Competition Commission v. W. Hing Construction Co Ltd and Others

CACV 143/2020, CACV 46/2021 & CACV 157/2021
(Heard together)

[2022] HKCA 786

CACV 143/2020 & CACV 157/2021

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS 143 OF 2020 AND 157 OF 2021

(ON APPEAL FROM CTEA NO 2 OF 2017)

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AND

CACV 46/2021

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 46 OF 2021

(ON APPEAL FROM CTEA NO 1 OF 2019)

________________________

________________________

(Heard together)

Before:  Hon Poon CJHC, Kwan VP and Au JA in Court

Date of Hearing:  5 May 2022

Date of Judgment:  2 June 2022

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J U D G M E N T

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The Court:

1.These three appeals, all brought by the Competition Commission (“the Commission”), are heard together as there are common contentions.

2.The judgment being the subject of the appeals in CACV 143/2020 and CACV 157/2021 is the judgment on sanction in CTEA 2/2017 of the President of the Competition Tribunal, G Lam J (as he then was), on 29 April 2020 ([2020] 2 HKLRD 1229; “W Hing No 3”). The judgment that is the subject of the appeal in CACV 46/2021 is the judgment on sanction in CTEA 1/2019 of the Deputy President of the Competition Tribunal, Au-Yeung J, on 5 January 2021 (“Fungs Sanction Judgment”).

3.One of the two contentions raised in CACV 143/2020, which is in common with CACV 46/2021, relates to the reduction of the “Base Amount” (ie a base amount linked to the volume of commerce affected by the contravention of a competition rule) in respect of the pecuniary penalties imposed on some of the respondents – R1, R4 and R9 in CACV 143/2020 and R1 and R6 in CACV 46/2021. These appeals are brought as of right under section 154(1) of the Competition Ordinance, Cap 619 (“CO”)[1].

4.The other contention in CACV 143/2020, which is in common with CACV 157/2021, relates to the refusal of G Lam J to grant a certificate for three counsel (one Queen’s Counsel, one Senior Counsel and one junior counsel) in respect of the costs of the Commission in the W Hing case. These appeals are brought with leave of the Court of Appeal under section 154(2)(c).

A.  Background

5.W Hing No 3 laid down a four-step approach for the determination of the amount of pecuniary penalty[2] by the Competition Tribunal (“the Tribunal”) upon finding contravention of the “first conduct rule” in section 6(1) of the CO. Fungs Sanction Judgment followed the approach in W Hing No 3. The only holdings in W Hing No 3 challenged on appeal are the two points of contention as mentioned earlier.

6.Both actions concerned enforcement proceedings brought by the Commission against contractors who had contravened the first conduct rule in providing renovation services to tenants in new public rental housing estates of the Hong Kong Housing Authority (“HKHA”). Rather than competing for the business of low-income tenants who were allocated apartments, the contractors chose to collude. The “serious anti-competitive conduct”[3] was in the form of market sharing and price-fixing. It comprised a floor allocation arrangement (whereby each of the contractors was allocated designated floors in a building to carry out decoration work for individual tenants and they agreed not to seek business from tenants on floors allocated to others) and a package price arrangement (whereby they agreed on the prices of the packages to be put on the flyers distributed to tenants).

7.The ten respondents in the W Hing case were held to have contravened the first conduct rule after a trial ([2019] 3 HKLRD 46; “W Hing No 2”). The nine respondents in the Fungs case admitted liability and Au-Yeung J adopted the procedure in Competition Commission v Kam Kwong Engineering Co Ltd & Ors [2020] 4 HKLRD 61 and made declarations that R1 to R6 had contravened the first conduct rule and R7 to R8 were “involved in” the contravention of the first conduct rule, based on the statement of agreed facts akin to the Carecraft procedure[4] in the context of proceedings for the disqualification of company directors (“Fungs Liability Judgment” on 14 October 2020).

8.All ten respondents in the W Hing case were decoration contractors approved by the HKHA under its decoration contractors registration system and became appointed decoration contractors (“Appointed DCs”) for decoration works for three buildings in Phase 1 of On Tat Estate, Kwun Tong when they were granted licences by the HKHA. Notwithstanding that the tenants were free to engage decoration contractors other than the Appointed DCs, the HKHA operated a Decoration Contractor System (“DC System”). This was to protect the tenants from the infiltration of illegal elements so that decoration works could be carried out in an orderly manner. The respondents were permitted by the HKHA to set up a site office in the estate. In respect of R1 (“W Hing”) and R9 (“Wide Project”), they did not directly participate in the anti-competitive conduct but became liable as a result of letting their licence to a sub-contractor who was found to have engaged in the infringing conduct. As for R4 (“Tai Dou”), it was not seriously in dispute that the renovations were actually carried out by another in the name of Tai Dou, in a manner similar to the way in which the business was run directly by the sub-contractors of W Hing and Wide Project. The sub-contractors or representatives of W Hing, Tai Dou and Wide Project were not made respondents in the enforcement proceedings brought by the Commission.

9.For present purpose, the main difference between the W Hing case and the Fungs case is that in the latter, certain contractors and their respective sub-contractors or representatives were made respondents in the enforcement proceedings. In the Fungs case, R1 to R6 were the Appointed DCs for decoration works for two buildings in Phase 1 of On Tai Estate, Kwun Tong. R7 or his wife Madam Pau Wai Lin was the sub-contractor of R1 (“Fungs”). R8 was the sub-contractor of R5 and R6 (“Dao Kee”). R3 and R4 had also engaged sub-contractors although their sub-contractors were not made respondents. R2 was the only Appointed DC that did not sub-contract the works.

B.  The legal framework

10.As in EU and UK law, the competition rules[5] apply only to “undertakings”. The first conduct rule in section 6 focuses on agreements, concerted practices and decisions of associations of undertakings. In section 2(1), an “undertaking” is defined to mean “any entity, regardless of its legal status or the way in which it is financed, engaged in economic activity, and includes a natural person engaged in economic activity”. The language employed in this definition is borrowed from EU case law. This concept of an undertaking is that of a single economic unit, “even if in law that economic unit consists of several persons, natural or legal” and “when such an economic entity infringes the competition rules, it falls, according to the principle of personal responsibility, to that entity to answer for that infringement” (Akzo Nobel v Commission of the European Communities (C-97/08 P) [2009] 5 CMLR 23 at §§55, 56; quoted in W Hing No 2 at §302). Thus, this functional concept of undertaking captures all entities irrespective of their legal organisation, as long as they are involved in an economic activity.

11.Further as explained in W Hing No 2 at §303:

“While the competition rules target undertakings, in accordance with general legal principles, applications brought in the Tribunal and orders made by the Tribunal are necessarily addressed to legal entities. Thus ss 92-94 of the Ordinance allow the Commission to apply for and the Tribunal to make orders against persons who have contravened or been involved in a contravention of a competition rule. Accordingly, when liability is to be attached for infringement by an undertaking, the infringement must be imputed to one or more person against whom legal proceedings may be instituted and on whom orders including financial penalties may be imposed.”

12.It is provided in section 2(1) that the term “person”, in addition to the meaning given by section 3 of the Interpretation and General Clauses Ordinance, Cap 1[6], includes an undertaking. Each of the ten respondents in the W Hing case and each of R1 to R6 in the Fungs case were entities within the respective undertakings that have contravened the first conduct rule.

13.Section 91, which is headed “Persons involved in contravention of competition rule”, provides for accessory liability. This section is drawn largely from the Australian Competition and Consumer Act 2010 (Cth) and reads as follows:

“A reference in this Part to a person being involved in a contravention of a competition rule means a person who —

(a) attempts to contravene the rule;

(b) aids, abets, counsels or procures any other person to contravene the rule;

(c) induces or attempts to induce any other person, whether by threats or promises or otherwise, to contravene the rule;

(d) is in any way, directly or indirectly, knowingly concerned in or a party to the contravention of the rule; or

(e) conspires with any other person to contravene the rule.”

14.Under section 92(1), the Commission may apply to the Tribunal for a pecuniary penalty to be imposed on “any person” it has reasonable cause to believe “(a) has contravened a competition rule; or (b) has been involved in a contravention of a competition rule”. The provision in (a) relates to primary contraveners and that in (b) relates to accessories.

15.Section 93(1) provides that if the Tribunal is satisfied, on application by the Commission under section 92, that “a person has contravened or been involved in a contravention of a competition rule”, it may order that person to pay to the Government a pecuniary penalty of any amount it considers appropriate.

16.Section 93(2) sets out certain matters to which the Tribunal must have regard in determining the amount of a pecuniary penalty:

“(2) Without limiting the matters that the Tribunal may have regard to, in determining the amount of the pecuniary penalty, the Tribunal must have regard to the following matters –

(a) the nature and extent of the conduct that constitutes the contravention;

(b) the loss or damage, if any, caused by the conduct;

(c) the circumstance in which the conduct took place; and

(d) whether the person has previously been found by the Tribunal to have contravened this Ordinance.”

17.In summary, as noted in Butterworths Hong Kong Competition Law Handbook (2^nd ed) at [91.01], “by combining the broad EU law prohibitions centred on the notion of undertaking with the broad regime of accessory liability and preventive action found in Australian law, the Hong Kong legislator has equipped the Competition Tribunal with extremely vast enforcement powers.”

18.As for the four-step approach laid down in W Hing No 3 in determining the amount of pecuniary penalty, these are the four main steps:

(1)  Step 1 is to determine the Base Amount. This involves identifying the value of the undertaking’s sales (“Value of Sales”) directly or indirectly related to the contravention within Hong Kong in the financial year in question and applying a “Gravity Percentage” of 15% to 30% multiplied by the number of years of the undertaking’s participation in the contravention.

(2)  Step 2 is to make adjustments in accordance with aggravating, mitigating and other factors. As mentioned, section 93(2) sets out non-exhaustive factors that must be taken into account.

(3)  Step 3 is to apply the statutory cap provided in section 93(3). The maximum penalty is 10% of the turnover of the undertaking concerned for each year in which the contravention occurred, or where the contravention occurred in more than three years, 10% of the turnover of the highest three years.

(4)  Step 4 is to give reductions to reflect co-operation with the Commission, and to consider the plea of inability to pay, if any.

19.The contention raised in these appeals regarding the reduction of the Base Amount is in relation to Step 2.

C.  The sanction judgments under appeal

20.In W Hing No 3, G Lam J gave a one-third reduction of the Base Amount in respect of the pecuniary penalties to be imposed on R1 (W Hing), R4 (Tai Dou) and R9 (Wide Project). His reasoning was in §§103 to 104:

“103. Turning to the matters put forward as mitigating circumstances, the 1^st and 9^th respondents submit that they did not directly participate in the conduct impugned, but that each of them became liable only as a result of letting their “licence” to a “subcontractor” who was found to have engaged in the infringing conduct. The details of their arrangements with their respective “sub-contractors” have been described in section H of the Judgment, where it was held that each of these two respondents formed an undertaking with its subcontractor in relation to the contravening conduct. While the Base Amount, as explained above, is assessed with reference to the undertaking, the fact that the penalty is sought only against the respondent is a factor that can, in my view, be taken into account in its assessment. In the circumstances of the present case, the association of the respondent and the subcontractor was an ad hoc, temporary one; they were not companies in a group or individuals in partnership. There may or may not be some private arrangement between the respondent and the subcontractor on the responsibility for the consequences of these proceedings, but the issue has not been inquired into, and I do not think that it would be right or safe to assume the respondent would be able to recoup what it has to pay from the subcontractor. I consider that to reflect their role as part only of the undertaking in question, there should be a reduction of the Base Amount by one-third for the 1^st and 9^th respondents.

104. Although the 4^th respondent was held not entitled to run the subcontractor defence to liability, it is not seriously in dispute that, in fact, the renovations at On Tat Estate (Phase 1) were actually carried out by KC Ho in the name of Tai Dou, in a manner similar to the way in which the business was run directly by the subcontractors of the 1st and 9^th respondents in the name of W Hing and Wide Project respectively. It seems to me that a similar reduction ought to be given to the 4^th respondent.”[7]

(Emphasis supplied.)

21.Thus, the judge gave a one-third reduction based on these considerations:

(1)  the pecuniary penalty is sought only against R1, R4 and R9, not these respondents together with their respective sub-contractors or representatives;

(2)  it would not be right or safe to assume that R1, R4 or R9 would be able to recoup part or all of the pecuniary penalty imposed from their respective sub-contractors or representatives, in that the association of these respondents and their sub-contractors was ad hoc and temporary, there may or may not be some private arrangement between them on the responsibility for the consequences of these proceedings and the issue has not been inquired into; and

(3)  the pecuniary penalty imposed should reflect the role of R1, R4 and R9 as part only of their respective undertakings.

22.Having made the adjustments by a one-third reduction, the judge arrived at $670,000, $420,000 and $740,000 as the penalties which he then imposed on R1, R4 and R9 respectively. The Commission seeks to set aside the one-third reduction on appeal and raise the penalties for these respondents to $1,030,000, $656,000 and $1,135,000 respectively.

23.In Fungs Sanction Judgment, Au-Yeung J adopted the four-step approach in determining the pecuniary penalties and also followed W Hing No 3 in making a reduction to the Base Amount in Step 2 for R1, R3 to R6 for similar reasons. She noted there was no applicable precedent in Hong Kong on the pecuniary penalties for R7 (Wong Wai Chuen) and R8 (Wong Fu San) in that these respondents were not proceeded against as primary contraveners but as those “involved in” the contravention of a competition rule pursuant to section 91[8].

24.The Commission made these submissions before the judge that no reduction should be given[9]:

(1)  There is no evidence which clearly shows that R1 (and R3 to R6) attempted to seek compensation from their respective sub-contractors, and even if they chose to do so, they would not succeed.

(2)  The fact that R1 (and R3 to R6) only played a role in part of the undertakings in question was in breach of their agreement with the HKHA there would be no sub-contracting. To use this as a ground of mitigation would be to allow them to benefit from their own wrong.

25.The judge rejected the submissions. As to (1), she did not think it is important there was no attempt to seek recoupment from the sub-contractors, as it is possible that the respondents would first look at the amount of the penalty imposed before they decide whether to seek compensation from others. In this connection, she noted that although R1 has initiated third-party procedure for indemnity[10] from R7’s wife, Madam Pau Wai Lin, that procedure has been stayed, and it does not help the Tribunal to understand the relationship between them or to decide the amount of the penalty[11].

26.In respect of (2), the judge took the view that lending the licence or sub-contracting in itself does not contravene the competition law. The role of the Tribunal is not to penalise contractors for breaching their contracts with the HKHA, but to penalise their omissions for failure to comply with competition law or to prevent anti-competitive conduct[12].

27.The judge noted that unlike the W Hing case, some of the contractors in the Fungs case and their respective sub-contractors or representatives were all made respondents in the enforcement proceedings – R1 with R7/Madam Pau, R5 with R8 and R6 with R8. Although R7 and R8 were not sued as an entity within an undertaking, each group of contractor and sub-contractor was actually one undertaking and this should be what W Hing No 3 meant in giving a reduction. She reasoned that although the Base Amount is assessed on the basis of the undertaking’s Value of Sales, using the example of a contractor and a sub-contractor that would split the gains, the volume of sales is an aggregate of the two entities, so it is unfair for the contractor to bear the pecuniary penalty alone, citing W Hing No 3 at §103[13].

28.The judge took the view that the Tribunal ought to give appropriate reduction, instead of the “standard one-third”, to reflect the extent of actual participation of each respondent in each group of undertaking. Hence, a contractor could be given a maximum reduction of 50% in accordance with its sub-contracting yield, and contractors that did not lend their licence or sub-contract would not have a reduction because they enjoyed all the gains exclusively[14]. The judge therefore gave a reduction of 30% to R1 (who benefited from R7’s admission that he split the proceeds with R1 in a 3:7 ratio[15]) and 50% to R6 (who shared the profit equally with R8[16]).

29.After making the adjustment in Step 2 and in Step 4 for co-operation with the Commission, the penalties imposed on R1 and R6 were $598,000 and $341,000. The Commission seeks to set aside the reduction in Step 2 on appeal and increase the penalties to $855,000 and $682,000.

D.  The appeal in respect of the reduction of the Base Amount in Step 2

30.Mr James Segan QC, who appeared for the Commission on appeal in the W Hing case[17] and Mr Jonathan Wong, who appeared for the Commission on appeal in the Fungs case[18], took the position that the appeal court is not asked to interfere with the pecuniary penalties on the basis that the Tribunals had erred in the exercise of its discretion in giving a reduction or that the Tribunals were wrong to give excessive weight to a particular factor or that the amounts of the penalties were plainly wrong because they were manifestly inadequate, but because the Tribunals had acted on a wrong principle and had thereby taken irrelevant factors into account or failed to have regard to relevant factors (Hong Kong Civil Procedure 2022, vol 1, §59/10/20).

31.The Commission contended that the Tribunals had erred in principle in making the reduction for three main reasons:

(1)  The pecuniary penalty is to be imposed on and determined with reference to the economic activities and conduct of the relevant undertaking. R1, R4 and R9 in the W Hing case, and R1 and 6 in the Fungs case, as persons constituting their respective undertakings, are jointly and severally liable with their respective sub-contractors or representatives for the pecuniary penalties.

(2)  It is impermissible, on the grounds of public policy and the doctrine of ex turpi causa non oritur actio, for R1, R4 and R9 in the W Hing case, and R1 and 6 in the Fungs case, to rely on unlawful conduct (ie sub-contracting in violation of the requirements of the DC System and the licence granted to them by the HKHA) as a mitigating factor and a basis for the reduction.

(3)  Even if the alleged ability to recoup all or part of the pecuniary penalties from their respective sub-contractors or representatives is a potentially relevant mitigating factor, these respondents had not discharged their burden to show the alleged inability.

32.The submissions of all counsel is focussed primarily on (1), which raises the question of the extent to which the determination of pecuniary penalties under the CO should be guided by EU jurisprudence in this area. The contentions of the Commission on the three main grounds would be considered in the order set out above.

D.1. Ground (1): pecuniary penalties specific to undertakings

D.1.1. The EU jurisprudence

33.It would be convenient to set out first the relevant EU jurisprudence, of which there is no or no serious dispute.

34.This may be encapsulated in one sentence: the competition rules target undertakings (an economic concept or functional notion), but in practice enforcement is against legal or natural persons. Thus, where an undertaking contravenes a competition rule, it is for the undertaking to answer for the infringement. Pecuniary penalties, while ultimately payable by legal or natural persons, are imposed and determined with reference to economic activities and conduct of undertakings. See the decision of the Court of Justice of the European Union (“the CJEU”) in Joined Cases C-231/11 P to C-233/11 P European Commission v Siemens AG Österreich (Re Gas Insulated Switchgear Cartel)[2014] 5 CMLR 1 (“Siemens (CJEU)”) at:

“42. The authors of the Treaties chose to use the concept of an undertaking to designate the perpetrator of an infringement of competition law, who is liable to be punished pursuant to arts 81 EC and 82 EC[19], and not other concepts such as the concept of a company or firm or of a legal person …

43. The Court of Justice has consistently held that the concept of an undertaking covers any entity engaged in an economic activity, regardless of the legal status of the entity or the way in which it is financed. That concept must be understood as covering an economic unit, even if, from a legal perspective, that unit is made up of a number of natural or legal persons …

44. When such an economic entity infringes the competition rules, it is for that entity, in accordance with the principle of personal responsibility, to answer for that infringement …

49. … according to case law, where several persons may be held personally responsible for participation in an infringement committed by one and the same undertaking for the purposes of competition law, they must be regarded as jointly and severally liable for that infringement.”

35.As mentioned, in EU case law, persons constituting the undertaking are jointly and severally liable for the infringement of the competition rule, and in turn the pecuniary penalty which is imposed on the undertaking. As stated by the CJEU in Case C-882/19 Sumal SL v Mercedes Benz Trucks España SL [2021] Bus LR 1755 (“Sumal”):

“44. … the concept of an ‘undertaking’ and, through it, that of ‘economic unit’ automatically entail the application of joint and several liability amongst the entities of which the economic unit is made up at the time that the infringement was committed …”

36.And as pointed out by the General Court in Joined Cases T-122/07, T-123/07 & T-124-07 Re Gas Insulated Switchgear Cartel: Siemens AG Österreich v European Commission [2011] 4 CMLR 27 (“Siemens (GC)”):

“149. … joint and several liability between companies for the payment of fines due as a result of an infringement of art. 81 EC and art. 53 of the EEA Agreement[20] is a legal effect which follows from the substantive provisions of those articles.”

37.Thus, as explained in Siemens (CJEU):

“55. While it is true that a Commission decision imposing fines must necessarily be addressed to the legal persons comprising an undertaking, that limitation, which is of a purely practical nature, does not mean that, where the Commission makes use of its power to hold a number of legal entities jointly and severally liable for payment of a fine, as they formed a single undertaking at the time the infringement was committed, the rules and principles of EU competition law are to be applied not only to the undertaking concerned but also to the legal persons of which the undertaking is made up.

56. It follows from the foregoing that the rules governing EU competition law, including those relating to the Commission’s power to impose penalties, the EU law principle of personal liability for an infringement and the principle that the penalty must be specific to the offender and the offence, which must be complied with when the power to impose penalties is being exercised, relate only to the undertaking per se, not the natural or legal persons forming part of the undertaking.”

(Emphasis supplied.)

38.In other words, the pecuniary penalty must be specific to the undertaking and the undertaking’s contravention, not to the natural or legal persons constituting the undertaking and/or their role within the undertaking in respect of the infringement. Thus, the Commission is not “required to find all the persons responsible for participation in an infringement committed by one and the same undertaking jointly and severally liable for payment of a fine”. (Siemens (CJEU) at §50) To the contrary, the Commission “may freely choose to hold liable for an infringement, and to punish by the imposing a fine, any legal entity belonging to an undertaking that participated in an infringement of article 101”. (Sumal at §63) “The EU law concept of joint and several liability for payment of a fine concerns only the undertaking itself and not the companies of which it is made up.” (Siemens (CJEU) at §57)

39.There is yet further exposition of the law in Siemens (CJEU):

“58. While it follows from art. 23(2) of Regulation 1/2003[21] that the Commission is entitled to hold a number of companies jointly and severally liable for payment of a fine, since they formed part of the same undertaking, it is not possible to conclude on the basis of either the wording of that provision or the objective of the joint and several liability mechanism that that power to impose penalties extends, beyond the determination of joint and several liability from an external perspective, to the power to determine the shares to be paid by those held jointly and severally liable from the perspective of their internal relationship.

59. On the contrary, the objective of joint and several liability resides in the fact that it constitutes an additional legal device available to the Commission to strengthen the effectiveness of the action taken by it for the recovery of fines imposed for infringement of the competition rules, since that mechanism reduces for the Commission, as creditor of the debt represented by such fines, the risk of insolvency, which is part of the objective of deterrence pursued generally by competition law …

60. The determination, in the context of the internal relationship of those held jointly and severally liable for payment of a fine, of the shares each of them is required to pay does not pursue that dual objective. That is a contentious issue, to be resolved at a later stage, and, in principle, the Commission no longer has any interest in the matter, where the fine has been paid in full by one or more of those held liable.

61. Moreover, neither Regulation 1/2003 nor EU law in general contain rules for the resolution of such a dispute, which concerns the internal allocation of the debt for the payment of which the companies concerned are held jointly and severally liable …”

D.1.2. The respondents’ arguments

40.All counsel for various respondents in the two cases on appeal (Mr Harrison Cheung for W Hing and Dao Kee, Mr Joshua Wong for Tai Dou, Ms Connie Lee for Wide Project, Mr Matthew Ngai and Ms Mandy Chan for Fungs) submitted that the EU jurisprudence mentioned above should not apply or be fully imported, in that the determination of pecuniary penalties is a “localised affair” (similar to sentencing in criminal law), that the Tribunals had taken into account all relevant circumstances and hence their overall assessment and exercise of discretion should not be impeached. Their detailed submissions may be summarised as follows:

(1)  EU competition law adopts the concept of undertakings on contraventions as well as on fines, see article 23 of Regulation 1/2003 which makes specific reference to “undertakings”. The rules relate only to undertakings and not natural or legal persons forming part of an undertaking. In contrast, the enforcement provisions in Part 6 of the CO are drawn largely from Australian legislation and are aimed at “persons”, and a “person” may be a natural person or a body of persons, corporate or unincorporated (according to Cap 1), within an infringing undertaking. Pursuant to sections 92 and 93, the Commission may take enforcement action against any “person”, which includes an undertaking, and apply for pecuniary penalty to be imposed on a “person”, whether as primary contravener under section 92(1)(a) or as accessory under section 92(1)(b).

(2)  Unlike EU competition law, sections 93(1) and (2) empower the Tribunal to order a pecuniary penalty in any amount it considers appropriate and without limiting the matters it may have regard to. Consequently, the Tribunal retains a measure of discretion in making an overall assessment of the size of any reduction in the fines to reflect the mitigating circumstances. The usual constraints in an appeal against the exercise of discretion should apply here.

(3)  Section 93(2) specifically provides for matters which the Tribunal must have regard to in determining the amount of the pecuniary penalty. Among them are “the nature and extent of the conduct that constitutes the contravention” (section 93(2)(a)) and “the circumstances in which the conduct took place” (section 93(2)(c)). In taking into consideration various factors and surrounding circumstances in making adjustment under Step 2 (namely, that the pecuniary penalty was sought against the contractor alone; that the association of the contractor and the sub-contractor was ad hoc and temporary; that there might be uncertainties in being able to recoup from the sub-contractor; and that the contractor’s participation was only part of the undertaking), the Tribunals were taking into account what section 93(2) mandatorily requires them to do and were thereby adopting a holistic approach. How the undertaking was constituted and the role of the natural or legal persons targeted for enforcement within that undertaking are clearly relevant considerations.

(4)  The main concern in Siemens was the apportionment of penalty. It was held by the CJEU at §58 on the basis of either the wording of article 23(2) of Regulation 1/2003 or the objective of the joint and several liability mechanism that it is not possible to conclude that the power of the Commission to impose fines extends beyond the determination of joint and several liability from an external perspective. Thus, it is for the national courts to determine the individual shares to be paid by those jointly and severally liable for a fine, where there is no contractual agreement on apportionment, by applying the applicable national law.

(5)  Courts of law have jurisdiction to look into the internal composition of an undertaking and the relative share of responsibilities among separate entities within the economic unit. This was what the Tribunals did in W Hing No 3 and Fungs Sanction Judgment. Contrary to the situation in Siemens, the Tribunal is not precluded by any provision in the CO from dealing with apportionment or internal allocation of the fine for which the entities within the undertaking are jointly and severally liable. Under section 142(2), the Tribunal has the same jurisdiction to grant remedies and reliefs, equitable or legal, as the Court of First Instance.

(6)  Where the Commission proceeded against a contractor alone, it would be unfair and wrong in principle for that contractor to be solely responsible for the entire economic activities of a single undertaking.

(7)  To avoid any reduction in the penalties, the Commission can, if so desire, proceed against all known natural and legal persons in the undertaking, as was apparently done in the Fungs case. This would ensure that all persons potentially affected by the judgments on liability and/or sanction would have the opportunity to be heard and be bound by the Tribunal’s decision. In the absence of an opportunity to be heard, it would be unfair for a respondent to recoup the penalty from another member of the undertaking.

(8)  The objective of deterrence generally pursued by competition law would not be frustrated by giving a reduction to reflect the role of a respondent as being part only of an undertaking. In determining the pecuniary penalties, the Tribunals had taken into account the “gravity percentage” in Step 1, the general objective of deterrence and the specific deterrence sought by the Commission.

D.1.3. Discussion

41.Even though the determination of pecuniary penalties is a “localised affair”, it must be recognised that the concept of an undertaking lies at the heart of the competition law in Hong Kong and this is derived from EU jurisprudence. The infringement of the first conduct rule is committed by an undertaking, see section 6(1). The same goes for the infringement of the second conduct rule, as provided in section 21(1). It is rightly recognised as the “key organising concept” (W Hing No 2 at §302).

42.We do not agree with the respondents’ submission that EU jurisprudence on the concept of undertaking should not be applicable in view of the difference in wording in the relevant statutes (article 23 of Regulation 1/2003 refers to “undertaking”, whereas the enforcement provisions in Part 6 of the CO refer to “persons”). The definition of “person” in section 2(1) includes an undertaking. There is apparent reason why “person” and not “undertaking” is used in Part 6. This is because the CO is modelled not just on EU and UK competition law in respect of the contravention of a competition rule by an undertaking, it is also modelled on Australian legislation for establishing an accessory liability regime. Hence, in sections 92(1) and 93(1), “person” is used to cover both regimes – contravention by an undertaking and accessory liability.

43.As found by the Tribunals in the W Hing case and the Fungs case, each of the respondents in these appeals formed a single economic unit or undertaking with their respective sub-contractor. In each instance, “to undertake and deliver the economic activity which is the subject matter of the infringements, both the respondent and the sub-contractor were necessary and had to act together” (W Hing No 2 at §317). The perpetrator of the infringement in each instance was the undertaking of which the respondent formed part, with its respective sub-contractor. There was no separate infringement by each of the respondents in these appeals.

44.In the W Hing case, W Hing and Wide Project sought to dispute liability by the “sub-contractor defence”, contending that they just received a fixed fee of $200,000 from the sub-contractor but did not thereafter derive any profit or incur any expenses. The judge rejected the defence as the matters raised were not relevant, they concerned “the internal, private relationship between the respondent and the sub-contractor” (W Hing No 2 at §320). A similar argument of Tai Dou that the two partners named did not take part personally or were not aware of the conduct impugned was likewise rejected as “beside the point” (W Hing No 2 at §328). At the sanction hearing, the judge again rejected the contentions of W Hing that its Value of Sales should be taken as only $200,000 and of Tai Dou that its Value of Sales should be nil because the partnership or the two named partners did not carry out the renovation business[22]. “The correct focus is on the Value of Sales in relation to the contravention found of the undertaking responsible.” (W Hing No 3 at §§78 to 80).

45.In the Fungs case, there was no dispute as to the Value of Sales of the respondents in question in that the above approach of W Hing No 3 was followed (Fungs Sanction Judgment at §8).

46.Insofar as it was contended by some of the respondents (Mr Harrison Cheung for W Hing and Dao Kee, Mr Joshua Wong for Tai Dou) that the entities in an undertaking should not be jointly and severally liable for the whole of the infringement, we do not accept this contention[23]. Nor do we accept Mr Joshua Wong’s submission that the Commission’s stance is contradictory to its position in the liability hearing when it accepted that of the four partners in Tai Dou, only the two named as respondents could be subject to any sanctions and orders imposed by the Tribunal in the enforcement proceedings[24].

47.As we have mentioned earlier, the case law in EU jurisprudence is clear. The principle of joint and several liability does not emerge solely or primarily from article 23 of Regulation 1/2003. It is a legal consequence that follows when the economic activity that infringed the competition law is committed by an undertaking made up of a number of legal or natural persons. And the concept of undertaking has been adopted in the CO.

48.We agree with the Commission that it would be wrong in principle to reduce the fine by a percentage to reflect the respondent’s role that it only formed part of an undertaking. Where an undertaking contravenes a competition rule, it is for the undertaking to answer for the infringement. Whilst the pecuniary penalty is ultimately to be paid by legal or natural persons, the penalty is imposed and remained determined with reference to the economic activities and conduct of the undertaking. There is no separate infringement by each of the entities within the undertaking. As submitted by Mr Segan, by reducing the penalty in this way, it would be inconsistent with the scope of the conduct for which each of the respondents is answerable as an entity within that particular undertaking.

49.We could discern no inconsistency in the above approach with the mandatory considerations that the Tribunal must have regard to under section 93(2). In the context of a primary contravener in section 92(1)(a), the conduct referred to in “the nature and extent of the conduct that constitutes the contravention” (section 93(2)(a)) and “the circumstances in which the conduct took place” (section 93(2)(c)) must be the conduct of the primary contravener, namely, the undertaking.

50.Thus, in the four-step approach laid down in Wing Hing No 3, the considerations taken into account at various stages pertain to the undertaking, not one or more of the entities within the undertaking. In Step 1, the Base Amount is calculated by reference to the Value of Sales of the undertaking, the duration multiplier is the number of years of the undertaking’s participation in the contravention. In Step 2, the non-exhaustive mandatory matters to be taken into account under section 93(2) relate to the conduct of the undertaking. Insofar as Au-Yeung J was of the view that Step 1 takes into account the things in common between respondents or a certain group of them and Step 2 focuses on the conduct of individual respondents (as opposed to the conduct of the undertaking)[25], we think the judge is in error. The statutory cap in Step 3 is calculated by reference to the overall turnover of the undertaking. The co-operation reduction in Step 4 is made to the penalty imposed on an undertaking.

51.As emphasised in W Hing No 3 at §§36 and 59:

“36. … As the primary sanction provided for in the Ordinance, the pecuniary penalty serves the principal purpose of deterring undertakings from anti-competitive conduct. It is through this sanction that undertakings are to be deterred from activities which might otherwise be highly profitable to them and competition norms are reinforced for all including the law-abiding. …”

“59. Proportionality is relevant throughout the process of assessment but should in particular be considered here to give an overall sense check. It is important to stand back and look to see whether, subject to the subsequent steps, the amount arrived at would be a just and proportionate penalty for the contravention by the undertaking in the circumstances.”

(Emphasis supplied.)

52.Given the four-step approach devised in W Hing No 3 and the statements in the judgment that elaborated on the approach, we are inclined to agree with Mr Segan that §§103 and 104 (being the judge’s reasoning in making the reduction challenged in these appeals) leapt out as an anomaly.

53.There is no injustice or procedural unfairness that an entity within an undertaking brought before the Tribunal should answer for the whole of the infringement by an undertaking. In determining the pecuniary penalty specific to the undertaking, it is not relevant for the Tribunal to inquire into the internal relationship of those held jointly and severally liable for the payment of the penalty. And where payment has been made by one or more of those held liable, the Commission would cease to have interest in the matter. The apportionment of responsibility between entities within an undertaking for the payment of the penalty is not to be resolved in the enforcement proceedings but in subsequent proceedings for contribution or indemnity, in which the Commission would not have a role to play.

54.Provision is made for third party proceedings in rule 23 of the Competition Tribunal Rules, Cap 619D. A third party may be joined by a respondent for the purpose of seeking indemnity and contribution against it, in order that the findings of the Tribunal in the enforcement proceedings would bind the third party. That was what happened in the Fungs case, where Au-Yeung J granted leave to Fungs to join its sub-contractor Madam Pau as a third party to the enforcement proceedings. Au-Yeung J held that where a third party is joined in the enforcement proceedings, the Tribunal does have jurisdiction to hear the matter under section 142(1)(g) as a matter related to the enforcement action[26].

55.The objective of joint and several liability under EU competition law is to “strengthen the effectiveness of the action taken by [the Commission] for the recovery of fines”[27]. We agree with Mr Segan it would be highly onerous to the Commission if all the entities within an undertaking must be brought before the Tribunal in enforcement proceedings to ensure that there would be no reduction of the penalty to reflect a particular entity’s role as only part of an undertaking. This would undermine the effective enforcement of the competition rules. The Commission is at liberty to proceed against any of the entities comprised in an undertaking. If an entity in enforcement proceedings considers that it should seek indemnity and contribution from other entity not before the Tribunal, it is up to that respondent to seek leave to bring third party proceedings.

56.Mr Harrison Cheung for Dao Kee in the Fungs case pointed out that R8, who was sub-contractor to Dao Kee, had the pecuniary penalty reduced by 50% of the Base Amount of Dao Kee. The pecuniary penalties of Dao Kee and R8, added together, would account for 100% of the undertaking. He submitted that it would be unfair in these circumstances to raise the penalty of Dao Kee to 100%. Mr Matthew Ngai made a similar submission for Fungs that in giving a 30% discount to Fungs and 70% discount to Fungs’ sub-contractor R7, the penalties would still add up to 100%. The Commission did not appeal against the penalties of R7 and R8.

57.R7 and 8 were proceeded against not as primary contraveners with Fungs and Dao Kee respectively, but as persons involved under the accessory liability regime. Had they been proceeded against as entities in the respective undertakings, they would be jointly and severally liable with the contractors for the acts of infringement of the undertaking concerned, and be placed in the same position as far as the penalty is concerned. But as R7 and R8 were proceeded against on a different basis, we do not think there would be unfairness to Fungs and Dao Kee in this situation.

58.Much importance was placed by Ms Connie Lee for Wide Project on her reading in the W Hing case that the association of the contractor and sub-contractor was ad hoc and temporary should be regarded as a material mitigating factor on a holistic view, and as a reality the Tribunal could not ignore. She emphasised that section 93(2) does not limit the matters that the Tribunal may have regard to in determining the pecuniary penalty.

59.On a proper reading of §103 of W Hing No 3, it does not appear to us that the judge was attaching importance to the ad hoc and temporary association per se. Read in context, the significance of the temporary nature of the association lies in the judge’s deduction that it would not be right or safe to assume that the respondent contractors would be able to recoup part or all of the pecuniary penalty from their respective sub-contractors, as there may or may not be some private arrangement between them on the responsibility for the consequences of the enforcement proceedings. We will come back to inability to recoup when we deal with the third broad ground of appeal.

60.For the above reasons, we are of the view that the contentions in ground (1) are valid and that it is wrong in principle for the Tribunals to make the reductions challenged on appeal.

D.2. Ground (2): public policy/illegality

61.The Commission submitted that in any event, it is impermissible on grounds of public policy, for the respondents to avoid responsibility in part by relying on their own unlawful conduct, ie sub-contracting in violation of the DC System and the licence granted by the HKHA, as a mitigating factor. The public policy/illegality contention was not raised by the Commission at the sanction hearing in the W Hing case and only raised in the Fungs case.

62.The relevant findings of fact in W Hing No 2 are as follows.

63.The DC System was operated by the HKHA for new public housing buildings with the aim to protect tenants by “preventing infiltration of illegal elements so that decoration works in new estates and courts can be carried out in an orderly manner”. Decoration contractors on the reference list maintained by the HKHA were checked by the police for triad connections. When a new public housing estate was ready for tenant intake, licences were granted by the HKHA to Appointed DCs selected from the reference list, giving them the right to enter the estate and carry out decoration works for tenants. The Appointed DCs were briefed by the manager of the estate on the report of illegal conduct and by the police’s Anti-triad Section on the prevention of triad activities and crimes. And tenants would have the comfort of knowing that the Appointed DCs had been checked by the police to confirm the absence of triad connections[28].

64.The licence expressly provided that the licensee shall not assign, transfer or part with the right granted to him under the licence or any interest in it without the prior written approval of the HKHA, and that the licensee shall neither sublet nor sub-contract any decoration works or any works or any part thereof under the licence or any part of the licence without the prior written approval of the HKHA. None of the respondents had sought prior written approval from the HKHA when they gave their sub-contractors (who were not on the reference list) the right to carry out decoration works under their licences, and the HKHA was unaware of the existence of the sub-contractors. It was the respondents, not their sub-contractors, who had to fulfil the financial and other eligibility requirements to be placed on the reference list and they were checked for triad connections and financial soundness and monitored for their performance[29].

65.The Commission submitted that the DC System existed to protect and serve the public interest, in particular the interests of a vulnerable segment of the community. By the sub-contracting arrangements, the respondents led the HKHA and the tenants to believe by false pretences that the decoration works were to be carried out by the respondents. This was tantamount to deceiving and cheating the HKHA and the tenants, who were kept in the dark. The sub-contracting arrangements defeated the policy objectives of the DC System which was designed to protect new tenants from illegal elements and to ensure that decoration works would be carried out by properly vetted contractors of sound financial standing and with good performance records. In Sit Kam Tai v Gammon Iron Gate Co Ltd & Ors, HCA 779/2006, 26 July 2010, Deputy High Court Judge L Chan had this to say of a price-fixing cartel agreement of approved gate suppliers to cheat the Housing Authority and the main contractors: “This kind of cheating is against the public interest and should be discouraged in strong terms.” (at §83)

66.The Commission submitted that by treating the respondents’ allegedly lesser involvement within the undertakings as a mitigating factor, the Tribunals are recognising, giving effect to and indirectly enforcing the sub-contracting arrangements which were in breach of the licences. Further, the respondents had represented to the outside world they were taking sole responsibility for the works. In granting them a reduction on the basis that they should not be fully responsible for the works because they had sub-contracted, this would run counter to their representations to the outside world that they were solely responsible. The sub-contracting arrangements relied on by the respondents clearly necessitated reliance by the respondents on their own wrongs. It was submitted that the reliance principle identified in Tinsley v Milligan [1994] 1 AC 340 remains good law in Hong Kong[30].

67.In response, the respondents relied on §52 of the Fungs Sanction Judgment in which Au-Yeung J declined to have regard to the fact that sub-contracting was in breach of the licences, taking the view that lending the licence or sub-contracting in itself does not contravene competition law and that the role of the Tribunal is not to penalise contractors for breaching their licences with the HKHA but to punish contravention of competition law.

68.We think the Tribunal in the Fungs case had taken a far too narrow view of the matter. For the reasons submitted by the Commission, we are of the view that public interest is engaged in the operation of the DC System and that the sub-contracting arrangements in violation of the system were against public interest and contrary to public policy. The cases cited by Mr Matthew Ngai that it did not constitute a breach of public policy for male indigenous villagers to proceed with the sale of small exempted houses without prior government approval and without payment of additional premium were decided in a wholly different context (Li Pui Wan v Wong Mei Yin [1998] 1 HKLRD 84; Lau Kwai Kiu v Bian Xintian [2012] 2 HKLRD 954). The court noted that over the years the government has been considerably indulgent towards this sort of sale and purchase and has in effect amended the land grant policy. It took the view that “from the practical point of view, this measure has done more good than harm to the public.” (Li Pui Wan at 90C to E; Lau Kwai Kiu at §62)

69.We are inclined to think that in the present circumstances, it is wrong in principle to give recognition to the sub-contracting arrangements as a mitigating factor.

70.We reject also the respondents’ contention that the Tribunals did not place any reliance on the unlawful conduct and had only regarded the sub-contracting as part of the factual matrix in ascertaining the respondents’ level of participation in order to make the reductions under challenge. In determining the penalty in this manner, the Tribunals had taken into account the sub-contracting arrangements and made a reduction to reflect the respondents’ role “as part only of the undertaking in question”.

71.Nor do we think it apt to invoke the analogy of sentencing in criminal cases to have regard to the role of the defendant even if his conduct had constituted a criminal offence or would be the subject of disciplinary proceedings. The further contention that the Tribunals in the W Hing case and the Fungs case did not specifically find illegality or contravention of public policy in the sub-contracting arrangements is not to the point. And whether the respondents had knowledge of the anti-competitive conduct subsequently committed by the sub-contractors is irrelevant.

D.3. Ground (3): inability to recoup from sub-contractor

72.The Commission’s contention is that assuming the alleged inability to recoup all or part of the penalty from the sub-contractor is a potentially relevant mitigating factor, the respondents did not discharge their burden to show it. As was observed by the Tribunal in W Hing No 3 at §103:

“In the circumstances of the present case, the association of the respondent and the subcontractor was an ad hoc, temporary one; … There may or may not be some private arrangement between the respondent and the subcontractor on the responsibility for the consequences of these proceedings, but the issue has not been inquired into, and I do not think that it would be right or safe to assume the respondent would be able to recoup what it has to pay from the subcontractor.”

73.The Tribunal has held in W Hing No 3 at §§119 to 120 that in considering whether to make a reduction in Step 4 for inability to pay and financial hardship, it is necessary for the respondent in question “to produce clear and comprehensive evidence of its financial position”.

74.The Commission submitted that the position is no different as regards the alleged inability to recoup from a sub-contractor. The burden is not on the Commission to disprove the alleged inability. None of the respondents had adduced evidence or proper grounds to demonstrate the alleged inability to recoup[31]. It is therefore inappropriate for the Tribunals to take into account, let alone give the reduction to reflect, the alleged inability.

75.We think that must be correct. In determining the appropriate amount of the penalty, we do not consider it relevant for the Tribunal to inquire into the ability of an entity to recoup the penalty from another entity within the undertaking. As we have explained, the internal relationship between the respondent and the sub-contractor is not relevant as the penalty is specific to the undertaking and entities within the undertaking are jointly and severally liable. The inability to recoup may be due to a variety of reasons. If they are legal reasons, they should be resolved in contribution or indemnity proceedings with the involvement of the third party, not in the enforcement proceedings. If, contrary to our view, it were relevant to consider in the sanction hearing the ability of one entity to recoup from another entity within the undertaking, the Tribunal should have before it proper evidence and be satisfied on the evidence of the alleged inability before deciding to give an appropriate discount on that basis. Mere uncertainty of the alleged ability to recoup and giving the benefit of the doubt to the respondent is neither apposite nor sufficient.

76.For all the above reasons, we allow the Commission’s appeal in the W Hing case and the Fungs case in respect of the reduction of the Base Amount in Step 2.

E.  The appeal on costs in the W Hing case

77.This relates to the Tribunal’s refusal to grant a certificate for three counsel (one Queen’s Counsel, one Senior Counsel and one junior counsel) to the Commission in respect of its costs in the liability and sanction hearings which lasted for 20 days.

78.The principles are not in dispute. Awarding costs for three counsel is “exceptional”. It is not justified even if there is “a good deal of work” and “the issues were not simple”[32].

79.The judge recognised that the Commission’s counsel had to deal with multiple respondents, and “without underestimating the tasks that they had to undertake”, he would still not put this case in that exceptional category and awarded instead a certificate for two counsel (one Senior Counsel and one junior counsel)[33].

80.Mr Segan urged upon us the matters that were raised before the judge unsuccessfully when he refused to grant leave to the Commission to appeal on costs out of time[34]: this was one of the pair of first cases brought before the Tribunal under the new competition regime and a range of important principles of substantive law and process arose; the Commission’s application for overseas leading counsel was unopposed, there being consensus that the case is of the requisite difficulty and complexity and would have impact on the development of local jurisprudence; Mr Daniel Beard, QC was admitted to lead the Commission’s team on the condition that three counsel would be engaged, it was important that local Senior Counsel was engaged to provide support in relation to Hong Kong law and procedure and to further the objective of developing local capacity to handle a wide range of matters under the competition regime.

81.Mr Segan reminded this court that the Commission’s counsel had to deal with 12 counsel (one being a Senior Counsel) in opposition. He submitted that the judge is plainly wrong in ruling that the case is not exceptional to warrant a certificate of three counsel.

82.Costs are very much a matter of discretion for the Tribunal and this court will only interfere if satisfied that the Tribunal is wrong in principle or plainly wrong. The mere fact that we might have exercised the discretion differently is beside the point. The judge is most familiar with the conduct of the case and the issues canvassed at the hearings. He exercised his discretion to award a certificate for three counsel in Competition Commission v Nutanix Hong Kong Ltd & Ors [2020] HKCT 11 at §46[35] but declined to do so in the W Hing case. Having considered the judge’s reasons in W Hing No 3 and his decision in refusing leave to appeal, we are not satisfied that he is plainly wrong in holding that the case is not in the exceptional category to justify a certificate for three counsel.

83.We dismiss the Commission’s appeal on costs.

84.The remaining matter in relation to costs is an application by R8 (Poon Wai Woon and Poon Kai Wo Julio trading in partnership as Wai Sun Iron & Decoration Co) for leave to appeal against the costs order out of time. R8 acted in person on appeal.

85.About a week before the hearing of the appeal, R8 lodged a submission seeking leave to appeal against the costs order in §146 of W Hing No 3. R8 seeks to vary the costs order by carving out the costs of the “sub-contractor defence” such that only those respondents who had invoked this defence should be liable to pay the Commission’s costs relating to this defence. R8 contended that the Tribunal was in error in ordering those respondents who ran the “efficiency defence” to pay the Commission’s costs relating to that defence but did not make a similar order in respect of the costs of the “sub-contractor defence”. R8 sought indulgence from the court to allow this appeal be brought out of time as R8 has been acting in person and missed the deadline to file a respondent’s notice.

86.We decline to exercise our discretion to allow R8 to cross-appeal against the costs order out of time. The costs order was made nearly two years ago, on 29 April 2020. The Commission filed its notice of appeal in CACV 157/2021 on 8 April 2021. The latest date by which R8 should have filed a respondent’s notice was 22 April 2021. R8 was a year out of time. We do not find the substantial delay excusable. Nor do we think R8 has demonstrated a real prospect of success in the intended appeal (that the Tribunal’s costs order is wrong in principle or plainly wrong) for an extension of time to be granted.

F.  Dispositions

87.We allow the appeal in both cases in respect of the reduction to the Base Amount. In the W Hing case, we set aside the amount of pecuniary penalty to be paid by W Hing, Tai Dou and Wide Project and substitute the amount of pecuniary penalty as follows: $1,030,000 for W Hing, $656,000 for Tai Dou and $1,135,000 for Wide Project. In the Fungs case, we set aside the amount of pecuniary penalty to be paid by Fungs and Dao Kee and substitute the amount of pecuniary penalty as follows: $855,000 for Fungs and $682,000 for Dao Kee.

88.We dismiss the Commission’s appeal against the costs order in the W Hing case.

89.We make the following costs order nisi.

90.Costs of the appeals should follow the event. The Commission should be awarded costs in CACV 143/2020 attributable to the appeal in respect of the reduction to the Base Amount and in CACV 46/2021. The three respondents in CACV 143/2020 (R1, R4 and R9) should be awarded costs attributable to the appeal on costs and all the respondents in CACV 157/2021 (R2, R3, R5, R6, R7, R8 and R10) should be awarded their costs on appeal. We make no order as to the costs of R8 in relation to its failed application for leave to appeal against the costs order out of time.

91.For the costs awarded to the Commission in CACV 143/2020, we grant a certificate for two counsel, as we are of the view that the scope and difficulty of the issues raised do not bring the case within the exceptional category for a certificate for three counsel.

CACV 143/2020 and CACV 157/2021

Mr James Jeffrey Segan QC, Mr Jonathan Wong and Mr Byron Chiu, instructed by King & Wood Mallesons, for the Applicant (Appellant)

Mr Harrison Cheung, instructed by Wong & Lawyers, for the 1^st Respondent (1^st Respondent)

Sun Spark Construction Limited (裕輝建築有限公司), the 2^nd Respondent, unrepresented (2^nd Respondent)

Lau Chung Yan (劉頌欣) and Lau Chun Kwok Adam (劉鎮國) (in partnership trading as Mau Hang Painting & Decoration Co (茂恒油漆裝飾公司)), the 3^rd Respondent, acting in person, absent (3^rd Respondent)

Mr Joshua S Kanjanapas Wong, instructed by Henry Yu & Associates, for the 4^th Respondent (4^th Respondent)

Kam Kee Machine Electrical Iron Works Company Limited (金記機電鐵器工程有限公司), the 5^th Respondent, unrepresented (5^th Respondent)

Hui Tak Cheong Kanly (許德昌) and Hui Tak On Bryan (許德安) (in partnership trading as Hip Yick Construction Company (協益建築公司)), the 6^th Respondent, acting in person, present (6^th Respondent)

Suen Sik Kau (孫錫球) (trading as Tai Wah Civil Engineering (泰華土木工程)), the 7^th Respondent, acting in person, present (7^th Respondent)

Poon Wai Woon (潘維桓) and Poon Kai Wo Julio (潘啟和) (in partnership trading as Wai Sun Iron & Decoration Co (維新鐵器裝修公司)), the 8^th Respondent, acting in person, present (8^th Respondent)

Ms Connie Lee, instructed by Benjamin Au & Billy Chan, for the 9^th Respondent (9^th Respondent)

Luen Hop Decoration Engineering Co Limited (聯合裝飾工程有限公司), the 10^th Respondent, unrepresented (10^th Respondent)

CACV 46/2021

Mr Jonathan Wong and Mr Byron Chiu, instructed by King & Wood Mallesons, for the Applicant (Appellant)

Mr Matthew Ngai and Ms Mandy Chan, instructed by Stevenson, Wong & Co, for the 1^st Respondent (1^st Respondent)

Mr Harrison Cheung, instructed by Lui & Law, for the 6^th Respondent (6^th Respondent)