R. v. LIN KUO LIANG, DAVID

IN THE COURT OF APPEAL

1996, No. 356
(Criminal)

- Headnote -

Criminal law - Possessing false instrument with intent (i) to induce someone to accept it as genuine and (ii) by reason of so accepting to do some act to someone's prejudice, contrary to s75(1) of the Crimes Ordinance, Cap 200 - The intent in s75(1) relates to acts to be performed in the future: If the instrument is spent and cannot be used as at the date charged, the crime is not made out.

Observations by Court of Appeal on the ingredient of intent in s75(1). Query as to whether a finding that the defendant intended to induce "the authorities in China" to accept the instruments as genuine "in order to set up companies there" is sufficient to satisfy the ingredient of intent.

IN THE COURT OF APPEAL

1996, No. 356
(Criminal)

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J U D G M E N T

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Litton, V.-P. (giving the judgment of the Court):

1. This is an application for leave to appeal against conviction.

2. The applicant was convicted after trial before His Honour Judge Wong in the District Court on three charges: One of possessing material for making false instruments, contrary to section 76(1) of the Crimes Ordinance Cap 200, and two of possessing false instruments, contrary to s75(1) of the Crimes Ordinance. He was sentenced to a total of 2 1/2 years' imprisonment.

3. The primary facts are largely undisputed.

4. The appellant had an office at Room No. 116, 43/F Convention Plaza Office Tower, No. 1 Harbour Road, Wanchai.

5. On 4 January 1996 the police, under the authority of a search warrant, raided the office. A locked brief-case was found under a table next to the applicant's desk. When opened there were found the following material:

(i) six blank unissued Brazilian passports (exhibit P6A-F);

(ii) blank Brazilian identity cards (exhibit P7A-B);

(iii) blank Brazilian tax cards (exhibit P8A-B);

(iv) photocopies of Brazilian identity documents issued to holders with Chinese names (exhibit P9A-F) and to one Da CUNHA (exhibit P9G);

(v) a book of Portuguese baby names (exhibit P10);

(vi) documents providing guidance for applications for Brazilian citizenship such as the text in blank of an application to the Minister of Justice for Brazilian citizenship, a blank "declaration of residence", the text for a declaration of no - convictions etc (exhibit P11A-F).

6. When asked why he had the blank unissued passports in his possession, the applicant said that they were to be given to persons who were to invest in Brazil.

7. During the police search the applicant was seen tearing up some documents. These turned out to be photocopies of identification documents for PRC nationals (exhibit P12A-J).

8. The six blank unissued Brazilian passports formed the subject-matter of the first charge.

9. Inside the brief-case was an envelope containing (i) letters stating that the various companies named therein had a 9-figure credit line with the Ka Wah Bank (exhibit P16A-L); some of these letters were on Ka Wah Bank head-office note-paper; and (ii) a bundle of similar blank note-paper (exhibit P17A-E).

10. Amongst the companies referred to in these letters were Quality Synthetics (Far East) International Ltd. and International Machinery Supply Ltd: companies controlled by the applicant.

11. On 9 January 1996 another search warrant was executed in the office premises and another letter relating to Quality Synthetics (Far East) International Ltd. was found.

12. The letter stating that Quality Synthetics (Far East) International Ltd. had credit facilities of 9 figures with the Ka Wah Bank is dated 3 December 1993 (exhibit P20). This became the subject-matter of the second charge.

13. The letter stating that International Machinery Supply Ltd. had credit facilities of 9 figures with the Ka Wah Bank is dated 12 April 1995 (exhibit P16F). This is the subject-matter of the third charge.

14. The unissued blank Brazilian passports (exhibit P6A-F), the subject-matter of the first charge, were counterfeits.

15. Quality Synthetics (Far East) International Ltd. had at one time an account with the Ka Wah Bank but that was cancelled in 1993. International Machinery Supply Ltd. never had an account with the bank. The two letters, the subject-matter of the second and third charges, were forgeries.

Statements to police

16. The applicant was first interviewed by the police on 4 January 1996. When shown the six blank unissued counterfeit passports and asked how he came to have those in his possession the applicant said they were given to him by a person from the USA called Roland. He did not know Roland's surname. That was in 1992. Roland asked him to give the passports to Chinese people who were "politically troubled". He said he disagreed but later heard that Roland had been arrested and imprisoned in the USA. He kept the passports with the intention of returning them to Roland. The following exchange then took place:

"Q. David, when I first found the passports I asked you about them, you told me, that they were to be given to people who invested in Brazil, why do you change your story?

A. Because before, I say the politically trouble people, the only way you can, I mean they can get out, is use the investment reason."

17. The applicant was interviewed a second time by the police on 11 January 1996. In relation to the six unissued counterfeit passports he now said he did not get them from Roland but from a Chinese man; he had not spoken to Roland before getting the passports but did so on the telephone afterwards. He claimed never to have opened the brief-case in which the passports were found (though it was opened "by staff"); and when asked why the brief-case was under his desk he said that it was originally in his house but after his furniture had been removed to the USA he brought all the documents to his office and stored them under his desk. The removal of the furniture to the USA took place in early August 1995. When asked how many staff he had in his office, he answered: "Only Miss CHAN."

18. When asked about the purported letter of guarantee from Ka Wah Bank, in relation to International Machinery Supply Ltd., he said at first the letter was given to him by a Ka Wah banker Mr Luk but later, when asked who had prepared the letter, he or Mr Luk, the applicant said:

"I get permission from him, and prepare by us."

19. He said the letter was a formality to apply for company registration in China.

20. He gave similar answers in relation to the purported letter of guarantee relating to Quality Synthetics (Far East) International Ltd.

21. When asked whether Quality Synthetics had a 9-digit line with the Ka Wah Bank in December 1993 his answer was:

"At that time, Quality Synthetic, have a credit facility or do the business with other finance company or other banks, more than 9 digit."

22. When asked: "What about Ka Wah Bank?" His answer was: "This, is just to apply licence, just formality." He said that the letters were sent to China, some by fax and some by mail.

23. Pausing here, it is relevant to note that although he claimed never to have opened the brief case since 1992 - the brief-case was locked with a combination lock - there were documents in the brief-case dated April 1995.

24. The applicant was interviewed a third time on 16 January 1996. When asked about the identity documents and what he had to say about these he said:

"To help the Chinese people, I was just to copy these ones, I never issue any passports, and I never actually know I had these things, the reason they put lots of copy because they ask me, just learn from and they writing, and to help the Chinese, political trouble people."

25. When asked what his link to Brazil was he said:

"Why, Roland come to me, asking some one to help Chinese people. The main reason is I get best record in China customs, and I know several Chinese Government officials also I know Head of Interpol of Brazil, his name is Dr. ROBERTO, I believe, but I don't know he is the number 1 man of the Federal Police, of Brazil because, if try to help Chinese political trouble people you must have, get help from Brazilian side otherwise they cannot landing in Brazil so if I agree to do for Chinese political trouble people, I can call my friend Dr. ROBERTO to help them at the airport. This the reason the Chinese people believe I can help. Those people need help to get rid of trouble before June 4th, but I disagree to do it, and hold those passports till now."

26. There was a fourth interview on 17 January 1996 which added little to the case.

Evidence at trial

27. At the trial the applicant gave evidence. He adopted what was said in the records of interview. In relation to the two letters he said they were not letters of guarantee but "certification letters" to confirm the company was in business. He said he knew they were illegal documents so he had not given permission for the letters to be sent out: That explained why they were in the brief-case. He admitted that the letters, the subject of charges 2 and 3, had been faxed to China.

28. In his evidence he contradicted what he had told the police about Mr Luk of the Ka Wah Bank. He said he did not know Mr Luk: The name had been given to him by Taiwanese investors. He said the Taiwanese investors had told him they had consent from the bank to send out such letters.

The reasons for verdict

29. After having reviewed the evidence concerning charge 1 the judge said this:

" Having regard to all the exhibits found in his possession and what he told the police, I am satisfied beyond reasonable doubt that he was in possession of those six blank, forged Brazilian passports intending to use the same to turn them into forged passports to induce others to accept them as genuine to other persons prejudice."

30. In relation to the second and third charges, the judge said:

"I find that he had faxed those letters, of which the contents were made up or compiled by him knowing that they were false, with the intention of inducing the authorities in China to accept that they were genuine, in order to set up companies there to their prejudice.

In the circumstances, I am also satisfied beyond reasonable doubt that the prosecution had proved its case in respect of the 2nd and 3rd charges."

Grounds of appeal: Charges 2 and 3

31. It would be convenient to deal with the application in relation to charges 2 and 3 first.

32. The charge here is under s75(1) of the Crimes Ordinance, possessing a false instrument, with two specific intents:

(i) that the applicant or another should use it to induce somebody to accept it as genuine, and

(ii) by reason of so accepting it to do or not to do some act to his own or another person's prejudice.

33. As mentioned earlier, the letter, the subject of charge 2, is dated 3 December 1993 (exhibit P20); that relating to charge 3 is dated 12 April 1995 (exhibit P16-F).

34. Exhibit P20 reads:

"TO BEIJING MUNICIPAL FOREIGN ECONOMIC RELATIONS & TRADE COMMISSION

Date: December 3, 1993

Dear Sir/Madam

We hereby certify that QUALITY SYNTHETICS (FAR EAST) INTL, LTD. have credit available with us up to the nine digits Hong Kong Dollars.

This company is conducted in a satisfactorily manner.

Yours faithfully,
For The Ka Wah Bank Ltd.

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signed by its Vice-President"

35. Exhibit P16-F dated 12 April 1995 has no addressee. It is headed: "To whom it may concern". It is in similar terms to exhibit P20 except that it refers to International Machinery Supply Ltd.

Specific intent to be proved

36. In relation to the two specific intents in s75(1) the judge's finding was, as mentioned earlier: (i) the applicant intended the letters to induce "the authorities in China" to accept them as genuine and (ii) by reason of so accepting "to set up companies there to their prejudice". Are these findings sufficient to satisfy the ingredients of intent in s75(1)?

37. The charges themselves merely aver that the applicant intended to induce somebody to accept the letters as genuine and by reason of so accepting to do or not to do some act to his own or any other person's prejudice.

38. The charge is good on its face, but it is a pity that no particulars were sought as to who the "somebody" might have been, and what the "act" was, the doing of which or refraining from doing might have inured to that person's, or another person's, prejudice.

In each of the cases referred to by Mr Mullick, the person to be induced by the false instrument was quite specific:

In R. v. Garcia [1988] 87 Cr.App.R. 175 it was Trans-World Airlines, a body corporate, who was to be prejudiced by the use of forged airline tickets. The act induced was, of course, to accept the holders of forged tickets as bona fide paid-up passengers. The judge erroneously directed the jury that the passengers were the persons who could well have been prejudiced. The conviction was quashed.

In R. v. Tobierre [1986] 82 Cr.App.R. 212 it was the Secretary of State for Social Security who was to be prejudiced by to use of false vouchers to claim child allowance. The judge's summing-up was impeccable except for this: He did not direct the jury that the Crown had to prove that the appellant intended the Secretary of State to act to his prejudice. This omission was fatal. The conviction was quashed.

In R. v. Campbell [1985] 80 Cr.App.R. 47 it was the bank which was to be prejudiced by the false indorsement on the back of the cheque: Believing it to be a genuine indorsement the bank credited the amount of the cheque to the appellant's account.

39. It is to be noted that "prejudice" and "induce" in s75(1) is specifically defined. Section 70(1) says:

"70. Meaning of 'prejudice' and 'induce'

(1) Subject to subsections (2) and (4), an act or omission intended to be induced is to a person's prejudice if, and only if, it is one which, if it occurs, will -

(a) result in his permanent or temporary loss of property;

(b) result in his being deprived of an opportunity to earn remuneration or greater remuneration;

(c) result in his being deprived of an opportunity to gain a financial advantage otherwise than by way of remuneration;

(d) result in somebody being given an opportunity to earn remuneration or greater remuneration from him;

(e) result in somebody being given an opportunity to gain a financial advantage from him otherwise than by way of remuneration; or

(f) be the result of his having accepted a false instrument as genuine, or a copy of a false instrument as a copy of a genuine one, in connection with his performance of any duty.

(2) For the purpose of this section, an act which a person has an enforceable duty to do and an omission to do an act which a person is not entitled to do shall be disregarded."

40. To convict, it was necessary for the Judge to find the "dual intent" in s75(1) established by reference to the matters set out in s70(1)(a) to (f). In the context of this case, it could only be (f): Here, the person to be induced must be under some identifiable duty. What could that be in the context of this case?

"Performance of duty"

41. It will be recalled that the applicant, in his statements to the police, said that the letters were to "get the licence in China", to "register a company or branch in China". No evidence was led as to what function the Beijing Municipal Foreign Economic Relations & Trade Commission (the addressee in exhibit P20) performed and whether it had anything to do with registering companies in China. The prosecution relied simply upon the applicant's vague admissions to the police. Hence the judge's amorphous findings regarding "the authorities in China" being induced to "set up companies".

42. Assuming, by reading between the lines, that the judge's finding amounts to this: The applicant intended by the use of the letters to induce the authorities concerned with registering companies in China to allow the two companies named in charges 2 and 3 to be registered, or branches of those companies to be registered when, if they had known the truth, their duty would have been to refuse registration. This is a somewhat beign enlargement of the judge's actual findings and, without such enlargement, we are by no means sure that the bare findings made by the judge can properly sustain the convictions.

43. But we need not resolve this point, because there is a further point which is fatal to the convictions. It is this: The allegation in charges 2 and 3 is that the applicant had in his possession in January 1996 the false instruments intending to use those instruments in the future to induce the conduct as averred. But, on the Crown's own case, the material was spent. The letters had been used. There is no suggestion that those stale letters might have been used again.

44. In these circumstances the convictions on charges 2 and 3 cannot stand. They must be quashed.

Alternative verdict

45. Under s75(2) a person who, without lawful authority or excuse, has in his custody or control an instrument which is, and which he knows to be false, commits an offence punishable by 3 years' imprisonment.

46. On the facts as found by the judge these ingredients were clearly satisfied and the applicant could have been convicted of an offence under s75(2): that is, of simple possession.

Grounds of appeal: Charge 1

47. The charge here is under s76(1). The intent necessary to constitute the crime is (i) that the applicant or another should make a false instrument with the material in his custody or control, and (ii) that the applicant or another should use the false instrument to induce somebody to accept it as genuine, to his own or someone else's prejudice.

48. As to (ii), obviously if the prosecution succeeded in establishing that either the applicant or another intended to use the six blank passport forms to make forged Brazilian passports, the further intent, to induce an immigration officer to accept them as genuine Brazilian passports would almost automatically follow.

49. The question then is whether the evidence before the judge entitled him to find the first intent established.

50. There is no doubt that, on the facts, the applicant was guilty of the lesser offence of possession under s76(2) which provides:-

"(2) A person who, without lawful authority or excuse, makes or has in his custody or under his control a machine or implement, or any paper or other material, which to his knowledge is or has been specially designed or adapted for the making of any false instrument, commits an offence and is liable on conviction on indictment to imprisonment for 3 years."

51. But was there sufficient evidence for the Judge to find the first specific intent in s76(1) proved?

52. There was evidence before the court to show that the package of documents, including the six blank passport forms, were of ancient vintage: The declaration of residency forms (exhibit P11-C) bore the date "1990". It is therefore quite possible, as the applicant asserts, that the material had been in his custody since 1992. On the other hand, there was all the other material found together with the passport forms, tending to show that the intention was to use the forms to make complete forged passports. The Judge did not accept the applicant's explanation. In all the circumstances, whilst the findings of fact were sparse, it was open to the judge to conclude that the ingredients in charge 1 had been proved.

Conclusion

53. The application relating to charge 1 is dismissed. Treating the application in relation to charges 2 and 3 as the hearing of the appeal we allow the appeal and quash the convictions on charges 2 and 3. In the exercise of our powers under s83A of the Criminal Procedure Ordinance Cap 221 - as modified by s83 of the District Court Ordinance - we substitute a verdict of guilty of possession of a false instrument under s75(2) of the Crimes Ordinance in relation to charges 2 and 3.

54. We need now to hear counsel with regard to sentence.

Sentence

55. As to sentence, naturally the sentence of 2 1/2 years' imprisonment imposed by the judge on the first charge must stand. In relation to the convictions for possession of a false instrument under s75(2) of the Crimes Ordinance which we have just ordered, we sentence the applicant to 6 months on each of the two charges to be served concurrently with the sentence on charge 1 and with each other. The total sentence is therefore 2 1/2 years.