HKSAR v. Chu Hoi Kan

CACC 132/2024, [2025] HKCA 332

On Appeal From [2024] HKDC 751

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 132 OF 2024

(ON APPEAL FROM DCCC NO 623 OF 2021)

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REASONS FOR JUDGMENT

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1.On 17 May 2024, following a trial in the District Court before Deputy Judge M Chow (“the judge”), the applicant was convicted of a charge of bookmaking, contrary to section 7(1)(a) of the Gambling Ordinance, Cap 148. Subsequently, on 28 May 2024, he was sentenced to 2 years and 7 months’ imprisonment.

2.By his Form XI Notice filed on 24 June 2024, the applicant seeks leave to appeal against his conviction only. At the hearing of the application, after hearing argument from the parties, I refused leave to appeal and said I would hand down my reasons for doing so in due course. These are my reasons.

The prosecution case

3.PW1, a successful businessman, and PW2, a childhood friend and employee of PW1, came to know the applicant at a sauna establishment in Wan Chai, which they both frequented. As PW1 and the applicant became more familiar with each other, PW1’s hobby of betting on horse racing became known to the applicant. In due course, the applicant invited PW1 to place bets with him on horse races in Hong Kong. He offered PW1 a 13% discount on any bets PW1 lost, which was 3% more than the discount offered by the Hong Kong Jockey Club (“HKJC”) for bets over HK$10,000. As for any winnings, PW1 would be paid in full by the defendant, the amount calculated according to the odds set out by HKJC. PW1 was also told that he could collect his winnings the following day and settle any gambling debts within one or two days[1].

4.Attracted by the convenience of betting without a daily limit or the need to deposit the bet amounts in cash beforehand, and, to a limited extent, by the 3% difference in the discount, PW1 accepted the applicant’s offer. Between 12 September 2018 and 31 October 2019 (“the Charge Period”), PW1 placed multiple bets with the applicant on 14 horse racing days. Through telephone calls, the applicant would immediately accept PW1’s bets within HK$1 million. For bigger bets, such as ones over HK$2.5 million, the applicant would ask PW1 to wait for a while and would then call back within 10 minutes to confirm acceptance of the bet. All of the bets PW1 placed were accepted[2].

5.Out of all the bets PW1 placed with the applicant during the Charge Period, PW1 won HK$5,555,000 from the applicant and lost about HK$27 million. At the end of each race day, PW1 and the applicant would discuss and agree on the amount of losses and winnings. PW2, on behalf of PW1, handled settlement with the applicant by collecting PW1’s winnings from the applicant in cash and issuing cheques or paying cash to the applicant in respect of PW1’s losses. The cheques were deposited into various bank accounts designated by the applicant. Holders of these accounts consisted of two companies, one of which was named Dragon Linker Trading Limited (“DLT”), and seven individuals, including the applicant’s daughter, a Lam Lai Ling (whose name bore resemblance to that of the applicant’s wife, Lam Lai Fun), a Cheng Cham Fong (“Cheng”) and a Poon Hung David (“Poon”). These two companies and the seven individuals were not known to PW1 or PW2[3].

6.On 9 November 2019, 9 days after the Charge Period, ICAC officers raided a flat at Unit B, 7/F, Tower A1, Chelsea Court, 100 Yeung Uk Road, Tsuen Wan, New Territories (“the Flat”). The Flat was owned by Cheng and used by DLT as its correspondence address. Upon entry, the officers found Cheng, Poon and an elderly female in the living room, where a television was broadcasting live horse racing. The applicant and Madam Lau So Kam (“Lau”) were inside the master bedroom. From a wardrobe in the master bedroom, a laptop (“the Laptop”) and a notebook (“the Notebook”) were seized. Upon further search of other areas in the Flat, the officers also found horse racing newspapers and books, calculators, notebooks, stationary and some bank slips[4].

7.The applicant, along with Lau, Cheng and Poon, was arrested and cautioned in connection with 3 offences: (i) conspiring to offer advantages[5], (ii) conspiring to engage in bookmaking[6], and (iii) money laundering[7]. Under caution, the applicant said:

“I understand the reasons for the arrest and the meaning of the caution. Ng Wai Man (PW1), Wan Yat Kwai and I are only ordinary friends. Usually, we would have meals and play mahjong together. For mahjong games, I would only play with Wan Yat Kwai. The two of them (would) ask me to place bets on horse races. So I placed bets for them on horse races either at the Jockey Club or on the internet. I only earned one point out of that. I did not accept their bets and dared not accept them. I only earned a meal.”

When asked about the meaning of “one point”, the applicant told the arresting officer that it meant “1 percent” but sometimes it was even less, such as 0.5 percent[8].

8.Examination of the Laptop showed that its web browser was displaying a betting website: “web.ctb988.com”. The applicant said under caution that, since he did not know how to use a computer or the internet, Lau was the one who helped him press the keys to place bets on the website called “AA something”. The applicant’s DNA was found on the keyboard of the Laptop whereas Lau’s DNA was the dominant DNA on the Notebook[9].

9.PW3, a gambling expert with the Hong Kong Police, gave expert opinion that “web.ctb988.com” was an online platform for illegal gambling. Having been vetted by the platform operator, one could become a user of the platform to either place bets or accept bets. Browser record of the Laptop showed that on 9 November 2019, the day of the arrest, user “hho321a” at least accepted 5 bets on the platform and won HK$44,701.588 (before deduction of the platform charge). The login credentials of “hho321a” were written on the Notebook[10].

10.In relation to the bets PW1 placed with the applicant through telephone calls during the Charge Period, PW3 said that there was no evidence supporting the fact that they were placed online. Neither was there anything to support the applicant’s claim that he received 0.5% to 1% as commission for each bet[11].

11.It was clear from the evidence that PW3 believed, among other things, that (i) anyone who accepted bets on the platform must be a bookmaker; and (ii) a middleman between a punter and a bookmaker must be an agent acting for both sides. However, counsel then prosecuting on fiat submitted that PW3’s expertise was only required to assist the court’s understanding of the online betting platform, not the law on bookmaking[12].

12.It was PW1’s evidence that he never paid the applicant any reward or commission, such as the 0.5% to 1% claimed in the applicant’s cautioned statement. At the conclusion of the prosecution case, prosecuting counsel invited the judge to infer from all circumstances that the applicant had engaged in bookmaking during the Charge Period[13].

The defence case

13.The applicant elected not to give evidence, nor to call any defence witnesses. Leading counsel for the defendant at trial, Ms Draycott SC, with her Mr Chui, submitted that the prosecution had failed to prove beyond reasonable doubt that the applicant accepted PW1’s bets as his own or that he did so by way of trade or business. In particular, she submitted:

(i)  The applicant’s cautioned statement was inconsistent with the prosecution case that the applicant accepted PW1’s bets as his own. Other than this statement, there was no evidence on what the applicant had done with PW1’s bets[14].

(ii)  Whether or not the applicant accepted bets online on 9 November 2019, which was outside the Charge Period, was irrelevant to the issue. In fact, none of the evidence gathered from the Flat was relevant to the bets of PW1[15].

(iii)  PW3 was mistaken about the law on bookmaking[16].

(iv)  Nothing found in the Flat suggested that the applicant accepted PW1’s bets in the course of a trade or business. Apart from the Laptop and Notebook, there was no other evidence in the Flat that was connected to illegal gambling, let alone bookmaking. The scene at arrest was merely a group of friends gathering to gamble together. The applicant’s cautioned statement showed that he was only placing bets for PW1 as a friend and making money for a few meals, which was not equivalent to a trade or business[17].

14.In essence, the defence was that the prosecution could not disprove that the applicant was merely a “conduit”; in other words, someone who passed on all the bets of PW1 to bookmakers and did not receive them as his own.

The Reasons for Verdict

15.The judge noted that there was no obligation on the applicant to prove his innocence. However, the applicant’s electing not to give evidence also meant that there was no evidence from him to undermine, contradict or explain the prosecution evidence. With regard to the applicant’s cautioned statement, different weight could be attached to its inculpatory and exculpatory parts.

16.The judge concluded that the irresistible inference to be drawn from the following circumstances was that the applicant had engaged in bookmaking as alleged by being the bookmaker himself:

(i)  It was not disputed that the applicant solicited and negotiated with PW1 to place bets with the applicant by offering PW1 a discount of 13% and the convenience of betting without putting up funds in advance. PW1 did place bets with the applicant via telephone calls and settled the winnings and losses with the applicant through PW2[18].

(ii)  PW1’s winnings were all collected from the applicant in cash, whereas PW1’s losses were all paid either in cash to the applicant or by cheque to the bank accounts designated by applicant, the holders of which were not known to PW1 or PW2. This demonstrated that the applicant was deliberately covering the traces of gambling money[19].

(iii)  The bets of PW1 were massive in amount and were never rejected. As PW1 was not required to put up funds in advance, the applicant therefore faced great risks. There must have been a financial interest for the applicant to do this, bearing in mind that PW1 denied paying the applicant any commission or reward for his service. It was also impossible for the applicant to pass on all PW1’s bets to the HKJC because of the 3% shortfall in losing bets and PW1’s full entitlement to winning bets under the HKJC odds[20].

(iv)  The judge dismissed the proposition that the scene of arrest on 9 November 2019 was no more than a social gathering. The Flat was clearly used for activities related to horse racing. If such activities were innocent, there would be no need to have the Laptop and the Notebook in the wardrobe when the Flat was raided. The Laptop was used to accept bets on an illegal gambling platform on the day of arrest. The judge found that the applicant was the user and a bookmaker[21].

(v)  The judge rejected the applicant’s claim that he earned 0.5% to 1% as commission by placing bets for PW1. Such claim not only lacked support but also contradicted the evidence. Therefore, the judge attached no weight to the applicant’s assertion that he did not accept PW1’s bets as his own.

The grounds of appeal

17.Mr Chui, acting for the applicant at the leave application, has advanced no less than 20 grounds of appeal against conviction. Despite their multiplicity, they can essentially be categorised as follows:

(i)  The judge was wrong to find that the applicant accepted PW1’s bets as his own, since there was no evidence that he did so (Grounds 1 & 5) and the judge’s interpretation of the evidence in this regard was incorrect (Grounds 12, 13, 14, 16, 17, 18 & 19).

(ii)  The judge mistakenly accepted PW3’s wrong understanding of the law on bookmaking (Grounds 2, 3, 4 & 20).

(iii)  The judge erred in drawing inferences from the events of 9 November 2019, which were irrelevant to the bets placed by PW1 (Grounds 6, 7, 8, 9, 10, 11 & 15).

Category I: the conduit defence (Grounds 1, 5, 12-14, & 16-19)

18.The complaints under this category all derive from the argument that the state of evidence could not disprove, beyond reasonable doubt, the possibility that applicant was an agent of PW1[22]. Although the applicant solicited, accepted, negotiated and settled bets with PW1, there was no evidence that the applicant did so as a counter party or that he accepted the bets as his own[23]. There remained the possibility that the bets of PW1 were all passed on by the applicant to someone who offered a bigger discount, such as 14%, in which case the applicant was merely a conduit who made money by virtue of the difference in discount rates without taking the bets himself[24].

19.In fact, the risk involved in taking PW1’s bets without prior deposit of funds supported the conduit scenario, because the applicant would not take such enormous bets as his own[25]. Further, there was nothing unusual about the fact that the applicant allowed PW1 to bet without putting up funds in advance. It was PW3’s evidence that this was established practice for gambling other than through the HKJC. Accordingly, it was wrong for the judge to draw adverse inference against the applicant on this matter[26].

20.It is complained that, by rejecting the applicant’s assertion that he took 0.5% to 1% as commission as well as the conduit defence because of the lack of supporting evidence, the judge has effectively reversed the burden of proof. It was pointed out that, since PW3 did not examine the Laptop apart from its screenshot of 9 November 2019, it was only natural that PW3 found nothing supportive of the applicant’s claim on the bets of PW1, which were placed earlier than 9 November 2019[27].

21.The applicant also criticised the judge for misinterpreting or misapplying the evidence as follows:

(i)  the judge wrongly assumed that there were two kinds of accounts on the online gambling platform, one for placing bets and one for accepting them, when in fact both functions could be used by the same account at difference costs[28];

(ii)  without evidence, the judge should not have speculated that Lam Lai Ling, one of the holders of the recipient bank accounts designated by the applicant, was related to the applicant’s wife Lam Lai Fun simply because of the similarities in their names[29]; and

(iii)  the judge erred in assuming that the applicant’s effort to conceal the source of gambling money was indicative of bookmaking[30].

Category I (Grounds 1, 5, 12-14, & 16-19): the respondent’s submission

22.Mr Lai, on behalf of the respondent, submitted that the evidence, when considered as a whole, was overwhelming in showing that the applicant took PW1’s bets as his own. In addition to a line of analysis similar to that of the judge as set out at [16] supra, Mr Lai pointed out that Cheng and Poon were present at the Flat during the raid on 9 November 2019. Cheng, Poon and DLT, which used the Flat as its correspondence address, were all recipients of PW1’s payments for betting losses[31].

23.In respect of the applicant’s claim that the judge reversed the burden of proof, the respondent argued that the 0.5% to 1% reward was merely a bare assertion made in a vacuum. The judge was entitled to reject it for want of any evidential support[32].

24.As for the complaint that the judge erred in believing there were two kinds of accounts on the online gambling platform, the respondent submitted that this was immaterial since the judge had concluded that the applicant was user “hh0321a”, who accepted bets on the platform as a bookmaker[33].

25.On the judge’s observation about the identity of recipient account holder Lam Lai Ling, the respondent argues that this was not speculation. The judge was entitled to take that into account, although she only went so far as to say that the women “might be related”. In any event, whether such observation was justified or not was unimportant given other ample evidence[34].

26.The applicant’s use of secret ways to receive PW1’s gambling debts was a piece of evidence the judge considered before reaching her conclusion. There was no such assumption as alleged[35].

Category II: PW3’s mistaken beliefs (Grounds 2, 3, 4 & 20)

27.The applicant submitted that PW3 was wrong in law to claim that (1) a middleman who made a profit from the difference in discount rates amounted to an agent of the bookmaker, or (2) a middleman who passed on the punter’s bets to the bookmaker was necessarily the agent of both the punter and the bookmaker. These conclusions were apparently at odds with the authority of HKSAR v Chu Kam You and Others[36]. However, the judge “accepted” such opinions in her Reasons for Verdict[37]. The judge should have analysed the facts and law herself, instead of relying on PW3’s opinion as to what constituted bookmaking[38].

Category II (Grounds 2, 3, 4 & 20): the respondent’s submission

28.The respondent pointed out that the judge never accepted PW3’s impugned opinion. The Reasons for Verdict merely recited his opinion without expressing either acceptance or agreement[39]. Besides, the judge did not find that the applicant was an agent of a bookmaker but was the bookmaker himself[40].

Category III: the events of 9 November 2019 (Grounds 6-11 & 15)

29.The applicant argued that the issue was not whether the applicant was acting as a bookmaker on the day of arrest, 9 November 2019. The charge concerned PW1’s bets placed during the Charge Period, which had nothing to do with the bets accepted using the Laptop on 9 November 2019. The bets accepted online on 9 November 2019 were very different in scale to those placed by PW1. It follows that the judge was wrong to jump from a conclusion that the applicant engaged in bookmaking on 9 November 2019 by accepting bets online to a finding that the applicant had accepted PW1’s bets as his own[41]. In this context, complaint is also made about the judge’s observation that the applicant must have had a record of the names of punters stored somewhere, even though none was found in the Flat[42].

30.Furthermore, when the applicant was arrested and cautioned on 9 November 2019, he was not asked about the online bookmaking shown on the Laptop, but bookmaking of a different type and scale. His subsequent statement about being unfamiliar with the computer may have been related to PW1’s bets only, instead of the bets accepted online that day as shown on the Laptop. In other words, the applicant may have been saying that he had not used the computer to place PW1’s debts. Hence, it was wrong for the judge to find the applicant to be “lying” under caution because his DNA was found on the Laptop[43]. Reliance on such DNA evidence was itself flawed as the evidence did not show if anyone else’s DNA was on the Laptop, or how the applicant had used the Laptop[44]. It was the applicant’s submission that the judge used this “lie” to reject the other assertions of the applicant, including the claim that he had not accepted PW1’s bets himself[45].

Category III (Grounds 6-11 & 15): the respondent’s submission

31.The respondent submitted that the judge did not jump to her final determination because of the events of 9 November 2019. It was not disputed that the evidence surrounding the raid of 9 November 2019 could provide inferential evidence on the core issue, namely, whether the applicant accepted PW1’s bets as a bookmaker. The judge only arrived at her conclusion after carefully and thoroughly considering the evidence in its entirety[46]. It was also reasonable for the judge to observe that the applicant must have had a way to record the information of his punters[47].

32.With regard to Grounds 7 & 9, Mr Lai disagreed with the applicant’s reading of the cautioned statement. After the applicant was cautioned about offences connected with PW1, he mentioned placing bets on the internet. To elaborate on this statement, the applicant said that it was Lau who helped him press the keys as he had little knowledge of how to use the computer. The judge cannot be faulted for her refusal to accept such statement, which was contradicted by the DNA evidence found on the Laptop computer[48]. In any event, the DNA evidence and the rejected cautioned statement were not the only basis upon which the applicant was convicted[49].

Consideration

33.I should make these three observations about this application. Firstly, there are no less than 20 perfected grounds of appeal in this case. That is by any yardstick a very large number of grounds of appeal but such a practice is unfortunately symptomatic of the culture of appeals in this jurisdiction. We have seen fit to criticise this practice in HKSAR v Khaw Kim Sun[50], where 20 grounds of appeal were also advanced in a double-murder appeal, albeit some with numerous sub-grounds, a criticism with which the Court of Final Appeal agreed in its judgment on costs in HKSAR v Khaw Kim Sun[51]. With respect, there is considerable repetition in these grounds, which could have been reduced to three essential issues, as I have indeed categorised them in this judgment.

34.Secondly, the fact that there are so many grounds of appeal gives the unmistakeable impression and leads to the inevitable conclusion that this is an essentially factual appeal, in which the applicant takes issue with a large number of the judge’s findings of fact. There is nothing wrong with an appeal which attacks a tribunal’s findings of fact but it is worth remembering the high hurdle which any applicant must surmount when an appeal to this Court is put on this basis. As Lord Reed JSC (later PSC and NPJ) put it in Henderson v Foxworth Investments Ltd and another[52]:

“It follows that, in the absence of some other identifiable error, such as (without attempting an exhaustive account) a material error of law, or the making of a critical finding of fact which has no basis in the evidence, or a demonstrable misunderstanding of relevant evidence, or a demonstrable failure to consider relevant evidence, an appellate court will interfere with the findings of fact made by a trail judge only if it is satisfied that his decision cannot reasonably be explained or justified.”

This passage has been cited with approval by this Court in HKSAR v TPD[53]. In my judgment, faced with this high hurdle, none of the applicant’s grounds of appeal concerning the judge’s factual findings are reasonably arguable.

35.This leads me to a third observation that the Court of Appeal is not a court of trial and it is invariably ill-equipped to re-try issues of fact when it has neither heard nor seen the witnesses and when it is not in a position to ask the questions which it is sometimes suggested could or should have been asked at trial.

36.Having made those observations, the fundamental problem for the applicant in this appeal is that he did not give evidence at his trial. That is not to criticise or undermine his undoubted right to remain silent and require the prosecution to prove its case against him: all it means is that much of what Mr Chui valiantly put before this Court by way of argument was deprived of any evidential foundation. Moreover, there was no real evidential basis for a credible, alternative inference to the one the judge drew. Faced with the judge’s clear findings that the applicant was the bookmaker himself, soliciting, negotiating, receiving and settling PW1’s bets, Mr Chui was left grasping at speculative theories as to how the applicant might have been relaying enormous bets to the Internet for either a pittance as a conduit or indeed no benefit at all for someone he regarded merely as an “ordinary friend”.

37.Much of the applicant’s argument derives from an interpretation of what the applicant said under caution, but the judge did not accord these assertions very much weight at all. The reasons are not difficult to fathom. When the applicant asserted that he placed bets for PW1 either at the HKJC or on the internet, for which he only earned 0.5% or at most 1%, he could not have placed bets with the HKJC without funds, nor would the HKJC have paid any commission to the applicant. And since PW1 said, and the judge accepted, that he did not pay the applicant any commission in respect of any of these bets, what is left of the applicant’s assertions under caution is that he somehow derived up to 1% from the bookmaker on the internet. Yet there is no evidence that any of PW1’s bets were ever placed on the internet.

38.Mr Chui sought to suggest that the delay in accepting PW1’s larger bets was in order for the applicant to find someone who would accept the bet on the internet. But again, there is no evidence to that effect. As for the hypothesis that the applicant may have profited from a difference between the discount offered by him to PW1 on his losses and the discount offered by the bookmaker who ultimately accepted the bet, there is again no evidence whatsoever for this hypothesis.

39.The evidence appears to have been overwhelming that the bets were received and dealt with by the applicant qua bookmaker. The way the funds were sent to various bank accounts with whom the applicant was connected is cogent evidence that the applicant was the bookmaker himself, as the judge indeed found him to be. She expressly concluded[54]:

“There is no doubt in my mind that the defendant was engaging in bookmaking in a role as a taker/bookmaker”.

40.Without condescending into each of the 20 grounds of appeal, I agreed with Mr Lai’s answers to each specific ground of appeal and am unable to find any reasonably arguable grounds of appeal in this case. It was for these reasons that the application for leave was refused.

41.The applicant is reminded that he has the right to renew his application for leave to appeal against conviction before the full Court of Appeal, but he is also warned that that Court has the power to order the loss of any time which he has served in custody pending his appeal, if it were to come to the view that there was no justification for the renewal of the application.

Mr Derek Lai SADPP, of the Department of Justice, for the Respondent

Mr Raymond KF Chui, instructed by Wat & Co Solicitors, for the Applicant