HKSAR v. CHAN KWOK SUM

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

1997, No. 678
(Criminal)

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J U D G M E N T

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

1. The Applicant seeks leave to appeal against his conviction for making or possessing equipment for the making of a false instrument contrary to Section 76(1) of the Crimes Ordinance (Cap. 200). He was convicted of this offence after a trial before Deputy Judge CHOW in the District Court. Particulars of the charge read:

"CHAN Kwok-sum, on the 10th day of April 1997, at 2/F, 24 Tung On Street, Yaumatei, Kowloon, in Hong Kong, had in his custody or under his control implements or materials, namely twenty plastic cards bearing the following names and account numbers: 5192 8130 0555 8583 CHEN Pei Lian, 5403 0400 4212 9096 CHEN Pei Lian, 5424 1801 2663 1389 CHEN Pei Lian, 5268 0505 1027 1621 CHEN Pei Lian, 5407 5613 8001 4539 CHEN Pei Lian, 5194 9300 0356 9681 CHEN Pei Lian, 5628 2324 6001 3233 CHEN Pei Lian, 5369 9201 1049 3254 CHEN Pei Lian, 5323 5138 3001 4719 CHEN Pei Lian, 4520 222 224 811 WONG Shing Ki, 4512 209 378 736 WONG Shing Ki, 4907 0702 0008 5107 Derek Anderson, 4500 085 686 330 TONG Chong, 4538 013 478 198 JANG Myung Hye, 4538 013 779 900 SITU Yuling, 4512 203 538 061 SHAO Xiu Lin, 4520 210 783 794 Steven Schachter, 5268 0505 1009 1060 CHEN Pei Lian, 5194 9300 0353 5997 CHEN Pei Lian, 5268 0307 5000 1474 CHEN Pei Lian which to his knowledge were or had been specially designed or adapted for the making of instruments with the intention that he or another would make false instruments and that he or another would use those false instruments to induce somebody to accept them as genuine, and by reason of so accepting them to do or not do some act to his own or another person's prejudice."

2. Section 76(1) of Crime Ordinance reads:

"(1) A person who makes or has in his custody or under his control a machine or implement, or any paper or other material, which to his knowledge is or has been specially designed or adapted for the making of any instrument, with the intention that he or another shall make a false instrument and that he or another shall use that false instrument to induce somebody to accept it as genuine, and by reason of so accepting it to do or not to do some act to his own or any other person's prejudice, commits an offence and is liable on conviction on indictment to imprisonment for 14 years."

3. On the 10th April 1997 the police conducted a raid at premises at 24 Tung On Street, Yaumatei which were occupied by the Applicant. The credit cards or incomplete credit cards referred to in the charge were found and the Applicant made a number of inculpatory statements the admissibility of which was contested at the trial. It is apparent that the main issues which are ventilated on this application relate to the question as to whether the Judge was right to convict the Applicant under Section 76(1) on the evidence which lay before him.

4. Mr. Whitehouse who represented the Applicant does not attempt to argue that the Judge was wrong to admit statements as evidence. He submits that there was insufficient material before the Judge to enable him to draw the adverse inferences he did against the Applicant.

5. There were altogether twenty counterfeit credit cards the subject matter of the charge. The Judge held that eight of the cards did not come within the scope of the conviction. He was however satisfied that twelve of them did.

6. The Judge heard expert evidence concerning the cards. There was undisputed evidence concerning Exhibits 2 - 10 and 28 - 30 that they were counterfeit Mastercard credit cards which had not been encoded with the necessary information on the magnetic strips on the cards.

7. There was however expert evidence that even without the strips being encoded the credit cards could be used to facilitate fraudulent transactions. Mr. Sunny IP, one of the experts gave evidence that there were retail outlets which would effect payment by Mastercard by using the embossed account numbers alone to produce debit slips.

8. In the cautioned statement made by the Applicant, he admitted that he knew that the credit cards which had been found in his possession by the police were forged cards and would be used by himself and an accomplice to make money in Thailand. He did not though admit that he knew that the necessary information had not been encoded upon the magnetic strips.

9. The first three grounds of appeal which are conveniently dealt with together read as follows:

"1. That the Appellant was convicted wrongly of the first charge in the charge sheet, namely of making or possessing equipment for the making of a false instrument, contrary to Section 76(1) of the Crimes Ordinance (Cap 200).

2. That there was no evidence that the alleged implements or materials in his possession, namely a number of forged credit cards were or had been specially designed or adapted for the making of false instruments as alleged. The forged credit cards were completed and ready for use, and accordingly the Appellant should have been charged with the offence of possessing a false instrument, contrary to Section 75 of the Ordinance (Cap 200).

3. Accordingly there was no evidence to convict the Appellant of the offence with which he had been charged."

10. The Judge dealt with the question as to whether the counterfeit cards could be considered under Section 76(1) as a "machine or implement or any paper or other material" in this way.

"The cards in the parcel which appear to be ordinary credit cards are Exhibits 2 to 10. Exhibits 28 to 30 are similar to them. Likewise, they must have been intended to be used together with Exhibits 2 to 10. Once the cards were encoded with information they would become instruments within the meaning of 'instrument' under section 68(1) of the Crimes Ordinance, Cap. 200, which defines 'instrument' to mean -

'(a) any document whether of a formal or informal nature;

(b) any postage stamp or revenue stamp;

(c) any seal or dye; and

(d) any disk, card, tape, microchip, soundtrack, or other device on or in which information is recorded or stored by mechanical, electronic, optical or other means.'

I have no doubt at their present stage, not having been encoded with any information in the magnetic stripes, the counterfeit cards were materials specially designed or adapted for the making of an instrument within the meaning of section 76(1) because they have magnetic stripes for recording or storing information by electronic means. This covers the cards, Exhibits 2 to 10, and Exhibits 28 to 30." (Emphasis supplied.)

11. With respect to the Judge it did not matter whether the counterfeit cards were encoded nor was it incumbent upon him to draw an inference that it was the intention of the Applicant to encode information on the magnetic strips on the cards. There was the evidence which has already been referred to of Mr. Sunny IP to the effect that the cards in their then state were accepted by some outlets who would by using a mechanical imprinting machine obtain an impression of the embossing on the face of the card on a debit slip. This being the case the cards could be regarded as "implements ... specifically designed or adapted for the making of any instrument" such as is contemplated by the section.

12. The only problem which then arises is that the Judge went on to make a finding of fact that it was not the intention of the Applicant to use the cards until the necessary information was encoded on the magnetic strips.

13. The answer to this problem is that it does not matter whether the cards had the information encoded on them or were to be used without that having been done. The Applicant was guilty as charged if the cards were encoded and used or if they were used unencoded to produce debit slips. From his admission it is clear that he intended them to be used in one way or the other. Grounds 4 and 5 are couched in this form:

Ground 4

"The reason why the deputy Judge held that the forged cards were not false instruments was because the magnetic strips had not been encoded. The reason he held they that were "materials etc" was because he inferred that the Appellant would encode the cards with the necessary data. (See pages 61 L-S, 62 F-H and Q-T and 64 L-R). There was however no evidence from which the trial Judge could draw such inference. The only evidence as to what he would do with the cards came from his statements which were admitted in evidence (See Exhibit 42 at page 84). He said he would go to Thailand with Cheng Keung to use the cards. Though at page 59 N-S the trial Judge expressed some doubts about the truth of the statement, he accepted the part about the Appellant going to Thailand to use the cards.

Further there was no evidence that any equipment found or, available to the Appellant to encode the magnetic strip. There was therefore nothing from which he was entitled to draw the inference he did.

Ground 5

Section 83A of Cap 221, applies to the District Court by virtue of Section 83 of the District Court Ordinance (Cap 336). However the Court of Appeal can only substitute a conviction for an offence under Section 75 of Cap 200 if:-

'... on the finding of the (jury) it appears to the Court of Appeal that the (jury) must have been satisfied of facts which proved him guilty of the other offence.'

However, in this case, the trial Judge, as a tribunal of fact playing the role of the jury was not satisfied, despite a defence submission to this effect, that the forged Mastercards were completed cards and therefore forged instruments. This is an essential finding of fact to support a conviction under Section 75 (see pages 62 Q-U and 64 B-L)."

14. As indicated earlier in this judgment, it was not necessary for the Judge to draw the inferences he did.

15. It is however evident that the Judge did proceed on the sole basis of an inference that the cards would be encoded in the future and that he erred in doing so as this was not established by the evidence. The evidence did, however, establish that they were material which could be used to produce either encoded cards or debit slips and the applicant clearly intended that one or other result should occur. This being the case it is necessary for us to exercise the proviso under Section 83(a) of the Criminal Procedure Ordinance. We have no hesitation in doing so. The Applicant was properly convicted under Section 76(1) of the Ordinance. This application is accordingly dismissed.

16. Application for leave to appeal against conviction is granted. Hearing of application is treated as hearing of appeal. The appeal is dismissed.