HKSAR v. Leung Chi Keung

CACC 151/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 151 OF 2006

(ON APPEAL FROM DCCC NO. 529 OF 2005)

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BETWEEN

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Before : Hon Ma CJHC, Hon Stuart-Moore V-P and Lunn J in Court

Date of Hearing : 13 December 2006

Date of Reasons for Judgment : 22 December 2006

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J U D G M E N T

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Lunn J (giving the judgment of the Court):

1.The applicant, who was the second defendant at trial, was convicted after trial before Deputy Judge Anthony Kwok in the District Court of two charges of conspiracy to defraud.  The judge sentenced the applicant to 18 months imprisonment on each of the two charges, ordering that six months of the sentence of imprisonment imposed on charge 2 be served consecutively to that imposed on charge 1, with the result that the total sentence of imprisonment imposed on the applicant was two years.  The applicant applied for leave to appeal against both his convictions and the sentences of imprisonment.  At the hearing we dismissed the applications for leave to appeal against conviction and sentence and, pursuant to section 83 W of the Criminal Procedure Ordinance, Cap.221, ordered that three months of the time spent by the applicant in custody pending the determination of his application did not count as part of the term of his sentence. We indicated that we would give our reasons for so doing in due course.  We do so now.

THE TRIAL

2.By charge 1 it was alleged that between 1 July 2002 and 24 August 2004  the applicant conspired with Au Wai Hung and four other stipulated persons to defraud the Leisure and Cultural Services Department (‘LCSD”) of the Government of the HKSAR by dishonestly:

(i)    falsely representing to the LCSD that Polyking Services Ltd. (‘Polyking’) paid its cleaning workers no less than the wages stipulated in the service contract for the provision of cleaning services in respect of the Central library; and

(ii)    concealing from the LCSD that some of the cleaning workers were not paid the wages stipulated in the service contract.

3.By charge 2 it was alleged that between 1 November 2003 and 24 August 2004 the applicant together with three other stipulated co-conspirators, the first two of whom were named as the first two co-conspirators in the Particulars of Offence in charge 1, conspired to defraud the LCSD by dishonestly making similar false representations and concealing from LCSD similar matters in respect of a contract for the provision of cleaning and other services at Kowloon Park.

The trial

4.In his Reasons for Verdict the judge described what he said were the undisputed facts in setting out the background to the issues in the case.  He noted that Polyking was a subsidiary of the Allied Group Limited whose principal business was to provide cleaning and supporting services to both Government and private buildings and facilities and that the 1^st accused, the applicant , the and the 4^th accused were respectively the general manager, the accountingmanager and the site supervisor of Polyking. The 3^rd accused was a subcontractor of Polyking of its cleaning contract with the LCSD at Kowloon Park.

Charge 1

5.Of the undisputed evidence adduced at trial in respect of charge 1 the judge stated that the contract between the LSCD and Ployking provided that day workers be paid $5,166 per month and summarised the evidence of what happened in fact thus:

“23.    Since the commencement of the Central Library contract, Polyking has recruited day and night shift cleaning workers at a monthly wages of $4,500 and $2,500 respectively. (“contracted wages”) Employment contracts and staff records were signed by the cleaning workers containing information of the contracted salary. A large numbers of day workers however were paid at $5,166 and night workers at $4,300 monthly by Polyking through autopay in their bank account. (“the stipulated wages”) The First Accused, the general manager, instructed that the workers shall refund cash of $666, $728, $1,666 or a pro rata sum in accordance with their attendance record during the month to Polyking as meal fees. However, most workers were not provided with meals by Polyking except for a few occasions. In this connection, the 1st Accused has instructed the 2^nd Accused to prepare a meal fee list containing the list of cleaning workers and the amounts to be collected each month. From August to early December, 2002, after the meal fees were collected from the cleaning workers by PW2, the cash was handed to the accounting department. At times, PW2 had also deposited the sum into his own personal bank accounts and then transferred the monies into Polyking’s bank accounts. The collection of meal fees finally stopped in December when the 1^st Accused instructed to pay the cleaning workers the contracted wage instead.

24.    Later, after the broadcast of a programme about a complaint of an anonymous cleaning worker of Polyking in Cable Television, the LCSD has stepped up her supervision and made numerous enquiries with the management of Polyking regarding the pay conditions of the cleaning workers either by letters or in meetings. In response, Polyking has furnished to the LCSD different documents in an attempt to explain the pay conditions of its cleaning workers in Central Library. These documents included, inter alias, monthly statements, backdated employment contracts of individual workers, receipts of wage balances and consent forms for deduction of training fees etc., A large numbers of cleaning workers were asked by their site supervisors to sign and they indeed signed on those documents, many of which in one go and retrospectively.  The training provided to the cleaning workers in Central Library were however not compulsory. It took the form of distributing to them some written materials and the display of videos in the cleaner room. The written materials were prepared by PW1 as instructed by the 1^st Accused and the videos were obtained from the Labour Department free of charge. There were application forms for housing allowance but the cleaning workers were not asked to submit any rent receipts or proofs of mortgages to Polyking for approval. They were told that the purpose of the application for housing allowance was to avoid the liability of the mandatory provident fund (MPF) contribution. In fact, no housing allowance had ever been received by any of them.

25.    Since May, 2004, Polyking has adopted a new payroll system of issuing wages to its cleaning workers by way of two cheques or two auto pays. (“the two cheques system”) Polyking first issued to them a sum represented about 2/3 of the salary as stipulated in the contract at the end of the month who were then required to repay to Polyking the difference of $666, $728 or $1,666 as the case may be by depositing or transferring the amount into the company’s designated accounts. With the exception of some cleaning workers, in most cases, the remaining 1/3 of the salary would only be paid at the beginning of the next month after the receipt of the 2/3 payments.”

Charge 2

6.Of the undisputed evidence in respect of charge 2 the judge noted that :

“27.    Most of the cleaning workers in the Kowloon Park were recruited at the monthly wage of $ 4,300(“contracted wages) and they were so paid through autopay at the end of the month. In about March 2004, upon request from the LCSD for proof of wages paid to workers, similar documents were produced and submitted by Polyking to the LCSD for checking as in the case of the Central Library. Cleaning workers were asked to sign various receipts and employment contracts like their counterparts in the Central Library. They were also asked to sign application forms for housing allowance to show that they have received allowance. None of them have submitted any supporting document for Polyking’s approval. Training of the cleaning workers was also set up in the case of  Kowloon Park as the Central Library where the same videos were displayed. The trainings were again not compulsory and the attendance rate was low.  Nevertheless, on the forms which were submitted to the LCSD, they all stated that cleaning workers were agreeing to pay a monthly training fee of $890 or $900. The two cheques payroll system of the Central Library was also adopted in Kowloon Park. Most of them have to pay to Polyking the training fees to one of the designated bank accounts of Polyking before they could receive the final payments of their monthly salaries.”

The Prosecution Case

7.In the prosecution case two of the persons stipulated as being co-conspirators in the ‘Particulars of Offence’ of each of the charges, Miss Liu Yin Ling, Terri (PW1) and Mr Lee Lap Hon (PW2), gave evidence under conditional immunities from prosecution.  They were the administrative manager and contracts manager respectively of Polyking at the material time.  Miss Liu enjoyed equal status with the second applicant within Polyking.  Mr Lee was responsible for the day-to-day operation of the cleaning contracts held by Polyking. Their evidence encompassed the circumstances in which Polyking had paid their employees less than the wages stipulated in their contracts with the LCSD and how, to conceal the truth, resort had been had to the use of various devices, for example the collection of ‘fees’ in respect of meals, training, uniform and miscellaneous expenses together with retrospectively created documents about wages paid to employees, which on the face asserted that employees had been paid more than was the fact, which documentation was supplied from time to time to the LCSD.  In particular, they described the role of the applicant in that conduct.

8.In addition, the prosecution called as witnesses a selection of cleaning workers employed by Polyking who were involved in the contracts of Polyking with LCSD in respect of the Central library (charge 1) and Kowloon Park (charge 2).  The general tenor of their evidence was that they had agreed to be employed on wages less than the stipulated in the contract between Polyking and the LCSD and that, at the request of the company, they had signed various documentary consents, for example for training, meals and uniforms which on the face of the documents permitted deductions to be made from their wages.  In short, they were paid less than the documentation asserted.

9.Finally, managers in the LCSD with responsibility for the respective contracts, Miss Wan Wai Ling (PW 15) and Miss Wong Wa Nuen (PW 19)-charge 1 and Madam Choi Lai Chun (PW 16)-charge 2, gave evidence of their ongoing efforts to ensure compliance with the contractual terms of the contracts between the LCSD and Polyking, in particular that the employees of Polyking be paid the wages stipulated in the contracts.  The combined effect of the volume of documentation presented to the LCSD by Polyking was to support the assertion that the employees were being paid as required by the contracts with the LCSD.  On that basis they permitted payments to be made by the LCSD to Polyking. Had those managers of the LCSD known the truth they would not have recommended or authorised those payments.

The case for the applicant

10.The applicant testified in his defence at trial.  The judge described him as having both a Bachelor's and Master's degree in Finance and having embarked on attaining a professional qualification in accountancy.  Polyking were responsible for about 30 cleaning contracts, in respect of which contracts about 600 cleaning workers were employed.  The judge noted that the applicant described the first defendant at trial as a strong character who required compliance with his instructions without question.

11.Of the applicant's testimony the judge noted that:

“ 96.    The 2^nd Accused was directly involved in the preparation of the meal fees list in relation to the Central Library and the final summary report. Also, he admitted that he had drafted the monthly statement sent to the LCSD.  All the other documents produced in the trial were all prepared by PW1 or under her direction.  He had little contact with the site supervisors, PW2 and 3rd Accused.  Most of his contact was with PW1.   Moreover, the 2^nd Accused said that he had no day-to-day knowledge of what actually occurred in the Central Library or the Kowloon Park. He confirmed that it was often the case that the particulars in the employment contract were not filled up and the salary of the staff record would be input as salary of the workers.

The 2^nd Accused denied any knowledge as to how cleaning workers were recruited.  He denied any knowledge as to the circumstances under which the cleaning workers came to sign on those documents. He accepted the content of those documents on its face values. He said he had no knowledge as to whether meal boxes were actually provided and he was not even told that during the time, the buying of the meal boxes for the workers was already ceased.  He even denied any knowledge as to the training organised on site and the participation of the cleaning workers in those trainings. He also denied ever telling PW1 to prepare any forms to avoid the checking by the LCSD. 

97.    The 2^nd Accused admitted that he went to the Central Library to collect the ATM vouchers but other than this there was no need to go there.  He never went to the Kowloon Park for business of Polyking.  He denied telling PW1 about net payment policy or that the workers had been reluctant to pay meal fees by way of refunds of cash.  He also denied that he knew the purpose of the two cheques system was to make sure the cleaning workers would pay the difference in wages.

98.    When he testified, he also mentioned the presence of Ronald Lau, the solicitor advising Polyking.  He said the legitimacy of meal fees deduction, training fees, and the backdating or replacement of employment contracts were matters that have been raised or discussed in the meetings when Ronald Lau had confirmed their legitimacy.”

The judge's findings

12.In an overview of the conduct described in evidence on which the prosecution relied in proof of the two different conspiracies the judge noted:

“118.    There were ample documentary evidence in this case which went to show that Polyking had falsely represented to the LCSD that it paid its cleaning workers no less than the specified wages in the service contracts. From the direct evidence of the co-conspirators and the documents in relation to the deduction wages, any one who came to be involved in this case will not fail to see firstly, the existence of a dishonest agreement at least by the 1st Accused, PW1 and PW2 to defraud the LCSD. PW1 and PW2 had by their direct testimonies and by the production of the various kinds of different forms created and signed by the cleaning workers demonstrated how Polyking had resorted to the use of meal fees and training fees to deduct wages firstly from the cleaning workers in the Central Library and later in Kowloon Park. Because of the problems encountered in the collection of meal fees, the collection of meal fees stopped and the cleaning workers were paid their contracted wage direct. The net payment of the contracted salary however could not sustain the close scrutiny by the LCSD. As a result, documents like receipt for wages and consent forms for deduction for uniforms and even miscellaneous fees were given to cleaning workers to sign.”

13.In determining that he was satisfied on the evidence that the applicant was proved to be a party to both of the alleged conspiracies (see paragraph 142 of the Reasons for Verdict), the judge made reference, inter alia, to the following evidence, indicating as he did so the conclusions that he drew therefrom:

“127.    PW 1 said in August, 2003 during the time when receipts for wage balance in the sum of $666 were prepared, the 2^nd Accused told her that cleaning workers were recruited at $4,500. Later, in January, 2004, during a discussion, with PW1, the 2^nd Accused said he would continue to prepare the forms for cleaning workers to sign in case the LCSD would check the records. The combined force of these two declarations by the 2^nd Accused was that he must knew the wage deduction was fake. All the workers testified that they received $4,500 and it corroborated what the 2^nd Accused told PW1. In fact, there was no evidence that cleaning workers were ever paid $3,834 (i.e.$4,500-$666) by Polyking during the time. The continuation of the preparation of documents like this for the purpose of the LCSD’s checking clearly indicated he had joined the conspiracy.

128.    Secondly, in May 2004, before the running of the two cheques systems, the 2^nd Accused, on the instruction of the 1^st Accused, prepared slips containing account numbers for the cleaning workers to pay back the company. Given my finding on the knowledge of the contracted wages, his involvement was also an indication that he was a party to the conspiracy.

129.    In the Kowloon Park case, PW1 also said that in an internal meeting before July 2004, the topic of the contracted and stipulated wage was discussed and the 2^nd Accused was present. The amount and the meaning of the two wages were of course very different and it would not be up to the 2^nd Accused to now deny his knowledge on what was being discussed. 

130.    Further, the 2^nd Accused admitted that he prepared the monthly statements in both in respect of the Central Library and Kowloon Park to submit to the LCSD for the purpose of obtaining payment. If, according to the evidence that he well knew the cleaning workers were recruited and paid at only the contracted wage, his act of preparation must mean he agreed to join the conspiracy.

131.    It was the Prosecution case that given his position and involvement in the preparation of the documents, the court can readily infer from these acts, done in pursuance of a common purpose between the alleged co-conspirators to defraud the LCSD.” 

THE APPLICANT’S PERFECTED GROUNDS OF APPEAL AGAINST CONVICTION

14.By ground 1 it is contended that the applicant did not receive a fair trial in that it was oppressive and wrong in principle to have charged and tried the applicant on charges of conspiracy to defraud, rather than with appropriate substantive offences.

15.By ground 2 it is submitted that the judge erred in determining that the requisite direction in respect of the ingredient of ‘dishonesty’ in each of the charges was that prescribed in the judgment of the Court of Appeal of England and Wales in R v Ghosh [1982] 75 Cr. App. R., 154, rather than the application of a purely subjective test.

16.By ground 3 it is submitted that the judge erred in law in failing to consider properly whether the applicant had the requisite ‘mens rea’ to enter into the alleged conspiracies with any of the other co-conspirators.

THE SUBMISSIONS OF THE APPLICANT

Ground 1

17.On behalf of the applicant it was submitted by Mr Beel in his written Skeleton submissions that the allegations contained in the two charges and the evidence led in support thereto amounted in reality to allegations that he had “ conspired to obtain property by deception, or forgery or of using a false instrument.” Accordingly, so it is submitted, it was “ improper, oppressive and contrary to the interests of justice” to proceed against the applicant on charges of conspiracy to defraud. In advancing this ground of appeal Mr Beel acknowledged that the statutory provisions in respect of the offence of conspiracy to defraud are the same in Hong Kong and in England and Wales.  Furthermore, he asserted that the legislature in Hong Kong was prepared to countenance the retention of the offences of conspiracy to defraud for it to be used only in circumstances of complexity in relation to the parties involved in a conspiracy or its duration and in order to avoid indictments of unwieldy complexity.  He said that this is not such a case.  In support, he pointed to the legislative history in respect of the offence of conspiracy to defraud in England and Wales, judgments of the House of Lords (R v Ayres [1984] 2 WLR 257 and R v Cooke [1986] 3 WLR 327) contrasting and distinguishing the common law and the more recent statutory offence and to guidelines issued by the Crown Prosecution Service in the 1980s as to the circumstances in which it would be appropriate to prosecute under the common law offence.  Of the latter, he asserted that the guidance was to the effect that where a simple substantive offence was made out on the evidence it was wrong to commence proceedings with a charge of conspiracy to defraud.  For reasons that became apparent in the oral hearing Mr Beel did not develop this argument further.

18.Secondly, it is submitted that the LCSD did not suffer any economic loss, rather their rights have been prejudiced in that the terms of the contract had been breached and the workers employed by Polyking had not been paid the wages stipulated in the contract.  In developing this ground in his oral submissions Mr Beel submitted that because the work for which the LCSD had contracted was done by Polyking it mattered not what wages their workers were paid.

Ground 2

19.Mr Beel asserted that in the context of a consideration of the issue of ‘dishonesty’ as an ingredient of the offences of conspiracy to defraud it was inappropriate and the judge erred thereby to employ, as he stated he was doing in his Reasons for Verdict (at paragraphs 165 and 166, page 100 of the appeal bundle) the test articulated in the judgment of Court of Appeal in England and Wales in R v Ghosh [1982] 75 Cr. App. R 154, which test was prescribed in relation to the appropriation of property.  He commended to the court the judgments of the High Court of Australia in R v Peters [1998] 192 CLR 493, in particular a passage from the joint judgment of Toohey and Gaudron JJ (at page 504 paragraph 18) :

“In a case in which it is necessary for a jury to decide whether an act is dishonest, the proper course is for the trial judge to identify the knowledge, belief or intent which is said to render that act dishonest and to instruct the jury to decide whether the accused had that knowledge, belief or intent and, if so, to determine whether, on that account, the act was dishonest…….  If the question is whether the act was dishonest according to ordinary notions, it is sufficient that the jury be instructed that this is to be decided by the standards of ordinary, decent people.”

20.However, in the circumstances of this case Mr Beel submitted that it was appropriate to amend the test enunciated in R v Peters so that the appropriate test was a purely subjective test: did the applicant think that what he did was dishonest?

21.Mr Beel contends that in neither of the charges was it alleged or proved that the conspirators intended to obtain a personal economic gain or cause an economic loss to the LCSD rather, so Mr Beel contends, in these circumstances the defrauding was of a person performing a duty who was thereby induced to act in a way contrary to his public duty.

22.In the alternative, Mr Beel submits that even if the test as enunciated in R v Ghosh is the appropriate test that, in applying the objective limb of that test, regard is to be had not to the standards of ordinary decent people in Hong Kong but having regard to the standards ordinarily held within the business community of Hong Kong.  Clearly, it is inferred that the two are not of the same standard.

Ground 3

23.By this ground it is contended that although the defendant's conduct may have amounted to the commission of substantive offences there was an insufficient evidential basis for the judge to be satisfied of one of the essential ingredients of the offence of conspiracy to defraud, namely that the defendant had agreed with a stipulated co-conspirator or co-conspirators to carry out the unlawful act or acts intending so to do.  Mr Beel points to the absence of direct evidence, in particular, from the stipulated co-conspirators who gave evidence under conditional immunity from prosecution (PW1 and PW2) of the applicant joining such an agreement between the conspirators. He submits that the judge was not entitled to infer from the applicant's conduct, he being an employee merely carrying out his superior’s instructions, that the applicant had joined the conspiracy as a party. He submits that a distinction is to be drawn between an employee who is merely following instructions and an employee who has joined with others in a conspiracy to defraud. 

A CONSIDERATION OF THE SUBMISSIONS

Ground 1

24.We can state at the outset that there is no merit whatsoever in this ground of appeal.  It is perfectly clear having regard to the nature and ambit of the evidence led by the prosecution in support of the two charges of conspiracy to defraud the those charges were entirely apposite.  Certainly, the applicant's right to a fair trial was not in any way whatsoever compromised in the trial.  We note that Mr Beel advanced substantially the same ground of appeal, in respect of the convictions of two applicants of the offence of conspiracy to defraud contrary to common law, before a differently constituted division of this court, in HKSAR v He Ping Sheng and another CACC 98/2006, judgment in respect of which was delivered on 22 November 2006.  There, Ma CJHC in the judgment of the court said:

“8.    It was submitted in the written material before the court that the Applicants had not received a fair trial on account of having been charged with conspiracy to defraud under the common law when they ought to have been charged with the substantive offences of attempted theft, attempt to obtain property by deception or even a statutory conspiracy (see section 159A(1) of the Crimes Ordinance, Cap.200).  In our view, these submissions must likewise be rejected.  The common law offence remains in Hong Kong and is one that can be and is regularly used.  We do not regard it as in any way inappropriate in the present case for the Applicants to have been charged with conspiracy to defraud.  We were referred to the cases of R v Ayres [1984] AC 447 and R v Cooke [1986] AC 909 but they provided little assistance in the present case.  Although it may have been possible (putting the matter at its very highest for the Applicants) to have been charged with other offences, it was certainly not wrong to have charged them with a conspiracy to defraud.  Mr Beel also submitted in this context that guidelines similar to those which exist in the United Kingdom should now be made applicable in Hong Kong.  The United Kingdom guidelines are found in the Code for Crown Prosecutors which are laid down under section 10 of the Prosecution of Offences Act 1985.  There is no such statutory provision in Hong Kong and we feel it is inappropriate to lay down any guidelines for the prosecution of this offence.  We should also add that these points were not raised in the trial court.  Neither counsel for the Applicants regarded the charge as being in any way unfair or oppressive for their respective clients.”

25.With respect we echo and endorse those statements of principle.

26.Regrettably, Mr Beel did not add that judgment to his List of Authorities nor did he file a supplementary Skeleton argument advising the court or the Respondent of the rejection of the same argument by a differently constituted division of the court three days after he had filed his skeleton argument.

27.In our judgment, it was entirely appropriate to bring the two separate charges of conspiracy to defraud. The underlying conduct that supported charge 1 encompassed a period of two years and that for charge 2, ten months. The evidence encompassed conduct of a diverse range of criminal offences embarked on in order to implement and conceal the fraud.

Ground 2

28.We are satisfied that the conspirators, including the applicant, in each of the conspiracies intended to cause loss to the LCSD in that they intended payments be made by the LCSD pursuant to the contracts, which payments they knew would not be made had the managers of the LCSD been aware that the employees of Polyking were paid less than the rates of wages stipulated in the respective contracts.  Equally, we are satisfied that the conspirators intended to defraud managers of the LCSD in the discharge of their public duties.

Dishonesty

29.In his evidence, the applicant accepted that he had been involved in the preparation and processing of some of the documentation, which the prosecution categorised as the active concealment from the LCSD of the underpayment of the employees of Polyking.  In respect of the monies deducted from the wages of employees in respect of ‘training’ he said that he had just carried out the instructions of the 1^st accused (see paragraph 137 of the Reasons for Verdict).  Of his evidence, the judge said at paragraph 96:

“The 2nd accused was directly involved in the preparation of the meal fees list in relation to the Central library and the final summary report.  Also, he admitted that he had drafted the monthly statement sent the LCSD.”

30.Furthermore, the applicant had admitted in his evidence that he went to the Central library to collect ATM vouchers of payments made to the company by its employees.  It was the prosecution case that these were repayments by employees of part of their wages to Polyking.  It was the nub of the 2^nd applicant's case that he had

“no clear knowledge of the wages of the cleaning workers and he just followed the instructions of the first accused.”

(see paragraph 121 of the Reasons for Verdict) and that not only was he not a party to a conspiracy

“he did not even have the slightest suspicion that there was a conspiracy.”

(see paragraph 137 of the Reasons for Verdict).

31.Of the issue of the legality of the deductions made from the wages of employees allegedly for ‘training’ the judge said of the applicant’s testimony paragraph 137, page 88):

“137.      …He admitted that he had voluntarily raised a point for discussion during an internal meeting with the 1^st Accused and in the presence of Ronald Lau, the company’s solicitor.  He had concerns over the legitimacy of the training scheme.  He compared the training scheme with the case of the unscrupulous model agency which was covered in the media reports.”

32.Clearly, the effect of the applicant’s testimony was that in participating in the creation and processing of the documentation relating to the deduction of wages for ‘training’ fees, having considered the matter and taken legal advice, he did not consider what he did to be dishonest.

33.In those circumstances, whilst normally it is unnecessary and undesirable to attempt to define ‘dishonesty’, in light of the issues arising from the evidence clearly it was appropriate that the judge direct himself, as he did, in terms of the test enunciated in R v Ghosh.

34.We reject the assertion by Mr Beel that the judge’s use of the test enunciated in R v Ghosh in defining ‘dishonesty’ in respect of the offence of conspiracy to defraud was inappropriate and in error. Of his statement in oral argument that he had been unable to find any example of this court approving the use of that test in these circumstances we note that on numerous occasions this court has affirmed the appropriateness, where required, of such a direction in respect of a count of conspiracy to defraud, contrary to common law: for example, see HKSAR v Cheng Sui Wa (unreported) CACC 223 of 2001 paragraphs 45-47; R v Tam Chung Shing [1990] 1HKLR 718 at page 721 B-I; R v Tam Chung Shing [1991] 1 HKLR 458 at 463C.

There is no merit in this ground of appeal.

Ground 3

35.We are satisfied that the judge directed himself correctly as to the ingredients of the offence of conspiracy to defraud and, in particular, of the requirement of proof that the 2^nd applicant was a party to an agreement with others to carry out unlawful acts with an intention to carry it out.  Furthermore, as the judge demonstrated in his detailed analysis (paragraph 119-142, pages 83-88 of the Reasons for Verdict), there was overwhelming and compelling evidence of the applicant's participation in the two conspiracies to defraud.  An extract from the analysis illustrates the compelling nature of the evidence on which the judge relied:

“132.    According to PW1, the 1^st Accused had informed her that the 2^nd Accused and PW2 would collect the meal fees from the workers.  The 2^nd Accused also confirmed that when he testified.  The 2^nd Accused was responsible for making the meal fee lists (P96-104) for the purpose of collecting the meal fees from the cleaning workers.   The amount of the meal fees printed on the list happens to represent the difference between the stipulated and the contracted wage of a cleaner.  According to the 2^nd Accused, he had no idea of the amount and the amount of the meal fee was just provided by the 1^st Accused.  He was told all along by the 1^st Accused that the workers should be paid $5,166.  In other words, he did not know that the workers were actually promised to be paid $4,500 only.

133.    However, PW1 testified that it was the 2^nd Accused who informed her that the workers were reluctant to pay the meal fees.   Therefore, the new cleaning workers recruited would only be paid the net salary of $4,500 while the existing workers still had to pay the meal fees in order bring their salaries down.  In November, the practice of the meal fee collection was stopped and the 2^nd Accused told PW1 that all workers would now be paid the contracted wage as so many workers were not paying the meal fees.  

134.    The 2^nd Accused denied ever said that to PW1.  Yet, the change in the payroll system from a gross payment (meal fees included) to a net payment was not an insignificant change in the payroll system.  Being the person in charge of the accounting department and therefore the payroll system, it was almost inconceivable that the 2^nd Accused would not notice or know this piece of information.  If according to the 2^nd Accused’s testimony that his understanding of the wage level was still the stipulated wage i.e. $5,199, there was no reason that the new cleaning workers should be paid $4,500 instead, especially if they had refused to pay the meal fees.

135.    Under the cross-examination by Mr. Colghan, counsel for the prosecution, the 2^nd Accused could not explain why if he believed that the fees were collected from the cleaning workers for the purpose of buying meals, there were no corresponding expenses account which show the total amount of money spent by Polyking on buying meals for the cleaning workers.  He only said that he did not notice that.  His reply was evasive and he was increasingly untruthful.   

136.    Among the documents submitted to the LCSD on the 26^th of August 2003, there was a copy of employment contract of PW9 which actually bore the signature of the 2^nd Accused.  The wage as stated in that contract was $5,166. (P1112) Given my finding that he knew for a fact that cleaning workers were not paid the stipulated wage but only the contracted wage, the signature by the 2^nd Accused in this document clearly indicated that he agreed and indeed had embarked upon a course of conduct which amounted to defrauding the LCSD.”

36.There is no merit in this ground of appeal.

Conclusion

37.For the reasons set out above, at the hearing of the application we dismissed the applicant's application for leave to appeal against his convictions.

THE APPLICANT’S GROUNDS OF APPEAL AGAINST SENTENCE

The sentence imposed by the judge

38.As stated earlier the judge sentenced the applicant to 18 months imprisonment on each of the two charges of which he was convicted.  Having regard to the principle of ‘totality’ he ordered that six months of the sentence of imprisonment imposed in respect of charge 2 be served consecutively to the imposed in respect of charge 1.

The Reasons for Sentence

39.Of the nature of the two conspiracies, the judge said in his Reasons for Sentence:

“16.    The offence disclosed on both charges involved considerable planning and endeavour, and also the scheme was elaborate and blatantly dishonest.  The gravamen of this offence was that this was a calculated scheme orchestrated by the 1st accused and faithfully executed by the 2nd and 3rd accused to underpay and thereby exploit the cleaning workers.  It also defeated and undermined the policy of the LCSD of the Hong Kong SAR Government that those cleaning workers under the Government contract should be paid a minimum wage which was specified in the cleaning contract.

17.    The extensive use of false documents in the two offences had aggravated the seriousness of the offence and indicated the cavalier attitudes of those involved in the execution and the implementation of this scheme.  While it is accepted that both the 1st and 2nd accused were only employees of Polyking, thereby deriving no personal financial gain, the money factor is, in my judgment, not the only factor in deciding the criminality and the seriousness of the two offences.”

40.Having had regard to the fact that the applicant was of good character and that the background report was “exceptionally favourable” nevertheless, the judge concluded :

“This is a serious case which merits an immediate custodial sentence for public deterrence.”

GROUNDS OF APPEAL AGAINST SENTENCE AND RELATED SUBMISSIONS

41.By the grounds of appeal against sentence it is argued that the total sentence of imprisonment imposed on the applicant was manifestly excessive and wrong in principle in that the judge:

(i)    found that the two offences of conspiracy to defraud of which the second applicant was convicted were offences committed in circumstances of the defrauding of a public officer in the execution of his public duty not that of economic loss to the LCSD;

(ii)    erred in determining that the employees of Polyking were exploited;

(iii)    erred in taking into account that there had been no restitution; and

(iv)    failed to take into account properly that the second applicant was an employee only who stood to make no personal financial gain; that there was no economic loss to the victim and the good ‘ background report’ all of which amounted to "exceptional circumstances" warranting the imposition of a suspended sentence of imprisonment.

A CONSIDERATION OF THE GROUNDS OF APPEAL AGAINST SENTENCE

42.It has to be said at the outset that the submissions made in respect of the sentences imposed on the applicant were bereft of merit.  The conduct the subject of charge 1 covered a period of over two years.  The applicant, who occupied a position of seniority in Polyking as Accounts manager, became a party to the conspiracy at an early stage.  From the outset cleaning workers were recruited at $4,500 per month rather than at $5,166 per month, as provided in the contract with the LCSD.  In the first six months monies were collected from those employees as ‘meal fees’.  The applicant was involved in the collection of cash from them.  Thereafter, he was involved throughout the period of that conspiracy in the preparation and processing of the plethora of false documentation created and presented to the LCSD to conceal the true position.

43.Clearly, as the judge found the LCSD had been defrauded into making payments to Polyking on the basis of the falsehoods contained in the various and ongoing representations made to them that the employees of Polyking were paid as stipulated in the contracts and not the lesser amounts that in truth they were paid. He was entitled, if not required, to take into account that in respect of each charge the conspirators had misled the LCSD into believing that the employees of Polyking had been paid a total of $1 million more than the amount that they had in fact been paid.  Clearly, also, officers of the LSCD had been defrauded in the discharge of their public duties. The fact that no restitution had been made, as the judge noted, was relevant in that there was not available to the applicant the positive factor in mitigation of restitution.

44.We reject unhesitatingly the submission made by Mr Beel that  the cleaning- worker employees of Polyking were not exploited by the conduct of the conspirators because, in the economic conditions of the time, which included the period of SARS, they were employed by Polyking at the depressed ‘market rate’.  No doubt, it was because of those very circumstances that the LCSD as an arm of government, in the discharge of its duties, sought to protect the vulnerable in the workforce and required those companies that wished to benefit from contracts with the LCSD to agree to pay stipulated rates of wages to their employees working on those contracts.  Those that were exploited included the mentally handicapped.

45.Finally, it is clear that the judge gave full consideration to the fact that the applicant obtained no personal gain as a result of the conspiracy and was a man of previous good character who had risen from humble origins by his own hard efforts. Nevertheless, in our judgment the judge was entirely correct in determining that the two charges of conspiracy to defraud of which the applicant had been convicted were serious and that they merited an immediate custodial sentence for public deterrence.

Conclusion

46.In the result, we were satisfied that there was no merit whatsoever in the grounds of appeal against sentence, which we dismissed.

LOSS OF TIME

47.Having dismissed the applications for leave to appeal against conviction and sentence we heard from Mr Beel on the issue of an order for ‘lost time’ served by the applicant, pursuant to section 83 W of the Criminal Procedure Ordinance, Cap.221.  Having been convicted of the two charges of conspiracy on 6 March 2006 and sentenced to a total term of two years’ imprisonment on 13 March 2006 the applicant filed notice of his application for leave to appeal against conviction and sentence in April 2006. In the event, pursuant to that section we ordered that three months of the time during which the applicant was in custody pending the determination of his appeal should not be reckoned as part of the term of the sentence which the applicant is subject.

48.In making an order for ‘ loss of time’ we were mindful that counsel had settled the grounds of appeal against conviction and sentence for the applicant. The fact that there was no merit whatsoever in any of the grounds of appeal against conviction or sentence was self-evident and must have been obvious to the applicant.  He is an educated man who holds a Masters degree in finance and who occupied a senior managerial position of Polyking.  The trial of the applicant and two of his co-conspirators occupied 29 days and resulted in Reasons for Verdict and sentence which occupy 64 and 10 pages of transcript respectively. There the judge articulated in simple and logical terms the analysis of the evidence that led him into convict the applicant and his reasoning for the imposition of the sentences of imprisonment.  We have no doubt that the applicant was fully aware that his application for leave to appeal were hopeless but that, nevertheless, he determined to have ‘one more shot’ at success.  He has brought these consequences upon himself.

Mr I C McWalters, SC, DDPP, of the Department of Justice, for the Respondent.  

Mr Trevor Beel, instructed by Messrs Lawrence K Y Lo & Co., for the Applicant.