HKSAR v. CHENG MING LIM

DCCC 1056/2024

[2025] HKDC 1116

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 1056 OF 2024

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REASONS FOR SENTENCE

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Introduction

1.  The Defendantpleaded guilty to one charge of fraud, contrary to section 16A of the Theft Ordinance, Cap 210.  I found him guilty as charged after he admitted the Summary of Facts.

The Facts

2.  Facts admitted by the Defendant disclosed that Andreessen Food Service Company Limited (“AFS”), a food supplier, was incorporated on 11 February 2016 with the Defendant’s wife as the director and shareholder and the Defendant’s mother as the secretary.  They remained in their positions until 30 March 2022.

3.  H.R. Woodward Food Service Co., Limited (“HRW”) was a frozen meat supplier.  On 27 October 2020, the Defendant joined HRW as a Senior Sales Executive.  He signed an employment contract and an acknowledgement of receipt of the staff handbook.  He was responsible for sourcing customers and processing purchase orders received from HRW customers.

4.  The employment contract stated that during the Defendant’s employment with HRW, and for a period of three months thereafter, the Defendant was not allowed to, without the prior written consent of HRW, be employed by, retained by (as a consultant or contractor), own, manage, operate, control or participate in the ownership, management, operations or control of any food trading, food wholesale, food processing, food services business which was in competition with HRW’s business.

5.  The staff handbook of HRW stated that all staff members were not allowed to operate or be employed by a company which had the same business nature as HRW.  The staff members were required to report to the management of HRW if they found themselves in violation of the regulations of the staff handbook.

6.  In about March or April 2021, the Defendant introduced AFS to HRW as a customer.  Between July and December 2021, AFS placed various purchase orders with HRW involving a total sum of HK$5,230,249.14.  As of December 2021, AFS had failed to settle the payments for the orders amounting to a total of HK$5,124,728.34.  HRW eventually agreed to accept the return of HRW products from AFS for settling part of the payments owed.  After the return of products, the outstanding total amount owed by AFS to HRW was HK$2,719,976.59.

7.  On 22 March 2023, the Defendant was arrested.  Under caution, the Defendant admitted that he was all along responsible for the operational matters of AFS, including the sourcing of customers and handling of procurement matters.  In October 2020, he joined HRW.  He introduced AFS to HRW.  After introducing AFS to be a customer of HRW, he was responsible for dealing with AFS on HRW’s behalf.

8.  The Defendant had never declared to HRW his involvement in AFS.  If HRW knew that the Defendant had an interest in AFS, HRW would not have conducted business with AFS at the material times, since the Defendant had the discretion to set prices for purchase orders and payment terms.  He could benefit from his position in HRW and could cause financial loss to HRW.

Background and Criminal Record

9.  The Defendant is a 49-year-old bus captain who earns approximately HK$20,000 per month.  He is divorced with no children and currently resides with his elderly and dependent parents, both of whom are in poor health.  I was told in mitigation that the Defendant himself also suffers from severe diabetes, which has progressed to diabetic retinopathy, significantly compromising his health.

10.  The Defendant has a clear record.

Mitigation

11.  Mr Chan, Counsel for the Defendant, provided me with his written submission for mitigation.

12.  He has correctly recognized that the present offence was a fraud conviction involving breach of trust by the Defendant here.  Mr Chan drew my attention of the case of HKSAR v Leung Chun Hei [2023] 2 HKLRD 391.  It was submitted that the total purchase orders with HRW was HK$5,230,249.14.  However, after AFS returning certain products to HRW which was accepted by HRW as discharging part of the indebtedness, the outstanding total amount is HK$2,719,976.59.  While no amount is particularized in the present charge, it was submitted that taking the entirety course of dealing between HRW and AFS as a whole, Mr Chan urges the Court to adopt the outstanding amount of HK$2,719,976.59 as representing the amount for the purpose of determining the applicable band for sentencing.

13.  With respect to the level of trust and responsibility conferred upon the Defendant, Mr. Chan highlighted that the Defendant was employed as a senior sales executive with a monthly salary of less than HK$20,000. Notably, the defendant did not possess supervisory duties nor were any subordinates assigned to him. The fraudulent activities or thefts occurred over an estimated period of one year and three months.

14.  Regarding the use of the funds or property obtained through dishonest means, the entity that benefited was AFS, a company entirely owned by the Defendant’s former spouse. It was submitted that the Defendant held no shares in AFS nor was he employed by the company. Consequently, he did not receive any personal gain from the fraudulent activity.

15.  It was said that the Defendant has shown genuine remorse by pleading guilty to the charge.  Mr Chan also urged the court to consider that there was no international element involved in this case and the amounts involved which was not high in the context of fraud.

16.  I have received and considered a letter of mitigation written by Pastor Wong from Tai Po Baptist Church Tin Chak Chapel, Pastor Chung and Principal Cheng from Baptist Wing Lung Secondary School, wherein leniency is sought on behalf of the Defendant.  I am not going to refer to the contents of these letters.  Suffice to say that they all spoke to the Defendant’s positive nature.  He now serves diligently in church activities, attends Sunday worship, helps clean up afterward, and has improved his relationships with family and friends.  They believe the he has learned from his past mistakes and will continue to be a responsible citizen.

Sentencing Considerations

17.  I have taken into account everything urged in mitigation by Mr Chan on behalf of the Defendant.  Needless to say, fraud is a very serious offence, the maximum sentence for which is 14 years’ imprisonment.  There is no sentencing tariff for the offence of fraud because of the range of diverse circumstances that may arise in different cases.

18.  As said, the present offence was a fraud conviction involving breach of trust by the Defendant.  I have also considered the principles set out in R v John Barrick (1985) 81 Cr App R 78 at page 82, in relation to sentencing of cases involving a person in a position of trust, using that privileged and trusted position, to steal or defraud others.  The court should have regard to the following matters:

(i) The quality and degree of trust reposed in the offender including his rank;

(ii) The period over which the fraud or the thefts have been perpetrated;

(iii) The use to which the money or property dishonestly taken was put;

(iv) The effect upon the victim;

(v) The impact of the offences on the public and public confidence;

(vi) The effect upon fellow-employees or partners;

(vii) The effect on the offender himself;

(viii) His own history;

(ix) Those matters of mitigation special to himself, such as illness, being placed under great strain by excessive responsibility or the like; where, as happens, there has been a long delay, say over two years, between his being confronted with his dishonesty by his professional body or the police and the start of his trial; finally, any help given by him to the police.

19.  In Leung Chun Hei quoted by counsel for the Defendant, the appellant also pleaded guilty to one count of fraud. In that case, after discussion of the cases cited, including HKSAR v Cheung Mee Kiu [2006] 4 HKLRD 776, HKSAR v Ng Kwok Wing [2008] 4 HKLRD 1017, HKSAR v Lam Wing On [2019] HKCA 616, the Court of Appeal says at paragraph 15 of the judgment:

“In summary, the following could be discerned from the above cases:

(1) Irrespective of whether the charge was one of theft, fraud, or conspiracy to defraud, the Guidelines were invariably referred to when the defendant was shown to be in a position of trust.

(2) Where an amount has been particularised in the charge, that sum, instead of the actual loss, would form the basis, amongst other things, for the determination of the applicable band.

(3) The actual loss, if less than the particularised amount, might, depending on the circumstances, constitute a mitigating factor.

(4) The amount involved is only one of the factors to be taken into account when determining the sentence.”

20.  In coming to the appropriate starting point, I have regard to the sentencing bands for fraud as laid down by the Court of Appeal in Cheung Mee Kiu and Ng Kwok Wing.  These cases lay down sentencing guidelines in breach of trust theft cases.  The relevant guidelines are summarized in the headnote of Ng Kwok Wing as follows:

“(1) The starting points set out in HKSAR v Cheung Mee Kiu for the offence of theft involving breach of trust would be revised as follows: (a) involving HK$15 million or more: 10 years or above; (b) involving HK$3 million to HK$15 million: 5 to 10 years; (c) involving HK$1 million to HK$3 million: 3 to 5 years; (d) involving HK$250,000 to HK$1 million: 2 to 3 years; and (e) involving HK$250,000 or less: below 2 years (HKSAR v Cheung Mee Kiu [2006] 4 HKLRD 776 revised).”

21.  Turning to the facts of this case, the Defendant, as a Senior Sales Executive, was entrusted with significant responsibility, including the discretion to determine pricing for purchase orders and establish payment terms. This level of trust enabled him to commit the fraudulent act, constituting an abuse of his position.

22.  I disagree with Mr Chan’s submission that the Defendant received no benefit from the fraud, given that AFS was managed by his mother and wife and established in 2016 prior to the Defendant joining HRW in 2020.  The facts admitted by the Defendant disclosed that all HRW staff members received the Staff Handbook, which serves to remind them not to operate any business with the same nature as HRW, in order to prevent conflicts of interest and ensure HRW remains informed of any potential conflicts. I find the Defendant ought to have been fully aware of this fact. Although there is no evidence indicating the amount of profit gained personally by the Defendant, it appears that the Defendant misused his position of trust for personal or familial advantage.  

23.  The facts indicate that between July and December 2021, AFS placed multiple purchase orders with HRW totaling HK$5,230,249.14. HRW accepted the return of products from AFS as part of the payment settlement. If HRW had been aware of the Defendant’s relationship with AFS, it would not have agreed to enter into business transactions with AFS.

24.  I accept the Defence submission that the act of fraud was uncomplicated and direct, lacking any international dimension, and that there is no evidence indicating the use of forged documents in its commission.  That said, the fraud occurred over a span of 1 year and 3 months. After the products were returned to HRW, the remaining amount owed by AFS to HRW was approximately HK$2.7 million.  According to the sentencing guideline for breach of trust cases, it falls in the band of HK$1 million to HK$3 million, which attracts a starting point between 3 and 5 years, that is to say, between 36 months and 60 months.  The amount involved was approximately HK$3 million, which is near the upper limit of the applicable range. Ultimately, the amount involved is only one of several factors considered when sentencing an offender who holds a position of trust.

25.  Having fully considered the background of the present case, the mitigation put forward by Mr Chan, HRW’s acceptance of the return of some of the products from AFS to mitigate the loss, the contents of the mitigating letters of support, and also the fact that the Defendant has a clear record, I consider the appropriate starting point to be 54 months’ imprisonment.  The only mitigating factor I can see is the Defendant’s plea of guilty at the earliest available opportunity.  I will give him a full one-third discount for his plea.  After the customary one-third discount for the plea, he is sentenced to 36 months’ imprisonment.

26.  I am told that the Defendant has diabetes, which has advanced to diabetic retinopathy.  Generally, poor health is not considered a mitigating factor. I am sure the Defendant should receive adequate care while serving his sentence. I see no other reasons to further reduce the sentence.