HKSAR v. LEE WOON FAI

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

1998, No.366
(Criminal)

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J U D G M E N T

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Stuart-Moore, J.A. (giving the judgment of the Court):

The charges

1. On 29th May 1998, the Applicant (D1 at trial) was convicted in the District Court of 11 charges of lending money at an excessive interest rate following a trial before Deputy Judge Ma. He was sentenced to a total of three years' imprisonment. The Applicant originally sought leave in person to appeal against conviction and, with the benefit of Legal Aid, to appeal against sentence including an order that he should pay the whole of the taxed costs of the prosecution. He has not pursued his application in regard to conviction and we have accordingly dismissed that part of this application.

2. All the charges were laid under section 24(1) of the Money Lenders Ordinance, Cap.163. D1 faced a total of 17 charges of which one, Charge 10, was a joint offence with Madam SHUM Yat-ping (D2). D1 was acquitted on a further six offences and D2 was acquitted on four other offences. It seems, so far as D1 is concerned, that the acquittals were not on the merits but rather because one or more witnesses failed to attend the trial, and in at least one case, a witness went hostile.

The Prosecution's case

3. A concise account of the nature of the case brought against D1 is set out by the judge in his Reasons for Verdict where at page 47M of the Appeal Bundle, he said this :

" The allegations against D1 are that he had a long history of lending money to others at excessive interest rates. Most of the present offences against D1 are only sample charges.

Over 10 civilian witnesses were called to testify against D1 and most of them are civil servants. They came to know D1 on social occasions such as mahjong games or through introduction by friends. D1 was said to frequent the Mong Kok area, in particular in a few tea houses or restaurants where he lent money to the others or at the Sai Yee Street Depot of the Water Supplies Department in which D1 came to know some of the witnesses.

The sums lent ranged from $1,000 to $20,000 on each occasion. The effective rates of interest per annum calculated by the Treasury Accountant, according to the Money Lenders Ordinance, stood between 120 per cent and 551 per cent.

The arrangements of loan between D1 and the borrowers are these : in most cases, a sum would be deducted from the agreed sum of loan initially so that the borrower would receive an amount, normally in cash, less than the nominal loan; that they have to repay the nominal loan within a stipulated period, usually 30 days or by the end of the same month in which a loan took place; in case the borrowers are not able to make repayment by the due date, they can choose to delay the repayment of the nominal loan but they have to pay D1 an extra sum proportional to the nominal loan, for example, $150 per $1,000 loan within a fixed period, for example, 30 days; in case the borrowers are unable to pay even the extra sum upon the due date, the same sum would be accumulated to the nominal loan until the whole loan is settled. Some of the borrowers made repayments on the earliest due date whilst some repaid later.

In most cases, borrowers had to give D1 proof of home address, copy of identity card and means of contact such as telephone number and pager number. In some cases, D1 kept the bank withdrawal cards for the purpose of collecting payment of interest or repayment of loans. In one case, the borrower had to draw a number of post-dated cheques and hand it to D1 as a means of repayment.

D2 was said to be involved in a number of transactions in which she lent money to two borrowers adopting similar arrangements of repayment. The prosecution said D1 and D2 had a close relationship. The personal properties of both defendants were respectively found in the residence of D2 in Yuen Long and a flat in Mong Kok to which D1 had access.

In respect of the only count in which they were jointly charged (charge 10), D2 lent money to the borrower while some of the repayments were deposited into an account of D1.

Upon interview, D1 made admissions."

Grounds of appeal on sentence

4. Turning to the sentence that was imposed in this case, Mr Wilson Chan, on D1's behalf, submits firstly that the imposition of imprisonment in the circumstances of this case was wrong in principle, or that alternatively in a case where there was no evidence of triad association, or of violently reinforced threats for repayment, three years' imprisonment was manifestly excessive. Secondly, he argues that the order that D1 should pay the taxed costs of the case was wrong in principle.

5. Taking the first of the submissions made by Mr Chan, he has attached considerable significance to the remark which is made by the trial Judge which is to be found at page 31K :

"Some of the counts were only sample charges. There was evidence that the defendant had been lending money to the witnesses at excessive interest rates before the relevant offence dates."

Mr Chan says that bearing in mind what this Court decided in R. v. Chow Tat Ming [1997] HKLRD 353, this was not a consideration that the Judge should have had in mind when passing sentence in the sense that D1 may have had a longer sentence imposed on him as the result of other offences to which he had not pleaded guilty and which he had not asked to have taken into consideration.

6. The approach in Chow Tat Ming was that a defendant should, following R. v. McKenzie (1984) 6 Cr. App. R. (S) 99, not be sentenced for offences he had not accepted. D1 did not testify on the general issue in this case and he had not directly, or by implication, accepted other examples of offences of the same kind and yet it does seem, from what the Judge said in passing sentence, that the fact that these charges represented only samples of D1's criminality was an adverse factor he had borne in mind. In the particular circumstances of this case, it was not, as Mr Chapman concedes on behalf of the Respondent, a matter that should have been taken into account.

7. Mr Chan goes on to submit that another irrelevant consideration was what the Judge referred to on page 32E :

"...While the borrowers had their part to blame, the activities of the defendant must have seriously hampered the performance of the borrowers and thus the services provided to the public."

It is difficult to understand quite what the Judge was driving at when he said this. Clearly any victim of an unlicensed money lender, who has been charged rates of interest such as here, would be almost bound to be distracted by the worry he would feel. This, however, was not such a powerful consideration as the matter to which Mr Chan turned his attention next, namely, that the Applicant had no connections with any triad society whatsoever, and had used no force or threats to reinforce payment. This was, however, a matter that was in the mind of the Judge who did make specific reference to the absence of coercion.

8. We have been provided with a very large number of authorities concerned with this kind of case. We should say at once that those authorities are concerned with cases relating to the penalties that used to be applicable to cases of this kind brought on indictment. The new and higher penalties for this kind of case came into effect on 2nd December 1994, and we are of the view that there is nothing on the transcript that indicates that the trial Judge was even aware of the new provisions. We can say that because he was referred to cases relating to the old provisions and it appears, in particular, that he applied the principles of those cases. In this Court, we were shown the case of R. v. Yung Yiu-keung [1989] 1 HKLR 277 which was a Magistracy appeal in which a fine was held to be the appropriate method of dealing with a first offender who had not used intimidation to recover the money. However, some years later, in R. v. Lui Sau-cheong [1993] 2 HKCLR 298, this Court had this to say at page 300 :

"...Such operations are unfortunately all too frequent nowadays. In case after case coming before the criminal courts, one sees a procession of offenders to a large extent driven to their offences - whether involving dangerous drugs, forgery, fraud, theft, robbery, burglary or any other number of offences - to escape the clutches of loan sharks with whom they had the misfortune to deal. The courts have in recent years seen enough of the evils and ills of loan-sharking to become fixed with a duty to combat the same by penalties heavier than those generally imposed in the past."

9. Lui Sau-cheong was a far graver case with very different facts to the one presently being considered. It involved one victim who worked as a prostitute. When she could not make repayment of the loans she had taken, her whereabouts were discovered. She was falsely imprisoned and she was then given the choice of repaying the sum owed, which was far beyond her means, or working as a prostitute under the defendant's control. The three money lending charges resulted in sentences of nine months' imprisonment, to run concurrently on each. That sentence was made consecutive to four years' imprisonment on the more serious charge of false imprisonment.

10. In the present case, the trial Judge passed consecutive sentences of nine months on Counts 8 to 11, making the sentences on Charges 12 to 14, 16 to 18 and 21, all concurrent.

Conclusion

11. In light of the matters considered, including, in particular, the nature of the present offences and the fact that the Judge took into account that these were specimen offences only, we feel that the sentence was too long. In those circumstances, what we propose to do is to give leave to appeal and, treating this hearing as the appeal, to make concurrent orders of 12 months' imprisonment on each count, with the result that the sentence is reduced from three years' imprisonment to one year's imprisonment.

Grounds of appeal on taxed costs

12. There remains the question of the taxed costs which the Judge ordered should be paid in full by D1. Mr Chan has made two points of considerable substance. Firstly, he submits, this was a prosecution of two Defendants and whilst they were closely linked, it was, he says, wrong in principle for D1 to be ordered to pay the whole of the costs. Secondly, on a number of charges, D1 and D2 were acquitted and the result therefore is that the Defendants were entitled to say that they were justified in contesting some of the offences.

13. In this case, the prosecution had put the defence on notice that they would be asking for costs. During the course of the mitigation, Counsel for D1 very properly and very straightforwardly and candidly informed the Court that some of the information in the Probation Report was not entirely accurate. The Probation Report indicated that D1 was heavily in debt as a result, amongst other things, of his gambling. Mr Paul Kwong, D1's representative in the District Court, made it plain that D1 was certainly not penniless and was able, should the Court see fit to impose a fine, to pay a financial penalty.

14. The result today is that the costs have been properly assessed and we are informed, and accept from Mr Chapman, that they amount to $230,000 which appears to us to be a modest sum for a trial that had occupied 20 days in the District Court. Other matters have been argued, but we are quite satisfied that the Judge was right in exercising his discretion in principle to make an award of costs. However, for the reasons that we have already outlined, we do not believe it was right that the whole of the costs in the circumstances here should have been awarded against D1.

Conclusion

15. Having regard to the circumstances, we feel that justice will be done if we quash the original order for the whole of the costs and make an order in its place that this Applicant pays $100,000 towards the costs of the prosecution. To that extent on this aspect of the application, again the appeal succeeds.