HKSAR v. Chong Hung Shek
Read the full judgment text of CACC 168/2018 on BabelCite. This Court of Appeal judgment was delivered on 3 April 2019 before McWalters JA, M Poon J.
Criminal law – fraud – Theft Ordinance Cap 210 s.16A – breach of trust – conveyancing clerk misappropriating clients' monies – guilty plea – sentencing – global approach versus individualised approach – sentencing bands under HKSAR v Cheung Mee Kiu and HKSAR v Ng Kwok Wing – whether sentencing band determined by amount charged or actual loss – whether prior conviction for similar dishonesty offence can be relied on as mitigation – applicant employed as conveyancing clerk by S. Cheng & Yeung, Solicitors since 2009 – stole clients' monies over several years by altering payee names on cheques, misappropriating monies received as agent and falsely instructing firm's accounts staff to transfer client monies – total misappropriated HK$35,797,221 – actual loss HK$10,498,193.54 – heavy personal debts from mortgage, bank loans, credit cards and gambling – undisclosed prior 2007 conviction for conspiracy to defraud – whether global approach to sentencing (same sentence on each count, all concurrent) is wrong in principle – held yes, individualised sentences required for each offence with totality considered afterwards through concurrency or whole or partial consecutiveness – whether sentencing band determined by amount in charge or actual loss – held by amount in charge, actual loss is mitigation only – appeal allowed – sentences of 8 years on each of the three counts quashed – substituted with 6 years on Count 1, 10 months on Count 2 and 4 years on Count 3 – Count 2 concurrent with Count 1, 2 years of Count 3 consecutive to Counts 1 and 2 – total effective sentence 8 years' imprisonment.
Legal issues: Whether a global approach to sentencing on multiple charges is wrong in principle · Whether the sentencing band for breach-of-trust fraud is determined by the amount in the charge or the actual loss suffered
Outcome: Application for leave to appeal against sentence allowed; sentences of the trial judge set aside and the applicant resentenced by the Court of Appeal to an effective total of 8 years' imprisonment.
Cited by 25 cases · Cites 9 cases
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CACC 168/2018 [2019] HKCA 451 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CRIMINAL APPEAL NO 168 OF 2018 (ON APPEAL FROM HCCC NO 47/2018) ------------------------
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_________________________ REASONS FOR JUDGMENT _________________________ Hon McWalters JA (giving the Reasons for Judgment of the court): 1.Following his pleas of guilty before Madam Justice Barnes (“the judge”) on 5 February 2018, the applicant was convicted of three counts of fraud, contrary to section 16A of the Theft Ordinance, Cap 210. On 7 June 2018, he was sentenced to 8 years’ imprisonment on each of the counts with an order that all the sentences should be served concurrently. 2.The applicant subsequently filed a Notice of Application for Leave to Appeal against sentence (Form XI) with the court. 3.At the hearing of the application we allowed the appeal, quashed the sentences imposed by the judge and in substitution for them imposed sentences of imprisonment on each of the three counts of 6 years, 10 months and 4 years respectively. We ordered that the sentences on the 1st and 2nd counts be served concurrently and that 2 years of the sentence on the 3rd count be served consecutively to the sentences on the 1st and 2nd counts. We said we would hand down our reasons for our judgment at a later date. This is we now do. The factual background 4.At the time of the offences, the applicant was employed as a conveyancing clerk by S. Cheng & Yeung, Solicitors, a law firm (“the firm”) and had been so employed since 2009. He was responsible for handling conveyancing transactions and dealing with the firm’s conveyancing clients. In the course of so doing he would receive monies from clients that had been paid as deposits on properties they were selling and monies that were to be paid as deposits on properties they were buying. He would also receive from the firm’s clients money to settle stamp duty in relation to a property transaction. 5.In mid-August 2016, some of the firm’s clients found that their conveyancing transactions that had been handled by the applicant could not be completed as the firm had failed to release the monies needed for completion. 6.On 24 August 2016, Mr Cheng Chun Chung (“Mr Cheng”), solicitor and boss of the applicant, confronted the applicant after a client of the firm had complained to him two days previously. The applicant confessed to him that he had been stealing the clients’ monies. The applicant signed a declaration stating,“I…admit that I have stolen client’s money deposited with [the firm] and the amount is not less than $8 million.”Mr Cheng then asked the applicant to locate all the files of clients from whom he had stolen money. 7.On 29 August 2016, some of the firm’s clients reported the matter to the police. Subsequently, the police attended the firm and seized a list of clients handled by the applicant and arrested the applicant. 8.In the course of his 1st cautioned video record of interview with the police the applicant made the following admissions:
9.In two subsequent cautioned video records of interview, the applicant made the following further admissions:
10.The police investigation of the applicant’s fraudulent conduct revealed that:
11.Over the period of time covered by the three charges the applicant dishonestly misappropriated a total sum of HK$35,797,221. However, the actual loss suffered by the clients in respect of each charge was as follows:
Thus, the final total loss from the applicant’s criminal conduct is HK$10,498,193.54. The mitigation 12.The applicant was 55 years of age at the time of sentencing. He is married with one daughter. The applicant had received education up to Form 5 and since the 1990s, had been employed as a conveyancing clerk in other law firms in Hong Kong until he joined S. Cheng & Yeung, Solicitors in 2009. 13.The applicant had one previous conviction for conspiracy to defraud in 2007 for which he had been sentenced to 4 months’ imprisonment. He committed this offence when he was in financial difficulties. According to his counsel at trial, Ms Monica Chow, the applicant defrauded the government by falsely representing himself to be a person entitled to compensation in respect of a government land resumption. However, at no time did the applicant disclose his criminal record to Mr Cheng when he was employed by the firm in 2009. 14.Ms Chow informed the court that by the time the applicant joined the firm, he was already struggling to make ends meet and had total debt of about HK$1 million from taking out a mortgage, bank loans, credit card loans and from gambling. The applicant had to pay HK$30,000 monthly for his mortgage and a further HK$40,000 for various loan repayments. But his monthly income at that time, was only in the region of HK$40,000 to HK$50,000, inclusive of commission. 15.The applicant first misappropriated the firm’s client’s money in June 2013 but did not do so again until July 2015, when he was no longer able to obtain any loan or to borrow any further against his credit card. 16.Ms Chow said that initially the applicant misappropriated the monies only to temporarily resolve his problems. But once he started, he did not know how to stop and in fact lacked the courage to confess and bring his misconduct to an end. He was relieved when the matter came to light in August 2016 and he voluntarily surrendered to the police. 17.Ms Chow invited the judge to sentence the applicant on the basis that the actual amount lost was only HK$10 million. However, she accepted that as the total amount he had appropriated was up to HK$35 million, his culpability was higher than someone who had stolen only HK$10 million. 18.Ms Chow asked the judge to give full credit to the applicant’s guilty plea, which was tendered at the earliest opportunity, and pleaded for leniency. The Reasons for Sentence 19.In passing sentence, the judge considered the applicant’s personal background, the background to the present offences, the actual loss suffered by the clients and the impact on them and on the applicant’s employer Mr Cheng, who had since then lost his qualification, been declared bankrupt and now worked as a solicitor’s clerk. The judge had been provided with victim impact statements from 43 victims and Mr Cheng. 20.The judge stated that the present case was “clearly a serious breach of trust case… they were all acts of fraud which [the applicant] was able to perpetrate as a result of his position held in the company and also because of the loopholes in existence in the accounting practices of the firm”[1]. 21.In coming to the appropriate starting point, the judge had regard to the sentencing bands for fraud as laid down by the Court of Appeal in HKSAR v Cheung Mee Kiu[2] and HKSAR v Ng Kwok Wing[3] These cases lay down sentencing guidelines in breach of trust theft cases. The relevant guidelines are summarized in the headnote of Ng Kwok Wing as follows:
22.The judge said that she would determine the appropriate sentence by taking a global view of the fraud and having regard to the total amount defrauded by the applicant, that is, HK$35 million. This, she said, would enable her to assess the magnitude of the applicant’s fraudulent acts. However, she would still take into account the fact that the actual loss came to only about $10.5 million. 23.In response to Ms Chow’s submission that the judge should use the amount of the actual loss as the basis for determining the relevant sentencing band within which she would locate her starting point, that is the $3 million to $15 million sentencing band rather than the $15 million or more band, the judge said:
24.It was urged upon the judge by Ms Chow that she should sentence for each count separately and then order that each sentence be served concurrently. This would result in an individualised sentence being imposed on each account appropriate for the amount involved in that count. The judge rejected this approach as, when used in conjunction with an order for concurrent sentences, it would have the effect of punishing the applicant for a fraud of only $24 million as that was the largest amount of the appropriations in the three counts. 25.In assessing the seriousness of the applicant’s conduct the judge noted that the applicant’s fraudulent acts had lasted a number of years and were not an isolated incident or committed out of momentary greed but rather had been “done systematically for a long time.”[6] 26.The judge then turned to the question of the starting point she should adopt. She said that as the total amount defrauded was over $35 million she would, on the authority of Cheung Mee Kiu, adopt a starting point over 10 years’ imprisonment. Having decided upon the relevant sentencing band for the purpose of determining her starting point, the judge assessed what that starting point should be, saying:
27.The judge reminded herself that the actual loss suffered was about HK$10.5 million, an amount much less than the amount the applicant had misappropriated. She said that after having given this matter some thought she was of the view that a deduction of 3 years from the global starting point was appropriate in the circumstances. This resulted in a reduced starting point of 12 years’ imprisonment. 28.The judge then turned to the plea for leniency which Ms Chow had advanced on the applicant’s behalf and said:
29.Having concluded that there was no basis for extending leniency to the applicant, the judge said that the only mitigating factor was the applicant’s guilty plea. 30.The judge then gave the applicant a full one-third discount for his plea of guilty and, by this route, reached a final sentence of 8 years’ imprisonment. She imposed this sentence on each count and ordered the sentences on all the counts to be served concurrently, thereby resulting in a total sentence of 8 years’ imprisonment. The applicant’s grounds of appeal against sentence 31.Having been refused legal aid, the applicant was acting in person in this application. In his Form XI filed on 20 June 2018, he made the following complaints:
32.He expanded upon these complaints in a written submission dated 5 December 2018, in which he submitted that the sentence was manifestly excessive because:
33.In a letter to the court dated 1 February 2019, the applicantinvited the court to look at the reasons for sentence in HKSAR v Ko Ka Wai[10]. In that case the defendant was tried and convicted of one count of theft of HK$37.45 million in breach of trust and had been sentenced to 10 years’ imprisonment, ie the statutory maximum for the offence of theft. The applicant submitted that by comparison, he should have received a lesser sentence as he was convicted on his own plea and the amount of money involved in his case was much less that in Ko Ka Wai. 34.At the hearing of his application the applicant complained that by adopting a starting point of 15 years the judge had exceeded the statutory maximum for the section 16A Fraud Offence of 14 years’ imprisonment. He had nothing to say on whether the overall sentence of 8 years’ imprisonment should be reduced. The respondent’s submissions 35.Ms Jessie Sham, for the respondent, submitted that the applicant’s grounds of appeal fall into the following two complaints.
36.Ms Sham submitted that a global approach was clearly warranted in this case and that it was correct for the judge to arrive at a global starting point by having regard to how much the applicant had misappropriated, instead of how much was actually lost and unrecovered. Taking into account how the frauds were perpetrated, their duration, the amount involved and the impact on the victims, a global starting point of 15 years’ imprisonment for all three charges is entirely justified. 37.Ms Sham submitted that in allowing a reduction of three years to reflect the actual loss the sentence was already “a very lenient one” and nothing said in mitigation warranted any further discount to be given. 38.In respect of the second ground Ms Sham said the applicant’s complaint under this ground is misconceived in that he only looked at his sentence with “form over substance”. 39.In passing the sentence of 8 years’ imprisonment the judge was taking a global approach and clearly had in mind the total amount of HK$35 million that the applicant had misappropriated. This was not a situation where the judge had passed an individualised sentence for each charge according to the amount involved in each count. 40.Ms Sham submitted that the result would have been the same even if the applicant had received individualised sentences based on the amount involved in each count. The judge had, in her exchanges with counsel, made clear that she would not accept the suggestion that all sentences were to run concurrently. It follows from what the judge said that even she had imposed individualised sentences on each count, she would have ordered that the sentences on each count should be served partially consecutively and the final overall sentence would still have been about 8 years’ imprisonment or perhaps even more. Discussion 41.In sentencing the applicant, the judge took a global approach in determining the starting point, by first considering the total amount defrauded under the three charges, then making downward adjustment for the amount of money that was recovered and then imposing the same term of imprisonment on all three counts. Adopting this approach gave the applicant the impression that the individual sentences, especially that for the 2nd count, were manifestly excessive on their face. 42.The complaint of the applicant is that such a “global approach” to sentencing is wrong. In such an approach the culpability reflected by other charges is factored into all charges and a higher starting point adopted than would otherwise be appropriate for the limited culpability reflected by the individual charges. The same sentences are then imposed on all charges which are ordered to be served concurrently with each other. 43.In contrast, an individualised approach to sentence involves the court imposing a sentence appropriate for the culpability reflected only by the particular charge for which the sentence is imposed. In order to achieve a sentence which reflects the whole of the defendant’s culpability the court will then consider whether to make orders of whole or partial consecutiveness in respect of the sentences imposed for the other offences. 44.The superficial attractiveness of the global approach to sentencing is that it is perceived as allowing the sentencer to take an overall view of the whole of a defendant’s culpability and, thereby, to arrive at an appropriate punishment. But it has been deprecated by the Court of Appeal as it results in an inappropriate sentence on each of the charges the defendant faces and this can cause difficulties at the appellate level. Furthermore, an overall view of a defendant’s culpability can still be taken but after, and not before, the imposition of individualised sentences. 45.As long ago as 1988 in Attorney General v Wong Sek-shing[11] the Court of Appeal said:
46.In HKSAR v Chiu Ping Kei[12], Lugar-Mawson J, in giving the judgment of the Court of Appeal helpfully expanded on this principle when he said:
47.More recently, in HKSAR v Chan Nai Keung & ors[13] Stuart-Moore VP, in giving the judgment of the Court of Appeal said at [64]-[65]:
48.In HKSAR v Tan Meiyuan & ors[14] Stock JA, as Stock NPJ then was, in giving the judgment of the Court of Appeal explained the reasons why it was so important to impose individualised sentences:
49.In HKSAR v Wong Chor Wo[15] this issue was before the Full Court of the Court of Appeal presided over by Ma CJHC, as Ma CJ then was. In giving the judgment of the court Saunders J said:
50.The judge cannot be criticized for wanting to take a global view of the applicant’s culpability. However, a global view of culpability is different from a global approach to sentence. A global view of culpability is an essential tool when sentencing for multiple offences. It comes into play after the sentencing judge has completed an individualised sentencing process and it is used to guide the judge to an appropriate final sentence in conjunction with the application of the totality principle. The tool by which the final sentence is achieved is the court’s power, in respect of multiple charges, to order that the sentence imposed on one charge be served consecutively or partially consecutively to the sentence imposed on another charge. 51.Here, by imposing global sentences, the judge has erred in principle and it falls to us to sentence the applicant afresh. 52.The complaint of the applicant that the judge should have used the actual loss suffered when choosing the sentencing band from which to draw her starting point, can be quickly answered. The charge particularized the amount of the fraud. It is that amount which determines which sentencing band should be used as it is in respect of that amount that the defendant is convicted and for which he must be sentenced. The actual loss, whether caused by the nature of the fraud, the time at which it is detected or because restitution is made, is simply a matter of mitigation. 53.Most of the applicant’s complaints fall away once it is accepted that the judge erred with her global approach to sentencing but did not err in not using the amount of the actual loss to determine into which sentencing band each of the charges fell. 54.There is nothing in the applicant’s complaint that the judge was prejudiced against him because of his prior conviction. The judge specifically said she would not enhance her starting point because of it. Nor did the judge evidence any adverse view of his character that was not warranted by the facts. The applicant is a person who had a prior conviction for a fraud offence. The offence was conspiracy to defraud which is an offence of dishonesty. Contrary to what the applicant asserted in his written submission, it is very much an offence of the same nature as that for which he stood to be sentenced. 55.Also, in his written submissions to us the applicant emphasized his remorse but at the same time asserted that the offences were committed only because the lax accounting practices of the firm both tempted him and enabled his offending. This is self-serving nonsense. What enabled the applicant’s offending to take place was the fact that he was employed by the firm and placed in a position of trust in respect of clients’ monies and this happened only because the applicant dishonestly concealed from Mr Cheng the fact that he had a prior conviction for conspiracy to defraud. We can detect no sign of genuine remorse, no willingness by the applicant to accept responsibility for his actions and nothing favourable about his character. 56.In his written submissions he has relied on the Reasons for Sentence of trial judges in quite different cases. We have had regard to them but do not find them helpful. In one HKSAR v Ko Ka Wai[16], the defendant had been charged with only one count of theft which, the judge acknowledged, tied his hands in passing a sentence in accordance with the guideline laid down in Cheung Mee Kiu and Ng Kwok Wing as the statutory maximum for theft is only 10 years’ imprisonment. 57.In assessing, for ourselves, appropriate sentences for each of the three counts we had regard to the amount stolen, the gravity of the applicant’s breach of trust, the duration of the fraud and the consequences to the victims. We were satisfied that appropriate starting points for each of the three counts were 12 years’ imprisonment, 18 months’ imprisonment and 8 years’ imprisonment. In order to allow for the actual loss resulting from the fraud, we then reduced these starting points to 9 years, 15 months and 6 years. These reduced starting points were further discounted by one-third to allow for the applicant’s guilty pleas. The final sentences for each count then became 6 years’ imprisonment, 10 months’ imprisonment and 4 years’ imprisonment. 58.At this stage we stood back in order to form a view of the overall culpability of the applicant so that we could fairly determine what would be an appropriate total sentence for him. It is only by forming such a view that we could decide whether the sentences we imposed on each count should be served concurrently or wholly or partially consecutively. We found we reached the same global view of the applicant’s culpability as the judge. There was no doubt in our minds that the 2nd and 3rd counts added to the culpability of the applicant but that they should not be ordered to be served wholly consecutively. To do so would result in an excessive sentence and would not sufficiently allow for the fact that the 3rd count was committed not for the purpose of the applicant appropriating monies for himself, but rather in order to enable him to continue concealing the fraud and prevent his detection. Given that the actual loss for count 2 was relatively minor we decided to order that the sentence for that count should be served wholly concurrently with the sentence for the 1st count. For the 3rd count, it being a much more serious offence, we ordered that 2 years of its sentence should be served consecutively to the sentences imposed on the 1st and 2nd counts. Disposition 59.For these reasons we allowed the application for leave to appeal against sentence, set aside the sentences of the judge and in their place imposed on the applicant sentences of 6 years’ imprisonment on the 1st count, 10 months’ imprisonment on the 2nd count and 4 years’ imprisonment on the 3rd count. We ordered that the sentence on the 2nd count be served concurrently to the sentence on the 1st count and that 2 years of the sentence on the 3rd count be served consecutively to the sentences for the 1st and 2nd counts. The total sentence of the applicant remains unchanged at 8 years’ imprisonment.
Ms Jessie Sham SPP of the Department of Justice, for the respondent The applicant appeared in person [1] Appeal Bundle, page 41 I – L. [2] [2006] 4 HKLRD 776 [3] [2008] 4 HKLRD 1017 [4] Ibid, at 1018-1019. [5] Appeal Bundle, pages 41R-42C. [6] Appeal Bundle, page 42K. [7] Appeal Bundle, page 42N-P. [8] Appeal Bundle, page 43C-E. [11] [1989] 1 HKLR 192 at 196D [12] CACC476/2001, unreported, 17 June 2002. [13] [2008] 2 HKC 378 at 394G-H [14] CACC 360/2008, unreported, 2 April 2009. [15] CACC 314/2006, unreported, 6 May 2009. | ||||||||||||||||||||||
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