HKSAR v. Chiang Tsui Yan

CACC000188/1999

CACC 188/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 188 OF 1999

(ON APPEAL FROM DCCC NO. 920 OF 1998 )

Coram: Hon Stuart-Moore, V-P, Leong & Wong, JJA

Date of Hearing : 23 November 1999

Date of Handing Down Judgment : 2 December 1999

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J U D G M E N T

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Wong, J.A. (giving the judgment of the Court) :

Introduction

1. The Applicant seeks leave to appeal against the sentence of 4 years and 4 months' imprisonment imposed on him after he pleaded guilty before His Honour Judge Davies in the District Court to 13 charges of false accounting, contrary to section 19(1)(a) of the Theft Ordinance, Cap. 210.

Facts

2. The facts were these. The Applicant and his wife, Pit Cho-yin were the only two shareholders and directors of Wellstandard Textiles Company Limited (Wellstandard) with the Applicant holding 80% of the shares. Wellstandard was incorporated in Hong Kong and carried on the business of buying, selling, importing and exporting textile goods in and out of Hong Kong. One of Wellstandard's customers was the Gitano Group Inc, an American Company (Gitano) and between 1988 and 1991 Mr Stanley Bernstein was its business manager and vice president. Part of his responsibility was to buy materials worldwide to meet the needs of Gitano's production line.

3. In the months of October and November 1989, Mr Bernstein on behalf of Gitano and the Applicant and Wong Mei Sheung on behalf of Wellstandard signed two open contracts under which Gitano agreed to buy from Wellstandard 'Textiles dyed/finished piece goods' the quantity and details of which were to be specified and subject to final confirmation of each sales contract and terms of payment were by Document Against Acceptance Bills ("D/A bills") 30 days. All goods were to be delivered to Gitano's factories in China and not anywhere else.

4. Since August 1989, one of Wellstandard's bankers was Caisse Nationale De Credit Agricole (the Bank), a bank based in France and carrying on banking business in Hong Kong. The bank had granted banking facilities to Wellstandard including advances on discounting D/A bills before maturity. In 1990 the extent of this facility was HK$25,400,000. The D/A bills facilities could be utilized if the transaction under which the bill was drawn was covered by an ECIC (Export Credit Insurance Corporation) policy of 100% bank guarantee or negotiation of a master letter of credit. In order to obtain an ECIC policy to cover the risk of non-payment by the buyer of the price of goods exported by Wellstandard, a sales contract made between Wellstandard and the buyer had to be submitted to ECIC.

5. Since about the middle of 1990, Wellstandard had run into cash flow problems and the offences in the 13 charges were committed between 15 June 1990 and 25 June 1991 when the Applicant obtained payment from the bank under the discounting D/A bills procedure by means of forged documents. He forged the signatures of Mr Bernstein on 13 sales contracts to be used for securing an ECIC policy which he submitted to the bank together with other documents. Acting on the strength of the ECIC policy which the Applicant had obtained by forgery and deception, the bank made payments to Wellstandard in the total sums of HK$17,819,789 and US$282,128.

6. The matter came to light at the end of August 1991 when the Applicant confessed to Mr Lau, deputy manager of the bank, that he had forged the signatures of Mr Bernstein on the sales contracts. He also admitted this to the police under caution when he was first interviewed. The Applicant was arrested on 25 September 1991. He absconded from Hong Kong on 15 November 1991 while he was on police bail. He was rearrested on 5 August 1998 after he was deported from the Mainland. He was then charged with the present offences.

Starting Point and Discount Adopted by the Judge

7. In sentencing the Applicant, the judge took a starting point of 6 years' imprisonment and reduced it by 14 months, which is about 19.5% in recognition of plea. He gave the Applicant a further discount of 6 months for previous good character. If these 6 months and 14 months are added together, it would result in a discount of something like 27.7% which is not an insubstantial discount.

Grounds of Appeal

8. Three grounds of appeal are set out in the Amended Perfected Grounds of Appeal. It is not necessary for us to repeat them as the thrust of this appeal has been succinctly and aptly summarised by Mr Macrae, SC who appears for the Applicant before us in five words :

"High Starting Point; Low Discount".

Starting Point

9. We deal first with the starting point. Mr Macrae submits that as the offences were committed in 1990/1991, the Applicant should be sentenced in accordance with the levels of sentence and sentencing practice prevailing at that time. He contends that the starting point back in 1990 and 1991 for this type of offence would be 5 years. No authorities were cited to us in support. There is no merit in this argument and we have no hesitation in rejecting it. The judge described this as a very substantial case of fraud, where the loss to the bank was huge. In our view, the starting point of 6 years in the circumstances of the present case is entirely justified.

Discount

10. We turn to the question of discount which Mr Macrae considers to be his substantial ground. It is true that the practice of the courts in Hong Kong is normally to give a defendant who pleads guilty a one-third discount of his sentence. If this is not done, there must be a substantial reason for the failure to give the normal discount.

11. The judge explained why he declined to give the Applicant a full one-third discount. This is to be found in his Reasons for Sentence at p24 M-S of the transcript :

"Following his re-arrest and charging, he indicated his intention to defend these charges. He went further by indicating through his counsel at one pre-trial review, that he proposed to challenge the allegation of forgery, insisting that the contracts contained the genuine signatures of Mr Bernstein. As a result, and because Mr Bernstein had declined to come to Hong Kong to give evidence in person, the prosecution applied and was granted by the High Court a letter of request to have the witness examined and testify in the USA for the purposes of a trial in Hong Kong. Consequently, counsel for both the prosecution and defence (the defendant being funded by the Legal Aid Department) went to the USA and returned with Mr Bernstein's evidence supporting forgery."

Over the page at p25 A-D, he continued :

"Notwithstanding this, the defendant persisted in his stance and further time was then allowed to him at his request to obtain a handwriting expert's opinion. It was only following this that the court was notified on his behalf some two weeks or so ago, that he had decided to resist these charges no longer and would plead guilty."

12. In our view, these are relevant matters which the judge could legitimately take into consideration in coming to his conclusion that percentage of discount to be given to the Applicant must be reduced. In the same context, the judge was entitled to have regard to the fact that the Applicant had absconded from the jurisdiction after he was arrested and put on police bail as another factor relevant to discount.

R v Kwok Yee

13. In deference to Counsel, we must refer to the case of R v Kwok Yee, William Cr App No 452 of 1993 in which Mr Macrae represented Kwok in the appeal. He placed considerable reliance on this decision to support his argument that his client should be given a discount of one-third. The gist of the case was that Kwok, a local practising solicitor became acquainted with a Canadian Queen's Counsel who was interested in investing in real estate in Hong Kong. He appointed Kwok a director of his company called Can Asia. What happened afterwards was that Kwok stole a total sum of over HK$23,000,000 through deception and forgery creating bogus transactions of non-existent or fictitious purchases of real property. The total loss suffered by the Canadian gentleman came to more than HK$15,000,000.

14. In dealing with discount for pleas of guilty, Silke VP had this to say at p16 :

"Generally, pleas of guilty are to be encouraged and that encouragement can only be given by a substantial reduction in sentence from that which would have been imposed after a full trial. Pleas of guilty save a great deal of taxpayers' money, the time of witnesses and the time of the court. Of that last, we do not mean to imply the convenience of the court but that the time saved can be put to good use, in what are presently very over-crowded lists, by the advancement of the trial dates of other defendants many of whom may well be in custody. In particular in commercial crime it has, in recent years in Hong Kong, been all too apparent that these trials can take an inordinate length of time and involve very substantial financial commitments by the prosecuting authorities - both in the preparation for trial and in the trial itself. Very careful as the trial judge was - he adjourned overnight to consider sentence - in reaching the conclusions he did we do not think that the element of the plea was given the discount it deserved. We accept that, while an indication of a plea of guilty was given at a very early stage indeed, it was not implemented until the day of trial. We accept that tracing the evidence in this case must have entailed costs by the prosecuting authority. Nevertheless, we feel in all the circumstances of this case, bearing in mind all of the mitigation and with particular reference to the pleas of guilty, that a greater discount should have been given. An overall sentence of 51/2 years would, we think, have been appropriate."

15. The result is that Kwok's overall sentence was reduced from 8 1/2 years to 5 1/2 years which represents a discount of 35%. But Kwok Yee does not establish nor was it intended to establish any principle that there should be an automatic one-third discount of the sentence on a plea of guilty in cases such as the present one, where the Applicant absconded on bail and demonstrated in other ways that his pleas of guilty were only tendered in the very last resort. These were not timely pleas of guilty; they were a tactical ploy to gain credit when all else had failed. The Applicant was on the run for almost seven years and the Applicant must have known that the prosecution would by then have had great difficulty in proving their case. The Applicant played the system for all it was worth and in our judgment, the judge was fully entitled to reduce the discount the Applicant might in normal circumstances have received if he had faced up to his trial and pleaded guilty straight away.

16. Having said this, we should add that nothing we say in this judgment should be taken as detracting from the passage of Silke VP at p16 in Kwok Yee.

17. In the present case, we are satisfied that there is no breach of principle.

Conclusion

18. If the judge had adopted a global approach to discount, by lumping the 6 months for good character and 14 months representing a discount of "about 20%" together, the Applicant would have received a discount of 20 months or 27.7%, which is a very substantial discount. The sentence imposed in every case must sufficiently reflect the overall criminality of the offender. We are dealing with a case of serious commercial fraud involving the stealing of HK$20,000,000 over a period of 12 months. A sentence of 4 years and 4 months for a fraud of this magnitude cannot, on any view, be considered to be manifestly excessive or wrong in principle.

19. The application is dismissed.

Representation:

Mr Robert Lee, SADPP and Mr Sharman Lam, GC, for DPP/Respondent

Mr Andrew Macrae, SC and Mr Luke McGuinniety instructed by M/S Fairbairn Catley Low & Kong for the Applicant