THE QUEEN v. KEUNG CAM YUEN ALIAS KEUNG KAM CHUEN

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JUDGMENT

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Silke, J. A.:

1. This is the judgment of the Court. My Lord Li, V.-P. has authorised me to say that he has had the opportunity to read that which I am about to say in draft and is in agreement with it.

2. The applicant was tried and convicted in the District Court of three counts of obtaining property by deception. He had originally been charged with a count of conspiracy to defraud but this was not proceeded with The counts upon which he was convicted were counts 2, 3 and 4 in the Charge Sheet. He now seeks leave to appeal against those convictions.

3. A firm named Ekson Limited - "Ekson" - was registered on 11th May 1981 with two directors. Later, both of those gentlemen resigned and on 5th May 1982, the applicant and one Shunbo Sae Pao became directors.

4. On 20th July 1982, a contract was made between Weng Heng Trading Company - "Weng Heng" - and Ekson by which Weng Heng was to sell to Ekson 440 pounds - 1,100 bales of cotton graded cloth. This cloth was to be supplied by Choong Nam Spinning Company Limited, a Korean firm. Mr. Wong Ming of Weng Heng had discussions with Choong Nam's representatives in Hong Kong and the final arrangements were that there were to be two shipments, one of 500 bales at the end of August and one of 600 bales in September. The total cost was US$546,700. Payment was to be made by Ekson by way of two irrevocable letters of credit negotiable at sight and in favour of Choong Nam. These were to be opened within ten days of the signing of the contract.

5. On 27th July 1982, a letter of credit KRE821290, by way of tested telex, was issued by Burfield National Finance (H.K.) Limited - "Burfield" - on behalf of Ekson and in the full sum due. The advising bank was the Crocker National Bank, Seoul, Korea and the test key had been supplied to Burfield by Crocker's branch in Hong Kong some time before.

6. In August 1982, another contract was made, in a similar manner but for a different type of cotton yarn again with Ekson as the ultimate purchaser and Choong Nam the supplier. This was in the sum of US$324,250. There were, to be two letters of credit in respect of two shipments. Burfield issued a single letter of credit KRE821308 also on behalf of Ekson and in favour of Choong Nam. This was negotiated twice, first as to the shipment in count 3 and second as to the one in count 4,

7. Shipments of the goods took place. The goods in the first shipment, on 27th September 1982, were received by Ekson the goods in the second, on 5th September 1982, having been received by Ekson, were endorsed over to Wang Shun Company who in turn endorsed them over to Ming Hing Knitting and Dyeing Factory who finally endorsed them to Edward Wong Finance: the goods in the third, on 14th September 1982, were received and kept by Ekson. In referring to the shipments dates we follow the numbering of the counts on the Charge Sheet.    

8. Crocker, the advising bank, having been asked to give their release by Choong Nam, passed the letters of credit to Choong Nam who in turn passed them to the negotiating banks. These were as to KRE821290, the Kwang Ju Bank of Korea, as to part of KRE821308, the Hanil Bank, Korea and thence the Banque de 1 'Indochine et de Suez: as to the other part of KRE821308, the Cho Heung Bank in its Kwang Wah Mun Branch, Korea.

9. The letters were negotiated and Choong Nam was paid their value but on terms that, if there be default, they would reimburse the negotiating banks. No payment was forthcoming and ultimately Choong Nam's account was debited with the amounts which they had previously received. They were the losers.

10. The issuing house - Burfield - was registered in May 1980 naming as its directors Mr. Balchand Bansal and Madam Lily Yin. On 19th May 1982, Mr. Johnson Kyaw Win - (the husband of Madam Lily Yin) - replaced Mr. Bansal. The manner in which this was done and the part the applicant played in it are matters of controversy and the evidence given by Madam Lily Yin at trial has been attacked in various aspects. We shall come back to this later. In July 1982, the composition of; the directors of Burfield changed again with the addition of a Mr. Keung Yee Hong, the brother of the applicant, and two Thai gentlemen. Burfield ceased business in February 1983.

11. The submissions in this appeal were made on two broad aspects. The first: was the admission under section 20 of the Evidence Ordinance Cap.8 -" the Ordinance" - of affirmations from officers of the negotiating banks in Korea exhibiting "banker's records" relating to the letters of credit and their negotiation, proper? Ancillary to this was whether or not the Crown had proved an improper dishonour of the letters of credit. The second: had the Crown proved that at the time of the issue of those letters in July and August 1982, the applicant had the intention to defraud necessary to ground the counts

12. As to the first issue.

13. Section 20 of the Evidence Ordinance was introduced into the law in 1984. Its subsection (1) reads :

"Subject to this section, a copy of any entry or matter recorded in a banker's record, shall on its production without further proof, be admitted in any proceedings as prima facie evidence of the matters, transactions and accounts therein recorded if -

 

                (a)    It is proved -

14. Its subsection (4) reads:

"In any proceedings the matters referred to in subsection (1)(a) and (b) ....... in relation to a banker's record may be proved, orally or by affidavit, by any officer of the bank and such affidavit shall, on its production without further proof be admitted in evidence an may include an explanation of the contents of the copy of any entry or matter recorded in such banker's record which is tendered in evidence or any abbreviations, symbols other markings appearing in such copy that may be relevant in the proceedings, and a description of the banker's record, its nature and use and procedure followed in keeping it; and for the purposes of this subsection, it shall be sufficient for a matter referred to in subsection (1)(a)(i) to be stated in an affidavit to the best of the knowledge and belief of the person making the affidavit." (emphasis supplied)

 

15. Section 19B of the Ordinance empowers the Financial Secretary to "designate" anybody carrying on the business of banking outside Hong Kong and a certificate from him that he has so designated is admissible without further proof as prima facie evidence of the facts contained. By its subsection (5), the provisions of section 20 are applied to any document or record used in the ordinary business of a body so designated by the Financial Secretary: It is undisputed that there was such designation here.

16. "Banker's record" is defined in section 2 of the Ordinance as including - for our purposes- 

"(a)    any document or record used in the ordinary business of a bank; ....."

17. Towards the end of the trial, after some adjournments, the Crown sought to produce these disputed affirmations. There was none from any officer of the Banque de l' Indochine.  Mr. Potts, with him Mr. Mullick, who appeared both here and below, raised objection but the trial judge ruled them admissible. The contest on this ruling has taken up a large portion of the hearing of this Appeal.  It is Mr. Potts' contention that, without these documents, there was not sufficient evidence of an improper negotiation of the letters of credit. He further submits, generally, that it was incumbent upon the Crown to prove

He says that if the Crown fails to establish any one of those three ingredients in relation to any one of the counts, then that count cannot stand. The wrong admission of the affirmations would, he says, be fatal to the case for the Crown.

The affirmations

18. These were made by persons describing themselves as "officers" of the Kwang Ju Bank, the Hanil Bank and the Cho Heung Bank. They contained exhibits which, it is submitted, were not in certain cases banker's records at all and that in any case, none speak for themselves and they are not evidence.

19. Mr. Potts says that section 20 was intended to facilitate the proof of entries in banker's books to be produced in evidence to avoid the banks themselves having to produce the originals of those entries. He accepts, and with respect quite rightly, that the definition of "banker's records" in the Ordinance is much wider than that of "banker's books" in the Bankers' Books Act. He submits that the Ordinance is a penal one and must be strictly construed; that the admission of, in particular, foreign "affidavit" evidence precludes any cross-examination of the deponent; that the phrase, contained in various parts of the section, "without further proof" means no more than that the affidavit may be admitted if it purports on its face to be properly affirmed; that Part VIII of the Ordinance makes specific provision for the reception of foreign evidence and provides the safeguard in that, if the tribunal before which it is sought to be adduced thinks that its production would be unfair, then it has a discretion to refuse to admit it.

20. Mr. Potts places great emphasis upon the trial judge's reference in his Ruling to his having "no discretion but to admit these documents" and says that this is wrong: there was a discretion both generally and specifically which the trial judge, by so finding, precluded himself from exercising judicially.

21. Banks have, as part of their business, the negotiating of letters of credit. It is necessary for a tribunal, faced with a section 20 "affidavit" to scrutinize with particular care the documents sought to be produced to see if they fall within the very wide definition of "banker's records".  Such records are not confined merely to copies of ledger sheets and it seems to us quite clear that, if the banks retained a copy of a letter, or of a telex, or of a commercial. invoice, or of bill of lading which they have sent in connection with "the ordinary course of their business" then the document to be exhibited is that copy.  The originals would have been sent to the person who would require them, where letters of credit are concerned, for the purposes of obtaining the goods under those letters.

22. Where a bank writes to persons who owe them money requesting payment, they are entitled to produce those letters though the letters, of themselves, do not prove the fact of non-payment.

23. The affirmations in several of the paragraphs had the deponent declaring "I can say from the documents" certain things. Taking, as an example, the affirmation of Kim Yung Boo of the Kwang Ju Bank and his comments on a copy of a letter marked KYH1.  Mr. Kim explained various items appearing upon that document, one being that it indicated that both copies of the letter of credit, KRE821290, had been sent to Burfield together with other documents required under the letter.  This is nothing more than a description of items appearing on the face of that document itself and it does not go so far as to show that Burfield received the various items.

24. We shall in a moment refer to the inferences which can be drawn from these documents and from other evidence on the point of the receipt by Burfield of the documents required under the letter of credit and of the receipt of the Letters of Credit themselves.

25. It is further necessary for a tribunal to consider the explanations, if there be any, given of the contents of any of those records; to consider the description, if any, given of "a banker's record of its nature and of its use"; and the procedures followed in keeping such a record if reference is made.  It has a duty to ensure that they do not stray outside the confines of subsection (4) of section 20, wide though the terms of that subsection may be. It is not permissible in an affidavit of this nature to introduce evidence which falls outside those confines.  This is not a matter of discretion it is a matter of law.  The lack of cross-examination, or the possibility of it, is something which goes to the weight to be given to the affirmation and its exhibits.

26. If here the trial judge were saying, when he made reference to "no discretion", that, once produced, these affirmations and exhibits must be accepted without scrutiny, then we would say he was wrong. He would be correct if he meant by that that, once they were shown to be admissible within the terms of section 20, then they should be admitted for whatever weight they might carry We are reinforced in this view by the terms of section 77F which clearly envisages evidence which goes outside the ambit of section 20 and which does entail a discretion as to whether the admission of such evidence would or would not be fair in all circumstances.

27. These affirmations and the exhibits were here details of that which had taken place. They were not proof of the applicant's dishonesty nor do they, of themselves, show him to have been a party to the dishonour of the letters of credit nor direct evidence that they were in fact dishonoured. They were an aid to such proof - but no more than that.

28. In dealing with these matters in his Reasons for Verdict, the trial judge, on count 2, stated himself to be satisfied, by the affirmation of Mr. Kim of the Kwang Ju Bank, that that bank did despatch the documents "as set out in the exhibit KYH1" to Burfield and that the Kwang Ju Bank had negotiated the letter of credit. He went on:

 

"As we have seen, Ekson subsequently did obtain the goods. It could have been done so only by first obtaining the document of title of the goods from Burfield. It must therefore follow that Burfield must, as I am sure and so find, have received the said documents couriered albeit DHL was not called."

The reference to DHL applied to the courier service used by the Kwang Ju Bank to send documents to Burfield.

29. On count 4, he found from the affirmation of Kit Bae Oh, an officer of the Cho Heung Bank, that Burfield had received the documents required under the letter of credit but he added that he was so convinced because otherwise Ekson would not have got the goods.

30. On the third count, which was complicated by the presence of the Banque de 1' Indochine in the chain of negotiation, he accepted that there was no direct evidence how that bank, to whom Hanil Bank had sent the various documents, had despatched them to Burfield. He held himself satisfied however that the appropriate documents had been sent on by the Banque de 1 Indochine. Again he relied on what I would respectfully call "the commonsense view of the affair" namely that Ekson did get the goods and could not have got them unless the documents were in order.

31. In our judgment, all those conclusions were sound.  There was no dispute of the receipt by Ekson of the goods, there was no dispute, and the evidence of PW19 Won Yong Suk of Choong Nam is sufficient for that, that Choong Nam had never been paid. In the absence of any other evidence, and there was none here, the only inference that could be drawn from a combination of the affirmations, the exhibits and the other evidence - oral -before the Court was that the letters of credit had been dishonoured.  There was nothing before the Court to suggest that this dishonouring had been due to any defect.

Improper dishonour

32. The improper dishonouring of the letters of credit and the dishonesty of the applicant are intertwined in matters which took place on 29th October 1982 and after.

33. On 29th October, an extraordinary series of transactions took place at two banks in Hong Kong: the first at the Dah Sing Bank and the second at the China State Bank. On that date a representative of Ekson, and it must be  remembered that the applicant was the only authorised signatory for this company in relation to the account, it held in the Dah Sing Bank, came to that bank and lodged the sum of $1.6 million in cash.  He was taken to the vault and the cash was placed therein. he then produced a series of cheques and deposit slips, persuaded the bank officer, who showed no great reluctance, to enter these into the account. All of them were kept by the bank.   Having done so, the $1.6 million was withdrawn and the net effect upon Ekson's account was that its opening balance on that day of $266,219.29 was reduced to $244,574.20.

34. Some of these cheques in particular numbers 387174, 387175, 397151 and 397152, were originally made out to Burfield and bore on their reverse the Burfield endorsement of a chop and a signature.  At the request of the bank officer, the payee's name was struck out, the signature on the back had a line drawn through it and each was endorsed by Ekson Limited with the applicant's signature.  The sums were sufficient to show payment to Burfield for the Letters of Credit and were itemized in certain instances for that purposes.   The series opened with the cheque 387174, a purported payment to Burfield of $1,001,925. There was then an apparent deposit of $1,001,000 in cash.  We use the word "apparent" because in fact no cash was deposited under any of the deposit slips. The series continued with the cheque 387175, a purported withdrawal of $976,000 again payable to Burfield. $980,000 was "apparently" deposited.  The next cheque numbered 397151 in the sum of $1,515,850 again made out to Burfield and so it went on. This was an entirely sham accounting exercise.

35. On the same day, at the China State Bank, a representative of Burfield went through a similar paper exercise in relation to the account Burfield held there. The person carrying out the exercise was the applicant's brother. Here, there was no initial deposit of cash but there was an apparent deposit, by the use of a deposit slip, in the sum of $1,036,237.50. Again, we use the word "apparent" because there was no actual cash involved in any of these transactions. The net result there was that the opening balance in Burfield's account on that day of $5,374.18 was precisely the same after the transactions had concluded. Again, these were entirely sham transactions but they gave a colour of reality of a payment to Burfield by Ekson - and it was the Crown's contention that they were set up for that purpose.

36. To aid the deception, say the Crown, Burfield on 1st December 1982 filed a writ in the Supreme Court citing as defendant one Vira Sae Heng trading as Wing Sing Trading Company . This purported to claim against Vira as a drawer of a series of cheques which, by remarkable coincidence, amounted in total to $9,567,545 and all of which were said to have been drawn on 29th October 1982.  Vira was proved to have left Hong Kong in 1981 and had not returned.

37. There were also, say the Crown, the issuance of two receipts by Burfield to Ekson.  These were both dated the 18th October 1982.  The first related to the whole of letter of credit KRE821308 in the sum of US$324,250 and the alleged payment of $1.5 million, stated to have been made by cheques numbers 387174 and 387175.  Both these cheques appeared in the paper transactions which took place on 29th October in Ekson's account with the Dah Sing Bank. 387174 being the initial cheque in the sum of $1,001,925 and the second being the cheque for $976,000.

38. The second receipt dated 18th October with the money being recorded as having been received on 23rd October was in respect of cheque number 397151 - being the payment for letter of credit KRE821290 for US$248,599 - and in the sum of $1,015,850.  This was yet another of the cheques appearing in the Dah Sing Bank account in that exact sum.  All three cheques had been originally made out to Burfield and had the Burfield endorsement on the back, all three were altered at the request, as I have said, of the bank officer.

39. For myself, it does seem unusual, to use the mildest word of which I can think, that these two banks, the Dah Sing Bank and the China State Bank, should allow themselves to be used in the fashion in which they were here.  No enquiry appears to be made as to why their customers wished to do what they did.  No reference seems to have been made to any senior officer of the bank.

40. These matters, together with the rest of. the evidence in the case could lead to one conclusion and one only that there was an imporper dishonour of the letters of. credit and in coming to that conclusion, the judge cannot be faulted - this whether or not the Korean affirmations were before him

Dishonesty on the part of the applicant

41. Madam Yin, a director of Burfield, gave evidence.  She was not a very satisfactory witness. The judge warned himself that she might have a purpose of her own to serve and indeed one also of her husband who was not called in evidence.  They were both Canadian residents at the time of trial and were applicants for Canadian citizenship.  It was necessary for them to keep clear of the law. They were both, on Madam Yin's evidence, running Burfield at the time the letters of credit were issued. Madam Yin possessed the test key from Crocker and this before she met the defendant. The judge went on:

 

"Thus there is reason to think that she might be trying to shift her responsibility and that of her husband of Burfield to the Defendant."

He felt that while there was no admissible evidence to show that she was a participant in the crime that it was possible to infer that she might have participated in deception or false representation relating to the letters of credit.

42. He warned himself of the danger of acting on her uncorroborated evidence in the same way as he would warn himself in the case of as accomplice.  Having done so, he accepted her evidence which clearly went to show a singular involvement in Burfield by the applicant.

43. Mr. Potts has sought to show not only that her evidence was unreliable but that it was not direct evidence. Of the latter, he instances her reference to a payment by the defendant of $350 000 to Mr. Bansal so that he would resign from Burfield and her husband be made a director in his place.  On this her evidence may well be not as direct as it would appear on its face. But in her other evidence she described a meeting between herself, her husband, Mr. John Ip and the defendant. The result of that meeting was a contract to her to work for Burfield as a secretary at $3,000 a month. She understood that the applicant was her employer.  This while she was still a director.  She met the applicant when he came to open letters of credit at Burfield. She described the applicant as desiring to continue the finance business of Burfield after Mr. Bansal had wanted to close it. She made reference to Burfield receiving written applications from the applicant for the opening of letters of credit - this included an application for the opening of a letter of credit dated the 21st July 1982.  The effect of her evidence was, that while she and her husband ran the day-to-day business of Burfield, it was under the general directions of the applicant.

44. The evidence overall shows, overwhelmingly, that there was fraud.  It is Mr. Potts point that this fraud does not go back to the time of the issue of the letters of credit and that the Crown have failed to prove the necessary mens rea in the applicant at that time.   There was, as I have said, no evidence from the defence so as to provide any explanation of any of the events.  Having scrutinized the evidence with care, and directed himself that, if he drew an inference from primary facts he could only do so when that inference was "compelling and irresistibly" the only inference to be drawn, the trial judge found that he was sure:

 

"that not merely the Defendant did in the capacity of the director in control of Ekson, obtain for Ekson from Choongnam the goods of each of the charges as particularized but also obtained them dishonestly without intention to pay for them nor any intention to return the goods and further dishonestly obtained the goods by the deception misrepresenting that the respective Letters of Credit in.relation to Charges 2, 3 and 4 would be honoured knowing full well that they would not or at least not likely to be honoured to the detriment of Choongnam who eventually turned out to be the net loser and that such acts on the part of the Defendant were done dishonestly by the ordinary standards of reasonable and honest people and the Defendant must at all the material times realized that what he was doing was thoroughly dishonest according to those standards."

45. Findings which, with respect, were fully justified.  We refuse leave to appeal.