HKSAR v. Yam Kong Lai
Read the full judgment text of CACC 458/2006 on BabelCite. This Court of Appeal judgment was delivered on 2 July 2008 before Stuart-Moore VP and McMahon J.
Criminal law – Organised and Serious Crimes Ordinance (Cap 455) s.25(1) – dealing with property knowing or having reasonable grounds to believe it represents proceeds of an indictable offence – sentencing – cross-border fraud – dormant time deposit of elderly US residents stolen via forged documents – whether judge's reference to applicant's retention of private counsel was improper – whether sentence was manifestly excessive – whether circumstances of underlying theft may be taken into account in sentencing for s.25(1) offence – Court of Appeal reduces sentence from five to four years – whether applicant's engagement of private counsel is an aggravating factor – held not, but observation was directed at unsubstantiated offer of compensation – whether sentence was manifestly excessive – held that judge erred in taking into account the heartlessness of the underlying theft and the victims' loss, which were extrinsic to the s.25(1) charge – whether underlying indictable offence can be considered in sentencing for s.25(1) – following HKSAR v Xu Xia Li (CACC395/2003) and HKSAR v Chen Szu Ming (CACC270/2005), held that as a general principle the defendant should be sentenced for the s.25(1) offence only, save where the underlying crime is particularly serious – underlying theft here not of such gravity – appeal allowed in part, sentence reduced to four years' imprisonment, criminal bankruptcy order maintained.
Legal issues: Whether retention of private counsel is an irrelevant sentencing factor · Whether the sentence of five years was manifestly excessive · Whether circumstances of the underlying theft can be considered in sentencing for a section 25(1) OSCCO offence
Outcome: Appeal against sentence allowed in part; sentence reduced from five years' imprisonment to four years' imprisonment; criminal bankruptcy order remains intact.
Cited by 60 cases
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CACC458/2006 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CRIMINAL APPEAL NO. 458 OF 2006 (ON APPEAL FROM DCCC 332 OF 2006) ----------------------
---------------------- Before : Hon Stuart-Moore VP and McMahon J in Court Date of Hearing : 13 June 2008 Date of Judgment : 2 July 2008 ---------------------- J U D G M E N T ---------------------- Hon McMahon J (giving the reasons for judgment of the Court) : BACKGROUND 1.The applicant was convicted after a trial before Deputy Judge Sham in the District Court of an offence of dealing with property knowing or having reasonable grounds to believe it represented the proceeds of an indictable offence, contrary to section 25(1) of the Organised and Serious Crimes Ordinance (“the Ordinance”). She was sentenced to five years’ imprisonment and made the subject of a criminal bankruptcy order. She originally sought leave to appeal both her conviction and sentence but abandoned her application concerning conviction prior to this hearing and it was dismissed. She maintains her application regarding sentence. FACTS 2.In 1990, two persons resident in the United States of America (“the Coes”) opened a time deposit account with UFJ Bank in Hong Kong which subsequently became the Sanwa Bank (“Sanwa”). They deposited US$500,000 in that account and that sum, together with its accrued interest, was allowed to automatically roll over annually without further instructions being required from the Coes. 3.In 2000, the applicant was employed in Hong Kong at Towa Securities Limited (“Towa”) as an investment adviser and dealer representative. That company effectively formed the securities trading arm of Sanwa. The applicant’s superior at Towa was a Mr Narahara, and on an occasion around July 2000 he gave her copies of various Sanwa account documents of the Coes, telling her that they needed to be contacted about their account. The prosecution case was that the applicant was unable to contact the Coes and realised that their time deposit account was dormant. A few months later, in September 2000, the applicant left Towa. 4.In early December 2000 Sanwa received various documents by fax purporting to be signed by the Coes directing Sanwa to uplift the time deposit which, including its accrued interest, now totalled US$522,311.69, and to transfer it to the account of a firm of solicitors in Singapore. After some correspondence with the persons purporting to be the Coes, Sanwa, on 8 December 2000, complied. However, unknown to Sanwa, all the documents, whether original or faxed, which had purported to be signed by the Coes were false. The signatures were forgeries and the Coes had been wholly unaware that their time deposit had been uplifted and transferred to the Singapore account. 5.Billion House International Limited (“Billion”) was a general trading company in Hong Kong. The applicant made an arrangement with it for a sum of US$497,305.27 to be remitted on 15 December 2000 from the account of the solicitors firm in Singapore to the account of Billion with HSBC in Hong Kong. This was under the authority of a forged document purportedly signed by the Coes which had appointed the Singapore solicitors firm as a stakeholder of the money and obliged them to transfer the money to Billion when given notice to do so by Billion. The sum transferred represented the balance of the US$522,311.69 which had been remitted to the solicitors account in Singapore, less various bank charges and legal fees. The use of Billion’s bank account, and Billions cooperation, had been achieved because the applicant was apparently an acquaintance of one of its directors and had promised her a commission for the use of its bank account, and had signed a declaration apparently intended to indemnify Billion in the event it suffered any loss in the transaction. 6.The money remained in Billion’s account for a few days only before US$497,305.27, representing the money remitted from Singapore to Billion less bank charges, was transferred to a time deposit account at HSBC in the name of the applicant. This transfer was again achieved by the utilization of a document shown to Billion by the applicant which had upon it the forged signatures of the Coes. 7.Over the next year, the applicant drew down that sum of money deposited in her account and by December 2001 had exhausted it. A large part of it had been transferred to the accounts of associates and family members of the applicant both in Hong Kong and overseas. Some was simply drawn down by the applicant in cash. 8.The applicant knew that the money she received in her account represented the funds, or most of them, which had been obtained from the Coes’ time deposit account with Sanwa. She was a knowing participant in the original fraud in the sense that she was aware that the monies had been obtained using forged documents. Indeed, the fraud had come about as a result of her realization that the Coes’ account was dormant and that they were unable to be contacted. 9.Some eighteen months later, in June 2002, the Coes made enquiries about their account and discovered that the deposit had been withdrawn without their permission and by the utilisation of documents containing forgeries of their signatures. They then made a report to the Hong Kong police. 10.Investigation proved difficult. A Singaporean court order had to be obtained against the solicitors so as to have them divulge what they had done with the money. It was not until 2005 that the Hong Kong police obtained documents which evidenced the transfer of the funds back to the HSBC account of Billion in Hong Kong and thence to the applicant’s account. 11.The applicant was arrested on 18 February 2006 and convicted on 22 September 2006. GROUNDS OF APPEAL 12.Mr Oderberg for the applicant relies on two grounds of appeal against sentence which may be set out as follows :
Ground 1 13.The Coes had given evidence that their US$500,000 time deposit represented a significant part of their life savings and that they had left the money on deposit in Hong Kong as they intended to use it to buy a flat and settle in this city after their retirement. No part of the funds taken from their account with Sanwa had been returned to them. In that context, the judge said :
and
Mr Oderberg argues that the applicant was entitled to retain counsel of her choice and should not have been penalized for having done so. He says that the judge therefore took into account an irrelevant factor. 14.We agree that the applicant’s retention of private legal representatives for the purpose of her trial was irrelevant to sentence, and the judge would have been in error if he had taken it into account as a factor in any way increasing her sentence. But he did not. There is no suggestion in that which the judge said that he regarded the applicant’s employment of private legal representatives as an aggravating factor. Nor did he take it into account in determining the starting point of sentence. It is quite obvious that the judge made his comments simply to illustrate the lack of substance of the applicant’s mitigation to the effect she was willing to make compensation to the Coes. 15.As pointed out by Mr Zervos SC for the respondent this proffered mitigation apparently stemmed from the applicant’s earlier statement to the reporting probation officer that “if the court was prepared to pass a non custodial sentence, she was prepared to raise US$500,000 and compensate the Coes.” Regardless of what the applicant had said to the probation officer, and what had been said on her behalf to the court, no compensation has ever been paid by her to the Coes. 16.In our view while it was not helpful for the judge to make the observation that he did, the applicant was not penalised because of her representation. The judge did no more than dismiss her mitigation. Her expression of willingness to compensate the Coes would in any event, wholly unsubstantiated as it was, never have amounted to significant mitigation and the judge was right to regard it as being of no weight. The judge’s comments therefore in no way exacerbated the applicant’s sentence as Mr Oderberg suggested in his submissions and were wholly irrelevant to the sentence eventually imposed. This ground must fail. Ground 2 17.Mr Oderberg argues that the sentence imposed was manifestly excessive and that a sentence of no more than four years’ imprisonment was appropriate. He firstly complains that the judge sentenced the applicant on the basis that she was the sole beneficiary of the funds taken from the Coes’ account, when there was evidence that a substantial portion of those monies, or at least gifts in the form of jewellery and handbags paid for from those monies, went to a person Lo Thin Hook, or others associated with him. 18.The judge accepted that this individual existed, but had rejected the applicant’s evidence that it was he who had instigated the fraudulent removal of the Coes’ funds from Sanwa bank or had anything to do with the eventual transfer of those funds back to the Billion account in Hong Kong, and thence to the applicant’s personal account. He concluded that the applicant was “the ultimate beneficiary of the money”. 19.Given the judge’s rejection of the applicant’s evidence that she had dealt with the funds on behalf of the individual Lo, all that remained was the prosecution’s evidence as to a large part of the funds going either to the applicant’s personal or family’s benefit or to other persons of unknown relationship to her, including Lo and persons who may have been associated with him. In the context of the monies having being finally deposited into the applicant’s personal account, the judge’s comment as to the applicant being the ultimate beneficiary was unexceptionable. 20.Mr Oderberg further complains that the judge “treated” the applicant as if she might have been the person who forged the Coes’ signatures on the various documents which triggered the movement of the funds. He says the judge “failed to indicate whether he was sentencing (the applicant) on the basis of having forged the signatures, knowing or believing that they would be forged by someone else or knowing or believing they were forged but not being a party to it and discovering the true facts after the event.” 21.The judge’s finding in this regard however was quite specific and was that :
22.So far as Mr Oderberg’s complaint is concerned, we are satisfied that the judge was entitled to conclude that the applicant either created the false documents or knew they were false. The applicant was a person with both a banking and a financial background. Given the judge’s finding that she knew of the plan to obtain the funds from the Coes’ bank account, it necessarily followed that she was aware false documentation would be used in the transfer of the funds. It mattered little in terms of her own culpability whether she herself forged those documents or acted with someone else who forged them. 23.Whilst there was no merit in this particular complaint, we raised with counsel during arguments our concern with the judge’s taking into account the applicant’s role in the underlying offence of theft. Where a defendant is convicted of an offence pursuant to section 25(1) of the Ordinance, it is that offence for which he or she should be sentenced. As was said in HKSAR v. Xu Xia Li (unreported) CACC395/2003, per Woo VP :
Those comments were re-affirmed in HKSAR v. Chen Szu Ming (unreported) CACC270/2005. 24.It would be quite wrong as a general principle to sentence a defendant on the basis of an offence with which he or she was not charged, though as was pointed out in Xu Xia Li where the underlying offence is of a particularly serious nature, a defendant’s dealing with the profits of such an offence may well be an aggravating factor. In those circumstances, an enhanced sentence may be required as a matter of policy and general deterrence. 25.The present case, though not in that category, was somewhat unusual in that the applicant was found to have known that the funds she received represented the proceeds of an indictable offence for the purposes of section 25(1), for the simple reason that she had stolen them. Was the judge entitled then to take into account her involvement in that theft as a sentencing factor? 26.We do not think so. The applicant was charged with a section 25(1) offence, and should have been sentenced solely on the basis of her role in dealing with the proceeds of the theft, rather than for her role in the theft itself. A number of the factors the judge properly took into account were directly relevant to the nature of the applicant’s dealings with the funds. Her use of forged documentation, her knowledge of the sophistication of the methods used to disguise the origin of the funds before their transfer to her personal account and her subsequent use of the funds for her own benefit and that of her family were matters the judge was entitled to regard as relevant to sentence. 27.However the circumstances of the actual theft and its effect upon the Coes seem to us to be matters which pertained only to the theft rather than the charged offence. 28.The judge, in giving his reasons for sentence, had said this :
No doubt the judge was right to sympathise with the plight of the Coes and to regard the original theft as heartless, but those matters were extrinsic to the charged offence. By considering the circumstances of the offence itself, the judge took into account matters which were irrelevant. The underlying offence was one of theft and was not of a nature so serious as to amount to an aggravating factor. 29.That was an error of principle and we revisit sentence. In our view, the role of the applicant in her dealing with the funds obtained from the Coes’ account was an active one. She was instrumental in the stolen funds being transferred to Singapore into the account of a firm of solicitors and thence back to Hong Kong, into Billion’s account and finally into her own. She then further dealt with those funds by distributing them to various people and family members. She was involved throughout the dealings with the stolen monies and presented forged documentation to Billion to effect a transfer of the balance of the funds to her own account. 30.Having said that, the amount of money involved was, by the standards of these offences, not particularly large being slightly less than HK$4,000,000 and, balancing these matters, in our judgment a sentence of four years’ imprisonment after trial is appropriate. 31.Accordingly we grant leave to appeal, treat the hearing as the appeal and allow the appeal to the extent that the applicant’s sentence is reduced to one of four years’ imprisonment. The judge’s imposition of a criminal bankruptcy order remains intact.
Mr Kevin P. Zervos SC, Ag DDPP and Mr David Leung, SGC of the Department of Justice, for the Respondent Mr Keith Oderberg and Mr Victor Luk, instructed by Messrs Knight & Ho, for the Applicant |
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