HKSAR v. Lau Siu Kam

DCCC271/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO.271 OF 2010

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Reasons for Sentence

1.The defendant faces one charge of Fraud, contrary to s.16A of the Theft Ordinance, Cap.210. Particulars of the charge are that the defendant between 1^st April and 11^th September 2008 in Hong Kong, by deceit, namely making false representations that the number of days that the workers had reported duty as stated in the wages sheet was true and accurate, and with intent to defraud, induced D&B Interior Contracting to commit an act, namely, giving the defendant a total sum of $464,695.00 which resulted in benefit to the defendant or in prejudice or a substantial risk of prejudice to the said D&B Interior Contracting.

2.The defendant pleaded guilty to the charge, admitted to the summary of facts and was duly convicted.

Summary of facts

3.The defendant had on 10 occasions between the charge dates inflated the number of days that the casual workers had performed duty in the wage sheets and submitted them to D&B for payment. D&B issued 12 checks according to that information. The defendant only paid the casual workers the actual number of days they each had worked, pocketing the difference.

Previous convictions

4.The defendant was convicted of 2 charges of blackmail and 1 charge of theft back in 1977 when he was only 17 years old.

Mitigation

5.The defendant is now 47, married with 2 children. The elder daughter is 10 years old and the younger son is about 5 months old. the defendant’s wife is a housewife and the whole family lives in mainland China in Lowu. The daughter is studying P.4 in Sheung Shui. Sometimes the defendant has to take care of his daughter, because of his wife having to take care of the 5 month old son, the primary care taker would be the defendant.

6.The defendant’s mother is 84, living in Tuen Mun, Hong Kong. The reason why the defendant lives in mainland is for economical reason. The defendant is still being employed by the victim company. There is a letter from Mr. Lee of D&B. The company confirmed that the whole of the $464,695.00 had been returned to the company and that the company had forgiven the defendant for his misconduct and will continue to employ him as the site foreman. There is therefore full restitution.

7.When the defendant was arrested on 29^th April 2009, after that the defendant had repaid already about $380,000 to the victim company. The balance was repaid in May 2010.

8.In the latter part of the mitigation letter, Mr. Lee urges the court not to impose an immediate custodial sentence because he thinks that the defendant is a very hard working employee and he is willing to employ him in the future.

9.The reason why the defendant committed the present offence was because his own company had suffered loss, the sub-contractor in the charge, (Gar Bo interior decoration company). Because of the loss, the defendant had to obtain the money in order to repay debts owed by that company. The defendant is not using the stolen money for an extravagant lifestyle but to save his company, to support his company and the employees of that company.

10.When the defendant was arrested, the defendant fully cooperated with the ICAC officers and had admitted through his video recorded interview fully and frankly all the details of the charge. He was immediately remorseful and wished to compensate to the victim company.

11.The offence is a serious breach of trust case and it is not disputed that the case of HKSAR v Cheung Mee Kiu [2006] 4 HKLRD 776applies. Guidelines for the present amount is within the 2-3 years band. It is submitted that on a mathematical basis, the $464,000 odd would be slightly less than 28 months’ imprisonment. The defendant is aware that immediate custodial sentence is inevitable.

12.There is however substantial restitution before he was charged. In HKSAR v Leung Shuk Man [2002] 3 HKC. Full restitution is a strong mitigating factor. “(3) The restitution that the appellant had made was a powerful factor…In view of …overall discount of 50%....”

13.In that case the stolen money was about $430,000 odd, an amount similar to our present case. The facts are found in paragraph 13, “Even before the appellant was charged, she repaid the whole of the sum…” In our present case a substantial amount had already been repaid before charged and counsel urged the court for a 50% discount for the early restitution.

14.Counsel also submitted that there are special circumstances in this case. In the case of Secretary for Justice v Hui Sui Man, a case involving breach of trust, a suspended sentence was imposed on the basis of delay in prosecution. In Hui Sui Man, the defendant was arrested In April 1997, but not charged until June 1998, a 10 month delay. Similar to our present case, the defendant was arrested in April 2009, charged in March 2010. About 10 odd months’ delay.

15.Counsel submitted that there are therefore special circumstances warranting a suspended sentence. The delay is similar to the case of Hui Siu Man and the victim company had forgiven the defendant and willing to employ him. There was full restitution, full cooperation with the ICAC officers.

16.If an immediate custodial sentence is imposed, the interest of the company will be damaged, the defendant is still handling the company’s work. This court was told that the legal costs for the hearing today was paid for by the victim company as well.

17.In relation to the suggested delay in prosecution, the prosecution informed the court of the following.

18.This case began as a corruption complaint to the ICAC. The ICAC arrested the defendant on 29.4.2009, suspected him of having committing the offence of an agent using document with intent to deceive principal.

19.The defendant was interview on the same day, but in that interview the defendant only admitted that he had deceived $40,000 odd dollars from the main contractor. The ICAC then investigated and checked the documents and the wage sheets and then interviewed the 10 odd casual workers involved.

20.It was in August 2009 when the ICAC finished obtaining all the witness statements from the workers and the project manager. As a result, the ICAC found out that the amount the defendant deceived was much more than the $40,000. ICAC interviewed the defendant again on 19.8.2009 and it was then that the defendant made full admission of having deceived $400,000 from the main contractor. There was no full admission in the beginning, only after further review when the defendant further admitted.

21.The ICAC submitted the file to the Department of Justice for advice in Oct 2010. Advice was given in January 2010. The prosecution explained that it is normal for counsel of the Department to use 2-3 months to give legal advice in complex commercial cases.

Sentence

The Cheung Mee Kiu guidelines

22.Mr. Lee for the defendant submitted that this is a case of fraud involving a breach of trust on the defendant’s part and that the sentencing guidelines in the case of Cheung Mee Kiu therefore apply. Mr. Lee very graciously accepted that a starting point of between 27 and 28 months would be appropriate.

Restitution

23.The defendant had repaid the full sum that he had stolen to the victim company. The majority part of the money was repaid not long after the defendant’s arrest in April 2009. I was told that the defendant simply used the money he had stolen but which had not yet been disposed of and returned it to the victim company. As for the balance of around $85,000 odd, the defendant had been making regular payments to the victim company and had finished the repayment in May 2010, 2 months after he was formally charged.

24.Mr. Lee referred me to the case of HKSAR v Leung Shuk Man [2002] 3 HKC, where a 50% discount (inclusive of the usual one-third discount upon a plea of guilty) was given in sentence in recognition of restitution as a strong mitigating factor. There the appellant stole from her employer by way of forging signatures on checks. A total of $430,000 was stolen. The part of the judgment relevant for our purpose are as follows:

“Even before the Appellant was charged, she repaid the whole of the sum she had stolen as the judge recognized in his sentencing remarks. But despite this, the judge unfortunately, perhaps because of oversight, made no reference to this as a powerful factor in mitigation which justified a reduction in sentence beyond the usual one-third in order to reflect the compensation the Appellant had paid to her victim. If the situation were otherwise, and a specific discount was not given for the payment of compensation or restitution, there would be no advantage to an offender who has repaid some or all of the ill-gotten gains to the victim, over and above the one-third discount the offender could necessarily expect to receive for a timely plea of guilty…

Bearing in mind all of the circumstances of this case, and importantly the Appellant's payment of compensation at an early stage to her victim, we consider that the overall discount she should have received on the totality of her sentence was in the region of 50%. This, applied to the present case, would reduce by a further six months the sentence the Appellant is serving. The additional six months' reduction from her total sentence is intended to inform the Appellant that the compensation she has paid to her victim has been recognized as an important mitigating factor.”

Delay

25.Despite delay in prosecution being recognized as a possible mitigating factor that can be taken into account when sentencing, it arises where the prosecution is at fault for the delay: Cross & Cheung, HKSAR v Lau Kin Yu, MA391/2002.

26.In HKSAR v Law King Yip and Others Cr App 369/2003, the Court commented that the delay had to be viewed in the context of the size of the investigation that the Police, or in our case the ICAC had to conduct. There in that case, the conspiracy had lasted for more than a year, there were many victims, expert witnesses had to be consulted and the prosecution was not at fault for the delay. Lunn J. said the court was satisfied that “neither the delay in the commencement of proceedings nor the length of the trial itself are factors relevant to the sentence imposed.”

27.I find that in our present case, the fraud had taken place over a period of around 6 months. About 10 casual workers were actually involved. Obviously the ICAC would have to contact and did contact each one of the workers to confirm with them their real work days and compare them to the fraudulent wage sheets submitted by the defendant to the victim company.

28.I was also told that the defendant did not make full and frank admissions to all the facts relevant to the charge which caused part of the delay.

29.I am willing to accept that a 6 month period between the arrest of the defendant and the sending of the file for legal advice from the Department of Justice is a necessary and reasonable time in the circumstances.

30.But then I find that a 3 month period between the receiving of the file and the giving of the advice slightly difficult to understand. While fully understanding the heavy workloads of the Department, this appears to be a relatively straightforward case with the defendant making full and frank admissions in 3 video recorded interview after arrest. 3 months, even allowing for workload seemed a disproportionately long time for our present case. The summary of facts has merely 4 paragraphs over in essence 1 page, seemingly supporting my understanding that this is not a case of complexity.

31.Also important, in the case of Hui Siu Man, the Court considered what happened during the time of delay relevant. There the appellant had organized his life and gotten steady employment, as well as repaying substantial amount of the money that was stolen. More importantly, in our present case it was the victim company that had continued to employ the defendant and is still willing to take the defendant back after him serving his sentence.

32.Having taken into consideration submissions from both sides and all the circumstances of the case as well as authorities, I find first of all a starting point of 28 months’ imprisonment is appropriate according to the guidelines of Cheung Mee Kiu.

33.I will grant the defendant a 50% discount, which is inclusive of the one-third discount for his plea of guilty to the charge, and reduce that sentence to that of 14 months’ imprisonment.

34.Although I find that there is some delay in the prosecution of the defendant, in particular the 3 month period which the Department of Justice took to give legal advice, the delay here does not amount to the exceptional circumstances as in the case of Hui Siu Man to warrant a suspension of the sentence. I find however that this delay does warrant a slight reduction in the sentence. I will therefore further reduce the defendant’s sentence by 3 months to that of 11 months’ imprisonment.