AF2504 Introduction to

Business Law
Lecture 1
Introduction to HK Legal System

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 Part I

Classification of Laws and Legal

Systems

Origin and Sources of Hong Kong

Law

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 Classification of Law (1)
Criminal Law vs Civil Law
Differences Criminal Law Civil Law

Objectives Maintain social order Defining rights

Punishing the wrong doer Resolve conflicts
Compensating the victim
Parties in a court case Prosecutor (HKSAR) Plaintiff
Defendant Defendant
HKSAR v. Defendant Plaintiff v. Defendant
Consequences of Fine / Imprisonment Paying compensation
violation
Standard of evidence to The case must be proved The case must be proved on a
prove a case in court beyond reasonable doubt. balance of probabilities.

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Balance of Probabilities

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 Classification of Law (2)
Private Law vs Public Law

• Law of Contract • Constitutional law

• Law of Tort • Administrative law
• Law of Property • Criminal law
• Law of Trust
• …

Person------Person Gov’t-----Person
Private Law Public Law

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 Legal Systems (legal origins)
Civil law system Common law system Others
(e.g.
Islamic
law)
Major •Legislature makes •Both the Legislature and
difference law. judges make law.
•Laws are codified. •Court decisions (judge-
(“legislation” / made law) are binding
“statute”) precedents (“case law”).

Jurisdictions France, Germany, US, UK, Singapore, India,

Japan, China etc.
(Mainland), etc.

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Origins of Hong Kong Legal System
• HK was ceded to the Great Britain in 1842.
• The English legal system (common law system) was
introduced to HK by the British.
• Section 3(1), the then Application of English Law
Ordinance provided that
English common law and rules of equity should be in force in Hong Kong
insofar as they were applicable to the circumstances of Hong Kong or its
inhabitants.

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 After 1997
• Basic Law
– Article 5: one country, two systems
– Article 8: confirms that the laws previously in force in HK remain
effective
– Article 18
“The laws in force in the Hong Kong Special Administrative Region shall
be this Law, the laws previously in force in Hong Kong as provided for
in Article 8 of this Law, and the laws enacted by the legislature of the
Region.”
– Article 84:
“The courts of the Hong Kong Special Administrative Region shall
adjudicate cases in accordance with the laws applicable in the Region
as prescribed in Article 18 of this Law and may refer to precedents of
other common law jurisdictions. ”

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 Sources of HK Law
1. The Basic Law
2. Chinese national law (limited to nationality, defense and foreign affairs)
3. Common law
– Doctrine of binding precedent / stare decisis
– Where the common law rules are to be found? – law reports
E.g. IRC v. Hinchy [1960] 1 All ER 505
4. Rules of equity
– When there is conflict between the rules of common law and the rules of
equity, rules of equity prevails.
5. Legislation
6. Chinese customary law
– S.13 of the New Territories Ordinance: the courts may recognise and
enforce Chinese customs in relation to land in the New Territories.
7. International law

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 Common law
• Before 1066, there was no single system
of law which applied to the whole
England.
• William I conquered England and
established a central government.
• The Kings sent judges traveling around
the country to hear cases.
• When decided cases, the judges applied
principles drew on common customs,
and applied them in subsequent cases.
• Hence, created legal principles common
applied across England – “common
law”.

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 The Doctrine of Precedent
General principles
• Similar cases should be decided in a similar manner for
consistency. i.e. a similar subsequent case will follow the
decision in a previous case.
• Doctrine of binding precedents: Following already-decided
cases. (遵循先例)
• Stare decisis: (Latin) To stand by previous decisions.
Higher courts v Lower courts
• A lower court is bound by a decision given by a higher court.
• The lowest courts do not make precedents because their
decisions are usually not reported.

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Doctrine of binding precedents

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 Rules of Equity
• By the 15th century, the procedure of common law had
become very slow, technical and expensive. It also grew
rigid while circumstances changed.
• It could not satisfy the growing need of people. People
petitioned the King himself for justice and proper remedy.
• The King delegated the work to the Chancellor, and the
Chancellor later formed the Court of Chancery.
• When deciding cases, the Court of Chancery was not bound
by the doctrine of binding precedent, and any formality in
procedure.
• Cases were decided by the sense of fairness and conscience
of the judges.

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The common law courts and the
Court of Chancery co-existed
until 1870s.

After that, all courts in England

(and HK) can apply both
common law rules and the rules
of equity.
 Legislation
• Ordinances
– Primary form of legislation
– Passed by the LegCo
– E.g. Sale of Goods Ordinance (Cap.26)
– Where to find? http://www.elegislation.gov.hk/
Rules, Regulations, Order, etc.
– Subsidiary legislation
– Made by the Executive Council or other bodies empowered by
relevant ordinances
 When there is conflict between common law / rules of
equity and statute law, statute law prevails.

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 Part II

Creation and
Interpretation of Court System
laws

Legal Profession

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 The Process of Passing Legislation
Legislative Government First Reading
Council Gazette

Second Reading
Executive
Council

Committee
Stage

Bill
Ordinance Third Reading

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 Interpretation of Legislation
• When a dispute arises involving different
understanding of a specific legislation provision,
[which body? ] will interpret the law.

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 Interpretation Rules
• Intrinsic aids (interpretation that can be found within the
same statute)
• Extrinsic aids
– The Interpretation and General Clauses Ordinance (Chap. 1)
– Common law rules
• The Literal Rule: using the ordinary meaning of the word
IRC v. Hinchy [1960]
• The Golden Rule: Where literal interpretation of a word can give
rise to an absurd outcome, the court will modify the ordinary
meaning so as to avoid absurdity. R v Allen [1872]
• The Mischief Rule: Court should take into account the mischief
that the statute intends to remedy. Smith v. Hughes [1960]

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 IRC v Hinchy [1960]
• S.25 of the Income Tax Act 1925 provided that any
tax avoider should pay a fine of £ 20 plus “treble the
tax which he ought to be charged under this Act”.
• Hinchy ought to pay £146 as tax, but he only paid £
132.
• He argued he should be fined £ 20 plus £14 × 3 = £62
• By applying the literal meaning of s.25, the court
decided he should pay £20 + £146 × 3 = £458

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 R v Allen [1872]
• S.57 of the Offences Against the Person Act 1862 made it an
offence to “marry” whilst one’s original spouse was still alive
(and there had been no divorce).
• Allen, having a wife, went through a ceremony of marriage
with another woman. He was charged as guilty of bigamy.
• His lawyer argued being married, Allen could not have validly
“marry” another person.
• The court held that the word “marry” can mean to become
legally married or to “go through a ceremony of marriage”. To
do otherwise would have produced an absurd result.

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 Smith v. Hughes [1960]
• S.1(1) of the Street Offences Act 1959 said “it shall be an
offence for a common prostitute to loiter or solicit in a
street or public place for the purposes of prostitution.”
• The court considered appeals by women who had been on
a balcony or at the windows of ground floor rooms. In
each case, the women were attracting men by calling to
them or tapping on a window.
• They argued they were not guilty since they were not in
the street or in public place.
• Lord Parker said the Act aimed at cleaning up the street.
So it did not matter whether the prostitutes were standing
in the street or on the balcony or at the window.

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The Mischief Rule

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 Courts / Tribunals
• Small Claims Tribunal
– Contract or tort claims under $75,000
– Informal procedure / legal representation not allowed
• Labor Tribunal
– Employment contract claims exceeding $8,000
– Informal procedure / legal representation not allowed
• Magistrate’s Court
– All criminal cases commence from here
– More serious cases transferred to District Court or Court of First
Instance
• Coroner’s Court: investigate unnatural or suspicious deaths

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• Land’s Tribunal
– Claims for possession of premises, tenancies, sub-
tenancies and building management disputes
• District Court
– Civil: up to $3 million
– Criminal: May impose maxi. 7 years imprisonment
cannot hear murder, manslaughter or rape cases
• High Court
– Court of First Instance
• Unlimited civil and criminal jurisdiction
– Court of Appeal
• Court of Final Appeal

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HK Legal Profession
(1) Solicitors
• Work as general practitioners (in firms)
• Advise clients on all aspects of the law
such as:
- drafting contracts, wills, etc.
- dispensing advice on purchase of
property, divorce matters, etc.
• Professional body: Hong Kong Law
Society

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HK Legal Profession: (2) Barristers
• Work as sole practitioners (in chambers)
• Specialise in specific legal matters such as:
- drafting documents relating to litigation
- advocacy (arguing in court)
- giving opinions on the law
• Professional body: Hong Kong Bar Association
• Clients cannot consult them directly
• They represent clients in courts (normally in
higher courts)

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 Laws against Corruption
• (1) Independent Commission Against
Corruption Ordinance (Cap 204)
• (2) Prevention of Bribery Ordinance (Cap 201)
• (3) Elections (Corrupt and Illegal Conduct)
Ordinance (Cap 554)

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 Anti-Money Laundering and
Counter-Terrorist Financing
• (1) Anti-Money Laundering and Counter-Terrorist Financing
(Financial Institutions) Ordinance (AMLO)
• (2) Drug Trafficking (Recovery of Proceeds) Ordinance
• (3) Organized and Serious Crimes Ordinance
• (4) United Nations (Anti-Terrorism Measures) Ordinance
• (5) United Nations Sanctions Ordinance

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The End

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