HKSAR v. CHAN GODFREY

DC cC 286/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 286 OF 2012

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REASONS FOR SENTENCE

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1.  The defendant has pleaded guilty before me and was convicted of a total of 22 charges of Theft, contrary to s 9 of the Theft Ordinance, Cap210.

2.  This is a breach of trust case and the facts are quite straight-forward. The defendant was employed as an accountant in Paul Y Engineering Group Limited (“the Group”) which is a Hong Kong Listed company and it is the parent company of numerous “Paul Y” companies, including Paul Y Construction Company Ltd. In 2001, Paul Y Construction Company Limited commenced a joint project with Penta-Ocean Construction Company Ltd on Lamma Island (“the Lamma Project”). A joint venture company, Paul Y Penta-Ocean Joint Venture (“the Company”) was set up for the purposes of the Lamma Project.

3.  The Company held various accounts with Mizuho Corporate Bank, Ltd in relation to the Lamma Project, including the current account numbered H10-768-102395 (“the Company account”) The defendant was responsible for the financial aspect of the Lamma Project and the handling of the Company account, including compiling monthly financial reports and having custody of the cheque books in respect of the Company account.

4.  Over a period of almost six years (between 13 April 2004 and 28 June 2010) the defendant misappropriated a total sum of $4,883,668 by falsifying the authorized signatures in 22 cheques of the Company account. All the cheques were drawn against the Company account in favour of the defendant. All the cheques were deposited into the defendant’s two personal saving accounts held with the Hong Kong Bank. (“HSBC”). Details of the date and amount of each cheque form the basis of each charge and are more particularized in the particulars of offence.

5.  The defendant was arrested in July 2010 after he confessed to the financial director of the Group that he had embezzled monies from the Lamma Project by forging signatures in the cheques. The defendant was summarily dismissed by the Group and was accompanied by the personnel manager of the Group to surrender himself to the Kwun Tong Police Station.

6.  Under caution, the defendant admitted that he had stolen from the Company account and therefore he surrendered himself and promised that he would never do it again. Later, he withdrew a total of $714,124.10 from his two personal saving accounts and handed the same to the police as exhibits. In the subsequent video-recorded interviews, the defendant admitted forging the signatures of the 22 cheques in question and deposited them into his personal HSBC accounts. The money was spent on gambling and no one authorized him to sign the cheques. Regarding the sum of $120,000 he stole on 4 January 2010, he said he later repaid the money the Company’s bank account by way of a cashier order which he purchased with the money in his personal HSBC account. Additionally, the defendant claimed he surrendered himself after he was queried by the Company about the problems in its accounts.

Defendant’s Background and Mitigation

7.  The Defendant is now 42 years old and he has a clear record. He received secondary education up to Form five level. He then started working as an accounting clerk in 1989 and he joined the Group in 1999. He is still single and living with his elder brother. After he was arrested, he was dismissed by the Group in 2010. Facing with the possibility of immediate imprisonment, I was told he has not totally given up on himself. He took part in various community services as a volunteer worker; he attended counseling sessions to kick his gambling habits and he still had worked as a construction worker for about six months.

8.  I was further told in mitigation that the defendant used to be very closed to his father but when his father passed away due to cancer in 2001, the tragic loss of the defendant has caused him much emotional stress and that was why he finally resorted to gambling to release the stress. The defendant first indulged in horse-racing and soccer gambling but later even turned to gamble in the casinos in Macau resulting in heavy losses and hence huge credit card debts and personal loans from financial institutions. The defendant had no alternative but turned to stealing from the Company account to solve his own financial problems.

9.  Miss Cecilia To, counsel for the defendant, also submitted to the court two mitigation letters written by the two elder sisters of the defendant. I am not going to refer to the content of the letters. Both sisters praised the defendant and attributed to his downfall due to the habit of gambling. They all said the defendant is now very remorseful and hope the court can be as lenient as possible.

10.  Miss To urged the court to take into account the defendant’s plea of guilty and the partial restitution made and the totality principle when I come to sentence the defendant.

Sentencing considerations

11.  As said, this is a typical breach of trust case and in sentencing, the principles laid down in R v Clark (1998) 2 Cr App Rep 137 remain applicable in Hong Kong. However in order to avoid the unsatisfactory result of the bands changing with fluctuating exchange rates, in HKSAR v Cheung Mee Kiu [2006] 4 HKLRD 776, the Court of Appeal converted the Clark bands into Hong Kong dollar bands to be adopted in future cases of a similar nature.

12.  The guidelines were later revised in HKSAR v Ng Kwok Wing [2008] 4 HKLRD 1017 as follows: (a) involving $15 million or more: 10 years or above; (b) involving $3 million to $15 million: 5 to 10 years; (c) involving $1 million to $3 million: 3 to 5 years; (d) involving $250,000 to $1 million: 2 to 3 years; and (e) involving $250,000 or less: below 2 years.

13.  The present case was a relatively serious one, with two different companies of a Joint Venture suffering a total loss close to $5,000,000 over a long period of almost six years. The offences were clearly premeditated. Had the problems of the Company account not been discovered, the defendant would not surrender himself and would certainly inflict further harm to the companies.

14.  Whilst the sums involved were important, they were not the sole consideration. Other matters to be taken into account were the quality and degree of trust reposed in the offender; the period of the fraud or theft; the use to which the money had been put; and the offender's own history. Here, the defendant was responsible for the handling of the Company account of the Lamma Project and was entrusted with the custody of the cheque book of the Company account and thus a considerable degree of trust was reposed in him; the offences were committed over an extended period to fund his own gambling habit; and apart from the sums handed over by the defendant to the police after he was arrested together with the $120,000 cashier order which he had already repaid to the Company account, he had spent all the rest of the amount stolen which is still close to $4,000,000 and there is simply no prospect of restitution. In the circumstances, a significant term of imprisonment was warranted.

15.  There are before me a total of 22 charges of Theft. In HKSAR v Tai Kai Cheung [2011] 3 HKLRD H3, there were a total of 16 charges of fraud. The Court of Appeal criticized the Judge below of not taking an appropriate starting point on each individual charge but, rather, sentenced globally. What the Judge below did was she had regard to the aggregate amount of the loss to the employer occasioned by the 16 fraud charges to determine the starting point in respect of each of the individual offences. She then reduced this by one third and imposed a sentence in respect of each of the fraud charges and ordered that they be served concurrently with one another. It was held that this was an error in principle and might be important where an accused appealed against conviction and was successful on some, but not all, of the offences for which he had been sentenced on a global basis. It was further held that the requisite course to be adopted in passing sentences where there are a number of offences on the charge sheet or indictment is initially to determine the appropriate sentence for each offence taking into consideration all the circumstances of the offence, including its background, and of the offender, and thereafter to apply the principle of totality so that the end result is the imposition of a sentence which properly reflects the entire criminality, including the effect of any plea of guilty, the individual circumstances of the offender and the fact that a number of individual offences were involved.

16.  In Tai Kai Cheung (supra.), the Court of appeal said it was appropriate for the judge to have regard to Cheung Mee Kiu at the stage of determining totality in order to obtain broad guidance as to an appropriate overall sentence. (see para 12) Here, applying the revised guidelines, as the present case involves a total amount of about $5,000,000, a starting point of 5½ years is appropriate which will normally be reduced by one third to reflect the plea. In my judgment, there should be a further discount of 6 months to take into account of the partial restitutions made by the defendant thus far (approx 17% of the total amount stolen). The overall sentence should therefore be 38 months’ imprisonment which is already about 40% discount on the totality as decided in the cases of HKSAR v. Leung Shuk Man CACC 230/2001and HKSAR v. Lam Shuk Ping CACC 57/2003 for partial restitution.

Conclusion

17.  In order to arrive at the totality indicated and taking into account of the revised guidelines set for the different bands of amount, I would divide the charges into three groups. I shall use a starting point of 33 months for those charges involving more than $300,000 namely, Charges 7, 12, 16, 17, 20, 21 and 22(Group A); 24 months for those charges involving around $250,000, namely Charges 1, 10, 14 and 15 (Group B) and 12 months for the balance of the charges involving the lesser amounts, namely 2-6, 8-9, 11, 13, 18-19 (Group C). After the discount on plea, the resulting sentences for these three groups of charges would become 22 months, 16 months and 8 months respectively. Applying the principle of totality, I order the sentence on each charge within the same group to run concurrently but the resulting sentences on Group A and Group B to run wholly consecutive to each other whilst the resulting sentences on Group C to run concurrently to all the charges of both Group A and B.

18.  The total sentence of these 22 charges is therefore 38 months’ imprisonment.