SECRETARY FOR JUSTICE v. KWAN CHI CHEONG AND OTHERS

CAAR 1/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

APPLICATION FOR REVIEW NO. 1 OF 1999

(ON APPEAL FROM ESCC 3887 OF 1998)

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J U D G M E N T

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Stuart-Moore, V.-P. (giving the judgment of the Court):

1. This matter comes before the court for review of sentence in these circumstances. The Respondents, D2, D3 and D4 at trial, all pleaded guilty to the charges they faced when they appeared before Mr. Tallentire at Eastern Magistrates' Court on 19th November 1998.

2. D2 was charged solely with eight offences and, jointly with D3 and D4, with a further seven offences. Altogether, the offences comprised one of agreeing to offer and fourteen of offering an advantage to an agent, all contrary to section 9(2)(a) of the Prevention of Bribery Ordinance, Cap.201.

3. The summary of facts setting out the background of the case was admitted and reads as follows:

"At all material times, D2, D3 and D4 were partners of Hopewell Company which provided cargo packing and transportation services to AEPCL.

2. On 1st December 1992, D2, D3 and D4 became registered partners of Hopewell Company.

3. At all material times, D1 (To Tak-ming) was the Scheduling Manager of Asian Express Packing Company Limited (AEPCL) (now known as Asian Express International Movers Limited) which provides cargo packing and transportation services to its customers. Such services include the transportation of inbound and outbound cargoes in containers. AEPCL contracted the actual work of packing of cargoes into containers and its transportation to different companies or firms. D1, at the material times, was the Scheduling Manager, responsible for awarding orders to such companies or firms.

15th Charge (against D2, D3 and D4)

4. On an occasion between 1st December 1992 and 31st December 1993, D1 invited D2 to attend a meal in a local restaurant to discuss various matters concerning the award of orders to Hopewell Company. In the meeting, D2 agreed to offer advantages to D1 in return for securing the orders. D2 subsequently discussed with D3 and D4 and they all agreed to offer a monthly rebate at the rate of $0.30 per cubic foot of outbound cargoes packed and transported by Hopewell Company for AEPCL to D1 in return for D1's awarding packing and transportation orders to Hopewell Company.

16th, 17th, 18th, 22nd, 24th and 25th Charges (against D2, D3 and D4)

5. On each and every occasion, which is the subject matter of the respective charge, D2, D3 and D4 offered the following advantages in cash and deposited such cash into D1's bank account or D1's telebet account with the Hong Kong Jockey Club:

19th, 20th, 21st, 23rd, 26th, 27th, 28th and 29th Charges (against D2)

6. On each and every occasion, which is the subject matter of the respective charge, D2 offered the following advantages in cash and deposited such cash into D1's bank account:

7. ICAC subsequent investigations revealed the abovesaid D1's bank account movement and telebet account transactions at the material times. Further investigations by ICAC also confirmed the corrupt receipt of payments corresponded to the formula of $0.30 per cubic foot of outbound cargoes undertaken by Hopewell Company during the relevant period.

8. AEPCL forbids its employees to solicit or accept any advantage from any person in connection with their duties."

4. In monetary terms, the joint charges involving all three defendants amounted to $40,600, and those involving D1 alone amounted to $41,673. These amounts, totalling $82,273, were spread over several years. It was accepted in the court below that, despite the difference between the number of charges faced by D1 when compared to the others, little, if any, distinction could be drawn between the Respondents because they were effectively all in the scheme of corruption together.

5. The magistrate adjourned sentence for a fortnight to give time for background and community service reports to be prepared. He remanded all the Respondents in custody for this purpose.

6. On 3rd December 1998, the hearing resumed. Having heard mitigation and having read the reports which spoke well about the three Respondents, the magistrate made orders in each case that they should do 160 hours community service for each offence to run concurrently. The magistrate's reasons for making these orders were that he:

"..... found this to be an exceptional case where a community service order could and indeed should be used as a direct alternative to imprisonment. The reports were eloquent as to their deep remorse and that none could be regarded as of a criminal disposition. In each case I had before me a man of previous good character, a family man and father who had worked diligently to support the family. In each case there was a positive recommendation for an order of community service. Each had suffered the trauma of the 'clang of the prison gates' by being remanded in custody for some 14 days with the attendant uncertainty as to their fate. This in itself is clearly a severe punishment for such men. However the exceptional factors which led me away from an immediate custodial sentence were the circumstances of the offences. I totally accepted the mitigation advanced that D1 had been the prime mover and instigator of the offences. It was absolutely clear that it was D1 who held them hostage in an economic sense to the provision of bribes by either explicitly or implicitly making it abundantly clear that unless the bribes were paid that the business of his company would be withdrawn and they would face economic ruin. Further it was accepted by me that in this venture they complied with desperation and naivety. I was and remain fully confident that they will not reoffend. In these exceptional circumstances I resolved that justice could be tempered with mercy ....."

7. On 18th January 1999, the Secretary for Justice applied to the magistrate for a review of the sentence he had imposed. The application was refused for the same reasons which have already been cited, although the magistrate added:

"Also the leading authorities produced and relied upon by the prosecution either did not apply to offences contrary to S9 of the Ordinance or specifically excluded such offences. Thereby the authorities were self-limiting in their usefulness. After careful consideration over the period of the adjournment, in all the circumstance I was satisfied that the sentences imposed were neither wrong in principle nor manifestly inadequate."

8. Following this decision, an application for review of sentence was then made to this court.

9. The essence of the Applicant's argument is that, although there has been increasing use of community service orders in the magistracy for certain corruption offences, the Court of Appeal has taken the opportunity in The Secretary for Justice v Li Cheuk-ming, (1999) 1 HKLRD 59 (English translation at page 63), to consider whether such orders were appropriate for offences of this kind. This was a case that differed from the present one in that the respondent had pleaded guilty to offering a $500 bribe to a member of the staff employed by China Light & Power who was, it was said, a public servant. The charge was preferred, therefore, under section 4(1)(c) of the Ordinance. Clearly, as this court found, the respondent's offence in that case was not by any means the most serious of its kind. The respondent had a wholly creditworthy background and his family were likely to be left destitute if he was incarcerated. The magistrate sentenced him to 100 hours community service. On review, this Court indicated that a sentence of nine months' imprisonment was appropriate but that, for reasons we shall return to later in this judgment, only three months would be imposed on review.

10. In giving the judgment of the court, Chan CJHC said the option of imposing a community service order should not be excluded for serious crime such as corruption in cases where there existed "exceptional circumstances". As the court went on to say, such circumstances will generally relate to personal matters, the nature of the offence or to its consequences, but Chan CJHC made it clear that exceptional circumstances do not extend to a guilty plea, general family background and financial losses.

11. Mr. Alain Sham, on behalf of the Secretary for Justice, submits that the matter presently before us had no features to it which can be said to have amounted to exceptional circumstances.

12. Counsel on behalf of all the Respondents have emphasized the salient points that clearly influenced the magistrate into reaching his decision. Most important of these was that D1, having instigated the offences, had then exploited the Respondents.

13. Miss Draycott, for D4, has very clearly expressed this in her written submissions in the following way:

"All the defendants worked for Asian Express Packing. D1, as Scheduling Manager, was in a position to award orders from the Company. D1 suggested to D2, 3 and 4 that they leave their employment and set up a separate company to service the orders from Asian Express that D1 would be in a position to provide. They did so and set up Hopewell Co. Asian Express was their only customer but was able to supply substantial business. D1 thus ensured that the other defendants were completely dependent on him for their livelihoods. After some months in which they become totally financially committed to Hopewell, D1 suggested that they pay him commission or bribes. He probably always intended to ensnare them in this way and extract his reward. The defendants were trapped and complied rather than face penury."

14. Added to this, the Respondents were all previously of good character, albeit these were offences which had continued over a long period of time, and they were clearly extremely remorseful. It seems from the passage already cited from the magistrate's Reasons for Sentence that this mitigation was accepted. Indeed during the course of the hearing before this court, the Applicant, in accordance with instructions, took no issue on the way in which this aspect of the case had been put.

15. In the light of the unusually strong mitigation which was greatly strengthened by the admirable probation reports on the three Respondents, we have some sympathy with the magistrate in reaching his conclusions, after balancing the personal circumstances of each Respondent against the general weight of authority which has stressed the importance of deterrence as the predominant factor to be borne in mind when sentencing on charges where corruption is involved.

16. The Prevention of Bribery Ordinance provides the sanctions necessary to deal with breaches of this kind. The Ordinance was intended to be draconian in its effect. Bribery, whether in its acceptance or by the offering of an advantage, is an evil which can strike at the heart of commercial and public life if it is left unchecked. A punishment that fails to deter will produce all the wrong signals just as sentences which act as a deterrent will reinforce this community's efforts to rid itself of corruption.

17. For these reasons, even the first offender charged with an offence of corruption under the Ordinance, unless it is merely a technical breach, must usually expect a deterrent sentence. This will almost invariably involve a sentence of immediate imprisonment.

18. Taking Lawton L.J.'s four classic principles of sentencing, [See R v Sargeant, (1970) 60 Cr.App.R. 74 at 77], these are retribution, deterrence, prevention and rehabilitation. It may well be that in many cases, the balancing act which the sentencer must perform will be a difficult one. All factors need to be taken into account but, depending on the circumstances, it may be that greater significance has to be given to one factor rather than another. In cases of corruption, where an advantage is offered or accepted, it is difficult to envisage a situation where public interest does not require deterrence to predominate. The personal circumstances of the offender will carry less weight. This, it seems to this Court, should apply whether the corruption is in the public sector or in the private sector. It may be that in some cases of public sector corruption the offences will be more serious but that is a matter which can be reflected in the length of sentence rather than the mode of sentence.

19. This case is a prime example of the sad results which are occasioned when otherwise honest and hardworking people, succumb to temptation and fall prey to corruption. The probation reports are, as the magistrate has said, eloquent as to the Respondents' capabilities in the past and as to their potential for the future. However, from all the reports before us, it is clear that they agreed out of weakness to be exploited in a way which they knew was unlawful. In an illuminating passage from D4's Community Service Suitability Report, it says:

"He committed the present offence out of greediness and his underestimation of the legal consequences."

20. This precisely highlights what may happen when the courts dilute the strength of many years' firm resolve when dealing with cases of corruption, and instead impose sentences that fail to deter. It would be most unfortunate if it was not generally understood in the community that dire consequences will ensue where corruption is established.

21. This was not, in our judgment, a case where community service was appropriate however suitable for community service the candidates themselves may have been. The circumstances would have to be wholly exceptional. It follows that the personal backgrounds of the Respondents, their pleas of guilty and the risk to them of economic loss if they did not accede to D1's exploitation of themselves are not factors, even in combination, which could justify a non-custodial sentence.

22. Accordingly, we are driven to the conclusion that the magistrate erred in finding "exceptional circumstances" for the imposition of community service orders.

23. In our opinion, immediate sentences of imprisonment of not less than nine months' imprisonment after trial were merited on these facts. Taking into account the normal discount for pleas of guilty, the fact that the Respondents have all satisfactorily completed their community service and, lastly, that this is a review of sentence, necessarily resulting in the imposition of prison sentences following the non-custodial orders made in the magistrates' court, we think it proper to impose on each Respondent a sentence of 3 months' imprisonment.

24. We have given anxious consideration to a further question which we considered it right to ask ourselves in the light of this background, namely whether the sentences should be suspended. In canvassing this issue with Mr. Sham, he drew our attention to the passage in Li Cheuk-ming's case (above), at page 67, which closely mirrors the situation which is presented in this case. Chan CJHC took into account circumstances which included the discount for the plea of guilty, the fact that the community service order amounting to 100 hours had been completed by the respondent and that a non-custodial sentence was being replaced by immediate imprisonment. The court nevertheless imposed an immediate sentence of three months' imprisonment. On this aspect, the present case is virtually indistinguishable from Li Cheuk-ming. Once again, we are forced to conclude that there are no exceptional circumstances for the suspension of these sentences.

25. Accordingly, the application made on behalf of the Secretary for Justice is allowed. The original orders of community service are quashed and, in the case of each Respondent, he must now serve a sentence of 3 months' imprisonment.