HKSAR v. CHAN WING KAM

[English Translation – 英譯本]
CACC 264/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 264 OF 2006

(ON APPEAL FROM DCCC NO. 1190 OF 2005)

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REASONS FOR JUDGMENT

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Hon Chu J (giving the reasons for of the Court):

1.  The Applicant was charged in the District Court with one count of conspiracy to defraud, contrary to common law and sections 159E(2) and 159C(6) of the Crimes Ordinance, Cap. 200. He pleaded not guilty and was convicted after trial. On 27 June 2006, he was sentenced to 6 years’ imprisonment.

2.  The Applicant applied for leave to appeal against conviction and sentence.

3.  At the hearing, the Applicant abandoned his application for leave to appeal against conviction, which was accordingly dismissed.

The facts

4.  The present case involves a fraudulent scheme in which a shell company was set up and dishonoured cheques were issued for the purpose of dishonestly obtaining goods from suppliers. A total of 19 suppliers had been defrauded, and the total value of the goods obtained was over $7 million. The facts as found by the trial judge are outlined below.

5.  In September 2003, the Applicant and one Cheung Tung Wah (張東華) (“Cheung”) set up a company called Shun Bo Enterprise Limited (transliteration) (信寶實業有限公司) (“Shun Bo”). The Applicant and Cheung were the shareholders and sole directors of Shun Bo. In November of the same year, the Applicant and Cheung opened two current bank accounts and they were both authorized signatories of those accounts. The Applicant and Cheung gave false addresses when they applied for the company registration and business registration of Shun Bo and when they opened the said bank accounts.

6.  Between April and July 2004, the conspirators (as particularised in the charge) contacted suppliers in the names of the Applicant and Cheung and ordered goods from them under the name of Shun Bo. The goods were delivered between late June and early July of that year. Shun Bo purported to pay for the goods by issuing cash cheques or post-dated cheques to the suppliers. All those cheques were to be drawn upon the said bank accounts and most of the cheques were signed and issued on Friday 9July 2004.

7.  On 12 July 2004, the only employee of Shun Bo went to work as usual but discovered that everything in the company had been moved away. The suppliers were informed on the same day that none of the said cheques was honoured. And some of the suppliers were yet to collect the cheques when the office of Shun Bo was vacated.

8.  The Applicant was subsequently arrested. He made a cautioned statement in which he admitted he had signed blank cheques on a number of occasions and confirmed that all the dishonoured cheques were issued by Cheung and him. He also said in his statement that he and Cheung had been friends for years and that it was by reason of the trust he had in Cheung that he agreed to assist one Yuan Wan Hoi (袁雲海), a friend of Cheung’s, in setting up Shun Bo and the bank accounts for a remuneration of $5,000 per month.

Sentence by the trial judge

9.  The Applicant, now aged 45, is a married man with two daughters who have come of age. He has a clear record.

10.  When passing sentence, the trial judge pointed out that the present case involved a premeditated fraudulent scheme and that the circumstances of the offence were very serious. The judge took the view that the value of the goods obtained was an important sentencing consideration which would be indicative of the length of sentence. Having considered the sentencing guidelines in R. v. Trevor Clark (1998) 2 Cr App R 137 and Secretary for Justice v. Wong Kay Din, CAAR 7/1998 which laid down tariffs on the basis of the amount defrauded, and taking into account the mitigating circumstances submitted on behalf of the Applicant, the trial judge sentenced the Applicant to 6 years’ imprisonment.

First ground of appeal 

11.  The Applicant’s first ground of appeal is that the trial judge had erred in principle by applying the sentencing guidelines for cases involving a breach of trust.

12.  There is no doubt that the present case is one of commercial fraud involving no breach of trust. It is also true that the two cases of R. v. Trevor Clark and Secretary for Justice v. Wong Kay Din referred to by the trial judge, as well as HKSAR v. Cheung Mee Kiu [2006] 4 HKLRD 776, a case cited by Mr. Cheung at this hearing, are all cases involving a breach of trust. However, the reason why the trial judge referred to those cases was that he thought those cases showed that the value of the property obtained could be a guide to sentencing. The trial judge also pointed out that the Applicant was no less culpable than an offender in an ordinary breach of trust case because he conspired with others to perpetrate a well-planned fraud that involved setting up a company for the purpose of gaining the trust of the suppliers and then deceiving them.

13.  In his Reasons for Sentence, the trial judge further stated that, regardless of whether the cases he cited were appropriate sentencing guidelines for the present case, the value of the goods dishonestly obtained should be an important sentencing consideration in the present circumstances, which involved a substantial amount of over $7 million.

14.  In our view, the trial judge clearly knew that the present case did not involve any breach of trust, and he adopted R. v. Trevor Clark and Secretary for Justice v. Wong Kay Din only to the extent of taking the value of the property obtained by deception as indicative of the sentence. In this respect, he had not erred in principle. As the trial judge emphasized, this was a premeditated and organized commercial fraud which took place for nearly 10 months and resulted in the loss of goods with a total value in excess of $7 million. This was a very serious offence. One can never overstate the harm that commercial frauds of this nature can inflict upon Hong Kong’s status as an international commercial and trade centre.  These are all aggravating factors.

15.  Mr. Chan cited the judgment of the Court of Appeal in R. v. Chow Tat Ming [1997] HKLRD 353 to support his contention that the sentence imposed by the trial judge was excessive. The defendant in that case was charged with 10 counts of obtaining property by deception and 5 counts of theft. The particulars alleged that he obtained, within one month, jewellery with a total value of over $6.8 million by deception, namely by using cheques which were subsequently dishonoured. The Court of Appeal held that, in view of the value of the lost property and the defendant’s culpability, a starting point of 5 years’ imprisonment was appropriate.

16.  On the facts in the present case, including the number of suppliers involved and the value of the goods lost, we consider that a term of 6 years’ imprisonment upon conviction after trial is on the high side but not manifestly excessive.

17.  The first ground of appeal therefore fails.

Second ground of appeal

18.  The Applicant’s second ground of appeal is that, when passing sentence, the trial judge had not duly considered that fact that the Applicant had agreed to a substantial body of facts, thereby sparing the prosecution the need to adduce evidence and saving time.

19.  It is true that at trial the Applicant agreed to a large part of the suppliers’ evidence and did not dispute the voluntariness of his cautioned statement, and this obviated the need for the suppliers to testify in court and therefore saved the court’s time. However, whether this constitutes a mitigating factor will depend on circumstances of the particular case: see HKSAR v. Lam Tsz Leung [2006] 2 HKC 295, at 316, paragraph 49.

20.  In the present case, the trial judge made it clear for sentencing purposes that he had taken into account that much of the evidence before him had been agreed by both the prosecution and the defence, but in view of the gravity of the case and the amount involved, he held that a sentence of 6 years’ imprisonment should be imposed. We see nothing improper in his reasoning and conclusion in this respect.

21.  The second ground of appeal also fails.

Third ground of appeal

22.  The third ground of appeal is that the Applicant was not the mastermind and his participation was confined to setting up Shun Bo and signing blank cheques at the initial stage. He had not contacted the suppliers to deceive them.

23.  This ground was put forward as a mitigating factor at trial but was not accepted by the trial judge. We consider that the Applicant was an indispensable part of and played a significant role in the fraudulent scheme. Whether he was the mastermind had no relevance to his culpability.

24.  This ground of appeal fails.

Fourth ground of appeal

25.  The fourth ground of appeal is that the trial judge, having overlooked the point that the Applicant had been manipulated into setting up Shun Bo and his name had subsequently been borrowed by the conspirators to perpetrate the fraud, mistakenly imputed the whole scheme to the Applicant.

26.  However, the Applicant did not give evidence at trial. The relevant record of interview showed that he had provided exculpatory explanations, including that he had misplaced his trust on Cheung, but these explanations were not accepted by the trial judge. As a matter of fact, in convicting the Applicant, the trial judge found that the Applicant was well aware from the very beginning that Shun Bo was set up for the purpose of perpetrating fraud. The trial judge also found that the conspirators’ subsequent use of the names of the Applicant and Cheung in contacting suppliers and purchasing their goods was part and parcel of the whole fraudulent scheme. For these reasons, the fact that the Applicant had not directly contacted suppliers did not reduce the Applicant’s culpability or constitute a mitigating factor.

27.  The fourth ground of appeal also fails.

Conclusion

28.  For the above reasons, we dismiss the Applicant’s application for leave to appeal against sentence.