HKSAR v. LI KWOK FUNG

HCMA688/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO. 688 OF 2004

(ON APPEAL FROM FLCC 2293 OF 2005

---------------------

---------------------

------------------------

JUDGMENT

------------------------

1. The appellant was convicted on his own plea of one charge of ‘fraud’ contrary to section 16A of the Theft Ordinance (Cap. 210).  He was sentenced to 4 months’ imprisonment.  He appeals against that sentence.

THE CHARGE

2. The charge reads :

“Li Kwok-fung, between 1 January 2000 and 17 May 2002, both dates inclusive, in Hong Kong, by deceit, namely by falsely representing to the North District Council Secretariat that the said Li Kwok-fung had incurred rental expenses in a total sum of HK$145,000 as stated in the rental receipts for the months from January 2000 to May 2002 purportedly issued by the Fanling District Rural Committee, and with intent to defraud, induced the North District Council Secretariat to reimburse the said Li Kwok-fung a total sum of HK$129,027 resulting in benefit to the said Li Kwok-fung in prejudice or a substantial risk of prejudice to the North District Council Secretariat.”

3. This was Charge 1.  In the charge sheet, there was a Charge 2 joining the appellant (“D1”) and one Mr Tang (“D2”) in a similar fraud regarding Tang’s rental claim.  The prosecution applied for that charge to be left on the court file and not to be proceeded with against the appellant.  They did so after the appellant pleaded guilty to Charge 1.  Before that, the appellant had in connection with Charge 2 provided the authorities with a non-prejudicial statement.  This statement preceded Tang’s guilty plea to Charge 2 on the second day of trial.

THE FACTS

4. The appellant was Chairman of the Fanling District Rural Committee (“FDRC”) hence an ex-officio member of the North District Council (“NDC”).  As such, he was entitled to a monthly allowance aimed at reimbursing District Counsillors for their operating expenses.  This allowance was fully accountable.  Its application required the submission of detailed breakdowns and supporting documents.  A related set of Home Affairs Department guidelines (dated December 1999) and its revision (dated December 2001) were distributed to all District Councillors including the appellant.

5. During the period between 1 January 2000 and 17 May 2002, a total of 29 receipts were received by NDC claiming that the appellant had paid an aggregate of $145,000’s rent for his ward office in the FDRC Building.  In fact, the appellant had never paid FDRC any rent, and the accounts clerk at FDRC had never seen the lease the appellant submitted to NDC for reimbursement.  All 29 receipts were prepared by the appellant’s assistants and signed by him as the FDRC Chairman.  It was only in May 2002 that he instructedthe FDRC clerk to record the rent still outstanding in an account book.

MITIGATION

6. Below is a summary of the appellant’s mitigation, as recorded by the magistrate and to the extent I find relevant :

“8.   … Mr Kwok told me that:

(a)   D1 is a 53 years old married man with a hitherto clear record.  After studying up to Form 3, he left Hong Kong and worked in his brother’s restaurant in the United Kingdom until 1976.  On his return to Hong Kong, he ran a business in the vegetable wholesale market and operated a western style restaurant in Fanling.

(b)   D1’s public service began in 1987, when he became a representative of the village where he was born.  In 1995, he was appointed a committee member of FDRC, and in 1999 he became its Chairman.  By virtue of being FDRC’s Chairman, D1 became an ex-officio District Councillor of NDC in 2000, and in 2004, he was elected as the Chairman of NDC.  Further, D1 was appointed by the Home Affairs Department as the chairman of a committee, which organised activities to show respect to the elderly in the North District … for unprecedented 7 consecutive years.  All those appointments indicated the general acceptance and appreciation of D1’s work and his effort in promoting the welfare of the community.

(c)   When the offence began in January 2000, D1 was new to his office as a District Councillor and the rules governing the Allowance.  He also found that the incomes of the FDRC were barely sufficient to meet its regular expenditures and, as a result, many recreational activities had been curtailed.  LEUNG told D1 that, as a District Councillor, he was entitled to rental allowance, and D1 decided to let part of the first floor of the FDRC Building to himself, in order to create additional incomes for FDRC.  And owing to an established practice of the FDRC, D1 felt there was no problem in him owing rents, so long as they were paid before he ceased to be the Chairman of the FDRC.

(d)   In the course of 2000 to 2006, D1 had made numerous donations.  These included: regular donations to various institutions like hospitals and those promoting education, and welfare of the elderly; contributions towards the costs for the decoration and repairs of the FDRC Building; $1,000 to the FDRC’s education fund; $20,000 to help setting up the FDRC’s soccer team, and 2 sets of sportswear for its players.  Further, knowing that the FDRC was running on a tight budget and could not gave its staff a raise in salaries, D1 gave CHEUNG and Mr. WONG monthly allowances since he became Chairman of the FDRC, in order to keep them happy at their jobs.  And when the income of the FDRC fell substantially as from the later part of 2005, D1 extended loans to the FDRC.

9.    Mr. Kwok also read in open court and handed up: 3 letters written by members of the Legislative Council, who are also the Chairman, and vice-Chairmen of Heung Yee Kuk; a letter from a retired officer of the District Land Office North; 3 letters from the vice-Chairman and committee members of FDRC; a letter signed by the Chairman, vice-Chairman, and Honorary Chairman of the New Territories General Chamber of Commerce; a letter signed by 5 committee members of the Committee for the Elderly; and pro-forma testimonies signed 61 village representatives and executive members of the FDRC.

10.  In conclusion, Mr. Kwok submitted that, whilst the offence was serious, D1 did not commit the offence out of personal greed, but to increase the income of the FDRC; he did not pocket the illegal gains, but spent them on worthy causes.  The letters, which were read out in court, showed the offence was out of D1’s character.  He had shown genuine remorse, by pleading guilty and giving a non-prejudicial statement to the Prosecution in relation to Charge 2, in which he was jointly charged with D2, and that might have brought about the change of D2’s plea to one of guilty to that charge.  Relying on The Queen v YAN Im-kun CACC 680/1996, in which Bokhary JA (as he then was) said:

‘Where there is more than one accused, that each of them should have an incentive to be the first to plead guilty and offer to give evidence against the other or others is a very good thing.  Whatever may be said about the rat race, the courts should give criminals every incentive to enter a race to rat, so to speak.’

Mr. Kwok suggested that ‘incentive’ should be given to D1.  He further pointed out that there are no tariff sentences on offences of this nature, and said that D1 had previously offered to return the sum mentioned in Charge 1, and deposited the same with his solicitors, but for various reasons the offer did not come to fruition.  After standing down the hearing for Miss Susanna KU, counsel-on-fiat, to take instructions, a cheque for the said amount and made payable to the HKSAR Government was handed over to the Prosecution ….”

7. For present purposes, it is unnecessary to identify all the personae alluded to in this text.  The same is true of the text reproduced below.

MAGISTRATE’S REASONS

8. In the end, the magistrate stated :

“11. In coming to my decision on sentence, I carefully considered the mitigation advanced by Mr. Kwok, and noted that D1 repaid $129,027 to the Government.  It was clear to me that D1 had not only a hitherto clear record, but also a long record of public service and of making donations to worthy causes.  It was equally clear that he enjoyed huge support from the FDRC, village representatives, and legislative council members who have connections with New Territories; they all spoke highly of him.  However, as pointed out in Secretary for Justice v LAI Wai-cheong [1998] 1 HKLRD 56, 60, good character was not a ‘very strong mitigating factor’ for that accused, who had committed electoral fraud, as a person with a previous conviction would hardly be in a position to commit the offence in the first place.  Like considerations, in my view, should also apply in this case, just as courts have also consistently done in ‘white-collar crime’ and breach of trust cases.  As for the ‘incentive’ in recognition of D1 having given a non-prejudicial statement in relation to Charge 2, which might have brought D2 to plead guilty, I noted Charge 2 was left on court’s file against D1.  That, in my view, was sufficient ‘incentive’. 

12.  Mr. Kwok submitted that when the offence began in January 2000, D1 was new to his office as a District Councillor and the rules governing the Allowance.  But then, according to the facts admitted by D1, not only were the guidelines for claiming the Allowance distributed to him in December 1999 and December 2001, he had also caused a rental agreement to be sent to NDCS, and instructed LUNG and WANG to prepare rental receipts, which he signed in support of his claims.  In the circumstances, it appeared to me that he must have realised that the claims were on a fully accountable basis.  Mr. Kwok also submitted that D1’s motive was to increase the income of the FDRC, because the incomes of the FDRC were barely sufficient to meet its regular expenditures to such an extent that many recreational activities had been curtailed.  And further, owing to an established practice, he felt it was in order for him to owe rents, so long as they were paid before he ceased to be the Chairman of the FDRC.  But then again, according to the facts admitted by D1, it was only in May 2002 that he first informed CHEUNG that he had claimed rental expenses for the ward office, and asked her to record the rents he owed in an account book.  It was difficult to understand why he waited for some 29 months before he told CHEUNG, if his motive were to increase FDRC’s income.  And it was even harder to understand how by owing rents would help FDRC in meeting its regular expenditures.  And in that regard, I noted that the rents were still outstanding on the FDRC’s account from what Mr. Kwok told me.  In the circumstances, I did not find it possible to accept those submissions.  However, on the materials before me, I was prepared to accept that the monies D1 spent on matters related to FDRC and worthy causes might well have exceeded his illegal gains. 

13.  In my view, the seriousness of the offence lay not only on the breach of trust, which the Government reposed on D1, but also on the disrepute that D1 brought to the offices he occupied.  The Government and the public have every right to expect people such as D1 to be law abiding and to act honestly at all times.  In committing the offence, he undermined the public’s confidence in the integrity of the District Council’s members, and the good works which they have performed.  The offence was further aggravated, in my view, by D1 abusing his office as the Chairman of the FDRC and instructed LUNG and WANG to prepare false rental receipts over a period of 29 months.

14.  Mr. Kwok said non-custodial sentence is not unheard of in this type of case.  He mentioned the recent case of SAU Chun-fai, but was unable to provide me with the details or a copy of the Judgment.  In any case, Mr. Kwok rightly pointed out that there are no tariff sentences, and it seemed to me that each case would depend very much on its own facts.

15.  Before coming to my decision, I have also carefully considered the question whether Community Service Order could be an appropriate sentence.  I was mindful of our criminal justice system, which requires me to pass such sentence, that not only serves as retribution and deterrence, but also accords with the moral sense of the community.  And at the same time, the ends of justice need to be met not only for the protection of society, but also after such consideration of the accused as is his due: R v Wilmott [1967] 1 CCC 171, 179.  However, for the reasons above, I concluded that a term of imprisonment was the only appropriate sentence, having regard to all the circumstances of this case.  I took 9 months of imprisonment as starting point, which I reduced to 4 months after giving D1 one-third discount on his plea, and further 2 months on account of his past public service and full restitution.  I saw no exceptional circumstances that warrant a suspension of the sentence, and I sentenced him to 4 months of immediate imprisonment accordingly.”

THIS APPEAL

Ground (1)

9. This ground complains the lack of discount for the appellant’s assistance in Charge 2.  It says the magistrate was wrong to regard the leaving on court file Charge 2 as a “sufficient incentive” (paragraph 11 of the magistrate’s reasons for sentence).

10. The respondent does not seek to argue otherwise, for good reason in my judgment.

11. It remains unexplained why the prosecution decided not to proceed against the appellant on Charge 2.  A reasonable suggestion would be because he had pleaded guilty to Charge 1.  On the other hand, there is every indication that Tang pleaded guilty to Charge 2 because of the appellant’s non-prejudicial statement.  In the circumstances, I agree that he is entitled to some extra credit.

Ground (2)

12. The complaint here is that the magistrate rejected the appellant’s claim that he did not commit the offence for personal gain – without informing counsel who would otherwise have asked for a Newton hearing.

13. Having read the transcripts, I am satisfied that that was what happened.

14. I also understand the respondent’s position to be that the magistrate was entitled to reject mitigation that was “patently incredible”, without warning: R. v. Chung Kam Fai [1993] 1 HKCLR 178.

15. This position does not impress me, however, because it is conceivable that the appellant’s motive was not entirely selfish.  I say ‘not entirely’ because his intention could be to use the money philanthropically, while pretending it to be out of his own pocket, thus winning for himself a wider circle of friends and/or bigger acclaim.  The fact that he delayed instructing the FDRC clerk in opening an account proves nothing because once done, there could be no masquerading the source of money and his scheme would be curtailed.

16. Whether or not the magistrate accepted that there was this practice to leave outstanding accounts until immediately before the chair of the FDRC changed hands (paragraph 12 of the magistrate’s reasons for sentence), I am satisfied that he should have given thought to the above as a bottom line.  As it is, he had done neither that nor informed counsel of his doubt about the appellant’s version of events.

Ground (3)

17. The criticism here is that the magistrate had failed to take sufficient account of the fact that the offence was not committed out of personal greed.  The thrust of the complaint being while accepting the monies the appellant spent on the FRDC might well have exceeded the amount defrauded, the magistrate remained inexplicably incredulous of the appellant’s motive.

18. On this question, I can do no more than repeat what I have just said in paragraphs 15 and 16.  It is a question of simple arithmetic.  If the appellant was giving out more than he took in, the compelling inference is that he did not do so for financial gain.  That, in my judgment, is a real distinction in criminality.

Ground (4)

19. It is submitted here that in view of the tuberculosis recently diagnosed of the appellant, 4 months’ imprisonment is manifestly excessive.

20. By ‘manifestly excessive’, counsel means it would be wrong to send the appellant to prison.

21. Having read the medical reports now admitted, which serves no point in repeating, I would simply say that the appellant’s health is not in real peril and that a term of immediate imprisonment, either on this ground alone or in conjunction with others, is neither wrong in principle nor manifestly excessive. 

CONCLUSIONS

22. I will not disturb the 9-month starting point which appears to me right in all the circumstances.  For the guilty plea in Charge 1, and the assistance in Charge 2, there will be a discount of slightly less than 45% to 5 months.  Seeing the facts in their best possible light, including the claim that there would be an end-of-term settlement, a version supported by letters read in mitigation and which is now inordinately late to challenge, and honouring the original reduction for past public service and full restitution, I will reduce the sentence by another 3 months to 2 months.  That is all.

23. The appeal is allowed to the extent just mentioned.