HKSAR v. CHUNG CHI KING

CACC 504/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 504 OF 2001

(ON APPEAL FROM DCCC NO. 1184 OF 2000)

____________________________

____________________________

____________________________

J U D G M E N T

____________________________

Hon. Cheung J.A. (giving the judgment of the Court):

Appeal against sentence

1. The applicant was separately charged and convicted in two District Court criminal trials. In the first criminal trial, namely District Court Criminal Case No. 1184 of 2000 ("the first case"), the applicant together with other defendants were convicted of the offence of conspiracy to defraud. The trial was conducted in his absence. He had absconded before trial. He was sentenced to five years and ten months' imprisonment. The sentence was imposed on 30 October 2001.

2. In the second criminal trial, namely District Court Criminal Case No. 383 of 2002 ("the second case"), the applicant was charged with two offences. The first was conspiracy to defraud. The second was failing to surrender to custody, contrary to section 9L(1) of the Criminal Procedure Ordinance Cap. 221. He pleaded guilty to both offences.

3. On the first offence in the second case, he was sentenced to four years and two months' imprisonment. On the second offence, he was sentenced to two months' imprisonment. One month of the second sentence was ordered to run concurrently with that of the first offence and the remaining one month consecutively.

4. Since the applicant was then serving his earlier sentence of five years and ten months' imprisonment under the first case it was ordered that one year and three months of the sentence in the second case was to be served concurrently with the earlier sentence, while the remaining three years was to be served consecutively. In other words, the applicant has to serve a sentence of eight years and ten months for the two cases. The second sentence was imposed on 2 July 2002, the applicant having surrendered himself to the police on 20 March 2002.

5. The applicant now seeks leave to appeal against the sentences imposed on him in these two cases. Extension of time to appeal is sought in the first case. The reason for the delay was that he was waiting to see what the sentence was to be in the second case. He hoped that it would be a concurrent one.

The first case

6. The period of conspiracy in the first case was between 1 September 1998 and 16 May 1999. This Court had on 16 May 2002 considered another appeal from one of the defendants in the first case, namely Chung Chi Kin, the ninth defendant, who was the brother of the applicant. The appeal was dismissed. The facts of the case was summarized by Lugar-Mawson J. We will respectfully adopt the summary of facts.

The facts

7. The case involved a Loco-London gold and silver fraud. It was the prosecution's case that on 2 November 1998, the police, after having received complaints about its activities, raided Champion Market Ltd. ("Champion"). Champion purported to be a genuine gold and silver bullion trading company. Champion recruited its victims as junior office employees through newspaper advertisements. Most were offered and took part-time employment. None had any experience in bullion trading and all appeared to have been selected because of their apparent naivety. On their offer of employment by Champion, they were offered an attractive salary. The victim was placed to work in a room with two fellow workers who, needless to say, were both parties to the fraud. One claimed to be newly recruited; the other claimed to be more experienced in the Champion's work and to have opened his own trading account, trading in gold and silver successful.

8. Under pressure from his newfound colleagues who spoke of the boundless opportunities for him to make easy money from a foolproof scheme, the victim was induced to open his own trading account, making investments in cash. His more experienced colleague claimed that he would teach the victim how to operate his account. To buoy his confidence the victim was given receipts for his investment. A few days later, Champion's manager would claim that the victim had made a trading mistake that had resulted in him making a loss. He was required to pay Champion further sums of money in order to recover his original investment. If he did so, a few days later still he was told that due to his further trading mistakes all of his money had been lost. The victim would then either leave Champion in desperation or was dismissed, being of no further use to the fraudsters.

9. In the course of the trial, the names of the 'colleagues' and 'teachers' appeared and reappeared in the evidence of 33 victims, who were called to give evidence of their experiences while with Champion over the period of conspiracy.

10. Expert evidence from a certified public accountant and a member of the Chinese Gold & Silver Society in Hong Kong supported the prosecution's case that Champion was not a genuine bullion trading company.

11. There was abundant evidence that Champion's activities carried on unabated after the day of the police raid.

Enhancement

12. The only reason advanced against the sentence under the first case is that the judge had wrongly enhanced the sentence. The trial judge used a starting point of four years and eight months' imprisonment. At the invitation of the prosecution, the judge enhanced the sentence by 25% i.e. one year and two months under section 27(11) of the Organized and Serious Crimes Ordinance ("the Ordinance") Cap. 455. The total sentence came to five years and ten months.

13. Under section 27(11), the Court may enhance the sentence on either one of two basis. First, the offence is a specified offence and that it is an organized crime. Second, based on the information furnished under subsection (2) or (8).

14. A specified offence is one of the offences set out in Schedule 1 or 2 of the Ordinance. Conspiracy to defraud is one of the offences stated in Schedule 2. It is, therefore, a specified offence. Organized crime means a Schedule 1 offence that :

“(a)	is connected with the activities of a particular triad society;
(b)	is related to the activities of two or more persons associated together solely or partly for the purpose of committing two or more acts, each of which is a Schedule 1 offence and involves substantial planning and organization; or
(c)	is committed by two or more persons, involves substantial planning and organization and involves-

(i) loss of the life of any person, or a substantial risk of such a loss;

(ii) serious bodily or psychological harm to any person, or a substantial risk of such harm; or

(iii) serious loss of liberty of any person."

15. Since a conspiracy to defraud is not an offence stated in Schedule 1, therefore, despite the fact that it was a specified offence it could not be an organized crime. Hence, any enhancement of the sentence cannot come within the first limb of subsection (11).

16. In respect of the second basis, the information contained in section 27(2) are :

“(a)	the nature and extent of any harm caused, directly or indirectly, to any person by the act in respect of which the person has been so convicted;
(b)	the nature and extent of any benefit, whether financial or otherwise, that accrued or was intended to accrue, directly or indirectly, to that or any other person from that act;
(c)	the prevalence of that specified offence;
(d)	the nature and extent of any harm, whether direct or indirect, caused to the community by recent occurrences of that specified offence;
(e)	the nature and extent of the total benefit, whether financial or otherwise, accruing directly or indirectly to any person from recent occurrences of that specified offence."

17. In relation to section 27(8), if the court determines that a specified offence was an organized crime by reason of its connection with the activities of a triad society, the prosecution may furnish information to the court regarding the nature and extent of those activities and the way in which the offence was connected with those activities.

18. Since the offence is not an organised crime, therefore section 27(8) is irrelevant for the purpose of this case.

Wrong enhancement

19. The judge enhanced the sentence because he considered that this type of fraud was prevalent. The evidence produced by the prosecution under section 27(2) showed the statistics of this type of fraud from 1997 to 2001. The number of victims in 1997 was 129. The amount involved was $35,640,000.00. The offence peaked in 1999. Then the number of victims declined drastically from 710 in 1999 with money involving HK$158,000,000.00 to 41 victims up to August 2001 with money involving HK$14,600,000.00. There was clearly a substantial reduction in the number of victims and also in the amount lost by victims by August 2001. It cannot be said that an offence of this type was so prevalent at the time of the sentence in October 2001 that it would require the Court to enhance the sentence as a means of deterrence.

20. The judge was wrong to enhance the sentence on the basis of prevalence.

Seabrook

21. Mr. Reading S.C., counsel for the respondent, referred to the decision of Seabrook v. HKSAR [1999] 1 HKC 567 in which the Court of Final Appeal laid down the principles on how a sentencing guideline that reduced sentence could benefit those defendants who were sentenced before the guideline was introduced. It was held that they would be benefited provided that :

1) their offences were committed at a time when the state of affairs on which the guideline was based was in existence;

2) their sentences were imposed at a higher level than those set by the guideline; and

3) the sentencing process was still extant.

In relation to the last requirement it means that the appeal period had not yet expired.

Wong Fung Ming

22. In HKSAR v. Wong Fung Ming (CACC No. 515 of 2001), this Court on 5 December 2002 allowed an appeal against sentence in a similar case. The trial judge had enhanced the sentence when the statistics showed that the fraud had decreased since 1999. This Court held that the enhancement was incorrect. In the present case, the applicant was seeking to appeal out of time. The appeal period had expired. Therefore, it is argued that the applicant cannot take advantage of the guideline stated in Wong Fung Ming.

23. In our view, what this Court said in Wong Fung Ming cannot be treated as a sentencing guideline envisaged in Seabrook which was a case dealing with the tariff of sentence for drug offences. Ultimately, in this case it is a question of interpreting the statistics to see whether crime of this nature was prevalent at the time of the sentence. If there was such a substantial drop in the number of similar crime being committed, the conclusion on the evidence is simply that such a crime was not prevalent. If this Court in Wong Fung Ming came to the view that on similar facts the crime was not prevalent, it is not laying any sentencing guideline at all.

24. Furthermore, as a matter of statutory construction, the prevalence of the offence must be considered at the time of the sentence since the purpose of an enhanced sentence is to impose a deterrence on potential wrong doers. Hence the time of the commission of the crime is irrelevant. Again what this Court had said in Wong Fung Ming was merely to give effect to this construction.

25. This Court on 12 October 2001 in HKSAR v. Chiang Chun Wai and another (CACC No. 11 of 2001) had already stated that the starting point of four years' imprisonment for this type of offence was meant to be a deterrent sentence. What this Court said in Wong Fung Ming was merely a reminder of the earlier decision.

26. The appeal in the first case is allowed and the sentence is substituted by one of four years and eight months' imprisonment.

The second case

27. A similar type of fraud was practised in the second case. By then the applicant was already charged with the offence under the first case. According to the mitigation advanced on behalf of the applicant in the second case, the same group of organizers had set up another company, namely Yieldson Trading Ltd. ("Yieldson") after they had ceased the operation of Champion and the applicant together with others carried on the same mode of deception in Yieldson. The period of conspiracy was between 14 June 1999 and 3 August 1999. There were ten victims who complained to the police. Their loss was about HK$2,000,000.00. The applicant acted as a manager in Yieldson. His role also involved with receiving money from the victims.

Sentence for the conspiracy

28. On the conspiracy to defraud, the trial judge used a starting point of five years' imprisonment. He enhanced the sentence by 25%, making a total of six years and three months' imprisonment. He reduced it by one third because of the guilty plea and the sentence imposed on the first charge was four years and two months' imprisonment.

Starting point

29. On the starting point of five years, it is clear that the applicant had full knowledge that he was involved with the conspiracy. He actually carried on the deception in a new establishment after the police raid of Champion.

30. This Court had stated in Chiang Chan-Wai that a defendant who carried on with the conspiracy after the police raid was an aggravating factor. The situation is even worse that he carried on the conspiracy not merely in the former company after that company was raided, but further in a new company established solely for the purpose of deception. In our view, even recognizing that the applicant was not the mastermind of the fraud and he surrendered himself to the police, we still consider a five year's starting point to be appropriate in the circumstances of the case.

Enhancement

31. The trial judge also enhanced the sentence by 25%. He did it not on the basis of prevalence but on the material supplied by the prosecution under section 27(2) (a) and (b). The statistics that were provided were only up to 2000. They showed that the victims had dropped to 210 in 2000. The amount lost in 2000 was $52,770,000.00.

32. The judge was correct not to enhance the sentence on prevalence. As pointed out by this Court in Chiang Chun Wai and Wong Fung Ming the four year starting point was already appropriate in itself to act as a deterrence for those engaged in this crime. Hence the sentence should not be enhanced on the other grounds.

33. The trial judge also referred to the first offence as an organised crime. This is incorrect.

The sentence

34. As a result the first sentence should not be enhanced. After taking into discount the one-third disccount, the sentence for the conspiracy should be three years and four months' imprisonment. One month of the second sentence is to be served consecutively making a total sentence of three years and five months' imprisonment.

Totality

35. Considering the principle of totality, we are of the view that an overall sentence of six years and six months' imprisonment is appropriate. We will order one year and ten months of the sentence of the second case to be served consecutively to the sentence of the first case while one year and seven months will be served concurrently.

Conclusion

36. We will allow the applications and treat them as the appeal proper. The two appeals are allowed to the extent as indicated.