HKSAR v. KOON YEE POON

CACC No. 95 of 1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

______________

______________

_______________

J U D G M E N T

_______________

Keith J.A. (giving the judgment of the Court):

Introduction

1. On 18th November 1998, the Applicant pleaded guilty in the Eastern Magistracy to 18 charges of theft. He was committed to the High Court for sentence. On 2nd February 1999, he was sentenced by Deputy Judge Lugar-Mawson (as he then was) in the Court of First Instance to 6 years' imprisonment on each charge, all to be served concurrently with each other. He now applies for leave to appeal against those sentences.

The facts

2. The facts were not in dispute. We take them from the Summary of Facts, which the Applicant agreed was correct, and from what counsel told the judge. The Applicant worked for a firm of stockbrokers as an account executive. He bought and sold stocks and shares on behalf of the firm's clients. He was described by his counsel as the firm's "key employee and a very successful trader". He was said to have built up the firm's business in Hong Kong, having "acquired more than 300 clients over the years" and having earned commission for the firm in the region of $100m.

3. A few years ago, the Applicant decided to speculate on the stock market himself. The firm prohibited its employees from trading in shares on their own account, and the Applicant therefore opened an account with the firm in his wife's name. He incurred heavy losses, and the series of offences which he committed amounted to a forlorn and ultimately disastrous attempt to trade his way out of debt. Over a period of three years or so, the Applicant on 18 occasions sold the shares of two of the firm's clients whose accounts he had been responsible for. He did so without their knowledge or consent. He used the proceeds to finance his own trading. The 18 occasions on which he sold the clients' shares constituted the 18 separate charges of theft.

4. One of the two clients was a retired businesswoman who had known the Applicant for over 20 years. In her case, the Applicant had, on 8 occasions between July 1994 and July 1995, sold shares which were in her name without her knowledge or consent. The proceeds of those sales, which represented the prevailing prices of the shares, amounted to about $6.6m. The Applicant's employers eventually paid a sum in excess of $12.5m. to acquire shares for her to replace those which the Applicant had sold.

5. The other of the two clients was a businessman from Mauritius. He had also known the Applicant for a number of years. In his case, the Applicant had, on 10 occasions between March 1994 and August 1997, sold shares which were in his name without his knowledge or consent. The proceeds of those sales, which again represented the prevailing price of the shares, amounted to about $14.7m. When the client became aware of what the Applicant had done, he gave the Applicant the opportunity to compensate him for his losses. The Applicant made two payments amounting to $1m. by way of restitution, but that was all he could afford. The sum which the Applicant's employers will have to pay that client to acquire shares for him to replace those which the Applicant had sold has not been finally agreed, though in the course of the investigation into what the Applicant had done, the client had told the Commercial Crimes Bureau that the value then of the shares which had been sold was in the region of $26.7m.

6. One particular feature of the Applicant's conduct needs to be mentioned. He had to conceal from his two clients that their shares had been sold. He had, in other words, to cover his tracks. He did that by producing the statements of their accounts on his personal computer at home and sending them to the clients. He must have intercepted the statements which would have been sent to them by the firm in the normal way. The statements which he sent the clients did not, of course, accurately record the shares which had been bought and sold on their behalf, and the positions which the statements disclosed were entirely fictitious.

The approach of the judge

7. The judge could not have been unmindful of the fact that the Applicant initially turned to dishonesty in order to recoup what he thought was a temporary setback in his trading activities, but that soon the Applicant found himself in an ever-decreasing spiral which it was impossible to extricate himself from without revealing what he had done. Even so, the judge took an exceptionally serious view of the Applicant's conduct. He said that it "would be hard to imagine a worse example of breach of trust", and he considered the case "to be one of the worst examples of theft by a professional man" which he had encountered. He bore in mind that the maximum penalty for a single charge of theft was one of 10 years' imprisonment. For the systematic theft of shares then worth over $21m., but subsequently worth more than that, over a period of 3 years in grave breach of trust, the judge decided to take an overall starting point of 10 years' imprisonment.

8. The judge regarded the most powerful mitigation to be the fact that, when the Applicant's crimes came to light, he admitted what he had done, he co-operated in the investigation and pleaded guilty at the earliest opportunity to do so. The judge also took account of the opportunity which the Applicant took to compensate one of the clients, his hitherto blameless and successful professional life and his genuine regret for what he had done. The judge reflected those mitigating factors by reducing the overall sentence to 6 years' imprisonment.

The criticisms of the judge's approach

9. The principal criticism of the judge made by Mr. Graeme Mackay for the Applicant is that, although this was a serious case, it was not as serious as the judge characterised it, and it was certainly not so serious as to attract a starting point equivalent to the maximum penalty if the individual thefts had been charged as one offence. In that connection, Mr. Mackay relied on the principle that the maximum penalty should be reserved for the most serious type of offence. This was, he said, not the most serious example of theft: the accounts of only two clients were involved, and therefore this was not a case of wholesale fraud on the public or small investors; there was no element of organised crime; and there was no evidence of gain by the Applicant (for example, he did not secrete what he had stolen abroad or spend it on a lavish or exorbitant lifestyle).

10. We cannot go along with this argument in its entirety. The principle that the maximum sentence is reserved for the worst possible example of the offence concerned has no application to the present case. Although the offences committed by the Applicant conformed to a pattern, they constituted distinct and separate offences. The judge was not saying that each of the offences deserved the maximum punishment. He was saying that, viewed cumulatively and applying the totality principle, the series of grave offences which the Applicant committed justified an overall sentence which happened to equate to the maximum sentence for each offence if they had been viewed individually.

11. We note the features of these offences to which Mr. Mackay referred, and we think that there may be some force in the contention that a starting point of 10 years' imprisonment may be more appropriate for cases in which hundreds of millions of dollars have been stolen or cases in which large numbers of small investors have been deprived of their life savings. But the fact remains that this was a deliberate and sustained pattern of dishonest behaviour over a lengthy period which caused very considerable loss to people who had placed their trust in the Applicant. In Barrick (1985) 81 Cr. App. R. 78, the Court of Appeal in England identified at p.82 some of the matters which the courts should have regard to in determining what the proper level of sentence should be in cases of dishonesty involving a breach of trust. These have been held to be equally valid in Hong Kong: see Ying Lai Chau [1991] 1 HKLR 48 at pp.50G-51A. We have considered these factors in the case of the Applicant, and although sentences totalling 10 years' imprisonment following a contested trial would have been heavy, we cannot say that the starting point selected by the judge was so manifestly excessive as to justify interference by an appellate court. But even if we had thought that the starting point of 10 years' imprisonment was unduly excessive, the judge gave the Applicant more than the usual discount, and we do not think that the ultimate sentence of 6 years' imprisonment was so harsh as to warrant a reduction.

12. Mr. Mackay referred us to two cases which he said were out of kilter with the judge's starting point of 10 years' imprisonment. One of them was Kwok Yee William (CA 452/93). In that case, the Court of Appeal approved a starting point of 81/2 years' imprisonment in a case which was not all that dissimilar from the present case in terms of culpability. But absolute consistency in sentencing is not something which can be achieved, and it has often been said that what has been thought to be appropriate in one case does not mean that that should necessarily be followed in the next.

The judge's reliance on Clark

13. Finally, one factor which is said to have contributed to the judge's conclusion that the starting point should be 10 years' imprisonment was the recent decision of the Court of Appeal in England in Clark [1998] 2 Cr. App. R. 137. In that case, the Court considered the effect of inflation and the increase in white-collar crime on the guideline sentences in Barrick, as well as the effect of the reduction of the maximum sentence in England for the offence of theft from 10 years' to 7 years' imprisonment. In Clark, it was said that contested cases involving ￡1m. or more would merit sentences of 10 years' imprisonment or more. In the last few weeks, the Court of Appeal in Hong Kong said in Secretary for Justice v Wong Kay Din (CAAR 7/98) that there was "no rational justification to depart from the sentences suggested in Clark", though no attempt was made to see whether the comparison between England and Hong Kong was an apt one.

14. Judgment in Clark was delivered in November 1997, which was after the Applicant had committed the offences for which he had to be sentenced. It is settled law that the sentence for an offence should be in accordance with the practice prevailing at the time of the commission of the offence. The criticism of the judge, therefore, is that he erred in principle in that he erroneously took Clark into account.

15. We reject this criticism of the judge. In our view, the judge did not use Clark in any way which was contrary to principle. We do not read the judge as having relied on the tariff of 10 years' imprisonment or more for cases involving ￡1m. or more. The judge simply cited a passage in Clark about the increase in white-collar crime in order to support his own view on the topic which he trenchantly expressed as follows:

"Gone are the days when sentences for what is euphemistically called 'white collar crime' were so low that they presented no punishment to the offender, and no deterrent to others who may be tempted to commit similar offences; so much so, that the rewards of crime far outweighed the punishment for them."

There may be room for doubt as to whether white-collar crime has been treated unduly leniently in recent years, but we endorse the judge's remarks that the rewards of crime should not outweigh the punishment for it.

Conclusion

16. For these reasons, but with some sympathy for the Applicant who found himself in a spiral of dishonesty from which he could not emerge without breaking cover, this application for leave to appeal against sentence must be refused.