ATTORNEY GENERAL v. SHEK WAI IP

IN THE COURT OF APPEAL

Application for Review
1994, No.8

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HEADNOTE

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Commercial crime - three charges of theft and one of obtaining property by deception - Gross breach of trust over a period of 18 months which occasioned loss of about $15.5 million. Sentenced to 28 months on each charge, sentences to be concurrent. Trial judge gave a two-thirds discount for plea and good character.

The sentences were wholly inadequate. Two separate criminal transactions were involved - the sentences should not have all been concurrent. The discount of two-thirds was much too generous.

Sentences imposed were quashed and an overall sentence of 4½ years was imposed.

Observations as to the assessment of proper starting point in District Court.

IN THE COURT OF APPEAL

Application for Review

1994, No.8

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J U D G M E N T

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Power, V.-P.(giving the judgment of the Court):

1. The respondent faced four charges, three were charges of theft and one was a charge of obtaining property by deception. In the first theft charge, it was alleged that between 12th August 1991 and 21st January 1993 the respondent, who was the head of the Securities Department at Magusta Securities Limited, by using the Central Clearing and Settlement System, stole shares valued at $22.65m. He pledged those shares as security to cover trading accounts, which were in various names which he controlled, with a brokerage firm named as "Koo and Co.". Those were the transactions, the subject of the first charge.

2. In January 1993 on two occasions, using the same modus operandi, he stole two lots of shares from another broker Unico. He was at that time working in a part-time capacity with Unico helping them to set up the Central Clearing and Settlement System. These two lot of shares had a value of $700,000. They were the subject of the second and third charges.

3. On 19th January 1993 he misappropriated four Unico cheques which were made out to Koo & Co. and he used those cheques to pay his own account with that broker. These cheques were in a total of $356,250. This was the subject of the obtaining by deception charge.

4. It seems that the losses of Unico and Magusta have been recouped by the return of some of the share certificates, by payments which were made by insurance companies and by indemnity payments which were made by Koo & Co. However at the end of the day Koo & Co., even after receiving their own insurance reimbursement, have lost $7.5m and the insurance company, of course, remain the substantial losers in the sum of $8m with no hope of reimbursement. I set out these matters not because they in any way avail the defendant but in order that the consequences of the thefts be fully appreciated.

5. The respondent was guilty of a gross breach of trust over a period of 18 months which, in the outcome, occasioned loss of about $15.5m. He pleaded guilty in the District Court before Deputy District Judge Z.E. Li and was sentenced to imprisonment to 28 months on each of the four charges. All of the sentences were ordered to be concurrent.

6. When mitigating for him in the District Court Mr. McNamara, who then appeared, referred to his family circumstances and submitted that the respondent himself had not pocketed any money. The trial judge, quite properly in our view, refused to give weight to these matters.

7. When sentencing he took seven years as his starting point. He was, it seems, influenced when so doing by the fact that this was the maximum which he could properly impose by reason of s.82 of the District Court Ordinance. He stated that this was his global starting point for the four offences as he took the view that they were, to use his words, "one continuing criminal venture". He then gave a discount of one-third for good character and clear record and a further discount of one-third for the plea of guilty. This reduced the sentence to one of 28 months.

8. In this Application for Review Mr. Mumford, Q.C., with Mr. Raymond Lau, appears for the Respondent. He urges that it is for the trial judge to arrive at the appropriate discount and that, given that he grounds his discount upon a proper factual basis, this court should not interfere. That may well be so but it is for the court to examine whether or not he has grounded his discount upon a proper factual basis and has, having done so, arrived at a proper figure for discount.

9. We were not assisted by reference to sentences imposed in cases decided years ago when the sentencing climate was much more lenient as regards offences of this kind than it is today. We again observe, not for the first time, that sentences in cases where the Court of Appeal has refused to intervene upon an appeal against sentence are of very limited assistance. Fraud cases depend very much upon their own facts as seen, in their entirety, by the sentencing court.

10. The approach of the judge in the present case illustrates how a sentencing judge can be misled by the adoption of a mathematical approach. We have no doubt that this judge considered that each step in his approach was a correct one. Even so, he should, when he saw the figure which the approach produced, have realized that he must look at the matter again. That figure was 28 months for gross breaches of trust committed over a period of more than 18 months resulting in a loss of $15.5m. The trial judge should have realized that his approach, which threw up a sentence which was, by a measure wholly inadequate, must be flawed.

11. We appreciate that the assessment of sentence can be approached in a number of ways but we are satisfied that it was wrong in the present case to deal with these four offences as though they were all part of "one continuing criminal venture". Further, although not much turns upon it in the outcome, the judge was wrong to fix the seven years, which he took as his global starting point, by reference to the seven years maximum which he was authorized to impose by virtue of s.82. Section 82 does no more than state the maximum sentence that can be imposed in the District Court. It is true, as this court has held (The Queen v. Ho Sik-yin Civil Appeal No. 126 of 1991) that a discount for plea must be made from the seven years but that is not to say that the seven years becomes the appropriate starting point. A judge in the District Court should make his determination as to the correct starting point without any reference to the maximum sentence allowed by s.82 (Mo Kwong-sang v. The Queen (1981) H.K.L.R. 610). If the starting point is in excess of the seven years, then he will, of course, have to observe that he is bound by s.82 and cannot impose a sentence of more than seven years and that he is further bound to make any deduction for plea from the figure of 7 years.

12. As we have already stated, the judge was wrong to hold that all the offences could be considered to be part of one transaction. In our view the second and third offences could properly have been held to be one venture and, indeed, given the proximity of time and the fact that the victim was the same, the fourth offence might also properly have been regarded as part of the same venture. We cannot, however, agree that there is anything which would warrant placing the first offence within that venture. The victim was different as was the time of commission. It is true that the modus operandi was the same but that is not sufficient to place it with the other three as part of a "continuing criminal venture".

13. Given this to be so, the judge should have assessed the appropriate starting points for sentence firstly by assessing a starting point for charge 1 and then by assessing a global starting point for charges 2, 3 and 4. He should, as we have already made clear, have done so without any reference to the seven year sentencing limit. In our view 6½ years would have been the appropriate starting point for the first charge and three years the appropriate global starting point for the second, third and fourth charges. We turn to consider the appropriate discount. A substantial discount was called for. The applicant had previous good character and he had pleaded guilty. He had, further, co-operated fully with the authorities enabling the complicated accounts between a number of parties and the insurers to be more readily resolved. Had he not done so the resolution of those matters would have been fraught with difficulty. Having said this we are, nonetheless, quite satisfied that the discount of the two-thirds, given by the trial judge, was wholly inappropriate. In our view the proper discount would have been such as would reduce the 6½ years sentence to one of 4 years and the sentence of 3 years to one of 2 years. These sentences should have been ordered to be consecutive producing a sentence of six years. The court would then have to determine whether the totality of this sentence was too severe. In our view the totality principle would require an adjustment to an overall sentence of 4½ years.

14. The Attorney General's application is allowed. The sentences which were imposed are quashed. We order the sentence on the first charge be one of four years and the sentence on the second, third and fourth charges to be each of two years. Those latter sentences are ordered to be concurrent with each other. The sentences on the first charge and on the second, third and fourth charges will be partly concurrent and partly consecutive. The concurrent sentences of 2 years on the second, third and fourth charges will commence after the applicant has served 2½ years of the sentence on the first charge making a total of 4 1/2 years.