R. v. SIU YIN-KING

IN THE COURT OF APPEAL

1993 No. 93
(Criminal)

HEADNOTE

Appellant charged under s.19(1) of the Theft Ordinance - dishonestly with a view to gain, or with intent to cause loss, falsified an account record. The Appellant argued, relying on Golechha and Choraria (1990) 90 Cr. App. R. 241 that there was no offence disclosed by the facts as she had done no more than obtain a forbearance to enforce an existing indebtedness.

The Court held that Golechha and Choraria was concerned only with interpretation of "gain" and did not involve any consideration as to whether the victim had suffered loss in accordance with the terms of the Theft Ordinance. The Court held that where a person falsifies an account with the intention that another will be tricked into refraining from suing on his chose-in-action to recover money to which he is entitled, the person charged can properly be held to have done so with intention to cause loss under s.19 of the Theft Ordinance.

The Court held further that a false entry done with the view to enabling another to retain his employment and salaries could properly be held to have been done with "a view to gain" under the Theft Ordinance.

IN THE COURT OF APPEAL

1993 No. 93
(Criminal)

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J U D G M E N T

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Power, V.-P.:

1. This is the judgment of the Court.

2. The applicant faced one count of false accounting which alleged that in or about April 1990 in Hong Kong, together with Aikira Sugiyama ("Sugiyama"), she dishonestly with a view to gain for herself or for another or with intent to cause loss to another, falsified a record made or required for an accounting purpose, namely the cash account of Kosei Securities Co. (Asia) Ltd. by creating three entries purporting to show that a sum of 1,226,824,770 Yen was received from Norise Investment Ltd., Vast Profit Investment Ltd. and Foreway Investment Ltd. seriousness of the matter can be gauged from the fact that the amount involved was about HK$60,000,000. The applicant was convicted after trial in the District Court before Caird D.J. and sentenced to imprisonment for 21 months. She now appeals against that conviction.

3. Before this court, it was agreed by counsel that the opening by Crown counsel correctly represented the facts presented at trial and the facts set out hereunder are taken from that opening. At trial, the applicant neither gave nor called evidence.

4. Sugiyama who, by the time of the trial, had absconded, was the chief accountant in charge of the Accounts Department and a director of Kosei Securities Co. (Asia) Ltd. (Kosei), a subsidiary of Kosei Securities Japan (Kosei, Japan). Directors were prohibited from carrying out share trading with Kosei and it was against company policy to grant unsecured loans to customers for the purpose of share trading. In the Accounts Department at the relevant time there were three employees - Sugiyama the Director, the applicant who was Senior Accountant, and a Miss Ho Ka Yin (Ho) who was a Junior Accountant. The only other department in Kosei was the Sales Department headed by Mr. Fujita (Fujita), also a Director of Kosei, which had five employees.

5. The applicant, having joined Kosei in December 1988, became the Senior Accountant in 1990. Sugiyama, contrary to the terms of his employment, had formed a number of companies for the purpose of conducting share trading with Kosei. Three of these companies, Norise, Vast Profit and Foreway ("the three companies") are involved in the count charged. Two ladies, Any Ho and Dorothy Lam, appear to have acted as "fronts" for Sugiyama in two of those companies. The applicant allowed Sugiyama to use her bank account to disguise the fact that payments to Kosei for share purchases were coming from him.

6. The three companies lost money in share trading. These losses were, however, shown in the books of Kosei as loans and were, contrary to company policy, unsecured. In order to conceal these debit accounts from Kosei Japan, the applicant sometime in April 1990 gave three slip entries to Ho for entry into the computer. These entries recorded that on 31st March 1990, the amount specified in the charge, 1,226,824,770 Yen, had been received from the three companies. The accounts falsified were "cash in hand" and "accounts receivable" and the applicant as senior accountant was in charge of them. She later handed Ho three further slip entries for entry into the computer which had the effect of reversing the three earlier entries. The exact dates when the two lots of slip entries were handed to Ho are not clear but it seems that this was done in the first two or three days of April.

7. The significance of the dates was that the accounting year for Kosei ended on 31st March 1990. This falsifying of the accounts made it appear in the financial statements which were sent to Kosei, Japan that for the year ended 31st March 1990 there was nothing owed by the three companies to Kosei.

8. Ho gave evidence that the "slip entries" were initialled by the applicant and were handed to her by the applicant. Fujita gave evidence that no cash was ever received at the office prior to March 1990 and that there was no safe to keep any such amount. Further, an accountant Mr. Tang Yau Tak gave evidence that neither of the three companies had a bank account. There was evidence that the auditors of Kosei in Peat Marwick, accountants, questioned the entries of 31st March 1990 and the reversals of 2nd April 1990, the dates which appeared against the slip entries in the accounts.

9. Miss Chow Yin-Yung, a senior accountant from Peat Marwick, said that when she performed the final audit from 6th April 1990 to 21st April 1990, she noted the entries of the 31st March and 2nd April and questioned Sugiyama about the nature of the cash settlements and of the refund. She said that Sugiyama told her that the three clients had paid cash to Kosei on 31st March 1990 to settle their outstanding balances; according to Sugiyama, the cash received was not banked on 31st March as the bank refused to accept it on the ground that it was a Saturday; the money was not banked on the following Monday as the clients refused to pay the commission charged, presumably for converting the money into Hong Kong dollars, and so the cash was refunded to the clients on 2nd April. Miss Chow said that she sought confirmations from the three companies and that all three sent replies, one signed by Amy Ho, one signed by Dorothy Lam and the other unsigned, stating that cash had been paid to Kosei on 31st March. Amy Ho and Dorothy Lam, however, gave evidence that they signed the audit confirmations at the request of Sugiyama and that in fact they had never delivered any cash to Kosei.

10. It was not contested by Mr. Marash, who appeared for the applicant, that there was uncontradicted evidence that no cash had, in fact, been paid to Kosei and that the applicant had caused it to appear in the books that cash had been paid by giving Ho the first three slips and had then caused those entries to be reversed by giving her three further slips.

11. The trial judge was clearly alive to the fact that the core of the Prosecution's case was an allegation that the applicant and Sugiyama were acting in concert. He stated in his Reasons for Judgment:

"Although there have been a number of documents produced, the issue narrows down as to whether the defendant was acting in concert with, or under the direction or instigation of Mr. Sugiyama."

He went on to say later:

"The Crown through Mr. Daley have made it quite clear that they are putting the case on the basis of there being a common or joint enterprise, Mr. Sugiyama with (the)(sic) defendant."

At the conclusion of his Reasons, he made the following finding:

"I find that I am unable to accept that she did not know what she was doing, and I hold that the Crown has established beyond reasonable doubt that she was acting in concert with Mr. Sugiyama, Further that she in so doing acted dishonestly."

There was ample evidence to establish a conspiracy between the applicant and Sugiyama and the finding of the trial judge that one existed is, we are satisfied, unassailable. It is true that the trial judge did not make any specific finding as to the scope of that conspiracy. However, given the timing and the circumstances generally, we consider it unarguable that the scope of the conspiracy encompassed, at least, an intention to conceal the existence of the debit accounts from the parent company.

12. To appreciate the arguments of Mr. Marash, it is necessary to set out the relevant terms of the Theft Ordinance:

"19(1) Where a person dishonestly, with a view to gain for himself or another or with intent to cause loss to another -

(a) destroys, defaces, conceals or falsifies any account or any record or document made or required for any accounting purpose; or

(b) in furnishing information for any purpose produces or makes use of any account, or any such record or document as aforesaid, which to his knowledge is or may be misleading, false or deceptive in a material particular, he shall be guilty of an offence and shall be liable on conviction upon indictment to imprisonment for 10 years."

Section 8 defines "gain":

"(2) For the purposes of this Ordinance- 'gain' and 'loss' are to be construed as extending only to gain or loss in money or other property, but as extending to any such gain or loss whether temporary or permanent; and -

(a) 'gain' includes a gain by keeping what one has, as well as a gain by getting what one has not; and

(b) 'loss' includes a loss by not getting what one might get, as well as a loss by parting with what one has;"

Section 5(1) of the Ordinance provides:

"'Property' includes money and all other property, real and personal, including things in action and other intangible property."

13. The first ground argued by Mr. Marash was :

"(1) That the learned trial judge erred in law in convicting the appellant of false accounting because there was no evidence that the appellant acted 'with a view to gain for herself or another or with intent to cause loss to another' within the meaning of section 19(1), 5(1) and 8(2) of the Theft Ordinance Cap. 210."

Mr. Marash relied upon Golechha and Choraria (1990) 90 Cr.App.R. 241 when making this submission. In that case Golechha, through his company, Berg, discounted a series of five bills of exchange, which purported to be trade bills, with the Johnson Matthey Bank. He met Berg's liability on each preceding bill of exchange by presenting the next bill for discount. It was the Crown's case that the three last bills were false and were not founded upon real transactions. There was no evidence as to the authenticity, or lack thereof, of the first two bills. When directing the jury, the trial judge did not invite them to consider the possibility that golechha's object in presenting the false bills was merely to obtain forbearance from the bank. The Lord Chief Justice, when delivering the judgment of the court, said:

"If it be accepted for present purposes that the learned judge's construction of the words 'with a view to gain' was correct, and that it is therefore legitimate to see how funds sought to be obtained on the strength of a falsified bill would be used by the defendant, that cannot avail the prosecution in a case where all that the defendant had in view was the forbearance to enforce an existing indebtedness. If the desired forbearance is obtained, this neither gives to the defendant nor allows him to retain anything on which he can draw or which he can convert into cash or goods. Such a case is quite distinct from one in which the object in view is to obtain an advance.

If, which we do not, we had any doubts as to the correctness of this analysis, they would be dispelled by the reflection that s.16 of the 1968 Act or s.2 of the 1978 Act are entirely apt to found charges based on the sort of conduct we have been considering.

It follows that, since it was at the very least a distinct possibility that the appellant's object in falsifying the bills in question was merely to obtain the bank's forbearance, the judge's failure to invite the jury to consider whether that was the position and to direct then that if it was ? not guilty of the offence charged was a misdirection." (Emphasis supplied.)

14. The basic contention of Mr. Marash that the situation in the present case was exactly parallel to that in Golechha. He submitted that Sugiyama had never at any time obtained any money from Kosei but had simply obtained credit for the three companies which enabled them to deal in shares. He submitted that the fact that the credit was contrary to company regulations, being both unsecured and obtained by a company employee, did not in any way affect the criminality of what was alleged to have been done. He submitted that there was a "distinct possibility" that the object of the applicant and Sugiyama was merely to obtain Kosei Japan's "forbearance to enforce an existing indebtedness." He submitted that, as the evidence stood, the possibility must be open that the applicant was acting with Sugiyama to do no more than put off the day when the debt would be discovered and action taken, i.e. doing no more than seeking to obtain a forbearance. Mr. Marash asked rhetorically what view to gain, either in money or property, could it be suggested the applicant had when falsifying the accounts. He conceded that the obtaining of a chose-in-action would be a gain in accordance with the meaning of that term as it is used in s.19 but submitted that the three companies had not obtained any chose-in-action by the false entries as the debit in the accounts of Kosei gave them no right against Kosei. He pointed out that, in fact, only Kosei had a chose-in-action on which it could bring suit against the three companies.

15. Mr. Pethes, who appeared for the Crown, submitted that what the applicant and Sugiyama had done was to attempt to extinguish the debt in the books of Kosei. He submitted that by virtue of the existence of the debt in the books of Kosei, Kosei had a chose-in-action which they could exercise against the three companies and that there had been attempt to extinguish this chose. This being so he submitted that the applicant and Sugiyama did have an intent to cause loss. We are not persuaded by this argument.

16. The falsification did no more than to make it appear, temporarily, that the debts were extinguished as at 31st March 1990 and were reversed almost instantaneously.

17. As the evidence stood we are satisfied that what it established was no more than an attempt to conceal the debts from Kosei Japan and that it could not properly be held to have established an attempt to extinguish the right of action of Kosei. No such intention can properly be inferred.

18. It is important in the present case to bear in mind that the charge, using the words of s.19, was in the alternative alleging either "a view to gain" or "an attempt to cause loss". As we have just indicated, the Crown in its opening and in argument before us went too far in suggesting that the falsification "had the effect of extinguishing the debt owed by the three companies as at 31 March 1990 ....". The approach of the Crown does, however, indicate that the thrust of its case was the loss sustained by Kosei and not any gain achieved by the three companies. It is true that the judge in his reasons makes no finding as to either gain or loss but he did, at the outset, when outlining the charge, indicate that it involved an allegation that the applicant did "dishonestly with a view to gain for herself or another or (sic) to cause loss to another" (Emphasis supplied) falsify a record made for an accounting purpose.

19. The significance of the decision in Golechha's Case can only be properly understood if we bear in mind the issue raised for the decision of the court. This was clearly set out in the certificate of the trial judge the wording of which appears at p.243 as follows:

"They appeal against conviction pursuant to a certificate of the trial judge under s.1(2) of the Criminal Appeal Act 1968, in the following terms: 'A point of law arises as to the correct interpretation of "gain" in s.17 of the Theft Act 1968 in the light of the decision in Thompson (1984) 79 Cr.App.R. 191, [1984] 3 All E.R.565.'"

It can be seen clearly from this passage that the issue was the interpretation of "gain". That issue, insofar as it is pertinent to our enquiry, was described by the Lord Chief Justice in the following way, at p.246:

"The second main argument on which both appellants relied at the trial was this. There was, they contended, no evidence on which the jury could properly conclude that the last three bills, even if false as the Crown allege, were falsified for any purpose other than to induce the bank to forbear from suing on the earlier bills, as to which there was no evidence of falsity; and a forbearance to sue cannot amount to a gain of property as defined in the Act." (Emphasis supplied)

That the court was concerned only with "gain" is put beyond doubt by the following passage at p.249:

"If it be accepted for present purposes that the learned judge's construction of the words 'with a view to gain' was correct, and that it is therefore legitimate to see how funds sought to be obtained on the strength of a falsified bill would be used by the defendant, that cannot avail the prosecution in a case where all that the defendant had in view was the forbearance to enforce an existing indebtedness. If the desired forbearance is obtained, this neither gives to the defendant nor allows him to retain anything on which he can draw or which he can convert into cash or goods. Such a case is quite distinct from one in which the object in view is to obtain an advance."

20. We make no comment as to the correctness of the reasoning in Golecha's case as to what constitutes "gain". Suffice to say that we are satisfied that the decision did not involve any consideration as to whether the bank had suffered "loss" in accordance with the terms of the Theft Act.

21. Section 8 of the Ordinance states that the loss must be in money or other property and that it includes a loss by not getting what one might get. We are satisfied that where a person falsifies an account with the intention that another will be tricked into refraining from suing on his chose-in-action to recover money to which he is entitled the person charged can properly be held to have done so with an intent to cause loss under s.19 of the Theft Ordinance. It is clearly a loss to a person not to be able to sue for money to which he is entitled. Although the judge made no specific finding in this regard we are satisfied that there was clear and uncontradicted evidence to establish that the applicant and Sugiyama did dishonestly intend to cause loss to Kosei by falsifying a record made for an accounting purpose. Despite the lack of finding we have no doubt that this is a proper matter in which to apply the proviso.

22. The evidence was, moreover, in our view sufficient to support a conviction upon another basis. The Crown argued, relying on Henry Leonard Asquith Wines (1954) 37 Cr. App. R. 197, that the applicant and Sugiyama must have acted with a view to inducing Kosei to keep Sugiyama in his employment and to pay him salaries and that this was done with a view to gain, in accordance with the meaning of that term as it is used in s.8 of the Theft Ordinance. It is submitted that it must have been done with a view to allowing Sugiyama to get what he had not, i.e. continued payment of salaries. Mr. Marash was quick to point out that the prosecution in Wines' Case was brought under the Falsification of Accounts Act of 1875, s.1 which has been replaced by s.17 of the Theft Act (our s.19) and that s.1 was concerned with "intent to defraud" and not with "intent to cause loss to another". It is correct that Wines' Case is no authority for the proposition that an act done with a view to obtain the continued payment of wages is an act contrary to s.17 of the Theft Act. To determine whether or not it is, one must look at the words of s.17. When so doing we are assisted by the words used by the Lord Chief Justice in Wines' Case at p.199:

"One thing that is clear is that the appellant has himself said what he intended to achieve by the falsification, namely, to remain in the service of the society; in other words, to avoid being dismissed by them, which he feared would happen if he made a proper return. If he had been dismissed, because he did not show a satisfactory return, he would have lost his wages, and therefore the society, by his falsification, assuming his object to be what he said it was, would be induced to retain him in their service and pay him wages, and he was thereby getting wages from the society by means of falsifying the accounts."

What we must first ask ourselves is whether there was uncontradicted evidence sufficient to establish beyond reasonable doubt not only that the act was done with the intention to conceal the existence of the debt from Kosei but was also done with a view to ensure that Sugiyama remained in his employment. We have no hesitation in holding that the parties to the falsification must have been aware that the inevitable fallout which would have followed the discovery of the unsecured debit of 1,226,824,770 Yen would have included not only action to recover the money but also the dismissal of those concerned in the transaction, namely Sugiyama, and, very probably, the applicant herself. We are satisfied, therefore, that there was evidence to establish that the falsification was done with a view, at least, to enabling Sugiyama for the time being to retain his employment and salaries. What we must now ask is whether that was with a view to gain under the Theft Ordinance. A gain includes the getting of money that one has not. If Sugiyama had been dismissed he would have lost his employment and been paid no further salaries. By tricking Kosei into continuing to employ him, he retained his employment and his entitlement to salaries. There was, therefore, we are satisfied, evidence sufficient to establish that the applicant and Sugiyama were falsifying the records with a view to ensuring, inter alia, that Sugiyama would continue in his employment and in receipt of salaries. This would, we are satisfied, constitute a gain in accordance with the meaning of that term as it is used in the Theft Ordinance. We consider that there was unchallenged evidence before the court sufficient to warrant a conviction upon this basis. Again, although the trial judge made no specific finding in this regard, we, given the cogency of the evidence, have no hesitation in applying the proviso.

23. Mr. Marash's second ground read as follows:

"(2) The learned trial judge erred in law in admitting into evidence and relying upon statement made by Aikira Sugiyama (who was not on trial) to Miss Chow Yin-yung, a Senior Accountant of Peat Marwick, as to the reason for the alleged false accounting entries in the absence of evidence and a finding that such statements were made in furtherance of a subsisting conspiracy between the appellant and Sugiyama to falsely account at the time such statements were made."

As we have already indicated, the judge did allow this evidence to be given and did make reference to it in his statement of findings. He did not, however, indicate what, if any, reliance he placed thereon. It was an exculpatory statement which he clearly rejected. However as the judge made no mention of the way in which he approached it, Mr. Marash argued that he may, while refusing to believe it, have also used it in some way which was unfair to the applicant. There are two limbs to this argument. The first is that the evidence was inadmissible and should not have been before the court and that this in itself makes the finding of guilt unsafe and unsatisfactory. The second is that even if it was admissible, the failure of the trial judge to indicate the use to which he put it makes his finding of guilt unsafe and unsatisfactory.

24. . Marash did not suggest that if the statement was made in the furtherance of a conspiracy it would not have been admissible. What he submitted was that there was no finding by the trial judge as to the nature and extent of the conspiracy and that there was therefore no finding of fact which would allow this court to say that the statement was made in furtherance of the conspiracy. We are not impressed by this argument. We are satisfied that there was uncontradicted evidence sufficient to establish that there was a conspiracy between Sugiyama and the applicant to conceal the existence of the debt from Kosei Japan. Indeed Mr. Marash concedes that if the applicant had been so charged this appeal could not have been brought. We are satisfied that the statements made by Sugiyama to the auditor were clearly in furtherance of that conspiracy. The evidence was, therefore, admissible.

25. We turn to the second limb of Mr. Marash's argument. Might the judge have made some improper use of the evidence of Miss Chow? This was evidence of no more than an explanation, unconvincing on its face, by Sugiyama of the double set of entries. The judge clearly rejected that explanation. He would, as we have already indicated, have been entitled to use the statement as evidence of an act done in furtherance of the conspiracy. We are unable to see what improper use he might have made of it. This ground also fails.

26. The application for leave to appeal against conviction is granted. We treat this hearing as the hearing of the appeal which is dismissed.