The Queen v. Navaratnam Vijayaratnam and Another

CACC000238/1988

BETWEEN

--------

Coram: Silke, V.-P., Power & Penlington, JJ.A.

Dates of hearing: 11 and 12 January 1989

Date of judgment on sentence of D2: 12 January 1989

Date of handing down reasons: conviction D1: 27 January 1989

-----------------------

J U D G M E N T

-----------------------

Silke, V.-P.:

1. Navartnam Vijayaratnam - "D1" - and Michael Lee Nam Kwong - "D2" - appeared for trial before His Honour Judge Wilson in the District Court on four charges. The first three alleged an offence contrary to section 75 of the Crimes Ordinance, Cap.200 causing property to be delivered on false instruments, the fourth, possession of a forged documents contrary to section 76(3) of that Ordinance.

2. D1 was convicted after trial and sentenced to concurrent periods of inprisonment of three years on each charge: D2 pleaded guilty at a late stage in the trial and was sentenced to two years' imprisonment concurrent on each of the charges.

3. D1 sought leave to appeal against his conviction and D2 to appeal against his sentence.

4. At the conclusion of the hearing we refused D1's application stated we would give our reasons later and went on to deal with D2's application granting leave. The judgment we gave at that time is appended to these reasons.

5. It was the case for the Crown that there was in existence a scheme described as "arbitrage" - "the scheme". The Crown was neutral as to whether this was or was not of itself dishonest. They did not seek to prove that it was. The scheme involved a loan of US$1 billion in which various persons and institutions were to he Participants. The suggested profit overall was to be the difference as between the 80% or 90% of the loan advanced and the full repayment of 100%. Involved in this scheme were D1, D2, a name named Reardon, a man named Schmitt and others.

6. On 8th August 1987, a Mr. Sumich, together with his Operations Executive, Mr. Landon, came to Hong Kong with a view to participation in the scheme. They knew Reardon. They saw D1 who explained its oneration to them While they did not fully understand it, a massive profit was dangled in front of them. They were to, and eventually did, invest US$178,000.

7. They wanted this investment to be secured. There was a discussion concerning bank guarantees. They eventually agreed to put up the money but only subject to such, a guarantee and the money itself would not he handed over until that guarantee was provided. This was agreed.

8. Mr. Landon wanted to go to the bank concerned to see the guarantee signed. To this D1 would not agree. The participation by Mr. Sumich began to fall apart. Assurances were received from Reardon who said he would be going. There was talk that, if everyone went, there would be great danger of breach of the tight security necessary to the transaction. It was said that third world countries were involved who were very jealous of their renutations and did not wish to disclose the obtaining of such a massive loan.

9. On 10th August, and after further discussions with D1, a party set out from D1's office. This included D2, whose first annearance in the matter it was as far as Mr. Sumich and Mr. Landon were concerned. They went to a prominent firm of solicitors to have signatures notarised. They then went to the Western Branch of the Kincheng Bank. Mr. Landon and Mr. Sumich remained outside the bank. Readon, D1 and D2 went in. Half an hour later they returned with a purported guarantee. This was handed over to the intended investors and the cash was transferred to D1 who said that he would take it Singapore for the completion of the transaction. That guarantee as indeed were the guarantees involved in the other two charges, was a forgery, They all bore the name of the Kincheng Bank and each had the same signature. There was no evidence as to whose signature that was save that it was not a bank authorised signature.

10. On 13th December 1987 a Mr. Polka, with his accountant Mr. Gasson, came to Hong Kong They had earlier been approached in Perth, Australia by Mr. Reardon. They were also intended investors. On 14th September they went to D1's office and held a discussion as to their participation. D1 spoke generally of third world countries, massive loans and of a neucular power stations. D1 described himself as a "trustee" and indicated that there were four parties to the scheme - the lenders the security providers, a fiduciary bank and the risk takers such as Mr. Polls. They were shown a copy of the Sumich guarantee. There were lengthy discussious. They signed at D1's insistence, a document called a "Non-Disclosure Agreement" ensuring surety. D1 refused to permit Mr. Polla to have outside advice, on the transactions.

11. Mr. Polla, and in particular Mr. Gasson were not satisfied. They told D1. Reardon was present. Mr. Gasson remained sceptical but a little later, after Mr. Polla had had a private discussion with D1, he surprised Mr. Gasson by deciding to go on with the matter. A bank guarantee was required.

12. On 17th September a party again set out from D1's office also for the Kincheng Bank. This included D2 who appeared for the first time in this transaction. At the bank Mr. Polla and Mr. Gasson were told to wait outside but in fact Mr. polla waited in the bank hall while Mr. Gasson remained outside. Mr. Polla saw D1 and D2 go down some stairs at the rear of the bank. Mr. Gasson thought up an excuse to enter the bank and while be was there D1 and D2 returned from whence they had gone with a guarantee. This was given to Mr. Polla who in turn handed over US$160,000.

13. There was to be a further payment of US$30,000.

14. There was evidence that the stairs at the rear of the bank led solely to its safe deposit box area. There was evidence that D2 had hired a safe deposit box in the bank in his wife's name.

15. Mr. Gasson remained suspicious. On his return to Australia, he checked the bank entry in the Hong Kong Yellow Pages directory. He found that the telephone number on the letterhead which appeared on the guarantee was not that of the bank. He returned to Hong Kong on 10th October and on the 12th of that month came to know of D1's arrest.

16. On 5th October 1987 a Mr. Draeger who knew Mr. Sumich and had heard of the deal and of Reardon came from Europe to Hong Kong. Reardon had earlier contacted him, explained the transaction and had faxed to him certain documentation. Mr. Dreager had had a telephone conversation with D1 who requested him to bring US$380,000 cash as his share of the participation.

17. To effect this Mr. Dreager, who did not wish to travel with so much cash, had arranged a loan with the Royal Trust Bank in Zurich, this in conjunction with Royal Trust Asia which was his bank in Hong Kong. Mr. Dreager required a bank guarantee. He was aware of the name of the Kincheng Bank before he came to Hong Kong.

18. In Hong Kong he was met by Reardon who took him to D1's office. D1 wanted a cash cheque as he was flying out that evening to Singapore and it was necessary to conclude the transaction with some haste. When Mr. Dreager was in D1's office, D2 made an appearance.

19. On 5th October, a party set out for the Kincheng Bank picking up on the way an officer of the Royal Trust Asia. They went to the usual solicitor's office for signatures to be notarized. At the bank the request for a cash cheque was refused. D1 and D2 went down the stairs at the back of the bank and in a short time returned with the guarantee. This they would only who to the parties, including the Boyal Trust Asia official, on their return to the waiting, transport.

20. That Royal Trust officer had been under instructions to verify the signatures on the guarantee with the bank and to see it signed. In the haste in which the transaction was completed he forgot to do this. In the car he did examine it and was doubtful of its validity because it contained but one signature. D1 and D2 sought to reassure him showing another bank document which contained a single signature and suggested that this was normal.

21. The party went to the Bank of America, which was the fund holder, and the money was handed over.

22. On his return to his office, the Royal Trust Asia officer started to make inquiries and was as a result D1 was arrested on 6th October. At the time of his arrest he was in possession of a briefcase containing US$360, 000 out of the US$380,000 handed over by Mr. Dreager. What happened to the missing $20,000 is not known.

23. The office from which D1 worked had been lent to him in 1987. In it was a word processor. When that office was searched the word processor and its relevant disks were found to contain the stored text of all the guarantees. In D1's desk were found the forged guarantees, subject of the fourth charge and one of them had the writing of D1 on it.

24. The letterheads of the Kincheng Bank which bore an inaccurate telephone number and a wrong description of the branch, had been printed in Wanchai at the order of D2 who had paid for them.

25. The Applicant gave no evidence.

26. Mr. Sarony who appeared for D1 both here and below has urged upon its that the trial judge was in error in finding that D1 was the main mover. It is his submission that D2 was the real power in the scheme and that he had deceived D1 who was under the impression that the guarantees were genuine and whose participation in the whole scheme, including the provision of the guarantees, was as an ordinary, innocent business man being used without his knowledge by D2.

27. He further submits that in coming to the conclusion he did, the trial judge found as fact matters which conflicted with the evidence led and then went on improperly to draw inferences adverse to D1.

28. But, given that the trial judge was not wrong to find the facts he did, he was entitled to draw adverse Inferences and to draw those inferences more readily in the absence of any explanation from D1.

29. Mr. Sarony, apart from certain individual matters to which we shall refer in a moment, based his contentions upon the evidence given by D2 for, immediately upon his plea of guilty, he was called as a witness by the Crown. The trial judge found him unreliable and took the view, a view thorouchly. Justified by the nature of the evidence he gave, that D2 was doing his best to distance himself as far as possible from his admitted criminality. D2 is 70 years of age and a tetired man who, having worked in Canada had lately returned to Hong Kong, was dealingin a minor way, with the selling of insurance. His evidence, of which we have had the benefit of a transcript was evasive, confused and confusing. It was in certain aspects untrue. He emerged, and the trial judge so found, as a very unlikely deceiver of D1.

30. Mr. Sarony accents that while this is a possible finding, nevertheless, considering the whole of the evidence as to D2 participation in these transatcion it is not a finding which can he so totally excluded from consideration as to make D1's participation beyond doubt.

31. With respect, we do not agree. It is true that probably on 17th September, a day upon which the Applicant left. Hong Kong, the order for the printed Kincheng Bank letterheads was left with the printer in Wanchai by D2. Further, that on the 23rd while D1 was still absent from Hong Kong a hard cony of the guarantee given to Mr. bolla was faxed, to him hearing the bank letterhead The only real difference between the document given to Mr. Polla and, the purported hard copy of the guarantee was the addition of the bank's letterhead. The body of the document was already in the word processor.

32. D2 had made some entries in his diary to which, as Mr. Sarony granhically put it, he "talked". An entry relating to this transactions referred, to the 18th September. It was further said that the newly printed bank letterheads were handed to D1 on the 23rd. However, this appears yet another attempt by D2 to try and mitigate his part for D1 had not yet returned to Hong Kong on that day.

33. The trial judge in his Reasons for Verdict did make reference to the word processor as being that of D1. It is equally true that that word processor was introduced to the office by the person who lent the office to D1 and that it was in a place where it is available for use by others. But there was also clear evidence from an employee in that office that she printed various documents on the word processor at the directions of D1. We think the judge's phraseology to be a colloquial use and that he clearly intended to and did mean that the word Processor was mainly used by D1. This was a finding to which he was fully entitled to come.

34. There was one inconsistency in evidence which was not fully resolved by the trial judge. This was the evidence of the Manager of the Kincheng Bank, who is in no way involved in these matters, that the only person to come to his office when the first visit to that bank was made was D2. He had said he thought that an Indian gentleman was outside but did not come to the office or converse with him. Other evidence suggested that both D1 and D2 had gone to see the Manager. The object of going there then, and on the later occasions, was to lend verisimilitude to the guarantees. However, in the context of the evidence overall we do not consider that this failure to in any way vitiate the judge's conclusions.

35. Mr. Sarony further complains that the judge should not have borne in mind the scheme when considering the specific charges which lay for his consideration. At one point in the trial the judge had referred to that scheme as a "scam" but conceded, upon objection being made to the view he expressed that to consider it such would be an incorrect approach on his part. However that may be it was impossible, in the context of the whole of the evidence, to separate the issue of the guarantees from the generality by of the scheme afoot. As Mr. McMahon, who appeared for the Crown both here and helow, has assured us it was never part of the Crown's case to show the scheme was a sham. This surprised us a little but the trial judge was quite justified in taking the general view of the evidence which he did and in considering these guarantees in the context of the scheme for the participation of the potential investors was conditional upon their receiving those guarantees.

36. Mr. Sarony has valiantly attempted by taking us through, and in detail, the evidence and the Reasons for Verdict to persuade us that the trial judge took the wrong view and, as we said at the beginning, shoud have found that D1 may have been an innocent, deceived business man. If we have not referred to each and everyone of Mr. Sarony's points of argument it is not from any discourtesy.

37. Having listened to his able submissions and to that which Mr. McMahon has said to us we are left in no doubt a at all as to the safe, and satisfactory nature of these convictions. The evidence was strong and, in the absence of any explanation the inferences of guilt drawn by the judge were proper-this bearing in mind that such an inference must be the only one susceptible of being drawn from the proven facts.

38. In the event, we refused leave in respect of the convictions.

Sentence: Lee Nam Kwong Michael D2 (Delivered on 12th January 1989)

39. Two persons one known as Dr. Vijayartham "D1" and the other the Applicant ^"D2" were convicted after trial in the District Court on four joint charges. Three related to the actual use of forced instruments and the fourth of forged instruments being found in their Possession in the premises which they occupied.

40. D1 was convicted after a full trial and sentenced to three years' imprisonment consurrent on each of the charges. D2 had pleaded guilty towards the close of the prosecution case and had then been called by the prosecution in evidence. He was sentenced to two years on each charge concurrent.

41. In Passing the sentence he did, the trial judge was aware of, and took into consideration, the age of the Applicant, he is now 70, the effect of a sentence on a man of those years and his previously clear record. It .was accepted that the sentences on both Dr. Vijayaratham ant D2 should be custodial ones.

42. The issue which has been argued by Mr. Lunn, who appeared on behalf of D2 both here and below, is that there was insufficient a distinction drawn as between the participation of D1 and that of D2. It is clear and we have had the benefit of being taken through the evidence in detail including the evidence given by D2 in the Court below in the course of the application in respect of his conviction by D1, that the doctor was the dominant character. He was accented as being the mian mover in these transactions which stemmed from a general scheme which may or may not have had substance. It was essential to the success of that scheme, in so far as the various people who were parting with their monies required grarantees, that they he given those documents. They were forged.

43. The trial Judge had, in his Peasons for Verdict, found that D1 conducted all the important negotiations both as to the main scheme and the supporting guarantees. That he had arranged many of the matters which came to light. That he was a man of apparently impressive academic and professional qualifications that is according to the Item set out upon his letterheads which we have seen. That he talked of vast sums of money and that he outlined every step in the procedure necessary in providing the guarantees.

44. D2 on the other, hand was knowingly used by D1, undoubtedly because of his race and his age. He was useful in conjunction with the chinese Bank which was said to have given these guarantees and the approaches to that bank by those involved.

45. He was undoubtedly dishonest. Me knew the guarantees were false. He did benefit to the extent of at least US$20,000. be had prospects of getting considerably greater benefit had everything come to fruition. D1, benefited to a much greater extent. The total sum involved was some US$700,000 of which $360,000 found in his suitcase was recovered.

46. It is clear that the Applicant's role was nothing like as great as that of D1.

47. In So Hung Lee  [l986]  H.K.L.R. 1049 this Court said in relation to disparity:

"Two situations cap arise [and this first is the situation with which we are concerned here]. The first is where there is a disparity between sentences passed on the same occasion by the same judge. In this case the sentence should be varied by this court if, but only if, it can be shown that the judge has not properly apportioned the blame between the accused. If the sentence was otherwise appropriate and the judge was under no misapprehension of the roles of the various accused, then the sentence should stand."

48. We are of the view that the totality of the sentence of two years in relation to the charges to which D2 pleaded guilty is not, by itself, in any way excessive. We are however concerned with the difference as between the three years to the mastermind and prime mover and the two years to D2 whose participation, as we have said, was considerably less. We think the difference should have been reflected to a greater extent in the quantum of the sentence passed.

49. We therefore, grant leave, allow this anneal and quash the sentence of two years substituting therefor one of eighteen months' imprisonment.

Representation:

N. Sarony, Esq. (Poop & Dissanavake) for D1 Michael Lunn, Esq. (F. Zimmern & Co.) for D2 M. McMahon, Esq. for Crown/Respondent