HKSAR v. LEE YUE HO

HCMA719/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO.719 OF 1999

(ON APPEAL FROM ESCC 1114/99)

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J U D G M E N T

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1. The appellant was convicted on 22 June 1999 of four charges of possession of false instrument, contrary to section 75(2) of the Crimes Ordinance, Cap.200. He was sentenced to five months' imprisonment on each charge, the sentences to be served concurrently. He now appeals against those sentences. A notice of appeal against conviction having been abandoned and the appeal against conviction having been dismissed upon receipt of that notice of abandonment.

2. The facts were that on 28 July 1998 at the offices of Paul Wang & Associates in Central, Hong Kong, were seized a valuation report obtained from C.Y. Leung & Company Limited which was to the knowledge of the appellant, a false document. Also found were three copies, each of page 9 of the valuation report of the same company which the appellant was alleged to have known or believed to be false.

3. The appellant, through a holding company, is the owner of a garden house at Tuen Mun of considerable value. These premises were mortgaged to ING Baring, the value of the mortgage not being paid to the appellant but being used internally in the bank to trade in stocks and shares on behalf of the appellant. The appellant, therefore, obtained the use of the mortgage funds to trade in shares, but the bank would obtain control over the value of those shares as well as the mortgage over the property.

4. Having convicted the appellant, the magistrate embarked upon an exercise to sentence him.

5. Mr Percy criticizes the approach taken by the magistrate. In his first ground of appeal, he argues that when deciding upon the appropriate sentence, the magistrate placed undue weight on the potential or latent risks of the appellant's criminality as opposed to the actual situation. The magistrate in considering sentence in his written Reasons for Sentence clearly had the appropriate offence in mind when he addressed quantum. He said :

"The appellant was convicted of the less serious of the two offences created by section 75 of the Crimes Ordinance. The maximum sentence on indictment was three years' imprisonment and was therefore two years in the magistracy.

In determining sentence, it was necessary first to identify what the appellant had done. By his possession of the false instruments, he had advanced an application designed to obtain a mortgage far greater than that to which he would have been entitled if the instruments had not been false. ....

The appellant was not charged with making or using the false instrument but it was appropriate to have some regard to the skill and determination used in the production of the false instruments which he possessed."

The magistrate then went on to consider the purpose to which such documents could be put. He acknowledged that no bank would have relied upon the false valuation and he conceded that any mortgage obtained would have been less than the actual value of the property and that the exposure of the bank would have been only to the unnecessary risk that the mortgage was a higher proportion of the value of the property than would normally be granted.

6. The argument that the magistrate has gone too far in his assessment of the nature of the documents which form the charges is without foundation. The magistrate has done no more than considered the potential available in the documents themselves.

7. I am referred by Mr Percy to R. v. Li Shui Nung [1995] 1 HKC 39. There an appellant was charged with simple possession of dangerous drugs and the mitigation was conducted on that basis. The judge was required to sentence on that basis, the court held it was ligitimate for the judge to take into account the latent risk factor, but he ought not to have taken the view that when the applicant was arrested, he had some of the drugs in his possession for personal consumption and some for another purpose. It was not open to the judge to say that he did not accept the applicant had possession of all the drugs for his own consumption and to sentence him on that basis.

8. In this case, the magistrate has not fallen into that trap. The magistrate has not considered what use the applicant was going to put the documents or which he may put the documents. He was looking at the inherent risk in the nature of the documents themselves within the framework of the business transactions of the appellant. I cannot say, therefore, that the magistrate has been wrong in his approach and that the sentence passed is wrong in its quantum.

9. The second ground of the appeal is that the magistrate should have given more weight to the special circumstances of the appellant's previous good record, his ability to service a high value mortgage security against his property and his ability to pay a substantial fine as a basis for suspending any prison sentence.

10. The magistrate specifically considered whether or not a suspended sentence was appropriate. He said in his reasons :

"I regarded the offences as amounting to substantial dishonesty by him which had the potential to affect others to a high degree and which may also have affected the reputation of the company in whose name the altered documents were presented and circulated. The purpose of the exercise had to be to make a substantial gain for himself. I decided that only sentence of imprisonment was justified for such a course of offending and that there were no grounds to suspend it."

The magistrate therefore directed his mind to the question of the suspension.

11. Mr Percy argues that the good record, the ability to service the mortgage and the ability to pay a substantial fine were considerations which the magistrate ought to have taken into account. The magistrate did take into account the good record of the appellant and the fact that he was a first offender. It must have been within his mind, given the knowledge that he had from the trial of the value of the property owned by the appellant, that he was able to service a high value mortgage. He further had that evidence from a Mr Cheung of ING Barings who had said that there had been no problems with the account.

12. Mr Percy further advances before me considerations such as no loss was occasioned to any body, nor was there a potential risk for loss given the age of the valuation. Given the facts that the prosecution has brought under section 75(2) which relates to bear possession of such documents, the potential for loss in any offence under this section is small. I do not consider either of these matters to be a factor to be taken into consideration. I am not of a view that there is anything in the mitigation which the magistrate ought to have considered in respect of the sentence which would have given rise to suspension of that sentence.

13. The next ground of appeal that the magistrate was wrong to have passed what must have been intended to be a deterrent sentence, the magistrate did not state it to be a deterrent sentence, nor is there anything on the face of what he had said to indicate that that is what he intended. The sentence is not wrong in principle as is acknowledged by Mr Percy, and I do not consider that it is deterrent in its nature.

14. I cannot say that the magistrate has erred in the sentence and the appeal against sentence is dismissed.