HKSAR v. Lo Siu Kong and Another

[English Translation – 英譯本]
HCMA 152/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 152 OF 2011

(ON APPEAL FROM TMCC 2277 OF 2010)

__________________

__________________

Coram: Hon Barnes J in Court

Date of Hearing: 28 June 2011

Date of Judgment: 28 June 2011

Date of Reasons for Judgment: 15 July 2011

___________________________

REASONS FOR JUDGMENT

___________________________

1.There were three defendants in the present case. The first appellant Lo Siu Kong was the first defendant, the second appellant Lo Siu Hung was the second defendant, and the third defendant was Wong King Wa.

2.The first defendant was charged with one count of “being a licensed estate agent employing a salesperson without a licence”, contrary to section 39(1) of the Estate Agents Ordinance, Cap. 511, Laws of Hong Kong.  It was alleged in the amended particulars of offence of the charge that in June 2008, the first defendant, being a licensed estate agent of Wing Hung Property Agency Company, without reasonable excuse, did employ the second and third defendants as salespersons who for the time being were not the holders of a licence.  The first defendant pleaded not guilty to the charge.  He was convicted after trial and fined $15,000.

3.The second and third defendants were each charged with one count of “being a salesperson for licensed estate agent without a licence”, contrary to section 16(1)(a) of the aforesaid Estate Agents Ordinance. The re-amended particulars of offence of each charge alleged that in June 2008 in Pat Heung, New Territories, the accused, not being the holder of a licence issued under the Estate Agents Ordinance, without reasonable excuse, did act as a salesperson for a licensed estate agent [namely, Wing Hung Property Agency Company] or hold himself out to the public as being a salesperson.  Both the second and third defendants pleaded not guilty to their respective charges.  They were convicted after trial and fined $10,000 and $5,000 respectively.

4.The first and second defendants appealed against convictions.  After the hearing, I allowed the appeals, quashed the convictions and set aside the fines.  I ordered that the two appellants be awarded costs of the appeals, but not the costs of the trial before the magistrate, to be taxed by the Registrar if not agreed.  My reasons are set out below.

Undisputed Facts

5.The undisputed facts were that Wing Hung Property Agency Company was a company holding a valid estate agent’s licence, the first appellant being its sole proprietor. The first appellant also held a valid individual estate agent’s licence.  The second and third defendants were the first appellant’s employees.  Both did not hold any valid licence.

Prosecution Case

6.The prosecution case, in a nutshell, was this.  The first prosecution witness wished to purchase a residential property in Yuen Long.  When he and his wife for the first time visited Yue Ming Rich Garden which was then still under construction, they did not come across any estate agent.  A week later, when they, together with their close friend [the second prosecution witness], visited Yue Ming Rich Garden again, they came across the second appellant.  The second appellant showed them his name card, saying he represented Wing Hung Property Agency.  He also gave an introduction on Yue Ming Rich Garden to them and pointed out that it was a development of an old scheduled building lot, for which regrant premium was not required.  Yue Ming Rich Garden comprised seven blocks of houses.  The second appellant told the first prosecution witness about the area of each floor, garden area and approximate price in respect of each house.  The second appellant also accompanied the party including the first prosecution witness to visit the interior of the houses and the roof tops.

7.When the second appellant almost finished his introduction about the residential estate, the party including the first prosecution witness met the first appellant outside the houses.  The second appellant said the first appellant was his employer as well as his younger brother.  The first appellant stayed there for not more than 5 to 10 minutes, during which he did not say anything, nor did he give any introduction on the residential estate.  Then they proceeded to the shop premises of Wing Hung Property Agency.

8.Afterwards, at Wing Hung Property Agency, the second appellant described to the first prosecution witness the prices of various houses in the residential estate.  The first prosecution witness indicated that he would approach and discuss with lawyers and banks first.

9.Later, the second appellant telephoned the first prosecution witness and arranged with him to go to Kam Sheung Road for “property viewing”.  The second appellant accompanied the first prosecution witness to view three houses, namely, Houses A, B and C at No. 510 Kam Sheung Road and also gave an introduction about them. The second appellant told the first prosecution witness about the prices of 510A and 510B, and that the price of 510C was not yet available.

10.After that, the second appellant again arranged with the first prosecution witness to go to Kam Sheung Road for “property viewing”.  The first prosecution witness and his wife together with the second prosecution witness were present.  At that time, the third prosecution witness showed up and was introduced by the second prosecution witness as being the owner.  The first prosecution witness requested the second appellant to ask the third prosecution witness whether a price reduction would be allowed.

11.Afterwards, the second appellant informed the first prosecution witness that there was someone intending to buy 510A and asked the first prosecution witness whether he was interested in buying 510A.  The first prosecution witness indicated in the affirmative.  When the first prosecution witness and his wife arrived at Wing Hung Property Agency, they met the third defendant for the first time.  The second appellant and the third defendant gave a brief introduction on the sale and purchase procedure to the first prosecution witness and his wife and drafted a provisional agreement for sale and purchase in respect of the purchase of 510A.

12.During their conversations, the second appellant suggested that 510A, which was a detached house, could be divided into three separate floors for the purpose of transaction, so that some $200,000 in stamp duty could be saved.  The first prosecution witness agreed in principle.  The third defendant then filled out three sets of provisional agreements for sale and purchase.  The first prosecution witness and his wife signed the agreements and also handed to the second appellant a cheque as the deposit.

13.Before the aforesaid provisional agreements were signed, the third prosecution witness was also present.  However, after the second appellant and the third defendant had explained to him about the idea of dividing the entire house into three separate floors for the purpose of sale, he was unwilling to sign and said he had to seek legal advice.

14.Afterwards, the second appellant telephoned the first prosecution witness, saying that 510A could not be divided into three separate floors for sale.  While the first prosecution witness had not yet enquired with lawyers and banks as to whether the whole block of property could be transacted together, the second appellant telephoned the first prosecution witness, saying that 510A had been sold.

15.The first prosecution witness subsequently, through a friend working in the bank, came into contact with the third prosecution witness, as hewas aware that in fact 510A had not yet been sold.  Later, he successfully purchased 510A without going through any estate agent.

16.In around September or October 2008, the first prosecution witness received a phone call from a person who claimed himself to be Alex Lo of Wing Hung Finance and demanded the first prosecution witness to pay commission in the sum of $140,000 for the completed transaction in respect of 510A.  As Alex Lo said to the first prosecution witness that he knew the first prosecution witness’s work address as well as residential address and told him to be careful, the first prosecution witness reported the matter to the police for record after having consulted his lawyers.

17.After the phone call from Alex Lo, the first appellant telephoned the first prosecution witness, asking him to pay the commission.  The first prosecution witness later replied him by suggesting that he would pay $25,000. That was rejected by the first appellant, who clearly indicated that he would recover the commission via the legal channel.

18.Wing Hung Property Agency subsequently filed a claim against the first prosecution witness and his wife for the recovery of the commission with the Small Claims Tribunal.  Afterwards, the first prosecution witness lodged a complaint with the Estate Agents Authority, alleging that Wing Hung Property Agency employed the second appellant and the third defendant as salespersons without any licence.

Defence Case

19.When giving evidence in court, the first appellant said that he was a licence holder, and that although the second appellant and the third defendant were working at Wing Hung Property Agency, they were not engaged in estate agent’s duties.  The first appellant further said although the second appellant was present during the “property viewing”, it was he himself who gave an introduction on the houses to the party including the first prosecution witness and gave them professional advice.

20.When the first prosecution witness and his wife inspected the three properties including 510A for the first time, it was the first appellant who accompanied them, during which the second appellant was not present.  Later the first prosecution witness requested to view 510A again.  As the first appellant did not have time, therefore the second appellant was arranged to borrow the keys so that they could view the property.  Subsequently the first prosecution witness and his wife requested again to view 510A.  The first appellant then arranged again with the third prosecution witness for him to come over, during which the second appellant was also present.  At that time the first and third prosecution witnesses reached an agreement whereby the third prosecution witness would sell the entire block of property to the first prosecution witness for 7.25 million dollars.  The second appellant was also present at that time.

21.Afterwards, all of them returned to Wing Hung Property Agency [the second prosecution witness did not go along with them], where the first appellant assisted the first and third prosecution witnesses in drafting the provisional agreement for sale and purchase.   Since the first appellant’s hand had been injured in a fall, the third defendant only assisted in filling out (the forms).

22.The third defendant also assisted in making photocopies and conducting a land search.  The first prosecution witness made out a cheque in the sum of $150,000 as deposit.

23.The first appellant alleged that it was the first prosecution witness who proposed to divide the property into three separate floors for the purpose of transaction in order to save stamp duty.  The third prosecution witness indicated that he needed to seek legal advice first.  After the third prosecution witness left, the first prosecution witness said he would not conclude the deal if (the property) was not divided into three separate floors for transaction.  The first appellant then asked the third defendant to fill out another three sets of agreements, the prices on which being provided by the first prosecution witness.

24.Afterwards, the third prosecution witness told the first appellant that (the property) could not be divided into separate floors for sale, and insisted that it must be sold as an entire block.  The first prosecution witness subsequently informed the first appellant that he would not consider purchasing 510A.

25.Later, in September of the same year, the first appellant learnt from a “fellow tradesman” that the third prosecution witness would not let him [the first appellant] handle the “subject property” anymore because the third prosecution witness’s son had a grudge against him; the “fellow tradesman” also reminded the first appellant that 510A had already been sold.  After conducting a land search, the first appellant found that the purchaser was the first prosecution witness.  So he contacted the first prosecution witness and demanded payment of commission in the sum of $145,000.   Afterwards, the first prosecution witness indicated that he was willing to pay $25,000 in commission, which was rejected by the first appellant who then filed a claim against the first prosecution witness with the Small Claims Tribunal. 

Grounds of Appeal

26.Mr. Wong Man Kit, SC, and Mr. William Lam, counsel for the two appellants, have advanced two grounds of appeal, stating that the convictions were unsafe and unsatisfactory.

First Ground of Appeal

27.It was submitted by the appellants that the magistrate erroneously considered that as the first prosecution witness was a doctor –– a professional, if the first prosecution witness were to conspire together with the second and third prosecution witnesses to give false evidence, he would have to bear the criminal liability for perverting the course of justice; thereby categorizing the first prosecution witness as likely to be more credible than others.

28.The appellants quoted a passage from the magistrate’s statement of findings (page AB112, para. 132):

“Firstly, PW1 is a doctor, who had purchased (other) property prior to his dealing with Wing Hung Property Agency. He knew that it was necessary to pay commission for any purchase of property through an estate agent; further, Wing Hung Property Agency only sued him at the Small Claims Tribunal, where the amount of claim is $50,000 at most. Also, PW1 did not have any concern about having to pay legal costs because lawyers are not allowed to participate in claims brought before the Small Claims Tribunal. In such circumstances, would an evasion to pay $50,000 amount to sufficient incentive for PW1 to give false evidence at the Estate Agents Authority, police station and the court? As a professional, would he be willing to take the risk of having to bear the criminal liability for perjury because of such an amount of money? Was it because he wanted to make the Estate Agents Authority, the police and the court believe his false evidence, so he conspired with PW2 and/or PW3 to pervert the course of justice? As shown by the document (or documents) quoted by counsel Mr. Lam during his cross-examination of PW1, PW1 was indeed legally represented when he lodged the complaint with the Estate Agents Authority. According to PW1’s evidence, the legal fees were not inexpensive, and just the drafting of each letter cost him several thousand dollars. In other words, if PW1 really had made up the story, and yet he had to pay legal fees, how much from this claim of $50,000 could he have saved?”

29.The appellants argued that the above passage from the magistrate’s statement of findings suggested that because the first prosecution witness was a doctor –– a professional, therefore he would not conspire with the second and third prosecution witnesses to pervert the course of justice thereby causing himself to bear the criminal liability for perjury.  This was tantamount to categorizing the first prosecution witness as likely to be more credible than others.

30.The appellants cited Lee Fuk Hing v HKSAR[1]. In that case, the Court of Final Appeal pointed out that the court, in assessing the evidence of a case, was not allowed to consider the serious consequences of police officers giving false evidence, otherwise it may result in the police officers being categorized as likely to be more credible than others.

31.It was submitted by the appellants that in the above passage of the statement of findings, the magistrate in the instant case had violated the principles stated by the Court of Final Appeal in Lee Fuk Hing, and that in the instant case, the defence case was exactly that the first, second and third prosecution witnesses conspired together to give false evidence, as a result of which the first prosecution witness was not required to pay commission and the first appellant could not obtain his commission.  The first prosecution witness was the most important witness of the prosecution in the present case.  This fundamental error of the magistrate has rendered it impossible for him to consider the credibility of all the prosecution witnesses impartially.

Second Ground of Appeal

32.The appellants argued that the magistrate had erroneously failed to consider the inherent probabilities of the prosecution case and the defence case, and had unfairly applied double standards adverse to the defence.

33.The salient points of the prosecution case and the defence case were set out by the appellants as follows:

Salient points of the prosecution case:

“(i) The second appellant and the third defendant did provide estate agent’s service to the first and third prosecution witnesses.

(ii) As there had been a law suit between the first appellant and the third prosecution witness’s son on some business dispute, therefore the first appellant gave up (the chance) to facilitate the sale and purchase of the property between the third prosecution witness and the first prosecution witness, and gave up (the chance) to earn the commission. He also told the first prosecution witness that the third prosecution witness’s property had been sold, as a result of which the first prosecution witness and the third prosecution witness did not conclude any deal through the first prosecution witness’s property agency.

(iii) Later, the first prosecution witness, through his friend, approached the third prosecution witness. Without going through any estate agent, the first prosecution witness and the third prosecution witness entered into a transaction for the sale and purchase of the property, in which the first prosecution witness was not required to pay commission to any estate agent.

(iv) After the first appellant came to know that the first prosecution witness and the third prosecution witness had concluded the deal without going through the first appellant’s company, both the first appellant and the second appellant verbally demanded the first prosecution witness to pay commission. But the first prosecution witness said (to them) that as the second appellant was a salesperson without a licence, the first prosecution witness should not pay any commission. However, the first prosecution witness was willing to pay $25,000 to the first appellant, but that was refused by the first appellant who also stated that he would initiate legal action. (page AB87, para. 32; and page AB94, para. 57)

(v)       Later, the first appellant filed a claim against the first prosecution witness for recovery of $50,000 with the Small Claims Tribunal.”

Salient points of the defence case:

“(i) The first appellant did provide estate agent’s service to the first and third prosecution witnesses. The second appellant and the third defendant did not provide any estate agent’s service to the first and third prosecution witnesses.

(ii) The first appellant did not tell the first prosecution witness that the third prosecution witness’s property had been sold. Rather, it was the first prosecution witness who told the first appellant that he was not interested in the third prosecution witness’s property, as a result of which the first prosecution witness and the third prosecution witness did not conclude any deal through the first appellant’s company. The purpose of the first prosecution witness in doing this was that he did not want to pay commission to the first appellant’s company in the event of the deal being concluded through the appellant’s company.

(iii) Later, the first prosecution witnesses, through his friend, approached the third prosecution witness with whom he directly entered into a transaction for the sale and purchase of the property, thereby achieving his purpose to evade payment of commission to the first appellant’s company.

(iv) The reason why the first prosecution witness said in his evidence given in court that the first appellant told him that the third prosecution witness’s property had been sold was that he wanted to conceal the truth that he had side-stepped the first appellant’s company in concluding the sale and purchase of the property with the third prosecution witness.

(v) As the first appellant did not say to the first prosecution witness words to the effect that the third prosecution witness had sold his property, rather it was the first prosecution witness who privately side-stepped the first appellant in concluding the sale and purchase of the property with the third prosecution witness, therefore the first appellant was of the view that he was entitled to receive commission. For this reason, he filed a claim against the first prosecution witness for recovery of the commission.

(vi) As the second appellant and the third defendant did not provide any estate agent’s service to the first and third prosecution witnesses, rather it was the first appellant who provided estate agent’s service to the first and third prosecution witnesses, therefore the first appellant was of the view that he was entitled to receive commission and he filed a claim against the first prosecution witness for recovery of the commission.”

34.It was submitted by the appellants that the magistrate, in his assessment of the facts of the case, had ignored the following inherent probabilities which were highly favourable to the defence:

(i) If the first appellant had told the first prosecution witness that the third prosecution witness had already sold his property, as a result of which the first prosecution witness and the third prosecution witness did not conclude a deal through the first appellant’s company, that would mean the first appellant certainly did not wish to earn any commission at all from this transaction, then why would the first appellant, after having come to know that the first prosecution witness and the third prosecution witness had concluded the deal, have filed a claim against the first prosecution witness for recovery of the commission?

(ii) If the first appellant really had told the first prosecution witness that the third prosecution witness’s property had already been sold, the first appellant would have known that there was no justification whatsoever for him to recover the commission and that the first prosecution witness certainly would never pay any commission to the first appellant in such circumstances, then why would the first appellant have taken the trouble to do that?

(iii) If the second appellant and the third defendant really had provided estate agent’s service to the first and third prosecution witnesses, then when the first prosecution witness put forward this reason to the first and second appellants as the basis for his refusal to pay commission, the first appellant would certainly be aware that there was no justification for him to recover the commission and that if he insisted on recovering the commission, it would only reveal the truth of the crime before the court that the first appellant had employed the second appellant and the third defendant as salespersons without any licence.  That being the case, how come the first appellant would have insensibly filed a claim against the first prosecution witness with the Small Claims Tribunal?

(iv) The amount claimed by the first appellant in the Small Claims Tribunal was only $50,000.  And the first prosecution witness already said in the telephone conversation that he was willing to pay $25,000.  Why would the first appellant, knowing full well that justice was not on his side at all, still have initiated proceedings in the Small Claims Tribunal to reveal the truth of his crime?

35.The appellants cited HKSAR v Egan & Others[2] in which the Court of Final confirmed that inherent possibilities of evidence were an important factor which must be borne in mind in every case.  Contrary to this principle, the magistrate, in assessing the evidence, failed to consider the inherent possibilities which were obviously highly favourable to the defence.

36.The magistrate questioned whether the first prosecution witness, being a doctor –– a professional, would conspire with the second and third prosecution witnesses to give false evidence to pervert the course of justice for the purpose of evading the liability to pay $50,000 in commission (page AB112, para. 132).  However, on the other hand, the magistrate failed to consider whether the (first) appellant, being a professional as an estate agent and knowing full well that the first prosecution witness might advance the allegation that the second appellant was a salesperson without a licence, would make a false claim in the Small Claims Tribunal as a result of which the appellant would have to give false evidence to defend himself in a criminal court, just because of $25,000 [namely, $50,000 in commission minus $25,000 which the first prosecution witness was willing to pay].  This is double standards, obviously adverse to the defence, applied by the magistrate in dealing with the witnesses of the prosecution and the defence, as a result of which justice could not be seen to be done.

Discussion

First Ground of Appeal

37.Having considered the relevant findings of the magistrate, the submission made on behalf of the appellants and the judgment of Lee Fuk Hing, I agree with the argument of the appellants.

38.In considering whether the first prosecution witness’s evidence was credible and reliable, the magistrate should not have considered whether, as a doctor – a professional, an evasion of payment of $50,000 was sufficient incentive for him to make false representations.  The approach as adopted by the magistrate was not different from that of the trial judge in Lee Fuk Hing, where he directed the jury to consider what consequences might arise if police officers gave false evidence.  Doctors or professionals are not in a position higher than others.

39.Further, there was evidence in the present case to show that the first prosecution witness requested or agreed to have the whole block of property divided into three floors for the purpose of transaction [no matter whether this idea came from him or others] in order to save stamp duty.  It appears that the first prosecution witness is not a person who does not care about money.

40.The first prosecution witness was the most important witness in the present case.  The second prosecution witness was not an entirely independent witness –– he was a close friend of the first prosecution witness.  The third prosecution witness was not an entirely independent witness either –– his son had a grudge against the first appellant.  The magistrate violated the principles set out in Lee Fuk Hing, thereby rendering it impossible for him to consider the credibility of all the prosecution witnesses in a fair manner.

Second Ground of Appeal

41.After having considered the salient points of the prosecution case and of the defence case, and the inherent probabilities of the defence case, I accepted the submission made on behalf of the appellants.  The magistrate failed to properly and sufficiently consider the inherent probabilities or inherent improbabilities of the prosecution case and the defence case.  In particular, in rejecting the defence case, he failed to adequately consider its inherent probabilities.  It appears that the magistrate had applied double standards adverse to the appellants.

Ruling

42.For the above reasons, I ruled that the convictions were unsafe and unsatisfactory and allowed the appeals.

Costs

Costs of the Appeals

43.As the appeals have been allowed, the appellants should be awarded costs of the appeals.  To this, the respondent has raised no objection.  Therefore, I ordered that the appellants be awarded costs of the appeals, to be taxed by the Registrar if not agreed.

Costs at the Magistrate Court

44.In relation to the costs at the magistrate court, I have taken into account the principle stated by Litton PJ in Tong Cun Lin[3]:

“The legislature in empowering the court to award costs has not laid down the conditions under which the broad discretion under s.73A(1) should be exercised. The court must therefore by construction fill the gap. What then are the governing principles? When a defendant has been brought to trial upon particular charges and is then found not guilty it is clearly right that he should normally be compensated out of public revenue for the costs incurred in defending those charges. 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. This cannot be confined to any particular period of time. Since, however, the discretion is being exercised in the context of an acquittal – the averments constituting the charges having been found by the jury as not amounting to the crimes alleged – it follows that, generally speaking, the conduct most relevant to the matters under consideration must be the defendant’s conduct during the investigation and at the trial: How he first responded to the investigators, the answers he gave when confronted with the accusations, the consistency of those answers with his subsequent defence, etc. Wrapped up with this is the strength of the case against the defendant and the circumstances under which he came to be acquitted: These too are relevant to the exercise of the discretion to deprive him of his costs, so long as the judge is not, indirectly, thereby punishing him by taking a view of the facts palpably different from that taken by the jury and reflected in the not-guilty verdict. The person in the best position to weigh those matters is clearly the judge himself.”

45.I adopt the Chinese translation contained in Extracts From Criminal Cases as follows:

「……如果被告人為某些控罪受審而後來獲判無罪，在正常情況下，他顯然應當獲得補償，由公帑支付他為抗辯該等控罪而招致的訟費。當法官行使酌情權，考慮是否即使有該一般原則，也應判被告人不得獲付全部或部份訟費時，很明顯，法官必須整體審視被告人的行為，但大前提是該等行為須與被告人的控罪有關，這不得局限於某段期間。不過，既然法官是在被告人獲判無罪的情況下行使酌情權 ——換言之，構成控罪的事實陳述已被陪審團裁定為不足以作為罪證 ——一般而言，與斟酌事項最有關的行為，必定是被告人在接受調查及審訊時的行為：諸如被告人最初對調查人員有何反應，面對指控時如何應對，其應對與其後的抗辯是否一致。最後還須考慮的是：對被告人不利的理據的強弱，以及被告人在何種情況下獲判無罪。法官行使酌情權，判定被告人不得獲付訟費時，凡此種種均屬需要考慮的因素，但大前提是法官並非因個人看法明顯有別於陪審團的觀點及無罪判決所反映的看法，而要藉此以間接方式懲罰被告人。最有資格衡量上述種種事宜的人，很明顯就是法官本人。」

46.In the present case, I have taken into account the omissions of material particulars in the “property viewing sheet”, that photocopy of the “property viewing sheet” was not instantly provided to the first prosecution witness, and that in the “property viewing sheet” the name of the person signing the “property viewing sheet” on behalf of the estate agent as prescribed by the law was omitted, etc., I ruled that the conduct of the first and the second appellants had brought suspicion on themselves.  Therefore, in exercise of my discretion, I refused to award costs of the trial to either of them.

Michael Tsang, Public Prosecutor of the Department of Justice, for the Prosecution

Wong Man Kit, SC and William Lam, instructed by CK Mok and Co., for the First and Second Defendants

Translated by the Judgment Translation Unit of the Judiciary and approved by Mr. P. Y. Lo, Barrister-at-law.

[1]       Lee Fuk Hing v HKSAR [2005] 1 HKLRD 349 at 356, paras. 14-22.

[2]       HKSAR v Egan & Others [2010] 5 HKC 180 at 183E to I.

[3]       Tong Cun Lin v HKSAR (1999) 2 HKCFAR 531.