HKSAR v. CHAN CHARN SUM AND OTHERS

[English Translation — 英譯本]
CACC 348/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO. 348 OF 2007

(ON APPEAL FROM DCCC NO. 807 OF 2006) 

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J U D G M E N T

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Hon Yeung JA (giving the judgment of the Court):

1. There remain only 7 applicants in the present case. Three of them are companies, namely the 4^th Applicant Chung Luen (Holdings) Limited (hereinafter “Chung Luen Holdings”), the 7^th Applicant Yau Luen Hong International Limited (hereinafter “Yau Luen Hong”) and the 9^th Applicant Kwong Ming International (Holdings) Limited (hereinafter “Kwong Ming International”). The other four applicants were the persons-in-charge of those companies.

2. The 3^rd Applicant Chan Charn Sum was a person-in-charge of Chung Luen International, the 5^th Applicant Chan Charn Lam and the 6^th Applicant Shum Kit Yee were directors and persons-in-charge of Yau Luen Hong, whereas the 8^th Applicant Iu Kwong Wa was a director of Kwong Ming International.

3. On 6April 2006, following a complaint and investigations thereof, the Hong Kong Customs and Excise conducted searches at a number of warehouses of Chung Luen Holdings and Yau Luen Hong, located at On Lok Factory Building, Ha Heung Road, Kowloon. Large quantities of “fake” Maling Brand and Narcissus Brand canned food were found upon search.

4. Chan Charn Sum admitted that the canned products found inside the Chung Luen Holdings warehouses were purchased by him on behalf of Chung Luen Holdings for sale.

5. Chan Charn Lam and Shum Kit Yee also admitted that the canned products found inside the Yau Luen Hong warehouses were purchased by them and owned by Yau Luen Hong.

6. The “fake” canned products found inside the Yau Luen Hong warehouses included 51,840 cans of “Maling Brand” pickled cabbage which were supplied to Yau Luen Hong by Kwong Ming International.

7. On 10 April 2006, Customs officers arrested Iu Kwong Wa, a director of Kwong Ming International. Iu Kwong Wa admitted that Kwong Ming International had supplied to Yau Luen Hong a batch of “Maling Brand” pickled cabbage, including the 51,840 cans of pickled cabbage found inside the Yau Luen Hong warehouses on 6 April 2006. Customs officers seized from the office of Kwong Ming International an invoice dated 7 March 2006. The invoice, issued and signed by Iu Kwong Wa, indicated that Kwong Ming International had sold the said 51,840 cans of “Maling Brand” pickled cabbage to Yau Luen Hong.

8. As a result of the incident, the applicants and a few other persons were charged with offences contrary to section 9(2) of the Trade Descriptions Ordinance, Cap. 362 of the Laws of Hong Kong.

9. The five charges against Chung Luen Holdings, Chan Charn Sum and one other director, as well as the two charges against Yau Luen Hong, Chan Charn Lam and Shum Kit Yee, were that they had in their possession, for sale or for the purpose of trade, goods to which forged trademarks were applied. The charge against Kwong Ming International and Iu Kwong Wa was that they had sold goods to which forged trademarks were applied.

10. All applicants pleaded not guilty to the respective charges. The case was tried before Deputy District Judge Johnny Chan.

11. Having called all its witnesses, the prosecution applied to amend all the charges by substituting, in respect of the goods which the applicants had allegedly possessed or sold, “to which false trade descriptions were applied” for “to which false trademarks were applied”. According to the proposed amendments, Kwong Ming International and Iu Kwong Wa were charged under section 7(1)(a)(ii) of the Trade Descriptions Ordinance (for having supplied goods to which false trade descriptions were applied), whereas the other applicants were charged under section 7(1)(b) (for having in their possession, for sale or for the purpose of trade, goods to which false trade descriptions were applied).

12. The defence opposed the prosecution’s application to amend the charges, but to no avail. Judge Chan took the view that the original charges were defective and that the proposed amendments were necessary in the circumstances of the case. In allowing the prosecution’s application to amend the charges, Judge Chan made the following ruling:

The evidence against the defendants does not change as a result of [the amendments to the charges]. It is just that they no longer have to deal with the issues of who owned the relevant trademarks or whether they were forged. In relation to the COFCO’s trademarks and descriptions, the defence also had ample opportunity to cross-examine the witnesses. In my view, neither the prosecution’s evidence nor the basis of the prosecution’s case is altered.

13. Having allowed the prosecution’s application to amend the charges, Judge Chan adjourned the trial to enable the defence to re-assess its position and formulate a proper response to the amended charges.

14. In order to ensure a fair trial, Judge Chan ordered that, at the resumed hearing, the defence would be entitled to cross-examine the prosecution witnesses again in respect of the amended charges.

15. Judge Chan also made a costs order to ensure that the applicants would not suffer any pecuniary loss in respect of costs as a result of the amendments.

16. When the trial resumed, the prosecution reopened the examinations-in-chief for some witnesses. The defence raised no objection thereto.

17. After trial, with the exception of a charge against Chung Luen Holdings, Chan Charn Sum and one other director, all charges against the applicants were found established and they were convicted accordingly.

18. Except Chan Charn Lam who was sentenced to imprisonment for a total of 10 months, all the applicants were sentenced to fines ranging from a few thousand dollars to tens of thousands of dollars.

19. All applicants have applied for leave to appeal against convictions. Chan Charn Lam previously applied for leave to appeal against sentence, but he subsequently withdrew the application.

20. We therefore only have to deal with the applicants’ applications in respect of convictions.

Prosecution’s case and evidence

21. China National Cereals, Oils & Foodstuffs Corporation (hereinafter “COFCO”) is the owner of the trademarks of “Maling” and “Narcissus” in Hong Kong and the PRC. The Customs alleged that the marks of “Maling” or “Narcissus” and other marks of COFCO had been applied to the canned products in question without the approval or knowledge of COFCO, and therefore those products were goods to which false trade descriptions were applied.

22. The search and seizure of the goods, which was not in dispute, was tendered as evidence by way of Admitted Facts. In addition, the prosecution called the following witnesses to give evidence at trial: Mr. Zhu Bing (朱兵), Manager of COFCO; Mr. Zhang Jing (張靜), Business Manager of COFCO Industrial Food Import & Export Company Limited (hereinafter “COFCO Industrial Food”), and Mr. Kam Wing Shing (金永成), Manager of Hong Kong Dah Fat Company Limited (hereinafter “Dah Fat Company”).

23. According to Mr. Zhu, COFCO owned the trademarks of “Maling Brand” and “Narcissus Brand” but had at different times authorized various companies to apply the “Maling” and “Narcissus” trademarks to canned food.

24. Mr. Zhu agreed that COFCO had changed its company name more than once since 31 August 1998, details of which were as follows:

Until 31 August 1998, the full name of COFCO was ‘China Cereals, Oils and Foods Import and Export Company (an unincorporated body)’. On 31 August 1998, it was changed to ‘China Cereals, Oils, Foods Import and Export (Group) Company Limited (a body corporate)’. Since 1 September 1994 the name has been changed to its current one, namely ‘中國糧油食品（集團）有限公司 (a body corporate)’, and its name registered in English is China National Cereals, Oils and Foodstuffs Import & Export Corporation.

25. Having compared the information shown on the canned food found from the applicants’ premises with the information he had on hand, Mr. Zhang Jing concluded that the trademarks displayed on the canned food in question had been applied without the authorization of COFCO. In respect of the various items of canned food particularized in the charges, Mr. Zhang Jing examined the samples of the canned food one by one and explained why they were fake goods. His conclusion was based on the labels of the cans, names of the distributors, dates of manufacture, the descriptions of the names of the companies granting and receiving authorization, and the investigation he had conducted.

26. Mr. Kam Wing Shing said that Dah Fat Company was one of the three distributors who were authorized to sell goods under the “Maling Brand” and “Narcissus Brand” in Hong Kong. He explained how Dah Fat Company would handle complaints from the public about product quality and the presence of fake goods. He said that when a problem arose, Dah Fat Company would buy a small quantity of the goods for investigation and, if necessary, send the goods to COFCO in Beijing for verification.

Applicants’ defence

27. Apart from the explanations given by individual applicants on how they obtained the fake canned products in question, no challenge had been mounted by the defence on the elements of the charges or the prosecution’s case. Individual applicants also explained the confessions that they made to the Customs officers upon arrest. In essence, however, the applicants’ position at trial was that they wished to establish the defence under section 26 of the Trade Descriptions Ordinance.

Judge’s findings

28. Having carefully analyzed the evidence of both parties, Judge Chan held that, save and except the 5^th Charge against Chan Charn Sum and Chung Luen Holdings, all charges against the applicants were established. The Judge held that, apart from the canned products particularized in the 5^th Charge, all the canned products in question bore the trademarks of “Maling” or “Narcissus” or other marks owned by COFCO, which indicated that they were distributed with the authorization of COFCO or related to COFCO; in fact, however, the goods were neither distributed by/manufactured with the authorization of COFCO or COFCO Industrial Food, nor related to COFCO or COFCO Industrial Food.

29. Judge Chan rejected both the applicants’ explanations that they had no knowledge of the matter and other exculpatory explanations given by them, and accordingly held that they could not rely on the defence of mistake or accident under section 26 of the Trade Descriptions Ordinance. On that basis, Judge Chan held that, save and except the 5^th Charge against Chung Luen Holdings and Chan Charn Sum, all charges against the applicants were established.

Grounds of appeal

30. The applicants do not take issue with most of the findings of fact by Judge Chan. They also accept the Judge’s conclusion that they had failed to establish any defence under section 26 of the Trade Descriptions Ordinance.

31. Indeed, the applicants basically agree that, on the findings of fact made by Judge Chan, he was correct in convicting the applicants on the charges.

32. The main ground of appeal put forward by Mr. Kwok, SC, Counsel for the applicants, is that procedural irregularities and injustice arose when Judge Chan allowed the prosecution to amend the charges by substituting “false trade descriptions” for “forged trademarks”.

33. Mr. Kwok, SC submits that Judge Chan erroneously held that, despite the amendments to the charges, the defence would still have ample opportunity to challenge the evidence of the prosecution witnesses or the basis of the prosecution’s case would remain the same. It is contended that by the time the charges were amended, the applicants could not reverse what they had already done by way of defence to the original indictment. And the way the applicants had defended the case made it easier for the prosecution to prove the amended charges. The amended charges therefore caused injustice to the applicants.

34. Mr. Kwok, SC has also pointed out in his written submissions that the trial had to be adjourned following the amendments to the charges, and the ensuing delay was unfair to the applicants, and, contrary to what the Judge said, such unfairness could not be eliminated by the costs order made by the Judge.

35. Mr. Kwok, SC further submits that, in the absence of any finding by the Judge as to which of the trade descriptions on the canned products as particularized in the charges were false or why they were false, the applicants’ convictions were unsafe.

Discussion

36. Judge Chan gave a detailed account of the evidence by Mr. Zhang Jing. The Judge pointed out that the canned products in question bore not only the trademarks of “Maling” or “Narcissus”, but also the name of COFCO or a similar name such as COFCO Industrial Food or the former name of COFCO.  The Judge also pointed out that the products were packaged in a similar way, using packaging paper of the same colour, and that there were statements indicating that COFCO had authorized companies with names similar to COFCO to sell the products.

37. Judge Chan was satisfied that the above trademarks, names, packaging and statements etc. would lead one to believe that, contrary to the truth, the canned products in question were manufactured, produced, processed and reconditioned by COFCO, or that they were approved by COFCO or fell within the type of products approved by COFCO.

38. The Judge made the following findings in paragraph 146 of his Judgment:

The Court is of the view that PW14’s testimony clearly indicates that the canned products in Charges 1 to 4 and 6 to 12 were products to which false trade descriptions were applied. Although the trade descriptions were false in different ways and to different extents, they obviously led one to believe that the canned products were manufactured, produced, processed and reconditioned by COFCO, or were at least related to COFCO and of a type approved by COFCO. When the name of COFCO was applied to the canned products, one would naturally think that the products were made by COFCO. If a name similar to ‘COFCO’ was used, such as ‘former COFCO’, and even packaging similar to PX75 or packaging paper of the same colour was used, people would easily be misled. If information such as COFCO, COFCO Industrial Food, ‘Maling’ or ‘Narcissus Brand’ was applied to the canned products with which such information had in fact no connection, such description or display would be false to a material degree.

39. Mr. Kwok, SC submits that Judge Chan did not make any findings on which of the trade descriptions on the canned food in question were false or why they were false. With respect, we cannot accept this submission which is in our view misconceived. Given the factual matrix of the present case, the way in which Judge Chan dealt with the case was reasonable, correct and amply sufficient. He had set out the results of the verification by Mr. Zhang in relation to each charge, and as a matter of fact, at trial the defence never challenged the prosecution’s case on whether the elements of the charges had been established. The Judge cannot be faulted for not having dealt with the relevant issues in greater depth.

40. Section 23 of the Criminal Procedure Ordinance, Cap. 221 of the Laws of Hong Kong, provides as follows:

(1)   Where, before trial or at any stage of a trial, it appears to the court that the indictment is defective, the court shall make such order for the amendment of the indictment as the court thinks necessary to meet the circumstances of the case unless, having regard to the merits of the case, the required amendments cannot be made without injustice.

41. The above provision states in clear language that the court has both the power and duty to amend a defective indictment unless the amendments will cause injustice.

42. On the question of how the court should amend an indictment pursuant to section 23 of the Criminal Procedure Ordinance, the Court of Appeal laid down clear guidelines in the case of AG v Chan Hung Hoi [1987] HKLR 969.

43. In that case, having reviewed a number of English authorities, Roberts CJ held that it was open to a judge to order the amendment of an indictment if the evidence adduced at trial did not support the allegations contained in the indictment, provided that the amendment would not lead to injustice.

44. Roberts CJ concluded (at p. 974) that:

(a)    The trial judge has a power to consider, of his own motion, whether to amend the indictment in accordance with its provisions.

(b)    There is no duty on him to exercise that power of his own motion.

(c)    If application is made for such amendment by the Crown or the defence, the judge is obliged to consider the application.

(d)    In considering that application, the judge is obliged to make such amendment as is necessary to meet ‘the circumstances of the case’, unless the required amendments ‘cannot be made without injustice’.

(e)    This power may be exercised at any time during the course of trial, in the case of a District Court up to the moment of delivery of judgment.

45. Mr. Kwok, SC contends that the original indictment alleged that forged trademarks had been used on the products in question, whereas the amended indictment alleged that false trade descriptions had been used on those products. With this change of allegation, the issues to be addressed by the defence also changed. Therefore, it is submitted, the amendments to the indictment caused injustice to the applicants.

46. It goes without saying that the allegations in the original indictment must be different from those in the amended indictment, which is what makes an amendment necessary in the first place. The fact that the defence may, as a result of the amendment, have to deal with certain issues that may otherwise not arise does not necessarily mean that the amendment will cause injustice. If an amendment to the indictment is not allowed for the reason that it will alter the allegations against the defence and hence cause injustice, the court’s power to make such amendments will become illusory.

47. In the present case, the improper conduct being alleged against the applicants both before and after the amendments to the indictment was essentially the possession or supply of canned products that suggested, contrary to the truth, that they were related to COFCO. The prosecution all along alleged that the batch of canned food was not products of “Maling” or “Narcissus Brand” and hence had nothing to do with COFCO. In our view, the alleged improper conduct was basically the same both before and after the amendments to the indictment. We have not ignored the principle that a broad approach should be taken in considering the scope of “improper conduct” (see the decision by the Court of Final Appeal in Poon Chau Cheong v SJ [2000] 2 HKLRD 636). In all the circumstances of the case, the “irreversible” (as submitted by Mr. Kwok, SC) information disclosed by the applicants in the defence to the original indictment was in fact insignificant and no question of injustice would have arisen.

48. The key issue pertinent to the present application is not whether the amendments gave rise to new issues for the defence, but whether the defence had been given ample opportunity to properly deal with the issues that arose from the amendments to the indictment.

49. If an amendment to the indictment will alter the allegations against a defendant but he is not given ample opportunity to raise a defence that he wishes to raise to the new allegations, and the defendant will be able to raise such defence if the prosecution’s allegations are made well in advance, then the amendment will cause injustice.

50. The present case, however, is entirely different from the above scenario. The prosecution's case against the applicants had all along been that they had possessed or sold canned products that appeared to be related to COFCO, i.e. they were of “Maling Brand” or “Narcissus Brand”, but in fact those products were in no way related to COFCO and were fake products.

51. As COFCO had changed its name many times, it was somewhat difficult to adduce evidence in respect of the trademarks. The allegations in the indictment were therefore amended to those involving false trade descriptions. This did not alter the substance of the allegations against the applicants or the evidence in relation thereto.

52. Furthermore, after the indictment was amended, the applicants were given ample opportunity to put forward such defence as they wished. At trial, the applicants were well aware of the prosecution’s case and were able to defend the prosecution’s allegations as they wished and call witnesses to testify on their behalf. On the other hand, the amendments to the indictment did not result in any substantial change to the evidence for the defence.

53. As a matter of fact, whether at trial or at the present stage, the applicants were unable to specify what real impact on their defence or what kind of injustice had been caused by the amendments to the charges.

54. After the trial resumed, the prosecution reopened the examinations-in-chief for the purpose of highlighting the key issues of the case. The prosecution’s failure to apply to the Judge for permission to do so was a procedural omission and the defence did not raise any objection at that time. The merits of the case had not been affected whatsoever, and no injustice had been caused.

55. The fact that the defence now relies on the omission as a ground of appeal serves to demonstrate the weakness of the defence.

56. We have considered the grounds of appeal put forward by the applicants and find none of them meritorious. In our judgment, Judge Chan was correct in finding the applicants guilty and their convictions are neither unsafe nor unsatisfactory. The applicants’ applications for leave to appeal against conviction are dismissed.