HKSAR v. LAM MEI KIU

CACC 144/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 144 OF 2008

(ON APPEAL FROM DCCC NO. 686 OF 2007)

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REASONS FOR JUDGMENT

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Hon Tang VP:

1.  The applicant was originally charged with 19 offences.  The 1^st and 2^nd charges were of fraud contrary to section 16A of the Theft Ordinance, Cap. 210.  The 3^rd to 19^th charges were for using a copy of false instrument(s), contrary to section 74 of the Crimes Ordnance, Cap. 200.  On the 5^th day of the trial and at the end of the prosecution’s case, the applicant pleaded guilty to the 3^rd to 18^th charges.  Earlier, on the 4^th day of the trial, the prosecution offered no evidence in respect of the 19^th charge.  The trial then continued in respect of the 1^st and 2^nd charges.  She was acquitted of the 1^st and 2^nd charges.

2.  On 7 April 2008, the Deputy District Judge N. Wong sentenced the applicant to 2½ years’ imprisonment.  The learned judge was of the view that a starting point of 2 years would have been appropriate for a single offence, but with a total of 16 charges, he adopted a global starting point of 3 years.  The sentence of 2½ years was arrived at because the learned judge gave her a 4 months’ discount which was a little over 10% for her plea, and an extra 2 months’ discount for her clear record and generally favourable background.

3.  The applicant and her husband were the directors and shareholders of Harbourfield Property Management Limited (“Harbourfield”)  She was the person in charge of the daily operations of Harbourfield.  Harbourfield provided management service to a number of properties in Hong Kong, including Robinson Mansion.  On 18 April 1997, a savings account number 014-703-1001-3000 was opened with the Bank of China (Hong Kong) Limited (“BOC”) in the name of Harbourfield.  This account was opened for the purpose of holding funds for the maintenance and repair of Robinson Mansion and was designated as a special fund account.  That was referred to by the learned judge as the ‘3000 account’.

4.  On 4 July 2000, another account 014-703-1004-1638 (“the 1638 account”) was opened with the BOC.  This account was to receive the management fees from the owners, and to pay out operational expenses incurred in the daily management of Robinson Mansion.

5.  In respect of both accounts, the applicant and her husband were the authorised signatories.  It was stated in the Summary of Facts that at the end of each month, the accounts staff of Harbourfield had to prepare a monthly income and expenditure account which was enclosed with a bundle of documents for the incorporated owners of Robinson Mansion.  Included was a copy of the purported bank passbook extracts of the 3000 account and in some cases, both the 3000 account and the 1638 account.  However, the copies supplied were false in that they had been altered by the applicant who had deleted references to some withdrawals and repayments.  According to para. 12 of the Summary of Facts, the effect of the deletion was to conceal the fact that the true balances were much lower than those in the false copies.  That was to hide the fact that the applicant had been using the monies of the incorporated owners as a free float for Harbourfield.

6.  Mr Stirling, appearing for the applicant, submitted that it was made clear to the learned judge that the applicant’s decision to change her plea after the close of the prosecution’s case was because under section 70(1)(f) of the Crimes Ordinance, Cap. 200, prejudice for the purpose of section 74 included:

“(f)    the result of his having accepted a false instrument as genuine, or a copy of a false instrument as a copy of a genuine one, in connection with his performance of any duty.”

7.  Under section 74 a person who uses a copy of an instrument which is, or which he knows or believes to be, a false instrument, with the intention of inducing somebody to accept it as a copy of a genuine instrument, and by reason of so accepting it to do or not to do some act to his own or any other person’s prejudice commits an offence.  Under section 70, such prejudice includes e.g. under (a) permanent or temporary loss of property.  The prejudice resulting from the use of the false instrument is highly relevant to determining the appropriate sentence.

8.  Mr Stirling referred us to the transcript where, shortly before the learned judge adjourned for sentence he asked Mr Mackay, then appearing for the prosecution, whether the prosecution accepted the prejudice was under section 70(1)(f)?  This is Mr Mackay’s reply:

“Yes, yes, that’s clear, clearly apparent on the facts. In relation to -- the defendant has raised the question of the trust account. We don’t say it was a trust account and, again, without going into the niceties of the Civil Law, given the structure of the contract and the fact that she was given a general management licence over the funds, it is foreseeable that it would be proper, not improper, in her mind, for moneys to be transferred into the Harbourfield account to give flexibility to management, as a matter of good management. That might have been the case, whatever the side effects may have been as to interest and overdraft and so on and might even be an implied -- were there to be a similar dispute, it might well be an implied term that, without restriction, there was a general licence to use moneys in this way as long as it was later accounted for. I think we accept that as a real possibility.”

9.  Mr Stirling also told us that at trial he had available accounting evidence to show that there was no real risk of loss to the incorporated owners.  Presumably as a result of Mr Mackay’s concession, the evidence was not produced.

10.  Mr Ned Lai for the respondent informed us that Harbourfield had been involved with the management of Robinson Mansion since 1994 but that the 3000 account was not opened until April 1997 and the 1638 account in 2000.  It appears therefore that between 1994 and 1997 Harbourfield enjoyed the benefit of the free float.  That may explain Mr Mackay’s concession.

11.  Anyway, it is common ground that there was no actual loss to the incorporated owners in that all the monies temporarily borrowed by the defendant had been repaid to the incorporated owners.

12.  Mr Stirling also submitted that the accounts were not trust accounts.  He submitted the mandate for operating the accounts were given to the applicant and her husband without qualification.  But that cannot be right.  This is a classic trust situation.  Harbourfield was managing the accounts as agents for the incorporated owners.  Any use of the money for any other purpose without the consent of the incorporated owners would be a breach of trust.  More importantly, as Mr Stirling has rightly accepted, the false instruments were used to avoid queries being raised about the use of the funds of the incorporated owners.  Nor does it matter that Mr Mackay seemed to have accepted that the accounts were not trust accounts.  It is clear that Harbourfield was an accounting party and in rendering such accounts Harbourfield (and hence the applicant) was in the position of a fiduciary.

13.  Mr Stirling also submitted that the learned judge was wrong in not giving sufficient regard to the fact that the incorporated owners suffered no actual loss. 

14.  Mr Ned Lai, for the respondent, does not dispute that for these kind of offences, other things being equal, an offence which did not result in any consequential actual loss to the victim should be treated more leniently than where there was actual loss.

15.  Mr Lai has referred us to HKSAR v Leung Shuk-man [2002] 3 HKC 424 where Stuart-Moore Ag CJHC giving the judgment of the court, described full restitution as a powerful factor in mitigation.  In that case a discount of 50% was given on a plea.  That was because if a specific discount were not given the defendant would have no incentive to compensate the victim.  The learned VP went on to say that a sensible use of the sentencer’s discretion will normally enable the offender to receive an appropriate discount.

16.  Here we are not concerned with restitution as such.  The applicant was not charged with theft.  It was not the prosecution’s case that the applicant ever intended to permanently deprive the incorporated owners of their money.  But, the fact that there was no actual loss is highly relevant to sentence.  It is common for an offence under section 74 to be committed as part of a scheme to defraud resulting in financial loss to the victim.

17.  The applicant pleaded guilty to 16 charges, but Mr Lai accepted that the amount involved at any one time was less than $250,000. 

18.  In HKSAR v Cheung Mee-kiu [2006] 4 HKLRD 776 the court set the following guidelines for theft involving a breach of trust:

“(a)    over $15 million — 10 years or more;

(b)     $3 million to $15 million — 5 to 9 years;

(c)     $1 million to $ 3 million —  3 to 4 years;

(d)     $250,000 to $1 million — 2 to 3 years;

(e)     less than $250,000 — less than 2 years.”

19.  We are not concerned with theft but with the use of false instruments.  Often in such cases some false documents would be involved.  So in the present case, if the applicant had been charged with say one count of theft of less than $250,000 and one count of the use of false instrument, the actual sentence was likely to be less than 2 years.  That would be reduced if there had been full restitution.

20.  Here I would proceed on the basis that the money was never really at risk, and in any event at any one time less than $250,000 was involved.  In such circumstances I believe a starting point of 18 months would be appropriate for each offence and globally, a starting point of 24 months.  For her plea (though a belated one) and her general good record and generally favourable background, like the learned judge I would give her a further discount of 6 months.  The result is that her sentence will be reduced to 18 months.  I do not agree with Mr Stirling that this is a suitable case for a suspended sentence.  For the above reasons I granted leave to appeal and allowed the appeal by reducing the sentence to one of 18 months.

Hon Burrell J:

21.  I agree.