Your World of Legal Intelligence
 Hong Kong | 1-800-335-6202

Hksar v Chan Wai Yip And Others

Judgment Cited authorities 27 Cited in Precedent Map Related
Vincent
Judgment Date01 April 2010
Year2010
Judgement NumberHCMA449/2008
Subject MatterMagistracy Appeal
CourtHigh Court (Hong Kong)
HCMA000449/2008 HKSAR v. CHAN WAI YIP AND OTHERS

HCMA449/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MAGISTRACY APPEAL NO. 449 OF 2008

(ON APPEAL FROM FLCC NO. 886 OF 2007)

______________

BETWEEN

HKSAR (香港特別行政區) Respondent
and
Chan, Wai Yip (陳偉業) (D2) 1st Appellant
Fung, Moon Kwai (馮滿貴) (D3) 2nd Appellant
Hung, Chau Ming (洪秋明) (D4) 3rd Appellant
Wong, Lit (王烈) (D5) 4th Appellant
Sin, Kam Sing (單錦星) (D6) 5th Appellant
Choi, Kwai Sing (蔡貴成) (D7) 6th Appellant
Chan, Chun Kim (陳振鉗) (D8) 7th Appellant
Lee, Chi Ying (李志英) (D9) 8th Appellant
Cheung, Chi Keung (張志強) (D10) 9th Appellant
Wong, Chung Tit (黃松秩) (D11) 10th Appellant
Li, Yuk Fai (李育輝) (D12) 11th Appellant
Wong, Tak Hing (黃德興) (D13) 12th Appellant
Cheung, Mui Fong (張梅芳) (D14) 13th Appellant
Fung, Moon Kwong (馮滿光) (D15) 14th Appellant
Tang, Yiu Kwan (鄧耀坤) (D16) 15th Appellant
Li, Sai Hung (李世鴻) (D17) 16th Appellant
Wong, Oi Kwan (黃愛群) (D18) 17th Appellant

______________

Before: Hon Tang VP, Yeung JA and D Pang J in Court

Dateof Hearing: 15 March 2010

Date of Judgment: 15March 2010

Date of Reasons for Judgment: 1 April 2010

________________________________

REASONS FOR JUDGMENT

________________________________

Hon Tang VP:

Introduction

1. 19 defendants were charged with one single count of conspiracy to defraud, contrary to common law and punishable under section 159C(6) of the Crimes Ordinance, Cap. 200. The particulars of offence alleged that:

“… between a date unknown in June 2004 and the 21st day of July 2004, in Hong Kong, conspired together with AU Wing and other persons unknown, to defraud the Food and Environmental Hygiene Department (‘the FEHD’), by dishonestly pre-allotting amongst themselves and their representatives the cooked food stalls at Tai Po Hui Market at No.8 Heung Sze Wui Street, Tai Po prior to the auction held by the FEHD on the 21st day of July 2004 (‘the Auction’) and agreeing amongst themselves and their representatives not to compete against one another in bidding the aforesaid cooked food stalls at the Auction, thereby deceiving the FEHD into believing that there was only one bid offered at the upset price for each of the aforesaid cooked food stalls and renting the aforesaid cooked food stalls at the upset prices to the aforesaid persons or their representatives.”

2. After trial, apart from the 1st defendant who had pleaded guilty, all the defendants were convicted by Deputy Magistrate Eric Cheung Kwan-ming (as he then was). They were each sentenced to imprisonment ranging from 9 months to 12 months. They appealed against both conviction and sentence. On 13 May 2009, Deputy High Court Judge Toh transferred these appeals to this Court pursuant to section 118(1)(d) of the Magistrate Ordinance, Cap. 227. She also granted the appellants bail pending appeal. They had earlier been denied bail by the learned Deputy Magistrate. Unfortunately, pending appeal, the 19th defendant died. His appeal was abated on 2 March 2010.

3. We have allowed the appeal and now give reasons for our decision.

Facts

4. The facts are quite straight-forward. For the present purpose they can be stated briefly.

5. The appellants were the tenants or assistants to the tenants of cooked food stalls at the former Tai Po Temporary Market (“the Old Market”). In 2004, the appellants and other tenants were required by the Food and Environmental Hygiene Department (“FEHD”) to move from the Old Market to the newly built Tai Po Hui Market (“the New Market”). They were given priority to bid for stalls at the New Market in a restricted auction （圍內競投） which was held exclusively for them. The bid price would become the rent to be paid. The upset prices for these stalls were fixed at 75% of the market rent as assessed by the Rating and Valuation Department. These upset reserved prices were made known by letters sent by FEHD to the potential bidders including the defendants in early June 2004.

6. The prosecution’s case is that before attending the restricted auction, the appellants had attended a pre-allotment exercise held among themselves and other tenants of the Old Market. The exercise was conducted by way of the drawing of lots. The numbers drawn in the first round would determine the sequence of the draw in the second round. A number drawn in the second round would be the number of the stall in the New Market allotted to the drawer of that number. The participants also agreed amongst themselves that, each would only bid for the stall which had been allotted to him/her in this manner.

7. The restricted auction was held on the 21 July 2004 and was attended by 36 eligible bidders, including these appellants. 40 cooked food stalls were put up for auction. There were no competitive bidding during the auction and the stalls were knocked down to all the 36 bidders at the upset prices.

Rival submissions

8. Mr Terence Wai, who appeared for the prosecution below and before us, relied on the pre-allotment and the agreement not to compete, as the constituents of the offence. He does not rely on any aggravating feature such as fraud, misrepresentation, violence, intimidation or inducement of a breach of contract as he had not relied on any of these aggravating features at trial.

9. Nor did he rely on section 7(1) of the Prevention of Bribery Ordinance, Cap. 201 (“PBO”) which makes it an offence for:

“(1) Any person who, without lawful authority or reasonable excuse, offers any advantage to any other person as an inducement to or reward for or otherwise on account of that other person's refraining or having refrained from bidding at any auction conducted by or on behalf of any public body, shall be guilty of an offence.”

10. Section 7(2) makes it an offence for a person to solicit or accept any advantage in similar circumstances. Section 6 covers corresponding offences in respect of tenders by public body. I will return to section 7 of PBO in due course.

11. Instead, Mr Wai relied on what Viscount Dilhorne said in Scott v Metropolitan Police Commissioner [1975] AC 819 at page 840:

“… in my opinion it is clearly the law that an agreement by two or more by dishonesty to deprive a person of something which is his or to which he is or would be or might be entitled and an agreement by two or more by dishonesty to injure some proprietary right of his, suffices to constitute the offence of conspiracy to defraud.”

12. He submitted that FEHD had suffered economic loss as a result of the appellants’ conduct.

13. The arrangement complained of in this case, namely, an agreement by which parties agreed not to bid against one another at an auction is not a recent or uniquely Hong Kong phenomenon. Mr Martin Lee, SC, who, leading Ms Bonnie Tam, appeared for the 3rd, 5th to 9th, 13th, 15th to 17th appellants on appeal but not below, submitted that such an agreement has always been held to be valid and enforceable by English courts and more importantly, has never been held to be criminal. The other appellants have adopted Mr Lee’s submissions.

Authorities up to 1975

14. The first authority relied on by Mr Lee is Galton v Emuss [1844] 1 Coll 243. The agreement was that in consideration of A’s withdrawing his opposition to B’s purchase of an estate at a sale by auction, A shall have the right of pre-emption of that estate and of another estate belonging to B during his lifetime, and for twelve months after his disease. The agreement was held to be founded upon valuable consideration and specific performance was ordered.

15. Knight Bruce VC said at 246:

“Two men, severally desirous of effecting a purchase of an estate, become acquainted with each other’s intentions, and, with a view to their own benefit, enter into an engagement together that one shall retire, leaving the field open to the other. It is not suggested that this arrangement involved any matter of fraud or misrepresentation; it was merely that one should not bid while the other was a competitor. No authority has been cited to show that a contract founded on such a consideration is illegal …”

16. In In re Carew's Estate[1858] 26 Beav. 187, on a sale under the court, two persons agreed not to bid against each other, but that one should bid up to £1,500 and divide the lot between them. They bought it for £650. When the agreement became known to the vendors, they took out a summons to set aside the sale. Sir John Romilly MR refused to set aside the sale, and in a reserved judgment said at 189:

“… I am not aware of any case, or of any principle which establishes that such an agreement is inequitable. … Its validity must depend on the legality of such an agreement, and not the amount to be given.”

17. After examining an earlier authority he said at page 190:

“I find that it does not bear out the proposition that a mere agreement, between two persons, each desirous to buy a lot that they will not bid against each other, is sufficient to invalidate a sale to one of them …”

18. In Heffer v Martyn [1867] 36 LJ Ch 372, where the plaintiff, to induce B not to bid at a public auction, agreed to pay B £500 if the plaintiff should buy the property at a price not greater than £6,500. He also tried unsuccessfully to arrange with other persons that they should not bid. The plaintiff eventually bought the property at £3,000, which was the reserve. On the vendor’s refusal to complete, Lord Romilly MR ordered specific performance and said:

“I had to consider this in the matter of In re Carew's Estate, and I came to the conclusion that such an arrangement is not illegal; that the intending buyers may arrange between themselves which lots they will bid for and which not, and agree...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT