HKSAR v. CHIANG SEE WAI

HCMA 878/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. HCMA 878 OF 2009

(ON APPEAL FROM KCCC 4838/2009)

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J U D G M E N T

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1.  The Appellant pleaded guilty to fraud at the Kowloon City Magistracy on 6 October 2009 and was sentenced to 6 months’ imprisonment.  He was also ordered to pay compensation in the sum of $16,684.00 to the Social Welfare Department and was given a period of time in which to pay the compensation.  The payment of that sum should have been by 11 December 2009, but I understand that it has not yet been paid for reasons explained by the Appellant.  The appeal is against the sentence of imprisonment, which was ordered to run consecutively to a term of 4 years’ imprisonment that the Appellant is already serving for a drug trafficking offence.

2.  The facts showed that the fraud was in respect of comprehensive social security allowance (“CSSA”) by which the Appellant, over a 9 month period, deceived the Social Welfare Department and obtained $16,684.00 to which he was not entitled by reason of his ownership of real property, that is to say, a flat, which took him outside the scope of CSSA.  The Appellant lied to the Social Welfare Department and claimed he owned no real property.

3.  A rough timetable shows that the Appellant was granted CSSA first in 1999, and then, in 2003, became the executor of an estate (he said it was his parents’ estate) which included the flat in question.

4.  In 2005, he was sent to prison for another offence.  In 2006, he conveyed the flat to himself as beneficial owner and in December 2006, he attended an interview with Social Welfare Department to review his CSSA, declaring then that he had no property in Hong Kong; and he repeated that lie in 2007.  In July 2007, the Social Welfare Department discovered the Appellant’s ownership of the flat and he claimed he had forgotten to report that he owned that flat.

5.  In mitigation, counsel for the Appellant told the Magistrate that he sold the flat in September 2007 for $1.5 million or thereabouts; and that he had used some of that money to repay debts; but he still had $300,000 to $400,000 left which was in the bank account of a friend.

6.  The Appellant has a record of convictions but they do not include a record of any significance for offences of dishonesty: most of them are for drugs trafficking offences.

7.  I have been referred by the prosecution to two authorities dealing particularly with social security frauds.  The principle case is Leung Wai-kei [2007] 2 HKLRD 89 (with English translation).  That was a decision of the Court of Appeal in March 2007 in which the Court said that in considering the appropriate sentence for this sort of offence, a court should consider a number of factors including, the defendant’s plea, the amounts involved, and the length of time over which the offence was committed; and the circumstances leading up to the offence, in particular whether there was an application for CSSA which was fraudulent from its inception; or whether it was an application which became fraudulent due to a change in circumstances.  The court should also consider the use to which the funds obtained were put, as well as the record and circumstances of the offender; and whether he had voluntarily repaid, in whole or in part, the sums wrongfully obtained.

8.  The Court of Appeal gave some guidance as to the appropriate length of sentence, according to the amount dishonestly obtained.  And for sums up to $50,000, the court said a sentence of less than 9 months’ imprisonment was appropriate, subject to individual factors relating to each case.

9.  There is another case to which I was referred, HKSAR v Jackson-Lipkin & anor., which was decided in fact a few days after that first case; but that is to be regarded as a decision which is very much dependent on its facts; and I do not think it gives any general guidance as to the approach to be taken by the court in social security fraud cases. 

10.  The Appellant submits that the sentence that he has been ordered to serve in respect of this offence was too long; and he says that he has been willing all along to repay the sum.  He said it has been impossible for him to repay because he has been in custody and he cannot get to the bank account of his friend and cannot locate his friend.  Therefore he cannot obtain the sum to repay the Social Welfare Department.  He says he is remorseful and realizes that his conduct was very wrong; and he remains willing to repay the sum involved and intends to do so when he is released.  Whether that happens or not remains to be seen.

11.  So far as the sentence of imprisonment is concerned, the starting point taken by the Magistrate was a term of 9 months’ imprisonment, which was reduced by the conventional one third to reflect the plea of guilty.

12.  Given the amount of CSSA fraudulently obtained, the term of imprisonment was at the top of the range referred to in that case of Leung Wai-kei.  There the upper limit for sentence was set at less than 9 months for amounts less than $50,000; and here we are talking about $16,000.

13.  It is to be noted that the Appellant here repeatedly lied to the Social Welfare Department during the course of the fraud; that he deliberately concealed an asset; and that he has failed to repay the sum involved despite having the resources to repay.

14.  Nevertheless, the sum fraudulently obtained was well below that $50,000 figure, where less than 9 months is the recommended sentence.  I am bound to say, I take a different view to that of the Magistrate.  I consider that in all circumstances of this case, the proper starting point for sentence would be a term of 6 months’ imprisonment and that term must be reduced to reflect the plea of guilty.

15.  Accordingly, I allow the appeal and direct that the sentence in respect of this offence should be 4 months’ imprisonment.

16.  The Magistrate has given cogent reasons for ordering that the sentence should run consecutively to the Appellant’s existing term of imprisonment.  This offence was wholly separate from the drug trafficking that resulted in that sentence.  I agree that this sentence should be consecutive and I so order.

17.  During the course of these proceedings today, some question has been raised to what enforcement procedure is available in the Magistracy for the payment of compensation, that is to say whether a court can order a period of imprisonment in default.

18.  On the basis the Ordinance, in particular sections 68 and 98 of the Magistrates Ordinance, it would appear that a term in default can be imposed.  Of course, that Ordinance has application only to Magistrates’ compensation orders.

19.  As far as the District Court and the Court of First Instance are concerned, compensation orders are made under section 73 of the Criminal Procedure Ordinance, Cap.221 which was substantially amended in 2002, as a consequence of which, compensation orders are enforceable as a judgment debt. 

20.  I mention this because during the course of submissions, it has become apparent that Archbold Hong Kong 2010 suggests that section 98 of the Magistrates Ordinance Cap. 227 has been amended in a like manner. 

21.  In fact section 98, the Magistrates Ordinance has not been amended and Mr Hui’s researches, for which I am grateful, demonstrate that to be the case and therefore paragraph 5-341 of HK Archbold 2010 is wrongly printed, that is, it wrongly reproduces section 98 and that paragraph ought to be amended.  Section 98 does not include references to compensation orders being enforced as judgment debts.

22.  I do not intend to make any further or with regard to the compensation which has been ordered in this case.  The Appellant remains liable to pay that sum to the Social Welfare Department.  He says that he intends to do so upon his release which will be for shortly thereafter in July 2010.  He should do so.