The Queen v. Kwan Mo Fai and Others

CACC000233/1985

BETWEEN

-----------

Coram: Li, V.-P., Yang, J.A. & Liu, J.

Date of hearing: 14th February, 1986.

Date of decision: 14th February, 1986.

Date of handing down of judgment: 14 MAR 1986

__________

JUDGMENT

__________

Yang, J.A.:

1. In this case the three applicants were convicted of endeavouring to obtain $594.628.64 by means of a forged bill of lading purported to have been issued on 27th December 1983 in respect of 600,000 kgs of sodium sulphate purportedly shipped on board the vessel "Clipper Ace" from Hong Kong to Manila.

2. This judgment concerns the applicants' application for leave to appeal, against conviction. Their application for leave to appeal against sentence will be dealt with separately.

3. At all material times D1 was the proprietor of the Shun Hing Industrial Chemicals, which name was interchangeable with Shun Hing Industrial Material. D2 was the proprietor of Sunin Enterprises Company. D3 was the proprietor of Shun Hing Chemical Material and the middleman between D1 and D2 in the transaction now under consideration. The key prosecution witness Wu Cheuk-fan (PW3) was the proprietor of Qualifex Trading Company. He was the helper who assisted the three applicants in their fraudulent endeavour (though PW3 insisted that he was innocent and did not know that any forgery was involved).

4. D2 was in possession of a genuine letter of credit in respect of the quantity of sodium sulphate mentioned above, and it was his wish to transfer the letter of credit to D1's company. D3 met Wu by chance at a Mass Transit Railway station and spoke to him about D1 and D2. D3 then introduced Wu to D1 and D2 with a view to obtaining his assistance through his bank to have the letter of credit transferred as desired, because neither D1's nor D2's bank was prepared to effect the transfer.

5. On 29th December 1983, Wu and D3 went to Wu's bank, the Bank of Credit and Commerce, and tendered the letter of credit (Ex P1) together with a forged bill of lading dated 27th December 1983 in support (Ex P2). Together with these two documents, there was also tendered an authority of D2's company to substitute Wu's company as the beneficiary under this letter of credit. On the forged bill of lading, Shun Hing Hong Chemical Material (a name very similar to D3's company), was shown as the shipper. And whilst the forged instrument showed that 600,000 kgs of sodium sulphate was on board the vessel "Clipper Ace" from Hong Kong to Manila, nothing under the letter of credit had been loaded onto this ship.

6. Though Wu's bank manager Mr. Tse was prepared to accept the letter of credit and bill of lading for transfer, a pro manager Mr. Ahmed requested that the bill of lading be altered by substituting Wu's company as the shipper, well knowing that Wu's company was not the shipper. According to Mr. Ahmed, this alteration was necessary in order to comply with bank procedures. D2 briefed D1 and D3 on the required amendments to the bill of lading. The bill of lading was thereupon handed back to D2 for him to make the alteration required. There was no evidence that there was anything reprehensible about this alteration. At any rate, on the following day, i.e., the 30th, D2 tendered the altered bill of lading (Ex P5), still forged but dated 29th December 1983, to the Bank of Credit and Commerce. Instead of Shun Hing Hong Chemical Material, Wu's company was now shown as the shipper.

7. On the basis of the letter of credit (Ex P1) and the altered forged bill of lading (Ex P5) the Bank of Credit and Commerce transferred the sum of $594,628.64 (i.e. U.S.$76,800 under the letter of credit) into Wu's account with the bank, and Wu later distributed the proceeds amongst the applicants and himself. Naturally Wu's bank would not even have begun to consider Ex P5 if they had not accepted and relied on Ex P2.

8. It is not in dispute that there was nothing necessarily wrong in Wu's agreement to assist in the transfer of a letter of credit, for a commission which had been promised at 3%. This happens in normal business practice.

9. Clearly if the alteration to shipper's name on the first forged bill of lading (Ex P2) had not been required by Mr. Ahmed, the Bank of Credit and Commerce, through Mr. Tse, would have accepted the letter of credit and the first forged bill of lading. In the event, the amount on the letter of credit was credited into Wu's account on the basis of the second forged bill of lading. At the end of the day Wu distributed the proceeds as follows: D1 $196,500, D2 $110,200, D3 $263,900, and the remainder, some $24,000 representing more than 3 went to Wu.

10. The basic facts stated above are not in dispute. The true issue in the trial is whether or not the applicants or any of them did endeavour to obtain money payable under the letter of credit (Ex P1) by virtue of the first forged bill of lading (Ex P2) knowing it to be forged.

11. Mr. Alderdice acting for the second and third applicants grouped their several grounds of appeal under three main heads:

12. As to (1), the judge found that PW3 Wu was in effect an innocent middleman in pursuit of a legitimate profit for helping to transfer a letter of credit, which was in accordance with usual, commercial practice. There was no evidence to show he had an interest of his own to serve. His credibility was fully considered by the judge who, having taken the weaknesses in his evidence into account, found him a reliable witness. As to knowledge, it is true that the division of spoils is not per se sufficient evidence to show guilty knowledge. But looking at the involvement of the applicants from the inception of the scheme until it came to fruition a clear picture emerges as to show that they knew precisely what they were doing.

13. The applications by D2 and D3 are dismissed.

14. Mr. Pedruco acts for D1 and apart from one ground on the issue of knowledge he contented himself with adopting all the grounds and arguments of Mr. Alderdice, stating in his Grounds of Appeal that he would rely on "the grounds and arguments put forward by the 2nd and 3rd Appellant (sic) and their Counsel so far as they are of assistance to the 1st Appellant in his appeal against conviction".

15. In so far as reliance is placed on the grounds already advanced on behalf of the second and third applicants, we simply say that these grounds fail for the reasons already given.

16. On knowledge, as we understand the argument, it is argued that there was no evidence to show that D1 knew that the first bill of lading (Ex P2) was a forgery.

17. Mr. Pedruco drew our attention to the following matters. The forged bill of lading (Ex P2) bears the name of Shun Hing Hong Chemical Material as the shippers, so there was no reason for D1 to know if it was forged. Even if D1's own company had been shown as the shipper, there is authority for saying that D1 would not automatically be saddled with knowledge of its falsity.

18. It will be recalled that D1 was the proprietor of Shun Hing Industrial Chemicals, which title was interchangeable with Shun Hing Industrial Material. D3 was the proprietor of Shun Hing Chemical Material. Shun Hing Hong Chemical Material is the name shown as the shippers on the first forged bill of lading (Ex P2). During a conversation on 29th December 1983 between Wu (PW3) and the three applicants, D2 told Wu that he had purchased goods from D1, who nodded in agreement. D2 further said that the goods were on board a ship and the name of the shipper was D1's company. Both the letter of credit and bill of lading were produced in Dl's presence. In the course of the day, D1 told Wu that the goods had already been loaded on a ship and he should get money immediately. Then there was the indemnity (Ex P8) dated 29th December 1983, signed by D1 over the company stamp of Shun Hing Industrial Material, which certified that he was the shipper named in the bill of lading and the goods shipped were in accordance with the letter of credit.

19. On the evidence, it is difficult to see how D1 could claim that he had no knowledge that the goods described in the bill of lading had not in fact been shipped.

20. We have no doubt that this ground of appeal must also fail.

21. The three applicants' applications for leave to appeal against conviction are dismissed.

Representation:

Luiz da Silva Pedruco (R.J. Oliver & Co.) for 1st Appellant/D1

G. Alderdice (David K.W. Tsang & Co.) for D2 and D3

J. Hammond, Crown Counsel for DPP/Respondent