Cheung So and Others v. The Queen

CACC001086/1980

Vice establishment - use mainly or wholly for organising prostitution - liabilities of licensee and manager for acts committed outside premises - presumption of knowledge.

IN THE SUPREME COURT OF HONG KONG

APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 1086 OF 1980

(On Appeal from South Kowloon Magistracy Case No. K13428/79)

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Coram: Penlington J. in Court

Date of Judgment: 24th February 1981

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JUDGMENT

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1. These are appeals against convictions for managing or assisting in the management of a vice establishment, contrary to Section 139(b) of the Crimes Ordinance, Cap 200.

2. The evidence against the accused was that of various Police Officers who, acting on instructions, went to the Kumagai Nightclub in Kowloon on the 3rd, 10th, 17th and 30th October 1980, where they posed as customers. In the course of the visit on the 3rd October the Constables had a conversation with an employee of the Nightclub and they gave evidence about what this employee said relating to the manner in which the Nightclub was operated. This employee was not identified as any of the accused. T This was clearly hearsay but was admitted only as evidence that the conversation took place, but not as to the truth of what was said. It seems to me that the conversation could only been of relevance if admissible as to the truth of the contents and as that was not so it should not have been admitted. However the Magistrate has not relied on that conversation and I do not think any harm has been done. Evidence was also given as to a conversation which took place with hostesses on this occasion, and I think this evidence was relevant in that the Constables were asked by the girls if they wished to go out and on being told that they did not wish to do so the girls looked unhappy and soon left them. The Constables paid a bill of $63 on this occasion for the hostesses company at their table. I think this was relevant to show that while customers were able to pay a fee for the time a hostess would spend with them at their table the reaction to just doing that was not friendly and it was not encouraged.

3. On the 10th October the Constables were met by the 5th accused who introduced girls to them. They were told by the girls that in order to take them out of the Nightclub they would have to pay a sum of $46.20. This they did and after that the 5th accused said to one of the Constables that on getting to the apartment house all he had to pay was another $100 and he needed not pay more. The girls then took the Constables to nearby apartment houses where they rented rooms. The girls took their clothes off and clearly were prepared to have sexual intercourse. The Constables were asked by the girls to pay $100. There was very similar evidence given by the other Constables as to events which took place on the 17th October when they were met by the 3rd accused who introduced girls to them. On the 30th October a Constable was introduced to a girl by the 4th accused. On each of these occasions a Constable paid a fee of approximately $50 to the Nightclub in order to take a girl out, which they proceeded to do. On each occasion they were taken to a nearby apartment house and the girl in question asked for sum of approximately $100 and on payment proceeded to take her clothes off. There was further evidence in the form of cautioned statements given by the accused which were admitted without objection, in which it was said by the Appellant that customers coming in could simply have a hostess sit with them at the table, for which they would pay approximately $3 for 5 minutes, or if they paid about $50, depending on the time of day or night, they could take the girl out. The management's attitude was that whatever happened after the girl left the premises with the customer was entirely up to her. There was no evidence that the Nightclub took any share of the fees charged by the girls. It was submitted by Counsel that a customer was quite at liberty to simply take the girl out for a meal and that nothing immoral need necessary take place.

4. It was also submitted that the premises, on the evidence before the Magistrate did not come within Section 117(3) of the Ordinance. This section states that premises shall not be treated as a vice establishment for the purposes of the Ordinance unless the premises are used wholly or mainly by two or more women for the purposes of prostitution or "the premises, vessel or place are or is used wholly or mainly for or in connection with the organising or arranging of prostitution". It is said on behalf of the defendants that while on some occasions the hostesses may have been willing to go out with customers for the purposes of prostitution, and this clearly was arranged within the premises, that is not sufficient and that on many other occasions it may well be that the customers simply sat down with the hostesses and had a drink and conducted themselves in a perfectly moral manner.

5. It seems to me on the evidence given by the Constables and accepted by the Magistrate was that on arrival in the premises on each occasion they were immediately asked if they wanted to take a girl out. I am satisfied that was the main function of the Nightclub. It was submitted by Counsel for the Appellants that the Magistrate was wrong in saying that Section 117(3) was a "deeming section". I think this submission is correct in that even if premises fall within the require-ments of that subsection that does not necessarily mean that the premises are a vice establishment. Counsel was unable to suggest circumstances under which, if it was shown that the premises were used in the manner set out in the subsection, they could nevertheless be held not to be a vice establishment but it may be such circumstances could exist. However on the evidence given in this particular case I am quite satisfied that the premises were used mainly for the organising of prostitution and they were a vice establishment.

6. The second limb of the appeal is that even if that was so the Appellants were not managing it or assisting in the management of it. So far as the 3rd, 4th and 5th defendants were concerned there is, in my view, clear evidence that these defendants took an active part in introducing girls to customers and that they were well aware of what was going to happen when the girls took the customers away from the Nightclub. In the light of the evidence of the conversations with those Appellants given by the Constables who went to the Nightclub, which evidence has been accepted by the Magistrate not withstanding certain inconsistencies in it, I am satisfied that those Appellants knew that the girls were going to take the customers into the nearby apartment houses where prostitution would take place. I am satisfied therefore that there is no merit in those appeals and they are dismissed.

7. The evidence against the 1st Appellant consists entirely in his own statement; it said that he is a director of the Company which operates the premises that he is a substantial shareholder, and is the licensee. He said that he is aware of the charges levied by the Nightclub and that includes a charge for taking a hostess out which is $41 before 8 p.m. and $45 after that. He also in his statement set out the charges made by the Nightclub for the services of a hostess who is not taken out. He said that the Manager, who is the 2nd Appellant, receives a salary plus a commission and is responsible for the business of the Company. The Company pays the hostesses and the ushers once a week and that each month the Nightclub takes an account and hands the balance owing to the Company. In a subsequent statement taken later on the 10th October the 1st Appellant said that he accepted the Police advice regarding the running of his Nightclub and that in future he would put up a notice stating that hostesses were not allowed to go to apartment houses with customers.

8. When the premises were raided on the 30th October a notice was in fact found. This notice was produced and the relevant part of it states "soliciting customers for an immoral purpose is forbidden". It does not say that hostesses shall not take customers to apartment houses. It is also quite clear from the evidence that the notice was totally ignored. The 1st Appellant quite clearly had control over these premises, as a director of the Company and licensee, and he visited the premises daily. There is no evidence that he was present on any occasion when a Constable went and took out a girl but he knew that the Nightclub made a charge for customers so taking hostesses out. It is quite true that charges were made for having a hostess simply sit and chat with a customer but I am satisfied that such formed a very small part of the Nightclub's business. The Magistrate in his findings said that the charges were collected on a profit sharing basis between the management and the girls. I am not quite sure what charges he is referring to and certainly there is no evidence at all that the charges made by the girls once they had got to the apartment house was shared with the management. Indeed the 2nd Appellant vigorously denies that such took place. I think the Magistrate must be referring to the charges made by the Nightclub for taking the girls out. And from these charges, which I am satisfied formed the bulk of the Nightclub's revenue, the girls' salaries were paid. To that extent only I think the Magistrate perhaps was not correct in saying that the charges were collected one a profit sharing basis.

9. The 1st Appellant must have been aware of the Police raids on the premises which took place on the 10th and 17th October. I am satisfied that he was aware that girls were taking customers out to nearby apartment houses for the purposes of prostitution and that his premises were being used to organise that prostitution. I am satisfied that his Nightclub was collecting fees from customers for taking girls out, even if they did not collect the fee actually paid for the act of prostitution. I am therefore satisfied that the Magistrate was quite right in coming to the conclusion which he did that the 1st Appellant was managing a vice establishment as set out in the charge against him and that he was properly convicted of that charge.

10. The evidence against the 2nd Appellant, who is the Manager of the Nightclub, is again that contained in his own statements which were made on the 10th and 30th October. On the 10th October in his statement he said that he got a share of the profits from the Nightclub and that he did not care what happened when a girl took a customer out. It is submitted that this is a defence and that there is no presumption that when a customer takes a girl out of a nightclub such as this he is necessarily going to take her out for the purposes of prostitution. I feel that is asking the Court to be totally naive. There is evidence that in this area there are a large number of apartment houses of various sorts and indeed one nearby building seems to be occupied by virtually nothing else. It may be that on occasions a customer would take a girl out for purposes other than sexual intercourse but such occasions would be rare. I am satisfied that the management of the Nightclub must have known perfectly well the purpose for which the girls were taking out. I am therefore satisfied that the 2nd Appellant was managing a vice establishment as charged and was properly convicted.

11. The evidence against the 6th Appellant is undoubtedly the weakest of all the Appellants in this manner. The only evidence is his own statement in which he said that he was responsible for greeting customers and taking them to their seats. That is in his statement of the 10th October. In his statement of the 30th October he said that he was responsible for collecting the money. I am satisfied that in view of the evidence as to what was going on in the Nightclub on the occasions when the Constables visited it, the 6th Appellant must have been well aware that girls were being taken out to nearby apartment houses for the purpose of prostitution and that was the main function of this Nightclub. I am also satisfied that by collecting the cash he had some form of control over its operation so as to fall within the principles set out in Abbot and another v. Smith⁽¹⁾. I am therefore satisfied that the 6th Appellant was also properly convicted and his appeal is also dismissed.

12. The Appellants also appeal against the sentences, which were substantial fines. The 1st Appellant was fined a total of $15,000, the 2nd Appellant $8,000, the 3rd and 4th Appellants a total of $3,000, the 5th Appellant $2,500 and the 6th Appellant $3,000. There were factors in mitigation which were clearly of some substance. There was no evidence that the management shared in the fees charged by the girls in the apartment houses. There was no evidence that the girls were in any way reluctant to do what they were going. Counsel also pointed out that the services provided by this Nightclub are probably the same as provided by many others but I did not consider that is a strong point in mitigation. The Appellants in their statements apparently did not consider that they were doing anything against the law. However the fact is that these premises were raided on the 10th and on the 17th October before the final one on the 30th October. There is no evidence whatever that the manner of operation changed at all between those dates. I did not consider that the notice put up by the 1st Appellant following the first raid is of any great significance. As I have said it does not prohibit hostesses taking customers out of the Nightclub and in any event it appears to have been totally ignored. While the fines were substantial I did not consider that they are excessive. The appeals against sentence were also therefore be dismissed.

13. I would just finally like to add that this appeal was argued most thoroughly and confidently by Mr. Hoosen, Counsel for all the Appellants. Everything that could have been said in their favour both as to facts and law was put before me very clearly indeed and I am grateful for his assistance.

Representation:

Mr. Abdul Aziz Hoosen instructed by P.H. Sin & Co. for the Appellants.

Miss J.C. Plumptre Counsel for Respondent.

(1) 1964 3 AER 762