HKSAR v. LAM HING WAN

CACC 387/2016

[2018] HKCA 456

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 387 OF 2016

(ON APPEAL FROM DCCC 378/2014)

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REASONS FOR JUDGMENT

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1.  On 17 January 2013 police raided the cockloft of Shop 2 at 2‑8A Yi Pei Square, Tsuen Wan. After searching the premises they arrested a total of 20 people including the applicant. 13 of the persons were observed to be playing mah-jong at electronic mah-jong tables. Subsequently the applicant was charged with operating a gambling establishment, contrary to section 5 of the Gambling Ordinance, Cap 148. He pleaded guilty to this offence and was fined $15,000 and sentenced to 3 months’ imprisonment with the sentence being ordered to be suspended for a period of 36 months.

2.  He was subsequently prosecuted for three offences of “dealing with property known or believed to represent proceeds of an indictable offence”, contrary to section 25(1) and (3) of the Organised and Serious Crimes Ordinance, Cap 455.  The first of the three charges alleged that he dealt with HK$27,000 cash, RMB 14,300 cash and the number of watches and pieces of jewelleries on the day of the police raid, ie 17 January 2013. 

3.  The second charge related to a period of about 3 years 4 months between 1 October 2009 and 17 January 2013 and involved dealings by the applicant with a total sum of $15,453,626.26 in an HSBC bank account.  The final charge related to the period of about 1 year 4 months between 3 September 2011 and 17 January 2013 and involved dealings in a total sum of $4,773,353.60 in respect of a different HSBC bank account. 

4.  The applicant pleaded not guilty to these charges and was tried in the District Court before Deputy District Judge Bina Chainrai (“the judge”).  On 15 November 2016 the judge acquitted the applicant of the first charge but convicted him of the second and third charges.  On 1 December 2016 the judge sentenced the applicant to a total period of 5 years and 11 months’ imprisonment. 

5.  The applicant subsequently applied for leave to appeal both his conviction and sentence but on 1 February 2018 he filed a Notice of Abandonment in respect of his application for leave to appeal against conviction. 

6.  At the hearing of the application for leave to appeal against sentence I allowed it but only for the purpose of arguing the third ground of appeal.  These are my reasons for doing so.

The judge’s Reasons for Verdict

7.  As the application for leave to appeal against conviction has been abandoned I shall focus on the findings of the judge as set out in her Reasons for Verdict.  It was the prosecution case that the properties in the three charges related to the applicant’s operation on an unlicensed gambling establishment that took the form of an illegal mah-jong parlour. 

8.  The applicant gave evidence and denied that the properties were derived from an illegal gambling business.  His exculpatory explanations for how the monies in the bank accounts were derived were rejected by the judge who said:

“ 70.    … I did not believe D1.  I rejected his testimony that he had a sub-contracting business from the 1990’s to 2013 and that he had winnings at gambling and made loans to friends that were repaid. … 

71.  I was satisfied beyond all reasonable doubt that D1 was operating an unlicensed gambling establishment at the cockloft at Shop No. 2, No. 2-8A, Yi Pei Square, Tsuen Wan and he took commissions from other people’s winnings on 17 January, 2013 when the police raided the premises.  I was also satisfied beyond all reasonable doubt that D1 had operated an unlicensed gambling establishment during the relevant periods set out in the particulars of Counts 2 and 3 and he took commissions from other people’s winnings.”

9.  In respect of the first charge it was the prosecution case that the items of jewelleries and watches were used as security by gamblers at the mah‑jong establishment to enable them to borrow money from the applicant.  The judge said that she was unable to draw this inference on the evidence adduced before her and so she acquitted the applicant of the first charge. 

10.  In respect of the second and third charges she noted that the applicant had himself admitted that he had been paid commissions from other people’s winnings at the gambling establishment and of this she said:

“ 73. … It must be an irresistable inference that in operating the gambling establishment, he had made profits and in the process some of the monies that was being moved or distributed or dealt with by D1 through his two HSBC bank accounts were the profits and therefore the proceeds of an indictable offence. …”

The mitigation

11.  Mr Wu, who appeared for the applicant at trial, referred to the applicant’s sentence in the magistracy in October 2013 for operating an illegal gambling establishment.  After explaining to the judge that he did not represent the applicant in his magistracy case, Mr Wu said:

“ … I have no first-hand information as to why despite his past conviction record he received, in my humble view, a rather lenient sentence by getting a suspended sentence. But from the material before me, I could only infer that because again the magistracy did not have the benefit of reading all the documents concerning his bank record, things like that, he was sentenced on the basis that the scale of the establishment was not particularly large perhaps and, secondly, not much money at stake was involved in that case in the Magistrate Court.”

12.  Mr Wu then went on to urge the judge not to consider the entire sum that went through the two bank accounts as being the proceeds of the applicant’s illegal gambling operation but he did not suggest what sum the judge should use or how she should calculate it.

13.  The applicant had a criminal record dating back to 1974 which included triad and triad related offences and possession of dangerous drug offences.  The applicant was also suffering from a number of medical conditions.  To learn more about the applicant the judge ordered a Probation Officer’s Background Report. It contained the following unfavourable portrayal of the applicant:

“ 3. The Accused could hardly remember his past criminal record. Criminal record summary showed that the Accused had 11 previous convictions relating to violence, against properties, triad activity and illicit drugs from 1974. He took a denial attitude towards the drug-related offences. He demonstrated little reflection towards his past law transgressions.

4. The Accused denied his offence in the present enquiry. He alleged D2 and D3 were his close friends. The Accused alleged to rent the material place from a friend at a monthly rental of $12,000 one year and three months ago. He planned to let his friends working in construction sites to play mahjong and he would receive service charges. D2 assisted in preparing food for the customers and received $500 a day from the Accused. D3 assisted the Accused to deposit money to bank on voluntary basis without receiving any salary. He claimed to be able to earn up to $2,000 per day in operating the mahjong gambling establishment. He denied involving in money laundering. Instead, he made up excuses of having won money from horse-racing, mahjong playing and gambling in Macau which still could hardly explain the large amount of money as stated in the brief facts. Hoping to take care of his two adult children, the Accused begged Your Honour to grant him a lighter sentence.

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6.  The Accused all along held a reserved and evasive attitude throughout the present enquiry.  He was an adult from the Mainland for over 40 years.  Yet, he commenced illegal acts soon after arriving in Hong Kong and continued his unlawful acts in the following decades.  Evidently, the Accused did not learn any hard lessons from his previous convictions and continued to commit the present offence.  Worse still, the Accused denied his misdeeds and made up various excuses for his present offence.  He was absent from any insightful reflection on his frail law-abiding concept.”

The judge’s Reasons for Sentence

14.  After repeating her factual findings in respect of the applicant the judge turned to his criminal record which dated back to 1974.  He had 14 previous convictions in 11 court appearances, his most recent being his operation of the gambling establishment offence arising from the police raid on 17 January 2013.  She noted that he had no similar conviction, that is for money laundering offences, but he did have a previous conviction in 1986 for operating a gambling establishment and also one in 2006 for assisting in operating a gambling establishment. 

15.  The judge then turned to the applicant’s personal circumstances.  She noted that he was aged 62 years, was single but lived with a co-habitee and had a daughter and son. He had medical conditions for which he was receiving treatment.  Amongst these were heart disease and diabetes.

16.  The judge then directed herself on the relevant sentencing authorities and set out the sentencing principles which could be derived from those authorities. 

17.  In respect of the applicant she noted that he had been convicted after trial and had shown no remorse.  She concluded that the only appropriate sentence must be an immediate custodial sentence.  She reminded herself of the previous conviction and sentence of the applicant for the offence of operating a gambling establishment that arose from the police raid in this case.

18.  She also noted that “there was no international dimension or any sophistication and there is no evidence that the offences were committed by D1 on behalf of any organized criminal syndicate.  D1 was the sole signatory of these two HSBC bank accounts.” [1]

19.  The judge then addressed the question of what proportion of the monies that passed through the two HSBC bank accounts could be said to be the proceeds of the illegal gambling establishment.  On this question and on the question of the appropriate starting point she said:

“ 47. Mr. Wu submitted that the gambling operation was not a big one, and not all the proceeds in the two bank accounts would be the proceeds of an indictable offence. There is no way to calculate the proportion of the total proceeds which represent the proceeds derived from the unlicensed gambling establishment. Counsel cannot propose any basis, documentary or otherwise, for the estimation of proportion. There has to be a degree of speculation. I take 30% to be a reasonable discount, and sentence D1 on that basis for the funds in the 2 HSBC bank accounts i.e. $10,817,538.82 in respect of Count 2 and $3,341,347.52 in respect of Count 3.

48. I bear in mind that D1 was the person in control of the business of the unlicenced gambling establishment and the property that he dealt with through the 2 HSBC bank accounts were the proceeds of his own unlicenced gambling establishment business — I view that as an aggravating factor.

49.  Balancing all the above factors, I find that the appropriate sentence for D1 for Count 2 should be that of 5 years’ imprisonment and that for Count 3 should be 3 years’ imprisonment.”

20.  As there had been considerable delay in this case coming to trial whilst all the parties awaited the clarification of the law relating to money laundering by the Court of Final Appeal the judge reduced the sentences for the second and third charges by one month.  This made final sentences of 4 years 11 months’ imprisonment on the second charge and 2 years and 11 months’ imprisonment on the third charge.  She saw no further reason to reduce the sentences.  She then had regard to the totality of the two sentences and ordered that 1 year and 11 months for the sentences on the third charge should be served concurrently with the sentence of the second charge and that 1 year should be served consecutively.  This resulted in a total sentence for the applicant on both charges of 5 years and 11 months’ imprisonment. 

The applicant’s grounds of appeal

21.  In his Perfected Grounds of Appeal, Mr Wong Man Kit SC together with Mr Jon Wong, raised three grounds of appeal.  The first ground of appeal is that the judge erred in considering only the statutory maximum sentence of 14 years for the money laundering offence under section 25(3) of the Organised and Serious Crimes Ordinance, Cap 455 without taking into account the statutory maximum sentence for operating a gambling establishment under section 5 of the Gambling Ordinance, Cap 148, which is only 7 years’ imprisonment. 

22.  In his second ground of appeal Mr Wong complained that the total sentence of 5 years 11 months is manifestly excessive given that the total amount of money involved in this case is only about $14,000,000 and there is no international dimension, no sophistication in the commission of the offences, and no involvement of any organized criminal syndicate.  Furthermore, the judge erred in treating the applicant’s laundering of his own proceeds of crime as an aggravating factor for the purpose of calculating his sentence. 

23.  The third ground of appeal is simply that in all the circumstances of the case the sentence is manifestly excessive.

Discussion

24.  The first ground of appeal is based on the assumption, which I find not to be reasonably arguable, that in determining an appropriate starting point the judge did not bear in mind the maximum sentence for the offence of operating a gambling establishment.

25.  There is simply no factual basis for this assumption.  The predicate offence was constantly being referred to by the judge in her Reasons for Verdict and Reasons for Sentence and by the applicant’s counsel during the sentencing hearing.  Mr Wong recognized that this ground of appeal was not his strongest and did not press it with any real vigour.  I refused leave to appeal on this ground. 

26.  In respect of the second ground of appeal Mr Wong abandoned that part of it which asserted that the judge erred in treating as an aggravating factor the fact that the monies laundered by the applicant were the proceeds of his own criminal activity.

27.  In support of the second ground of appeal, Mr Wong asserted that the applicant did not employ any of the means to disguise the source of the monies that are typically employed by money launderers in order to distance themselves and their illicit money from the predicate offence.  But as Ms Vinci Lam, Senior Assistant Director of Public Prosecutions, and Mr William Siu, Senior Public Prosecutor, for the respondent, pointed out, this was not factually correct.  The applicant used Instant Deposit Machines or ATMs to make multiple deposits of small amounts of cash and for larger cash deposits he employed the services of D2 and D3.

28.  Mr Wong also submitted that because there was little done by the applicant to launder the proceeds of his illegal gambling establishment, the section 25(1) offence did not add to the culpability of the operating an illegal gambling establishment offence.  Because these offences do not add to the culpability of the predicate offence, so Mr Wong’s argument ran,the applicant should have been sentenced on the basis that he was operating an illegal gambling establishment for the period covered by the section 25(1) charges.  Had the judge adopted this approach then, given that the maximum sentence for the Gambling Ordinance offence is only 7 years, she would not have sentenced the applicant to 5 years 11 months’ imprisonment which is close to the 7 years maximum. 

29.  I accept that the extent to which an offender launders his proceeds of crime is relevant to his ultimate sentence but I do not regard as reasonably arguable that in respect of this applicant there was no or minimal laundering by him of the proceeds such that it could be said that the money laundering charges did not add to the culpability that arose from his operating an illegal gambling establishment.  I, therefore, do not think it is reasonably arguable that the applicant’s sentence should have been calculated by reference to the maximum sentence for the gambling offence.  For these reasons I refused leave to appeal to argue the second ground of appeal.

30.  The third ground of appeal is broadly drafted but is essentially based upon a submission that appellate authority reveals a pattern of sentencing for the section 25(1) offence which suggests the range for the applicant’s conduct is 4 – 4½ years’ imprisonment when the predicate offence is no more serious than illegal gambling and when the monies laundered do not exceed $14 million.

31.  The applicant’s conduct, it was submitted, fell within these parameters, namely he was the operator of what was only a relatively small scale illegal gambling establishment who made little effort to launder the proceeds of his criminal activity which amounted to some $14 million.

32.  The actual amount of funds flowing through the applicant’s two bank accounts was some $20 million but the judge discounted this amount at the invitation of trial counsel.  It is not clear to me why she acceded to counsel’s invitation, what the other $6 million was supposed to represent and how she came to settle on the amount of the discount of 30%.  For a defendant whom she found had no other source of income it seems to me to be an extraordinarily generous discount.  Neither counsel could point to any legal obligation on the judge to carve out an amount from the total money flow and neither could explain how or why she settled upon a discount figure of 30% which seems to have been reached somewhat arbitrarily and with a good dose of speculation.  In my view it is questionable whether the judge was correct in assessing the value of the property with which the applicant dealt at $14 million.

33.  Nonetheless, I am persuaded that, based on the authorities to which Mr Wong referred me, he has a reasonably arguable ground of appeal that the sentence is manifestly excessive.  However, I should emphasise that I put it no higher than that, especially given the previous convictions of the applicant and his complete lack of remorse.  But, as I am granting leave I shall say no more on this.

Conclusion

34.  For these reasons I granted the applicant leave to appeal to argue this third ground of appeal.

[1] Appeal Bundle page 172, paragraph 46 of the Reasons for Sentence.