SECRETARY FOR JUSTICE v. LEE CHO KEUNG AND OTHERS

CAAR 2/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

APPLICATION FOR REVIEW NO. 2 OF 2003

(ON APPEAL FROM DCCC NO. 532 OF 2003)

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J U D G M E N T

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Hon Stock JA (giving the judgment of the Court):

Introduction

1. This is an application by the Secretary for Justice under section 81A of the Criminal Procedure Ordinance, Cap 221, for a review of sentence, for which leave was granted by Stuart-Moore Ag CJHC on 29 July 2003. 

2. The application is in respect of sentences passed by Judge Chua in the District Court on 10 July 2003 upon seven defendants who had pleaded guilty to two offences of conspiracy: conspiring to manage premises as a vice establishment; and conspiring to live on the earnings of prostitution.  The judge imposed sentences on the first respondent of eight months' imprisonment suspended for 18 months; and, as to the rest, sentences of six months, suspended for a period of twelve or eighteen months. 

3. The applicant says that the sentences in so far as they were suspended were wrong in principle, and were in any event manifestly inadequate.

The facts

4. The facts set out in the written submissions prepared by Mr Zervos are not contentious and we adopt them for the purpose of this judgment:

“….

(4) The Respondents were variously involved in the management of a vice establishment called “Yat Yuet Sing Massage” which was located in Kowloon (the massage parlour).  The massage parlour consisted of 3 locations all situated on the floor.  There were 22 rooms altogether in the three locations which were principally used as a vice establishment.  Each of these rooms was furnished with one bed, one television and one bathroom.  There were four rooms in another location on the same floor which was used as a dormitory for the prostitutes.  Surveillance cameras were installed at the entrances and staircases to the locations and they were connected to monitors and televisions at a central location.

(5) Between a period of three weeks from 15 April to 7 May 2002, an undercover police officer was employed as a keeper at the massage parlour by the 1^st Respondent.  He observed the various roles played by the Respondents were as follows:-

(a) The 1^st Respondent was the supervisor of the massage parlour;

(b) The 2^nd Respondent was the keeper of one of the locations of the massage parlour (location 1) during the day shift;

(c) The 3^rd Respondent was the cashier of one of the locations of the massage parlour (location 1) during the night shift;

(d) The 4^th Respondent was one of the keepers of one of the locations of the massage parlour (location 2) during the day shift;

(e) The 5^th Respondent was the cashier of one of the locations of the massage parlour (location 2) during the day shift;

(f) The 6^th Respondent was one of the keepers of one of the locations of the massage parlour (location 2) during the day shift;

(g) The 7^th Respondent was the cashier or keeper of one of the locations of the massage parlour (location 3) during the day shift.

(6) The undercover police officer observed that each customer was charged $420 for sexual services provided and that a total of 1,320 customers were served during the three week period he was there.  He also observed that almost everyday, the 5^th and 7^th Respondent would hand over the takings and the business records to the 2^nd Respondent who would consolidate and calculate the trading figures of the massage parlour.  Occasionally, the 4^th and 5^th Respondent would hand over the takings and the business records to the 2^nd Respondent.  The 2^nd Respondent would hand over the trading figures to the head boss, a person by the name of Choi Kong (Choi) who would attend the massage parlour daily to check the business records which he took away together with the daily proceeds.  The 3^rd, 4^th and 7^th Respondent would occasionally hand over the takings and the business records to Choi directly.

(7) The level of sophistication of the operations of the massage parlour was reflected by the organizational structure and defined roles of the various persons involved, the attention to customers and the handling of any complaints in relation to the sexual services provided, the system in place in the event of any police raid, the provision of legal services for staff in the event of arrest and the extensive promotional and advertising campaign of the massage parlour and the services provided.  The brazen disregard for the law was evidenced on one occasion, when a closure order was executed at one of the locations of the massage parlour.  The 1^st Respondent tore off the notice of closure order and Choi gave instructions to continue business as usual.

(8) As submitted in oral submissions at pp. 21-22 in supplement to paragraphs 27 and 30 of the summary of facts, prostitutes who came to Hong Kong from China on a two-way permit would perform sexual services for a certain number of customers before they were paid by the management of the massage parlour.  The number of customers for whom they were required to perform sexual services before they got paid depended upon the length of their stay under the permit; the longer the stay, the greater number of customers they served before they got paid.  After this, the prostitute would get $100 for each customer served.

(9) On 7 May 2002, the massage parlour was raided by the police and a large number of new condoms (some of which had been used) and some lubricant jelly were found at the massage parlour.  A number of women were arrested at the massage parlour, of whom six were illegal immigrants and two were two-way permit holders.”

5. One or two of these facts require some amplification, which we draw from the summary of facts admitted upon the pleas of guilty:

(1) The reference to the provision of legal services: the undercover officer was told by the 1^st Respondent, as part of the extensive instructions as to his duties, that in the event of an arrest, a lawyer would be arranged to assist him to deal with all matters arising from that arrest and that he would be compensated to the tune of $20,000.  The 1^st Respondent was also seen instructing the 2^nd Respondent to record the names of each staff member to facilitate the system for legal advice in case of arrest.  The officer was told that in the event of a raid he was to admit his status as a keeper but to say nothing else, especially to say nothing about the identity of the boss.

(2) The prostitutes were kept in a dormitory provided as part of the operation.

(3) The testimony of one prostitute was that between 25 March 2002 and 7 May 2002 she had provided sexual services at this establishment to about 240 customers but she received nothing from the fees charged for the first 180 customers.  The effect of the evidence of the officer, in relation only to the events he himself witnessed, was that the establishment received a sum of HK$554,400 in the three week period he was there.

(4) The evidence spoke of the taking of nude photographs of the prostitutes by photographers called to the premises, so that their photographs could be used for advertising purposes.

(5) The summary of facts provide particular detail in relation to the conduct of each respondent.  So for example only, the 3^rd Respondent although described as a mere cashier was seen, as was the 4^th Respondent, to handle a customer complaint and thereafter to scold the prostitute about whom the complaint had been made.  The 5^th Respondent had ordered a prostitute to clean up a mess left after she had provided services to a customer.

6. The respondents were at the time of these offences aged between 27 and 42 years.  All with the exception of the 4^th Respondent had previous convictions.  The 5^th Respondent's convictions included a conviction in 2000 for managing a vice establishment, and the 2^nd Respondent had a similar conviction but committed after the present offences.

The judge's approach

7. In sentencing these respondents the judge acknowledged that this was a large-scale operation 'intended' she said 'to be reasonably sophisticated'.  The prostitutes who were employed there were brought from the Mainland and although there was no suggestion that the respondents had a hand in doing so, they knew they were Mainland women illegally in Hong Kong.  The judge said that 'these were willing women aged between 16 and 25'.  The judge noted too that cases within the categories of these offences – managing vice establishments and living on the earnings of prostitution – carried no tariff; that everything depended on the facts of the case; and she cited a passage from R v Kwan Wah-sang Mag App No 1324 of 1988 in which Yang J, as he then was, had said that the range for this type of offence was very wide indeed and, in so far as custodial sentences were concerned, they ran between three to eighteen months, three to six months being the most common. 

8. She noted as well that in 1998 the legislature had increased the maximum penalty for the offence of managing a vice establishment from 7 years to 10 years' imprisonment.

9. Against that background, the judge said that it was relevant that the bail of the respondents had been suspended in May 2002 after their arrest so that they had been in custody before sentence for seven and a half weeks.  She then said that what influenced her to suspend the sentences was the fact that these respondents had either obtained employment by the time their bail was suspended or had a good prospect of employment.  'In these hard economic times,' she said 'the fact that they have shown willing to go out and find any kind of job, worked hard and not be dependent on the Social Welfare Services of Hong Kong is a big plus in their favour'. 

10. She passed the following sentences:

(1) 1^st Respondent, a man with several serious previous convictions, though none of this kind; the person engaged as supervisor in these premises; the person who had ripped the closure order down; she adopted a starting point of twelve months' imprisonment reduced to eight months on account of his plea of guilty on each charge, to run concurrently, and noting that he was 'setting up as second hand car salesman' she suspended the sentence for 18 months.

(2) For the remainder she adopted a starting point of nine months' imprisonment discounted to six because of the pleas and then as follows as to the individual results.

(3) 2^nd Respondent, aged 47 years, with a conviction for robbery and a conviction for managing a vice establishment, a man who took an active role in the day to day affairs of this vice business; she noted that he was to look for a job in the TV and movie industry and she suspended the resulting 6 months' imprisonment for 18 months.

(4) 3^rd Respondent, aged 33 years with a minor unrelated offence: she noted that he had a job, meaning he was capable of earning up to $500 per day and his sentence of 6 months she suspended for 1 year.

(5) 4^th Respondent was aged 38 years at the time and had no previous convictions.  There was no suggestion of a job to pray in aid but she suspended his 6 months' sentence for one year.

(6) 5^th Respondent was aged 25 years and he had been sentenced to prison in the year 2000 for two months for managing a vice establishment.  But she said 'as you have no other previous convictions I am prepared also to suspend your sentence' and she suspended his 6-month sentence for one year.

(7) 6^th Respondent was aged 24 years with an appalling criminal record for one of his age, though none in the realm of vice establishment management.  He had been a drug addict and no longer was, it was said and, since he had a job, she suspended his six-month sentence for a term of one year.

(8) 7^th Respondent was aged 37 years and he too had a bad criminal record, though not for offences similar to those now charged.  No rationale was provided for suspending the sentence in his case: the judge merely suspended his six-month sentence for 18 months.

Analysis

11. We are satisfied that the judge has erred in several material respects, which form the basis of this application.

12. On the facts of this case, the starting point adopted in the case of each respondent was far too low, falling quite outside the range which a judge properly applying his or her mind to the particular facts could reasonably reach.

13. The judge was right to say that the cases did not set a tariff.  As Cross and Cheung 'Sentencing in Hong Kong' 4^th edition, correctly remark at page 571, there is no customary sentence for this type of offence and 'everything depends on the particular facts of the case: whether the accused is the keeper, the manager or the assistant; the scale of the operation; the age of the prostitutes.  Managers or keepers regularly receive terms of imprisonment; those who assist, less regularly.  The maximum penalties for keeping a vice establishment under section 139 of the Crimes Ordinance, Cap 200, were increased from 2 years to 3 years on summary conviction and from 7 years to 10 years on conviction on indictment on 22 May 1998 (the maximum fine of $20,000 was repealed).  Cases decided before that day should be considered in the light of those increases.'

14. However having acknowledged, at para. 12 of her Reasons for Sentence, that 'everything must depend on the facts of each case', the judge then seemed entirely to ignore that principle in that the sentence passed self-evidently paid no regard, in its effect, to the facts of this case.  The judge acknowledged that this was a sophisticated operation, but gave no effect to that fact in the sentences passed.  She noted that the maximum sentence for these offences had been increased by the legislature in 1998 but relied on ranges suggested by cases decided before that date and gave no effect to the legislature's intention.

15. This was no ordinary or simple vice establishment.  This was a large operation involving a significant number of prostitutes and a stream of customers; the use of several premises; four different floors, 22 rooms; and it was also a sophisticated operation involving the generation of substantial sums of money within a matter of weeks; an operation that ran promotional campaigns requiring the visits of photographers to take nude photographs of the women for the purpose of advertisement; and those who were actively involved in its functioning must self-evidently have been aware of the scale of the operation in which they were involved.  It is a matter of some surprise to us that no application was made for enhancement of sentence under the Serious and Organized Crimes Ordinance, as was the case when more major players still were tried in the High Court.  Nonetheless, sophistication and organization, and schemes to keep the law at bay could hardly have been matters about which these participants were unaware. 

16. If cases even before 1998 took a range of sentences from 3 months to 18 months' imprisonment, one has to wonder by what token this judge could possibly have thought that the sentences she imposed were appropriate upon the facts of this case.  Nor, with respect, could she have paid attention to the message that sentences of this kind would impart to those who would contemplate running prostitution businesses of this size, or being involved in them in an employee capacity: the resulting message could only be, if such sentences were to stand, that it was well worth the candle commencing a lucrative business of prostitution by engaging persons to operate and manage such places with the promise of lawyers and compensation to those minded to keep their mouths shut; for the prospective employees could simply be told that all that was likely to happen, especially if they obtained a job before the day of sentence, was a suspended sentence of imprisonment, with, in addition, an amount of compensation not to be sneezed at, and all legal expenses covered.  And if these were the sentences for large-scale operations, how much less then would the sentences be for the standard or smaller business of this kind?

17. Some of the women engaged in this conveyer belt of prostitution were aged as young as 16 years and to say, as did the judge, that they were willing is correct as far as it goes but, especially with the young and those in Hong Kong unlawfully or working here unlawfully, that is to ignore the exploitation and dangers to which a system such as this one subjects them.  A reading of the full facts gives some flavour too of the demands made of them; of the monetary exploitation which required them to perform sexual services for many customers before they earned any money and even then only a fraction of what was paid by the customer.  Each of these respondents, more so the first than the others of course, exercised an active role in controlling the daily activities of the women and in running this establishment.  The operation continued after a closure order on one of the premises and, albeit at the direction of the boss, the first respondent tore down a closure order and carried on regardless.  That, in his case, is an aggravating feature.  Quite what economic considerations have to do in such circumstances as a mitigating feature, as against the requirement for deterrence that involvement in prostitution on this scale requires, it is impossible to see.  As we have already remarked, if sentences of this kind are imposed for an operation on this scale, even on those employed as keepers and not as supervisors, it is difficult to understand what possible deterrence there can be in carrying on operations on this or on a lesser scale.  The sophistication of the operation went so far as to detailed arrangements for lawyers and for substantial compensation in case of arrests.  These women were all of them illegal immigrants or two-way permit holders who ought not to have been working.  Counsel for the respondents in the court below conceded that the respondents knew that, but the concession is ambiguous and was not a fact asserted in the summary of facts, though we dare say that it would have been surprising had they not known the status, in general terms at least, of these women.

18. None of these men could possibly be painted as naïve; and the fact that they or some of them had for a week or two obtained employment of some kind before trial was, given the nature of the offences and the backgrounds of most of them, hardly a matter which warranted the suspension of sentences: it certainly did not constitute anything exceptional, the importance of which factor as a sentencing principle in the context of suspended sentences the judge did not seem to appreciate.  In suspending the sentences, the judge took into account that the men had already been in prison for seven or so weeks but with no recognition of the fact that those weeks are counted as part of time served pursuant to any sentence imposed.  There was no good reason whatsoever for suspending the sentences and to do so was fundamentally wrong in principle.  Indeed we notice that the notion of a suspended sentence was a notion of the judge's own making, counsel for the respondents at trial himself expressly acknowledging, before this windfall was presented to him as a possibility, that effective sentences were inevitable. 

19. We are satisfied that in so far as the sentences were suspended the judge erred in principle and in so far as the terms themselves are concerned, the sentences were manifestly inadequate.

20. We are aware of facts in relation to the main players not before the judge and of which the sentencing judge was not aware, for they relate to events after sentence of these respondents.  The boss to whom the admitted facts referred has been tried in the High Court and he was sentenced on a plea of guilty to a large number of offences to a term of five years' imprisonment, which included a substantial enhancement factor because of the application of provisions of the Organized and Serious Crimes Ordinance. 

The appropriate sentences

21. We consider that an appropriate starting point in the case of the 1^st Respondent, given his role, was one of 3½ years' imprisonment; and that after the appropriate discount for his plea of guilty the sentence ought to have been one of 2 years and four months' imprisonment.  In the case of the other respondents we take the view that the appropriate starting point was a term of 2 years' imprisonment with a resulting sentence of 16 months after plea.  All these sentences should have been immediately effective.  Some distinction is urged on behalf of D4 who is the only of the respondents without any previous convictions.  However, as we commented in the course of submissions, the established course is now to view the presence of good character as part and parcel of the one-third discount given upon a plea. 

The question of discount

22. The question arises whether despite the fundamental errors of the judge below, this court should interfere with the sentences that were imposed and, if so, whether there should be a discount from the sentences which would have been appropriate to reflect the fact and circumstances of the review.

23. The argument has been put that since the judge below has imposed suspended sentences and many of the applicants have found themselves employment and have to one degree or another, it is suggested, rehabilitated themselves, now to impose effective custodial terms would be inappropriate and cruel.  We have carefully considered this point, but are not persuaded that it permits us properly to refuse to alter the sentence.  The fact that these respondents are to be incarcerated after being placed at liberty, as it were, is a matter that more appropriately in this case goes to the question of discount from the proper sentence.  The respondents must themselves have been astonished at the outcome of the District Court hearing, where their own counsel recognized on their behalf the inevitably of a prison sentence, and they were aware very quickly of this review; and any proper advice would have made them well aware of the likely outcome of this review.  We recognize however that in taking the course she took, the judge below has not done them a service.  The applicants have in the meantime enjoyed a liberty to which they were never properly entitled.

24. Moreover, there has been a degree of delay, which warrants consideration.  The delay between the date of review application and the day of the hearing of this review has in large part been due to the size of this case and the question of finding a date convenient to all counsel.  Nonetheless a period of over a year has passed since the lodging of the application.

25. We think that to reflect these factors this is a case in which there should be some reduction from the sentences which the sentencing judge ought to have passed.

Result

26. In the result, the application for a review succeeds.  We quash the sentences passed by the sentencing judge and substitute in the case of the first respondent a sentence of 24 months' imprisonment on each charge, the sentences to run concurrently making a total in his case of 24 months' imprisonment; and in the case of each of the other respondents a sentence of 13 months' imprisonment on each charge, to run concurrently, making a total in each case of 13 months' imprisonment.