HKSAR v. CHU KWOK SUN AND OTHERS

HCMA 1224/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 1224 OF 2004

(ON APPEAL FROM ESCC 1154/2004)

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J U D G M E N T

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1.  Each of the three Appellants was convicted, after trial, of a single charge of conspiracy to defraud. The First Appellant was alleged to have conspired with the Fourth Accused in court below, who was also convicted, but has not appealed.  The Second Appellant was alleged to have entered into a separate conspiracy with the Fourth Accused.  The Third Appellant was convicted of having conspired with another, named, person who was not charged.  In due course, each of the three Appellants was sentenced to serve a term of imprisonment.  Each now appeals the sentence: in addition the Second and Third Appellants gave notice of their intention to appeal their convictions.  Today, the Third Appellant abandoned his appeal against conviction.

The convictions

2.  The case of the prosecution against each of the Appellants was that each had claimed from his employer, PCCW, by way of reimbursement of travelling expenses, amounts to which they were not entitled.  In respect of the First and Second Appellants the allegation was that he had received a discount from the Fourth Accused with whom he had conspired which was not reflected on the receipt, issued by the Fourth Accused, which each Appellant subsequently tendered to his employer as proof of disbursement of the amount in respect of which he applied for reimbursement.  In each instance, the Appellant received a discount of some 20% which he did not disclose to his employer but which he retained. 

3.  The First Appellant was also alleged in addition and the Third Appellant was alleged to have submitted entirely false claims in that each had used a private vehicle but had claimed reimbursement as if the journeys had taken place by taxi:  this had been made possible by virtue of an arrangement with the respective taxi driver that he would drive the route, free of any passengers, and provide the machine-generated receipt to the respective Appellant who would then share the proceeds of the reimbursement with the respective taxi driver.

4.  This matter came to light as a result of internal investigations within PCCW.  It was then reported to the police.  The Appellants were arrested.  Each made full and detailed confessions to the police when interviewed in which each admitted the factual basis of the allegations.  None of the Appellants challenged the admissibility of the records of interview with the police.

5.  On the merits, the prosecution called a single witness being, the person who had conducted the initial inquiry and then relied upon the documentary evidence as well as the contents of the records of interview.  Each Accused elected to testify on his own behalf.  None called a witness.  The Magistrate noted that each Accused had a clear a criminal record and expressly reminded himself of the benefits which flow from that fact.

6.  The First Appellant testified that, in regard to the discount, he thought that the machine-generated receipt provided by the taxi driver reflected that discount: in regard to the claims where he had used a private vehicle, he said that these were inadvertent due to his not having carefully checked the various receipts.  He denied being dishonest.

7.  The Second Appellant testified that he had received no discount on the trips taken between 12 midnight and 6 a.m.: that he had paid the full fare, which is what he had claimed.  He had taken a discount only in respect of trips taken at other times when the amount which he received by way of reimbursement was, in each instance, less than the amount he had actually paid to the taxi driver.  He denied being dishonest.

8.  The Third Appellant testified that his understanding of the claim for reimbursement was that he was entitled to claim an allowance for a taxi fare even though he had not used a taxi but had driven to and from work:  he suggested that this procedure had the approval of his employer.  He denied being dishonest.

9.  The Magistrate had the opportunity of observing the prosecution witness as well as the Appellants when they testified.  He rejected, with incisive reasoning, the evidence of each of the Appellants.  He dealt directly with the issue of dishonesty by referring to the well-known decision in GHOSH.

10.  He accepted the evidence of the prosecution witness.  He placed full weight on the inculpatory portions of the respective records of interview.  In a clear and comprehensive statement of findings, which is a model of its kind, the Magistrate set out his findings of fact and conclusions of law.  He found, as he was bound to do in these circumstances, that the prosecution had discharged the onus upon it in each instance.  He convicted each Appellant.

Grounds of Appeal by Second Appellant

11.  There has been reference made on behalf of the Second Appellant to the proceedings and the evidence against the First and Third Appellants.  They were not jointly charged in a single conspiracy but, rather, three separate conspiracies.  Insofar as the Second Appellant’s case is concerned, those proceedings are irrelevant.  The Magistrate appreciated that to be so.

12.  The first ground of appeal contends that the Magistrate was wrong to have found that an agreement had been concluded between the Second Appellant and the Fourth Accused to defraud the Second Appellant’s employer.

13.  I recognize that there is no evidence that they sat down together and that the Second Appellant spelt out, in terms, that that was what was intended.  It is not necessary for that to occur for a conspiracy to defraud to have come into existence.  As the Magistrate rightly observed, it was simply unnecessary for the Fourth Accused to have known the identity of the person who or entity which was to be deceived provided he appreciated that the intention was, and he adopted that intention, to defraud another.

14.  As to whether the Fourth Accused would have apprehended the fact of a deception, and thus agreed to participate in it, the Magistrate was fully entitled to find, from the Second Appellant’s interview,  that the Second Appellant engaged the services of a person named CHEUNG on an ongoing basis to drive him from, as must have been apparent to CHEUNG, the Second Appellant’s home to, as must have been apparent to CHEUNG, the Second Appellant’s employment.  The name CHEUNG appears in the Second Appellant’s interview.

15.  He was entitled to find from the oral testimony in Court of either the Second Appellant or the Fourth Accused that CHEUNG was the Fourth Accused.  As the Magistrate recognised, what is said by an accused during an interview out of court is inadmissible against another accused:  however, when a co-accused testifies in court he becomes a witness for all purposes.

16.  The Magistrate was right to find that the Second Appellant obtained from the Fourth Accused a receipt for payment of fares incurred on each occasion.  It is simply out of touch with reality to suggest that the Fourth Accused would not have appreciated that those receipts were to form the basis of a claim of some nature.  The Magistrate, entirely understandably, rejected the Fourth Accused’s protestations that he had “no idea” what would be done with the receipts.  To do otherwise would fly in the face of commonsense.

17.  The Magistrate was plainly right in finding, on the evidence, that a conspiracy had come into existence between the Second Appellant and the Fourth Accused.

18.  The second ground suggests that the Magistrate failed to address the gravaman of the Second Appellant’s defence, namely that he had not claimed for amounts in excess of that he had paid to the Fourth Accused and had in fact in some instances claimed less than the full amount he had paid. 

19.  The Second Appellant testified that he had not received discount from the Fourth Accused when journeys were taken between midnight and 06h00:  that what he had claimed is what he had paid to the Fourth Accused.  The Magistrate was fully alive to the fact that that was the Second Appellant’s defence.  He rejected, as he was entitled to do, the evidence of the Second Appellant:  he found him to be a dishonest and unreliable witness.  The Second Appellant’s attempt in oral evidence to qualify his unequivocal admissions in his interview bear no scrutiny at all.  One only need look at one passage of his interview:

“A:	…When I took [the Fourth Accused’s] taxi for the first time, I discussed the issue of discount with him.  [The Fourth Accused] said he would give me a 20% discount.  That is to say I would be given a 20% discount on the taxi fare for each trip. [The Fourth Accused] would charge me 80% of the nominal taxi fare and I could have a 20% gain.
Q:	Did you always pay [the Fourth Accused] after each and every trip?
A:	No, we reached an agreement to settle payment on a weekly basis.  When I paid him the taxi fare, he would give me receipts…he would inform me the total amount after knocking 20% off it.  Then I paid him cash.
Q:	How long had this agreement lasted for?
A:	It has lasted for almost three years…when PCCW started to make enquiries…I stopped hiring [the Fourth Accused] ”
[emphasis supplied]

20.  In truth whether or not he had so claimed is not relevant to the conviction.  The offence with which the Second Appellant was charged was one of conspiracy to defraud.  Once the Magistrate found, as he was so entitled, that the agreement had been concluded between the Second Appellant and the Fourth Accused, the offence was complete whether or not either acted in pursuance of that agreement.

21.  The appeal of the Second Appellant is devoid of merit.  He was correctly convicted. 

The sentences

22.  Prior to sentencing the Appellants the Magistrate called for background reports.  It will be recalled that all three Appellants were previously of good character.

23.  The First Appellant is a married man of 42 years of age.  He has an infant child.  His wife is again pregnant, apparently with twins.  He told a probation officer that he had worked as an audio production officer in PCCW or its successors for over 20 years. 

24.  The Second Appellant is 30 years old and married.  He owns his residence.  He has been employed by PCCW since about 1992. 

25.  The Third Appellant is in similar circumstances.  He is 34 years of age and married.  He has an infant daughter.  He owns his residence. 

26.  The employment of each of the Appellants has been terminated.  There is nothing remarkable in the background or personal circumstances of any of them.

27.  The Magistrate took as starting points for the First and Third Appellants a period of 12 months imprisonment and took nine months imprisonment as the starting point in respect of the Second Appellant.  He then reduced their starting points by one month each as an allowance for previous good character.  There is no clear indication as to why he drew a distinction in favour of the Second Appellant.  It is not a matter about which I need speculate.

28.  For the sake of completeness, I note that the Fourth Accused, who was the taxi driver involved with the First and Second Appellant’s conspiracies, was sentenced to a period of 11 months imprisonment in respect of each offence but the sentences were ordered to be served concurrently with one another.

29.  I am not satisfied that it is possible to accurately quantify just how much money each Appellant made from his dishonest conduct.  Whatever the precise figure may be it certainly amounts, in each instance, to no more than a few thousand dollars. 

30.  The Magistrate took the view that this conduct amounted to a breach of trust.  He was correct to do so.  He was aware, of course, that that breach was not an especially aggravating feature because of the fact that the three Appellants were comparatively low-level employees.  It was an ongoing course of conduct and would not have been detected were it not for the vigilance of the first prosecution witness.  That said, it was a relatively unsophisticated scheme.

31.  It was urged upon him that he should consider either probation or community service orders.  He declined to follow either of those courses.  This was justified.  A significant factor to be taken into account in deciding to follow either course is an expression of remorse by the person about to be sentenced.  None of the Appellants displayed the slightest remorse throughout the trial.  It was only once the Magistrate had indicated that a custodial sentence was likely that there was any suggestion of contrition or offer of restitution.  The Magistrate was also urged to consider the suspension of any custodial sentence which he determined to impose.  He did so but rejected it as an option.

32.  In my judgment the Magistrate was right to consider that the appropriate penalty for each Appellant was an immediate custodial sentence.  Whilst courts are reluctant to impose immediate custodial sentences upon first offenders, there are instances where it is appropriate: this is one of those instances.

33.  I respectfully disagree, however, with the assessment of the length of the sentences imposed by the Magistrate.  Whilst I do not necessarily suggest that the Magistrate was wrong in drawing a distinction in favour of the Second Appellant, in the circumstances of this matter it seems to me to amount to an over-refinement.  In my judgment, the criminal culpability of the three Appellants in entering into and pursuing the conspiracies is deserving of no more than three months imprisonment.

Conclusion

34.  I confirm the conviction of the Second Appellant whose appeal against conviction is dismissed.

35.  Each Appellant’s appeal against the sentence imposed upon him is allowed.  I substitute therefore a period of three months imprisonment.

36.  I make no order for compensation, firstly, because of the fact that I am not satisfied that I am able to determine the precise amount which should be repaid and, secondly, as the First Appellant is insolvent he is unable to make payment.  It is open for civil proceedings to be taken, if that be thought appropriate.