HKSAR v. Lam Chi Kin, Anthony

DCCC 997/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 997 OF 2015

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Reasons for Sentence

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1.The defendant has been found guilty after trial of a section 73 offence under the Crimes Ordinance: using a false instrument. I will not repeat the details of the evidence. I gave full reasons in my verdict.

2.According to the charge, it was PW1 who provided service to the defendant and another as an escrow agent.  He was paid to provide a service to act as a neutral third party holding important documents. These documents were related to security provided for a loan of US$700,000.  If the loan was not repaid, then the security of 70 shares of the company, Lotto Holdings Limited, would be transferred to Flywell who made the loan. 

3.That company Lotto held a property worth in 2005 HK$8.2 million, premises in Baguio Villas, Pok Fu Lam. Obviously, the premises would be worth more in June 2010, the date of this offence.  The property was in reality bought by and owned by the defendant’s elder brother, PW4.  Lotto was a company set up to hold the property.  Lotto had 100 shares.  30 were held by PW3, a director of Lotto and the then wife of the defendant.  The other 70 were held by the defendant but on trust for his brother’s wife, PW2.

4.In essence, the defendant became a co-borrower for this loan of US$700,000 with a man called Ashroff.  He had business dealings with this Ashroff for some time before this loan happened. Defendant’s evidence: he did not receive $700,000 but $128,000.  He agreed to be a co‑borrower because he believed that Ashroff would not default in this loan.  His evidence was that he put up security, thinking he had authority from the directors.  

5.I found he had no such authority and knew he had no such authority.  I found the defendant knew that Exhibit P4 was a false document.  There are two possibilities.  Either the defendant made this document himself or Ashroff made it and the defendant turned a blind eye to its veracity.  If Ashroff made it, I am sure the defendant knew PW3 or PW4 would not have agreed to such a directors’ resolution at Ashroff’s request.  Maybe the defendant thought the directors did not need to know, may never know because he thought there was no danger those shares would ever be transferred.

6.However, what he said he thought was unthinkable actually happened.  If PW1 had not agreed to escrow what he thought were genuine documents, then I am sure the loan would not have been made.  PW1’s prejudice was not a financial prejudice but due to his accepting Exhibit P4 as genuine in due execution of his duty as an escrow agent.

7.I also found that Lotto and its directors and shareholders suffered prejudice by way of financial loss because for a period of time, Flywell obtained a charging order over the 70 shares.  I am quite sure the defendant did not envisage all this happening.  I give him the benefit of the doubt and doubt he intended his brother and family so much trouble.  He more than likely turned a blind eye to Exhibit P4 when he was offered US$128,000 which is HK$1 million.  He received this as a reward for putting up the security he did not think would be at risk.  If he was that gullible, he was equally as greedy.  I have been told the defendant offered to repay the loan and was in discussion with Flywell in late 2012 to repay by instalments.

8.Defendant was a man with a clear record.  He is 50 years old and is divorced but recently remarried, and from his second marriage, he has a 6-month-old son.  His two children from his first marriage have left to live in Canada with his ex‑wife.  The defendant was a professional man who has fallen from grace.  Flywell took action against the defendant personally and he was declared bankrupt in 2014.  He remarried in 2015 and lives in Singapore with his second wife and young son.

9.I have had two letters of mitigation from the defendant’s elder brothers.  The defendant is the youngest of seven siblings and, clearly, his brothers are very close to him and certainly supportive.  The letters are self-explanatory and both ask for leniency on the defendant’s behalf.

10.Mr Tse on the defendant’s behalf has pleaded a delay in prosecution as a mitigating factor.  I have been given details regarding the complaint investigation and ultimate charge.  A representative of Flywell made a complaint to the police on 28 May 2013.  Flywell was the complainant.  Defendant was first arrested on 25 June, one month later.  However, he was released unconditionally in December 2013 from police bail as the police were not ready to charge the defendant. 

11.A year later, in December 2014, the police file was sent to the Department of Justice.  This was for the second time.  The advice to the police was to investigate further.  Apparently, more people were interviewed and fund flows from what I assume were bank accounts investigated. The police file went back to the Department of Justice in August 2015.  After advice, the defendant was arrested on 21 October 2015.  He appeared in the District Court on 11 December 2015 where a trial date was given.  From that timeline, the defendant was arrested for the second time nearly two and a half years after his first arrest.

12.The complainant does not feature in the charge as a victim nor did any appear as witnesses in the trial.  It seems that there was not enough credible evidence after investigation or, rather, after assessing their credibility as witnesses, I have been told.  It is a most odd situation.  Therefore, the only evidence was that from PW1, the escrow agent, that could constitute a charge.  I am sure the defendant’s family would not have come forward as victims.  The officer in charge of this case is no longer with the police force and unable to assist today. 

13.From what I have been told, I see no tangible reason for the delay in prosecuting the defendant.  I will find delay in prosecution a mitigating factor, especially bearing in mind the defendant has since his first arrest remarried, relocated countries and become a father again to a young child.  The stress of the delay in prosecution hanging over his head can only be described as considerable.

14.There are no tariffs for sentences for this charge.  Each case would be fact-sensitive.  I am sure this was a District Court case because the complaint was related to US$700,000.  I do not see any evidence that the defendant received the full amount.  I also do not believe the defendant was the mastermind behind this.  I think another or others preyed on his greed or his need for money or his gullibility or all of those reasons.

15.Defendant, please stand up.  I do take that into account as well as previous clear record, age, background, mitigation put forward and the facts of this case.  I also take into account that PW1, the victim in the charge, did not suffer any financial prejudice.  I, having considered those factors, take a starting point of 2 years and 4 months. I will reduce this by a further 10 months for the delay in prosecution.  For this offence, the defendant is sentence to 1 year and 6 months’ imprisonment.  Do you understand that sentence?

DEFENDANT: Understood.