HKSAR v. MICHAEL WANG

CACC 184/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

criminal APPEAL NO. 184 OF 2006 

(ON APPEAL FROM DCCC No. 133 of 2006)

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J U D G M E N T

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

Background

1.  The applicant – Michael Wang, born in Shanghai in 1937, was brought up and educated in Hong Kong before he pursued his higher education in Taiwan and the USA. Having obtained a degree of Master in Business Administration, majoring in pharmaceuticals in 1970, the applicant worked in the pharmaceutical field in the USA for a long period of time.

2.  In 1986, the applicant returned to Hong Kong and established Pharmedic International (HK) Ltd (“Pharmedic International”) with two partners. In 1990, Pharmedic International Inc (“PII”), registered in BVI, was set up as the holding company of Pharmedic International.

3.  The applicant, as a director of Pharmedic International and one of its beneficial owners through PII, was responsible for identifying Chinese pharmaceutical suppliers who might be interested in the USA market.

4.  In 1997, the applicant purported to sell 30% shares of Pharmedic International to Generated Force Corp and another 10% to Chinney Development Co Ltd for $3.6 million and $1.2 million respectively. The applicant pocketed the entire sum of $4.8 million from the purported sales.

5.  In 1998, Vasetech Development Ltd deposited US$ 650,000 with Pharmedic International and the 30% shares purportedly sold to General Force Corp was used as security. The applicant, on two subsequent occasions, namely 27 February 1998 and 11 March 1998, transferred the respective sums of US$ 500,000 and US$ 150,000, totalling US$ 650,000, from Pharmedic International’s account to his personal account.

6.  Between 7 April and 16 April 1998, on seven occasions, the applicant, either by cheques or by cash, further withdrew a total of $3,864,000 from the bank accounts of Pharmedic International.

7.  On 17 April 1998, the applicant left Hong Kong and returned to the USA.

8.  In April 2001, Pharmedic International was wound up for insolvency. The total loss to Pharmedic International arising out the applicant’s dishonest conduct was about HK$ 9 million. The applicant did not repay any of the money. He claimed to have used $ 1million to repay his share trading loss and gambled away the remaining $ 8 million.

9.  On 9 April 2001, Interpol issued a red notice for the applicant’s arrest.

10.  On 16 April 2003, the applicant was arrested by FBI agents in California, USA and was kept in custody pending extradition.

11.  The applicant then made repeated applications/appeals relating to his detention even before the commencement of the extradition proceedings.

12.  The extradition order was made on 17 October 2003 after a contested proceeding. The applicant then filed a habeas corpus application and when it was denied, appealed to the Ninth Circuit court of appeals with repeated applications for stay of the orders certifying extradition.

13.  When the Ninth Circuit court of appeals handed down its judgment on 27 July 2005 dismissing the appeal, the applicant immediately issued an emergency motion to issue a writ of certiorari. He was granted leave and was given a stay of the order certifying extradition.

14.  However, the stay would be lifted if the applicant failed to file the writ within a time limit. In the end, the applicant did not take the matter further and a mandate for his extradition was finally issued on 1 December 2005. The applicant returned to Hong Kong on 23 December 2005.  By then, the applicant had been in custody in the USA for a period of about 32 months.

15.  On 30 March 2006, the applicant appeared before Deputy Judge A Kwok in the District Court on an indictment consisting of 20 charges.

16.  The applicant pleaded guilty to nine charges of theft, namely charges 8 to 15 and 17. The other charges were ordered to be left in the court file and not to be proceeded without leave of the court.

17.  Charges 8 and 9 related to the transfers of US$ 500,000 and US$ 150,000 from Pharmedic International’s account to the applicant’s account in February 1998. The other seven charges related to the applicant’s seven withdrawals of the total sum of $3,864,000 from accounts of Pharmedic International between 7 April and 16 April 1998.

The Sentence

18.  The judge sentenced the applicant on 13 April 2006, having had a  two week adjournment for the probation officer’s report. The judge adopted a starting point of six years’ imprisonment, which was reduced to 4 years on account of the guilty pleas.

19.  The judge further reduced the sentence by four months to 3 years and 8 months, as an act of mercy, to reflect the fact that the applicant had been in custody in the USA for 32 months. The four months related to the period between August and December 2005 when the extradition order was stayed, pending the applicant’s application for a writ of certiorari.

Grounds of Appeal Against Sentence

20.  Ms Draycott, on behalf of the applicant, quite sensibly, does not take issue with the starting point of six years adopted by the judge. Considering the amount involved and the absence of any form of repayment, leading no doubt to the eventual winding up of Pharmedic International, we agree with Mr Goodman’s submission that the six-year starting point is indeed a low one.

21.  Ms Draycott points out that the applicant appealed against the extradition order made on 17 October 2003 and the judgment dismissing his appeal was only received on 27 July 2005. Although the applicant was granted leave to take the matter to a higher court on 1 August 2005, he declined to do so and was returned to Hong Kong on 22 December 2005.

22.  Ms Draycott produces a letter dated 26 July 2006 from Mr Craig Wilke of the Federal Public Defender’s Office in California, that represented the applicant in the extradition proceedings. The relevant part of the letter is produced as follows:

“Based on my discussion with Mr Sze (who acted for the applicant), I understand that, on April 17, 2003, Mr Wang made his initial appearance in United States District Court for the Central District of California.  By order dated April 25, 2003, a United States magistrate Judge detained Mr Wang in custody pending the extradition proceedings. On October 17, 2003, the magistrate judge issued an order certifying Mr Wang for extradition. On April 27, 2004, the (a) United States District Judge issued an order denying Mr Wang’s petition for a writ of habeas corpus. On April 30, 2004, Mr Wang filed a notice of appeal of the district judge’s order denying the habeas corpus petition. On July 27, 2005, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s denial.

Mr Sze has also informed me that Mr Wang’s chief issue throughout the extradition proceedings was a challenge under the United States Constitution to the extradition treaty between the United States and Hong Kong. Specifically, Mr Sze asserted on behalf of Mr Wang that the President of the United States lacked the authority to enter into a treaty with Hong Kong. This was an issue purely related to interpretation of the Constitution and did not pertain in any way to Mr Wang’s factual guilt or innocence. At oral argument, the judicial panel specifically stated that the constitutional issue involved in the case was unusual and complex. The panel also issued a published decision in that case, further supporting the difficult nature of (the) case, further supporting the difficult nature of the issue. Finally, the appeals process in this case took 15 months, an abnormally long period of time. The delay was likely the result of the complexity of the constitutional issue. …

Mr Sze has also advised me that he personally contacted Hong Kong counsel who assured him that he would obtain credit for his time spent in United States custody during extradition proceedings. According to Mr Sze, Mr Wang also received this assurance from Hong Kong counsel. Mr Sze has informed me that he believes that Mr Wang would not have pursued the constitutional challenge to extradition without this assurance.”

23.  Ms Draycott submits that if the judge was aware of the matters set out in the aforesaid letter, he would not have come to the view that the applicant had brought the additional time in custody upon himself by his own folly and would have deducted a greater portion than four months from the applicant’s sentence.

24.  Ms Draycott emphasizes the unusually long time of 15 months from the date when the extradition order was made and the date when the appeal panel handed down its judgment, and that the applicant had been led to believe that the time he spent in custody pending extradition would be deducted from his sentence as of right.

25.  Ms Draycott further suggests that the judge had not taken into consideration that the applicant was getting divorced from his wife of 34 years and was also in dispute with his partners in Pharmedic International at the time of the offence.

Discussion

26.  The matters alluded to in Mr Wilke’s letter could have been placed before the judge at the time of sentence. The applicant chose not to.

27.  Neither defence counsel nor the applicant raised those issues before sentence, not even after the adjournment of two weeks pending the probation officer’s report. They were only first mentioned on 11 May 2006 in the Notice of Application for leave to appeal, followed by the perfected grounds of appeal dated 28 June 2006 together with a letter dated 18 April 2006 from the applicant’s former US Federal Public Defender.

28.  If those matters were properly raised, full details could have been obtained and the matters could have been investigated if challenged by the prosecution. Depending on his findings, the judge would then have been able to place what he considered to be proper weight to those matters.

29.  We note that the letters from the Federal Public Defender’s Office contain hearsay materials. There is no information as to how the Hong Kong lawyer was instructed to give the advice. There is no indication if the purported advice was given orally or in writing and, if in writing, the whereabouts of the written advice. Even the name of the lawyer or lawyers who purportedly gave the erroneous advice were left unnamed.

30.  It was not until the day before the hearing of this appeal, in the supplementary written argument of Ms Draycott, that it was suggested for the first time that the erroneous advice came from Ms Weena Lee, a partner of Messrs Paul Tse and Co. However, Ms Lee was never asked to comment on the erroneous advice that she had supposedly given.

31.  Ms Draycott informs us, in her oral submissions, that Ms Lee had no recollection of having given the alleged advice.

32.  With respect, we find it impossible to place any reliance on the assertion that the applicant had been misled.

33.  Any legal proceeding takes time and complicated legal proceedings take longer. The applicant was arrested in April 2003 and his extradition was ordered on 17 October 2003 after a contested hearing. In the meantime, there were various applications/appeals relating to the applicant’s detention.

34.  After the applicant’s habeas corpus petition was denied on 30 April 2004, his appeal was argued before the United States Court of Appeal, Ninth Circuit on 7 February 2005. The judgment was handed down on 27 July 2005. On 1 August 2005, the applicant was granted leave to take the matter to a higher court but until December 2005, he had not done so.

35.  There was no undue delay from the time when the applicant submitted and argued his appeal to the US Court of Appeal, Ninth Circuit on 7 February 2005 until their judgment was delivered on 27 July 2005.

36.  There was no detailed explanation of the alleged delay, with the exception of a period of three months between December 2004 and February 2005 when the applicant’s appeal was adjourned from November 2004 to February 2005 allegedly to accommodate the prosecutor’s honeymoon arrangements.

37.  The vague suggestion by the Federal Public Defender’s Office that “the appeal process took an unusually long time to reach judgment, the delay was likely the result of the complexity of the constitutional issue”, even if true, was the result of the applicant’s own choice and making, arising from his repeated applications and/or appeals.

38.  A sentencing judge has the discretion to decide if, and how much of the period of detention, after a fugitive defendant has fought extradition, should be taken into account when calculating sentence (see A G v Shamsudin [1987] HKLR 826, Secretary For Justice v Sugiyana, Akira AR 4/1996).

39.  Stuart-Moore J (as he then was) observed in R v Law Yui-wo [1994] 2 HKCLR 204 that any such detention ought only to be considered when “it is felt that justice demands that account should be taken of the time spent in custody outside the jurisdiction and that credit should be given for it.”

40.  Extradition proceedings are time-consuming and extremely costly. The resulting delay can lead to a miscarriage of justice. It is therefore, generally, in the public interest to encourage fugitives to return voluntarily and discourage fugitives to resist extradition proceedings. We note, however the following comment of Stock JA in HKSAR v Lam Tse Leung (unreported CACC 476 of 2004) at page 23:

“Extradition proceedings cost money and cause delay and – even though experience suggests that failure is rare – may be unsuccessful. This is a factor which sentencing courts should recognise; and a decision not to contest extradition proceedings abroad may well, depending on the facts of the case, warrant some credit. But, we repeat, whether credit is due and, in particular, the extent of that credit, will be dictated by the facts which are highly case-sensitive. It must be remembered that those who decide to contest extradition proceedings will often be advised of the cost of so doing; will be aware in many a case that the proceedings are often lengthy; ……”

41.  Clearly, the applicant, in a desperate attempt to avoid returning to Hong Kong to face the charges, chose to challenge the extradition proceedings and put up arguments that were ultimately ruled to be unarguable.

42.  On the information supplied by Mr Goodman, counsel for the respondent, the applicant fought every inch of the way in the extradition proceedings, with repeated applications/appeals.

43.  The applicant never consented being extradited back to Hong Kong. The fight was only finally given up when there was clearly no hope of success. Even then, the applicant waited until the expiration of the period of stay of the orders certifying extradition between August and December 2005 before he agreed to return to Hong Kong.  The attitude adopted by the applicant must be discouraged.

44.  In our view, the judge was entitled to conclude as he did that the delay “is something of a folly of his own and that he was actually the author of his own misfortune”. The judge was entitled to refuse, in the exercise of his discretion, to give any credit for the time that the applicant was in USA custody pending extradition.

45.  Indeed, in our view, the judge was generous in deducting a period of four months as “an act of mercy” when the applicant could have “thrown in the towel” earlier by agreeing to return to Hong Kong after his appeal was dismissed by the Ninth Circuit court of appeal in August 2005 instead of waiting until the period of staying the order of certification expired in December 2005.

46.  This period of four months might well be regarded as having cancelled out the three-month delay caused by the “prosecutor’s honeymoon”, a factor heavily relied on by Ms Draycott.

47.  Power JA in R v Liu Kwok Kwong, Wallace (unreported, CACC 205 of 1991 said the following:

“This was a matter for the exercise of the discretion of the trial judge. This exercise will only be upset if it be shown that she was plainly wrong or that she plainly failed to take into account matters which she should have had in her mind when exercising her discretion. This, in our view, has not been shown”.

48.  On the materials before the judge, the decision to only deduct four months of the 32 months period whilst the applicant was fighting the extradition from his sentence cannot be faulted. The further matters so heavily relied on by Ms Draycott, would not have, in our view, made any difference.

49.  The applicant’s personal difficulties could not have constituted, in the circumstances of the case, valid mitigating factors.

50.  In all the circumstances of the case, the sentence of 3 years and 8 months cannot be said to be manifestly excessive.

51.  We have indicated that the starting point adopted by the judge is low. But for the fact that the applicant had been in custody for a long time before returning to Hong Kong and that such period, with the exception of 4 months, will not be count as part of the sentence, we would have given serious consideration to our power of increasing the sentence.

Conclusion

52.  We have concluded, in all the circumstances, simply to dismiss the application for leave to appeal against sentence.