Public Prosecutor v R Sekhar s/o R G Van

[1] The accused, R Sekhar s/o R G Van (“Van”), was acquitted in the magistrate’s court of 11 charges of obtaining credit, by taking up accommodation at the Peninsula Hotel (“the hotel”) and incurring monthly debts of over $500, without disclosing to the hotel that he was an undischarged bankrupt, under s 141(1)(a) read with s 146 of the Bankruptcy Act (“the Act”). On appeal by the prosecution against his acquittal, I amended the 11 charges to a single charge under the same provision and convicted him of that charge. I now give my reasons.

[2] Van who was an undischarged bankrupt at all material times, had registered to stay at the hotel as a guest on 4 July 1997. Even though his registration card (Exhibit P13) stated that his departure date would be 7 July 1997, he eventually stayed at the hotel for more than one year.

[3] The 11 charges with which Van was charged were based on monthly summaries of invoices for the period from 4 July 1997 to 9 November 1998 (Exhibits P14 – P30). Each monthly summary of invoices, save the first, reflected the balance brought forward from the previous month. Such a balance was, however, deducted from the total hotel charges as stated in the summary of invoices for each month for the purposes of determining whether Van had incurred debts of over $500 in that particular month. The sums of payment made by Van in each month were also deducted. As such, after the calculations were made, for some months (July ’97, Nov ’97, Feb ’98 and Apr ’98) Van had a credit balance and for some other months (Oct ’97 and Dec ’97), he incurred debts of less than $500. The 11 charges brought against him were for each of the remaining months during his stay at the hotel, for which he incurred debts to the extent of $500 or more.

[4] The prosecution’s case was built around the evidence of the main prosecution witness, one Lee Chia Loo, also known as “Michael Lee” (“Michael”). Michael was the Front Office Manager of Peninsula-Excelsior Hotel at the material time. He testified that he was formerly the Front Office Manager of Excelsior Hotel since 1984 and when Peninsula Hotel and Excelsior Hotel merged, he was promoted to become the Front Office Manager of the Peninsula-Excelsior Hotel, starting from 1 August 1997. His duties included the organisation and running of daily operations such as the registration of guests.

[5] Michael confirmed that Van was the same person stated to be “Simon Van” on the registration card. He had the opportunity to meet Van once in October 1998, when he had to deal with him over some irregularities in the guest invoices rendered for the period from April 1998 to September 1998.

[6] The words “pax account” were endorsed on the registration card. Michael explained that this meant that the guest would be settling by cash. The hotel allowed a credit limit of up to $500. If this amount was exceeded, the guest would be contacted and asked to settle the payments. Van was, however, allowed to extend his stay at the hotel as a result of his long-term relationship with it, notwithstanding that his arrears had started snowballing.

[8] Van testified that he was a regular guest of the hotel from as early as the 1980s. He knew several of the people who were part of the management of the hotel, including the financial controller, Mr KK Tay and the assistant general manager, Mr James Loo. He claimed to have a working relationship with the hotel as he had supplied musicians to the hotel at one stage and had also recommended clients to stay at the hotel. According to Van, Michael was also known to him, since they had had tea together on many occasions.

[14] The trial judge, relying on the case of Highway Video Pte Ltd v PP [2002] 1 SLR 129, came to the view that Michael’s evidence was hearsay and unreliable. As he came over to the hotel to work only on 1 August 1997, he could not have been privy to the workings of the hotel at the time Van registered to stay at the hotel. The trial judge also took issue with the fact that the prosecution had not called any of the staff who had attended to Van as witnesses. Neither was any evidence adduced as to who was the maker of the registration card. In the circumstances, the trial judge was of the view that it could not be said conclusively that the hotel did not enquire about the solvency status of the guests in so far as Van, who checked in on 4 July 1997, was concerned. This would, in turn, mean that it could not be inferred conclusively that, at the time of checking-in, Van had not disclosed his bankruptcy status to the hotel.

[19] It is useful at the outset of the appeal to lay down the provision under which Van had been charged. Section 141(1)(a) of the Bankruptcy Act provides as follows :-

[23] Reverting back to s 141(1)(a) of the Act, in my judgment, there was no doubt that on a true construction, the section in effect prohibits an undischarged bankrupt from obtaining credit to the extent of $500 or more, unless he first informs the proposed lender of his bankruptcy status. To my mind, the object of the section is indisputably to protect the person from whom the bankrupt seeks to obtain credit. The section strives to prevent innocent people and business organisations from being misled by a bankrupt’s appearance of solvency and a promise to pay. Having regard to the intention and purpose of the section, I was of the view that it places an obligation squarely on the undischarged bankrupt to disclose his status to the proposed lender before obtaining credit to the extent of $500 or more.

[24] The impracticality of the prosecution proving the fact of non-disclosure on the part of the undischarged bankrupt becomes evident when one considers the case of PP v Ong Ker Seng [2001] 4 SLR 180. In that case, with regard to the issue of the proper time and context for a notification of the bankruptcy status to be valid, the trial judge was of the opinion that the notification must be given in the context of the undischarged bankrupt obtaining credit from the proposed lender. I disagreed with her and held (at p 185) :

[25] From the passage above, it can be seen that the duty of disclosure as required by s 141(1)(a) of the Act is satisfied in instances where disclosure was made within a reasonable time before the extension of credit. The disclosure need not be made at the precise moment when credit is obtained or even in the context of the lending transaction. In the circumstances, the point of disclosure would be one which is fully within the knowledge of the undischarged bankrupt. This is even more so when the proposed lender is an organisation, as in the present case. Only the bankrupt himself would be in a position to know to whom he had disclosed his bankruptcy status and the time and context of the notification and therefore could prove with ease the fact of disclosure. On the other hand, the prosecution may well have to produce every single employee of the organisation as witnesses in order to prove that the bankrupt had never made the disclosure about his bankruptcy status.

[26] Therefore, in my judgment, there is no doubt that the form, substance and effect of s 141(1)(a) of the Act are such that the burden is shifted to an undischarged bankrupt to show that he had informed the proposed lender of his status before obtaining credit to the extent of $500 or more. By virtue of the section, the bankrupt is specifically tasked with the duty of disclosing his status and, in my opinion, he ought to be vigilant in this regard. As I had pointed out in the case of PP v Ong Ker Seng, it is in the bankrupt’s own interest that he personally and directly inform the proposed lender of his status at the point when he obtains credit and optimally, such matters should be properly documented.

[27] After considering the evidence of Van, it was clear to me that he had not established that he had informed the hotel about his status as an undischarged bankrupt.

[28] Van claimed that he had a long-standing relationship and was familiar with the hotel management, as he had stayed at the hotel on numerous occasions. This did not, however, mean that he had disclosed his bankruptcy status to the hotel management. I noted that the hotel had a policy of allowing guests a credit limit of up to $500 only. If this amount was exceeded, the guest would be contacted and asked to settle the payments. Had the hotel known that he was an undischarged bankrupt, I found it most unlikely and contrary to common sense that it would have allowed Van’s arrears in total hotel charges to accumulate continuously over a period of one year and four months, notwithstanding his long-standing relationship with it.

[29] Van also claimed that he was removed from the Booze Members’ Club as a result of his adjudication as a bankrupt in the early 1990s. This was, nevertheless, a bare assertion. Furthermore, as pointed out by the prosecution, the actual relationship between the club and the hotel was unknown. There was no indication that the club was, in fact, a part of the hotel. Van had merely said that “the hotel had a small group of people coming to drink at the garden lounge”. In the circumstances, the court could not determine that there was an association between the club and the hotel, and a fortiori, that the hotel had actual knowledge of his bankruptcy status through the club.

[30] Van further claimed that there was a newspaper article on him, which mentioned clearly that he was a bankrupt. However, he was registered at the hotel as “Simon Van” and it was not known whether the newspaper article had referred to him by this name or whether the hotel knew that “Simon Van” and “R Sekhar s/o RG Van” were one and the same. In the premises, the court would not draw any inference that the hotel knew of Van’s bankruptcy status. In any event, s 141(1)(a) of the Act requires the undischarged bankrupt to inform the proposed lender of his status and he cannot escape from this obligation simply by presuming that the latter must have known of his status through some other means, such as a newspaper article.

[31] In the circumstances, not only did I find that Van had not informed the hotel about his bankruptcy status, I found his conduct, on the whole, reprehensible, bordering on cheating. Based on his long-term relationship with the hotel, he was able to obtain an extension of his stay and had eventually stayed at the hotel for a period of over one year and four months, despite continuous accumulation of arrears in hotel charges. He was ultimately locked out of his hotel room on 9 November 1998. At the trial, he claimed that the hotel, in so doing, had seized his property left in the hotel room, which was worth “thousands of dollars”. Nevertheless, at that time when he was locked out of his hotel room, he did not report the matter to the police or make any effort to recover his property or negotiate with the hotel to pay the arrears in instalments or for a longer grace period to settle his payments. It would seem that he had simply left the hotel. As such, I disbelieved his claim that he had left behind property, which was worth “thousands of dollars” and found that his actions indicated that he had no intention whatsoever of making any payments to settle the debt owing to the hotel for accommodation and other services.

[32] Moreover, when the hotel obtained a judgment in default of appearance against him for the sum of $23,874.94, he did not attempt to set aside the judgment and instead, waited until the trial to vehemently insist that the amount which he owed the hotel was only about $7,000. If this was indeed true, one would have expected him to apply to set aside the judgment and put it on record with the hotel that he would be settling the debt owed. However, he was content to leave the matter as it was. When pressed by the prosecuting officer as to why he had not set aside the judgment, he gave the unbelievable answer that the Official Assignee had advised him “never mind” and that it was easier to negotiate and settle the matter instead. In the course of the trial, he had further attempted to cast aspersions on the office of the Official Assignee, claiming that over the years since his adjudication as a bankrupt, he had seen many different officers regarding his matters and that his file was “spun around”.

[33] It will be recalled that Van faced a total of 11 charges, which were based entirely on the monthly summaries of invoices tendered by the prosecution through Michael. The charges brought against Van were for those months for which he had incurred debts of $500 or more, according to the summaries of invoices. The accuracy and authenticity of the summaries of invoices were of crucial importance, since whether or not there was an offence committed depended on whether the summaries of invoices reflected a debit balance of $500 or more for any particular month.

[34] Van had challenged the summaries of invoices on the grounds of hearsay and unreliability. There was no doubt that the summaries of invoices were tendered to prove the facts stated therein without more. Accordingly, section 35 of the Evidence Act became applicable to determine whether the summaries of invoices should, nevertheless, be admissible despite being hearsay evidence. The section provides for the admissibility of computer output as evidence of the facts stated therein if it is relevant or otherwise admissible according to the other provisions of the Evidence Act or any other written law and if it satisfies one of three conditions listed under subsection (1); that the computer output is : -

[35] Michael, through whom the summaries of invoices were tendered, was unable to explain how the amounts in the summaries of invoices were derived. He claimed that Van was a long-term guest and enjoyed corporate rates. He also claimed that Van was given better rates and that “they did not go up but went down”. However, he was unable to answer defence counsel when asked for an explanation for the fluctuations in room rates for September 1997, February and April 1998. He even admitted that “it may be a possible typographical error”. It was patently clear that he was not the one who prepared the summaries of invoices. He alluded that all financial statements were prepared by the accounts department and were within the purview of the financial controller, Mr KK Tay. During cross-examination, it transpired that the summaries of invoices were created by extracting figures from guest invoices, the originals of which were not tendered in court, for the purposes of commencing civil litigation against Van. To compound the unreliability of the summaries of invoices, by Michael’s own admission, he had met with Van in October 1998 over some irregularities in the guest invoices for the period from April 1998 to September 1998, caused by computer glitches. No evidence was led to show that the accuracy of the summaries of invoices had not been affected by the computer glitches. In the circumstances, there was compelling reason to doubt or suspect the truth or reliability of the summaries of invoices. Since s 35 of the Evidence Act was not satisfied, the summaries of invoices were therefore inadmissible. Without the summaries of invoices, there was nothing to show that Van had obtained credit of $500 or more on 11 occasions, forming the basis of the 11 charges against him.

[36] Notwithstanding this, the record of evidence revealed that Van had admitted to owing the hotel about $7,000. In fact, he had stated categorically no less than three times during his testimony in court that the amount owing to the hotel was around $7,000 only and not $23,874.94 alleged to be owed. In Er Joo Nguang v PP [2000] 2 SLR 645, I stated that the High Court, sitting in its appellate capacity, is empowered through a combination of case law and statute, to amend a charge and that such a power to amend the charge will be exercised in appropriate cases where the record of facts and the record of evidence support the amended charge, and where such amendment does not affect the substance of the evidence given in the lower court. In exercising such a power, the court must ensure that no prejudice is caused to the accused.

[37] In my judgment, this was indeed a proper case for amending the original 11 charges to a single charge under the same provision. From the record of facts and the record of evidence, Van had evidently owed the hotel debts in the sum of around $7,000 during his entire stay at the hotel. The records hence supported the single charge which I amended to read as follows : -

[38] Such an amendment did not affect the substance of the charge against Van, which was that he had obtained credit from the hotel to the extent of $500 or more without informing the hotel about his bankruptcy status. There was no dispute at the trial that a sum in excess of $500 was owed to the hotel. Van’s defence was that he had made known his bankruptcy status to the hotel. Such a defence, if indeed believed, would have been a complete answer to the amended charge inasmuch as it would have been to the 11 original charges. In the premises, I was satisfied that no prejudice had been caused to Van by such an amendment.

[39] For all the reasons which I have given above, I found Van guilty of the amended charge and accordingly I convicted him of it.

[40] In mitigation, counsel for Van submitted that he has to look after his 81-year old mother, who was recently discharged from hospital after suffering from heart problems. In addition, he has to support his niece who will be taking her ‘A’-level examinations. Counsel also submitted that Van has been gainfully employed for two years now and has been paying taxes on his earnings and working hard towards obtaining a discharge from his bankruptcy.

[41] In PP v Ong Ker Seng, I stated that I agreed with the view expressed in R v Schefelaar [1939] SSLR 221 that in offences of obtaining credit without disclosure, the accused is more appropriately punished with imprisonment than with a fine. In such cases, a sentence in the form of a fine is generally ineffective as the bankrupt is unlikely to have sufficient funds to pay the fine, which would result in someone else (usually family members) having to pay the fine on behalf of the bankrupt. As such, I was minded to impose a custodial sentence in this instance.

[42] Hardship on the family as a result of imprisonment is generally not a good mitigating factor : Lai Oei Mui Jenny @ Tan Siew Hong v PP [1993] 3 SLR 305. As for the fact that Van had been gainfully employed for the past two years and working hard towards obtaining a discharge from his bankruptcy, I was of the view that this was what he ought to have been doing in any event. In my opinion, not only does a bankrupt have a personal interest to obtain a discharge from his bankruptcy, he also has a social responsibility to do so. As such, I did not view this as much of a mitigating factor.

[43] In passing the sentence, I noted that Van’s actions smacked thoroughly of dishonesty. He took advantage of his long-term relationship with the hotel to extend his stay for months on end, and consequently incurred greater credit than he would have been allowed to. In addition, when he was locked out of his hotel room, there was no attempt by him whatsoever to negotiate with the hotel to pay for the arrears in instalments or for a longer period to make the payments. To my mind, it did not seem as if he had any intention at all to settle the arrears which he owed, when he left the hotel. I also took into account the conduct of Van’s defence. During the course of the trial, he made many allegations against Michael to attack his credibility, which the trial judge found to be wholly unmeritorious. Moreover, he even took the opportunity to cast aspersions on the office of the Official Assignee. Taking all the relevant factors into consideration, I sentenced him to one year’s imprisonment.

Appeal allowed.