HKSAR v. TSANG CHIU CHUEN AND OTHERS

CACC 504/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 504 OF 2001

(ON APPEAL FROM DCCC NO. 1184 OF 2000)

____________

_______________

J U D G M E N T

_______________

Hon McWalters JA (giving the judgment of the Court):

Introduction

1.  The applicants, to whom I will refer by their numerical designation as defendants at trial, seek leave to appeal against their sentences almost 13 years out of time.

2.  The 1^st applicant was the 6^th defendant and the 2^nd applicant was the 7^th defendant in a District Court criminal trial, in which they were charged with nine other defendants with Conspiracy to Defraud, contrary to Common Law and punishable under section 159C(6) of the Crimes Ordinance, Cap 200 (Charge 1).  The period of the conspiracy was between 1 September 1998 and 16 May 1999. They and five of the other defendants were also charged with failing to comply with an order of the Court of First Instance made under section 4(2) of the Organized and Serious Crimes Ordinance, Cap 455 and contrary to section 4(13) of the same Ordinance (Charge 2).

3.  On 20 February 2001, the 11 defendants were required to attend court but the 6^th and 8^th defendants did not appear.  There was a subsequent court appearance on 23 March 2001 and this time the 4^th, 5^th and 7^th defendants did not appear.  The trial of the remaining defendants took place in August 2001, and it was conducted in the absence of the absconding 6^th and 7^th defendants.

4.  On 22 October 2001, District Judge Christie (“the judge”) convicted both the 6^th and 7^th defendants of Charge 1 but acquitted them of Charge 2.  On 30 October 2001, the judge sentenced both defendants in their absence.  The 6^th defendant he sentenced to 5 years and 5 months’ imprisonment having adopted a starting point for sentence of 4 years and 4 months and enhanced it by 25% on the basis of prevalence.  The 7^th defendant he sentenced to 4 years and 5 months’ imprisonment but as she had previously been sentenced to 3 years and 8 months’ imprisonment for a similar offence he ordered that 2 years and 3 months of the sentence he imposed be served consecutively to her existing sentence thus making a total sentence for her of 5 years 11 months.  In reaching this sentence for the 7^th defendant the judge also made use of his power to enhance the sentence for which he was sentencing her.

5.  The 6^th defendant surrendered to the Hong Kong Police on 9 December 2013 and the 7^th defendant on 21 January 2014.

6.  They both subsequently applied for an extension of time in which to apply for leave to appeal their sentences.

The Background to the Offence

7.  The case involved a particular type of fraud that was prevalent in the 1990s and which became known as Loco-London gold and silver fraud.  The following description of the circumstances of the offence is taken from the judgment of Cheung JA in HKSAR v Chung Chi King CACC 504/2001; unreported, 4 March 2003, where the Court was dealing with an applicant who was the 4^th defendant in the trial of this case:

“7 … It was the prosecution’s case that on 2 November 1998, the police, after having received complaints about its activities, raided Champion Market Ltd (“Champion”). Champion purported to be a genuine gold and silver bullion trading company.  Champion recruited its victims as junior office employees through newspaper advertisements.  Most were offered and took part-time employment.  None had any experience in bullion trading and all appear to have been selected because of their apparent naivety.  On their offer of employment by Champion, they were offered an attractive salary.  The victim was placed to work in a room with two fellow workers who, needless to say, were both parties to the fraud.  One claimed to be newly recruited; the other claimed to be more experienced in the Champion’s work and to have opened his own trading account, trading in gold and silver successfully.

8. Under pressure from his newfound colleagues who spoke of the boundless opportunities for him to make easy money from a foolproof scheme, the victim was induced to open his own trading account, making investments in cash.  His more experienced colleague claimed that he would teach the victim how to operate his account.  To buoy his confidence the victim was given receipts for his investment.  A few days later, Champion’s manager would claim that the victim had made a trading mistake that had resulted in him making a loss.  He was required to pay Champion further sums of money in order to recover his original investment.  If he did so, a few days later he was told that due to his further trading mistakes all of his money had been lost.  The victim would then either leave Champion in desperation or was dismissed, being of no further use to the fraudsters.

9. In the course of the trial, the names of the ‘colleagues’ and ‘teachers’ appeared and reappeared in the evidence of 33 victims, who were called to give evidence of their experiences while with Champion over the period of the conspiracy.

10. Expert evidence from a certified public accountant and a member of the Chinese Gold & Silver Society in Hong Kong supported the prosecution’s case that Champion was not a genuine bullion trading company.

11. There was abundant evidence that Champion’s activities carried on unabated after the day of the police raid.”

8.  Evidence revealed that in carrying out the fraud the 6^th defendant played the role of manager but his actual role in the execution of the conspiracy was not known.  Five prosecution witnesses testified that they had dealings with the 6^th defendant and they had lost a total of $886,500.  Four of them identified him at an identification parade.

9.  As for the 7^th defendant, three prosecution witnesses described her as their teacher who provided them with examples of successful trading on her own account in order to persuade them to invest as well.  She guided them in making “trading decisions” from which they were later told they had lost their investment.  All these witnesses identified her at an identification parade.

The Reasons for Sentence

10.  In passing sentence, the judge referred to HKSAR v Sam Wai Keung CACC 226/1999; unreported, 10 September 1999, in which this Court held that in arriving at a starting point for this offence, no particular attention should be paid to the acting role played by the defendant in question.  A starting point of 4 years’ imprisonment was considered proper unless it was found that the defendant in question had played a part in the planning, financing or execution of the conspiracy; then the starting point for sentence should be higher.  However, the judge also noted that this Court said in HKSAR v Chiang Chun Wai and anor CACC 11/2001; unreported, 12 October 2001, that where participants in a fraud such as this continued with the fraud after their operation has been raided by the police, then such persistence should be regarded as an aggravating feature.

11.  In respect of the 6^th defendant the judge adopted a starting point for sentence of 4 years and 4 months’ imprisonment. The additional 4 months’ imprisonment was imposed to reflect the 6^th defendant’s continued participation in the fraud after the police raid.

12.  In respect of the 7^th defendant, the judge took a starting point of 4 years’ imprisonment which he did not increase since she was apparently only present for a short time after the police raid on 2 November 1998.

13.  On the prosecution’s application for enhancing the sentence, the judge had this to say:

“… it was apparent from the police raid of 2 November that a large number of victims made investments with the fraudulent company Champion Market Limited but never made complaints to the police. There were at least 10 persons who had paid money; another 14, at least, who were there as employees but had not yet paid any money, and there were receipts for money having been received found at the premises for over $800,000, most of which had not been paid by any of the witnesses who complained to the police and gave evidence in this trial. This shows that the scale of the fraud was higher than indicated by the losses of the witnesses who were called in the trial.

The prosecution applied under s 27(2) Organized and Serious Crimes Ordinance, Cap. 455, for enhanced sentences under s 27(11). It has furnished information under s 27(2) in the form of a statement by Inspector Chan … The statement shows, according to the number of victims who reported to the police, that the offence peaked in 1999. Although reports of this fraud have dropped since it has to be said that they are still prevalent. Prevalence of the offence is one of the matters referred to in subsection (2) which I may take into account in deciding whether to make an enhanced sentence and it was not taken into account in the fixing of the 4 year sentencing tariff which I have referred to. I therefore think it right to exercise my discretion to enhance the sentence to take into account the prevalence of this offence.

As to the procedure to be followed once that decision is taken, this is outlined by the Court of Appeal in HKSAR v Tam Wai-pio [1998] 2 HKLRD 949.”

14.  In respect of the 7^th defendant, the judge was aware that she had, on 2 May 2001, also after a trial in her absence, been convicted of the same kind of fraud as in this case and sentenced to a term of 3 years and 8 months’ imprisonment by Deputy Judge Browne, as he then was, in another District Court Criminal trial, namely DCCC 432/2000.

15.  In the present case, the judge adopted a starting point for sentence of 4 years’ imprisonment.  He then considered totality of sentence in this case and that of DCCC 432/2000, and concluded that the appropriate totality for the two offences was 5 years and 6 months’ imprisonment.  The 1 year and 10 months difference between the existing 3 years and 8 months and 5 years 6 months sentences he then enhanced by 25% ie 5 months on the basis of prevalence. It meant that the 7^th defendant’s sentence for the present offence became 4 years and 5 months’ imprisonment.  The judge then ordered that 2 years and 3 months of the term of 4 years and 5 months’ imprisonment was to run consecutively to the term of 3 years and 8 months’ imprisonment of DCCC 432/2000, thereby making a total of 5 years and 11 months’ imprisonment.

The Application for an Extension of Time

16.  The 6^th and 7^th defendants filed with the Court an application for leave to appeal against sentence out of time by way of Form XI of the Criminal Appeal Rules, Cap 221 dated 24 December 2013 and 26 February 2014 respectively.  In an accompanying affirmation, the 6^th defendant explained the delay for making the application.  He said that he had absconded from Hong Kong when the sentence was passed on him in 2000, and that his co-defendants, namely the 3^rd and the 4^th defendants had successfully appealed against their sentences.

17.  In respect of the 7^th defendant, she explained in her affirmation that her parents were old and suffered from chronic disease.  As such, she had to stay home to take care of them.  At present, her younger sister is able to look after her parents.  She then decided to surrender to the police so as to bear the responsibility for what she had done wrong.

The Ground of Appeal

18.  On their behalf, Mr Luk King-wang, Counsel assigned by the Director of Legal Aid, advanced a single ground of appeal against sentence, namely that the judge had wrongly enhanced their sentences by 25% on the basis of prevalence, thereby resulting in their sentences being manifestly excessive.  Mr Luk relied upon the judgments of this Court (differently constituted) when it heard the appeals against sentence of the 3^rd and the 4^th defendants.

19.  In HKSAR v Chung Chi King CACC 504/2001; unreported, 4 March 2003, the appeal of the 4^th defendant, Cheung JA, giving the judgment of the Court, said on the issue of enhancement:

“19. The judge enhanced the sentence because he considered that this type of fraud was prevalent. The evidence produced by the prosecution under section 27(2) showed the statistics of this type of fraud from 1997 to 2001. The number of victims in 1997 was 129. The amount involved was $35,640,000.00. The offence peaked in 1999. Then the number of victims declined drastically from 710 in 1999 with money involving HK$158,000,000.00 to 41 victims up to August 2001 with money involving HK$14,600,000.00. There was clearly a substantial reduction in the number of victims and also in the amount lost by victims by August 2001. It cannot be said that an offence of this type was so prevalent at the time of the sentence in October 2001 that it would require the Court to enhance the sentence as a means of deterrence.

20. The judge was wrong to enhance the sentence on the basis of prevalence.”

20.  Likewise, in HKSAR v Yung Chi Lok CACC 504/2001; unreported, 26 February 2009, the appeal of the 3^rd defendant, Stock JA (as he then was) giving the judgment of the Court, addressed the issue of granting an extension of time in the circumstances of an absconding defendant who subsequently seeks to benefit from the successful appeal of a co‑accused:

“11. Only rare circumstances would warrant an extension of time so long after sentence. The matter upon which the applicant relies is that a co-defendant, who was D4 at trial, successfully appealed against sentence on the basis that the judge erred in principle in enhancing sentence because of a supposed prevalence of the offence at the date of sentencing. D4 was the appellant in HKSAR v Chung Chi King CACC 504 of 2001, 4 March 2003, unreported. That Court examined the figures for the particular type of fraud, known as Loco London gold and silver fraud, between 1997 and 2001 and concluded that after the offence had “peaked” in 1999 the numbers declined significantly thereafter and that “there was clearly a substantial reduction in the number of victims and also in the amount lost by victims by August 2001. It cannot be said that an offence of this type was so prevalent at the time of the sentence in October 2001 that it would require the Court to enhance the sentence as a means of deterrence”.

12. Where there has been an error of principle of this type and which, in addition, has been recognized in favour of a co‑defendant, a sufficiently exceptional circumstance is made out to warrant an extension of time in which to apply for leave and, accordingly, we grant that extension.”

Discussion

21.  In light of these decisions Miss Vivien Chan, Counsel for the respondent, has very fairly and properly conceded that the extensions of time sought by the 6^th and 7^th defendants should be granted as the sentences imposed on the them should not have been enhanced.  Ms Chan accepts that this Court should reduce the sentence of the 6^th defendant to 4 years and 4 months’ imprisonment, and the sentence of the 7^th defendant to 4 years’ imprisonment.

22.  That, of course, still leaves the question of the appropriate totality for the 7^th defendant.  Having identified error by the judge in his sentencing of this defendant, she now falls to be sentenced afresh by this Court.

23.  The sentence imposed by Deputy Judge Browne was 3 years and 8 months’ imprisonment.  The pre-enhancement sentence proposed by the judge in the present case was 4 years’ imprisonment.  This made a total for the two offences of 7 years 8 months’ imprisonment.  The judge correctly recognised that such a sentence would offend the totality principle. In his view the appropriate total sentence for the two offences was 5½ years’ imprisonment and this is what he would have imposed had he not enhanced the sentence for the current offence.

24.  The 7^th defendant’s two offences overlapped significantly.  The charge period for the current offence was 1 September 1998 to 16 May 1999.  The charge period for the offence for which Deputy Judge Browne sentenced the 7^th defendant was 1 May 1998 to 7 December 1999.  Extraordinarily, the 7^th defendant was participating in two Loco-London frauds at the same time.

25.  We are satisfied that the Judge was correct in his assessment that 5½ years’ imprisonment was an appropriate sentence for this offender’s overall culpability.

Conclusion

26.  For these reasons we grant the application for an extension of time in which to apply for leave to appeal against sentence and treating the application of leave to appeal as the hearing of the appeal, allow the appeal.  We set aside the sentences imposed by the judge and in substitution for them impose sentences of 4 years 4 months’ imprisonment on the 6^th defendant and 4 years’ imprisonment on the 7^th defendant.  We further order in respect of the 7^th defendant that 1 year 10 months of this sentence be served consecutively to the sentence imposed by Deputy Judge Browne.