HKSAR v. Cheng Yuk Ying and Another

DCCC 51/2020

[2020] HKDC 852

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 51 OF 2020

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REASONS FOR SENTENCE

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1.The defendants Cheng Yuk Ying (“D1”) and Chan Chi Kuen (“D2”) pleaded guilty to a joint charge of Conspiracy to defraud, contrary to Common Law and punishable under section 159C(6) of the Crimes Ordinance, Cap 200.

2.The particulars of the charge read as follows:-

“CHENG Yuk-ying and CHAN Chi-kuen, between the 1^st day of May 2014 and the 20^th day of February 2019 (both dates inclusive), in Hong Kong, conspired together to defraud Baguio Cleaning Services Company Limited, by dishonestly falsely representing to the said Baguio Cleaning Services Company Limited that the said CHAN Chi-kuen had been employed to work as a cleaner of the said Baguio Cleaning Services Company Limited during the period as shown in the duty rosters, thereby inducing the said Baguio Cleaning Services Company Limited to pay the said CHAN Chi-kuen monthly salary and Mandatory Provident Fund contributions for the aforesaid period.”

Summary of Facts

3.The facts admitted by the defendants can be summarized as follows:-

“1. Baguio Cleaning Services Company Limited (“Baguio”) is a contractor of the Leisure and Cultural Services Department (“LCSD”) providing cleaning services to various leisure venues in Tsuen Wan, including Approach Beach and Lido Beach (“the Beaches”). Under the contract effective from 1^st May 2014, Baguio had to supply sufficient cleaners to work daily at each leisure venue, including the Beaches. D1 had been the supervisor of Baguio responsible for recruiting cleaners, preparing the duty rosters of cleaners for the Beaches and monitoring cleaners’ attendances at the Beaches.

2. According to the records of Baguio, D2 was purportedly a full-time cleaner between 1^st May 2014 and 20^th February 2019 at either Approach Beach or Lido Beach. She had reported to duty almost daily at the Beaches during the period. As a result, Baguio had paid D2 a total of HK$513,301.30 as salaries and HK$53,171.20 to the MPF account of D2 as employer’s MPF contributions.

3. In fact D2, the niece of D1, never had any intention to work as a cleaner for Baguio. She signed the recruitment documents as requested by D1. She had never worked as a cleaner at the Beaches for Baguio during the whole period. There was no record of any temporary worker standing in for D2 either.

4. Baguio confirmed that had it been known that records in respect of D2 contained false information, they would not process the job application, release the salary payments and make the MPF contributions for D2.

5. Both Ds were arrested by ICAC officers on 20^th February 2019. Under caution, both Ds admitted their wrongdoings. D2 also stated that she had passed the entire sums of her salaries received from Baguio to D1 each month upon receipt.”

Background of the Defendants

D1

4.D1 is 64 years old, born in Hong Kong to a fishing family on 6 December 1955.  She is married with 3 children, aged between 43 and 39.  Her husband is 65 years old and has been suffering from schizophrenia since 1989.  She lived onboard the fishing boat of her family until the age of 11 and had only received 1 year education.  She has a clear criminal record.

5.She started her working life as a factory worker.  She got married in 1977.  After the birth of her first daughter, she turned to engage in domestic processing work so that she could stay home to take care of the family.  In 2005 she started to work as a cleaner at the Beaches, for either the Johnson Cleaning Services Company Limited or the Baguio Cleaning Services Company Limited, depending on which company secured the work contract of LCSD.  She was later promoted as site supervisor overseeing the work arrangements of 6 public beaches. She was suspended from her duties after her arrest in February 2019 for the present offence.

D2

6.D2 is 48 years old, born in Hong Kong on 19 October 1971.  She is single and residing with her 71 years old mother and 46 years old younger sister. Her father had passed away due to an industrial accident in 1991. She is the 3^rd among 4 siblings but her eldest brother had passed away in 2018, around the same time when her then boyfriend passed away. Her 2^nd elder brother is 50 years. D1 is the wife of her fraternal uncle. She also has a clear criminal record.

7.After completing Form 5 education, D2 worked as a clerk for several years before becoming a private tutor.  In recent years she operated a small-scale private tutorial company with her friends.  Her monthly income was about HK$5,000.  Unfortunately, due to the COVID-19 pandemic, she had to close down the company in early 2020.  She is now unemployed.  I am told that she has been suffering from epilepsy and hypertension since 2009, requiring regular medical attention on a long-term basis.

Mitigation

D1

8.In mitigation, Mr Chan for D1 stated that under the contract with the LCSD, Baguio has to provide sufficient manpower to maintain the cleanliness of the Beaches, otherwise, the government would impose penalties on Baguio.  It had been very difficult for D1 to recruit sufficient cleaning workers, both full-time and part-time, as the work was unpleasant and the pay was low.  Also, she was aware of the job nature of D2, her niece.  As a private tutor with very low income, D2 had no MPF protection for her future.  Therefore, D1 persuaded D2 to be enrolled as a permanent cleaning worker of Baguio, so that D2 could generate some protection under the scheme.

9.Mr Chan submitted that though D2 had never actually worked for Baguio, D1 had been able to find temporary replacement cleaning workers over the years to take the place of D2.  However, these workers were not registered and/or would only receive cash without having to wait for cheque payments from Baguio, D1 had to pay them in cash and reimburse herself when D2 received the salaries from Baguio and paid them over to her.

10.Mr Chan submitted that D1 had done all these out of her concern for D2’s future and for the benefit of Baguio.  D1 did not have any monetary gain.  In fact she might be said to have lost some money as she paid those temporary workers out of her own pocket in advance.  This was borne out by the mitigation letter by D1’s supervisor, Mr Chan Yu Lung, who was a prosecution witness.  In his letter Mr Chan Yu Lung stated that D1 had been outstanding in her work performance, attracting praises not only from the senior staff of Baguio, but also the beach users and LCSD.  Further, since her suspension upon her arrest in February 2019, Baguio had not been able to recruit sufficient cleaning workers to meet the government requirement and been fined for over HK$200,000.  Mr Chan Yu Lung re-iterated to the Probation Officer that D1 got herself into trouble because she was too enthusiastic in helping the company, her niece and her friends who wanted to get salary from the jobs.  He believed that D1 had arranged substitute workers to replace D2 but without reporting the fact to the company.

11.Mr Chan submitted that D1 is extremely remorseful.  She made full confessions to the ICAC about her misdeed upon arrest and pleaded guilty to the present charge at the first available opportunity.  She has developed Adjustment Disorder with mixed symptoms of anxiety and depression as a result of her arrest and the present Court proceedings.

12.Other mitigation letters submitted by Mr Chan tend to show that D1 is a person with very kind heart.  She would assist her relatives wherever and whenever she could.  She has also been very much involved in helping children in need, having participated in the foster parent scheme arranged by the HK Family Welfare Association between 1995 and 2001.  In addition to her own children, she had provided parental care to at least 3 foster daughters during the period.  The 3 foster daughters all submitted mitigation letters in support of D1.

D2

13.Ms Wu for D2 submitted that D2 played a lesser role in the fraudulent scheme.  She only acted according to the instructions of her Aunt (D1).  Her criminality was less serious as, so far as she was concerned, no breach of trust was involved.  Admittedly she initially agreed to the suggestion of D1 out of greed, to obtain the benefits under the MPF scheme.  However, over the years she had told D1 on several occasions she wanted to withdraw from this scheme, but was persuaded by D1 to stay on.

14.Ms Wu submitted that D2 is extremely remorseful.  She is ready and willing to compensate Baguio in full for the MPF contributions Baguio had paid on her behalf during the period, ie HK$53,171.20.  She has the money ready.  The reason why the money is not yet paid to Baguio is because it is not clear whether she would also be responsible for the salaries paid to her by Baguio during the period of the fraudulent scheme, ie HK$513,301.30.  Ms Wu re-iterated that D2 had paid over all the salaries she had received from Baguio to D1.

15.Further, Ms Wu submitted that D2 had indicated to the prosecution at a very early stage of the present Court proceedings that she would plead guilty to the Charge and be a witness for the prosecution against D1.  D2 had given a NPS to the ICAC.  It was only after the NPS was served on D1 when D1 finally indicated she would also enter a plea of guilty to the Charge.  Ms Wu submitted that D2 should be given due credit for the assistance she had provided to the prosecution, citing HKSAR v Lo Sze Tung Stephanie [2019] 1 HKC 309, [2018] HKCA 421 in support.

Sentence

16.There is no sentencing guideline for the offence of Conspiracy to defraud, the maximum sentence being 14 years’ imprisonment.  Each case depends on the its own facts.

17.There can be little doubt that the present offence to which Ds had pleaded guilty is a serious one, with the fraudulent scheme being perpetrated over a period of almost 5 years.  This is particularly so for D1, who was in a position of trust vis-à-vis her employer, Baguio.

18.At my request Ms Lee for the prosecution has helpfully provided me with the following information:-

(a) LCSD personnel would count the number of visible cleaners working on each beach of the public beaches in Tsuen Wan District every day. LCSD would also cross check the time cards of the cleaners at the beaches to verify the shortage of manpower if spotted. If there was a shortage, arrangement would be made to deduct the salary of the shortage from the contract money payable to Baguio in the following month.

(b) During the period of the present offence, ie, May 2014 to February 2019, D1 was responsible for 6 beaches. A total sum of HK$480,777.50 had been deducted from the payable contract sum to Baguio for these 6 beaches. After D1 was suspended from duty in February 2019, within the 7 months between April and October 2019, a total of HK$1,184,480 had been deducted by LCSD from the payable contract sum to Baguio as a result of shortage of cleaning workers.

(c) During the period of the present offence, in relation to Lido Beach, which D2 was purportedly to have worked, there were a shortage of manpower spotted on 43 days, out of which D2 had purportedly reported for work on 28 days. For these 28 days, a total sum of HK$24,560 had been deducted from the contract sum payable to Baguio even though according to the records of Baguio, there was no shortage of manpower on those 28 day. However, Ms Lee did not know if Baguio had taken up the matter with LCSD. If that was the case, either the records of Baguio were not accurate or that Baguio had already been alerted to the problem of the duty roster then, but did not take any action.

19.The above information clearly supported the mitigation put forward by Mr Chan on behalf of D1 and the comments by Mr Chan Yu Lung, the supervisor of D1, that D1 committed the offence out of her over enthusiasm to help the company to maintain sufficient manpower required under the contract with LCSD, difficult as it may have been.  I am satisfied that D1, in doing what she had done, was not motivated by personal gain.  She did not benefit monetarily by perpetrating the fraudulent scheme.  I am satisfied that all the salaries paid to D2 by Baguio were used by D1 to pay the temporary cleaners who stood in for D2.

20.I accept that apart from the MPF contributions by Baguio, D2 did not benefit from the salaries paid by Baguio.  She had the intention to pay restitution in full to Baguio of the MPF contributions out of genuine remorse.  I also accept that the role she played in the scheme was lesser than D1.  Ms Lee has also provided me with a chronology of events leading up to the guilty pleas of both Ds.  I am satisfied that D2’s early indication of a guilty plea and the provision of a NPS have contributed to the eventual guilty plea of D1.

21.In SJ v Li Cheuk Ming [1999] 1 HKLRD 63, 65, Chan CJHC (as he then was) said that CSO was not to be excluded as a sentencing option under exceptional circumstances even where the offences were serious, including bribery and corruption.  Generally speaking, they can be categorized into personal exceptional circumstances, exceptional circumstances relating to the nature of the offence, and exceptional circumstances relating to consequences.  The definition of exceptional circumstances varies from case to case, but a guilty plea, general family background and financial losses do not constitute exceptional circumstances.

22.In the circumstances of this case, I am satisfied that both exceptional circumstances relating to the nature of the offence and exceptional circumstances relating to consequences do exist in relation to both Ds.

23.I have called for CSO reports on both Ds.  Both received favourable comments and are recommended to be placed on CSO for a medium duration.  Both Ds fit in with the 6 criteria for consideration for CSO as endorsed by the CA in HKSAR v Chow Chak Man [1999] 2 HKC 659.

24.CSO is an alternative to immediate custodial sentence, it contains both punitive and rehabilitative elements.  In the very special circumstances of this case, I am satisfied that CSO is the appropriate sentence to be imposed on both Ds.

25.For the offence of Conspiracy to defraud to which both Ds had pleaded guilty, both Ds are sentenced to 160 hours’ CSO.  D2 is to pay to Baguio HK$53,171.20 as restitution for the MPF contributions paid by Baguio.