SECRETARY FOR JUSTICE v. YAU ON PAWN SHOP LTD AND ANOTHER

DCMP 625/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 625 OF 2010

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D E C I S I O N

1.  The Secretary for Justice, on behalf of the police, took out interpleading proceedings for the purpose of determining the proper disposal of the 2 gold necklaces that had been stolen from a shop of Chow Sang Sang (the 2^nd Claimant) and subsequently pawned to Yau On (the 1^st Claimant) in 2009. Essentially this court had to decide whether and, if yes, on what terms an order should be made in the circumstances of this case pursuant to the court’s discretion under section 23 of the Pawnbrokers Ordinance.

2.  After hearing evidence and submissions, I handed down my judgment on 5 July 2010 (“the Judgment”). I ordered for the return of the necklaces to Chow Sang Sang upon its payment to Yau half of the pawn value.  I ordered that both claimants should pay the costs of the Secretary for Justice in these proceedings in equal shares.  Between the claimants, I made a nisi order that they bear their own costs of these proceedings; and the nisi order shall become absolute in 14 days.

3.  On 13 July 2010, Chow Sang Sang took out its summons to vary the nisi order as to costs.  On the following day, Yau On took out its summons for leave to appeal against the Judgment.

Chow Sang Sang’s summons

4.  Chow Sang Sang referred to its without prejudice written offer dated 22 April 2010 to Yau On.  Yau On had until 27 April 2010 to accept the offer.  This never happened. Eventually, the terms offered by Chow Sang Sang turned out to be similar to those of the Judgment.  Chow Sang Sang therefore asks that the costs order nisi be varied to the extent that Yau On should pay Chow Sang Sang’s costs of these proceedings since 28 April 2010.

5.  Mr Tang submitted that Chow Sang Sang was no different from his client because both parties sought to attribute more blame to each other during the hearing.  I disagree.  Had Yau On accepted the offer by Chow Sang Sang, the contest would not have proceeded and the incidental hearings would have been saved.  On the basis of the Judgment, I would grant an order to vary the costs order nisi as prayed for.

Yau On’s summons

6.  But Yau On seeks to appeal against the Judgment.  Leave to appeal shall not be granted unless there is a reasonable prospect of success in the intended appeal or there are issues that should in the interest of justice be heard by the appellate court: section 63A(2) of the District Court Ordinance.  Yau On relies on both limbs of the test.

Grounds (a) and (d)

7.  Grounds (a) and (d) could be combined for consideration.  Essentially, it is argued that Chow Sang Sang was demonstrably more culpable than Yau On in enabling the unlawful pawning in the present case.  Hence this court’s apportionment of blame is said to be erroneous.  It is also said that question of blame in relation to the unlawful pawning of the 2 necklaces respectively should receive different consideration.

8.  Mr Tang repeated the arguments advanced during the last hearing.  He maintained that Chow Sang Sang could and should have put in place a system that would have enabled the shop to prevent the theft, the swap, the retrieval of the stolen necklaces from the shop and/or to discover the crime sooner.

9.  As explained in the Judgment (para.24), the court should hesitate before condemning any employer’s system without first investigating and understanding the system; and secondly having evidence as to how and why a different system would have operated and should have been installed by a hypothetical reasonable employer in that line of business.   The alternative system would have to be effective (perhaps in the manner submitted by Yau On) and at the same time reasonably practicable in the circumstances prevailing at the material time.  Evidence of such a system is lacking (paras.25 to 27 of the Judgment).

10.  This court adopted similar approach towards considering the system of Yau On and its effectiveness in preventing the acceptance of unlawful pawn.  This court, as Mr Tang expected, had to understand the circumstances surrounding the pawnshop at the material time as well (paras.33 to 39* of the Judgment).

11.  Mr Tang acknowledged that once retrieved from the shop, the stolen properties could well be pawned in no time before report could be made to the police and notice be given to pawnshops like Yau On.  Mr Chan also pointed out that even assuming that more frequent detailed stock check could be carried out, the process would still have taken time during which such crime could still have been committed without being detected, and hence the unlawful pawning.

12.  All these reflect that one can really assess the effectiveness of the any system only by reference to reasonableness, not perfection.  At the end of the day, I am not convinced that the appellate court would easily interfere with this court’s conclusion on the parties’ respective responsibility towards the unlawful pawning in the circumstances of the present case and the exercise of discretion under section 23 of the Ordinance (paras.40 to 41 of the Judgment).  Likewise, I am not satisfied that the (factual) basis for treating the question of responsibility towards the unlawful pawning of the 2 necklaces differently is established.

Grounds (b) and (c)

13.  Grounds (b) and (c) relate to the 1998 case of Legrand Jewellery (MFG) v Wo Fung Pawnshop (a firm) & Ors [1988] 2 HKLR 326 that both parties relied on at the hearing.  It is said that the case is distinguishable from the present case. It is also said that a definitive ruling on section 23 of the Pawnbrokers Ordinance is called for.

14.  This court did acknowledge the distinction between the Legrand Jewellery case and the present case (paras.32-35; 38-39 of the Judgment).  The distinguishing features could well be referred to as advantageous to the evaluation of Yau On’s case.

15.  By a definitive ruling on section 23 of the Ordinance, Mr Tang submitted that what he meant was some more definitive guidelines by the Court of Appeal as to how the various factors underlying the discretion should be evaluated in relation to the meaning and apportionment of fault and the loss and damage when it comes to other similar situations, especially when it is discovered that the security system implemented by the jewellers is actually ineffective in preventing illegal pawning.

16.  I am not convinced that what Mr Tang submitted amounts to a new point that the Court of Appeal was yet to consider in Legrand Jewellery.  Within the existing statutory framework, the question is always one of evaluating the respective responsibility of the property owner (be it jeweller or not) and the pawnbroker in enabling the unlawful pawning to happen in the circumstances of the case; and upon that, the apportionment of the loss and damage.  Each case has to be decided on its own facts.

17.  I am not satisfied that the matter can go further on either of the grounds under section 63A(2).

Stay of execution

18.  In view of the above conclusion, there is no need to rule on the application for stay of execution. Even assuming that leave to appeal were granted, I would not have granted the stay of execution.

19.  First, the fact that the Judgment is subject to appeal would not have entitled Yau On to stay of execution.  Secondly, there is no reason why execution of the monetary judgment and the costs order against Yau On need to be stayed pending the appeal.  There is hardly any question of the appeal being rendered nugatory in the absence of the stay.  Nor is there any suggestion that Chow Sang Sang would be unable to satisfy an adverse order in the event that the appeal by Yau On succeeds.

Order

20.  I refuse to give leave.  The application for leave to appeal is dismissed with costs to Chow Sang Sang.  Costs shall be taxed, if not agreed, with certificate for counsel.

21.  The order nisi as to costs between the claimants made on 5 July 2010 is now varied and made absolute as follows:

(1) There be no order as to costs of these proceedings between Yau On and Chow Sang Sang up to 27 April 2010;

(2) Yau On do pay Chow Sang Sang’s costs of these proceedings from 28 April 2010 including the costs of the application to vary the costs order nisi, to be taxed, if not agreed, with certificate for counsel.

* The word “where” in the last sentence of para.38 of the Judgment should read “whether” instead.