Chua Li Hoon Matilda and Others v Public Prosecutor

• Jurisdiction: Singapore
• Judge: Choo Han Teck J
• Judgment Date: 15 May 2009
• Neutral Citation: [2009] SGHC 116
• Court: High Court (Singapore)
• Published date: 18 May 2009
• Citation: [2009] SGHC 116
• Plaintiff Counsel: Cheah Kok Lim (Sng & Company)
• Defendant Counsel: Philip Fong and Khaleel Namazie (Harry Elias Partnership),David Khoo, David Chew Siong Tai and Diane Tan (Deputy Public Prosecutors)
• Subject Matter: Criminal Law
• Year: 2009

15 May 2009 Judgment reserved.

Choo Han Teck J:

1 Matilda Chua Li Hoon (“the First Appellant”) was charged and tried with one count (DAC 43704/2006) of creating a false or misleading appearance of the price of WizOffice.com (“WizOffice”) shares, an offence under s 97(1) of the Securities Industry Act (Cap 289, 1985 Rev Ed) and punishable under s 104 of that Act with a fine not exceeding $250,000 or imprisonment for a term not exceeding seven years or both, and two counts (DAC 15729/2006 and DAC 15730/2006) of falsifying the books of Global Net Relations (“GNR”), an offence punishable under s 477A of the Penal Code (Cap 224, 1985 Rev Ed) with a fine or imprisonment for a term not exceeding seven years or both. Seah Chin Yew (“the Second Appellant”) was charged and tried with one count (DAC 43705/2006) of creating a false or misleading appearance of the price of WizOffice shares, an offence under s 97(1) of the Securities Industry Act and punishable under s 104 of that Act, and two counts (DAC 43702/2006 and DAC 43703/2006) of abetting the First Appellant to falsify GNR’s books, an offence punishable under s 477A read with s 109 of the Penal Code. Seah Say Yoong (“the Third Appellant”) was charged and tried with one count (DAC 43706/2006) of creating a false or misleading appearance of the price of WizOffice shares, an offence under s 97(1) of the Securities Industry Act and punishable under s 104 of that Act, and one count (DAC 43701/2006) of abetting one Quek Suan Choo (“Quek”), an accounts clerk of Seah Holdings Pte Ltd (“SHPL”), to falsify the accounts of SHPL, an offence punishable under s 477A read with s 109 of the Penal Code.

2 At the end of the trial, the First Appellant was acquitted of creating a false or misleading appearance of the price of WizOffice shares (DAC 43704/2006) and one count of falsifying her company’s books (DAC 15730/2006). She was convicted on the other charge of falsifying GNR’s books, and was sentenced to a fine of $10,000 (DAC 15729/2006). The Second Appellant was acquitted on one count of abetting the First Appellant to falsify GNR’s books (DAC 43702/2006) but was convicted on the charge of creating a false or misleading appearance of the price of WizOffice shares (DAC 43705/2006), and the other charge of abetting the First Appellant to falsify GNR’s books (DAC 43703/2006). He was sentenced to a $150,000 fine for the former and a $10,000 fine for the latter. The Third Appellant was acquitted of abetting Quek to falsify the accounts of SHPL (DAC 43701/2006) but was convicted of creating a false or misleading appearance of the price of WizOffice shares (DAC 43706/2006). He was sentenced to a $150,000 fine. The reasons for the acquittals and the convictions were set out in the grounds of decision of the District Judge in PP v Mathilda Chua Li Hoon [2008] SGDC 290 (“the Judgment”). The First Appellant, the Second Appellant and the Third Appellant have appealed against their convictions and sentences. The Public Prosecutor appealed against the acquittals and sentences.

3 The First Appellant was, at the material time, the managing director and shareholder of GNR. The other director of GNR was one TT Durai. The First Appellant, however, on her own evidence, managed GNR on a full-time basis. The Second Appellant was, at the material time, the managing director and majority shareholder of WizOffice and a former director of SHPL. The Third Appellant is the father of the Second Appellant, and was the managing director of SHPL, which was a family investment company. GNR had obtained 10 million WizOffice shares as a result of a share swap agreement dated 28 June 2001 between GNR and WizOffice, and the First Appellant urgently needed to liquidate these shares in order to raise funds for the operation of GNR. The Second Appellant subsequently brokered a deal between the First Appellant as managing director of GNR and the Third Appellant as managing director of SHPL for the sale and purchase of the WizOffice shares at a discounted price – the discount being $150,000. The arrangement was for GNR to privately pay this substantial discount to SHPL after GNR sold the shares to SHPL on the open market at the then market price of 4.5¢ per share. They did not use the conventional and legitimate method by way of a “married trade”, that is, a transaction between two willing parties who agree on the share price and number of shares. The Second Appellant instructed a broker, one Kwek Sok Hoon (“Kwek”), to execute the share sale and purchase in two tranches of five million WizOffice shares on the open market at 4.5¢. Kwek was to enter a sell order followed by a buy order less than one minute later. The transaction took place on 18 December 2001 and resulted in a total of 9,875,000 WizOffice shares being bought by SHPL at 4.5¢. The remaining 125,000 shares were sold to third parties. The DPP submitted that a false or misleading appearance of the price of WizOffice.com shares was thus created in that the shares appeared to be traded at 4.5¢ per share on the open market when they were actually being traded at 3¢ per share.

4 Soon after the transaction, GNR paid SHPL the $150,000 discount in a circuitous route by way of a cheque signed by the First Appellant on 24 December 2001 in favour of the Second Appellant’s girlfriend, one Yee Lee Fen (“Yee”), an air stewardess at the material time. In turn, she issued a blank cheque on 3 January 2002, the day after the cheque from GNR cleared, and gave it to the Second Appellant, who wrote in SHPL as payee on the cheque and handed the cheque over to SHPL. The payment to Yee was purportedly for advisory services rendered pursuant to an advisory agreement between Yee and GNR for the sale of the WizOffice shares (“the Advisory Agreement”), and it was initially recorded in the books of GNR as an “acquisition fee”. (GNR’s accountant confirmed that the Advisory Agreement had been used to substantiate the so-called “acquisition fee” (NE at p 22).) Subsequently, Yee signed an annulment agreement in regard to the Advisory Agreement. The $150,000 payment was then described as a repayment of a loan to GNR from the Second Appellant. The Prosecution submitted that the recording of the $150,000 payment, first, as a payment for advisory services, and subsequently, as a repayment of a loan, proves the defalcation of the accounts of GNR by the First Appellant and abetted by the Second Appellant. The $150,000 cheque was recorded in the books of SHPL by Quek as a repayment of a loan from the Second Appellant. The Prosecution submitted that the Third Appellant had abetted Quek in recording the $150,000 payment as such.

5 Turning first, to the offence of creating a false or misleading appearance of the price of securities, s 97(1) of the Securities Industry Act states:

A person...