HKSAR v. CHAN CHEONG KIT

[English Translation - 英譯本]
CACC 176/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 176 OF 2007

(ON APPEAL FROM DCCC NO.1308 OF 2005)

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JUDGMENT

Hon. Yeung, J.A. (giving the judgment of the Court):

Introduction

1. The applicant Chan Cheong Kit, the 2^nd defendant Lo Yiu Wai (“Lo”) and the 3^rd defendant Fung Man Hei (“Fung”) were tried together before Chief District Judge Patrick Li for 7 offences under the Copyright Ordinance, including:-

(1) Conspiracy to sell infringing copies of a copyright work;

(2) Possession of an article used or is intended to be used to make infringing copies of a copyright work for sale or other purposes, including blank compact discs and compact discs writers,

(3) Making, together with other people, for sale or hire infringing copies of a copyright work;

(4) Possession, together with other people, of articles used or intended to be used to make infringing copies of a copyright work for sale or other purposes, including about 8,000 blank compact discs, 18 compact discs replicators (each with 2 to 7 compact discs writers);

(5) Possession, together with other people, of infringing copies of a copyright work at Flat 12, 8^th floor, Pacific Trade Centre;

(6) Possession, together with other people, of infringing copies of a copyright work at Flat I, 6^th floor, Wing Lee Building, Kimberley Road; and

(7) Possession, together with other people, of infringing copies of a copyright work at Room 6, Flat D8, 10^th floor, Chung King Mansion.

2. The applicant was additionally charged with the 8^th charge, a  “money laundering” offence.  The money involved was 5 million odd dollars.

3. The applicant, Lo and Fung pleaded not guilty to all the charges but were convicted of all the charges on 7 May 2007.

4. On 28 May 2007, Judge Li sentenced the applicant to 5 years and 7½ months imprisonment for the 1^st charge to the 7^th charge, and 4½ years imprisonment for the 8^th charge, the “money laundering” offence, of which 6 months were to be served consecutively.  The applicant’s total term of imprisonment is 6 years and 1½ months.

5. The applicant applied for leave to appeal against conviction and / or sentence.

6. At the commencement of this hearing, the applicant abandoned his application in relation to the conviction and that application was dismissed. This Court is only required to consider the application for leave to appeal against sentence.

Prosecution case

7. Between August 2004 and August 2005, Customs officers put the following shops under surveillance: the shop at the lobby entrance, shop 102, shop 121 and shop 122 at the ground floor of Chung Kiu Commercial Building, Shantung Street, Kowloon.  In these 4 shops the wrapping covers of compact discs were displayed. The titles of infringing copies of compact discs, graphics and computer codes representing the titles of the infringing copies were printed on the wrapping covers.  Price lists showing the selling prices of various compact discs were also displayed.

8. Customers were provided with blank pieces of paper and pencils in these 4 shops for them to write down the computer codes of the compact discs which they were going to buy.  After a customer wrote down the code numbers, he handed the piece of paper to the shop assistant.  The shop assistant asked the customer to wait for a moment and then he could go to a corridor, a staircase, or an empty shop nearby to collect the infringing copies of compact discs which he ordered.

9. In this process the shop assistant would inform, by a mobile phone, the people working in a warehouse where the infringing copies of compact discs were kept the titles and quantities of the compact discs which the customers selected.  The warehouse people then followed the directions, packed the discs and made records.  After that, the discs would be delivered to the designated places and handed to the customers.

10. In fact, in 2004 and 2005 Customs officers had raided these 4 shops a number of times and they discovered infringing copies of compact discs were on sale there.  A number of undercover operations had been conducted, in which many Mainlanders sold pirated discs to undercover detectives.  The undercover operations ascertained the mode of operation of how pirated discs were sold in these 4 shops.

11. The Customs officers observed that the applicant, Lo and Fung actively took part in managing the 4 shops and operating the business of selling compact discs.  The applicant was present there many times and had contacts with many people who had a hand in these crimes.

12. This criminal gang, besides running the shops where the compact discs were on sale and the warehouses where the compact discs were kept, also possessed manufactories for making infringing copies of compact discs.  The warehouses and the manufactories were situated at Flat 12, 8^th floor, Pacific Trade Centre, 28 Kai Hing Road, Kowloon Bay; Flat I, 6^th floor, Wing Lee Building, 27-33 Kimberley Road, Tsimshatsui; Room 6, Flat D8, 10^th floor, Chung King Mansion, 40 Tsimshatsui and Flat 4B, 500 Shanghai Street, Kowloon.

13. Documents and other exhibits seized in the dwelling place and the car of the applicant showed that the applicant actively participated in the crimes of infringing copyrights and pirating compact discs.

14. The infringing copies of compact discs involved in this case were more than 70,000 copies; in addition, there were nearly 20 compact discs replicators, each with 2 to 7 compact discs writers.  When the Custom officers searched the warehouses and manufactories of these infringing copies of compact discs, they found a large number of two-way permit holders being engaged in the work of packing and making compact discs.

15. At all material times, the applicant had a telebet account with the Hong Kong Jockey Club, a savings account and a current account with HSBC and a savings account and a current account with the DBS Bank.

16. Between 1 January 2004 and 4 August 2005, a total of $4,919,970 was deposited into the applicant’s telebet account.  $3,834,610 of this amount was deposited by way of cash deposits at different betting centres.  The money deposited was soon withdrawn and paid into the applicant’s savings account with HSBC.  Another sum of money, amounting to $1,200,000 odd, was also paid into the applicant’s 4 bank accounts by way of cash deposits.

17. Ms. Lam Lai Kuen [transliteration,林麗娟], a chartered management accountant of the Customs Investigation Bureau gave evidence that at all material times, of the $4,900,000 odd which was deposited into the applicant’s telebet account with the Jockey Club, $2,200,000 was for betting and the dividend received was about $2,000,000.  However, $2,600,000 odd had not been used for betting.  About $2,600,000 went through the following process: after money was deposited into the betting account, it was withdrawn on the same day or the following day; and $670,000 of this amount was withdrawn within a very short time after the corresponding deposits were paid into the account.  Of the $4,900,000 deposit in the applicant’s telebet account, more than $3,800,000 was deposited at off-course betting centres of the Jockey Club.  Ms. Lam’s view was that of the money in the applicant’s betting account at least $2,100,000 cash was of unknown origin.

18. According to the Inland Revenue Department records, at all material times in this case, the applicant and his wife did not file any return about their incomes at all.

19. It is obvious that the applicant was an important figure in this criminal gang.  He used various places to make and store a large quantity of infringing copies of compact discs and, over a long period of time, sold pirated compact discs at the shops on the ground floor of Chung Kiu Commercial Building, resulting in immeasurable financial losses to the copyright owners of those compact discs. Through these crimes, the applicant reaped enormous financial benefits for himself.

Sentences

20. The learned judge used 3 years as the starting point for the 1^st, 3^rd, 5^th, 6^th and 7^th charges and 4 years as the starting point for the 2^nd and 4^th charges.  He made all these sentences concurrent and, because the applicant agreed to part of the facts, he reduced the term of imprisonment by 3 months to 3 years and 9 months.  At the same time, pursuant to section 27 of the Organized and Serious Crimes Ordinance, he enhanced the sentence by 50% to 5 years and 7½ months.  As for the 8^th charge, the “money laundering” charge, he used 3 years as the starting point and similarly enhanced it by 50% to 4 years and 6 months; 6 months of which was to run consecutively to the sentences for the 7 charges about infringing copyright offences, making a total of 6 years and 1½ months imprisonment.

21. Mr. Chiu, counsel for the applicant, submitted that the sentences were too severe.  The percentage, namely 50%, by which the sentences were enhanced pursuant to the Organized and Serious Crimes Ordinance was too high.  Mr. Chiu argued that the 50% enhancing rate was only applicable to offences like triad-related offences, smuggling of vehicles, illegal trafficking in women to Hong Kong for prostitution and loan sharking, but not suitable for infringing copyright offences.

22. Mr. Chiu stressed that there were similar cases in which the starting points ranged from 2-3 years and that the enhancing rate was only 30%.

23. As far as sentences in similar cases are concerned, although the offences are the same offences, the mode and the scale of the operations are not the same. Therefore, the sentences passed in those cases are not guidelines, albeit not irrelevant.

24. We must point out that this case is an extremely serious one in this kind of cases. The applicant and his many accomplices had been perpetrating these crimes of making and selling infringing copies of compact discs over a long period of time.

25. There were more than 70,000 infringing copies of compact discs seized by the Customs Officers, but such quantity cannot sufficiently reflect the seriousness of the applicant’s crimes. This is because the Customs officers had kept the applicant and his accomplices under surveillance for more than one year and during this period of time or in a even longer period of time, the applicant’s gang made use of a number of shops in a busy shopping arcade to sell infringing copies of compact discs.  There is no way to work out the total amount but it must be a very substantial amount.  The scale of operation of the applicant’s gang can be gleaned from the vast sums of money deposited into his accounts.

26. The making and selling of infringing copies of compact discs seriously and adversely affect the interests of the copyright owners, and is harmful to the reputation of Hong Kong as one of the major commercial centres in the world.  Since the mid 90’s in the last century, the Government of Hong Kong has publicized extensively against these crimes in order to combat and prevent people from committing these crimes.  However, the applicant and his accomplices paid no heed to the Government’s warnings and instead perpetrated these infringing copyright crimes over a long period of time and in an extensive scale.

27. In this case, in addition to the aggravating factors which are sometimes present in similar kind of cases, there are other factors which warrant more severe punishment.  The facts show that the applicant’s gang employed many two-way permit holders to assist them in committing these crimes.  By such conduct, the applicant’s gang demonstrated that they encouraged those people to contravene their conditions of stay, and there is also a possibility that they exploited those people by paying them very low wages.  The applicant must be given a heavy sentence in order to produce any deterrent effect.

28. This case is among the worst ones of its kind.  We consider that the 4 years starting point adopted by the trial judge for the 2^nd and 4^th charges is well founded and correct.  However, we think that it is questionable whether, after a high starting point was adopted, the term of imprisonment should further be substantially increased by 50% pursuant to the Organized and Serious Crimes Ordinance. As correctly pointed out by Mr. Chiu, to increase the term of imprisonment by 50% pursuant to the Organized and Serious Crimes Ordinance in a pirated compact disc case is unprecedented.  According to the authorities submitted to the court by the parties, in pirated compact disc cases, the percentage by which the sentences were enhanced pursuant to the Organized and Serious Crimes Ordinance did not exceed the range of 25% to 30%.

29. We quote the comment in paragraph 10 of the judgment of HKSAR v Ma Suet Chun and two others (CACC 1/2001)

“Prior to this case there was no precedent to indicate that the court would enhance the sentence by 50% for similar cases. In such circumstances, if the sentence were to be suddenly enhanced by 50%, the defendants would feel a sense of unfairness.”

30. We would like to emphasize that no matter how abhorring a particular crime is and how serious the facts of a particular case are, restraint should be exercised by the court when passing sentences and the sentencing guidelines should be followed. Otherwise, the severity of sentences in criminal cases would go on increasing.  This would lead to inconsistencies in sentencing and the lower courts would be at a loss as to what to do.

31. The facts of this case are serious but in view of the fact that the starting points adopted are already high, we consider that to enhance the sentence by one third pursuant to the Organized and Serious Crimes Ordinance is sufficient. We accept the starting points used by the trial judge and his way of dealing with the terms. However, we reduce the rate of enhancing the sentences pursuant to the Organized and Serious Crimes Ordinance from 50% to one third. The sentence for the 1^st, 3^rd, 5^th, 6^th and 7^th charges is varied to 48 months. The sentence for the 2^nd and 4^th charges is varied to 64 months. These sentences are to run concurrently and we reduce the term of imprisonment by 3 months to 61 months, because the applicant agreed to part of the facts, thereby saving time spent in the trial. As for the 8^th charge, the “money laundering” charge, we reduce the term to 48 months, 5 months of which are to run consecutively to the sentences for the 7 infringing copyright charges. The total sentence to be served by the applicant is reduced from 6 years and 1 ½ months to 66 months, i.e. 5 ½ years.

32. We grant the application for leave to appeal and treat it as the formal appeal. The applicant’s appeal against sentence is allowed and the terms of imprisonment are varied as stated above.