HKSAR v. Hui Po Keung and Another

CACC 240/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 240 OF 2011

(ON APPEAL FROM HCCC 40 OF 2011)

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BETWEEN

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Before : Hon Stock VP, Lunn JA and Beeson J in Court

Date of Hearing : 12 October 2012

Date of Judgment : 29 November 2012

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J U D G M E N T

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Hon Lunn JA (giving the judgment of the court) :

1.The 1st applicant seeks leave to appeal against his conviction on 2 June 2011 after trial by Deputy High Court Judge Andrew Chan, as he was then, and a jury of 14 counts of fraud, contrary to section 16 A of the Theft Ordinance, Cap. 210 and the total sentence of 7 years and 3 months’ imprisonment imposed upon him in consequence of those convictions. Having abandoned his application for leave to appeal against his convictions, the 2nd applicant seeks leave to appeal against the total sentence of 8 years and 3 months’ imprisonment imposed upon him in consequence of his convictions on the same 14 counts of fraud, on which he had stood trial jointly with the 1st applicant.

THE TRIAL

2.The corporate background, family relationships, banking transactions and the fund flow were the subject of admitted facts.  The 2nd applicant and the 3rd defendant at trial, Madam Ho Wai Ching, are husband and wife and the only directors and shareholders of Cyberspeed Technology Company Limited (“Cyberspeed”), which was incorporated in August 2000.  It engaged in the business of buying and selling computers and computer accessories.  Similarly, the 2nd applicant and 3rd defendant were the directors and shareholders of Cyberspeed Services Limited (“Cyberspeed Services”).  The elder sister of the 3rd defendant at trial is married to the 1st applicant.  The 1st applicant was one of two directors and the majority shareholder of Ming Fai Production Company Limited (“Ming Fai”), which was incorporated in September 2001.  It engaged in trading and manufacturing.  Sofmap Company Limited (“Sofmap”) and Global Gain Properties Limited, (“Global Gain”) were companies controlled by the 2nd applicant and 3rd defendant.

3.On various dates in the period 2 January to 9 July 2007, on the application of Cyberspeed on 301 occasions to 14 banks, ‘invoice financing’ to a total of just over $153 million was granted to Cyberspeed.  Those monies, less bank fees, were paid to the bank accounts of Ming Fai to which, after deducting a commission of 0.2% of the value of the transaction, were transferred at the direction of the 2nd applicant.  Over $36 million was transferred from Ming Fai’s bank accounts to a bank account of Sofmap, whilst a little less than $36 million was transferred to Cyberspeed.  Over $96 million was transferred from Ming Fai’s bank account to Global Gain.  Over $17 million was transferred from Ming Fai’s bank account to Cyberspeed Services bank account.

The prosecution case

4.The prosecution case was that to the knowledge of the 1st and 2nd applicants and the 3rd defendant there were no goods involved in the supposed sale of computers by Ming Fai to Cyberspeed, as represented to the banks in the documentation, in particular invoices of Ming Fai, presented to the banks in order to obtain invoice financing from the banks.

5.The prosecution case against the 1st applicant was that he agreed to the use of Ming Fai in the scheme, in particular the use of invoices apparently evidencing the sale of computers to Cyberspeed knowing that there were no genuine goods so that the documentation was false and that it was being used dishonestly by the 2nd applicant to obtain money from the banks by way of invoice financing.

6.The prosecution case against the 2nd applicant was that he was the mastermind behind the scheme in which false purchase orders from Cyberspeed and invoices from Ming Fai were created and presented to the banks, falsely representing the sale of computers between them when there were no such goods, in order to obtain invoice financing dishonestly.

The defence case

7.The 1st applicant did not give or call any evidence.  The 2nd applicant gave evidence and called a witness who spoke to the movement of computers in and out of a warehouse used by Cyberspeed.  The 2nd applicant said that there were genuine goods involved.  Sofmap purchased computers from the Mainland, which it provided to Cyberspeed.  Nominating Sofmap to the banks as a supplier for purposes of borrowing monies by invoice financing would create difficulties and delays.  So, the 2nd applicant approached the 1st applicant, who agreed to act as a middleman between Cyberspeed and Sofmap for a 0.2% commission on the value of the goods transacted.

8.In his out-of-court statements to the police, the 1st applicant said that he participated in the agreement with the 2nd applicant because he believed that there were genuine goods involved.  He trusted the 2nd applicant.  He did not know that the 2nd applicant was an owner of Sofmap.

The 1st applicant’s grounds of appeal against conviction

Ground 1

9.By ground 1, Mr. Lok SC submitted that the judge failed to give the jury a full and proper direction as to the relevance of the 1st applicant’s good character in respect of their consideration of his out-of-court statements.

Ground 2

10.By ground 2, it was contended that the judge had failed to give the jury a fair and balanced summing up :

(i) Firstly, the judge failed to direct the jury that even if they found the 2nd applicant guilty of fraud there was a probability that the 1st applicant had been misled by the 2nd applicant into believing that the trading, the subject of the particular charge, was in genuine goods.

(ii) Secondly, in directing the jury that, in considering the case of the 1st applicant, they were entitled to have regard to the evidence of the 2nd applicant, the judge failed to give any or any proper direction as to how the jury should deal with inconsistencies between the out-of-court statements of the 1st applicant and the evidence of the 2nd applicant.

(iii) Thirdly, in summing up the evidence to the jury, having described the prosecution case in detail the judge failed to give the jury a full and balanced summary of the exculpatory parts of the out-of-court statements of the 1st applicant.

(iv) Fourthly, the judge erred in using the 1st applicant as an example of how a person could be culpable of fraud, even if he had acted through the innocent agency of another.

Grounds 3 and 4

11.By grounds 3 and 4, it was submitted that in the course of the trial the judge had unfairly intervened and interrupted the examination of witnesses, thereby evidencing a bias against the case of the defendants at trial.  It was contended that the judge not only intervened to assist counsel for the prosecution in the examination-in-chief of Ms Tung Kwai Chun but also interrupted the cross-examination conducted on the behalf of the 1st applicant.  It was contended that the judge conducted himself in a similar fashion in the cross-examination of the 2nd applicant by counsel for the 1st applicant and the subsequent cross-examination conducted on behalf of the prosecution of the 2nd applicant.  Then, it was suggested that the interventions by the judge in the course of the closing speeches made on behalf of the 1st and 2nd applicants were unjustified and unfair, in particular in the case of the 2nd applicant.  It was contended that, in consequence, there was a real likelihood that the jury were led into disbelieving the testimony of the 2nd applicant to the detriment of the case of the 1st applicant, who placed reliance on his testimony.

A consideration of the submissions

Ground 1 : the good character direction in respect of out-of-court statements

12.In his original directions to the jury in respect of the good character of the three defendants at trial, namely arising from the fact that they had no previous criminal convictions, the judge directed the jury that it was relevant to the issue of propensity in each of their cases.  By contrast, his original direction in respect of credibility was limited specifically to the jury’s consideration of the case against the 2nd applicant, on the basis that he alone of the defendants at trial had given evidence.

13.There is no dispute that the judge was in error in limiting the direction in respect of the credibility limb to the 2nd applicant and, in particular, not directing the jury specifically that it applied to their consideration of the out-of-court statements of the 1st applicant [see the judgment of this court in HKSAR v Soo Chun Sou, Dominic (unreported; CACC 262/2008-20 January 2010, at page 7 F - L, paragraph 14), following  R v Aziz [1996] 1 AC 41, at page 52 C - F].

14.The judge had given the jury the standard direction contained in the Specimen Directions issued by the Judicial Studies Board in respect of their approach to the ‘mixed’ out-of-court statements of the 1st applicant, namely (appeal bundle, page 107 T - 108 C) :

“ You must consider the whole of the statement in deciding where the truth lies. You may feel that the incriminating parts are likely to be true, for why else would he have made them? You may feel that there is less weight to be attached to his explanations, for they were not made on oath and have not been repeated on oath and have not been tested by cross-examination.”

15.The summing up began on the morning of 30 May 2011 and, after an adjournment overnight, resumed on the following morning, the jury retiring at about 10:20 a.m.  Jury deliberations continued throughout the day and, after further directions in response to jury questions at about 7:30 p.m., the jury retired for the night shortly after 8 p.m.  At the outset of proceedings on the following morning, 1 June 2011, in the absence of the jury, counsel for the 1st applicant drew to the attention of the judge his failure to give the credibility direction in respect of the jury’s consideration of the 1st applicant out-of-court statements.

16.In due course, the judge re-directed the jury in the following terms (appeal bundle, page 123 I - L) :

“ Although the 1st defendant has chosen not to give evidence before you, he did, as you know, give explanations to the police. In considering those explanations and what weight you should attach to them, you should bear in mind that those explanations were made by a person of good character. Take that into account when deciding whether you can believe those explanations, right?”

17.That was the direction that the judge had informed counsel he proposed to deliver prior to the jury returning to the court room.  He did not accede to the suggestion made on behalf of the 1st applicant that the direction be amplified, so that in addition the jury was directed that the applicant, being of good character, his out-of-court statements were “more likely to be truthful”.

18.Clearly, the judge’s further direction to the jury was taken from Specimen Directions 37.3 of the Specimen Directions of the Judicial Studies Board.  The notes to that Specimen Direction suggest that such a direction is appropriate in circumstances where, “...a defendant has not given evidence, but has e.g. made a statement to the police or has answered questions in an interview”.  Obviously, the effect of the direction is to direct the jury to have regard to the applicant’s good character in considering his credibility in respect of his out-of-court explanations.  No further direction was required.

19.Obviously, it would have been better if the judge had given that direction to the jury at the outset, as he ought to have done.  However, at the behest of counsel for the applicant the judge put right his omission.  Thereafter, the jury continued their deliberations for the rest of the day until the jury returned their verdicts at about 6 p.m.  There is no merit in this ground of appeal.

Ground 2

As to (i) : failure to direct the jury that there was a probability that the 1st applicant had been misled by the 2nd applicant into believing that there were genuine goods

20.At an early stage of the summing up the judge reminded the jury of the common issue taken by all three defendants at trial, namely that there were genuine goods involved in the transactions (appeal bundle, page 57 K - M).  In respect of the applicant, the judge went on to say that, in addition to that primary defence, the applicant asserted that he had no knowledge that the transactions did not involve genuine goods :

“ For D1, it was further suggested that he did not know that these transactions involved no genuine goods, that he did not act dishonestly and that he was no more than a middleman making small percentage of profit in these transactions. He also had no intention to defraud any banks.”

21.There was no dispute that the applicant had become involved in the transactions, including those the subject of the charges, at the initial invitation of the 2nd applicant to play the role of a middleman.  Further, that it was the 2nd applicant who had provided him with information as to the nature and scheme of the transactions.

22.Later in the summing up, the judge returned to the nature of the defence advanced by the 1st applicant (appeal bundle, page 106 A - C) :

“ D1’s case is that he did not know that there existed no genuine goods, nor did he know that D2 would use these invoices to defraud banks. On the contrary, he thought there were goods. He said so in his video interview.”

23.The judge repeated the assertion in respect of the 1st applicant’s belief in the existence of goods and the degree of trust that he reposed in the 2nd applicant when enumerating the explanations relied upon by the applicant in his out-of-court statements (appeal bundle, page 108 G - H).  Furthermore, the judge referred specifically to a point made in the closing speech of the 1st applicant’s counsel as to whether or not the applicant would have been “a knowing and major player in this fraudulent scheme” for a remuneration of only 0.2% of the value of the goods transacted (appeal bundle, page 109 C - F).

24.The judge reminded the jury of the 2nd applicant’s evidence and that of a witness called in his case, Choi Lin Wan, to the effect that there were genuine goods and that those goods were delivered to the latter’s warehouse in Kwai Chung (appeal bundle, page 93 R - 98 R).  Of that evidence the judge said (appeal bundle, page 61 G - I):

“ But even if you entirely reject the account put forward by the defence, that does not relieve the prosecution of their burden of making you sure, by evidence, of each of the defendant’s guilt in respect of each charge which you have to consider.”

25.Relevant to that direction to the jury was the standard direction the judge gave, namely that a determination that one of the defendants was guilty, “...does not mean that you must, therefore, find the other defendant to be guilty” (appeal bundle, page 59 N - O).

26.We are satisfied that the judge brought home to the jury this aspect of the 1st applicant’s defence, namely that he believed the 2nd applicant, in particular that there were real goods involved in the transactions.

As to (ii) : inconsistencies between the 1st applicant’s out-of-court statements and the evidence on the 2nd applicant

27.There is no dispute that the overall tenor of the evidence of the 2nd applicant was favourable to the 1st applicant.  As a consequence, the judge directed the jury that the 1st applicant and the 3rd defendant were entitled to rely on that evidence (appeal bundle, page 61 O - Q) :

“ ...which affects their case, their role and duty which are relevant to all the charges they are facing and to their knowledge, or lack of it, as to the existence of any genuine goods and any invoice financing applications made by D2.”

28.Later, the judge reminded the jury of the 2nd applicant’s evidence of discussions with the 1st applicant relevant to those issues, in particular (appeal bundle page 95 S - U):

“ …according to D2, he never told D1 details of any financial arrangements. The term ‘invoice financing’ was also not used. According to D2, D1 told him words to the effect that the transactions better be genuine.”

29.Nevertheless, the judge also drew the jury’s attention to the difference between the testimony of the 2nd applicant and the out-of-court statements made by the 1st applicant as to his lack of knowledge of the ownership of Sofmap (appeal bundle, page 108 M - P) :

“ D1’s lack of knowledge of the ownership of Sofmap in his video interviews is contradicted by D2’s evidence in court. If you remember D2’s evidence in court, he said he told D1 that one of his wholesale companies would supply goods to D1’s independent company and D2 said, after a few transactions, D1 should have realised Sofmap was one of his companies.”

30.As part of a balanced and fair summing up the judge was entitled to draw to the attention of the jury the fact that in one respect the testimony of the 2nd applicant, otherwise favourable to the 1st applicant, contradicted the 1st applicant’s assertion that he lacked knowledge that Sofmap was one of the 2nd applicant’s companies.  Similarly, the judge was entitled to direct the jury, as he did, that they might feel that less weight was to be attached to exculpatory out-of-court statements than the incriminating parts, “...for they were not made on oath, have not been repeated on oath and have not been tested by cross-examination”.

31.It is to be noted, that very soon after having drawn the jury’s attention to that matter, the judge went on to address the fact that Ming Fai had done renovation work for Sofmap (appeal bundle, page 109 G - I) :

“ Counsel for D1 also points out you that even if Ming Fai had done renovation work for Sofmap, D1, being the boss, might not have been aware of the ownership of Sofmap. After all, the receipt, sent to Sofmap was not signed by D1. You remember the receipt?”

As to (iii) : the exculpatory parts of the applicant’s out-of-court statements

32.In his summing up the judge identified succinctly the out-of-court statements made by the 1st applicant that were, on the one hand, incriminating and, on the other hand, exculpatory (appeal bundle, page 108 D - I) :

“ The incriminating parts, among others, include : (1) D1’s agreement to use Ming Fai as a middleman, (2) Ming Fai’s participation in issuing cheques to Sofmap, (3) Ming Fai have only one purchaser, one supplier, (4) Ming Fai’s non-involvement in delivery and collections, etc.

On the other hand, explanations given by D1 include : (1) his belief concerning the existence of genuine goods, (2) his lack of knowledge on the ownership of Sofmap, (3) his lack of knowledge on bank dealings, (4) his trust on D2, etc.”

33.Having identified the significant issues that arose in the 1st applicant’s out-of-court statements, the judge went on to invite the jury, “...to look at what D1 said in those three interviews again” reminding them that, whilst a transcript was available, the tape recording was the primary source of evidence.

34.In a lengthy closing speech, counsel for the prosecution addressed the jury only briefly in respect of the out-of-court statements of the 1st applicant.   He drew their attention to three matters only : first, the 1st applicant’s denial of knowledge about Sofmap; secondly, the 1st applicant’s assertion that the 2nd defendant told him that it wasn’t convenient for Cyberspeed to buy directly from Sofmap; and thirdly, the 1st applicant’s assertion that he knew only that the monies paid to Ming Fai were borrowed monies, but no more (appeal bundle, pages 1510 F - 1511 K).

35.By contrast, counsel for the 1st applicant addressed the jury in some detail and at length in respect of the exculpatory parts of the 1st applicant’s out-of-court statements (appeal bundle pages 1302 A - 1309 P). Nevertheless, it is clear that the topics that she addressed were those described succinctly in the judge’s summing up to the jury, cited earlier.

36.It was not necessary for the judge to repeat the passages read out at length by counsel in her closing speech.  The jury was better assisted by the real issues being identified, as they were, by the judge.

As to (iv) : reference to the 1st applicant in an example of fraudulent conduct through an innocent agent

37.Having directed the jury that a person can act jointly with another in conduct amounting to a criminal offence, even if the person with whom he was acting did so innocently, the judge said that he would give the jury a “scenario” to illustrate the point.  In doing so, he said that if the 1st applicant had instructed Ms Garfield Tung to transfer monies from Ming Fai’s bank account to that of companies owned by the 2nd applicant, albeit that she acted innocently, if all the ingredients of fraud were proved against the 1st applicant, he would be guilty.

38.Whilst, as the respondent suggested, it would have been better if the judge had not taken one of the defendants at trial to illustrate the point, it must have been blindingly obvious to everyone that the judge was merely illustrating a point and nothing more.

Grounds 3 and 4 : judicial intervention

39.As Li CJ noted in the judgment of the majority in the Appellate Committee of the Court of Final Appeal in Chan Kam Keung v HKSAR (2008) 11 HKCFAR 664 (at 669 D - E, paragraph 13) :

“ Assessments of judicial interventions must be made recognizing the court’s duty to exercise proper management of the proceedings in what are often difficult conditions.”

40.Earlier in his judgment, Li CJ cited with approval (page 668 G - J, paragraph 11) a passage from the judgment of this court, differently constituted, in the Queen v Yeung Mau Lam [1991] 2 HKLR 468 at 473, namely :

“ The ultimate question for the consideration of an appellate court is whether the judge’s conduct was such that it would have caused the informed bystander listening to the case to say that the defendant had not had a fair trial.

We think it appropriate also to emphasize that the court, when considering the propriety of interventions by a judge, must bear in mind that it is the judge’s duty throughout to ensure that a trial is properly and coherently conducted.”

41.The issue of the dividing line, between permissible and impermissible judicial intervention, was addressed in the oft-quoted judgment of the Court of Appeal of England and Wales in R v Hulusi 58 Cr. App. R. 378, in which the judgment of Lord Parker’s CJ in R v Hamilton (unreported; 9 June 1969) was cited with approval (page 382) :

“ Of course it has been recognised always that it was wrong for a judge to descend into the arena and give the impression of acting as advocate. Not only is it wrong but very often a judge can do more harm than leaving it to experienced counsel. Whether his interventions in any case give ground for quashing a conviction is not only a matter of degree, but depends to what the interventions are directed and what their effect may be. Interventions to clear up ambiguities, interventions to enable a judge to make certain that he is making accurate note, are of course perfectly justified. But the interventions which give rise to a quashing of the conviction are really threefold; those which invite the jury to disbelieve the evidence for the defence which is put to the jury in such strong terms that it cannot be cured by the common formula that the facts are for the jury and you, the members of the jury, must disregard anything that I, the judge may have said with which you disagree. The second ground giving rise to a quashing the conviction is where the interventions have made it really impossible for counsel for the defence to do his or her duty properly presenting the defence, and thirdly, cases where the interventions have had the effect of preventing the prisoner himself to do himself justice in telling the story in his own way.”

Judicial interruptions of the evidence of the 2nd applicant

42.Of relevance to a consideration of the judicial interruptions of the evidence of the 2nd applicant is the fact that he gave evidence over a period of 4½ hearing days, three of which were days on which he was being cross-examined by the prosecution.  Of all that testimony, Mr. Lok took issue with only eight passages in the transcript.  Most of those interventions were readily explicable, as the judge maintaining proper control of the proceedings.

43.For example, in respect of the issue of the ‘loss’ by the 2nd applicant of his hardcopy business records, including all of those relevant to the impugned transactions, and the unknown whereabouts of the computer version of those records, in cross-examination by the prosecution the 2nd applicant was asked (appeal bundle, page 1193 - 4) when it was that he had moved out of the building in which his companies had their offices.  In face of a non-responsive answer from the 2nd applicant to the question posed by counsel for the prosecution, the judge intervened and reminded the witness of the question :

“ The question is: what date did you move away from Hua Chiao Commercial Centre?”

44.In face of further non-responsive answers from the 2nd applicant, the judge repeated the question, so that in the end the question was posed five times before the 2nd applicant finally said that at the beginning of October he had learned from an employee that the locks to the premises had been changed, but the computer servers and equipment remained on the premises.

45.In the course of cross-examination by counsel for the prosecution (appeal bundle, page 1202 - 3) having said that he had “missed out something earlier” the 2nd applicant volunteered that Ms Ng :

“…would deal with the invoice financing, fax them, would deal with Sofmap things-no, not Sofmap, Cyberspeed.”

46.The judge intervened, clearly to assist the 2nd applicant, reminding him that it had been Ms Ng’s evidence that she merely passed those forms from the office to the bank reminding him

“ She did not do any of those invoice financing, because you remember her evidence: she can’t read and write English.”

47.In the event, the 2nd applicant clearly accepted his error and said :

“ Yes, that’s right. Sorry I remembered it wrongly.”

48.In the face of an answer from the 2nd applicant in cross-examination by counsel for the prosecution (appeal bundle, page 1225 - 6) as to monies available to the 2nd applicant and Cyberspeed, the 2nd applicant gave an answer that the interpreter said that she was unable to understand.  For his part, the judge said, “I don’t think anyone could understand”.  In the event, counsel for the prosecution indicated that he would move on to another topic.  In face of a request by counsel for the 2nd applicant, that the latter be permitted to give his explanation, the judge invited counsel to re-examine on the subject, if he wished.  That he did (appeal bundle, page 1274 - 7).

49.In respect of one of the impugned passages of interventions by the judge of the testimony of the 2nd applicant, the court listened to the audio recording of the proceedings.  Counsel for the prosecution explored with the 2nd applicant how it was that he had come to choose Ming Fai, which company had not previously dealt in computers, to be identified to the lending banks as the supplier of computers to Cyberspeed.  In the face of the 2nd applicant’s answers to counsel for the prosecution, the judge intervened and posed his own questions (appeal bundle, pages 1113 Q - 1114 Q) :

“ Q. You wouldn’t -- you wouldn’t tell the bank Ming Fai was not in that business, Ming Fai was in decoration, would you?

A. I would tell the bank that it was a supplier.

Q. When it wasn’t.

A. To Cyberspeed it was a real supplier.

Q. Because you created him to be.

A. I don’t agree.

Q. I’ll come to the creation...

COURT: Pause. Pause.

Q. ...after lunch.

COURT: That was a -- well, we of course know that you used Cyberspeed to apply for invoice financing in respect of at least 14 banks, right? But when you did the first -- when you, say, applied for the first -- to the first bank, when you made the application to the first bank, Ming Fai which was not a supplier of computers previously was to become a supplier by your creation.

A. I did not create it. After negotiation, we agreed on the selling and buying of computers. It was the result of business negotiation.

COURT: Yes. So to speak, so the birth of Ming Fai as a supplier only started there and then.

A. You mean at the time of the application? My view was -- my view is when we agreed to co-operate, I treated it as a supplier of Cyberspeed at the time when we reached the agreement.

COURT: So if I and you agree tomorrow I would do that, I became a supplier.

A. The same scenario, you mean? 如果我今日係傾 -- 即係同 -- 即係傾 -- 或者生意做，咁就遲啲同你買賣，咁平…

COURT: Yes.

A. “Hai”.

COURT: No, no, no, knowing that I am a judge.

A. (Witness answers in English) Sorry.

COURT: In the same token, as you know, Ming Fai was a decorator and a plastic manufacturer.

A. (Interpreted evidence continues) Yes, I knew...

COURT: So I...

A. ...about the company, he previous...

COURT: Yes. So coming back to my question, then I become one of your suppliers.

A.                 Yes, if you have the goods, you can sell them to me.”

50.It was readily apparent from the audio recording that the judge had dealt with the matter in a measured and low-key fashion.  He did so at a speed that suggested that he was making notes of the issue and verifying his understanding of the applicant’s evidence.  Nowhere, was there any suggestion of sarcasm or disbelief in the tone in which the judge questioned the 2nd applicant.

51.There is no merit in the suggestion that any of the judge’s interventions in the course of the testimony of the 2nd applicant evinced disbelief of his testimony, in particular such that an independent observer would conclude that the applicants were not receiving a fair trial.

Judicial intervention in closing speeches

52.There was no dispute between the parties, nor could there be, that it is undesirable for a judge to interrupt a closing speech of counsel, in particular counsel for the defence.  Of course, mistaken assertions as to the evidence are made from time to time by even the most thorough and well-prepared counsel.  The usual way in which a judge deals with that matter is to wait until the end of that counsel’s speech and, having invited the jury to retire, to confirm with all counsel that the assertion was made in error and then invite counsel to remedy the matter in a short further address to the jury.  Of course, ultimately, if the incorrect assertion is not corrected by counsel, then it falls to the judge to make the correction in his summing up.  Similarly, if counsel for one of the other parties wishes to raise the issue with the judge of an incorrect assertion by another party in the course of a closing speech the same procedure is to be followed, so that the counsel addressing the jury is allowed to finish his address uninterrupted.

53.That the judge was aware of the usual method by which the issue is addressed was evidenced in a statement that he made, in the absence of the jury, to counsel in the course of counsel for the prosecution’s closing speech.  Having apparently raised an issue of controversy in counsel’s speech he said to counsel (appeal bundle, page 1485 T - 1486 A) :

“Court : Just a reminder, if any of you say the other side say the wrong things, etc., quoting wrong facts, etc, then in the absence of the jury you may point that to me, right. Let’s have the jury back, please. So far, this is what I spotted, all right.”

54.Nevertheless, sometimes the error is so egregious, particularly if counsel has strayed into issues of law and stated them incorrectly, that it may be necessary for the judge to intervene whilst the matter is still fresh in the minds of the jury.  In those unusual circumstances, the better course is for the judge to choose a suitable moment in the delivery of counsel’s speech at which to invite the jury to withdraw, informing them of no more than that matters have arisen which he needs to discuss with counsel.  Then, the matter can be discussed between the Bench and Bar and the judge can determine how best to remedy the error.  But the need to make corrections, during a speech will be rare.

Judicial interventions in the closing speech of counsel for the 1st applicant

55.In the course of the closing speech for the 1st applicant, the judge intervened when counsel dealt with the issue of what material it was that the police seized when they obtained a CD-ROM from records kept in Ming Fai’s computer.  Counsel asserted that it represented “all Ming Fai’s records kept in the computer”.  The judge intervened immediately (appeal bundle, pages 1296 - 7) :

“ MS CHEUNG : At this juncture, you may recall that Mr Iu suggested yesterday that the police did not have any documents from Ming Fai for investigation into this case. This is entirely not true, not the real picture. You will remember that on 25 October 2007 the un-notified raid, right? The police had got from Ming Fai’s auditor firm Ming Fai’s financial statements for 2006 and all the green files of Ming Fai between 2001 and 2007. The same day the police raided Ming Fai’s office which was shared with Hing Wai and the police also got a CD ROM of all Ming Fai’s record kept in the computer, that was Exhibit P51. And then, on the next day, 26 October 2007 the police came back to Ming Fai’s auditors and got the auditor’s report for 2004 and 2005 together with all Ming Fai’s vouchers for 2006, and that was Exhibit D1-1. So the police got everything that Ming Fai could have given them.

COURT: I hate to interrupt.

MS CHEUNG: Yes.

COURT: The CD ROM as far as I can remember only have faxes...

MS CHEUNG: Yes, in and out.

COURT: Faxes, yes?

MS CHEUNG: Yes.

COURT: But you say all records. That’s not correct.

MS CHEUNG: All records in the computer so if I may clarify that.

COURT: Right. The CD ROM only contains in and out fax.

MS CHEUNG: Yes.

COURT: Not all records.

MS CHEUNG: No, I mean all records that were stored in the computer at that time. And subsequently we knew that these were...

COURT: Not all records. When you say records...

MS CHEUNG: Stored in the computer.

COURT: ...are you talking transactions?

MS CHEUNG: No.

COURT: So she is not talking transaction records.

MS CHEUNG: No, no. I stand to be corrected. I’ll make it clear. They were Ming Fai’s documents stored in the computer at that time and these documents were fax in and fax out. But you heard Ms Tung tell you that at that time Ming Fai’s records for 2007 were in China and apparently all that the police could get from the Ming Fai office and the auditor’s firms they had that.

COURT: Can I have your last sentence again, please.

MS CHEUNG: Yes. All that, that were on the premises of Ming Fai, at that time, and in the auditor’s firm, they got them.

COURT: All the documents available at Ming Fai’s premises and at the auditor’s office were surrendered to the police.

MS CHEUNG:  Yes, yes.  Put it in that way.”

56.As is obvious from the nature of the subject matter, it was wholly unnecessary for the judge to have interrupted counsel’s speech.  Clearly, it was a matter that could have been dealt with, as suggested earlier, by the judge and counsel at the end of her speech.  Apart from anything else, in intervening at that moment the judge did not have the benefit of the whole of counsel’s speech, in particular whether the matter was to be developed or qualified in any way.

57.Although the judge’s intervention was unnecessary and undesirable, it was not of a nature that undermined or called into question the defence of the 1st applicant.  Plainly, it related to a factual matter of relative insignificance in the overall consideration of the jury.  The judge and counsel were plainly at cross purposes as to what counsel was asserting.  As is apparent from the interchange, counsel sought to place emphasis on the fact that the material was all that was available in the computer that related to Ming Fai, whereas the judge appeared to have understood that counsel was asserting that all Ming Fai’s transaction records had been obtained from the computer.  Clearly, his enquiries were directed at no more than ensuring that he understood correctly the ambit of the assertion.

Interventions in the closing speech of counsel for the 2nd applicant

58.The judge intervened in the course of the closing speech of counsel for the 2nd applicant on a number of occasions.  The first intervention, by way of a challenge to what the judge appeared to understand was the assertion of counsel for the 2nd applicant, served to remind the jury that they were free to determine what evidence to accept and what evidence to reject, including witness statements admitted into evidence under section 65 B of the Criminal Procedure Ordinance.  As was to be expected, that was a direction that the judge gave to the jury subsequently in his summing up (appeal bundle, page 58 N - P).  As is apparent from the transcript (appeal bundle, page 1311 S - 1312 C), counsel for the 2nd applicant readily accepted that to be the case.  He said that his suggestion to the jury was merely that, where evidence was unchallenged between the parties, before the jury rejected such evidence the jury ought to be satisfied that there was a reason for so doing.

59.Clearly, there was no need for the judge to have intervened immediately to deal with the point which, if the judge felt that the matter needed remedying having had the benefit of hearing the whole of counsel’s speech, could have been raised with counsel in the absence of the jury and, in any event, dealt with in the judge’s summing up.

60.Following several other interventions, to ensure that counsel was referring to the exhibit by the correct number or page, the judge intervened in respect of an issue as to the evidential basis for an assertion made by counsel for the 2nd applicant (appeal bundle, page 1316 N - P) :

“ Court: I’m so sorry, Mr Omar. Where is the evidence that between 2004 and 2006 all the money returned to Sofmap. There is no evidence.

Mr Omar: the evidence of the defendant.

Court:  All right, okay.”

61.Subsequently, after the luncheon adjournment, and in the absence of the jury, counsel acknowledged that his earlier assertion was incorrect.

“ MR OMAR: I was saying that earlier on (when) I was addressing the jury that they knew that Ming Fai, prior to October 2006, the money from Ming Fai went back to Sofmap.

COURT: Yes.

MR OMAR:  And your Lordship raised there (that she) asked me - I said from Kenny Leung - that was wrong.  In fact from PW2, Garfield Tung, that was her evidence.”

62.Following an interchange between counsel and the judge, in which they made reference to their respective notes as to the evidence of Ms Garfield Tung, counsel for the applicant accepted as accurate the summary of her evidence as suggested by the judge (appeal bundle, page 1325 P) :

“ COURT: ...she testified to the effect that save and except in some occasions where she was asked to pay money to parties other than Sofmap, most of the monies during that two years went to Sofmap.”

In particular, counsel for the 2nd applicant accepted that he had been wrong to tell the jury that all, rather than most, of the money had gone to Sofmap.

63.Notwithstanding the acknowledgement by counsel for the 2nd applicant to the judge that his statement that all payments made to Ming Fai had been paid to Sofmap was inaccurate, counsel did not correct that inaccuracy in the remainder of his speech.  That was left to the judge in his summing up (appeal bundle, page 74 M - O) :

“ According to PW 2 (Ms Garfield Tung), between 2004 and 2006, apart from Sofmap, payments were also made to other account entities. She asked D1. D1 simply told her to follow D2’s instructions. D2 told her that he would settle the sums with the other party. It was D2 who decided the recipients of those payments.”

64.When counsel for the 2nd applicant resumed his speech, he informed the jury that he proposed looking at the financial status of the 2nd defendant before Ming Fai came into operation. In the course of counsel’s address on that subject, the judge intervened once again (appeal bundle, page 1328 M onwards).

“ MR OMAR: ……..So before Ming Fai came into existence he got cash of $70 million.

COURT: He has cash?

MR OMAR: Or asset because one is investment fund -- it should be cash, hard cash.

COURT: 70 million?

MR OMAR: Yes.

COURT: The fixed deposit plus?

MR OMAR: The fixed deposit plus the down payment.

COURT: All right.

MR OMAR: So you can see that he’s not a man - not without money. The prosecution wish to rely on the fact that he doesn’t have money to purchase property. I’ve said earlier on they’ve got no evidence. If they want to do that they produce evidence to prove it.

COURT: I’m sorry again to interrupt. I don’t think this is the prosecution’s or Mr Iu’s submission. I believe his submission is this, that he had purchased all these properties at the time, and by the time in 2006 the business had gone down, the property market was quiet, the interest rate was going up and, therefore, as a result of that D2 experienced financial difficulties. I believe that’s what he is saying. So he wasn’t saying that in 2004 or 2006 that the defendant had no money.

MR OMAR:  So there is - there is no suggestion - can I understand this correctly because if that’s the prosecution’s case.  It wasn’t the prosecution’s case that there was no money to purchase.  It wasn’t the prosecution case that he used the Ming Fai funds to purchase the property?  If it wasn’t, I accept it.  Tell me - because my understanding was it was a suggestion through this cross-examination 50 million...”  [Italics added.]

65.Whether or not the invitation to be informed as to what was the prosecution’s case was directed at prosecution counsel, the latter chose to reply to counsel for the 2nd applicant’s enquiry.  Regrettably that interchange between counsel occurred before the jury :

“ MR IU: No, no, no. Sorry, what I was saying was - forgive me for interrupting - there was listed by middle 2004, there was a list of property before that time, you’ve covered that. And I was following the property that was purchased from mid 2004 to end of 2006 or somewhere 2005, 2006. That’s all. Those properties were already listed in his statement of affairs and that would cost $170 million in total. One third down payment is 50 million, that’s all.

MR OMAR: I see.

MR IU: That’s all I said.

MR OMAR: Yes but the inference of...

MR IU: Make what you like of it.

MR OMAR: Come on...

MR IU: That’s all I said.

MR OMAR: ...being interrupted in the submission before a jury is my first time.

MR IU:  You want to be educated.”

66.The final remark by counsel for the prosecution was not only rude but entirely uncalled for.  It ought never to have been said, let alone said in front of the jury.

67.Belatedly, the judge interposed between counsel and asked counsel for the 2nd applicant if he wished proceedings to continue in the absence of the jury.  The latter declined the invitation.

“ MR OMAR: I’m sorry. For me to tell the jury I need to know. And, according to the suggestion, the inference - the inference is he’s got no money. That’s why we prepared the submission on that basis. Unless that wasn’t the case - I’m sorry I misunderstood what was being suggested.

COURT: Do you want to speak to me in the absence of the jury?

MR OMAR: No. I will continue, my Lord.

COURT: All right, thank you.

MR OMAR:  I’m sorry, members of the jury, we have this conversation.  Look, as I understand the way the questions were put, it was a suggestion that he has no money.  I don’t know if you - but my impression was that.  But in any event - but in any event it can be shown that he has money so if there is no suggestion that there was no money, then we work on the basis this man has money.”

68.This court has listened to the audio tape of this part of the interchange between the counsel and the judge.  Once again, it is readily apparent that the judge’s tone was measured and considered, conveying an obvious intent to understand the point being made in behalf of the 2nd applicant, lest it be made in error.

69.Having resumed his speech, counsel for the 2nd applicant addressed the evidence of Leung Ping Shun, a bank officer of the Development Bank of Singapore, who had testified that he had told the 2nd applicant and his wife, the 3rd applicant, that the use of related companies was prohibited, namely “notional or nominal suppliers”.  That evidence was challenged by the 2nd and 3rd applicants’ counsel in cross-examination and contradicted by the 2nd applicant in his own testimony.  Again, the judge intervened (appeal bundle, page 1332 N - onwards) :

“ MR OMAR: Now, come PW33, DBS.

MS CHEUNG: 23.

MR OMAR: What went wrong with me. What went wrong when I deal with numbers today? PW23 DBS. I believe he’s the only banker who actually said, “I explained to Kenny Leung and Wendy Ho that we would not allow nominal suppliers, nominal and notional suppliers.” He was the only one. But what is nominal and notional suppliers? He was asked that question. He said “It meant no goods were involved.” Mr Iu suggest to you either he did not remember correctly or he was lying. This case occurred some years ago...

COURT: Mr Iu?

………………………

COURT: You see the banker stated that he informed your client, right? And what Mr Iu suggests is that why would he make up such...

MR OMAR: Exactly. Have I not present it that way?

COURT: No. I don’t think, no. I will repeat.

MR OMAR: No. My fault.

COURT: Why would he make up such a statement or such piece of evidence either he remember incorrectly or...

MR OMAR: Yes.

COURT: Right?

MR OMAR: Or, he lied. Have I not said so, earlier on?

COURT: Carry on.

MR OMAR:  Yes.  So treat what his Lordship has said as my point.”

70.It was at this juncture that counsel for the 2nd applicant asked for, and was granted a short adjournment, “I think I need five minutes, my Lord I’m dropping out.”  Thereafter, he concluded his closing speech with an address of a further 10 minutes.

71.Having perused the transcript carefully and having listened to passages on the audiotape, we are satisfied that the categorisation that the judge’s interventions “led to heated arguments amongst the judge and counsel and counsel for Leung had to calm down for five minutes before he could resume his submissions” is bereft of merit.  The exchanges between counsel for the 2nd applicant and the judge were, as was to be expected, measured and conducted in an appropriately polite manner.  By contrast, counsel for the prosecution at trial indulged in the inappropriate remarks directed at counsel for the 2nd applicant to which we referred earlier.  However, that was but one incident after which the judge had asked counsel for the 2nd applicant whether or not he wished the jury to retire.  He did not.  There is no merit in this ground of appeal.

Conclusion

72.We are satisfied that whilst there is some merit in the last ground of appeal it is not such as to show that the trial was unfair.  Accordingly, we grant the application for leave to appeal against conviction and, treating the hearing of that application as the hearing of the appeal, we dismiss the appeal.

The 1st and 2nd applicants’ application for leave to appeal against sentence

The judge’s reasons for sentence

73.In his reasons for sentence, the judge noted that, “a total of 14 banks have been cheated on 301 occasions”.  Noting that the total amount of the loans involved was $153 million, the judge observed that the loss to the banks had been $21.4 million, of which Citic Ka Wah Bank had lost $6.8 million.

74.Although he stated that he was aware that the counts on indictment did not involve the use of letters of credit, the judge said that he had regard to the factors identified as relevant to sentence in such cases in the judgments of this court in HKSAR v Dai Chi Wai [2011] 4 HKLRD 534; HKSAR v Law Chi Man (CACC 356/2006; unreported, 7 September 2006) and HKSAR v Lee Kwok Yun (CACC 117/2004; unreported, 18 July 2005).  In particular, the judge said that relevant factors included :

“ the amount of the loans, the number of banks, the period, the role of each defendant and the actual loss to the bank.”

75.The judge described the 2nd applicant as the ‘mastermind’ behind the fraudulent scheme and the 1st applicant as having played a lesser role, albeit one that was an “essential and integral” part of the fraudulent scheme. 

76.Of the 2nd applicant’s conduct, the judge said that it was (appeal bundle, page 1016 B - D) :

“ recruiting D1 into the scheme, creating all false documents, negotiating facilities with banks and signing on all individual applications.”

77.Of the 1st applicant’s conduct, the judge noted that he had participated in the scheme for a commission of 0.2% of the value of the goods and said of his conduct:

“ you not only permitted D2 to use your company to manufacture false invoices and purchase orders but also allowed D2 to operate your company’s bank account for transfer of monies. Without your cooperation the scheme could not take off the ground. Your role could, therefore, not be described as unimportant or insignificant.”

Counts 9 and 3

78.Noting that the two greatest losses to banks concerned Citic Ka Wah, $6.8 million, (count 9) and Industrial and Commercial Bank of China, $6.4 million, (count 3), and reflecting the different roles of the applicants, for each of those counts the judge imposed a sentence of 5 years’ imprisonment on the 2nd applicant and 4 years’ imprisonment on the 1st applicant.  In doing so, the judge said that he imposed a lesser sentence on the 1st applicant having regard to the fact that he “benefited less”.

79.Stating that he had regard to the amount of money that had been loaned and lost by the banks in respect of the other charges on the indictment the judge sentenced the 2nd applicant to 4 years’ imprisonment in respect of each of the other counts and the 1st applicant to 3 years’ imprisonment in respect of those counts.

Totality

80.Having regard to totality, the judge ordered that 3 months’ imprisonment of each of the sentences imposed on the 2nd applicant, other than in respect of count 9, be served consecutively to the sentence of five years’ imprisonment imposed in respect of count 9.  Accordingly, the total sentence imposed on the 2nd applicant was 8 years and 3 months’ imprisonment.  The judge made a similar order in respect of the 1st applicant, so that the total sentence of imprisonment imposed on him was 7 years and 3 months.

The 1st applicant’s grounds of appeal against sentence

81.Mr. Lok submitted that in sentencing the 1st applicant to a total sentence of 7 years and 3 months’ imprisonment, the judge had ignored or given inadequate consideration to the evidence that :

(i)      the fraudulent scheme was devised by the 2nd applicant;

(ii)     the 2nd applicant carried out the whole operation, including the transfer of money from Ming Fai’s accounts;

(iii)    the 1st applicant’s participation was not only for monetary gain, given that the applicants were related to one another through marriage; and

(iv)    the applicants had been educated to significantly different levels, the 1st applicant to Form 3 whereas the 2nd applicant held the degree of Master of Business Administration.

82.Finally, Mr. Lok submitted that the distinction the judge drew between the two applicants in the total sentence imposed upon them, namely one year’s imprisonment, was wholly inadequate having regard to their very different roles.  The judge had described the 2nd applicant as the ‘mastermind’ of the fraudulent scheme.  By contrast, it was contended that the 1st applicant was to be regarded as a mere ‘puppet’ of the 2nd applicant.

The 2nd applicant’s grounds of appeal against sentence

83.On behalf of the 2nd applicant, Mr. Eric Kwok S.C. submitted that, in determining the appropriate sentences of imprisonment to be imposed in respect of each of the counts, the judge had erred in failing to take into account the seriousness of the conduct the subject of each of the respective charges, in particular the actual monetary loss to each of the banks.  He invited the court to note that in respect of the counts, other than counts 3 and 9, six of the twelve banks involved suffered no loss, and the greatest loss sustained by any one of the remaining six banks concerned with those counts was a loss of just over $3.2 million.  He submitted that the starting point taken by the judge of 4 years’ imprisonment for each of those counts was manifestly excessive.  Whilst he acknowledged that the loss of the banks concerned with counts 3 and 9 was $6.4 million and $6.8 million respectively, he suggested that the starting point of 5 years’ imprisonment was also manifestly excessive.

84.Furthermore, Mr. Kwok submitted that the judge failed to have regard to the principle of totality of sentence in ordering that 3 months of each of the terms of imprisonment imposed in respect of counts 1 to 8 and 10 to 14 be served consecutively to the sentences of 5 years’ imprisonment imposed in respect of charge 9.

85.Next, it was contended that the judge had erred in not having taken into account the period of delay in prosecuting the case, none of which was the responsibility of the 2nd applicant, who had been arrested on 7 November 2007.  The trial did not commence until 21 March 2011.  The issue of delay in prosecuting the case against the applicants had been raised specifically in mitigation on behalf of the 1st applicant, who had been arrested on 30 October 2007.  Finally, it was submitted that the judge had failed to take into account that the offences were committed over the relatively short period of about 6 months during which period the conduct the subject of different counts had overlapped.

A consideration of the submissions

Delay

86.As it is evident from the undisputed Chronology of Events provided to the court, the applicants were charged only on 6 July 2009 and appeared in the Magistracy on the following day.  On 12 February 2010, the applicants were committed to stand trial in the Court of First Instance.  After two hearings held to list the case for trial were adjourned in March and April 2010, at the request of the applicants, so that they could obtain legal representation, the trial was listed for hearing commencing on 14 October 2010, with 13 days reserved.  Unsurprisingly, given the nature of the case, there then ensued multiple Pre-Trial Reviews.  At the third such hearing, on 22 September 2010, the judge determined that the time reserved for the trial was inadequate and the trial was re-listed to commence on 21 March 2011 with 40 days reserved.  Also, the judge ordered the prosecution to prepare core bundles and fund flowcharts.  At the Pre-Trial Review, on 20 December 2010, those representing the applicant’s indicated that they had no objection to the fund flowcharts.  At the final Pre-Trial Review, on 18 February 2011, the agreement was reached between the parties as to the use of flowcharts in the prosecution opening and as to admitted facts.  The trial commenced on 21 March 2011and concluded on 7 June 2011.

87.As Mr. David Leung for the respondent pointed out the proper context of the delay of just over three years and four months from the time of the arrest of the applicants and the commencement of their trial is the fact that the investigation was concerned with 301 applications to no less than 14 different banks over a period of six months.  An added impediment to the expeditious investigation was the fact that a large part of the related business documentation was not available, the 2nd applicant claiming that it had gone missing.  Further, in proof of the alleged frauds it was necessary for the prosecution to trace the flow of monies.

88.Given the ambit of the investigation, it is wholly unsurprising that following the arrest of the applicants in late October and early November 2007 it was not until early July 2009 that they were charged and brought to court.  Similarly, given that the committal papers comprised 22 box files of which 7,000 pages were exhibits, it is unsurprising that committal did not take place for a further six months.  Although there was a further delay of 13 months before the trial commenced it is apparent from the chronology described earlier that the judge was taking active case-management steps in anticipation of the trial being conducted before the jury.  It is regrettable that in the first place the case was listed with a wholly inaccurate estimate as to its likely length.  It appears that the underestimated length of the trial resulted in the trial being re-fixed for hearing and its commencement being delayed by five months.  In the event, the trial lasted 49 hearing days.

89.In the result, we are satisfied that the delay from the arrest of the applicants to the commencement of the trial was justified in all the circumstances.  The applicants were not entitled to any discount in sentence arising from that delay.

The different sentences imposed on the 1st and 2nd applicants

90.We are satisfied that the judge was correct to distinguish between the 1st and 2nd applicant in the sentences imposed on the individual counts on indictment.  The judge’s categorisation of the 2nd applicant as the mastermind was entirely justified, as was his determination that, nevertheless, the 1st applicant played an essential and integral role in the fraudulent scheme.

Counts 3 and 6

91.Given the aggravating factors in the commission of counts 3 and 6, the judge was entitled to treat those counts as the most serious offences.  In count 3, no fewer than 46 false applications were made to the Industrial and Commercial Bank of China over the period 2 January to 6 July 2007 resulting in total loans of $25,721,989, of which $6,443,718 was lost to the bank.  In count 9, no fewer than 33 false applications were made to Citic Ka Wah Bank over the period 11 January to 5 July 2007 resulting in total loans of $17,518,242, of which $6,804,251 was lost to the bank.  The judge was fully justified in imposing sentences of 5 years’ imprisonment and 4 years’ imprisonment on the 2nd and 1st applicants respectively.

92.In respect of the other twelve counts on the indictment, the judge imposed sentences of 4 years’ imprisonment on the 2nd applicant and 3 years’ imprisonment on the 1st applicant.  There is some merit in Mr. Kwok’s complaint that in imposing the same sentence on each count, albeit that he distinguished between the 1st and 2nd applicant, the judge did not reflect the different aggravating factors obtaining in the commission of some of the offences reflected in the counts.

93.For example, count 4 was concerned with only 3 false applications made in the period 3 to 12 January 2007, as a result of which a total of $1,572,020 was loaned and of which nothing was lost to the bank.  On the other hand, the fact that loss was sustained by the bank no doubt was more to do with luck, in particular as to what monies were outstanding at the point in time at which the 2nd applicant was no longer able to keep the ‘balloon’ of his fraud in the air.  The risk to which all the banks were exposed throughout was a significant factor of culpability.  For example, the conduct the subject of count 10 resulted in no loss to Hang Seng Bank.  However, it concerned no less than 36 false applications, made in the period 12 January to 5 July 2007, in which a total of $17,518,242 was loaned.

94.To reflect the significantly lower degree of culpability involved in the commission of the offence the subject of count 4, we quash the sentences of 3 years’ and 4 years’ imprisonment imposed on the 1st and 2nd applicants respectively and in their place we impose a sentence of 2 years’ imprisonment on the 1st applicant and 3 years’ imprisonment on the 2nd applicant.

Totality

95.Given that not only was the 2nd applicant the mastermind of the fraudulent scheme but also its primary beneficiary and, having regard to the fact that over $153 million was raised in loans by no fewer than 301 false application, resulting in a total loss of $21,470,422, we are satisfied that the total sentence of 8 years and 3months’ imprisonment imposed upon the 2nd applicant was entirely appropriate.

96.By contrast, in our judgment the different roles played by the 1st and 2nd applicants and their respective benefits was inadequately reflected in the difference of only one year’s imprisonment in the total sentence of imprisonment imposed upon them.  We are satisfied that a total sentence of 6 years’ imprisonment was appropriate for the 1st applicant. In order to achieve that total sentence of imprisonment we quash the judge’s order in respect of the 1st applicant that 3 months of the sentence of imprisonment imposed on counts 4, 6 to 9 be served consecutively to the sentence of 4 years’ imprisonment imposed on count 9.

Conclusion

97.In the result, we allow the applications for leave to appeal against sentence and, treating the hearing of the applications as the hearing of the appeals, we allow the appeals to the extent set out earlier.  Accordingly, the total sentence of imprisonment imposed upon the 2nd applicant, namely 8 years and 3 months, remains unchanged, whereas that imposed upon the 1st applicant is reduced from 7 years and 3 months’ imprisonment to 6 years’ imprisonment.                  

Mr. David Leung, SADPP and Mr. Felix Tam, PP, of the Department of Justice, for the respondent

Mr. Lawrence Lok, S.C. and Ms. Diana Cheung, instructed by William Sin & So, for the 1st applicant

Mr. Eric Kwok and Mr. Tony C. Y. Li, instructed by Cham & Co, for the 2nd applicant