HKSAR v. LAI KWOK HING

CACC 319/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 319 OF 2015

(ON APPEAL FROM DCCC 4 OF 2015)

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REASONS FOR DECISION

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Introduction

1.  The applicant and one other faced separate charges of Fraud, arising from the same misconduct.  The applicant was D2 on the charge sheet.  D1 was charged with Charges 1 to 4, being four counts of Fraud in relation to insurance policies taken out with Zurich International Life Limited (“Zurich”).  The applicant faced four charges of Fraud, being Charges 4 to 8 on a charge sheet in respect of the same insurance policies. 

2.  Both D1 and the applicant were tried in the District Court before District Judge Yiu (“the judge”) and on 28 August 2015 convicted of their respective charges of fraud.  On 16 September 2015 D1 was sentenced to 20 months’ imprisonment in respect of each charge with all sentences ordered to be served concurrently.  The applicant was sentenced to 14 months’ imprisonment on each charge with all of his sentences also ordered to be served concurrently.

3.  The applicant has applied for leave to appeal against both his convictions and his sentences and after filing those applications he has applied for bail pending appeal. 

4.  At the hearing of the application for bail I allowed it and said I would give my reasons for so doing at a later date.  This I now do.

The trial

5.  The prosecution’s case was that D1 and the applicant were both registered insurance agents working for different brokerage firms.  An insurance brokerage firm receives commission from insurance companies for selling their products.  Each insurance brokerage firm will then share the commission received from an insurance company with the insurance agent of the firm, called a Technical Representative (“TR”), who sold the particular insurance product. The amount of commission that each brokerage firm shares with its TRs may vary.

6.  The prosecution’s case alleged that D1 sold certain products to his clients but arranged for those products to be processed through the applicant’s brokerage firm so that a higher amount of commission could be received by him, D1.  These policies were processed through the applicant’s firm with the applicant signing on the policies and representing himself to be the person who had dealt with the clients and his firm as being the relevant brokerage firm.  In due course the applicant’s brokerage firm received commission from Zurich and the TR’s share of that commission was paid to D1.  This gave D1 $111,839.60 more than he would have received had the insurance policies been processed through his own brokerage firm.

7.  The prosecution’s case consisted of witnesses from D1’s firm and from Zurich but did not, surprisingly, include witnesses from the applicant’s insurance brokerage.  The prosecution also produced in evidence a statement made under caution by the applicant to the ICAC officers at the time of his arrest and the contents of a video-recorded interview (“VRI”) subsequently made by the applicant.

8.  These statements to the ICAC were all challenged as being involuntary and the judge determined their admissibility by means of the alternative procedure.  The applicant testified on the alternative procedure but when the statements were ruled admissible he did not give evidence on the general issue or call any witnesses. 

9.  Amongst the statements made by the applicant in his VRI was a claim by him that he had agreed to put his name on the policy documents and had purported to be the representative of the clients on the instruction of his supervisor who had introduced him to D1 and told him that D1 would shortly be joining their firm.  The applicant claimed that he did not receive any benefit for his actions and did not receive any share of the commissions received by his brokerage firm for these policies.

The bail application

10.  The bail application is based upon initial grounds of appeal which have been filed and which are said to be reasonably arguable.  It is also made on the basis that the applicant will have completed a substantial part of his sentence before the appeal is likely to be heard and determined.  The earliest release date for the applicant is 7 June 2016.

11.  The legal principles relating to bail pending appeal are well known.  Where an application is made on the time ground it is still necessary for the applicant to demonstrate that the grounds of appeal on which he relies are at least reasonably arguable.  (See HKSAR v Lau Man Kin [2010] 1 HKLRD 336)

Initial grounds of appeal against conviction and sentence

12.  The Notice of Appeal has attached to it Initial Grounds of Appeal Against Conviction and Sentence.  This document contains five grounds of appeal against conviction and three grounds of appeal against sentence. 

13.  For the first ground of appeal the applicant argues that the judge in ruling the video interview to be admissible did so not on the strength of the prosecution’s evidence but on the basis that he did not believe the applicant.  This ground relies for its support entirely on a comment made by the judge at the end of his analysis of the evidence in the course of delivering his Ruling on the admissibility of the caution statement and the VRI where the judge said:

“… All in all, I do not find D2 telling the whole truth to the court and his evidence on special issue shall be rejected.

          Therefore I find that the notice, the notebook entry and the interview were all made voluntarily by D2 and there is no other reason to exclude it.”

14.  The second ground of appeal argues that the judge erred in finding that D2 must have received some share of the commissions from his involvement in these offences.

15.  The third ground of appeal is allied with the second ground of appeal and relates to a statement by the judge in which he refers to other consequential benefits which would have flowed from the conduct of D1 and the applicant.  These were future benefits that might flow should D1 join the applicant’s firm.

16.  The fourth ground of appeal was abandoned at the hearing of the bail application by Mr McGuinniety, counsel for the applicant.

17.  The final ground of appeal against conviction is that the judge erred when he stated the applicant was able to use his phone to contact his lawyer as he wished during the period after his arrest.  This is dependent upon transcript which was not yet before the court and so this ground was not relied upon by Mr McGuinniety for the purpose of the bail application.

18.  The first ground of appeal against sentence, the sixth ground of appeal, is that in the course of advancing mitigation the judge misled counsel, by his silence, into thinking that a Community Service Order was still a sentencing option to which he, the judge, was sympathetically inclined.

19.  The second ground of appeal against sentence complains about the judge’s reference to the offence having been committed by the applicant conspiring with D1 and that this perception by the judge may well have led him into sentencing the applicant for an offence more serious than that with which he was charged.

20.  The final ground of appeal against sentence argues that by virtue of the applicant’s clear record, that he was not motivated by greed, that he was acting under the instruction of his supervisor together with the applicant’s age, and the contents of the probation report, an immediate custodial sentence was manifestly excessive. 

Discussion

21.  I am of the view the first ground of appeal against conviction is not reasonably arguable.  The judge in his final paragraph, where he commences the sentence with the word “therefore”, was not referring to his adverse finding in respect of the applicant’s truthfulness but to all the other matters he had mentioned in his discussion of the admissibility of the applicant’s caution statement and VRI. 

22.  The second and third grounds of appeal relate to the proof by the prosecution of the result element of the offence ie the benefit to the offender or another or prejudice to the victim.  Here, there was unarguably benefit to D1 and prejudice to the victim so there was in fact no need for the judge to make a finding in respect of benefit to the applicant.  For this reason I find that grounds 2 and 3 are not reasonably arguable.

23.  But the comments the judge made are, arguably, relevant to the judge’s perception of the culpability of the applicant for sentencing purposes.  The judge’s comments could be said to reflect a view that D1 and the applicant were acting together in a joint enterprise and support for this can arguably be derived from the comment of the judge which is the subject of the seventh ground of appeal.  The judge said at paragraph 15 of his Reasons for Sentence:

“… The present case is akin to conspiracy to defraud where the interests of Zurich and policyholders were much at stake. Without D1’s initiation and D2’s active participation, the plot would not have been able to be carried through.”

24.  The evidence, confirmed by counsel for the respondent, was that D1 received all of the commission payable under the policies the subject of the charges.  The applicant’s case was he received nothing and was acting under the instructions of his supervisor.  If this were so then, arguably his culpability would be much less than if he were fully involved with D1 in a joint enterprise crime.

25.  In my view it is reasonably arguable that the judge has sentenced the applicant on the basis that his involvement in these offences, was akin to that of a co-conspirator in a conspiracy to defraud.  That such a view was not available to him on the evidence of this case is also reasonably arguable.

26.  For the sake of completeness I should say that, on the material presently available to me I would not regard ground 6 of the initial grounds of appeal as reasonably arguable.  As the relevant transcript was not available it was difficult for Mr McGuinniety to advance this ground. As to ground 8 the question of whether the sentence of imprisonment was wrong in principle or was manifestly excessive depends on the view that can be taken, and is taken, of the applicant’s culpability.

27.  Given that this application is made on the time ground and that applications under this ground have to show reasonably arguability only I am satisfied I should grant the applicant bail pending appeal.

Conclusion

28.  For these reasons I allowed the applicant bail pending his appeal.