HKSAR v. FUNG KA CHUN AND ANOTHER

CACC 368/2016

[2018] HKCA 357

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 368 OF 2016

(ON APPEAL FROM DCCC NO 199 OF 2016)

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REASONS FOR JUDGMENT

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1.  The 1^st applicant (D1 at trial) was charged with living on the earnings of prostitution of others, contrary to section 137(1) of the Crimes Ordinance, Cap 200 (Charge 1); while the 2^nd applicant (D2 at trial) was charged with aiding, abetting, counselling and procuring the 1^st applicant’s commission of the offence, contrary to the same provisions and section 89 of the Criminal Procedure Ordinance, Cap 221 (Charge 2)[1]. The applicants both pleaded not guilty to the charges they faced. On 6 October 2016, after a trial before HH Judge Alex Lee (“the judge”) in the District Court, the applicants were convicted on their respective charges. On 10 November 2016, the 1^st applicant was sentenced to 240 hours of Community Service and fined HK$100,000; while the 2^nd applicant was sentenced to 160 hours of Community Service. Both applicants now seek leave to appeal against their convictions only.

2.  On 12 June 2018, I granted leave to appeal to both applicants on re‑formulated grounds of appeal, saying that I would hand down the reasons for my decision in due course.

The prosecution case

3.  The entire prosecution case was agreed by way of Admitted Facts under section 65C of the Criminal Procedure Ordinance, Cap 221, making it effectively a trial on paper.

4.  During routine cyber surveillance of the Internet in July 2014, a website, namely www.hkbigman.net (“hkbigman”) with an online members’ forum was discovered, which appeared to be promoting ‘compensated dating’; accordingly, police commenced an investigation into the website.  The online forum had various sub‑categories, one of which was described as an “Adult Forum”.  Female memberships were free of charge and, although there were three levels of female membership, they appeared to be based on age, appearance and exclusivity.  There were different classes for male membership ranging from Ordinary Members to VIP to Prestige VIP Members.  VIP members were further divided into New VIP members and Accredited VIP members.  Ordinary membership for males was free of charge, while VIP membership cost HK$550 for the first year, with reduced annual fees thereafter.  Prestige VIP membership could be obtained with a one‑off payment of HK$8,000.  The different classes of members gained different levels of access to the details of female members, with Prestige VIP members gaining full access to all female members’ contact and personal details, including photographs and sexual preferences.

5.  Undercover police officers, both male and female, were deployed to investigate the activities of hkbigman’s online forum further.  The undercover women police officers, on joining the forum, were told that they were required to undergo “verification” of their willingness to engage in sexual intercourse, to provide a full list of sexual preferences and to have sexual intercourse with three VIP members, so that a report of their performances and other details could be posted on the forum.  The undercover male police officers, who became members, were able, upon upgrading their membership, to gain access to the details of all female members.  One of the male officers contacted one such female member and obtained a price list of her fees and sexual practices on offer through messaging on Wechat.  Later, on meeting in person, the officer was shown the same message on the female member’s mobile telephone.

6.  The police operation became overt in January 2015.  It was found that hkbigman had been rented by the 1^st applicant from a server company since August 2010, and that he was the registered administrator of the website.  His bank accounts with HSBC and HSB showed a total balance of HK$1,847,201.

7.  The 1^st applicant’s computers and mobile telephones were seized and the contents revealed numerous contacts with others concerning the operation of the forum, including references to sexual services and charges.  Some members had joined hkbigman since September 2012, paying their membership fees into the 1^st applicant’s HSBC bank account, of which he was the sole signatory.  Those members had been given full access to the details of female members; while one of the male members had availed himself of the sexual services of three females on hkbigman.

8.  The 2^nd applicant, upon his arrest some months later, admitted in a video-recorded interview that he joined hkbigman in 2013 and became an assistant webmaster of hkbigman in June 2014. He knew that the Adult Forum provided a platform for promoting and facilitating sexual services for payment but claimed that he himself received no reward, working only on a voluntary basis.

9.  The prosecution alleged that the design of the Adult Forum was such that it was for male members to view information about female members, make requests for dating and wait for a reply; but not the other way around.  Whilst male members were not required to provide their personal information, female members were required to state their ages, heights, measurements and contact details together with an “accreditation” photograph and a “reference” photograph.  Photographs showing their figures along with descriptions, which were explicitly sexual, were posted.  Female members were not required to provide any information about their educational backgrounds, work, hobbies or interests.

10.  When PW1, an undercover woman police officer, registered as a female member, the 1^st applicant, using the nickname of “Mo Ngo”, contacted her via Wechat to discuss her accreditation.  The 1^st applicant then posted the message, “Newbie needs your help to get accredited” in the VIP Secret Information Group of the Adult Forum; and sought assistance from others to write a report on PW1 after meeting her.  Several responded via Wechat and subsequently, on 11 August 2011, a male member met up with PW1 in Mongkok.  Their conversation concerned sexual practices, with the male explaining to PW1 that “accreditation” meant that VIP members and one Diamond VIP member would assess her performance and then post reports on hkbigman; PW1 would thereby become an “accredited” female member.  He further mentioned that the prevailing fee was HK$1,500 per “Q”.  Having told PW1 about his own sexual preferences, and after suggesting that they repair to a nearby hotel, PW1 made an excuse and left.

11.  PW3 and PW4 were undercover male police officers.  After PW3 had registered as a member and paid the requisite fees, PW3 had access to the full information and details of female members in the “Dating Zone”, which included the sexual practices on offer, the prices based on the activity and time involved and travel expenses.  PW4 deposited HK$550 into the 1^st applicant’s bank account on 24 June 2014 and became a VIP member.  He subsequently received a posting from the 1^st applicant asking members to help “accredit” PW1.

The defence case

12.  The defence did not call any evidence and the applicants elected not testify.  The defence was that, as a matter of law, the 1^st applicant’s activities were not illegal and, accordingly, the 2^nd applicant and D3 could not be found guilty of assisting the former in what he did.  The main issue for the court was whether what the 1^st applicant did, in receiving payments through the website, amounted to the offence of “living on the earnings of prostitution of others”; and if so, whether the 2^nd applicant had knowingly assisted in that offence.

13.  The defence challenged the notion that the 1^st applicant’s income from hkbigman amounted to the “earnings of prostitution”.  There was no dispute that the 1^st applicant had obtained income from the Adult Forum in the form of membership fees and the purchase of “gold coins” (used in order to view information and contact female members); however, the 1^st applicant’s earnings came not from female members but from male members only.  Furthermore, the payments from male members were not for sexual favours but for browsing female information and making requests to meet through the system.  The 1^st applicant did not introduce any members to each other and had made no arrangements for the male and female members to meet.  He was not concerned whether a sexual transaction took place and he had no control over female members.  It was submitted that the income derived from the mere provision of information of prostitutes to customers did not amount to the “earnings of prostitution”.

14.  The 2^nd applicant also contended that he had not obtained any financial benefits from any assistance that he might have given to the 1^st applicant.

Reasons for verdict

15.  The judge rejected the contention that the 1^st applicant’s income from hkbigman did not in law amount to the “earnings of prostitution”.  He noted that section 137(1) of the Crimes Ordinance provided, inter alia, that a person who exercises control, direction or influence over another person’s movements in a way which shows that he or she is aiding, abetting or compelling the other’s prostitution, shall be presumed to be knowingly living on the earnings of prostitution, unless he or she proves the contrary.  In R v Farrugia[2], the Court explained, at p 112, its earlier decision in R v Ansell[3] that where there was direction, influence or control, a jury could infer that money received from an arrangement under which prostitution was to take place was the earnings of prostitution.  Accordingly, “direction, influence and control” was only a piece of evidence, rather than an element of offence, the absence of which was not necessarily fatal to the prosecution.  Where the money received by an accused was referable to and closely connected with prostitution or intended prostitution, it amounted to the earnings of prostitution.

16.  The judge considered that a website intended to be used by prostitutes to facilitate their sex trade was no different from a magazine intended to be used for the same purpose.  Besides, the membership fees and purchase of “gold coins” in the present case enabled male members not only to browse information of female members, but also to request a meeting with them.  Judging from the information provided by female members in hkbigman, a compelling inference could be drawn that the reason why a female member would meet a male member was for her to engage in “compensated dating”, which was a form of prostitution.  The judge held that it did not matter that the 1^st applicant was not paid anything by the prostitutes directly.

17.  Accordingly, the judge was satisfied beyond reasonable doubt that:

(a)  The Adult Forum was intended by the 1^st applicant to be a platform which facilitated prostitution of female members, and the 2^nd applicant knew that;

(b)  The 1^st applicant had obtained income from payments for male membership and “gold coins”, and the 2^nd applicant knew that also; and

(c)  The only reasonable inference to be drawn from all the relevant evidence was that both applicants knew that most (if not all) of the male members would spend money on membership and “gold coins” because they were looking for girls who would provide them with sexual services for payment.  The suggestion that people may spend money just for browsing female information or calling girls out for a chat was unrealistic.  This became clear when one read the intimate descriptions of female members given in the website.

Grounds of appeal against conviction and applicants’ submissions

18.  In the course of argument before me, I indicated that there was a degree of disconnection between the issues raised in the applicants’ written submissions and the perfected grounds of appeal filed with the Court; and that I could only grant leave to appeal on properly articulated grounds of appeal, not on issues which were said to arise in argument. Accordingly, the matter was stood down for Ms Catherine Wong, with her Ms Leona Chan, to re‑formulate the perfected grounds so that the issues were properly identified in the grounds of appeal before the Court.  In the result, the grounds of appeal put forward by Ms Wong were re‑cast as follows:

(Ground 1)

The income of the 1^st applicant was not capable in law of amounting to the “earnings of prostitution of another”;

(Ground 2)

The income received by the 1^st applicant was not referable to and closely connected with prostitution or intended prostitution, so as to amount to the “earnings of prostitution of another”;

(Ground 3)

Although the exercise of control, direction or influence over another person’s movements was not an element of the offence of living on the earnings of prostitution, the absence of such control, direction or influence was fatal to both convictions;

(Ground 4)

Since no offence of living on the earnings of prostitution of another could be made out against the 1^st applicant, the 2^nd applicant could not be shown to have aided, abetted, counselled and procured the 1^st applicant’s offence.

19.  In support of these re‑formulated grounds of appeal, Ms Wong submitted that the legislative objective of the provision was to target conduct that was both parasitic and exploitative.  In Shaw v DPP[4], Lord Reid characterised the mischief at which the offence is directed as that of men who live parasitically on prostitutes and their earnings, for example touts and protectors, who would not have an occupation if the women were not prostitutes.  This was a penal statute, whose terms should not be unfairly stretched to embrace circumstances not naturally falling within its provisions, however socially undesirable those activities may be.  Whilst, in the decision of the English Court of Appeal in R v Ansell[5],the acts of the appellant could be said to be parasitic since the activities would not exist but for prostitution, the Court considered that the receipt of money from men by the appellant must be shown to be so closely connected with the exercise by the appellant of control, direction or influence over the movements of prostitutes.

20.  Ms Wong submitted that, although money coming from the men with whom the prostitutes were dealing and not from the prostitutes themselves did not in law prevent the money from being “the earnings of prostitution of another”, its receipt however must be shown to be so closely connected with the exercise by the applicants of control, direction or influence over the movements of prostitutes that it could clearly and fairly be said to be the earnings of prostitution.  In the present case, there was no such control, direction or influence sufficient to secure the conviction.

21.  She relied on R v Ansell and distinguished the later case of R v Farrugia & Others[6], which sought to explain, at p 112, the test applied in R v Ansell.

Respondent’s submissions

22.  Ms Vinci Lam, for the respondent, conceded that Ground 1 raised a question of law, for which leave was not required.  Similarly, Ground 4 was largely dependent upon the resolution of the point of law in Ground 1.  However, Grounds 2 and 3 concerned mixed law and fact and did require the leave of this Court.

23.  She cited a number of authorities, where the convictions were upheld in respect of conduct which did not involve control, direction or influence over a prostitute’s movements: for example, Shaw v DPP[7] (advertisement of prostitution); R v Howard[8] (provision of cards and adhesive stickers to prostitutes to advertise their services and telephone numbers); R v Stewart[9] (letting of premises to prostitutes); and R v Farrugia & Others[10] (mini‑cab drivers driving prostitutes to their clients).

24.  Ms Lam submitted that the judge, having directed his mind to the above authorities, properly held that[11]:

“earnings of prostitution is not to be interpreted as being limited to the earnings of the prostitute only. Where the money received by an accused is referable to and closely connected with prostitution or intended prostitution, this too, in my view, amounts to earnings of prostitution.”

Accordingly, she argued that whether the 1^st applicant’s income was referable to and closely connected with prostitution or intended prostitution was a matter of fact and degree and evidence.

25.  The Adult Forum was, as the judge found as a fact, a platform to facilitate prostitution of female members.  It facilitated female members’ promotion of their sexual services and prices; it made it easy for the male members to find females for sexual activities at a charge.  The facilitation of prostitution was obvious to anyone having access to the Adult Forum.

26.  Ms Lam further argued that it was specious to suggest that the 1^st applicant was not concerned with whether sexual intercourse took place or that his income did not depend on the result of the meetings and the sexual transactions between male and female members.  VIP members paid HK$550 annually; Prestige VIP members, HK$8,000 at one time. There was a system of accrediting, scoring, commenting upon and ranking female members according to their “performance”.  The ready availability of, and access to, a pool of prostitutes, the readiness of female members to prostitute themselves and the comments on the prostitutes, which assisted other male members to choose their desired prostitute, drew male members into paying over money to the 1^st applicant as so‑called “fees”.

27.  Ms Lam argued that the Adult Forum was akin to a magazine which published prostitutes’ advertisements, but in a more sophisticated and organized way by means of a membership system.  The 1^st applicant’s income was clearly referable to and closely connected with prostitution or intended prostitution.  Accordingly, the judge did not err in his findings in this respect.

28.  Ms Lam also relies on the explanation in R v Farrugia & Others, at p 112, of the test in R v Ansell, at p 50.

Consideration

29.  I do not propose to go into the respective arguments in any depth at this stage.  My purpose in highlighting them is to demonstrate that there are clearly issues of law, as well as reasonably arguable issues of mixed fact and law, to be resolved by the Court in due course.

30.  Ground 1 may be said to raise an issue of law, for which leave is not required; while Ground 4 is essentially dependent upon the resolution of the point of law in Ground 1.  As for Grounds 2 and 3, they may be described as questions of mixed fact and law.  However, they are inextricably linked with, and to a large extent also dependent upon, Ground 1 and its resolution.  It seems to me that it is not productive for me to adjudicate on the viability of Grounds 2 and 3 unless and until the point of law in Ground 1 is resolved.  And yet, in order properly to determine Grounds 2 and 3, I would have to answer the point of law posed by Ground 1, which is beyond my immediate remit, since leave is not required.  As Ms Lam realistically accepts, the better course, in the circumstances of this appeal and the way the issues are inter-connected, would be for all of the grounds of appeal to be canvassed and determined at the same time.

31.  In any event, as I have said, I consider Grounds 2 and 3 to be reasonably arguable; leave is accordingly granted on those grounds of appeal as re‑formulated.  Ms Wong has undertaken to file a set of amended perfected grounds of appeal, which should, if possible and subject to stylistic preferences, conform with the grounds re‑formulated in paragraph 18 above, and on which leave is granted.  The amended perfected grounds of appeal should be filed with the court within 14 days hereof.