HKSAR v. C & C TEXTILES LTD

bjbj HCMA713/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE (Appellate Jurisdiction) MAGISTRACY APPEAL NO.713 OF 2006 (ON APPEAL FROM FLMP 85 OF 2006) ----------------------------

BETWEEN HKSAR Respondent and C & C TEXTILES LIMITED Appellant ------------------------ Before : Hon Nguyen J in Court Date of Hearing : 21 August 2007 Date of Judgment : 10 October 2007 -----------------------

JUDGMENT ----------------------- Background

AUTONUMOUT On 21 February 2005, the appellant company was convicted of a charge under section 12(1) of the Trade Descriptions Ordinance, Cap. 362, namely importing goods to which a false trade description was applied. The particulars of the charge were that on 19 January 2004, the appellant imported 2,589 ladies knitted cardigans to which the false trade description made in Uzbekistan was applied. The appellant company lodged an appeal against that conviction and on 13 July 2005, the appeal was allowed by Pang J, the respondent not opposing the appeal. The reason why the appeal was allowed was that the trial magistrate when considering section 24A of the same Ordinance had committed an error of law. Section 24A of Cap. 362 provides (1) In any prosecution for an offence under this Ordinance in respect of the import of goods to which a false trade description of the place of manufacture, production, processing or reconditioning is applied, evidence that the goods were imported from a place shall be prima facie evidence that the goods were manufactured, produced, processed or reconditioned, as the case may be, in such place.

AUTONUMOUT Section 24A was considered in HKSAR v. Guo Xin Zhi and Another [2004] 3 HKC 50 where it was held that ... Section 24A made no mention in its terms of any presumption arising or of any requirement of rebuttal by a defendant. All it did was require evidence of one event (ie the importation of goods into Hong Kong) to be taken as prima facie evidence of another event (ie the manufacture of those goods in the country or place from which they came into Hong Kong). The possible wrongful attribution of a burden of proof to a defendant was a material misdirection which related to the fundamental issue before the court. ...

AUTONUMOUT The trial magistrate who convicted the appellant had fallen into the same error when he said that the appellant had to rebut the presumption created by section 24A on a balance of probabilities. An application by the prosecution for a retrial was rejected by Pang J.

AUTONUMOUT On 13 February 2006 the Customs and Excise Department lodged an application for forfeiture of the goods in question. The forfeiture application was heard by Deputy Magistrate Stephen Wong on 13 July 2006. During the forfeiture hearing, the prosecutor called no evidence but produced the transcript of the original trial and certain documentary exhibits which had been produced at the original trial. The law relating to forfeiture of goods

AUTONUMOUT The application for forfeiture was made under section 30(1) of Cap.362 which states Any goods in respect of which an offence under this Ordinance has been committed shall be liable to forfeiture, whether or not any person has been convicted of any such offence.

AUTONUMOUT Under subsection (3) where goods have not been released to the owner or his authorised agent, the Commissioner of Customs and Excise may, whether in the same proceedings where an offence is prosecuted or in other proceedings under this Ordinance, apply to a court or magistrate for the forfeiture of the goods.

AUTONUMOUT Under subsection (4), the court or magistrate, if satisfied that the goods are liable to forfeiture, may order that : (a) the goods be forfeited to the Government; (b) the goods be destroyed; (c) any false trade description applied to the goods be obliterated and thereafter either disposed of as directed by the court or released to the owner.

AUTONUMOUT Quite clearly then, the Ordinance envisages that the application for forfeiture may be made either during the trial for the prosecution of the commission of an offence under the Ordinance or in other proceedings under the Ordinance. Grounds of appeal

AUTONUMOUT Bedford on behalf of the appellant advanced three grounds of appeal. These are 1. The Learned Magistrate erred in allowing the forfeiture proceedings to go ahead when the essential precondition for such proceedings contained in section 30(1) of the Trade Descriptions Ordinance ... Cap. 362 ... had not been and could not be met by the Prosecution.

2. Although correct in thinking that he was bound to adopt a neutral starting point to the exercise of his unfettered discretion by virtue of the Court of Appeal s decision in The Queen v. CEC Finance Limited [1993] 2 HKCLR 134, the Learned Magistrate erred in law by signally failing to adopt a neutral starting point to the exercise of his discretion. The Learned Magistrate fettered his discretion by mistakenly applying the presumption contained in section 24A of the [Ordinance], when the presumption should have played no part in the exercise of his discretion.

3. In all the circumstances of the present case, the forfeiture order made by the Learned Magistrate is unsafe and unsatisfactory.

AUTONUMOUT The first two grounds of appeal can be taken together. In essence, counsel s submission is that the goods in question were not liable to be forfeited unless and until, in accordance with section 30(1) of the Ordinance, it can be shown that an offence under the Ordinance had been committed. It is clear from section 30 that that is all the prosecution need prove and it matters not that no person has been convicted of any such offence. To try and prove that an offence under the Ordinance had been committed, the prosecution relied entirely on section 24A of the Ordinance. Counsel s submission is quite simply that section 24A could not have been used by the prosecution in the forfeiture proceedings because the section starts off by saying In any prosecution for an offence under this Ordinance... . Counsel s submission is quite simply that the forfeiture proceedings were distinct and separate proceedings from the prosecution for an offence under the Ordinance, namely the original trial. Counsel submitted that if it was the intention of the legislature that section 24A can be used in forfeiture proceedings where those proceedings are distinct and separate from the prosecution for an offence under the Ordinance, the legislature should have made that clear in section 24A. If that submission is right, then in my view the legislature could have used the words which appear in section 30(3), namely whether in the same proceedings where an offence is prosecuted or in other proceedings under this Ordinance in lieu of the phrase in any prosecution for an offence under this Ordinance

AUTONUMOUT The reply by Mr Wong appearing for the respondent is that it is an undisputed fact that the cardigans were imported into Hong Kong from the Mainland. That may be so, but if section 24A cannot be employed in the forfeiture proceedings how does that help the applicant in the forfeiture proceedings that the cardigans were imported into Hong Kong from the Mainland?

AUTONUMOUT Wong also submits that to prove that an offence has been committed under the Ordinance as required by section 30(1), the prosecution is entitled to and should turn back to the offence section itself, namely section 12 and apply section 24A which would be relevant for the determination of whether an offence has indeed been committed in relation to the goods sought to be forfeited. He therefore submits that for the purpose of determining whether an offence under section 12 had been committed, the legislature s intent must be that section 24A can be invoked. He noted that section 30 does not preclude the use of the section 24A provision.

AUTONUMOUT cannot agree with the submission by Mr Wong. On a plain reading of section 24A, that section can only be used where the proceedings are for ... any prosecution for an offence under this Ordinance in respect of the import of goods to which a false trade description of the place of manufacture, production, processing or reconditioning is applied. As I mentioned above, if the legislature intended that section 24A can be used for forfeiture proceedings, their intention could have been made quite clear by the use of the words which I suggested above in paragraph 10. Without the use of section 24A which says that the fact that these goods were imported from China would be prima facie evidence that they were manufactured in China, what evidence was there in the proceedings to prove that the goods were indeed manufactured in China?

AUTONUMOUT As was decided by the Court of Appeal in The Queen v. CEC Finance Limited [1993] 2 HKCLR 134, the discretion to order forfeiture is unfettered and the question is to be resolved by the court from a neutral starting point ... with both parties on a level playing field, ... and each with the onus of proving on a balance of probabilities any fact which he or it asserts if that fact is not admitted by the opposite party. ...

AUTONUMOUT have found that the use of section 24A in the instant case was wrong and therefore this appeal must be allowed to the extent that the order for forfeiture is set aside. If the Commissioner feels that he can prove that these goods were not manufactured in Uzbekistan without the employment of section 24A then he is at liberty to make another application for the forfeiture of the goods which can then be heard afresh before another magistrate.

AUTONUMOUT Before concluding, I should mention that it is most commendable on the part of the Bar Association to provide the Free Legal Service Scheme under the auspices of which this appeal was launched. It is most commendable that counsel would volunteer his time to prepare for and appear in court to argue the appeal. Mr Bedford, most commendably, was able to go through the voluminous transcript of the original trial and the transcript of the forfeiture proceedings, which were all in Chinese. No translations were made and counsel is commended for his industry in this matter. (Peter Nguyen) Judge of the Court of First Instance, High Court Mr Michael Wong, SGC of the Department of Justice, for HKSAR Mr Nigel Bedford, instructed by the Bar Free Legal Service Scheme, for the Appellant

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