Secretary for Justice v. Leung Yat Ming and Another

CAAR000009/1998

CAAR 9/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

APPLICATION FOR REVIEW NO. 9 OF 1998

(ON APPEAL FROM DCCC 451/98)

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

Coram: Hon. Nazareth, V.-P., Stuart-Moore, V.-P., and Mayo, J.A. in Court

Date of hearing: 8 June 1999

Date of delivery of judgment: 25 June 1999

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

J U D G M E N T

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

Mayo J.A. (giving the judgment of the Court):

1. This is an application by the Secretary for Justice for the review of sentences imposed by H.H. Judge Toh on 21st July 1998 in DCCC 451/98.

2. In that case the Judge convicted Leung Yat-ming (R1) of an offence under s. 9(3) of the Prevention of Bribery Ordinance, Cap. 201 and Madam Leung Suk-fong (R2) of two offences under the section.

3. On the first and second charges R2 received a sentence of 9 months imprisonment which was ordered to be suspended for 2 years. In addition to this the Judge ordered R2 to repay $1,258,000 being the moneys she had received from the Chinese University as a rent allowance for the relevant periods.

4. R1 received a similar sentence on the third charge and was ordered to repay $286,370 being the rent allowance he had received from the Hong Kong University.

5. All three charges were framed in a similar manner save for the details as to who was charged, the date of the alleged offence and the particulars of the Institution concerned.

6. The first charge reads as follows:

"1st Charge (Against D2 only)
Statement of Offence

Agent using false document with intent to deceive her principal, contrary to section 9(3) of the Prevention of Bribery Ordinance, Cap 201.

Particulars of Offence

LEUNG Suk-fong, on or about the 12th of April 1986, in Hong Kong, being an agent of the Chinese University of Hong Kong, namely, a Lecturer of the said Chinese University of Hong Kong, with intent to deceive her principal, used a document, namely, the Application for Private Tenancy Allowance:

(a) in respect of which the said Chinese University of Hong Kong was interested;

(b) and which contained a statement which was false in a material particular, namely that the leased accommodation was not owned by herself, her spouse and/or a relation of either herself or her spouse and neither she, her spouse nor any of her spouse's relations had a financial interest in it; and

(c) which to her knowledge was intended to mislead the said Chinese University of Hong Kong."

7. The relevant facts are as follows:

8. R1 and R2 are husband and wife. At the relevant time, R1 was a lecturer in the Department of Curriculum Studies at the University of Hong Kong and R2 was a lecturer in the Department of Paediatrics at the Chinese University of Hong Kong.

9. The two Universities offered staff of a certain rank a Private Tenancy Allowance (PTA) which was a financial contribution paid monthly to the employee towards the payment of rent for leased accommodation. Entitlement to the allowance was based on certain conditions. In particular, an applicant had to declare that the proposed leased accommodation was not owned by the employee, his/her spouse and/or a relation of either himself/herself or his/her spouse and that neither the employee his/her spouse nor any of his/her or his/her spouse's relations had a financial interest in it. "Relations" included parents, brothers, sisters and their spouses and children and their spouses.

10. In February 1986 a shelf company, Marble Shine Limited, was purchased by R1 who owned and controlled it through nominee shareholders and nominee directors were provided by Michael Secretarial Services which also provided secretarial services to the company. In March 1986 Marble Shine purchased a flat at Scenery Garden, Fo Tan, Shatin which was later sold in October 1990. In November 1990 Marble Shine purchased a flat in Savanna Garden, Tai Po. R1 and R2 were the authorised signatories of the company's bank account and guarantors of the mortgage loan that had been secured over the Savanna Garden property.

11. R2 applied for PTA in relation to the Scenery Garden property on 12 April 1986 (Charge 1 - exhibit 6) and in relation to the Savanna Garden property on 6 November 1990 (Charge 2 - exhibit 9). R2 submitted in each instance a lease agreement signed by Marble Shine and R2 and subsequently rental receipts for reimbursement. She received PTA totalling $588,600 in relation to the Scenery Garden property and $669,400 in relation to the Savanna Garden property. The PTA for the Savanna Garden property ceased when she joined the Hospital Authority and was therefore no longer eligible for it.

12. R1 applied for PTA in relation to the Savanna Garden property on 21 June 1993 (Charge 3 - exhibit 23). R1 submitted a lease agreement signed by Marble Shine and R1 and subsequently rental receipts for reimbursements. He received PTA totalling $286,370 in relation to the Savanna Garden property.

13. The Judge found there was an irresistible inference that Marble Shine was bought by R1 as a "vehicle to buy and rent these properties to himself and his wife". She was satisfied for all the reasons she gave that she was entitled to lift the corporate veil of Marble Shine. Having done so the Judge accepted that there was sufficient evidence from which she could be satisfied that R1 had a financial interest in the properties owned by the company and was aware of that fact. Also R2 knew of R1's interest in the properties.

14. The Judge also accepted that both respondents had the necessary intention to deceive their principals.

15. On this basis the Judge convicted the respondents of their respective charges.

16. To get the full flavour of the reasons why the Judge passed the sentences she did, it is necessary to quote a large portion of the reasons she gave:

"Having said that, this offence is a serious one for it involves a breach of trust. As I have said, the University of Hong Kong is entitled to place a certain degree of trust in its staff members. However, this betrayal is to some degree mitigated by the inequitable terms then prevailing in the local universities between the local staff as opposed to the terms for the expatriate staff. The inequity in the system therefore gave a strong temptation to the local staff to maximise their benefits and I have no doubt that the defendant may not have been the only one who succumbed to this temptation.

Having stepped into this quagmire, he foolishly did not extricate himself when Hong Kong University started the Home Purchasing Scheme for local staff. As Mr LOK said, if he had done so, the defendant would have collected a tidy profit from selling his flat in Savanna Garden and buying a new flat under the Home Purchasing Scheme. It is perhaps an indication of the defendant's lack of business cunning that he did not do so.

It has been said by the courts that in corruption cases they merit custodial sentences and I would here cite the case of R v CHAN Koon-kwok [1990] 2 HKLR at page 458. Working within that parameter, each court will have to weigh the gravity of each offence that comes before it.

In this case the only loss to Hong Kong University is only in monetary terms. As I have said, that temptation to maximise the benefits in the university is a very strong one and no doubt the 1st defendant with his wife, the 2nd defendant, felt they were entitled to all the benefits on a par with the expatriate staff. But unfortunately, it was not available to them because of the policy prevailing in the universities at the time under the colonial administration.

For an offence of this nature I consider that a starting point of 12 months' imprisonment after trial would be appropriate. But taking into account that this defendant will be making full restitution and although he had pleaded not guilty at the beginning, the conduct of his defence was such that he should be given some discount. There was no wasting of the court's time and most of the evidence was agreed and admitted, even where he could have taken advantage of the fact that some of the witnesses were abroad, but he did not do so. His defence was based only on the legal arguments advanced on his behalf, and I must say, most eloquently by Mr LOK.

So in those circumstances I feel that the defendant is entitled to a discount and I reduce the sentence of 12 months' imprisonment to 9 months' imprisonment.

The 1st defendant has been without doubt a man who has served not only the Hong Kong community well but has also contributed to the exchange of information and relations with the academia in China and I have been told that this has been done on a lot of occasions at his own expense.

The defendant has a clear record and an exemplary background as shown by the outpouring of support in the letters that have been submitted to me. And most important of all, the defendant has made much contribution to the education of young persons in Hong Kong. These factors alone must warrant the court to temper mercy with justice. I have no doubt that this is only a single fall from grace and that the defendant will not reoffend in the future. I do not consider that putting him behind bars will in any way benefit society and it will be adding undue hardship to his young family. The defendant with his background and respect within his field has been punished by the attendant shame and publicity and I agree with Mr LOK that his children will equally share in this upon their return to school. I can think of no stronger punishment for the 1st defendant than this.

I feel therefore that in these circumstances, particularly the contribution of the 1st defendant to the Hong Kong community in the past and hopefully also in the future towards the better education of our young, I have been persuaded therefore to suspend his sentence. The 1st defendant is therefore sentenced to 9 months' imprisonment, suspended for 2 years."

17. And then:

"Like her husband, the 2nd defendant was not born with a silver spoon in her mouth. The 2nd defendant worked very hard and through her own effort and determination has achieved a name for herself in Hong Kong. The respect with which her colleagues in her field have for her can be seen in the letters of support submitted to me.

The 2nd defendant, to her credit, did not rest on her laurels and had concerned herself in lending support to various organisations like the promotion of breastfeeding in Hong Kong and child abuse. There is no doubt that the children of Hong Kong have benefited from her research into child growth and diet and also from her willingness to give talks and seminars in this field. Much of this has been on her own account, both in money terms and in spare time.

Having said that, I do feel that an offence of this nature warrants a sentence of imprisonment but, as I have been told, the 2nd defendant is prepared to make full restitution. The Chinese University has not suffered any loss apart from the money that she is prepared to return.

For charge 1 I consider that a starting point of 12 months' imprisonment to be appropriate.

As in the case of the 1st defendant, I have to take into account the way that the defence has been conducted and you should be given some credit for that, so I will reduce the 12 months to 9 months' imprisonment.

For charge 2 I also consider 12 months to be appropriate and for the same reasons I will reduce it to 9 months' imprisonment and I will make this concurrent to the 9 months' imprisonment for charge 1 because of the totality principle.

I will also take the unusual step of suspending these sentences because of the 2nd defendant's blameless life till now. Like her husband, I believe that this is only a single fall from grace and unlike a lot of the defendants that come before these courts, the 2nd defendant and her husband have suffered from the overwhelming media attention in this case and the fact that therefore their shame will be shared by their children and this will be more constraining than any prison bars can ever be. Also I believe that the community will benefit more from the 2nd defendant being allowed to continue with her work and research in her field than in keeping her incarcerated.

So the 9 months will be suspended for a period of 2 years. And again, no doubt your counsel will explain to you what that means, but it just means that within these 2 years if you don't commit any other offences, you will not need to serve out those 9 months' imprisonment."

18. The Secretary for Justice submitted that the sentences were wrong in principle and or manifestly inadequate.

19. In support of this the main submissions made were:

"(a) A supposed inequality in terms of employment as between local staff and expatriate staff is no basis for diminishing the seriousness of the breach of trust. Nor is the consideration that other such staff may also have 'succumbed to this temptation'.

(b) The starting point of 12 months imprisonment failed to give due recognition to the precept of sentencing that requires a court when considering sentence to have regard to the intention of the legislature as indicated in the penalties provided, and to measure the case before it against the kind of case capable of attracting the maximum penalty: Attorney General v Ho Chun-chau [1985] 1 HKC 40.

(c) The Judge fell into error in relying upon the undertaking to make full restitution. As the Court of Appeal made clear in R v Kwok Lai-ling [1989] 1 HKLR 418, 470: 'A mere promise to make restitution may be broken as easily as it is made. However, actual restitution made voluntarily before criminal proceedings have commenced, or while they are at their earliest stages, may have some relevance to sentencing as evidence of remorse. On the other hand, where it appears to have been made merely in the hope of obtaining a reduction in sentence, it can no longer be seen in that light. The courts do not make bargains with the convicted ...'

(d) The Judge erred in granting the Respondents discounts of 25% after they had pleaded not guilty. A reason for granting substantial discounts is to recognise the significance which the criminal justice system attaches to the remorse which is demonstrated by a guilty plea. The Respondents by contesting their guilt throughout exhibited no such remorse.

(e) That the impact of the offences if discovered would have a serious effect upon their family was something the Respondents ought to have had in mind when they committed the offences: R v Hung Mau-sing Cr App 476/89; R v Nguyen Manh-hung Cr App 314/92. Part of the price to be paid by the defendant who is convicted is the hardship this may entail to his family, and this cannot be allowed to affect the appropriate sentence. As Cons VP put it in Attorney General v Yau Chun-fong [1993] 1 HKCLR 42, 45:

'We have also in mind the need to deter others, even those with happy family backgrounds, and successful children, who might, in severely straitened circumstances, be tempted to resort to crime to solve their difficulties.'

(f) The Judge ought to have attached full weight to the fact that the highest standards of integrity are required of those who carry on a business or practice a profession in Hong Kong: Attorney General v Shamsudin [1987] HKLR 826, 833. Although each Respondent suffered 'a single fall from grace', the time has long since passed when an offender enjoying a high position in society can rely upon that status to shield him from the consequences of his criminality: R v Cargill (1913) 8 Cr App R 224, 231. As Kempster JA recognised in Attorney General v Chan Chi-yin and Another [1988] HKC 44, 46:

'We would also hesitate to give currency to the notion that an offender coming from a good and comfortable background is entitled to more favourable treatment by this court than one who has not enjoyed such advantages and, very often, is subject to much greater pressures. The culpability of a person coming from a good background may, indeed, be regarded as the greater particularly if he is a person to whom others look for an example.'

(g) That the crime attracted 'shame and publicity' ought not to have influenced sentence in the way it did. This is part of the price any offender must expect to pay if his crime is exposed. ...

(i) Whilst it may be true, as the Judge said, that the Respondents would 'not reoffend in the future', the reality is that they will not, in all likelihood, ever be in the position which enables them to offend again in that manner. As made clear by the Lord Chief Justice in R v Barrick (1985) 7 Cr App R (S) 142, 145, where there is a breach of trust the offender will usually 'be a person of hitherto impeccable character. It is practically certain ... that he will never offend again and, in the nature of things, he will never again in his life be able to secure similar employment with all that means in the shape of disgrace for himself and hardship for himself and also his family'.

(j) In Attorney General v Ngan Suen-kee [1987] HKLR 451, the Court of Appeal indicated that it is only in an exceptional case that it is proper to pass a sentence, other than an immediate custodial sentence, in cases of breach of trust. In such cases sentences of immediate imprisonment are called for as a general deterrent, and additionally to mark the gravity of the offence. Further, a court is required to have regard in such a case to the amount involved and to the element of premeditation: R v Chu Tai-wai and Another [1986] HKLR 1008, 1010. The Judge, before suspending the terms of imprisonment, ought to have given full weight to the considerations canvassed in those judgments."

20. It has to be said immediately that it would be difficult to dissent from any of these propositions in the normal case.

21. This however was not a normal case. It was a wholly exceptional case.

22. While in no way condoning the offences we do consider that the overall criminality was rather less than is immediately evident.

23. This was on account of the particular nature of the regulations which were infringed. While it is undoubtedly true the institutions in question did lose substantial amounts of money it is equally true to state that it would have been a simple matter for these respondents to have obtained comparable benefits if they had let their flats on the open market and then themselves rented alternative premises and claimed the relevant benefits. There are suggestions from respectable quarters that in all likelihood other members of the staff with similar benefits may have proceeded in this manner and quite likely have achieved the same objective.

24. The quality and degree of trust reposed in the offender was the first of the matters to which it was suggested in Barrick at p.147 the court will no doubt wish to pay regard in determining the proper level of sentence. It is apparent from the cases that the trust reposed in employees and servants is of two sorts. First, the general trust reposed in all employees and servants. Second, the special trust imposed upon some, and arising out of e.g. property entrusted to them, or particular duties with which they are charged. The examples given in Barrick are of an accountant, solicitor, bank employee or postman. Here, the applicants, like other employees, had a general trust reposed in them. But they had no special trust and certainly not one they specifically breached by their conduct in question.

25. In our view these factors clearly distinguish the present case from the situation envisaged in cases such as R. v. Barrick [1985] 7 Cr. App. R. 142.

26. Another important factor in this case is the character and background of these respondents. A large number of people have taken the trouble of writing the most glowing letters of support for the respondents. What emerges from these letters is that both respondents have by dint of their own strenuous efforts made quite outstanding contributions to society in their respective fields. They have also most generously given of their time and also on occasion their financial support to worthy causes.

27. Mr. Zervos for the Secretary for Justice very properly drew our attention to the fact that however constructively these respondents had contributed to society it was still nonetheless the case that they had to be sentenced for the offences they had committed rather than simply on the basis of their previous character. It was essential that everyone should be equal before the law.

28. Following on from this it was unacceptable, he submitted, that there should be wide disparity in sentence for offences of this kind. There had to be a limit to the extent to which it was justifiable not to pass an immediate term of imprisonment which would normally be imposed for the type of offence in question.

29. We accept that counsel was quite right in making all of these submissions. We also accept that while the discretion reposed in a sentencing Judge is wide the sentences imposed in this case having regard to all of the circumstances were lenient.

30. However there is a further factor which has to be borne in mind. The Judge imposed the suspended sentences on 21st July 1998 almost a year ago. For most of the time since then they have lived in the shadow of this review. It would be a severe punishment for them to be now sent to prison, little short of devastating.

31. Both respondents have lost their positions and we have been advised by Mr. Lok, S.C. that they have also had to forfeit valuable pension rights as a consequence of this. They have also repaid all the moneys they were ordered to pay.

32. We have also to say that we would have found it considerably easier to have imposed a custodial sentence immediately after trial than we do now, following a review of the sentence, and the substantial period following the trial during which the respondents have been at liberty.

33. In the very exceptional circumstances of this case we have come to the conclusion that it would be unduly harsh at this late stage to order that immediate custodial sentences should now be imposed. We would however emphasise that we do not in any way reject the submissions which were so ably advanced by Mr. Zervos. We consider though that the interests of justice will be served if we decline to accede to this application. This is the order we make.

Representation:

Mr. K.P. Zervos, S.A.D.P.P (Ag.) for Applicant

Mr. Lawrence Lok, S.C. & Mr. Sterling Tsu, instructed by M/S Macksion Chan & Co. for Respondents