THE QUEEN v. CHRISTINE YUN-TAI GILES ALIAS TSANG YUN-TAI

                Obtaining property by deception - original terms of payment 45 days credit - not affected by accepting cheque post-dated 90 days. Dishonest means to induce agreement to accept post-dated cheques issued later part and partial of dishonesty and deception.

IN THE COURT OF APPEAL

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JUDGMENT

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Li, J. A. (read by Sir Alan Huggins):

1. The applicant was originally charged with three offences: one charge of obtaining property by deception; two charges of evading liability by deception. In the event she was convicted of the third charge which alleged that on or about 13th August, 1982 with intent to make default of payment of an existing liability to Shun Fat Textiles Limited of $439,419.20 she dishonestly induced the said Shun Fat Textiles Ltd. to wait for payment by falsely representing that the four cheques issued to it were good and valid orders.

2. Prosecution evidence was that in May/June 1982 the applicant was the sales manageress and the majority shareholder of Manta Trading Limited (Manta) which contracted to buy some cloth material from Shun Fat Textiles Ltd. (Shun Fat). The proprietor of Shun Fat at the time agreed to accept for payment a cheque post-dated 45 days. Deliveries were effected - the first on 17th June and the second on 26th June 1982.

3. On 28th June, 1982 an employee of Shun Fat went to collect payment for the first delivery. He was given a cheque post-dated to 18th September, 1982. This was a cheque for $207,130 70 representing the value of the first delivery of cloth. He referred the matter to his employer, Mr. Loi. There was a further negotiation on the telephone between Mr. Loi and the applicant. In the end the employee was instructed to accept` that post-dated cheque.

4. No payment was made for the second delivery. The total worth of cloth for that delivery was $201,242.90. There had been demands for payment in respect of the second delivery from time to time in the month of July.

5. The applicant was away from Hong Kong from late June until the middle of August. Upon her return the applicant telephoned Mr. Loi of Shun Fat for the delivery of the balance of the cloth, a third delivery, on the 16th August, 1982. Mr. Loi refused on the ground that no payment had yet been made for the second delivery. There was some protracted negotiation. A few days later the applicant invited Mr. Loi to meet her business associates.

6. A meeting was held in Kowloon. Present at that meeting were the applicant, Mr. Charles Julian (a buyer from an American firm) and Mr. But, a Hong Kong agent of Charles Julian running the firm of Portola, at which the applicant showed Mr. Loi a letter of credit and a purchase order showing that Manta had received an order placed by Charles Julian for delivery of some garments to be shipped by 15th September, 1982. The representation was that when the order was fulfilled Manta would be paid by Charles Julian and Manta would be in a position to pay Shun Fat for the whole of the price. for all three deliveries. The applicant assured Mr. Loi that she would issue cheques for them, albeit post-dated to 18th September and. thereafter. Upon that understanding Mr. Loi agreed to effect the third delivery, which took place on 24th August, 1982.

7. In the event 4 post-dated cheques were issued by the applicant to a total sum of $439,419.20. In the meanwhile, the original cheque given on 28th June for $207,130.70 was returned to Manta in exchange for these four cheques. There was some dispute as to the actual date in. August when the four post-dated cheques were issued. The complainant, Mr. Loi, said that they were issued on 30th August. The applicant suggested that they were issued on 26th August, 1982. In the event the judge found as a fact that they were issued on 30th August. This is an issue to which we shall return later.

8. Quite unknown to Mr. Loi of Shun Fat, Manta was indebted to a finance company, Ho Kee Hong Finance Company. The cloth that was delivered on 16th and 26th June was subject matter of security for a loan of $50,000. It was arranged that Manta would repay Ho Kee Hong by five monthly instal-ments of a sum of $10,840 each. Manta was in default for the July instalment. In the meanwhile, the August instalment would soon be due. In addition Manta owed its own staff salary for 2 months. The financial condition of Manta could be described as desperate. A defence witness said that the applicant was in "a half-broken state".

9. Near the end of August the cloths delivered by Shun Fat were taken away by Ho Kee Hong and sold to third parties. They took from the proceeds of sale the capital and interest owing and paid over the balance of about $100,000 to the applicant. Such sum was used by the applicant to pay the staff salaries and to satisfy other creditors of Manta.

10. By the 30th August, 1982 one LAM Ping, an employee of Shun Fat, observed that the cloth that used to be stored in Manta's office had disappeared. He reported this to Mr. Loi of Shun Fat. Mr. Loi queried the applicant as to the disappearance of the cloth. The applicant told Mr. Loi a lie by saying that the cloth had been sent out to another place for "cutting-up" in order to fulfil the shipment order.

11. There was evidence that Manta maintained three bank accounts. Between the months of May and September 1982 Manta had not sufficient money to pay for the cloth even if all the money in the accounts were put together. Manta had no credit facilities. From time to time there had been small overdrafts, which was tolerated by its banker. By mid-August Manta was in great financial difficulty. Such was the case for the prosecution.

12. The applicant declined to give evidence but called witnesses. The gist of the defence was that there was a genuine contract of sale and purchase between Manta and Charles Julian via the firm Portola. There was a buying order for gentlemen's trousers etc. One of the shipments to be effected was on 15th September, 1982. For such, the applicant had a genuine expectation to receive payment by 15th or 16th September, 1982.

13. Manta also had unpaid, but plainly bad, debts owing to it by other people. There was also evidence that the trousers samples for the order from Charles Julian were not up to the required standard. For over a month Manta tried to improve upon these samples without success. By the end of August the cloth material. supplied by Shun Fat were taken away. However, the four cheques issued in favour of Shun Fat were issued on 26th August before the cloth was taken away.

14. The trial judge acquitted the applicant of the first two charges. The first charge related. to the property supplied in the first two deliveries in June. The judge was not satisfied. beyond reasonable doubt that the first two deliveries in June were effected upon a cash on delivery basis. The judge found that there was no demand for immediate payment.

15. The second charge related to the cheque that was issued to Shun Fat by the applicant on 28th June, 1982. Again the judge gave the applicant the benefit of the doubt. He said it might be argued that at the material time the applicant had a genuine expectation of payment by Charles Julian if she fulfilled the order placed with Manta by the 15th September.

16. He convicted the applicant of the third charge because he found that before the post-dated. cheques were issued to Shun Fat by the applicant on 30th August, 1982, the cloth supplied by Shun Fat had been taken away by Ho Kee Hong. That being the case there was no hope for Manta to fulfil any order placed with it by Charles Julian and get paid. Whateven genuine expectation might have existed in June/July the applicant could not have such expectation by 30th August.

17. The trial judge referred to the statutory presumption contained in section 29(6)(a)(ii). However, as an alternative the judge said this:

"Even had I found that these 4 post dated cheques had in fact been issued by the accused on 26/8 and not on 30/8, I would still have found on the evidence that when she issued them on that day she could not have genuinely believed that they would have been met on the respective due dates. She was fully aware on her return from U.S.A. on 15/8/82 of the desperate financial situation of the company, of its inability to pay its debts even the 2nd monthly instalment of $10,840 due to Ho Kee Hong Finance Company for July 1982, that unless that instalment was paid (and she fully realised she would be unable to pay, and another instalment was due at the end of August), Ho Kee Hong would take possession of the cloth materials and sell them by the end of August 1982, and without, the cloth materials there was no prospect of Manta processing the Charles Julian's order, and without funds coming from Charles Julian's order, there would be no way of Manta meeting the obligation under the 4 post dated cheques."

He said also:

"By the time the accused returned to Hong Kong on 15/8/82, Manta's financial situation was hopeless and she fully realised then that she would be unable to meet Manta's obligations to Shun Fat. She accordingly panicked. Instead of being frank to Shun Fat and explained the situation, she did something dishonest - she issued the cheques well. knowing that there was no way in all the circum-stances, of any of them being honoured on its due date."

18. Counsel for the applicant advanced two arguments in support of the application. Firstly, the judge erred in deciding that the prosecution had proved:

a)	that when the ;;four cheques were issued the cloth had been removed; and
b)	that the cheques were issued only on 30/8/82.

Secondly, the judge erred in law by holding that the evidence established the offence because there was no evidence:

a)	of an existing debt or liability;
b)	that the applicant dishonestly induced Shun Fat on 30th August to wait for payment; and
c)	that the-applicant or her company intended to. make default in payment.

19. Dealing with his second ground first Mr. van Buuren argued that there was no. existing debt at the time when the 4 post-dated cheques were issued in August. He conceded that the contract between Shun Fat and Manta was made orally sometime in May or June 1982. Although Mr. Loi could not remember the figures, he said the quantity and price were agreed. It appears that delivery was to be made on demand. Negotiations continued as to the date of payment and this was eventually agreed at 45 days after delivery by post-dated cheque. It is immaterial whether there was originally (as alleged by the prosecution) an agreement to pay on delivery. There was evidence of the first two deliveries, the unit prices mentioned in the invoices in respect of the two deliveries and the suggestion by the applicant by the middle of August that Shun Fat should deliver the balance of the cloth by a third delivery. In the event, however, Mr. Loi accepted a cheque post-dated 90 days on 28th June, i.e. to 18th September, 1982, in respect of the first delivery. On this basis Mr. van Buuren argued that no debt was due until 18th September: there was no existing liability in August 1982.

20. We cannot accept this argument. There was no evidence that at the time of contract in May/June the parties agreed that Manta should be given credit for 90 days, although it is true that Shun Fat accepted a cheque post-dated 90 days in respect of and after the first delivery. On the basis of the agreement for payment 45 days after delivery the debt in respect of the first two deliveries was due before the middle of August.

21. It is further argued by Mr. van Buuren that at the time when the cheques were issued the applicant had a genuine expectation for payment. He prayed in aid what the judge said in his reasons for verdict:

"".... at the time the accused contracted for the delivery by Shun Fat to Manta of the cloth materials she genuinely hoped she would have processed the Charles Julian's order and settled Manta's liability in respect of the cloth materials."

When the judge mentioned the time of contract he obviously meant May or June, when the parties agreed. That was precisely why the judge acquitted the applicant in respect of the first and second charges. This is apparent, as the judge continued to say:

"By the time the accused returned to Hong Kong on 15/8/82, Manta's financial situation was hopeless and she fully realised then that she would be unable to meet Manta's obligations to Shun Fat."

22. Counsel further contended that a mere finding that the applicant was dishonest at the time the cheques were issued was not sufficient for the judge to find the offence proved. This argument proceeded on the basis that the judge must find that the applicant dishonestly induced Mr. Loi. Mr. van Buuren said there was no finding by the judge to that effect. There was no evidence to support such finding. He said that if there was any dishonesty on the part of the applicant it existed only at the meeting between Charles Julian, Mr. But, the applicant and Mr. Loi on or about the 20th August: by then Mr. Loi had already agreed to accept post-dated cheques so that by the time the 4 cheques were issued they were issued by the applicant with Mr. Loi's agreement and not because of dishonest inducement.

23. We cannot accept such a proposition either. By the middle of August there was already an existing liability on the part of Manta to settle the debt in respect of the second delivery. Even on the evidence adduced by the defence the orders from Charles Julian would not enable Manta to meet three of its post-dated cheques in September 1982. The applicant must have known that she was in no position to honour those post-dated cheques. Yet, she showed the Charles Julian orders to Mr. Loi so as to induce his accepting the post-dated cheques. The trial judge was entitled to draw the only logical inference that there was a dishonest intent at the time. Such act of the applicant's was part and. parcel of the fact of deception. Obviously, Mr. Loi was lured into a frame of mind which gave him a sense of security. We are concerned with the mental element of the applicant. Her conduct showed that even on 20th August she had the dishonest intent of inducing Mr. Loi to accept post-dated cheques. Such dishonest intent persisted until the post-dated cheques were issued. Thus, when she was questioned by Mr. Loi as to the disappearance of the cloth materials, she dishonestly lied that they were sent to another place for "cutting-up" for shipment. When she signed those post-dated cheques and then directed that they be issued. she completed the guilty act of evading liability by deception.

24. In his reasons the trial judge analysed the evidence carefully before he concluded that the 4 cheques were issued on the 30th August. It is not in dispute that the applicant was the person who executed those 4 post-dated cheques. The trial judge accepted the evidence of LAM Ping. Mr. van Buuren cites the judge's observation to the effect that, even if he had found the cheques had been "issued by the accused on 26th August", he would "still have found .... that when she issued them .... she could not have genuinely believed that they would have been met on the respective dates" as showing that the judge had doubts whether the 4 cheques were in fact issued on the 30th August. He contends that what the judge had in mind was the date of physical delivery of the cheques rather than the date of issue.

25. However, the judge accepted the evidence of Mr. LAM Ping and rejected the evidence of the first defence witness and we cannot say that he was wrong to do so. There was ample evidence to enable the judge to come to the conclusion that even if the applicant induced Mr. Loi to accept post-dated cheques on the 20th of August such inducement was dishonest. The judge was right in his conclusion. There is no merit in this application. Accordingly it should be dismissed.