ATTORNEY GENERAL v. COVO KNITTERS LTD

1993, MA No. 547

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H E A D N O T E

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          Trade Descriptions Ordinance - Costs - Power to award costs against a convicted defendant - whether limited to counsel’s fees, solicitors costs and disbursements, and witness expenses - whether extends to costs of transporting and storing seized goods.

Held : (1)     The power under section 28 of the Trades Descriptions Ordinance to award costs is not limited to counsel’s fees, solicitors costs and witness expenses.

          (2)     The power under section 28 includes a power to award costs necessarily incurred in the investigation; the cost of preserving evidence required as proof in the prosecution; and the cost of preserving evidence in so far as such preservation is necessary for the purpose of an application for disposal of the goods.

          (3)     Section 28 of the Ordinance empowers a magistrate to award costs represented by actual expenses incurred in transporting seized goods.

          (4)     The fact that the space used to store the seized goods would have been used by the Government to store other goods even had the offence not been committed does not preclude an order for the cost of such storage, since the use of the space occupied by the seized goods was lost for other purposes. Once it is shown that rent was paid for the occupied space, or that in consequence of storage other space had to be rented, an order for costs to cover that expense could be made.

          (5)     If the seized goods are forfeited to the Crown and are intended by the Crown for sale so that such investigative, transport and storage charges could be recovered by the proceeds of sale, no order for costs should be made

IN THE SUPREME COURT OF HONG KONG

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO.547 OF 1993

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J U D G M E N T

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1. This is an appeal by way of case stated from a determination of a magistrate that the power conferred by section 28 of the Trade Descriptions Ordinance to award costs in proceedings under that Ordinance was limited to legal costs and disbursements, and witnesses expenses.

2. In May 1992 the respondent company was in possession of 1244 woollen pullovers to which false trade descriptions had been applied. The pullovers were seized by officers of the Customs and Excise Department. A prosecution was instituted, and on 3rd December 1992 the respondent pleaded guilty to the charge specified by the information. The offence thus committed an offence contrary to section 7(1)(b) of the Trade Descriptions Ordinance. The respondent company was fined.

3. The Crown then sought costs pursuant to the provisions of section 28 of the Trade Descriptions Ordinance. The costs claimed included :

(1) transportation charges in the sum of $600.00; and

(2) storage charges in the sum of $2,547.21.

4. The transport charges were in respect of sums actually expended in transporting the goods from the place of seizure to a godown. The storage charge was sought for the cost of storage at a godown at a daily rate of $12.93, a rate determined by the Director of Accounting Services as the cost of storage at ordinary commercial rates.

5. The magistrate refused to award these costs. He put the matter this way in the case:

 “6. I, however, being of the opinion that :

(a) the Respondent had pleaded guilty before the Court at the first opportunity and I was entitled to take that it into accountin deciding whether or not it was expedient to order the Respondent to pay the costs sought by the Appellant.

(b) the fines imposed upon the Respondent on 3 December 1992 were substantial and I was entitled to have regard to the total of those fines in deciding whether or not it was expedient to order the respondent to pay the costs sought by the appellant.

(c) it was unrealistic for the Director of Accounting Services to assign a daily rate for storage at a Government godown when that space would have been used in the service of the Customs and Excise Department whether or not a charge was paid for its use.

(d) the word ‘costs’ in s. 28 of the Trade Descriptions Ordinance extended to cover expenses such as counsel’s fees, solicitor costs and disbursements, and witness expenses but did not extend to the expenses claimed by the Appellant which were too remote.

held that the word ‘costs’ in s. 28 of the Trade Descriptions Ordinance did not include the claim made and dismissed the application.

7. The questions of law arising on the above statement for theopinion of this court therefore are

(a) Whether my determination was erroneous in point of law.

(a) Whether s. 28 of the Trade Descriptions Ordinance extends to cover actual expenses incurred by the Crown in transporting seized goods.

(b) Whether s. 28 of the Trade Descriptions Ordinance extends to cover notional expenses incurred by the Crown in storing seized goods.

6. I confess to some difficulty in following the relevance of paragraphs 6(a) and (b) of the case. Whether the court was entitled to take into account the plea of guilty, or the total fines, in deciding whether to award costs is not relevant to determination of the width of section 28 of the Trade Descriptions Ordinance (“the Ordinance”).

7. The first and central point is whether section 28 is limited to “counsel’s fees, solicitors’ costs and disbursements”. I do not think that it is. Section 28 of the Ordinance provides as follows :

“In any proceedings under this Ordinance, a magistrate or court hearing the proceedings may, notwithstanding any provision of any other Ordinance, make such order as to costs as he or it may think fit.”

There is nothing in the provision itself which limits costs to those of the proceedings themselves, and nothing in the scheme of the Ordinance detracts from the wide words of the section or the wide discretion which, prima facie, the section confers. Furthermore, in my judgment, an analysis of the Ordinance and of relevant authorities supports an interpretation wider than that adopted by the magistrate.

8. The power to remove or detain goods is conferred upon the Commissioner for Customs and Excise by section 15(1)(c) and (f) of the Ordinance. These sub-sections provide as follows :

“15(1)  An authorized officer may, on production, if required, of evidence of his appointment  -

……

(c)        if he has reasonable cause to suspect that an offence under this Ordinance has been committed, seize or detain any goods for the purpose of ascertaining, by testing or otherwise, whether the offence has been committed;

……

(f) seize, remove or detain

(i)         any goods in respect of which he has reasonable cause to suspect an offence under this Ordinance has been or is being committed; and

(ii)        anything which he has reason to believe may be required as evidence in proceedings for an offence under this Ordinance.”

9. Section 30 of the Ordinance confers upon a court power to order forfeiture of the goods seized under the Ordinance. The power arises whether or not a person is convicted of an offence under the Ordinance, but no such power arises unless the goods are goods in respect of which such an offence has been committed.

10. It follows that, within the scheme of the Ordinance, a prime purpose of seizure of goods is to investigate whether or not an offence has been committed in respect of them. That apart, removal and detention, or further detention, once it is decided that an offence has been committed, will primarily be for one of two purposes : detention pending a court order for disposal where no offender is identified; or detention for the purpose of a prosecution - that is, to preserve the goods for the purpose of proof, if necessary, in the prosecution, of an alleged offender, and in any event until an order for disposal can be made, (although the Commissioner does have power himself to release goods to those who appear to him to be the owner).

11. So what is it that is sought in this case and in cases like it? What is sought are the costs of the investigation insofar as removal and detention is for the purpose of that investigation; as well as the costs of preserving the evidence, should that evidence be required for the purpose of proving the offence. It might be argued that it cannot conceivably be necessary to preserve 1244 pullovers in order to prosecute; that far fewer will be required, if any at all; or that photographs will do; or that oral evidence will suffice. That may be, though it is always difficult to predict what defence might be run. But, in any event, part of the aim of the proceedings is to receive the court's order for the disposal of the goods, and the goods must be preserved pending that order. For that purpose at least, transportation and storage is necessary.

12. The power in this Ordinance to award costs includes, in my judgment, the costs necessarily incurred in the investigation, the cost of preserving evidence which a prudent and cautious prosecutor reasonably adjudges may be required as proof in the prosecution of an alleged offender, and the cost of preserving evidence in so far as such preservation is necessary for the purpose of an application which is consequential upon a conviction. There is nothing in the section itself, nor in the scheme of the Ordinance as a whole, which warrants a restriction of costs to legal fees and witness expenses.

13. In R.v. Burt, ex-parte Presburg [1960]1 QB 625, the Divisional Court of the Queen’s Bench Division was asked for an order of certiorari to quash a magistrate’s order as to costs in the following circumstances. Section 6 of the Costs in Criminal Cases Act 1952 gave to the magistrate’s court the power, on summary trial of an information, to

“make such order as to costs …… on conviction …… as it thinks just and reasonable.”

In the exercise of that power, a magistrate ordered a defendant to pay the estimated costs of the attendance of the only witness, a police officer, in a traffic offence trial unattended by a professional prosecutor, or indeed by anyone in the prosecution camp other than that witness. The argument on the application to quash was that the prosecution incurred no costs, for costs could not include a sum marked as compensation for the salary paid to a police officer. The application failed. It was decided that costs were not limited to direct disbursements incurred through legal representation. This is what Lord Parker C.J. said, at page 633 :

“What, then, is included in the word ‘costs’? Must it be confined and confined only to disbursements and expenses properly so called? I confess that I should be surprised if it was necessary to confine the word ‘costs’ in that limited way. An illustration was given in the course of the argument of some of these big stores today who employ private detectives and others to keep an eye on shoplifters. If such an employer uses one of his salaried staff in and about the prosecution of an offender, is it to be said that the employer has been put to no expense? It seems to me that he has been put to expense in that he has employed a member of his salaried staff to do that and thereby lost that man’s labour for the time being, and is put to the expense of having to find another person to perform the work which the first employee would otherwise be doing.”

14. That judgment was cited by the Divisional Court in Neville v.Gardner Merchant Limited [1983]5 Cr.App.R.(S) 349. There, various charges were laid under the Food Hygiene (General) Regulations 1970. The defendant company pleaded guilty, and the magistrates allowed costs for preparatory and court work carried out by the prosecuting authority’s legal officer, and by its advocate, but no costs were allowed in respect of work done by the investigating officer in connection with the offences. The justices had stated that they “were of the opinion that the officer in question was doing no more than her job in carrying out the two inspections.” The statutory costs provision was not dissimilar in its apparent scope from section 28 of the Ordinance. It provided :

“On the summary trial of an information a magistrate’s court shall, on conviction, have power to make such order as to costs to be paid by the accused to the prosecutor as it thinks just and reasonable ....”

15. Two questions of law were posed by the justices:

“(A)     Did we misdirect ourselves in law in refusing to order costs in favour of the prosecutor to reimburse the cost of time extended by a Senior Environmental Health Officer in investigating the case on the ground that our discretion was not wide enough to embrace such costs? ...

(B)       In the alternative did we misdirect ourselves in law in refusing to award investigation as well as legal costs in that since the investigating officer is paid from public funds and since it is her job to investigate such contravention on behalf of the local authority such costs were not properly payable to a prosecutor?”

16. In addressing the first of those questions, Kerr L.J. cited the passage in Burt which I have set out, and also referred, at page 352, to Tottenham Justices, ex parte Dwarkados Joshi (1982)4 Cr.App.R.(S) 19, stating that in the latter case, Lord Lane C.J. had

“…. [approved] in principle that account should be taken of the time of investigation which brought the offences in question to light. He went on : ‘The matter which the justices had to consider then was, what sum of money would reimburse the local authority for those items of time and trouble which the offence committed by these two men had made necessary?’ That, taken together with what was said in Burt’s case, makes it quite clear that not only is that no fetter on the discretion of the justices in awarding such costs, but that prima facie it is right that such costs should be taken into account and awarded.”

17. The empowering provision itself, or its statutory context, can of course result in a more restrictive approach. So, for example, in Maher and Others (1983)5 Cr.App.R.(S) 39, costs for which the Crown applied pursuant to pleas of guilty in the Crown court included a substantial item in respect of jury expenses, and overtime payments to and travelling expenses of officers engaged in the investigation. The trial judge acceded to the application, but the Court of Appeal decided that the order went beyond the limits contemplated by law. The court’s reasoning was explained by O’Connor L.J., at page 41:

“The extent of the over estimate depends on the meaning of ‘costs’ in the Costs in Criminal Cases Act 1973. Section 4 provides :

‘(1)      Where a person is prosecuted or tried on indictment before the Crown Court the Court may -

a) if the accused is convicted order him to pay the whole or any part of the costs incurred in or about the prosecution and conviction, including any proceedings before the examining justices ...’

The problem is best demonstrated by considering an item included in an attempt to justify at least half the estimate, namely £32,000 jury expenses. In one sense payments made to the jury are certainly an expense incurred in or about the prosecution and conviction of the accused, but is this item part of ‘the costs?’ We are clear that it is not. ‘Costs’ in the context of litigation, civil or criminal, does not mean ‘the costs’ by whomsoever paid. In the section ‘incurred’ means ‘incurred by the prosecutor.’ The expense of providing a jury is not incurred by the prosecutor, nor is it chargeable to the prosecutor. It is not ‘part of the costs incurred in or about the prosecution.’ That this is so is made clear by s.3 of the Act, which provides, inter alia, for the payment out of central funds of' ‘the costs of the prosecution.’ Section 3(3) provides :

‘The costs payable out of central funds under the preceding provisions of this section shall be such sums as appear to the Crown Court reasonably sufficient -

(a) to compensate the prosecutor ….. for the expenses properly incurred by him in carrying on the proceedings and

(b) to compensate any witness for the prosecution for the expense trouble or loss of time properly incurred in or incidental to his attendance.’

Sections 3 and 4 are in the part of the Act headed ‘awards by the Crown court. We hold that the wording of s.4(1)(a) does not permit the Crown Courts to order the accused to pay as costs the expense of items which it could not order as costs to be paid out of central funds.

Other suggested items were even more remote : overtime payments to, and travelling expenses of, officers engaged in the investigation, at £300,000. Similar payments for security at Lancaster Castle and the judges’ lodgings, another £300,000. None of these items could be charged to the DPP and cannot be included in any bill of costs.”

18. I note the limited interpretation of “costs” in that case and in particular the decision that payments to officers investigating the case were too remote. I have also taken the liberty of looking at the magistrate’s notes of proceedings in the present case in so far as they relate to the arguments placed before him concerning the proper order as to costs, and in so far as they relate to his decision. None of the authorities I have examined was drawn to his attention, save that there is reference by him in these notes to Blackstone’s Criminal Practice, para.D26-41. The editors there contend that :

“... the only items the court should properly take into account in assessing the prosecution costs ... are items such as counsel’s fees, solicitor’s costs and disbursements plus witness expenses. More remote costs loosely associated with the prosecution ... should be ignored.”;

and in so submitting, they rely on Maher, acknowledging, however, that Maher was decided upon statutory provisions worded differently from section 18 of the Prosecution of Offences Act 1985, the provision under discussion in Blackstone. Section 18 provides that upon conviction "... the court may make such order as to the costs to be paid by the accused to the prosecutor as it considers just and reasonable".