THE QUEEN v. GOBINDREM HARKISHINDAS SABNANI

IN THE SUPREME COURT OF HONG KONG

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO. 340 of 1991

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BETWEEN

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JUDGMENT

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        The appellant was convicted on the 4th March 1993 on two charges.

1. Charge A was fraudulent removal of property, contrary to s.129(1) (e) of the Bankruptcy Ordinance, Cap.6 of  the Laws of Hong Kong, whereas Charge B was perjury, contrary to s.31 of the Crimes Ordinance, Cap.200.   

The particulars of Charge A alleged as follows:-

 

".... you are charged that on or about the 12th day of May, 1989, in Hong Kong, you did fraudulently remove part of your property to the value of HK$65,000 within 12 months next before the presentation of a bankruptcy petition against you.

 

2. The particulars of Charge B were in the following terms:-

".... you are charged that on the 28th day of November 1989, in Hong Kong, you having been lawfully sworn as a witness in a judicial proceeding, namely, the public examination of your being a debtor under the Bankruptcy Petition No. 277 of 1989, wilfully made a statement material in that proceeding which you knew to be false or did not believe to be true, namely, a sum of HK$65,000 which was withdrawn from your bank account with the Wing Lung Bank on the 12th day of May 1989 did not belong to you but belonged to one of your friends, namely Dowlani who was living in Bombay, India."

 

3. It was the prosecution's contention that the sum of $65,000 referred to in both charges was part of the proceeds of sale in respect of a car parking space which had belonged to the appellant.  

4. At the commencement of the case, Mr Kynoch, who appeared for the appellant at his trial, admitted under s.65C of the Criminal Procedure Ordinance that the car parking space was sold on the. date it was alleged and that from the sale, a sum of $65,000 was placed in the appellant's bank account on the 3rd may 1989, and on the 12th May 1989,the same sum was withdrawn from. the appellant's bank account. He also admitted. under s.65C that bankruptcy notice was issued by the Indian Overseas Bank on the 29th May 1989 and was served personally on the 6th June 1989 and that bankruptcy proceedings were filed on the 4th July 1989 by the Indian Overseas Bank. Further that the receiving order dated the 31st July 1989 against the appellant was filed on the 3rd of August 1989, the order being made by Mr Justice Jones and that the date of discovery of the alleged offence was the 20th January 1990.

5. By agreement between the parties a number of exhibits were admitted without formal proof as being the documents relating to the admitted facts.  Amongst them was exhibit P12 which, it was admitted, was a chronology of the events which happened in relation to the sale and purchase of the car parking space. It was also admitted that exhibit P13 was the flow-chart showing the fund flow in respect of the $65,000 in question

6. At this stage the Crown closed its case and a submission was made by Mr Kynoch that there was no case to answer on both charges.

7. The magistrate rejected the appellant's submission and found that there was a case to answer on both charges. Upon the appellant's counsel closing his case without calling evidence, the learned magistrate convicted the appellant on both charges.

8. At the time of giving judgment the magistrate recorded a short judgment as follows:-

"On Charge (A),  there is no dispute as to the property transaction. Mr Kynoch submitted that the transaction and disposal of funds took place before the bankruptcy petition. It is just a matter of experience that. bankruptcy petition is the end product of long litigation. Indeed in PW.1 which is admitted and not challenged, it is obvious that final judgment had been obtained against D on 26/1/89 well before the sales of the car parking space and disposal of the proceeds. Given the lack of explanation as to the disposal of this large a mount. of money plus the fact that I found that he did perjure when examined about the $65,000, I found that I the only irresistible inference that could be drawn is that D did remove the funds fraudulently from his estate and that he did so within 12 months next before the presentation of the Bankruptcy petition.

On charge (B), while there is no evidence that what D said in the proceeding before Master Beeson is false, I have before me evidence as to the source of the $65,000. The fact that the cheque of $65,000 was paid by the solicitors to D as the price for the sales of the car parking space, plus that the same amount was withdrawn a few days later, is evidence that this is the source of money and that D's allegation that they belonged to Dowlani who was living in Bombay is untrue. I am therefore satisfied that D did perjure.

I am therefore satisfied beyond all reasonable doubts that both charges are proved against D."

 

9. The contentions of the prosecution were set out in the statement of findings of the magistrate as follows:-

"Prosecution Case:

2.     The entirety of the Crown's case. composed of admissions or documents admissible under the Bankruptcy Ordinance and the Evidence Ordinance, or documents admitted by consent.

3.     The Appellant was the owner of a car parking space No. 138 at Villa Monte Rosa at 41A Stubbs Road.

4.     On 15/9/88, the Appellant entered into a sale and purchase agreement in respect of the parking space with one Balani (Exhibit P-6). By an agreement dated 14/3/89, the completion date was extended (Exhibit P-8). By an agreement of the same date, Balani entered into a subsale agreement with Coqueen Co. Ltd. for the subsale of the parking space (Exhibit P-7). On 29/4/89, the Appellant duly assigned the parking space to Coqueen Co. Ltd. (Exhibit P-9). The sale and purchase as well as the subsequent assignment were handled by Ng, Lie, Lai & Chan Solicitors.

5.     On 3/5/89, Ng, Lie, Lai & Chan Solicitors issued a cheque in the sum of $65,000 being-balance of purchase price for the parking space to the Appellant. Exhibit P-11 is a Clients Account Cheque Requisition form of Ng, Lie, Lai & Chan Solicitors authorizing the payment of the said $65,000 to the Appellant via Far East Bank Cheque No. 439810. Exhibit P-3 is an affidavit from an officer of The First Pacific Bank Limited (formerly Far, East Bank Limited) confirming the payment of the said cheque.

6.     On the same date the above mentioned cheque was deposited into the current account of the Appellant with Wing Lung Bank Ltd., account number 06-000-0542-3. On 12/5/89 the Appellant withdrew the said sum of $65,000 from that account. Exhibit P-2 is an affidavit from an officer of the Wing Lung Bank Limited confirming the said deposit and withdrawal.

7.     Bankruptcy proceeding was filed by the Indian Overseas Bank on 4/7/89. Exhibit P-1 is a certified copy of the Bankruptcy Petition. Receiving Order was duly made on 31/7/89 with the Official Receiver being constituted the Receiver of the estate of the Appellant. Adjudication Order was. made on 2/10/89.

8.     The Appellant attended a public examination before Master Claire-Marie Beeson on 28/11/89. Exhibit P-5 is a copy of the Transcript of Proceedings of the Public Examination. Pages 20 and 21 contain the statement which the Crown alleged was a perjury."

10. The relevant portion of the transcript of that public examinaton is as follows:-

11. The magistrate set out the appellant's case in the following paragraphs of. his statement of
findings:-

"The Appellant's case:

9.     Mr Kynock on behalf of the Appellant submitted that there was no case to answer. I rejected that submission. The Appellant elected hot to give evidence.

 

10.     Mr Kynock submitted that the Crown had adduced no evidence as to the state of mind of the Appellant, or dishonesty. He submitted that there was no evidence as to the Appellant's financial position before 29/5/89 i.e. the date on which the bankruptcy notice was issued by the Indian Overseas Hank and that the Appellant did not know bankruptcy petition will be served on him. He submitted that the withdrawal of $65,000 could not be fraudulent in those circumstances.

 

11.     In relation to the perjury charge, Mr Kynock submitted that there was no evidence that the Appellant's statement that the money belong to Dowlani was untrue and that the Crown had adduced no evidence that the money did not belong to Dowlani."

 

The magistrate set out his conclusions as follows:-"

Conclusion:

12.     I found it more convenient to deal with the perjury charge first. There was no direct evidence as to the falsity of the Appellant's statement given before Master Beeson. However, I have before me evidence as to the source of the $65,000. From paragraph 5 and 6, I found that the $65,000 deposited into the Appellant's account was the amount of a cheque paid by his solicitors, Ng, Lie, Lai 6 Chan Solicitors, as balance of proceeds from the sale of his parking space. There was simply no other source to which this payment could be attributed to. This exact amount was withdrawn within 10 days. There was no other payment in or out in between, nor was there any payment in of equal amount between 1/9/88 and 31/7/89 when the account was closed. As such, the Appellant's statement that the money belonged to his friend, Dowlani, living in Bombay must be false and he knew it was false. Given the nature of the proceedings, I also found it a material statement.

 

13.     The source of the $65,000 being proceeds from the sale of the parking space was corroborated by Exhibits P-3 P-6 to P-9, and P-11. In particular the cheque number 439810 of Far East Bank Limited appeared on Exhibit P-11 and the bank statement attached to Exhibit P-3. These were sufficient corroborating evidence as to the falsity of the Appellant's statement..

 

14.     On Charge (A), there was no direct evidence of fraud in the withdrawal of the $65,000. It is the common experience that bankruptcy petition is the end product of a long litigation. Indeed in the petition it was alleged that final judgment of about $1,150,.000 had been obtained against the Appellant on 26/1/89. This took place some three months before the completion of the sale of the parking space. Thus when the Appellant received the $65,000 he must be aware of this final judgment. Though the withdrawal of the said sum of $65,000 took place before the presentation of the bankruptcy petition, given the lack of explanation as to the disposal of this large amount of money shortly before the bankruptcy petition, its withdrawal when the appellant was well aware that the final judgment of $1,150,000 had been awarded against him, and that he subsequently perjured as 'to the source of this money; the only irresistible inference was that he withdrew the money from his estate to the prejudice of his creditors and therefore did so fraudulently. And he did so within 12 months next before the presentation of the bankruptcy petition.

 

15.     Having considered the above and Mr Kynoch's submission, I was satisfied that both charges were proved beyond all reasonable doubt against the Appellant."

12. The first ground of appeal is that "the learned magistrate erred in law in finding that the Appellant did "remove" property within s.129(1) (e) Bankruptcy Ordinance, Cap.6, as the word "remove" denotes a physical transference of property and is inapt to apply to intangible interests even in tangible property."

13. In support of this contention, Mr McCoy. For the appellant, relies on an Australian Authority R v Edwards [1948] QWN 26 at p.33. In that case at first instance Mansfield S.P.J.   gave a very short judgment which I set out below:-

"Mansfield S.P.J. : The Bankruptcy Act, 1924-1946 (Commonwealth), s.210(2) (a),  reads as follows:

'Any person against whom a sequestration order is made, who after or within six months before the presentation of the petition on which the order is made conceals or. removes any part of his property to the value of £10 or upwards shall be guilty of an offence.'

 

This section is a penal section, and the prosecution must prove that it clearly covers the actions which are alleged to have been committed by an accused person. If there is any doubt, the doubt must be resolved in favour of the subject. [His Honour read the first charge and proceeded:]

 

The facts as admitted by the prosecution disclose that the Morris motor car was the property of a partnership of which the accused was a member. He had an interest in it as a partner in the partnership assets, and his interest in such assets was an equitable interest, as shwon by Anning v. Anning ([1907] 4 CLR. 1049, at p.1058).

 

The meaning of 'property' in s.4 of the Act and in s.210 (2) (a) is, in my opinion. the. same, and includes an interest such as the accused had in the partnership property. The word 'removes', however, in my view indicates a physical transference of property, and is inapt to apply to intangible interests, even if they are intangible interests in tangible property. Therefore, where an accused is charged with removing property, the word 'removes' limits the meaning of the word 'property' to such things as can be physically moved. The word  'conceals' possibly gives a wider meaning to the word 'property', but we are not concerned with that in this particular case.

 

In view of the fact that my opinion is that the word 'removes' denotes the physical transference of tangible property and is inapt to apply to intangible interests even in tangible property, the charge against the accused muse be dismissed."

14. Although Mansfield S.P.J. did not refer to it in his judgment, an American Authority had been quoted to him by counsel for the. bankrupt, namely, in re Wilmington Hosiery Co. [1903] 120 Fed R 180 where a similar view was taken. In that case, Bradford, D.J. had to construe a similar provision in. the Bankruptcy Act in force in Delaware, U.S.A. Section 32(1) of that Act (U. S. Comp. St. 1901 p.3422] provides that:-

"Acts of bankruptcy by a person shall consist of his having (1) conveyed, transferred, concealed, or removed, or permitted to be concealed or removed, any part of his property with intent to hinder, delay, or defraud his creditors, or any of the them."

 

In the course of his judgment he said: -

 

"The word 'removed' as employed in subdivision (1), whether taker by itself or viewed in the light of the context, clearly signifies an actual or physical change in the position or. locality of the property consitituting the subject of the removal."

 

15. Mr 1i for the respondent maintains that it was clear at all material times that the property referred to in the charge was the cash sum of $65,000, the proceeds of the sale of the car parking space. He has taken me through the transcript, but there is no need to repeat it here. I am satisfied that he is right and that it had always been the Crown's contention in the Court below that the property. removed was cash $65,000. Since that sum was removed from his account, ground one cannot avail the appellant in this case.

16. Ground 2 is that the learned magistrate erred in law and in fact in finding that the property belonged to the appellant.

17. This contention is also, based on the premise that the property referred to in Charge A was the car parking space and that since this had been sold more than 12 months before the presentation of the petition, it could not have been the appellant's property at the time of the charge. This submission is based on the admitted fact that the sale and purchase agreement in respect of the car parking space was executed on the 15th September 1988.

18. In support of this contention Mr McCoy relies on  R v Thomas Creese LR 2 CCR 105.

19. The facts in the headnote of that case are set out as follows: -

"On the 21st December, 1872, the prisoner executed an assignment of the property upon his farm to trustees for the benefit of certain of his creditors. The assignment was not registered as a bill of sale, and the prisoner continued in occupation of the farm, and in possession of the property assigned, under an agreement with the trustees by which he was to hold possession as their bailiff. On the 14th, 16th and 17th October, 1873, the prisoner fraudulently removed stock from the farm of more than £10 in value, forming part of the property assigned. On the 17th October, 1873, the prisoner commenced proceedings for liquidation by arrangement, and on the 7th November, 1873, the prisoner's creditors duly resolved that his affairs should be liquidated by arrangement, and a trustee was appointed. The prisoner was indicted under sect. 11, subs. 5, of the Debtors Act, 1869, for having within four months next before the commencement of the liquidation, fraudulently removed part of his property of the value of £10 and upwards: -

 

Held, that though the assignment, not having been registered as a bill of sale, was void as against the trustee in liquidation, still, inasmuch, as, at the time of the fraudulent removal, the assignment was in force and the property in the stock removed in the trustees under the assignment, he could not properly be convicted."

20. That decision was referred to in the Full Court in Hong Kong in R v Moosa Ebrahim (1910) HKLR 52 but was distinguished on the grounds that in Moosa's case there was no direct evidence of a transfer.

21. In the present appeal Mr McCoy argues that there was direct evidence of transfer and registration and that no interest in the car parking space was removed within the 12 months period precedent the presentation of the petition of bankruptcy.

22. Mr Li relies on the clear evidence that the $65,000 paid into the appellant's account on 5/5/89 constituted part of the proceeds of sale of the car parking space and argues that if it was the proceeds of sale of the car parking space which had belonged to the appellant, the proceeds of sale themselves must also have belonged to him.

23. Mr McCoy in reply concedes that the success of his argument on this point depends on whether Charge A relates to the sale and purchase agreement or the $65,000.

24. In my judgment, it was abundantly clear, in the Court below, that the prosecution and the defence were aware that the charge related to the removal of $65,000, part of the proceeds of the sale of the car parking space. It was conclusively proved by the admitted facts that the $65,000 withdrawn from his bank account, was the same $65,000 which had been deposited into it a few days before and was therefore the property of the appellant. For this reason ground two also fails.

25. Ground 3 of the appellant's grounds of appeal is that there was no evidence, or no sufficient evidence that the appellant had acted fraudulently. The learned magistrate failed to take into account that the sale of the car park had taken place openly and was registered with the Registrar General.

26. It is Mr McCoy's contention that these facts, coupled with the fact that they were carried out through solicitors, were inconsistent with the appellant having acted fraudulently, and that the magistrate never dealt with this point. He does not dispute that the source of the money was the sale of the car parking space and that the $65,000, when it was paid into his account, belonged to him, but argues that it is a non-sequitur that that shows that Dowlani was not the owner. He argues that the appellant had a creditor called Dowlani. That money belonged to Dowlani. It had always belonged to Dowlani and that the appellant was holding it in a trust situation. He complains that everyone at the trial concentrated on the car parking sale, when they should have concentrated on proving that Dowlani was entitled to the money.

27. Mr McCoy did not address me on the meaning of "fraudulent" within the terms of this section.

28. Mr Li, for the respondent, argues that s.49(1) gives rise to a deeming of fraudulence. This provides:-

"Every conveyance or transfer of property, or charge thereon made, every payment made, every obligation incurred and every judicial proceeding taken or suffered by any person unable to pay his debts as they become due from his own money in favour of any creditor or of any person in trust for any creditor, with a view to giving such creditor, or any surety or guarantor for the debt due to such creditor, a preference over the other creditors, shall, if the person making, taking, paying or suffering the same is adjudged bankrupt on a bankruptcy petition presented within 6 months, or in relation to anything made, taken, paid or suffered before the commencement of the Bankruptcy (Amendment) Ordinance 1984 3 months, after the date of making, taking, paying or suffering the same, be deemed fraudulent and void as against the trustee in the bankruptcy."

 

29. Mr McCoy counters that this section has nothing to do with an offence under s.12.9.

30. The intent to defraud, which was an essential element of this offence under section 154 of the Bankurptcy Act 1914 from which section 129 was taken is dealt with in Archbold Criminal Practice. and Pleading 42nd Edition at paragraph 26-24, where reference is made back to paragraph 17-26 for the general meaning of the words" intent to defraud". There it is stated that "to defraud" or to act "fraudulently" is dishonestly to prejudice or take the risk  of prejudicing another's right, knowing that you have to . right to do so."

31. In my judgment, this was an essential element which had to be proved on the A charge.

32. Although the magistrate did :not specifically, define the word "fraudulently" he did say why he reached the conclusion that the appellant had acted fraudulently.

33. In both judgments, he basedh his decision in respect of this element of the offence on four factors -

(1)	At that time when he received the $65,000 into his account the appellant was aware of the final judgment against him on the 26th January 1989 in respect of HK$1,150,000.-.
(2)	The disposal of this large sum of money took place after that judgment.
(3)	There has been a lack of explanation as to the disposal of this large amount of money.  and
(4)	The appellant perjured himself at the public examination before the master in respect of this sum.

 

34. On these facts he concluded that "the only irresistable inference that could be drawn is that the appellant did remove the funds fraudulently from his estate and that he did so within 12 months next before the presentation of the bankruptcy petition".

35. In view of the reliance of the magistrate on the fact that the appellant had perjured himself to support the conviction on the A charge, I will now consider the remaining grounds of appeal.

36. Ground 4 is that the learned magistrate erred in law in reversing the onus of proof on charge A by finding that the appellant had given no explanation, and using this omission as being in support of the crown case.

37. Mr Li, for the Crown, takes issue with this ground pointing out that all the magistrate was doing was commenting upon the lack of explanation as he was entitled to do.

38. It is abundantly clear that the magistrate was commenting upon the fact that the appellant had given no explanation in the proceedings before his Court. He regarded the explanation given to the master in the public examination as being untrue.

39. In my judgment, the magistrate was perfectly entitled to draw the inference which he did more readily from the fact that no explanation had been given by the appellant in the witness-box before him. It is manifestly clear that he was well aware upon whom the burden of proof lay and of the correct standard of proof. There is nothing in this ground.

40. Ground 5 is that the learned magistrate erred in law on charge A by using charge B to support the conviction and that such reasoning is impermissible and violates the fundamental rule that charges should be tried separately although heard jointly.

41. Mr Li for the Crown answers this on the basis that the magistrate's reasoning was not flawed. When a court examines a material element of this type, the court is entitled to take into consideration the whole course of conduct of the appellant from before removal of the $65,000 from his account up to the time he allegedly told lies to the master during the public examination.

42. I consider this to be a very technical argument. Having reached the conclusion that the $65,000 belonged to the appellant, a conclusion reached on admitted facts, it was abundantly clear to the magistrate that the appellant had lied before the master in the public examination when he said that the $65,000 belonged to Dowlani. Lies told at any stage of an investigation subsequent to the event, about a material fact relating to the event, would be a proper factor for the magistrate to take into consideration. In my judgment, he was entitled to reach that conclusion.

43. I come now to the perjury charge. Ground 6 is that the learned magistrate erred in law on charge B in convicting the appellant without addressing his mind to the mandatory corroboration requirement of s.43 of the Crimes Ordinance, Cap 200, at the time of conviction. Later the magistrate referred to corroboration in giving his reasons, upon notice of appeal having been filed. In the premises, a reasonable observer would consider that the belated reference to corroboration was not in fact in the magistrate's mind at the time of conviction.

44. Mr Li for the Crown argues in reply that the magistrate was not only considering the admitted facts but was also considering the various sources of the evidence and in particular the documentary exhibits which supported the admitted facts. Exhibits P2 and P3 confirm one another on the source of the $65,000. Section 43 of the Crimes Ordinance does riot require two witnesses as to the falsity of the appellant's statement before the master. All that is required is one witness who is corroborated by either another witness or documents. He relies on Threlfall (1914) 10 Cr App R 112 to support this contention.

45. While it is now clear that the law only requires one witness to perjury, if his evidence is corroborated by documentary evidence, as was stated by Mustill, L.J. in Rider (1986) 83 Cr App R 207 at 210, no corroboration is required at all in the case where all the facts are admitted.

46. In my judgment, the admitted facts show clearly that the $65,000 which was removed from his bank account belonged to the appellant. These facts show conclusively that his statement before the master was false. There was therefore no need for corroboration.

47. Ground 7 is that the learned magistrate wrongly described exhibit 3, exhibits 6 - 9 and exhibit 11 as being corroboration, when in law, the said exhibits do not amount to corroboration.

48. I can only say that for the reasons stated above, there is no merit in this ground.

49. Ground 8 is that the learned magistrate has erred in law and in fact in finding that the sum of $65,000 did not belong to Dowlani. His conclusion is not supported by the evidence, which does not disprove beyond reasonable doubt that the sum of $65,000 did not belong to Dowlani, irrespective of the appellant's banking transactions.

50. In view of what I have said above, I can see no merit in this ground.

51. For the above reasons, I hold that the magistrate was perfectly entitled to reach the conclusions he did for the reasons he gave on both charges.

52. The appeals are therefore dismissed and the convictions affirmed.