To be a forgery, a document must “tell a lie about itself”
Introduction
In the case of HKSAR v Chan Kam
Ching [2022] HKCU 1683, the Court of Final Appeal (the “CFA”) considered the appeal case from
the Court of Appeal (the “CA”) which
concerns what constitutes “falsity” for the purposes of forgery-related
offences involving use of a false instrument under the Crimes Ordinance, Cap
200 (the “CO”).
Background
Facts
The present case stemmed from an abuse of the New Territories Small
House Policy where a male indigenous villager (also known as a “Ding”) who has the right to build a small
house (also known as a “Ding House”)
on a piece of land owned by him at a concessionary rate subject to a 5-year
alienation restriction period (the “ARP”)
restricting sale, breach of which would lead to payment of a land premium to
the government.
The
appellant, Chan Kam Ching (the “Appellant”),
who is a solicitor in Hong Kong, was responsible for handling such a
transaction involving the sale of a Ding’s rights. In around November 1996, two
developers (the “Developers”)
acquired a piece of land situated in Tuen Mun (the “Property”) and conveyed the same to a
male indigenous villager, Chan Wai Man (“Chan”)
for the purpose of applying to build a Ding House on the Property. After a
building license was obtained in the name of Chan, the Developers sold the Property
to Lai Yee Kum, Kate (“Lai”) at a
price of HKD1,050,000, which was paid by Lai’s de facto Husband, Shum Kin Wing (“Shum”).
After
the assignment, Shum instructed the Appellant to handle the matters relating to
the building of a Ding House on the Property. Shortly after the expiry of the 5-year ARP under
the building license, Shum instructed the Appellant to transfer the registered
ownership of the Property to Lai’s name and to apply for a mortgage loan on the
Property. The Appellant then performed the following actions:
1.
created a power of attorney for Chan to authorize Shum to deal with the
Property on Chan’s behalf;
2.
prepared an agreement for sale and purchase (the “SPA”), in which Chan was referred to as the vendor (signed by Shum
as Chan’s attorney), and Lai was referred to as the purchaser, in relation to
the sale and purchase of the Property at a price of HKD3,000,000. The SPA was
signed by a clerk of the Appellant’s solicitor firm as “witness” and the
Appellant had attested to the clerk’s signature;
3.
sent a copy of the SPA to GE Capital (Hong Kong) Limited (“GE Capital”) in support of an
application by Lai for a loan of HKD1,500,000 on the Property. GE Capital
eventually granted the loan which was paid into the bank account of the Appellant’s
solicitor firm and transferred to the bank account of Shum on the next day;
4.
registered the SPA with the Land Registry. The Appellant had signed at
the bottom of the memorial in verification of its contents; and
5.
prepared an assignment (the “Assignment”)
for the purported assignment of the Property by Chan (again signed by Shum as
Chan’s attorney) and registered with the Land Registry. The Appellant had
signed at the bottom of the memorial in verification of its contents.
The
Prosecution’s case
Section
69 defines “falsity” for the purpose of Part IX (which includes sections 73 and
74) of the CO. In particular, section 69(a)(vii) provides that an instrument is
false if it purports to “have been made
or altered on a date on which or place at which or otherwise in circumstances
in which it was not in fact made or altered”.
It
was the prosecution’s case that the SPA and the Assignment were “false instruments
within the meaning of section 69(a)(vii). It was argued that both parties did
not enter into negotiations or reach any agreement in respect of that
transaction nor was there the intention to do so. Hence, the transaction did
not exist in nature. It follows that the Appellant, when submitting the copy of
the SPA to GE Capital and registering the SPA and the Assignment with the Land
Registry, knew well that there was no real transaction between Chan and Lai and
that neither the SPA nor the Assignment was genuine.
The
lower courts’ decision
The trial judge held that the prosecution had proved all the elements of the offences charged
under sections 73 and 74, namely, that the Appellant had used a copy of a false
instrument and two false instruments which he knew were false, with the
intention of inducing GE Capital and the Land Registry to accept them as
genuine, and by reason of so accepting them to do the respective acts of
granting a mortgage loan and accepting registration of the documents to their
prejudice. The CA further concluded that the SPA and Assignment were false,
though on a significantly different basis.
The CFA’s decision
The question concerned in the present appeal is one of statutory interpretation, namely, the
proper construction of “false instrument” where section 69(a)(vii) is relied
upon. The CFA rejected the lower courts’ wide construction and held that the
proper construction of section 69(a)(vii) compels acceptance of the principle
of “automendacity”, which suggests that an instrument was not “false” for the
purposes of the offence of forgery merely because it told a lie (i.e. contained
a false statement), it had to “tell a lie about itself” (i.e. the instrument had
to be false). In other words, the instrument does not merely
contain some false information but also purports to be what it is not, for
example, it tells lies as to who made it, the signatory’s authority to sign it,
when and where it was made, etc, in order to qualify as a “false instrument”
under the CO.
The CFA also criticised the lower court’s
decisions, which based “falsity” under section 69(a)(vii) on the lack of
genuineness of the underlying transaction, i.e. non-payment of the stated
consideration or its allegedly “sham” character, where on its true construction,
an instrument is not false simply because it contains falsehoods about such
extraneous matters or misleading statements.
Applying the above principle of “automendacity”
to the facts of the present case, the CFA held that the SPA and the Assignment
only told lies about the underlying sale and purchase transaction, particularly
in respect of the fact and manner of payment of the consideration, but it was
not established that those documents told a lie about the circumstances of
their making. In particular, the SPA was executed by Lai and Shum on Chan’s
behalf, pursuant to a power of attorney granted by Chan to Shum created and
attested by the Appellant, authorising him to execute the agreement, witnessed
by a clerk in the Appellant’s firm and accepted for registration by the Land
Registry with the Appellant signing the attached memorial. Similar findings
were made in relation to the Assignment that was also verified by the Appellant
and registered. As a result, “falsity” within the meaning of section 69(a)(vii)
was not made out and as such, the CFA quashed the Appellant’s convictions under
sections 73 and 74.
Conclusion
While it is attractive to expand the scope of “forgery”, adopting too
wide a construction of the meaning of “falsity” runs the risk of extending
the law of forgery far beyond its proper bounds. The CFA decision confirmed
that “automendacity” remains a feature of the offence of forgery under sections
73 and 74 of the CO. That said, it should be noted that a person who creates or
uses a document which tell lies about an underlying or other extraneous matter
may well be guilty of other offences, such as deception or fraud.
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Important: The law and
procedure on this subject are very specialised and complicated. This article
is just a very general outline for reference and cannot be relied upon as
legal advice in any individual case. If any advice or assistance is needed,
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Published by ONC Lawyers
© 2022 |