HKSAR v. Muhammad Nadeem Bhutta

CACC 377/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 377 OF 2015

(ON APPEAL FROM DCCC NO. 147 OF 2015)

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J U D G M E N T

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Introduction

1.The applicant faced three charges of dealing with property known or believed to represent proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap 455 (Charges 1 to 3); and one charge of attempting to deal with property known or believed to represent proceeds of an indictable offence, contrary to the same provision and section 159G of the Crimes Ordinance, Cap 200 (Charge 4).  The applicant pleaded not guilty to all charges.  On 15 October 2015, after a trial before HH Judge Sham (“the judge”) in the District Court, the applicant was convicted on all charges.  On 22 October 2015, the applicant was sentenced to an overall term of 5 years’ imprisonment.

2.On 2 November 2015, a Notice of application for leave to appeal (Form XI) was filed and the applicant now seeks to appeal against both his conviction and sentence.

The trial

(The prosecution case)

3.It was not disputed that on 6 March 2013, the financial controller (“PW1”) of a Spanish company, known as Valmont S.A.U. (“VSAU”) received a telephone call at her office in Madrid, Spain.  The caller claimed to be the Chief Executive Officer of VSAU.  Relying on what the caller told her, PW1 remitted a sum of Euros 966,256 to the bank account (“the Account”) of the applicant’s company (“Arsons”) in Hong Kong for investment purposes.  PW1 later found out that she had been cheated and reported the case to the police both in Spain and Hong Kong.

4.Within the space of two days of the remission of the money to the Account on 7 March 2013, the applicant had removed, or attempted to remove, the money from the Account on four occasions in the following ways:-

(a)   On 7 March 2013 at 1650 hours, the applicant converted Euros 248,235.05 into HK$2.5 million and withdrew the same in cash (Charge 1);

(b)   On 8 March 2013 at 1021 hours, the applicant transferred Euros 566,014 to a company in Cyprus by telegraphic transfer (Charge 2);

(c)   On 8 March 2013 at 1029 hours, the applicant converted Euros 98,800 into HK$1 million and withdrew the same in cash (Charge 3); and

(d)   On 9 March 2013, the applicant transferred Euros 50,400 to the same company in Cyprus by telegraphic transfer, but the transfer failed (Charge 4).

5.The defence did not dispute that such an amount of money was indeed deposited into the Account on the day in question; nor did the defence challenge that it was the applicant who dealt with the money in the Account on the four occasions (set out in para 4(a)-(d) above).  Hence, the main issue at trial centred on the credibility of the applicant’s explanation for the movement of the monies.

(The defence case)

6.The applicant elected to give evidence and testified that the sum of money had been sent to him from a buyer, Mr Johnas Mallaka (“Johnas”), who at that time had struck a HK$3.6 million deal with him to purchase 600 iPads from the applicant at HK$6,000 per piece.

7.The applicant said that the sum of money, which was more than twice the amount required for the payment of the goods, had been sent by mistake; accordingly, the applicant was asked by Johnas to pay back the excess by transferring the money to a designated overseas bank account.  The applicant explained that he intended to make a deposit to a supplier of iPads when he withdrew cash on two occasions amounting to HK$3.5 million; however, Johnas wanted to cancel the deal and had asked the applicant to refund the money.  Thus, the applicant handed over HK$3.5 million cash to a man called Mario, in accordance with Johnas’s instructions.

Reasons for verdict

8.The judge, having heard the applicant’s account, noted a number of suspicious aspects about it:

(i)   The applicant only had limited knowledge of Johnas.  Notwithstanding that the alleged transaction was their first business deal together and was the biggest order the applicant had ever received, there was no written sale and purchase agreement between the parties.  Furthermore, the deal was a one-way communication, i.e. only Johnas could contact the applicant but not vice versa[1];

(ii)   There was no mention of the types of iPads to be purchased in the deal, leaving the impression that Johnas would take whatever iPads the applicant had obtained for him[2];

(iii)   The applicant had to pay HK$2.4 million, being 70% of the purchase price of 600 iPads to the supplier as deposit.  However, there was no written order form specifying the type of iPad[3];

(iv)   The applicant was a stranger to Johnas.  Yet, Johnas apparently had sufficient confidence in the applicant to transfer millions of dollars to the applicant without carrying out any form of due diligence[4];

(v)   When Johnas asked the applicant to cancel the deal, the applicant made no attempt to bargain with him[5];

(vi)   There were other safer ways of making the refund to Johnas than passing HK$3.5 million in cash to Mario, who was a total stranger to the applicant[6];

(vii)   After the applicant returned the money, Johnas only acknowledged receipt of an approximate sum.  Moreover, the difference between the sums returned by the applicant and the acknowledged amount was sufficiently large to give rise to a potential dispute.

(viii)  The whole deal did not make business sense.[7]

9.After careful consideration, the judge found that the defence version of events was so extraordinary that he had no doubt that Johnas and the alleged business deal were wholly fictitious.  The judge also found that the emails between the applicant and Johnas had all been forged.[8]

10.The applicant had removed the money from the Account shortly after the same had been deposited into it.  The judge considered that to be clear evidence of co-operation on the part of the applicant in the deception, even if he may not have been party to the telephone scam itself.  The judge was satisfied that the applicant, by his actions, knew that the money represented the proceeds of an indictable offence at the time he dealt with it.[9]

11.Even if the finding of the applicant’s knowledge of the deception was incorrect, the judge found that the applicant clearly knew that he was not entitled to the money but nevertheless went on to deal with it.  Since he had successfully remitted part of the money to Cyprus, he must have had instructions to do so.  The judge was satisfied that anyone looking at the situation in its entirety would believe that the money represented the proceeds of an indictable offence.  Putting it in a different way, the applicant ought to have known the money he dealt with represented the proceeds of an indictable offence.[10]

Mitigation

12.The applicant was 45 years old at the time of his sentence.  He was a man of previous good character.  He was a university graduate from Pakistan, who had come to Hong Kong in 1997.  He was married and was living with his wife and three children aged 5 to 9.

13.Mr Richard Donald, counsel for the applicant at the trial below told the court that the applicant was a successful businessman, who ran several shops in Chungking Mansions, Tsim Sha Tsui, mainly selling mobile telephones, iPads and accessories.  Counsel referred to HKSAR v Xu Xia Li and Another (unrep., CACC 395/2003), in which the applicants were each convicted after trial of conspiracy to launder money.  The money laundered was HK$11 million and the applicants were each sentenced to 3 years’ imprisonment. The appellate Court held that the starting point of 3 years’ imprisonment after trial was not out of line with other similar cases.  Counsel invited the judge to adopt a similar starting point and, giving credit for the applicant’s clear record, to pass a sentence of something in the region of 2 years and 9 months’ imprisonment.

Reasons for sentence

14.The judge referred to the sentencing considerations set out in HKSAR v Boma [2012] 2 HKLRD 33;and also to HKSAR v Hsu Yu Yi (unrep., CACC 159/2009) and Secretary for Justice v Wan Kwok Leung, (unrep., CAAR 13/2010), where the Court of Appeal gave some guidance as to the significance of the amount of money laundered when assessing the length of sentence.

15.The judge found that the applicant had played a significant role in the offence.  Not only had he provided his bank account for the purpose of channelling the funds, but he had also proactively taken part in removing and dispersing funds from his account within a short period of time.  The judge said of the applicant’s involvement that “[w]ithout him, the scam could hardly be a success”.  The money involved amounted to almost HK$10 million and there was also an international element to the offence.

16.The judge explained that he would give a 2 months’ imprisonment discount for the applicant’s clear record; however, that allowance would be reflected in the overall totality of sentence.  By taking into account everything put forward in mitigation, the facts of the case and the amount of money laundered, the applicant was sentenced to 3 years’ imprisonment for Charge 1; 4 years’ imprisonment for Charge 2; 3 years’ imprisonment for Charge 3; and 2 years’ imprisonment for Charge 4.  Having regard to the totality of sentence, the judge ordered the sentence on Charge 2 to run consecutively to 4 months of each of the other charges, making an overall term of 5 years’ imprisonment.  The judge then returned to the applicant’s clear record and made it clear that the overall sentence would have been 5 years and 2 months had it not been for his good character.

Grounds of appeal

(Against conviction)

17.In his written submissions filed to court on 10 May 2016, the applicant has set out two grounds of appeal, namely:-

(a)   The judge erred in law in reaching a guilty verdict by not having proper regard to the defence case (Ground 1); and

(b)   The judge erred in allowing only one day of preparation time for counsel newly assigned by the Legal Aid Department (Ground 2).

He has amplified those grounds before me this morning.  In particular, he says that a case involving HK$10 million in the District Court should have merited more than one day of preparation by his counsel.

(Against sentence)

18.In relation to his application for leave to appeal against sentence, the applicant argues that the sentence was wrong in principle as the judge failed to order a concurrent sentence for all four charges, which were of similar nature.  He also says that an overall sentence of 5 years’ imprisonment was manifestly excessive.

Respondent’s submissions

(Against conviction)

19.Mr Derek Wong SPP, on behalf of the respondent, submits, in respect of Ground 1, that the judge gave a lengthy and detailed analysis of the applicant’s evidence.  The judge’s findings in relation to facts and credibility were reasonable and logical. Moreover, the applicant has not been able to point to any error made by the judge in reaching his conclusions. Nor did the judge err in law.

20.Regarding Ground 2, the respondent submits that the applicant had in fact had more than one month to request a new defence counsel if he was not satisfied with the performance of his original assigned counsel (not Mr Donald).  The applicant had been represented by his original counsel at a pre-trial review held on 28 July 2015; yet the trial was not due to be heard until Monday, 31 August 2015.  In the event, the original counsel was only discharged on 31 August and the trial was adjourned until Tuesday, 1 September.  On that morning, Mr Donald appeared for the applicant for the first time and requested an adjournment until the following day, namely, Wednesday, 2 September.  The judge obliged him, notwithstanding that there was an overseas witness outside court waiting to give evidence for the prosecution, and the trial proceeded without complaint on 2 September 2015.

21.Mr Wong submits that the issues in the present case were very straightforward.  Since much of the prosecution case was not disputed, the issue ultimately turned on the credibility of the applicant’s explanation.  The time available to an experienced counsel such as Mr Donald would have been sufficient for him to understand the applicant’s instructions and to present his case in an orderly manner.  The trial was not rendered unfair simply because the judge allowed only one full day for preparation.  Further, there was no evidence of any breach of the presumption of innocence as alleged by the applicant in his written submissions.

22.Accordingly, the respondent submits that the convictions were not unsafe and unsatisfactory and should be upheld.

(Against sentence)

23.The respondent submits that the applicant in the present case had laundered, or attempted to launder, a total sum of Euros 966,256, which amounted to almost HK$10 million.  That sum was a significant feature to be considered in sentencing.

24.Mr Wong says that the judge had regard to the eight “significant features” in Boma before concluding that 5 years and 2 months’ imprisonment was a sufficient starting point to reflect the applicant’s culpability.  He gave the applicant 2 months’ discount for his clear record.  He then determined the individual sentences for each offence and ordered the sentences to run partly concurrently and partly consecutively in order to achieve the overall sentence.  The respondent submits that the global approach adopted by the judge was correct and the overall sentence imposed could hardly be regarded as manifestly excessive, bearing in mind the amount of money and the international element involved.

25.Mr Wong distinguishes the case of Xu Xia Li and Another as wholly different on its facts.

Consideration

(Re conviction)

26.This was a very straightforward case which ultimately depended on the evaluation of the applicant’s evidence, particularly since the essentials of the prosecution case were not in dispute; namely, that the money in question was obtained by a telephone deception, that it in fact represented the proceeds of an indictable offence and that it had been deposited into the applicant’s account.[11] The applicant was represented by experienced junior counsel, who would have brought it to the judge’s attention if he did not feel he was in a position properly to do his client justice at the trial.  Mr Donald did not do so and I have no reason to think that, in a straightforward case such this, he was in any way disadvantaged.

27.The endorsement of the judge’s clerk on the court file makes it clear that Mr Donald had told the judge that he had already read the papers in the case but not yet seen his client in conference by the hearing of 1 September.  The applicant accepts, however, that he was on bail and went from court to a conference at Mr Donald’s Chambers on that day, following the adjournment of the case at Mr Donald’s request.  Mr Donald was clearly in a position, therefore, to begin the trial on 2 September.  Certainly, he made no request for any further adjournment.  This cannot amount to an arguable ground of appeal against conviction.

28.As for the reasons given for rejecting the applicant’s evidence, I can see no error either in the logic of the judge’s assessment or in the conclusions to which he came.  These were factual matters of evidence for the tribunal of fact to resolve and I can see nothing which would afford the applicant a reasonable ground of appeal against conviction in respect of the fact-finding exercise.

29.There is no issue of law engaged in this case, given that the judge has found as a fact on the basis of the evidence adduced at trial that the applicant knew that the money in question represented the proceeds of an indictable offence.  I cannot at this stage see any basis for upsetting that finding, even though the judge has gone on to give his views on an alternative basis as well.

(Re sentence)

30.In respect of sentence, the judge referred to the pertinent authorities and was right to conclude that there were a number of “significant features” to be reflected in this particular sentence.  In particular, the amount dealt with was the equivalent of almost HK$10 million[12]; the predicate offence was a scam or deception[13]; the applicant’s role as a conduit for the money was essential[14]; from that role, he must have known that the money represented the proceeds of serious crime[15]; and there was an international element both in respect of the receipt of funds (from Spain) and the dispersal of some of the funds (to Cyprus).[16]

31.As for the making of the sentence on Charge 2 consecutive to part of each of the other three sentences (and concurrent with the remainder of those sentences), this approach was unobjectionable in ensuring that the overall totality was not manifestly excessive.

32.The judge did expressly give the applicant a 2-month discount for the fact that at the age of 45, he was of good character.[17]  He later made it clear that, but for the question of good character, the overall sentence would have been 2 months greater.[18]  Thus, it is clear that the judge has expressly factored the applicant’s good character into his sentencing equation and given a specific discount for that factor.

33.Given the number and quality of “significant features” at play in this particular case (as identified at para 30 above), I do not consider there is a reasonable argument that the ultimate sentence was either manifestly excessive or wrong in principle.

Conclusion

34.The application is accordingly refused.  The applicant is further advised of his right to renew his application for leave to appeal against conviction and/or sentence to the Court of Appeal, but is also warned of the consequences of so doing, which may include a direction for any loss of time spent in custody pending his appeal, if the Court of Appeal were to come to the view that there was no justification for the renewal of his application.

Mr Derek Wong SPP, of the Department of Justice, for the Respondent

The Applicant appeared in person