HKSAR v. TSE WING-HAP, ANDREW

 DCCC710/2009 & 150/2010

(Consolidated)

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 710/2009 & 150/2010 (Consolidated)

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Reasons for Sentence

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1.  The defendant has been convicted after trial of 34 charges of the indictment. He was acquitted on Charges 16 and 36. He was convicted of the charges of obtaining property by deception in most of the charges except for Charges 7, 17 and 34 when he was convicted of the alternative of theft and for Charges 24 and 25 when he was convicted of evasion of liability under section 18B. All these offences carry a maximum of 10 years’ imprisonment.

2.  The facts are that the defendant was involved in the jewellery trade as a result of helping his father who had started the Ebel Jewellery Company. His father had built up a reputation amongst the jewellery traders. Unfortunately, he died and the defendant took over the company. From then on, very shortly after the defendant took over the company, the company closed down and basically the defendant then tried his best to continue in this trade on a smaller scale.

3.  Some of the victims in these charges had dealt with the defendant before the offences, successfully, in that they had sold diamonds to him and they had been paid. So, this is not a case of the defendant setting out to commit a deliberate fraud on these victims. I found that he was guilty of a reckless deception in that at the time when the diamonds were taken from these victims and cheques were written, the defendant, as is apparent from his bank accounts, did not have that money available to meet the cheques. All he had was an empty promise from his alleged business partner, Miss Yao, in mainland China that she would transfer the money to him.

4.  Certainly, there had been -- a look of the bank accounts do reveal that, on occasions, large sums of money were paid into the bank accounts but were very soon dissipated with large withdrawals and presumably to pay the many creditors of the trade. The defendant himself said that he moved his office to the premises in Hunghom because he wanted to save rent. And, in fact, he said he claimed that he was working on a commission basis for Miss Yao who owned the company, TKT & Nicholas.

5.  I do not accept that part of his evidence because the defendant was made a signatory of the Citibank account and he signed the cheques on behalf of TKT & Nicholas Diamonds and all the victims had the impression that the defendant was the boss of the company. The only time some of them heard that he was not the boss was at the end when the defendant admitted to some of them that the money had not come from China as expected and the company was closing down and they could take whatever action they required, including reporting to the police.

6.  According to the defendant, he said that all the diamonds that he had taken from the victims have been given to Miss Yao to take to China. And so he claimed that he only got commission after those diamonds had been sold. He had no control whatsoever over those diamonds once it got into Miss Yao’s hands. According to his evidence, he did not know who Miss Yao’s business contacts were in China until the end when he was desperately chasing Miss Yao for the money that he went with her to visit several businesses, jewellery businesses, in China, who presumably owed Miss Yao money.

7.  The impression that I got from the evidence of the defendant was that his attitude was he could not care less what happened to other people’s property and other people’s money. Mr Fenton submitted that he was duped by Miss Yao and he lacked judgment.

8.  The defendant is not a young man. He was born in 1970. He has had an overseas education in that he went to Australia, presumably to finish year 11 and year 12. He entered university there. He did not complete his university degree. He then started a restaurant business in Australia and that was closed down because of dispute between him and his partner. He then went to acquire knowledge on a pearl production farm and, subsequently, he returned to Hong Kong. And he helped his father in the jewellery business and he was in charge of buying and selling, of buying really and selling diamonds and presumably pearls and other forms of jewellery. So, he was not a freshman in the business.

9.  And whilst it is true, as Mr Fenton submitted, he did not deliberately set out to cheat the businessmen but, nevertheless, there was an element of deliberation in that he continued to put up a front that everything was well and he was ordering those diamonds, taking those diamonds, all the while knowing that the money was not enough in Hong Kong to pay for them.

10.  Mr Fenton correctly pointed out there is no evidence he had gained anything and the amount is a large one. The amount outstanding is well over $10 million. According to Mr Fenton, it is $13.8 million. These victims have been left out of pocket. And a look at the victims themselves, these seven victims, they are not huge, large jewellery conglomerates. They are, in some cases, self-employed businessmen running a small business, a sole proprietorship, when to lose this amount of money, even though as Mr Fenton said that $13.8 million is divided by the seven victims, in fact, it is not a small amount. There has been no restitution whatsoever and it is unlikely that these victims will ever be able to recoup their losses.

11.  There is also an element of breach of trust. I agree with Mr Fenton this is not the type of breach of trust which one normally finds between employer and employee, but there is still an element of breach of trust because these businessmen, these victims, had trusted the defendant. This is how the jewellery trade apparently is organised. It is that they would on some occasions give diamonds to the defendant on trust in that he is allowed to examine these diamonds and keep it for a while and try and find a buyer or try and estimate the clarity of the diamonds before making up his mind whether to buy them.

12.  And during this period, the victims do not have control of those diamonds and, therefore, they do have to trust the defendant with them, that he would not deal with them improperly and that, at the end of the day, should he wish to buy them, that his cheques will be honoured upon presentation. It would appear in this trade also that the cheques that are given to them are normally in the form of post-dated cheques. So, there is a lot of trust involved in this business and which the defendant should know because he was in the business himself.

13.  So, the wheels of international business and finance which is very important to the international name of Hong Kong could not run if people like the defendant who are reckless with other people’s money and trust are allowed to do this with impunity. It will eventually affect Hong Kong’s international reputation.

14.  It is true, as Mr Fenton pointed out, there is no sentencing guidelines for this type of case. Each case must be considered on its own facts. There is only one case I wish to perhaps mention. It is the HKSAR v Chan Kai Chung CACC12/2001. The Court of Appeal there was dealing with an appeal against sentence on a theft charge, embezzlement via illegal use of cheques. And in that case, it is a breach of trust between an employer and employee and it occurred over a period of four years on 20 separate occasions and a total of over $1 million had been embezzled.

15.  And the court there considered the cases of Barrick in the UK and said that it is not helpful to consider sentencing guidelines in the UK because the circumstances in Hong Kong are different. But the court mentioned, with approval, the factors which Lord Lane had stated in the case of Barrick [1985] CAR 78 at page 83 when considering sentence of offences of the nature of theft involving breach of trust.

16.  I would pray in aid those factors because in a way some of those factors are, I consider, also to be considered for the case that is before me. It is the quality and degree of trust reposed in the offender, including his rank. And in this case, it is the quality and degree of trust which the victims in this case had reposed in the defendant; the period over which the fraud or thefts had been perpetrated; thirdly, the use to which the money or property dishonestly taken was put; and, fourthly, the effect upon the victim; fifthly, the impact of the offences on the public and public confidence; sixth, the effect on fellow employees or partners; seventh, the effect on the offender himself; and, eighth, his own history.

17.  And in the case of Chan Kai Chung, the Court of Appeal said that the amount involved in the case is just one of the factors relevant to sentence.

18.  The defendant here has, as I have said, recklessly deceived these victims. And the impact on these victims, although I do not have any evidence from them, as I have said, they have made not a small loss monetarily. The defendant himself, as far as he is concerned, there doesn’t seem to have been much impact on his finances. He was finding it hard to make ends meet at the time of these offences and he went on CSSA in February 2010. So, as Mr Fenton pointed out, it is likely that he had, if not been declared bankrupt, almost bankrupt.

19.  He has a child but he is divorced. His child is taken care of by his wife. The probation officer was not allowed to interview his ex-wife and so the probation officer’s report is of no assistance whatsoever in relation to his relationship with his son and his ex-wife. His mother was interviewed and his mother was of the view that it was out of character for the defendant to commit these offences and his mother is now living with one of his sisters.

20.  It is a sad tragic circumstance for a man who has, as the probation officer said, come from a “favourable” family background. He not only managed to dissipate whatever goodwill his father had, he also has brought shame on his family. Nevertheless, this court has to look at the facts in this case and give an appropriate sentence for his overall criminality. He has been convicted of a total of 34 charges on a total of seven victims.

21.  The only mitigating factor is that he has a clear record and, as Mr Fenton correctly pointed out, he did not challenge most of the prosecution case. So, the case had gone shorter and more smoothly than otherwise would have been the case. The only issue in this case was one of dishonesty and the only challenge he made, real challenge, is Charge 36 for which he was acquitted. So, that goes towards mitigating the sentence that he would otherwise face.

22.  I had considered that, in this case, a proper starting point for sentence overall would be one of 5 years’ imprisonment. But I do take into account the fact that the defence was conducted in such a way that a lot of time had been saved and so I will give him credit for that and deduct 6 months from that sentence. So, the overall total sentence would be 4½ years. So, I will sentence the defendant to 4½ years’ imprisonment on each of the 34 charges to be served concurrently.