THE QUEEN v. CHAN SHING YAU ALAN

IN THE SUPREME COURT OF HONG KONG

CRIMINAL JURISDICTION

CRIMINAL APPEAL NO. 473 OF 1988

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BETWEEN

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J U D G M E N T

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Mortimer J. delivered the judgment of the Court:

1. This is an application for leave to appeal. The applicant was tried on five counts of obtaining goods by deception and on one count of evading liability by deception between the 24th and 26th August last year before His Honour Judge Downey in the District Court. At the end of the prosecution case he found that there was no case to answer in respect of count 6. The applicant was convicted on counts 1 to 5. The learned judge gave reasons on the 9th September 1988 and sentence him to 9 months imprisonment on each count concurrently. That sentence he has already served and he has been released. He now applies for leave to appeal against the conviction in respect of counts 1 to 5.

2. A great deal of the evidence in the case was agreed. The offences followed a long course of dealing between the defendant, trading as Power Supply Corporation, and Samsung Korea and Samsung Hong Kong in Semiconductors which the defendant bought from both Korea and Hong Kong. If they came from Korea payment was by Letter of Credit, but if they were delivered later than they were required from Korea, he would borrow goods from the Hong Kong office and replace them later when they arrived from Korea. The material method of payment was by postdated cheques.

3. On each occasion alleged against him, the defendant dishonestly obtained a quantity of semiconductors by the deception that the post-dated cheque drawn was a good and valid order for the payment of the sum if presented on or after the due date. Each count was similar so that cheques were drawn on the 5th May in respect of the 1st count; on the 10th May in respect of the 2nd court; the 11th May on the 3rd count; the 13th May in respect of the 4th count; and the 16th May in respect of the 5th count. Those cheques were postdated 25 days in respect of the 1st count and 10 days in respect of each of the other counts. The total amount involved on the cheques was of the order of $500,000.

4. The facts relating to the cheques and the obtaining of the goods were admitted. The dispute at the trial was in relation to two matters; whether the Crown could prove that at the time when the cheques were drawn and the goods obtained (which were for all intents and purposes the same) the defendant was aware that the cheques would not be met, and secondly whether he was at the time acting dishonestly. His defence was that at all times he expected the cheques would be met because of money which his company was owed by others and that therefore he was not acting in anyway dishonestly.

5. The prosecution case was summarised by the learned judge as follows:

"On the dates when the defendant issued 5 dishonoured cheques he knew that they would be dishonoured and he did so dishonestly because knowing that his business had crumbled, he pursued a course of action, which involved liquidation of his cash resources to his own benefit or that of his wife at the expense of his various creditors, culminating in his departure from Hong Kong, followed by an absence of some four and a half years during which no serious attempt was made to meet his commitments to Samsung and his other creditors."

6. After the goods had been obtained, on the 19th May the defendant spoke to Mr. Chung, the Manager for Samsung, asking him not to present the cheques and to allow a further 30 days' credit otherwise he said that business levels could not be maintained. He said the payment could be made early in June as by then he would receive payment himself. There followed discussions between the two of them.

7. A cheque was presented on the 20th May which had been countermanded. The result of further discussions between them was that no action was taken in relation to the cheques which the defendant had said would not be honoured but on the 26th May, the 30th May and on the 2nd June further goods were obtained by the defendant cash-on-delivery. The cheques were drawn on the Hang Seng Bank on an account which the defendant had opened on the 10th May and into which considerable sums of money had been paid.

8. Samsung agreed to hold the later dishonoured cheques until some further agreement could be made about payment. It was suggested that Samsung agreed to the use of this money for further purchases because business was poor. Shortly after this, the defendant went to the United States with his wife, decided to close his business never contacted his creditors, and according to his evidence said that he was satisfied from what he heard from Hong Kong that the business would end up in credit.

9. As I indicated the real issues were whether the applicant know at the time he drew the cheques that they would not be met on the relevant dates and whether he was acting dishonestly.

10. In relation to the 1st issue, section 29(6) of Chapter 210 was an important consideration. That reads:

(6)"In any proceedings for an offence under section 17...-

(a) any person who -

(i) obtains property .... by means of a cheque...which is refused payment upon presentation on or after becoming due shall, until the contrary is proved, be deemed to have obtained the property.... with knowledge that such cheque .... would not be honoured."

11. The burden of establishing that matter transferred to the applicant for him to discharge on the civil standard of proof.

12. The learned judge properly considered this in his reasons on Page 8 when he said:

"Although I must eventually come to an overall assessment of the defendant's honesty or dishonesty during the period May, June 1983, it seams to me that the social question is whether he knew, at the times when he issued the cheques which constituted the alleges deception in the first five charges that these cheques would not be honoured on due presentment, i.e. on the various dates between the 20th and 30th May 1983. In the context of the present case, the crucial question is whether the defendant has disproved, the knowledge which he is deemed to have had on the dates when the various cheques were issued, as a result of section 29(6) of Cap. 210."

13. It is to be noted that although the learned _.judge considered that the relevant time was when the cheques were issued, it is clear that the relevant time was when the property was obtained and that is the relevant time to which section 29(6) of the Ordinance is directed. In this case, the learned judge was considering the time when the cheques were issued because there was no material difference between the time when the cheques were issued and the time when the goods were obtained.

   The learned judge having considered the evidence under section 29(6) came to the conclusion at page 11 that the defendant had failed to disprove the knowledge which he was deemed to have had by reason of the section.

14. That was not quite an end of the case because he had then to consider the question of dishonesty. He turned to that and relied upon a number of matters.

15. First he relied for his decision that the defendant was acting dishonestly upon the fact that he had issued the cheques knowing that they would be dishonoured. Secondly, he relied upon the defendant's actions when on the 19th May he sought further time for payment without disclosing that he had already opened a bank account with Hang Seng, another banker, and built up a credit there and without disclosing that during April, and May there had been a substantial flow of funds from the defendant's business account and his wife's personal accounts, and also substantial movements of cash in either cash or bearer cheques, from the account. Further, he relied upon the fact that having heard the defendant's evidence about dealings with a firm called `Tai Hing' involving nearly $500,000 for the purchase for cash of other semiconductors, he rejected that explanation of the use of the money.

16. Having considered the whole of the evidence, he came to the conclusion that the defendant knew that his business was heading for financial disaster and he then set upon a course of realising as many assets as he could without proper regard to his obligations to his creditors and that he was acting dishonestly.

17. Now, in relation to those matters, leave to appeal is sought on two remaining grounds. I will deal with ground 3 first:

"The learned trial judge wrongly found the applicant to be dishonest on the admitted facts binding upon the Crown pursuant to the Criminal Precedure Ordinance relating to the cash-on-delivery purchases between the complainant and the appellant after the appellant had given notice to the complainant on the 19th May that the five cheques would not be met on presentation."

18. With the greatest respect to Mr. McCoy, who has argued this matter valiantly on behalf of his client, there is nothing in this ground. The learned judge had well in mind that those cash-on-delivery purchases had been made. They were made long after the offences were complete. The fact that the victim was prepared by that time to sell other goods for cash and that he agreed to the cheques in the charges being further deferred does not impinge upon the^, question the learned judge was considering which was -Was the defendant acting dishonestly at the time when the cheques were drawn and the goods were obtained? There is no reason whatsoever to deal with that matter at any further length.

19. The second ground of appeal similarly is unarguable. The ground is that when the learned judge relied open the fact that the defendant did not disclose to Samsung that he had already begun to build up a credit with another banker, there was clear evidence by way of admissions that the victim Samsung already knew of the existence of the second bank account with Hang Seng.

20. The learned judge dealt with this at page 11. He said that when on the 19th May 1983 the applicant sought to gain further time for payment of the post-dated cheques he did not disclose that he had already begun to build up a credit with another banker. With the greatest respect to the argument presented there is absolutely no evidence that on the 19th May the victim Samsung had any idea that the Hang Seng account existed. On the evidence the first time Samsung would have any reason to think that that account existed was when the first cheque for cash-on-delivery was passed on the 26th May. This ground, in our view, is unarguable.

21. The other grounds were quite properly abandoned by Mr. McCoy.

22. This is a case in which there was abundant evidence upon which the learned judge could draw the inferences and make the findings which he made. He approached the case fairly, warning himself not to draw inferences against the applicant unless they were compelling. He seemed to us to deal with the various matters with great fairness to the applicant. There is no arguable basis upon which the learned judge's careful reasoning can be doubted and leave to appeal is refused.