HKSAR v. KONG KAM YUK AND ANOTHER

HCMA473/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO. 473 OF 2006

 (ON APPEAL FROM KTCC 6311 OF 2005)

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J U D G M E N T

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1. The 1^st appellant was convicted after trial of two charges of ‘contravention of condition of massage establishment licence’ (Charges 1 and 3), contrary to section 13(1) of the Massage Establishments Ordinance, Cap. 266.  He was sentenced to two concurrent terms of 3 months’ imprisonment.  In the same trial, the 2^nd appellant was convicted of one charge of ‘managing a vice establishment’ (Charge 2), contrary to section 139(1)(b) of the Crimes Ordinance, Cap. 200 and was sentenced to 5 months’ imprisonment.  The appellants appeal against these convictions, having abandoned their appeals against sentence.

THE CHARGES

2. Charges 1 and 3 both read :

“Kong Kam-yuk, on the 12^th day of May 2005, at King Dao Sauna, 1 floor and 2 floor, Nam Lo Mansion, No. 334, Un Chau Street, Kowloon, in Hong Kong, while keeping a massage establishment, namely King Dao Sauna in regard to the operation of which a licence had been issues under the Massage Establishments Ordinance, contravened a condition of the licence by contravening condition number ___ of Conditions of Licence No. A3592.”

3. For Charge 1, the condition contravened was condition number 4 ― “the licencee shall adequately and personally supervise the licensed premises during the permitted hours of business”.  For Charge 3, it was condition number 7 ― “no vice or immoral activities shall take place in the premises”.

4. As regards Charge 2, these are the particulars :

“Ko Chui-ching Annie, on the 12^th day of May 2005, at 1 floor and 2 floor, Nam Lo Mansion, No. 334, Un Chau Street, Kowloon, in Hong Kong, did manage the said premises which were kept as a vice establishment.”

EVIDENCE

5. Quoting from the magistrate’s Statement of Findings, the following is a summary of what took place at trial :

“Evidence on behalf of the prosecution was given by PC 53958, PW1; PC 33607, PW2; PC 335 94 PW3; Sgt 23804, PW4; PC 33364, PW5; WPC 3926, PW6; WPC 56913, PW7; PC 4249, PW8 and Insp. WONG Wai-yin, PW9.  The 1^st Appellant gave evidence on his own behalf.  He gave evidence after three customers who were found on the premises had given evidence, namely LUI Fai-chak, DW1; MAN Kam-ming, DW2; WONG Chi-keung, DW3 and LEUNG Chun-ho, DW4.  The 2^nd Appellant elected to remain silent.  There were a number of exhibits produced including photographs and plans of the premises, receipts, both company and visa, employment records and condoms and Records of Interview.”

6. Next comes the prosecution evidence in detail (reproduced in parts only, and with paragraph numbers inserted by me for easy reference) :

“3.       PW1, acting undercover, visited the premises on the 12^th May 2005 in company with PW2.  He described what happened when he entered.  Briefly he described a female staff member, whom he subsequently identified as the 2^nd Appellant, as greeting him and informing him that for HK$466 he would receive a 2 hour massage and masturbation and for HK$638 he would receive a 2 hour massage and sexual intercourse.  He described the circumstances in which he had observed the female in black.  She stated that she would choose a pretty girl for him as he had not been to the premises before, but he could change her if he wished.  PW1 then described being taken to a room, meeting a masseuse, receiving massage and then being offered the same sexual services.  He described leaving the massage on the pretext that he wished to use the lavatory, during which time he telephoned his sergeant to report on the progress of the operation.  PW1 stated that he returned to the room, the treatment was continued, the lights were dimmed and a towel was used to cover the windows.  He described what happened at the time of the police raid.  He further described the identification procedure in relation to the 2^nd Appellant and his masseuse.

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5.        PW2 gave evidence of attending the premises with PW1.  He confirmed the offer by sexual packages by a female in black, whom he also identified as the 2^nd Appellant.  He described the circumstances in which he observed the female in black.  He described being taken to a massage room and having been given some massage was then asked which of the two sexual packages he wanted.  PW2 stated that he phoned his sergeant whilst the masseuse was out of the room and then later he heard persons shouting License Check.  He described the identification process followed during which he identified the 2^nd Appellant and his masseuse.

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7.        PW3 gave evidence of arriving at the premises shortly after PW1 and PW2.  He gave evidence of being approached by a female in black who described the same sexual services as being on offer as were on offer to PW1 and 2.  The female was subsequently identified as the 2^nd Appellant.  He described being taken to the massage room where he met his masseuse who in due course offered him the same sexual services.  He also managed to create an opportunity to telephone his sergeant.  He described the identification process.

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9.        PW4, the sergeant described arriving at the premises with PW9 and other officers.  He stated that PW9 was armed with the Crimes Authorisation.  The License Holder was asked for and the 1^st Appellant arrived and introduced himself as the License Holder.  The Crimes Authorisation was then shown and explained to the 1^st Appellant.  PW4 stated that he asked the 1^stAppellant asked about the staff working at the premises and the staff cards were produced.  There were 18 masseuses, 3 female supervisors, a male manager, 11 waiters and cleaning workers, 1 female cashier and 1 attendant.  Inter alia, he confirmed the finding of the receipts including the visa receipts and produced them as Exh.P4.  He also produced the employment cards as Exh.P5.

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11.      PW5 gave evidence of arresting the 1^st Appellant.

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13.      PW6 gave evidence of searching the belongings of 3 of the masseuses and their lockers.  She produced some of the condoms.  She arrested the 2^nd Appellant.

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15.      PW7 also was concerned in the search of 3 masseuses and their lockers.  She found the majority of the condoms and a bottle of lubricant.

16.      PW8 was an exhibit officer.

17.      PW9 gave evidence of leading the raid after the information had been obtained from PW1, 2 and 3 …”

7. Finally, there is the defence case :

“19.     DW1, 2, 3 and 4 were all customers found on the premises at the time of the raid.  All them had been interviewed at the time of the raid and all had denied being offered any sexual services at the premises.  Each was x-examined.

20.      Indeed all the customers and masseuses had been interviewed at the times and all had denied offering or being offered sexual services.

21.      The 1^st Appellant gave evidence.  He had been a licensee of these premises since June 1994 and there had been no complaints made against the premises at any time.  He was of clear record.  He described the premises and the facilities it offered.  He described the training offered to ensure that no sexual services were offered or provided at the premises.  He purported to explain the differences between the business receipts and the visa receipts as tips.  He produced his record of interview.  He gave evidence of the identification procedure as he saw it.  He denied being shown the crimes authorization and denied being informed of the suspected sexual activities taking place on the premises.  He explained the actions taken against the offending masseuses.  He stated that the 1^st Appellant resigned shortly thereafter before any action was taken against her.

22.      The 1^st Appellant was x-examined.  Inter alia, he stated that all the masseuses involved with the undercover police were longstanding employees.

23.      The 2^nd Appellant elected to remain silent.”

THE MAGISTRATE’S FINDINGS

8. In convicting the appellants, the magistrate observed (reproduced in parts only, and with paragraph numbers) :

“38.     I found the prosecution witnesses to be truthful, honest and reliable witnesses and I accepted their evidence as the truth of what occurred.  I found the 1^st Appellant to be a dishonest witness, and I found his evidence lacking in any credibility.  In so finding I took into account his previously clear record.  Similarly I found the defence witnesses, in my judgment, in no way affected the required standard of proof, and certainly in no way affected or assisted the statutory defence.

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40.      In relation to managing a vice establishment, it is settled law that the word ‘kept’ in the context of section 139(1)(b) carries with it a sense of continuity.  I am satisfied that there was an element of continuity.  PW1 to 3, in my judgment, were not just isolated incidents.  They were each offered sexual services, both by D2 and by their respective masseurs.  It is more than a co-incidence that three officers who came into the premises within a short time of each other were all offered sexual services in the same terms by the staff who greeted them and by their respective masseuse.  Further, the invoices and the attendant Visa payments support the prosecution submission that sexual services were readily available on the premises, being offered to customers and being regularly taken up.  Apart from one of the Visas slips which was for HK$500, all the others were multiples of the $600-odd being charged for sexual services.  I also noted that if one compares the remaining invoices and the money found on the premises this also supports the prosecution submission that such services were being offered and taken up. 

41.     The quantity of condoms the lubricants found in some of the hostesses’ lockers and some handbags also indicate and support the evidence of PW1 to 3 that sexual services were being offered at all times or whenever required.  This repetition of conduct and the persistence on the 2^nd Appellant’s part and the masseuses to offer sexual services to PW1 to 3, together with the financial exhibits, the condoms and the lubricants found, in my judgment, are more than sufficient to satisfy the requirement of continuity. 

42.     The prosecution have to prove that the premises are used, or were used, wholly or mainly by two or more persons for the purpose of prostitution, or for or in connection with organising or arranging of prostitution.  In my judgment, there can be no doubt that the provision of masseurs by the 2^nd Appellant was done in connection with the organising or arranging of prostitution. 

43.      I now have to consider whether the premises were used wholly or mainly for prostitution.  The premises were advertised as a massage establishment.  Massage was clearly available and undertaken.  However, the masseurs were always ready to offer sexual services to PW1 to 3.  In my judgment, this prosecution submission is further supported by the invoices, Visa receipts and the cash found at the premises compared to the remaining invoices.  Again there was the quantity of condoms available and the lubricants found in the various lockers and handbags. 

44.      In my judgment, there is more than sufficient evidence to support the prosecution case that these premises were used wholly or mainly for the purposes of prostitution.  The defendants’ witnesses in my judgment in no way affect the required standard of proof, and in no way raise any doubt.  The invoices, corresponding visa receipts, the remaining invoices and cash, and the condoms and lubricants are more than sufficient to challenge their credibility.

45.      In relation to the 1^st Appellant’s evidence, it is quite clear that these premises have been in operation for a substantial period of time; during this time there have been no police actions in relation to these premises.  However having examined the invoices/receipts, the visa receipts, the condoms, and the lubricants, these exhibits clearly indicate that sexual services were being regularly offered and provided on those premises.  Any checks of the invoices/receipts and the Visa receipts and cash should have put any licence holder on notice.  There should have been searches of the lockers, which would also have brought the problem to the 1^st Appellant’s notice.  

46.      There was clear breach of both of the conditions of the licence.  The masseurs involved were long-standing masseurs at these premises, and a quick look at the invoices would tell anybody that something was amiss at these premises.  Clearly, by the exercise of reasonable supervision and reasonable diligence, these matters could have been prevented, so the statutory defence falls completely in relation to the second section, section 13(1)(ii).  Further, in my judgment, I am satisfied that the 1^st Appellant knew that there were sexual services being carried out of these premises.”

THE PRESENT APPEAL

Charges 1 and 3

9. The main ground of appeal against these charges (Ground 4) is simple.

10. It is contended that section 13 of Cap. 266 provides for a separate offence under each of its subsections as follows :

“(1)   Any person who on any occasion operates, keeps, manages, assists in any capacity in the operation of, or assists in the managements of, a massage establishment in regard to the operation of which a licence has been issued under this Ordinance otherwise than in accordance with the conditions of the licence commits an offence.

(2)    Where a condition of the licence is contravened the licensee shall be guilty of an offence unless he satisfies the court that ―

(a)   he did not know and had no reason to suspect the existence of the circumstances giving rise to the contravention; and

(b)   he could not, by the exercise of reasonable supervision and reasonable diligence, have prevented those circumstances arising.

(3)     Any person who makes any false or misleading statement or furnishes any false or misleading information in connection with any application for the issue or renewal of a licence commits an offence.”

11. In finding that the 1^st appellant had failed to invoke the statutory defence under section 13(2) (see paragraph 46 of the Statement of Findings where the magistrate misquoted the provision as “section 13(1)(ii)), whereas the 1^st appellant was in fact charged under section 13(1), an irreparable error of law has therefore been committed, or so it is argued.

12. Having considered counsel’s submissions, I am not convinced that that is the correct position.  There is simply no authority to support that contention.  In my judgment, sections 13(1) and 13(2) are two distinct offences while section 13(2) is a built-in defence for the former.

13. Before moving on, counsel has, as an aside, complained that (a) there was no finding of the 1^st appellant’s “keeping” (see the wording of the charges); and (b) there should in fact be one single charge covering the breach of both conditions number 4 and 7.

14. I am not persuaded that there is anything to these complaints either.

15. As pointed out by the respondent, the evidence shows that the 1^st appellant had been managing the locus in quo since June 1994.  He interviewed every new employee and kept an overview of everything both in the day shift and the night shift.  He was responsible for holding internal vice-prevention meetings and had terminated a number of staff for alleged breaches.  He was on site when the offences took place.  Whether or not the magistrate spelt it all out, there is abundant material to show that the 1^st appellant was a keeper.  Nor was it part of the defence case that he was not.

16. As regards the other question, I will simply say that I find nothing irregular in the prosecution laying two charges, one for each of the two breaches.   

17. Turning to the second ground (Ground 3), there are two limbs.

18. The first criticizes the magistrate for relying on an uncertified copy of a licence as proof of the content of conditions number 4 and 7.  By uncertified copy, counsel means one that is not certified according to section 15 of the Massage Establishments Ordinance.  The same section provides that copy licences certified by police officers of Superintendent rank and above can be used for that purpose.

19. The second limb of this ground contends that there was insufficient evidence to prove Charge 1 re condition 4 ― “the licencee shall adequately and personally supervise the licensed premises during the permitted hours of business”.  It is argued that the magistrate had wrongly equated evidence of sexual services as evidence of inadequate personal supervision.

20. In answer, it is true that there was a technical error in production of the licence, but the respondent’s position is that it does not go to merit.  I agree and adjudge that no injustice had been done to the 1^st appellant: Ching Kwok Yin v. HKSAR [2000] 3 HKCFAR 387.  At trial, there was never any argument about the content of the conditions in question.

21. As for what constituted adequate evidence for Charge 1, I reiterate that the 1^st appellant was present when PW1 to 3 made their visits.  These three were offered sexual services not only by the 2^nd appellant at reception but by the individual masseuses who later dimmed the lights and covered the windows to provide them.  In my judgment, nothing shows up the 1^st appellant more badly than this in terms of supervision.  In fact, it strongly suggests that he was fully aware of the goings-on in the premises.

Charge 2

22. The grounds counsel advances against this charge concern the way in which the magistrate had dealt with (a) the evidence of the defence witnesses; and (b) the documentary exhibits.

23. Having considered the matter carefully, I find these complaints to have substance.

24. In saying that the defence witnesses had “in no way affected the required standard of proof”, it is unclear what the magistrate meant and why.  Did she find them dishonest?  Or were they credible but of no help to the defence case?  And to put everything in perspective, how many customers in fact were there at the scene in total?  The main user of whole or part of the premises being in issue, these and other questions of the same nature ought to have been dealt with in detail.  They cannot be brushed aside.

25. Similarly, I do not think the issue of the visa slips, etc. can be dealt with properly in the blandness that is evident in the Statement of Findings.  A first-instance tribunal cannot do its mental sums in private and expect the appellate court to go on a separate analysis to support its conclusions.  In any event, I doubt whether the magistrate’s calculations were comprehensive because, as the respondent has fairly pointed out, there were 28 company receipts each for the sum of $236 ― a matter that does not seem to have entered the magistrate’s computation and which does not present a figure ($236) of immediate apparent significance.

26. Finally, it causes me much concern to know that no submissions had been made or invited at trial on these documentary exhibits.  I do not think it is desirable (some would say proper) for the magistrate to go on her own analysis without the benefit of such assistance.

27. Nothing said so far, though, has affected the magistrate’s conclusion that PW1 to 3 were honest and reliable witnesses.

JUDGMENT

28. For reasons already explained, the appeal of the 1^st appellant is dismissed.  The appeal of the 2^nd appellant is allowed with her sentence set aside.