HKSAR v. WONG KA CHI & ANOTHER

HCMA 1063/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 1063 OF 2002

(ON APPEAL FROM ESCC 2814/2002)

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REASONS FOR JUDGMENT

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Introduction

1. Both Appellants pleaded guilty to a charge of Conspiracy to possess equipment for making false instruments, contrary to section 76(1), 159A and 159C of the Crimes Ordinance, Cap. 200. They were each sentenced to 16 months imprisonment. They both now appeal against sentence.

Summary of Facts

2. The fact disclosed that between 16 May 2002 and 26 May 2002 a total of 3 sets bona fide credit card data were compromised at Baby Blue Bar and Cafè("Baby Blue"). Counterfeit credit cards of those accounts were subsequently uttered in retail outlets in Hong Kong causing a loss of HK$110,386 to three local banks.

3. In May 2002 someone called Simon Tam approached the 1st Appellant and asked him to capture 200 sets of card data for a reward of $100,000. The 1st Appellant, while ignoring this suggestion, nevertheless related the same to 2nd Appellant. The 2nd Appellant was then working as a waiter at Baby Blue. On two occasions thereafter, Simon Tam gave two electronic devices "skimmer" to 1st Appellant who in turn passed them to the 2nd Appellant. One of these skimmers was labelled especially used for capturing platinum credit card data. The 1st Appellant also taught the 2nd Appellant how to use the skimmers to capture card data. Both 1st and 2nd Appellants admitted their involvement under caution. They admitted they knew the captured card data would be used to make counterfeit credit cards. The 1st Appellant also admitted having returned the two skimmers to Simon Tam in late May but he failed to receive any reward from Simon Tam, having lost contact with him later.

4. Skimming is defined as the compromise of the full magnetic strip data encoded in a genuine credit card, followed by the transfer of the data by computer and encode onto a magnetic strip of a counterfeit credit card for fraudulent use.

Grounds of Appeal

5. Mr Lo, counsel for both Appellants, advanced the following grounds:-

Firstly, the learned Magistrate erred in taking 24 months' imprisonment as the starting point in sentencing both the 1st and 2nd Appellants:-

(a) The learned Magistrate wrongly emphasized that the possession and use of equipment for making counterfeit credit cards was "an even more serious offence" than offences involving forged or counterfeit credit cards or the misuse of other persons' credit cards. The maximum penalty for both types of offences is the same (14 years' imprisonment on coviction on indictment).

(b) In assessing the seriousness of the joint offence that the 1st Appellant admitted, the learned Magistrate failed to take into account, or failed to take into account sufficiently, the facts that -

(i) both Appellants were merely "cogs in the wheel" in the operation of the co-conspirator Simon;

(ii) they obtained no financial benefit from the conspiracy;

(iii) the scale of the conspiracy was relatively small (involving the compromise of three sets of credit card details over a period of one month);

(iv) the skimmers provided by the co-conspirator Simon were returned and the compromise of the sets of credit card data was discovered, thus closing the conspiracy and making the potential for further losses highly unlikely;

(v) all losses were local and there was no international dimension.

(c) The learned Magistrate appeared to have placed the actual loss suffered by local banks to be the most significant factor in assessing the punishment for the joint offence. Given the factors adumbrated in (b) above, the learned Magistrate erred in giving the actual loss such prominent significance. It is submitted that the factors of "cog in the wheel" and lack of financial benefit should be more significant than actual loss. See R v Chan Sui To & Anor [1996] 2 HKCLR 128, CA.

(d) In assessing the seriousness of the joint offence that the both Appellants admitted, the learned Magistrate wrongly emphasized that one of the skimmers supplied by the co-conspirator Simon was configured to compromise data from platinum credit cards, when there was no evidence before the court that in fact platinum credit card data had been compromised and the fact was that the conspiracy was closed before the arrest of both Appellants with the return of the skimmers.

(e) The learned Magistrate failed to consider the following relevant cases: HKSAR v Ma Chor Yu (unreported, 16 December 1999, HCMA 608/1999), where Nguyen J indicated that 15months' imprisonment may be an appropriate starting point for a charge of conspiracy to use false instruments; HKSAR v Chan Cho Hei Joe (unreported, 14 June 2000, HCMA 274/2000), where Gall J indicated that 18 months' imprisonment may be an appropriate starting point for a charge of conspiracy to defraud involving counterfeit credit cards; and HKSAR v Chu Chun Man (unreported, 16 May 2002, HCMA 350/2002) Deputy Judge McMahon, approving 18 months' starting point.

6. Secondly, the learned Magistrate wrongly considered that a community service order was a manifestly inadequate penalty in the case of the 1st Appellant and the 2nd Appellant. Both Appellants satisfied in substantial terms the criteria set out in the case of R v Brown (1981) 3 Cr App R (S) 294 (and considered in HKSAR v Chov Yau Pun (unreported, 24 June 2002, HCMA 450/2002)) for community service order. Community service order may be applied to deal with offences related to fraudulent use of credit cards in exceptional circumstances: R v Jackson & Jackson (1992) 13 Cr App R (S) 22. The 1st Appellant committed the joint offence not for personal gain and in fact did not gain anything out of the conspiracy. The 2nd Appellant, though motivated by greed did not in fact get anything out of the conspiracy. Mr Lo submitted that a community service order was an appropriate and suitable option for sentence in the case of the 1st Appellant and 2nd Appellant.

7. Thirdly, the learned Magistrate erred in not considering the option of imposing a suspended term of imprisonment on the 1st Appellant/ 2nd Appellant.

8. Mr Lo submitted that the sentence of 16 months' imprisonment imposed upon the 1st Appellant and 2nd Appellant for the joint offence was in all the circumstances of the case manifestly excessive.

Additional ground advanced on behalf of 2nd Appellant

9. Mr Lo said that the learned Magistrate erred in not giving the 2nd Appellant further discount in sentencing for his assistance given to the ICAC in effecting the prompt arrest of the 1st Appellant.

Respondent's Response

10. Ms Leung, on behalf of the Respondent, made the following response:-

(i) As to the Appellants' claim that their acts were "transient and peripheral" and the Magistrate failed to consider that their roles were only minor, the Magistrate had considered their roles, especially that of the 1st Appellant, but did not accept that their roles were minor.

(ii) The Appellants complained that the Magistrate had erred in taking the actual loss suffered by local banks ($110,386) and the platinum card skimmer as significant factors in sentencing. It is correct that the sum of money involved is only one of the factors to be taken into account. In fact, the acts of the Appellants could cause potential losses which could be far more than $100,000 and the potential losses is a more important consideration. She referred to HKSAR v NG Swee-thiam & others [2000] 1 HKLRD 772 and HKSAR v CHEUNG Ka-wo Johnny CACC 136/2001 for my consideration. Further, she submitted that although there was no evidence of any actual loss caused by the skimmer marked for platinum credit data, the potential loss could be huge.

(iii) The Appellants complained that the Magistrate erred in emphasizing that the possession and use of equipment for making false credit cards (i.e. skimmers) was "an even more serious offence than offences involving forged or counterfeit credit cards or the misuse of other persons' credit cards". The Court of Appeal in CHAN Sui-to set down various factors for the sentencing court to consider. These factors include "the planning that had gone into perpetrating the fraud ... whether technical skills were used, and to what extent". Ms Leung submitted that the capturing credit card data by skimmers required technical skill and the special opportunity of handling credit card payments, making such act more serious.

(iv) As to the appropriateness of a community service order, Ms Leung submitted that while a community service order might be appropriate to the circumstances of the Appellants, there remains the question of whether such an order would be appropriate to the circumstances of the offence. She referred to HKSAR v WONG Yiu-kuen [2000] 1 HKLRD 712 at PP 718A. She submitted deterrence is an important factor during sentencing credit card fraud offenders: see HKSAR v YAU Wai-chun CACC 417/2000 and HKSAR v CHEUNG Ka-wo Johnny CACC 136/2001. Ms Leung submitted that the 2nd Appellant's conduct had betrayed the trust of his employer and customers who entrusted him to handled the credit card payments. Thus immediate custodial sentence is more appropriate for serving the deterrence purpose: see HKSAR v CHOY Yau-pun [2002] 3 HKLRD 156.

(v) As to the issue on suspended sentence, Ms Leung submitted that suspended sentence is justified only in "exceptional circumstances". What amounted to 'exceptional circumstances' would depend on the facts of each case. Good character, youth and an early plea, taken on their own or in combination, were not exceptional circumstances justifying a suspended sentence, since they were common features of many cases and hence could not be characterised as ' exceptional'. The circumstances of both Appellants are not 'exceptional'.see Okinikan [1993] 1 WLR 173.

(vi) Regarding the Appellants' complaint that the Magistrate erred in adopting 2 years as the starting point, Ms Leung, with reference to HKSAR v LIU Bing-kin and others CACC 622/1997, submitted that the roles of Appellants were similar to the 8th Defendant therein, 2 years as the starting point is not wrong.

(vii) Finally, the 2nd Appellant complained that his assistance leading to the arrest of the 1st Appellant should be given a further discount. Ms Leung agreed that assistance rendered by the 2nd Appellant to the ICAC had been raised the 2nd Appellant's in mitigation and that the learned Magistrate in neither his verbal nor written reasons for sentence made any reference to the assistance factor.

11. Ms Leung submitted that for the 1st Appellant, the sentence imposed was not wrong in principle nor manifestly excessive. As to the 2nd Appellant, the Court might have to assess the value of the assistance that he had rendered.

Judgment

12. The learned Magistrate is a Principal Magistrate with vast experience. At the time of the hearing, he adjourned the matter so that he could consider the appropriate sentences. He is fully entitled to take the view that the roles taken by both Appellants were not transient and peripheral. Although the 1st Appellant did not actually use the 'skimmer' I am in total agreement with the learned Magistrate when he made no differentiation between the role taken by the 1st and 2nd Appellants. Without the 1st Appellant informing the 2nd Appellant about the offer made by Simon Tam; the 1st Appellant bringing the two skimmers to the 2nd Appellant; and, more importantly, teaching the 2nd Appellant how to use them, the 2nd Appellant might not have been able to capture credit card data of customers who patronised Baby Blue.

13. Whilst on the facts the 1st Appellant did not receive any reward, in his caution statement he said that he failed to receive any reward as he lost contact with Simon Tam. That is quite different from Mr Lo's assertion that 1st Appellant did what he did for no financial gain. In any event, it defies logic why the 1st Appellant did what he did if no financial gain was expected. The 1st Appellant heard the facts being read out, he knew the contents of the cautioned statement. If there was never any offer of financial gain from Simon Tam, one would have expected that to be made clear to the learned Magistrate.

14. As to the complaint that there was no evidence to show that in fact platinum cards data had been compromised, I am of the view that the learned Magistrate is entitled to take into consideration that one of the skimmers were specifically set up to retrieve information from platinum credit cards. It is common knowledge that the credit limit of a Platinum credit card is higher than an ordinary credit card.

15. I am also in total agreement with the learned Magistrate to treat the planning and making of counterfeit credit card, particularly one with data from genuine credit card holders, more serious than one using forged or counterfeit cards. The former required a certain amount of technical knowledge and skill. The capturing and subsequent use of genuine data, as opposed to/compared with totally fabricated data, make it more difficult for such crime to be detected.

16. Having considered the submissions of both Mr Lo and Ms Leung, I am in complete agreement with Ms Leung. On the record before me the learned Magistrate was correct in reaching the conclusion that the offence was serious, and that no differentiation should be made as between the two Appellants in their roles. Having considered the authorities submitted, in particular the Court of Appeal decision in HKSAR v Liu Bing-kin (supra), I cannot see how it could be said that a starting point of 2 years was manifestly excessive.

17. The learned Magistrate was fully aware of the fact that both Appellants were of clear record, and that they were both considered suitable for community service order. He was of the view that the offence was serious, that credit card fraud was extremely prevalent, and that immediate custodial sentence would have the deterrent effect the gravity of the offence required. Although Mr Lo referred me to the case of HKSAR v Chan Yuk Kwan CACC 26/2001 in which the wife of the appellant therein was sentenced to a community service order when she made photocopies of Identity Cards from clients in her Estate Agent Business, that is not an authority to say that community service order is appropriate in the present case. In any event, the extent of involvement by both Appellants here are much more than that of the wife of the other Appellant. Credit card frauds are serious and prevalent. Deterrent sentence is called for even in case of a first offender, particular where genuine credit card data from customers patronising a restaurant is captured to make counterfeit cards. The 2nd Appellant had breached the trust placed on him.

18. I see no merits in the submission that both Appellants should be given either community service order or a suspended sentence.

19. The only valid ground of appeal concerns the 2nd Appellant. Indeed the learned Magistrate had failed to give the 2nd Appellant the appropriate discount in view of the assistance he gave to the ICAC. But for the information given by the 2nd Appellant, the 1st Appellant might not have been apprehended; or, at any rate, not as expeditiously. Having considered the matter I am of the view that a further discount of one month is appropriate. The appeal of the 1st Appellant is dismissed. The appeal of the 2nd Appellant is allowed, the sentence of 16 months is quashed, to be substituted by one of 15 months.