ATTORNEY GENERAL v. KAM KIM CHUNG AND OTHERS

BETWEEN

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JUDGMENT

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1. This is a case stated by a magistrate at the instance of the Attorney General. A complaint was preferred in a Magistrates Court on 12th May this year against the three respondents in the following terms -

 

"Against KAM Kim-chung (hereinafter called the first respondent), TAM Kam-wah (hereinafter called the second respondent) and YUEN Man-tak (hereinafter called the third respondent) under section 5(c) of the Gambling Ordinance, Cap. 148, alleging that on the 19th day of February, 1986 at Maison Rouge Restaurant, 3rd floor, 275-277 Hennessy Road, Wanchai, in Hong Kong, they assisted in the operation of a gambling establishment."

2. The complaint was heard by the magistrate on 12th May, 1986 and dismissed by him.

3. According to the Statement of Case by the magistrate, which I commend for the logical and sensible way in which it sets out the facts and issues, among the facts agreed are the following -

 

(a)	That the Maison Rouge Restaurant operates with a licence issued under the Public Health and Municipal Services Ordinance.
(b)	That on 19th February in the early hours of the morning, four police officers posing as customers arrived at the third floor of the Restaurant.
(c)	When they did so, the third respondent ("D.3") asked them if they would like to play mahjong and they replied "Yes".
(d)	He asked them if they were members and when they said they were not he told one of them to register. One of the police officers did so and was given a membership card.
(e)	D.3 showed the officers to a room on the same floor, No. 18. Inside the room were a mahjong table and mahjong equipment. Shortly afterwards, an unknown man entered the room, poured tea for them and left.
(f)	At bout 2 o'clock in the morning, one of the four officers telephoned from the room and asked for the bill, which was brought. The officers were charged $16 an hour.
(g)	On the evening of the same day another group of four police officers went to the same premises and they saw the second respondent ("D.2") standing behind the counter wearing a staff badge with the word "Captain" on it. D.2 asked them if they wanted to play mahjong. They said they did. U.2 asked them if any of them were members and, on hearing that they were not, entered the number of the Identity Card of one of then in a register. He also noted the number of the room in which the mahjong was to be played and the time. The officers were not given membership cards on this occasion.
(h)	They were taken to Room 20 where they found a mahjong set, some chips and other mahjong cquipment and started to play. On a couple of occasions they were brought tea in the room and at 2250 hrs. one of the officers telephoned for a bill and went to make payment. The bill was $62.20 after two hours of playing of mahjong.
(i)	A police raid was conducted shortly afterwards, at about 2300 hrs. that evening. Four people were found to be playing mahjong in each of 10 of the rooms on the third floor, there being, I think, 28 rooms in all. Some of them were carrying membership cards, but a number were not.

 

4. The magistrate, before the Crown case opened, gave certain preliminary indications to counsel of his view on the law and the facts involved.

5. He said that he was satisfied that on the evidence, the presumption provides for in section 19 of the Gambling Ordinance arose; that is to say, that the premises were a gambling establishment. He did explain how he thought that presumption arose, but 1 think it reasonable to assume that he decided that it arose because gambling equipment had been found in the premises. He added, correctly, that the onus of proof then shifted to the defendant on the balance of probabilities, to show that the premises were not a gambling establishment.

6. They would be a gambling establishment and would so remain if, according to the definition of "gambling establishment" the premises were kept or used for the purposes of, or in connection with, unlawful gambling. By section of the Ordinance all gambling is unlawful, save as provided in various subsections of that same section.

7. The magistrate observes, in my view correctly again, that the point which he had to decide was whether the playing of mahjong, which would otherwise be unlawful had become lawful, because the respondents had fulfilled the conditions prescribed in section 3 (4)(d) of the Gambling Ordinance.

8. He poses this question in the following terms -

 

"As section 3(4)(a)(b) and (e) clearly had application in the circumstances, it is paragraph (d) that is in issue : if, on a balance of probabilities, the defence can establish that the game was not promoted or conducted by way of trade or business in the premises, otherwise than to the extent of the charging of a fee not exceeding the prescribed amount of $20 per day for the hire of any set of tiles, then the premises can no longer be regarded as a gambling establishment and the charge under section 5(c) would fail."

9. The magistrate notes, in a subsequent paragraph, that about 25% of the area of the restaurant was set aside for customers wishing to play mahjong. On the third floor of the restaurant, it was sub-divided into rooms of various sizes in which mahjong tables and equipment were provided.

10. In addition, he finds that soft drinks, tea and cigarettes were available to customers who were playing mahjong on the third floor.

11. He then finds, having stated that "it would appear that a charge of $16 per hour was made for playing mahjong at least in some instances", that it "is certainly not clear from the Summary of Facts provided by the prosecution that the $16 per hour charge was a charge for the hire of mahjong equipment. It can equally be inferred that those charges were for room hire which a restaurant is perfectly entitled to charge for."

12. In his next paragraph the magistrate comments -

 

"I nevertheless considered it more likely than not that the room lay-out and arrangements for playing mahjong that occupied the one out of four floors was designed to attract more customers to the restaurant thereby increasing the amount and sales of food and beverages by the Restaurant."

13. The respondents elected to give no evidence. At the close of the Crown case, the magistrate accordingly acquitted them. He sets out three questions of law for the opinion of this court. though the third was not argued before me -

"(a)

Having found as a fact that the charge of $16 per hour was not necessarily a charge in whole or part for the hire of mahjong tiles but may have been a charge for room hire only, was I correct in law in holding that the saving provision in section 3(4)(d) as read with Regulation 7 of the Gambling Regulations, Cap. 148 in regard to the hire of mahjoing tiles had not been breached. and accordingly that the playing of mahjong in the premises was not promoted or conducted by way of trade or business.

(b)

Was I correct in law to reject the Crown's submission that, in the absence of evidence from the defence, the only reasonable inference to be drawn from the agreed facts was that the playing of mahjong in the said premises was promoted or conducted by way of trade or business?"

 

14. It is, of course, well established that the court to which a case is stated is, save in very exceptional circumstances, bound by those findings of fact which are reaches by the magistrate who is stating the case.

15. I am thus obliged to deliver my opinion upon the basis that the charge of $16 per hour was made either in relation to the hire of mahjong tiles or by way of charge for room hire, though the magistrate did not decide which it was.

16. Mr. Nguyen argued, on behalf of the respondents, that the charge of $16 an hour, which is not in dispute, could have been a combination of a mahjong charge, room hire or service fee. I think that I must ignore the possibility of it being a service fee because the magistrate discounted it.

17. Counsel submitted that the evidence establishes, taking the restaurant as a whole, that the playing of mahjong on the third floor was merely subsidiary to the main restaurant business. This may very well be so, but if an activity is illegal per se the fact that it helps to further perfectly lawful enterprises conducted on the same premises does not legalize it.

18. If I am satisfied that gaming was promoted or conducted by way of trade or business on the third floor of these premises, the presence on other floors, and indeed on the same floor, of entirely legitimate activities will not convert unlawful gambling into lawful gambling.

19. The test which, in my view, has to be applied to paragraph (d) of section 3(4) of the Gambling Ordinance is as follows -

20. Is the gambling conducted by way of trade or business? In other words, in such a manner that the promoter of the mahjong intends to, derive some profit from it, though whether he makes any net profit is irrelevant. It is sufficient to show that the game is promoted for the purpose of profit.

21. As I read this paragraph, the only charges which are permissible by someone promoting mahjong on his premises are those which are allowed by the Gambling Regulations, that is to say, a total charge of $20 per set of mahjong equipment per day.

22. In both the instances in which the police officers paid money, the charges exceeded $20 per day. Therefore, they exceeded the amount permitted under the Gambling Regulations, if the whole of the charge was for the hire of equipment.

23. Mr. Nguyen submitted, on the basis of the magistrate's findings, that the charge for mahjong equipment may have been not more than $20 and that the rest was a charge for the hire of the room.

24. Assuming that this was the case, there would still have been an additional charge above that permitted for the hire of the tiles. It seems to me to be quite divorced from reality to pretend that a charge of $16 per hour for the hire of a room, in which mahjong was to be played, was anything other than a charge related to the promotion or conduct of that game by way of trade or business in the premises.

25. The answer to the first question posed by the magistrate, therefore, is that he was wrong in his conclusion that the saving provision in section 3(4)(d) had not been breached, and to find that the playing of mahjong was not promoted or conducted by way of trade or business.

26. I would also answer his second question in the negative, since I do not find that the only reasonable inference to be drawn was that the playing of mahjong was promoted or conducted otherwise than by way of trade or business.

27. The case is therefore remitted to the magistrate, with a direction to convict the respondents of the offence charged.