HKSAR v. Cheung Suet Ting

CACC 226/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 226 OF 2009

(ON APPEAL FROM DCCC NO. 426 OF 2008)

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Before: Hon Hartmann JA and Mackintosh J in Court

Date of Hearing: 9 July 2010

Date of Judgment: 9 July 2010

Date of Reasons for Judgment: 11 August 2010

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REASONS  FOR  JUDGMENT

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Hon Mackintosh J (giving the judgment of the Court):

1.This is an application for leave to appeal against a sentence of 12 months’ imprisonment imposed by HH Judge Browne in the District Court on 8th July 2009. At the conclusion of the hearing of this matter, we dismissed the application for leave to appeal and said we would give our reasons later. These are our reasons.

2.The Applicant, who was D1 out of four defendants in the District Court proceedings, was convicted after trial of a single charge which can be described in shorthand as a “ghost workers” conspiracy to defraud, involving cleaning staff at a public housing estate.  The monetary value of the fraud was HK$423,527.

3.The thrust of the application, is that the learned judge failed adequately to distinguish between the different roles of the co-conspirators, and in particular, the Applicant and her mother, D2; that he failed to have proper regard to the family circumstances of the Applicant; and failed to have sufficient regard to the delay in bringing the proceedings to court.  Furthermore, on the basis of fresh material now before this Court by virtue of section 83V of the Criminal procedure Ordinance, Cap 221, the Applicant, who was allowed bail pending appeal on the 17^th July 2009, has recently been diagnosed as suffering from post traumatic stress disorder as a direct result of the sentence imposed upon her. That grant of bail was at a time when the Applicant, who was then 7 months’ pregnant, was appealing against her conviction as well as sentence: given the length of the trial and the need for a transcript, it was obvious that her appeal against conviction could not be heard until after she had served the 12‑month sentence and bail was accordingly granted here in the Court of Appeal.  In the event, the Applicant abandoned her appeal against conviction on the 10^th December 2009.

4.Finally, a further and important element of this application for leave to appeal against sentence, is the fact that since the imposition of the sentence of imprisonment, indeed, on the 27^th May 2010,shortly before the hearing of this application, the Applicant made full restitution of $423,857.

5.It is argued that these new factors, taken together with other the mitigation to which, it is suggested the learned judge gave insufficient weight, should lead this Court to conclude that the sentence of 12 months’ imprisonment was manifestly excessive and that the term should be reduced and/or suspended in its operation.

The Facts

6.The facts of the case can be distilled from the learned judge’s comprehensive reasons for verdict and reasons for sentence. The case centred around a cleaning company (hereinafter “the Company”) which had originally been established by the Applicant’s father and which was incorporated in 2003.  When he died in 2004, the Applicant and her mother, who was D2, became its directors.  D3 (a cousin of the Applicant) and D4 were foremen, employed by the Company on the Kin Ming Estate in Tseung Kwan O where the Company was engaged in cleaning work for the estate under a sub-contract. The lead-contract, dating from 2002, was between the Housing Department and a company called KMW Cleaning Services Limited (hereinafter “KMW”).

7.In 2003, KMW sub-contracted the cleaning works to the Company.  It was stipulated in both the lead-contract and the sub-contract that two cleaning Foremen and 39 cleaners were to be employed on the estate and that the cleaners were to be paid a particular minimum monthly wage.  The Company was paid a monthly fee of $328,754 under the sub-contract. If the number of workers fell below the number stipulated, the fees payable under the lead-contract and sub-contract were to be adjusted pro rata.  In order to check that the cleaning work on the estate was being performed in accordance with its contract with KMW, the Housing Department engaged in random inspections on the estate.  In addition, documentation was required including (a) attendance records; (b) salary confirmation records; and (c) payment certification.

8.There were, in all, five types of documents created in the course of the operation of the fraud, referred to as the “underlying documents” in the trial.

9.The evidence established that over the period of the conspiracy, which was the 14 months from May 2004 (when the Applicant’s father died, and she and her mother, D2, took over the running of the Company, until July 2005), the average number of cleaning workers on the estate was 26, 13 short of what was required under the lead-contract with the Housing Department.  These 13 workers who were put forward by the Company as being employed on the Kin Ming Estate, were either persons who had worked on the estate in the past, but not at the time claimed by the Company; or were workers on different housing estates.  Most of the signatures on the relevant documentation in relation to their attendance were forgeries: in other words, they were “ghost workers”: the documentary evidence asserted that they were working at the estate but they were not.  They did not receive the salaries as stipulated in the underlying documents for working as cleaners on the estate. Cheques issued in respect of these workers were cashed either by D3 or D4 (the Foremen) or other workers; or, on one occasion by the Applicant herself. During some periods, cheques were received by certain of the ghost workers in respect of work they had genuinely done at the estate.

10.It was also established that in order to satisfy inspections by officers of the Housing Department, persons, including office staff of the Company, were asked to go to the estate to pose as cleaning workers and, if randomly selected for interview, to lie about working there and about the salaries paid to them.

11.The learned judge observed, when delivering verdict, that,

“one of the more disturbing aspects of this case is that employees were routinely requested to attend the Kin Ming Estate solely for the purpose of telling lies to Housing Department officers: and the employees did so. It is a depressing feature of cases such as this, that those who conceive such scams, do so on the cynical assumption that company employees, and for no apparent benefit, will be prepared to lie to government officials on the company’s behalf.” AB pg74N.

12.It was established that during the period of the conspiracy, there was an overpayment to the Company of approximately $423,257 which was ultimately paid by a public body, namely, the Housing Department.

13.In sentencing the Applicant and her mother, D2, the learned judge accepted that but for the untimely death of the Applicant’s father, neither of them would have become involved in the conspiracy.  It is apparent, that the use of ghost workers in relation to this cleaning contract had commenced prior their involvement.  Nevertheless the judge went on to say:

“however, they did become directors of the company and when they did learn of the conspiracy, they allowed it to continue and they actively participated in it.” [emphasis added]

14.D2’s role, as the sole signatory of the Company bank account, included signing pay cheques of the ghost workers.  Those included cheques made out to workers in the office of the Company who were obviously not cleaners on the estate.  On one occasion she instructed an office worker to go to the estate to pose as cleaning worker when there was to be an inspection by the Housing Department.

15.The Applicant was an authorised signatory of the Company and, at first, her signature chop was used by office staff on much of the documentation created during the course of the conspiracy.  However, the Judge accepted the evidence of one of the office staff at the Company (PW5) that the Applicant’s original signature was to be found on a number of salary payment certification forms for the period March 2004 to June 2005(AB page 52M and page 82L).  As earlier noted, on at least one occasion, she was responsible for cashing three cheques issued in the names of ghost workers.

16.We are satisfied that whilst the Applicant and D2 did not initiate the activities which gave rise to the conspiracy which they joined, there were nevertheless ample grounds for the learned judge’s conclusion that, having become aware of the dishonest activities involving cleaning workers at the estate, they actively participated in continuing these activities and thereby conspired to defraud the Housing Department and KMW.

17.We are invited on behalf of the Applicant to engage in a comparison between the roles played by different conspirators and, in particular by the Applicant and her mother, D2; but also with the other convicted conspirators, D3 and D4.  This is with a view to determining whether the sentences imposed upon each of them were unjustifiably disparate in nature.

18.It should be emphasised that D3, who, as noted earlier, was a foreman at the estate in question, pleaded guilty.  It was accepted on his behalf, and the Judge found, that he was central to the conspiracy.  He must have been involved in the co-ordination of the ghost workers and in the covering activities during Housing Department inspections.  He was a man with a clear record, aged 32.  He had waited from February 2009, when he had pleaded guilty, to mid-July, after the trial of the Applicant and D2, to be sentenced.  He was the beneficiary of a number of good testimonials.  The learned judge, having said that he considered the range of sentence to for this offence to be 30 months to 3 years’ imprisonment, took a starting point for sentence of 30 months’ imprisonment for D3 which was reduced to 20 months, largely to reflect the plea of guilty.

19.D4, a woman of 49, was also of clear record. Like the Applicant and D2, she pleaded not guilty and was convicted after trial.  The learned judge found her role to be less than that of D3, but she was, nevertheless, an important part of the conspiracy.  She was aware of the false documentation being submitted to the housing department and knew that cleaning workers were being brought from other estates to Kin Ming Estate to lie to Housing Department officers during inspections.  She cashed some of the cheques payable to the ghost workers.  She was sentenced to 18 months’ imprisonment.

Sentence generally

20.Before turning to specific matters of mitigation canvassed before us in respect of the Applicant, we feel bound to say that we consider that the sentence imposed on this Applicant was remarkably lenient. The Applicant might have expected a term of imprisonment exceeding 24 months upon conviction after trial in a conspiracy to defraud of this nature, sophistication and value, involving a public body.  The fraud necessitated the creation of substantial volumes of false paperwork, much of it including forged signatures; it drew in other people who were recruited to lie as part of the cover-up; it took place over a period of about 14 months and involved in excess of $400,000 of public money.  We consider that the judge’s valuation of this fraud for sentencing purposes as being in the range of 30 months to 3 years to have been correct; and in our judgment, the Applicant was extremely fortunate not to have been sentenced to a term which fell within that range.  It follows, that the consideration of the specific matters which have been raised before us, must be seen against the background of what we consider to be a very moderate sentence.

21.Certain of those matters, relating to restitution and the health of the Applicant, have arisen since the imposition of the sentence and therefore could not have been taken into account by the sentencing judge.  We are mindful of the principles set out by this Court in HKSAR v Yeung Kwai Kuen [2002] 3 HKC 395 @ 396, per Stock JA, as he then was, that:

“… the fundamental function of the appellate court was to determine whether the exercise of the judge’s sentencing discretion and powers had been appropriate; and, in performing that function, it looked primarily to the offence itself and to the circumstances which presented themselves to the judge at the time of sentence. The role of the appellate court was not to act as an administrative review or a supervisory tribunal to take into account factors since sentence. That was not to say that there were never instances in which the court would give weight to developments since sentence, or that the court was precluded from doing so; but the circumstances in which the court would give effect to post sentence events were limited.”

The First Ground of Appeal: the roles of the co-conspirators

22.The first ground of appeal against sentence is to the effect that the judge did not sufficiently distinguish between the Applicant and D2 in passing a sentence of 12 months’ imprisonment on each of them; and that if he had, he would have passed a lesser sentence on the Applicant.  The particulars of the distinctions suggested include the amount of time spent by each of them in the office, D2’s responsibility for signing the pay cheques, as opposed to the Applicant’s responsibility with regard to the signing other documentation and her acts of cashing cheques.  It was submitted, not that D2’s sentence of 12 months was wrong; but that the Applicant’s sentence should have been shorter or should have been suspended.  We have examined these suggested distinctions with care and that we are satisfied that they amount to very little in substance.  Both offenders were involved in the operation of the Company and were, as the learned judge found, active in the furtherance of the fraud.  The judge was alive to the different roles played by all the co-conspirators and described them in some detail in his reasons the sentence.  He distinguished D3 and D4, in part, for the reasons noted earlier and we are satisfied that he was right to find that there was little to distinguish the roles of the Applicant and her mother.  There is nothing in this ground of appeal.

The Second Ground of Appeal: alleged delay in prosecution

23.The second ground of appeal relates to what is said to have been delay in the conduct of these proceedings by the prosecution which, it is submitted, should lead, either on its own, or in combination with other mitigating factors, to a reduction in the 12‑month term and/or the suspension any sentence of imprisonment.

24.It is widely recognised that delay in bringing an offender to justice is a mitigating factor which can be taken into account in sentence.  In this case, the Applicant was first interviewed in May 2006 after a complaint had been received by the ICAC in relation to the alleged conspiracy.  She was approached again by investigating officers in December 2006 and there was a further formal interview with the ICAC in March 2007 where the Applicant, in the presence of her solicitors, declined to answer questions. She and the other defendants were arrested in May 2008, approximately 24 months after the first interview.  The trial commenced in February 2009 and it lasted until the end of April.  Verdict was given in June.  Delay by the prosecution in bringing an offender before the court is not a mitigating factor per se: but delay in the prosecution of an offence after the offender has acknowledged guilt; and where the delay has given him an opportunity to rehabilitate himself, and to make restitution, may carry substantial weight in mitigation: see SJ v Hui Siu Man [2999] 2 HKLRD 236 where Power VP said that, in the circumstances of that case, it was of crucial importance that the delay in the prosecution of the offender,  after he had acknowledged guilt, had given him the opportunity to rehabilitate himself and to borrow a very large sum of money  which he had used to make restitution.  The offender may also acquire, by reason of prolonged and unjustified delay in commencing proceedings, a legitimate expectation that he will not be further pursued in respect of his offence.  In the present case, there was never any acknowledgement of guilt by this Applicant.

25.It is also to be noted, that in HKSAR Law King-yip & Others, unreported CACC 369/2003, the Court of Appeal made some observations to the effect that apparent delay in prosecution had to be viewed in the context of the size of the investigation which was being conducted.  It is obvious that the present case involved a substantial investigation, a large number of witnesses and a great volume of documentation.  Complex frauds often require a great deal of time and resources to unravel, especially where there is no admission of guilt and assistance from the participants.  And the present case was no exception.  There is no basis for believing that the time taken to bring this case to trial was longer than was necessary; and in our judgment, the sequence of interviews by the ICAC with the Applicant gave her no grounds to believe that she would not be pursued further by the authorities over this matter.  There was never any such legitimate expectation in the mind of the Applicant.  After she had been charged, the Applicant chose to plead not guilty and therefore a trial of some length had to be arranged: that was bound to take a considerable time.  The Applicant was on bail during this period.  There was no particular evidence of rehabilitation during this period and no attempt was made to pay restitution as had happened in SJ v Hui Siu Man (supra).  We are satisfied that the delay until final judgment was given in this case should have no impact on sentence.

The Fifth Ground of Appeal: Restitution

26.It is convenient to turn at this stage to the fifth ground of appeal which relates to restitution.  We have allowed an application under section 83V of the Criminal Procedure Ordinance, Cap 221, to allow for fresh material to be put before this Court that was not before the trial judge, namely that on 2^nd June 2010, the Housing Authority received $423,257 from KMW, the head contractor, which was paid to that Company by the Applicant on 27th May 2010, as restitution. Again it is well established that restitution can amount to mitigation, particularly when coupled with other factors such as a plea of guilty.  There is no reason why that mitigation should not continue to be available at the appellate stage so that an appellate court can properly adjust a sentence to take account of restitution made after a sentence has been passed at first instance - though naturally, the principles enunciated above all in the case of Yeung Kwai Kuen will apply.  Restitution is to be encouraged because it is manifestly in the interests of victims.  However, as this Court said in SJ v Hui Siu Man [supra @ page 242], it is uncommon in cases of commercial fraud to find an immediate acknowledgment of complicity and full restitution. Usually the offender pleads that no money is left, either because of business or, very commonly, gambling losses; and the unfortunate victims simply have to bear their loss.  Thus, while the courts had duty to pass sentences which would deter offenders and protect the public; there would be no encouragement to make restitution if the offender knows that it would have little effect on sentence.  Full restitution, particularly in commercial crimes, must be a mitigating factor of real weight, even if it was not in itself an exceptional circumstance that would justify suspending a sentence of imprisonment.  Of course, the weight to be attached to restitution as a mitigating factor will always depend on the circumstances.  We are mindful of what was said by Stuart Moore VP in SJ v Lin Ming Ying & Anr [2002] 2 HKLRD823 @ page 830 that of course, it is much stronger mitigation to be able to show that a defendant has immediately faced up to his responsibilities and made every effort at an early stage to repay any dishonest gains to the victim.  However, even when restitution is paid much later in time, whatever the defendant’s motives for making reparation, the fact that dishonest gains have been repaid is nonetheless a material factor in mitigation.

27.In this case, the Applicant was convicted in June 2009 and was sentenced on the 8 July 2009.  Having been released on bail on 17 July 2009, she appealed against her conviction, abandoning that appeal in December 2009.  We judge that her subsequent payment of compensation, in June 2010, whilst it did repay the dishonest gain and put right the loss suffered by the Housing Department as a result of the fraud, cannot be regarded as a mark of true remorse in all the circumstances, and that it should not carry great weight, certainly not enough to allow us to reduce what was an already lenient sentence.

The Third Ground of Appeal: personal circumstances

28.The third ground of appeal suggests that the learned judge failed to have due regard to the Applicant’s personal circumstances, in particular, that having been first interviewed in May 2006, the Applicant married in January 2008 and gave birth to her first child in June 2008.  Her second child was born in September 2009.  She is a 29-year-old woman, university educated.  She had a clear record prior to her conviction in this matter.  The judge obtained a background report before sentence which set out her family circumstances in some detail and so he was aware of all relevant matters.  That report shows that the appellant, at the time sentence, lived in a household which employed two domestic helpers and a driver.  Her husband is frequently overseas on business.  It is submitted that were she to be further incarcerated, domestic helpers would have to care for her children, now aged 23 months in 10 months, we note these facts; but we also note that at the time of the preparation of a background report, the Applicant lived with her husband and parents-in-law in two duplex units in a four-storey building in Repulse Bay.  The Applicant also has a younger sister, aged 27, living reasonably close by.  Her mother, D2,has by now finished serving her own 12‑month sentence though we have been told today that D2 played little part in child care.  However, we are satisfied that there were at the time of sentence, and are now, suitable family members available to help look after the children over the relatively short period in which the Applicant would be in custody under this sentence.  In the circumstances, and we do not consider that any weight can be attached to this aspect of her appeal.

The Fourth Ground of Appeal: psychiatric evidence

29.We have, with some hesitation, allowed a further application under section 83V of the Criminal Procedure Ordinance Cap 221 to admit further evidence relating to sentence which was not before the sentencing judge, namely a report from Dr PS Shum who is a specialist in psychiatric medicine and who first examined the Applicant in December 2009, and gives an account of her mental health.  Our hesitation arises from the principles as to the proper approach to appeals against sentence set out in HKSAR v Yeung Kwai Kuen (supra) to the effect that the Court of Appeal is not engaging in an administrative review of the sentence imposed in the light of subsequent events.  Nevertheless we considered it expedient in the interests of justice in this case, to receive the report.

30.Since the imposition of the sentence upon her in July 2009, the Applicant was said to have turned from an active, vivacious, sociable and fun loving person into a reclusive, a hesitant and absent-minded, homebound housewife.  It was reported that she had lost appetite, had difficulty in sleeping and had panic attacks at the thought of being returned to prison.  She was often tearful and despondent.  Dr Shum concluded that he had formed the impression that she suffered from a post traumatic stress disorder as a result of her experience in being detained for approximately 10 days in July.  She was in need of medical and psychological intervention; and by February 2010, she had shown some signs of improvement under treatment.  A return to prison “may push the applicant deeper into depression, with untold damage to her mental health”.  There is no evidence that the Applicant was suffering from any mental health problems at the time of sentence.

31.We do not doubt that the Applicant’s incarceration in July 2009 must have come as a great shock to her, as it would to any person with a clear record.  We are alive to the fact that at the time of sentencing, the Applicant was pregnant with her second child, born in September 2009.  We take particular note of the findings of Dr Shum as earlier described; but we can find nothing exceptional in them.  They are not to be minimised; but neither can they allow the court to conclude either that the sentence imposed was excessive, or that it ought now to be varied from its already lenient length by way reduction or of suspension on humanitarian grounds.  In HKSAR v Chiu Peng [2002] 1 HKLRD 186 this Court, said that where an accused was suffering from mental illness which played a part in the commission of the offence, the court could properly allow a discount in sentence to reflect his diminished criminality or culpability: but that is not the case here where the mental and emotional problems of the Applicant have not only manifested themselves after the commission of the offence, but also after the conviction and sentence, and, it is suggested, because of the sentence.  There is no reason why appropriate treatment such as that which the Applicant is presently receiving, cannot be continued while she is in custody, either by the intervention of the medical services of the Correctional Services Department or by the continued involvement of Dr Shum in her case so far as is practicable.  In the case of Eddie So Chee Kong v The Attorney General (Unreported) CAAR 9/1992, the Court of Appeal, Power VP, Mortimer JA and Sears J, when dealing with an application for review of sentence by the Attorney General, was presented with medical reports which stated that it was “probable” that [the Respondent’s] mental health would deteriorate if his sentence were to be lengthened.  It was held that, regrettable though that might be, it would not be proper for the Court of Appeal to give weight to possible deterioration in the Respondent’s health: “It is a matter for the prison authorities to see that he receives proper medical attention”.  We are satisfied that the same considerations apply here.

32.It is further submitted today, that because of the present mental health of the Applicant, as revealed in Dr Shum’s report, let alone the prospect of any deterioration in her condition, this Court ought not to countenance her return to prison, in case Dr Shum’s concern that she may be pushed deeper into depression is well founded.  This submission must be seen in the context of this Applicant having been sentenced in July 2009, then released upon her application for bail pending appeal against conviction in July 2009, when she was heavily pregnant; and her subsequent abandonment of that appeal against conviction in December 2009.  It might be thought that it is the fact that she is now on bail following that application for bail pending appeal which is the foundation for this submission; but if so, the responsibility must lie with the Applicant herself and she ought not to be able avail herself of it in this way now. Otherwise, the well established and sometimes compassionate process by which bail pending appeal is granted, could be used for tactical advantage.

33.In our judgment, having regard to the leniency of the sentence actually imposed upon this Applicant, none of the matters canvassed before us in support of her application; her role in the conspiracy; the payment of restitution; her family circumstances; or her mental condition, whether taken individually or cumulatively, can justify any reduction in the 12‑month sentence on the footing that the sentence was manifestly excessive or wrong in principle. 

34.It is well established that sentences of imprisonment should not be suspended unless exceptional circumstances exist.  There are no such exceptional circumstances in this case.  Thus the submission on behalf of the Applicant that the court should suspend any term of imprisonment imposed upon her is without substance.

35.There are no grounds upon which to interfere with the sentence imposed upon this Applicant and there is no merit to her application which must be dismissed.

Mr Gary Plowman, SC and Mr Giles Surman, instructed by Messrs Christine M Koo & Ip, for the Applicant