HKSAR v. LEE OI LIN, IRENE also known as LEE SZE YIU

[English Translation – 英譯本]
CACC 166/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 166 OF 2011

(ON APPEAL FROM DCCC NO. 832OF 2010)

________________

Reasons for Judgment

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

Introduction

1.  The applicant (Lee Oi Lin, Irene also known as Lee Sze Yiu) was charged with stealing 220 pieces of jewellery belonging to Profit Gem Jewellery (Group) Limited (“Profit Gem”), the total value of which exceeded $2 million.  The applicant pleaded not guilty and was tried before Deputy District Judge Anthony Yuen.

2.  On 8 April 2011, Deputy Judge Yuen convicted the applicant on the charge and sentenced her to imprisonment for 2 years and 8 months.  The applicant, who was represented by Mr Edward Chan of counsel, sought leave to appeal the conviction and/or sentence. After hearing, we dismissed all the applications for reasons which we now give.

Prosecution case

3.  Profit Gem was a jewellery wholesaler which contracted out some processes of work to jewellery workshops on the Mainland.  One of the subcontractor workshops at the material time was Lung Ngai (transliteration) Professional Jewelry Manufacture Limited (“Lung Ngai”) in the control of the applicant and her boyfriend (Lung Kit Shing).  Profit Gem and Lung Ngai had had business dealings since 2005. Profit Gem had on a number of occasions through the applicant entrusted Lung Ngai with the processing work of jewellery.

4.  After receiving orders from customers, Profit Gem would prepare the materials and design specifications for the jewellery in accordance with the customers’ instructions and pass them to Lung Ngai as manufacturing orders.

5.  The applicant or her representative would personally collect the raw materials from Profit Gem and sign an acknowledgment of receipt, and the materials and design specifications would be delivered to Lung Ngai’s in-house workshop on the Mainland for manufacturing.  Upon completion of work, a representative of Profit Gem would visit Lung Ngai’s workshop on the Mainland to inspect the products.

6.  If the products met the requirements of the specifications, Lung Ngai would issue an invoice to Profit Gem in respect of labour cost, and the applicant or Lung Kit Shing would personally deliver the finished products to Profit Gem and collect payment.

7.  In early 2010, one Madam Wong, a director of Profit Gem liaised with the applicant and passed to the applicant or her representative some materials to the value of approximately $750,000 for Lung Ngai to process.  The applicant undertook to deliver 220 pieces of finished product (the total value of which exceeded $2 million) to Profit Gem in May 2010.

8.  On 25 May 2010, the applicant notified the staff of Profit Gem and confirmed that 220 pieces of finished product would be delivered to Profit Gem on the same day.  However, the applicant did not deliver the finished products to Profit Gem as agreed, and Profit Gem lost contact with the applicant and Lung Kit Shing.

9.  The police found upon investigation that the applicant had pawned 21 of the 220 pieces of finished product and thereby obtained $40,000.  The staff of Profit Gem confirmed that all the 21 pieces of jewellery pawned by the applicant belonged to Profit Gem because they all bore the markings designated by its customer(s).

10.  In her testimony, Madam Wong detailed her transaction with the applicant.  She said that she had had dealings with the applicant for over ten years and had entrusted her with the task of processing jewellery since 2005.  Madam Wong emphasized that the applicant had always been punctual in delivering finished products but had failed to keep her promise on 25 May 2010 by not only failing to deliver the 220 pieces of finished product in question on that day as agreed but also getting disappeared.

11.  Madam Wong stressed that the incident had not only caused monetary loss to Profit Gem, but also ruined the reputation of her company.

12.  A staff member of Profit Gem confirmed that orders had been placed with Lung Ngai in March and April 2010, involving a total of 220 pieces of jewellery and with the date of completion set for April or May 2010.  According to that staff member, although that batch of jewellery had passed the inspection and the applicant had already issued an invoice for labour cost, no delivery was made despite the lapse of time and the applicant was even nowhere to be found on the day of delivery.

13.  A staff member of a pawnshop confirmed that on 2 June 2010 the applicant pawned a total of 21 pieces of jewellery in two bags, for which the shop gave her $40,000.  All those jewellery items were confirmed to belong to Profit Gem and the remaining 199 pieces of jewellery had all gone missing.

Defence

14.  The applicant did not give evidence or call any witness, nor did she contest the prosecution case. She only contended that the prosecution had failed to prove she had actually stolen all 220 pieces of jewellery in question.

Trial judge’s ruling

15.  The trial judge accepted the evidence given by the prosecution witnesses.  In fact the defence had not sought to challenge the credibility and reliability of the prosecution witnesses.

16.  The trial judge did not accept the defence’s contention that since not all the materials of the jewellery in question had been provided by Profit Gem, the finished products did not belong to Profit Gem.

17.  He pointed out that Profit Gem had provided the major part of the materials required for the jewellery in question and that, compared with the value of the jewellery as a whole, the value of the remaining components and the labour cost were insignificant.

18.  He found that even though Profit Gem was not the provider of all materials for the jewellery, the jewellery still belonged to Profit Gem.

19.  He pointed out that the applicant had on 25 May 2010 clearly indicated to the staff of Profit Gem that all 220 pieces of jewellery were being delivered to Profit Gem, but she not only reneged on her promise but went on to pawn 21 of the pieces, with the remaining 199 pieces disappearing into thin air.  He found that, in the absence of any credible explanation, the only reasonable inference that could be drawn was that the applicant had in fact stolen all 220 pieces of jewellery in question.

Grounds of appeal against conviction

20.  In his written submission, Mr Chan for the applicant advanced two grounds of appeal.  He said that the trial judge should not have found that the jewellery in question was the property of Profit Gem, and what was more, he should not have inferred, by reason of the applicant not having given evidence, that she had “appropriated” the 199 missing pieces of jewellery.

21.  Mr Chan said that according to the trial judge’s decision, the best part of the value of the 220 pieces of jewellery belonged to Profit Gem, but there was still a small part of the value which was attributable to the labour cost owed to the applicant or which belonged to entities other than Profit Gem.

22.  He emphasized that a very small quantity of crystal stones used on the jewellery in fact came from Lung Ngai instead of Profit Gem, because some of the crystal stones had cracked and Lung Ngai had to replace them with crystal stones of the same type.

23.  Mr Chan suggested that the relationship between Profit Gem and Lung Ngai was one of bailment for hire of work and labour, the reason being that Profit Gem gave goods to Lung Ngai which then processed those goods in exchange for remuneration.

24.  Mr Chan submitted that the trial judge incorrectly understood the relationship between Profit Gem and Lung Ngai.  Mr Chan also argued that the applicant or Lung Ngai had liens in the jewellery in question because Profit Gem had not yet settled the relevant labour cost, and hence that batch of jewellery did not belong to Profit Gem.

25.  Mr Chan said that with the exception of the 21 pieces of jewellery which the applicant had pawned, the whereabouts of the remaining 199 pieces was unknown.  He suggested that those 199 pieces might have been taken away by others or might still be in the possession of the applicant who exercised the liens.  Hence, the prosecution had (Mr. Chan said) failed to prove that the applicant had “appropriated” those 199 pieces of jewellery.

26.  Mr Chan further submitted that the trial judge drew an inference adverse to the applicant on the ground that she had not explained the whereabouts of those 199 pieces of jewellery, and that the judge’s approach showed he had wrongly shifted the burden of proof to the applicant.

27.  In his oral submission, Mr Chan made it clear that no issue would be taken with the allegation that the applicant had stolen the 21 pieces of jewellery that she had pawned.  He submitted that the applicant had stolen only 21 pieces of jewellery, not 220 pieces as alleged by the prosecution.

28.  He asserted that the prosecution evidence did not support an only or irresistible inference that the applicant had actually stolen the remaining 199 pieces of jewellery in question.

Discussion

29.  There is insufficient legal basis for what Mr Chan said regarding who had the right of possession of the 220 pieces of jewellery in question at the material time.

30.  The Theft Ordinance contains detailed provisions on the meaning of “belonging to another”, an essential element of the offence of theft.  Section 6 of the Ordinance defines “belonging to another”  as follows:

“(1) Property shall be regarded as belonging to any person having possession or control of it, or having in it any proprietary right or interest (not being an equitable interest arising only from an agreement to transfer or grant an interest).

(2) Where property is subject to a trust, the person to whom it belongs shall be regarded as including any person having a right to enforce the trust, and an intention to defeat the trust shall be regarded accordingly as an intention to deprive of the property any person having that right.

(3) Where a person receives property from or on account of another, and is under an obligation to the other to retain and deal with that property or its proceeds in a particular way, the property or its proceeds shall be regarded (as against him) as belonging to the other.

(4) Where a person gets property by another’s mistake, and is under an obligation to make restoration (in whole or in part) of the property or its proceeds or of the value thereof, then to the extent of that obligation the property or its proceeds shall be regarded (as against him) as belonging to the person entitled to restoration, and an intention not to make restoration shall be regarded accordingly as an intention to deprive that person of the property or proceeds.”

31.  The offence of theft is generally committed against the owner of the property, no matter whether or not the owner is in possession of the property at the material time (R v Hancock [1990] 2 QB 242).  However, the offence may also be committed against someone whose interests in the property are less than those of the owner.

32.  It is even possible to commit the offence against another thief, for the reason that the objective of the Theft Ordinance is to keep the peace of society, not to protect private property rights.

33.  The case of R v Smith [2011] 1 Cr App R 379 involved a defendant who, using violence, took away dangerous drugs from the victim.  The defence submission that dishonestly taking away items in illegal possession of another did not constitute theft was not accepted.  The English Court of Appeal held that prohibited items were also “property belonging to another” within the meaning of the UK provision which corresponded to the Theft Ordinance.

34.  Lord Bridge CJ specified in page 382 of the judgment:

“The Criminal Law is concerned with keeping the Queen’s Peace, not vindicating individual property rights.”

35.  The issue in the present case was not whether the civil law principle of “bailment” or other civil law principles had been established, but whether the prosecution had proved each and every element of the charge of theft brought against the applicant (see paragraphs 53-54 of the judgment in HKSAR v Tsang Wai Hung & OthersCACC 328/2004).

36.  In any event, even if the civil law principle of “bailment” was applicable, the applicant still would not be entitled to appropriate the 220 pieces of jewellery.

37.  The undisputed facts showed that the applicant was under a duty to deliver all 220 pieces of jewellery back to Profit Gem.  She was contractually obliged to return all the jewellery upon completion of the processing work.  On a correct interpretation of the Theft Ordinance, the 220 pieces of jewellery should all be regarded as “belonging to Profit Gem”.

38.  There was nothing to support Mr Chan’s suggestion that the applicant had exercised a “lien”.  It was not the defence case, nor was there any evidence to show, that Profit Gem had refused to pay or was owing Lung Ngai any processing cost.

39.  The applicant should have returned all 220 pieces of jewellery to Profit Gem upon completion of the processing work, and in fact she had on 25 May 2010 promised to do so.  However, she failed to keep her promise and even pawned 21 of the 220 pieces of jewellery, thereby obtaining $40,000.

40.  The applicant should have, but had never, returned the remaining 199 pieces of jewellery which, as it turned out, had simply gone missing.

41.  The trial judge pointed out that, the applicant not having put forward any reasonable explanation as to why those 199 pieces of jewellery had disappeared, the only reasonable inference was that the applicant had in fact stolen those jewellery items.  The trial judge did not shift any burden of proof to the applicant.

42.  Applying the principle laid down in the case of HKSAR v Li Defan (2002) 5 HKCFAR 320, the prosecution case was obviously strengthened by the fact that the applicant did not testify or call any witness to explain why she had pawned 21 pieces of jewellery and to clarify the whereabouts of the remaining 199 pieces.

43.  The applicant had all along represented Lung Ngai in dealing with Profit Gem and had on a number of occasions been entrusted with doing processing work for Profit Gem.  Following liaison with the applicant, Madam Wong delivered the raw materials for the jewellery in question to Lung Ngai for processing, and the applicant did expressly indicate that 220 pieces of finished product would be returned to Profit Gem on 25 May 2010.  However, instead of doing so, the applicant pawned 21 pieces of them and gave no account of the remaining 199 pieces.  Regardless of whether the principle laid down in Li Defan was applicable, on the evidence put forward by the prosecution, which had not been rebutted by the applicant, the trial judge felt able to draw the inference that the applicant was guilty.  The basis of the conviction was the applicant had stolen not only the 21 pieces of jewellery but also the remaining 199 pieces. In our view, the trial judge had taken a correct and sensible approach.

44.  The conviction of the applicant for theft of all 220 pieces of jewellery was in our judgment neither unsafe nor unsatisfactory.  The applicant’s application for leave to appeal against conviction was dismissed accordingly.

Sentence

45.  The trial judge said that the present case involved breach of trust and the value of the property was between $1 million and $2 million.

46.  He emphasized that the applicant had played an important role in the case and that her culpability could not be reduced on the ground that her boyfriend was the boss behind the scene.

47.  He placed particular emphasis on the fact that the other 199 pieces of jewellery were still missing and that the applicant had not given any account in that connection.

48.  He adopted 3 years’ imprisonment as the starting point, and reduced the sentence by 4 months to 2 years and 8 months on account of the applicant’s clear record.

49.  Mr Chan contended that a term of 2 years and 8 months was manifestly excessive.  He submitted that the value of the raw materials for the jewellery in question was $750,000 or even less, instead of $1 million to $2 million.  He emphasized that Profit Gem had not yet paid Lung Ngai the labour cost.  He asserted that the present case did not involve any breach of trust because there was no employer/employee relationship between the applicant and Profit Gem and the applicant was not a professional who owed fiduciary duties to Profit Gem.

50.  Mr Chan submitted that in considering sentence, the trial judge had failed to take into account the fact that 21 pieces of jewellery had been recovered and that the applicant had been punctual in delivering finished products to Profit Gem ever since she started doing processing work for Profit Gem in 2005.

Discussion

51.  While it was not in dispute that the applicant had all along delivered finished products punctually, this could not possibly be a mitigating factor.  Obviously, it was on account of the applicant’s track record that Profit Gem reposed trust in her and entrusted her with the handling of a substantial quantity of valuable jewellery.  However, the applicant breached that trust and stole a large quantity of jewellery from Profit Gem.  Although the applicant was neither an employer of Profit Gem nor a professional who owed fiduciary duties to Profit Gem, she stole the valuable jewellery from Profit Gem, taking advantage of her business dealings with Profit Gem over the years and the trust that Profit Gem had reposed in her.  This constituted an aggravating factor.

52.  The relationship between the applicant and Profit Gem is not necessarily one of those relationships set out in R v Barrick (1985) 81 Cr App R 78 and R v Clark [1998] 2 Cr App R 137 which would give rise to breach of trust.  The examples of breach of trust given in those two cases are merely illustrative and not intended to be exhaustive.  Breach of trust is a crucial sentencing factor which reflects the seriousness of the offence of stealing, from the very person who trusts the offender, property with which that person has entrusted the offender.  From this perspective, the offence committed by the applicant also involved breach of trust.

53.  Furthermore, we did not think that the recovery of 21 pieces of jewellery by the police could serve to alleviate the severity of the case.  In respect of those 21 pieces, the victim might be Profit Gem or the pawnshop, but the applicant was the one who had stolen and pawned those items and obtained $40,000 thereby.  In any event, whether Profit Gem had lost 220 or 199 pieces of jewellery would not materially affect the sentence imposed on the applicant.

54.  The value of the 220 pieces of jewellery should not be calculated solely by reference to the price of the raw materials.  The Court should be concerned with the value of that batch of jewellery and the economic loss suffered by Profit Gem as a result of the offence committed by the applicant.  Apart from raw materials, the value of the jewellery should also reflect such factors as design and profit.

55.  The prosecution case, which the applicant was unable to rebut on any ground, was that according to Madam Wong’s evidence, the value of the 220 pieces of jewellery in question was $2 million odd.  By taking the value of the jewellery in question at $1 million to $2 million as the sentencing basis, the trial judge had adopted an approach which was very generous to the applicant.

56.  In our view, having regard to the facts of the case as a whole, the sentence of imprisonment for 2 years and 8 months imposed on the applicant was not manifestly excessive and there was no room for further reduction.

57.  For the above reasons, we have also refused to grant leave to the applicant to appeal her sentence.

Translated by the Judgment Translation Unit of the Judiciary and vetted by Mr. Edmund Cham, Solicitor.