HKSAR v. CHU KAM YIU AND OTHERS

CACC182/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 182 OF 2001

(ON APPEAL FROM DCCC 1162 OF 2000)

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J U D G M E N T

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Hon Leong CJHC (giving the judgment of the Court) :

1. The three defendants were convicted of one charge of conspiracy to engage in bookmaking and each of them was sentenced to 15 months' imprisonment. The 3rd defendant was in addition, convicted of one charge of being the owner knowingly permitted his premises to be used as a gambling establishment and was sentenced to nine months' imprisonment concurrent to the sentence on the conspiracy charge. They now seek leave to appeal against conviction and sentence.

2. The period of the conspiracy alleged is between 26 February 2000 and 21 June 2000 and the particulars relied on by the prosecution are these :

(a) receiving bets on local horse racing;

(b) negotiating bets with other bookmakers;

(c) laying off bets they received to other bookmakers (including one called Ng Kit Lin) as well as the Hong Kong Jockey Club;

(d) settling bets with people who placed bets with them; and

(e) settling bets with other bookmakers (including Ng Kit Lin) as well as the Hong Kong Jockey Club to whom they had laid off bets.

3. Most of the prosecution evidence may be summarised as follows :

4. ICAC officers had been keeping surveillance on the 3rd defendant's premises since September 1999. The 1st and 2nd defendants had been seen visiting the 3rd defendant's premises on a number of racing days. On 21 June 2000, a racing day, shortly after the third race started, ICAC officers raided the premises of the 3rd defendant. The 1st and 2nd defendants were seen throwing pieces of paper from the 3rd defendant's premises. These included a racing booklet and five pieces of paper. The 3rd defendant's fingerprints were found on two of these pieces of paper. The 3rd defendant's premises were searched and ICAC officers seized a booklet, some pieces of paper with figures on them, a calculator, and a mini disc recorder with a mini disc. Three Hang Seng Bank transaction advice slips dated 24 and 27 February 2000 and 16 June 2000 were also seized.

5. ICAC officers also seized some pieces of paper with writings on them from the home and office of the lst defendant and from the office of the 2nd defendant, a mini disc recorder instruction manual and two Hang Seng Bank transaction advice slips dated 8 and 6 June 2000.

6. Four segments of audio recording were subsequently retrieved from the mini disc. The recording was made at the 3rd defendant's premises and it recorded conversations showing that callers rang up the 2nd defendant to place bets on horse racing and the 2nd defendant placed bets with book makers. The callers included one Kwai Chai and one Tony. It is not disputed that all three defendants took part in the conversations. It is also not disputed that all the pieces of paper seized from the premises of the three defendants came from the same source i.e. the booklet found in the 3rd defendant's premises.

7. A prosecution expert on gambling gave evidence that these pieces of paper were betting slips more likely to be records of bookmakers. An expert called by the defence on the other hand said these were more likely to be punters' records.

8. Prosecution witness Ng Kit Lin gave evidence that she was a bookmaker and during the period of the alleged conspiracy, the 2nd defendant and the 3rd defendant had placed bets with her. She said payments for the bets were settled through the Hang Seng Bank as evident by the transaction slips.

9. Only the 2nd defendant gave evidence. The other two defendants remained silent.

10. The essence of the 2nd defendant's evidence is that he placed bets with several bookmakers on behalf of his friends including Kwai Chai and Tony. They rang him up to give him the instructions. Bookmakers would give discounts for bets made but all discounts given were passed back to his friends. When bookmakers considered the risk of a particular bet too high they would not accept the whole amount. In that case, he would go back to his friends for further instructions. He passed all the bets from the callers to the bookmakers though he sometimes added his own bet if he considered the tips were reliable. He earned racing tips for placing bets for his friends. He was not an agent of bookmakers. The papers seized by the ICAC officers were not bookmaking records.

11. The trial judge rejected the evidence of the 2nd defendant and he found the 2nd defendant was accepting bets from the callers and the three defendants were together in the business of accepting bets from the callers and were engaging in bookmaking activities. He also found that the 3rd defendant had permitted his premises to be used for bookmaking. He convicted the defendants of the charges against them.

12. The lst and 2nd defendant's grounds of appeal essentially are the judge failed to consider the element of "by way of trade or business" in the offence of bookmaking and secondly, the judge had failed to consider sufficiently all the material evidence and resolve the differences in evidence, in particular, the judge had improperly rejected the evidence of the 2nd defendant which is supported by the conversation in the mini disc recording and finally the convictions are unsafe and unsatisfactory.

13. The 3rd defendant relies on substantially the same grounds as the lst and 2nd defendants. In addition, he complains that the judge was wrong to have exercised his own expert knowledge on gambling matters in reaching his determination. As regards the 2nd charge, the complaint is the judge was wrong in failing to consider the element that the bookmaker must be in Hong Kong to find that the 3rd defendant allowed his premises to be used for betting

14. The main issue at the trial was whether the three defendants were engaged in bookmaking activities in that they had received, negotiated or settled bets from the callers in the course of trade or business.

15. The judge relied on the mini disc conversations and said this in his reasons for verdict :

" I am aware that the recording may not be complete and they are not in sequence but then from the tone and manner of the telephone conversation ... were clear evidence of the 2nd defendant accepting bets..."

16. He also found that the 2nd defendant had laid off the bets he had accepted to bookmakers and the Hong Kong Jockey Club. The judge concluded that such evidence together with the 2nd defendant's admission that he gave a fixed discount to the callers and the fact that large sums were involved and different people had placed bets, was sufficient for him to find that the three defendants were engaged in bookmaking activities.

17. Section 7 of the Gambling Ordinance (Cap.148) creates the offence of bookmaking which is defined in section 2 as the soliciting, receiving, negotiating or settling of a bet by way of trade or business whether personally or by letter, telephone, telegram or by any other means. Mr Wong, Senior Counsel, for the lst and 2nd defendants submits that in order to show that the defendants were engaged in bookmaking activities, it must be proved that the 2nd defendant accepted bets in the course of trade or business. He submits that the 2nd defendant was only acting as a conduit pipe for the callers because the 2nd defendant had relayed all the bets they placed to book makers and had no personal stake in the bets. Mr Wong submits that the evidence support the contention that the 2nd defendant did not accept the bets. He contends that it was dangerous for the judge to rely on the mini disc recording for his conclusion. The recording, it is submitted, is not a recording of running events and some of it overlapped so that it does not show a genuine picture of the activities during the period covered by the recording.

18. Mr Wong refers to R. v. Gambrell & Ors., (No.2796/B/78, unreported). There, the defendants were charged with conspiracy to evade the payment of general betting duty. One of the defences raised was that the defendants were not accepting bets by the punters but only as conduit pipes for bookmakers.

19. The Court of Appeal followed the definition of a bet in Attorney General v. Luncheon and Sports Club Ltd [1929] AC 400. In that case, the club, admitted to be a bookmaker, operated a totalisator for members, keeping 10 per cent of all stakes. The question was whether the members were betting with the club. Lord Dunedin said at p.406 :

"My Lords, the essence of a bet is that on the determination of an event in one way the first party wins and the second loses; on the determination the other way the first party loses and the second party wins. To induce liability under the statute there must be a bet with a bookmaker. The only bookmaker alleged is the club. Inasmuch as on the determination of the event in question - to wit, whether a certain horse is first or is placed in a race, as the case may be - the club can neither win nor lose, it follows that there is no bet with the only bookmaker alleged. The case for the Crown's claim therefore fails. Quod erat demonstrandum."

20. The Court of Appeal held that the question whether the defendants were bookmakers and were liable for betting duties should be left to the jury.

21. Another case relied on by Mr Wong is Seay v. Eastwood & Anr. [1976] 3 All ER 153 where the House of Lords considered the various elements essential to a bet : an uncertain event, the possibility of loss, the holding of opposite views, and an interest in winning or losing. It held that there would be no bet if the defendant did not stake anything. Accordingly the defendant, who installed machines which customers operated by inserting a coin and pulling the lever and received a payment when a combination was matched, was not a bookmaker. The customer played with stakes provided by other players and not against the defendant who staked nothing.

22. In the Hong Kong case of R. v. Tang Tak Ming, HCMA 760 of 1988 (unreported), Barnes J said in effect that no bet had been placed on the person receiving it if it had been relayed to a bookmaker.

23. Mr Wong submits that the documentary evidence shows conclusively that all the bets made by the callers had been relayed to the bookmakers. And this is demonstrated by the pieces of paper which experts from both sides accepted as records of the bets on the day of the raid on 21 June 2000. The figures there show, Mr Wong submits, that all the bets that had been received by the 2nd defendant were immediately relayed to bookmakers although the 2nd defendant had added some of his own bets to them. Mr Wong also relies on the conversations in the recording to show that a bookmaker had refused to accept a bet relayed to him by the 2nd defendant and the 2nd defendant went back to the caller who eventually agreed to reduce his bet. On discount, Mr Wong argues that the 2nd defendant gave all the discount from the bookmaker to the caller and therefore had no stake in the bet. All these he said show that the 2nd defendant did not accept the bets.

24. Mr Lee for the Department of Justice, while conceding that the documentary evidence essentially showed the 2nd defendant had relayed all the bets to the bookmakers and had given all bookmaker discounts to the callers, submits that there is other evidence showing the 2nd defendant accepted bets. He relies on the recording and the 2nd defendant's evidence that he was responsible to the bookmakers for payment of the bets if the caller did not pay them.

25. He submits that Gambrell decided that a person who ran an agency for placing bets for others and but did not accept bets personally was nevertheless liable for betting duty because there was "a bet made with the bookmaker" within the meaning of that term in the Betting and Gaming Duties Act 1972. This scenario, he says, is different from the present case. As to Seay v. Eastwood, he submits that the case does not affect the ordinary meaning of the word "receive" which should not be interpreted to mean "accept".

26. Mr Lee further argues that profit is not an element to be proved to amount to booking and although book making is a risky business and runs the risk of loss, it is, as any other business, there to make profit. In any case, Mr Lee says, even if the 2nd defendant had passed all the bets to bookmakers, he had nevertheless made a profit in that he obtained good race tips through this process and there is undisputed evidence that the 2nd defendant did win a race and made handsome profit by following the bets of his customers.

27. He finally submits that, even if receiving bet did not amount to accepting bets, the 2nd defendant had at least either negotiated the bets or settled the bets. That would bring him within the definition of bookmaking and guilty of engaging in bookmaking activities.

28. In our view, the question is whether the bets were received by the 2nd defendant in the sense of accepting them as his own so that he would have a stake in it i.e. an interest in winning or losing, or the 2nd defendant was merely acting as a conduit pipe passing the bets on to the bookmakers for the callers.

29. The judge found the 2nd defendant was accepting the bets with a personal stake. The judge had relied substantially on the recording although it is incomplete.

30. Both sides now accept that apart from the four segments retrieved, there are many other unknown segments of recording in the mini disc. These unknown segments are not in sequence and had been written over the retrieved segments. The retrieved segments are also not in sequence and it is difficult to see if there are breaks in them. Therefore the recording cannot be taken as a continuous recording of sequential conversations. To rely on it to exclude the 2nd defendant's case that he passed all bets received to bookmakers would be dangerous.

31. Further, although the recording appears to show callers placing bets with the 2nd defendant and the 2nd defendant had accepted them, the recording also shows there were not many callers and they was not unfamiliar to the 2nd defendant since they did not need to identify themselves. The recording also shows the 2nd defendant was able to apportion the bets placed by the callers. In addition, the documentary evidence shows that all the bets the 2nd defendant received on 21 June 2000 had been passed on to the bookmakers. All these support the 2nd defendant's case. There is no evidence that the 2nd defendant made a profit or suffered loss, or gained commission or discount or otherwise benefited from passing bets to bookmakers. His winnings from his own betting albeit by following the bets of the callers and the racing tips he obtained are not profits or benefits from receiving bets. In these processes, the 2nd defendant had no interest in winning or losing the bet and personal stake was absent. All these are consistent with the 2nd defendant acting as a conduit pipe.

32. It is submitted by Mr Lee that the 2nd defendant acting as a conduit pipe for bet to be placed with bookmaker was nevertheless aiding and abetting bookmaking and he would be liable in bookmaking. But this is not part of the prosecution case to prove the lst charge of conspiracy to bookmaking.

33. Mr Lee also submits that the 2nd defendant was negotiating or settling the bets because the 2nd defendant was responsible to pay the bookmakers if the callers did not pay. We do not accept that argument. As we said earlier, the 2nd defendant made no gain and there was no personal stake. There was no bet until the bookmaker accepted the bets. The 2nd defendant was responsible to see the caller pay the bookmaker when he passed the bet to the bookmaker. When he paid the bookmakers, he was paying in discharge of that duty.

34. In our view, the proof that the 2nd defendant accepted bets in the course of trade or business or he was engaged in bookmaking activities is not beyond reasonable doubt. The finding that there were bookmaking activities in which the three defendants had taken part cannot sustain. The convictions of all three defendants on the lst charge cannot stand.

35. The 2nd charge against the 3rd defendant is under section 15(1)(a) of the Gambling Ordinance, Cap.148, the relevant part of it is as follows :

"15. Responsibility of owners, tenants, et.

(1) No person shall-

(a) being the owner, tenant, occupier ... of any premises ... knowingly permit ... such premises .... to be ... used as a gambling establishment; or

....."

36. "Gambling establishment" under section 2 includes any premises used whether on one or more occasion for the purpose of or in connexion with unlawful gambling or unlawful lottery. All gamblings which include betting are considered to be unlawful unless they come with the provisions of section 3 of the Ordinance. Betting with a bookmaker is an offence under section 8 of the Ordinance.

37. Mr Lee submits that the defendants were undoubtedly gambling unlawfully in the 3rd defendant's premises at least on the day of the raid because they were betting with a bookmaker. The 3rd defendant may not be guilty of the offence of conspiracy to bookmaking, he certainly is guilty of the offence of permitting his premises to be used for unlawful gambling.

38. Mr Christopher Grounds for the 3rd defendant submits that in order to amount to the offence of betting with bookmakers, there must be evidence that the bookmaker is in Hong Kong and in the present case there is no such evidence. Reliance is placed on the Gambling (Amendment) Bill 2000. This Bill seeks to amend the Ordinance in sections 7 and 8 to make it also an offence to bet wholly or partly outside Hong Kong. It is submitted that because there is at present no extraterritorial jurisdiction relating to bookmaking outside Hong Kong, the Bill adds this extraterritorial element to the offence.

39. Mr Lee argues that the locality of the bookmakers is not important as long as the premises of the 3rd defendant had been used for placing bets with bookmakers.

40. In our view, under section 8, betting with a bookmaker in Hong Kong is an offence because bookmaking is prohibited in Hong Kong under section 7. Betting is made when the bet is placed with the bookmaker. Where the bookmaker is outside Hong Kong, no offence is committed in Hong Kong because the bet is made outside Hong Kong. Until the Bill becomes law making betting with overseas bookmakers an offence, to amount to an offence under section 8 there must be proof that the bookmaker is in Hong Kong. In the present case, having regard to the phone numbers of the bookmakers which were recorded in the exhibits, the evidence has not established beyond doubt that the bookmakers were located in Hong Kong.

41. For these reasons, the conviction on the 2nd charge cannot stand.

42. For the reasons given above, we allow the appeal of the three defendants and quash their convictions on the 1st charge and the conviction of the 3rd defendant on the 2nd charge. The sentences are set aside.