HKSAR v. KOEY SHU KWAI MORRIS

CACC10/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 10 OF 2003

(ON APPEAL FROM DCCC NO. 535 OF 2002)

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

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

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

J U D G M E N T

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

Jackson J (giving the judgment of the Court) :

1. On 11 December 2002, after trial in the District Court before Deputy Judge Candy, the applicant (a Senior Immigration Officer) was convicted of an offence of furnishing false information contrary to section 19(1)(b) of the Theft Ordinance, Cap.210.

2. On 27 December 2002 he was sentenced to a term of nine months' imprisonment and, on 12 February 2003, he was granted bail by Yeung JA pending his applications before us for leave to appeal against both conviction and sentence.

3. In the event, on 4 December the applicant (through his counsel Mr Boyton) did not pursue his application in respect of his conviction which application we accordingly dismissed. Having then heard Mr Boyton in argument in respect of the application for leave to appeal against sentence we dismissed that application and said that we would hand down our reasons later. These are our reasons.

4. The charge and the particulars to the charge facing the applicant at trial were as follows :

"Charge

Statement of Offence

Furnishing false information, contrary to section 19(1)(b) of the Theft Ordinance, Cap. 210.

Particulars of Offence

KOEY Shu-kwai, Morris, on or about the 8th day of August 1997, in Hong Kong, in furnishing information for the purpose of obtaining a mortgage loan of $2,464,900.00 Hong Kong currency from The Bank of East Asia, Limited, dishonestly and with a view to gain for himself or another or with intent to cause loss to another, produced to the said The Bank of East Asia, Limited a copy of an agreement dated 21st July 1997 between the said KOEY Shu-kwai, Morris as purchaser and NING Pui-chun, KAU Chi-chung, LEE Lai-fong, TAM Tsun-bik and LEE Wah-bong as vendors (collectively referred to as the 'Vendors'), which to his knowledge was misleading, false or deceptive in a material particular in that it purported to show that the Vendors have agreed to sub-sell to the said KOEY Shu-kwai, Morris a property situated at Ground Floor, Lot Number 303 in Demarcation District Number 252, Sai Kung, New Territories, Hong Kong at the consideration of $3,600,000.00 Hong Kong currency."

The prosecution's case at trial

5. The general nature of the prosecution's case is quite apparent from the particulars to the charge although what is not apparent is the fact that the 'vendors' were the applicant's relatives.

6. In mid 1997 the applicant agreed to purchase the property in Sai Kung from the owner at the price of HK$2.55 million and, on 4 July 1997, five of his relatives at his behest entered into a provisional purchase agreement with the owner at that price. On 16 July those five relatives signed the necessary documents to complete the purchase ("the first transaction") and on the same day (and again at the behest of the applicant) they entered into a provisional agreement to sell the property to the applicant at the price of HK$3.6 million which sale was completed on 21 July ("the second transaction").

7. At that time many (if not all) of the banks in Hong Kong would only entertain applications for property mortgage loans which did not exceed some 70-75% of the value of the property.

8. The applicant then made an initial (or tentative) application to the bank for a mortgage loan in consequence of which the valuers for the bank (presumably influenced by information gleaned from mention of the second transaction) valued the property at HK$3.6 million. In a subsequent formal written application to the bank, dated 1 August 1997, the applicant specifically stated that the purchase price of the property was HK$3.6 million. In that document the person put forward as the proposed guarantor of the loan was a Ms Tan Fung Sheung Eileen (who, it transpired, was the applicant's former wife).

9. On 9 August the bank, having had sight of the documents relating to the second transaction, approved a mortgage loan to the applicant in the sum of HK$2.4649 million, and that sum (which it should be noted was 98.5% of the purchase price originally agreed by the applicant with the vendor) was paid by the bank to the applicant's solicitors on 13 August. Also paid into the solicitors' account on that day were two sums totalling HK$1.1351 million which represented government home purchase loans earlier applied for by the applicant.

10. Coincidentally on 14 August the applicant's solicitors issued a cheque in the sum of $640,075 in favour of Lee Lai Fong, one of the vendors named in the second transaction who was the applicant's former mother-in-law, which cheque was deposited into her bank account on 15 August. On 19 August Lee Lai Fong purchased a cashier order in the sum of $468,000 in favour of Eileen Tan. On 15 August, the applicant's solicitors issued two cheques in the sum of $33,527 and $482,338 respectively in favour of the applicant and on 19 August 1997, they issued a further cheque in his favour in the sum of $50,900.

The defence case at trial

11. The applicant gave evidence and adopted what he had said to ICAC officers in interview when he admitted that he had made the somewhat complex 'confirmor' arrangements in order to acquire additional money with which to decorate the premises but in which interview he also said that he was not acting dishonestly because (as he put it) he went 'through all the proper procedures' and he had spent most of the money in decorating the premises.

12. It was implicit from what the applicant told the ICAC in interview, and from what he said in evidence, that his case was that the transaction involving his relatives was both a real and a genuine 'at arm's length' transaction as opposed to being one that was a sham or a fiction designed purely for his financial benefit.

The judge's findings

13. In the result the judge expressed himself as being satisfied beyond a reasonable doubt of (inter alia) the following matters :

(a)	that it was the applicant who negotiated the initial purchase price of the property at HK$2.55 million and who arranged for the intervention of his relatives as 'confirmors';
(b)	that those 'confirmors' were never genuine buyers or sellers of the property and that their sole intention or purpose in signing the documents was to assist the applicant in the purchase of the property (i.e. they allowed their names to be used for the purposes of the applicant irrespective of what those purposes were);
(c)	the transactions in which the applicant's relatives purported to buy the property from the original vendor and then to sell it to the applicant were not real or genuine property transactions and were a sham designed, and intended, by the applicant to mislead the bank and its valuers into believing that the value of the property was greater than it truly was;
(d)	the applicant's statement as to the purchase price which he submitted to the bank was a false statement, and he knew that it was such;
and
(e)	the applicant's conduct (as set out above) was dishonest by the ordinary standards of reasonable and honest persons.

14. As to the evidence given by the applicant himself at trial the judge had this to say :

" ... I have to say that the defendant as a witness was utterly lacking in credibility. In cross-examination, in particular, his mendacity was patent. He is an intelligent and educated person who has been in the public service for a number of years. ...

Insofar as the defendant claims that his actions were honest and above board, I reject the evidence."

The grounds of appeal against sentence

15. The perfected grounds of appeal against sentence settled by Mr Boyton read as follows :

"The sentence of 9 months immediate imprisonment was wrong in principle.

Particulars

1.	When a judge purposely postpones sentence so that an alternative to prison can be examined, and the alternative is found to be a satisfactory one in all respects, the court ought to adopt the alternative, as a feeling of injustice is otherwise aroused. Had the Judge held the view that there was no alternative to imprisonment he should only have called for background reports or sentence there and then without calling for any reports...
2.	There were 'unusual circumstances' to this case, which could have allowed the trial Judge to have suspended the sentence of imprisonment. These included the fact that there was no loss, that there was a delay in the prosecution (for whatever reason) and the fact that the six criteria identified in Brown (1981) 3 Cr App R (S) 294 was in place...
3.	Furthermore, since the applicant was granted bail pending appeal, he now has only 15 weeks of actual time of his sentence left to serve. This, coupled with the unnecessary calling of Community Service Order Suitability Reports, should now allow the sentence to be varied to either a shorter term of imprisonment, which would allow his immediate release, or to be replaced by a suspended sentence.
4.	This was a case involving a first time offender, who had committed an offence, which was totally out of character. It does not call for a deterrent sentence, as the loss of his well-paid job, and pension would be sufficient deterrent enough for a Government employee..."

16. In substance what those submissions amount to is this :

(a)	that the judge was in error in calling for a community service suitability report if he was not prepared to act upon it;
(b)	that there were exceptional circumstances in this case (including delay in instituting proceedings) which would justify the suspension of a prison sentence;
and
(c)	that the circumstances of the offence and of the offender did not justify a deterrent sentence.

17. To place each of those matters in proper context, what the judge said after Mr Boyton had urged him in mitigation to consider community service as a lenient form of disposal, was this :

"Given the facts which have been proven and the dishonesty which has been proven on your part, I am satisfied that prison sentence is the appropriate penalty. There are various aspects which I want to consider and I propose to adjourn the sentence for two weeks so that I can have a background report which will give me full details.

However, in the meantime, I propose to remand you in custody, and I will also ask for consideration as to your suitability for community service, but I stress that in seeking that report you should not have your hopes raised, because at the moment I consider that the only appropriate sentence is a sentence of immediate imprisonment. Therefore, I remand you in custody. The 14 days will be in fact Christmas Day, so 27 December.

I am calling for a community service and background report, and when I have the reports, I will consider what is the appropriate penalty."

18. And when he had the reports the judge said (inter alia) this :

" The offence, which you have admitted, is a serious offence. By a dishonest and sham transaction with your family members, you provided the bank with a false purchase price for the property which you were buying, and thereby obtained a higher mortgage than you would have obtained had you given the bank the true purchase price.

... The banks, in general, are entitled to rely upon the honesty and propriety of the information which they are given, and the manner in which they are given it, by persons applying for mortgages.

I take note of the fact that there was no loss to the bank up to July of this year, when the mortgage repayments ceased, and that the bank is now considering proceedings to recover the sum lent. The fact that the mortgage has ceased to be repaid since July is not a significant matter in regard to the sentence in this case, since it might well be viewed as no more than an expected decision by somebody in your position.

In assessing sentence, I am taking into account your background and the progress of your career, and I am aware that there will inevitably be further serious financial consequences for your career and your pension as a result of your conviction.

You have been convicted of the offence after trial. Taking everything into consideration in assessing sentence, I am satisfied that in your case a sentence of 9 months' imprisonment is appropriate, and that is the sentence which I now impose.

Given the gravity of the offence, it is not appropriate to suspend the sentence."

19. Looked at in proper context, Mr Boyton's complaint concerning the community service suitability report is, in our judgment, without substance. All that the judge did was to keep all of his sentencing options open, whilst at the same time making it abundantly clear to the applicant that it was more likely than not that he would receive a prison sentence.

20. Included in Mr Boyton's written submissions about the judge declining to make a community service order was this :

"It is submitted that the calling [for a] suitability report ... in effect creates a implied promise in the mind of a defendant that if he was to be found suitable, he would be sentenced accordingly."

And he cites the case of R.v. Gillam [1980] Cr. App. R(S) 267 at page 269 as authority for that submission.

21. However that ignores what the judge in this case specifically told the applicant at the time of the adjournment and of his calling for the reports. There can be no question as to what the judge said; and, no doubt, in the light of what he said, Mr Boyton would have advised the applicant (in order to disabuse him of any possible notion that he might have held about an 'implied promise') of the likely consequences.

22. In this context it is perhaps worth noting and repeating what was said in the judgment in Janet Renan (1994) 15 Cr. App. R(S) at page 725 as follows :

" Our attention has been drawn to the Gillam principle and to two decisions of this Court applying the Gillam principle. The first was Rennes (1985) 7 Cr.App.R.(S.) 343, where, on the facts there, the Court took note of the circumstances in which a magistrates' court had adjourned for reports. The judgment, given by Lloyd L.J. reads :

'We emphasise that in every case it all depends on what the defendant has been led to expect. There can be no absolute rule that where a community service assessment is included among the reports and where that assessment is favourable, a sentence of imprisonment will automatically be quashed. That appears sufficiently from a decision of this Court in Stokes (1983) 5 Cr.App.R.(S.) 449, where the Court emphasised that it will, in every case, depend on what the defendant has been led to expect.'

Secondly, our attention was also drawn to the decision in Norton and Claxton (1989) 11 Cr.App.R.(S.) 143. In that judgment, this passage appears:

'The third observation in this particular appeal which turns entirely on its own special facts should not be understood as laying down any principle that a sentencing court which asks for a social inquiry report is committing itself in any way to a non-custodial disposal, even if the report proves to be favourable. Unlike a report on suitability for community service, which was the subject matter of the request in Stokes and which has no purpose unless the sentencer contemplates making an order if the offender is suitable and work is available, a social enquiry report is a valuable source of information for a sentencer who is considering a range of sentencing options. We repeat that the present case is no authority for the view that any option is foreclosed, merely because a sentencer asks for a social inquiry report, though it will often be prudent for sentencer to make it quite plain when he asks for a report that there should be no inference that a non-custodial disposal is going to be the one ultimately chosen.' (Per Mustill L.J.)"

23. Mr Boyton also submits that because all of the six factors referred to in R.v. Brown (1981) 3 Cr. App. R(S) 294 were present in this case that such provided further cogent reason for making a community service order or for suspending a prison sentence. With respect, that ignores the fact that all of the six factors were not present in this case. In particular the applicant showed no remorse whatsoever until after he had been convicted.

24. It also ignores what was said by this court in Secretary for Justice v. Lin Min Ying and Another [2002] 3 HKC 415 (at 421) to the effect that just because the six factors may be present it does not necessarily follow that a judge must make a community service order. He will only do so having :

"... carefully analysed the matters to be weighed towards sentence, and the [defendant's] general suitability for community service was merely one aspect to be considered."

25. As we have said, in this case the applicant had been convicted after trial and he showed no remorse for what he had done until after he had been convicted and was awaiting sentence. There were no exceptional circumstances to justify the suspension of a prison sentence and nor, in our judgment, could this offence (the details of which appear above) appropriately be met by the imposition of a community service order.

26. The immediate sentence of nine months' imprisonment cannot, in our view, be criticised as being wrong in principle or manifestly excessive. Insofar as that sentence reflects a degree of deterrence about which Mr Boyton complains, we need look no further than to the judgment of this court in HKSAR v. Li Po Ying, CACC105/2001 where at paragraph 21 Stock JA said this :

"... it must be made clear ... that calculated and well planned offences of this kind, involving substantial frauds on banks, will be met with imprisonment even in the case of first offenders, and that the terms are likely to be significant. The deterrent element, and the public interest, so require."

27. Indeed it is quite apparent to us that, in arriving at the sentence of nine months' imprisonment, the judge had very properly taken fully into account those matters of mitigation which Mr Boyton has sought before us to advance in further lessening the penalty.

28. It was for all of these reasons that we dismissed the application for leave to appeal against sentence.