SECRETARY FOR JUSTICE v. YUEN WAI SHAN AND ANOTHER

DCMP 2261/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 2261 OF 2011

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BETWEEN

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J U D G M E N T

Background

1.  This is an adjourned hearing of an interpleader summons taken out by the Secretary for Justice (on behalf of the Commissioner of Police) pursuant to Order 17 of the Rules of the District Court. 

2.  Ms. Yuen Wai Shan, the 1^st Claimant herein (“Yuen”), is the owner of a gold necklace, a gold necklace with pendant and a gold wrist chain more particularly described in the Originating Summons and Affirmation of Cheung Chi Ho filed on 5^th September 2011 (collectively “the gold items”).

3.  On unknown date(s) and while still in the employment with Yuen, her Filipino maid in the name of Luisa Mandane Sorreda (“Sorreda”) stole the gold items from her and pawned the same on three separate occasions between 8^th January 2009 and 6^th February 2009 with Shun Fat Pawn Shop, the 2^nd Claimant herein (“Shun Fat”) at a total price of $8,400.

4.  The theft was discovered by Yuen on or about 14^th February 2009. A report was made to the police. The gold items were seized from Shun Fat on 9^th March 2009. No prosecution was ever laid, as Sorreda has left Hong Kong for Philippines on 8^th February 2009 without Yuen’s prior knowledge.

5.  Both Yuen and Shun Fat claim ownership in the gold items.

Hearing of 25^th October 2011

6.  This case first came before me on 25^th October 2011. Both Yuen and Shun Fat were unrepresented, as they are today. But they helpfully indicated to me that the following are not in dispute:

(1)  Yuen are the owners of the gold items at all material times.

(2)  Sorreda stole the gold items from Yuen and then pawned them to Shun Fat on the dates as depicted in Shun Fat’s pawn records.

(3)  Shun Fat paid Sorreda a total price of $8,400 for the gold items.

(4)  The costs of the Secretary for Justice (on behalf of the Commissioner of Police) are assessed and agreed at $9,500; such costs are to be borne by the party who is found to be at fault or careless by this Court.  

7.  Further, after my explanation on section 23 of the Pawnbrokers Ordinance, Cap. 166 (“the Ordinance”) to them, they have agreed that the issues to be determined by this Court are:

(1)  What Order should be made pursuant to section 23(2) of the Ordinance?

(2)  To determine (1) above, whether Yuen or Shun Fat was at fault or careless in causing or contributing to the unlawful pawning of the necklaces under section 23(3) of the Ordinance.

8.  Directions were thus given by me for filing affidavit evidence to address to the agreed issues. The Secretary for Justice was granted leave to be excused from further attendance.

Today’s Hearing

9.  The hearing today is conducted in Chinese. But the parties have agreed that my Judgment can be given in English, provided Chinese translation of the same is made available to the parties upon request.

Yuen’s Case

10.  It is Yuen’s case that the gold items were the wedding gifts given by her relatives to her way back in 1996. She has kept them, together with other valuables such as passports and birth certificates, at two locked drawers inside the wardrobe of the master bedroom.

11.  Soredda was her Filipino maid who started to work for her since January 2000. She picked Soredda because she had worked for the same employer in Singapore for 10 consecutive years before working for Yuen. Ever since Soredda joined the family of Yuen, she worked diligently and delicated to her work. She was soon treated as part of the family. Everything went smoothly and the employment contracts were renewed on a 2-year’s basis consecutively. By 2009, Sorreda was in the 9^th year of employment with Yuen. 

12.  However, on a sunday of 8^th February 2009, Sorreda sent a SMS message to Yuen’s husband informing him that she would not return to their home any more. Yuen thought that Sorreda was just joking, as all her belongings were still lying intact at home. But it soon turned out that Sorreda had left for good.  A report about Sorreda’s missing was thus made by Yuen to the police on 9^th February 2009.

13.  Less than a week after Sorreda left, Yuen started to receive demand letters addressed to Sorreda from a credit company. This alerted Yuen and aroused her suspicious. She searched and checked her two locked drawers in which expensive items were kept. She then came to find out that some gold items, including the gold items of this case, and two watches were found missing. A further report was made to the police on 14^th February 2009.

14.  Yuen explained that there were two locked drawers installed at the bottom part of her wardrobe inside the master bedroom. The locks were combination locks of 3 digits, the pin code of which was only known to her and her husband. All valuables were kept in these two locked drawers. To be exact, the gold items in question were kept inside a Chinese-style jewellery box which was placed inside the upper drawer at the material time.

15.  Yuen, however, confessed that she did not open the jewellery box to check the gold items therein on a frequent basis. The last time she opened and checked the gold items was at the end of 2007 when she was thinking to give away a gold item as wedding gift to her relative’s daughter.

16.  Be that as it may, when she found out that the gold items were missing from the upper drawer, she also noticed that the upper drawer was in good condition. The combination lock was intact and showed no sign of tampering or breakage.

Shun Fat’s Case

17.  Shun Fat’s case is set out in the affirmation of Hon Yin Kwok (“Hon”), the director of Shun Fat. He deposed that he has been in the pawning business for over 40 years. At the material times, he was the one who attended Sorreda when she came to pawn the gold items as follows:

(a) A gold necklace on 8^th January 2009 for $4,000;

(b) A gold necklace with pendant on 30^th January 2009 for $2,100;

(c) A gold wrist chain on 6^th February 2009 for $2,300.

18.  It is the evidence of Hon that whenever a Filipino domestic helper comes to his pawn shop to pawn, he would take into account the following factors in order to decide if to accept the pawn:

(1)  whether agreement on the price of pawn can be reached.

(2)  whether the item to be pawned is, in his own assessment, a “practical item” for use by the domestic helper. He gives the example of Chinese zodiac gold decorations as not practical items and will not be bought by Filipino domestic helper because she will not wear these. He will find the pawn suspicious and refuse to accept the pawn in this circumstance.

(3)  whether the item to be pawned is real or fake, or within the “stolen properties” list given to his pawn shop by the police each day.

19.  Hon also deposed in his affirmation that he would assess whether the foreign domestic helper’s financial means could afford her to own the item that is being pawned. If the item being pawned is, in his view, too expensive or prone to suspicion, he will refuse to accept the pawn. When asked how to assess the financial condition of a domestic helper, Hon said that he would see if the domestic helper has worked in Hong Kong sufficiently long. If she has stayed in Hong Kong long, it would be more likely that she is able to buy gold ornaments for wearing.

20.  Hon further explained that over 70% of his counterpart pawn shops has installed computers, making it easier to check past records on whether a person has pawned frequently in the past year. However, his pawn shop has not gone computerised yet due to the objection of his partner. Thus, his pawn records are all in handwriting. It is not possible for him to cross-check past pawn records each time to see if there is any client who has pawned repeatedly within a short period of time.

21.  Hon also conceded that he had not asked Sorreda if she was the owner of the gold items on all three occasions in question. He further added that he would ask this question on ownership only when he smelt suspicion.  

Applicable Law

22.  Section 23 of the Pawnbrokers Ordinance, Cap. 166, provides that:

“(1) Where in any proceedings before a court or magistrate –

(a) it appears that any goods have been unlawfully pawned with a pawnbroker; or

(b) ......

the court or magistrate shall dispose of the goods in the manner provided by this section.

(2) The court or magistrate may, in respect of any goods to which subsection (1) applies, of its or his own motion or upon application –

(a) on proof of ownership of the goods, make, subject to subsection (3), an order for the delivery or non-delivery thereof to the owner:

(i) on payment to the pawnbroker of the amount of the loan advanced by him thereon and the interest due; or

(ii) on payment to the pawnbroker of any part of such loan or interest; or

(iii) without payment to the pawnbroker of any part of such loan or interest,

as may seem just in all the circumstances

……

(3) In the making of an order under subsection (1)(a), the court or magistrate shall take into account the conduct of the owner and of the pawnbroker and consider whether the fault or carelessness of either party has caused or contributed to the unlawful pawning of the goods and shall as regards the apportionment between them of any loss or damage:

(a) in the case where the court or magistrate finds –

(i) that no fault or carelessness in their conduct; or

(ii) that equal fault or carelessness in their conduct,

has caused or contributed to the unlawful pawning of the goods; apportion the loss or damage in equal shares;

(b) in the case where the court or magistrate finds that the fault or carelessness in the conduct of the owner or of the pawnbroker, as the case may be, has caused or contributed to the unlawful pawning of the goods in the whole or in the greater part, apportion the loss or damage in such whole or greater part, having regard to their respective shares in the responsibility for such unlawful pawning.” (emphasis added)

23.  The Court of Appeal has in Legrand Jewellery (MFG) Ltd v Wo Fung Pawnshop (a firm) & Ors [1988] 2 HKLR 326 set out the following approach on how to construe “fault and carelessness” under the said Section 23(3) (per Hunter JA):

(1)     Section 23(3) must impose some statutory duty on owners. It imports an obligation akin to contributory negligence, a duty on the owner to take reasonable care of his own. 

(2)     The court has to consider both “causal potency” and blameworthiness.

(3)     As with contributory negligence the first requirement is causation. Has “fault or carelessness” caused or contributed to the unlawful pawning. Only if causation is established in relation to pawning, not the theft, do the respective shares in the responsibility for such unlawful pawning have to be considered.

(4)     What has to be considered is the fault or carelessness of the owner qua owner and the pawnbroker qua pawnbroker.  Each must be separately judged by the standard of the hypothetical reasonable owner or pawnbroker, as the case may be.

Discussion

24.  There is no dispute that the gold items were illegally pawned to Shun Fat by Sorreda at the material time. It is thus clear that Section 23 (1) of the Ordinance is satisfied. The crux is therefore whether Yuen or Shun Fat was the party that was at fault or careless that caused or contributed to the illegal pawning.

25.  Yuen argues that Shun Fat is the careless party here. The fact that a Filipino maid pawning 3 gold items over a short period of 4 weeks (between 8^th January 2009 and 6 February 2009) with a total value of more than 2 months’ of her basic income should have aroused Shun Fat’s suspicion to make further enquiry. Yet, Shun Fat has failed to do so.

26.  Shun Fat, however, argues that it was Yuen who had failed to detect the missing gold items and to report to the police on time, which enabled Sorreda to pawn the gold items at Shun Fat.  The gold items were first discovered to be missing only on or about 14 February 2009, by which time they had already been pawned and Sorreda already gone and left the jurisdiction.  Shun Fat had no way of knowing about the theft until they received the information from the police on 20^th February 2009.  This was about 1.5 months since the pawning of the first gold item on 8^th January 2009.

27.  In my view, Shun Fat has a duty as a pawnbroker to stay alert and ask the appropriate questions if they have suspicion about a particular pawn.  In Legrand Jewellery (MFG) Ltd v Wo Fung Pawnshop (a firm) & Ors quoted above, Hunter JA has this to say on the position of a pawnbroker in Hong Kong:

“….every pawnbroker is always on risk of being offered stolen goods. It is a risk which arises daily and must therefore constantly be in the fore front of his mind. Secondly, the practice of thieves in relation to pawnbrokers in Hong Kong is I think notorious. They readily use pawnbrokers as receivers, with not the slightest intention of redeeming the goods. It follows that the pawnbroker's risk of accepting the stolen goods is both real and double-edged. If the thief is found and the goods are traced to the pawnbroker, he loses his advance, subject only to section 23. If the thief is not found or the goods are not traced, then most probably after four months he will be free to sell with an apparent title…. In these circumstance I think the legislature must have expected pawnbrokers to take serious and effective steps to reduce this risk, if they were not to be held to be the sole effective cause of an unlawful pawning.” (emphasis added)

28.  Hon admits in his affirmation that whenever a foreign domestic helper comes to pawn an item, he will enquire into her financial status. This is, in itself, a strong indication that pawn from a foreign domestic helper is one of those suspicious scenarios which would cause a pawnbroker to enquire further into the matter. The suspicion should have been escalated when Sorreda came to pawn not only once, but three times within one month for items worth more than 2 months’ of her statutory salaries.

29.  However, in assessing if a pawn from a Filipino domestic helper arouses suspicion, Hon adopts an approach by considering if the item to be pawned is of “practical use” to the domestic helper; and if the domestic helper has worked in Hong Kong long enough. Yet, in my Judgment, the duration of a foreign domestic helper working in Hong Kong may not have a direct bearing on her financial means. Even worse, from the evidence of Hon, he has done nothing than the bare minimum to enquire Sorreda on all three occasions when she came to pawn the gold items. His own evidence reveals that he did not enquire on all three occasions if the gold items belonged to Sorreda and if so, for how long. He did not ask for any receipt of the gold items. I am of the view that Shun Fat has taken an incorrect approach that a pawnbroker would take in the circumstance.

30.  Pausing here, one must not lose sight of the confession made by Hon that over 70% of pawnbrokers has installed computers making it easier to trace suspicious clients who pawn frequently over a short period of time. Yet, Shun Fat, for its own reason, has not followed the general trend.  Hon also confessed that had his pawnshop been installed with computers, it would be better protected against suspicious pawns.

31.  On the other hand, Yuen, as an owner of the gold items, “does not have, or need to have, scrutiny at the front of her mind”. She “will take reasonable not obsessive care” (See also: Legrand Jewellery (MFG) Ltd v Wo Fung Pawnshop (a firm) & Ors).

32.  To Yuen, Sorreda was a maid who had worked for her for 9 years with nothing phenomenal in the maid’s integrity over the years. Understandably, some degree of trust was established between Yuen and Sorreda. Besides, from Yuen’s evidence, she did keep safe custody of the gold items. She stored them in a jewellery box that was kept inside a locked drawer. The locked drawer was protected by a combination lock, the pin code of which was only known to her and her husband. In the circumstances, I cannot see there is any fault or carelessness on the part of Yuen qua owner.

33.  Due to the above analysis, I come to the conclusion that Shun Fat has failed to exercise reasonable care to make enquiries or make sufficient enquiries with Sorreda. Such failure causes or contributes to the illegal pawning. In my Judgment, this connotes the fault or carelessness of Shun Fat qua pawnbrokers.

Conclusion

34.  I make an order for delivery of the gold items (more particularly described in the Originating Summons and the Affirmation of Cheung Chi Ho) to Yuen without any payment on the part of Yuen to Shun Fat.

35.  Shun Fat shall bear the costs of the Secretary for Justice (on behalf of the Commissioner of Police) previously assessed and agreed at $9,500 to be paid within 21 days from the day after this Order is sealed.

36.  I note that both Yuen and Shun Fat are not represented in this matter. Thus I think it is unlikely that any legal costs have been incurred by Yuen. Be that as it may, it is trite law that costs, if any, shall follow the event. Therefore,   I shall also make a costs nisi to the effect that Yuen do have the costs of the interpleader summons including costs of today. If no application is made to vary the costs order nisi within 14 days from today, the said costs order nisi will be made absolute. The following directions will then apply:

(1)   Yuen do within 7 days from the date of the costs order absolute lodge and serve statement of costs, if any;

(2)   Shun Fat do within 7 days thereafter lodge and serve summary of objections;

(3)   In lieu of agreement on the amount of costs between parties, Yuen do within 21 days from the date of the costs order absolute fix a date with the Listing Clerk for summary assessment of costs to be heard before me in chambers (open to the public) with 30 minutes reserved.

37.  Lastly, Yuen is reminded to comply with paragraph 6 of my Order dated 25^th October 2011, i.e. to serve a sealed copy of today’s order on the Secretary for Justice within 7 days upon sealing of this Order.