HKSAR v. Law Mei Lan and Another

Case No.CACC 697/1996

Court

Court of Appeal

Date16 Sep 1997

Judge—

Case Document

100%

CACC000697/1996

IN THE COURT OF APPEAL	1996, No.697
	(Criminal)

BETWEEN
	HKSAR
	AND
	LAW MEI-LAN (D1)
	CHAU HAU-YIP (D3)

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Coram: Hon. Power, Ag. Chief Judge, H.C., Mayo, J.A. & Saied, J.

Date of Hearing: 16 September 1997

Date of Judgment: 16 September 1997

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JUDGMENT

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Power, V.-P. (giving the judgment of the Court):

1. The applicants in this matter faced two charges of conspiracy and 12 charges of false accounting. Each pleaded guilty to the conspiracy charges and the prosecution did not proceed on the false accounting charges. The 1st applicant was D1 at trial and the 2nd applicant was D3. We shall refer to them as such in this judgment. D1 and D3 were each sentenced to four years on the first conspiracy charge and they were each sentenced to four years on the second conspiracy charge. However as regards D1, one year of the second four years was ordered to be consecutive to the first four years. As regards D3 six months of the four years on the second conspiracy charge was ordered to be consecutive to the first four years. Each now appeals against sentence.

The trial judge said when sentencing:

	"The first conspiracy involved D1 and D3, and ran from February of 1994 to August of 1994. There was an agreement to defraud Delta Asia. Bogus security deposit forms were prepared showing deposits of shares to the accounts of the bogus account holders, who had been recruited by the 1st defendant. It involved a total of some 156,000 share certificates. The share certificates were either non-existent or held by individuals unrelated to the accused or Delta Asia. A corresponding number of shares were sold in advance through Hong Kong Securities Clearing. Sale proceeds were obtained by cheque issued by Delta Asia and they were then handed to the 1st or 3rd defendants, or put into their bank accounts. The transactions were not authorised by Delta Asia and the transactions could not have been done without the cooperation of the two accused.
	In respect of the second conspiracy, from July 1994 to January 1995, the three defendants entered into another agreement to defraud Delta Asia. The 1st defendant prepared and the 2nd and 3rd defendant countersigned eight stock withdrawal forms. They were submitted to Hong Kong Securities Clearing to authorise the withdrawal of shares. 85,400 shares of Hang Seng Bank, Hongkong Shanghai Bank and Cheung Kong, which were held in CCASS for Delta Asia, were withdrawn and sold. The proceeds went to the 1st and 3rd defendant's bank accounts. The 2nd defendant had actually created a special account in the computer system of Delta Asia to keep the false accounts and to enable him to balance deposit and withdrawal figures in relation to this scheme. The 2nd defendant obtained $60,000 from the 1st defendant for his participation in the scheme.
	The total value of the shares lost as a result of the fraudulent transactions was $11,971,599. It is not clear from the facts how much of this was actually obtained in cash by the defendants."

2. The trial judge then went on to make general comments on the matters that had been argued before her particularly the matters that were referred to in mitigation. She said:

"In mitigation in respect of the 1st defendant, I am advised that she lost share certificates - how or why is not explained - and that on the instructions of the 2nd defendant, she planned to cover up the losses. I should point out that I do not accept that this is the way things happened; I take D1 as the instigator of these offences. That is not to say that she could have committed all these offences without the active and wholehearted assistance of the 2nd and 3rd defendants. I am asked to take into account her plea of guilty and the fact that she offered to give evidence to the Crown against the 2nd defendant."

She then turned to the 3rd defendant:

	"The 3rd defendant's culpability is slightly less than that of the other two. However, that is not saying very much. He was an active and willing participant in both conspiracies, and although he may have been equal in position to D1 and subordinate in position to D2, he was in a position of trust and should have gone and reported any matters of this nature to his employers and his superior.
	In assessing sentence I note the following: that these were very substantial conspiracies resulting in losses to the owners - and ultimately Delta Asia - of shares to the value of $11 million, nearly $12 million. It appears that none or a very small amount of this money can be recovered."

She went on:

	"The defendants have, to a certain extent, tried to blame one another as organisers and beneficiaries to make their own position look better. As I said, I find it difficult to believe that the 1st defendant started the scheme simply to cover up share certificates that had been lost. It is highly probable that any loss was actually caused by illicit speculation resulting in loss. Accordingly, I accept D1 as the main organiser initially and that the 2nd and 3rd defendants joined in when they realised what profits could result.
	All the defendants have clear records but that is of limited benefit to them. The nature of these offences is such that those perpetrating them would not be in a position to do so if they did not have clear records. Delta Asia appears to have had in place an adequate system of checks. What appears to have been overlooked by Delta Asia is the possibility of all parties involved in the signing and countersigning procedures being involved in agreements to defraud the company, as in fact happened.
	No doubt the commercial reputation of Delta Asia, not to mention its fiscal well-being, has been severely damaged by these defendants. Clients are unlikely to be attracted to a company where the manager and supervisors are actively trading in fraudulent accounts for their own benefit.
	In respect of these offences, I take a starting point of 6 years. I give all the defendants credit for their pleas of guilty and consider that is the only mitigation that is really valid in this case."

The judge then went on to sentence as I have already indicated.

3. D1, who is represented today by Mr. Lambert Lee, who also appeared below, argues in the first ground that the judge in imposing sentence failed to attach sufficient weight to the plea of guilty, the fact that she had surrendered to the police and the fact that she gave a statement and offered to give evidence against the 2nd defendant. It is not correct to suggest that a full one-third discount, which is all she was entitled to, was not given for the plea of guilty. The submission that an early plea can at times attract a greater than one-third discount without more is wrong. She was entitled to a one-third discount for her plea and she obtained it. It is submitted that she should be entitled to a further discount because she surrendered to the police. The judge did not think so nor do we. She surrendered after having absconded and lived in Taiwan for about a year. The suggestion that her surrender somehow indicated real remorse on her part is not one which impressed the sentencing judge nor does it impress us. The offer to give evidence, if it had impelled the 2nd defendant to plead, might well have redounded in her favour but the judge, having heard all the matters that were placed before her, rejected this suggestion and we are not in a position to say that she was wrong in so doing.

4. The second ground of appeal was not pursued.

5. In the third ground of appeal it was suggested that the judge was wrong "to allow a disparity of sentence between the appellant" and her co-accused upon the following "unfounded reasons" namely:

(i) that D1 was the instigator of the offences;

(ii) that the "cause of the misfortune" was illicit speculation resulting in loss;

(iii) that D1 had received the proceeds of the offences.

6. We can shortly dismissed the third of those matters because it was an admitted fact that she and D3 had received the proceeds of the offences. Although it must be said it was not admitted exactly how much he had obtained.

7. We turn to (i). The prosecution contended that it is clearly indicated in the admitted facts that she was the instigator of the offences. It was her mitigation that she had lost share certificates, that she had reported the loss to her superior and that her superior, D2, had concocted a scheme not to deal with the matter by reporting the loss but to somehow try to realise their value by a complicated, fraudulent and totally unnecessary manoeuvre. This court has held that if it is satisfied that matters advanced in mitigation are manifestly false or wholly implausible the judge can dismiss them without a Newton inquiry. We have no hesitation in saying that the trial judge was entitled to dismiss the mitigation advanced as it was plainly both manifestly false and wholly implausible.

8. Having refused to accept that mitigation the judge was left with the admitted facts which strongly indicated that the applicant was the instigator of the offences and she was entitled to deal with the matter as she did.

9. The observation of the trial judge, (iii) above, that it is "highly probable that any loss was actually caused by illicit speculation" was no more than an observation. It did not play any part in the assessment of sentence.

10. The fourth ground is that the judge failed to consider that the two conspiracy charges were part and partial of a scheme of fraud. We are not quite sure what is meant by this. It is true that they were part and partial of a general scheme of fraud but they were individual separate offences. In each a different modus operandi was used. In each a distinct amount was fraudulently obtained. The trial judge was quite right in our view to deal with them as separate offences and to impose consecutive sentences.

11. Nothing has been advanced on behalf of D1 which gives us any cause to think that the sentences were either wrong in principle or manifestly excessive. We therefore reject the application.

12. We turn now to the application of D3.

13. The Perfected Grounds of Appeal suggest that the judge erred in taking six years as the starting point for sentence in respect of the two charges and that the totality of 4 1/2 years was excessive. When arguing that the judge was wrong in taking that starting point, Mr. Dominic Yeung, who appears for D3, suggests that the judge was wrong to have proceeded upon the basis that "nearly $12m" was the amount involved in the two conspiracy charges. He appeared to be suggesting that, at least in the first conspiracy, only "shares" had been obtained and not money and to be further suggesting that some at least of the shares had been replaced. We reject these suggestions. There is nothing in the admitted facts that would give any countenance to them. We rely upon the admitted facts as did the trial judge which clearly admit that pursuant to each conspiracy shares were obtained and sold and that the proceeds of those sales were either handed to D1 and D3 or deposited into their bank accounts. It was further admitted that the "total value of the shares involved in these transactions amounted to $11,971,599".

14. The starting point of the judge, given the seriousness of these offences which involved a gross breach of trust on the part of each defendant was in our view a proper one.

15. The only other matter is totality. We have already, when dealing with the application of D1, dealt with the question of totality. These were separate offences. Separate sentences were properly imposed and D3 was, in our view, fortunate that only six months were made consecutive.

16. The application of D3is also refused.

(N.P. Power)	(Simon Mayo)	(M. Saied)
Ag. Chief Judge, High Court	Justice of Appeal	Judge of the Court of First
		Instance of the High Court

Representation:

Ms. Shine, S.G.C. (D.P.P.) for the Respondent.

Mr. Lambert Lee assigned by D.L.A. for the 1st Applicant.

Mr. Dominic Yeung instructed by Messrs. Ford, Kwan & Co. for the 2nd Applicant (D3).