HKSAR v. Yuen Kam Fung

DCCC 811/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO. 811 OF 2009

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REASONS FOR SENTENCE

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1.The defendant stands convicted after trial of one charge that she between the 21st January 1997 and the 31st May 1997 dealt with property having reasonable grounds to believe in whole or in part, directly or indirectly represented the proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crimes Ordinance, Chapter 455. This was charge 5.

2.The offence related to the purchase by the defendant of Flat 6D, 6th Floor, Block 1, Site 10 of Whampoa Garden (“Flat 6D”). The defendant’s husband, Ng Hang-chung (“Ng”) was at the material time the manager of the Deposit Services Support Department of the Hang Seng Bank Limited (“Hang Seng Bank”).  Over a period of about two years commencing in 1996 Ng misappropriated funds from two Thai clients of Hang Seng Bank, one of whom was Chavarat Charnvirakul (“Chavarat”).

3.In January 1997 the defendant entered into a Provisional Agreement for Sale and Purchase to purchase Flat 6D for the sum of $7,620,000.  The deposit of $762,000 was paid in two instalments.  The initial deposit in the sum of $250,000 was paid on signing the agreement by cheque.  There was no evidence before the court whose bank account this was.  The balance of the deposit in the sum of $512,000 was paid on signing the Agreement for Sub-sale and Purchase by cheque drawn on the account of Ng.  The balance of the purchase price was paid by transferring the sum of $2,286,000 from the account of Chavarat and by securing a mortgage in the sum of $4,572,000 with the Citibank.

4.I was satisfied so I was sure that there were reasonable grounds to believe that Flat 6D in whole or in part, directly or indirectly represented any person’s proceeds of an indictable offence.  In summary the family had insufficient means to buy Flat 6D and pay for the mortgage and the defendant herself had no income to support the payment of a mortgage of $46,373.00 per month.  Full particulars are set out in my verdict delivered on the 30th December 2010. 

5.Money laundering is a serious offence for which deterrent sentences are required (see HKSAR v XU Xia-li & another [2004] 4 HKC 16).  In HKSAR v Javid Kamran CACC 400/2004 the court, stressing the need for deterrent sentences, said that it was not possible to lay down guidelines, as there is a very wide range of culpability.  The court identified a number of factors relevant in determining the culpability of a defendant, including the nature of the offence that generated the laundered money, the extent to which the offence assisted the crime or hindered its detection, the degree of sophistication of the offence and perhaps the defendant's participation, including the length of time the offence lasted and the benefit derived from the offence. 

6.In Secretary for Justice v Jerome Yuval Arnold Herzberg [2010] 1 HKLRD 502 the Court of Appeal said that other relevant factors are the amount of money involved; the degree of sophistication of the operation; the defendant’s knowledge of the underlying offence and whether there was an international element to the commission of the offence.

7.In HKSAR v HSU Yu-yi CACC 159/2009 the Court of Appeal reviewed a number of cases, includingXU Xia-li and Javid Kamran. The court at paragraph 13 highlighted five factors to be considered in determining sentence:

(1) It is the amount of money involved that is a major consideration and not the amount of benefit received by a defendant in the transaction.

(2) The culpability of the offence lies in the assistance, support and encouragement offered to the commission of an indictable offence. So a defendant's level of participation and the number of occasions on which he is involved in the ‘money laundering' activities are relevant factors to be considered.

(3) The offence of dealing with the proceeds from an indictable offence does not necessarily have any direct correlation with the indictable offence in question. However if the relevant indictable offence can be identified, the court may take into account the sentence imposed on the indictable offence pre se when determining the sentence of the dealing offence.

(4) If the case has an international element involving activities carried out across different regions, the court may impose a more severe sentence. This is to protect Hong Kong's reputation as an international finance and banking hub from being tarnished.

(5) The length of time the offence lasted.

8.I accept there was no evidence that the defendant knew of her husband’s theft of money from clients of Hang Seng Bank and that such funds had been used to purchase Flat 6D.  I accept the defendant agreed to purchase Flat 6D in her name at the request of her husband and would not otherwise have been involved.  The defendant stands to be sentenced for assisting her husband by refusing to accept the reality of where the money had come from to purchase Flat 6D.  I also accept that there is no evidence of any direct benefit to the defendant in assisting her husband by purchasing the property in her name.

9.Whether or not the defendant benefited is insignificant as a sentencing factor for the reality is the offence of money laundering is very serious (see HKSAR v CHEN Szu-ming CACC 270/2005).  As seen in the recent cases of HSU Yu-yiand HOU Shun-hsiung CACC 472/2009 the amount of money involved is a major consideration and not the amount of benefit received by a defendant.

10.In passing sentence I take into account everything said on behalf of the defendant by Mr Andrews together with all the letters submitted by her children, family members and long standing friends, all of which speak very highly of the defendant and variously describe her as a loving and devoted mother; a caring daughter to her parents; kind-hearted, patient and helpful; kind and caring.  I take into account the defendant has no previous convictions.  I have carefully considered all the reports submitted by Mr Andrews together with the update psychological and psychiatric reports called by the court, which Mr Andrews submits show for the first time remorse on the part of the defendant for her wrong doing, as does her letter to the court asking for forgiveness. 

11.In passing sentence I have borne in mind all that said by the Court of Appeal in HKSAR v LEUNG Pui-shan CACC 317/2007 of the need for individual justice. 

Starting point

12.The cases reviewed in HSU Yu-yi show that a starting point of between 3 and 5 years imprisonment has been applied to amounts ranging between $1 and $15 million.  None of the cases are however factually similar to the present case, highlighting each case is to be decided on its own facts and circumstances.

13.I have also considered the case of HKSAR v LAI Kam-yee, Teresa CACC 120/2009, a case where the defendant over a period of 28 months laundered $4,205,925.30 through her three bank accounts for her ex-husband.  The court in passing sentence accepted that because of her relationship with her ex-husband, the defendant agreed to deal with the monies, so as to protect the interests of her 12 year old son.  The court further accepted that although the defendant used a small portion of the money she did not deal with the money with the intention of making a profit and that this was an isolated incident.  The Court of Appeal held that 12 months imprisonment after trial was appropriate, in particular where the evidence that the prosecution adduced came mostly from the information given by the defendant to the police, which information also formed the basis for the court’s determination on her mens rea.   

14.Taking into account that Flat 6D was purchased for the sum of $7,620,000 of which $2,286,000 was paid by transfer from the account of Chavarat; and the role of the defendant in that she acted only on the request of her husband, I am satisfied the proper starting point after trial is one of 1 year and 6 months imprisonment, which I reduce by 3 months on account of the defendant’s clear record. 

Suspended sentence

15.Mr Andrews accepting a prison sentence is inevitable submits there are exceptional circumstances to either suspend the sentence or alternatively impose a community service order.  In support Mr Andrews submits two main grounds, delay and ill health. 

Delay

16.Delay in bringing an offender to justice is a mitigating factor which can be taken into account in sentence but is not a mitigating factor per se.  All the circumstances must be looked at including whether the offender has acknowledged guilt; where the delay has given the offender the opportunity to rehabilitate himself; whether restitution has been made; whether there was a legitimate expectation the matter will not be further pursued; the size of the investigation and whether the time taken to bring the case to court was longer than necessary (see HKSAR v CHEUNG Suet-ting CACC 226/2009).  I have also considered the cases on delay submitted by Mr Andrews, HKSAR v LAU Kin-yu HCMA 391/2002 and The Queen v William Hung [1994] 1 HKCLR 47.

17.The offence dates back to 1997.  In January 1998 Ng was arrested and admitted to bail to appear in court on the 11th March 1998.  Ng absconded.  In the meantime the defendant left Hong Kong for the United Kingdom on the 11th February 1998.  At the time the defendant left she had not been interviewed by the police or warned of such an eventuality. 

Extradition

18.Mr Shiu and Mr Andrews have both provided to the court a chronology of events from 1996 up to the commencement of the trial in September last year.  I have also been supplied by Mr Andrews the rulings of the Bow Street Magistrates’ Court on the application by the Government to extradite the defendant back to Hong Kong; the subsequent appeal against the decision to extradite; and the judicial review of the decision of the Secretary of State to make the Extradition Order.  I have read all these decisions, which are very helpful in understanding why this case has taken over 12 years to come to trial, in particular the judgment of the High Court in March 2009 upholding the decision of the Secretary of State to make the Extradition Order.

19.In summary the defendant was arrested in England in October 2000 pursuant to a provisional request issued in February 1999.  I note Mr Andrews criticism that the Hong Kong police were slow in acting as they had suspected the defendant prior to her leaving Hong Kong but did not issue the arrest warrant until a year later and that the United Kingdom police were also slow in acting by taking over 18 months to arrest the defendant, when all along they knew her address in Earls Court.

20.Soon after arrest extradition proceedings were commenced.  On the 17th April 2001 the Bow Street Magistrates’ Court concluded there was insufficient evidence to raise a prima facie case in respect of any of the proposed charges of furnishing false information on which the defendant’s extradition was sought and accordingly discharged the defendant (see the ruling of District Judge Nicholas Evans).

21.A month later a fresh request was issued in respect of eight charges of money laundering (charge 5 relating to Flat 6D).  On the 10th January 2002 the Bow Street Magistrates’ Court concluded there was a prima facie case in respect of all eight charges and ordered the committal of the defendant to Hong Kong (see the ruling of C. L. Pratt).  The defendant appealed the Committal Order, which appeal was dismissed by the Divisional Court on the 14th June 2002 (see the summary of the judgment of the Divisional Court).

22.Representations were then made to the Home Office, largely based on the defendant’s mental health, seeking to persuade the Secretary of State not to make the Extradition Order.  The Secretary of State signed the Order on the 6th September 2007 but permitted further representations to be made.

23.On the 24th January 2008 the Secretary of State confirmed the Order for return of the defendant to Hong Kong.  The defendant applied for judicial review of this decision.  On the 25th March 2009 in Yuen v The Secretary of State for the Home Department [2009] EWHC 573 (Case No: CO/2728/2008) the High Court dismissed the application    (see the judgment of Mr Justice Ouseley).

24.The defendant was extradited from the United Kingdom on the 23rd April 2009, some 12 years since the commission of the offence, and over 8 years since the defendant was arrested and extradition proceedings commenced.  Mr Andrews prays in aid of this as amounting to delay. 

25.In HKSAR v LUI Kin-hong CACC 378/1998 the defendant spent 17 months in custody pending extradition having fled Hong Kong knowing full well that an investigation was underway.  The judge in passing sentence reduced the sentence by 10 months to give the defendant some credit for the time spent in custody.  The Court of Appeal in finding this generous said at paragraph 29, “…..He fought the extradition largely on the basis that he could not obtain a fair trial in Hong Kong, and whilst he is not to be penalised for adopting that fashionable line, neither should he be permitted to pray in aid the period of custody which he thereby brought upon himself.”

26.Similarly in HKSAR v Michael Wang CACC 184/2006 the defendant spent 32 months in custody pending extradition having left Hong Kong after stealing about HK$9 million from his company.  The Court of Appeal described as generous the deduction of a period of  4 months where the defendant had fought every inch of the way the extradition proceedings.

27.Although on the 14th June 2002 the appeal against the Committal Order was dismissed by the Divisional Court, as seen, the defendant was not extradited until April 2009.  In the intervening 7 years the defendant made various representations to the Secretary of State and when those failed applied to judicially review the decision of the Secretary of State.

28.Much of the argument put before the Secretary of State related to the defendant’s mental health and whether she was fit to plead and able to participate effectively in the trial.  Many of the medical reports submitted to the Secretary of State and in the judicial review have been shown to the court by Mr Andrews.  I have read all the reports.  The conclusion of the Secretary of State was that it would not be unfair to return the defendant to Hong Kong.  I note no application was made in this trial that the defendant was not fit to be tried.

29.Related to this was the argument that due to the passage of time it would be unjust and oppressive to extradite the defendant.  The defence contended that by the passage of time the defendant would be prejudiced in the conduct of her trial. The High Court concluded no error of legal approach was made by the Secretary of State (see in particular paragraphs 34-53 of the judgment of Mr Justice Ouseley). Again no application was made in this trial arising from the passage of time that the defendant could not receive a fair trial. 

30.Mr Andrews relies on an apparent delay between July 2004 and November 2006, when there was seemingly no active consideration of the file by the Secretary of State, which delay Mr Andrews submits could not be regarded as the fault of the defendant.  This is referred to in the judgment of Mr Justice Ouseley, in particular at paragraphs 23, 32, 33, 51 and 61.  I note in the correspondence submitted by Mr Shui the Home Office assured that the case was under consideration.  Mr Justice Ouseley however concluded at paragraph 51 that in reality the case was allowed to become dormant but pertinently observed the defendant appeared not to have chased the Secretary of State either. 

31.Perhaps not surprisingly the defendant fighting extradition did not chase the Secretary of State to decide whether to make the Extradition Order.  The defendant continued to fight the extradition and only after the judicial review was dismissed in March 2009 was she extradited.

32.Although the defendant did not leave Hong Kong knowing she was being investigated, and save for one day has not spent time in custody pending extradition, I am satisfied the principles established in the decided cases are applicable to the present case. In my view, save and except the initial extradition proceedings, which were dismissed, and to some degree the period between July 2004 and November 2006, the time taken to extradite the defendant is entirely attributable to the exercising of her right to challenge every step of her extradition to Hong Kong. 

33.In my view whilst the defendant is not to be penalised for exercising her rights, I am satisfied she cannot pray in aid of the time taken to extradite her to Hong Kong as amounting to exceptional circumstances to suspend the sentence. 

Hong Kong

34.Mr Andrews submits there has also been delay in the proceedings once the defendant arrived in Hong Kong.  The defendant was first taken to court on the 24th April 2009, the day after arriving in Hong Kong.  Proceedings were transferred to the District Court on the 24th July 2009 with plea day in the District Court set for the 14th August.  A pre-trial review was fixed for the 15th October when at the request of the defence, the trial was fixed for the 29th January 2010. 

35.The trial did not proceed and was re-fixed to the 26th April.  The trial was again adjourned and a new trial date set for the 27th September with the trial eventually starting on the 29th September 2010.  The reason for the first adjournment was the late service by the defence of the expert report of Mr Shum Lau, which was only served by the defence on the 27th January, two days before the trial was due to start.

36.Mr Andrews sought to attribute this delay to the prosecution by saying the prosecution only thought fit to deploy their own expert after service of the expert report of Mr Shum Lau, when the prosecution full well knew that forgery of the signatures was in issue.  The fact however was that at no time prior to trial did the defence, as is their right, disclose the defence.  The fact expert evidence may be called was neither mentioned at the pre-trial review in October nor in the pre-trial questionnaire completed by Mr Andrews.  Nor was any mention made in a further pre-trial review held on the 8th January 2010, by which time the defence had instructed Mr Shum.

37.When asked if there was anything he wished to say as to why the court was not told in advance of trial that expert evidence may be called Mr Andrews was unable to explain.  I allowed Mr Finch, the solicitor instructing Mr Andrews, to explain. Mr Finch sought to blame the prosecution by the late service of documents between November and December 2009; in particular Mr Finch said the account opening documents of the three bank accounts were not in the transfer bundle and that he anticipated/expected the prosecution would instruct their own expert.  When the defence had received all the documentation was the defence, Mr Finch said, in a position to instruct their expert.  Mr Shiu on the other hand says he believed all banking documentation was included in the extradition bundle.  Mr Finch could not however remember what was included in the extradition bundle. 

38.Whilst I have not seen the content of either the extradition bundle or the transfer bundle to determine what documents were in fact served and when, it is clear the defence have known for a very long time the substance of the case they had to meet together with the documentary evidence (see paragraph 37 of Mr Justice Ouseley’s judgment).  The late instruction of an expert witness is therefore most surprising, in particular considering throughout the extradition proceedings reference is made to the possibility of someone forging the defendant’s signatures and the need for expert evidence (see paragraph 38 of Mr Justice Ouseley’s judgment). 

39.Further I find hard to accept the defence were waiting to see if the prosecution were going to call an expert.  The defence case being many signatures were forgeries, the question of calling an expert witness would have been considered independent of whether or not the prosecution were to call expert evidence.  

40.Albeit the solicitors in the United Kingdom are different to the Hong Kong solicitors, the question of obtaining expert evidence must have been at the forefront of their consideration.  Mr Finch said the defendant was on legal aid and therefore leave of the Legal Aid Department is required before instructing experts.  That may well be but in such situation surely one tells the court they are not ready for trial rather than asking for a trial date to be fixed in October.

41.Further even if some documents were served for the first time in November or December 2009, this does not explain why the decision to call expert evidence was not made until the very last moment resulting in the adjournment of the first trial date. If by reason of the late service of documents the defence were not ready then again surely one tells the court they are not ready for trial at the pre-trial review on the 8th January.  Clearly for whatever reasons the defence chose not to tell the court.

42.One simply cannot say as Mr Andrews submits that in reality there would have been no difference in the terms of delay if expert reports had been obtained earlier.  As Mr Shui pointed out Mr Shum in fact only considered a few documents in addition to the questioned cheques subject of the charges and not the majority of documents served in November and December. 

43.In February through no fault of the defence Mr Shum withdrew acting on behalf of the defence (apparently over payment of fees by the Legal Aid Department). This necessitated a new expert to be instructed.  The defence instructed Dr Strach from Australia, whose summary report was served on the prosecution on the 31st March.   This ultimately led to a further adjournment of the trial, which eventually started on the         29th September 2010. 

44.Although the adjournment of the trial in April cannot be said to be the fault of the defence or the prosecution, the adjournment of the first trial clearly was as a result of the late service of the defence expert report.  The delay caused by this cannot in my view be in anyway attributable to the prosecution.  Mr Finch submits that if criticism can be levelled for the late instruction of the expert this is not the fault of the defendant.  Whilst this may not be the fault of the defendant as opposed to the defence, I am nevertheless satisfied the defendant cannot pray in aid of this fact as amounting to exceptional circumstances to suspend the sentence.

Ill Health

45.Mr Andrews submits by reason of the delay in bringing the case to trial the defendant’s mental health has suffered, including attempts to take her own life, whereby the defendant has suffered more than in the ‘ordinary case’.  There can be no doubt that the proceedings will have been very distressing.

46.The defendant’s mental health since arriving in the United Kingdom is detailed in the many reports submitted by Mr Andrews, all of which I have read, and a summary of which can be found in paragraphs 16-26 of the judgment of Mr Justice Ouseley.

47.The medical reports show that the defendant likely started taking anti-depressants when she first went to the United Kingdom at which time she made an attempt on her life and those of her children (see the report of Dr Sarah J Lack dated 31st March 2003). 

48.The defendant was first seen by a psychiatrist Dr Clare Smith in February 2001 who diagnosed the defendant as suffering from moderate to severe Depressive Disorder with clear features of depression (see the reports of Dr Smith dated the 8th May 2003; the 1st August 2003 and the 17th January 2007).     

49.In 2003 Dr Lack also diagnosed the defendant as suffering from depressive illness of moderate severity, showing symptoms of depressed mood, reduced sleep and appetite, suicidal thoughts, weight loss and poor concentration/ memory.  Dr Lack believed that it was of significance that the defendant first started experiencing these symptoms shortly after the arrest of her husband (see page 12 of Dr Lack’s report).   

50.As Mr Justice Ouseley states the problems of the defendant arise from her mental health rather than the passage of time and that what has exacerbated her condition is the taking of further steps in the decision making process, and that her condition has then calmed down to a degree, as the step proves ineffectual (see paragraphs 41 and 50 of the judgment).

51.When the defendant first appeared in the Magistrates’ Court in April 2009 she was remanded in custody for the preparation of psychiatric reports.  Dr Ho was of the opinion that the defendant suffered from depression which has been in remission for a few years but did not suffer from any active psychiatric problem at that time.  Dr Yuen was of the opinion that the defendant did not have any active mental problem and that her condition seemed quite stable without suicidal thoughts in the last few years.

52.In his latest report, prepared for sentencing, Dr Yuen states the defendant’s mood was mildly depressed and noted that the defendant denied the presence of any psychotic or morbid depressive symptom, including suicidal thought.  The defendant was said to regard herself as mentally stable in the past 18 months.  Dr Yuen concludes that the defendant’s depression is, to a great extent, understandable in nature and he is sure that her mood will further improve after the trial is over.  Psychiatric treatment is required for at least 9 months from the time of full remission.  In patient treatment is not required and the defendant can continue to attend Kowloon Hospital for psychiatric treatment no matter how she is sentenced.

53.In the report of psychologist Yvonne Lee assessment shows some depressed mood with no obvious psychotic signs.  As the defendant’s mental state was being taken care of by psychiatric service the psychologist concludes there is no need for immediate psychological intervention. 

54.Whilst one has sympathy with anyone suffering from mental illness, by exercising her rights to challenge every step of the extradition this has at times exacerbated the defendant’s mental condition. Fortunately that condition appears to have improved whilst in Hong Kong. I am satisfied the mental health of the defendant over the past 12 years does not amount to exceptional circumstances to suspend the sentence.

55.I have carefully considered all matters put forward by Mr Andrews.  I am satisfied individually and collectively they do not amount to exceptional circumstances to suspend the sentence or for the imposition of a community service order.  I do however take into account the passage of time in bringing this case to trial and the health of the defendant and further reduce the sentence by a period of 3 months.  The defendant is sentenced to 12 months imprisonment.