HKSAR v. LEUNG KAM CHUN AND OTHERS

[English Translation]
HCMA 589/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO.589 OF 2012

(ON APPEAL FROM STS 4166-4168 OF 2012)

_____________

_____________

JUDGMENT

Background and the charge

1.  The 1^st to 3^rdAppellants (i.e. the 5^th to 7^th defendants out of the 7 defendants in the trial) pleaded guilty in court to one count of “failing to comply with the Stop Notice issued by the Planning Department”, contrary to section 23(6) of the Town Planning Ordinance, Cap. 131 of the Laws of Hong Kong (“the Ordinance”).  They were fined between $80,000 to $100,000 by Andrew Ma, a magistrate, on 8 August 2012.  The three Appellants appealed against sentence.

2.  The site in question was a piece of land located on several lots in D. D. 92, Hang Tau Tai Po, Kwu Tung, New Territories.  The site was mainly vegetated land of an area of about 1,811 sq. m.  It was set apart for agricultural use under the “Interim Development Permission Area Plan for Kwu Tung South” gazetted on 17 August 1990.

3.  On 1 June 2011, the Director of Planning issued an enforcement notice under section 23(1) of the Ordinance, requiring that the Defendants shall on or before 1 August 2011 discontinue the relevant matters as specified in the notice, i.e. using the site for storage purposes and as a workshop. Despite the issue of the enforcement notice, items including excavators, forklift trucks, mechanical spare parts as well as many types of workshop tools were still found being stored within the site.  The site was still being used for storage purposes and as a workshop.  In this regard, the Appellants failed to comply with the requirements of the notice to discontinue the relevant matters for 213 days from 1 August 2011 to 2 March 2012.

4.  In his Reasons for Sentence, the Magistrate said:

“3. The three Appellants in the present case come from the same family — the father is the 2^ndAppellant, the mother the 3^rdAppellant, and their son the 1^stAppellant. The land owned by the three of them made up about 67% of the area of the whole site with the 1^stAppellant owning one half and each parent one quarter respectively. Given that the total area of the site was 1,181 sq. m, the area owned by the three Appellants was therefore about 780 sq. m, or 8,300 sq. ft. In the present case, the total number of days of contravention involved is 213. The legislation prescribes that the court has the power to impose a daily fine in addition to the basic fine. To avoid the trouble of calculation, I have taken account of the number of days of contravention in the calculation of the total fine in sentencing.

4. As stipulated by the Ordinance concerned, the maximum fine for a first offence is $500,000 and a separate daily fine of $50,000. For a repeat offence, the maximum fine is $1,000,000 and a separate daily fine of 100,000.

5. I have referred to various sentencing authorities. In the appeal case of R v Tai Tong Lychee Valley Co. Ltd. [1977] 2 HKC, the Appellant concerned was fined $60,000 after trial. It was held in the High court that the sentence concerned was not wrong in principle or manifestly excessive. In particular, I noted that there were no similar records on the part of the Appellant concerned.

6. A more useful case for reference is the appeal case of [R v] Tang Ying Yip & Another [1995] 2 HKC, where Litton J (as he then was) took the following view: Deterrence is one of the important considerations if the legislation concerned is to be effectively enforced. Heavy fines could encourage the land owners concerned to be more vigilant to prevent unauthorized development.

7. The 2^nd and 3^rdAppellants have no record of criminal conviction, but the 1^stAppellant has a similar record dated 23 January 2008. In other words, the 1^stAppellant is faced with the maximum fine of $1,000,000.

8. In sentencing, I have paid particular attention to the fact that the three Appellants have let the land of his and others without authorization for unwarranted gains by changing the land use.

9. All the other four Defendants in the present case (the 1^st to 4^th Defendants) were the four managers of the same ‘Tso Tong’ with a piece of Tso Tong land located next to the three Appellants’ land jointly owned by them. In mitigation, they alleged that the three Appellants had let the said two pieces of land (i.e. the site in the present case with about two thirds and about one third of the site area being the portion belonging to the three Appellants and that belonging to the other four Defendants respectively) without authorization for the purpose of storage and as a workshop, and that they knew nothing about this and had never received any rent. In this regard, the three Appellants admitted frankly. The 2^ndAppellant (the father) who represented the three Appellants admitted that the site had been let for as long as eight years at a monthly rent of 4,000-odd dollars, all of which went to the household expenses for the three of them. By merely using $4,000 as a basis for calculation, I find that the total income over the eight years should be $384,000 (4,000 x 12 x 8). In sentencing, the court further adopted a relatively low amount for consideration, i.e. $350.000.

10. In HKSAR v Tang Kam Tai & Ors (HCMA 572/2010), Deputy Judge Andrew Chan, as he then was, pointed out in particular that the primary consideration for sentencing in this kind of cases is to deprive the financial gains from illegal change of land use and to impose a punitive sentence so as to deter people from committing such offences. The conduct of the three Appellants is particularly serious in that one third of the rental they received, i.e. a hundred-odd thousand dollars, were proceeds from unauthorized and illegal letting of the land of others. When calculation is done using the rental of $350,000 as a basis with a certain amount of fine included, the three Appellants should at least be fined $400,000.

11. I have given consideration as to whether the three Appellants can afford a larger fine. However, in view of the special circumstances pertaining to this case, i.e. by jointly owning about 8,300 sq. ft. (about 780 sq. m) of land in addition to having obtained the said illegal proceeds of $350,000, they are not people who are left alone with no one to turn to, I find that a proper way of sentencing is to set an appropriate fine and then give the Appellants a reasonable time to pay. After consideration the court fined each of the 2^nd and 3^rdAppellants, who have no previous record, $80,000. Since the 1^stAppellant had already had one similar record, he was fined $100,000. As the 2^ndAppellant representing the three of them did not mention a time limit for payment but merely said that there was a difficulty in paying the fine as imposed, they were eventually given three months to pay the fine.

12. Consideration has been given to the fact that the other four Defendants had their land let by others without their knowledge and they had not received any rental. Although they should be liable for negligence in managing the Tso Tong that led to the land use being changed, their criminality is much lower than that of the three Appellants. The four of them all had a clear record. I adopt a specially lenient approach by imposing a fine of $5,000 for each of them.” (underline added)

Grounds of appeal

5.  Ms Manyi Tsang, counsel for the Appellants, raised three grounds of appeal, namely:

(1)     The Magistrate failed to consider, or sufficiently consider the financial conditions of the three Appellants and whether or not they could afford to pay the fines concerned;

(2)     The Magistrate erred in having considered the evidence not covered by the summons and the facts of the case in sentencing;and

(3)     The sentences imposed on the three Appellants were manifestly excessive.

The first ground of appeal

6.  Ms Tsang submitted that according to the ruling in R v Leung Yee Keung [1988] HKC 569, the court has to ensure that the fine imposed is within the accused’s means.  At trial, the Appellants made no representation about their financial conditions, nor did the Magistrate raised any questions on this matter, except for conducting an analysis that the three Appellants had gained about $384,000 in rental over a period of eight years and that they were the owners of the land lots concerned.

7.  At the start of the appeal, I made it clear to Ms Tsang that the Magistrate had made no errors in his analysis about the financial conditions of the three Appellants; it was merely the case that the Appellants said unilaterally to the Magistrate such words as “[we are] unable to pay that much money” without providing evidence or making a submission to him to establish that they themselves had found it financially difficult to pay the fine.  The Magistrate did not indicate specifically that the Appellants were required to establish their financial conditions.  However, when he asked the Appellants if they had any submission to make and also the reason for the issue of their inability to pay the fine, they gave no specific answers.  Although the circumstances are now that there is counsel representing the Appellants in front of this court, attempting to make an application for admitting the Appellants’ affirmations on their financial conditions as evidence, what those so-called financial affirmations stated was merely that there was no income or just a meager income and that they did not wish to sell the land in question passed on to them from their ancestors instead of giving any evidence in support of their inability to pay the fine as alleged.  Not one single monthly bank statement, or a passbook was provided, let alone any proof of assets.  Having obtained instructions from the Appellants, Ms Tsang did not provide any information on assets, but merely abandoned the first ground of appeal.

The second ground of appeal

8.  According to Ms Tsang, the time period in question was about 7 months, from 1 August 2011 to 2 March 2012 (213 days in all), and in the absence of any evidence to show that the land lots concerned were taken for illegal development outside the period between 1 August 2011 and 2 March 2012, the trial Magistrate should, in considering any illegal proceeds, stick to the period between 1 August 2011 and 2 March 2012 (about 7 months) to arrive at the figure of $28,000 by multiplying this period by the monthly rental income of $4,000 as referred to by the 3^rdAppellant.  The proceeds of $384,000 worked out by the trial Magistrate were obviously outside the scope of the charge.

9.  Ms Peggy Leung, Senior Public Prosecutor of the Department of Justice for the Respondent responded that: “The trial Magistrate did not err in having considered evidence beyond the facts of the case, i.e. the three Appellants had let the site in question.”

10.  As far as the sentencing principles in the present case are concerned, Litton JA (as he then was) pointed out in R v Tang Ying Yip & Anor [1995] 2 HKC 277, 288H that deterring others from committing offences of the same type is an important consideration:

“Deterrence is an important consideration if the legislation is to be effective. Heavy fines could encourage land owners to be more vigilant to prevent unauthorized development …”

11.  Besides, in HKSAR v Tang Kam Tai & 11 Ors  (HCMA 572/2010),Deputy Judge Andrew Chan (as he then was)was of the view that cases of this type involved a economic crime, and so in order to deter land owners from committing offences, the most effective way was to deprive them of the proceeds they obtained from changing the land use (see paragraph 8 of the judgment).

12.  Ms Leung submitted that as indicated by the said authorities, whether or not the site in question had been let and the proceeds associated with the letting of land are relevant to sentencing, and for this reason, the trial Magistrate did not err in principle in having considered the factor that the site in question had been let.

The third ground of appeal

13.  Relying on the cases on sentencing referred to by the Magistrate in his Reasons for Sentence for comparison, Ms Tsang submitted that the fine imposed on the three Appellants in the present case was seriously excessive when compared with other cases.

14.  In the appeal case of R v Tai Tong Lychee Valley Co. Ltd. [1977] 2 HKC, the Appellant concerned was fined $60,000 after trial.  The appeal case of [R v] Tang Ying Yip & Another [1995] 2 HKC 277 actually embraced two Magistracy Appeals.  In the first case which involved 4 pieces of land, the two defendants were fined $25,000 plus a daily fine of $100 for 147 days ($14,700 in all), making a total fine of $39,700.  In the second case that involved a piece of land and a single defendant, the Defendant was fined by a different magistrate $20,000.   Both cases dealt with using agricultural land for storage of containers and the defendants were convicted after trial instead of pleading guilty.  Mr. Justice Litton considered that the sentence was neither contrary to principle nor manifestly excessive.  The present case and the said cases involved the same offence, but the punishment applicable then was that the maximum penalty for a first offence was a fine of $100,000 and a daily fine of $10,000.  However, the two cases do not report the specific circumstances under which the sentence was passed, so they are of little assistance to the finer aspects of sentencing in the present case.

15.  On 30 June 1995, the maximum penalty under the Ordinance was increased five-fold — the maximum fine and the daily fine became $500,000 and $50,000 respectively for a first offence, and $1,000,000 and $100,000 respectively for a repeat offence.

16.  The judgment in respect of the case of Tang Kam Tai under HCMA 572/2010 heard before Deputy Judge Andrew Chan was delivered on 31 December 2010.  At that time, the maximum fine and the daily fine were already as much as $500,000 and $50,000 respectively for a first offence, and $1,000,000 and $100,000 respectively for a repeat offence — the same penalty as what the 3 Appellants in the present appeal case are faced with.  With the Reasons for Sentence of the trial Magistrate made available by Ms Leung representing the Respondent, I have gained a better understanding of the sentencing approach in the case.

17.  That was a Shatin Magistracy case under STS 5190-5207/2010 (18 case numbers in all) with the title of HKSAR v TANG Tim Shing (transliteration) (鄧添勝) & 17 Ors.  It was also tried before the magistrate Mr. Andrew Ma with the sentence passed on 23 June 2010.  The case involved a site embracing ponds and vegetated land.  It had already been formed, paved and hoarded for a different use, namely for storage of containers and as a tool-repairing workshop.  Containers were stacked up in part of the land to four to five tiers high. Oxy-acetylene cylinders were found placed at the entrance of the site.  The site had an area of about 10,358 sq. m (over 110,000 sq. ft.).  The period of contravention concerned was from 2 September 2008 to 20 March 2010, covering a total of 563 days.  All the Defendants have similar convictions, ranging from 1 to 12 times.  From 10 March 2007 to 3 August 2007 (a total of about 146 days), they committed an offence involving the same contravention on the site in question.  On 17 October 2007, they pleaded guilty and were fined $2,500 to $15,000 respectively.

18.  Having considered that the Defendants had pleaded guilty and had taken suitable measures in reducing the risk of re-offending, Andrew Ma, the magistrate, divided the 18 Defendants into three groups for the purpose of sentencing such that those Defendants in the first group accounting for 0.6% to 2.33% of the land were each fined $30,000; those in the second group accounting for 4.6% to 5.88% of the land $60,000 each; and those in the third group accounting for 9.16% to 16.61% of the land $100,000 each.  Thus the sentences imposed on the 18 Defendants were as follows:

Defendant with number of similar conviction (only for those with information  available) in brackets	Percentage of area accounted for by each person	Area (approximate values only) out of the total area of 10,358 sq. m accounted for by each person.	Fine
1st , 2nd	2.33%	241.34 [sq.] m	$30,000
3rd	9.16%	948.79 [sq.] m	$100,000
4th (3), 5th (3) and 6th (5)	10.73%	1,111.41 [sq.] m	$100,000
7th (5)	16.61%	1,720.46 [sq.] m	$100,000
8th (7), 9th (7) and 10th (7)	0.95%	98.40 [sq.] m	$30,000
11th (1)	1.10%	113.94 [sq.] m	$30,000
12th (2)	4.60%	476.47 [sq.] m	$60,000
13th (2)	0.60%	62.15 [sq.] m	$30,000
14th (3), 15Th (4) and 16th (1)	2.67%	276.56 [sq.] m	$30,000
17th and 18th	5.88%	609.05 [sq.] m	$60,000

19.  Adopting the above sentencing approach, given that the 1,181[sq.] m (including the other four Defendants’ land) of land was the portion accounted for by the three Appellants in the present case, the fine should more or less be $130,000, i.e. $30,000 for approximately 240 [sq.] m and $100,000 for approximately 948 [sq.] m.  There are of course different circumstances in each case.  A possible reason for the Magistrate to have imposed a heavy sentence on the three Defendants was because they had let their land together with that of the other four Defendants without their consent.  However, the said reason is not found in the Magistrate’s Reasons for Sentence for enhancement of sentence; it merely mentioned that the three defendants were imposed a heavy sentence on account of the importance of a deterrent penalty.  In fact, there are many aspects in the present case that make the situation more favourable compared to the case of Tang Tim Shing (transliteration) (鄧添勝) & 17 Ors  (Tang Kam Tai & Ors on appeal): namely (1) the land area involved in the Tang Tim Shing case was 10,358 sq. m, whereas it was 1,181 sq. m in the present case; (2) in the Tang Tim Shing case, those containers illegally stored or placed for repairs were stacked up to a height of four to five tiers, whereas there were containers stacked up to a height of two tiers in the present case; (3) the Defendants in the Tang Tim Shing case had 1 to 12 similar convictions while in the present case, the 1^st Defendant had only one similar conviction and the 2^nd and the 3^rd Defendants were even first offenders; and (4) in the Tang Tim Shing case, the duration of contravention was 563 days while in the present case, it was 213 days (38% of that of the said case), shorter than that of the said case by 350 days (almost a year) or by over 62%.  On account of the imposition of a daily fine provided for in the Ordinance, the magnitude of the duration of contravention is therefore an important sentencing consideration — the longer the duration, the heavier will be the fine.

20.  As pointed out by Deputy Judge Andrew Chan in the Tang Kam Tai case, the primary consideration for sentencing in this kind of cases is to deprive the financial gains from illegal change of land use and to impose a punitive sentence so as to deter people from committing such offences.  With this consideration as a basis, other aggravating/mitigating factors should also be taken into account, including:

· environmental impact:  including the impact on the lives of nearby residents; obstruction to views; increase in noise pollution; deterioration in air quality; increase in traffic flow; water and soil contamination; adverse effects on animals and plants in the ecosystem;

· previous similar record;

· previous similar record in relation to the same piece of land;

· if the magistrate did not intend to impose a daily fine for the contravention, he should take into account the duration of breach;

· any remedial measures taken;

· whether temporary permission/permission to change the land use was subsequently granted, etc.

21.  Apart from the above factors, attention has certainly to be given to the area of the land in question as well as whether or not any dangerous goods or dangerous operations, etc. are involved.  

My views and the conclusion

22.  Using the two-year-old Tang Tim Shing case with Mr Andrew Ma. also as the sentencing Magistrate as a reference, it seems to me that even if an upward adjustment is necessary on account of inflation, the fine in the present case is still manifestly excessive.  To say the least, there is no adequate explanation in the Magistrate’s Reasons for Sentence as to why the penalty in the present case is much enhanced than that in the Tang Tim Shing case.  The reason, and possibly the only reason, is based on the primary consideration as stated by Deputy Judge Andrew Chan in the Tang Kam Tai case, which is the appeal case of that case — to deprive the financial gains from illegal change of land use.  However, Deputy Judge Andrew Chan did not comment that the sentence in the Magistracy case was unduly lenient apart from dismissing the appeal.

23.  Based on the fact that the 2^nd Appellantadmitted in mitigation that the site had been let for 8 years, the magistrate worked out the proceeds of the Appellants.  They amounted to be not less than $350,000 and the magistrate adopted this as the basis for sentencing (the second ground of appeal).  Such an approach is contrary to principle in that the duration of contravention was only 213 days or about 7 months; there is no reason to take into account as well the proceeds over a period of 8 years during which the Appellants were not charged with any breach of the legislation, otherwise it will cause injustice to the Appellants.  

24.  The circumstances surrounding this case were that although out of the total area of 1,181 sq. m of the site, the land owned by the three Appellants merely made up 67% of it (1^st Appellant accounted for one half and his parents one quarter each), they had appropriated the land of the other 4 Defendants by letting it out to users.  Thus they were not only liable with regard to the approximate 780 sq. m (about 8,300 sq. ft) of land owned by them, but also with respect to the whole piece of land.  Taking account of the respective percentage of land owned by each Appellant for calculation, the 1^st Appellant who owned 50% should account for 590.5 [sq.] m, whereas the 2^nd and 3^rd Appellant who owned 25% each 295.25 [sq.] m each.  The total duration of contravention involved in the present case was 213 days. The rent paid to the Appellants was about $4,000 per month.  With 213 days or about 7 months multiplied by the monthly rent, the illegal proceeds for the whole contravention period is worked out to be about $28,000.   With the daily fine of $100 per day per person for first offenders in mind, then if each person is fined $21,300, they will not only be deprived of their illegal proceeds but also subjected to an additional penalty of more than one-fold of the proceeds. I am of the view that imposing a more or less equivalent amount as an overall fine for the present case instead of working out a fine on a daily basis would adequately serve the purpose of deterrence enunciated by the court.  Having considered all the circumstances of the present case, I hold that imposing a total fine of $40,000 (an amount far exceeding the illegal proceeds they obtained over the 213-day contravention period) on each of the first offenders, namely the 2^nd and 3^rd Appellants respectively will be a severe punishment to them.  As the 1^st Appellant had one similar record and the proportion of land he owned was two times that of each of his parents, the financial penalty is to be enhanced to $80,000, which will serve as a greater deterrent, warning him and those concerned not to re-offend.  I consider that these penalties have taken account of the various aspects of the present case and adequately represent the sentencing principles and factors.  I therefore allow the appeal, set aside the sentence and impose the above penalties instead, i.e. 1^st Appellant be fined $80,000 and the 2^nd and 3^rd Appellants $40,000 each.  The Appellants are required to pay off the fine within 3 months hereof, i.e. on or before 23April 2013.