Secretary for Justice v. Chan Ho Kit

[English Translation – 英譯本]

CAAR 1/2024, [2024] HKCA 409

On review from [2023] HKDC 1850

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

APPLICATION FOR REVIEW NO. 1 OF 2024

(ON REVIEW FROM DCCC NO. 238 OF 2023)

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BETWEEN

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REASONS FOR JUDGMENT

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

1.The respondent pleaded guilty to one count of conspiracy to defraud[1] and one count of money laundering[2] (the alternative charge to another count of conspiracy to defraud[3])  before Deputy District Court Judge Francis Cheng (the “sentencing judge”), and was sentenced to 21 months’ imprisonment and 12 months’ imprisonment respectively.  The sentencing judge ordered 5 months of Charge 3 to run consecutively, making it a total of 26 months’ imprisonment.

2.Leave was granted by the Chief Judge of the High Court for an application for review to the Court of Appeal pursuant to section 81A of the Criminal Procedure Ordinance, Cap. 221, Laws of Hong Kong, on the grounds advanced by the applicant that the sentence was wrong in principle and manifestly inadequate.  After the hearing, this Court allowed the application for review, set aside the sentences imposed by the sentencing judge for Charges 2 and 3 and substituted with 40 months’ and 30 months’ imprisonment respectively.  We ordered 8 months of Charge 3 to run consecutively, making a total term of 48 months’ imprisonment.  The reasons are set out below.

Admitted facts

3.Charges 2 and 3 both took place on 9 November 2022.  The two female victims each received telephone calls from a swindler who impersonated as their sons and falsely claimed that the sons were arrested for fighting.  The victims were requested to deliver money to a certain location and to hand it over to someone.

(Incident 1/ Charge 3)

4.Madam Lam received a telephone call at 2:00 p.m. on the day in question, in which the caller said, ‘Mom, things have gone wrong’, ‘chatted with girls, fighting caused phone to be completely damaged’ and ‘have gone to the police station, in need of money’.  She was asked to take a taxi to a designated location (St. Margaret’s Co-educational English Primary and Secondary School at Sham Mong Road)  to hand over HK$30,000 cash wrapped in paper to a ‘Mr Lee’.  Madam Lam handed HK$30,500 over to the respondent at about 5:00 p.m. on that day.  It was not until the following day when Madam Lam spoke to her daughter-in-law over the phone that she realised that she had been defrauded.

(Incident 2/ Charge 2)

5.At 2.30 p.m. on the same day, Madam Wong received a telephone call from someone who claimed to be her second son, ‘Sai B’, saying that he had been taken to Sham Shui Po Police Station because of a traffic accident and a fight.  She was asked to help by using all the money she had.  Madam Wong took HK$65,600 of cash from her residence and took a taxi to a designated location (Ying Wa Street which was just one street away from Sham Mong Road), as requested by the caller.  During this time, Madam Wong’s eldest daughter became suspicious of the incident and made a report to the police.  When Madam Wong arrived at the scene at about 5:00 p.m., the respondent who claimed to be a ‘Mr Lee’, a friend of her son, approached her to collect the money and was immediately arrested by the police officers in ambush.  The HK$30,500 he had earlier collected from Madam Lam was recovered.

6.The respondent stated in his record of interview that he was only instructed by others to collect something wrapped in newspaper from an elderly woman and about HK$60,000 from another elderly woman, and that he would be paid a reward of about HK$2,000 for each transaction afterwards.

Prosecution’s application for enhancement of sentence

7.The prosecution applied to the sentencing judge for an enhancement of sentence for the two charges pursuant to section 27(2)  of the Organized and Serious Crimes Ordinance (Cap. 455).  The prosecution submitted the relevant figures for telephone deception cases from 2018 to 2022, i.e. an increase from 615 cases in 2018 to 2,831 cases in 2022, and the monetary loss rose from $6.09 million to $10.76 million[4].

8.The defence did not object to the application for enhancement[5].

Reasons for sentence

9.The sentencing judge considered the following authorities: HKSAR v Ng Kwok Wing[6], HKSAR v Lam Wing On[7], HKSAR v Hsu Yu Yi[8], HKSAR v Boma Amaso[9] and HKSAR v Lin Zong Yue[10]. [11]

10.The sentencing judge considered that the degree of the respondent’s participation was crucial in respect of Charge 2[12], but accepted that the respondent played the role of a ‘legman’.  Having considered the sum involved in the two charges, the sentencing judge accepted the defence suggestion and adopted 24 months and 12 months as the respective starting points for Charges 2 and 3.  After giving one-third discount on account for the respondent’s guilty plea, upon the prosecution’s application for enhancement of sentence under section 27(2)  of the Organized and Serious Crimes Ordinance, the sentence was enhanced by one-third as set out below:

	Starting point	After one-third discount on account of the guilty plea	Level of enhancement	Ultimate sentence
Charge 2	24 months	16 months	31.25% / 5 months	21 months
Charge 3	12 months	8 months	25% / 2 months	10 months

11.The sentencing judge ordered five months of the sentence for Charge 3 to run consecutively with the sentence for Charge 2.  The total term was 26 months’ imprisonment.

Grounds of review

12.Mr Lee Sze Yin, Charles, Senior Public Prosecutor and Mr Cheng Shu Fan, Brian, Public Prosecutor, for the applicant, contended that the sentences for each charge or as a whole imposed by the sentencing judge were wrong in principle and manifestly inadequate.  For Charge 2 (the offence of conspiracy to defraud), citing the Hung Yung Chun case[13], HKSAR v Yang Chia Cheng & Another[14]and HKSAR v Leung Yiu Fai[15], the applicant submitted that the guidelines laid down by the Court of Appeal in the relevant authorities for telephone deception cases with four years as the general starting point were binding in the present case.

13.For Charge 3 (the offence of money laundering), the applicant relied on HKSAR v Wu Jianbing[16], Cen Huakuo[17] and Lin Zong Yue[18], and stressed that even if there was no evidence which could show the direct involvement of a defendant who took part in handling crime proceeds in the fraudulent act behind, the appropriate starting point should be 3 years.  However, the respondent did not dispute that he had knowledge of the predicate offence, namely the telephone deception.  As this was an aggravating factor, the sentencing judge erred in principle for not enhancing the sentence.

Reply from the Respondent

14.The respondent continued to be represented by Mr Yuen who was his legal representative at the sentencing hearing.  Regarding the two grounds of review advanced by the applicant, Mr Yuen replied that the starting point of four years laid down by the Court of Appeal in Hung Yung Chun was not meant to be a straitjacket to be applied without any flexibility.  He emphasised that Hung Yung Chun and Yang Chia Cheng on conspiracy to defraud or Wu Jian Bing and Cen Huakuo on ‘money laundering’ all involve threats of family members were being held captive, harmed or beaten up.  Hung Yung Chun and Yang Chia Cheng even involved serious circumstances of foreign residents travelling to Hong Kong for the sole purpose of committing crimes. The swindler in the present case only claimed that the sons of the two victims were detained in the police station for certain reasons, and therefore the circumstances were not as serious when compared with the above cases and a distinction could be drawn.  The Court should not rigidly apply the starting point of four years’ imprisonment to the present case.  On the respondent’s knowledge of the predicate offence behind Charge 3, Mr Yuen emphasised that there was no evidence in the present case to suggest that the person who made the telephone call to defraud Madam Lam was the respondent.  As the main charge of fraud had been ordered to be remained in court file and not to be proceeded with, the Court should sentence on the basis that the respondent only had limited knowledge of the predicate offence in sentencing.

Discussion

15.The maximum penalties for both conspiracy to defraud and money laundering are 14 years’ imprisonment.  In considering the sentence on Charge 2, the sentencing judge applied Ng Kwok Wing and Lam Wing On which were relied on by Mr Yuen in mitigation.  Those authorities concern thefts involving a breach of trust or obtaining pecuniary advantage by deception, in which the sums involved were an important consideration in sentencing.  However, sentencing guidelines for telephone deceptions have been laid down by the Court of Appeal in Hung Yung Chun, which were later endorsed in Yang Chia Cheng and Leung Yiu Fai (Leung was an Internet fraud).  In street deceptions and telephone deceptions, the sum involved is not the most important consideration.  In Leung Yiu Fai, the Court of Appeal pointed out that the sum involved in this type of offence ‘[was] not necessarily large.  Even if the defendant [had] no criminal record’, a starting point as high as 3 to 4 years would be adopted for deterrence.[19]

16.Mr Yuen argued that a common thread in the above-mentioned authorities was that swindlers subjected victims to psychological stress by claiming that their family members were held captive and harmed by criminals, whereas this case simply involved claims that the victims’ family members were detained in a police station.  There was an inherent difference between the two as the degrees of threat caused to the victims varied.  A distinction should therefore be reflected in sentencing.  We disagree with Mr Yuen’s argument.

17.In Yang Chia Cheng, the Court of Appeal pointed out that:

‘60. … the telephone deceptions committed by the two applicants are more serious than the common street deceptions. Usually the victims in the street deceptions fell prey to the evildoers because of their own greed, superstition or stupidity. This kind of victims are not too many in number and since street deceptions are committed in public places, there can be eyewitnesses and so there will be higher chances of cracking these cases. These two applicants deceived the victims by taking advantage of the victims’ concern for the safety of their sons. There is an element of blackmail in their conduct. People who are not greedy, superstitious or stupid might also be deceived. The two applicants committed their crimes in such a way that the victims were overcome by fear …’ (emphasis added)

18.The Court of Appeal also pointed out in Leung Yiu Fai that:

‘44. The court will impose heavier sentences on some immoral, abhorrent and despicable offences targeting at the public, like street deception and phone deception, in order to deter such offences and protect the innocent public from harm.’

19.Street deceptions are known to involve different modus operandi, such as ‘blessing gangs’, ‘panacea swindlers’ and ‘electronic parts deceptions’.  The same applies to telephone deceptions, whose modus operandi proliferate in variety and are not limited to falsely claiming that victims’ relatives have been beaten up, kidnapped or detained.  The seriousness of telephone deceptions does not just lie in the modus operandi of the operation, but that the swindlers take advantage of the victims’ vulnerability — their love for their children or their urge to protect and rescue their relatives — throw them into a panic and defraud them of their money by claiming that their relatives’ freedom is restricted for various reasons. They aim at catching the victims off guard, taking advantage of their weaknesses with menaces, causing them to lose their mind and judgment so that they part with their money.  This is tantamount to emotional blackmail.

20.The dicta of Hung Yung Chun clearly pointed out that telephone deceptions are more serious than street deceptions[20]. The co-conspirators were obviously acting in an organised manner and each co-conspirator performed his or her own role according to the plan.  The Court of Appeal stated that the appropriate starting point is 4 years.  For this type of fraud, whilst the sum involved may not be large, it could well be the whole or most of the victim’s life savings.  In respect of Charge 2 in the present case, the victim was asked by the swindler to hand over all the money she had at home.  Therefore in Leung Yiu Fai it was said that the sum involved in this type of offence ‘[was] not necessarily large.  Even if the defendant [had] no criminal record’, a starting point as high as 3 to 4 years would be adopted for deterrence.[21] Given its unique nature, this type of case cannot be viewed as on a par with thefts in breach of trust.  The sentence should not be linked to the defrauded sum.

21.In summary, this Court is of the view that the nature and circumstances of what was falsely claimed by the swindlers, and the lack of threat of beating or detention in no way mitigate the seriousness of this type of fraud.  We do not agree that it is necessary to further distinguish between the various modus operandi in sentencing.  Although both Hung Yung Chun and Yang Chia Cheng involved the circumstances of foreigners coming to Hong Kong to commit crimes whilst Leung Yiu Fai did not, the Court of Appeal still regards a starting point of 4 years appropriate for telephone deceptions[22].  In Hung Yung Chun, in considering whether the enhancement of 50% was correct, the Court of Appeal took the fact that the applicant had been specifically recruited to come to Hong Kong for collecting the money into account which highlighted the difficulty the Police encountered in solving this type of case[23].  It is never the view of this Court that a starting point of 4 years is only applicable to offenders who come to Hong Kong to play the role of forerunner to collect money in telephone deceptions.  Moreover, according to the facts admitted by the respondent[24], he knew the entire fraud scheme involved ‘dishonestly and falsely representing that the son of PW2 (Madam Wong)  was detained by the Police and in need of money’, thereby dishonestly inducing PW2 to hand over to him HK$65,600.  The respondent was not simply a ‘legman’ as the sentencing judge described but held a pivotal part in the fraud scheme in respect of Charge 2[25].

22.We do not agree that there are circumstances which distinguish this case from Hung Yung Chun and Yang Chia Cheng, as argued by Mr Yuen.  We also disagree that even if there exist such circumstances, the sentencing guidelines laid down in Ng Kwok Wing and Lam Wing On should be followed instead.  The guidelines laid down in those two authorities are not applicable to this case.  In respect of Charge 2, the starting point of 4 years in Hung Yung Chun applies.  The starting point of 24 months adopted by the sentencing judge was wrong in principle and manifestly inadequate.

23.In respect of Charge 3 (money laundering), the sentencing judge took into account the amount of ‘black money’ involved, the length of time the offence lasted, the role played by the respondent and his personal background[26]. In HKSAR v Cen Huakuo, the Court of Appeal distinguished the sentence for the offence of conspiracy to defraud involving telephone deception from that for ‘money laundering’, and clearly stated that the sentences passed in Hung Yung Chun were applicable to the former but not necessarily the latter:

‘16. The sentences passed in of Hung Yung Chun were based on the fact that the defendants knew the details of the deception offences including the fact that the victims were put into fear because someone told them that their family members were being detained or beaten up, and the victims gave the culprits several hundred thousand dollars out of that fear. Owing to the above factors, the Court of Appeal was of the view that the culpability of the defendant of a phone deception case was more serious than that of the defendant of a street deception and thus adopted the starting point of 4 years.

17.  In “money laundering” cases, some defendants have no knowledge or only have an incomplete and sketchy understanding about the indictable offence in connection with the “money laundering” offence, but some defendants, even though they have not taken part in the relevant indictable offence, may have detailed knowledge and understanding of it and are also aware of the adverse impact arising out of their acts of “money laundering”.  The Court has to take into account these factors when considering the sentence.’

24.In Lin Zong Yue, Pang JA cited the following observation by the Court of Appeal in the case of Hung Yung Chun:

‘13. … what is noteworthy is another observation made by the Court of Appeal which does shed light on the sentencing approach to be adopted in the present case:

“… the so-called ‘money laundering’, in general, refers to cases where the prosecution preferred the charge of ‘dealing with property known or believed to represent proceeds of an indictable offence’ against the defendants mainly because they may not be able to prove beyond reasonable doubt their direct involvement in a conspiracy to defraud. Also, in that kind of cases, although the defendants did not know that the property was obtained from the proceeds of an indictable offence, they are convicted for dealing with property ‘believed’ to be proceeds from an indictable offence …”’

25.The three counts of money laundering in Lin Zong Yue involved sums ranging from $30,000 to $75,000.  The Court of Appeal adopted 3 years as the starting point for both Charges 1 and 2 (which took place on two consecutive days)  and 3 years and 3 months for Charge 3 on the basis that the applicant had no more than some sketchy idea about the predicate offence.

26.The respondent’s knowledge of the source of the ‘black money’ constitutes an aggravating factor.  We disagree with the respondent’s contention that he only had a peripheral and sketchy understanding of the indictable offence in connection with the ‘money laundering’ offence.  Firstly, when Madam Lam received the swindler’s call, she was told that her son was in a police station and was asked to hand over money to a Mr Lee.  When the respondent went to collect the money, he first claimed to be Mr Lee and said he had to go to the police station before he left[27]. This indicated that he had a certain degree of understanding of the predicate offence, which went beyond his claims that ‘someone asked him to collect money’ and ‘to do the most risky thing’[28]. Furthermore, the two incidents took place within a very close time frame — the swindler called the two victims and the respondent collected the money from them around the same time.  The two locations where the respondent collected the money were just one street apart.  In fact, when the respondent was stopped, he had the $30,500 cash which was just collected from Madam Lam on his person.  It would be unreasonable and unrealistic to suggest that the respondent had knowledge of and took an active role in the second incident but only had a peripheral and sketchy understanding of the predicate offence as to the first incident.

27.We are of the view that the sentencing judge erred in principle in adopting 12 months as the starting point for Charge 3, which was manifestly inadequate.  The appropriate starting point is 3 years’ imprisonment.

Substitution of sentence

28.This Court allows this application for review and sets aside the sentences imposed by the sentencing judge on Charges 2 and 3.  Taking into account all the relevant circumstances, this Court considers the appropriate starting point for Charge 2 to be 4 years’ imprisonment.  The respondent pleaded guilty and is entitled to a one-third discount, which brings the sentence down to 32 months.  This Court agrees with the sentencing judge in enhancing the sentence by one-third, i.e. 10 months (rounded down to an integer), in view of the prevalence of telephone deception cases. The sentence on Charge 2 is 42 months.

29.In respect of Charge 3, this Court considers the appropriate starting point to be 3 years’ imprisonment.  A one-third discount is given for the guilty plea, which brings the sentence down to 24 months before enhancing it by one-third, i.e. 8 months.  The sentence on Charge 3 is 32 months.  (This Court notes that the sentencing judge only enhanced the sentence on Charge 3 by one-fourth, rather than one-third as stated in paragraph 31 of his Reasons for Sentence.)

30.As the respondent is about to be released from prison after serving the sentence originally imposed on him and this review of sentence results in a substantial increase in the imprisonment term, a further reduction of 2 months for each charge is given, thus bringing the sentence on Charge 2 down to 40 months, and the sentence on Charge 3 to 30 months.  Having considered the totality principle, this Court orders that 8 months of the sentence on Charge 3 be served consecutively.  The total sentence is 48 months’ imprisonment.

Mr Charles Lee, Senior Public Prosecutor, and Mr Brian Cheng, Public Prosecutor, for the applicant

Mr Bernard Yuen, instructed by W K To & Co Solicitors, assigned by the Legal Aid Department, for the respondent

Translated by the Court Language Section of the Judiciary and vetted by  Mr P Y Lo, Barrister-at-law.