HKSAR v. CHEUNG CHUN YUEN BARRY

HCMA 277/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO 277 OF 2015

(ON APPEAL FROM ESS 14346 and 14347 OF 2014)

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REASONS FOR JUDGMENT

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Background

1.  The appellant was convicted, on his own plea, before Ms Veronica Heung at the Kowloon City Magistrates’ Courts of the following two offences:

(1) ESS 14346/2014 – Failing to pay wages within due date after termination of employment, contrary to sections 25, 63C, and 64B(1) of the Employment Ordinance (EO), Cap 57 (Offence 1).  

(2) ESS 14347/2014 – Failing to pay any sum payable under an award of the Labour Tribunal, contrary to sections 43P(1) and 43Q(1) of the EO (Offence 2).

The appellant was sentenced to a total of 6 weeks’ imprisonment.

2.  The appellant appealed against the sentence imposed.

3.  At the conclusion of the hearing I allowed the appeal, set aside the sentence of imprisonment and ordered the appellant to be placed on a Community Service Order for 160 hours.  I now give my reasons.

Summary of facts

4.  At all material times the appellant was the chairman and a director of Hong Kong Mercantile Exchange Limited (HKMEL).  He was also one of the authorised signatories of the bank account of HKMEL.  Raymond Ma (Ma) was an employee of HKMEL with a monthly wages of $53,500.  Ma did not receive his wages for May 2013.  In June 2013 the appellant had a meeting with the employees of HKMEL (including Ma).  He informed the employees he was seeking new investments.  When Ma was still not paid his wages by August 2013, he deemed his employment terminated by HKMEL.  Ma was owed wages from 1 May 2013 to 30 August 2013, totalling $207,274.19.  

5.  Ma filed a claim for arrears of wages, wages in lieu of notice, etc with the Labour Tribunal against HKMEL on 16 October 2013.  He was awarded a total of $339,920.86 on 11 November 2013.

6.  Up to 11 March 2014, Ma had not received any payment from HKMEL in relation to the sum awarded to him.

7.  By failing to pay Ma’s wages as soon as practicable and in any case no later than seven days after the day of termination of his employment wilfully and without reasonable excuse, HKMEL had contravened sections 25 and 63C of the EO.  As the offence was committed with the consent or connivance or was attributable to the neglect on the part of the appellant, the appellant had contravened section 64B(1) of the EO (Offence 1).

8.  By failing to pay Ma the sums payable under the award of the Labour Tribunal within 14 days after the date of award, in whole or in part, for the payment of specified entitlements, HKMEL had contravened section 43P(1) of the EO.  As the offence was committed with the consent or connivance or was attributable to the neglect on the part of the appellant, the appellant had contravened section 43Q(1) of the EO (Offence 2).

Background of the appellant

9.  The appellant is a 57-year-old married man with children.  He has no previous conviction.  He was a recipient of the Gold Bauhinia Star and was a Justice of the Peace.  He had served on a number of public bodies.  He was a member of the Central Policy Unit of the Hong Kong Government in 1993 and 1994. Between 2012 and 2013 he served as a non-official member of the Executive Council.  He was also the Chairman of the Urban Renewal Authority from 2007 to 2013.

10.  A number of character reference letters were tendered in mitigation.  The appellant was portrayed as a man of integrity who had dedicated his time and his own resources to serve the public, particularly the underprivileged.  His former employees also testified to his sense of responsibility and generosity; and the care he had shown to his employees. 

Community Service Order suitability report

11.  Prior to sentence, the learned magistrate called for a Community Service Order suitability report.  The report sets out the background of the appellant, how he came to commit the present offences, and his attitude towards the commission of the offences.  In view of the appellant’s “clear record in criminal background, long history of public services, remorseful attitude towards the present offences and adequate family support”, a Community Service Order was recommended.

Circumstances leading to the two summonses

12.  The appellant was a founder and director of the HKMEL, which was established in 2008 for the trading of futures, options and other financial derivatives of commodities.  Due to insufficient funds, the trading licence was surrendered which resulted in its revocation on 18 May 2013 and HKMEL ceased trading.  The appellant tried to save the business by seeking new investors, borrowing money through his private means, and personally guaranteed loans to HKMEL.  He was unable to pay his staff but had hoped that once the business was saved, the outstanding salaries would be paid.  His efforts were in vain in the end and HKMEL was wound up.  He himself was made a bankrupt on 15 April 2015.

Reasons for sentence

13.  In coming to her conclusion that a sentence of Community Service was inappropriate in the circumstances, the learned magistrate referred to the case of Secretary for Justice v Ting Kong-ho, CAAR 9/2000 and noted that remorse was a precondition of imposing compulsory community service. Based on the following three matters she came to her conclusion that there was a lack of “genuine remorse” on the part of the appellant as the payment to Ma was not a “priority” to him:

(1) 2 months after Ma’s employment was deemed to have been termination HKMEL “managed to have one of its creditors pay its office rental to its landlord” (1^st matter);

(2) The appellant managed to maintain his accommodation in Repulse Bay when he entered his plea of guilty (on 25 March 2015) and only moved out of the “expensive accommodation” at the end of March (2^nd matter);

(3) The appellant had changed his team of counsel from time to time and had declined the offer of assistance from the Duty Lawyer Scheme (3^rd matter).

14.  The learned magistrate considered that an immediate sentence was warranted in view of the seriousness of the two offences: a large sum was involved and had been outstanding for a long period of time; even upon an order made by the Labour Tribunal, the appellant did not give priority to the outstanding wages.

15.  The learned magistrate took 9 weeks as the starting point for Offence 1 and 12 weeks for Offence 2.  The sentences were reduced by one third to reflect the appellant’s plea of guilty.  Both sentences (6 weeks and 8 weeks) were ordered to run concurrently, arriving at a total of 8 weeks.  The learned magistrate took into account the appellant’s positive good character and further reduced the sentence by 2 weeks, arriving at a final total sentence of 6 weeks’ imprisonment.

Grounds of appeal

16.  The grounds of appeal against sentence advanced by Mr Peter Duncan SC leading Mr Lawrence Hui can be shortly stated.  The learned magistrate erred in taking into consideration irrelevant matters when she reached her conclusion that the appellant had not shown “genuine remorse”.  She had also failed to give proper recognition to the outstanding and exceptional contribution made by the appellant to the community.  The appellant was “tailor-made” for a Community Service Order.

17.  In relation to the 1^st matter relied on by the learned magistrate, I was informed what had happened was that a creditor of the appellant (not of the company HKMEL) had offered to pay the rental for HKMEL when the latter was facing imminent eviction, with the purpose of keeping HKMEL afloat so as to enable the appellant to bring in new investors.  The loan was specifically for the purpose of paying the rental.  It was therefore not the case that the appellant managed to borrow money from his creditor and, failing to prioritize, paid the rent for the office of HKMEL instead of paying Ma.

18.  As to the 2^nd and 3^rd matters, it was submitted that neither amount to evidence of lack of remorse when it was not disputed that the rent of the Repulse Bay flat was paid by the appellant’s wife and the legal fees by the appellant’s family.

19.  None of these matters had any bearing on whether the appellant was remorseful, Mr Duncan submitted.

20.  Further, it was submitted that the learned magistrate wrongly concluded that the appellant was “personally” liable for the payment of outstanding wages when she considered the issue of remorse.

21.  It was submitted that there was an abundance of material before the learned magistrate that the appellant was remorseful.  Such material include the appellant’s plea of guilty and contents of the Community Service Order suitability report referring to the “regret” and “repentant” attitude of the appellant.

Response of the respondent

22.  Mr Eddie Sean, SADPP leading Mr Henry Hung SPP of the Department of Justice, conceded that the three matters relied on by the learned magistrate to show the failure on the part of the appellant to give priority to the repayment are “insupportable”. Mr Sean also conceded that the appellant is not, in law, personally liable to make payment to Ma.

23.  Accepting that deterrence is only one of the factors to be considered by the sentencing judge, Mr Sean did not try to persuade this Court that a Community Service Order is inappropriate in all the circumstances of this case.

My consideration of the submission

24.  According to the Long Title of the EO, its aim was to “regulate the conditions of employment and protection of the wages of employees…”.  This no doubt is an important piece of legislation aiming to protect labour rights.

25.  I bore in mind the fact that the penalty stipulated under section 63C of EO had been increased from a fine of $200,000 and sentence of 1 year’s imprisonment to that of a fine of $350,000 and imprisonment of 3 years in 2006.

26.  In the present case, Ma was not paid his monthly wages for 4 months, and even after he obtained an award from the Labour Tribunal, still no payment was made.

27.  Having said that, one must not lose sight of the fact that the appellant was NOT the employer of Ma and, as conceded by the respondent, he is not personally liable to Ma to make repayment.  HKMEL was the employer.  It was HKMEL who had failed to pay Ma the wages.  The present offences were committed “with the consent or connivance or to be attributable to the neglect” on the part of the appellant as a director of HKMEL.

28.  After reading the transcript of the hearings and the Reasons for Sentence, the learned magistrate appeared to have attributed to the appellant a “personal” liability to pay the outstanding wages to Ma.  According to the learned magistrate, the appellant was not only obliged to make payment to Ma but also “to give priority to resources he has and has access” to fulfil such an obligation.[1]  The learned magistrate took into account the three matters mentioned above (para 13) and came to the view that the appellant did not give priority to the matter of repayment when he applied the money/resources available to him. 

29.  There was never any consideration or determination whether the appellant was an “employer” as defined under EO, as the appellant was made a bankrupt before sentence and the prosecution withdrew its application for an order under section 65 of EO against the appellant to pay the outstanding wages.  In any event, the respondent has conceded before me that the appellant was not the employer of Ma and he is not personally liable to pay Ma the outstanding sum. 

30.  Once it was conceded that the appellant was not personally liable in law to make payment to Ma, the three matters relied on by the learned Magistrate could not be used as basis to say that the appellant failed to “prioritize”, thus showing the lack of genuine remorse.

31.  Dealing first with the fact that the appellant resided at an expensive apartment until the end of March 2015 (2^nd matter), one must not forget that the appellant was living with his family and there is no challenge that the rental was paid by his wife after the appellant was unable to pay.  The appellant’s continual occupation of a family home rented by his wife did not mean he was not remorseful. 

32.  Similarly, the fact that the appellant changed his team of legal representatives on a number of occasions and declined the offer of the service of the Duty Lawyer Scheme (3^rd matter) did not mean that he did not have genuine remorse – when the fees were paid for by his family members.

33.  Coming back to the payment of rental for HKMEL by a creditor of the appellant (1^st matter), as indicated by Mr Duncan, the reason for such a creditor to help pay the office rental is to keep the company HKMEL afloat, so as to enable the appellant to seek new investments.  This is not a case in which the company HKMEL chose to use its resources to meet other expenses instead of paying the wages owed to Ma, as in the case of HKSAR v Li Fung Ching Catherine, FAMC 4/2012.

34.  In Li Fung Ching Catherine, the Court of Final Appeal, in refusing to grant leave to appeal, remarked that such an act (ie chose to use its resources to meet other expenses instead of paying the wages owed to its employees) amounts to a “calculated decision to break the law designed to protect those employees” and could not be used as a “reasonable excuse” to avoid conviction.  Such a remark has no bearing on the issue of remorse.

35.  In my view, the respondent had rightly conceded that the basis used by the learned Magistrate to find the lack of genuine remorse could not stand.

36.  The appeal before me is a re-hearing.  The offences are serious and it would not be appropriate to impose a fine – particularly when the appellant is already a bankrupt.  The seriousness of the offences certainly warranted the consideration of a prison sentence.

37.  Having considered all the circumstances of how the appellant came to commit the present offences, the remorse he had shown, his outstanding and impeccable record of public services, and his willingness to perform unpaid work of benefit to the community, I was satisfied that the appellant was suitable for the imposition of a Community Service Order.

38.  For these reasons, I allowed the appeal against sentence, set aside the sentence of 6 weeks’ imprisonment, and ordered the appellant to be placed on a Community Service Order for 160 hours for both offences, to run concurrently.

[1] Appeal Bundle 17