HKSAR v. CHEUNG YING KIT, VICKY

CACC 202/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 202 OF 2004

(ON APPEAL FROM DCCC 1115 of 2003)

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REASONS   FOR   JUDGMENT

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Hon Lugar-Mawson J: (giving the judgment of the Court)

Introduction

1.  On 18 November 2004 we refused the Applicant, Vicky Cheung Ying Kit, leave to appeal against conviction and sentence.  In doing so we exercised our powers under section 83W(1) of the Criminal Procedure Ordinance and directed that 3 months of the time the Applicant has spent in custody pending the determination of this matter shall not be reckoned as part of the sentence to which he is for the time being subject.

2.  We now give our reasons for our decisions.

Background

3.  On 22 April 2004, the Applicant was convicted after trial in the District Court before H.H. Judge Gill of twenty-five charges of theft, contrary to section 9 of the Theft Ordinance, Cap. 210.  All the charges were of a similar nature.  Each alleged that the Applicant had stolen property belonging to a limited company called Ocean Craft Manufactory Ltd (Ocean Craft).  The property in each case was described as a chose in action in the form of a debt that its bankers owed to Ocean Craft.  The offences spanned dates between 4 May 1998 and 20 November 2001.  The total amount alleged to have been stolen was $879,688.

4.  On the same day, the Judge sentenced the Applicant to 2 years' imprisonment on each charge.  He then ordered that the Applicant serve his sentences on charges 1 to 14 concurrently and that he serve his sentences on charges 15 to 25 concurrently with each other, but one year consecutively to the sentences on charges 1 to 14, thus making the Applicant’s overall sentence one of 3 years’ imprisonment.

The prosecution's case

5.  The prosecution’s case was that the complainant Wong Yun Kam (PW1) and the Applicant each owned, through their respective nominees, half of the shares of Ocean Craft, which they had set up in 1995.  Ocean Craft’s business was the manufacture of silk flowers.  It had an office in Hong Kong and a factory in Dongguan on the Mainland.  PW1 provided the initial capital of $1.5 million and the Applicant owed PW1 money advanced to him in respect of a failed business venture called the Cheng Wu Silk Flower Factory, which the Applicant had formerly owned.

6.  The Applicant was employed as Ocean Craft’s General Manager and attended to its day-to-day management.   For his part, PW1 took no part in the running of Ocean Craft.

7.  Ocean Craft had two bank accounts.  One with the Hua Chiao Commercial Bank the other with the Shanghai Commercial Bank.  Each account required two signatories to operate.  The mandated signatories on both accounts were PW1, his wife, and the Applicant. 

8.  Tsang Kin (PW2) was a Manager stationed in Dongguan; his duties included general administration and the preparation of Customs forms.  He was also PW1’s brother-in-law.  He gave evidence under an immunity from prosecution.

9.  Ms. Chow Kin Ha (PW3) was the accounts clerk employed in Hong Kong.  Her duties included preparing company cheques for signature by PW1 and the Applicant.  She too gave evidence under an immunity from prosecution.

10.  On the twenty-five occasions particularised in the charges the Applicant in Hong Kong asked PW1 to sign cheques after having first falsely represented to him that they were required to pay rebates to customers.  The Applicant told PW1 that if no rebates were paid to them the customers would not place orders with Ocean Craft.  Believing what the Applicant told him, PW1 signed the cheques.  PW3 had made the calculations and prepared the cheques on the Applicant's instruction.  He had also told her that they were needed to pay rebates to customers.

11.  There was no dispute that all twenty-five cheques were passed on to the Applicant, who either cashed them or deposited them into his personal bank accounts.  No rebates were ever paid to customers.

12.  In respect of the cheques involved in charges 1 to 14, the payments were disguised in Ocean Craft’s accounts partly as rentals for the Dongguan factory paid to a local public body and partly as salaries to a non-existent employee.  At the Applicant and PW3’s request PW2 had prepared bogus tenancy agreements and rent receipts for that purpose.

13.  In respect of the cheques involved in charges 15 to 25 the cheque payments were disguised in Ocean Craft’s accounts as payments to a Wing Hang Company for orders supplied to the Dongguan factory.  It was an admitted fact that Ocean Craft had no commercial dealings with Wing Hang Company.

The defence case

14.  The Applicant elected neither to give evidence nor call witnesses.  His case, as disclosed in cross-examination, was that it had been agreed at the outset of the business venture between PW1 and himself that, because he wanted to hide his true income from his creditors, his monthly income would be enhanced by the secret payment to him of commissions disguised as rebates to customers. 

15.  Records of his cautioned interviews with the ICAC, in which he proffered the same explanation, were adduced by consent.

The Judge’s findings

16.  The Judge found no evidence to support the Applicant’s contention that PW1 had agreed to him augmenting his income by paying himself commissions disguised as rebates to customers.

17.  The Judge felt unable to give much weight to the contents of Applicant’s cautioned interviews as he considered that they were "almost entirely exculpatory and self-serving".

18.  The Judge was satisfied that the Applicant upon his own instigation, and taking advantage of his position of authority in Ocean Craft, had directed the accounts clerk (PW2) and his subordinate at the Dongguan factory (PW3) to put together a scheme which enabled him to regularly extract money from Ocean Craft’s bank accounts and thus deprive it permanently of that money, for his own use.  He was, therefore, satisfied that the prosecution had proved beyond doubt that the Applicant stole the money particularised in the twenty-five charges from Ocean Craft.

Application for leave to appeal against conviction

19.  We turn to the application for leave to appeal against conviction first.

The grounds of appeal

20.  In his “Amended Perfected Grounds of Appeal Against Conviction" dated 8 November 2004, Mr. Y. C. Yeung for the Applicant has raised nine substantive grounds of appeal, in addition to a “sweeping-up” 10^th ground that the conviction is unsafe and unsatisfactory.  At the hearing, Mr. Yeung offered no argument in support of the 8^th ground and told us that the 9^th ground was not a ground at all, but a repetition of the arguments he had already advanced on the Applicant’s behalf.  We therefore, gave no consideration to those two grounds and no separate consideration to the 10^th ground.

21.  We regret to say that we found Mr. Yeung’s arguments in support of the remaining seven grounds of appeal very confusing and at times disingenuous.  We express our thanks to Mr. Alex Lee, Senior Government Counsel, who appeared for the Respondent and whose well-structured and well-researched skeleton argument helped us understand both the case and the issues behind the grounds of appeal.

22.  We deal with those grounds which were based on matters of law first.

Ground 1

23.  In ground 1 it was contended that the Judge erred in failing to note that the Applicant had “the final and conclusive say” over what expenditure Ocean Craft could incur, as well as failing to note that PW1 was a separate legal entity from that company, who had no such say. 

24.  In argument reliance was placed on section 3(1) of the Theft Ordinance which proves that a person’s appropriation of property belonging to another is not to be regarded as dishonest if he appropriates it in the belief that he has in law the right to deprive the other of it, either on behalf of himself, or a third person.  The argument here was that, as the Applicant was entrusted with the day-to-day management of Ocean Craft, he believed that he had the right in law to deprive Ocean Craft of its money and was, therefore, not acting dishonestly when he appropriated the proceeds of the twenty-five cheques. 

25.  We have more to say about the issue of dishonesty later when we deal with the 4^th ground of appeal.  Suffice it to say, this argument ignored the fact that, firstly, having decided that he was unable to give much weight to the contents of Applicant’s cautioned interviews, in which there was some glimmer of a claim that could support the existence of such a belief in the Applicant’s mind, there was no evidence in the prosecution’s case that could support it.  There certainly was none in Applicant’s case for he chose neither to give evidence nor call witnesses.

26.  Secondly, the argument ignored the Judge’s finding that PW1’s consent was required before cheques could be issued.  Two signatories were required to operate Ocean Craft’s bank accounts.  Had it been the intention of PW1 and the Applicant, who were Ocean Craft’s only shareholders, that the Applicant had a "final and conclusive say" over the use of the company money, there would have been no need for such a requirement.  And, thirdly, the argument ignored the Judge’s finding that the Applicant resorted to false representations to induce PW1 to sign the twenty-five cheques in question.

Ground 2

27.  In ground 2 complaint was made that the Judge failed to consider the issue of either the joint-shareholder PW1 or the company consenting to the appropriations being made. 

28.  He did not have to.  The point is well settled.  The House of Lords in R v. Gomez [1993] AC 442 approved their own earlier decision in Lawrence v. Metropolitan Police Commissioner [1972] AC 626 and re-affirmed that consent to, or authorization by the owner of, the taking of his property by a rogue is irrelevant.  In the particular circumstances of the theft of company property by those in de facto control of it, Lord Brown-Wilkinson had this to say, at page 496D to 497B: 

“Turning to the company cases, the dictum in Reg. v. Morris [1984] A.C. 320 has led to much confusion and complication where those in de facto control of the company have been charged with theft from it. The argument which has found favour in certain of the authorities runs as follows. There can be no theft within section 1 if the owner consents to what is done: Reg. v. Morris. If the accused, by reason of being the controlling shareholder or otherwise, is "the directing mind and will of the company" he is to be treated as having validly consented on behalf of the company to his own appropriation of the company's property. This is apparently so whether or not there has been compliance with the formal requirements of company law applicable to dealings with the property of a company and even to cases where the consent relied on is ultra vires: see Reg. v. Roffel [1985] V.R. 511 and Reg. v. McHugh [1988] 88 Cr.App.R. 385.

In my judgment this approach was wrong in law even if the dictum in Morris had been correct. Where a company is accused of a crime the acts and intentions of those who are the directing minds and will of the company are to be attributed to the company. That is not the law where the charge is that those who are the directing minds and will have themselves committed a crime against the company: see Attorney- General's Reference (No. 2 of 1982) [1984] Q.B. 624 applying Belmont Finance Corporation Ltd. v. Williams Furniture Ltd. [1979] Ch. 250.

In any event, your Lordships' decision in this case, re-establishing as it does the decision in Reg. v. Lawrence [1972] A.C. 626, renders the whole question of consent by the company irrelevant. Whether or not those controlling the company consented or purported to consent to the abstraction of the company's property by the accused, he will have appropriated the property of the company. The question will be whether the other necessary elements are present, viz. was such appropriation dishonest and was it done with the intention of permanently depriving the company of such property? In my judgment the decision in Reg. V. Roffel [1985] V.R. 511 and the statements of principle in Reg. v. McHugh, 88 Cr.App.R. 385, 393, are not correct in law and should not be followed.  As for Attorney-General's Reference (No. 2 of 1982), in my judgment both the concession made by counsel (that there had been an appropriation) and the decision in that case were correct, as was the decision in Reg. v. Philippou, 89 Cr.App.R. 290.

I am glad to be able to reach this conclusion. The pillaging of companies by those who control them is now all too common. It would offend both common sense and justice to hold that the very control which enables such people to extract the company's assets constitutes a defence to a charge of theft from the company. The question in each case must be whether the extraction of the property from the company was dishonest, not whether the alleged thief has consented to his own wrongdoing.”

Ground 4

29.  In ground 4 complaint was made that the Judge either failed to note that the Applicant was not dishonest, or failed to appreciate that there was no evidence that he was dishonest.  The strange argument is tendered that the Judge “…did not find that it was impossible for the Applicant to harbour such an idea (that the drawings were part of his remuneration) in all the circumstances of the case…”

30.  The test of dishonesty in theft offences is well known.  It was set out by the English Court of Appeal in R v. Ghosh [1982] QB 1053.  Having reviewed many earlier authorities, Lord Lane LCJ concluded, at page 1064:

“In determining whether the prosecution has proved that the defendant was acting dishonestly a jury must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest. If it was not dishonest by those standards, that is the end of the matter and the prosecution fails. If it was dishonest by those standards, then the jury must consider whether the defendant himself must have realised that what he was doing was by those standards dishonest. In most cases, where the actions are obviously dishonest by ordinary standards, there will he no doubt about it. It will be obvious that the defendant himself knew that he was acting dishonestly.  It is dishonest for a defendant to act in a way which he knows ordinary people consider to be dishonest, even if he asserts or genuinely believes that he is morally justified in acting as he did. For example, Robin Hood or those ardent anti-vivisectionists who remove animals from vivisection laboratories are acting dishonestly, even though they may consider themselves to be morally justified in doing what they do, because they know that ordinary people would consider these actions to be dishonest.”

31.  The English Court of appeal in R v. Roberts (W) 84 Cr App R 117, CA, held that that there is no need to give a jury a Ghosh direction unless the defendant himself has raised the issue that he did not know that anybody would regard what he did as dishonest.  Also, in R v. Price (R W) 90 Cr App R 409, CA, the same court held that a Ghosh direction need only be given where the defendant might have believed that what he was alleged to have done was in accordance with the ordinary person's idea of honesty.  Ghosh and the English cases following it are accepted as authorative in Hong Kong.

32.  In this case, the Applicant chose not to give evidence at trial. He did not, therefore, raise the issue of whether or not he realised that what he was doing would be regarded as dishonest by reasonable and honest persons. 

33.  The Judge rejected the Applicant’s strange defence that PW1 and he had agreed at the outset of the business venture between them that he could augment his income by secretly paying himself commissions disguised as rebates to customers, because not only was there no evidence in the prosecution’s case that lent support to it, but also it was in itself inherently implausible.  He said this in his Reasons for Verdict:

“I have no evidence before me to support the defence stance that the defendant and Mr. Wong had a private, unwritten arrangement at the outset of their relationship that his monthly income should be enhanced by the secret collection of commission, publicly extracted, to pay rebates to customers.  Indeed, I have to say, in the light of Mr. Wong's direct denial of such arrangement, that it would be extraordinary if it was in place with the attendant subterfuge, bogus tenancy agreements and supporting documents, because to what end? How could a creditor, even a nosy, angry one, have lawful access to books of account of a private company to see whether his debtor was good for repayment?  In fact, I have no difficulty in holding there was no such arrangement.”

34.  Once the Judge found that there was no such agreement between PW1 and the Applicant, and that PW1 had signed the cheques as a result of the Applicant’s false representations, there could be no basis for the contention that the Judge should have considered whether or not the Applicant “harboured” any “idea”' that he was entitled to the money as part of his remuneration.

35.  Further, the test is not whether the Judge found that it was "impossible" for the Applicant to “harbour the idea” that he was entitled to the payments. The test is whether the prosecution had proved beyond reasonable doubt that the Applicant had acted dishonestly.  The Judge made this finding on that issue in his Reasons for Verdict:

"The defendant, upon his own instigation and taking advantage of his position of authority, directed his accounts clerk and subordinate at the factory to put together a scheme. That scheme had the purpose of enabling him to extract without authority or colour of right regularly money from the coffers of Ocean Craft, thus to deprive it permanently of that money, for his own unlawful enrichment. He got away with it because his partner, playing no direct role in Ocean Craft, accepted his words and signed the cheques in the belief that he was paying rebates to customers to foster trade. In short, the prosecution has proved beyond doubt that the defendant stole all that money from Ocean Craft. "

36.  It is obvious from that trenchantly worded passage that the judge was satisfied that the Applicant had deceived PW1 and had been dishonest in doing so.  Indeed dishonesty must be an essential element of any deception.

Ground 5

37.  In ground 5, the convoluted argument was raised that, and we quote:

“The learned Judge erred in failing to note that, as far as the cheques (bills of exchange) are concerned, once they are properly executed, the instructions conveyed by them to the banks, for the banks to extinguish the existing "chose in actions" were not conditional upon the propriety or otherwise of the purposes which the Company issued the cheques and therefore that the "appropriations" of the "chose in actions" were unconditionally authorized by the Company.

In other words, the learned Judge erred in failing to distinguish (i) the consensus between PWI and the Applicant (thus the Company) for all cheques to be honoured despite the dispute between them on the underlying transactions (if any) leading to the issuing of the cheques from (ii) the said disputed underlying transactions.”

38.  Quite what this meant is not clear, for both Mr. Yeung’s skeleton argument and his oral submissions only served to obfuscate the matter further.  We take it that he was saying that where there is a dishonest transfer of funds from one bank account to another, the fraudster who effects the transfer cannot be guilty of theft of the chose in action which the victim has against his bank as a new chose in action belonging solely to him to him is created in his own bank account.  

39.  Well-established authority settles the point against the Applicant.  In HKSAR v. Wong Cho Sum & Others [2001] 3 HKLRD 76, this Court was concerned with the following factual situation: the first defendant ran a model agency scam and the second to fifth defendants worked as that agency's managers or scouts.  The victims paid the agency money on the false pretext that the amounts were either a recruitment fee or an advance fee for a portfolio of photographs.  The funds wereelectronically transferred from the victims’ bank accounts to the agency's bank account either by the victims themselves, or by the defendants after the victims had given them their credit cards. The charges against the defendants each alleged the theft of a chose in action.  The defendants were convicted and appealed against their convictions.  At issue was whether the electronic transfer of funds from one account to another could amount to appropriation of property belonging to another.

40.  On appeal, it was argued, relying on the English House of Lords’ decision in R v. Preddy [1996] AC 815, that where there is a transfer of funds from one bank account to another, the fraudster who effects the transfer could not be guilty of theft of the chose in action which is represented by the victim's bank account.  That argument was abandoned in the course of the hearing of the appeal.   This Court thought the abandonment justified, Stock JA saying, at page 84:

“A study of the decision in R v Kohn (1979) 69 Cr App R, 395 highlights, we suggest, the following important distinction, a distinction relevant to the present case: that whereas the fraudster who himself causes the transfer of money from the victim's bank account does not thereby obtain a chose in action belonging to another, because what he obtains is a fresh chose in action belonging to himself, he may nonetheless be guilty of theft of the victim's chose in action if it be shown that by his act he has appropriated it. "Appropriation" is not to be equated with "obtaining".  And where there is an act of appropriation, in other words an act by which the fraudster assumes the rights of the owner of the chose in action, and the thing recoverable by action is diminished or extinguished by the act of appropriation, then the fraudster is guilty of theft. That is because each element of the offence as defined by s.2(1) of the Ordinance is then made out. There has been an appropriation (the interference with the owner's rights); of property belonging to another (the credit balance belonging to the victim); with the intention permanently to deprive the owner of that property (it is not intended that the proceeds will be utilised to restore the balance); and, assuming dishonesty is shown, the offence is complete.”

41.  The facts in Kohn are very similar to the facts in this case.  In Kohn, the appellant drew cheques on the bank account of a limited company, of which he was a director, in favour of various third parties.  The cheques, however, were intended for his benefit rather than the company named as payee, and after negotiating them through others the proceeds were paid into his bank account.  Some of the drawings occurred when the account was in credit, some when it was overdrawn, but within the agreed facility.  And there was one drawing when the victim company’s account was over the agreed overdraft limit.  The appellant was charged, in relation to each of a number of such payments, with (a) theft of a chose in action, namely a debt owed to the company by the bank; and (b) theft of a cheque form, the property of the company. 

42.  The English Court of Appeal held that where the victim company’s bank account was either in credit, or overdrawn within the agreed limit, the bank had an obligation to meet cheques drawn on it which could be enforced by action. The company, therefore, had a right of property, a chose in action.  As to the count which related to the period when the agreed overdraft limit was exceeded, there was then no relationship of debtor and creditor, even notionally, and so the bank had no duty to the company to meet the cheques.  Even if it did so as a matter of grace, that did not retrospectively create any personal right of property in the customer and did not create any duty retrospectively in the bank.  The Court of Appeal quashed the conviction on that count. 

43.  Although the decision in Kohn relating to the charges of theft of the cheque forms was impliedly overruled by the House of Lords’ decision in Preddy (as there can be no intention permanently to deprive the owner of a cheque form, which theoretically, though not in practice, will on presentation for payment be returned to the drawer via his bank) as may be seen from the reliance placed on it in Wong Cho Sum, Kohn is, in other respects, still regarded as good law.

Ground 7

44.  Ground 7 was in three parts.  It was contended, firstly, that the Judge erred in law in concluding that the Applicant’s cautioned ICAC interview was "almost entirely exculpatory” when it was in fact a mixed statement.  Secondly, that the Judge erred in concluding that he was unable to give much weight to the interview’s contents and that there was no evidence before him to support the Applicant’s case, when the interview contained the Applicant’s case and formed part of the prosecution's evidence.  And thirdly, that the Judge wrongly directed himself that there was no evidence coming from the Applicant to undermine, contradict, or explain the prosecution's case against the Applicant.

45.  This ground and the argument advanced in support of it misrepresented the Judge’s words.  He did not say that the contents of the interview amounted to an exculpatory statement and not a mixed statement, what he said was:

“Both sides invite me to treat the (interview record) as a mixed statement, giving such weight to the contents as is appropriate in the circumstances.  Of course, I have read the same. I have to say that, in my view, it is almost entirely exculpatory and self-serving, and thus I am unable to give much weight at all to its contents.”

46.  That is something entirely different from the construction Mr. Yeung contended for.  It is clear from that passage that the Judge was assessing the weight he could give to the interview’s contents.  He was not speaking of its evidential consequences, for had it been an entirely exculpatory statement it would have been evidence of no more than what the Applicant’s reaction was when asked about his alleged offences.

47.  The finding he made, that he was unable to give much weight to its contents, was part of his function as the trial judge and we see no reason to fault him in respect of that decision.

48.  It is true that the Judge went on to say, in the passage quoted at paragraph 33 above that he had no evidence before him to support the Applicant’s defence.  Given that this defence was raised in the Applicant’s ICAC interview, this may be, technically, a misrepresentation of the evidence.   We however believe that, when read in proper context, the Judge was there referring to the fact that the Applicant had chosen not to give or call evidence to support his defence.

49.  We now turn to the two remaining grounds based on matters of fact or evidence

Ground 3

50.  In ground 3, the complaint was that the Judge failed to note that the payments to the Applicant were “justified.”  “Justified” in the sense, it would appear from Mr. Yeung’s argument on this ground, that PW1 was in some way estopped from denying that the Applicant had carte blanche in running Ocean Graft, because he, PW1, had chosen not to do so. 

51.  This staggering proposition is in no way supported by the evidence at trial.  There was undisputed evidence that the Applicant converted the proceeds of all of the twenty-five cheques in question to his own use.   It was part of his defence that there were no rebates to customers.  His case, as we have said, was that the payments were part of his remuneration and that this had been agreed between PW1 and himself at the start of the venture between them.  It was not that PW1 had abdicated all responsibility for the company to him.  The fact that the Applicant had been given the authority to manage Ocean Craft on a day-to-day basis cannot be taken to mean that he was unaccountable to the company and its other shareholder for the way the company's money was used. 

52.  Further, the Judge found as a fact that there was no agreement between PW1 as contended for by the Applicant.  We have already pointed out that two signatures were required to operate the company’s bank accounts, and that the Judge found that the Applicant had obtained PW1's signature to the twenty-five cheques in question by means of false representations that they were to pay rebates to customers.  Had the Applicant enjoyed the sweeping degree of control contended for, he would not have been required to obtain a joint signature on the company cheques and would not have needed to resort to deception to obtain that signature.

Ground 6

53.  Ground 6 charged the Judge, in accepting PW1's evidence and rejecting the Applicant's, with failing to consider that it would be “highly improbable” for PW1 as an “experienced merchant” to have signed the twenty-five cheques in question without knowing the nature of the transactions and as equally “highly improbable” for the irregularities not have been discovered in Ocean Craft’s annual audit of its accounts. 

54.  The fact that PW1 was an experienced merchant does not necessarily mean that he could not have been deceived by the Applicant, as the Judge accepted he was.  The evidence, which the Judge accepted, was that he played no active part in the day-to-day management of Ocean Craft and believed what the Applicant told him about the cheques being for payment of rebates to customers.

55.  There is certainly nothing improbable in the fact that the accounting irregularities resulting from the Applicant’s falsifications of the company accounts were not discovered in the annual audit.  That the auditors failed to discover them is no more than testimony to the Applicant’s skill in getting others to falsify the tenancy agreements and rent receipts.

Decision on the application for leave to appeal against conviction

56.  We found nothing of any merit at all in any of the grounds of appeal and were not persuaded that the Applicant’s convictions were unsafe or unsatisfactory.  The application for leave to appeal against conviction was, therefore, dismissed.

Application for leave to appeal against sentence

57.  We turn to the application for leave to appeal against sentence.

Ground of appeal against sentence

58.  The sole ground of appeal was that the overall sentence of 3 years’ imprisonment is manifestly excessive and/or wrong in principle.

The Judge’s reasons for sentence

59.  When sentencing the Applicant, the Judge said that he was following the guidelines set out in the English case of R v.Clark [1998] 2 Cr App R 137, which was followed in Hong Kong in S J v. Wong Kay Din, CAAR No. 7 of 1998 (unreported).  In strict theory, as Wong Kay Din was not decided until 26 June 1999, the Clark guidelines should not have been applied in respect of the sentences on the first 12 charges, all of which pre-date the decision in Wong Kay Din.  The point however is academic, at the most, as Clark, is the English Court of Appeal’s attempt to take account of inflationary values since its decision thirteen years earlier in R v. Barrick 81 Cr App R 78 and, other than that, it established no new sentencing principles.

60.  Clark followed Barrick in holding that the appropriate sentence for theft involving breach of trust depended, amongst other factors, on the amount of money stolen.  The Court made these suggestions (at page 142 C-D) as to the range of sentences, stressing that they were guidelines only and that many factors other than the amount involved might affect sentence:

“Where the amount is not small, but is less than £17,500, terms of imprisonment from the very short up to 21 months will be appropriate; cases involving sums between £17,500 and £100,000, will merit two to three years; cases involving sums between £100,000 and £250,000, will merit three to four years; cases involving between £250,000 and £1 million will merit between five and nine years; cases involving £1 million or more, will merit 10 years or more.”

61.  The Court went on to say that these terms applied to contested cases and guilty pleas would attract the appropriate discount. Consecutive sentences might be called for where the sums involved were exceptionally large and not stolen on a single occasion, or where the dishonesty was directed at more than one victim or group of victims.

62.  In England and Wales, where the maximum sentence for theft has been reduced from 10 to 7 years’ imprisonment, the only way that sentences at the higher levels could be imposed is by way of consecutive sentences where the defendant is convicted on more than one charge.  This complication does not arise in Hong Kong where the maximum sentence for a single count of theft remains at 10 years’ imprisonment.

63.  The total amount the Applicant stole was $879,688, which (assuming, for the purposes of rendering the Clark sentencing bands intelligible in Hong Kong, an average Hong Kong dollar to sterling exchange rate of HK$12 to £1 over the time of the Applicant’s commission of his twenty-five offences) placed him in the range of offenders who could expect to receive a sentence of up to 3 years’ imprisonment.  As he had been convicted after trial, the Judge was unable to give him any discount for a guilty plea.

64.  The Judge found nothing in the Applicant’s background that warranted a reduction of sentence.  He dealt with the Applicant’s previous clear record in this way: 

“I accept that you have a clear record. But for breach of trust cases that cuts little or no ice, because it is assumed that the offender would not have achieved his position of authority and trust without having had a good character in the first place and, after all, this offending did take place over a long passage of time. So I give no discount for that.”

The Applicant’s arguments

65.  Mr. Yeung argued that the Applicant should have been sentenced on the basis that as a 50% shareholder in Ocean Craft he had a claim to half of the money he stole, and that the true loss to the company was in the region of $435,000, or more accurately $439,844.

66.  Mr. Yeung also argued that this is not a breach of trust case in the proper sense, as the Applicant was both a shareholder in Ocean Craft as well as its employee.  Here again the Applicant’s defence - which the Judge rejected - that this case involved no more than a dispute between PW1 and Applicant over how the Applicant should be remunerated was repeated.

67.  We were also reminded that the Applicant was of clear record and that the thefts occurred many years ago. 

68.  It was also argued that the Applicant had no experience or knowledge of law and that had he been told to stop after the first theft  - it is not made clear by who - the ensuing twenty-four thefts would not have occurred.

Discussion

69.  We were not impressed by any of these arguments.

70.  Even assuming that the Applicant was, by virtue of his 50% shareholding in Ocean Craft, entitled to half of the amount stolen, the balance would still fall within the second sentencing band recommended in Clark and still attract a sentence of up to 3 years’ imprisonment.

71.  The fact that the Applicant had a 50% shareholding in Ocean Craft does not mean that he was entitled to 50% of the amount he stole. The evidence was that Ocean Craft had its production costs to meet and had a cash flow problem.  It also owed rent to PW1 who was the owner of its premises.  The first call on the company’s money was to meet its running costs and debts and not pay rewards to its shareholders.

72.  We could not accept the contention that the Applicant’s conduct arose from his ignorance of the law.  The fact that he had to resort to making false representations to PW1 to induce him to sign the cheques, and that he drew PW2 and PW3 into his criminal enterprise by procuring their falsification of accounting documents and records and bogus tenancy documents, shows all too clearly that he was well aware that what he was doing was wrong.

73.  This, very clearly, was a breach of trust case and the fact that Applicant was more than an employee in no way mitigates the seriousness of his criminal conduct.  PW1, the Applicant's business partner, had placed trust in him and left him to run Ocean Craft.  Obviously he would, and should, have expected that the Applicant would run it honestly for their mutual benefit and profit.  Instead, for around three and a half years, the Applicant regularly and systematically embezzled the company’s funds.  He did that not only by practising an ongoing deception on PW1, but also by suborning the company’s bookkeeper and its junior manager into committing criminal offences to aid him in his embezzlement.  The Judge was quite correct when he said that the Applicant’s previous clear record  "cuts very little or no ice."

74.  In this regard, we also note this Court’s view expressed in HKSAR v. LEUNG Shuk Man [20021 3 HKC 424, where at page 427H, the Court said that a multiplicity of offences may render an appellant's so-called good character, in the sense that he had no previous convictions, “a fairly meaningless label.”

Decision on the application for leave to appeal against sentence

75.  We were satisfied that the Applicant’s sentences were neither wrong in principle nor manifestly excessive and dismissed his applications for leave to appeal against sentence. 

Loss of time

76.  This was a wholly unmeritorious appeal, both as to conviction and sentence.  It had no realistic chance of success.  We, therefore, exercised our powers under section 83W(1) of the Criminal Procedure Ordinance and directed that 3 months of the time the Applicant has spent in custody pending the determination of this matter shall not be reckoned as part of the sentence to which he is for the time being subject.