Judicial Committee of the Privy Council
| Date | 01 November 1992 |
| DOI | 10.1177/002201839205600404 |
| Published date | 01 November 1992 |
| Subject Matter | Judicial Committee of the Privy Council |
JUDICIAL
COMMITTEE
OF
THE
PRIVY
COUNCIL
FALSE ACCOUNTING IN HONG KONG
Lee Cheung Wing v R
Lam
Man Yau v R
Section 19 of the Theft Ordinance of Hong Kong provides that where a
person dishonestly, with a view to gain for himself or another or with
intent to cause loss to another falsifies any account or record or document
required for accounting purposes he is guilty of an offence. By s 8, 'gain'
and 'loss' are defined to include temporary gain or loss of money or other
property and 'gain' includes keeping what what one has, as well as getting
what
one
has not. In the two cases reported in (1992) 96 Cr
App
R 355, it
could not be denied that the two appellants had dishonestly falsified
withdrawal slips, so that the only question was whether they had done so
with a view to gain, within s 19 and s 8. Lee was a securities dealer and
Lam was the senior clerk working under him, employed by a firm which
dealt in futures contracts. Employees were forbidden, as both employees
knew, to operate such accounts on their own behalf. To circumvent this
rule, Lam persuaded afriend, Chung, to allow him to use his name to
open an account, which Lam and Lee then operated extensively for a year,
in that name, on a margin basis, although they had not given the security
required for the operation in respect of each contract dealt with. The
appellants were charged with a number of offences contrary to s 19, arising
in some cases
out
of withdrawals from the account requested by Lee, for
which purpose Lam signed the slips with his friend's name (Chung) and
verified that signature by initialling the slip himself. A second set of charges
arose
out
of withdrawals by cheque which Lee signed in the friend's name
and which Lam also signed. They were both convicted and, while the
dishonest falsification could not be denied, they submitted that this
falsification was not for the purpose of gain, within s 8(2) and that no gain
had resulted to either appellant by any of the falsifications. Their argument
was that what gains had accrued to them accrued as a result of the sale of
futures in a rising market and that what loss had occurred in a falling
market was not loss caused to the company, since the money lost had
always been that of the appellants themselves.
On appeal to the Privy Council from the decision of the Court of Appeal
upholding the convictions, the Board held that their 'ingenious argument'
was unsound. That conclusion was based expressly on the principle of the
appellants' accountability to their employers, although the Board added
its opinion that, if that were not so, there was a further ground upon which
the appeal could have been dismissed. The Board's decision, however,
was based primarily on 'the trite law' that aservant who uses his position
as an employee to make a personal profit must account to his employer
for that profit whether or not the employer has suffered any loss as a result
395
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