HKSAR v. CAI ZHAORONG

CACC365/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 365 OF 2011

(ON APPEAL FROM DCCC NO. 319 OF 2011)

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BETWEEN

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J U D G M E N T

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

Introduction

1.  On 23 August 2011, following a trial in the District Court before Judge Browne, the applicant was convicted of 16 charges of theft involving a total of US$823,896 (a sum of approximately HK$6.4 million).  He was sentenced to 22 months’ imprisonment and now seeks leave to appeal that sentence.

The prosecution case

2.  Although the applicant lived and worked in the Mainland, he was the sole shareholder and director of U-way Electronics Company Limited, a company incorporated in Hong Kong.  The company had a bank account with HSBC in Hong Kong, the applicant being the sole signatory.

3.  On 18 June 2010, a bank in the United States of America, the National Bank of Indianapolis, mistakenly transferred US$823,896 to the U-way account with HSBC.  At the time of transfer, U-way held a credit of just US$11.72 in the account.

4.  The day following the erroneous transfer, the applicant began to transfer sums of money out of the account.  He did so utilising the bank’s online facilities.  In respect of such transfers, HSBC allowed a daily maximum limit of HK$500,000 (equivalent to approximately US$64,500). The majority of the applicant’s transfers were close to that limit.  Between 19 June and 22 July 2010, the applicant made 16 withdrawals, withdrawing all but US$17 of the total sum transferred into the account.

5.  In late July 2010, the bank wrote to U-way at its correspondence address in Shenzhen, requesting the return of the money.  There was no reply.

6.  On 16 August 2010, in order to distance himself from the thefts, the applicant resigned his directorship in U-way and transferred all of his shares to a person named Ye Ya Bing.  Thereafter, seemingly with Ye Ya Bing as the front man, there were negotiations with the bank as to repayment.

7.  In late December 2010, the applicant was arrested when he came across the border into Hong Kong.

8.  At trial, the applicant pleaded not guilty.  The nature of his defence is not relevant; suffice to say that it was rejected and there has been no appeal against conviction.

9.  As it was, at the date of the applicant’s arrest, two re-payments had been made to the bank leaving a balance owing of US$385,109.  This balance, together with legal costs in the sum of US$10,000, was repaid within the next few weeks.  Accordingly, before the matter came to trial full restitution had been made.

The sentencing exercise

10.  In assessing sentence, the judge took into account that the applicant had played no part in the erroneous transfer of funds to U-way’s HSBC account and that his criminal acts had been opportunistic.

11.  The judge also took into account that the applicant was 30 years of age, the holder of a law degree from a Mainland university and previously of unblemished character.  Because of his father’s illness, the applicant had been forced to take over the family business called Romate, a substantial enterprise in the Mainland employing some 80 people.  The applicant, who was married, supported his parents and two siblings who were still in education.  A number of the transfers had been made to Romate, the balance to other businesses; in short, they were for business purposes not personal indulgence.

12.  In assessing sentence, the judge took as his starting point a term of two years’ imprisonment in respect of each count.

13.  In seeking to impose a sentence that reflected the applicant’s overall culpability, the judge divided the 16 charges into two blocks, directing that the sentences imposed in respect of Charges 1 to 8 be served concurrently and that the sentences imposed in respect of Charges 9 to 16 be served concurrently.  He then directed that 6 months of the sentences imposed in respect of Charges 9 to 16 be served consecutively with the sentences imposed in respect of Charges 1 to 8.  This resulted in a term of 30 months’ imprisonment.

14.  Recognising that the applicant’s full repayment of the stolen funds together with an amount to cover legal costs demanded a ‘significant discount’, the judge directed that the sentence of 30 months’ imprisonment be reduced by 8 months.  This made for an overall sentence of 22 months’ imprisonment.

The application

15.  In his perfected grounds of appeal, Mr McCoy SC, the applicant’s counsel, submitted that the sentence of 22 months’ imprisonment was in all the circumstances manifestly excessive, particularly in light of the fact that the thefts had involved no breach of trust, being opportunistic in nature, and that the applicant had made full restitution.

16.  Before us, Mr McCoy accepted that no complaint could be made of the two-year starting point adopted by the judge.  His complaint was that the judge, in seeking to reflect the applicant’s overall criminality, fell into error in arbitrarily dividing the 16 offences into two blocks and ordering that 6 months of the second block be served consecutively to the first thereby increasing the starting point to 30 months.

17.  Mr McCoy emphasised that all 16 counts of theft were committed over the period of a single month, each being of the same nature and each being in respect of the same capital sum lying in the U-way account.  They should therefore have been considered as a single offence meriting, as a starting point, a sentence of two years only.

18.  While, before us, the submission was not pressed, we must reject any suggestion that the judge acted arbitrarily in the manner in which he sought to come to an overall sentence that, before taking into account the matter of restitution, was appropriate in that it reflected the nature and extent of the applicant’s culpability.  When a judge passes sentence in respect of a series of offences the question of totality is paramount and it matters less by which approach that is achieved than that in the final analysis the total sentence be appropriate to the overall criminality: see HKSAR v Kwok Shiu To, William [2006] 2 HKLRD 272.

19.  There were several ways in which the judge could have approached the matter in order to achieve what he considered to be a sentence reflecting the overall criminality of the applicant’s actions.  We are satisfied that the approach adopted by the judge in the present case was appropriate.  As was said by this Court in HKSAR v Kwok Shiu To, William (cited above):

“It is true that in achieving the desired totality of sentence a court will often have to order certain offences to run consecutively or concurrently. But that process cannot fairly be described as arbitrary ... as its purpose and function is to ensure an appropriate totality of sentence and the selection of which sentences are ordered to be served consecutively or concurrently is undertaken with that specific end in mind.”

20.  Mr McCoy’s principal point, however, was that, considered in the context of all the relevant facts, the starting point of 30 months was manifestly excessive.

21.  In his written grounds, Mr McCoy submitted that the judge failed to give proper weight to the applicant’s personal circumstances which, considered together with his previously unblemished record, should have led to a reduced starting point.  More importantly, he failed to give due weight to the fact that there had been no breach of trust and that, serendipity having placed such a large sum of money in his account, the applicant had fallen prey to the opportunity presented.

22.  The judge cannot be criticised for overlooking material matters of mitigation.  He gave consideration not only to the applicant’s personal circumstances, considering them in light of the fact that he was a man of previously unblemished record, a dutiful son and law graduate whose future would be blighted by his conviction, he also took into account the opportunistic nature of the offences.

23.  That being said, the judge was also obliged to take into account the fact that the applicant over a relatively prolonged period – a period of a month – in a calculated manner stole a sum of money approaching $6.4 million, effecting almost daily transfers until (for all practical purposes) the full amount erroneously transferred into the account had been exhausted.

24.  In cases of this kind there are no guidelines as to sentencing, each case depending on its own circumstances.  However, in seeking some reference point, it is to be noted that in HKSAR v Cheung Mee Kiu [2006] 4 HKLRD 776 this Court laid down guidelines for theft involving a breach of trust, the guidelines suggesting that a sentence of about five years would be appropriate for the theft of the amount stolen in the present case.  In the present case – there being no breach of trust – a sentence of 30 months was imposed (before calculating a discount in recognition of the payment of full restitution): exactly half of what would have been imposed if there had been a breach of trust.

25.  In the circumstances, we do not see how it can be said that the determination of a starting point of 30 months’ imprisonment fell outside of the range of sentences properly open to the judge. 

26.  Mr McCoy further submitted that the judge failed to give proper credit to the applicant’s most striking feature of mitigation, namely, that he had made full restitution.

27.  We do not agree.  Recognising that the applicant had made full restitution and done so in a timely manner, the judge determined that a reduction of 8 months was appropriate.  This constituted a reduction of just under 27%.

28.  It is now well settled that evidence that dishonest gains have been repaid constitutes strong mitigation.  In the present case it meant that the victim, which otherwise might never have been compensated or compensated only after the rigours of lengthy, expensive and uncertain litigation, was compensated in full.  The financial impact of the crimes was for all intents and purposes nullified.

29.  To encourage restitution, an offender must know that there is a material advantage in it for him, that advantage being in the form of a discount of sentence.  As this Court said in HKSAR v Leung Shuk Man [2002] 3 HKC 424, at 428:

“If the situation was otherwise, and a specific discount was not given for the payment of compensation or restitution, there would be no advantage to an offender who has repaid some or all of the ill-gotten gains to the victim…”

30.  As to the amount of any discount, the Court continued (page 429):

“There are, of course, no guidelines as to precisely what discount should be given where compensation for a victim’s losses has been paid or partially paid. The circumstances of each case will obviously vary. A sensible use of the sentencer’s discretion will normally enable the offender to receive an appropriate discount. In a case ... where full repayment has been made, a significant discount… should plainly be given.”

31.  The Court in Leung Shuk Man considered that, having regard to all the circumstances of the case, particularly the appellant’s early payment of compensation, an overall discount of 50% was appropriate.  However, that discount included a one-third discount for the plea of guilty.  Similarly, in HKSAR v Lam Shuk Ping, unreported, CACC 57/2003, this Court considered that where the applicant had made partial restitution an overall discount of 40% was appropriate.  In that case too the applicant had pleaded guilty and the discount included the standard one-third discount for the plea.

32.  By comparison, therefore, the discount awarded in the present case in recognition of the fact that the applicant had made full restitution was in no way inadequate.

33.  For the reasons given, we are satisfied that the sentence of 22 months was not manifestly excessive.

34.  The application for leave to appeal against sentence is dismissed.