Read the full judgment text of CACC 000311/2006 on BabelCite. This Court of Appeal judgment was delivered on 30 January 2008 before Stuart-Moore VP, Stone and Beeson JJ.
Criminal law – secondary liability – aiding and abetting – omission – mens rea – letter of credit fraud – section 18D Theft Ordinance Cap 210 – banking record deception – sentencing – starting point – concurrent sentences. The case involved a letter of credit fraud in which three subsidiary companies of Po Sing (Holdings) Ltd applied to the Bank of China for ten irrevocable letters of credit between January and November 2003, naming Trisource Enterprise Company Limited (owned by the 1st and 2nd defendants) as beneficiary. There were no actual goods or underlying transactions in Hong Kong; false documentation was submitted to the bank. After receiving funds, Trisource would remit almost all the money back to Po Sing (minus a small 'commission'), effectively creating an unauthorized revolving credit line of approximately HK$22.5 million. The 5th defendant was the primary mover of the scheme; the 1st defendant (former teacher of the 5th defendant) was a director of Trisource; the 2nd defendant (wife of the 1st defendant) was the majority shareholder and director of Trisource. The court held that secondary liability by omission can be established where the defendant, as a director or majority shareholder, becomes aware of the corporate fraud and fails to take steps to control the corporate vehicle. The court adopted the Giorgianni standard for mens rea: specific intent or wilful blindness is required, but recklessness or negligence is insufficient. The court allowed the 2nd defendant's appeal, holding that the evidence from her pre-trial interviews did not establish specific intent or wilful blindness – at most it established negligence or recklessness, which is insufficient. The court dismissed the 5th defendant's appeal against conviction, finding the evidence amply supported his dishonest intent as the primary mover of the scheme. The court also addressed the 'Li Defan point' on the 2nd defendant's failure to testify, holding that in the particular circumstances it would be wrong to use her failure to testify to strengthen the inference of guilt. On sentencing, the court held that a starting point of 5 years' imprisonment for the 1st and 5th defendants was not manifestly excessive, taking into account the size of the scheme (HK$22.5 million), the systematic execution over 11 months, and the importance of maintaining the integrity of the documentary credit system. The court also held that no sufficient difference in moral culpability existed between the 1st and 5th defendants to justify reducing the 1st defendant's sentence. Convictions and sentences on all 10 charges against the 2nd defendant were quashed; the 1st and 5th defendants' applications for leave to appeal against sentence were dismissed.
Legal issues: Whether omission can found the actus reus of secondary liability (aiding and abetting) · Mens rea required for secondary liability by omission · Whether the 2nd defendant's conviction for aiding and abetting by omission was safe · Whether the 5th defendant's conviction was safe · Whether the 2nd defendant's failure to testify could strengthen the inference of guilt (Li Defan point) · Whether a starting point of 5 years' imprisonment for the section 18D offences was manifestly excessive · Whether the 1st defendant's sentence should be reduced for lesser moral culpability compared to the 5th defendant
Outcome: 2nd defendant's appeal against conviction allowed and convictions on all 10 charges quashed; 5th defendant's appeals against conviction and sentence dismissed; 1st defendant's application for leave to appeal against sentence dismissed
Cited by 6 cases · Cites 7 cases