HKSAR v. CHAN PAU CHI

CACC 228/2019

[2020] HKCA 496

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 228 OF 2019

(ON APPEAL FROM DCCC NOS 991 and 1007 – 1010 OF 2016)

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J U D G M E N T

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Introduction

1.  The 1^st and 2^nd applicants were D1 and D2 respectively in a case involving 15 defendants who stood trial before District Court Judge Casewell (the judge), variously charged with offences of conspiracy to lend money at an excessive interest rate, contrary to section 24(1) of the Money Lenders Ordinance, Cap 163 and section 159A of the Crimes Ordinance, Cap 200 and punishable under section 24(4) of the Money Lenders Ordinance and section 159C of the Crimes Ordinance (Charge 1), conspiracy to live on the earnings of prostitution, contrary to sections 137(1), 159A and 159C of the Crimes Ordinance (Charge 2), and dealing with property representing the proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organised and Serious Crimes Ordinance, Cap 455 (Charges 3 to 5 against D1, and Charges 6 to 14 against D2).

2.  On 23 May 2019, after a lengthy trial, D1 was convicted of all the charges he faced of conspiracy to lend money at an excessive rate of interest (Charge 1), conspiracy to live on the earnings of prostitution (Charge 2) and three offences of dealing with property representing the proceeds of an indictable offence (Charges 3 to 5), whilst D2, of the charges she faced, was convicted of conspiracy to lend money at an excessive rate of interest (Charge 1) and eight offences of dealing with property representing the proceeds of an indictable offence (Charges 6, 8 to 14), but acquitted of one offence of dealing with property representing the proceeds of an indictable offence (Charge 7).[1] On 24 July 2019, the judge sentenced D1 to a total term of 48 months’ imprisonment and D2 to a total term of 45 months’ imprisonment.

3.  On 14 August 2019, both D1 and D2 filed a notice of application for leave to appeal against conviction and sentence.

4.  Some of the other defendants also filed a notice of application for leave to appeal but they were subsequently abandoned by them, namely D3 abandoned his leave application to appeal against conviction and sentence, and D5, D6, D11 and D13 each abandoned their leave application to appeal against conviction.  D4, D7, D8, D9, D14 and D15 were convicted of the charge they each faced, but none of them applied for leave to appeal against conviction or sentence.  In the case of D10 and D12, they were each acquitted of the charge they faced.

5.  On 21 August 2019, Mr John Reading, SC, for D1 and D2, filed for each of them initial grounds of appeal against conviction and sentence.  On 25 November 2019, he filed perfected grounds of appeal against conviction and sentence, which he later replaced on 15 April 2020 with amended perfected grounds of appeal against conviction and sentence.

The trial proceedings

6.  This case primarily focused on the alleged activities of D1, who together with D2 (D1’s wife) and D3 operated a money lending business at excessive interest rates (Charge 1), and together with D3, D8, D9, D10, D11 and D12 operated a vice website (Charge 2).  It was also alleged that D1, D2 and D3 (sometimes together with another or others) were variously involved in money laundering. 

7.  The case came before the District Court on 15 November 2016 and after a series of pre-trial hearings, it was fixed for trial to commence on 16 October 2017, with 45 days set aside.  It concluded on 23 May 2019 after 65 days of hearings.  It seems that the main reason for the delay in the proceedings, other than the number of hearing days, was because the parties were awaiting the outcome of a legal challenge to the money laundering offence provision.

The charges against the defendants

8.  It is useful at this stage to describe the charges and the allegations against the relevant defendants in order to have an overall appreciation of the case. 

9.  Charge 1 alleged that D1, D2 and D3, between one day in 2002 and 2 December 2013, conspired together and with other persons unknown to lend money at an effective rate of interest in excess of 60% per annum.  The case against the defendants was that they operated the money lending business through two companies which were owned by D2 and D3 respectively.  D2 operated a licensed money lending business under the name of UT Finance Company (UT Finance), which commenced business in June 2005.  D3 operated a money lending referral business under the name of Belief Consulting Company (Belief), which commenced business in March 2005.  Belief was previously known as Believe Finance Consulting Company (Believe), and was owned by D1 from 15 May 1995 to 1 March 2005.  At the end of this period, he transferred the company to his wife, D2, and changed its name to Belief.  It was alleged that the two companies operated in tandem and artificially structured their charges and fees to conceal that money was being lent at a rate in excess of 60%.

10.  Charge 2 alleged that D1, D3, D8, D9, D10, D11 and D12, between 5 January 2012 and 4 December 2013, conspired together to knowingly live wholly or in part on the earnings of prostitution of other persons.  The case against the defendants centred on the vice website, known as “sex141.com”, which facilitated the provision of sexual services by sex workers. It was alleged that the sex workers were required to pay a monthly subscription fee to the operators of the website for promoting their services. D1 was the boss of the website, with D3 tasked to deal with the proceeds of the website, D9 assigned as editor and providing technical support, and D8 to D12 employed to administer the website. 

11.  D1 and D2 were also separately charged with money laundering offences as set out below.

12.  Charge 3 alleged that D1, between 25 June 2007 and 24 January 2013, dealt with the total sum of $9,398,855.77, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

13.  Charge 4 alleged that D1, between 4 July 2007 and 3 December 2013, dealt with a total sum of $20,883,308.61, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

14.  Charge 5 alleged that D1, between 5 July 2007 and 28 January 2013, dealt with a total sum of $5,101,266.07, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

15.  Charge 6 alleged that D2, between 28 October 2006 and 3 December 2013, dealt with a total sum of $43,167,093.63, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

16.  Charge 7 alleged that D2, between 16 October 2007 and 4 November 2013, dealt with a total sum of $8,008,129.17, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

17.  Charge 8 alleged that D2, between 1 September 2007 and 31 December 2013, dealt with a total sum of $11,213,289.46, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

18.  Charge 9 alleged that D2, between 3 May 2007 and 16 December 2013, dealt with a total sum of $18,635,498.50, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

19.  Charge 10 alleged that D2, between 4 September 2007 and 24 December 2013, dealt with a total sum of $6,994,726.69, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

20.  Charge 11 alleged that D2, between 19 December 2007 and 22 November 2013, dealt with a total sum of $5,506,300, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

21.  Charge 12 alleged that D2, between 12 September 2007 and 5 November 2013, dealt with a total sum of $3,959,615, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

22.  Charge 13 alleged that D2, between 11 September 2007 and 13 November 2013, dealt with a total sum of $11,132,403.14, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

23.  Charge 14 alleged that D2, between 14 January 2008 and 30 November 2013, dealt with a total sum of $20,631,860.21, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

24.  It was further alleged that D3 disposed of the proceeds of the website by acquiring bank accounts from various persons, which had been procured by D13, and laundering the proceeds through those accounts. The money laundering charges involve D3 either using named individual accounts on his own or using accounts procured by and in the name of D4 to D7, D11, and D13 to D15.

25.  Charge 15 alleged that D3, between 9 October 2007 and 2 December 2008, dealt with the total sum of $8,605,276.30, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

26.  Charge 16 alleged that D3, between 16 October 2008 and 6 December 2013, dealt with the total sum of $18,414,433.40, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

27.  Charge 17 alleged that D3, between 16 August 2007 and 6 December 2013, dealt with the total sum of $9,926,818.71, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

28.  Charge 18 alleged that D3, between 27 September 2004 and 9 December 2013, conspired together with another person unknown to deal with an unknown sum of Hong Kong currency, held in the bank accounts under the names of 15 other persons, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

29.  Charge 19 alleged that D3 and D4, between 18 September 2008 and 11 November 2013, conspired together and with another person unknown to deal with the total sum of $11,751,774.76, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

30.  Charge 20 alleged that D3 and D5, between 18 October 2011 and 11 June 2013, conspired together and with another person unknown to deal with the total sum of $11,953,876.17, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

31.  Charge 21 alleged that D3 and D6, between 27 September 2004 and 2 June 2011, conspired together and with another person unknown to deal with the total sum of $15,075,918.99, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

32.  Charge 22 alleged that D3 and D11, between 7 June 2012 and 9 December 2013, conspired together and with another person unknown to deal with the total sum of $5,424,655.80, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

33.  Charge 23 alleged that D3, D7 and D13, between 30 October 2012 and 9 October 2013, conspired together and with “Sum Chai” and other persons unknown to deal with the total sum of $3,219,900.64, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

34.  Charge 24 alleged that D3, D 13 and D 14, between 27 April 2011 and 5 December 2013, conspired together and with “Sum Chai” and other persons unknown, to deal with the total sum of $4,415,720.50, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

35.  Charge 25 alleged that D3, D13 and D15, between 7 December 2010 and 26 June 2013, conspired together and with “Sum Chai” and other persons unknown to deal with the total sum of $5,338,720.93, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

36.  Charge 26 alleged that D3, between 19 August 2013 and 6 December 2013, conspired together with “Sum Chai”, Yuen Hoi-kwong, Joe and another person unknown to deal with the total sum of $828,500.08, knowing or having reasonable grounds to believe that it represented the proceeds of an indictable offence.

The reasons for verdict

37.  Having extensively reviewed the evidence and the case for and against each defendant in relation to Charge 1, the judge found that D1, D2 and D3 conspired to operate a moneylending business at exorbitant rates of interest.  D1 had been the proprietor of Believe between 15 May 1995 to 1 March 2005, when D3 took over the company and changed the name to Belief. Meanwhile D2 became the sole proprietor of UT Finance on 16 June 2005.  The judge found that the two companies UT Finance and Believe (as well as its predecessor Belief), which were located in adjoining rooms were, during the conspiratorial period from 2002 to 2 December 2013, operated by D1, D2 and D3 “as one entity” to lend monies at illegal interest rates.  He found that even though D1 transferred his interest in Belief to D3 in March 2005, he continued his involvement in the illegal money lending business.  As part of the arrangement between the two companies, UT Finance required all money borrowers to take out a referral service at Belief, for which the borrowers would be charged an administrative fee.  The judge found that once the administrative fee was removed from the loan then the effective rate of interest on the loan exceeded 60% per annum.  This had been proven from the uncontested evidence from a large number of borrowers and the expert accountant.[2]

38.  The judge similarly reviewed the evidence and the case for and against each defendant in relation to Charge 2.  He concluded that “sex141.com” promoted prostitution by providing a forum for sex workers to advertise their sexual services upon payment of a fee to the operators of the website.[3] He found that D1 was “the payee of sex141.com’s essential service” and that he performed the senior management functions of the operations of this website.  He noted that the IP address of the server used for the domain name “sex141.com” was provided by a US network supplier, Softlayer Technologies Inc (Softlayer).  It was shown that D1 made a monthly payment through his credit card from July 2007 to August 2012 to Softlayer.  In addition, he noted that the New World Company Telecommunication Limited server in Hong Kong was the server of “sex141.com” and that D9 was the authorised person having access and control of the server.  It was revealed that there were WhatsApp messages between D1 and D9 about the operation of the server, as well as references to the username and password of the website.  From these primary facts, the judge concluded that the only reasonable inference to draw was that D1 played a senior management role in the operation of the website.[4]  He said:

“435. D1 paid for Softlayer and communicated with D9 who paid for the server and maintained it. I reject D1’s explanation for the payment and the exchanges with D9.

436. I find in the absence of any acceptable explanation that the inference can be drawn that D1 paid for sex141.com and D1 communicated with D9 about that site.

437. D1 as proved to be the payee of sex141.com’s essential service it must therefore be inferred was operating the senior management functions of that enterprise and must clearly be part of the agreement charged. Thus is the only reasonable and irresistible inference that can be drawn from the proven facts.”[5]

39.  The money laundering offences alleged against D1 in Charges 3, 4 and 5, concerned three accounts operated by him with the Hong Kong and Shanghai Banking Corporation.  It was established that between 2006 and 2013 the accounts had deposits and withdrawals of about $9.3 million, $20.8 million and $5.5 million respectively, and that D1 had not filed a tax return in Hong Kong for this period.  The prosecution case was that there were large amounts of the deposits into the accounts, including substantial cash deposits, which did not have any legitimate source.  The judge rejected D1’s explanation for the cash transactions, and it was only in relation to the substantial and unaccountable cash sums that he found the charges proven.[6]

40.  The money laundering offences alleged against D2 in Charges 6 to 14, concerned accounts that were either operated by UT Finance (Charges 8 to 13) or D2 (Charges 6, 7 and 14).  The judge found that as UT Finance was operated as part of the conspiracy to lend money at excessive interest rates, the funds it received into its six accounts from the illegal money lending business were the proceeds of crime.  He further found that D2 knew this to be the case and therefore she was guilty of Charges 8 to 13.[7]

41.  The period for the offences of the three accounts in Charges 6, 7 and 14 was between 28 October 2006 and 3 December 2013. The judge referred to D2’s evidence that the accounts related to commercial transactions that were unrelated to the business of UT Finance.  In particular, he referred to D2’s evidence in relation to various property and financial transactions which was not challenged by the prosecution, even though the total deposits in the three accounts amounted to about $89 million in cash and D2 had not reported her sources of income, besides from UT Finance, in her annual tax return.  The judge found that in relation to the amounts of $4,213,506 in Charge 6, and $787,500 in Charge 14, these were deposits from the illegal money lending business.  He explained that no such conclusion could be reached in relation to the amounts in Charge 7.  He therefore found D2 guilty of Charges 6 and 14, and not guilty of Charge 7.[8]

The grounds of appeal against conviction

42.  The grounds of appeal against conviction advanced by Mr Reading for D1 and D2 are as follows. 

43.  Of D1’s appeal against conviction, Ground 1 complains that there was insufficient evidence to support a conviction on Charge 1, the conspiracy to lend money at an excessive rate of interest; Ground 2 complains that there was insufficient evidence to support a conviction on Charge 2, conspiracy to live on the earnings of prostitution; Ground 3 complains that the evidence does not in law constitute the offence of conspiracy to live on the earnings of prostitution; Ground 4 complains that there was insufficient evidence to support the conviction on Charges 3 to 5, dealing with property representing the proceeds of it and indictable offence; Ground 5 complains that the prosecution should have elected to proceed on the “knowledge” limb of section 25(1) of the Organised and Serious Crimes Ordinance, Cap 455, and it was unfair to proceed on the “reasonable grounds to believe” limb; Ground 6 complains that D1 was deprived of a fair trial because the prosecution proceeded with disparate charges against 15 defendants in a joint trial; and Ground 7 complains that in all the circumstances the convictions were unsafe and unsatisfactory.

44.  Of D2’s appeal against conviction, Ground 1 complains that there was insufficient evidence to support a conviction on Charge 1, the conspiracy to lend money at an excessive rate of interest; Ground 2 complains that it was unfair to charge a single conspiracy because there were two separate conspiracies; Ground 3 complains that there was insufficient evidence to support the convictions on Charges 6 and 8 to 14; Ground 4 complains that D2 was deprived of a fair trial because the prosecution proceeded with disparate charges against 15 defendants in a joint trial; Ground 5 complains that in all circumstances the convictions were unsafe and unsatisfactory.

Discussion of the grounds of appeal against conviction

45.  I will firstly deal with D1’s grounds of appeal, as some of them are common with D2’s grounds, and then go on to address D2’s remaining grounds.

46.  Ground 1, which is the same as D2’s Ground 1, complains that there was insufficient evidence to support a conviction on Charge 1.  Mr Reading accepted that a key aspect of the conspiracy alleged under this charge was whether UT Finance and Belief (and its predecessor Believe) were in reality one single entity.  The judge made a positive finding to this effect and concluded that the conspiracy alleged had been proven.  The judge set out in his reasons for verdict a detailed exposition of the evidence that supported this proposition and why as a consequence D1 and D2 were guilty of this offence.[9]  After reflecting on the judge’s findings, Mr Reading at the leave hearing withdrew this ground of appeal on behalf of D1 and D2.  It was a concession that was properly made.

47.  Ground 2 complains that there was insufficient evidence to support a conviction on Charge 2.  Mr Reading’s main argument is that there was “a gap” in the evidence to show that the monthly payments made by D1 through his credit card to the overseas server, Softlayer, of “sex141.com”, were payments for facilitating the website.  As pointed out by Mr Ned Lai, for the respondent, when this aspect of the evidence is considered together with the other evidence, it is clear beyond peradventure that the payments by D1 were for this very purpose.  In any event, as noted by Mr Lai, the evidence accepted by the judge proved to the requisite standard that D1 was a party to the alleged conspiracy.  The judge found on the evidence that D1 was very much involved in the operation of the website and played a senior role in its management and operation.

48.  I do not find this ground of appeal reasonably arguable.

49.  Ground 3 complains that the evidence does not constitute in law the offence in Charge 2.

50.  The difficulty that Mr Reading has to overcome in arguing this ground is the application of the offence provision as explained by Viscount Simonds in Shaw v Director of Public Prosecutions [1962] AC 220, where he said: 

“… I think that (apart from the operation of sub-section (2)) a person may fairly be said to be living in whole or in part on the earnings of prostitution if he is paid by prostitutes for goods or services supplied by him to them for the purpose of their prostitution which he would not supply but for the fact that they were prostitutes.”[10]

51.  The circumstances in that case were not dissimilar to the circumstances in this case, except that the medium through which sex workers advertised their sexual services was a printed publication, rather than a social website as in this case.  Put briefly, the House of Lords in Shaw concluded that the purpose of the publication was to promote prostitution and as a consequence it fell foul of the offence provision. 

52.  The judge found proven the conspiracy alleged in Charge 2 on the basis that the evidence supported that the conspirators operated a business promoting prostitution that was funded by the advertising fees paid by prostitutes.[11]

53.  In the case of HKSAR v Fung Ka Chun and Szeto Ka Fai, unrep., CACC 368/2016, 19 June 2018, Macrae VP granted the two applicants leave to appeal against their convictions in relation to the offence of living on the earnings of prostitution of others.  It was alleged that they provided or facilitated an adult website through which male members were brought into contact with female members who offered sexual services.  The issue on appeal appears to be whether or not the activity of operating an adult forum on this basis, and deriving income from the male members, is in fact and in law capable of amounting to the offence of living on the earnings of prostitution carried on by others for the purposes of section 137 of the Crimes Ordinance, Cap 200, which reads:

“(1) A person who knowingly lives wholly or in part on the earnings of prostitution of another shall be guilty of an offence and shall be liable on conviction on indictment to imprisonment for 10 years.

  (2)   For the purposes of subsection (1), a person who lives with or is habitually in the company of a prostitute, or who exercises control, direction or influence over another person’s movements in a way which shows he or she is aiding, abetting or compelling that other person’s prostitution with others, shall be presumed to be knowingly living on the earnings of prostitution, unless he or she proves the contrary.”

54.  The point of law that is raised concerns what constitutes “earnings of prostitution of others” and the scope of the offence.[12]

55.  On 24 June 2019, McWalters JA granted leave to the appellants in Fung Ka Chun to add the following constitutional challenge to the offence:

“Section 137(1) of the Crimes Ordinance, to the extent that it is not focused solely on exploitative behaviour or exercising control, direction or influence over women for the purposes of prostitution, is inconsistent with Articles 30 and 33 of the Basic Law and Articles 14 and 16 of the Hong Kong Bill of Rights provided in section 8 of the Hong Kong Bill of Rights Ordinance, and is unconstitutional.”

56.  There has been a recent development in that appeal case.  On 10 July 2020, Poon CJHC granted Mr David Perry, QC, ad hoc admission to appear for the appellants.[13]  In granting the application, he stated that the constitutional challenge to section 137(1) will have immediate practical consequences for many social networking and dating websites and mobile telephone applications that have emerged in recent years.[14]  Of course, this will depend on the interpretation of the offence provision and its application to the particular facts and circumstances of the case in question.

57.  Whilst the nature and character of the website in this case appears to be different from that in Fung Ka Chun, I am nevertheless satisfied that D1 should be granted leave to join in the challenge to the offence provision on which he was convicted.  On this basis only, I am prepared to grant D1 leave to appeal against his conviction on Charge 2.

58.  Finally, under this ground Mr Reading argues that the offence of living on the earnings of prostitution is similar to the offence of dealing with property representing the proceeds of an indictable offence in that it has been held that the monies used to finance the crime are not proceeds of the crime.  He relies on the decision of the Court of Final Appeal in HKSAR v Li Kwok Cheung George (2014) 17 HKCFAR 319, but as is clearly apparent that decision was concerned with an entirely different statutory provision and is not, in my view, apposite.  The wording, context and purpose of the offence of living on the earnings of prostitution provided under section 137(1) is entirely different from the money laundering offence.

59.  Ground 4 complains that there was insufficient evidence to support the convictions on Charges 3 to 5.

60.  The three money laundering charges that D1 faced concerned three separate bank accounts held by him which dealt with deposits totalling about $35.8 million.  A total sum of about $7.8 million were cash deposits which the prosecution alleged were receipts from the illegal money lending business in Charge 1.  The judge rejected D1’s claim that the cash deposits were loan repayments from his business interests in mainland China.  He found that D1’s intention was to “mix this money with other transactions to give an appearance of legitimacy”, and given the large amount of unaccounted cash, D1 “had at minimum reasonable grounds to believe that the money in the accounts were proceeds of indictable offences”.[15]

61.  I do not find this ground of appeal reasonably arguable.

62.  Ground 5 complains that the prosecution should have elected to proceed on the “knowledge” limb, and it was unfair to proceed on the “reasonable grounds to believe” limb for the money laundering offences.

63.  There is no reason why the prosecution was not entitled to proceed on the “reasonable grounds to believe” limb for the money laundering offences.  It was open to the prosecution in relation to these charges to advance a case that the cash transactions were not for any legitimate source that could be established under either form of mens rea for this offence. 

64.  I do not find this ground of appeal reasonably arguable.

65.  Ground 6, which is the same as D2’s Ground 4, complains that D1 and D2 were deprived of a fair trial because the prosecution proceeded with disparate charges against 15 defendants in a joint trial.

66.  It is hard to understand how this complaint can amount to a serious ground of appeal.  This is made manifest by the fact that Mr Reading concedes that this is not a ground on its own that would be sufficient to overturn the convictions in this case.  It is being advanced on the basis that the ground adds weight to the other grounds. 

67.  As pointed out by Mr Lai it is clear from the nature of the charges and the facts of the case alleged against the defendants that there was proper legal and factual nexus among the defendants for a joint trial.  There was no application to sever any of the charges or the defendants prior to or during the course of the trial.  The fact that the case had run over a protracted period was not the fault of any of the parties as explained by the judge and did not result in any apparent unfairness. 

68.  I do not find this ground of appeal reasonably arguable.

69.  As for the remaining grounds of D2, they are as follows.

70.  Ground 2 complains that it was unfair to charge D2 with a single conspiracy under Charge 1 because there were two separate conspiracies.

71.  It is contended by Mr Reading that although the conspiracy charge was against D1, D2 and D3 and other persons unknown, there was no evidence of any other persons being involved.  He notes that D2 was the wife of D1 and therefore in law she could not conspire with her husband.  He also notes that it was unclear from the verdict whether D2 was found to be involved in the conspiracy for the entire period from a day in 2002 to 2 December 2013, or whether she joined an ongoing conspiracy at some stage during this period.  It is quite apparent from the judge’s reasoning that the conspiracy was struck between D1 and D3 which D2 joined, particularly when she became the sole proprietor of UT Finance in mid-2005.  There was also evidence that others were involved in the operations of the money lending business throughout this period. 

72.  Mr Lai rightly makes the point that it was sufficient for the prosecution to establish that D1, D2 and D3 conspired as alleged during the charge period in order to prove its case, bearing in mind that no such conspiracy could be found in law between D1 and D2 as they were husband and wife.  The judge in his reasons for verdict noted that he could not in law find a conspiracy between D1 and D2 alone, but was nevertheless satisfied on the evidence that there was one between D1 and D3 which D2 had joined.

73.  I do not find this ground of appeal reasonably arguable.

74.  Ground 3 complains that there was insufficient evidence to support the convictions on Charges 6 and 8 to 14.

75.  It is being argued by this ground of appeal that there was insufficient evidence to convict D2 on the money laundering offences for two principal reasons.  First, D2 gave plausible explanations for the monies passing through her bank accounts which should have been accepted by the judge.  Secondly, the interest charged by D2 for the loans she advanced was within the lawful limit, that is, less than 60% per annum, and it was only when the additional sums that were charged by D3, through Belief, were added that it exceeded 60%.

76.  As noted by Mr Reading, the applicant in her evidence conceded that monies received in some of her accounts were monies derived from her money lending business.  In respect of the six accounts of UT Finance, it was not in dispute that they had been established for the purposes of transacting the funds of the money lending business.  The judge found that the money lending business was illegal because the effective rate of interest on the loans advanced exceeded 60% per annum.  He further found that the funds derived from the illegal money lending business were the proceeds of crime. The judge convicted D2 on Charges 6 and 8 to 14 on the basis that the monies deposited into those accounts were derived from the illegal money lending business of UT Finance.[16]

77.  I do not find this ground of appeal reasonably arguable.

78.  Finally, both D1 and D2 argue that in the circumstances the convictions against them were unsafe and unsatisfactory. Nothing of any significance was advanced by either of them to support this ground of appeal, and it is therefore not reasonably arguable.

The grounds of appeal against sentence

79.  The grounds of appeal against sentence advanced by Mr Reading for D1 and D2 are as follows.

80.  Of D1’s appeal against sentence, Ground 1 complains that the total sentence was manifestly excessive and that a reduction to the sentence of more than 2 months should have been allowed for the undue delay in the determination of the case; and Ground 2 complains that having regard to the factors to be taken into account when sentencing for the offence of dealing with property representing the proceeds of an indictable offence, the sentences for these charges were manifestly excessive.

81.  Of D2’s appeal against sentence, Ground 1 complains that the total sentence of 45 months imprisonment was manifestly excessive; and Ground 2 complains that having regard to the factors to be taken into account when sentencing for the offence of dealing with property representing the proceeds of an indictable offence the sentences for these offences were manifestly excessive.

Discussion of the grounds of appeal against sentence

82.  The grounds of appeal against sentence in relation to D1 and D2 raise the same complaints, albeit as they relate to the specific circumstances of their case.

83.  The first ground of appeal is that the judge gave an inadequate discount for the undue delay in putting D1 and D2 on trial and as a consequence the final sentence on each of them was manifestly excessive.

84.  As is apparent from the nature and duration of the criminality involved, it is not unreasonable that the investigation and prosecution of this case would take some time in order to unravel and identify what has taken place and ultimately prepare and present at trial.  It would appear that the trial proceedings were truncated because of an outstanding legal challenge to the money laundering offence provision and that this was compounded by the availability of counsel and one of the defendants on the adjourned dates.  The judge found that “the parties themselves are not at fault” for the delay to the proceedings, and having carefully considered the matter, he gave a discount for this factor of 2 months.[17]  I cannot see in the circumstances that there is any justifiable criticism against the judge in the manner in which he has exercised his sentencing discretion for this factor.  I therefore do not consider it reasonably arguable that the discount the judge gave was wrong in principle or manifestly inadequate.

85.  The second ground of appeal is that the sentences imposed on D1 and D2 for the money laundering offences for which they were convicted were manifestly excessive.

86.  When sentencing D1 and D2 for the money laundering offences, the judge was guided by the principles laid out in HKSAR v Boma [2012] 2 HKLRD 3, and also referred to HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545 and HKSAR v Lam Hing Wan, unrep., CACC 387/2016.  He took into account, amongst other things, the origins of the proceeds, the amounts involved and the nature and frequency of the offending.

87.  In the case of D1, the judge adopted an initial starting point of 28 months, 32 months and 27 months’ imprisonment on Charges 3, 4 and 5 respectively.  He reduced each of the starting points by 2 months for the delay and this resulted in sentences of 26 months, 30 months and 25 months’ imprisonment on each of those charges.  Having determined a sentence against D1 to 18 months’ imprisonment on Charge 1 and 7 months’ imprisonment on Charge 2, the judge went on to address the issue of the totality of the sentences.  He considered that D1 should receive an overall sentence of 48 months’ imprisonment.  He achieved the sentence by first ordering that the sentences on Charges 1 and 2,  and on Charges 3 and 4 be served concurrently. He then ordered that 3 months of the concurrent sentence on Charges 1 and 2 of 18 months be served consecutively to the concurrent sentence on Charges 3 and 4 of 33 months, and that 15 months of the sentence on Charge 5 be served consecutively to the sentence on Charges 1 to 4, thus resulting in a sentence of 48 months’ imprisonment.[18]

88.  In the case of D2, the judge adopted a starting point of 30 months’ imprisonment on Charge 1, which he reduced by 2 months to 28 months’ imprisonment for the delay incurred in the trial.  In respect of the money laundering offences, the judge adopted a starting point of 30 months’ imprisonment which he reduced by 2 months for the delay to 28 months’ on Charge 6, 47 months’ imprisonment which he reduced by 2 months for the delay to 45 months’ imprisonment on Charges 8 to 13, and a starting point of 18 months’ imprisonment which he reduced by 2 months for the delay to 16 months’ imprisonment on Charge 14.  He ordered that all the sentences be served concurrently, thus resulting in a sentence of 45 months’ imprisonment.[19]

89.  I cannot see in either case of D1 or D2 that the sentences imposed by the judge on them for the money laundering offences to be excessive in the circumstances of their respective cases.  It is also quite apparent that because of the sentences imposed in relation to the conspiracy charges on which they were found guilty that the judge applied the totality principle which reduced the actual sentence imposed on each of the money laundering offences.

Conclusion

90.  For the reasons I have given, I grant D1 leave to appeal against his conviction on Charge 2 in respect of the challenge to section 137 of the Crimes Ordinance, but I refuse him leave in relation to the other grounds of appeal against conviction and the grounds of appeal against sentence; and I refuse D2 leave to appeal against conviction and sentence.

91.  I make the following directions in relation to D1’s appeal against conviction on Charge 2:

(i)      this appeal be heard together with CACC 368 of 2016 on 8 and 9 September 2020;

(ii)     D1 is to file perfected grounds of appeal to the extent identified in the leave judgment within 14 days and written submissions and a list of authorities in aid of this ground on or before 14 August 2020;

(iii)    the respondent is to file written submissions  and a list of authorities on or before 28 August 2020; and

(iv)    the parties in CACC 368 of 2016 be notified that these two appeals will be heard together.

92.  D1 and D2 are reminded of their right to renew their applications for leave to the Court of Appeal on their unsuccessful grounds of appeal, but they are also warned of the consequences of doing so, which may include a direction of any loss of time spent in custody pending their appeals, if the Court were to come to the view that there was no justification for the renewal of their applications.