HKSAR v. Goh Swee Yan Angelina
Read the full judgment text of CACC 491/1999 on BabelCite. This Court of Appeal judgment was delivered on 21 June 2000.
1. Amy Ng and Angelina Goh were close friends. For a while they lived with each other and shared the same bed, though Amy says that they never became lovers. Eventually, they fell out, and Amy went to the police complaining that Angelina had taken money from her. The result was that Angelina was charged with various offences. She was tried in the District Court by Deputy Judge Duggan. She was convicted on two of the three charges she faced, having pleaded not guilty. She was sentenced to 2 years
Cited by 7 cases · Cites 1 case
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CACC000491/1999 CACC 491/1999 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CRIMINAL APPEAL NO. 491 OF 1999 (ON APPEAL FROM DCCC NO. 457 OF 1999) ______________
______________ Coram: Mayo V-P, Wong JA and Keith JA Dates of Hearing: 18 and 22 May 2000 Date of Judgment: 21 June 2000 _______________ J U D G M E N T _______________ Keith JA (giving the first judgment at the invitation of Mayo V-P): Introduction 1. Amy Ng and Angelina Goh were close friends. For a while they lived with each other and shared the same bed, though Amy says that they never became lovers. Eventually, they fell out, and Amy went to the police complaining that Angelina had taken money from her. The result was that Angelina was charged with various offences. She was tried in the District Court by Deputy Judge Duggan. She was convicted on two of the three charges she faced, having pleaded not guilty. She was sentenced to 2 years' imprisonment on each charge to be served concurrently with each other. She now applies for leave to appeal against her convictions. Since her application raises questions which require mature and careful consideration, I would give her leave to appeal. 2. The relationship between Amy and Angelina was such that the trial in the District Court was widely reported and achieved a considerable degree of notoriety. That relationship is at the heart of one of the issues in the appeal, and I refer to it for that reason only. I take the liberty of referring to the principal protagonists as Amy and Angelina as that, no doubt, was how they referred to each other during the time when the events which gave rise to these charges occurred. The charges 3. The three charges which Angelina faced related to offences under the Theft Ordinance (Cap. 210). All references in this judgment to sections of an Ordinance are references to the Theft Ordinance, save where otherwise stated. In the first charge, Angelina was charged with procuring the making of an entry in a record of a bank by deception contrary to section 18D. In the second charge, she was charged with theft contrary to section 9. In the third charge, she was charged with evading a liability by deception contrary to section 18B. The third charge was the charge on which she was acquitted. The facts relating to the first charge 4. The judge's Reasons for Verdict are a little discursive, but the facts relating to the first charge which the judge must be taken to have found proved were as follows. The business of which Amy was the proprietor had an account at the Hang Seng Bank ("the Bank"). On 14 January 1997, Angelina telephoned Wong Po Sum, the manager of the branch at which the account was held. They knew each other because Angelina had worked in the Bank's legal department in the past. Angelina told him that Amy had gone to China on business, and that Amy had asked her (Angelina) to call him and request that a sum of $1.07m. be transferred to a particular account. She gave Mr Wong the number of the account to which the money should be transferred and the name of the account-holder. Angelina added that Amy would lose the business deal if the money was not transferred. Believing what he had been told, Mr Wong gave instructions for the money to be transferred. 5. In fact, Amy had not told Angelina to do anything of the kind. When Amy discovered what Angelina had done and talked to Angelina about it, Angelina told her that she had used the money to repay gambling debts which she had incurred in Macau. Angelina requested her to treat the transfer of the money as a loan, and she promised to repay it to Amy. Amy decided to treat the transfer of the money as a loan, and on the following day she signed the necessary documents retrospectively authorising the transfer. The grounds of appeal relating to the first charge 6. The particulars of the offence in the first charge, insofar as are relevant to the grounds of appeal, alleged that Angelina had
I shall come later to the subsidiary ground of appeal - which was whether the prosecution had proved by admissible evidence that an entry in the Bank's records had indeed been made. But upon the assumption that an entry had been made, it was not disputed by Mr Gerard McCoy SC for Angelina (who did not appear for Angelina at the trial) that the judge had been entitled to find
The principal ground of appeal is that the judge did not properly consider whether, in procuring the making of such an entry by deception, Angelina had acted dishonestly. The only reference to the element of dishonesty which the judge made in that part of his Reasons for Verdict relating to the first charge was that he had reminded himself of "the dual test enunciated" in R. v. Ghosh [1982] 1 QB 1053. 7. The principal ground of appeal. The argument on this ground of appeal went like this. The principal issue of fact which the judge had had to decide on the first charge was whether Amy had requested Angelina to instruct the Bank to transfer the funds, i.e. had Angelina been expressly authorised by Amy to ask for the transfer of the funds? By having to focus on this factual issue, the judge's attention was understandably diverted from another question which Mr McCoy says he had had to address. That was whether, even if Amy had not asked her (Angelina) to request the transfer, Angelina nevertheless thought that Amy would have consented to her (Angelina) using Amy's money to settle a pressing gambling debt. If the judge had concluded that Angelina may have thought that, he may have concluded that in requesting the transfer of the funds Angelina had not been acting dishonestly. The criticism of the judge is that he did not address the question of dishonesty from that angle. 8. The difficulty with this argument is that there was no direct evidence that Angelina had thought that Amy would have consented to her using Amy's money to settle a pressing gambling debt. Angelina elected not to give evidence, as was her right, but as a result of not giving evidence, there was no evidence from her to the effect that she had thought that Amy would not have objected to what she had done. Even when she was interviewed by the police, she had not said anything on those lines. What she had been saying then was that Amy had expressly authorised her to request the transfer of the money - an assertion which, in the light of Amy's evidence, the judge rejected. 9. Although there was no direct evidence that Angelina had thought that Amy would have consented to her using Amy's money to settle a pressing gambling debt, there was a considerable body of circumstantial evidence from which it might have been open to the judge to infer that Angelina had thought that. It is here that the relationship between Amy and Angelina is important. Their relationship had obviously been a very close one. For example, apart from living with each other, Amy's evidence had been that a property in Canada had been placed in their joint names, and that Amy had made Angelina a director of one of her companies. In particular, Amy accepted that she had accompanied Angelina to Macau on five or six occasions when Angelina had gone there to gamble, and after one of those occasions when Angelina had lost, Amy had requested Mr Wong to make a transfer which was identical to the transfer to which the first charge related - a transfer of $1.07m. to the same account. Indeed, Amy had also transferred money to that account before going to Macau so that there would be gambling chips available for Angelina when they arrived. It would not have been surprising in those circumstances, submitted Mr McCoy, for Angelina to have thought that she could take liberties with Amy's money: after all, although annoyed by what Angelina had done, Amy had agreed on the occasion to which the first charge relates to treat the money which had been transferred as a loan to Angelina and had signed the necessary documents authorising the transfer. 10. Although parts of this evidence were referred to by the judge in his Reasons for Verdict, he considered this evidence only in the context of the disputed factual issue which the first charge raised, namely whether Amy had expressly authorised Angelina to arrange for the transfer of the funds. The judge did not consider this evidence in relation to the question whether, even if Angelina had not been expressly authorised to arrange for the transfer of the funds, she nevertheless had thought that Amy would not have minded. I can see some theoretical force in the suggestion that the judge should have addressed that question. After all, a judge trying a case with a jury is obliged to leave for the jury's consideration all possible defences which are realistically raised by the evidence, even if a particular line of defence is not being relied upon. Similarly, a judge sitting alone should consider all possible defences which are realistically raised by the evidence, even if no reliance is being placed on a particular line of defence. On the other hand, I have considerable sympathy for the judge. It was not suggested to us by Mr McCoy that the judge had been asked by Angelina's counsel at trial even to consider the possibility that Angelina had thought that Amy would not have minded about the transfer of the funds, and it is entirely understandable for the point not to have occurred to the judge in these circumstances. 11. Having said all that, though, I am convinced that the whole question of whether Angelina thought that Amy would not mind about the transfer of the funds is a complete red herring. We go back to where the argument began, which was the question of dishonesty. The fact of the matter is that, on the judge's findings of fact, Angelina untruthfully told Mr Wong that Amy had expressly authorised her to request the transfer of the funds. The question which the judge had to address was whether that was dishonest. After all, on the assumption that an entry had been made in the Bank's records, that entry had plainly been procured by Angelina's deception in lying to Mr Wong that the request for the transfer had been expressly authorised by Amy. In other words, even if Angelina had thought that Amy would not have minded about the transfer of the funds, she nevertheless deceived Mr Wong into thinking that Amy had expressly authorised the transfer. That must have been the dishonesty which the judge was addressing. 12. It is just possible that there may be occasions when deception does not amount to dishonesty (which was what Mr McCoy was forced to argue when this argument was put to him). But it is quite impossible to say that, applying the dual test in Ghosh, it was not open to the judge in the circumstances to conclude that Angelina's procuring of the transfer of the funds by the deception which she practised was dishonest. If she was not being dishonest, why did she resort to the lie? Even if she had thought that Amy would not have minded about the transfer of the funds, the judge would have been bound to conclude that she had resorted to the lie because she would have thought that without making Mr Wong believe that she had Amy's express authority, there would have been little chance of Mr Wong acceding to her request. For these reasons, I would reject the principal ground of appeal on the first charge. 13. The subsidiary ground of appeal. The particulars of the first charge set out the entry in the Bank's records the making of which Angelina was alleged to have procured. That entry was
The subsidiary ground of appeal is that the prosecution had not proved by admissible evidence that this entry in the Bank's records had indeed been made. 14. At the trial, the prosecution had sought to prove the making of this entry by the reception in evidence, pursuant to section 20(4) of the Evidence Ordinance (Cap. 8), of an affirmation by an officer of the Bank. That affirmation exhibited two documents which were relevant for present purposes:
The admissibility of these documents was not disputed by Angelina's counsel at trial. If they were admissible, the making of the relevant entry in the Bank's records would have been sufficiently proved. 15. But were the documents admissible? Having heard Mr McCoy's arguments, Mr John Reading SC for the prosecution (who likewise did not appear below) accepted that they were not. In my judgment, Mr Reading was correct to make that concession. Exhibit 1-03 was not admissible for the following reasons:
Exhibit 1-04 was not admissible for the following reasons:
16. Mr Reading's concession was made on the first day of the hearing of this appeal. Between then and the day on which the hearing of the appeal was concluded, Mr Reading found another document on which he contended he could rely. That document was exhibited to a second affirmation from the same officer of the Bank, which had also been adduced in evidence pursuant to section 20(4) of the Evidence Ordinance. It was a copy of an account withdrawal form which contained
Again, the admissibility of this document was not disputed by Angelina's counsel at trial. Mr McCoy contended that it had been inadmissible, but on this occasion Mr Reading contended otherwise. 17. In my opinion, it is unnecessary to decide whether this exhibit was admissible, because even if it was it could not have proved the making of the relevant deposit entry in Chan Hon Fai's account. The most it could have proved was that a withdrawal entry had been made on the account of Amy's company with the Bank, and that the funds which were withdrawn were to be transferred to Chan Hon Fai's account. It could not prove that the funds had already been transferred or that the transfer had resulted in a deposit entry being recorded on Chan Hon Fai's account. 18. If these documents were not admissible to prove that the deposit entry had been made, was there other evidence from which that deposit entry could have been inferred? I accept unreservedly that there was evidence that
I also note that Mr Wong's evidence - admittedly in response to a leading question from counsel for the prosecution (to which no objection was taken) - was that he had "caused" the $1.07m. to be transferred to Chan Hon Fai's account. But I must assume that Mr Wong's evidence was hearsay, because I do not suppose that he actually effected the transfer himself. By agreeing with the question that he had "caused" the money to be transferred, I must assume, in Angelina's favour, that all that he had meant by that was that he had given instructions to a cashier to effect that transfer. 19. The question then is whether it can be inferred - from the primary facts that (a) the Bank had received instructions to transfer the funds to Chan Hon Fai's account, (b) Mr Wong had given instructions for the funds to be transferred, and (c) that everyone assumed at the time that the funds had been transferred - that the deposit entry had been made. I do not think that these facts are capable of giving rise to such an irresistible inference. We all know from our own experience of occasions when instructions to banks are not put into effect. That may not happen very often but it does happen. I do not suppose for one moment that that happened in this case, because there are contemporary documents which show that the transfer was effected and that a deposit entry had been made. The trouble is that, for the reasons I have given, those contemporary documents were not admissible. Moreover, in the present case, it was necessary for the prosecution to prove, not merely the transfer of the funds, but that a deposit entry recording that transfer had been made. That is the feature of the offence created by section 18D. Although one would not expect the Bank to make a transfer of funds to an account without raising documents recording the deposit of those funds into that account, it does not necessarily follow that what is intended to happen happens in every case. Difficult though it may be to put to one side the contemporary documents, once they are put to one side (as they must be since they were inadmissible) it is simply not possible to say that the making of the deposit entry had been proved. 20. I do not have any qualms about reaching this conclusion. The law recognises that the number of transactions which a bank daily carries out, and the use of computers to record them, makes it quite impossible for first-hand evidence to be given about them. That is why section 20 of the Evidence Ordinance created a simple regime for the admission of evidence relating to such transactions which does not depend on either the recollection or the evidence of the employee of the bank who carried them out. But in order to minimise the risk of error, safeguards were built into that regime. They are not onerous, and compliance with them is not difficult. If they are not complied with, and defendants who might otherwise have been convicted of criminal offences slip through the net, the persons responsible for not ensuring that the safeguards were complied with have only themselves to blame. 21. For these reasons, I have reached the conclusion that the prosecution had failed to prove by admissible evidence one of the ingredients of the first charge, i.e. the making of the deposit entry, by admissible evidence. However, instead of quashing Angelina's conviction on the first charge, Mr Reading asked us to apply the proviso to section 83(1) of the Criminal Procedure Ordinance (Cap. 221) and to dismiss the appeal because no miscarriage of justice had actually occurred. We cannot do that in the present case. It can never be appropriate to apply the proviso if the admissible evidence relied on by the prosecution was not capable of proving one of the ingredients of the offence. Otherwise, a conviction would be upheld when proof of an essential element of the offence had not been established. When that was put to Mr Reading, he explained that what he had meant was that even if the admission of inadmissible evidence had resulted in a material irregularity in the trial, the proviso should be applied because that material irregularity had not resulted in any injustice to Angelina. However, that could only be right if there had been other evidence from which the deposit entry could have been inferred. Since there was none, the question of the application of the proviso cannot arise. 22. But that is not quite the end of the matter. In the course of argument, it occurred to us that even if the prosecution had failed to prove the making of the deposit entry by admissible evidence, it was certainly possible that Angelina had been guilty of attempting to commit the offence created by section 18D. We invited submissions on the topic in the light of the recent codification of the law of attempts in section 159G of the Crimes Ordinance (Cap. 200). So far as is relevant, section 159G provides:
23. Two points were taken by Mr McCoy. First, he submitted that on the facts found by the judge Angelina had not done anything more than merely preparatory to the offence. I disagree. There was nothing more that she could have done to procure the making of the entry. Secondly, he contended that the offence of procuring an entry in a bank record by deception was not one to which section 159G applied by reason of the exclusion from section 159G of offences of procuring the commission of an offence by section 159G(5). Again, I disagree. That point was considered, in relation to an identical provision in section 1(4)(b) of the English Criminal Attempts Act 1981, in Chief Constable of Hampshire v. Mace (1987) 84 Cr. App. R. 40. The substantive offence in that case had been the procuring of an act of gross indecency, and the question was whether an attempt to commit that offence was precluded by section 1(4)(b). Taylor J (as he then was) said at p. 43:
That logic is unimpeachable and it applies with equal force to the present case. 24. For these reasons, I am satisfied that on the judge's findings of fact the prosecution had proved an attempt on the part of Angelina dishonestly to procure the making of a deposit entry in Chan Hon Fai's account by deception. It is therefore open to us, pursuant to sections 83A(1) and 83A(2) of the Criminal Procedure Ordinance, when read with section 83 of the District Court Ordinance (Cap. 336), to substitute for the verdict of guilty on the first charge a verdict of guilty of the offence of attempting to procure the making of an entry in the record of a bank by deception. That would be permissible, even if Angelina had in fact been guilty of the completed offence: although only applicable to trials at first instance rather than appeals, section 51(3) of the Criminal Procedure Ordinance shows that the policy of the law is to permit a conviction for an attempt to commit an offence even if the defendant is shown to have been guilty of the completed offence. 25. But the critical question is: should we exercise this power? It is noteworthy that Mr Reading did not initially press us to do so. He was content to draw section 51(3) of the Criminal Procedure Ordinance to our attention, and merely to contend that it was arguable that we had the power to take the course which we had been considering. He made no submission whatsoever as to whether we should exercise that power. It was only when that omission was pointed out to him that he submitted that we should do so. 26. In my judgment, it would be proper, even desirable, for us to exercise that power. Had the objection to the admissibility of exhibits 1-03 and 1-04 been made at the trial, the problem could have been cured by the production of a further affirmation or by calling the employee of the Bank who actually effected the transfer. I appreciate that the prosecution should not have sought to place inadmissible evidence before the judge, but Angelina should not be in a better position than she would have been if the admissibility of the exhibits had been objected to by her counsel at trial. Counsel for the defence is as obliged as counsel for the prosecution to ensure that inadmissible evidence is not placed before the court. Not substituting a conviction for an attempt to procure the making of the entry would have resulted in Angelina being the beneficiary of an unjustified windfall. The facts relating to the second charge 27. It is not easy to discern the primary facts which the judge found proved on the second charge. That is because the judge referred in his Reasons for Verdict to the evidence of the witnesses without making express findings that he accepted their evidence. However, it is possible to reconstruct the primary facts which the judge must be taken to have found proved from the evidence which was for the most part unchallenged. 28. Angelina was a director of Styland Holdings Ltd. ("Styland") by whom she was also employed on a part-time basis. She suggested to Kenneth Cheung, who was another director of Styland and its major shareholder, that she lend Mr Cheung $3m. to enable Styland to negotiate a business deal which would in due course generate profits in which Angelina could share. She suggested that the loan should be repaid in three months' time, and that the charge for that loan should be $300,000.00. Mr Cheung agreed, and Angelina drew a cheque dated 4 December 1996 for $3m. on her account in favour of Mr Cheung. In return, Mr Cheung drew two cheques - one for $3m. and one for $300,000.00 - on his account in favour of Angelina. These two cheques were post-dated to 4 March 1997. 29. However, Angelina was not financing the loan herself. She got Amy to put up the $3m., and Amy agreed to finance Angelina's loan to Mr Cheung for three months, with interest at $300,000.00 repayable at the end of the term. Accordingly, on 4 December 1996, Amy transferred $3m. to Angelina's account, and Angelina drew two cheques - one for $3m. and one for $300,000.00 - on her account in favour of Amy. These two cheques were also post-dated to 4 March 1997. Mr Cheung did not know that Amy was financing the loan. 30. When Angelina's loan to Mr Cheung was about to mature, and Amy was about to present Angelina's two cheques for $3.3m. for payment, Angelina told her that Mr Cheung wanted the loan to be extended for a further three months. Amy was prepared to do that on two conditions. First, the interest for the period during which the loan was to be extended had to be $396,000.00. Secondly, post-dated cheques had to be provided by Mr Cheung, not by Angelina, for the $3m., the $300,000.00 and the $396,000.00. Angelina presumably told Amy that Mr Cheung was agreeable to those terms, because she provided Amy with three cheques for those amounts post-dated to 4 June 1997. They were drawn on the account of a company incorporated in the British Virgin Islands "owned" by Angelina and bore signatures which were illegible save for the first two letters of each name, which were the initials of Mr Cheung. Indeed, Angelina told Amy that they had been issued by Mr Cheung. Amy returned to Angelina the two earlier cheques which Angelina had drawn on her account. 31. In fact, Mr Cheung knew nothing of what Angelina had told Amy purportedly on his behalf. He had had nothing to do with the three cheques drawn on the British Virgin Islands' company's account. Indeed, he had not wanted to extend the loan. His two cheques had been presented for payment in March, and the proceeds of the cheques had gone into Angelina's account. Mr Cheung had assumed that that was the end of the matter. On 10 March 1997, six days after the proceeds of Mr Cheung's cheques had been paid into Angelina's account, Angelina withdrew sums totalling $2.7m. which she used for her own purposes. That $2.7m. had come from the proceeds of Mr Cheung's cheques, because immediately before her account had been credited with the proceeds, the credit balance in her account had only been about $3,000.00. 32. In commercial terms, therefore, what Angelina had done was to trick Amy into not expecting the return of her money for another three months, and to have access to this $3.3m. in the meantime. To say that Angelina had "stolen" the $3.3m. is, at first blush, a little artificial. My instincts tell me that if Angelina was guilty of a criminal offence, a more appropriate offence would have been one of evading a liability by deception. But since she was convicted of stealing the $3.3m., it is necessary to examine with care whether the ingredients of such a charge had been proved. The judge does not appear to have considered some of the ingredients, in particular whether what Angelina had stolen was indeed $3.3m. in cash, whether that cash belonged to Amy, and whether Angelina had intended permanently to deprive Amy of it. He appears simply to have assumed that on the primary facts which he must be taken to have found proved the property which Angelina took consisted of $3.3m. which belonged to Amy, and that Angelina had intended to deprive Amy of that money permanently. The concerns of the prosecution relating to the second charge 33. The particulars of the charge of theft which Angelina faced in the second charge alleged
While not conceding that Angelina could not have been convicted on a charge framed in that way, Mr Reading saw two possible problems with the charge. I say at once that one of the problems which concerned him - namely the possibility that the charge was duplicitous because it related to the proceeds of the two separate cheques which Mr Cheung had drawn in favour of Angelina in December 1996 - does not concern me in the slightest. If a defendant steals two sums of money on the same occasion in exactly the same circumstances, a charge is not duplicitous if it includes in the one charge the aggregate of those two sums. I note that Mr McCoy did not seek to assert that the charge was duplicitous. 34. Mr Reading's other concern about the charge is that, on a true analysis of the facts, what Angelina had stolen was not so much $3.3m. in cash, but the choses in action which the two cheques drawn by Mr Cheung in December 1996 represented. Although Mr Reading did not develop the argument, it presumably went like this. If Angelina had stolen anything, what she had stolen were the proceeds of the two cheques which Mr Cheung had drawn. The cheques were drawn in Angelina's favour, because Mr Cheung had thought that she was financing the loan herself. Whatever she intended to do with the money which the cheques represented, the cheques first had to be paid into her account. Once they had been paid into her account, the cheques were converted into an increased credit balance in her account. That increased credit balance represented a debt which the bank owed to Angelina, which it had undertaken to repay on demand. That debt was a chose in action, which is the legal expression used to describe all personal rights which can only be claimed or enforced by action. 35. In my view, this analysis is correct. If Angelina had been guilty of theft, what she had stolen was not $3.3m. in cash, but the chose in action consisting of the increased credit balance in her bank account which amounted to a debt which Angelina's bank owed to her, the bank's obligation being to repay to her the sum of money which the increased credit balance represented on demand. In those circumstances, Mr Reading requested the court to substitute, for Angelina's conviction on the second charge of stealing $3.3m. in cash, a conviction for stealing the proceeds of the two cheques which constituted the theft of choses in action. A chose in action can, of course, constitute property which can be stolen, because section 5(1) defines "property" as including "things in action". 36. However, this substitution does not meet Mr McCoy's submissions on the second charge, which were that, even if Angelina had been charged with stealing a chose in action, two of the ingredients of such a theft had not been established - namely, that what Angelina had stolen belonged to another, and that when Angelina had appropriated the proceeds of the cheques she had done so with the intention of permanently depriving that other of it. That those ingredients are ingredients of the offence of theft is apparent from section 2(1) which provides:
It is to these ingredients of the offence of theft that I now turn. "Belonging to another" 37. In commercial terms, the person who had been denied the use of the $3.3m. was Amy. That is because it was to Amy that Angelina should have repaid the $3m. lent by Amy to her together with the agreed interest of $300,000.00 on it. Understandably, therefore, the property which Angelina was alleged to have stolen, both in the charge in its original form as well as in its proposed substituted form, is alleged to have belonged to Amy. 38. The problem here is that, once the property which Angelina is alleged to have stolen is characterised as a chose in action, the decision of the House of Lords in R. v. Preddy [1996] AC 815 prevents that chose in action from being capable of belonging to another. The Preddy case was described by Maurice Kay J in R. v. Klineberg [1999] 1 Cr. App. R. 427 at p. 430E as a "bombshell which landed on the unsuspecting world of criminal practitioners". Although criticised for its artificiality, it cannot be denied that Preddy has a compelling logic. 39. In Preddy, the House of Lords was concerned with advances which had been made to the defendants by various lending institutions. The defendants were alleged to have obtained (or attempted to obtain) those advances by deception. Those advances had been made by electronic transfers between the lending institutions' and the defendants' (or their solicitors') bank accounts, those transfers involving a debit entry in the payer's bank account and a responding credit entry in the payee's bank account. At p. 834B-E, Lord Goff of Chieveley said:
40. In the present case, of course, payment was made to Angelina, not by electronic transfer, but by cheque. Although the particular cases which the House of Lords was dealing with in Preddy did not involve payment by cheque, Lord Goff addressed the legal position in relation to cheques. At p. 836G, he said:
Applying this principle to the present case, when Angelina paid the two cheques drawn on Mr Cheung's account into her bank account, a new chose in action came into existence. That chose in action was the increased credit balance in Angelina's account which amounted to a debt which Angelina's bank owed to Angelina and which it had undertaken to repay on demand. That chose in action belonged to Angelina, and there could therefore have been no question of her "stealing" that chose in action, because it did not belong in law to anyone other than her. The chose in action which, in the substituted charge proposed by Mr Reading, Angelina is alleged to have stolen could not in law have amounted to property belonging to another. 41. Preddy, of course, was a case in which the defendants were charged with obtaining property by deception. An ingredient of that offence is that the property which the defendant obtained by deception has to have belonged to another. It follows that the reasoning in Preddy should apply to a case in which the defendant is charged with stealing a chose in action, provided, of course, that the chose of action is of a kind which could not have belonged to another. This is in line with what Lord Bingham of Cornhill CJ said in R. v. Graham [1997] 1 Cr. App. R. 302 at p. 313F:
42. Mr Reading's response to this analysis was to rely on a provision which, in the situations to which it applies, regards property as belonging to someone other than the defendant, even though, on a strict analysis of banking and property law, it might not. That is section 6(3), which provides:
Section 6(3) is, in effect, a deeming provision. Two conditions have to be satisfied before property or its proceeds can be regarded as belonging to someone other than the defendant under it. First, the defendant must have "receive[d] property from or on account of another" (the first condition). Secondly, the defendant must have been "under an obligation to the other to retain and deal with that property or its proceeds in a particular way" (the second condition). 43. At first blush, section 6(3) appears entirely apposite to the present case. It is in identical terms to section 5(3) of the English Theft Act 1968, and as Prof. Sir John Smith said in "The Law of Theft", 8th ed., para. 2-73:
In this case, a non-lawyer might well think that Angelina received the $3.3m. from Mr Cheung for onward transmission to Amy. Mr Reading did not spell out precisely how section 6(3) applies to the facts of the present case, but his contention presumably was that the proceeds of the cheques should be regarded as belonging to Amy because
44. Mr Reading relied on Klineberg (and the local case of HKSAR v. Li Ting Kit (CACC 402/99)) in support of his contention that section 6(3) overcame the problem created by Preddy. In Klineberg, intended purchasers of properties in a timeshare development paid sums of money to the company which was buying the development from the developers. Instead of passing that money on to a trust company or a firm of solicitors who would hold the money as stakeholders, as the intending purchasers had been promised, the directors of the company and the manager of its London office did not cause the money to be so transmitted. In concluding that the English equivalent of section 6(3) overcame the problem posed by Preddy, the court concluded that a legal obligation within the meaning of the second condition of section 6(3) arose when persons were induced to contract or did contract (whether by implied terms or otherwise) on the basis that their money would be safeguarded by trusteeship or otherwise. In my judgment, that line of reasoning is unimpeachable as far as it goes. But it only addresses the second of the two conditions which triggers the deeming of property or its proceeds as belonging to another. It does not address at all the first of the two conditions. That feature of the Klineberg case was not brought to the attention of the court in Li Ting Kit. This does not mean, of course, that Klineberg and Li Ting Kit were wrongly decided. It may be that, even if the first of the two conditions had been addressed, the outcome of the appeals would have been the same. 45. I therefore turn to whether the first of the conditions has been satisfied in the present case. I have to say that I do not see how, in the light of Preddy, Angelina could have "received" the proceeds of the two cheques drawn on Mr Cheung's account. The proceeds of the cheques consisted of the increased credit balance in Angelina's bank account. Preddy tells us that the increased credit balance was a new form of property which had not belonged to anyone. Since it had not belonged to anyone, it could not have been "received" at all, whether from Mr Cheung or on account of Amy. Support for this line of thinking comes from a commentary by Prof. Sir John Smith on Klineberg in [1999] Crim. L. R. 418. 46. If Angelina could not have "received" the proceeds of the cheques, was there any other property which on the facts she could be said to have received? The answer is that there was: the two cheques themselves. Were those cheques (as opposed to their proceeds) received "from or on account of another"? I do not see how the cheques (as opposed to their proceeds) could be said to have been received on account of Amy. Those cheques were made payable to Angelina - because Mr Cheung had not known that Amy was financing the loan. He therefore knew nothing of the intended onward transmission to Amy of the money which the cheques represented. The proceeds of the cheques, i.e. the increased credit balance in Angelina's account, may have been held by Angelina on account of Amy, but the cheques themselves could not have been. 47. Thus, the only way in which the first condition in section 6(3) could be said to have been satisfied in the present case is in relation to Angelina's receipt of the cheques (as opposed to the proceeds) from Mr Cheung. However, that cannot assist the prosecution because the person from whom the defendant has to have received the property has to have been the same person to whom an obligation was owed to retain and deal with the property in a particular way. Angelina was not under an obligation to Mr Cheung to retain and deal with the proceeds of the cheques in any particular way. If Angelina was under such an obligation, the obligation was owed to Amy. 48. If it could have been said that the cheques (as opposed to their proceeds) had been received "on account of" Amy, the proposed substituted charge might have been saved. I say that because
But as I have said, the cheques cannot, in my view, be said in law to have been received by Angelina "on account of" Amy. 49. Before leaving section 6(3), there is one final comment I wish to make. It has been said that section 6(3) is an unnecessary provision because a defendant caught by section 6(3) will usually be caught by section 6(1) as well: see Smith, "The Law of Theft", op. cit., para. 2-71 and "Blackstone's Criminal Practice 2000", para. B4.20. Section 6(1), which is identical to section 5(1) of the English Theft Act 1968 on which these commentators were commenting, provides:
Mr Reading did not rely on this provision to overcome the impact of Preddy, and accordingly Mr McCoy did not address us on it. It would not, therefore, be appropriate for us to take it into account. For the record, though, I want to state that I have not considered whether Amy could be said to have a "property right or interest" in the increased credit balance in Angelina's account, and if so, whether that right or interest amounted to "an equitable interest arising only from an agreement to transfer or grant an interest". 50. The same is true of section 6(2). That provides:
Again, Mr Reading did not rely upon this provision to overcome the impact of Preddy. Without the benefit of submissions on the topic, I have not though it right to consider whether the increased credit balance in Angelina's account was being held by Angelina in trust for Amy as beneficiary. 51. For these reasons, section 6(3) does not, in my judgment, overcome the impact of Preddy on whether the property which Angelina is said to have stolen in the proposed substituted charge belonged to Amy. The first condition for the applicability of section 6(3) had not been satisfied. In those circumstances, it is unnecessary for me to decide whether the second condition for the applicability of section 6(3) had been satisfied. Indeed, it would be undesirable for me to do so in view of the similarity between the issue raised on that question and a subsequent issue which I shall have to address. Nor is it necessary for me to decide whether, when Angelina appropriated the proceeds of the cheques, she had done so with the intention of permanently depriving Amy of them. Because the prosecution failed to prove that Angelina had stolen anything which was capable of belonging to Amy, Angelina's conviction on a charge of theft cannot stand. Evasion of liability by deception 52. But that again is not quite the end of the matter. Mr Reading contended that if Angelina could not have been guilty of the theft of $3.3m. or of the chose in action into which the two cheques for $3.3m. had been converted, Angelina must nevertheless have been guilty, on the primary facts which the judge must be taken to have found proved, of the offence of evading a liability by deception contrary to section 18B(1)(b). He asked the court to exercise its power to substitute a conviction for such an offence for the conviction on the second charge. 53. So far as is material, section 18B provides:
Mr Reading reduced the particulars of his proposed charge into writing. He had two separate charges in relation to each of the two cheques, and I set out in similar language to that used by Mr Reading a version of the proposed charge which relates to both cheques:
54. On the primary facts which the judge must be taken to have found proved, there can be no doubt that Angelina practised a deception on Amy. She told Amy that Mr Cheung wanted to have the loan extended for a further three months. That was untrue. She also told Amy, in order to convince Amy that the extension of the loan had been secured by Mr Cheung, that the three cheques drawn on the British Virgin Islands' company's account had been issued by Mr Cheung. That was untrue as well. A third representation appears in Mr Reading's version of the charge. I have italicised it for easy reference. I shall refer to it later, but the two false representations which I have mentioned could not have been anything other than dishonest. Nor can it be disputed that these false representations were intended to persuade Amy not to present for payment the two cheques drawn on Angelina's account for $3.3m. on 4 December 1996 but post-dated to 4 March 1997. Nor can it be disputed that they achieved that purpose. Amy did not present the cheques for payment. Instead, she handed them back to Angelina. 55. There is a problem with the third representation which I have put in italics. That the issuing of the British Virgin Islands' company's cheques amounted to a representation that they were good and valid orders for the payment of the sums referred to in them if presented on or after 4 June 1997 cannot be disputed. But what finding of fact made by the judge amounted to a finding that that representation was false? Indeed, what evidence was there that when Angelina issued in March the three cheques drawn on the British Virgin Islands' company's account, she knew then that those cheques would not be honoured on presentation? The mere fact that they bore signatures which were different from the signature of the authorised signatory on the bank's mandate did not by itself mean that they would be dishonoured on presentation. However, the fact that the falsity of this representation had not been established is not fatal to the prosecution's case, because the falsity of the other two representations (even though only one was referred to in Mr Reading's version of the charge) was clearly established. 56. That leaves only one other ingredient of the offence of evading a liability by deception: proof that Angelina's liability to Amy for $3.3m. was a legally enforceable one. Mr Reading's version of the charge spells out the nature of that liability clearly. Angelina's liability was in respect of the $3m. which Amy lent to her on 4 December 1996 for three months which was therefore due for repayment plus the agreed interest of $300,000.00 on 4 March 1997. This presupposes that Amy never lent the $3m. to Mr Cheung. She lent it to Angelina, and it was Angelina who lent it to Mr Cheung. Indeed, my summary of the facts relating to the second charge is based on that assumption. On that basis, there was incontestably a legally enforceable liability as at 4 March 1997 for the repayment of the loan of $3m. plus $300,000.00 interest, the settlement of which was deferred as a result of Angelina's false representations. 57. But there is an alternative scenario. That is that Amy lent the $3m. not to Angelina but to Mr Cheung. Mr Cheung did not know that, and he thought that he was borrowing the money from Angelina. On this scenario, Angelina would have been acting as agent for Amy in agreeing the terms of the loan and in lending the money to Mr Cheung, but her agency would have been undisclosed. When Mr Cheung repaid this loan together with the interest which had accrued on it, i.e. when the two cheques drawn on his account for $3m. and $300,000.00 on 4 December 1996 but post-dated to 4 March 1997 were presented for payment and met, Angelina as Amy's agent was under a duty to Amy as her principal to account for those sums. A failure on the part of Angelina to do so gave Amy a restitutionary claim against Angelina: see Bowstead & Reynolds on Agency, 16th ed., art. 53, para. 6-058. Since the principal's claim in these circumstances is a restitutionary claim, the absence of any consideration in the contract of agency does not matter. 58. For these reasons, I am satisfied that, on the primary facts which the judge must be taken to have found proved, a legally enforceable liability existed
It follows that, on the primary facts which the judge must be taken to have found proved, the prosecution had proved all the ingredients of the offence of evading a liability by deception. I readily appreciate that the judge did not address these ingredients because he was considering a charge of theft. But if, as I find, the primary facts which the judge must be taken to have found proved necessarily amounted to proof of all the ingredients of the offence of evading a liability by deception, the conditions for substituting a conviction for that offence will have been satisfied. As for the exercise of the court's decision, I have not discerned any compelling reason why we should not substitute for the conviction on the charge of theft a conviction for the real offence which on the facts Angelina committed. Conclusion 59. For these reasons, I would have substituted,
but since Mayo V-P and Wong JA take a different view on the conviction on the first charge, their view on that charge must prevail. Wong JA: 60. I have had the benefit of reading in draft the judgments of Keith JA and Mayo V-P. 61. On the first charge, I agree with Mayo V-P and for the reasons he gives I would uphold the conviction on the offence of procuring the making of an entry in a record of a bank by deception contrary to section 18D Theft Ordinance, Cap. 210. In my view, there is sufficient evidence for the judge to draw the irresistible inference that the transaction was completed and an entry was made in the record of the bank. 62. In relation to the second charge, I agree with Keith JA that the charge of theft as originally framed could not stand and should be replaced by an amended charge of evasion of liability by deception contrary to section 18B of the Theft Ordinance. I would only add this. HKSAR v Li Ting Kit (CACC 402/99) was decided on facts different from the present case. In that case, the applicant received property from the victims directly for a specific purpose and was clearly under an obligation to retain and deal with the property (or its proceeds) in a particular way. It seems to me that the case fell squarely within the purview of s.6(3) of the Theft Ordinance. 63. I would, for my part, dismiss the appeal against conviction on the first charge and substitute a conviction of evading liability by deception on the second charge. Mayo VP: 64. I have had the advantage of seeing Keith JA's judgment in draft. I am much indebted to him for his outline of the factual background and I am in entire agreement with the conclusion he reaches in relation to the first count that the Judge was right to hold that the applicant's conduct had amounted to the dishonesty required by the section. 65. The difficulty I encounter is in connection with what has been described as the subsidiary ground of appeal on this count. 66. I accept Keith JA's analysis relating to the inadmissibility of the documents he refers to at pages 9, 10 & 11 of his judgment. Where however I find myself respectfully unable to agree with him is his rejection of Mr Reading SC's submission that it was possible to draw an inference from the bank account withdrawal form which had been completed by a member of the staff of the bank that the deposit entry referred to in the first charge had been proved. This was exhibit P45 at the trial. In my view even if this evidence is inadmissible it is possible to view this matter in the overall context of the evidence given by Mr Wong the bank manager. An irresistible inference can be drawn that the applicant did in fact procure the entry in the bank's records. 67. Mr Wong gave evidence of the conversation he had with Angelina. He went on to give evidence of instructing his staff to effect the transfer. Perhaps even more importantly he subsequently also gave evidence of his conversation with Amy and of the measures which were taken for her to ratify the transfer. It is also of relevance to add this issue was not ventilated before the trial Judge. Had it been remedial measures might readily have been effected. 68. The consequence of all of this is that I am of the opinion that the first charge was duly proved and that the appeal against this conviction should be dismissed. 69. On the second charge I agree with Keith JA that the conviction for theft cannot stand. 70. The charge as framed reads: "2nd Charge
71. The problem which arises is dealt with in R v Preddy [1996] 2 Cr. App. R. 524. What was stolen was the choses in action represented by the cheques. Also the cheques did not belong to Amy. 72. Mr Reading attempted to surmount this problem by referring to HKSAR v LI Ting-kit Unreported being Crim. App. 402/99. He argued that on the basis of this case Preddy had no application to the facts of the instant case. 73. As was pointed out by Mr McCoy it would appear that LI ting-kit was wrongly decided. 74. What is evident from the judgment in that case is that reliance was placed upon S. 6(3) of the Theft Ordinance, Cap. 210 which provides:
75. Mr McCoy contended that the first eleven words of that subsection begged the whole issue which was ventilated in Preddy. What was decided in Preddy was that in the type of situations which were being envisaged property is extinguished. In this connection he referred to a commentary on the case of Klineberg in [1999] Crim. L.R. 417 by Professor Smith. 76. It would appear from this commentary that the Court of Appeal in England erred in a similar manner to our Court of Appeal. 77. I agree however with Keith JA that if the second charge is amended in the manner proposed by Mr Reading and the charge is laid under s. 18B of the Ordinance as evasion of a liability by deception it is possible on the facts as apparently found by the Judge to convict the applicant of this offence. In my view a substitution along these lines should be effected and the applicant should be convicted of this. 78. The result of all of this is that this application for leave to appeal is allowed. Treating it as the appeal the appeal against conviction on the first count is by a majority dismissed. The appeal on the second count is successful to the extent that the conviction for theft is substituted for a conviction under S. 18B of the Ordinance for evasion of a liability by deception. As a consequence of this it will be necessary to restore this appeal to consider the sentence to be imposed on the substituted charge.
Representation: Mr Gerard McCoy SC, Mr Philip Ross and Miss Cherry Hui, instructed by Messrs S. Y. Chu & Co., for the Applicant. Mr John Reading SC and Mr Isaac Tam, of the Department of Justice, for the Respondent. |
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