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FACC No. 17 of 2018
[2019] HKCFA 47
IN THE COURT OF FINAL APPEAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
FINAL APPEAL NO. 17 OF 2018 (CRIMINAL)
(ON APPEAL FROM CACC NO. 352 OF 2015)
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| BETWEEN |
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HKSAR |
Respondent |
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and |
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HARJANI HARESH MURLIDHAR |
Appellant |
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| Before: |
Chief Justice Ma, Mr Justice Fok PJ, Mr Justice Cheung PJ, Mr Justice Stock NPJ and Lord Phillips of Worth Matravers NPJ |
| Dates of Hearing: |
27 November 2018 and 10 June 2019 |
| Date of Judgment: |
5 December 2019 |
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JUDGMENT
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The Court:
Introduction
1. On 4 August 2015, the appellant, Haresh Murlidhar Harjani, was convicted in the District Court[1] of conspiring with others to deal with property, knowing or having reasonable grounds to believe that that property represented the proceeds of an indictable offence, contrary to sections 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455 (“OSCO”) and sections 159A and 159C of the Crimes Ordinance, Cap 200. On 7 October 2015, he was sentenced to 3 years and 9 months’ imprisonment.
2. Section 25(1) of OSCO provides that:
“Subject to section 25A, a person commits an offence if, knowing or having reasonable grounds to believe that any property in whole or in part directly or indirectly represents any person’s proceeds of an indictable offence, he deals with that property.”
3. In reaching his decision, the Judge relied upon the judgment of this Court in HKSAR v Pang Hung Fai[2](“Pang Hung Fai”), interpreting the effect of it as requiring a substantial objective element when deciding whether a person had “reasonable grounds to believe” that property represented the proceeds of an indictable offence. He rejected the suggestion that if it were or might be the case that a defendant honestly believed that the property was not thus tainted, he was entitled upon that basis alone to be acquitted. Although he found that the appellant did not know that the property represented the proceeds of an offence, he concluded that he had shut his eyes to obvious indicia of illegality and had reasonable grounds to believe that the property was thus tainted.
4. On 12 September 2017, the appellant’s appeal against conviction was dismissed but the Court of Appeal[3] held that the Judge had adopted an erroneous approach to the question of “reasonable grounds to believe”. In purporting to apply the decision of this Court in HKSAR v Yeung Ka Sing Carson[4](“Carson Yeung”), the Court of Appeal concluded that it sufficed to mandate an acquittal if a defendant honestly believed, or may honestly have believed, that the property with which he dealt did not represent the proceeds of an indictable offence, even if that belief were, objectively assessed, unreasonable. However, the court concluded that, notwithstanding the Judge’s erroneous approach to the law, it was apparent from the Reasons for Verdict that he had found that the appellant did not hold that honest belief and, accordingly, dismissed the appeal.
5. The application for leave to appeal to this Court was restricted to substantial and grave injustice limb of section 32 of the Court of Final Appeal Ordinance, Cap 484. However, since it was apparent in the light of the Court of Appeal’s judgment that the judgments in Pang Hung Fai and Carson Yeung merited clarification, and that other issues relevant to the application of section 25 of OSCO and section 159A of the Crimes Ordinance presented themselves for consideration, this Court raised a number of questions for argument and determination, namely:
(1) What is the meaning of “having reasonable grounds to believe that any property … represents any person’s proceeds of an indictable offence” (abbreviated to “the property is tainted”) in section 25(1) of OSCO?
(2) What is the relevance of the defendant’s actual belief in determining whether the statutory test is satisfied?
(3) To what extent is “wilful blindness” relevant in determining whether the statutory test is satisfied?
(4) In the light of section 159A of the Crimes Ordinance:
(a) given the requirements of subsection (2), can there be an offence of conspiracy to deal with property having reasonable grounds to believe that such property … represents any person’s proceeds of an indictable offence?
(b) given the requirements of subsection (1)(a), where defendants have reasonable grounds to believe that property is tainted, will they be guilty of conspiracy if they agree to deal with the property notwithstanding that those grounds may not exist at the time of the dealing?
The facts and the charge
6. The particulars of the charge, as ultimately amended, read as follows:
“HARJANI Haresh Murlidhar, between the 26th day of April, 2014 and the 21st day of July, 2014, both dates inclusive, in Hong Kong, conspired with CASTELINO Brian Mario, DIALLO Ibrahima and other persons unknown, to deal with property, namely a sum of $539,375 United States currency in account numbered 076-402-63220051 of State Bank of India held in the name of Sino Investment and Trading Limited, knowing or having reasonable grounds to believe that the said property, in whole or in part directly or indirectly represented the proceeds of an indictable offence.”
7. The facts which gave rise to the charge were not complex. A contract was made by exchange of emails for the sale by Dohigh Trading Limited (“Dohigh”) to Dragon Asia Fertilizer Limited (“Dragon Asia”) of a shipment of fertilizer to be shipped from a Chinese port to Bangladesh for US$10,788,000. Dragon Asia was required to make a down payment of 5% of the sum, with the balance to be paid by letter of credit. Those emails were hacked and modified so as to deceive Dragon Asia into paying the required deposit into a bank account of Sino Investment and Trading Limited (“SIAT”) at the Hong Kong branch of State Bank of India (“SBI”) and into nominating SIAT as the beneficiary of the letter of credit. Accordingly, on 9 July 2014, the sum of US$539,375 (representing the 5% deposit less bank charges of US$25) was diverted and paid into the US Dollar bank account of SIAT at the Hong Kong branch of SBI instead of to Dohigh.
8. SIAT was a company incorporated in Hong Kong by the appellant and one Castelino Brian Mario (“Brian”) in 2012. Brian, who remained in India throughout, instructed transfers totalling US$327,175 to be made from that account to SIAT’s Hong Kong Dollar account. The appellant and Brian were the signatories for both bank accounts. On 12 July 2014, the appellant came to Hong Kong from Sri Lanka and, after he withdrew cash totalling HK$236,000 between 15 and 18 July 2014, he was arrested on 21 July 2014 and charged with conspiracy to deal with the US$539,375 knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence, contrary to sections 25(1) and (3) of the OSCO and sections 159A and 159C of the Crimes Ordinance.
9. Initially, the charge named the appellant and Brian as the two co‑conspirators. The prosecution had intended to call as a witness, one Diallo Ibrahima (“Diallo”) with a view to rebutting the appellant’s evidence that he had been asked to handle matters relating to the contract by someone he knew as “Daniel”. However, when shown defence exhibits consisting of extensive email and skype communications passing between Diallo and the appellant relating to the funds and to use of bank accounts, the prosecution dropped Diallo as their witness. After Diallo was produced and cross-examined by the defence, the prosecution amended the charge to name Diallo as a co-conspirator along with Brian, the appellant and other persons unknown (such persons being those who had manipulated the emails). It was the prosecution’s case (accepted by the Judge) that Diallo and “Daniel” as well as the person who used the email or skype names of “saint cool” or “coolsaintt” were the same person. The Judge also found that Diallo “knew there was fraud going on”.[5]
10. The appellant admitted that Dragon Asia had been deceived by fraudsters and that the deposits and withdrawals had occurred, as instructed by Brian. The appellant’s case was that he was a legitimate businessman and that both he and Brian had dealt with Diallo but believed that the latter was an agent acting bona fide on behalf of the principals in the fertilizer deal with the funds in question deriving from a genuine commercial transaction.
11. The appellant claimed that he was asked to execute the letter of credit and to receive the deposit and the letter of credit proceeds in the SIAT account as an account that had been designated by Dragon Asia, the letter of credit’s applicant. The reward for so doing and for providing inspection services at shipment would be 15% of the contract price, with SIAT getting 12% (US$1,294,560) and Diallo receiving the other 3% (US$323,640). After deducting this 15%, the balance of the monies would be remitted to the supplier. He claimed that the US$539,375 was received by SIAT as part of the aforesaid 15% which it would earn if the deal went through, but which would be returned in case it did not. The fraud came to light on 17 July 2014 when Dohigh informed Dragon Asia that it had not been paid and Dragon Asia revoked the letter of credit. The diverted deposit amount had to be replaced and the fertilizer shipment was postponed from August to September. The appellant claimed that he was deceived by Diallo into unwittingly receiving the proceeds of that fraud.
The judgments below and this appeal
12. The debate in the courts below focussed on the mental element of the substantive offence, in particular on the...
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