HKSAR v. Koon Lam Lam

HCMA351/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO.351 OF 2006

(ON APPEAL FROM KTCC 4309 OF 2005)

---------------------------

BETWEEN

---------------------------

Before : Deputy High Court Judge M. Poon in Court

Date of Hearing : 11 August 2006

Date of Judgment : 11 August 2006

-----------------------

J U D G M E N T

-----------------------

1.The appellant was convicted after trial of one count of False Accounting (Charge 1), contrary to section 19(1)(a) of the Theft Ordinance, Cap. 210.  She was bound over in the sum of $5,000 for a period of 12 months.  She now appeals her conviction.

The prosecution case

2.At the material time, the appellant worked as a beauty consultant for Squina Cosmetics Company Limited (“Squina”) at Fu Yan Street, Kwun Tong.

3.PW1 was a customer there.  From 2000 or 2001 she received beauty treatment from the appellant.  In September 2001, she was arranged by the appellant to take over a second-hand contract from another customer.  She learned from the appellant that Squina did not approve of this sort of deal.  Exh. P1 was made out on 8 September 2001 with only the writing in black and PW1 signed on it.  She was not given any copy at that time and neither did she see Exh. P2 which was meant to be the duplicate of Exh. P1.  She was told that after she had transferred the purchase money $18,000 for the second-hand contract into the appellant’s account Exh. P1 would be amended to show the addition of the second hand contract.  After PW1 transferred the money, she received Exh. P1 with the writing in blue added.

4.In June or July 2002, PW1 learned the appellant had left.  She enquired about the balance of services remaining in her programme.  It was then that she saw Exh. P2 for the first time, the contents therein were different from Exh. P1, showing the consolidation of PW1’s four previous contracts with Squina into a new contract instead (Exhs. P4 to P7 : dated back in 1998 and 1999, “the Consolidation”).

5.Exh. P2 was not the record signed by PW1 on 8 September 2001 which purported to reflect the second hand contract.  PW1 denied knowledge of any Consolidation or upgrading, or that she had confused the exchange with the second-hand contract.  The prosecution’s case was that this was a falsified record and formed the basis of the charge against the appellant.

6.PW2 was the accountant of Squina at the material times.  He said that on the face of Exh. P2, it reflected incorporation of other old contracts “brought forward”.  PW3 testified about the sales and operation of Squina counters and it was also said that Exh. P2 on its face showed a new contract incorporating a proper transfer of balance contracts in Exh. P4 to P7.

7.The appellant’s statement under caution to the police was admitted into evidence as Exh. P11.  There was no challenge as to admissibility.  In the statement she said that Exh. P1 showed Consolidation as well as products she gave to PW1 as gifts but did not record her receipt of $18,000 which was for products that PW1 purchased from her.  She said this was a special arrangement with PW1.

8.In the statement it was also explained that Exh. P1 was the customer’s copy showing balance owed to the customer and Exh. P2 was a copy for Squina showing only the Consolidation.

The defence case

9.The appellant elected not to give evidence.  Another beautician was called as DW1 to give evidence.  DW1 said that the idea for change of programme came from PW1.  As both she and the appellant knew that was not advisable by Squina and they also discovered that PW1 had been overcharged on previous occasions, they agreed to accommodate her wish by an exchange of beauty programmes/course.  At the same time, another customer wanted a refund on her contract which was also not allowed by Squina.  So PW1 was asked if she was interested in taking over that contract, and the deal went through.  The $18,000 was eventually passed on to the other customer.  It was the defence case that Exh. P1 recorded the exchange and PW1 fully understood this.  It was not recorded in Exh. P2 in order to circumvent Squina policy. 

Grounds of appeal

10.I could discern the following grounds :

(1) It was alleged that Exh. P2, which was the basis of the charge that the appellant faced, was a false document.  From the point of view of PW2 and PW3, Exh. P2 showed a valid consolidation of balance of old accounts.  So counsel for the appellant submitted that there was no falsity in this document, nor did the particulars of the charge allege that the falsity was in failing to record the second-hand contract, thus an essential element of the charge is lacking.  Without amendment to the particulars the magistrate should have accepted a no case submission.  Furthermore, it was submitted that the magistrate, after ruling a case to answer, erred in accepting part of DW1’s evidence, i.e. that Exh. P2 did not reflect the truth of the transaction to Squina, to convict the appellant.  Therefore it was submitted that the conviction was unsafe.

(2) Even if what was done was contrary to Squina’s policy, Squina’s accounts were not affected : what was done was a redirection of products and services from one customer to another.

(3) Whilst according to PW1, there was a sale of a second-hand contract to her, the prosecutor submitted at the final address that their stance was that there was never any such contract.  Counsel for the appellant submitted that this was misleading and prejudicial to the defence which precluded the appellant from having a fair trial.

(4) It was also submitted that the magistrate erred in drawing the inference of a dishonest intent on the part of the appellant, and it was ‘most likely’ that she did not believe what she was doing was anything wrong.  It could well be that she did what was done with the best of intention to please a customer. 

Respondent’s reply

11.The respondent’s reply as per the written skeleton is as follows :

(1) It was submitted by counsel for the respondent that the particulars of the charge were drafted in accordance with Rule 4 of the Indictment Rules which states that “the particulars shall disclose the essential elements of the offence”.  There was nothing unclear in the way the particulars were drafted which prevented the appellant from having a fair trial.  The falsity of Exh. P2 lies in the fact that it did not reflect the actual transaction which took place between the appellant as an agent of Squina and PW1 on 8 September 2001 : that no consolidation ever took place, contrary to what was evident in Exh. P2.  PW1, a party to this contract, and directly affected by it, knew nothing about any consolidation.  It was never suggested that the falsity of the document manifested on its face.

Whether the second hand contract existed or not was irrelevant for considering whether Exh. P2 was a false document.  There was no lacking in the element of falsity as alleged by the appellant’s counsel.  The magistrate was correct in rejecting a no case submission.

(2) The prosecution only had to prove no consolidation as evident in Exh. P2 ever took place.  Whether a second-hand contract did exist or did not exist was immaterial.

(3) The magistrate was entitled to make a finding that the second-hand contract did exist.

(4) On that findings by the magistrate that the second-hand contract did exist, it was not a simple redirection of services from one customer to another.  Given the existing policy of Squina which forbade such transfer, it was obvious that a redirection would cause loss to Squina.

(5) On the evidence the magistrate was entitled to infer dishonest intent on the part of the appellant.  He had made it clear that an intention to keep or please customers and a dishonest intent were not mutually exclusive.

My judgment

12.Dealing with Ground 1 first.  Section 19(2) of the Theft Ordinance, Cap. 210 states :

“For the purposes of this section a person who makes or concurs in making in an account, record or document an entry which is or may be misleading, false or deceptive in a material particular, or who omits or concurs in omitting a material particular from an account, record or document, is to be treated as falsifying the account, record or document.”

13.What the particulars alleged was that Exh. P2, being a record made or concurred to be made by the appellant, which recorded consolidation of four contracts, was ‘misleading, false or deceptive in a material particular’.  The magistrate correctly pointed out that :

“…. The fact that it properly showed the Consolidation was neither here nor there.  Documents used in false accounting often show on their face legitimate transactions whilst veiling the reality of the situation.  To Squina, Exhibit P2 contained information that was misleading, false and deceptive in a material particular.”

14.Counsel for the appellant suggested that whilst the particulars of the charge alleged that Exh. P2 was a “false document”, however, Squina did require consolidation of old contracts in the interest of customers, and both PW2 and PW3 confirmed that on the face of Exh. P2, it properly recorded a consolidation.  It was further submitted that there was no requirement for each and every transaction to be reflected in the invoice and therefore Exh. P2 did not tell a lie about itself, and the element of falsity was lacking.

15.What was in the submission of counsel for the appellant was to invite the court to consider the contents of Exh. P2 in isolation of facts extraneous to the document, and then suggested that as that document did not tell a lie about itself so there was no falsity.

16.Counsel’s submission was a fallacy.  It is clear that in considering whether a document told a lie about itself by virtue of the way in which they were drafted, one must take into account the purpose for which they were used.  In the present case, Exhs. P2 and P1 were duplicates and there was no reason why their contents should not be identical.  The fact that Exh. P1 which was given to the customer recorded particulars at variance with Exh. P2 which was given to Squina cried out for explanation.  Exh. P2 was prepared and used for accounting purposes.  It was drafted under the pretext of consolidation to mislead Squina, to disguise the true transaction with PW1 which took place on 8 September 2001.  In the circumstances Exh. P2 did tell a lie about itself and was false.

17.The argument that the element of falsity was lacking was no doubt an uphill task.  Neither was there any lacking in the particulars of the charge which would mislead the appellant in any way.  The magistrate was correct in ruling a case to answer.  There was simply no question of a submission of no case wrongly rejected by the magistrate and wrong use of defence evidence subsequently to convict the appellant.  The case of R. v. Patrick Joseph Smith & Ors [199] EWCA Crim 1525 does not apply in the present case.

18.I now turn to Ground 2, that is, whether the act of the appellant affected the accounts of Squina.

19.In R. v. Mallet [1978] 1 WLR 820, it was held that once it is established that the document in question was made or required for an accounting purpose, then if it contained a false statement in a material particular being a particular that was material for the purpose for which the document was being brought into existence and used and the maker or the person who concurred in its making was dishonest, then the offence is made out. 

20.Therefore, it does not matter whether redirection of products and services from one customer to another actually affected or would affect the accounts of Squina.  Whether Squina was eventually losing out was irrelevant.  There is no merit in this ground.

21.Dealing now with Ground 3.  As I have already said above, the falsity of Exh. P2 lies in the fact that it told a lie about consolidation to Squina.  The prosecution based its case on the non-existence of consolidation rather than the existence or non-existence of the second-hand contract.  Whether there existed a second-hand contract was just one factor in considering what the true transaction was which took place on 8 September 2001.  This ground is also rejected.

22.Turning to the last ground of dishonest intent.  Counsel said that in the magistrate’s Statement of Findings, whilst he was alive to the Ghosh test of dishonesty, he also accepted that the appellant might have a dual intention to keep customers satisfied.  Counsel for the appellant said this in his written submission :

“.… and that her overriding intention was not to cheat the Company, then it was most likely she did not believe she was doing anything ‘wrong’ …

…

…. there was no evidence to refute the suggestion that D1 may have genuinely believed that her employers had no interest in knowing about the second-hand sale to PW1... D1 may also have genuinely believed her employers would have consented to the ‘exchange’ for PW1 had they known of the circumstance. ….”

23.According to R. v. Chong Kin Cheong, CACC196/1995, the Court of Appeal said :

“As was his right, the applicant chose not to give evidence.  This does not advance the case against him but compelling inferences may remain unanswered and it is not the judge’s task when considering the facts put before him to imagine possible defences of which there is no evidence.  By the same token it is not his task -- nor that of a jury -- to speculate upon the absence of possible evidence.  His duty was to try the case just on the evidence before him.”

24.Further, in R. v. Lee Pun Ling, MA456/1996, also a false accounting case, Bokhary JA, as he then was, said this :

“The magistrate, as the tribunal of fact who would have had the ‘feel’ of the case, was entitled to take the view that the only reasonable inference in the circumstances of the case was that D acted dishonestly……

Although silence on the part of an accused could never turn an insufficient case against him into a sufficient one, if there was a sufficient case against him, the absence of any explanation from him, which might be true, left the case against him intact.”

25.The appellant in this case, having been found to have made out or concurred in making out a false document to her company, could only hope to succeed in saying that she was not acting dishonestly by explaining in the witness box the nature of her intentions in relation to the transactions as a whole, and exposing herself to cross-examination designed to show that she was dishonest.  In the absence of such, the court did not have to imagine possible defences such as her likely genuine believes as set out in counsel’s written submission.

26.This grounds fails as well.

27.The appeal is dismissed and I affirm the conviction.

Ms Olivia Tsang, GC of the Department of Justice, for HKSAR

Mr Duncan Percy, instructed by Messrs Henry Wan & Yeung, for the Appellant