YIP KAM FAI and Another v. R.

IN THE COURT OF APPEAL OF HONG KONG

1993, No. 108
(Criminal)

(ON APPEAL FROM D.C. CASE NO. 573/92)

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Reasons handed down on: 3 September 1993

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J U D G M E N T

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Barnett J.

1. This is the judgment of the court.

2. The applicants each pleaded guilty to an offence of bookmaking contrary to section 7(1)(a) of the Gambling Ordinance Cap.148. Each was sentenced to 18 months' imprisonment and ordered to pay a fine of $250,000.00 within 1 month. In default of payment, each was to serve a further sentence of 6 months' imprisonment, consecutive to the sentence of 18 months' imprisonment. Against those sentences the applicants sought leave to appeal.

3. On 28th March 1992, the police, pursuant to a gambling authorization, raided a flat at Kin On Mansion, Taikoo Shing. In the flat, they discovered evidence of a very substantial bookmaking operation. There were coded telephones, a telephone recording control unit and betting slips which showed, or appeared to show, an average turnover of some $926,000.00 for each of the 13 race meetings in February and March. While the police were in the premises further telephone bets in a substantial sum were received. The applicants admitted that they were partners running the bookmaking business which had been in operation since the beginning of the current racing season on 14th September 1991.

4. In his reasons for sentence, His Honour Judge Sharwood said that he considered an immediate custodial sentence was necessary. He noted that the maximum penalty on indictment is 7 years' imprisonment and a fine of HK$5,000,000.00 suggesting that the offence is an extremely serious one. He remarked that the operation was substantial, well-organized and had been going on for at least seven months. Although there might have been bigger operations, this one amply justified the imposition of an immediate custodial sentence. He calculated that, given more than 40 race meetings since September, approximately HK$40,000,000.00 had been turned over. Putting profit at a very low 1% of turnover, the figures were very large indeed. It had been submitted to him that the profits were between $100,000.00 and $120,000.00 but, in the absence of anything other than an assertion to that effect, he disbelieved it. He imposed the sentences which he did after taking into account the pleas of guilty, the matters put forward in mitigation by counsel including their ages, their personal circumstances and their remorse.

5. For the 1st Applicant, Mr. Plowman said that the admitted facts had been signed by counsel then representing his client "subject to the issue of the daily turnover mentioned above in paragraph 8". The turnover was the figure of $926,000.00, which we have already mentioned and which represented the apparent amount of stake money culled from betting slips found by the police. In mitigation, however, counsel had said that the turnover was approximately HK$500,000.00. Given the proviso to the admitted facts and the assertion made by counsel in mitigation, Mr. Plowman said that the question of the daily turnover had not been properly resolved and could only have been resolved had the Judge conducted a Newton hearing. He argued that the Judge was wrong to take the figure of approximately HK$1,000,000.00 as the daily turnover and apply it to every race meeting during the season. He said that as the business had only commenced at the beginning of the season, turnover was likely to have been much lower until the business became known and established.

6. Mr. Plowman said that he had recently been advised that the discrepancy arose because the police had seized two types of betting slips. One type represented the stake money coming from customers of the business. The other type represented money which the business had laid off with the Royal Hong Kong Jockey Club. He understood Crown Counsel was prepared to accept that the real turnover was in the region of HK$500,000.00. He could not take the matter farther, however, because he had no evidence available to support his contention and had instructions not to apply for an adjournment but to proceed with the appeal.

7. For the 2nd Applicant, Mr. Grounds found himself in the same position as Mr. Plowman in relation to turnover.

8. We do not think it to have been necessary for the Judge to have conducted a Newton hearing. The meaning of the caveat or proviso to the agreed facts was obscure. Counsel's assertion as to daily turnover was unsupported by any explanation or evidence. In those circumstances, we are satisfied that the Judge was entitled to treat what was shown in the admitted facts as stake money as the daily turnover.

9. In applying the average daily turnover for February and March to the beginning of the season, the Judge was on less certain ground. We are prepared to accept that the turnover of the business increased as the season progressed. We are also prepared to accept that the daily turnover was substantially less than the sum which the betting slips appear to suggest. Crown Counsel did not reject or disagree with Mr. Plowman's assertion. She informed us that she had only received the file that morning, was unfamiliar with the case and unable to help us. No explanation for this unsatisfactory state of affairs was offered, nor did she ask for a short adjournment to make enquiries to assist the court. We deplore such an approach and express the hope that greater cooperation will be shown in future. The fact remained, however, as counsel themselves accepted, that this was a very substantial operation.

10. The researches of the Applicants' counsel were unable to throw any real light on the question of sentence for an offence of this nature. In Attorney General v. Li Wai-ming and another (1984) HKLR 324, this court was dealing with an application for review in relation to an offence under section 7(1)(a) Cap.148. At page 325, it said:

"We do suggest that in all but minor cases under sections 5 and 7, the Court should seriously consider whether an immediate custodial sentence is not appropriate, possibly in addition to a fine. If a fine alone is imposed, it should be heavy enough to constitute an effective deterrent".

11. R. v. Lin Sai-yin, Magistracy Appeal No. 683 of 1986 dealt with an offence of operating a gambling establishment under section 5 Cap.148. The appellant appealed against a sentence of 9 months' imprisonment and a fine of HK$50,000.00. The Judge observed that it was a serious offence, obviously elaborately planned and executed, and using sophisticated telecommunication devices. He regarded the sentence as neither manifestly excessive nor wrong in principle and dismissed the appeal. That case occurred in 1986 and related to a different section of the Ordinance. We do not find it of any material assistance.

12. Nonetheless, Mr. Plowman argued that a sentence of 9 months' imprisonment was possibly the highest penalty ever imposed for an offence of this or an allied nature. He argued that the Judge's starting point, which the Judge expressed to have been as a sentence in excess of 2 years' imprisonment, was too high. He said that, after taking into account the factors urged upon the Judge in mitigation and which he repeated before us, an appropriate sentence would have been one of 12 months' imprisonment. He also complained that the Judge had made no enquiry as to the means of the 1st Applicant to pay the fine which he imposed. He said it is axiomatic that a fine must be within the capability of the offender to pay. The only information before the Judge was that the joint income of the 1st Applicant and his wife was HK$13,000.00 per month. The 1st Applicant has no resources with which to pay a fine of $250,000.00 and therefore faces an additional 6 months' imprisonment. In the circumstances, he submitted that the fine should be set aside.

13. For the 2nd Applicant, Mr. Grounds adopted all that had been said by Mr. Plowman. He pointed out that the 2nd Applicant had been extremely cooperative with the police and that, without his admission, it would have been impossible for the police to have proved how long the business had been going on. He said that the appropriate starting point which should have been taken by the Judge was one of 18 months' imprisonment from which the Judge should have deducted one-third to reflect the 2nd Applicant's cooperative attitude, his remorse and all the other factors which had been urged in mitigation.

14. As to the fine, Mr. Grounds said that this had been imposed in addition to a punitive sentence. He said that the 2nd Applicant had paid the fine by borrowing from friends. He would, therefore, have the question of repayment hanging over him upon leaving prison. The 2nd Applicant's wife, who now has three children to look after, is no longer working.

15. We feel we should make it clear that anyone who facilitates gambling beyond the limits permitted by the legislature on a scale such as in the present case must expect to be dealt with severely by these Courts. The operators of a substantial bookmaking operation can expect to receive a sentence of between 2 and 3 years' imprisonment after trial. The Judge was wholly justified in taking a starting point of a sentence in excess of 2 years' imprisonment and gave an appropriate discount in all the circumstances. The sentence of 18 months' imprisonment was not manifestly excessive.

16. We accept, of course, that any fine which is imposed must be within the capability of the offender to pay. In the present case, the fines which were imposed were plainly beyond the ability of either applicant to pay upon the basis of the relatively meagre earnings from their legitimate employment. The Courts must, however, approach cases such as this with common sense, as the Judge tried to do. He rightly rejected a submission that the profits from the business had been between $100,000.00 and $120,000.00. We think, however, that in the circumstances he went too far in saying that the total turnover for the season had been in the region of HK$40,000,000.00. Thus, while we agree that it was appropriate to impose a fine in addition to a substantial period of imprisonment, we think that the fine should in all the circumstances be reduced by 50%.

17. For these reasons, we allowed the applications and, treating the hearing of the applications as the hearing of the appeals, allowed the appeals. We confirmed the sentences of 18 months' imprisonment, but reduced each fine to one of $125,000.00 and ordered that it be paid within 1 month, with 3 months' imprisonment in default, consecutive to the period of 18 months' imprisonment.