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CACV 75/2000
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
CIVIL APPEAL NO. 175 OF 2000
(ON APPEAL FROM CoURT OF FIRST INSTANCE ACTION No. HCA 11533 of 1996)
____________________
BETWEEN
Dr Paul KI Ping-ki 1st Plaintiff
Hong Kong Washington Company 2nd Plaintiff
and
Next Magazine Publishing Ltd 1st Defendant
CHEUNG Kim-hung 2nd Defendant
Toppan Printing Co (HK) Ltd 3rd Defendant
YEUNG Wai-hong 4th Defendant
LEE Kwong-fung 5th Defendant
____________________
Before: Hon Leong and Woo JJA in Court
Date of hearing: 6 July 2000
Date of delivery of judgment: 13 July 2000
_________________
J U D G M E N T
________________
Woo JA (giving the judgment of the Court) :
This is an appeal by the 1st plaintiff, Dr Paul Ki, against Yuen J’s decision made on 2 May 2000. The decision was made in respect of an application for leave to appeal out of time from an order made on 30 May 1999 by Registrar Chu. The Registrar’s order was to the effect that the 1st defendant was entitled to set off the debt owed to it by Dr Ki against a judgment sum of $200,100 awarded to the plaintiffs in the action entitled HCA 11533 of 1996. Despite the fact that the Registrar’s order was made on 30 May 1999, Dr Ki only made an application for leave to appeal against that order out of time on 15 March 2000.
The factual background of this matter was set out in pages 2-4 of Yuen J’s judgment, which we do not propose to repeat except the following significant dates and events :
A defamation action brought by Dr Ki against Next Magazine Publishing Limited (“Next”, the 1st defendant herein), being HCA No. 8071 of 1994, was dismissed in June 1996 with costs to be paid by Dr Ki to Next.
In October 1996, Dr Ki brought another defamation against Next and four other defendants, being HCA No. 11533 of 1996 (this action), in respect of an article published by Next on 3 November 1995.
In May 1997, the costs payable by Dr Ki to Next in HCA No. 8071 of 1994 were taxed, amounting to $906,185.40 (“the taxed costs”).
In July 1997, Dr Ki not having made payment of the taxed costs, Next served a Bankruptcy Notice on him; in September 1997, a petition was presented for Dr Ki’s bankruptcy; in December 1997, a receiving order was made against Dr Ki; and in April 1998, Next filed its proof of debt.
In December 1998, the jury in HCA No. 111533 of 1996 awarded damages for defamation in the sum of $200,100 in favour of the plaintiffs (“the damages”).
Next had submitted a proof of debt in the sum of $1,060,882.66 to the trustee in bankruptcy (being the taxed costs payable by Dr Ki to Next plus interest). On the other hand, Next was also indebted to Dr Ki in the sum of $200,100 being the damages.
By a letter of 20 January 1999 addressed to the solicitors for Next, the Official Receiver stated that as the damages of $200,100 were exclusively to compensate the damage done to the personal reputation to Dr Ki, the sum did not form part of the property vested in the Official Receiver and trustee in bankruptcy in Dr Ki’s bankruptcy.
On 19 March 1999, Dr Ki took out a summons in HCA No. 11533 of 1996 to seek payment of the damages against the defendants. Registrar Chu who heard the summons, ordered that the 1st defendant do within seven days amend the proof of debt filed with the Official Receiver by deducting therefrom the sum of $200,100 together with interest thereon at judgment rate from 3 December 1998 until the date of the amended proof of debt. Regarding the effect of this order, Yuen J said :
“Although couched in mandatory terms requiring Next to amend its proof of debt, the effect of the order was that Next could set-off its liability to pay Dr Ki’s damages in the 2nd defamation action against its entitlement to costs from Dr Ki in the 1st defamation action.”
In his notice of appeal against Yuen J’s decision, Dr Ki raises three grounds of appeal, as follows :
the defendants did not obey the order of the Official Receiver made on 20 January 1999 (ie, the statement of the Official Receiver made in the letter of 20 January 1999 referred to above) and were therefore in contempt of court.
Dr Ki had made the mistake of applying to the Registrar instead of the Bailiff’s Office to execute the judgment in his favour in the sum of $200,100. The Registrar did not have the right to overturn the Official Receiver’s order.
The reason for the late appeal against Registrar Chu’s order was that Dr Ki had never received the written order which was made on 13 May 1999 and that the sealed copy of the order was not filed until 5August 1999.
Yuen J in her judgment identified, and we are of the view correctly, four factors to be considered whether the court should grant extension of time to Dr Ki to appeal the Registrar’s decision, namely,
the length of the delay;
the explanation for the delay;
the extent of prejudice to the respondent; and
the merit of the appeal.
The Judge held that the length of the delay, from the time limit of 5 days after the Registrar’s order for lodging the appeal, to 15 March 2000, a total of 10 months, was a most substantial delay. Even where the Registrar’s order was sealed on 5 August 1999, as Dr Ki now points out, there was a delay of over 7 months before Dr Ki lodged his application for time to appeal against the Registrar’s order. In our view, that is still a very substantial delay.
It is interesting to note that the reason for the delay now raised as ground (3) of appeal, referred to above, is very different from the reasons that were mentioned to Yuen J. Before the Judge, Dr Ki said that he was confused by the Registrar’s order which he told the Judge was inconsistent with the judgment in HCA No. 11553 of 1996 in his favour and the position of the trustee in bankruptcy as expressed in the Official Receiver’s letter of 20 January 1999. He also told the Judge that he had been distracted by another action in which he was involved sometime in May 1999. All these reasons were rejected by the Judge as amounting to no reasonable excuse for his lengthy delay. We agree with the Judge. Before us, Dr Ki points out that the Registrar’s order was difficult for him to understand. It was sometime in June 1999 when he went to the Bailiff’s Office trying to pursue the enforcement of the damages award that he was told that the Registrar’s order obstructed the enforcement. It is therefore clear that even if he was “confused” by the Registrar’s order, his confusion must have been cleared up as early as June 1999.
In the present notice of appeal, Dr Ki states that he had never received the written order which was made by the Registrar on 13 May 1999 and that the sealed copy of the order was not filed until 5 August 1999 as a reason for his delay in proposing to appeal against the Registrar’s order. He elaborates by telling us that it was not until sometime in February 2000 (and counsel for Next confirms that it was 8 February 2000) that the defendants’ solicitors sent him a copy of the sealed order. First, this reason for making his application for leave to appeal the Registrar’s order out of time is unbelievable because if it were true, it would have been made known to Yuen J. Secondly, even where Dr Ki was only supplied with a copy of the sealed order on 8 February 2000, there is not, nor can there be, any reasonable explanation why he did not lodge his appeal within the time allowed, instead of only making an application for leave out of time on 15 March 2000.
Neither the sealing of the order on 5 August 1999 nor the supply of a copy of the sealed order to him in February 2000 affects the time for lodging the appeal. Order 58, rule 1 of the Rules of the High Court relevant to the appeal against the Registrar’s order provides:
“Unless the Court otherwise orders, the notice [of appeal] must be issued within 5 days after the judgment, order or decision appealed against was given or made and must be served within 5 days after issue …” [emphasis added]
This differs from the terms of Order 59, rule 4 of the Rules of the High Court applicable to appeals to the Court of Appeal. Order 59, rule 4 provides:
“(1) Except as otherwise provided by these rules, every notice of appeal must be served under rule 3(5) not later than the expiration of the following period beginning on the date immediately following the date on which the judgment or order of the court below was sealed or otherwise perfected, that is to say – [the various periods are then set out]” [emphasis added]
From the difference in terms as emphasised above in the two rules, it is clear that regarding an appeal from a master’s or a Registrar’s order, the time starts to run from the date when the order or decision was given or made, whereas regarding an appeal to the Court of Appeal, the time starts to run from the date when the order appealed against was sealed or perfected. The sealing of the Registrar’s order in August 1999 and Dr Ki’s receipt of a copy of the sealed order in February 2000 therefore do not assist Dr Ki. Despite Dr Ki’s submissions and elaboration to us, the position remains almost the same that Dr Ki has advanced no reason or reasonable explanation for his delay, at least since June 1999, in taking any step to appeal against the Registrar’s order. The delay was inordinate and without any reasonable excuse.
While Yuen J held that there was no substantial prejudice suffered by Next or anyone else as Next was the only proving creditor in the bankruptcy of Dr Ki, she held that there was no merit in Dr Ki’s proposed appeal against the Registrar’s order. Section 35 of the Bankruptcy Ordinance, Cap 6 governs set-offs in bankruptcy. After citing that section, the Judge referred to authorities on the meaning of “mutual dealings” provided in the section. She came to the view, and we think correctly, that Next was entitled to set-off the taxed costs against the damages awarded in favour of Dr Ki. She therefore concluded, again correctly, that Dr Ki had failed to show a “real prospect of success on the merit” of the appeal in order for the court to exercise its discretion to extend time for him to appeal against the Registrar’s order, particularly in the light of such a lengthy delay.
The first ground of appeal raised by Dr Ki is premised on his assertion that the letter of the Official Receiver dated 20 January 1999 was an order made by the Official Receiver that the damages of $200,100 awarded to him were not to form part of the property vested in the Official Receiver and trustee in bankruptcy and that the defendants committed a contempt of court in failing to obey that order. In fact, the statement made by the Official Receiver in that letter could not be said to be an order. It was rather an opinion held by the Official Receiver and the letter was an expression of that opinion. It was just a matter for the court’s consideration in deciding how the judgment carrying the damages of $200,100 should be enforced. It is not a court order the disobedience of which may amount to a contempt of court.
Linked with this ground (1) of appeal, ground (2) also states that the Registrar did not have the right to overturn the Official Receiver’s so-called order. Dr Ki tries to reinforce this ground (2) by saying that he had made a mistake of making an application to the Registrar instead of to the Bailliff’s Office to enforce the judgment in the sum of $200,100 against Next. His application to the court on 19 March 1999 was by way of a summons for an order that Next pay him the damages of $200,100. As Yuen J said in her judgment, “in effect, the Registrar was being asked to determine whether Next could set off the damages, or whether Dr Ki could enforce the judgment giving him that award.” The Registrar had the jurisdiction to decide whether the judgment sum could be enforced against Next, and her decision was sought by Dr Ki. There was no mistake as alleged by Dr Ki that he had made.
In our view, the Judge had carefully decided the matter and considered all the four relevant factors regarding the exercise of her discretion whether to grant an extension of time for Dr Ki to appeal against the Registrar’s order. She also decided correctly on all those four factors. In our judgment, the Judge was fully justified in refusing to exercise her discretion to grant leave to Dr Ki. Dr Ki has not shown us any basis for our interfering with the Judge’s decision. We therefore dismiss the appeal with costs.
(Arthur Leong) (K H WOO)
Justice of Appeal Justice of Appeal
1st Plaintiff : Dr Paul KI Ping-ki, in person
Mr Richard Khaw, instructed by T.S. Tong & Co., for the 1st – 5th Defendant

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CACC 171/2012
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
CRIMINAL APPEAL NO. 171 OF 2012
(On Appeal From District Court Criminal Case No. 1383 of 2011)
___________
BETWEEN
____________
Before : Hon Cheung and Barma JJA in Court
Date of Hearing : 4 January 2013
Date of Judgment: 4 January 2013
Date of Reasons for Judgment: 15 January 2013
Hon Cheung JA (giving the reasons for judgment of the Court) :
The appellant pleaded guilty to three charges of dealing with property known or believed to represent proceeds of an indictable offence, contrary to sections 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap. 455 and was sentenced to imprisonment of 2 years and 8 months by H H Judge Douglas Yau. The appellant was successful in his appeal against sentence before us and had his sentence reduced to 2 years’ imprisonment. We now give reasons for our judgment.
Facts
According to the summary of facts, between 20 October and 23 October 2009, two persons who resided in America and Taiwan, namely ‘PW1’ and ‘PW2’ were deceived by investment and lottery fraud and induced to remit funds into the Hong Kong bank accounts held in the name of the appellant. The total amount involved in relation to the three charges was in the sum of HK$2,042,120.47.
The appellant was the sole account signatory and account-holder of three personal saving bank accounts.
On 20 October and 23 October 2009, PW2 was deceived to remit HK$547,969 and HK$618,835.31 into one of the appellant’s bank accounts (charge 3). On 23 October 2009, PW1 was deceived to remit HK$355,251.90 and HK$520,064.26 into two of the appellant’s bank accounts (charges 1 and 2).
The monies were then withdrawn in cash or ATM transfer within one to two days.
The appellant was arrested on 12 December 2009. Under caution, he stated that:
He met a male named ‘Ah Yung’ when gambling in Macau and he owed ‘Ah Yung’ debts;
He was requested by ‘Ah Yung’ to use his bank accounts to deal with certain remittances and he did so accordingly;
After the monies were deposited into his bank accounts, he withdrew the monies and passed them to ‘Ah Yung’;
He did not know PW1 and did not know the reason why he deposited monies into his bank accounts;
He was told that PW2 was a relative of ‘Ah Yung’ and the inward remittance of HK$618,835.31 was related to the construction business of ‘Ah Yung’;
Although he did not receive any rewards for lending his bank accounts to ‘Ah Yung’, ‘Ah Yung’ did not require him to pay the debt in the sum of about $50,000 to $60,000.
The sentence
At the suggestion of the appellant’s lawyer (not Ms Flora Cheng who only appeared in this appeal), the Judge adopted a starting point of three years’ imprisonment for each of the charges, reduced it by one-third because of the plea and arrived at a sentence of two years’ imprisonment. He ordered 8 months on charge 3 to be served consecutively to the sentences on charges 1 and 2 which are to be served concurrently and arrived at a total sentence of 2 years and 8 months’ imprisonment.
The Court’s approach
In HKSAR v Boma Amaso [2012] 2 HKLRD 33 this Court (Stock VP, Cheung and Lunn JJA) maintained the view that because of the different circumstances that may arise in money laundering cases, it is not appropriate to provide a tariff of sentence. Instead the sentence should be based on factors such as the nature of the predicate offence, knowledge of the offender, whether an international element is involved, the sophistication of the offence, whether an organised criminal syndicate is involved, the number of transactions and the length of the crime, the role of the offender and whether the offender continued with the offence after detection by the authorities or discovery by the offender of the nature of the offence.
In considering the degree of culpability of the offender, the Court cited the example of the drug addict or petty crook who is paid a small sum to open an account and hand over its operation to another with no more participation and no more knowledge than that it is going to be used for some sort of crime and held that he ‘is much less culpable than an offender of a different sort not “used” in that way’.
Our view
The role played by the appellant in this case fits the example. As the Judge said, he had no knowledge of the crime behind the proceeds and all that he did was to allow his bank accounts to be used for dealing with the money.
In this case the amount involved is slightly more than $2 million and the money was remitted within a four day period. While the amount involved in the transaction is not a conclusive factor, it is nonetheless often an important factor to be considered. Although this case has an international element because of the overseas fraud, we are of the view that the final sentence of 2 years and 8 months’ imprisonment is excessive. This reflects a notional starting point of four years’ imprisonment which is usually adopted in cases involving far larger amounts (see, for example, HKSAR v. Lee Shun Fat (CACC 49/2012)). In HKSAR v. Zhan Jian Fu (詹劍富) CACC 258/2007, a sentence of 2 years and 8 months’ imprisonment was upheld on appeal where the amount under the two charges was about $2 million. But the aggravating feature in that case, apart from a similar overseas lottery fraud, is that the applicant there was a Mainlander who came to Hong Kong specifically to commit the crime by opening two bank accounts for the purpose of receiving the proceeds of fraud. On that basis the 2 years and 8 months’ imprisonment was clearly justified.
In our view an overall sentence of two years’ imprisonment is appropriate in this case. Although Ms Flora Cheng criticised the Judge for adopting an identical starting point for the three different sums, we had decided not to disturb the approach adopted by the Judge and had, instead, simply ordered the three sentences to be served concurrently to arrive at a global sentence of two years’ imprisonment.
Ms Peggy Lo, SPP of Department of Justice, for the respondent
Ms Flora Cheng, instructed by Director of Legal Aid, for the appellant

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CACC 188/2009 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CRIMINAL APPEAL NO. 188 OF 2009 (ON APPEAL FROM HCCC NO. 7 OF 2009) _______________________ BETWEEN HKSAR Respondent   and    MBUGUA JAMES WAIGWA Applicant  _______________________ Before: Hon Yuen JA, Barnes and McWalters JJ in Court Date of Hearing: 3 July 2013 Date of Judgment: 10 July 2013 J U D G M E N T    Hon Yuen JA (giving the Judgment of the Court): This is an application by James Waigwa Mbugua (“the Applicant”) for leave to appeal out of time against his conviction on 21 May 2009 by the late Deputy High Court Judge Mackintosh and a jury of one count of trafficking in dangerous drugs.
Prosecution case at trial The prosecution case against the Applicant, a 44 year old businessman from Kenya, was that on 6 July 2008, he arrived at Hong Kong International Airport from Kuala Lumpur. He was from Kenya, and he had flown from Delhi to Mumbai and from there to Kuala Lumpur the previous day. Customs officials at Hong Kong airport observed that his abdomen was bulging abnormally. He was escorted to hospital where a medical examination confirmed the presence of foreign objects in his body. He was arrested. On that and the following 8 days, he excreted a total of 75 pellets containing 610.67g of heroin hydrochloride, with a street value of more than $500,000. The day after his arrest, the Applicant was interviewed by Customs officers through a Swahili interpreter. The record of interview was produced at the trial. He said he had gone to India for business. While in India, he met some West Africans at a hotel. He said they forced him to swallow the pellets. If he did not do so, he would not be able to continue with his journey to Guangzhou, where he was heading to buy clothes and medical equipment. The West Africans paid for his fare to Hong Kong and promised a reward of US$4,000. He said he was forced to smuggle illegal goods into Hong Kong, he regretted what he had done and asked for leniency. There was no mention of any threat to any members of his family. Defence case at trial The Applicant pleaded not guilty to a charge of trafficking in dangerous drugs. He gave evidence at trial. He said that the year
before, in August 2007 his father had been kidnapped or “hijacked”. His own business failed and he was promised work by some people in Kenya at a factory in India. He borrowed money to travel to Delhi. In Delhi he met some West Africans who took him to Mumbai. They claimed to be the same people, or in the same gang of people, who had kidnapped his father. They gave him some pellets which he was told to swallow. They threatened they would kill his father and impliedly injure his wife and family if he did not co-operate. If he did, his father would be released. He said he was beaten and during cross-examination he said (for the first time) that two guns were pointed at his head. He therefore did as he was told. The West Africans paid for his trip to Hong Kong. His instructions were that when he arrived in Guangzhou, he should find himself a hotel, call a number in Mumbai to give the name of the hotel he was staying at, and someone would be sent to collect the goods from him. Issues at Trial The Applicant was represented at trial. The issues were whether he knew the contents of the pellets and whether he was acting under duress. Conviction The Applicant was found guilty by a unanimous verdict. The judge took a starting point of 20 years imprisonment in view of the quantity of drugs involved and added 1 year to reflect the international element involved in the offence, making a total term of 21 years.
Application for leave to appeal On 3 June 2009 the Applicant applied for leave to appeal against sentence. A typewritten document and a handwritten document accompanied his Form XI. In the typewritten document headed “PLEAD GUILTY”, he said that when he was in Mumbai he was driven off to a slum where he saw two Indians with guns. He was told that he had to swallow some pellets containing “powder chemical”, that he had to follow instructions otherwise he would be killed and his family would be hurt, and he had no choice but to agree. He said “I plead guilty and beg leniency”. In the handwritten document, he said he had wanted to plead guilty whilst at the magistracy and had given mitigation instructions to his solicitors, but a Chinese man in court asked him to plead not guilty and eventually he pleaded not guilty. On 14 May 2010 the application for leave to appeal against sentence was dismissed by another division of this court (Hartmann JA and Lunn J, now Lunn JA). Nine months later, on 24 February 2011 the Applicant filed a notice for leave to appeal against conviction out of time. In an affirmation he admitted being a drug trafficker and said he had only pleaded not guilty because he was mentally ill. This allegation led to directions being given for an examination of the Applicant’s mental condition by psychiatrists.
Two psychiatric reports were produced which stated that in August 2009 (about 3 months after his conviction), he was referred to hospital for disturbance in his cell but no psychotic symptoms were elicited. He was diagnosed to be suffering from Adjustment Disorder. In December 2009 he was referred to hospital again and psychosis was diagnosed on that occasion. Anti-psychotic medication was prescribed. The psychiatrists were of the opinion that the Applicant was “likely suffering from schizophrenia currently in remission” at the time of their examination. Their opinion was that he was mentally fit to plead and give instructions at the time they examined him, but they were unable to express an opinion for the period from 6 July 2008 (when he was arrested) to 21 May 2009 (when he was sentenced). Ground of appeal The Applicant is now represented by Mr Ross of counsel and the only ground of appeal advanced concerns the judge’s direction to the jury to the effect that the threats would only be valid as a defence of duress if they were of “immediate or almost immediate” harm. It is argued that the judge should have used the word “imminent” or the phrase “close temporal link” as these refer to a longer period in the future. Mr Ross argued that by using the words “immediate or almost immediate”, the judge had excluded the threat of harm to the Applicant’s father, because (on the Applicant’s evidence) he was already in the gang’s hands and the harm to him could be inflicted sometime in the more distant future. Mr Ross also argued that when the judge directed the jury to ask themselves whether the Applicant could have taken evasive action “whether by going to the police or Customs, or in some
other way, such as warning his family by telephone or message of some sort, to ensure their safety ...”, he failed to take into account the position of the father who (on the Applicant’s evidence) had already been kidnapped the year before. Discussion The principles governing the court’s decision whether to grant leave to appeal out of time are well-established. The first relevant factor is the length of delay. As indicated earlier, this application is substantially out of time. There was a period of more than 1½ years between June 2009 (when the Applicant was convicted) and February 2011 (when he applied for leave to appeal against conviction out of time). The longer the delay, the more onerous is the Applicant’s burden to persuade the court to grant him leave out of time (R v Wong Kai Kong [1990] HKC 279, HKSAR v Corredor Medina CACC296/2007). Secondly, the Applicant was well aware of the appeal procedure as he had applied for leave to appeal against sentence within time. It was after that application failed that he sought to apply for leave to appeal against conviction. The reason he has given for the delay was his mental condition. However the psychiatric evidence can only account for at most a period of 4 months (from August to December 2009) when his psychosis was untreated. There was no expert evidence to support his allegation that his mental condition affected his ability to decide whether to lodge an application for leave to appeal against
conviction (in addition to pursuing the application regarding sentence) for the balance of the period of delay. Thirdly, and most importantly, is the consideration whether the ground of appeal is substantial and plainly arguable. In our view, it is not. Regarding the use of the words “immediate or almost immediate”, the judge was clearly tracking the language of Lord Bingham in R v Z [2005] 2 AC 467. Pausing here, it is correct that that part of Lord Bingham’s speech was obiter, but the breadth and depth of the discussion are such that it can be safely taken as the authoritative exposition of the current law regarding the defence of duress and should be preferred to other cases decided prior to that case. Moreover in our view there is no real difference between “imminent” and “almost immediate”. Thus at para 27 of R v Z, Lord Bingham refers to “the requirement that execution of a threat must be reasonably believed to be imminent and immediate if it is to support a plea of duress” and at para 28 he said “it should however be made clear to juries that if the retribution threatened against the defendant or his family ... is not such as he reasonably expects to follow immediately or almost immediately on his failure to comply with the threat, there may be little if any room for doubt that he could have taken evasive action, whether by going to the police or in some other way, to avoid committing the crime with which he is charged”. (Emphasis added). He drew no distinction between the two phrases. As for the term “close temporal link”, in our view that is a less direct way of expressing “imminence” or “immediacy”, and the latter should be preferred when directing a jury.
Nor can we agree with Mr Ross’s argument that by using the words “immediate or almost immediate”, the judge had excluded the threat of harm to the Applicant’s father, because (on the Applicant’s evidence) he was already in the gang’s hands and the harm to him could be inflicted sometime in the more distant future. One would have thought that the threatened harm to the Applicant’s father (who was already being held captive) would be more immediate than that to the Applicant’s wife and children. As for Mr Ross’s last argument, as we understand it, his complaint is that when the judge directed the jury to ask themselves whether the Applicant could have taken evasive action “whether by going to the police or Customs, or in some other way, such as warning his family by telephone or message of some sort, to ensure their safety before going to the authorities”, he failed to take into account the position of the father, who (on the Applicant’s evidence) had been held captive for some time (nearly a year) before the gang made its approach to the Applicant in Mumbai and who the gang threatened to kill if the Applicant did not co-operate. In our view, the “evasive action” meant in R v Z is that of the defendant avoiding the commission of a crime. The availability of such an action is of course directly affected by whether the defendant reasonably expected an immediate or almost immediate threat to life or serious injury to those threatened. In the passage set out in the above paragraph, the learned judge was simply giving examples of “evasive action”, hence the use of words like “some other way, such as ...”. One example of evasive action, which may be pertinent to the father’s position, was going to the police or customs in India, Malaysia or Hong Kong as
rescue efforts might have been made in the time lag before the gang expected to hear from the Applicant after checking into a hotel in Guangzhou. Another example of evasive action, which may be pertinent to the wife and children, was warning them by telephone. But these were just examples to explain to the jury what was meant by “evasive action”. The judge did not in any way suggest that the jury should find that the Applicant did in fact have those evasive actions available to him at the relevant time. That was a matter for the jury. The judge made sure that the jury did not lose sight of the Applicant’s allegations about the father’s position. The judge referred to it virtually immediately before handing out a document on the essential features of duress, when he reminded the jury of the Applicant’s evidence that “his father had been kidnapped in Kenya in August 2007 and was in the hands of the same syndicate or gang who were forcing him, in Mumbai, to swallow the packets and that his father would be killed if he did not co-operate and would be released if he did”. The judge referred to the father again when he recounted the Applicant’s evidence-in-chief “about his father’s kidnap, or hijack as it was put, in August 2007 by some people. He suggested that these were from the same group as those he had met in India. There was an agreement for his father’s release if he co-operated but, he said, his father would be killed, or so he believed, if he did not co-operate”. The judge referred to the father again when he recounted the Applicant’s cross-examination when he said the Applicant “reaffirmed that he was protecting his father ...”.
In the circumstances discussed above, we do not consider that there are any merits in the intended appeal and we would dismiss the application for leave to appeal against conviction out of time. (MARIA YUEN) Justice of Appeal (JUDIANNA BARNES) Judge of the Court of First Instance (IAN McWALTERS) Judge of the Court of First Instance   Mr Phillip Ross, instructed by Christine M. Koo & Ip, assigned by the Director of Legal Aid, for the Applicant Ms Catherine Ko, ADPP (Ag.) of Department of Justice, for the Respondent
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CACC 42/2012
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
CRIMINAL APPEAL NO. 42 OF 2012
(ON APPEAL FROM HCCC NO. 40 OF 2010)
BETWEEN
Before : Hon Stock VP, Lunn JA and Barnes J in Court
Date of Hearing : 18 June and 28 August 2013
Date of Judgment : 25 October 2013
________________
J U D G M E N T
________________
Hon Lunn JA (giving the Judgment of the Court):
The applicant sought leave to appeal against her conviction after trial by Deputy High Court Judge Andrew Chan , as he was then and a jury on 17 January 2012 of 14 counts of fraud, contrary to section 16A of the Theft Ordinance, Cap. 210 and the sentences of imprisonment imposed upon her in consequence, to a total of 7 years and 3 months imprisonment.
The Counts
Each of the counts alleged that the applicant, together with Hui Po Keung and Leung Chi Keung, Kenny, committed fraud on the respective banks on stipulated dates in the overall period 2 January to 9 July 2007. The Particulars of Offence of Count 1 illustrate the nature of the alleged frauds, namely that those persons:
“ … by deceit, namely by falsely representing that the purported or intended sales and purchases of goods mentioned in 21 Ming Fai Production Company Limited invoices were genuine, and with intent to defraud, induced the Standard Chartered Bank (Hong Kong) Limited to accept the said documents as genuine and to pay Ming Fai Production Company Limited, which resulted in benefit of the total sum of $9,805,355 Hong Kong currency to themselves, or in prejudice or a substantial risk of prejudice to the said Standard Chartered Bank (Hong Kong) Limited.”
Background
The applicant, who is the wife of Mr Kenny Leung and the sister-in-law of Mr Hui Po Keung, stood trial together with them in a trial on the same indictment before the same judge in a trial which concluded in June 2011. Whilst her two co-accuseds were convicted of all 14 counts on the indictment the jury was unable to reach a verdict in respect of the applicant. As a result, the applicant was re-tried.
Overview
The 14 counts on the indictment concerned a total of 301 applications that were made on behalf of Cyberspeed Technology Company Limited (“Cyberspeed”) to 14 different banks for invoice financing payments in respect of alleged purchases of computers by Cyberspeed, to a total value of over $153 million, to be made to the vendor, Ming Fai Production Company Limited (“Ming Fai”) in the period in and between January and July 2007. There was no dispute that the banks granted those applications and made payments to that value to the stipulated bank accounts of Ming Fai. When Cyberspeed ceased business in July 2007, a total of over $21.47 million was owed to the various banks under the invoice financing arrangements.
The prosecution case
The fraud
It was the prosecution case that none of the 301 transactions described in the documentation provided in support of the application for invoice financing was concerned with a genuine transaction. That documentation asserted on its face that Cyberspeed had bought computers from Ming Fai, payment in respect of which was to be made through that bank financing. There were no such transactions. The purpose of the arrangement was to provide for funds for Cyberspeed. Hui Po Keung, the applicant’s brother-in-law, was a shareholder and director of Ming Fai and in control of that company.
Shortly after payments were made to Ming Fai by the banks as requested on behalf of Cyberspace, the monies, less a deduction of 0.2% commission of the monetary value received by Ming Fai, were transferred, first to one of three companies controlled by the applicant and her husband Kenny Leung and then to Cyberspeed. Those companies were Sofmap Company Limited (“Sofmap”), Global Gain Properties Limited (“Global Gain”) and Cyberspeed Services Limited (“Cyberspeed Services”). The movement of those monies, reflected in fund flows, was the subject of admitted facts.
The prosecution case against the applicant
The prosecution case against the applicant was that she was not only in name but also in fact the Financial Controller of Cyberspeed. She stated in her tax returns that she occupied that position for the financial years 2004-2005, 2005-2006 and 2006-2007 in which she described receiving salary of $360,000, $450,000 and $720,000 respectively. As the Financial Controller of Cyberspeed, she knew that Ming Fai, her brother-in-law’s decoration company, did not sell computers to Cyberspeed to a value of $153 million in the period of just over six months in the first half of 2007. She knew that there were no goods involved in the transactions in respect of which applications were made to the banks for invoice financing payments to be made to Ming Fai.
It was the prosecution case that the applicant was knowledgeable about invoice financing, having not only signed on applications for the grant of such facilities but also having received explanations about the operations of the facility from bank officers employed by a number of the banks with whom Cyberspeed had such facilities.
The defence case
Although the applicant did not avail herself of her right to give evidence she called her husband, Mr Kenny Leung as a witness in the defence case. He testified they met while the applicant was working at American Express and they married in 1994. In 2002, the applicant had left her employment with American Express and become a housewife. He said that 60 to 70% of the 301 transactions that were the subject of the charges were not genuine transactions. However, he said that the remaining balance concerned genuine sales of computers from Ming Fai to Cyberspeed. He prepared all the invoices and purchase orders on the letterhead of Ming Fai. It was an admitted fact that Mr Kenny Leung signed on all 301 application forms made to the banks for invoice financing. He testified that the applicant played no part in making those applications. Mr Kenny Leung testified that, having been given the security key to the bank accounts of Ming Fai, he transferred the payments made by the banks to Ming Fai in respect of invoice financing, less the 0.2% commission, to one or other of the three companies used as a first step in receiving those monies, which he then transferred to Cyberspeed itself.
Although the applicant held the title of Financial Controller of Cyberspeed, Mr Kenny Leung testified that in reality she did not perform any such duties. She was accorded that title for purposes of window dressing only. He said that although the applicant did attend the offices of Cyberspeed several mornings a week she merely followed arrangements approved by him. Her time was primarily absorbed looking after their young daughter.
GROUNDS OF APPEAL AGAINST CONVICTION
In the grounds of appeal against conviction advanced on behalf of the applicant by Mr Eric Kwok SC it was submitted, in effect, that the applicant had not received a fair trial. Firstly, evidence had been adduced improperly from witnesses called by the prosecution. Counsel for the prosecution had asked leading questions and even cross-examined some of those witnesses. Four former employees of Cyberspeed were stipulated to be the witnesses concerned. Further, that evidence had been accompanied by improper comments made by counsel for the prosecution. Secondly, it was submitted that the judge had interrupted and intervened in the evidence of prosecution witnesses to the extent that he had assumed the role of an advocate in the proceedings. Further, the judge had conducted himself in that manner in the defence case as well, in the evidence adduced from Mr Kenny Leung.
Finally, it was contended that the judge had failed to give the jury proper/adequate directions that they consider each of the 14 counts separately from one another.
A CONSIDERATION OF THE SUBMISSIONS
The four witnesses called in the prosecution case in respect of whom criticisms were made of prosecution counsel for the manner in which their evidence was adduced, namely by leading questions and cross-examination accompanied by improper comments, were identified as Mr Joe Lai Yiu Cho, Mr Danny Ho Kwai Yuen, Ms Ann Ng Mee Lin and Mr Marco Chan Yik Lung. All four of them had been former employees of Cyberspeed and, save for Mr Marco Chan, were colleagues at Super Dragon Technology at the time of their testimony. Mr Joe Lai is the sole proprietor of the latter company. Mr Danny Ho is the brother of the applicant. The court has been provided with a transcript of the testimony of all four witnesses.
Unsurprisingly, a considerable amount of evidence was adduced in evidence-in-chief of those witnesses by answers given to leading questions. Broadly speaking, that was done without issue being taken by counsel for the applicant. No doubt, that was because the evidence was not controversial. Where the evidence was controversial, counsel for the applicant objected readily.
An issue in the trial canvassed with some of the four witnesses was the nature of the business conducted at or the use made of premises of Cyberspeed at Kwai Chung, in particular whether or not any wholesale, rather than retail, business in computers was conducted at the premises.
In his evidence in chief, Mr Danny Ho, the warehouse supervisor of Cyberspeed said that nobody manned the Kwai Chung warehouse. He said that it was used, “to keep some laptop computer bags, laptop computer display shelves and miscellaneous items”. He agreed with the leading question that it was, “not a warehouse for computers”. However, he also said that Cyberspeed conducted a wholesale business, albeit that he was not involved himself. In cross-examination, it was asserted to him by counsel on behalf of the applicant that in his witness statement dated 12 November 2007 he had said of the Kwai Chung premises, “its main function was to put company’s goods, to store company’s goods, mostly hand-carry computers”. There followed an interchange with counsel:
“ A. I believe what I said in my witness statement was hand-carry computer bags.
Q. No…do you want to read paragraph 2 of that statement of yours dated 12 November?”
It appears that thereafter the witness was provided with a copy of the statement and he was given an opportunity to read paragraph 2. However, counsel did not return to the issue of whether or not the statement asserted that hand-carry computers were stored at that warehouse, contenting himself with the witness’s agreement that he only visited the Kwai Chung warehouse rarely and that the items stored there were not his responsibility. He agreed that the wholesale side of the business was carried on by Mr Kenny Leung and that he was not involved. Also, Mr Danny Ho agreed with a series of leading questions asked at the end of cross-examination to the effect that his sister, the applicant, was not responsible for the day-to-day management of either the retail or wholesale business of Cyberspeed, its sales or purchases or negotiations with suppliers, customers or bankers.
Re-examination by counsel for the prosecution began with a wholly unacceptable sarcastic comment:
“ Now, since you were so observant of the management of Cyberspeed Technology…
Mr Chang: I object to that question.
Q. That is the sum total of your answer ..
Mr Chang: That is comment.
COURT: You can skip the first sentence, yes.
Mr Iu: All right.”
Next, Mr Danny Ho said that Mr Kenny Leung was responsible for looking after the stock of the wholesale business. That evidence produced a barrage of hostile questions from counsel for the prosecution:
“ Why? What was the reason as you saw it? Why was it that you were required to look after the stocks for retail and he did not employ anybody to look after the stocks for wholesale but he would look after it personally?”
In the absence of the jury, the judge overruled counsel for the applicant’s objection that counsel for the prosecution was cross-examining his own witness. Counsel for the prosecution continued his line of questioning before the jury:
“ Q. …I was dealing with the stocks for the wholesale. You said there was wholesale. Now, you said Kenny Leung looked after the stocks himself.
Yes
Q. Now, you said he was a very busy man, right?
A. Yes.
Q. Right. Now, in the warehouse, that was yourself and three other staff.
A. Yes.
Q. Can you think of any reason why Kenny Leung would not appoint one of the four of you to help him or engage another person…
Mr Chang: I object to that question. It amounts to cross-examination of his own witness.
COURT: Allow. Thank you
Q. Can you think of any reason why he wouldn’t employ another one or delegate it to you or one of the four of you to do that?
A. I don’t know.”
Counsel for the prosecution questioned the witness in a similar vein in respect of the role of the applicant in the company:
“ Q. Did you know that your sister signed cheques for Cyberspeed Technology?
No, I don’t know.
Q. I see. You don’t know. Did you know that your sister is one of the signatories to the Cyberspeed cheque accounts?
A. No, I don’t know.
Q. Do you know that your sister employed people, employed staff working for Cyberspeed Technology? Did you know that?
A. I don’t know either.
Q. You don’t know. I see. Did you know that the office staff would turn to her when there was an accounting problem? Did you know that?
Mr Chang: That’s a leading question, putting words into the witnesses mouth, and I apologise.
Mr Iu: I’ll rephrase it. Alright. There’s no argument.”
That pattern of posing leading questions to the witness had been employed by counsel for the prosecution, without objection, in eliciting evidence-in-chief from the witness in respect of the applicant:
“ Q. Did you know that she was officially the Financial Controller of Cyberspeed Technology at Hua Chiao?
I don’t know.
Q. Did you know that she looked after the accounts or the accounting matters of Cyberspeed Technology at Hua Chiao?
A. I don’t know.”
Although counsel for the prosecution was deflected in pursuing that pattern of impermissible questioning on that occasion, it was soon resumed:
“ Q. ...Did you know that bankers sometimes came to the offices of Cyberspeed Technology and would speak to Kenny Leung? Did you know that?
A. Yes, I know.
Q. Did you know that sometimes Wendy, sister Wendy also took part in those discussions?
Mr Chang: I object to that question, and that is not in accordance with the material on hand, and that is also a leading question, putting words into the witness’ mouth.
COURT: Thank you. Allow.
Q. Did you know that?
A. I don’t know.
Q. Or vice versa, put it this way, sometimes your sister and your brother-in-law would go to the banks and talk to the bankers, vice versa.
Mr Chang: I object to that again, putting words into the witness’ mouth.
COURT: “Do you know?” That is the question.
Mr Iu: Yes.
Q. Do you know that sometimes your..
COURT: Yes or no?
I don’t know.”
Counsel for the prosecution then embarked on traversing the assertion made by counsel for the applicant to Mr Danny Ho that he had said in an out-of-court statement that the main function of the Kwai Chung warehouse was, “to store company’s goods, mostly hand-carry computers.” He did so by the extraordinary device of simply reading out to Mr Danny Ho passages in another statement made shortly after the statement in respect of which he had been questioned in cross-examination and inviting the witness to confirm that the questions and answers were as read out and that the answers were correct to the best of his recollection at the time the statement was made. No objection was taken and the court did not intervene, notwithstanding the fact that the witness had in effect denied making the statement asserted by counsel for the applicant, who had not persisted in his attempt to have the witness confirm that the statement was inconsistent with his oral testimony. In the result, the assertion by counsel for the applicant to the witness was just that, a bare assertion, not supported by evidence. Nevertheless, counsel for the prosecution embarked in questioning his own witness in re-examination in the following fashion:
“ Q. Could you now look at Question 2 and Answer No. 2 in that statement? Does the question read like this: “Did the company have any other stores for goods in the time it was in business at Hua Chiao Commercial Building, Nathan Road, Mongkok?” That was the question the police asked of you.
A. Yes.
Q. And you answered the police like this: “As far as I know, besides the store at Hua Chiao, the company also leased a store once in an industrial building unit in Lam Tin Street, Kwai Chung, especially for holding parts and notebook computer covers.”
A. Yes.
Q. And then you go on to say this: “However, no notebook computers were kept at the store because it was not manned.” “It was not manned.”
A. Yes.
Q. Lastly, you said, “My workmates and I went to the store to draw stocks only when required.”
A. Yes.
Q. That was your answer.
A. Yes.
Q. Was that a correct answer to the best of your recollection at the time?
A. Yes.
Q. Finally, in the next question, Question No. 3, you were asked this question: “Did the suppliers deliver notebook computers to the store in Kwai Chung?” That was the question put to you.
A. Yes.
Q. And your answer was no.
A. That’s right.
Q. That was a correct answer at the time to the best of your recollection.
A. Yes.”
It is apparent from an interchange between counsel during cross-examination on behalf of the applicant of Mr Joe Lai, the manager of Cyberspeed, which required the intervention of the court, that counsel for the prosecution failed to conduct himself in the manner appropriate to that role:
“ Q. Did you understand Mr Tsoi to be the company’s employee?
A. I am not sure.
Q. He helped Kenny Leung in wholesale business, as you said.
A. Yes, but I don’t know in what way Kenny employed him, the form of recruitment, I don’t know.
Q. His work was delivery, transportation of goods, he’s a driver.
MR IU: No, I think the proper question or the fair question is, “Do you know how he worked?”
MR CHANG: That’s my way of asking.
MR IU: No, it’s not your way of asking.
COURT: Stop.
MR IU: Sorry.”
The context in which the interchange occurred concerned the evidence of Mr Joe Lai as to the business conducted at or the use made of premises of Cyberspeed at Kwai Chung, in particular whether or not any wholesale, rather than retail, business was conducted at the premises. In cross-examination, Mr Joe Lai testified that he had encountered a Mr Tsoi at the Kwai Chung premises and understood that he had something to do with a wholesale business in notebook computers of Mr Kenny Leung.
The question posed by counsel for the applicant was unobjectionable. In any event, it was no business of counsel for the prosecution to formulate the question he wished the witness to be asked. His intervention was uncalled for and rude to boot. It ought never to have happened. Fortunately, decisive judicial intervention brought the matter to a close eliciting a thoroughly merited appropriate apology from counsel for the prosecution.
In re-examination of that witness, counsel for the prosecution re-visited the issue of the operation of a wholesale business at the Kwai Chung warehouse. Again, he did so in a manner inappropriate to questioning a prosecution witness:
“ Q. Now, if the wholesale, as you understood it, that was taking place at Kwai Chung, you know why there was only one staff, Mr Tsoi, doing a.. one-man job?
A. I don’t know why, neither do I know how it was operated.
Q. You told this court in the beginning of your examination that the thrust of the business of Cyberspeed was retail throughout the years. Remember that?
A. Yes.
Q. You stand by that answer?
A. I only dealt with the retail business.
Q. Come on, you’re on the senior management, you work there six, seven years, you know what the business was about, what was the thrust of the business.
Mr Chang: my Lord, I hate to rise again and to object, but I do appreciate if my learned friend will refrain from cross-examining his own witness.
COURT: Thank you. Noted. Allow.
Q. Please.
A. Mainly carry out retail business.”
As counsel for the applicant pointed out in their written submissions there were many other instances in which leading questions were put to prosecution witnesses by counsel for the prosecution in areas in which it was clear there was a dispute between the parties. However, in almost all of those instances no objection was taken on behalf of the applicant. The style of questioning of counsel for the prosecution created a strong impression that he suspected that the sentiments of those witnesses lay in the defence camp. Whilst that approach in a prosecutor is to be deprecated strongly, we are satisfied that in instances, cited earlier, in which impermissible questions were posed of witnesses to which objection was taken those witnesses held firm to their testimony and no damage was done to the defence case. Accordingly, we are satisfied that there is no merit in this ground of appeal.
Judicial interruptions of testimony
Needless to say, there were interventions from time to time from the judge in the course of the testimony of the four prosecution witnesses highlighted on behalf of the applicant. Counsel has not been able to point to any interruption which was in any way inappropriate. By contrast, the judge’s interruption at the end of the examination-in-chief of Mr Kenny Leung was uncalled for and inappropriate.
There was no issue that the documentary and computer records of Cyberspace were not available to the police when they made their investigation. Mr Danny Ho testified that in September 2007, at the request of Mr Kenny Leung, he had arranged for 80 to 100 boxes of documentation to be removed from the offices of Cyberspeed and taken to a 20 tonne lorry in a scrapyard in the New Territories where they were stored. Ms Ann Ng testified that on 18 September 2007 she had accompanied Mr Kenny Leung to that scrapyard in order to retrieve some of that documentation. However, they found no lorry in the scrapyard and were unable to retrieve any documentation. At Mr Kenny Leung’s behest she reported the loss to the police that day. Similarly, there was no dispute that the hard disks on the computers of Cyberspeed were damaged or missing.
In the context of Mr Kenny Leung’s evidence of the movement for storage of the documentary records of Cyberspeed from the company’s offices to the lorry in the scrapyard in the New Territories and the subsequent attempts to retrieve them, the following interchange ensued:
“ COURT: Well, straight to the question, please.
MR CHANG: Yes.
COURT: What happened?
Q. Did you -- did you type out a list of things to be retrieved?
A. Yes.
Q. What documents did you need at that time? Why did you need those documents?
COURT: Why did you need first?
MR CHANG: Yes.
COURT: The restructuring company wished to have those documents. Yes.
A. Yes.
Q. Now, look at page 25 which is the police report dated 18 September, which contained a list of 19 company names in respect of which a documents of lost report was filed.
A. Yes.
COURT: Were those documents really lost? Really?
A. The documents are put away for storage by Danny Ho were lost.
COURT: They were not caused to be lost.
INTERPRETER: Sorry, I don’t understand.
COURT: They [were] not made to disappear. They were genuinely lost.
A. Genuinely lost.
COURT: Thank you. So as the hard disk within the company’s computers. Hard disks.
MR CHANG: Server.
COURT: Hard disk.
MR CHANG: Hard disk.
COURT: Hard disk, within office computer, desktop. You see, we have heard evidence that they were either removed or damaged. Office, Mr Leung. Office. Office computers. Office computers.
A. Now I’m telling you why...
COURT: No. Office computers.
Q. Used in the office.
COURT: The computers used in your office.
Q. Used by Karen Lee, used by Ann Ng, used by you, those computers.
A. Yes.
COURT: Why were those hard disks either damaged or removed?
A. I don’t know. I was not the last person to deal with them. It was engineering staff who dealt with it.
COURT: Can you think of any reason why they would do such things?
A. Maybe apart from contacting me the liquidator, Alvan Liu, also contacted my secretary or the repair staff. Maybe he said if the data will not be used after liquidation the hard disk should be removed because those hardware would be sold later. The data would be lost. So I remember that he talked to me about that then I told him to talk to my secretary who arranged somebody to deal with it. That’s what I remember about this matter.
COURT: Without consulting you? Without asking you to look into what’s inside the hard disk?
A. He did not ask me further.
COURT: You see, at that stage you were still hoping for restructuring or second creditors’ meetings. You know, information inside computer would still be of some assistance to you.
A. It was not at that time. I saw that before the first creditors’ meetings they’d dealt with the computers. Computers were returned from the shops to the of course. They were put together with other computers in the office. I saw them do it before the first creditors’ meeting. Many equipments had already been put in the meeting room.” [Italics added.]
Clearly, the judge evinced an obvious suspicion that the documentary and computer records of Cyberspeed had been deliberately destroyed, the clear inference being that Mr Kenny Leung was directly or indirectly responsible for that happening. In due course, that was the suggestion put to Mr Kenny Leung in cross-examination by counsel for the prosecution. At that time, the judge returned to the issue asking the witness:
“So the destruction of hard disc, the disappearance of the server as well as the documents they were simply coincidence?”
In asking Mr Kenny Leung whether the documents had really been lost and in asking him if, in fact, they had been “caused” to be lost, the judge was trespassing onto the remit of counsel for the prosecution. He ought not to have asked those questions. They were questions for counsel for the prosecution.
Clearly, the line of questioning by the judge went primarily to the ambit of Mr Kenny Leung’s admitted criminality. He accepted that he was responsible for practising fraud on each of the 14 banks by presenting them with applications for the grant of invoices financing in respect of sham transactions to the extent of 60 to 70% of the purported transactions with Ming Fai. The questions asked by the judge, put directly in due course by counsel for the prosecution, went to the issue of whether or not Mr Kenny Leung was involved in covering up his crimes by having the relevant company records destroyed. Whilst it was the prosecution case that the applicant was a party to the frauds, it was never suggested that she was in any way a party to the destruction of the relevant company records. There was no evidence of that at all, as is apparent from the judge’s recitation of the evidence relevant to that issue in his summing up.
Insofar as the judge’s questioning might have impacted on the general credibility of Mr Kenny Leung, it is to be noted that not only did he admit in testimony that he had practiced fraud on the 14 banks but also be accepted that in his own trial he had lied in his testimony to the jury in testifying that the transactions were genuine.
In the result, whilst we are satisfied that the judge ought not to have posed the impugned questions, that did not viewed in context of his conduct of the proceedings as a whole constitute a material irregularity.
Separate consideration of each count
In order better to understand the context of the judge’s directions to the jury in respect of the need to consider each count separately, the hearing of 18 June 2013 was adjourned, so that the court could have the benefit of a transcript of the Opening and Closing speeches of counsel for the prosecution at trial and of the Closing speech of counsel for the applicant. It is clear from the speeches that counsel for the prosecution, notwithstanding the fact that there were 14 counts of fraud on the indictment, put its case on the basis that there was one underlying “fraudulent scheme” in which the applicant was a party. It was the prosecution case that the applicant was a party to the arrangement of the banking facilities, in which Ming Fai was named as a supplier of computers to Cyberspeed, pursuant to which the banks provided funding in the applications reflected in the 14 counts, in which Ming Fai was named as a supplier of computers to Cyberspeed. Further, it was contended that the applicant knew that Ming Fai was not a supplier of computers to Cyberspeed. It did not deal in computers at all. On the prosecution case, that obtained throughout in respect of Ming Fai, notwithstanding the fact that none of that behaviour was the subject of charges in the period mid-2004 to December 2006.
There is no dispute that the judge gave the jury the standard direction that they should consider each count on the indictment separately. He said:
“ You must consider the case against and for the defendant on each count separately.”
Then, the judge went on to give the direction envisaged by footnote 5 of Specimen Direction 3 of the Judicial Studies Board’s Specimen Directions, namely:
“ Of course, that does not mean that you must consider each count in isolation from the other counts. There is quite a lot of common ground between the different counts on this indictment, because they cover a course of business dealings in the business over a significant period and there are common features between all these different counts. You are entitled to use your decision in relation to the facts of one count to assist you in reaching a conclusion on the facts of another count.”
At an early stage in his directions to the jury the judge identified as one of the issues between the prosecution and defence:
“ whether the defendant had the necessary knowledge, intention and participation in defrauding the banks.”
Subsequently, the judge gave the jury directions in respect of the issue of joint responsibility:
“ The prosecution case is that the defendant jointly committed the offence with Kenny and Hui Po Keung in all counts. … Where a criminal offence is committed by two or more persons, each of them may play a different part, but if they are in it together as part of a joint plan or agreement to commit it, they are each guilty. The words “plan” and “agreement” do not mean there has to be any formality about it. An agreement to commit an offence may arise out of the course of conduct of two or more people….From their conduct you may be able to infer there is a plan or agreement. An agreement can be inferred from acting together.
The essence of joint responsibility for a criminal offence is that each person shared the intention to commit the offence and took some part in it, however great or small, so as to achieve that aim.
Your approach to this case should therefore be as follows: if you are satisfied that the offence of fraud was committed, and if, looking at the case of the defendant, you are sure that with the intention to commit the offence, she took some part in it, then she is guilty of the offence in question.”
Then, the judge went on to describe to the jury how the prosecution put its case against the applicant:
“ …the defendant, being the financial controller, director and person in charge of the accounting department of Cyberspeed Technology:
knowing that there existed no genuine goods in these 301 transactions;
knowing that false invoices would be used by her husband to obtain invoice financing; and
knowing that false invoices would be relied on by the bank;
took part in applying and signing banking facilities, executing personal guarantees and transferring moneys.” [Italics added.]
Later in the summing up, the judge revisited the twin issues of the applicant’s knowledge of the perpetration of the fraud on the various banks and her acts of participation in the frauds:
“ At the beginning of my summing-up, I have told you the essence of joint responsibility for a criminal offence is that each person shared the intention to commit the offence and took some part in it, however great or small, so as to achieve that aim.
Putting that into the context of this case, it means the prosecution have to make you sure that the defendant, knowing that there existed no genuine goods in these 301 transactions or some of these 301 transactions, knowing that invoices produced to the banks were false and would be relied upon, she took some part in it.”
Of the evidence relevant to those issues, having reminded the jury that the applicant and her husband Mr Kenny Leung were shareholders and directors of all the relevant companies, except Sofmap, the judge said:
“ She could also operate all the corporate bank accounts singly. In addition to that, Wendy also had internet access to Cyberspeed Technology’s bank accounts in DBS and BEA since 2004. She could see all invoice finance transactions, including those of Ming Fai, on the computer screen in respect of the DBS account.
The prosecution say the defendant had knowledge about invoice financing. Between 2004 and 2007, the defendant signed on many, many banking facilities letters, corporate resolutions, authorising the granting of such facilities. The prosecution say after the granting of this invoice finance facilities, Kenny and Wendy started to purchase a large number of properties. The prosecution say by 2007, when Cyberspeed Technology had difficulty in paying their staffs, when Wendy had to move to a smaller house, the fact that the influx of 153 million could not have escaped her attention. Furthermore, the defendant continued to participate in the signing of letters of guarantee and banking facilities letters in 2007, and as late as April 2007. The last banking facilities letter that the defendant put her signature on was the Citic Ka Wah Bank facilities letter. That was done on 24 April 2007.
The prosecution say she was a real financial controller of Cyberspeed Technology. Between 2004 and 2007 the defendant claimed herself to be financial controller on tax returns. It was admitted in paragraph 62 of the Admitted Facts that at different places and times, she held herself out as financial controller.
The prosecution say she was responsible for the accounting department. I mentioned this morning about the bankers’ evidence. I do not want to repeat myself here, but PW19, Mr Man, of Bank of Communication; PW20, Miss Tam, of ICBC; PW29, Mr Lui Man-fai of Fubon; PW22, Mr Leung Ping-shun of DBS; PW31, Mr Li Wai-nin, Edwin, of PT Bank told you all about that, that they all thought that the defendant was responsible for financial matters or accounting matters.
The prosecution say looking from the monetary aspects, Wendy could not be involved only superficially in the company’s financial affairs. These monetary aspects include her interest in properties either personal or corporate, her interest in fixed deposits, her liability in mortgage repayment, her liability in executing unlimited personal guarantees.
The prosecution say the defendant had personal knowledge about Ming Fai’s business nature. Ming Fai was no more than just a decorator for Cyberspeed Technology’s retail shop and office. Ming Fai could not be a supplier of any computer or computer-related accessories to Cyberspeed Technology. She certainly should know the business of her sister’s husband.
The prosecution also say the defendant’s silence when contents of the banking facilities letters were read to her indicate her knowledge throughout. She did not raise any questions to the bankers about Ming Fai.”
There is no dispute that the judge did not condescend to identifying the specific evidence available on each of the counts, contrasting and comparing the evidence on different counts. In respect of the evidence of the applicant’s role in securing and renewing invoice financing facilities with the various banks, as noted above, the judge dealt with matters generally, reminding the jury that:
“ Between 2004 and 2007 the defendant signed on many, many banking facilities letters, corporate resolutions, authorising the granting of such facilities.”
Earlier in the summing up, the judge had reminded the jury of the Admitted Facts, including Exhibit 46, which put into evidence banking documentation in respect of each of the banks alleged to have been defrauded in each of the 14 counts. Those documents included the applications for the grant/renewal of invoice financing bank facilities, together with lists stipulating Cyberspeed’s suppliers. The applicant was a signatory of those documents. Of significance, was the fact that the banks restricted invoice financing to stipulated suppliers. Ming Fai was named as one of their suppliers in the facilities arranged by the applicant with the banks.
The judge summarised the evidence of the banker witnesses who testified in respect of the invoice financing facilities granted by the 14 respective banks:
“ All the bank officers stated generally in their evidence that prior to the granting of the facilities, their banks required Cyberspeed Technology:
to submit a pre-approved list of suppliers;
not in any way related or connected to any of those suppliers;
if such relationship exists, to declare the relationship to the bank and to provide further evidence to substantiate the purchase;
to use the money advanced to finance genuine purchase of goods.”
As noted earlier, the judge reminded the jury that Ming Fai was a business run by her sister’s husband, which provided decoration services, including for Cyberspeed. As such, the issue was how it could be named as a supplier of computers and computer related accessories to Cyberspeed?
The judge made specific reference to the fact that the invoice financing facility with the Citic Ka Wah Bank, stipulating Ming Fai as a supplier, had been renewed by the applicant in April 2007. Of course, that was in the middle of the period stipulated in the counts on the indictment in which the offences were alleged to have been committed. However, the invoice financing facilities arranged with other banks had been granted prior to January 2007.
It follows that in identifying the three issues of knowledge said to be relevant to the applicant’s acts in applying for and signing bank facilities, namely knowing that “there existed no genuine goods in the 301 transactions” the judge was putting the cart before the horse. The bank facilities, save for Citic Ka Wah Bank, had been obtained before the impugned 301 transactions the subject of the counts. Clearly, the gravamen of the prosecution case was that the applicant secured the banking facilities naming Ming Fai as a supplier of computers knowing that not to be the case. Rather, she knew and intended that, as when required by their mutual cash-flow needs, her husband, Kenny Leung, would avail himself of that facility to obtain financing in respect of Ming Fai invoices.
Of the evidence of the limits of the applicant’s participation in the execution of the frauds, the judge reminded the jury of the defence case:
“ The defence say between January 2007 and July 2007, she only signed 70 cheques out of 283 cheques issued by Cyberspeed Technology through five of the 14 lending banks. She did not sign on any of the 301 invoice finance applications. Her only involvement in these 301 transactions was signing on five cheques transferring 2.85 million out of a total of 153 million. You can do your calculation yourself. I did mine briefly: 2.85 out of 153. She drew salary because she needed to, otherwise the creditworthiness as a guarantor would be called into question. The salary given to her was no more than using for mortgage repayment.
The defence say that the defendant may have knowledge about banking facilities, may have knowledge about invoice financing, or may have knowledge about Ming Fai, that, however, did not mean the defendant had the necessary knowledge of and involvement in, Kenny’s fraudulent scheme.”
Notwithstanding the judge’s inaccuracy, save in respect of the Citic Ka Wah Bank’s invoice financing facility, in stating that the applicant had signed bank invoice financing facilities knowing that there were no genuine goods in the 301 transactions, we are satisfied that it was readily apparent from the banking documentation before the jury that all the other banking facilities were granted before any of the 301 transactions. More accurately stated, the issue was whether she had done that knowing that any application for invoice financing in respect of Ming Fai, rather than the 301 transactions it turned out to be, would not involve genuine goods and would be false. We are satisfied that was obvious to the jury.
As was made clear to the jury, the primary issue was the applicant’s knowledge of the falsity of the stipulation in the information supplied by her to the banks in respect of invoice finance facilities that Ming Fai was a supplier of computers to Cyberspeed. If the applicant knew that to be false, what was the purpose of Ming Fai being so stipulated? As the judge had directed the jury, the issue was whether the applicant was a party in a joint enterprise with her husband and her brother-in-law where that had been her role, whereas it was her husband’s role to apply for the invoice financing funds in each purported transaction in which Ming Fai was the named beneficiary, as particularised in the counts in the indictment. At issue, was whether when she applied for the bank invoice financing facilities from the 14 banks she knew and intended that, as and when required by their mutual cash-flow needs, her husband, Kenny Leung, would avail himself of that facility to obtain funds in respect of Ming Fai invoices.
We are satisfied that that the summing up overall identified those issues and posed the appropriate questions for the jury.
Conclusion
Having regard to the matters addressed in paragraphs 26 to 31 of this judgment. We grant the application for leave to appeal against conviction but, treating the hearing of the application as the hearing of the appeal, we dismiss the appeal against conviction.
SENTENCE
Reasons for sentence
In imposing sentence on the applicant, the judge acknowledged that her husband, Mr Kenny Leung was the “mastermind” behind the fraudulent scheme, in which he had made false invoices and purchase orders which he produced to banks in order to obtain invoice finance loans. He found that he had done so, “to save you and your husband’s ailing computer business and to ease the financial difficulty”. Of the applicant’s role, the judge to determine that she had assisted her husband:
“ in applying for banking facilities, signing on banking facility letters, company resolutions, exercising deeds of guarantee and transferring moneys.”
The judge said that the seriousness in the commission of these offences lay, first of all, in the fact that invoice financing requires a relationship of trust between the applicants for finance and the banks. He noted that that relationship of trust is vulnerable to the use of false documents. He said that the factors identified by the courts in cases involving letters of credit fraud of banks as relevant to sentence were relevant to sentence in this case. He identified the relevant factors stipulated in the judgment of this court in HKSAR v Dai Chi Wai as being, “the amount of the loans, the number of banks, the period, the role of each defendant and the actual loss to the bank”.
The judge noted that in HKSAR v Law Chi-man, Kenneth this court had determined that a total sentence of 6 years’ imprisonment imposed on the appellant after trial in respect of three charges, two of conspiracy to fraud and one of fraud of three separate banks, involving total loans of $15.6 million and the loss of $9.8 million was not excessive.
As Stock JA, as he was then, noted in the judgment of the court the applicant was not the prime mover behind the offences. The three charges involved loans of $4.5 million, $3.6 million and $7.5 million of which the respective losses were $2.5 million, $1.8 million and $5.5 million. The court quashed sentences of 6 years’ imprisonment imposed in respect of each of the charges and substituted sentences of 4 years’ imprisonment. However, it ordered that two years of sentence of imprisonment imposed in respect of Charge 3 be served consecutively to the sentences of imprisonment imposed in respect of the other charges. Accordingly, the total sentence of imprisonment imposed on the appellant remained 6 years’ imprisonment.
Finally, the judge referred to the judgment of this court in the HKSAR v Lee Kwok Yun & Others. He noted that this court determined appropriate a total sentence of 6 years’ imprisonment imposed upon the applicant after he had pleaded guilty. There, the applicant pleaded guilty to 18 counts of false accounting, concerning letters of credit related to goods which did not exist in which the banks sustained a total loss of US$11.4 million.
Of the circumstances of the commission of this case, the judge noted that the loans obtained from the banks in total amounted to $153 million, with an outstanding loss of $21.4 million. Further, that those monies have been obtained by way of 301 applications in a period of just over six months. He noted that Citic Ka Wah Bank suffered a loss of $6.8 million having advanced a total of $17.5 million (Count 3), whereas Industrial and Commercial Bank of China sustained a loss of $6.4 million having advanced a total of $25.7 million (Count 9).
Sentence
In sentencing the applicant, the judge acknowledged that the applicant had played a “slightly lesser role” and imposed sentences of 4 years’ imprisonment in respect of each of Counts 3 and 9 and three years’ imprisonment in respect of each of the other 12 counts. Then, the judge ordered that 3 months’ imprisonment imposed in respect of counts 1 to 8 and counts 10 to 14 be served consecutively to the sentence of imprisonment imposed in respect of Count 9. Accordingly, the total sentence of imprisonment imposed upon the applicant was 7 years and 3 months.
GROUNDS OF APPEAL AGAINST SENTENCE
Mr Kwok submitted that the overall sentence of 7 years and 3 months’ imprisonment imposed upon the applicant was manifestly excessive. He suggested that the judge had placed inadequate weight on mitigating factors, including:
the applicant had committed the offences because her husband’s business had encountered financial difficulties and her role culpability was less than that of her husband; and
the loss suffered by the banks of around $21 million was far less than the aggregate amount of loans obtained.
Next, it was submitted that the judge erred in sentencing the applicant to 4 years’ imprisonment in respect of counts 3 and 9, given that the respective losses were $6.4 million and $6.8 million. Further, given that 6 out of the 12 banks involved in the other counts sustained no loss at all and the largest loss was only $3.2 million, the sentences of 3 years’ imprisonment imposed in respect of the other counts was excessive.
A CONSIDERATION OF THE SUBMISSIONS
In HKSAR v Hui Po Keung and Leung Chi Keung, Kenny this court, differently constituted, was concerned, inter-alia, with the sentences of imprisonment imposed by the judge upon the applicant’s husband and her brother-in-law after their convictions in the first trial, of the offences of which the applicant was convicted in the re-trial. Determining Kenny Leung to have been the “mastermind” of the fraudulent scheme and Hui Po Keung to have played a lesser role the judge had imposed a total sentence of 8 years and 3 months’ imprisonment on the former and 7 years and 3 months’ imprisonment on the latter. Having regard to the aggravating features of the commission of the offences the subject of Counts 3 and 9, the judge sentenced Kenny Leung and Hui Po Keung to 5 years and 4 years’ imprisonment respectively for each count. For the other 12 counts, the judge sentenced Kenny Leung to 3 years’ imprisonment on each count and Hui Po Keung to 2 years’ imprisonment on each count.
Mr Kwok, who appeared in that appeal for Hui Po Keung, advanced arguments, some of which are similar to those advanced on behalf of the applicant in this case. The court rejected the submission that the sentences imposed in respect of Counts 3 and 9 were excessive, noting:
“ In Count 3, no fewer than 46 false applications were made to the Industrial and Commercial Bank of China over the period 2 January to 6 July 2007 resulting in total loans of $25,721,989, of which $6,443,718 was lost to the bank. In Count 9, no fewer than 33 false applications were made to Citic Ka Wah Bank over the period 11 January to 5 July 2007 resulting in total loans of $17,518,242, of which $6,804,251 was lost to the bank.”
However, the court did accept that there was merit in the submission that in imposing the same sentences for each of the counts, other than Count 3 and Count 9, the judge failed to reflect appropriately the different aggravating factors obtaining in the commission of the offences. Of Count 4, the court noted that it concerned only three applications in the period 3 to 12 January 2007, as a result of which only $1,572,020 was lent, but nothing lost to the bank. In the result, the court quashed the sentences imposed on that count and substituted sentences of 3 years’ imprisonment for Kenny Leung and 2 years imprisonment for Hui Po Keung.
Having regard to the fact that, “not only was the 2nd applicant the mastermind of the fraudulent scheme but also its primary beneficiary” and noting the extent and duration of the fraudulent scheme and the loss to the banks, the court determined that the sentence imposed on Kenny Leung was “entirely appropriate”. By contrast, the court concluded that, having regard to the different roles and the benefits received, the sentence imposed on Hui Po Keung was excessive. The court quashed the order that 3 months of each of the sentences imposed in respect of Counts 4, 6 to 9 be served consecutively to the sentence of 4 years’ imprisonment imposed in respect of count 9. In the result, the total sentence of imprisonment imposed upon Hui Po Keung was 6 years.
We are satisfied that the applicant’s culpability fell between the culpability of her husband, Kenny Leung, and that of her brother-in-law, Hui Po Keung. The latter’s benefit from his participation in the fraudulent scheme was only 0.2% of the $153 million obtained from the banks. By contrast, the applicant and Kenny Leung shared the benefits flowing from the frauds. Further, we are satisfied that the total sentence of 7 years and 3 months’ imprisonment imposed upon the applicant was entirely appropriate.
Conclusion
For the reasons set out earlier, we allow the application for leave to appeal against sentence and, treating the hearing of the application as the hearing of the appeal, allow the appeal in respect of Count 4, which sentence we quash imposing in its place a sentence of 2 years’ imprisonment. We do not disturb any of the other orders. Accordingly, the total sentence of imprisonment imposed on the applicant is 7 years and 3 months.
Mr David Leung, DDPP(Ag) and Mr Felix Tam, PP, of the Department of Justice, for the respondent
Mr Eric T M Kwok, SC and Mr Tony C Y Li, instructed by Cham & Co, for the applicant

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CACV 441/2019
[2020] HKCA 649
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
CIVIL APPEAL NO 441 OF 2019
(ON APPEAL FROM HCAL NO 2619 OF 2018)
_____________________
BETWEEN
_____________________
Before: Hon Yuen, Au JJA and Lisa Wong J in Court
Date of Written Submissions: 22 June 2020
Date of Judgment: 6 August 2020
___________________
J U D G M E N T
___________________
Hon Yuen JA (giving the Judgment of the Court):
This court (Hon Yuen JA and Lisa Wong J) handed down judgment on 28 May 2020 ([2020] HKCA 370) dismissing the applicant’s appeal from an order of DHCJ K.W. Lung given on 16 September 2019 refusing her application for leave to apply for judicial review concerning her non-refoulement claim. The facts and issues in the appeal before the Court of Appeal, as well as the court’s reasons for dismissing it, are set out in our judgment and will not be repeated here.
The applicant subsequently applied, by a Notice of Motion on 9 June 2020, for leave to appeal to the Court of Final Appeal.
On 10 June 2020, the Registrar of Civil Appeals directed that the applicant shall lodge her written submissions on or before 23 June 2020, and the Notice of Motion shall be determined on paper only without an oral hearing. The applicant lodged her written submissions on 22 June 2020. We agree it is appropriate to determine this application on paper.
The applicant only stated the following in her Notice of Motion:
“1. In my appeal judgment the assessor did not consider my fear that why I would not return to my country of origin because of fully political dispute against current regime in my country, my claim is fully political conflict but not private dispute, for which my life would be at danger upon refoulement.
2. The assessment of my claim, the assessor gave their decision on based on paper, lack of inquiry about country of conditions, and did not [properly] consider under BOR 3 risk.” (sic)
In the applicant’s submissions, she mainly repeated her arguments which had been assessed by the Judge and this court in detail. She did not address the reasons in this court’s judgment at all.
Section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance (Cap. 484) provides that leave to appeal to the Court of Final Appeal may be granted at the discretion of the Court of Appeal or the Court of Final Appeal if the question involves great general or public importance or otherwise ought to be determined by the Court of Final Appeal.
No question of great general or public importance has been identified in the Notice of Motion.
Nor do we see any basis for granting leave on the “or otherwise” limb under section 22(1)(b).
By reason of the above, the Notice of Motion dated 9 June 2020 is dismissed.
The applicant, unrepresented, acting in person.

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{
"Date": "6 Aug, 2020",
"Action No.": "CACV441/2019",
"Neutral Cit.": "[2020] HKCA 649",
"case_title": "AKTHER MOSAMMAT FATEMA V. TORTURE CLAIMS APPEAL BOARD / NON-REFOULEMENT CLAIMS PETITION OFFICE AND ANOTHER",
"page_title": "AKTHER MOSAMMAT FATEMA V. TORTURE CLAIMS APPEAL BOARD / NON-REFOULEMENT CLAIMS PETITION OFFICE AND ANOTHER | [2020] HKCA 649 | HKLII",
"case_history": [],
"appeal_history": [
{
"name": "CACV441/2019",
"link": "https://www.hklii.hk/en/appealhistory/CACV/2019/441"
}
],
"case_url": "https://www.hklii.hk/en/cases/hkca/2020/649",
"neutral_cit": "[2020] HKCA 649",
"court_code": "HKCA",
"content": "CACV441A/2019 AKTHER MOSAMMAT FATEMA v. TORTURE CLAIMS APPEAL BOARD / NON-REFOULEMENT CLAIMS PETITION OFFICE AND ANOTHER\nCACV 441/2019\n[2020] HKCA 649\nIN THE HIGH COURT OF THE\nHONG KONG SPECIAL ADMINISTRATIVE REGION\nCOURT OF APPEAL\nCIVIL APPEAL NO 441 OF 2019\n(ON APPEAL FROM HCAL NO 2619 OF 2018)\n_____________________\nBETWEEN\nAKTHER MOSAMMAT FATEMA\nApplicant\n(Appellant)\nand\nTORTURE CLAIMS APPEAL BOARD / NON-REFOULEMENT CLAIMS PETITION OFFICE\n1\nst\nPutative Respondent\nand\nTHE DIRECTOR OF IMMIGRATION\n2\nnd\nPutative Respondent\n_____________________\nBefore: Hon Yuen, Au JJA and Lisa Wong J in Court\nDate of Written Submissions: 22 June 2020\nDate of Judgment: 6 August 2020\n___________________\nJ U D G M E N T\n___________________\nHon Yuen JA (giving the Judgment of the Court):\n1.\nThis court (Hon Yuen JA and Lisa Wong J) handed down judgment on 28 May 2020 (\n[2020] HKCA 370\n) dismissing the applicant’s appeal from an order of DHCJ K.W. Lung given on 16 September 2019 refusing her application for leave to apply for judicial review concerning her non-refoulement claim. The facts and issues in the appeal before the Court of Appeal, as well as the court’s reasons for dismissing it, are set out in our judgment and will not be repeated here.\n2.\nThe applicant subsequently applied, by a Notice of Motion on 9 June 2020, for leave to appeal to the Court of Final Appeal.\n3.\nOn 10 June 2020, the Registrar of Civil Appeals directed that the applicant shall lodge her written submissions on or before 23 June 2020, and the Notice of Motion shall be determined on paper only without an oral hearing. The applicant lodged her written submissions on 22 June 2020. We agree it is appropriate to determine this application on paper.\n4.\nThe applicant only stated the following in her Notice of Motion:\n“1. In my appeal judgment the assessor did not consider my fear that why I would not return to my country of origin because of fully political dispute against current regime in my country, my claim is fully political conflict but not private dispute, for which my life would be at danger upon refoulement.\n2. The assessment of my claim, the assessor gave their decision on based on paper, lack of inquiry about country of conditions, and did not [properly] consider under BOR 3 risk.” (\nsic\n)\n5.\nIn the applicant’s submissions, she mainly repeated her arguments which had been assessed by the Judge and this court in detail. She did not address the reasons in this court’s judgment at all.\n6.\nSection 22\n(1)(b) of the\nHong Kong Court of Final Appeal Ordinance\n(\nCap. 484\n) provides that leave to appeal to the Court of Final Appeal may be granted at the discretion of the Court of Appeal or the Court of Final Appeal if the question involves great general or public importance or otherwise ought to be determined by the Court of Final Appeal.\n7.\nNo question of great general or public importance has been identified in the Notice of Motion.\n8.\nNor do we see any basis for granting leave on the “or otherwise” limb under section 22(1)(b).\n9.\nBy reason of the above, the Notice of Motion dated 9 June 2020 is dismissed.\n(Maria Yuen)\n(Thomas Au)\n(Lisa Wong)\nJustice of Appeal\nJustice of Appeal\nJudge of the Court of First Instance\nThe applicant, unrepresented, acting in person.",
"attachments": [
{
"download_url": "https://legalref.judiciary.hk/doc/judg/word/vetted/other/en/2019/CACV000441A_2019.docx",
"file_name": "CACV000441A_2019.docx",
"file_ext": ".docx",
"status": "success"
}
]
}

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FAMC No. 2 of 2007
IN THE COURT OF FINAL APPEAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MISCELLANEOUS PROCEEDINGS NO. 2 OF 2007 (CRIMINAL)
(ON APPLICATION FOR LEAVE TO APPEAL
FROM CACC NO. 26 OF 2006)
_____________________
Between:
_____________________
Mr Justice Bokhary PJ:
The Court of Appeal’s judgment leaves the applicant with two convictions. One is of conspiracy to defraud (under Charge 2), and the other is of conspiracy to pervert the course of public justice (under Charge 3). The Court of Appeal certified the applicant’s first point, which is her point to the effect that the elements of the offence of conspiracy to defraud are insufficiently precise to satisfy the constitutional requirement of legal certainty. They refused to certify her remaining four points, namely points 2 to 5 which are the ones identified by these questions :
(2) Whether it is sufficient for the admission against A of evidence of acts and declarations by B in furtherance of a conspiracy, that there is prima facie proof that A has agreed with B to be party to that conspiracy.
(3) Whether it is necessary for a judge to direct himself in terms of the dangers of relying on the acts and declarations of co-conspirators where the person against whom the evidence has been admitted has no effective opportunity to cross examine in relation to that evidence.
(4) Whether on appeal from a professional judge, an appellate court is in law entitled to assume that an element of an offence as charged has been proved (Charge 2) or an important evidential matter has or has not been relied upon (Charge 3) in the absence of an express finding by the trial judge or alternatively notwithstanding an express finding that suggests the contrary.
Whether on appeal from a professional judge, an appellate court shall have regard to the findings of the trial judge and consider the merits of an appeal by reference to a proper construction of those findings.
Shortly stated, the Court of Appeal’s reasons for refusing to certify points 2 to 5 are as follows. The context was so plain and straightforward that nothing turned on point 2. On the Court of Appeal’s view as to what evidence the trial judge had relied upon, point 3 did not arise. Point 4 did not arise because the Court of Appeal took the view that, contrary to the applicant’s contention, the trial judge did make the findings concerned. And point 5 was obvious, did not call for certification and merely went to a complaint that the Court of Appeal had erred in its analysis of the trial judge’s reasoning.
What the applicant now asks to do can be summarised as follows. She asks us to :
grant her leave to appeal for the purpose of pursuing the point certified by the Court of Appeal;
certify points 2 to 4 and grant her leave to appeal for the purpose of pursuing them;
grant her leave to appeal on the “substantial and grave injustice” ground for the purpose of pursuing the substance of the complaint under point 4 if we do not certify that point; and
grant her leave to appeal on the “substantial and grave injustice” ground for the purpose of pursuing complaints that the trial judge had given insufficient reasons, that the Court of Appeal had wrongly resorted to a process of inference to interpret the reasons given by the trial judge and that the Court of Appeal had failed to have regard to certain findings of the trial judge which were relevant to their consideration of whether an inference drawn by the trial judge was warranted.
We think that the Court of Appeal were right in refusing to certify the points which they refused to certify. And we see no basis for leave to appeal in this case on the “substantial and grave injustice” ground.
As for the point which the Court of Appeal certified, we consider it appropriate to grant leave to appeal for the purpose of pursuing it. We extend time and grant the applicant leave to appeal to the Court of Final Appeal for the pursuing the certified point.
This means that the applicant does not have leave to appeal against her conviction for conspiracy to pervert the course of public justice but has leave to appeal against her conviction for conspiracy to defraud, such appeal being limited to the question of whether the elements of the offence of conspiracy to defraud are sufficiently precise to satisfy the constitutional requirement of legal certainty.
Ms Clare Montgomery QC and Ms Po Wing Kay (instructed by Messrs W M Lo & Co.) for the applicant
Mr Kevin P Zervos SC and Ms Winnie Ho (of the Department of Justice) for the respondent

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FACV No. 11 of 2007
IN THE COURT OF FINAL APPEAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
FINAL APPEAL NO. 11 OF 2007 (Civil)
(ON APPEAL FROM CACV No. 44 of 2006)
_______________________
Between:
KENSLAND REALTY LIMITED Plaintiff
(in compulsory liquidation) (Appellant)
- and -
TAI, TANG & CHONG Defendant
(Respondent)
_______________________
Court: Mr Justice Bokhary PJ, Mr Justice Chan PJ,
Mr Justice Ribeiro PJ, Sir Noel Power NPJ and
Mr Justice McHugh NPJ
Date of Hearing: 9 January 2008
Date of Judgment: 7 March 2008
_______________________
J U D G M E N T
_______________________
Mr Justice Bokhary PJ and Sir Noel Power NPJ :
The Court has been shown a number of English decisions on s.14A of the Limitation Act 1980, which is the United Kingdom provision on which s.31 of the Limitation Ordinance, Cap.347, is modelled. We do not consider an exhaustive discussion of those decisions essential to the disposal of this relatively straightforward appeal. This is not to say that we have any quarrel with any of those decisions. Indeed we consider them helpful. Mr John Scott SC for Kensland has submitted that those decisions, or at least some of them, have put a gloss on the legislation concerned. As to that, we would say this.
Purposive construction …
Statutes of limitation seek to provide potential defendants with a measure of repose. They seek to do that without unduly curtailing the right of would-be plaintiffs to pursue their claims. So they always involve striking a balance between competing interests. The balance struck by way of any given limitation provision would reflect a legislative policy. We would not rule out the possibility of a limitation provision that is open to a constitutional challenge, for example, because it so favours defendants as to fall foul of the access to the courts clause of art.35 of the Basic Law. But subject to that possibility, which is always remote and certainly does not arise in the present case, there can be no doubt as to the judiciary’s duty when a limitation provision calls for construction. That duty is to construe such provision so as to promote its underlying legislative policy. Construing a provision of course involves more than reciting its terms. Considerably more is often needed, especially where there are substantial difficulties to be resolved in a purposive way. Putting a purposive construction on a provision is not to be equated with putting a gloss on it.
There is nothing unprecedented in the idea of purposive construction aimed at promoting underlying legislative policy. Look at what the Barons of the Exchequer said in Stradling v. Morgan (2 Eliz. I) 1 Plowden 199. They said (at p.205) that “the sages of the law … have ever been guided by the intent of the Legislature, which they have always taken according to the necessity of the matter, and according to that which is consonant to reason and good discretion”. The phraseology may be dated, but the idea is there. Then there is the statement which Chief Justice Abbott famously made in R v. Hall (1822) 1 B & C 123 at p.136 when giving the judgment of the Court of King’s Bench. He said that the meaning of a statutory provision “is to be found not so much in a strict etymological propriety of language, nor even in popular use, as in the subject or occasion, on which they are used, and the object that is intended to be attained”. That statement now bears the imprimatur of the Privy Council, for Lord Romilly MR cited it with approval in The “Lion” (1869) LR 2 PC 525 at p.530 in the course of delivering their Lordships’ advice.
… of statutes of limitation in particular
We move now from the general to the particular. It is well-known that statutes of limitation have been described as statutes of repose. That description was first made famous by Story J in Bell v. Morrison 26 US (1 Peters) 350 (1828) at p.360 when giving the judgment of the United States Supreme Court. It has been repeated in the House of Lords (by Lord Simon of Glaisdale in The Ampthill Peerage Case [1977] AC 547 at p.575H) and in this Court (by Chief Justice Li in Wong Tak Yue v. Kung Kwok Wai No.2 (1997-98) 1 HKCFAR 55 at p.67 D-E). What we wish to draw attention to in particular is Story J’s statement on construction. He said (at p.359) that the construction of a statute of limitation should “proceed upon principles … adapted to carry into effect the real objects of the statute”.
The case of Haward v. Fawcetts [2006] 1 WLR 682 has been made the subject-matter of a case commentary by Ms Janet O’Sullivan. That commentary is to be found in PRFN 2006, 22(2) 127. We will not conceal our admiration for the refreshing candour of Ms O’Sullivan’s observation at p.130 that “the words of the statute may require some bending when dealing with cases of negligent professional advice”. That is of course not to deny the desirability of legislation free from any need of such treatment. Hence the call at the conclusion of the commentary for legislative reform. But such reform is another day and somebody else’s work. Meanwhile the Court has the present case to deal with on current legislation.
Circumstances of the case
Turning to the circumstances of the case at hand, they are shortly stated as follows. On 13 January 2004 Kensland Realty Ltd (“Kensland”), now the appellant, commenced an action against its former solicitors Messrs Tai Tang & Chong (“TTC”), now the respondent. The action is for damages sustained as a result of acting on legal advice tendered to Kensland by TTC, which advice Kensland complains against as negligent. In striking-out proceedings taken out by TTC, the Court of Appeal (Rogers VP and Le Pichon JA) reversed the High Court (Deputy Judge Gill) and dismissed Kensland’s action as time-barred. Kensland now appeals to this Court, seeking the reinstatement of its action.
Kensland had entered into an agreement to sell certain shop premises to a company named Whale View Investment Ltd (“Whale View”). Since Kensland was selling as a confirmor, the agreement not surprisingly provided for payment of the balance of the purchase price by such cashier’s orders or cheques in favour of such persons as Kensland may direct. The agreement provided that completion was to take place between 10:00 am and 1:00 pm on 2 September 1997 and that time was of the essence. Whale View did not tender the balance of the purchase price until six minutes after the 1:00 pm deadline. But there was a question of whether the missing of that deadline was due to Kensland’s lateness in giving Whale View a split payment direction. Nevertheless Kensland treated the missing of the 1:00 pm deadline as a repudiatory breach on Whale View’s part, refused to complete and forfeited Whale View’s deposit of $8.25 million. According to Kensland, it took that course on TCC’s advice that such a course might result in Kensland being sued by Whale View for the return of its deposit but that such a suit’s chances of success would be very low. As it turned out, the suit succeeded. We will come to its details later.
Obviously out of time under s.4
Where negligent advice gives rise to a cause of action, that cause of action accrues when the person who is given such advice acts on it. So the cause of action on which Kensland’s action against TTC is based would have accrued on 2 September 1997. As has been noted, that action was commenced more than six years after that date. Section 4 of the Limitation Ordinance provides that an action founded on simple contract or tort shall not be brought after the expiration of six years from the date on which the cause of action accrued. Obviously therefore Kensland’s action against TTC is out of time under s.4.
Turning to s.31
So the question becomes whether that action was commenced within the time allowed by the ameliorating effect of s.31 of the Limitation Ordinance. This section reads :
“(1) This section applies to any action for damages for negligence, other than one to which section 27 applies, where the earliest date on which the plaintiff or any person in whom the cause of action was vested before him first had both
(a) the knowledge required for bringing an action for damages in respect of the relevant damage; and
(b) a right to bring such an action,
(referred to in this section as the ‘date of knowledge’) falls after the date on which the cause of action accrued.
(2) The period of limitation prescribed by section 4(1) in respect of actions founded on tort shall not apply to an action to which this section applies.
(3) An action to which this section applies shall not be brought after the expiration of the period applicable in accordance with subsection (4).
(4) That period is either –
(a) 6 years from the date on which the cause of action accrued; or
(b) 3 years from the date of knowledge, if that period expires later than the period mentioned in paragraph (a).
(5) In subsection (1) ‘the knowledge required for bringing an action for damages in respect of the relevant damage’ means knowledge –
(a) of such facts about the damage in respect of which damages are claimed as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment;
(b) that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence;
(c) of the identity of the defendant; and
(d) if it is alleged that the act or omission was that of a person other than the defendant, of the identity of that person and the additional facts supporting the bringing of an action against the defendant.
(6) Knowledge that any acts or omissions did or did not, as a matter of law, involve negligence is irrelevant for the purposes of subsection (1).
(7) For the purposes of this section or section 33 a person’s knowledge includes knowledge which he might reasonably have been expected to acquire –
(a) from facts observable or ascertainable by him; or
(b) from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek,
but a person shall not be taken by virtue of this subsection or section 33 to have knowledge of a fact ascertainable only with the help of expert advice so long as he has taken all reasonable steps to obtain (and, where appropriate, to act on) that advice.”
Reverting to the circumstances of the case
We now revert to the circumstances of the case. Relevant to the question of whether Kensland’s action against TCC is within time under s.31, this is what happened in consequence of Kensland’s refusal to complete. On the day following such refusal, Whale View took two steps. One was the commencement of an action against Kensland by a writ endorsed with a claim for, among other relief, specific performance and damages in addition to or in lieu of specific performance. The other was the registration of that action as a lis pendens (pending action) against the shop premises concerned, which step would so deter other purchasers as to block any attempt that Kensland might make to sell those premises to someone else.
Initially Whale View’s sought specific performance. But after the property market fell, as it had by November 1997, Whale View sought instead the return of its deposit and damages representing the profit which it would have made if the sale and purchase had been completed and it had then on-sold the shop premises within a few weeks of completion on 2 September 1997.
Whale View’s action against Kensland proceeded to trial in the High Court. It was dismissed by the High Court on 5 April 2000. The matter then went on appeal to the Court of Appeal, and that appeal succeeded. On 23 January 2001 the Court of Appeal entered judgment for Whale View against Kensland in the sum of $16.25 million (made up of a returned deposit of $8.25 million and damages of $8 million) with interest at the rate of 10.5% from the issue of the writ until the Court of Appeal’s judgment and with the costs of the action and of that appeal. Kensland then appealed to this Court. On 10 December 2001 this Court (by a judgment now reported at (2001) 4 HKCFAR 381) dismissed that appeal with costs nisi.
By 14 November 1997 if not before, Kensland realised that the fall in the property market had resulted in the shop premises becoming worth much less than the $55 million for which it had agreed to sell and Whale View had agreed to purchase those premises. That is attested by the fact that on that day Kensland sought counsel’s advice on whether it could successfully reverse course so as to hold Whale View to that sale and purchase by admitting Whale View’s claim.
It is also to be noted that by November 1997 Kensland had already been billed for $78,300 by way of costs incurred in defending Whale View action up to that time.
Knowledge
One sees the reference in s.31(1)(a) to “the knowledge required for bringing an action in respect of the relevant damage”. And one sees what s.31(5)(a) to (d) say as to what such knowledge means. Mr Scott submits that Kensland did not have such knowledge until this Court gave judgment on 10 December 2001 affirming the Court of Appeal’s decision to enter judgment for Whale View. Alternatively, Mr Scott submits that Kensland did not have such knowledge until, at the earliest, the Court of Appeal entered judgment for Whale View on 23 January 2001. For the reasons which we are about to state, we are unable to accept either of those submissions.
Among the decisions on s.14A of the Limitation Act 1980 which this Court was shown is that of the House of Lords in Haward v. Fawcetts (the case the subject-matter of the case commentary which we referred to earlier). It was a case of allegedly negligent advice. The advice was that of an accountant in reliance on which the claimant had acquired a controlling interest in a company. And the House of Lords was concerned with the question of knowledge in the s.14A sense on the part of the claimant. In regard to the degree of certainty required, Lord Nicholls of Birkenhead endorsed the guidance given by Lord Donaldson of Lymington MR in Halford v. Brookes [1991] 1 WLR 428 at p.443. Doing that, Lord Nicholls said (in para.9) that “knowledge … means knowing with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice, and collecting evidence”.
Lord Nicholls then turned to the degree of detail required, noting that questions as to that have mostly arisen in the context of the need for the claimant to know that the damage was attributable in whole or in the part to the act or omission which is alleged to constitute negligence. In para.10 he considered what had been said in Wilkinson v. Ancliff (BLT) Ltd [1986] 1 WLR 1352 at p.1365, Hendy v. Milton Keynes Health Authority [1992] 3 Med LR 114 at pp 117-118, Nash v. Eli Lilly & Co. [1993] 1 WLR 782 at pp 797-799, Spargo v. North Essex District Health Authority [1997] PIQR 235 at p.242 and Broadley v. Guy Clapham & Co. [1994] 4 All ER 439 at p.448. He concluded (in para.11) that “paraphrasing, time does not begin to run against a claimant until he knows that there is a real possibility his damage was caused by the act or omission in question”.
Statutory provisions are typically expressed in general terms which are sometimes far from happily worded. But they always have to be applied with a view to doing practical justice in real life situations. So they often call for construction, and the construction that they receive should be a purposive one. It is in the nature of purposive construction to give practical guidance for the application of a statutory provision according to its true meaning and effect. Giving such guidance is, in our view, precisely what Lord Nicholls did in Haward v. Fawcetts.
As to the language of our s.31 (modelled on the legislation with which the House of Lords was there concerned), one sees what subsection (5) says “knowledge” means. One sees what subsection (6) says about the irrelevance of knowledge that any acts or omission involve negligence. And one sees what subsection (7) says about knowledge which a person might reasonably have been expected to acquire. Lord Nicholls’s approach is, we think, amply accommodated by the language of the legislation read as a whole, in context and purposively.
Facts known and the knowledge to which they amounted
By the end of November 1997 Kensland obviously knew that acting on TTC’s advice had (i) prevented it from on-selling the shop premises quickly, (ii) exposed it to the drop in value which those premises had undergone, (iii) involved it in already considerable costs and (iv) left it facing a substantial and triable claim.
Knowing those facts must amount at least to knowing that there was a real possibility that it had suffered damage caused by TTC’s advice on which it had acted.
Although the agreement for sale and purchase provided for completion “between the hours of 10:00 am and 1:00 pm”, the correct split payment direction was not given until 11:48 am. And when it was eventually given, it was for nine cheques and complying with it involved eight cheques and two cashier’s orders. On Kensland’s case, the only thing which TTC warned that Whale View might sue for was the return of its deposit. There was no warning that TTC might sue for specific performance and damages in addition to or in lieu of specific performance. Nor was there any warning that Whale View might register its action as a lis pendens against the shop premises, effectively preventing Kensland from on-selling those premises to someone else. And, despite the lateness of the split payment direction, TTC advised that a suit by Whale View would have no more than a very low chance of success.
Those omissions were highly material in themselves. Moreover there was another dimension to them. As soon as it appeared that there was much advice that should have been given but had been omitted, it became natural to wonder about the accuracy of such advice as had been given. Rather like the thirteenth stroke of the clock that falsifies all that went before, the omissions called into question the accuracy of the advice which had been given. In this case the thirteenth stroke of the clock sounded loud and clear on the following day.
Time barred on any approach
By reason of the knowledge which Kensland had by the end of November 1997. The limitation period for its action against TTC having expired long before Kensland commenced it on 13 January 2004, that action is plainly time-barred. We have proceeded on the approach articulated by Lord Nicholls in Haward v. Fawcetts, but would reach the same conclusion on any of the approaches to be discerned from the speeches of the other Law Lords in that case.
For the purposes of our s.31, we would take the precaution of drawing attention to an observation which Lord Walker of Gestingthorpe made in para.56. This is that “[t]he wide range of claims to which section 14A may extend suggests that general observations made by the court in one type of case may not be directly apposite in a case of another type”. At the same time, we would point out that of the principles stated in Lord Nicholls’s speech, the ones which we have treated as the most significant come essentially from paras 10 and 11. And in para.80 Lord Walker described those principles – accurately in our view – as “settled”.
Result
In the result, we would dismiss this appeal with costs (the parties having accepted at the hearing that costs should follow the event).
Mr Justice Chan PJ:
I have had the advantage of reading the judgment of Mr Justice Ribeiro PJ in draft. I entirely agree with his detailed and comprehensive analysis of the provisions in s.31 of the Limitation Ordinance, Cap 347 and the case law relevant to these provisions. For the reasons he has given, I agree that this appeal should be dismissed with costs.
The purpose of having limitation provisions is to ensure on the one hand, that a defendant is not unduly vexed by stale claims to his disadvantage particularly when the relevant evidence has been lost and the memory of the witnesses has failed; and on the other hand, that a plaintiff is not unfairly prejudiced by a lack of knowledge of the relevant facts required to bring a claim until after it is time barred. This is what s.31 is aimed at achieving in relation to actions based on non-personal injury negligence.
As Mr Justice Ribeiro’s analysis amply demonstrates, the construction of that section and its application to the facts of a particular case is by no means an easy task. The reason is that this provision (closely following the English equivalent in s.14A of the Limitation Act 1980 as amended by the Latent Damage Act 1986), to quote the words of Ms Janet O’Sullivan in her helpful and enlightening article, Limitation, latent damage and solicitors’ negligence, “which was enacted primarily with claims for property damage in mind and based closely on the drafting of the parallel provisions for personal injury claims, is not easily applied to claims for economic loss arising from the alleged negligence of solicitors” at p.219 of Professional Negligence, Vol. 20 No. 4, 2004. This is evident from the increasing volume of jurisprudence purporting to apply this provision (or its equivalent) in professional negligence claims in England and Australia. No doubt, the legal and other professions here would also be anxious to have some clear guidance on how s.31 operates in practice. A legislative review of the relevant statutory provisions may well be necessary in future.
Whether a plaintiff can invoke s.31 is a question of mixed law and fact. This involves an examination of a host of issues, such as, what was the defendant’s act or omission complained of, what is the cause of action relied on, when did the cause of action accrue, what was the damage caused to the plaintiff, how much did the plaintiff know about these facts or ought he reasonably to have known about these facts, would a reasonable person having such knowledge or imputed knowledge consider the damage sufficiently serious to justify instituting proceedings for damages, when did the plaintiff first have actual or imputed knowledge of such facts, did the plaintiff know or ought he reasonably to have known that the damage was attributable in whole or in part to the defendant’s act or omission, and if so, when did he first have actual or imputed knowledge of this. Needless to say, all the circumstances of the case have to be considered.
Applying s.31 to the facts of this case, one cannot escape the conclusion that Kensland had acquired the necessary knowledge required to bring the present action at the latest by November 1997 and that the present action is clearly statute-barred.
Mr Justice Ribeiro PJ:
The appellant (“Kensland”) seeks to overturn the decision of the Court of Appeal striking out its action alleging professional negligence against the respondents, a firm of solicitors (“TTC”). The action was struck out on the ground that it is statute-barred under the Limitation Ordinance, Cap 347 (“the Ordinance”).
In the courts below, Kensland conceded that its writ had been issued after expiry of the primary limitation period of six years under section 4 of the Ordinance. However, Kensland was allowed to withdraw that concession without opposition so that on this appeal, the Court is asked to decide whether the action should be permitted to proceed on the basis either that it was started within the primary limitation period or that the secondary limitation period provided for by section 31 of the Ordinance applies.
A. The original proceedings
The present action arises out of a property transaction which led to legal proceedings culminating in an appeal to this Court decided in 2001. The course of events was as follows.
A.1 The underlying property transaction
In June 1997, with TTC acting as solicitors on its behalf, Kensland agreed to purchase certain shop premises for HK$53 million and contracted to re-sell them to a purchaser named Whale View Investment Ltd (“Whale View”) for HK$55 million. The solicitors acting for Whale View were Messrs Tam, Pun and Yipp (“TPY”). Deposits totalling HK$8.25 million were paid by Whale View and completion was agreed to take place on or before 2 September 1997 between the hours of 10.00 am and 1.00 pm at TTC’s offices, with time made of the essence. An important clause of the contract entitled Kensland to direct that payment should be by a specified number of cashier orders or solicitors’ cheques in stated amounts, designed to enable Kensland to pass on appropriately denominated cheques to the head vendor. Unless payment was made in accordance with Kensland’s directions (referred to in the original proceedings as the “split cheque directions”) Whale View’s payment obligations would be deemed not to have been discharged.
It was therefore necessary for Whale View to receive the split cheque directions in good time. However, they were not received from TTC until 11.13 am (with a correction made at 11.48 am) on 2 September 1997, that is, until rather less than two hours before the 1.00 pm deadline for completion. Whale View was keen to complete its purchase since the property market was very buoyant and, as the parties later agreed, the shop premises were then worth some HK$63 million. But despite the urgent efforts of TPY and Whale View’s bankers, the 1.00 pm deadline was not met: the payment instruments arrived at TTC’s offices at 1.06 pm, six minutes late.
In an affirmation filed in the present proceedings by Yvonne Yeung Han Yi (“Ms Yeung”), one of Kensland’s directors, Ms Yeung states that shortly after 1.00 pm on that day, she was advised by TTC that Whale View’s tender of payment after the deadline entitled Kensland to rescind the contract and forfeit the deposits. She affirms that Kensland acted on that advice. It will be necessary later to consider more closely the exchanges between Ms Yeung, TTC and TPY surrounding that decision.
A.2 The original proceedings brought by Whale View
Whale View issued proceedings against Kensland on the very next day, 3 September 1997, claiming specific performance and alternatively, return of the deposits with damages, interest and costs. The writ was immediately registered against the property as a lis pendens.
The original proceedings were dismissed by the trial Judge on 5 August 2000 on the basis that sufficient time had been allowed for completion. Whale View had sued TPY in an alternative claim for negligence in their preparation of related banking documents. That action succeeded with damages being awarded against TPY. However, the Judge’s decision was reversed by the Court of Appeal on 23 January 2001. It held that Kensland was in breach of an implied term and had itself repudiated the contract. It ordered Kensland to return the deposits and to pay damages of $8 million to Whale View with interest (agreed to run at the rate of 10.5% from 3 September 1997) and costs. It also allowed TPY’s appeal.
Kensland’s appeal to this Court was dismissed on 10 December 2001, for reasons differing in some respects from those of the Court of Appeal. It was held that Kensland’s provision of the split cheque directions at such a late stage constituted breach of an implied term that such directions had to allow the purchaser’s solicitors a reasonable time to comply. Kensland was therefore not entitled to take advantage of its own wrong by invoking the “time of the essence” clause and refusing completion. It was held to have repudiated the contract, entitling Whale View to the relief granted by the Court of Appeal.
B. The present proceedings
After the Court of Appeal’s judgment in the original proceedings, Kensland went into compulsory liquidation and, on 23 November 2001, its liquidators were appointed.
B.1 The claims made by Kensland in the present proceedings
The writ in the present proceedings was issued on 13 January 2004. It is indorsed with claims for damages in the sum of HK$8 million (in respect of the damages paid by Kensland to Whale View); damages of HK$2,767,407.33 (representing legal fees incurred by Kensland); and damages in the sum of HK$17,980,000 in respect of “the diminution in value [of the premises] between 9 September 1997 and 19 May 1998”; all said to result “from negligent legal advice by” TTC. Interest is claimed on all these sums.
Kensland’s Statement of Claim alleges that the damage suffered was “a result of TTC’s negligent handling of Kensland’s affairs” particularised in terms of TTC :
failing to provide the split cheque directions to TPY within a reasonable time;
wrongly advising Kensland “that TPY’s late tender, in the circumstances, constituted a repudiation of the agreement”;
wrongly advising that the split cheque directions “had been given within sufficient time for the preparation of split cheques and cashier[s] orders”;
failing “to advise Kensland that, in law, it would not be entitled to take advantage of [its] own breach of the implied term”;
failing “to advise Kensland ... that if Kensland’s delay in completion was due to its default Kensland would not be entitled to treat the agreement as repudiated or take any consequential steps”; and,
failing “to point out and advise Kensland fully of the risks involved in refusing to complete and, in particular, of the very real risk of having to compensate Whale View”.
B.2 TTC’s limitation defence and the striking-out application
In its Defence TTC joins issue with many of the factual allegations of negligence but these do not require discussion. Pertinently, it pleads limitation, contending that Kensland’s causes of action arose on 2 or 3 September 1997, more than six years before issue of the writ, and are statute-barred.
TTC proceeded to issue the striking-out summons and evidence was filed. At the hearing before the Judge, a “draft Reply” was handed up on Kensland’s behalf, pleading section 31 and putting the availability of the secondary limitation in issue.
The striking-out application has proceeded on the basis of essentially undisputed evidence, in particular of Ms Yeung, regarding the circumstances in which Kensland refused to complete the sale agreement and consequential developments. It has also proceeded on the assumption, made for striking-out purposes, that Kensland’s pleaded allegations, particularly regarding TTC’s negligence and the resultant damage suffered by Kensland, are made good.
At first instance, the Judge refused to strike out Kensland’s claim, holding that it was arguably not time-barred. But the Court of Appeal reversed the Judge, holding that knowledge relevant to section 31 was established so that Kensland’s action was not saved by the secondary limitation period.
C. Kensland’s claim and the primary limitation period
The primary limitation period relevant to Kensland’s claim is laid down by section 4(1)(a) of the Ordinance which provides:
“The following actions shall not be brought after the expiration of 6 years from the date on which the cause of action accrued, that is to say ... actions founded on simple contract or on tort ...”
While Kensland’s complaint against TTC may in principle be founded on concurrent breaches of contractual and tortious duties, it is rightly accepted by Mr John Scott SC on Kensland’s behalf that its contractual cause of action is time-barred. In accordance with the general rule, that cause of action accrued on the date when the contract was broken, that is on 2 September 1997 when TTC allegedly gave the negligent advice. We are accordingly concerned only with Kensland’s claim in tort and, for the purposes of this first argument, with the date when Kensland first incurred damage.
C.1 Damage which completes the cause of action in tort
Mr Scott seeks to argue that no damage was suffered “until the Court of Appeal handed down judgment in the [original proceedings]” and therefore that the cause of action only accrued on 23 January 2001, putting issue of the writ well within the primary limitation period. In the draft Reply, there is a suggestion that damage was only incurred even later, that is, when this Court handed down its judgment on 10 December 2001. In my judgment, neither proposition is sound and Kensland’s argument must be rejected.
A cause of action in tort accrues when the damage which results from the tortious conduct is real, as distinct from minimal or negligible and is actual, as opposed to purely contingent. The concept of “damage” is given a broad meaning. It encompasses damage consisting of “any detriment, liability or loss capable of assessment in money terms.” Where economic loss is involved, it includes loss suffered “by payment of money, by transfer of property, by diminution in the value of an asset or by the incurring of a liability.” Whether damage has been incurred in any particular case is a question of fact. Its precise quantification may only be possible at a later date, by which time it may have become more serious, but that does not detract from the earlier accrual of the cause of action. The damage must, however, be recoverable as falling within the measure of damages applicable to the defendant’s wrong in question.
C.2 When damage was incurred in the present case
Applying these principles, there can be no doubt that Kensland’s cause of action accrued on 2 September 1997. The applicable measure of damages for negligence aims to put Kensland in the position that it would have occupied had there been no breach of duty by TTC. Kensland’s case is that it would have completed the sale but for TTC’s negligent advice. If that had happened, then having purchased the property for HK$53 million, it would have on-sold to Whale View for HK$55 million, making a profit of HK$2 million less transaction expenses.
Instead, acting upon TTC’s advice, it refused to complete and immediately incurred a liability in damages to Whale View, later quantified at HK$8 million. It also incurred a liability to pay interest on that amount which, as noted above, Kensland later agreed should run from 3 September 1997. On that date, Kensland was made a defendant in the action brought by Whale View and began incurring legal costs in mounting its defence and prosecuting its counterclaim. Kensland now claims damages from TTC in the sum of HK$2,767,407.33 representing accumulated legal costs. It also found itself saddled with a property which was encumbered by the registration of a lis pendens in a volatile property market, effectively rendering it unsaleable until the encumbrance was vacated. It now claims that it suffered a loss of HK$17,980,000 “between 9 September 1997 and 19 May 1998” representing “the diminution in value of the premises” during that period.
Mr Scott’s argument that no loss was incurred until the handing-down of the courts’ decisions is untenable in the light of the abovementioned facts. Those decisions merely declared that the immediate legal consequence of Kensland’s refusal to complete on 2 September 1997 was the incurring of liability in respect of the heads of loss set out above. Kensland’s proceedings were therefore commenced outside the primary limitation period and the concession made below was correct.
D. Legal principles applicable to the secondary limitation period
D.1 Section 31
The secondary limitation period which Kensland relies on is provided for by section 31 of the Ordinance as follows:
Actions in respect of latent damage not involving personal injuries
Section 31: Special time limit for negligence actions where facts relevant to cause of action are not known at date of accrual
(1) This section applies to any action for damages for negligence, other than one to which section 27 applies, where the earliest date on which the plaintiff or any person in whom the cause of action was vested before him first had both-
(a) the knowledge required for bringing an action for damages in respect of the relevant damage; and
(b) a right to bring such an action,
(referred to in this section as the “date of knowledge”) falls after the date on which the cause of action accrued.
(2) The period of limitation prescribed by section 4(1) in respect of actions founded on tort shall not apply to an action to which this section applies.
(3) An action to which this section applies shall not be brought after the expiration of the period applicable in accordance with subsection (4).
(4) That period is either-
(a) 6 years from the date on which the cause of action accrued; or
(b) 3 years from the date of knowledge, if that period expires later than the period mentioned in paragraph (a).
(5) In subsection (1) “the knowledge required for bringing an action for damages in respect of the relevant damage” means knowledge-
(a) of such facts about the damage in respect of which damages are claimed as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment;
(b) that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence;
(c) of the identity of the defendant; and
(d) if it is alleged that the act or omission was that of a person other than the defendant, of the identity of that person and the additional facts supporting the bringing of an action against the defendant.
(6) Knowledge that any acts or omissions did or did not, as a matter of law, involve negligence is irrelevant for the purposes of subsection (1).
(7) For the purposes of this section or section 33 a person’s knowledge includes knowledge which he might reasonably have been expected to acquire-
(a) from facts observable or ascertainable by him; or
(b) from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek,
but a person shall not be taken by virtue of this subsection or section 33 to have knowledge of a fact ascertainable only with the help of expert advice so long as he has taken all reasonable steps to obtain (and, where appropriate, to act on) that advice.
D.2 The effect of section 31
The effect of being brought within section 31 is, at least for present purposes, uncontroversial: the plaintiff is enabled to rely on a three-year secondary limitation period which commences, not from the accrual of the cause of action, but from his “date of knowledge”, as defined in section 31(1). The barring of the plaintiff’s claim is postponed to the extent, if any, that the secondary limitation period expires later than the six-year primary limitation period. However, by section 32, the potential period of postponement is subject to an overall cap of 15 years from the occurrence of the last act or omission alleged to constitute negligence (whether or not the resultant damage has by then been incurred).
Since the secondary limitation period allows a period of only three years from the “date of knowledge”, that is, the date when the plaintiff first acquired the relevant knowledge, for starting proceedings, the section can only help a plaintiff who did not acquire such knowledge until over halfway into the six-year primary limitation period. Earlier knowledge would not result in any extension of time for issuing the writ.
The controversial provisions which have given rise to some difficulties of construction are subsections (1), (5), (6) and (7) of section 31, setting out the conditions for applicability of the secondary limitation period. They must be construed in the context of their statutory purpose.
D.2 The origins and purpose of section 31
The objective of limitation periods is well known. A defendant who is forced to defend an action long after the events which gave rise to the plaintiff’s claim is likely to suffer injustice. Evidence required in his defence may no longer be available or may, over time, have diminished in cogency. From the court’s point of view, such cases are much more difficult to try. The various statutes of limitation therefore require plaintiffs, in the public interest, to pursue their claims within a reasonable time.
Limitation periods generally run from the date of accrual of the cause of action. With the tort of negligence, as we have seen, this is when damage is incurred, “damage” being broadly defined as encompassing any detriment, liability or loss capable of monetary assessment. The great breadth of the concept means that the consequences which immediately follow upon a defendant’s breach of duty will often qualify as “damage” so as to set time running for limitation purposes. This is so even if such damage is imperceptible at that stage and is not reasonably discoverable until much later – by which time the limitation period may already have expired.
Plainly, a limitation statute works an injustice if it bars a plaintiff’s claim in such circumstances. And well-known cases of such injustice have arisen. As Lord Nicholls points out:
“They were high-lighted in decisions of your Lordships’ House in appeals such as the pneumoconiosis case of Cartledge v E Jopling & Sons Ltd [1963] AC 758 and the defective chimney case of Pirelli General Cable Works Ltd v Oscar Faber & Partners [1983] 2 AC 1. There claimants were held to be statute-barred before they knew or could be expected to know they had suffered damage.”
The legislative amendments introduced in England and Wales to remedy that injustice are now contained in the Limitation Act 1980 (“the Act”). The provisions presently relevant derive from those amendments which were shadowed in our Ordinance. Section 11 of the Act, which introduced a secondary limitation period in personal injury cases, is reproduced in section 27 of the Ordinance. And section 14A of the Act, inserted by the Latent Damage Act 1986 in respect of non-personal injury negligence actions, is replicated in section 31.
The essential purpose of section 31 is therefore to redress the injustice of barring a plaintiff’s claim by limitation where the latency of the damage incurred has deprived him of the knowledge required to bring proceedings within the primary limitation period.
D.3 The main features of section 31
I will begin by mentioning three features of section 31 which appear to me to be of importance.
D.3a The method of approach under section 31
First, section 31 provides an indication of how it should be approached from what it implicitly assumes. It presupposes the existence of an action for negligence brought by a plaintiff, stating in section 31(1)(a) that it relates to an “action for damages for negligence.” Indeed, if there were no action being prosecuted, there would be no defendant raising a plea of limitation. It also presupposes that the action is brought both after the cause of action has accrued and after the primary limitation period has expired since it is only necessary to consider the section if the six-year period has gone by. Accordingly, section 31 assumes that in applying its provisions, the court will be able to refer to a pleaded negligence claim, in which the plaintiff has identified the defendant who is alleged directly or vicariously to be responsible for acts or omissions said to constitute negligence and to have resulted in specified damage. What section 31 addresses is the question of when the plaintiff first acquired knowledge of the matters which he has since been able to set out in his pleadings.
Section 31 focuses on the four aspects of knowledge set out in section 31(5). These concern knowledge about the seriousness of the damage incurred; the linkage between that damage and the acts or omissions alleged to constitute negligence; and the identity of the defendant. Time does not begin to run until the plaintiff acquires all four aspects of knowledge. But since the identity of the defendant is not in issue in the present case, I will confine myself to a discussion of the first two aspects, the seriousness of the damage and its attributability dealt with in paragraphs (a) and (b).
It is established that where a defendant raises a limitation defence and the plaintiff invokes the section 31 secondary limitation period, it is the plaintiff who bears the burden of proving that he did not acquire the required knowledge until a point of time within the three year period immediately preceding the issue of the writ.
D.3b The plaintiff’s actual and imputed knowledge are taken into account
Secondly, the knowledge which sets time running under section 31 consists both of the plaintiff’s actual knowledge and knowledge which is imputed to him. When sections 31(1)(a) and 31(5) speak of the plaintiff having knowledge of certain matters, they are naturally taken to be referring to the plaintiff’s actual knowledge. However, an objective standard is clearly also applicable. Section 31(7) provides that for the purposes of the section, “a person’s knowledge includes knowledge which he might reasonably have been expected to acquire (a) from facts observable or ascertainable by him; or (b) from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek.” It follows that the extended meaning given to “knowledge” by section 31(7) is part of the definition of that word wherever it appears in section 31.
Of course, on the facts of a particular case, it may be unnecessary to resort to any concepts of imputed or constructive knowledge. If the court finds that a plaintiff had actual knowledge of the matters set out in section 31(5), it needs to go no further. But if a plaintiff lacked actual knowledge but could reasonably have been expected to have acquired the relevant knowledge in accordance with the provisions of section 31(7), then such knowledge is to be imputed to him.
I should mention one aspect of the House of Lords’ judgment in Haward v Fawcetts that may at first sight appear puzzling. Their Lordships approached their decision on the footing that it was not open to them to take into account any constructive knowledge within the meaning of section 14A(10) of the Act (the Hong Kong equivalent being section 31(7)). Lord Walker of Gestingthorpe thought this an “unusual feature” of the case and both Lord Brown of Eaton-under-Heywood and Lord Mance thought that this hampered their decision-making. Lord Mance stated:
“I have not found this an easy appeal to resolve on the facts, bearing in mind that all that is in issue is actual knowledge. The difficulty I have found would have been unlikely to exist had the issue of constructive knowledge been squarely raised before the judge. The House was not invited to depart from the Court of Appeal’s conclusion that it was not open to Fawcetts to assert constructive knowledge within section 14A(10).”
In my view, their Lordships should not be understood as suggesting that the applicability of section 31(7) (which is in terms materially identical to section 14A(10)) is somehow a matter dependent upon the attitude taken by one of the parties or indeed, by the lower court. It is part of the statutory definition of what constitutes “the knowledge required for bringing an action” referred to in section 31(1)(a) as elaborated upon in the subsections following and it is obviously not open to a party to opt out of part of a statutory definition. A plaintiff’s invocation of the secondary limitation period requires the court to construe the word “knowledge” wherever it arises in section 31 and in doing so, it inescapably takes into account what the statute, including section 31(7), says that term does and does not include.
Their Lordships should, in my opinion, be understood merely to have been expressing regret that factual issues relevant to the application of the equivalent of section 31(7) had not been aired. Consequently, they reached their decision on grounds which dispensed with any need to consider imputed knowledge. They held that Mr Haward’s case for being allowed to rely on the secondary limitation period had been misdirected, the inquiry having been addressed not to knowledge of the relevant damage (the plaintiff’s loss of large sums invested) but to damage falling outside the proper measure of damages (the failure of the company acquired). Accordingly, Mr Haward was held not to have properly addressed, and therefore not to have discharged, his burden. Nevertheless, their Lordships did indicate that even on the evidence as it stood, Mr Haward could have had imputed to him knowledge of the relevant damage and its attributability. Thus, Lord Nicholls commented that the disparity between the advice received and the company’s disastrous losses had “stared Mr Haward in the face” well before the relevant cut-off date. And Lord Mance referred to “the obviousness of the company’s problems from the outset in contrast with the optimism of the 1995 business plan and of Fawcetts’ alleged advice and attitude” as supporting his decision to allow the appeal. Other members of the panel took a similar view.
D.3c The required knowledge relates to damage, not liability
Thirdly, section 31 is concerned with the plaintiff’s knowledge relating to the damage incurred and not with the defendant’s liability. This is in accordance with the statutory purpose of postponing limitation in cases of latent damage. Section 31 centres on whether the plaintiff had “the knowledge required for bringing an action for damages in respect of the relevant damage”. This is made to depend on the state of his knowledge, actual or imputed, regarding the damage incurred and its attributability, in other words, on whether the damage should in the circumstances be considered latent.
Postponement of the limitation period has nothing to do with whether the plaintiff knew that the defendant’s conduct amounted in law to negligence or that he had a good claim against the defendant. Thus, in laying down the standard for deciding whether the damage is known to be sufficiently serious, section 31(5)(a) posits an objective test involving a defendant who does not dispute liability, so that negligence is hypothetically assumed. And section 31(6) expressly provides that “knowledge that any acts or omissions did or did not, as a matter of law, involve negligence is irrelevant.” This is consistent with the law’s general approach to limitation periods, dismissing a statute-barred action whether or not it would otherwise have been a good claim.
D.4 Section 31(5)(a)
Against this background, I turn to consider more closely the construction of section 31(5)(a) which materially provides as follows:
“In subsection (1) ‘the knowledge required for bringing an action for damages in respect of the relevant damage’ means knowledge of such facts about the damage in respect of which damages are claimed as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment ...”
Obviously, by the time the action is commenced and the case is pleaded, the plaintiff will have considered the damage to be of a sufficient magnitude to justify initiating legal proceedings. However, the fact that the plaintiff needs to invoke the secondary limitation period means that he has only commenced the proceedings after expiry of the primary limitation period and accordingly that there has for some reason been a delay.
A legitimate reason recognized by section 31(5)(a) as justifying postponement involves the case where the plaintiff did not commence proceedings because he only realised the seriousness of the damage incurred at a late stage: a typical case of latent damage. The other paragraphs of section 31(5) identify the other matters considered legitimate reasons for delay (up to the maximum of 15 years): lack of knowledge of the linkage between the damage and the relevant acts or omissions and ignorance of the identity of the defendant.
Section 31(5)(a) imposes an objective standard to judge the plaintiff’s delay from the aforesaid perspective. It postulates a reasonable person’s assessment of the facts known to the plaintiff about the damage and deems his knowledge sufficient to trigger the secondary limitation period at the point in time when a reasonable person would have considered the damage sufficiently serious to justify starting proceedings against a hypothetical solvent defendant who does not dispute liability. Gaining such knowledge may of course involve a process during which additional facts become known over time. It is a question of fact, applying the objective standard, when the plaintiff should be taken to have acquired the relevant knowledge.
Section 31(5)(a) establishes a low threshold. If a reasonable person knows that the defendant will not contest liability and will pay up, quite minor damage may be thought to justify the cost and effort of issuing a writ. It follows that where a plaintiff becomes aware or has imputed to him knowledge of some actual damage, provided that it is not so trivial as to be not worth bothering about, the knowledge requirement of section 31(5)(a) is likely to be satisfied.
In adopting this low threshold, section 31(5)(a) mirrors the rule concerning objective accrual of the cause of action in a negligence claim. Thus, in Cartledge v Jopling, Lord Reid held that the cause of action is complete where the injury suffered is “beyond what can be regarded as negligible” and Lord Evershed spoke of “real damage as distinct from purely minimal damage.” Section 31(5)(a) treats knowledge of damage with similarly slight dimensions as sufficient for the purposes of section 31(1)(a).
A potential source of confusion involves the different contexts in which section 31 introduces separate objective standards which interact with the subjective knowledge possessed by the plaintiff.
As we have seen in Section D.3b above, one such objective standard, introduced by section 31(7), relates to the knowledge which is to be imputed to the plaintiff where he might reasonably have been expected to acquire knowledge about the damage and its attributability from facts observable or ascertainable by him, with appropriate expert help if necessary.
That standard obviously differs from the standard introduced by section 31(5)(a) just discussed. The latter operates to assess the seriousness of the damage which the plaintiff knew about or is (pursuant to section 31(7)) taken to have known about.
The distinction between these two standards was emphasised in Lord Hoffmann’s analysis of sections 14(2) and 14(3) of the Act (parallels of our sections 31(5)(a) and 31(7) in the English personal injury context) in the recent decision of the House of Lords in A v Hoare. His Lordship stated:
“The test for imputing knowledge in section 14(3) is by reference to what the claimant ought reasonably to have done. It asks whether he ought reasonably to have acquired certain knowledge from observable or ascertainable facts or to have obtained expert advice. But section 14(2) is simply a standard of seriousness applied to what the claimant knew or must be treated as having known. It involves no inquiry into what the claimant ought to have done. A conclusion that the injury would reasonably have been considered sufficiently serious to justify the issue of proceedings implies no finding that the claimant ought reasonably to have issued proceedings. He may have had perfectly good reasons for not doing so. It is a standard to determine one thing and one thing only, namely whether the injury was sufficiently serious to count as significant.”
As we shall see, a third objective standard, performing yet another different function, has been introduced by the case-law. That third standard is applied to assess the quality and scope of the plaintiff’s knowledge, as discussed below. It is important that the different roles played by each of these different standards be recognized and kept analytically separate.
D.5 Section 31(5)(b)
Section 31(5)(b) relevantly provides:
“In subsection (1) ‘the knowledge required for bringing an action for damages in respect of the relevant damage’ means knowledge that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence.”
As noted in Section D.3c above, section 31 does not concern itself with any knowledge on the plaintiff’s part concerning the defendant’s liability. The courts have emphasised that the words “knowledge that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence” do not invite any such discussion. As Hoffmann LJ stated in Dobbie v Medway Health Authority:
“...the words ‘which is alleged to constitute negligence, nuisance or breach of duty’ serve to identify the facts of which the plaintiff must have knowledge without implying that he should know that they constitute a breach of a rule, whether of law or some other code of behaviour.”
Those words indicate the method of approach discussed in Section D.3a above, pointing the court in the direction of the plaintiff’s pleaded case regarding the acts or omissions alleged to constitute the defendant’s negligence.
Sir Thomas Bingham MR, in the Dobbie case, illustrated the way the equivalent of section 31(5)(b) works with the following example:
“Time starts to run against the claimant when he knows that the personal injury on which he founds his claim is capable of being attributed to something done or not done by the defendant whom he wishes to sue. This condition is not satisfied where a man knows that he has a disabling cough or shortness of breath but does not know that his injured condition has anything to do with his working conditions. It is satisfied when he knows that his injured condition is capable of being attributed to his working conditions, even though he has no inkling that his employer may have been at fault.”
D.6 Further issues
In most cases, the application of section 31 presents no difficulty.
Having identified, from the pleadings and, in so far as relevant, any other materials, the damage and the acts or omissions from which such damage is said to have resulted, it becomes a question of fact when the plaintiff first had actual knowledge of the damage and its level of seriousness (applying the objective standard of seriousness laid down by section 31(5)(a)), as well as actual knowledge of the attributability of that damage to the acts or omissions in question.
If the court finds that such actual knowledge did exist as from a particular time, the secondary limitation period is deemed to commence running from that moment on and no further consideration of the section’s operation is required. It proceeds to determine whether the action was commenced before expiry of the secondary limitation period. Many cases will be decided at this point.
To the extent that the court finds that the plaintiff lacked such actual knowledge, it goes on to consider whether, given the facts observable or ascertainable by him, the plaintiff ought reasonably to have such knowledge imputed to him under section 31(7), applying the objective standard contained in that provision. It is likely that the great majority of cases can be resolved at this stage.
However, the experience of the courts has been that in some cases, further issues arise for resolution. These are issues concerning the quality and scope of the knowledge possessed by or imputed to the plaintiff. Having gone through the process described in the preceding paragraph, the court may arrive at the conclusion that the plaintiff’s actual or imputed knowledge was incomplete or lacking in detail or involved a significant degree of uncertainty. Does knowledge with such characteristics qualify as knowledge within section 31 so as to set time running? What tests or standards should one apply for drawing the line between knowledge which is too uncertain or too vague and knowledge which suffices?
D.6a The quality and scope of the knowledge
These issues stem from the immense variety of possible types of damage and their interaction with the almost limitless permutations of conduct which may be alleged to constitute negligence. They are issues which can arise in the context of both section 31(5)(a) and section 31(5)(b): To what degree of certainty must the plaintiff know (or be taken to know) that he has in fact suffered damage and that such damage is sufficiently serious? How certain, complete and detailed must his knowledge (or imputed knowledge) be of the attributability of such damage to the acts or omissions subsequently alleged to constitute negligence?
One example of a case where such issues arose in the personal injury context is Nash v Eli Lilly & Co, which concerned wide-ranging side-effects experienced by users of a drug called “Opren”, licensed to be used in the treatment of arthritis. Some plaintiffs suffered from photosensitivity and others from onycholysis, being a condition damaging to finger and toe nails. Some suffered from conditions said to be “to a large extent subjective, eg irritation, pain, dizziness, etc,” with little to be seen by way of organic damage. Yet others suffered from serious complications such as liver and kidney failure, resulting in some cases, in death. Plainly, it would not have been easy for some of these plaintiffs to be confident of the fact and extent of the damage suffered or confident of attributing their particular side-effects to the drug. There would in some cases have been difficulty in drawing a “distinction between an expected, or accepted, side effect, and an injurious and unacceptable consequence of taking a prescribed drug.” At what point is equivocal knowledge of this sort, located somewhere in a spectrum of suspicion and belief, sufficient to start time running under section 31? I turn to consider the solutions developed in the case-law.
D.6b Where knowledge has a significant degree of uncertainty
It has, of course, always been acknowledged that the knowledge which triggers the secondary limitation period does not have to involve the plaintiff knowing anything “for certain”. Life seldom lends itself to such certainty and such a high standard would in practice be likely to mean that the secondary limitation period is routinely extended to the limit of the 15 year cap under section 32. Thus, in Halford v Brookes, Lord Donaldson of Lymington MR stated (as to the degree of certainty of knowledge regarding the identity of the defendant):
“The word has to be construed in the context of the purpose of the section, which is to determine a period of time within which a plaintiff can be required to start any proceedings. In this context ‘knowledge’ clearly does not mean ‘know for certain and beyond possibility of contradiction’. It does, however, mean ‘know with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking legal and other advice and collecting evidence’. Suspicion, particularly if it is vague and unsupported, will indeed not be enough, but reasonable belief will normally suffice.”
Halford v Brookes was an unusual case. A mother, suing as the personal representative of her daughter whom she had strong reason to believe had been murdered by either one or other of two defendants, could not be sure to which of these men’s actions her daughter’s death should be attributed. The court held that “attributable” in the equivalent of our section 31(5)(b) meant “capable of being attributed” and that this applied to both men who could be made defendants in the alternative, there being no need for the plaintiff to have any greater degree of certainty to start time running. On the strict application of the secondary limitation period, the case was held to be time-barred since the mother had possessed the requisite knowledge at an early stage. But as it was a personal injury claim, the court had, and decided to exercise, a discretion to override the limitation period and permit the action to continue.
In Nash v Eli Lilly & Co, the “Opren” case, Purchas LJ proposed a standard of certainty similar to that suggested by Lord Donaldson MR:
“In applying the section to the facts of these cases, we shall proceed on the basis that knowledge is a condition of mind which imports a degree of certainty and that the degree of certainty which is appropriate for this purpose is that which, for the particular plaintiff, may reasonably be regarded as sufficient to justify embarking upon the preliminaries to the making of a claim for compensation such as the taking of legal or other advice.”
The answer which their Lordships gave in these two cases was therefore a pragmatic one: the plaintiff’s knowledge is to be treated as sufficient for setting time running from the moment when a reasonable person would have regarded it as certain enough “to justify embarking upon the preliminaries to the making of a claim for compensation such as the taking of legal or other advice”. He would then have three years to bring preparations to a stage when a writ could be issued. However, a reasonable person could be expected to refrain from taking such steps while the knowledge remained too scanty or too vague or amounted only to speculation or unsubstantiated suspicion. This introduces the third objective standard mentioned above. It obviously plays a role different from the two objective standards previously discussed. It is an approach which has often since been adopted.
It is my respectful view that this approach involves an entirely legitimate and necessary purposive construction of section 31. That provision is centred around ascertaining when the plaintiff first had “the knowledge required for bringing an action for damages in respect of the relevant damage” as stated in section 31(1)(a). That concept is defined in subsections (5), (6) and (7). But those definitions have been found not to be exhaustive, leaving further issues concerning the quality and scope of the knowledge possessed by or imputed to the plaintiff to be dealt with. In seeking to address the issue concerning the degree of certainty required, Lord Donaldson MR and Purchas LJ returned to the central concept of “the knowledge required for bringing an action.” The pragmatic threshold of certainty which they adopted implements the basic statutory purpose of section 31, asking: At what point in time did the knowledge become certain enough objectively to justify taking the first steps in the bringing of an action?
D.6c Uncertainty in the context of legal liabilities
As noted above, one form of damage which completes the cause of action in negligence is the incurring of legal liability. This raises two particular issues in relation to the certainty of knowledge.
In the first place, since the incurring of such a liability is a legal construct and not in itself physically perceptible, there may be cases where the plaintiff has no knowledge whatsoever that he has incurred such damage and only finds out when he is visited with some palpably detrimental consequences, such as when a demand is made by mortgagees in respect of a debt which he did not previously know had been secured on the property in question. It was on this basis that the House of Lords in Haward v Fawcetts overruled HF Pension Trustees v Ellison, a case where trustees of a pension scheme were wholly unaware that a reorganization and transfer of surplus monies effected under legal advice constituted an invalid exercise of a fiduciary power which attracted potentially irrecoverable tax liabilities.
Secondly, even where a plaintiff knows that he has attracted a potential liability to a third person as a result of the acts or omissions of the defendant, uncertainty may exist as to whether such liability will ultimately crystallize in favour of that third person so as to be translated into actual financial loss.
Issues of this kind are resolved by applying the pragmatic objective test referred to above. If the potential for being made liable to the third party is real enough to lead a reasonable person to conclude that steps preliminary to the commencement of proceedings against the defendant ought to be taken, the plaintiff is taken to have sufficiently certain knowledge to set time running for the purposes of section 31. Consistently with this approach, Lord Nicholls held that time does not begin to run against a claimant until he knows there is “a real possibility” that his damage was caused by the act or omission in question. And Lord Brown considered it sufficient if Mr Haward “knew that his loss might well have resulted from an investment made on Fawcetts’ advice.”
D.6d Where knowledge is incomplete or lacking in detail
In the plaintiff’s pleadings, the acts or omissions alleged to constitute negligence are likely to have been particularised in a number of alternative ways aimed at covering a variety of findings that may be made at the trial. Such particulars may have been fashioned for various legal purposes, such as for bringing the case within a precedent favourable to the plaintiff. They are obviously not intended to describe what the plaintiff actually came to know about the attributability of the damage to the defendant’s acts or omissions now said to amount to negligence. Nor should section 31 be construed as requiring the plaintiff to have detailed knowledge of the matters set out in such particulars before he is treated as having the knowledge required to set time running. What matters is the plaintiff’s knowledge of what lies at the core of the pleaded case.
That is the principle developed in the case-law. As Hoffmann LJ put it in Broadley v Guy Clapham & Co:
“Section 14(1)(b) [the equivalent for our purposes of section 31(5)(b)] requires that one should look at the way the plaintiff puts his case, distil what he is complaining about and ask whether he had, in broad terms, knowledge of the facts on which that complaint is based.”
The requisite knowledge is not of the acts or omissions as pleaded, but knowledge of the facts constituting “the essence of the complaint of negligence” distilled from such pleading. Lord Nicholls summarises some of the authorities in the following terms:
“Consistently with the underlying statutory purpose, Slade LJ observed in Wilkinson v Ancliff (BLT) Ltd [1986] 1 WLR 1352, 1365, that it is not necessary for the claimant to have knowledge sufficient to enable his legal advisers to draft a fully and comprehensively particularised statement of claim. Where the complaint is that an employee was exposed to dangerous working conditions and his employer failed to take reasonable and proper steps to protect him it may well be sufficient to set time running if the claimant has ‘broad knowledge’ of these matters. In the clinical negligence case of Hendy v Milton Keynes Health Authority [1992] 3 Med LR 114, 117-118, Blofeld J said a plaintiff may have sufficient knowledge if she appreciates ‘in general terms’ that her problem was capable of being attributed to the operation, even where particular facts of what specifically went wrong or how or where precise error was made is not known to her. In proceedings arising out of the manufacture and sale of the drug Opren Purchas LJ said that what was required was knowledge of the ‘essence’ of the act or omission to which the injury was attributable: Nash v Eli Lilly & Co [1993] 1 WLR 782, 799. In Spargo v North Essex District Health Authority [1997] PIQR P235, P242 Brooke LJ referred to ‘a broad knowledge of the essence’ of the relevant acts or omissions ...”
These formulations make the important point that the section does not require the plaintiff to have had knowledge of the full-blown pleaded facts. But it may well be said that notions like “the essence” of the complaint, “broad knowledge” of the facts, an appreciation of the problem “in general terms” and “a broad knowledge of the essence” are not very informative as standards to be applied.
Once again, as Hoffmann LJ held in Broadley v Guy Clapham & Co, a purposive construction leads to application of the pragmatic objective standard discussed above for guidance as to when the plaintiff’s knowledge should be regarded as sufficiently complete and detailed. His Lordship stated:
“How does one determine the ‘essence’ of the act or omission? The purpose of s 14(1), as Lord Donaldson MR pointed out in Halford v Brookes [1991] 3 All ER 559 at 573, [1991] 1 WLR 428 at 443 is to determine the moment at which the plaintiff knows enough to make it reasonable for him to begin to investigate whether or not he has a case against the defendant. He then has three years in which to conduct his inquiries and, if advised that he has a cause of action, prepare and issue his writ. Ordinarily it will suffice that he knows that the injury was caused by an act or omission of the defendant. But there may be cases in which his knowledge of what the defendant did or did not do is so vague and general that he cannot fairly be expected to know what he should investigate.”
D.6e The knowledge must extend to all the essentials
The proposition that the plaintiff must know “the essence” of the complaint has two aspects. We have seen that it means that he does not need to know all the pleaded details. But it also means that he must know or be taken to know all the essential facts necessary to constitute the claim before time starts running against him. That is not to say that he must know he has a good claim in law. Such knowledge is plainly made irrelevant by section 31(6). What it does mean is that he must be shown to have actual or imputed knowledge of all the facts which are essential to the complaint which is eventually formulated as his negligence claim.
As Lord Mance points out, this is indicated by the language of section 31(5)(b):
“Turning to the phrase ‘the act or omission which is alleged to constitute negligence’, the word ‘constitute’ is in my view significant. It indicates that the claimant must know the factual essence of what is subsequently alleged as negligence in the claim.”
As Hoffmann LJ explains in Hallam-Eames v Merrett Syndicates, it would be an over-simplification to read section 31(5)(b) as merely requiring the plaintiff to have known that his damage had been caused by an act or omission of the defendant. That provision:
“... speaks of the damage being attributable to the act or omission which is alleged to constitute negligence. In other words, the act or omission of which the plaintiff must have knowledge must be that which is causally relevant for the purposes of an allegation of negligence. ... He must have known the facts which can fairly be described as constituting the negligence of which he complains. It may be that knowledge of such facts will also serve to bring home to him the fact that the defendant has been negligent or at fault. But that is not in itself a reason for saying that he need not have known them.”
This passage has often been followed and was approved in Haward v Fawcetts. However, deciding what facts should be characterised as part of the essentials can give rise to difficulty. This is illustrated by Dobbie v Medway Health Authority, a case in which the plaintiff, who had detected a lump in her left breast underwent surgery, believing that this was in order to have the growth removed and diagnostically examined. However, upon excising the lump, the surgeon thought it appeared to be cancerous and he proceeded, without her prior consent, to perform a mastectomy. The growth was in fact found to be benign. On coming round from the anaesthetic, the plaintiff was horrified to learn that her left breast had been removed but accepted the view of the surgeon and the nurse “that she was very fortunate that the growth had not proved to be malignant”. But she was devastated by loss of her breast and suffered not merely that physical injury but also serious psychological harm in consequence. It was not until some 15 years later that she realised, from hearing about a similar case, that the breast should not have been removed prior to a biopsy. She issued the writ a year later. The issue was whether her state of knowledge had been such as to have triggered the secondary limitation period long before it could save her action from being time-barred.
Sir Thomas Bingham MR held that “the essential thrust of the case was that the breast should not have been removed until the lump had been microscopically examined and found to be malignant.” On this footing he found that she had, from an early stage, knowledge of all the essentials so that the secondary limitation period had long expired:
“The personal injury on which the plaintiff seeks to found her claim is the removal of her breast and the psychological and physical harm which followed. She knew of this injury within hours, days or months of the operation and she, at all times, reasonably considered it to be significant. She knew from the beginning that this personal injury was capable of being attributed to, or more bluntly was the clear and direct result of, an act or omission of the health authority. What she did not appreciate until later was that the health authority’s act or omission was (arguably) negligent or blameworthy. But her want of that knowledge did not stop time beginning to run.”
In Hallam-Eames v Merrett Syndicates, Hoffmann LJ, illustrating by reference to the Dobbie case the need for the plaintiff to have actual or imputed knowledge of all the essential facts which constitute the claim, emphasised that it would not have been enough merely to assert that she knew, as she obviously did, that her left breast had been removed. The essential additional fact which she had to know to constitute the required knowledge and to set time running was that it was a healthy and not a cancerous breast that had been removed :
“If one asks on common sense principles what Mrs Dobbie was complaining about, the answer is that the surgeon had removed a healthy breast. It would in our view be a seriously incomplete statement of her case to say that it was simply that the surgeon had removed her breast. This is not a matter of elaborating the detail by requiring knowledge of precisely how he had come to do the act complained of, such as this court rejected in Broadley. It was part of the essence of her complaint. Nor is it requiring knowledge of fault or negligence. The court’s emphatic rejection of such a requirement is entirely consistent with characterising the act complained of (and of which knowledge was therefore required) as the removal of a healthy breast.”
One readily sees the necessity of requiring the plaintiff at least to know that the removed breast had not in fact harboured a cancerous growth and that there had been no diagnostic examination before its removal, if time was to run against her. One can, however, also see the attraction of characterising the essentials of her complaint as having additionally to include the proposition that removal of a breast merely on the surgeon’s suspicion that the growth was cancerous and without a biopsy was not accepted medical practice – something that she did not discover until 15 years later. However, it is understandable that such argument was rejected as shading too far into a requirement for knowledge that the surgeon had acted negligently, which is territory forbidden by section 31(6). I venture to suggest that in the light of A v Hoare, a similar case to Dobbie occurring in the future might well find the court more willing to exercise the personal injury discretion to override the limitation period, especially in the light of the plaintiff having been advised by the surgeon and the nurse that she had had a fortunate surgical outcome, thereby putting her off the scent and contributing greatly to her delay.
D.7 Legal advice and section 31(7)
The position taken by both parties during submissions was that section 31(7), which deals with imputed or constructive knowledge, has no application to the taking of legal advice. In my view, that is too broad and undifferentiated a proposition.
Two matters might be suggested in favour of excluding section 31(7)’s application to the giving of legal advice, namely:
that section 31(6) provides: “Knowledge that any acts or omissions did or did not, as a matter of law, involve negligence is irrelevant for the purposes of subsection (1)”; and
that section 31(7)(b) confines the imputation to knowledge which the plaintiff might reasonably have been expected to acquire “from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek.”
To take the first of these, section 31(6) operates to make it clear that time may run against a plaintiff even though he has no idea that the acts or omissions of the defendant involved negligence as a matter of law. It follows that it is never relevant to ask whether the plaintiff knew that such acts or omissions involved negligence on the defendant’s part. It also must follow that it is never relevant to invoke section 31(7) with a view to establishing that the plaintiff ought to have such knowledge of the defendant’s negligence imputed to him. But that is the limit of section 31(6)’s impact on section 31(7). There is nothing in section 31(6) to suggest that it operates so that the expert advice of a lawyer on topics other than the defendant’s liability to the plaintiff can never be “appropriate expert advice” or advice “appropriate to act on” within the meaning of section 31(7)(b).
The second matter centres on the word “facts” in section 31(7)(b). A person, it might be said, goes to a lawyer for advice on the law and not about facts. Accordingly, one would not expect the plaintiff to acquire knowledge from facts which he has ascertained with the help of expert legal advice since that is not the function of such advice. Therefore, so the argument runs, section 31(7) has no role to play in connection with legal advice. In my view, this argument over-simplifies the nature of the advice which a client seeks and obtains from his lawyer.
Section 31(7) might of course have no application in a situation where the plaintiff seeks advice purely on some point of law, for instance as to whether under Hong Kong law a company can operate with only one director or whether we have the equivalent of American anti-trust legislation. However, it must be very rare for advice to be sought purely on a point of law. A client does not go to a lawyer for an academic seminar but to ascertain matters of factual relevance to himself. He may for instance wish to find out, to use commercial rather than legal terms, what his “exposure” is or what financial consequences he faces in a particular situation: how much he might have to pay or be able to recover following a failed transaction; whether he may have difficulties realising security taken for a loan; or whether his insurers might refuse to indemnify him for a loss; or how much tax he has to pay; and so forth. These are all factual matters and may constitute damage which has already occurred or which may be looming in the future. Simply because the lawyer, in giving the advice is likely to refer to a statutory provision or principle of the common law in support of his conclusions, does not eclipse the factual dimensions of the advice given which may be important in a limitation context. It is therefore my view that advice obtained from lawyers in such circumstances is capable of being characterised as advice about “facts ascertainable by [the plaintiff] with the help of appropriate expert advice”, although, as it happens, resort to such imputed knowledge is unnecessary in the present case.
E. Kensland’s claim and the secondary limitation period
E.1 Kensland’s case on knowledge
In Section B.1 above, the damages claimed by Kensland have been set out together with the factual basis of such claims: HK$8 million to recover the damages Kensland was held liable to pay to Whale View; HK$2,767,407.33 to recover legal fees incurred; and HK$17,980,000 to compensate for “the diminution in value [of the premises] between 9 September 1997 and 19 May 1998”. They are all pleaded to be attributable to the “negligent legal advice by [TTC]” consisting of the particularised acts and omissions referred to above.
Financial detriment of this magnitude is plainly sufficiently serious on the objective standard imported by section 31(5)(a). Neither can there be any doubt that insofar as Kensland knew or is taken to have known that it had incurred such damage, it must have known or could be taken to have known that it was attributable to the advice given by TTC and acted upon by Kensland.
So the crucial question is: When, as a matter of fact, did Kensland first have knowledge (or to the extent necessary, imputed knowledge) that it had incurred such damage? Unless its date of knowledge fell within the three-year period immediately preceding 13 January 2004 when the writ against TTC was issued, the secondary limitation period does not save the claim from being statute-barred.
Kensland puts forward as its date of knowledge, 23 January 2001 which does fall within that three-year period. That was when the Court of Appeal handed down judgment in the original proceedings. Kensland argues that it did not have the required knowledge until it knew, as a result of that judgment, that the advice it had received from TTC was wrong:
“... it is necessary to know that the advice was wrong, because without that knowledge, there was no knowledge of a loss and so no knowledge of the facts which constitute the cause of action.”
E.2 The facts relating to Kensland’s actual knowledge
To put Kensland’s argument in a proper context, the facts relating to its rejection of the tendered purchase monies and the events which followed must be examined.
According to Ms Yeung, shortly after payment had been tendered by Whale View at 1:06 pm on 2 September 1997 she received a phone call from a Mr Tang of TTC who advised her that Whale View had repudiated the contract and that Kensland was entitled to rescind the agreement and to forfeit the deposit. She adds:
“... Mr Tang said to me that if I decided to rescind the Agreement, the other side might argue that the late delivery of the cheques was caused by [Kensland’s] delay in giving the instructions on the split cheque arrangement. However, he then said to me that he thought ‘one and a half hour’ would be regarded as sufficient time for the preparation of the split cheques.”
Ms Yeung records that when she went to Mr Tang’s office a little later that afternoon, he advised her that :
“... the other side might sue [Kensland] to get back the deposit. However, he told me that the chances of their succeeding were very low.”
Later that day, TTC received a letter from TPY (which TTC forwarded to Kensland) asking whether TTC had instructions to accept service of proceedings and stating:
“We … wish to place on record that [after a fax received at 11:12 a.m.] ... correct instructions were only given to us by telephone ... at around 11:45 a.m. You have given us effectually one hour and fifteen minutes to arrange for the issue of cashier orders for completion. ... Your delay in advising us the manner in which the balance of the purchase price is to be paid has left us with an unreasonably short period of time to arrange the cashier order for completion.”
On the following day, Whale View’s writ claiming specific performance and damages was served and a lis pendens registered. In the Statement of Claim which followed on 16 October 1997, Whale View pleaded an implied term that the split cheque directions should be given within a reasonable time before the deadline for completion, that the time allowed was not reasonable and that Kensland was accordingly not entitled to rescind and was liable for the relief claimed.
On 28 October 1997, Kensland filed a Defence stating: “If, which is not admitted, there was an implied term [to give the directions allowing a reasonable time] the defendant says that such reasonable time is 1 hour”.
By mid-November 1997, the property market had collapsed and on 14 November 1997, reflecting Kensland’s realisation that the value of the property had fallen sharply, TTC wrote to counsel instructing him to advise on questions including the following:
“(1) Can [Kensland] bind [Whale View] to purchase the said property at the price of HK$55,000,000 if we take out a Summons (or write a letter) admitting [its] claims or submitting to judgment as claimed?
(2) In such event, can [Whale View] amend ... to avoid purchasing the property if [it] takes note that the property is now worth much less than HK$55 million? ...
(4) If [Kensland] successfully admits [Whale View’s] whole claim and [Whale View] accepts such admission, what is the likely quantum of damages which [Whale View] can recover?
(5) If [Whale View] withdraws its claim for specific performance, can [Kensland] successfully apply to vacate the lis pendens from the Land Registry?”
By this time, some HK$78,300.00 in legal costs had been incurred.
On 19 December 1998, Kensland changed its solicitors, TTC ceasing to act, although no evidence was filed as to why this occurred.
E.3 What Kensland knew
On the foregoing facts, there can be no doubt that Kensland had actual knowledge of its having incurred serious financial damage from the outset and well before the start of the relevant three-year period in January 2001.
The first head of damage consisted of the liability to Whale View arising upon Kensland’s refusal to complete on 2 September 1997. Kensland knew full well on that very day that in doing so, it ran the risk of being held liable for breach of the agreement. That was what Ms Yeung was told by Mr Tang, even before Kensland decided to refuse the payment. This is not one of those cases where the plaintiff contracted a liability without having any inkling that this has occurred.
The risk of being held liable to Whale View was manifestly brought home to Kensland by TPY’s letter delivered later on 2 September and by Whale View’s writ issued the next day. The particulars of Whale View’s claim based on an implied term – essentially upheld in the Court of Appeal and in this Court – were set out in the Statement of Claim so that by 16 October 1997 Kensland knew in detail how it was at risk.
What Mr Scott’s argument actually amounts to is the contention that Kensland was not fixed with the required knowledge because it did not know for certain that liability for breach of the agreement would be established until the court declared that such was the position. But, as we have seen, knowledge as a certainty is not the standard. Rather, applying the objective standard developed by the courts regarding certainty of knowledge, one must ask at what point in time the potential for being held liable to Whale View would have been regarded by a reasonable person as sufficiently real to lead him to conclude that taking steps preliminary to the commencement of proceedings against TTC would be justified.
It is true that on 2 September 1997, Ms Yeung was being advised by Mr Tang that the risk was low. But on any objective assessment, the risk ought to have been seen as very significant. The precariousness of Kensland’s position is brought out by the plea in its Defence that a “reasonable time” for completion “is one hour.” Bearing in mind that Whale View had written on 2 September complaining that 1 hour and 15 minutes had insufficiently been allowed, Kensland’s defence rested on the slim margin of about 15 minutes. Concepts of “reasonableness” are obviously to some degree impressionistic and commonsense dictates that no one could be confident in drawing such a fine line to separate what would, from what would not, constitute a “reasonable time” in this context.
Moreover, whatever confidence might have been exuded in the advice received on 2 September, it is clear from the letter to counsel dated 14 November that, at least by then, Kensland fully appreciated that if it lost or admitted the other side’s case, an award of damages would be faced and was seeking advice as to its likely quantum. Additionally, the possibility that the advice received may have been wrong and that the advising solicitors may have been negligent must have occurred to Kensland when they saw Whale View joining TPY as alternative defendants in their writ. There can accordingly be no doubt that, so far as damage in the form of liability to Whale View was concerned, Kensland’s actual awareness was at an ample level of certainty and detail to qualify as knowledge within section 31.
Furthermore, as we have seen, Kensland’s case is not merely that it had suffered damage in the form of such liability. It also claims damages in respect of damage incurred by having to pay legal costs and in suffering the property’s fall in value. By 15 November 1997, Kensland knew that it had already incurred legal costs totalling $78,300.00 and that the property was “worth much less than HK$55 million”. There was no element of uncertainty or vagueness regarding such damage although the precise quantification of each head of loss was something for the future. As noted above, the need for quantification does not detract from the earlier accrual of the cause of action. Moreover, as previously noted, Kensland agreed with Whale View that its liability to pay interest should date from 3 September 1997. Additionally, in its own pleadings, Kensland crystallizes the loss in the value of the premises, presumably a matter within its own knowledge, in the sum of $17.98 million as at 19 May 1998, a date well before the start of the relevant three-year period. There was, in brief, nothing latent about the damage incurred.
F. Conclusion
Kensland plainly had actual knowledge about the relevant damage with a sufficient degree of certainty for section 31 purposes commencing on 2 September 1997. The damage and actual knowledge thereof were added to in the period leading to mid-November 1997 and supplemented further in the period up to 19 May 1998, all well before the secondary limitation period can make any difference. It is unnecessary to consider any imputed knowledge. Kensland’s case is that the damage flowed from its acting on TTC’s advice when it refused to complete the contract. It obviously knew that it was acting on such advice. It therefore knew that such damage was attributable to TTC’s acts and omissions representing the advice tendered. Kensland’s claim is accordingly, in my view, statute-barred and the appeal must be dismissed.
I would finally add that where a plaintiff’s reliance on section 31 is sought to be challenged in advance of the trial, this should generally be by trial of a preliminary issue so that all relevant evidence can be adduced and tested. As it happens, the materials available to the court in the present case were sufficient to allow the claim to be struck out in the exercise of the court’s inherent jurisdiction. However, even then, certain issues of possibly relevant fact were unresolved, such as why Kensland changed solicitors in December 1998 and on what basis the value of the property was said to have dropped by HK$17.98 million as at 19 May 1998. Issues such as these ought to be investigated, with oral evidence if necessary, on the trial of a preliminary issue. If the facts had been less unequivocal, adoption of the striking-out procedure would have involved a waste of time and costs since an arguable question of whether Kensland’s case was time-barred would have had to be examined afresh at the trial.
Mr Justice McHugh NPJ:
Kensland Realty Limited (in compulsory liquidation) (“Kensland”) appeals against an order of the Court of Appeal which ordered that Kensland’s action for damages for negligence against Tai, Tang & Chong (“TTC”), the respondent be dismissed. The first question in the appeal is whether Kensland’s action was commenced outside the six-year limitation period mandated by s.4 of the Limitation Ordinance, Cap. 347 (“the Ordinance”)? If it was, two further questions arise. First, when did Kensland know such facts about its damage as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify instituting proceedings? Second, when did it know that that damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence on the part of TTC? If Kensland first obtained knowledge of either of these two matters within three years of commencing its action against TTC, s.31 of the Ordinance entitled it to bring the action, despite the action otherwise being barred by s.4 of the Ordinance.
In my opinion, Kensland’s claim against TTC was barred by s.4 of the Ordinance, and it was not entitled to the benefit of s.31 of the Ordinance because, over three years before it commenced its action, it knew facts about its damage that would lead a reasonable person to conclude that the damage was sufficiently serious to institute proceedings against TTC and knew that that damage was attributable to the acts or omissions of TTC that it alleges constitute negligence.
The material facts
TTC were Kensland’s former solicitors who had advised Kensland on 2 September 1997 that it could lawfully terminate a contract for the sale of premises on the ground that the purchaser of the premises had tendered payment of the sale price after the expiration of the time for completion.
In June 1997, Kensland, which had agreed to buy shop premises from Delight Holdings Limited for HK$53 million, agreed to sell the premises to Whale View Investment Ltd (“Whale View”) for HK$55 million. The contract with Whale View had to be completed by 1 pm on 2 September 1997 at the offices of TTC. Under the contract, Kensland was entitled to direct how the balance of the purchase price was to be paid, and Whale View’s obligation to pay that balance was not discharged unless payment was made in the manner stipulated. On three occasions – the last on the morning of 2 September 1997, Whale View’s solicitors asked TTC for the breakdown of the cheques and the persons in whose favour they should be drawn. TTC did not answer any of the requests until 11:13 am on 2 September. And it was not until 11:48 am that Whale View’s solicitors were finally informed of the correct amounts to be paid to various parties. In all, eight cheques and two cashier’s orders were required to be drawn and paid. Realising that they would not meet the 1:00 pm deadline, the solicitors for Whale View asked TTC for an extension of time to complete, but TTC, after saying that it would seek instructions, did not contact the solicitors for Whale View before 1:00 pm. In the result, the solicitors for Whale View did not arrive with the required cheques and cashier’s orders until 1:06 pm.
According to para.15 of Kensland’s Statement of Claim in the present action, TTC spoke to a director of Kensland shortly after this time and informed her that Whale View’s solicitors had failed to complete the purchase in time and that this constituted a breach of a material term of the agreement. TTC advised her that, because Whale View had repudiated the contract, Kensland was entitled to rescind the contract and forfeit the deposit. TTC also informed her that Whale View might challenge the rescission and seek the return of the deposit but its chance of succeeding in an action for these purposes was very low. Relying on this advice, Kensland terminated the contract.
On the following day, Whale View commenced proceedings against Kensland in which it claimed that the rescission was invalid, that the Court should order specific performance of the contract of sale and that the Court should assess its damages. It registered the writ as a lis pendens against the property. Kensland was kept fully informed of the progress of the action and the allegations made in Whale Views pleading and the terms of Kensland’s Defence to the action. By November 1997 Kensland had been invoiced for HK$78,300 for the costs of defending the action brought by Whale View.
On 14 November 1997, Kensland instructed TTC to admit Whale View’s claims. It also sought counsel’s advice on the possibility of admitting those claims and requiring Whale View to complete the purchase. This turnaround was motivated by the fact that “the property is now worth much less than HK$55 million”.
The trial of the action came before Deputy High Court Judge Gill who held that Whale View had repudiated the contract and that Kensland was entitled to damages. However, on 23 January 2001, the Court of Appeal allowed an appeal against these findings and held that it was Kensland who had repudiated the contract. It ordered Kensland to repay the deposit of HK$8.25 million and damages of HK$8 million together with interest at the rate of 10.5% from 3 September 1997. On 10 December 2001, this Court upheld the orders of the Court of Appeal but for different reasons. It held that, in the absence of an express clause to the contrary, where a contract for sale contains a clause empowering the vendor to give a direction concerning the manner of payment, there is an implied term arising from business efficacy to the effect that, if a direction is given, it will allow the purchaser a reasonable time to do what has to be done to comply with the direction prior to the time for completion. This Court held that the direction given at 11:13 am did not allow Whale View reasonable time to complete by 1:00 pm. Accordingly, Kensland had breached the implied term. Furthermore, because a party to a contract cannot take advantage of its own breach and because Kensland’s breach was the direct cause of Whale View’s failure to complete in time, Kensland could not treat that failure as a ground for terminating the contract. To the contrary, Kensland’s failure to accept the tender at 1:06 pm was itself a repudiatory breach of the contract entitling Whale View to damages.
Over two years after this Court’s decision and almost three years after the Court of Appeal’s decision, on 13 January 2004 the liquidators of Kensland commenced an action for damages and interest thereon against TTC for negligent advice. Paragraph 19 of the Statement of Claim alleged that as a result of TTC’s negligent handling of Kensland’s affairs, it “has suffered damages”. Paragraph 21 gave “the particulars as to damages suffered by Kensland as the result of TTC’s negligent handling and advice concerning the sale and purchase of the property”: (1) HK$8 million, payable “as damages pursuant to the judgment of the Court of Final Appeal”; (2) HK$2,767,407.33, “paid by Kensland as legal fees”; and (3) HK$17,980,000, “being the diminution in value of the property following the non-completion of the sale”.
Paragraph 20 of the Statement of Claim pleaded six particulars of negligence. The first alleged that “TTC, for no good reason, failed to provide the instructions to [Whale View] within a reasonable time”. The second and third particulars alleged that TTC wrongly advised Kensland that Whale View’s late tender constituted a repudiation of the agreement and that instructions were given within sufficient time for the preparation of the cheques and cashier’s orders. The fourth particular alleged that TTC failed properly to review and consider the agreement, failed properly to advise on the basis thereof and in particular failed to advise that in law Kensland would not be entitled to take advantage of its own breach of the implied term. The fifth particular alleged that TTC failed to advise that, if Kensland’s delay in completion was due to its default, it would not be entitled to treat the agreement as repudiated. The sixth particular alleges that TTC failed generally to inform Kensland of the impact of the late instructions in the circumstances and failed to point out and advise fully of the risks involved in refusing to complete and of the very real risk of having to compensate Whale View.
On 26 May 2005, TTC issued a summons under RHC O.18 r.19 for an Order that the Statement of Claim be struck out on the ground that it was frivolous or vexatious or otherwise an abuse of the process of the Court. By a subsequent order, the parties were given leave to file and serve evidence in support of or opposition to the Orders sought. At first instance, Deputy High Court Judge Gill dismissed the Summons by TTC, but the Court of Appeal allowed an appeal by TTC and ordered that the action brought by Kensland be dismissed. Subsequently, this Court by a determination of the appeal committee gave leave to appeal against the order of the Court of Appeal.
The application to strike out
An order striking out a Statement of Claim, which is based on a limitation defence, can only be sustained if that defence is “manifestly and immediately destructive of the Plaintiff’s claim”: Ronex Properties v. John Laing Construction Ltd [1983] 1 QB 398 at 408A; Peconic Industrial Development Ltd v. Yu Ka Hong [2006] 4 HKC 406 at para.27. However, once a limitation defence is raised, the onus is on the plaintiff to prove that the cause of action relied upon accrued within the limitation period. In form, a limitation defence appears to be a defence of confession and avoidance. If it were, the onus of proof would lie on the party raising it. Indeed, the Full Court of the Supreme Court of Victoria has decided that, where the action concerns the occurrence of latent damage, the onus is on the defendant to plead and prove that the cause of action fell outside the period specified in the statute of limitations: Pullen & Another v. Gutteridge Haskins and Davey Pty Ltd [1993] 1 VR 27. But courts in the United Kingdom and this Court have taken the opposite view. They have insisted that, although the defendant must raise and plead the limitation defence, once the defence is pleaded, the onus is on the plaintiff to prove that the cause of action accrued within the limitation period: Darley Main Colliery Co. v. Mitchell (1886) 11 AC 127 at 135; Cartledge v. Jopling & Sons Ltd [1963] AC 758 at 784; London Congregational Union v. Harriss & Harriss [1988] 1 All ER 15 at 29; Bank of East Asia v. Tsien Wui Marble Factory (1999) 2 HKCFAR 349 at 384; Haward v. Fawcetts [2006] 1 WLR 682 at 688, HL. Accordingly, Kensland carries the burden of proving that its claim fell within the limitation period.
The Limitation Periods
(a) Section 4
Section 4 of the Limitation Ordinance, Cap. 347 declares that an action founded on simple contract or tort “shall not be brought after the expiration of six years from the date on which the cause of action accrued”.
Kensland contended that its cause of action had been brought within the six-year limitation period specified in s.4 of the Ordinance. It pointed out that a cause of action in tort does not accrue until damage is suffered: Coburn v. Colledge [1897] 1 QB 702, CA. Moreover, the damage must be damage in a “real and substantial sense”: Bank of East Asia v. Tsien Wui Marble Factory (1999) 2 HKCFAR 349 at 385, 388 and 390. In the usual case of an action based on the negligent advice of a solicitor, the cause of action arises when the advice is acted upon: Forster v. Outred & Co. [1982] 1 WLR 86; D W Moore & Co. v. Ferrier [1988] 1 WLR 267. However, Kensland contended that this was not the usual case. It argued that the outcome of its action in acting on the advice of TTC was unpredictable and that it suffered no damage before the decision of the Court of Appeal on 23 January 2001. Only then, so Kensland argued, could it or anyone else know that it had suffered damage. Until then, its liability to pay damages was contingent, not actual. Kensland sought to reinforce the argument by pointing out that it had succeeded at first instance in the High Court. Hence, so Kensland argued, its damage had not occurred earlier than 23 January 2001. Consequently, it contended that it could have commenced the present action at any time before 23 January 2007, and the present action, which was commenced on 13 January 2004, was well within the six-year limitation period specified by s.4 of the Ordinance.
In the courts below, Kensland conceded that it suffered damage and its cause of action arose in September 1997 when it acted on the advice of TTC in refusing to accept the late tender of payment by Whale View. In this Court, however, it sought to withdraw the concession. TTC did not oppose the withdrawal provided that it could rely on an affidavit whose tender had been rejected by Deputy High Court Judge Gill because of the concession. Kensland did not oppose TTC tendering and relying on the affidavit in question. Because that is so and the question is one of law on undisputed facts, it is a proper case for the Court to exercise its discretion and allow Kensland to withdraw its concession, despite the disadvantage of not having the benefit of the judgments of the courts below on the point: Adams (Deputy Federal Commissioner of Taxation (Victoria)) v. Chas. S. Watson Pty Ltd (1938) 60 CLR 545 at 548.
In my opinion, however, the concession made by Kensland in the courts below was correct. A plaintiff suffers damage when that person incurs a liability to pay damages, and that is so even though the quantification of the damage is not then ascertainable: Wardley Australia Ltd v. State of Western Australia (1992) 175 CLR 514 at 536 per Brennan J cited with approval by Lord Nicholls of Birkenhead in Nykredit Mortgage Bank Plc v. Edward Erdman Group Ltd (No.2) [1997] 1 WLR 1627 at 1634 and by Lord Hoffmann in Law Society v. Sephton [2006] 2 AC 543 at 551. Thus, when a defendant’s negligent breach of a duty of care causes physical harm to the plaintiff or the plaintiff’s property, the defendant incurs a liability to pay damages from that moment. The time for bringing the plaintiff’s action runs from the moment that the plaintiff suffers damage. That the damage cannot be quantified, or is not known, at that moment is not relevant. If the plaintiff acquires a benefit at the same time as acquiring the liability, however, it may not be possible to determine whether the plaintiff has suffered damage until an adverse balance is struck between the benefit and the burden of the liability: Wardley Australia Ltd v. State of Western Australia (1992) 175 CLR 514 at 536 per Brennan J. Similarly, if the damages are not payable until the happening of a further event, the plaintiff’s liability is contingent only and damage is not sustained until the event occurs: Wardley Australia Ltd v. State of Western Australia. Personal guarantees are cases that usually fall within this category.
Paragraph 21 of Kensland’s Statement of Claim sets out three heads of damage that it incurred as the result of TTC’s breach of duty. They were the liability to pay the damages that Whale View ultimately received – HK$8 million, the loss that it suffered in the diminution of the value of the property following non-completion of the sale – HK$17,980,000 and the consequential loss of legal fees incurred – HK$2,767,407.33. In acting upon the advice of TTC, Kensland did not obtain any benefit from Whale View or TTC. So no question of balancing benefit and burden arises. It is true that both the fact of its liability and the quantification of that liability had to await a judicial determination. But once that determination was made, both the liability and its quantification were fixed as from the date when Kensland acted upon the advice of TTC – 2 September 1997. Whale View was entitled to damages and interest thereon as from that date, and Kensland’s damage was incurred as at that date.
In contending that it had suffered no damage before the Court of Appeal gave its decision, Kensland sought to rely on the decision of the High Court of Australia in Wardley Australia Ltd v. State of Western Australia (1992) 175 CLR 514. In Wardley, the High Court unanimously held that a claimant who had been induced by misleading conduct to give an indemnity did not suffer damage until it was called on to meet the indemnity. The Court rejected the argument that the indemnifier suffered damage on entering into the indemnity agreement. However in Wardley, the indemnifier did not, and could not suffer, damage until it was called on to make good the indemnity. Until that time, its liability to pay damages was contingent only because it might never be called on to indemnify the party indemnified. The principle of that case has no application to a case such as the present where the determination of liability and damages is dependent upon a judicial decision. Judicial decisions determine the rights and liabilities of parties as at the date when the facts giving rise to those rights and liabilities arose. If the contrary were true, no defence under limitation statutes could succeed. Nor is there any valid analogy between the situation in Wardley and the present case. The rights and liabilities of Whale View and Kensland were not fixed as at the date of the Court of Appeal’s decision or the date when this Court affirmed that decision. The Court of Appeal and this Court declared the rights and liabilities of Kensland and Whale View as they existed as at 2 September 1997, not January 2001 or December 2001. Neither the liability nor the damage suffered by Kensland arose on the handing down of those decisions which merely declared the pre-existing rights and liabilities of the parties.
Accordingly, Kensland’s damage was suffered on 2 September 1997. As from that date, it had a liability to pay damages and interest thereon to Whale View. It was liable to pay nominal damages for its breach of contract as at that date even if Whale View had not suffered any actual damage. The damage flowing from that breach increased as time passed and eventually included the three heads of damage to which I have referred. However, for the purposes of s.4 of the Ordinance, Kensland suffered its damage on 2 September 1997, the date on which Whale View’s cause of action for damages arose. The present action, having been commenced more than six years after 2 September 1997, is therefore barred by s.4 of the Ordinance unless the case falls within s.31 of that Ordinance.
(b) Section 31
Section 31 of the Ordinance ameliorates the stringency of the operation of s.4. It provides:
“(1) This section applies to any action for damages for negligence, other than one to which section 27 applies, where the earliest date on which the plaintiff or any person in whom the cause of action was vested before him first had both-
(a) the knowledge required for bringing an action for damages in respect of the relevant damage; and
(b) a right to bring such an action,
(referred to in this section as the ‘date of knowledge’) falls after the date on which the cause of action accrued.
(2) The period of limitation prescribed by section 4(1) in respect of actions founded on tort shall not apply to an action to which this section applies.
(3) An action to which this section applies shall not be brought after the expiration of the period applicable in accordance with subsection (4).
(4) That period is either-
(a) 6 years from the date on which the cause of action accrued; or
(b) 3 years from the date of knowledge, if that period expires later than the period mentioned in paragraph (a).
(5) In subsection (1) ‘the knowledge required for bringing an action for damages in respect of the relevant damage’ (就有關損害而提出損害賠償訴訟所需的知悉) means knowledge-
(a) of such facts about the damage in respect of which damages are claimed as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment;
(b) that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence;
(c) of the identity of the defendant; and
(d) if it is alleged that the act or omission was that of a person other than the defendant, of the identity of that person and the additional facts supporting the bringing of an action against the defendant.
(6) Knowledge that any acts or omissions did or did not, as a matter of law, involve negligence is irrelevant for the purposes of subsection (1).
(7) For the purposes of this section or section 33 a person’s knowledge includes knowledge which he might reasonably have been expected to acquire-
(a) from facts observable or ascertainable by him; or
(b) from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek,
but a person shall not be taken by virtue of this subsection or section 33 to have knowledge of a fact ascertainable only with the help of expert advice so long as he has taken all reasonable steps to obtain (and, where appropriate, to act on) that advice.”
(c) The history of s.31
Section 31 is based on s.14A of the Limitation Act 1980 (UK) which was enacted to overcome the deficiencies in the law that existed in cases of latent injury or damage. It applies only to actions for the tort of negligence; it does not apply to an action for breach of contract or misrepresentation: Societe Commerciale de Reassurance v. ERAS (International) Ltd [1992] 2 All ER 82; Laws v. Society of Lloyd’s [2003] EWCA Civ 1887. Judicial exposition of the section is best understood by reference to the history of limitation legislation in the United Kingdom which led to the enactment of 14A of the Limitation Act 1980 (UK) through the medium of the Latent Damage Act 1986 (UK).
The long journey to s.14A began with the decision of the House of the Lords in Cartledge v. Jopling & Sons Ltd [1963] AC 758 where the House held that a plaintiff who suffered pneumoconiosis as the result of the defendant’s negligence suffered damage as soon as he inhaled the noxious dust that caused the disease even though he did not become aware of the disease until long afterwards. Consequently, the House held that the plaintiff’s action was commenced after the expiration of the limitation period and his action was statute barred.
To overcome the injustice that arose from the decision in Cartledge v. Jopling & Sons Ltd [1963] AC 758, the United Kingdom Parliament enacted the Limitation Act 1963, whose meaning gave rise to controversy with various courts and judges interpreting it differently. In 1975, Parliament made a second attempt to cure the injustice that arose from Cartledge. To overcome the perceived ambiguities in the 1963 legislation, it enacted what later became s.14 of Limitation Act 1980, which was a consolidation Act. As will appear, decisions on s.14 of that Act have been influential in interpreting s.14A.
However s.14 was also deficient. It applied only to actions for damages consisting of or including personal injuries or death. It did not apply to actions for latent damage to property. Consequently, in Pirelli General Cable Works Ltd v. Oscar Faber & Partners [1983] 2 AC 1, the House of Lords held that, because the plaintiff suffered damage when cracks first occurred in the chimney of its factory even though the plaintiff did not discover the damage until seven years later, the plaintiff’s action was commenced after the expiration of the limitation period. Accordingly the House held that the action was statute barred.
To overcome the injustice that the decision in Pirelli General Cable Works Ltd exposed, the Parliament enacted the Latent Damage Act 1986 (UK) which inserted s.14A in the Limitation Act 1980. Although there are differences both in form and verbiage between s.14A and s.31 of the Ordinance, these differences are not material. Consequently, decisions of the United Kingdom courts on s.14A would normally be persuasive authorities on the meaning of s.31 of the Ordinance.
As often happens with a much litigated section, however, the United Kingdom courts now tend to apply the judicial exposition of s.14A rather than its words. Unfortunately, as I see it, the judicial exposition in the United Kingdom has so far not been notably successful. This Court is not bound by judicial expositions by Courts in other jurisdictions, no matter how eminent is the stature of those Courts. That reminder is particularly important when the issue concerns the meaning of a statute. It is the text of the enactment, not the judicial expositions on similar statutes in other jurisdictions, that is binding. My preference would be to disregard the dicta with which the equivalents of s.31 have become encrusted, except in so far as they are helpful in applying it in particular circumstances, and apply what is to me, at least, the reasonably clear intention of the legislative text. I would have preferred this Court to develop its own jurisprudence on s.31. However, the parties conducted their cases within the framework of the judicial exposition of the equivalents of s.31. Because that is so, it would not be proper on this occasion to look at the section, stripped clean of the judicial exposition on the statutory equivalents of s.31 in the United Kingdom.
However, it does not follow that this Court should automatically apply the United Kingdom decisions. Judges develop the common law and interpret statutes against a background of the social, moral, economic and political values and assumptions of the societies in which they work. Inevitably, these values and assumptions influence the development of the common law and the interpretation of legislative texts. But the values and assumptions of societies are not necessarily the same. This is the reason why the courts of former United Kingdom colonies have legitimately developed the common law of their countries so that it no longer retains its unity with the common law of the United Kingdom: Invercargill City Council v. Hamlin [1996] AC 624 at 640 – 644 per Lord Lloyd of Berwick. It is also the reason that identical legislative texts may legitimately have different interpretations in different countries even in those countries that have inherited the rule of law and their legal systems from the United Kingdom: Geelong Harbor Trust Commissioners v. Gibbs Bright & Co. [1974] AC 810 at 818 – 820 per Lord Diplock.
In interpreting s.14 and s.14A of the Limitation Act 1980 (UK), the United Kingdom courts have given those sections a restricted meaning with the result, as the great majority of the leading cases show, plaintiffs have difficulty in obtaining the benefit of those sections. Whether or not these restrictive interpretations reflect an underlying assumption that justice requires that defendants should not have to litigate stale claims, as may well be the case, it does not follow that this Court should slavishly follow the reasoning and dicta in the United Kingdom cases. Despite the parameters in which the parties litigated this case, the rational development of s.31 of the Ordinance requires this Court to depart from the reasoning and dicta of those cases when it is persuaded that their reasoning and dicta cannot be justified by the legislative text of s.31.
(d) The construction of s.31
As the opening words of s.31 show, neither that section nor its UK counterpart is confined to cases of physical injury or physical damage. Cases of pure economic loss also attract the application of the section. In Haward v. Fawcetts [2006] 1 WLR 682 at 698, however, Lord Walker of Gestingthorpe warned that the “wide range of claims to which section 14A may extend suggests that general observations made by the court in one type of case may not be directly apposite in a case of another type”. Although, as reported cases on s.14A in the United Kingdom show, the section is sometimes difficult to apply in cases of physical injury or property damage, it is usually harder to apply in cases of economic loss. This is especially so when the provisions of s.31(5)(a) and (b) have to be applied to cases of economic loss resulting from a solicitor’s negligence, as in the present case.
Section 31(5)(a) is readily understandable and often easy of application when it has to be applied to the paradigm case of latent damage to property. In that case, it usually poses no difficulty to determine whether the plaintiff’s knowledge of “facts about the damage” would lead a reasonable person to consider the damage sufficiently serious to institute proceedings against a defendant who would not dispute liability. If the plaintiff knew that a chimney had cracks and also had constructive knowledge from “facts ascertainable by him with the help of appropriate expert advice”, s.31(7), that the chimney was liable to collapse, it is a simple matter of judgment as to whether a reasonable person would think those facts “sufficiently serious to justify his instituting proceedings”. Cases of latent physical injury may sometimes be more difficult of decision, but s.31(5)(a) also readily applies to them. The difficult cases are those of pure economic loss where the loss results from acting on professional advice. In cases concerning the professional advice of solicitors in particular, s.31(7) often does not have the scope for the operation that it has in other situations: see O’Sullivan, Limitation, latent damage and solicitor’s negligence 20 PN 218 at 219, 225.
The chief reason for this is that, in solicitors’ negligence cases, often there are no facts about the damage in any sense meaningful to a non-lawyer. It is legal advice or the lack of it in conjunction with facts in their ordinary sense that brings about the plaintiff’s damage in many cases concerned with a solicitor’s negligence. Without legal advice, facts – such as the contents of a document – may have no significance for the lay plaintiff. For example, a plaintiff who suffers damage because she executed a mortgage document with an “all moneys” clause in it may have no idea that she has suffered damage until she learns either from legal advice or the enforcement of the mortgage that she has suffered damage. And in such cases, it is the solicitor’s failure to give such advice that constitutes the case against him. It is unrealistic to conclude that, because a plaintiff had read or ought to have read the mortgage, that person knew the facts about the damage that he or she has suffered. As Janet O’Sullivan points out in Limitation, latent damage and solicitor’s negligence 20 PN 218 at 225:
“[I]n cases of solicitor’s negligence it is impossible to retain this sharp division between the facts and the law. At its simplest, the claimant’s case may be that he suffered damage as a result of incorrect advice about the law: he cannot know he has suffered damage unless he knows that the legal advice was incorrect. Or the claimant may have read a particular document revealing that he has suffered damage (and thus have knowledge of its contents), but may not have appreciated its meaning or its legal significance, primarily because his solicitor has not taken care to explain it to him. Or a solicitor may fail to give advice in circumstances in which the claimant, quite reasonably, does not appreciate that the solicitor owed her any duty of care at all.
In a nutshell, the problem once again is that the ‘the fact v law’ distinction was first enacted to solve a personal injury issue, more particularly the problem of claimants suffering from asbestos related industrial disease, who knew the facts of their injury and that it had been caused by their working conditions, but had not been advised that they had a cause of action against their employer. This wording was adopted wholesale for cases other than personal injury in the Latent Damage Act 1986, with no mention or discussion of it in the proceeding Law Reform Committee Report, and is, it will be suggested, wholly ill-suited to cases of solicitor’s negligence.”
But even if the fact v law distinction is glossed over, there are other problems. The “facts about the damage” in pure economic loss cases are often not observable or ascertainable by the plaintiff and, because it is often reasonable for the plaintiff to rely on the advice of the solicitor, it cannot be said that the plaintiff “might reasonably have been expected to acquire” knowledge of facts “with the help of appropriate expert advice” even if legal opinions and predictions concerning legal or curial events are treated as “facts”. Because of the reliance factor, it is also often difficult to determine whether the plaintiff had knowledge “that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence”.
The United Kingdom decisions
The similarities in the terms and purpose of s.14 and s.14A are such that the United Kingdom case law on s.14 assists in considering the meaning of the comparable or identical terms in s.14A. Indeed, the speeches in the House of Lords in the leading case of Haward v. Fawcetts [2006] 1 WLR 682 – a s.14A case – are replete with references to the case law on s.14. Because of the high similarity in the language of s.14A and s.31 of the Ordinance, the United Kingdom cases do give guidance on the meaning and application of s.31. But, as appears below, there are arguable difficulties in reconciling the judicial interpretation of the term “knowledge” with the text of the United Kingdom equivalents of s.31.
In Halford v. Brookes [1991] 1 WLR 428 at 443 – a decision on s.14 – Lord Donaldson MR said that the purpose of the section was “to determine a period of time within which a plaintiff can be required to start any proceedings”. In Broadley v. Guy Clapham & Co. [1994] 4 All ER 439 at 449, Hoffmann LJ agreed that this was the purpose of the section. And, in my view, it is also the purpose of s.14A and s.31 of the Ordinance.
As s.31(1) shows, the section is concerned with “the earliest date on which the plaintiff … had both … the knowledge required for bringing an action for damages in respect of the relevant damage; and … a right to bring such an action”. In the present case, it is common ground that Kensland had a right to bring the action. What is in dispute is whether it had the requisite knowledge.
The “knowledge required for bringing an action” means knowledge of the four matters specified in s.31(5). Time does not begin to run against the plaintiff for the purposes of the section unless that person had knowledge of those four matters: Dobbie v. Medway Health Authority [1994] 1 WLR 1234 at 1247 per Steyn LJ. If the plaintiff can establish that he or she did not have knowledge concerning any one of these matters until a date within three years of the commencement of his action in cases where the cause of action accrued more than six years before the action was commenced, the plaintiff obtains the benefit of s.31(4)(b). The legal onus is on the plaintiff to prove that he or she did not have knowledge of one or more of the matters in s.31(5) until a date within the three-year period in such cases. Forensically, however, the defendant will seek to show the opposite for the purpose of rebutting the plaintiff’s claim or, if possible, to establish positively that the plaintiff knew of each of the four matters more than three years before the commencement of an action that is otherwise statute barred.
In Halford v. Brookes [1991] 1 WLR 428 at 443, Lord Donaldson MR said that the term “knowledge” has to be construed in the context of the purpose of the section. His Lordship went on to say:
“In this context ‘knowledge’ clearly does not mean ‘know for certain and beyond possibility of contradiction.’ It does, however, mean ‘know with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking legal and other advice and collecting evidence.’ Suspicion, particularly if it is vague and unsupported, will indeed not be enough, but reasonable belief will normally suffice.”
In Haward v. Fawcetts [2006] 1 WLR 682 at 685, Lord Nicholls of Birkenhead said that this statement of Lord Donaldson MR “gave valuable guidance” “as to the degree of certainty required”. “In other words”, Lord Nicholls said, “the claimant must know enough for it to be reasonable to begin to investigate further”. In Dobbie v. Medway Health Authority [1994] 1 WLR 1234 at 1240, Sir Thomas Bingham MR said that Lord Donaldson’s test was not hard to apply. It involved, he said, “ascertaining the personal injury on which the claim is founded and asking when the claimant knew of it”.
In Nash v. Eli Lilly & Co [1993] 1 WLR 782 at 792, Purchas LJ, in giving the judgment of the Court of Appeal, said that it did not intend to lay down a definition for the purposes of the statute which Parliament had “left to speak for itself”. However, he went on to say that knowledge:
“… is a condition of mind which imports a degree of certainty and that the degree of certainty which is appropriate for this purpose is that which, for the particular plaintiff, may reasonably be regarded as sufficient to justify embarking upon the preliminaries to the making of a claim for compensation such as the taking of legal or other advice.”
In Broadley v. Guy Clapham & Co. [1994] 4 All ER 439 at 449, Hoffmann LJ expressed a view similar to that of Lord Nicholls and said that the purpose of s.14(1) was:
“… to determine the moment at which the plaintiff knows enough to make it reasonable for him to begin to investigate whether or not he has a case against the defendant. He then has three years in which to conduct his inquiries and, if advised that he has a cause of action, prepare and issue his writ. Ordinarily it will suffice that he knows that the injury was caused by an act or omission of the defendant. But there may be cases in which his knowledge of what the defendant did or did not do is so vague and general that he cannot fairly be expected to know what he should investigate. He will also not have reached the starting point if, in an unusual case like Driscoll-Varley v. Parkside Health Authority, he thinks he knows the acts and omissions he should investigate but in fact he is barking up the wrong tree.” (emphasis in original)
The courts have taken a strict view of a plaintiff’s obligation to investigate. In Forbes v. Wandsworth Health Authority [1997] QB 402 the plaintiff had two operations on his leg which was subsequently amputated. Nine years later he consulted a solicitor who obtained an expert report which indicated that the leg could have been saved but for the negligent delay in carrying out the second operation. The Court of Appeal held that the claimant was fixed with constructive knowledge from about 12 to 18 months following the operation. Stuart-Smith LJ said (at 412):
“It seems to me that where, as here, the deceased expected, or at least hoped, that the operation would be successful and it manifestly was not, with the result that he sustained a major injury, a reasonable man of moderate intelligence, such as the deceased, if he thought about the matter, would say that the lack of success was ‘either just one of those things, a risk of the operation, or something may have gone wrong and there may have been a want of care; I do not know which, but if I am ever make a claim, I must find out.’
In my judgment, any other construction would make the Act unworkable since the plaintiff could delay indefinitely before seeking expert advice and say, as the deceased did in this case, ‘I had no occasion to seek it earlier.’ He would therefore be able, as of right, to bring the action, no matter how many years had elapsed. This is contrary to the whole purpose of the Act which is to prevent defendants being vexed by stale claims which it is no longer possible to contest.”
Nothing in s.14, s.14A of the Limitation Act or s.31 of the Ordinance expressly refers to the investigation of a plaintiff’s case. But that requirement seems the inevitable construction of s.31(7) and its UK equivalents. The reference in that sub-section to “knowledge which he might reasonably have been expected to acquire … from facts observable or ascertainable by him; or … from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek” necessarily implies that the plaintiff will be fixed with facts whose observation or ascertainment can be determined objectively when they could reasonably have been obtained. And the words “which he might reasonably have been expected to acquire” imply a course of investigation by the plaintiff during which the plaintiff could be expected to observe or ascertain those facts.
But judicial statements about investigating whether the plaintiff has a claim or has a case or statements about beginning to investigate need to be read with care. They are relevant to the issue of constructive knowledge, not actual knowledge. They are concerned with the process by which the plaintiff becomes fixed with knowledge of facts that that person ought to have known. As will appear, I think that three of the Law Lords in Haward v. Fawcetts [2006] 1 WLR 682 overlooked this vital distinction and led them into error. The questions posed by s.31(5)(a) – (d) are required to be answered by the actual knowledge of the plaintiff as supplemented by the deemed knowledge of those facts that “he might reasonably have been expected to have acquired”. But questions about whether the plaintiff has or might have a claim or should embark on an investigation of the claim have nothing to do with answering the questions posed by those four paragraphs. Not only does s.31(7) exclude negligence as an issue but s.31(5)(a) is concerned only with the extent of the damage being sufficient to institute proceedings on the hypothesis that the defendant does not dispute his or her liability.
The knowledge of a plaintiff that is relevant for the purposes of s.31 is (1) his actual knowledge concerning the matters referred to in s.31(5)(a) – (d) and (2) the deemed knowledge of those matters that “he might reasonably have been expected to acquire” (i) from facts observable or ascertainable by him and (ii) from facts ascertainable by him with the help of appropriate expert advice which it was reasonable for him to seek. The Court is then required to make a judgment as to whether the combination of actual and deemed knowledge constitutes “knowledge” of those four matters. The fact that s.31(7) requires constructive knowledge to be taken into account means that the ultimate issue of knowledge does not depend on the mental state of the plaintiff. Knowledge for the purpose of s.31(5) is a legal construct consisting of the plaintiff’s actual knowledge and the deemed knowledge that is imputed to that person. Because that is so, to my mind, “knowledge” in s.31(5) simply means “awareness” or “recognition”. In dealing with each paragraph in that sub-section, the Court asks itself whether it was more likely than not that the plaintiff was aware of or recognised the existence of the matters specified in that paragraph.
Properly understood, I do not think that the statements of Lord Nicholls, Lord Donaldson MR, Purchas LJ or Hoffmann LJ to which I have referred were intended as an exhaustive description of the term “knowledge” in the United Kingdom equivalents of s.31(5). Rather they should be read as referring to the point in time when the plaintiff is required to find out more about bringing an action. In other words, they are directed to the s.31(7) situation; they are directed to the time when the plaintiff “might reasonably have been expected to acquire” (s.31(7)) further information about his or her case. If their Lordships had meant that a plaintiff had “knowledge” for the purpose of s.31(5)(a) – (d) as soon the plaintiff knew “enough for it to be reasonable to begin to investigate further”, the constructive knowledge provisions of s.31(7) would seem superfluous. It is hardly to be supposed that the plaintiff was to be fixed with knowledge of the facts referred to in s.31(7) before he had sufficient knowledge to require further investigation. If that is so, the point at which the plaintiff has “knowledge” for the purpose of s.31(5) cannot be the point at which it was reasonable for the plaintiff to investigate further.
Although a literal reading of what was said by Lord Nicholls, Lord Donaldson MR, Purchas LJ and Hoffmann LJ supports a contrary view, I do not think that their statements should be so read. It would mean that time would run against a plaintiff not from when he or she had knowledge of all the matters specified in s.31(5)(a) – (d) but from the time when the plaintiff should begin to investigate whether those matters were present and whether he or she had a valid or arguable claim. That seems contrary to what the legislature intended to be the case.
Knowledge “of such facts about the damage” – s.31(5)(a)
The first matter to which s.31(5) refers is knowledge “of such facts about the damage in respect of which damages are claimed as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment”. This paragraph draws a distinction between “the damage” and the “damages” that are claimed. It is knowledge of the “facts about the damage” that is relevant for the purpose of this paragraph, not knowledge of the damages that the plaintiff claims in the action. Section 31(5) also distinguishes between knowledge of “facts about the damage” in para.(a) and knowledge of “the damage” in para.(b).
It seems reasonable to conclude that “facts” in s.31(5)(a) include not only phenomena that are perceptible by or through the senses but also intellectual constructs such as systems, methods and expert opinions including predictions. Whether “facts about the damage” are “sufficiently serious” is a value judgment, and it is not to be supposed that the “reasonable person” of whom s.31(5)(a) speaks must always make that judgment unaided by expert advice as to the seriousness of the facts concerning that damage. It seems likely that s.31(7)(b), which refers to “facts ascertainable by him with the help of appropriate expert advice”, was enacted so that expert opinions that could reasonably be obtained would be considered in respect of the issues arising under s.31(5) whether the issue relates to the seriousness of damage under para.(a), attributability under para.(b) or identity under paras (c) and (d). Much expert advice consists of opinion, and there is no reason to confine the facts of which s.31(7) speaks to those physical phenomena that only the expert can see or identify and relate to the plaintiff. Section 31(5)(b), for example, raises the causal issue whether “the damage was attributable … to the act or omission which is alleged to constitute negligence”. In many cases, the issue of attributability is one on which expert opinion is required. Again, it is not to be supposed that the legislature intended this causal issue to be determined by reference only to the knowledge or judgment of a hypothetical reasonable person unassisted by expert opinion. Furthermore, I see no reason to confine opinions to past or current matters or events. In the context of the issues raised by s.31(5), there is no good reason for excluding “predictions” from the concept of “facts”. Suppose a plaintiff learns or could have learned from an expert: (1) that the cracking of a building was caused by defective foundations; (2) that the cracking is continuing; and (3) that the foundations are so defective that the building is likely to collapse. It would be astonishing if the legislature intended to exclude item (3) from the “facts” to be considered in determining whether the facts about the damage were sufficiently serious to justify proceedings.
Speaking generally, in cases concerning physical injury or property, the only issue under s.31(5)(a) is whether what is accepted as damage and was known to the plaintiff was sufficiently serious to justify instituting proceedings. As s.31(6) emphasizes, questions of whether any acts or omissions involve negligence is irrelevant to the s.31(5) issues, and s.31(5)(a) operates on the hypothesis that the defendant does not dispute that he is liable for the damage caused. Cases concerning economic loss, however, do raise difficult questions as to whether the plaintiff knew that he or she had suffered damage. Some cases of physical injury or property damage also raise questions as to whether the plaintiff knew that he or she had suffered damage. These cases raise the question whether bare physical facts alone constitute the existence of damage of which the plaintiff knew or whether the existence of damage requires an evaluation of those physical facts, an evaluation which will require either expert advice or the existence of an additional fact. The problem is illustrated by Dobbie v. Medway Health Authority [1994] 1 WLR 1234.
In Dobbie, the plaintiff had had an operation to remove a lump in her breast. Thinking that the lump was cancerous, the surgeon removed the whole breast without having the lump pathologically tested. In fact, the lump was benign, which the plaintiff learned shortly after the operation. Fifteen years passed before the plaintiff discovered that the surgeon should have had the lump tested before removing her breast. Dismissing her appeal against a lower court finding that the claim was statute barred, Sir Thomas Bingham MR said (at 1243):
“She knew of this injury within hours, days or months of the operation and she at all times reasonably considered it to be significant. She knew from the beginning that this personal injury was capable of being attributed to, or more bluntly was the clear and direct result of, an act or omission of the health authority. What she did not appreciate until later was that the health authority’s act or omission was (arguably) negligent or blameworthy. But her want of that knowledge did not stop time beginning to run.”
Beldam LJ said (at 1245):
“The injury in respect of which the plaintiff claims damages is the loss of her left breast and the severe psychological symptoms which followed. The act or omission of the defendant on which she relies is the act of the surgeon in removing the breast and the omission to carry out a test before doing so which would have indicated that the removal of her breast was unnecessary.
Thus the plaintiff had actual knowledge as required by section 14 within a few days of the operation being performed.”
The difficulty about this reasoning is that the damage that the plaintiff suffered was not the loss of her left breast, as Beldam LJ found. If the breast had been cancerous, its removal would have caused her no damage. No one could sensibly say that a person suffers damage when a cancerous growth is removed. The plaintiff’s damage was the loss of a healthy breast. Until she learned that her breast should not have been removed, she did not know “that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence”. The Court of Appeal subsequently recognised this in Hallam-Eames v. Merrett Syndicates [2001] Lloyd’s Reports PN 178 where Hoffmann LJ, giving the judgment of the Court, said (at 181):
“If one asks on common sense principles what Mrs Dobbie was complaining about, the answer is that the surgeon had removed a healthy breast. It would in our view be a seriously incomplete statement of her case to say that it was simply that the surgeon had removed her breast. This is not a matter of elaborating the detail by requiring knowledge of precisely how he had come to do the act complained of, such as this court rejected in Broadley. It was part of the essence of her complaint. Nor is it requiring knowledge of fault or negligence. The court’s emphatic rejection of such a requirement is entirely consistent with characterising the act complained of (and of which knowledge was therefore required) as the removal of a healthy breast. But the judge [ie in the present case], as it seems to us, has read Dobbie to mean that knowledge that the surgeon had removed her breast would have been enough.
If one asks what is the principle of common sense on which one would identify Mrs Dobbie’s complaint as the removal of a healthy breast rather than simply the removal of a breast, it is that the additional fact is necessary to make the act something of which he would prima facie seemed entitled to complain. She was suspected of having a cancerous lump and if this had been the case, the removal of the breast would not have been a matter for complaint.”
The analysis of Dobbie by Hoffmann LJ was directed at the United Kingdom equivalents of s.31(5)(b) “that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence”. The difficulty I have with the reasoning of the Court of Appeal in explaining Dobbie is that it re-writes the terms of s.31(5)(b). It substitutes the plaintiff’s complaint in a broad sense for the words “act or omission which is alleged to constitute negligence”. By referring to the “removal of a healthy breast”, the Court substituted a compound conception of s.31(5)(a) and s.31(5)(b). I would have thought it was the failure to test the lump in her breast that was relevantly the “act or omission” and that losing a healthy breast was “the damage”. Nevertheless, Lord Justice Hoffmann’s analysis indicates that Dobbie was wrongly decided on para.(a) of the UK equivalents of s.31.
In Haward v. Fawcetts [2006] 1 WLR 682 at 686-687, Lord Nicholls said the Court of Appeal in Dobbie had erred when it criticised the trial judge in that case for saying that the claimant had to have “broad knowledge of sufficient facts to describe compendiously (i) that her breast had been unnecessarily removed, (ii) that something had gone wrong”. Lord Nicholls said (at 687) that the essence of the claimant’s case in Dobbie was that “she had suffered injury by the removal of a healthy breast, that is, her breast had been removed unnecessarily and something had gone wrong. These were the acts and omissions she alleged constituted negligence. Under the statute, time did not begin to run until she knew of these acts or omissions. Until she was aware of these matters she could not know her injury was attributable to them”. Lord Nicholls said that he agreed with the observations concerning Dobbie that the Court of Appeal made in Hallam-Eames v. Merrett Syndicates [2001] Lloyd’s Reports PN 178 at 181.
These remarks of Lord Nicholls were also directed to the United Kingdom equivalent of s.31(5)(b) but they apply equally to the issue under s.31(5)(a). It may be that his Lordship did not think his analysis of Dobbie applied to the United Kingdom equivalent of s.31(5)(a), but this seems unlikely. In Haward v. Fawcetts [2006] 1 WLR 682 at 701, Lord Walker also agreed with the analysis by Hoffmann LJ of Dobbie.
In Dobbie, Sir Thomas Bingham MR had said that questions of evaluation do not enter into the question of a plaintiff’s knowledge in the United Kingdom equivalent of s.31(5)(a). After referring to Broadley v. Guy Clapham & Co. [1994] 4 All ER 439 and Nash v. Eli Lilly & Co. [1993] 1 WLR 782, Sir Thomas Bingham MR said [1994] 1 WLR 1234 at 1241H:
“These decisions are, I think, consistent with and supportive of the construction of the statutory language set out above, subject to one possible qualification. The requirement that the injury of which a plaintiff has knowledge should be ‘significant’ is in my view directed solely to the quantum of the injury and not to the plaintiff’s evaluation of its cause, nature or usualness. Time does not run against the plaintiff, even if he is aware of the injury, if he would reasonably have considered it insufficiently serious to justify proceedings against an acquiescent and credit-worthy defendant, if (in other words) he would reasonably have accepted it as a fact of life or not worth bothering about…” (my emphasis)
In Dobbie, Sir Thomas Bingham MR was construing s.14 which required knowledge “that the injury in question was significant”. The term “significant” does not appear in s.14A or s.31 but Lord Mance in Haward v. Fawcetts [2006] 1 WLR 682 at 717 and Chadwick LJ in 3M United Kingdom Plc v. Linklaters & Paines (A Firm) [2006] PNLR 543 at 553-554 took the view that Sir Thomas Bingham’s remarks were equally applicable to the United Kingdom equivalent of s.31(5)(a). In Haward, Lord Mance said (at 717):
“106 …Subsection (6) of section 14A distinguishes two aspects of the knowledge required. The first aspect relates to the seriousness of the damage, the second to ‘the other facts relevant to the current action’ including in particular that such damage was attributable in whole or part to the act or omission alleged to constitute negligence and the identity of the defendant. The seriousness of the damage is relevant because there may be cases where, although it is known that loss has been suffered due to the negligence of another person, the loss may appear for a time so minor that no one would contemplate instituting proceedings. That is I think more likely in the area of personal injuries and fatal accidents, covered by section 14 on which section 14A (7) - (10) were modelled, than in the area covered by section 14A itself. In both areas, the statutory language assumes that it is known that there has been some injury (under section 14) or damage (under section 14A). But this too can give rise to difficulty. If a doctor advises that it is necessary to operate, or to remove a breast, in order to remove a malignant tumour, one would not usually speak of the patient sustaining an injury until one knew that the diagnosis was misconceived and there was no such tumour. Similarly, if a financial adviser advises in favour of an investment, one would not describe the making of the investment itself as ‘damage’ until one discovered that it had been a bad or unsound investment from the outset.
107. In such cases, there is an interplay between knowledge of what would ordinarily be regarded as injury or damage and knowledge regarding the factual circumstances in which the operation or investment occurred. Yet, the first aspect of the knowledge required relates to damage of sufficient seriousness ‘to justify [the claimant] instituting proceedings’ … whereas the knowledge required regarding the attributability of such damage to some act or omission of the defendants is, as will appear, not necessarily such knowledge as to justify proceedings. To maintain a coherent scheme, the better view therefore appears to be to treat the first aspect of knowledge as relating solely to matters of quantum and all questions regarding the evaluation or classification of damage as such as falling within the second aspect of the knowledge required. This is also the view taken in the authority: see Dobbie v. Medway Health Authority [1994] 1 WLR 1234, 1241 - 1242, per Sir Thomas Bingham MR.”
These passages were cited by Chadwick LJ in 3M United Kingdom Plc v. Linklaters & Paines (A Firm) [2006] PNLR 543 at 553-554.
No doubt s.31(5)(a) and its United Kingdom equivalents are directed solely to the issue of quantum (how serious is it?) but it does not follow that, in determining that issue, evaluation of the nature of the damage is irrelevant. One must first identify the damage before one can assess the quantum issue, and evaluation of facts may be necessary in determining whether damage has been suffered.
The difficulty of determining the issue of a plaintiff’s knowledge of damage in a solicitor’s negligence case is illustrated by Bowie v. Southorns [2003] PNLR 135. It also shows that the United Kingdom courts meet this difficulty by looking at the issue of “facts about the damage” in very broad terms. In 1988, the claimant and her husband had executed a charge in favour of a bank over their matrimonial home to secure the husband’s business debts. Although a partner in the defendant firm of solicitors had signed an attestation clause confirming that he had explained the charge to the claimant, she alleged in an action brought in 2001 against that firm for negligence that he had not done so. She further alleged that she did not believe that the solicitor was acting for her in 1988 and, although she had consulted solicitors and counsel in 1992 when she had unsuccessfully defended possession proceedings brought by the bank, she was not told that she might have an action against the defendant firm. Nelson J held that the action against the defendant firm was statute barred. He found (at 148) that the plaintiff knew that she had signed the legal charge over her home which secured repayment of some of the husband’s debts, that, when the bank commenced proceedings for possession, she knew there was a risk she might lose the home, that she thought that the solicitor acted for her husband’s business, that he had not explained the nature of the charge to her before she signed it, that she knew that the attestation clause was false and that she would not have signed the charge if he had explained what the document meant for her. His Lordship said (at 152):
“What is required is that the claimant must have in broad terms knowledge of the facts on which her complaint is based. She does not in my judgment have to know how a claim in damages might be presented by the lawyers. If she knows that she has suffered damage or loss or potential damage or loss that is sufficient … Here [the plaintiff] knew that there was a risk that she might lose her home, that that risk would become a reality if the bank succeeded in its action, and that that loss arose from her signing a legal charge which, if [the solicitor] had explained it to her properly, she would not have signed. I am satisfied on the evidence that she had this knowledge by November 1992. She did not need expert advice in order to have that knowledge which was in my judgment sufficient to lead her to the view, after the bank had commenced possession proceedings, that she had suffered damage such as to consider it sufficiently serious to justify the institution of proceedings. I am further satisfied that on the facts as I have found them, she knew that the damage was attributable in part to [the solicitor’s] failure to explain the charge to her, as but for that failure she would not have entered into the transaction.” (my emphasis)
Just as in Dobbie, “an additional fact” was necessary to convert the facts that the plaintiff knew into “damage”, so, in Bowie v. Southorns, it is difficult to see how the bare facts that Mrs Bowie knew constituted knowledge of “facts about the damage” unless there was added an element of legal knowledge, an element that did not exist until 2000. As Janet O’Sullivan points out in her comment on that case (Limitation, latent damage and solicitor’s negligence 20 PN 218 at 238):
“Unfortunately, justifying the result by reference to attribution in ‘broad terms’ does not explain how the solicitor’s omission to explain the charge to the claimant makes her damage attributable to the omission - unless you add that the solicitor was under a duty to her, he stands in the same position as ‘everyone else in the world’ who gave no advice about the charge!”
However, not all cases concerning a solicitor’s negligence raise difficult questions concerning the plaintiff’s knowledge of damage in the context of s.31(5)(a). In 3M United Kingdom Plc v. Linklaters & Paines (A Firm) [2006] PNLR 543, three related companies who were members of the 3M corporate group, held leases expiring in 2012. Each lease contained a break clause, personal to the tenant, which allowed the tenant at a price to determine the lease on one year’s notice ending on 4 December 1997. As part of restructuring the group in 1989, the defendant solicitors drafted assignments of the leases without noticing that the break clause in each lease was personal to the tenant. The loss of the right to terminate came to the knowledge of the group’s in-house lawyer during negotiations on 30 August 1995 for an extension of the break date to 31 March 2001. The landlord took the point that the option to terminate could no longer be exercised as a result of the assignments, and 3M lost the opportunity to move its operations penalty free to new premises it had obtained. The 3M companies did not commence their action against the solicitors until 1999 but it was agreed that it should be treated as started on 1 September 1998.
The Court of Appeal held that the action was statute barred. The Court rejected the argument that 3M did not know that it had suffered damage before 1 September 1995 because it did not know until after that date that the landlord could and would rely on the fact that the option had been lost which was knowledge acquired after 1 September 1995. Chadwick LJ said that the damage to the plaintiff was the loss of the options when the leases were assigned in 1989. He said (at 557) that it was impossible to contend that, because the landlord had agreed in principle to defer the options before 30 August 1995 when it thought that they were exercisable in 1997 it could be taken as an indication that it would be willing to affirm the agreement in principle once it knew the options were not exercisable. His Lordship said (at 557):
“The true position on August 30, 1995, as the judge appreciated, was that the claimant companies…well knew what they had lost by the assignments in 1989. And they knew that that loss was serious, unless the problem could be solved. The hope that [the landlord] would not receive informed advice as to the strength of its position has not been advanced: there could be no basis for a suggestion that the landlord would not be properly advised by its solicitors. The hope that there could be a solution to the problem by negotiation was founded on sand: there was no basis for negotiation.”
The foregoing discussion shows that there are difficulties in applying s.31(5)(a) in some cases, particularly when the case concerns a solicitor’s negligence and more so when it concerns a negligent omission. There is also, as I have indicated, judicial support for the view that s.31(5)(a) is concerned solely with quantum and does not concern itself with “questions regarding evaluation or classification of damage”, a view which I think is erroneous.
The questions under s.31(5)(a) aided by s.31(7) then are:
when did the plaintiff know enough to make it reasonable for him to begin to investigate whether or not there are other facts that are relevant to the issues under that paragraph;
what facts about the damage did the plaintiff actually know with or without that investigation;
what facts about the damage should the plaintiff have known by reason of the hypothetical investigation; and
would the plaintiff’s actual or constructive knowledge of facts about the damage have led a reasonable person to consider that they were sufficiently serious to justify instituting proceedings against the defendant on the assumption that the defendant did not dispute liability and would meet a resulting judgment?
Section 31(5)(a) and the present case
Whatever difficulties may be present in some cases in determining whether the plaintiff had knowledge of the “facts about the damage” for the purpose of s.31(5)(a), no difficulties arise in this case. Paragraph 19 of the Statement of Claim alleged that as a result of TTC’s negligent handling of Kensland’s affairs, it “has suffered damages”. Paragraph 21 gave “the particulars as to damages suffered by Kensland as the result of TTC’s negligent handling and advice concerning the sale and purchase of the property”: (1) HK$8 million, payable “as damages pursuant to the judgment of the Court of Final Appeal”; (2) HK$2,767,407.33, “paid by Kensland as legal fees”; and (3) HK$17,980,000, “being the diminution in value of the property following the non-completion of the sale”.
Kensland almost certainly did not know the quantum of this damage until the litigation against Whale View had concluded. But it knew each of the three heads of damage that are the basis of its claim for damages no later than the end of November 1997. It knew on 3 September 1997 that it was being sued for specific performance of the contract and for damages as the result of acting on the advice of TTC that it could terminate the contract for the sale of the premises. By November 1997, it had been required to pay HK$78,300 to defend the action brought by Whale View. On 14 November 1997, it sought counsel’s advice on the possibility of admitting Whale View’s claim because “the property is now worth much less than HK$55 million”. Thus, by the end of November 1997, it knew each of the three heads of damage that now form the basis of its action for damages against TTC, and these three heads of damage are “the facts about the damage” that are relevant for the purpose of s.31(5)(a).
Kensland’s knowledge of these heads of damage then raises the question whether they would lead a reasonable person to consider them sufficiently serious to justify his instituting proceedings for damages against TTC. Section 31(5)(a) does not make time run when a plaintiff knows “the damage”; it makes it run when the plaintiff knows “the facts about the damage” which would lead a reasonable person to conclude that proceeding are justified. On this aspect of the present case, it is not even necessary to adopt the approach of Nelson J in Bowie v. Southorns [2003] PNLR 135 and look at the facts about the damage in “broad terms” or look at the “potential damage or loss”. No later than the end of November 1997, Kensland had knowledge of the specific facts concerning the damage which is the subject of its damages claim.
Given the hypothesis upon which s.31(5)(a) proceeds – that the defendant does not dispute its liability and is able to satisfy a judgment against it – there can be no doubt that a reasonable person would have considered the facts about the damage in this case sufficiently serious to justify instituting proceedings by the end of November 1997. As I have indicated, this paragraph is concerned with quantum. What it requires is the judgment of a reasonable person as to whether the facts about the damage are sufficiently serious and therefore the likely amount of damages recoverable sufficiently large to justify bringing an action against a defendant who will not be disputing that he is liable for the damage and can satisfy the judgment obtained. Thus, the s.31(5)(a) issue in the present case must be decided on the basis that TTC did not dispute its liability to Kensland for damages for the three heads of damage which is the basis of its damages claim. Each of those heads of damage was substantial and exposed Kensland to a liability to pay large sums of money to Whale View. To my mind, there can be no doubt that in these circumstances a reasonable person would regard the facts about the damage sufficiently serious to justify proceedings against a hapless defendant who cannot dispute its liability and can satisfy the judgment against it.
Accordingly, in my opinion by the end of November 1997, Kensland had the relevant knowledge for the purpose of s. 31(5)(a).
Section 31(5)(b)
Section 31(5)(b) raises the issue whether, by reason of actual or constructive knowledge or both, the plaintiff knew “that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence”. It is necessary that the plaintiff know the act or omission that allegedly constitutes negligence, but the plaintiff does not need to know “that, as a matter of law, such act or omission involve negligence”: Haward v. Fawcetts [2006] 1 WLR 682 at 719 per Lord Mance. As I earlier indicated, this paragraph concerns “the damage” as opposed to para.(a)’s concern with the “facts about the damage”.
If one simply examined the terms of s.31 and its United Kingdom equivalents, the meaning of s.31(5)(b) would seem clear enough. By reason of the provisions of s.31(6), all that s.31(5)(b) requires is for the Court to identify the damage and the act or omission alleged to constitute negligence and ask whether the plaintiff had knowledge that the damage was attributable to that act or omission without its negligent quality. Unfortunately, as I see it, the clear meaning of the paragraph has become encrusted with judicial dicta that have substituted judicial exposition for the meaning of the paragraph. One of the best known expositions of the paragraph is found in the judgment of Hoffmann LJ in Hallam-Eames v. Merrett Syndicates [2001] Lloyd’s Reports PN 178 when he explained the operation of the United Kingdom equivalent of s.31(5)(b). He said (at 181):
“In other words, the act or omission of which the plaintiff must have knowledge must be that which is causally relevant for the purposes of an allegation of negligence… It is this idea of causal relevance which various judges of this court have tried to express by saying the plaintiff must know the ‘essence of the act or omission to which the injury is attributable’ (Purchas LJ in Nash v. Eli Lilly & Co [1993] 1 WLR 782, 799) or ‘the essential thrust of the case’ (Sir Thomas Bingham MR in Dobbie [1994] 1 WLR 1238) or that ‘one should look at the way the plaintiff puts his case, distil what he is complaining about and ask whether he had in broad terms knowledge of the facts on which that complaint is based’ (Hoffmann LJ in Broadley [1993] 4 Med L R 328, 332).”
Lord Scott cited this passage with evident approval in Haward v. Fawcetts [2006] 1 WLR 682 at 695, as did Lord Walker at 700-701. In the same case, Lord Nicholls cited with approval the above passage in the judgment of Hoffmann LJ in Broadley v. Guy Clapham & Co. [1993] 4 Med L R 328, 332.
The various tests to which Hoffmann LJ refers represent, with great respect to those that have formulated them, a departure from the statutory text. What s.31(5)(b) and its United Kingdom equivalents require is knowledge “that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence”. They do not require knowledge of the “essence of the act or omission”, “the essential thrust of the case” or “in broad terms knowledge of the facts on which that complaint is based”. They require identification of the “act or omission” that the plaintiff says is negligent. And the inference to be drawn from s.31(6) is that the “act or omission” must be stripped of its negligent quality. If the plaintiff says that he was negligently advised, the act or omission is the advising. The issue under para.(b) then becomes when, as in Haward v. Fawcetts [2006] 1 WLR 682, whether the plaintiff knew that the loss of money invested (the damage) was attributable to that advising. If the plaintiff says that she lost a healthy breast by reason of the surgeon’s negligent failure to test the lump to see whether it was cancerous before removing it, as in Dobbie v. Medway Health Authority [1994] 1 WLR 1234, the issue becomes when the plaintiff knew that the loss of her breast was attributable to not testing the lump to see whether it was cancerous before it was removed.
Three cases illustrate the operation of para.(b) in the United Kingdom. The first is Broadley v. Guy Clapham & Co. [1994] 4 All ER 439 where the plaintiff sued her solicitor for negligence in failing to commence an action for negligence against Mr Lowy, a surgeon, who had operated on her to remove a foreign body from her knee. As a result of the operation – which took place in August 1980 – the plaintiff “had left foot drop”. In June 1983, she consulted the defendant who arranged for her to see another orthopaedic surgeon who told her that the operation on her knee might have been negligent, but the solicitor did not receive a report from that surgeon and he did not issue a writ against Mr Lowy. It was not until 17 August 1990 that the plaintiff issued her writ against the defendant for negligence. The solicitor defended the action by asserting that, if he was negligent, it caused the plaintiff no damage because her claim against Mr Lowy was barred by the Limitation Act when the alleged negligence occurred. Hence, as Balcombe LJ said (at 442) “the plaintiff’s cause of action against the defendant is barred if her knowledge of her cause of action against Mr Lowy and the hospital existed before 19 August 1981”. Strictly speaking, knowledge of a cause of action was not the issue. At first instance, Turner J found (at 442 – 444) that, by reason of the plaintiff’s actual and constructive knowledge, she knew before the relevant date in August 1981 all the matters to which the United Kingdom equivalent of s.31 refer. The Court of Appeal affirmed his decision.
Hoffmann LJ said (at 449):
“In this case the plaintiff knew, or could have known with the help of the medical advice reasonably obtainable, that her injury had been caused by damage to the nerve resulting from something which Mr Lowy had done or not done in the course of the operation. In my judgment this was all the knowledge or imputed knowledge which she needed to have.”
With respect, this decision and this reasoning seem plainly correct. Broadley and the facts in Forbes to which I earlier referred illustrate how the operation of s.31(7) with its constructive knowledge provisions works smoothly in most physical injury cases.
The second case is the leading case of Haward v. Fawcetts [2006] 1 WLR 682 where, on 9 December 1994, relying on the advice of Mr Austreng, a partner in a firm of accountants, the claimants acquired a controlling interest in a company. In addition, one of the claimants acquired the freehold of the company’s leased premises for ₤100,000. Mr Austreng also forecast that, by investing about another ₤100,000, the company would be brought to reasonable profitability during 1995. However, although the claimants invested further substantial sums in the company in 1995, 1996, 1997 and 1998, it failed to become profitable. In 1998 the first claimant asked a specialist in corporate rescues to investigate the company’s losses. On 6 December 2001 the claimants brought an action against the accountants for professional negligence. The House of Lords unanimously held that, before 6 December 1998, the claimants knew with sufficient confidence that the damage was attributable to the acts or omissions of the accountants. That was because they knew in broad terms the facts on which their complaint was based and of the accountants’ acts or omissions and knew that there was a real possibility that those acts or omissions had been the cause of the damage they had suffered.
I must confess that there are parts of the reasoning in Haward which I find puzzling and which supports the comment of counsel for TTC – who relied on the decision - that their Lordships have put a “gloss” on the statute. I think that some of the difficulties that I have with these parts of the reasoning arise from some of their Lordships equating “knowledge” with knowing enough to require further investigation. I have already set out the reasons why that cannot be so, and I need not to repeat them. The remaining difficulties that I have with parts of the reasoning is the re-writing of the equivalent of s.35(1)(b), a point to which I earlier referred.
Lord Nicholls said (at 688) that the conduct alleged to constitute negligence “was the giving of flawed advice”. He went on to say:
“20 …This feature is the very essence of [the first claimant’s] claim. Stated in simple and broad terms, his claim is that Mr Austreng did not do his job properly. Time did not start to run against [the first claimant] until he knew enough for it to be reasonable to embark on preliminary investigations into this possibility.
21. There may be cases where the defective nature of the advice is transparent on its face. It is not suggested that was so here. So, for time to run, something more was needed to put [the first claimant] on inquiry. For time to start running there needs to have been something which would reasonably cause [the first claimant] to start asking questions about the advice he was given.”
Lord Nicholls said that the claimants had the burden of proving that they were not put on inquiry until after 6 December 1998 but had not attempted to discharge this burden. Accordingly, their claim for an extension of the limitation period failed.
With great respect, I find two features of this reasoning difficult to accept. The first is the reference to being put on inquiry. In Haward, the accountants did not rely on the claimants’ constructive knowledge, as Lord Nicholls acknowledged. So no question of investigation or inquiry arose. It follows that the reference to start asking questions or an inquiry was irrelevant. Because the accountants did not contend that the claimants had constructive knowledge of any facts, the only issue was whether, on the facts actually known to the claimants, they had knowledge of each of the four matters referred to in the United Kingdom equivalent of s.31(5). Of those four matters, the only live issue concerned whether before 6 December 1998 they knew “that the damage was attributable in whole or in part to the act or omission” that constituted the alleged negligence. If they had that knowledge, their claim was barred. Lord Nicholls did not address the issue posed by the United Kingdom equivalent of s.31(5)(b) in these terms. Instead of asking whether the claimants knew that Mr Austreng had advised investment in the company (which was the relevant act or omission when stripped of its negligent quality), his Lordship asked whether [the first claimant] “knew enough for it to be reasonable to embark on preliminary investigations into this possibility”. That was a question that would be relevant if constructive knowledge was an issue in Haward, but it was not an issue in that case. The second feature is the characterization of the act or omission as flawed advice. In substance, that seems to reintroduce by another name the element of negligence which the United Kingdom equivalent of s.31(6) renders irrelevant.
With great respect, and independently of this last point, what his Lordship did in Haward was to apply the process for ascertaining facts that are imputed to the plaintiff’s store of knowledge to a case where facts constructively known were not an issue.
Lord Scott said (at 696) that the damage that the claimants had suffered “was the making of a bad investment”. He went on to say (at 696) that the essence of the claimant’s complaint against the accountants was that they did not give them the advice that the true state of the company’s affairs warranted and that, if given, would have warned them against the disastrous investment of their money. Lord Scott said (at 697) that the first claimant knew what advice had been given and what advice had not been given by the accountants. He “knew by 6 December 1998 that the true financial state of the company had required, if the company were to keep trading, the very substantial additional investment that had to be made, and was made, to cover the losses incurred in the years 1995, 1996 and 1997”. Lord Scott said that the trial judge had summed up the situation accurately and in accordance with the requirements of the United Kingdom equivalent of s.31 when he said:
“it is the basis of [the claimants] claim that [the accountants] advised ongoing investment and it is hard to see how [the first claimant] could have failed to appreciate that he was spending money either on their advice or without their advice. So far as [the first claimant] was concerned, there was nothing of a factual nature that was latent; all was patent. The only thing that he did not know was that [the accountants] had been, as he now alleges, negligent or that he had a claim against them but such matters are irrelevant.”
With respect, I think that Lord Scott’s and the trial judge’s approach was the correct one. The damage was the loss of the moneys invested, and the “act or omission” was the advice that was given or not given.
Lord Walker also thought that, although the trial judge’s judgment was “not without some defects and difficulties”, he “was basically right in his overall conclusion”.
Lord Brown said (at 710):
“90. What the claimant must know to set time running is the essence of the act or omission to which his damage is attributable, the substance of what ultimately comes to be pleaded as his case in negligence. That essence or substance here could no doubt be characterised in either of two ways: either as the act of recommending investment in the company (or omitting to caution against it - on the particular parts of this case these are two sides of the same coin), or, with greater particularity, the act of recommending investment without first carrying out the investigations necessary to justify such positive advice. Having at first preferred the latter characterisation, I have come to prefer the former. True, under the former the claimant knows nothing beyond the fact that his advisers led him into what turned out to be a bad investment; he does not know, as under the latter characterisation he would, that he has a justifiable complaint against his advisers. But he surely knows enough (constructive knowledge aside) to realise that there is a real possibility of his damage having been caused by some flaw or inadequacy in his advisers’ investment advice, and enough therefore to start an investigation into that possibility, which section 14A then gives him three years to complete.
91. If the other approach is adopted, time only starts to run once the claimant recognizes that a fuller examination of the company’s prospects should have been carried out than was in fact carried out, knowledge which [the first claimant] only learned here at some unascertained date after the investigation into [the accountants] conduct had itself begun in an May 1999 (when another accountant first suggested to [the first claimant] that a negligence claim might lie against [the accountants]). But what if that suggestion and the investigation which it prompted had themselves been made at a later date still, perhaps very substantially later? On this approach the limitation period would appear capable of almost limitless extension and for no sufficient reason…”
With great respect, for the reasons that I gave in discussing Lord Nicholl’s speech, I find part of the reasoning in these paragraphs puzzling. Because the claimants did not have constructive knowledge of any facts, the only issue was whether, on the facts known to them, they knew before 6 December 1998 “that the damage was attributable in whole or in part to the act or omission” that constituted the alleged negligence. Lord Brown held that, for the purpose of the United Kingdom equivalent of s.31(5)(b), the claimant had that knowledge although he knew “nothing beyond the fact that his advisers led him into what turned out to be a bad investment”. Earlier, Lord Brown had said (at 709) that “[g]iven, however, that [the accountants] case is based solely on [the first claimant’s] actual knowledge, to my mind it must fail if anything more is required than that [the first claimant] knew that his loss might well have resulted from an investment made on [the accountants’] advice”. With respect, this analysis of the relevant act or omission was correct.
However, his Lordship then went on to comment that “he surely knows enough (constructive knowledge aside) to realise that there is a real possibility of his damage having been caused by some flaw or inadequacy in his advisers’ investment advice, and enough therefore to start an investigation into that possibility, which s.14A then gives him three years to complete”. In Haward, the accountants did not rely on the claimants’ constructive knowledge. So no question of investigation arose, and the reference to the starting of an investigation seems irrelevant unless Lord Brown is speaking hypothetically of a case whose facts are similar to those in Haward. Having correctly identified the relevant act or omission, I find it difficult to see why his Lordship thought that the case turned on the issue of investigation. The claimants either had knowledge of that act or omission or they did not have it. Lord Brown’s reasons show that they had that knowledge. That, in my opinion, was enough to defeat their claim.
Lord Mance, like Lord Nicholls, saw the issue as being when the first claimant knew enough to make it reasonable for him to investigate whether the claimants had a case against the accountants. Lord Mance said (at 725):
“The question is when [the first claimant] actually knew both enough of the acts or omissions now alleged to constitute negligence and that the loss suffered was capable of being attributable thereto to make it reasonable for him to begin to investigate whether or not the claimants had a claim against [the accountants]. That would be the case, taking the reasoning in Hallam-Eames’s case, once he realised that he had prima facie cause to complain of unsoundness from the outset of the investments; this would in turn suggest unsoundness in the advice given or not given by [the accountants]. In relation to the issue raised by this question, the onus was on the claimants. It was for the claimants to displace the basic limitation period by showing, if they could, that [the first claimant] did not have the requisite knowledge prior to 6 December 1998.”
Lord Mance went on to hold (at 728) that the claimants had not discharged the onus that lay on them. Lord Mance’s approach was similar to that of Lord Nicholls and, with respect, open to the same criticism. Perhaps the source of his Lordship’s error was reliance on Hallam-Eames which turned on the potential availability of constructive knowledge.
Thus, the reasoning of three of their Lordships is predicated on the assumption of a need to find that it was reasonable for the claimants to have begun an investigation. As I have indicated, this was not an issue in a case where constructive knowledge of facts was not a relevant issue. It also led to the curious conclusion that time ran against the claimants not from when the claimants had knowledge of the four matters specified in s.14A but when they should have commenced to investigate those matters.
Fortunately, as will appear, the present appeal can be disposed of without the necessity of invoking the reasoning of the House of Lords in Haward. Whether this Court should apply that reasoning should be left for another day. Indeed, it is unlikely that future courts will need to apply its ratio decidendi and principal reasoning, helpful as much of its dicta is. That is because much of what their Lordships said would be applicable in cases where constructive knowledge was in issue, which it was not in Haward.
The third case is Hallam-Eames v. Merrett Syndicates [2001] Lloyd’s Reports PN 178 which shows the difficulty of striking out a statement of claim on the basis of the plaintiff’s knowledge when the facts known or imputed to the plaintiff are not clearly admitted or established. The claimants in that case were Lloyd’s Names who suffered losses when syndicates of which they were members became liable to meet a number of large claims. The defendants contended that all the plaintiffs could reasonably have been expected to acquire the knowledge required for bringing an action in respect of the relevant damage from documents that had been sent to them or their agents more than three years before the issue of the first group. The issue for decision was whether they knew that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence. At first instance, Gatehouse J found that the documents supplied would have told the Names that they had suffered losses sufficiently serious to justify instituting proceedings and struck out the Names actions. However, the Court of Appeal held that the Gatehouse J had “unduly restricted the facts which s.14A(8)(a) [the equivalent of s.31(5)(b)] requires to be known and the material before him did not enable him or this court to decide … as a preliminary issue that the plaintiff’s claims was statute barred”.
Section 31(5)(b) in the present case
The issue in this case under s.31(5)(b) is whether Kensland knew that the damage it suffered “was attributable in whole or in part to the act or omission which is alleged to constitute negligence”. As I have indicated it knew the heads of damage that are the basis of its action against TTC. Paragraph 20 pleaded six particulars of negligence. The first alleged that “TTC, for no good reason, failed to provide the instructions to [Whale View] within a reasonable time”. The second and third particulars alleged that TTC wrongly advised Kensland that Whale View’s late tender constituted a repudiation of the agreement and that instructions were given within sufficient time for the preparation of the cheques and cashier’s orders. The fourth particular alleged that TTC failed properly to review and consider the agreement, failed properly to advise on the basis thereof and in particular failed to advise that in law Kensland would not be entitled to take advantage of its own breach of the implied term. The fifth particular alleged that TTC failed to advise that, if Kensland’s delay in completion was due to its default, it would not be entitled to treat the agreement as repudiated. The sixth particular alleged that TTC failed generally to inform Kensland of the impact of the late instructions in the circumstances and failed to point out and advise fully of the risks involved in refusing to complete and of the very real risk of having to compensate Whale View.
So the question under this part of the case is whether Kensland knew before 13 January 2001 that its liability to pay damages to Whale View was attributable in whole or in part to each of these six particulars of negligence. Kensland bears the onus of establishing that it did not know before that date that its damage was attributable to one or more of these acts or omissions of TTC. In determining that question, it is necessary in accordance with s.31(6) to disregard so much of these particulars as “involve negligence”. Hence, the use of terms such as “no good reason”, “wrongly” and “properly” must be disregarded.
In my opinion, by the end of November 1997, Kensland knew that its damage was attributable to the particularised acts and omissions that are alleged to constitute negligence on the part of TTC. Once the descriptions of negligence are stripped from the particulars, Kensland’s claim is that TTC gave it or failed to give it advice concerning the termination of the contract of sale or its construction and failed to advise it of the risks involved in terminating the contract and that this led to the damage that it has suffered. However, Kensland knew what advice TTC had or had not given it. By the end of November, it even knew from the Statement of Claim served by Whale View and correspondence between the parties the respects in which this advice or lack of it was the basis of Whale View’s claim for damages. By the end of November, Kensland knew that its liability to pay damages and costs and the drop in the valuation of its property was the result of the advice and lack of advice that TTC had given it. What it did not know was whether that advice or lack of it was negligent, but, for the purposes of s.31(5)(b) that is irrelevant. Consequently, Kensland knew by the end of November 1997 that the damage that is the subject of its action for damages against TTC “was attributable…to the act or omission” of TTC.
Conclusion
It follows that TTC has established that by the end of November 1997, Kensland had knowledge of each of the four matters referred to in s.31(5) (two of them not being in dispute), that it cannot obtain the ameliorating benefit of s.31 and that its claim against TTC is statute barred.
Order
The appeal must be dismissed with costs.
Mr Justice Bokhary PJ:
The Court unanimously dismisses the appeal with costs.
(Kemal Bokhary) (Patrick Chan) (R A V Ribeiro)
Permanent Judge Permanent Judge Permanent Judge
(Sir Noel Power) (Michael McHugh)
Non-Permanent Judge Non-Permanent Judge
Mr John Scott, SC and Mr Charles Manzoni (instructed by Messrs Jonathan Rostron Solicitors) for the Appellant
Mr Michael Thomas, SC and Mr Andrew Bullett (instructed by Messrs Richards Butler) for the Respondent

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{
"Date": "",
"Action No.": "",
"Neutral Cit.": "",
"case_title": "MOULIN GLOBAL EYECARE TRADING LTD (IN LIQUIDATION) (FORMERLY KNOWN AS MOULIN OPTICAL MANUFACTORY LTD) V. THE COMMISSIONER OF INLAND REVENUE",
"page_title": "undefined | | HKLII",
"case_history": [],
"appeal_history": [],
"case_url": "https://www.hklii.hk/en/cases/hkcfa/2014/22",
"neutral_cit": "[2014] HKCFA 22",
"court_code": "HKCFA",
"content": "",
"attachments": []
}

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{
"Date": "19 May, 2016",
"Action No.": "FAMC15/2016",
"Neutral Cit.": "[2016] HKCFA 41",
"case_title": "HKSAR V. LUK KIN PETER JOSEPH AND ANOTHER",
"page_title": "HKSAR V. LUK KIN PETER JOSEPH AND ANOTHER | [2016] HKCFA 41 | HKLII",
"case_history": [],
"appeal_history": [
{
"name": "FAMC15/2016",
"link": "https://www.hklii.hk/en/appealhistory/FAMC/2016/15"
}
],
"case_url": "https://www.hklii.hk/en/cases/hkcfa/2016/41",
"neutral_cit": "[2016] HKCFA 41",
"court_code": "HKCFA",
"content": "FAMC68/2015 HKSAR v. LUK KIN PETER JOSEPH AND ANOTHER\nFAMC Nos 68, 69 of 2015 & 15 of 2016\nFAMC No 68 of 2015\nIN THE COURT OF FINAL APPEAL OF THE\nHONG KONG SPECIAL ADMINISTRATIVE REGION\nMISCELLANEOUS PROCEEDINGS NO 68 OF 2015 (CRIMINAL)\n(ON APPLICATION FOR LEAVE TO APPEAL\nFROM CACC NO 283 OF 2014)\n____________________\nBETWEEN\nHKSAR\nRespondent\nand\nLUK KIN PETER JOSEPH (陸健)\nApplicant\n(1\nst\nDefendant)\n____________________\nFAMC No 69 of 2015\nIN THE COURT OF FINAL APPEAL OF THE\nHONG KONG SPECIAL ADMINISTRATIVE REGION\nMISCELLANEOUS PROCEEDINGS NO 69 OF 2015 (CRIMINAL)\n(ON APPLICATION FOR LEAVE TO APPEAL\nFROM CACC NO 283 OF 2014)\n____________________\nBETWEEN\nHKSAR\nRespondent\nand\nYU OI KEE (余藹琪)\nApplicant\n(2\nnd\nDefendant)\n____________________\nFAMC No 15 of 2016\nIN THE COURT OF FINAL APPEAL OF THE\nHONG KONG SPECIAL ADMINISTRATIVE REGION\nMISCELLANEOUS PROCEEDINGS NO 15 OF 2016 (CRIMINAL)\n(ON APPLICATION FOR LEAVE TO APPEAL\nFROM CACC NO 283 OF 2014)\n____________________\nBETWEEN\nHKSAR\nApplicant\nand\nLUK KIN PETER JOSEPH(陸健)\n1\nst\nRespondent\nYU OI KEE (余藹琪)\n2\nnd\nRespondent\n____________________\nAppeal Committee: Chief Justice Ma, Mr Justice Ribeiro PJ and\n Mr Justice Tang PJ\nDate of Hearing: 19 May 2016\nDate of Determination: 19 May 2016\n________________________\nDETERMINATION\n________________________\nChief Justice Ma:\n1.\nLeave is given for all three applications, on the following questions: -\n(1) What is the meaning of “agent” for the purposes of\ns.9\nof the\nPrevention of Bribery Ordinance\n,\nCap. 201\n(“the POBO”) and specifically whether a person who is under no legal, contractual or fiduciary obligation to act in relation to the affairs or business of another is that person’s “agent” for the purposes of s.9?\n(2) Whether the words “or other document” in s.9(3) of the POBO are to be construed\nejusdem generis\nwith the words which precede them and specifically whether board minutes are documents which come under this definition?\n(3) Whether or not the common law principle as espoused in\nR v McDonnell\n[1966] QB 233\nand\nAttorney-General’s Reference (No. 2 of 1982)\n1 QB 624\n, in the context of the offence of conspiracy to defraud or theft, namely, the principle that the mind and will of the sole director(s) are treated in law as the mind and will of the limited company, applies in the context of the statutory anti-corruption regime under the POBO and, in particular, to the offence of conspiracy for agents to use a document with intent to deceive their principal, contrary to sections 9(3) and 12(1) of the POBO and section\ns 159A\nand 159C of the\nCrimes Ordinance\n,\nCap. 200\n?\n2.\nThese appeals will be listed for hearing on 23 November 2016.\n(Geoffrey Ma)\nChief Justice\n(R A V Ribeiro)\nPermanent Judge\n(Robert Tang)\nPermanent Judge\nMr Edwin Choy and Mr Joe Chan, instructed by V. Hau & Chow, for the 1\nst\nDefendant (Applicant in FAMC 68/2015)\nMr Gerard McCoy SC leading Mr Albert N.B. Wong in FAMC 69/2015, and leading Ms Nisha Mohamed in FAMC 15/2016, instructed by Leung & Lau, for the 2\nnd\nDefendant (Applicant in FAMC 69/2015)\nMr William Tam SC, DDPP, and Ms Samantha Chiu, SPP, of the Department of Justice, for the HKSAR (Applicant in FAMC 15/2016)",
"attachments": [
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"download_url": "https://legalref.judiciary.hk/doc/judg/word/vetted/other/en/2015/FAMC000068_2015.doc",
"file_name": "FAMC000068_2015.doc",
"file_ext": ".doc",
"status": "failed"
}
]
}

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FAMC No. 50 of 2022
[2023] HKCFA 30
IN THE COURT OF FINAL APPEAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MIsCELLANEOUS PROCEEDINGS nO. 50 OF 2022 (CRIMINAL)
(ON APPLICATION FOR LEAVE TO APPEAL FROM
HCMA NO. 187 OF 2021)
BETWEEN
Mr Justice Ribeiro PJ:
At the hearing, we dismissed this leave application for reasons which we now provide.
On 1 May 2020, about three months after the first case of COVID-19 was reported in Hong Kong, eight persons decided to stage a May Day procession from Admiralty Centre to the Central Government Offices to demand unemployment benefits and to protest against COVID restrictions on public gatherings affecting freedom of demonstration.
After ignoring repeated police warnings, they were charged with participating in a prohibited group gathering contrary to section 6 of the Prevention and Control of Disease (Prohibition on Gathering) Regulation (“the Regulation”) which had come into operation on 29 March 2020, having been issued by the Chief Executive in Council as a public health emergency regulation pursuant to section 8 of the Prevention and Control of Disease Ordinance.
The Regulation’s object was to ban “group gatherings” for the purpose of “preventing, protecting against, delaying or otherwise controlling the incidence or transmission of” the COVID-19 virus. Section 3 provided that “No group gathering may take place in any public place during a specified period”. “Group gathering” was defined as “a gathering of more than four persons” and a “prohibited group gathering” was defined as “a group gathering the taking place of which is prohibited under section 3”. Section 6 made it an offence for anyone to participate in or organise, etc, a prohibited group gathering (subject to a defence of lawful authority or reasonable excuse) punishable by a fine and imprisonment for 6 months. A person committing such offence might be given an option of paying a fixed penalty fine of $2,000. Although fixed penalty tickets were issued against them, summonses were issued against the eight defendants since they chose not to pay and to dispute liability.
After trial before the Magistrate, Mr Cheang Kei-hong, they were convicted of participation in a prohibited group gathering contrary to section 6 and sentenced to 14 days’ imprisonment suspended for 18 months. Their appeal before Wong J was dismissed. The Courts below found that the eight defendants had together constituted and participated in a group gathering involving more than the permitted maximum of four persons. Applications to the Judge for certification of points of law with a view to making a leave application to this Court were refused on the basis that the grounds advanced either involved pure questions of fact or were not reasonably arguable.
The present applicants, comprising four of the convicted defendants, now seek certification and leave to appeal. They seek to raise questions as to the true construction of certain sections of the Regulation, in particular, as to the meaning of “group gathering” in the context of the Regulation as a whole, and as to what is capable of constituting a “reasonable excuse”. They wish to challenge the restriction on group gatherings arguing that this involves a disproportionate and unconstitutional infringement of the freedom of demonstration.
It is unnecessary to deal with the specific grounds sought to be advanced since this application falls at the first hurdle. In criminal cases, the Court’s statute provides that leave to appeal shall not be granted unless the court below or the Appeal Committee certifies:
“... that a point of law of great and general importance is involved in the decision or it is shown that substantial and grave injustice has been done.”
In the present case, the applicants have no prospect of showing that a point of law of great and general importance is involved in the decision since the Regulation expired at midnight on 31 March 2023 and has since been a dead letter. The proper construction of its provisions, whether regarding its definition of “group gathering” or any of its other sections, is no longer of any general importance, let alone of great and general importance. The prohibition no longer operates so that its constitutionality and questions of proportionality are entirely moot. There is no arguable question of any substantial and grave injustice.
In their reply submissions, the applicants contend that the questions are of great and general importance because “there may be similar regulations enacted in response to similar pandemic[s] in the future”, inviting the Court to “take judicial notice that the SARS outbreak occurred in just less than 20 years before COVID-19”.
That submission is without substance. The hope is obviously that there will not be a fresh pandemic any time soon. But even if there is, no basis exists for assuming that the same public health emergency measures, let alone a regulation having similar wording and calling for a similar construction, would be issued. What control measures may be required would depend on the nature of the pandemic, its mode of infection and a host of other considerations. The SARS outbreak was very different in nature and called for very different public health measures.
The Regulation was not a statute. It was a public health regulation made by the Chief Executive in Council in response to a developing public health emergency. It was on each occasion given a short expiry date and was frequently amended – changing the maximum number of participants in a group gathering eight times before the matter came to trial in the present case. Unlike a property or commercial or criminal statute, there is no question of such a Regulation receiving a beneficial, enduring construction from the Court of Final Appeal.
For the aforesaid reasons, leave to appeal was refused.
Mr Anson Wong Yu Yat and Mr Jason Kung, instructed by JCC Cheung & Co. Solicitors, for the 1st, 2nd, 5th and 7th Appellants (Applicants)
Mr Andrew Li, SPP and Mr Christopher Fung, SPP (Ag), of the Department of Justice, for the Respondent

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No. A7670 of 1992 IN THE SUPREME COURT OF HONG KONG HIGH COURT ____________ BETWEEN LAI SAU KING Plaintiff and LAM CHARP FAT Defendant ____________ Before : The Hon. Mr. Justice Barnett in Court Dates of Hearing: 8th - 10th, 13th - 17th and 20th - 22nd February 1995 Date of Delivery of Judgment: 10th March 1995 _______________ J U D G M E N T _______________ Introduction This action arises out of the former cohabitation between the parties. It is the plaintiff’s case that, during the period of cohabitation, she made available, to put it neutrally, certain sums of money to the plaintiff. She now pursues four separate claims against the defendant : -
First, she seeks a declaration that Shop 6, Ground Floor, Jing Ying Building, Yuen Long (the shop) is held on resulting trust for her by the defendant to the extent of 50%. This on the ground that she contributed some 36% of the purchase price and made other contributions in kind. She also seeks other appropriate declarations and orders. Second, she seeks a declaration that she is the sole beneficial owner of Flat A, 1st Floor, Shiu Yat House, On Lok Road, Yuen Long (the flat) now held jointly by the plaintiff and the defendant, and other appropriate relief. This on the ground that she contributed the whole of the purchase price of the flat. Third, she seeks $50,000 as money lent to the defendant. Fourth, she claims damages of $75,262.07 for breach of an agreement by which she loaned $200,000 to the defendant, the money having been raised by way of mortgage on the flat. The plaintiff’s case The plaintiff gave evidence. She said she first met the defendant when aged 17 or 18 (which would be in about 1965) through their mothers. They became acquaintances. Then the plaintiff went to Holland where she worked hard on a farm and occasionally in a restaurant. She married a Mr. Ottens in 1972 by whom she had a son Wai Chi in November 1972. They separated in 1977 and divorced in 1979. At about the beginning of 1977, the plaintiff set up her own restaurant in Holland, Hong Kong Restaurant. For this purpose, she
purchased a house with the help of a bank loan of Dutch Guilders 90,000. The ground floor of the house was turned into the restaurant. For this, the plaintiff obtained a loan from a finance company of Guilders 80,000, secured on the inventory of the restaurant. The plaintiff also expended a sum in the region of Guilders 80,000 from her own pocket. Additionally, she obtained a loan of Guilders 80,000 from her father, the intention being to pay off the loan used to purchase the house. In the event, it was not used for that purpose but for general business purposes and was not required to be repaid. The restaurant made little profit over the years, although the plaintiff was paid between Guilders 2,000 and 3,000 per month as wages. Ultimately, in circumstances which are a matter of dispute, the restaurant was sold in 1980. In 1977, the plaintiff said she met the defendant by chance when, with her younger brother, she went into the defendant’s restaurant in Amsterdam to use the telephone. The defendant’s restaurant was called Sam Sing Restaurant. Following this, they frequently contacted each other and at the end of the year or at the beginning of 1978 began to cohabit. Next came the purchase of the shop. Because of its importance, I set out the plaintiff’s evidence in full : - “In 1979, I let the defendant bring Guilders 160,000 to Hong Kong to buy property in Hong Kong. We intended to come back to Hong Kong for further business development. We had a discussion. We decided to use our money to buy property in Hong Kong. He brought the money to Hong Kong and afterwards returned to Holland and asked me to go to Hong Kong to look at the site.”
The plaintiff said that the money she gave to the defendant to take to Hong Kong was money which she had saved. The defendant left the money with his mother in Hong Kong. On the defendant’s return to Holland, he said that the plaintiff should go to Hong Kong in 1980 to look at the site. This she did, and visited the site with the defendant’s mother where she obtained a catalogue or brochure showing the size of the shop premises. On her return to Holland, she and the defendant decided to buy the shop and asked the defendant’s mother to purchase it for them. The price was to be $1,138,380. The defendant’s mother was given a power of attorney to act on behalf of the defendant in the purchase of the shop. The shop was registered in the defendant’s name only. I should mention here that the plaintiff was asked why the shop was registered in the defendant’s sole name. The plaintiff said that she asked the defendant why this had been done and the defendant said : “in future when we get married, you automatically get a share of the property”. Mr. Li, for the defendant, at that stage as at other times objected to the evidence because the plaintiff’s pleaded case was one of contribution giving rise to a resulting trust. He said that it was not open to the plaintiff to rely upon a promise, an agreement or any other form of factual basis giving rise to the plaintiff’s interest other than the one pleaded. Mr. Poon, for the plaintiff, said it was and would remain the plaintiff’s case that her interest arose because of contribution. No amendment was made to the statement of claim. Accordingly, I disregard this piece of evidence as I do assertions by the plaintiff that there was an agreement that they were acquiring half shares in the shop.
The plaintiff said that she also made decisions about and arrangements for the decoration of the shop including the installation of a cockloft, a staircase and a rolling shutter. She said she paid in arrears 6 months management fees of $100.00 per month for the period February to July 1981. She said that, with the defendant’s mother, she negotiated a tenancy agreement of the shop with a Mr. Yeung Kam Sing in 1981. The rent arising from that tenancy was collected by the defendant’s mother. After the plaintiff returned to Hong Kong in 1982 to settle there, the defendant’s mother intended to return all the rent to her but the plaintiff suggested that the mother keep half of the accumulated rent in the bank to earn interest while the plaintiff received the other half for household expenses. The plaintiff explained that, in mid 1982, she set up her own boutique. From this, she had enough money for her expenses so told the defendant’s mother to keep the rent. Between 1985 and 1987, the plaintiff and the defendant sold fruit and snacks from the shop. From 1st September 1987 until 31st August 1990, the shop was let at $22,000 or 23,000 per month. And from 1st November 1990 until 31st October 1993 at $38,000 per month. The defendant collected the rent throughout and kept it all in spite of the plaintiff asking for it. After returning to Hong Kong in 1982, the plaintiff purchased the flat using Guilders 160,000 arising from the sale of her restaurant in Holland. She said she sold the restaurant in 1981 to her younger brother for that sum. She kept the house in Holland which was subsequently let. The tenant paid rent to her bank account from which she authorised the defendant to draw half, the other half being used to pay off the bank loan on
the house. The defendant, however, drew more than half and later the tenant stopped paying. Eventually, she sold the house in 1985 by private sale to a neighbour for Guilders 90,000. After paying off the bank, little money remained. The plaintiff said that the flat was put in the joint names of the defendant and herself because the defendant returned to Hong Kong for a visit in June 1982. The defendant said it would be more convenient for him to apply for water and other utilities because the plaintiff was busy with her boutique and the two children. Accordingly, by nomination dated 30th June 1982, the plaintiff nominated the defendant as joint tenant. The defendant had previously been married, that marriage having been dissolved in Hong Kong in January 1980. He had one son by that marriage. After the flat was purchased in mid 1982, the plaintiff said that she, the defendant and their two sons went to live there. Shortly thereafter, the defendant returned to Holland and, until 1985, lived partly in Holland and partly in Hong Kong where he stayed both with the plaintiff and with his mother. The plaintiff looked after the defendant’s son until 1983 when the boy went to live with the defendant’s mother. After the defendant returned to Hong Kong to settle in 1985, he still divided his time between the plaintiff and his mother because, according to the plaintiff, the defendant could not face the plaintiff because of what he had done with the rent of her house in Holland. Eventually, the defendant moved out of the flat altogether at the end of 1989. In 1987, the defendant told the plaintiff that he wanted to run a business and asked her to obtain a loan of $200,000. An agreement was
signed with the Kwang Tung Provincial Bank on 12th March 1987. On 20th March, $200,000 were paid into a savings account opened in the plaintiff’s sole name, the flat having been mortgaged to the bank for the purpose of the loan. $100,000 were immediately transferred to the defendant. The defendant was to repay the loan and he kept the passbook for this purpose. In cross-examination, the plaintiff accepted that the defendant decided that he only wanted a loan of $100,000 and that the balance would be used to repay the mortgage, to which arrangement the plaintiff said she agreed. She said that 3 withdrawals in October 1987 of $42,480, $50,400 and $50,430 and re-deposits of slightly increased amounts were 3 forex trades. They were carried out at the request of the defendant who simply gave her the necessary documents to sign because all transactions on the savings account required the plaintiff’s signature. The plaintiff said that when the defendant finally left her and the flat at the end of 1989, he returned the passbook to her. She found a balance of only $238.99. She discovered that some $60,000 of the loan had not been repaid to the bank. Through solicitors, she discharged the mortgage by paying the solicitors $75,262.07 which included $69,082.07 for redemption of the mortgage. On 14th March 1988, the plaintiff said that she transferred $50,000 to the defendant’s account at his request to help him buy shares. The defendant never repaid that sum. The plaintiff’s evidence covered many years and a great deal of ground. She was, accordingly, subjected to a lengthy and probing cross-
examination. In this cross-examination 2 important matters were canvassed. First, at the beginning of 1980, the plaintiff became the subject of bankruptcy proceedings in Holland. The genesis of these proceedings lay in the default by the plaintiff’s husband in repayment of a bank loan for a car. Although the plaintiff was guarantor of this loan, her liability, according to sealed copies of documents from the District Court in Assen, appears to have arisen from community of property. Although she had been divorced in February 1979, partition of the joint matrimonial property had not yet been enforced. Accordingly, the plaintiff was liable for half of the outstanding loan, her liability being about Guilders 10,500. According to the court documents, she was declared bankrupt on 29th April 1980. In his report dated 6th June 1980, the plaintiff’s trustee in bankruptcy (the trustee) recorded that the plaintiff had sold her restaurant to her brother on 24th March 1980, in consideration of the brother making repayments on the restaurant loan. The mortgage on the house was being repaid out of rent paid by the brother to the plaintiff. Neither the bank nor the finance company appeared, according to the trustee, interested in foreclosure. On 19th September , the trustee reported a deficit of about Guilders 12,000 including the car loan. By 14th January 1981, the deficit had risen to approximately Guilders 27,000. However, the trustee anticipated a settlement by virtue of a payment of Guilders 20,000 to be made by her brother on behalf of the plaintiff. On 24th March 1981, the court sanctioned a settlement by which preferential creditors were paid in
full and ordinary creditors, who included the finance company which had made the car loan, received 25%. The plaintiff was remarkably unperturbed by all this. According to her, in 1979 or 1980 she was chased for payment of the car loan. She spoke to her former husband, Mr. Ottens, and also to the company’s lawyer. Following that, she understood that Mr. Ottens had repaid the loan and returned the car. She was no longer pressed about the bankruptcy proceedings. She did speak to the trustee who asked her if she could pay the debts. She told him she could. There was no enquiry about her financial position and she did not disclose it. Indeed, she said it was not necessary to disclose it because the trustee would soon find out anyway. She said she did not borrow from her family. She only told the trustee she would borrow if necessary. She did not pay her creditors because they trusted her and would only press her after she was declared bankrupt. In any event, when she transferred her restaurant to her brother, she said he would have to be responsible for her debts. Since then, she had not been pressed. She was adamant that she was never declared bankrupt. At that time, both the plaintiff and the defendant were using the same accountant in Holland. For the purpose of these proceedings, both parties made enquires of the accountant. The replies which they received and which were in evidence before me are conflicting. Various suggestions were made as to the reason for this conflict. I am quite satisfied that there is nothing sinister attaching to this conflict. The accountant was trying to provide information about matters which occurred over ten years before. It may be that his records were incomplete and his memory not wholly accurate. Further, in all probability, he was irritated by the demands of two
erstwhile clients. It is clear to me that the conflict between the accountant’s letters amounts to no more than confusion and that the letters must be given no weight. The documents to which weight must plainly be attached are the court documents relating to the bankruptcy proceedings. From the documents, it is clear that the plaintiff was declared bankrupt and that her ordinary creditors were not paid in full. Yet, if the plaintiff is believed, she had or could have made available funds from which the creditors could have been paid. The second factor was that two documents were discovered during trial. These were two sale and purchase agreements by which the plaintiff’s restaurant was sold first to her brother and then by her brother to another. An agreement dated 24th March 1980 recorded the sale by the plaintiff to her brother for Guilders 80,000 of which Guilders 2,666 were to be paid in cash, Guilders 40,000 were to settle a loan made by her brother to the plaintiff in 1977 and the balance was to defray the loan from the finance company. The plaintiff explained that the actual price was Guilders 160,000 but this was stated in the agreement as Guilders 80,000 to avoid the attention of the tax authorities. In any event, the plaintiff said that because her brother had only just come to Holland, he had no money at all to pay her at the time. The second agreement dated 17th April 1981 recorded the sale by the plaintiff’s brother, also for Guilders 80,000. The plaintiff said that
again the real price was Guilders 160,000. She gave the same reason as before for the difference between the recorded and real prices. She said it was upon this sale that she actually received Guilders 160,000 and was able to buy the flat in Hong Kong. The defendant’s case The defendant’s case was somewhat startling to say the least. The defendant said that he went to Holland in 1971 where he worked as a chef until 1975 when he opened Sam Sing Restaurant. He was divorced in January 1980, met the plaintiff for the first time in mid 1981 and at the end of that year began to cohabit with her. If that evidence is true, there can be no question of the plaintiff having contributed to the shop as it had already been purchased a year previously. According to the defendant, he took Guilders 200,000 back to Hong Kong in 1978 which, with his share of his father’s estate, was used for the shop. In 1982, the defendant said he returned to Hong Kong with the plaintiff who did not want to stay in Holland. In Hong Kong, they lived with his mother in her flat No. 7C located in the same building as the shop. The defendant returned to Holland where he received a call from the plaintiff saying that she did not get on with his mother and wished to purchase a flat in which to live with their two children. Before the defendant could react, the plaintiff had paid the deposit of $30,000 which the defendant said came from Guilders 20,000 he had left with her for expenses. The plaintiff, however, had no money to complete the purchase and, with his agreement, the balance of $270,000 was provided by his mother from family funds. He has since repaid his mother that sum.
In 1982 and 1983, the plaintiff ran a boutique for which she obtained an advance of $44,000 from the defendant’s mother. After that the plaintiff invested in a restaurant in Tsim Sha Tsui but withdrew in 1985 when it made no profit. The defendant said he returned to Hong Kong in 1985, recovered possession of the shop from the tenant, Mr. Yeung, who had not paid the management fees and caused some damage. He began the Universal Fruit business in his name although the plaintiff assisted him. Later, he changed the business to 328 Snack Shop in which the plaintiff played no part. That business ceased about July 1987. Soon after, the shop was let. At the time, when the defendant was considering changing to the 328 Snack Shop, the plaintiff said she wanted to go into business with two ex-schoolmates. Between them, they opened Hoi Wan Good Food Shop but after one month, they quarrelled. To help the plaintiff raise the money for that business, the defendant said he agreed to mortgage the flat for $200,000. It was agreed that each would have $100,000 and if both had good business, they would repay the mortgage together. The defendant used the money to change his business. The plaintiff told him that she withdrew large sums for speculation. It is of course not in dispute that several large sums were transferred from the loan passbook into the plaintiff’s forex account. It is, however, in dispute as to who instigated these transfers. In any event, the defendant denied that he was responsible and said that he had never had possession of the passbook.
The defendant said he repaid the mortgage until January 1991 because “if I didn’t, who would”. He said he ceased living at the flat since December 1989 when, to avoid a dispute with the plaintiff, he stayed with his mother for two days. When he returned, he found the plaintiff had changed the locks of the flat and he could not gain access. He continued to pay the mortgage thereafter because he still wanted to try and maintain a happy family and anyway his daughter was living there. It is not in dispute that the plaintiff had a daughter by the defendant in 1987. In 1991, however, the defendant said there was a bad quarrel between the parties after which he ceased paying the mortgage. As to the loan of $50,000, the defendant said that in 1987, when he let the shop, he lent money acquired from that letting to the plaintiff for investment. He said she transferred it back to his account in March 1988 when he asked for its return so that he could pay for some shares. Availability of funds Unlike the plaintiff, the defendant is able to point with some conviction to sources of funds available to him or his mother for the purchase of the shop and flat. First, the defendant said, and there seems no reason to doubt it, that his Sam Sing Restaurant which he opened in Holland in 1975 was very successful. In evidence was a commercially printed postcard of the restaurant from which it appears to be large, well decorated and well appointed. It seems the restaurant was still in business until at least 1989 because the defendant’s younger brother, Lam Bo, continued to operate it until then. It was, said the defendant, from the profits of the restaurant that in 1978, he brought Guilders 200,000 from
Holland to Hong Kong. The money was left with his mother who suggested putting it into property rather than a bank. As a result, the shop was eventually purchased. It must be said that the defendant brought that money to Hong Kong for the same reason as the plaintiff remitted her funds namely, to avoid coming to the attention of the tax authorities. Second, it is clear that the defendant’s family was quite well-off. The defendant’s father died in 1974 leaving land. Some land was sold privately and some resumed by the government for cash compensation and Letters B. New Territories Land Office records show that the private sales were worth approximately $1.3 m. The defendant also said, and it was not challenged, that his father left $300,000 cash. The defendant, his mother and sister all said that the family had approximately $2 m. There seems no reason to doubt this. According to the defendant and his mother, the $2 m. was divided into four shares, one for each of the defendant and his two brothers, and one for his mother. The defendant’s share, $500,000, together with the sum of Guilders 200,000 would, it seems, more or less have financed the purchase of the shop. The money for the purchase of the flat came from money still retained by the defendant’s mother but which was recently repaid by the defendant. The plaintiff’s account of the funding of the shop and the flat lacks any support other than that she is named as a joint owner of the flat. That, however, is equally consistent with the parties’ relationship as with a
contribution to or complete provision of the price. The evidence of the bankruptcy proceedings and of the two sale and purchase agreements of her restaurant tended to undermine the plaintiff’s case. The defendant’s credibility There is, however, evidence which in my judgment destroys the defendant’s credibility entirely and which goes some way to breathing life into the plaintiff’s case. The plaintiff has three photographs (exhibit P1) labelled A, B and C taken, she said, in Holland on the occasion of the wedding banquet of an acquaintance, Madam Yeung Wan Hen (PW2). The plaintiff said that the banquet was held in the defendant’s Sam Sing Restaurant on 2nd December 1978, i.e. at least two years before the defendant said that they first met. Photograph B shows the defendant sitting behind PW2, the bridegroom and friends. Photograph C shows the plaintiff, defendant and plaintiff’s son Wai Chi. Photographs A and B also show the traditional red wedding cloth signed by guests at a wedding banquet. This too was produced and appears to bear, amongst others, the signatures of the plaintiff, defendant and plaintiff’s son. PW2 gave evidence. She said her future husband worked in Sam Sing Restaurant where she occasionally helped him. She saw the plaintiff and the defendant there in 1978 while preparing for her wedding. After the wedding, she went to live in the Sam Sing Restaurant’s dormitory where she saw the plaintiff and defendant sharing a room. She confirmed the identity of the persons appearing in the photographs, where the photographs
were taken and the contents of the wedding cloth. She said that the defendant in fact helped take some photographs on the occasion. She identified him in court, picking him out of three men sitting together, one of whom was the defendant’s younger brother, Lam Bo. The defendant asserted that the photographs do not depict his restaurant, that the man alleged to be him is his elder brother Lam Chak Tai, and that the lady alleged to be the plaintiff is unknown to him as is the child (it is worth noting that, in cross-examination, it was put to the plaintiff that the lady in photograph C was the niece of PW2’s husband). He expressed his suspicion about the wedding cloth, saying that it looked in good condition although the inscription of the occasion was of poor quality compared with the guests’ signatures. He could not explain why the characters of his name appear on the cloth. He would not however go so far as to say that it was some sort of fabrication. I have no hesitation in rejecting the defendant’s evidence on this topic. The photographs were quite clearly taken in Sam Sing Restaurant. Photograph C shows part of a window of the establishment. The “M” of Sam and “S” of Sing can be seen in reverse. Although obscured by a curtain, it is almost possible to read the word “Sam”. Further, with other wording on the window, the whole clearly resembles the logo of Sam Sing Restaurant as shown upon the postcard to which I referred earlier. In photograph A, although taken in another part of the restaurant, the word “Sing” and the “S” of Sam are clearly visible on the window in the background. Further, the decoration of the restaurant and the chairs shown in the postcard appear in the photographs. The defendant explained that he copied the decoration from another restaurant and indeed that there is a
number of similar restaurants in Amsterdam. I found that explanation rather feeble. In my view, the decorations shown in the photographs and the postcard are identical, down to the last detail including the red lanterns with their yellow tassels shown in the postcard, because the bottom of the yellow tassels appear in the photographs. I have no doubt they are the same restaurant. Notwithstanding the lapse of over 16 years since it is said the photographs were taken, the man in photograph C is plainly the defendant, who has a rather pronounced and distinctive aspect to his left jaw. The lady in photograph C is certainly the plaintiff. It is significant that the defendant’s elder brother, Lam Chak Tai, who was identified as the man in photograph C and photograph B, did not give evidence. He was in Hong Kong throughout the period of the trial. Early in the proceedings I was told from the bar that it was unlikely he would be available to give evidence because he was involved in an important ceremony, which I understood to be connected with the birth of his first grandson. In the event, he did not give evidence, partly for that reason; I was told also because he was superstitious and because he was reluctant to give evidence. Mr. Li, of course, was only following his instructions. But I found his instructions far from convincing or satisfactory. The plaintiff’s witnesses I see no reason to believe that PW2 was other than an honest witness who reliably recalled her wedding banquet and the persons there present. She said that copies of photographs taken at her wedding were sent to the plaintiff about a week after the wedding banquet itself. The
wedding cloth she brought to Hong Kong when she returned in 1982, where it has been in the custody of her father-in-law until provided to the plaintiff for the purpose of the trial. The plaintiff called two other witnesses in support of her case. Yeung Kam Sing was the first tenant of the shop in 1982 who, I bear in mind, might not have been an entirely disinterested witness, having been sued by the defendant for possession of the shop. He said that he met the defendant’s mother at the shop when he went to look at it but she told him she was unable to make any decision without instruction from her daughter-in-law, the plaintiff. That night, he said, he met the plaintiff and her mother-in-law at Lok To Restaurant where agreement was reached. He said in mid August he went to a firm of solicitors to sign the tenancy agreement, where the plaintiff and her mother-in-law were present. He also said that the plaintiff wrote a receipt for the cheque deposit which he then paid and that he was able to recognise her signature on subsequent rent receipts in which the plaintiff was named as landlord. He said he no longer had those receipts. That evidence was substantially in accord with that of the plaintiff. The only real flaw was as to the date when all this took place. In answer to a request for further and better particulars, the plaintiff said that she “negotiated with the first tenant, Mr. Yeung Kam Sing in beginning of 1981, inside and outside the shop . . .”. The plaintiff’s passport showed and she accepted that she was not in Hong Kong at the beginning of 1981. She was in Hong Kong only between 10th June and 8th July. The tenancy agreement is dated 23rd June 1981. Apart from the evidence of Mr. Yeung, there was nothing to suggest that the date on the tenancy agreement is not
the date when it was actually signed. Therefore, it was perfectly possible for the plaintiff to have taken part in the negotiations and in the signing of the tenancy agreement. Mr. Yeung, apart from putting the visit to the solicitor’s office in mid August, also said that he did not go in the shop to inspect it. After all this time, I do not find these discrepancies to be of great significance. The plaintiff also called another acquaintance, Madam Wong Kwai Hing. This lady said that she was in the flat at the end of December 1989 when a man came, took some clothing and left behind a passbook. She identified this passbook as the plaintiff’s passbook relating to the loan. She also purported to identify the defendant whom she said she had not seen before or since. Mr. Poon for the plaintiff did not seek to rely on that identification. Madam Wong also purported to recall the exact date on which this incident occurred. In the circumstances, I attach little weight to her evidence. Its only significance, it seems to me, is to demonstrate the extraordinary lengths to which the plaintiff must have gone in order to substantiate the story she has allegedly concocted. There are other discrepancies in the plaintiff’s case. For example, the plaintiff was adamant that the $200,000 loan was for the defendant only, and that she did not need it for and had no part in the business of the Hoi Wan Good Food Shop. PW2, however, in cross-examination said she had heard that the plaintiff was operating the shop and that the plaintiff had mentioned that she was a partner. That answer, however, was a vague one involving reference to both a fruit shop and a good food shop. I am satisfied that PW2 was simply confused about the businesses which had
previously been carried on in the shop which, at the time mentioned to her, would have been of no great significance. Criticisms of the plaintiff’s case I accept that, notwithstanding my rejection of the defendant’s evidence, there must still be credible evidence of the plaintiff’s assertion, particularly in relation to the shop which is in the defendant’s name only. In assessing the plaintiff’s evidence upon which her case alone depends, I keep in mind all the factors urged upon me by Mr. Li. In particular, there is effectively a complete lack of any documentary evidence. The plaintiff said that on bringing Guilders 160,000 from the sale of her restaurant to Hong Kong, she deposited it in a bank. The records relating to that deposit she had long since thrown away. In contrast, she was insistent that Lam Bo has in Holland several boxes of her belongings including three boxes of documents which he kept for her after she sold the house in Holland. There is some credence perhaps to be attached to this. Lam Bo brought to Hong Kong, just before trial, the two agreements for the sale of the plaintiff’s restaurant in Holland and also some papers relating to the loan made to the plaintiff by her father in connection with her restaurant. Lam Bo denied that he had simply extracted from the boxes documents favouring the defendant. He explained that they were three documents he had found when clearing up for the defendant when the defendant finally left Holland in 1985. He said that there are no other documents and no boxes of belongings. Lam Bo’s evidence I am unable to accept for reasons to which I shall come.
Mr. Li pointed out that the plaintiff produced one document namely, what is essentially an address book in which there is a note to the effect that the defendant had borrowed (or had had lent) Guilders 160,000 in 1979, also that the plaintiff had lent Guilders 50,000 to her father. I attach no weight to the document as it is not clear when or why this entry was made. Mr. Li, however, made two points on it. First, the use of the word “borrow” or “lent”. He said that the plaintiff had in evidence also spoken of lending Guilders 160,000 to the defendant or of the defendant borrowing that sum. He argued that if Guilders 160,000 was given to the defendant, it was given as a loan. Therefore, no questions of contribution and trust arose. At best, he said, the plaintiff would be entitled to seek repayment of the loan, a claim which is now statute barred. I reject that argument. If the plaintiff’s evidence is accepted, it is plain she was not using those words in their strict sense but in the sense simply of having transferred money to the defendant. Second, Mr. Li said that it is curious that the plaintiff was lending money to her father when the loan for the restaurant was still outstanding. The plaintiff explained that it was for the purpose of sponsoring a visit by her father to Holland. I find that explanation not to be wholly lacking in credibility. Next, Mr. Li submitted that the bankruptcy proceedings cast doubt both upon the plaintiff’s financial position and her credibility generally. He said that it is inexplicable that the plaintiff could be as well off as she said she was at the time and able to pay her creditors in full when the court documents show that she had to borrow money from her family,
that the agreement for the sale of the restaurant to her brother recites that she had earlier borrowed from him, and that the ordinary creditors received a dividend of only 25%. Further, the plaintiff’s evidence to the effect that she was ignorant of the progress and effect of the bankruptcy proceedings is unacceptable from someone who had been and continued to be a business woman. Mr. Li added that the bankruptcy documents and the two agreements for the sale of the restaurant indicated that, even if the price for the restaurant was actually Guilders 160,000, she would have received nothing like that sum once various commitments had been paid off. Mr. Li then pointed to confusion on the part of the plaintiff. In a letter before action, the plaintiff’s solicitors asserted a claim by the plaintiff to the whole of the shop. In contrast, no claim for rent was made until the statement of claim was amended. In relation to the flat, Mr. Li suggested that the plaintiff’s explanation of why the defendant’s name was added is barely credible, particularly as the defendant was then only in Hong Kong for a short stay and not yet intending to settle in Hong Kong. Finally, Mr. Li said that the plaintiff’s evidence about the loan of $200,000 was inconsistent with her pleaded case and anyway incredible. He pointed out that the plaintiff’s evidence was that, having arranged the loan from the bank, the defendant said that he only required $100,000, which was transferred to his business at the shop, and that he would use the balance to pay off the mortgage. The plaintiff agreed to that. Mr. Li said
the plaintiff’s evidence was that there was then a number of forex transactions, using money left in the plaintiff’s account, at the instigation of the defendant who prepared the necessary documents which she merely signed. Mr. Li said that the plaintiff is a business woman in her own right who admitted trading in forex and gold and would hardly be amenable to signing without question any documents which the defendant put before her. The defendant’s witnesses The defendant, for reasons which I have already given, was left with little credibility after his effort to try and establish that he had no link or relationship with the plaintiff before 1981. That part of his evidence I reject entirely. The remainder, necessarily, I view with the utmost suspicion. In support of his case, the defendant called four witnesses. His younger brother, Lam Bo, said that he first met the plaintiff only in 1981 in Sam Sing Restaurant. He said he did not know PW2 or her husband. He said that the photographs do not show Sam Sing Restaurant, that the man in photograph C is Lam Chak Tai, while the lady is not the plaintiff. In view of my findings in relation to the photographs, I reject Lam Bo’s evidence. Mr. Leung Kwok Choi had been employed by the defendant as a chef in Sam Sing Restaurant for about nine months. He had been approached by the plaintiff and signed a prepared statement in which he said the plaintiff and the defendant met him when he arrived in Europe in 1980. He was called by the defendant. He said that the date given in that
statement was incorrect and the date should have been in 1981. In my view, Mr. Leung clearly could not recall exactly when he arrived and was in Holland. He did however say that the plaintiff and the defendant were living together and that he saw the defendant’s mother when she visited Holland. The defendant’s mother also gave evidence. She is an engaging but redoubtable lady of at least 80. She was plainly determined to protect her family and family interests. Her evidence was emphasized periodically by “I didn’t know her at the time” when referring to the plaintiff. She was adamant that she did not know the plaintiff until after the shop had been let for the first time in 1982. Yet, if Mr. Leung is to be believed, she must have met the plaintiff in Holland at least in 1981. The defendant’s mother certainly supported the defendant’s case. She said she was responsible for buying the shop, and also a flat for Lam Bo, using money in her possession that is, the brothers’ respective shares of the estate and, in relation to the defendant, Guilders 200,000 which he had provided. She said she arranged decoration of the shop and also its letting before the plaintiff came on the scene. Later, she advanced $270,000 to the plaintiff to purchase the flat. It is, in my view, on that sum of $270,000 that her evidence finally founders. It was not until late in the defendant’s cross-examination that this figure, a precise one, first occurred when the defendant said that he had repaid his mother $270,000 in two instalments, being $150,000 and $120,000, in mid 1994 out of rent collected from the shop. His mother gave evidence to the same effect. She had, however, made a witness statement
on 4th August 1994 in which she said that she totally gave the plaintiff $297,000, the plaintiff having paid a deposit of $3,000. She made no mention of any repayment by the defendant. Given the explanation for the sum of $270,000, it is difficult to see why that amount only emerged so late in the case and why the defendant’s mother should have referred to a different sum in her statement, a sum which she simply never mentioned at trial. It is no explanation that the mother is an old and illiterate lady. She was quite alert and quick to understand questions put to her. She had no difficulty in remembering figures, dates and other facts when it suited. With great reluctance, I find myself unable to accept her evidence. The only witness called by the defendant who remained undamaged was his sister, Lam Yuk Wah. The importance of her evidence was that the plaintiff was not involved in the purchase, decoration or letting of the shop and that she first met the plaintiff in early 1982. From the plaintiff’s evidence and her passport, the plaintiff returned to Hong Kong on 10th February 1982 to settle. She had, however, been in Hong Kong in June/July the previous year by when, there is no dispute, the plaintiff and the defendant were already cohabiting. It seems inconceivable that the plaintiff would not seek to assist the defendant in dealing with the shop even if the defendant had provided the finance, and that she would not have met the defendant’s mother and sister at that time. Evaluation The plaintiff was generally a composed witness who gave evidence of events spanning many years. Her account was an elaborate
one. But it hung together and was not, as far as I could see, undermined in any significant or substantial way in a lengthy cross-examination. The dates, sequence of events and other details did not begin to unravel under persistent questioning as they would undoubtedly have done if the story was wholly contrived. The plaintiff’s account was, however, exposed to all the criticisms which I have already set out. It is true that the sums which the plaintiff said she was able to save or derive from the sale of her restaurant were substantial, particularly when set against the background of her financial difficulty in Holland. Chinese people, however, have a well deserved reputation for hard work and thriftiness, particularly when working in another country. I see no reason why the plaintiff should not have been able to accumulate funds as the defendant said he did. Both parties said that they tried to avoid the attention of the tax authorities in Holland. The plaintiff is as likely as the defendant to have been anxious to repatriate hard-earned money. She would have had, I have no doubt, no scruples about putting a price lower than the real one in a contract and, I have no doubt, about depriving creditors of their full entitlement. In all the circumstances, after accepting all the justified criticism of the plaintiff’s evidence, in particular the complete lack of any documentation to support the financial aspect of it, I am satisfied that the plaintiff was giving an honest account of the financial transactions between her and the defendant. In relation to the shop, I find that the plaintiff did give the defendant Guilders 160,000 which was used as part of the purchase money for the shop. I infer from what passed between the parties at the time and from the plaintiff’s activities in visiting the site and the shop generally that it was the intention of the parties that the plaintiff should have a beneficial interest in the shop. That beneficial interest, however, I
find to be limited to her financial contribution. I am quite unable to accept that the somewhat loose cohabitation arrangement between the parties, the relatively short period during which the plaintiff looked after the defendant’s son or any other activities on her part, somehow increased her contribution to an interest in the shop. Although pleaded, no evidence was led as to the exchange rate between the Dutch Guilder and Hong Kong dollar at the time. Unless the parties can, as they should, reach agreement upon the rate, I propose to order an enquiry for that purpose so that the correct percentage of the plaintiff’s contribution can be assessed. Subject thereto, the plaintiff appears entitled to the relief which she seeks in relation to the shop. I also find that the plaintiff paid the whole of the purchase price of the flat. There can be no question in the circumstances but that it was intended that she should be the beneficial owner. Again, the plaintiff appears entitled to the relief which she seeks. I also find that the plaintiff loaned the sum of $50,000 to the defendant in 1987. She is entitled to the repayment of that sum. In spite of Mr. Li’s submission, I do not find that the plaintiff has departed from her pleaded case in relation to the loan of $200,000. Accepting, as I do, the plaintiff’s evidence, the whole sum was obtained at the request of and made available to the defendant. How the defendant then decided to use the money was entirely a matter for him as long as he honoured the agreement to repay the loan which, in the event, he did not. Accordingly, I find the plaintiff entitled to the damages she seeks.
The plaintiff also seeks payment of her share of the rental income of the shop from 16th August 1987 onwards. In fact, the shop was let for three years from 1st September 1987 at a rent of $22,000 per month which continued until 1st November 1990 when, under a new agreement, the tenant paid $38,000 per month. Although that agreement expired in 1993 at the end of three years, the tenant has, according to the defendant, remained in the shop paying the same rent. There being no evidence to the contrary, apart from the plaintiff’s suspicion, the proportion of rent payable to the plaintiff must be calculated on the basis of a rent of $38,000 still being payable. I leave it to the parties to work out the exact figure.
Discretion On the assumption of all facts being found against him, Mr. Li fell back upon the principle that he who seeks equity must come with clean hands to receive it, a principle followed by the Court of Appeal in Yim Bo Ying v. Chan Iu Warm (1985) HKLR 354. In that case, the defendant said that he had provided the purchase price but directed the conveyance into the name of the plaintiff to effect a saving in stamp duty. The Court of Appeal denied the defendant relief upon the basis that “there is no resulting trust where it would be against public policy to permit the presumption”. Mr. Li relied upon three matters. First, the second sum of Guilders 160,000 at least was brought by the plaintiff to Hong Kong to avoid the attention of the tax authorities. Second, the first sum of Guilders 160,000 was not, when it could have been, made available for payment of creditors in Holland. Third, the mis-statement of the sale price of the plaintiff’s restaurant was apt to deceive both the tax authorities and the trustee. Therefore, said Mr. Li, the money contributed by the plaintiff was tainted money, the plaintiff should be denied the equitable relief which she seeks in relation to the shop and flat, and as the Court of Appeal said, “the estate should lie where it falls”. Mr. Poon drew my attention to Snells Equity, page 32 paragraph 6, where it is said : - “The maxim must not be taken too widely; “Equity does not demand that its suitors shall have led blameless lives”. What bars the claim is not a general depravity but one which has “an immediate and
necessary relation to the equity sued for,” and it is not balanced by any mitigating factors.” Mr. Poon made two points. First, he said that, unlike the case with which the Court of Appeal was dealing, there was no direct connection between the taint, if it be a taint, affecting the plaintiff’s money and the purchase of the shop and flat. Second, the plaintiff’s activities were not tax evasion, as I was minded to describe them, but rather the not uncommon practice of a lay person who, having received money which he believes not to be taxable, keeps it secret in order to avoid becoming unnecessarily entangled with the tax authorities. I accept that, in Hong Kong at least, it is not necessary to declare to the tax authorities all sums of money of which a person is or becomes possessed. It seems to me, however, that if a business person seeks to hide substantial savings, the proper and adverse inference to be drawn is that they derived from some income or profit which itself has not fully been disclosed. I would think that a person, like the plaintiff, in business on his or her own account can have few illusions on that score. While what the plaintiff did may not have been tax evasion in its strict sense, it was certainly an evasion of the tax authorities. The same applies to the understatement of the price in the agreement for the sale of the restaurant. The money is plainly tainted. I accept that the taint attaching to the money has no direct connection with the use to which the money was ultimately put. There is, however, a plain connection in that the money affected by the taint was used for the purchase of and effectively has become the shop and flat. If
the matters rested there, I would be inclined to deny the plaintiff the relief which she seeks in relation to these two premises. I take into account, however, that the defendant on his own evidence is not blameless in relation to the tax authorities in Holland. Further, the plaintiff has been hardly treated by the defendant in relation to these two premises. The manner in which the defendant has conducted these proceedings, in which he has not only denied any contribution at all on the part of the plaintiff but sought to deny any knowledge of her existence in what can only have been an attempt to try and avoid the loss of any interest in the shop, militates strongly against the defendant. In the circumstances, I am not prepared to deprive the plaintiff of the relief which she seeks. Accordingly, I give judgment for the plaintiff for declarations that the plaintiff is the sole beneficial owner of the flat and that the defendant holds the legal estate jointly with the plaintiff on trust for the plaintiff. I also order that the defendant transfer and vest the legal estate in the flat in the plaintiff. I grant declarations that the plaintiff is beneficial owner of the shop as to a percentage to be ascertained, and that the defendant holds the legal estate in the shop on trust for the plaintiff to that extent. I order that the defendant pay to the plaintiff her share or rental income from the shop calculated with effect from 1st September 1987. I am satisfied that, in principle, there should be an order for sale of the shop, the net proceeds of which are to be divided between the plaintiff and defendant, according to their respective entitlements. I will hear counsel on the precise terms of such an order if the terms cannot be agreed.
The defendant is to repay the plaintiff the sum of $50,000 being money lent. I award the plaintiff damages for breach of contract amounting to $75,262.07. I dismiss the counter claim. I make an order nisi that the plaintiff have the costs of the action. I will hear counsel further on the question of interest if this cannot be agreed. There is to be liberty to apply. (N.J. Barnett) Judge of the High Court Mr. J. Poon, inst’d by Leo K.W. Lok & Co. for Plaintiff Mr. C.Y. Li, inst’d by Woo & Woo for Defendant
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HCAL 2573/2019 [2019] HKCFI 2252 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO 2573 OF 2019 BETWEEN 郭‍卓‍堅 1st Applicant 葉‍慶‍祥 2nd Applicant and 香‍港行‍政長‍官林‍鄭‍月‍娥女‍士 Putative Respondent ________________ Before: Hon Chow J in Chambers Date of Decision: 11 September 2019 ___________________ D E C I S I O N ___________________ In this application for leave to apply for judicial review, the Applicants seek to challenge the decision of the Chief Executive not to establish a Commission to inquire into whether the Police have acted in abuse of their powers and the reasons for the recent continuous protests seen in Hong Kong. It is alleged that the Chief Executive’s failure to do so amounts to improper conduct (行為失當) and is contrary to the reasonable, or legitimate, expectation (合理期望) of the Applicants and the public. Accordingly, the Applicants seek a court order to require the Government to appoint a Commission to inquire into the recent protests arising from the proposed amendments to the Fugitive Offenders Ordinance, Cap 503, why the protesters have refused to compromise with the Government despite more than 2 months of protests, whether the Police have abused their powers against the citizens, whether the protesters have gone too far, and whether it is reasonable of the Police to use force to stop or suppress the protests. In my view, the application is not reasonably arguable, and has no realistic prospect of success, for the following reasons. First, under Section 2(1) of the Commission of Inquiry Ordinance, Cap 86, the power to appoint a Commission is vested in the Chief Executive in Council, which is defined in Section 3 of the Interpretation and General Clauses Ordinance, Cap 1, to mean “the Chief Executive acting after consultation with the Executive Council”. The court has no power to appoint, or direct or compel the Chief Executive in Council to appoint, a Commission. Second, it has not been contended, and cannot reasonably be contended, that the Chief Executive in Council is under a legal duty to appoint a Commission, or has acted in breach of a legal duty for failing to do so. In so far as “legitimate expectation” is concerned, such expectation would generally only arise from a relevant representation, by words or a previous consistent course of conduct, made by the decision-maker. No such representation exists, or is alleged to exist, in the present case. Third, the relief sought by the Applicants are plainly inappropriate to be granted by the court. The Applicants invite that court to order the Government to establish a Commission, without identifying the precise incident or incidents which the Commission is supposed to inquire into or the scope of inquiry or terms of reference of the Commission. No Commission can properly function unless these matters are clearly and precisely defined. The question of whether a Commission should be established in the prevailing circumstances in Hong Kong is plainly a political decision. As the court has repeatedly emphasised, it is not the function of the court in an application for judicial review to resolve political issues. The court can only determine legal issues properly defined in a Form 86 and raised by an applicant with a sufficient interest in the matter to which the application relates. The present application is an attempt by the Applicants to ask the court to make a political decision which it has no power to make. It amounts to an abuse of the court’s process and must be rejected. Accordingly, the application for leave to apply for judicial review is dismissed. (Anderson Chow) Judge of the Court of First Instance High Court The Applicants acting in person
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{
"Date": "11 Sep, 2019",
"Action No.": "HCAL2573/2019",
"Neutral Cit.": "[2019] HKCFI 2252",
"case_title": "郭卓堅 AND ANOTHER V. 香港行政長官林鄭月娥女士",
"page_title": "郭卓堅 AND ANOTHER V. 香港行政長官林鄭月娥女士 | [2019] HKCFI 2252 | HKLII",
"case_history": [
{
"name": "HCAL2573/2019",
"link": "https://www.hklii.hk/en/appealhistory/HCAL/2019/2573"
}
],
"appeal_history": [],
"case_url": "https://www.hklii.hk/en/cases/hkcfi/2019/2252",
"neutral_cit": "[2019] HKCFI 2252",
"court_code": "HKCFI",
"content": "HCAL2573/2019 郭卓堅 AND ANOTHER v. 香港行政長官林鄭月娥女士\nHCAL 2573/2019\n[2019] HKCFI 2252\nIN THE HIGH COURT OF THE\nHONG KONG SPECIAL ADMINISTRATIVE REGION\nCOURT OF FIRST INSTANCE\nCONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO 2573 OF 2019\n________________________\nBETWEEN\n郭卓堅\n1st Applicant\n葉慶祥\n2nd Applicant\nand\n香港行政長官林鄭月娥女士\nPutative\nRespondent\n________________________\nBefore:\nHon Chow J in Chambers\nDate of Decision:\n11 September 2019\n___________________\nD E C I S I O N\n___________________\n1.\nIn this application for leave to apply for judicial review, the Applicants seek to challenge the decision of the Chief Executive not to establish a Commission to inquire into whether the Police have acted in abuse of their powers and the reasons for the recent continuous protests seen in Hong Kong. It is alleged that the Chief Executive’s failure to do so amounts to improper conduct (行為失當) and is contrary to the reasonable, or legitimate, expectation (合理期望) of the Applicants and the public. Accordingly, the Applicants seek a court order to require the Government to appoint a Commission to inquire into the recent protests arising from the proposed amendments to the\nFugitive Offenders Ordinance\n,\nCap 503\n, why the protesters have refused to compromise with the Government despite more than 2 months of protests, whether the Police have abused their powers against the citizens, whether the protesters have gone too far, and whether it is reasonable of the Police to use force to stop or suppress the protests.\n2.\nIn my view, the application is not reasonably arguable, and has no realistic prospect of success, for the following reasons.\n3.\nFirst, under Section 2(1) of the\nCommission of Inquiry Ordinance\n,\nCap 86\n, the power to appoint a Commission is vested in the Chief Executive in Council, which is defined in Section 3 of the\nInterpretation and General Clauses Ordinance\n,\nCap 1\n, to mean “the Chief Executive acting after consultation with the Executive Council”. The court has no power to appoint, or direct or compel the Chief Executive in Council to appoint, a Commission.\n4.\nSecond, it has not been contended, and cannot reasonably be contended, that the Chief Executive in Council is under a legal duty to appoint a Commission, or has acted in breach of a legal duty for failing to do so. In so far as “legitimate expectation” is concerned, such expectation would generally only arise from a relevant representation, by words or a previous consistent course of conduct, made by the decision-maker. No such representation exists, or is alleged to exist, in the present case.\n5.\nThird, the relief sought by the Applicants are plainly inappropriate to be granted by the court. The Applicants invite that court to order the Government to establish a Commission, without identifying the precise incident or incidents which the Commission is supposed to inquire into or the scope of inquiry or terms of reference of the Commission. No Commission can properly function unless these matters are clearly and precisely defined.\n6.\nThe question of whether a Commission should be established in the prevailing circumstances in Hong Kong is plainly a political decision. As the court has repeatedly emphasised, it is not the function of the court in an application for judicial review to resolve political issues. The court can only determine legal issues properly defined in a Form 86 and raised by an applicant with a sufficient interest in the matter to which the application relates. The present application is an attempt by the Applicants to ask the court to make a political decision which it has no power to make. It amounts to an abuse of the court’s process and must be rejected.\n7.\nAccordingly, the application for leave to apply for judicial review is dismissed.\n(Anderson Chow)\nJudge of the Court of First Instance\nHigh Court\nThe Applicants acting in person",
"attachments": [
{
"download_url": "https://legalref.judiciary.hk/doc/judg/word/vetted/other/en/2019/HCAL002573_2019.doc",
"file_name": "HCAL002573_2019.doc",
"file_ext": ".doc",
"status": "success"
}
]
}

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HCAL 779/2019 [2023] HKCFI 1165 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST No. 779 of 2019 BETWEEN Valles Julie Ann Caranto Applicant    and        Torture Claims Appeal Board/ Non-refoulement Claims Petition Office Putative Respondent   and        Director of Immigration Putative Interested Party          Application for Leave to Apply for Judicial Review NOTIFICATION of the Judge’s decision (Ord. 53 r. 3) Following; ( consideration of documents only; or     ( consideration of documents and Applicant being absent in open court;   Order by Deputy High Court Judge K.W. Lung: Leave to apply for Judicial Review be refused. Observations for the Applicant: THE APPLICATION The applicant applies for leave to apply for judicial review of the Decision dated 7 March 2019 of the Torture Claims Appeal Board/Non-refoulement Claims Petition Office (“the Board’s BOR 2 Decision”) refusing to allow the applicant’s late filing of notice of appeal/petition against the Director’s Second Decision as described below. The applicant did not ask for a hearing. Pursuant to Order 53, rule 3(3) of the Rules of the High Court, I shall deal with her application on paper. Pursuant to Order 20, rule 8 and Order 53, rule 3(6) of the RHC, Form 86 is amended to the effect that the Board is the proposed respondent and the Director of Immigration (“the Director”) is the interested party.
The applicant The applicant is a national of the Philippines. She entered Hong Kong as a foreign domestic helper on 16 September 2011. However, her employment contract was prematurely terminated on 20 June 2012. She was required to leave within two weeks. However, she did not depart and had overstayed since 5 July 2012. On 21 June 2013, she was arrested by the police. On 14 April 2014, she lodged a non-refoulement claim. Her claim was made on the basis that, if refouled, she would be harmed or killed by her husband, Valles Oscar Paderon, and a couple of loan sharks. According to the applicant, she married her husband on 14 May 1996. Her husband was from Valles family which was rich and influential. However, her own family was middle class. In around 1997, her husband became addicted to drugs and their family financial situation worsened. Her husband refused to seek assistance from the Valles and demanded the applicant to work and support their family. Initially, the applicant worked as a laundry lady but the income was insufficient. Her husband became abusive and assaulted her on several occasions. She then decided to work in Hong Kong in 2002. From 2002 to 2004, she would remit the salary to her husband. However, her mother told her that he spent the sum on alcohol and drugs. She then changed to send money to her mother. Upon knowing the change, her husband threatened and hit the applicant’s mother. When the applicant’s employment contract was terminated in 2005, she returned to the Philippines. The physical and mental abuses from her husband continued and escalated. Thereafter, her husband took her to the loan sharks and borrowed money for her overseas employments. While abroad, in 2007, she learnt from her mother that her husband got into troubles with her family members and other villagers. On 28 March 2009, the applicant returned home to attend her son’s graduation ceremony. She did not encounter her husband during this visit. In May 2011, she started to receive letters from the loan sharks demanding the repayments. In September 2011, she came to work in Hong Kong again. In around February 2012, her mother informed her that her husband had returned to the village. He later sent threatening messages to the applicant’s Hong Kong number. Meanwhile, her mother also received a message asking them to repay the loan. Out of fear, the applicant decided to stay in Hong Kong for protection. Details of her claim are set out at paragraph 6 of the Notice of Decision dated 28 July 2015 (the “Director’s First Decision”). The Director’s Decisions The Director considered the applicant’s claim in relation to the following risks: risk of torture under Part VIIC of the Immigration Ordinance, Cap. 115, (“the Ordinance”) (“Torture risk”); risk of violation of the right to life under Article 2 of Section 8 of the Hong Kong Bill of Rights Ordinance, Cap. 383 (“HKBOR”) (“BOR 2 risk”); risk of torture or cruel, inhuman or degrading treatment or punishment (“CIDTP”) under Article 3 of Section 8 of the HKBOR (“BOR 3 risk”); and risk of persecution by reference to the non-refoulement principle under Article 33 of the 1951 Convention relating to the Status of Refugees and its 1967 Protocol (“Refugee Convention”) (“Persecution risk”). By way of the Director’s First Decision, the Director dismissed the applicant’s claim on the grounds of Torture risk, BOR 3 risk and Persecution risk. In elaboration, the Director found
that (i) the past events did not support her assertions that her husband or the loan sharks had the intention to cause harm or kill her and there was no state involvement in these disputes [16]-[37]; (ii) state protection would be available to her [38]-[45]; and (iii) internal relocation was a viable alternative [46]-[49]. In passing, the Director also noted that her delay in seeking non-refoulement protection undermined her credibility [50]-[53]. In the Notice of Further Decision dated 11 April 2017, the Director found that the applicant’s right to life would not be violated and thus rejected her claim on BOR 2 risk (the “Director’s Second Decision”). The Board’s Decisions The applicant first appealed the Director’s First Decision to the Board. On 11 August 2016, the Board conducted an oral hearing for her appeal. The applicant chose not to testify in the hearing [4]. At the outset, the Board rejected the applicant’s claimed risk of harm from the loan sharks on the basis of lack of evidence [2]. It then proceeded to consider the claimed risk of harm from the husband. The Board noted that the dispute with the husband had no state involvement [7]-[9]; that the alleged injuries failed to attain a minimum level of severity [10]; that, while she was raped by her husband, it was 9 years ago and she conceded that her husband had ceased to demand sex long before she came to Hong Kong [11]; and that internal relocation was proven to be available according to the country of origin information [15]-[21]. As a result, the Board rejected the applicant’s claim on Torture risk. For the same reasons, it also rejected her claim on the remaining grounds. Independently, the Board found that her delay in lodging the non-refoulement claim undermined her credibility [33]-[36]. For the aforesaid reasons, by way of a decision dated 18 January 2017, the Board rejected the applicant’s claim and dismissed her appeal against the Director’s First Decision (the “Board’s First Decision”). On 5 June 2017, the applicant filed a notice of appeal/petition against the Director’s Second Decision. She was around 1 month and 9 days out of time [5]. The Board rejected the applicant’s explanation of change of address as it was her responsibility to notify the Board about the change of address [8.1]-[8.2]. It also noted that the applicant’s grounds of appeal only contained a summary of her claim which had been ventilated in the Board’s First Decision [9]. In any event, based on the findings of the Board’s First Decision, her appeal was devoid of merits. As a result, by way of the Board’s BOR 2 Decision, the Board refused to allow the applicant’s late filing of notice of appeal/petition. Application for leave to apply for judicial review of the Board’s Decision The applicant has filed Form 86 dated 20 March 2019 for leave to apply for judicial review of the Board’s Second Decision. In her affidavit in support of her application, the applicant did not raise any specific ground. DISCUSSION The role of this Court is supervisory, meaning that it ensures that the Board complied with the public law requirements in coming to its Decision on the applicant’s appeal. The Court will not usurp the fact finding power vested in the Director and the Board. See TK v Michael C
Jenkins Esq and Director of Immigration [2013] 1 HKC 526, §40 and Nupur Mst v Director of Immigration [2018] HKCA 524, §14 (1). The Court will bear in mind that the Board’s Decisions should be examined with rigorous examination and anxious scrutiny. The question before this Court is whether the Board was correct to refuse to extend time to the applicant to file her notice of appeal and whether there are any merits in her application. The applicant has an obligation to keep the Director and the Board up to date as to her address or telephone number for communication. The Court of Appeal in Re: Karamjit Singh [2018] HKCA 460, 2 August 2018 held: “14. … …It is the duty of a litigant/claimant to give the authority an address to which correspondence or notice can come to his attention in timely manner. The consequence of any delay occasioned by the ineffectiveness of such an address would fall on the shoulder of the litigant/claimant, see: Islam Raja Rais v Director of Immigration HCMP 881/2017, 26 June 2017; Said Umair v Torture Claims Appeal Board [2018] HKCA 82; and Re Saqlain Muhammad [2018] HKCA 346….” In any event, there is no merit in the applicant’s application as she had failed in her claim on the other risks, particularly the BOR 3 risk. The Court of Appeal in Kulwinder Kaur v Director of Immigration and Torture Claims Appeal Board/Non-refoulement Claims Petition Office [2022] HKCA 48, 7 January 2022, held “59. … upon determining that there is no BOR 3 risk, there is no arguable ground for any BOR 2 risk: see AA v Sweden (2017) 64 EHRR 20 at [52] and [96]; RM v Gerard Paul Muttrie Esq (unrep., HCAL 166/2015, 3 March 2016) at [52].” There is no valid ground to challenge the Board’s Second Decision. The Court does not find any error of law or procedural unfairness in the Board’s Decision. The findings of the Board are not in any respect open to challenge as Wednesbury unreasonable or irrational. The applicant fails to show that she has any realistic prospect of success in her proposed judicial review. CONCLUSION I refuse to grant leave to the applicant to apply for judicial review of the Board’s Second Decision. Accordingly, I dismiss her application. Dated the 10th day of May 2023 (M.O. WONG)(Ms) for Registrar, High Court  
Where leave to apply has been granted, Applicants and their legal advisers are reminded of their obligation to reconsider the merits of their application in the light of the Respondent’s evidence Notes for the Applicant: If leave has been granted, the Applicant or the Applicant’s solicitors must:    a) serve on the respondent and such interested parties as may be directed by the Court the order granting leave and any directions given within 14 days after the leave was granted (Order 53, rule 4A); b) issue the originating summons within 14 days after the grant of leave and serve it in accordance with Order 53, rule 5; and c) supply to every other party copies of every affidavit which the Applicant proposes to use at the hearing, including the affidavit in support of the application for leave (Order 53, rule 6(5)). Sent to the Applicant on 10/5/2023 Valles Julie Ann Caranto Applicant’s ref. no: Nil. Sent to the Putative Respondent / the Putative Respondent’s solicitors / such Putative Interested Parties as may be directed by the Court / the Putative Interested Parties’ solicitors on 10/5/2023 Torture Claims Appeal Board/Non-refoulement Claims Petition Office Putative Respondent’s ref. no.: USM 2035/15/8/56/F155; BOR 702/17/6/19/F53 Director of Immigration Putative Interested Party’s ref. no.: QA T/C/313/15 & RBCZ 9000954/17 (Formerly RBCZ 3000873/14)(T6S6) Department of Justice, Senior Assistant Law Officer (Civil Law) (Civil Litigation Unit 2)   Form CALL-1
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CCDI 346-354/2013 (PW)
IN THE CORONER’S COURT
THE HONG KONG SPECIAL ADMINSTRATIVE REGION
(Case No. CCDI 346-354 of 2013)
HO Oi-hing
HO Oi-ying
HO Oi-ming
TANG Yuk-ling
SIU Chi-man
KWAN Pui-man Eleni
POON Lau-tim
TO Sau-ching
POON Tak-sze
Coram: June Cheung, Coroner
Dates of hearing: 15-26 Feb, 2 March, 9 March, 31 March and 23 May 2016
Date of delivery of inquisition: 7 June 2016
____________________
I N Q U I S I T I O N
_____________________
Introduction
1. I have mentioned at the commencement of and during this inquest, but I will reiterate here: that the purpose of this Inquest is to inquire into the cause of the death and the circumstances connected with the death. We are not concerned with the fault, civil liability or compensation here. Although we have looked into matters concerning travel insurance as well as responsibility of travel agent at different locality, those, as I have mentioned more than once, were to facilitate me in making practicable recommendation to prevent future tragedy. In fact, the law expressly prohibits any conclusion being framed in such a way as to determine any question of civil liability. Therefore the question as to whether or not there was negligence such as to give rise to an action for damages or compensation is not a matter for this court; - that is a matter for the civil courts. My role here is to determine simply: what happened and what did not happen as well as making practicable recommendation having the hard lesson learnt.
2. The standard of proof I apply in this inquest, unless I specify otherwise, when deciding upon all matters is what known is as “on a balance of probabilities”. In other words, is it more likely than not that a fact existed or an event occurred.
3. Despite the difficulties encountered during the investigation, namely the fact that all eye witnesses of incident were not available, the court was not able to examine the real exhibits and that Hong Kong itself does not have experience or expertise in hot-air ballooning, this court has fortunately obtained two detailed reports from the Egyptian authority which were admitted as evidence, namely, 1) the investigation report issued by the Egyptian Ministry of Civil Aviation in December 2013 (“AAIC report”) governed by Annex 13 to the Convention on International Civil Aviation and 2) the Public prosecution report signed by the “President of the Appeals, Acting Chairman of the Technical Officer to the Officer of the Attorney General of the Arab Republic of Egypt (“Prosecution report”) containing the transcript and memorandum from the General Prosecutor’s office. The two reports are in my view thorough, detailed and professionally produced by persons with the necessary skills, knowledge and expertise. We also have the benefit of having Mr. Chadwick, General Aviation Flight Standard Officer (Balloon Operations) from the UK Civil Aviation Authority, to assist this court to understand the two reports and operation of hot air balloon (“HAB”) in general. I consider Mr. Chadwick’s expert evidence was most helpful, impartial and professional.
4. During the inquest, we have called 9 witnesses: they were Mr Wilson AU (CW1) (“AU”) and LAU Tak ping (CW3) (“LAU”) from Kuoni Travel (“Kuoni”); Mr Wong Kong Sing (CW2), one of the tour member who did not join the optional hot air balloon ride; Mr Joseph Tung, Chairman of the Travel Industry Council (“TIC”) (CW4), Mr Chin Shing (CW5) who was responsible for making the HAB model for the purpose of this inquest and two Arabic translators for clarification of some of the contents of the reports (CW6 and CW7); Mr Chadwick (CW8), the HAB expert mentioned above and finally Miss Scarlett SO Lai-kuen (CW9), person in charge in Hong Kong of Paradise Travel (“Paradise”) which was the Destination Management Company (“DMC”) engaged by Kuoni for this Egypt tour. Their evidence covered a number of issues in great details that apparently might not be strictly relevant to the findings at inquest set out in Form 12 but essential for this court to understand the background of the case and finally making recommendation to prevent future similar tragedy.
General course of event leading to the deaths
5. The present case may be one of the most tragic incidents happened while Hong Kong citizens were travelling abroad. As a matter of fact, it was the deadliest hot air ballooning disaster in history resulted in 19 deaths, 9 of which were the deceased in the present inquest. The general course of event was largely undisputed. All the nine deceased, together with 6 other tour members who did not join the HAB ride, were joining a 10 days’ tour to Egypt departing on 22 February 2013 organized by Kuoni. The HAB ride in question took place in Luxor city and was one of the self-pay optional activities offered in the tour. Kuoni has engaged Paradise as their DMC responsible for the arrangement in Egypt and Paradise has chosen Egyptian Airship and Balloon-Sky Cruise Company (“Sky Cruise”) as the local HAB service provider.
6. At small hours on 26 Feb 2013, the 9 deceased, AU, tour escort of Kuoni, and Mostafa, assistant from Paradise, set off from hotel to the place where the balloon would take off. It was around 0615 hours local time when the balloon took off with 20 passengers. When the balloon had flown for more than 35 minutes, the pilot instructed the ground crew to receive the drop line starting the landing procedure. The HAB suddenly caught fire in the air which caused major injury to the pilot who exited the basket followed by a few passengers. While the balloon was still burning with less weight on the basket, it kept ascending until the envelope was so badly damaged, incapable of supporting the basket and fell on the field. As a result of the incident, 19 passengers were dead, 9 of which were the deceased of the present inquest. The pathologists found that the injury causing each of their death to be multiple injuries and burns.
Cause of the accident
7. The HAB in question was manufactured in 2004 by a Spanish balloon company called Ultramagic and registered as SU 283. The balloon type was “Ultramagic N425” and Sky Cruise bought it in 2005 from a Sweden operator. The balloon was operated by wind action effects for horizontal movements while vertical movements control was made through the control of the burners by the balloon pilot.
8. On the evidence, the take-off procedures seemed to be normal and the balloon had flown for about 35 minutes before the fire started in the course of landing.
Evidence from the Pilot
9. The only surviving eye-witness of the event who has given evidence to the Egyptian authority was the pilot of the HAB in question, Mr Momen Murad Ali Hussein, Egyptian, aged 29. The other surviving passenger was not willing to give evidence. The pilot has held a balloon pilot commercial licence issued by the Egyptian Civil Aviation Authority since 2006. He was firstly interrogated by the authority when he was badly injured in bed after the accident. He was further taxed for the purpose of prosecution in April 2013 and he gave a statement to the investigation authority again on 17 June 2013. The prosecution was not proceeded with finally. His evidence was contained in the AAIC report and prosecution report.
10. He stated that because there was no maintenance manager available at the time, he took a look at the balloon and ensured the hoses were safely installed using sense of smell before taking off. At the time of taking off, he contacted the control tower but no one was there to answer him. He said however the take-off procedures went smoothly and the balloon kept flying like usual until it started to land at around 10 meters height from the ground. At the beginning of the landing, the fuel quantity for both aft cylinders showed ¼ capacity, whilst the forward burners were not used except for the “pilot light”. After about 35 minutes, the pilot used the forward cylinders. All of a sudden, a fire hit him on his back and ejected him from the balloon. He was not able to take any measures to control the fire, neither using the extinguisher nor turning off the valve of the gas cylinder.
11. The pilot also stated that at the beginning of the landing, he dropped the rope out of the basket before he heard a loud sound of a fire flame. He did not notice any interference between the rope and any of the hoses. The location of the drop line rope is far from the hoses, he believed it cannot be scrambled around them. Neither did he smell any gas nor hear any explosion sound of any part. All he heard was the sound of a fire flame. The fire sound was similar to the spraying sound coming out of an “insect repellant pressurized can”. He said the fire came from the forward burners but was not able to identify the exact location of the fire source. The fire was from left side and his injuries mainly on the left side. The fire was in one direction of yellow color.
12. He could not conclusively identify the source of the flame. He believed that the cause of accident could be as a result of defect of one of the hoses connecting the cylinder to the burner.
13. The Egyptian investigation also showed that the surviving pilot was suffering from burn wounds scattered on his head, his face, his back, his left upper limb and right upper arm, and upper chest and abdomen and lower limbs. Skin grafting operations were conducted.
Maintenance of the hoses
14. The maintenance manual states the need for a special inspection of the hoses every ten years and to check if there are any cuts or damage. It is said that the maintenance manager conducted a 100 hour annual inspection dated 5 October 2012 under the supervision of Egyptian Civil Aviation Authority and the Validity Certificate was renewed for the period of 13 October 2012 until 12 October 2013.
15. Within the AAIC analysis, it is stated that maintenance carried out by Sky Cruise did not always refer to the appropriate part number or serial number, as per the full maintenance procedures.
16. On the other hand, Hasan Muhammad Kinnawi, the assistant of the Ground Team Head for the HAB who was responsible for supervising the workers in taking off and landing, stated that gas leakage was a usual occurrence in his job, and they usually noticed the leakage by smell it and would change it without mentioning of any reporting system. He also said that the operation manager (ground team head) and the maintenance engineer were both absent on the day of the incident for unknown reasons. The operation manager of Viking Company, another HAB company in Luxor, also said that gas leakage of HAB happened a lot.
17. Mr Chadwick commentedthat the hose that was attached to the burner that was made in 2005 and may have accumulated high flight hours may not necessarily be directly a contributing factor to the accident. Hoses with many more confirmed flying hours and much older are being regularly used in the world hot air balloon fleet. At the time of this report, the UK CAA are unaware of another hot air balloon accident that is attributed to an in-flight hose failure of the nature specified in the report, this being largely due to the stringent inspection and maintenance requirements in of HAB activities in UK and the implementation of it.
Conclusions from the Egyptian authority
18. It is stated in AAIC report (Exhibit C30), at page 147, that:
“The probable cause for the accident as seen by the investigation committee is due to a (1) hose fuel leak at the upper portion of the forward right hose connected to burner number 193 capturing its ignition source from burner’s fire causing a fire that caused a major and direct injury to the (2) balloon captain” (my emphasis)
19. Nevertheless, it could not be ascertained from the investigation carried out by the Egyptian authority if the hose fuel leak was as a result of internal malfunction of the hose due to lack of inspection and/or maintenance or if there was an outer force pulling off the hose from the burner, e.g. tangling by drop line at the time of landing.
20. The AAIC report also considered two contributing factors to the accident at page 147 of the report:
“1. Maintenance actions that were carried out on the hoses could not indicate the need to replace the hose that was the cause of the accident”
2. The part number of the hose connected to the burner 193 was for a hose made in 2005 and therefore it has accumulated high flight hours and sometimes under adverse conditions”
21. On the other hand, the Spanish Civil Aviation Commission of Accidents (CIAIAC) made their point in their letter, as the accredited representative from Spain in the Egyptian investigation, that:
“the simultaneity or coincidence in time of the action of pulling down the balloon by the ground crew through the drop line rope (handling line) and the start of the gas leak and a further fire should be considered as a significant condition for the accident scenario under which the fire broke out”
22. Further conclusion by CIAIAC was that:
“- Operator maintenance discrepancy issues and certain lack of maintenance control were evident during the AAIC investigation;
With regard to this particular flight, the pre-departure check had not been fully completed by the balloon pilot.”
Finding at inquest in Form 12
23. Having heard all the evidence I accept and find that:
Injury causing death
The medical causes of death for all of the deceased were multiple injuries and burns.
Time, place and circumstances at or in which injury was sustained
All nine deceased died in the morning of 26 Feb 2013 during a hot-air balloon ride over Luxor City when the balloon caught fire during the flight after the landing procedure had started. The fire was due to hose fuel leak at the upper portion of the forward right hose connected to the burner number 193. Such fire also caused serious and direct injury to the balloon pilot who was unable to do anything to control the fire.
Conclusion as to the deaths
I find the conclusion as to the deaths of all deceased to be deaths by accident.
24. I now also read out the Particulars for the time being of each deceased required by the Birth and Deaths Registration Ordinance (Cap 174) to be registered concerning the death (See form 12 attached for each deceased).
Consideration of recommendation
25. Under section 44(2) of the Coroners Ordinance (Cap 504), the coroner at an inquest may make recommendation designed:
(a) to prevent the recurrence of fatalities similar to that in respect of which the inquest is being held;
(b) to prevent other hazards to life disclosed by the evidence at the inquest;
(c) to bring to the attention of a person who may have power to take appropriate action any deficiencies in a system or method of work which are disclosed by the evidence at the inquest and which are of public concern.
26. The following are some features of the evidence which are helpful to me in considering recommendations to be made after the inquest.
Risk involved in HAB ride in Egypt
27. HAB is an activity not available in Hong Kong and has become a popular activity around the world and welcomed by Hong Kong tourists travelling abroad. As HAB was operated under apparently simple mechanics and the speed of the same is generally quite slow and steady for commercial/tourism purpose, the risk of the same was generally not recognized by tourists. Although Mr LAU of Kuoni testified that he, as a member of senior management responsible for designing tour, viewed that HAB ride involved moderate degree of risk, Kuoni has not conducted any risk assessment on this activity before offering them and there was no particular attention, guidelines or information concerning risk of taking part in this activity provided to their employees, including front desk receptionists or tour escorts nor their customers. LAU said that they basically relied on the fact that other companies were also offering HAB activities and they were aware that HAB was offered in many other countries and considered to be safe in general.
28. HAB is a type of aircraft and a highly regulated industry. Of course, each jurisdiction has its own civil authority to regulate this activity. It was emphasized at times by Mr Ozorio, SC, representing Kuoni, that HAB ride is a safe activity by quoting Mr Chadwick’s report: “the advancement in fabric technology and envelope rapid deflation systems has facilitated larger balloons to be operated with a high degree of safety and reliability.” However, since HAB ride is taken place in the air with considerable height, it undoubtedly involves a certain degree of risk. By giving a simple click in the internet will show a number of serious fatal HAB accidents occurred in the past around the world. That is why hot air ballooning needs stringent regulation on the airworthiness and operation of the balloon and pilot licensing scheme. In fact, as testified by Mr Chadwick, UK has developed a set of stringent regulations to ensure safety of air ballooning activities especially the commercial passenger carrying balloon has been vastly developed over the years around the world. The safety of and risk involved in this activity actually depend on how stringent such regulations are and how well the same are implemented.
29. It is of note that AAIC report did make a recommendation, at p.149 of the report, that:
“Issue necessary instructions to balloon companies to assure informing passengers when they reserve their flights that this kind of sports included some degree of risk and for the purpose of adventure in order that passengers would make their decisions from the beginning .” (my emphasis)
30. In relation to that, Mr Chadwick responded in his report that:
“Many hot-air balloon passenger flights are bought by a third party as a present, with the actual passenger not finding out about their flight until the day of the flight. However, it is accepted that flying as a passenger in a hot-air balloon involves certain different threats to that of flying on a commercial airliner, and the AAIC is correct that information as to the physical requirements of flying in a hot-air balloon needs to be given at the point of reservation. This would therefore have implications to tour operators and local representatives at resorts, etc.” (my emphasis)
Information about HAB ride provided by Kuoni to its staff
31. The present tour was the fifth Egypt tour Mr AU led as he testified. He started escorting Egypt tour since Sept 2012. He testified that before he led the first Egypt tour it was the experienced colleagues sharing to him local information about Egypt and he has not received any formal training or briefing relating to safety of leading tour in Egypt or taking part in hot air balloon activities. About half to one month prior to the 1st Egypt tour escorted by him in Sept 2012, experienced colleagues did mention to him briefly and casually in office how HAB was operated by wind, the flight distance and landing posture. Apart from that, no other information or training was given to him in respect of the risk of taking HAB ride. He was also told that people who had heart condition, hypertension and fear of height should not take part in HAB.
Information about HAB provided to tour members
32. In early 2013, Mr AU was assigned by Kuoni to host the “tea party” on 7 Feb 2013 for the present tour. By then, he did not know if he would be the tour escort of the tour. About a week before the departure, Mr AU was informed by Kuoni to escort the tour in question.
33. There is no dispute that the need for customers to purchase comprehensive travel insurance before departure is generally set out in the tour booking form and the receipts issued by Kuoni to the deceased. It was also reminded in the receipts, though in small prints, under the heading of “Important Notice” that customers are suggested to read carefully the coverage and relevant clauses in their insurance policies to ensure sufficient coverage in case of accident. I am also well aware that Kuoni was not allowed by the TIC nor did they put pressure upon or force customers to purchase Kuoni’s own Generali insurance. The question is whether the customers are provided with clear and sufficient information concerning the activity they are joining and the risk involved in it before they made an informed decision of participation.
34. AU said that during the tea party, among other information, there was a note named “Safety guidance of activities in Middle East and African area”, provided to tour members. On which there was a paragraph concerning taking HAB rides which stated to the effect that participants shall follow staff’s safety guidance and rules of activity. Participants shall only leave the balloon as directed by the staff upon landing of the balloon.
35. At the tea party, tour members were also provided with a Price list of Self-pay Activities in Middle East and Africa on which it was said relating to HAB ride: “Go on a hot air balloon ride in Luxor to view the beauty of Nile and Luxor. This activity includes breakfast and insurance. An aviation certificate will be issued: Approx. 45 minutes (the entire trip takes approx. 2.5 hrs: USD 190 for all age group” (my emphasis)
36. The information given to customers in the above price list: “this activity includes insurance” was ambiguous. When Senior Manager LAU was asked as to what it exactly meant, he said vaguely that might mean this activity included flying insurance taken by Sky Cruise and customers were covered by insurance when they take part in this HAB activity. LAU said they in fact just translated and copied the information stated on the Sky Cruise’s leaflet. In my view, this clause may let the customers misunderstand that their joining of this activity was covered by insurance which turned out to be not the case, as revealed from the evidence of this inquest. Should the members be warned more clearly and specifically that their insurance may not cover this HAB activity, their decision to join the activity may be changed.
37. This court is well aware of its limited jurisdiction. I am not concerned about why 6 deceased out of 9 did not buy Kuoni’s travel insurance but bought their own Comprehensive Travel Insurance from China Merchants Insurance Company Limited. Nor is this court attempting to explore the reasons why they were not insured. My concern is whether practicable recommendation could be made to prevent recurrence of similar fatalities. The ambiguous wording on the above optional self-pay activity price list about the HAB ride and the lack of sufficient information provided to the customers joining the HAB ride so that they could make better assessment of the risk may affect their choices of participating the activity.
38. On AU’s evidence, he said that when tour members were paying the fees the day before the ride, he had told them briefly information about the duration of the flight, what scenery to be seen and advised them not to join if they have heart condition, hypertension and fear of height. He has also shown pictures taken about the ride before to the tour members. Upon arrival at the taking-off place before they were approaching the balloon in question, he gave his group of 9 members some information as to the duration of the flight and landing posture. He also told them he would be taking pictures for them and taking care of their belongings. While the pilot of the HAB from Sky Cruise was conducting briefing session in English to 20 passengers before taking off, no instant interpretation was given by AU because he saw no need as his had given his own briefing to the deceased earlier on.
Information concerning HAB ride acquired by Kuoni
39. In fact, after hearing the evidence, it was not surprising why not much information relating to HAB ride was given to the employees and customers by Kuoni. On LAU’s evidence, even the senior management designing the tour did not have much information about the HAB ride. Apart from having been told by Paradise that Sky Cruise was licensed, insured and experienced, Lau basically told the court that he had never discussed the HAB ride among the senior management before offering this activity. Neither did he nor Kuoni as far as he knew conduct any formal evaluation after this incident.
40. It was submitted by Mr Ozorio, SC for Kuoni that there were no discussion nor query raised among tour members concerning risk of
HAB ride and that they could easily do researches on their own should they wish so. That, as submitted, showed that the deceased were not concerned with the risk of HAB ride. I am afraid I cannot agree with that. It is not hard to observe that people who tend to join travel tour, as opposed to planning their own trip, are those who are either more senior in age or do not prefer to plan by their own. Participants of travel tours tend to leave the planning and entrust all the arrangement to the travel agent company and the tour escort. That may require higher responsibility from the travel company to conduct sufficient risk assessment before offering the activities and to provide sufficient information to the customers.
41. It is of note that this case happened in Egypt which is not a developed and advanced country like the United Kingdom, Australia or New Zealand where HAB industry is long established and governed by stringent regulatory system. It is common sense that an activity is considered to be safe in one country does not necessarily mean that it is safely operated in another.
42. As a matter of fact, it was not the first HAB accident occurred in Luxor. It is not disputed that there was a major HAB accident happened in Luxor as a result of which 16 passengers were injured which caused temporary suspension of the activity. I consider that Hong Kong travel companies apart from designating a DMC to appoint and liaise with the local service providers should also acquire sufficient information of such activity before offering the activities that involved a certain degree of risk.
43. Instead of relying on the fact that other companies are also providing the same activity, travel companies should acquire sufficient information for its own risk assessment before providing such activity. The information is also essential for training the frontline staff. More importantly, customers should be well informed of the information before taking part in such activity involving certain degree of risk. In my view, the list of basic information about the HAB ride that should be acquired by the travel company and provided to the customers includes but not limited to:
- Height and duration of the HAB flight;
- Pictures of HAB showing the envelope, basket and burners of the HAB;
- Size of the HAB;
- Brief information about material and mechanics of operation of the HAB;
-Information about experience and reputation of the company providing the HAB ride;
- Any HAB accidents happened before in the destination and any of such related to the service provider;
- The licensing system in the country as compared with other worldly recognized country.
44. In fact, it is stated at paragraph 9.3 of Code of Conduct for Outbound Tour Escort issued by TIC in October 2007 that: “Prior to arranging self-pay activities, tour escort shall explain clearly to tour participants the content, duration, fee, safety and responsibility of such activities.” Checklist 4.2 attached to the same Code also provides a few items for checking in respect of optional activities.
Selecting and supervising the local destination management company and/or service provider
45. From the evidence of LAU, Senior manager of Kuoni responsible for product designing and tour planning, Kuoni started to offer HAB ride in 2008. Kuoni stopped offering HAB immediately after this accident, but still offer Egypt tour until June 2013. He said that Kuoni relied upon the fact that other Hong Kong travel companies were also offering HAB ride before they were offering the same. He was aware that HAB ride was also provided in other countries around the world and was considered to be safe by other companies. He said that some of their colleagues also had the experience of HAB ride in other companies before they joined Kuoni.
46. When asked if there was any risk assessment of HAB ride in Egypt done by him or Kuoni as far as he knew before the accident, LAU replied negative and said that they usually relied on the local licensing system and if the company was insured. He was informed by Paradise that Sky Cruise was licensed and insured (being one of criteria of obtaining license). Surprisingly, Kuoni has not even obtained a copy of those documents but just relied on Paradise words until the accident occurred. He was told by Paradise that Sky Cruise was an experienced operator of HAB and started to operate HAB activities in 90s. Kuoni basically relied on the choice and information given by Paradise. LAU said that they also relied on feedback from tour escorts and customers when considering the quality of service provided by local company.
47. Despite the absence of any risk assessment done by LAU/Kuoni before offering HAB ride, he agreed that HAB contained certain degree of risk. He considered HAB ride as an activity having moderate degree of risk. As to what training, if any, was given to tour escort or front desk staff, he said there would only be casual sharing given by experienced colleagues to junior ones. Kuoni did not have particular safety guidelines or briefing of HAB ride provided to staff. During the tour in Egypt, AU basically was responsible for liaisoning with the local guide/assistant there called Mostafa and relied on him for all the local arrangements.
48. Miss Scarlet So, the person in charge of Paradise in Hong Kong testified that she had not received any training on travel industry. She worked for Osama, founder of Paradise in Egypt, since 2005 through an introduction by a common friend. She did not have any travel or working experience in Egypt. She, although being the person in charge of Paradise in Hong Kong and having the title as Regional Manager, basically said that she was not more than a mail box transferring message between Kuoni and Osama. In relation to the choosing Sky Cruise, she said it was Osama’s choice and she had no idea why it was chosen. She said there was no discussion between Kuoni and her on HAB activities. Before the accident, she has never given any copy of Sky Cruise’s license or insurance but just told Kuoni that Sky Cruise was chosen as the HAB service provider upon Osama’s instruction.
49. A Risk Solutions Manual for Travel Industry in Hong Kong was issued by TIC in February 2008. Paragraph A1.1.1 of the Manual provided a Supplier selection criteria checklist. However, the checklist does not cover present situation in which the Hong Kong travel company has engaged a DMC to select and arrange with the local service providers.
50. Despite the fact that Kuoni was told by Paradise that Sky Cruise was an experienced service provider with reputation, it was revealed from the Egyptian investigation that the maintenance carried out at Sky cruise did not always refer to the appropriate part numbers or serial numbers, as per the full maintenance procedures; for example: absence of record of the 5th tank (for inflating the balloon) and unclear basket number. Further, gas leakage appeared to be a common problem as testified by the staff of balloon companies, which did not appear to cause serious concern by the company, which seemed to be quite contrary to the stringent UK reporting system as testified by Mr. Chadwick.
51. Regarding operation of the present HAB, it was also revealed that the pilot was allowed to take off, despite absence of the maintenance engineer and the operation manager and that he was not able to contact the control tower until 10 minutes after taking off. When the pilot was asked by the investigation team about the dissimilarity between his pre-departure check signature and his previous signature, he claimed that he would use several signatures in order not to be imitated! Mr. Chadwick could not help expressing his concern as to why anyone would want to imitate a pre-departure check signature during normal operation. Also, no summary or translation of pilot briefing was supplied to the passengers before taking off. It was however recommended by Mr. Chadwick that the use of laminated passenger safety briefing cards should complement the pilot’s briefing to passengers. The use of diagrams and briefing cards in major world language should be provided.
52. My pointing out the above observation made after Egyptian investigation was not because I wanted to discuss or determine the fault or liability, but to show the danger of Hong Kong travel companies simply replying on words of DMC without conducting its own risk assessment. It is equally important for Hong Kong travel companies to properly select and supervise the service providers even after a DMC has been engaged.
53. Given the highly technical nature of HAB operation and the fact that the inquest does not have the advantage of hearing direct evidence, this court is not in the best position to make any conclusion or comments on the requirement of a safe HAB maintenance or operation.
54. Upon hearing this inquest, I reckon that there is at present a lacuna in TIC’s guidance on Hong Kong travel companies’ duty and responsibility on local service providers when DMC is engaged. I note that there is quite a detailed list for TIC members to select local service providers, however such manual does not cover situation when travel agent companies have entrusted a local DMC.
55. Apart from telling me that we should trust the licensing system of each country and it is very difficult for Hong Kong travel company to monitor local service providers as well as it is a worldwide common practice to engage a DMC to do the work for travel companies, Mr. Tung of TIC basically gave me no suggestion nor assistance as to how the service of Hong Kong travel companies can be improved and safety of Hong Kong customers be better safeguarded.
56. To my surprise, both Kuoni and TIC have never conducted any evaluation of the case until the present inquest. Neither has TIC done anything to review the existing guidelines. More than three years have lapsed since the date of this tragic event. It is disappointing to learn that not only the travel company and TIC were not able to realize the risk involved in this particular activity showed by the lack of risk assessment, they were also not alerted after loss of nine precious lives. That in a way shows how insensitive the Hong Kong travel industry is to the well-being of customers. Regardless of whether this tragedy could possibly be avoided, the cursory attitude in assessing risk and reflecting after the accident as showed from the testimony given by LAU being senior management of Kuoni, given its reputation as one of the most high-end travel companies in Hong Kong, was unsatisfactory in my view. Similarly, I consider TIC’s reaction after the accident to be too slow and attitude too passive. The AAIC report was issued in December 2013 and I expect TIC should have looked into the matter thoroughly and reviewed the present guidelines on outbound activities involving risk much earlier instead of waiting for the result of this inquest.
57. Further, I consider that information or assistance currently provided by TIC to travel companies and more importantly to customers as to risks involved in various activities operated at various countries to be insufficient.
Recommendations to Travel Industry Council (TIC)
58. Analyzed as the above, I now recommend:
TIC to conduct a thorough research and collect data from the industry so as to list out popular activities operated in different countries offered by travel companies involving certain degree of risk. TIC to categorize the degree of risk in respect of different activities provided in different countries for industry as reference. Such list should be updated from time to time;
TIC to set out clear guidelines for travel companies as to the necessary information of activities involving certain degree of risk to be provided to customers before taking part in such activities;
TIC to set out clear and specific guidelines for travel companies that customers should be reminded that their travel insurance may not cover activities involving certain degree of risk;
TIC to look into travel companies’ duty and responsibility in selecting and supervising the local service providers and review the existing guidelines when destination management companies are engaged;
TIC to set out new guidelines on travel companies’ duty and responsibility to supervise destination management companies;
TIC to set out safety guidance and advertise to customers as to the importance of obtaining details of travel policy insurance and information on activities involving risk before enrolment.
Recommendations to Kuoni
59. I also recommend:
Kuoni to obtain sufficient information from local service providers and conduct thorough risk assessment on activities involving certain degree of risk provided to customers before offering the same;
Kuoni to conduct thorough evaluation after every major accident taking place during tours provided by them so as to find out the cause of the accident and consider if there is anything that can be done to improve the quality and safety of service provided to customers.
Kuoni to provide sufficient information to customers about activities involving certain risk and remind them in more specific and clear terms that activities involving risk may not be covered by their travel insurance;
Kuoni to provide more training and information to front desk staff, including receptionists and tour escorts, so that they can be better equipped to explain the risk involved in activities provided by the company;
Kuoni to set out clear criteria for selecting destination management companies and local service providers with first hand information and to closely monitor the service provided by destination management companies and local service providers.
60. Both TIC and Kuoni need to reply the Coroner in writing in three months’ time as to 1) whether the above recommendations are accepted and if yes 2) what steps have been taken to implement the recommendations and 3) reasons if the recommendations are not accepted.
61. Lastly, let me offer my deepest condolence again to the next of kin for their loss of loved ones and also thank you all for attending this inquest. I cannot even try to imagine the difficult journey you have gone through and dare not expect that by having this inquest you will be soothed in anyway. What I sincerely hope is that you will find this inquest helpful in some way having been informed of more details about the incident. I am indebted to the Hong Kong police, Mr Brook and Mr IP, SPP of Department of Justice, for their unfailing support in this investigation despite all the difficulties. I also thank counsel’s assistance from all parties. Lastly, I need to deliver my gratitude to the senior interpreters, Mr Wong and Mr Lai and the Clerk to Coroner, Miss On for their invaluable assistance throughout the hearing.
62. If parties and the press wish, a copy of this inquisition can be obtained from my clerk after the court rises. A press summary is also available for the press. The inquisition and press summary will also be uploaded to the Judiciary website very soon after today’s hearing. The inquest is hereby closed.
June CHEUNG
Coroner
Representation:
Mr Michael Ozorio, SC instructed by Messrs Paul C. K. Tang & Chiu for KUONI Travel (China) LTD.
Mr Bernard Murphy of Messrs Howse Williams Bowers for Ultramagic S.A.
Mr Foster Yim instructed by Messrs Wan Yeung Hau & Co. for next of kin of Ho Oi Hing, Ho Oi Ying, Ho Oi Ming, Tang Yuk Ling, Siu Chi Man & Kwan Pui Man Eleni
Mr Edward Brook and Mr Cliff Ip of Department of Justice as Coroner’s Officer

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{
"Date": "27 Nov, 2009",
"Action No.": "DCCJ4581/2008",
"Neutral Cit.": "[2009] HKDC 282",
"case_title": "SUPER POWER PROPERTIES LTD V. TANG HING CHEUNG",
"page_title": "SUPER POWER PROPERTIES LTD V. TANG HING CHEUNG | [2009] HKDC 282 | HKLII",
"case_history": [
{
"name": "DCCJ4581/2008",
"link": "https://www.hklii.hk/en/appealhistory/DCCJ/2008/4581"
}
],
"appeal_history": [],
"case_url": "https://www.hklii.hk/en/cases/hkdc/2009/282",
"neutral_cit": "[2009] HKDC 282",
"court_code": "HKDC",
"content": "DCCJ004581/2008 SUPER POWER PROPERTIES LTD v. TANG HING CHEUNG\nDCCJ4581/2008\nIN THE DISTRICT COURT OF THE\nHONG KONG SPECIAL ADMINISTRATIVE REGION\nCIVIL ACTION NO. 4581 OF 2008\n_________________________\nBETWEEN\nSUPER POWER PROPERTIES LIMITED\nPlaintiff\nand\nTANG HING CHEUNG\nDefendant\n_________________________\nBefore: Her Honour Judge Mimmie Chan in Chambers (open to public)\nDate of Hearing: 27 November 2009\nDate of Delivery of Decision: 27 November 2009\n_______________________\nD E C I S I O N\n_______________________\n1.\nIn this application to set aside the judgment entered in default on 10 February 2009, the issue is whether the Writ had been duly served on the Defendant on 17 October 2008, when the Plaintiff’s representatives inserted the Writ through the Defendant’s letterbox at Flat B, rear block, 14th Floor, Wai On Building, 1A Austin Road, Kowloon, at the last known residential address of the Defendant.\n2.\nThe Summons to set aside was issued on 9 July 2009, supported by an affirmation made by the Defendant on 8 July 2009. The Defendant claims that he had never received the Writ, nor the letter before action dated 15 August 2008, nor any of the court documents served by the Plaintiff. He claims that the first time he became aware of these proceedings was when he received the letter from the Food and Environmental Hygiene Department dated 3 March 2009, when he was informed that his wall stall abutting the Plaintiff’s property had to be vacated within 6 months as the Plaintiff had obtained a court order on 10 February 2009.\n3.\nI accept that the Defendant has to show a credible and convincing case that he had no notice of the issue and the service of the Writ. Service by insertion through the letterbox can be deemed good service but it is always open to the Defendant to show that he had not received the writ in fact. Whether or not there is sufficient evidence for the court to accept the credibility of the Defendant’s assertion that he had not received the Writ obviously depends on the facts of each and every case.\n4.\nHaving considered the evidence filed on behalf of both parties, I accept that there is a credible case that the Writ may not have been brought to the attention of the Defendant and may have been mis-delivered. From the Defendant’s evidence and the photographs exhibited as “THC-7” and “THC-5”, the two entrances to Wai On Building on Austin Road do appear very confusing and misleading. Importantly, so do the letterboxes which are in the lobby of the building identified as “Number 1”; “Number 1 rear block”; “Number 1A”, “Number 1B”, “Number 1B rear block”; and “Number 1C” of Austin Road. Looking objectively at the photographs of the letterboxes, it appears very difficult to make out which should be the correct letterbox for the address of the Defendant given as Flat B, rear block, 14th Floor, 1A Austin Road.\n5.\nThe Defendant having put forward, in my opinion, a credible case and despite the fact that the Plaintiff had filed evidence in reply to the Defendant’s affirmation, the Plaintiff’s representative had not identified which entrance to Wai On Building he took, and in which of the 6 letterboxes for the 14th Floor he had inserted the Writ, by way of confirmation or clarification, at least, that he had put the Writ in the Defendant’s correct letterbox.\n6.\nThe evidence relating to the service of the Summons for the hearing of the application for judgment and injunction is not, in my judgment, material. Even if it was true that the Summons had been left at the Defendant’s stall at Bowring Street, this cannot prove that the Defendant had received the Writ, nor can it accordingly throw doubt on the credibility of the Defendant’s assertion that the Writ had not been served on him. On the same basis, the allegation that the Defendant had telephoned the Plaintiff’s solicitors after the issue of the Summons for the hearing on 10 February 2009 cannot establish that the Defendant had duly received the Writ.\n7.\nI find, therefore, on the evidence that the only manner of service of the Writ relied upon by the Plaintiff, i.e. through insertion through the letterbox on 17 October 2008,is irregular.\n8.\nBeing bound by\nPo Kw\nong\nMarble Factory Limited\nv Wah Yee Decoration Co Ltd\n[1996] 4 HKC 157\n, the judgment on 10 February 2009 must be set aside without regard to the merits of the proposed Defence. I have seen nothing in the evidence which justifies my imposing any condition in the exercise of my residual discretion on the setting aside.\n9.\nI therefore set aside the Judgment entered on 10 February 2009, with costs to the Defendant. The costs include the reserved costs.\n(Mimmie Chan)\nDistrict Judge\nMr Kent Yee, instructed by Messrs Chu & Lau, for the Plaintiff\nMs Bethany M.Y. Chan, instructed by Rowdget W. Young & Co., for the Defendant",
"attachments": [
{
"download_url": "https://legalref.judiciary.hk/doc/judg/word/vetted/other/en/2008/DCCJ004581_2008.doc",
"file_name": "DCCJ004581_2008.doc",
"file_ext": ".doc",
"status": "success"
}
]
}

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LBTC 2827/2008 IN THE LABOUR TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CLAIM NO. LBTC 2827/2008, 2828/2008 & 2829/2008 __________________________________ BETWEEN LBTC 2827/2008 LBTC 2828/2008 LBTC 2829/2008 KWAN SIU WA BECKY WU YEE MEI VERA HO KIT MAN JENNY CLAIMANTS   and    CATHAY PACIFIC AIRWAYS LIMITED DEFENDANT   __________________________________ Coram: Pang Ka Kwong, Esq., Deputy Presiding Officer Date of Trial: 22, 23 & 24 December 2008, 12 January 2009 Date of Decision on Liability: 12 January 2009 Date of Reasons for Decision on Liability: 12 January2009 __________________________________ Reasons for Decision on Liability The trial proceedings use the Chinese language. The parties agree that I can deliver this Reasons for Decision on Liability in the English language. The parties reserve their respective positions on quantum.
Under paragraph (a) 1 of the Claimants’ respective Form 2, the Claimants stated that their grounds for the claims include :- (a) “Failure to grant statutory holidays” (b) “Failure to grant annual leaves”. The Claimants do not pursue the claims under paragraph (a) 1. Claim The present claims are for "shortfalls" in the amounts of Statutory Holiday Pay ("SHP") and Annual Leave Pay ("ALP") that were paid by Cathay Pacific, such shortfalls allegedly arising from the non-inclusion of Line Duty Allowance ("LDA"), Outport Allowance ("OA"), Ground Duty Allowance ("GDA") and Duty Free Sales Commission ("DFSC") in calculating SHP and ALP. In material, there is no dispute on the background facts of the cases. Kwan Siu Wa Becky ("Becky") By a letter of appointment dated 20th September 1975, Becky joined Cathay Pacific as a Junior Flight Hostess of the cabin crew. She was promoted to the post of Chief Purser L1011 on 18th September 1987. The post was retitled to Inflight Service Manager on 1st April 1999 and she remains in the same position to date. She is required to perform duties in air and on ground as Cathay Pacific directs. Becky is a monthly paid cabin crew. She receives a basic salary and title allowance of HK$23,883 and HK$11,501 respectively
each month. In addition, she receives various allowances such as LDA and OA. By 2002 Becky has served Cathay Pacific for more than 10 years and therefore she is entitled to 5 weeks' paid annual leave and 94 Guaranteed Days Off ("GDOs") each year. Additionally, Cathay Pacific provides Becky with the following days without work :- (a) Short Break - A period, at or away from base, of at least 34 hours and including 2 local nights during which a crew members are not required to perform any duty. (b) Stop over in outports - A period commencing after the scheduled arrival time of crew at an outport until 60 minutes before the scheduled departure time. Crew members are not required to perform any duty during the stop over. (c) Standby duty also known as reserve duty (without being called out) – Crew members are scheduled for standby duty period specified on the front sheet of the roster. The actual period scheduled varies from roster to roster. Crew members will be notified within their standby period to operate a flight if it is required. (d) Guaranteed Days Off ("GDOs") - these are essentially days without work and are further explained below. Clause 16(C) of Conditions of Service 1986 (“COS 1986”) provides :-
"Guaranteed Days Off (GDO) - the annual GDO count for cabin crew on line flying will be based on two days off per week less the period of the cabin crew member's annual leave entitlement, i.e. those cabin crew entitled to three weeks annual leave per year will be entitled to 98 GDO's, those cabin crew with four weeks annual leave per year will be entitled to 96 GDO's and those cabin crew entitled to five weeks annual leave will be entitled to 94 GDO's. Cabin crew required to operate on a 'G' day will be given the option of having another 'G' day at a mutually convenient time or payment at the rate of HK$40 per flying hour for the duration of the flight. Such payment will be made only for the first 24 hours involved. If payment is made then these GDOs will be deducted from the annual GDO entitlement. Rules contained in Operations Manual. Volume 1 Part 2 will apply." Wu Yee Mei Vera ("Vera") By a letter of appointment, dated 12th June 1995, Vera joined Cathay Pacific as a cabin attendant. She was promoted to the post of purser on 1st December 2000 and remains in the same position to date. She is required to perform duties in air and on ground as Cathay Pacific directs. Vera is a monthly paid cabin crew. She receives a basic salary and title allowance of HK$20,139 and HK$2,370 respectively each month. In addition, she receives various allowances such as LDA and OA.
Between June 1995 and May 2000, Vera is entitled to 3 weeks' paid annual leave and 98 GDOs each year. Between June 2000 and May 2005, she is entitled to 4 weeks' paid annual leave and 96 GDOs each year. By June 2005, she is entitled to 5 weeks' paid annual leave and 94 GDOs each year. Additionally, Cathay Pacific provides Vera with the following days without work :- (a) Short Break; (b) Stop over in outports; (c) Standby duty also known as reserve duty (without being called out); (d) Guaranteed Days Off ("GDOs") (see explanation below). Clause 13(b) of Conditions of Service 1993 (“COS 1993”) provides :- "Those Cabin Attendants entitled to three weeks annual leave per year will be entitled to 98 GDOs, those Cabin Attendants entitled to four weeks annual leave per year will be entitled to 96 GDOs and those Cabin Attendants entitled to five weeks annual leave will be entitled to 94 GDOs. In any of the above case, the number of GDOs granted includes days off in lieu of the statutory holidays to which a Cabin Attendant would otherwise be entitled pursuant to the Employment Ordinance of Hong Kong" The details of the Short Break, Stop over in outports, Standby duty also known as reserve duty and GDOs are the same in Vera's case as
in Becky's case. Ho Kit Man Jenny ("Jenny") By a letter of appointment, dated 19th January 2005, Jenny joined Cathay Pacific as a Flight Attendant of the Inflight Services Department and she remains in the same position to date. She is required to perform duties in air and on ground as Cathay Pacific directs. Cathay Pacific pays Jenny Minimum Guaranteed Flying Pay ("MGFP") at the value of 70 Block Hours (see explanation below) i.e. 70 hours X HK$146.4 per hour = HK$10,248 per month. The payment structure of Jenny is set out in Clause 3 of the COS 2003, Clause 3.1 of which provides :- "Salary Cabin Attendants will (subject to any provisions stated in the Letter as to probation or otherwise) receive a salary calculated on a monthly basis. Salary will be calculated with reference to the Minimum Guaranteed Flying Pay. If the total value of a Cabin Attendant's Block Hours and Credits in the relevant month exceeds the Minimum Guaranteed Flying Pay, he or she will receive a salary calculated by reference to the actual Block Hours flown and Credits earned in that month. The applicable payment rate of a Block Hour, and the number of Block Hours assigned to Cabin Attendants, will be determined by the Company from time to time and notified to the Cabin Attendant. For the purposes of these COS:
Block Hours are the hours between Departure Time and Arrival Time (or otherwise, as amended or determined by the Company in its absolute discretion from time to time). Credits comprise : (i) Work Credits : these are credits received for absences from flight duties by reason of, for example, Reserve Duty or Special Duties; and (ii) Leave Credits : these are credits received for absences from flight duties by reason of leave. Leave Credits may include payment additional to the paid time off that a Cabin Attendant receives as such leave pursuant to these COS. (However, for the avoidance of doubt, the Company's use of a formula which records Leave Credits for the purpose of computation of salary does not create any entitlement to payment additional to the actual paid time off taken, except and to the extent determined by the Company from time to time.) The type and value of credits available to Cabin Attendants will be determined by the Company and notified to the Cabin Attendants, from time to time, having regard to relevant Company Policies." Credits that Jenny may earn include :- (i) Work Credits : Jenny earns credits for absences from flight duties by reason of :- Training - 4.65 credit hours for each calendar day of training; Special duties - 4.65 credit hours for each
calendar day of special duties; Standby duties - 1 credit hour for each 3 hours of standby duties; Duty travel - 0.5 credit hour for each 1 hour of duty travel. (ii) Leave credits : Jenny earns 3.25 credit hours for each day of leave taken. The credit of 3.25 block hours for each day of leave is calculated by reference to the following mathematical formula. Cathay Pacific assumes that a cabin crew works 85 credit hours (inclusive of Block Hours flown) and 25.5 ground duty hours (see explanation in paragraph 83 below) each month. Ground duty hours worth 50% of Block Hours. Therefore, total monthly credit hours for such crew member are :- 85 + (25.5 ÷ 2) = 97.75 This figures is then averaged over 30 days to give a standard credit of 3.25 block hours for each day of leave taken. In addition, Jenny receives various allowances such as OA, GDA and DFSC. Jenny does not receive LDA, whilst Becky and Vera do not receive GDA or DFSC. With less than 5 years’ service, she is entitled to 21 days' paid annual leave. Additionally, Cathay Pacific provides Jenny with the following days without work :-
(a) Short Break (b) Stop over in outports (c) Standby duty also known as reserve duty (without being called out) (d) Days Without Duties - see explanation below. The details of Short Break, Stop over in outports and Standby duty are the same in Jenny’s case as in Vera and Becky’s case. Clause 2.4(3) of the Conditions of Service 2003 (“COS 2003”) provides :- "Days Without Duties The company will periodically issue rosters for Cabin Attendant Days Without Duties. These rosters will apply for the stated time period. The Days Without Duties will include any statutory holidays (or alternative holidays) and rest days, as the case may be, to which a Cabin Attendant is entitled under the Employment Ordinance. For operational reasons, the Company reserves the right to require Cabin Attendants to work on any Day Without Duties subject to and in accordance with the provisions of the Employment Ordinance." The Issues Despite that Becky and Vera are employed under different COS, they are in the same position for the purpose of the present claims. They contend that Cathay Pacific should include OA and LDA in the calculation of their ALP and SHP in accordance with the old ss.41 and 41C of the Employment Ordinance (“EO”). Jenny contends that Cathay
Pacific should include OA, GDA and DFSC in the calculation of her ALP and SHP in accordance with the old ss.41 and 41C of EO. Jenny also contends that as she is hourly paid, Cathay Pacific has not paid her any SHP on her statutory holidays. Cathay Pacific denies that OA, LDA, GDA and DFSC are required to be included in the calculation of SHP and ALP. Cathay Pacific also contends that Jenny is paid a monthly salary that is calculated with reference to the MGFP and, therefore, it has already paid Jenny’s SHP. The Employment Ordinance ("EO") The following provisions are relevant to the present claims : “2. Interpretation (1) In this Ordinance, unless the context otherwise requires "wages"(工資), subject to subsections (2) and (3), means all remuneration, earnings, allowances including traveling allowances and attendance allowances, attendance bonus, commission, overtime pay, tips and service charges, however designated or calculated, capable of being expressed in terms of money, payable to an employee in respect of work done or to be done under his contract of employment, but does not include (d) any sum payable to the employee to defray special expenses incurred by him by the nature of his employment;”
The old s.41 of the EO (prior to the changes introduced by the Employment (Amendment) Ordinance ("EAO") in July 2007) provides : "41 Rate of Holiday Pay (1) Holiday pay shall be a sum equivalent to the wages which the employee would have earned on a full working day. (2) Notwithstanding subsection (1), where an employee is employed on piece rates or where the daily wages of an employee vary from day to day, the holiday pay shall be a sum equivalent to the average daily wage earned by the employee, and for the purposes of this subsection the average daily wage shall be the average of the daily wages earned by the employee on each day on which he worked during every complete wage period, comprising not less than 28 days and not more than 31 days, immediately preceding or expiring on the holiday or first day of the holiday." The old s.41C of EO (prior to the changes introduced by the EAO) provides : "41C. Rate of Annual LeavePay (1) Annual leave pay shall, subject to subsection (2), be a sum equivalent to the wages which the employee would have earned if he had worked every day during the period of annual leave. Where an employee is employed on piece rates or where the wages of an employee vary from
day to day, the annual leave pay shall be calculated by reference to the average daily wage earned by the employee, and for the purposes of this subsection the average daily wage shall be the average of the daily wages earned by the employee on each day on which he worked during every complete wage period, comprising not less than 28 days and not more than 31 days, immediately preceding or expiring on the first day of the annual leave or on the day on which the contract of employment terminates, as the case may be." Following the introduction of the EAO, the provisions for calculating SHP and ALP are :- (i) SHP "41. Rate of Holiday pay (1) For the purposes of subsections (2), (3) and (4), "wages"(工資) includes any sum paid by an employer in respect of - (a) a day of maternity leave, a rest day, a sickness day, a holiday or a day of annual leave taken by the employee; (b) a day of leave taken by the employee with the agreement of his employer; (c) a normal working day on which the employee is not provided with work; (d) a day of absence from work of the employee due to temporary incapacity for which compensation is payable under section 10 of the Employees' Compensation Ordinance (Cap 282).
(2) The daily rate of holiday pay is a sum equivalent to the daily average of the wages earned by the employee during - (a) a period of 12 months immediately before the holiday or first day of the holidays (as appropriate); or (b) if the employee has been employed by the employer concerned for a period shorter than 12 months immediately before the holiday or first day of the holidays (as appropriate), the shorter period. (3) In calculating the daily average of the wages earned by an employee during the period of 12 months or the shorter period - (a) any period therein for which the employee was not paid his wages or full wages by reason of - (i) any maternity leave, rest day, sickness day, holiday or annual leave taken by the employee; (ii) any leave taken by the employee with the agreement of his employer; (iii) his not being provided by his employer with work on any normal working day; or (iv) his absence from work due to temporary incapacity for which compensation is payable under section 10 of the Employees' Compensation Ordinance (Cap 282); and (b) any wages paid to him for the period
referred to in paragraph (a). (4) For the avoidance of doubt, if the amount of the wages paid to an employee in respect of a day specified in subsection (1) is only a fraction of the amount earned by the employee on a normal working day, the wages and the day are to be disregarded in accordance with subsection (3). ….." (ii) ALP "41C Rate of annual leave pay (1) For the purposes of subsections (2), (3) and (4), "wages"(工資) includes any sum paid by an employer in respect of - (a) a day of maternity leave, a rest day, a sickness day, a holiday or a day of annual leave taken by the employee; (b) a day of leave taken by the employee with the agreement of his employer; (c) a normal working day on which the employee is not provided with work; (d) a day of absence from work of the employee due to temporary incapacity for which compensation is payable under section 10 of the Employees' Compensation Ordinance (Cap 282). (2) The daily rate of holiday pay is a sum equivalent to the daily average of the wages earned by the employee during - (a) a period of 12 months immediately before the holiday or first day of the holidays (as appropriate); or
(b) if the employee has been employed by the employer concerned for a period shorter than 12 months immediately before the holiday or first day of the holidays (as appropriate), the shorter period. (3) In calculating the daily average of the wages earned by an employee during the period of 12 months or the shorter period - (a) any period therein for which the employee was not paid his wages or full wages by reason of - (i) any maternity leave, rest day, sickness day, holiday or annual leave taken by the employee; (ii) any leave taken by the employee with the agreement of his employer; (iii) his not being provided by his employer with work on any normal working day; or (iv) his absence from work due to temporary incapacity for which compensation is payable under section 10 of the Employees' Compensation Ordinance (Cap 282); and (b) any wages paid to him for the period referred to in paragraph (a). (4) For the avoidance of doubt, if the amount of the wages paid to an employee in respect of a day specified in subsection (1) is only a fraction of the amount earned by the employee
on a normal working day, the wages and the day are to be disregarded in accordance with subsection (3). ….." The EAO Since the EAO takes effect, Cathay Pacific has included LDA, GDA and DFSC in calculating SHP and ALP. OA is not included in the calculation of SHP and ALP even after the introduction of the EAO. Analysis and Findings OA Becky is employed under Conditions of Service 1986 ("COS 1986"). Clause 5(C) of COS 1986 provides : Outport Allowance "Overnight, meal and laundry allowances will be paid in accordance with the rates laid down in Operations Manual, Volume 1, Part 4." OA is known as "Overnight allowances" in Operations Manual, Volume 1, Part 4, which provides (among other things) : "Overnight allowances are reviewed bi-annually and on any change of hotel. They are intended to cover reasonable out-of-pocket expenses. Vera is employed under Conditions of Service 1993 ("COS 1993").
Clause 15(ii) of the COS 1993 provides, "Whilst Cabin Attendants are on duty in outports, they will receive overnight, meal and laundry allowances in accordance with the policy and rates laid down in Operations Manual, Vol. 1 Part 2 and 4 as amended from time to time and/or such other allowances or meal arrangements a published from time to time. Jenny is employed under Conditions of Service 2003 ("COS 2003"). Clause 1.3 of the COS 2003 provides :- "In addition to the duties and obligations set out in these COS, the Cabin Attendant is also required to comply with Company Policies." Clause 4.1 of the COS 2003 provides :- "4.1 Outport facilities and reimbursement Subject to Company Policies in force from time to time, a Cabin Attendant who is required to stay at an Outport between flying duties may be provided: (i) rest facilities and accommodation; and (ii) reimbursement of expenses for necessary meals and other expenditure incurred during the stay. 4.2 Other benefits A Cabin Attendant may be entitled or eligible to receive other benefits offered or provided by the Company in accordance with the relevant Company Policies."
Clause 10 of the COS 2003 provides that "Company Policies" means :- "the provisions of that document produced by the Company entitled the Operations Manual, as in force from time to time, and any other policies, schemes, rules and regulations relating to or arising from employment which may be issued, and amended or varied by the Company in its discretion from time to time. Such Operations Manual, policies, schemes, rules and regulations are collectively referred to in these COS as "Company Policies", and references in these COS to Company Policies shall where the context permits be construed accordingly." Clause 5.1 of the Operations Manual, Volume 6, Part 1 provides :- "At each outport a schedule of meal and overnight allowance has been established. These allowances are reviewed bi-annually in order to meet price changes. The allowances are intended to meet reasonable costs. Upon arrival at an outport where a stopover is scheduled crew members will be issued with the cash allowance by the hotel in accordance with the schedule, and based on a telex from Crew Control." Although their entitlement is arising from difference contractual provisions, the details of OA are the same in all Claimants’ case. OA is calculated by reference to a formula agreed with the Fight Attendants Union (“FAU”) that takes account of the actual cost of meals and services at the relevant crew hotel. The amount of each item
of OA is determined by reference to the costs in the designated crew hotel in each port. In practice, reviews of the allowance are held twice a year and adjustments will also be made whenever there is a change in crew hotel. The allowance may decrease as well as increase. OA includes :- meal allowance; allowance in case of delayed and rescheduled flight; incidental allowance ("IA"); laundry allowance; duty travel expenses and management crew allowance; taxi allowance; and Indian port allowance. Meal allowance will be paid if crew members are rostered on flight that requires a stopover at an outport that exceeds 2 hours and the stopover includes any part of the following period : (i) Breakfast - 0600 to 0859; (ii) Lunch - 1200 to 1359; (iii) Dinner - 1800 to 2159. When the stopover time falls between 0600-0859 of the local time, crew members will be paid an amount in respect of breakfast. The calculation is based on the hotel coffee shop prices for full American breakfast consists of fruit juice, two eggs with ham or bacon or sausage, toast with jam or marmalade and coffee, or the breakfast set rate covering all the above items, whichever the least expensive. When the stopover time falls between 1200-1359 of the local time, the amount paid in respect of lunch will not be less than a set lunch
menu consisting of soup of the day, a chicken dish, medium priced dessert and coffee in the medium priced Western style restaurant in the crew hotel. When the stopover time falls between 1800-2159 of the local time, crew members will be paid an amount in respect of dinner. The calculation of the amount in respect of dinner is based on the crew hotel medium priced Western style restaurant. If no medium restaurant exists in the hotel then the prices will be based on the most expensive hotel coffee shop price or the lower end of the top class hotel restaurant. The amount covers a medium priced steak, a medium priced dessert and coffee in a set menu. Delayed flights allowance will be paid if crew members are in the airport and the flight delays for more than 30 minutes. Operations Manual Volume 1, Part 4, Clause 2.1C(a) provides : "Delayed Flights If the crew are at the airport, refreshment chit or reimbursement up to a maximum of HK$90 will be authorized if the delay exceeds 30 minutes." As to rescheduled flight allowance, if crew members are required to stay at the airport, meal vouchers will be given. When crew members are required to stay at the hotel, meal allowance will be provided if the rescheduled stopover includes any part of the period stated in the above. In respect of IA, Clause 2.1(D) of Operations Manual, Volume 1, Part 4 provides :
"D. Incidental Allowance An incidental allowance will be paid when a stopover exceeds 6 hours. If a stopover exceeds 30 hours, a second incidental allowance will be paid. A third incidental allowance will be paid if a stopover exceeds 54 hours and so on. During a continuous duty period if a stopover exceeds 6 hours an incidental allowance will be paid." Crew members on "shuttle" duties are deemed to be on continuous duty for the purpose of qualifying for overnight allowance. An example of a "shuttle" duty is Paris-Manchester-Paris. No allowance is paid for crew members operating shuttle duties from their homeports. IA is calculated based on two times flag fall in an air-conditioned taxi to and from places for a beer or drinks, eight km or five miles total, two small local beers in the crew hotel bar or crew lounge and a tip for one small suitcase. The provision of IA is similar to that of "Overnight Allowance" in Clause 5.5 of the Operations Manual, Volume Part 1. There is no provision on IA in Operations Manual, Volume 6 Part 1. Laundry allowance is paid on the 3rd night and consecutive nights away from home base. The laundry allowance calculation is based on costs in the crew hotel to launder one shirt, one undershirt, one pair of underpants, one pair of socks and one handkerchief. Taxi allowance will be paid if crew members incur cost on taxi journey between the airport and the hotel. Taxi allowance will not
normally be paid when Cathay Pacific or the hotel provides transport or where the hotel operates regular shuttle bus service between the airport and the hotel. Indian port allowance is simply the overnight allowances where crew members fly into Indian ports. The only difference is that the allowance for Indian ports is paid in Hong Kong instead of overseas. The parties dispute where crew members are put in a hotel that is more expensive than the designated crew hotel in an ad hoc situation, if they want to receive OA that is calculated according to the higher of the different hotel tariffs, whether receipts are required to prove that extra out-of-pocket expenses are incurred. The Claimants testified that in their personal experience, receipts were never required. Ms Li Ka Lia Elizabeth, Cathay Pacific’s representative do not have personal experience in the matter. I accept that the Claimants are honest witnesses and their testimony is reliable. After having carefully considered all evidence, I accept that in such case, in practice, receipts will not be required. Usually, crew members are not required to demonstrate that they actually incur any expense while working away from home base. The Claimants produced a 1994 Year and Review Agreement between Cathay Pacific and FAU the contents of which show that there were discussions to change the manner of calculation of OA from meals basis to time basis. In this respect, however, no change has been agreed. The rate of LDA(A) is four times more than that of LDA(B)
(See paragraph 86 below). Becky explained that it is because crew members do not earn OA when they perform duties on day turnaround and split duty flights. Becky said that the purpose of the division being to compensate crew members’ loss of OA, it shows that Cathay Pacific recognizes that OA is a source of income of crew members. Cathay Pacific denies that OA is required to be included in calculating SHP and/or ALP on the following basis : (a) OA is not "wages" within the definition of "wages" in s.2 of the EO as it falls within the exception in subparagraph (d) of s.2 being a "sum payable to the employee" to defray special expenses incurred by him by the nature of his employment", and (b) further and in the alternative, if OA is "wages" under s.2 of the EO (which is denied): (i) OA is not "wages" which the Claimants "would have earned" for the purposes of ss.41(1) and 41C(1) of the EO, and (ii) OA is not "daily wages" for the purposes ss.41(2) and 41C(2) of the EO and/or it is impossible to calculate OA on a daily basis. Firstly, I deal with the question on whether OA is wages within the definition of "wages" in s.2 of the EO. The Claimants contend that OA is wages because it is described in the COS and the Operations Manual as an item of allowance
and that it is represented by Cathay Pacific in its advertisements as forming part of a cabin crew's income. The above considerations relate to how the parties label OA. It is trite that the court does not only look at the label of a payment to determine its true nature. The label is not conclusive. It is not what the parties call it but what it is in substance that matters. One has to look into the nature of the payment, the reasons therefore and the circumstances under which the payment is made. In practice, the Claimants have never paid salary tax on income earned by OA. OA (except for the allowance for Indian ports) is paid overseas. Due to foreign exchange restrictions, allowance for Indian ports is paid when crew members report duty at the Hong Kong airport as they start the flying duty. In my view, the above arrangement is congruent with the intention that OA is to cover out of pocket expenses. OA is calculated by reference to a formula agreed with FAU, which takes account of the actual cost of meals and services at the relevant crew hotel in each port. Periodical reviews of the allowance are held. It appears that the amount of OA payable is a genuine pre-estimate of what the amount of the expense is likely to be. I am aware that OA forms a substantial part of the Claimants' total income and it arises in the course of flying duties performed by them at outports.
After having carefully considered all evidence, I accept that the purpose of OA is to cover meals and miscellaneous out-of-pocket expenses relating to the Claimants' layover overseas between flying duties. OA is however paid in the form of a fixed allowance instead of an actual reimbursement against receipts and, it is on this basis (and on the basis that the allowance is non accountable rather than an accountable reimbursement) that the Claimants seek to argue that OA constitutes wages within the meaning of s.2 of the EO and, does not fall within exception (d). Cathay Pacific contends that the meaning of the words "to defray" means "to reimburse" or "to provide money to cover the costs or expenses". Therefore, the exception in subparagraph (d) applies to a non-accountable allowance as well as to an allowance that is available on a reimbursement basis only. Cathay Pacific lends support from the judgment of Deputy High Court Judge To in Star Express Limited v Cheng Tak and Ors, Labour Tribunal Appeal No. 86/1998, unreported, 11 May 1999. In that case, it was held that on the basis that pre-determined and non-accountable fixed monthly payments made to drivers of tourist coaches to cover parking fees were genuine pre-estimates of what the amount of the parking fees was likely to be, such payments constituted the reimbursement of expense and did not constitute "wages". The Claimants contend that the term "special expenses" in subparagraph (d) to the definition of "wages" in s.2 of the EO denotes something that is of a non-recurrent nature and should be an one-off
expenditure pertinent to the nature of the employment. I note that there is no requirement under the EO that such "special expenses" should be non-recurrent in nature. Though some OA components such as meals and traveling expenses are daily expenses that are incurred whether the Claimants are inside or outside Hong Kong, the Claimants should accept that probably they will incur extra meal and traveling expenses when they stay overseas. Plainly such extra expenses can be regarded as special expenses incurred by them by the nature of their employment. During the trial hearing, the Claimants did not pursue the contention that as IA does not relate to out-of-pocket expenses, IA is a hardship allowance. Anyway, such assertion is not borne out by the relevant provisions of the COS and the Operations Manual. In my view, there is no suggestion that IA is in the nature of a hardship allowance as alleged by the Claimants. After having carefully considered all evidence, I hold that OA is not "wages" within the definition of s.2 of the EO because it falls within the exception in subparagraph (d) being "a sum payable to the employee to defray special expenses incurred by him by the nature of his employment." I do not need to deal with the second leg of Cathay Pacific's argument (See para. 64(b) above). LDA and GDA The details of LDA and GDA are as follows. Clause 5(A) of the COS 1993 provides :-
"A Line Duty Allowance will be paid at the rate published from time to time from each flying duty hour. This allowance will be paid to all Cabin Attendants for each hour spent on flying duty. It is not part of basic salary and will not be paid for any other duty or non-flying activities including sick leave travel. The Line Duty Allowance will be calculated and paid on the basis of Flying Duty Period (FDP) as defined in the Operations Manual Vol. 6." Clause 3.2 of the COS 2003 provides :- "Allowances A Cabin Attendant may also receive, in addition to salary, other payments or allowances, in respect of any special or other duties or circumstances arising from the Cabin Attendant's employment, in accordance with any Company Policies or as determined by the Company's discretion. Such allowances may include … [Ground Duty Allowance]." Clause 3.2(A) of the COS 2003 provides that GDA is payable for ground duty hours spent on ground, being :- “(i) the time between when Cabin Attendants are required by the Company to report for duty and the time from which the aircraft commences to move whether under its own power or not ("Departure Time"); (ii) 15 minutes after the time when the aircraft is finally stationary after landing ("Arrival Time") in the last single sector a cabin crew operates prior to the Rest Period ("the Final Sector") or (as the case may be), in situations of extended delay after the Arrival Time where a cabin crew is required to remain on an aircraft in excess of one hour after arrival in the Final Sector, the actual
time the cabin crew is required to carry out duties in relation to the extended delay; and (iii) save in relation to extended delays which are covered by paragraph (ii) above, within a Flight Duty Period any time on ground which is not considered as Rest Period.” Crew members' duty comprises of time on ground and time in air. LDA is payable due to time in air (line duty hours). GDA is payable due to time on ground preparing to fly (ground duty hours). They both relate to duty time that is dependant on a number of different factors. While LDA and GDA are different, I consider that I can deal with them at the same time for the purpose of the present claims. In the Statement of Defence filed in these proceedings, Cathay Pacific said that as the COS provides that the Claimants “may” be entitled to OA, LDA, GDA and DFSC, there is a strong argument that the Claimants does not have any contractual entitlement to the same. During the trial hearing, Cathay Pacific's representative accepted that LDA and GDA are part of the Claimants' wages, although she maintained that they are not wages that the Claimants would have earned for the purpose of the old ss.41(1) and 41C(1) of EO. There is no provision in COS 1986 that provides for entitlement to LDA. Clause 5(A) of COS 1986 provides that Becky was entitled to Inflight Meal Compensation Allowance. Clause 5(B) of COS 1986 provides that Becky was entitled to Ground Allowance. Loosely speaking, since about 1988, the Inflight Meal Compensation Allowance and Ground Allowance have been replaced by LDA. Clause 5(A) of COS 1993 provides Vera’s entitlement to LDA. Details of when LDA is payable are set out in Clause 6 of the Operations Manual Volume 6, Part 1. Clause 3.2 of COS 2003 provides Jenny’s entitlement to GDA.
Details of when GDA is payable are set out in Clause 3.2(A) of COS 2003. After having carefully considered all evidence, I consider that Jenny receives GDA pursuant to Company Policies rather than Cathay Pacific’s discretion. On the whole, LDA and GDA are not of a gratuitous nature or payable only at Cathay Pacific's discretion. LDA and GDA represent a component in the Claimants' wages for work that they have done. In my view, it is indisputable that LDA and GDA are part of the Claimants' wages. The real issue is whether they are wages that the Claimants would have earned for the purpose of the old s.s41(1) and 41C(1) of the EO. LDA is paid on two scales that are LDA(A) and LDA(B). LDA(A) is payable for day turnaround and split duty flights at HK$60.5 per hour. LDA(B) is payable for all other flights at HK$15.125 per hour. Such division is again a deal struck between Cathay Pacific and FAU. Becky and Vera receive LDA on the total number of line duty hours that they operate in an aircraft. LDA is calculated based on the total number of line duty hours that starts when a cabin crew reports duty and finishes on blocks or engines off on the final sector. The duty hours start when the cabin crew reports duty and finishes 30 minutes after on blocks or engines off on final sector. The cabin crew will have a 30 minutes debriefing after the engines are off. Therefore, the line duty hours are 30 minutes less than the duty hours. LDA varies based on the flight that the cabin crew is rostered to operate and the length of time spent on a flight. LDA is calculated down to the minute. No two flights produce the same amount of LDA. There are various factors that affect
the number of the line duty hours of a flight and therefore LDA a cabin crew earns. These factors include weather, wind speed, location of the gate, delay or cancellation of flights etc. When a flight is cancelled due to adverse weather, the cabin crew will not earn any LDA even if she is rostered on a flight on that day. If the flight is delayed because of some technical problems, the line duty hours will be longer and the cabin crew will earn more LDA. The rate of GDA is HK$73.2 per hour. Jenny receives GDA on the total number of ground duty hours. Very rarely would two flights depart at the same time. Again, factors such as weather, delay or cancellation of flights etc affect the Departure Time of a flight and therefore the GDA a cabin crew earns. If a cabin crew reports for duty and the flight is subsequently cancelled due to adverse weather, the cabin crew will earn GDA for the period between the time she reports duty and the time Cathay Pacific announces that the flight is cancelled. The ground duty hours could be longer or shorter than the period between the time required to report duty and the scheduled departure time. If the flight is cancelled before the time required to for report duty, the cabin crew will not receive any GDA. If the flight is delayed because of, say, some technical problems, the ground duty hours will be longer and the cabin crew will receive more GDA. Some flights depart earlier than others. There is no certainty on the number of ground duty hours. A cabin crew will not earn any LDA or GDA if she reports
sick on a day that she is rostered with flying duties. Crew members may swap duties among themselves and Cathay Pacific has the right to alter, vary or substitute the roster issued to a crew, as it considers appropriate to meet its operational requirements. Cathay Pacific pays LDA and GDA monthly at the end of the following month. Cathay Pacific contends that LDA and GDA are not "wages" that the Claimants "would have earned", rather it is something that the Claimants "might have earned" because there is no certainty on the amount of LDA or GDA that the Claimants will earn each month; that both LDA and GDA are paid only if a cabin crew has performed flying duties and that the Claimants are not always assigned with flying duties. After having carefully considered all evidence, I accept that LDA and GDA should not be regarded as wages that would have earned for the purpose of ss.41(1) and 41C(1) of the old EO because there is no workable mode of calculation for working out the amount of LDA and GDA that the Claimants would have earned during the leave period. I now turn to the question on whether LDA and GDA should be included in the calculation of the ALP and SHP in accordance with the old ss.41(2) and 41C(2) of the EO. In Lam Pik Shan v. Hong Kong Wing On Travel Services Ltd., CACV 394/2007, unreported, 9 May 2008, the Court of Appeal upheld the decision of the High Court that tips received by the Plaintiff (Respondent), a travel escort, should be included in the calculation of ALP and SHP. In the paragraph (1) of the Judgment, Hon. Rogers VP held,
"In that judgment (Lisbeth Enterprises Ltd. v. Mandy Luk (2006) 9 HKFAR 131) the Court of Final Appeal came to the conclusion that the provisions in the Employment Ordinance, Cap. 57 relating to commission were unworkable where the commission was calculated at rates that varied on a monthly basis. That is not the situation in this case, which relates to tips which are based on a daily rate. In the second place it is quite clear that the legislature intended that tips should be taken into account in calculating wages. That is the clear intention emerging from the Ordinance itself. I am fortified in that conclusion because in passing the Employment (Amendment) Ordinance 2007, and in particular sections 10-15, the legislature has removed any difficulty there might be in making the relevant calculations. In the absence of the new provisions, had there some supposed difficulty in the method of calculation, it would have been the function of this court to give effect to the manifest intention of the legislature that tips should be taken into account in the calculation." In the following paragraphs, Hon. Le Pichon JA held, "20. Prima facie, tips received from tour participants would fall squarely within the statutory definition of "wages". The real question is whether a workable mode of calculation exists for working out the net tips and whether it can be said to accrue daily. 21. As already noted, the discretionary nature of tips is not a bar (as distinct from the case of commissions) to their forming part of an employee's wages. Further any discretion in the payment of a tip would be that of the tour participant and not employer i.e. the tour operator. While
the amount of tips received per month may vary, depending on a number of factors including the number of days spent escorting tours, the type of tour, the number of persons joining the tours etc., in the present case, these factors do not pose any particular difficulty in the way of calculating daily wages. Not only is the rate of recommended tips made on a per person per day basis, the tips the tour guide/escort had to defray in the foreign country are also expressed in a similar fashion. Even if the tour guide does not receive his tips until the end of the tour, given that the duration of the tour is a fixed number of days, the net tips per day can be said to "accrue" on a daily basis and are readily calculable on the same basis." Notably, in Lam Pik Shan v. Hong Kong Wing On travel Services Ltd, the travel escort, like Becky and Vera, received a monthly salary. In Lam Pik Shan v. Hong Kong Wing On Travel Services Ltd, the travel escort was paid tips that were based on a daily rate. In the present case, LDA and GDA are not calculated at daily rate. It seems to me that for the old ss.41(2) and 41C(2) of EO to apply, however, it is not necessary that the wages shall be calculated at daily rate. The old ss.41(2) and 41C(2) of EO apply where an employee is employed on piece rates or where the daily wages of an employee vary from day to day. I hold that LDA is part of Becky and Vera's wages and GDA is part of Jenny's wages. In my view, inasmuch as an employee's wages are calculable daily, the old ss.41(2) and 41C(2) of EO may apply. As Hon Le Pichon JA held, "The real question is whether a workable mode of calculation exists for working out … and whether it can be said to accrue daily". LDA and GDA are calculated by minutes. There should be no difficulty in calculating the LDA and GDA already earned by the Claimants on any
given day. Therefore, even if the Claimants do not receive LDA and GDA until the end of the next month, given that LDA and GDA is calculable daily and therefore can be said to accrue daily, in my view, they can be said to be daily wages that vary from day to day. In Wong Yin Fong & Others v. ISS Hong Kong Services Ltd [2005] 2 HKLRD 648, Labour Tribunal Appeal 56 of 2003, 17-19 May and 28 June 2005, Court of First Instance, J Lam J held, "99. Although there are differences between the statutory scheme for rest days and that for annual leave, I think it is equally plain from the statutory scheme as analyzed above that the protection conferred under Pt. VIIIA by way of annual leave is to protect employees from the evils of continuously working without proper opportunity to rest. The Legislature obviously considered that it is important that an employer (p.679) should give an employee proper rest by way of annual leave. This explains the mandatory nature of annual leave, see the observations of A Cheung J in para. 33 of his judgment in Laing & Others v. Lisbeth Enterprises Ltd [2004] 3 HKC 548. Given its paternalistic nature, the statutory scheme strives to achieve through s.41C that an employee will not suffer any accompanying economic loss for not working during the leave period." The above-mentioned Judgment was delivered before Lisbeth Enterprises Ltd v Mandy Luk [2006] 9 HKFAR 131. It is worthy of noting that when the case went further to the Court of Appeal, Wong Yin Fong & Others v. ISS Hong Kong Services Ltd [2008] 1 HKLRD 63, 28 November 2007, Court of Appeal, Hon Cheung JA said, "52. Wong Ping Kong and Lam J's decision in the first
instance on section 41C were referred to by the Court of Final Appeal in Lisbeth Enterprises Ltd v. Mandy Luk [2006] 9 HKCFAR 132. In my view the Court of Final Appeal not only has not disapproved of these two cases but has actually approved them." Taking that the legislative intention is to achieve through s.41C that employees will not suffer any accompanying economic loss for not working during the leave period, given that s.41 is parallel to s.41C at this end, I am satisfied that Cathay Pacific should include LDA and GDA in the calculation of the Claimants’ ALP and SHP by using the following formulas, in accordance with the old ss.41(2) and 41C(2) of EO : ALP - (Total LDA/GDA earned during the month immediately preceding or expiring on the first day of the annual leave or on the day on which the contract of employment terminates, as the case may be) ÷ (Number of working days during the same period) SHP – (Total LDA/GDA earned during the month immediately preceding or expiring on the holiday or first day of the holiday) ÷ (Number of working days during the same period) I reckon that probably the parties will propound different modes of calculation for working out the number of working days for the purpose of the formulas. Becky and Vera are monthly salaried while Jenny is hourly paid. Does it mean that the whole month immediately preceding or expiring on the holiday or first day of the leave (i.e. 30 or 31 days) should
be counted as working days of Becky and Vera? Further or in the alternative, should only the days on which the Claimants are required to perform duties (in air and on ground) be counted as working days; should only the days on which Becky and Vera are required to perform duties in air (but not on ground) be counted as their working days, as LDA is payable due to time in air; should only the days on which Jenny is required to perform duties on ground (but not in air) be counted as her working days, as GDA is payable due to time on ground preparing to fly; should the days during which the Claimants are put on Standby duties be counted as working days; should the days during which the Claimants are put on Stop over in outports be counted as working days; and/or should the days during which Jenny earns Work credits and Leave credits be counted as her working days, for the purpose of the formulas? The parties reserve their respective positions on these questions. I shall leave them to be dealt with when the question of quantum arises. In any case, once these questions are resolved, the parties will have no difficulty in working out the amount that Cathay Pacific is liable to pay in compensation to the Claimants. DFSC Cathay Pacific would assign hourly paid crew members to conduct inflight duty free sales. Once an hourly paid crew is assigned, she has no choice but to perform the same as part of her duties. The details of Duty Free Sales Commission (“DFSC”) are set out in Cathay Pacific's Inflight Sales Commission Policy. DFSC is separated into Individual Commission, Team Award, BC Star Award and ISM Star Award. Individual cabin crew earns a flat rate of 3.5% of sales
made by her. The commission is paid at the end of the following month. Team Award is given to the top team with the best inflight sales performance. Crew members of the top team receive gifts as prizes. BC Star Award is given to top performers. ISM Star Award is given to the top Inflight Services Managers. During the trial hearing, Cathay Pacific’s representative accepted that DFSC is part of Jenny's wages. After having carefully considered all evidence, I am satisfied that DFSC is not of a gratuitous nature or payable only at Cathay's discretion. I hold that DFSC represents a component in Jenny's wages for work that she has done and is part of her wages. Cathay Pacific contends that DFSC is not "wages" that Jenny "would have earned", rather it is something that Jenny "might have earned" because : (1) Some, but not all, of the flights have inflight sales. There is no certainty that Jenny will be rostered on a flight that has inflight sales; (2) Not all crew members are entitled as of right to earn DFSC. The computer may assign a crew to be responsible for inflight sales and the Inflight Service Manager can always assign another crew to perform inflight sales; (3) The entitlement to DFSC depends on the flight Jenny is rostered on and whether or not she is assigned with the inflight sales duty. After having carefully considered all evidence, I accept that
DFSC should not be regarded as wages that would have earned for the purpose of the old ss.41(1) and 41C(1) of the EO because there is no workable mode of calculation for working out the amount of DFSC that Jenny would have earned during the leave period. I now turn to the question on whether DFSC should be included in the calculation of the ALP and SHP in accordance with the old ss.41(2) and 41C(2) of the EO. In my view, inasmuch as an employee’s wages are calculable daily, the old ss.41(2) and 41C(2) of the old EO may apply. In Lisbeth Enterprises Ltd v Mandy Luk, the employee who worked in a health and beauty club was entitled not only to a monthly salary but also to a commission on sales made by her. The contractual commission was calculated on a monthly basis, payable according to fluctuating monthly results on a sliding scale. Jenny’s case is different from Lisbeth Enterprises Ltd v Mandy Luk in that Jenny receives DFSC on the flat rate of 3.5% of the sales made by her. The upshot is that there would be no difficulty in calculating the amount of DFSC already made by Jenny on any given day (disregarding the Team Award gifts, BC Star Award and ISM Star Award), and therefore it can be said to accrue daily. Even if the Claimants do not receive DFSC until the end of the next month, given that DFSC can be said to accrue daily, it is daily wages that vary from day to day. Further or alternatively, apparently Jenny is employed on piece rate when she performs the duty free sales duty. By reason of matters aforesaid, I hold that Cathay Pacific should include DFSC in the calculation of Jenny's ALP and SHP by using the following formulas, in accordance with the provisions of the old ss.41(2) and 41C(2) of the EO : ALP - (Total DFSC earned during the month immediately preceding or expiring on the first day of the annual leave or
on the day on which the contract of employment terminates, as the case may be) ÷ (Number of working days during the same period) SHP – (Total DFSC earned during the month immediately preceding or expiring on the holiday or first day of the holiday) ÷ (Number of working days during the same period) Again, I shall deal with those questions regarding the mode of calculation for working out the relevant number of working days for the purpose of the formulas when the question of quantum arises. Has Jenny received any SHP at all? Clause 2.4(3) of the COS 2003 provides :- "Days Without Duties The Days Without Duties will include any statutory holidays (or alternative holidays) and rest days, as the case may be, to which a Cabin Attendant is entitled under the Employment Ordinance. Clause 5.3 of the COS 2003 provides :- "Statutory Holidays and Rest Days Statutory holidays and rest days are allocated to Cabin Attendants as Days Without Duties (please refer to paragraph 2.4(3) of these COS, above.)" Cathay Pacific intimates that, in addition to the Days Without Duties, Cathay Pacific also uses Standby duties (Jenny earns 1 credit hour
for each 3 hours of Standby duties) to discharge its obligation to provide Jenny with statutory holidays under the EO. I do not agree. It is clear from the above-mentioned contractual provisions that Cathay Pacific uses Days Without Duties to discharge its obligation to provide Jenny with statutory holidays under the EO. Unlike to the other two Claimants who are monthly paid crew, Jenny's wages are calculated on the numbers of flying hours she is able to achieve on a monthly basis. Her salary structure is not governed by the Master Pay Scale like the monthly paid crew members do. She does not enjoy the benefit of automatic annual increment along the Master Pay Scale. Generally, Jenny is rostered to not less than the value of 70 hours of flying duties each month. If she wants to earn more, she may swap flights with colleagues to fly more, thus earning the extra flying hours which are all calculated on the basis of HK$146.4 per hour. In practice, Jenny swapped flights with colleagues to fly less, thus receiving only the MGFP in many months. Her wages are linked to performance of flying duties, Work Credits and Leave Credits. Therefore, Jenny contends that Cathay Pacific has not paid her any SHP at all. Cathay Pacific contends that according to Clause 3.1 of the COS 2003, Jenny receives a monthly salary that is, rather than a specified amount in her contract, calculated with reference to MGFP that is paid regardless of the work or duty she may or may not have undertaken or been assigned to her during the month; that MGFP is payable due to time on duty as well as time not on duty in the same way as a worker is paid a
basic monthly salary but may also be entitled to monthly overtime if she works extra hours in that month. Clause 3.1 of the COS 2003 provides that Jenny will receive salaries calculated on a monthly basis. Having salaries calculated on a monthly basis does not mean that she is monthly salaried. Employees employed at piece rate or hourly rate may receive salaries calculated on a monthly basis. In my view, the payment structure of Jenny plainly shows that she is an hourly paid employee. Cathay Pacific pays Jenny MGFP at the value of 70 Block Hours, as it assumes that a cabin crew works 85 credit hours (inclusive of Block Hours flown) and 25.5 ground duty hours each month. It demonstrates that the MGFP relates to crew members’ flying duties rather than the Days Without Duties. For example, when an hourly paid cabin crew performs more than 70 flying hours in a month, she is paid by the actual flying hours plus any credits earned. It means that she will not reap any benefit from the MGFP, notwithstanding that Cathay Pacific may well provide her with Days Without Duties in that month. An hourly paid cabin crew is not paid for those Days Without Duties that coincide with the statutory holidays. In other words, in a month if there is a statutory holiday, she is still paid 70 flying hours plus the extra flying hours she has performed (if any) without any SHP. In my view, the corollary is that she does not receive any SHP. One can educe from Jenny’s salary structure that she does not
receive any payment for the Days Without Duties. In so far as Cathay Pacific uses Days Without Duties to discharge its obligation to provide Jenny with statutory holidays under the EO, Jenny does not receive any SHP. Ordinary Wages Prior to the amendments introduced by the EAO, s.42 of the EO provides :- "42 Ordinary wages instead of holiday pay, annual leave pay, maternity leave pay or sickness allowance Where, pursuant to the terms of his contract of employment or the terms of any other agreement or for any other reason, an employee is paid his ordinary wages in respect of any holidays, annual eave, maternity leave or sickness day, the employee shall not, in addition to such ordinary wages, be entitled to be paid holidays pay, annual leave pay, maternity leave pay or sickness allowance, as the case may be." The EAO repealed s.42 of EO. Cathay Pacific contends that the Claimants' monthly basic salary, together with other regular fixed monthly allowance, represents their "ordinary wages" for the purposes of s.42 of the EO. Mr Justice Rogers VP held at paragraph 21 of Lam Pik Shan v. Hong Kong Wing On Travel Services Ltd, "21. As regards section 42 of the Ordinance, I see no
basis for restricting the meaning of "ordinary wages" to the bare, almost notional, payment under clause 7 of the agreement. In my view "ordinary wages" has no other meaning than "wages" as used in the Ordinance." Such view was echoed by the Honorable Mr. Justice Cheung JA in Fong Mung Yan v. ISS Hong Kong Service Limited, at paragraph 49 where the learned Judge said, "49. In my view section 42 does not assist the Defendant. This section merely prevents the worker from receiving a double benefit. It provides no answer to the question whether wages include attendance bonus. In my view there is no distinction between the term "wages" as defined by section 2(1) and ''ordinary wages' referred to in section 42." I hold that s.42 of does not assist Cathay Pacific. S.40 of the EO In relation to the payment of SHP, s.40 of the EO provides : "40. Payment of holiday pay Subject to section 12(11), an employee who has been employed by his employer under a continuous contract for a period of 3 months immediately preceding a statutory holiday shall, not later than the day on which the employee is next paid his wages after that holiday, be paid by his employer holiday pay at the rate specified in section 41, whether the employee takes a holiday on the statutory holiday or on an alternative or substituted holiday or a holiday
under section 39(4)." This section is applicable both prior to and after the introduction of the EAO. Cathay Pacific contends that by virtue of the provisions of s.40, to the extent that the Claimants worked on a statutory holiday, the wages paid to them in respect of that statutory holiday (which she worked) constitute their full entitlement under the EO in respect of that statutory holiday. In these circumstances, the Claimants will have received the amount they "would have earned" on the statutory holiday. In effect, Cathay Pacific rigidly construes "that holiday" referred to in s.40 as the statutory holiday. In my view, "that holiday" plainly means the holiday actually taken by the employee, whether the employee takes a holiday on the statutory holiday or on an alternative or substituted holiday or a holiday under s.39(4). Were Cathay Pacific's construction acceptable, an employer would have no obligation under the EO to pay SHP in respect of an alternative or substituted holiday. That must be wrong. Contractual Annual Leave Pay Clause 16(A) of the COS 1986 provides :- "Annual Leave – Cabin crew will be granted three weeks’ paid leave per year. In the first year cabin crew do not qualify for annual leave until they have completed nine months’ service. After completing five years of service, cabin crew will be granted four weeks’ paid leave per year. After completing ten years of service, cabin crew will be
granted five weeks’ paid leave per year." Clause 12(A) of the COS 1993 provides :- "Annual Leave – Cabin Attendants will be granted three weeks’ paid leave per year. In the first year Cabin Attendants do not qualify for annual leave until they have completed probation. After completing five years of service, Cabin Attendants will be granted four weeks’ paid leave per year. After completing ten years of service, Cabin Attendants will be granted five weeks’ paid leave per year. Leave shall be taken in accordance with the leave roster system established by the Company. The taking of leave will be subject to the exigencies of service as determined by the Company. " Clause 5.1 of the COS 2003 provides :- "Annual Leave The Company operates a common leave year from 1 January to 31 December. Cabin Attendants are eligible to apply for and take annual leave in accordance with Company Policies. Annual leave will be granted subject to the needs of the Company, determined in its discretion from time to time. A Cabin Attendant is expected to take all annual leave within the current leave. Annual leave cannot be carried forward without prior written approval of the Company. Advance annual leave may be granted at the Company’s sole discretion. If granted, the Cabin Attendant’s annual leave entitlement for the ensuing period will be adjusted accordingly. If, upon leaving the employment of the Company, a Cabin Attendant has taken annual leave in excess of the Cabin Attendant’s pro-rata annual leave entitlement, calculated
to cessation of employment, the final payment made to the Cabin Attendant will be adjusted accordingly." The Company Policy provides Jenny’s AL entitlement as follows :- "Cabin crew who join on or after 01 September 1996: Flight Attendant or Flight Purser with less than 5 years of service as cabin crew, 21 days of leave entitlement Flight Attendant or Flight Purser with more than 5 years of service as cabin crew, 24 days of leave entitlement Senior Purser or Inflight Service Manager, 28 days of leave entitlement" Section 2 of the EO provides that "annual leave" means the annual leave provided for in Part VIIIA and "annual leave pay" means the annual leave pay required by the EO to be paid in respect of a period of annual leave provided for in Part VIIIA in respect of a period of annual leave required to be paid under section 41D. Therefore, Cathay Pacific contends that the provisions in the EO relation to annual leave and annual leave pay are applicable only to statutory annual leave (a maximum of 14 days); that the statutory provisions do not apply to leave granted by an employer in excess of the statutory annual leave and that leave granted in excess of the statutory requirement. In other words, contractual annual leave, including the taking and the payment of such leave, is therefore governed solely by the terms of the relevant employment contract, which fall to be interpreted and construed in accordance with general contractual principles. Cathay Pacific contends that on the basis of general
contractual principles of construction and on the basis of plain common sense, the expression "paid leave" means leave of absence from work with the payment of basic salary and those allowances to which a cabin attendant is entitled by virtue of his or her position i.e. title and appointment allowances, but excluding allowances which arise by virtue of the actual performance of in flight or other specific duties, such as OA, LDA and GDA and which plainly do not arise at all during periods of leave. I accept that the Claimants' contractual AL is governed by the terms of the employment contract. The COS are drafted in details. Upon reading the relevant provisions of the COS, I observe that they do not make any distinction between a cabin crew's statutory and contractual annual leave payment. In practice, there is no way to tell when the Claimants take AL, whether they are on the statutory or contractual AL. As a matter of construction of the employment contract, I take the starting point that the calculation of the ALP regarding all AL provided by the employment contract is equal. In Wong Yin Fong & others v. ISS Hong Kong Services Ltd, J Lam J held that "Given its paternalistic nature, the statutory scheme strives to achieve through s.41C that an employee will not suffer any accompanying economic loss for not working during the leave period". In the present case, Cathay Pacific takes into account of the numbers of days of AL taken by Becky and Vera to calculate their Excess Flying Pay ("EFP") (See Clause 6 of COS 1986 and Clause 5 of COS 1993 for EFP’s meaning). Jenny's situation is similar. Cathay Pacific takes into account the number of hours flown as well as credits earned by reasons of leave (including AL) to calculate MGFP and Jenny's wages. Jenny earns
3.25 leave credits per day of AL. Such arrangements suggest that the parties are also prepared to make provision for making up a cabin crew’s accompanying economic loss for not working during the leave period. Conversely, Cathay Pacific contends that on the basis of plain common sense, allowances that arise by virtue of the actual performance of duties such as LDA and GDA should be excluded in calculating ALP and SHP. Courts will imply terms into individual contracts on the ground of business efficacy but it is nothing to do with making things reasonable or fair. All in all, I am not persuaded by Cathay Pacific's common sense approach. After having carefully considered all evidence, I take the view that there is no contractual basis to calculate the ALP attributable to the statutory and contractual AL differently. Conclusion I hold that Jenny is hourly paid. Therefore, she is employed on daily wages that vary from day to day. In accordance with the old s.41(2) of EO, her holiday pay shall be a sum equivalent to the average of the daily wages earned by her on each day on which she worked during every complete wage period, comprising not less than 28 days and not more than 31 days, immediately preceding or expiring on the holiday or first day of the holiday. In my view, she does not receive any SHP. In accordance with the old s.41C(2) of EO, her annual leave pay shall be calculated by reference to the average of the daily wages earned by her on each day on which she worked during every complete wage period, comprising not less than 28 days and not more than 31 days, immediately preceding or expiring on the first day of the annual leave or on the day on which the contract of employment terminates, as the case may be. Account will be taken into ALP that were already paid by Cathay Pacific.
In conclusion, I hold that Cathay Pacific should calculate and pay Becky and Vera shortfalls in the amounts of ALP and SHP in the manners as set out in the above paragraph 102 and should calculate and pay Jenny shortfalls in the amounts of ALP and SHP in the manners as set out in the above paragraphs 102, 108 and 140, but it is not required to include OA in the calculation of ALP and SHP. The parties shall make arrangements with the case Tribunal Officer for the purpose of fixing a mutually convenient date for a mention hearing on the question of quantum. Costs reserved.  (K.K. PANG) Deputy Presiding Officer  
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LBTC 2828/2008 IN THE LABOUR TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CLAIM NO. LBTC 2827/2008, 2828/2008 & 2829/2008 __________________________________ BETWEEN LBTC 2827/2008 LBTC 2828/2008 LBTC 2829/2008 KWAN SIU WA BECKY WU YEE MEI VERA HO KIT MAN JENNY CLAIMANTS   and    CATHAY PACIFIC AIRWAYS LIMITED DEFENDANT   __________________________________ Coram: Pang Ka Kwong, Deputy Presiding Officer Date of Trial: 22, 23 & 24 December 2008, 12 January 2009 Date of Decision on Liability: 12 January 2009 Date of Reasons for Decision on Liability: 12 January 2009 Date of Corrigendum: 22 January 2009 __________________________________ CORRIGENDUM The quoted provisions of ss.41 and 41C of the Employment (Amendment) Ordinance on pp. 12-15 should be amended as shown in red in the Attachment to this Corrigendum.
(Yau Wai-yuen) Clerk to Pang Ka Kwong, Deputy Presiding Officer
he worked during every complete wage period, comprising not less than 28 days and not more than 31 days, immediately preceding or expiring on the first day of the annual leave or on the day on which the contract of employment terminates, as the case may be." 33. Following the introduction of the EAO, the provisions for calculating SHP and ALP are :- (i) SHP "41. Rate of Holiday pay (1) For the purposes of subsections (2), (3) and (4), "wages"(工資) includes any sum paid by an employer in respect of - (a) a day of maternity leave, a rest day, a sickness day, a holiday or a day of annual leave taken by the employee; (b) a day of leave taken by the employee with the agreement of his employer; (c) a normal working day on which the employee is not provided with work; (d) a day of absence from work of the employee due to temporary incapacity for which compensation is payable under section 10 of the Employees' Compensation Ordinance (Cap. 282). (2) The daily rate of holiday pay is a sum equivalent to the daily average of the wages earned by the employee during - (a) the period of 12 months immediately before the holiday or first day of the holidays (as appropriate); or
(b) if the employee has been employed by the employer concerned for a period shorter than 12 months immediately before the holiday or first day of the holidays (as appropriate), the shorter period. (3) In calculating the daily average of the wages earned by an employee during the period of 12 months or the shorter period - (a) any period therein for which the employee was not paid his wages or full wages by reason of - (i) any maternity leave, rest day, sickness day, holiday or annual leave taken by the employee; (ii) any leave taken by the employee with the agreement of his employer; (iii) his not being provided by his employer with work on any normal working day; or (iv) his absence from work due to temporary incapacity for which compensation is payable under section 10 of the Employees' Compensation Ordinance (Cap. 282); and (b) any wages paid to him for the period referred to in paragraph (a), are to be disregarded. (4) For the avoidance of doubt, if the amount of the wages paid to an employee in respect of a day specified in subsection (1) is only a
fraction of the amount earned by the employee on a normal working day, the wages and the day are to be disregarded in accordance with subsection (3). ….." (ii) ALP "41C Rate of annual leave pay (1) For the purposes of subsections (2), (3) and (4), "wages"(工資) includes any sum paid by an employer in respect of - (a) a day of maternity leave, a rest day, a sickness day, a holiday or a day of annual leave taken by the employee; (b) a day of leave taken by the employee with the agreement of his employer; (c) a normal working day on which the employee is not provided with work; (d) a day of absence from work of the employee due to temporary incapacity for which compensation is payable under section 10 of the Employees' Compensation Ordinance (Cap. 282). (2) The daily rate of annual leave pay is a sum equivalent to the daily average of the wages earned by the employee during - (a) the period of 12 months immediately before the day of annual leave, the first day of the annual leave or the date of termination of the contract of employment (as appropriate); or (b) if the employee has been employed by the employer concerned for a period shorter than 12 months immediately before the
day of annual leave, the first day of the annual leave or the date of termination of the contract (as appropriate), the shorter period. (3) In calculating the daily average of the wages earned by an employee during the period of 12 months or the shorter period - (a) any period therein for which the employee was not paid his wages or full wages by reason of - (i) any maternity leave, rest day, sickness day, holiday or annual leave taken by the employee; (ii) any leave taken by the employee with the agreement of his employer; (iii) his not being provided by his employer with work on any normal working day; or (iv) his absence from work due to temporary incapacity for which compensation is payable under section 10 of the Employees' Compensation Ordinance (Cap. 282); and (b) any wages paid to him for the period referred to in paragraph (a), are to be disregarded. (4) For the avoidance of doubt, if the amount of the wages paid to an employee in respect of a day specified in subsection (1) is only a fraction of the amount earned by the employee
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LBTC 2828/2008 IN THE LABOUR TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CLAIM NO. LBTC 2827/2008, 2828/2008 & 2829/2008 __________________________________ BETWEEN LBTC 2827/2008 LBTC 2828/2008 LBTC 2829/2008 KWAN SIU WA BECKY WU YEE MEI VERA HO KIT MAN JENNY CLAIMANTS   and    CATHAY PACIFIC AIRWAYS LIMITED DEFENDANT   __________________________________ Coram: Pang Ka Kwong, Esq., Deputy Presiding Officer Date of Trial: 22, 23 & 24 December 2008, 12 January 2009 Date of Decision on Liability: 12 January 2009 Date of Reasons for Decision on Liability: 12 January2009 __________________________________ Reasons for Decision on Liability The trial proceedings use the Chinese language. The parties agree that I can deliver this Reasons for Decision on Liability in the English language. The parties reserve their respective positions on quantum.
Under paragraph (a) 1 of the Claimants’ respective Form 2, the Claimants stated that their grounds for the claims include :- (a) “Failure to grant statutory holidays” (b) “Failure to grant annual leaves”. The Claimants do not pursue the claims under paragraph (a) 1. Claim The present claims are for "shortfalls" in the amounts of Statutory Holiday Pay ("SHP") and Annual Leave Pay ("ALP") that were paid by Cathay Pacific, such shortfalls allegedly arising from the non-inclusion of Line Duty Allowance ("LDA"), Outport Allowance ("OA"), Ground Duty Allowance ("GDA") and Duty Free Sales Commission ("DFSC") in calculating SHP and ALP. In material, there is no dispute on the background facts of the cases. Kwan Siu Wa Becky ("Becky") By a letter of appointment dated 20th September 1975, Becky joined Cathay Pacific as a Junior Flight Hostess of the cabin crew. She was promoted to the post of Chief Purser L1011 on 18th September 1987. The post was retitled to Inflight Service Manager on 1st April 1999 and she remains in the same position to date. She is required to perform duties in air and on ground as Cathay Pacific directs. Becky is a monthly paid cabin crew. She receives a basic salary and title allowance of HK$23,883 and HK$11,501 respectively
each month. In addition, she receives various allowances such as LDA and OA. By 2002 Becky has served Cathay Pacific for more than 10 years and therefore she is entitled to 5 weeks' paid annual leave and 94 Guaranteed Days Off ("GDOs") each year. Additionally, Cathay Pacific provides Becky with the following days without work :- (a) Short Break - A period, at or away from base, of at least 34 hours and including 2 local nights during which a crew members are not required to perform any duty. (b) Stop over in outports - A period commencing after the scheduled arrival time of crew at an outport until 60 minutes before the scheduled departure time. Crew members are not required to perform any duty during the stop over. (c) Standby duty also known as reserve duty (without being called out) – Crew members are scheduled for standby duty period specified on the front sheet of the roster. The actual period scheduled varies from roster to roster. Crew members will be notified within their standby period to operate a flight if it is required. (d) Guaranteed Days Off ("GDOs") - these are essentially days without work and are further explained below. Clause 16(C) of Conditions of Service 1986 (“COS 1986”) provides :-
"Guaranteed Days Off (GDO) - the annual GDO count for cabin crew on line flying will be based on two days off per week less the period of the cabin crew member's annual leave entitlement, i.e. those cabin crew entitled to three weeks annual leave per year will be entitled to 98 GDO's, those cabin crew with four weeks annual leave per year will be entitled to 96 GDO's and those cabin crew entitled to five weeks annual leave will be entitled to 94 GDO's. Cabin crew required to operate on a 'G' day will be given the option of having another 'G' day at a mutually convenient time or payment at the rate of HK$40 per flying hour for the duration of the flight. Such payment will be made only for the first 24 hours involved. If payment is made then these GDOs will be deducted from the annual GDO entitlement. Rules contained in Operations Manual. Volume 1 Part 2 will apply." Wu Yee Mei Vera ("Vera") By a letter of appointment, dated 12th June 1995, Vera joined Cathay Pacific as a cabin attendant. She was promoted to the post of purser on 1st December 2000 and remains in the same position to date. She is required to perform duties in air and on ground as Cathay Pacific directs. Vera is a monthly paid cabin crew. She receives a basic salary and title allowance of HK$20,139 and HK$2,370 respectively each month. In addition, she receives various allowances such as LDA and OA.
Between June 1995 and May 2000, Vera is entitled to 3 weeks' paid annual leave and 98 GDOs each year. Between June 2000 and May 2005, she is entitled to 4 weeks' paid annual leave and 96 GDOs each year. By June 2005, she is entitled to 5 weeks' paid annual leave and 94 GDOs each year. Additionally, Cathay Pacific provides Vera with the following days without work :- (a) Short Break; (b) Stop over in outports; (c) Standby duty also known as reserve duty (without being called out); (d) Guaranteed Days Off ("GDOs") (see explanation below). Clause 13(b) of Conditions of Service 1993 (“COS 1993”) provides :- "Those Cabin Attendants entitled to three weeks annual leave per year will be entitled to 98 GDOs, those Cabin Attendants entitled to four weeks annual leave per year will be entitled to 96 GDOs and those Cabin Attendants entitled to five weeks annual leave will be entitled to 94 GDOs. In any of the above case, the number of GDOs granted includes days off in lieu of the statutory holidays to which a Cabin Attendant would otherwise be entitled pursuant to the Employment Ordinance of Hong Kong" The details of the Short Break, Stop over in outports, Standby duty also known as reserve duty and GDOs are the same in Vera's case as
in Becky's case. Ho Kit Man Jenny ("Jenny") By a letter of appointment, dated 19th January 2005, Jenny joined Cathay Pacific as a Flight Attendant of the Inflight Services Department and she remains in the same position to date. She is required to perform duties in air and on ground as Cathay Pacific directs. Cathay Pacific pays Jenny Minimum Guaranteed Flying Pay ("MGFP") at the value of 70 Block Hours (see explanation below) i.e. 70 hours X HK$146.4 per hour = HK$10,248 per month. The payment structure of Jenny is set out in Clause 3 of the COS 2003, Clause 3.1 of which provides :- "Salary Cabin Attendants will (subject to any provisions stated in the Letter as to probation or otherwise) receive a salary calculated on a monthly basis. Salary will be calculated with reference to the Minimum Guaranteed Flying Pay. If the total value of a Cabin Attendant's Block Hours and Credits in the relevant month exceeds the Minimum Guaranteed Flying Pay, he or she will receive a salary calculated by reference to the actual Block Hours flown and Credits earned in that month. The applicable payment rate of a Block Hour, and the number of Block Hours assigned to Cabin Attendants, will be determined by the Company from time to time and notified to the Cabin Attendant. For the purposes of these COS:
Block Hours are the hours between Departure Time and Arrival Time (or otherwise, as amended or determined by the Company in its absolute discretion from time to time). Credits comprise : (i) Work Credits : these are credits received for absences from flight duties by reason of, for example, Reserve Duty or Special Duties; and (ii) Leave Credits : these are credits received for absences from flight duties by reason of leave. Leave Credits may include payment additional to the paid time off that a Cabin Attendant receives as such leave pursuant to these COS. (However, for the avoidance of doubt, the Company's use of a formula which records Leave Credits for the purpose of computation of salary does not create any entitlement to payment additional to the actual paid time off taken, except and to the extent determined by the Company from time to time.) The type and value of credits available to Cabin Attendants will be determined by the Company and notified to the Cabin Attendants, from time to time, having regard to relevant Company Policies." Credits that Jenny may earn include :- (i) Work Credits : Jenny earns credits for absences from flight duties by reason of :- Training - 4.65 credit hours for each calendar day of training; Special duties - 4.65 credit hours for each
calendar day of special duties; Standby duties - 1 credit hour for each 3 hours of standby duties; Duty travel - 0.5 credit hour for each 1 hour of duty travel. (ii) Leave credits : Jenny earns 3.25 credit hours for each day of leave taken. The credit of 3.25 block hours for each day of leave is calculated by reference to the following mathematical formula. Cathay Pacific assumes that a cabin crew works 85 credit hours (inclusive of Block Hours flown) and 25.5 ground duty hours (see explanation in paragraph 83 below) each month. Ground duty hours worth 50% of Block Hours. Therefore, total monthly credit hours for such crew member are :- 85 + (25.5 ÷ 2) = 97.75 This figures is then averaged over 30 days to give a standard credit of 3.25 block hours for each day of leave taken. In addition, Jenny receives various allowances such as OA, GDA and DFSC. Jenny does not receive LDA, whilst Becky and Vera do not receive GDA or DFSC. With less than 5 years’ service, she is entitled to 21 days' paid annual leave. Additionally, Cathay Pacific provides Jenny with the following days without work :-
(a) Short Break (b) Stop over in outports (c) Standby duty also known as reserve duty (without being called out) (d) Days Without Duties - see explanation below. The details of Short Break, Stop over in outports and Standby duty are the same in Jenny’s case as in Vera and Becky’s case. Clause 2.4(3) of the Conditions of Service 2003 (“COS 2003”) provides :- "Days Without Duties The company will periodically issue rosters for Cabin Attendant Days Without Duties. These rosters will apply for the stated time period. The Days Without Duties will include any statutory holidays (or alternative holidays) and rest days, as the case may be, to which a Cabin Attendant is entitled under the Employment Ordinance. For operational reasons, the Company reserves the right to require Cabin Attendants to work on any Day Without Duties subject to and in accordance with the provisions of the Employment Ordinance." The Issues Despite that Becky and Vera are employed under different COS, they are in the same position for the purpose of the present claims. They contend that Cathay Pacific should include OA and LDA in the calculation of their ALP and SHP in accordance with the old ss.41 and 41C of the Employment Ordinance (“EO”). Jenny contends that Cathay
Pacific should include OA, GDA and DFSC in the calculation of her ALP and SHP in accordance with the old ss.41 and 41C of EO. Jenny also contends that as she is hourly paid, Cathay Pacific has not paid her any SHP on her statutory holidays. Cathay Pacific denies that OA, LDA, GDA and DFSC are required to be included in the calculation of SHP and ALP. Cathay Pacific also contends that Jenny is paid a monthly salary that is calculated with reference to the MGFP and, therefore, it has already paid Jenny’s SHP. The Employment Ordinance ("EO") The following provisions are relevant to the present claims : “2. Interpretation (1) In this Ordinance, unless the context otherwise requires "wages"(工資), subject to subsections (2) and (3), means all remuneration, earnings, allowances including traveling allowances and attendance allowances, attendance bonus, commission, overtime pay, tips and service charges, however designated or calculated, capable of being expressed in terms of money, payable to an employee in respect of work done or to be done under his contract of employment, but does not include (d) any sum payable to the employee to defray special expenses incurred by him by the nature of his employment;”
The old s.41 of the EO (prior to the changes introduced by the Employment (Amendment) Ordinance ("EAO") in July 2007) provides : "41 Rate of Holiday Pay (1) Holiday pay shall be a sum equivalent to the wages which the employee would have earned on a full working day. (2) Notwithstanding subsection (1), where an employee is employed on piece rates or where the daily wages of an employee vary from day to day, the holiday pay shall be a sum equivalent to the average daily wage earned by the employee, and for the purposes of this subsection the average daily wage shall be the average of the daily wages earned by the employee on each day on which he worked during every complete wage period, comprising not less than 28 days and not more than 31 days, immediately preceding or expiring on the holiday or first day of the holiday." The old s.41C of EO (prior to the changes introduced by the EAO) provides : "41C. Rate of Annual LeavePay (1) Annual leave pay shall, subject to subsection (2), be a sum equivalent to the wages which the employee would have earned if he had worked every day during the period of annual leave. Where an employee is employed on piece rates or where the wages of an employee vary from
day to day, the annual leave pay shall be calculated by reference to the average daily wage earned by the employee, and for the purposes of this subsection the average daily wage shall be the average of the daily wages earned by the employee on each day on which he worked during every complete wage period, comprising not less than 28 days and not more than 31 days, immediately preceding or expiring on the first day of the annual leave or on the day on which the contract of employment terminates, as the case may be." Following the introduction of the EAO, the provisions for calculating SHP and ALP are :- (i) SHP "41. Rate of Holiday pay (1) For the purposes of subsections (2), (3) and (4), "wages"(工資) includes any sum paid by an employer in respect of - (a) a day of maternity leave, a rest day, a sickness day, a holiday or a day of annual leave taken by the employee; (b) a day of leave taken by the employee with the agreement of his employer; (c) a normal working day on which the employee is not provided with work; (d) a day of absence from work of the employee due to temporary incapacity for which compensation is payable under section 10 of the Employees' Compensation Ordinance (Cap 282).
(2) The daily rate of holiday pay is a sum equivalent to the daily average of the wages earned by the employee during - (a) a period of 12 months immediately before the holiday or first day of the holidays (as appropriate); or (b) if the employee has been employed by the employer concerned for a period shorter than 12 months immediately before the holiday or first day of the holidays (as appropriate), the shorter period. (3) In calculating the daily average of the wages earned by an employee during the period of 12 months or the shorter period - (a) any period therein for which the employee was not paid his wages or full wages by reason of - (i) any maternity leave, rest day, sickness day, holiday or annual leave taken by the employee; (ii) any leave taken by the employee with the agreement of his employer; (iii) his not being provided by his employer with work on any normal working day; or (iv) his absence from work due to temporary incapacity for which compensation is payable under section 10 of the Employees' Compensation Ordinance (Cap 282); and (b) any wages paid to him for the period
referred to in paragraph (a). (4) For the avoidance of doubt, if the amount of the wages paid to an employee in respect of a day specified in subsection (1) is only a fraction of the amount earned by the employee on a normal working day, the wages and the day are to be disregarded in accordance with subsection (3). ….." (ii) ALP "41C Rate of annual leave pay (1) For the purposes of subsections (2), (3) and (4), "wages"(工資) includes any sum paid by an employer in respect of - (a) a day of maternity leave, a rest day, a sickness day, a holiday or a day of annual leave taken by the employee; (b) a day of leave taken by the employee with the agreement of his employer; (c) a normal working day on which the employee is not provided with work; (d) a day of absence from work of the employee due to temporary incapacity for which compensation is payable under section 10 of the Employees' Compensation Ordinance (Cap 282). (2) The daily rate of holiday pay is a sum equivalent to the daily average of the wages earned by the employee during - (a) a period of 12 months immediately before the holiday or first day of the holidays (as appropriate); or
(b) if the employee has been employed by the employer concerned for a period shorter than 12 months immediately before the holiday or first day of the holidays (as appropriate), the shorter period. (3) In calculating the daily average of the wages earned by an employee during the period of 12 months or the shorter period - (a) any period therein for which the employee was not paid his wages or full wages by reason of - (i) any maternity leave, rest day, sickness day, holiday or annual leave taken by the employee; (ii) any leave taken by the employee with the agreement of his employer; (iii) his not being provided by his employer with work on any normal working day; or (iv) his absence from work due to temporary incapacity for which compensation is payable under section 10 of the Employees' Compensation Ordinance (Cap 282); and (b) any wages paid to him for the period referred to in paragraph (a). (4) For the avoidance of doubt, if the amount of the wages paid to an employee in respect of a day specified in subsection (1) is only a fraction of the amount earned by the employee
on a normal working day, the wages and the day are to be disregarded in accordance with subsection (3). ….." The EAO Since the EAO takes effect, Cathay Pacific has included LDA, GDA and DFSC in calculating SHP and ALP. OA is not included in the calculation of SHP and ALP even after the introduction of the EAO. Analysis and Findings OA Becky is employed under Conditions of Service 1986 ("COS 1986"). Clause 5(C) of COS 1986 provides : Outport Allowance "Overnight, meal and laundry allowances will be paid in accordance with the rates laid down in Operations Manual, Volume 1, Part 4." OA is known as "Overnight allowances" in Operations Manual, Volume 1, Part 4, which provides (among other things) : "Overnight allowances are reviewed bi-annually and on any change of hotel. They are intended to cover reasonable out-of-pocket expenses. Vera is employed under Conditions of Service 1993 ("COS 1993").
Clause 15(ii) of the COS 1993 provides, "Whilst Cabin Attendants are on duty in outports, they will receive overnight, meal and laundry allowances in accordance with the policy and rates laid down in Operations Manual, Vol. 1 Part 2 and 4 as amended from time to time and/or such other allowances or meal arrangements a published from time to time. Jenny is employed under Conditions of Service 2003 ("COS 2003"). Clause 1.3 of the COS 2003 provides :- "In addition to the duties and obligations set out in these COS, the Cabin Attendant is also required to comply with Company Policies." Clause 4.1 of the COS 2003 provides :- "4.1 Outport facilities and reimbursement Subject to Company Policies in force from time to time, a Cabin Attendant who is required to stay at an Outport between flying duties may be provided: (i) rest facilities and accommodation; and (ii) reimbursement of expenses for necessary meals and other expenditure incurred during the stay. 4.2 Other benefits A Cabin Attendant may be entitled or eligible to receive other benefits offered or provided by the Company in accordance with the relevant Company Policies."
Clause 10 of the COS 2003 provides that "Company Policies" means :- "the provisions of that document produced by the Company entitled the Operations Manual, as in force from time to time, and any other policies, schemes, rules and regulations relating to or arising from employment which may be issued, and amended or varied by the Company in its discretion from time to time. Such Operations Manual, policies, schemes, rules and regulations are collectively referred to in these COS as "Company Policies", and references in these COS to Company Policies shall where the context permits be construed accordingly." Clause 5.1 of the Operations Manual, Volume 6, Part 1 provides :- "At each outport a schedule of meal and overnight allowance has been established. These allowances are reviewed bi-annually in order to meet price changes. The allowances are intended to meet reasonable costs. Upon arrival at an outport where a stopover is scheduled crew members will be issued with the cash allowance by the hotel in accordance with the schedule, and based on a telex from Crew Control." Although their entitlement is arising from difference contractual provisions, the details of OA are the same in all Claimants’ case. OA is calculated by reference to a formula agreed with the Fight Attendants Union (“FAU”) that takes account of the actual cost of meals and services at the relevant crew hotel. The amount of each item
of OA is determined by reference to the costs in the designated crew hotel in each port. In practice, reviews of the allowance are held twice a year and adjustments will also be made whenever there is a change in crew hotel. The allowance may decrease as well as increase. OA includes :- meal allowance; allowance in case of delayed and rescheduled flight; incidental allowance ("IA"); laundry allowance; duty travel expenses and management crew allowance; taxi allowance; and Indian port allowance. Meal allowance will be paid if crew members are rostered on flight that requires a stopover at an outport that exceeds 2 hours and the stopover includes any part of the following period : (i) Breakfast - 0600 to 0859; (ii) Lunch - 1200 to 1359; (iii) Dinner - 1800 to 2159. When the stopover time falls between 0600-0859 of the local time, crew members will be paid an amount in respect of breakfast. The calculation is based on the hotel coffee shop prices for full American breakfast consists of fruit juice, two eggs with ham or bacon or sausage, toast with jam or marmalade and coffee, or the breakfast set rate covering all the above items, whichever the least expensive. When the stopover time falls between 1200-1359 of the local time, the amount paid in respect of lunch will not be less than a set lunch
menu consisting of soup of the day, a chicken dish, medium priced dessert and coffee in the medium priced Western style restaurant in the crew hotel. When the stopover time falls between 1800-2159 of the local time, crew members will be paid an amount in respect of dinner. The calculation of the amount in respect of dinner is based on the crew hotel medium priced Western style restaurant. If no medium restaurant exists in the hotel then the prices will be based on the most expensive hotel coffee shop price or the lower end of the top class hotel restaurant. The amount covers a medium priced steak, a medium priced dessert and coffee in a set menu. Delayed flights allowance will be paid if crew members are in the airport and the flight delays for more than 30 minutes. Operations Manual Volume 1, Part 4, Clause 2.1C(a) provides : "Delayed Flights If the crew are at the airport, refreshment chit or reimbursement up to a maximum of HK$90 will be authorized if the delay exceeds 30 minutes." As to rescheduled flight allowance, if crew members are required to stay at the airport, meal vouchers will be given. When crew members are required to stay at the hotel, meal allowance will be provided if the rescheduled stopover includes any part of the period stated in the above. In respect of IA, Clause 2.1(D) of Operations Manual, Volume 1, Part 4 provides :
"D. Incidental Allowance An incidental allowance will be paid when a stopover exceeds 6 hours. If a stopover exceeds 30 hours, a second incidental allowance will be paid. A third incidental allowance will be paid if a stopover exceeds 54 hours and so on. During a continuous duty period if a stopover exceeds 6 hours an incidental allowance will be paid." Crew members on "shuttle" duties are deemed to be on continuous duty for the purpose of qualifying for overnight allowance. An example of a "shuttle" duty is Paris-Manchester-Paris. No allowance is paid for crew members operating shuttle duties from their homeports. IA is calculated based on two times flag fall in an air-conditioned taxi to and from places for a beer or drinks, eight km or five miles total, two small local beers in the crew hotel bar or crew lounge and a tip for one small suitcase. The provision of IA is similar to that of "Overnight Allowance" in Clause 5.5 of the Operations Manual, Volume Part 1. There is no provision on IA in Operations Manual, Volume 6 Part 1. Laundry allowance is paid on the 3rd night and consecutive nights away from home base. The laundry allowance calculation is based on costs in the crew hotel to launder one shirt, one undershirt, one pair of underpants, one pair of socks and one handkerchief. Taxi allowance will be paid if crew members incur cost on taxi journey between the airport and the hotel. Taxi allowance will not
normally be paid when Cathay Pacific or the hotel provides transport or where the hotel operates regular shuttle bus service between the airport and the hotel. Indian port allowance is simply the overnight allowances where crew members fly into Indian ports. The only difference is that the allowance for Indian ports is paid in Hong Kong instead of overseas. The parties dispute where crew members are put in a hotel that is more expensive than the designated crew hotel in an ad hoc situation, if they want to receive OA that is calculated according to the higher of the different hotel tariffs, whether receipts are required to prove that extra out-of-pocket expenses are incurred. The Claimants testified that in their personal experience, receipts were never required. Ms Li Ka Lia Elizabeth, Cathay Pacific’s representative do not have personal experience in the matter. I accept that the Claimants are honest witnesses and their testimony is reliable. After having carefully considered all evidence, I accept that in such case, in practice, receipts will not be required. Usually, crew members are not required to demonstrate that they actually incur any expense while working away from home base. The Claimants produced a 1994 Year and Review Agreement between Cathay Pacific and FAU the contents of which show that there were discussions to change the manner of calculation of OA from meals basis to time basis. In this respect, however, no change has been agreed. The rate of LDA(A) is four times more than that of LDA(B)
(See paragraph 86 below). Becky explained that it is because crew members do not earn OA when they perform duties on day turnaround and split duty flights. Becky said that the purpose of the division being to compensate crew members’ loss of OA, it shows that Cathay Pacific recognizes that OA is a source of income of crew members. Cathay Pacific denies that OA is required to be included in calculating SHP and/or ALP on the following basis : (a) OA is not "wages" within the definition of "wages" in s.2 of the EO as it falls within the exception in subparagraph (d) of s.2 being a "sum payable to the employee" to defray special expenses incurred by him by the nature of his employment", and (b) further and in the alternative, if OA is "wages" under s.2 of the EO (which is denied): (i) OA is not "wages" which the Claimants "would have earned" for the purposes of ss.41(1) and 41C(1) of the EO, and (ii) OA is not "daily wages" for the purposes ss.41(2) and 41C(2) of the EO and/or it is impossible to calculate OA on a daily basis. Firstly, I deal with the question on whether OA is wages within the definition of "wages" in s.2 of the EO. The Claimants contend that OA is wages because it is described in the COS and the Operations Manual as an item of allowance
and that it is represented by Cathay Pacific in its advertisements as forming part of a cabin crew's income. The above considerations relate to how the parties label OA. It is trite that the court does not only look at the label of a payment to determine its true nature. The label is not conclusive. It is not what the parties call it but what it is in substance that matters. One has to look into the nature of the payment, the reasons therefore and the circumstances under which the payment is made. In practice, the Claimants have never paid salary tax on income earned by OA. OA (except for the allowance for Indian ports) is paid overseas. Due to foreign exchange restrictions, allowance for Indian ports is paid when crew members report duty at the Hong Kong airport as they start the flying duty. In my view, the above arrangement is congruent with the intention that OA is to cover out of pocket expenses. OA is calculated by reference to a formula agreed with FAU, which takes account of the actual cost of meals and services at the relevant crew hotel in each port. Periodical reviews of the allowance are held. It appears that the amount of OA payable is a genuine pre-estimate of what the amount of the expense is likely to be. I am aware that OA forms a substantial part of the Claimants' total income and it arises in the course of flying duties performed by them at outports.
After having carefully considered all evidence, I accept that the purpose of OA is to cover meals and miscellaneous out-of-pocket expenses relating to the Claimants' layover overseas between flying duties. OA is however paid in the form of a fixed allowance instead of an actual reimbursement against receipts and, it is on this basis (and on the basis that the allowance is non accountable rather than an accountable reimbursement) that the Claimants seek to argue that OA constitutes wages within the meaning of s.2 of the EO and, does not fall within exception (d). Cathay Pacific contends that the meaning of the words "to defray" means "to reimburse" or "to provide money to cover the costs or expenses". Therefore, the exception in subparagraph (d) applies to a non-accountable allowance as well as to an allowance that is available on a reimbursement basis only. Cathay Pacific lends support from the judgment of Deputy High Court Judge To in Star Express Limited v Cheng Tak and Ors, Labour Tribunal Appeal No. 86/1998, unreported, 11 May 1999. In that case, it was held that on the basis that pre-determined and non-accountable fixed monthly payments made to drivers of tourist coaches to cover parking fees were genuine pre-estimates of what the amount of the parking fees was likely to be, such payments constituted the reimbursement of expense and did not constitute "wages". The Claimants contend that the term "special expenses" in subparagraph (d) to the definition of "wages" in s.2 of the EO denotes something that is of a non-recurrent nature and should be an one-off
expenditure pertinent to the nature of the employment. I note that there is no requirement under the EO that such "special expenses" should be non-recurrent in nature. Though some OA components such as meals and traveling expenses are daily expenses that are incurred whether the Claimants are inside or outside Hong Kong, the Claimants should accept that probably they will incur extra meal and traveling expenses when they stay overseas. Plainly such extra expenses can be regarded as special expenses incurred by them by the nature of their employment. During the trial hearing, the Claimants did not pursue the contention that as IA does not relate to out-of-pocket expenses, IA is a hardship allowance. Anyway, such assertion is not borne out by the relevant provisions of the COS and the Operations Manual. In my view, there is no suggestion that IA is in the nature of a hardship allowance as alleged by the Claimants. After having carefully considered all evidence, I hold that OA is not "wages" within the definition of s.2 of the EO because it falls within the exception in subparagraph (d) being "a sum payable to the employee to defray special expenses incurred by him by the nature of his employment." I do not need to deal with the second leg of Cathay Pacific's argument (See para. 64(b) above). LDA and GDA The details of LDA and GDA are as follows. Clause 5(A) of the COS 1993 provides :-
"A Line Duty Allowance will be paid at the rate published from time to time from each flying duty hour. This allowance will be paid to all Cabin Attendants for each hour spent on flying duty. It is not part of basic salary and will not be paid for any other duty or non-flying activities including sick leave travel. The Line Duty Allowance will be calculated and paid on the basis of Flying Duty Period (FDP) as defined in the Operations Manual Vol. 6." Clause 3.2 of the COS 2003 provides :- "Allowances A Cabin Attendant may also receive, in addition to salary, other payments or allowances, in respect of any special or other duties or circumstances arising from the Cabin Attendant's employment, in accordance with any Company Policies or as determined by the Company's discretion. Such allowances may include … [Ground Duty Allowance]." Clause 3.2(A) of the COS 2003 provides that GDA is payable for ground duty hours spent on ground, being :- “(i) the time between when Cabin Attendants are required by the Company to report for duty and the time from which the aircraft commences to move whether under its own power or not ("Departure Time"); (ii) 15 minutes after the time when the aircraft is finally stationary after landing ("Arrival Time") in the last single sector a cabin crew operates prior to the Rest Period ("the Final Sector") or (as the case may be), in situations of extended delay after the Arrival Time where a cabin crew is required to remain on an aircraft in excess of one hour after arrival in the Final Sector, the actual
time the cabin crew is required to carry out duties in relation to the extended delay; and (iii) save in relation to extended delays which are covered by paragraph (ii) above, within a Flight Duty Period any time on ground which is not considered as Rest Period.” Crew members' duty comprises of time on ground and time in air. LDA is payable due to time in air (line duty hours). GDA is payable due to time on ground preparing to fly (ground duty hours). They both relate to duty time that is dependant on a number of different factors. While LDA and GDA are different, I consider that I can deal with them at the same time for the purpose of the present claims. In the Statement of Defence filed in these proceedings, Cathay Pacific said that as the COS provides that the Claimants “may” be entitled to OA, LDA, GDA and DFSC, there is a strong argument that the Claimants does not have any contractual entitlement to the same. During the trial hearing, Cathay Pacific's representative accepted that LDA and GDA are part of the Claimants' wages, although she maintained that they are not wages that the Claimants would have earned for the purpose of the old ss.41(1) and 41C(1) of EO. There is no provision in COS 1986 that provides for entitlement to LDA. Clause 5(A) of COS 1986 provides that Becky was entitled to Inflight Meal Compensation Allowance. Clause 5(B) of COS 1986 provides that Becky was entitled to Ground Allowance. Loosely speaking, since about 1988, the Inflight Meal Compensation Allowance and Ground Allowance have been replaced by LDA. Clause 5(A) of COS 1993 provides Vera’s entitlement to LDA. Details of when LDA is payable are set out in Clause 6 of the Operations Manual Volume 6, Part 1. Clause 3.2 of COS 2003 provides Jenny’s entitlement to GDA.
Details of when GDA is payable are set out in Clause 3.2(A) of COS 2003. After having carefully considered all evidence, I consider that Jenny receives GDA pursuant to Company Policies rather than Cathay Pacific’s discretion. On the whole, LDA and GDA are not of a gratuitous nature or payable only at Cathay Pacific's discretion. LDA and GDA represent a component in the Claimants' wages for work that they have done. In my view, it is indisputable that LDA and GDA are part of the Claimants' wages. The real issue is whether they are wages that the Claimants would have earned for the purpose of the old s.s41(1) and 41C(1) of the EO. LDA is paid on two scales that are LDA(A) and LDA(B). LDA(A) is payable for day turnaround and split duty flights at HK$60.5 per hour. LDA(B) is payable for all other flights at HK$15.125 per hour. Such division is again a deal struck between Cathay Pacific and FAU. Becky and Vera receive LDA on the total number of line duty hours that they operate in an aircraft. LDA is calculated based on the total number of line duty hours that starts when a cabin crew reports duty and finishes on blocks or engines off on the final sector. The duty hours start when the cabin crew reports duty and finishes 30 minutes after on blocks or engines off on final sector. The cabin crew will have a 30 minutes debriefing after the engines are off. Therefore, the line duty hours are 30 minutes less than the duty hours. LDA varies based on the flight that the cabin crew is rostered to operate and the length of time spent on a flight. LDA is calculated down to the minute. No two flights produce the same amount of LDA. There are various factors that affect
the number of the line duty hours of a flight and therefore LDA a cabin crew earns. These factors include weather, wind speed, location of the gate, delay or cancellation of flights etc. When a flight is cancelled due to adverse weather, the cabin crew will not earn any LDA even if she is rostered on a flight on that day. If the flight is delayed because of some technical problems, the line duty hours will be longer and the cabin crew will earn more LDA. The rate of GDA is HK$73.2 per hour. Jenny receives GDA on the total number of ground duty hours. Very rarely would two flights depart at the same time. Again, factors such as weather, delay or cancellation of flights etc affect the Departure Time of a flight and therefore the GDA a cabin crew earns. If a cabin crew reports for duty and the flight is subsequently cancelled due to adverse weather, the cabin crew will earn GDA for the period between the time she reports duty and the time Cathay Pacific announces that the flight is cancelled. The ground duty hours could be longer or shorter than the period between the time required to report duty and the scheduled departure time. If the flight is cancelled before the time required to for report duty, the cabin crew will not receive any GDA. If the flight is delayed because of, say, some technical problems, the ground duty hours will be longer and the cabin crew will receive more GDA. Some flights depart earlier than others. There is no certainty on the number of ground duty hours. A cabin crew will not earn any LDA or GDA if she reports
sick on a day that she is rostered with flying duties. Crew members may swap duties among themselves and Cathay Pacific has the right to alter, vary or substitute the roster issued to a crew, as it considers appropriate to meet its operational requirements. Cathay Pacific pays LDA and GDA monthly at the end of the following month. Cathay Pacific contends that LDA and GDA are not "wages" that the Claimants "would have earned", rather it is something that the Claimants "might have earned" because there is no certainty on the amount of LDA or GDA that the Claimants will earn each month; that both LDA and GDA are paid only if a cabin crew has performed flying duties and that the Claimants are not always assigned with flying duties. After having carefully considered all evidence, I accept that LDA and GDA should not be regarded as wages that would have earned for the purpose of ss.41(1) and 41C(1) of the old EO because there is no workable mode of calculation for working out the amount of LDA and GDA that the Claimants would have earned during the leave period. I now turn to the question on whether LDA and GDA should be included in the calculation of the ALP and SHP in accordance with the old ss.41(2) and 41C(2) of the EO. In Lam Pik Shan v. Hong Kong Wing On Travel Services Ltd., CACV 394/2007, unreported, 9 May 2008, the Court of Appeal upheld the decision of the High Court that tips received by the Plaintiff (Respondent), a travel escort, should be included in the calculation of ALP and SHP. In the paragraph (1) of the Judgment, Hon. Rogers VP held,
"In that judgment (Lisbeth Enterprises Ltd. v. Mandy Luk (2006) 9 HKFAR 131) the Court of Final Appeal came to the conclusion that the provisions in the Employment Ordinance, Cap. 57 relating to commission were unworkable where the commission was calculated at rates that varied on a monthly basis. That is not the situation in this case, which relates to tips which are based on a daily rate. In the second place it is quite clear that the legislature intended that tips should be taken into account in calculating wages. That is the clear intention emerging from the Ordinance itself. I am fortified in that conclusion because in passing the Employment (Amendment) Ordinance 2007, and in particular sections 10-15, the legislature has removed any difficulty there might be in making the relevant calculations. In the absence of the new provisions, had there some supposed difficulty in the method of calculation, it would have been the function of this court to give effect to the manifest intention of the legislature that tips should be taken into account in the calculation." In the following paragraphs, Hon. Le Pichon JA held, "20. Prima facie, tips received from tour participants would fall squarely within the statutory definition of "wages". The real question is whether a workable mode of calculation exists for working out the net tips and whether it can be said to accrue daily. 21. As already noted, the discretionary nature of tips is not a bar (as distinct from the case of commissions) to their forming part of an employee's wages. Further any discretion in the payment of a tip would be that of the tour participant and not employer i.e. the tour operator. While
the amount of tips received per month may vary, depending on a number of factors including the number of days spent escorting tours, the type of tour, the number of persons joining the tours etc., in the present case, these factors do not pose any particular difficulty in the way of calculating daily wages. Not only is the rate of recommended tips made on a per person per day basis, the tips the tour guide/escort had to defray in the foreign country are also expressed in a similar fashion. Even if the tour guide does not receive his tips until the end of the tour, given that the duration of the tour is a fixed number of days, the net tips per day can be said to "accrue" on a daily basis and are readily calculable on the same basis." Notably, in Lam Pik Shan v. Hong Kong Wing On travel Services Ltd, the travel escort, like Becky and Vera, received a monthly salary. In Lam Pik Shan v. Hong Kong Wing On Travel Services Ltd, the travel escort was paid tips that were based on a daily rate. In the present case, LDA and GDA are not calculated at daily rate. It seems to me that for the old ss.41(2) and 41C(2) of EO to apply, however, it is not necessary that the wages shall be calculated at daily rate. The old ss.41(2) and 41C(2) of EO apply where an employee is employed on piece rates or where the daily wages of an employee vary from day to day. I hold that LDA is part of Becky and Vera's wages and GDA is part of Jenny's wages. In my view, inasmuch as an employee's wages are calculable daily, the old ss.41(2) and 41C(2) of EO may apply. As Hon Le Pichon JA held, "The real question is whether a workable mode of calculation exists for working out … and whether it can be said to accrue daily". LDA and GDA are calculated by minutes. There should be no difficulty in calculating the LDA and GDA already earned by the Claimants on any
given day. Therefore, even if the Claimants do not receive LDA and GDA until the end of the next month, given that LDA and GDA is calculable daily and therefore can be said to accrue daily, in my view, they can be said to be daily wages that vary from day to day. In Wong Yin Fong & Others v. ISS Hong Kong Services Ltd [2005] 2 HKLRD 648, Labour Tribunal Appeal 56 of 2003, 17-19 May and 28 June 2005, Court of First Instance, J Lam J held, "99. Although there are differences between the statutory scheme for rest days and that for annual leave, I think it is equally plain from the statutory scheme as analyzed above that the protection conferred under Pt. VIIIA by way of annual leave is to protect employees from the evils of continuously working without proper opportunity to rest. The Legislature obviously considered that it is important that an employer (p.679) should give an employee proper rest by way of annual leave. This explains the mandatory nature of annual leave, see the observations of A Cheung J in para. 33 of his judgment in Laing & Others v. Lisbeth Enterprises Ltd [2004] 3 HKC 548. Given its paternalistic nature, the statutory scheme strives to achieve through s.41C that an employee will not suffer any accompanying economic loss for not working during the leave period." The above-mentioned Judgment was delivered before Lisbeth Enterprises Ltd v Mandy Luk [2006] 9 HKFAR 131. It is worthy of noting that when the case went further to the Court of Appeal, Wong Yin Fong & Others v. ISS Hong Kong Services Ltd [2008] 1 HKLRD 63, 28 November 2007, Court of Appeal, Hon Cheung JA said, "52. Wong Ping Kong and Lam J's decision in the first
instance on section 41C were referred to by the Court of Final Appeal in Lisbeth Enterprises Ltd v. Mandy Luk [2006] 9 HKCFAR 132. In my view the Court of Final Appeal not only has not disapproved of these two cases but has actually approved them." Taking that the legislative intention is to achieve through s.41C that employees will not suffer any accompanying economic loss for not working during the leave period, given that s.41 is parallel to s.41C at this end, I am satisfied that Cathay Pacific should include LDA and GDA in the calculation of the Claimants’ ALP and SHP by using the following formulas, in accordance with the old ss.41(2) and 41C(2) of EO : ALP - (Total LDA/GDA earned during the month immediately preceding or expiring on the first day of the annual leave or on the day on which the contract of employment terminates, as the case may be) ÷ (Number of working days during the same period) SHP – (Total LDA/GDA earned during the month immediately preceding or expiring on the holiday or first day of the holiday) ÷ (Number of working days during the same period) I reckon that probably the parties will propound different modes of calculation for working out the number of working days for the purpose of the formulas. Becky and Vera are monthly salaried while Jenny is hourly paid. Does it mean that the whole month immediately preceding or expiring on the holiday or first day of the leave (i.e. 30 or 31 days) should
be counted as working days of Becky and Vera? Further or in the alternative, should only the days on which the Claimants are required to perform duties (in air and on ground) be counted as working days; should only the days on which Becky and Vera are required to perform duties in air (but not on ground) be counted as their working days, as LDA is payable due to time in air; should only the days on which Jenny is required to perform duties on ground (but not in air) be counted as her working days, as GDA is payable due to time on ground preparing to fly; should the days during which the Claimants are put on Standby duties be counted as working days; should the days during which the Claimants are put on Stop over in outports be counted as working days; and/or should the days during which Jenny earns Work credits and Leave credits be counted as her working days, for the purpose of the formulas? The parties reserve their respective positions on these questions. I shall leave them to be dealt with when the question of quantum arises. In any case, once these questions are resolved, the parties will have no difficulty in working out the amount that Cathay Pacific is liable to pay in compensation to the Claimants. DFSC Cathay Pacific would assign hourly paid crew members to conduct inflight duty free sales. Once an hourly paid crew is assigned, she has no choice but to perform the same as part of her duties. The details of Duty Free Sales Commission (“DFSC”) are set out in Cathay Pacific's Inflight Sales Commission Policy. DFSC is separated into Individual Commission, Team Award, BC Star Award and ISM Star Award. Individual cabin crew earns a flat rate of 3.5% of sales
made by her. The commission is paid at the end of the following month. Team Award is given to the top team with the best inflight sales performance. Crew members of the top team receive gifts as prizes. BC Star Award is given to top performers. ISM Star Award is given to the top Inflight Services Managers. During the trial hearing, Cathay Pacific’s representative accepted that DFSC is part of Jenny's wages. After having carefully considered all evidence, I am satisfied that DFSC is not of a gratuitous nature or payable only at Cathay's discretion. I hold that DFSC represents a component in Jenny's wages for work that she has done and is part of her wages. Cathay Pacific contends that DFSC is not "wages" that Jenny "would have earned", rather it is something that Jenny "might have earned" because : (1) Some, but not all, of the flights have inflight sales. There is no certainty that Jenny will be rostered on a flight that has inflight sales; (2) Not all crew members are entitled as of right to earn DFSC. The computer may assign a crew to be responsible for inflight sales and the Inflight Service Manager can always assign another crew to perform inflight sales; (3) The entitlement to DFSC depends on the flight Jenny is rostered on and whether or not she is assigned with the inflight sales duty. After having carefully considered all evidence, I accept that
DFSC should not be regarded as wages that would have earned for the purpose of the old ss.41(1) and 41C(1) of the EO because there is no workable mode of calculation for working out the amount of DFSC that Jenny would have earned during the leave period. I now turn to the question on whether DFSC should be included in the calculation of the ALP and SHP in accordance with the old ss.41(2) and 41C(2) of the EO. In my view, inasmuch as an employee’s wages are calculable daily, the old ss.41(2) and 41C(2) of the old EO may apply. In Lisbeth Enterprises Ltd v Mandy Luk, the employee who worked in a health and beauty club was entitled not only to a monthly salary but also to a commission on sales made by her. The contractual commission was calculated on a monthly basis, payable according to fluctuating monthly results on a sliding scale. Jenny’s case is different from Lisbeth Enterprises Ltd v Mandy Luk in that Jenny receives DFSC on the flat rate of 3.5% of the sales made by her. The upshot is that there would be no difficulty in calculating the amount of DFSC already made by Jenny on any given day (disregarding the Team Award gifts, BC Star Award and ISM Star Award), and therefore it can be said to accrue daily. Even if the Claimants do not receive DFSC until the end of the next month, given that DFSC can be said to accrue daily, it is daily wages that vary from day to day. Further or alternatively, apparently Jenny is employed on piece rate when she performs the duty free sales duty. By reason of matters aforesaid, I hold that Cathay Pacific should include DFSC in the calculation of Jenny's ALP and SHP by using the following formulas, in accordance with the provisions of the old ss.41(2) and 41C(2) of the EO : ALP - (Total DFSC earned during the month immediately preceding or expiring on the first day of the annual leave or
on the day on which the contract of employment terminates, as the case may be) ÷ (Number of working days during the same period) SHP – (Total DFSC earned during the month immediately preceding or expiring on the holiday or first day of the holiday) ÷ (Number of working days during the same period) Again, I shall deal with those questions regarding the mode of calculation for working out the relevant number of working days for the purpose of the formulas when the question of quantum arises. Has Jenny received any SHP at all? Clause 2.4(3) of the COS 2003 provides :- "Days Without Duties The Days Without Duties will include any statutory holidays (or alternative holidays) and rest days, as the case may be, to which a Cabin Attendant is entitled under the Employment Ordinance. Clause 5.3 of the COS 2003 provides :- "Statutory Holidays and Rest Days Statutory holidays and rest days are allocated to Cabin Attendants as Days Without Duties (please refer to paragraph 2.4(3) of these COS, above.)" Cathay Pacific intimates that, in addition to the Days Without Duties, Cathay Pacific also uses Standby duties (Jenny earns 1 credit hour
for each 3 hours of Standby duties) to discharge its obligation to provide Jenny with statutory holidays under the EO. I do not agree. It is clear from the above-mentioned contractual provisions that Cathay Pacific uses Days Without Duties to discharge its obligation to provide Jenny with statutory holidays under the EO. Unlike to the other two Claimants who are monthly paid crew, Jenny's wages are calculated on the numbers of flying hours she is able to achieve on a monthly basis. Her salary structure is not governed by the Master Pay Scale like the monthly paid crew members do. She does not enjoy the benefit of automatic annual increment along the Master Pay Scale. Generally, Jenny is rostered to not less than the value of 70 hours of flying duties each month. If she wants to earn more, she may swap flights with colleagues to fly more, thus earning the extra flying hours which are all calculated on the basis of HK$146.4 per hour. In practice, Jenny swapped flights with colleagues to fly less, thus receiving only the MGFP in many months. Her wages are linked to performance of flying duties, Work Credits and Leave Credits. Therefore, Jenny contends that Cathay Pacific has not paid her any SHP at all. Cathay Pacific contends that according to Clause 3.1 of the COS 2003, Jenny receives a monthly salary that is, rather than a specified amount in her contract, calculated with reference to MGFP that is paid regardless of the work or duty she may or may not have undertaken or been assigned to her during the month; that MGFP is payable due to time on duty as well as time not on duty in the same way as a worker is paid a
basic monthly salary but may also be entitled to monthly overtime if she works extra hours in that month. Clause 3.1 of the COS 2003 provides that Jenny will receive salaries calculated on a monthly basis. Having salaries calculated on a monthly basis does not mean that she is monthly salaried. Employees employed at piece rate or hourly rate may receive salaries calculated on a monthly basis. In my view, the payment structure of Jenny plainly shows that she is an hourly paid employee. Cathay Pacific pays Jenny MGFP at the value of 70 Block Hours, as it assumes that a cabin crew works 85 credit hours (inclusive of Block Hours flown) and 25.5 ground duty hours each month. It demonstrates that the MGFP relates to crew members’ flying duties rather than the Days Without Duties. For example, when an hourly paid cabin crew performs more than 70 flying hours in a month, she is paid by the actual flying hours plus any credits earned. It means that she will not reap any benefit from the MGFP, notwithstanding that Cathay Pacific may well provide her with Days Without Duties in that month. An hourly paid cabin crew is not paid for those Days Without Duties that coincide with the statutory holidays. In other words, in a month if there is a statutory holiday, she is still paid 70 flying hours plus the extra flying hours she has performed (if any) without any SHP. In my view, the corollary is that she does not receive any SHP. One can educe from Jenny’s salary structure that she does not
receive any payment for the Days Without Duties. In so far as Cathay Pacific uses Days Without Duties to discharge its obligation to provide Jenny with statutory holidays under the EO, Jenny does not receive any SHP. Ordinary Wages Prior to the amendments introduced by the EAO, s.42 of the EO provides :- "42 Ordinary wages instead of holiday pay, annual leave pay, maternity leave pay or sickness allowance Where, pursuant to the terms of his contract of employment or the terms of any other agreement or for any other reason, an employee is paid his ordinary wages in respect of any holidays, annual eave, maternity leave or sickness day, the employee shall not, in addition to such ordinary wages, be entitled to be paid holidays pay, annual leave pay, maternity leave pay or sickness allowance, as the case may be." The EAO repealed s.42 of EO. Cathay Pacific contends that the Claimants' monthly basic salary, together with other regular fixed monthly allowance, represents their "ordinary wages" for the purposes of s.42 of the EO. Mr Justice Rogers VP held at paragraph 21 of Lam Pik Shan v. Hong Kong Wing On Travel Services Ltd, "21. As regards section 42 of the Ordinance, I see no
basis for restricting the meaning of "ordinary wages" to the bare, almost notional, payment under clause 7 of the agreement. In my view "ordinary wages" has no other meaning than "wages" as used in the Ordinance." Such view was echoed by the Honorable Mr. Justice Cheung JA in Fong Mung Yan v. ISS Hong Kong Service Limited, at paragraph 49 where the learned Judge said, "49. In my view section 42 does not assist the Defendant. This section merely prevents the worker from receiving a double benefit. It provides no answer to the question whether wages include attendance bonus. In my view there is no distinction between the term "wages" as defined by section 2(1) and ''ordinary wages' referred to in section 42." I hold that s.42 of does not assist Cathay Pacific. S.40 of the EO In relation to the payment of SHP, s.40 of the EO provides : "40. Payment of holiday pay Subject to section 12(11), an employee who has been employed by his employer under a continuous contract for a period of 3 months immediately preceding a statutory holiday shall, not later than the day on which the employee is next paid his wages after that holiday, be paid by his employer holiday pay at the rate specified in section 41, whether the employee takes a holiday on the statutory holiday or on an alternative or substituted holiday or a holiday
under section 39(4)." This section is applicable both prior to and after the introduction of the EAO. Cathay Pacific contends that by virtue of the provisions of s.40, to the extent that the Claimants worked on a statutory holiday, the wages paid to them in respect of that statutory holiday (which she worked) constitute their full entitlement under the EO in respect of that statutory holiday. In these circumstances, the Claimants will have received the amount they "would have earned" on the statutory holiday. In effect, Cathay Pacific rigidly construes "that holiday" referred to in s.40 as the statutory holiday. In my view, "that holiday" plainly means the holiday actually taken by the employee, whether the employee takes a holiday on the statutory holiday or on an alternative or substituted holiday or a holiday under s.39(4). Were Cathay Pacific's construction acceptable, an employer would have no obligation under the EO to pay SHP in respect of an alternative or substituted holiday. That must be wrong. Contractual Annual Leave Pay Clause 16(A) of the COS 1986 provides :- "Annual Leave – Cabin crew will be granted three weeks’ paid leave per year. In the first year cabin crew do not qualify for annual leave until they have completed nine months’ service. After completing five years of service, cabin crew will be granted four weeks’ paid leave per year. After completing ten years of service, cabin crew will be
granted five weeks’ paid leave per year." Clause 12(A) of the COS 1993 provides :- "Annual Leave – Cabin Attendants will be granted three weeks’ paid leave per year. In the first year Cabin Attendants do not qualify for annual leave until they have completed probation. After completing five years of service, Cabin Attendants will be granted four weeks’ paid leave per year. After completing ten years of service, Cabin Attendants will be granted five weeks’ paid leave per year. Leave shall be taken in accordance with the leave roster system established by the Company. The taking of leave will be subject to the exigencies of service as determined by the Company. " Clause 5.1 of the COS 2003 provides :- "Annual Leave The Company operates a common leave year from 1 January to 31 December. Cabin Attendants are eligible to apply for and take annual leave in accordance with Company Policies. Annual leave will be granted subject to the needs of the Company, determined in its discretion from time to time. A Cabin Attendant is expected to take all annual leave within the current leave. Annual leave cannot be carried forward without prior written approval of the Company. Advance annual leave may be granted at the Company’s sole discretion. If granted, the Cabin Attendant’s annual leave entitlement for the ensuing period will be adjusted accordingly. If, upon leaving the employment of the Company, a Cabin Attendant has taken annual leave in excess of the Cabin Attendant’s pro-rata annual leave entitlement, calculated
to cessation of employment, the final payment made to the Cabin Attendant will be adjusted accordingly." The Company Policy provides Jenny’s AL entitlement as follows :- "Cabin crew who join on or after 01 September 1996: Flight Attendant or Flight Purser with less than 5 years of service as cabin crew, 21 days of leave entitlement Flight Attendant or Flight Purser with more than 5 years of service as cabin crew, 24 days of leave entitlement Senior Purser or Inflight Service Manager, 28 days of leave entitlement" Section 2 of the EO provides that "annual leave" means the annual leave provided for in Part VIIIA and "annual leave pay" means the annual leave pay required by the EO to be paid in respect of a period of annual leave provided for in Part VIIIA in respect of a period of annual leave required to be paid under section 41D. Therefore, Cathay Pacific contends that the provisions in the EO relation to annual leave and annual leave pay are applicable only to statutory annual leave (a maximum of 14 days); that the statutory provisions do not apply to leave granted by an employer in excess of the statutory annual leave and that leave granted in excess of the statutory requirement. In other words, contractual annual leave, including the taking and the payment of such leave, is therefore governed solely by the terms of the relevant employment contract, which fall to be interpreted and construed in accordance with general contractual principles. Cathay Pacific contends that on the basis of general
contractual principles of construction and on the basis of plain common sense, the expression "paid leave" means leave of absence from work with the payment of basic salary and those allowances to which a cabin attendant is entitled by virtue of his or her position i.e. title and appointment allowances, but excluding allowances which arise by virtue of the actual performance of in flight or other specific duties, such as OA, LDA and GDA and which plainly do not arise at all during periods of leave. I accept that the Claimants' contractual AL is governed by the terms of the employment contract. The COS are drafted in details. Upon reading the relevant provisions of the COS, I observe that they do not make any distinction between a cabin crew's statutory and contractual annual leave payment. In practice, there is no way to tell when the Claimants take AL, whether they are on the statutory or contractual AL. As a matter of construction of the employment contract, I take the starting point that the calculation of the ALP regarding all AL provided by the employment contract is equal. In Wong Yin Fong & others v. ISS Hong Kong Services Ltd, J Lam J held that "Given its paternalistic nature, the statutory scheme strives to achieve through s.41C that an employee will not suffer any accompanying economic loss for not working during the leave period". In the present case, Cathay Pacific takes into account of the numbers of days of AL taken by Becky and Vera to calculate their Excess Flying Pay ("EFP") (See Clause 6 of COS 1986 and Clause 5 of COS 1993 for EFP’s meaning). Jenny's situation is similar. Cathay Pacific takes into account the number of hours flown as well as credits earned by reasons of leave (including AL) to calculate MGFP and Jenny's wages. Jenny earns
3.25 leave credits per day of AL. Such arrangements suggest that the parties are also prepared to make provision for making up a cabin crew’s accompanying economic loss for not working during the leave period. Conversely, Cathay Pacific contends that on the basis of plain common sense, allowances that arise by virtue of the actual performance of duties such as LDA and GDA should be excluded in calculating ALP and SHP. Courts will imply terms into individual contracts on the ground of business efficacy but it is nothing to do with making things reasonable or fair. All in all, I am not persuaded by Cathay Pacific's common sense approach. After having carefully considered all evidence, I take the view that there is no contractual basis to calculate the ALP attributable to the statutory and contractual AL differently. Conclusion I hold that Jenny is hourly paid. Therefore, she is employed on daily wages that vary from day to day. In accordance with the old s.41(2) of EO, her holiday pay shall be a sum equivalent to the average of the daily wages earned by her on each day on which she worked during every complete wage period, comprising not less than 28 days and not more than 31 days, immediately preceding or expiring on the holiday or first day of the holiday. In my view, she does not receive any SHP. In accordance with the old s.41C(2) of EO, her annual leave pay shall be calculated by reference to the average of the daily wages earned by her on each day on which she worked during every complete wage period, comprising not less than 28 days and not more than 31 days, immediately preceding or expiring on the first day of the annual leave or on the day on which the contract of employment terminates, as the case may be. Account will be taken into ALP that were already paid by Cathay Pacific.
In conclusion, I hold that Cathay Pacific should calculate and pay Becky and Vera shortfalls in the amounts of ALP and SHP in the manners as set out in the above paragraph 102 and should calculate and pay Jenny shortfalls in the amounts of ALP and SHP in the manners as set out in the above paragraphs 102, 108 and 140, but it is not required to include OA in the calculation of ALP and SHP. The parties shall make arrangements with the case Tribunal Officer for the purpose of fixing a mutually convenient date for a mention hearing on the question of quantum. Costs reserved.  (K.K. PANG) Deputy Presiding Officer  
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LBTC 2829/2008 IN THE LABOUR TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CLAIM NO. LBTC 2827/2008, 2828/2008 & 2829/2008 __________________________________ BETWEEN LBTC 2827/2008 LBTC 2828/2008 LBTC 2829/2008 KWAN SIU WA BECKY WU YEE MEI VERA HO KIT MAN JENNY CLAIMANTS   and    CATHAY PACIFIC AIRWAYS LIMITED DEFENDANT   __________________________________ Coram: Pang Ka Kwong, Deputy Presiding Officer Date of Trial: 22, 23 & 24 December 2008, 12 January 2009 Date of Decision on Liability: 12 January 2009 Date of Reasons for Decision on Liability: 12 January 2009 Date of Corrigendum: 22 January 2009 __________________________________ CORRIGENDUM The quoted provisions of ss.41 and 41C of the Employment (Amendment) Ordinance on pp. 12-15 should be amended as shown in red in the Attachment to this Corrigendum.
(Yau Wai-yuen) Clerk to Pang Ka Kwong, Deputy Presiding Officer
he worked during every complete wage period, comprising not less than 28 days and not more than 31 days, immediately preceding or expiring on the first day of the annual leave or on the day on which the contract of employment terminates, as the case may be." 33. Following the introduction of the EAO, the provisions for calculating SHP and ALP are :- (i) SHP "41. Rate of Holiday pay (1) For the purposes of subsections (2), (3) and (4), "wages"(工資) includes any sum paid by an employer in respect of - (a) a day of maternity leave, a rest day, a sickness day, a holiday or a day of annual leave taken by the employee; (b) a day of leave taken by the employee with the agreement of his employer; (c) a normal working day on which the employee is not provided with work; (d) a day of absence from work of the employee due to temporary incapacity for which compensation is payable under section 10 of the Employees' Compensation Ordinance (Cap. 282). (2) The daily rate of holiday pay is a sum equivalent to the daily average of the wages earned by the employee during - (a) the period of 12 months immediately before the holiday or first day of the holidays (as appropriate); or
(b) if the employee has been employed by the employer concerned for a period shorter than 12 months immediately before the holiday or first day of the holidays (as appropriate), the shorter period. (3) In calculating the daily average of the wages earned by an employee during the period of 12 months or the shorter period - (a) any period therein for which the employee was not paid his wages or full wages by reason of - (i) any maternity leave, rest day, sickness day, holiday or annual leave taken by the employee; (ii) any leave taken by the employee with the agreement of his employer; (iii) his not being provided by his employer with work on any normal working day; or (iv) his absence from work due to temporary incapacity for which compensation is payable under section 10 of the Employees' Compensation Ordinance (Cap. 282); and (b) any wages paid to him for the period referred to in paragraph (a), are to be disregarded. (4) For the avoidance of doubt, if the amount of the wages paid to an employee in respect of a day specified in subsection (1) is only a
fraction of the amount earned by the employee on a normal working day, the wages and the day are to be disregarded in accordance with subsection (3). ….." (ii) ALP "41C Rate of annual leave pay (1) For the purposes of subsections (2), (3) and (4), "wages"(工資) includes any sum paid by an employer in respect of - (a) a day of maternity leave, a rest day, a sickness day, a holiday or a day of annual leave taken by the employee; (b) a day of leave taken by the employee with the agreement of his employer; (c) a normal working day on which the employee is not provided with work; (d) a day of absence from work of the employee due to temporary incapacity for which compensation is payable under section 10 of the Employees' Compensation Ordinance (Cap. 282). (2) The daily rate of annual leave pay is a sum equivalent to the daily average of the wages earned by the employee during - (a) the period of 12 months immediately before the day of annual leave, the first day of the annual leave or the date of termination of the contract of employment (as appropriate); or (b) if the employee has been employed by the employer concerned for a period shorter than 12 months immediately before the
day of annual leave, the first day of the annual leave or the date of termination of the contract (as appropriate), the shorter period. (3) In calculating the daily average of the wages earned by an employee during the period of 12 months or the shorter period - (a) any period therein for which the employee was not paid his wages or full wages by reason of - (i) any maternity leave, rest day, sickness day, holiday or annual leave taken by the employee; (ii) any leave taken by the employee with the agreement of his employer; (iii) his not being provided by his employer with work on any normal working day; or (iv) his absence from work due to temporary incapacity for which compensation is payable under section 10 of the Employees' Compensation Ordinance (Cap. 282); and (b) any wages paid to him for the period referred to in paragraph (a), are to be disregarded. (4) For the avoidance of doubt, if the amount of the wages paid to an employee in respect of a day specified in subsection (1) is only a fraction of the amount earned by the employee
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LBTC 2829/2008
IN THE LABOUR TRIBUNAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CLAIM NO. LBTC 2827/2008, 2828/2008 & 2829/2008
__________________________________
BETWEEN
__________________________________
Coram: Pang Ka Kwong, Esq., Deputy Presiding Officer
Date of Trial: 22, 23 & 24 December 2008, 12 January 2009
Date of Decision on Liability: 12 January 2009
Date of Reasons for Decision on Liability: 12 January2009
__________________________________
Reasons for Decision on Liability
The trial proceedings use the Chinese language. The parties agree that I can deliver this Reasons for Decision on Liability in the English language.
The parties reserve their respective positions on quantum.
Under paragraph (a) 1 of the Claimants’ respective Form 2, the Claimants stated that their grounds for the claims include :-
(a) “Failure to grant statutory holidays”
(b) “Failure to grant annual leaves”.
The Claimants do not pursue the claims under paragraph (a) 1.
Claim
The present claims are for "shortfalls" in the amounts of Statutory Holiday Pay ("SHP") and Annual Leave Pay ("ALP") that were paid by Cathay Pacific, such shortfalls allegedly arising from the non-inclusion of Line Duty Allowance ("LDA"), Outport Allowance ("OA"), Ground Duty Allowance ("GDA") and Duty Free Sales Commission ("DFSC") in calculating SHP and ALP.
In material, there is no dispute on the background facts of the cases.
Kwan Siu Wa Becky ("Becky")
By a letter of appointment dated 20th September 1975, Becky joined Cathay Pacific as a Junior Flight Hostess of the cabin crew.
She was promoted to the post of Chief Purser L1011 on 18th September 1987. The post was retitled to Inflight Service Manager on 1st April 1999 and she remains in the same position to date. She is required to perform duties in air and on ground as Cathay Pacific directs.
Becky is a monthly paid cabin crew. She receives a basic salary and title allowance of HK$23,883 and HK$11,501 respectively each month. In addition, she receives various allowances such as LDA and OA.
By 2002 Becky has served Cathay Pacific for more than 10 years and therefore she is entitled to 5 weeks' paid annual leave and 94 Guaranteed Days Off ("GDOs") each year.
Additionally, Cathay Pacific provides Becky with the following days without work :-
(a) Short Break - A period, at or away from base, of at least 34 hours and including 2 local nights during which a crew members are not required to perform any duty.
(b) Stop over in outports - A period commencing after the scheduled arrival time of crew at an outport until 60 minutes before the scheduled departure time. Crew members are not required to perform any duty during the stop over.
(c) Standby duty also known as reserve duty (without being called out) – Crew members are scheduled for standby duty period specified on the front sheet of the roster. The actual period scheduled varies from roster to roster. Crew members will be notified within their standby period to operate a flight if it is required.
(d) Guaranteed Days Off ("GDOs") - these are essentially days without work and are further explained below.
Clause 16(C) of Conditions of Service 1986 (“COS 1986”) provides :-
"Guaranteed Days Off (GDO) - the annual GDO count for cabin crew on line flying will be based on two days off per week less the period of the cabin crew member's annual leave entitlement, i.e. those cabin crew entitled to three weeks annual leave per year will be entitled to 98 GDO's, those cabin crew with four weeks annual leave per year will be entitled to 96 GDO's and those cabin crew entitled to five weeks annual leave will be entitled to 94 GDO's.
Cabin crew required to operate on a 'G' day will be given the option of having another 'G' day at a mutually convenient time or payment at the rate of HK$40 per flying hour for the duration of the flight. Such payment will be made only for the first 24 hours involved. If payment is made then these GDOs will be deducted from the annual GDO entitlement.
Rules contained in Operations Manual. Volume 1 Part 2 will apply."
Wu Yee Mei Vera ("Vera")
By a letter of appointment, dated 12th June 1995, Vera joined Cathay Pacific as a cabin attendant. She was promoted to the post of purser on 1st December 2000 and remains in the same position to date. She is required to perform duties in air and on ground as Cathay Pacific directs.
Vera is a monthly paid cabin crew. She receives a basic salary and title allowance of HK$20,139 and HK$2,370 respectively each month. In addition, she receives various allowances such as LDA and OA.
Between June 1995 and May 2000, Vera is entitled to 3 weeks' paid annual leave and 98 GDOs each year. Between June 2000 and May 2005, she is entitled to 4 weeks' paid annual leave and 96 GDOs each year. By June 2005, she is entitled to 5 weeks' paid annual leave and 94 GDOs each year.
Additionally, Cathay Pacific provides Vera with the following days without work :-
(a) Short Break;
(b) Stop over in outports;
(c) Standby duty also known as reserve duty (without being called out);
(d) Guaranteed Days Off ("GDOs") (see explanation below).
Clause 13(b) of Conditions of Service 1993 (“COS 1993”) provides :-
"Those Cabin Attendants entitled to three weeks annual leave per year will be entitled to 98 GDOs, those Cabin Attendants entitled to four weeks annual leave per year will be entitled to 96 GDOs and those Cabin Attendants entitled to five weeks annual leave will be entitled to 94 GDOs. In any of the above case, the number of GDOs granted includes days off in lieu of the statutory holidays to which a Cabin Attendant would otherwise be entitled pursuant to the Employment Ordinance of Hong Kong"
The details of the Short Break, Stop over in outports, Standby duty also known as reserve duty and GDOs are the same in Vera's case as in Becky's case.
Ho Kit Man Jenny ("Jenny")
By a letter of appointment, dated 19th January 2005, Jenny joined Cathay Pacific as a Flight Attendant of the Inflight Services Department and she remains in the same position to date. She is required to perform duties in air and on ground as Cathay Pacific directs.
Cathay Pacific pays Jenny Minimum Guaranteed Flying Pay ("MGFP") at the value of 70 Block Hours (see explanation below) i.e. 70 hours X HK$146.4 per hour = HK$10,248 per month.
The payment structure of Jenny is set out in Clause 3 of the COS 2003, Clause 3.1 of which provides :-
"Salary
Cabin Attendants will (subject to any provisions stated in the Letter as to probation or otherwise) receive a salary calculated on a monthly basis.
Salary will be calculated with reference to the Minimum Guaranteed Flying Pay. If the total value of a Cabin Attendant's Block Hours and Credits in the relevant month exceeds the Minimum Guaranteed Flying Pay, he or she will receive a salary calculated by reference to the actual Block Hours flown and Credits earned in that month.
The applicable payment rate of a Block Hour, and the number of Block Hours assigned to Cabin Attendants, will be determined by the Company from time to time and notified to the Cabin Attendant.
For the purposes of these COS:
Block Hours are the hours between Departure Time and Arrival Time (or otherwise, as amended or determined by the Company in its absolute discretion from time to time).
Credits comprise :
(i) Work Credits : these are credits received for absences from flight duties by reason of, for example, Reserve Duty or Special Duties; and
(ii) Leave Credits : these are credits received for absences from flight duties by reason of leave. Leave Credits may include payment additional to the paid time off that a Cabin Attendant receives as such leave pursuant to these COS. (However, for the avoidance of doubt, the Company's use of a formula which records Leave Credits for the purpose of computation of salary does not create any entitlement to payment additional to the actual paid time off taken, except and to the extent determined by the Company from time to time.)
The type and value of credits available to Cabin Attendants will be determined by the Company and notified to the Cabin Attendants, from time to time, having regard to relevant Company Policies."
Credits that Jenny may earn include :-
(i) Work Credits : Jenny earns credits for absences from flight duties by reason of :-
Training - 4.65 credit hours for each calendar day of training;
Special duties - 4.65 credit hours for each calendar day of special duties;
Standby duties - 1 credit hour for each 3 hours of standby duties;
Duty travel - 0.5 credit hour for each 1 hour of duty travel.
(ii) Leave credits : Jenny earns 3.25 credit hours for each day of leave taken.
The credit of 3.25 block hours for each day of leave is calculated by reference to the following mathematical formula. Cathay Pacific assumes that a cabin crew works 85 credit hours (inclusive of Block Hours flown) and 25.5 ground duty hours (see explanation in paragraph 83 below) each month. Ground duty hours worth 50% of Block Hours. Therefore, total monthly credit hours for such crew member are :-
85 + (25.5 ÷ 2) = 97.75
This figures is then averaged over 30 days to give a standard credit of 3.25 block hours for each day of leave taken.
In addition, Jenny receives various allowances such as OA, GDA and DFSC. Jenny does not receive LDA, whilst Becky and Vera do not receive GDA or DFSC.
With less than 5 years’ service, she is entitled to 21 days' paid annual leave.
Additionally, Cathay Pacific provides Jenny with the following days without work :-
(a) Short Break
(b) Stop over in outports
(c) Standby duty also known as reserve duty (without being called out)
(d) Days Without Duties - see explanation below.
The details of Short Break, Stop over in outports and Standby duty are the same in Jenny’s case as in Vera and Becky’s case.
Clause 2.4(3) of the Conditions of Service 2003 (“COS 2003”) provides :-
"Days Without Duties
The company will periodically issue rosters for Cabin Attendant Days Without Duties. These rosters will apply for the stated time period.
The Days Without Duties will include any statutory holidays (or alternative holidays) and rest days, as the case may be, to which a Cabin Attendant is entitled under the Employment Ordinance.
For operational reasons, the Company reserves the right to require Cabin Attendants to work on any Day Without Duties subject to and in accordance with the provisions of the Employment Ordinance."
The Issues
Despite that Becky and Vera are employed under different COS, they are in the same position for the purpose of the present claims. They contend that Cathay Pacific should include OA and LDA in the calculation of their ALP and SHP in accordance with the old ss.41 and 41C of the Employment Ordinance (“EO”). Jenny contends that Cathay Pacific should include OA, GDA and DFSC in the calculation of her ALP and SHP in accordance with the old ss.41 and 41C of EO. Jenny also contends that as she is hourly paid, Cathay Pacific has not paid her any SHP on her statutory holidays.
Cathay Pacific denies that OA, LDA, GDA and DFSC are required to be included in the calculation of SHP and ALP. Cathay Pacific also contends that Jenny is paid a monthly salary that is calculated with reference to the MGFP and, therefore, it has already paid Jenny’s SHP.
The Employment Ordinance ("EO")
The following provisions are relevant to the present claims :
“2. Interpretation
(1) In this Ordinance, unless the context otherwise requires
"wages"(工資), subject to subsections (2) and (3), means all remuneration, earnings, allowances including traveling allowances and attendance allowances, attendance bonus, commission, overtime pay, tips and service charges, however designated or calculated, capable of being expressed in terms of money, payable to an employee in respect of work done or to be done under his contract of employment, but does not include
(d) any sum payable to the employee to defray special expenses incurred by him by the nature of his employment;”
The old s.41 of the EO (prior to the changes introduced by the Employment (Amendment) Ordinance ("EAO") in July 2007) provides :
"41 Rate of Holiday Pay
(1) Holiday pay shall be a sum equivalent to the wages which the employee would have earned on a full working day.
(2) Notwithstanding subsection (1), where an employee is employed on piece rates or where the daily wages of an employee vary from day to day, the holiday pay shall be a sum equivalent to the average daily wage earned by the employee, and for the purposes of this subsection the average daily wage shall be the average of the daily wages earned by the employee on each day on which he worked during every complete wage period, comprising not less than 28 days and not more than 31 days, immediately preceding or expiring on the holiday or first day of the holiday."
The old s.41C of EO (prior to the changes introduced by the EAO) provides :
"41C. Rate of Annual LeavePay
(1) Annual leave pay shall, subject to subsection (2), be a sum equivalent to the wages which the employee would have earned if he had worked every day during the period of annual leave.
Where an employee is employed on piece rates or where the wages of an employee vary from day to day, the annual leave pay shall be calculated by reference to the average daily wage earned by the employee, and for the purposes of this subsection the average daily wage shall be the average of the daily wages earned by the employee on each day on which he worked during every complete wage period, comprising not less than 28 days and not more than 31 days, immediately preceding or expiring on the first day of the annual leave or on the day on which the contract of employment terminates, as the case may be."
Following the introduction of the EAO, the provisions for calculating SHP and ALP are :-
(i) SHP
"41. Rate of Holiday pay
(1) For the purposes of subsections (2), (3) and (4), "wages"(工資) includes any sum paid by an employer in respect of -
(a) a day of maternity leave, a rest day, a sickness day, a holiday or a day of annual leave taken by the employee;
(b) a day of leave taken by the employee with the agreement of his employer;
(c) a normal working day on which the employee is not provided with work;
(d) a day of absence from work of the employee due to temporary incapacity for which compensation is payable under section 10 of the Employees' Compensation Ordinance (Cap 282).
(2) The daily rate of holiday pay is a sum equivalent to the daily average of the wages earned by the employee during -
(a) a period of 12 months immediately before the holiday or first day of the holidays (as appropriate); or
(b) if the employee has been employed by the employer concerned for a period shorter than 12 months immediately before the holiday or first day of the holidays (as appropriate), the shorter period.
(3) In calculating the daily average of the wages earned by an employee during the period of 12 months or the shorter period -
(a) any period therein for which the employee was not paid his wages or full wages by reason of -
(i) any maternity leave, rest day, sickness day, holiday or annual leave taken by the employee;
(ii) any leave taken by the employee with the agreement of his employer;
(iii) his not being provided by his employer with work on any normal working day; or
(iv) his absence from work due to temporary incapacity for which compensation is payable under section 10 of the Employees' Compensation Ordinance (Cap 282); and
(b) any wages paid to him for the period referred to in paragraph (a).
(4) For the avoidance of doubt, if the amount of the wages paid to an employee in respect of a day specified in subsection (1) is only a fraction of the amount earned by the employee on a normal working day, the wages and the day are to be disregarded in accordance with subsection (3).
….."
(ii) ALP
"41C Rate of annual leave pay
(1) For the purposes of subsections (2), (3) and (4), "wages"(工資) includes any sum paid by an employer in respect of -
(a) a day of maternity leave, a rest day, a sickness day, a holiday or a day of annual leave taken by the employee;
(b) a day of leave taken by the employee with the agreement of his employer;
(c) a normal working day on which the employee is not provided with work;
(d) a day of absence from work of the employee due to temporary incapacity for which compensation is payable under section 10 of the Employees' Compensation Ordinance (Cap 282).
(2) The daily rate of holiday pay is a sum equivalent to the daily average of the wages earned by the employee during -
(a) a period of 12 months immediately before the holiday or first day of the holidays (as appropriate); or
(b) if the employee has been employed by the employer concerned for a period shorter than 12 months immediately before the holiday or first day of the holidays (as appropriate), the shorter period.
(3) In calculating the daily average of the wages earned by an employee during the period of 12 months or the shorter period -
(a) any period therein for which the employee was not paid his wages or full wages by reason of -
(i) any maternity leave, rest day, sickness day, holiday or annual leave taken by the employee;
(ii) any leave taken by the employee with the agreement of his employer;
(iii) his not being provided by his employer with work on any normal working day; or
(iv) his absence from work due to temporary incapacity for which compensation is payable under section 10 of the Employees' Compensation Ordinance (Cap 282); and
(b) any wages paid to him for the period referred to in paragraph (a).
(4) For the avoidance of doubt, if the amount of the wages paid to an employee in respect of a day specified in subsection (1) is only a fraction of the amount earned by the employee on a normal working day, the wages and the day are to be disregarded in accordance with subsection (3).
….."
The EAO
Since the EAO takes effect, Cathay Pacific has included LDA, GDA and DFSC in calculating SHP and ALP. OA is not included in the calculation of SHP and ALP even after the introduction of the EAO.
Analysis and Findings
OA
Becky is employed under Conditions of Service 1986 ("COS 1986").
Clause 5(C) of COS 1986 provides :
Outport Allowance
"Overnight, meal and laundry allowances will be paid in accordance with the rates laid down in Operations Manual, Volume 1, Part 4."
OA is known as "Overnight allowances" in Operations Manual, Volume 1, Part 4, which provides (among other things) :
"Overnight allowances are reviewed bi-annually and on any change of hotel. They are intended to cover reasonable out-of-pocket expenses.
Vera is employed under Conditions of Service 1993 ("COS 1993").
Clause 15(ii) of the COS 1993 provides,
"Whilst Cabin Attendants are on duty in outports, they will receive overnight, meal and laundry allowances in accordance with the policy and rates laid down in Operations Manual, Vol. 1 Part 2 and 4 as amended from time to time and/or such other allowances or meal arrangements a published from time to time.
Jenny is employed under Conditions of Service 2003 ("COS 2003").
Clause 1.3 of the COS 2003 provides :-
"In addition to the duties and obligations set out in these COS, the Cabin Attendant is also required to comply with Company Policies."
Clause 4.1 of the COS 2003 provides :-
"4.1 Outport facilities and reimbursement
Subject to Company Policies in force from time to time, a Cabin Attendant who is required to stay at an Outport between flying duties may be provided:
(i) rest facilities and accommodation; and
(ii) reimbursement of expenses for necessary meals and other expenditure incurred during the stay.
4.2 Other benefits
A Cabin Attendant may be entitled or eligible to receive other benefits offered or provided by the Company in accordance with the relevant Company Policies."
Clause 10 of the COS 2003 provides that "Company Policies" means :-
"the provisions of that document produced by the Company entitled the Operations Manual, as in force from time to time, and any other policies, schemes, rules and regulations relating to or arising from employment which may be issued, and amended or varied by the Company in its discretion from time to time. Such Operations Manual, policies, schemes, rules and regulations are collectively referred to in these COS as "Company Policies", and references in these COS to Company Policies shall where the context permits be construed accordingly."
Clause 5.1 of the Operations Manual, Volume 6, Part 1 provides :-
"At each outport a schedule of meal and overnight allowance has been established. These allowances are reviewed bi-annually in order to meet price changes. The allowances are intended to meet reasonable costs. Upon arrival at an outport where a stopover is scheduled crew members will be issued with the cash allowance by the hotel in accordance with the schedule, and based on a telex from Crew Control."
Although their entitlement is arising from difference contractual provisions, the details of OA are the same in all Claimants’ case.
OA is calculated by reference to a formula agreed with the Fight Attendants Union (“FAU”) that takes account of the actual cost of meals and services at the relevant crew hotel. The amount of each item of OA is determined by reference to the costs in the designated crew hotel in each port. In practice, reviews of the allowance are held twice a year and adjustments will also be made whenever there is a change in crew hotel. The allowance may decrease as well as increase. OA includes :-
meal allowance;
allowance in case of delayed and rescheduled flight;
incidental allowance ("IA");
laundry allowance;
duty travel expenses and management crew allowance;
taxi allowance; and
Indian port allowance.
Meal allowance will be paid if crew members are rostered on flight that requires a stopover at an outport that exceeds 2 hours and the stopover includes any part of the following period :
(i) Breakfast - 0600 to 0859;
(ii) Lunch - 1200 to 1359;
(iii) Dinner - 1800 to 2159.
When the stopover time falls between 0600-0859 of the local time, crew members will be paid an amount in respect of breakfast. The calculation is based on the hotel coffee shop prices for full American breakfast consists of fruit juice, two eggs with ham or bacon or sausage, toast with jam or marmalade and coffee, or the breakfast set rate covering all the above items, whichever the least expensive.
When the stopover time falls between 1200-1359 of the local time, the amount paid in respect of lunch will not be less than a set lunch menu consisting of soup of the day, a chicken dish, medium priced dessert and coffee in the medium priced Western style restaurant in the crew hotel.
When the stopover time falls between 1800-2159 of the local time, crew members will be paid an amount in respect of dinner. The calculation of the amount in respect of dinner is based on the crew hotel medium priced Western style restaurant. If no medium restaurant exists in the hotel then the prices will be based on the most expensive hotel coffee shop price or the lower end of the top class hotel restaurant. The amount covers a medium priced steak, a medium priced dessert and coffee in a set menu.
Delayed flights allowance will be paid if crew members are in the airport and the flight delays for more than 30 minutes. Operations Manual Volume 1, Part 4, Clause 2.1C(a) provides :
"Delayed Flights
If the crew are at the airport, refreshment chit or reimbursement up to a maximum of HK$90 will be authorized if the delay exceeds 30 minutes."
As to rescheduled flight allowance, if crew members are required to stay at the airport, meal vouchers will be given. When crew members are required to stay at the hotel, meal allowance will be provided if the rescheduled stopover includes any part of the period stated in the above.
In respect of IA, Clause 2.1(D) of Operations Manual, Volume 1, Part 4 provides :
"D. Incidental Allowance
An incidental allowance will be paid when a stopover exceeds 6 hours. If a stopover exceeds 30 hours, a second incidental allowance will be paid. A third incidental allowance will be paid if a stopover exceeds 54 hours and so on. During a continuous duty period if a stopover exceeds 6 hours an incidental allowance will be paid."
Crew members on "shuttle" duties are deemed to be on continuous duty for the purpose of qualifying for overnight allowance. An example of a "shuttle" duty is Paris-Manchester-Paris. No allowance is paid for crew members operating shuttle duties from their homeports.
IA is calculated based on two times flag fall in an air-conditioned taxi to and from places for a beer or drinks, eight km or five miles total, two small local beers in the crew hotel bar or crew lounge and a tip for one small suitcase.
The provision of IA is similar to that of "Overnight Allowance" in Clause 5.5 of the Operations Manual, Volume Part 1. There is no provision on IA in Operations Manual, Volume 6 Part 1.
Laundry allowance is paid on the 3rd night and consecutive nights away from home base. The laundry allowance calculation is based on costs in the crew hotel to launder one shirt, one undershirt, one pair of underpants, one pair of socks and one handkerchief.
Taxi allowance will be paid if crew members incur cost on taxi journey between the airport and the hotel. Taxi allowance will not normally be paid when Cathay Pacific or the hotel provides transport or where the hotel operates regular shuttle bus service between the airport and the hotel.
Indian port allowance is simply the overnight allowances where crew members fly into Indian ports. The only difference is that the allowance for Indian ports is paid in Hong Kong instead of overseas.
The parties dispute where crew members are put in a hotel that is more expensive than the designated crew hotel in an ad hoc situation, if they want to receive OA that is calculated according to the higher of the different hotel tariffs, whether receipts are required to prove that extra out-of-pocket expenses are incurred. The Claimants testified that in their personal experience, receipts were never required. Ms Li Ka Lia Elizabeth, Cathay Pacific’s representative do not have personal experience in the matter. I accept that the Claimants are honest witnesses and their testimony is reliable. After having carefully considered all evidence, I accept that in such case, in practice, receipts will not be required.
Usually, crew members are not required to demonstrate that they actually incur any expense while working away from home base.
The Claimants produced a 1994 Year and Review Agreement between Cathay Pacific and FAU the contents of which show that there were discussions to change the manner of calculation of OA from meals basis to time basis. In this respect, however, no change has been agreed.
The rate of LDA(A) is four times more than that of LDA(B) (See paragraph 86 below). Becky explained that it is because crew members do not earn OA when they perform duties on day turnaround and split duty flights. Becky said that the purpose of the division being to compensate crew members’ loss of OA, it shows that Cathay Pacific recognizes that OA is a source of income of crew members.
Cathay Pacific denies that OA is required to be included in calculating SHP and/or ALP on the following basis :
(a) OA is not "wages" within the definition of "wages" in s.2 of the EO as it falls within the exception in subparagraph (d) of s.2 being a "sum payable to the employee" to defray special expenses incurred by him by the nature of his employment", and
(b) further and in the alternative, if OA is "wages" under s.2 of the EO (which is denied):
(i) OA is not "wages" which the Claimants "would have earned" for the purposes of ss.41(1) and 41C(1) of the EO, and
(ii) OA is not "daily wages" for the purposes ss.41(2) and 41C(2) of the EO and/or it is impossible to calculate OA on a daily basis.
Firstly, I deal with the question on whether OA is wages within the definition of "wages" in s.2 of the EO.
The Claimants contend that OA is wages because it is described in the COS and the Operations Manual as an item of allowance and that it is represented by Cathay Pacific in its advertisements as forming part of a cabin crew's income.
The above considerations relate to how the parties label OA. It is trite that the court does not only look at the label of a payment to determine its true nature. The label is not conclusive. It is not what the parties call it but what it is in substance that matters. One has to look into the nature of the payment, the reasons therefore and the circumstances under which the payment is made.
In practice, the Claimants have never paid salary tax on income earned by OA.
OA (except for the allowance for Indian ports) is paid overseas. Due to foreign exchange restrictions, allowance for Indian ports is paid when crew members report duty at the Hong Kong airport as they start the flying duty. In my view, the above arrangement is congruent with the intention that OA is to cover out of pocket expenses.
OA is calculated by reference to a formula agreed with FAU, which takes account of the actual cost of meals and services at the relevant crew hotel in each port. Periodical reviews of the allowance are held. It appears that the amount of OA payable is a genuine pre-estimate of what the amount of the expense is likely to be.
I am aware that OA forms a substantial part of the Claimants' total income and it arises in the course of flying duties performed by them at outports.
After having carefully considered all evidence, I accept that the purpose of OA is to cover meals and miscellaneous out-of-pocket expenses relating to the Claimants' layover overseas between flying duties.
OA is however paid in the form of a fixed allowance instead of an actual reimbursement against receipts and, it is on this basis (and on the basis that the allowance is non accountable rather than an accountable reimbursement) that the Claimants seek to argue that OA constitutes wages within the meaning of s.2 of the EO and, does not fall within exception (d).
Cathay Pacific contends that the meaning of the words "to defray" means "to reimburse" or "to provide money to cover the costs or expenses". Therefore, the exception in subparagraph (d) applies to a non-accountable allowance as well as to an allowance that is available on a reimbursement basis only.
Cathay Pacific lends support from the judgment of Deputy High Court Judge To in Star Express Limited v Cheng Tak and Ors, Labour Tribunal Appeal No. 86/1998, unreported, 11 May 1999. In that case, it was held that on the basis that pre-determined and non-accountable fixed monthly payments made to drivers of tourist coaches to cover parking fees were genuine pre-estimates of what the amount of the parking fees was likely to be, such payments constituted the reimbursement of expense and did not constitute "wages".
The Claimants contend that the term "special expenses" in subparagraph (d) to the definition of "wages" in s.2 of the EO denotes something that is of a non-recurrent nature and should be an one-off expenditure pertinent to the nature of the employment. I note that there is no requirement under the EO that such "special expenses" should be non-recurrent in nature. Though some OA components such as meals and traveling expenses are daily expenses that are incurred whether the Claimants are inside or outside Hong Kong, the Claimants should accept that probably they will incur extra meal and traveling expenses when they stay overseas. Plainly such extra expenses can be regarded as special expenses incurred by them by the nature of their employment.
During the trial hearing, the Claimants did not pursue the contention that as IA does not relate to out-of-pocket expenses, IA is a hardship allowance. Anyway, such assertion is not borne out by the relevant provisions of the COS and the Operations Manual. In my view, there is no suggestion that IA is in the nature of a hardship allowance as alleged by the Claimants.
After having carefully considered all evidence, I hold that OA is not "wages" within the definition of s.2 of the EO because it falls within the exception in subparagraph (d) being "a sum payable to the employee to defray special expenses incurred by him by the nature of his employment."
I do not need to deal with the second leg of Cathay Pacific's argument (See para. 64(b) above).
LDA and GDA
The details of LDA and GDA are as follows.
Clause 5(A) of the COS 1993 provides :-
"A Line Duty Allowance will be paid at the rate published from time to time from each flying duty hour. This allowance will be paid to all Cabin Attendants for each hour spent on flying duty. It is not part of basic salary and will not be paid for any other duty or non-flying activities including sick leave travel.
The Line Duty Allowance will be calculated and paid on the basis of Flying Duty Period (FDP) as defined in the Operations Manual Vol. 6."
Clause 3.2 of the COS 2003 provides :-
"Allowances
A Cabin Attendant may also receive, in addition to salary, other payments or allowances, in respect of any special or other duties or circumstances arising from the Cabin Attendant's employment, in accordance with any Company Policies or as determined by the Company's discretion.
Such allowances may include … [Ground Duty Allowance]."
Clause 3.2(A) of the COS 2003 provides that GDA is payable for ground duty hours spent on ground, being :-
“(i) the time between when Cabin Attendants are required by the Company to report for duty and the time from which the aircraft commences to move whether under its own power or not ("Departure Time");
(ii) 15 minutes after the time when the aircraft is finally stationary after landing ("Arrival Time") in the last single sector a cabin crew operates prior to the Rest Period ("the Final Sector") or (as the case may be), in situations of extended delay after the Arrival Time where a cabin crew is required to remain on an aircraft in excess of one hour after arrival in the Final Sector, the actual time the cabin crew is required to carry out duties in relation to the extended delay; and
(iii) save in relation to extended delays which are covered by paragraph (ii) above, within a Flight Duty Period any time on ground which is not considered as Rest Period.”
Crew members' duty comprises of time on ground and time in air. LDA is payable due to time in air (line duty hours). GDA is payable due to time on ground preparing to fly (ground duty hours). They both relate to duty time that is dependant on a number of different factors. While LDA and GDA are different, I consider that I can deal with them at the same time for the purpose of the present claims.
In the Statement of Defence filed in these proceedings, Cathay Pacific said that as the COS provides that the Claimants “may” be entitled to OA, LDA, GDA and DFSC, there is a strong argument that the Claimants does not have any contractual entitlement to the same. During the trial hearing, Cathay Pacific's representative accepted that LDA and GDA are part of the Claimants' wages, although she maintained that they are not wages that the Claimants would have earned for the purpose of the old ss.41(1) and 41C(1) of EO. There is no provision in COS 1986 that provides for entitlement to LDA. Clause 5(A) of COS 1986 provides that Becky was entitled to Inflight Meal Compensation Allowance. Clause 5(B) of COS 1986 provides that Becky was entitled to Ground Allowance. Loosely speaking, since about 1988, the Inflight Meal Compensation Allowance and Ground Allowance have been replaced by LDA. Clause 5(A) of COS 1993 provides Vera’s entitlement to LDA. Details of when LDA is payable are set out in Clause 6 of the Operations Manual Volume 6, Part 1. Clause 3.2 of COS 2003 provides Jenny’s entitlement to GDA. Details of when GDA is payable are set out in Clause 3.2(A) of COS 2003. After having carefully considered all evidence, I consider that Jenny receives GDA pursuant to Company Policies rather than Cathay Pacific’s discretion. On the whole, LDA and GDA are not of a gratuitous nature or payable only at Cathay Pacific's discretion. LDA and GDA represent a component in the Claimants' wages for work that they have done. In my view, it is indisputable that LDA and GDA are part of the Claimants' wages. The real issue is whether they are wages that the Claimants would have earned for the purpose of the old s.s41(1) and 41C(1) of the EO.
LDA is paid on two scales that are LDA(A) and LDA(B). LDA(A) is payable for day turnaround and split duty flights at HK$60.5 per hour. LDA(B) is payable for all other flights at HK$15.125 per hour. Such division is again a deal struck between Cathay Pacific and FAU.
Becky and Vera receive LDA on the total number of line duty hours that they operate in an aircraft. LDA is calculated based on the total number of line duty hours that starts when a cabin crew reports duty and finishes on blocks or engines off on the final sector. The duty hours start when the cabin crew reports duty and finishes 30 minutes after on blocks or engines off on final sector. The cabin crew will have a 30 minutes debriefing after the engines are off. Therefore, the line duty hours are 30 minutes less than the duty hours. LDA varies based on the flight that the cabin crew is rostered to operate and the length of time spent on a flight.
LDA is calculated down to the minute. No two flights produce the same amount of LDA. There are various factors that affect the number of the line duty hours of a flight and therefore LDA a cabin crew earns. These factors include weather, wind speed, location of the gate, delay or cancellation of flights etc.
When a flight is cancelled due to adverse weather, the cabin crew will not earn any LDA even if she is rostered on a flight on that day. If the flight is delayed because of some technical problems, the line duty hours will be longer and the cabin crew will earn more LDA.
The rate of GDA is HK$73.2 per hour.
Jenny receives GDA on the total number of ground duty hours. Very rarely would two flights depart at the same time. Again, factors such as weather, delay or cancellation of flights etc affect the Departure Time of a flight and therefore the GDA a cabin crew earns.
If a cabin crew reports for duty and the flight is subsequently cancelled due to adverse weather, the cabin crew will earn GDA for the period between the time she reports duty and the time Cathay Pacific announces that the flight is cancelled. The ground duty hours could be longer or shorter than the period between the time required to report duty and the scheduled departure time. If the flight is cancelled before the time required to for report duty, the cabin crew will not receive any GDA. If the flight is delayed because of, say, some technical problems, the ground duty hours will be longer and the cabin crew will receive more GDA. Some flights depart earlier than others. There is no certainty on the number of ground duty hours.
A cabin crew will not earn any LDA or GDA if she reports sick on a day that she is rostered with flying duties. Crew members may swap duties among themselves and Cathay Pacific has the right to alter, vary or substitute the roster issued to a crew, as it considers appropriate to meet its operational requirements.
Cathay Pacific pays LDA and GDA monthly at the end of the following month.
Cathay Pacific contends that LDA and GDA are not "wages" that the Claimants "would have earned", rather it is something that the Claimants "might have earned" because there is no certainty on the amount of LDA or GDA that the Claimants will earn each month; that both LDA and GDA are paid only if a cabin crew has performed flying duties and that the Claimants are not always assigned with flying duties.
After having carefully considered all evidence, I accept that LDA and GDA should not be regarded as wages that would have earned for the purpose of ss.41(1) and 41C(1) of the old EO because there is no workable mode of calculation for working out the amount of LDA and GDA that the Claimants would have earned during the leave period.
I now turn to the question on whether LDA and GDA should be included in the calculation of the ALP and SHP in accordance with the old ss.41(2) and 41C(2) of the EO. In Lam Pik Shan v. Hong Kong Wing On Travel Services Ltd., CACV 394/2007, unreported, 9 May 2008, the Court of Appeal upheld the decision of the High Court that tips received by the Plaintiff (Respondent), a travel escort, should be included in the calculation of ALP and SHP. In the paragraph (1) of the Judgment, Hon. Rogers VP held,
"In that judgment (Lisbeth Enterprises Ltd. v. Mandy Luk (2006) 9 HKFAR 131) the Court of Final Appeal came to the conclusion that the provisions in the Employment Ordinance, Cap. 57 relating to commission were unworkable where the commission was calculated at rates that varied on a monthly basis. That is not the situation in this case, which relates to tips which are based on a daily rate. In the second place it is quite clear that the legislature intended that tips should be taken into account in calculating wages. That is the clear intention emerging from the Ordinance itself. I am fortified in that conclusion because in passing the Employment (Amendment) Ordinance 2007, and in particular sections 10-15, the legislature has removed any difficulty there might be in making the relevant calculations. In the absence of the new provisions, had there some supposed difficulty in the method of calculation, it would have been the function of this court to give effect to the manifest intention of the legislature that tips should be taken into account in the calculation."
In the following paragraphs, Hon. Le Pichon JA held,
"20. Prima facie, tips received from tour participants would fall squarely within the statutory definition of "wages". The real question is whether a workable mode of calculation exists for working out the net tips and whether it can be said to accrue daily.
21. As already noted, the discretionary nature of tips is not a bar (as distinct from the case of commissions) to their forming part of an employee's wages. Further any discretion in the payment of a tip would be that of the tour participant and not employer i.e. the tour operator. While the amount of tips received per month may vary, depending on a number of factors including the number of days spent escorting tours, the type of tour, the number of persons joining the tours etc., in the present case, these factors do not pose any particular difficulty in the way of calculating daily wages. Not only is the rate of recommended tips made on a per person per day basis, the tips the tour guide/escort had to defray in the foreign country are also expressed in a similar fashion. Even if the tour guide does not receive his tips until the end of the tour, given that the duration of the tour is a fixed number of days, the net tips per day can be said to "accrue" on a daily basis and are readily calculable on the same basis."
Notably, in Lam Pik Shan v. Hong Kong Wing On travel Services Ltd, the travel escort, like Becky and Vera, received a monthly salary. In Lam Pik Shan v. Hong Kong Wing On Travel Services Ltd, the travel escort was paid tips that were based on a daily rate. In the present case, LDA and GDA are not calculated at daily rate. It seems to me that for the old ss.41(2) and 41C(2) of EO to apply, however, it is not necessary that the wages shall be calculated at daily rate. The old ss.41(2) and 41C(2) of EO apply where an employee is employed on piece rates or where the daily wages of an employee vary from day to day. I hold that LDA is part of Becky and Vera's wages and GDA is part of Jenny's wages. In my view, inasmuch as an employee's wages are calculable daily, the old ss.41(2) and 41C(2) of EO may apply. As Hon Le Pichon JA held, "The real question is whether a workable mode of calculation exists for working out … and whether it can be said to accrue daily". LDA and GDA are calculated by minutes. There should be no difficulty in calculating the LDA and GDA already earned by the Claimants on any given day. Therefore, even if the Claimants do not receive LDA and GDA until the end of the next month, given that LDA and GDA is calculable daily and therefore can be said to accrue daily, in my view, they can be said to be daily wages that vary from day to day.
In Wong Yin Fong & Others v. ISS Hong Kong Services Ltd [2005] 2 HKLRD 648, Labour Tribunal Appeal 56 of 2003, 17-19 May and 28 June 2005, Court of First Instance, J Lam J held,
"99. Although there are differences between the statutory scheme for rest days and that for annual leave, I think it is equally plain from the statutory scheme as analyzed above that the protection conferred under Pt. VIIIA by way of annual leave is to protect employees from the evils of continuously working without proper opportunity to rest. The Legislature obviously considered that it is important that an employer (p.679) should give an employee proper rest by way of annual leave. This explains the mandatory nature of annual leave, see the observations of A Cheung J in para. 33 of his judgment in Laing & Others v. Lisbeth Enterprises Ltd [2004] 3 HKC 548. Given its paternalistic nature, the statutory scheme strives to achieve through s.41C that an employee will not suffer any accompanying economic loss for not working during the leave period."
The above-mentioned Judgment was delivered before Lisbeth Enterprises Ltd v Mandy Luk [2006] 9 HKFAR 131. It is worthy of noting that when the case went further to the Court of Appeal, Wong Yin Fong & Others v. ISS Hong Kong Services Ltd [2008] 1 HKLRD 63, 28 November 2007, Court of Appeal, Hon Cheung JA said,
"52. Wong Ping Kong and Lam J's decision in the first instance on section 41C were referred to by the Court of Final Appeal in Lisbeth Enterprises Ltd v. Mandy Luk [2006] 9 HKCFAR 132. In my view the Court of Final Appeal not only has not disapproved of these two cases but has actually approved them."
Taking that the legislative intention is to achieve through s.41C that employees will not suffer any accompanying economic loss for not working during the leave period, given that s.41 is parallel to s.41C at this end, I am satisfied that Cathay Pacific should include LDA and GDA in the calculation of the Claimants’ ALP and SHP by using the following formulas, in accordance with the old ss.41(2) and 41C(2) of EO :
ALP - (Total LDA/GDA earned during the month immediately preceding or expiring on the first day of the annual leave or on the day on which the contract of employment terminates, as the case may be) ÷ (Number of working days during the same period)
SHP – (Total LDA/GDA earned during the month immediately preceding or expiring on the holiday or first day of the holiday) ÷ (Number of working days during the same period)
I reckon that probably the parties will propound different modes of calculation for working out the number of working days for the purpose of the formulas. Becky and Vera are monthly salaried while Jenny is hourly paid. Does it mean that the whole month immediately preceding or expiring on the holiday or first day of the leave (i.e. 30 or 31 days) should be counted as working days of Becky and Vera? Further or in the alternative, should only the days on which the Claimants are required to perform duties (in air and on ground) be counted as working days; should only the days on which Becky and Vera are required to perform duties in air (but not on ground) be counted as their working days, as LDA is payable due to time in air; should only the days on which Jenny is required to perform duties on ground (but not in air) be counted as her working days, as GDA is payable due to time on ground preparing to fly; should the days during which the Claimants are put on Standby duties be counted as working days; should the days during which the Claimants are put on Stop over in outports be counted as working days; and/or should the days during which Jenny earns Work credits and Leave credits be counted as her working days, for the purpose of the formulas? The parties reserve their respective positions on these questions. I shall leave them to be dealt with when the question of quantum arises. In any case, once these questions are resolved, the parties will have no difficulty in working out the amount that Cathay Pacific is liable to pay in compensation to the Claimants.
DFSC
Cathay Pacific would assign hourly paid crew members to conduct inflight duty free sales. Once an hourly paid crew is assigned, she has no choice but to perform the same as part of her duties.
The details of Duty Free Sales Commission (“DFSC”) are set out in Cathay Pacific's Inflight Sales Commission Policy. DFSC is separated into Individual Commission, Team Award, BC Star Award and ISM Star Award. Individual cabin crew earns a flat rate of 3.5% of sales made by her. The commission is paid at the end of the following month. Team Award is given to the top team with the best inflight sales performance. Crew members of the top team receive gifts as prizes. BC Star Award is given to top performers. ISM Star Award is given to the top Inflight Services Managers.
During the trial hearing, Cathay Pacific’s representative accepted that DFSC is part of Jenny's wages. After having carefully considered all evidence, I am satisfied that DFSC is not of a gratuitous nature or payable only at Cathay's discretion. I hold that DFSC represents a component in Jenny's wages for work that she has done and is part of her wages.
Cathay Pacific contends that DFSC is not "wages" that Jenny "would have earned", rather it is something that Jenny "might have earned" because :
(1) Some, but not all, of the flights have inflight sales. There is no certainty that Jenny will be rostered on a flight that has inflight sales;
(2) Not all crew members are entitled as of right to earn DFSC. The computer may assign a crew to be responsible for inflight sales and the Inflight Service Manager can always assign another crew to perform inflight sales;
(3) The entitlement to DFSC depends on the flight Jenny is rostered on and whether or not she is assigned with the inflight sales duty.
After having carefully considered all evidence, I accept that DFSC should not be regarded as wages that would have earned for the purpose of the old ss.41(1) and 41C(1) of the EO because there is no workable mode of calculation for working out the amount of DFSC that Jenny would have earned during the leave period.
I now turn to the question on whether DFSC should be included in the calculation of the ALP and SHP in accordance with the old ss.41(2) and 41C(2) of the EO. In my view, inasmuch as an employee’s wages are calculable daily, the old ss.41(2) and 41C(2) of the old EO may apply. In Lisbeth Enterprises Ltd v Mandy Luk, the employee who worked in a health and beauty club was entitled not only to a monthly salary but also to a commission on sales made by her. The contractual commission was calculated on a monthly basis, payable according to fluctuating monthly results on a sliding scale. Jenny’s case is different from Lisbeth Enterprises Ltd v Mandy Luk in that Jenny receives DFSC on the flat rate of 3.5% of the sales made by her. The upshot is that there would be no difficulty in calculating the amount of DFSC already made by Jenny on any given day (disregarding the Team Award gifts, BC Star Award and ISM Star Award), and therefore it can be said to accrue daily. Even if the Claimants do not receive DFSC until the end of the next month, given that DFSC can be said to accrue daily, it is daily wages that vary from day to day. Further or alternatively, apparently Jenny is employed on piece rate when she performs the duty free sales duty. By reason of matters aforesaid, I hold that Cathay Pacific should include DFSC in the calculation of Jenny's ALP and SHP by using the following formulas, in accordance with the provisions of the old ss.41(2) and 41C(2) of the EO :
ALP - (Total DFSC earned during the month immediately preceding or expiring on the first day of the annual leave or on the day on which the contract of employment terminates, as the case may be) ÷ (Number of working days during the same period)
SHP – (Total DFSC earned during the month immediately preceding or expiring on the holiday or first day of the holiday) ÷ (Number of working days during the same period)
Again, I shall deal with those questions regarding the mode of calculation for working out the relevant number of working days for the purpose of the formulas when the question of quantum arises.
Has Jenny received any SHP at all?
Clause 2.4(3) of the COS 2003 provides :-
"Days Without Duties
The Days Without Duties will include any statutory holidays (or alternative holidays) and rest days, as the case may be, to which a Cabin Attendant is entitled under the Employment Ordinance.
Clause 5.3 of the COS 2003 provides :-
"Statutory Holidays and Rest Days
Statutory holidays and rest days are allocated to Cabin Attendants as Days Without Duties (please refer to paragraph 2.4(3) of these COS, above.)"
Cathay Pacific intimates that, in addition to the Days Without Duties, Cathay Pacific also uses Standby duties (Jenny earns 1 credit hour for each 3 hours of Standby duties) to discharge its obligation to provide Jenny with statutory holidays under the EO. I do not agree. It is clear from the above-mentioned contractual provisions that Cathay Pacific uses Days Without Duties to discharge its obligation to provide Jenny with statutory holidays under the EO.
Unlike to the other two Claimants who are monthly paid crew, Jenny's wages are calculated on the numbers of flying hours she is able to achieve on a monthly basis. Her salary structure is not governed by the Master Pay Scale like the monthly paid crew members do. She does not enjoy the benefit of automatic annual increment along the Master Pay Scale.
Generally, Jenny is rostered to not less than the value of 70 hours of flying duties each month. If she wants to earn more, she may swap flights with colleagues to fly more, thus earning the extra flying hours which are all calculated on the basis of HK$146.4 per hour. In practice, Jenny swapped flights with colleagues to fly less, thus receiving only the MGFP in many months.
Her wages are linked to performance of flying duties, Work Credits and Leave Credits. Therefore, Jenny contends that Cathay Pacific has not paid her any SHP at all.
Cathay Pacific contends that according to Clause 3.1 of the COS 2003, Jenny receives a monthly salary that is, rather than a specified amount in her contract, calculated with reference to MGFP that is paid regardless of the work or duty she may or may not have undertaken or been assigned to her during the month; that MGFP is payable due to time on duty as well as time not on duty in the same way as a worker is paid a basic monthly salary but may also be entitled to monthly overtime if she works extra hours in that month.
Clause 3.1 of the COS 2003 provides that Jenny will receive salaries calculated on a monthly basis. Having salaries calculated on a monthly basis does not mean that she is monthly salaried. Employees employed at piece rate or hourly rate may receive salaries calculated on a monthly basis. In my view, the payment structure of Jenny plainly shows that she is an hourly paid employee.
Cathay Pacific pays Jenny MGFP at the value of 70 Block Hours, as it assumes that a cabin crew works 85 credit hours (inclusive of Block Hours flown) and 25.5 ground duty hours each month. It demonstrates that the MGFP relates to crew members’ flying duties rather than the Days Without Duties.
For example, when an hourly paid cabin crew performs more than 70 flying hours in a month, she is paid by the actual flying hours plus any credits earned. It means that she will not reap any benefit from the MGFP, notwithstanding that Cathay Pacific may well provide her with Days Without Duties in that month.
An hourly paid cabin crew is not paid for those Days Without Duties that coincide with the statutory holidays. In other words, in a month if there is a statutory holiday, she is still paid 70 flying hours plus the extra flying hours she has performed (if any) without any SHP. In my view, the corollary is that she does not receive any SHP.
One can educe from Jenny’s salary structure that she does not receive any payment for the Days Without Duties. In so far as Cathay Pacific uses Days Without Duties to discharge its obligation to provide Jenny with statutory holidays under the EO, Jenny does not receive any SHP.
Ordinary Wages
Prior to the amendments introduced by the EAO, s.42 of the EO provides :-
"42 Ordinary wages instead of holiday pay, annual leave pay, maternity leave pay or sickness allowance
Where, pursuant to the terms of his contract of employment or the terms of any other agreement or for any other reason, an employee is paid his ordinary wages in respect of any holidays, annual eave, maternity leave or sickness day, the employee shall not, in addition to such ordinary wages, be entitled to be paid holidays pay, annual leave pay, maternity leave pay or sickness allowance, as the case may be."
The EAO repealed s.42 of EO.
Cathay Pacific contends that the Claimants' monthly basic salary, together with other regular fixed monthly allowance, represents their "ordinary wages" for the purposes of s.42 of the EO.
Mr Justice Rogers VP held at paragraph 21 of Lam Pik Shan v. Hong Kong Wing On Travel Services Ltd,
"21. As regards section 42 of the Ordinance, I see no basis for restricting the meaning of "ordinary wages" to the bare, almost notional, payment under clause 7 of the agreement. In my view "ordinary wages" has no other meaning than "wages" as used in the Ordinance."
Such view was echoed by the Honorable Mr. Justice Cheung JA in Fong Mung Yan v. ISS Hong Kong Service Limited, at paragraph 49 where the learned Judge said,
"49. In my view section 42 does not assist the Defendant. This section merely prevents the worker from receiving a double benefit. It provides no answer to the question whether wages include attendance bonus. In my view there is no distinction between the term "wages" as defined by section 2(1) and ''ordinary wages' referred to in section 42."
I hold that s.42 of does not assist Cathay Pacific.
S.40 of the EO
In relation to the payment of SHP, s.40 of the EO provides :
"40. Payment of holiday pay
Subject to section 12(11), an employee who has been employed by his employer under a continuous contract for a period of 3 months immediately preceding a statutory holiday shall, not later than the day on which the employee is next paid his wages after that holiday, be paid by his employer holiday pay at the rate specified in section 41, whether the employee takes a holiday on the statutory holiday or on an alternative or substituted holiday or a holiday under section 39(4)."
This section is applicable both prior to and after the introduction of the EAO.
Cathay Pacific contends that by virtue of the provisions of s.40, to the extent that the Claimants worked on a statutory holiday, the wages paid to them in respect of that statutory holiday (which she worked) constitute their full entitlement under the EO in respect of that statutory holiday. In these circumstances, the Claimants will have received the amount they "would have earned" on the statutory holiday.
In effect, Cathay Pacific rigidly construes "that holiday" referred to in s.40 as the statutory holiday. In my view, "that holiday" plainly means the holiday actually taken by the employee, whether the employee takes a holiday on the statutory holiday or on an alternative or substituted holiday or a holiday under s.39(4). Were Cathay Pacific's construction acceptable, an employer would have no obligation under the EO to pay SHP in respect of an alternative or substituted holiday. That must be wrong.
Contractual Annual Leave Pay
Clause 16(A) of the COS 1986 provides :-
"Annual Leave – Cabin crew will be granted three weeks’ paid leave per year. In the first year cabin crew do not qualify for annual leave until they have completed nine months’ service. After completing five years of service, cabin crew will be granted four weeks’ paid leave per year. After completing ten years of service, cabin crew will be granted five weeks’ paid leave per year."
Clause 12(A) of the COS 1993 provides :-
"Annual Leave – Cabin Attendants will be granted three weeks’ paid leave per year. In the first year Cabin Attendants do not qualify for annual leave until they have completed probation. After completing five years of service, Cabin Attendants will be granted four weeks’ paid leave per year. After completing ten years of service, Cabin Attendants will be granted five weeks’ paid leave per year.
Leave shall be taken in accordance with the leave roster system established by the Company. The taking of leave will be subject to the exigencies of service as determined by the Company. "
Clause 5.1 of the COS 2003 provides :-
"Annual Leave
The Company operates a common leave year from 1 January to 31 December. Cabin Attendants are eligible to apply for and take annual leave in accordance with Company Policies.
Annual leave will be granted subject to the needs of the Company, determined in its discretion from time to time.
A Cabin Attendant is expected to take all annual leave within the current leave. Annual leave cannot be carried forward without prior written approval of the Company.
Advance annual leave may be granted at the Company’s sole discretion. If granted, the Cabin Attendant’s annual leave entitlement for the ensuing period will be adjusted accordingly.
If, upon leaving the employment of the Company, a Cabin Attendant has taken annual leave in excess of the Cabin Attendant’s pro-rata annual leave entitlement, calculated to cessation of employment, the final payment made to the Cabin Attendant will be adjusted accordingly."
The Company Policy provides Jenny’s AL entitlement as follows :-
"Cabin crew who join on or after 01 September 1996:
Flight Attendant or Flight Purser with less than 5 years of service as cabin crew, 21 days of leave entitlement
Flight Attendant or Flight Purser with more than 5 years of service as cabin crew, 24 days of leave entitlement
Senior Purser or Inflight Service Manager, 28 days of leave entitlement"
Section 2 of the EO provides that "annual leave" means the annual leave provided for in Part VIIIA and "annual leave pay" means the annual leave pay required by the EO to be paid in respect of a period of annual leave provided for in Part VIIIA in respect of a period of annual leave required to be paid under section 41D.
Therefore, Cathay Pacific contends that the provisions in the EO relation to annual leave and annual leave pay are applicable only to statutory annual leave (a maximum of 14 days); that the statutory provisions do not apply to leave granted by an employer in excess of the statutory annual leave and that leave granted in excess of the statutory requirement. In other words, contractual annual leave, including the taking and the payment of such leave, is therefore governed solely by the terms of the relevant employment contract, which fall to be interpreted and construed in accordance with general contractual principles.
Cathay Pacific contends that on the basis of general contractual principles of construction and on the basis of plain common sense, the expression "paid leave" means leave of absence from work with the payment of basic salary and those allowances to which a cabin attendant is entitled by virtue of his or her position i.e. title and appointment allowances, but excluding allowances which arise by virtue of the actual performance of in flight or other specific duties, such as OA, LDA and GDA and which plainly do not arise at all during periods of leave.
I accept that the Claimants' contractual AL is governed by the terms of the employment contract. The COS are drafted in details. Upon reading the relevant provisions of the COS, I observe that they do not make any distinction between a cabin crew's statutory and contractual annual leave payment. In practice, there is no way to tell when the Claimants take AL, whether they are on the statutory or contractual AL. As a matter of construction of the employment contract, I take the starting point that the calculation of the ALP regarding all AL provided by the employment contract is equal.
In Wong Yin Fong & others v. ISS Hong Kong Services Ltd, J Lam J held that "Given its paternalistic nature, the statutory scheme strives to achieve through s.41C that an employee will not suffer any accompanying economic loss for not working during the leave period". In the present case, Cathay Pacific takes into account of the numbers of days of AL taken by Becky and Vera to calculate their Excess Flying Pay ("EFP") (See Clause 6 of COS 1986 and Clause 5 of COS 1993 for EFP’s meaning). Jenny's situation is similar. Cathay Pacific takes into account the number of hours flown as well as credits earned by reasons of leave (including AL) to calculate MGFP and Jenny's wages. Jenny earns 3.25 leave credits per day of AL. Such arrangements suggest that the parties are also prepared to make provision for making up a cabin crew’s accompanying economic loss for not working during the leave period. Conversely, Cathay Pacific contends that on the basis of plain common sense, allowances that arise by virtue of the actual performance of duties such as LDA and GDA should be excluded in calculating ALP and SHP. Courts will imply terms into individual contracts on the ground of business efficacy but it is nothing to do with making things reasonable or fair. All in all, I am not persuaded by Cathay Pacific's common sense approach. After having carefully considered all evidence, I take the view that there is no contractual basis to calculate the ALP attributable to the statutory and contractual AL differently.
Conclusion
I hold that Jenny is hourly paid. Therefore, she is employed on daily wages that vary from day to day. In accordance with the old s.41(2) of EO, her holiday pay shall be a sum equivalent to the average of the daily wages earned by her on each day on which she worked during every complete wage period, comprising not less than 28 days and not more than 31 days, immediately preceding or expiring on the holiday or first day of the holiday. In my view, she does not receive any SHP. In accordance with the old s.41C(2) of EO, her annual leave pay shall be calculated by reference to the average of the daily wages earned by her on each day on which she worked during every complete wage period, comprising not less than 28 days and not more than 31 days, immediately preceding or expiring on the first day of the annual leave or on the day on which the contract of employment terminates, as the case may be. Account will be taken into ALP that were already paid by Cathay Pacific.
In conclusion, I hold that Cathay Pacific should calculate and pay Becky and Vera shortfalls in the amounts of ALP and SHP in the manners as set out in the above paragraph 102 and should calculate and pay Jenny shortfalls in the amounts of ALP and SHP in the manners as set out in the above paragraphs 102, 108 and 140, but it is not required to include OA in the calculation of ALP and SHP.
The parties shall make arrangements with the case Tribunal Officer for the purpose of fixing a mutually convenient date for a mention hearing on the question of quantum.
Costs reserved.

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LBTC 595/2012
IN THE LABOUR TRIBUNAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
LABOUR TRIBUNAL CLAIM NO. 595 OF 2012
---------------------
----------------------
Before : Ms. Michelle Lam, Presiding Officer
Dates of Hearing: 21-23 and 26-27 March, 25-28 May and 14 June 2012
Date of Decision: 13 July 2012
Date of Review Hearing: 6 August 2012
Date of Reasons for Decision on Review: 20 September 2012
REASONS FOR DECISION ON REVIEW
1. After trial, I made the following rulings in respect of the present case on 13 July 2012:
The five Claimants’ claims under item (A) for severance payments is allowed, and the Defendant shall pay forthwith: HK$13,412.05 to the 3rd Claimant, HK$3,003.42 to the 4th Claimant, HK$21,848 to the 7th Claimant, HK$13,827.86 to the 9th Claimant, and HK$13,826.82 to the 11th Claimant;
The five Claimants’ claims under the second item for terminal payments are dismissed;
The Defendant shall pay forthwith costs of: HK$197 to the 3rd Claimant, HK$1,020 to the 4th Claimant, HK$180 to the 7th Claimant, HK$290 to the 9th Claimant, and HK$199 to the 11th Claimant;
Interest on the above judgment sums shall be calculated in accordance with section 39(3) of the Labour Tribunal Ordinance (Cap 25) and be paid by the Defendant.
2. The Defendant applied for review of the above rulings, and the hearing of the application took place on 6 August 2012.
3. Having carefully considered all the grounds of application by the Defendant, I found that those grounds had been raised at trial and each of them had been considered and eventually rejected by me. Therefore, the Defendant failed to put forward any additional grounds in support of the application for review.
4. For the above reason, I have rejected the Defendant’s application for review.
5. The Defendant had also applied for a stay of payment-out to the five Claimants of the sum of HK$67,996.81, being the judgment sum paid in by the Defendant on 26 July 2012. In this respect, having taken into account that the Defendant had all along merely repeated the grounds of defence already raised and fully canvassed but eventually rejected at trial, that the Defendant’s appeal had little prospect of success, and the temporal impact of the appeal proceedings on the five Claimants who were senescent, and also having assessed the impact of a stay of payment-out of the judgment sum on the Defendant and the five Claimants and all relevant factors, I took the view that the Defendant’s application was unjustified. I have therefore dismissed the application.
6. As for costs, in the absence of any application by the parties, I make no order as to costs.
Translated by the Judgment Translation Unit of the Judiciary and vetted by Mr. Edmund Cham, Solicitor

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{
"Date": "20 Sep, 2012",
"Action No.": "LBTC595/2012",
"Neutral Cit.": "[2012] HKLaT 1",
"case_title": "CHENG KWOK WAH AND OTHERS V. LI HING CLEANING SERVICES CO. LTD",
"page_title": "CHENG KWOK WAH AND OTHERS V. LI HING CLEANING SERVICES CO. LTD | [2012] HKLaT 1 | HKLII",
"case_history": [],
"appeal_history": [
{
"name": "LBTC595/2012",
"link": "https://www.hklii.hk/en/appealhistory/LBTC/2012/595"
}
],
"case_url": "https://www.hklii.hk/en/cases/hklat/2012/1",
"neutral_cit": "[2012] HKLaT 1",
"court_code": "HKLAT",
"content": "LBTC595AX/2012 CHENG KWOK WAH AND OTHERS v. LI HING CLEANING SERVICES CO. LTD\nLBTC 595/2012\nIN THE LABOUR TRIBUNAL OF THE\nHONG KONG SPECIAL ADMINISTRATIVE REGION\nLABOUR TRIBUNAL CLAIM NO.595 OF 2012\n---------------------\nBETWEEN\nCHENG KWOK WAH（鄭國華）\n3rd Claimant\nLAI AH LOI（黎亞來）\n4th Claimant\nLIU FAT HOI（廖發開）\n7th Claimant\nHO CHING HOI（何清海）\n9th Claimant\nHSU CHE CHEONG（徐志中）\n11th Claimant\nand\nLI HING CLEANING SERVICES CO. LIMITED\n（利興清潔服務有限公司）\nDefendant\n----------------------\nBefore : Ms. Michelle Lam, Presiding Officer\nDates of Hearing: 21-23 and 26-27 March, 25-28 May and 14 June 2012\nDate of Decision: 13 July 2012\nDate of Review Hearing: 6 August 2012\nDate of Reasons for Decision on Review: 20 September 2012\nREASONS FOR DECISION ON REVIEW\n1.\nAfter trial, I made the following rulings in respect of the present case on 13 July 2012:\n(1) The five Claimants’ claims under item (A) for severance payments is allowed, and the Defendant shall pay forthwith: HK$13,412.05 to the 3\nrd\nClaimant, HK$3,003.42 to the 4\nth\nClaimant, HK$21,848 to the 7\nth\nClaimant, HK$13,827.86 to the 9\nth\nClaimant, and HK$13,826.82 to the 11\nth\nClaimant;\n(2) The five Claimants’ claims under the second item for terminal payments are dismissed;\n(3) The Defendant shall pay forthwith costs of: HK$197 to the 3rd Claimant, HK$1,020 to the 4th Claimant, HK$180 to the 7th Claimant, HK$290 to the 9th Claimant, and HK$199 to the 11th Claimant;\n(4) Interest on the above judgment sums shall be calculated in accordance with\nsection 39\n(3) of the\nLabour Tribunal Ordinance\n(\nCap 25\n) and be paid by the Defendant.\n2.\nThe Defendant applied for review of the above rulings, and the hearing of the application took place on 6 August 2012.\n3.\nHaving carefully considered all the grounds of application by the Defendant, I found that those grounds had been raised at trial and each of them had been considered and eventually rejected by me. Therefore, the Defendant failed to put forward any additional grounds in support of the application for review.\n4.\nFor the above reason, I have rejected the Defendant’s application for review.\n5.\nThe Defendant had also applied for a stay of payment-out to the five Claimants of the sum of HK$67,996.81, being the judgment sum paid in by the Defendant on 26 July 2012. In this respect, having taken into account that the Defendant had all along merely repeated the grounds of defence already raised and fully canvassed but eventually rejected at trial, that the Defendant’s appeal had little prospect of success, and the temporal impact of the appeal proceedings on the five Claimants who were senescent, and also having assessed the impact of a stay of payment-out of the judgment sum on the Defendant and the five Claimants and all relevant factors, I took the view that the Defendant’s application was unjustified. I have therefore dismissed the application.\n6.\nAs for\ncosts, in the absence of any application by the parties, I make no order as to costs.\n(Michelle Lam)\nPresiding Officer of the Labour Tribunal\nTranslated by the Judgment Translation Unit of the Judiciary and vetted by Mr. Edmund Cham, Solicitor",
"attachments": [
{
"download_url": "https://legalref.judiciary.hk/doc/judg/word/vetted/other/en/2012/LBTC000595AX_2012.doc",
"file_name": "LBTC000595AX_2012.doc",
"file_ext": ".doc",
"status": "success"
}
]
}

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LBTC 595/2012
IN THE LABOUR TRIBUNAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
LABOUR TRIBUNAL CLAIM NO. 595 OF 2012
---------------------
----------------------
Before : Ms. Michelle Lam, Presiding Officer
Dates of Hearing: 21-23 and 26-27 March, 25-28 May and 14 June 2012
Date of Decision : 13 July 2012
Date of Reasons for Decision: 20 September 2012
REASONS FOR DECISION
Background
1. The five Claimants herein, being the 3rd, 4th, 7th, 9th and 11th Claimants, claim against the Defendant for severance payments and alternatively terminal payments. The Defendant denies liability to pay but does not dispute the quantum of the claims.
Background facts
2. The background facts of the present case are not subject to serious dispute.
3. The Defendant provided various cleaning services to the Government and also various types of private and public organizations. Following a tender exercise, the Defendant entered into a two-year “Street Cleaning Services Contract for Wanchai” with the Food and Environmental Hygiene Department (“FEHD”) under which the Defendant provided cleaning services to FEHD for streets in Wanchai from 1 January 2008 to 31 December 2009. Following a subsequent tender exercise, the Defendant entered into another two-year “Street Cleaning Services Contract for Wanchai”, i.e. Government Service Contract No. FEHDSC/63/09, with the FEHD (“FEHD Contract”), under which the Defendant continued to provide cleaning services for streets in Wanchai from 1 January 2010 to 31 December 2011. On 7 December 2011, however, the FEHD notified the Defendant in writing that it was not selected as the contractor in the new tender exercise for the two-year period starting from 2012, and hence no new service contract would be made with the Defendant upon expiry of the FEHD Contract on 31 December 2011.
4. A total of 375 staff members were affected by then. 371 of them were engaged on monthly basis and had each entered into a “Standard Employment Contract for Employees of Contractors of Government Services Contract” with the Defendant (“Government Standard Contract”). This was a pro forma Standard Employment Contract which, pursuant to the mandatory requirement of the government, contractors had to enter into with non-skilled workers whom they employed to provide services under any Government Services Contract. For the remaining four staff members, as they were temporary daily-wage workers who had worked for less than seven days, the Defendant was not required to enter into Government Standard Contracts with them.
5. In mid to late December, the Defendant sent personnel to various roll-call points across the district where cleaning services were provided, informing the cleaning workers that the FEHD Contract would end on 31 December. Cleaning workers of less than two years’ service were given seven days’ notice of termination of their employment contracts, whereas workers of more than two years’ service, totalling 163, were asked whether they would accept re-deployment by the Defendant to other places of work starting from 1 January 2012. Some of the staff members signed a pro forma “Staff Reply Slip on Arrangements upon Expiry of Contract at Site” prepared by the Defendant (“Reply Slip(s) on Expiry of Contract”).
6. The Defendant was notified by the Labour Department on 23 December that the Cleaning Workers Union and the Department had received complaints from workers against the Defendant, alleging that the Defendant had misled workers into signing the Reply Slips on Expiry of Contract with a view to evading liability for severance payment. The Labour Department invited the Defendant to attend a meeting with its staff scheduled for 28 December.
7. Among the attendees of the meeting on 28 December were two officers from the Labour Department; one Ms Wu Mei-lin, an officer of the Cleaning Workers Union (“the Union Representative”); and one Ms Woo Ching Sum Connie, Executive Director of the Defendant (“the Company Representative”). Some of the cleaning workers were notified by the Union to attend the meeting, and some by fellow workers.
8. No agenda was set for the above meeting. No pre-arrangement was made as to the time of attending the meeting or the number of attendees, and the cleaning workers went in and out of the meeting randomly and freely. As there was no outline of topics for discussion, the Defendant played a passive role at the meeting and merely answered questions from individual staff members. As the meeting became very disorderly, the Union Representative took the initiative to propose that the Defendant should set out its deployment arrangements in writing, specifying the new working hours and places of work for each member of staff, and to request that each member of staff be given a copy of those written arrangements at the meeting on the following day.
9. Similarly, among the attendees of the meeting on 29 December were two Labour Department officers, the Union Representative and the Company Representative. The Defendant had prepared 162 copies (with one person being omitted) of “Notification of Re-deployment to Workplaces” (“Re-deployment Notification”), each of which set out the new place of work to which a particular staff member would be deployed and his working hours. At that time, the Labour Department and the Union Representative asked the Company Representative to distribute, in person and on the spot, the Re-deployment Notifications to each staff member present at the meeting. Regarding the Re-deployment Notifications to the 26 staff members who did not attend the meeting, as the Labour Department and the Union Representative both refused to collect them on behalf of those staff members, the Defendant took the copies back.
10. Some of the staff members who attended the meeting (including the five Claimants herein) wrote down the reasons for refusing to be re-deployed in the respective Re-deployment Notifications distributed to them and then returned them to the Company Representative on the spot. The Company Representative said that she would take into account the replies of each individual and consider whether they would be re-deployed.
11. On the following day, namely 30 December, the Defendant revised the re-deployed work places and/or working hours of some of the staff members. As regards the five Claimants herein, only the 9th and 11th Claimants had their re-deployed work places and/or working hours revised. However, the Defendant only sent the revised particulars concerned to the Union Representative and the Labour Department by e-mail without notifying the staff members individually.
12. Having sent the e-mail, the Defendant telephoned the Labour Department and the Union Representative to see if they had duly received the e-mail. Apart from this, the Defendant did not communicate any further with the workers, the Labour Department or the Union Representative regarding the arrangements on re-deployment or resignation.
13. Some of the workers were dissatisfied with the Defendant’s arrangements and took part in a strike on 31 December in which the Union also participated.
14. On 6 January 2012 the Defendant sent by post the Notifications of Termination of Employment Contract to those cleaning workers who did not turn up for work at their new posts after 1 January, including the five Claimants.
15. Of the 163 workers of two years’ service or more, only six continued to work for the Defendant after 1 January. These six workers had already entered into employment contracts with the Defendant for the provision of services under other Government services contracts.
The five Claimants
16. Except for the 4th Claimant, who started working for the Defendant on 4 July 2008, the Claimants started working for the Defendant on 1 January 2008. Each of the five Claimants had entered into his own Government Standard Contract with the Defendant when he first joined the Company. Those contracts specified that they were employed by the Defendant as cleaning workers providing cleaning services in Wanchai district. As the previous “Street Cleaning Services Contract for Wanchai” between the Defendant Company and the FEHD came to an end on 1 January 2010 and they entered into a new contract – the FEHD contract, the Defendant was required to enter into another Government Standard Contract with each of the five Claimants as required by the FEHD contract. All these contracts came into effect on 1 January 2010 and the Claimants’ wages were revised.
17. On 1 May 2011, following the implementation of the Minimum Wage Ordinance, the Defendant entered into another Government Standard Employment Contract with each of the five Claimants which took effect from 1 May 2011 and under which wages were revised (“the 3rd Contract(s)”). The second and the 3rd Contracts mentioned above both specified that the places of work of the five Claimants were within the service area specified in the FEHD contract (with the FEHD contract number stated), and also specified the Claimants’ respective working hours and monthly wages.
18. The five Claimants had provided services exclusively under the “Wanchai Street Cleaning Services Contracts” ever since their recruitment by the Defendant until 31 December 2011. Except for the 7th Claimant, whose working hours had been varied once during his employ with the Defendant, the places of work and the working hours of the Claimants had never changed. Their working hours were specified in their respective Government Standard Contracts with the Defendant, and their places of work were within the service area under the FEHD contract. The relevant particulars are set out below:
19. The personal background of the five Claimants is summarized below:
Contact on two occasions
20. During the period from 7 December 2011 to 6 January 2012 when the Defendant sent dismissal letters by post to the five Claimants, the five Claimants and the Defendant had contacted each other on only two occasions in relation to the arrangements after 31 December (except for the 9th Claimant, who was present for some time at the Labour Department meeting on 28 December). The first one took place in mid to late December when the Defendant sent personnel to various roll-call points, informing the workers of the expiry of the FEHD contract on 31 December and enquiring if they were willing to be re-deployed to other places of work. All but the 11th Claimant signed the “Reply Slip on Expiry of Contract”.
21. The second occasion was when all the five Claimants attended the Labour Department meeting on 29 December, at which the Re-deployment Notifications were distributed to them. However, the Defendant did not hold any direct or separate discussion with any of the Claimants. According to the Re-deployment Notifications given to the Claimants, the work arrangements after 1 January 2012 which the Defendant required of the five of them are as follows:
22. On 30 December the Defendant re-arranged the workplaces and working hours of the 9th and 11th Claimants (as shown below), but the arrangement was not communicated to those two Claimants.
Claimants’ case
23. It was the five Claimants’ case that they had at various points of time entered into three Government Standard Contracts with the Defendant, which specified that the Claimants were employed to provide cleaning services under the “Wanchai District Street Cleaning Services Contract” between the Defendant and the FEHD, with places of work being confined to the locations at which services were to be provided under the said contract, and which also specified the Claimants’ working time, number of working hours and wages. Given that, following the expiry of the FEHD contract on 31 December, the parties did not enter into new employment contracts, nor did the Defendant offer to enter into new contracts with the Claimants or renew their existing contracts pursuant to the Employment Ordinance, the Defendant is liable for severance payments or terminal payments.
Defendant’s case
24. The Defendant’s case is that its employment relationship with the five Claimants did not terminate as a result of the expiry of the FEHD contract, because the Defendant had notified the Claimants in mid-December that they would be re-deployed to other workplaces starting from 1 January 2012 and had also given the Claimants written notice on 29 December informing them of the new time and place of work. It was just that the Claimants did not comply with the re-deployment order by failing to turn up for work at the new workplaces on or after 1 January 2012. The Defendant contends that, as the Claimants failed to comply with a legitimate and reasonable order, the Defendant was entitled to issue to them notices of dismissal on 6 January, notwithstanding it was stated therein that the Defendant would not claim against the Claimants for wages in lieu of notice. The Defendant therefore considers the Claimants’ claims unjustified.
25. The five Claimants gave evidence in court and called the Union Representative as their witness, whereas the Defendant called the Company Representative and Wong Shuk Yin, the Defendant’s Deputy Human Resources Officer, to give evidence in court.
Findings of fact
26. In determining the present case, I have carefully considered all the witness statements and exhibits submitted by the parties, the testimonies and demeanour of the witnesses in court, as well as all relevant surrounding circumstances.
Severance payment
27. Under section 31B of the Employment Ordinance (Cap 57), where an employee who has been employed under a continuous contract for a period of not less than 24 months is dismissed by his employer by reason of redundancy, the employer shall be liable to pay to the employee a severance payment.
28. It is not disputed in the present case that the five Claimants had each been employed for not less than 24 months under a continuous contract. The issue is whether they were dismissed by reason of redundancy.
29. Section 31D of the Employment Ordinance provides as follows:
“(1) For the purposes of and subject to this Part, an employee shall be taken to be dismissed by his employer if, but only if -
(a) the contract under which he is employed is terminated by the employer with or without notice or payment in lieu thereof other than in accordance with section 9;
(b) where under that contract he is employed for a fixed term, that term expires without being renewed under the same contract; or
(c) the employee terminates that contract with or without notice or payment in lieu, in circumstances such that he is entitled to terminate it without notice or payment in lieu in accordance with section 10 by reason of the employer’s conduct.
(2) An employee shall not be taken for the purposes of this Part to be dismissed by his employer if -
(a) his contract of employment is renewed, or he is re-engaged by the same employer under a new contract of employment; and
(b) the renewal or re-engagement takes effect immediately on the ending of his employment under the previous contract.
(3) For the purposes of the application of subsection (2) to a contract under which the employment ends on a rest day or holiday, the renewal or re-engagement shall be treated as taking effect immediately on the ending of the employment under the previous contract if it takes effect on or before the next day after that rest day or holiday.”
Dismissal
30. Having carefully considered all the evidence, I find the five Claimants to have been dismissed by the Defendant in the circumstances as provided in section 31D(1)(b). In other words, they were employed under the 3rd Contracts for a fixed term, upon expiry of which the contract was not renewed. I consider that the fixed term concerned is the period from 1 May 2011 to 31 December 2011.
31. The employment relationship between the five Claimants and the Defendant since 1 May 2011 was based on the 3rd Contracts which they individually entered into with the Defendant. All the five contracts were Government Standard Contracts in the prescribed format and terms, and they differed from one another only in terms of wages, working time and the number of working hours.
32. In construing the five contracts, I have taken into account the underlying factual matrix. The Defendant entered into the FEHD contract, following which the five Claimants were employed to provide services under that contract, which expressly required the Defendant to enter into a Government Standard Employment Contract with each of the Claimants.
33. As a matter of fact, since April 2005, in respect of service contracts mainly involving the use of non-skilled workers, the Government has required the relevant service contractors to enter into Standard Employment Contracts with non-skilled workers in their employ. This is to ensure that the places of work, working hours and calculation and amount of wages of those employed by the contractors to provide services under the service contracts are governed by the relevant terms of the service contracts, the objective of which is to provide clear and stable places and time of work to non-skilled workers who provide services for the Government but who are employed by the service contractors. The service contracts also provide for a penalty points system under which contractors who fail to comply with the above requirements are penalized.
34. The 3rd Contract is the version of the Government Standard Employment Contract which has been revised consequential to the implementation of Minimum Wage Ordinance on 1 May 2011.
35. The relevant terms and conditions of the five employment contracts read as follows:
“Standard Employment Contract
for Employees of Contractors of Government Service Contract (Note 1)
Government Service Contract No.: FEHDSC/63/09 (Note 2)
…
This employment contract shall commence on 1 May 2011.
The Employee shall be employed by the Employer as cleaning worker (job title). The place of work is street cleaning services in Wanchai district (as specified in Government service contract no.: (Note 2) FEHDSC/63/09). If necessary, the Employer shall be allowed to deploy the Employee to work within the Hong Kong Island region (Note 3) under an urgent situation or on an ad hoc and limited basis.
(a) The Employee shall work 6 days per week, and his/her daily working hours shall be: (Note 4)
[state the exact time of going on and off duty]
Under exceptional circumstances and at the request of the relevant procuring department, the Employer may make appropriate adjustment to the above working hours, provided that such adjustment shall be on an ad hoc basis and shall not affect the original daily number of working hours of the Employee.
…
6. In respect of work done in accordance with the working hours specified in Clause 3(a) of this employment contract, the Employee shall receive:
(a) wages of HK$… [state the exact amount of wages] per month …
21. Any variation of, amendment to, cancellation of or addition to any terms of this employment contract (including the Schedule) shall be void unless it does not extinguish or reduce any right, benefit or protection conferred upon the Employee by this employment contract and is signed by both parties. The Employer shall also provide a copy of the amendments signed by both parties to the Employee for his/her retention.
[Emphasis added]
36. Furthermore, Clauses 22 and 23 of the 3rd Contract state that the Employee and the Defendant agree that a copy of the 3rd Contract, wage records, attendance records and other relevant information shall be provided to the FEHD for record and for the purpose of monitoring the Defendant’s performance of employment-related obligations under the FEHD contract.
37. It follows that Clause 2 of the contract strictly provides that the place of work must be the place where cleaning services are to be provided under the FEHD contract. In other words, the Claimants can only work within the areas specified in the FEHD contract.
38. Although a mobility clause is also provided under Clause 2, it is a rather stringent provision in that it only allows the Defendant to adjust the deployment within Hong Kong Island region where it is necessary to do so as an emergency measure or on an ad hoc and limited basis. In other words, even when there is an actual need, the Defendant may not re-deploy an employee to work somewhere beyond the cleaning service area specified in the FEHD contract for an extended period of time, let alone permanently.
39. Therefore, it is apparent from Clause 2 itself that the subsistence of the 3rd Contract was highly dependent on the fixed term of the FEHD contract. And paragraph 1(a) of Part 2 of the FEHD contract [Exhibit D-238, page 34] expressly stated that the fixed term of the contract was from 1 January 2010 to 31 December 2011. This being the case, a term must have been implied in the 3rd Contract that the employment contract would come to an end on 31 December 2011.
40. Furthermore, the existence of such an implied term finds support in the other terms and provisions of the 3rd Contract.
41. First of all, the title of the contract made it clear that it was an employment contract between the Defendant as a FEHD contractor and its employees. Moreover, the salient terms of the contract, such as those on working time, number of working hours and wages, were all governed by the relevant provisions of the FEHD contract. Furthermore, the contract expressly prohibited any variation of, amendment to, cancellation of or addition to any terms of the contract, and also provided that the rights and benefits conferred upon the employee by the contract must not be extinguished or reduced. Both parties expressly agreed to allow the FEHD to monitor the performance of the contract.
42. It would indeed be impossible to perform or enforce these terms following the expiry of the FEHD contract. For this reason, a term must have been implied in the 3rd Contract that the 3rd Contract would be terminated at the same time as the expiry of the FEHD contract. As such, the 3rd Contract must have come to an end on 31 December 2011.
43. It follows that, according to the 3rd Contract which each of the five Claimants entered into with the Defendant, the fixed term of employment of each of them expired on 31 December 2011. After the expiry of the term, the Defendant failed in a subsequent tender exercise and was therefore unable to renew the terms of employment of the five Claimants under the same contracts. For this reason, the circumstances of their dismissal fall within sections 31B(2) and 31D(1)(b) of the Employment Ordinance, and accordingly, pursuant to section 31B(1)(a), they shall be taken to be dismissed by their employer by reason of redundancy, and the Defendant is liable for severance payments.
44. Alternatively, even if the said implied term did not exist, which means that the 3rd Contract did not come to an end with the expiry of the FEHD contract on 31 December 2011, the Defendant would still not have been able to comply with Clause 2 of the 3rd Contract.
45. The reason is that, with the expiry of the FEHD contract on 31 December 2011, the Defendant could no longer assign the five Claimants to the places of work specified in the FEHD contract, but as pointed out above, the mobility clauses in Clause 2 prohibited the Defendant from re-deploying an employee to work at places other than those specified in the FEHD contract for an extended period of time or on a permanent basis.
46. Therefore, when the Defendant, as mentioned above, sent personnel to contact the five Claimants individually for the first time so as to ascertain their intentions regarding the Defendant’s proposal to re-deploy them to other places of work, the Claimants were entitled to refuse the re-deployment. This was all the more so given the fact that they had been working in the same place throughout the many years of employment by the Defendant.
47. When the Defendant issued Re-deployment Notifications to the five Claimants on 29 December, ordering them to show up for work on 1 January 2012 at the specified new places of work, of which none was among those specified in the FEHD contract, the Defendant had unilaterally varied a major employment condition on which the parties had mutually agreed.
48. Furthermore, Clause 3 of the 3rd Contract clearly stated that the Defendant could make appropriate adjustments to the working hours only in special circumstances and upon request of the FEHD, and that such adjustments were to be temporary and should not affect the daily number of working hours as originally prescribed. This being the case, the Re-deployment Notifications show that the Defendant had unilaterally varied the working hours and even the number of working hours, thereby unilaterally varying another major employment condition.
49. For these reasons, the five Claimants were entitled to refuse re-deployment on the spot as they did and not to show up at the new places of work on 1 January 2012. It was beyond doubt that in doing so, they were exercising their rights to terminate their respective employment contracts in response to the employer’s breach.
50. These rights are aptly illustrated in the case of Western Excavating (ECC) Ltd v Sharp [1978] 1 QB 761 and form part of the legal principle of constructive dismissal. Under this principle, if an employer acts in serious breach of an employment contract, which expressly or implicitly shows that he no longer intends to be bound by the essential terms of the contract, the employee is entitled to treat himself as discharged from any further performance of his obligations under the contract. If the employee chooses to do so, he terminates the contract by reason of the employer’s conduct. In that case, the breach of contract by the employer constitutes constructive dismissal. The employee is entitled to leave at the instant without giving any notice to the employer, or he may give notice to the employer or leave at the end of the notice period. Applying this legal principle, it was by reason of the serious breach of contract by the Defendant that the five Claimants terminated the employment contract with the Defendant after 31 December 2011, and the Defendant could neither allege that the Claimants voluntarily resigned on 6 January 2012 by reason of absence for work at the new places of work, nor dismiss them summarily pursuant to section 9 of the Employment Ordinance, and hence cannot rely on section 31C(1) of the Employment Ordinance to avoid liability for severance payments. On the other hand, under 31D(1)(c), the five Claimants are taken to have been dismissed by their employer and the Defendant is liable to pay to them severance payments.
51. Although the Defendant contends that the five Claimants were bound by the unlimited mobility clause in the Code of Conduct for Staff prepared by the Defendant, there is no concrete evidence whatsoever which indicates that the Defendant had ever distributed the Code or made the contents thereof known to the five Claimants. Further, it was only in the middle of the trial that the above contention was raised out of the blue. I do not believe that the Defendant had ever drawn the attention of the five Claimants to the abovementioned clause.
52. Furthermore, given the presence of an express mobility clause in Clause 2 of the 3rd Contract, coupled with the stringent restrictions in Clause 21 on variation of contract terms, the 3rd Contract could not possibly allow for the unlimited mobility clause in the Code of Conduct for Staff or an implied term permitting permanent re-deployment of the Claimants to other places of work (Wong Yuk Ling v East East Food Products Limited, HCLA 95/2002).
Reply Slips on Expiry of Contract
53. On the other hand, I have also carefully considered the effect, if any, of the following incidents on the Claimants’ case, namely the first contact the Defendant made with the five Claimants in relation to the ending of the FEHD contract, and the fact that the 3rd, 4th, 7th and 9th Claimants signed the Reply Slips on Expiry of Contract.
54. The overall case of the five Claimants is that, around mid to late [December], the Defendant sent personnel to their respective places of work during their respective working hours (some time after 15 December for the 3rd and 4th Claimants; on 23 or 24 December for the 7th Claimant; on 26 December for the 9th Claimant; and on 28 December for the 11th Claimant), telling them the FEHD contract would come to an end on 31 December and asking if they were willing to be re-deployed to other workplaces thereafter, but without specifying the places, times and re-deployment arrangements. The five Claimants expressed their refusal right away.
55. According to the 3rd, 4th, 7th and 9th Claimants, at that time they were shown a document which they did not understand and the contents of which were not explained to them. They had no idea whatsoever about the contents of the document when they signed it. The 4th Claimant’s case is that he was specifically told that he would be paid wages and annual leave pay as soon as possible after he signed the document at hand. The 7th Claimant’s case is that he signed the document as instructed as he was told that the document was merely a Notice of Expiry of Contract. The other two Claimants’ case is that they were arranged to sign the document without knowing what was going on. All the four of them claim that they did not know that refusal to accept the re-deployment was tantamount to voluntary resignation, and that they had never indicated that they would resign.
56. On the other hand, while the Company Representative, who claimed to have talked to the 3rd and 9th Claimants individually in person and had them sign the Reply Slips on Expiry of Contract in mid-December was called by the Defendant to give evidence in court, the staff members who had communicated with the other three Claimants regarding the Reply Slips on Expiry of Contract were not called as witnesses.
57. The Company Representative contended that although specific re-deployment arrangements or places of work had yet to be confirmed when she talked face to face with the 3rd and 9th Claimants individually, she did read out to them the contents of the Reply Slips including the two available options and leave them to make their own choices, telling them that it was for the purpose of ascertaining their preferences before proceeding to make further arrangements. When she learned that they refused to accept re-deployment to other places of work, she ticked the second option for them and then let them sign the Reply Slips. She testified that she also told the 9th Claimant that his failure to follow the re-deployment by the Defendant amounted to resignation.
58. And under cross-examination, Ms. Wong Shuk Yin admitted in the end that she neither communicated directly with the five Claimants nor had any idea of the details of the communication between her colleagues and the five Claimants. She only maintained that, upon instructions given by her superior on 16 December, she visited various FEHD cleaning services roll-call points on 20 and 21 December, bringing along the Reply Slips on Expiry of Contract and informing staff members of less than two years’ service of their last day of service; and after 23 December, she notified staff members of more than two years’ service and ascertaining their intentions regarding re-deployment to other places of work.
59. Having carefully considered all the evidence, including all the witness statements, exhibits and testimonies, and having closely observed their demeanour in the course of giving evidence in court and taken into account all the relevant surrounding circumstances, I do not consider any of the Defendant’s witnesses veracious or reliable. There were extensive contradictions in their testimonies and statements, which were also inconsistent with the actual circumstances on the material days. Furthermore, when they gave evidence, they were evasive from time to time and kept changing their stance. I find their evidence to be incredible.
60. On the contrary, although there were discrepancies between the evidence given by the four Claimants in court and their witness statements, given they are seniors with limited education and, as far as I could observe during the trial, their hearing and ability in comprehension and expression are obviously poor, it is understandable that some of their thoughts were not properly expressed in their statements, which were not prepared by professionals on their behalf. However, in the course of giving evidence, as long as the questions put to them were clear enough for them to truly understand their meaning and they were given sufficient time to organize their thoughts, they could eventually give clear accounts of the crucial details of events. Their testimonies were also consistent with both their individual circumstances and objective circumstances. I accept their evidence.
61. On the contrary, I do not accept that the Company Representative had face-to-face conversations with the 3rd and 9th Claimants and had the Reply Slips on Expiry of Contract signed. The reason is that such contention had never been mentioned in any of her statements, nor had it ever been raised at any of the numerous pre-trial hearings or any stage of the two-day trial. What is more unbelievable is that she did not mention such contention or put it to the 3rd Claimant when the 3rd Claimant gave evidence. She was unable to give a reasonable explanation of her failure to recognize the appearance of the 3rd or 9th Claimant all along. She could not even provide such basic information as the date and time. She also gave various versions of what people did at the scene. Given a time lapse of only two months and her background as a young professional, her memory of the events should have been fresh.
62. Furthermore, it is clear from a comparison of the handwriting on the two sets of Reply Slips on Expiry of Contract [Exhibits D-208(1) and D-208(7)] which she claimed to have been written by her, and further comparison of the same with what she wrote in court [Exhibits D-210 and D-213(1)] and in other documents, that she was lying.
63. Therefore, the Defendant did not have any substantial evidence to dispute the fact that the five Claimants had communicated with personnel sent over by the Defendant at that time.
64. Furthermore, turning to the Reply Slips themselves, they contain the following relevant provisions:
“[ ] I am willing to be re-deployed to Yue Wan Estate or Hong Kong Museum of Coastal Defence or Chi Fu Fa Yuen or ( ) as from 1 January 2012 to perform duties of the same nature. From the date hereof until the date of re-deployment, if I change my mind and do not intend to work at ( ), I will be taken as resigning of my own accord and have to give 7 days’ notice or payment in lieu of notice to the Company in order to terminate the employment contract.
[ ] For personal reasons, I am not willing to be re-deployed to other places of work for personal reasons, and I also decide to resign of my own accord and my last working day is _____(Day)____(Month)_____(Year).
* Please delete as appropriate
* Please tick as appropriate”
65. There is no doubt that the Reply Slips offered the workers only two options, one being willing to be re-deployed to other places of work, and the other being unwilling to be re-deployed, which would be taken as a decision to resign voluntarily. No other options were available. Therefore, it is highly probable that the Reply Slips did not truly reflect the intentions of the signatories, which is also consistent with the contention made by the four Claimants that they had merely indicated that they were unwilling to accept the re-deployment but had never indicated that they would resign.
66. And taking into account each Claimant’s age, education background and handwriting on the relevant Reply Slip, I accept the Claimants’ evidence that they simply put their signatures on the Reply Slips and that the rest was filled in by staff members of the Defendant. The Claimants could not read and understand the contents of the Reply Slips, and no one explained the contents to them. They did not know that refusal to be re-deployed would be taken as voluntary resignation.
67. Therefore, having carefully considered the proper construction of the Reply Slips and the fact that the four Claimants signed them without full knowledge and understanding of their effect, I find that although they signed the Reply Slips, the four Claimants had never decided or indicated that they would resign of their own accord, and the Reply Slips did not serve to terminate the employment relationship between the Defendant and the four Claimants.
68. Indeed, the Defendant’s case and the conduct of the parties further demonstrate the fact that the four Claimants’ signing of the Reply Slips on Expiry of Contract had not been taken as voluntary resignation.
69. First of all, on the Defendant’s own case, it sent staff members to various roll-call points for the purpose of informing the cleaning workers of the expiry of the cleaning services contract on 31 December, and the Defendant merely wanted to make preliminary enquiries about the workers’ intentions regarding re-deployment so as to enable the Defendant to decide the way forward. For this reason, particular re-deployment arrangements and new places of work were yet to be confirmed.
70. Furthermore, neither party had ever made any subsequent move in respect of voluntary resignation. The Defendant took no corresponding steps to accept their resignation; instead, it issued re-deployment notifications to the five Claimants on 29 December, requiring them to turn up for work at the new places of work on 1 January 2012, failing which they would be regarded as being absent without leave.
71. Subsequently on 6 January 2012, the Defendant sent notifications to the Claimants by post, informing them that by reason of their absence at the new places of work on 1 January 2012 and thereafter, they were deemed to have resigned of their own accord and terminated the employment contracts. This shows that at no time did the Defendant or the Claimants regard the signing of the Reply Slips by the four Claimants as voluntary resignation. The Defendant was all along fully aware that the Claimants had not indicated that they would resign.
Exclusion from right to severance payment
72. I have also considered whether the re-deployment of staff to other working places by the Defendant would enable the Defendant to avoid liability to pay severance payment by relying on section 31C of the Employment Ordinance. As the Defendant sought to change the times and places of the Claimants’ employment and most of the terms and conditions of the 3rd Contract could not be retained, I only have to consider whether section 31C(3) is applicable, in other words, whether the Defendant had made written offers to the five Claimants to renew their employment contracts or to re-engage them under new contracts not less than 7 days before the termination of the employment contracts, and in relation to the five Claimants the offers constituted offers of suitable employment which were no less favourable than hitherto, so that if the five Claimants unreasonably refused those offers, they shall not be entitled to severance payments.
73. Viewing the arrangements made by the Defendant as a whole, I do not consider section 31C(3) applicable. The Defendant had only contacted the five Claimants twice in relation to the arrangements after 31 December 2011, with only the first contacts with the 3rd, 4th and 7th Claimants made no less than 7 days before the termination of the employment contracts or the expiry of the contract terms as required by section 31C(3).
74. Besides, during the course of the first contact, the Defendant only showed the Claimants the Reply Slips on Expiry of Contract which, however, contained no terms and conditions of new contracts, not even essential terms of employment such as working hours, wages, specific places of work and holidays. They simply could not satisfy the statutory requirements.
75. The second contact was made on 29 December, which temporally failed to meet the 7-day requirement. Furthermore, the re-deployment notices, being the only documents shown, specified nothing but the working hours and places of work and were silent on wages or other essential terms and conditions of employment.
76. Moreover, the working hours of each of the five Claimants were varied. The working hours of the 7th and 11th Claimants were even significantly varied, and this would, as the Claimants pointed out, certainly affect their other part-time engagements and family arrangements. In addition, the five Claimants had hitherto worked at the same places all along; given their senescence and limited education or even illiteracy, they would naturally find it difficult to work in a completely new environment.
77. Furthermore, at no stage did the Defendant specify the amount of wages. Although the Company Representative contended that at the Labour Department meeting on 28 December she mentioned that the wages would not be lower than those in the original contracts or the statutory minimum wage, none of the four Claimants attended that meeting. Nor is there evidence that the 9th Claimant, who was the only Claimant present for some time at the meeting on 28 December, was actually present at the moment the Company Representative made the above statement on wages. In any event, even if it is assumed that the five Claimants were all present, given that the Defendant had varied their places of work, working times and number of working hours, a general statement that the wages would not be lower than those in the original contracts or the statutory minimum wage would not, without more, suffice to show that the new offers of employment were not less favourable than hitherto. All these indicate that the five of them had not unreasonably refused the Defendant’s offers.
78. In the premises, the arrangements made by the Defendant failed to comply with the statutory requirements, and the five Claimants were entitled to refuse the Defendant’s offer on 29 December. The Defendant cannot avoid liability for severance payments on the ground that it had arranged new jobs for the Claimants.
Working for the new service contractor
79. The Defendant also sought to argue that, since 1 January 2012, the contractor who took over the FEHD service contract from the Defendant had employed the five Claimants as cleaning workers in their existing posts. However, the Defendant admitted that, as of the middle of the present trial, it had no idea at all whether the five Claimants were employed by that contractor. The Defendant also admitted that at no point during their employ by the Defendant had the five Claimants indicated that they would switch over to work for the new service contractor.
80. On the other hand, the five Claimants indicated that they had been awaiting specific arrangements by the Defendant and it was only when they heard nothing from the Defendant that they decided to work for the new service contractor from 1 January 2012, and written employment contracts were entered into only after they reported duty. This being the case, the Defendant cannot possibly avoid liability for severance payments on the ground that the Claimants eventually switched to another company on 1 January 2012.
Ruling
81. Having considered all the evidence and the various arguments and grounds of defence put forward by the Defendant, I do not consider any of those grounds sustainable. The employment contracts between the Defendant and the five Claimants came to an end following the expiry of the FEHD contract on 31 December 2011. As the parties neither renewed the existing contracts nor entered into any new contracts, the Defendant is liable to pay severance payments to the Claimants. Alternatively, even if the employment contracts did not come to an end upon the termination of the FEHD contract, the Defendant was in breach of the fundamental terms and conditions of the employment contracts by making the requests for re-deployment, and the Claimants were therefore entitled to refuse re-deployment on 29 December, not to turn up for work at the new places of work on 1 January 2012, and to seek severance payments.
82. For the above reasons, by virtue of section 31D of the Employment Ordinance, the five Claimants have been dismissed by reason of redundancy. Accordingly, I allow their claims under item (A) for severance payments and order that the Defendant do pay forthwith: HK$13,412.05 to the 3rd Claimant, HK$3,003.42 to the 4th Claimant, HK$21,848 to the 7th Claimant, HK$13,827.86 to the 9th Claimant, and HK$13,826.82 to the 11th Claimant.
83. As I have allowed the five Claimants’ claims for severance payments, their claims under the second item for terminal payments are dismissed.
84. Interest on the said judgment sums is to be calculated in accordance with section 39(3) of the Labour Tribunal Ordinance (Cap 25).
Costs
85. I have considered the submissions on costs made by the parties. The basic principle governing awards of costs is that costs are to follow the event. There are no exceptional circumstances in the present case to justify a departure from that principle. As provided in section 28 of the Labour Tribunal Ordinance, costs include any reasonable expenses necessarily incurred and any loss of salary or wages suffered by a party and its witnesses in attending a hearing of the Tribunal. Having regard to the reasonableness of costs and the factual background to the present case, I order that the Defendant do pay forthwith: HK$197 to the 3rd Claimant, HK$1,020 to the 4th Claimant, HK$180 to the 7th Claimant, HK$290 to the 9th Claimant, and HK$199to the 11th Claimant.
86. Interest on the above sums is also to be calculated in accordance with section 39(3) of the Labour Tribunal Ordinance and to be paid by the Defendant.
(Michelle Lam)
Presiding Officer of the Labour Tribunal
Translated by the Judgment Translation Unit of the Judiciary and vetted by Mr Edmund Cham, Solicitor

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LDMR000001/1982
Statutory Electricity Easements - compensation for diminution in value of property - revocable modification of agricultural lease permitting residential use - whether residential user to be taken into account in assessing open market value of land - evidential value of owner’s asking sale price for property - affect on comparables of New Town layout - whether oversails affect value - whether danger to human and animal health - risk of future loss or damage - Held: 1. registration of easement and existence of oversails diminished open market value of property entitling owner to compensation; 2. no compensation payable for risk of future loss or damage but remedies for persons suffering actual loss available at common law and under statutory cause of action by way of damages and not by way of compensation - Sections 10, 11 Electricity Networks (Statutory Easements) Cap. 357, Section 12(c) Crown Lands Resumption Ordinance, Cap. 124.
IN THE LANDS TRIBUNAL OF HONG KONG
Miscellaneous Reference No.1 of 1982
IN THE MATTER of the Electricity Networks(Statutory Easements Ordinance, Cap.357
BETWEEN CHOW CHI KEUNG Applicant
AND CHINA LIGHT & POWER COMPANY LIMITED Respondent
JUDGMENT
TRIBUNAL: His Honour Judge Cruden, Presiding Officer and
M.W. Phillips, Esq., Member.
This is the first application for compensation under the Electricity Networks (Statutory Easements) Ordinance Cap. 357 which was enacted on the 11th day of July, 1980. The applicant is the registered Crown lessee of all that parcel of land containing 2178 square feet (202.34 square metres) being Lot 998 in Demarcation District 130, New Territories, Hong Kong. The lease was for a term, including renewals, of 99 years from the 1st day of July 1898 less the last 3 days thereof.
In 1981 the respondent commenced to construct a 400 KV transmission network in the New Territories. One of the reasons for the enactment of this new Ordinance was to facilitate the construction of the transmission line and to enable owners of land which suffers a diminution in value as a consequence of the construction of the network, to apply to the Tribunal for Compensation.
Under the Ordinance statutory easements may be created in favour of a power company, in the terms of a scheme approved by the Secretary of Lands and Works, to enable the power company to carry out works in accordance with the approved scheme. The respondent is a “power company” as defined in Section 2.
The respondent’s scheme to construct a 400 KV network was approved by the Secretary, under his earlier designation as Secretary of the Environment, and deposited in the Land Office on the 5th day of March 1981. Subsequently on the 25th day of March 1981 the Governor in Council ordered, pursuant to Section 3, that the provision’s of the Ordinance should apply to the approved scheme. Notice of the Order was published on the 27th day of March 1981 in No. 13 Volume CXXIII Hong Kong Government Gazette under L.N. 80 of 1981.
The applicant’s property is situated near Lo Fu Hang Village which is south-east of To Yuen Wai, To Yuen Wai is on the main road between Tuen Mun and Yuen Long. There is no vehicular access to the appellant’s property which is about 30 minutes walking distance from To Yuen Wai along partly paved footpaths.
The Crown lease describes the property as a “padi lot” and we find that it is at present lawfully used for residential and agricultural purposes. The property is beyond the Tuen Mun New Town Layout Plan. We were informed that the property falls within an area zoned Lowland Rural Area on the Government’s internal department plans. At present pigs and chickens are reared and some vegetables are grown on the property. A house of two stories and an adjoining kitchen, used for residential purposes, are occupied by the applicant’s parents. There are also two pigsties with a total area of 51.68 square metres and chicken sheds of a total area of 38.99 square metres.
The right to compensation is contained in Section 10 which provides :-
”10.(1) Where an order made under this Ordinance affecting any land is registered by a power compensation under the Land Registration Ordinance, the company shall be liable to pay company to the person who, at the date of registration of the order is the owner of the land in respect of any diminution of the value of his estate or interest therein attributable to the registration of the order.”
We are satisfied that the Order has been duly registered and that the applicant was at the date of registration the Crown lessee of the land. Section 10 goes on to give the Lands Tribunal jurisdiction to determine the amount of compensation, if any, payable in the case of a claim and Sub-section 6 provides that:
”(6) For the purposes of this section “value”, in relation to any land affected by an order made under this Ordinance, means the open market value of the land assessed as at the date of registration of the order.”
However, the Section also provides that in determining the compensation payable thereunder, no compensation shall be paid for:
”(a) any expectancy or probability of the grant or renewal or continuance by the Crown or any person of any licence, permission, lease or permit whatsoever;
(b) any use of the land which is not in accordance with the terms of the Crown lease under which the land is held.”
At the hearing evidence was given as to the status of the house and related buildings used for domestic premises. In accordance with New Territories agricultural land practice the applicant is the holder of a Modification of Tenancy permitting him to maintain the residential buildings we have referred to on this agricultural land subject to the conditions appearing on the modification document. These conditions include:
1. The permission may be cancelled on 1 month’s notice or where there a breach of the conditions forthwith.
2. The permission is not transferable.
3 The annual permit fee is $12.
In practice a purchaser of the property may, upon the existing Modification of Tenancy in favour of the vendor being cancelled, apply for a new Modification of Tenancy in his name. In a letter from the Principal Government Land Agent/Acquisition of the Lands Department dated the 30th day of July 1982 to the respondent, that officer confidently asserts that as the permit is of a temporary nature and is subject to cancellation in the case of breach of conditions:
“ … no compensation shall be given under Section 10 of the Electrcity Networks (Statutory Easements) Ordinance 1980,”
The respondent adopted that view in its submissions and contended that any valuation of the property must be on the basis that it is bare agricultural land without any buildings erected thereon. The respondent pointed out that Section 10(5) provides:
”10. (5) In the determination of the amount of compensation, if any, payable under this section, no compensation shall be given in respect of -
(a) any expectancy or probability of the grant or renewal or continuance by the Crown or any person of any licence, permission, lease or permit whatsoever;”
Our attention was drawn to the fact that Section 10(5) appears to have been modelled on Section 12(c) of the Crown Lands Resumption Ordinance, Cap. 124 which provides:
”12 In the determination of the compensation to be paid order this Ordinance -
(c) no compensation shall be given in respect of any expectancy or probability of the grant or renewal or continuance by the Crown or any person of any licence, permission, lease or permit whatsoever;
Provided that this paragraph shall not apply to any case in which the grant or renewal or continuance of any licence, permission, lease or permit could have been enforced as of right if the land in question had not been resumed; and ”
We are satisfied that the applicant could not have enforced any right to have the Modification of Tenancy renewed or continued. So had this been a resumption under the Crown Lands Resumption Ordinance, his position would not have been protected by the proviso to Section 12(c). We are further satisfied that the provisions of Section 10(5) and Section 12(c), are, for practical purposes, identical.
The affect of Section 12(c) when land is resumed under the Crown Lands Ordinance was considered by the Court of Appeal in Ching Chun-Kau v. Director of Lands and Survey (1978) H.K.L.R. 320. In that case the land resumed was held under a Crown lease which at the date of resumption had an unexpired term of 22 years. However, the sole permitted use under the lease was for the purposes of a dairy. A dairy required an annual licence from the Director of Agriculture and Fisheries. The annual licence in that case had 6 months to run at the date of resumption and the grant of a new annual licence was within the discretion of the Director of Agriculture and Fisheries. The Lands Tribunal, relying on Section 12(c), held that the value of the unexpired term of the lease was not to be calculated on the basis of 22 years but merely on the 6 months remaining under the annual licence.
The Court of Appeal had little difficulty in rejecting that approach and held that the land should be valued on the whole of the unexpired term of the lease of 22 years. On appeal Huggins J.A., thought Section 12(c) was irrelevant and would have been prepared to dispose of the appeal on that basis:
“The short answer appears to me to be that the Claimant is not seeking compensation in respect of any expectancy or probability of the grant of a licence but in respect of the unexpired term of the Crown lease. …
The Tribunal felt constrained to limit the compensation to the period of six months, a period entirely unconnected with the unexpired term in respect of which the claim was made and dependant solely upon the relationship between the date of resumption and the date of expiry of the current dairy licence. It was, no doubt, a pure matter of chance that the resumption order was not made either on the day on which that licence was granted or on the day on which it expired. Had it been the latter day the Tribunal would presumably have awarded no compensation at all. Such an extraordinary result is not one which I could endorse unless driven by the clearest possible language. It was the force of the words of s. 12(c) which so impressed the Tribunal that they thought they were driven to that result. As I have said, I think that paragraph has no relevance to the case before us.”
The Court of Appeal emphasised that the application for compensa-tion was for the unexpired 22 years of the Crown lease. The application was not for compensation for the expectancy of the renewal or continuance of the dairy licence. If the dairy licence were not renewed Huggins J.A. went on to point out that certain action could in any event have been taken against the Director of Agriculture and Fisheries or alternatively there were other remedies under the Crown lease.
There are, of course, important differences between the instant facts and those in Ching Chun-kau V. Director of Lauds and Survey. In the latter case the claim was for compensation upon a resumption, while here we are concerned with compensation for diminution of value of land. The Lands Tribunal appealed from, attempted to limit the assessment of compensation to the 6 months remaining under the annual licence when the interest being resumed was the much longer term under the lease.
The respondent here makes a far less ambitious submission. For it recognises that any valuation is to be based on the whole unexpired term of the Crown lease. It simply submits that in that valuation the buildings not authorised under the lease, but permitted by the Modification of Tenancy, should not be included. We recognise that Ching Chun-kau’s position against the Crown as lessor, was very different and more power-ful than the present applicant’s position as grantee under the Modification of Tenancy and as Crown lessee.
However, the Court of Appeal’s judgment in Ching Chun-kau V. Director of Lands and Survey remains most helpful in indicating the limited extent of the perhaps otherwise apparently wide provisions of Section 12(c) and by analogy in this particular case Section 10(5). In view of the several factual differences it may be helpful if we return to the relevant provision of the Electricity Networks (Statutory) Easements Ordinance relating to compensation, namely Section 10. Under Section 10, as we have seen, the applicant is entitled to compensation for “any diminution of the value” of his land. Further the value of his land is the “open market value of the land” as at the date of registration of the order.
Any accurate assessment of any diminution of value will usually include an assessment of the value of that land to provide a base. If there has been any diminution we must then quantify that diminution. The first task would require the open market value of the subject property to be determined.
What then comprises the subject property for the purposes of this valuation? It is undisputed that it at least includes the bare agricultural land. We are equally satisfied that some of the buildings are incidentally used for agricultural purposes, namely the pigsties and chicken sheds. The respondent’s objection to buildings being included seems to have overlooked the fact that it is only the residential buildings which are referred to in the Modification of Tenancy. The Modification of Tenancy is also, to some extent, a misnomer for under that document, as the body of that document declares:-
“ … the Crown hereby permits the modification of the Crown Lease … “
The modification is, of course, subject to the terms therein set out but it is far more than merely a modification of a tenancy. In terms of the document it is a modification by the Crown of the Crown lease. The modification permits the applicant to maintain on the land contained in the lease the private residence, porch and kitchen at present situate on the property.
From a consideration of the whole of the evidence including the Crown lease and the modification thereof, we are satisfied that the other buildings used for pig and chicken farming are lawfully erected and used for agricultural purposes in terms of the lease. We have not overlooked that, as was typical for leases of this vintage, the permitted use is described as a “padi” lot. We hold that such a use includes not merely the growing of rice but general agricultural purposes. Such buildings must necessarily be included in any valuation. So the subject property clearly includes at least the land and those agricultural buildings.
We accept that the residential buildings are only permitted under the Modification of Tenancy. However, it is equally clear that those residential buildings are lawfully erected on the land for residential purposes pursuant to the Crown lease as modified by the Crown under the modification document. We recognise that the modi-fication in respect of those residential buildings may be cancelled by the Crown on 1 month’s notice and is not transferable.
However, we also remind ourselves that the established practice in the New Territories is for residential modifications to enure in favour of the grantee subject to payment of an annual fee. We note that the modification in favour of the applicant has continued on payment of an annual fee since he purchased the property in 1977. We further accept that upon a property, subject to a modification in favour of the vendor, being sold the new owner will normally have no difficulty in obtaining a new Modification of Tenancy, in relation to existing residential buildings included in the purchase. The new modification too, in the normal course, will continue subject to the annual fee being paid.
For these reasons we are well satisfied that the open market value of the subject property will include an element for the residential buildings. The present residential occupancy is clearly lawful and in the context of Hong Kong’s relatively high residential property values, even in the New Territories, these particular residential buildings must have value.
In ascertaining the open market value of the subject property we therefore hold in accordance with Ching Chun-kau v. Director of Lands and Survey that no deduction for residential buildings is to be made under Section 10(5). On the basis of the evidence available to us, we now turn to consider the open market value of the subject property. We would con-firm that the subject property includes the bare land, the buildings used for pig farming, the buildings used for chicken farming and the residential buildings referred to in the Modification of Tenancy.
We would also confirm that under Section 10 the relevant date for assessing the open market value of the subject property is at the date of registration of the order. In this case the order was registered against the subject property in the Tuen Mun District Land Registry on the 30th day of March, 1981 as Memorial No. 202470.
The applicant did not call a chartered surveyor or other expert to give evidence of value. However, he informed the Tribunal that he purchased the property after negotiations were conducted by a village elder on his behalf on the 16th day of May, 1977. We were informed that the consideration formally expressed in the assignment was $20,000. There were suggestions that the total cost to the applicant may have been in excess of that sum but the evidence was not sufficiently clear for us to make any contrary finding on this issue and we are left with the stated consideration of $20,000.
The applicant also stated that in 1980 he attempted to sell the property through a village elder for $350,000. He was offered $250,000 which he rejected. No sale was effected. In January 1982, by which time the pro-perty was subject to the statutory electricity easement, he reduced the sale price to $200,000, to take into account the effect of the easement on the property, but was unable to find a purchaser.
It is trite law that an offer to buy or sell at a certain price is not direct evidence of value. Often it may merely be an estimate by the offeror of the value of the property to him. Depending on the circumstances it may not even be evidence of that fact. For an offer may also reflect the financial position of the offeror and his estimate of his bargaining position against the other party, rather than his estimate of the real value of the property. A variety of other factors, not directly related to value, may also influence the calculation of the offer. Generally little or no weight should be given to evidence of this kind as was emphasised by the High Court of Australia in McDonald v. The Deputy Federal Commissioner of Land Tax for New South Wales (1915) 20 C.L.R. 231, 237, where in a taxation appeal Isaacs J., pointed out:-
“ … it is plain that the mere fact of a statement by an owner to a stranger that he would be willing to sell at a given figure, and that offer was not accepted, for some reason undisclosed, is not evidence of what the Statute requires, namely the price which a willing buyer would give, supposing the seller announced reasonable conditions. At most, it is evidence of the owner’s bona fide belief at the time as to the value of his land. Nor is the refusal of the person to whom the offer was made to accept it, even if specifically on the ground of excessive amount, any more than an expression of his opinion on the point … When the matter has reached the point of a concluded contract, there has been a definite concrete fact established, which not only evidences value, but to some extent helps to create or modify it. Where an owner has actually parted with his land for a fixed sum and a buyer has parted with his money for the land, a clear event has arisen, which, based on the ordinary instincts and impulses of human nature, indicates a consensus of opinion between two adverse parties in the community respecting the value of similar lands. Some advantage to justice is therefore manifestly possible from considering it, and the law presumes that up to that point the disadvantages of having to undertake the collateral inquiries as to comparison do not outweigh the possible advantages.
But if the negotiations do not end in a concluded bargain, the field is at once open to a multitude of other considerations before the same point of opinion is reached. Excursions into the realm of collateral circumstances would be endless. ”
We have been unable in this application to refer, if only for background purposes, to current rateable values. For the subject property is exempt from rates under the Rating Ordinance, Cap. 116. Section 36(1)(a) exempts from assess-ment agricultural land while Section 36(1)(b) exempts any dwelling house in the New Territories (except New Kowloon) which is occupied in connexion with agricul-tural land. The Commissioner of Rating and Valuation has therefore not been obliged to value the property.
However, we did have the assistance of the evidence of Mr. T. Lo, Chartered Surveyor, who was called by the respondent. Mr. Lo was of the opinion that there had not been any diminution in value attributable to the registration of the order. In coming to that conclusion, he disregarded the existence of the residential buildings treating the property as agricultural land. Turning to possible comparables he stated that there was no record of any comparable transactions for similar properties before and after orders were registered. So there was no direct evidence of any possible diminution in value as reflected in actual sales. As far as sales generally in the immediate locality were concerned, he stated that these suffered from the disadvantage that they were either in or near the Tuen Mun New Town Layout. He was of the opinion that sales in both of these areas reflect a speculative element arising from the Crown’s practice of making generous ex-gratia payments to owners of resumed land.
We have already considered this issue in Hofei Estates Limited v. Secretary for City and New Territories Administration C.L.R. No. 1/82. We accept that prices paid within layouts tend to exceed the true value of those properties for agricultural use. However, we are not satisfied that principle can properly be extended to properties outside a layout. If there is a pattern of sales of comparable agricultural land outside a layout, those sales should not be rejected solely because of the possibility that they may include a speculative element arising from the hope that, at some indeterminate time in the future, an existing layout maybe extended to include such properties.
In Appendix XI of his report, Mr. Lo set out details of sales of Properties Nos. 1, 2, 3 and 4 all of which are within the Tuen Mun New Town Layout and quite properly rejected by him as comparables for that reason. He then went on to give details of Properties Nos. 5, 6 and 7 all of which are not only outside the layout but are situated in the same locality as the sub-ject property. However, he also rejected these latter three properties on the ground that, while they were outside the layout, their sale prices were also inflated due to the vicinity of the layout. Yet, in relative terms, they were no closer to the layout than the subject property. To overcome this self-imposed restriction, Mr. Lo went far beyond the locality of the subject property and preferred to rely on much larger agricultural properties in more remote areas. The procedure he followed, he explained, was that he:-
“ … gathered sales evidence of land lying in the more remote part of the New Territories where there is little or no prospect of resumption or development. ”
In March 1981, sales of agricultural land in those remote areas ranged from as low as $43 to $80 per square metres for properties ten to twenty times larger than the subject property. The subject property is 202.34 square metres. The area of Mr. Lo’s preferred comparables were 4694.31 square metres, 4532.44 square metres and 2630.43 square metres. On the basis of those very different transactions he adopted a rate of $80 per square metres for the subject pro-perty producing a value of $16,187. Having considered the particulars of those much larger and more remote properties, which are referred to Appendix XII of his Report, we are satisfied that they are not sufficiently comparable to be used as a sound basis for valuing the subject property. Indeed, they would be well below the market value of the subject property as, conversely, agricul-tural land within a layout, would be above the value of the subject property.
We note in passing, that the Crown’s ex-gratia zonal rate for resump-tion of agricultural land within the Tuen Mun Layout, being 75% of $89 per square foot, is very much higher. Indeed it equals $718.50 per square metre compared to the $80 per square metre used by Mr. Lo for his valuation of the subject property. We understand that the zonal rates are for bare agricultural land without buildings. If the subject property were within the layout, that would produce a figure of $145,000 plus an allowance for buildings.
Notwithstanding Mr. Lo’s hesitancy, we are satisfied that greater weight should have been given to Properties Nos. 5, 6 and 7 in Appendix XI. Of these Property No. 7 appears most closely to relate to the subject property. Property No. 7 is similar in size comprising 228.17 square metres compared with the subject property’s 202.34 square metres. The property was sold for $98,240 on the 30th day of May 1981 which also is very close to the date at which we have to assess compensation, namely the 30th day of March 1981. This property also appears to be a similar if not even a further distance inland, from Castle Peak Road and to lack vehicular access. It is likewise outside the Tuen Mun Town Layout. Unfortunately, we were not told whether Property No. 7 was bare agricultural land or whether it includes any buildings.
Nevertheless, even after taking into account Properties Nos. 5, 6 and 7, the evidence remains insufficient for us to make any precise finding as to the actual open market value of the subject property as at the 30th day of March 1981. We are satisfied, however, that it is worth less than the applicant’s suggested valuations which varied from $350,000 to $200,000. Equally it is worth very much more than the respondent’s value of $16,187. Some of our difficulties may not have arisen if the applicant had called a valuer. In the circumstance’s we can only estimate that the open market value of the property as at the 30th day of March 1981, may have been somewhere in the region of $100,000 to $200,000. We would emphasise that we have not arrived at those figures as the open market value of the property but merely record them as parameters within which the actual open market value would probably fall.
We must now proceed, as best as we are able, subject to all the foregoing qualifications, to ascertain the diminution, if any, in that value of the land “attributable to the registration of the order”. We hold that any such diminution necessarily includes not merely the registration of the Order in terms of the Ordinance but also the construction of the transmission line which includes the pylons and the lines themselves. The normal method of ascertaining any diminution would be to compare the value of properties, as reflected in actual sales, which are subject to such orders with similar pro-perties which are not encumbered by such orders. It was common ground that as this is the first major transmission line affecting privately owned pro-perties there simply is, as yet, no record of any such sales.
However, we have had the advantage of inspecting the property. No pylons are constructed on the property but the transmission lines pass over the property. This particular transmission line appears physically to be of a much larger kind than is commonly seen elsewhere in Hong Kong. The pylons are major steel structures carrying 6 transmission lines at a height of about 100 feet above the residential buildings of the subject property. The subject property itself is largely covered by the buildings we have already described. The buildings take up 65% of the total area. The balance of 35% comprises paths and a small garden. So this is not an example of the more common case of electrical transmission lines covering large areas of remote bare agricultural land.
Before proceeding to consider the effect of the order on the subject property it may be helpful, particularly as this is the first application under our new Ordinance, to consider the position in countries overseas where for much longer, statutory provision has been made for the erection of electrical trans-mission lines over private property. In England the empowering legislation is the Electricity (Supply) Act 1919 and the Electricity Acts 1947-1958. Where “way-leaves” are acquired a right of compensation arises. Compensation is determined under the Land Compensation Act 1961 so the general principles relating to the compulsory acquisition of land by the Crown are applicable. A “way-leave” is defined in Volume XII Oxford English Dictionary 211 as:-
”way-leave: permission to make and use a way for conveying coal from the pithead across a person’s land; the rent or royalty for such permission; the way or road constructed for the purpose. Also, permission to carry telephone wires over or along buildings, or to lay waterpipes or drains across private land, and the charge or rent payable therefor.”
The first cited use of “way-leave” goes back to 1427. With the development of electricity and the necessity to reticulate it over long distances “way-leave” has also been used, to mean the right to carry electri-cal transmission lines over or under land. In ’Modern Methods of Valuation of Land, Houses and Buildings’ (6th Edn.) 413 it is stated that in England:-
’The acquisition of “way-leaves” ... may include the following:
(a) The carrying of overhead conductors across land by means of supports erected on the land;
(b) the carrying of overhead conductors across land without any supports being erected on the land itself - sometimes referred to as “oversails”;
(c) the carrying of conductors underground.
The extent of the injury suffered by owners and occupiers will obviously differ according to the nature of the wayleave.’
In this particular case the species of wayleave affecting this pro-perty is that categorised in paragraph (b) as “oversails”. As to the diminution in value caused by oversails the authors go on to state:
”In (b) there is no actual occupation of the land itself, and in the case of purely agricultural land the presence of the oversail may have little, if any, effect on value, although the minimum height at which the conductor crosses the land is always a matter for consideration.”
In England compensation is paid either by way of annual rent or by way of lump sum payment. Under Section 10 the power to award compensation seems to be wide enough to cover both alternatives. In this claim, the applicant sought a lump sum payment. “Modern Methods of Valuation”, after referring to actual loss suffered to owners by damage to crops and the like, observes that normally electricity conductors cross open country and that if it were proposed to carry a line over ripe building land the better course for an owner would be to make representations for an alternative route. This implicity recognises that a loss may be suffered by the mere presence of an oversail, even though there is no physical damage to crops or other property. Express reference to the affect of oversails on bare land with development potential is made at page 415:
”If the original proposal were persisted in, then the effect on the value of the state of the erection of pylons on certain plots and the presence of high-voltage cables over other plots would have to be considered. In such a case a claim for depreciation in the value of the land affected could be made.”
Reference is also made to the decision of the English Lands Tribunal in Radnor Trust Ltd. v. Central Electricity Generating Board (1960) 12 P. & C.R. 111 which was a claim for compensation due to the erection of pylons and oversails. £220 was awarded for the value of the land taken for the pylons and £750 for depreciation in the value of the house. However, the depreciation appears to have been allowed because of the pylons and no separate provision was made for the oversails. The Tribunal was satisfied that the pylons and the wires depreciated the property’s value stating at page 114:
”I have viewed the property and in the light of that view I am satisfied that the existence of the pylons and wires does not materially detract from the enjoyment of the very attractive property. At the same time I am satisfied by the evidence that it would prove a deterrent to some, and form a strong bargaining point in the case of all prospective purchasers.”
So the Tribunal found that the pylons, together with the transmission wires, would affect the bargaining position of all prospective purchasers. A less generous view seems to have been taken by a differently constituted Lands Tribunal in Pryor v. Central Electricity Generating Board (1968) 206 E.G. 1143. In that case compensation was allowed for the potential interference with aerial cultivation, annual cleaning, converging of double lines and injurious affection to the farmhouse. But on the facts of that particular case a claim that future sales would be impaired was rejected.
The present applicant places the affect of the transmission lines on a future sale in the forefront of his claim for $200,000. He submitted that the erection of the transmission lines had affected his enjoyment of the pro-perty by their physical presence above the property; their affect on fung shui; their danger to human and animal health; and their affect on television reception. All these factors, it was submitted, would result in a lower resale value of the property.
As to loss of resale value, the applicant cited his first offer to sell the property before the transmission lines were erected for $350,000 com-pared with his reduced subsequent offer of $200,000. Now he expected to be able to sell the property at about $150,000. He therefore assessed his loss of value on resale at $200,000 being the difference between the earlier $350,000 and the present $150,000. In the New Territories he stated that fung shui is a dominant factor in ascertaining land values. The installation of the transmission lines, in his opinion, had reduced the fung shui value.
The applicant produced a newspaper article in the ’Oriental Daily News’ of 3rd September, 1981 apparently prompted by the construction of these trans-mission lines, raising fears of the danger to human life. On whether high voltage lines cause danger to human and animal life the respondent called its Environmental Protection Officer Dr.C.J. Muskett. Dr Muskett holds the degrees of Bachelor of Science (Honours) and Doctor of Philosophy in Applied Biology from the University of London and is a Member of the Institute of Biology. For 8 years he has been employed as a professional environmental scientist. We accept he is an expert in these fields. He produced reports on the effects of high voltage transmission systems on animals and humans, supporting his opinion by reference to 27 authorities. Dr. Muskett’s evidence was most interesting and revealed that for some years research studies have been carried out to investigate the effect of high voltage transmissions on animals and humans. His evidence included the following observations:
”Overhead transmission lines affect the surrounding environment in a number of ways. In addition to the electric and magnetic fields generated; small arc discharges, air ions, low frequency noise, ozone nitrous exide and radio interference are also characteristically produced. Hence the environment in the vicinity of transmission lines can be in chemical and physical terms, extremely complex ... research studies carried out in America and Western Europe into the possible effects of transmission lines on human health ... none of these studies was able to indicate a significant effect of electric fields on humans number of Soviet studies and more recently Spanish studies have been carried out on persons occupationally exposed to high voltage electric fields in switchyard environments. Before proceeding with a review of the research results from these studies, it is important to consider the differences in environmental conditions prevalent in switchyards as opposed to those in the vicinity of transmission lines. In contrast to the studies conducted in America and Western Europe, Soviet studies have indicated adverse effects of high voltage transmission. In a report by Krivova for example, in which 319 men aged up to fifty years exposed to switchyard environments rated at 220,330 and 500 kV were tested, it was concluded that the electric field caused a nonspecific disturbance to the central nervous system. Another Soviet study, by Asanova and Rakov carried out on workers employed on 400 and 500 kV installions found multiple functional disorders of the neurological, cardiovascular and digestive systems. Sazonova followed up these disorders and found comparable results in further studies ... Much criticism has been levelled at the Russian studies, principally with regard to methodology ... However, as a result of the Russian work, exposure standards have been set for occupationally exposed persons in the USSR ... Based on this review of available data, it appears that there is no conclusive evidence to support the hypothesis that there may be significant biological effects from exposure of the public to EHV transmission systems. The effects that have so far been reported are confined to occupational exposure situations (switchyards) and are non-specific. Persons working in switchyards would be expected to be exposed to greater electric field intensities than would be the case for members of the public in the vicinity of transmission lines. In addition occupationally exposed workers would be subject to additional environmental influences such as low frequency noise, small arc discharges, vapours from transformer oils and oxidants (ozone). These additional factors are unlikely to be significant to members of the public. The overall conclusion resulting from a review of the relevant literature is that 400 kV transmission systems have not been shown to be in any way hazardous to the general public.”
Dr. Muskett was of the opinion that the high voltage electricity transmitted in the wires would not affect the health of either the persons living at the property or the pigs and chickens reared for sale. He therefore equated their position with that of the general public.
The complaint in respect of television reception seemed credible. It was consistent with Dr. Muskett’s concession that the transmission lines could cause radio interference. Yet when we visited the property and the television was put on, for demonstration purposes, it did not appear to be affected by the high voltage transmission lines.
We were informed by the respondent that if one of the wires should break and fall to the ground it would be automatically neutralised posing no danger. The pylons and the wires had been designed to withstand a wind force several tines greater than the maximum recorded winds in this area during the past 50 years. Many of the applicants’ fears were either ungrounded or speculative.
At the same time we sympathise with his obvious concern. A layman’s fears caused by these transmission lines is certainly understandable. As to the speculative nature of some of these fears, a similar issue arose in Wood & Anor v. Taranaki Electric-Power Board (1927) N.Z.L.R. 392. The Board had erected a transmission line along the common boundary of the claimants farm and an adjoining major drain. The claimants claimed compensation for diminu-tion in the value of their land caused by the proximity of the lines which rendered more costly the regular cleaning of the drain. The Court of Appeal held that the Board was by statute responsible to clean the drain and no duty devolved on the claimants. However, as to the possible damage to land or animals from falling wires, the Chief Justice observed:
“On the argument before us counsel for the claimants admitted that the claimants could only recover compensation in respect of losses sustained in consequence of what the respondent Board has lawfully done or might lawfully do under its statutory powers. If it exceeds those powers, either by committing an act not authorized or by doing an authorized act in a negligent manner, the person injured would have a remedy by action and would not be entitled to compensation. The respondent Board contended that no injuries of any kind mentioned were proved to be necessarily incidental to the proper use of such transmission-line, or to its use without negligence; and that if any injury can be suggested to be necessarily incidental to the proper use of the transmission-line the happening of the same is too uncertain and speculative to be the subject of compensation. The claim therefore is based entirely upon an anticipated injury to the land of the claimants not due to negligence on the part of the respondent Board. The risk, it is suggested, may arise from the breaking of one or more of the transmission-wires by tempest, accident, or some unforeseen cause bringing the wires into contact with the lands through which they run, and so causing fires on the lands and to the fences and injury to the live-stock. It was shown however, by the evidence that the transmission-lines of the respondent Board are supplied with what is ordinarily known as an overloading device, and in addition with a leakage relay device. The effect of these safety devices, according to the evidence, is that directly a transmission-line comes off the insulator or makes contact with the earth the line is deadened automatically ... After considering the evidence we hold as a fact that there is no reasonable probability of injury to the land or the live-stock of the claimants by reason of the accidental fall to earth of the transmission-wires. The possibility of such a fall of wires is wholly uncertain and quite incapable of estimation. It may never happen. If it should happen it appears clear from the evidence that there is no reasonable probability of injury to the land ... It is impossible to hazard or guess whether some such accident would ever happen, or whether, if it should happen, what injury would be sustained by the workmen. The whole matter is in the region of mere speculation. For these reasons we determine that the claimants are not entitled to compensation in respect of the injurious affection claimed for risk of damage to their lands by fire and injury to workmen and stock, and generally to the lands, through the escape of electrical energy from the said works.”
We have also considered the English Court Appeal decision in West Midlands Joint Electricity Authority v. Pitt & Ors. (1931) 2 K.B. 2 which considered wayleaves; the power to place electric lines across land; land-owners right to compensation; and the procedure by which it was determined. The power to place transmission lines over private land in England was introduced in 1919 by the Electricity (Supply) Act. Among several issues resolved by the Court of Appeal which are of interest in the present claim, is that it was undisputed that the wayleave was “land” within the meaning of the English Acquisition of Land (Assessment of Compensation) Act 1919. The easement constituted an interest in land and was therefore “land” for compensation purposes. The narrow question was whether compensation was to be determined judicially or decided administratively by the Minister of Transport.
The rental offered for the wayleave was calculated on the basis of the number of towers with different rates depending whether they were erected on arable, grass or other land together with a different rate for underground cables. The length of oversails was not an element expressly taken into account. However, the judgments of the Court of Appeal were emphatic that, apart from statutory rights under the Electricity Acts, the Crown had no right to enter upon private land to erect pylons or carry electric lines across such land. Romer L.J. at page 54, referring to the effect of a wayleave over private property, observed:-
“But an electric line cannot be so placed without taking away some of the rights of property of the owner or occupier of the land … But he does obtain a legal right to compensation as I understand those words. The compensation to which the statement of Lord Atkinson refers is surely compensation commensurate with the invasion of his property that the land owner has incurred, and not a compensation commensurate with the sense of justice possessed by the Minister of Transport for the time being.”
In Hong Kong a right to compensation arises pursuant to Section 10 in favour of a claimant, upon the registration of an order under the Electricity Networks (Statutory) Easements Ordinance against his property. In the event of a dispute it is to be determined judicially by this Tribunal. Section 10 further provides that the measure of compensation is the diminution in the open market value of the property attributable to the registration of the order.
Before proceeding to determine if there has been any diminution in value, there is one other matter which arose in evidence which we should refer to at this stage. We were informed that the route of the wayleave affecting many properties was determined after consultations with at least some of the parties affected. An arrangement was also made between the Government and the respondent whereby the Government, as agent for the respondent, would make ex-gratia offers to the various owners whose properties were affected by the wayleave. The offers were conditional upon the owners waiving and surrendering all their rights against the respondent. A letter from Government to the applicant dated the 4th day of August, 1981 included this provision:
“4 However, Government on behalf of China Light and Power Company Limited is prepared to offer you for the land affected an ex-gratia cash allowance of $10,346. This offer is subject to the following conditions:
(a) that you waive and surrender to China Light and Power Company Limited all your rights to and interest in the compensation payable to you in respect of the said lot(s) under Section 10 of the Ordinance; and
(b) that you accept this offer in writing by signing the acceptance part of this letter and returning it to me before 3rd August 1982.”
The Government is not a party to these proceedings for under the Ordinance the parties are the owner of the property as applicant and the China Light and Power Company Limited as respondent. In Hong Kong the production and sale of electricity is not a Government function but is the business of public limited liability companies. The Government may have considered that it was in the public interest for the technicalities in relation to the way-leave to be resolved expeditiously and offered assistance. In any event it undertook the task of negotiating with the owners on behalf of China Light and Power Company Limited. We are not concerned with that decision. What does concern us in this claim, however, is the preceding paragraph of that letter which concluded:
“The Tribunal must, under Section 10 of the said Ordinance, determine the compensation for your estate or interest strictly in accordance with the lease conditions and is precluded from awarding any compensation in respect of any expectancy or possibility of a grant of land exchange or licence and must discount any evidence which shows that the land values have been enhanced by expectation of development or of a modification of lease conditions. If you are not sure of your rights you should enquire from the District Office, Tuen Mun or seek independent professional advice.”
No doubt that paragraph was written in the utmost good faith. It includes a statement of what the Tribunal “must” do in determining compensation which might be thought to be an unhappy choice of words. What is more important is the reference to the Tribunal having to discount the expectancy or possibility of a grant of land exchange or licence or any enhancement by expectation of development or of a modification of lease conditions, which enters a difficult area of law. In certain circumstances that statement of law in the letter apparently limiting a claim for compensation is wrong. A similar statement was included in a subsequent letter from the respondent to the applicant dated 14th April 1982. An example of where such an expectancy or possibility, to the contrary, is not to be discounted has already been referred to in Ching Chun-kai v. Director of Lands and Survey (supra).
The very same issue arose in this application when we came to consider the Modification of Tenancy. We have held the mere expectancy of the annual renewal of the modification of tenancy is not to be a discounting factor. In many compensation claims a variety of delicate questions may arise. If the Government ventures to inform the parties with whom it is negotiating of the legal limit of their right to compensation, care should be taken to ensure that such information is accurate. Here the Government informed this applicant that, as a matter of law, his right to compensation was in one particular limited, when in fact it appears to be not so limited.
We now return to the question whether there was any diminution of value. We have already seen that due to the fact that the wayleave had just been completed and is the first of its kind to be built in Hong Kong affect-ing private land, that there simply are no comparables of affected and unaffected similar properties from which we could arrive at a figure by that method.
In those circumstances Mr. Lo adopted what he described as a notional method of valuation. He discounted the possibility of the annual renewal of the modification of tenancy. He accepted that the lines are inherently safe and that there was no substantiated health hazard to humans or to livestock. On that basis he concluded that the registration of the Order would not diminish the agricultural value of the land.
We have already held that in assessing the value of the property the existing permitted residential use is to be taken into account, as well as the agricultural user. We accept, however, that the oversails are inherently safe and following Wood & Anor v. Taranaki Electric Power Board no compensa-tion is presently payable for the possibility that they may become unsafe or cause damage in the future. This finding in no way prejudices the applicant. For if in the future the lines became unsafe and the applicant were to suffer damage he would then, depending on the circumstances, have a claim not for compensation but an action for damages. In particular we would point out that Section 11 not only preserves a party’s common law rights but, in addition, creates a separate statutory cause of action in favour of persons suffering loss or damage.
From our view of the property we are satisfied that the oversails do not affect television reception. Nor on the evidence has it been established that there is any health hazard caused by their presence. If any of these factors were established then, while they are not separate statutory heads of compensation, it would be open to us to infer that their presence would diminish the open market value of the property.
Similarly, if the adverse fung shui effect of the transmission lines was reflected in a reduced open market value, weight would also have to be given to that factor. It matters not whether fung shui is a separate head of compensation or recognised by the statutory or common law, if in fact it affects the open market value. The position might well be the same even if the open market value was not the test and we had to consider loss or damage generally. For Section 3 of the Application of English Law Ordinance, Cap. 88 provides that the common law shall be in force in Hong Kong so far as it is applicable to the circumstances of Hong Kong and its inhabitants and “subject to such modifications as such circumstances may require.” Under that provision Hong Kong Courts have, for example, long recognised as separate common law heads for damages in personal injuries actions, claims for extra nourishment and bonesetters fees, which would not be allowed in England.
If the need arose there is no reason why the courts in Hong Kong, in appropriate compensation cases, might not recognise fung shui. However, in this case we do not need to consider fung shui as a separate head of com-pensation for if it is, as alleged, a factor in the price of land in the New Territories, it would be reflected in the open market value. The only evidence on fung shui was from the applicant himself. He was a relatively young man, who did not claim any expertise in fung shui, but merely made the general assertion that fung shui is a dominant factor in land transactions among villagers in the New Territories and that the fung shui of his property had been adversely affected. On that evidence, alone, if it were necessary we would be unable to find that the order has diminished the value of the pro-perty because of the alleged detrimental fung shui effect.
The ownership of property at common law includes, of course, not only the surface of the earth, but as stated by Pollock C.B. in Electric Telegraph Co. v. Salford Overseers (1855) 11 Ex. 181 everything under and over the surface of the land. However, those rights are only to everything immediately above and immediately below the surface. On the other hand we accept the respondent’s submission, citing William Aldred’s Case 9 Co. Rep. 57b, that an owner of land enjoys no right of prospect. As Wray C.J. declared at page 58b:
“ … the law does not give an action for such things of delight. ”
On this point we were also referred to Megarry & Wade “Law of Real Property” (3rd Edn.) 812. We therefore ignore the fact that the pylons and transmission lines on at least one adjoining property may have effected the applicant’s view. For loss of view beyond his property he is not entitled to any compensation.
As to the right of ownership of everything above and below the surface the only restriction on that common law right is where legislation has intervened to impose modifications or restrictions. The enactment of the Electricity Networks (Statutory Easements) Ordinance as recently as 1980 is an implied recognition of that common law right in Hong Kong. For the respondent had to obtain the statutory power, not merely to construct pylons on private land, but also to carry electric lines across private property. The exercise of that power, whether described in the terms of Romer L.J. in West Midlands Joint Electricity Authority v. Pitt & Ors. (supra) 54, as an “invasion” of the applicant’s property rights, is certainly an interference with the applicant’s estate or interest in the property which, but for that exercise, would not have occurred.
On the basis of the evidence and our inspection, we are satisfied that in applications under the Electricity Networks (Statutory Easements) Ordinance, it will be important for each affected property to be considered on its own particular facts. Properties necessarily vary one from another. In some cases an affected property may be bare agricultural land; others may include residential buildings; still others may consist solely of residential buildings. In large properties the effect of a wayleave may be less than in the case of smaller properties. These and other differences will be among the factors which will inevitably result in different amounts of compensation being awarded Certainly these differences make it impossible to evolve a simple formula, statistical, by way of percentage or otherwise, which could directly be applied to all affected properties. In this particular case, we considered it necessary to view the property. We found our inspection invaluable. In the light of the differences we have adverted to, it would seem to be necessary and certainly desirable, for the Tribunal to view each property involved in similar applications under the Ordinance before compensation is determined.
The easement registered against the subject property is in relation to 144 square metres or approximately two-thirds of the total area of the pro-perty. The respondent contended that as only two-thirds of the property was immediately under the 6 transmission lines compensation was payable for a maximum sum equal to the diminution of two-thirds only, of the total area of the subject property. We reject that contention. Where an affected property is relatively small, if it is crossed by transmission lines of this size, then probably the whole of the property will be detrimentally affected. In this particular case we are satisfied that while the transmission lines are immediately over only two-thirds of the property, their presence affects the whole of the property. It would be artificial and misleading to attempt to limit their affect by partition, severance or other means. We are well satisfied that while the transmission lines cross directly over two-thirds of the property, the whole property is affected.
What we also find from our view of the property is that the sheer size of the lines together with manner in which they are strung, materially detracts from the visible appearance and enjoyment of the property. We are satisfied that if there were an otherwise identical property in this area, not subject to the wayleave, then it would be preferred by a willing buyer to the applicant’s property subject to the wayleave. The presence of the wayleave to the detriment of the owner would certainly, to apply the words used in Radnor Trust Ltd. v. Central Electricity Generating Board, page 114, “form a strong bargaining point in the case of all prospective purchasers”.
Against this background we hold that the value of the applicant’s property has diminished but the real difficulty is to quantify the amount of the diminution. We have already observed that this is not a case where com-parables indicating diminution in value are available or where unit rates or before and after methods of valuation, are appropriate. We share the view expressed in ’Modern Methods of Valuation’ at page 413, that generally over-sails will have little effect or no effect on value. In this particular case we are not concerned with a major diminution of value but we are satisfied there has been some diminution.
We have already dwelt on the fact that in some areas we have, to some extent, been inhibited by a lack of detailed evidence. However, on the basis of the evidence that has been adduced and in accordance with the principles we have mentioned, we determine the compensation payable to the applicant under Section 10, by way of lump sum, at $20,000. The applicant is also entitled to interest since the 30th day of March 1981. Leave to apply is reserved in respect of interest, costs and any other incidental matters.
DATED this 11th day of March, 1983.
(Judge G.N. Cruden) M.W. Phillips
Presiding Officer Member
Representation:
The applicant in person.
Mr. C.N. Ingham, by leave, for the respondent.

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```
The Background 1.The Applicant of the captioned application is the landlord of a property at No.67B. 10th Street, Hong Lok Yuen (on SS 847 of S.H. of Lot No.1945 in D.D. 7). The property is a semi-detached house leased to the Respondent since 6th September 2002. The application seeks to recover the arrears of rent and possession of the above-mentioned property.
The Dispute 2.The Applicant was represented by her husband and the Respondent appeared in court in person. The Applicant's representative advised the Tribunal that the Respondent had since the 6th October 2003 failed to pay the full rent stipulated under the tenancy agreement. The rent stipulated under the tenancy agreement is $18,000 per month whereas the amount the Applicant received each month since 6th October 2003 fell short by $2,500 to $6,840. The total amount she received since 6th October 2004 up to the Respondent's last payment in April 2004 fell short by $21,840. By the amount of $104,160 she received to set off the amount the Respondent needs to pay each month, she reckoned that the arrears emerged in the month of March 2004 (i.e. from 6th March 2004 to 5th April 2004). The amount of arrears for this month is $3,840. Thereafter, the Respondent owed her $18,000 per month.
Agreement for Rent Reduction 4.To substantiate the agreement, the Respondent took out two letters between the Applicant and himself. These are the letter sent from the Applicant to the Respondent on 21st May 2003 and the Respondent's reply on 10th October 2003. The Applicant's letter in brief proposed to the Respondent a reduction of rent from $18,000 to $15,500 per month. The Respondent's reply is an acceptance of the offer. The Respondent considered that he was obliged to pay only $15,500 per month with effect from the 6th October 2003.
Other allegations against the Applicant included the Applicant's threatening and evasive manner, and the Applicant's failure to implement structural repairs to up-keep the safety of the property.
Conclusion 6.The Tribunal first of all does not accept that the outstanding repair works are good defence for not paying rent. The decision of the court higher in hierarchy than the Lands Tribunal in this respect is quite clear and binding upon the Tribunal. The Respondent should first establish the nature of works required and the responsibility for the repair. Only if the Applicant is responsible and she refuses to undertake the responsibility on request, the Respondent is entitled to kicking off the legal action.
7.The Tribunal does not agree that the letter of 21st May 2003 was not an offer for reduction of rent. The gist of the letter is clear. The gist of the Respondent's letter of acceptance is clear, too. There was an agreement between the Applicant and the Respondent. The third letter from the Applicant on 17th October 2003 attempted to repudiate or withdraw the offer. The intention of this letter is clear, too. The point central to the issue is whether the third letter from the Applicant can validly overturn the agreement reached.
8.For an agreement to be valid, there must be consideration passed from one party to the other. The consideration passed from the Respondent to the Applicant in the present case is as the letter of 21st May 2003 stated that the Respondent has to give up his right (under Clause 4 in Schedule II of the tenancy agreement) to determine the tenancy earlier than the stipulated tenancy expiry date. By this, the Tribunal considers that there was consideration passed and therefore a binding agreement between the two parties. The third letter of 17th October 2003 cannot invalidate the agreement reached.
9.The Tribunal must now tackle the Applicant's view concerning the term "without Prejudice." The Applicant's view was correct that the contents of the letter marked "without Prejudice" should not be disclosed to the Tribunal. The Tribunal is supposed not to have knowledge about the existence of the offer. The Applicant's intention was quite clear. If the contents were not to be disclosed, the Tribunal would have no evidence of an offer on rent reduction. The Applicant's representative had attempted in court to block the Respondent's submission (of the letter) on this ground (not appropriate to disclose the contents). The Tribunal did not accept his move because the Tribunal was totally not aware the background of the issue. Without knowing the contents of that letter, the Tribunal would have to guess the full picture of the issue from the pieces of information provided in piecemeal. The Tribunal's refusal to view the contents (of the letter) therefore may result in injustice to the Respondent. The Tribunal's view is that it should see the contents of the letter in order to have a full picture of the case but since the letter should be barred, it should ignore this part of the information in arriving at its decision for the case.
10.Having said so, the Tribunal's conclusion is that there is no agreement on rent reduction. The Respondent must pay back the arrears of rent as claimed.
Orders: 11.(a)Vacant possession of the suit premises shall be delivered to the Applicant conditional upon the Respondent failing within 14 days in terms of the High Court Ordinance, Cap. 4, to pay the sums provided for in paragraphs (b) and (c) herein (if paid within 14 days, the Respondent be relieved from forfeiture and that all further proceedings in respect of this application be stayed);
(b)The Respondent shall pay the Applicant (i) arrears of rent for the period from 6th March 2004 to 5th April 2004 in the sum of $3840 and (ii) the arrears of rent/mesne profits from 6th April 2004 until the date of delivery of vacant possession at the rate of $18,000 per month;
(c)The Respondent shall pay the Applicant's costs of this application fixed at $800; and
(d)Payment out to the Applicant upon payment in to the Tribunal by the Respondent.
C.Y. LAM
Member Lands Tribunal
Mr. LEUNG Yiu-ki, the representative of the Applicant, in person
The Respondent, in person
```
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LDPD 1477/2006
IN THE LANDS TRIBUNAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
Application No. LDPD 1477 of 2006
________________
BETWEEN
SOUND VIEW ENTERPRISES LIMITED Applicant
and
CHAN KAI LUNG LERRY Respondent
________________
Before: Deputy Judge WONG, Presiding Officer, Lands Tribunal
Date of Hearing: 12 September 2006
Date of Handing Down of Judgment: 4 October 2006
________________
CORRIGENDUM
________________
Please note the following amendments in the Judgment handed down on 4 October 2006:
On page 6 at paragraph 14:
1st line – “Mennai” should be “Mannai”
3rd line – “Mennai” should be “Mannai”
On page 6 at paragraph 15:
2nd line – “Mennai” should be “Mannai”
Dated this 31st day of January 2007.
(Carmen Leung)
Clerk to Deputy Judge WONG

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LDPD 1477/2006
IN THE LANDS TRIBUNAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
Application No. LDPD 1477 of 2006
________________
BETWEEN
SOUND VIEW ENTERPRISES LIMITED Applicant
and
CHAN KAI LUNG LERRY Respondent
________________
Before: Deputy Judge WONG, Presiding Officer, Lands Tribunal
Date of Hearing: 12 September 2006
Date of Handing Down of Judgment: 4 October 2006
________________
JUDGMENT
________________
Background
1. This is an application by the Applicant for possession of the premises known as Flat C, 12th Floor, Block 7, and Car Parking Space No.198 on Basement, Beverly Villas, No.16 La Salle Road, Kowloon, Hong Kong (“the Premises”). The Applicant is the landlord of the Premises. By a tenancy agreement written in Chinese and dated 15 April 2003, the Applicant let the Premises to the Respondent for a term of two years from 9 May 2003 to 8 May 2005 at the rental of $18,500.00 per month (“the Tenancy”).
2. Although the contractual term of the Tenancy expired on 8 May 2005, the Tenancy continues by virtue of the Landlord and Tenant (Consolidation) (Amendment) Ordinance 2004 (“the Ordinance”). Section 5(2) of the Ordinance stipulates that:-
“On and after the commencement date, a tenancy to which Part IV applies and which is in existence on the day before the commencement date, but in respect of which no notice or request has been given or made before the commencement date under section 119 or 119A of the principal Ordinance, may, subject to subsections (4) ands (5), only be terminated by a transitional termination notice as provided for by section 6.”
3. There is no dispute that section 5(2) of the Ordinance applies to the Tenancy and hence a transitional termination notice is required to terminate it. The Applicant did issue a transitional termination notice dated 8 May 2005 (“the TTN”) to the Respondent, and the Respondent did receive the same on 14 May 2005. The Applicant relies on the TTN to say that the tenancy has been terminated and claim for possession of the Premises. However, the TTN states that:-
“Pursuant to section 5(2) of the above Ordinance, I hereby notify you that the tenancy of the above premises will be terminated on May 8th , 2005.”
4. On the face of it, it seems that there was a mistake of the date of termination as it was the same date of the issuance of the notice. However, it is not the Applicant’s case that the date “May 8th , 2005” was wrongly typed by clerical mistake or that it should be read as “May 8th , 2006”. According to the evidence of the Applicant’s witness, Mdm. Chan Kwai Chuen, she did intend to put down the date “May 8th , 2005”, as she thought that she had to put down the date of expiration of the Tenancy. Thus, there was no clerical mistake, but only a mistaken belief of Mdm. Chan.
5. Section 6(2) of the Ordinance stipulates that:-
“A transitional termination notice must be served-
by a landlord, not less than 12 months;
…
before the day on which it is to take effect.”
6. Despite Mdm. Chan’s mistaken belief, the Applicant argues that the TTN is a valid notice, as the Ordinance does not require the date of termination to be stated in the TTN, and once the Applicant has served the TTN, it can recover possession after 12 months.
7. The Respondent disputes the Applicant’s claim, as the TTN issued by the Applicant is not a valid notice. The Respondent argues that the TTN must state a termination date by which the termination is to take effect and it cannot be less than 12 months from the date when the TTN was served.
8. Thus, the only issue in this case is whether the TTN is a valid notice.
Whether the TTN is a valid notice
9. Although, as submitted by the Applicant, there is no standard form for a transitional termination notice as prescribed by the Ordinance, it does not mean that the Applicant can give an ambiguous notice to the Respondent. At common law, a notice must be clear and certain, so as to bind the party who gives it and to enable the party to whom it is given to act upon it, at the time when it is given (see Woodfall: Landlord and Tenant, Release 63, at para. 17.246). The TTN issued by the Applicant is far from clear as to when the Respondent is to quit the Premises. The date “May 8th , 2005” would not give the Respondent, or any reasonable man, a meaningful deadline by which the Respondent must quit.
10. The Applicant, however, argues that section 6(2) of the Ordinance does not require the date of termination to be stated in the notice and since the TTN has made reference to section 5(2) of the Ordinance, the Respondent should be able to refer to the Ordinance and know that the Applicant can recover possession after 12 months. The Applicant contends that it can simply wait for 12 months after the notice was served and then recover possession thereafter even though the notice did not specify an effective date of the termination.
11. I totally reject this line of argument. I think section 6(2) of the Ordinance makes it clear that a transitional termination notice must be served by a landlord not less than 12 months before the day on which it is to take effect. Such a notice is equivalent to a notice to quit. The purpose of a notice to quit is to notify the recipient when he has to quit. A transitional termination notice must be interpreted in the same way. So it must state when it is to take effect. In other words, the date of termination must be mentioned in the notice or at least it is ascertainable from the notice the deadline by which the recipient must quit. The reference to the Ordinance would not help the Applicant, as it would not give the deadline by which the Respondent must quit. It only gives the earliest time the Applicant may recover possession, but it does not say that 12 months is the deadline for the Respondent to quit. A landlord can always give a longer notice period than 12 months because section 6(2) only stipulates that the period cannot be less than 12 months. So one would not know the deadline by reference to the Ordinance.
12. The Applicant also argues that the Ordinance should be interpreted in a way that would give effect to the purpose of the legislation. According to the Applicant, the purpose of the Ordinance is to ensure that a landlord can recover possession after 12 months. I do not agree with the Applicant on this contention either. As submitted by the Respondent, the purpose of the legislation is to give a transitional period for those tenants who would be affected by the Ordinance. When the Ordinance took effect on 9 July 2004, a landlord would no longer be required to give any statutory notice to terminate a tenancy. Section 5(2) and section 6(2) are to safeguard the position of those tenancies created before the commencement of the Ordinance. I think the purpose of the legislation is to ensure that the tenants of such tenancies would have sufficient notice to quit and not affected by the new law during the transitional period. Thus, the purpose of such transitional provisions in the Ordinance is to protect the tenants rather than the landlord. On such purposive interpretation, I would also find in favour of the Respondent.
13. The Applicant refers to two cases mentioned by Mr. Malcolm Merry in his book “Hong Kong Tenancy Law 4th edition”, at page 140, to support the contention that a notice to quit should be given a more liberal interpretation. It used to be thought that notices should receive a strict or literal construction and the notice should be precise, but in Carradine v. Aslam [1976] 1 WLR 442, the court held that the test was whether the notice was clear to a reasonable tenant reading it: was it plain that he could not be misled by it? In the Carradine case, a landlord was held to be entitled to break a lease in September 1975, when he had given notice to do so in September 1974, but mistakenly put down a date in September 1973. As the date given was impossible, having already passed, it was clear that the landlord could not have meant September 1973.
14. The second case is Mennai Investment Co Ltd v. Eagle Star Assurance Co Ltd [1997] AC 749, where the House of Lords approved the test laid down in the Carradine case. In the Mennai case, the lease contained a break clause permitting the tenant to end the lease by serving written notice of not less than six months upon the landlord to expire on the third anniversary of the term commencement date. That date should be 13 January 1995, but the tenant gave the date of 12 January 1995 in the notice. The House of Lords ruled that as the landlord would know the date of the third anniversary of the commencement of the lease, the landlord would not have been misled by the wrong date. The House of Lords emphasized that the test was to be applied objectively, i.e. the question was not whether the notice was clear to the actual recipient but whether it would have been clear to a reasonable recipient.
15. Although I agree with the test laid down in the Carradine case and approved by the Mennai case, I do not think that these cases and the test help the Applicant. First of all, even according to the Applicant’s case, there is no clerical mistake in the present case. The Applicant is not saying that the date should read 8 May 2006 instead of 8 May 2005. The Applicant only stated the contractual expiry date of the Tenancy in the TTN, so no effective date of the notice was ever stated in the TTN. By reading the date “8 May 2005” in the TTN, no reasonable recipient would know when the Tenancy is going to be terminated. There cannot be such an interpretation that the Tenancy must end on 8 May 2006, as a landlord can give a notice that is more than 12 months.
16. The Applicant also submits that I should consider some of the telephone conversations and representations made between the parties, as these events are indicative of the parties’ comprehension of the situation. These factual matters are in dispute by the parties. However, I do not find that these factual disputes are relevant to the issue of the validity of the TTN. The Ordinance requires a valid notice to be issued and it is my finding that the notice must state or indicate the effective date of the termination. As there is no such date given or indicated, no valid notice has been given. When there is no valid notice given, the Tenancy is not terminated and the Applicant cannot recover possession. That should be the end of the matter. I need not deal with these factual disputes at all.
17. In the circumstances, it is my finding that the TTN is not a valid notice.
Conclusion
18. By reasons aforesaid, the Applicant’s claim must fail and I order as follows:-
The Applicant’s application herein be dismissed.
Costs order nisi: The Applicant do pay costs of the application to the Respondent, to be taxed on District Court Scale if not agreed. If there is no application for costs within the next 14 days, the costs order nisi herein shall become absolute.
Deputy Judge WONG
Presiding Officer
Lands Tribunal
Mr. Martin WONG, instructed by M/S Tang & So, for the Applicant.
Mr. Dennis CHAN, of M/S Gallant Y.T. Ho & Co., for the Respondent.

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{
"Date": "4 Oct, 2006",
"Action No.": "LDPD1477/2006",
"Neutral Cit.": "[2006] HKLDT 29",
"case_title": "SOUND VIEW ENTERPRISES LTD V. CHAN KAI LUNG LERRY",
"page_title": "SOUND VIEW ENTERPRISES LTD V. CHAN KAI LUNG LERRY | [2006] HKLDT 29 | HKLII",
"case_history": [
{
"name": "LDPD1477/2006",
"link": "https://www.hklii.hk/en/appealhistory/LDPD/2006/1477"
}
],
"appeal_history": [],
"case_url": "https://www.hklii.hk/en/cases/hkldt/2006/29",
"neutral_cit": "[2006] HKLDT 29",
"court_code": "HKLDT",
"content": "LDPD 1477/2006\nIN THE LANDS TRIBUNAL OF THE\nHONG KONG SPECIAL ADMINISTRATIVE REGION\nApplication No. LDPD 1477 of 2006\n________________\nBETWEEN\nSOUND VIEW ENTERPRISES LIMITED\nApplicant\nand\nCHAN KAI LUNG LERRY\nRespondent\n________________\nBefore:   Deputy Judge WONG, Presiding Officer, Lands Tribunal\nDate of Hearing:  12 September 2006\nDate of Handing Down of Judgment:   4 October 2006\n________________\nCORRIGENDUM\n________________\nPlease note the following amendments in the Judgment handed down on 4 October 2006:\nOn page 6 at paragraph 14:\n1\nst\nline – “\nMennai\n” should be “\nMannai\n”\n3\nrd\nline – “\nMennai\n” should be “\nMannai\n”\nOn page 6 at paragraph 15:\n2\nnd\nline – “\nMennai\n” should be “\nMannai\n”\nDated this 31\nst\nday of January 2007.\n(Carmen Leung)\nClerk to Deputy Judge WONG",
"attachments": [
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"status": "success"
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LDRA536/1999 & 48 others IN THE LANDS TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION RULES 4, 14 AND 20 OF THE LANDS TRIBUNAL RULES APPLICATION NO. LDRA 536-540 OF 1999, LDRA 542-543 OF 1999, LDRA 504-508 OF 2001, LDRA 363-367 OF 2002, LDRA 819-823 OF 2003, LDRA 365-369 OF 2004, LDRA 466-470 OF 2005, LDRA 130-134 OF 2006, LDRA 114-118 OF 2007, LDGA 21 OF 2001, LDGA 767 OF 2002, LDGA 618 OF 2003, LDGA 241 OF 2004, LDGA 173 OF 2005, LDGA 153 OF 2006, LDGA 112 OF 2007 (Heard together) _______________ BETWEEN CLP POWER HONG KONG LIMITED Applicant and COMMISSIONER OF RATING AND VALUATION Respondent _______________ Before: Hon Lam J, President of the Lands Tribunal, in Chambers Date of Hearing: 3 December 2008 Date of Judgment: 3 December 2008 _______________ J U D G M E N T _______________
This is an application for a review of my decision on 3 November this year concerning various appeals, in particular whether they should be consolidated and be heard together or whether there should be a single appeal being allowed to be proceeded and treated as a test appeal. In my decision on 3 November I decided that as a matter of case management, having considered various factors which I have mentioned in my judgment given on that day, there should be a single case chosen as a test appeal, with the other appeals continued to be stayed in the meantime pending the outcome of the test appeal. The applicant seeks to review that decision. Under the Lands Tribunal Ordinance, the Tribunal may review its decisions in accordance with section 11A of the Lands Tribunal Ordinance. Subsection (1) says the Tribunal may, within one month from the date of any decisions by it, decide to review their decisions, and on such grounds that it may think sufficient may set aside, reverse, vary or confirm it. Subsection (3) provides that: “If the Tribunal shall have decided within one month from the date of any decisions to exercise its power of review in respect thereof, such power may be exercised at any time thereafter, whether within such period of one month or otherwise.” In my judgment, the wording of section 11A makes it quite clear that a review process in the Lands Tribunal is a two stage process. First, the Tribunal has to ask the question whether there should be a review and make a decision on that. If the Tribunal decided that there should be a review, then the review will proceed. That will be the second stage. And at the second stage, as provided under section 11A(4), the Tribunal may hear and receive evidence it thinks fit for the purpose of determining the issues between the parties.
As far as the first stage is concerned, it is no less a decision by the Tribunal. In other words, on the question of whether there should be a review, it is quite clear from the wording of subsection (1) and (3) that the Tribunal has to make a decision and that decision has to be made within one month. Since the present application is made in respect of my decision on 3 November, time will expire today for me to decide whether there should be a review. Unfortunately this application for a review was made by the applicant quite late yesterday afternoon. There has been some confusion as to whether the respondent is entitled to be heard on this matter in regard to the first stage of the process. Mr Wilmot referred me to a decision of Judge Wong in the case of Good Trader Limited v Hinking Investment Limited in LDCS1000/2006, in which the presiding officer held that as far as the first stage is concerned it could be an ex-parte process, i.e. there is no requirement that the respondent be afforded an opportunity to be heard. With respect, I do not agree. A decision of the Tribunal, like any judicial decision, should - except in clearly established cases (like ex parte applications for injunctive or similar relief) or except when the wording of the statute clearly indicates to the contrary - should not be decided on ex parte basis. It is a fundamental precept of our legal system that no party shall be condemned unheard. So when there is a matter which requires judicial determination, prima facie everybody interested or every party to the application is entitled to be heard. One then turns to the wording of the statute to see whether there is anything by implication stemming from the statute which suggests that the statute authorised ex parte application as far as application for review is concerned. I appreciate a decision on whether there should be a review does not touch on the substantive merit as far the matters under review is concerned. In a way it is a procedural decision. But the fact that it is a procedural decision does not mean that by implication the other party is not entitled to be heard. The court has to decide on procedural matters as well as substantive matters. And it is a feature in our legal
system that even for procedural matters normally the court should not make a decision unless both parties are heard. In the Good Trader case Judge Wong in fact referred to another decision, an earlier decision by the Tribunal, which decided that a respondent is entitled to be heard on the first stage. This is the case of Solar Max Limited v Homex Investment Limited, LT358/1997. However, Judge Wong was persuaded otherwise in the light of the decision of Deputy High Court Judge Kwan, as she then was, in the case of Lee King Sin v Stikeman, Elliott, a Labour Tribunal case, HCLA83/2000. I am not concerned with the review procedures in the Labour Tribunal, but it seems to me that there are differences in the wording in the Labour Tribunal Ordinance and that in Section 11A. One must remember that a review will inevitably disrupt the smooth continuation of proceedings, especially if a review is sought in respect of case management decisions as regards how a matter should be proceeded. In my view, in this sort of situation there is no justification for depriving a respondent an opportunity to be heard as regards why there should not be a review. As Mr Man pointed out at today’s hearing, taking the present case as an example, since 3 November the respondent has been working on the assumption, or rather on the basis, that there will be a test appeal and expert reports were prepared accordingly. In other words, experts were instructed to deal with the matters on the basis that he is only concerned with one single appeal as opposed to appeal covering different years. I would not repeat what I said on the last occasion about the difference in terms of an expert report for several years or an appeal covering several years as opposed to a report on just one single year. I remain of the view that if the appeal is to be heard on the basis that it will deal with matters covering several years, it will be unduly complicated. This is because the state of the knowledge of the hypothetical tenant and the hypothetical landlord may vary in different years, and
therefore, as far as preparation of expert reports covering appeals on several years is concerned, the expert has to give evidence on the perspective of the hypothetical landlord and hypothetical tenant in respect of each of the years under appeal. I am not satisfied that this is a case where one can say that, “Well, the additional burden on the evidence would only be minimal just because of the inclusion of several years instead of just one year in the appeal.” And this illustrates why it is important that one should stick to the original decision on case management unless there is very cogent and overriding reason to suggest that one should re-examine the situation. And on these matters I think the respondent is entitled to be heard. Coming to the facts of the present case, the applicant pinpointed two new matters to suggest that as a result of those matters this court should re-examine the decisions on 3 November. The first point is about the possibility of a refund and the substantial amount being involved in the case of a refund. The argument is that because of what has been said by the expert in another appeal the applicant expects the same thing will be said in respect of these appeals involving the applicants. As a result of the increase in the WACC, the applicant said it is likely that there will be a refund. And if all these appeals of the applicant were heard together and decided at the same time, they can expect a refund at an earlier time, as compared with having a test appeal and the other appeals not to be dealt with in the meantime. That may be so, but I am not impressed that one should revisit the question of the decision on 3 November 2008 just because of this factor. This is particularly so in the light of the fact that the applicant has agreed to have all these appeals stayed for quite a considerable time already. Moreover, as soon as a decision is reached in a test appeal, and by then it is also likely that there will also be a decision handed down in respect of the HEC appeal, it is very likely that all the other appeals can be resolved in the light of what has been decided in the test appeal as well as the HEC appeal.
It is also likely that even if the other appeals have to be restored for argument there could be arrangement in the meantime for some partial refunds. In any event, I am told that there is a High Court action pending, namely High Court action 2290/2007, in which the applicant is making a restitution claim against the respondent with regard to amount to be refunded as far as the interest element is concerned. Therefore, if the applicant has a claim for any financial disadvantage as a result of rate being paid in advance pending the outcome of appeal, that can be ventilated in the High Court proceedings. The other new factor urged upon me to reconsider my decision is the new appeal by the applicant with regard to the Commissioner’s decision for the year of 2008. I am not going to speculate about the progress of that appeal. That may or may not be stayed pending the outcome of the test appeal. It may be that the parties would like to give some consideration to that after today. But I do not think the fact that there is another appeal by CLP should have any bearing at all about my case management decision with regard to the other appeal which has been stayed by consent, and the decision had been made by this court on 3 November that there should not be any lifting of those stays pending the outcome of the test appeal. I think it is important to bear in mind that it is desirable that matters are proceeded with and decisions can be made as early as possible. Unfortunately, as far as these appeals are concerned, they have been stayed, and matters have been allowed to be left hanging there for quite a substantial time already. But as far as the progress of the matters is concerned, this court has made the decisions on 3 November as to how the matters can be efficiently and effectively decided. It is a case management discretion of the Tribunal, bearing in mind the circumstances of the case, to decide that the test appeal procedure is the preferred option. If one were to re-examine that, as I have said previously, there has to be good and cogent reasons. I am afraid, having heard submissions from
Mr Wilmot and considering what he has said about the circumstances, I do not see any ground to revisit that decision. The other matters he set out in the skeleton submissions are basically points that have been raised in the hearing on 3 November. I would not go through them again. For example, he asked the court to consider the lifting of the stay in the HEC appeals, and he mentioned about perception of unfair treatment. With respect, I do not agree. As I said, the question of whether there should be a consolidated appeal in the HEC case is still an open question. In any event, as far as the practical side of the matter is concerned it really boils down to the question of the timing of the refund. And this is a point I have already dealt with. I therefore remain of the view that as far as the CLP appeals are concerned the way to proceed is to conduct a test appeal. Therefore I refuse any application for a review. (M H Lam) Judge of the Court of First Instance High Court Mr Richard Wilmot, instructed by Messrs Holman Fenwick Willan, for the Applicant Mr Bernard Man, instructed by the Department of Justice, for the Respondent
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{
"Date": "9 Apr, 2014",
"Action No.": "KCS4911/2013",
"Neutral Cit.": "[2014] HKMagC 6",
"case_title": "HKSAR V. HO CHUNG YI HENRY AND OTHERS",
"page_title": "HKSAR V. HO CHUNG YI HENRY AND OTHERS | [2014] HKMagC 6 | HKLII",
"case_history": [
{
"name": "KCS4911/2013",
"link": "https://www.hklii.hk/en/appealhistory/KCS/2013/4911"
}
],
"appeal_history": [],
"case_url": "https://www.hklii.hk/en/cases/hkmagc/2014/6",
"neutral_cit": "[2014] HKMagC 6",
"court_code": "HKMAGC",
"content": "KCS 4906-4911/2013\nIN THE KOWLOON CITY MAGISTRATES’ COURTS OF THE\nHONG KONG SPECIAL ADMINISTRATIVE REGION\nCASE NO. 4906, 4907, 4908, 4909, 4910 AND 4911 OF 2013\n--------------------------\nHKSAR\nv\nHO CHUNG YI HENRY\n2nd Defendant\nWONG PAK LAM\n3rd Defendant\nHIEN LEE ENGINEERING COMPANY LIMITED\n4th Defendant\n--------------------------\nCoram: Chief Magistrate, Mr Clement Lee\nDates of hearing:\n27 November to 17 December 2013 (15 days), and\n10 to 17, 20 February 2014 (8 days)\nDate of verdict: 9 April 2014\nDate of corrigenda: 11 April 2014\n--------------------------\nCORRIGENDA\n--------------------------\nPlease note the following corrigenda in the Reasons for Verdict dated 9 April 2014 : -\n(1)Page 63, Paragraph 174 of the Reasons for Verdict, Line N to Line O: -\n“… According to PW8, the normal result for PR should be 2 or more. The normal result for LDR should be within the range of 0.15 to 2. …”\nshould read as\n“… According to PW8, the normal result for LDR should be 2 or more. The normal result for PR should be within the range of 0.15 to 0.2. …”\n(2) Page 63, Paragraph 174 of the Reasons for Verdict, Line Q to Line R: -\n“… One may note that regarding PR, only sample no. S3 has the figure closes to 2.”\nshould read as\n“… One may note that regarding PR, only sample no. S3 has the figure closes to 0.2.”\n(3) Representation : -\n“Mr Tony Jenkyn-Jones” should read as “Mr Toby Jenkyn-Jones”\nDated this 11\nth\nday of April 2014\n(Jenny Cheng)\nClerk to Chief Magistrate",
"attachments": [
{
"download_url": "https://legalref.judiciary.hk/doc/judg/word/vetted/other/en/2013/KCS004906_2013.doc",
"file_name": "KCS004906_2013.doc",
"file_ext": ".doc",
"status": "success"
},
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"download_url": "https://legalref.judiciary.hk/doc/judg/word/vetted/other/en/2013/KCS004906M_2013.doc",
"file_name": "KCS004906M_2013.doc",
"file_ext": ".doc",
"status": "success"
}
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ESS 30671-30676/2013 ESS 39231-39232/2013 IN THE EASTERN MAGISTRATES COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CASE NO. ESS 30671-30676 OF 2013 AND ESS 39231-39232 OF 2013 Securities and Futures Commission v C.L. Management Services Limited 1st Defendant AU Suet-ming, Clarea 2nd Defendant ---------------------- Coram : Magistrate, June Cheung Dates of hearing : 27-28 February, 3 March and 3 April 2014 Date of verdict : 29 April 2014 Date of statement of findings : 11 June 2014 ---------------------- STATEMENT OF FINDINGS Introduction The Summonses In the present case, a total of 8 summonses have been laid against C.L. Management Services Limited (“D1”), a company registered in Hong Kong
and Madam AU Suet-ming, Clarea (“D2”), being the sole shareholder and director of D1. The summonses are summarised as follows: Summonses against D1 (four summonses in total): ESS 30671/2013 and alternative summons ESS 39231/2013: It is alleged that D1, without reasonable excuse, has carried on a business in a regulated activity, namely, advising on corporate finance, in relation to a client company, 3 Wells Group holdings Limited (“3 Wells”) without licence (ESS 30671/2013). Alternatively, it is alleged that D1 has held itself out to 3 Wells as carrying on a business in advising on corporate finance(ESS 39231/2013); ESS 30673/2013 and 30675/2013: it is alleged that D1 has respectively held itself out to another two client companies, UK Fur Limited (“UK Fur”) and New Bonus Holdings Limited (“New Bonus”) as carrying on a business in advising on corporate finance. Summonses against D2 (four Summonses in total): It is alleged that D2, being an officer of D1, has aided, abetted, counselled, procured or induced D1 in committing the above offences under section 114 of the Ordinance, or these offences were committed with the consent or connivance of D2 or was attributable to her recklessness.
I convicted, after trial, D1 of three summonses, i.e. ESS 39231/2013, 30673/2013 and 30675/2013 concerning the “holding- out” offences under section 114(1)(b) of the Ordinance and D2 of the three corresponding attributable offences under section 390 (summonses ESS 39232/2013, 30674/2013 and 30676/2013). Upon conviction, I imposed fines in a total sum of $900,000 and $600,000 on D1 and D2 respectively. I also sentenced D2 to a total term of imprisonment for 6 months suspended for 18 months. D1 and D2 now appeal against both their convictions and sentences. The Issues The main issues on the law raised at trial are: Whether the summonses against D1 are strict liability offences? and if so, what defence is available and the burden of proof? Whether the term “without reasonable excuse” under section 114(8) creates an element of the offence or a defence only? Could D1 be liable for acts of Michael, being D2’s agent? While the issues on the evidence are: Was Michael acting on behalf of D2 within her actual and specific authority to give advice on corporate finance?
Whether D1 was “carrying on” the business in advising on corporate finance in respect of its dealing with 3 Wells? Whether D1 was “holding out” as carrying on such business in advising on corporate finance in respect of its dealings with the three clients concerned? Could the defences, if any, be factually made out by D1/D2, i.e. 1) did D2 know the content of the agreements or 2) did D2 know what Michael was doing on her behalf? Background The Prosecution case The facts of the case are largely undisputed. The prosecution case mainly relied on the evidence given by four prosecution witnesses. They were either the chairmen/senior officers of the 3 respective client companies. Mr Clement CHEUK, PW1, (“Cheuk”) was the Chairman, and Ms Phoebe Lee, PW2, (“Lee”) was the Chief Financial Officer of 3 Wells. They were called to give evidence relating to 3 Wells. While Mr Pat WONG, PW3 (“P Wong”), the Chairman of UK Fur and Mr WONG Kam-fai, PW4 (“KF Wong”), the chairman of New Bonus gave evidence relating to UK Fur and New Bonus respectively. The Prosecution originally intended to call a Michael ANG (“Michael”), who was engaged by D2 as her agent at the material times responsible for dealing with the three respective client companies. However, after Michael was called and taking oath, he suddenly, on his own initiative, raised with court that he was unwilling to give evidence as he worried that what he said might incriminate himself. The
Prosecution finally informed the court that they decided not to call Michael and would not rely on his evidence at all.  3 Wells Regarding 3 Wells, it is alleged by the Prosecution that, during the period between July 2011 and January 2012, D1 has carried on a business in advising on corporate finance for 3 Wells with a view to assisting the latter to be listed on the Growth Enterprise Market (“GEM”) Board of the Stock Exchange of Hong Kong Limited (“SEHK”). By signing a detailed and unequivocal “Professional Financial Consultation Services Agreement” (“3 Wells Agreement”), Exhibit P12, with 3 Wells around July/August 2011, which was procured by D2, D1 did assign and authorise a team of her staff headed by Michael ANG (“Michael”) to have meetings, both in Hong Kong office as well as factory located in Mainland, with senior officers of 3 Wells with a view to assessing their capability of being listed on the GEM Board. D2 and Michael, representing D1, also assisted 3 Wells to line up a professional team consisting of the right professionals, including lawyers, accountants and sponsors to substantially handle the listing matters. Pursuant to the aforesaid 3 Wells Agreement, 3 Wells made two payments in the sum of HK$ 150,000 each to D1 on 31 August 2011 and 14 May 2012 respectively.
Around September/October 2012, upon request by Michael, representing D1, allegedly due to problems of “internal audit”, 3 Wells agreed to terminate the 3 Wells Agreement with D1. This was done by way of a letter drafted by Michael and finalised by Cheuk and Lee. Cheuk said that the agreement was terminated upon D1’s promise that a full refund of HK$300,000 would be made by D1 to 3 Wells. However, no refund was ever made by D1. It is the prosecution case that what D1 has done amounted to carrying on a business in “advising on corporate finance”, or alternatively holding itself out to 3 Wells as doing so. Moreover, D2, in her capacity as an officer of D1, did aid, abet, counsel, procure or induce the commission of the offence under section 114 by D1 or the offence was committed by D1 with her consent or connivance or was attributable to her recklessness. UK Fur and New Bonus The evidence given by P Wong and KF Wong was relatively brief. The prosecution said that the mere fact that a similar written Professional Financial Consultation Services Agreement had been signed between D1 and UK Fur (“UK Fur Agreement”) as well as between D1 and New Bonus (“New Bonus Agreement”) respectively was sufficient to prove that D1 had held itself out to the above two companies as carrying on a business in advising on corporate finance. As a matter of fact, by completing the UK Fur Agreement, UK Fur has paid a total sum of HKD $600,000 to D1 in four instalments during the period between 20 October 2010 and 30 June 2011. Additionally, pursuant to the UK
Fur Agreement, upon submission of UK Fur’s listing application to SEHK, D1 was granted 14,400,000 option shares at the exercise price of HKD $ 0.26 per share on 1 August 2012 which was accepted by D2 on 2 August 2012. With respect to New Bonus, in pursuant to the New Bonus Agreement, a sum of HKD $ 170,000 was paid to D1 by New Bonus on 3 January 2011. The prosecution said that all the summonses against D1 laid under section 114 of the Ordinance require prosecution to prove “without reasonable excuse” as an element of the offence and that the prosecution has succeeded in proving beyond reasonable doubt that D1 had at the material times, without reasonable excuse, held itself out to the UK Fur and New Bonus as carrying on a business in advising on corporate finance and D2, being an “officer” of D1, was liable attributably in all the commission of the offences. Defence case D2 elected to give evidence herself but called no defence witness. She basically said that although she had signed all the relevant written agreements with the respective clients, she was not aware of the actual content stated therein and had no intention at all to carry on or hold herself out to the respective clients as carrying on a business in advising on corporate finance. What she actually had done was offering to the client companies that she, with the assistance of Michael, could line up a team of suitable professionals and participate in the liaison work for the listing matters only. After signing the contracts and attended the first introductory meeting with the professionals for the respective clients, she basically did nothing and was not sure what Michael and his team was doing to the
respective clients. The three written agreements in question were all prepared by Michael upon her instruction but she has not read through them before signing. Defence contended that first of all, what D1 and D2 have done in respect of 3 Wells did not amount to carrying on a business in advising on corporate finance. Additionally, neither was there any sufficient evidence to prove D1 had held itself out to the respective companies as carrying on a business in such an activity. D2 had no intention whatsoever in carrying on or holding herself out as carrying on a business in advising on corporate finance. The defence submitted that the prosecution was required to prove mens rea for all the summonses against D1 and that the prosecution has failed to do so. Further, what D2 said in her evidence could amount to a reasonable excuse and the statuary defence had been made out factually. It was submitted by the defence that as the commission of offences by D1 could not be proved, D2 should not be liable for all the “attributable” offences under section 390 of the Ordinance. Analysis Discussion on the Law There are quite a number of legal issues raised during the trial by both parties that I need to resolve before analysing the evidence. Issue I: Whether the summonses against D1 are strict liability offences? The Five Alternatives
The question of whether the summonses against D1, in contravention of section 114 (1) and (8) of the Ordinance, created strict liabilities or offences with full intent is never an easy one. The principles and application of the same have been thoroughly discussed in Hin Lin Yee v HKSAR (2010) 13 HKCFAR 142 and subsequently Kulemesin Yuriy & Tang Dock Wah v HKSAR, FACC 6 and 7 of 2012, now the landmark cases in this area of law decided by the Court of Final Appeal. Hin Lin Yee has helpfully set out, at paragraph 96, five possible alternatives which were subsequently reformulated, by addressing the possible alternative mental requirements relating to the consequences and not just the circumstances of the defendant’s conduct, in another decision of the Court of Final Appeal, Kulemesin Yuriy & Tang Dock Wah v HKSAR, FACC 6 and 7 of 2012, unreported , at paragraph 83: first, that the mens rea presumption persists and the prosecution must prove knowledge, intention or recklessness as to every element of the offence (“the first alternative”); second, that the prosecution need not set out to prove mens rea, but if there is evidence capable or raising a reasonable doubt that the defendant may have acted or omitted to act in the honest and reasonable belief that the circumstances or likely consequences of his conduct were such that, if true, liability would not attach, he must be acquitted unless the prosecution proves beyond reasonable doubt the absence of such exculpatory belief or that there were no reasonable grounds for such belief (“the second alternative”);
third, that the presumption has been displaced so that the prosecution need not prove mens rea but that the accused has a good defence if he can prove on the balance of probabilities that he acted or omitted to act in the honest and reasonable belief that the circumstances or likely consequences of his conduct were such that, if true, he would not be guilty of the offence (“the third alternative”); fourth, that the presumption has been displaced and that the accused is confined to relying on the statutory defences expressly provided for, the existence of such defences being inconsistent with the second and third alternatives mentioned above (“the fourth alternative”); and fifth, that the presumption is displaced and the offence is one of absolute liability so that the prosecution succeeds if the prohibited act or omission is proved against the accused, regardless of his state of mind regarding the relevant elements of the offence in question (“the fifth alternative”).” Should “mens rea” be displaced? I have born in mind the principle stated by Ribeiro PJ in Hin Lin Yee, at paragraph 41, that “where the offence-creating provisions are silent or ambiguous as to the mental requirements, it is generally accepted that the starting-point is that the statute must be construed adopting the presumption that it is incumbent on the prosecution to prove mens rea in relation to each element of the offence”. As Lord Scarman emphasised that the presumption of mens rea “can be displaced only if this is clearly or by necessary implication the effect of the statute”.
To summarise what Ribeiro PJ said in Hin Lin Yee, the considerations that are relevant to the proper statutory construction in respect of the issue of displacement of presumption of mens rea include: The statutory language; The nature and subject matter of the offence; The legislative purpose. The statutory language Section 114(1) and (8) provides that: “(1) Subject to subsections (2), (5) and (6), no person shall- (a) carry on a business in a regulated activity; or (b) hold himself out as carrying on a business in a regulated activity…. (8) A person who, without reasonable excuse, contravenes subsection (1) commits an offence and is liable- (a) on conviction on indictment to a fine of $5,000,000 and to imprisonment for 7 years and, in the case of a continuing offence, to a further fine of $100,000 for every day during which the offence continues; or (b) on summary conviction to a fine of $500,000 and to imprisonment for 2 years and, in the case of a continuing offence, to a further fine of $10,000 for every day during which the offence continues.” [my emphasis] Reading through section 114(1), I cannot see there are words or text stated therein which can be construed as carrying a connotation of knowledge or intention. For example, the common words of criminal intention like “knowingly”,
intentionally” or “recklessly” are absent from the provision. However, the word “shall” is used is used in the provision. In LI Yiu-kee v Chinese University of Hong Kong, unreported, CACV No.93 of 2009, when the Court of Appeal considered the meaning of “shall” appearing in the provision concerned, the entry below stated in the Hong Kong English-Chinese Legal Dictionary, Butterworth, 2005 was quoted with assistance: "Mandatory -- enforcing strict compliance; not directory. Whether a provision in a statute conferring a power or imposing a condition to be observed is mandatory is a question of the intention of the legislature in the context of the statute as a whole … . While the use of the word 'shall' or 'must' is prima facie indicative of a mandatory provision, care should be taken before identifying a provision to be mandatory to ascertain the consequences if the requirement is not complied with, particularly when such consequences are not spelt out in the provision …" (my emphasis) The nature and subject matter of the offence While exceptions exist, the more serious the offence in terms of penalty and social obloquy, the less likely it is that the presumption will be held to have been supplanted. On the other hand, as Ribeiro PJ said at paragraph 142 of his judgment in Hin Lin Yee, there is generally less need to feel inhibited about overriding the presumption in relation to what may compendiously be call “regulatory offence”. Lord Reid in R v Warner [1969] 2 AC 256, at paragraph 271, gave some examples of such offences which in the English context, were
held to impose absolute liability. They were offences under public health, licensing and industrial legislation. It is of note that the long title of the Ordinance provides that: “An Ordinance to consolidate and amend the law relating to financial products, the securities and futures market and the securities and futures industry, the regulation of activities and other matters connected with financial products, the securities and futures market and the securities and futures industry, the protection of investors, and other matters incidental thereto or connected therewith, and for connected purposes.”[My emphasis] The subject matter and nature of offences governed under section 114 are obviously “regulatory” in nature concerning “licensing” matters and the Ordinance aims at protecting the investors. I have not lost sight that the maximum penalty upon conviction on indictment is 7 years’ imprisonment, and on summary conviction is 2 years’ imprisonment. However, despite the relatively heavy penalty, and possibly the serious professional ramification imposed on the offenders upon conviction of the offence, carried by the provision, I consider that this is an offence attaches comparatively less “social obloquy” or “stigma” to the offender, especially when this kind of offence would most commonly be committed by a corporate body. It is worth noting that when reading section 114(1) and section 390 together, it is clear that when an officer is involved or contributed to the commission of the offences of s.114, the provision of s.390 then deliberately require proof of mens rea, namely “recklessness”, “with consent” “induced” or
“procured” etc. It is not difficult to infer that it must be due to the presumption of mens rea and the fact that stigmatising effect on a natural person is much more than on a corporate body. The legislative intent Ribeiro PJ continued, at paragraph 143, in his judgment of Hin Lin Yee: “the legislative purpose is obviously important. If, in the light of the nature and subject matter of the offence, construing the provision to require full mens rea would make successful prosecution so unlikely that the statutory objectives would be frustrated, this must be given weight. Where this is a legitimate consideration, the response should often be to consider whether the adoption of an intermediate basis of liability accords with the true legislative intention.” Having considered the subject matter and nature of the offences in question, I consider that the statutory objective of section 114(1) of the Ordinance will be frustrated if proof of full mens rea is required. It is very difficult for the prosecution to prove a company or the directing mind of it is intentionally or knowingly carrying on or holding itself out as carrying on the business in advising on corporate finance. It is common sense that companies of securities and futures industry normally involve sophisticated division of labour due to its complex nature of work. The actual works and daily operations usually are not carried out by the directing mind of the company but its professional staff. It will defeat the whole purpose of the Ordinance to protect the investors many of which may not have much knowledge of the industry and rely heavily on the conducts and integrity of their financial adviser. The onerous duty to prove full mens rea would render the regulatory function of the governing body and enforcement of the provision ineffective.
Furthermore, sections 114(1) and 390 of the Ordinance cannot be read in isolation. It is very clear that the legislation deliberately requires proof of mens rea in respect of section 390 when “officer” is targeted. I am of the view that it does shed light on the legislative intent. If mens rea is required for section 114(1), the legislator could have easily spelt it out like what it is done in section 390 of the Ordinance. Taking into account all the relevant principles of statutory construction set out in Hin Lin Yee, I consider that the presumption of mens rea should be displaced in respect of the offences created in section 114(1). Are the offences under section 114(1) absolute liabilities? Regulatory offences do not as a rule involve conduct falling within the fifth of the aforementioned categories where absolute liability may be justified. Many regulatory offences may fall within other categories of the five alternatives. The legislative policy underlying the regulatory offence may justifiably be to require diligent proactive management or supervision on the part of the person subjected to the duty. In the case Kulemesin Yuriy, Ribeiro PJ “noted that when dealing with a serious as opposed to regulatory offence, a court considering whether the presumption of mens rea should be displaced – and if so, replaced by what – is likely to find it more appropriate to infer that the second (rather than the third) alternative best reflects the presumed intention of the legislature since that alternative lies closer to the full mens rea end of the spectrum and does no violence to the presumption of innocence, as befits a serious offence. On the other hand, the third alternative is likely to be more compelling in relation to a
regulatory offence.” That is also in line with the observation made by him in Hin Lin Yee at, paragraph 161, that “the policies underlying regulatory offences are likely to be best reflected by construing the offences as falling within the third alternative, founding liability on the absence of due diligence or the absence of honest and reasonable belief”. Since section 114(1) carries heavy penalty with maximum term of 7 years’ imprisonment upon indictment, I consider the fifth alternative of absolute liability should be put out of the picture in the present case. In other words, I consider the first (full meas rea required) and fifth alternative (absolute liability) of liability as set out in Hin Lin Yee are not applicable in the present case. Issue II: “Without reasonable excuse” ---an element of the offence or a defence only? There remain three alternatives: the second, the third and the fourth, which are regarded as intermediate basis of liability. It is of note that the phrase “without reasonable excuse” appears in the offence-creating provision, namely section 114(8). Before deciding which alternative (2nd, 3rd or 4th) the offences under section 114(1) should fall in, I shall deal with another separate but related legal issue that has been raised in the trial: whether “without reasonable excuse” should be regarded as an element of the offence or just a defence under section 114(1)? In fact, the issue has previously been discussed in the Court of First Instance by Barnes J in Securities and Futures Commission v Yu Ka Tak [2007]
HKCLRT 728. It was held by Barnes J, at paragraph 20, that “without reasonable excuse” is an element of the offence under section 114(1): “20. In the present case, the contents of s.114, particularly ss.114(3) and 114(9), show that the legislation has included “without reasonable excuse” as an element of the offence. Of course, this case also involved the prosecution’s allegation that the respondent was “without licence”, and under s.94A of the Criminal Procedure Ordinance, it was not necessary for the prosecution to prove that the respondent was “without licence”. If the respondent wished to prove that he had a licence, the burden of proof would be on him on a balance of probabilities. However, this does not mean that it was unnecessary for the prosecution to prove that the respondent had contravened s.114(3) without reasonable excuse. The present case is not significantly different from HKSAR v Lam Yuk Fai, and the principles stated therein are also applicable to this case.” Barnes J further observed that: “21. Although, generally speaking, whether a person has a“reasonable excuse” is probably something that only that person himself will know, this does not mean that there is anything improper in requiring the prosecution to prove the element of“without reasonable excuse” (as held by the Court of Final Appeal in HKSAR v Lam Yuk Fai and the Court of First Instance in HKSAR v Ng Po On).
22. Apart from the fact that the provision reflects that “without reasonable excuse”is one of the elements, I have also taken the legislative spirit into consideration. Had the legislative intent been that any person who contravened s.114(3) committed an offence subject to the defence of “without reasonable excuse”, the provision could have expressly said so, as in s.118(5) of the Copyright Ordinance (Cap.528) and s.9(4) of the Trade Descriptions Ordinance (Cap.362). 23. The contravention involved in this case is quite different from the offence of “possessing an offensive weapon in a public place” contrary to s.33 of the Public Order Ordinance (Cap.245). It would be rather difficult for the prosecution to prove that a defendant was in possession of an offensive weapon in a public place“without reasonable excuse”. Given that the legislation is intended to protect the well being of a person, it is neither improper nor unfair for “without reasonable excuse” to be made not an element of the offence which the prosecution has to prove but a defence. Furthermore, the fact that prosecutions have to be sanctioned by the Secretary for Justice serves to provide considerable protection to a person. Lord Woolf also mentioned similar offences in HKSAR v Lam Yuk Fai (see para.18 above). 24. The scenario in this case is different. The prosecution’s case was that the respondent carried on a regulated activity (leveraged foreign exchange trading) as business, and the case involved three persons going to the company for which the respondent worked to
open accounts and carry out foreign exchange transactions. The respondent also told them that his company would charge 18% of the profit as commission etc. 25. The prosecution alleged that the respondent did not have a licence. If the respondent claimed the contrary, he had to prove it on a balance of probabilities. If he exercised his right not to give evidence, the defence would not have any evidence to show that he had a reasonable excuse. Under such circumstances, the court could, on the evidence adduced by the prosecution, determine whether the only reasonable inference to be drawn was that the respondent was “without reasonable excuse” and had contravened s.114(3) accordingly.” Nevertheless, subsequently in Securities and Futures Commission and Liu Su Ke [2010] 2 HKLRD 673, Lunn J considered the same issue but came to a different conclusion. He ruled that “without reasonable excuse” was not an ingredient of the offence, and in pursuance to s. 94 A of the Criminal Procedure Ordinance (Cap 221), a defendant bore the persuasive burden of proving reasonable excuse. However, there were no compelling reasons to justify the abrogation of the presumption of innocence in this way and applying the proportionality test, s. 94A would be read down, so that an evidential burden was imposed on a defendant to point to evidence that raised the issue of reasonable excuse.  Although in Liu Su Ke, the court was concerned with a different provision namely, section 328 (a) of the same Ordinance, the wordings and
drafting of both provisions of 328 and 114 are actually very similar. As a matter of fact, the case of Yu Ka Tak was submitted to Lunn J for his consideration by Senior Counsel for the Respondent in favour of his contention that “without reasonable excuse” should be an element of the offence, however Yu Ka Tak was not discussed in the judgment by Lunn J. Lunn J made it plain, at paragraph 74 to 76, that “74. In my opinion, Mr Bell has identified succinctly the correct approach to the construction of the relevant provisions of this Ordinance: “Specific conduct or omission prohibited by a statutory provision may or may not be sufficient to constitute an offence. The essential criterion is whether the prohibited conduct or omission is inherently culpable.” 75. It is apparent from the long title of the Ordinance that one of the purposes and objectives in regulating activities in the securities market is, and is stated, to be the "protection of investors". Clearly, the requirement of a disclosure of interests in shares, on acquisition or cessation of that interest, is the better to inform the market and is for the protection of investors. Importantly, the ingredients of the offence alleged against the appellant require proof by the prosecution of knowledge in the appellant of the occurrence of the relevant event. It is only with that knowledge, that culpability is imposed in consequence of a failure to make disclosure of a notifiable interest….
76. In my judgment, in the context of the objects and purposes of the Ordinance, in particular the regime of disclosure to better inform and protect investors that is an inherently culpable act and those are the ingredients of the offence” I am of the view that the above principle stated in Liu Su Ke also applies in the present scenario. Although Liu case concerned a difference provision relating to criminal act of “non-disclosure”, advising on corporatefinance without licence in the present situation is also, in my view, inherently culpable. And we are here concerned of the same Ordinance with the same objective of protecting investors and regulating the securities and futures industry. In the present case, Senior Counsel for the Defence, Mr Duncan, in court, as opposed in the defence written closing submission, did fairly agree that the terms “without reasonable excuse” should be considered as a defence instead of an ingredient of the offence while Miss PO Wing Kay for the Prosecution maintained her view that “without reasonable excuse” should be considered as an element of the offence relying on the judgment by Barnes J. Be that as it may, Miss PO frankly admitted in the court that she was not aware of the subsequent judgment of Lunn J on the same issue. Having carefully considered both aforesaid authorities from the Court of First Instance, I ruled that the term “without reasonable excuse” should be regarded as a defence to be raised by defendants on evidential burden. I note that Liu Su Ke case was delivered after Yu Ka Tak case and that the Court of Final
Appeal Judgment of HKSAR v Ng Po On [2008] 4HKLRD 176 had not been delivered when Yu case was decided. What defence is available and the standard of proof? By now, I have decided that a statutory defence, namely “without reasonable excuse” is available for offences under ss. 114 (1) and (8). The effect of any statutory defences applicable to the offence charged is obviously important where the presumption of mens rea relating to the offence-creating provision is displaced. The key question is whether the statutory defence, if properly construed, is inconsistent with the availability of the second or third alternative. If so, only the statutory defence could be relied on. That was regarded as the fourth alternative liability as defined in Hin Lin Yee. Further, Ribeiro PJ subsequently observed in Kulemesin Yuriy, at paragraphs 85- 89, that: “85. Hin Lin Yee was concerned with the mental element to be proved in relation to a regulatory offence, namely, breach of section 54(1) of the Public Health and Municipal Services Ordinance. The offence involved selling drugs which were intended for use by man but unfit for that purpose (because they had been contaminated by a certain contaminant). It was an offence punishable on summary conviction by a maximum fine of $50,000 and imprisonment for 6 months….
86. The present case involves an offence which is not merely regulatory but involves serious criminal liability, being triable on indictment and punishable by a fine of up to $200,000 and by imprisonment for up to 4 years. In cases like the present, a conviction is also likely to have serious professional ramifications for the mariners involved. As we have seen, a constitutional challenge was made to the reverse onus apparently imposed by the statutory defences provided for. 87. I concluded in Hin Lin Yee that the halfway house to be adopted in Hong Kong was the third (reverse onus) and not the second (evidential burden) alternative, on the basis that once the Court was prepared to go so far as to accept as a halfway house, the imposition of a reverse onus on the defendant, there was little to be said in favour of the second alternative. I also remarked that the latter alternative was less straightforward, since it requires the prosecution to proceed subject to the contingency that the accused discharges an evidential burden as to his having had reasonable grounds for an exculpatory belief. The prosecution would then have to prove either the absence of an honest belief or the absence of reasonable grounds for such belief. 88. Such reasoning is apt when the Court is dealing with a merely regulatory offence and no constitutional issue is raised. Given the relatively minor gravity of the offence, the Court may be prepared to adopt the reverse onus alternative which falls close to the absolute liability end of the spectrum as best reflecting the presumed legislative intent upon displacement of the presumption of mens rea.
Such alternative remains available and may be compelling when construing regulatory offences. 89. However, where, as in the present case, the Court is not dealing with a merely regulatory offence, it may conclude that the presumption of mens rea has been displaced but may not accept that adoption of the third alternative would reflect the legislative intent. Where a serious offence carrying severe penalties is involved, a reverse onus may also be regarded as making excessive inroads into both the presumption of mens rea and the constitutionally protected presumption of innocence. In such cases, the Court may find it more appropriate to infer that the second alternative best reflects the presumed intention of the legislature, doing no violence to the presumption of innocence.” Given the serious criminal liability and severe penalty carried by the s.114 offences and the fact that the standard of proof of the statutory defence held in Liu Su Ke to require evidential burden only is consistent with that of the second alternative set out in Hin Lin Yee, I, having considered all the above steps of statutory construction, find that the present offences under sections 114(1) and (8) are offences to which the second alternative of intermediate basis of liability applies. In other words, they are offences where: The prosecution is required to prove beyond reasonable doubt that the D1 did carry on or hold itself out to the company clients in question as carrying on a business in advising on corporate finance;
If D1 is able to reply on evidence which, if unrebutted, raises reasonable doubt as to whether he acted or omitted to act in the honest belief on reasonable grounds that her conduct was not carrying on or holding itself out as carrying on a business in advising on corporate finance, D1 is entitled to be acquitted unless at the end of the day, the prosecution establishes beyond reasonable doubt that the D1 either did not have such belief or that his belief, although honestly held, was not based on reasonable grounds (common law defence); Furthermore, given the existence a statutory defence, if D1 is able to reply on evidence which, if unrebutted, raises a reasonable doubt as to whether a reasonable excuse exists for its conduct, D1 is entitled to be acquitted unless at the end of the day, the prosecution establishes beyond reasonable doubt that no such excuse exists or that the excuse relied on is not reasonable (statutory defence). Issue III: Could D1 be liable for acts of Michael? Concerning the criminality of a corporate body, there is no dispute by both parties that the current law is that the company will have imputed to it the acts and state of mind of those of its director and managers who represent its “directing mind and will”. And it is also common ground that D2 in the present case was the directing mind of D1, being the sole shareholder and director of D1. The issue is whether the acts of Michael, having been engaged by D2 to deal with the respective clients in question, could be attributed to D1?
The key question was identified by Lord Reid in Tesco Supermarkets Ltd v Nattrass [1972] AC 153 , in two passages at pp. 170 and 171 respectively: “I must start by considering the nature of the personality which by a fiction the law attributes to a corporation. A living person has a mind which can have knowledge or intention or be negligent and he has hands to carry out his intentions. A corporation has none of these: it must act through living persons, though not always one or the same person. Then the person who acts is not speaking or acting for the company. He is acting as the company and his mind which directs his acts is the mind of the company. There is no question of the company being vicariously liable. He is not acting as a servant, representative, agent or delegate. He is an embodiment of the company or, one could say, he hears and speaks through the persona of the company, within his appropriate sphere, and his mind is the mind of the company. If it is a guilty mind then that guilt is the guilt of the company. It must be a question of law whether, once the facts have been ascertained, a person in doing particular things is to be regarded as the company or merely as the company's servant or agent. In that case any liability of the company can only be a statutory or vicarious liability.” “Normally the board of directors, the managing director and perhaps other superior officers of a company carry out the functions of management and speak and act as the company. Their subordinates do not. They carry out orders from above and it can make no difference that they are given some measure of discretion. But the board of directors may delegate some part of their functions of management giving to their delegate full discretion to act
independently of instructions from them. I see no difficulty in holding that they have thereby put such a delegate in their place so that within the scope of the delegation he can act as the company. It may not always be easy to draw the line but there are cases in which the line must be drawn….” Also, a contrast can be drawn between the offences of strict liability and those require proof of mens rea. Lord Templeman said at p.465 in re Supply of ready mixed concrete, HL, (No.2) [1995] AC 456 that: “the first principle is that a company is an entity separate from its members but, not being a physical person is only capable of acting by its agents. The second principal is that a company, in its capacity as a supplier of goods, like any other person in the capacity of taxpayer, landlord, or in any other capacity, falls to be judged by its actions and not by its language. An employee who acts for the company within the scope of his employment is the company. Directors may give instructions, top management may exhort, middle management may question and workers may listen attentively. But if a worker makes a defective product or a lower manager accepts or rejects an order, he is the company. It is recently held by the Court of Appeal of England in R v St Regis Paper Co. Ltd [2011] EWCA Crim 2527 that the above principles however have no application to the regulation in question in that case which required proof of full intent. It again distinguished between offences of strict liability and offences which required proof of mens rea.
On the other hand, in HKSAR v Timful Garment Ltd, HCMA 770 of 2001, Deputy Judge Toh, as she then was, quoted what Litton JA said in the R v Wong Tak Choy [1994] 3 HKC 353: "The Import and Export "General" Regulations do not by express terms make an employer liable for a servant's act of taking article out of Hong Kong contrary to the provision of the export licence unless he has caused the servant to do so. The effect of the verb to cause in the context of the Import and Export Regulations has been exhaustively analyzed by the Privy Council in AG v Tse Hung Lit [1986] AC 876. There the Privy Council expressively approve of the passage in the judgment of the High Court of Australia in O'Sullivan v Truth and Sportmans Limited 1957-96 CLR 2001 where the High Court was dealing with the offence of causing a newspaper to be offered for sale containing certain prohibited matters. The passage is in these terms: "(The expression to cause) should be interpreted as confined to cases where the prohibited act is done on the actual authority, express or implied, of the party said to have caused it or in consequence of his exerting some capacity which he possesses in fact or law to control or influence the acts of the other. He must moreover contemplate or desire that the prohibited act will ensue." Deputy Judge Toh, as she then was, further observed that: “15. The appellant in Wong Tak Choy case was not a limited company. The appellant was one of the three partners of a garment
factory. In Wong Tak Choy case there was evidence that a Mr Tsang who was in charge of the Shipping Department had carried out some import and export transactions and that the Appellant did not authorise it and knew nothing about it. 16. The Magistrate in Wong's case decided that Wong was vicariously liable for what Mr Tsang had done. Litton JA (as he then was) held that the decision was wrong and that the Appellant could only be found guilty if there was evidence to show that he did cause the servant to commit the crime. 17. I agree with the Respondent that the present case can be distinguished from Wong Tak Choy case in that the Appellant is a limited company and its mind and will must, of course, be exercised by the Company Directors and Managers, and the Company had through its board of directors, given full authority to Mr So to act on its behalf, as its production manager, in charge of not only production but import and export. 18. The learned Magistrate correctly found that a company "will have imputed to it the state of mind, both of its directors and managers, who represent its directing will and mind. So any mistakes or intentional flouting of the law by Mr So can be imputed to the Company.” As I have ruled the offences under section 114(1) are strict liability to which the second alternative applies and that D1 is a corporate body instead of a natural person, I consider that, by applying the principles stated in the authorities
above, what Michael (being an agent of D2)’s acts done could be attributable to not only D2 but also D1, subject to the finding of facts as to whether Michael was acting within the actual and specific authority of D2. Directions and reminders In reaching the verdict, I have reminded myself that the prosecution is required to prove the guilt of the defendants beyond reasonable doubt. The defendants have nothing to prove except D1 to raise the defence with evidential burden in respect of s.114 offences. If I were to disbelieve D2’s evidence in court that does not mean she or D1 is guilty of the offence. Were I to disbelieve what she said in court I am also required to consider the evidence I do accept and decide if that satisfies me of the guilt of the defendant to the required standard. In assessing the credibility of witnesses, I reminded myself that each case has its own particular features and sweeping generalization should not be made. I bore in mind that I had to consider the inherent probabilities of the evidence and that the demeanour of the witnesses could be relied on only as a last resort. D2 has a clear record and I have followed the guideline laid down in the case of Berrada and regarded her as having a lower propensity to crime and a higher degree of credibility. I also reminded myself that where the prosecution relies on circumstantial evidence, the court can only draw an inference from facts proved beyond reasonable doubt and such an inference must be the only reasonable
inference that can be drawn from such facts. It must also be an irresistible inference. This case involved similar summonses laid against D1 and D2 under sections 114 and 390 respectively of the Ordinance, I have reminded myself that I have to deal with evidence for each summons separately. Discussion on the Evidence The credibility of all the prosecution witnesses are generally not in issue, except the defence challenged Cheuk had actually not read the content of the written agreements before his signature, which Cheuk firmly disagreed. In the following paragraphs, I will firstly deal with the evidence concerning summonses laid under s.114(1) against D1, i.e. C.L. Management Services Ltd, in relation to its dealing with the 3 respective client companies: 3 Wells, UK Fur and New Bonus. The “carrying-out” offence under section 114(1)(a) only concerned 3 Wells while the “holding-out” offences under section 114(1)(b) concerned all three companies in question. Summonses against D1 The “carrying-out” offence in respect of 3 Wells (ESS 30671 of 2013) Background of D1, D2 and Michael D1, C.L. Management Services Ltd, was and is a registered company in Hong Kong and D2 was the sole director and shareholder of the company at all material times. D1 shared the same office at the address stated in the agreements in question with Cheong Lee Securities Limited (“Cheong Lee”) which was and
is a securities company owned by D2. It is admitted by both parties that neither D1 nor D2 were licensed with SFC in any capacity or in relation to any regulated activities under the Ordinance.  Neither was it disputed that D2 knew that she was not licensed to do so at the material times. D2 is educated and received part of her education in Australia. She was divorced having 4 children. She has been actively participating in the charitable work held by Yan Oi Tong where she met Cheuk’s wife who was the chairlady of Yan Oi Tong. D2 was also elected as a vice-president of Yan Oi Tong before. She was a stockbroker and a licensee as a securities’ dealer between 1991 and 2003. D2 acquired Cheong Lee in 2007 which was and is a company engaged in the business of dealing in securities and futures. In March 2011, the holding company of Cheong Lee, CL Group (Holdings) Limited (“CL Group”) was listed on the GEM board of SEHK and D2 was and is the major shareholder. D2 knew the listing procedures from the past listing experience of her own company, CL Group and as a result of which, she knew a number of professional parties, including lawyers, accountants and sponsors for listing matters. As testified by D2, Michael was a certified public accountant and also a chief financial officer of a listed company. D2 knew him since 2004 and CL Group had employed Michael as a company secretary in 2005 for 6 months. Between 2004 and 2007, D2 hired Michael to handle accounting matters for her personal companies. As far as D2 knew, Michael was conversant with the listing procedures. D2 regarded Michael as a person of experience and one could handle matters very well, as she had worked with him for a long time. In the present case, D2 alleged that he had engaged Michael to prepare the agreements in question and liaise with the respective three client companies for her. She also asked Michael
to look into the internal audit of 3 Wells for allegedly “her own assessment” only as to whether 3 Wells were capable of being listed before she introduced the professional parties handling the listing procedures of 3 Wells. D2 maintained that Michael was not an employee of D1 at the material times. Before 3 Wells Agreement was signed According to the evidence, what D2 and Michael have done to 3 Wells before the 3 Wells Agreement had been signed were as follows: In early 2011, about half a year before signing the agreement, D2 firstly raised with Cheuk if he was interested to be instructed by her to upgrade 3 Wells, meaning getting it to be listed; Cheuk subsequently visited several times D2 at the address of D1, as stated in the 3 Wells agreement for the purpose of knowing more about D1’s scale of business (though in his mind he only knew Cheong Lee) and considering whether to choose D1 for the listing matters. Every time he saw D2 working inside the office and it was Michael who received and discussed the matter with Cheuk; Cheuk also, during the half year before the agreement was signed, has gathered information in respect of provider of consultancy services in listing matters. He said the price was generally from $300,000 to $500,000; Cheuk was not familiar with the listing procedures and therefore he needs advice on the procedures, human resources and a professional party to line up all the right professionals for the listing
application; Cheuk admitted that apart from the payment and lining up of professionals, the other terms on scope of services were not discussed with D2 in details. Those were only confirmed when the agreement was signed; What Cheuk understood was that D2 and Michael would act like a “martial-art instructor” to help 3 Wells in the listing procedures. He expected that D2’s party would supervise or even work with the team of professionals to ensure the smoothness of the listing of 3 Wells; Michael was the first “staff”, as said by Cheuk, D2 had introduced to Cheuk; D2 instructed Michael to prepare the 3 Wells agreement for Cheuk to sign. Cheuk signed the agreement first at 3 Wells’ office, the agreement was subsequently sent to Michael for D2’s signature at her own office; A signed copy by both parties was later sent to 3 Wells; Cheuk said he did read the content of the agreement before he signed. Because of their friendship and D2’s reputation on both her profession and charity, Cheuk said that he did not care much about whether D2 was signing the contract on behalf of Cheong Lee or any other company of her. Nor did he care much about the date of the agreement; Cheuk knew well that he was appointing D1 as 3 Well’s “exclusive financial adviser” and he did believe D2 was capable of providing such service as a professional financial adviser for 3 Well’s listing and D2 being a consultant should provide such service as a whole.
Relevant clauses in the 3 Wells Agreement The written agreement signed between D1 and 3 Wells is not at all a complicated one. The terms stated in are in fact clear and easy to understand. I quote below the relevant ones: “PROFESSIONAL FINANCIAL CONSULTATION SERVICES AGREEMENT Name of Party A : 3 Well Groups Holdings Limited (referred to as “Party A”) Office of Party A : Units 1503 – 6, 15/F, Tower 1, Ever Gain Plaza, 88 Container Port Road, Kwai Chung, N.T., Hong Kong Name of Party B : C. L. Management Services Limited (referred to as “Party B”) Office of Party B : Room 1106, 11/F, Mass Mutual Tower, 38 Gloucester Road, Wan Chai, Hong Kong In view of Party A’s intention to apply for a listing status on the Growth Enterprise Market (GEM) Board of the Hong Kong Stock Exchange, Party A and Party B hereby enter into this Engagement Agreement on matters about the engagement of Party B as an exclusive financial advisor in relation to Party A’s listing upon arm’s length negotiation : 1. Engagement With the effective from the confirmation and signature of this Agreement by Party A, Party B is duly appointed by Party A as the exclusive financial advisor of Party A and its subsidiaries (hereinafter referred to as the “Group”) in relation to the listing in Hong Kong. 2. Scope of Services Party B shall make full endeavour to use its resources and advantages for the listing of Party A, in order to enable Party A to be listed on the Hong Kong Stock Exchange. The responsibilities of Party B in relation to this listing include : (1) to provide professional financial advices in relation to arrange of the application for the listing on the Hong Kong Stock Exchange and to assist in resolving the relevant important issues;
(2) to provide technical advice on all related foreign and domestic policies, and to assist Party A in drawing up a listing scheme or proposal on the basis of an initial evaluation; (3) to assist and guide Party A on the formulation of a restructuring plan, and a timely tracking and monitoring program for the intended listing, and on the implementation thereof; (4) to assist Party A in preparing the financial statements of the Group in accordance with the Hong Kong Accounting Standards; (5) to guide and assist the Group in the preparation of the listing financial information (including the preparation of the financial information to be contained in documents such as the prospectus of Party A) in accordance with the standard requirements, and to actively participate in the preparation work for Party A’s application for listing; (6) to assist Party A in the engagement of various listing-related intermediaries in relation to the intended listing, such as accountants, lawyers and listing managers (including securities brokers and underwrites etc., which shall be internationally-renowned institutions). The selection of the aforesaid institutions shall be confirmed by Party A, and the payment of costs to each of the intermediaries shall be made by Party A; (7) to assist Party A in performing the required due diligence in respect of the listing project and to coordinate with other intermediaries; (8) to enthusiastically follow up audit work in connection with the listing matters with the Hong Kong auditors for and on behalf of Party A; (9) to assist Party A in the overall arrangement with respect to the questions raised by the Hong Kong Stock Exchange and the Securities and Futures Commission (SFC), including the review and submission of replies on financial information; (10) to consult with Party A to frame a practicable listing schedule in order to ensure the timely completion of the required work; (11) The advisory services shall span over the financial accounting years from September 2011 to December 2012. ……. 5. Payment of Costs Party A agrees and undertakes to pay a cost of HK$600,000 annually to Party B as compensation for acting as its financial adviser. Upon successful listing of Party A on the Stock Exchange of Hong Kong, Party A shall grant an additional number of share options, being equivalent to 1.5% of the issued shares, to Party B. The payment should be made within 7 days when this agreement effective. The payment terms is as follows
Time of payment Payment Within 7 days after signing this Engagement HK$150,000 Agreement and payment in quarter The date on which the listing application submit to Share options the Stock Exchange of Hong Kong equivalent to 1.5% of the number of issued shares The accommodation expenses incurred by Party A during its work should be financed by Party A.” (My emphasis) I find the above 3 Wells Agreement a very clear and comprehensible agreement representing that D1 would during the period covered by the agreement act as an “exclusive financial advisor” providing a comprehensive scope of advisory services for 3 Wells concerning the compliance with and in respect of the listing rules. The reasons are: The agreement was clearly named as “Professional Financial Consultation Services Agreement”; It was stated therein twice that D1 was engaged by 3 Wells as an “exclusive financial advisor” in relation to 3 Wells’ listing in Hong Kong; All the terms in Clause 2 “Scope of Services” clearly concerned advisory services on listing matters, including compliance with and in respect of the listing rules, of 3 Wells; In Clause 5, the payment of costs was clearly for D1 acting as 3 Wells’ “financial adviser”. It is of note that the payment of costs to other
professional listing-related intermediaries, e.g. lawyers, accountants and listing managers, were to be separately and additionally paid by 3 Wells; The advisory services shall span over the financial accounting years from September 2011 to December 2012. After 3 Wells Agreement was signed On the evidence, after the agreement was signed, D2 and Michael did provide part of the services as stated in Clause 2 of the agreement: 1-2 weeks after 31 Aug 2011 when 1st payment of HK$ 150,000 was paid by 3 Wells to D1 in pursuance of the agreement, Cheuk and Lee met Michael and his team for the listing matters; Michael, and his team, then requested to assess each department of 3 Wells by interviewing each department head and visiting the mainland factory; On 1 September 2011, Geoffrey WONG  (“Geoffrey”) of Michael’s team, sent a outstanding list and time table for the listing purpose to Lee; The same was forwarded to Michael; Between 16 September and 17 October 2011, Lee sent, as requested by Geoffrey, a list of 3 Wells’ internal documents to
Alex Tse (“Alex”) and Geoffrey, for the purpose of reviewing the internal control. Alex sent their comments on the internal control to 3 Wells on 22 September 2011. As seen from the email, meetings for the same purpose were held on 19 September, 4, 13 and 17 October 2011, all the emails were forwarded to Michael and Cheuk; Cheuk understood that all the above documents were sent to Michael and his team for their consideration as to whether 3 Wells was capable of being listed; Before D2 lining up the professional team, Cheuk recalled that either D2 or Michael had come back to him and told him that 3 Wells should be eligible to be listed; On 3 October 2011, Michael and Cheuk’s team had the first meeting with the company lawyer ; On 21 October 2011, Lee sent to Geoffrey another list of 3 Well’s information which would be forwarded to Sponsor’s consideration; On 25 October 2011, Michael attended the first meeting with the Sponsor and Cheuk’s team ;
On 12 December 2011, Michael attended a meeting with the Sponsor and Cheuk’s team concerning the extension of the listing on GEM project for one year to September 2013; On 16 January 2012, Michael attended a meeting with Cheuk’s team and the Sponsor for the purpose of outlining the execution plan for GEM project; On 14 May 2012, 3 Wells paid a second payment of $150,000 to D1 in pursuance of the agreement; Around September/ October 2012, Michael called Lee repeatedly and urgently requesting 3 Wells to terminate the 3 Wells Agreement due to problem of “internal audit”. It was promised that a refund of a total of $300,000 will be made to 3 Wells by D1. The request was agreed by Cheuk and a letter was finalised, drafted by Michael and amended on Cheuk’s instruction, and sent to D1’s address and to the attention of D2; D2 admitted that she had received the termination letter but did not pay heed to it and therefore did not act on it; No refund was ever made by D1 to 3 Wells until now;
Cheuk all along understood that D2, Michael and their team, apart from lining up the professionals including the lawyers, accountants and sponsors, would supervise and work with them to make the listing process successful. However, several months after the agreement, it seemed that D2 and her team did not do much in the listing process; Upon lining up the professionals, D2 said she had attended the first introductory meeting after which he did not take part in the process. She relied on Michael to do all the liaison work for 3 Wells’ listing matters; D2 admitted that out of the total sum of $300,000 D1 had received from 3 Wells, $150,000 was paid to Michael. Was Michael acting on behalf of D2 within her actual and specific authority? It is contended by the Defence the acts by Michael and his team to 3 Wells were not done within D2’s actual and specific authority. On the evidence, D2 was the sole shareholder and director of D1. The scale of D1, as testified by D2, was not a huge one. She said in evidence that it was her another company Cheong Lee assigning a room at the address in question for her to work for D1. Cheuk said that Michael was the first staff D2 had introduced to 3 Wells responsible for the listing project. Michael was working in the same office as that of D2 in respect of the dealing with 3 Wells as testified by Cheuk. It is reasonable to infer that D2 and Michael did work together closely during the material times. According to Cheuk and Lee, if there was
anything they wanted to inform D2, they would do it through Michael, e.g. D2 signing the 3 Wells agreement or Lee sending the termination letter to D2. 3 Wells’ party always understood Michael being the agent/staff of D2. At no stage did D2 inform 3 Wells that such her relationship with Michael had been changed. Further, I found Michael was actually working as a delegate/agent of D2, being responsible for the services provided to 3 Wells about the listing matters. On the evidence, it is clear that after D2 getting the business from 3 Wells by using her connection and reputation acquired both from her charity and professional works, she then left the actual operation to her able assistant, Michael. As admitted by D2, Michael was conversant with listing procedures as he was a certified public accountant and a chief financial officer of a listed company before. Michael has also been employed by D2 as company secretary for CL Group in the past. It was mainly Michael and his team to follow up the listing matters of 3 Wells. As a matter of fact, what Michael and his team did was generally consistent with the agreement terms, although it turned out to fall short of performance as expected by Cheuk. No doubts Cheuk and his team understood that Michael was all along acting on behalf of D2. Even during the termination of the contract, the letter was sent to D2’ attention. D2 admitted that she had received the termination letter which showed that she remained in control and was the person in charge of the whole process on behalf of D1. Before the 3 Wells Agreement was terminated, a total of HKD$300,000 was paid to D1 by 3 Wells on schedule which has never been refunded as promised by Michael over the phone. Out of HKD$300,000, Michael was rewarded with half of the remuneration, i.e. HKD $ 150,000, as admitted by D2. All of these are consistent with Michael’s role as an agent for D2. It makes no sense that Michael, without any reasons, would be or intended to be in any way
acting outside D2’s authority. Having reviewed all the evidence, I found that Michael was all along acting on behalf of D2. D2 had delegated her duties for 3 Wells to Michael and that Michael had acted within D2’s actual and specific authority and within the scope of her delegation. As I have ruled above that offences under section 114 created strict liability of 2nd alternative and the fact that D1 was a corporate body in the summons concerned, together with my finding that D2 had delegated her duty in respect of 3 Wells to Michael who had acted within D2’s delegation and authority, I consider that what Michael had done on 3 Wells was attributable to D1. In other words, D1 was liable for not only D2’s, but also Michael’s acts. What amounted to “advising on corporate finance”? It is common ground that the meaning of “advising on corporate finance” is defined in Part 2 of Schedule 5 of the Ordinance and the relevant part concerned in the present case in my view is confined only to the first part of subsection (a): “advising on corporate finance means giving advice- (a) concerning compliance with or in respect of rules made under section 23 or 36 of this Ordinance governing the listing of securities….; On reading the above extract of the definition, it seems that the provision aims at covering a wide range of areas of any advice given concerning compliance with or in respect of rules governing the listing of securities.
As analysed in paragraphs 61-64 above, I am of the view that what D2 and Michael did to 3 Wells before, during and after the 3 Wells Agreement was signed obviously amounted to advising on matters concerning compliance with or in respect of the rules governing the listing of securities. Although what D1 did fell short of what it had promised in the written agreement and what was expected from Cheuk. On the evidence, D2, Michael and his team were but trying to give assistance and advisory services on the listing matters for 3 Wells on behalf of D1. The services provided were generally in line with what D2 had promised to 3 Wells both in the oral and written agreements. Defence said that D2 was just using her experience and connections to line up a professional team for 3 Wells’ listing and that was it, which fell short of amounting to advising on corporate finance. I disagree with it. That in fact was just part of D2’s work. As said above, D2, after signing the 3 Wells Agreement, also sent her team headed by Michael, as testified by Cheuk and Lee, to have meetings with Cheuk, Lee and their department heads, both in Hong Kong and Mainland. They also helped to review a list of internal documents to access whether 3 Wells had the capability to be listed. Such advices were indeed given to them before D2 lined up the professionals for the listing of 3 Wells. After that, D2 (even for the first introductory meeting only as said by her) and Michael had also met up with Cheuk’s party and other professional intermediaries concerning 3 Wells’ listing. I do not accept Defence contention that D2 was not aware of Michael and his team’s doing all along. D2 was a professional in the securities industry and she was involved from the beginning until the end, although she was not the person who actually did most of the liaison or advisory work. This part will be considered in more details later in my verdict.
Did D1 “carry on” a business in advising on corporate finance? As to the meaning of “carrying on” a business, it was held in Lee Yee Shing v Commissioner of Inland Revenue (2008) 11 HKCFAR 6 at paragraph 38, that “whether something amounts to the carrying on a trade or business was a question of fact and degree to be answered by the fact finding body upon the consideration of circumstances.” Further, it was held in HKSAR v Fung Yee Man [2001-2003] HKCLRT 464 by Deputy Judge Pang, as he then was, that: “A business must be “carried on” in order to become registrable, and the term “carry on” cannoted a degree of continuity. As a matter of common sense, a one-off sale and purchase transaction did not constitute “carrying on”. I have found above that what D2 and Michael had done amounted to giving advice on corporate finance, I still have to consider whether on the evidence D1 was “carrying on” a business in advising on corporate finance. Applying the principle set out in the above cases, I do have reservation in concluding beyond all reasonable doubt that what D1 had factually done to 3 Wells could satisfactorily be regarded as “carrying on” a business in advising on corporate finance, although the evidence showed that it did at some stage, through Michael and D2, give 3 Wells “some bits and pieces” advisory service on its listing during the material times. Cheuk testified that several months after the agreement had been signed, he realised that D1 actually did not do much in the listing process, as opposed to what he had expected. On the evidence, the
advisory service provided by D1 to 3 Wells was abruptly terminated upon D1’s request around September or October 2012 before the agreement was completed. At that moment, 3 Wells was not able to be listed as originally scheduled. Analysed as the above, I acquit D1 of ESS 30671/2013 on the “carrying-out” offence. As there is no commission of the relevant offence in section 114(1)(a), D2 must also be acquitted of the “attributable offence” of ESS 30672/2013 laid under section 390 of the Ordinance. The “holding-out” offences (ESS 39231, 30673 & 30675 of 2013) As stated above, the “holding-out” offence against D1 concerned all three client companies. Meaning of “Holding- out” From the Hong Kong Bilingual Legal Dictionary, it is said that the term “hold out” means: “To represent or pretend. It is an offence for an unqualified, unlicensed or unregistered person to hold out, advertise or represent that he or she is qualified or licensed to provide professional or regulated services” Evidence relating to 3 Wells On the evidence set out above in paragraph 62, Cheuk said that before signing the 3 Wells agreement, D2 had asked him twice whether he would
like to promote 3 Wells to a higher level, which he understood was to have 3 Wells being listed. D2 asked if Cheuk was interested to be instructed by her for such purpose which Cheuk understood D2 would act like a martial art instructor in the whole listing process of 3 Wells. Cheuk had actually considered this issue for about half a year, during which he had gathered information about other companies providing similar consultancy services concerning listing procedures and visited D2’s office to learn about the scale of her business. Before the written agreement was signed, the payment terms and paying schedule were largely agreed. As to the scope of services to be provided by D1, D2 and Cheuk did not discuss it in details before signing the agreement. What Cheuk understood was that, apart from introducing the right professional parties to handle the listing process for 3 Wells, D2 and his team would also supervise or work together with other professional parties to ensure the listing process would be smooth. The Defence disputed that Cheuk had actually not read every term of the agreement before he signed it which was firmly disagreed by him. Cheuk explained that what he told SFC that he did not care about the contract meant that he did not care about the company’s name, the scope of services in details and the date of the agreement. Neither did he care to check whether each term of the contract was duly carried out by D2 in the course of the process after signing the agreement. It was because he trusted D2 very much. But he did read and understand every term of the contract before he signed. After considering the content of his evidence as a whole and observing the way in which Cheuk was giving evidence, I accept all what Cheuk said in court and I found him a very honest and reliable witness.
In any event, what the court mostly concerned is not what Cheuk had understood, but what D2 had held herself out before, during and after she had signed the agreement. The terms stated therein the 3 Wells Agreement are clear and simple. D2 is educated and has been working in the profession of securities and futures for a long time. The agreement was prepared upon her instruction. The evidence also showed that there was abundant time for her to read and understand the contract before signing the agreement. Apart from the conduct of D2 before and when she signed the agreement with 3 Wells, what she and Michael performed to 3 Wells after signing the agreement as stated above in paragraph 65 also supported the conclusion that, at the time when D2, on behalf of D1, signed the agreement, D1 did held itself out to 3 Wells as carrying on a business in advising on corporate finance. It was also in line with 3 Wells’ understanding all along until the termination of the contract. The fact that D1, urgently and strangely, requested 3 Wells to terminate the agreement also strengthened the inference that D1 did at the outset held out to 3 Wells as carrying on a business in advising on corporate finance which was later discovered to be unlawful and needed to be terminated. In light of the foregoing, I have no hesitation to conclude that D1 did, at the time when the 3 Wells Agreement was signed, hold itself out to 3 Wells as carrying on a business in advising on corporate finance. What if Michael’s acts do not count? Even if I were wrong in concluding D1 should be liable for Michael’s acts, I still found that D2 being the “directing mind and will” of D1, had held herself out to 3 Wells as carrying on such a business.
Taking into account the above facts concerning the acts of D2 alone performed to 3 Wells before, during and after the agreement was signed together with other circumstantial evidence, in particular her background and the clear content of the 3 Wells Agreement as set out above at paragraphs 59-65 and analysed at paragraphs 81-86, I am sure that D1 did, at the time when the 3 Wells Agreement was signed, hold itself out to 3 Wells as carrying on a business in advising on corporate finance. Evidence relating to UK Fur The Prosecution only called PW3, P WONG, the Chairman and executive director of UK Fur, which was in the business of fur trading. P WONG knew D2 for over 20 years. P Wong’s evidence was relatively brief. What D2 had done to UK fur included: D1 entered into a “Professional Financial Services Consultation Agreement” with UK Fur signed by P Wong and D2, on or around 20 October 2010; The draft of the above agreement was prepared by Michael which was sent to D2 for consideration before signature. After three days, D2 replied Michael, by way of email, that the draft had no problem. D2 also emphasised to Michael to make sure the payment would be well received; 
The UK Fur Agreement contained very similar terms as the one signed with 3 Wells which included: The agreement was named as “Professional Financial Services Consultation Agreement”; Engaging D1 as UK Fur’s “exclusive financial adviser” in relation to its listing in Hong Kong (Clause 1); Purporting to provide very similar scope of advisory services as stated in Clause 2; Providing for payment of $600,000 and the granting of share options equivalent to 1.5% of the number of issued shares upon successful listing as stated in Clause 5 by UK Fur to D1 which were for the latter acting as the “financial adviser”; The payment of costs to other professional listing-related intermediaries, e.g. lawyers, accountants and listing managers, were to be separately and additionally paid by UK Fur; The advisory services shall span over the financial accounting years from 2009 to 2011. UK Fur had paid a total sum of $600,000 to D1 in 4 instalments as stated in Clause 5 of the agreement;
During the oral discussion with D2 before signing the agreement, P Wong said that D2 only had offered services of lining up of a team of professionals for the listing matters, which he agreed upon cross examination that was what he expected too; P Wong admitted that he knew nothing about the listing procedures; When signing the agreement, although he had read it, he did not understand the content of it; On 26 October 2011, UK Fur and D1 entered into a Supplemental Agreement . This agreement varied the payment terms under clause 5 of P2 in that the consideration for the services was changed from $600,000 to $700,000. However, the additional $100,000 was not paid to D1; D2 introduced various professional parties to UK Fur including lawyers, accountants and sponsors for the listing process; By a Confirmation Letter dated 18 November 2011, signed by D2 and P WONG, the parties confirmed that D2 did not and would not perform the services stated in the original agreement. Instead, there was a totally different list of other services stated therein the letter that D1 had and would provide during the contractual period;
Further, the role of D1 being a “financial advisor” was changed to “financial consultant” pursuant to the Confirmation Letter. P Wong said that the confirmation letter was prepared on the advice of the Sponsor of UK Fur’s listing application as it was said that the services stated in clause 2 of the original agreement should have been provided by the sponsor but not D1; UK Fur’s holding company was listed on the GEM board of SEHK on 24 August 2012; On 1 August 2012, UKF Holdings granted an option of $14,400,000 shares equivalent to 1.5% of the number of issued shares in favour of D1 at the exercise price of $0.26. On 2 August 2012, D1 accepted the option in a letter signed by D2 on behalf of D1 Given the unequivocal terms stated in the contract signed between D2 and P Wong, I consider that there is sufficient evidence to show that D2 did hold itself out to UK Fur as carrying on such business in advising on corporate finance. I note that P Wong said that he did not understand the terms of the contract and expected D2 did nothing more than the introductory service. However, what the court concerned the most was what D1 had held itself out to be. I must say that I did have reservation on some part of the evidence of given by P Wong, who was a good friend of D2 for more than 20 years, concerning what he understood about the scope of services provided by D2 before the agreement was signed. The court is entitled to accept part of the evidence given by a witness. In any event, the
clear representation stated on the written agreement should be considered as the most forceful and reliable evidence of what parties were agreeing and representing. Defence said that P Wong’s understanding of what D2 said orally was in contrast with what was stated in UK Fur Agreement. Normally, the written contract should be considered as overriding if there is any discrepancy between the oral and written agreement. For example, in D2’s evidence, she orally agreed with the respective clients that she would charge around HKD$50,000 each month for her services. But in all the agreements concerned, the payment terms stated therein were quite different from what she told the clients before. This also showed that D2 intended to finalise all the terms of her service with her clients in the written but not the oral agreement. Strangely enough, the term about “Scope of Services” (Clause 2) has been substantially amended and the role of D1 being a “financial advisor” was changed to “financial consultant” by way of a Confirmation Letter dated 18 November 2011 after almost 13 months when the UK Fur Agreement was firstly signed. A compelling inference could be drawn that either the advisory services stated in Clause 2 of the original agreement had not actually been carried out or should not have been carried by D1, which was somehow discovered and needed to be rectified by UK Fur during the listing process. In either situation, it further supported the irresistible inference that D1 did, at the time when signing the contract, hold itself out to UK Fur as carrying on a business in advising on corporate finance. On the other hand, the fact that, D1 did, at some stage after signing the agreement and performing part of the unregulated activity, try to rectify its legal status with UK Fur only showed that it might not be aware what
it/D2 was doing was not permitted by the law. However, ignorance of law is no defence. Clearly, section 114 does not only target those who actually carried on a business in the regulated activity but also those who held itself out to others as carrying on such business. In light of the unequivocal terms set out in the UK Fur Agreement and the other circumstantial evidence as set out above, I am sure that D1, at the time when the UK Fur Agreement was signed, actually held itself out as carrying on the business in advising on corporate finance. Evidence in relation to New Bonus The Prosecution only called PW4, KF WONG, another friend of D2 and also the director of New Bonus, which was in the business of selling luxury yachts. His evidence was quite similar to what was given by P Wong of UK Fur. On the evidence, what D2 had done to New Bonus included: Around the end of December 2010 and early January 2011, KF WONG on behalf of New Bonus entered into a Professional Financial Services Consultation Agreementwith D2 signing on behalf of D1; The New Bonus Agreement was also in very similar terms as 3 Wells Agreement and UK Fur Agreement which included:
The agreement was named as “Professional Financial Services Consultation Agreement”; Engaging D1 as New Bonus’s “exclusive financial adviser” in relation to its listing in Hong Kong (Clause 1); Purporting to provide very similar scope of advisory services as stated in Clause 2; Providing for payment of $680,000 and the granting of share options equivalent to 3% of the number of issued shares upon successful listing as stated in Clause 5 by New Bonus to D1 were for the latter acting as the “financial adviser”; The cost for other professional parties were to be separately and additionally paid by New Bonus; The advisory services shall span over the financial accounting years from November 2011 to December 2012. D1 was paid $170,000 by New Bonus within 10 days after the written agreement was signed; KF WONG said, upon cross-examination, that before signing the written agreement, he and D2 did discuss about D2 introducing professional parties to New Bonus for the listing application and
that he himself did not expect D2 to provide other services regarding the listing process. I have to consider whether D2, on behalf of D1, by signing of an unequivocal written agreement as well as providing the introductory services to New Bonus could amount to “holding-out” in carrying on a business in advising on corporate finance. Clearly, D2, on behalf of D1, did represent in the New Bonus Agreement that services of advising on corporate finance would be provided to New Bonus. In fact, the first instalment of $170,000 was paid to D1 by New Bonus shortly after the agreement was signed. The listing application of New Bonus was somehow not proceeded with, but part of the services, namely the introductory service as specified in Clause 2 had been provided by D2 as admitted by her. In light of all the evidence concerning what D2, on behalf of D1, had done to New Bonus before, during and after the signing of the New Bonus Agreement, I have no hesitation to conclude that D1, at the time when the contract was signed, did hold itself out to New Bonus as carrying on the business in advising on corporate finance. Defence said that KF Wong himself did not expect D2 would provide services other than the introductory services. As what I have said earlier, the court is mostly concerned of what D2 was doing on behalf of D1. Although KF Wong testified that during prior discussion what he understood from D2 was that she would be introducing some professional parties for the New Bonus’s listing, but that would not negate the clear fact that D2, on behalf of D1, had later on by way of an unequivocal written agreement held herself out as carrying on the business in advising on corporate finance. I therefore consider that D1 had at the material
time held itself out to New Bonus as carrying on the business in advising on corporate finance. Can the defence be made out by D1 factually? I pray in aid of the holding in HKAR v Adams Secuforce (International) Limited [2008] 1 HKLRD 207 relating to the steps in considering the defence of “reasonable excuse”: “the defence of “reasonable excuse” had first to be examined and identified; secondly, that it was necessary to determine whether the excuse was genuine; and thirdly, an assessment was necessary to determine if the excuse was reasonable. The Court said that the defendant's belief or his state of mind were relevant factors and may afford some assistance to the trier of fact but the final answer must always come from an objective assessment of the particular facts of each case. The Court said that that assessment required a consideration of not merely the defendant's belief and state of mind but it required the application of community standards.” In a recent case HKSAR v Li Fung Ching Catherine [2012] 3 HKLRD 377, the Court of First Instance also held that: “In relation to non-payment of wages under section 23 of the Employment Ordinance, the question of “reasonable excuse” should be considered from the perspective of a reasonable man, namely
whether there was a cause which a reasonable man would regard as an excuse, consistent with a reasonable standard of conduct. Regard must be had to the objective of the Ordinance, which was to provide for the protection of the wages of employees.” In reaching my conclusion as to whether the defence could be made out factually, I bear in mind the principles above and the objective of the Ordinance in question which is to protect the investors and regulate the industry of securities and futures. The defence contended that D2 firstly, was not aware of the content of all the agreements she had signed with the respective clients and secondly, did not know what Michael had done to 3 Wells. I have to consider whether the defence has successfully proved the above two assertions, if unrebutted, could amount to a “reasonable excuse” (i.e. the statutory defence) or an honest belief on reasonable grounds that what she did was not holding herself out as carrying on a business in advising on corporate finance (i.e. the common law defence). D2 elected to give evidence and I accept that the evidential burden for both statutory and common law defence has been satisfied by the defence. What I have to do next is to consider whether the prosecution could successfully rebut, beyond all reasonable doubt, that what was said by D2 in her evidence could never be a “reasonable excuse” (statutory defence) nor in any way an “honest belief on reasonable grounds” (common law defence). Did D2 know the content of the agreements? As narrated earlier, D2 is an educated lady and understands English. She has been dealing in the securities industry for years and her own
company has gone through the process of listing in 2009-2011. She testified that the three agreements in question were prepared by Michael on her request but she did not have chance of reading through them in details before signing. She said she had told Michael to look for similar agreement which provided only introductory services for listing. On the evidence, the draft of UK Fur Agreement was sent to D2 by Michael for her perusal.  The draft was subsequently approved by her as showed from the e-mail he replied to Michael. D2 however told the court that the first time when she had a chance to read the terms in details of the three respective agreements was when she was asked to do so during her evidence-in-chief in court. She said what she concerned the most was to get money from the clients on time and she was not concerned with other terms of the agreement because the three clients were all her friends. She even told the court that the agreements were not important. She also excused that she was just too busy, both in family and work, to read the content of the agreements. I must say that D2’s above assertions in court were in my view no more than a pack of lies. Being such a professional in the industry, how can one believe that she would not read carefully the terms before signing the contracts? D2 said what she concerned the most was the receipt of payment which could most effectively be showed and enforced in the agreements. Payment could only be collected when the duties of D1 was duly performed as specified in the agreement. Therefore, both the terms of payment and scope of services were equally important. D2’s saying that she only had a glance on the payment clause but not other terms was totally unreasonable. The most utterly unbelievable part
was that she only read it for the very first time when she was giving evidence in court. How could one believe such a dishonest and ridiculous piece of evidence? 102. At least, D2 would read the agreements when she was informed, on two occasions, that the same had problems. Regarding UK Fur’s case, a Supplemental Agreement dated 26 October 2011 and Letter of Confirmation dated 18 November 2011 were signed by both parties, specifying the substantial changes of scope of services and the role of D1. Similarly, in the case of 3 Wells, a letter back-dated to 31 May 2012 to terminate the original 3 Wells Agreement was received by her in late 2012. D2 although admitted that she had received all the abovesaid documents denied that she had paid much attention to the same. That again in my view defies all common sense. The above documents were unusual in nature and hardly can one be convinced that D2, being the directing mind of the party concerned of the agreements, would not have paid any attention to them. It is wholly unconvincing that D2 have not read again what she had signed when the terms of the agreements had been substantially changed. It is also absurd that D2 would not have read the contracts again when she was being investigated by SFC which was well before giving evidence in court. In any event, I do not believe that D2 have not read through the respective agreements before she signed each of them. There is no evidence suggesting she was in a rush at all. As a matter of fact, the first draft of UK Fur Agreement was sent to her email account by Michael for her perusal and was approved three days later. In 3 Wells’ case, Cheuk said that after he signed the 3 Wells Agreement, the same was sent to D2’s office for her signature. In both cases, D2 had plenty of time to read and understand the agreements before signing.
Although Michael did not give evidence, D2’s evidence did not suggest any ground that Michael, being her reliable agent all along, would depart from her instructions on preparing the appropriate agreements without any reasons. On the other hand, D2 said that she had known Michael for a long time and that she regarded Michael as a very competent assistant of her who could handle things very well. These must be the reasons why D2 would employ him as the company secretary before and in the present case the person responsible for most of the dealings with the clients concerned. D2 said Michael was very familiar with the listing procedures and she herself also had the experience and knowledge of the same as CL Group had gone through the listing process before. I have no doubt that the agreements must have been prepared according to D2’s instructions. If D2’s evidence were true, all the agreements prepared by Michael turned out to be substantially departing from her instructions. If the services D2 intended to provide were just so simple as alleged by her, why Michael would not have just drafted an agreement with very simple terms but acted against D2’s instructions and prepared a much more detailed one instead? On the evidence, all the money was firstly paid to D1 and the substantive work was mostly done by Michael. What was the point for Michael to perform so much more arduous duties for the clients if the same amount of money would be received by D2 and him by just doing the introductory services? This is again illogical. D2 also testified that as she trusted Michael very much and she was very busy both at work and family, she simply did not care to read through them but just signed them right away. Such excuses are unacceptable to me. It is entirely improbable that D2 would not have read such clear and comprehensible terms even once. Each agreement contained only several pages and the terms were all very similar, clear and easy to understand. D2’s such excuse/belief was
neither reasonable nor honest at all in my view. I am sure that D2 must have full knowledge of the content of all the agreements in question. Also, after signing the contract, D2 was still involved in the process, at least by introducing the professional parties for and attending the first meeting with the respective clients as she testified. The receipt of payment on schedule did further infer that what she signed was what she meant. Further, the considerable monetary remuneration, let alone saying the granting of share options, received by D1 from the clients was incompatible to D2’s allegation that she intended to provide and had provided introductory services only. From Cheuk’s evidence, he did conduct some research on the fees charged for similar advisory services for listing provided by other companies which ranged from $300,000 to $500,000. Defence submitted that the prosecution should have called independent evidence to prove the normal charges for such advisory service for listing before one could comment on the reasonableness of the costs charged by D1 for the introductory service, I consider common sense, Cheuk’s evidence and other circumstantial evidence suffice to rebut D2’s assertion that the cost D1 had received from the clients only intended to cover introductory and liaison services. With the above reasons, I am of the view that the prosecution has successfully rebutted beyond all reasonable doubt that D2’s assertion that she was not aware of the content of the agreement concerned when she signed each of them. The allegation of such “belief” or “excuse” was neither honest/genuine nor reasonable.
Did D2 know what Michael was doing on her behalf Regarding D2’s contention that she was not aware of Michael’s acts on 3 Wells, it is also improbable and illogical to me. Michael was her able assistant, receiving a handsome amount of monetary remuneration i.e. almost half of what D1 had received. Michael and D2 were working in the same office at least for the project of 3 Wells, as Cheuk testified that he did see Michael whenever he visited D2. And it was always Michael receiving and discussing the matters with him. Cheuk said clearly that the first staff D2 had introduced to him was Michael. All along, Cheuk understood Michael was acting on D2’s behalf. No one has ever informed 3 Wells that the relationship between D2 and Michael had changed in any way. It was D2’s admission that she had entrusted Michael to look into the internal information of 3 Wells to assess its capacity to be listed for her own benefit but not for 3 Wells. It was said by defence that as Cheuk had testified that 3 Wells already “knew” that they were capable of being listed and therefore there was simply no need for 3 Wells to be advised by D1 on the listing matter. This submission, with respect, was convoluted and misleading in my view. I find that D2 was simply trying to explain away the fact that Michael had on the undisputed evidence looked into 3 Wells’ internal audit and gave advice as to its ability for listing. Although Cheuk was confident about his own company, it did not mean that he did not need D1’s advice on its capacity and procedures to be listed. In fact, that was the whole purpose for Cheuk to engage D1 as he was not familiar with the listing procedures and manpower and he did believe D2, like a martial art instructor as said more than once by Cheuk, had the ability to advise 3 Wells on
the listing process as a whole. The assertion of D2 that the assessment of listing capacity of 3 Wells by Michael was only for her but not 3 Wells was without force. Further, when Michael telephoned Lee to discuss the urgent request for termination of 3 Wells Agreement, the finalised letter was sent to and received by D2. All these could provide the court with sufficient evidence to draw an irresistible inference that D2 was well aware of Michael’s acts to 3 Wells all along and that Michael was acting with D2’s actual and specific authority at all material times. I am satisfied that the prosecution has disproved beyond reasonable doubt that the allegation of honest and reasonable belief/excuse that D2 was not aware of Michael’s doing and therefore thought that she was not holding out as carrying on the business in advising on corporate finance does not exist. Neither is such excuse/belief, if ever existed, relied on reasonable. As such I consider the prosecution has proved beyond reasonable doubts all the elements of all “holding-out” offences against D1 and rebutted beyond reasonable doubt all the possible defences. I therefore convict D1 of summonses ESS 30673, 30675 and 39231 of 2013. Fallback position--- Did D1 have mens rea in the “holding-out” offences? If I were wrong in ruling the “holding-out” offence against D1 under section 114 as creating strict liability falling within the category of second alternative, meaning the offences in fact require proof of full mens rea on the part of D1, I still find D1 guilty of the offences. On the evidence, as I have analysed as above which I do not intend to repeat, it showed clearly that D2, being the directing mind of D1, knew full well
the content of all the Professional Financial Consultancy Agreement signed with the three respective clients. She was clearly in control of D1 and she was the one who received the payments and then shared almost half of it with Michael in each and every case. Cheuk and Lee of 3 Wells said that they understood Michael was all along working on behalf of D1/D2. I am sure that what Michael did to the clients was all within D2’s authority and delegation. Further, she was also responsible for using her own connection and knowledge to introduce the professional teams for her clients’ listing applications. D2 must have knowledge that D1 did represent itself as carrying on a business in advising on corporate finance. When signing the respective agreements, D1, with D2’s directing mind, did intend to hold itself out to all respective clients as carrying on a business in advising on corporate finance which were clearly shown in the agreements and supported by all the circumstantial evidence. Summonses against D2 As I have found D1 guilty of summonses ESS 30673, 30675 and 39231of 2013 laid under section 114(1) and (8) of the Ordinance, I now move on to consider whether D2 should be liable for the respective “attributable” offences on the same facts laid against her under section 390. It is stipulated in section 390 of the Ordinance that: “1) Where the commission of an offence under this Ordinance by a corporation is proved to have been aided, abetted, counselled, procured or induced by, or committed with the consent or connivance of, or attributable to any recklessness on the part of, any officer of the corporation, or any person who was purporting to act in any such
capacity, that person, as well as the corporation, is guilty of the offence and is liable to be proceeded against and punished accordingly.” In Schedule I of the Ordinance, “officer” in relation to a corporation is defined as: “officer (高級人員)- (a) in relation to a corporation, means a director, manager or secretary of, or any other person involved in the management of, the corporation;” The meaning of “connivance” has been considered, at paragraphs 60-65, in HKSAR v Li Fung Ching Catherine [2012] 3 HKLRD 377: “60. The terms used in s.64B of the Employment Ordinance are "consent", "connivance" and "neglect". It is spelt out clearly that the intention is to target the three different situations. 61. In the Ordinance, there is no definition given to the term "connivance". Therefore, the term "connivance" should be interpreted in accordance with its usual meaning. 62. The New Longman Advanced Chinese Dictionary defines the word "connivance" as indulgence and non-interference of misconduct.
63. To connive at someone's act, whether or not one agrees or disagrees with it is not important, what is important is one fails to stop it from happening knowingly. 64. The term "connivance" is used in the English version of the Ordinance. According to the Shorter Oxford English Dictionary, the definition of "connivance" includes assistance in wrongdoing by conscious failure to prevent or condemn; or tacit permission. The word "connive" means shutting one's eyes to (something) . 65. In the English-Chinese Dictionary of Joint Publishing, "connivance" carries the meaning of "turning a blind eye to an action one ought to oppose; and tacit permission" which corresponds with the translation given in The Oxford (one wrong character) English-Chinese Dictionary.” It is not in dispute that D2 was an officer of D1 at the material times. As I have ruled above that D2 did have knowledge of what D1, with the assistance by Michael, was doing all along and the content of the respective agreements, I have no difficulty at that to conclude that all the “holding-out” offences under section 114 could not have been committed by D1 without the assistance or consent or connivance of D2. The whole thing was procured and induced by D2 as elicited in the trial. At the very least, the commission of the offences must be attributable to the recklessness on the part of D2. As such I find that the commission of the offences by D1 were all aided, abetted, counselled, procured or induced by, or committed with the consent or connivance of, or attributable to any recklessness on the part of D2. Without any doubt, I find D2 guilty of all the summonses laid against her under 390 offences in respect of each of convicted offences stated above. In other words, I convicted D2 of summonses nos. ESS 30674, 30676 and 39232 of 2013 accordingly.
Conclusion To conclude, I am satisfied that the prosecution has proved beyond all reasonable doubt that D1 is guilty of summonses nos. ESS 30673, 30675 and 39231 of 2013 and D2 is guilty of summonses nos. ESS 30674, 30676 and 39232 of 2013 accordingly. (June Cheung) Magistrate Representation : Miss PO Wing-kay, instructed by the Securities and Futures Commission, for the Prosecution Mr Peter Duncan, SC and Mr Edwin Choy, instructed by Haldanes, for D1 and D2
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WKCC 3633/2021 [2023] HKMagC 2 IN THE WEST KOWLOON MAGISTRATES’ COURTS OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CRIMINAL CASE NO. 3633 OF 2021 ________________ BETWEEN HKSAR and Chow Hang Tung (鄒幸彤) D1  Tang Ngok Kwan (鄧岳君) D2  Tsui Hon Kwong (徐漢光) D5  ________________ Coram: Mr Peter Law, Principal Magistrate Date of Verdict: 4 March 2023 __________________________ V E R D I C T __________________________ CONTENTS Page   (s)  Introduction The Facts Public Interest Immunity and Legal Professional Privilege
Preliminary issues The Trial proper The Evidence PW1 PW2 D1 The principles, history and the operation Explanation on the $20,000 from Org 4 Explanation on the $3,000 from “Asia Democracy Network” Interaction with other entities Donations The allegation of foreign agent Incorrect construction by PW1 Unreasonableness Oppression Legal issue Other matters Evaluation of evidence Finding of facts Legality of the Notice The Requirement The Challenges Systemic The National Security Law The Implementation Rules Operational “Reasonable grounds to believe” it to be a foreign agent The material times Reasonable belief as to necessity Use of wordings Retrospective Alternatives Ulterior motive Oppression
Balancing Issuing the Notice Conclusion The Open letter Statutory defence The Verdict 3-6 6-7 7-9 9-15 15 15-21 15-17 17-18 18-21 18 18-19 19 19 19 19 20 20 21 21 21 22-24 24-25 25-26 26-28 29-42 29-31 30 30-31 32-42 32-34 34 34-36 36-37 37 38 38-39 39-41 41 41-42 42 42-44 44 44-45     Attachment [1] The investigation report compiled by PW1  Attachment [2] The application to the Commissioner of Police and the Commissioner submitted for approval by the Secretary for Security  Attachment [3] A chart showing (i) the content and information before the Commissioner and (ii) the corresponding content and information upon which PW1 based as recorded in Attachment [1]   Introduction D1, D2, D5 and others are facing one count of failure to comply with notice to provide information. The particulars of the offence: “… on the 8th day of September, 2021, being an office-bearer of Hong Kong Alliance in Support of Patriotic Democratic Movements of China in Hong Kong, or a person managing or assisting in the management of the said organization in Hong Kong, who has been served with a notice under section 3(1)(b) of Schedule 5 to the Implementation Rules for Article 43 of the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative
Region (Instrument A406A), failed to comply with the said notice.” I have dealt with D1 before in other proceedings; as a professional Magistrate I will eliminate all irrelevant matters not relating to the present case and ensure a fair trial. There are multiple Defendants in this case and each case must be considered separately. Sch. 5 s1 states: “……………….. foreign agent (外國代理人)- means a person who carries on activities in Hong Kong, and- is directly or indirectly directed, directly or indirectly supervised, directly or indirectly controlled, employed, subsidized or funded by a foreign government or foreign political organization, or accepts monetary or non-monetary rewards from a foreign government or foreign political organization; and carries on all or part of the person’s activities for the benefit of a foreign government or foreign political organization; but does not include a diplomatic agent, a consular officer, or an employee of a consular post, who is entitled to privileges and immunities in Hong Kong in accordance with the laws of Hong Kong, or any other person or body that is entitled to privileges and immunities in Hong Kong in accordance with the laws of Hong Kong;”
Sch. 5 s3 states: “Regulation of foreign or Taiwan agents (1) If the Commissioner of Police reasonably believes that it is necessary to issue the requirement for the prevention and investigation of an offence endangering national security, the Commissioner may from time to time, with the approval of the Secretary for Security, by written notice served on a foreign agent or Taiwan agent, require the agent to provide the Commissioner with the following information within the specified period in the specified way- …………………… (b) if the agent is an organization- (i) the personal particulars of the staff of the organization in Hong Kong, and of the members of the organization in Hong Kong (including name, age, type and number of identification document, occupation and residential address); (ii) the activities of the organization in Hong Kong; (iii) the assets, income, sources of income, and expenditure of the organization in Hong Kong. …………………… (3) If a foreign agent or Taiwan agent is an organization- (a) the obligations imposed on the agent by subsection (1)(b) is binding on every office-bearer in Hong Kong, and on every person managing or assisting in the management of the organization in Hong Kong, if the office-bearer or person has been served with the notice under subsection (1); and (b) if the agent fails to comply with a notice served under subsection (1)(b), every office-bearer and person who is mentioned in paragraph (a) and who has been served with the notice commits and offence and is liable
on conviction on indictment to a fine of $100,000 and to imprisonment for 6 months unless the office-bearer or person establishes to the satisfaction of the court that the office-bearer or person has exercised due diligence and that the office-bearer or person has failed to comply with the notice for reasons beyond the office-bearer’s or person’s controls.” The Facts The Hong Kong Alliance in Support of Patriotic Democratic Movements of China (HKA) was incorporated in 1989 as a company under the Companies Ordinance until the recent winding up. At all material time, D1 was the vice-chairperson while D2 and D5 were committee members. On 25 August 2021, the Commissioner of Police in pursuance NSL 43 and Sch. 5 of the Implementation Rules (IR) issued and served Notice on D1, D2, D5 and others, requiring for some specified information in writing with supporting documents within 14 days. Before the expiration of the prescribed period, HKA held a press conference announcing their non-compliance and subsequently presented an open letter to the Commissioner on the last day of the period to show their dogged determination of non-compliance. The Defence asserted that: They were not foreign agent of any organization; They will challenge the legality of the Notice;
They will take issues on numerous aspects; Infringement of rights against self-incrimination and the rights to a fair trial, freedom of association and protection of privacy. Public Interest Immunity and Legal Professional Privilege The prosecution claimed Public Interest Immunity (PII) mainly on the grounds that the disclosure would jeopardise the ongoing investigation. The investigation report and the recommendations (see attachments [1] and [2]) were not solely targeted at HKA, but also related to ongoing investigation into other organizations and persons (the other targets). I have gone through all materials including the supporting affirmation of the Chief Secretary. I followed the steps laid down in HKSAR v Nyab Amin. My ruling on PII was not final, I have monitored the developments throughout the trial and review when necessary to fit the best interest of the Defence. The investigation is large-scale and still ongoing. National security is utmost importance to public interest. Leaking of secret
information, such as identities, strategies and interim investigation results of others would definitely seriously jeopardise the ongoing investigation. The key defence is the legality of the Notice, after the preliminary rulings, to prove as a matter of fact the subject organization was a foreign agent is not required. I ordered a redaction on: The identities of entities/person are subject to ongoing investigation; All acts, activities, roles and interim investigation results which could be reasonably be regarded as leading to the leaking of the identities; All information relating to ongoing investigation, but not related to HKA and the Defendants; in order to minimize the risk of any sidetrack strategy leading to reasonably guessing as to the identities of the targets; especially the exact amount or details of monetary transactions. After balancing, I deployed some safeguards, only to disclose the figures in number of digits. The focus is on the factual nexus involvement leading to the triggering of the measure rather than the identities of others. I do not see the non-disclosure of materials, other than which related to HKA and the Defendants would undermine a fair trial.
The PII is based on the said direction, I came to the view that the anonymity with limited disclosure of some factual nexus be sufficient for purpose of conducting the defence case and ensuring a fair trial. I am satisfied there is no possible detriment or disadvantage of any kind or degree to the Defence. As to the legal advice given by the Department of Justice, it is protected by Legal Professional Privilege. Preliminary issues Two issues have been posed for preliminary determination: “(1) Legality of the Notice Whether it is open to the defence to challenge the legality of the Notice in the context of Schedule 5 to the Implementation Rules in a criminal trial. Elements of the offence Under Section 3(3) of Schedule 5 to the Implementation Rules, whether the prosecution need to prove the subject organisation was as a matter of fact a foreign agent.” I deal with the second issue first. The information required under Sch. 5 are related to privacy, any overriding of fundamental rights should take a narrow approach. NSL 43 confers on the Police some power to obtain information by two means: (1) By a Police Notice under Schedule 5.
By a Production Order issued by a CFI Judge under Schedule 7. There is a statutory definition of foreign agent under Sch. 5 s1, but silent on the criteria to identify a particular organisation as a foreign agent (the threshold). Under Schedule 7: “Requirement to furnish information and produce materials (1) The Secretary for Justice may, for the purpose of an investigation into an offence endangering national security, make an ex parte application to the Court of First Instance for an order under subsection (2) in relation to a particular person or persons of a particular description. (2) The Court of First Instance may, if on such application is satisfied that the conditions in (4)(a), (b) and (d) or 4(a), (c) and (d) are fulfilled, make an order complying with subsection (3) in respect of the particular person or persons of the particular descriptions to whom the application relates.” Under Sch. 7 s2(4): “…………………. (b) Where the application relates to a particular person that there are reasonable grounds for suspecting that the person has information, or is in possession of materials likely to be relevant to the investigation; (c) Where the application relates to persons of a particular description, that - (i) there are reasonable grounds for suspecting that some or all persons of that description have such information or in possession of such material, and”
An analogy can be drawn between Schedule 5 measure and Schedule 7 on some special features. Schedule 5 Schedule 7  Purpose The Commissioner of Police reasonably believes that it is necessary for prevention and investigation of any offence endangering national security The Secretary of Justice may, for the purpose of an investigation into an offence with reasonable grounds for suspecting endangering national security has been committed  The recipient Foreign agent The person in possession of the information or materials relevant to the investigation  Threshold to identify the recipient No mentioned Reasonable grounds for suspecting  Issuing authority Commissioner of Police with the approval by Secretary for Security Ex-parte application to the Court of First Instance by the Secretary for Justice  Nature of order Notice to produce Production Order  Frequency From time to time No mentioned  Maximum penalty 6 months imprisonment and a fine of $100,000 12 months imprisonment and a fine of $100,000   There is no doubt that the Sch. 5 measure is comparatively less stringent than that under Sch. 7.
NSL 3 states: “………………………….. It is the duty of the Hong Kong Special Administrative Region under the Constitution to safeguard national security and the Region shall perform the duty accordingly. The executive authorities, legislature and judiciary of the Region shall effectively prevent, suppress and impose punishment for any act or activity endangering national security in accordance with this Law and other relevant laws.” Taking together both the effectiveness requirement under NSL 3, and the said special features of the Sch. 5; the IR is intended to provide an effective administrative procedure to facilitate the implementation of the National Security Law, in particular to NSL 43(5). I have the following observations: (1) It is clear that measures taken under Sch. 5 are meant to be responsive and effective, which is the purpose of NSL 3. (2) To set up a foreign agent or any associate with it is not an offence. There is no mandatory scheme or mechanism for setting up a foreign agent. It can even be as simple as registered as a company. As for an individual, there is also no requirement for registration. (3) There is no mechanism or scheme for setting up a foreign agent, nor is there any list thereof.
(4) A foreign agent is inevitably associated with overseas connections. To seek information, assistance from foreign authorities is unavoidable but, that would also be delayed with unexpected difficulties and even be unfeasible under the current climate. The lawmakers were well aware of that situation and the difficulties. (5) Sch. 5 measure is comparatively less stringent than Sch. 7 for reasons that: At a more peripheral stage. Less severe on the maximum penalties upon violation. More simplified in procedure. From the above observations, I conclude that: Lesser severity of the measure should be proportionate to lesser stringency of the threshold. The overall purpose of Sch. 5 is an effective measure for prevention and investigation of matters relating to national security. To be effective, the measure must be responsive and efficient. There is a deliberate silence on the threshold requirement for identification of a foreign agent; obviously the rulemakers were minded to create some
flexibility for the Commissioner to exercise his professional judgment at that juncture, regardless of the strict rules of evidence, the burden and standard required in a criminal trial. Identifying the foreign agent is the entry to and also part and parcel of the long process of effective prevention and investigation. Looking into the background and the purpose of the promulgation coupled with the deliberate silence on the threshold requirement; it is clear that the lawmakers and the rule-makers were not intended to create the proof of foreign agent as a matter of fact be an element of the offence upon non-compliance. Prevention and investigation is a state of surmise, the threshold must be relatively low, even not requiring prima facie proof. I rule that as a matter of law: (1) The concept of foreign agent is the conclusion of an administrative decision at that juncture, not an essential constituent element that the prosecution has to prove at the trial. (2) The prosecution need not prove the subject organisation was as a matter of fact a foreign agent.
I move back to the first issue. (1) There is no existing mechanism for licensing nor registration of foreign agent. The norm is all entities are without obligation to disclose their composition, activities or means unless by stipulation. (2) I am not convinced that, as a matter of law, the defence is barred from challenging the legality of the Notice on aspects not been ruled by me. I rule that the defence is entitled to challenge the legality of the Notice at trial for matters not been dealt with before. The Trial proper After my rulings on the preliminaries, the remaining issues for the trial proper is mainly on the legality of the Notice. The Evidence PW1 Superintendent Hung was in charge of the investigation team as well as the applicant to the Commissioner for the Sch. 5 Notice. He prepared an investigation report refined the information therein and submitted his application with recommendations to the Commissioner
who subsequent endorsed them with final approval by the Secretary for Security. In the investigation report and the application, HKA was amongst the other targets for the Sch. 5 measure. For easy reference, Mr Cheung for the prosecution has prepared a chart (see attachment [3]) on the key points of: The relevant information with the corresponding contents in the investigation report which was confirmed in evidence; The information put forward to the Commissioner for consideration. PW1 explained that even though some information could be retrieved from other sources, but still necessary for cross-checks on completeness, accuracy, mistakes and different interpretation. Under the marathon and intensive cross examination by D1 on numerous aspects, mostly circling around on: By using a lot of guessing tactics from all angles aiming at retrieval of the redacted information, in particular the identities of the organizations and persons; trying to establish HKA was not a foreign agent as PW1 had thought.
To distinguish the exact wordings of the political ends of HKA from other organization, to illustrate they were not on the same track; such as “to end one party ruling” as oppose to “end one party dictatorship” and “to rebuild a democratic China” as oppose to “to build a democratic China”; To laid the basis for her subsequent testimony to establish or raise doubt on to HKA not being any foreign agent with some examples; The query about the possible unreasonableness, that some information could be retrieved from other source; Make suggestion that certain description and events could have more than one interpretations and highlight some participants with double status who participated in a capacity not related to HKA; Suggestion of ulterior motive; bring out the disparity to illustrate possible fabrication as the Police had commenced strike off proceedings against HKA almost at the same time without mentioning HKA was a foreign agent. PW2 PW2 was the arresting officer upon instructions arrested D1 at her office on 8 September 2021.
All Defendants have clear record, I have to consider their propensity and also the credibility of D1 as she testified. D1 D1’s testimony was that she joined HKA after her graduation from university and had held different positions, including part time staff, volunteer, committee member and lastly became the vice-chairperson in 2015 till the compulsory strike off from the Companies Registry. She told about what she had experienced over the years as well as some of her observations. The principles, history and the operation HKA was a joint organization of lots of bodies. D1 reiterated HKA had never an agent or a puppet of any foreign entity. It acted independently according to their own objectives. Their Memorandum and Article of Association stipulated the income and property be applied solely on the promotion of their objects. Under the mechanism, the highest decisions were made at the general meeting and the committee was responsible for the daily operation. Explanation on the $20,000 from Org 4 HKA had launched an appeal for donations for the extension of their June 4 museum by purchasing a property at $8,000,000. They had been receiving donations from various bodies including a one-off
donation (not funding) of $20,000 from an entity which was a stranger and never had and would not have other dealing with HKA. Explanation on the $3,000 from “Asia Democracy Network” It was her personal reward for writing articles and nothing to do with HKA. Since the request was about HKA’s affair and it had nothing to do with her personal matters. Interaction with other entities In the course of its normal business, HKA had met with other entities which shared common objectives and involved in some interactions, including cooperation and joint participation in some activities and yet, it had never been an agent or acting for others’ interest. Donations HKA accepted general donations, but the donors had no say in HKA’s operation nor had there been any case that it had acted for their interest. The allegation of foreign agent D1 alleged that it was the Government’s tactics for propaganda to shift the focus from the international eye.
Incorrect construction by PW1 HKA never used such slogan: rebuild a democratic China as oppose to build; end one party ruling as oppose to directorship. PW1 had misunderstood the status of some participants who had more than one capacities who shown up in HKA activities. D1 criticised PW1’s suggestion of the alleged common purpose was not substantiated Unreasonableness D1 criticised the requirement is too harsh, too much, and too far. She contended some of the information could have been retrieved from other sources, such as the director’s list from the Companies Registry, the account ledger from auditor, activities from the yearbooks and activities pamphlets or open announcements. To retrieve information of the staff even dated back to 1989 is unreasonable since it was so long ago and with lots of difficulties. They even lost contacts with some of the staff. Furthermore, asking for identity card numbers and date of birth would trigger privacy issues.
Oppression Due to insufficient manpower and resources to deal with such large amount of information required, some of which even stored in the warehouse causing hardship. However, D1 agreed no specific arrangement nor steps had been taken to retrieve it, they only had discussion. Legal issue The requirement for provision under Sch. 5 s3(1) is “… to provide the Commissioner with the following information in writing, together with the relevant supporting documents, …”, however the extra requirements of “in writing” and “together with supporting documents” are outside the perimeter of Sch. 5. Other matters D1 also asserted that: the issue of the Notice was an abuse with an ulterior purpose of doxing information of all civil societies; Political persecution; HKA had no obligation to assist the Police.
Evaluation of evidence PW1’s testimony was focused on the information from his team’s investigation and his analysis. He was unshaken under intensive and marathon cross-examination. He was not narrow-minded, and was willing to accept suggestions of possible multi-interpretations or misunderstanding without hesitation or delay. PW1 declined to give answer on some areas due to the possible risk of jeopardising the restrictions in PII. Since he was in-charge of the whole information and in the know of the ongoing investigations, he was in the best position to evaluate the potential risk of leaking information; in particular he had been at the centre of an guessing exercise. His refusal to answer was justified. I am satisfied PW1 was an honest and truthful witness. I am satisfied when he evaluated the investigation result from his team members, he held an honest belief in its truthfulness. In this regard he performed an honest and bona fide analysis in his best endeavour and professionalism. I accept the flaws from the misinterpretation and misunderstanding would not affect his overall judgement. I accept his evidence in the factual aspect and also the facts that exhibits P19(1) and P20(1) are his honest and bona fide analysis and recommendations, being direct and not bent by the flaws. However, this is not the end of the matter. As to his analysis, I still have to take a panoramic look into the operational and other legal aspects on that factual basis.
PW2 was honest and truthful. He was the arresting officer with insignificant role in the incident and there was no challenge on his credibility and truthfulness of his testimony. I accept his evidence. D1’s testimony can be divided into: a description of the nature of HKA; her role in HKA and her experience; the factual material about certain incidents; her complaint of the faults in the Notice; her criticism of the analysis of PW1. For the factual aspect, the prosecution was not in any position to challenge the truthfulness and the substance as PW1 was an outsider did not have any participation in HKA’s activities; on this basis I accept those facts for the purpose of this trial. With regard to her speculative observations, those were lack of foundation, I cannot accept that. As to her observations related to legal aspects, I will deal with that in due course with the accepted factual basis. Her suggestion of options for retrieving information from open source; such as the yearbook, pamphlets and open announcements may negate part of the challenge on privacy will also be considered in due course.
D2 and D5 elected to remain silent nor did they call any defence witness. No adverse would be drawn for exercising their legal rights. Finding of facts There is not much dispute over the facts and my facts finding, inter alia, is: Since the establishment in 1989, HKA had been active and engaged in multiple nexus activities and interaction with Hong Kong and non-Hong Kong entities and people as stated in the investigation report and the recommendations; also had been holding at least one mass rally annually; Throughout the entire period concerned, direct and indirect flow of funds was recorded; HKA had the five operational goals throughout the years, some, not all, were common in nature with other entities; D1, D2 and D5 were amongst the office-bearers at the material time; PW1 honestly relied on and evaluated the investigation information, and he bona fide compiled
the investigation report and made recommendations to the Commissioner; The Commissioner endorsed the whole of PW1’s recommendations without any query or clarification; The Secretary of Security approved the measure; HKA held a press conference and sent an open letter to the Commissioner with D1, D2 and D5’s cosignatory; Up to the due date, none of the required information was provided; The Notice was properly served on all Defendants; The Defendants were aware of the requirement. Legality of the Notice The objective of NSL 43 and Sch. 5 is for prevention and investigation of an offence endangering national security. The foundations are: honest belief in the truthfulness of the information available at that time; the analysis was in bona fides;
the Commissioner made his decision according to the information at that time, not in hindsight. The Requirement The Notice: “According to the police investigation, the Commissioner of Police has reasonable grounds to believe that the “Hong Kong Alliance” is a “foreign agent’ specified in Section 1 of Schedule 5. Under Section 3(1) of Schedule 5, as the Commissioner of Police reasonably believes that it is necessary to issue the requirement of this notice for the prevention and investigation of an offence endangering national security, the Commissioner, with the approval of the Secretary for Security, by this notice served on the “Hong Kong Alliance”, requires the “Hong Kong Alliance” to provide the Commissioner with the following information in writing together with relevant supporting documents, within 14 days: [1] For the staff members in Hong Kong and the members in Hong Kong since the establishment of the “Hong Kong Alliance”, that is, the following persons: [i] directors, [ii] standing committee members (and) [iii] full-time staff members, Their personal information, including name, date of birth, type and number of the identification document, contact phone number, residential address, position and employment period shall be provided; [2] For the activities held in Hong Kong by the “Hong Kong Alliance” from 2014 to present, involving the following organizations or person [regardless of the organizations or person participating in the activities as joint organizers, co-organizers, sponsors or attendees, and including the activities conducted by contracting with the places outside Hong Kong with the use of the communication technology]:
[i] “New School for Democracy” established in Hong Kong, [ii] “China Human Rights Lawyers Concern Group”, [iii] political parties outside the territory of the People’s Republic of China or in Taiwan or other organizations outside the territory of the People’s Republic of China or in Taiwan that pursue political ends and/or their branches in Hong Kong, including “Federation for a Democratic China”, “Asia Democracy Network”, “New School for Democracy”, “The National Endowment for Democracy” and the organizations that receive money from “The National Endowment for Democracy” [including “National Democratic Institute”, “International Republican Institute”, “Solidarity Center” and “Center for International Private Enterprise”], (and) [iv] Mark Herman SIMON, Information on the activities concerned, including name, purpose, date, time and place of the activity, details of the person-in-charge, source of fund and breakdown of the expenditure, and all records of contacting the aforesaid organizations or person for organizing, holding, sponsoring or attending the aforesaid activities [including the electronic communication records] shall be provided; [3] Minutes of the following meetings that the “Hong Kong Alliance” convened in Hong Kong from 2014 to present [including the meetings with the places outside Hong Kong by communication technology] shall be provided: [i] board meetings and standing committee meetings, [ii] meetings with political parties outside the territory of the People’s Republic of China or in Taiwan or other organizations outside the territory of the People’s Republic of China or in
Taiwan that pursue political ends and/or their branches in Hong Kong [including “Federation for a Democratic China”], (and) [iii] meetings with Mark Herman SIMON; [4] The assets, revenue, sources of revenue and expenditure of the “Hong Kong Alliance” in Hong Kong from 2014 to present shall be provided, that is; [i] details of account(s) directly or indirectly held with the local bank(s) currently or previously, including the account number, the account holder and/or the ultimate beneficial owner, [ii] details of the assets like the property, vehicle(s), stock(s), etc., in Hong Kong directly or indirectly held currently or previously, [iii] all transactions and money dealing, including reason, purpose, date, amount, the bank account and the account book(s) involved, with “New School for Democracy” [whether it was established in Taiwan or Hong Kong or other places]; “China Human Rights Lawyers Concern Group”; “Federation for a Democratic China”; “Asia Democracy Network”; “The National Endowment for Democracy”; and the organizations that receive money from “The National Endowment for Democracy” [including “National Democratic Institute”, International Republican Institute”, “Solidarity Center” and “Center for International Private Enterprise”]; Mark Herman SIMON; and political parties outside the territory of the People’s Republic of China or in Taiwan or other organizations outside the territory of the People’s Republic of China or in Taiwan that pursue political ends and/or their branches in Hong Kong, (and) [iv] reason and purpose of CHOW Hang-tung, the vice-chairperson of the “Hong Kong Alliance”, receiving some HK$3,000 from “Asia Democracy Network” on 4th February 2021 shall be provided.”
The Challenges In Leung Kwok Hung, the Court of Appeal held: “182. Thus, the proportional analysis has to be applied on two different levels: (1) examining the systemic proportionality by reference to the legislation or rules in question: (2) examining the operational proportionality by reference to the actual implementation or enforcement of the relevant rule on the facts and specific circumstances of a case at the operational level. 183. In these appeals, it should be emphasized that we are only concerned with the first level of challenges. It remains for the court to assess the proportionality on the second level on the facts and circumstances in a particular case if a charge is brought against person.” Systemic NSL 43 confers on the law enforcement authorities, including the police, certain power: “When handling cases concerning offence endangering national security, the department for safeguarding national security of the Police Force of the Hong Kong Special Administrative Region may take measures that law enforcement authorities, including the Hong Kong Police Force, are allowed to apply under the laws in force in the Hong Kong Special Administrative Region in investigating serious crimes, and may also take the following measures:” ………………. “… (5) requiring a political organisation of a foreign country or outside the mainland, Hong Kong, and Macao of the People’s Republic of China, or an agent of authorities or a political
organisation of a foreign country or outside the mainland, Hong Kong, and Macao of the People’s Republic of China, to provide information;” The National Security Law In HKSAR v Lai Chee Ying Court of Final Appeal held: “37. In our view, in the light of Ng Ka Ling v Director of Immigration (No 2), the legislative acts of the NPC and NPCSC leading to the promulgation of the NSL as a law of the HKSAR, done in accordance with the provisions of the Basic Law and the procedure therein, are not subject to review on the basis of any alleged incompatibility as between the NSL and the Basic law or the ICCPR as applied to Hong Kong.” In the light of the above context; NSL is not the subject of any challenges. The Implementation Rules Under NSL 43: “… The Chief Executive shall be authorized, in conjunction with the Committee for Safeguarding National Security of the Hong Kong Special Administrative Region, to make relevant implementation rules for the purpose of applying the measures under the first paragraph of this Article.” NSL 13 stipulates the composition of the Committee for Safeguarding National Security be: “The Chief Executive shall be the chairperson of the Committee for Safeguarding National security of the Hong Kong Special Administrative Region. The other members of the Committee shall be the Chief Secretary for Administration, the Financial Secretary, the Secretary for Justice, the Secretary for Security, the Commissioner of Police, the head of the
department for safeguarding national security of the Hong Kong Police Force established under Article 16 of this Law, the Director of Immigration, the commissioner of Customs and Excise, and the Director of the Chief Executive’s Office. A secretariat headed by a secretary-General shall be established under the Committee. The Secretary-General shall be appointed by the Central People’s Government upon nomination by the Chief Executive.” Under NSL 14: “The duties and functions of the Committee for Safeguarding National Security of the Hong Kong Special Administrative Region shall be: ………………… advancing the development of the legal system and enforcement mechanisms of the Region for safeguarding national security; and ………………… No institution, organization or individual in the Region shall interfere with the work of the Committee. Information relating to the work of the Committee shall not be subject to disclosure. Decisions made by the Committee shall not be amenable to judicial review.” Judicial review is not a term of art; it must be construed accordingly to ordinary language together with the purpose of promulgation. The only logical understanding is the Committee’s decisions not be amenable to any judicial proceeding or decision. Also in the light of the above contexts, the Implementation Rules, are not the subject of any challenge.
Operational NSL 42 and Sch. 5 confer on the Police the power to issue the Notice with consequential penalty in case of non-compliance. At the same time it is expected the Police will exercise the executive power properly. Although the charge is failure to comply with the Notice, the essence of the trial is basically on the legitimacy of the Notice as the recipients contended they were not obliged to answer the purported Notice. (ab initio). Being a foreign agent is not an offence, the impugned provision is the non-compliance of the Notice. Owing to that special feature in this case, the legality of the Notice requires some studies. The application of operational proportionality analysis must be taken in full picture and done objectively. “Reasonable grounds to believe” it to be a foreign agent The IR already set out in Sch. 1 and Sch. 7 the mandatory standard of the threshold for identification of the target or recipient, but none is provided in Sch. 5, the Commissioner adopted the threshold of “reasonable grounds to believe”.
I have the following observations: To identify the foreign agent is the initial step to the measure; When multiple organizations, people and interactions were involved; some even overseas. Adopting a stringent standard of identification would be unrealistic; Information obtained at the early stage would normally be in loose pieces; Ensuring effectiveness is essential; National security is of cardinal importance; There is no existing mechanism for registration nor is there any existing list of foreign agents; The overall difficulties in the entire situations. Unlike Sch. 1 or Sch. 7 which requires strict judicial scrutiny, the application of Sch. 5 is comparatively less rigid and a slightly lower threshold is to be expected. “Reasonable grounds to believe” is not in itself a low standard but, just slightly lower than “reasonable grounds for suspecting”; with which there is still a series of hurdles to overcome in the balancing exercise. Having regard to the nature, purpose, necessities and to strike a balance between the measures and the rights concerned; the decision to adopt the threshold of “reasonable grounds to believe” can hardly be criticized.
With their backgrounds, political aims, activities and nexus with both locals and non-locals throughout the years, suffice to say is that “… the Commissioner of Police has reasonable grounds to believe that the ‘Hong Kong Alliance’ is a foreign agent’…” was the correct approach. The material times The material time relevant to legality is the point of time when the Commissioner made his decision, not in hindsight. Any subsequent information, no matter how significant it was, was irrelevant as the legitimacy had already been frozen at that point of time. Reasonable belief as to necessity All measures taken for prevention and investigation on national security must be executed in a solemn way, and thoroughly, and with the highest standard of professionalism. A professional investigation body will definitely have its own judgement and strategy to act on the needs raising in different circumstance. Exploration and analysis of information is the usual course of exercise. Divergence in the deployed tactics per se cannot be criticised as unreasonable and rejected unless it is found to be obviously absurd. To evaluate reasonableness of needs, one must not derail the purpose of NSL, the IR and the reality.
Foreign agent is a new concept in Hong Kong without any legal precedent. Being an agent per se is not an offence and there is no existing mechanism for registration, everything has to start from zero. Some agents are even hidden, so a comprehensive searching and screening exercise is necessary. HKA was set up in 1989 and had been carrying out non-stop political activities mainly circulating around the June 4 incident throughout the years. Most of their activities were nexus of interactions with local and non-local organizations and people. Inevitably a comprehensive list of directors and full-time staff would be required from the outset to ascertain the background of the organization. Retrieving their personal information for the purpose of identification was essential to the exercise. Information of recent years that needed to be ascertained included from the minutes, their interactions, affiliations, and also the monetary flows with some named specified subjects and entities. HKA’s full list of assets was also essential for the ascertaining of its backgrounds and functions. Since HKA had been running actively with various entities and people aboard, it is necessary to explore their dealings, connections, monetary flows and asset in order to find out their affiliation and ultimate purpose. Such requirement for information was nothing like a broad-brush fishing exercise but rather was constrained in terms of periods of
time and nature. The police had taken an abstemious and self-restrained approach. Use of wordings “Information” is a term with wide coverage of meanings, which includes all sort of facts or details about a situation, person and event. According to the Notice: “To provide the Commissioner with the following information in writing, together with relevant supporting documents, …” Under the interpretation section of the Personal Data (Privacy) Ordinance states: “data（資料）means any representation of information (including an expression of opinion) in any document, and includes a personal identifier,” “in writing” is the means of transmission of information, “supporting documents” is additional information requiring for the purpose of verification/corroboration. Personal data is a type of information contains personal details. “Investigation” is a broad description of the exercise, including to retrieve information and verification of its correctness.
The enabling law require the information is NSL 42(5): “requiring a … to provide information;” Suffice it to say that NSL 42(5) embraces Sch. 5 s3(1) and the Personal Data (Privacy) Ordinance. I cannot see the information required is anything would go beyond the perimeter of NSL 42(5) and Sch. 5. Retrospective In the present case, there are two aspects to explore: At the date of the offence; The calling for information of events took place before the promulgation of NSL. The present charge is non-compliance of the Notice served on 25 August 2021; there is no room for argument on retrospective issue. It has been suggested that some of the information required was dated before the promulgation of NSL and some even back to 1989 when it was a time of a different regime. The concept of national security is not just limited to an outbreak at a particular point of time but instead is, as can usually be found in most of cases, a continuation of series of acts with accumulative and generative aim to an ultimate end, be it a part of the adventure under the same or another different regime. In this case, the claim for retrospective limitation is invalid.
Alternatives Sch. 5 is intended for prevention and investigation. Hence no matter the information required was obtained by direct approach or indirect research from their yearbooks and pamphlets. The more direct must be better; at least to minimize the risk of delay and omission. It would be unrealistic to expect the Police first to obtain a full collection of yearbooks and pamphlets, then approach the target under investigation for its assistance in verification as to correctness and completeness at its discretion. Sch. 1 confers on Magistrate the power upon application, to issue search warrant to enter (to use reasonable force if necessary), to search, examine, seize and can detain anyone found therein until the conclusion of the search. Sch. 7 is about an ex-parte application by the Secretary for Justice to a judge of the Court of First Instance for a Production Order. The maximum penalty is one year imprisonment and a fine of $100,000, which is double the imprisonment in Sch. 5, upon violation. From the above information, suffice to say the Sch. 5 measure is the mildest of all. Ulterior motive Although the police had initiated another proceedings against HKA, striking off HKA from the Companies Registry is under a different mechanism and criteria. Any omission from mentioning
foreign agent is nothing odd or skeptical which should lead to any reasonable doubt on the genuineness of the Sch. 5 measure taken before me nor was there any ulterior motive behind. I am satisfied Superintendent Hung held an honest belief in the truthfulness of the investigation information and he acted bona fide on his analysis. Oppression The assessment of oppression is not merely on theoretical concept; it must be practical by looking into the whole picture, including the capabilities, resources and the conduct of the recipient. The requirement of large amount of information, some even aged, within 14 days, sounded tough on the face of it, but there are some additional features of this case: A liaison contact point was provided in the Notice, which could form a channel for some constructive and potential relief if necessary; The high-profile press conference and the open letter, was a clear message of total refusal; That letter clearly stated that the refusal was due to some legal issues involved, which shows the recipients had considered all the information required;
None of the required information was provided in the end. I have the following observations: Most of the information required was not that aged, only back from 2014; Some of the information required is actually the information that needs to be maintained. Examples are: accounting records and the supporting documents for years for spot check by the Inland Revenue; the tax return and the provident fund documents with personal details of all the employees; D1 offered an explanation to the Court about the details of some of the requested information which was supposed could have been given to the Police at that time. From what can be seen, it was not that difficult to retrieve the required information; No constructive actual attempt had been made for any retrieval, not even on the easy ones. Based on the above, it is difficult to justify the significance of hardship was in any sense compromised when the Defendants had
provided none, not even some were not that hard to be accessed. There is no room for any claims of oppression. Balancing National security is cardinal importance to public interest and the whole nation. For prevention and investigation, information is the core of the measure; any obstruction would defeat the whole process. From the facts before me, the requirement was in an abstemious and restrained manner, all confined to reasonable necessary. Given the close nexus, interactions amongst HKA and the others who shared common objectives and the monetary flows. I am satisfied all the required information is necessary for the prevention and investigation of an offence endangering national security. Taken an objective, panoramic and complete evaluation of all evidence before me, I am satisfied an overall fair balance had been achieved. Issuing the Notice Although the Commissioner only had the recommendations from Superintendent Hung, it was a refinement of the investigation report in simple and direct terms put in context from one professional to his superior, focusing on the issues for the Commissioner’s decision.
The Commissioner endorsed the recommendations without query or seeking clarification was a sign of his satisfaction to the sufficiency of information which enable him to make his professional decision. There is no material faulty on the Commissioner’s decision. Conclusion In this case, the legality of the Notice is strictly related to the time when it was served; therefore the Court’s consideration is confined to that material moment. D1’s subsequent explanation with details in Court on some of the events, monetary transactions and nexus which is part and parcel of the information required; which should have been provided before the deadline, not in hindsight. I am satisfied the Notice was sound and legal at the time when it was served. There is no grounds to exercise my discretion to reject it. I rule the Notice was legal and the recipients were obliged to provide the information required. The Open letter HKA submitted an open letter co-signed by D1, D2, D5 and others to Commissioner of Police:
“ An Open Letter from the Hong Kong Alliance in Reply to the Commissioner of Police Regarding the letter dated 25th August 2021 to the Hong Kong Alliance from the Commissioner of Police [hereinafter referred to as ‘the Letter’] in accordance with Schedule 5 of the Implementation Rules for Article 43 of the National Security Law [hereinafter referred to as Schedule 5], the Alliance would like to make the following responses: The Alliance is not a ‘foreign agent’. Therefore, the Commissioner of Police has no power to request the provision of information from the Alliance under Schedule 5. The Commissioner of Police made an error of law by mistakenly assuming that as long as he ‘had reasonable grounds to believe’ that the Alliance was a ‘foreign agent’ specified in Section 1 of Schedule 5, he could make a request for the provision of information in accordance with Schedule 5. Schedule 5 is application only if the organization is in fact a foreign agent. Merely ‘having reasonable grounds to believe’ does not suffice. The Commissioner of Police failed to provide any justification to explain: On what reasonable ground did (he) believe that the Alliance was a ‘foreign agent’? Why did (he) reasonably believe the issuance of the Letter was necessary for the prevention and investigation of an offence endangering national security? The nature of the offence endangering national security to be investigated and how it was related to the required information; It is a violation of the rules of natural justice. In summary, the Alliance is of the view that there is no legal basis for the issuance of the Letter. Therefore, we will not provide any information as requested in the Letter.”
There is clear evidence of no intention to provide the required information whatsoever. Statutory defence Under Sch. 5 s3 (3)(b): “unless the office-bearer or person establishes to the satisfaction of the court that the office-bearer or person has exercised due diligence and that the office-bearer or person has failed to comply with the notice for reasons beyond the office-bearer’s or person’s controls.” In the present case, nothing of the above was done to support such. They took no actual steps to retrieve the required information. Instead they merely held discussions among themselves. The Verdict The conclusion is: the Notice was legal when it was served on D1, D2 and D5 respectively; the Defendants were obliged to answer; the Defendants’ non-compliances was unjustified. I am satisfied beyond reasonable doubt the prosecution has established their case on every aspect.
I thereby convict D1, D2 and D5 accordingly. (Peter Law) Principal Magistrate Mr Anthony Chau, DDPP (Ag.), Mr Ivan Cheung, ADPP (Ag.) and Ms Karen Ng, SPP of the Department of Justice, for the HKSAR D1 appeared in person Mr Esmond Wong, instructed by Messrs L & W Lawyers, for D2 Mr Philip Dykes SC leading Mr Albert Wong, instructed by Messrs Kenneth Lam, Solicitors, for D5
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OATD30/2006
OATD31/2006
Control of Obscene and Indecent Articles Ordinance Cap. 390 – Obscene Articles Tribunal – Part V jurisdiction – Determination – Section 10 Guidance – Publishers' intention – Use of previous classified publications – Reference or comparison prohibited – No distinction between classification and determination – Articles indecent.
IN THE OBSCENE ARTICLES TRIBUNAL OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
Transcript of the audio recording in the case of
Determination under Section 29(5) of Cap. 390, before the Tribunal
___________________
___________________________
Before: Mr W LEUNG Esq, Presiding Magistrate in OAT Tribunal
Ms LAM Koon-kun and
Mr TSE Wun-shuen, Edward, Adjudicators
Date of Hearing : 20 September 2007
___________________
J U D G M E N T
___________________________
Court:
These are the reasons for determination. This tribunal is exercising its jurisdiction under part V of the Control of Obscene and Indecent Articles Ordinance, Cap. 390.
Two articles are referred to this tribunal for determination under section 29. One article was published on page C21 of the Oriental Daily, to be called the Oriental article; and the other was published on page C54 of the Sun, to be called the Sun article, both of 2 December 2005. These referrals arose from two summonses issued by the Commissioner for Television and Entertainment Licensing Authority, called the TELA, against the publishers of the two articles. They are the Oriental Daily Publisher Limited and The Sun News Publisher Limited respectively.
Miss Agnes Chan, senior government counsel, appears for TELA; and Mr Cheng Huan, senior counsel, leading Mr Paul Leung, appears for both publishers. No admission that both articles are indecent is made. Miss Agnes Chan agrees that only indecency is in issue.
Mr Cheng calls three editors responsible for these two articles to give evidence - one from the Oriental Daily and two from the Sun. Their evidence will be dealt with later in the appropriate contexts.
Regarding the source of the photographs, they confirm that they came from the Starpix, an international pictures seller. There was a series of photographs of model, Kelly Brook, and her actor boyfriend, Billy Zane, holidaying on the French West Indies Island of St. Barthelemy, and they chose photographs from this series.
Both articles carry one main photograph of Kelly Brook and Billy Zane standing next to each other. They appeared to be on the beach and standing in the water of ankle deep. Billy Zane was only wearing a pair of knee-length shorts. Kelly Brook was wearing only her bikini without the bra top. It was a frontal view photograph showing the breasts of Kelly Brook, as appeared in the photographs, of significant size. Both nipples and aureoles were obscured by small oblique squares.
The Oriental article occupies one-third of the page and the main photograph occupies half of the space of the article. There is one other small photograph about this holiday. The Sun article occupies half of the page and the main photograph occupies two-thirds of the space of the article. It also carries another photograph of 4R size showing the couple embracing and kissing while floating in the water. Both articles carry titles emphasising the naked breasts. There are the main texts and also captions to the photographs. I must point out here that the adjudicators and I would consider each article separately and in its entirety.
This tribunal is to determine whether the two articles are indecent or not indecent according to the guidance under section 10, and I would use the compendious words for convenience to stand for the requirements of the relevant subsections as follows:
(i) moral standards;
(ii) dominant effect;
(iii) readership;
(iv) honest purpose.
One more guidance should be added, which is the most important of all. It is the definition under section 2B, which states that a thing is indecent if by reason of indecency it is not suitable to be published to a juvenile; and a juvenile means a person under the age of 18 years. Therefore five matters have to be considered.
I should also state here that these five matters will be set out separately later for clarity and convenience. But they will be considered jointly and severally and in such orders and combinations as common sense and logic may dictate.
This is part of a criminal proceeding and all the relevant considerations will apply. In particular, the burden of proof is on the prosecution and the standard is beyond reasonable doubt. Before we begin with the determination according to the guidance, I should deal with some arguments and legal points raised.
First, Mr Cheng submits that the intentions of the publishers are important, if not critical. The editors are called to say that they had been very careful in choosing the photographs. I find this evidence neither here nor there. We are only concerned with the final product, not the care with which the final product is produced. I hold that apart from the matter of honest purpose, the intentions of the publishers or editors are irrelevant. Otherwise, the indecency would be decided by the publishers or editors and the functions of the OAT will be made nugatory.
Secondly, previous materials classified as non-indecent are produced. Mr Cheng argues that we should look at them for reference to ascertain the general moral standards. Attractive these arguments may sound, I am bound by authority. In the Court of First Instance and when the judicial review of this case was heard in relation to classification, Lam J held that this course, which included comparison, should be prohibited.
Mr Cheng argues that the authority should be distinguished because it was made in relation to classification. I find that, apart from the criminal and civil standards of proof, there is only a difference without a distinction. I hold that on the principle of what is sauce for the goose is sauce for the gander, the prohibition should apply to both classification and determination. I therefore exclude such evidence which includes the Now Magazine and the Apple Daily’s picture. Even if comparison were allowed, I would find that the materials were so different to be beyond comparison.
Thirdly, Mr Cheng points out that the prevalent policy of newspapers is more pictorial and less verbose, and the slightly coarse Cantonese expressions merely enhance the entertainment value of the article. I should say here that we have no prejudice against such policy or practice if they are within bounds in the present context of this hearing.
I now come to the five matters and begin with the dominant effect.
First: dominant effect. We find that the photographs were given prominent effect by virtue of the size in the article and on the page of the newspaper as a whole. The editors explain that they chose the photographs with care in order not to appear to be indecent. Judging from the original photograph, I find that this could not be true. The original photograph shows the couple in the middle of the photograph with large area showing the beach and the water. In the two articles, the bodies of the couple are shown on their own without any background and therefore given prominent effect. We also find there are many gratuitous portrayals of Kelly Brook on what they call ‘lustrous body and huge breasts’, and on the enjoyment of Billy Zane in relation to this body.
Secondly: readership. It is agreed fact and I should take judicial notice that the Oriental Daily and the Sun each commands a very wide readership. They could reach public at large of all ages. This wider readership could give a boost to any small harmful effect.
Thirdly: honest purpose. The three editors give evidence on this matter. Mr Cheng summarises it to this effect that, I quote:
“The texts essentially describe the holiday activities and the intimate demeanour of the celebrity couple while they were in the Caribbean.”
Mr Cheng also argues that the original intention was simply to publish a piece of light-hearted entertainment news which is capable of giving readers a good laugh. It might be for fun and attraction, but we find that it was overdone.
Fourthly: moral standards. To avoid doubt, we wish to state that we are using the standards of moralities, decency and propriety that are generally accepted by reasonable members of the community. We find that it is indecent to expose the naked body of a woman and her breasts, despite the obscuring of the nipples in such fashion as adopted by the two articles. The body and breasts are given a large and prominent position, and the effect is further enhanced by the vivid language of the younger generation used to describe them.
Fifthly and lastly: suitability for juvenile. We find that the two articles show titillating and seductive photographs of a half-naked body of a model of international fame, to be accompanied by gratuitous portrayals of her body and her breasts. This has a glorifying effect on the naked body of a woman, and on this basis, there is a message that her boyfriend is being envied for his company of such a naked woman and enjoyment of such an occasion. On these findings, we are satisfied beyond reasonable doubt that the two articles are not suitable to be published to a juvenile and are indecent.
Lastly, we wish to emphasise that the above determinations are reached separately on the two articles which, we notice, have as many similarities as dissimilarities. However, the principles, reasons and conclusions are the same for them.
These are our determinations. For the Oriental article: indecent; the Sun article: indecent.
Miss Agnes CHAN, SGC, for the Television and Entertainment Licensing Authority
Mr CHENG Huan and Mr Paul LEUNG, instructed by Messrs Iu, Lai & Li, for the defendants

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{
"Date": "10 Jun, 2002",
"Action No.": "CACV2548/2001",
"Neutral Cit.": "[2002] HKCA 1116",
"case_title": "林育麟 訴 入境事務處處長",
"page_title": "林育麟 訴 入境事務處處長 | [2002] HKCA 1116 | HKLII",
"case_history": [
{
"name": "CACV2548/2001",
"link": "https://www.hklii.hk/tc/appealhistory/CACV/2001/2548"
}
],
"appeal_history": [],
"case_url": "https://www.hklii.hk/tc/cases/hkca/2002/1116",
"neutral_cit": "[2002] HKCA 1116",
"court_code": "HKCA",
"content": "CACV002548/2001 林育麟 訴 入境事務處處長\nCACV002548/2001\nCACV 2548/2001\n香港特別行政區\n高等法院上訴法庭\n民事司法管轄權\n民事上訴\n案件編號：民事上訴案件2001年第2548號\n(原本案件編號 : 高院憲法及行政訴訟2001年第2245號)\n------------------------\n申請人\n林育麟\n對\n答辯人\n入境事務處處長\n------------------------\n主審法官:\n高等法院上訴法庭法官胡國興\n高等法院上訴法庭法官張澤祐\n審理日期：2002 年 5 月 30 日\n頒發判案書日期：2002 年 6 月 10 日\n------------------------\n判案書\n------------------------\n由上訴法庭法官胡國興頒發上訴法庭判案書\n:\n1．\n就申請香港特別行政區居留權(\"居留權\")的問題，1999年1月29日終審法院判決了\n吳嘉玲及其他人士對入境事務處處長\n1\n和\n陳錦雅及其他人士對入境事務處處長\n2\n兩案。在\n吳嘉玲\n案，終審法院裁定《基本法》第24條第2款第(3)項並不受第22條第4款[須以國內機關簽發的單程證(\"單程證\")來港]規限，香港永久性居民（“永久性居民”）在香港以外所生的中國籍子女申請居留權者不須先取得單程證才可獲取居留權。在\n陳錦雅\n案，終審法院裁定永久性居民在香港以外所生的中國籍子女，不論他們是在父母之中最少一人取得永久性居民身分之前或之後出生，均屬《基本法》第24條第2款第(3)項所述的人士，享有居留權。\n2．\n1999年6月26日全國人民代表大會常務委員會對居留權問題作出解釋(\"人大常委會解釋\")，取代了終審法院上述的裁決，該等裁決不再適用。2002年1月10日，終審法院在\n吳小彤及其他人士對入境事務處處長\n3\n一案清楚闡述和解釋了\n吳嘉玲\n和\n陳錦雅\n兩案及人大常委會解釋的關係和效果，對居留權的問題作出了決定性的結論。\n3．\n吳小彤案是終審法院的判決，是對本庭有約束力的案例，人大常委會的解釋對本庭也是有約束力的，本庭必須遵守。根據該案例及該解釋，永久性居民在香港以外所生的中國籍子女，只有符合下列三項其中一項條件的才可獲法庭頒發濟助：\n(1) 申請人在1997年7月1日之前已抵達香港，而且申請人在出生時其父母之中最少一人已經是永久性居民。符合這條件者有權在香港申請或繼續申請獲取居留權，無須領取單程證；或\n(2) [有合法理期望者] 申請人曾收到(a)法律援助署在1998年12月7日至1999年1月29日間發出的有關公函，述明申請人不必參與當時的訴訟程序或展開新訴訟程序，或(b)保安局局長在1998年4月24日發出的有關信件，內容大意是入境事務處會依循法院的判決處理居留權的申請。對於符合這條件者，入境事務處處長應考慮行使\n《入境條例》\n第11條\n、\n第13條\n和\n第19(1)條\n賦予他的酌情決定權，在決定前不把申請人遣送離開香港；或\n(3) [政府寬免政策受惠者] (a)申請人在1997年7月1日至1999年1月29日期間在香港，和(b)在該期間他在香港時向入境事務處提出居留權的聲稱，和(c)入境事務處存有該聲稱的記錄或聲稱由其他政府官員在執行職務時轉交予入境事務處。如果有文件可以明確(i)辨認出申請人是永久性居民的子女；(ii)提供有關申請人的資料，如出生日期和地點；和(iii)要求申請人來香港以便定居或要求給予申請人居留權，入境事務處處長應視之為居留權的聲稱。對於符合條件者，入境事務處處長應按照\n吳嘉玲\n和\n陳錦雅\n兩案的上述裁決考慮申請人的申請。\n4．\n若申請人不能符合以上第3段所述條件的任何一項，申請人就沒有居留權；即使在他出生時其父或其母已經是永久性居民，他必須先向國內機關取得單程證，才可以在香港行使永久性居民的居留權。\n5.\n本案資料顯示，本案申請人於1968年5月9日在國內出生。出生時父母都不是香港永久性居民。本案申請人的情況也不符合上述任何一項的條件。\n6.\n本案申請人的上訴無理據支持。本庭駁回上訴，不作出訟費命令。\n（胡國興）\n(張澤祐)\n高等法院上訴法庭法官\n高等法院上訴法庭法官\n申請人 ： 無律師代表，缺席。\n答辯人 ： 由律政司何展鵬政府律師代表。\n1\n(1999) 2 HKCFAR 4\n(decision of CFA on 29 Jan 1999)\n2\n(1999) 2 HKCFAR 82\n(decision of CFA on 29 Jan 1999)\n3\nNg Siu Tung & others v The Director of Immigration\n, FACV1-3/2001 (10 Jan 2002, unreported)",
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26
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{
"Date": "22 Mar, 2002",
"Action No.": "CACV760/2000",
"Neutral Cit.": "[2002] HKCA 3476",
"case_title": "李杏彬 訴 入境事務處處長",
"page_title": "李杏彬 訴 入境事務處處長 | [2002] HKCA 3476 | HKLII",
"case_history": [
{
"name": "CACV760/2000",
"link": "https://www.hklii.hk/tc/appealhistory/CACV/2000/760"
}
],
"appeal_history": [],
"case_url": "https://www.hklii.hk/tc/cases/hkca/2002/3476",
"neutral_cit": "[2002] HKCA 3476",
"court_code": "HKCA",
"content": "CACV000760/2000 李杏彬 訴 入境事務處處長\nCACV000760/2000\nCACV760/2000\n香港特別行政區\n高等法院上訴法庭\n民事司法管轄權\n民事上訴\n案件編號 : 民事上訴案件2000年第760號\n(原本案件編號 : 高院憲法及行政訴訟2000年第474號)\n----------------------\n申請人\n李杏彬\n對\n答辯人\n入境事務處處長\n------------------------\n主審法官:\n高等法院首席法官梁紹中\n高等法院上訴法庭法官胡國興\n高等法院上訴法庭法官張澤祐\n審理日期：2002年3月11日\n頒發判案書日期：2002年3月22日\n------------------------\n判案書\n------------------------\n由上訴法庭法官梁紹中頒發上訴法庭判案書：\n1．\n就申請香港特別行政區居留權(\"居留權\")的問題，1999年1月29日終審法院判決了\n吳嘉玲及其他人士對入境事務處處長\n1\n和\n陳錦雅及其他人士對入境事務處處長\n2\n兩案。在\n吳嘉玲\n案，終審法院裁定《基本法》第24條第2款第(3)項並不受第22條第4款[須以國內機關簽發的單程證(\"單程證\")來港]規限，香港永久性居民（“永久性居民”）在香港以外所生的中國籍子女申請居留權者不須先取得單程證才可獲取居留權。在\n陳錦雅\n案，終審法院裁定永久性居民在香港以外所生的中國籍子女，不論他們是在父母之中最少一人取得永久性居民身分之前或之後出生，均屬《基本法》第24條第2款第(3)項所述的人士，享有居留權。\n2．\n1999年6月26日全國人民代表大會常務委員會對居留權問題作出解釋(\"人大常委會解釋\")，取代了終審法院上述的裁決，該等裁決不再適用。2002年1月10日，終審法院在\n吳小彤及其他人士對入境事務處處長\n3\n一案清楚闡述和解釋了\n吳嘉玲\n和\n陳錦雅\n兩案及人大常委會解釋的關係和效果，對居留權的問題作出了決定性的結論。\n3．\n吳小彤案是終審法院的判決，是對本庭有約束力的案例，人大常委會的解釋對本庭也是有約束力的，本庭必須遵守。根據該案例及該解釋，永久性居民在香港以外所生的中國籍子女，只有符合下列三項其中一項條件的才可獲法庭頒發濟助：\n(1) 申請人在1997年7月1日之前已抵達香港，而且申請人在出生時其父母之中最少一人已經是永久性居民。符合這條件者有權在香港申請或繼續申請獲取居留權，無須領取單程證；或\n(2) [有合法理期望者] 申請人曾收到(a)法律援助署在1998年12月7日至1999年1月29日間發出的有關公函，述明申請人不必參與當時的訴訟程序或展開新訴訟程序，或(b)保安局局長在1998年4月24日發出的有關信件，內容大意是入境事務處會依循法院的判決處理居留權的申請。對於符合這條件者，入境事務處處長應考慮行使\n《入境條例》\n第11條\n、\n第13條\n和\n第19(1)條\n賦予他的酌情決定權，在決定前不把申請人遣送離開香港；或\n(3) [政府寬免政策受惠者] (a)申請人在1997年7月1日至1999年1月29日期間在香港，和(b)在該期間他在香港時向入境事務處提出居留權的聲稱，和(c)入境事務處存有該聲稱的記錄或聲稱由其他政府官員在執行職務時轉交予入境事務處。如果有文件可以明確(i)辨認出申請人是永久性居民的子女；(ii)提供有關申請人的資料，如出生日期和地點；和(iii)要求申請人來香港以便定居或要求給予申請人居留權，入境事務處處長應視之為居留權的聲稱。對於符合條件者，入境事務處處長應按照\n吳嘉玲\n和\n陳錦雅\n兩案的上述裁決考慮申請人的申請。\n4．\n若申請人不能符合以上第3段所述條件的任何一項，申請人就沒有居留權；即使在他出生時其父或其母已經是永久性居民，他必須先向國內機關取得單程證，才可以在香港行使永久性居民的居留權。\n5.\n申請人沒有到庭，本庭在申請人缺席下聆訊本上訴。\n6.\n本案資料顯示，本案申請人於1959年4月2日在國內出生。出生時父母都不是香港永久性居民。本案申請人的情況也不符合上述任何一項的條件。\n7.\n上訴無理據支持。本庭駁回上訴，不作出訟費命令。\n(梁紹中)\n(胡國興)\n(張澤祐)\n高等法院首席法官\n高等法院上訴法庭法官\n高等法院上訴法庭法官\n申請人： 缺席。\n答辯人： 由律政司黃惠沖高級政府律師及何展鵬政府律師代表。\n1\n(1999) 2 HKCFAR 4\n(decision of CFA on 29 Jan 1999)\n2\n(1999) 2 HKCFAR 82\n(decision of CFA on 29 Jan 1999)\n3\nNg Siu Tung & others v The Director of Immigration\n, FACV1-3/2001 (10 Jan 2002, unreported)",
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"status": "success"
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49
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CACV 939/2001
香港特別行政區
高等法院上訴法庭
民事司法管轄權
民事上訴
案件編號：民事上訴案件2001年第939號
(原本案件編號 : 高院憲法及行政訴訟2000年第2138號)
------------------------
申請人 蔡輝揚
對
答辯人 入境事務處處長
------------------------
主審法官 : 高等法院上訴法庭法官胡國興
高等法院原訟法庭法官朱芬齡
審理日期 ：2002年5月7日
頒發判案書日期 ：2002年5月21日
------------------------
判案書
------------------------
由上訴法庭法官胡國興頒發上訴法庭判案書：
1． 就申請香港特別行政區居留權(“居留權”)的問題，1999年1月29日終審法院判決了吳嘉玲及其他人士對入境事務處處長和陳錦雅及其他人士對入境事務處處長兩案。在吳嘉玲案，終審法院裁定《基本法》第24條第2款第(3)項並不受第22條第4款[須以國內機關簽發的單程證(“單程證”)來港]規限，香港永久性居民（“永久性居民”）在香港以外所生的中國籍子女申請居留權者不須先取得單程證才可獲取居留權。在陳錦雅案，終審法院裁定永久性居民在香港以外所生的中國籍子女，不論他們是在父母之中最少一人取得永久性居民身分之前或之後出生，均屬《基本法》第24條第2款第(3)項所述的人士，享有居留權。
2． 1999年6月26日全國人民代表大會常務委員會對居留權問題作出解釋(“人大常委會解釋”)，取代了終審法院上述的裁決，該等裁決不再適用。2002年1月10日，終審法院在吳小彤及其他人士對入境事務處處長 一案清楚闡述和解釋了吳嘉玲和陳錦雅兩案及人大常委會解釋的關係和效果，對居留權的問題作出了決定性的結論。
3． 吳小彤案是終審法院的判決，是對本庭有約束力的案例，人大常委會的解釋對本庭也是有約束力的，本庭必須遵守。根據該案例及該解釋，永久性居民在香港以外所生的中國籍子女，只有符合下列三項其中一項條件的才可獲法庭頒發濟助：
(1) 申請人在1997年7月1日之前已抵達香港，而且申請人在出生時其父母之中最少一人已經是永久性居民。符合這條件者有權在香港申請或繼續申請獲取居留權，無須領取單程證；或
(2) [有合法理期望者] 申請人曾收到(a)法律援助署在1998年12月7日至1999年1月29日間發出的有關公函，述明申請人不必參與當時的訴訟程序或展開新訴訟程序，或(b)保安局局長在1998年4月24日發出的有關信件，內容大意是入境事務處會依循法院的判決處理居留權的申請。對於符合這條件者，入境事務處處長應考慮行使《入境條例》第11條、第13條和第19(1)條賦予他的酌情決定權，在決定前不把申請人遣送離開香港；或
(3) [政府寬免政策受惠者] (a)申請人在1997年7月1日至1999年1月29日期間在香港，和(b)在該期間他在香港時向入境事務處提出居留權的聲稱，和(c)入境事務處存有該聲稱的記錄或聲稱由其他香港政府官員在執行職務時轉交予入境事務處。如果有文件可以明確(i)辨認出申請人是永久性居民的子女；(ii)提供有關申請人的資料，如出生日期和地點；和(iii)要求申請人來香港以便定居或要求給予申請人居留權，入境事務處處長應視之為居留權的聲稱。對於符合條件者，入境事務處處長應按照吳嘉玲和陳錦雅兩案的上述裁決考慮申請人的申請。
4． 若申請人不能符合以上第3段所述條件的任何一項，申請人就沒有居留權；即使在他出生時其父或其母已經是永久性居民，他必須先向國內機關取得單程證，才可以在香港行使永久性居民的居留權。
5. 本案資料顯示，本案申請人於1955年1月2日在國內出生。出生時父母都不是香港永久性居民。本案申請人的情況也不符合上述任何一項的條件。
6. 本案申請人的上訴無理據支持。本庭駁回上訴，不作出訟費命令。
申請人 ： 無律師代表，缺席。
答辯人 ： 由律政司何展鵬政府律師代表。

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{
"Date": "21 May, 2002",
"Action No.": "CACV939/2001",
"Neutral Cit.": "[2002] HKCA 3796",
"case_title": "蔡輝揚 訴 入境事務處處長",
"page_title": "蔡輝揚 訴 入境事務處處長 | [2002] HKCA 3796 | HKLII",
"case_history": [
{
"name": "CACV939/2001",
"link": "https://www.hklii.hk/tc/appealhistory/CACV/2001/939"
}
],
"appeal_history": [],
"case_url": "https://www.hklii.hk/tc/cases/hkca/2002/3796",
"neutral_cit": "[2002] HKCA 3796",
"court_code": "HKCA",
"content": "CACV000939/2001 蔡輝揚 訴 入境事務處處長\nCACV000939/2001\nCACV 939/2001\n香港特別行政區\n高等法院上訴法庭\n民事司法管轄權\n民事上訴\n案件編號：民事上訴案件2001年第939號\n(原本案件編號 : 高院憲法及行政訴訟2000年第2138號)\n------------------------\n申請人\n蔡輝揚\n對\n答辯人\n入境事務處處長\n------------------------\n主審法官:\n高等法院上訴法庭法官胡國興\n高等法院原訟法庭法官朱芬齡\n審理日期：2002 年 5 月 7 日\n頒發判案書日期：2002 年 5 月 21 日\n------------------------\n判案書\n------------------------\n由上訴法庭法官胡國興頒發上訴法庭判案書\n:\n1．\n就申請香港特別行政區居留權(\"居留權\")的問題，1999年1月29日終審法院判決了\n吳嘉玲及其他人士對入境事務處處長\n1\n和\n陳錦雅及其他人士對入境事務處處長\n2\n兩案。在\n吳嘉玲\n案，終審法院裁定《基本法》第24條第2款第(3)項並不受第22條第4款[須以國內機關簽發的單程證(\"單程證\")來港]規限，香港永久性居民（“永久性居民”）在香港以外所生的中國籍子女申請居留權者不須先取得單程證才可獲取居留權。在\n陳錦雅\n案，終審法院裁定永久性居民在香港以外所生的中國籍子女，不論他們是在父母之中最少一人取得永久性居民身分之前或之後出生，均屬《基本法》第24條第2款第(3)項所述的人士，享有居留權。\n2．\n1999年6月26日全國人民代表大會常務委員會對居留權問題作出解釋(\"人大常委會解釋\")，取代了終審法院上述的裁決，該等裁決不再適用。2002年1月10日，終審法院在\n吳小彤及其他人士對入境事務處處長\n3\n一案清楚闡述和解釋了\n吳嘉玲\n和\n陳錦雅\n兩案及人大常委會解釋的關係和效果，對居留權的問題作出了決定性的結論。\n3．\n吳小彤案是終審法院的判決，是對本庭有約束力的案例，人大常委會的解釋對本庭也是有約束力的，本庭必須遵守。根據該案例及該解釋，永久性居民在香港以外所生的中國籍子女，只有符合下列三項其中一項條件的才可獲法庭頒發濟助：\n(1) 申請人在1997年7月1日之前已抵達香港，而且申請人在出生時其父母之中最少一人已經是永久性居民。符合這條件者有權在香港申請或繼續申請獲取居留權，無須領取單程證；或\n(2) [有合法理期望者] 申請人曾收到(a)法律援助署在1998年12月7日至1999年1月29日間發出的有關公函，述明申請人不必參與當時的訴訟程序或展開新訴訟程序，或(b)保安局局長在1998年4月24日發出的有關信件，內容大意是入境事務處會依循法院的判決處理居留權的申請。對於符合這條件者，入境事務處處長應考慮行使\n《入境條例》\n第11條\n、\n第13條\n和\n第19(1)條\n賦予他的酌情決定權，在決定前不把申請人遣送離開香港；或\n(3) [政府寬免政策受惠者] (a)申請人在1997年7月1日至1999年1月29日期間在香港，和(b)在該期間他在香港時向入境事務處提出居留權的聲稱，和(c)入境事務處存有該聲稱的記錄或聲稱由其他政府官員在執行職務時轉交予入境事務處。如果有文件可以明確(i)辨認出申請人是永久性居民的子女；(ii)提供有關申請人的資料，如出生日期和地點；和(iii)要求申請人來香港以便定居或要求給予申請人居留權，入境事務處處長應視之為居留權的聲稱。對於符合條件者，入境事務處處長應按照\n吳嘉玲\n和\n陳錦雅\n兩案的上述裁決考慮申請人的申請。\n4．\n若申請人不能符合以上第3段所述條件的任何一項，申請人就沒有居留權；即使在他出生時其父或其母已經是永久性居民，他必須先向國內機關取得單程證，才可以在香港行使永久性居民的居留權。\n5.\n本案資料顯示，本案申請人於1955年1月2日在國內出生。出生時父母都不是香港永久性居民。本案申請人的情況也不符合上述任何一項的條件。\n6.\n本案申請人的上訴無理據支持。本庭駁回上訴，不作出訟費命令。\n（胡國興）\n(朱芬齡)\n高等法院上訴法庭法官\n高等法院原訟法庭法官\n申請人 ： 無律師代表，缺席。\n答辯人 ： 由律政司何展鵬政府律師代表。\n1\n(1999) 2 HKCFAR 4\n(decision of CFA on 29 Jan 1999)\n2\n(1999) 2 HKCFAR 82\n(decision of CFA on 29 Jan 1999)\n3\nNg Siu Tung & others v The Director of Immigration\n, FACV1-3/2001 (10 Jan 2002, unreported)",
"attachments": [
{
"download_url": "https://legalref.judiciary.hk/doc/judg/word/vetted/other/ch/2001/CACV000939_2001.doc",
"file_name": "CACV000939_2001.doc",
"file_ext": ".doc",
"status": "success"
}
]
}

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CACC 477/2012 香港特別行政區 高等法院上訴法庭 刑事司法管轄權 判刑上訴申請 刑事上訴案件2012年第477號 （原區域法院刑事案件2012年第676號）    答辯人 香港特別行政區    對   上訴人 許樹榮（HUI SHU WING）        主審法官： 高等法院上訴法庭副庭長楊振權 高等法院原訟法庭法官張慧玲 聆訊日期： 2013年7月26日 判案日期： 2013年7月26日 頒發判案理由書日期： 2013年8月2日 判案理由書   
高等法院上訴法庭副庭長楊振權頒發上訴法庭判案理由書： 引言 上訴人（許樹榮）被控一項“危險駕駛引致他人死亡”罪，上訴人否認控罪並在區域法院法官郭啟安（原審法官）席前受審。 2012年11月16日，原審法官裁定上訴人罪名成立，並在同日判上訴人入獄3年2個月，停牌5年。原審法官同時下令上訴人在停牌期屆滿之前的三個月，要自費參加及完成“駕駛改進課程”，才能恢復駕駛資格。 上訴人不服定罪及判刑，曾提出上訴許可申請，要求獲准就定罪及判刑上訴。其後，上訴人放棄就定罪的申請，而其就判刑的上訴許可申請則在2013年4月24日獲上訴法庭單一法官批准。因此，本庭只需考慮上訴人就判刑的上訴。代表上訴人的伍家聰大律師的立場是他關注的只是刑期的長短，而非停牌或“駕駛改進課程”令。 經聆訊後，本庭裁定上訴人上訴得直。本庭將上訴人的刑期由3年2個月減為2年6個月，其他判令則不改。以下是本庭的判案理由。 案發經過 2012年1月13日，上訴人駕駛一輛公共巴士在九龍灣德福花園C座對開的斑馬線上撞死了一名89歲的老婦
（死者）。當時，涉案路段交通繁忙，行人眾多，而斑馬線上不斷有行人橫過馬路。死者從上訴人駕駛的巴士左邊向右邊橫過馬路時，在斑馬線中間位置遭巴士車頭正中間撞倒後捲入車底。死者被送往醫院留醫，但延至兩個月後不治。 上訴人的背景及求情理由 上訴人61歲，已婚及有一名成年女兒。上訴人任職司機30多年，事發前從沒有任何交通違例紀錄，亦沒有任何刑事定罪紀錄。 上訴人的立場是事件是不幸的意外，對他及家人造成極大的影響。上訴人多次向法庭表示他對事件感到十分悔疚，亦表示要向死者及其家人道歉。上訴人強調自己雖然學歷不高，但一直奉公守法，卻因一次意外令他終生遺憾，更影響到他年邁有病的母親及長期患病的妻子。上訴人要求法庭能對他寬大，令他能早日和家人團聚。 原審法官的判刑理由 原審法官的裁決並非是上訴人見到有人沿斑馬線過馬路時，仍不顧一切駛過斑馬線而撞到死者。原審法官的裁決基礎是上訴人沒有留意到是否有人正在等候過斑馬線或是否有人正踏在斑馬線上，而他是在駛過斑馬線時，沒有停車或慢駛並撞到死者。當時死者並非突然衝出，而是徐徐以正常步伐行至斑馬線中間位置。
原審法官指出涉案罪行的最高判刑是十年監禁，但上訴法庭並沒有訂出判刑指引。原審法官認為涉案罪行可分兩類，一類是被告人持續地去魯莽駕駛；另一類是被告人一時作出錯誤判斷，而前者較後者為嚴重。原審法官沒有表明本案屬前者還是後者，而只指出上訴人的立場是他駕駛的車輛的車身太高，而死者的個子生得矮小，故他不能看見死者過馬路。原審法官認為上訴人理應看到死者，但他卻因見不到她而繼續前行，故撞到死者。 原審法官表示上訴人不應因其駕駛的車輛體積龐大就認為行人必會看見他的車輛而會讓開。原審法官亦認為上訴人應該禮讓斑馬線上的行人，但他卻沒有這樣做，故他的疏忽行為是嚴重的。 原審法官沒有表明在撞到死者前上訴人是否有看見死者在斑馬線上，而只表示上訴人理應看到死者。事實上，死者被撞時已行至斑馬線中間位置，若上訴人有留意斑馬線路面情況，實很難想像他何以見不到死者。 原審法官列出Secretary for Justice v Wong Wai Hung (CAAR 7/2010) 案的案情，並指出該案的判刑應為4年監禁，原因之一是同類案件的判刑須具有阻嚇性。原審法官強調上述Wong Wai Hung案的被告人除了撞死一人外，亦撞傷了另外一名傷者。
原審法官認為適當的量刑基準為3年6個月監禁，但考慮到上訴人同意了大部分的控方案情，節省法庭時間，再加上上訴人任職司機30多年，而完全沒有任何交通違例紀錄，屬難能可貴，故將刑期扣減多4個月至3年2個月。 上訴理由 伍大律師只提出一項上訴理由。他指事發時，上訴人只是沒有留意斑馬線上行人過路的情況，而非看見死者，但仍莽顧她的安全，強行駛過班馬線。伍大律師認為在上述情況下，原判的判刑過重。 討論 原審法官表示上訴人理應看見死者，卻沒有看見死者，但原審法官沒有說明為何上訴人沒有看見死者。 從其判刑理由書字裏行間，原審法官像是接納在撞倒死者前，上訴人是沒有見到死者在斑馬線上的，而原因是上訴人沒有充分留意路面情況。證據顯示上訴人在意外前沒有減速，更沒有停下。上述事實和上訴人沒有見到死者在斑馬線上的說法相符。 根據原審法官的判刑理由，本庭認為應採取的立場是在案發時，上訴人沒有看見死者在斑馬線上。 假若上訴人能看見斑馬線上有行人橫過馬路，但卻沒有減速，而強行駛過斑馬線以致撞死在斑馬線上過馬路的
死者，上訴人的罪行會是極為嚴重，原因是他的駕駛行為是罔顧在斑馬線上過馬路的行人之安危。 但本庭認為較合適的處理方法是上訴人在駛過涉案路段時沒有留意或沒有充分留意路面情況，故未能看見死者橫過斑馬線。 上述Wong Wai Hung案的被告人是看見死者和攙扶他的傭人一起以慢速過斑馬線，但他沒有停車，仍以時速約20公里駛過斑馬線，原因是他誤認有足夠時間駛過斑馬線。結果他撞死死者和撞傷傭人。上訴法庭認為在上述情況下，適當的量刑基準是4年。 本庭認為上訴人的罪責較Wong Wai Hung案被告人的罪責為輕。 伍大律師援引的香港特別行政區訴余永勝（CACC33/2012）案的被告人在駛近行人過路處前，已顯著減速。該名被告人沒有衝燈，而只是沒有留意路面情況，故不屬罔顧路人的安全。上訴法庭認為適當的量刑基準為2年9個月。 本庭認為上訴人的罪責較上述余永勝案被告人的罪責為重。雖然兩者都是沒有留意路面情況，但余永勝案的被告人駛過的是由燈控制的行人過路處而非斑馬線，而駛過行人過路處前，更有顯著減速。
本庭認為上訴人並非罔顧路人的安全，在看見有人過斑馬線而仍然冒險駛過斑馬線。本庭認為以上訴人沒有留意路面情況，故看不見死者過斑馬線而導致意外作為量刑基礎，3年6個月的量刑基準屬明顯過重。本庭認為3年的量刑基準已足夠反映上訴人罪行的嚴重性。 上訴人是一名職業司機，而在30多年的駕駛生涯中完全沒有犯過任何交通規例，實屬難能可貴。原審時上訴人同意大部分控方案情，節省法庭時間。本庭認為上述因素應導致6個月的刑期扣減，而得出2年6個月的判刑。 因此，本庭裁定上訴人的減刑上訴得直，並將其刑期由3年2個月減為2年6個月。 （楊振權） 高等法院上訴法庭副庭長 （張慧玲） 高等法院原訟法庭法官   答辯人：由律政司高級檢控官趙偉天代表。 上訴人：由法律援助署委派大律師伍家聰代表。
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CACC 296/2019
[2020] HKCA 729
香港特別行政區
高等法院上訴法庭
刑事司法管轄權
上訴訟費申請
刑事上訴案件2019年第296號
（原區域法院刑事案件2018年第547號）
________________
答辯人 香港特別行政區
對
上訴人 盧耀國
________________
主審法官： 高等法院上訴法庭法官彭偉昌
高等法院原訟法庭法官彭寶琴
上訴人書面陳詞日期： 2020年7月20日
答辯人書面陳詞日期： 2020年8月3日
上訴人進一步書面陳詞日期：2020年8月13日
訟費判決書日期：2020年8月28日
訟 費 判 決 書
高等法院原訟法庭法官彭寶琴頒發上訴法庭訟費判決書：
上訴人於區域法院法官葉佐文席前經審訊後被裁定一項「猥褻侵犯罪」罪名成立，並於2019年9月10日被判處兩年監禁。
上訴人不服定罪及判刑，提出上訴許可申請。高等法院原訟法庭法官黃崇厚於2020年5月20日審理有關上訴許可申請後，拒絕就定罪上訴發出許可，但批准上訴人的判刑上訴許可；並在同日批准他的保釋申請。
2020年7月15日，本庭經聆訊後，裁定上訴人的判刑上訴得直，將兩年監禁改為判處讓上訴人可獲即時釋放的刑期。
上訴人現就以下項目，向本庭提出訟費申請：
就判刑上訴許可申請尋求法律意見的費用；
2020年5月20日就判刑部份提出的上訴許可申請聆訊；
2020年5月20日的等候上訴保釋申請聆訊；及
2020年7月15日的判刑上訴聆訊。
同時，上訴人亦希望本庭發出需要兩名大律師處理本案的證明書。
就上訴人的訟費申請，答辯人明確表示並沒有任何特別理由可提出反對。然而，答辯人向本庭陳詞指針對本案的判刑上訴，理據極其簡單直接，亦沒有牽涉任何複雜的法律詮釋，故認為不需要兩名大律師處理。
本案的背景及本庭就判刑上訴的判決理由詳見本庭於2020年7月30日頒下的判案理由書，在此不贅。
上訴人的判刑上訴得直，成功獲得減刑，他應獲得相關的訟費，但本庭經考慮本案的背景、上訴理據及上訴得直的原因後，同意答辯人所指，本案並沒有必要由兩位大律師處理。
因此，本庭下令，上訴人可獲得上文第4段第（1）至第（4）項的訟費，但訟費當中的大律師費用，只限於由一名大律師代表。假如雙方未能就訟費金額達成協議，則交由聆案官處理。
(彭偉昌) (彭寶琴)
高等法院上訴法庭法官 高等法院原訟法庭法官
答辯人：由律政司高級檢控官潘藹蓮代表
上訴人：由林佩琼律師行轉聘李紹強資深大律師及劉日雄大律師代表

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{
"Date": "28 Aug, 2020",
"Action No.": "CACC296/2019",
"Neutral Cit.": "[2020] HKCA 729",
"case_title": "香港特別行政區 訴 盧耀國",
"page_title": "香港特別行政區 訴 盧耀國 | [2020] HKCA 729 | HKLII",
"case_history": [],
"appeal_history": [
{
"name": "CACC296/2019",
"link": "https://www.hklii.hk/tc/appealhistory/CACC/2019/296"
}
],
"case_url": "https://www.hklii.hk/tc/cases/hkca/2020/729",
"neutral_cit": "[2020] HKCA 729",
"court_code": "HKCA",
"content": "CACC296B/2019 香港特別行政區 訴 盧耀國\nCACC 296/2019\n[2020] HKCA 729\n香港特別行政區\n高等法院上訴法庭\n刑事司法管轄權\n上訴訟費申請\n刑事上訴案件2019年第296號\n（原區域法院刑事案件2018年第547號）\n________________________\n答辯人\n香港特別行政區\n對\n上訴人\n盧耀國\n________________________\n主審法官：\n高等法院上訴法庭法官彭偉昌\n高等法院原訟法庭法官彭寶琴\n上訴人書面陳詞日期：\n2020年7月20日\n答辯人書面陳詞日期：\n2020年8月3日\n上訴人進一步書面陳詞日期：\n2020年8月13日\n訟費判決書日期：\n2020年8月28日\n訟 費 判 決 書\n高等法院原訟法庭法官彭寶琴頒發上訴法庭訟費判決書：\n1.\n上訴人於區域法院法官葉佐文席前經審訊後被裁定一項「猥褻侵犯罪」罪名成立，並於2019年9月10日被判處兩年監禁。\n2.\n上訴人不服定罪及判刑，提出上訴許可申請。高等法院原訟法庭法官黃崇厚於2020年5月20日審理有關上訴許可申請後，拒絕就定罪上訴發出許可，但批准上訴人的判刑上訴許可；並在同日批准他的保釋申請\n[1]\n。\n3.\n2020年7月15日，本庭經聆訊後，裁定上訴人的判刑上訴得直，將兩年監禁改為判處讓上訴人可獲即時釋放的刑期。\n4.\n上訴人現就以下項目，向本庭提出訟費申請：\n(1) 就判刑上訴許可申請尋求法律意見的費用；\n(2) 2020年5月20日就判刑部份提出的上訴許可申請聆訊；\n(3) 2020年5月20日的等候上訴保釋申請聆訊；及\n(4) 2020年7月15日的判刑上訴聆訊。\n5.\n同時，上訴人亦希望本庭發出需要兩名大律師處理本案的證明書。\n6.\n就上訴人的訟費申請，答辯人明確表示並沒有任何特別理由可提出反對。然而，答辯人向本庭陳詞指針對本案的判刑上訴，理據極其簡單直接，亦沒有牽涉任何複雜的法律詮釋，故認為不需要兩名大律師處理\n[2]\n。\n7.\n本案的背景及本庭就判刑上訴的判決理由詳見本庭於2020年7月30日頒下的判案理由書\n[3]\n，在此不贅。\n8.\n上訴人的判刑上訴得直，成功獲得減刑，他應獲得相關的訟費，但本庭經考慮本案的背景、上訴理據及上訴得直的原因後，同意答辯人所指，本案並沒有必要由兩位大律師處理。\n9.\n因此，本庭下令，上訴人可獲得上文第4段第（1）至第（4）項的訟費，但訟費當中的大律師費用，只限於由一名大律師代表。假如雙方未能就訟費金額達成協議，則交由聆案官處理。\n(彭偉昌)\n(彭寶琴)\n高等法院上訴法庭法官\n高等法院原訟法庭法官\n答辯人：由律政司高級檢控官潘藹蓮代表\n上訴人：由林佩琼律師行轉聘李紹強資深大律師及劉日雄大律師代表\n[1]\n香港特別行政區及盧耀國\n[2020] HKCA 379\n[2]\n答辯人舉例指出，在下列兩案，上訴法庭亦只是批出一位大律師的訟費申請：\n香港特別行政區對周禮梅\n［2018］HKCA 957及\nHKSAR v Wong Hei-chit\n[2017] 1 HKLRD 928\n，第38段\n[3]\n香港特別行政區對盧耀國\n[2020] HKCA 581",
"attachments": [
{
"download_url": "https://legalref.judiciary.hk/doc/judg/word/vetted/other/ch/2019/CACC000296B_2019.doc",
"file_name": "CACC000296B_2019.doc",
"file_ext": ".doc",
"status": "success"
}
]
}

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[Chinese Translation — 中譯本] FACV14/1998 香港特別行政區 終審法院 終院民事上訴1998年第14號 （原本案件編號：高院民事上訴1997年第216號）    上訴人 吳嘉玲 吳丹丹   （兩人皆屬未成年人士， 由父親及起訴監護人吳錫年代表）   對   答辯人 入境事務處處長        FACV15/1998 香港特別行政區 終審法院 終院民事上訴1998年第15號 （原本案件編號：高院民事上訴1997年第217號）
   上訴人 徐權能    對   答辯人 入境事務處處長        FACV16/1998 香港特別行政區 終審法院 終院民事上訴1998年第16號 （原本案件編號：高院民事上訴1997年第203號）    上訴人 入境事務處處長    對   答辯人 張麗華   （屬未成年人士，由父親及 起訴監護人張妙祥代表）      
主審法官：終審法院首席法官李國能 終審法院常任法官烈顯倫 終審法院常任法官沈澄 終審法院常任法官包致金 終審法院非常任法官梅師賢爵士 聆訊日期：1999年1月6、7、8、11及12日 宣判日期：1999年1月29日 判 決    終審法院首席法官李國能宣讀判詞： 這是本法院作出的一致判決。 一直以來，香港居民與中國其他地區的居民都有家庭聯繫。自從內地實行門戶開放政策後，香港與中國的關係變得息息相關，家庭聯繫更形廣泛密切。1997年7月1 日，在中華人民共和國恢復對香港行使主權時，許多在內地出生的中國公民的父母，至少其中一人是擁有香港居留權的香港永久性居民。
在本上訴案中，我等所處理的是他們作為香港永久性居民的身分及在港之居留權問題。有關《基本法》的正確解釋問題亦首次在本法院審理。此等問題對於有關人士的將來，以及憲制法律體系在新制度下的發展極為重要。 有關名稱 為方便起見，我等將會使用以下簡稱：中華人民共和國稱為中國；全國人民代表大會常務委員會稱為“人大常委會”；香港特別行政區稱為特區或香港。 本判決書中提及的“條款”是指《基本法》內的條款。雖然《基本法》的文本並沒有把每條條款內的小段編號，但按照一般做法把小段編號可方便引述。舉例說，第24條第二小段將稱為第24（2）條。 首兩宗上訴案的上訴人及第三宗上訴案的答辯人均為司法覆核程序中的申請人，以下稱為“申請人”。 香港特別行政區入境事務處處長以下稱為“入境處處長”。他是首兩宗上訴案的答辯人，亦是第三宗上訴案的上訴人。
憲制架構 《中華人民共和國憲法》第31條規定： “ 國家在必要時得設立特別行政區。在特別行政區內實行的制度按照具體情況由全國人民代表大會以法律規定。” 全國人民代表大會是最高國家權力機關，它的常設機關是常務委員會（《中國憲法》第57條）。全國人民代表大會及它的常務委員會行使國家立法權（第58條）。 《中華人民共和國香港特別行政區基本法》乃根據第31條制定，並由全國人民代表大會通過，於1990年4月4日予以公佈。當香港特別行政區於1997年7月1日成立，即中國恢復對香港行使主權時，《基本法》即成為特區的憲法。 《基本法》的序言說明特區是根據第31條成立的： “…並按照“一個國家，兩種制度”的方針，不在香港實行社會主義的制度和政策。國家對香港的基本方針政策，已由中國政府在中英聯合聲明中予以闡明。” 第一章述明總則，載有十一條條文。第1條規定香港特別行政區是中華人民共和國不可分離的部分。第2條規定全國人民代表大會授權香港特別行政區依照《基本法》的規
定實行高度自治，享有行政管理權、立法權、獨立的司法權和終審權。第5條規定特區不實行“社會主義制度和政策”，保持原有的資本主義制度和生活方式，五十年不變。 中英政府於1984年12月19日簽訂了關於香港問題的《聯合聲明》，以處理恢復行使主權的事宜。《聯合聲明》自1985年5月27日，即互換批准書之日起生效。中國政府於《聯合聲明》第三段宣示其對香港的基本方針政策，並謂這些基本方針政策將在《基本法》加以規定，並維持五十年不變。有關方針政策並於《聯合聲明》附件一加以具體說明。 《基本法》 《基本法》第24（1）條規定，香港特別行政區居民包括永久性居民和非永久性居民。 關於第24（2）條及24（3）條的釋義乃本上訴核心所在。第24（2）條規定，永久性居民為該條文所列出的六個類別的人士，即： “（1）在香港特別行政區成立以前或以後在香港出生的中國公民； （2）在香港特別行政區成立以前或以後在香港通常居住連續七年以上的中國公民； （3）第（1）、（2）兩項所列居民在香港以外所生的中國籍子女；
（4）在香港特別行政區成立以前或以後持有效旅行證件進入香港、在香港通常居住連續七年以上並以香港為永久居住地的非中國籍的人； （5）在香港特別行政區成立以前或以後第（4）項所列居民在香港所生的未滿二十一周歲的子女； （6）第（1）至（5）項所列居民以外在香港特別行政區成立以前只在香港有居留權的人。” 我等需要處理的是第三類別的人士，以下稱為第24（2）條第三類別人士。 第24（3）條規定，永久性居民在香港享有居留權和有資格依照特區法律取得載明其居留權的永久性居民身分證。 第24（4）條規定，非永久性居民為有資格依照特區法律取得香港居民身分證，但沒有居留權的人士。 第三章的標題為“居民的基本權利和義務”，而第24條是該章內的第一條條文。在第24（1）及（2）條界定了永久性和非永久性居民的身分後，第三章就永久性居民的基本權利和義務，包括居留權訂定條文。此等權利和義務體現了憲法對各種自由的保障，而自由乃香港文明社會的要素。值得留意的是，只有永久性居民才可依法享有選舉權和被選舉權（第26條）。
第三章第39條是憲法在保障個人權利方面的重要條款。第39（1）條規定：“《公民權利和政治權利國際公約》……適用於香港的有關規定繼續有效，通過香港特別行政區的法律予以實施。”第39（2）條規定，香港居民享有的權利和自由，除依法規定外不得限制，此種限制不得與第39（1）條規定抵觸。 《基本法》第二章的標題為：“中央和香港特別行政區的關係”。第22（4）條規定： “ 中國其他地區的人進入香港特別行政區須辦理批准手續，其中進入香港特別行政區定居的人數由中央人民政府主管部門徵求香港特別行政區政府的意見後確定。” 第八章的標題為：“本法的解釋和修改”。第158條是關於解釋問題，該條文規定： “ 本法的解釋權屬於全國人民代表大會常務委員會。 全國人民代表大會常務委員會授權香港特別行政區法院在審理案件時對本法關於香港特別行政區自治範圍內的條款自行解釋。 香港特別行政區法院在審理案件時對本法的其他條款也可
解釋。但如香港特別行政區法院在審理案件時需要對本法關於中央人民政府管理的事務或中央和香港特別行政區關係的條款進行解釋，而該條款的解釋又影響到案件的判決，在對該案件作出不可上訴的終局判決前，應由香港特別行政區終審法院請全國人民代表大會常務委員會對有關條款作出解釋。如全國人民代表大會常務委員會作出解釋，香港特別行政區法院在引用該條款時，應以全國人民代表大會常務委員會的解釋為準。但在此以前作出的判決不受影響。 全國人民代表大會常務委員會在對本法進行解釋前，徵詢其所屬的香港特別行政區基本法委員會的意見。” 《聯合聲明》 《基本法》第24條內有關永久性居民的定義乃源自《聯合聲明》附件一第十四部。該附件具體說明中國的基本方針政策。第十四部規定，列於該部內的各類人士有居留權並有資格按照香港法律獲得載明此項權利的永久性居民身分證。關於其後列於《基本法》第24（2）條的首三類人士，第十四部界定為： “在香港特別行政區成立以前或以後在當地出生或通常居住連續七年以上的中國公民及其在香港以外所生的中國籍子女。” 第十四部又包括以下條文：
“ 對中國其他地區的人進入香港特別行政區將按現在實行的辦法管理。” 香港法例 就香港而言，“居留權”一詞是在《聯合聲明》中才初次使用。在《聯合聲明》簽訂後，自1987年起《入境條例》（香港法例第115章）第2A條便載有香港永久性居民所享有的居留權的定義： “具有以下權利 — 在香港入境； 不會被施加任何逗留在香港的條件，而任何向他施加的逗留條件，均屬無效； 不得向他發出遞解離境令；及 不得向他發出遣送離境令。” 附表1列出屬香港永久性居民之各類人士。香港永久性居民可獲發永久性居民身分證，而永久性居民身分證之定義則為：載有“持有人擁有香港居留權”字句的身分證（見《人事登記條例》（香港法例第177章）第1A條）。
人民入境（修訂）（第2號）條例 在1997年7月1日前，《入境條例》附表1並沒有採用《基本法》第24（2）條所界定的類別來訂明何類人士屬香港永久性居民。1997年7月1日，臨時立法會制定《人民入境（修訂）（第2號）條例》（以下簡稱“第2號條例”），並以新制定的附表1取代舊附表1。新附表1第2段規定： “2. 香港特別行政區永久性居民 任何人如屬以下任何一項，即為香港特別行政區永久性居民 — 在香港特別行政區成立以前或以後在香港出生的中國公民，而在其出生時或其後任何時間，其父親或母親已在香港定居或已享有香港居留權。 在香港特別行政區成立以前或以後通常居於香港連續7年或以上的中國公民。 （a）或（b）項的香港特別行政區永久性居民在香港以外所生的中國籍子女，而在該子女出生時，其父親或母親已享有香港居留權。 … … …”
關於該類憑藉血緣成為永久性居民的人士，“第2號條例”第2（c）段規定其父親或母親在其出生時須已享有香港居留權。有關此項要求是否符合憲法的爭論，本法院將會在另一個上訴案中審理。附表1第1（2）段界定父母與子女的關係如下： “在以下的情況下，視為有父母與子女的關係存在— 任何女子與其婚生或非婚生子女之間的關係，為母親與子女的關係； 任何男子與其婚生子女之間的關係，為父親與子女的關係；如子女屬非婚生子女，只有當該子女其後因父母結婚而獲確立婚生地位，該男子與該子女之間才存在有父親與子女的關係； 只有父親或母親與其在香港根據法院命令領養的子女之間的關係，方為父親或母親與領養子女的關係，而該法院命令是指香港法院根據《領養條例》（第290章）作出的命令。” 由此可見，就非婚生子女而言，上述定義對母親和父親的處理並不一樣。任何女子與其非婚生子女之間，被視為有“父母與子女的關係”存在；然而，任何父親與其非婚生子女之間，則只有當該子女其後因父母結婚而獲確立婚生地位，才被視為有“父母與子女的關係”存在。
1997年入境（修訂）（第3號）條例 1997年7月10日，臨時立法會制定《入境（修訂）（第3號）條例》（以下簡稱“第3號條例”）。該條例當作自1997年7月1日起實施（第1（2）條），並引進一項計劃處理附表1第2（c）段所指的該類憑藉血緣成為永久性居民的人士。根據此項計劃，任何人依據第2（c）段所獲得的永久性居民的身分，只可藉其持有以下文件確立 — “（a）發予他的有效旅行證件，和同樣是發予他並且附貼於該旅行證件上的有效居留權證明書； （b）發予他的有效特區護照；或 （c） 發予他的有效永久性居民身分證。” （見第2AA（1）條）。任何持有有效的特區護照或有效的永久性居民身分證的人士，其居留權早已確立。誠如前述，有效的永久性居民身分證的定義是載有“持有人擁有香港居留權”字句的身分證。此外，申請領取護照的條件之一是申請人須持有永久性居民身分證（見《香港特別行政區護照條例》（香港法例第539章）第3（2）條）。因此，雖然法例列出了三種文件，然而，只有（a）項是與要求憑藉血緣取得永久性居民身分的人士有關。此類人士只可藉持有有效旅行證件及附貼於該旅行證件上的有效居留權證明書才能確立其身分。以下將簡稱該等文件為“旅行證件”及“居留權證明書”。
而提述該等文件時應視為提述有效文件。“第3號條例”載有居留權證明書的法定表格，該表格列明： “本證明書持有人在香港特別行政區的居留權已確立。本證明書必須附貼於本證明書持有人的有效旅行證件上，方為有效。” 此段陳述強調居留權證明書本身不能單獨使用，必須附貼於旅行證件方為有效。 第2AA（2）條規定： “ （2） 任何人憑藉其作為附表1第2（c）段所指的香港特別行政區永久性居民而享有的香港居留權，只在按照第（1）款確立了他作為該類永久性居民的身分時方可行使，而據此當其作為該類永久性居民的身分並無如此確立時，他就本條例而言須視作並不享有香港居留權。” 所以，若某人並非持有附貼居留權證明書的旅行證件，則視作並不享有香港居留權。 居留權證明書的申請可向入境處處長提出，並須按處長以憲報公告指明的方式提出（見第2AB（1）及（2）條）。第2AB（4）條明確規定此類公告不是附屬法例。此條文的作用是使該公告不須受立法局根據《釋義及通則條例》（香港法例第1章）第34條所提出的修訂所限制。若申請人能提出處長所指明的證明，令處長信納申請人屬附表1第2（c）段所指的永久性居民，則處長須發出證明書（第2AB（6）
條）。若處長不信納申請人屬附表1第2（c）段所指的永久性居民，則須拒絕該申請，並將理由通知申請人，以及告知申請人向入境事務審裁處上訴的權利。 第2AD條是關於上訴的問題。審裁處須“就其所裁斷的事實”裁定上訴人是否屬附表1第2（c）段所指的憑藉血緣成為永久性居民的人士。審裁處作出的決定為最終決定。除非經過審裁處作出決定，以及在審裁處作出決定之前，任何人不得申請司法覆核（第2AE條）。 申請人不得在他留在香港的任何時間內提出上訴（第2AD（3）條）。若入境處處長已向他發出遣送離境令，他不得以其享有居留權為理由，就該命令向審裁處上訴。為了強化上述計劃：即他只可藉持有附貼居留權證明書的旅行證件確立其身分，“第3號條例”引入第53D（3）條，該條文規定，除非上訴人的身分已按照第2AA（1）條所訂明的方式確立，否則審裁處不得以上訴人憑藉附表1第2（c）段所指的身分而享有居留權為理由，就該遣送離境令的上訴判上訴人得直。 “第3號條例”訂立了一些新的刑事罪行，包括為報酬而申請居留權證明書、為取得證明書作出虛假陳述、偽造證明書、使用及管有偽造的或經改動的證明書等罪行。然而，追溯條文並不適用於新的罪行，這些罪行只在立例後才生效。
公告 該份於1997年7月16日在憲報刊登、日期為1997年7月11日的公告（以下稱為“該公告”），公佈入境處處長已訂立列於“該公告”內之條文。關於在申請居留權證明書時居住在中國內地的人士，“該公告”指明其申請必須“通過當地的公安廳出入境管理處提出”（甲（i）段）。此外，“該公告”又述明，上述人士根據中國內地現行法律向公安廳出入境管理處所遞交的到香港定居的‘前往港澳通行證’申請書，可視為居留權證明書的申請書（見乙段）。就申請居留權證明書而言，在以下情況下，任何人士如在緊接進入香港境內之前通常居於內地，則被視為在其逗留在香港的期間是居住在內地：（i）若他未獲准許而在香港入境，後又未獲入境處處長授權的情況下在香港逗留，或（ii）同樣，若他獲准許在香港入境，並在如此入境後受逗留條件所規限（丙段）。“該公告”（丁段）又列明申請書須載有何類陳述和資料。若申請人居住在中國以外地方，其申請則須通過當地中國大使館或領事館或以郵遞方式向入境處處長提出，而若居住在台灣或澳門，則規定以郵遞方式提出（甲（ii）及（iii）段）。 “該公告”提及與申請出境通行證有關的內地法律。內地法律有管制措施規管中國公民往來香港。現行的內地法律是於1985年11月22日公佈的《公民出境入境管理法》第17條，以及於1986年12月25日公布的《中國公民因私事往來香港地區或者澳門地區的暫行管理辦法》。中國公民出
境須取得出境批准。公安廳出入境管理處是負責發出通行證之機關。一般所指的單程證是為前來定居人士而發，而單程證的簽發受定額制度規限。《暫行管理辦法》第5條規定： “ 內地公民因私事前往香港、澳門定居，實行定額審批的辦法，以利於維護和保持香港和澳門的經濟繁榮和社會穩定。” 一般所指的雙程證，則是發給非為定居而來港的人士。 根據代表入境處處長作出並送交法院的誓章證詞所載，內地機關已實行單程證定額制度多年，而定額數目亦時有改變。現時定額為每天150名。據該誓章證詞所載，情況如下： “ ．．．．內地居民前來定居的合法途徑，仍然是必須取得單程證。公安部出入境管理廳在各省、市或縣的有關辦事處或部門負責決定是否批准發出單程證。入境事務處並無參與涉及輪候單程證之事宜，亦無參與分配或批准發出單程證之事宜，該等事宜是由公安部出入境管理廳單方面負責，而且情況一向如此。關於每天的單程證定額數目，雖然內地機關會徵詢香港機關的意見，然而最終決定仍然是由內地機關作出。換言之，問題並不僅是根據香港法律某人是否有權在香港入境或居留，而是有意在香港入境或居留的內地居民也必須符合關於在中國離境適用的內地法律。”
上述誓章證詞對有關機關的描述與“該公告”之描述略有不同。本法院將會採用“該公告”之描述，以下稱之為“內地出入境管理處”。此誓章證詞又指出，截至1997年年中為止已約有66,000名在二十歲以下的人士提出單程證申請，聲稱屬第24（2）條第三類別以內的人士。 我等注意到內地法律規定中國公民必須得到出境批准方可出境；而與本上訴有關的是上述關於中國公民從內地前來香港（即中國的另一部分）的內地法律。 “第3號條例 ”計劃的實行 就內地居民聲稱根據《入境條例》新附表1第2（c）段憑藉血緣而擁有永久性居民身分一事，本法院現闡述有關計劃之運作： 內地居民須要通過其在中國內地所居地的“內地出入境管理處”向入境處處長申請居留權證明書。向“內地出入境管理處”所遞交的單程證申請書，可視為居留權的申請書。 經確定其身分、國籍及其父母的婚姻是否有效後，“內地出入境管理處”便會將其申請書送交入境處處長處理。若入境處處長接納其申請，則會發出居留權證明書，而證明書亦會送交內地出入境管理處。
他要受單程證定額制度所規限。內地機關負責實行該定額制度，並決定是否發出單程證。在“內地出入境管理處”批准發出單程證給他時，即會將其居留權證明書附貼於該單程證上。這單程證便是“第3號條例”引入的計劃所預計的有效旅行證件。 他的身分只可藉其持有附貼居留權證明書的單程證確立。若沒有該單程證，則須視作不享有居留權。即使入境處處長信納他憑藉血緣取得永久性居民身分並已發出居留權證明書（證明書會送交“內地出入境管理處”），情況也是如此。按照此計劃，單靠該證明書並不足以確立其身分，其身分只可藉持有附貼該證明書的單程證才能確立。 他不可來香港提出申請，而必須向其所居地的“內地出入境管理處”提出。就此計劃的運作而言，若他身處香港，則視為在其逗留在香港的期間是居住在中國內地。他不得藉提出證據以證明其身分來抗拒根據《入境條例》發出的遣送離境令。他只可藉持有附貼居留權證明書的單程證才能確立其身分。 申請人
各申請人的案情可作簡單陳述如下： 吳嘉玲小姐及吳丹丹小姐（終院民事上訴1998年第14號） 她們兩人是姊妹，是內地出生的中國籍人士。她倆分別於1987年及1989年出生，當時她們的父親已是在香港通常居住連續七年以上的中國公民。他在1976年來港，而兩名申請人則於1997年7月1日沒有通過入境管制站而進入本港。1997年7月4日她們向入境處報到，堅稱根據《基本法》第24（2）條第三類別擁有居留權，但她們的權利未獲入境處處長承認。入境處將她們拘捕，其後批准他們領取擔保書外出。 徐權能先生（終院民事上訴1998年第15號） 他是內地出生的中國籍人士，在1978年出生時，他父親已是在香港通常居住連續七年以上的中國公民，並早於1962年來港，而申請人則於1997年7月1日沒有通過入境管制站而進入本港。1997年7月3日，他向入境處報到，並堅稱根據《基本法》第24（2）條第三類別擁有居留權，但他的權利未獲入境處處長承認。入境處將他拘捕，其後批准他領取擔保書外出。
張麗華小姐（終院民事上訴1998年第16號） 她是內地出生的中國籍人士，在1989年出生時，她父親已是在香港通常居住連續七年以上的中國公民，並早於1967年來港。她不是父母所婚生的，其母親在她出生後的第二天便不幸去世。1994年12月，張小姐持雙程證來港。1995年1月，她的雙程證有效期屆滿，之後一直逾期居留。1997年7月15日，她向入境處報到，並堅稱根據《基本法》第24（2）條第三類別擁有居留權。但她的權利未獲入境處處長承認。入境處將她拘捕，她被拘留4日後，於1997年7月19日獲批准領取擔保書外出。 申請人之立場 兩名吳氏姊妹及徐先生均在1997年7月1日抵港，而張小姐則於此日之前抵步。除了徐先生外，她們均為未成年人，但他們的實際年齡對本案並不重要。我等明瞭現時大約有1,000至1,500名於1997年7月10日之前抵港的人士聲稱他們均屬《基本法》第24（2）條第三類別所述之永久性居民。
就吳氏姊妹及徐先生而言，入境處處長承認他們均屬《基本法》第24（2）條第三類別所述之永久性居民，在他們出生時他們的父母其中一人（即父親）屬《基本法》第24（2）條第二類別所述之永久性居民，而他們是這些居民“在香港以外所生的中國籍子女”，他們的父親則是在香港通常居住連續七年以上的中國公民。 至於張小姐，入境處處長則以她是非婚生為理由，稱她不屬《基本法》第24（2）條所述之永久性居民。但若非持有此論點，則入境處處長會承認張小姐屬《基本法》第24（2）條第三類別所述之永久性居民。她亦是在香港以外出生之中國籍人士，而她出生時，其父親屬第24（2）條第二類別所述之永久性居民。 他們的父親已分別在港居留一段頗長時間。徐先生的父親早於1962年來港。張小姐的父親於1967年抵港，而吳氏姊妹的父親則於1976年到港。雖然第24（2）條第二類別所述的永久性居民必須為在香港通常居住連續七年以上的中國公民，但我等應該留意到本案所涉及的申請人的父親在香港居住已遠遠超過七年，並且早已成為我們社會的一分子。
申請人堅稱他們屬第24（2）條所述之永久性居民，故享有第24（3）條所賦予之居留權。張小姐堅稱她雖屬非婚生，但這不應影響她的永久性居民的身分。 入境處處長的立場 入境處處長所持的立場為申請人受“第3號條例”引進的計劃所限制。根據這項計劃，憑藉血緣而享有之永久性居民身分只能以附貼有居港權證明書的單程通行證予以確立。上述申請人無一持有這種通行證，更遑論是附貼有此種居港權證明書的通行證。根據“第3號條例”第2AA（2）條，他們須視作不享有居留權。根據這項計劃，他們不能在香港逗留，必須返回內地向“內地出入境管理處”申請居權證，而向該管理處提出之單程證申請可視為居權證申請。有關人士只能持有附貼有這種居權證的單程證才可確立其永久性居民身分，而在此身分獲確立前，他須視作不享有居留權。 儘管入境處處長信納申請人（張小姐除外）屬第24（2）條第三類別所述之永久性居民，亦同時承認若張小姐不是非婚生子女，她也屬第24（2）條第三類別所述之永久性居民，但他們也因上述理由而不享有居留權。此外，儘管申請人在1997年7月10日計劃實施之前已扺港，情況亦是一樣。入境處處長堅稱，由於在1997年7月10日制定之“第3號條例”當作自1997年7月1日起實施，故申請人仍受該項計劃所限制。
透過司法覆核提出異議 各申請人提出司法覆核，要求法院作出多項宣告及命令，以推翻入境處處長的決定。這些均屬例案。 原訟庭法官之判決 原訟庭法官（祈彥輝）只在非婚生子女問題上裁定張小姐勝訴，在其他事項上則裁定各申請人均敗訴，並撤銷他們的司法覆核申請。（見[1997]《HKLRD》1081及[1997]3《HKC》64）。 上訴法庭之判決 各申請人向上訴法庭提出上訴。就張小姐一案而言，入境處處長就非婚生子女問題之判決提出上訴，而張小姐則就司法覆核之判決交相上訴。 由高等法院首席法官陳兆愷、上訴法庭副庭長黎守律及副庭長馬天敏組成之上訴法庭維持原訟庭法官之判決。他們聆聽上訴後，分兩部分作出判決。第一部分處理“第2號條例”及“第3號條例”所產生的問題（見[1998]1《HKC》617），而第二部分則處理臨時立法會的合法性問題（見[1998]1《HKLRD》772及[1998]2《HKC》382）。關於第一部分的問題，上訴法庭維持原訟庭法官就“第2號條例”判張小姐勝訴之判決，以及維持就“第3號條例”的合法性問題判入境處處
長勝訴之判決。至於追溯條文方面，上訴法庭則以多數裁定此條文有效，但卻不適用於1997年7月1日前抵港之人士。至於第二部分之問題，上訴法庭裁定法庭受較早前該庭在香港特別行政區訴馬維騉一案的判決所約束（見[1997]《HKLRD》761及[1997] 2《HKC》315（1997年7月））。上訴法庭在該案裁定臨時立法會乃獲合法授權而成立。 上訴法庭作出判決後，徐先生獲發單程證，並以此證離開及再次進入本港。但本案的關鍵並非在此。就本上訴而言，處理徐先生的案件時，應把他當作仍在提出司法覆核申請時的階段，並無持有單程證般處理。 上訴法庭批准申請人向本法院上訴。關於張小姐一案方面，入境處處長就非婚生子女問題之判決提出上訴，而張小姐則交相上訴。至於其他案件，則屬各申請人提出之上訴。 祈彥輝法官及上訴法庭用心撰寫的判詞，特別是高等法院首席法官陳兆愷的判詞，對我等幫助很大。 所爭議之問題 在本上訴案中所爭議之問題如下：- （1） 終審法院在審理這些案件時是否有司法管轄權解釋《基本法》的有關條款，或是否必須根據《基本法》第158條請全國人民代表大會常務委會對
有關條款作出解釋（“提交人大解釋問題”）。 （2） 引進居權證計劃的“第3號條例”是否違憲，以及倘若違憲，則“第3號條例”在那方面違憲（““第3號條例”是否違憲問題”）。 （3） “第3號條例”第1（2）條這項賦予追溯力的條文將該條例當作自1997年7月1日起實施是否符合憲法（“追溯效力問題”）。
（4） “第2號條例”引進的附表1第1（2）（b）段是否違憲。該項條文的後果是，如果一名子女屬非婚生，則只有因父母其後結婚而獲確立婚生地位後，父親與該子女之間才可視為有“父母與子女的關係”存在，並僅以此情況為限（“非婚生子女問題”）。 （5） 臨時立法會是否一個合法組成的機構（“臨時立法會問題”）。倘若臨立會不是一個合法組成的機構，則由其制定之“第3號條例”亦順理成章是違憲的。 法律代表 在本法院以及下屬法院進行訴訟時，申請人均由法律援助署以公帑延聘律師出任他們的法律代表。本案在下屬法院審理時，申請人是由資深大律師張健利代表，而有關臨時立法會問題則由資深大律師戴啟思代表。至於入境處的法律代表則為資深大律師馬道立。他們以及由他們領導的法律代表團對本法院提供了相當大的幫助，我等在此謹表謝意。 憲法賦予法院的司法管轄權 在處理上述受爭議的問題前，我等首先說明憲法賦予香港特別行政區法院的司法管轄權，然後再為解釋《基本法》
制定恰當的處理方法；這兩點均至為重要。 香港特區享有獨立的司法權和終審權（《基本法》第19（1）條），而特區各級法院是特區的司法機關，行使特區的審判權（《基本法》第80條）。 在行使《基本法》所賦予的司法權時，特區的法院有責任執行及解釋《基本法》。毫無疑問，香港法院有權審核特區立法機關所制定的法例或行政機關之行為是否符合《基本法》，倘若發現有抵觸《基本法》的情況出現，則法院有權裁定有關法例或行為無效。法院行使這方面的司法管轄權乃責無旁貸，沒有酌情餘地。因此，若確實有抵觸之情況，則法院最低限度必須就該抵觸部分，裁定某法例或某行政行為無效。雖然這點未受質疑，但我等應藉此機會毫不含糊地予以闡明。行使這方面的司法管轄權時，法院是按《基本法》執行憲法上的職務，以憲法制衡政府的行政及立法機構，確保它們依《基本法》行事。 一直引起爭議的問題是，特區法院是否具有司法管轄權去審核全國人民代表大會或其常務委員會的立法行為（以下簡稱為“行為”）是否符合《基本法》，以及倘若發現其抵觸《基本法》時，特區法院是否具有司法管轄權去宣佈此等行為無效。依我等之見，特區法院確實有此司法管轄權，而且有責任在發現有抵觸時，宣佈此等行為無效。關於這點，我等應藉此機會毫不含糊地予以闡明。
根據《中國憲法》（第57及58條），全國人民代表大會是最高國家權力機關，其常設機關是常務委員會，二者行使國家立法權，故此其行為乃屬主權國行使主權的行為。特區法院審核上述二者之行為是否符合《基本法》的司法管轄權是源自主權國，因為全國人民代表大會是根據《中國憲法》第31條而制定特區的《基本法》的。《基本法》既是全國性法律，又是特區的憲法。 與其他憲法一樣，《基本法》既分配權力，也界定權限，並且訂明各項基本權利及自由。與其他憲法一樣，任何抵觸《基本法》的法律均屬無效並須作廢。根據《基本法》，特區法院在《基本法》賦予特區高度自治的原則下享有獨立的司法權。當涉及是否有抵觸《基本法》及法律是否有效的問題出現時，這些問題均由特區法院裁定。因此，全國人民代表大會或其常務委員會的行為是否抵觸《基本法》這問題由特區法院裁定，但當然特區法院所作的決定亦必須受《基本法》的條款限制。 鑑於制定《基本法》是為了按照《聯合聲明》所宣示和具體說明的內容，落實維持香港五十年不變的中國對香港的基本方針政策，上述論點便更具說服力。《基本法》第159（4）條訂明《基本法》的任何修改均不得抵觸既定的基本方針政策。為了行使司法管轄權去執行及解釋《基本法》，法院必須具有上述的司法管轄權去審核全國人民代表大會及其常務委員會的行為，以確保這些行為符合《基本法》。
香港特別行政區訴馬維騉一案是涉及普通法在新制度下的繼續存在以及臨時立法會的合法性問題。上訴法庭（由高等法院首席法官陳兆愷、上訴法庭副庭長黎守律及馬天敏組成）接納政府的陳詞，裁定由於全國人民代表大會的行為是主權行為，因此特區法院並不擁有司法管轄權去質疑這些行為的合法性。上訴法庭並裁定特區法院的司法管轄權只局限於審核是否存在主權國或其代表的行為（而非行為的合法性）。我等認為上訴法庭就特區法院的司法管轄權所作出的這項結論是錯誤的，上文所述的立場才是正確的。 上訴法庭基於《基本法》第19（2）條作出其結論。第19（2）條規定：- “ 香港特別行政區法院除繼續保持香港原有法律制度和原則對法院審判權所作的限制外，對香港特別行政區所有的案件均有審判權。” 政府在該案所陳述的論據為1997年7月1日前，香港法院也不能質疑英國國會通過的法例是否違憲，即是否違反英國的不成文憲法或香港作為殖民地的憲法文件《英皇制誥》。因此，這是《基本法》第19（2）條所設想的“原有法律制度和原則”對香港法院審判權所作的一種限制。所以政府辯稱在1997年7月1日後，這限制同樣適用於全國人民代表大會的行為。上訴法庭接納了政府的論據。 把舊制度與此相提並論是對問題有所誤解。1997年7
月1日前，香港是英國殖民地。根據普通法，英國國會擁有最高權力為香港立法而香港法院不能質疑這項權力。 基於已申述的理由，在新制度下，情況截然不同。《基本法》第19（2）條規定“原有法律制度和原則”對憲法賦予法院的司法管轄權有所限制。但這條款不能把在舊制度下純粹與英國國會法例有關的限制引進新的制度內。 我等應指出代表入境處處長的資深大律師馬先生在本法院聆訊本案時已不再堅持政府較早前在香港特別行政區訴馬維騉一案所持的立場。他實際上同意特區法院擁有我等所述之司法管轄權去審核全國人民代表大會及其常務委員會的行為是否符合《基本法》，並且同意該案在這方面的判決與我等所闡述之立場有抵觸之處，實屬錯誤。 我等亦應指出高院首席法官陳兆愷在本案就臨時立法會問題作出判決時表示，他在香港特別行政區訴馬維騉一案就特區法院司法管轄權所發表的意見只是針對該案的情況而言，不可理解為全國人民代表大會通過的法律及其行為凌駕《基本法》；他又表示他在該案把特區法院與殖民地時代法院相提並論可能不大恰當，並謂可能在某些適當的案件
中，特區法院有司法管轄權去審核影響特區的全國人民代表大會的行為及其通過的法律。 對法院的司法管轄權所作出的任何限制必須以《基本法》為依據。如上文所述，《基本法》第19（2）條提及繼續保持香港原有法律制度和原則對法院審判權所作的限制。第19（3）條便提供了一個例子。第19（3）條規定：- “香港特別行政區法院對國防、外交等國家行為無管轄權。．．．．．” 《基本法》第158條亦規限終審法院不得在該條款所指的情況下，對《基本法》“關於中央人民政府管理的事務或中央和香港特別行政區關係”的條款進行解釋，且終審法院有責任請全國人民代表大會常務委員會對有關條款作出解釋。稍後討論到有關“提交人大解釋的問題”時，我等會再處理《基本法》第158條的問題。
有關解釋《基本法》的處理方法 首先我等必須認識及了解這份文件的特性。《基本法》是為貫徹獨一無二的“一國兩制”原則而制定的憲法性文件，具有不可輕易修改的地位。制定憲法性文件時，一般都會採用涵義廣泛和概括性的語言。憲法是一份具有靈活性的文件，旨在配合時代轉變和適應環境的需要。 解釋《基本法》這樣的憲法時，法院均會採用考慮立法目的這種取向，而這方法亦已被廣泛接納。法院之所以有必要以這種取向來解釋憲法，是因為憲法只陳述一般原則及表明目的，而不會流於講究細節和界定詞義，故必然有不詳盡及含糊不清之處。在解決這些疑難時，法院必須根據憲法本身及憲法以外的其他有關資料確定憲法所宣示的原則及目的，並把這些原則和目的加以貫徹落實。因此，在確定文件的真正含義時，法院必須考慮文件的目的和有關條款，同時也須按文件的背景來考慮文本的字句，而文件的背景對解釋憲法性文件尤為重要。
關於目的方面，制定《基本法》的目的是按照《聯合聲明》所闡述及具體說明的中國對香港的基本方針政策，在“一國兩制”的原則下成立與中華人民共和國不可分離的香港特別行政區，並實行高度自治。在確定《基本法》某項條款的目的時，法院可考慮該條款的性質，或《基本法》的其他條款，或參照包括《聯合聲明》在內的其他有關外來資料。 有關文本所使用的字句，法院必須避免採用只從字面上的意義，或從技術層面，或狹義的角度，或以生搬硬套的處理方法詮釋文意。法院必須考慮文本的背景。《基本法》某項條款的文意可從《基本法》本身及包括《聯合聲明》在內的其他有關外來資料中找到。法院也可藉用語傳統及文字慣用法去了解所用的文字的意思。 《基本法》第三章一開始便界定包括永久性居民及非永久性居民在內的香港居民類別的定義，接着訂明香港居民的權利和義務，其中包括永久性居民享有居留權。界定了香港居民類別的定義後，《基本法》第三章接着列明受憲法保障的各項自由；這些自由是兩制中香港制度的重心所在。為了令香港居民充分享有上述憲法所保障的各項基本權利及自由，法院在解釋第三章內有關那些受保障的權利及自由的
條文時，應該採納寬鬆的解釋。 然而，法院在解釋有關界定香港居民定義的條款，特別是關於永久性居民類別的條款時（有別於解釋該等居民的權利自由等憲法保障），則只應參照任何可確定的目的及背景來考慮這些條款的字句。背景包括《基本法》的其他條款。適用於香港並根據第39條繼續有效的《公民權利和政治權利國際公約》（“國際人權公約”）的有關條文，以及任何從該公約歸納出來的有關原則，尤其有助於解釋這些條款的字句。 上文所列關於在解釋《基本法》時法院所應採納的原則，實非詳盡無遺，亦不可能一一盡列。憲法文件的詮釋跟其他文件的詮釋一樣，主要是針對具體問題。一旦出現詮釋問題時，法院便會處理這些問題所帶來的疑難，並在有需要時訂立一些原則加以解決。 我等現轉而處理所爭議的問題。 提交人大解釋問題
《基本法》第158條已在本判決書的較前部分原文照錄。第158（1）條規定《基本法》的解釋權，屬於全國人民代表大會常務委員會。第158（2）條規定“人大常委會”“授權”特區法院“在審理案件時對本法關於香港特別行政區自治範圍內的條款自行解釋”。顯而易見，這包含了憲法上的授權，而雙方大律師也接納這論點。我等認為，“自行”二字強調了特區的高度自治及其法院的獨立性。 但特區法院的司法管轄權並非局限於解釋這類條款。因為，第158（3）條規定特區法院在審理案件時對《基本法》的“其他條款也可解釋”。 然而對終審法院來說，這項司法管轄權存在一種規限。如果特區法院： “ 在審理案件時需要對本法關於中央人民政府管理的事務或中央和香港特別行政區關係的條款進行解釋，而該條款的解釋又影響到案件的判決，在對該案件作出不可上訴的終局判決前，應由香港特別行政區終審法院請全國人民代表大會常務委員會對有關條款作出解釋。” 由於只有終審法院才能對案件作出不可上訴的終局判決，所以這條款規限了終審法院的司法管轄權。當符合上述指定的條件時，終審法院便有責任請“人大常委會”解釋有關的條款。
第158（3）條接著規定當“人大常委會”對該等條款作出解釋，“香港特別行政區法院在引用該條款時，應以“人大常委會”的解釋為準。但在此以前作出的判決不受影響。” 第158（4）條規定“人大常委會”有責任在決定如何解釋有關條款前，先徵詢其所屬的《基本法》委員會的意見。《基本法》委員會是全國人民代表大會在1990年4月4日會議通過設立的。當日的議決是《基本法》委員會為“人大常委會”下設的工作委員會，由十二名成員組成；由“人大常委會”任命內地和香港人士各六名，其中包括法律界人士。香港委員須由香港特別行政區行政長官，立法會主席和終審法院首席法官聯合提名。 根據《基本法》第158條，香港法院是在“審理案件”時才有權解釋《基本法》條款。言下之意即是當法院並非在審理案件時，便沒有這項權力。這情況反映出我們的制度內一套確立已久的原則：法院的職責是審判裁決，而非提供參考意見。特區法院有以下的解釋權。《基本法》第158條提及： （a） 屬特區自治範圍內的條款，及 （b） 《基本法》的其他條款。在這些其他條款內，有兩種屬範圍之外的類別，即涉及（i）中央人民政府管理的事務，或涉及（ii）中央和香港特別行政區關係的條款。我等將（i）或（ii）條款簡稱為“範圍之外的條款”。
根據第158條，終審法院以下的各級法院，均有權解釋（a）及（b）項內的條款，包括“範圍之外的條款”。終審法院有權解釋（a）項內的條款，及（b）項內的其他條款，但不包括“範圍之外的條款”。 因此，終審法院以下的各級法院，有權解釋所有的《基本法》條款，不受任何限制。唯一受限制的是終審法院的司法管轄權。第158（2）條的措辭強調特區的各級法院均有權“自行”解釋在特區自治範圍內的《基本法》條款。 以終審法院來說，當符合以下兩項條件時，便有責任將有關條款提交“人大常委會”解釋：
（1）第一，當有關的《基本法》條款（a）關乎中央人民政府管理的事務，或（b）關乎中央和特區的關係，即為“範圍之外的條款”。以下簡稱此條件為“類別條件”。 （2）第二，當終審法院在審理案件時，有需要解釋這些條款（即“範圍之外的條款”），而這些條款的解釋將會影響案件的判決。以下簡稱此條件為“有需要條件”。 我等認為在審理案件時，唯獨終審法院才可決定某條款是否已符合上述兩項條件；也只有終審法院，而非全國人民代表大會，才可決定該條款是否已符合“類別條件”，即是否屬於“範圍之外的條款”。代表申請人的大律師及代表入境處處長的大律師也接納這個論點。 如果該條款不符合“類別條件”，事情就會告一段落。就算本法院需要解釋該有關條款，而該項解釋又會影響案件的判決，該條款也會因為不屬於“範圍之外的條款”而不能符合“有需要條件”。 如果該條款符合“類別條件”，也只可由終審法院決定有關案件是否符合“有需要條件”。 如果終審法院認為該“範圍之外的條款”已符合上述兩項條件，便必須請“人大常委會”解釋有關之條款。我等強調提交“人大常委會”解釋的是某些特定的“範圍之外的
條款”而非一般性的解釋。 誠如前述，入境處處長接納，若張小姐不是因為非婚生子女這點，她與其他申請人一樣都屬《基本法》第24（2）條第三類別的永久性居民。第24（3）條規定永久性居民有居留權。根據“第3號條例”引進的居權證計劃，申請人除非擁有內地簽發的單程證，而單程證上又附貼了由入境處處長簽發的居留權證明書，否則並不享有居留權。入境處處長請求法院裁定“第3號條例”是符合憲法的，原因是《基本法》第24條受第22（4）條規限。第22（4）條規定中國其他地區的人士若要進入特區，必須辦理批准手續。這條款還進一步規定進入特區定居的人數，要由中央人民政府主管部門徵求特區政府的意見後確定。入境處處長的論點是由於申請人是第22（4）條所述的來自中國其他地區的人士，一定要先得到內地當局批准才可進入特區，而這規定也成為居權證計劃的憲法基礎，即申請人必須獲得以單程證形式簽發的出境批准，才可享有居留權。
代表入境處處長的資深大律師馬先生指出第22（4）條是在《基本法》的第二章內，而第二章的標題是“中央和香港特別行政區的關係”。他認為第22（4）條是“範圍之外的條款”，原因是這條款符合《基本法》第158條所述兩種“範圍之外的類別”。他認為出境批准是關乎中央人民政府管理的事務，而人民由內地進入特區則關乎中央和香港特區的關係。根據入境處處長的論點，本法院在審理本案時，必須解釋第22（4）條。所以，他認為這條款符合了“類別條件”及“有需要條件”。 資深大律師馬先生清楚指出入境處處長並非要求法院根據《基本法》第158條，將這條款提交“人大常委會”解釋，但他一定要作出這些陳詞，令本法院能夠考慮應否將該條款提交“人大常委會”。我等覺得代表入境處處長的資深大律師馬先生作出這些陳詞是恰當的，因為這是關乎法院在憲法上的司法管轄權。 雖然資深大律師馬先生同時依賴該兩種“範圍之外的類別”，但以目前處理的問題來說，我等會純粹基於第22（4）條涉及中央政府與特區的關係而假設第22（4）條為一項“範圍之外的條款”。
我等面對的問題關鍵在於法院在考慮該條款是否符合“類別條件”時，應該採用何種考慮原則。 資深大律師馬先生認為當（a）法院在解釋X條款時（以本案來說，即《基本法》第24條），而該條款屬關於特區自治範圍內的條款，因而並非“範圍之外的條款”，但法院發覺（b）屬關於範圍之外的Y條款（以本案來說，即第22（4）條）是否與解釋X條款有關是一個可爭論的問題，則在這情況下，法院應根據第158條，將這條款提交“人大常委會”。 我等現在要考慮的是應否根據第158條將該條款提交“人大常委會”。現階段本法院需要處理的是，有關論點是否一個可爭論的問題，而非就解釋的問題作出決定。如果該條款須要提交“人大常委會”，便會由“人大常委會”處理；如果不須提交的話，便會由本法院處理。任何論點如果是顯而易見的歪理，當然便沒有爭論餘地。如果本法院在現階段決定這論點是不可爭論的話，提交的問題便告一段落。如果法院決定這論點是可爭論的話，便會進一步考慮是否符合“類別條件”及“有需要條件”。就本案來說，一項“範圍之外的條款”(第22(4)條)是否與解釋一項“非範圍之外的條款”(第24條)有關是一個可爭論的問題。 在決定應採用何種考慮原則來決定該條款是否符合“類別條件”時，法院須要採用“立法目的”這一原則。《基本法》第158條其中一個重要的目的是“人大常委會”授權香港法院，包括終審法院，“自行”解釋《基本法》中屬“範圍之外的條款”以外的各章節，特別是關於屬特區自治範圍
內的條款。這是特區高度自治的必不可少的部分。 從上述的觀點出發，讓我等討論應採用何種考慮原則。X條款（這裡指第24條）是關於特區自治範圍內的條款，在作出解釋時，必須考慮其背景，這自然包括《基本法》的其他條款，而這些條款可能在某幾方面與解釋X條款有關。例如這些條款可能透過增減修訂等形式來規限X條款，或潤飾X條款的意思，又或提供指標來解釋X條款。根據資深大律師馬先生的論點，當一項“範圍之外的條款”（這裡指第22（4）條）如上述般與X條款有關，便須提交“人大常委會”。提交的主題不是要求解釋X條款，因它並非“範圍之外的條款”；馬先生的論點似是：提交的主題是請“人大常委會”解釋該“範圍之外的條款”，而該項解釋只限於涉及X條款的解釋。這樣的提交，會收回了本法院對解釋《基本法》中關於屬特區自治範圍內的條款（X條款）的司法管轄權。我等認為這樣做會嚴重削弱特區的自治，而且是不對的。 我等認為，在考慮該條款是否符合“類別條件”時，應採用代表申請人的資深大律師張先生提出的考慮原則 — 實質上，法院審理案件時最主要需要解釋的是哪條條款？如果答案是一條“範圍之外的條款”，本法院必須將之提交“人大常委會”。如果最主要需要解釋的並非“範圍之外的條款”，便不須提交。在這情況下，即使一條“範圍之外的條款”可以爭辯地說成與“非範圍之外的條款”的解釋有關，甚至規限了“非範圍之外的條款”時，法院仍毋須將問題提交“人大常委會”。
這考慮原則落實了《基本法》第158條的兩項主要目的，就是賦予“人大常委會”有權解釋《基本法》，尤其是“範圍之外的條款”，並同時授權特區法院解釋“非範圍之外的條款”，特別是屬自治範圍內的條款，特區法院更可“自行”解釋。 我等覺得相當重要的是：《基本法》第158條規定只在解釋“範圍之外的條款”時，才須提交“人大常委會”。當多條條款（包括“範圍之外的條款”）與解決案中涉及的一般性解釋問題有關時，第158條並沒有規定法院須請“人大常委會”作一般性的解釋。 法院在採用這考慮原則來審理此案時，實質上最主要需要解釋的是第24條，即關於永久性居民的居留權及該項權利內容的規定，而申請人上訴要求行使的權利，正是源自這條款。在這情形下，本法院覺得毋須把這條款提交“人大常委會”解釋，儘管第22（4）條是否與解釋第24條有關是一個可爭論的問題。 “第3號條例”是否違憲 關於這項爭論，問題的關鍵在於《基本法》第22（4）條是否規限了第24（3）條所訂的居留權。原訟庭法官裁定後者是受前者規限。他認為這可能是削弱特區高度自治的一個例子，但這是第22（4）條所認可的。上訴法庭的兩位副
庭長黎守律及馬天敏都同意原訟庭法官的取向。高等法院首席法官陳兆愷也裁定這兩條條款是互有關連，然而他認為第22（4）條限制了仍在內地的人士去行使這居港權利。如果恰當地解釋《基本法》後，本法院的意見跟原訟庭及上訴法庭的法官意見不同的話 — 該兩條條款並無關連，而第24條也不受第22（4）條影響，則在這情形下，“第3號條例”要求永久性居民要先持有單程證才可享有居留權便缺乏憲法上的依據。代表入境處處長的資深大律師馬先生也接納這個論點。至於要求永久性居民持有居權證來核實其聲稱，則是另一回事。
本法院必須強調，若張小姐不是受非婚生的問題所影響，入境處處長便會接納她和本案其他申請人一樣都屬第24（2）條第三類別所述的永久性居民。本法院現在並非要處理永久性居民類別的定義，而是要處理第24（3）條所述的人士的居留權問題，而該等人士毫無疑問屬永久性居民。 第24（3）條規定：永久性居民在特區“享有居留權”。《入境條例》（2A條）界定了永久性居民享有的權利，即有權入境，不會被施加任何逗留條件，不受任何遞解離境令或遣送離境令的約束。法例界定的居留權，類似普通法的居留權概念。普通法內的居留權曾被描述為“．．．．進入[該司法管轄區]的權利，不受任何障礙或阻礙，任由（居留權擁有人）喜歡何時入境及[隨己意]在境內逗留多久”（見1972年英國上訴案例：Director of Public Prosecutions v. Bhagwan [1972 ]《AC》 60，見第74頁B行。）因此，進入司法管轄區的權利，或根據法例所界定的入境權利，正是居留權的要素。 本法院在前文界定了永久性居民類別後，已斷定在解釋保障他們權利的憲法條款時，應採用寬鬆的取向。誠如代表申請人的資深大律師張先生所指出，居留權實為一核心權利。事實上，入境權是居留權之要素，如沒有居留權和入境權，申請人便難以享有其他獲憲法保障的權利和自由，特別是選舉權和參選權。在採用寬鬆的取向時，本法院認為，對於任何指第22（4）條削弱了核心權利的論點均應非常仔細研究。
第24（3）條賦予永久性居民不受限制的居留權。如果第22（4）條規限了第24（3）條這個論點是正確的話，那些亳無疑問擁有永久性居民身分卻仍在內地居住的人士，其居留權利便毫無保障。特區的憲法一方面賦予他們在特區內符合憲法的居留權，但另一方面，卻令這權利受國內機關的酌情權所限制，而這酌情控制權是在特區政府的權力範圍外。單程證所作出的控制，和配額數目及配額分配的決定有關。再者，根據這項論點，這種情況會導致兩類同樣擁有永久性居民身分的人士在憲法上有不同的居留權利，即對於仍在國內居住的人士來說，儘管他們是符合第24（2）條第三類別的永久性居民，但他們的權利受到第22（4）條規限；但同樣類別的永久性居民，如在內地以外的地方居住，其居留權則不受此規限。 我等不能接納這個論點。在解釋居留權條款時，定要採用一種寬鬆的取向。我等考慮到第24條與第22（4）條的用詞時，認為第22（4）條內所指的“中國其他地區的人”包括進入特區定居的人，但不包括《基本法》已賦予其在特區擁有居留權的特區永久性居民。按對言詞的一般理解，根據《基本法》而擁有永久性居民身分的人士不能稱之為“中國其他地區的人”。他們是中國這地區（香港）的永久性居民。將他們形容為是為了定居而進入特區的人也是不正確的。他們進入特區並非為了定居。他們本身為永久性居民，擁有進入特區及在特區隨意逗留的權利。 我等認為，按照第22（4）條的正確解釋，即使全面履
行該條款時亦不會侵犯第24條所列的居留權。第22（4）條並不適用於特區的永久性居民，只適用於內地絕大部分沒有特區居留權的人士，儘管他們居住的地方與特區同屬一國，他們也不能未經批准便進入特區。“批准”應該是指內地機關的批准，這個假設是正確的。再者，這條例規定進入特區定居的人數，由中央人民政府主管部門徵求特區政府的意見後確定。 我等的結論符合《基本法》設立特區的目的，就是在“一國兩制”的原則下實行高度自治。批准在國內的非特區永久性居民的人士進入特區，及決定進入特區定居者的人數都是內地機關的責任。特區政府在不同的制度下行使高度自治，並有責任去接收根據憲法擁有居留權的永久性居民。我等認為，第22（4）條並沒有容許特區的自治權受到削弱。
代表入境處處長的資深大律師馬先生指出第24條是受到第22（4）條的規限，並援引《聯合聲明》附件一第十四部分以支持這個論點。《聯合聲明》具體說明了中國的基本方針政策。附件一第十四部分列出了永久性居民的類別，亦即現今在《基本法》第24（2）條的類別。這第十四部分繼而規定中國其他地區的人在進入特區時，“將按現在實行的辦法管理”。資深大律師馬先生所倚賴的“實行的辦法”，在1984-1985《聯合聲明》發表的當時，就是指內地居民獲得離境批准後才可進入香港的規定。第十四部分訂定這“實行的辦法”須沿用下去，然而，並無跡象顯示，這個部分的原意是要這“實行的辦法”適用於永久性居民，從而規限了他們擁有的居留權，而這居留權早已在這部分有所訂明。因此，我等並不認為《聯合聲明》在這方面能提供任何協助。 資深大律師馬先生除了基於第22（4）條作出基本陳詞外，亦同時提出另一論點（儘管他只是輕輕帶過）。他指出鑑於內地的法律規定居民來港須有出境批准，故第24（3）條的解釋便受一項隱含限制的約束，即基於合理的原則，必須遵守關於出境須經批准才可來港的國內法律。如果一條內地的法例可提供憲法基礎去規限《基本法》賦予的一項憲法權利這一論點是正確的話，這便會帶來深遠的影響。 我等認為這論點絕不能成立，原訟庭法官與上訴法庭駁回這點，實屬正確。《基本法》第18（2）條規定全國性法律除列於《基本法》附件三者外，不在特區實施；而列於附件三之全國性法律，由特區在當地公佈或立法實施。第18
（3）條規定“人大常委會”在徵詢其所屬的《基本法》委員會和特區政府的意見後，可對列於附件三的法律作出增減。但第18（3）條跟著規限了“人大常委會”的權力，規定任何列入附件三的法律，“限於有關國防、外交和其他按本法規定不屬於香港特別行政區自治範圍的法律”。這條款限制了引用內地的法律，這點在履行“一國兩制”的原則上是非常重要的。如果資深大律師馬先生的論點是正確的話，這便會提供一偏徑，讓內地的法律得以在香港施行。我等認為這論點是毫無基礎可言的。 內地的法律規定內地居民要有出境批准才可進入香港，這法律當然可以全面在國內執行，但卻不能作為一項憲法的基礎來規限《基本法》所賦予的權利。 因此，“第3號條例”規定居於內地的特區永久性居民，要先持有單程證才可享有憲法賦予的居留權，這點是違憲的。
然而，這並非表示“第3號條例”所引進的整個居權證計劃是違憲。大家必須把享有居留權的永久性居民和聲稱是永久性居民的人士區別清楚。所以，立法當局引進一項計劃來核實某些人士聲稱擁有永久性居民的身分是合理的做法。我等認為在居權證計劃中，必須持有單程證的規定是違憲的，除此之外，計劃的其他部分都是符合憲法的，不能稱之為逾越核實範疇。因此，該計劃規定聲請人須向入境處處長申請及領取居權證，並且只能在持有居權證後才能確立其永久性居民的身分都是符合憲法。再者，居權證計劃訂明這些人士必須留在內地申請居權證，及在被入境處處長拒發居權證而提出上訴時，也必須留在內地，這方面也是符合憲法。永久性居民因為擁有居留權而有權入境，但聲稱擁有這身分的人其身分必須首先獲得核實。 我等裁定因居權證計劃（持有單程證的規定除外）的目的在於核實聲稱人身分，所以是符合憲法的，同時我等亦顧及到入境處處長必須合法地，以公正合理的態度來執行居權證計劃，而且在落實計劃時還有一些制衡的保護措施。 首先，以法例釋義來說，在這核實計劃運作時，法院會對若干條款定下要求，引進合理標準。例如入境處處長可透過憲報公告形式，具體說明該如何申請居權證（第2AB（2）（a）條），但在行使這項權力時，入境處處長所作出的說明必須是合理的，而法庭亦只會作如是詮釋。其次，如果入境處處長不合法地拖延作出接納或拒絕申請的決定，有關申請人雖然身處內地，仍可向特區法院要求作出公法上的補救。
再者，如果入境處處長決定拒絕該項居權證的申請，申請人有法定的上訴權，可向入境事務審裁處提出上訴。這項上訴權利是一種全面的保障。入境處處長有法定責任提供拒絕該項申請的理由，申請人在90天內可提出上訴。根據法例，審裁處的決定為最終的判決，但審裁處有責任“就其所裁斷的事實”來決定有關人士是否可憑藉血緣成為永久性居民，如答案是肯定的話，則要裁定上訴得直。 分割（違憲部分） 我等經考慮後，認為“第3號條例”內的違憲部分，可適當地與符合憲法的部分分割開。分割的準則在於符合憲法的部分是否可清晰地與違憲部分區別出來，從而使符合憲法的部分仍保持完整。我等認為這是可行的。以下乃違憲的部分，應予刪除。在提及法院反對的部分時，我等採用《入境條例》的條款編號，除非另有所指才屬例外。 第2A（1）條 增加了的文字，即“在不抵觸第2AA（2）條的條文下”，現予刪除。經刪除後，第2A（1）條的內容如下： “（1）香港永久性居民享有香港居留權，換言之，具有以下權利 — 在香港入境； … … …”
（2）第2AA（1）（a）條 經刪除後，該條款的內容如下： “（1）任何人作為附表1第2（c）段所指的香港特別行政區永久性居民的身分，只可藉其持有以下文件確立— 發予他的有效居留權證明書” 除了以上所列之內容外，（a）段的其他文字予以刪除。 （3）第53D（3）（a）條 第53D（3）條由“第3號條例”第7條增補，刪除後，第53D（3）（a）條的內容如下： “（a）發予他的有效居留權證明書。” 除了以上所列之內容外，（a）段的其他文字予以刪除。 （4）《入境規例》之附表一 “第3號條例”第10條於附表一內加入表格12，即居留權證明書表格。現將表格內的第二句刪除，即 “ 本證明書必須附貼於本證明書持有人的有效
旅行證件上，方為有效。” 經刪除後，只留下第一句，即 “本證明書持有人在香港特別行政區的居留權已確立。” 我等以下稱“第3號條例”及其引入的居權證計劃經刪除後的部分為“分割後的第3號條例”及“分割後的居權證計劃”。 關於入境處處長的公告，雖然並非附屬法例，但根據我等較早前對“第3號條例”的合憲性作出的結論，也可以將我等反對的部分予以刪除。據了解，因為“第3號條例”規定申請人須持有單程證，所以便牽涉“內地出入境管理處”，而我等已裁定須持有單程證的規定是違憲的。我等並不知道在“分割後的居權證計劃”下，入境處處長是否願意請“內地出入境管理處”作為入境處在內地的代理機關，方便內地居民申請居權證；本法院也不知道“內地出入境管理處”會否願意牽涉在內。因此，我等將“該公告”內的A（i）及B段剔除。這令到公告內就有關內地居民應向誰申請居權證這方面缺乏交代。入境處處長必須以公告形式，具體說明新的安排。本法院並不反對要向內地的某一單位提出申請這種安排，只要該單位是以香港入境處的代理機構身分運作，方便內地居民申請居權證便行。至於“內地出入境管理處”是不是一個合適的機構提供這項服務，便應由入境處處長及“內地出入境管理處”去考慮。 有關追溯力的問題
“第3號條例”在1997年7月10日制訂，但根據第1（2）條，該條例被視為於1997年7月1日起生效。問題在於這條賦予追溯力的條文（“追溯條文”）是否符合憲法。若不符合的話，第1（2）條便要從該條例中刪除。 原訟庭法官和上訴法庭副庭長馬天敏都認為該條文是有效的，並影響(i)1997年7月1日之前到港人士以及(ii)在1997年7月1日或之後及在7月10日之前到港人士。上訴法庭副庭長黎守律認為該條文有效但不影響上述第(i)類人士。而高等法院首席法官陳兆愷則認為該條文無效，因此均不影響第（i）及第（ii）類人士。可是，他們考慮這個問題時，都是基於他們認為《基本法》第24條受第22（4）條規限所作出的結論，但我等對《基本法》的解釋持有不同的結論，故此我等以不同基礎來考慮這個問題。我等所要考慮的是，到底“分割後的第3號條例”中這條“追溯條文”是否違憲。 1997年7月10日“第3號條例”制定之前，任何憑藉血緣成為永久性居民的人士，如已抵達香港，便擁有憲法賦予的居留權。事實上，他們都已行使了這個權利，不能被遣返內地。“分割後的第3號條例”引進一個計劃。根據這個計劃，他們只可藉持有居留權證明書，才能確立他們永久性居民的身分；否則，他們便視作不享有居留權。在1997年7月10日前，他們當然不可能持有居留權證明書。若這條“追溯條文”是符合憲法，他們便會被視為不享有居留權。這樣便會剝奪他們根據《基本法》已享有的、具憲法性的居留權。我等認為，這條“追溯條文”乃屬違憲。代表入境處處長的
資深大律師馬先生以“第3號條例”有部分違憲為基礎接納這點，這與他在陳詞中聲稱“第3號條例”並無違憲的說法有所不同。 我等接着考慮代表申請人的資深大律師張先生所提出的另一個理據，以支持他認為這條“追溯條文”是違憲的陳詞。 在1997年7月10日之前，永久性居民（例如那些獲入境處處長接納為屬於第24（2）條中第三類別的申請人）享有憲法所賦予的居留權，並因此有權入境及逗留。但是，倘若“第3號條例”中的“追溯條文”是符合憲法的話，追溯力便會導致他們觸犯了刑事罪行。根據“分割後的計劃”，他們必須持有居留權證明書，否則，其身分便會被視作未獲確立，而他們便須被視作不享有居留權；這樣，他們便無權入境或逗留，若入境或逗留便會觸犯刑事罪行，違反《入境條例》第38條，因該條文禁止未獲批准的人士入境或逗留，違反者便是觸犯了刑事罪行。 資深大律師張先生爭辯說，這條導致他們觸犯該等刑事罪行的“追溯條文”是違憲的，因為它與“國際人權公約”第15（1）條相抵觸。 “國際人權公約”適用於香港的有關規定，憑藉第39條而繼續有效。“國際人權公約”第15（1）條規定： “ 任何人之行為或不行為，於發生當時依香港法律及國際法均不成罪者，不為罪。……”
“國際人權公約”第15（1）條和香港法例第383章《人權法案條例》中人權法案的第12（1）條完全相同。既然“國際人權公約”第15（1）條適用於香港，引述此條公約是恰當的。 高等法院首席法官陳兆愷認為此條“追溯條文”與“國際人權公約”第15（1）條互相抵觸，也違反憲法。可是，原訟庭法官與上訴法庭副庭長黎守律及馬天敏對“國際人權公約”第15（1）條的理解則為：該條款禁止根據具追溯力的條文向任何人士提出檢控並將他們定罪，但不會令該“追溯條文”失效。 “國際人權公約”第15（1）條所用的文字是：“任何人……不為罪。”正如資深大律師張先生指出，在詮釋這一句時，必須緊記“國際人權公約”是國際性公約，其對象是不同法制的國家，包括一些不一定以立法作為刑法來源的國家。有鑑於此，我等認為，根據第39條而適用的“國際人權公約”第15（1）條確實令到該“追溯條文”違反憲法。在我們的法制下，禁止憑具追溯力條文對觸犯刑事罪行的人士定罪這個做法確實會打擊該“追溯條文”的有效性。這個觀點得到Van Dijk 及 Van Hoof的支持：見《歐洲人權公約 — 理論和實踐》（譯名）Theory and Practice of the European Convention on Human Rights（第三版）第485-486頁有關該歐洲人權公約中等同的條文。 倘若我等的判決一如原訟庭及上訴法庭的判決，這便會對有關人士造成不公平的民事後果。他們可被說成是犯了
刑事罪；雖然他們不能受到檢控或定罪，但亦可能因此受到不利的待遇，例如，在誹謗法方面以及在各種不同情況下，能否在法律上被認定為“合適及適當”的人選。但若依我等所作的結論，他們便不會面對上述可能產生的後果。 因此，我等從“第3號條例”中刪除該“追溯條文”，亦即第1（2）條。 非婚生子女的問題 根據“第2號條例”引入《入境條例》的附表1內的第1（2）（b）段規定，如子女屬非婚生子女，只有當該子女其後因父母結婚而獲確立婚生地位才存在父親與子女的關係。問題在於究竟這條文在憲法上是否有效。這段規定應與第1（2）（a）段中的母親與子女的關係作一對比；在該條文內，非婚生子女並沒有受到歧視，他們與婚生子女受同等的待遇。 這宗例案的申請人張小姐是一名非婚生子女。她的父母從沒有結婚，母親在她出生後第二天便不幸去世。假若第1(2）（b）段是符合憲法的話，她與父親之間便會被視作不存在“父母與子女的關係”。結果，由於她不屬於“父親或母親是永久性居民”的類別，便不能符合附表1第2（c）段中憑藉血緣成為永久性居民的資格。在其他各方面，入境處處長都接納她是符合資格的。
問題在於經正確解釋第24（2）條第三類別後，非婚生子女是否屬於這個類別。如果是的話，附表1第1（2）（b）段把這類子女摒諸這類別之外便屬違憲。 我等在此要處理的是如何解釋一條界定永久性居民類別的條文。在解釋這條文時，必須考慮其背景，包括《基本法》內其他條文，其中第39條規定“國際人權公約”適用於香港的有關規定繼續有效。背景中有兩項相關的原則。其一，《基本法》和“國際人權公約”都奉行平等原則，反對任何歧視。見《基本法》第25條和“國際人權公約”第3及26條。在這方面，顯而易見，香港本地的法例跟隨着近年的明顯趨勢，通常都把非婚生子女與婚生子女同等看待。其二，“國際人權公約”第23（1）條認定家庭是社會之自然及基本的團體單位，應該受到社會和國家的保護。 在解釋有關條文時，緊記這些原則是很重要的。我等必須指出，若入境處處長的論點正確，則婚生與非婚生子女便會得到不平等的待遇，而非婚生子女的母親和非婚生子女的父親也受到不平等的待遇。再者，由於第24（2）條的永久性居民類別並沒有包括配偶在內，故該條款令他們不能闔家團聚。依入境處處長的論點，父親的非婚生子女不會因為與父親的血緣關係而得到永久性居民的身分；這樣對促進某程度的家庭相聚沒有任何幫助。 當緊記這些原則時，並考慮到第24（2）條第三類別的文字，我等認為這個類別明顯包括婚生及非婚生的子女。第
三類別所界定的是在第一和第二類別列明的“[永久性]居民……所生的……子女”。不論是婚生還是非婚生，這些都是該等居民所生的子女。非婚生子女與婚生子女兩者沒有分別，同樣是該等居民所生的。我等認為這就是該條文顯而易見的意思。因此，附表1第1（2）（b）段把父親的非婚生子女（其後因父母結婚而成為婚生子女者除外）摒諸這類別之外是違反憲法的。 資深大律師馬先生向我等指出，“國際人權公約” 適用於香港的有關規定乃受英國在1976年5月簽署及確認“國際人權公約”時作出的保留條款所限制。關於香港方面，這些保留條款包括有權繼續引用入境方面的法例來監管進入香港、逗留及離開香港的人士。而且，接受“國際人權公約”的條件是該公約並不影響針對無權進入及逗留在香港的人士的法例。但是，依我等之見，這並不會阻止本法院在解釋有關永久性居民類別的憲法條文時，考慮“國際人權公約”的原則，而這些原則是構成條文背景的一部分。 代表入境處處長的資深大律師馬先生基於中國和英國政府在中英聯合聯絡小組（下稱“聯合聯絡小組”）達成的一項協議而提出其論點。我等沒有該協議的任何記錄。有關這項協議，入境處處長所倚賴的證據來自一本該處在1997年4月印制有關香港居留權的小冊子。這本小冊子內有一段文字，其意思與現在已成為法例的附表1第1（2）（b）段相同，就是對一名父親而言，他的子女不包括非婚生子女，除非他與該子女的母親其後結婚，否則該子女不能成為婚生子女。小冊子述明它是“根據現行的入境條例和常規及基於中、
英雙方在[聯合聯絡小組]中的共同看法”而編訂的。 資深大律師馬先生以《維也納條約法公約》第31條為依據提出其論點。這公約的第31（1）條規定：“條約應依照其用語按上下文並參照條約的目的及宗旨所具有的通常意義善意解釋”。第31（3）（a）條規定： “在考慮上下文之餘，還應一併考慮： 締約國其後所訂關於條約的解釋或適用的任何協議。” 《聯合聲明》附件一第十四部分聲明，現屬於第24（2）條第三類別所指的人士應有居留權。資深大律師馬先生辯稱，在“聯合聯絡小組”達成的協議是其後達成的協議。基於《維也納公約》第31條的規定，在解釋《聯合聲明》這一部分時應依據“聯合聯絡小組”其後達成的協議來解釋，而解釋《基本法》時亦應採用同樣方法。 “聯合聯絡小組”的成立是基於《聯合聲明》附件二：“為了進行聯絡、磋商及交換情況的需要…”。其職能包括就《聯合聲明》的實施進行磋商（附件二第3（a）段）。它是聯絡機構而非權力機構（附件二第6段）。即使其職能包括由兩國政府在其後就有關《聯合聲明》的解釋或其條文的適用訂立協議，而且該協議屬《維也納公約》第31（3）（a）條的範圍，但依我等之見，該協議對本法院須要解釋的問題並無影響。 首先，達成該協議的基礎並不清楚。該協議可能是為了尋求一個實際的解決方法而達成，與解釋條文或其適用的
問題無關。由於小冊子沒有區分母親的非婚生子女及婚生子女（第1（2）（a）段亦沒有如此區別），故此該協議是否以解釋條文或其適用為基礎實令人疑惑。倘若協議是基於解釋條文或其適用而達成，則父親與子女的關係便有別於母親與子女的關係，而要為這個區別找到一個合理的基礎並不容易。 其次，即使該協議是基於解釋條文或其適用而達成，第31（3）（a）條只規定須將其納入考慮之列。不過，經考慮後本法院可以作出不同的結論。我等認為本法院所作的結論明顯是正確的。 因此，我等裁定附表1第1（2）（b）段乃屬違憲。原訟庭法官和上訴法庭這樣裁定實屬正確。經分割後，第1（2）（b）段應為： “（2）在以下的情況下，視為有父母與子女的關係存在— （b）任何男子與其婚生或…非婚生子女之間的關係，為父親與子女的關係…” 除這些字句外，條文中其他字句予以刪除。
臨時立法會的問題 資深大律師戴啟思先生為申請人爭辯這個問題時提出，臨時立法會（下稱“臨立會”）並不是《基本法》內所訂明的立法機關，亦不是一個合法組成的機構。任何經“臨立會”通過的法例必先符合普通法的“必需原則”方為有效。他認為“第3號條例”的“追溯條文”並不符合這個原則，因此亦屬無效。代表入境處處長的資深大律師馬先生認為“臨立會”是一個合法組成的機構。他同意“臨立會”並不是《基本法》內訂明的特區立法機關。但當時的情況是，在1997年7月1日之前的立法機關在該日之後便不再延續，套用一般的說法，就是沒有“直通車”。資深大律師馬先生認為，在這情況下“臨立會”是依據全國人民代表大會在1990年4月4日的決定而成立，亦符合該項決定及《基本法》。 有關的決定眾所周知。 在1990年4月4日正式通過的《基本法》規定特區的立法會須由選舉產生（第68（1）條）。第68（2）條規定它的產生方法須根據特區的情況及循序漸進的原則，最終達至全部議員由普選產生這個目標（第68（2）條）。第68（3）條訂明立法會產生的具體方法和法案、議案的表決程序由附件二“香港特別行政區立法會的產生辦法和表決程序”規定。
第69條規定立法會除第一屆任期為兩年外，每屆任期均為四年。《基本法》附件二對第二屆和第三屆立法會的產生辦法有所規定。至於第一屆，附件二規定立法會須按照“全國人民代表大會關於香港特別行政區第一屆政府和第一屆立法會產生辦法的決定”產生。 該項決定與《基本法》同時在1990年4月4日經全國人民代表大會通過（下稱“1990年決定”）。第一段述明特區第一屆政府和立法會須“根據體現國家主權、平穩過渡的原則產生”。 第2段規定： “ 在1996年內，全國人民代表大會設立香港特別行政區籌備委員會，負責籌備成立香港特別行政區，根據本決定規定第一屆政府和立法會的具體產生辦法。…” 第6段規定第一屆立法會由60名議員組成，其中20名議員由分區直接選舉產生，10名議員由選舉委員會選舉產生，30名議員由功能團體選舉產生。該段進而規定，如1997年7月1日前的立法局的組成符合該決定和《基本法》的有
關規定，其議員擁護《基本法》、願效忠中華人民共和國香港特別行政區，並符合《基本法》規定之條件者，經籌備委員會確認，即可成為第一屆立法會議員。第6段的最後部分規定第一屆立法會議員的任期為兩年。 顯然，從《基本法》及在《基本法》內提及的“1990年決定”來看，當時預期立法局會乘直通車過渡。 為進行1995年選舉，香港的選舉法例有所改變。中國政府不接受這些改變，堅稱這些改變抵觸《基本法》。中國和英國政府在這個問題上的政治爭議人所共知，而結果是沒有直通車。 1994年8月31日，“人大常委會”決定立法局不會有直通車，而籌備委員會須負責籌備成立特區的有關事宜，並須根據“1990年決定”規定第一屆立法會的具體產生方法及組織第一屆立法會。 1996年3月24日，籌備委員會決定成立臨時立法會。“臨立會”是經由負責推選特區第一屆政府的推選委員會選舉產生，並運作至特區第一屆立法會成立時為止，即不應遲過1998年6月30日。臨立會的指定職責，包括制定對特區的“日常運作必不可少”的法例，以及處理除指定在特區第一屆立法會成立之前規定須由臨時立法會處理之外的其他
事宜。1996年10日5日，籌備委員會採納了其訂明的方法成立“臨立會”。1997年2月1日，籌委會決定“臨立會”應在1997年6月30日前開始運作，及須在特區成立時確認那些已經通過的條例草案。 《基本法》第160條規定香港特區成立時，香港原有法律除由“人大常委會”宣佈為同《基本法》有抵觸者外，採用為特區法律。1997年2月23日，“人大常委會”議決不採用若干項法例，包括1995年度立法局的選舉法例。 1997年3月14日，全國人民代表大會議決接納籌委會的工作報告，這份報告提及籌委會根據“1990年決定”成立“臨立會”。 1997年5月23日，籌委會採用指定的方式來組成特區第一屆立法會。立法會的選舉須在1998年6月30日前完成，而特區須依據該辦法制訂有關選舉立法會的條例。結果，“臨立會”制訂了這些條例。選舉在1998年5月進行。首屆立法會在1998年7月就職。 《基本法》規定第一屆立法會須按照“1990年決定”來成立。該決定授權籌委會籌備成立特區並根據該決定去規定第一屆政府和立法會的具體產生辦法。我等認為，由籌委會籌組“臨立會”是在“1990年決定”的範圍內，所以也符合《基本法》。該決定第二段所賦予籌備委員會的權力範圍廣濶，足以令籌委會有權成立臨立會。
作出“1990年決定”時，預期會有直通車。因此，第一屆立法會的任期為兩年。但是，“1990年決定”的第6段第二部分規定只有在符合若干條件後，才會有直通車。在沒有直通車的情況下，籌委會成立的“臨立會”職能有限，而運作的時間亦有限。“臨立會”只是一暫時性的機構，是填補根據《基本法》及“1990年決定”第6段的第一部分成立第一屆立法會之前出現的立法真空。“臨立會”並不是根據《基本法》及該決定第6段的第一部分所產生的第一屆立法會，代表入境處處長的資深大律師馬先生也同意這點。成立“臨立會”的目的完全為了使第一屆立法會得以產生。因此，“臨立會”的成立與《基本法》是相符的。“臨立會”制訂的選舉法符合籌委會在1997年5月就第一屆立法會的產生所作出的決定。這些選舉法使第一屆立法會可在1998年7月前依據該決定產生。 考慮到我等作出的結論，即“臨立會” 是符合 “1990年決定”的合法組成機構，亦與《基本法》相符，故我等無須回應資深大律師戴啟思先生基於“必須原則”所提出的論點。
法庭判令 三宗上訴 (終院民事上訴1998年第14、15 及16號) 有關這三宗上訴案，我等就每宗案件作出宣告並頒令如下： A(1) 我等宣告以下部分的《入境條例及規例》乃屬無效，並從該條例或規例中刪除： 第2A（1）條的“在不抵觸第2AA（2）條的條文下”這句。 第2AA（1）（a）條的條文，以下字句除外： “（1） 任何人作為附表1第2（c）段所指的香港特別行政區永久性居民的身分，只可藉其持有以下文件確立— 發予他的有效居留權證明書。” 第53D（3）（a）條的條文，以下字句除外： “（a）發予他的有效居留權證明書。” 《入境規例》附表1內的居留權證明書表格12內第二句句子，即：
“ 本證明書必須附貼於本證明書持有人的有效旅行證件上，方為有效。” 我等宣告在1997年7月16日刊登於憲報，日期為1997年7月11日（1997年憲報第(E)21號）的公告內的第A（1）段及第B段為無效，並從“該公告”中刪除。 我等宣告“第3號條例”第1（2）條為無效，並從該條例中刪除。 關於訟費問題，我等不作判令。各申請人的訟費（包括終院民事上訴1998年第16號入境處處長的上訴中的申請人的訟費）按《法律援助條例及規例》評定。 吳嘉玲小姐及吳丹丹小姐（終院民事上訴1998年第14號） 有關本上訴案，我等頒令如下： B（1） 判令兩名申請人上訴得直。 （2） 判令撤銷入境處處長以下的決定： 約在1997年7月4日扣留申請人的決定， 約在1997年7月4日規定申請人須受擔保約束的決定， 約在1997年8月7日拒絕讓申請人入境的決
定。 （3）我等宣告兩名申請人乃屬《基本法》第24（2）條第三類別的香港特別行政區永久性居民，她們自1997年7月1日開始便擁有這身分；故此，她們享有居留權。 徐權能先生（終院民事上訴1998年第15號） 資深大律師張先生告知我等現無須撤銷入境處處長的決定，因為處長已同意徐先生有居留權。有關本上訴案，我等頒令如下： C（1）判令申請人上訴得直。 （2）我等宣告申請人乃屬《基本法》第24（2）條第三類別的香港特別行政區永久性居民，他自1997年7月1日開始便擁有這身分；故此，他享有居留權。 張麗華小姐（終院民事上訴1998年第16號） D（1）我等宣告《入境條例》附表1的第1（2）（b）段中以下字句予以保留，其他字句乃屬無效並從該段中刪除： “（2）在以下情況下，視為有父母與子女的關係存在—
（b）任何男子與其婚生或…非婚生子女之間的關係，為父親與子女的關係…” （2）判令撤銷入境處處長以下的決定： （a） 約在1997年7月15日有關申請人不能享有《基本法》第24（3）條所指的居港權的決定， （b） 約在1997年7月15日羈留扣押申請人的決定， （c） 約在1997年7月19日規定申請人須受擔保約束的決定， （d） 約在1997年8月9日決定申請人必先按照《入境條例》第1B部分指定的模式，確立她在該條例附表1第2（c）段中永久性居民的身分，才有權行使居港權。 （3）我等宣告申請人乃屬《基本法》第24（2）條第三類別的香港特別行政區永久性居民，她在1997年7月1日開始便擁有這身分，故此她享有居留權。
（李國能）  （烈顯倫）  首席法官  常任法官   （沈 澄）  （包致金）  （梅師賢爵士）  常任法官  常任法官  非常任法官   資深大律師張健利先生、資深大律師戴啟思先生及大律師郭瑞熙先生（由賈偉林劉天均律師行延聘並由法律援助署署長委派）代表終院民事上訴案1998年第14和15宗的上訴人及終院民事上訴案1998年第16宗的答辯人 資深大律師馬道立先生及大律師霍兆剛先生（由律政司延聘）代表終院民事上訴案1998年第14和15宗的答辯人及終院民事上訴案1998年第16宗的上訴人 LAW32/99
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HCSA 21/2000
香港特別行政區
高等法院
原訟法庭
小額錢債審裁處上訴2000年第21號
（原本案件編號：小額錢債審裁處申索2000年第4808號）
____________
有關
精誼紙品廠 申索人
（答辯人）
及
CHAK HAK T/A STANDARD (HONG KONG) CO. 被告人
（上訴人）
_____________
主審法官：高等法院原訟法庭朱芬齡暫委法官內庭聆訊
聆訊日期：2000年9月26日
宣判日期： 2000年9月26日
判 决 理 由 書
被告人就小額錢債審裁處審裁官本年6月5日裁決其敗訴和8月9日拒絕其覆核申請的決定申請上訴許可。本席經聆訊後拒絕被告人的申請，現將當庭口述的理由記述於後。
申索人為紙品供應商。其於去年年中供應了一批衣服標簽給一間明暉製品公司（“明暉”）。明暉以支票支付貨款，但支票不能兌現。明暉東主何小姐告之申索人已將公司出售予被告人，而所欠貨款亦由被告承擔。申索人亦應何小姐要求，重新發出發票供被告人確認，並將不兌現的支票退回何小姐。後何小姐用被告人公司的印章在重發的發票上蓋印確認。申索人其後因被告人拒付有關貨款，遂入禀小額錢債審裁處申索。
被告人雖同意是在明暉的原址經營業務及曾支付部份明暉的其他債務，但否認曾承諾支付欠申索人的貨款。被告人亦指從未授權何小姐以其公司印章確認申索人重發的發票，更沒有授權她代表被告人的公司承認有關的貨款。被告人同時指出收購明暉的計劃最終乃是告吹。
審裁官經聆畢申索人東主周先生、何小姐和被告人的兒子翟格先生（也即是被告公司的負責人）的証言後，裁定周先生和何小姐的証言可信。審裁官認定何小姐與被告人方面曾協議由被告人承擔欠申索人的貨款。何小姐同時出任被告人公司的營業經理，並獲授權使用公司印章。審裁官又認定翟先生曾聯絡周先生，口頭上確認本案所涉的貨款，並承諾負責清還。審裁官因此裁定：(1)何小姐是代表被告人公司在發票上蓋印作實、承認有關貨款；和(2)經申索人、明暉和被告人三方面同意下，本案所涉的貨款經已轉移予被告人。審裁官遂裁決申索人勝訴。
被告人提出擬上訴的理由為所涉債務源於申索人與明暉間的業務往來，與被告人無關；而債務又是在申索人和明暉私相授受的情況和未得被告人授權下強加諸被告人身上。代表被告人出席本庭的翟先生也指何小姐的証言失實。他同時指出被告人雖曾使用部份申索人所提供予明暉的貨品，但債務始終是明暉和申索人的瓜葛， 不該由被告人肩負。
被告人代表在本庭聆訊時所作的觀點在原審和覆核聆訊時均已提及。然而審裁官最終認為申索人方面的証言和說法可信，並採納為判案的事實依據。也就是說審裁官並不接納被告人上述的說法。這些屬事實方面的裁斷，與訟雙方無權就此提出上訴。按審裁官所認定的事實，則法律上何小姐無疑是有權代表被告人的公司行使公司印章以確認欠申索人的款項，而何小姐的作為亦對被告人具法律約束力。針對作為第三者的申索人而言，即使何小姐實際上是未獲授權或其作為是超越其權限，被告人也不能以此作為抗辯理由。被告人明知明暉負債，在收購明暉過程中選擇在明暉原址經營，又委任何小姐為其公司營業經理，且容許其使用公司印章，造成何小姐是被告人公司獲授權的代表或代理人的客觀事實。在此情況下，針對不知實情的第三者而言，被告人遂得為何小姐的作為負上責任。審裁官裁定被告人是經何小姐接收並負上明暉所欠申索人的的債務這一點，乃是無爭辯的餘地。
同樣，基於審裁官對事實方面的裁斷，即翟先生曾向周先生承諾支付有關貨款，而周先生因而不向明暉進一步追討，且退回不兌現支票，涉案三方面確是已達成對彼此均有約束力的債務轉讓協議。在此原則下，審裁官裁決被告人須負擔有關債務亦是不容爭辯。
再者，審裁官裁決時也曾引申《業務轉讓（債權人保障）條例》作為裁決被告人敗訴的依據。本席認為這部份的裁決理由亦無失誤之處。
基於上述考慮，本席認為被告人不能顯示其上訴乃涉可供爭辯的法律論點，因而不符合《小額錢債審裁處條例》第28條所規定的上訴範圍，故本席拒絕給予上訴許可。
（朱芬齡）
高等法院原訟法庭暫委法官
被告人無律師代表，授權翟格先生代表出庭。

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HCB 5969/2006 香港特別行政區 高等法院原訟法庭 民事司法管轄權 高等法院破產案件2006年第5969號 ____________ 有關欠債人何添的事宜 有關債權人英國保誠保險有限公司的單方面申請 ____________ 主審法官：高等法院原訟法庭法官關淑馨公開聆訊 聆訊日期：2006年10月31日 判案書日期：2006年10月31日 判案書 這個破產呈請，由英國保誠保險有限公司提出，要求法庭就何添先生作出破產命令。 何先生以前為呈請人服務，他是一名保險從業員。2000 年12月期間，何先生加入呈請人工作，作為保險代理，簽署了
四份協議，同意呈請人定下的條款，給予他預支佣金，和日後在賺取的佣金扣除。 由於何先生未能達到呈請人定下的工作指標，呈請人在2002年1月1日，終止了對何先生預支佣金的安排。根據雙方簽訂的協議，何先生有法律責任，償還之前預支的佣金。 2002年8月12日，何先生在呈請人發給他的信件上簽署，確認在2002年7月，他欠下呈請人的金額為HK$114,701.74。 2004年3月8日，呈請人又去信何先生，通知他直至2003年11月30日，他所欠的金額為HK$97,058.26。假若何先生仍未達到呈請人工作指標的要求，呈請人有權在2005年1月31日或之前終止他的代理協議。一旦終止協議，何先生即需全數歸還欠下呈請人的債項。不過如果何先生達到呈請人工作指標的要求，而呈請人又願意在2005年2月1日或之後，繼續委任他為保險代理的話，呈請人同意不追討他欠下的債項。上述信件的條款，何先生一一接受。在2004年3月9日，他在呈請人發給他的信件，加簽確認。 由於何先生一直沒有達到呈請人工作上的要求，2004年10月20日，呈請人終止了他的委任，由2004年10月19日生效。 根據2004年3月9日雙方達成的協議，何先生需要即時清還欠下呈請人的款項。2004年11月17日，呈請人去信何先生，要
求償還HK$99,031.86，其中HK$97,058.26為上述追討預支佣金的欠款，另外HK$1,973.60是其他的欠款。 2004年11月26日，呈請人發信何先生，提出以12個月期限分期還款的建議，但是何先生沒有接受。2005年8月11日，呈請人在報章刊登法定要求償債書，向何先生追討HK$99,031.86。2006年7月28日，呈請人入禀高等法院，要求頒令何先生破產。呈請書在2006年8月14日，以面交方式送達何先生。 其後，何先生與呈請人接觸，呈請人又提出了新的還款建議，但何先生都沒有接受。 何先生對於呈請人追討的債項，並無任何實質的爭議，也沒有能力償還。在這情況下，本席必須作出破產命令。呈請人的訟費，將由何先生的資產支付。 （關淑馨） 高等法院原訟法庭法官 呈請人：由普衡律師事務所蕭泳茵律師代表出席 債務人：何添先生，無律師代表，親自應訊 破產管理署：由該署張偉顏大律師代表出席
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{
"Date": "31 Oct, 2006",
"Action No.": "HCB5969/2006",
"Neutral Cit.": "[2006] HKCFI 1998",
"case_title": "有關何添的事宜",
"page_title": "有關何添的事宜 | [2006] HKCFI 1998 | HKLII",
"case_history": [
{
"name": "HCB5969/2006",
"link": "https://www.hklii.hk/tc/appealhistory/HCB/2006/5969"
}
],
"appeal_history": [],
"case_url": "https://www.hklii.hk/tc/cases/hkcfi/2006/1998",
"neutral_cit": "[2006] HKCFI 1998",
"court_code": "HKCFI",
"content": "HCB005969/2006 有關何添的事宜\nHCB 5969/2006\n香港特別行政區\n高等法院原訟法庭\n民事司法管轄權\n高等法院破產案件2006年第5969號\n______________________\n有關欠債人何添的事宜\n有關債權人英國保誠保險有限公司的單方面申請\n______________________\n主審法官 ： 高等法院原訟法庭法官關淑馨公開聆訊\n聆訊日期 ： 2006年10月31日\n判案書日期 ： 2006年10月31日\n判案書\n1.\n這個破產呈請，由英國保誠保險有限公司提出，要求法庭就何添先生作出破產命令。\n2.\n何先生以前為呈請人服務，他是一名保險從業員。2000 年12月期間，何先生加入呈請人工作，作為保險代理，簽署了四份協議，同意呈請人定下的條款，給予他預支佣金，和日後在賺取的佣金扣除。\n3.\n由於何先生未能達到呈請人定下的工作指標，呈請人在2002年1月1日，終止了對何先生預支佣金的安排。根據雙方簽訂的協議，何先生有法律責任，償還之前預支的佣金。\n4.\n2002年8月12日，何先生在呈請人發給他的信件上簽署，確認在2002年7月，他欠下呈請人的金額為HK$114,701.74。\n5.\n2004年3月8日，呈請人又去信何先生，通知他直至2003年11月30日，他所欠的金額為HK$97,058.26。假若何先生仍未達到呈請人工作指標的要求，呈請人有權在2005年1月31日或之前終止他的代理協議。一旦終止協議，何先生即需全數歸還欠下呈請人的債項。不過如果何先生達到呈請人工作指標的要求，而呈請人又願意在2005年2月1日或之後，繼續委任他為保險代理的話，呈請人同意不追討他欠下的債項。上述信件的條款，何先生一一接受。在2004年3月9日，他在呈請人發給他的信件，加簽確認。\n6.\n由於何先生一直沒有達到呈請人工作上的要求，2004年10月20日，呈請人終止了他的委任，由2004年10月19日生效。\n7.\n根據2004年3月9日雙方達成的協議，何先生需要即時清還欠下呈請人的款項。2004年11月17日，呈請人去信何先生，要求償還HK$99,031.86，其中HK$97,058.26為上述追討預支佣金的欠款，另外HK$1,973.60是其他的欠款。\n8.\n2004年11月26日，呈請人發信何先生，提出以12個月期限分期還款的建議，但是何先生沒有接受。2005年8月11日，呈請人在報章刊登法定要求償債書，向何先生追討HK$99,031.86。2006年7月28日，呈請人入禀高等法院，要求頒令何先生破產。呈請書在2006年8月14日，以面交方式送達何先生。\n9.\n其後，何先生與呈請人接觸，呈請人又提出了新的還款建議，但何先生都沒有接受。\n10.\n何先生對於呈請人追討的債項，並無任何實質的爭議，也沒有能力償還。在這情況下，本席必須作出破產命令。呈請人的訟費，將由何先生的資產支付。\n（關淑馨）\n高等法院原訟法庭法官\n呈請人 ： 由普衡律師事務所蕭泳茵律師代表出席\n債務人 ： 何添先生，無律師代表，親自應訊\n破產管理署 ： 由該署張偉顏大律師代表出席",
"attachments": [
{
"download_url": "https://legalref.judiciary.hk/doc/judg/word/vetted/other/ch/2006/HCB005969_2006.doc",
"file_name": "HCB005969_2006.doc",
"file_ext": ".doc",
"status": "success"
}
]
}

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HCMA 278/2010 香港特別行政區 高等法院原訟法庭 刑事上訴司法管轄權 定罪上訴 案件編號：高院裁判法院上訴案件2010年第278號 （原觀塘裁判法院刑事案件2009年第7796號） ____________ 答辯人 香港特別行政區 訴 上訴人 郭宇謙 ____________ 主審法官 ：高等法院原訟法庭法官馮驊 聆訊日期 ：2010年10月7日 判案日期 ：2010年10月7日 判案理由書日期 ：2010年10月11日 判案理由書 上訴人郭宇謙在裁判官席前經審訊被裁定一項猥褻侵犯罪有罪，他針對定罪上訴。 本席即席批准上訴，現頒下理由。
控方證據 控方第一證人及男友（控方第二證人）在街上攜手而行。第一證人見上訴人從其左前方行來，第一證人閃避，好讓上訴人有足夠位置通過。當上訴人經過第一證人身邊時，第一證人感覺「股罅」（即股溝）被手指按下，歷時1秒。第一證人感覺有3隻手指（手掌一面）按下她的股溝，其中一隻比較用力。第一證人隨即向控方第二證人說被摸。第二證人與上訴人對質，然後報警。 辯方案情 上訴人作供，他否認非禮。上訴人指當時急步行走，「手捹捹」般兩手搖擺。他感覺碰到第一證人，但沒有停下道歉。當被第二證人上前截停時，上訴人否認非禮，並即解釋不小心碰到第一證人，一場誤會。 裁判官的理由 原審時，辯方律師質疑控方證據上的矛盾，包括： (1) 第一證人向在場女警指稱上訴人用手按她右邊臀部，及後第一證人錄取口供時，則說她臀部中間股溝被人按下。第一證人在庭上解釋，只是當時沒有仔細向女警說出被觸碰部位； (2) 第二證人作供時指出第一證人在警署時並不肯定是否上訴人觸碰她，擔心冤枉好人。裁判官問第二證人不肯定的是甚麼，第二證人則指第一證人不肯定上訴人身分。 裁判官認為以上分歧並不重要，因此裁定罪名成立。
上訴理由 完備上訴理由概括如下： (1) 裁判官錯誤地裁定上訴人的行為有猥褻成分及/或有猥褻意圖； 裁判官沒有充分考慮控方第一證人被觸碰位置的分歧； 裁判官以上訴人在警誡口供中說過他的右手觸碰到控方第一證人的臀部以支持定罪，並不正確； 裁判官沒有充分考慮意外或無意識觸碰。 討論 代表答辯人的陳律師指控方第一證人不肯定的是上訴人身分。基於身分並無爭議，因此，這點並不重要。 代表上訴人的吳大律師則指出正因爲上訴人身分由始至終沒有爭議，所謂第一證人不肯定上訴人的身分根本全無理據。況且，第一證人未被重召親自説明她不肯定的究竟是甚麼，及/或基於身分沒有爭議之下，爲何她說不肯定上訴人的身分。因此，證據上有缺餘，未能釋疑。 就被觸碰位置，陳律師亦承認很難解釋為何觸碰點之描述不同，但極有可能第一證人因為尷尬沒有說出詳情。然而，第一證人指她是被手掌一面而非手背一面的手指按到，則無論是右邊臀部或中間股溝，兩者均必然並非意外。
吳大律師則指證據沒有交代當上訴人行近第一證人時，第一證人怎樣轉身。若上訴人因為急步及雙手擺動而觸碰到第一證人的右邊臀部，則不能在不知雙方之相對位置下，單以手掌一面的接觸而排除意外。 吳大律師亦指出股溝與右邊臀部區別甚大，股溝被按會即時令人排除意外。第一證人既然當衆投訴被非禮，則沒有理由不第一時間提及股溝。 況且，第一證人在錄取口供時非常詳細，還以女警身軀作示範，則無理由不交待為何在現場說出右邊臀部而非中間臀溝。 本席認為上訴人所提的兩個疑點均屬重要，第一證人都沒有作出合理解釋。 基於上述理由，上訴得直。 （馮驊） 高等法院原訟法庭法官 答辯人：由律政司高級檢控官陳詠嫻代表香港特別行政區 上訴人：由鄧黃張律師事務所轉聘吳達輝大律師代表
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{
"Date": "11 Oct, 2010",
"Action No.": "HCMA278/2010",
"Neutral Cit.": "[2010] HKCFI 1661",
"case_title": "香港特別行政區 訴 郭宇謙",
"page_title": "香港特別行政區 訴 郭宇謙 | [2010] HKCFI 1661 | HKLII",
"case_history": [
{
"name": "HCMA278/2010",
"link": "https://www.hklii.hk/tc/appealhistory/HCMA/2010/278"
}
],
"appeal_history": [],
"case_url": "https://www.hklii.hk/tc/cases/hkcfi/2010/1661",
"neutral_cit": "[2010] HKCFI 1661",
"court_code": "HKCFI",
"content": "HCMA000278/2010 香港特別行政區 訴 郭宇謙\nHCMA 278/2010\n香港特別行政區\n高等法院原訟法庭\n刑事上訴司法管轄權\n定罪上訴\n案件編號：高院裁判法院上訴案件2010年第278號\n（原觀塘裁判法院刑事案件2009年第7796號）\n____________\n答辯人\n香港特別行政區\n訴\n上訴人\n郭宇謙\n____________\n主審法官 ：高等法院原訟法庭法官馮驊\n聆訊日期 ：2010年10月7日\n判案日期 ：2010年10月7日\n判案理由書日期 ：2010年10月11日\n判案理由書\n1.\n上訴人郭宇謙在裁判官席前經審訊被裁定一項猥褻侵犯罪有罪，他針對定罪上訴。\n2.\n本席即席批准上訴，現頒下理由。\n控方證據\n3.\n控方第一證人及男友（控方第二證人）在街上攜手而行。第一證人見上訴人從其左前方行來，第一證人閃避，好讓上訴人有足夠位置通過。當上訴人經過第一證人身邊時，第一證人感覺「股罅」（即股溝）被手指按下，歷時1秒。第一證人感覺有3隻手指（手掌一面）按下她的股溝，其中一隻比較用力。第一證人隨即向控方第二證人說被摸。第二證人與上訴人對質，然後報警。\n辯方案情\n4.\n上訴人作供，他否認非禮。上訴人指當時急步行走，「手捹捹」般兩手搖擺。他感覺碰到第一證人，但沒有停下道歉。當被第二證人上前截停時，上訴人否認非禮，並即解釋不小心碰到第一證人，一場誤會。\n裁判官的理由\n5.\n原審時，辯方律師質疑控方證據上的矛盾，包括：\n(1) 第一證人向在場女警指稱上訴人用手按她右邊臀部，及後第一證人錄取口供時，則說她臀部中間股溝被人按下。第一證人在庭上解釋，只是當時沒有仔細向女警說出被觸碰部位；\n(2) 第二證人作供時指出第一證人在警署時並不肯定是否上訴人觸碰她，擔心冤枉好人。裁判官問第二證人不肯定的是甚麼，第二證人則指第一證人不肯定上訴人身分。\n6.\n裁判官認為以上分歧並不重要，因此裁定罪名成立。\n上訴理由\n7.\n完備上訴理由概括如下：\n(1) 裁判官錯誤地裁定上訴人的行為有猥褻成分及/或有猥褻意圖；\n(2) 裁判官沒有充分考慮控方第一證人被觸碰位置的分歧；\n(3) 裁判官以上訴人在警誡口供中說過他的右手觸碰到控方第一證人的臀部以支持定罪，並不正確；\n(4) 裁判官沒有充分考慮意外或無意識觸碰。\n討論\n8.\n代表答辯人的陳律師指控方第一證人不肯定的是上訴人身分。基於身分並無爭議，因此，這點並不重要。\n9.\n代表上訴人的吳大律師則指出正因爲上訴人身分由始至終沒有爭議，所謂第一證人不肯定上訴人的身分根本全無理據。況且，第一證人未被重召親自説明她不肯定的究竟是甚麼，及/或基於身分沒有爭議之下，爲何她說不肯定上訴人的身分。因此，證據上有缺餘，未能釋疑。\n10.\n就被觸碰位置，陳律師亦承認很難解釋為何觸碰點之描述不同，但極有可能第一證人因為尷尬沒有說出詳情。然而，第一證人指她是被手掌一面而非手背一面的手指按到，則無論是右邊臀部或中間股溝，兩者均必然並非意外。\n11.\n吳大律師則指證據沒有交代當上訴人行近第一證人時，第一證人怎樣轉身。若上訴人因為急步及雙手擺動而觸碰到第一證人的右邊臀部，則不能在不知雙方之相對位置下，單以手掌一面的接觸而排除意外。\n12.\n吳大律師亦指出股溝與右邊臀部區別甚大，股溝被按會即時令人排除意外。第一證人既然當衆投訴被非禮，則沒有理由不第一時間提及股溝。\n13.\n況且，第一證人在錄取口供時非常詳細，還以女警身軀作示範，則無理由不交待為何在現場說出右邊臀部而非中間臀溝。\n14.\n本席認為上訴人所提的兩個疑點均屬重要，第一證人都沒有作出合理解釋。\n15.\n基於上述理由，上訴得直。\n（馮驊）\n高等法院原訟法庭法官\n答辯人：由律政司高級檢控官陳詠嫻代表香港特別行政區\n上訴人：由鄧黃張律師事務所轉聘吳達輝大律師代表",
"attachments": [
{
"download_url": "https://legalref.judiciary.hk/doc/judg/word/vetted/other/ch/2010/HCMA000278_2010.doc",
"file_name": "HCMA000278_2010.doc",
"file_ext": ".doc",
"status": "success"
}
]
}

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HCMA 717/2015 香港特別行政區 高等法院原訟法庭 刑事上訴司法管轄權 定罪上訴 案件編號：裁判法院上訴案件2015年第717號 (原粉嶺裁判法院刑事案件2015年第2882號) ________________________ 答辯人 香港特別行政區 訴 上訴人 邱陽 ________________________ 主審法官 ：高等法院原訟法庭暫委法官陳廣池 聆訊日期 ：2016年1月28日 與2016年2月15日 判案書日期 ：2016年4月15日 判 案 書 上訴人否認一項侵害人身罪，經裁判官周至偉席前審訊後，被判罪名成立，判監2星期及賠償$2,000給受害人。上訴人不服定罪，提出上訴。上訴人在原審時由當值律師代表，在本上訴聆訊則沒有律師代表。
控方案情 第一控方證人(受害人)是港鐵職員，案發當日身穿制服。他和同事在落馬洲站負責人群控制。第一控方證人在出境大堂看見上訴人在7 - 11店鋪外亦是港鐵範圍內通道蹲在地上，用數個膠袋在執拾食物，把食物由一個膠袋放入另一個。 第一控方證人上前表露身份，叫上訴人不能停留。上訴人把一個膠袋撕爛，引致食物散落在地上。第一控方證人勸上訴人不要生事，叫上訴人前行。上訴人不斷以粗口辱罵第一控方證人。第一控方證人作出多番警告但上訴人亦不停謾罵，聲稱他是向天講粗口。第一控方證人要求上訴人出示身份證明文件，打算票控上訴人在港鐵範圍內講粗口。上訴人拒絕。第一控方證人報警，警員到達後，上訴人交出身份證。第一控方證人發出擬檢控通知書給上訴人。大家離開現場，但走在第一控方證人前面的上訴人突然折返到前者面前，向他講了粗口，並以右手推第一控方證人，致使他失去重心跌在地上。警員再折返而拘捕上訴人。醫生診斷第一控方證人，說他背部受創。 辯方案情 上訴人選擇作供，亦傳召一名女性友人作供。他說因膠袋爛了，所以在7-11店鋪外執食物。第一控方證人叫他不能停留。上訴人的解釋不為接納。上訴人自覺委屈，不肯出示身份證。上訴人說他只說了一次粗口。上訴人拿出手機拍攝。上訴人說第一控方證人在沒有任何警告下便票控上訴人講粗口。第一控方證人在完成票控後，在上訴人的左耳邊說：「呢班係我的伙記，我要玩死你好容易。」並對上訴人講粗口。上訴人對警員投訴，但第一控方證人突然「呀」一聲自己坐在地上，並隨即躺
下。上訴人說他全程都沒有接觸第一控方證人的身體。上訴人不爭議他和第一控方證人有所爭拗，但否認推撞後者。上訴人指稱第一控方證人假扮跌倒。 上訴理據 上訴人在2015年9月17日所填寫的表格101只引用所列印的字句提出上訴。上訴人早前要求把一些上訴人自己用手機來錄取的片段呈堂。本席予以批准並把上訴案件押後至2016年2月15日。有關的片段作為新增證物，有關的記憶棒為DP1，而另外3段錄像為DP2至DP3。 在本上訴聆訊，上訴人指裁判官沒有細心觀察有關錄像。上訴人開始時並沒有講粗口，後來才講粗口。上訴人說裁判官不應接納第一控方證人的證供。他講大話。第一控方證人因懷恨在心，亦曾用粗口罵上訴人。第一控方證人突然坐在地上，假扮跌倒。上訴人說當時有4名警員在附近。上訴人主要是說第一控方證人「屈」他。上訴人根本沒有觸碰第一控方證人。 上訴理據的討論 本席觀看新增的以上訴人手機拍攝的錄像，最後的錄像片段只看見第一控方證人已經坐在地上，而本席相信是上訴人的聲音，屢屢說不要「屈」他。其他的錄像則看見一些混亂的情況，以及上訴人對港鐵職員和到場的警員的不合作態度。事件由一宗較細微的紛爭開始，爭拗則逐步升溫。問題是上訴人是被控一項襲擊罪。那麼案件的重點在上訴人是否有觸碰第一控方證人引致後者跌倒。事實上，就算第一控方證人沒有跌倒，如果控方有證據指上訴人蓄意地觸碰第一控方證人，第一控方證人有沒有
跌倒或受傷並不是關鍵。有沒有跌倒、有沒有受傷只涉及刑罰及求情的因素。 裁判案件的上訴是以重審形式處理。裁判官耳聞目睹証人作供，自然有其優勢來評審証人的可信性和可靠性。 第一控方證人的傷勢報告並沒有爭議。醫生說第一控方證人「下背部有觸痛，能正常活動，沒有神經性病徵；X光檢查顯示有退化的情況。臨時診斷：背部受創。」 裁判官在其判決理由書中詳細分析控辯雙方的證言，最後說「總括來說，被告人與其證人孫小姐的證供前後不一致，又互相矛盾，不合情理，令人難以相信。」 對於控方證人，裁判官說：「兩名控方證人的證供清晰簡潔。…本席認為控方證人的證供清晰、有力，盤問下不受動搖。」 裁判官亦認為第一控方證人「竟然仍會選擇自己坐下而不理會在此情況下他的行為甚有可能被警員看到，以固有可能性而言，本席認為不甚可能。」 裁判官考慮了上訴人和辯方證人有良好的紀錄，但裁定他們的案情及證據「不可靠不可信」不為接受。反之，裁判官接納2名控方證人誠實可靠，亦信納他們的說法為事實，在此情況下，本席認為裁判官的事實裁斷並沒有不妥當的地方。上訴人所新增呈堂的錄像亦不能提出新證據支持上訴人的說法，指稱第一控方證人假裝跌在地上。事實上，本席同意原審裁判官所言，在那一刻已經有其他港鐵職員和警員在場，第一控方證
人犯不著甘冒妨礙司法公正，假裝被襲而誣告上訴人。本席認為就算上訴人推第一控方證人一下而後者並沒有跌到，上訴人仍然可以干犯了普通襲擊罪。第一控方證人有沒有跌倒或受傷並不是關鍵。第一控方證人所指證上訴人推他一把已經足夠構成普通襲擊的罪行。 結論 基於上述原因，本席駁回上訴，維持原判。本席在考慮本案性質和上訴人的個人情況後，決定就訟費不作出任何頒令。 (陳廣池) 高等法院原訟法庭暫委法官 答辯人：由律政司高級檢控官馮美琪代表香港特別行政區 上訴人：沒有律師代表，親自應訊
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