R. v. LAW KA-FU

IN THE COURT OF APPEAL

1995, No.158

(Criminal)

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J U D G M E N T

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Power, V.-P.:

1. The applicant in this matter faced five charges of procuring entry in records by deception contrary to s.18D of the Theft Ordinance. He pleaded not guilty and was convicted after trial in the District Court before District Judge Kilgour and sentenced to 3 years on each charge, the sentences to be concurrent. One offence occurred on 24th October, one on 25th and three on 27th. In each it was charged that the applicant dishonestly with a view to gain, procured the making of a credit entry in Hong Kong Bank ("the Bank") records. In each case the entry was in favour of Sun Shing Sze Laser Film Appliance Company ("The Sun Company"). In each the entry was obtained by falsely representing that a valid credit card transaction had taken place. The sums involved were $305,623, $507,634, $379,190, $468,738 and $268,010. On 28th September 1990 the applicant, together with Chan Yee-ning ("Mr. Chan") had entered into a merchant agreement with the bank which allowed the Sun Company, a business registered by Mr. Chan, to process credit card transactions. From 20th to 26th October, credit card transactions amounting to just under $2m were processed by the Sun Company. Credit card sales slips covering 71 transactions involving 49 cards were submitted to the bank in five batches. $796,376 was credited to the Sun Company's account. On 29th October the Bank reported the matter to the police and on 30th October it sought information from card issuing banks and thereafter received replies from those banks. On 30th October Mr. Chan and the applicant were arrested. Evidence that the credit cards had not been used by the persons to whom they had been issued came from the affirmation of a Mr. Lau Yiu-cheung ("Mr. Lau"), the Assistant Manager of the Card Investigation, Card Security Department, Card Products Division of the bank. This affirmation contained evidence of what was said to be "banker's records" admissible under s.20 of the Evidence Ordinance. The principal matter in this appeal is whether they were properly so admitted.

2. It was common ground that the applicant was employed as manager of the Sun Company. It was his evidence that the company employed a delivery worker and a salesman whose name was Li Siu-wing ("Li"). He said that he had inspected Li's I.D. card at the time of the employment and particulars were entered into the employment record book. Li apparently worked for the company for only one week and left suddenly on about 27th October just before the time when the bank became alerted to irregularities. Li appears to have left without taking the wages and commission which would have been his entitlement under his terms of employment.

3. On 27th October after the bank had been alerted by what the judge described as "the frenzied use of the account", the applicant was contacted and said that some of the goods had been supplied to the customers and that some had not.

4. The applicant made four statements in which he agreed that he had conducted some but not all of the transactions and that he had obtained approval code for most, if not all, of the transactions. The voluntariness of these statements was challenged and the decision to admit them is the third ground of appeal.

5. The flavour of the admissions made by the applicant in the statements is indicated in the following passage from the judge's reasons. Upon being shown a credit card slip, the applicant said

"This deal was done by Li Siu-wing. As for what was sold, I cannot recall but I recall that the customer hadn't taken the goods yet, the approval code was obtained by me."

6. The applicant gave evidence both in the voire dire and on the general issue. The thrust of the defence was described by the judge in the following way:

"The crux of the defendant's case was that he had no dishonest intent and did not know the credit cards were forgeries or were being used dishonestly. Further, that if there was anything dishonest happening, it was because either he had been set up by D1, CHAN Yee-ning, who he called on his behalf, or alternatively, by LI Siu-wing, who he had employed and who had now disappeared."

The Crown contended that the judge, having rejected the applicant's evidence, had ample evidence from which he could properly infer guilt. As to the applicant's evidence, the judge said:

"The defendant elected to give evidence and it is now appropriate to deal with all aspects of his case, both in general and in particular. Having heard him both on the voir dire and on the main issues, I am bound to say that I found his credibility very poor indeed. There had, of course, been considerable lapse of time since the events of 1990 but even allowing for this, I found his evidence about certain aspects, indeed most aspects, extremely vague and tenuous. He was, in my view, repeatedly evasive in the extreme, at times saying anything rather than answer simple, pertinent questions. At times his unwillingness to answer simple questions appeared to frustrate even his own counsel.

I made allowance for his present medical condition, taking into account the fact that his condition might well have deteriorated since 1990. Candidly, I thought at times he was over-acting. Whether this was to engender a more favourable gloss on the evidence relating to the voir dire, or just generally to evoke sympathy, I don't know."

The judge was satisfied that, applying the test in R. v. Ghosh, it had been proved that the applicant had acted dishonestly, that he had procured the entries with a view to gain and that there had been deception. He took into account the applicant's character. He bore in mind that there was no onus upon him to prove anything. Having done so he said:

"In assessing the evidence, I was asked to draw inferences by the prosecution in relation to the circumstantial aspects of the prosecution's case. I reminded myself that any inference I drew must be compelling and the only one that any reasonable man could draw from the facts and the circumstances, i.e. that the inference was both rational and irresistible.

Having considered all the material put forward by the defendant, I am satisfied beyond reasonable doubt, first that he was acting dishonestly, secondly that he was responsible, whether with others or not, for procuring the entry of records in the Hongkong and Shanghai banking record system, that the records are covered by the definition of the Ordinance, that the entries were made with a view to the gain of the Sun Shing Sze Laser Company and himself and perhaps Mr. Chan, and certainly with a view to the bank or the credit cardholders or companies losing and that the use of false credit cards amounted to a deception. That being so, it is implicit that I find the defendant guilty on all 5 charges."

7. Mr. Hoosen, who appeared for the applicant, argued four grounds. We deal first with Ground 4. This reads as follows:

"The learned judge failed to take into account adequately or at all the evidence that in relation to a significant number of the alleged fraudulent transactions, goods were supplied to the customers totalling over $700,000, which would tend to show that the Appellant was not a party to or had knowledge of any fraud, and which evidence was not challenged in cross-examination."

8. We find little substance in this ground. The fact that goods were delivered for which proper payment had never been made can, we are satisfied, be of little assistance to the applicant. It was the Crown case that, if they existed at all, they were not genuine customers but simply persons to whom goods had, by virtue of fraudulent credit card transactions, been handed.

9. We turn to the third ground:

"The learned judge wrongly admitted the first and second cautioned statements in that his finding that there was no oppression was materially influenced by consideration of expediency, in the form of the seriousness and size of the alleged fraud and the need for the police to act quickly, which was one of the factors that removed his concern at the lateness of the hour of the first cautioned statement and the length of the second cautioned statement."

Complaint is directed to the following passage in the Reasons:

"I should mention, however, that I was caused some concern by the lateness of the hour of the first interview and the length of the second interview and that made me look with even greater care at all the evidence surrounding the defendant's allegations. But I weighed in the balance the seriousness and the size of the fraud and the need for the police initially to act as quickly as possible."

The judge, we are satisfied, was here doing no more than saying that had a statement been taken late at night without explanation, it might have given rise to a suspicion of impropriety. But given that there was good reason for the interviewing officer to act with expedition, he was satisfied that there was no impropriety in the taking of the statement. Indeed the care with which the trial judge examined the circumstances surrounding the taking of the statement was, in our view, exemplary.

10. We turn now to Grounds 1 and 2.

"1. The learned judge erred in admitting into evidence exhibits to the banker's affirmation, namely copies of credit card sales slips, telexed inquiries by the Hong Kong and Shanghai Bank and replies from the card issuing banks containing the results of their investigations, as copies of entries or matters recorded in a banker's record within the meaning of subsections 20(1) and 20(1)(a)(i) of the Evidence Ordinance, and further erred in treating the said exhibits as bankers' records or forming part of a banker's record.

2. The learned judge erred in finding that the information contained in the said replies from the card issuing banks as constituting 'definite proof' that 67 of the genuine cardholders were not in Hong Kong or did not authorise the transactions at the material time, failing to consider what weight if any such replies might carry."

The section with which we are concerned reads as follows:

"20. Copy of entry in banker's record

(1) 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 -

(i) that such entry was made or matter recorded in the ordinary course of business; and

(ii) that such record is in the custody or control of the bank;".

It is necessary also to look at the relevant part of the definition section:

" 'Banker's record' includes -

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

(b) any record so used which is kept otherwise than in legible form and is capable of being reproduced in legible form;"

11. This definition was inserted by amendment in 1984. Prior to that time banker's books had been defined as including "any ledger, day book, cash book, or any other book used in the ordinary business of the bank". The amendment was a far reaching one as the earlier definitions had included only books of various kinds whereas the new definition covered documents and records. The enactment recognized that the records which banks use today are very different from those used in former times. Today the records of banks, which they use to carry out their ordinary business, are composed of tapes, microfilms, computer printouts and, we are satisfied, as we set out below, fax transmissions. We note that even before the amendment the admissibility of the information in the banker's record was in no way governed by whether or not it had come to be recorded in the banker's books as a result of hearsay. As long as the requirements were satisfied, regardless of whether it was the result of hearsay, it was admissible. Once the entry was made in the banker's book, whether it came from the bank's employee or any other source, it was admissible.

12. We deal firstly with the credit card sales slips. Mr. Lau said in his affirmation that:

"The Bank upon receipt of the credit card sale slips will enter information thereon into a computer. The sales slip is then microfilmed to keep a permanent record thereof. The information entered the computer from the sales slips is collated each day in relation to each merchant who submits those sales slips to the Bank. It is compiled in batch lists."

13. A banker's record is, by definition, wide enough to include any document used in the ordinary business of a bank. Before a copy of any matter recorded in a banker's record can be admitted as prima facie evidence, it must be proved, as required by s.20(1), that the "matter was recorded in the ordinary course of business" and that the record is "in the custody or control of the bank".

14. We are satisfied that the credit card sales slips were documents used in the ordinary business of the bank and were therefore prima facie capable of being banker's records. They were further clearly in the custody and control of the bank. The final matter which falls for decision is whether they can properly be described as matter recorded in the ordinary course of business. It was the argument of Mr. Hoosen that they could not be so described as they were recorded after the incident had been reported to the police and as the inquiries were made at the instigation of the police. We do not consider that this prevents them from being regarded as matters recorded in the ordinary course of business as, according to Mr. Lau, part of the business of the bank was the monitoring of credit card transactions. Whether the monitoring was carried out before or after the commencement of police inquiry is not of any real moment as the bank, when monitoring, was clearly carrying out one of its duties in relation to the supervision of credit card transactions. A further submission was that matters recorded in the ordinary course of business of another party, as these credit card sales slips were, could not properly be regarded as having been recorded in the ordinary course of business of the bank. It is suggested that the credit card slips were unarguably recorded in the course of business of Sun Company and that s.20 has, therefore, no application. It is true that the sales slips were, initially, recorded in the ordinary course of business of the Sun Company but once they were sent to the bank and placed in its records they must, we are satisfied, be regarded as documents in the Bank's record and the matters referred to therein are matters recorded in the ordinary course of the Bank's business. The slips, like any other matter in the bank's records, were clearly there to be referred to and acted upon by the Bank's employees.

15. We turn now to the inquiries by the Bank and the replies from the card issuing banks containing the results of their investigations. Three samples of these documents provided to us in the course of argument showed that the Bank in its inquiry sought information as to:

(i) the card status,

(ii) the genuineness of the transactions specified,

(iii) the card-holders' full address,

(iv) whether the cardholder had his card at the time of the transaction, and

(v) the whereabouts of the cardholder at the time of the transaction.

The three sample replies were variously phrased but all stated that the transactions were not genuine. Mr. Lau's affidavit states that 67 replies stated that the transactions were not authorized by the genuine cardholder, that in one case the card had been cancelled, that in one the card number was not on file and that in two there were no replies. Mr. Lau stated that the replies were copies of records used in the ordinary business of the Bank and were under the custody and control of the Bank. He said that the matters were recorded in the ordinary business of the bank and that photo copies of the documents exhibited to his affirmation were photo copies of the records of the Bank.

16. The opinion of Mr. Lau expressed above as to the status of the replies would not, of itself, make the documents admissible under s.20. We are, however, satisfied, for the reasons we have set out above when dealing with the credit card sale slips, which are reinforced by Mr. Lau's statement, that the documents did become part of the Bank's records and could therefore be used to show that no valid transaction had taken place.

17. It is submitted in Ground 2 that the information in the replies from the card issuing banks had clearly been supplied to the writer of the reply by the card holder and was, therefore, for the most part hearsay and that the judge was wrong to regard the replies as definite proof of the fact that the transaction had not been authorized. This submission, in our view, flies in the face of the words of the Ordinance which provide that the record is "prima facie evidence of the matters, transactions and accounts therein recorded". The matter recorded was that the transaction was unauthorized and the entry was, therefore, prima facie evidence of that fact. The evidential weight of one reply, on its own, might be slight. Cumulatively, the weight of 67 replies, all pointing to the falsity of the transaction was overwhelming.

18. As we have already noted even before the 1984 amendment the provenance of the entry, i.e. whether or not it was the result of hearsay, was not material.

19. We are satisfied that the trial judge rightly relied upon the entries. There is nothing which makes the convictions either unsafe or unsatisfactory and the application is refused.

Litton, V.-P.:

20. I agree.

Keith, J.:

21. I have reached a different conclusion from that of Power V.-P. and Litton V.-P. on ground 1 of the Notice of Appeal. The Crown had to prove a number of things in order to secure the conviction of the Applicant. One of them was that the transactions to which the credit sales slips purported to relate had not been authorised by the holders of the relevant credit cards. In order to prove that, the Crown sought to produce the responses from the banks which had issued the credit cards to the inquiries from the Hong Kong and Shanghai Banking Corporation ("the HKSBC") as to whether the transactions had been authorised. Those responses were the only route by which the Crown sought to prove that the transactions had not been authorised by the cardholders. In order to do so, the Crown relied on section 20 of the Evidence Ordinance (Cap. 8) ("the Ordinance") alone as prima facie evidence of the matters recorded in the responses.

22. The responses could only be treated as prima facie evidence of the matters recorded in them if

(a) they amounted to banker's records,

(b) the conditions for them to be treated as prima facie evidence of the matters recorded in them had been satisfied.

Even then, it was necessary to determine precisely what the responses were prima facie evidence of.

23. Prior to 1984, the Ordinance had referred not to banker's records but to banker's books. The phrase "banker's book" was defined in section 2 as including "any ledger, day book, cash book, account book, or any other book used in the ordinary business of the bank." The Ordinance went on to provide in section 20 as follows:

"Subject to the provisions of this section, a copy of an entry in a banker's book shall in all proceedings be received as prima facie evidence of such entry and of the matters, transactions, and accounts therein recorded:

Provided -

(a) that such book was, at the time of making the entry, one of the ordinary books of the bank, and the entry was made in the usual and ordinary course of business, and the book is in the custody or control of the bank; such proof may be given by a partner or officer of the bank orally or by an affidavit sworn before any person authorized to take affidavits ..."

These provisions reproduced, to all intents and purposes, sections 3, 4 and 9(2) of the Bankers' Books Evidence Act 1879. The effect of those provisions were described by Donaldson M.R. in Williams v. Williams [1988] 1 QB 161 at p. 167 B - D as follows:

"The Act in this form clearly contemplated that the banks had a series of books of various kinds which, in the course of the ordinary business of the bank, were in everyday use in that clerks made entries, that is to say wrote, in them. The transfer of any of these books to the court, with a consequent inability to make such entries, and indeed to consult the books, would have been a very considerable inconvenience. Hence the power to provide certified copies, not of the books, but of the relevant entries in the books. However there was no need for this power to extend, and it did not extend, to papers (including cheques and paying-in slips) which were retained in the bank's possession, but did not constitute an 'entry in a banker's book'."

24. What is plain, therefore, is that the 1879 Act and the Ordinance in its pre-1984 form related only to a bank's own books. They were intended to make proof of entries in the bank's own books easier. The words "any other book" in the definition of "banker's books" had to be construed to give effect to the fact that they were linked in the definition with ledgers, day books, cash books and account books. The common characteristic of such books was that they were all books generated by the bank, and the entries recorded in them were part of the daily records kept by the bank.

25. As a result of amendments to the Ordinance in 1984, the Ordinance now refers to banker's "records", not banker's "books". That required an amendment to be made to the interpretation section. Section 2 of the Ordinance now provides:

"In this Ordinance, unless the context otherwise requires - ...

'banker's record' includes -

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

(b) any record so used which is kept otherwise than in a legible form and is capable of being reproduced in a legible form ..."

26. This definition of "banker's record" differs from the old definition of "banker's book" in two significant respects:

(i) The second limb of the definition recognises that technological changes have resulted in a bank's records no longer being kept in the form of books. To use the language of the Attorney-General when he proposed these amendments on the second reading of the Bill, records are now kept "by electronic and other modern means, such as computers, tapes, microfilm and so forth": Hong Kong Legislative Council, Reports of Debates, 30th May 1984, p. 1016.

(ii) The first limb of the definition substitutes the words "any document or record" for the words "any ledger, day book, cash book, account book, or any other book." The question which arises is whether the latter words were removed (a) to include in the phrase "banker's records" documents or records which are not generated by the bank, but which, though generated by outsiders, are used by the bank in the ordinary course of its business, or (b) merely in recognition of the fact that ledgers, day books, cash books, account books and the like are no longer the medium by which the bank records the various transactions to which it or its customers are parties.

27. In my judgment, the words "any ledger, day book, cash book, account book, or any other book" were removed from the new definition for reason (b). That, I think, follows from one of the themes running through the Attorney-General's speech in the Legislative Council. For example, he said:

"The manner in which business records are kept nowadays has very little to do with the ledgers or books or handwritten entries": ibid., p.1016.

I read the removal of the relevant words in the first limb of the definition as merely intended to bring the first limb of the definition into line with the second limb. If it had been intended to extend the definition to cover, for the first time, records which had not been generated by the bank, the Attorney-General would surely have said so.

28. I am confirmed in this view by the amendments which were made to section 20 of the Ordinance. The new section 20 substituted the words "a copy of any entry or matter recorded in a banker's record" for the words "a copy of an entry in a banker's book", and it rendered such an entry or matter admissible as prima facie evidence of what was recorded therein if

"(a) it is proved -

(i) that such entry was made or matter recorded in the ordinary course of business; and

(ii) that such record is in the custody or control of the bank ..."

The reference to "the bank" in (ii) can only be a reference to the bank which (a) made the entry or recorded the matter in the relevant document or record, and (b) purported to produce a copy of the entry or matter as prima facie evidence of the contents of the document or record. It therefore could not have been intended for the entries or matters to be admissible as prima facie evidence of what is recorded in the document or record, if that document or record was not generated by the bank which purported to produce it.

29. I recognise that limiting a "banker's record" to a document or record generated by the bank which purports to produce a copy of the entry made or matter recorded in it can produce surprising results. This case is an example of that. The responses by the issuing banks to the inquiries from the HKSBC would not be banker's records, though if the information contained in the responses had, in the ordinary course of the HKSBC's business, been fed by the HKSBC into one of its own computerised files, that information would have constituted an "entry or matter recorded in a banker's record", rendering that entry prima facie evidence of its contents. The information would also have been admissible under section 22A of the Ordinance. However, the fact that what in my view is the proper construction to be placed on the definition of a "banker's record" can occasionally produce surprising results is not a sufficient reason for not according to it the construction which logic would otherwise dictate.

30. Since the responses by the issuing banks to the inquiries from the HKSBC were not generated by the HKSBC, they were not banker's records within the meaning of the Ordinance. Section 20 of the Ordinance was not available, therefore, to permit the matters recorded in them to be prima facie evidence of those matters. It is possible that section 22 of the Ordinance could have been used to permit the matters recorded in the responses to be prima facie evidence of those matters, but section 22 would not have been available if the responses had been made in connection with the investigation which led to the criminal proceedings. It is likely that they were. Accordingly, there was no admissible evidence that the transactions to which the credit sales slips related had not been authorised by the holders of the relevant credit cards.

31. Since there was no admissible evidence of one of the things which the Crown had to prove, this is not an appropriate case for the application of the proviso. For my part, I would have granted the application for leave to appeal against conviction, I would have allowed the appeal and quashed the convictions, and I would have ordered that the appeal be re-listed for the Court to determine whether to order a retrial. However, since Power V.-P. and Litton V.P. take a different view, the order to be made is the one which they propose.