HKSAR v. CHENG CHUNG MING

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. HCMA 210/2000

(On appeal from NKCC 5221 of 1999)

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JUDGMENT

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Introduction

1. The Appellant was convicted after trial of 21 counts of False Accounting contrary to section 19(1)(a) of the Theft Ordinance, Cap. 210. He was sentenced to concurrent sentences of 3 months imprisonment suspended for 12 months for the 21 charges. He appeals against the conviction.

2. All 21 charges were identical save as to the date of the offence, the particular of the invoice and the weight description thereon. I will set out the particulars of one of the counts (i.e. 1st charge):

"CHENG Chung-ming, on or about 11.7.96, in Hong Kong, dishonestly and with a view to gain for himself, falsified a document made or required for an accounting purpose, namely a commercial invoice of Express Stationery Supplies, numbered 39681 and dated 11.7.96, by making or concurring in the making of an entry thereon which was or may have been misleading, false or deceptive in a material particular in that it purported to show that the marker paper sold to Wanlee Fashion Limited had a total weight of 2400 pounds whereas in fact it was not."

Facts

3. The prosecution case was that at the material time the Appellant was the sole proprietor of Express Stationery Supplies ("Express"). Express supplied marker paper for use in garment and textile industry. Sun Cheung Paper Company ("Sun Cheung") and Tai Fat Paper Hong ("Tai Fat") were the only suppliers of marker paper to Express. Cash memos were issued by Sun Cheung and Tai Fat in respect of their sales to Express. The marker paper came in sizes of 36 inches, 46 inches and 60 inches in diameter; and their weight, according to evidence adduced by the prosecution, would not have exceeded 300 pounds, 400 pounds and 500 pounds respectively. Since 1996, Express sold marker paper to Wanlee Fashion Limited ("Wanlee").

4. The prosecution alleged that in its invoices to Wanlee, the Appellant had marked up the weight of the marker paper to the extent of 100-200 odd pounds. These formed the basis of the 21 charges against the Defendant.

5. The Appellant was interviewed by the police and the video-recorded interview was admitted into evidence after the learned Magistrate held a voir dire. During the interview the Appellant admitted that he and his wife were the only persons who had prepared the invoices and that he prepared most of them. He had also admitted that he had marked up the weight as it was a trade practice.

6. The Appellant did not give evidence but called his brother, who also engaged in the same kind of business as the Appellant, to give evidence. The Appellant's brother testified that he had heard of marker paper imported in parallel with other importers (known as "水貨" in Chinese), and that such paper was cheaper than the usual supply. He said he had heard, in relation to 36 inches in size, the weight would be more than 300-400 pounds.

7. The learned magistrate rejected the evidence of the Appellant's brother and found that Sun Cheung and Tai Fat were the only suppliers to Express.

8. Although the cash memos issued by Sun Cheung and Tai Fat contained information as to the weight of the paper they supplied to Express, there was no dispute that such evidence was hearsay and was not admissible as to the truth. Consequently, there was no evidence as to the actual weight of the marker paper supplied to Express. The learned magistrate ruled that for the purpose of the charges in question, the prosecution did not need to prove the falsity of the weight information before they could prove the invoices had been falsified.

9. In relation to whether the prosecution had proved that the Appellant was responsible for the making of the entry in the invoices, the learned Magistrate, after referring to Defence Counsel's submission that there were other partners though in law the Defendant was the sole proprietor (as shown in the business registration), has this to say:

"It is not incumbent upon the prosecution to prove everything in a criminal case. Propositions of this kind would have to be proved by the defence in the form of a negative averment. If the defence says that there are, in fact, partners, they have to call the evidence. There is simply no evidence here.

On the contrary, the defendant admitted in the interview that either he or his wife prepared the invoices and he prepared most of the invoices (Q &A 360-365). I am satisfied that he was telling the truth there and, as a sole proprietor, in the light of the above admission, he must be taken to be making or, at the very least, concurs in the making of these 21 invoices"

10. The learned magistrate found that the Appellant did not care whether the weight information was true or not but he falsified them in Express's invoices by marking them up anyway.

11. On the issue of mens rea, the learned magistrate referred to the test laid down in R. v. Ghosh [1982] QB 1053 and found that what the Appellant had done was dishonest even if he believed it was a trade practice. He found the Defendant guilty of all charges.

Grounds of appeal

12. Mr. M. K. Wong, counsel for the Appellant, submitted the following five grounds of appeal:

1. The learned magistrate erred in admitting into evidence the record of video-recorded interview of the Appellant.

2. The Actus reus of false accounting had not been proved in that there was no evidence to show that the information of weight shown on the invoices in question was or may have been false in a material particular.

3. The learned magistrate erred in accepting the evidence of a particular witness, PW5.

4. The learned magistrate erred in shifting the burden of proof to the Appellant on the issue whether the Appellant was the sole proprietor of Express when he found negative averment applicable in the present case.

5. The learned magistrate failed to evaluate the evidence when dealing with the 'dishonesty' issue.

Mr. Wong has raised a number of interesting legal points in his submission. However, for the purpose of this appeal, it is not necessary for me to deal with all the grounds advanced. I need only consider the 4th ground to dispose of this matter.

Negative averments

In criminal cases, subject to certain exceptions, the prosecution bears the burden of proof to the requisite standard that the Defendant is guilty of the offence(s) charged. One such exception is negative averments. In R v Edwards [1975] QB 27, at 39 the Court of Appeal in England, dealing with this exception at common law, said as follows:

".......This exception..... is limited to offences arising under enactments which prohibit the doing of an act save in specified circumstances or by people of specified classes or with specified qualifications or with the licence or permission of specified authorities. Whenever the prosecution seeks to rely on this exception, the court must construe the enactment under which the charge is laid. If the true construction is that the enactment prohibits the doing of acts, subject to provisos, exemptions and the like, then the prosecution can rely on the exception

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Two consequences follow ........First, as it comes into operation upon an enactment being construed in a particular way, there is no need for the prosecution to prove a prima facie case of lack of excuse, qualification or the like; and secondly, what shifts is the onus: it is for the defendant to prove that he was entitled to do the prohibited act. What rests on him is the legal, or it is sometimes called, the persuasive burden of proof. It is not the evidential burden."

The common law rules concerning negative averments apply in Hong Kong: R v. Lam Yu-tung [1958] HKLR 140; R v Wong Sang [1964] HKLR 883; with section 94A of the Criminal Procedure Ordinance (Cap.221) being both declaratory of and supplementary to the common law rule: see Bruce & McCoy: Criminal Evidence in Hong Kong, Division III, paragraphs 102).

Negative averments can only come into operation upon a statute being construed in a particular way. It is common ground that negative averments have no application for offences under section 19 of the Theft Ordinance or any other relevant statute. By saying the Appellant's propositions that there were other partners needed to be proved 'by the defence in the form of a negative averment', the learned magistrate had erred in shifting the legal burden of proof that the Appellant was the sole proprietor of Express to the Appellant, when the prosecution bore the burden of proof throughout. The learned magistrate's finding that the Appellant was the sole proprietor of Express was therefore based on a legal misdirection on the burden of proof. Such a finding amounts to a material irregularity.

The learned magistrate's finding that the Appellant 'must be taken to be making or, at the very least, concurs in the making of the 21 invoices in question' was based on the aforesaid materially irregular finding. A finding that the Appellant had made or concurred in the making of the 21 invoices in question was an important element in the false accounting charges faced by the Appellant. It is true that the learned magistrate also relied on the answers given by the Appellant during the video-recorded interview to find that the Appellant had made or concurred in the making of the invoices in question. It is, however, not open to me to consider dismissing the appeal on the basis that no miscarriage of justice has occurred, even if I were to come to that conclusion, since there is no equivalent in the Magistrates Ordinance (Cap. 227) to section 83(1) of the Criminal Procedure Ordinance (Cap.221).

Conclusion

For this reason I rule that the conviction is unsafe and unsatisfactory. The appeal is allowed, the conviction is quashed and the sentence set aside.

Costs

13. Mr. Wong has indicated that he would apply for costs should the appeal be allowed. Arrangements will be made after this judgment is handed down for parties to attend court to make their respective submission.