THE QUEEN v. CHAN SHING FOON

IN THE COURT OF APPEAL

_______________

_______________

JUDGMENT

_______________

Roberts, C.J. -

Preliminary

1. CHAN Shing-foon (“D.1”) and CHEUK Ka-pui ("D.2") were jointly charged with procuring the execution of a valuable security, contrary 22(2) of the Theft Ordinance.

2. The Particulars of Offence read as follows -

"CHAN Shing-foon and CHEUK Ka-pui, on or about the 31st day of December 1985 in Hong Kong, together with LEUNG Wah, dishonestly, with intent to gain for themselves or cause loss to another, procured the execution of a valuable security, namely a letter of credit numbered 5/UHl/00011/2310 opened by the Medium Business Bank of Taiwan (the said Letter of Credit) by deception, namely by falsely representing to the Hongkong and Shanghai Banking Corporation that the information contained in documents submitted to it in order to obtain payment to a firm entitled Fook Shing Trading Company (the said firm) under the said Letter of Credit was true and correct and that the said firm was thereby entitled to receive the proceeds thereof."

3. D.1 was also charged with theft, contrary to section 9 of the Theft Ordinance, but was acquitted of this charge by the District Judge.

4. Both defendants seek leave to appeal against conviction and D.2, against sentence also.

Background Facts

5. In November 1985, a contract was signed in Taiwan between Joy Spinner Joint Stock Company Limited (“the buyer”) and Dawa Trading Company of Hong Kong (“the seller”) for the purchase of 150 tons of raw ramie by the buyer from the seller.

6. This meeting was attended by D.2, a broke acting on behalf of the Hong Kong seller.

7. To finance this transaction a letter of credit was opened by the Medium Business Bank of Taiwan in favour of Dawa for US$217,500.

8. However, when Mr. Ho, the owner of Dawa, saw the terms of the letter of credit, he asked D.2 to try to find another supplier.

9. D.2 was introduced to D.1 and a man called LEUNG Wah, who was named in the indictment but not tried with the first two defendants, in December 1985. It was the Crown's case that between them they arranged to ship empty containers to Taiwan and to submit false documents to the Hongkong and Shanghai Bank, the confirming bank under the letter of credit, in order to negotiate the letter of credit which had been opened up by the buyer in Taiwan.

10. In furtherance of this scheme, the Crown alleged, D.1 registered a new business name, the Fook Shing Company, giving it a false address. He opened a bank account in the name of Fook Shing, again giving a false address.

11. D.2 approached Dawa and persuaded Mr. Ho, the owner, to transfer the letter of credit to Fook Shing. D.2 then took the letter of credit and arranged with Leung Wah for empty containers to be delivered for shipment to Taiwan.

12. Armed with the necessary documents, including a packing list showing that the ramie had been shipped to Taiwan, D.1 asked Mr. CHAN Kam-hung to present the letter of credit and documents. Chan owed Mr.-Lee Sang-woong, his employer, a large sum of money and the latter agreed to negotiate the letter of credit in order to secure repayment of the debt which CHAN Kam-hung owed to him.

13. On 30th December, Mr. Lee presented the letter of credit to the Hongkong & Shanghai Bank with the supporting documents which D.1 had handed to Chan. US$217,500 was credited to the account of the Fook Shing Company by the Hongkong & Shanghai Bank.

Grounds of Appeal by D.1

14. The main ground of appeal argued on behalf of D.1 was that there was no evidence that the bank executed the letter of credit in reliance upon the information contained in the documents submitted to it being true and correct.

15. It was suggested that the bank had not in fact been deceived by the documents attached to the letter of credit when this was presented for payment to the credit of Fook Shing Company by the Hongkong & Shanghai Bank, because the bank was the cause of its own misfortune, since not all the necessary documents were attached to the letter of credit on presentation.

16. However, Mr. LAU Chuen Shing, Manager of the Hongkong & Shanghai banking Corporation, gave evidence that the bank acts on the documents where letters of credit are concerned and does not investigate the commercial transaction behind them, though it does examine the documents presented to ensure that, on their face, they comply with the conditions of the letter of credit.

Mr. Lau testified that all the documents concerned were examined and that they appeared to be in order, adding “obviously I did not know at that time that the goods had not been shipped.”

17. There can be no doubt whatever, in our minds, that the Hong Kong Bank was induced to credit money to Fook Shing by reason of the assertion, in the documents presented to it, that raw ramie had been shipped to Taiwan whereas, in fact, the containers were empty and no such goods had been shipped at all.

18. We were referred to LAU Hon-wang v. R.[1], in which Pickering, J.A., dealing with not dissimilar circumstances, commented that -

"There were in fact two deceptions and it is important to view them separately and not to let them merge. The deception in not supplying 100% cotton denim was deception of the purchaser: that in presenting false documents was deception of the banks. The latter deception was effected not by misleading the banks as to the true facts because the banks were not interested in the true facts: the deception lay in putting the banks in possession of documents containing false information complying literally with the terms of the letters of credit, in creating by deceit a situation in which the banks would automatically pay."

19. Those words seem to us to govern this case precisely; and we see no substance in the main ground argued on behalf of D.1.

20. The second ground was that there was not sufficient evidence that D.1, at the material time, knew that empty containers were sent to Taiwan.

21. The Judge noted that D.1 opened a bank account and registered a business, giving false addresses in each case and that D.1 signed a packing list which contained wholly false information as to the contents of the containers.

22. D.1 gave no evidence on his own behalf and called no witnesses.

23. It was therefore open to the Judge to reach the conclusion that this evidence was consistent, in the absence of any explanation by D.1, only with guilty knowledge.

24. A further ground was that the Judge had failed to warn himself as to the dangers of relying on the uncorroborated evidence of P.W.5, who was an accomplice.

25. The Judge directed himself with great care as to the weight which he should give to the evidence of P.W.5, whom in certain respects he thought to be unreliable and reluctant to disclose details of his business dealings.

26. Nevertheless, the Judge came to this conclusion -

"whilst not making a wholly credible witness the evidence that P.W.5 gave for the Crown against the first accused, as opposed to making any admission or volunteering details of his own affairs, really remained unshaken."

27. While it is true that the trial judge made no reference as to the possibility of P.W.5 being regarded as an accomplice, there was, in our view, no evidence to suggest that he could be so categorized.

Ground of D.2

28. D.2 addressed us on his own behalf. His submissions amounted in effect to an attempt to give evidence that he did not know that D.1 was the proprietor of Fook Shing; that he did not know anything about the containers being empty; and that he was innocent of any complicity in the deception of the bank.

29. In our view, there was more than sufficient evidence to implicate D.2 firmly in the deception of the bank.

30. It was D.2 who persuaded Dawa to transfer its interest in the letter of credit to another vendar introduced by D.2. It was D.2 who, with the assistance of the secretary to Mr. HO Kwok Fai, prepared the shipping orders, insurance policies and other documents in support of the transfer of the letter of credit to Fook Shing.

31. Mr. Cheung Tse-hoi, whose father operated the Lee Kee Transportation Company, carried out the sealing of empty containers. Being uneasy about this, Mr. Cheung, having consulted his father, asked for an indemnity stating that Lee Kee had nothing to do with the loading of the containers. This indemnity, in the form of a letter was provided by a man identified by Mr. Cheung as D.2, though he was led to believe, by Leung Wah that D.2 was a Mr. Chan Shing Foon (D.1) of Fook Shing.

32. Furthermore, the following day, D.2 took Mr. Cheung to the premises in western, where he handed to him photocopies of the drayage receipts relating to the shipment.

33. The Judge found on the evidence presented to him that D.2 had played a central role in the affair, working in close association with D.1 and Leung Wah; that D.2 knew that the containers had been sealed empty; and that he allowed himself to be passed off as the boss of Fook Shing in order to remove the anxieties of Mr. Cheung and his father. On the basis of these findings, the Judge found that the irresistible inference was that D.2 was guilty. We agree.

34. As in this case, it is common for defendants, against whom a substantial case has clearly been established at the close of the Crown evidence, to elect to give no evidence themselves.

35. They then seek, particularly if appearing in person, to give evidence to this Court, when it should have been given before the trial judge.

36. We think it appropriate to suggest that defence counsel, when taking a client's instructions as to whether he should remain silent or give evidence, should warn him clearly of the risks of deciding to remain silent.

37. While such a right exists in law, it is a perilous course to adopt, since it leaves the court with the prosecution evidence only and with no alternative version put forward by the defendant.

38. We were satisfied that there were no grounds on which we could grant leave to appeal against conviction in relation to either defendant.

Application for leave to appeal against sentence

39. Counsel sought leave to appeal against sentence on behalf of D.2 only, arguing -

(a) that a sentence of 2½ years for an offence of this nature was manifestly excessive; and

(b) that the judge was in error in commenting, in his reasons for sentence, that D.2 had played a more significant part in the enterprise than D.1 and should be more severely punished accordingly, D.1 having been sentenced to 2 years' imprisonment and D.2 to 2½ years.

40. Counsel conceded that the bracket of sentences for offences of this kind lay between 18 months and 3 years, and submitted that 2½ years was so near the top end of the bracket that it could fairly be regarded as manifestly excessive.

41. Suffice it to say that we do not consider that there is substance in that submission.

42. Nor are we inclined to accept the argument that the Judge was wrong in attributing a heavier share of the responsibility to D.2 than to D.1.

43. In the absence of any evidence from either defendant, it was not easy for the Judge to assess their respective levels of responsibility.

44. However, D.2 is a far older and more experienced man than D.1 and was clearly familiar with the kind of business concerned and with the sort of documents involved in international transactions.

45. We see no reason, on the face of the record, to justify us in interfering with the District Judge's assessment of the appropriate level of sentence on each of the defendants.

46. Accordingly the application for leave to appeal against sentence of D.2 is also dismissed.