HKSAR v. CHEUNG KWUN YIN

FACC No. 11 of 2008

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 11 OF 2008 (CRIMINAL)

(ON APPEAL FROM CACC NO. 164 OF 2007)

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J U D G M E N T

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Chief Justice Li :

1. Section 18D(1) of the Theft Ordinance, Cap.210, criminalizes the dishonest procuring by deception of the making of an entry in a record of a bank.   It provides :

“Any person who dishonestly, with a view to gain for himself or another or with intent to cause loss to another, by any deception (whether or not such deception was the sole or main inducement) procures the making, omission, altering, abstracting, concealing or destruction of an entry in a record of a bank or deposit-taking company, or any subsidiary thereof the principal business of which is the provision of credit, shall be guilty of an offence and shall be liable on conviction upon indictment to imprisonment for 10 years.”

Section 18D(2)[1] defines “deception” to have the same meaning as in s.17[2], namely :

“‘deception’ means any deception (whether deliberate or reckless) by words or conduct (whether by any act or omission) as to fact or as to law, including a deception relating to the past, the present or the future and a deception as to the intentions of the person using the deception or any other person.”

The question arising in this appeal concerns the correct interpretation of s.18D(1).  The issue is, whether on its proper interpretation, the deception must be practised on the bank in question[3].

Convictions at trial

2.  On 24 April 2007, the respondent was convicted in the District Court (HH Judge Yau) of an offence under s.18D(1) and an offence of blackmail.  He was sentenced to three years’ imprisonment for each offence.  One year of the sentence for the blackmail offence was ordered to be served consecutively to the sentence for the s.18D(1) offence, making a total term of four years.  The present appeal is only concerned with the s.18D(1) conviction.

The facts

3.  The facts can be shortly stated.  The respondent developed a sexual relationship with the first prosecution witness (“PW 1”), a married businesswoman, who was referred to as “X” at the trial.  In December 2004, the respondent borrowed sums totalling $200,000 from PW1 on the pretext that he needed the money to be engaged in business.  In January 2005, the respondent informed PW1 that he would like to open a premier account at HSBC in order to enable him to apply for a platinum credit card.  He said that a minimum of $1 million was required to open such an account and asked PW1 to lend him the money.  He said that PW1 only needed to lend him $800,000 as he still had the $200,000 PW1 had earlier lent him.  In order to please the respondent and to maintain their relationship, PW1 acceded to his request.

4.  On 24 October 2005, PW1 and the respondent opened a joint account, into which PW1 deposited a cheque of $800,000.  This was the subject matter of the s.18D(1) charge.  The respondent promised her that after he obtained the platinum credit card in about one month’s time, he would repay the $800,000 to PW1.  At that time, PW1 was aware that the respondent had used the $200,000 to buy shares but she trusted that he would eventually sell the shares and put the money into the account.

5. On 13 November 2005, the respondent told PW1 that he had used up the money in the joint account and that he would not repay the money to her.  Further, he threatened her that unless she gave him another $1 million, he would disclose their relationship to her husband.  This was the subject matter of the blackmail charge.  PW1 then discovered that only $1,000 was left in their joint account and reported the matter to the Police.

6. On the facts, in relation to the s.18D(1) offence, the relevant entry in the record of a bank was the credit entry of $800,000 in the joint account in the records of HSBC.  The deception consisted of the false representation to PW1 that HSBC required to have $1 million in the account for applying for a platinum credit card and that the respondent was to apply for such a card, whereas in fact, the respondent had no intention of applying.  Such deception was practised on PW1 and not on HSBC.

The Court of Appeal

7. The Court of Appeal (Cheung JA, Yuen JA and Barnes J) upheld the conviction for blackmail but quashed the conviction for the s.18D(1) offence.  The Court of Appeal accepted that the wording of s.18D(1) is capable of covering a case, such as the present, where the target of the deception was not the bank.  But it held that on its true interpretation, the offence created by s.18D(1) required that the deception must be practised on the bank.  The Court of Appeal reached this result on the basis of statements made by the Attorney General in the Legislative Council in the course of the passage of the Theft (Amendment) Bill 1986 which among other things introduced the s.18D(1) offence.  It read these statements as defining the purpose of s.18D(1) to be the creation of an offence which required the deception to be practised on a bank but not anyone else[4].

8. The Court of Appeal was of the view that if its interpretation of s.18D(1) were wrong, the respondent was properly convicted of the s.18D(1) offence.

9. As to sentence, the Court of Appeal considered that : (1) The appropriate sentence for the blackmail offence was 2½ years’ imprisonment; and (2) If the s.18D(1) conviction were sustained : (a) the appropriate sentence for that offence would also be 2½ years’ imprisonment and (b) one year of the sentence for the blackmail offence should be ordered to be served consecutively to the sentence for the s.18D(1) offence, making a total sentence of 3½ years’ imprisonment instead of the sentence of 4 years’ imprisonment imposed by the trial Judge.

Leave to appeal

10. On 19 December 2008, the Appeal Committee certified the following question of law and granted leave to appeal.

“Is the reference to “any deception” in section 18D(1) of the Theft Ordinance, Cap.210 restricted to deception which targets a bank or deposit-taking company?”

Approach

11. In interpreting a statute, the court’s task is to ascertain the intention of the legislature as expressed in the language of the statute.  This is of course an objective exercise.  The court is not engaged in an exercise of ascertaining the legislative intent on its own.  As Lord Reid pointed out in Black-Clawson International Ltd v Papierwerke Waldhof – Aschaffenburg AG [1975] AC 591 at 613G.

“We often say that we are looking for the intention of Parliament, but that is not quite accurate.  We are seeking the meaning of the words which Parliament used.”

12. The modern approach is to adopt a purposive interpretation.  The statutory language is construed, having regard to its context and purpose.  Words are given their natural and ordinary meaning unless the context or purpose points to a different meaning.  Context and purpose are considered when interpreting the words used and not only when an ambiguity may be thought to arise.  In HKSAR v Lam Kwong Wai (2006) 9 HKCFAR 574 at 606E, Sir Anthony Mason NPJ stated :

“The modern approach to statutory interpretation insists that context and purpose be considered in the first instance, especially in the case of general words, and not merely at some later stage when ambiguity may be thought to arise.”

See also Medical Council of Hong Kong v Chow Siu Shek (2000) 3 HKCFAR 144 at 154 B-C.  As the Court pointed out in Town Planning Board v Society for the Protection of the Harbour Limited (2004) 7 HKCFAR 1 at 14 A-C, the mischief rule is an early example of the purposive approach.  And the purposive approach (including the mischief rule) has been reflected in Hong Kong in s.19 of the Interpretation and General Clauses Ordinance, Cap.1[5].

13. The context of a statutory provision should be taken in its widest sense and certainly includes the other provisions of the statute and the existing state of the law.  See Town Planning Board v Society for the Protection of the Harbour Limited at 13 I-J and Attorney-General v Prince Ernest Augustus of Hanover [1957] AC 436 at 461.

14. The purpose of a statutory provision may be evident from the provision itself.  Where the legislation in question implements the recommendations of a report, such as a Law Reform Commission report, the report may be referred to in order to identify the purpose of the legislation.  The purpose of the statutory provision may be ascertained from the Explanatory Memorandum to the bill.  Similarly, a statement made by the responsible official of the Government in relation to the bill in the Legislative Council may also be used to this end.  See PCCW – HKT Telephone Ltd v Telecommunications Authority (2005) 8 HKCFAR 337 at 351 F-J and Director of Lands v Yin Shuen Enterprises Ltd (2003) 6 HKCFAR 1 at 15 A-H.

Pepper v Hart

15. Whilst as noted above, statements made by officials of the Government in relation to the bill in the Legislative Council may be used to identify the purpose of the statutory provision, employing it in order to ascertain the meaning of the statutory words stands in a fundamentally different position.  In England, in Pepper v Hart [1993] AC 593, the House of Lords decided that such statements may be referred to as an aid to interpretation for the purpose of ascertaining the meaning of the statutory language, where the following three conditions are met : (a) The legislation is ambiguous or obscure or leads to an absurdity; (b) The material relied upon consists of one or more statements by a Minister or other promoter of the Bill together if necessary with such other Parliamentary material as is necessary to understand such statements and their effect; (c) The statements relied upon are clear.

16. The House of Lords has emphasised that the three conditions should be strictly insisted on.  See R v Environment Secretary, Ex parte Spath Holme Ltd [2001] 2 AC 349 at 392 D-E, 408 C-D, 413 G-H and Robinson v Secretary of State [2002] NI 390 at 405e.  Under the approach laid down in Pepper v Hart, where the three conditions are fulfilled, the Minister’s statements may be used to resolve the ambiguity, obscurity or absurdity.  In R v Environment Secretary, Ex parte Spath Holme Ltd, Lord Nicholls (at 399 C-E) emphasised that even where the conditions are met, Government statements, however they are made and however explicit they may be, cannot control the meaning of legislation and it is for the court when determining what was the intention of Parliament in using the words in question, to decide how much importance, or weight, if any, should be attached to a Government statement.

17. In Hong Kong, although the Court has applied the approach in Pepper v Hart on isolated occasions on the assumption that it applies[6], it has kept open the question whether and the extent to which that approach is applicable in Hong Kong.  See Lam Pak Chiu v Tsang Mei Ying (2001) 4 HKCFAR 34 at 44 D-E and PCCW – HKT Telephone Ltd v Telecommunications Authority at 352 F-H.  It is unnecessary to determine this question in the present case.  When it arises for examination, the practical as well as the conceptual and constitutional implications involved in the Hong Kong context would have to be considered.

Section 18D(1)

18. Section 18D(1) in so far as relevant to the present case provides :

Any person who dishonestly, with a view to gain for himself or another or with intent to cause loss to another, by any deception (whether or not such deception was the sole or main inducement) procures the making, … of an entry in a record of a bank …, shall be guilty of an offence …. .

19. Section 18D was enacted by the Theft (Amendment) Ordinance 1986 (“the 1986 Ordinance”).  That Ordinance effected three changes to the Theft Ordinance.  In addition to introducing s.18D, the 1986 Ordinance amended s.18 which provides for the offence of obtaining property by deception.  Section 18(2) provides for the cases in which a pecuniary advantage is to be regarded as obtained for a person.  Section 18(2) was amended (1) to provide in s.18(2)(a) for the case where the person concerned is granted a credit facility or credit arrangement, an improvement to, or extension of its terms or a credit to or a set off against an account, whether it is in his name or the name of another person or is legally enforceable or not and (2) to provide in s.18(2)(b) for the case where the person concerned is allowed to borrow by way of overdraft or to take out any policy of insurance or annuity contract or obtains an improvement on the terms he is allowed to do so, whether it is in his name or the name of another person or is legally enforceable or not[7].  Further, the 1986 Ordinance increased the level of penalty for certain offences.

20. The context of s.18D included the existing state of the Theft Ordinance.  In 1986, it already included various offences involving deception : obtaining property by deception (s.17), obtaining pecuniary advantage by deception (s.18), obtaining services by deception (s.18A) and evasion of liability by deception (s.18B).

21. The purpose of s.18D is evident from the provision itself.  It was to introduce a new offence involving deception.  The Explanatory Memorandum stated (in para 1) that the object of clause 3 proposing the enactment of s.18D is “to make it an offence to procure by deception certain changes to entries in certain records”.  Paragraph 3 of the Explanatory Memorandum states : 

Clause 3 adds a new section 18D to the principal Ordinance to make it an offence for a person to procure by deception the making, not making, altering, abstracting, concealing or destruction of an entry in a banker’s record or the record of a deposit-taking company where such action is for the purpose of gain by that person or another or with intent to cause loss to another.           

22. Section 18D(1) should be construed in the light of its context and purpose.  Given its context and purpose, it should be given its natural and ordinary meaning.  Its natural and ordinary meaning is consistent with its context and purpose and there is no justification for giving the statutory language any different meaning.  The offence consists of the dishonest procuring by deception of the making of an entry in a record of a bank with a view to gain or intent to cause loss.  Procuring involves causing the making of the entry and the defendant must have the intent of procuring the relevant entry.  The procuring must be dishonest with a view to gain or intent to cause loss and the means employed to procure must be deception.  If the means employed do not involve deception, the offence under s.18D(1) would not be made out. 

23. Section 18D(1) refers to a person who dishonestly, with a view to gain or with intent to cause loss, by any deception procures the making of an entry in a record of a bank.  On the natural and ordinary meaning of the statutory language, there is no limitation on the type of person on whom the deception is practised and there is no requirement that it must be practised on the bank where the relevant entry is made.  Where the deception by the defendant was practised not on the bank but on another party, it is necessary to establish both that the relevant entry in the record of a bank was procured as a matter of causation and that the defendant intended by deception on that party to procure the relevant entry. 

24. There may be cases where a defendant, practising deception on a bank’s customer, has no intent to procure an entry in the record of that bank, but an entry is nevertheless made in the bank’s record on the customer’s initiative as a consequence of the deception.  In such cases the offence is not made out because there is no relevant dishonest intent to procure an entry in the bank’s record.  The present case is plainly not such a case because both the requirements of causation and intent are satisfied.

The Attorney General’s statements

25. The Court of Appeal in interpreting s.18D(1) to be restricted to the case where the deception is practised on the bank in the record of which the entry is made was decisively influenced by the Attorney General’s speeches in the Legislative Council. The Attorney General made two speeches in the Council during the passage of the Bill; on 12 March 1986 in moving the second reading of the Bill and on 16 July 1986 on resumption of debate on the second reading.

26. These speeches were extensively quoted in the judgment of the Court of Appeal (at paras 21 and 22) and it is unnecessary to set them out in this judgment.  The Attorney General’s speeches of course related to the entire Bill which proposed the enactment of the 1986 Ordinance.  As has been noted when referring to that Ordinance, apart from proposing the introduction of the new offence in s.18D, the Bill had proposed amendments to s.18(2) so that for the offence of obtaining a pecuniary advantage by deception under s.18, a pecuniary advantage is regarded as obtained, (1) where the person concerned is granted a credit facility or credit arrangement, an improvement to, or extension of, its terms or a credit to, or a set-off against, an account or (2) where the person concerned is allowed to borrow by way of overdraft or to take out any policy of insurance or annuity contract or obtains an improvement on the terms he is allowed to do so.

27. In his first speech on 12 March 1986, the Attorney General referred to the difficulties the prosecution had encountered under the existing law in dealing with certain fraudulent transactions carried out for the purpose of obtaining credit from banks or deposit taking companies.  He stated :

“The best course therefore is to enact new provisions to make these and similar activities criminal, as they should be, and the Theft (Amendment) Bill 1986 is designed to achieve this object.”

He informed the Council that clause 2 of the Bill (proposing amendments to s.18(2)) makes it an offence to obtain by deception credit from banks or deposit-taking companies and that clause 3 (proposing the introduction of s.18D) “creates a new offence for a person dishonestly to procure by deception the making of an entry in the record of a bank or deposit-taking company”.  He concluded by saying that the two new provisions “will bring the fraudulent activity of obtaining credit by deception clearly within the ambit of the criminal law.”

28. In his second speech on 16 July 1986, he referred to the amendments proposed to clauses 2 and 3[8] and stated that the amendments

“will now clearly identify those bodies on which [t]his kind of fraud will ordinarily be perpetrated, that is to say, banks and deposit-taking companies, and subsidiaries of banks or deposit-taking companies whose principal business is the provision of credit.”

29. Whilst the Attorney General directed attention to fraudulent activities of obtaining credit from banks or deposit-taking companies, he did not say that these were the only activities which would be covered by the proposed legislation.  On the contrary, he made clear by his reference to “similar activities” in his first speech and to “will ordinarily be perpetrated” in his second speech that these were not the only activities which would be caught.  His speeches cannot be read as identifying the purpose of the introduction of s.18D to be to criminalize only those cases where the deception is practised on banks or deposit-taking companies.  The purpose of s.18D, as is evident from the provision itself and as stated in the Explanatory Memorandum to the bill referred to above, was entirely consistent with what was stated in the Attorney General’s statements.

Chow Wai-ming

30. The Court of Appeal distinguished its previous authority in Attorney General v Chow Wai-ming [1992] 1 HKCLR 214 on the basis that it did not authoritatively state that s.18D(1) covers situations other than where the deception was practised on banks and deposit taking companies.  On the facts, the deception was practised not on the bank in whose record the entry was made but on the retailer who accepted the payment by credit card from the accused who dishonestly used it in excess of the credit limit with no real intention of ever making repayment.  That decision is consistent with the proper interpretation of s.18D(1) as held in this judgment.

Answer to the certified question

31. The answer to the certified question (see para 10) is in the negative.

Result

32. The appeal should be allowed and the conviction for the s.18D(1) offence should be restored.  On this basis, as noted in para 9 above, the Court of Appeal (1) would have imposed a sentence of 2½ years’ imprisonment for this offence and (2) would have ordered that one year of the sentence for the blackmail offence should be served consecutively to the sentence for the s.18D(1) offence.  Since the respondent has already served his sentence for the blackmail offence, the orders, which the Court of Appeal would have made, are no longer appropriate.  Instead, in order to achieve the same effect, that is, a total sentence of 3½ years’ imprisonment for both offences, the Court should impose a sentence of one year’s imprisonment for the s.18D(1) offence which should now be served.

Mr Justice Bokhary PJ :

33. I agree with the judgment of the Chief Justice.

Mr Justice Chan PJ :

34. I agree with the judgment of the Chief Justice.

Mr Justice Ribeiro PJ :

35. I agree with the judgment of the Chief Justice.

Sir Anthony Mason NPJ :

36. I agree with the judgment of the Chief Justice.

Chief Justice Li : 

37. The Court unanimously allows the appeal and restores the conviction for the s.18D(1) offence.  A sentence of one year’s imprisonment is imposed for such offence and should now be served.

[1]     It also contains definitions of “bank”, “deposit-taking company”, “record” and “subsidiary”.

[2]    Section 17 provides for the offence of obtaining property by deception.

[3]    Section 18D(1) refers to “a bank or deposit-taking company, or any subsidiary thereof the principal business of which is the provision of credit”.  Since the present case concerns a bank, it is unnecessary to refer to the other financial institutions.

[4]      Subsequently, in HKSAR v Chan Tak Ping CACC 142/2008 (28 August 2008), the Court of Appeal (Yeung JA, Yuen JA and Barnes J) followed its decision in the present case on the interpretation of s.18D(1) as it considered itself bound and quashed a conviction for an offence under s.18D(1).

[5]     Section 19 provides : “An Ordinance shall be deemed to be remedial and shall receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Ordinance according to its true intent, meaning and spirit.”

[6]    See Commissioner of Rating & Valuation v Agrila Ltd (2001) 4 HKCFAR 83 at 104 A-B and Registrar of Births and Deaths v Syed Haider Yahya Hussain (2001) 4 HKCFAR 429 at 444 A-C.

[7]    Before the 1986 Ordinance, s.18(2)(b) already contained the case in (2).  What was added by that Ordinance were the words “whether any such overdraft, policy of insurance or annuity contract – (i) is in his name or the name of another person; or (ii) is legally enforceable or not.”

[8]    The amendments are not material for present purposes.  They were directed to identifying and defining the financial institutions within the purview of s.18D(1).