Cheng Yiu Tong and Another v. HKSAR

HCAL 81/2026

[2026] HKCFI 2298

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO 81 OF 2026

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J U D G M E N T

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A. Introduction

1.The Applicants were respectively the 1^st and 2^nd defendants in criminal proceedings DCCC 729/2023 before Deputy District Judge Don So (“Trial Judge”).  The Putative Respondent was the prosecution acting on behalf of the HKSAR (“Prosecution”).  The charges related to money-laundering offences.

2.On 7 November 2025, the Applicants were acquitted after trial.  However, the Trial Judge refused their applications for costs made immediately upon the acquittal (“Costs Decision”).

3.By their Form 86 dated 7 January 2026, the Applicants sought leave to apply for judicial review so as to challenge the Costs Decision.  By way of relief, the Applicants seek an order of certiorari to bring up and quash the Costs Decision and remit it back to the Trial Judge for fresh determination.

4.I gave directions to bring the application to a ‘rolled-up’ hearing, which was heard on 9 April 2026.  At the hearing, the Applicants were represented by Mr Simon So and Mr Jack Hui of Counsel, and the Putative Respondent was represented by Mr Nicholas Wong, SADPP, and Mr Edward Lau, SPP.

5.At the end of the hearing, I reserved my decision.  This is my Judgment.

B.     Background

6.Much of the background matters have been set out in the parties’ skeleton submissions and affirmation evidence, and are in summary as follows.

7.This case dates back to 2013, when the Applicants were first arrested and investigated for money laundering offences. The Applicants, along with seven others, were prosecuted on a number of charges of dealing with proceeds of indictable offences.

8.On 3 May 2023, the Applicants were rearrested by the police and then charged with a total of nine money-laundering offences contrary to sections 25(1) and (3) of the Organized and Serious Crimes Ordinance Cap 455.

9.On 25 June 2025, the 2^nd Applicant by way of her legal representative wrote to invite the Prosecution to consider withdrawing the charges against her.  The 2^nd Applicant also provided some property-related documents.

10.The trial before the Trial Judge in the District Court commenced on 4 August 2025 and lasted for a total of 26 days.  On the first day of the trial, all defendants including the Applicants applied for a permanent stay of proceedings.  On 22 August 2025, the Trial Judge made a ruling on the stay applications and refused the Applicants’ and five other defendants’ applications.

11.The Prosecution case against the Applicants relied primarily on the evidence of its sole witness, a forensic accounting expert. Although the expert highlighted numerous transactions that were unusual, uncommon and inconsistent with the income declared by the defendants to the Inland Revenue Department (“IRD”), she also acknowledged that at the time of her report she did not have access to documents subsequently submitted by the defence, and she conceded that, having considered those documents, some of her opinions might change.

12.At the close of the Prosecution case, the Applicants made submissions of no case to answer, which were opposed by the Prosecution.  The Trial Judge found there was a case to answer.

13.The Applicants elected to call witnesses.  In addition, the 2^nd Applicant also gave evidence for herself and the 1^st Applicant.  The 1^st Applicant elected not to give evidence himself.

14.On 7 November 2025, the Trial Judge gave his written reasons for verdict (“Reasons for Verdict”) and acquitted the Applicants of all charges.  The reasoning of the Trial Judge can be summarised as follows (in English translation of the Chinese original):

(1)     Although not legally married, the Applicants were de facto husband and wife.  The evidence concerning the Applicants was interrelated and common.  As such, the charges against them were dealt with together.

(2)     The businesses operated by the Applicants, namely a bakery and/or café named “Sai Kung Café & Bakery” (“Bakery”), a snack bar named “Wing Tai Restaurant”, a Hung Hom massage parlour and a parallel import trading business, were industries involving substantial cash and capital flows, which the Applicants likely handled frequently.

(3)     The Applicants possessed the financial means to speculate in taxi licences and/or property, stocks, options, foreign exchange, and so forth.

(4)     Gains from speculative activities were not required to be declared to the IRD, so the income recorded by the tax authorities did not reflect the Applicants’ actual earnings.

(5)     The evidence showed the 1^st Applicant was a habitual gambler, which explained the cash withdrawals and his Jockey Club account activity.

(6)     The totality of the evidence showing the wealth, business dealings, income and cash handling practices of the Applicants accounted for the relevant bank account transactions.

(7)     As to charges 4 and 5 against the 1^st Applicant only – concerning other persons’ bank cards seized at the village house where the Applicants resided – there was insufficient evidence to establish the 1^st Applicant was aware of the existence of the bank cards, let alone that he actually possessed or used the cards to handle the funds in question.

15.On the same day as the acquittals of the Applicants, the Trial Judge heard their application for costs.  He made the Costs Decision, refusing the Applicants’ costs application.  The admittedly short reasoning in full is as follows (in English translation):

D1 and D2 did not, at the material time, report to the relevant statutory bodies, including the Inland Revenue Department, Companies Registry, Business Registration Office, in a full and accurate fashion about their shareholding, business operation or income, capital, and salary.  The prosecution did not have this information and therefore cannot accurately understand the actual financial capabilities and cash flow of D1 and D2.  These are mistakes committed by D1 and D2, and they have to bear the consequence as it led to the prosecution wrongly thinking the evidence was stronger, and decided to prosecute D1 and D2.  These negligence and omissions were bringing suspicion on themselves.  D1’s and D2’s applications for costs are refused.

C.     Relevant Statutory Provisions and Legal Principles

16.Section 5 of the Costs in Criminal Cases Ordinance Cap 492 (“CCCO”) provides that where after trial a defendant is acquitted the Court may order that costs be awarded to the defendant.

17.The Prosecution Code (2013) at §21.6 sets out reasons which may be relied upon to refuse an order for costs following acquittal, including, amongst other things, where:

(1)     the accused has brought suspicion upon himself or herself by his or her conduct;

(2)     the accused’s conduct has led the prosecution to assess the case as being stronger than it is;

(3)     the accused failed to reveal at an early and appropriate time a good and valid explanation for his or her conduct, being either a non-evidential matter or an obvious explanation known only to the accused.

18.Though not directly applicable to Hong Kong, Practice Direction (Costs in Criminal Proceedings) 2015 [2015] EWCA Crim 1568 (“UK Practice Direction (2015)”) provides some further guidance as follows (emphasis added):

2.2     In the Crown Court

2.2.1    Where a person is not tried for an offence for which he has been indicted, or in respect of which proceedings against him have been sent for trial or transferred for trial, or has been acquitted on any count in the indictment, the court may make a defendant's costs order in his favour.  Whether to make such an order is a matter for the discretion of the court in the light of the circumstances of the particular case.  A defendant’s costs order should normally be made whether or not an order for costs between the parties is made, unless there are positive reasons for not doing so, for example, where the defendant's own conduct has brought suspicion on himself and has misled the prosecution into thinking that the case against him was stronger than it was.  The court when declining to make a costs order should explain, in open court, that the reason for not making an order does not involve any suggestion that the defendant is guilty of any criminal conduct but the order is refused because of the positive reason that should be identified.  Where the court considers that it would be inappropriate that the defendant should recover all of the costs properly incurred, either the lesser amount must be specified in the order, or the court must describe to the appropriate authority the reduction required.

19.In HKSAR v Tong Cun Lin (1999) 2 HKCFAR 531 at §§14 and 20, the Court of Final Appeal (“CFA”) stated the general principles governing costs following an acquittal as follows:

(1)     Where a defendant has been brought to trial upon particular charges and is then found not guilty, he should normally be entitled to the costs incurred in defending those charges.

(2)     In considering whether, despite this general rule, he should be deprived of all or part of his costs, the judge exercising the discretion must obviously look to his conduct generally, so long as such conduct is relevant to the charges he faced.

(3)     This cannot be confined to any particular period of time, but the conduct most relevant to the matters under consideration must be the defendant’s conduct during the investigation and at the trial.

(4)     This includes how the defendant first responded to investigators, the consistency of those answers with his subsequent defence, etc.

(5)     The strength of the case against the defendant and the circumstances under which he came to be acquitted are also relevant.

(6)     Wide discretion is given to the trial judge who is in the best position to assess the large number of factors relevant to the exercise of that discretion.

(7)     The judge’s reasons for exercising his discretion must necessarily be brief.

20.Further, in Tsang Wai Ping v HKSAR (2005) 8 HKCFAR 80 at §27, the CFA held that “the discretion is to be exercised having regard to the defendant’s conduct during the investigation and at the trial but the judge must not take a view of the facts palpably different from that taken by the jury”.

21.In deciding not to grant a defendant his costs upon acquittal, the Court may take into consideration the fact that a defendant had a good and valid explanation which he neglected to bring forward at an early and appropriate moment: see The Queen v Kwok Moon-yan and Lok Man-chiu [1989] 2 HKLR 396at 401D.  This is also reflected in the Prosecution Code: see above.

22.It is trite that the Prosecution is under a duty to consider whether or not it is in the public interest to bring a prosecution (including whether there is a reasonable prospect of conviction).  It is also correct that Prosecution remains under a continuous duty to review a prosecution that has been commenced, and the prosecution must be discontinued if, following a change of circumstances, a re-application of the prosecution test indicates that the evidence is no longer sufficient to justify a reasonable prospect of conviction or the interests of public justice no longer require the prosecution to proceed: see §10.1 of the Prosecution Code.

23.Hence, in the context of deciding whether a positive reason has been shown as should deprive an acquitted defendant of his or her costs, the conduct of the defendant and the state of the materials available to the Prosecution at any particular stage can be taken into account.  This is why the principle has been set out – by the CFA amongst others – that the conduct of an accused prior to and after the charge has been laid, including conduct in the run-up to and at trial, is all potentially relevant to the decision on costs.

24.I accept and apply those principles.  By way of summary relevant to the core point in the current proceedings, I remind myself that:

(1)     Generally, the award of costs is discretionary, and the discretion is wide.

(2)     The discretion should be exercised to award costs in favour of the defendant where the defendant is acquitted, unless there are positive reasons not to do so.

(3)     Those reasons focus on the defendant’s conduct, and the defendant’s conduct at all or various times in the investigation, charge and trial process may be relevant to the question of costs.

(4)     Relevant conduct may include (a) where the defendant’s own conduct has brought suspicion on himself and (b) where the defendant has misled the prosecution into thinking that the case against him is stronger than it is.

(5)     The bringing suspicion on himself and misleading the prosecution about the strength of the case are but examples of the possible positive reasons for depriving an acquitted defendant of his costs.

D.     Grounds of Review

25.The Applicants put forward four grounds of review, being:

(1)     Ground 1: The Trial Judge’s reasons for refusing costs were directly in contradiction with his reasons for acquittal.

(2)     Ground 2: The Trial Judge’s reasons for refusing costs failed adequately to take into account (if at all) the entire litigation conduct of the Applicants.

(3)     Ground 3: The Trial Judge failed adequately to take into account (if at all) that the Prosecution’s case in any event could not be proven beyond a reasonable doubt upon the close of the Prosecution’s case.

(4)     Ground 4: In refusing costs to a defendant who has been acquitted, the defendant must have both brought suspicion upon himself/herself and misled the Prosecution; simply satisfying one condition (i.e. or) was insufficient.

26.Grounds 1 to 3 are based on points of fact, whereas Ground 4 raises a point of law, i.e. whether a defendant bringing suspicion upon himself simpliciter would be a sufficient basis to deny an acquitted defendant his application for costs.  A question arises also whether Ground 4 is actually academic in the circumstances of this case.

27.It is common ground between the parties that the grant or refusal of costs following an acquittal in criminal proceedings was within the discretion of the Trial Judge, and the Trial Judge refused the Applicants’ costs applications on the ground that they brought suspicion on themselves and misled the prosecution into thinking the case against them was stronger than it was.

E.     Ground 1: Contradictory Reasons

28.The Applicants submitted that the Trial Judge’s Costs Decision was erroneous, irrational and/or self-contradictory on the basis that its reasons were self-contradictory with the reasons for acquittal given in the Reasons for Verdict.

29.As already noted, a decision to refuse costs should not self-contradict with the reasons for acquittal.  Hence it is necessary to consider the two sets of reasons.

30.The specific wording used in the Reasons for Verdict at §11 is as follows (in English translation):

There is no evidence indicating how wealthy D1 and D2 are, but business operators are unlikely to be penniless.  Moreover, D1 and D2 possessed the financial means to speculate in taxi licences (cash transactions) or property, stocks, options, foreign exchange, etc.  Consequently, their wealth was likely substantial.  Gains from such speculative activities were not required to be declared to the Inland Revenue Department, meaning the meagre income recorded by the tax authorities did not reflect their actual earnings.

31.I can again set out the reasoning for the Costs Decision, as follows:

D1 and D2 did not, at the material time, report to the relevant statutory bodies, including the Inland Revenue Department, Companies Registry, Business Registration Office, in a full and accurate fashion about their shareholding, business operation or income, capital, and salary.  The prosecution did not have this information and therefore cannot accurately understand the actual financial capabilities and cash flow of D1 and D2.  These are mistakes committed by D1 and D2, and they have to bear the consequence as it led to the prosecution wrongly thinking the evidence was stronger, and decided to prosecute D1 and D2.  These negligence and omissions were bringing suspicion on themselves.  D1’s and D2’s applications for costs are refused.

32.Mr So submitted that there existed a contradiction between the Trial Judge’s decisions because:

(1)     Investments with securities, speculation with taxi licences, selling and buying of real properties, and receiving company dividends, etc do not require an individual person to make reports or declarations to the IRD.  Hence, the Prosecution’s lack of such information was not the result of “mistakes” committed by the Applicants.

(2)     The shareholding, directorship and/or revenue of Star Talents was material long possessed by the Prosecution, who made no further enquiries of the 1^st Applicant in the VRI.

(3)     In the course of investigation, the Prosecution in fact knew that the Applicants were engaged with investments of securities (as such accounts were sub-accounts of other accounts disclosed).

33.Mr Wong submitted that it was impossible for the Prosecution to find out that (1) Stars Talents was linked with the Bakery and the cash income generated through the operation of the Bakery, (2) the running of the Bakery involved a cash-intensive mode of operation, and (3) the Applicants were entitled to and would bring the cash away from the Bakery and deposit it into their own accounts.  I agree.  I note in particular that the 2^nd Applicant admitted Stars Talents’ nature of business as recorded in the business registration was “INV’T” meaning investment.  That in itself certainly gives some weight to the Trial Judge’s finding that the Applicants misled the Prosecution.

34.More centrally, the Reasons for Verdict included the fact that the materials shown in the IRD documents would not have revealed the totality of the Applicants’ income and cash flow.  On the other hand, the reasons for the Costs Decision included that the Applicants brought suspicion on themselves and the Prosecution was misled because the Prosecution could not have understood the actual financial capabilities and cash flow of the Applicants in circumstances where they did not report to the relevant authorities in a way which, if that were the material in the hands of the Prosecution, would give a full and accurate picture of their financial position.

35.Thus, taking into account the evidence available to the Prosecution prior to the Applicants giving evidence and/or calling witnesses at the Trial, it was only evident to the Prosecution that:

(1)     The turnover and net profit/loss of Stars Talents during 2007/08 to 2010/11 from IRD records available to the Prosecution at the time only showed a total net profit/loss of HK$9,046.

(2)     Out of the HK$6.3 million deposited in the 1^st Applicant’s Bank of China (“BOC”) account, Stars Talents accounted for HK$270,390 only.  Of the HK$27 million deposited in the 1^st Applicant’s Hang Seng Bank (“HSB”) account, there were no deposits from Stars Talents.

(3)     On the other hand, cash deposits accounted for HK$2.7 million and HK$9.5 million of the BOC and HSB account deposits respectively.

36.It was only when the 2^nd Applicant gave evidence that the Prosecution knew these three aspects were correlated. There is some force in Mr So’s argument that the Applicants applied for a BR certificate for the Bakery under the name of Stars Talents.  However, even if it were evident the Bakery was cash intensive, the Prosecution could not know the true extent of its cash flow until the Applicants gave their evidence at a later stage.  I further accept Mr Wong’s submission that the 1^st Applicant remained silent and did not offer an explanation when questioned in the 2013 video recorded interview (“VRI”). as stated above, the Court may take into consideration the fact that a defendant had a good and valid explanation which he neglected to bring forward at an early and appropriate moment in deciding not to grant a defendant his costs upon acquittal.

37.Further, Mr So’s submission that beneficial ownership of businesses need not be disclosed is correct, but ultimately that does not assist the Applicants’ case.  Indeed, the 2^nd Applicant was only a minority shareholder holding 40%, whilst the majority shareholder was the 1^st Applicant’s mother.  The 1^st Applicant was not a shareholder in Stars Talents, but a director.  However, this was only made clear to the Prosecution when the 2^nd Applicant gave evidence during the trial.  In light of that, I do not see how it would be possible for the Prosecution to know that the 1^st Applicant would take cash from the bakery and deposit them into his own bank accounts. It seems to me that it was open to the Trial Judge therefore to find that the Prosecution was misled into thinking the evidence against the Applicants was stronger than it was.

38.Mr So’s submission that the Prosecution in fact knew that the Applicants were engaged with securities investments, is also not convincing.  Indeed, it was not until the trial itself that the Applicants tendered defence exhibits, including documents related to apparently extensive securities and trading accounts, such as the statements of accounts opened by the Applicants with various securities firms.

39.These were matters which were not disclosed to the Prosecution or for that matter the Trial Judge (until a late stage, even after the commencement of the Trial) which would have permitted consideration of a fuller picture of the Applicants’ cash flow and financial situation. Insofar as the Prosecution had access only to the required statutory disclosures in the possession of the IRD for example, they would not have had the full picture, which might have diverted the Prosecution to a different path.

40.Although a defendant is of course entitled to his right of silence and no adverse inference can be drawn against him, it is certainly relevant for the determination of costs and the underlying question of whether a positive reason has been shown to deprive the acquitted defendant of his costs to ask why, when provided with numerous opportunities to clarify their positions and prove their innocence, the Applicants failed to do so and only at the very late stage after commencement of the trial brought the evidence to light.  This is particularly significant where the Prosecution may have decided not to prosecute at all if such evidence had been made available at an earlier juncture.

41.Hence, it is indeed trite that investments with securities, speculation with taxi licenses, selling and buying real properties, and/or receiving dividends from a limited company does not require an individual to make reports and/or declarations to the IRD.  But in the Costs Decision, the Trial Judge was in effect saying it is not simply a question of what should be reported to the statutory authorities, but more importantly what should be disclosed to the Prosecution.  The Trial Judge was not saying it was a mistake not to report to the IRD matters which did not need to be reported to the IRD.  Rather he was saying that because the Prosecution did not have the information which it was not necessary to disclose to the IRD, the mistake on the part of the Applicants was not to provide that information to the Prosecution, as would have permitted the Prosecution an accurate understanding of the actual financial capabilities of the Applicants.

42.Therefore, I reject the argument that the reasons given by the Trial Judge for his Costs Decision contradict with the reasons for acquittal given in the Reasons for Verdict.

43.Ground 1 is not reasonably arguable with any realistic prospect of success.  Even if it were, I would dismiss it on substantive review.  Ground 1 fails.

F.     Ground 2: Entire Litigation Conduct

44.Ground 2 is premised on the argument that the Trial Judge should have, but did not take into account the entire litigation conduct of the Applicants.

45.The Applicants asserted that they were full and frank with the Prosecution throughout the trial process, and in light of the evidence provided by the Applicants the Prosecution should have ceased but did not cease prosecution.  Mr So submitted the question now was whether the Trial Judge considered this factor when making his decision on costs, and the extent of his consideration.

46.Mr So submitted that, had the Prosecution actively reviewed the evidence and demonstrated caution as to whether the state of evidence would provide a basis to convict the Applicants, a decision to cease prosecution would have been made on a number of occasions, including:

(1)     before the case was brought to court upon receipt of the accountant’s report of Stars Talents;

(2)     before commencement of the trial upon receipt of the materials in respect of real properties once held by D2;

(3)     before the Prosecution expert gave evidence upon receipt of the complete defence bundle; and/or

(4)     before the close of the Prosecution’s case upon hearing the Prosecution expert’s answers in cross-examination.

47.The relevant procedural chronology which is largely not disputed by the parties is as follows:

(1)     On 11 January 2013 and 16 January 2013, the 2^nd Applicant and 1^st Applicant were arrested respectively.  The Applicants remained silent under caution.

(2)     Following a period of investigation by the police, the Applicants were arrested again on 3 May 2023.  Under caution, the Applicants denied the offences but did not provide further explanation.

(3)     On 25 June 2025, the 2^nd Applicant’s legal representatives wrote to the Prosecution to invite the Prosecution to consider withdrawing the charges against her and attached documents relating to her properties.  The Prosecution refused on 7 July 2025.

(4)     On Day 1 of the trial (4 August 2025), incomplete defence bundles were provided to the Prosecution.

(5)     Three days after the Trial Judge rejected the 1^st and 2^nd Applicants’ stay applications on 22 August 2026 (i.e. Day 10 of the trial), all defence bundles were provided to the Prosecution on 25 August 2026 (i.e. Day 11).

48.But of the evidence itself, I note the complete bundles comprised 1,300 pages, which is voluminous.  This was provided one day before the Prosecution expert was called to give evidence.  This at least raises some obvious concerns as to how this could amount to timelydisclosure by the Applicants.

49.The key relevant evidence that was only apparent upon the giving of evidence by the Applicants and the defence witnesses included as follows:

(1)     The Applicants operated the Bakery through Stars Talents, which was a cash-intensive business.

(2)     The 1^st Applicant took cash from the Bakery to his home or deposited it into the Applicants’ personal bank accounts.

(3)     The Applicants received cash dividends from “Wing Tai Restaurant”, which was also a cash-intensive business.

(4)     The bank card relevant to Charge 4 belonged to Mr Fan Chi-wai (“Fan”), who gave the 1^st Applicant the card after a gambling loss.

50.Reference can be made to SJ v Cheung Chun Tai [2025] HKCA 40 at §22, where the Court of Appeal (“CA”) held that if all the documents disclosed by the defendants were accepted by the prosecution, the prosecution would not continue and the issue of legal costs would not arise.  This is relevant to two points raised by Mr Wong.  First, Mr Wong sought to distinguish that case on the basis that the defendants in Cheung Chun Tai provided the relevant documents as early as April 2020, months before trial, whereas in this case the Applicants only provided complete bundles on Day 11 of the Trial.  Second, the defendant in Cheung Chun Tai maintained a consistent defence.

51.Hence, Mr Wong submitted, the Applicants’ very different conduct brought suspicion on themselves and misled the Prosecution.

52.The Applicants had the opportunity as early as 2013 when they were first arrested to explain the transactions that eventually led to their arrest and prosecution.  There seems to me to be little to no force in the Applicants’ claim that they duly informed the Prosecution of their defence and provided relevant information that should have invited the Prosecution to reconsider ceasing prosecution, when (1) the Applicants neglected multiple opportunities to inform the Prosecution of their defence and provide relevant documents that would alleviate any suspicion the police and/or the Prosecution had as to their case, and (2) the Applicants provided complete defence bundles only after the commencement of the trial.

53.Mr Wong submitted, and I agree, that the Prosecution could not have known the defence of the Applicants in relation to the cash deposits without the complete bundles and the evidence of the Applicants which only arose at the Trial.  Of course, the CA in Cheung Chun Tai was correct to say disclosure by the defence during an investigation need not be to a “flawless standard”, but it can hardly be questionable to refuse costs where a defendant has failed to disclose material that would have brought the prosecution to an end in the first place or to cessation at an earlier stage.

54.It bears emphasis that the Costs Decision was given almost immediately following the conclusion of the trial.  The issues that had just been fully argued clearly must have been fresh in the Trial Judge’s mind, and in particular the Applicants’ conduct throughout the entire process.  Further, as the CFA has pointed out, a wide discretion is given to the trial judge who is in the best position to assess the large number of factors relevant to the exercise of that discretion.

55.I note that the Applicants also invited the Trial Judge to consider (as an alternative to giving them all of their costs) granting a percentage of the requested costs.  But it seems to me that the Judge’s reasons for refusing costs – i.e. that the Applicants did not report their shareholdings, business operations, income and relevant financial information to the Prosecution in a full and accurate fashion – not only concerns the Applicants’ conduct at the trial itself, but dates back to matters as far as 2013, when the police first began investigating the Applicants.

56.As such – though his reasoning was (necessarily) brief – it seems to me that, in his Costs Decision, the Trial Judge did take into account adequately the entire litigation conduct of the Applicants.  I see no reasonably arguable basis for the Court exercising its supervisory jurisdiction to interfere.  Even if leave were to be granted on this ground, I would reject it on substantive review.  Ground 2 fails.

G.     Ground 3: Impossible Proof of Prosecution Case

57.Ground 3 specifically deals with Charges 4 and 5, which concern two bank cards which belonged to Fan and Maggie Lee Man-hei (“Maggie”) found inside the residence where the Applicants resided.

58.Mr So submitted that no (or no adequate) reasons were provided by the Trial Judge to demonstrate that he had properly applied his mind to the fact that the Prosecution should continuously review the prospects of conviction after the commencement of prosecution.

59.At §15 of the Reasons for Verdict, the Trial Judge stated the following in acquitting the 1^st Applicant of Charges 4 and 5 (in English translation):

D1 now faces only charges 4 and 5.  The prosecution contends that, as the police seized bank cards belonging to him from the village house where Dl and D2 resided, Dl (and only Dl, not D2) is charged jointly with the cardholders for laundering funds from the cardholder's accounts.  This Court finds that there is insufficient evidence to establish that Dl was aware of the existence of the bank cards, let alone that he actually possessed or used them to handle the funds in question.  This Court finds that, despite the highly suspicious circumstances, Dl must be acquitted of charges 4 and 5 in accordance with the law.

60.The basis of the 1^st Applicant’s acquittal in relation to Charges 4 and 5 hinges on the premise that he was not aware of the existence of the bank cards, and therefore had not possessed or used them to handle funds in the related accounts.

61.Mr So submitted the Trial Judge failed to take into account adequately (if at all) that there was no reasonable prospect of proving beyond reasonable doubt the case as to Charges 4 and 5.  Further, Mr So drew attention to the fact that the Applicants raised that defence as early as the no case to answer stage, and argued the Prosecution should have realised Charges 4 and 5 were “doomed to fail”, particularly where there was no evidence suggesting the 1^st Applicant had dealt with the accounts.

62.It is not disputed that the bank cards belonging to Fan and Maggie were found in the property where the Applicants resided.  The Applicants also remained silent when interviewed.  At that point in time, the police and the Prosecution received no explanation for the discovery/presence of those bank cards.

63.It was only at the later stage of the Trial, when Fan gave evidence for the Applicants, that an explanation was given for the 1^st Applicant’s possession of the bank cards in relation to Charge 5.  The explanation was that he and the 1^st Applicant gambled together and he “threw the bank card to [the 1^st Applicant] because he was drunk at the time” and “asked [the 1^st Applicant] to help withdraw money to pay the gambling debt” but neglected to ask for it back until the card was seized by police.

64.Similarly, it was only at the Trial when the 2^nd Applicant stated she knew Maggie and Maggie’s boyfriend were friends of the 1^st Applicant, and Maggie once borrowed money from the 1^st Applicant, hence that was the explanation for Maggie’s bank card being found at the Applicants’ residence.

65.It was the finding of the Trial Judge at §15 of the Reasons for Verdict that there were “highly suspicious circumstances” surrounding Charges 4 and 5.  Notwithstanding those highly suspicious circumstances, the Trial Judge acquitted the 1^st Applicant on the application of law and the appropriate criminal standard of proof.

66.I accept Mr Wong’s submission that the Prosecution’s case was not doomed to fail before the trial, and that there was apparently a simple explanation for those bank cards which was never disclosed to the Prosecution until the trial.  It was obviously open to the Trial Judge to think – and he was in my view correct – to find the Applicants had brought suspicion on themselves and misled the Prosecution into thinking the case was stronger than it was by failing to disclose that simple explanation for the bank cards.

67.Ground 3 is not reasonably arguable with any realistic prospect of success.  Even if it were, I would reject it upon substantive review.  Ground 3 fails.

H.     Ground 4: Conjunctive or Disjunctive

68.Ground 4 raises a discrete point of law as to what must be shown as would amount to a sufficient positive reason to refuse an acquitted defendant’s application for defence costs.

69.As identified by Mr So, the contest in this case focuses on the phrase “brought suspicion upon himself and misled the prosecution into thinking the case was stronger than it was”.  As framed, the contest assumes that there are two separate elements or limbs being (1) the bringing of suspicion upon oneself, and (2) misleading the prosecution.  Once those supposedly separate elements or limbs are identified in that way, the contest is framed as to whether they are to be read conjunctively or disjunctively – i.e. to deprive an acquitted defendant of his costs, is it sufficient for only one limb to be established, or must limbs both be established.  Mr So submitted that “bringing suspicion” on its own is inadequate as a stand-alone reason to refuse costs.

70.To begin with, Mr Wong submitted that Ground 4 is academic because the Trial Judge refused costs on the basis that the Applicants had both brought suspicion on themselves and misled the Prosecution.  Where a question is purely hypothetical or academic in the sense that there are simply no events that have occurred that form the basis for the question to be answered, this Court will ordinarily not entertain it: see Chit Fai Motors Co Ltd v Commissioner for Transport [2004] 1 HKC 465 at §20.

71.I agree.  In this case, it is moot or academic to debate whether “bringing suspicion” simpliciter is enough to justify refusal of costs, where the Trial Judge plainly found that the Applicants had both misled the Prosecution into wrongly thinking the evidence was stronger than it was, and had brought suspicion on themselves.

72.As such, Ground 4 must fail on that point alone.  Nevertheless, I will go on to consider this point, as it was subject to detailed argument.

73.The CCCO merely provides that the Court “may” order that costs be awarded to the defendant where the defendant is acquitted after trial.  The statute contains no other guidance as to how that discretion as to be exercised.

74.As pointed out above, the analogy adopted by Mr So was that the discretion to refuse costs hinged upon two limbs: “bringing suspicion on himself” and “misleading the prosecution”.  He argued that this is a conjunctive requirement, in that both the “bringing suspicion” limb and the “misleading the prosecution” limb must be satisfied.

75.Mr Wong submitted that it is a disjunctive requirement only, which simply requires that either “bringing suspicion” or “misleading the prosecution” can suffice.

76.In part based upon the wording of the UK Practice Direction (2015) – see above – Mr So submitted that the UK and ECHR authorities gravitate towards a conjunctive interpretation.  But, as Mr So was forced to recognise, Hong Kong has diverged from this approach (though not necessarily consistently).

77.In the Kwok Moon-yan case, the CA found at p401B that “bringing suspicion on himself” and “misleading the prosecution” did not mean there must be both a bringing of suspicion and a misleading, but rather that if the defendant has brought suspicion on himself, or having done that, he has also misled the prosecution, either by the very bringing of that suspicion, or some other matter, into thinking the case against him is stronger than it is then these, either separately or combined, are factors which lie for the consideration of the Court in the exercise of its discretion.  Kwok Moon-yan took the approach that a conjunctive test requiring both “bringing suspicion” and “misleading the prosecution” is wrong, and instead it appears to support a disjunctive view to bringing suspicion/misleading the prosecution. The suggestion was also that misleading the prosecution is a possible outcome of bringing suspicion.

78.In Ting James Henry v HKSAR (No 2) (2007) 10 HKCFAR 730 at §16, it was held that if a defendant’s conduct during the investigation and at the trial is such that it brings suspicion on himself, that provides a ground for refusing him costs.  However, the discretion may extend to a defendant’s conduct prior to the investigation and trial stages, including conduct which formed part of the setting for the charges laid against him.  As such, the refusal to award costs was justified on the basis of the defendant’s dishonest conduct in a way relevant to the counts charged.

79.HKSAR v Pang Hung Fai (No 2) (2015) 18 HKCFAR 1 at §4 similarly endorsed the disjunctive view, where the test was stated to be “where the appellant’s own conduct has brought suspicion on himself or has misled the prosecution into thinking the case against him is stronger than it is”.  The CFA held at §9 that the appellant should be deprived of his costs despite acquittal, on the ground that he had invited suspicion as to whether he had the requisite reasonable grounds to believe that the property with which he dealt represented the proceeds of an indictable offence.

80.But Mr So also referred to HKSAR v Li Kwok Kay (re: costs) [2014] 5 HKLRD 726 at §13, whereby Patrick Li J took the view that it was a twofold test, saying:

In my view, Silke VP meant that a defendant might mislead the prosecution either by bringing suspicion on himself, or by some other matter, or a combination of both.  Under those scenarios, a court might refuse costs on his acquittal.  In all scenarios, the prosecution must be misled.  I agree with Wright DHCJ in HKSAR v Dildar RIZVI that it is a twofold test – the defendant had brought suspicion and also misled the prosecution.

81.With respect, Li Kwok Kay is unhelpful as it contradicts with what was said by the CA and CFA in other authorities.  Indeed, I would respectfully suggest that the very description of it as a twofold test was inapt: the focus was simply on misleading the prosecution, albeit it was recognised that the prosecution might be misled by the defendant bringing suspicion on himself, or by some other matter.  I note that prior to this, authorities dealing with the discretion to refuse costs following acquittal did not explicitly refer to “bringing suspicion/misleading the prosecution” as a two-limbed test.

82.As Mr Wong drew to my attention, the proposition advanced in this case by Mr So has been advanced in other cases by Mr So, all of which have ultimately failed.

83.Very recently, “bringing suspicion/misleading the prosecution” was considered in HKSAR v Lee Man Wah Angel [2025] HKCFI 2075 at §35 and §55, where DHCJ Edmond Lee gave the following interpretation of “bringing suspicion/misleading the prosecution”:

35.     After careful consideration, I agree with the Respondent’s position and relevant submissions, namely that the two factors of “bringing suspicion on oneself” and “misleading the Prosecution into believing that its case is stronger than it actually is” (hereinafter referred to as “misleading the Prosecution”) do not need to coexist; either one alone is sufficient to justify refusing costs.  I must add here that, as a matter of practical consideration, in the general run of cases, if a defendant has engaged in conduct which brought suspicion upon himself, this will usually, or in many cases, mislead the Prosecution in some way or to some extent.  This may explain why in many cases, the court handling the costs application will find that both factors exist and use this as the basis for refusing costs.  However, there is actually no necessary causal relationship between the two, and they may occur independently.

55.     As can be seen, “misleading the Prosecution” may be a consequence of the defendant’s “bringing suspicion on himself” and co-exist with it, or it may exist independently as a basis for refusing costs to an acquitted defendant. However, it is not part of or an inevitable extension of “bringing suspicion on oneself”.  As in the aforementioned cases, the principle clearly established that either one alone may constitute a positive reason for the court to exercise its discretion to refuse costs to the Defence.

84.Lee Man Wah Angel hence decided that “bringing suspicion” and “misleading the prosecution” are taken independently instead of forming two limbs of a test, and either factor could serve as a basis to refuse costs.  DHCJ Edmond Lee also seemed to suggest the key was to look at the conduct of a defendant, rather than specifically at the question of whether that defendant “brought suspicion on himself” or “misled the prosecution”.  As such, it may be the case that the defendant’s conduct which “brought suspicion on himself” could also be conduct which “misled the prosecution”.  However, it was not necessarily causal.

85.I would adopt the reasoning as given by DHCJ Edmond Lee in Lee Man Wah Angel to say that it seems far more appropriate to adopt a composite approach as to “bringing suspicion” and/or “misleading the prosecution”. Instead of struggling with the question of “and/or”, the Court should adopt a holistic approach and examine the circumstances as might show positive reason why the Court may exercise its discretion to disallow costs to a defendant following an acquittal.  Ultimately, it may very well be that a defendant has brought suspicion upon himself, or misled the prosecution either as a result of that suspicion or separately due to other factors.  Nevertheless, as seems to me to be plain, the key question remains simply to focus on the conduct of the defendant and to see whether that conduct identifies a positive reason as would justify depriving him of his costs notwithstanding acquittal, in essence because that conduct justified the commencement and/or continuation of the prosecution.

86.It must also be clarified that “misleading” need not be a positive or deliberate act committed by the defendant with the ultimate objective of misleading the prosecution into thinking the case against him is stronger than it is, for example by deliberately lying to the prosecution.  Rather, the act of “misleading” can also be an omission or a decision not to do something.  An example would perhaps be the defendant’s ability to inform the prosecution of a material fact (or circumstances), being of a nature that may have completely changed the view as to the propriety of initiating or continuing prosecution against the defendant.  Consequently, by deciding not to inform the prosecution of that fact or circumstances the defendant subsequently allows or misleads the prosecution into believing the case against him is stronger than it really was.

87.In the present case, it is precisely because the Applicants maintained their silence at various stages that ultimately led to the commencement and continuation of prosecution against them.  The Applicants chose not to make any statements or give any explanations that would have alleviated that suspicion and/or led the Prosecution to the conclusion that the evidence was not strong enough and hence that proceedings should have been discontinued. Indeed – not least in the circumstances that the Trial Judge held at there was a case to answer – the full materials which led to the acquittal were produced only on Day 11 of the Trial and subsequently during the evidence given by or on behalf of the Applicants.

88.Ground 4 is rejected.

I.     Result

89.It seems to me that Ground 4 is academic in the circumstances of this case.  In any event, neither that ground nor Grounds 1, 2 or 3 identify any reasonably arguable public law error with any realistic prospect of success.

90.In those circumstances, leave to apply for judicial review is refused.  But I also emphasise that, even had I granted leave, I would dismiss all of the grounds on substantive judicial review.

91.Therefore, the Applicants’ application is dismissed.

92.As to costs, I currently see no reason why the costs should not follow the event.  Hence, the Prosecution’s costs should be payable by the Applicants, to be taxed if not agreed.  However, I make that order first on a nisi basis, to become absolute after 14 days unless any party makes an application for variation of the nisi order.  Any variation application will be dealt with by me on paper.

Mr Simon So and Mr Jack Hui, instructed by Wong & Co., for the applicants

Mr Nicholas Wong, Senior Assistant Director of Public Prosecutions, and Mr Edward Lau, Senior Public Prosecutor, of the Department of Justice, for the putative respondent