HKSAR v. KO WAI MAN

DCCC 20/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASENO. 20OF 2010

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BETWEEN

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Reasons for Sentence

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Background

1.  The 1^st Defendant was convicted on 23 June 2010 upon his own guilty plea of the charge of lending money at an effective rate of interest which exceeds 60 per cent per annum, contrary to section 24(1) and (4) of the Money Lenders Ordinance, Cap.163, Laws of Hong Kong.

2.  The Particulars of Offence are:

“KO Wai-man, between late May, 2008 and mid-July, 2009, in Hong Kong, lent a sum of $500 Hong Kong currency to LAM Shing-dor at an effective rate of interest exceeding 60 per cent per annum, namely 720 per cent per annum.”

3.  The facts admitted by the 1^st Defendant reveal that in early April 2008, LAM Shing-dor (“PW1”) was introduced to the 1^st Defendant. In late May 2008, PW1 borrowed HK$500 from the 1^st Defendant. It was agreed that PW1 had to repay a total of HK$800 in a month’s time; otherwise interest would build up. PW1 was unable to repay the debt in time. By the end of August 2008, the 1^st Defendant told PW1 that PW1 had already owed the 1^st Defendant HK$6,400. The 1^st Defendant asked PW1 to hand over PW1’s Bank of China ATM card to the 1^st Defendant and give the 1^st Defendant the PIN number of the ATM card. PW1 complied. Since then, PW1 noticed that someone had been withdrawing HK$1,800 from PW1’s bank account every month. PW1 therefore cancelled the ATM card in June 2009. The effective interest rate of the aforesaid loan made by the 1^st Defendant to PW1 was 720 per cent per annum.

Antecedents of the 1^st Defendant

4.  The 1^st Defendant is not a person of previous good character. He has 10 previous convictions resulting from 8 court appearances, namely five convictions of possession of or trafficking in dangerous drugs, one conviction of blackmail, one conviction of theft, one conviction of fighting in a public place, one conviction of criminal damage and one conviction of wounding or inflicting grievous bodily harm. None of the 1^st Defendant’s previous conviction is similar to the present one. He was last convicted in July 2003. He was last discharged from prison on 2 July 2005.

5.  The 1^st Defendant is now 50 years old. He received education up to primary six level. He used to be a decoration worker but he was unemployed when he was arrested on 13 October 2009 for the present offence.

The Probation Officer’s Background Report cum Community Service Order Suitability Report

6.  According to the Probation Officer’s Background Report cum Community Service Order Suitability Report, Community Service Order is not recommended.

Mitigation

7.  Nothing much was advanced in mitigation except that Mr Sky Cheng for the Defendant submitted three cases to this Court, namely R v Or Lung Yuen CACC 408/1983, R v Wong Tak Chi CAAR 22/1986 and HKSAR v Wong Yuen Chuen HCMA 288/1999. As the first two cases CACC 408/1983 and CAAR 22/1986 were decided prior to 2^nd December 1994 when the new and higher penalties for this kind of case came into effect, I am of the view that these two cases are inapplicable. As to HKSAR v Wong Yuen Chuen, it was a magistracy appeal against conviction, not sentence. Further, the interest rate involved in that case was 327.273% per annum whereas in the present case, the interest rate involved was 720% per annum. I do not consider HKSAR v Wong Yuen Chuen applicable to the present case.

Authorities on sentence

8.  In R v Lui Sau Cheong, CACC 95/1993, the Court of Appeal remarked that the courts had 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. Such remark has been confirmed in subsequent Court of Appeal’s judgments, including R v Chiang Hung Choy and another, CACC 729/1993, and HKSAR v So Tang Fat and another, CACC 183/1997.

9.  In HKSAR v Lee Woon Fai, CACC 366/1998, the defendant was convicted after trial of 11 charges of lending money at an excessive interest rate. The sums lent ranged from $1,000 to $20,000 on each occasion. The effective interest rates per annum were found to be between 120 per cent and 551 per cent. There was no evidence of triad association or of violently reinforced threats for repayment. The Court of Appeal allowed the appeal against sentence, and made concurrent orders of 12 months’ imprisonment on each count.

10.  In HKSAR v Wong Kwok Choi, CACC 636/1998, the applicant was charged with 11 counts of lending money at an excessive interest rate. At the commencement of trial, the applicant pleaded guilty to 1 of the charges. After the prosecution closed its case, the applicant pleaded guilty to all the other 10 charges. Adopting 9 months’ imprisonment as the starting point, the trial judge sentenced the applicant to 5 months’ imprisonment for the offence to which the applicant pleaded guilty at the commencement of trial, and to 6 months’ imprisonment for each of the other offences. The interest rate was 900 per cent per annum and the loan amounts varied from $1,000 to $10,000. The applicant had, over the phone and using foul language, pressed the borrowers for repayment and intimidated them. The applicant had a clear record. The Court of Appeal dismissed the appeal against sentence and affirmed the starting point of 9 months’ imprisonment. In paragraph 26 of the judgment, Mr. Justice Chan, CJHC (as he then was) said:

“26.  From this it can be seen that nowadays loan-sharking is not only a social problem or ‘unattractive exploitation of those in need/a social menace that has to be discouraged’, but is something that can lead to a concatenation of even more serious offences and bring about far-reaching repercussions and undesired consequences upon our society. Those who borrow from loan sharks are simply unable to repay the extortionate interest involved and are prone to commit offences under threat or inducement. For this reason, apart from the Court’s statement in R v Lui Sau-cheong that urged a substantial increase in sentence, the government and legislature are very concerned about the matter and have amended the legislation by drastically increasing the maximum penalties for the offence. In our view, it is necessary to increase the sentence for this type of offence as it poses a genuine social problem and there is a need to combat loan-sharking and forestall the unlawful activities and social unrest that loan-sharking may lead to.”

In paragraph 27 of the judgment, his Lordship cited R v Chu Ka Po, CACC 783/1981 and set out the sentencing considerations for this type of offence. In the middle of paragraph 27, his Lordship said:

“… If the interest charged did not far exceed the statutory maximum, or if the lending was a one-off incident, or if there was no evidence of an organized lending operation, then the sentence will be lighter… In these circumstances, if no other aggravating factors are present, the court may consider imposing a heavy fine, a suspended sentence or even short-term imprisonment. On the other hand, if the lending activities are highly organized or the interest rate exceeds statutory maximum by a wide margin, then even if there are no aggravating factors, the starting point for each offence upon conviction after trial should, in the absence of exceptional circumstances, generally be 9 months to one year…”

11.  In HKSAR v Cheung Wing Lam, CACC 32/2004, the applicant was convicted after trial of twenty charges of lending money at an excessive interest rate. The trial judge took a starting point of 9 months’ imprisonment on each charge, and sentenced the applicant to a total of twenty-seven months’ imprisonment. The amounts lent on each occasion ranged from $3,000 to $10,000. The effective interest rates per annum ranged from between 360% to 685%. The applicant was not a person of previous good character but none of his previous conviction was similar to the offences he was sentenced in that case. On appeal, although the Court of Appeal was of the view that the overall sentence was manifestly excessive, the Court did not disturb the individual sentences of 9 months’ imprisonment. The Court of Appeal substituted the total sentence to 18 months’ imprisonment.

12.  In the present case, the 1^st Defendant was convicted upon his own plea of one single charge of lending money at an excessive interest rate. There is no evidence of triad connection, organized lending operation, use of violence, or intimidation. However, the interest rate was 720% per annum which far exceeded the statutory maximum of 60% per annum. Despite the absence of other aggravating factors, I consider a custodial sentence is required to reflect the seriousness of this type of offence and achieve its deterrent effect. As the amount of loan involved was $500 only, I will adopt a starting point of 7½ months’ imprisonment.

13.  In light of the 1^st Defendant’s guilty plea, I will give him the usual one-third discount thus reducing the sentence to 5 months’ imprisonment. As there are no other remarkable mitigating factors, I sentence the 1^st Defendant to 5 months’ imprisonment.