HKSAR v. LIN ZONG YUE

[English Translation – 英譯本]

CACC 141/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 141 OF 2014

(ON APPEAL FROM DCCC NO 47 OF 2014)

________________

Hon Derek Pang J (giving the judgment of the Court):

1.  This matter lies from the District Court. The applicant pleaded guilty to, and was therefore convicted on, three counts of “dealing with propertyknown or believed to represent proceeds of an indictable offence”, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455. He was sentenced to imprisonment for a total term of 52 months[1] and ordered to pay certain sums of money by way of compensation. He now applies for leave to appeal the sentence (confined to the terms of imprisonment).

The charges and the facts

2. Chronologically, the three offences took place on 5 September, 6 September and 28 October 2013. The particulars of all three offences are that the applicant “together with a person known as ‘Ah Ming’, knowing or having reasonable grounds to believe that certain property in whole or in part directly or indirectly represented the proceeds of an indictable offence, dealt with the said property”.

3. All three offences arose from phone scam. The facts are summarized as follows by Judge Sham, the trial judge[2]:

“3. Facts of Charge 1: Madam Lee (transliteration), aged 76, received a call on the day in question at her home in Ping Shek Estate, Ngau Tau Kok. The man on the phone asked her if she wanted to pay a ransom for the release of her son who was being held captive, and if she was, she would have to pay a sum of $200,000. Madam Lee asked the man if he knew the name of her son. The man replied that it was ‘Man Chai’ (transliteration) and went on to say that if the money was not paid, the limbs of ‘Man Chai’ would be chopped off. The man said her son and his business partner owed his company HK$200,000. Madam Lee said she was able to borrow $50,000. The man instructed her to pay by instalments of HK$50,000 each, and told her to take a taxi right away to Metropark Hotel Kowloon in Prince Edward to pay the money. Madam Lee took cash of $39,500 from home and went to the Hotel.

4. Madam Lee arrived at the Hotel after one-odd hour. 20 minutes later, [the applicant] approached her. Madam Lee asked [the applicant] if the money was to be paid over there, and he said yes. Madam Lee handed the $39,500 over to [the applicant] and at the same time asked him if he knew her son’s name. [The applicant] replied that it was ‘Man Chai’ and then left.

5. Facts of Charge 2: on the day immediately following the date of the offence in Charge 1, Mr Wong (transliteration), aged 81, received a call at his home in Choi Ying Estate, Ngau Tau Kok. The caller asked him to repay in full a debt of $200,000 that his son owed. Mr Wong told the caller that he only had HK$30,0w00 [sic]. The man on the phone asked Mr Wong for his home address. 10 minutes later, [the applicant] showed up at the door of Mr Wong and asked for $30,000. Mr Wong handed $30,000 over to [the applicant].

6. Facts of Charge 3: Around noon on 28 October 2013, Madam Choi (transliteration), aged 80, received a call at her home in Lower Ngau Tau Kok Estate. The man on the phone cried ‘mum’ as soon as she had picked up the phone. Madam Choi responded by asking, ‘Is it Ah Tong (transliteration)?’ (‘Ah Tong’ was the name of her youngest son). The man then called himself Ah Tong and said that he was being held captive. Then another man took over the phone, told Madam Choi that her son had made his friend pregnant, and demanded a sum of HK$400,000 to resolve the matter. At the same time, Madam Choi heard the man who had called himself ‘Ah Tong’ shout ‘Don’t hit me. Mum save me!’. Madam Choi told the caller not to hit her son and said that she did not have $400,000. The caller asked her if she had $100,000. She said she had to check how much cash there was at home, and came up with $75,000 in the end.

7. The parties agreed to meet up and hand over the money at Ngau Tau Kok Market. Madam Choi left home with the $75,000. Using a quadripod walking aid, she walked slowly to the Market. She then took a rest at a staircase nearby. About 10 minutes later, [the applicant] approached her and said, ‘This is Ah Tong’, and then handed a mobile phone to her. Madam Choi recognized the voice of the person on the phone to be that of the person who had talked to [her] just now, but as it was noisy out there, she could not hear him clearly. [The applicant] took the $75,000 from Madam Choi, but he had in fact been followed by police all along. Since [the applicant] entered Hong Kong at 10:15 am on 28 October 2013, he had been under police surveillance all the time. The police subsequently intercepted [the applicant] and found from his person the $75,000 that he had just taken from Madam Choi.”

4. According to the Summary of Facts to which the applicant pleaded, after being arrested, he denied having taken part in defrauding people. He only admitted collecting and dealing with the sums in question:

“11. The police conducted a number of video-recorded interviews with [the applicant]. Under caution, he admitted that as he owed Ah Ming money, he followed his instructions to come to Hong Kong to collect money. Two days before that (that is, on Saturday), Ah Ming told him to come to Hong Kong. On 28 October 2013, Ah Ming told him to go to Ngau Tau Kok Market to meet up with an old lady dressed in grey. Upon arrival in Ngau Tau Kok, he saw PW1 outside the Market. As instructed by Ah Ming, he handed the phone to PW1. Following a brief exchange over the phone with Ah Ming, PW1 handed a black plastic bag to him. According to the agreement between him and Ah Ming, he would receive 10% of the amount collected as reward (Charge 3).

12. As regards Charge 1, [the applicant] admitted that as he owed Ah Ming gambling debt, the latter told him to come to collect money. He therefore came to Hong Kong a few days before 5 September 2013. On the day in question, Ah Ming telephoned him and asked him to go to Metropark Hotel Kowloon to meet up with a woman and collect money from her. Upon arrival, he saw a woman dressed in red. As instructed by Ah Ming, he handed the phone to that woman. She then handed him the money. Ah Ming said it should be a sum of HK$39,500, but he did not count it. He later went to Mongkok and remitted the money to a Jiangmen account at a money changer. Having made the remittance, he sent a message to Ah Ming. He had already lost the account number. Ah Ming gave him $3,900 after he returned to Jiangmen.

13. In respect of Charge 2, [the applicant] admitted that on 6 September 2013, Ah Ming telephoned him and asked him to go to a certain unit to collect money. He went as instructed to Ying Lok House, Choi Ying Estate. He knocked on the door of Room 915. He then handed the phone to the elderly gentleman who opened the door. The elderly gentleman handed him HK$30,000. He then went to Mongkok and remitted the money to an account the number of which he had already forgotten. He then returned to Jiangmen, and Ah Ming gave him $3,000 as agreed.

14. He contacted Ah Ming all along using a pre-paid phone card.”

Background of the applicant and mitigation

5. The applicant came from the Mainland. At the time of the conviction, he was aged 21 and had no prior conviction in Hong Kong. Before the trial judge, he was adamant that he came to Hong Kong to collect money on behalf of Ah Ming because he owed Ah Ming gambling debt of $8,000. He admitted that he had reason to believe that the three sums in question were proceeds of an indictable offence.  He denied knowing that the three sums came from phone scams.

Sentencing at first instance

The applicant and the fraudster belonged to the same gang

6.                The trial judge refused to accept the applicant’s contention that he knew nothing about the phone scams. The judge took the view that the applicant and the fraudster in question were in the same gang[3]:

“9. After the defendant pleaded guilty to the charges and admitted the facts, I tried to ascertain from defence counsel the nature of the mitigation to be advanced. I learned that the defence was going to submit that [the applicant] did not know that the sums in question came from phone scams. At that time, I pointed out to defence that based on the evidence before the court, I might not accept that submission. After hearing the mitigation advanced by the defence explaining how [the applicant] committed the offences, I made it clear to defence counsel that I would not accept that the defendant had no knowledge, but I also made it clear that I was prepared to hear further evidence for consideration. In the end, defence indicated that no further evidence would be adduced. The evidence now before the court comes mainly from the facts the prosecution case — facts to which [the applicant] agreed.

10. Generally speaking, as far as offences involving ‘money laundering’ in phone scams are concerned, the culprit usually instructs the victim to leave the money at a certain place. The offender (defendant) will then go to that place to pick up the money. There is in fact not much contact between the two of them. In such a case, if the defendant’s explanation is that ‘I only followed others’ instructions to pick up the money at a certain place, and I knew nothing about whether the moneycame from phone scam or other circumstances’, I am prepared to accept that he had no knowledge.

11. The circumstances of the present case are, however, different. There is no dispute that the background to it is phone scam. The question is whether or not [the applicant] knew that the sums of money came from phone scams. In the present case, [the applicant] not only showed up to collect the sums of money and hence had direct contacts with the victims, he had actually spoken with them. As far as the facts of Charge 1 are concerned, it was falsely represented over the phone that Madam Lee’s son was being held captive and a ransom of $200,000 was needed to secure his release. And over the phone, Madam Lee asked the caller for the name of her son and the caller answered that it was ‘Man Chai’. When [the applicant] had contact with Madam Lee, she also asked the defendant if he knew the name of her son, and [the applicant] replied that it was ‘Man Chai’.

12. The facts of Charge 2 do not reveal such a situation. As for the facts of Charge 3, it is beyond doubt that after the call was made to Madam Choi, someone cried ‘mum!’ on the phone, and Madam Choi answered, ‘Is it Ah Tong? Is it Ah Tong?’ (Ah Tong was her youngest son). The culprit then immediately called himself ‘Ah Tong’. When [the applicant] approached Madam Choi to take the money, the words he said to her were also ‘Ah Tong’.

13. Therefore, the present case is not simply a case of the defendant showing up to take the money, but rather a case of him showing up prepared, knowing full well the exchanges made over the phone earlier. Judging by the facts of Charge 1, Madam Lee had asked the caller on the phone if he knew the name of her son and he was able to give the answer, as a result of which she believed that her son was being held captive. The facts disclose that when [the applicant] approached Madam Lee, she asked him the name of her son and he was able to say that it was ‘Man Chai’. There is no doubt that [the applicant] was aware of the content of the phone conversation, and also knew that when he approached the victim he might be asked about the information exchanged over the phone. He must have had full knowledge of such information, otherwise he would not have been able to answer the questions.

14. It may be counter-argued that ‘Ah Ming’ might indeed have only asked [the applicant] to go to take the money and might have only instructed him that ‘if the other party asks you, tell her that her son’s name is Ah Man’. However, such a possibility does not, in my view, withstand close scrutiny. It is because when either ‘Ah Ming’ or the phone fraudster gave instructions to [the applicant], there was no need at all to withhold such information from [the applicant] to prevent him from knowing the content of the exchanges made over the phone. On the contrary, putting him in the picture would make it easier for him to get the money without being tripped up by questions from the other party. Therefore, from this perspective, this gang of criminals had no reason whatsoever not to let [the applicant] know the aforesaid information, particularly when they knew that the other party would ask questions. Therefore, he must have had a clear knowledge of the content of the exchanges made over the phone.

15. Judging by the account [the applicant] gave the police, the response he gave regarding the three contacts he had with the victims was the same, namely that he handed the phone to the victims as ‘Ah Ming’ had instructed. In respect of Charge 1, his response was that he handed the phone to the woman as Ah Ming had instructed and then she gave him the money. In respect of Charge 2, his response was he went to the target unit, knocked on the door and handed the phone to the elderly gentleman who opened the door, who then handed him $30,000. In respect of Charge 3, his response was he handed a mobile phone to Madam Choi. According to [the applicant], he handed the phone to the other party as had been instructed by ‘Ah Ming’. Clearly, the person on the phone wanted to speak to the victim. And according to the account [the applicant] gave, ‘Ah Ming’ was someone who had knowledge of this phone scam. The charges also alleged that he dealt with this ‘black’ money with this ‘Ah Ming’. The ‘Ah Ming’ who was on the phone had knowledge of the matter, and [the applicant] also handed the phone to the victim. Putting all these together, the only conclusion that the court can reach was that [the applicant] was a member of this gang of culprits who knew fully and clearly that the victims were to be contacted by phone, falsely told that their family members had been held captive, and required to pay ransom money for their release. [The applicant] was a member of this gang responsible for turning up to collect those sums of money. These are findings of fact which I make in the present case.

…

30.       … For Charge 2, although there is no evidence that [the applicant] had said the words uttered over the phone, I also draw the inference that he had knowledge. It is because I have already drawn the inference in respect of Charge 1 that he and ‘Ah Ming’ and perhaps others defrauded Madam Lee by means of this kind of phone call. And when he was in Hong Kong, he took money from 81-year-old Mr Wong on the following day by the same means. Therefore, it can logically be inferred that he was a member of that gang. After committing an offence on the first day, he re-offended the following day. The third offence that followed was the same.”

Appropriate starting point

7.                In view of the above findings, the trial judge considered that the starting point for each offence should be 4 years[4]:

“16. Defence counsel has referred the court to a number of decided cases, of which two are worthy of note: Hung Yung Chun (CACC 453/2009) and Wu Jian Bing (CACC 32/2011). Simply put, both are phone scam cases. In Hung Yung Chun, the defendant was charged with, and pleaded guilty to, conspiracy to defraud. The trial judge adopted 3 years’ imprisonment as the starting point and enhanced it by 50% pursuant to the Organized and Serious Crimes Ordinance. On appeal, the Court of Appeal considered that this kind of offence was even more serious then street deception cases and that the starting point should be 4 years, but an enhancement by one-third was considered sufficient.

17. After Hung Yung Chun,the defendant in Wu Jian Bing was charged with ‘money laundering’. The trial judge adopted 4 years’ imprisonment as the starting point and enhanced it by one-third, and the total term was 42 months. On appeal, the Court of Appeal considered that in the circumstances the starting point should be 3 years and enhanced it by one-third (adding 8 months to it), and the total term for the offence was 32 months.

18. In Wu Jian Bing, it appears that the court did not think that the appellant had knowledge of the phone scam or was a member of the gang of phone fraudsters. Therefore, the situation in Wu Jian Bing was that the appellant had reason to believe that the money he was dealing with was from an indictable offence, but he had no knowledge of the phone scam.

19.       [The applicant] in the present case is also charged with ‘money laundering’ but in view of the findings of fact I made earlier, he was a member of this gang of phone fraudsters. Although he is not charged with conspiracy to defraud, in fact the circumstances were basically identical to those in Hung Yung Chun. Therefore, I rely on the sentencing of Hung Yung Chun in considering the present case.”

Enhancement of sentence pursuant to the Ordinance

8.                Furthermore, the trial judge considered that the sentence in the present case should be enhanced pursuant to the Organized and Serious Crimes Ordinance, the extent of such enhancement being one-third (10 months) of the starting point(4 years) as reduced on account of the guilty plea (32 months). As a result, the term of imprisonment for each count should be 42 months. The trial judge reasoned as follows:[5]

“20. Pursuant to section 27 C and D [sic, for section 27(2)(c) and (d)] (the harm caused to the community and the prevalence of the offence) of the Organized and Serious Crimes Ordinance, the prosecution also applies for an enhancement of sentence in the present case. The prosecution has submitted a report prepared by Chief Inspector Lam (transliteration) which sets out the statistics and circumstances of this kind of phone scam cases in recent years. Paragraph 22 of the report sets out the annual statistics from 2007 to 2013 and also statistics from January to February 2014.

21. As far as the amount of loss was concerned, the total amount of reported loss in 2007 as a result of successful phone scam cases exceeded 20 million dollars. The amount jumped to more than 23 million dollars in 2008 and to more than 29 million dollars in 2009. It went down to around 25 million dollars in 2010 and dropped further in 2011 to around 22 million dollars before leaping to more than 33 million dollars in 2012 and then rising to almost 40 million dollars in 2013.

22. At the hearing, the prosecution sought to adjourn the matter for 3 weeks in order to allow the prosecution to include more figures in the report for the court’s reference. The prosecution intended to set out the number of instances in these phone scam cases where the offenders were charged with ‘money laundering’ offences. Having inquired into the situation, in the end I refused the application for adjournment. I was of the view that the further information sought to be provided could not in fact directly assist the court in considering whether or not to enhance the sentence, because the prosecution was basically asking the court to consider the first report on cases of reported phone scams and the second report on cases of successful phone scams.

23. In my view, these figures alone are sufficient to assist the court in considering whether or not an enhancement is called for in the present case. It is my view that this type of phone scams takes only one form: the perpetrators contact the victim by phone, falsely claiming over the phone that a family member of the victim has been held captive for a certain reason and demanding payment of money by the victim for the release of the family member. Therefore, this type of offence involves, firstly, a gang of people who conspire to defraud, and then contacts are made with victims by phone, and, with the abovementioned lies, the victims are led to believe that the culprits have held their family members captive. If the victims believe the story, they will hand over money. Therefore, whatever the charge preferred against the perpetrators is, whether it is ‘money laundering’ or conspiracy to defraud, it does not affect in any way the modus operandi of this kind of phone scams.

…

27. Defence counsel has also submitted that, according to the decided cases referred to, the power to enhance the sentence is not arbitrary, and the court is not bound to enhance the sentence in each and every case. Judging from the report prepared by Chief Inspector Lam, there has clearly been a huge jump in the number of such cases over the last two years. In 2007 and 2008, the average number of reported cases of receipt of scam phone calls was 1,500; by contrast, the number of such cases had risen above 2,000 by 2012 and 2013. Turning to the statistics for reported cases of successful phone scams, the numbers of such cases over the last two years exceeded 700 cases; whereas the figures in 2007 and 2008 were, respectively, over 500 and almost 500 (over 480). Compared with the situation a few years ago, these offences have been on the rise recently and the numbers thereof are by no means negligible.

…

29. Having considered the decided cases and Inspector Lam’s report, I am of the view that these offences are prevalent, have been on the rise in recent years, and have caused considerable harm to the community. Judging by the number of reported cases of scam phone calls as set out in Inspector Lam’s report, it is clear that culprits have not stopped using this method to continue to practice deception. The numbers of reported cases of successful phone scams show that there are still people in the community who will fall prey to the fraud and lose money as a result. In my view, the rising numbers show that [the fraud] has caused considerable harm to the community. By reference to the above decided cases, I allow the prosecution’s application for enhancement and enhance the sentence by one-third.

…

31. For each count, I adopt a starting point of 4 years. There are no other powerful mitigating factors apart from his guilty plea. Giving one-third discount for the guilty plea, the total term is 32 months. Enhancing it by one-third (10 months), the final sentence for each count is 42 months’ imprisonment.”

Total term of imprisonment

9. Finally, the trial judge considered that the total term of imprisonment in the present case should be 52 months. This already included the discount to which the applicant was entitled by reason of his having, in respect of Charge 1, voluntarily confessed to facts which were otherwise undetectable. The judge had this to say[6]:

“32. As regards the total sentence, defence counsel has sought a further reduction of the sentences for Charges 1 and 2 for the reason that prosecution on those charges was made possible by confessions made by the defendant upon arrest. In respect of Charge 2, the evidence shows that when he entered the building in which Mr Wong resided, his features were captured by the CCTV in the lift. I asked the defence whether the image clearly showed the defendant’s features, and the defence indicated that it did. Although the defence claimed that Mr Wong was not able to recognize the person who visited his premises and took the money on the day in question, the evidence regarding the defendant’s identity did not, in my view, necessarily have to be given by Mr Wong because the CCTV had recorded the defendant’s features. Wearing the hat of a juror, I could also look at this evidence and decide if that person was the defendant. Besides, from the temporal evidence, it could be inferred that it was the defendant who visited Mr Wong and took the money. Therefore, it is not the case that prosecution was made possible only by the defendant’s confession. However, in respect of Charge 1, I do accept that prosecution would not have been possible but for the defendant’s confession. I shall make allowance for this fact in sentencing.

33. I imposed on the defendant, who committed three similar offences on his visit to Hong Kong, a total sentence as follows: the term of 42 months for Charge 3 is to be served consecutively to 6 months of the term for Charge 2 and 4 months of the term for Charge 1, and the remaining sentences are to be served concurrently, making a total term of 52 months.

34. I was at first minded to order that 6 months each of the terms for Charges 2 and 1 were to be served consecutively to the term for Charge 3, but in view of the fact that Charge 1 was derived from the defendant’s confession, 4 months instead of 6 months of the term for that Charge will be made consecutive so as to reflect this fact.”

Grounds of appeal

10. The grounds of appeal put forward by Counsel for the applicant can be distilled into two major grounds.

11. The first ground is that the term of 42 months imposed for each charge is manifestly excessive because:

(1) the trial judge erred in finding that the applicant was a fellow gang member of the culprits with whom he acted in concert in committing the three “phone scam” offences. It is argued that this conclusion is inconsistent with the evidence adduced.

(2) the trial judge erred in referring to the statistical report compiled by the police in respect of phone scam cases. Counsel argues that, as the offence in question is “dealing with property known or believed to represent proceeds of an indictable offence” and not “fraud”, the figures in the report do not have any referential value.

(3) the trial judge erred in not reducing the sentences for Charges 1 and 2. Counsel submits that the sentences as they stand do not fully reflect the fact that the offences could not have been detected but for the confession voluntarily made by the applicant.

12. The second ground is that the total term of 52 months is manifestly excessive because:

(1) the total loss flowing from the three offences is merely HK$68,022.

(2) taking a reverse calculation, the term of 52 months represents a total starting point of as high as 78 months.

(3) viewed as a whole, this sentence goes against the totality principle.

Discussion

13. In sentencing, the trial judge relied mainly on the case of HKSAR v Hung Yung Chun [2011] 2 HKLRD 167[7] . The two defendants in that case also played the role of money collectors, but they were charged with “conspiracy to defraud” and not “dealing with property known or believed to represent proceeds of an indictable offence”.  In this regard, the Court of Appeal had said that phone scam cases (that is, the fraudulent acts that the two defendants in that case had participated in) were more serious than general street deception cases in that phone fraudsters often terrified victims by uttering excuses such as family members of the victims being held captive.  It was therefore necessary to adopt a higher starting point for phone scam cases. On the facts of that case, the starting point should be 4 years. Besides, due to the sharp rise in the number of similar cases, the sentence was enhanced by one-third pursuant to the Organized and Serious Crimes Ordinance[8]. As for the two defendants’ assertion that they were merely responsible for taking the money and had no knowledge whatsoever of the underlying phone scams, the Court of Appeal also pointed out that such assertion  was not consistent with their pleas of guilty to the charge of “conspiracy to defraud”[9]. However, what is noteworthy is another observation made by the Court of Appeal which does shed light on the sentencing approach to be adopted in the present case[10]:

“… the so-called ‘money laundering’, in general, refers to cases where the prosecution preferred the charge of ‘dealing with property known or believed to represent proceeds of an indictable offence’ against the defendants mainly because they may not be able to prove beyond reasonable doubt their direct involvement in a conspiracy to defraud. Also, in that kind of cases, although the defendants did not know that the property was obtained from the proceeds of an indictable offence, they are convicted for dealing with property ‘believed’ to be proceeds from an indictable offence. In the present case, both applicants pleaded guilty to conspiracy to defraud. The facts they had admitted also indicate their active participation in the scheme. Their acts were more serious than the ones in a general ‘money laundering’ case.”

14. The same issue arose in the recent case of HKSAR v Cen Huakuo CACC 21/2014 (date of judgment: 4 July 2014). The victim in that case was a 78-year-old lady. She received a phone call in which she was told that her son had committed some offences of indecency, for which $50,000 had to be paid in order to ensure his safety. The defendant then showed up at the designated place. He asked the victim if she had brought along the money, and he was able to say the name of her son. He claimed that her son was being held captive. He handed a mobile phone to her so that another male could continue to put pressure on her. As a result, the defendant was convicted after trial on one count of “conspiracy to deal with property known or believed to represent proceeds of an indictable offence”. Having referred to Hung Yung Chun, the judge also adopted 4 years as the starting point and enhanced the term by 50% on the ground that there had been a sharp increase in the same type of cases. On appeal, the Court of Appeal considered the sentence clearly excessive and took the view that the appropriate starting point was 3 years and that the extent of enhancement should not exceed one-third. The Court of Appeal reasoned as follows:

“16. The sentences passed in Hung Yung Chun were based on the fact that the defendants knew the details of the deception offences including the fact that the victims were put into fear because someone told them that their family members were being detained or beaten up, and the victims gave the culprits several hundred thousand dollars out of that fear. Owing to the above factors, the Court of Appeal was of the view that the culpability of the defendant of a phone deception case was more serious than that of the defendant of a street deception and thus adopted the starting point of 4 years.

17. In ‘money laundering’ cases, some defendants have no knowledge or only have an incomplete or sketchy understanding about the indictable offence in connection with the ‘money laundering’ offence, but some defendants, even though they have not taken part in the relevant indictable offence, may have detailed knowledge and understanding of it and are also aware of the adverse impact arising out of their acts of ‘money laundering’. The Court has to take into account these factors when considering the sentence.

18. The applicant did not take part in the deception, he told Madam Chan that her son was being detained, but that only shows his sketchy understanding about the relevant indictable offence and does not mean that he knew the details. When considering the applicant’s knowledge about the relevant indictable offence, the trial judge should not have interpreted the facts in the most unfavourable way against the applicant.

19. The prosecution evidence was insufficient to show that the applicant knew the culprit did tell Madam Chan that harm would be done to her son as he had committed some offences of indecency. The trial judge considered that what happened was equivalent to kidnapping Madam Chan and that she was subjected to far greater fear and stress than those experienced by victims in street deception cases, and he blamed the applicant for that. In the circumstances of the present case, this approach was unfair to the applicant.

20. In any event, the criminal acts of the defendants in Hung Yung Chun were far more serious than that of the applicant. The applicant did not take part in the relevant deception offence, and it is very likely that he was just instructed to collect money from Madam Chan.

21. Although the applicant must have known that the money collected from Madam Chan was obtained unlawfully and the incident was in connection with the phone deception, it was too harsh to apply the starting point in Hung Yung Chun to him.

…

23. Aggravating factors may vary in different cases. In respect of ‘money laundering’ offences, the amount of the ‘black money’ involved is certainly a major sentencing consideration (see paragraph 38 of the judgment in Boma and paragraph 44 of the judgment of HKSAR v. Ngai Fung Sin Apple[2013] 5 HKLRD 95). The amount of the ‘black money’ involved in this case is $50,000. The starting point of 4 years adopted by the trial judge is still manifestly excessive even if sentencing is considered from the point of view most unfavourable to the applicant. His approach of enhancing the sentence by 50% due to the rising trend of this type of offence is also too severe. In fact, there is no authority to support the trial judge’s enhancement by 50%. We do not consider it a proper approach, especially on the facts of this case.

…

25. Taking into account all the circumstances of the case and the requirement that a sentence should have deterrent effect in order to prevent mainlanders from taking part in such an abhorrent and despicable offence like ‘phone deception’ in whatever manner, we are of the view that the appropriate starting point is 3 years’ imprisonment, and the sentence should be enhanced by one-third pursuant to the Organized and Serious Crimes Ordinance.”

15. In our view, the above analysis is entirely applicable to the present case. Sensible as it is, the trial judge’s understanding of the applicant’s role in the offences could not possibly have led to the conclusion that the applicant was of the same gang as the fraudster.  The situation of the applicant falls squarely within that referred to in Cen Huakuo, namely that he had no more than some sketchy idea about the predicate offence. We do note that the trial judge had clearly indicated to the defence that he did not believe that the applicant had no knowledge of the deception, but the defence chose not to adduce evidence on that issue in a voir dire[11].  Even so, the problem remains that the trial judge did not have sufficient evidence before him to reach the conclusion that he did. The trial judge had plainly reversed the burden of proof by drawing a conclusion adverse to the applicant as a result of the defence’s failure to adduce evidence.[12]

16. In view of the above findings, a starting point of 4 years for each offence is in our view manifestly excessive. As regards whether or not the sentence should be enhanced, we respectfully adopt another observation made in Cen Huakuo, namely that the court “may … take into account the overall circumstances of the case in so far as they are related to the defendant’s culpability”[13]. This means that the applicant’s acts were after all an important part of the phone scams, and at the material time phone deception was indeed rampant and caused great harm to the community. Therefore, it is appropriate to enhance the sentence in the present case pursuant the Organized and Serious Crimes Ordinance, as was the case in Cen Hua Kuo[14].

17.              Finally, the applicant complains that but for his own confession, the prosecution would not have had any evidence to prosecute him on Charges 1 and 2, but this was not fully reflected in the sentence imposed by the trial judge. This argument is open to question. For example, the applicant, a Mainland resident, was in Hong Kong on the day in question, and his features were captured by the CCTV when he entered the building in question. All these, as the trial judge clearly pointed out in his judgment, are independent pieces of evidence against the applicant on Charge 2. Even more importantly, the Court of Appeal has already decided on the same issue in HKSAR v Ma Ming[2013] 1 HKLRD 806[15], reaching aconclusion different from what the applicant contends:

“31. The applicant cooperated with the police and after he was arrested he frankly confessed. This led to his being charged with the 1^st charge. We are of the view that this factor should also be subsumed within the one third discount, and should not be treated as a reason for giving any discount more than one third. Otherwise, it would be in conflict with the policy and purpose of giving the one third discount. Not only would it create uncertainly but also it would give rise to disputes, and so it is against public interest.

32. When dealing with individual cases and when considering the totality of the sentence, the court, in exercising its discretion, can take into account the fact that the frank confession of the defendant provides the only evidence which support the charge or charges and therefore make minor adjustments to the total sentence. To this we do not object. However, this factor does not support the argument that this kind of defendants must be given a further discount over and above the one third discount. If the court does not give such defendants any discount in addition to the one third discount, that does not constitute an arguable ground of appeal.

33. In giving the one third discount to the applicant upon his pleading guilty, the trial judge had already taken into account the applicant’s cooperation with the police, his voluntary confession and his guilty plea entered in court.  That he was denied a further discount in addition to the one third discount cannot constitute a reasonable complaint, nor can it be a ground of appeal against sentence.  This ground put forward by Mr. Ma is not substantiated.”

18. It should also be mentioned that it was in fact not correct for the trial judge to adjust the sentence for Charge 1 by making part of the term concurrent in order to reflect that the charge resulted solely from the applicant’s confession[16]. The correct approach would have been to treat the special circumstances of Charge 1 as an additional mitigating factor (if it was indeed necessary to consider such circumstances) and make adjustment to the sentence for Charge 1 during the pleas of guilty and application for enhancement, and then determine the total sentence for the case having regard to the totality principle.

19. In our view, a starting point of 3 years can be adopted for both Charge 1 and Charge 2 which took place on two consecutive days. The applicant defied the law again after 53 days by committing the offence in Charge 3, and a starting point of 3 years and 3 months is warranted for that charge. In view of the decision in Ma Ming, we see no reason for giving more than one-third discount for Charges 1 and 2. Therefore, only the usual discount for guilty pleas will be given to these two charges and Charge 3, which means the terms therefor are reduced to 2 years, 2 years, and 2 years and 2 months respectively. The sentences should then be enhanced by one-third pursuant to the Organized and Serious Crimes Ordinance, to 32 months, 32 months and 34 months respectively. The total sentence should in our view be 46 months in order to reflect the overall seriousness of the case. To this end, the sentences for Charges 1 and 2 can be made wholly concurrent, but 12 months of that term is to run consecutively to the sentence for Charge 3, making a total term of 46 months. The compensation order will remain undisturbed.

Decision

20. We allow the applicant’s application and, treating the hearing as the appeal proper, allow the appeal. The outcome is set out in paragraph 19 above.

Translated by the Judgment Translation Unit of the Judiciary and vetted by Mr Edmund Cham, Solicitor.

[1] To quote from the trial judge: 42 months’ imprisonment for each of Charges 1, 2 and 3. The sentence for Charge 3 to run consecutively to 6 months of the sentence for Charge 2 and then 4 months of the sentence for Charge 1.

[2] See Reasons for Sentence.

[3] See Reasons for Sentence.

[4] See Reasons for Sentence.

[5] See Reasons for Sentence.

[6] See Reasons for Sentence.

[7] See paragraph 7 above and end of paragraph 19 of the Reasons for Sentence.

[8] Paragraphs 22-24 of the judgment.

[9] Paragraph 14 of the judgment.

[10] Paragraph 13 of the judgment.

[11] See paragraph 6 above and paragraph 9 of the Reasons for Sentence.

[12] It is true that in HKSAR v Ngai Ho Ting [2013] 4 HKC 547 the Court of Appeal had pointed out that, except where the mitigation advanced is so implausible that it can be regarded as totally ridiculous, so that it is not necessary to hold a Newton hearing, the judge is under a duty to inform the defence that he does not believe the defendant’s version, so that the defence has to decide immediately whether to call the defendant to give evidence in support of his story, or not to call the defendant, thereby leaving his version open to rejection by the judge. However, relevant to Ngai Ho Ting was some additional information from the defence (the defendant, who admitted trafficking in a dangerous drug, claimed that he brought the drug to Hong Kong for his own consumption solely because he could not withstand the pressure brought about by his wife’s illness); the present case, however, is different in that the applicant simply gave an assertion consistent with the charge (that is, the applicant believed that he himself was not a fraudster but only someone dealing with proceeds of a crime). The trial judge could not impose on the applicant the burden of proving that assertion.

[13] Paragraph 13 of the judgment.

[14] Paragraph 25 of the judgment.

[15] The defendant in that case was arrested on the spot for the offence of “aiding, abetting, counselling or procuring the transfer to another of a travel document” when he bought a passport from an undercover policeman. Subsequently, in the absence of any other evidence, he confessed that that he was recruited, for reward, to place an advertisement on a newspaper offering to buy passports. As a result, he was charged additionally for “conspiracy to aid, abet, counsel and procure the transfer to another of travel documents”, i.e. the 1^st charge against him.

[16] See paragraph 9 above and paragraph 34 of the Reasons for Sentence.