The Queen v. Lee Tsat Pin

CACC000315/1985

Coram: Hon. Li, V.-P., Kempster, J.A. & Power, J.

Dates of Hearing: 17, 18 & 19 December 1985

Date of Judgment: 19 December 1985

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JUDGMENT

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Li, V.-P.:

1. The applicant was originally indicted for 30 counts of offences under the Theft Ordinance. At the end of the prosecution case the learned trial judge held that the applicant had no case to answer in respect of 20 counts leaving 10 for the consideration of the jury. In the event the jury convicted the applicant of 4 counts of furnishing false information for accounting purposes contrary to section 19(1)(b) of the Theft Ordinance. The counts were 2, 5, 8 and 11 respectively.

2. Count 2 alleged that on the 19th of May 1982 in requesting the Lloyds Bank International (LBI) to purchase a bill of exchange number UI 1177/82(R) drawn by Leeds Textiles Limited on Bestex Manufacturing Limited in the sum of US$156,000 dated 15th May 1982 the applicant dishonestly produced to LBI documents required for accounting purposes, namely a Collection Letter No. 282008140 and a Bill of Lading No. 1013197 which according to his knowledge might be false in that the documents purported to evidence the creation of a genuine contract for sale of goods between Leeds and Bestex and that the Bill of Lading purported to describe accurately the nature and quality of the goods purportedly shipped thereunder.

3. Count 5 alleged that on the 19th of May 1982 in presenting to LBI a bill of exchange number UI 1175/82(R) drawn on Prosperity Knitting Factory in the sum of US$95,000 dated 15th May 1982 the applicant equally dishonestly produced to LBI a Collection Letter No. 282008169 and a Bill of Lading No. 1013196 which again were false in material particulars as suggesting a genuine contract between Leeds and the Prosperity Knitting Factory.

4. Count 8 alleged that on the 17th of May 1982 a Collection Letter was produced to the Hong Kong and Shanghai Banking Corporation (Hong Kong Bank) for the purchase of bill of exchange number UI 1177/82 drawn by Leeds on Golden Town Apparel Limited in the United Kingdom for the same sum of US$156,000 dated 15th May 1982 on the basis of an Export Collection Order and with the same Bill of Lading No. 1013197 for the sale of goods to Golden Town Apparel Limited.

5. Count 11 alleged that on the l7th of May 1982 a Collection Letter was presented to the Hong Kong Bank and a bill of exchange number UI 1175/82 for the sum of US$95,000 dated 15th May 1982 drawn on the Golden Town Apparel Limited on the basis that there had been a contract of sale with the Bill of Lading No. 1013196 which was false.

6. Pausing at this stage it is apparent that whoever was responsible for making use of the bills of lading and bills of exchange twice over drawing on different companies should have known they were false. The documents relating to count 2 were those same documents relating to count 8 and count 5 to count 11 respectively.

7. The prosecution evidence in support of the indictment were that at all material times the applicant was the managing director of Leeds Textiles Limited. That the Leeds Textiles had an extensive export business with great potential. In particular, they were interested in the European market. In early 1982 they were going into the American market as well. This company has a sizeable number of staff and divided into various departments - the Shipping Department, the Garments Department, to name only two of them. The applicant being the managing director was in the overall charge, taking a supervisory role and made spot checks from time to time. Under him were two of his lieutenants, one Hall-Snipe and the other Helen Hui who had authority to sign all the shipping papers and contracts.

8. The Leeds Textiles Limited had been having banking facilities from both the Hong Kong Bank and LBI for some time. Its business with them could only be described as fairly considerable. The course of the business procedure was that whenever Leeds obtained a contract of sale of goods to be exported its Shipping Department would prepare what was called a shipping order in which was entered the name of the purchaser abroad, the goods to be sold and the name of the ship which carried the goods for export. They made extensive use of a forwarding agent by the name of W.T. Shipping Limited. The procedure was that once a shipping order was completed it would be handed over to W.T. Shipping. W.T. Shipping would then prepare documents called house bills of lading which were non-negotiable. Goods were then delivered to the warehouse of W.T. Shipping for which a cargo receipt would be given by the warehouse people. An officer of Leeds would then take the cargo receipt to W.T. Shipping in exchange for the bills of lading. Then the Leeds people would complete what was called a Collection Letter or Collection Order in a form provided by the appropriate bank, namely either the Hong Kong Bank or LBI in which was entered the details of the transaction together with a bill of exchange drawn on the buyer overseas, the drawee, and then together with the house bill of lading giving details of the transaction, handed it to the bank either for purchase or for collection. The bank concerned would then pay Leeds on a discount basis. Once the transaction had been completed the banks would have recourse to the drawee of the bill, in these counts either Bestex, Prosperity or Golden Town Apparel Limited, to recover payment. If the drawee should fail to pay, the bank would then have recourse to Leeds. Otherwise the Bank would retire the bill if it was unpaid and debit the account of Leeds with that bank.

9. The other evidence was that two bills of exchange were drawn on Golden Town Apparel and were purchased by the Hong Kong Bank for the respective sums of US$156,000 and US$95,000 for purchase. LBI purchased exactly the same two bills of exchange all over again on the 19th of May. In the event the two bills of exchange purchased by the Hong Kong Bank were accepted by Golden Town Apparel and later paid in full in England; whereas the two bills purchased by LBI were accepted by Bestex and Prosperity respectively but never honoured. The bills had to be retired and the sums of US$156,000 and US$95,000 had to be debited to Leeds' account with LBI.

10. It was also admitted that insofar as the transaction with the Golden Town Apparel Limited was concerned no goods had ever been shipped to England at all. In respect of the bills purchased by the LBI there was never even a genuine contract between these two companies.

11. Sometime in June 1982 there were some exchanges of telexes between the manager or the person in-charge of Golden Town Apparel Limited and the applicant showing that the goods had not been shipped to England at all.

12. The person sending the initial telex, that is the person in-charge of Golden Town Apparel Limited was Joseph Lee. He suggested that it would not be nice for the Hong Kong Bank to find out that no goods had been shipped and that the applicant should send money by telegraphic transfer to England in order to honour the two accepted bills of US$156,000 and US$95,000. Such was the gist of the prosecution evidence.

13. The defence adduced no evidence whatsoever despite of the lack of defence evidence a few salient features came into the picture. It was abundantly clear that the collection orders, the bills of lading which were attached to the collection order or collection letters handed to the Hong Kong Bank and LBI were signed by one Hall-Snipe who, as I have mentioned, was one of the right-hand men of the applicant in Leeds. Reference regarding the signing of those papers was made to one Helen Hui, another of the righthand persons of the applicant. Hall-Snipe was called. Helen Hui never gave evidence without any further explanation. The documents showed that Helen Hui was a senior officer of Leeds Textile Limited. Hall-Snipe was tendered by the prosecution as an honest and truthful witness.

14. There was no evidence whatsoever to show that the applicant had given instructions or had consented to or connived at the signing or the presentation of any of the relevant documents to either of the two banks concerned. In his opening counsel for the prosecution told the jury that there would be evidence to link the applicant with the presentation of such papers.

15. In relation to count 11 there was evidence in addition to the collection order and the bill of lading to show that there had been at least delivery of 324 rolls of materials to the godown of W.T. Shipping on account of a sale of 500 rolls of dyed denim. There was a chop on the house bill of lading issued by W.T. Shipping to show that while the goods had been received for shipment they had not yet been shipped on the designated ship by the name of "Oriental Chief".

16. There was evidence on paper that godown charges and freight had been paid. Such was the evidence relating to count 11. In addition a witness, by the name of CHUNG Kai-fai who work for W.T. Shipping, agreed that there were a variety of reasons for which shipment might well be postponed or even cancelled.

17. Joseph Lee, the author of the first telex from London to Hong Kong and of telexes to the applicant agreed that there was nothing sinister in hiding non-shipment from the Hong Kong Bank in that Leeds Textile Limited, the associated parent company, was in the course of expanding its trade to the American market and it would not look very nice from the point of view of Leeds Textile if Hong Kong Bank found out they had had to cancel two shipments to England. That would not enhance their position. If the Hong Kong Bank had found this out it might have affected the credit facilities to be granted to Leeds Textile for the purposes of expansion to the American market. In any event the two accepted bills presented to Hong Kong Bank for purchase, as I said, were eventually paid some time in July. It might seem cumbersome. But that was explained by the evidence of Joseph Lee.

18. As to the other two sets of papers presented to the LBI, papers relating to counts 2 and 5, there was evidence that it was Hall-Snipe who signed them with the name of Helen Hui put in for reference. There was never any evidence to show that the applicant either instigated, authorized, consented or connived at the presentation of such papers. One witness, Lau of Bestex, and another from Prosperity said in so many words that despite the papers in the collection order showing that their respective companies had transactions with Leeds Textile Limited, in fact there were no such transactions at all. But they accepted the respective bills of lading at the instigation of one Au Yeung, an accounts manager of LBI who was in-charge of the credit facilities and accounts of Leeds Textile Limited. For what purpose Au Yeung should induce Bestex or Prosperity to accept the bills where there was no transaction at all was never disclosed. Suffice it to say that they had nothing to do with the applicant as far as the acceptance was concerned. There was no evidence adduced to show why Hall-Snipe, being an honest and truthful person, should have signed two identical set of papers on the same day, namely the 15th of May, just to be presented to two different banks. It was apparent by the end of the prosecution case that the transactions with the Hong Kong Bank appear by the date to have preceded the transactions between Leeds and LBI.

19. Having regard to the circumstances the complaint was that the trial judge should never have left the case to the jury at all. He should have ruled that there was no case to answer even on these four counts, let alone the other 6 counts of which the applicant was acquitted. It must be borne in mind that when the Grown opened the case the jury were told that evidence would be adduced to link the applicant with the presentation of these papers to the two banks. This evidence was not forthcoming and the case would have fallen flat on its face had not counsel for the Crown prayed in aid section 20 of the Theft Ordinance which reads:

In this particular case, however, there was no evidence as to who had been authorized to sign the collection orders or to sign the bills of exchange. Certainly, as the judge told the jury, it was not the applicant. The person who signed the papers was Mr. Hall-Snipe, upon whom no suspicion was cast. He was presented to the jury as an honest person. There was no evidence, as the judge pointed out, to indicate that the applicant consented to or connived at the signing of these papers. There was indeed no attempt to identify any person in Leeds Textile as having committed any offence at all except that an accusing finger pointed at the applicant, because, it was alleged, he was the managing director.

20. It is unfortunate that counsel for the prosecution misunderstood the principle that was laid down in Andrews Weatherfoil Ltd.⁽¹⁾ and in Tesco Supermarket Ltd. v. Nattrass⁽²⁾. The principle, as we understand from these two cases, is that in order to attach liability to a limited company for the act of an officer of that company the officer who committed the offence must be a person who was in control of the company so that his criminal act could be identified as that of the company. What went wrong in the present case was that while there was nothing to link the applicant with any offence, there was not even evidence to show that Leeds Textile Limited had committed any offence because no officer of Leeds Textile had been accused of having committed any criminal act. To point an accusing finger at the applicant was really going round in a vicious circle. Yet, the judge, instead of withdrawing the case from the jury, left it to them though he repeatedly reminded them there was nothing to link the applicant with the criminal act of presenting those papers. He said at page 24:

"The Crown put forward an alternative contention that if not done on his instructions it was done with his consent and connivance, and we shall have to look generally at the question whether there is any evidence of that. "

Then he went on to elaborate the Crown's case along this line. At page 80 he said:

"The second question which it was suggested to you you would have to solve, was this. If you find, if you are satisfied beyond reasonable doubt that a crime was committed here, did the defendant commit it? And the Crown did put its case in two ways there. It said that either the defendant himself gave instructions which led to these things being done, or if he didn't do that, then he consented to it, or connived at its being done by somebody else in the firm. "

Unfortunately the evidence did not point to anybody else in the firm. Our comment is that there was no evidence to show that anybody else in the firm committed the offence. At page 81 he said as follows:

"So far as the suggestion is concerned as to the defendant having known that somebody else was doing this, not having given the instructions himself, and consented to, or connived at that being done, then, members of the jury, you will have to ask yourselves what evidence is there of this, because I have not been able to draw to your attention any evidence which shows that anybody else dishonestly brought into being these documents. Mr. Hall Snipe signed them, but he has been called as an honest prosecution witness, and Brela WONG and Jason LEUNG were involved in the production of these documents, but they've been put before you by the Crown as honest prosecution witnesses, so who is it who is supposed to have committed the crime which was condoned or connived at, or consented to by the defendant?"

Pausing here again we observe that the term condone was never included in section 20 of the offence creating section. The judge then continued:

"Here, members of the jury, I come to this matter, that you've heard about a person who held a very responsible position in the firm, Helen HUI, but she hasn't appeared in this court. We don't know why, and it's not for us to speculate on why, but she hasn't been called; and a number of other responsible managers in the firm have been mentioned, and you haven't heard from them either. What the evidence does show, however, is that there were a number of people in the firm who had authority to take steps which would have led to the creation of these forms, and not just the defendant. "

There again if that had been in the judge's mind the only cause for him to take at the end of the prosecution would have been to rule that the applicant had no case to answer. There was no explanation to the jury as to the fact that there was no evidence to suggest the company itself committed an offence. There was no direction to the jury that in order to convict the applicant they must be satisfied not only that the company had committed the offence, but that the applicant was virtually in complete charge of the company so that whatever the company did could be attributed to him at that time. In any event, the judge said in so many words there was no evidence to implicate the applicant whatsoever.

21. It was conceded very fairly by learned counsel for the Crown that section 20 of the Theft Act had no application whatsoever in this case. Without saying anything further, it is sufficient to mention that to leave the matter then to the hands of the jury could only serve to confuse them. Such, we believe, was the complaint of ground 6 in support of the appeal as advanced by the learned counsel for the applicant. We feel that there is substance in this ground.

22. Ground 7 in support of the applicant complained that the trial judge failed to put the complete defence case to the jury in respect of count 8 and count 11. Again, very fairly, counsel for the Crown conceded that the judge had not done so. As was said earlier at the end of the prosecution case, it was abundantly clear that the documents relating to count 8 and count 11 preceded the presentation of the papers in relation to count 2 and count 5 by date. For some peculiar reason the indictment put count 2 and count 5 before count 8 and count 11. In short, the various counts in the indictment were not put according to chronological order. This caused further confusion. We will deal with that at a later stage.

23. First of all, as was mentioned, there had been documents to prove that goods had been delivered for shipment in relation to count 11. Cargo receipt had been surrendered in exchange for the house bills of lading. Freight had been prepaid. Cargo storage had been paid in order to retrieve the goods at a later stage. There was indeed no shipment. The evidence of CHUNG Kai-fai of the W.T. Shipping Company was that there could be a variety of reasons for the postponement or cancellation of contracts or shipments. These matters were in evidence before the court. The judge having reiterated and adumbrated the prosecution case failed to put the defence which was disclosed in the prosecution evidence to the jury again. He failed to explain to them in the context of such defence that they could convict on an inference pointing to guilt rather than to innocence only if it was the only reasonable inference they could draw and that they would have to discount the reasons agreed by Mr. CHUNG Kai-fai, the witness, for the non-shipment of the goods.

24. We now come to the papers in relation to the LBI. By virtue of the dates these papers were in fact presented after the equivalent two sets of papers had been presented to the Hong Kong Bank. These were admittedly completely bogus and fictitious transactions. Despite the absence of any transaction, both the drawees accepted the bills. This strange incident was at the instigation of Mr. Au Yeung, the accounts manager of LBI. However, in his direction to the jury the trial judge first said at page 23 as follows:

"Members of the jury, let us now turn to consider Count 2 on the indictment, the first of the remaining counts. As you know, it charges furnishing false information, and it gives particulars in the count of the drawee of the Bill of Exchange with which the Bank was concerned, in this case it is Bestex Manufacturing Company. It also gives particulars of the Collection Letter, and of the Bill of Landing by number, and you can see those in the counts for yourselves. "

Page 27, he said:

"Now, turning to Count 5, the basis of the Crown's case in relation to Count 5, of course, is very similar to that in Count 2. This time the purchaser was shown to be Prosperity Knitting Factory, and, again, you will know that the Bill of Lading in that case was accepted, and you heard from Mr. FUNG Kai-dick that Mr. AU YEUNG, a manager of Lloyd's Bank, rang him and told Mr. FUNG that he wanted Mr. FUNG to accept some Bills which he had discussed with his Director in charge of financial matters, and Mr. FUNG agreed that the company would accept the Bills. When I say 'the company', Mr. FUNG had a company called Gloves Industrial Alliance Ltd., of which I understand Prosperity Knitting Company and Bestex were both associated companies. "

Then on page 28 he said:

"But, in any event, you may, as in Count 2, have no difficulty in deciding that this was an entirely fictitious transaction which was adverted to in the documents submitted to the Bank. So you then have to decide whether the information which was clearly false, you may think, was to be regarded as material from the Bank's point of view, and you will also have to ask yourself whether there's any evidence at all that the defendant had anything whatever to do with this transaction. I shall be dealing with that question, as to whether the defendant can have been shown to have had anything to do with any of these transactions, later, in a general way.

Now in relation to these transactions, the Crown has pointed out a remarkable similarity between the particulars of the papers in these two counts (in short, 2 and 5) and the particulars in the next two counts (in short, 8 and 11) with which you have to deal, and the Crown asks you to say that that remarkable similarity, and the fact that no goods were ever shipped in relation to any of those transactions will assist you in deciding not only whether the contracts referred in Counts 2 and 5 were wholly fictitious, but also whether the contracts referred to in Counts 8 and 11 were wholly fictitious. "

Not only was the judge not putting the defence case in relation to counts 8 and 11 he was telling the jury that they might consider the similarity of counts 2 and 5 together with counts 8 and 11; thereby further confused the jury. But what was more material was what was said in his direction at pages 63 and 65. At page 63 the judge said:

"Turning to count 8, the company concerned in relation to this count is Golden Town Apparel and the bill of lading is 1013197 as set out in the count, and you will remember that the Crown say that one of the pointers to dishonesty here is the extraordinary resemblance between the particulars in the documents relating to this matter and the particulars relating to one of the earlier counts, and I have no doubt you will bear in mind that suggestion when you are considering your verdict."

This was an open invitation to the jury to judge the applicant in respect of count 8 by reference to the matters and material in relation to count 2 and while it was abundantly clear that count 2 was a completely bogus transaction not linked to the applicant, there could be a reasonable explanation for the non-shipment as regards count 8. At page 65 he said again:

"In fact, members of the jury, there was evidence of a message coming to the bank, Exhibit 109, on the 7th of July indicating that the goods were short shipped which has been treated in this case as a phrase meaning that the goods had not been shipped at all and another message that the bill had been paid off by Golden Town Apparel Limited.

So, members of the jury, what the Crown is asking you to find is that this is a bogus transaction because the goods were never shipped and because the details of it so closely resembled the details of an earlier bogus transaction. "

Here again the judge could not have referred to anything else but counts 2 and 5. Finally in page 84 he said:

"The way to carry out the exercise, you may think, is to start off with the first count, and consider the general background evidence, consider the evidence in relation to the first count in particular, and then decide on the issues which I have outlined to you, and try to arrive at a verdict, and once you have done that you can move on to the second count, and carry out the same exercise. "

25. Having regard to his previous directions, despite his earlier warning in page 84 that the jury should consider the counts separately, this direction that they should start with the first count and, having considered it, should consider the rest of the counts in the light of their initial conclusions was absolutely fatal.

26. There is substance in the complaint in ground 7. Learned counsel did not argue strongly the subject matter of the complaint disclosed in ground 8. As to ground 9 the circumstantial evidence about the letter which obviously suggested that the letter asking for a term loan instead of extended credit facilities would be subject material for the jury to consider whether that provided motivation on the part of the applicant to commit the offence was obviously a wrong direction.

27. As to the telexes when one looked at the explanation as given by Joseph Lee who was presented by the Croon as an honest and truthful witness, there was nothing sinister to be found in those telexes by saying "Well, the bill should be matched at the London end rather than go direct to the headoffice in Hong Kong Bank branch and retire the bills. " In any event, the telexes were not necessarily consistent with guilt. Nothing sinister could be read into the text of those telexes.

28. Such being the case, we are of the opinion that the trial judge should at the end of the prosecution case have ruled that there was no case to answer in respect of all the counts; particularly these four counts of which the applicant was convicted. When there is a misdirection in this regard we are mindful of Badjan's case⁽³⁾ and that we cannot properly apply the proviso.

29. For these reasons we would grant application for leave to appeal against conviction and treat the application as the appeal proper. We allow the appeal, quash all the convictions and set aside all the sentences. The applicant is discharged.

30. Upon the conclusion of this appeal learned counsel for the applicant applied for costs under section 83XX of the Criminal Procedure Ordinance, Cap. 221. This section provides as follows:

(The provision in subsection 3 is not applicable, and then we go on to subsection 4)

31. Counsel contended that since we found that the learned trial judge should have ruled there was no case to answer in respect of these four counts at the end of the prosecution case the applicant is entitled to costs. Learned counsel for the Crown opposed it formally on the ground that the prosecution failed simply because the witnesses did not come up to proof; a frequent occurrence. Secondly, there was a practice direction that if by his own conduct the applicant brought the prosecution on himself he should not be granted costs. Counsel observed that when the applicant was interviewed by the ICAC people he did not advance any explanation as to any of the transactions that had been queried. Thirdly, that the thirty counts that were levelled against him were only selective charges.

32. We do not accept these as the correct reason for refusing costs because if the witnesses did not come up to proof the best thing for the prosecuting counsel to do was to offer no further evidence and not to persist with the prosecution. In this connection, in all fairness to Mr. Lugar-Mawson, he was not counsel prosecuting in the court below. Secondly, as far as the applicant not advancing any explanation to the ICAC is concerned it is a cardinal principle that no one is obliged to convict himself out of his own mouth or, in any event, to give any explanation. A suspect may remain silent during the investigation stage. Thirdly, we do not consider it relevant that the thirty counts were merely selective charges.

33. For these reasons we feel that the applicant should have costs in this court and the court below to be taxed if not agreed.

(1) (1972) 56 Crim. App. Rep. 31

(2) 1972 A.C. 153

(3) (1966) 50 Crim. App. R. 141

Representation:

Mr. William Denny & Mr. Eddie Soh (Oscar Lai & Ho) for appellant

Mr. Lugar-Mawson, Crown/respondent