HKSAR v. CHUNG YEE FONG, HELEN

CACC 33/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 33 OF 2004

(ON APPEAL FROM DCCC NO. 686 OF 2003 )

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J U D G M E N T

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Hon Woo VP (giving the judgment of the Court):

Background

1. This is an application for leave to appeal against conviction. The applicant, Chung Yee-fong, Helen, faced two alternative charges, namely theft, contrary to section 9 of the Theft Ordinance, Cap 210 (the first charge), or alternatively, procuring the execution of a valuable security by deception, contrary to section 22(2) of the Theft Ordinance (the second charge).

2. The particulars of offence of the first charge were that on 18 November 1993, the applicant stole a chose in action, namely a debt of $5,285,825.76, owed by Chekiang First Bank Limited to Kao, Lee & Yip, Solicitors ("KLY"). The particulars of offence of the second charge were that on or about 18 November 1993, the applicant dishonestly with a view to gain for herself or another, or with intent to cause loss to another, procured from KLY the execution of a cheque dated 18 November 1993 in the sum of $5,285,825.76, drawn on the account of the said KLY with Chekiang First Bank Limited by deception, namely, by falsely representing that:

(a) The sum of $30,000 being the deposit money for the property situated at Flat C, 14th Floor, Block 1, Braemar Hill Mansions, No 15 Braemar Hill Road, Hong Kong ("the property") has been returned by the vendor to the purchaser;

(b) the purported purchaser named in the cancellation agreement dated 18 November 1993 was entitled and authorised to sign the cancellation agreement; and

(c) upon receiving the sum of $5,279,825.76, being the balance of the purchase price of the property, she would pass a good title to the property to Ng Yun-chun and Leung Shuk-ching.

3. The applicant was tried before Judge Line in the District Court. At the conclusion of the trial on 15 January 2004, the judge found her guilty of both charges, but as they were framed in the alternative, the judge chose to convict her of the second charge. The case was then adjourned for two weeks in order that a psychiatric report could be prepared at Siu Lam Psychiatric Centre. On 29 January 2004, the judge passed a nominal sentence of one day's imprisonment on the basis that she had been continuously in custody (partially in USA) since sometime in 2001.

The facts

4. All the relevant facts revolved around the completion of the sale transaction in respect of the property by the applicant as vendor that took place on or about 18 November 1993. But the story started in May 1988. Most of the underlying facts were contained in the Admitted Facts made before the judge by both the prosecution and the defence pursuant to section 65C of the Criminal Procedure Ordinance, Cap 221.

5. On 27 May 1988, the applicant signed a provisional agreement in Chinese with an intended purchaser named in it as "Sarrayo Investment Co Ltd" ("Sarrayo") to sell the property for the price of $1,960,000 ("the provisional agreement"). Pursuant to it, the applicant was paid an initial deposit of $30,000 by the intended purchaser. On 13 July 1988, the provisional agreement was registered with the Land Registry by Memorial No 3762108 against the property.

6. Some time in 1989, Sorrayo Investment Co Ltd ("Sorrayo") took out an action in the High Court, HCA 642/1989, against the applicant for specific performance of the provisional agreement, but the action was never registered as a lis pendens against the property. It is to be noted that the judge found as a fact that Sorrayo was in fact the intended purchaser but its name was written wrongly as Sarrayo on the provisional agreement.

7. It was a fact admitted by the prosecution and the defence that the intended purchaser failed to sign the formal sale and purchase agreement and pay the further deposit to the applicant as stipulated in the provisional agreement.

8. The judge also found as a fact that HCA 642/1989 was practically speaking abandoned in 1991.

9. In the meantime, on 30 September 1988, the applicant, who had owned a company by the name of Obion Ltd, caused the name of that company to be altered to Sarrayo Investment Co Ltd, the name of the intended purchaser under the provisional agreement.

10. On 28 June 1992, the applicant entered into a second sale and purchase agreement with Panlead Development Ltd ("Panlead") at the price of $4,800,000. Panlead paid a deposit of $200,000 to the applicant under this second agreement. The solicitors acting for Panlead in the transaction refused to complete the purchase because of the blot on the title to the property caused by the registration of the provisional agreement. On 8 October 1992, Panlead took out a writ to claim against the applicant for the return of the deposit and damages in the High Court, being HCA 6853/1992. The basis for the claim was that the applicant was unable to pass or show good title to the property by reason of the fact that the provisional agreement had been registered in the Land Register and had not been cancelled. That action was defended by the applicant.

11. On 23 August 1993, while HCA 6853/1992 was pending, the applicant entered into a third agreement with Ng Yun-chun and Leung Shuk-ching, who were husband and wife ("the 3rd purchasers") to sell the property to them for $6,450,000. KLY was the solicitors firm handling the transaction for the 3rd purchasers. Helen Chung & Co, solicitors, of which the applicant was the principal, was acting on behalf of the applicant in the transaction.

12. KLY and Helen Chung & Co entered into correspondence about the title to the property, in the course of which Helen Chung & Co sent a draft cancellation agreement alleged to be "between our client [ie the applicant] and Sarrayo Investment Co Ltd" for the perusal of KLY. It was expressly stated that the cancellation agreement "would only be executed upon completion."

13. KLY requested that the draft cancellation agreement should correctly describe the property and should "provide for the refund to the purchaser of the deposit paid under the agreement Memorial No 3762108 as is usually the case in cancellation of agreements for sale and purchase."

14. Eventually, a cancellation agreement dated 18 November 1993 was made between the applicant and Sarrayo Investment Co Ltd ("the cancellation agreement"). Following the recital of the provisional agreement registered by Memorial No 3762108 and the deposit of $30,000 paid thereunder, the cancellation agreement provided that

"IN CONSIDERATION of the return of the Deposit Money to the Purchaser as aforesaid the parties hereto hereby cancel the said Agreement to the intent that the said Agreement shall hereafter in all respects be null and void and release each other from the obligations respectably contained in the said Agreement."

15. A receipt clause evidencing the receipt by Sarrayo of the return of $30,000 deposit was included in the cancellation agreement. The applicant signed as the vendor and also signed for and on behalf of Sarrayo as a director. The receipt clause was also signed by her as a director of Sarrayo. All her three signatures were witnessed by Mr John Morgans, a solicitor of Baker & McKenzie.

16. The cancellation agreement was provided to KLY. The sale went through. KLY drew a cheque on their clients' account in favour of the applicant for the balance of the purchase money in the sum of $5,285,825.76. That was the cheque referred to in the particulars of offence of the second charge.

17. Several witnesses were called by the prosecution and the applicant also gave evidence. The judge found her not a witness of truth.

18. The judge found that the first two false representations referred to in the particulars of offence of the second charge proven, but did not find it necessary to decide on the third representation as to whether the applicant would pass a good title to the property to the 3rd purchasers. He convicted the applicant of the second charge.

The hearing of the application

19. Before dealing with the application for leave to appeal, we need to briefly record what happened during the hearing on 12 August 2004 and the connected history.

20. Legal Aid was granted to the applicant for the trial. She had Mr H Y Wong and Messrs Littlewoods, respectively counsel and solicitors, assigned to represent her. During the course of the trial, the applicant discharged both her counsel and solicitors. The trial proceeded with the evidence of PW5 Raymond Chu while she was acting in person. At the conclusion of the prosecution's case, she made a No Case submission which was rejected by the judge. She then reinstated her counsel and solicitors before she elected to give evidence in her defence. Mr Y H Wong and Messrs Littlewoods represented her till the conclusion of the trial.

21. The judge convicted the applicant on 15 January 2004 and passed sentence on 29 January 2004. The applicant filed her application for leave to appeal on 30 January 2004 with grounds of appeal that she apparently drafted ("personal grounds").

22. On 4 May 2004, the applicant was granted legal aid in respect of her application for leave to appeal. The same counsel and solicitors were assigned. Perfected Grounds of Appeal signed by Mr H Y Wong were then filed on 21 June 2004.

23. By a letter dated 29 June 2004, Messrs Littlewoods applied for transcript of the evidence of Paul Ho (PW4) and Raymond Chu and of the applicant's No Case submission. After the court had sought detailed reasons in support of the application, by a letter of 12 July 2004, Messrs Littlewoods confirmed that they did not need the transcript.

24. By an appeal aid certificate dated 6 August 2004 issued by the Director of Legal Aid, Mr Aziz Hoosen was assigned in lieu of Mr H Y Wong and Messrs Jal N Karbhari & Co were assigned in lieu of Messrs Littlewoods, to act for the applicant.

25. By a letter of 10 August 2004 written by Messrs Jal N Karbhari to the Registrar, an application was made to the Court for an adjournment of the hearing fixed on 12 August 2004. The reason given was "in order to prepare the case properly and in order to see if we require to amend the grounds of appeal, we might need to obtain transcript of Court below". Stuart-Moore, Ag CJHC, refused the application on 10 August 2004.

26. At the commencement of the hearing before us on 12 August 2004, Mr Hoosen again sought an adjournment, mainly on the basis of obtaining the transcript of the trial proceedings to support a ground of appeal raised in the applicant's personal grounds alleging that the judge "kept interfering and stopping the Appellant from giving evidence at witness stand." This was not a ground raised in the Perfected Grounds settled by Mr H Y Wong. We were told that the transcript of the entire hearing might not be needed, because during the adjournment further instructions would be taken from the applicant. Having considered the matter very carefully, we did not believe it right to grant an adjournment in the circumstances.

27. Mr Hoosen then proceeded to argue the Perfected Grounds and adopted the Skeleton Submissions dated 21 July 2004 prepared by Mr H Y Wong. Mr Hoosen, at some length, emphasised certain of the grounds and drew our attention to certain other matters. At the end of his address, Mr Hoosen sought leave to allow the applicant to address the court on her personal grounds. We refused. Whereupon, Mr Hoosen informed us that the applicant had discharged him and his solicitors and she would act in person. We therefore proceeded to hear the applicant. She presented to us an eleven-page affidavit which she had sworn on 12 August 2004 which was said to contain her grounds and submissions. She also addressed us.

28. Her address was mainly on why we should have adjourned the case for the transcript of the trial to be obtained. She continued to deal with some facts to support the ground that she was not deceiving KLY or that KLY was not deceived by the cancellation agreement.

The grounds of appeal

29. We do not feel it necessary to deal with the applicant's personal grounds of appeal save to say that some were covered by the Perfected Grounds that were relied on by her two successive counsel Mr Wong and Mr Hoosen, some were challenges to the view of the judge detached from the facts as found by him and some were even scandalous allegations without a scintilla of evidence in support, and that all of them were unmeritorious. We will concentrate on the grounds raised in the Perfected Grounds.

30. Seven grounds of appeal are raised on behalf of the applicant in the Perfected Grounds. Some of the grounds overlap and will be dealt with together.

Grounds (1), (3) and (5)

31. Ground (1) alleges that as the judge had found that Sorrayo had practically speaking abandoned HCA 642/1989 in 1991, he erred in finding that the applicant did not honestly believe that she could remove the "blemish" on title by executing the cancellation agreement. Ground (3) alleges that the judge failed to appreciate that the registration of the provisional agreement did not have any effect on title and did not protect Sorrayo because Sorrayo was not Sarrayo and in HCA 642/1989 it never sought rectification of the name Sarrayo in the provisional agreement. Ground (5) states that the judge had failed to consider the defence of claim of right adequately or at all.

32. The factual basis of these three grounds were that the judge found that Sorrayo had practically speaking abandoned HCA 642/1989 and that the applicant, in testimony, claimed that she believed that the provisional agreement had been repudiated. Reliance is also placed on the admitted fact that the intended purchaser under the provisional agreement had failed to pay the further deposit and sign the formal agreement as stipulated in the provisional agreement. This, it is argued, would have given rise to a repudiation of the provisional agreement by Sorrayo entitling the applicant to forfeit the deposit and treat the provisional agreement as at an end. She therefore, it follows, honestly believed that she had the right to execute the cancellation agreement on 18 November 1993, for the purpose of giving effect to this right of hers honestly claimed.

33. Mr Hoosen refers us to R v Tse Chun-fat [1992] 2 HKC 221 where the Court of Appeal cited with approval as a correct statement of the law as to bona fide claim of right what White J said in R v Kastratovic [1985] 19 A Crim R 28. At page 55, White J said:

"The cases of Lopatta, Langham, Smith, Salvo, Brow and Bonollo and many others constitute clear authority for the proposition that honest belief in a claim of right is a complete defence and entitles the accused to an acquittal, if that claim is accepted as a reasonable possibility by the jury, no matter how extravagant or unreasonable or dishonest the means used."

34. The Court of Appeal also cited what King CJ said in Kastratovic. King CJ referred to the case of Williams [1836] 7 Car & P 354; 173 ER 132, where the accused was charged with obtaining two sacks of malt from a debtor of his employer by falsely pretending to the debtor's wife that his employer had purchased the malt from her husband. The accused took the malt to his employer to enable him to pay himself the debt. King CJ observed:

"The application of the principles which I have derived from the authorities appears to lead to the conclusion that a person is not defrauded if he is caused to do no more than pay his just debt. If no more occurs than that, he cannot be said in any true sense to have acted to his detriment or to have been prejudiced in any lawful right, interest, opportunity or advantage. He has been caused to do no more than perform his lawful obligation."

35. It is important to note the limitation put on the defence of bona fide claim of right by King CJ:

"It would seem then that an intent to do no more than procure the payment of a debt which is presently due and payable to the accused, or which the accused believes to be presently due and payable, by the alleged victim is not an intent to defraud and is not converted into an intent to defraud by the employment of dishonest means or the means which are forbidden by the statute. That proposition, however, should not be understood in a wider sense than intended. It can apply only to a belief that the debt is presently due and payable. An intent to procure by dishonest means the payment of a debt at a date which is earlier than the due date to the detriment of the debtor would be an intent to defraud. Moreover I think that the proposition must be confined to a state of mind which excludes any belief that there is a genuine dispute about or reasonably available defence to the accused's claim."

36. The principles are well established. They do not help the applicant because the judge's finding that "the prosecution did prove for sure an absence of a belief in a claim of right". The judge also found the applicant's act of executing the cancellation agreement and providing it to KLY as objectively and subjectively dishonest, and that she knew that KLY would not have completed the third transaction without the cancellation agreement. The judge dealt with this in many parts of his Reasons for Verdict. For instance, he said:

"22. ... The point is that the vacation of the registration allowed the transaction to go forward in the way that it did; that vacation had been brought about by fraud; without the fraud the transaction would not have gone forward in the way that it did. Common sense tells one that no purchaser's solicitors would, in the absence of them joining a criminal conspiracy, agree to completion when the vacation of a prior registration of a sale and purchase agreement was brought about by fraud. Not only did common sense tell me this but so did two solicitors from Kao Lee and Yip. I was sure that the defendant knew it as well. ...

23. It follows that the prosecution did prove for sure an absence of belief in a claim of right and a belief that the owner of the chose would consent to its appropriation if the other knew of the circumstances of it. Knowledge of the circumstances of the appropriation of the chose in action would obviously include knowledge of the true position concerning the cancellation agreement.

...

26. The defendant did claim that she believed that the first agreement [the provisional agreement] had been repudiated. Whilst this is not at the forefront of her case in relation to dishonesty it left open the consideration that such a belief robbed her conduct of dishonesty as she was just taking a short cut to a position to which she was legally entitled. Such an argument was doomed as no one could consider it other than dishonest to remove so solemn and significant a thing as a registration at the Land Registry by the deceptive device adopted."

37. On behalf of the respondent, Mr Goodman submits, in our view correctly, that the judge did not accept that the applicant held an honest belief in a claim of right. The "honest belief in a claim of right" ground fails.

38. Under these three grounds, it is also argued that since the provisional agreement had been repudiated, Sorrayo had no claim against the applicant, and that Sarrayo, the name of the intended purchaser under the provisional agreement, was non-existent and therefore the provisional agreement was invalid. It is also argued that the registration of an invalid instrument (presumably on the basis that it was executed by an non-existent company) did not make it valid and could not have formed any blot on title. It is further argued that the registration of the provisional agreement would not protect Sorrayo as there was no registration of HCA 642/1989 as a lis pendens against the property. The existence of a handwritten note referring to the case of MEPC v Christian Edwards [1981] AC 205 on KLY's Land Registry search form is also prayed in aid because it was held in that case that if the facts and circumstances of a case were so compelling that the court concluded beyond a reasonable doubt that the purchaser would not be at risk of a successful assertion against him of the incumbrance, the court should declare in favour of a good title shown, which in turn would have suggested that KLY had considered the ineffectiveness of the registration of the provisional agreement.

39. Whether the lack of registration of HCA 642/1989 as a lis pendens against the property, as opposed to the mere registration of the provisional agreement, would have been effective to protect the interest of the intended purchaser under the provisional agreement is beside the point. Similarly, whether the applicant honestly thought that the provisional agreement should have been discharged, or would not have caused a blot on title, would not be decisive in the consideration of whether she was guilty of the second charge. All these would have been relevant to Sorrayo's interest in the property and the strength of Sorrayo's claim against her. But as far as KLY and the 3rd purchasers were concerned, the registration of the provisional agreement on the land register against the property was certainly a blot on title. The provisional agreement, as registered, evidenced an interest in the property that had priority over the 3rd purchasers' interest created by the third agreement for sale and purchase dated 23 August 1993, pursuant to section 3 of the Land Registration Ordinance, Cap 128. Unless this blot on title was cleared, no proper conveyancer would advise the 3rd purchasers to complete the third sale and pay the balance of the purchase money to the applicant. As we have said in para 36 above, the judge found that the applicant knew that no payment would have been made to her without the cancellation agreement. Thus, she had no claim of right to payment by KLY.

40. MEPC v Christian Edwards was scribbled on a document dated 17 November 1993 entitled "Land Search Form" relating to the property in KLY's papers produced at the trial. It was stated to be from "Allen Sy" for Search Clerk only, with a tick each marked on the two boxes for "land search" and "research". This document and the reference to the authority have to be considered in the context of contemporaneous documents. A "telephone minute" dated 16 November 1993 recorded a message that it was confirmed that the writ of summons Memorial No 5458658 had been stopped by the Land Registry for registration, and that up to date P H Sin & Co (solicitors acting for the second purchaser Panlead) had not resubmitted the writ for re-registration. There was also a letter dated 18 November 1993 from KLY to the 3rd purchasers. The letter referred to a conference held between the 3rd purchasers and Paul Ho in the morning. It noted that the writ of summons dated 8 October 1992 (in HCA 6853/1992) brought by Panlead against the applicant had been registered in the daybook of the Land Registry on 14 October by Memorial No 5458658 and marked "stopped deed", and that as KLY understood from Panlead's solicitors, the writ was withheld from registration by the Land Registry on the ground that Panlead's claim for the return of deposit was not a claim affecting land and thus not registrable in the Registry. The letter advised of the risk that the writ might be amended and resubmitted to the Land Registry for registration, which might take priority to the agreement for sale and purchase made between the 3rd purchasers and the applicant. This is clear evidence that the authority of MEPC v Christian Edwards written on the Land Search Form had nothing to do with the requirement of clearing the blot on title caused by the registration of the provisional agreement.

41. Even if KLY had considered the case of MEPC v Christian Edwards and come to the conclusion that the registration of the provisional agreement only created a little risk to good title, KLY's insistence on the necessity of the cancellation agreement and of the express provision of the return of the deposit of $30,000 under the provisional agreement in the cancellation agreement demonstrated beyond doubt that KLY did rely on the cancellation agreement to get rid of the effect of the registration of the provisional agreement as a blot on title, regardless of however slight the risk that the provisional agreement might have caused.

42. The argument that Sorrayo, the plaintiff in HCA 642/1989, was not the intended purchaser Sarrayo in the provisional agreement is nonsensical. Nor does the argument that Sarrayo was a non-existent company and that there was no claim by Sorrayo to rectify the provisional agreement strengthen the applicant's case. These arguments are based on part of the facts that at the time when the provisional agreement was signed there was no company known as Sarrayo, without taking into account the true facts that Sorrayo, which was existent, was a party to the provisional agreement. This well demonstrates that with that knowledge in mind, the applicant caused her company's name to be altered to Sarrayo. That change of name might not have been dishonest by itself because, as the judge described it, this was to achieve "a tactical advantage" (by blocking any attempt by others to do the same), but the applicant's using her own company with the altered name of Sarrayo to enter into the cancellation agreement as if it had been the intended purchaser under the provisional agreement to avoid the effect of the registration of the provisional agreement was a flagrantly dishonest act.

43. One of the arguments proffered in support of Ground (5) is that even a cursory reading of the cancellation agreement would reveal that on the face of it the applicant was selling her own property to a company of which she was the majority shareholder, through an estate agent (so that she would have to pay commission both as the seller and buyer), and for some mysterious reasons found it necessary to enter into such an agreement in the first place (when a direct assignment of the property would do), and for good measure had the provisional agreement registered against her own property and for so many years. Given such glaring irregularities, so it is contended, it could only have been wishful thinking that the cancellation could deceive anybody.

44. While the judge seemed to have accepted the force of this argument, he did not treat it as sufficient to detract from the applicant's guilt. His answer was:

"I judge that it was a risk that she was willing to take."

45. However, in our opinion, the risk that the deceit contained in the cancellation agreement could have been revealed is not as great as it is wished to make out for the applicant. The cancellation agreement was clothed with respect by being witnessed by Baker & McKenzie, instead of by Helen Chung & Co, and was supported by the company documentation of Sarrayo. When the vendor and the purchaser under the provisional agreement were made to appear to have signed such a cancellation agreement with an acknowledgement of the receipt of the returned deposit, it would be difficult to expect KLY to inquire further into the circumstances under which the provisional agreement was signed and the unusual and unexpected intricacy that the name of the purchaser Sarrayo in the provisional agreement was a misspelling of Sorrayo, the true purchaser. Moreover, the clear evidence was that KLY relied on the cancellation agreement. It is not a defence to say that the victim of fraud should not have been taken in, if indeed, he had been deceived.

46. None of grounds (1), (3) and (5) has any substance.

Ground (2)

47. Ground (2) alleges that the judge erred in finding that the $30,000 deposit had remained with the applicant and that KLY, who was concerned with the return of the deposit, was misled to believe that the person who might claim the deposit had received it back. The basis of the argument was that Sorrayo was not entitled to the return of the deposit which the applicant was entitled to forfeit. As a result, it is argued, the judge had failed to consider the subjective honesty of the applicant in this regard.

48. This ground is similarly devoid of merit and is not in accordance with the facts as found by the judge. If the applicant was honest about her belief that she was entitled to forfeit the $30,000 deposit paid by Sorrayo under the provisional agreement, there was no reason why she did not tell KLY the truth, but instead employed the deceptive device of the cancellation agreement in which she pretended to be the purchaser under the provisional agreement, to have received the return of the deposit and to agree to the cancellation of the provisional agreement.

Ground (4)

49. Ground (4) relies on the fact that in the correspondence between Helen Chung & Co and KLY before the completion of the third sale the applicant threatened to exercise her right under clause 8 of the 1993 agreement to annul the sale on the ground that she was unable or unwilling to answer the requisitions raised by KLY. It is argued that the threat to exercise her right under clause 8 to annul the sale must be inconsistent with any dishonest intent on her part to execute the cancellation agreement in order to facilitate the sale. It is complained that the judge failed to consider this point adequately or at all.

50. The letter that referred to clause 8 of the 1993 agreement was one dated 8 November 1993 written by Helen Chung & Co and addressed to KLY, which dealt with the terms of the cancellation agreement as well as the Memorial No 5458659 relating to the writ in HCA 6853/1992 (Panlead's action). The crucial sentence was

"You must take the title as it is or our client will insist to exercise her right to rescind under condition 8 of the Sale and Purchase Agreement."

51. It is clear from the letter itself that the reference to clause 8 was made in connection with the registration of that writ of summons or the lack of it and had nothing to do with the cancellation agreement. Even if it could also be treated as referring to the cancellation agreement, the threat of the applicant's reliance on clause 8 to annul the sale on the ground that she was unable or unwilling to answer KLY's requisitions could only prove that she had that option opened to her. However, she did not pursue that course but instead executed the cancellation agreement and provided it to KLY in order to complete the sale. To carry on with the sale or to annul the sale were the two options opened to her at the time. She chose to use the deceptive device of the cancellation agreement to get the sale completed and to get the balance of the purchase money from KLY. The availability of the option of annulling the sale does not support the contention that she was not dishonest in providing the cancellation agreement to KLY. Quite the contrary, the annulment would have been an honest thing for her to do so that it would not have been necessary for her to use the deceptive device to achieve completion. Adopting a dishonest device while an honest means was available again demonstrates beyond doubt that she was dishonest.

Grounds (6) and (7)

52. The remaining grounds (6) and (7) relate to the identity of the person deceived under the second charge. The particulars of offence of the second charge were that the applicant procured from KLY the cheque for the balance of the purchase money. It was in evidence that the cheque was signed by two partners of KLY, Emmanuel Kao ("Kao") and Raymond Chu. Raymond Chu and another solicitor of KLY gave evidence before the judge. That other solicitor was Paul Ho who was an assistant solicitor in KLY at the time.

53. Ground (6) relies on the presence of the handwritten note of the case MEPC v Christian Edwards to suggest that Kao, who was not called to give evidence, might have considered that the registration of the provisional agreement only posed a negligible risk to good title, and as a result, he was not deceived by the cancellation agreement.

54. The points relating to MEPC v Christian Edwards have been dealt with and will not be repeated. As to the point that Kao was one of the two signatories of the cheque together with Raymond Chu, that will be considered below together with ground (7).

55. Ground (7) alleges that the judge should have upheld a submission of no case to answer in respect of the second charge, because it was not specified in that charge who in KLY was deceived. Being a partnership, KLY was not a legal person. By failing to call Kao, who was the senior partner of KLY and one of the signatories of the cheque, the prosecution had failed to establish the essential element that the deception was operative. The prosecution therefore had failed to prove that KLY must have been deceived in executing the cheque.

56. Two cases are referred to in this regard. R v Laverty [1970] 3 All ER 432 is said to be an authority for the proposition that the fact that a false representation acted on the mind of the representee should be proved by direct evidence. However, that proposition was not exactly what Lord Parker CJ said in Laverty. He said:

"... It is axiomatic that it is for the prosecution to prove that the false representation acted on the mind of the purchaser; and in the ordinary way, and the court emphasises this, the matter should be proved by direct evidence. However, it was said in R v Sullivan (1945) 30 Cr App Rep 132 that the inducement need not be proved by direct evidence, and I quote from the headnote:

'If the facts are such that the alleged false pretence is the only reason that could be suggested as having been the operative inducement.'

And in the special facts of that case it was held that the prosecution had given sufficient proof, although it was made very clear that the proper way and the ordinary way of proving the matter was by direct evidence."

57. In our judgment, although the ordinary and proper way of proving that a false representation has acted on the mind of the representee is by way of direct evidence, it all depends on the facts of a particular case. In the present case, it was Paul Ho and Raymond Chu who made out the payment voucher for the payment of the balance of the purchase money under the third sale. Both of them gave evidence before the judge that they approved the payment out of the sum on the payment voucher. Nowhere in the documents adduced before the judge did Kao's name feature. Quite on the contrary, the formal sale and purchase agreement dated 23 August 1993 was executed by the applicant as well as the 3rd purchasers in the presence of Paul Ho who also witnessed the receipt of the deposit and further deposit paid by the 3rd purchasers to the applicant in the two receipt clauses in that agreement. The applicant's execution of the assignment of 18 November 1993 was done in the presence of John Morgans, of Baker & McKenzie whilst it was executed by the purchasers in the presence of Paul Ho.

58. In R v Rozeik [1996] 1 WLR 159, the appellant was charged with dishonestly obtaining cheques from two finance companies. The trial judge had failed to direct the jury to decide whether Birch and Wilkinson, the branch managers of the finance companies, knew of the appellant's fraud, and the prosecution accepted that these two managers may not have been deceived by the transactions. Leggatt LJ, giving the judgment of the Court of Appeal, said at p 163E and p 164H:

"If Birch and Wilkinson knew of the appellant's fraud it helped the appellant, because the companies were not deceived on account of their knowledge."

"Since Birch and Wilkinson were managers of their respective branches, their knowledge was the knowledge of their companies unless they were shown to be acting dishonestly."

59. He continued at page 165E-H:

"There are therefore two reasons why the judge's direction was wrong that it was sufficient that any employee of the company was deceived who was concerned in the provision of each cheque. First, the question is not whether any employee of the company was deceived but whether any employee whose state of mind stood as that of the company knew of the falsity of the transaction, since, if he or she did know, the company also knew. If the company knew, it would not matter how many fellow employees were personally deceived. Secondly, and in any event, a cheque could only be obtained from the company from an employee who had authority to provide it. The deception had to operate on the mind of the employee from whom the cheque was obtained. In no sense could a cheque be 'obtained' from the person who merely typed it out. So the judge's references to 'any' employee were fatally wide. What the Crown had to prove was that when the cheque was obtained from the company it was obtained from a person who was deceived. Although in no sense was it obtained from those who checked or typed it, the signatories of the cheques (apart from Birch and Wilkinson) were in a different position. They had a responsibility to ensure that the cheques were not signed unless satisfied that the money should be paid. They were more than mere mechanics and in our judgment, if they were deceived, the company also was, once Birch and Wilkinson were disregarded. That means that (1) where a manager only signed, the offence could not be made out, (2) where a manager signed with another employee, it had to be shown that that other was deceived, and (3) where two employees (other than a manager) signed, it had to be proved either that one was or that both were deceived, and that where one was, the other did not know of the fraud, since if he or she did, the company would not have been deceived."

60. From the evidence in the case before us, we consider that situation (3) referred to in the concluding part of the passage of the judgment cited above was that applicable.

61. The payment voucher to approve the payment of the balance of the purchase money to the applicant had Allen Sy's signature on it as the requesting person. Paul Ho signed to approve and Raymond Chu also signed to authorise the payment. Kao's name or signature did not appear on the payment voucher. Nor, as said before, did he feature in any of the transactions involving the making and witnessing of the formal sale and purchase agreement or the assignment of the property.

62. In this regard, it is pertinent to repeat the judge's observation in para 22 of the Reasons for Verdict (cited above):

"Common sense tells one that no purchaser's solicitors would, in the absence of them joining a criminal conspiracy, agree to completion when the vacation of a prior registration of a sale and purchase agreement was brought about by fraud. Not only did common sense tell me this but so did two solicitors from Kao Lee and Yip. I was sure that the defendant knew it as well."

63. In the present case, the effective mind of KLY to sign the cheque was demonstrably clear to be Raymond Chu's. He told the judge that he relied on the cancellation agreement, and the judge made the following findings:

"35. Was the execution of the cheque procured by an operative deception? I was sure that it was. Both Raymond Chu and Paul Ho told me that they would not have approved the voucher which led to the execution of the cheque if they had known that the cancellation agreement had not in fact been made between the parties to the first agreement [provisional agreement]. That is just what one would expect of honest solicitors and I find it to have been so."

64. The evidence showed clearly that the cheque that was signed by both Kao and Raymond Chu was signed as a matter of routine following the payment voucher which had already approved and authorised the payment. As a partner of KLY, Raymond Chu was the person that had been induced by the cancellation agreement to authorise the payment on the payment voucher. Paul Ho, the assistant solicitor who handled the transaction, was also induced to approve the payment. Kao, the other signatory of the cheque, might or might not have been so involved in the transaction as to have been deceived by the cancellation agreement, but so long as he did not realise the fraud, and there is no evidence to show that he might have been in that position, the prosecution's failure to call him is not a matter that can go anyway against the propriety of the conviction.

Conclusion

65. For the reasons given above, the application must be dismissed.