CHIU YU MAN & OTHERS v. HKSAR

FACC Nos. 1 and 2 of 2001
(Consolidated)

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NOS. 1 & 2 OF 2001 (CRIMINAL)

(ON APPEAL FROM CACC NO. 577 OF 1999)

_____________________

_____________________

__________________

J U D G M E N T

__________________

Chief Justice Li :

1. I agree with the judgment of Sir Gerard Brennan NPJ.

Mr Justice Bokhary PJ :

2. I agree with the judgment of Sir Gerard Brennan NPJ.

Mr Justice Chan PJ :

3. I agree with the judgment of Sir Gerard Brennan NPJ.

Mr Justice Nazareth NPJ :

4. I agree with the judgment of Sir Gerard Brennan NPJ.

Sir Gerard Brennan NPJ:

5. Among the customers of the Bank of America (Asia) Limited ("the Bank") at its central branch in Hong Kong were three trading companies, named respectively Cosmos Manor Development Limited ("Cosmos"), Sun Kwong Building Materials Company ("Sun Kwong") and Rever Hairstyling Salons Limited ("Rever"). Each of these customers applied to the Bank for the issue of letters of credit in favour of another trading company Oriental Associates ("Oriental"). The Bank issued those letters of credit. Each letter of credit identified the relevant bank customer as the applicant and Oriental as the beneficiary and specified the amount of the credit established. Each letter of credit read:

"We hereby establish our irrevocable letter of credit in your favor available by payment against beneficiary's draft(s) drawn at sight on Bank of America (Asia) Ltd. Hong Kong accompanied by documents specified below covering full invoice value of merchandise to be described in invoice as..."

and there followed a description of the invoice and of the documents required to satisfy the letter of credit. On presentation by Oriental of documents which, on their face, conformed to the descriptions specified by the respective letters of credit, the Bank paid Oriental the amounts for which it drew on the Bank under those letters of credit.

6. In fact the documents presented by Oriental which purported to evidence the supply of goods by Oriental as seller to the respective bank customers as buyers were shams. No goods were supplied or were ever intended to be supplied by Oriental to those customers. Upon receipt of the proceeds of each letter of credit, Chung Tze-pui, the sole proprietor of Oriental, paid the money to the bank customer who had applied for the letter of credit or to a conduit from whom the customer received that money less a percentage in some instances. In most instances, Chung Tze-pui paid the amounts received to the credit of the bank account of the first appellant Chiu Yu-man ("Chiu") who was at all material times a Vice President of the Bank at its central Hong Kong branch. On each occasion when Chiu's account was credited with an amount so paid in by Chung Tze-pui, Chiu drew that amount less a small percentage from his account and paid it to the customer who had applied for the relevant letter of credit.

7. In due course, each of the customers repaid the Bank the amount which had been advanced by the Bank under the relevant letter of credit. Each of the customers thus received 90 days' use of the funds paid by the Bank under the relevant letter of credit, less a percentage in some instances.

8. An information preferring six charges was presented in the District Court. The defendants charged were Chung Tze-pui, Chiu and certain officers of each of the customer companies. Each was charged with conspiracy to procure the execution of valuable securities by deception, contrary to the common law and s.22(2) of the Theft Ordinance, Cap. 210. These appeals relate only to the first three charges. The first charged Chung Tze-pui, Chiu and two of the shareholders and directors of Cosmos - the appellants, Wong Siu-leung and Yip Wai - as parties to conspiracy in relation to two letters of credit; the second charged Chung Tze-pui, Chiu and the general manager of Sun Kwong as parties to conspiracy in relation to eleven letters of credit; the third charged Chung Tze-pui, Chiu and two shareholders and directors of Rever as parties to conspiracy in relation to one letter of credit. The other three charges are irrelevant to these appeals.

9. Chung Tze-pui pleaded guilty to all charges and one of the Rever directors pleaded guilty to the third charge. Upon the trial of the other accused, Chiu, Wong Siu-leung and Yip Wai were convicted on the first charge; Chiu and the general manager of Sun Kwong were convicted on the second charge; Chiu was convicted on the third charge but the second director of Rever was acquitted. Chiu, Wong Siu-leung and Yip Wai appealed to the Court of Appeal against their respective convictions but the appeals were dismissed. The Court of Appeal certified that there were two points of law of great and general importance involved in their decision. By leave, Chiu, Wong Siu-leung and Yip Wai now appeal to this Court and raise those two points of law, namely -

(1) whether an irrevocable letter of credit falls within any part(s) of the definition of "valuable security" under s.22(4) of the Theft Ordinance, Cap. 210; and

(2) if the answer to (1) is in the affirmative, whether the letters of credit in question had been "executed" as valuable securities within the meaning of s.22(2) of the Theft Ordinance.

Section 22 of the Theft Ordinance, which follows in terms s.20 of the Theft Act 1968 of the United Kingdom provides, inter alia, as follows:

"(2) 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 execution of a valuable security shall be guilty of an offence and shall be liable on conviction upon indictment to imprisonment for 10 years.

(3) Subsection (2) shall apply in relation to the making, acceptance, indorsement, alteration, cancellation or destruction in whole or in part of a valuable security, and in relation to the signing or sealing of any paper or other material in order that it may be made or converted into, or used or dealt with as a valuable security, as if that were the execution of a valuable security.

(4) For the purpose of this section -

.....

"valuable security" means any document creating, transferring, surrendering, or releasing any right to, in or over property, or authorizing the payment of money or delivery of any property, or evidencing the creation, transfer, surrender or release of any such right, or the payment of money or delivery of any property, or the satisfaction of any obligation."

10. In Reg. v. King (Hugo) [1992] QB 20 at 30 the Court of Criminal Appeal suggested that, a court might consider three questions in determining whether there has been an execution of a valuable security within the meaning of those terms in the provisions of the Theft Act 1968 (U.K.) corresponding to ss 22(2), (3) and (4) of the Ordinance:

"The first is to identify what the document does. The second, in the light of that, is to ask whether the document falls within any part of the definition of 'valuable security' as provided by [s.22(4)]. If it does, then the third stage is to ask, bearing in mind the wide terms of [s.22(3)], whether, in the respect in which the document is a valuable security, it has been executed."

11. The first step draws attention to the operation of the document: what does the document do? The second step calls for a comparison between the effect of the document and one or other of the effects which s.22(4) prescribes as indicia of a "valuable security". The third step focuses on the extended meaning which s.22(3) attributes to the term "execution".

What does the document do?

12. Each of the letters of credit was issued "subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision) International Chamber of Commerce Publication No. 500" ("UCP"). "The stated purpose of the UCP", said Sweet USDJ in Brenntag International Chemicals Inc v. Norddeutsche Landesbank GZ 70 Fed Supp 2d 399, "is to facilitate international trade by providing a uniform set of rules accepted around the world". Article 9(a) of the UCP states that -

"An irrevocable Credit constitutes a definite undertaking of the Issuing Bank, provided that the stipulated documents are presented to the Nominated Bank or to the Issuing Bank and that the terms and conditions of the Credit are complied with:

(i) if the Credit provides for sight payment - to pay at sight;

(ii) ...

(iii) ...

(iv) ..."

Letters of credit are usually applied for by a buyer of goods in order to satisfy a stipulation in a contract of sale. The seller stipulates for payment by a banker's irrevocable letter of credit so as to be assured of a reliable and solvent paymaster. There are at least three parties to a letter of credit transaction - the buyer, the seller and the issuing bank. Jenkins LJ explained in Hamzeh Malas & Sons v. British Imex Industries Ltd [1958] 2 QB 127 at 129 that:

"the opening of a confirmed letter of credit constitutes a bargain between the banker and the vendor of the goods, which imposes upon the banker an absolute obligation to pay, irrespective of any dispute there may be between the parties as to whether the goods are up to contract or not. An elaborate commercial system has been built up on the footing that bankers' confirmed credits are of that character ..."

There may be a fourth party to the transaction, especially if the seller is in a foreign country, namely, a confirming bank acting on the request of the issuing bank. If a confirming bank has undertaken the obligation to pay the seller, the seller has a direct right to payment by that bank. In UCM v. Royal Bank of Canada [1983] 1 AC 168 at 182-183, a confirming bank was involved in a transaction consisting of an international sale of goods to be financed by means of a confirmed irrevocable documentary credit. Lord Diplock held (at 182-183) that the banker's "absolute obligation to pay" the seller is contractual:

"It is trite law that there are four autonomous though interconnected contractual relationships involved. (1) The underlying contract for the sale of goods, to which the only parties are the buyer and the seller; (2) the contract between the buyer and the issuing bank under which the latter agrees to issue the credit and either itself or through a confirming bank to notify the credit to the seller and to make payments to or to the order of the seller (or to pay, accept or negotiate bills of exchange drawn by the seller) against presentation of stipulated documents; and the buyer agrees to reimburse the issuing bank for payments made under the credit. For such reimbursement the stipulated documents, if they include a document of title such as a bill of lading, constitute a security available to the issuing bank; (3) if payment is to be made through a confirming bank the contract between the issuing bank and the confirming bank authorising and requiring the latter to make such payments and to remit the stipulated documents to the issuing bank when they are received, the issuing bank in turn agreeing to reimburse the confirming bank for payments made under the credit; (4) the contract between the confirming bank and the seller under which the confirming bank undertakes to pay to the seller (or to accept or negotiate without recourse to drawer bills of exchange drawn by him) up to the amount of the credit against presentation of the stipulated documents."

13. His Lordship added ([1983] 1 AC 168 at p.183):

"The whole commercial purpose for which the system of confirmed irrevocable documentary credits has been developed in international trade is to give to the seller an assured right to be paid before he parts with control of the goods that does not permit of any dispute with the buyer as to the performance of the contract of sale being used as a ground for non-payment or reduction or deferment of payment."

14. In the United States, the balance of authority is to the same effect: see All Service Exportacao v. Banco Bamerindus 921 F 2d 32, 34-35 (1990); Federal Deposit Insurance Corporation v. Plato 981 F 2d 852, 854 n3 (1993); 10 CJS §345.

15. The proposition that the beneficiary's rights arise from a contract with the bank suffices to secure a beneficiary's expectation of payment by a reliable and solvent paymaster when the beneficiary presents the stipulated documents, but it raises some questions which are fundamental in the law of contract. First, how and when is the contract formed? Second, what consideration is given by the beneficiary? A possible answer to these questions which would satisfy the ordinary principles of contract law is that the contract is formed only on and by the beneficiary's presentation to the bank of the stipulated documents (Carlill v. Carbolic Smoke Ball Co. [1893] 1 QB 256). Some support for that theory can be found in the judgment of Donaldson J in Elder Dempster Lines Ltd v. Ionic Shipping Agency Inc [1968] 1 Lloyd's Rep 529 at 535 Col. 2:

"The best explanation of the legal phenomenon constituted by a banker's letter of credit is that it is an offer which is accepted by being drawn upon."

But that theory would deny the existence of a contract prior to the presentation of the stipulated documents and would leave the bank free of any contractual obligation to the beneficiary not to revoke the letter of credit. The analysis which commended itself to Rowlatt J in Urquhart Lindsay & Co. Ltd v. Eastern Bank Ltd [1922] 1 KB 318, was that the credit becomes irrevocable when the beneficiary acts on it. But in Dexters Ltd v. Schenker & Co. [1923] 14 Lloyd's Rep 586, Greer J suggested that the credit becomes irrevocable when it is communicated to the beneficiary. Neill J in Bunge Corporation v. Vegetable Vitamin Foods Ltd [1985] 1 Lloyd's Rep 613 at 617 also appears to favour the irrevocable opening of the credit to be effected on communication with the beneficiary:

"The opening of a confirmed letter of credit involves three contracts: (a) a contract between the buyer and the issuing bank; (b) a contract between the issuing bank and the seller beneficiary; and (c) a contract between the confirming bank and the seller beneficiary. If the argument on behalf of the buyers were correct it would mean that a letter of credit is opened as soon as the first of those contracts has been concluded. It seems to me that that cannot be right and that a letter of credit cannot be regarded as having been opened until the second and third contracts have come into existence and the credit or something equivalent to it has been communicated to the seller or to his agent."

The present weight of opinion favours the proposition that a contract between the bank and the beneficiary comes into existence when the existence of the irrevocable letter of credit is communicated to the beneficiary. Thus Benjamin's Sale of Goods (5th ed.) para. 23-118 comments:

"The prevailing view is that the contract between the issuing banker and the seller is established as soon as the irrevocable credit reaches the hands of the seller. But this view leads to theoretical difficulties, because no consideration appears to move from the seller at the time he receives the documentary credit. There are two possible explanations. First, it has been argued that the seller provides consideration at the time he receives the letter of credit ... It has been argued that, from a practical point of view, the seller forbears, on the basis of the irrevocable credit, from demanding direct payment from the buyer. Such forbearance, if established, constitutes good consideration. However, it must be conceded that, primarily, the seller becomes bound to ship the goods at the time at which he receives the irrevocable credit because of the stipulations in the contract of sale.

The second explanation of the legal nature of an irrevocable credit is based on regarding it as established by a mercantile usage recognised all over the world."

And Chitty on Contracts (28th ed.) Vol. 1 para. 3-169 says:

"Where a banker issues (or confirms) an irrevocable credit, the generally held commercial view is that the banker's promise to the beneficiary is binding as soon as it is communicated to the beneficiary, and before the latter has acted on it in any way. If, as seems probable, this view also represents the law, it constitutes a clear exception to the doctrine of consideration."

16. It is unnecessary for this Court now to resolve, if resolution be possible, the difficulties which are inherent in attributing to an irrevocable letter of credit the character of a contract with the beneficiary binding on the Bank so soon as the existence of the letter of credit is communicated to the beneficiary. Sir John Swaine SC, for the second and third appellants, presented a careful argument turning on the interpretation of the first two limbs of the definition of "valuable security". That argument can be addressed whether the opening of the irrevocable letter of credit be taken to be when the letter of credit is communicated to the beneficiary or at some later time. The critical question relates to the nature of the right which the beneficiary possesses against the bank, once the irrevocable letter of credit is opened.

17. What did the irrevocable letters of credit do? In one sense, the fraud by which they had been procured denied their efficacy to create any rights against the Bank. When an issuing bank has notice of a beneficiary's fraud before the beneficiary presents the stipulated documents and draws on the bank for payment, the bank cannot be called on to pay: Société Metallurgique v. British Bank for Foreign Trade (1922) 11 Lloyd's Rep 168, 170; The Royal Bank of Scotland plc v. Holmes (1999) SLT 563; Sztejn v. J Henry Schroder Banking Corporation 31 NYS 2d 631 (1941). But when s.22 of the Theft Ordinance creates the offence of dishonestly procuring by deception the execution of a valuable security, it is proscribing conduct in relation to a document which, if valid, would have one or other of the effects prescribed by the definition of "valuable security" in subsection (4).

18. The right which each irrevocable letter of credit purported to confer on Oriental was a right to be paid according to the tenor of the instrument on presentation of the stipulated documents and the beneficiary's draft. True it is that the Bank was not obliged to pay until the stipulated documents and the draft had been presented to it, but the obligation to pay on the occurrence of those events was created by the opening of the letter of credit. Counsel for the appellants submitted, in reliance on the speech of Lord Reid in Winter v. Inland Revenue Commissioners [1961] 3 All E R 855 at 859, that the Bank's obligation to pay was suspended until the conditions precedent, namely, the presentation of the stipulated documents and the draft, had been fulfilled. But that is not to say that the Bank was not contractually bound to the beneficiary until after the conditions had been fulfilled. It was so bound and, so soon as the conditions were fulfilled, the Bank was obliged to pay in accordance with the contract: Meehan v. Jones (1982) 149 CLR 571, 581-582. The Bank's obligation was contingent when the letter of credit was opened and it became an absolute obligation when the stipulated documents and draft were presented to it by the beneficiary. As Kaufman J said in All Service Exportacao v. Banco Bamerindus 921 F 2d 32, 35, (1990):

"The bank's obligation to pay is fixed upon presentation of documents specified in the credit and upon acceptance of the draft."

The right acquired by a beneficiary - at first contingent, later absolute - is a right acquired by force of the letter of credit. It is a right to payment by the Bank of money in or up to the amount specified in the relevant letter of credit. Therefore the first argument of Counsel for the appellants that a letter of credit does not create any right must fail.

The definition of "valuable security"

19. The question whether the letters of credit answered one or more of the descriptions of "valuable security" in s.22(4) of the Theft Ordinance depends on the operation of the document.

20. To be a "valuable security", the document must -

(i) affect, in one of the stated ways, a "right to, in or over property", or

(ii) authorize the payment of money or delivery of property, or

(iii) evidence an operation of the kind referred to in either (i) or (ii), or

(iv) evidence the satisfaction of an obligation.

To fall within the first limb of the definition, there must be some property (which, by the extended definition given to that term by subsection (4), may include money) "to, in or over" which a right may exist.

21. The trial judge (Deputy District Judge Duggan) and the Court of Appeal (Wong, Keith and Woo JJA) held, contrary to the submission of the appellants, that the Bank's letters of credit fell within the first limb of the definition of "valuable security" in s.22(4) of the Theft Ordinance. Their Lordships followed a decision of the Court of Criminal Appeal in England in the only case which, to date, has considered the application of that definition to an irrevocable letter of credit. In Benstead and Taylor (1982) 75 Cr App R 276 at p.280, Dunn LJ speaking for the Court of Criminal Appeal said:

"In our view, the obligation of the bank created a corresponding right in the beneficiary to enforce payment of the ￡90,000 on presentation of the specified documents. That was a chose in action and so a right in property. The fact that the payment was conditional on the presentation of documents did not affect the existence of the right which was created by the irrevocable letter of credit and evidenced by it. In our judgment, therefore, the letter of credit was a valuable security within the meaning of section 20(2) of the Theft Act and for these reasons the appeal against conviction was dismissed on March 8, 1982."(Emphasis added)

The respondent relies on that decision. The decision has been criticized by text writers. Sir John Smith The Law of Theft 8th ed. 1997 para. 6-19 said:

"In Benstead and Taylor, it was held that an irrevocable letter of credit was a 'valuable security' within the meaning of the subsection, apparently on the ground that it was a document creating a right in property. This is a questionable interpretation of the provision. The words, 'any right to, in or over property', seem to assume some existing property, a right to, in or over which is created, transferred, surrendered or released. In the case of a letter of credit there is no existing property to, in or over which a right is created. The letter of credit no doubt creates a right, but it is not a right to, in or over property. It is no answer to say that the thing in action created by the letter of credit is itself property because the subsection does not include a document creating property. If the decision is taken to its logical conclusion, any written contract is a valuable security because, being an enforceable contract, it creates a thing in action."

A similar criticism was expressed by Dr ATH Smith in Property Offences (London 1994) para. 24.17 and by Arlidge & Parry on Fraud 2nd ed. p.190 para. 4-170. These criticisms were rejected by the Court of Appeal. Wong JA, holding that Benstead and Taylor was correctly decided and should be followed (p.15), dismissed a submission that the rights created by the letters of credit were not rights "to, in or over" property within the meaning of that phrase in s.22(4). His Lordship said (at p.14K):

"No bank would grant a letter of credit to an applicant without, prior to the issue of the letter of credit, the applicant having paid the full amount or provided sufficient security to the bank in satisfaction of the amount to be drawn on the letter of credit. This is accepted commercial and banking practice. In this case, a credit line or overdraft facilities would have been granted to Cosmos, Sun Kwong and Rever before the letters of credit were issued. This, in my view, satisfies the requirement that the property was already in existence at the time of issue of the letters of credit. An ordinary contract in writing is subject to the law governing ordinary contracts and the uncertainties and litigation that such a contract may bring. In my view, a letter of credit is no less a valuable security than a cheque."

His Lordship appears to have treated the Bank's approval of "a credit line or overdraft facilities" as property "to, in or over" which the letter of credit created rights. With respect, a "credit line" or "overdraft facilities" is not property. It is merely the amount which the Bank has agreed to advance to its customer out of whatever assets the Bank chooses to appropriate for the purpose when the customer draws down the amount or the Bank applies it in accordance with the customer's direction.

22. Keith JA held that the right conferred on the beneficiary was a right "to, in or over" property of a different kind. He said (at p.29I):

"I appreciate that the first limb of the definition does not speak of a document creating property, but a document creating a right to, in or over property. But I do not read that as excluding from the definition a document which is itself the mechanism by which the property came into existence - provided that the property came into existence pursuant to a right created by the document. In the present case, the rights of the beneficiaries to enforce payment from the Bank arose from the rights created by the letters of credit, i.e. the right to the actual payment from the Bank of the sums due under the letters of credit. The primary right is the right to payment. The secondary right is the right to enforce that primary right by action ...

I can see some merit in this argument if the only rights under the letters of credit were the rights of the beneficiaries to enforce payment from the Bank. But as I have said, the beneficiaries' right to sue the Bank on the letters of credit if the Bank failed to pay was only a secondary right. Their primary right was to be paid the sums due under the letters of credit. If the property is regarded as being the sums due under the letters of credit, rather than the beneficiaries' right to sue for the payment of those sums if payment is not made, the letters of credit can properly be regarded as creating a proprietary right to specific property, i.e. creating a right in the beneficiaries to be paid the sums due ... (at p.30E)

... I conclude that the letters of credit in this case came within the first limb of the definition of 'valuable security'."(at p.31G)

Keith JA distinguished between the beneficiary's right to payment by the bank (presumably the right which arose on presentation of Oriental's draft) which his Lordship described as a "primary right" and the right to enforce payment by the Bank which "arose from the rights created by the letter of credit" which is described as a "secondary right". His Lordship's conclusion that the letters of credit came within the first limb of the definition of "valuable security" must have followed because the secondary right was regarded as a right "to, in or over" the primary right. With respect, the distinction between a primary and a secondary right is a false dichotomy. The right to payment is a right to enforce the payment, else it would not be a "right": where there is a right, there is a remedy. There is but one obligation to pay - contingent when created but absolute once the stipulated documents and the draft are presented by the beneficiary.

23. Is there, then, any property "to, in or over" which any right is created by the letter of credit? None can be identified. An obligation to pay money, without more, creates no rights "to, in or over" the property of the payer. It creates merely a personal obligation which the payer may discharge out of whatever assets the payer may have or may obtain. The beneficiary's right is not a right "to, in or over" the money or other property of the bank or "to, in or over" the money or other property of the bank's customer. The respective assets of both bank and customer are not encumbered or affected in any way by the opening of the letter of credit. In my respectful opinion, the criticism of Benstead and Taylor, so far as it arises from reliance on the first limb of the definition of "valuable security" is justified.

24. But the opening of a letter of credit creates in the bank a liability to pay money to, or to the order of, the beneficiary. Is it, on that account, "a document authorizing the payment of money" so as to fall within the second limb of the definition? A document falling within the second limb of the definition need not have any contractual effect. But it must express an authority to pay. From whom must the authority come? In the usual case, an authority for payment is issued by a creditor to the debtor or banker who is requested or commanded to pay a third party. But a payer may issue an authority to itself to pay. An I.O.U., a bank cheque or cashier's order, a voucher for payment issued to a member of the public by a public authority or an interest coupon attached to a bond or debenture is a document authorizing the payment of money though the party issuing the document is the payer. And they are documents authorizing the payment of money even though they express the authority to pay as conditioned on the happening of an event. Contracts requiring the payment of money can be distinguished from authorities to pay money if the contract imposes obligations on the payee but a document which entitles a payee to the payment or permits a payee to receive a payment without the payee's performance of an obligation created by the document falls within the definition. A banker's letter of credit issued on the application of a customer of the bank in favour of a beneficiary imposes no obligation on the beneficiary. The right of the beneficiary is simply to be paid if and when the beneficiary chooses to fulfil the condition on which the bank's obligation to pay depends. The letters of credit in the present case therefore fall within the second limb of the definition of "valuable security".

Execution of letter of credit

25. The act of "execution" which is an element of the offence created by s.22(2) of the Theft Ordinance is given an extended meaning by s.22(3). Many documents which are commonly accepted as valuable securities have no effect until they are dealt with by delivery, or registration, or publication or in some other way. Subsection (3) applies subsection (2) "in relation to the signing or sealing of any paper" - that is to say, it treats the signing or sealing as, "execution" for the purposes of subsection (2) - when the paper is signed or sealed "in order that it may be ... used or dealt with as a valuable security". In other words the element of "execution" in the offence created by subsection (2) is satisfied by the signing or sealing of a document which, when "used or dealt with" answers the description of a valuable security provided that the person signing or sealing the document did so in order that it would become a valuable security by being used or dealt with.

26. A bank officer who signs an irrevocable letter of credit as the bank's authorized officer clearly does so with the purpose that the letter be communicated to the beneficiary and thereby become a valuable security. Hence the signing of such a letter of credit amounts to the execution of a valuable security for the purposes of subsection (2).

The answers to the two points of law raised in these appeals are -

(1) an irrevocable letter of credit falls within the second limb of the definition of "valuable security" under s.22(4) of the Theft Ordinance, Cap. 210; and

(2) the letters of credit involved in these appeals had been "executed" within the meaning of s.22(2) of the Theft Ordinance.

27. The appeals should be dismissed.

Chief Justice Li:

28. The Court being unanimous dismisses the appeals.