HKSAR v. FUNG YEE MAN

[English Translation – 英譯本]
HCMA 376/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(APPELLATE JURISDICTION)

MAGISTRACY APPEAL NO. 376 OF 2003

(ON APPEAL FROM FLCC NO. 2522 OF 2002)

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JUDGMENT

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1. The Appellant was convicted after trial on one count of “failing to make application to the Commissioner of Inland Revenue for registration of business”, contrary to sections 5 and 15(1)(c) of the Business Registration Ordinance, Cap. 310, Laws of Hong Kong (Charge 1), and five counts of “obtaining access to a computer with a view to dishonest gain for himself or another”, contrary to section 161(1)(c) of the Crimes Ordinance, Cap. 200, Laws of Hong Kong (Charges 2 to 6). He now appeals against all the convictions.

Background

2. Charge 1 alleged that, between 1997 and 2000, the Appellant engaged in a business of buying and selling cars but failed to apply to the Commissioner of Inland Revenue for registration of that business. This business of buying and selling cars involved buying dilapidated vehicles from places such as insurance companies, and then repairing the vehicles and selling them.

3. In fact, the Appellant was at the material time a police officer. From 1998 onwards, he worked for the New Territories North Traffic Investigation Division. As he was responsible for handling speeding cases, he was authorized to use a computer system in the police force called VALID III for the purpose of looking up information on offending vehicles and their registered owners. However, the Appellant was found to have accessed the said system on five occasions between December 1999 and March 2001 for personal purposes. This formed the basis of Charges 2 to 6.

4. On the other hand, the Appellant alleged that he bought and sold second-hand cars between 1994 and 2000 because he loved cars and he found that the cars could still be sold for higher than original prices even though they had been used for some time. He therefore kept buying and selling cars in the hope of making profits, but he did not always manage to make a profit, and hence he did not regard what he did as a business. Furthermore, he assessed VALID III he wanted to practise using the system.

5. The above is an outline of the prosecution case and defence case.

The evidence

6. The appeal bundle shows that the evidence being relied on by the prosecution mainly consisted of Exhibits P5 to 8, namely documents provided by the Transport Department or downloaded from VALID III regarding particulars of registration of the relevant cars, as well as records of two videotaped interviews of the Appellant under caution. All the above evidence was adduced by consent of the parties, and the contents of Exhibits P5 to 8 were not in dispute. The Appellant himself also gave evidence at trial.

The statutory provisions

7. The relevant provisions under section 5 of the Business Registration Ordinance are reproduced below:

“5.        Application for registration

(1)        Every person carrying on any business not registered under the provisions of the Business Regulation Ordinance 1952 (14 of 1952), or commencing to carry on any business, or carrying on any business to which this Ordinance is made to apply shall make application to the Commissioner in the manner prescribed for the registration of that business.

(1A)     …

(1B)     …

(2)        An application under subsection (1) shall be made within 1 month of the coming into operation of this Ordinance or of the commencement of such business or of the date on which this Ordinance is made to apply to a business, as the case may be, whichever is the later:

Provided that the Commissioner may extend such period if he sees fit.”

8. The provisions make mention of “carry on” or “carrying on”. “Business” is defined in the interpretation provision of the Ordinance to mean “any form of trade, commerce, craftsmanship, profession, calling or other activity carried on for the purpose of gain”.

9. The relevant provisions under section 161 of the Crimes Ordinance are now set out below:

“161.   Access to computer with criminal or dishonest intent

(1)        Any person who obtains access to a computer ―

…

(c)  with a view to dishonest gain for himself or another; or

…

whether on the same occasion as he obtains such access or on any future occasion, commits an offence and is liable on conviction upon indictment to imprisonment for 5 years.

(2)        For the purposes of subsection (1) “gain” (獲益) and “loss” (損失) are to be construed as extending not only to gain or loss in money or other property, but as extending to any such gain or loss whether temporary or permanent; and ―

(a)  “gain” (獲益) includes a gain by keeping what one has, as well as a gain by getting what one has not; and

(b)  “loss” (損失) includes a loss by not getting what one might get, as well as a loss by parting with what one has.”

Appeal against Charge 1

10. The Appellant’s ground of appeal against Charge 1 is simple. In a word, the Appellant contends that, during the 4-year period in question, the number of vehicles involved in the Appellant’s dealings was not such as to constitute a business which required business registration. The Appellant argues that what he did was analogous to investment activities such as buying and selling real property and stocks.

11. It is very obvious that the term “business” under section 5 of the Business Registration Ordinance is so widely defined that it encompasses the activities of buying second-hand cars, refurbishing them and then selling them for the purpose of gain. Indeed, this was a finding of fact made by the magistrate and has not been disputed by the Appellant.

12. However, under section 5, a business must be “carried on” in order to become registrable, and the term “carry on” obviously connotes a degree of continuity. This is shown by the requirement under section 5(2) that an application for registration must be made within one month of the commencement of the business. As a matter of common sense, a one-off sale and purchase transaction does not constitute “carrying on”.

13. As regards the question of continuity, it can in my view be considered from two perspectives, namely the platform for transactions and the number of transactions.

14. A platform for transactions means a contact point available to customers for conducting business negotiations. This can be a shop, a letterbox, an Internet address, or even a telephone number. If this contact point is open to public and relatively stable, then even where the business has just commenced or where the number of transactions is very small, the business can still be regarded as continuous and hence being carried on.

15. On the other hand, where considerable transactional activities have been maintained, then even if there is no fixed platform for the transactions or even if the business is kept confidential, those activities can still be regarded as continuous and hence being carried on.

16. Between the two scenarios described above, there will of course be a wide spectrum of modes of activities. Therefore, whether a business is being “carried on” must in the end depend on the circumstances of the particular case. Whether at trial or on appeal, neither party provided the court with relevant case law, and without the benefit of such assistance, the above interpretation of the Ordinance is the only one that I am able to arrive at.

17. Applying the above principles to the present case, I am concerned with the rather ambiguous findings of fact by the magistrate.

18. For example, in her Reasons for Verdict, the magistrate said (at page 8):

“I have carefully considered the documents submitted before the court and the Appellant’s admissions in the two records of interviews that he had owned those cars. Having done so, I hold that the cars being owned or having been owned by the Appellant include JF 1917, HH 7353, ET 4010, EU 4693, GM 510, GU 3697, JD 7394, EG 5880, HP 7495 and HE 9089. And when HE 9089 was under the Appellant’s name, its vehicle registration number should have been HA 528.”

19. However, she went on to say (at page 10):

“The Appellant testified that, during the period from 1994 to 2000, he engaged in buying and selling second-hand cars. He purchased dilapidated cars and then repaired them. He said he loved cars and he sold cars for the purpose of making profits. He said he bought and sold 5 to 10 second-hand cars during the said period.

I hold that, of the 10 cars that the Appellant owns or has owned, two were bought in 2001 and are irrelevant to Charge 1. The Appellant said that HH 7353 has been stolen and the loss has been reported. Regarding two other cars EG 5880 and HP 7495, I hold upon the evidence as a whole that they have been disassembled. After consideration, I hold that ET 4010, EU 4693, GM 510, JD 7394 and HA 528 (i.e. HE 9089) have been sold.”

20. This question of “include” or “not include” is by no means insignificant because, according to the records, the Appellant said during the interviews that he “has owned many cars” or “I am not sure how many cars there are under my name, because some of the cars have been crushed and I have not made a report”. This suggested that a large number of cars were involved. In fact, as the magistrate pointed out at page 6 of her Reasons for Verdict, the police had at the videotaped interviews put it to the Appellant that 16 cars had been registered under his name, and although the Appellant did not clearly admitted to it, he said he had some recollection of some of the vehicle registration numbers, i.e. the numbers referred to above.

21. What I mean is that, on all the evidence, the magistrate might have made an irresistible inference that the Appellant had very actively engaged in the sale and purchase of second-hand cars, with frequent transactions and more than 10 cars being involved; but the magistrate had never made this clear. On the contrary, after summarizing the Appellant’s testimony at trial, the magistrate said she held that the Appellant had owned 10 cars. This gives the impression that she had negated the previous proposition of “including” 10 cars, i.e. that more than 10 cars were involved.

22. Furthermore, as the Respondent has fairly pointed out, of the 10 cars that the magistrate referred to, only three (namely HA 528, HH 7353, HP 7495) were registered under the Appellant’s name during the period from 1997 to 2000 (i.e. the period particularized in Charge 1). However, for some unknown reason, the magistrate merely mentioned in the above-cited passage from her Reasons for Verdict that the two cars bought in 2001 were irrelevant to the charge and made no mention whatsoever of, for example, cars bought and sold in 1994.

23. For the above reasons, I am of the view that the magistrate’s findings of fact on Charge 1 are far from clear. Although, as the Respondent has pointed out, the Appellant had admitted that he had put in a lot of effort, vision, money and time in the process and that he had promoted his sales activities by means of advertising in the popular magazine Easyfinder, I still take the view that, no matter what the purpose might have been, the sale within 3 to 4 years of three ordinary cars which were not collectibles did not have the degree of continuity required to constitute “carrying on business” within the meaning of the Ordinance.

Appeal against Charges 2 to 6

24. The Appellant’s grounds of appeal are, firstly, that the prosecution was unable to rebut the allegation that the Appellant accessed VALID III to practise using the system, and therefore the magistrate could not make the same finding or regard the Appellant as “dishonest”; and secondly, the information that the Appellant saw upon access to VALID III on the occasions in question was his personal information which he already knew and never printed out, and the information was open to public, and therefore he had never obtained any “gain”. In short, the Appellant contends that his acts did not have two of the elements needed to establish the offence under section 161(1)(c) of the Crimes Ordinance.

25. The Appellant did not deny that he accessed VALID III at the following times to look up information on the following vehicles:

Date	Time	Vehicle
99.12.23	15:53:21	HH 7353
01.1.4	11:59:03	HH 7353
01.2.21	12:34:05	GU 3697
01.3.14	12:17:04	GU3697
01.1.4	12:00:04	HE9089

These occasions, in the order set out above, formed the particulars of Charges 2 to 6. And as mentioned above, the five cars in question had been owned by the Appellant.

26. Regarding the Appellant’s explanation that he practised using VALID III with the registration numbers of his own cars, the magistrate rejected the explanation only after a thorough analysis. The analysis began on page 14 of the Reasons for Verdict, where the magistrate reiterated the evidence of the Appellant’s supervisor on the operation of the system and the relevant regulations. The magistrate then set out her assessment of the Appellant’s explanation on each charge and the objective circumstances. The analysis did not conclude until page 23 of the Reasons for Verdict. The analysis is detailed and I do not find any fault in the magistrate’s reasoning. Therefore, I should not and cannot interfere with the magistrate’s findings of fact

27. I now turn to the issue of “gain”.

28. As the Respondent has pointed out, at least in respect of GU 3697, Exhibit P5 shows that the Appellant did not become the registered owner of that car until 15:37 on 21 February 2001, but he already accessed VALID III at 12:34 on the same day to look up information (Charge 4). Similarly, Exhibit P5 and the records of interviews show that the Appellant sold HE 9089 on 14 March 1997, but on 4 January 2001 he used the system to check information on that car (Charge 6). Furthermore, as the magistrate pointed out, according to the records of interviews of the Appellant, HH 7353 had never been found since September 1998 when it was stolen, but the Appellant accessed VALID III in relation to that car on two occasions on 23 December 1999 and 4 January 2001 (Charges 2 and 3).

29. As the Respondent has further pointed out, in respect of any car, the Appellant could in fact use VALID III to check the identity of each owner of the car as well as its registration numbers during various time periods, and this went beyond the information that the public could obtain at any time. This is apparent from a comparison of the contents of Exhibit P5 (Certificate of Particulars of Registration of Vehicle issued pursuant to the Road Traffic (Registration and Licensing of Vehicles) Regulations) and Exhibit P8 (information printed out from VALID III). A similar or indirect admission of the same point was made by the Appellant at the videotaped interviews.

30. It can therefore be seen that, whatever the purpose of the Appellant’s personal access to VALID III might have been, the information he obtained was additional and not something he hitherto possessed. The elements of “dishonesty” and “gain” were therefore present. This was no different from that case of Tsui Shui Lun HCMA 723/1988 to which the magistrate referred. The Appellant’s complaint against the magistrate’s verdict cannot be sustained.

Judgment

31. The Appellant’s appeal against Charge 1 is allowed, and his conviction and sentence therefore are set aside. His appeal against Charges 2 to 6 is dismissed.