HKSAR v. TSOI SHU

CACC 461/2003

 IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 461 OF 2003

(On Appeal From District Court Criminal Case No. 169 of 2003)

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REASONS FOR JUDGMENT

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Hon Cheung JA (giving the reasons for judgment of the Court) :

1.  On 14 December 2004 we allowed the 10th applicant’s application for leave to appeal against conviction, treated it as the appeal proper and allowed her appeal.  We also allowed the applications of the 1st, 2nd, 5th, 6th, 7th and 9th applicants for leave to appeal against sentence, treated them as the appeal proper and allowed their appeals.  We now give our reasons.

Facts

2.  All the applicants were charged with conspiracy to defraud.  The fraud was the well known loco London silver fraud.  In respect of the 1st and 2nd applicants, the offence took place between May 1999 and November 1999 at a company called Masterland Holdings Limited (‘Masterland’) (the first charge).  In respect of the 5th, 6th, 7th, 9th and 10th applicants, the offence took place between January 2000 and September 2000 at a company called Royal Asia International Holdings Limited (‘Royal Asia’) (the second charge).  The 2nd applicant was also a defendant in the second charge. 

3.  Masterland and Royal Asia advertised in the newspapers for job vacancies in their companies such as translators or supervisors. After the job applicants answered the advertisement they were employed and trained in the field of silver trading.  In the office of these two companies the victims met persons who pretended to be new recruits but in fact were involved with the fraud.  They were described by the judge as decoys or specialized persons.  These decoys pretended that they made good profits in operating their own accounts in silver trading.  The victims were then lured into opening accounts of their own.  Initially trading attracted some profits which were later turned into losses.   The victims were then encouraged to invest further in order to recoup the loss.  However, the so-called further investment led to more losses until their funds were exhausted. 

4.  Apart from the decoys there were also those whom the judge described as working in the ‘front part’ of the fraud.  Their role was to encourage the victims to open their own accounts and invest.  There were also those involved with the ‘latter part’ of the fraud where the losing victim was encouraged to make further investments. 

5.  The police raided Masterland on 28 September 1999.  It ceased operation at the end of October 1999. 

6.  Later on at the beginning of 2000 Royal Asia started its operation.  Documents that came from Masterland were found at Royal Asia’s premises.  The police raided Royal Asia on three occasions, namely 6 March, 15 August and 21 September 2000. 

7.  There were nine victims in these two conspiracies.  The total amount of loss by the victims was over $2,000,000.  In the conspiracy involving Masterland, $480,000 were lost by three victims.  The Royal Asia conspiracy had six victims.  The loss was about $1.6 million. 

8.  Two of the co-conspirators (PW39 and PW40) who were charged together with the applicants pleaded guilty and gave evidence for the prosecution against the applicants.  The victims also gave evidence for the prosecution.

Evidence against the applicants

9.  The applicants were not the masterminds of the fraud.  The 1st applicant worked as a decoy in Masterland for two to three months.  He then was a latter part manager.  He also acted as a lecturer and front part manager.  He made reports in managers’ meetings and conducted interviews.  The 1st applicant was arrested at the police raid on 28 September 1999 and continued with the job after the raid.  He elected not to give evidence at the trial. 

10.  The 2nd applicant was a latter part manager at Masterland.  He made reports in managers’ meetings and conducted interviews.  He was also a latter part manager in Royal Asia.  He taught in small group in the company.  He was arrested at the police raid of Royal Asia on 6 March 2000 and remained with Royal Asia until September of the same year.  He elected to give evidence.

11.  The 5th applicant was a lecturer.  She was arrested at the raid at Royal Asia on 15 August 2000.  However, at the end of the same month she was still teaching other victims about silver trading for one to two hours.  She did not give evidence.

12.  The 6th applicant was a decoy in Royal Asia.  He pleaded guilty. 

13.  The 7th applicant discussed silver trading with the victims and was introduced as someone there to assist them in the trading of silver.  He was described as a front part and latter part manager of the company.  He attended the daily meetings and reported on the progress being made with the victims.  He was arrested at the raid on 15 August 2000 but he was still at Royal Asia in October.  He did not give evidence. 

14.  The 9th applicant was a decoy at Royal Asia.  He reported his progress in gaining confidence of the victims to the daily meetings of the company.  He did not give evidence. 

15.  The 10th applicant was arrested at the premises of Royal Asia on 21st September 2000.  One of the victims, PW4, said that she interviewed her for the job at the end of August 2000 and she also occasionally sat at the reception counter.  She did not give evidence.

The conviction

16.  The trial was held in the District Court before H H Judge Line.  He found the applicants guilty (the 6th applicant pleaded guilty).

The sentences

17.  The 1st applicant : 6 years imprisonment. 

18.  The 2nd applicant : 7 years imprisonment

charge 1 : 5 years, charge 2 : 6 years.  1 year in the charge 1 is to be served consecutively to the 6 years of charge 2. 

19.  The 5th applicant : 5½ years imprisonment. 

20.  The 6th applicant : 3 years and 3 months imprisonment. 

The judge used a starting point of 4½ years and reduced it to 3 years and 3 months because of his guilty plea.  The judge did not give the full one-third discount but only a 25% discount because the 6th applicant pleaded guilty only after he had been identified by one of the witnesses. 

21.  The 7th applicant : 6 years imprisonment. 

22.  The 9th applicant : 4½ years imprisonment. 

23.  The 10th applicant : 3 years imprisonment.

The applications

24.  The 10th applicant applied for leave to appeal against conviction and sentence.  The 1st, 2nd, 5th, 6th, 7th and 9th applicants applied for leave to appeal against sentence only.

Appeal against conviction

25.  There was a paucity of evidence against the 10th applicant.  The evidence showed that other than the victims, Royal Asia employed 10 odd to 20 employees.  The judge accepted the evidence of PW40 who said that those who were employed by Royal Asia as staff members were recruited through personal recommendations of familiar friends and that interviews of victims were conducted by those ‘in the know’. 

26.  The only evidence implicating the 10th applicant came from PW4 who was one of the victims.  She said that she was interviewed by the 10th applicant for the job at the end of August 2000.  She also saw her occasionally sitting at the reception counter.  The 10th applicant was arrested at the premises in Royal Asia on 21 September 2000.  PW39 and PW40 did not implicate her.  This is explained by the fact that the 10th applicant only began to work at Royal Asia after they had left. 

27.  It is clear from a fair reading of the Reasons for Verdict that the foundation on which the judge found the 10th applicant guilty was because she had interviewed PW4.  This indicated that she was someone ‘in the know’.  On that basis the judge held that it supported a reasonable inference that she knew of the fraud and was participating in it and the failure for her to give an explanation made such an inference to be an irresistible one. 

28.  As a matter of logic and commonsense one would expect that those who interviewed the victims would have knowledge of the fraud that was being carried out in Royal Asia.  Royal Asia was set up for one purpose and one purpose only, namely to perpetrate a fraud on some gullible investors.  Hence it would be extremely important for the fraudsters to assess someone who came to answer the job advertisement to see whether he or she in fact had the financial means to be swindled.  One would expect that this function would only be given to someone who was part of the fraud.

29.  However the evidence of PW4 did not reveal anything akin to such an interview.  PW4 said she went to Royal Asia and met the 10th applicant who said she was from personnel.  PW4 then filled in a form at the reception area and handed it to her.  The job application form was not produced as an exhibit.  However, another form filled out by another applicant was produced as an exhibit.  From what we can see it did not contain any financial details of that applicant nor was the printed form designed to elicit that detail.  PW4 said the 10th applicant briefly introduced the company to her, saying that it was an American company engaged in petroleum and was about to develop its business in China.  PW4 was asked if she could work on a long term basis in China and she answered yes.  The amount of salary was also mentioned (we note that the advertisement actually referred to the amount of the salary).  The applicant then took away the form, returned a short while later and told PW4 that she was employed.  PW4 said that she did not speak much to the applicant as she was busy filling in the form.  

30.  That was all that happened at the interview.  It fell far short of the sort of exercise in which the fraudster will try to ‘size up’ a potential victim to see if she has the money to be cheated. 

31.  On the other side of the evidence, the 10th applicant only came to the scene after the second raid of Royal Asia on 15 August 2000.  She worked there for about 15 days or so before she ‘interviewed’ PW4 and she remained at the job until the last raid on 21 September 2000.  This was a short period of time.  Mr. Surman, counsel for the 10th applicant, argued that one could equally say that the fraudsters would not reveal the true nature of the enterprise to someone who is new to the job.

32.  The judge said that the consequence of the absence of explanation from the 10th applicant is that ‘the basic inference runs harder and makes it the only and the irresistible inference’.  He held the case fell within the principle set out in HKSAR v. Li Defan [2002] 5 HKCFAR 320. 

33.  In our view the prosecution evidence against the 10th applicant is at best equivocal.  Given the nature of the evidence in this case, one cannot even say that the 10th applicant had actually conducted an interview with a victim, which was the first step in the perpetration of the fraud.  This weakened the foundation on which inferences could be drawn against the 10th applicant.  It is important to remind oneself of how Lord Hoffmann NPJ in Li Defan dealt with this issue.  First, he cited with approval the judgment of Mason CJ, Deane and Dawson JJ in the judgment of the High Court of Australia in Weissensteiner v. The Queen (1993) 178 CLR 217 :

‘Not every case calls for explanation or contradiction in the form of evidence from the accused.  There may be no facts peculiarly within the accused’s knowledge.  Even if there are facts peculiarly within the accused’s knowledge the deficiencies in the prosecution case may be sufficient to account for the accused remaining silent and relying upon the burden of proof cast upon the prosecution.  Much depends upon the circumstances of the particular case and a jury should not be invited to take into account the failure of the accused to give evidence unless that failure is clearly capable of assisting them in the evaluation of the evidence before them.’

   [p332 H-J]

Secondly, he concluded

‘  29.    In summary, therefore, I consider that in most cases in which the accused does not give evidence it is undesirable that the judge should give the jury more than the standard Judicial Studies Board direction.  There is unquestionably power in an appropriate case to comment that the jury may — but need not — consider that the prosecution case on a particular issue relevant to guilt is strengthened by the absence of the accused from the witness box.  But the cases in which such comment is permissible and, even if permissible, necessary, will be exceptional.’  [emphasis added]

34.  This case did not call for an explanation or contradiction in the form of evidence from the 10th applicant.

35.  In view of the equivocal nature of the evidence, the prosecution had simply failed to prove the offence against the 10th applicant beyond reasonable doubt.  Her election not to avail herself of her right to give evidence did not in anyway strengthen the case against her.  It was not an exceptional case in which it was permissible and necessary to approach the case in that way.

36.  The judge also considered whether, if the 10th applicant was a receptionist, she would have had knowledge of the fraud.  The judge did not make a finding on whether she was a receptionist or not.  The judge was aware of PW40’s evidence that apart from the receptionist, the other staff members were participants in the fraud.  While accepting this evidence, he nonetheless came to the conclusion that those receptionists who were present when PW39 and PW40 were working at Royal Asia also knew of the fraud.  On that basis the judge came to the view that the fraudsters could not possibly have adopted a different approach towards the 10th applicant.

37.  We are unable to accept this reasoning.  Even if the previous receptionists were in the know, one just cannot say categorically that the 10th applicant must be in the know as well.  The evidence adduced by the prosecution fell far short of permitting that inference to be properly obtained.

38.  In the circumstances the conviction of the 10th applicant was unsafe and unsatisfactory and we accordingly allowed the appeal and quashed the conviction.

Appeal against sentence

39.  It is not in dispute that it is a settled principle of sentencing that an offender is to be sentenced upon the existing or prevailing guideline or tariff of sentence which existed at the time of the commission of the offence, unless the guideline or tariff has become lower by the day of the sentence (see Article 12(1) of the Hong Kong Bill of Rights, Cap. 383 and R. v. Chan Ka Wai, CACC 530 of 1988). 

40.  The offences in this case took place in 1999 and 2000 and the sentences imposed in this case ought to be in line with the range of sentences that were imposed in respect of similar offences that took place over the same period.  A great number of these cases were cited in this appeal.  It is not necessary for us to comment on these cases individually.  It is sufficient to identify the principles stated in these cases and make observations on these principles.

The relevant principles

The error

42.  In this case we considered the sentences imposed to be manifestly excessive.  The judge fell into error when he said that Stuart-Moore VP in Chiang Chun Wai ‘had criticised as inadequate in similar circumstances to these a starting point of 4 years’.  In our view Stuart-Moore VP did not criticise the 4 years as an inadequate starting point.  As it was intended to be a deterrent sentence, it was already a heavy one.  As pointed out earlier, his criticism was directed towards the sentences of those who played a greater role in the fraud in that particular case.  In our view, had the judge recognized the 4 years starting point and then, when appropriate, increase it to reflect the higher level of culpability of the individual applicants, he would not have imposed the level of sentences he had imposed in this case.

43.  While there was evidence that the documents of Masterland were found in Royal Asia, it had to be remembered that the prosecution had chosen to rely on two separate conspiracies.  Apart from the 2nd applicant who faced two charges, the other applicants faced one charge only.  It would be wrong when imposing sentence to treat the two offences as being part and parcel of one large conspiracy.

The individual sentences

44.  The 1st applicant had acted variously as a decoy, a team manager, a lecturer and a latter part manager.  He continued working in Masterland after the police raid.  In our view, a 4 years imprisonment is clearly not sufficient to reflect the gravities of his involvement in the fraud.  At the same time we are not convinced that his role should attract a sentence of 6 years imprisonment.  In our view, the appropriate sentence of 1st applicant is 5 years imprisonment. 

45.  The 2nd applicant was involved with both conspiracies.  He was a latter part manager at both companies.  He also taught at Royal Asia.  The 2nd applicant was arrested on 6 March 2000 in Royal Asia and remained employed there through the raids in August and September.  The Royal Asia conspiracy took place over a period of nine months.  All these are aggravating factors.  However, bearing in mind that the 2nd applicant was not the mastermind of the fraud, we are of the view that a 6 years imprisonment should be the appropriate sentence for his role in the two conspiracies. 

46.  The 5th applicant was a lecturer who gave training to one of the victims on 30 and 31 May 2000 and to another victim on 30 August 2000 (the second training was given 15 days after she was arrested for the present offence on 15 August 2000).  As the role of the 5th applicant was a lecturer, we are of the view that the appropriate sentence should begin at the 4 years starting point.  Although there was evidence from a witness for the prosecution that the 5th applicant was someone who she had worked with every day in Masterland as a colleague or decoy.  The 5th applicant was not charged with the first conspiracy at all.  Hence, this evidence should be ignored for the purpose of sentencing.  Her continuous involvement with the conspiracy after the arrest obviously called for an enhanced sentence.  However, we are of the view that the 5½ years sentence imposed by the judge was manifestly excessive. We considered that a sentence of 4½ years imprisonment to be appropriate.

47.  The 6th applicant acted as a decoy whose role was to lure one victim to take part in the scam.  His involvement was a relatively short duration namely between end of May and mid July 2000.  He did not continue with the fraud after the police raid.  In the circumstances we considered 4 years to be the appropriate starting point.  We will not disturb the 25% discount given by the judge.  His final sentence will be 3 years imprisonment.

48.  The 7th applicant played the role of a front and latter part manager.  He was arrested at the raid on 15 August 2000 but continued to work there until October.  After his arrest he continued to teach one of the victims silver trading who lost money to him.  In our view, considering his role and his continue involvement after the arrest, a 5 years sentence is appropriate.

49.  The 9th applicant was a decoy.  There was no evidence that he was instrumental or successful in luring any victim.  His involvement in the fraud was between June/July to September 2000.  He did not continue with the fraud.  He had a clear record.  We are of the view that a 4 years sentence should be imposed. 

Costs

50.  For completeness we also state that at the conclusion of the hearing we ordered costs to be awarded to the 10th applicant in respect of the appeal and the application for bail pending appeal.  The latter order was made in accordance with the decision of this Court in HKSAR v. Tam Kwai Keung & Another CACC 10 of 2001.  We refused the costs applications made by the 1st, 5th and 9th applicants.