Attorney General v. Ng Hung Nam

CACC000311/1970

IN THE SUPREME COURT OF HONG KONG

APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 311 OF 1970

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Coram: Mills-Owens, Huggins & McMullin, JJ.

Date of Judgment: 11 December 1970

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JUDGMENT

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Mills-Owens J. :

1. This is an appeal by way of case stated by a District Judge on the application of the Crown, in which the decision of the judge that the respondent had no case to answer on the 7th, 8th, 9th and 10th charges of embezzlement laid against him, under the Larceny Ordinance, is sought to be reversed.

2. The respondent was a salesman employed by the Goddard Engineering Co. Ltd. and the charges in question arose out of the sale by him, in that capacity, of air-conditioning plant on behalf of his employer. It was within the scope of his authority, on effecting a sale, to secure a contract signed by the customer and to collect a deposit. The four charges concern two such transactions, the deposit in each case having been made by two cheques, in effect two instalments making up the deposit in each case.

3. There was a formidable body of evidence from which it might be concluded that the respondent made certain arrangements designed to profit himself dishonestly at the expense of his employer. He established, by registration under the Business Registration Ordinance, a firm in the name of Jor Dak Company. "Jor Dak" is accepted as the Chinese equivalent of "Goddard". He then opened a bank account in the name of Jor Dak Company describing himself as sole proprietor. Then came the two transactions giving rise to the charges in question. As we have said, there were two cheques made out for the deposit in each transaction. At his request the customer made the cheques payable, in three instances to 'Jor Dak Air-Conditioning Co.' and in the fourth instance to 'Jor Dak Co.' All four cheques were paid into the respondent's bank account and not accounted for to his employer.

4. There is no such company as Goddard Air-Conditioning Co., Ltd., although there is a company, of which Goddard Engineering Co. Ltd. is a subsidiary, named Goddard & Co. Ltd. The learned judge having pointed out that the charges were of embezzlement of the currency represented by the cheques, not of embezzlement of the cheques themselves, held that in the absence of evidence that the bank of the employer, Goddard Engineering Co. Ltd., would have credited the cheques to its account, notwithstanding that they were made payable as we have indicated, it had not been proved that they were capable of being converted into currency in the bank account of his employer and hence that the 'currency' alleged to have been embezzled had not been proved to belong to the employer.

5. On the hearing of the appeal it was accepted that it is not necessary to prove ownership by the employer of the money or thing embezzled (vide R. v. Beacall (1824 1 C. & P. 454). In this respect, the heading of paragraph 1734 of Archbold (36th Edn.) is misleading; the heading is: "1734. Thing received must be master's property". The text of the paragraph, however, makes it clear that the type of case there referred to is that where the defendant makes unauthorised use of his master's implements of trade to earn something for himself, the party paying him being, in fact, unaware of the existence of the employment and contracting with him personally.

6. Mr. Martin Lee, for the respondent, put his case on the basis that whilst the respondent might well have been guilty of embezzlement of the cheques, which he conceded were received for or on account of his employer - as indeed he was bound to concede, the respondent being the salesman selling his master's goods in his capacity of a salesman - he could not be guilty of embezzlement of the proceeds thereof as it was not within the scope of his authority to convert the cheques into money; the proper charge was embezzlement of the cheques.

7. Mr. Soh, for the Crown, replied upon the case of R. v. Gale (1876 2 Q.B.D. 141). In that case, Gale was manager of the head office of the company whose servant he was. It was in the ordinary course of his duty that he should open all letters and receive remittances for the office both in cash and in cheques, and should hand over the cash and cheques to the cashier of the company, after indorsing such cheques as were made payable to his order. The cashier then paid all into the company's bank, accounting for all details in the books. On the material dates Gale received on account of the company one cheque for £400 and another for £200 made payable to his order. He did not hand over these two cheques to the cashier nor inform him of their arrival, but indorsed them and cashed them through private friends of his own who gave him the money and paid the cheques into their own banks. Later in the day Gale handed £600 in gold and bank notes as his own to the company's cashier and told him to set this money against his salary which was then overdrawn to that amount. The cashier in good faith took the money and returned to Gale the IOUs which Gale had given him in respect of the overdraft. The full truth of the matter was not known till some months later when the prisoner had left the company's service and become bankrupt. Gale was charged on two counts, one for embezzlement of £400 and the other for embezzlement of £200. Counsel for the prisoner submitted that there was no embezzlement, (a) since each cheque was payable to his order and required his indorsement, so that he was entitled to the money he received for them, and (b) since the identical money he received was paid by him to the cashier, although paid as though it were his own money in discharge of his overdraft. Gale was convicted but the case was reserved for the Court for Crown Cases Reserved who affirmed the conviction on the grounds that Gale received the money on account of his masters since it was his duty to pay over the proceeds of the cheques at once in whichever way he received them: and having dealt with that money as he did he showed that he intentionally appropriated it to his own use. The salient facts in R. v. Gale were that Gale, in the ordinary course of his duty, regularly received into his possession cash destined for his masters, and it was his duty to pass this cash over into their possession: it was also his duty to inforse and pass over such complete and valid cheques as had come into his possession. It was therefore no forgery by him when he indorsed the two cheques which he cashed. Looking at the evidence the Court for Crown Cases Reserved unanimously held that whether he received the cash in the first place or whether he received it as the result of cashing the cheques which had come, in the course of his duty, into his possession, he received it "on account of his masters" and he did so because it was his duty to pay over the proceeds at once, in whichever way he received them. Cockburn C.J. said "It is the same case as if, being on his way to cash the cheques, he had met a friend in the street who cashed them for him, to save him the trouble of going to the bank." The court's decision rested purely on their interpretation (a) of the words of the statute holding that "received on account of the master" rendered irrelevant the fact that the persons who gave Gale the money knew nothing of his masters and therefore did not pay to the account of the masters; and (b) of the evidence as to what his duty comprised, namely, to bring in the payments of his masters' debtors, in whatever form he held those payments in his possession.

8. Mr. Martin Lee sought to distinguish the case of Gale on the ground that the cheques in that case were made payable to Gale, not his employer, whereas in the present case the cheques were not made payable to the respondent and, moreover, there was, as the learned District Judge held, no evidence that the employer, Goddard, could have secured the crediting thereof to its account.

9. As it appears to us, equally in the present case as in the case of Gale, accepting the facts as they have been stated to us, there was an unauthorized conversion of the cheques and embezzlement of the proceeds. The case of Gale is clear authority for the view that although the conversion of the cheques into cash was not within the authority of the respondent as a clerk or servant nevertheless he received the proceeds for or on account of his employer. In our judgment the decision in Gale's case is precisely in point and the law as there laid down concludes the appeal in favour of the Crown. The fact that Goddard might have had difficulty in getting the cheques credited to its account, without resort to the drawers for their amendment, appears to us to be immaterial, the essential question being whether the cheques, and consequently the proceeds thereof, were received for or on account of Goddard. Pursuant to section 38 of the District Court Ordinance, therefore, we reverse the decision of the District Court in this matter and direct that the trial be resumed, before the same judge, who has jurisdiction by virtue of section 8 of that Ordinance.

Representation:

Eddie Soh, C.C. for Appellant.

Martin Lee (L. S. Shum & Co.) for Respondent.