The Queen v. Lee Cheung Wing and Another

CACC000095/1989

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Coram: Hon. Power, J.A., Penlington & Macdougall, JJ.A.

Date of Hearing: 18 August 1989

Date of Judgment: 18 August 1989

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J U D G M E N T

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Power, J.A.:

1. The applicants faced seven charges of false accounting spanning the period from the 15th of April 1987 to the 26th of September 1987. In each case it was alleged that they falsified a document required for accounting purposes namely a withdrawal slip by making a misleading, false or deceptive entry thereon.

2. The facts upon which the Crown relied were that the defendants were employed by Forex Commodities Ltd., to which I shall refer as Forex, as a security dealer in one case and a senior clerk in the other case. Forex offered its customers facilities to trade on the Hang Seng Index Futures on margin. Customers could open what was called Hang Seng Index Futures account (an HSIF account). Employees were, understandably, not permitted to open or operate such accounts.

3. The applicant Lam (the 2nd defendant) asked a friend Mr. Chung Kam Wah to allow, him to use his name to open such an account. Mr. Chung agreed and supplied him with a copy of his identity card and the account was opened on the 29th of September 1986 under the designation CL00117H. The 2nd defendant signed the account opening forms using Chung's English name Sammy and entered the personal particulars of Chung thereon. This whole transaction was deceitful as the real Sammy Chung played no part therein. The signatures were forgeries perpetrated by the 2nd defendant. He also signed the customer's agreement form in his capacity as the senior clerk of Forex and witnessed the false signature which he himself had applied thereto. He then used the account to trade. His immediate superior a Mr. Lee (the 1st defendant at trial) apparently became aware of this and requested to be allowed to use the account also. From September 1986 to mid-October 1987 they used the account extensively. During the period of use it appears that on a number of occasions the appropriate margin security deposit was not maintained. It was their duty to monitor such deficiencies and to bring them to the notice of their superior. The superior during some of the relevant times, a Mr. Alan Pau, was not notifed as to this deficiency. However; it was noticed by another superior, a Mr. Ng, who was told that "Chung" was "a trustworthy customer and that there was no need to be concerned.

4. In October 1987 the market failed and the defendants were instructed to arrange for customers who had suffered losses to attend at the Forex office. The fictional "Chung Kam-wah" one of these customers. Because of the investigations that followed and the call for Mr. Chung Kam-wah that this whole matter was uncovered.

5. The first charge relates to a transaction that took place on the 15th April 1987. On that date the 2nd defendant at the request of the lst defendant prepared a withdrawal slip in the sum of $22,000 on the account in the name of Chung. The 2nd defendant signed Chung's English name Sammy on the place where the customer was to sign and initialled the slip indicating that he had verified the validity of that signature. He then presented the slip to the Chief Cashier Mr. Ng who, relying upon the signature and the verification, approved the payment out of $22,000 in cash. The 2nd, 4th and 5th charges alleged that the same procedure was adopted. They are identical except for the dates and the amounts involved.

6. The 3rd, 6th and 7th charges are somewhat different. In those charges the withdrawal slips relate to cheque withdrawals. In each case the withdrawal slips were prepared by the 2nd defendant at the request of the lst defendant. They were prepared in the name of Chung and in each case the 2nd defendant signed Chung's English name "Sammy' Chung" in the place reserved for the customer requesting the withdrawal, and the lst defendant signed, allowing the withdrawal of the funds. The proceeds of those withdrawals were then paid out to the 2nd defendant.

7. The trial judge was satisfied that each of the defendants was guilty on each of the charges. It is to be noted that the defendants did not give any evidence at the trial but had simply put the Crown to proof. The trial judge was satisfied among other matters that the withdrawal slips were false and that the falsification of the slips was dishonest. Those are material findings for the purpose of this appeal.

8. The grounds of appeal which have been argued before us were taken in reverse order, the second ground being dealt with first. In the second ground it is urged that the trial judge erred in law in finding that the applicant was not entitled to withdraw funds from account CL00117H in the name of Chung Kam-wah, there being no sufficient evidence to support such finding in fact. It is important to look at the context in which the judge made that finding. He was dealing with an argument advanced to him by Mr. Sedgwick, Q.C., who then appeared for the defendants. His finding is as follows:

"Mr Sedgwick Q.C., for Dl submitted that it was absolutely essential in this regard for the Crown to prove that at the time the withdrawals were made, the account was in deficit. That, with respect, is not the point. It is true that the Crown failed to prove that the drawings were made when the account was in deficit, but it does not matter. Assuming that the account was in credit, neither D1 nor D2 was entitled to draw upon it. They could only do so by representing to those to whom the withdrawal slips were presented that they contained the instructions of a genuine customer. As they well knew, they were not allowed to operate; Hang Seng Index Futures margin accounts and they were acting dishonestly in falsely representing that transactions initiated by them were initiated by a genuine customer."

The trial judge went on later to say:

"The company, had it known the true facts, would not have accepted D1 or D2 as customer, or paid money to them out of the account in question. The defendants were not entitled to draw the money. When D1 caused the slips to be made out by D2 he did so with a view to obtaining money for himself, that is, with a view to gain for himself."

9. It suggested that in these two passages the trial judge had wrongly found that D1 and D2 were not entitled to draw upon the accounts. That in our view misunderstands what the trial judge was saying. What he was saying was that neither of those defendants could, without practising a further deceit upon the company, obtain any moneys from the account under the name Chung Kam-wah. This is entirely correct. However, Mr. Shaw, who now appears for both applicants, submits that they would have been entitled to get back the money which they themselves had paid into the account. He submits that whatever their rights under the contract, whether or not it might have been enforceable by, them, they would be entitled to the return of their stake money.

10. Mr. Shaw does not seek to argue, with regard to any profit made, that the company would not have had a defence to any claim brought by the defendants endeavouring to recover that profit.

11. This approach was never urged in the court below. There was no evidence called to establish that they were at any stage withdrawing their stake. The argument is that if there was evidence, which was not rejected, and which was capable of proving that they were withdrawing their stake money, the trial judge must have had some doubt as to whether dishonesty had been proved. There was, however, no such evidence. They were, according to their evidence, withdrawing money from a running account. There was no suggestion of any specific withdrawal of a stake, and these matters were not the subject of any submissions at the trial. We are satisfied that there is nothing of any substance in this submission, and that the observations of the trial judge were, as we have indicated, no more than an indication that he was satisfied that neither would have had any entitlement to withdraw the money in their own names from the account.

12. The first ground to which we now turn is that the trial judge erred in law in that, when deciding whether the Crown had proved the element of dishonesty on the part of the appellants, he failed or failed adequately to consider whether according to the ordinary standards of reasonable and honest people the conduct of the appellants was dishonest and, if it was dishonest by those standards, whether each appellant himself must have realized that his conduct was by those standards dishonest. The test referred to is that set out in R. v. Ghosh [1982] 3 W.L.R. 110. It is suggested that the trial judge failed to make an examination of the second limb of Ghosh, that is to examine, whether or not the applicants realized that what they were doing was dishonest by ordinary standards. The trial judge was, it is quite clear from his findings, satisfied that the conduct of the appellants was dishonest. It is true that he did not refer to the two tests specifically but this is perhaps, understandable because it does not appear that the approach now being urged. was the one adopted by the counsel who represented the applicants at the trial. The judge does, nonetheless, seem to us to have been satisfied that the defendants did know that they were acting dishonestly. This appears from a passage which in his findings where he said, when referring to the withdrawing of the money by the applicants:

"They could only do so by representing to those to whom the withdrawal slips were presented that they contained the instructions of a genuine customer. As they well knew, they were not allowed to operate Hang Seng Index Futures margin accounts and they were acting dishonestly in falsely representing that transaction initiated by them were initiated by a genuine customer."

13. We are satisfied the trial judge was satisifed as to both of the limbs set out in Ghosh. Indeed we cannot help but remark that if we had been called upon to consider the application of the proviso we would have been prepared without hesitation to apply it. The evidence clearly established dishonesty by ordinary standards and was such that an overwhelming inference arose therefrom that the applicants knew that they were dishonest by those standards. The applications for leave to appeal against conviction will be dismissed.

14. Both of the applicants ask for leave to appeal against sentence. Mr. Shaw has very cogently argued that both have a good record, neither has ever been involved in any criminal activities prior to these events and that both have lost a great deal by their convictions. He points out that this is not the usual sort of offence where the victim is relieved of money to which the criminal has no right. Here the applicants did to an extent create the wealth in which they sought to share. He suggests that the justice of the situation would be served by this court ordering that each of the applicants be released forthwith. We have given consideration to all he had said, but are satisfied that it would be wrong upon the basis suggested to interfere with sentences which are otherwise perfectly proper. We have considered whether there should be a differentiation between the two applicants. Having re-read the Reasons for Sentence of the trial judge, we are satisfied that he was entitled to differentiate as he did and that we should not do anything to interfere with that differentiation we therefore also dismiss both of the applications for leave to appeal against sentence.

Representation:

Mr. S.R. Bailey (Crown Prosecutor) for the Respondent.

Mr. Jonathan L.M. Shaw (D.L.A.) assigned for both Applicants.