Chan Chi-wo v. The Queen
Read the full judgment text of CACC 311/1981 on BabelCite. This Court of Appeal judgment.
1. On the 12th of August we allowed the appeal of CHAN Chi-wo against his conviction upon one charge of Obtaining Property by Deception and three charges of Obtaining a Pecuniary Advantage by Deception contrary to the provisions of section 18(1) of the Theft Ordinance, Cap. 210. We reserved our reasons which are as follows.
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CACC000311/1981 Charges under S.S. 17(1) and 18(1) of the Theft Ordinance - risky course of trading by undercapitalized defendant - many cheques issued both post-dated and for immediate encashment dishonoured on presentation - evidence as to non post-dated cheque insufficient to establish that defendant had no honest belief that cheque would be met if promptly presented. As to post-dated cheques the complainant in accepting the cheques was aware that their validity depended upon the defendant being paid in due time by his own customer. On the whole the evidence was insufficient to show criminal deception on the part of the defendant.
----------------- Coram: McMullin, V.-P., Li, J.A. & Zimmern, J. Date of Judgment: 12th August 1981 ----------------- JUDGMENT ----------------- McMullin, V.-P. : 1. On the 12th of August we allowed the appeal of CHAN Chi-wo against his conviction upon one charge of Obtaining Property by Deception and three charges of Obtaining a Pecuniary Advantage by Deception contrary to the provisions of section 18(1) of the Theft Ordinance, Cap. 210. We reserved our reasons which are as follows. 2. The appellant was the sole proprietor of the Versailles Trading Company its business being the installation of decorative lamps in restaurants and business enterprises. He entered into several contracts with a restaurant called Kingsway for the installation of mahjong lamps which he was to design and make for that purpose. There were four such contracts the total value being $74,940. These contracts were all signed in the month of April 1979 and it was originally stipulated by Kingsway that the work should be completed before the 25th of May 1979 which was to be the opening date of the restaurant. 3. The proprietors of Kingsway were however having difficulty in getting the necessary permit for the decoration work. The deadline for the completion of the defendant's work with the mahjong lamps was consequently repeatedly deferred and it was not until November that he was permitted to instal the completed lamps in the restaurant. That work was completed on the 20th of November 1979. 4. The appellant had received some interim payments from Kingsway which by then amounted to the greater part of the contract price. By then however he was in grave financial difficulties and was in no position to meet the obligations which he had incurred to the two firms who are the complainants in the several charges. In fact, although he was eventually paid in full under his contract with Kingsway, his own company, which from the outset had been grossly under-capitalized, was unable to meet these debts which remain in large part undischarged to the present time. 5. The contract with Kingsway was virtually the only business which the appellant had during this period and it is clear that he was from the outset hopeful that he would be able to complete the work for Kingsway at an early date, receive full payment and realize a profit over and above his current overheads and the cost of purchasing the necessary materials. It was in that hope that he issued the several cheques which are the basis of the five charges. 6. The first charge is concerned with the purchase of a quantity of glass beads used in the making of these lamps from Mr. Li Kai-man, the proprietor of the Wing Wah Lamps Decoration Company on the 28th of May 1979. Mr Li was only able to supply beads to the value of $6,300 on that day and he asked to be paid in cash. However, he accepted a bearer cheque for $7,000 in lieu of cash on the basis that the balance of $700 could be offset against a further purchase of beads when available. 7. The appellant's case was that when he issued this cheque he did so in the belief that he had funds in his account to cover it. 8. The prosecution relied upon figures shown in the appellant's bank statement covering that period. This shows that the company account which on the 25th of May had been overdrawn by some $1,300 odd was replenished on the following day by a deposit of $15,000 converting the overdraft into a positive balance of $13,653.80. 9. On the 28th of May the appellant drew upon this account by issuing four cheques, including the cheque for $7,000 paid to Mr. Li, which came to a total of slightly over $14,000. If they had all been met, it would have resulted in an overdraft on that day of $593. The bank however refused to honour the cheque for $7,000 which was referred to the drawer. This was not done until three days later by which time more cheques had been presented and the dishonour of the cheque for $7,000 converted an overdraft of $4,512 on the 31st of May into a credit of $2,486.93. 10. Since the honesty of the appellant's intentions at the time that he issued the cheque to Mr. Li is the crux of the matter it is worth noting at this point that had the cheque given to Mr. Li been for $6,300 only (viz the actual value of the goods purchased) and had it been presented immediately by Mr. Li in person instead of being paid through his account it would have been honoured on the 28th of May. 11. Nevertheless the judge found a sinister implication in the giving of a cheque for $7,000 rather than one for the actual value of the goods. He said:
These were the reasons which persuaded him that the defendant had practised a deception on PW1 in giving that cheque. 12. Mr. Hoosen in his able address did not deny that the appellant's management of his account was somewhat precarious but he was plainly right in pointing out that we are concerned with the state of the appellant's knowledge and intentions at the date upon which the cheque was issued to Mr. Li. In drawing a cheque upon his account any person who is honest will only do so if he is aware that the state of his account justifies belief that the cheque will be met upon presentation. But it would be unrealistic to demand of any person an exact knowledge to the very dollar of the state of his account. $15,000 had been paid into the appellant's account on the 26th of May and the balance then was $13,653.80. The cheque for $7,000 was numbered 10741. Three other cheques: Nos. 10742, 10734 and 10739 appear in the account as presented for honouring and as honoured upon that day. In the absence of evidence to the contrary it must be assumed in the appellant's favour that the cheques were drawn in sequence, the lower numbers being drawn earlier that the higher. That would mean that following upon the deposit of $15,000 on the 26th of May only two cheques (10734 and 10739 totalling $3,138) were drawn before the cheque for $7,000. The total of those three cheques is only $10,138 whereas the balance upon that date was $13,653.80 less a sum of $8.47 interest, or $13,645.33. If, on this view, cheque 10741 had not only been drawn before cheque No. 10742 but presented before the latter it must have been met since there would have been funds to cover it. 13. The fact that the order of presentation of the cheques was otherwise than the sequence suggests does not detract from the reality that at the time the cheque for $7,000 was drawn the appellant would have been justified in his belief that there were funds to cover it. 14. There was thus no justification for the judge's finding that when that cheque was drawn the accused "knew or ought to have known that he then had $6,507.33 in his company's bank account". Mr. Halley for the Crown concedes that the subsequent finding that the cheque for $7,000 was given to induce Mr. Li to give the goods without payment of cash and to ensure that the cheque would be rejected when presented because of insufficient funds is unsupported by the evidence. 15. The remaining four charges concern the purchase by the appellant of a further quantity of glass beads for these ornamental lamps from Mr. So Kai-cho, the manager of Michigan Enterprises. A selling price of $18,468 was agreed between the defendant and Mr. So on the 21st of July 1979. Mr. So accepted a cheque for that amount post-dated to a date some two or three weeks later. Mr. So was aware that the appellant was suffering financial difficulties as a result of the repeated deferments of the opening date of Kingsway Restaurant and that the appellant was hoping to honour that cheque upon further payments being made to him by Kingsway. Mr. So did not dispute the appellant's evidence that he had been assured by Kingsway that the restaurant would open on the 1st of August and that he would receive payment about the 4th. This assurance however proved as groundless as had previous such assurances and on the 3rd of August the appellant wrote to Mr. So telling him not to present the cheque for $18,468 which was due to mature on the 6th of August. Thereafter So agreed to accept in exchange for that cheque a cheque for $8,468 post-dated to the 13th of August and the cheque for $10,000 post-dated to the 1st of September. 16. The second charge alleges that the 50,000 glass beads were obtained by deception in that the cheque for $18,468 was falsely represented as a good and valid order for the payment of that sum. The learned District Judge rightly perceived that upon the facts as I have described them no such deception had in fact been practised and he acquitted the appellant upon that charge. 17. The third and fourth charges however were laid under Section 18(1) of the Theft Ordinance. In the third charge it is alleged that the appellant dishonestly obtained a pecuniary advantage in the form of the deferment of the debt of $18,468 by falsely representing that the two replacement cheques given to the complainant on the 4th of August were good and valid orders for the payment of those two sums. 18. The fourth charge alleges a similar offence arising out of the fact that a couple of days before the 13th of August when the first of the two replacement cheques was to fall due the appellant phoned Mr. So and told him that he was not yet in funds and asked him to postpone presenting the cheque for $8,468 for a few days more. Mr. So agreed to this and on the 17th of August he presented the cheque for $8,468 but there were no funds to meet it. 19. Thereafter he accepted in part payment of that debt a further cheque for $3,000 post-dated to the 15th of September 1979. The fourth charge relates to this latter cheque. This cheque was also dishonoured on presentation and the appellant subsequently treated with Mr. So and undertook to settle his total indebtedness by instalments. In the end however he was only able to pay him a sum of $5,000 which he did by endorsing over to Mr. So a cheque received by him from Kingsway in part payment of his work for that firm. 20. There is no doubt that by this series of somewhat desperate financial manoeuvres the appellant did succeed in deferring payment of his debts to Mr. So as laid in the two charges. It is also clear from the evidence of Mr. So however that he was aware from the outset that the appellant was proposing to pay him when he in due course was paid by Kingsway and that he kept him informed of his disappointments in that regard. The parties were therefore at arm's length in the sense that upon each occasion when he received a cheque from the appellant Mr. So was aware that the post-dating of each cheque was due to the non-existence of funds at the date upon which the cheque was given and that he was content, like the appellant himself, to rest in hope of payment. Mr. So indeed proved a most accommodating witness from the appellant's point of view in cross-examination. The final question and answer to counsel for the defendant read as follows:
Mr. Halley for the Crown conceded that in view of that answer it would be difficult to sustain either of these two charges. That was plainly right. Throughout the whole course of dealing between the appellant and Mr. So it is clear that, however desperate his situation was, the several cheques were given and accepted in good faith. Any element of dishonesty was therefore quite lacking and the convictions upon those charges were likewise set aside. 21. The final charge concerns a cheque for $3,000 paid by the appellant to Mr. So in January of 1980 and drawn upon his own personal account. It is common ground that this cheque was intended to replace the post-dated cheque for the same amount which had been dishonoured on the 15th of September. On the 27th of September the parties had come to an interim settlement of their differences by an agreement, evidenced by a note in writing, to the effect that $3,000 would be paid in cash before the 1st of October and the remainder of the debt by stipulated instalments thereafter. The cash payment of $3,000 was not made but the agreement was honoured to the extent that the Kingsway cheque for $5,000 was endorsed over to Michigan Enterprises thereby reducing the total debt to $13,463. No further payments were made thereafter, however, despite several representations by Mr. So. 22. Mr. So went to the appellant's shop in January and was given a cheque for $3,000, dated 23rd of January, ostensibly in replacement of the original cheque for $3,000 which had been dishonoured on the 15th of September. The latter cheque had been, of course, in purported part payment of the sum of $8,468 represented by one of the previous cheques. 23. I have referred to this final cheque as a cash cheque for such it was said to be by Mr. Hoosen in his address. Counsel for the Crown did not demur to that contention. The evidence is by no means clear though for my own part the somewhat sketchy testimony both of Mr. So and the appellant on the point tends rather to indicate that the cheque was given early in January and post-dated to the 23rd. However it was not contested on the appeal that it was a cash cheque intended for immediate presentation. If that was the case then Mr. Hoosen's point that the charge was defective must succeed. The deception alleged in that charge relates to the deferring of a debt dishonestly. The appellant admits that there were not sufficient funds to meet that cheque on the 23rd of January though he protests that he had been expecting payment from another client by that date. If the cheque was given upon that date and in that knowledge then, on the principles enunciated by Lord Reid in the leading case of Turner(1), a case taken under the identical provisions of the English Theft Act, and even assuming dishonesty in the appellant, his act would constitute not the deferment but the evasion of a debt of $3,000 and that has not been charged. If, however, on the contrary the cheque was a post-dated cheque, then in view of the course which the previous relations of the parties had taken it would be unrealistic to hold that Mr. So can then have been any more deceived about the prospect of its being met than he had been in respect of all the earlier cheques. There is no doubt that the appellant's whole course of trading was in a high degree risky and unwise. Once launched upon this venture he was, in view of his lack of capital, fatally restricted by the performance of his principal customer. Some of his creditors were in the end paid but not these complainants. His intentions were honourable and in the earlier stages at least not unrealistic. By the end his bona fides had, doubtless, (like his hope of payment by Kingsway) become somewhat attenuated. But it was never so wholly without foundation as to reduce his behaviour to the level of criminal deception. For these reasons the convictions were quashed and the sentences set aside. Representation: A.R. Hoosen, instructed by (Chan & Chan) for the appellant J.E. Halley, for Crown/respondent (1) (1973) 3 All E.R. 124 |