HKSAR v. HO KING NANG AND OTHERS

CACC 445/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 445 OF 2010

(On Appeal From District Court Criminal Case No. 1192 of 2009)

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REASONS FOR JUDGMENT

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

1.  The four applicants in this application were the 2^nd, 3^rd, 4^th and 5^th defendants in the trial below. For ease of reference we will refer them as the defendants. They together with the 1^st defendant were convicted after trial by H H Judge Longley of the offence of conspiracy to defraud. They were sentenced as follows :

2^nd defendant  (1^st applicant)    5 years and 9 months

3^rd defendant  (2^nd applicant)    5 years and 9 months

4^th defendant  (3^rd applicant)    3 years and 9months

5^th defendant  (4^th applicant)    3 years and 9 months

2.  The 2^nd, 3^rd and 5^th defendants applied for leave to appeal against conviction and sentence, while the 4^th defendant only applied for leave to appeal against sentence.  The 3^rd defendant abandoned her application for leave to appeal against conviction at the hearing and was dismissed by this Court.

3.  After hearing we dismissed the 2^nd and 5^th defendants’ application for leave to appeal against conviction.  We allowed the application by the 2^nd and 3^rd defendants for leave to appeal against sentence and treated it as the appeal proper.  We quashed their respective sentence of five years and nine months and substituted by a sentence of four years and six months.  We dismissed the 4^th and 5^th defendants’ application for leave to appeal against sentence.

4.  We now give our reasons.

The charge

5.  The victim of the conspiracy charge was one Madam So Ying (‘So Ying’). She was a middle-aged woman and owned her own flat and who had a reasonably large sum of savings.

6.  The particulars of the charge alleged that the five defendants between 15 December 2006 and 9 February 2007 conspired together with others to defraud So Ying by dishonestly and falsely :

1) procuring the employment of her as an accounting clerk at Good Wealth (Promotion) Development Company (‘Good Wealth’);

2) proposing to her that she, the 2^nd and 3^rd defendants would purchase 320 mobile phones from Sure Rise (Hong Kong) Limited (‘Sure Rise’) in Hong Kong for $978,100.00, the cost to be shared between them;

3) proposing to her that the 320 mobile phones purchased would be sold to a mobile phone shop in Shenzhen at a price of $1,068,500.00;

4) proposing to her that the 4^th defendant would be employed to deliver the 320 mobile phones purchased to the mobile phone shop in Shenzhen at a courier fee of $9,600.00, the cost to be shared between So Ying, the 2^nd and 3^rd defendants;

5) proposing to her that she, the 2^nd and 3^rd defendants would share the profits after deducting the costs and the courier fee.

Summary of evidence

7.  The Judge found that there was an elaborate scheme to defraud So Ying.  We will gratefully adopt substantially the finding made by the Judge which was outlined in his Reasons for Sentence.

8.  In January 2007 two shelf companies were bought and premises rented.  One of the companies, Sure Rise, purported to be a company trading in mobile phones, and the other, Good Wealth (China) Limited, whose offshoot, Good Wealth, purported to trade in cheap costume jewellery.

9.  Dummy telephones and advertising material were acquired to give the premises of Sure Rise the semblance of a genuine business.

10.  Some cheap costume jewellery was bought and put on display in the office of Good Wealth.

11.  A young receptionist, Karen Lam, was employed by Good Wealth and a young man, Siu Wang-yip, was employed by Sure Rise as a salesperson to give the companies the appearance of legitimacy.

12.  The two companies were closely connected.

13.  The 1^st defendant, who held himself out as being the manager of Sure Rise, was involved with the 3^rd defendant in renting the premises of Good Wealth.  Both gave false names to PW6, the agent who took them to view potential premises for Good Wealth’s office.

14.  The 1^st defendant also gave a false name to Siu Wang-yip.

15.  Advertisements were placed in the press, advertising positions in Good Wealth as accounting clerks and merchandisers.

16.  The interviewing of job applicants and selection of potential victims was done by the 5^th defendant, purporting to be the manager of Good Wealth, whereas the 2^nd and 3^rd defendants posed as other members of the staff of that company.

17.  So Ying was interviewed for the post of accounts clerk at Good Wealth by the 5^th defendant on 31 January 2007.  During the course of the interview, information was elicited from her that she owned her own home and had savings.

18.  Later that day, she was told that she was engaged.

19.  When she first reported to work on 2 February 2007, she was required to produce her bank savings book to the 5^th defendant, which showed a credit balance of over $100,000.

20.  She was introduced to the 2^nd defendant and the 3^rd defendant as being fellow members of the staff.  It was pretended that it was also the 3^rd defendant’s first working day at the company.

21.  The 5^th defendant instructed the 2^nd defendant to teach So Ying and the 3^rd defendant the duties that they should perform.  The tasks that So Ying and the 3^rd defendant were instructed to perform that day were purely nominal, and about 3 pm, the 5^th defendant told them they could leave early.

22.  On So Ying’s second day at work, 5 February 2007, she was led by the 5^th defendant, accompanied by the 2^nd and 3^rd defendants, on a trip to Mong Kok, to look at shop premises Good Wealth intended to rent, but in reality, as a pretext after the visit was over, for the 2^nd and 3^rd defendants to introduce So Ying to the 1^st defendant at Sure Rise as a purported supplier of mobile phones.  The pretence that was put forward by the 2^nd defendant was that he wanted to look at mobile phones.

23.  Thereafter, the 5^th defendant instructed the 2^nd defendant and the 3^rd defendant to accompany So Ying to the Mainland on the next four successive days, the stated purpose being ‘to see how costume jewellery was bought there’.

24.  On the first of these visits to Shenzhen on 6 February 2007, costume jewellery of only very small value was bought at different stalls.

25.  At one point, the 3^rd defendant stated that she wanted to sell a mobile phone.  The 2^nd defendant then led the 3^rd defendant and So Ying to a mobile phone shop and introduce her to a man who identifed himself as Mr. Lam.  The 3^rd defendant purported to sell a mobile phone to this Mr. Lam.

26.  Thereafter, the 2^nd defendant suggested that they have a foot massage.  The 2^nd defendant, accompanied by the 3^rd defendant, led So Ying to a foot massage establishment where the 4^th defendant appeared and talked to the 2^nd defendant.  The 4^th defendant represented himself to be a driver who would be in a position to smuggle goods across the border.

27.  On the following day, 7 February 2007, the 5^th defendant again instructed So Ying to accompany the 2^nd and 3^rd defendants to Shenzhen on a purported buying expedition.  Once more costume jewellery of very little value was bought.

28.  During the visit, the 2^nd defendant claimed that he too wanted to sell a mobile phone.  The 2^nd defendant took So Ying, accompanied by the 3^rd defendant, back to the shop where they had been the previous day.

29.  It was while visiting Mr. Lam at the shop that Mr. Lam, apparently without any prompting from the 2^nd or 3^rd defendant, proposed a deal to So Ying, the 2^nd defendant and the 3^rd defendant involving 10 mobile phones which would be bought in Hong Kong and then brought over the border where they would be sold at a higher price.

30.  On their return to Hong Kong after Mr. Lam had proposed the deal involving 10 mobile phones, the 2^nd defendant arranged a meeting with the 4^th defendant, at which So Ying and the 3^rd defendant were present.  The 4^th defendant said that he agreed to transport the 10 mobile phones to the Mainland for a small fee of $300.

31.  This meeting with the 4^th defendant was followed by a visit to the 1^st defendant at the premises of Sure Rise, where the 10 mobile phones were purportedly ordered from the 1^st defendant.

32.  So Ying was prevailed upon to contribute $5,840 as her one-third contribution to this proposed deal.

33.  On the next day, 8 February 2007, the 5^th defendant again instructed So Ying to accompany the 2^nd and 3^rd defendants to Shenzhen on a buying expedition.

34.  On the following day, the 2^nd and 3^rd defendants together So Ying went to Sure Rise’s premises, where they received the 10 mobile phones.  The mobile phones were then delivered to the 4^th defendant for him to transport to the Mainland.

35.  Following this, So Ying, the 2^nd and 3^rd defendants then crossed the border.  They then received the 10 mobile phones back from the 4^th defendant and delivered them to Mr. Lam, who paid the price as agreed.  So Ying, the 2^nd and 3^rd defendants made a small profit of $160 each.

36.  Mr. Lam then proposed a much larger deal involving 320 phones, which the 2^nd defendant apparently accepted.

37.  The 2^nd defendant purported to make a call to Sure Rise to enquire how much Sure Rise would charge for the phones in Hong Kong.  The 2^nd defendant informed So Ying that Sure Rise would charge $978,100.  The 2^nd defendant then attempted to persuade So Ying to contribute one-third of this sum, i.e. over $300,000.

38.  So Ying reluctantly acquiesced in contributing the $5,840, plus the profit of $160, which she was led to believe she had earned on the transaction involving the 10 phones, to be used towards a deposit to be paid to Sure Rise for the 320 phones.

39.  She did not agree to anything further.

40.  On her return to Hong Kong, So Ying was taken by the 2^nd defendant, accompanied by the 3^rd defendant, to a restaurant where they met the 4^th defendant.  The 4^th defendant agreed that he would agree to take the 320 phones to the Mainland.

41.  The 2^nd defendant, accompanied by the 3^rd defendant, then led So Ying to Sure Rise’s office, where $72,000 was given to the 1^st defendant as a purported deposit for the 320 mobile phones.

42.  The 1^st defendant pretended to make a call from his office to a supplier, confirming that 320 mobile phones were available.

43.  The 2^nd defendant told So Ying that she and the 3^rd defendant should meet him at Sure Rise’s building the following day at 10.30 am, when they should each contribute a one-third share of the balance of the purchase price.

44.  That evening, the 5^th defendant again instructed So Ying to accompany the 2^nd and 3^rd defendants on yet another buying expedition to the Mainland.

45.  During the course of the night, So Ying became very reluctant to have anything further to do with the proposed deal.  She called the 2^nd defendant some time after 8 am to express her reluctance to participate in the deal. He told her that no one could take her place and that she should obtain a loan.

46.  Just before 10.30 am, she called the 2^nd defendant again.  He informed her that she could contribute $100,000 and he would try to get someone else to raise the balance.

47.  Shortly beforehand, So Ying had called the 3^rd defendant, who claimed she was at a bank withdrawing money.

48.  When So Ying went to Sure Rise’s building at 10.30 am, neither the 2^nd nor the 3^rd defendants were present.  She received calls from them, urging her to go up to Sure Rise’s premises first, as well as a call from the 1^st defendant, asking if she was coming up to the premises.

49.  So Ying went to the bank to withdraw her contribution.  The Police were in the bank who told her of the fraud.

50.  The 1^st defendant was arrested at Sure Rise’s office.

51.  The 2^nd, 3^rd and 4^th defendants were found waiting at a nearby restaurant and were arrested.

52.  The 5^th defendant was in the Mainland, but returned for just over an hour and a half later in the afternoon, only to return quickly to the Mainland.  He returned to Hong Kong eight days later and was arrested.

53.  The 1^st defendant was found with the bulk of the $72,000 which had been given to him on 8 February 2007.  So Ying’s $5,840 could be returned to her.

The defence

54.  None of the defendants gave evidence or called evidence on their behalf.

Leave to appeal against conviction

The 2^nd defendant

55.  The 2^nd defendant’s grounds of appeal can be summarised as follows :

1)  He did not deceive any person, including So Ying.

2)  The Judge was unfair to the defendants and favoured the prosecution.  He was overly involved in the prosecution’s questioning of the witnesses.

3)  The Judge allowed the prosecution to produce documents without observing procedures.  He allowed the prosecution to amend the agreed facts.

4)  There was inconsistency in the evidence of Madam Tang (another new recruit who was employed only for one day at Good Wealth) and the receptionist Karen Lam.

5) (1)   The prosecution’s case against the defendants was that they set up two fake companies.  However, the prosecution was unable to prove that the two companies were fake or that he had assisted in the setting up of the two companies.  The Judge misunderstood the evidence on the leasing of a shop to run an artificial jewellery business and he further misunderstood the evidence of So Ying on the purpose of buying samples of the jewellery.

(2)  The Judge wrongly assumed that the sale of the 320 telephones was a scam.  He ignored the possibility that the transaction of the 320 telephones could be completed if not for the Police’s intervention.

(3)  The evidence of So Ying was not satisfactory.  She was told of prejudicial things of the defendants by the Police.  She gave evidence based on her opinion and feeling.

(4)  It was illogical to spend over $200,000 in the setting up of the companies and the decoration of the premises in order to cheat So Ying only of $100,000.

6)  So Ying did not suffer any loss.  She in fact would benefit from the price difference if the transaction was to be completed.

7)  The Judge was wrong to use ‘movement records’ to prove he and the other defendants travelled in and out of Hong Kong and the Mainland.

8)  Employees were hired to do actual work as receptionist and shopkeeper, this indicated that the two companies were not fake.

The 5^th defendant

56.  The 5^th defendant relied on the following grounds of appeal :

1) There was error in procedure :

  (1)  The Judge refused to accept the agreed facts agreed by the parties.

  (2)  The Judge improperly allowed the production of his record of interview.

2)  There was error in law :

  (1)  The Judge wrongly inferred that Good Wealth was set up solely for the purpose of deception.  The Judge did not accept that the telephone transaction of So Ying was a private transaction which had nothing to do with Good Wealth.  The Judge found without evidence that the telephone transaction could not succeed.  The Judge wrongly held that he took part in the transaction but ignored the fact that his role was no different than Karan Lam.  The Judge ignored So Ying’s evidence that he had no knowledge of the telephone transaction.

  (2)  The Judge wrongly convicted him on the basis of his record of interview.

  (3)  The Judge wrongly drew inference on the movement records.

  (4)  The Judge only accepted evidence unfavourable to him and ignored those favourable to him.

Overview of the grounds of appeal

57.  The defendants’ appeal can be grouped into two broad issues :

1) There was insufficient evidence to convict them.

2) There was procedural irregularity at the trial.

Evidence of a conspiracy

58.  We will address the first issue first. It is not necessary for us to address the individual complaints by the defendants on the Judge’s treatment of the evidence.  As can be seen from an overview of the evidence these complaints are without merits. 

59.  It is important to bear in mind that the charge is one of conspiracy.  The crux of the charge is whether there was an agreement to commit an illegal act, namely, to defraud So Ying.  In our view there was clearly sufficient evidence in support of the charge.  Two new companies were set up.  The personnel of these two companies were closely connected.  According to Karen Lam who was employed as a receptionist in Good Wealth, she was interviewed by the 1^st defendant and was told by him to report to the 5^th defendant for work.  When she turned up for work at Good Wealth’s premises she saw both the 1^st and 5^th defendants in the premises.  During the time she worked for Good Wealth, she had seen the 1^st defendant at the office on five or more occasions, talking to the 2^nd, 3^rd and 5^th defendants.  Although 1^st defendant had no desk at the office, he had on occasions given her instructions as to how to record the particulars of applicants for job interviews and what to say to them when they asked for particular people. 

60.  The companies did not seem to have any real trading activities.  According to Karen Lam, during the time she worked at Good Wealth, nobody had, to her knowledge, made any telephone calls enquiring about purchasing jewellery nor had anyone visited the office enquiring about purchasing jewellery.  She was unaware of any books of account kept in the company.  According to Siu Wang-yip (‘Siu’) who was a salesperson in Sure Rise, the telephones on display at the premises were only display dummies.  He had never seen any books of account at Sure Rise.  He had asked the 1^st defendant about the absence of books of account and the 1^st defendant said that there were none.  As far as he was aware, Sure Rise had no regular supplier of mobile phones.  He had asked the 1^st defendant from which supplier the 320 telephones had been ordered and the 1^st defendant did not give any reply.  When the Police searched Sure Rise no real mobile phones were found. 

61.  There was a total lack of commercial justification for employing So Ying and Madam Tang to have performed the tasks that were assigned to them.  The Good Wealth was to recruit employees which fit a certain profile.  The 5^th defendant told Karen Lam that if the applicant was a female aged between 35 and 55, she should immediately arrange an interview.  If not, she should leave it to them to decide who to interview.

62.  The key players pretended that they did not know each other.  The 3^rd defendant who obviously knew the 2^nd and 5^th defendants pretended to the new recruits that she was also a new employee.  When applicants for jobs arrived for interview, the 2^nd, 3^rd and 5^th defendants who had previously been talking together would pretend not to know each other.  The 5^th defendant would come out of his office and ask Karen Lam if the 2^nd and 3^rd defendants were new colleagues, and she would say, ‘Yes’, and then the 2^nd and 3^rd defendants would be asked their names.  When So Ying came to Sure Rise the 1^st defendant told her that his name was Chan.  Again the 1^st defendant pretended that he did not know the 2^nd and 3^rd defendants.

63.  The 4^th defendant who appeared to have met So Ying in a chance encounter was asked to transport mobile phones to the Mainland by the 2^nd defendant in a private transaction. Yet he was observed to have departed from the Mainland with the 1^st and 5^th defendants within an hour of So Ying departing there with the 2^nd and 3^rd defendants on 8 February 2007, and then return with the 1^st and 5^th defendants the same afternoon.

64.  These were not normal activities one would expect in a legitimate business.  It is beyond doubt that a conspiracy existed and the purpose was to cheat So Ying of her money.  It is amply demonstrated by the way in which So Ying was invited to take part in the two transactions.  The illegal purpose was also supported by the evidence of PW9, Madam Tang whom the 2^nd defendant suggested should start a business in the Mainland on her first day at work.  After Madam Tang had indicated that she did not have sufficient money and was not interested in making a private investment, she was told that the company’s boss had decided that she should not report for duty until three weeks’ later on 24 February 2007.  At the same time So Ying was engaged to start work in the same capacity on 2 February 2007.  As the Judge observed this must have been because So Ying seemed to be a more promising target.  If the conspiracy existed, it does not matter if So Ying had not in fact parted with her money in the second transaction.  The contention that the second transaction might be completed if not for the Police’s intervention is totally unrealistic. 

The role of the 2^nd and 5^th defendants

65.  It is clear from the Judge’s analysis of the evidence that the 2^nd and 5^th defendants were not some innocent employees in Good Wealth and were unaware of the fraud.

The 2^nd defendant

66.  The 2^nd defendant was involved in the recruitment process at Good Wealth.  He gave the impression both to Madam Tang and So Ying that it was the 3^rd defendant’s first day at work.

67.  He was the person who engineered So Ying’s introduction to Sure Rise by suggesting that they visit a mobile phone shop.  In so doing he concealed from her the 1^st defendant’s involvement in Good Wealth.

68.  He was the person who engineered So Ying’s introduction to the person who gave his name as Mr. Lam at the mobile phone shop in Shenzhen.

69.  He was the person who instigated and encouraged So Ying to participate in the bait transaction relating to the 10 mobile phones.

70.  Later, his part was to persuade her to contribute to the purported deal involving 320 mobile phones.

71.  The 2^nd defendant was legally represented at the trial.  He did not explain why his record of interview was wrongly admitted.  In any event the Judge did not rely on it in his finding against him.

The 5^th defendant

72.  His role was to appear to be the manager of Good Wealth, to interview and employ So Ying for that company and to give directions as to the tasks she should perform and the places she should visit, so as to give opportunity to his fellow conspirators to introduce her into the purported telephone transaction.

73.  On 5 February 2007, he left Hong Kong for Shenzhen within 31 seconds of the 4^th defendant who later turned up at a message parlour where So Ying, the 2^nd and 3^rd defendants were and introduced himself to the 2^nd defendant as someone who could smuggle goods to the Mainland.  On 8 February 2007, when it was arranged for the 4^th defendant to deliver the first batch of ten telephones to So Ying, the 5^th defendant crossed the border to Shenzhen at about the same time as the 1^st and 4^th defendants.  He again returned to Hong Kong that afternoon at about the same time as the 1^st and 4^th defendants.  On the same evening, the 5^th defendant crossed the border again to Shenzhen at about the same time as the 1^st, 2^nd and 4^th defendants.  These are more than co-incidences. 

74.  The 5^th defendant returned to Hong Kong on the morning of 9 February 2007, at 2.15 pm, by which time all the other defendants had been arrested.  He left Hong Kong about an hour and a half later.     On 11 February 2007, he telephoned Karen Lam, asking her about what the Police had asked her and suggesting that she did not identify them.  He did not return until 17 February 2007, when he too was arrested.

75.  He was interviewed by the Police on 17 February 2007.  The record of interview was admitted as evidence.  The 5^th defendant was legally represented at the trial.  He did not state why the record was wrongly admitted.

76.  The Judge was satisfied that he minimised his role in Good Wealth in his interview and the Judge placed no weight on his answers.  In our view, the Judge was entitled to do so having regard to the evidence of the case.

Procedural irregularity :

Admitted facts

77.  The trial commenced on 28 June 2010. It was then adjourned for the parties to reach an agreement on the admitted facts.  On 29 June 2010, the prosecution opened the case and read the admitted facts.  The prosecution case was based on a fake employment.  However the then admitted facts seemed to suggest that So Ying was genuinely employed by Good Wealth.  The Judge commented on this.  The prosecution later applied to withdraw the admitted facts which were opposed by all the defence counsel.  On 30 June 2010, the prosecution’s application to withdraw the admitted facts was granted by the Judge and new sets of facts were agreed between the prosecution and the respective defendants.  Subsequently when the conduct of the prosecution was taken over by another fiat counsel, a new set of admitted facts dated 12 November 2010 was signed by the parties.

78.  Section 65C(4) of the Criminal Procedure Ordinance, Cap. 221, provides that

‘ an admission under this section may with the leave of the court be withdrawn in the proceedings for the purpose of which it is made or any subsequent criminal proceedings relating to the same matter’.

79.  The Judge clearly had the power under this provision to allow the prosecution to withdraw the first set of admitted facts.  The defendants had not shown that the Judge had erred in the exercise of his discretion.  In any event, the prosecution still had to prove its case by calling evidence. 

Conclusion on conviction

80.  In our view, the 2^nd and 5^th defendants’ application on conviction has no merits and was accordingly dismissed.

Leave to appeal on sentence

81.  The Judge first adopted a starting point of four years’ imprisonment for all the defendants.  He then deducted three months for delay in prosecution and arrived at a sentence of three years and nine months’ imprisonment.  This is the sentence he imposed on the 4^th and 5^th defendants.  As the 2^nd and 3^rd defendants each had a previous conviction of a similar nature, the Judge enhanced their sentences by an extra two years, resulting in a sentence of five years and nine months’ imprisonment.

Is four years’ imprisonment the appropriate starting point?

82.  The conspiracy in the present case is a variation of the Loco London gold or silver fraud schemes.  Refreshly recruited employees of a company which does not carry out any real business activities are enticed to put money in some non-existing investment in promise for high returns : (see HKSAR v. Tsoi Shu & Ors [2005] 1 HKC 51). Many of the victims lost their life savings in this way.  It was an elaborate and heartless scam to cheat the unsophisticated and gullible victims.  This Court has repeatedly stated that a deterrent sentence is required in offences of this type : Tsoi Shu, HKSAR v. Law King Yip and others (CACC 369/2003).

83.  In Tsoi Shu this Court referred to the previous authorities which held that a four-year imprisonment was the appropriate starting point.  This starting point applies to all the players who took part in the fraud without distinguishing whether someone is playing a minor role.  On the other hand, this starting point may be adjusted upwards if there are aggravating factors, such as someone who had a higher degree of involvement with the fraud. 

84.  More recent cases involving the employment fraud schemes affirmed the starting point of four years’ imprisonment : see HKSAR v. Au Koon Yip (CACC 271/2007) and HKSAR v. Tsang Chi Sang, Ricky (CACC 430/2007).

85.  It is true that in Tsoi Shu there were nine victims who had lost a total of over $2 million in two separate conspiracies and in Law King Yip and others, the conspiracy spanned over 14 months where a number of employees were defrauded of $3 million.  However, proceeding on the basis that the four-year starting point is intended to be a deterrent to criminals who devised what on the face to be legitimate business to cheat people of their savings, we do not consider that we should adopt a lower starting point for the present case.  It is only because of the quick action of the Police that the fraud was stopped and this prevented other potential victims who might have responded to the advertisement for jobs placed by Good Wealth from being cheated.

86.  It can be readily seen from the evidence that each of the defendants were actively engaged in the fraud.  The 2^nd defendant played the role of instructing So Ying in her new job.  He was actively involved in the two telephone transactions.  The 3^rd defendant was involved from the beginning at least from the time of the leasing of the Good Wealth’s premises.  She not only pretended to So Ying that she was a new employee, she also accompanied So Ying on the trips to Shenzhen.  The 4^th defendant was also closely connected in the scheme.  He was not simply a courier of the mobile phones.  He travelled at about the time of the 5^th defendant to Shenzhen and where he purported accidentally to become acquainted with the 2^nd defendant, 3^rd defendant and So Ying in a massage establishment.  On the day he delivered the first batch of telephones to So Ying, he crossed the border at the same time as the 1^st and 5^th defendants.  They returned to Hong Kong again at exactly the same time in the afternoon.  As the Judge found no explanation had been offered as to why the 4^th defendant should have crossed the border, not only with the 1^st defendant, who apparently was simply the supplier of the mobile phones, but also with the 5^th defendant who, as far as So Ying was concerned, had no involvement with the mobile phones transactions and was apparently the manager at Good Wealth who had instructed her to visit the Mainland on the business of costume jewellery that day.  The 5^th defendant was likewise heavily involved in the fraud as found by the Judge.  In our view the Judge was plainly right to apply the starting point of four years’ imprisonment to all four defendants.

Discount for delay

87.  The defendants argued that the 3-month deduction for delay is not sufficient.  The respondent, on the other hand, argued that the discount should not be given at all.

88.  The 2^nd, 3^rd and 4^th defendants were arrested together with the 1^st defendant on 9 February 2007 and the 5^th defendant was arrested on 17 February 2007.  On 5 March 2007 an identification parade was held in which the 1^st, 2^nd and 4^th defendants were identified.  The 3^rd defendant, however, was not identified by PW6 because of the change of her appearance.  On 23 May 2007, PW9 Madam Tang contacted the Police and pointed out the 3^rd defendant to two policemen outside a fast food outlet.  The next step that happened in the chronology of events was on 4 June 2008 when the Department of Justice received the file from the Police for legal advice which was provided on 26 September 2008.  It suggested further investigation by the Police.  On 22 December 2008, PW6 attended a photographic identification parade and identified the 3^rd defendant.  Further advice was sought from Department of Justice on 2 February 2009 which was given on 24 July 2009.  It recommended charges against the defendants which were eventually laid on 1 September 2009.

89.  Unreasonable delay in prosecution can be taken into account in sentence.  The position is correctly summarised by Cross and Cheung in Sentencing in Hong Kong page 381 :

‘ In Mills v HM Advocate and The Advocate General for Scotland 2002 SCR 860, 877, (PC) Lord Hope said that a “delay in bringing the accused to justice is widely recognised as a mitigating factor that can be taken into account when he is being sentenced.” This usually arises where the prosecution is at fault for the delay: HKSAR v Lau Kin-yu [2003] HKCU 251 (HCMA 391/2002, 7 February 2003, unreported). Such a delay might cause the accused to be “under the strain of legal proceedings for a very long time”: Attorney General v Ling Kar-fai (No 2) [1997] 2 HKC 651, 654. In Secretary for Justice v Schmitt [2008] HKCU 979 (CAAR 12/2006, 17 June 2008, unreported), Stuart-Moore VP noted that there is a delay in every case before trial, and that the “real question is whether there has been an unreasonable delay, through no fault of a defendant, which has contributed to his punishment”. The court will also need to be satisfied that the delay has “resulted in unfairness to the accused”: R v L (1995) 84 A Crim R 142, 145.’

90.  The cases of SJ v. Hui Siu Man [1999] 2 HKLRD 236 and HKSAR v. Cheung Suet Ting [2010] 6 HKC 249 which referred to situations of delay which gave a defendant an opportunity to rehabilitate himself and made restitution, do not weaken in any way the basic principle that the Court may give a deduction if there has been unreasonable delay in prosecution.

91.  In HKSAR v. Law King Yip (CACC 369/2003) and HKSAR v. Wong Ka Wah (CACC 260 and 261/2006) this Court observed that delay apparent had to be viewed in the context of the investigation which was being conducted.  While recognising that further investigations might be required in the present case after the arrest of the defendants, we consider that the two and a half years taken to charge the defendants was unduly lengthy and we consider there was unreasonable delay which the Judge was correct to give a three-month discount on sentence. 

Enhancement of the 2^nd and 3^rd defendants’ sentences

92.  The 2^nd defendant was sentenced previously in 2002 to three years’ imprisonment on a conspiracy to defraud charge.  The 3^rd defendant was sentenced in 2001 to 2 years and 2 months’ imprisonment to a similar charge.  Both of them were engaged in the Loco London gold/silver employment scams similar to the present case.

93.  That a re-offender may receive an enhanced sentence as a deterrence is well established.  This is to ensure that the public is protected from the criminal activities of the re-offender : see HKSAR v. Chan Pui Chi [1999] 2 HKLRD 830, HKSAR v. Tam Kam Mun, CACC 327 of 2001, HKSAR v. Chau Hon Kwong, CACC 86 of 2010 and HKSAR v. Tang Wing Cheung, CACC 146 of 2002.

94.  The Courts have treated the present offence as a serious crime and have imposed sentences which are intended to be deterrent.  The 2^nd and 3^rd defendants, had despite being sentenced for a similar type of fraud, chose to engage themselves again in the present fraud.  We are of the view that the Judge was clearly correct to increase their sentences.  However, in our view the two-year increase is excessive.  A sense of proportion must be adopted.  After all they had been penalized for their earlier crime.  The two-year increase is two third of the first sentence that was received by the 2^nd defendant and is almost the same length of the sentence received by the 3^rd defendant.  It is also a 53% increase from the sentence of three years and nine months. As Mr. David Leung SADPP (appearing together with Ms Mickey Fung SPP for the respondent) conceded he was unable to find any case which shows such a high level of enhancement.

95.  We are of the view that a nine-month increase is appropriate.

Conclusion on sentence

96.  Accordingly the sentence for the 2^nd and 3^rd defendants should be four years and six months’ imprisonment and that of the 4^th and 5^th defendants should remain at three years and nine months’ imprisonment.