HKSAR v. CHIK WAI WAN STEPHEN

CACC254/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 254 OF 2008

(ON APPEAL FROM DCCC 177 OF 2008)

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REASONS  FOR  JUDGMENT

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Hon Barnes J (giving the judgment of the Court) :

1. The applicant faced one count of Using a copy of a false instrument, contrary to section 74 of the Crimes Ordinance, Cap. 200, the particulars of which are as follows :

“CHIK Wai-wan, Stephen, sometime in August 1994, in Hong Kong, used a copy of an instrument, namely a copy of financial statement, dated 16^th June 1994 of Pacific Asia Group Limited registered in Western Samoa purported to have emanated from and on the letterhead of Moore Stephens, an international accountancy firm, which was, and which he knew or believed to be, a false instrument, with the intention of inducing YAW Chee-siew to accept it as a copy of a genuine instrument, and by reason of so accepting it, YAW Chee-siew invested $2 million United States currency into Pacific Asia Group Limited.”

2. The applicant pleaded guilty before Deputy District Judge Douglas Yau.  The judge adopted a starting point of 9 years, reduced it by one-third to reflect the plea and ordered a further reduction of 3 months to take into account the time the applicant spent in custody while awaiting extradition in Germany.  The applicant was sentenced to 5 years 9 months’ imprisonment for the offence. 

3. The applicant applied for leave to appeal against sentence and, in order to advance one of the grounds of appeal — that the victim had completely forgiven him — applied to produce a mitigation letter written by the victim.

4. At the end of the hearing, we granted leave to appeal against sentence and treated the hearing as the appeal proper.  We allowed the appeal and reduced the sentence to one of 4 years 9 months’ imprisonment.  Here are our reasons.

Brief facts

5. The applicant met Yaw Chee Siew (“the victim”) in mid-1994 and they became friends.  The applicant was then a shareholder of Pacific Asia Group Limited (“PAGL”), registered in Western Samoa.  The applicant asked the victim to invest in PAGL and some time in August 1994, handed a copy of the financial report of PAGL dated 16 June 1994 to the victim.  The said report was purported to be prepared by Moore Stephens, an international accountancy firm.  Based on the report, the victim invested US$2 million into PAGL.

6. Despite repeated requests, the applicant never showed the victim the books or ledgers of PAGL.  It later transpired that Moore Stephens had never acted for PAGL and the report was a forgery.

7. The victim instituted winding up petition against the company in 1997 and a civil claim against the applicant in 1999.  In his defence the applicant falsely alleged that the report was prepared by a Mr Choi, who turned out to be a fictitious figure.

8. Although not stated in the brief facts, it also transpired that the applicant left Hong Kong and was later apprehended in Germany.  He was extradited back to Hong Kong without putting up a fight.  He pleaded guilty at the District Court on 15 July 2008, 14 years after the offence.

Production of the mitigation letter

9. The applicant applied to produce as fresh evidence a mitigation letter (dated 13 November 2008) written by the victim.  We considered the letter de bene esse.  The applicant deposed that as he was forbidden to contact the victim prior to his plea, therefore he only wrote to the victim after he was sentenced, seeking his forgiveness.  The victim in the letter said he had completely forgiven the applicant and asked for leniency from this Court so that the applicant could have a second chance.

10. Mr Joseph Lam, counsel for the applicant, referred us to Cross and Cheung’s Sentencing in Hong Kong 5^th ed. and some of the cases cited therein (including R v Sung Chin Pang [1995] 2 HKC 352 and HKSAR v Wong Siu Kwan,CACC 166/2001) and submitted that the applicant was entitled to a further reduction as a result of the said forgiveness.

11. The circumstances of this case were very different from those involving a victim of kidnapping (as in the case of Sung Chin Pang), or a victim of an horrendous attack (as in the case of Wong Siu Kwan). 

12. In Sung Chin Pang, the Court of Appeal said (at page 356) that if “victims seek to persuade the court to exercise mercy or leniency in a wholly unsolicited but principled manner, it would be wholly wrong for the court not to pay some regard to it.  Such a case would, however, be exceedingly rare.”  (Emphasis applied).

13. It is indeed rare for a victim of a kidnapping case, who was held captive in her own car with her 4-year-old daughter by the pistol-brandishing defendant — though the pistol was in fact a toy — to “persuade the court to exercise mercy or leniency in a wholly unsolicited but principled manner.”

14. The mitigation letter the applicant wanted to produce was not unsolicited at all, as rightly pointed out by Ms Vinci Lam for the respondent.  As deposed by the applicant, it was only “after some communication” that the victim was willing to help.

15. Bearing in mind that the applicant sought to further deceive the court and the victim in the civil action in 1999 by falsely alleging a fictitious person was responsible for the preparation of the said financial report, that he left Hong Kong and was finally apprehended in Germany and was extradited back to Hong Kong to face the consequences of his criminal act, and that the amount involved was very substantial (US$2 million which translates to over HK$15 million), the fact that the victim had completely forgiven the applicant 14 years after the offence carried little or no weight in view of the impact of such an offence on the public at large : see R v Kwok Yee, William, CACC 452/1993.

16. The production of the mitigation letter would not have afforded any ground for allowing the appeal, and it was not, in our view, necessary or expedient in the interests of justice to have the letter admitted in evidence under the provisions of section 83V of the Criminal Procedure Ordinance, Cap. 221.  We therefore refused the application.

Grounds of appeal

17. The main ground of appeal advanced was that the judge erred in equating the seriousness of this case with those involving a breach of trust.  It was submitted that, in all the circumstances, the sentence of 5 years 9 months was manifestly excessive and wrong in principle.

Breach of trust?

18. Did the facts of this case involve a breach of trust?  It is interesting to note that counsel then representing the applicant before the judge (not Mr Joseph Lam) conceded that it was a case of breach of trust.  The judge did not, however, simply accept the concession, but went on to analyse the facts — with reference to the English decision R v Barrick (1985) 81 Cr. App. R 78.  The judge came to the conclusion that the case involved a breach of trust as the applicant was in a privileged and trusted position in relation to PAGL when he handled the detailed accounts of that company, and the applicant exploited that position when he deceived the victim.

19. With great respect, the facts disclosed did not involve any breach of trust.  Being the one who handled the detailed accounts of the company and thereby being privy to its financial position did not make the applicant’s act of deceiving his friend, who then had no connection with the company, a breach of trust.  It was a case of someone deceiving a friend into investing into a company of which he was a shareholder.  What the applicant has done was “no more than a conman practised in the art of deceit” : see HKSAR v Au Wing Kun, CACC 391/2006.  The applicant was not acting in any professional capacity for the victim.  As Ms Lam rightly conceded, the judge had erred in equating this case with those involving breach of trust.

20. Having said that, deceiving a victim out of US$2 million remains a very serious offence, whether involving a breach of trust or not.  According to the applicant, half of the money was used towards maintaining the applicant’s business, including paying the overheads of the company, and the other half was lost in overseas investments.  In other words, the victim did not get a single cent back.

21. The applicant also left Hong Kong and was only apprehended and extradited many years after the offence.

22. In our view, it matters not whether the applicant’s deception resulted in the victim parting with money for the purpose of investment (as submitted by Mr Joseph Lam) or for other purposes.  The fact was that the victim parted with his money on the strength of the false financial report.

23. We have looked at two cases of a similar kind to the present although the losses incurred by the victims in those cases were smaller by comparison to the instant case.

24. In Secretary for Justice v Buk Chui Ying [2008] 5 HKLRD 185, the defendant stole HK$5 million from the victim, who was known to her for a few years.  The victim was suffering from cancer and anticipating divorce proceedings.  The defendant agreed to hold the victim’s money for her and to repay her on demand.  The defendant’s husband utilized some of the money without the victim’s permission.  The defendant repaid about $3 million before the matter was reported to the police.  The defendant was convicted after trial and the judge imposed a 240-hour community service order (“CSO”).  On review, the Court of Appeal quashed the CSO and substituted it with a sentence of 2 years’ imprisonment.  The Court held that an appropriate starting point would have been 4 years’ imprisonment, given the gravity of the offence, even though the case did not strictly involve a breach of trust.

25. In Au Wing Kun (supra), the defendant had been entrusted with HK$1.265 million given to him by four persons for the agreed purpose of acquiring stocks and shares on their behalf.  The defendant used the money for his own purposes.  He pleaded guilty to four counts of fraud and one count of theft.  Concurrent sentences of 30 months’ imprisonment was imposed by the judge.  The Court of Appeal held that an appropriate starting point for the first charge (involving $830,000) was 30 months’ imprisonment, while the other four charges (involving $80,500, $110,000, $145,000 and $100,000 respectively) warranted a starting point of 18 months each.  The sentence was reduced in overall length to one of 2 years’ imprisonment.

26. We have also considered the case of HKSAR v Tse Ching Ng and others CACC 361/2004, a case relied on by Mr Joseph Lam.  In that case, the applicants (i.e. D1, D3 and D4), together with one other person (D2) were convicted after trial of a conspiracy to defraud.  Nine Letters of Credits (“LCs”) were involved and the bank paid out some $40 million on the strength of false documents purporting to evidence genuine commercial transactions.  Companies owned or controlled by D3 and D4 received certain proceeds of the LCs.  D3 also received some of the proceeds personally.  The end result was that D1’s company suffered a loss of some $26 million when the repayment was defaulted.  D1 was not the instigator of the fraud while D3 and D4 were. All applicants appealed against conviction but only D1, who was an 80-year-old first offender, appealed against sentence.  Having considered D1’s culpability and the effect of his offence, the Court of Appeal came to the view that the starting point of 5 years adopted by the judge was not manifestly excessive or wrong in principle.  However, due to the special circumstances of D1, the sentence was reduced from 4 years to one of 2½ years.

27. Since D3 and D4, the main instigators of the fraud, withdrew their applications against sentence, the Court of Appeal did not consider the appropriateness of the 5-year starting point adopted, or the 4½ years’ imprisonment imposed by the trial judge.  We therefore did not find this case of assistance.

28. The applicant was a highly educated man, having graduated from the Harvard University.  He had had every advantage in life but he chose to deceive the victim, his friend, when he lacked capital to pursue his dream of establishing his own merchant bank.

29. Having considered all the circumstances of the offence, we considered that a starting point of 9 years was manifestly excessive and that a starting point of 7½ years would have been more appropriate.

30. The applicant pleaded guilty and he was entitled to the usual one-third discount.  It was also proper for the judge to allow a further reduction of 3 months for the time the applicant spent while awaiting the uncontested extradition proceedings.  It would have been quite a different matter had the applicant resisted extradition.

Conclusion

31. For these reasons, the appeal was allowed.  We set aside the sentence of 5 years and 9 months and substituted it with 4 years and 9 months’ imprisonment.