THE QUEEN v. ENTERPRISE LACASA & ASSOCIATES LTD. AND ANOTHER

HEADNOTE

False labelling of goods -

Presumption in Section 24A of Trade Descriptions Ordinance that if goods imported from a particular country they were manufactured in that country applies to goods falsely labelled after import into Hong Kong.

IN THE SUPREME COURT OF HONG KONG

(Appellate jurisdiction)

MAGISTRACY CRIMINAL APPEAL NO. 603 OF 1991

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JUDGMENT

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1. These are appeals against conviction by Mr. L.J. D'Almade Remedios in the Shatin Magistrate's Court on 8th May 1991 on charges under Sections 7 and 21 of the Trade Descriptions Ordinance, Cap. 362, of applying a false trade description, namely "MADE IN JAPAN", to 623 cartons of licorice extract which had been imported from the People's Republic of China ("China").

2. Facts were admitted, pursuant to Section 65C of the Criminal procedure Ordinance, Cap. 221, that on 7th June 1990 at Shatin Cargo Yard customs officers discovered some transportation workers including a Mr. Huen Po Cheung in the act of applying adhesive labels bearing the words "MADE IN JAPAN" onto cartons of licorice extract which were being unloaded from a wagon no. 650845. The goods contained in the wagon were 1,400 cartons of licorice extract which had arrived from Inner Mongolia in the People's Republic of China on the previous day. The customs officers seized 623 cartons of the licorice extract which had already been loaded into a container.

3. The 2nd defendant (D2) is one of the two directors of the 1st defendant (D1). She is also a director of Spanish East Asia and Lacasa Limited. Both D1 and Spanish East Asia and Lacasa Limited have their offices at 4th Floor, Sea Bird House, 22-28 Wyndham Street, Central, Hong Kong. The trial magistrate has found and there is no dispute regarding his findings that a Mr. Chan Wing Kai was the sales representative of Spanish East Asia and Lacasa Limited. In April 1990 he went to the Canton Trade Fair, being authorised by D2 and there he executed a contract for the purchase of licorice extract. The licorice extract arrived in Hong Kong by rail on 6th June 1990 in 1,400 cartons consigned to D1 from Inner Mongolia. A Miss Tang Yi Kam, a shipping clerk employed by D1, arranged with a Mr. Huen Po Cheung, the proprietor of a transportation company to collect the goods. She handed two sets of adhesive labels to Mr. Huen with instructions that they should be affixed to the cartons:

"LICORICE EXTRACT
NET WT	25 KG
GROSS WT	26.4 KG
MARUZEN KASEI CO, LTD.
MADE IN JAPAN"

Those labels were then applied to 623 cartons in the Shatin cargo yard. Those were the cartons which were then seized:

4. The labels were printed by the Commercial Printing Press. D2 told Mr. Chan Wing Kai to get the labels printed and they were duly delivered to D1 in May 1990 and before his departure he told D2 that the labels had been left in a file rack.  D2 told him that should the goods arrive while he was away he was to inform another witness, Miss Tang Yi Kam, where the labels were. Miss Tang accordingly instructed Mr. Huen to have them affixed to the carton boxes.

5. D2 made a cautioned statement, the admissibility of which was challenged. The trial magistrate, having heard evidences on a voir dire, found the statement to be voluntary and it was admitted in evidence. At this appeal there is no challenge to that finding.

6. In her statement she said that on 7th June 1990 her company had a batch of licorice extract transported to Hong Kong from China and that some employees were sent to the cargo yard in Shatin to pick up the goods. They had been purchased from the Inner Mongolia Autonomous Region Branch Company of the Chinese Medical and Health Products Imports and Export Company in China. At the request of the ultimate purchaser in Taiwan her company had arranged for labels to be printed in Hong Kong bearing the words "MADE IN JAPAN" and these had been affixed to the cartons in the Shatin Cargo Yard. When asked about the other partner in her company, a Mr. Lacasa, she said "Mr. Lacasa knows about the business of the company and the transactions with customers. Yet I am responsible for the details of the transactions. Therefore he does not know that the aforesaid licorice extract, for import reasons, has to bear the "MADE IN JAPAN" labels. It will be fine as long as I manage to conclude business". She was specifically asked, and strong reliance is placed on this in this appeal, "where was the aforesaid licorice extract manufactured" and she replied "I am not sure. I only know that it was purchased from China".

7. Neither defendant called evidence and D2 did not give any evidence on the general issue. It was submitted on behalf of D1 that its employee, Mr. Chan, did not have proper authority from D1 to affix the labels in the Shatin Cargo Yard and that D2 was not sufficiently aware of what was going on before 2nd June 1990 so as to be criminally  liable. Both the submissions were rejected and the defendants were convicted. They were each fined $34,800, i.e. 20% of the value of the goods. There was an order made for the return of the goods to the 1st defendant subject to payment of storage charges and with the labels removed.

8. In his statement of findings the trial magistrate simply said that on the evidence before him and, in particular, having regard to D2's answers in her cautioned statement he was satisfied that the charges against both defendants had been proved and that they were duly convicted.

9. It seems clear that at the trial and in submissions made at each conclusion no reliance was placed on, or indeed any mention made, of Section 24A of the Trade Description Ordinance. This was no doubt due to the fact that the question of where the goods had been manufactured did not form any part of the defence before the trial magistrate. However the trial magistrate then went oh in his statement of findings to say that he now had reservations as to whether his findings of guilt could be justified if a true construction of Section 24A limited it to prosecutions for the importation of goods with a false trade description which had already been affixed prior to entry into Hong Kong. At the hearing of this appeal that was in fact the only point argued and it was submitted by Mr. Charles Ching, Q.C., leading counsel for the appellants, that as there was no agreement as to the place of manufacture of the goods there had been no finding that the goods were made in China and that the magistrate is now saying he may have been wrong, if Section 24A did not apply to this charge there was not sufficient evidence to justify a conviction. It was not a necessary inference from the evidence that the goods had been made in China. In fact that they had been imported from that country did not necessarily mean that China was the place of manufacture. The Crown had failed to prove a very essential element of the charge.

10. Section 24A of the Trade Descriptions Ordinance reads as follows:

"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 or country of manufacture, production, processing or re-conditioning is applied, evidence that the goods were imported from a place or country shall be prima facie evidence that the goods were manufactured, produced, processed or re-conditioned as the case may be in such place or country".

11. It is submitted by Mr. Ching that from its wording the section only relates to goods which have been imported into Hong Kong already bearing a false trade description. If that was not so, he argues, the words "in respect of the import of goods to which a false trade description of the place or country of the place or country of manufacture, production, processing or re-conditioning is applied" are superfluous. The Ordinance could simply provide that in any prosecution for an offence under the Ordinance evidence that the goods were imported from a particular place or country should be prima facie evidence that the goods were so imported. It must be assumed that because the extra words were used in the Ordinance it was the intention of the legislature that the provisions of this section should not apply where goods were imported into Hong Kong and a false trade description was affixed here.

12. Somewhat surprisingly Mr. Forlin for the Crown conceded that if the presumption in Section 24A did not apply he could not argue that there was sufficient evidence for the magistrate to come to the conclusions that he did without  its aid. I have therefore given careful thought to the way in which this section should be construed. Taking into account all that has been said by Mr. Ching favour of a narrow construction, and also bearing in mind the doubts expressed by the trial magistrate, I am nevertheless satisfied that although some of the words in the section may be superfluous, it means that any goods which bore a false trade description, whether that was on the goods when they arrived in Hong Kong or whether it was affixed here, should be presumed to be manufactured in the country from which they had been imported. Quite clearly this section was designed to overcome the enormous difficulty faced by the prosecution of proving beyond reasonable doubt the country of manufacture of any particular goods. It is, in my view, a not unreasonable presumption and one which, if it is not correct, can easily be rebutted. Tne section refers to "the import of goods to which a false trade description of the place or country of manufacture, production, processing or re-conditioning is applied" (my emphasis). If I was to place the meaning on the section for which Mr. Ching argues it would mean reading the words "is applied" as "had been applied". I see no reason to do so and I do not think that it was the intention of the legislature that the section should only apply to goods falsely labelled before entry into Hong Kong. It was not challenged that the goods were imported from China, not Japan, and there was therefore a presumption that they were not made in Japan. No evidence was given either by the Crown or the defendants to rebut that.

13. I am therefore satisfied that Section 24A does apply to the facts of this case and that the defendants were properly convicted. The appeals are therefore dismissed.