HKSAR v. LAM KA SIN also known as MAK KA SIN

CACC 341/2019

[2021] HKCA 180

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 341 OF 2019

(ON APPEAL FROM DCCC NO 353 OF 2018)

_______________

_______________

__________________________________

R E A S O N S   F O R   J U D G M E N T

__________________________________

Hon Zervos JA (giving the Reasons for Judgment of the Court):

Introduction

1.  On 19 November 2019, the appellant pleaded guilty to a single charge which alleged that on 12 January 2016 she conspired with a person known as “Ah Fei” to deal with property knowing or having reasonable grounds to believe represented the proceeds of an indictable offence[1] (commonly referred to as “money laundering”) and was sentenced to 1 year and 10 months’ imprisonment by Deputy District Court Judge LC Cheng (the judge). 

2.  On 6 December 2019, the appellant applied for leave to appeal against sentence.  On 4 September 2020, a Single Judge[2] granted leave to the appellant, together with an appeal certificate for legal aid, as he considered that it was reasonably arguable: (1) that the appellant’s effort to rehabilitate herself and to positively respond to the challenges she had been facing in her life would amount to exceptional circumstances so as to justify a sentence other than an immediate custodial sentence; and (2) that a more individualised sentence was appropriate and that the sentence for this offence did not exclude the imposition of a rehabilitative sentence tailored to the need of the individual offender.

3.  It is necessary that we set out a brief timeframe of this case in light of the decision we have made.  The appellant committed the present offence on 12 January 2016 but it was not until 8 December 2016 that she was arrested for it.  She was released on police bail the next day.  On 27 January 2017, the appellant was sentenced to attend a Drug Addiction Treatment Centre following her conviction for possession of a dangerous drug.  On 23 February 2018, she was rearrested for the present offence.   On 30 May 2018, the appellant gave birth to a son.  On 19 November 2019, she was sentenced to 1 year and 10 months’ imprisonment.  As of the date of this appeal, she had served 11 months of her sentence and arrangements had been made for her to have the care of her son whilst she was in prison custody.

4.  At the hearing of this appeal we allowed the appeal, set aside the sentence of the judge, and substituted for it such sentence that allowed for the appellant’s immediate release from custody.  These are our reasons for doing so.

An overview of the case

5.  The appellant was one of six defendants who stood trial in the District Court in relation to a case involving allegations of fraud and money laundering.  She was the sixth defendant at trial and only faced a single charge of conspiracy to deal with the proceeds of crime (Charge 2). 

6.  The appellant was not involved in the underlying fraud, which concerned two sham companies, namely Richside International (Asia) Ltd and Richgain International (Asia) Ltd that were utilised by other defendants and their accomplices as vehicles to defraud victims by representing themselves as an intermediary between banks and prospective borrowers.  The fraudsters falsely represented to the victims that security money was required before their applications for bank loans could be processed.  The bank loans never eventuated and the victims never recovered the security money that they had paid.  If they could not afford to pay the security money they were referred to a finance company where they could borrow the money they needed, but at an exorbitant rate of interest.

7.  The appellant pleaded guilty to the charge that she faced.  It was alleged that she had agreed to lend her bank account to an accomplice of the criminal syndicate in order to receive the security money paid by one of the victims. 

8.  The appellant admitted that on 12 January 2016 she presented a cheque, which was issued by the victim in the sum of $1.1 million payable to the appellant, to the Hang Seng Bank for clearance.  However, the cheque could not be banked into her personal account due to an irregularity on the face of it.  

9.  On 8 December 2016, the appellant was arrested for this offence and admitted under caution that she “just lent the account to someone for collecting money” and she did not know anything else.  She further explained that about a year previously she had become acquainted with a person known as “Ah Fei”, who was the boyfriend of her ex‑school friend.  “Ah Fei” asked if she was interested in earning quick money by lending her bank account to him to cash a cheque in the sum of $1.1 million.  He offered her a reward of $10,000 and she agreed to assist him.  He then passed her a cheque and told her to deposit it, and immediately cash it at the counter of the Hang Seng Bank in Central.  She did as she was told but the bank staff refused to process the cheque because the particulars on the cheque had been poorly written.  She then returned the cheque to “Ah Fei” who was waiting outside the bank.

10.  Subsequently, a replacement cheque was obtained, but arrangements were made for it to be negotiated by someone else.  The appellant took no further part in transacting the cheque and received no reward.   

The appellant’s mitigation

11.  For the purpose of sentencing the appellant a background report was obtained.  The appellant was 25 years of age at the time of the report, a single mother and with a young infant son.  It was revealed that the appellant had an extremely difficult and traumatic life but with the birth of her son she had made great personal strides and turned her life around.  She grew up with her brother in a broken family.  She initially lived with her mother, then with the parents of her mother’s cohabitant, then with her mother’s new family, and eventually she left the family.  She suffered acute depression under the stress of being separated from her sibling and being torn between different guardians.  She experienced suicidal episodes throughout this period.  She left school at the age of 16 years and later worked as a teen bar girl at night in order to make a living.  It was during this period that she resorted to drug abuse, consuming ketamine and cocaine, as a means to cope with the harassment of customers and the financial difficulties that she was experiencing.  She met and cohabited with a man, who showed little if any regard for her.  He deserted her in September 2018 soon after their son was born in May 2018,[3] some two and half years after the present offence.  Motivated out of a desire to care for her son and provide for him, she changed her lifestyle and stopped consuming drugs.  This was evidenced by very favourable testimonials on behalf of the appellant that were submitted in mitigation.[4] 

12.  Defence counsel urged the judge to consider imposing on the appellant a non-custodial sentence.  He noted that although the cheque was for an amount of $1.1 million, it could not be deposited and as a result there was no loss to the victim.  He emphasised that the appellant took no further part in the matter and received no reward.  He also emphasised that the appellant had no involvement in the underlying offence, and had no knowledge of the nature of the funds.  He submitted that the case was not the most serious of its kind and that the appellant’s level of participation was low, given her involvement was limited to a single act which was not successful.  He finally submitted that consideration should be given to a suspended sentence bearing in mind that the appellant had changed her way of life and was a responsible and caring mother, who had displayed remorse and contrition. 

The reasons for sentence

13.  The judge accepted that the appellant had an unfortunate personal background and her life had changed in a positive way since her son was born.  He noted that she was free from her drug habit and was remorseful at the time of sentence.  He took into account the appellant’s low participation and single act of involvement, for which she had not received any reward, and that she was not aware of the predicate offence.  However, he noted that the offence was serious and that the appellant knew the amount she was laundering.  He also noted that it was only due to the irregularity on the face of the cheque that the transaction did not go ahead.  He adopted a starting point of 2 years and 9 months’ imprisonment which he reduced by one third for the appellant’s guilty plea, and sentenced her to 1 year and 10 months’ imprisonment.

14.  The judge was of the view that the personal background of the appellant did not warrant a further reduction in sentence, nor justified suspending the sentence.

The grounds of appeal

15.  Mr Wan Fung Ching, for the appellant, advanced the following grounds of appeal, in which he complained that the judge erred in law by not giving sufficient consideration:

(i)  that there were exceptional circumstances to suspend the appellant’s sentence;

(ii)  that there were circumstances which justified the judge to adopt a lower starting point to reflect the gravity of the offence and the appellant’s particular background; and

(iii)  that in light of the efforts made by the appellant after her commission of the offence, a further deduction of sentence was warranted.

16.  Mr Ching complained that the judge did not discuss whether the background of the appellant and her mitigation would amount to  exceptional circumstances[5] to suspend her term of imprisonment.  Relevant considerations in this regard were that the appellant did not participate in the deposition of the replacement cheque which showed her reluctance to be further involved, and the impact that an immediate custodial sentence would have on the welfare of her family. 

17.  Mr Ching submitted that the judge had already accepted the mitigation of the appellant and therefore, when considering the appellant’s background, her low level of participation in the case, and her positive change of attitude since the birth of her son, a lower starting point should have been adopted.  The appellant’s improved change of circumstances and positive character, together with letters of mitigation and the background report, should have, at least, led the judge to reduce the sentence.

Respondent’s reply

18.  Mr Johnathan Lin, for the respondent, stressed the serious nature of the offence of money laundering and the heavy penalty provisions that apply.  He emphasised comments by this Court that money laundering involves an offender attempting to legitimise the proceeds of criminal activities which needs to be appropriately punished[6], given the signal importance of preserving Hong Kong’s reputation as an international financial centre of integrity and given the further vital importance of international cooperation in the fight against money laundering.[7]  He also emphasised that this Court has held that immediate custodial sentences for offences of money laundering are required even for a first offender.[8]  In view of the legislative intent of the penalty and taking account of the overall circumstances of the present case, he submitted that even if the appellant was given the most favourable treatment, a suspended sentence would be wrong in principle and manifestly inadequate.

19.  Mr Lin submitted that of the various factors that are usually taken into account when sentencing a money laundering offence as suggested in Boma[9], the amount involved is a significant feature.  He accepted that there was no sentencing tariff for the offence of money laundering because of the range of diverse circumstances that may arise in different cases.  He however referred to SJ v Wan Kwok Keung[10] and submitted that a starting point of 3 years’ imprisonment in the present case was within the suggested range of “3 years or so” for a case where the “black money” involved is between $1million to $2 million.  Whilst accepting that it was a one-off incident, involving one attempted deposit on a single day, he argued that in a more serious case the judge would be entitled to upwardly adjust the starting point.  He noted that the appellant acted on the promise of a reward and therefore a starting point of 3 years’ imprisonment, was not manifestly excessive given the culpability of the appellant in the present offence and the absence of aggravating factors.  He added that appropriate downward adjustment could be made for individual justice.

20.  Mr Lin accepted that the appellant’s background may justifiably attract sympathy and that she appeared to have genuinely learned a lesson and was determined to turn a new leaf.  He also accepted that the appellant was strongly motivated to provide for her infant son and that the risk of her reoffending was not high.  He noted that the appellant was slightly under 21 years of age at the time of offence, and that her young age was a mitigating factor.[11]

21.  Mr Lin fairly acknowledged that the judge might not have applied his mind to an individualistic approach in sentencing, notwithstanding the rehabilitative needs of the appellant as a young adult and single mother.  He addressed this issue as being an exercise of mercy, but we see a distinction, although there may be some overlap, between extending mercy to an offender when sentencing and applying sentencing principles to achieve individual justice.  As noted by this Court, the exercise of mercy when sentencing an offender must be done in the context of a balanced approach.[12]  Clearly, mercy must be exercised by considerations which are supported by evidence and by having proper regard to essential sentencing principle and policy so as not to render a merciful sentence into an inappropriate one.[13]

22.  Mr Lin noted that in certain cases personal circumstances may not provide a basis for reducing an offender’s sentence. However, he accepted a sentencing court may still extend mercy to the offender as long as it is done in a balanced approach.  He contended that the appellant’s concern about the welfare of her child whilst she was serving a prison sentence was catered for by either appropriate arrangements in prison for the child to be with her or other welfare facilities that provide alternative care for the child.  This he submitted addressed the interests of the child while dispensing an appropriate sentence on the appellant.  

23.  In formulating an appropriate sentence to be imposed on the appellant, Mr Lin suggested taking a starting point of 3 years’ imprisonment, which when reduced by one third for the appellant’s guilty plea, would result in a sentence of 24 months’ imprisonment.  He further suggested that “to temper justice with mercy in a balanced approach”, the sentence could be adjusted downwards by 3 months to arrive at a sentence of 22 months’ imprisonment, which was “not so crushing as to defeat the entire purpose of rehabilitation.”

Discussion

24.  As a general rule persons convicted of money laundering, even if they are first offenders, should be sentenced to a term of immediate imprisonment.[14] There is no tariff for sentencing an offender for money laundering although there are a number of decisions setting out relevant sentencing principles or considerations.[15] 

25.  Stock VP (as he then was) in Boma explained that given the highly variable circumstances in which the offence of money laundering might be committed, it was difficult and undesirable to offer guidelines.  He explained that deterrence was paramount given the encouragement and nourishment money laundering gave to crime in general, but that whilst the amount of money laundered was a significant consideration, it was not “the be-all and end-all.”[16]  He added:

“39. We were at one stage of our deliberations minded to provide a suggested starting point for a specified relatively low sum involved in an offence, leaving courts to use that as a base for other sentences but we at once could conjure a myriad of factual variations which might render even that single starting point unwise with the further risk that it might encourage a rigid mathematical approach and progression without proper regard to other individual relevant factors.”

26.  Stock VP also listed other significant considerations that could be taken into account, including (a) the nature of the predicate offence; (b) the state of the offender’s knowledge; (c) where the operation involved an international dimension, this would be a significant aggravating feature; (d) the sophistication of the offence, including the degree of planning; (e) where the offence was committed by or behalf of an organised criminal syndicate would be an aggravating feature; (f) whether there was one transaction or many and the length of time over which the offence was committed; (g) whether the offender continued to launder funds after he had discovered the nature of the funds were proceeds of an offence or a serious offence was involved; and (h) the role of the offender and the acts performed by him.[17]

27.  Notwithstanding there is no formal tariff for sentencing of money laundering offences, it has been held that generally the sentence should mainly reflect the amount of “black money” laundered,[18] and where there are present circumstances that justify the sentencing court taking a lenient approach, the means by which this should be achieved is by reducing the starting point that would otherwise be appropriate for the gravity of the offending.[19] There may be cases where a sentencing court is satisfied there are present “exceptional circumstances” to warrant consideration of alternative sentencing options.  The concept of “exceptional circumstances” for the purposes of suspending a sentence of imprisonment, was wide enough to allow a sentencing court to take into account all relevant circumstances surrounding the offence, the offender and the background.[20]  Accordingly, “exceptional circumstances” may arise because of the prominent effect of an individual factor or the cumulative effect of several factors, but whatever the situation, it requires taking an overall or holistic view of the case.[21]

28.  The facts and circumstances of the present case highlight the importance of individual justice when sentencing an offender.  The classical principles of sentencing have been characterised by the objects of retribution, deterrence, prevention and rehabilitation.[22]  It will depend on the particular circumstances of the offence and the offender which of these objects apply and to what level and degree.  There is a tendency when sentencing offenders for serious crime to place emphasis on deterrence, for the very important primary object of protecting the community, but rehabilitation should not be overlooked, particularly when the circumstances of the case cry out for a more individualised sentence.  As stated by Stock JA (as he then was) in HKSAR v Leung Pui Shan[23] the sentence a court imposes must carefully be moulded not only to the category of the offence but to the offender.  There will be cases, because of the gravity of the offence and the culpability of the offender, where little if any weight is given to mitigating factors that would otherwise be taken into account.  But Stock JA also stressed the need for individual justice in such a case, having regard “to the policy considerations that might dictate in a category of case a stern general approach but never forgetting the fact that the courts are on each sentencing occasion dealing with an individual whose peculiar circumstances, if they exist, always deserve careful attention.” [24]

29.  When addressing individual justice, a sentencing court is particularly focused on rehabilitation of the offender.  Rehabilitation as an object of sentencing is aimed at the renunciation by the offender of his wrongdoing and past misdeeds and his establishment or re-establishment as a law-abiding citizen.  The ultimate object of the courts is to fashion sentencing measures designed to bring back into the fold an offender as a law-abiding citizen wherever such measures are consistent and compatible with the primary object of the criminal law which is the protection of the community.[25]

30.  There are obvious tangible benefits in the successful rehabilitation of an offender, the importance of which cannot be overestimated. This was succinctly explained by King CJ in Yardley v Betts[26], as follows:

“The protection of the community is also contributed to by the successful rehabilitation of offenders. This aspect of sentencing should never be lost sight of and it assumes particular importance in the case of first offenders and others who have not developed settled criminal habits. If a sentence has the effect of turning an offender towards a criminal way of life, the protection of the community is to that extent impaired. If the sentence induces or assists an offender to avoid offending in future, the protection of the community is to that extent enhanced.”

31.  There is an element of compassion when addressing the object of rehabilitation, and this is normally displayed by the recognition of the suffering or misfortune of an offender.  However, the offender must have shown that he has dissociated himself from his past wrongful conduct, and has committed himself to the future respect of the law.  Where an offender has reformed and is not likely to reoffend, he is deserving of a sentencing option or measure that is appropriate for the category of the offence, and that also provides the means for his rehabilitation.

32.  In our judgment, we do not consider that sufficient account was given to the circumstances of the offence and to the personal background and mitigation of the appellant.  We believe that this had a bearing on the gravity of the offence and the culpability of the appellant as well as revealing “exceptional circumstances” that warranted consideration of the range of sentencing options or measures that would appropriately address individual justice. 

33.  The appellant agreed to process a cheque through her bank account for a fee.  It was to be a single transaction.  It did not go through because of a fault on the face of the cheque but she withdrew from the arrangement and had no further involvement in the matter.  A new cheque was negotiated through someone else’s bank account.  She obviously had second thoughts and decided not to continue to be involved in this crime.  Where a person agrees to engage in criminal conduct but because of some reason or intervening factor decides not to continue to be involved, this is a matter that clearly reflects on the gravity of the offence and the culpability of the offender. 

34.  The appellant’s withdrawal from the arrangement provided strong support that she was forced to go through with this arrangement by “Ah Fei”, who escorted her to the bank and waited outside while she was processing the cheque.  She was at the time 20 years of age and it would appear from her psychological profile that she was in a vulnerable state and easily influenced by others.

35.  Mr Lin properly conceded that there was support for the appellant’s claim that she was forced to go along with the arrangement, and that this was a matter favourable to the appellant which was not given any consideration when she was sentenced.  He added, however, that there were other countervailing factors, namely that she agreed to provide her bank account for reward.  He stressed that general deterrence was an important sentencing object for a crime of this type.  As we have already noted, this ignores the object of rehabilitation that clearly applies in the circumstances of this case.

36.  We consider that the appellant’s personal circumstances and factual circumstances of her involvement in the offence were not properly evaluated and the judge therefore erred in imposing a high and inappropriate starting point.  This highlights the warning that was given in Boma against fixing a tariff in sentencing for money laundering as “it might encourage a rigid mathematical approach and progression without proper regard to other individual relevant factors.”  In our view, the appropriate starting point was one of 24 months’ imprisonment.

37.  We would have reduced the notional starting point by one third for the appellant’s guilty plea of 16 months’ imprisonment. However, there were present in this case “exceptional circumstances” that, in our view, warranted consideration as to whether the sentence should be suspended in accordance with section 109B(1) of the Criminal Procedure Ordinance.[27] The “exceptional circumstances” in this case were a culmination of the following matters:

(1)  the events leading up to and surrounding the offence and the fact that the appellant withdrew from the arrangement (even though this also reflected on the gravity of the offence and the culpability of the appellant);

(2)  the appellant’s age and personal circumstances and her vulnerability to exploitation by others;

(3)  the birth of the appellant’s child and the change of her lifestyle and attitude in a positive and responsible way in the prolonged period after the offence; and

(4)  the appellant’s renunciation of her wrongdoing and past misdeeds and the reformation of her character and commitment to pursuing a law abiding life.

38.  For these “exceptional circumstances”, we would have suspended the appellant’s sentence of 16 months’ imprisonment for a period of two years.  However, as she had already served the equivalent of the actual term of imprisonment, we ordered her immediate release.

39.  This case is an important reminder that sentencing is not a “black-and-white” exercise.  The objects of sentencing also include the important, and sometimes overlooked, object of rehabilitation when seeking to provide individual justice.  An individualised sentence and a sentence which caters to other objects of sentencing, such as deterrence and denunciation, should not be regarded as mutually exclusive.  They are all objects of a balanced and just sentence, although where the balance falls and how each object will be accommodated will necessarily vary from offence to offence and from one offender to another. 

Conclusion

40.  For these reasons we allowed the appeal, set aside the sentence of the judge and sentenced the appellant to 16 months’ imprisonment, which resulted in the appellant’s immediate release from prison custody.  We adopted a starting point of 24 months’ imprisonment which we reduced by one third for the appellant’s guilty plea to 16 months’ imprisonment.  We note that with the usual one third remission for good conduct, the appellant was entitled to immediate release from prison custody having served 11 months of the sentence that was originally imposed on her.

[1] Contrary to section 25(1) and (3) of the Organised and Serious Crimes Ordinance (Cap 455) and section 159A and 159C of the Crimes Ordinance (Cap 200).

[2] McWalters JA.

[3] Appeal Bundle, 173.

[4] Appeal Bundle, 155.

[5] Secretary For Justice v Siu Yun Yee [2017] 3 HKLRD 678, at [46].

[6] Secretary for Justice v Wan Kwok Keung [2012] 1 HKLRD 201, at [12].

[7] HKSAR v Boma [2012] 2 HKLRD 33, at [31].

[8] Secretary for Justice v Siu Yun Yee [2017] 3 HKLRD 678, at [43].

[9] HKSAR v Boma [2012] 2 HKLRD 33.

[10] Secretary for Justice v Wan Kwok Keung [2012] 1 HKLRD 201.

[11] Section 109A of the Criminal Procedure Ordinance, Cap 221.  See SJ v Leung Hiu Yeung (2018) 21 HKCFAR 421, at [76].

[12] HKSAR v Lkhaijav Bayanmunkh, unrep., CACC 320/2011, 2 April 2012, at [13]-[15].

[13] HKSAR v Chan Kin Chung and Another [2002] 4 HKC 314, 326E-H.

[14] See Secretary for Justice v Choi Sui Hey [2008] 6 HKC 166; Secretary for Justice v Siu Yun Yee [2017] 3 HKLRD 678.

[15] HKSAR v Ng Man Yee [2014] 4 HKC 241, at [21]-[27].

[16] Boma, at [38].

[17] Ibid., at [40].

[18] In Secretary for Justice v Wan Kwok Keung [2012] 1 HKLRD 197, it was held by the Court of Appeal that the sentence should mainly reflect the amount of “black money” laundered and not the benefit obtained by the defendant or others.  Other relevant factors included: the number of offences involved, the duration of the offence, the defendant’s level of participation and whether or not it was an organised and sophisticated crime. If the “black money” was proved to have originated from serious and organised indictable offences, including drug trafficking, kidnapping and blackmail, and human trafficking, or the defendant’s benefit was huge, the sentence should be adjusted upward.  The Court further stated:

     “15.    In HKSAR v Hsu Yu Yi [2010] 5 HKLRD 545, Cheung JA set out the amounts of money involved and the sentences passed in a number of ‘money laundering’ cases.  The sentencing starting point is 3 years or so where the ‘black money’ involved is between $1 million and $2 million; 4 years or so where it is between $3 million and $6 million; and could be over 5 years where it is above $10 million.”

[19] HKSAR v Lai Kam Yee Teresa [2010] 4 HKLRD 165; HKSAR v Leung Wai Wah, unrep., CACC 201/2011, 9 November 2011.

[20] Secretary for Justice v Wade [2016] 3 HKC 274, 290; R v Lowery (1992) 14 Cr App R(S) 485, 489.

[21] HKSAR v Kim Eung-who [2015] 4 HKC 293, 296.

[22] R v Sargent (1974) 60 Cr App R 74. 

[23] [2008] 4 HKLRD 14, at [13].

[24] Ibid., at [13].

[25] Vartzokas v Zanker (1989) 51 SASR 277, per King CJ.

[26] Yardley v Betts(1979) 22 SASR 108.

[27] Section 109B(1) provides:

     “A court which passes a sentence of imprisonment for a term of not more than 2 years for an offence, other than an excepted offence, may order that the sentence shall not take effect unless, during a period specified in the order, being not less than 1 year nor more than 3 years from the date of the order, the offender commits in Hong Kong another offence punishable with imprisonment and thereafter a court having power to do so orders under section 109C that the original sentence shall take effect.”