Attorney General v. Amos William Dawe

CACC000960/1982

BETWEEN

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

Coram: Sir Alan Huggins, V.-P., Yang & Barker, JJ.A.

Date: 17 November 1982

____________

JUDGMENT

____________

Sir Alan Huggins, V. P. :

1. Yang, J.A. is unable to be present today, but the judgment which I am about to read is the judgment of the court.

2. We feel compelled to start by indicating the very unsatisfactory state of the law in relation to appeals by the Crown against acquittals. It is a type of proceeding unknown to the Common Law and contrary to its principles. In 1972 Parliament decided that, having regard to the doctrine of precedent, it was undersirable that mis-statements of the law which resulted in acquittals should in England remain as authorities which might not only mislead other courts in similar cases but also become the foundation of further sidetracks in related areas of the law. Accordingly it enacted s.36 of the Criminal Justice Act 1972. A reference of a point of law by the Crown was thereby initiated by way of case stated and it was inherent in the procedure there laid down that the defendant in the particular case in which the reference was made could-not be convicted of the offence charged: all the court could do was to declare the law. Our Legislature adopted a similar form of reference where a person had been acquitted upon a trial on indictment (s.81D of the Criminal Procedure Ordinance) but in relation to trials in the District Court, which for most purposes are assimilated to trials on indictment and may be for most offences triable on indictment, it had in 1962 gone further and provided for an appeal which could lead to the conviction of the defendant in the case in which the reference was made. This opened up a field which Parliament has kept fenced off. An appeal "on a point of law" can include an appeal on a question whether there was evidence on which the court could (acquittal on a ruling of no case to answer) or should (acquittal after hearing the defence, as here) have convicted. The same procedure by way of case stated was adopted, and it must be followed in all cases in spite of the wide powers conferred upon the court and, consequently, of the very different nature of the inquiry which may fall to be conducted. Moreover, it is not to be overlooked that no provision is made for a cross appeal by the acquitted defendant, a fact which may be of considerable importance in the present case because we are told that the Respondent desired to challenge one of the trial judge's findings. We recognise that both in England and in Hong Kong the prosecution has for many years had a statutory right to appeal by way of case stated against decisions of magistrates, but the evidence leading to such decisions is unlikely to be of such volume or complication as the evidence in this case and we doubt whether it was ever contemplated that a case such as the present would be brought under s.84 of the District Court Ordinance. Nevertheless we are unable to say that an appeal does not lie and we can do no more than express a hope that the whole procedure will receive further consideration.

3. The difficulties which we face as a result of the nature of the proceedings have been compounded by the inadequacy of the "Case Stated" and by the fixing of dates for the hearing of the appeal before any appeal had in fact been lodged. What happened was this. The Respondent was charged before the District Court on four charges. After a trial he was acquitted on all four charges. The Attorney General was aggrieved at the acquittal on the first three charges and was minded to appeal. At the trial both sides had been represented by counsel from England and it was contemplated that counsel from England would appear upon the appeal. The courts in Hong Kong have always welcomed the assistance of English counsel end have endeavoured to meet their convenience as to dates whenever possible. In the present case the Registrar was approached to fix dates for the hearing of an appeal. That could not be done because at the time there was no appeal, but to accommodate counsel the Clerk of the Court was directed to reserve ten days from 13th October 1982. In the event the document purporting to be a case stated, which is the document by which an appeal by the Crown is commenced in this court, was lodged on 11th October, two days before the date reserved for the hearing. This necessitated an abridgment of the time for steps in the proceedings. Had the document lodged been a proper case stated, no one would have objected, but it was not.

4. A case stated is defined in Jowitt's Dictionary of English Law as "a written statement by an inferior court or judge, raising a question of law for the opinion of a superior court". Although it is the judge who is required to state the case, it is not normally he who has the responsibility of preparing it: it is for the appellant or his advisers to produce a draft. The Full Court set out the procedure in detail in the Attorney General v Leung Chi Kin 1974 H.K.L.R. 269, although I there overlooked that a form was expressly prescribed by the Magistrates Ordinance. Those directions were an attempt to cure the slovenliness which had been a feature of so many cases stated in the preceding twenty years. In Seymour v King 1954 38 H.K.L.R. 214 Reynolds, J. said at p. 215:

"A case as stated by a magistrate should contain a full, clear, unambiguous statement of all the relevant facts which it is necessary for the Appellate Court to consider and, where consideration of any of the documentary exhibits is necessary, these should either be attached or at least specifically referred to in the case as stated."

We emphasize the word "necessary" in that passage. In Commissioner of Inland Revenue v Sewell 1971 H.K.L.R. 187 Blair-Kerr, J. said at p. 209:

"I understand that in previous appeals, my Brother, Mr. Justice Huggins, has commented adversely about this practice of having "annexures" to a case stated; and I agree that it is not a desirable practice. A case stated should be complete in itself. All the facts which it is desired that this court should take into consideration should be found by the Board and set out seriatim together with the basis of the Commissioner's determination and the Board's reasons for agreeing or disagreeing with that determination."

In 1977 this court added its authority to what had been said so often before. In the Attorney General v Au 1977 H.K.L.R. 76 I said at p.80:

"We are compelled to observe that, in spite of the long time which has elapsed since the decision appealed against, the Case Stated was defective in other respects than that already mentioned. Judges of the Supreme Court have repeatedly had to criticise failures to appreciate that ideally a Case Stated should be a self-contained document with no annexures of any kind. We now desire to add the weight of the authority of this court to what was said on the subject by the Full Court in The Attorney General v Leung Chi-kin (1974) H.K.L.R. 269, 273. There was no justification in the present case for the annexure of the judge's Ruling and, so far as the argument before us went, it tended to show that there was no justification for the annexure o all the very numerous exhibits produced in the court below. We do not say - and the Full Court did not say --that there should never be annexures to a Case Stated, but some reason is required other than that it will save the draftsman the trouble of making, for inclusion in the Case Stated, a precis of the relevant parts of a document.'"

Pickering, J.A. said at p, 82:

"I wish to add a few words to the observations of my learned brother Huggins as to the failure to present to this Court a self-contained Case Stated. The one circumstance in which the judgment or decision not only may but must be annexed to the case has no application to a case stated by a District Judge or a Magistrate. It arises in relation to cases stated by Tribunals and an obligation to annex is imposed by 0.61 r.5 but even in the case of Tribunals that obligation only arises where the decision of the Tribunal states all the relevant facts found by the Tribunal and indicates the questions of law to be decided by the Court of Appeal. In that event the facts found and the questions of law to be decided are sufficiently stated in a case by referring to the statement thereof in the decision."

With respect, it is absurd to suggest, as has been suggested, that it was necessary to annex some 2,000 pages of transcript, exhibits, Reasons for Verdict and Reasons for Award of Costs. Many of those pages, including some which were referred to, were before us in the form of almost completely illegible Photostat copies. With reasonable diligence the evidence which was alleged to constitute conclusive proof of the Respondent's guilt, along with the various findings of the learned judge, could have been set out. We understand that both counsel for the Respondent and the judge himself objected to the form of the document and that it was only with reluctance that they accepted it.

5. What makes this Case Stated worse than any which has been criticised in the cases to which we have referred is that it is now alleged not even to state definitively the reasoning of the learned judge. Counsel for the Appellant himself contends that the reasoning as set out in the Case Stated was not the true reasoning of the judge and he seeks to prove his contention by reference to some of the exhibits and to what, we are told, was the course of events leading up to the signature of the Case Stated. The whole purpose of a case stated is to set out shortly a disputed point of law for the decision of the court. A procedure is laid down for the settlement of a case stated and it is entirely wrong that the court burdened with deciding the point of law should be trammelled by arguments as to what the dispute really is. Had days not been reserved, at the expense of other litigants, we would have refused to proceed upon the Case Stated as it stood. It was with great reluctance that we allowed the final annexure to be made, the more so since the judge has had no opportunity to state his position in the matter.

6. Other difficulties have arisen. Because there has been no proper statement of the case, it was apparently thought unnecessary to paginate all the documents properly and confusion has arisen because several documents bear the same page number. Counsel did not have identical documents and those they had were differently paginated. On the penultimate day of the hearing it was discovered that one exhibit relied upon by the Respondent was not the same as that provided for everyone else. With something in the region of 2,000 pages of exhibits, the vast majority of which have never been referred to, the physical handling of the documents has been awkward and time consuming. The exhibits have not been indexed and no attempt has been made to arrange them in any kind of logical sequence.

7. Before we can begin to consider the questions which have been posed to us, we must do what ought to have been done before the appeal came on for hearing, namely decide what was the decision of the learned judge. This is of special importance here because it was upon his approach to inferences which he might legitimately draw from primary facts found by him that the verdicts inevitably turned. In the case as stated the judge asserts:

"I confirm that I held that I might only draw inferences from primary facts themselves established beyond reasonable doubt: any adverse inferences being not only consistent with guilt but also inconsistent with any other reasonable conclusion. In relation to inferences I recognised, in accordance with R. v Yim Chor-man (1975) H.K.L.R. 546, 554 that a combination of apparently innocuous circumstances may in a proper case be the basis of a finding of guilt. Further, guided by that decision and also Attorney-General v Yiu Wun-Ying Criminal Appeal No. 672/78, I appreciated that it was wrong to consider each apparently innocent circumstance separately for possibilities consistent with innocence. I instead went on to consider them in combination. My approach is reflected by the fact that generally in relation to each such circumstance before any, final finding could be made I expressly stated that such circumstances had to be weighed by the Court when the whole of the evidence was reviewed."

It is contended that this passage, which was added by the judge only four days before the date on which the hearing commenced before this court, is belied by the Reasons for Verdict, which have been included as part of the voluminous exhibits. It is regrettable that, in an appeal Which is supposed to be by way of case stated (which should mean conclusively stated) we have been put in a position where it is necessary for us to decide such an issue. Certainly we would not agree that in every case a judge should be condemned if he thinks that it is right to expand in a case stated the reasoning which has led to his decision. In the present case the paragraph of the Case Stated from which we have cited does have some appearance of inconsistency with what the judge had expressly said previously and of advocacy in support of his decision. What he said in his Reasons for Verdict was:

"In a criminal trial it is open to a Court to draw inferences. This is particularly true in conspiracy cases where an intention to defraud can often only be inferred. As to drawing inferences I remind myself that I can only do so from primary facts which have first been established beyond reasonable doubt. In addition I may only draw adverse inferences if I am satisfied that there is no other inference, consistent with innocence, that may reasonably be drawn from those facts Teper v R. (1952) A.C. 480."

It is the last sentence of this passage which is relied upon as being inconsistent with the Case Stated and as indicating, despite statements to the contrary, that the judge did not consider the evidence as a whole but discarded some suspicious circumstances or the ground that they did no more than raise suspicion. The matter is not vital to the result of the appeal but is said to explain why the judge went wrong: the ultimate contention is that, on the facts found by the judge and the documents proved before him no reasonable tribunal of fact, properly directed, could come to the conclusion he did. As demonstrating the judge's wrong approach Mr. Hidden pointed to p. 51 of the Reasons for Verdict, where the judge was considering the authenticity of a written resolution of the directors of Mosbert Holdings Limited ("M.H.L."):

"When I add that appearance to its absence from the Minute Book and the extreme difficulty all three witnesses had in dealing with it, the cumulative effect of the whole of that evidence leads me to very much doubt whether it is genuine. However, I must recognise, as a matter of law, that there are other inferences which might reasonably be drawn from the same primary facts I have mentioned. I am therefore unable to find that it is a forgery. However, its authenticity is so doubtful that I will not give it any material weight in favour of the defence."

It is the word ''therefore" which tends to give weight to Mr. Hidden's argument, but it may be that the judge meant only that this was one of the factors which led him to conclude that the document was not a forgery. The judge cited Teper v R. 1952 A.C. 480 in his Reasons for Verdict and it is inherent in the Appellant's argument that the judge misunderstood the principle underlying that case. Although he may have done so, we are not satisfied that the error has been sufficiently established and we must give him the benefit of the doubt.

8. It follows from what we have just said that the only answer we can give to the fourth question put to us is that, on the assumption that he drew inferences in accordance with the principles stated in the Reg. v Yim Chor Man 1975 H.K.L.R. 546 and the Attorney General v Yiu Wun Ying Cr. App. 1978 No. 672, his approach was right in law.

9. We come now to the substance of the appeal and we think that the main issue can be dealt with most conveniently in relation to charge 3, which reads:

"False accounting contrary to section 19 of the Theft Ordinance, Cap. 210. Particulars of offence:

Amos Dawe, on a date unknown between the 17th day of December, 1974 and the 3rd day of January, 1975, dishonestly and with a view to gain for himself or another or with intent to cause loss to another, concurred in the falsifying of a record made or required for an accounting purpose, namely a book of account relating to Mosbert Holdings Limited by concurring in the making of an entry therein, in this Colony, which was misleading or deceptive in a material particular, namely an entry purporting to show that on the 18th day of December, 1974 the said Mosbert Holdings Limited had received full payment of $91,878,000 Hong Kong currency for the sale of 91,878,000 shares in the said Mosbert Holdings Limited to the Development and Commercial Bank Limited."

The elements of that charge were (1) that in return for the allotment of the shares there specified the company was shown in the books to have received full payment in Hong Kong currency (or, more briefly, "in cash"), (2) that full payment was not made in cash and (3) that the falsification was with a view to gain or to causing loss. The defence in the court below appears to have been directed towards the third of these elements, whilst the judge, on his own initiative, dismissed the charge also on the ground that payment had been made in cash: he took the view that the defence to the third element also negatived the second element.

10. It has been contended on behalf of the Respondent - and the judge appears to have thought - that the case for the Crown altered in the course of the trial. Originally, the argument runs, the gravamen of the charges was that there was in reality no consideration at all for the allotment of 91,878,000 shares to the Development and Commercial Bank Limited ("D. & C.B.") and that only at a later stage was it suggested that the complaint was the absence of actual cash consideration. Although the wording of charge 2, standing alone, might lend some support to this contention, we are satisfied that it was clear from the beginning that the absence of cash was the substantial matter of complaint and we are not persuaded that the Respondent was prejudiced by any misunderstanding. Charge 1 expressly mentioned "cash" and charge 3 "the payment of $91,878,000 Hong Kong currency". Nothing that was said in opening the case for the Crown was inconsistent with that allegation. It was the defence who sought to argue that the provision of property to the value of the allotment price constituted "payment in cash" and it was to meet that argument that the prosecution sought to show that in truth no property had been transferred by way of consideration for the shares.

11. The case for the Crown centered upon what has been described as "the cheque cross firing exercise in Brunei", whereby five companies controlled by the Respondent exchanged cheques drawn on accounts each of which contained insufficient funds to meet the cheques drawn on it until credited with the value of other cheques in the circular exchange. At no time, either in the court below or before us, was there ever suggested an honest motive for such an exercise, nor can we conceive of one. Anyone knowingly responsible for it must have been intending to deceive. This was an aspect of the evidence to which, for all that counsel for the Appellant had made it the central pillar of his case, the judge made no reference whatever in paragraph 7 of the Case Stated ("The Court's Ruling") or, in fact, in his Reasons for Verdict. The seriousness of the omission becomes apparent when seen alongside the finding and comment of the judge

"that everything that was done in Brunei occurred with the knowledge, authority and in accordance with the instructions of Dawe. If the procedures followed in Brunei were dishonest and the subsequent accounts were based on those procedures then Dawe is guilty."

The comment may not have been entirely accurate, but, if that is what the judge thought, it is difficult to see how he came to acquit the Respondent:  the procedures followed in Brunei cannot have been anything but dishonest. At p. 22 of the Case Stated the judge says:

"I held that an exchange of cheques, as performed in Brunei, was "by itself neutral. It might represent a cash transaction. It may not. To determine whether the exchange is genuine or fraudulent one must next turn and ascertain whether assets were transferred." I want on to hold that if the exchange of cheques evidenced a transfer of assets of a value sufficient to negative fraud, those cheques represented cash."

With respect he appears to have confused the cheque cross firing exercise with the alleged transfer of assets in payment for the allotment of shares. The exchange of cheques in Brunei could not possibly be "neutral". It could not "represent a cash transaction" because there was no cash or cash facility with the bank to support the cheques. No amount of property elsewhere could give the cheque cross firing exercise a validity which it did not otherwise have.

12. The last but one passage cited above from the Reasons for Verdict disposed of the first defence relied upon by the Respondent, namely that the whole of the cheque cross firing exercise had been carried out by a man called Choh Yet on his own account and without the knowledge of the Respondent. The alternative defence put forward was that there was no motive of gain or of causing loss, because assets to the value of $91,878,000 were intended to be, and had been, transferred to the company as consideration for the allotment of the shares. If that fact had been established it might have been a good defence, even though the Crown's contention was that nothing less than the payment of cash could be a good defence to any of the charges. What defeats the alternative defence is that the assets relied upon were not transferred in payment for the allotment of the shares and, it is argued, were never intended so to be transferred. What the Respondent is shown to have done is this. He transferred assets to a nominal value of $91,878,000 to Overseas Acceptance Limited ("O.A.L.") and M.H.L. bought the entire equity in O.A.L. from Singapore Trading Company (Private) Limited ("S.T.C."). The transfer of those assets to M.H.L., therefore, was not in consideration of the allotment of the shares in question but of the payment of the agreed purchase price for the equity in O.A.L., a fact which the Respondent very well knew. If M.H.L. was having to pay for the equity in O.A.L., it was having to pay for the assets which had been transferred by the Respondent to O.A.L. and M.H.L. was receiving no consideration for the allotment of its shares. That must have been obvious to the Respondent and the false entries in the books must have been intended to cause loss to the shareholders of M.H.L. Only if the Respondent had been able to arrange for O.A.L. to transfer "the assets" to M.H.L. as payment for the allotment of the shares could the defence possibly have succeeded. Whether it would even then have succeeded would have depended upon the Respondent's honest belief in the value of the assets transferred and, as he elected not to give evidence, he might still have been in difficulty. Much of the trial was taker up with an attempt to establish that the assets were in fact worth $91,878,000, but that was an issue which counsel for the Crown at all stages of the proceedings firmly asserted to be unnecessary for decision and, in the event, we think they were right. As it is, there could be no defence, on the findings and the evidence, to the allegation of fraudulent intent.

13. The judge's excursion into the meaning of payment "in cash" thus became irrelevant to charge 3, for there was no evidence upon which he could properly find that payment was made at all. However, as question 2 put to us involves our saying whether a transfer of assets of like value could constitute payment in cash, we will deal with that issue here. The judge's view that he could was based upon a, passage in 7 Halsbury's Laws of England (4) 209 (380) and the cases there cited. With respect to him we think he has wrongly extended the principle beyond what has so far been established. No doubt the waiver in good faith of an existing, enforceable debt owed by a company to an allotted can constitute "payment in cash" within the meaning of s.45 of the Companies Ordinance. This aspect of the case was not argued before the judge and none of the cases he referred to supported the view which he reached. In Re Johannesburg Hotel Co. Ex Parte Zoutpansberg Prospecting Company 1891 1 Ch. 119 decided that for a transaction other than actual payment in currency to constitute "payment in cash'' there had to be cross demands, each upon the other, for present payment. That is enough for our purposes and it is not necessary for us to consider whether in Hong Kong - where we are not bound by the decision in Spargo's Case 1873 8 Ch. App. 407 - "payment in cash" can in any circumstances whatever be construed to cover payment without cash. This was not a case where, even if the assets had been transferred directly to M.H.L. by the Respondent himself as agent for the allottee (D. & C.B.) as consideration for the allotment, there would have been payment in cash. The entry in the books of account clearly suggested a payment in Hong Kong currency.

14. We turn next to charge 1, which reads:

"Conspiracy to defraud contrary to Common Law. Particulars of offence:

Amos Dawe, being a director of Mosbert Holdings Limited, conspired with CHOH Yet, the Development and Commercial Bank Limited, the said Mosbert Holdings Limited, Oil Palm Plantations (ONE) Limited, Rubber Plantation (ONE) Limited, Overseas Acceptance Limited and Singapore Trading Company (PTE.) Limited, on divers days between the 31st day of August, 1974 and 11th day of March, 1976, in this Colony, to defraud the shareholders and the creditors of the said Mosbert Holdings Limited and such persons as might purchase shares in the said Mosbert Holdings Limited by falsely representing that an issue of 91,878,000 shares in the said Mosbert Holdings Limited to the said Development and Commercial Bank Limited was a genuine transaction whereby the said Mosbert Holdings Limited would receive full cash consideration for the said shares."

This charge was dismissed on two grounds: the first was that, the judge having found "that Choh Yet at no stage entered into any agreement with Dawe to defraud shareholders, creditors or such persons as might purchase shares in M.H.L by making the false representation particularised" and "that all six companies were fully controlled by Dawe", there was no one with whom the Respondent could be shown to have conspired; and the second was that even if Choh Yet were not so eliminated, the exchange of cheques in Brunei "represented, in law, what in effect is to be treated as the payment of cash in respect of what [he found] to have been a genuine transaction".

15. As to the second ground, we have said that upon no view of the cheque cross firing exercise could it properly be said to represent a "genuine" transaction: it was dishonest from first to last. It did not represent a "payment" at all but merely a series of paper transactions intended to show that payments had been made when in truth they had not. Much time was spent in trying to persuade us that a purchase by M.H.L. of the entire equity in Raja Enterprises Limited ("Raja") and 51% of the equity in Mosbert Investment and Development (Private) Ltd ("M.I.D.") and of the entire equity in O.A.L. were genuine transactions. We did not understand the Appellant to contend that all those involved were party to the conspiracy. What was suggested was that the Respondent never intended (and that Choh Yet did not intend at least on 18th December, 1974, the date of the cheque cross firing exercise) that those transactions should be genuinely executed. Part of the Respondent's case was that property was transferred, and the court was, in effect, asked to infer that it was his intention that that property was to be the consideration for allotment of M.H.L. shares. He did not give evidence and there was no admissible evidence as to his intention beyond what in fact happened. Choh Yet said that he himself thought that that was the Respondent's intention but it was "not [his] personal opinion to do this transaction", i.e. the cheque cross firing exercise. In the event the transfer of property was clearly not the consideration for the shares: the cheque cross firing exercise was designed to make it appear that the allottee of the shares had paid in cash. The paper work was impeccable and it may well be that the directors who approved the agreements honestly believed that they would be executed according to their tenor. That would not make them genuine transactions if those signatories, too, were being deceived as to the true nature of the transactions.

16. It has not beer argued before its that the Respondent had been proved to have conspired with anyone other than Choh Yet: it is the finding that Choh Yet did not conspire with the Respondent in the manner alleged that is attacked. That composite finding involves, or may involve, several subsidiary findings:

It is not disputed that Choh Yet went to Brunei on the express instructions of the Respondent and we have seen that the judge expressly found that what Choh Yet did there was done with the Respondent's full knowledge and authority. Choh Yet asserted that he did not know that the scheme was dishonest but agreed that he did not think it was a proper transaction. It follows from what we have already said that no one who knew what Choh Yet clearly did know could possibly have believed that the scheme was honest or have had any intent other than one to defraud. He knew that the five companies involved in the cheque cross firing exercise had opened accounts with the National Bank in Brunei for the specific purpose of the exercise, with only nominal deposits; that four of the companies were in fact shell companies, thus being re-activated; that all five companies were controlled by the Respondent; that he and Goh Eng-chong had been sent to Brunei for the specific purpose of the exercise; and that all the cheques bore the same date and were intended to be negotiated in immediate succession.

17. It only remains for the Appellant to establish that the fraudulent agreement was to be effected by the false representation particularised. The more fact that Choh Yet was party to the cheque cross firing exercise was not enough. However, when one appreciates that he was a director of many of the Mosbert Group of Companies and personal assistant to the Respondent and the fact that the sum of B$45,939,000 - the exact equivalent of the price of the newly allotted shares - was included in the cheque cross firing exercise, it becomes impossible to do otherwise than conclude that he knew about the representation contained in the letter dated 17th October, 1974 to the shareholders of M.H.L. and intended that the deception should be continued by means of the cheque cross firing exercise. If there had been a genuine intention to transfer assets to the value of $91,878,000 to M.H.L. as consideration for the allotted shares, it might have been open to the Respondent to say that there was an intention to deceive but not to defraud. The existence of the cheque cress firing exercise is very strong evidence that there was not such an intention, and the manner in which the assets were transferred puts the matter beyond argument. The finding of the judge was not ultimately dependent upon the credibility of the witnesses but upon the proper inferences to be drawn from the primary facts, and it seems to us that the conclusion he reached cannot stand.

18. Charge 2 was as follows:

"Publishing a false statement, contrary to section 21 of the Theft Ordinance, Cap. 210. Particulars of offence:

Amos Dawe, on the 17th day of October, 1974, being an officer of a body corporate called Mosbert Holdings Limited concurred in the publishing, in this Colony, of a certain written statement namely a letter dated the 17th day of October 1974 addressed to the shareholders in the said body corporate which to his knowledge was or might be misleading false and deceptive in certain material particulars namely that a proposed issue of 91,878,000 shares at par of $1 Hong Kong currency to the Development and Commercial Bank Limited would provide capital for the said Mosbert Holdings Limited with intent thereby to deceive members of the said body corporate about its affairs."

The letter to the shareholders recited that "additional funds" were required and that the Board had recommended the issue of new shares "at par of HIM" to the D. & C.B. The proceeds of the issue were to be used "to finance" various activities of the company, "to repay" some loans and "to provide additional working capital". The contention on behalf of the Appellant is that this letter would inevitably lead the shareholders to believe that the D. & C.B., itself or by its agent, would pay cash for the shares. It is not relevant to this charge that the resolution of an extraordinary general meeting which authorised the issue expressly stated that the allotment was to be "for cash", nor that the agreement between the directors of M.H.L. and of D. & C.B. expressly provided for a subscription "in cash": we are concerned with the effect of the statements in the letter to shareholders. That letter did not refer to cash or, directly, to payment in Hong Kong currency. Nevertheless it is submitted that any reasonable shareholder would construe the letter as indicating that cash would be paid. The first question is whether, assuming that the letter should be so construed, the charge gives adequate particulars of, the offence in fact alleged. It merely alleges that the Respondent falsely stated that the issue would provide "capital": it does net allege that he said it would provide cash. To provide assets in any form would be to provide "capital". "Working capital" is defined by Jowitt as "excess of current assets over current liabilities'' and therefore need not consist of cash. If the property had in fact been transferred as consideration for the allotment of the shares, the Appellant might have been in some difficulty. As it is, the unavoidable conclusion is that the Respondent did not intend that the D. & C.B. should pay for the shares either in cash or in property and therefore he knew that there would be no provision of capital in any form. It has never been suggested that he planned to transfer the property otherwise than by the complicated series of intermediate transfers ending with the purchase by M.H.L. of the entire equity in O.A.L. from S.T.C. and there is not a scrap of evidence pointing to such an intention.

19. Whatever the proper construction of the letter to the shareholders, other documentary exhibits, including the statutory return of allotment, left no room for doubt that the shares were to be paid for in cash. That the Respondent was from the start not being straightforward in relation to this allotment appears from an exchange of letters between himself as director of Amos Dawe Limited and the D. & C.B. on the 9th, 11th and 12th October 1974 which refer to the allotment of some of the 91,878,000 shares to Amos Dawe Limited through the agency of the D. & C.B., whilst on 10th October 1974 he was attending a meeting of the directors of M.H.L. and voting for a resolution that the allotment of the 91,878,000 shares be to the D. & C.B. It was suggested that the explanation could be that the letters were all prepared in advance and , were not destroyed when the allotment to the D. & C.B. was agreed. In the absence of direct evidence to that effect it is a fanciful suggestion. The Respondent was asked on 16th November 1974 by the Secretary of M.H.L. for instructions relating to the necessary ledger entries in relation to the allotment. The Respondent replied that he was "looking into it". After some six weeks his reply was sent, through an officer of a company which performed secretarial and accounting services for the Mosbert Group, in the following terms .

"91,878,000 shares alloted to Development & Commercial Bank Ltd. for cash was banked into Mosbert Holdings Ltd.'s Bank Account no. 6284 with National Bank Ltd. - Brunei. Simultaneously, Mosbert Holdings Ltd. sold two of its subsidiary companies and purchase the entire capital in another company in Brunei." (sic)

That was a manifest untruth, since the "cash" credited to that account was, apart from the nominal deposit, non-existent and the fact that an immediate, honest reply was not given to the enquiry weighed heavily against the Respondent.

20. As the assets which were alleged to be or to support the consideration for the allotment of the shares were in truth not the consideration for the allotment at all, it was unnecessary to identify them or to consider what was their value. A very large part of the evidence was directed to those matters. Included in such evidence were documents produced by the defence and admitted under s.65C of the Evidence Ordinance on agreed conditions. The agreed conditions were that the prosecution admitted neither the authenticity nor the truth of the documents, although the of the documents by the alleged signatories were not disputed. Among the documents was Exhibit D.5, a letter written by the Respondent to the directors of O.A.L. and purporting to set out the "shares and property" which he was willing to "sell" to O.A.L. "in exchange for" 63,953,400 shares in O.A.L. The letter goes on to state that the Respondent would sell 63,938,400 shares in O.A.L. to M.H.L. for B$76,750,080. The document was repeatedly referred to by counsel for the Respondent as if it were evidence which tended to prove the facts which it asserted. With respect it did no such thing. To the extent that it was possible for the truth of those assertions to be established by other evidence it was an explanatory link in the evidential chain, but it was not itself evidence of the truth of those assertions. Thus there was evidence that Choh Yet and other directors of M.H.L. worked out which of the Respondent's assets should be used for a proposed exchange with the shares which were eventually allotted to the D. & C.B. and that Exhibit D.5 coincided with their conclusions, but there was no evidence that the Respondent had entered into the agreements referred to in that document. Equally the letter visa no evidence that the shares and property were in fact worth the figures therein placed upon them. On the judge's own findings there was insufficient evidence to satisfy him that the assets "were transferred by Dawe to M.H.L.". In truth there was no evidence at all of such a transfer and it was wrong for the judge to conclude that the Respondent was "entitled to the benefit of the doubt on that issue of transfer": this defence was based on speculation unsupported by evidence.

21. Exhibit D.6 was another of the disputed documents admitted under s.65C of the Evidence Ordinance. It purported to be a photostat copy of a written resolution dated 9th December 1974 by the directors of M.H.L. and was in these terms:

"That in consideration of Mr. & Mrs. Amos W. Dawe providing assets for the exchange of shares with Overseas Acceptance Ltd., we the Directors undertake to purchase 63,958,400 Overseas Acceptance Ltd. shares in cash from our sale of 91,878,000 shares to the Moscow Norodny Bank Ltd. We hereby unconditionally guarantee that all Mr. Dawe's personal guarantees in all his accounts with the Companies, Financial and Banking institutions for the Mosbert Group be released as follows:

That the sum of B $10,792,020 as per Mr. Dawe's letter to Overseas Acceptance Limited of 9th December 1974 be used to pay all the above mentioned guarantees and loans upon the sale of 63,958,400 shares to us.

That the sum of US$31,000,000 be set aside from the sale proceeds of 91,878,000 shares to Moscow Norodry Bank Ltd. for redemption of the said shares."

Those of the signatories who gave evidence were unable to recall having signed this resolution, although they identified the signatures. The original resolution did not appear in the minute book, although there was a blank page where it could have gone, but it must be acknowledged that original resolutions did not always find their way into the minute book. Moreover, when one of the directors later asked for copies of all the resolutions which he had signed, no copy of this resolution was included amongst those sent to him. The resolution itself is not entirely clear, even if it be genuine. First it relates to ''an exchange of shares with O.A.L." for which the Respondent and his wife would provide assets. To whom the assets were to be provided and who was to make the exchange with O.A.L. do not appear. The third transaction referred to is a sale by M.H.L. to Moscow Norodny Bank ("M.N.B.") of 91,878,000 shares. These must have been the same shares as those agreed to be allotted to the D. & C.B. for cash in October and in fact so allotted pursuant to a resolution dated 1st November 1974 but, at the request of M.H.L., issued in the name of Mosbert Finance Nominees Ltd. ("M.F.N."). The directors of M.H.L. then, in the second transaction mentioned, appeared to undertake to purchase 63,958,400 shares in O.A.L. with the "cash" received upon the sale of shares to M.N.B. The document does not state from whom the O.A.L.'s shares are to be purchased. The judge had very much doubt whether the document was "genuine". By that he must have meant that it may not have represented a genuine resolution by the Board of M.H.L'. There was no resolution produced authorising an allotment of shares to M.N.B. (whether beneficially or otherwise) and this document certainly was not evidence of a payment of cash by M.N.B. to M.H.L. in consideration of an allotment of shares to the D. & C.B. - or even to M.N.B.

22. Exhibit D.7 was a letter dated 10th December 1974 and addressed to the Respondent by O.A.L. It purported to accept the shares and property listed in Exhibit D.5 (and alleged to be valued at B$76,750,080) as consideration for the allotment of 63,958,400 shares in that company to Goh Eng-chong and Low Seow-nam in trust for the Respondent "or other beneficial owners". The allotment at per of that number of shares of B$1 each was approved by a resolution of the directors of O.A.L. on 10th December 1974. No approval is recorded of an allotment otherwise than for cash, but there are two resolutions dated 11th December 1974 authorising the purchase by O.A.L. of various blocks of shares at a total consideration of B$190,728,400. By one of these resolutions 16,000,000 shares of Oil Palm Plantation (One) Limited ("O.P.P.") , inter alia, were to be purchased at B$2.50 a share and by the other 16,000,000 shares of O.P.P., inter alias were to be purchased at B$1.50 a share. They were B$1.00 shares in a shell company. The transactions are inherently suspect and it is against that background that one has to view the agreement by M.H.L. to purchase from S.T.C. the entire equity in O.A.L. at a price of B$1.50, which was followed by an agreement to reduce that price to B$0.90 a share for no recorded reason. It appears from the correspondence that a sum of B$74,499,021 was in fact paid -an overpayment of B$16,936,401 for which, again, no explanation was recorded although credit for it was subsequently given.

23. We do not think it necessary to review all the contested documents in detail. Once they were admitted in evidence they became material which had to be considered and given the probative weight they deserved. However, until the authenticity and truthfulness of the documents was established, their weight was nil.

24. Whether the terms of the letter to shareholders were in truth indicative of an issue for cash is a question which, had it been necessary to decide it, might have caused us anxiety. However, we incline to the view that, in the absence of any statement that the shares would be paid for by delivery of property to a value equivalent to the par value of the shares, any shareholder would conclude that cash was to be paid.

25. We think the judge may have been blinded by the fallacy in one point which was sought to be made by counsel for the Crown in the court below when he suggested that the fact that, in the event, some of the new shares were offered to M.N.B. by M.E.L as security for a loan supported his contention that the issue of the shares was not for the purposes stated in the letter to shareholders. As the judge rightly pointed out during argument, it was the proceeds of the allotment of the shares which would be the property of M.H.L. and which could finance the projects described and it was immaterial what happened to the shares themselves if they were once allotted to the D. & C.B. in accordance with the letter to shareholders. This error (to which the judge again drew attention in his judgment) did not, however, affect the substance of the case against the Respondent.

26. We have already given an answer to the fourth question put to us. We answer the other questions as follows:

We will adjourn for argument as to the order which should be made.

17th November 1982.