THE QUEEN v. CHEUNG CHU AND OTHERS

[Unsatisfactory grounds: attention of Counsel drawn to Practice Direction - criminal appeals.]

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J U D G M E N T

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Silke, J.A.:

1. Three persons appeared in the District Court upon a charge of conspiracy to defraud the Nanyang Commercial Bank. They were tried upon that charge and convicted.

2. The 1st and the 2nd applicants seek leave to appeal against both their convictions and sentences. The 3rd applicant, having abandoned his application for leave to appeal against conviction, seeks leave to appeal against sentence.

3. The 1st applicant, CHEUNG Chu, - "Dl"- ran a finance company entitled "Chu Wah Finance Company". The 2nd applicant, KWOK Yiu-chun, - "D2" - ran a meat stall called "Yee Wo Chan" and he was a gambler. The 3rd applicant, YUNG Kin-san, - "D3" - was the Branch Manager of the Tai Po Branch of the Nanyang Commercial Bank - "the Bank".

4. Both D1 and D2 had accounts in the Tai Po Branch of the Bank which had been opened in April of 1979 with D3 as its Branch Manager. Both D1 and D2 were Tai Po residents.

5. In June of 1979, D1 obtained an overdraft in the Bank in the sum of $50,000. In September of 1979, D2 obtained an overdraft in the sum of $50,000 and in December of 1979 D2 had that ceiling of $50,000 increased to $100,000 and this done with the approval of the Head Office of the Bank. These limits were exceeded and the excess was covered up by a month end deposit of various cheques. These cheques had in the main been obtained from persons of little credit and were in blank, other than signature. Sums were filled in and the cheques deposited, leaving at the end of the month a balance apparently within the overdraft limit. Early in the following months they were dishonoured. This went on from soon after the overdrafts were granted up to October 1980.

6. Separately each of the applicants also procured other persons to make application to the Bank for overdraft facilities in their won names. These overdraft facilities were made use of by D1 and D2.

7. The systems were operated with the connivance of D3 for, under Bank rules, he was obliged at the end of each month to inform Head Office of any overdraft which exceeded the limits which he could grant or Head Office had approved.

8. Mr. Chang, who when he gave evidence was Deputy General Manager of the Nanyang Commercial Bank, testified that the Branch Manager was generally responsible to Head Office which had a fixed policy for loans and overdrafts. A Branch Manager had the right himself to approve overdraft facilities up to $50,000 the original amounts of the overdrafts with which we are concerned here. He must seek approval from Head Office for any overdraft above this figure before any cheques in excess of it would be met.

9. The result of this cover up was that during each month the overdraft grew necessitating an even larger amount of apparent reduction by these dishonest methods in the accounts at the end of the month.

10. In October 1980 Dl owed about $750,000 and D2 about $900,000. It must be said that there had been several real payments into the account of D2 and that there had been a mortgage of land in order to securs the initial increase of his overdraft limit to $100,000. Dl, after the events to which I have referred, did deposit deeds of an interest in land as a form of mortgage by deposit with D3 personally.

11. In October 1980 when the matter was clearly getting out of hand D3 made a report to his Head Office. Since then writs have issued against D1 and D2.

12. The particulars of the charge of conspiracy to defraud were as follows:

"CHEUNG Chu, KWOK Yiu-chun and YUNG Kin-san, between the months of May 1979 and Octobe 1980, in this Colony, conspired together to defraud the Nan Yang Commercial Bank Limited by dishonestly,

13. It was clear from the evidence that each of these schemes was to a very large extent, and I shall refer in a moment to the limit on that extent, operated as a separate scheme. D1 had borrowed cheques from NG Hung and had procured KOO to open an overdraft account. Neither of those transactions concerned D2. D2 had procured cheques from MAK Kam-kee and CHAN King-fan and had procured WU to get an overdraft in the Bank. None of those transactions involved Dl. These are examples of the lack of "togetherness" - if I may call it - between D1 and D2.

14. The two matters which have been argued before us were first: that there was not sufficient evidence to establish a conspiracy as between Dl, D2 and D3 together; and secondly that there was insufficient evidence of dishonesty.

15. On that last point, it is sufficient to say that there was evidence upon which the trial judge could properly find there to have been dishonest conduct and a defrauding within the meaning attribute to it by Scott v. Metropolitan Police Commissioner ⁽¹⁾. It is the first issue that concerns us.

16. The evidence of "togetherness" was limited to the fact that D1 and D2 knew each other, which is not surprising given that they were long-term residents in Tai Po, and that one introduced the other to D3. Our attention has also been drawn to a series of payments from D2 to D1 - on the 8th October 1979 for $8,350, the 18th October 1979 for $11,750 and the 18th December 1979 for $2,000. These were debited to D2's account and paid into the account of Dl on the same day. Further, there was evidence that D2 had, at some stage, borrowed money from D1 who ran the finance company.

17. This evidence is not, in our view, sufficient to show a conspiracy to defraud as existing between the three applicants. The evidence could have shown a conspiracy between Dl and D3 or D2 and D3 but not between all three together.

18. The trial judge stated at the commencement of his Reasons for Verdict:

"The central issue in this case is whether there was a conspiracy between the three accused or any two of them to defraud the Nan Yang Commercial Bank."

19. He then went on to give a perfectly correct definition of the common law offence of conspiracy, an agreement between two or more persons to do an unlawful act. The passage just cited would seem to suggest that he had in mind an agreement between the three men or between two of them relating to a common design of them all. At a later stage in his Reasons he said:

"This Court having considered all of the admissible evidence including the documentary evidence is satisfied beyond a reasonable doubt that there was an agreement between the three accused to operate the bank accounts of the 1st and 2nd accused to the economic detriment of the Man Yang Commercial Bank."

20. He then went on, and this is of some importance:

"In the case of the 3rd accuesd he joined into this agreement when he failed to take any action over the excessive use being made by the 1st and 2nd accused of their overdraft facilities and when he became aware of the system being used to reduce these overdrawn accounts to within overdraft limits at the end of each month."

21. That finding would suggest that D3 only became part of a conspiracy organised by D1 and D2 at some time after the agreement between Dl and D2 had come into being. As I have said, in our view there was no evidence to show an agreement between D1 and D2 in the first place. And certainly that finding gives the appearance of being against the trend of the evidence.

22. In the result, we do not think the convictions of D1 and D2 can stand. We grant the application for leave to appeal against conviction, treat the hearing of the applica-tions as the hearing of the appeal and quash those convictions.

Sentence (D3)

23. Turning now to the appeal against sentence on behalf of D3, Mr. Westbrook has put before us everything that can be properly said. He submits that this offence did not involve the worst sort of cupidity; there was no apparent financial benefit to D3 who himself made a report to his Head Office. This could have been shortly before an audit was carried out but nevertheless it was his information that brought the matter to a head.

24. The Bank itself seemed to have taken the view that its only interest was to recover as much of its money as it could and in this it was assisted in some measure by D3. He was dismissed in early 1981. He has had the matter hanging over him for a very considerable period of time. He was however in a position of trust.

25. The sentence passed upon him of eighteen months, if the trial judge's finding as to his attachment to the conspiracy at some period after it has been started by D1 and D2 was justified, does not seem to have honoured that finding.

26. By reason of the considerations which I have just enumerated we set aside the sentence of eighteen months and substitute therefor a sentence of six months' imprisonment.

27. We therefore allow the application for leave to appeal against sentence, treat the hearing as the hearing of the appeal, allow the appeal to that extent.

28. We have considered the issue as to a re-trial of D1 and D2 and the provisions of section 83A of the Criminal Procedure Ordinance. As we do not think that a re-trial is appropriate in this case we will reserve the question of our jurisdiction to make such an order in the circumstances that existed here.

29. Before leaving this case, we wish to refer to the unsatisfactory grounds of appeal which were before us once again. We draw the attention of Counsel to the Practice Direction dealing with Criminal Appeals and the perfecting of grounds and in particular to that passage which reads:

30. The grounds here were in such general terms as to be of no assistance to the Court - or to Counsel who was called upon to meet them.

(1) [1975] A.C. 819