Attorney General v. Reginald Charles Molyneux Stuart

CAAR000003/1978

-----------------

-----------------

Coram: Briggs, C.J., Huggins and Pickering, JJ.A.

Date of Judgment: 4th May, 1978.

-----------------

JUDGMENT

-----------------

Huggins, J.A.:

1. These are applications for review of sentences imposed in respect of offences under s. 82 of the Inland Revenue Ordinance. Unhappily they were presented before us on behalf of the Attorney General as though they were appeals against sentences, in spite of the repeated emphasis which the court has placed on the important distinction between an appeal and a review: see, for example, Re Applications for review of certain sentences by the Attorney General 1972 H.K.L.R. 370.

2. Contrary to the assertion of counsel for the Attorney General that here there was no fine and no order of imprisonment, both Defendants were in fact fined 25% of the tax which was undercharged in consequence of their offences. The maximum penalty in respect of each charge was a fine of $10,000 and "a further fine" of treble the amount of tax which was undercharged in consequence of the offence and imprisonment for three years. The Defendant Tsai pleaded guilty to twelve charges and the Defendant Stuart to seven charges.

3. The learned judge recognized that tax evasion is a very serious offence but said at p. 2 of his judgment (the bundle of papers filed was not paginated for the convenience of the court) :

"In most cases a substantial penalty would meet the needs of law enforcement, without need for imprisonment although the case does occasionally arise" (sic).

I understand that to mean that a substantial fine should be the normal penalty. Every case must be considered on its merits and I would not accept that as a general rule. In the present case, where the offences were committed over a long period of time and involved evasion of very large amounts of tax, I think it was clearly wrong not to impose a sentence of imprisonment. I do not dissent from anything that has been laid down in the previous cases as to the principles to be applied, but in my view any reasonable fine would, in the words of s. 81B, have been manifestly inadequate. I recognize that there were in Yu Pang-nin v Reg. Cr. App. 1977 No. 1069 aggravating factors which are not present here. The mitigating factors upon which counsel for the Respondent relies do not, however, weigh as heavily with me as they did with the learned judge in the court below and in my judgment he was in error in regarding the payment of bribes to police officers and unlawful key-money to a previous tenant as a matter of mitigation at all. Although one might possibly begin to have some sympathy for a businessman who has found himself the victim of blackmail and been unable to obtain from the police the assistance to which he was entitled, the sum of $304,000 which, it is agreed, has been paid as protection money bears little relationship to the amount of tax evaded, so that the connection between the two necessarily becomes suspect. Be that as it may I have no doubt that the fines imposed did not properly reflect the gravity of these offences and I concur in the order which my Lord has proposed, viz. that there be substituted for the sentences passed by the District Judge sentences of imprisonment for one year suspended for two years and fines of one and a half times the tax evaded.

4th May, 1978.

Representation:

-----------------

-----------------

-----------------

-----------------

Coram: Briggs, C.J., Huggins & Pickering, JJ.A.

Date of Judgment: 4th May, 1978.

-----------------

DECISION

-----------------

Pickering, J.A.:

4. In addition to concurring in allowing these applications and in increasing six-fold the fines imposed by the judge in the Court below and adding terms of imprisonment of twelve months suspended for two years, I think it desirable to reinforce what has been said by my brother Huggins regarding the learned judge's comment that in cases involving false tax returns the need for imprisonment does "occasionally" arise.

5. Whilst, as has been said, every case must be considered on its merits and there can be no rule-of-thumb sentencing, it will be a rare case in which gross understatements of income repeated year after year after year by businessmen, or professional men, in respect of substantial profits does not merit a term of imprisonment. The artisan relatively newly elevated to a salary scale at which, in his family circumstances, he first becomes liable to tax, may be deserving in terms of sentence, to some consideration for imperfect understanding of his position. The successful business or professional man has no such claim on the sympathy of the Court. In the present case that was undeniably so and the proper sentence was a term of imprisonment. That the term which we have imposed is suspended is no more than a reflection of the fact that these are Applications for Review and that the respondents have suffered that anxiety of double jeopardy which is not a normal feature of our law. In circumstances such as these the principle of a custodial sentence is one with which this Court would be unlikely to interfere even if we were to review its length. The Applications should serve as a warning to those reluctant to pay even the modest rates of tax applicable in Hong Kong.

Representation:

B.P. Clancy & M.T.C. Boase for Crown/applicant.

M.H. Jackson-Lipkin, Q.C. & A. Corrigan (Johnson, Stokes & Master) for respondents.