HKSAR v. LIU CHENGHAO AND ANOTHER

[English translation – 英譯本]

HCMA 289/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 289 OF 2013

(ON APPEAL FROM STCC NO. 841 OF 2012)

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J U D G M E N T

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Introduction

1.  At the conclusion of the hearing on 25 September 2013, I adjourned the case to today for delivery of judgment.  I allow the appeal, quash the convictions and set aside the sentences.  The reasons therefore are set out in this Judgment.

Background and charges

2.  The 1^st appellant (the 1^st defendant at the trial, hereinafter referred to as “D1”) and the 2^nd appellant (the 2^nd defendant at the trial, hereinafter referred to as “D2”) were each charged with one count of breach of condition of stay, contrary to section 41 of the Immigration Ordinance, Cap. 115, Laws of Hong Kong and regulation 2 of the Immigration Regulations.  Charge (1) was concerned with D1 and charge (2) was concerned with D2.  Both charges were identical in their wording, in that they alleged that the appellants on 7 March 2013:

“in Hong Kong you did contravene a condition of stay in force in respect of you imposed on 4 March 2013 by an Immigration Assistant, in that, you were only permitted to remain in Hong Kong as a visitor for 7 days from your date of entry on 4 March 2013, subject to the prescribed condition by virtue of Regulation 2 of the Immigration Regulations that you shall not take up employment, whether paid or unpaid, but you did take up employment as an odd job worker at Yaumatei.”

3.  The two appellants pleaded not guilty and were tried before Magistrate Mr. Cheang Kei-hong. On 23 April 2013 the Magistrate convicted both of them after trial and sentenced each of them to three months’ imprisonment.  They appeal against their convictions.

Prosecution case and defence case at trial

4.  At trial, the parties agreed on some undisputed facts and called witnesses.  The prosecution called two Immigration Assistants, while on the defence side the two appellants and one defence witness testified.

5.  According to the Admitted Facts (prosecution exhibit P1), both parties admitted that D1 and D2 entered Hong Kong as visitors on 4 March 2013, and that they were subject to the following conditions: they shall not take any employment, whether paid or unpaid, and shall not establish or join in any business.

6.  Both of the prosecution witnesses were Immigration Assistants.  The first witness was Mak Wai-kay [transliteration of 麥偉基] (“PW1”), and the second witness was Poon Ying-chi [transliteration of 潘瑩紫] (“PW2”).  In the Statement of Findings the Magistrate described the prosecution case as follows:

“6. Around 3.26 p.m. on 7 March 2013, PW1, disguised as a customer, entered a wholesale fashion shop called Maliano, which was located at Room 801, 8/F, Hanford Fashion, 221B-E Nathan Road, and occupied an area of about 2,000 square metres. On entry into the shop, PW1 saw D1 standing near the entrance and handing out tags for checking clothing to customers who had just gone into the shop. PW1 picked up a white bag with a picture of a tiger head printed on it …, and asked D1 about the price of the bag. D1 answered PW1 in Putonghua, saying that it was ‘about’ $110. PW1 further asked D1 how many he had to buy in order to buy them wholesale. D1 said he could buy whatever quantity he liked. PW1 asked D1 whether he had to pick up the goods himself after he bought them. D1 said that deliveries of goods could only be arranged for Hong Kong companies. After that, PW1 revealed his identity to D1 and asked D1 to show him his identity document. D1 showed PW1 his Mainland identity card. PW1 ascertained that D1 was a visitor. At 3.40 p.m. PW1 told D1 that he was put under detention and cautioned him, who answered in Putonghua that he understood. PW1 asked him what he was doing there. He answered, “I was handing out tags. Just now a young man left his position, so I gave help by handing out the tags. My family members and this company are of the same group. Seeing that they were busy, I helped them to hand out the tags.” Later, D1 was taken to an office of the Immigration Department. PW1 post-recorded in his notebook (prosecution exhibit P7) the answers given by D1 under caution. The post recorded statement was read over by a Putonghua interpreter to D1 and was handed to him to read it himself. D1 confirmed that he had read the post recorded statement, that its content was all true and that no alteration, correction or addition was required. D1 signed at various places in the statement.

7.  Around 3.25 p.m. on 7 March 2013, PW2, disguised as a customer, entered Maliano, located at Room 801, 8/F, Hanford Fashion, 221B-E Nathan Road.  PW2 saw that D2 was kneeling in front of a rack on which ornaments were displayed and which was near the cash register, sorting out clothes in a plastic basket which was placed on the floor. At that time D2 hanged the clothes up on hangers.  Having seen that, PW2 picked up a bangle from the rack on which ornaments were displayed and asked D2 how much its price was.  D2 replied that it was $200. PW2 went on and asked him about the minimum quantity for buying them wholesale.  D2 did not answer PW2.  He went away.  He went to a cardboard box which was at the side of the checkout counter and hangers were kept in the box.  There, he picked up some hangers, returned to the place where he was sorting out clothes a moment ago, and continued to sort out the clothes.  PW2 asked him whether they provided goods delivery service.  He answered that goods could be sent out by express delivery.  At 3.38 p.m. PW2 revealed her identity to D2 and asked D2 to show her his identity document.  D2 showed PW2 his Permit for Travelling To and From Hong Kong and Macao.  After checking D2’s Permit, PW2 ascertained that D2 was a visitor.  At 3.40 p.m. PW2 told D2 that he was put under detention and cautioned him.  D2 answered in Putonghua that he understood.  PW2 asked him what he was doing there.  He answered in Putonghua that he was a customer.”

7.   The defence case was that both D1 and D2 were employees of Shenzhen Jiaxinyuan [transliteration of 嘉鑫源] Trading Company Limited.  D1 was a purchasing agent and D2 was a shop assistant.  Jiaxinyuan Trading Company also had a shop in Shenzhen called Maliano.  The appellants’ evidence was that during the period 4 to 7 March 2013 they were in Hong Kong Maliano, located at Room 801, 8/F Hanford Fashion, 221 B-E Nathan Road (“Room 801”), picking and choosing what they should buy for Shenzhen Maliano from Hong Kong Maliano.  In the course of D1’s giving evidence, the defence produced as evidence several sales invoices issued by Hong Kong Maliano, namely defence exhibits D2, D3 and D5.  The employment contract between Jiaxinyuan Trading Company and D1, namely the Agreement Concerning the Employment of a Staff Member was produced as defence exhibit D1.

8.  The first defence witness DW1 Chan Yuk-wang gave evidence that he was the clerical supervisor of Hong Kong Maliano, responsible for administration, accounting, recruitment, issuing of bills and invoices, and settling of accounts.  He testified that D1 and D2 were respectively a purchasing agent and a staff member of Shenzhen Maliano, and that they were not employed by Hong Kong Maliano.

Reasons for findings

9.  The Magistrate rejected the evidence given by D1, D2 and DW1.  In addition, he found that none of the invoices which constituteddefence exhibits D2, D3 and D5 was a genuine invoice issued by Hong Kong Maliano, and that defence exhibit D1 was not a genuine employment agreement either.

10.  On the other hand, the Magistrate accepted totally the evidence of PW1 and PW2. He made the following conclusion:

“39. From PW1’s evidence about what D1 had said and done I drew an irresistible inference that in the afternoon of 7 March 2013, D1 was working at Hong Kong Maliano, 8/F Hanford Fashion. What D1 was doing there was what an employee was to do there. I made an irresistible inference that D1 was employed to work there. I was satisfied that the prosecution had proved beyond reasonable doubt all requisite elements of charge (1) and I found D1 guilty of charge (1).

40. On the basis of PW2’s evidence about what D2 had said and done, I drew an irresistible inference that in the afternoon of 7 March 2013, D2 was working at Hong Kong Maliano, 8/F Hanford Fashion.  What D2 was doing there was what an employee was to do there.  I made an irresistible inference that D2 was employed to work there.  I was satisfied that the prosecution had proved beyond reasonable doubt all requisite elements of charge (2) and I found D2 guilty of charge (2).”

Grounds of appeal

11.  Mr. Bruce Tse and Mr. Richard Yip, acting for the two appellants, put forward three specific grounds of appeal as follows:

(1) The testimonies and evidence in this case were insufficient to support the Magistrate’s finding that D1 and D2 at the material time contravened a condition of stay by taking up employment in Hong Kong. Even if (just an assumption) both of the prosecution witnesses were credible and reliable, as a matter of law, the prosecution failed/was not able to prove the element of “taking up employment” and the inference about employment was not the only and irresistible inference that could be drawn in this case.

(2) The Magistrate erred in totally rejecting the evidence of defence witness DW1 Mr. Chan Yuk-wang (“Mr. Chan”) when there was no or no sufficient reason for him to do so, and at the same time the Magistrate overlooked and/or failed to consider or evaluate the fact that Mr. Chan was an independent witness with no criminal conviction whose evidence was able to refute all the prosecution’s allegations or at least create a reasonable doubt in the prosecution case.

(3) The Magistrate failed to sufficiently and fully consider all the testimonies and evidence in this case, and erred in wholly rejecting the explanations proffered by D1 and/or D2 when there was no sound basis for him to do so.

12.  On these grounds of appeal the appellants asserted that their convictions were unsafe and unsatisfactory.

Discussion and my opinions

13.  Public Prosecutor Mr. Cliff Ip, acting for the respondent, correctly pointed out that a magistracy appeal is an appeal by way of rehearing on the evidence before the trial Magistrate; see Chou Shih Bin v HKSAR (2005) 8 HKCFAR 70.  Mr. Ip further submitted that in the recent case HKSAR v Cheung Yu Kay [transliteration of 張裕驥], HCMA 186/2013 (Date of Judgment: 9 May 2013, unreported), I set out the following legal principle about the way in which an appellate court should deal with findings of fact made by the trial Magistrate:

“14. As regards whether a magistrate should accept the evidence given by a prosecution witness and reject the appellant’s evidence, this is a decision which should be made by the magistrate in respect of the relevant facts. The Court of First Instance has repeatedly said that a magistrate has the benefit of having seen and heard the witnesses and observed their demeanour and the manner in which their evidence is given, so that in assessing the veracity, credibility, reliability of each witness and the weight to be attached to the evidence of each witness, the magistrate enjoys an immense advantage when compared with the appellate court. Whether a witness is credible and reliable is purely a matter for the trial magistrate to decide. The appellate court will not and should not disturb findings made by a magistrate unless the finding in question is manifestly unreasonable, illogical, contrary to the inherent probabilities, not supported by any evidence, or even contradicts the evidence, or the magistrate, in dealing with the evidence, omitted, failed to consider or analyse, or made wrong references to, material matters.”

14.  Therefore, regard must be had to this legal principle when considering whether the grounds of appeal of the defence should be accepted.  On the other hand, if a finding of fact made by the trial Magistrate is manifestly unreasonable, illogical, contrary to the inherent probabilities, not supported by any evidence, or contradicts the evidence, or the magistrate, in dealing with the evidence, omitted, failed to consider or analyse, or made an erroneous reference to, material matters, or the Magistrate committed errors in dealing with points of law or procedural matters, or committed errors in his analysis or inferences, then the appellate court should correct the errors.

15.  Having carefully considered the written submissions and oral submissions made by the legal representatives of the two parties, I find that ground of appeal (1) is not substantiated and that ground of appeal (3) is not substantiated either, except that it exposed the procedural mistakes made by the Magistrate. However, I consider that most of the arguments concerning ground of appeal (2) are established.

Ground of Appeal (1)

16.  In respect of ground of appeal (1), Mr. Tse and Mr. Yip, relying on several authorities, contended in their written submissions that the prosecution could not come to the conclusion that a defendant had taken up “employment” unless and until they had at least proved that fiduciary duties existed between the defendant and the person who engaged him to work.  I set out below their submissions regarding this ground in full:

“18. First and foremost, the prosecution have the duty to prove the element of “employment”, but they failed to do so in this case. There is a line of authorities which show that the courts generally would refuse to arbitrarily draw the conclusion that a defendant had taken up “employment” when the evidence before them was merely the prosecution’s one-sided account that at a certain place the defendant had attended to some petty matters or had done something which a customer would never do.

19. In HKSAR v Lau Chi Wai [transliteration of 柳志惠] (HCMA302/2003) (LA/5) Deputy High Court Judge M. Poon (as she then was) clearly pointed out that the prosecution at least had to prove that fiduciary duties existed between the defendant and the person who engaged him to work:

‘11. In my view, ‘employment’ subsists on the basis of an ‘employer and employee relationship’, that is to say, when one of the parties works for the other party, he regards the other party as his employer, and the other party (i.e. the party who is regarded as the employer) acknowledges their mutual duties or obligations and further, fiduciary duties exist between the two of them. In addition, the employer must have the power to arrange work for the employee and to deploy or instruct the employee to work.

12. The trial Magistrate found that since the Ordinance was about criminal law, it was not necessary to consider the question of whether there was any offer or acceptance. In my judgment, even if the Magistrate’s view is correct, at the very least, a common understanding should exist between the person who employs and the person who is employed. If that is not the case, then once a party, without the other party’s consent, knowledge or acquiescence, took the liberty of doing some simple labour of a short duration, an inference could be drawn that an employer and employee relationship existed between these two persons, leading to the result that the other party, who had not knowingly allowed this to happen, automatically committed the offence of being the employer of a person not lawfully employable. Such a conclusion strikes me as too severe, too harsh and too arbitrary.’

20. In R v Ip Po Fai (HCMA 1201/1995) (LA/6), two persons who entered Hong Kong on the strength of their two-way permits were found to be serving customers, cleaning dining tables and slaughtering snakes in the kitchen in the food establishment of the appellant, who was their cousin/close friend. P. Chan J (as he then was) allowed the appellants’ appeal, because there was no sufficient evidence in that case for the trial Magistrate to draw the inference that at the material time the two persons were employed to do what they were doing:

‘However, it does appear to me that in the present case, the Crown’s case is nothing more than that these two persons were found physically doing work in the shop. But there is evidence of their relationship with the appellant: one of them was a cousin of the appellant and the other a close friend. There is also the evidence that they were staying with the appellant’s mother and as a matter of fact, the mother appeared also to be working inside the shop. Then the question is: is there any difference between the mother and these two persons? I must say that the Crown had a difficult task in proving employment in a case of this sort. The Crown need to prove more than mere working in the shop to establish employment. With respect to the learned Magistrate, I do not think that in the circumstances of this case, the evidence is such that the only reasonable inference or the compelling inference was that these two persons were employed at the time when the officers entered into the shop or at any time at all. In the present case, I think the evidence falls short of proving employment beyond reasonable doubt.’

21. In HKSAR v Cham Sui Ying [transliteration of 湛瑞英] (HCMA 840/2005) (LA/7) A. Leong J [sic] remarked that ‘To perform odd jobs means to engage in doing odd jobs or to be occupied in doing odd jobs.  If one does some simple work for another, it does not follow that one is performing odd jobs.’  Therefore, even though in that case the first prosecution witness, who posed as a customer, saw that the appellant’s domestic helper sold scented tea, received payments, gave change and wrapped up the goods in the shop, the domestic helper was not found to have taken up employment. A. Leong J [sic] went on and said, ‘As [Deputy] Judge Poon said in Lau Chi Wai, if the doing of such trivial matters are regarded as breach of condition of stay, the law would be too severe and too harsh.’

22. In HKSAR v Gu Shaoqin(顧紹欽) (HCMA 411/2010) (LA/8), Deputy High Court Judge E. Toh (as she then was) found that at the material time the appellant was only visiting his uncle, who was the proprietor of a shop selling household sundry goods, and that although the prosecution alleged that an officer of the Immigration Department saw that the appellant moved goods, sold a cleaning cloth, received payments and gave change, the evidence was not conclusive, and she allowed the appeal:

‘14. In Ip Po Fai, HCMA 1201/1995, the facts were that two two-way permit holders were found serving customers inside a cake [sic] shop and in the kitchen of the shop. One of the two, surnamed Kwok, was a cousin of the Appellant and the other Lai was a friend of Kwok. At page 3 of the judgment, Mr. Justice Patrick Chan (as he then was) said:

…

15. It is clear that in this case there is cogent evidence from the Appellant and his witness that the owner of Luen Wo Metal is the Appellant’s uncle, and that the Appellant was only visiting at that time.  Thus this case falls within the ambit of what Mr. Justice Chan had pointed out in the paragraph above.

16. I therefore agree with Mr. Liu that the evidence is not conclusive that the Appellant was employed at that time.’

23. In HKSAR v Singh Jaya Mahohar (HCMA 516/2010) (LA/9), the appeal of a domestic helper who, motivated by her desire to help others, helped her employer to serve the customers in a curry restaurant by giving them the menu, taking their orders and receiving payments, was also allowed.  One of the reasons was that it was only a one-off event which lasted for about half an hour only:

‘22. It was stated in the case of R v Ip Po Fai that working in a place per se is not employment, although in the absence of other evidence, one may draw the necessary inference. This statement of principle has been accepted and applied in trials involving offences of a similar nature, (see HKSAR v Mariano Noemi Valdez, HCMA835/2004 and 香港特別行政區訴梁漢強, HCMA441/2004.) Ultimately, it would be a question of fact, depending on the evidence in the individual cases, for the court to decide whether a person was working as an employee or otherwise.

23. There seemed to be no dispute in our case that if the appellant’s account was true or possibly true, then her behaviour in the restaurant would not have constituted the offence, as she would not be under any duty to work.  In this regard, it is important to look at all the relevant aspect of the evidence.

24. The appellant said she had been to the restaurant many times to obtain food for the employer’s son.  I don’t see sufficient basis to reject her evidence on this point.  And if the appellant would go in the restaurant for this purpose, that she had done so before, and it was the same this time, then on the whole, it would be difficult to say there was no possibility in what she had said.

25. Of course, the appellate court would not usually disturb the factual findings of the magistrate as he had seen and heard the witnesses.  But in the present case, I would have to agree with Ms. Tjia that the reason for rejecting the evidence of the appellant and DW2 was questionable.  I also cannot see there in existence any material discrepancies between the evidence of the appellant and DW2.  I would further add that the appellant being able to engage in the activities without being stopped could not be interpreted as evidence against her.  If she was just an ordinary customer, naturally she should be stopped, but she being the helper of the boss, the situation would be very different.  I doubt if the staff would be eager to stop her when the appellant was trying to give a hand while waiting for the order.

26. Furthermore, I also tend to agree with the trial magistrate’s observation in the case against the employer (STCC3980/2010).  Considering that the appellant was still wearing a shoulder bag, it would be rather inconsistent with her working there on employment.

27. It is true that what the appellant had done might well be suspicious, and could cause suspicion.  While a longer period of observation or observation on separate occasions might throw different light on the appellant’s true position in the restaurant, based on the available evidence before the court, I have to conclude that the conviction was unsafe.’

24. In the present case, it is obvious that the prosecution had not proved their case beyond reasonable doubt.  Even though the trial Magistrate fully accepted everything said by PW1 and PW2 in their evidence, the evidence about taking up ‘employment’ is still too flimsy.  At the most it could only show that D1 and D2 had done something for others for a very short time.  The prosecution should never have concluded that D1 and D2 had definitely taken up ‘employment’ by merely relying on the descriptions given by PW1 and PW2 that D1 was standing near the doorway handing out tags and D2 was kneeling on the floor sorting out clothes.

25. First of all, the time taken by the prosecution witnesses to observe D1 and D2 was extremely short.  Even if they had done anything similar to doing odd jobs, that could be called a one-off event which lasted for a very short time only.  The trial Magistrate should not have relied on HKSAR v Ferosh (D3) (HCMA745/2012) (LA/10) and come to the conclusion which he stated in paragraph 38 of the Statement of Findings, namely that the time of observation in the present case was not too short.  The reason is that the facts of Ferosh were totally different from those of the present case.  In Ferosh, police officers saw the defendant and two other men dismantling a metal shack with a hammer and a crow bar.  When the officers went forward to stop and question the defendant, he fled the scene at once and was intercepted by the officers about a hundred metres away.  The defendant explained that he was in the area looking for accommodation.

26. Furthermore, handing out tags and sorting out clothes were not conduct indicative of or pointing to a certain conclusion.  As far as cogency of the evidence is concerned, such evidence is in no way comparable to the evidence about serving customers, moving goods, receiving payments and giving change revealed in the above-mentioned cases.  In respect of those cases, it was “too severe, too harsh and too arbitrary” to draw the inference about taking up ‘employment’. In the present case, D1 and D2 had done nothing which could clearly show that they were employees.  The prosecution was unable to adduce any evidence which was more convincing, for example, they had used the computer of Hong Kong Maliano, they had made out invoices and receipts for the customers, or they had received payments.  There is no such evidence at all.

27. The prosecution argued that it was because D1 and D2 were employees that they could tell the prices of the goods.  Such argument is nothing but groundless speculation.  PW1 himself admitted that D1 had just said the price of the tiger bag was about$110.  The tone and manner in which D1 uttered these words indicated that it was only his guess.  An ordinary customer could also have answered in this way.  As for D2, at first he simply took no notice of PW2.  It is only because PW2 kept on asking him that he said the bangle was $200 or about $200.  It seems that the trial Magistrate failed to consider that the two appellants, in particular D2, behaved in an unusually indifferent manner towards PW1 and PW2, who disguised as customers.  What they did was simply answering their questions by saying a few words casually.  They had never served, attended to or helped PW1, PW2 or other customers attentively on their own initiative.  The passive and casual responses made by D1 and D2 at the material time could never be evidence to prove that they were employees of Hong Kong Maliano.

28. Therefore, that D1 and D2 had ‘taken up employment’ cannot possibly be the only and irresistible inference, because probably D1 and D2 were just customers (as they said in evidence) purchasing clothes there, and nothing more.”

17.  At the trial, Mr. Tse, who represented the appellants, had also referred the Magistrate to the above-mentioned cases.  The Magistrate in his Statement of Findings commented that those cases were not applicable to this case, because the facts were different from those of this case.  He explained that in those cases the persons who were charged with taking up employment had some legitimate reasons for their presence at the respective scenes of crime, or they had close relationships with the owners or staff members at the scenes (for example, they were relatives or close friends).  The Magistrate said:

“37. … In respect of the present case, I rejected the defence evidence that on 7 March 2013 D1 and D2 were staff members of Shenzhen Maliano and the argument that the purpose of their visit was to purchase goods at Hong Kong Maliano for Shenzhen Maliano. For this reason, this case was distinguished from the cases which the defence counsel referred the court to.”

18.  I endorse the Magistrate’s reason for holding that those cases were not applicable to the present case.  I shall explain on what grounds the Magistrate found that D1 and D2 had contravened the condition of stay.  First of all, he rejected the evidence of D1, D2 and DW1, and did not accept defence exhibits D1, D2, D3 and D5 as genuine evidence (discussion will be provided later in this Judgment).  Furthermore, he accepted the evidence of PW1 and PW2 in its entirety.  Therefore, the evidence that remained in this case (which he accepted) was the descriptions given by PW1 and PW2 of how D1 and D2 were working in Room 801 in Hong Kong Maliano on 7 March 2013.  As for the nature of their work, since there was no other evidence which he accepted could serve as counter-evidence, the only inference was that the work in question was work done by employees.  There was no other evidence accepted by the Magistrate which could show that there were any other plausible reasons which could explain the conduct of and the work done by D1 and D2 in Room 801, for example, situations similar to those in the above-mentioned cases existed in this case, or a close relationship was present between D1 and D2 on one hand and the owner or staff members of the shop on the other hand.  On this basis, the Magistrate was entitled to draw an irresistible inference that D1 and D2 were employed to work at that place.  That being so, ground of appeal (1) is not substantiated.

Ground of Appeal (3)

19.  Ground of appeal (3) is a complaint about the Magistrate’s rejection of the evidence of D1 and D2.  The Magistrate had made detailed observations and analysis in his Statement of Findings.  Owing to the weaknesses and contradictions in the evidence of D1 and D2, the magistrate did not accept that they were reliable or credible witnesses.  The following are some examples:

(a) D1 was not clear about how much discount Hong Kong Maliano gave Shenzhen Maliano.  This was inconsistent with his claim that he was a purchasing agent.

(b) There were contradictions in D1’s evidence concerning when new goods would arrive at Hong Kong Maliano.

(c) D1 described the boss of Shenzhen Maliano as his relative, but actually the boss was only his fellow townsman.  The Magistrate considered that what he said earlier did not tally with what he said later.

(d) As regards when D1 would have holidays and how long his holidays were, the Magistrate considered that D1 was changing his evidence while giving evidence.

(e) D1 was not clear about what kind of clothes the goods reference numbers on the goods dispatch list [發貨單], which was a defence exhibit, referred to.

(f) In his evidence in chief, D2 said he was a computer assistant of Shenzhen Maliano, responsible for marketing and reception. However, when he was under cross-examination, he said he was a shop assistant / shop manager assistant.  The Magistrate considered that the earlier part of D2’s evidence was in conflict with the latter part.

(g) D2 gave evidence that on 5 March 2013 he and D1 had visited Hong Kong Maliano at Room 801 once.  This version of the events was different from D1’s evidence that on that day the two of them had gone to Room 801 twice.

(h) Concerning prosecution exhibit P11, which was a bangle, D2’s evidence in chief was that at Shenzhen Maliano it would be sold at the price of RMB 199 yuan or RMB 299 yuan; but under cross-examination, he said that at Shenzhen Malianoits selling price would be RMB 299 yuan or RMB 399 yuan.  The Magistrate considered that D2’s earlier evidence was inconsistent with what he said subsequently.

(i) D2 said under cross-examination that the nature of his visit to Hong Kong on this occasion was a private visit, that he had received no pay from Shenzhen Maliano, and that he had to apply for leave in order to come to Hong Kong.  However, D2 also gave evidence that he spent most of the time on selecting goods at Hong Kong Maliano with D1, and that he and D1 visited Hong Kong Maliano on 4, 5, 6 and 7 March 2013.  The Magistrate found that if D2 had to apply for leave for coming to Hong Kong and received no pay from Shenzhen Maliano for the period when he was on leave (plus the fact that this was the first time D2 visited Hong Kong), he would not have spent so much time on selecting goods at Hong Kong Maliano with D1.  Therefore, D2 contradicted himself in his evidence.

20.  Looking at the Magistrate’s reasons set out above, I think that they cannot be said to be manifestly unreasonable, or illogical, contrary to the inherent probabilities or not supported by any evidence, or contradicts the evidence; nor do I find that the Magistrate, in dealing with the evidence, omitted, failed to consider or analyse, or made erroneous references to important matters.  Therefore, the Magistrate cannot be faulted for rejecting the evidence of D1 and D2.  Ground of appeal (3) does not have a sound basis.

21.  Defence exhibits D2, D3 and D5 were produced during D1’s examination in chief.  They were sales invoices for the goods which D1 purchased respectively on 4, 6 and 7 March 2013 on behalf of Shenzhen Maliano at Hong Kong Maliano.  There were five invoices for 4 March, two for 6 March and one for 7 March.  The Magistrate made a number of observations about these three exhibits and he came to the conclusion that he should refuse to accept any one of the invoiceswhich constituted these three exhibits as a genuine invoice issued by Hong Kong Maliano.  This is a grave decision, because it is not only that the Magistrate was not convinced by the defence exhibits produced by D1, but it is also clear that he was saying, not explicitly, that the exhibits were not genuine, that they were fakes.  At the trial, this serious allegation had not been put by the prosecution or by any person to D1, D2 or DW1 to offer them the opportunity to say anything in reply.  The Magistrate also made the finding that exhibit D1 (the employment contract between D1 and Shenzhen Maliano) was not genuine either, and again, this allegation had not been put to D1 when he was in the witness box.  All these were violations of the rule in Browne v Dunn and were unfair to these three persons.  The rule in Browne v Dunn will be canvassed below.

Ground of appeal(2)

22.  I now discuss ground of appeal (2).  DW1 Mr. Chan was called as a defence witness.  In the Statement of Findings the Magistrate dealt with his evidence in the following way:

“31. Defence witness DW1 gave evidence that he was the clerical supervisor of Hong Kong Maliano, responsible for administration, accounting, recruitment, issuing of bills and invoices and settling of accounts. His evidence was that D1 and D2 were respectively a purchasing agent and a staff member of Shenzhen Maliano. He said Shenzhen Maliano purchased about $6,000,000 worth of goods from Hong Kong Maliano every year, which represented 20% of the yearly turnover of Hong Kong Maliano (that means the yearly turnover of Hong Kong Maliano was around $30,000,000). According to DW1, Hong Kong Maliano had never employed D1 or D2. My observations about DW1’s evidence were as follows:

(i) DW1 admitted that on 7 March 2013 he was working on 11/F Miramar Tower and that on that day he had not been to the shop premises of Hong Kong Maliano at 8/F, Hanford Fashion.

(ii) DW1 said in evidence that the 5^th item of goods on the first page of defence exhibit D2, namely the goods represented by the goods reference number G31391/G600682, were upper outer garments. This was different from D1’s evidence that the goods were jeans.

(iii) DW1 said that the format of defence exhibit D2 and the way of writing information on it were the same as those which he used for the invoices he issued in the usual course of business. I adopted the observations I made in paragraphs 27(ix)(b), (c) and (d) of this Statement of Findings and made the finding that Hong Kong Maliano would not issue their invoices in such a slapdash, perfunctory and unprofessional way as demonstrated by the way in which defence exhibit D2 was made out. Furthermore, the amounts payable stated on the five invoices which constituted defence exhibit D2 came to a total of $284,596.80. I did not believe that Hong Kong Maliano would issue any invoices like defence exhibit D2, with the name of D1, who was only a 17 year old purchasing agent, put down in the space for filling in the name of the payer, instead of addressing them to Jiaxinyuan Trading Company, or Shenzhen Maliano or D1’s boss Zhan Yang [transliteration of 詹陽]; nor did I believe that Hong Kong Maliano would print the name ‘Liu Chenghao’ in the bottom left corners of the invoices, in the spaces identified by the words ‘Confirmed by” or ‘I/We received the above goods in good conditions & agree [sic] the terms & conditions stated above’ to indicate that D1 could sign to confirm that the goods were duly received and to accept the terms and conditions contained in the invoices.

Based on the observations I made about DW1’s evidence, I found that DW1 was neither credible nor reliable and I rejected his evidence.  I did not accept DW1’s evidence that D1 and D2 were staff members of Shenzhen Maliano.  I rejected DW1’s evidence that the purpose of D1 and D2’s visit to Hong Kong Maliano at the material time was to purchase goods from Hong Kong Maliano on behalf of Shenzhen Maliano.  I also rejected DW1’s evidence that Hong Kong Maliano did not employ D1 or D2.  After all, at the time of the offence on 7 March 2013.  DW1 was simply not present at Hong Kong Maliano at 8/F Hanford Fashion.  He was in no position to say whether on that day D1 and D2 took up employment as odd job workers at the scene.”

23.  The correct approach to deal with the observations recorded in paragraphs 31(i) and (ii) of the Statement of Findings is that they should not be taken as being able to produce any detrimental effect on the credibility or reliability of Mr. Chan’s evidence.  My opinion as to paragraph 31(i) is set out in the following paragraph of this Judgment.  Paragraph 31(ii) should not be a reason for rejecting Mr. Chan’s evidence.  The fact that there was a discrepancy between Mr. Chan’s evidence and D1’s evidence was insufficient to render Mr. Chan’s evidence incredible or unreliable, particularly when the Magistrate had totally rejected D1’s evidence.

24.  In the final part of paragraph 31 of the Statement of Findings, the Magistrate remarked that ——  such remarks corresponded with the evidence mentioned in paragraph 31(i) ——  at the time of the offence on 7 March 2013 Mr. Chan was simply not in the Maliano shop on the 8/F, so he was in no position to say whether on that day D1 and D2 took up employment as odd job workers at the scene.  In the circumstances of this case, such view is unjustifiable.  Mr. Chan’s evidence was that he was the clerical supervisor of Hong Kong Maliano, responsible for such duties as administration, accounting, recruitment of staff members and paying wages.  Whether he was present in Maliano on the 8/F at the time of the offence has nothing to do at all with his assertion that Hong Kong Maliano did not employ D1 and D2.  How can Mr. Chan’s absence from Room 801 at the material time negate his knowledge of and evidence that his company, i.e. Hong Kong Maliano, did not employ the two appellants?  The Magistrate’s criticism of Mr. Chan’s evidence thus appears to be unreasonable.

25.  Turning now to paragraph 31(iii), at the trial no one had ever put to Mr. Chan any criticisms concerning defence exhibit D2, namely the invoices similar to those made by the Magistrate in that paragraph.  It was therefore a breach of the rule in Browne v Dunn.  The Magistrate’s criticisms of Mr. Chan’s evidence were unfair and should be disapproved.

26.  The respondent raised queries about the content and scope of the rule in Browne v Dunn and questioned whether it was applicable to the circumstances of the present case.  For this reason, I adjourned the case for three weeks to let both parties have thorough consideration and prepare written submissions.  I have received much assistance from the written submissions of the legal representative of the parties and would like here to express my thanks to them for the professionalism they exhibited and the diligence they employed.

Rule in Browne v Dunn

27.  The rule in Browne v Dunn originated from the case of Browne v Dunn (1893) 6 R 67, HL.  The rule is as follows: Where it is intended to suggest that a witness who is under cross-examination is not speaking the truth or is lying on a particular point, or if there is an intention to impeach the credibility of the evidence of this witness, this should be pointed out to him, so that he may have the opportunity of replying to, explaining or otherwise dealing with the aspect of the evidence, allegations or accusations to which his attention is drawn.  If this is not done, the court would not know the explanations or information which the witness might have been able to provide if he had the opportunity to respond.  It is not only a rule of professional practice and a rule of conduct to be observed by the cross-examiner, but is essential to fair play and fair dealing with witnesses.  See the discussion in Bruce & McCoy, Criminal Evidence in Hong Kong, paragraphs X[604] to [652].  Moreover, I am of the opinion that this rule can enable the court to have access to more complete evidence.  Allegations directed against documents produced by a witness who is under cross-examination are also covered by this rule.  If it is the cross-examiner’s case that the documents are fakes or forged, that should be unequivocally put to the witness under cross-examination, so that he is given the opportunity to respond or explain.  See pages 185 and 186 of the Judgment of the Court of Final Appeal in Lo Chun Nam v HKSAR (2001) 1 HKLRD 180.

28.  In subsequent cases in which the rule in Browne v Dunn was dealt with, there were the following clarifications and elaborations:

(1) Even if the evidence of a witness has not been challenged during cross-examination, the court is not bound to accept his evidence.  The court is entitled to make its findings and to decide whether the evidence of a certain witness should be accepted or rejected on the basis of the available evidence as a whole.  See HKSAR v Z, FAMC 68/2011 (24 February 2012, unreported), paragraph 4.

(2) The court can convict on the basis of certain weaknesses and inconsistencies in the defendant’s evidence even when these weaknesses and inconsistencies have not been put to him.  Such an approach does not violate the rule in Browne v Dunn or breach the rules of natural justice.  See paragraph 4 of HKSAR v Z, supra.

(3) The court is not obliged to give a witness an opportunity beforehand to provide explanations as to the weaknesses and inconsistencies in his evidence.  The court has no duty to improve the defence of a defendant.  See paragraph 87 of HKSAR v Choi Sheung Kay [transliteration of 蔡相祺], CACC 459/2011 (6 August 2013, unreported); Kaifull Investments Ltd v CIR (2002) 1 HKLRD 858 at 873, paragraph 45; and Wah Hing Fat Realty Co Ltd v CIR, HCIA 7/2001 (10 December 2002, unreported), paragraph 20.

(4)     The rule in Browne v Dunn does not apply where the witness knows or has been given notice that the opposite party does not accept his evidence or a certain part of his evidence.  See Tam Ka v Lam Hung Kwong, CACV 75/1999 (6 July 1999, unreported), page 8; HKSAR v Wong Tak Keung(黃得強), CACC 118/2007 (2 November 2007, unreported), paragraph 16; HKSAR v Tsui Sin Yee [2010] 1 HKLRD 876 at 885 and 886; and Dr Fong Ka Yeung v The Medical Council of Hong Kong, CACC [sic] 159/2007 (15 March 2011, unreported), paragraph 30(1).

29.  In Gutierrez v R(1997) 1 NZLR 192 at 199, lines 25-37, the Court of Appeal of New Zealand, having gone through relevant local authorities, had this to say about the rule in Browne v Dunn:

“ The decision referred to lead to the conclusion, which we adopt, that the rule is simply one of fairness. Has a reasonable opportunity been given to enable the evidence in question to be properly assessed? It is the responsibility of prosecuting counsel or a prosecutor who proposes to attack the credibility of defence witnesses, including the defendant, to cross-examine in a way which makes it plain that the relevant evidence is challenged and gives the witness a fair opportunity to answer the challenge. Such cross-examination however may not be necessary if from what has gone before or from the circumstances of the case it is fairly made plain that the truthfulness of particular facts given in evidence is not accepted, and an adequate opportunity to meet the challenge has otherwise been afforded.

If evidence relevant to credibility is not so tested when it ought to be, it is likely to be unreasonable for the trier of fact to make an adverse finding in respect of credibility.” (emphasis added)

30.  The important observation made in Gutierrez is that the rule in Browne v Dunn is a simple rule of fairness:  Has a reasonable opportunity been given to enable the evidence in question to be properly assessed?  If the prosecution intend to attack the credibility of the defence witnesses, including the defendant, they have the duty to make it plain in their cross-examination that the relevant evidence is challenged by the prosecution, so as to give the witnesses a fair opportunity to answer the challenge.

31.  Mr. Ip, acting for the respondent, advanced five arguments.  I shall deal with them one by one.

Argument A

32.  Mr. Ip said: (a) DW1 Mr. Chan did not say that exhibit D2 (let alone D3 and D5) was issued by (i) him himself or (ii) Hong Kong Maliano to D1, and D1 did not say that defence exhibits D2, D3 or D5 was issued to him by DW1 either; therefore, at the trial the prosecution did not need to put to DW1 that the invoices were fakes.  They did not need to, in accordance with the dictum in Gutierrez v R, make it plain to the 1^st appellant and Mr. Chan that this aspect of their evidence was challenged. (b) Discussion about the rule in Browne v Dunnis purely academic.  The Magistrate did not need to mention the authenticity of the invoices in that part of his decision which was about DW1.  (c) The Magistrate had no duty to improve the appellants’ defence.  Mr. Ip relied on the comment made in Choi Sheung Kay, supra: “The trial judge was entitled to reject the evidence of the witness for this reason and, before doing that, he was not required to give the witness an opportunity to provide explanations as to the weaknesses … in his evidence”.  This argument also featured in Kaifull Investment Ltd, Wah Hing Fat Realty Co Ltd and Dr Fong Ka Yeung.

33.  My brief response to this argument is that: the assertion in sub-paragraph (a) is not borne out by the evidence or it is unrealistic.  Firstly, the three defence exhibits, namely D2, D3 and D5 were produced by D1 during his examination in chief.  They were sales invoices relating to the goods which D1 purchased on 4, 6 and 7 March 2013 respectively from Hong Kong Maliano for Shenzhen Maliano.  All these three exhibits contained the reference numbers and the prices of the goods which D1 purchased.  On each of the invoices, the name and address of Hong Kong Maliano were printed and in the space for filling in the name of the payer, D1’s name and Shenzhen Maliano’s address were printed.  D1’s evidence was that defence exhibit D2 was issued by Hong Kong Maliano to Shenzhen Maliano.  As for DW1, during his examination in chief he had been asked about exhibit D2’s format and the way in which information was written on it, and he confirmed that its format and the way in which information was written on it were those he saw in the ordinary course of business and which were used by Hong Kong Maliano in issuing invoices to the customers.  When he was being cross-examined, the prosecution just asked him what goods the goods reference numbers on exhibit D2 stood for, without making any suggestion that exhibit D2 was fake.  The assertion in sub-paragraph (b) is that the Magistrate did not need to mention the authenticity of the invoices in that part of his decision which was about DW1.  This is true, but it is a fact that the Magistrate did mention this point and he relied on his finding that the invoices were fakes as the basis for rejecting DW1’s evidence.  That was a breach of the rule in Browne v Dunn. I agree with the proposition expressed in sub-paragraph (c), i.e. the Magistrate had no duty to improve the appellants’ defence.  However, according to Gutierrez mentioned above, when the prosecution intends to attack or challenge the evidence of any witness, they have the duty to cross-examine in a way which makes their intention clear, so as to give the witness a fair opportunity to answer the challenge.  In the present case the transcript shows that the prosecutor not only did not tell D1, D2 or DW1 that he challenged the authenticity of the three defence exhibits, but at the final stage of his cross-examination of D1 he suggested to D1 that he did not check the amounts (shown on the invoices) of the goods he purchased at all.  This question was stopped by the Magistrate, because this would have amounted to the prosecution accepting that D1 did purchase goods at Hong Kong Maliano.  The Magistrate certainly had no duty to improve the defendants’ defence, but equally he should not have alerted the prosecution to the danger of such a question.  Before he made a finding of critical importance, for example, the finding that the invoices in the present case were fakes, in order to be fair to the defendants and the witness, he should have pointed out to the witness (DW1) that someone might suspect that all the invoices which he confirmed to be genuine were fakesand forged, so that he could have a chance to admit, rebut or explain.

34.  Mr. Ip argued that if the Magistrate had warned the witness of such a serious allegation, he might have been regarded as having entered the arena and might have been accused of being unfair to the defence.  In my view, had the Magistrate just asked the witness what he would say in reply if someone suspected that his evidence was false or the exhibits he produced or confirmed were fakes, that would have prevented him entering into the arena and at the same time given a reasonable and fair opportunity for the witness to respond and explain.

35.  Mr. Ip specifically submitted that no one had ever asked DW1 about the authenticity of exhibits D2, D3 and D5, that DW1 had only given evidence about exhibit D2’s format and the way in which information was written on it, that therefore there was no evidence about whether the three exhibits were genuine or fake, and that consequently the Magistrate could refuse to accept the three exhibits as genuine because of the absence of evidence about their being genuine.  This view is untenable.  D1 produced these exhibits and stated that he purchased from Hong Kong Maliano the goods recorded on these invoices, and DW1 confirmed exhibit D2’s format and the way in which information was written on it.  It is hard to accept the theory that because they did not say explicitly in their evidence that these exhibits were genuine, these exhibits could then be treated as not genuine.  Furthermore, the Magistrate found that exhibit D2 could not possibly be invoices issued by Hong Kong Maliano not because of the fact that D1 and DW1 did not explicitly say that exhibit D2 was genuine but on the basis of other reasons which he set out, and because of this finding he proceeded to reject DW1’s evidence.

Argument B

36.  Mr. Ip submitted: Even if the court finds that DW1 did say exhibit D2 was issued by him (DW1) or Hong Kong Maliano to D1 (the respondent does not agree), it does not follow that DW1 had said exhibit D5 (according to D1, this was about the purchase he (D1) did in the shop on the day of the offence) or exhibit D3 was issued to D1 by DW1 or Hong Kong Maliano.  Since DW1 did not say that exhibit D5 was issued to D1 by him (DW1) or Hong Kong Maliano, at the trial the prosecution did not need to put to DW1 that D5 was a fake, therefore the discussion about the rule in Browne v. Dunn is purely academic.  I shall respond briefly by saying that this argument is as unrealistic as the theory advocated in sub-paragraph (a) of Argument A.  The Magistrate expressly made the finding that he did not accept that exhibit D2, D3 or D5 or any of the invoices was genuine.  Even if he did not spell out that all the three exhibits were fakes and forged, what he meant by making such a finding was crystal clear.  Putting it in another way, if he had accepted that any one of the invoices which constituted exhibit D2, D3 or D5 was genuine or might be genuine, then he should have considered whether the charges could be proved beyond reasonable doubt in the light of that exhibit, but he did not do that.

Argument C

37.  Mr. Ip relied on the case of Z and Choi Sheung Kay and emphasized two points:

(1) “When there are weaknesses and inconsistencies in the evidence of a witness, including that of the defendant, the trial judge was entitled to reject the evidence of the witness for this reason and, before doing that, he was not required to give the witness an opportunity to provide explanations as to the weaknesses and inconsistencies in his evidence.”  (paragraph 87 of Choi Sheung Kay)

(2) “...The magistrate was not bound to accept any particular item of evidence because there had not been cross-examination on it.  He made his findings on the basis of the evidence as a whole deciding to accept the prosecution version and rejecting the contrary evidence adduced for the defence.  There was no unfairness and everyone was fully able to deal with the single issue of credibility.”  (paragraph 4 of Z and paragraph 89 of Choi Sheung Kay; emphasis added; the footnote attached to the original text is omitted).

38.  It goes without saying that whether any unfairness is done in a particular case when the rule in Browne v Dunn is not followed depends on the circumstances of each particular case.  If the witness in question knows or has been given notice that the opposite party/cross-examiner does not accept his evidence or a certain part of his evidence, the rule in Browne v Dunn is not applicable; and when the evidence as a whole in a particular case shows that there is overwhelming evidence in support of the trial judge’s decision, it would be questionable for an appellate court to overturn that decision just because the rule in Browne v Dunn has been violated.

39.  However, if the part of the evidence which is to be challenged is of crucial importance to the case, or the allegation which is to be made against a witness is serious, then unless the witness is fully aware of that, in my judgment, in order to be fair to the witness and to both parties, and for enhancing the recognition of the court’s role in the administration of justice, the rule in Browne v Dunn should be observed.

40.  Mr. Ip quoted some evidence recorded in the transcript and submitted that DW1 in his evidence had said many times that goods would arrive on Mondays and Thursdays, but that D1 had said there were new goods on Mondays, Wednesdays, Thursdays and Fridays and he had purchased 400 pieces of new goods on 6 March 2013 (Wednesday), and that D2 also had said he together with D1 had purchased several hundred pieces of clothes on 6 March 2013 (Wednesday).  Mr. Ip alleged that what D1 and D2 said was a pack of lies.  In my view,although their evidence teemed with flaws, it cannot be said for sure that it was “a pack of lies”. Moreover, if the arrival date of new goods stated by D1 was different from that stated by DW1 and the Magistrate did not believe what D1 said, that cannot be the reason or the basis for finding that DW1 is not believable.

41.  Mr. Ip referred me to Leung Chi Keung v HKSAR (2004) 7 HKCFAR 526.  In that case the Court of Final Appeal pointed out (lines C-E, page 544) that even if the Magistrate committed an error, the Judge who heard the appeal should consider whether the error was one which would render the conviction unjust, so that the conviction should be set aside; and that if the Magistrate would undoubtedly have entered the same verdict had he not made the error, the error would not have been material.  I consider that this point is of no assistance to the respondent, because in the present case, had the Magistrate not committed the error, his rejection of DW1’s evidence or his giving no weight to it would have become groundless, and DW1’s evidence at least would have created a reasonable doubt in relation to the issue of whether D1 and D2 were employed to work at Hong Kong Maliano.

Arguments D and E

42.  These two arguments can be dealt with at the same time.  Mr. Ip argued that regardless of whether the rule in Browne v Dunn was applicable and whether D1 was really a purchasing agent of Shenzhen Maliano (the respondent maintained that D1 was not), he could still work in the shop on 7 March 2013 (the day of the offence), doing things which were to be done by an employee, so he was employed to work there.  D2 was in the same situation.  On 7 March 2013 (the day of the offence) he worked in the shop, doing things which were to be done by an employee, so he was employed to work there.

43.  I hold that in order to prove employment, it is not only necessary to prove that the offender did work, but must also prove the existence of fiduciary duties applicable to an employer and employee relationship, and the absence of a special relationship which featured in Ip Po Fai and other authorities (see the discussion in paragraphs 16 to 18 above).  If Mr. Ip is saying that the two appellants were employed to work in Room 801 on the day of the offence, but that they were not working for Hong Kong Maliano or employed by Hong Kong Maliano, such an argument is too far-fetched and has no evidential support.

Appellants’ submission

44.  Mr. Tse and Mr. Yip submitted that in respect of ground of appeal (2), the main argument of the appellants was that the Magistrate had no or no sufficient reason to reject DW1’s evidence.

45.  Ground of appeal (2) hinges on whether the Magistrate hadgiven sufficient and sound reasons for his finding that he should not believe DW1.  If that had not been done, the appellants submitted, the conviction must have been unsafe and unsatisfactory, because DW1’s evidence should have been able to refute all the prosecution’s allegations or at least create a reasonable doubt in the prosecution case.

46.  The appellants prayed in aid the guidance given by the Court of Final Appeal in Lo Chun Nam v HKSAR (2001) 4 HKCFAR 1 at 10I, which said that the trial Magistrate did not have to go into minute detail when he expressed his views, but that at least he was required “to indicate with clarity ... the basis for his acceptance of the evidence for the prosecution and his rejection of that for the defence.”

47.  In paragraph 31 of the Statement of Findings (quoted in paragraph 22 above) the Magistrate set out three reasons for his rejection of DW1’s evidence.  The appellants contended that the first and second reasons were no reason at all and that the third one actually was not a reason either, but was only a “finding”.  In other words, essentially, what the trial Magistrate had done was that he totally rejected DW1’s evidence without giving even one reason.

48.  At the trial, the prosecution did not adduce any evidence to prove that defence exhibits D2, D3 and D5 were forged; worse still, nothing to that effect was ever put or suggested to the appellants or their witness. The appellants complained that even if (just an assumption) defence exhibits D2, D3 and D5 did appear to be not quite professionally made out, it did not follow that the invoices were not genuine.  In these circumstances, there was simply no evidence which could be the basis of the Magistrate’s finding that defence exhibits D2, D3 and D5 were fakes.

49.  The appellants relied on Browne v Dunn just to make it clear that at the trial the prosecution had never alleged that the sales invoices (defence exhibits D2, D3 and D5) were not genuine or were fakes, nor did they challenge DW1’s truthfulness. Thus it was unfair to DW1 and the appellants for the trial Magistrate to totally reject DW1’s evidence for the reason that the sales invoices appeared to be “slapdash, perfunctory and unprofessional” and their convictions were accordingly unsafe and unsatisfactory.

50.  The appellants submitted that the main consideration under the rule in Browne v Dunn was whether the witnesses had been treated fairly in the prosecution’s conduct of the case.  According to the appellants, many of the cases cited by the respondent are civil cases, and their value as reference materials in the present case is much limited, because in a civil action, each party will be provided with the pleadings and the witness statements of the other party, and each party is represented by solicitors and/or barristers, so that the issues in the trial will be clear to the parties before the trial commences; whereas in a criminal trial, because there are no pleadings, usually some issues will surface only when the trial is underway, and in a criminal trial under the adversarial system, it is not strange that the prosecution do not reveal their position in relation to certain parts of the defence case until the defence are presenting their case.

51.  In the appellants’ view, the decided case which really can be of reference is Lo Chun Nam because in that case, like this case, a documentary exhibit which had never been challenged was found by the court to be a forged document.  Another decided case which has great value as reference material is HKSAR v Heung Yiu Chi [transliteration of 香耀枝] and another, HCMA 514/2012 (30 January 2013, unreported).  Similar to the present case, that case is about the question of in what way the prosecution should treat the defence witnesses in order to be fair.  In Heung Yiu Chi, I pointed out that in the circumstances of that case, the prosecution had different duties towards the defendants and the defence witness.  See paragraph 18 of the Judgment of that case quoted hereinbelow.

52.  The appellants submitted that there were many similarities between the facts of Lo Chun Nam and those of the present case.  In that casethe defendant, like what the appellants did in this case, produced a document in support of his case.  During cross-examination, the respondent, like the respondent in the present case, did not ask the defendant any question in relation to the document or adduce any legitimate evidence relating to the document; and the Magistrate in that case did the same as the Magistrate did in this case, i.e. jumping to the conclusion that it was a forged document.  In Lo Chun Nam the Court of Final Appeal, applying the rule in Browne v Dunn, held that if the prosecuting counsel did not “make it plain” to the witness that his evidence was not accepted and in what respects it was not accepted, that might constitute “substantial and grave injustice”.

53.  The appellants considered that the case which have the greatest resemblance to the present case was Heung Yiu Chi.  In that case, when the first defence witness was in the witness box, no one had ever put to him that his evidence that by the time of the commission of the offence the second defendant had already worked in the market for the first defendant for just over one year was untrue or incorrect, let alone seeking to challenge or impugn it. The relevant parts of the Judgment read as follows:

“16. According to the above paragraph, the principle (the rule in Browne v Dunn) requires that if the prosecution intend to ask the jury not to accept a defence witness’s evidence which is about a crucial part of the case, the correct and proper approach is that the witness should be challenged when he is in the witness box or, at least, it should be made plain while the witness is in the witness box that his evidence is not accepted. It would be unfair to the witness if this principle is not adhered to.

17. Public Prosecutor Ms. Lo, for the respondent, submitted that this part of the prosecution evidence, i.e. it is not true that the second appellant had worked at that place for just over one year, was simple and straight forward. The defence was fully aware of the prosecution case concerning this part, and so they called the defence witness to testify to support the second appellant’s evidence. That being so, even if the prosecution omitted anything during the cross-examination of the second appellant or the defence witness, that would not cause the defence to misapprehend or misunderstand this part of the prosecution case, and would never deprive the two appellants of a fair trial.

18. In my view, it can of course be said that since the first prosecution witness had already given clear evidence that he did not know and had never seen the second defendant, the prosecution did not need to cross-examine any witness of the defence on this aspect or put to the witness their position concerning this aspect. This argument can be established in relation to the second defendant, because he heard what the first prosecution witness said when the witness was giving evidence, so when he himself gave evidence he could respond to what the witness had said. However, as far as the first defence witness is concerned, what has just been said about the second defendant is not applicable to him, because he was not one of the parties. He did not necessarily know what dispute was involved in this case. When the first prosecution witness was giving evidences he was not present and, in the usual course of events, he would not be allowed to be present. If the prosecution did not agree with what he said in his evidence, I cannot see any reason why the prosecution did not draw his attention to that to provide him with an opportunity to explain or rebut. Just as what the Court of Final Appeal said in Lo Chun Nam, had the prosecution done that, at least any confusion might have been avoided. In this case, given that the Magistrate regarded ‘being a stranger’ was crucial in making the threat, such omission in the cross-examination of the first defence witness would be unfair to the witness and would deprive the two appellants of a fair trial.

19. What would be the consequence of being unfair to the first defence witness in this way?  If the witness had been given an opportunity to answer, it was possible that he would not say anything apart from saying that he did not agree, but it was also possible that he might have been triggered to provide information to prove what he said was true, and that might have affected the Magistrate’s assessment of the veracity of the evidence of the first prosecution witness, with the possible result that his credibility might have been impugned or undermined.  If the evidence given by the first defence witness under such circumstances had been accepted by the court, then the charges would necessarily have been dismissed, because, as pointed out by the Magistrate, such evidence would have rendered the account given by the first prosecution witness, i.e. the complainant Mr. Yip [transliteration of 葉], untenable.”

54.  The appellants submitted that the respondent’s interpretation of HKSARv Z and Choi Sheung Kay was not entirely correct or comprehensive. According to the appellants, the rule in Browne v Dunn had not been challenged or modified by these two cases.  The facts of Z were completely different from those of this case.  The only issue in that case was whether the defendant had squeezed the buttock of the first prosecution witness in the street or had merely touched her on the shoulder.  The case turned on the credibility of the defendant and that of the first prosecution witness.  It was a situation of one against one.  The Court of Final Appeal’s refusal to grant the application for leave to appeal did not undermine Lo Chun Nam or Browne v Dunnin any way, because the defendant Z had been adequately cross-examined and should be fully aware of the allegation against him; so the Court of Final Appeal held that there was no unfairness even though the prosecution did not put to the defendant during cross-examination every inconsistency in his evidence.  When that case was heard in the Court of First Instance as a case of magistracy appeal (HCMA 291/2010), Line J made the following analysis:

“ So why does the Appellant ask me to set aside his conviction? Let me turn to the grounds advanced on his behalf by Mr Parker. Firstly, there is a complaint that, contrary to the rule in Browne v Dunn, there was no cross-examination covering certain points that the magistrate relied upon in rejecting the evidence of the Appellant. I have read the cross-examination of the Appellant. It was perfectly adequate and in line with what one would expect in a summary trial of this nature. He can have been in no doubt of the thrust of what was being alleged against him and he had ample scope to deal with it. …”

55.  The appellants further submitted that in Z the Judgments made no mention of the points which had not been covered in the cross-examination, and that therefore Z was only of limited value to the present case as reference material.  In their view, Choi Sheung Kay cannot be mentioned in the same breath with the present case either.  The ground of appeal relied on by the applicant in that case was that his team of lawyers were “flagrantly incompetent”, so that he had no opportunity to tell the court the real reason why he and the victim in that case Ms. Chu [transliteration of 朱] opened an account under their joint names and jointly went on a tour to Japan, with the result that his evidence was rejected by the trial Judge.  The comments made by Yeung VP in paragraphs 87-89 of the Judgment, the appellants said, were not about the application of the rule in Browne v Dunn, but were intended to point out that the Judge could reject the evidence of a witness when there were weaknesses or inconsistencies in his evidence.  What Yeung VP meant to say was that since the applicant’s story was “incredible”, even if he had been asked about the opening of the joint account and the tour to Japan, obviously he could not have been able to give an acceptable explanation, therefore the omission committed by his team of lawyers could not be said to be “flagrantly incompetent”, nor could it be said to have created any injustice against him.

56.  The appellants pressed the point that DW1’s evidence was of crucial importance to the question on which the defence case hinged, namely whether the appellants were customers of Hong Kong Maliano.  If they were, then a special relationship existed between the appellants and Hong Kong Maliano, and the legal principle laid down in Ip Po Fai and similar cases would be applicable to this case.  Furthermore, DW1’s evidence explained why the appellants were present in the shop of Maliano on the day of the offence.

57.  The appellants emphasized that as things stood in the present case, DW1 had suffered grave injustice in that he was condemned for confirming false documents and for giving false evidence, but no opportunity whatsoever had been given to him to make any reply.  If DW1 had been cross-examined on the authenticity of the invoices, one possibility was that he would only say he disagreed, but it was also possible that he might have been triggered to provide information to prove that the invoices were genuine, or to provide an explanation as to why the invoices did not appear to be sufficiently “professional”.  DW1 was not one of the defendants of this case.  He would not know what the defence case was or what the key allegations were; nor would he know which part of the evidence was material and which part immaterial, which part was in dispute and which part not in dispute.  In these circumstances, it was of particular importance that the respondent should make it plain to him what challenge they intended to make to his evidence.  I noticed that the transcript of the trial showed that when D2 was under cross-examination, the Magistrate sought clarification from the defence counsel and it was confirmed that no defence witness was in court.  This provides additional support for the argument that DW1 did not know some people did not accept that defence exhibits D2, D3 and D5 were genuine.

58.  The appellants submitted it could be seen from the above that the respondent could not rely on HKSAR v Z or Choi Sheung Kay to exempt the prosecution from their duty to cross-examine DW1 thoroughly.  They submitted that the present case resembled Lo Chun Nam in that an allegation concerning the authenticity of certain documents was involved, and therefore it was imperative that the respondent should cross-examine DW1 thoroughly, and that they could not leave out questions about the authenticity of the sales invoices in the cross-examination as suggested by the respondent in Argument C or rush through their work perfunctorily.

59.  In conclusion, the appellants asserted that for the above reasons the Magistrate had erred in totally rejecting DW1’s evidence when there was no ground for him to do so, that Mr. Chan’s evidence was capable of refuting all the prosecution’s allegations or at least could create a reasonable doubt in the prosecution case, and that therefore the convictions were unsafe and unsatisfactory.

My opinions

60.  I entirely agree with the appellants’ submissions and their views.

61.  The foundation of the Magistrate’s finding that DW1 Mr. Chan’s evidence is not credible and not reliable (i.e. paragraph 31 of the Statement of Findings) has been pulled to pieces by the foregoing analyses made by the appellants and me.

62.  Can the Magistrate’s finding against Mr. Chan’s evidence be justified in any other way?  In paragraph 25 of the Judgment of HKSAR v Chan So Bing [transliteration of 陳素冰], HCMA 506/2005 (18 August 2005, unreported), which the respondent cited, it was said that the Magistrate did not need to explain in detail the mental process which he went through in making the inference in question.  In paragraph 15 of the Judgment of HKSAR v Ma Hon Ning [transliteration of馬漢寧], HCMA 24/2011 (15 July 2011, unreported) the court held that the Magistrate “did not need to enumerate exhaustively every matter which he had considered…”.  These are of course correct principles applicable to the hearing of magistracy appeals.  However, I would like to make the following two comments: (1) When a Magistrate set out the reasons for his making a certain decision, it can be expected that these reasons must be considered by him to be cogent, not feeble, reasons.  If it turns out that these reasons are manifestly unreasonable, or illogical, contrary to the inherent probabilities, or not supported by any evidence, or they are the products of faulty consideration and analysis, then it is hard to search for reasons not mentioned by the Magistrate in order to support that decision.  (2) Notwithstanding the respondent’s diligence and eloquence, they failed to come up with any justification for the Magistrate’s rejection of Mr. Chan’s evidence.  The conclusion I reached is that the court should have considered and given such weight to his evidence as is appropriate.  Mr. Chan’s evidence occupied a pivotal position in the overall state of the evidence in this case.  If his evidence could not be eliminated, the convictions of D1 and D2 could hardly be beyond reasonable doubt.

63.  For the reasons stated above, although I do not agree with the defence case that Mr. Chan was an independent witness (since if D1 and D2 were found guilty, Mr. Chan’s employer, i.e. Hong Kong Maliano, might be involved or implicated and might be charged with being an employer of a person not lawfully employable), I find that ground of appeal (2) is established.  At the very least, Mr. Chan’s evidence should have been able to create a reasonable doubt in the prosecution case and should have prevented the Magistrate from drawing as the only irresistible inference that D1 and D2 had taken up employment at the time of the offence.

Conclusion

64.  For the above reasons, the convictions of the two appellants are unsafe and unsatisfactory.  I allow the appeal, quash the convictions and set aside the sentences.

Translated by the Judgment Translation Unit of the Judiciary and vetted by Mr. P. Y. Lo, Barrister-at-law.