HKSAR v. PANG CHI KIN

HCMA63/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO.63 OF 2003

(ON APPEAL FROM WSCC 1874 OF 2002)

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J U D G M E N T

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1. This appellant appeared before the Principal Magistrate at Western Magistrates' Court facing three charges of fraud. The 1st charge alleged that he had on 21 September 2000 by deceit, namely by falsely representing that he had not applied for any credit facility or loan from any bank or finance company, with intent to defraud, induced Mr Wong Chu Pui of JCG Finance Company Limited to lend him the sum of $100,000 which resulted in prejudice or substantial risk of prejudice to the said JCG Finance Company Limited. The 2nd charge involved a similar fraud and another loan, this time of $20,000 from SHK Finance Limited and was taken out on 26 March 2001. The 3rd charge was in like form involving South China Financial Credits Limited who advanced a loan to the appellant of $18,000 on 25 April 2001.

2. He admitted all three charges and was sentenced to a term of four months' imprisonment on the 1st charge, three months on the 2nd charge, and three months on the 3rd charge, all to run consecutively. A total of ten months.

3. The frauds came to light after the appellant filed a bankruptcy petition in the High Court on 30 May 2001. In that petition, he declared debts of $792,804 to 23 unsecured creditors. One of those creditors was South China Financial Credits Limited, the victim in the 3rd charge. That company complained to the police and the subsequent investigation led to these three charges.

4. The 1st charge concerned his loan application for $100,000 from JCG Finance Company Limited on 21 September 2000. He claimed a monthly salary of $13,505 and said that he had no debts. In fact he had monthly loan repayments and minimum credit card repayments of about $24,000 a month. JCG would not have granted this loan had they known the extent of his indebtedness, and the appellant admitted that he had failed to disclose the information deliberately because he knew he would have not got the loan otherwise. He made seven monthly repayments of $5,315 before he applied for bankruptcy.

5. The 2nd charge concerned his loan application for $20,000 made to SHK Finance Limited on 26 March 2001 in which he again claimed to have no debts although by this time his loan and minimum credit card repayments had escalated to about $40,000 on an income which had shrunk to $9,715. SHK would not have approved the loan had they known the appellant's true financial position and he agreed that he deliberately kept it from them. He made two repayments on this loan before applying for bankruptcy.

6. The 3rd charge involved a loan application for $18,000 from South China Financial Credits Limited on 25 April 2001. He admitted to only one creditor, a payment of $1,963 to another finance company whereas by now his loan and a minimum credit card repayments had reached $47,000. Once again, South China would not have made the loan had they realized the appellant's true financial position and the appellant again admitted that he knew he would not get a loan if he disclosed his debts. He had, for this reason, chosen to conceal them. He made one repayment before claiming bankruptcy.

7. The appellant is a single man of 39, with a previously clear record. He told the magistrate he had worked for the Hongkong and Shanghai Bank but had lost that job when he was made bankrupt. Since then he had worked in a warehouse. He claimed to have incurred the debts originally as a result of failed stock market investments.

8. In sentencing the appellant the learned Principal Magistrate noted that the appellant had been "wholly dishonest and had recklessly exposed the companies to unacceptable financial risks". Succinctly put, if I may say so.

9. This man had obtained substantial sums by deliberate fraud at the time when he knew he had considerable debts. Debt, what is more, which he could never realistically have hoped to repay on his salary.

10. The 2nd loan, I note was taken out only two months before he applied for bankruptcy, and the last was taken out in the month before he declared bankruptcy.

11. He may well have been a desperate man financially, a matter the magistrate would have been all too well aware of, but this was deliberate fraud inevitably causing loss to others. Ultimately, the sums involved are not huge and the magistrate reflected that in the starting points he chose. The magistrate pointed out that in recent months he had seen a significant increase in the number of search warrants involving such frauds. As a principal magistrate of a busy magistrates' court, he is well placed to spot such a trend.

12. The appellant today attacks those comments and produces statistics which challenge his view. The figures produced today show a dramatic increase in bankruptcy petitions over the last two or three years, and of complaints made, and this perhaps confirms the trend which the magistrate has spotted. The appellant points out that the number of prosecutions increased from five in 2000 to 28 in 2001 and then decrease slightly to 26 in 2002. This may well show that the search warrant signed by the Principal Magistrate have not yet translated into prosecutions in the court. Only time will tell.

13. In my view, however, even without the added element of prevalence, in all the circumstances of this case, these sentences cannot be said to be manifestly excessive or wrong in principle, and the appeal is dismissed.