HKSAR v. Chu Lai Sze

HCMA527/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO. 527 OF 2010

(ON APPEAL FROM ESCC 119 OF 2010)

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Before : Hon McMahon J in Court

Date of Hearing : 19 October 2010

Dates of Judgment : 25 October and 15 November 2010

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J U D G M E N T

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1.The appellant was convicted by Mr Mierczak at Eastern Magistracy on her own plea of an offence of Forgery, contrary to section 71 of the Crimes Ordinance, Cap. 200. She was sentenced to four months’ imprisonment and now appeals that sentence.

2.The appellant at the time of the offence was an assistant financial services manager at Dah Sing Bank.

3.A customer of the bank had purchased Lehmann Brothers Minibonds on a previous occasion through the appellant.  On the present occasion the same customer verbally agreed with the appellant to purchase $200,000 of a subsequent series of the minibonds but had inadvertently not signed the documentation required to complete the transaction.

4.On 30 April 2008 when she realised the omission the appellant took it upon herself to forge the customer’s signature upon those documents, and $200,000 was then subsequently debited from the customer’s account with the bank.

5.In September 2008, at the early stages of what was to be a global economic recession Lehmann Brothers collapsed.  Its minibonds were effectively worthless.  The customer we are concerned with lost her investment so far as the earlier series of minibonds she had purchased were concerned, but had her $200,000 “investment” in the bonds the subject of the offence returned to her after she discovered the appellant had forged her signature on the bank documentation and complained to the bank’s management.

6.Accordingly, for the charged transaction no loss was suffered by the customer.

7.The grounds of appeal advanced by Mr Thomas Iu, Mr Chan Wai Ming and Ms Adgie Chan for the appellant are as follows :

“… the Magistrate:-

“(i) wrongly took into account that the Appellant had committed a breach of trust, which caused damage to the reputation of the Dah Sing Bank and Hong Kong as a commercial city;

(ii) did not fully consider the following special and/or exceptional circumstances of the case :

(a) the purchase of Minibond Series 36 had been done with the full consent and knowledge of the victim;

(b) the Appellant committed the current offence out of folly or laziness rather than a fraudulent or deceitful attempt to deceive the victim or the Dah Sing Bank;

(c) the Appellant had no personal gain by committing the offence;

(d)     good personal background of the Appellant.”

8.Those grounds can conveniently be dealt with together.

9.The magistrate in his reasons for sentence said :

“ It was clearly to my mind a breach of trust situation. The appellant’s supervisors had been induced to accept the documents as genuine. The appellant had presented the documents to her supervisor, as genuine.”

10.The argument advanced on behalf of the appellant is that there was no loss intended to be suffered by either the customer or by Dah Sing Bank and that the customer had obviously approved of and accepted the transaction prior to the collapse of Lehmann Brothers as she had been provided with, and accepted without complaint, regular interest payments and statements of account relating to the minibonds between the time of the agreement to purchase the minibonds in April 2008 and the demise of Lehmann Brothers and their minibonds in September 2008.  Nor was there any financial gain achieved or intended by the appellant, her reason for committing the offence being said to be “laziness, convenience and foolishness”.  In those circumstances it is argued that the breach of trust was “technical” at most.

11.It is also said that the magistrate was wrong to consider that the appellant’s acts had caused damage to the reputation of the bank and to Hong Kong as a commercial city.

12.Ms Irene Poon for the respondent argues on the other hand that a loss was occasioned to the bank at the end of the day as it returned the customer’s $200,000 in circumstances where, if the documents had been properly signed, it would not have needed to do so.

13.She argues that in any event the bank at the end of the day had been provided with a forged contract for the purchase of minibonds by the customer, and the practical reality was that the bank would have difficulty in enforcing that contract.  It is clear to me that the bank’s interest in the contract had been prejudiced and that is borne out by the fact that upon discovering the forgery the bank, upon the request of the customer, returned her $200,000 to her.

14.Regardless of the complicating factor of the global banking crises, the collapse of Lehmann Brothers and the problems (at least in Hong Kong) associated with the sale of their minibonds, the Dah Sing Bank’s interest in this particular transaction was potentially and, as events transpired, materially prejudiced by the action of the appellant in forging the customer’s signature on the four documents evidencing the transaction.

15.But that is not the end of the matter.  It is no doubt true, and is not disputed by the respondent, that the appellant had no intention of causing any loss either to the bank or the customer.  Her actions were not designed to bring any benefit or advantage to herself.  She had already provided the bank with notice of her intention to terminate her employment and so was not attempting to improve her career prospects (or avoid any harm to those prospects).  She was not working on commission.

16.Her actions, it is not disputed, were caused by an approaching deadline after which the minibond offer to customers of Dah Sing Bank would expire.  That deadline was Friday, 2 May 2008.  As I say, the appellant had met with the customer on 30 April.  The Thursday, 1 May was a public holiday.

17.The meeting with the customer on 30 April had been unremarkable in the sense that the customer had left the meeting on the understanding that she had purchased another $200,000 of minibonds.  The customer’s satisfaction with the transaction was evidenced by her acceptance of interest payments from the minibonds over the ensueing months.  It was only after the collapse of Lehmann Brothers some five months later that the customer then seized upon the forged signature on the documents evidencing the transaction so as to be able to repudiate it.

18.The appellant’s forgery of the documents came about, and this also is not challenged, because she had, during the meeting of 30 April, simply forgotten to have the customer sign some documentation required for the sale of the minibonds.  Her act of forging the customer’s signature was one of expedience.  It seems certain to me that had she remembered to ask the customer to sign the documents, the customer would have done so.  The appellant’s actions, I am satisfied, were designed to give effect to the agreement which had been arrived at with the customer before the date of expiry of the offer.

19.Mr Iu correctly described his client’s actions as stemming from folly or laziness.

20.In R. v. Barrick [1995] 81 Cr. App. R. 78, a case concerned with the sentencing of a defendant who had been employed as a manager of a small finance company and who had, by a mixture of false accounting and theft, stolen from it the then equivalent of HK$100,000.  The Court of Appeal said (per Lord Lane CJ) :

“ This case provides us with an opportunity to make some observations upon the proper sentence to be passed in respect of certain types of theft and fraud as to which there has been recently some divergence of opinion.

The type of case with which we are concerned is where a person in a position of trust, for example, an accountant, solicitor, bank employee or postman, has used that privileged and trusted position to defraud his partners or clients or employers or the general public of sizeable sums of money.  He will usually, as in this case, be a person of hitherto impeccable character.  It is practically certain, again as in this case, that he will never offend again and, in the nature of things, he will never again in his life be able to secure similar employment with all that that means in the shape of disgrace for himself and hardship for himself and also his family.”  [emphasis added]

and arrived at the principle repeated on a number of occasions in courts in this jurisdiction to the effect that :

“ In general a term of immediate imprisonment is inevitable, save in very exceptional circumstances or where the amount of money obtained is small. …”

21.It seems to me that the comments of the court were intended to apply to cases containing elements of misappropriation or fraud or other commercial dishonesty, in circumstances where there is a recognition by the offender that his actions will risk or cause some form of economic or other prejudice to the individual or corporate entity with which he stands in a fiduciary relationship.

22.In the unusual circumstances of the present case, I am satisfied that there was no intention, and very likely no recognition by the appellant, that her action would compromise the interests either of the Dah Sing Bank or of its customer.  In that sense I agree with Mr Iu, even though as events transpired the collapse of Lehmann Brothers triggered the uncovering of the forgeries, that the appellant’s breach of trust (if that be the correct description) was outside the principle expressed in Barrick and that that principle need not apply.  On that basis it seems to me that an immediate custodial sentence is not necessary. 

23.I might add that even were I to have approached this case on the basis of that principle, I would have found that there were such exceptional circumstances contained in the facts of this case so as to render an immediate custodial sentence in any event unnecessary.

24.That leaves the question as to what sentence is appropriate.

25.I agree with Ms Poon that an element of deterrence must be incorporated in the appellant’s sentence because it is important that standards within Hong Kong’s banking system be maintained.

26.In the circumstances of the present case I am of the view that a community service order provides a sufficient element of deterrence. 

[Following the provision of a favourable probation officer’s report, the court continued.]

27.I am in receipt of the probation officer’s report to the effect that the appellant is suitable for such an order and that there is a place available for her in the work programme.  For that reason I order that the appellant be ordered to perform community services for a period of 200 hours pursuant to section 4 of the Community Services Order Ordinance, the terms of section 6, section 8 and section 9 of the Ordinance having been explained to the appellant.  The appeal is allowed to that extent.

Ms Irene Poon, SPP of Department of Justice, for HKSAR

Mr Thomas IU, Mr Chan Wai Ming and Ms Adgie N.K. Chan, instructed by Messrs Li, Wong, Lam & W.I. Cheung, for the Appellant