HKSAR v. TSOI CHUNG WANG AND OTHERS

CACC 356/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 356 OF 2004

(ON APPEAL FROM HCCC NO. 74 AND 201 OF 2000)

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J U D G M E N T

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

Introduction

1. The applicants are husband and wife.  They were tried at the Court of First Instance before Lunn J and a jury upon an indictment containing one count that alleged conspiracy to defraud.  The particulars charged that between 30 June 1997 and 30 April 1998 they conspired with others “to defraud such companies and persons as might be caused loss by the dishonest copying, manufacturing and distribution of films, computer games, and sound recordings, the copyright in which and the manufacturing and distribution rights of which belonged to companies and persons other than the said persons so conspiring”.  On 19 July 2004, each was convicted of that count, and each was sentenced to a term of six years six months’ imprisonment.  The applicants, to whom we shall refer as D1 and D2, now seek leave to appeal against conviction and sentence.  In the case of D1, the application is for leave out of time but he was only one day out of time and that is not an issue that needs to trouble us in this case.

The facts

2. Given the grounds upon which the appeal against conviction is based, it is not necessary to rehearse the facts in much detail because, by and large, they were common ground.  On the night of Sunday 26 April 1998 officers of the Independent Commission Against Corruption (ICAC) entered the premises of four factories in Fanling where they interrupted the replication of copies of films, computer games and audio titles, all of which copying was unauthorized by the copyright owners. 

3. The judge succinctly summarized what they found and the nature of the allegations against the applicants.  This summary is at p 65 of the appeal bundle:

“The pirate operation which was underway was huge.  No less than 87 workers were found on these four premises.  38 of 41 replicating lines were in operation, so were 10 of 12 printing machines found on the premises.  The employees working in the factories represented half of the workforce.  This was the night shift fully engaged in pirating disks.

In the days which followed, officers of ICAC and Customs and Excise officers located and seized no less than 1,131,699 optical discs in those factories and in the warehouse of Bright Hope.  It is an Admitted Fact that they are all copies which infringe the copyright of the owners of the respective 75 titles made up of films in the most part, audio music and some computer games.  All of those disks, it is an Admitted Fact, were made in the two months up to 1 am on the early morning of 27 April 1998.

…About half of the infringing copies were found in the premises leased to Bright Hope Trading Company Limited at Room 106 of the World Trade Square, the other half found in the various factories. … all the factories were operated by Golden Science Technology.” (pp 65-66 Appeal bundle).

In his sentencing remarks, the judge explained that:

“You [D1 and D2] were the controlling shareholders and signatories of the bank accounts of Golden Science Technology.  You, [D1], were company secretary, and [D2], a company director.  Many of the employees of Golden Science Technology called as witnesses of the prosecution in the case, described you, [D1], as the boss, that is the boss of Golden Science Technology….  The corporate chart … placed you firmly at the apex of the corporate hierarchy.”

The judge went on to say:

“It is clear from the evidence led at trial that thought had been given by the conspirators to the necessity of being asked to explain the authority under which they manufactured titles if called upon to do so by the law enforcement authorities or others.  Born from that necessity was a system which resulted in the creation of false authorizations.  They were purportedly issued by Bright Hope in favour of Golden Science Technology and, to a lesser extent, Dual City.

Bright Hope itself was a company which was a sham. … It was a sham operated to house the infringing copies once they had been manufactured and used to return the profits of the sale of the infringing copies to Golden Science Technology.  

D1 directed the remittance of the moneys from Bright Hope to Golden Science Technology.  In the period 10 December 1997 to 30 March 1998, $21,920,000 was remitted from Bright Hope to Golden Science Technology.”

4. As for the role played by each applicant, the evidence adduced included the following:

(1)   a cheque drawn on the joint account of D1 and D2 to make initial payments of deposits in rents to the landlord of the premises leased by Bright Hope;

(2)   evidence that D2 gave the senior accounts clerk of Golden Science Technology instructions to keep a daily bank book for Bright Hope and that D2 inspected this book every few days;

(3)   evidence that D1 gave the senior accounts clerk of Golden Science Technology instructions to transfer monies from Bright Hope to Golden Science;

(4)   evidence of frequent visits by the applicants to the Golden Science Technology premises.  D1 had his office at the one of the Golden Science’s four factories;

(5)   the fact that D1 and D2 were the controlling shareholders of Golden Science;

(6)   the fact that 99% of the shares in Bright Hope were held in the name of D2’s brother and the only signatories to Bright Hope’s bank account were D1 and D2;

(7)   evidence that connected D2 with the renting of the premises at World Trade Square in the name of Bright Hope;

(8)   evidence of the transfer of $21,920,000 from Bright Hope to Golden Science in the three to four month period from 9 December 1997 to 30 March 1998;

(9)   the discovery of more than half of the 1.1 million pirated copies of disks on the premises of Bright Hope together with the discovery of false authorizations by Bright Hope in favour of Golden Science; and

(10)  the signing of a cheque for $1.9 million by D1 in favour of Golden Science Technology.

5. Neither applicant gave evidence at trial nor was any evidence on his or her behalf adduced.  The defence did not dispute that 1.1 million infringing discs had been manufactured at the various factory premises.  The essence of the defence was that it had not been proved by the prosecution that either D1 or D2 knew of the manufacture and storage of the pirated titles nor that they were parties to the conspiracy to defraud.  It was suggested that there was no evidence that they had inspected or visited the factories, as opposed to the office premises, of Golden Science Technology and no evidence that they had inspected or visited the warehouse at Bright Hope.  Further, it was stressed that each applicant had been absent from Hong Kong from time to time and that found at the premises of Golden Science Technology were several million non-infringing copies.

Flight

6. The first ground of appeal on behalf of both applicants is that the judge wrongly admitted evidence of flight or, more accurately in this case, evidence of the failure of the applicants to present themselves for trial at the date originally fixed for their trial.

7. The matter arises in this way.  The applicants were committed for trial by a magistrate on 12 July 2000 and granted bail.  It was not then a condition that either surrender their travel documents or remain in Hong Kong.  The first pre-trial review took place on 9 January 2001 and both applicants appeared.  Four days later, namely, 13 January 2001, D2 left for Canada where she and D1 had previously purchased a property.  Between 16 June and 26 September 2001, D1 was out of Hong Kong.  It followed that neither appeared at the next pre-trial review which was on 26 June 2001.  The court was then informed that D2 had fallen ill and hit her head in Canada and that D1 had flown there to see her.  An application for an arrest warrant was refused, and a further pre-trial review was fixed for 17 September 2001.  But neither applicant attended that further pre-trial review and on this occasion counsel told the court that his clients had had difficulties in arranging travel as a result of the events in the United States on 11 September 2001.  Medical chits were produced suggesting that D2 was still suffering from the consequences of her accident.

8. On 4 October 2001, D1 attended the pre-trial review but D2 did not; again, according to counsel, because she was suffering neck pain.  On this occasion, the bail conditions in respect of D1 were varied in that he was required to surrender all travel documents and not to leave Hong Kong.  The trial was by that stage fixed to begin on 19 November 2001.  Neither applicant turned up for their trial on that date, and counsel who appeared for them said that he had no instructions and was withdrawing from the case.  Consequently, warrants were issued by the trial judge for the arrest of both applicants.

9. On 16 September 2003, D1 was located on the Mainland, detained by authorities there, and escorted back to Hong Kong on 14 October 2003.  Upon his return to Hong Kong, he had in his possession a BNO passport as well as a home visit permit in his name.  It follows that whilst he had surrendered his Hong Kong SAR passport pursuant to the order of 4 October 2001, he had breached the terms of his bail in that, first, he had left Hong Kong and, second, he had not surrendered all his travel documents.

10. As for D2, a request for her provisional arrest was made to the Canadian authorities on 22 October 2003 and she was arrested a week later.  She waived extradition proceedings and returned to Hong Kong on 19 November 2003.

11. The trial commenced in June 2004 but prior to that, namely, in January 2004, D2 applied for bail.  In her supporting affirmation, she pointed out that during her absence from Hong Kong she lived at her address in Canada, an address that was known to the ICAC and that she had made no attempt to hide or conceal her whereabouts.  She failed, she said, to return for the pre-trial review or reviews because of physical injury, as well as inability to secure an air ticket after the terrorist attack in New York on 11 September 2001.  Just prior to the original trial date, according to this affirmation, she had been told that the fees demanded by the lawyers were such that her husband, D1, was not in a position to pay them and that therefore the two of them were not going to be represented at trial.  Accordingly, she said: “I was very concerned, stressed and panicked.  I did not want to leave my children in Canada.  They were then aged 15 and 12.  I could not cope with the situation.”  No explanation, we note, was given as to why those factors were not placed before the court prior to or upon the date of trial in November 2001.

12. At trial before Lunn J an issue as to the admissibility of the evidence that the applicants had failed to appear at the trial, when first listed, was raised.  The judge admitted the evidence.

13. It was submitted to this court on behalf of the applicants that he should not have done so.  The matter is put on the basis that “in order for flight to be capable of being supportive of the prosecution case, there must be some evidence which establishes a nexus between the flight of the applicants and the offence in question … in other words there has to be some evidence that their flight was not due to any innocent reason.”  The suggestion is that the only evidence relied upon by the prosecution was the fact of the non-appearance of the applicants at the pre-trial reviews and upon the original trial date, combined with the fact that the applicants knew that they had to attend the trial.  It is submitted, on the strength of the decision in Chan Kwok Keung v The Queen [1989] 2 HKC 9, that this did not suffice; that the prosecution had produced no evidence to establish that the applicants had been hiding away or behaving in an unusual manner.  Stress is placed upon the fact that according to the original conditions of bail, D2 was permitted to leave Hong Kong and that she had supplied the ICAC with her Canadian address where she resided at all times.  It is said that the prosecution failed to adduce any evidence that would entitle the jury to infer that flight was not due to an innocent motive on her part.  There arises, it is argued, no onus on the applicants to provide an explanation for their absence but that, even so, explanations had been provided that were consistent with innocence.

14. In our judgment, Chan Kwok Keung does not avail either applicant.  That is because the factual premise upon which that appeal was allowed was materially different from the facts in this case.  It was there held by the Privy Council that flight of an accused after an offence might be tantamount to an admission of guilt, but that in order for flight to be capable of amounting to such an admission there had to be some evidence which established a nexus between the conduct and the offence.  That was a murder case.  The killing took place in August 1986 and, later that month, the names of the applicants were placed upon the immigration black list.  In June 1987, the appellants were located as stowaways on board a ship en route from Hong Kong to Macau.  That was the long and the short of the matter, and what is vitally important as a distinction between that case and this, is that there was no evidence in that case that either of the appellants knew that they had been placed on the stop list in August 1986 or at all.  At pages 12-13 of that judgment, Lord Ackner said:

“It is common ground that conduct, and in particular the flight of an accused after an offence has been committed, may be tantamount to an admission by him of his guilt of that offence, and as such, admissible evidence.  Their Lordship’s attention was invited … to a number of Australian authorities which illustrate this proposition.  But each case must depend on its own particular facts.  In those cases to which their Lordships were referred, the flight of the accused had occurred within a short space of time of the offence being committed and in circumstances which clearly connected the accused with the offence.  In this case, the appellants were found stowed away nearly 10 months after the commission of the crime.  The prosecution led no evidence to suggest that they had been hiding for all or any part of this period.

In this case, the prosecution produced no evidence to establish that either of the appellants had been hiding away or otherwise behaving in unusual manner in this period of nearly 10 months.  There was therefore no material which could have justified the jury inferring the only reasonable explanation the appellants staying away on the ship from Hong Kong to Macau was that they were on the run because they might be arrested or charged with this murder.  It could have been of a variety of other reasons for their having stowed away nearly 10 months after the murder.”

15. The present case is somewhat different.  The applicants had been committed for trial but, without giving any notification to the prosecuting authorities or to the court, simply failed to turn up.  There was no record of D1 having left Hong Kong, itself possibly suggestive of a furtive departure.  D1 was in overt breach of his bail conditions, having failed to surrender his travel documents and having left Hong Kong.  D2 stayed in Canada and returned only after a provisional warrant for her arrest was issued by the Canadian authorities, having previously made no attempt to seek an adjournment of her trial.  Each was aware of the trial date.  That trial was for the very offences for which they ultimately stood trial in 2004.  To say, in the circumstances, that there was no evidence establishing a nexus between the conduct and the offences in question is, with respect, unrealistic.  It was not for the judge, at the time the application was made to admit the evidence, to determine whether the adverse inference that the prosecution would be asking the jury to draw was the only inference to be drawn.  That was a question for the jury.  What the judge had to decide was whether there was evidence upon which such an inference could properly be drawn.  It was a question of potential proof of a fact which, if proved, was relevant to an issue at trial.  Being relevant, “… both primary facts and the inferences therefrom are ‘matters generally speaking within the province of the jury’ … both can be critically be affected by later evidence or lack of evidence from the defence.  Assuming all proper directions, the test is not what the judge thinks the jury, and still less he, ‘must’ conclude at the moment, but what a jury ‘could, may or might’ properly conclude in the future’”.: Attorney General v Li Fook Shiu Ronald [1990] 1 HKC 1, at 9; comments made in relation to the establishment of a prima facie case, but equally relevant here.  We see no merit in this ground.

16. Mr Fung SC, for the applicants, goes on to say that the judge can only admit such evidence if he is satisfied that there is in fact no innocent explanation.  That, with respect, seems to us to be a far-reaching proposition.  It is to suggest that the judge takes the place of the jury in its fact-finding role.  If correct, we fail to see how evidence of flight or, for that matter, lies which fall within a similar category for these purposes, could ever been admissible if the judge at the admissibility stage had himself to decide that there was no conceivably tenable innocent explanation.  That point is made the more stark in this particular case when one realizes that no evidence was led by the applicants at the admissibility stage, or indeed later, as to why they failed to turn up.  Save for an untested affirmation by D2 that the judge apparently had in mind, there was no evidence at all as to why no explanation was given to the trial court, or why D1 was in clear and deliberate breach of his bail conditions.  Mr Fung goes on to say that the judge exercised his discretion wrongly to exclude the evidence as being more prejudicial than probative.  This was not part of the grounds filed but, be that as it may, this was a matter of discretion in respect of which Mr Fung must show the judge was clearly wrong.  In that task, he has not succeeded.  

17. The second ground also relates to this question of flight, and constitutes a submission that the judge’s directions to the jury in this regard were erroneous.  In the course of prosecuting counsel’s opening speech, counsel said that the prosecution stance was that the fact of “jumping bail shows that they were aware of their own guilt and so did not want to face a trial”.  The jury was reminded by the judge of that assertion in the course of his summing-up at p 84 of the appeal bundle:

“… The prosecution rely upon the non-attendance of both the 1^st and 2^nd defendants at the date fixed for trial, 19 November 2001, as supporting their case.  They say it is evidence of their guilt that the defendants knew that the case against them was over-whelming.  They knew that they were guilty and were not prepared to face you, a jury of Hong Kong citizens.”

You are entitled to consider whether this supports the case brought against the 1^st defendant or the 2^nd defendant.  You will need to consider, firstly, whether it has been established the defendants or either of them did abscond and failed to attend their trial.  If you are sure of that, then consider secondly this: why did he or she abscond and not attend the trial?

The mere fact that a defendant acts in this way is not itself evidence of guilt.  There are many reasons why a defendant may abscond and fail to attend trial, for example, an innocent man or woman may feel that his lawyers have not prepared his or her case properly and he may fear that he or she may be wrongly convicted, or he or she might not attend out of panic or confusion.”

18. The judge then proceeded to remind the jury of explanations tendered by D2 for her non-attendance at the pre-trial reviews and for a trial.  In doing so it might be said that the judge was generous in that these explanations were not tendered at trial by D2 herself, nor made evidence in some other way.  Be that as it may, he reminded the jury that she had continued to reside at her address in Canada, an address that was known to the ICAC.  In relation to both applicants, he reminded the jury also of various points made in their favour in this particular regard by counsel acting for them at their trial.  He continued at page 85Q:

“If you think that either of the defendants did not or may not have attended the date fixed originally for trial for one of those reasons or for any other innocent explanation, then take no notice of this evidence of non-attendance of trial because only if you are sure that he or she absconded and did not attend trial on the dates originally fixed, you are sure that that was not done for one of these innocent reasons, that his or her conduct in that respect can be regarded as evidence which supports the prosecution case.”

19. The complaint in the written grounds and written submissions, but not developed orally by Mr Fung today, is that the judge did not correct the proposition put to the jury by the prosecution that flight was itself evidence of guilt whereas it could be no more, in law, than supportive of the prosecution case.  The fact, it is said, that the judge himself used the correct formula did not suffice.  It is further asserted that the judge erred in failing to direct the jury as to the burden of proof in relation to the evidence of flight; namely, that the onus of showing that there was no innocent reason for flight lay upon the prosecution.

20. The latter point, about the burden of proof, is not well founded.  There was no need in this case for the judge to go further than he did which was to say to the jury, and it is worth repeating the passage to which we have just referred:

“If you think that either of the defendants did not or may not have attended the date fixed originally for trial for one of those reasons or for any other innocent explanation, then take no notice of this evidence of non-attendance of trial because only if you are sure that he or she absconded and did not attend trial on the dates originally fixed, you are sure that that was not done for one of these innocent reasons, that his or her conduct in that respect can be regarded as evidence which supports the prosecution case.”

The emphasis that we have added speaks, in the context of the point taken, for itself.

21. As to the way in which counsel for the prosecution had put the matter, the judgment of the Court of Appeal in Mo Shiu Sing [1999] 1 HKC 43 disapproves of references to consciousness of guilt.  We do not think it necessary to go into an analysis of the effect of what the prosecution said.  Let us assume that the prosecutor put the proposition in a non-orthodox and, strictly speaking, inaccurate way – making that assumption only for the purpose of this case.  The fact, nonetheless, is that the judge told the jury in terms that the fact relied on was not of itself evidence of guilt and that it could only be used to support the prosecution case.  The overall effect is not in our judgment such as to constitute a viable ground of appeal.  Furthermore, the judge had made it clear in his summing-up that in so far as anything said by counsel as to law did not accord with what the judge said, it was his directions that were to be followed.

A suggestion of imbalance

22. The final ground of appeal against conviction is that the judge's summing up was balanced in favour of the prosecution, and that the defence case was insufficiently addressed.  The defence case, such as it was – remembering that no defence evidence was adduced – was canvassed by the judge in the summing-up as fully as was reasonable in the circumstances.  It is true that the judge made comments about certain propositions advanced on behalf of the applicants by counsel, but we are satisfied that the effect of those comments did not fall outside the bounds of proper comment by a judge in a summing-up.  

Conviction: conclusion

23. No grounds are established that justify the granting of leave and, accordingly, the application for leave to appeal against conviction is, in the case of each applicant, dismissed.

Sentence

24. In relation to sentence, D1 is out of time.  But that is only because of an obvious oversight on his part; no point can properly be taken against him in this regard; and a notice of application for leave to appeal against sentence has now been filed by him, and we proceed to consider it. 

25. The grounds in support of the application for leave to appeal against sentence are these:

(1)   that the starting point of seven years’ imprisonment was excessive and wrong in principle;

(2)   that the judge failed adequately to take into account compelling mitigation; in particular of the respective ages of the applicants, their personal circumstances and their previous good character; and

(3)   that the sentences were in all the circumstances too harsh.

26. D1 was aged 49 years at the date of conviction, and D2 40 years.  Neither had any previous criminal conviction and theirs is a family with two teenage children.  These facts were acknowledged by the judge.

27. The judge noted the suggested mitigation that two of the four factories were not originally established merely to make pirated goods and that originally they made non-infringing articles, but began thereafter to manufacture infringing ones.  The third and fourth factories were established during the conspiracy itself.

28. The judge accepted that much time at the trial had been saved by a sensible approach on behalf of the defence in rendering many matters not the subject of contention, thereby limiting the issue at trial to the knowledge of, and the participation of the applicants in, the conspiracy.

29. As to the appropriate starting point for an offence of this type and on this scale, the judge noted, at p 115 of the appeal bundle: “Never before have defendants involved in a factory making so many discs with so many replicating lines been brought before the court.”  He then went on to note that: “The particular circumstances of the commission of this offence of conspiracy to defraud has parallels in the statutory offences provided for by the Copyright Ordinance, Cap. 528.”  The original indictment had been severed to hive off the conspiracy count from a number of substantive counts alleging offences against the Copyright Ordinance and the Trade Descriptions Ordinance.  The offences alleged in respect of the Copyright Ordinance, the judge noted, carried sentences with a maximum of eight years’ imprisonment.

30. The judge went on to note (p 116, appeal bundle) that the letters of authorisation issued by Bright Hope “encompassed a truly vast number of authorised manufacture, which in truth were infringing copies.  Clearly business boomed.  The legal business was able to operate under the guise of the legitimate business that ran in tandem.  The specific monetary rewards from the illegal business – about which we know – were huge.  $21,920,000 from Bright Hope to Golden Science Technology in just over three months.  Undoubtedly you two were the prime beneficiaries of those moneys.”  

31. Against those facts, the judge took a starting point of seven years’ imprisonment.  Given the applicants’ clear record and the sensible way in which the defence had been handled, resulting in a saving of judicial time and expense, the starting point was discounted by six months’ imprisonment.  It was in that way that the judge arrived at the sentence, which he imposed in relation to each applicant, of six years six months’ imprisonment.

32. Counsel for the applicants has in the written submissions referred the court to a couple of authorities and sought, by way of comparison, to demonstrate that the sentences in this particular case were manifestly excessive.  Those cases are not comparable and, with respect, are of no assistance.  These particular applicants were the proprietors of a vast illegal business and, as the judge correctly commented, the illicit operation which they conducted was huge.  Over 1.1 million illicit discs were seized.  The applicants had gone to considerable trouble to hide what was going on, by creating false authorisations and by operating the illicit side of the business under cover of the other part of their operation which was lawful.  The amount of money generated in a short span of time touched almost $22 million.  The cases to which we have been taken are therefore miles away in severity from this case.

33. It is then argued that the appropriate starting point should have been one of four years’ imprisonment and that is because, according to this argument, the maximum sentence that could be imposed for offences under section 118(1) of the Copyright Ordinance Cap. 528 was four years’ imprisonment.  This proposition is postulated in the light of the Privy Council decision in Verrier v DPP [1967] 2 AC 195, to the effect that it is not normally appropriate to pass a higher sentence for conspiracy than could have been passed for the substantive offence.

34. In Verrier, the appellant was convicted with one Anderson of conspiracy to cheat and defraud whatever insurance company might issue a policy of assurance on the life of Anderson, by falsely pretending during the currency of such policy that Anderson had died at sea.  The point was made that had the conspiracy been carried out, there could only have been one charge of obtaining by false pretences, the maximum punishment for which under the Act then in force was one of five years’ imprisonment, whereas a sentence of seven years’ imprisonment was imposed for the conspiracy.  True it is that it was there said that it was normally not appropriate to pass a higher sentence for conspiracy than could be passed for the substantive offence, but the judgment clearly allowed, as does commonsense, for exceptions.  Referring to comments made by Lord Goddard in Rex v Morris [1951] 1 KB 394, 399, in relation to the fact that in that case the appellant had been engaged in a traffic which had been going on for many months and was smuggling on a very extensive scale, Lord Peason said in Verrier at p. 222 that:

“ ... in substance it was right to make an exception in that case, because the conspiracy involved a combination of persons making elaborate preparations for smuggling on a large-scale and might well be regarded as an offence different from, and more serious than, the substantive offence of merely smuggling in the particular watches concerned.”

35. Even assuming that the judge was bound to limit himself to the maximum sentences permitted for substantive offences under the Copyright Ordinance, there is no warrant for the contention that he was bound to a four-year maximum.  The four-year maximum to which counsel refers is appropriate in the case of a substantive offence under section 118(1) of the Ordinance: that is, offences of making for sale or hire or possessing for the purpose of trade an infringing copy of a copyright work.  But the conduct in this case went well beyond that.  There was uncontroverted evidence that in these factories were articles for making infringing copies, offences in themselves under subsections (4) and (8) of 118.  Those subsections permitted a maximum term of imprisonment of eight years, and that is the starting point adopted by the sentencing judge.  He was perfectly entitled to do so.

36. The submission based on Verrier becomes weaker still when one recognises that this was precisely the type of case that was there envisaged as one that could properly be treated as coming outside the general rule.  This was a case in which people came together in order to facilitate the substantive offences, and where only a conspiracy charge could adequately reflect the true criminality and scale of the extensive operation that was undertaken by these applicants.  As Mr McWalters SC, for the respondent, points out in his written submissions, this analysis is highlighted by a study of the severed indictment in which a variety of offences were charged and which were clearly covered by the conspiracy charge in respect of which the applicants were convicted.  Those offences embraced one count of an article specifically designed or adapted for making copies of the particular copyright work, which article was used or intended to be used for making infringing copies for the purpose of trade; a different count of possession of an article knowing or having reason to believe that it was used or intended to be used for making infringing copies of copyright works for sale; three separate counts of possession of goods for sale or for the purpose of trade or manufacture to which a forged trademark had been applied (section 9(2) of the Trade Descriptions Ordinance, Cap. 362); two counts of forgery of a trademark; four counts of possession of an instrument for the purpose of applying a false trade description to goods; four counts of applying a false trade description to goods in the course of trade; and four counts of possession of goods for sale to which a false trade description had been applied.  Mr Fung says that it is inappropriate to look at the severed indictment.  But the exercise of looking at the severed indictment arises from the various fact of his submissions which is to suggest that there were substantive counts behind the conspiracy charge which in the manner suggested by Verrier, limited the sentencing powers of the judge.  One can immediately see that on a proper application of Verrier, even if the general rule applied, the judge was not restricted to a maximum of eight years’ imprisonment, because he was not limited, upon a proper view of those offences taken together, to an effective overall maximum of eight years’ imprisonment.  We are in any event satisfied that the limits of Verrier did not apply in this particular case and in this regard, by way of mere example – and it is only an example – our attention is drawn to the fact that the applicants forged authorisations in order to create the appearance that they were engaged in the legitimate reproduction of copyrighted works; and that alone is conduct that went beyond the substantive offences under the two Ordinances to which we have been referred.  Conspiracy to defraud was in our judgment the charge that correctly reflected the overall criminality and intent in this case.  The maximum penalty for conspiracy to defraud is 14 years’ imprisonment, rather than the eight years adopted by the sentencing judge.  In this context, we are invited by Mr McWalters in his written submissions to consider whether this is an appropriate case to invoke our powers under section 83I of the Criminal Procedure Ordinance, Cap. 221 to increase the sentences imposed.  We have decided not to do so, but the point made about the true maximum available and the true nature of the criminal activity which the judge was enjoined to address, brings into stark relief the weakness of the submission.

37. Finally, it is said in relation to sentence that the judge failed to pay adequate regard to the mitigation: the ages of the applicants, their personal circumstances, and previous good character.  In addition, it is suggested that the judge failed to accord sufficient weight to the fact that the company and factories were initially established to make genuine copyright works; that the pirating side of the business was substantially less when compared with the genuine side; that the applicants have been rendered bankrupt; and that there was delay on the part of the Canadian authorities in arresting D2.

38. The fact that there was in operation also a genuine business hardly stands as a mitigating factor.  To the contrary, the utilisation of a genuine front to hide illicit activity makes detection more difficult.

39. True it is that the applicants were aged in their 40s and had not previously been convicted of a criminal offence and true it is that the incarceration of these applicants impacts sadly upon the family.  Yet the sheer scale of this operation – and this is the biggest operation of its kind ever to come before the court – its sophistication and deliberation, the fact that it cannot by its nature be said to have been a momentary lapse, and the fact that these two applicants were at the pinnacle of the operation, puts these mitigating factors into proper view.  There is nothing, in the event, to the delay point, a point not developed in the course of oral submissions.

40. In all the circumstances, we are satisfied that the sentences were neither manifestly excessive nor wrong in principle and, accordingly, the applications for leave to appeal against sentence are, in the case of each applicant, dismissed.