John Taylor v. The Queen

CACC000763/1982

IN THE COURT OF APPEAL

BETWEEN

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Coram: McMullin, V.-P., Li & Silke, JJ.A.

Date: 25th February'.1983

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JUDGMENT

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Silke, J.A.:

1. The applicant appeared for trial on four charges.

2. The first charge: conspiracy to defraud. Particulars were: that he

"on divers days between the 1st day of April 1976 and the 4th day of November 1981, in this colony, conspired together with Peter Brenton and other persons unknown to defraud such persons and companies as might be induced to part with money to International Directory Publishing Company limited by falsely representing that the said persons or companies owed a debt to International Directory Publishing Company Limited and that entries in the names of the said persons and companies would be made in a telex directory and that the said directory would be published by the said company and distributed world-wide."

3. The second charge: counselling and procuring the posting of prohibited articles: this contrary to section 32(1)(g) of the Post Office Ordinance. The particulars alleged the offence to have taken place between the 17th day of December 1978 and the 18th day of April 1981 and that the applicant counselled and procured LAM Fung-kit and LEUNG Suk-ho to post from Hong Kong articles in sealed envelopes containing documents headed "International Telex" addressed to divers addressees in the United States of America, the importation and ciroulation of the said documents being forbidden in the United States of America.

4. The third and fourth charges were counselling and procuring the posting of articles having the intention of evading the full postage due and inciting the posting of prohibited articles. On these he was acquitted having been convicted on the first and second charges.

5. He was sentenced to a period of two years' imprisonment and a fine of $100,000 and to four months' imprisonment and a fine of $500 respectively.

6. He sought leave to appeal against his conviction on the first charge. He abandoned his application as to conviction on the second charge. There is no appeal now before us in respect of the sentences Dassed.

7. We allowed the appeal and stated we would give our reasons later. This we now do.

8. John Taylor formed a company called the International Directory Publishing Company Limited - "I.D.P."- which mainly worked from Hong Kong.

9. It sent out that which has been described as pro-fonmas to persons in the United States and these pro-formas took, at first, the form of a document headed "International Telex Published by I.D.P. Co. Ltd.". On the body of the form there appeared amongst other things - words in heavy type "Invoice/Statement", a request to the addressee to list changes regarding the annual. listing "on the space provided on the back" and a note "Acceptance of our proforma subject to our business terms on reverse".

10. On that reverse were set out six "Business Terms" which informs those who care to read them that:

Below these "terms" that came the space for the alteration of address.

11. Mr. Scrivener, with him Mr. Barretto, who appears for the applicant, makes no bones about this being an example of inertia selling. At first glance the forms appear to be a bill for services rendered. They are sent, with a suitably low charge set out , to large corporations in the clear hope that they are paid almost automatically and without their being properly read. They are really disguised solicitations for business. That the applicant's hope in this regard was realized is clear from the volume of business done by the company - rising from HK$378,105 in 1977 to HK$862,284 in 1979.

12. Such solicitations are controlled in the United States by the Postal Codes of that country and are similarly controlled in the United Kingdom by the Unsolicited Goods and Services Act. There is no controlling legislation in Hong Kong.

13. The conspiracy charge alleged three particulars of false representation: (a) of a debt owed to I.D.P.; (b) that entries in the names of persons or companies induced to part with money to I.D.P. would be made in a telex directory, and (c) that the directory would be published by I.D.P. and distributed world-wide.

14. In coming to the conclusions he did that the applicant was guilty of a conspiracy to defraud, the trial judge based himself on the first of those particulars. He was satisfied that the form of document did falsely represent a debt owing by the addressees and that it would not be treated by the average addressee as a mere solicitation.

15. Having so found he then went on to consider the question: "Was that misrepresentation fraudulent?" and he answered the self posed question by saying:

"I found that Exhibit P1 was a deception and that the defendant caused the false representations to be made to the addressees dishonestly."

16. He found the dishonest false representations to exist not only from the nature of the document itself but also from the surrounding circumstances of its distribution and from other matters such as the compilation by the typist in the office of the company of a list of addresses from a big old telex directory and her selection of numbers out of her head to complete the statistical references on the top right hand corner of Exhibit P1 - the pro-forma.

17. He felt however that, whether or not the examples of directories produced in evidence did reasonably constitute directories of the kind represented by the pro-forma as "International Telex", it was not a matter he need go on to consider. He made no finding as to whether or not the Crown had proved the two remaining particulars of false representation.

18. He then went on to deal with the element of a conspiracy, that is, Taylor with Peter Brenton and others. He found, quite rightly, that if conspiracy were proved it was with Brenton only. Having correctly addressed himself on those matters which are the elements necessary to be proved to make good a charge of conspiracy he set out six findings of fact. Of these he said:

"When I take all these factors into account the only reasonable inference is that Mr. Brenton knew, agreed and participated in the fraudulent scheme which was carried out. Any other inference would be fanciful."

and he concluded that a conspiracy existed as between the applicant and Brenton. We note his use of the expression the "fraudulent scheme" and will come back to this.

19. Mr. Scrivener attacks the findings of the trial judge on two main points. His first point being that Exhibit P1 - the pro-forma - by itself, and when properly read, was nothing more than a solicitation, albeit drafted in such a. way as to deceive the unwary.

20. His second point, subdivided into two, was that no fraudulent scheme was found to be proved and further that the trial judge posed to himself the wrong conspiracy question. The question to be asked, says Mr. Scrivener, is not whether Brenton conspired with the applicant, for Brenton was not on trial, but rather: did the applicant conspire with Brenton? He submits that there was no sufficient evidence of the necessary agreement to do a criminal act in that it had not, on the evidence, been proved that Brenton knew of the "fraudulent scheme". This is, of course, based on the supposition that we find against Mr. Scrivener on his first main point.

21. Dealing with that: there lay for the consideration of the trial judge the construction of the pro-forma. I should add that this came in a Mark 1 and Mark 2 variety: the first being Exhibit Pl, the second being a variation on that theme with the item "Invoice/Statement" deleted and replaced by an item reading "Proposed Listing For Your Entry In Our New Edition" and with "Business Terms" on the reverse altered as follows:

22. This change came around in 1981 after representations by the Postmaster General and enquiries by the police. Another variation was Mark 2 with computer punch holes.

23. Mr. Scrivener in his submissions accepted that he would be on more difficult ground if the trial judge had found the whole matter a sham and had made findings on the second and third particulars of false representation. As he did not we are concerned only with the first particular that is the alleged false representation "that the said persons or companies owed a debt" to I.D.P. based on the wording of the pro-forma.

24. It is Mr. Scrivener's contention that there was no fraud if the amount stated in the pro-forma was paid and if such payment constituted the acceptance of an offer: in essence that a careful reading of the pro-forma, as a whole and including the reverse to which attention was drawn, would show an addressee that the document was an offer open to his acceptance and not either a statement or a bill. One must look at the pro-forma in its entirety and not by simply taking the item "Invoice/Statement" in isolation. It is the contention of the Crown that this heading is, of itself, the misrepresentation. It was urged upon us by Mr. Poll, who appeared for the Crown both here and below, that that heading was a technical term. This we do not accept for it seems to us an ordinary term in everyday commercial use. We would accept however that, in isolation if it were so treated, it could be so mis-leading as to amount to a false representation of a debt owed. But we equally accept the contention that the document must be looked at as a whole.

25. There was an argument advanced to us on behalf of the applicant that the construction of the document was a matter of laic for the trial judge as opposed to its being simply a matter of fact. In the circumstances here it is unnecessary to express any decided opinion on this. It is an argument complicated somewhat by the person of the trial judge being both judge and jury and, for myself, I would prefer to reserve my opinions on Mr. scrivener's argument until the matter arises in a case where it will be more be germane to the decision.''

26. The   trial judge here did consider the whole document-at least at one stage. Of the title he said:

"         I notice that it is entitled as an 'Invoice/Statement' and am satisfied that on first glance the average addressee would presume it was a request for payment of an existing debt. I also notice that it includes these words - as does Exhibit P2 (Mark 2) - on the front page:

This statement reinforces the representation made by the "Invoice/Statement" heading. For I am well satisfied that a reasonable person reading those words would infer that he or his company had already agreed to and had authorised a listing in the previous year's directory."

27. He went on, having noted that the attention of the recipient was drawn to the Business Terms on the reverse and having considered those terms:

"Those Business Terms', contrary to the representations on the front page, correspond with a solicitation rather than an invoice or statement requesting payment of an amount already owing."

28. He then, having considered the defence's submissions, accepted that the misleading words on Mark 1 were "Invoice/Statement" and found that "From the form of the document I am satisfied that it does represent that a debt is owing by the addressee."

29. With respect to him this was not to consider the "form of the document" at all but to treat the words "Invoice/Statement" - a clear lure - in isolation.

30. He found evidence to exist of deception. But again, with respect, of the two witnesses upon. whose testimony he relied in for this, one had not bothered to read the pro-forma in full and the other had not seen it until after a clerk in his company had paid through that which the witness described as "total negligence".

31. True, there were innumberable complaints received by the U.S. Postal Authorties - but then as I have said solicitations of this sort, which could be interpreted as a bill due, are generally non-mailable matters - the method by which inertia selling is controlled in that country.

32. We have dome to the firm conclusion, despite the valiant efforts of Mr. Poll, that while the pro-forma Mark 1 could be reasonably interpreted as a bill due, on a full reading, and remembering that recipients were twice directed to read the reverse, the document is nothing more than a mere solicitation: an invitation to treat the acceptance of which constituted a valid contract. And there was no finding of misrepresentation as to the terms of that contract. The document as a whole, and it must be viewed as a whole, was not a false misrepresentation however unethical the activities of Taylor were. The judge was in error when he so held.

33. We were further addressed at length on the conspiracy point. This needs examination only if the first point fails. As it has not, and with no disrespect to counsel's argument, we do not think it necessary to express any opinion upon it.

34. In the event we granted the application for leave to appeal, allowed the appeal and quashed the conviction and set aside the sentence, that is, the conviction and sentence upon the first charge.

35. We would add this. It has been found necessary to control by legislation, both in the United Kingdom and the United States of America, inertia selling. In the highly commercial world of Hong Kong it seems necessary that the enactment of similar type of legislation be considered at an early date.

Representation:

A. Scrivener; Esq., Q.C. and R. Barretto, Esq. instructed by Haldane Midgley & Co. for the Appellant.

M. Poll, Esq. for Crown/Respondent.