Case Document

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CACC 94/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 94 OF 2008

(ON APPEAL FROM DCCC 365 OF 2007)

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BETWEEN

	HKSAR	Respondent
	and
	LAM CHI WA(林志華)	Applicant

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Before: Hon Stuart-Moore VP and Saw J in Court

Dates of Hearing: 28 November 2008

Date of Judgment: 28 November 2008

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J U D G M E N T

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Saw J (giving the judgment of the court) :

1.The applicant was charged with two counts of trafficking in dangerous drugs, contrary to section 4(1)(a) and (3) of the Dangerous Drugs Ordinance, Cap. 134 (Counts 1 and 2). He was also charged with two counts of dealing with property known or believed to represent the proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organised and Serious Crimes Ordinance, Cap. 455 (Counts 3 and 4).

2.On 15 February 2008, the applicant pleaded guilty to all four charges and was, after mitigation, sentenced by Deputy District Judge Pang as follows :

(1) Count 1 : to be imprisoned for two years and eight months from a starting point of four years.

(2) Count 2 : to be imprisoned for one year from a starting point of 18 months.

3.The Judge ordered that six months of the sentence on Count 2 was to be consecutive to the sentence on Count 1. This resulted in a total sentence for Counts 1 and 2 of three years and two months’ imprisonment.

4.On Counts 3 and 4, the applicant was sentenced in each case to be imprisoned for two years and eight months from a starting point of four years. Both sentences were ordered to be served concurrently, one to the other, but two years was ordered to be served consecutively to the sentences on Counts 1 and 2. The total sentence therefore was one of five years and two months’ imprisonment.

5.The applicant now seeks leave to appeal the sentences on Counts 3 and 4 only.

6.Whilst there is no application for leave to appeal the sentences imposed on Counts 1 and 2, it will be necessary to refer to the facts of those charges and the approach the Judge took to sentencing.

7.The particulars of Counts 1 and 2 were that on the morning of 7 February 2007, the applicant was observed by police officers in the vicinity of the Sau Mau Ping Estate. His conduct apparently caused them to approach and detain him. He was searched and a plastic bag which the police suspected contained dangerous drugs was found in his overcoat pocket. When questioned by the police, he admitted that the contents of the plastic bag were Ketamine. Subsequent analysis revealed that the plastic bag contained 499.40 grammes of a powder containing 431.17 grammes of Ketamine. This was the quantity of dangerous drugs referred to in Count 1.

8.The applicant’s motor vehicle which was parked in the Sau Mau Ping Estate car park was also searched and seven small packets of suspected Ketamine and 20 tablets of what was thought to be Methamphetamine were found. Again, subsequent analysis revealed there to be 19.94 grammes of a powder containing 16.74 grammes of Ketamine and the 20 tablets contained 1.16 grammes of 3,4-Methylenedioxymethamphetamine (“MDMA”) and 0.06 grammes of methamphetamine. This was the quantity of drugs in Count 2.

9.In the case of both quantities of drugs (Counts 1 and 2), the applicant readily admitted that he was trafficking in them. The total estimated value of the drugs was in the order of $79,000.

10.Subsequent to the applicant’s arrest, an analysis of his bank accounts was undertaken. They are referred to in the Summary of Facts as Account A and Account B.

11.Account A was with the Hang Seng Bank. From 24 December 2005 to 6 February 2007, a total of $3,942,947.35 was deposited into that account on 429 occasions. Approximately 75% of these deposits were in cash.

12.$3,810,166 was withdrawn from this account in 315 transactions, 80 of those transactions totalling $1,584,008 were in cash.

13.Account B was with the Bank of China (Hong Kong). A total of $960,955.10 was deposited into that account between 1 January 2006 and 12 February 2007 on 48 occasions, and $934,225 was withdrawn on 28 occasions. Of these, 26 deposits and 44 withdrawals were made in cash.

14.In the course of mitigation, it was revealed that the prosecution intended to apply at the conclusion of the proceedings for an order for the forfeiture of any funds which remained in the applicant’s bank accounts. That application which was made pursuant to the Drug Trafficking (Recovery of Proceeds) Ordinance, Cap. 405 was not resisted by the applicant, and on 6 May 2008 an amount of about $400,000 was confiscated.

15.Mr McGowan on the applicant’s behalf relies on three specific grounds of appeal. Grounds 1 and 2 can properly be taken together.

16.Ground 1 reads as follows :

“The Learned Deputy Judge erred in deciding that the source of the money was separate and distinct from the Applicant’s admitted Drug Trafficking.”

17.Ground 2 reads as follows :

“The learned Deputy Judge erred in all the circumstances of the case in sentencing on effectively a completely separate basis for charges 3 and 4.”

18.What the judge said in this regard was as follows :

“34.  On the facts admitted by the defendant, while he is a drug trafficker, there is no sufficient evidence to prove on a criminal standard that the money laundered was drug related. Though the defendant admitted to the police and says in mitigation that he was working as a casino chip seller, the admission to the police and the facts in the case cannot prove that the money laundered was related to gambling.

35.  The nature of the indictable offence from which the money was derived in this case is unclear. While the admission of the defendant forms sufficient basis for a conviction, the result of the unproven nature of the indictable offence is that the court cannot find on a criminal standard that the defendant knew that the money was deprived from very serious crimes.

….

37.  Moreover, the large amount of the money laundered and the length of time the offence has lasted must not be ignored. While there is no direct evidence or admissions from the defendant as to what benefit he could get from the scheme of money laundering, there can be no doubt that he committed the offences for financial gain.”

19.The applicant, in his initial grounds of appeal, complained that at all times he made it clear to his counsel in the trial that the transactions in the two bank accounts were all related to his conduct as a drug trafficker and not otherwise. We note that in mitigation, on behalf of the applicant, his counsel made no such concession but did advert to the fact that there was to be an application for the forfeiture of the balance of the funds in those accounts and that that application for forfeiture was to be made pursuant to the Drug Trafficking (Recovery of Proceeds) Ordinance, Cap. 405.

20.In his written submission in support of this application, Mr McGowan submits that :

“The accounts were effectively the Applicant’s current accounts for his Drug Trafficking Business.”

and

“The only realistic source of these funds was the Applicant’s drug trafficking.”

21.The Judge’s finding that the money laundering charges were not linked to the applicant’s drug trafficking is difficult to fathom.

22.In HKSAR v. Xu Xia Li and another [2004] 4 HKC 16, at p.22, Woo VP observed, when considering an offence committed under section 25(1) of the Organised and Serious Crimes Ordinance, that :

“….in our judgment, the nature of the indictable offence from which the money was derived should be of no particular significance in sentencing, save that if the defendant knew that the money was derived from very serious crimes, it would be an aggravating feature to be taken into account in sentencing.”

23.It is trite to say that drug trafficking and, in particular, drug trafficking over a very lengthy period of time, involving substantial sums of money, comes within the definition of a very serious offence. The Judge may have erred in the present case but not to the detriment of the applicant. Had the Judge been minded to he could properly have made the whole of the sentences on the money laundering charges consecutive to the other sentences, given that the underlying indictable offences were drug trafficking.

24.Mr McGowan submits that the judge’s approach was flawed. We do not agree. In the instant case, the drug trafficking occurred on 7 February 2007. The money laundering charges spanned a much longer period, from December 2005 to February 2007. The transactions revealed a very substantial flow of funds in and out of those accounts. They reflected the proceeds of drug trafficking over a very lengthy period and drug trafficking separate and discrete from the drug trafficking in Counts 1 and 2.

25.There is no substance in these grounds of appeal.

26.Ground 3 reads as follows :

“The learned judge erred in making only 8 months of the sentences concurrent to these for charges 1 and 2 with the other 2 years consecutive.”

27.Mr McGowan submits that all or a major part of the sentences for money laundering should have been made concurrent to the sentences for drug trafficking. This, he submits, is the case particularly where the defendant is both the drug trafficker and is charged with the money laundering of the proceeds of his own drug trafficking.

28.We pause to observe that there can be no doubt that in law a defendant can be convicted of the money laundering of the proceeds of his own criminal acts, see HKSAR v. Lok Kar Win and Others [1999] 4 HKC 783, 797.

29.Mr McGowan has referred us to a number of cases amongst which is the unreported judgment of this court in HKSAR v. Javid Kamran, CACC400/2004. He suggests that the approach taken there to order that a small part of the money laundering offence sentence be made consecutive to the sentence for trafficking in dangerous drugs offences is correct and should have been the approach adopted in the instant case.

30.We observe that Javid’s case was very different from the present. In Javid the total amount of money involved in the money laundering charges was just over $1,000,000. In the instant case it is more than four times that amount. In Javid, four years was adopted by the sentencer as the appropriate starting point. The Court of Appeal considered that three years was more appropriate.

31.The sentencer in Javid’s case had made the whole of the sentence on the money laundering charge consecutive to the sentences for the drug trafficking. The Court of Appeal interfered, not it would appear because it was wrong in principle to do that but to reflect the totality of Javid’s criminality.

32.There is nothing in the judgment in Javid’s case which supports the proposition that a defendant who launders the proceeds of his own drug trafficking must of necessity receive concurrent sentences.

33.This raises the issue as to what is the correct approach to be taken when the drug trafficker is also charged with the offence of dealing in or with the proceeds of his own crime. The trafficker is also the launderer, as Mr McGowan puts it. The answer we think is this. In a situation where a person is charged with a drug trafficking offence and at the same time a money laundering offence with respect to the proceeds of that very same drug trafficking, then allowance can properly be made for this by making the whole or a substantial part of the sentences concurrent. However, when the drug trafficking and money laundering charges are separate and discrete, and by this we mean that the funds are not referable to the actual drug trafficking charged, then it is only in the context of totality that a sentencer should consider making some part of the sentences on the money laundering charges concurrent to the sentence for drug trafficking. In the instant case the applicant, by admitting the particulars of Counts 3 and 4, was accepting that the sums going in and out of those accounts were the proceeds of his drug trafficking over a period of time. They were separate in time from the drug trafficking charges, albeit that he has not been charged with individual counts of drug trafficking for that period.

34.In these circumstances, it is entirely proper to order that all or part of the sentences for the money laundering charges be ordered to run consecutively to the drug trafficking charges.

35.The real issue in the present case is whether the total sentence in all of the circumstances is manifestly excessive.

36.We consider that the starting point for sentence of four years in the case of each count cannot be said to be manifestly excessive. The main thrust of Mr McGowan’s submission is that even if the starting point was correct the decision to make two years of the sentence consecutive to the sentence for the drug trafficking charges resulted in a final sentence which is manifestly excessive.

37.In the present case the judge ordered two years of the two years eight months’ imprisonment on the money laundering charges to be consecutive to the drug trafficking charges. We consider that he was correct to do so. The amount of money involved was very substantial and spanned a lengthy period.

38.One other matter should be addressed. The applicant has not sought to appeal the sentences imposed for Counts 1 and 2. However, it appears that the Judge has fallen into error. It has long been accepted that it is appropriate where two or more counts of drug trafficking are charged and the offences occur on the same day and at the same time (as they did here), where the reason for there being two or more charges as opposed to one is primarily that the drugs are located in different places (as they were here), for the sentencer to add the total of the active ingredient of the drugs together to arrive at a notional starting point.

39.In the instant case, had this been done this would have resulted in a total weight of active ingredient of 449.07 grammes.

40.The Court of Appeal’s guidelines for sentencing then in place recommended a sentence range of four to eight years after trial for amounts of 400 to 800 grammes of Ketamine (see HKSAR v. Lee Tak Kwan [1998] 2 HKLRD 46, 55 and HKSAR v. Leung Chun Fung [2003] 2 HKLRD 282, 283). The proper starting point for sentence for an amount of 449.07 grammes, as Ms Anthea Pang SADPP for the respondent has correctly pointed out in her written submissions, would then be four years and six months and the proper sentence after a full allowance for the plea of guilty would be a term of three years’ imprisonment (apportioned between the two charges) as opposed to the sentence of three years and two months’ imprisonment which the Judge imposed.

41.As a matter of principle, therefore, although there is no ground of appeal on this basis, we shall give leave, treating the hearing as the appeal, we reduce the sentence on Count 1 to two years and six months’ imprisonment. All other sentences will remain the same, leaving a total sentence of five years’ imprisonment.

42.To this extent the appeal succeeds.