THE QUEEN v ZHU HUA YU & LEI ZHANG [1999] NZCA 108 (9 July 1999)

IN THE court of appeal of new zealand

CA 230/99 ca 117/99

THE QUEEN

V

ZHU HUA YU (CA 230/99) AND

LEI ZHANG (CA 117/99)

Hearing:	30 June 1999 (in Auckland)
Coram:	Gault J Anderson J Goddard J
Appearances:	B W Morley for the Appellant Yu G Gotlieb for the Appellant Zhang C B Cato and S J Bonnar for the Crown
Judgment:	9 July 1999

judgment of the court delivered by GODDARD J

[1] The appellants were tried by a jury on four charges; one charge of conspiring to defraud Harrah's Sky City Limited ("the Casino") and three alternative charges of breaching the rules of an authorised game, namely Midi Baccarat, with intent to obtain pecuniary advantage for the appellant Mr Yu.They were acquitted on the charge of conspiracy but found guilty on the three alternative charges of "cheating".

Background

[2] All charges arose from the activities of the two appellants in the Members Room at the Casino during the late evening and early hours of 2 and 3 February 1997.At the time Ms Zhang, an employee of the Casino, was dealing Midi Baccarat at a gaming table where Mr Yu, a frequent visitor, was gambling. Surveillance video cameras recorded the activities of the appellants whilst Ms Zhang was dealing.Three incidents of alleged cheating were observed, each of which allegedly manifested in Mr Yu significantly raising his bet.

[3] The Crown's case was that Ms Zhang deliberately looked at the cards as she was reshuffling them and then "stacked" them in an order she knew would appear on the table. On the first two occasions she then conveyed to Mr Yu, by means of concealed signals at the table, that he should place his bet in a certain way.On the third occasion, after reshuffling the deck for the next dealer Ms Zhang was observed speaking with Mr Yu at the bar before he placed his bet. Such conversation was in contravention of Casino protocol which prohibits socialising between dealers and patrons.

[4] The evidence adduced by the Crown at trial was from experts in the game of Midi Baccarat and from others who observed the improper practices and procedures of Ms Zhang on the surveillance videotapes recorded that evening or saw her speaking with Mr Yu at the bar.

The Charges

[5] The charge of conspiracy to defraud and the substantive charges of cheating were presented in the alternative. All four charges alleged joint criminality.

[6] In respect of count 1, the conspiracy charge, the Crown relied on the proposition that the appellants had entered into a prior agreement to defraud the Casino by cheating.This alleged conspiracy was advanced on a wider basis than the cheating charges, which required proof of breaches of specific Rules.

[7] The cheating charges in counts 2, 3 and 4 were laid pursuant to s.2 of the Casino Control Act 1990, the essential elements being:

(a) The offence must be committed in a casino.

(b) There must be a contravention of the rules of an authorised game.

(c) It must be a knowing breach.

(d) With the intention of obtaining a pecuniary advantage.

[8] The authorised game in this case was Midi Baccarat.The Rules allegedly contravened by the appellants in relation to counts 2, 3 and 4 were the gazetted Rules of Casino Table Games.The relevant Rules were:

(a) Rule 4.1.A player shall not be advised by an employee of the casino on how to play, except to ensure compliance with these rules.

(b) Rule 12.1.A casino operator may invalidate the outcome of a game if:

(b) Any fraudulent act is perpetrated by any player or dealer that in the sole opinion of the casino operators affects the outcome of the game.

[9] The Crown also referred in evidence to a number of other Rules which it alleged were also breached in relation to counts 2, 3 and 4; for example, Rule 7.1 which requires cards to be shuffled "so that they are randomly inter-mixed" and Rule 7.4 which deals with the cutting of the cards.

Grounds of Appeal

[10] Three grounds of appeal were advanced on behalf of both appellants. First, that various of the provisions of ss. 24 and 25 New Zealand Bill of Rights Act 1990 concerning the right to a fair trial had been breached; secondly, that the trial Judge had misdirected the jury on the definition of cheating; and thirdly, that the verdicts of guilty on the cheating charges were inconsistent with the acquittal on the conspiracy charge or were unreasonable and not based on the evidence.

Alleged Breaches of New Zealand Bill of Rights Act 1990

[11] The appellants alleged numerous breaches of ss. 24 and 25 of the Bill of Rights Act arising from the Casino's video surveillance operation.The Casino apparently monitors all aspects of its operation with video surveillance.The videotapes are retained for seven days before being reused for surveillance purposes.On the evening of 2 and 3 February 1997, whilst Ms Zhang was dealing at the Midi Baccarat table in the Members Room, three video cameras were in operation, each recording eight hours of footage.Casino surveillance staff who viewed those tapes came to the conclusion that Ms Zhang and Mr Yu were cheating and promptly informed the Police.As a result both appellants were arrested and charged.At the time they were unaware their actions had been recorded on videotape or that surveillance cameras were constantly in operation at the Casino.

[12] Later, the Police received a composite videotape from the Casino staff. It contained 30 minutes of footage condensed from the total 24 hours of surveillance footage recorded on the three cameras operative during the relevant period.This composite footage concentrated on the allegedly fraudulent actions of both appellants during that period.The Officer in Charge did not, at any time, view the full and unexpurgated versions of the tapes for that period, nor was he aware that the Casino's practice was to reuse the surveillance videotapes every 7 days.At that point no issue about the video surveillance of the Members Room on 2 and 3 February 1997 or about the activities of the appellants during the preceding 7 days had arisen.

[13] Later, when the defence learned of the existence of the videotapes it sought to obtain copies of tapes recording Ms Zhang's activities on the days prior to 2 February 1997 for the purpose of rebutting any allegation that her behaviour patterns on 2 and 3 February 1997 had differed from her usual behaviour patterns.Part of Ms Zhang's defence was that although her reshuffling actions on 2 and 3 February may have appeared suspicious on tape, this was the way she always shuffled regardless of Mr Yu's presence.It was contended that surveillance of her behaviour during the 7 days prior to the alleged offending would have shown this.

[14] The Crown's case portrayed Mr Yu's betting patterns as also abnormal on

2 and 3 February.The Crown contended that the increased bets he made that evening, resulting in three large wins, were triggered by subtle signals from

Ms Zhang.In response, the defence contend that videotaped evidence of his betting patterns on previous occasions would have assisted in rebutting the Crown's allegations about his betting activities that evening.

[15] As the result of the unavailability of the full versions of the videotapes recorded on 2 and 3 February and those recorded during the preceding 7 days, the appellants' plead numerous breaches of their right to a fair trial, as affirmed in ss. 24 and 25 of the New Zealand Bill of Rights Act 1990.

[16] We find it unnecessary to determine this ground of appeal at this point. Nevertheless, we have considered the written submissions of all counsel on the issue.Those submissions do not satisfy us that there is any real substance in this ground of appeal.The issue of the unavailability of the tapes was fully and fairly canvassed in cross-examination at the trial and if the tapes had been available, they are likely only to have established the following:

[i] they may have shown the two appellants together in the Members Room but not cheating.In that case the tapes would not be determinative of whether they were in fact cheating as alleged on 2 and 3 February.

[ii] they may have shown the appellants together in the Members Room undertaking the same conduct, alleged as cheating in counts 2, 3 and 4.In that case the tapes would only provide evidence of further cheating.

Alleged Mis-Direction of the Trial Judge on "Cheating"

[17] The appellants allege that the trial Judge erred in directing the jury on the ingredients of the offence of "cheating", as those ingredients applied in their case.This ground of appeal can be conveniently dealt with under the third ground of appeal, which is that the verdicts of guilty on the cheating charges were inconsistent with the verdict of acquittal on the conspiracy charge.

Inconsistent Verdicts

[18] As noted, all four charges alleged joint criminality on the part of the appellants: joint enterprise in the conspiracy; concert of action in cheating to gain pecuniary advantage for Mr Yu.

[19] The Crown presented the conspiracy and cheating charges as alternatives although in the circumstances of the case they did not have that quality.As presented the conspiracy charge depended for proof on acceptance by the jury that cheating as alleged or fraud of some similar type had actually occurred. Mr Cato conceded this.Without the evidence of alleged cheating in the Members Room at the Casino on 2 and 3 February 1997, there was no evidence of conspiracy.In the circumstances of the case, prosecuting for the alleged conspiracy, on the one hand, or for all or any of the alleged specific acts of cheating on the other hand, were alternative options for the Crown to consider when framing the indictment, but were not appropriate alternative options for the jury's consideration. The Crown should have opted to indict on count 1, and rely on the actual alleged cheating as proof of conspiracy, or to indict on counts 2, 3 and 4, and allege pre-concert as part of the case on those counts. By proceeding on both the Crown risked either duplicitous verdicts or, as occurred, irrationally inconsistent verdicts.

[20] This is because the Crown's case in respect of the cheating charges relied on an inference of pre-arranged signals between Ms Zhang and Mr Yu whilst he was playing Midi Baccarat at her table, such signals enabling him to place winning bets.These signals could only have been credibly understood and acted upon by Mr Yu if they were the result of prior understanding between the parties because they were so subtle as to be virtually concealed from anyone but Mr Yu.The Crown's theory that this was so remained constant throughout the trial and the following excerpt from Mr Bonnar's opening address is illustrative of the way the Crown put its case to the jury:

The Crown alleges that by some means, Zhang is communicating to [Mr Yu] which way to bet at the stage at which the known sequence of cards is reached.We can't positively identify the signal - we don't of course know what may have been agreed between them - a mere glance might be all that is required, but you will see ladies and gentlemen that at a couple of points in the play, the accused Zhang begins playing with a couple of pucks on the table.These are marked pucks which are marked "player" and "banker" respectively.In the ordinary run of events they are used to denote which of the players gets to look at and turn over the relevant hands of the banker or the player.You will see that on a couple of occasions Zhang appears to move or flick one or other of the buttons, following which the accused Yu places a bet on either the player or the banker.It will be a matter for you to decide."

[21] Mr Bonnar's notes of his closing address also reflect the manner in which the Crown's case was left to the jury:

At its simplest you may want to ask yourselves are we satisfied that the Crown has shown us that these two are acting in the way alleged, and if so, isn't Miss Zhang instructing Mr Yu on how to play, that is, how to place his bets."

[22] It is clear from the facts in this case and from the approach taken by the Crown, that the appellants could only be convicted of cheating if the jury were satisfied they had jointly and knowingly breached the authorised Rules relating to Midi Baccarat.It is this joint aspect of the cheating charges and the concealed nature of the signals passed between them which necessarily leads to an inference of prior conspiracy.And conversely, although in similar vein, the conspiracy charge, whilst separate, was dependent upon the jury being satisfied of actual cheating.

[23] It is evident from parts of the summing up that the trial Judge also took this view.For instance:

As you will readily appreciate, essential to all charges is basically the allegation that the accused were cheating.That no doubt will be at the forefront of your considerations.I do suggest to you that possibly as a starting point in your deliberations you should endeavour to decide whether or not the Crown have proved beyond reasonable doubt that the accused were cheating because it is a major and indeed an essential part of the Crown's case in respect of Count 1 that the accused had agreed to cheat.The question of whether the accused were cheating is a factual matter which is solely within your province, you as the jury, to determine.You have seen the videos of the incidents relied upon by the Crown.Those occasions on which the Crown have identified as to when the actual cheating occurred are contained in Exhibit 3 (Surveillance Player Breakdown).

[24] And in a further passage in the summing up:

I remind you that the elements of Count 1 are that the Crown have to prove firstly, that the accused reached an agreement to act unlawfully.Secondly, that they decided to act fraudulently and dishonestly.Thirdly, that they intended to defraud the casino.If however you found that the Crown have proved beyond reasonable doubt that the accused were cheating, you may consider that would, and it is a matter entirely for you, substantially establish that they had agreed to act unlawfully, that they had agreed to act dishonestly and that they had intended to defraud the casino.

[25] However, in other parts of the summing up the trial Judge directed the jury that they had to form a conclusion of guilt or otherwise on count 1 before they could go on to consider counts 2, 3 and 4.On at least four separate occasions he directed the jury that if they found the accused guilty of count 1 they need not consider whether cheating had been proved.Two examples of such directions follow.First:

Because they are in the alternative the first charge, the conspiracy charge, if you find after due consideration weighing up all the evidence that the accused are guilty of Count 1 then you need not proceed any further.There will be no need for you to consider Counts 2, 3 or 4 - the cheating counts.

And in a later passage:

I remind you that you are only required to consider these charges if you find the accused not guilty of count 1 because they are alternative to count 1.If you find the accused guilty of count 1 you stop your deliberations.

[26] These directions meant the jury had to acquit on count 1 if they were to return a verdict of guilty on the remaining counts.Yet counts 2, 3 and 4 depended on the jury being satisfied of pre-arranged joint enterprise.As noted, this is absolutely clear from the circumstances of the case, from the way in which the Crown presented its case and from the nature of the charges themselves.It is also clear from other directions the Judge gave the jury about the relationship of the accused and about the joint nature of all charges.

Conclusion

[27] On the facts of this case and on the way it was presented at trial, it was a logical impossibility for the jury to find the appellants not guilty of conspiring to cheat but nevertheless guilty of cheating.This because the "concealed" signals by which Ms Zhang allegedly communicated advice to Mr Yu about how and when to place his bets were so subtle that they were unable to be clearly identified, even by experts reviewing the surveillance videotapes a number of times.That the jury also found this problematic is reflected in the questions they asked after retiring to consider their verdicts.It is particularly evident in their third and final question:

Could cheating on the spot be considered a conspiracy without communicating beforehand?

[28] The Crown could have chosen simply to proceed on the conspiracy charge alone or on the substantive cheating charges only.The evidence of prior relationship and the evidence of alleged cheating were relevant and admissible to support either.As noted, all four charges could have gone to the jury for verdict.Opting to present the charges as alternatives, in the way in which the Crown chose to, was also viable, so long as the jury were directed that aspects of the evidence were relevant to both sets of charges and a verdict was required in respect of only one set of charges:see R v Adams (CA 23/99, 19 April 1999).The problem arose when the Judge directed the jury that they could only go on and consider the cheating charges if they found the appellants not guilty of conspiring to cheat.That, as we have found, was a logical impossibility and led to an inconsistent verdict.The jury were clearly alive to the difficulty of separating the verdicts from mutually relevant aspects of the evidence and this was reflected in the tenor of their third question.

[29] The verdicts of guilty on counts 2, 3 and 4 are inconsistent with the acquittal on count 1 and cannot be allowed to stand.Leave to appeal out of time is granted to the appellant Mr Yu and the appeal is allowed in the case of each appellant.Re-trials on counts 2, 3 and 4 are ordered.Whether those retrials take place is a matter for the Crown to assess.

Solicitors:

Meredith Connell & Co, Auckland, for the Crown

Hesketh Henry, Auckland, for Appellant Yu

Gary Gotlieb, Auckland, for Appellant Zhang