HKSAR v. FAN SHEK HUNG

[English Translation – 英譯本]
CACC 393/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 393 OF 2006

(ON APPEAL FROM DCCC NO. 276 OF 2006)

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REASONS FOR JUDGMENT

Hon Cheung JA (giving the reasons for judgment of the Court):

1. The Applicant was charged with one count of “dealing with property representing proceeds of an indictable offence”, contrary to section 25(1) of the Organized and Serious Crimes Ordinance (Cap. 455 of the Laws of Hong Kong).  He pleaded not guilty to the charge.  After trial before Deputy District Judge Sham, the Applicant was convicted and sentenced to 6½ years’ imprisonment.  He applied for leave to appeal against sentence.  After the hearing, we allowed the application, treated the application as the appeal proper, and reduced the term of sentence to 5 years and 8 months.  The reasons for our judgment are set out below.

Prosecution case

2. The facts of the case revealed that in February 1996 a purchaser from a subsidiary of Chuang’s Consortium International Limited (‘the Purchaser’) purchased a property situated at Ground Floor, 15 Robinson Road (‘the Property’) for HK$105,000,000.00.  The Purchaser and vendors to that property transaction were represented by different solicitors’ firms.

3. On 23 February 1996, the Purchaser and two persons claiming to be the owners of the Property signed a provisional sale and purchase agreement in respect of the Property.  On the same day, the Purchaser sent a bank draft in the sum of HK$15,825,000.00 to the solicitors’ firm acting for the owners in payment of the first deposit as required for the purchase.  The owners instructed the firm to draw a cheque in the same amount in favour of a person named ‘So Chi Yin’.  Upon receipt of the cheque, So Chi Yin presented it in a bank and withdrew the cash.

4. On 22 March 1996, the Purchaser and the vendors signed a formal sale and purchase agreement.  The Purchaser delivered a bank draft in the sum of $15,825,000.00 to the solicitors’ firm acting for the owners in payment of the second deposit as required for the purchase.  The owners instructed the firm to transfer the above sum to the Applicant by way of a cash cheque in his favour.

5. On 22 March 1996 the Applicant and another male cashed the cheque in a bank.

6. The property transaction was in fact a sham.  The real owners of the Property had neither consented to sell the Property nor signed any document to convey the Property.  In the transaction, the Purchaser was defrauded of HK$31,650,000.00 being the total sum of the two deposits.

7. The Applicant left Hong Kong via Lowu on 25 March 1996, and thereafter the Immigration Department did not have any record of the Applicant entering or leaving Hong Kong.  Ever since he left Hong Kong, the Applicant had resided on the Mainland.  He smuggled himself back into Hong Kong in 2005 and was arrested by the police in March 2006.  During his stay on the Mainland, the Applicant had smuggled himself into Hong Kong for four times.

8. So Chi Yin, who withdrew the first deposit, was arrested by the police and prosecuted for the same charge in 1996.  The charge was stated to involve the sum of HK$15,825,000.00.  After trial before District Judge Barnes (as she then was), So Chi Yin was convicted and sentenced to 4 years’ imprisonment.  Judge Barnes adopted a starting point of 4 years.  Despite So Chi Yin had pleaded not guilty, Judge Barnes took into account that he had not disputed all aspects of the prosecution case and hence reduced the term by 6 months.  In the end, So Chi Yin was sentenced to a term of 3½ years.

Dissimilar sentences imposed on co-defendants

9. The ground of appeal advanced by the Applicant is that he is being unfairly treated by reason of the great disparity between the sentences passed on him and So Chi Yin.

10. In HKSAR v. Leung Yiu Ming and another [2000] 1 HKLRD 247, this Court (Nazareth VP, Stuart Moore VP and Wong JA) discussed the issue of dissimilarity in sentences imposed on two co-defendants.  As this Court observed, two scenarios are involved. The first is where there is a disparity between sentences passed on the same occasion by the same judge, in which case the sentence can be varied by the appellate court if the judge has not properly apportioned the culpability between the co-defendants.  The second scenario is where different sentences are passed on the co-defendants by different judges on different occasions, in which case, save in exceptional circumstances, the appellate court only has to consider whether the sentence imposed on the particular appellant is appropriate.

11. The present case falls into the second scenario discussed above.  It follows that, unless the Applicant can show that there are exceptional circumstances, the only issue we have to consider is whether the sentence passed on him is appropriate or not.

Sentencing principles

12. As far as the offence of “dealing with property representing proceeds of an indictable offence” is concerned, no sentencing guidelines have been laid down as the facts vary from case to case.  Nevertheless, the following factors may be considered for sentencing purposes:

(1) Although no direct relationship necessarily exists between “dealing with property representing proceeds of an indictable offence” and the underlying indictable offence, if the underlying indictable offence can be identified, then the court, in passing sentence for “dealing with property representing proceeds of an indictable offence”, can take into account the sentence for that indictable offence;

(2) The criminality of “dealing with property representing proceeds of an indictable offence” lies in assisting, supporting and encouraging the relevant indictable offence;

(3) The extent to which the person charged with “dealing with property representing proceeds of an indictable offence” knew of the indictable offence;

(4) The amount of money involved in “dealing with property representing proceeds of an indictable offence” is also a relevant consideration.

See R v. Karen Monfries [2004] 2 Cr App R (S) 3, 9.

13. While the sentencing court is entitled to take into account the sentence of the underlying indictable offence, this Court (Stuart-Moore VP and McMahon J) held in HKSAR v. Chen Szu Ming CACC 270/2005 that the court, in considering the sentence for “dealing with property representing proceeds of an indictable offence”, should only do so on the basis of that offence itself rather than of the underlying indictable offence.  That said, the defendant’s knowledge of the underlying indictable offence will of course constitute an aggravating factor.

Authorities

14. The following are several decided cases in which the amounts involved are similar to that in the present case:

(1) In HKSAR v. Renato Cemine Tandoc CACC 377/2002, the defendant pleaded guilty to a number of charges including one count of “using a false instrument” and four counts of “dealing with property representing proceeds of an indictable offence”.  The defendant dealt with a sum of HK$13,000,000.00 being the proceeds in a fraud case.  He was sentenced to imprisonment for 2 years and 8 months for count one and imprisonment for a total of 3 years and 4 months for the remaining four counts.  The two terms were to run consecutively, making a total of 6 years.

(2) In HKSAR v. Chen Szu Ming (CACC 270/2005), the defendant pleaded guilty to “dealing with property representing proceeds of an indictable offence”, the property being a sum of HK$14,000,000.00.  The defendant had knowledge of the underlying indictable offence.  He was sentenced to imprisonment for 3 years and 4 months.  This Court affirmed the sentence and agreed with the starting point of 5 years adopted by the trial judge.

(3) In HKSAR v. Xu Xia Li & Another CACC 395/2003, one of the defendants was convicted of dealing with $11,000,000.00 being property representing proceeds of an indictable offence.  She was sentenced to 3 years’ imprisonment, but on appeal this Court (Woo VP and Yuen JA) reduced the term to 2 years and 9 months.

(4)  In HKSAR v. Oei Hengky Wiryo CACC 109/2005, the defendant was convicted on one count of “conspiracy to commit bookmaking” and two counts of “dealing with property representing proceeds of an indictable offence”.  The latter offences involved two sums of $236,766,329.00 and $11,495,116.00.  It was accepted that the defendant only dealt with parts of the two sums.  This Court (Stuart-Moore VP, Stock JA and McMahon J) affirmed the sentences imposed for those two offences, namely imprisonment for 4 years and imprisonment for 18 months.  The total term was 5½ years.

(5) In HKSAR v. Ma Zhujiang and Another CACC 491/2005, D1 was convicted on three counts of “dealing with property representing proceeds of an indictable offence”, the property being a sum of HK$20,000,000.00.  This Court (Ma CJHC, Stock JA and McMahon J) affirmed the sentence of 5 years’ imprisonment imposed by the trial judge.

(6) In HKSAR v. Shing Siu Ming & Ors [1999] 2 HKC 883, D2 and D3 were each convicted on one count of “dealing with property representing proceeds of an indictable offence”.  They dealt with HK$2,645,729.00 and AUD$1,527,000.00 respectively, both sums being proceeds of heroin trafficking.  The two defendants were each sentenced to 7 years’ imprisonment.  The evidence showed that a sum of HK$46,900,000.00, being the proceeds of drug trafficking, was remitted from Australia to Hong Kong, and the two defendants had taken positive steps to assist D1 who was charged with conspiracy to traffic in heroin.  This Court (Power V-P, Mayo and Stuart-Moore JJA) affirmed the said sentences.

The Applicant’s role

15. The Applicant’s ground of defence was that he was involved in the present case purely because he rendered assistance to a friend.  That friend said he might obtain a sum of money from a relative and asked the Applicant whether he would assist him in opening a Chinese restaurant in case he did get the money.  Subsequently, that friend told the Applicant he had been given the money and asked the Applicant to collect the cheque from a solicitors’ firm and cash it at the bank on his behalf.  The Applicant did as told.  He alleged that he had no knowledge whatsoever about the whole incident being a fraud, and that the cash he withdrew from the bank was taken away by another man involved in the same case.  He had been unable to contact the said friend ever since then.  He subsequently left Hong Kong because prior to the incident he had promised some other friends to help look after their business on the Mainland.

16. Deputy Judge Sham rejected the Applicant’s defence, holding that the Applicant not only had knowledge of the fraudulent scheme but also participated in it by withdrawing the cash from the bank in person.  He clearly knew the money came from a sham.  In his Reasons for Sentence, the Deputy Judge said:

In the present case, the victim company was defrauded of more than $31 million, although for sentencing purposes I will of course only take into account the $15 million plus that the defendant dealt with.  It is obvious from the facts of the case that the deceit was orchestrated and well-planned.  I do not know how many people were involved and will not make any unnecessary speculation in that regard.  I am just shocked to learn that, despite the involvement of professionals from the beginning of the transaction, the culprits still managed to obtain such a large sum of money by deceit.

Defendant, I am satisfied that you were well aware of such a sham and took an active part in it.  It was submitted on your behalf that you were not the mastermind.  But I can tell you that you certainly played a pivotal role in this incident.  But for your willingness to let others use your name and to withdraw the money from the bank in person, this criminal enterprise would not have succeeded … .  

I believe some other culprits in this incident are still at large, enjoying the ill-gotten money which originated from their crime.  The logic is simple: if offenders who are caught do not have to pay a relatively high price for what they did, this will become a big temptation which lures even more like-minded people to deceptively obtain more money by taking their chances, because in this case they know that they will at most only be imprisoned for a short term even if they are caught.

In our daily lives, we often hear stories about people employing all sorts of illegal means to defraud others of money, and in some cases the amount involved exceeds that in the present case.  Judging from the cases handled by the courts, this offence is so prevalent that, in my view, it can only be curbed by sufficiently deterrent sentences.  Ideally, the term of the sentence should be linked to the amount of money being defrauded, but it is for the Court of Appeal to lay down sentencing guidelines in this connection at what the Court considers to be an appropriate time.

Discussion

17. We accept that the underlying indictable offence in the present case concerns an orchestrated fraudulent scheme.  Although professionals were involved in the whole transaction, they failed to notice anything deceitful and the Purchaser was defrauded of more than $30 million.  In our judgment, the Applicant not only had knowledge of the scheme but also participated in it.  He should therefore bear a higher level of culpability and receive a more severe sentence.

18. At the same time, we are not persuaded by the approach adopted by Deputy Judge Sham that in light of the prevalence of fraud cases in the society, a severe punishment should be imposed on the Applicant in order to achieve a deterrent effect.  In determining whether a deterrent sentence is to be imposed for a particular type of offence, the court must first obtain information about the prevalence of that offence as a basis for sentencing, and also consider the usual sentences imposed for similar offences.  In our view, a sentencing judge should follow the established sentencing principles and adopt a sentence appropriate to the type of offence in question.  The judge should not enhance a sentence so that it departs from the usual sentence appropriate to the same type of offence, simply because of his own views on certain social issues.  Such an approach is unfair to the defendant and, what is more, amounts to a disregard of sentencing principles.

19. Although Deputy Judge Sham said he would only sentence the Applicant on the basis of the $15,000,000.00 that he had dealt with, it appears from his Reasons for Sentence that of the sentence was in fact based on the facts of the fraud case.  Although the Applicant had knowledge of the fraud and participated in the scheme, he was not charged with “fraud”.  Judging from the Deputy Judge’s imposition of a term of as long as 6½ years, the only conclusion we can draw is that he had placed undue emphasis on the underlying indictable offence at the time of sentencing.

Conclusion

20. Having taken into account the sentences imposed for similar offences and the Applicant’s culpability, we consider that the appropriate term of imprisonment should be 5 years and 8 months.