Chiu Bu-chin and Another v. The Queen
Read the full judgment text of CACC 202/1977 on BabelCite. This Court of Appeal judgment.
1. I have not the slightest doubt but that the Appellants were guilty of a conspiracy to defraud the United Chinese Bank Ltd. by the unauthorized grant to the 2nd Appellant by the 1st Appellant of overdraft facilities at the said bank. That, unfortunately, was not the offence charged in the first charge: the object of the conspiracy was correctly stated, but the means whereby it was intended to be carried out were particularized as being two false representations, which have been set out in Pick
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CACC000202/1977
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----------------- Coram: Huggins and Pickering, JJ.A. and McMullin, J. Date of Judgment: 26th August 1977. ----------------- JUDGMENT ----------------- Huggins, J.A.: 1. I have not the slightest doubt but that the Appellants were guilty of a conspiracy to defraud the United Chinese Bank Ltd. by the unauthorized grant to the 2nd Appellant by the 1st Appellant of overdraft facilities at the said bank. That, unfortunately, was not the offence charged in the first charge: the object of the conspiracy was correctly stated, but the means whereby it was intended to be carried out were particularized as being two false representations, which have been set out in Pickering, J.A.'s judgment. In the present case the fraud was successfully perpetrated and in my view the evidence does not show that the means employed (and intended to be employed) were those alleged. 2. As I understand it, the false representations are alleged to have been contained either in the "Monthly Report of Banking Facilities for Branches" made by the 1st Appellant to the head office of the bank or in the cheques themselves. I entirely agree that the first of the misrepresentations alleged was never made. It is as to the second that I find myself driven to differ from the other members of the court. I accept that the Appellants agreed together to deprive the bank dishonestly of moneys to which, but for the perpetration of the fraud, it would have been entitled. There can be an intention to defraud without the element of deceiving the person defrauded (Scott v Metropolitan Police Commissioner 1974 3 W.L.R. 741), so that there would be an intention to defraud even though the fraud was effected by false representations made to some person other than the bank. This is important because in my view the drawer of a cheque makes no representation what so ever to the bank on which the cheque is drawn: a cheque is an order to pay and the drawer does not represent to the bank that the bank is bound to comply with the order. As Byles says in his Bills of Exchange (22nd edition) 251:
Not only does the drawer not represent to the bank that he is a customer but a fortiori he does not represent that he has an account which is in funds or that the bank has allowed him overdraft facilities. 3. In s.55(1)(a) of the Bills of Exchange Ordinance the Legislature used the word "engages". That, as I understand it, means no more than that the drawer promises with intent to bind himself contractually. It is arguable that a promise to the payee that the bank will, on due presentment, pay the cheque according to its tenor necessarily involves a representation that the bank will honour the cheque, but in my view there is no representation that the bank is, or will be, bound to honour it. With one possible exception all the cheques drawn by the 2nd Appellant were honoured upon presentation, even though the bank was not contractually bound to honour them, and it is therefore rightly argued on behalf of the Appellants that there was no misrepresentation in respect of those cheques. Assume that there was a representation that the cheques would be honoured: that representation turned out to be true, and it matters not that they were honoured as a result of a fraud. A cheque is not less "good and valid" because the bank refuses to honour it, whether or not it has a legal right so to refuse. To hold that those words were intended to have a wider meaning when used in the particulars of the first and third charges seems to me to introduce an element of uncertainty and even of unfairness to the Appellants. The charge could easily have been drafted so as to leave no loophole for escape and I do not think it would be right to give the words an extended meaning simply to support the convictions. 4. I have mentioned "one possible exception". The cheque for $200,000 drawn by the 2nd Appellant to bearer for what I will call the restoration of the Fook Lung deposit account had all the outward appearances of a valid order for payment. In fact no money had ever left the Fook Lung account, although there was an entry in the bank's books purporting to debit the account with $200,000. The evidence shows that Fook Lung throughout retained their deposit receipt and were credited with interest in respect of the sum shown thereon. If in fact the money never left Fook Lung's account it can never have reached the 2nd Appellant's account, although there was a corresponding credit entry. If the 2nd Appellant knew that the money had never passed, it would be arguable that when he drew his cheque to make repayment he never intended that it have any legal effect and that in consequence it was not a "good and valid order for payment". However, there is no evidence that the 2nd Appellant did understand that no money had passed. There is every reason to believe that he thought the transfer was effective to cancel out his overdraft and that he intended by his cheque to make repayment. That being so it matters not whether in fact the money had been transferred or that the cheque may in truth have been nothing more than a document to support a false debit in the 2nd Appellant's account: it was intended to be a good and valid order to pay and the bearer could have sued upon it as such, subject to any available defence of no consideration. If the cheque was a good and valid order for payment, there was no false representation. 5. I would have allowed the appeals to the extent of quashing the convictions on the first and third charges. 26th August 1977. Representation: N. Pirie (Raymond Tang & Co.) for 1st appellant. A.M. Niamatullah (Woo & Woo) for 2nd appellant. G.W. Alderdice for Crown/respondent.
----------------- Coram: Huggins, Ag. C.J., Pickering, J.A. & McMullin, J. Date of Judgment: 26th August, 1977. ----------------- JUDGMENT ----------------- Pickering, J.A.: 6. The first appellant is a bank manager and the second a customer of the bank. They were charged, together with the wife of the second appellant who is an employee of the bank, with conspiracy to defraud and were convicted. In addition the first appellant was charged with and convicted of making a false entry in a book of account contrary to section 85(a) of the Crimes Ordinance Cap. 200 and also with attempting to obtain property by deception contrary to section 17(1) of the Theft Ordinance Cap. 210. Both appellants were sentenced to three years' imprisonment and both appeal against both conviction and sentence. 7. The facts were that the second appellant traded as the Hang Fung Hardware Company which company had an account at a branch of the United Chinese Bank managed by the first appellant; over a period of approximately four years from June 1972 the overdraft of the hardware company increased from some $6,000 to more than $477,000. The overdraft was not authorised by the bank's head office and was vastly in excess of any sum which the first appellant was entitled to authorise without reference to head office. It was the duty of the first appellant to render a report to his head office at the end of each month showing the overdrafts then in existence at his branch of the bank. By various devices the appellants managed to ensure that at the end of each month there was, on paper, no overdraft with the result that no overdraft in the name of the Hang Fung Hardware Company was ever contained in the end-of-the-month reports to the head office of the bank. At the beginning of each succeeding month the overdraft came into existence again; it is unnecessary to detail the devices employed to eliminate the overdraft on paper at the end of each month but sufficient to say that in many instances the money used to apparently repay the deficit came from an account which did not in fact have the necessary money in it. There was in fact a charge on the "repaying" money before it ever got into the account of the Hang Fung Hardware Company and the scheme was one of window-dressing whilst in fact the overdraft facilities continued. 8. The second charge against the first appellant related to a false ledger entry in the sum of $200,000 in respect of the Hang Fung Hardware Company's account whilst the third charge against him alleged an attempt dishonestly to obtain from the bank, for a relative, the sum of $100,000 by a false representation that a cheque in that amount drawn by the second appellant was a good and valid order for payment. 9. Upon the appeal a number of points were ably canvassed by Mr. Pirie and Mr. Niamatullah for the respective appellants, upon not all of which did we find it necessary to ask Mr. Alderdice, for the Crown, to address us. In the result the matters which caused us to defer a decision were two in number and it may assist an understanding of them if I set out the Particulars of Offence in respect of the first charge which were as follows:
10. The Particulars of Offence of the third charge similarly alleged a representation that the cheque for $100,000 was a good and valid order for payment. 11. The first matter which caused us some doubt was whether the allegation that there had been false representations to the effect that the second appellant's hardware company had a properly authorised overdraft, was correct. Upon consideration we must reject that allegation because, by means of the end-monthly devices employed in relation to that account it was never represented to the head office of the bank that any overdraft, properly authorised or not, existed at all. The representation was, by inference, not that the overdraft was properly authorised but that it did not exist. The exercise was one of concealment rather than of assurance that the overdraft bore the imprint of proper sanction by the persons empowered to authorise overdrafts. It follows that the conviction upon the first charge cannot be sustained upon the basis of this particular alleged false representation. There was however an allegation of a second representation namely that the cheques drawn by the second appellant upon his Hang Fung Hardware Company's account were good and valid orders for payment. In this connection it was Mr. Pirie's contention that there was no false representation, the cheques being in fact good and valid orders since they had been met upon presentation. This argument affects also the third charge against the first accused. 12. The argument is that "the proof of the pudding is in the "eating" but that is an over-simplification. The second appellant, in drawing the numerous cheques upon his overdrawn account, was engaging that they would be accepted and paid according to their tenor (section 55(1)(a) Bills of Exchange Ordinance Cap. 19). Implicit in that engagement is the representation that the cheques would be honoured from a legitimate source and not from funds which represented a fraud upon the paying bank. Were it otherwise there could be no engagement at all - for an undertaking in respect of any particular cheque that it would be accepted and paid provided that the bank did not, in the meantime discover the true state of affairs, is no engagement at all and the instrument the subject of that dubious promise cannot constitute either a good or valid order. To be good and valid ab initio an order for payment must be such an order as the party giving it has a right to give: and if there resides in the giver no such right, the ex post facto accident that the order is obeyed by a bank ignorant of the fraud upon it will not render the order good and valid. There may exist circumstances in which an order originally neither good nor valid can be invested with those qualities. If, for example, I inadvertently draw a cheque which more than exhausts the funds in my account and the bank, instead of dishonouring the cheque, honours it and writes to me informing me that my account is overdrawn and requesting me to put it in funds once more, the effect may be to validate what was formerly invalid but that does not render my cheque good and valid ab initio for at the time of its issue and until the bank decided to grant me indulgence, the cheque was neither good nor valid. An order for payment made by a party who has no right to give the order is not, at the time it is made and irrrespective of its subsequent treatment by the acceptor, good and valid. 13. It follows that the representations as to the nature of the cheques referred to in the first and third charges were false and the appellants were properly convicted. The applications against conviction are dismissed. 14. As to sentence, these were calculated frauds perpetrated over a period of years and we are unable to say that terms of three years' imprisonment were unjustified. The applications for leave to appeal against sentence are likewise dismissed. Representation: N. Pirie (Raymond Tang & Co.) for 1st appellant. A.M. Niamatullah (Woo & Woo) for 2nd appellant. G.W. Alderdice for Crown/respondent.
----------------- Coram: Huggins, Ag. C.J., Pickering, J.A. & McMullin, J. Date of Judgment: 26th August, 1977. ----------------- JUDGMENT ----------------- McMullin, J.: 15. I concur in the judgment delivered by Pickering, J.A. and do not wish to add anything on my own account. Representation: N. Pirie (Raymond Tang & Co.) for 1st appellant. A.M. Niamatullah (Woo & Woo) for 2nd appellant. G.W. Alderdice for Crown/respondent. |