HKSAR v. TSANG SIN FAI

HCMA 708/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 708 OF 2001

(ON APPEAL FROM NKCC 1473/2001)

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J U D G M E N T

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1. On 23 March 2001 the appellant, a male aged 36 years of hitherto clear record, appeared for trial before A Kwok Esq., magistrate, having pleaded not guilty to the charge of theft of cash in the sum of $23,510.00 from his employer Jebsen & Co. Limited. After a trial of 3 days he was found guilty and convicted. This is his appeal against conviction.

2. I turn to the magistrate's statement of findings for assistance in relating the respective cases of the parties, his findings of facts and reasons for verdict.

3. The prosecution case was that Jebsen & Co. Limited (Jebsens) is the sole distributor in Hong Kong of Porsche cars and spare parts. The appellant at the material time was employed as supervisor in the Porsche spare parts department.

4. There is also a repairs department at Jebsens. Mr Chan is its assistant manager. In May 1999 Mr Chan received a cheque for $23,510.00 drawn in favour of Jebsens on the account of Goodpoint Agents Limited, a company owned by a customer called Dr So. Dr So by this cheque was settling an account for repairs with a surplus balance representing a deposit for some spare parts he had ordered but which were not yet to hand. Mr Chan gave the cheque to the appellant. He put it in a drawer in his office.

5. Mr Ip is the administrative manager of Jebsens. He said that it is Jebsens policy that all cash and cheques received for Jebsens should be immediately banked in the company's account. He referred to a company circulated memo of 1994 to that effect. Thus the appellant's election to hold the cheque unbanked was, on the face of it, conduct contrary to company policy.

6. Madam Tsui works in the Porsche parts department. In June 1999 she received cash of $30,000.00 being the proceeds of sale of a Porsche bike bought and paid for by a customer called Mr Kwan. The appellant presented to her the cheque of $23,510.00 and requested her to give him in exchange cash of $23,510.00 out of $30,000.00 she was holding. She acceded to this request. Whether she released all the cash to the appellant is not, from the magistrate's statement of findings, immediately apparent. But it seems she did part with all the cash for she was left with the cheque and a credit card voucher for the balance in the name of a Mr Au, another staff member in the parts department. Whatever happened to the cash of $6,490.00 is not, for the purposes of this appeal at any rate, material. Suffice to say that the appellant had, in effect, cashed the cheque.

7. What he did with the money is not the subject of an express finding of fact. The magistrate noted that the appellant in evidence said he had placed the cash in a drawer. But later on he was critical of the appellant's explanation as to why he had chosen to exchange the cheque for cash, and said of that: 'I found the defendant was not telling the truth'. But that did not relate to where the appellant put the cash or amount to an express finding that he was not to be believed as to what he did with it. In the event there was no evidence which the magistrate referred to to suggest that the money was not put in a drawer by the appellant.

8. Mr Kwan, the customer who had paid cash for the Porsche bike, subsequently indicated dissatisfaction with his purchase and sought a refund of the purchase price of $30,000.00 he had paid.

9. Mr To is the senior manager of the parts department. Mr Kwan's request revealed that the $30,000.00 had not been banked but instead had been converted into the cheque for $23,510.00 and the sales voucher of $6,490.00. This all appeared to be unauthorized and irregular. The appellant was interviewed. He handed over on request cash of $23,510.00. He gave an explanation of why he did what he did. In the meantime, Dr So had cancelled his order for parts and the money was refunded to him less the repair charge of $3,342.00. There being nothing to suggest otherwise, I assume that if Mr Kwan was permitted to return the bike he was refunded by separate cheque, so there was no loss. But the appellant's actions were found to be a serious breach of company policy, and he was dismissed. The matter was referred to the ICAC. The appellant was willing to give an interview and that was recorded on video. That was the case against the appellant.

10. The appellant elected to give evidence. He said he had a clear record and a work history with Jebsens that went back 11 years. He held the cheque of Dr So unbanked because he could not invoice him until the spare parts arrived. He had no idea of the company policy about having to bank cheques forthwith on receipt. He converted the cheque for cash because he was led to believe Mr Chan had settled Dr So's repair bill of $3,342.00 and this would be a convenient way of reimbursing him.

11. The magistrate from this evidence made findings of fact. One was that Mr Chan who received the cheque in the first place said the cheque could not be deposited as the parts had not arrived. Thus the magistrate found that the policy in place at Jebsens that all moneys when received had to be immediately banked may not have been effectively communicated to all staff members.

12. Then the magistrate turned to consider the individual components that made up a theft charge. After reminding himself that the appellant had a clear record, he found the necessary ingredients of the appropriation of another's property, dishonesty, and intention to deprive permanently all proved and convicted the appellant.

13. The appeal mounted on the appellant's behalf by Mr Cheng Huan, SC leading Mr Ma focused on these ingredients. He argued that the magistrate was wrong to have drawn the inference of guilt because on the evidence it could not be said to be an irresistible one, touching all the ingredients that make up the offence.

14. In the course of doing so the magistrate asked himself whether the appellant was acting dishonestly. Of this he said:

"After careful consideration of the evidence and applying the test as I did, I came to the conclusion that the defendant was indeed acting dishonestly."

Then he proceeded to explain why.

" There was no good reason for defendant to exchange the cheque for cash. He said he did it as a matter of convenience. But he himself admitted that no one in the company had did it before. Mr Chan testified that he did not ask for it and he did not know why defendant turned the cheque of $23,510.00 in cash. The customer Dr So said he never requested the refund to be made in cash.

Defendant stressed that he wanted to help Mr Chan to get back the repair fee and refund the balance to Dr So. I found it astonishing why he did not reveal these intentions and mentioned that when he was first investigated by the company.

What the defendant had done was irregular and unauthorized and he admitted that under cross-examination. Also he admitted that he had given different explanation to the company during investigation.

According to defendant, a few days before the exchange of the cheque, he learned from Mr Chan that he had used his own funds to settle some repair fees on behalf of Dr So. But when asked whether Mr Chan had requested him to convert the cheque into cash so that he could get back his cash, he admitted that it was not Mr Chan's idea and he just initiated it on his own. If what he said was true, there was no reason to him to keep the cash in his drawer and not return the same to Mr Chan immediately after the exchange of the cheque into cash on 16 June. I found the defendant was not telling the truth."

15. I have repeated these extracts because what in effect the magistrate was doing in determining whether the appellant had acted dishonestly was to come to a finding that his explanation was a fabrication.

16. I come now to consider the individual ingredients for the offence of theft. First appropriation. The magistrate said the act of swapping the cheque for the cash amounted to that; he was clearly assuming the rights of Jebsens. I do not see how that follows. There is nothing to suggest that he did anything with the cash other than put it in a drawer; perhaps the same one that had temporarily housed the cheque. The magistrate said it was at least possible he did not know the rule about immediately banking all moneys. After all Mr Chan did not know about that either. When called to explain he forthwith paid over cash of $23,510.00. Was it the same cash? Perhaps it was. There is nothing to suggest it was not.

17. The magistrate did not accept the appellant's explanation of why he did what he did. But there was no positive finding that he so conducted himself as to assume the rights of owner of the money.

18. In the circumstances there was no inference, certainly no irresistible one, that the magistrate was entitled to draw that there had been appropriation.

19. It follows that all the other ingredients fall away.

20. However, I believe it is appropriate for me to make reference to the magistrate's approach to the appellant's case.

21. It is clear from the extracts I have repeated that he was not impressed; indeed, that he was satisfied the appellant was lying. Of course that is his entitlement and as he is the arbiter of fact and not me it is not for me to criticise that finding. But on a reading of his statement of findings it seems to me that it was on that basis that he found that the appellant's conduct satisfied the tests for dishonesty as laid down in R v Ghosh [1982] QB1. As is well established a proven lie or admitted lie is not sufficient upon which to establish guilt.

22. HKSAR v Mo Shiu Shing [1999] 1 HKC 43, a landmark Court of Appeal case, is authority for the proposition that a lie itself is not evidence of guilt. A defendant might lie for many reasons and that includes innocent ones. The most that a prosecutor can derive from a lie is that in the total absence of any innocent explanation, a lie might support the prosecution case.

23. What the appellant did was clearly unauthorized and for good reason. If staff members were permitted to cash company cheques that could lead to all sorts of financial abuse and loss. But, in the circumstances of this case, it did not amount to criminal conduct.

24. The magistrate in finding all the ingredients of theft had been established beyond reasonable doubt had misdirected himself, resulting in a conviction which was unsafe and unsatisfactory.

25. The appeal is allowed. The conviction is quashed and the sentence goes with it.

Submissions heard

26. Costs here and below are to the appellant taxed if not agreed with certificate for two counsel.