HKSAR v. Wong Wai Kit and Others

DCCC 864/2019

[2022] HKDC 139

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 864 OF 2019

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Before: His Honour Judge Ko in Chambers (Open to Public)

Date of Hearing: 4 February 2022

Date of Ruling: 2 March 2022

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RULING ON COSTS

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INTRODUCTION

1.When this case was transferred to the District Court in November 2019,

(a)  D1 and D2 were jointly charged with two counts of fraud (Charges 1 and 2);

(b)  D1 was additionally charged with one count of attempted fraud (Charge 3); and

(c)  D3 was charged with one count of dealing with property known or believed to represent proceeds of an indictable offence or, commonly known as, money laundering (Charge 4).

2.The proceedings were then adjourned several times due to the outbreak of COVID-19 pandemic, for discovery of evidence, for the defendants to obtain legal advice, and pending the prosecution’s application for a letter of request.

3.On 30 November 2020, the prosecution commenced HCCP 707/2020 in the Court of First Instance (“CFI”) to apply for issuance of a letter of request so that the evidence of the accomplice witnesses in this case (PW2 to PW6) could be given in Mainland China (“the LOR Application”).  D1 to D3 opposed the application.  The CFI set down the application for argument with directions for filing of affidavit/affirmation evidence and submissions.

4.Prior to the scheduled argument before the CFI, the prosecution was informed by the police on 5 October 2021 that PW4 to PW6 were no longer willing to assist.  Two days later, the prosecution decided to withdraw Charges 1 to 3 and informed the defendants accordingly.  

5.Following the prosecution’s application to the CFI to withdraw the LOR Application and vacate the hearing, the defendants wrote in to apply for costs.  By a ruling handed down on 27 October 2021 ([2021] HKCFI 3207), the CFI:-

(a)  took the view that “the trial judge would be in a better position to consider all the relevant matters and circumstances to decide whether costs of this application should be awarded to any of the respondents”; and

(b)  directed the defendants “to make their application for costs arising out of this application to the trial judge.”

6.When the proceedings resumed in the District Court on 28 October 2021, the prosecution withdrew Charges 1 to 3 and D1 and D2 were discharged.  The charge against D3 has now been set down for trial.

7.This is the defendants’ application for costs.  More specifically:-

(a)  D1 and D2 apply for costs including their costs in the LOR Application with certificate for two counsel.

(b)  D3 applies for costs of and occasioned by the LOR Application under section 17 of the Costs in Criminal Cases Ordinance, Cap 492 (“the Ordinance”).

8.The prosecution:-

(a)  opposes D1’s application on the ground(s) that D1 had brought suspicion upon himself and/or that it would be an affront to the administration of justice for costs to be awarded to him;

(b)  is agreeable to pay D2’s costs but objects to the grant of certificate for two counsel; and

(c)  objects to D3’s application.

9.What falls for determination is:-

(a)  Whether D1 should be deprived of his costs?

(b)  Whether certificate for two counsel should be granted?

(c)  Whether D3 should be granted costs of and occasioned by the LOR Application under section 17?

ISSUE 1: WHETHER D1 SHOULD BE DEPRIVED OF HIS COSTS?

10.It is common ground that:-

(a)  This court has jurisdiction under section 4 of the Ordinance to award costs to D1 after the withdrawal of the charges against him.

(b)  Where charges are withdrawn, the court should normally award costs to the defendant unless there are positive reasons to deprive him of his costs: Secretary for Justice v Lam Chiu Fong [2009] 2 HKLRD 484.

The prosecution’s submission

11.Mr Beney Wong (leading Miss Angel Yuen) for the prosecution argues that there are positive reasons in this case why D1 should be deprived of his costs because:-

(a)  D1’s conduct was suspicious so that he should be considered to have brought the proceedings upon himself.

(b)  The background of the case, relevant to the charges against D1 albeit not part of the prosecution case, also shows that D1 had brought suspicion upon himself and it would be an affront to the administration of justice to award costs to him.

12.In the course of his submission, Mr Wong made references to: (i) the summary of facts dated 2 December 2019 (“the Summary of Facts”); (ii) the two witness statements made by PW1 during the investigation of this case; and (iii) the judgment dated 24 December 2019 of the Shenzhen Nanshan Peoples’ Court (廣東省深圳市南山區人民法院) (“the Mainland Judgment”).

13.I note from the Summary of Facts that the prosecution case against D1 (and D2) was that:-

(a)  In 1997, PW1 borrowed HK$3 million from a money lender, Rich Prosper Limited (“Rich Prosper”).  He was unable to repay the loan and was declared bankrupt on 8 September 1999.  The bankruptcy order was subsequently discharged on 19 January 2004.

(b)  In September 2017, PW1 went to a financial intermediary, Intell Finance and Mortgage Company (“Intell Finance”), to apply for a loan.  With the assistance of D1 of Intell Finance, PW1 successfully borrowed HK$2.55 million from a money lender, Top Winton Limited (“Top Winton”).

(c)  In about September/October 2017, PW1 went to Intell Finance again with a view to apply for RMB¥100 million investment fund financing (“the Fund Application”) and D1 assisted him with the application.

(d)  D1 asked PW1 to pay RMB¥88,000 for compiling a “viability report” in support of the Fund Application and recommended the use of Excellent Profit Inc Limited (“Excellent Profit”) to conduct the viability assessment to secure the approval of the Fund Application.  Under D1’s recommendation, PW1 signed a payment agreement and paid HK$99,880 (equivalent to RMB¥88,000) into Excellent Profit’s bank account. 

(e)  D1 subsequently provided PW1 with the viability report.

(f)  D1 further asked PW1 to pay HK$880,000 for compiling an “on-site assessment report” in support of the Fund Application and again recommended the use of Excellent Profit to conduct the on-site assessment to facilitate the approval of the Fund Application.  Under D1’s recommendation, PW1 signed a payment agreement and paid HK$880,000 into Excellent Profit’s bank account.

(g)  On 28 and 29 November 2017, five people (PW2 to PW6) attended PW1’s factories in Zhuzhou purportedly to conduct the on-site visit and assessment.  PW1 reimbursed their expenses in the sum of RMB¥24,000.  Unknown to PW1, however, none of PW2 to PW6 had any knowledge and/or qualification to conduct the on-site visit and assessment.

(h)  When PW1 was later provided with the on-site assessment report, D1 asked for a further HK$880,000 as consultation fee for the procurement of the Fund Application.  That was initially refused by PW1 who demanded D1 to either guarantee the success of the Fund Application or refund the monies paid.  Eventually, PW1 signed agreements to pay 4% of the RMB¥100 million as commission to Intell Finance and Excellent Profit respectively.  No commission was in fact paid whether to Intell Finance or Excellent Profit.

(i)  As it turned out, PW1 did not obtain any investment fund and there was no refund of the monies paid.  A report was made to the police.

(j)  Upon police investigation:

(i)    Copies of the viability report and the on-site assessment report and one set of Intell Finance name card for “K.L. Kei, Mortgage Department Manager”, amongst other documentary evidence, were seized from the office of Intell Finance.

(ii)   PW1 positively identified D1 as “K.L. Kei” of Intell Finance.

(iii)  According to PW2, D1 had worked in Rich Prosper before.

(iv)  PW3 and PW4 positively identified D1 as “member of Intell Finance” and D2 as “boss behind Intell Finance / younger brother of boss Wong Kwai-fun, Sunny”.

(v)   PW6 confirmed that she had no knowledge or qualification to compile the viability report and the on-site assessment report but had solely relied on the information provided by D2 to make the reports.

(vi)  Excellent Profit was set up on 18 March 2015.  According to Inland Revenue records, it was dormant in the taxable year of 2015/16 and there was no other record showing that it had carried on any business during the period of 2015/16 to 2017/18.  After PW1 had deposited the sums of HK$99,880 and HK$880,000 into Excellent Profit’s account, the monies were transferred to Top Winton on 27 November 2017 together with other funds.

(k)  Both D1 and D2 remained silent under caution.

(l)  PW1 confirmed that had he known Intell Finance would not assist him in the Fund Application as claimed and that the said viability report and on-site assessment report were not necessary for the application, he would not have parted with the sums of HK$99,880 and HK$880,000.

14.Based on the above, D1 was charged with the following offences:-

(a)  Charge 1 (Fraud) alleged that D1 and D2 together with other unknown persons had, with intent to defraud, induced PW1 to make payment of HK$99,880 to Excellent Profit by deceit, namely by dishonestly and falsely representing to PW1 that Intell Finance would assist him in the Fund Application, that a viability report had to be compiled in support of the Fund Application, and that the use of Excellent Profit to conduct the viability assessment would secure the approval of the Fund Application.

(b)  Charge 2 (Fraud) alleged that D1 and D2 together with other unknown persons had, with intent to defraud, induced PW1 to make payment of HK$880,000 to Excellent Profit by deceit, namely by dishonestly and falsely representing to PW1 that Intell Finance would assist him in the Fund Application, that an on-site assessment report had to be compiled in support of the Fund Application, and that the use of Excellent Profit to conduct the on-site assessment would facilitate the approval of the Fund Application.

(c)  Charge 3 (Attempted Fraud) alleged that D1, with intent to defraud, had attempted to induce PW1 to make a payment of HK$880,000 to D1 by deceit, namely by dishonestly and falsely representing to PW1 that Intell Finance would assist him in the Fund Application, and that another payment of HK$880,000 was required as consultation fee for the procurement of the Fund Application.

15.Mr Wong explains that as PW4 to PW6 are no longer willing to give evidence in this case, there is insufficient evidence to proceed with Charges 1 to 3 and so the prosecution decided to withdraw those charges against D1 and D2.

16.Mr Wong argues that D1’s conduct was suspicious because:-

(a)  All along, D1 was the person who liaised with PW1 on behalf of Intell Finance.

(b)  D1 introduced himself to PW1 using the false name of “KEI Ka Lok” and had given a name card for “K.L. Kei”.

(c)  It was D1 who instructed PW1 to make the transfers of HK$99,880 and HK$880,000 into the bank account of Excellent Profit, a dormant company with no real business.  That bank account also displayed hallmarks of money laundering (the subject matter of Charge 4).

(d)  PW1 positively identified D1 in an identification parade.

17.He also referred to the Mainland Judgment for the background of this case which he said was relevant. 

18.According to the Mainland Judgment, PW2 (周世匡) and PW3 (余磊) in this case and the other defendants mentioned in the Mainland Judgment were prosecuted for having, “under the assignment by Sunny Wong, kidnapped the Victim [PW1], harassed, assaulted [PW1] with minor bodily harm on an allegation of [a] non-existent debt.”^[1]

19.After trial, the Mainland Court found that:-

“From the evidence, [PW1] admitted to the fact that he had borrowed a 3Million HKD loan from [Rich Prosper]. It is defended that even though [PW1’s] company was insolvent and thus need not repay the debt under law, the debt was still objectively in existence. Therefore, when [PW3] and others was shown with the loan receipt, and photos, they therefore act in accordance with Sunny Wong’s instruction, to illegally detain [PW1] for the purpose of debt collection. [The defendants] argue that the collected amount was objectively less than the alleged debt owed by [PW1] to [Rich Prosper], and therefore should be considered as ‘commission of false imprisonment for the purpose of debt collection’ under law, which would amount to the offence of false imprisonment and not kidnap. This argument is accepted.

During the process of illegal imprisonment, [PW3] was responsible to give orders on-site, whilst Pan Canqiang and Pan Canhui assaulted the victim. This 3 people have greater effect than [PW2] and Zhang Yu, and should be accorded with graver penalty in sentencing.” ^[2]

20.PW2 and PW3 were found not guilty of kidnap but guilty of false imprisonment and were sentenced to imprisonment of 10 months and one and a half year respectively.^[3]

D1’s submissions

21.Mr Andrew Bruce SC (leading Mr Foster Yim) reiterates that D1 should normally be awarded his costs and it is for the prosecution to show positive reason for making a different order.

22.He submits that:-

(a)  D1 made no admission and had not done anything to lead the prosecution into thinking that the case against him was stronger than it was. D1’s exercise of his right to silence, which was guaranteed under the Basic Law, could not be seen as bringing suspicion upon himself.

(b)  The prosecution’s submissions assume that the assertions of the alleged victim in this case (PW1) are true.  However, PW1’s evidence has not been tested before a court and D1 has never had a chance to cross-examine him. It is D1’s (and D2’s) contention that PW1 is a terrible liar who should not be believed.

(c)  Of the alleged suspicious conduct on the part of D1:

(i)  They are the say-so of PW1.

(ii)  The prosecution ignores the commercial basis for the transfers in Excellent Profit’s account.  In any event, there was and still is no allegation of money laundering against D1 and no evidence to prove that D1 had knowledge or believed that the dealings in Excellent Profit’s account represented proceeds of an indictable offence.

(d)  The background relied on by the prosecution was not even part of the allegations levelled against D1 in this case.  He drew this court’s attention to the observation of Litton PJ in Tong Cun-Lin v HKSAR [2000] 1 HKLRD 113 that: “the judge exercising the discretion must obviously look to his conduct generally, so long as such conduct is relevant to the charges he faced.”

(e)  There is no independent evidence to support PW1’s assertions in his witness statements.  By way of illustration, there is no independent confirmation from the Public Security Bureau of the allegation that PW1 had been held against his will in a hotel room on the mainland until his rescue by officers of the Public Security Bureau.

(f)  Insofar as the prosecution is relying on the findings of the Mainland Court, D1 was never a party in those proceedings and did not participate in the trial.  While appropriate respect should be accorded to the findings of the Mainland Court, the fact that somebody elsewhere in the world believed PW1 is neither here nor there and it would be “about as flagrant a denial of natural justice as could be imagined to hold against D1 such findings in those circumstances on the criminal standard appropriate to criminal proceedings in Hong Kong.”

Discussion

23.Practical guidance was given by the Court of Appeal in Lam Chiu Fong as to how the discretion on costs should be exercised in cases where the charges against the defendant have been withdrawn:-

“42. … the starting consideration is the same as that established by the authorities … where there has been an acquittal, namely, that there should be an award of costs in favour of the person charged unless there is positive reason for making a different order. Where the essential facts are realistically in dispute, and the person charged has not by his conduct brought suspicion on himself or led the investigating authorities to believe that the case against him was stronger than in fact it was, then when a charge is withdrawn the costs discretion ought to be exercised in favour of that person.

43. But this is not a mechanical process. It will always be highly case-sensitive as to the facts and the submissions made before the tribunal. There is a difference between cases that have been prosecuted to a conclusion, where the findings of fact have been made, and a case where a charge is withdrawn. In both instances the presumption of innocence applies and the starting consideration on the question of costs is the same. But in a case such as the present, where charges are withdrawn, no findings of fact are made and it would be unrealistic and undesirable to expect the tribunal faced with a costs application to conduct a trial merely for the determination of that issue. The matter must therefore be approached with common sense.

44. Most particularly, it will be important for the court to know the reasons for withdrawing the charge, what the proposed evidence was, the apparent strength of that evidence, including the question whether there was evidence from a clearly independent source to support the complaint and, importantly, what undisputed indicia there are as to the charged person’s conduct in the setting of the factual circumstances giving rise to the alleged offence and in the investigation of them.”

24.Thus, the court’s discretion on costs is not fettered by the fact that there is no finding of fact upon which the costs decision could be based.  A common sense approach should be adopted.  If the prosecution case is realistically disputed and there is nothing to show that the defendant brought suspicion on himself, then the general rule should apply and costs should be awarded to him. 

25.However, if there is evidence from a clearly independent source that confirms the complaint or if there is undisputed evidence on the defendant’s conduct relating to the charge(s), then the court may still deprive him of costs even though there was no trial and no formal findings against him.

26.Mr Bruce is of course correct in observing that following the withdrawal of the charges in this case, this court does not have the benefit of hearing PW1 and making a finding on his assertions.  If the prosecution’s objection has rested on PW1’s assertions alone, I can see no justification for the parity of treatment adopted by the prosecution against D1 and D2 on costs. 

27.But the prosecution offers more than PW1’s assertions.  PW2 and PW3 were tried on the mainland for defrauding PW1 on the Fund Application in that:-

“In Sep 2017, [PW1] applied for 100 million loan from [Intell Finance], and used his property in Suzhou as mortgage. Yip Chi Man, [D1] and [PW2] acted as the representatives of [Intell Finance] and discuss the loan business with [PW1]. In Nov 2017, [Intell Finance] alleged that they need to conduct a valuation towards [PW1’s] property. On the head of investigation and evaluation fee, [Intell Finance] requested [PW1] to pay HKD88,000 and HKD880,000 to [Excellent Profit] in Hong Kong. Later on, [PW2] (Director of Mortgage Department), and [PW3] of [Intell Finance] led a team of staff to valuate and inspect [PW1’s] property. [PW3] arranged [PW5], [PW4] and [PW6] to pretend as employee of [Excellent Profit] and joined in the valuation trip. [PW6] was responsible to write the investigation report, and all expenses incurred from the valuation trip was bared by [PW1]. At the valuation, [PW2] and [PW3] signed another service contract and paid HKD 440,000 as consultation fee.”^[4]

This is essentially the prosecution case in this case.

28.The Mainland Court did not just hear the testimony of PW1 (see p 38 of the Mainland Judgment^[5]) but also received the testimony of eight other witnesses including PW4 to PW6 (see pp 39-40 of the Mainland Judgment^[6]) and documentary evidence including the agreement and cashier’s order for the payment of HK$880,000 and the agreement and bank customer notice for the payment of HK$99,880 (see p 39 of the Mainland Judgment^[7]).  PW2 and PW3 as defendants in that case also testified (see p 41 of the Mainland Judgment^[8]). 

29.In the end, the Mainland Court found that:-

“The above evidence has been proved in Court with cross-examination. The Court has validated its truthfulness.”^[9]

and made the following findings:-

“From the evidence, [Intell Finance] did not have any loan business record in the mainland, and none of their employee obtained relevant qualifications to conduct evaluation. Even under such circumstances, they pretended to negotiate with [PW1] to grant him a 100 Million loan, and charged him for investigation and evaluation fee. During negotiation, Ji Jiale of [Intell Finance] has already discovered that [PW1] had had an 3 Million HKD loan taken out in 1997 from [Rich Prosper], and was never repaid. It is obvious that it is no longer possible to approve for any further loan. However, [PW3] and [PW2] (as representative of [Intell Finance], continue to negotiate with [PW1], and arranged people including [PW6] to pretend to be employee of [Excellent Profit] to conduct evaluation to defraud the victim. The act by [PW3] and [PW2] would thus amount to fraud. The 2 Defendants committed fraud under the instruction of Sunny Wong and [D1], and the money obtained from the fraud was obtained by [Excellent Profit], the 2 Defendants only played a secondary role, and is thus considered as subsidiary offender.

All three of [PW4], [PW6] and [PW5] has participated in the evaluation in Suzhou. Even though objectively they has played a role in defrauding [PW1’s] property, the evidence of the case proved that, the 3 Defendants was under the instruction and supervision of Sunny Wong and [PW3]. Their intention in joining the incident was out of the belief that they are enjoying the benefits of the company and as travelling, they did not know whether or not the company received any evaluation fee at all, or how much evaluation fee the company received. Subjectively, they do not possess the intention of ‘illegal appropriation’, and thus did not constitute the offence of fraud.”^[10]

30.It should be noted that:-

(a)  There is an obvious typo in pp 37-38 of the Mainland Judgment (quoted in para 27 above), in that “HKD88,000” should refer to HK$99,880 given the documentary evidence accepted by the Mainland Court.[11]

(b)  The reference to “Ji Jiale” (纪家乐) (which may be Romanized as Kei Ka Lok or K.L. Kei) in p 49 of the Mainland Judgment (quoted in para 29 above), is a reference to D1 (see PW1’s evidence in p 38 of the judgment^[12] and PW2’s evidence in p 41 of the judgment^[13]).

31.Of the authorities cited in argument by both sides, only Lam Chiu Fong involved withdrawal of charges.  There, the Court of Appeal accepted that notwithstanding the withdrawal, “there was unchallenged material available to the Court which powerfully illustrated why the respondents had been arrested and charged.  In our view, the refusal of costs does not contravene the presumption of innocence and the Magistrate was entitled, in the proper exercise of her discretion, to refuse costs”. ^[14]

32.My own research has come up with the case of 香港特別行政區訴黃偉民[2019] HKDC 960 in which the court rejected the defendant’s application for costs following a withdrawal based on the defendant’s admissions in a video-recorded interview. 

33.Here, as submitted by Mr Bruce, D1 challenges PW1’s assertions and there was no admission.

34.In my view, the English case of Mooney v Cardiff Magistrates’ Court (2000) 164 JP 220 is apposite.  There, the husband was charged with assaulting his wife.  The wife did not wish to pursue the charge and the charge was withdrawn.  The justices refused the defendant’s application for costs on the ground that he had brought proceedings upon himself.  On appeal, Tuckey LJ said:-

“… it is not possible for the justices to conclude that a defendant in a case such as this has brought proceedings on himself simply because the complainant has withdrawn the allegation.

In order to reach a conclusion of this kind, the justices have, it seems to me, to do more than they did here.  They would of course listen to the prosecutor but they would be looking for some indication from him that there was independent evidence to support the allegation which had been made by the wife: for example, that the police were called or neighbors had come on the scene and found her in a certain state or that there was medical evidence to the effect that she had been injured.  In this case, one does suspect there must have been some evidence to support an injury…  Furthermore, and importantly the justices would be looking to see (and asking the prosecutor, if it was not supplying this information to them of his own accord) whether the defendant had made any admissions, because if that were the case then that would be the plainest possible material upon which they could act in order to reach a conclusion that he had brought the proceedings on himself.”

35.Mooney was quoted with approval by the Hong Kong Court of Appeal in Lam Chiu Fong.

36.In the present case, the prosecution is not basing its argument on the withdrawal of the charges or PW1’s assertions alone.  PW1’s complaint is supported by independent evidence in terms of the testimony of the witnesses testified in the Mainland trial and the documentary evidence adduced there.  The Mainland Court found the witnesses truthful after cross-examination and accepted the documentary evidence.

37.What’s more, there is also the finding of the Mainland Court that D1 had lured PW1 to Shenzhen which led to PW1’s false imprisonment, intimidation and assault between 8 and 10 February 2018 for the repayment of the HK$3 million loan made by Rich Prosper in 1997 – the so-called background relied on by the prosecution.

38.On that, apart from PW1’s testimony the Mainland Court also received the testimony of five witnesses including PW5 (see p 33 of the Mainland Judgment^[15]) and documentary evidence including the repayment agreements signed by PW1 under duress, the CCTV and booking record of the hotel (see pp 31-32 of the Mainland Judgment^[16]), and the electronic evidence of the part-repayment of RMB¥150,000 (see p 34 of the Mainland Judgment^[17]). There was also a forensic opinion on the injury on PW1 (see p 33 of the Mainland Judgment^[18]). There is thus ample evidence independent of PW1 and accepted by the Mainland Court to substantiate the complaint. ^[19]

39.I reject Mr Bruce’s submission, based on Tong Cun Lin, that the background relied on by the prosecution is not sufficiently “relevant” to the charges against D1.

40.In Ting James Henry v HKSAR (No 2) (2007) 10 HKCFAR 730, Li CJ referred to what Litton PJ had said in Tong Cun Lin and remarked (at para 16):-

“It may often be the case that a defendant’s conduct during the investigation and at the trial is such that it brings suspicion on himself, providing a ground for refusing him costs. Such conduct has been described as ‘most relevant’ to the discretionary exercise. However, it is incorrect to suggest (and the authorities give no warrant for suggesting) that a defendant can only be regarded as having brought suspicion on himself by virtue of his conduct during the investigation or at trial and not otherwise. The discretion is not bounded by any such inflexible rule. By his conduct prior to the investigation and trial stages, including conduct which formed part of the setting for the charges laid against him, the defendant may plainly have brought suspicion upon himself. There is no reason to ignore such conduct in the exercise of the court’s discretion on costs following an acquittal on the charges laid, provided always that the discretion is not exercised so as to undermine the presumption of innocence, and in particular, provided that its exercise does not involve the court in adopting a position at variance with the defendant’s acquittal by the tribunal of fact.”

41.In the more recent case of HKSAR v Wong Tak Keung (No 2) (2015) 18 HKCFAR 158, the Court of Final Appeal quashed the conviction (conspiracy to traffic in a dangerous drug) as the evidence relied on by the prosecution did not support the inference that the defendant had been a party to the conspiracy in Hong Kong.  In refusing to grant him costs of the trial, however, the Court of Final Appeal took into account the defendant’s conduct of beating and torturing the teenage courier in Australia albeit that such conduct was not indictable in Hong Kong.  Ribeiro PJ said in para 14 that:-

“In the light of such conduct on his part, it would, in our view, be an affront to the administration of justice to award the appellant his costs of the trial. A similar view was taken in the recent decision of this Court in HKSAR v Chan Yau Hei (unrep., FACC 3/2013) where Fok PJ, writing for the Court, held that it was a proper exercise of discretion to deprive the appellant of the costs of the trial before the Magistrate in view of his conduct which had involved posting an inflammatory message on line which the Court characterized as deserving of condemnation. His conviction was quashed on appeal because the offence of outraging public decency requires the act to be committed in a physical, tangible place, a basis that was in no way inconsistent with the findings made as to his reprehensible conduct.”

42.In the present case, the Mainland Court has found proven that D1 had lured PW1 to Shenzhen under the pretense of the Fund Application to pursue an unforgotten debt.  Over the course of about 2 days, PW1 had been subjected to inhuman treatment of false imprisonment, threats and intimidation, deprivation of food and assault which eventually led PW1 to signing three repayment agreements and instructing a friend to deposit RMB¥150,000 into a designated account as part-repayment.  The complaint was substantiated by independent evidence such as the repayment agreements signed by PW1, the CCTV and booking record of the hotel and the forensic opinion on PW1’s injury.  All these were accepted by a court of law with competent jurisdiction after a trial.  As it was the Public Security Bureau which investigated the complaint (and retrieved the CCTV and booking record from the hotel^[20]), it is futile for D1 to suggest that there was no independent confirmation from the Public Security Bureau.

43.It is common ground that, similar to Wong Tak Keung, D1 was not indictable in Hong Kong for the kidnap/false imprisonment incident as it happened across the border.  It is not known if D1 was ever wanted on the mainland for that incident.  If not, D1 should consider himself lucky. Nonetheless, I am satisfied that the kidnap/false imprisonment incident is sufficiently connected to the charges faced by D1 in this case so that I may take such conduct into consideration in the exercise of my discretion on costs.

44.As demonstrated above, this court is proceeding on the basis of evidence independent of PW1 which is not realistically disputed by D1.  I do not need to resolve conflict of evidence and make findings of my own and D1’s presumption of innocence is not compromised.  It would be an affront to the administration of justice if this court were to ignore all the above.

45.I accept the prosecution’s submissions that D1 brought suspicion upon himself.  In the exercise of my discretion, I would refuse him costs (including his costs in the LOR Application).

ISSUE 2: WHETHER CERTIFICATE FOR TWO COUNSEL SHOULD BE GRANTED?

46.The Ordinance is intended to be a complete and self-contained code regulating the law and practices in relation to costs matters in criminal cases.^[21] There is no express provision in the Ordinance for the court to certify a criminal case fit for the employment of any particular number of counsel.  Be that as it may, both parties have urged me to make a certification, if thought fit, for the assistance of the taxing officer based on HKSAR v Egan (2010) 13 HKCFAR 689 at para 11.

47.Mr Bruce’s submissions boil down to this.  His involvement in this case is warranted because:-

(a)  The nature of this case is not simple, involving a lot of difficult questions of fact and law which are highly complex.

(b)  Given the sums involved, some RMB¥100 million in relation to the fraud charges and HK$29,535,687.23 in relation to the money laundering charge, huge and substantial years of imprisonment can be expected if D1 is convicted.

(c)  If the case against D1 and D2 proceeded to trial, issues such as malice non-disclosure, breaches of the defendants’ constitutional and common law rights, etc would be raised and the court’s jurisdiction to try the case would be challenged.  For the purpose of the jurisdictional challenge, the defendants have obtained an opinion from a China legal expert.

(d)  At the hearing before the CFI, the prosecution was represented by a legal team led by a Senior Assistant Director of Public Prosecutions.

(e)  Part of the difficulty faced by the defence was the failure on the part of the prosecution to give adequate disclosure, and Senior Counsel was retained to argue that issue on both fact and law.  That was why D1 and D2 contended in the CFI that it would be inappropriate to grant letters of request until the court could be assured that there had been full disclosure.  The defence was unable to say, given the timing of the withdrawal of the LOR Application, whether the withdrawal was related to their objection.

(f)  At the time of the withdrawal of the LOR Application, leading counsel (assisted by the rest of the legal team) was building up a factual case for a stay of proceedings on the basis of non-disclosure.  That alone requires specialist expertise.

48.That is retorted by Mr Wong who argues that:-

(a)  The facts relied on by the prosecution in proving the charges, as set out in the Summary of Facts, are simple and straightforward based on the evidence of civilian witnesses.

(b)  Although the loan which PW1 had intended to procure may be large (RMB¥100 million), the total sum actually defrauded from him (Charges 1 and 2) came to HK$979,880 and the sum involved in the attempted fraud (Charge 3) was HK$880,000 only.  The sum of HK$29,535,687.23 relates to Charge 4 against D3 but not D1 or D2.

(c)  D1 and D2 have failed to particularize on the alleged difficult questions of fact and law.  There was no formal application for stay or to challenge the court’s jurisdiction.  The China legal expert retained by the defence focused on the incentives that witnesses in Mainland China may receive in assisting Hong Kong Police but not on any jurisdictional issue.  Anyway, the engagement of China law expert does not per se justify the engagement of Senior Counsel.

(d)  The was no basis to oppose the LOR Application.  Rather, the defendants should have reserved their objections to the trial proper when application is made for evidence to be adduced via live television link or by way of depositions.

(e)  The prosecution was initially represented by a Public Prosecutor at the CFI.  It was only when D1 and D2 indicated that they would be represented by Senior Counsel that a Senior Assistant Director of Public Prosecutions became involved for the purpose of the argument scheduled for 18 October 2021.  But as things turned out, that hearing was vacated.

(f)  On the other hand, despite the assurances of D1 and D2’s solicitors,^[22] D1 and D2 were represented by Senior Counsel as well as junior counsel at the mention hearings in the District Court.  There was no apparent need for Senior Counsel to attend, except perhaps on 28 October 2021 when substantive argument on costs was expected.

49.Notwithstanding his written submission that prayed in aid the approach advocated in pp 11-14 of Xinyuan Trading Co Ltd v NPH Petrochemical Ltd, unreported, HCA 18159/1998, dated 25 September 2000, Mr Bruce agreed at the hearing that section 15 of the Ordinance and rule 7 of the Costs in Criminal Cases Rules, Cap 492A (“the Rules”) are applicable.^[23] 

50.For the purpose of this ruling, I derive the following guidance from the above provisions:

(a)  The costs that may be awarded include the costs of preliminary or incidental proceedings.

(b)  The award is compensatory in nature.  The focus is historic, on costs “properly incurred” or work “actually and reasonably done”.

(c)  The court is directed to consider “all the relevant circumstances of the case including the nature, importance, complexity or difficulty of the work and the time involved.” 

(d)  The process is evidence based, and the court should consider “any further particulars, information or documents supplied by the claimant”.

(e)  Importantly, “any doubts … as to whether the costs were actually and reasonably incurred or were reasonably sufficient in amount must be resolved against the claimant.”

51.As I said at the hearing, there is a difference between engaging a senior counsel and engaging two counsel for the defence.  Alex Lee J explained in HKSAR v Tsang Sio Pou [2020] 4 HKLRD 729 at para 37(6) that:-

“Nowadays, senior counsel may appear for a defendant without the assistance of a junior counsel. Therefore, even if the court deems it reasonable for a defendant to instruct a senior counsel to defend him, this does not mean he will automatically be allowed the fees for two counsel (including the senior counsel and junior counsel)...”

52.In that case, the learned Judge was satisfied that it had been reasonable for the appellant to instruct a senior counsel (given the likely consequences in the event of a conviction) but declined to certify the case fit for two counsel (as the trial lasted one and a half day and involved factual disputes only). 

53.In the present case, whilst Mr Bruce’s submissions may tell us why the defendants elected to instruct a senior counsel for their defence, they do not explain why the engagement of two counsel was necessary.

54.Given the nature of the exercise, references to applications in the making or the defence theory to be run at trial do not advance the defendants’ argument.

55.The defendants have not placed before me the papers filed in the LOR Application.  Given my ruling on Issue 1, it remains for D2 to satisfy the taxing authority during the taxation process that any costs claimed in relation to the LOR Application were actually and reasonably incurred.

56.According to the court’s record, D1 and D2 were represented by Mr Yim alone (without a leader) when this case first appeared in the District Court on 5 December 2019 and by Mr Bruce alone (without a junior) at the hearing on 28 October 2021 when this costs application was launched.  There is simply no basis for the defendants to seek a certificate for these hearings.

57.As for the other hearings in the District Court in which D1 and D2 were represented by two counsel, they were all set down for mention only and lasted a few minutes.  I can see no justification for two counsel to attend.

58.In the course of argument, Mr Bruce said that his fees were charged on the basis that he would be assisted by a junior counsel.  Be that as it may, Master Poon (as the CJHC then was) has said in Xinyuan Trading at p 13 that in evaluating whether a junior should be instructed to assist a leader: “But I do not think that senior counsel’s own wish to have a junior to assist him is relevant.”

59.I am not convinced that the engagement of two counsel was warranted in this case.

ISSUE 3: WHETHER D3 SHOULD BE GRANTED COSTS OF AND OCCASIONED BY THE LOR APPLICATION UNDER SECTION 17?

60.I can dispose of this briefly.

61.The application is premised on section 17 of the Ordinance.  The relevant principles are succinctly summarised by Barnes J in HKSAR v Chan Kwun-chung [2018] HKCFI 528:-

“3. S 17 of [the Ordinance] provides: ‘Where at any time in the course of criminal proceedings a court or a judge is satisfied that costs have been incurred in respect of the proceedings by a party to the proceedings as a result of an unnecessary or improper act or omission by or on behalf of the other party to the proceedings, the court or the judge may, after hearing all such parties, order that all or part of the costs so incurred shall be paid to the first-mentioned party to the proceedings by the other party to the proceedings.’

4. As to the relevant principle, counsel for D2 referred me to two authorities: DPP v Denning [1991] 2 QB 532 and HKSAR v Au Yeung Lai‑hung, Doris [2013] 3 HKLRD 586.

5. In Denning, Nolan LJ said (541C‑D): ‘… the word ‘improper’ in this context does not necessarily connote some grave impropriety. Used, as it is, in conjunction with the word ‘unnecessary,’ it is in my judgment intended to cover an act or omission which would not have occurred if the party concerned had conducted his case properly.’

6. In Au Yeung Lai‑hung the principles stated in Denning was applied (at para 41 of the judgment).

7. Counsel for the Prosecution relied on what Stock JA (as he then was) described as improper conduct in HKSAR v Wong Wah Yee (No 2) [2001] 3 HKC 1: ‘Our attention has been invited to s 17 of the Costs in Criminal Cases Ordinance which permits a court to award costs where in the course of criminal proceedings costs have been incurred as a result of ‘an unnecessary or improper act or omission by or on behalf’ of a party to the proceedings.  It is unnecessary to determine whether such circumstances might be invoked in the context of an application for a certificate under s 32, and it is unnecessary because the circumstances envisaged by s 17 is not what the present question is about. The question which we address for present purposes is whether in the ordinary case an unsuccessful application for a certificate may be the subject of a costs order, whereas s 17 addresses particular types of conduct which merit condemnation in costs, such as negligence or specific unreasonable conduct, or improper conduct. Further representations have been made that the s 17 power is directed at matters arising in the course of proceedings rather than in relation to the result of the proceedings, but that too is not necessary to address, for we are satisfied that the section is not directed at the situation with which we are presently concerned.’”

62.Ms Karen Lau for D3 submits that as the prosecution has elected to proceed against D3 without the evidence of PW1 to PW6, that calls into question the necessity of the LOR Application in the first place.  She complains that the prosecution has failed to give full and frank disclosure of its evidence, that the Hong Kong Police did not directly confirm with PW2 to PW6 that they would be willing to testify, that the Hong Kong Police used WeChat to communicate with Mainland authorities and did not retain written record, and that the LOR Application was too late.

63.All these are rebutted by Mr Wong, who submits that it is common practice to apply for a letter of request after the defendant(s) has/have entered a plea of not guilty.  Significant time and resources in both jurisdictions would be wasted if such application is made without the case having been set down for trial.  In the circumstances of this case, D1 and D2 indicated their intention to set the case down for trial by their letter dated 10 February 2020 and the prosecution proceeded to prepare for the application and duly filed the application on 30 November 2020.  There was therefore no delay in the application.

64.He says that the Hong Kong Police received confirmation from Mainland authorities on 20 June 2019, in March 2020 and on 30 November 2020 respectively regarding the willingness of the witnesses on the mainland to testify.  After PW6 was released from prison in July 2021, the Hong Kong Police promptly made enquiry and was informed on 5 October 2021 that PW4 to PW6 were no longer willing to testify.

65.In my view, there is no ground to invoke section 17.

(a)  There is no complaint that Charge 4 was improperly joined with the other charges in the same case.  Whilst it may not be necessary for the prosecution to prove, as an element of the offence of money laundering against D3, that the proceeds being dealt with were in fact proceeds of an indicatable offence,^[24] Ms Lau does not dispute that it was necessary for the prosecution to apply for a letter of request in respect of the charges against D1 and D2.  As D3’s trial was bundled with the trial of D1 and D2, it is futile for D3 to argue that the LOR Application was unnecessary.

(b)  The LOR Application was based on section 77E of the Evidence Ordinance, Cap 8.  Given its statutory route, it may not be said that the application would not have occurred if the prosecution had proceeded properly. In my view, there is nothing to suggest that the application was negligent, unreasonable or improper.

66.D3’s application is dismissed.

67.I should add that my ruling is confined to section 17 and without prejudice to the court’s power under other parts of the Ordinance (eg section 5 in case of an acquittal).

Conclusion

68.In conclusion:-

(a)  I dismiss D1’s application for costs.

(b)  I refuse to grant certificate for two counsel to D2.

(c)  D3’s application for costs under section 17 of the Ordinance is dismissed.

Mr Beney Wong, Senior Assistant Director of Public Prosecutions leading Miss Angel Yuen, Senior Public Prosecutor, for HKSAR

Mr Andrew Bruce SC leading Mr Foster Yim, instructed by Deannie Yew and Associates, for the 1^st and 2^nd defendants

Ms Karen Y Y Lau, instructed by Louis K Y Pau & Co, for the 3^rd defendant