than in a strictly analytical, way for the purpose of determining what constituted one offence. Where a number of acts of a similar nature committed by one or more defendants were connected with one another, in the time and place of their commission or by their common purpose, in such a way that they could fairly be regarded as forming part of the same transaction or criminal enterprise, it was the practice, as early as the eighteenth century, to charge them in a single count of an indictment.”

130.A similarly practical approach to determining whether the criminal activity constituted more than one offence was espoused by Lord Morris of Borth-y-Gest.  He said at page 593C-D:

“In my view, such questions when they arise are best answered by applying common sense and by deciding what is fair in the circumstances. No precise formula can usefully be laid down but I consider that clear and helpful guidance was given by Lord Widgery CJ in … Jemmison v Priddle [1972] 1 QB 489, 495.”

131.Jemmison v Priddle [1972] 1 QB 489 involved the criminal activity of killing game without a licence arising out of the defendant firing three shots at two running deer.  Lord Widgery said at page 495 D-E:

“… it is legitimate to charge in a simple charge one activity even though that activity may involve more than one act. One looks at this case and asks oneself what was the activity with which this man was being charged. It was the activity of shooting red deer without a game licence, and although as a nice debating point it might well be contended that each shot was a separate act, indeed each killing was a separate offence, I find that all these matters, occurring as they must have done within a very few seconds of time and all in the same geographical location, are fairly to be described as components of a single activity, and that made it proper for the prosecution in this instance to join them in a single charge.”

132.Examples of where a charge has been held not to be bad for duplicity because the conduct constituted by different acts amounted to one offence only, are as follows:

(i) where a count in an indictment charged theft of a number of separate items from different departments of the same store on the same occasion; [14]

(ii) where a count alleged dangerous driving through a series of particularized streets; [15]

(iii) bribes paid over 16 months by the same offeror to the same acceptor at the same place and for the same purpose; [16]

(iv) two acts of rape of the same victim on the same occasion, separated by only 15 minutes; [17] and

(v) four acts of accepting an advantage, contrary to section 9 of the Prevention of Bribery Ordinance, Cap 201 by the same defendant from the same offeror over a period of at least a year and dealing with the bribe monies, contrary to section 25(1) of OSCO.[18]

133.However, in order to be the same offence it will usually be necessary that the target of the defendants’ criminal acts is the same victim.  An example is the case of R v Cheng Chun Wah [1980] HKC 563 where Addison J was concerned with the conduct of a defendant who was seen attempting to steal from the handbags of two ladies near a hawker stall.  In respect of this conduct he was charged with attempting to steal from two unknown females.  In holding that this charge was bad for duplicity Addison J said at page 567:

“Two separate offences of the same kind were wrongly joined in one charge. This was not all one activity separated by a matter of seconds as occurred in the case of Jemmison v Priddle [1972] 1 QB 489 nor was it one activity where an intended thief goes from one unsuspecting person to another all at one stall until he strikes lucky. The facts showed that there was an interval of ten minutes between two attempts during which time he went elsewhere in the market.”

134.The general deficiency exception arose in respect of theft and fraud offences where individual acts could not be identified during a period of criminal activity but the prosecution alleged that by the end of that period of criminal activity or by a particular accounting date, the victim had suffered an accumulated loss of a particular amount.

135.This Court discussed this exception in R v Chan Shui-sing & Anor [1980] HKLR 310 and held that the general deficiency charge could be used where the loss suffered by the victim was goods rather than money and further held that there was no requirement that there be a duty by the defendant to account or any accounting date at the end of which the aggregated loss is detected.  However, it should not normally be used where the occasions on which each criminal act occurred and the property in relation to which it occurred can be identified.  The benefit of such a charge is described at page 316 of the report:

“The necessity of bringing offenders to book exists none the less today and the advantage of the general deficiency was always to ensure justice was not defeated.”

An example of the application of this exception can be found in HKSAR v Poon Yin May Cammy [1998] 3 HKC 199.[19]

136.The Court then referred to another category of offence to which it said the duplicity rule did not apply.  It described this category as continuous offences and they were offences consisting of continuous acts.  The features of this exception are that there is a continuous course of conduct involving the same victim and this continuous course of conduct is composed of a number of quite separate acts of the same nature.[20]

137.This exception was described by Kennedy LJ in Barton v DPP [2001] 165 JP 779, a decision of the Queen’s Bench Division.  He said at page 781:

“5.   … There are two lines of authority where courts have approved charging appropriation of property in one count, or information, where the evidence discloses that the property has been taken on two or more occasions. The first line of authority relates to what is often called “general deficiency”, where individual items cannot be traced in detail but where it is clear on the evidence that there has been a large amount of property taken.   That is not this case.

6.   The second line of authority relates to what is sometimes called a “continuous offence”.  It arises where the individual transactions are known but where there are many transactions of the same type, frequently individually of small value, against the same victim, and it is convenient in order to reflect the overall criminality to put them together in one information, or one count, so that if the criminality can be proved, without prejudice to the defendant and having regard to the known defence, then the court will be in a position to sentence appropriately.”

Clearly, the reference to it being “convenient” meant convenient for the prosecutor in presenting his case and convenient for the Court in having before it a complete reflection of the defendant’s culpability so that Court is able to render justice for the whole of the defendant’s offending, without prejudice to the defendant.

138.The one continuous offence exception appears to be general deficiency but with the ability to identify the individual criminal acts and the property relating to them.  The rationale for it would appear to be that, even though the course of conduct continues over a period of time, the reality is that only one offence is being committed.  An example of the extent to which general deficiency and continuous offence overlap is DPP v McCabe [1992] Crim LR 885 which involved the theft of 76 library books over a period of time from different branches of a library that were all owned by the same local authority.

139.In respect of the present case the applicants argue section 25(1) is not a continuing offence but rather a transactional one with the actus reus being constituted by a dealing in property.  Where more than one dealing with property is covered by the charge with each dealing taking place on a separate occasion then, the argument goes, the charge must be bad for duplicity.

140.However the respondent argues that the one transaction exception, as described in Merriman, applies to the conduct of these applicants and those they were assisting to launder the proceeds of their crimes.  The respondent does not seek to argue that section 25(1) is a continuing offence and does not invite us to consider that issue should her reliance on the Merriman exception not be successful.

141.In support of her argument that the Merriman exception applies to this case, Ms Chan relies on the decision of this Court in HKSAR v Chan Yick Yiu CACC 353/2011; unreported, 26 September 2012.  In this case the applicant was convicted of four counts of accepting an advantage, contrary to section 9(1)(a) of the Prevention of Bribery Ordinance, Cap 201, and five charges of dealing with property known or believed to represent the proceeds of an indictable offence, contrary to section 25(1) of OSCO.  Two of the advantages accepted were amounts of money, HK$500,000 cash (Charge 5) and HK$2 million cash (Charge 9).  These amounts were given to the applicant on 11 February 2009 and August 2009.  One other of the accepting an advantage charge particularized four advantages, namely, three bottles of wine and a Bulgari watch and averred that they were accepted “on two days”.  One of the grounds of appeal argued that this latter charge was duplicitous.

142.In rejecting this ground of appeal, Macrae J, (as he then was), in giving the judgment of the Court said at paragraph 31 of the judgment:

“We cannot agree with this argument for the very reasons articulated by the deputy judge when a similar submission was made to him. Where two or more acts of a similar nature committed by one or more defendants are connected with one another in the time and place of their commission, or by their common purpose, in such a way that they can fairly be regarded as forming part of the same transaction or criminal enterprise, they can be charged as one offence in a single count in an indictment: see DPP v Merriman [1973] AC 584 at 607. The charges were not duplicitous and ground 9 must fail.”

143.The money laundering charges were Charges 17-21 on the Charge Sheet and involved the conduct of the applicant in depositing HK$860,000 of the HK$2.5 million in cash advantages that he had accepted into five bank accounts.  The dealing averred against the applicant in each of the five dealing charges was the depositing of different specified amounts of cash in a different specific bank account in his own name.  Because each charge involved a number of different deposits, they were argued to be duplicitous.  At paragraph 41 of the judgment Macrae J rejected this argument saying:

“Mr Egan’s fall-back position is that since there was more than one deposit of cash into each of the bank accounts represented in the five charges, which deposit took place on a different day and at a different time, the charges were void for duplicity. We have already addressed a similar argument under ground 9 by reference to DPP v Merriman. We apply the same reasoning. There is likewise no merit in this ground.”

144.In order to consider the contention that the charges in the present case are duplicitous it is necessary to examine the criminal conduct alleged by the prosecution.  Here, the conduct of the applicant is the aiding and abetting of the principal offenders to deal with property whilst possessed of a certain mens rea in respect of that property.  However, there is no evidence that the applicants knew what kind of dealings would take place in relation to the accounts or the source of the monies that made up those dealings or how or in what circumstances those monies had been obtained.  The prosecution case was essentially as follows:

(i) by opening bank accounts for others to use the applicants must have known that those accounts would be used for the purpose of dealing with property.  That is the actus reus of the offence; and

(ii) from the conduct of the applicants in travelling to a foreign jurisdiction solely for the purpose of opening bank accounts for others to operate, the mens rea element of having reasonable grounds to believe that these dealings would involve property that was the proceeds of an indictable offence is proven.

The prosecution presented its case as though the charge was a conspiracy to money launder.  But, it was not.  On this Charge Sheet each offence is a substantive offence and in respect of each dealing the mens rea element must be proven.

145.Here, the actual form of each dealing is the receipt of monies.  No act by the unknown principal offenders is relied upon in relation to the accounts; their actions take place beforehand when by fraudulent representations held out to various victims, those victims are induced to deposit monies into the accounts. There is no positive act of dealing by the unknown principal offenders.  They simply wait for the money to be deposited.

146.This is quite a different situation from Chan Yick Yiu where the defendant was making deposits of monies received by him as bribes.  There were a number of deposits because the defendant split them into smaller amounts as part of his activity of laundering them through a particular bank account.  Not surprisingly the Court viewed this as one activity.  See also the judgment of the Court of Appeal of England and Wales in R v Middleton [21] where the appellants were charged with converting the proceeds of drug trafficking over the course of a period of 3 years and converting criminal property over the course of the subsequent period of 2 years.  The prosecution case was that the 1^st appellant had been involved in drug dealing over a number of years and that both appellants had been involved in the process of converting the proceeds of this drug dealing.  Converting the proceeds of this drug dealing involved them depositing monies into their own respective bank accounts “in a huge number of individual transactions, mostly small in scale.” [22]  The Court determined that neither count, was “unlawfully duplicitous in itself.  They involved a continuing activity, or general deficiency, falling within the authorities nor, in the event, did they give rise to unfairness”.[23]

147.We do not see how this activity, spanning as it does a period of some two and a half months and involving different receipts on different occasions from different victims can be said to be one offence.  We are of the view that this conduct cannot be brought within the Jemmison v Priddle, Merriman exception.

148.For completeness’ sake, we should say that nor, in our view, can it be brought within the general deficiency or continuous act exceptions.  The former exception requires that the occasion of the individual criminal acts be incapable of identification and both require that the victim be the same. Here, each dealing, that is, each deposit of monies into the various bank accounts, can be identified and each deposit is made by a different victim.

149.Consequently, the counts in the Charge Sheet are duplicitous and that being so an order for retrial is not appropriate.

Conclusion

150.For the reasons given we allow the applications for leave to appeal and, treating the hearing of the applications as the hearing of the appeals, we quash the convictions of the appellants.  We make no other order.

Ms Alice Chan SADPP, of the Department of Justice, for the respondent

Mr Andrews Robert Craig, instructed by John M. Pickavant & Co., assigned by DLA, for the 1^st applicant (re: Conviction)

The 1^st applicant appeared in person (re: Sentence)

Mr Ross Phillip Geoffrey, instructed by Simon Si & Co, assigned by DLA, for the 2^nd applicant

[1] He claimed that this piece of paper was seized by the police and its whereabouts is unknown.

[2] This phrase has it origins in a judgment of Lord Bridge in Westminster City Council v Croyalgrange Ltd [1986] 1 WLR 674 where he said at page 684 that:

“… it is always open to the tribunal of fact, when knowledge on the part of a defendant is required to be proved, to base a finding of knowledge on evidence that the defendant had deliberately shut his eyes to the obvious or refrained from enquiry because he suspected the truth but did not want to have his suspicion confirmed.”

[3] Page 60, paragraph 175 of the Appeal Bundle.

[4] See HKSAR v Huynh Bat Muoi [2001] 4 HKC 643 at 658 I-660 H; HKSAR Tang Hoi On Barry [2003] 3 HKC 123 at 144-145; HKSAR v Tam Chi Choi [2009] 5 HKLRD 212.

[5] Page 446 of the Appeal Bundle.

[6] Pages 62-64, paragraphs 189-193 of the Appeal Bundle.

[7] HKSAR v Pang Hung Fai FACC8/2013; unreported, 10 November 2014.

[8] Ting James Henry v HKSAR (2007) 10 HKCFAR 632 at pages 648 J-649A,

[9] In re Attorney General’s Reference [1988] 1 HKLR 375.

[10] See, for example, R v Robertson 25 Cr App R 208.

[11] See R v Chow Tat Ming [1997] HKLRD 353.

[12] See the discussion in R v Middleton [2008] EWCA Crim 233.

[13] See the discussion in Barton v DPP [2001] 165 JP 779 at 784-785, paragraphs 22-23.

[14] Ronald Wilson (1979) 69 Cr App R 83.

[15] Lau Chi-kwan v R [1975] HKLR 445 where, applying Jemmison v Priddle, Huggins J held the conduct of dangerous driving constituted a single activity.

[16] R v Ng Wai Ming HCMA 274/1984; unreported, 5 July 1984.

[17] HKSAR v Ho Man Ho [2012] 1 HKLRD 188.

[18] HKSAR v Chan Yick Yiu CACC 353/2011; unreported, 26 September 2012.

[19] Monies were obtained by deception from the same victim over a period of 7 months.  The amount particularized represented a total amount aggregated from many payments.

[20] R v Chan Shui-sing & Anor [1980] HKLR 310.  This exception to the rule against duplicity is quite different from construing a statutory offence as being a continuing offence in nature.  The duplicity exception looks to the activity or conduct of the defendant, not the nature of the offence as revealed by its drafted elements.

[21] R v Middleton [2008] EWCA Crim 233.

[22] R v Middleton, paragraph 50.

[23] R v Middleton, paragraph 53.

Please refer to FAMC71/2014 for the relevant appeal(s) to the Court of Final Appeal.