HKSAR v. CHAN YUK KWAN

CACC 26/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 26 OF 2001

(ON APPEAL FROM DCCC NO. 1076 OF 2000)

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J U D G M E N T

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Hon Stock JA (giving the judgment of the Court):

This is a case about a credit card fraud, by which the applicant forged application forms for credit cards, obtained cards from a number of banks to whom the applications were made, and then incurred expenses by use of the cards. All the offences, save two, took place in January 1998. The applicant was arrested in May 1998, and some considerable time later, namely, in December 2000 he appeared before a District Court judge, and pleaded guilty to all thirteen charges which he faced. The judge sentenced him to a total of four years' imprisonment, and this is his application for leave to appeal against the sentences then imposed.

The facts

2 What happened, according to the admitted facts, was that the applicant's wife worked as an estate agent, and the applicant asked her, in January 1998, to supply him with photocopies of the identity cards of some of her clients. The wife duly did so and gave them to the applicant. He then used the particulars from those identity cards to apply for credit cards from a number of banks. He engaged two other men to help him in his escapade. He used a vacant flat in Sau Mau Ping as a correspondence address for the purpose of the applications, and the two men stole bank statements from a neighbouring apartment, and then the bank statements were altered to tally with the names on the application forms, which in turn tallied with the names on the identity cards, and these statements were forwarded with the applications. In addition, in relation to some of the applications, and again with the help of the two other men, tax assessments were submitted onto which false names had been placed. The applicant himself filled out the application forms, signed them purporting to be the true holders of the identity cards, put down the name of a referee - someone who had no idea that his name was being used in that way - and sent off the applications. The applicant was successful in that he obtained credit cards from the Standard Chartered Bank, American Express, the Wing Hang Bank, the Overseas Trust Bank, and the Bank of China.

3 He then used these cards, and it is accepted that as a result of the use of these cards, whether by himself or the two persons who operated with him, there was occasioned loss to the banks over the next four months in the sum of $148,000. This expenditure included two visits on 9 March 1998 to a company selling audio and similar equipment, where he purchased some amplifiers and a DVD machine in the total sum of $15,960, a sum which is included in the total of $148,000.

4 He was eventually arrested because, on 13 May 1998, he went to collect one of the cards he had ordered and the authorities, by this stage alerted to the offences, arrested him. He at once admitted the offences, and said that he had committed them because he needed money.

The charges

5 The charges fall into three groups:

Group 1, charges 1-6 inclusive, allege obtaining a pecuniary advantage by deception. Charge 1 is typical:

"Statement of Offence

Obtaining a pecuniary advantage by deception, contrary to section 18(1) of the Theft Ordinance, Cap. 210.

Particulars of Offence

CHAN Yuk-kwan, on or about the 20th of January, 1998, in Hong Kong, together with other persons unknown, by deception, namely, by falsely representing that (1) the particulars contained in the application form for two Gold Visa Cards of the Standard Chartered Bank; and (2) the bank statements and the notice of tax assessment attached to the said application form as income proof in the name of WONG Chee-sai, were accurate and genuine, dishonestly obtained for himself or another a pecuniary advantage, namely, a credit arrangement granted by the Standard Chartered Bank in the form of two credit card accounts of account No. 4966-5715-0890-1828."

Charge 2 also alleges an offence against the Standard Chartered Bank, and relates to obtaining two Gold Master Cards; an offence committed on the same day.

The other four Group 1 offences (charges 3 to 6) were committed on 20th, 21st and 22nd January 1998, and relate to cards obtained from the Wing Hang Bank, the Overseas Trust Bank and the Bank of China.

The third group of offences is very much part and parcel of the conduct represented by the first group, in that they allege the forgeries which were utilized in order to make the applications appear genuine. This group embraces charges 9 to 13 inclusive and, typically, charge that the applicant made a false instrument, namely, an application form for a credit card by forging a signature on the form with the intention that he should use the instrument to induce someone to accept it as genuine, and as a result to do an act to the deceived person's prejudice. Charge 9 relates to the applications to which charges 1 and 2 refer; charge 10 to the application covered by charge 3; charge 11 is linked to charge 4; charge 12 to charge 5; and charge 13 to charge 6.

The second group, charges 7 and 8, are aimed at the obtaining of the audio equipment in March 1998. The charge in each case is obtaining by deception, namely, the equipment.

The sentences imposed

6 What the judge has done is to say that for each offence of obtaining a credit card or cards by deception (that is, the group 1 charges) there should be imposed a term of eight months' imprisonment: that takes a starting point of one year, and reduces it to one of eight months because of the plea of guilty. He ordered each such sentence to run consecutively, save that where the same bank has been deceived more than once, those sentences are to run concurrently. So what we have are sentences of eight months' imprisonment in relation to charges 1 and 2 to run concurrently with each other; and then sentences of eight months' imprisonment on charges 3 to 6 (inclusive) on each charge to run consecutively to the sentences on charges 1 and 2, and to each other, making a total of 40 months. He has then treated each forgery of the relevant application forms as subsidiary to its counterpart offence in the first group of offences. So, for example, in relation to charge 9 he has said that the sentence for forging the application form for the cards from the Standard Chartered Bank should run concurrently with the sentences imposed on charges 1 and 2. On each of the forgery charges (Group 3: charges 9 to 13) he has again taken a starting point of one year for each offence and reduced that to one of eight months' imprisonment and has ordered each to run concurrently with its Group 1 counterpart.

7 As to the offences represented by charges 7 and 8, the obtaining of the audio equipment, the judge said that they merited sentences consecutive to the offences under the other groups. And he has then taken for each a starting point of six months' imprisonment, reduced it to four months each, to reflect the plea of guilty, ordered each to run consecutively to the other, and to the sentences imposed in relation to groups 1 and 3, thereby making a total of 48 months' imprisonment for all the offences.

The judge's approach

8 In his reasons for sentence, the judge referred to R v. Chan Sui-to [1996] 2 HKCLR 128 and said:

"Applying those guidelines, the Court of Appeal in the Chan Sui-to case said that the totality of sentences on the 1st defendant in that case should be four years. That is on a plea of guilty. The 2nd defendant ... was sentenced to three years' imprisonment after plea. Correction, those are sentences after trial so each of them got roughly a one third discount for plea."

The judge would seem to have assumed in relation to the case of Chan Sui-to, which prescribes certain guidelines in credit card fraud cases, and upon which the judge appears to have placed some considerable reliance, that D1 in that case received a term of four years' imprisonment, and he said, in terms, that D2 received a term of three years. That is inaccurate. D1, upon appeal, received a term of three years' imprisonment, and D2 a term of two years after plea. The judge has in fact imposed upon this applicant the same term which, it seems, he believed D1 received in Chan Sui-to but, even then, he has done so without stating what was the overall starting point which he adopted in this particular case.

9 What the sentencing judge in this case said was this:

"In sentencing the defendants for this type of case, I think one more principle that I would follow is this: the principle that I think should be followed is that one has got to look at the extent of the operation, specifically I mean one has got to look at how many frauds were actually perpetrated. I would think that if a defendant who tries to practice fraud on 10 banks should obviously attract a higher sentence than someone who has only been trying to deceive three banks, and so in that respect I do not think it is always advisable to sentence globally and I think, in appropriate cases, separate sentences should be passed on each offence."

10 It is difficult to know quite how the judge has in fact approached sentence in this case - whether he passed sentences for each offence which he thought appropriate for that offence, arriving at a total which, it so happened, sat comfortably with the sentence which he thought had been imposed in Chan Sui-to, or with the totality which the judge thought appropriate because of the guidelines in Chan Sui-to; or whether, on the other hand, he had in mind a totality, and then pruned individual sentences to fit that totality. Whatever the position, we should emphasise, as this court has so often emphasised, that judges should pass sentences appropriate to the offences, should always expressly address the question of totality, and should then give effect to the appropriate totality by use of the device of concurrent, or partly concurrent, sentences. One should never pass a sentence on an individual charge which is less than is warranted by the criminality reflected by the charge and the facts. Yet that is what happened in this case. We cannot think that it was at all adequate in this case to pass a sentence of eight months' imprisonment for an offence by which a credit card is fraudulently obtained from a bank using information from other person's identity cards, using stolen bank statements and which involves the forgery of signatures; nor was four months adequate for obtaining significant quantities of equipment from a shop by using a credit card fraudulently obtained.

11 Given that the judge has passed upon this applicant the same sentence as he thought was passed on D1 in Chan Sui-to, it is worth noting what the facts of Chan Sui-to were. That was a case of a counterfeit credit card factory in which D1 was involved, and he was found with four counterfeit credit cards, 12 false phone cards, and was caught emerging from this factory in which were discovered an encoder, an embosser, base cards, and the paraphernalia of credit card manufacture. His fingerprints were found on the embosser, and there was also found in those premises 384 credit card accounts data. That was a case which, on any view, was somewhat more sophisticated than the present.

12 If we examine some of the cases cited in Chan Sui-to - an exercise which the judge ought to have conducted - we see amongst the cases, (almost all of which involved the use of counterfeit credit cards), a case in which an applicant received three and a half years' imprisonment, on a plea of guilty, for a conspiracy to defraud by the use of credit cards in which the sum of $380,000 was involved (R v. Kwai Ying-ho Cr App No. 527/1992); a case where six years was imposed after trial where the applicant was a ringleader of a syndicate which obtained forged credit cards through members in Malaysia and Hong Kong, and where goods worth $600,000 were obtained (R v. So Chung-kwong Cr App No. 455/1993); a case in which the applicant was convicted after trial for two conspiracies to manufacture credit cards in Malaysia and their use in Hong Kong, with bribery of hotel and business staff, and where a sentence after trial of five and a half years was upheld (R v. Lau Kwok-hung and another Cr App No. 99/1993); and a case in which possession of 12 forged credit cards, a conspiracy to defraud, obtaining by deception, and illegal possession of an identity card, on the part of a police officer who had obtained $122,000 worth of goods, met with a sentence of four years' imprisonment after plea (R v. Chan Yet-wai [1995] 2 HKCLR 59).

This case

13 As was said in Chan Yet-wai, due regard must be paid to the seriousness and prevalence of credit card offences, and we would not wish by this judgment to say that the offences in this case were anything but serious. The applicant practised fraud upon a number of banks, caused his wife (who was also charged, and was sentenced by the same judge to community service) to breach the trust reposed in her by some of her clients by copying their details and identity cards, worked with other men to effect this scheme by which he fraudulently obtained eight credit cards; and went to some lengths to effect his crime - the use of premises not his own as an accommodation address, the theft of bank statements, and the use of a computer to effect forgeries. Whilst he has been charged with only two offences of obtaining property by the use of the credit cards, namely, the goods to the value of just under $16,000, we are in this case entitled to have regard to the fact, for it is admitted, that as a result of the use made of the cards obtained by him by deception, the banks have suffered a loss of $148,000. We see that he admitted to the police that he used the credit cards to purchase goods and to withdraw money, and told them that he and his two friends shared the money withdrawn from the ATM machine, and this escapade continued for a few months. There is no reason to think that it would not have continued further, had he not been arrested going to collect one of the cards. On the other hand, this case did not involve the manufacture of forged cards; was not an unusually sophisticated operation; had no international dimension; and did not involve the running of a substantial syndicate.

14 The facts of this case accord more closely with that of R v. Lai Chong-ning Cr App No. 729/1996, decided in June 1997. In that case, the applicant pleaded guilty to eight counts of using a false instrument with intent to induce the victim to accept it as genuine, and thereby act to its prejudice. The false instrument was an application to a bank made in the name of another for credit cards to be issued. As in this case, the applicant and a friend used the identity card of someone else, with copies of that person's bank statement, over a period of four months, during which $128,100 were obtained. That applicant had made no fewer than 42 applications for credit cards to the bank. He co-operated with police and offered to assist them and to give evidence against his friend if the friend was prosecuted. The judge took five years as a starting point for each offence, and reduced it to three years to take into account the plea and the offer of help. The Court of Appeal upheld that approach, pointing to the fact that this was a systematic course of conduct over a number of months involving a relatively large sum of money.

15 The nature of that case is broadly similar to the present, though we note that in that case there were many more applications for credit cards. The mitigation in our present case was, as we shall shortly see, much greater.

The starting points

16 We take the view that the appropriate starting points for the individual offences in this case are as follows:

For each of the group 1 offences, that is, charges 1 to 6, a starting point, before plea, of three years' imprisonment;

For each of the group 2 offences, that is, charges 7 and 8, a starting point of 18 months' imprisonment;

For each of the group 3 offences, that is, charges 9 to 13, a starting point of three years' imprisonment.

Mitigation

17 From those individual starting points there must be given the normal credit for the defendant's guilty plea. We note also that the defendant is a person of previous good character.

18 There are, however, two significant mitigating factors which the judge has either overlooked altogether, or, if he has not overlooked them, then they are factors for which he has given no credit, where credit was clearly due.

(1) Reimbursement

19 The first is the fact that the applicant, well before trial, paid back to the banks the sum of $91,453. That sum is in addition to a sum of $5,500 which was seized from his premises when the police first went there. What happened was that when the applicant was interviewed he told the police that he still had money which he had obtained by the use of the cards, and some days later he took the police to his home, and he handed over $34,000. Then he took them to a bank where, as he had told them, he had an account which held some of the proceeds of his crimes; and he withdrew money, and gave the police $51,453. His wife's bail money came from the proceeds of his offences. He told the police that, and that amount was recovered as a result. So, the long and the short of this is that the banks have been reimbursed to the tune of $96,953, in respect of which the applicant has himself been proactive in recovering $91,453 which he has handed over.

20 These are facts to which real weight should have been given in mitigation, and yet this reimbursement is a factor for which the judge, self-evidently, has given no credit whatsoever. We can but express considerable surprise that this fact is not even mentioned in the reasons for sentence, given that it featured significantly in counsel's address in mitigation, and was also mentioned in the probation service report prepared for the court to assist the judge in sentencing. It is true that the judge has said at the very outset of his reasons for sentence that: "I bear in mind everything that has been said in your favour by your counsel", but that hardly answers the point - not that anyone suggests that it does - for here was highly significant mitigation for which credit was due. If credit was given, then it needed expressly to be mentioned. If credit was not given for it, and quite clearly it was not, then unless it was altogether overlooked, the judge should have said why he did not accord weight to the fact of reimbursement.

(2) Delay

21 Then there is the question of delay in charging the applicant and in bringing these proceedings. This applicant was arrested in mid-May 1998. Yet the applicant was not charged for another 18 months or so, and the case did not come before the District Court for sentence until December 2000. That is a period of over two and a half years. It is not suggested that this applicant brought the delay upon himself. On the contrary, he admitted his guilt the very first time he was arrested, in May 1998. It was said in the proceedings below that time had been needed to make investigations to see whether there were other offences. We accept that, but it cannot possibly account for a delay of this length or anything like it. Mr Zervos, who appears today for the respondent, very properly accepts that there is no good reason for the extent of the delay. Significant delay may well in a particular case go in reduction of sentence, because of the stress occasioned when a case hangs over the head of a person awaiting trial, stress over and above that caused where there is no prolonged delay.

22 Again, the judge has made no mention of this fact; he has not said whether he considered it at all and, if so, whether he considered it a mitigating factor or not in this case and, if not, why not. This, too, is an odd omission given that when the matter was before the judge on 18 December 1999, he, quite rightly, expressed some dismay at the delay, intimated that he was not impressed by the explanation for it, and said that the matter would have to be clarified. There is no indication from that portion of the transcript of the second hearing which we have whether the matter was clarified or not; and nothing in the reasons for sentence which give this court any clue as to the judge's thinking on this question.

Conclusion

23 All in all, we are bound to say that the sentencing exercise in the court below has gone wrong at almost every turn. We are satisfied that the starting point which one can but infer from the sentences imposed was too high, and it is quite plain that, whilst the sentences on individual charges were manifestly inadequate, the overall sentence imposed on this applicant was manifestly excessive.

24 We have stated what we believe to be the appropriate starting point in this case for each offence. We take the view that, in the light of the mitigating factors which we have described, a reduction of 50% from that point is, in each case, warranted. We also take the view that the totality warranted by the criminality disclosed by all offences, would be a sentence before plea of four years' imprisonment, and a sentence of two years' imprisonment to give proper effect to the mitigation available. It is our judgment that the following sentences are appropriate:

On each of charges 1 to 6: a sentence of 18 months' imprisonment, these to run concurrently with each other.

On charges 9 to 13: for each offence a sentence of 18 months' imprisonment to run concurrently with each other, and since they are but part and parcel of the same conduct reflected in charges 1 to 6, to run concurrently with the sentences imposed on charges 1 to 6.

In respect of charges 7 and 8, there should be sentences of nine months' imprisonment on each charge to run concurrently with each other. Were we to order the whole of the sentences on those two charges to run consecutively to the sentences imposed on the other charges - and in principle, the conduct reflected by those charges warrant consecutive sentences - we would then be imposing a sentence which exceeds the totality which we have deemed appropriate. So what we will do is to order that six months of the sentences on charges 7 and 8 will run consecutively to the sentences imposed on the other charges, and that three months will run concurrently.

This means that the totality of the sentence which we intend to substitute is one of two years' imprisonment.

25 In these circumstances, we grant the applicant leave to appeal against his sentences, and we treat the hearing of this application as the hearing of the appeal. We set aside the sentences imposed by the judge, and we substitute the sentences which we have specified.