HKSAR v. TSANG CHIN CHIU AND ANOTHER

HCMA356/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO.356 OF 2002

(ON APPEAL FROM ESCC 3929 OF 2001)

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J U D G M E N T

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1. After his trial before a magistrate sitting in the Eastern Magistracy, the 1st appellant was convicted of one charge of breach of licence condition, contrary to section 46(1) of the Dutiable Commodities Ordinance, Cap.109. At the material time the 1st appellant is the holder of a liquor licence in respect of the premises known as Club Los Curros II, situated in Pennington Street in Wanchai. The 2nd appellant, Noble Knight Development Ltd ("the Company") is the owner of the business being carried out on the premises under the name of the club. The Company was not charged with any offence in the court below.

2. Condition 6 of the club liquor licence provides that the licensee shall not permit any person to occupy or use any portion of the club premises for any immoral or illegal purpose. The 1st appellant was found to be in breach of this condition.

3. At the conclusion of the trial, the magistrate further ordered that the sum of $27,233.30 seized by the police at the club premises be forfeited pursuant to section 102 of the Criminal Procedure Ordinance.

4. This is an appeal by the 1st appellant against his conviction and by the 2nd appellant against the forfeiture order.

5. The circumstances giving rise to the prosecution was that during the night of 14 July 2001, two police officers were instructed to go to the club premises posing as customers. They arrived at about 10:05 p.m. and were admitted to the club premises without being checked for their membership status. A male staff of the club nicknamed "Sam" introduced a number of ladies to the police officers and indicated that each lady could provide sex services for $1,000. The police officers accepted the suggestion and eventually a bill was presented for the sum of $4,977 and was settled by marked currency notes. The amount included the price of $2,000 for having sex with two ladies. The two police officers then left together with the ladies and subsequently they alerted the sergeant-in-charge of the operation. As a result, the club premises were raided in the small hours of the following morning. The previously marked currency notes together with cash in the sum of $27,233.30 was seized from the cashier station.

6. At the trial the 1st appellant was represented by Mr Tse who now appears for both appellants in this appeal.

7. In the court below the magistrate was called upon to rule whether the offence under section 46(1) of the Dutiable Commodities Ordinance was one of strict liability. The magistrate fully addressed the evidence of both the prosecution and the defence including the submission of both parties and a number of relevant authorities cited to him and ruled that the offence was one of strict liability. He further ruled that on the true interpretation of the provision, it would be a defence if the defendant could prove on a balance of probabilities that he believed for good and sufficient reason, though erroneously, that there was no breach of the licence conditions. Having so ruled the magistrate carefully considered the evidence of the 1st appellant and found that he was not a credible witness. He found that the 1st appellant had failed to establish, on a balance of probabilities, that he believed for good and sufficient reason that there was no breach of condition 6 of the liquor licence.

8. There are two grounds of appeal advanced by Mr Tse in support of the 1st appellant's appeal against conviction. They are :

(1) the learned magistrate appeared to be biased in favour of the prosecution; and

(2) the learned magistrate did not sufficiently consider the fact that the club was a private members' club when addressing the issue of social concern.

9. On the first ground, it is submitted that the magistrate had descended into the arena by asking questions which were calculated to undermine the credibility of the 1st appellant when he was giving evidence at the trial. Further, such questions were directed at issues which were not raised by either the prosecution or the defence.

10. I have the benefit of reading the transcript of that part of the proceedings. Although the magistrate did ask the 1st appellant a number of questions after re-examination, those questions were not, by nature, calculated to undermine the credibility of the 1st appellant or can they be treated as having the effect of cross-examination. They were, in my view, no more than attempts by the magistrate to clarify the evidence of the 1st appellant.

11. As to the complaint that the magistrate appeared to be biased in favour of the prosecution by tending to disregard the prosecution witnesses' inconsistencies, I find there is absolutely no merit in such a criticism. The magistrate had carefully considered the evidence of both the prosecution and defence and the submissions of both parties. At no time did the defence deny that the immoral activities described by the prosecution witnesses as not having taken place. The defence was one of absence of knowledge and the magistrate found that the 1st appellant had failed to discharge the burden of proof. The magistrate was entitled to his findings and the conviction was wholly consistent with the findings of fact in this case.

12. The second ground of appeal against conviction concerns the issue of social concern. The relevance of this issue lies with the fact that in the light of authorities, courts would be less inclined to construe an offence to be one of strict liability if the offence is not one which falls into this category. Counsel submitted that since the licence premises is a private club, the use and occupation of the licensed premises was available only to a small section of the public. That being the case, it was said, it has only very restricted social implications, if any. The offence is therefore, not one of social concern. The same point had been raised before the trial magistrate and had been succinctly dealt with by him. The magistrate referred to the case of Lim Chin Aik v. R [1963] AC 163 and Sweet v. Parsley [1970] AC 133; both being leading English cases on the subject. The magistrate concluded by observing at paragraph 17 of his Statement of Findings :

" There can, in my view, be no doubt that regulating the use and occupation of licensed premises is concerned with an issue of social concern, namely the protection of public morals. I do not accept Mr Tse's submission that merely because the licence was a club liquor licence, the use and occupation of the licensed premises is not of a social concern."

The magistrate's conclusion on this issue can hardly be criticised.

13. The conviction of the 1st appellant was properly arrived at by the magistrate. It was neither unsafe nor unsatisfactory. The appeal by the 1st appellant against his conviction is dismissed.

14. I would now turn to the appeal by the 2nd appellant against the forfeiture order. Three grounds are advanced by the 2nd appellant and they are :

(1) the learned magistrate failed to ascertain whether the 2nd appellant had any objection to the forfeiture application;

(2) the learned magistrate further failed to give the 2nd appellant an opportunity to adduce evidence and to make submissions in support of its objections; and

(3) the learned magistrate erred in holding that the money was proceed of a crime.

15. The subject matter of the forfeiture order was cash $27,233.30. The sum of money was seized by the police from the cashier drawer at the premises. At the conclusion of the trial the prosecution applied for forfeiture of a number of exhibits including the cash seized.

16. The magistrate conducted a brief enquiry at the end of which he was satisfied that the cash were proceeds of a crime and pursuant to section 102 of the Criminal Procedure Ordinance, ordered that the sum be forfeited. He found as a fact that sexual services were offered for money in the club premises and that liquor was supplied to persons who were not club members in breach of the licence conditions. At the commencement of the enquiry Mr Tse alerted the magistrate to the fact the club owner was not present and in any event, the owner should be given an opportunity to be heard and to present his case before the issue was decided. Nevertheless, the magistrate proceeded with the enquiry and at paragraph 6 of the Reasons for his forfeiture order he said :

"The evidence did not reveal who the actual owner of the club was. There was a change in the shareholding but this apparently had not been completed. There was also an apparent change in the name of the club from Club Los Curros II to Za Za Karaoke. Whilst I had no representations from the apparent owner I was satisfied that Mr Tse on his 'instructions' had submitted all that could be said to oppose the application. I was satisfied the money came into possession of the police within the provisions of section 102 and accordingly ordered the money to be forfeited."

17. It may well be that the money forfeited were the proceeds of a crime but it would have been readily apparent to the magistrate that Mr Tse was not representing the owner of the club. It is therefore not open to him to make the finding that Mr Tse "had submitted all that could be said to oppose the application". The fact remained that the company might have a valid objection to the forfeiture application but they were neither present nor represented at the forfeiture application.

18. It is a principle of our law that a party to the proceedings ought to be given an opportunity to be heard. Although the company had not been charged with any offence, this is not a case where its identity was not ascertainable. With respect to the magistrate, the correct approach would have been to have the application for forfeiture adjourned, the identity of the owner ascertained, so that an opportunity could be afforded to the company to present its case if so wished. It might have been that at the end of the day a forfeiture order would have been made in any event. This is a clear breach in the rules of natural justice and as such the forfeiture order has been rendered unsafe and unsatisfactory.

19. In view of the fresh evidence admitted by consent of the parties at the commencement of this appeal, I am of the view that no useful purpose would be served even if I were to remit the case to the learned magistrate for a new hearing. The appeal by the 2nd appellant against the forfeiture order is allowed. The amount forfeited is to be returned to the rightful owner.