SECRETARY OF JUSTICE v. LAU HON KEUNG AND OTHERS

   CACC156/2009

   IN THE HIGH COURT OF THE

   HONG KONG SPECIAL ADMINISTRATIVE REGION

   COURT OF APPEAL

   CRIMINAL APPEAL NO. 156 OF 2009

   (ON APPEAL FROM DCCC NO. 1280 OF 2005)

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BETWEEN

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JUDGMENT  AND  REASONS  FOR  JUDGMENT

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Hon Lunn J (giving the judgment and reasons for judgment of the Court) :

1.  The Secretary for Justice appealed by way of case stated against the acquittal of the three respondents at their trial on Charges 2 to 8, following Deputy District Judge Jenkins’s ruling that they had no case to answer on those charges. The questions of law stipulated in the case stated were posed in three questions :

“(a)  FIRSTLY WHETHER I was correct to rule that the conduct of PW1,2,4,5, and 10 had undermined and weakened the evidence to such an extent that a properly directed jury could not properly convict the respondents in respect of charges 2 to 8.

(b)  SECONDLY WHETHER I was correct in dismissing charges 2 to 8 for the reason that there was no case to answer for each of the respondents on these charges.

(c)  THIRDLY WHETHER I had failed to consider the whole of the evidence presented by the prosecution in respect of charges 2 to 8, and, in particular, the evidence that did not concern PW1,2,4,5, and 10.”

2.  At the hearing of the appeal we dismissed the Secretary for Justice’s appeal in respect of the 2^nd and 3^rd respondent’s and reserved our judgment in respect of the 1^st respondent. We indicated that we would give our reasons for so doing in this judgment.

THE CHARGES

3.  The 11 charges concerned four saunas, namely Temple Street Sauna, New Crystal Spa, City Sauna and Princess Sauna. The overall period of time in which the alleged misconduct occurred was from 24 May 2004 to 13 June 2005. By Charge 1 it was alleged that between 24 May 2004 and 13 June 2005 all nine defendants at trial had conspired together to keep a vice establishment known as Temple Street Sauna in Jordan Road, Yaumatei, contrary to sections 139(1)(a), 159A and 159C of the Crimes Ordinance, Cap. 200.

4.  The remaining 10 charges concerned allegations of dealing with property known or reasonably believed to represent proceeds of an indictable offence, contrary to section 25(1) and (3) of the Organized and Serious Crime Ordinance, Cap. 455. Those charges alleged variously against one or more of the 1^st, 2^nd and 3^rd respondents respectively, on various dates within the overall period of alleged misconduct, dealings with monies that had their provenance in the respective saunas : Charges 2 to 4 from the Temple Street Sauna; Charges 5 to 7 from the New Crystal Spa; Charge 8 from the City Sauna and Charges 9 to 11 from the Princess Sauna.

Temple Street Sauna

5.  Charge 2 alleged dealings by the 1^st and 2^nd respondents in monies in the period between 24 May and 20 October 2004; Charge 3 alleged dealings by the 3^rd respondent in the period to 31 May to 30 September 2004; Charge 4 alleged dealings by the 1^st respondent in the period 21 October 2004 to 13 June 2005.

New Crystal Spa

6.  Charge 5 alleged dealings between the 1^st and 2^nd respondents in monies in the period between 24 May and 27 October 2004; Charge 6 alleged dealings by the 3^rd respondent in the period 9 June to 8 September 2004; Charge 7 alleged dealings by the 1^st respondent in the period 28 October 2004 to 13 June 2005.

THE TRIAL

7.  The trial was of extraordinary length, beginning on 17 April 2007 and concluding with the judge’s ruling of “no case to answer” and his consequential verdict of not guilty in respect of all nine accused on 4 February 2008. In all, the court sat on 145 days. The prosecution was the result of a police undercover operation in which PC 53687 (PW1) had been employed in the Temple Street Sauna from May 2004 until the operation went overt with a police raid of the premises of all four saunas on 13 June 2005. He testified of his observations of conduct within the Temple Street Sauna premises in that period, in particular in relation to the various defendants at trial. Four other police officers, DPC 33418 (PW2), SPC 47153 (PW4), PC 17595 (PW5) and Sgt 47251 (PW10) testified of their visits on a total of 56 occasions in and between November 2004 and June 2005 as purported customers to the premises of the four saunas.

8.  On 5 December 2007, at the request of counsel for the 4^th and 6^th defendants at trial, PC 53687 (PW1) was recalled and the issue raised of whether or not there had been conversations during the trial between police officers who were prosecution witnesses at trial in respect of evidence led at the trial. In the lengthy enquiry that ensued into that matter, the defence put to police officers tape recordings and transcripts of what was said to be conversations between police officer prosecution witnesses held in a witness waiting-room outside the court room during the currency of the trial. Madam Ng Wai Bing, the wife of the 4^th defendant, testified that secretly she had caused a tape recorder to be placed in the witness waiting-room specifically in order to obtain a record of the conversations of the police officer prosecution witnesses. Those recordings were made over a period of 47 days beginning on 7 May and concluding on 7 September 2007.

“No case to answer”: submissions

9.  At the close of the prosecution case, counsel for each of the nine defendants submitted that there was no case to answer against any of the defendants on any of the charges. The central thrust of the submissions made on behalf of the defendants was that, in light of the cross-examination of the undercover police officer prosecution witnesses as to their various conversations outside the courtroom during the trial, the evidence of those police officers ought to be disregarded by the court.

“No case to answer”: the judge’s ruling

10.  In his ruling in favour of the submissions of “no case to answer” made on behalf of the nine defendants at the outset the judge adverted to the importance of the evidence of the police officers who had given evidence of their undercover activities in the various saunas :

“It was plain that the prosecution case depended very largely on the evidence of the undercover police officers.”

11.  Of the challenge to their testimony he noted :

“Very broadly the defence suggested that the officers fabricated their evidence to a large degree both as to what happened at the massage parlours, and in the case of the first prosecution witness, the roles played by the various defendants.”

12.  The judge indicated that the concession made by the prosecution that the authenticity of the tape recordings had been established was properly made. However, he noted that the authenticity of the transcript of the conversations recorded in the tapes had not been verified by evidence and he went on to observe that, because of the lack of clarity of parts of the tape recordings, an accurate transcript would be “difficult if not impossible”. Nevertheless, he noted that some of the tape-recorded conversations were clear and that the transcript was likely to be accurate in those instances.

13.  Of the contention made behalf of the defence that part of the tape recordings showed that “evidence was being discussed both by the witnesses and by others in their presence” the judge noted that counsel for the prosecution had conceded that this appeared to be true in the case of DPC 33418 (PW2) and that, in consequence, he had invited the court to disregard the evidence of that witness.

14.  Noting that it was a fundamental principle that witnesses must not discuss their evidence with others, the judge observed that whilst giving their evidence each witness had been specifically directed not to discuss their evidence with others during adjournments. In consequence, he concluded of the five undercover officers :

“I am driven to the conclusion that the witnesses in this case, on whose evidence the prosecution so heavily rely, have ignored that warning and have done what they should not have done.”

15.  Of the content of their conversations, the judge noted that much of it was uncontroversial such that it could not be the subject of any complaint. However, he went on to find :

“But on a number of occasions it is plain that the witnesses were talking about aspects of the evidence that earlier that day had been given or about questions that had been put in cross-examination or questions that might be asked in future.  And the recording of the conversation about Carmen between persons who could only be Daisy, the OC case, and PW 1 as well as others, on 10 May is open to the interpretation that suggestions are being made as to how to answer future cross-examination.”

Nevertheless, the judge went on to find :

“I do not go so far as to say that these witnesses have deliberately got together to fabricate evidence that would falsely implicate the defendants but the fact is that they have discussed specific areas of the evidence despite them knowing that they should not have done so.”

The judge went on to find that each of the five undercover officers had been present in the witness waiting-room on a number of occasions when evidence was discussed.

16.  The judge noted that the prohibition imposed upon the witnesses on discussing their evidence with others was not aimed solely at preventing deliberate fabrication of evidence but was also aimed at preventing the “unconscious or inadvertent contamination of the witnesses evidence”.

17.  Finally, the judge adverted to the fact that on being recalled to give evidence in respect of this issue a number of the undercover officers had testified that they were unable to identify the voices on the tape recordings made in the witness waiting-room. Of that evidence, the judge found :

“It is unbelievable that none of the prosecution witnesses recalled to deal with the recordings were able to recognize any of the voices.”

18.  In the result, the judge concluded of the five undercover police officers :

“… the behaviour of the five essential prosecution witnesses and their credibility is seriously to be questioned … I am led to the conclusion that the conduct of the witnesses undermines and weakens the evidence to such an extent that a properly directed jury could not properly convict.”

Accordingly, the judge ruled in respect of each of the nine defendants and in respect of each of the charges they faced that they had no case to answer.

THE APPELLANT’S SUBMISSIONS

19.  In his written submissions dated 24 March 2010 counsel for the Secretary for Justice, Mr William Tam, made it clear that he no longer challenged :

(i)  the determination as to credibility by the judge of the five undercover police officers, namely PW1, PW2, PW4, PW5, and PW10; and

(ii)  the judge’s ruling of no case to answer in respect of Charges 3, 6 and 8, the latter two charges being against the 3^rd respondent only and Charge 8 being an allegation against the 2^nd and 3^rd respondent’s.

In consequence, the Secretary for Justice had abandoned the appeal in respect of the 3^rd respondent.  The two remaining charges that concerned the 2^nd respondent, namely Charges 2 and 5, were allegations that, together with the 1^st respondent, he dealt with monies that had their provenance respectively in the Temple Street Sauna and the New Crystal Spa in the period May to October 2004.

The prosecution evidence other than that of the five undercover police officer witnesses

20.  It was the nub of Mr Tam’s submission that there was evidence other than that of the police officer undercover prosecution witnesses upon which it was submitted the judge ought to have ruled that the was a case to answer in respect of Charges 2, 4, 5 and 7. In short, Mr Tam relied upon the circumstances obtaining on the premises of the Temple Street Sauna and the New Crystal Spa on 13 June 2007 at the time of the police raids, together with banking evidence of dealings by the 1^st and 2^nd respondents with monies in bank accounts of the two companies that operated the respective saunas.

Temple Street Spa

21.  On the occasion of the police raid of the Temple Street Spa on 13 June 2005, sixteen of eighteen masseurs found on the premises were found to be in possession of unused condoms. A total of 467 unused condoms were found. Most of the masseurs had condoms in both their working bags and in their lockers. Sixteen of the masseurs were found to be in possession of lubricant jelly. Most of them had lubricant jelly in their working bags. A rubbish bag containing a considerable volume of soiled tissue paper, together with a used condom and opened condom packaging was found immediately outside the premises. A note book entitled “Customers’ Complaint Book” containing many pages of entries and a note book entitled “Happy Happy Events Book”, which stipulated it recorded the menstruation cycle of masseurs, containing 1½ pages of entries were found at the Reception desk at the first-floor entrance to the premises. Surveillance cameras on the premises could be accessed by computer in the manager’s office of, inter alia, the New Crystal Spa. Conversely, surveillance cameras installed in the New Crystal Spa premises could be accessed by computer in the manager’s office of Temple Street Sauna.

22.  Of the two notebooks, Mr Tam accepted that there was no evidence as to authorship or as to when the entries had been made. In oral argument he accepted that in those circumstances the entries were not admissible against the respondents as evidence of the truth of the assertions there recorded. Nevertheless, he sought to rely on entries in the “Customer Complaint Book” in respect of complaints in respect of sexual contact with the masseurs. He submitted that the very fact that the management maintained a record of the menstruation periods of masseurs was an indicie that the premises were a vice establishment.

New Crystal Spa

23.  On the occasion of the police raid of the New Crystal Spa premises on 13 June 2005, two boxes of condoms containing 50 packets of condoms were found on a sofa in the rest room of the masseurs. Nearby, next to a television set was found a plastic bag containing a further 31 packets of condoms. Three opened empty condom packages, together with soiled tissue paper, were found in a rubbish bin immediately outside the premises.

BANKING EVIDENCE

Brilliant Day

24.  There was no dispute that Brilliant Day Limited, trading as Temple Street Sauna, operated those premises and that Goldkeep Development Limited, trading as New Crystal Spa, operated those sauna premises. A current account and savings account was opened in the name of Brilliant Day with the Bank of East Asia in April 2003. Any two of the 1^st, 2^nd and 3^rd respondents were authorised to operate the accounts. On 21 October 2004 the 2^nd and 3^rd respondents were removed as authorised signatories. Thereafter, the account could be operated on the signature of either the 1^st respondent or Lau Ming Shum.

Goldkeep Development

25.  A current account in the name of Goldkeep Development Limited was opened with DBS Bank in February 2004. Operation of the account required the signatures of both the 1^st and 2^nd respondents. On 28 October 2004 the second respondent was removed as a signatory and Lau Ming Shum added as a signatory. Thereafter, the account could be operated on the signature of either the 1^st respondent or Lau Ming Shum.

The operation of the bank accounts: 1^st and 2^nd respondents

26.  Of the operation of the Brilliant Day current account with the Bank of East Asia, Mr Tam pointed to the undisputed evidence of Senior Inspector Choi of the Financial Investigations Division that in the period 21 October 2004 to 13 June 2005 (Charge 4) credits were made to the account of over $11 million, of which over $9.3 million was by way of payments by credit cards and EPS sales. Of more significance, he suggested, was the evidence that of the more than $9.8 million withdrawn from the account by a total of 1,455 cheques, 949 cheques each to a value of $2,000 or more to a total value of over $9.5 million were signed by the 1^st respondent.

27.  Finally, Mr Tam pointed to the evidence that in the period 24 May 2004 to 13 June 2005 the 1^st respondent had withdrawn over $2.2 million in cash from that account.

28.  In the earlier period of 24 May to 20 October 2004 (Charge 2) more than $6.5 million was deposited in the account. Of the more than $7.6 million withdrawn by cheque from the account, the 1^st and 2^nd respondents jointly were signatories of cheques to a total value of more than $7.5 million.

29.  Of the operation of the Goldkeep Development account with DBS Bank Senior Inspector Choi calculated that in the period from 28 October 2004 to 13 June 2005 (Charge 7) over $8 million was deposited into the account, the overwhelming majority of which was by way of credit card and EPS sales. The 1^st respondent was the sole signatory of 762 cheques, of a value of $2,000 or more, by which over $7.9 million of the $8.4 million was withdrawn from that accountant in the same period.

30.  In the earlier period of 24 May to 27 October 2004 over $7.2 million was deposited in the account, the majority of which was by way of credit card and EPS sales credits. The 1^st and 2^nd respondents were the joint signatories of the 522 cheques by which over $7.1 million of an overall total of over $7.3 million was withdrawn from the account in the same period.

31.  Finally, Mr Tam pointed to the evidence that in the period 25 May 2004 to 2 June 2005 the 1^st respondent had withdrawn over $1.4 million in cash from that account.

The drawing of inferences

32.  Mr Tam acknowledged that the appellant’s case was at its strongest in respect of the circumstances obtaining at the Temple Street Sauna on 13 June 2005. He submitted that the evidence of possession by almost all of the masseurs of both condoms and lubricant jelly, together with the related evidence, led to the drawing of the irresistible inference that those premises were a vice establishment. He accepted that the evidence in respect of the New Crystal Spa was less compelling but, nevertheless, submitted that it did permit properly of the drawing of the irresistible inference that those premises likewise were operated that day as a vice establishment.

33.  From his primary position that a jury properly directed “could, may or might” draw the inference properly that the two premises were operated as vice establishments on 13 June 2005, Mr Tam submitted that it was permissible to draw the inference that they had been operated in that way in the period prior to that date. He accepted that the longer the period prior to that date that was to be considered, the weaker was the proper drawing of that inference. In particular, he acknowledged that the time periods stipulated in the charges with which the 2^nd respondent was concerned, namely Charges 2 and 5, concluded on 20 and 27 October 2004 respectively, almost 8 months prior to 13 June 2005.

34.  Mr Tam submitted that in the period late October 2004 to 13 June 2005 (Charges 4 and 7) the 1^st respondent had almost exclusive control over the disposal of monies held in the accounts of both Brilliant Day and Goldkeep Development. The sums of monies that he withdrew from those accounts were very significant in value. In the earlier period of May to October 2004, together with the 2^nd respondent, he had been the joint signatory on both accounts in respect of withdrawals to a very significant value. Throughout the whole period of May 2004 to June 2005, he had withdrawn large amounts of money in cash from each of the accounts.

35.  Mr Tam submitted that a jury properly directed “could, may or might” draw the inference properly that the 1^st respondent was part of the “core management” of both companies throughout the period and that, in the earlier period of May to October 2004, the 2^nd respondent occupied the same position. In consequence, so Mr Tam contended, it was to be inferred that as persons involved in the ‘core management’ of the two companies they knew or had reasonable grounds to believe that the monies generated in those businesses, with which monies they dealt, were the proceeds of indictable offence.

THE SUBMISSIONS OF THE RESPONDENTS

36.  In his submission on behalf of the 1^st respondent, Mr Grossman SC, invited this court to dismiss the Secretary for Justice’s appeal. The judge was correct in ruling that the 1^st respondent had no case to answer. He invited this court to regard the judge’s ruling as having been made in the full knowledge and awareness of the ambit of the available evidence, in particular the evidence other than that of the five undercover police officer prosecution witnesses. Those matters had been raised with the judge in the lengthy submissions that had been advanced by counsel for all parties. Whilst he accepted that the judge had made no specific reference to the available evidence other than that of the undercover police officer prosecution witnesses, he submitted that no significance was to be attached thereto. The judge did not have to deal with all the matters that arose. He was entitled to address the matters of significance only.

37.  It was submitted in the written submissions advanced on behalf of the 1^st respondent that the possession by the masseurs of condoms and lubricating jelly, either in their working bags or in their lockers, on the premises of the Temple Street Sauna at the time of the police raid on 13 June 2005, was irrelevant. It was suggested that what the masseurs chose to do in their spare time was not relevant to the prosecution case.

38.  Of the evidential value of the finding of the two notebooks, namely the “Customer Complaint Book” and the “Happy! Happy! Event”, in the Temple Street Sauna on 13 June 2005, Mr Grossman submitted that the statements there recorded were hearsay and of no probative evidential value.

39.  Of the evidence that the 1^st respondent had caused withdrawals of large sums of money from the accounts of Brilliant Day and Goldkeep Development on his signature alone, in the period October 2004 to June 2005 (Charges 4 and 7) and done so jointly with the 2^nd respondent in the period May to October 2004 (Charges 2 and 5) in similarly large amounts of money, Mr Grossman submitted no significance attached. The two businesses were successful legitimate businesses generating significant revenue. The fact that the 1^st respondent withdrew large sums of money in cash from each of the accounts was irrelevant.

40.  Of the issue of the available evidence as to whether or not the 1^st respondent was aware of the circumstances of the operation of the Temple Street Sauna and the New Crystal Spa on or before 13 June 2005, Mr Grossman pointed out that the 1^st respondent was not a shareholder or officer of either Brilliant Day or Goldkeep Development. There was no evidence that he held any managerial position in either company. Whilst it was not disputed that on the signature of the 1^st respondent withdrawals were made by cheque from the two accounts, there was no evidence that he directed those withdrawals let alone that he knew of the circumstances in which the funds deposited into those accounts were generated. It was submitted that the 1^st respondent was “… merely a signatory on the cheques”. He was not on the premises of either sauna at the time of the police raid. On the other hand, it was accepted that there was no dispute that the 1^st respondent “would attend the saunas from time to time to distribute staff salaries”.

Abuse of process

41.  Mr Grossman submitted that in ignoring the judge’s direction that they were not to discuss their evidence with others during adjournments in the trial the police officer undercover prosecution witnesses had “flagrantly disobeyed the court’s instructions”, so that there was an abuse of process. Of that, he submitted that it was “akin to falsifying evidence … to distorting the prosecution case”. Whilst he accepted that no application had been made to the judge for a stay of the proceedings on the basis of an abuse of process, Mr Grossman submitted that it was open to the judge to have dealt with the matter on that basis. Further, that remedy was available to this court.

42.  In the alternative, Mr Grossman submitted that, if this court was against his primary submission and it construed the provisions of section 84(c) of the District Court Ordinance, Cap. 336 as mandatory, in particular that :

“… at the hearing of the appeal… the Court of Appeal shall-

(ii)  reverse the verdict order and direct that the trial be resumed or that the accused be retried as the case may be …”

in making such an order this court ought to indicate to the Secretary for Justice that it was of the view that it would be inappropriate to give effect to that order.  Mr Grossman submitted that approach was appropriate having regard to the fact that the alleged offences were stale and that, in the absence of evidence from the police officer undercover prosecution witnesses at a retrial, the 1^st respondent would be deprived of such parts of their evidence that was favourable to the 1^st respondent.

A CONSIDERATION OF THE SUBMISSIONS

Abuse of process

43.  As noted earlier, no application was made to the judge to stay the proceedings as an abuse of process arising from the misconduct of the police officer undercover prosecution witnesses in defying his direction not to discuss their evidence with others. Clearly, the nub of the submissions made to the judge and accepted by him was that in consequence of that misconduct those witnesses were not credible and not to be relied upon. Thereby, the judge was deploying a remedial power available to him in the conduct of the case in order to achieve a fair trial. It was entirely unnecessary for the judge to consider staying the proceedings.

44.  Mr Grossman’s assertion that the misconduct of the police officer undercover prosecution witnesses was “akin to falsifying evidence” flies in the face of the specific finding made by the judge in his ruling of no case to answer, namely :

“I do not go so far as to say that these witnesses have deliberately got together to fabricate evidence that would falsely implicate the defendants but the fact is that they have discussed specific areas of the evidence despite them knowing that they should not have done so.”

There is no merit in the submission.

The judge’s ruling of no case to answer

45.  Although the judge received both written and oral submissions in respect of the application of no case to answer, the latter for almost an entire week, after which he adjourned from a Friday morning to Monday to deliver his ruling he made no specific mention in his ruling of evidence other than that of the five undercover police officer prosecution witnesses, except for a passing reference to evidence of the operation of the respective company bank accounts by the 1^st, 2^nd and 3^rd respondents. However, of the five police officers he noted : “ … on whose evidence the prosecution so heavily rely”.

46.  As Mr Grossman submitted, it is well established that in delivering a ruling a judge is not required to address each and every item of evidence. What should be and what need not be addressed is always issue-specific and in a case where it is suggested that there is evidence, other than impugned evidence, which permits of a case to answer, one would expect that issue to be addressed.

The Law

47.  There is no dispute that the correct approach to considering a submission of no case to answer in the circumstances obtaining at trial, namely where there was some evidence that the crimes had been committed, are as set out in the judgment of this court by Kempster JA in AG v Li Fook Shiu, Ronald [1990] 1 HKC 1 at 13 B-C :

“(2)  is the evidence of primary facts of a quality permitting a jury to accept it?  If not, the judge will stop the case or discharge the count.  But, if such evidence is of appropriate quality;

(3)  could, may or might a jury properly directed be satisfied beyond reasonable doubt of such inferences as have to be drawn if all the elements of the prosecution case are to be established?  If he concludes that a jury could may or might so be satisfied, he will rule against the submission or application.”

The Temple Street Sauna

48.  At the time of the police raid on the premises of the Temple Street Sauna on 13 June 2005, there was overwhelming evidence that illicit vice activities were being conducted on the premises. Notwithstanding the facade of prohibitions by the management on sexual activity with the masseurs within the premises, the possession at the Temple Street Sauna by so many of the masseurs of both numerous condoms and jelly lubricant in both their working bags and in their lockers speaks eloquently to the contrary. The presence of a used condom, tissues and opened condom packages in the rubbish immediately outside the sauna is supportive of the drawing of that inference. The apparently flagrant way in which management prohibitions, asserted in notices displayed in each of the massage rooms, of sexual activity by the masseurs on the premises were ignored by masseurs is relevant to a consideration of the permissible inferences to be drawn as to awareness by the respondents of the circumstances obtaining in the premises. Although the contents of the two notebooks found at the reception desk of those premises are not admissible as to the truth of the contents, the fact that records were kept of the menstruation cycle of masseurs and of customer complaints against masseurs is consistent with the conduct of illicit vice activities on the premises.

New Crystal Spa

49.  Although the ambit of the evidence of vice activities at the New Crystal Spa on 13 June 2005 is less than that obtaining at the Temple Street sauna, nevertheless the open presence of so many condoms in the restroom available for the masseurs is compelling evidence from which a jury “could, may or might” properly directed draw the inference that at that date those premises were being used for illicit vice activities. Again, the apparently flagrant way in which management prohibitions, asserted in notices displayed in each of the massage rooms, of sexual activity by the masseurs on the premises were ignored by masseurs is relevant to a consideration of the permissible inferences to be drawn as to awareness by the respondents of the circumstances obtaining in the premises.

50.  Evidence of the link between the two premises is relevant to a consideration of not only the nature of the activities being conducted on the respective premises but also in respect of the issue of the awareness in the 1^st respondent of reasonable grounds to believe that the monies generated by those businesses were the proceeds of an indictable offence. As noted earlier, it was possible from the office of the manager in either premises to access the CCTV display in the other premises. Also, it is to be noted that at 13 June 2005 and for many months prior to that date the 1^st respondent by his sole signature was operating the bank accounts of each of the two companies operating the saunas, namely Brilliant Day and Goldkeep Development.

The role of the 1^st respondent

51.  The 1^st respondent’s conduct in signing, as sole signatory, hundreds of cheques to a total value of many millions of dollars drawn on the respective accounts of Brilliant Day and Goldkeep Development in the period October 2004 to 13 June 2005 (Charges 4 and 7) is highly relevant to the issue of the role played by the 1^st respondent in respect of the two saunas operated by those companies, namely Temple Street Sauna and New Crystal Spa. In a period of just less than eight months, he signed 949 cheques to a value of just over $9½ million for Brilliant Day and 522 cheques to a value of over $7 million for Goldkeep Development. Almost $1 million of the amount withdrawn from the bank account of Brilliant Day in that period was withdrawn in cash, whereas almost $400,000 was withdrawn in cash from the bank account of Goldkeep Development. There was no evidence of any other operator of those two accounts during that period. On the face of it, and in the absence of evidence to the contrary, the 1^st respondent was responsible for authorising withdrawals to discharge most, if not all, of the liabilities of the two companies.

52.  It is in that specific context and in light of the evidence as to the activities obtaining in the two premises on 13 June 2005 that a jury properly directed could or might draw the one inference that there were reasonable grounds to believe that the monies were the proceeds of an indictable offence and that the 1^st respondent was aware of those grounds.

Charges 4 and 7

53.  Charges 4 and 7 stipulated periods of time in which the alleged dealing in the proceeds of an indictable crime include 13 June 2007. Cheques drawn on the bank accounts of both Brilliant Day and Goldkeep Development dated in the first half of June 2005 evidence the 1^st respondent’s dealings in the proceeds of the businesses operated at the Temple Street Sauna and the New Crystal Spa and deposited into those bank accounts before and during that period. Clearly, there was ample evidence upon which a jury could be satisfied that illicit vice activities were being conducted on the premises of the two saunas on 13 June 2005. Then, it would be a matter for them to consider whether or not they could properly draw the inference that that activity had been under way prior to that date and for what period. Next, it would be necessary to consider whether there were reasonable grounds to believe that the monies withdrawn from the bank accounts of the two companies on the authority of the 1^st respondent were the proceeds of an indictable offence and, finally, whether the 1^st respondent was aware of those circumstances. We are satisfied that there was available at the trial evidence upon which a jury properly directed “could, may or might” be satisfied beyond reasonable doubt of all those elements of the offences.

CONCLUSION

54.  In the result, we are satisfied that the judge was in error in ruling that there was no case to answer in respect of Charges 4 and 7.

Charges 2 and 5

55.  By contrast, Charges 2 and 5 in which the 1^st and 2^nd respondents were allegedly dealing in the proceeds of an indictable crime stipulate 20 and 27 October 2004 respectively as the end of that conduct. Mr Tam was faint in his suggestions that from the evidence of the activities of the two premises on 13 June 2005 together with the other evidence it could be inferred that illicit vice activities occurred in those premises in the period from May to October 2004. It is to be noted that in October 2004 the 2^nd and 3^rd respondents ceased to be signatories of the bank accounts of Brilliant Day and Goldkeep Development to be replaced by Lau Ming Shum. We are not satisfied that a jury properly directed could properly infer that the illicit vice activities at the two premises were in operation in that earlier time period. For that reason, we were satisfied that the judge was correct in ruling that there was no case to answer in respect of Charges 2 and 5. In consequence, at the hearing we dismissed the Secretary for Justice’s appeal in respect of the 2^nd respondent.

Answer to the question posed in the “Case Stated”

56.  It is common ground that, in light of the concessions made by the appellant before and at the hearing of the appeal, the only remaining relevant question is that posed in Question 2 of the case stated. We answer that question thus :

“The judge was in error in ruling no case to answer in respect of Charges 4 and 7, but not otherwise.”

Consequential Orders

57.  Accordingly, we allow the Secretary of Justice’s appeal in respect of Charges 4 and 7, quash the judge’s order of acquittal in respect of those charges. The judge has retired but there is machinery for his appointment as a deputy judge for the purpose of a specific case. We order that in the event of such an appointment, and his availability for continuation of the trial, the trial be resumed before him but if such an appointment is not made within two months of the date hereof, there be a retrial of the 1^st respondent on Charges 4 and 7. In making the alternative order relating to a retrial, we are mindful that in meeting Mr Grossman’s complaint that, in the absence of evidence from the five undercover police officer witnesses at a retrial, the 1^st respondent would be deprived of evidence helpful to his case, the appellant has undertaken to tender those witnesses at a retrial.