HKSAR v. KWAN CHUN KIT PHILIP

HCMA 231/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO 231 OF 2014

(ON APPEAL FROM ESCC 231 OF 2014)

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J U D G M E N T
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1. The appellant pleaded guilty to one count of ‘fraud’[1] on 28 February 2014. Ms Chainrai, Principal Magistrate, sentenced him to imprisonment for 5 months on 17 March 2014. He appealed against the sentence. After considering the arguments and further reports, I allowed the appeal. I set aside the imprisonment term. I ordered that the appellant be put on Community Service Order (CSO) for 180 hours. The following is the reasons.

Background

2. The charge alleged that between May and July 2010, the appellant and another person (‘D1’)[2] induced Global Payments Asia-Pacific (HK) Ltd (‘GP’) to enter into a credit card processing services contract with Total Gain Holdings (‘TG’) by false representation.  This resulted in prejudice or substantial risk of prejudice to GP. 

3. The background leading up to the false representation was as follows:

a  The appellant and D1 were the directors of ‘Beauty Yoga’ (‘BY’)

b  Since 2006, BY had been using the services of GP to effect credit card payments by its customers.

c  On 3 May 2010, GP reviewed the business status and demanded BY to increase the cash reserve from $1 million to $5 million. D1 informed GP that BY could not meet the demand and would terminate the credit card processing services contract with GP. 

d  Shortly afterwards, the appellant arranged to rent a shop at Waldorf Garden Shopping Arcade in Tuen Mun.  He persuaded the property agent to allow him to install a credit card terminal at that shop.  This terminal could be operated through any telephone landline.  The lease was never completed as the appellant failed to rectify the errors in the cheques he issued. 

e  About the same time, the appellant and D1 successfully applied to GP to arrange credit card processing services for another company TG which purported to run a fashion and accessories business at that shop.  

f  In August 2010, there were customers seeking refund from GP.  These customers had paid TG by credit card.  Investigation by GP revealed that the payment actually related to the business of BY.  GP further discovered that TG did not operate at that shop. 

g  It transpired that BY had been using the credit card processing services provided by GP to TG.  There were 79 transactions totaling about $434,381. 

4. The appellant and D1 were arrested on 10 August 2010.  Soon after his arrest, the appellant repaid the sum of $434,381 to GP. There was no loss to GP.  The appellant also took steps to settle the claims by customers of BY. 

5. It was about three and a half years later on 17 January 2014 that the appellant and D1 were charged.  On 28 February 2014, the appellant pleaded guilty to the charge.  The prosecution offered no evidence against D1.  Ms Chainrai, Principal Magistrate, adjourned the sentence for medical, background and CSO reports.  The appellant was remanded in custody. 

The reasons for sentence

6. After considering the reports, the Principal Magistrate accepted that the appellant was remorseful.  She noted that had it not because of his ill-health, CSO would have been recommended.  However, the medical report from Lai Chi Kok Reception Centre confirmed that his general condition was satisfactory. 

7. The Principal Magistrate pointed out that there was a degree of sophistication in the plot.  CSO was not appropriate for this offence.  She bore in mind the delay in prosecution.  She also gave credit to the appellant for making restitution.  She thought that the health of the appellant did not amount to an exceptional circumstance to suspend or to further reduce the sentence. 

8. The Principal Magistrate took a starting point of imprisonment for 12 months.  She gave one-third discount for the plea, one month reduction for the restitution and two months reduction for the delay in prosecution.  She sentenced the appellant to imprisonment for 5 months on 17 March 2014.  She also granted bail to the appellant pending appeal. 

The appeal

9. On 31 March 2015, the appeal was heard in the absence of the appellant.  He had another cardiac attack recently and was undergoing treatment in Queen Mary Hospital.  Counsel for the appellant, Ms Alison Choy, sought to submit further medical reports which I allowed. 

10. The reports revealed that the appellant had received ‘coronary artery bypass graft’ in Queen Mary Hospital in May 2014. After the surgery, his heart condition did not improve very much.  There was further blockage in another artery.  There was risk of sudden cardiac arrest. It was life threatening.  He also developed anxiety disorder.  He was advised to avoid physical and psychological stress. 

11. Ms Choy stressed that the appellant needed physiotherapy and cardiac rehabilitation treatment which was only available in Hong Kong Sanatorium.  He also needed a second MRI scanning in the Hong Kong Sanatorium to monitor his condition.  All these were not readily available in public hospitals. 

12. Ms Choy also complained that the Principal Magistrate had not given sufficient consideration on the delay in prosecution and the restitution. 

13. Mr Daryanani, Senior Public Prosecutor for the respondent, pointed out that none of the reports said that the appellant could not serve the remaining term for health reasons.  While accepting that a serious health problem might be an exceptional circumstance, he maintained that the Correctional Services Department would be able to take care of the appellant.  He supported the sentence of imprisonment for 5 months by the Principal Magistrate. 

14. In view of the recent admission of the appellant to Queen Mary Hospital, this court requested for an updated medical report from the hospital and also a physiotherapist report.  The appellant was granted bail pending further reports. 

The hearing on 2 July 2015

15. On 2 July 2015 when the hearing resumed, the appellant was represented by another counsel, Mr Freddy Woon.  There were three further reports as follows:

a  In the report dated 24 April 2015, Dr K.F. Chung, Associate Professor of the Department of Psychiatry, University of Hong Kong, opined that the appellant required regular treatment as he suffered from Panic Disorder and Agoraphobia.  His panic attacks might lead to sudden surge of stress hormones and adrenaline.  This would further constrict blood vessels and increase the risk of myocardial infarction. 

b  Professor Tse Hung Fat of the Department of Medicine, University of Hong Kong, examined the appellant on 1 June 2015.  In the updated report, he opined that there was a high risk of recurrence of myocardial ischemia and myocardial infarction due to congenital coronary artery diseases. 

c  Mr Cheung Tsz Wai, physiotherapist of the Hong Kong Sanatorium, confirmed that the appellant was undergoing cardiac rehabilitation treatment which included aerobic exercise, muscle strengthening exercise and education for exercise.  The appellant needed close supervision while doing exercise. 

16. Mr Woon confirmed that the appellant was admitted to Queen Mary Hospital from 24 March to 4 April 2015 due to his cardiac disease.  Mr Woon accepted that humanitarian ground was the main argument in this appeal.  He supported seeking a further CSO report. 

17. In view of the medical condition of the appellant, this court decided to seek further CSO report.  The other medical reports were disclosed to the probation officer.  The hearing is further adjourned to 17 July 2015. 

The hearing on 17 July 2015

18. In the further CSO report dated 17 July 2015, the probation officer opined that CSO would not be suitable for the appellant in view of his medical conditions.  Mr Woon however pointed out that Professor Tse had recommended office work without physical exertion for the appellant.  In view of counsel’s request, this court seeks further reports from Professor Tse and Dr Chung as to the kind of work appropriate for the appellant.  Their reports would be available to the probation officer. 

The hearing on 8 September 2015

19. On 8 September 2015, this court had the benefit of the following reports:

a  Professor Tse opined that the appellant would be suitable for office work without physical exertion.[3]

b  Dr Chung recommended clerical and administrative duties or light manual work.[4]

c  Having considered the above reports, the probation officer recommended community service for clerical and administrative duties or light manual work.  She recommended 180 to 240 hours of work. 

Discussion

20. In my judgment, the offence committed by the appellant was serious.  It exposed GP to substantial risk of prejudice.  On the other hand, there was no evidence that the appellant engaged the plot with a view to defraud GP or customers of BY.  By the false representation, he only obtained the credit card processing services from GP.  This was accepted by the Principal Magistrate during mitigation.[5]

21. The appellant had received various treatments in the past one year since he was granted bail pending appeal.  Although he is still at high risk of cardiac attack, his condition has stabilized.  Both Professor Tse and Dr Chung opined that he is suitable for office duties or light manual work.  The latest CSO report also recommends him for this kind of work. 

22. In the first CSO report in March 2014, the probation officer would have recommended community service but for the ill-health of the appellant.  Circumstances have changed substantially since then.  Bearing in mind the mitigating circumstances before the Principal Magistrate and the additional reports before me, I am of the view that CSO for 180 hours is an appropriate sentence.