Hon Cheung JA (giving the reasons for judgment of the Court):
上訴法庭法官張澤祐頒發上訴法庭判案理由書：

Application for leave to appeal against sentence
刑期上訴申請

The applicant was the 1st defendant at trial.  He and the other two defendants were jointly charged with 11 counts of “conspiracy to defraud”, contrary to Common Law.  The case was tried in the District Court before Her Honour Judge Yuen.  Of the 11 counts, the applicant was convicted of 9 counts (namely, the 3rd charge to the 11th charge).  Judge Yuen adopted a starting point of 3 years and 6 months’ imprisonment for each count and deducted it by two months to reflect the applicant’s good family background.  The applicant was sentenced to a term of 3 years and 4 months’ imprisonment on each count to be served concurrently.  The applicant sought leave to appeal against sentence.  After hearing, we dismissed the application.  The following are the reasons for judgment.
申請人是原審時的第一被告人。他與其他兩名被告人一同

Facts of the case
被控十一項「串謀詐騙罪」，違反普通法。案件經區域法院法官源麗華審理後，申請人被裁定十一項控罪中的九項控罪(即第三至十一項控罪)罪名成立。源法官以三年六個月監禁作為每項控罪的量刑基準，扣減其中兩個月以反映申請人的良好家庭背景因素，判處申請人每項控罪入獄三年四個月，所有刑期同期執行。申請人就刑期提出上訴許可申請。本庭於聆訊後駁回申請，以下是本庭的判案理由。

The applicant was one of the directors and shareholders of a subcontractor company, that subcontracted from a main contractor that was a building maintenance and refurbishment work company.  The applicant held 20% of the shares of the subcontractor company.  The subcontractor company subcontracted works to other sub-subcontractors which collected fees inclusive of both labour and materials.  Initially, the subcontractor paid the sub-subcontractors work fees by way of cheques.  Later on, letters of credit issued by banks were used for payment of the relevant fees instead.  The applicant was charged with using false documents to apply for letters of credit from banks.  The beneficiaries of the letters of credit were the 9 sub-subcontractors.  The applicants and the other defendants falsely represented to the banks that the letters of credits were applied for the purpose of making payment for the purchase of building materials.  However, the genuine purpose was, indeed, to pay for the work fees of the sub-subcontractors (the 3rd to the 10th charge) or to compensate a worker of a sub-subcontractor for his wages during his leave due to work injury (the 11th charge).  The 9 counts of which the applicant was convicted involved 3 banks and a total of 27 local letters of credit.  The amount involved in these letters of credit exceeded HK$9,000,000.
案情

Legal principles
申請人是一間承辦大廈維修及翻新工程公司的二判商的其中一名董事及股東，他佔該公司百分之二十的股份。該二判商將工程分判給其他分判商。分判商以連工包料的方式收取費用。二判商最初以支票支付工程費給分判商，但後來改以銀行信用証來支付有關費用。申請人被控與其他被告人以虛假文件向銀行申請信用証。信用証的受益人是九名分判商。申請人及其他被告人向銀行訛稱申請信用証的用途是支付購買建築材料的費用，但事實上真正的目的是用作支付分判商的施工費用(控罪三至十)或用作賠償分判商工人的工傷休假薪金(控罪十一)。申請人被裁定罪名成立的九項控罪涉及三間銀行共二十七張本地的信用証。這批信用証所涉及的款額愈HK$9,000,000。

The Court of Appeal has stated clearly in a number of authorities that the use of false document to obtain a letter of credit from a bank is a serious offence.  First, it undermines the reputation of Hong Kong as an international financial and banking centre.  Modern commercial activities generally rely on a documentary system for loan and credit facilities.  Under normal circumstances, a bank relies on the truthful documents from both sides as the basis for approving loans, issuing letters of credit and making payment.  Hence, the Court has to ensure that this type of commercial activity will not be made use of by criminals.  Second, a bank relies upon the goods stated in the letter of credit as the security for the loan, so as to safeguard the bank from loss.  If the commercial transaction so stated is in fact non-existent, the bank does not have sufficient security and has to bear an extremely high risk.  Even if the bank is, ultimately, able to recover the loan and suffers no real loss, it does not in any way mean that the bank needs not face the economic risk arising from an applicant’s use of fraudulent documents to apply for the bank’s letter of credit.  (See: The Queen v Chan Kam-chuen [1995] 2 HKCLR 259; HKSAR v Kwong Shing-cheong, Stephen (CACC 555/2002); HKSAR v Leo Yee Sang Patrick (CACC 494/2004); HKSAR v Chu Wai San and Others (CACC 311/2006); HKSAR v Law Chi Man Kenneth (CACC 356/2006); Secretary for Justice v Grossmann Rainer Horst and Another (CAAR 13/2006) and HKSAR v Leung Wan Keung (CACC 275/2009).
法律原則

Although the Court of Appeal has not laid down any sentencing guidelines for “fraud” by using false documents to apply for a letter of credit, it has stated clearly that the Court has to take into account factors including the amount of money involved, the number of banks deceived, the period over which the fraudulent act was committed, whether the banks had suffered any loss and the roles played by each of the defendants.
上訴法庭已在多宗案例中清楚說明，以虛假文書獲取銀行信用証是嚴重的罪行。第一，有關行為會令香港作為國際金融及銀行中心的名譽受損。現代商業活動普遍以文書的形式進行貸款及融資活動。在一般情況下，銀行有賴雙方提供真實的文件作為批出貸款、發出信用証及支付款項的基礎，故此法庭必須確保這種類的商業活動不會被不法分子利用。第二，銀行是以信用証上所說的貨物作為借貸的抵押品，以保障銀行不會蒙受損失。但如果所報稱的商業交易根本不存在，銀行便沒有獲得足夠的擔保及需承擔極高的風險。就算銀行最終可收回貸款及沒有遭受實質損失，這也不表示銀行不須面對申請人以虛假文書申請銀行信用証的經濟風險(見：The Queen v Chan Kam-chuen [1995] 2 HKCLR 259； HKSAR v Kwong Shing-cheong, Stephen (CACC 555/2002); HKSAR v Leo Yee Sang Patrick(廖義生)(CACC 494/2004); HKSAR v Chu Wai San and Others, (CACC 311/2006); HKSAR v Law Chi Man Kenneth (羅稚岷)(CACC 356/2006); Secretary for Justice v Grossmann Rainer Horst and Another (CAAR 13/2006) 及香港特別行政區訴梁雲强(CACC 275/2009)。

In the case of Law Chi Man Kenneth, in order to defraud the banks, the defendant specially established a company, altered monthly bank statements and provided fictitious information in relation to buyers, suppliers and factories.  As a result, the banks suffered losses that amounted to HK$9,800,000.  The Court of Appeal adopted a starting point of 4 years’ imprisonment for each of the offences of the defendant, making a total of 6 years’ imprisonment for the three offences.
上訴法庭雖然沒有就以虛假文書申請信用証的「詐騙罪」作出刑期的量刑指引，但已經說明法庭是需要考慮案件所涉及的金額、受騙銀行的數目、詐騙行為持續時間多久、銀行有否蒙受損失及各被告人所扮演的角色因素。

In the case of Kwong Shing-cheong, Stephen, the defendant obtained 3 letters of credit using false documents and the amount involved was HK$7,800,000.  The Court of Appeal considered a starting point of 3 years’ imprisonment too low.
在羅稚岷一案，被告人為了向銀行詐騙而特地成立了一間公司、擅改銀行的月結單及提供虛假買家、供應商及廠房資料，導致銀行蒙受HK$9,800,000的損失。上訴法庭裁定被告人每項控罪的量刑基準為四年監禁及三項控罪的總刑期為六年監禁。

The applicant’s grounds of reduction of sentence
在Kwong Shing-cheong, Stephen一案，被告人以虛假文書獲得三張信用証，涉及的款額為HK$7,800,000。上訴法庭認為三年監禁的量刑基準是過低的。

Mr. Alex Ng, counsel for the applicant, points out that Judge Yuen neglected that there were in fact genuine transactions underlying eight of the letters of credit involved in this case, namely, the building materials provided by the sub-subcontractors.  This situation differentiates this case from the other cases with no real transactions.  In the applicant’s view, part of the work fees paid to the sub-subcontractors included material fees.  Thus the risks borne by the banks were relatively low.
申請人減刑理由

Besides, Mr. Ng points out that the culpability of the applicant should be the least amongst the three defendants.  The 2nd defendant was the majority shareholder of the subcontractor group of companies whereas the 3rd defendant was the financial controller.
代表申請人的吳政煌大律師指出源法官忽略了本案涉及的其中八項銀行信用証其實是有實質的交易支持的，即分判商所提供的建築材料，這情況是有別於其他沒有實質交易活動的案件。申請人認為部分支付給分判商的施工費中包括物料費，所以銀行所承受的風險是較低。

Views of this Court
另外，吳大律師指申請人的罪責應該是三名被告人之中最低。第二被告人是二判商集團的大股東，第三被告人是財務總監。

We do not agree with the arguments of the applicant.  Obviously, the relevant work fees covered both labour and materials of the subcontracted works.  The sub-subcontractors had never classified the amount into different fee items like fees for the purchase of materials, wages for workers or profits etc.  In fact, Judge Yuen had already dealt with the relevant topic in the judgment.  In respect of the 4th charge, Judge Yuen said:
本庭意見

‘166.PW9 pointed out that “Kei Yip” did not sell furniture to “Bolton Construction Company Limited”.  He provided furniture and renovation work inclusive of both labour and materials.
本庭不同意申請人的論點。明顯地，有關的工程費用是連工包料的分判工程。分判商從未把款項分類為購買物料費用、工人工資或利潤等不同費用項目。其實，源法官判案書上已經處理了有關的議題。就第四項控罪而言，源法官說：

… …
「166.PW9指『基業』並不是售賣傢俬給『快達營造』，他是提供連工包料的裝修傢俬工程。

168.The sub-subcontractors were not business operators with sophisticated minds.  It was not surprising that they did not know how letters of credit (L/C) issued by banks operated and did not understand the legal principles or requirements therein.  In respect of D1’s allegation that he had obtained the consent of the sub-subcontractors to use letters of credit (L/C) issued by banks for payment of their purchase of materials, I am unable to accept.  The sub-subcontractors had no idea how letters of credit (L/C) issued by banks operated, not to mention understanding that letters of credit (L/C) should only be used for purchase of goods.  What they were concerned was whether they could collect the subcontracted work fees that they were entitled to be paid.  As D1 did not enquire any of the sub-subcontractors about the acquisition price of their materials, how could it be alleged that the sub-subcontractors consented to D1 using letters of credit (L/C) issued by banks to pay for the price of the materials in the subcontracted work fees.  Furthermore, the sub-subcontractors themselves surely had the right to purchase materials with lower prices.  As they were the sub-subcontractors, unless the materials they provided were unmerchantable, the main contractor and the subcontractor should have no say in the acquisition price of the materials of the sub-subcontractors.  How come “Bolton Construction Company Limited” paid for the materials separately.’
……

.
168.各分判商不是頭腦精密的生意營運者。他們不懂銀行信用証(L/C)運作，不明其中法理或要求並不為奇。至於D1指他已獲取分判商同意用銀行信用証(L/C)支付他們購買物料的指稱，本席未能接納。分判商根本不懂銀行信用証(L/C)運作，更何來明白銀行信用証(L/C)只應用以買貨。他們關注的是他們能否收取應得的分判工程費用。Dl未有向他們任何一位分判商諮詢他們的物料來貨價，何以指分判商同意D1是以銀行信用証(L/C)支付分判工程費內的物料價格。再者，分判商當有權自行購買價格較便宜的物料。他們既然是分判商，除非他們提出的品料不合商用品質料(unmerchantable)，大判商與二判應無權過間分判商的物料來價，『快達營造』何以分開支付物料。」

In so far as the 7th charge is concerned, although there is evidence in the case to show that 30% of the overall contract price was the price of the material, Judge Yuen, when dealing with the evidence of the sub-subcontractors, said:
雖然就第七項控罪而言，案件有證據顯示總合約價格的30%為物料價，但源法官在處理分判商的證供時說：

“44.The sub-subcontractors had never classified the payments into different fee items like material fees, wages for workers or subcontracted profits.  As far as the sub-subcontractors understood, the aforesaid payments were the subcontracted fees which they were entitled to be paid.”
「44.分判商從未有把該些繳款分類為物料費，工人工資或分判利潤的不同項目收費。以分判商的理解，上述繳費是他們應得的分判費用。」

Besides, regarding the applicant’s allegation that 20% to 30% of the contract price referred to in the 9th charge was the price of the material, Judge Yuen said:
另外，就申請人指第九項控罪中指20% 至30%的合約價格為物料價一事，源法官說：

“115.PW15 pointed out that since what he put forth to “Bolton Construction Company Limited” was subcontracted work inclusive of both labour and materials, there should not be a situation where labour and materials were separated.  If it were insisted that he should estimate how much the cost of the material price should be within a subcontracted fee of HK$591,928.91, PW15 believed that materials should occupy 20% to 30% of the subcontracted fee.”
「115.PW15指出由於他向『快達營造』提出的是連工包料的分判工程，不應有工料分拆的情況。如硬要他估計HK$591,928.91的判費內應有多少是料價的成本，PW15相信物料應佔判費的20%至30%。」

We agree with what Ms. Alice Chan, Senior Public Prosecutor for the respondent, has submitted, which is that the so-called protection of the bank exists in name only.
本庭同意代表答辯人的高級檢控官陳淑文所說銀行的所謂的保障是如同虛設。

In so far as culpability is concerned, Judge Yuen adopted a starting point of 3 years and 6 months’ imprisonment for the applicant and the 2nd defendant; and a starting point of 2 years and 6 months’ imprisonment for the 3rd defendant.  Obviously, Judge Yuen arrived at the respective starting points of each of the defendants after hearing the evidence and on the basis of the culpability of each defendant.  The period over which the applicant committed these crimes was as long as 4 years and 9 months.  He actively participated in these fraudulent activities and directly instructed his subordinates to make false representations in the letter of credit application forms.  He even signed the relevant documents in confirmation.  We do not think the culpability of the applicant is less than that of the other defendants.  In any event, the illegal acts committed by the applicant would undermine the reputation of Hong Kong as an international financial centre.
關於罪責問題，源法官以三年六個月監禁作為申請人與第二被告人的量刑基準及兩年六個月監禁作為第三被告人的量刑基準。明顯地，源法官針對各被告人定出的量刑基準是在聆聽過証供後及基於各人的罪責而作出的。申請人所干犯的罪行為期四年九個月之久。他積極參予有關的詐騙活動及直接指示下屬在信用証申請表上作虛假陳述，他更在有關的文件上簽署作實。本庭不認為申請人的罪責是低於其他被告人。無論如何，申請所作出的違法行為是會令香港作為國際金融中心的名譽受損。

Conclusion
總結

In our view, both the starting point of 3 ½ years adopted by Judge Yuen and the ultimate sentence imposed by her are appropriate.  We therefore dismissed the application.
本庭認為源法官採用三年半監禁作為量刑基準及作出的最終刑期都是適當的裁決，故此本庭駁回申請。

Alice Chan, Senior Public Prosecutor of the Department of Justice, for the Respondent
答辯人：由律政司高級檢控官陳淑文代表。

Alex Ng, instructed by Henry Wan & Yeung, for the Applicant
申請人：由尹楊律師事務所轉聘吳政煌大律師代表。