HKSAR v. LAI TZE KAI AND OTHERS

HCMA 434/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. HCMA 434 OF 2006

(ON APPEAL FROM ESCC 4903/2005)

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J U D G M E N T

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1.  These Appellants and a 3^rd Appellant, Tai Hin, originally filed appeals against both conviction and sentence.  The 3^rd Appellant abandoned his appeals.  Appellants 1, 2, 4 and 5 abandoned their appeals against sentence and each appealed against conviction only.

2.  The 1^st Appellant was convicted of one count of Keeping a Vice Establishment.  The 2^nd, 4^th and 5^th Appellants were each convicted of one count of Assisting in Managing a Vice Establishment.  The convictions followed a trial in the Magistracy.  All Appellants elected not to give evidence or call witnesses.

3.  The Appellants were represented at trial and were represented at the appeal by Mr Morley, who did not appear at the trial.

Grounds of Appeal

4.  The basic ground was that the Magistrate erred in concluding, having heard the evidence, that the only irresistible inference was that the premises were used wholly or mainly for organising or arranging prostitution and that he had not taken into account sufficiently or at all;

(a) evidence of customers not engaged in immoral activities;

(b) evidence of customers receiving legitimate massage;

(c) evidence of employees who did not offer sexual services;

(d) evidence of rooms where there was activity but nothing irregular was detected;

(e) evidence that the premises were properly licensed as a massage parlour and commercial bath house with no breach of licence conditions, or previous record of being a vice establishment;

(f) evidence that very little vice paraphernalia was seized.

Findings of fact

5.  The premises were a licensed bathhouse and massage establishment.  Two undercover police officers posing as customers visited the premises on 13 and 14 May 2005.  Paid sexual services were offered to them on each of their visits on those 2 days.  Further, offers of sexual services were made to other customers in the hearing of one of the decoy officers.  Staff other than the masseuses, all knew about the higher price structure for sexual services; oral sex, masturbation and sexual intercourse.

6.  Section 117(3) of the Crimes Ordinance, Cap. 200, describes a vice establishment :

117(3)(a)   the premises… or place are or is used wholly or mainly by 2 or more persons for the purposes of prostitution; or

117(3)(b)   the premises… or place are or is used wholly or mainly for and in connection with the organizing or arranging of prostitution.

7.  The Magistrate had to decide whether the premises were a vice establishment and if so, whether D1 kept it as a vice establishment and whether D2, D4 and D5 had assisted in the management of a vice establishment.

8.  PW1 and PW2 first posed as customers on 13 May 2005 having been instructed not to take the initiative to ask for sexual services, and to stop such services once they started.  PW1 was given $1000 marked money.  He saw an advertisement outside the premises stating that a ‘single-time unit plus service charge' was $248.00 and a ‘double-time unit plus service charge' was $368.00.  He was greeted by D5, took a shower and changed into shorts.  D5 asked whether he had any familiar woman.  When PW1 said it was his first time there, D5 said he would arrange a lady to provide good massage and fun. He was taken to a room where a masseuse was waiting. She asked him to lie face down on the bed, massaged his legs and back and then asked him what he wanted to do.  He asked her to clarify and she explained that ‘full set plus making love' cost $828.00, ‘body massage' was $698.00 and ‘get the machine going' (a euphemism for masturbation was $550.00).  The masseuse suggested that PW1 should try the ‘full set' and he agreed.

9.  The masseuse left to obtain hot towels.  On her return she covered the window in the wall and in the door with a large towel hung from the top of the door.  She turned off all the lights inside the room, then took off all her clothing except a short skirt.

10.  She took a condom from her handbag and put it on PW1's penis.  She kissed his nipples and climbed onto the bed.  When she was about to have sexual intercourse with him, he stopped her, saying he was too tired.  He told her to massage his legs instead.  She did so.  At about 9:35p.m., she announced that time was up and helped him to dress.  Then she pulled the towel from the door.

11.  After taking a shower, PW1 went to the lounge.  Two customers were sitting in front of him.  He saw D3 approach them and ask if they had any familiar girls.  The two men asked how much that would cost and D3 explained the ‘single-time unit' system to them.  The men said that ‘double-time unit' would be fine; they did not want to do anything, except have a massage.  D3 approached another customer and asked if he had any familiar girl.  When that man gave the number “38”, D3 went to the bar counter and spoke on the phone.

12.  At l0:05 p.m., PW1 settled his bill.  The bill was stated as $288.00, but he was asked to pay $828.00.  He explained he had not had the ‘full set'.  The cashier, D4, said that he was charged for what he had ordered.  He asked D4 why it said $288.00 on the bill.  She replied it was to show the police during any licence check.  PW1 paid with the $1,000 marked note and received change of $172.00.  He asked for a receipt; the amount shown was $830.00.

13.  PW1 left the premises at 10:10 p.m. and reported to Eastern Special Duties Squad at North Point Police Station. 

14.  Next day, 14 May 2005, he paid a second visit to the premises, and an almost identical scenario was played out.  He was greeted by D1.  He inquired about prices, which were explained by D5.  D5 told him to go to Room 17.  The masseuse massaged him for a short period and asked what he wanted to do.  PW1 agreed to have ‘set A' at the masseuse's suggestion.  When she started to carry out sexual services he stopped her and said he was tired.  After a while he left the premises.

15.  This time, the bill was $288.00 but he was asked for $548.00.

16.  PW3 gave very similar evidence of his experiences during his visits on 13 and 14 May 2005. 

17.  Eventually, on 14 May 2005, a raid was carried out and PW1 and PW3 identified the Appellants.  PW2 confirmed there were roughly five customers found in the lounge and the massage rooms.  There were 14 massage rooms in the premises.  A Chinese declaration notice was posted in every massage room saying:

“The premises is purely for massage.  Masseuses or others must not make, among other things, any vice dealing there.  They would be responsible for their own breach.”

18.  Defence Counsel at trial, accused PW3 of concocting evidence against the Defendants and suggested he and PW1 had collaborated in giving false evidence.  These allegations were denied by PW1 and PW3.  The Magistrate accepted their evidence about what had happened.

19.  Defence Counsel had submitted that the prosecution had failed to prove vice activity was the main purpose of the operation and if any vice activity had occurred, it was clandestine or secret activity involving only the masseuses and, possibly, some staff members.  It could  not be proved that the management of the premises knew or approved such activity.  The Magistrate noted the premises had a clear record and the appearance of a “decent” massage parlour.  Counsel relied on the fact that legitimate massage services were provided to customers and that proper business records were kept. 

20.  There was ample evidence on which the Magistrate could find that PW1 and PW3 had been offered sexual services on the premises. 

21.  The Magistrate considered the question of “main user” at paragraph 80 to 94 of his Statement of Findings.  He noted that:

(1) the premises had been licensed properly as a massage parlour and commercial bathhouse.  D1 had been the licensee since December 2003, and there had been no reported breach of the licence conditions.  The premises had a clear record as did all defendants.

(2) The premises looked respectable and the records seized were apparently in order.  Five customers were inside the premises during the raid, but nothing irregular was revealed at that time.

22.  With the exception of one masseuse, the various masseuses who served PW1 and PW3 all provided or offered sexual services to them.  PW1 also heard D3 explain the charges for sexual services to two customers sitting in front of him.

23.  The masseuses serving PW1 and PW3 invariably used a towel to cover the door or wall-window before starting sexual services.  On 13 May 2005, PW1 passed three rooms with uncovered windows and saw nothing irregular.  On 14 May 2005, he saw as he passed that the wall-window of Room 12 was covered by a towel, though the door-window was not.  He saw a woman with naked upper body lying on a man.  When he returned an hour later, the towel over the wall-window of Room 12 had been removed and regular massage was taking place.  The room opposite Room 12 had both the door-window and the wall-window covered, there was light inside.

24.  PW3 reported that on 13 May 2005, two rooms he passed on his way to his room, had their windows covered.  On the day of the raid, four unused packets of condoms and one open but empty condom packet were found on the premises.  The unused condoms were found in the locker used by the masseuses.

25.  The Magistrate recognised that the customers of whom nothing irregular had been discovered, must be treated as having had, or to be about to have proper massage.  He concluded that those customers had rejected any sexual services offered, or had not yet been offered such services but that such services would have been offered if the police raid had not interrupted the usual routine.

26.  The Magistrate was sure sexual services were offered to customers as part of the regular business, rather than as isolated incidents.

Magistrate's Conclusion

27.  The Magistrate from the facts he found proved was sure that the irresistible inference to be drawn was that, the premises were used mainly for the organising or arranging of prostitution.  Customers would be offered or provided with sexual services by the masseuses if they wished.  If they refused, they would be given regular massage.  He was sure the primary purpose of the business, was the provision of sexual services and on that basis concluded that the premises was a vice establishment.

Authorities

28.  Although previous cases can assist in illustrating legal principles relevant to the charges, each case must be decided on its own facts.  The 3 cases the Appellant relied on examined the issue of ‘wholly or mainly', in circumstances where there was a very clear distinction between the legitimate business activity carried on and the inclusion of sexual services.

29.  In R v Cheng Sung Hin HCMA 498/1985 Bewley J found that the magistrate had not considered the issue of ‘wholly or mainly' before deciding that the apartment house concerned was a vice establishment.  As there was an innocent letting of the rooms contemporaneously with the arranging of prostitution, (initiated by the customer rather than offered by the staff), he found those premises could not be said to be wholly or mainly used for prostitution.

30.  In HKSAR v Wong Ming Chu HCMA 1127/2004, the premises was a large hostess karaoke nightclub.  On appeal Pang J. agreed that the magistrate had found correctly the premises had been ‘kept' as the evidence of repetition of conduct and persistence was sufficient to satisfy the continuity that “keeping” entails.

31.  On the question of ‘wholly or mainly' however Pang J found the Magistrate had failed to give proper consideration or weight to undisputed evidence on the issue of main user.  On the relevant nights customers were using karaoke and lounge facilities.  The premises were large and included a stocked bar frequented by customers; fully equipped karaoke rooms, and an office area with computers, safes and proper staff time records.

32.  On one reading that judgment seems to state that as long as premises are sufficiently large and have all the accoutrements of the respectable business it purports to be, it is impossible for a Magistrate to draw an inference that it is a vice establishment, however blatant the evidence of vice activity.

33.  At para. 14 the judge contrasts the premises with “a seedy operation conducted in a flat partitioned into small cubicles and holding itself out as an apartment house and where the cubicles consist only of a bed and washing facilities and where condoms, tissue papers and pornographic materials were seized.”

34.  Allowing that appeal, Pang J concluded that the Magistrate's decision was not the only reasonable inference that could be drawn from the evidence;

“It would be impractical and indeed impossible for the court to devise a precise mathematical formula to determine what constitutes wholly or mainly in the definition.  One must look at the evidence in each case in order to resolve this issue.”

35.  It may be that the Magistrate in Wong Ming Chu did not deal with the question of wholly or mainly in sufficient depth, but in my view the evidence referred to in that judgment would indicate prima facie that the arranging of prostitution was a mainstay of the operation.

36.  In HKSAR v Yeung Mei Ling HCMA 1024/2005 a nightclub was alleged to be a vice establishment.  On appeal by the club manager against 2 convictions for managing a vice establishment, Deputy High Court Judge Poon found the Magistrate had failed to consider fully the aspect of “wholly or mainly”, as he had ignored the significance of other customers being present the lobby area.

37.  Mr Morley submitted that the Magistrate wrongly drew the inference that the premises was wholly or mainly used for organising or arranging prostitution, when he should have drawn an inference in the Appellants' favour, namely that this was an orthodox sauna and bathhouse where some rogue staff, unbeknown to management, were offering sexual services.

38.  The circumstances of the instant case can be distinguished from the authorities referred to a Magistrate was aware of the issues of ‘wholly or mainly' and ‘keeping'; he considered and dealt with them.  He dealt too with matters which Mr Morley contended he had ignored.

39.  He was aware of the clear record of the premises, recognised that it was fitted out as a genuine bathhouse and accepted that genuine massage services were available.  However, the evidence of the officers, which he accepted as true, showed that the establishment was geared mainly to offering sexual services, for prices considerably enhanced over the advertised prices.

40.  On each of the 4 decoy visits, an immediate offer of sexual services was made and an explanation given as to what each set comprised.  Patrons observed by PW1 were approached openly with identical offers while he waited in the sitting room.  Although those offers were refused, the fact they were made immediately strengthens the prosecution contention about the main purpose of the establishment.

41.  The practised system to which the masseuses adhered – the blacking out of windows, the direct approach to the client; their prompt explanation about pricing; the provision of receipts which tallied with the advertised prices for massage, although much larger sums had been paid; the knowledge all staff had about the pricing system, were cogent indicators of the main purpose of the premises.

42.  He recognised that the premises looked respectable and records seized by the police were apparently “innocuous”.  No irregular activity was taking place at the time of the raid.  He was aware that on 14 May 2005, one masseuse who served PW3 did not offer sexual services, but noted that she was replaced by a masseuse who did offer sexual services.

43.  “Continuity” was established by the evidence of PW1 and PW3 of the activity which took place on the 2 consecutive days of their visits.  Further, the Magistrate noted that charges for sexual services, were commonly explained by members of staff to customers.  PW1 gave evidence about, 3^rd Defendant explaining the charges to customers who preceded him.

44.  The Magistrate drew the inference from the evidence of PW1 and PW3 that when sexual services were offered or carried out the usual practice was to cover the windows.

45.  During the raid, four unused packets of condoms were discovered and one open but empty condom packet had been found.  The Magistrate found the condoms were brought by the masseuses for use during sexual services.  If necessary they were used when sexual intercourse took place, or was attempted.

46.  Having considered the facts of the case and the manner in which the Magistrate dealt with the evidence, I am satisfied that he was entitled to draw the irresistible inference.

47.  It was not necessary for the prosecution to prove the premises was wholly devoted to providing sexual services.  It was sufficient the evidence show the premises was mainly used for that purpose.  This is always going to be a question for the court to consider on the facts of an individual case, but here the primary purpose was to encourage clients to indulge in the higher priced sexual services that were on offer as a matter of course.

48.  The higher charges for sexual services appeared to be the mainstay of the business.  They were offered routinely to customers, all the staff knew of and could explain them to customers if required.  The cashier actually took the money for more expensive services.  It was not accurate for the Magistrate to say that the records were “innocuous”, as on at least two occasions PW1 and PW3 were told that one receipt was devised specifically for licence checks, but a second receipt, which was given to customers showed the real, higher price paid for sexual services.

49.  Give the nature of the evidence and noting that he kept the relevant elements in mind, I find the Magistrate was justified in concluding that the premises were kept mainly for the organising or arranging of prostitution.  Accordingly, this appeal is dismissed.

Note

50.  There appears to be a view propounded, in particular by those representing persons who run vice establishments, that if premises are large clean, well-lit and well appointed, sexual services are unlikely to be on offer.  That may be an indication that sexual services are not offered, but it is not a definite conclusion.

51.  Similarly, a clear record insofar as the premises is concerned, is a factor, the Magistrate can take into account, but it does not prove conclusively that the premise cannot be used for, or had not been used in the past as a vice establishment.