Yu Pang-nin and Others v. The Queen

CACC001069/1977

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

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

Coram: Huggins and Pickering, JJ.A. and McMullin, J.

Date of Judgment: 19th January 1978.

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

JUDGMENT

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

Huggins, J.A.:

1. The Appellant was convicted on thirty-one charges of wilfully, with intent to evade tax, omitting profits from returns made by him under the Inland Revenue Ordinance and he was sentenced to twelve months' imprisonment concurrent on each charge. He seeks leave to appeal against sentence.

2. In the course of a lengthy submission Mr. Cheung distinguished the fasciculus of sections prescribing the penalties which may in Hong Kong be inflicted for attempted tax evasion from the comparable provisions in the English legislation. He did this with the aim of showing that the learned judge in the court below was wrong when he had regard to the sentences which had been imposed for attempted tax evasion in England. In our view cases decided in other jurisdictions may sometimes be of assistance when one is considering the general principles upon which a sentence should be based in Hong Kong but are of little value when it comes to the application of those general principles to the circumstances of a particular case: what may be a perfectly proper sentence in one jurisdiction might be unacceptable in the other. That is not to say that it is necessarily wrong to bear in mind, as did the judge here, what is the general level of sentences elsewhere for the crime under consideration, but one must also bear in mind any material differences in the sentencing policies of the jurisdictions concerned. That is enough to indicate the danger of too great a reliance on actual sentences in other jurisdictions. However, whether the judge was right or wrong in the weight he attached to the English cases, what we have to decide is whether the sentence of twelve months' imprisonment was right in Hong Kong.

3. Mr. Cheung has established that in recent years the tendency in Hong Kong has been not to impose an immediate sentence of imprisonment in cases brought for tax evasion. All the cases cited have been tried in the lower courts and none has been brought on appeal or on review. We are told that in March 1977, on imposing a fine of $1,000 for evasion of tax amounting to $5,408.50 His Honour Judge Barnes gave a warning that sentences of immediate imprisonment might be imposed in future, but that warning was given after these offences had been committed. In reaching our decision we will have regard to these decisions of the lower courts but we are not fettered by them.

4. The conduct of which the Appellant was guilty was criminal and it is not a valid argument that he would not have done what he did had he not believed that, if detected, he would be treated leniently: if persons choose to treat the criminal law as a lottery we must ensure that the stakes are commensurate with the prizes. The offences here were spread over nearly ten years and involved the omission from the Appellant's returns of about ninety-four per cent of the profits of four separate businesses. The mere percentage might give an exaggerated impression were it not for the fact that the assessable profits omitted totalled $6,153,015. In the event the tax undercharged was only $454,351, because the Appellant had incurred losses in an activity which the Commissioner was prepared to recognize as a "business" and those losses were set-off against the undeclared profits, but that in no way lessened the moral guilt of the Appellant. A more flagrant offence it is hard to imagine. Nonetheless Mr. Cheung's primary submission is that the purpose of the sentence in such a case should be to protect the revenue, by which we understand him to mean that the sentence should aim principally at bringing direct financial benefit to the public coffers. Whilst a defendant should certainly be forced to disgorge any benefits attributable to his crimes - and possibly some of his other wealth also - that should not be allowed to hide the fact that the dishonesty of a person who tries to evade the payment of lawful taxes is no less than that of a person who steals property of an equivalent value. That is not to say that the sentences for the two crimes should be the same, because the sentences prescribed by s. 9 of the Theft Ordinance and s. 82 of the Inland Revenue Ordinance are different.

5. It is conceded that the Appellant was cooperative once he came under investigation, but, as Mr. Caird points out, if he had not been cooperative the financial consequences might have been greatly more damaging to him, because at the commencement of the investigation an estimated assessment was raised against him on the sum of $9,800,000. It may well have been that his desire to challenge that assessment led the Appellant to reveal the code in which his accounts had been kept. It is in his favour that the accounts appear to have been accurate, even though in code, but for all that this was a bad case. What Mr. Cheung asks for his client is a large fine and a suspended prison sentence. Although we are assured that a fine equal to twice the amount of the tax undercharged could be paid, it seems to us that what the Appellant is doing is seeking to buy his way out of an immediate prison sentence.

6. On behalf of the Appellant it has been urged that his incarceration would actually diminish the revenues of the Colony in that his businesses would cease to earn taxable profits. Such must often be the result of the imprisonment of an offender, but we are not persuaded that it will inevitably happen here. The business was run by his son and two friends during three months when the Appellant was in Taiwan and, although it is possible that the same individuals will not be able to help out a second time, it is clear that the personal attention of the Appellant is not vital. Even were the businesses to be closed for a period of some months, the Appellant could probably resuscitate them upon his discharge from prison.

7. Mr. Cheung further relied upon Hung Hsing Construction Co. Ltd. v Director of Public Works 1964 H.K.L.R. 831, where the Full Court reduced a penalty imposed upon an architect by a disciplinary board because the offence was one which had been long tolerated and yet the penalty imposed was the maximum prescribed by the legislation. That was a very different case and it had something in common with one where conduct which was not criminal is made criminal retrospectively.

8. In our judgment a sentence of immediate imprisonment in the present case was amply justified and the term of twelve months was not manifestly excessive.

9. The application for leave to appeal is dismissed.

19th January 1978.

Representation: