Lau Hon-wang v. The Queen
Read the full judgment text of CACC 46/1978 on BabelCite. This Court of Appeal judgment.
1. The Appellant appeals against his convictions on five charges of obtaining property by deception. The nature of each transaction was the same and it will suffice for the purposes of this appeal to consider the facts of the fifth charge.
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CACC000046/1978
----------------- Coram: Briggs, C.J., Huggins & Pickering, JJ.A. Date of Judgment: 6th June, 1978. ----------------- JUDGMENT ----------------- Pickering, J.A.: 1. The Appellant appeals against his convictions on five charges of obtaining property by deception. The nature of each transaction was the same and it will suffice for the purposes of this appeal to consider the facts of the fifth charge. 2. The Appellant, in the name of his firm, Textilehouse International ("Textilehouse"), contracted to sell cotton denim cloth to Feld International Industries Ltd. ("Feld"), a company having its office in New York. Feld opened an irrevocable letter of credit with the Sterling National Bank and Trust Co. of New York ("Sterling") in favour of Textilehouse. That letter of credit entitled Textilehouse to credit upon production of specified documents. In due time the Appellant presented the specified documents in Hong Kong to the Wing On Bank Ltd. ("Wing On") together with the letter of credit and Wing On agreed to negotiate the letter of credit. Some minor discrepancies having been found and cleared up the amount was credited to Textilehouse and was shortly thereafter withdrawn by the Appellant, who then absconded from Hong Kong. One of the specified documents presented was a commercial invoice representing that Textilehouse had shipped "100% cotton ... denim" of the kind described in the letter of credit. To the knowledge of the Appellant that representation was false. 3. It is admitted that the Appellant intended to obtain from Wing On the sum which was in fact credited, but it is contended that there was no intention permanently to deprive the bank of the money. That argument is based on the premiss that Wing On, as a negotiating bank, had an indefeasible right to obtain payment from Sterling on production of the letter of credit with the specified documents. However s.7(1) of the Theft Ordinance provides:
Thus in our view the learned judge was right when he held that the conduct of the Appellant in withdrawing all the money and then absconding clearly indicated an intention to treat the money as his own regardless of Wing On's rights. 4. That leaves the difficult questions which form the principal subject matter of the appeal. Did Wing On credit the Appellant with the money as a result of the deception alleged and did the Appellant intend that they should do so? Again the kernel of the argument is that upon production of the specified documents the banks would normally make payment without enquiry as to the truth of the statements contained in the documents. We readily accept that in the circumstances of this case Wing On had no cause to make enquiry save that which was in fact made and were under no obligation to do so. Obviously the Appellant was aware that Wing On would not normally make enquiry because in the absence of knowledge that a fraud was being perpetrated they would not look beyond the documents themselves. Did he intend to deceive the bank and were they in fact deceived? In my view the answers to both questions must be "yes". 5. The Appellant's position, put in its simplest terms, was that by telling the truth he would not be paid whereas by telling a lie he obtained payment. That was clearly obtaining property by deception. There were in fact two deceptions and it is important to view them separately and not to let them merge. The deception in not supplying 100% cotton denim was deception of the purchaser: that in presenting false documents was deception of the banks. The latter deception was effected not by misleading the banks as to the true facts because the banks were not interested in the true facts: the deception lay in putting the banks in possession of documents containing false information complying literally with the terms of the letters of credit, in creating by deceit a situation in which the banks would automatically pay. It matters not that the banks were not concerned as to the truth of the statements made. That fact operates, as was evidenced by the civil cases cited by Mr. Litton, as a shield for the banks but it cannot be so employed by the Appellant. The banks' concern was that the documents supporting each of the Appellant's drafts should coincide in certain details with the requirements of the letters of credit and, in falsely creating that situation, the Appellant was guilty of deceit. That it was precisely that deceit which prompted the banks to pay is an unassailable inference. It was because the supporting documents complied literally with the requirements of the letters of credit that the banks paid: but in the very fact of that compliance lay the deceit. The detail of the deceit lay in the reference to "100% cotton denim" which is the deception alleged in the charge and it follows that the charge was properly drawn and the Appellant properly convicted. The judge said that the banks had been misled "into thinking that there had been compliance with the terms of the letter of credit". Where in fact they were misled was into making payment on the basis of false documents. 6. I would dismiss the application and I am asked by the learned Chief Justice to say that he concurs in the views expressed in this judgment. Representation: H. Litton, Q.C. & A. Huggins (T.Y. Lee & Co.) for Appellant. M.T.C. Boase for Crown/Respondent.
----------------- Coram: Briggs, C.J., Huggins and Pickering, JJ.A. Date of Judgment: ----------------- JUDGMENT ----------------- Huggins, J.A.: 7. There is no doubt that the Appellant was guilty of obtaining property by deceptions and, as the case is of importance in a business community and as the real point in issue is a nice one, I will indicate in a few words why I think he should have been acquitted. 8. I make no apology for starting at the beginning:
In obtaining by deception there are, therefore, four elements involved: (1) a representation; (2) an intention to make the victim believe that the representation is true; (3) success in making the victim believe the representation is true; and (4) the handing over of property in reliance upon the truth of the representation. 9. The representations alleged by the charges to be false were that the Appellant had shipped "100% cotton denim". He made those representations and clearly they were false. The persons alleged to have been deceived were the banks. Did he intend to deceive the banks into believing the truth of the representations? In the ordinary way the banks would not be concerned with the truth of the representations: they would be concerned merely to ensure that there was literal compliance with the terms of the letters of credit. We cannot assume that the Appellant was not aware of this and it may be, therefore, that he did not intend to deceive the banks into believing the truth of the representations. Nevertheless if the banks were to have reason to suspect fraud they might concern themselves with the truth of the representations. The Appellant may have known that also, in which case he would no doubt intend that the banks should believe the representations. He would not know whether the banks would have reason to suspect the frauds he was committing and it is reasonable to assume that he intended, if it were necessary, to persuade the banks that 100% cotton denim had been shipped. The first two elements of the offences were thus established. 10. Did he succeed in making the banks believe that the representations alleged were true? The evidence is that the banks, having no reason to suspect fraud, did not in fact consider whether the representations were true or false: they merely compared the documents with the letters of credit. It follows that the banks were not deceived into believing that the representations were true, though I would accept that they assumed that the representations were not untrue. On the findings of the learned judge the banks were not deceived by the false written representations but the existence of those representations laid the foundation for subsequent deceptions. 11. On the evidence the reason why the banks made payment was not that they believed the false written representations alleged in the charges but that they believed implied representations by the Appellant that the invoices he was tendering were honest, and not fraudulent, documents. Those implied representations were false, but the banks believed them to be true. Therein laid the successful deceptions, but they were not the deceptions laid in the charges. I respectfully part company with the other members of the court where they say: "That it was precisely [the] deceit [alleged in the charges] which prompted the banks to pay is an unassailable inference". That view was probably what led the learned District Judge to say that the representation alleged in each charge misled the bank's officers "into thinking that there had been compliance with the terms of the letter of credit". It is true that the banks were "misled" in the sense that they did something they would not have done if (a) the invoices had told the truth and (b) they had known the extent of the untruths appearing in the invoices. On the other hand the officers were not misled into thinking that there had been compliance, for there had been literal compliance. In my judgment the fallacy underlying the convictions was that of post hoc ergo propter hoc. The "things" which, in the words of Buckley, J., the banks were induced to believe were true and which the Appellant knew and believed to be false - the things, therefore, which prompted the banks to pay - were not the representations that the cloth shipped was "100% cotton denim" but the representations that the invoices in which those representations were made were honest documents. 6th June 1978. Representation: |