HKSAR v. KO MI LUN

CACC 449/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 449 OF 2001

(ON APPEAL FROM HCCC 189 OF 2001)

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J U D G M E N T

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Seagroatt J: (giving the Judgment of the court)

1. This Applicant, Madam Ko Mi-lun, seeks leave to appeal against a total sentence of 7 years' imprisonment imposed on 3 October 2001, having been convicted on her pleas of guilty of 30 offences of procuring the making of an entry in a record of a bank by deception, committed, effectively, between 30 June 1998 and 26 October 1998.

2. The nature of the offences is the manipulation of credit facilities with a bank in order to keep a business trading and property ventures alive. The details of the offences are helpfully and succinctly set out in the transcript of the sentencing proceedings before Beeson J.

3. The Applicant was the director and major shareholder of a company called Mazlo Trading Ltd which dealt in frozen meat. It had credit facilities of HK$117,000,000.00 at the Wing Hang Bank. It ran into serious cash flow problems in 1997.

4. The nature of the fraud falls into 3 categories. The first 14 counts relate to the discounting of postdated cheques by the bank to assist in the financing and sales of goods by Mazlo to its customers. The Applicant presented false documents and postdated cheques to the bank purporting to represent delayed payment by customers for goods already delivered. In fact the postdated cheques were supplied to the Applicant by friends and business acquaintances on the strength of her promise to them that she would provide them with funds in their accounts before the postdated cheques were presented. Of the 14 instances reflected in these counts, the postdated cheques were dishonoured on 12 occasions involving a loss of HK$33,000,000.00. On the other two occasions, the amounts were repaid to the bank.

5. Counts 15 to 26 related to the obtaining of letters of credit for the benefit of a company known as China Good, which was in fact controlled by the Applicant, for its purported supply of frozen meat to Mazlo. Documents purporting to evidence such trading transactions which were fictitious, were presented to the bank, which was thereby induced to advance HK$55,600,000.00. This was the sum lost by the bank.

6. The final 4 counts related to the obtaining of funds or letters of credit in respect of fictitious supplies of goods by Mazlo. When the bank tried to recoup its advance by attaching the goods, there were no such goods. The bank lost HK$15,000,000.00. The total loss to the bank was therefore HK$103,600,000.00.

7. A number of factors was put forward by the Applicant's Counsel in mitigation and the Judge had obtained a background report which set out all the family circumstances. A number of references from family and business acquaintances was also put before the judge. It was clear that the businesses were likely to be wound-up. The Applicant had already been made bankrupt. It was urged that the business and financial failure had been substantially the result of the economic downturn, the falling property prices and the "bird flu" crisis from 1998. The bank was unlikely to recover more than one-third of its losses.

8. The Judge very properly stressed the careful planning of the offences, the false documentation, the abuse of the letters of credit facilities and the trust which such banking institutions depend upon, for the commercial viability of this form of funding. For the first two groups of offences, the Judge took a starting point of 9 years on each count concurrent, reducing the sentence to one of 5 years on each, and ordering 1 year of the sentence on the second group, to run consecutively to the term of 5 years on the first group, making 6 years. On the third group, the sentence was 4 years on each count concurrent from a starting point of 6 years and again, the Judge ordered 1 year of that term to be consecutive to the 6 years, totaling 7 years in all.

9. In her application today, the Applicant has urged that the overall sentence is too severe. One of the features relied upon by her is her health and particularly her kidney problem. This unfortunate situation had, in any event, been disclosed to the Judge by her counsel in his mitigation on the Applicant's behalf and dealt with by her doctor in a report on her current condition. That was September/October 2001. Although the Applicant referred to a deterioration in her kidney function, in her application for an adjournment of this hearing no medical evidence has been put before us. We are however satisfied that all matters including this were properly taken into account by the Judge. We have sympathy for the Applicant in her present condition which is chronic, but are satisfied that she will receive proper medical treatment whilst she is in Tai Tam.

10. The maximum sentence for this offence is 10 years. The Judge quite properly grouped the offences in the manner to which we have referred. There is no sentencing guideline as such for offences of this nature. Indeed there could not be because they are so varied in terms of gravity, the amount involved, the part played by the offender in effecting them, the period over which they have been committed and the means by which the deception was practised. The offences in this case, committed by this Applicant, came right at the top of the scale of gravity.

11. Although the separate analysis, conducted by Mr Tam in his helpful written submission, of the starting point of the sentence for the groups of offences suggests a varying discount for the pleas of guilty, this is in our view, perhaps an artificial exercise. The Judge was fairly attempting to achieve a proper sentence on the basis of totality and her grouping of the offences for sentencing purposes cannot be faulted.

12. Some assistance as to the general approach to be applied can be derived from the Court of Appeal's decision in HKSAR v. Cheung King [2001] 3 HKLRD at page 68 to which Mr Tam has helpfully directed our attention. Many of the circumstances of that case, however, are not relevant to this application. A much smaller amount was involved and it was repaid. The Applicant was described as "small fry" and not a prime mover, but allowed herself to be used to effect the deception from which neither she nor her company benefited. She was part of a conspiracy in that particular deception.

13. There were other circumstances relating to the unusual sentencing procedure adopted by the Judge at first instance in that case which were peculiar to it. The single offence was concerned with a letter of credit. My Lord, the Vice-President, referred to the judgment of Mortimer JA in The Queen v. Chan Kam Chuen [1995] 2 HKCLR 257 at page 261. Mortimer JA said then:

"On any view, these offences are very serious. The system of documentary credits is the means whereby international trade has been conducted for hundreds of years. The system depends entirely upon trust. Money is paid out not upon an examination of the goods but upon the documents themselves. It is fundamental to the system that the documents should be truthful and accurate. If false documents are circulated, some of which are in effect title to the goods themselves, the whole system falls apart. That is why courts always regard offences of this nature as very serious."

14. For the single offence in Chan King's case which came before the Court of Appeal with my Lord, the Vice-President, presiding, a starting sentence of 4 1/2 years was regarded as appropriate and that a sentence of 3 years properly reflected a plea of guilty and cooperation. Applying that approach and the principle referred to in Chan Kam Chuen, the sentence of 7 years in total imposed by Beeson J was quite unimpeachable. Accordingly, this application is refused.