THE QUEEN v. LAM CHING

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J U D G M E N T

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Cons, Ag. C.J. delivered the judgment of the Court:

1. This is an application for leave to appeal against a total of 9 years' imprisonment imposed by Hopkinson J. on the 22nd December last year.

2. The Applicant, ("the Defendant"), was charged with 29 counts of procuring the execution of a valuable security by deception contrary to Section 22(2) of the Theft Ordinance, Cap. 210, 18 counts of forgery with intent to defraud contrary to Section 70(2)(a) of the Crimes Ordinance, Cap. 200 and 1 count of conspiracy to forge contrary to Common Law. He pleaded guilty to 10 of the counts of procuring, 7 of the counts of forgery and 1 count of conspiracy. The remaining counts have been ordered to remain on the court file and not to be proceeded with except by leave of the Court.

3. In addition the Defendant asked for 1,782 offences similar to either the procuring or the forgery charges to be taken into consideration in the sentence.

4. The Defendant was the effective owner of the Sze Fung Financial (H.K.) Co. Ltd., which was registered and licensed as a money lending company. During a period of almost 3 years he had used that company systematically to plunder banks and financial houses by means of fraudulent applications for Letters of Credit in relation to transactions which were completely fictitious. In some instances he made use of genuine merchants who were in financial straits and had come to his company for loans. In other instances he made use of companies which he had caused to be set up especially for the purpose. In these cases he sometimes found it necessary to have recourse to forgery. The extent of his activities can be seen from the fact that in all he procured 1,023 Letters of Credit to be executed by 97 different institutions to a total value of $418 million. The actual loss to the institutions was in the region of $111 million. The Defendant's own gain was somewhere between $21 and $27 million. It is not necessary to go into all the details of how this was achieved. It is sufficient to say at this stage that the 10 counts to which he pleaded guilty were, each a sample of one the various circumstances in which he managed to procure the execution of a Letter of Credit and the 7 counts were likewise samples in relation to the type, of documents that he had forged. The conspiracy charge involved one Chan Siu Sing, who was a senior employee of the Defendant's staff, but who however acted at all times only on the instructions of the Defendant.

5. For the purposes of sentencing the judge divided the procuring counts into the 2 groups which we have already mentioned. That is those in which he used the fraud to fund genuine borrowers, taking only his total commission and interest of 1.5% on the amount obtained, and those in which he instigated the fraud himself to obtain money directly to enable him to support and perpetuate the vast labyrinth of deceit he had managed to create. There are 5 counts in each category, although the sentences would have to reflect to some extent the great number of similar offences that he had asked to be taken into consideration.

6. The judge took the view that the first group of the offences "were all continuing examples of one series of transactions add were not distinct and separate offences". In taking this view he was accepting a concession made by counsel who then appeared for the Crown, that consecutive sentences would be wrong in principle in the circumstances. "This is" as counsel had put it to the judge "a one transaction situation".

7. Nevertheless the judge did decide that the second group were, as a group, distinct and separate from the first group, in that the objectives were entirely different; the Defendant was no longer acting on behalf of his borrowers, but was seeking instead to obtain money directly for himself. For these reasons, although the judge made the sentences concurrent within the category, he made them consecutive to those imposed for the first. As to the gravity of that first category the judge said

"I consider that this is a fraud of the worst kind and merits the maximum sentence, namely, 7 years."

As indeed it was at the time when the offences were committed, although the maximum has since been increased to 10 years. As to the second category the judge said

"    These offences are almost as serious as "the first category of procurings, and if he had not pleaded guilty, I would have imposed sentences for these of 6 years' imprisonment ..."

In the event the judge reduced the sentences to terms of 5 and 4 years respectively because of the mitigating features to which we shall presently return.

8. Concurrent to that total of 9 years the judge imposed concurrent sentences of 7 years on each of the 7 forgery charges. These he felt to be "part and parcel of the procuring". He took the same course with a sentence of 3?years on the count of conspiracy to forge which he regarded as "so closely connected with the other forgeries" as to merit a concurrent sentence.

9. Mr. Martin Lee who appears for the Defendant in this Court, although not in the court below, naturally takes no objection to the concurrent aspect of the forgery sentences. He does however complain of the distinction drawn by the judge between the two sets of procuring. That may be, he concedes, a distinction relevant to the sentences in themselves, but is no reason for making consecutive sentences which on general principles ought to be concurrent.

10. The main difficulty that he has to overcome, and we think to be fair to him, that when confronted with it he accepted that he could not overcome - is that with respect to the judge and counsel below, general principles do not lead to concurrent sentences for the procuring offences in the present circumstances. Those principles, commonly called the one transaction rule, are, as we have said before, to be found conveniently set out in Thomas on Principles of Sentencing, in the 2nd edition as from p. 53 The essence is contained in these two passages:

"    The one-transaction rule can be stated simply: where two or more offences are committed in the course of a single transaction, all sentences in respect of these offences should be concurrent rather than consecutive

....

...

    The essence of the one-transaction rule appears to be that consecutive sentences Are inappropriate when all the offences taken together constitute a single invasion of the same legally protected interest."

11. Although we appreciate the similarity between the various procuring offences, we find it impossible to accept that they were "committed in the course of a single transaction". The briefest glance at their details indicates that this cannot be so. For example the procuring in Count 2 related to a Letter of Credit issued on the 11th February 1982 by the United Commercial Bank, while the Letter of Credit in Count 45 was issued on the 31st January some 2 years later by the Hongkong & Shanghai Banking Corporation. By no stretch of imagination can these be looked upon as a single transaction or treated as a single invasion of the same legally protected interest. In our view it was wrong to make any of the procuring sentences concurrent on the basis of the one transaction rule. However, in a case like present, with frequent and repeated frauds, it is almost inevitable that a succession of consecutive sentences will produce a period of imprisonment that is, in its totality, too heavy, and the Court will be obliged to pass at least some concurrent sentences in order to achieve an overall sentence that is just and appropriate.

12. In deciding what is just and appropriate overall regard must, of course, be had to any mitigating factors. The judge below acknowledged, as we do, the substantial time and expense saved by the Defendant's voluntary return to Hong Kong, his cooperation with the authorities and his plea of guilty. The judge noted however, as again we do, that the Defendant jumped bail in 1984 and fled to Taiwan, and that there is no indication that he had intended to return voluntarily to Hong Kong before his arrest in Amsterdam in 1986.

13. Mr. Lee has sought to put forward as an additional factor in mitigation what he castigated as a laxity on the part of the banks and others in granting Letters of Credit in relation to local transactions.

14. We accept that there are occasions when the conduct of the victim of a crime has in some way contributed to or precipitated the offence itself. In that circumstance some acknowledgement of the fact is frequently given by way of discount in the sentence. But we have not been shown anything in the present case to make us think that is the situation here. Letters of Credit may well be more open to abuse if used for local rather than international transactions, but whatever facilities are offered in their place, the risks would seem to us to remain much the same. The only further precaution that could he taken by a bank is to adopt the ultimately impractical course of demanding physical inspection in every case.

15. To assist us in deciding what is just and appropriate in the present circumstances Mr. Lee has referred us to three examples of substantial fraud dealt with recently in this Court. They are the cases of Dominic Cheung⁽¹⁾, Mohammed Sham Sudin⁽²⁾ and Simon Yip⁽³⁾. In Dominic Cheung⁽¹⁾ in particular, Mr. Lee observes that the sum of money involved was almost the same as in the present and that the correct sentence suggested by this Court was one of 6 years.

16. With respect to Mr. Lee, we do not find these cases of much assistance. The criminal conduct of the defendants in those was of a completely different character from that in the present instance and we note that in the last mentioned the court was expressly careful to adapt the sentence to accord with those which had been imposed in a very narrow class of offences connected specifically with the collapse of the overseas Trust Bank.

17. We are particularly influenced in the present case by the way in which the Defendant, over a long period of time, carefully and systematically deceived a whole array of financial institutions and induced as many as 149 ordinary traders to take part in his web of deceit. We note that 28 of those have already been successfully prosecuted, and we understand that proceedings are pending with relation to the rest. We note too that of the $112 million lost to those financial institutions the Defendant has still not accounted for a sum which is not less than $21 million. There is no suggestion of restitution having been made or offered.

18. In all the circumstances we do not think that a sentence of 9 years is an inappropriate sentence. There is room, as almost always in circumstances of this kind, for a divergence of opinion as to how that period should be related to the particular charges. But we are not satisfied that the course chosen by the judge below is an unreasonable reflection of the true position, and therefore we are not disposed to interfere.

19. For these reasons we refuse leave to appeal.

(1) [1987] H.K.L.R. 788

(2) [1987] H.K.L.R. 826

(3) Criminal Appeal No. 250/1987