HKSAR v. Wong Fung Ming and Another

CACC000515/2001

CACC 515/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 515 OF 2001

(ON APPEAL FROM DCCC 202 OF 2001)

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Coram: Hon Stuart-Moore VP, Yeung JA and Suffiad J

Date of Hearing: 20 November 2002

Date of Judgment: 5 December 2002

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J U D G M E N T

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Stuart-Moore VP (giving the judgment of the Court):

Introduction

1.The Applicants (D9 and D11 respectively) appeared in the District Court before Deputy Judge Dufton on 3 October 2001 to answer a joint charge of conspiracy to defraud which also named ten others. The particulars of the offence alleged that between May and July 1999 the twelve named defendants:

".... conspired together with other persons unknown to defraud the employees of Link Legend Enterprise Limited by dishonestly:

(i) falsely representing that the said Link Legend Enterprise Limited was trading in Loco London Silver;

(ii) causing the said employees to invest money in the said Link Legend Enterprise Limited for the purpose of trading in Loco London Silver; and

(iii) falsely representing to the said employees that they had lost all their money trading in Loco London Silver."

2.Seven of the defendants pleaded guilty.

3.D9 and D11 were amongst those who pleaded not guilty. They were convicted on 23 October 2001.

4.On 1 November 2001, D9 and D11 were each sentenced to five years' imprisonment.

5.D9 now seeks leave to appeal against conviction and sentence and D11 seeks leave to appeal against sentence alone.

Background and D9's conviction application

6.The single ground of appeal in relation to D9's conviction is that the judge erred in drawing an inference that D9 "knew of, and participated in, the conspiracy merely from the evidence that she conducted a brief and formal interview with PW2 and from the evidence that she knew of the code to access the inner office of the premises". Mr Edwin Choy, on D9's behalf, submitted that this approach had rendered the conviction unsafe or unsatisfactory.

7.The nature of the fraud which had brought D9 before the court is one which is now all too familiar. Before we look at the judge's findings, the allegation against D9 can be briefly described.

8.The police investigation began as a result of complaints received from ten ex-employees (the victims) of a company called Link Legend Enterprise Limited.

9.The picture which emerged was that people with no real skills and with a poor educational background were recruited to work in the company as office workers, cleaners, junior clerks and warehousemen. Thereafter the victims filled in application forms and were each offered a job with Link Legend Enterprise Limited after a brief interview. Thereafter, the victims were kept isolated from each other and were given the task of copying some loco London silver (LLS) transactions which were said to be records of clients of the company.

10.None of those recruited were assigned actual work relating to the job for which they had applied. Instead, one of the members of the conspiracy would be assigned to work alongside a newly recruited victim in order to show how "calculations", which were said to relate to LLS trading, were done. The conspirators boasted that there were good profits to be made on the LLS trading market.

11.Despite their failure to understand how LLS trading really worked, the victims readily invested comparatively large sums of money in the company, in proportion to their financial status, when invited to do so. Shortly after they had done so, the victims were told that they had made mistakes of one sort or another and that they had incurred "losses" to the company. They would be asked to raise funds to compensate for these losses. If they were unable to do so, they were asked to leave immediately and were told that their wages would be taken by the company as compensation. Other victims were told to sign agreements stating that they would not make any claims against the company and would not inform others about what had happened.

12.The police raided the company's office on 15 July 1999.

13.The ten victims suffered financial losses amounting to approximately HK$2 million over the duration of the conspiracy.

14.The evidence against D9 was summarised by the judge in the following way:

"The identification of D9 by PWs 1 and 2 is admitted (see paragraphs 17 and 18, exhibit P1). PW1 testified that he answered an advertisement in the newspaper for an odd job worker. PW1 commenced work on the 1st June 1999 when D9 greeted him at the reception. D9 escorted PW1 to room 3, which was in the inner area of the offices access, which was by way of code lock (see photographs 3 and 8, exhibit P3). The persons at reception including D9 would press the code for PW1. PW1 himself did not know and was not told the code. PW1 saw D9 on about three or four other occasions. PW1 did not have any other contact with D9 and did not talk to D9. In cross-examination PW1 said that during the time he worked there he saw other receptionists but could not recall how many but thought it was a few.

PW2 testified that she answered an advertisement in the Oriental Daily for a job at Link Legend. PW2 went for the interview on the 28th May 1999. On arrival at the office of Link Legend she was taken to a room where she was interviewed by D9 who said she was 'Miss Ng'. D9 explained to PW2 the working hours, salary, and that her duties would be to now and then do photocopying and do odds and ends. In cross-examination PW2 agreed that after the interview she had no further contact with D9." (Appeal bundle p. 62)

15.This description of the evidence against D9 is in sharp distinction to the way in which Ms Lynda Shine, on the Respondent's behalf, had described the evidence against D9 in her written submission. Whilst noting the evidence of PW1 and PW2, which identified D9 as the "receptionist" and an "interviewer" respectively, she also stated that D9 had been identified by two other former staff members (PW5 and PW7) as one of those who taught the victims how to do "calculations" and as a "manageress" of the company.

16.If this were so, the evidence would have been overwhelming against the Applicant, but it was not so. Indeed, it would have been most surprising if she had been correct in saying this as the judge had made no mention of any evidence against D9 that she had acted as a manageress as well as a receptionist or that she had shown the victims how to make calculations as well as conducting an interview. Furthermore, as Mr Choy stated in the course of his most ably expressed submissions, if there had been such evidence it would have been most irresponsible to seek to argue that D9's conviction was unsafe.

17.Ms Shine then said that her reference to the "other" witnesses, PW5 and PW7, was an error on her part because these witnesses had in fact been called out of turn as the first and second prosecution witnesses (PW1 and PW2). We thought this was a somewhat curious observation as Ms Shine had apparently set out in her written argument the factual distinctions between PWs 1 and 2 on the one hand and PWs 5 and 7 on the other.

18.However, far from admitting that she had made a mistake in her interpretation of the evidence, when confined to the testimony given by PW1 and PW2, Ms Shine sought to justify her position by referring us to portions of the transcript of PW2's evidence which she contended carried an inference that D9 had been a manageress who taught calculations. Although we had made clear to her that we had not previously studied the transcript in any detail, some of the passages she then proceeded to show us were taken out of context as Mr Choy was easily able to demonstrate when he later read them in their full context. It turned out that the passages selected by Ms Shine established propositions which were directly opposed to her argument. The evidence showed that the judge's assessment of the case against D9 was entirely accurate.

19.We can well understand how, from time to time, mistakes can be made about the effect of the evidence in a case. Having said this, the evidence on which Ms Shine had concentrated was a crucially important part of the case as it converted fairly routine evidence about D9, from which it may or may not have been possible to infer her guilt, into a case which was overwhelming in its strength against her. With this in mind, we would have expected counsel to have set out the case against D9 with care to achieve complete accuracy, particularly when Ms Shine's submissions contradicted not only the Applicant's written contentions, which had been so articulately set out by Mr Choy, but also the summary of evidence given by a judge of considerable experience.

20.Far from receiving an apology for the misrepresentation of her case, except in relation to one obvious misreading of the transcript, Ms Shine became more intractable as the argument developed. She maintained, without the support of any evidence in the transcript or any finding in the Reasons for Verdict, that the evidence established that D9 had been a manageress who taught calculations.

21.In effect, in the present case, D9's counsel had come to court finding himself faced with an allegation which had been no part of the evidence in the lower court. It is right to say, however, that the Summary of Facts, which was not, of course, an agreed summary for the purposes of D9's trial, did make reference to 'PW5' and 'PW7' identifying D9 as a staff member who had taught 'calculation' work and as a 'manageress' respectively. Ms Shine was asked if she had confused this with the 'agreed' evidence called at trial but she answered that she had not been relying on this document when she gave us her version of the strength of the case against D9.

22.We feel bound to say that if she had been under some misapprehension, through carelessness, that the Summary of Facts had been adduced in evidence, we would have at least understood where the problem lay. As it is, we were less than impressed by the attitude taken by the Respondent which presented a lop-sided view of the true strength of the case against D9. We are satisfied that Ms Shine's submissions did not represent the prosecution's case on the evidence which was called at trial. We cannot recall a time when it has been necessary to remind counsel for the Respondent, as we feel bound to do in this case, of their duty to present the facts fairly, without exaggeration or distortion.

23.Putting completely to one side Ms Shine's response, the question we now have to address is whether the evidence against D9, based as it was on the testimony of PW1 and PW2, was nonetheless sufficient to support this conviction.

24.D9 did not give evidence and no witnesses were called on her behalf.

25.Mr Choy contended that there was insufficient material to draw an adverse inference against D9 that she was a participating conspirator. He submitted that D9 may have been an innocent dupe.

26.The judge clearly gave detailed thought to this issue.

27.By way of generalised comment, the judge rightly stated that none of the evidence should be viewed in isolation. In this context, he considered it important that the testimony of PWs 1 to 4 had been that they were never given the codes to enter the outer office premises or the offices situated inside. Furthermore, PW2 had said she was not allowed to walk around the offices freely and PWs 3, 4 and 5 had added to this by stating that they were even accompanied to the toilet and when going out for lunch. With these features of the evidence in mind, the judge turned to his assessment of the evidence against D9 which he expressed as follows:

"The evidence of PW1 that D9 was one of the receptionists who escorted him to room 3 in the inner area of the offices and was one of the persons who pressed the code for PW1 to enter the inner area was not challenged. The evidence of PW2 that D9 interviewed her was not challenged.

Issue was taken with PW2's evidence that D9 acknowledged she was Miss Ng. In chief, PW2 said D9 told her she was Miss Ng. In cross-examination PW2 said that the advertisement referred to a 'Miss Ng' and that when she asked D9 if she was Miss Ng she replied 'yes'. PW2 agreed with Mr Kan that D9 did not adopt the name Miss Ng. PW2 further explained she told the police D9 was called Miss Ng because she assumed this. Having carefully considered this evidence I cannot rule out the possibility that PW2 assumed Miss Ng interviewed her. I place no weight on this part of the evidence.

It is an admitted fact that the interview of the victims was part of the sham operation with no actual work relating to the job offer being assigned to the victims (see paragraph 1(b) and (d) of exhibit P1A). PWs 1-4 each testified they were interviewed for the post of odd job worker and PW5 as an office assistant. None of the witnesses carried out the work they were employed for.

Clearly the initial interview was an integral part of the scam, for the offering of the job lured the victim to work in the company. In my view in what was a wholly sham operation I reject that an interviewer would have no knowledge that the applicant would not be doing the job offered. The interviewer would need to know how to respond to any questions asked by the applicants. I am satisfied so I am sure the only inference to draw is that the persons conducting the interviews were party to the conspiracy.

The interview of PW2 by D9 was nothing more than a formality. All that D9 explained were the working hours, salary and that PW2 would now and then do some photocopying and odds and ends. There was no real interview. PW2 on her first morning of work was immediately taught how to do calculation work. She never did any work as described by D9 in the interview.

Further, D9 knew the secret code which let PW2 access the inner area of the offices. I do not accept that persons who were not party to the conspiracy would be told the secret code and thus be allowed to freely walk around the inner area of the offices. The operation of the conspiracy was such that there was a complete control on the movements of the victims, even to the extent of going to the toilet.

I am satisfied so I am sure on all the evidence that the only inference to draw is that D9 was a party to the conspiracy and in so doing acted dishonestly. In reaching my findings I have borne in mind the submission of Mr Kan, in particular that I cannot be satisfied D9 was a party to the conspiracy by reason of one interview only. This does not in any way cause me to doubt that this is the only inference to draw." (Appeal bundle pp. 72-73)

28.In a most carefully reasoned judgment, the judge had concluded that Link Legend Enterprise Limited was a "wholly sham operation". We can see no reason to interfere with the conclusions the judge had reached about the company's operation or, more particularly, about D9's role within it. In our judgment, there was nothing unsafe or unsatisfactory about D9's conviction.

Conclusion on conviction application

29.The application, so far as it relates to conviction, is dismissed.

Sentence applications

30.Turning next to the applications for leave to appeal against sentence, Mr Choy, who did not appear in the court below, advanced as his first ground on behalf of both Applicants that the judge had been:

".... inadvertently misled into finding the offence to be prevalent, when the statistics provided by CIP Chan Man-yin should have been interpreted to show a general decrease in the prevalence of the offences of a similar type. As a result, the sentence was wrongly enhanced."

31.A preliminary issue arose in relation to this ground. Leave was sought on behalf of D9 and D11, pursuant to section 83V(1) of the Criminal Procedure Ordinance, Cap. 221, for an order that additional evidence should be received in evidence. This related to the transcript of Chief Inspector Chan Man-yin's testimony in DCCC 446/2001, together with his witness statement, and the transcript of the trial judge's ruling in DCCC 446/2001 that there should be no enhancement in that case.

32.The application was initially opposed by the Respondent.

33.Mr Choy's submission was that D9 and D11 had received enhanced sentences under section 27(11) of the Organised and Serious Crimes Ordinance, Cap. 455 (OSCO) wholly as the result of the statistics provided in a statement to the judge by Chief Inspector Chan which showed a steady increase, between 1997 and 1999, in the number of cases of the kind with which we are presently concerned. However, Mr Choy submitted that when the Chief Inspector was called to give statistical evidence as to 'prevalence' in a slightly later case in which Mr Choy as it so happens had appeared for the defence (DCCC 446/2001) which concerned another scam involving almost identical allegations, the Chief Inspector was able to "clarify" that the statistics referred to in his statement actually showed a decrease in the number of cases since 1999.

34.Mr Choy argued that the decrease in the number of cases since 1999 meant that the offence was no longer one which could properly be described as 'prevalent' in November 2001 when D9 and D11 were sentenced. In essence, it was his submission that the judge in the present case had not been given the "clarification" which Judge D. Pang in DCCC 446/2001 had received, and that, looked at in this light, the prosecution should not have been seeking any enhancement of sentence in the present case. This happens also to have been the view taken by the judge in DCCC 446/2001 when he declined, after the position had been clarified, to enhance the sentence of any of the defendants in that case.

35.Obviously, if Mr Choy's submission was correctly formulated, the judge would have been unwittingly misled into thinking in the present case that the offence was one which was 'prevalent' within the meaning of section 27(2) of OSCO but we did not need to make a ruling on the admissibility of the additional evidence. The material which it had been proposed should be received in evidence became unnecessary when, without warning, and contrary to Ms Shine's lengthy written argument in support of the correctness of the passing of enhanced sentences in the present case and where, additionally, she had sought to exclude the additional evidence which Mr Choy wished to adduce, Ms Shine announced that she now conceded that the prosecution had been wrong to seek any enhancement of sentence.

36.Ms Shine went on to state that she now accepted that 'prevalence', as a factor which would allow a judge to enhance sentence under section 27 of OSCO, had to be determined at the time of passing sentence and not with relation to the date of the offence. Ms Shine provided no reason for her complete turnabout and sudden change of stance. She added, however, that she maintained, in spite of the wrongful enhancement by 25% of D9 and D11's sentences, that these sentences should be upheld. Ms Shine did not seek to support her statement that the correct sentences had been arrived at by the wrong route with any legal authority.

37.Section 27 of OSCO, so far as it is relevant to these proceedings, provides as follows:

"27. Sentencing in respect of specified offences

(1) This section applies where, in proceedings in the District Court or the Court of First Instance, a person has been convicted of a specified offence ......

(2) The prosecution may furnish information to the court regarding any or all of the following-

.......................

(c) the prevalence of that specified offence;

.......................

(3) Only information that would be admissible in evidence in criminal proceedings (including proceedings in respect of sentencing) may be furnished to the court under subsection (2)..........

(11) Subject to subsections (12) and (13), where a court is satisfied beyond reasonable doubt-

(a) that the specified offence was an organized crime; or

(b) as to any information furnished under subsection (2) or (8),

or where any such matter is agreed by the person convicted, the court shall have regard to such matter when it passes a sentence on the person for the relevant specified offence and may, if it thinks fit, pass a sentence on the person for that offence that is more severe than the sentence it would, in the absence of such matter, have passed.

..................

(13) A sentence passed pursuant to subsection (11) shall not exceed the maximum penalty permitted by law for the offence."

38.An "organized crime" is defined in section 2 of OSCO, so far as it is relevant to these proceedings, as a Schedule 1 offence which is "related to the activities of two or more persons associated together solely or partly for the purpose of committing two or more acts, each of which is a Schedule 1 offence and involves substantial planning and organization". As this case concerned a Schedule 2 offence, it seems that this may be why the prosecution had sought enhancement on the sole ground of the 'prevalence' of the offence. Certainly, Ms Shine did not seek to justify enhancement on any other basis.

39.No doubt, section 27(11) of OSCO was intended as a draconian measure to deter potential offenders from committing prevalent offences. As we have already said, the question we have to address, in spite of Ms Shine's concession, is whether 'prevalent' in this context means at the time of sentencing or at the time of the offence.

40.The evidence which was placed before the judge demonstrated that 28 offences of the kind with which we are concerned were committed in 1997, and that in the years between 1998 and 2000 there were, respectively, 15, 62 and 36 offences committed. In 2001, there had been 20 by 31 August 2001.

41.In passing sentence, the judge meticulously followed the guidance which was provided in HKSAR v Tam Wai-pio [1998] 2 HKLRD 949 when determining the length of sentence to be served by each of the defendants, including these Applicants.

42.In the course of this exercise, he referred to the application made by the prosecution under section 27 of OSCO, and stated that:

"The offence is 'prevalent', the statistics showing a steady increase of cases since 1997 with the most companies investigated in 1999 the year of the present offence. The total loss is a staggering 293.88 million with the biggest loss again in 1999 of 158.31 million.

I am satisfied that the evidence furnished by Chief Inspector Chan is admissible as required by section 27(3) and is both credible and reliable (see HKSAR v Ma Suet-chun CA 1/2001). I am satisfied beyond reasonable doubt as to the information provided (see section 27(11)). I am satisfied that I should have regard to such matters when passing sentence and that an enhanced sentence is required." (Appeal bundle pp 35-36)

43.The judge also considered what was said in HKSAR v Chiang Chun-wai, CACC 11/2001 (unreported) and HKSAR v Sam Wai-keung, [2000] 1 HKC 149 and adopted four years' imprisonment as an appropriate starting point. There was, he rightly considered, no mitigation for those who had pleaded not guilty. The judge concluded, on the material before him, that he should enhance the sentences to be served by 25% in the light of the information with which he had been provided under OSCO.

44.The judge would have had in mind from this court's decision in Chiang Chun-wai (above) that a sentence of four years' imprisonment was appropriate in itself to act as a deterrent for "those who enter into heartless and cruel scams of this kind, and who are prepared to fleece gullible and blameless victims of as much of their hard-earned savings as they can lay their hands on".

45.Returning to the element of enhancement which the prosecution had invited the judge to consider, the judge was not specifically informed, as the sentencing judge in DCCC 446/2001 had been, that the offence with which he had to deal in 2001 was now on the decrease. If he had been, we think that it is more than likely that he would have arrived at the same conclusion which Judge D. Pang reached in DCCC 446/2001. Whilst, in one sense, offences of this kind might be regarded as prevalent because they were still commonly being practised, we do not consider that it can have been the purpose of this particular legislation to impose an additional punitive sentence on an offender, which is specifically designed to deter others, once the offence in question has been shown to have substantially declined in numbers. In saying this, we are aware that this may leave open a somewhat arbitrary basis for sentencing about which sentencers should be aware. For example, if one of the defendants in the present case had been arrested before the others could be found, and had pleaded guilty straightaway, that defendant might well have been liable to receive an enhanced sentence at a time when the offence was still prevalent. On the other hand, these Applicants and their co-defendants, following a lengthy investigation, were not sentenced until about two and a half years after the conspiracy ended, by which time we think it was stretching the meaning of 'prevalence' to say that the offence still fell into such a category.

46.The power to enhance a sentence under section 27(11) is an extraordinary power. It enables a judge, as we have set out already, to pass a more severe sentence for a specified offence if one or more of a number of factors itemised in section 27 of OSCO has been established. We think that the power given to a judge to add to the sentence he has otherwise considered to be appropriate, which will often already have incorporated an element for deterrence, can only have been intended to spell out to others who might otherwise commit the same type of offence in the future that to do so will entail a particularly severe penalty. Inevitably, it is a power which ought to be utilised sparingly.

47.As this case was not approached on the footing that it was an 'organised crime' in the technical sense used in OSCO, we are concerned only with 'prevalence'. Bearing in mind the harsh nature of this legislation, we do not feel able to say, in the absence of a clear indication to the contrary, that it was intended that an enhanced sentence should be imposed at a time when the particular need to deter others has passed. It had passed in the present case because, on statistical analysis, the criminal conduct in question had substantially decreased.

48.Without making any criticism of the sentencing judge in this matter, we have concluded, in the light of Mr Choy's argument, that this was not a case where enhancement of sentence was appropriate. However, we do invite the Director of Public Prosecutions to maintain a careful watch over the cases where enhancement of sentence is considered to be appropriate to ensure that applications of this kind are only made in circumstances where the offence in question remains prevalent at the time of sentencing.

49.Mr Choy advanced two other grounds of appeal with which we should deal briefly. First, he invited us to consider whether the judge should have given some weight to the previous clear records which both Applicants were able to show they had.

50.This ground ignored what the sentencing judge had said when referring to D9 and D11's "hitherto good character with no previous convictions". He had gone on to cite what this court had said in Secretary for Justice v Au Man-kei, Alex, CAAR 2/2000 (unreported) which concerned a sham model-agency. The passages, aptly chosen by the judge from that case, were as follows:

"There was some evidence of positive good character in D3 and D5's cases where each of them could be shown to have done some charity work, by contrast to the others who merely had no criminal record to their names. Even this feature of D3 and D5's cases was, however, more than offset by the nature of the whole scheme with which the defendants were associated, designed as it was to steal other people's money as surely as if they were persistent pickpockets, but with considerably more sophistication to their operation .... In D1's case there was, with the greatest respect, no mitigation which called for the small discount he was given for 'good character'. He was effectively a serial thief. The judge said in passing sentence on D1:

'D1 can properly claim that he has no previous convictions and should be treated as a man of previous good character. In recognition of this, I will give D1 a discount of two months.'

It has long been regarded, as this court said in Shum Ming and others and The Queen (1978) HKLR 41 at p. 42, as difficult to regard persons who appear before the court for the first time, and who are charged with a number of offences, as true 'first offenders'. We confirm, should it be necessary to do so, that the approach taken in Shum Ming towards offenders committing a series of offences remains the proper one to adopt.

The same criticism of approach to discount applies with equal force to D3 to D8, all of whom were treated as having 'good character'."

51.There was nothing in Mr Choy's point and it ought not to have been raised as a ground which could stand any chance of success.

52.We were also invited to consider the role played by D9 in the context of the overall conspiracy as being one which was smaller than the part played by others who received the same sentence as she did.

53.We were not impressed by this argument. The roles played by all of those who participated in the scheme were effectively the same. They were merely actors and actresses, all of whom had combined their talents to give the appearance of respectability to what was just a bogus outfit, specifically designed to take as much money as possible from its unsuspecting victims. If D9 had been an organiser or mastermind then no doubt a longer sentence would have been called for, but no reason has been provided to us to reduce her sentence to a level below the other participants.

Conclusion on sentence applications

54.Accordingly, for the reason we have stated, we shall give leave so far as sentence is concerned and, treating the hearing as the appeal, we shall allow the appeal to the extent that the sentence of five years' imprisonment imposed on D9 and D11 will in each case be reduced to four years' imprisonment. This removes the element of enhancement from the sentences they have to serve.

55.The result of this appeal will almost inevitably have an effect on the remaining defendants in this case who also received enhanced sentences, namely D2 (Lee Yuek-sing), D3 (Wong Fuk), D4 (Lee Tak-yuen), D5 (Mak Yat-lung), D6 (Cheung Chi-yuet), D7 (So Lai-nar), D8 (Ng Kwai-chu) and D10 (So Choi-mui). Whilst it is not immediately clear in the case of some of these defendants that they received a 25% enhancement on their sentences, because some were already serving sentences for other similar frauds, we consider that all of them should be informed of the decision in this appeal so that they may, if they so wish, advance late grounds of appeal against sentence.

56.We will invite the Respondent to take responsibility for ensuring that each of the remaining defendants is informed of the position, together with the Department of Legal Aid, and to inform the court within six weeks, by way of written acknowledgement, when this has been done.

Representation:

Ms Lynda M.A. Shine, SGC, of the Department of Justice, for the Respondent.

Mr Edwin Choy, instructed by Messrs Shea & Co, for the Applicants.