THE QUEEN v. YUEN YUK LUN ALAN

No. 844 of 1987

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H E A D N O T E

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Seizure of imported goods with forged trade mark - application for return of goods by authorised agent - owner in China - imported goods not those ordered by consignee - consignee acquitted but held to be importer - goods forfeited - costs in discretion of Magistrate.

IN THE SUPREME COURT OF HONG KONG

(Appellate Jurisdiction)

MAGISTRACY CRIMINAL APPEAL NO. 844 OF 1987

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J U D G M E N T

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1. This is an appeal from a forfeiture order made:under s.30 of the Trade Description Ordinance, Cap. 362, by Mr Michael Jennings at Western Magistrates Court.

2. S.30 provides :-

"30(1)    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.

    (2)      Where goods are seized or detained by an authorized officer under section 15, the Commissioner may at any time release such goods to the person who appears to him to be the owner thereof or his authorized agent subject to any such condition as the Commissioner may specify in writing.

    (3)     Where goods have not been released under subsection (2), the Commissioner 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.

    (4)      If, on the hearing of an application under subsection (3), the court or magistrate is satisfied that the goods are liable to forfeiture, the court or magistrate may order that -

(a)     the goods be forfeited to the Crown;

                (b)     the goods be destroyed;

(c)     any false trade description or forged trade mark applied to the goods be obliterated and thereafter the goods be disposed of in such manner and subject to any such condition as the court or magistrate may specify in the order; or

(d)     any false trade description or forged trade mark applied to the goods be obliterated and thereafter the goods be released to the owner thereof or his authorized agent subject to any condition which the court or magistrate may specify in the order.

    (5)     Where under subsection (3) an application is made to a court or magistrate for the forfeiture of goods otherwise than in proceedings where an offence is prosecuted, the Commissioner shall forthwith notify in writing the owner of the goods or his authorized agent, unless the owner or his authorized agent has indicated in writing to the Commissioner that such notification is not required:

    Provided that, if there is more than one owner of the goods, it shall be sufficient for the purposes of this subsection to give notice to one such owner or his authorized agent, unless one such owner or his authorized agent has indicated that such notification is not required."

3. Earlier in the same proceedings the appellant was acquitted of importing goods to which a forged trade mark had been applied, contrary to section 12 of that ordinance. He was acquitted by virtue of section 12(2), which provides:-

"(2)     Any person who imports or exports any goods contrary to subsection (1) commits an offence unless he proves that -

(a)     he did not know, had no reason to suspect and could not with reasonable diligence have found out that the goods are goods to which a false trade description or forged trade mark is applied; or

                (b)     the goods are not intended for trade or business."

In section 2(1) "import" is defined as "to bring, or cause to be brought, into Hong Kong".

4. The main issue in this appeal is whether an offence has been committed in respect of these goods, thus rendering them liable to forfeiture. The appellant submits that no one has imported them and therefore no offence has been committed.

5. The magistrate accepted without reservation the appellant's evidence, which revealed the following remarkable state of affairs.

6. The appellant is the sole proprietor of a trading company in Hong Kong, which carries on business under the name Kin Yeh Co. The company employs only two people in Hong Kong but 59-60 in China, where goods are produced for sale in Hong Kong. The appellant also buys goods from other sources in China.

7. On 15th May 1986, the appellant signed a contract in Guangzhou, under which he agreed to buy from the Guangdong Yuehai Import and Export Corporation, 150,000 mini calculators for US$124,500 (Ex. P8). It provided, inter alia : "No surveyor's report is required for the commodities under this contract. Deal is concluded after the buyer inspects the goods and provides certification by signature. The seller shall not be responsible for any discrepancies in quantity and quality or in other aspects arising thereof outside the territory or in Hong Kong district". The goods were to be shipped to Hong Kong four days after a sighted draft was received. The draft was to be issued before 20th May.

8. The appellant inspected the goods 7 - 10 days before signing the contract and signed the required certificate. He also took some samples, including Ex. D3, which is a simple, unmarked, solar calculator. He paid HK$129,000, for a partial shipment of the goods, by draft on 19th May. He was promised they would arrive in four days time.

9. It was admitted that, at 9:45 a.m. on 24th May, customs officers boarded a vessel that had arrived from China and seized 79 cartons containing 20,001 calculators bearing the trade mark "Elsimate" and "Shrap" (Ex. P3). The bill of lading and import manifest were obtained and they indicated that the consignee was the Kin Yeh Co.

10. At 7.40 p.m. the same day a telex from the supplier in Guangzhou was received by the appellant. It read: "The 79 cartons shipped by our company on 23rd of May on board Yue Kong 313 are not the calculators purchased by your company, please assist in returning the goods to Jiangmun Industry Transport Supply Company". (Ex. D1).

11. On 26th May the appellant was notified by the shipping company that the goods had been shipped. One or two days later the Customs and Excise Department informed the appellant that they had seized the goods. The appellant went to their office on 29th May and handed over one of the samples he had brought back from China earlier that month (Ex. D3), together with the contract (Ex. P8) and the telex (Ex. D1).

12. At the beginning of June the appellant received a letter from the supplier, dated 29th May, confirming the telex in these terms: "In respect of the 20,000 pieces of mini calculators without brandname under contract 86GD0095YH, as the consigning unit issued the wrong goods, we now entrust unit comrade to change the goods. Would your company please go to local port to arrange for the change." (Ex. D2).

13. Finally, on 4th June, the appellant made a cautioned statement to a customs officer, in which he told him more or less what he told the magistrate.

14. The appellant's case was that, when negotiating the contract, he did not specify any particular brand of calculator. He knew there was a stock of solar power calculators in China. Before paying for these goods, he had checked one carton and examined five calculators, all of which were solar calculators identical to the sample he had given to the customs officer on 29th May (Ex. D3). These were the calculators he had intended to buy and which had, all along, been the subject of sale negotiations with the supplier.

15. The appellant said he had tried to get his money back, but he was told he must first return the consignment that had been sent by mistake. This is still the position so far as the appellant is concerned. It was twice put to him in cross-examination that, under the contract, the supplier was not obliged to take back the goods. He answered the questions obliquely, saying the suppliers by letter required him to send back the goods and that they were not responsible for them.

16. The appellant's case is that the suppliers are totally responsible for the catastrophe, that they recognise their error in the telex and subsequent letter and now ask the appellant to return the consignment. Only then, apparently, are they prepared to forward the solar calculators that the appellant ordered.

17. Under the contract the suppliers are entitled to take this stand, unjust though it may seem from the appellant's viewpoint. On the other hand, it is astonishing that the appellant should have signed such a contract, which in effect gave the suppliers carte blanche as to the type and quality of calculator actually shipped, without any remedy for breach, once the purchaser had certified the inspected goods were up to sample, which was 2-3 weeks before shipment. The appellant explained it in these terms : "Agree description of goods very vague - but it is the one I signed. I understood characters in round brackets. I did not run risk corporation would send calculators of any type and still not be in breach of contract - sometimes we do not even sign a contract before doing this." However this was precisely the risk the appellant did run.

18. The following exchange occurs in cross-examination:-

"Q :      Don't you agree detailed description of goods in question is essential to contract of this nature?

A :     In Hong Kong we can have detailed contract - but doing business in China if contract in too much detail there may be problem,

Q :     What sort of problems would there be about saying solar power calculators instead of mini-calculators?

A :     For solar poorer calculator or mini-calculators - don't think there is much problem in this business. Mainly I was purchasing calculators they had.

Q :     Any goods delivered to you would be good enough in answer to this contract - you would have no right of recourse to anybody?

A : No.

Q : Says seller shall not be responsible in contract for quality and other aspects?

But these goods were stocks.

19. The appellant's evidence was that it is better, when doing business in China, not to reduce the details of a contract to writing, but to trust the other party. On this basis, he paid HK$124,500 and received in return goods he had not ordered, does not want and cannot get rid of.

20. Nevertheless, the magistrate has found that the appellant's evidence is true. For the purposes of this appeal I accept his finding.

21. The magistrate gave the following reasons for making the forfeiture order:-

"The calculators had clearly been deliberately manufactured to deceive potential purchasers. Apart from the poorer quality of the casing and the spelling "SHRAP", the calculators are virtually exact copies of the genuine SHARP calculators. In view of the Appellant's evidence about the ready market for calculators with false trade marks in China, it seems likely that is the market these particular calculators were destined for, i.e. a market where the mis-spelling of a well-known brand name would be more easily missed by a purchaser than in a more sophisticated market like Hong Kong. Mr Tsui made the point that the offending wording would easily be removed. Clearly, the Appellant wants to return the calculators to the supplier to secure the release of his originally intended consignment. Once back with the supplier the offending wording could just as easily be re-applied to the calculators. I was not prepared to condone such practices against purchasers whether here or in China."

22. With those sentiments it is hard to disagree.

23. The Crown has taken the point that the appellant has no locus standi in the proceedings, on the ground that he is neither the owner nor the authorised agent of the owner in terms of s.30(2). The appellant admits he is not the owner, but submits that the letter and telex clearly authorise him to reclaim the goods from the Hong Kong authorities and return them to the owner in China. I shall assume, for the moment, that is right and that the appellant was entitled to claim the goods as agent of the owner.

24. Were these goods liable to forfeiture? The appellant was the consignee. No other person is involved. If anyone was the importer it was he. But he submits that, since he had no idea these particular goods had been shipped, his mind did not go with the action and he therefore did not import them. If he did not do so, no one did. No offence has therefore been committed.

25. That, I fear, is an over-simplified view of the matter. The goods were consigned to the appellant as a direct consequence of the contract that he signed on 15th May. If he had not signed that contract, these goods would not have been shipped. That is beyond dispute. The fact that the wrong goods were shipped - goods he had not ordered - cannot affect the situation. He caused them to be brought into Hong Kong and he was therefore the importer.

26. What if the cartons had been packed with radios instead of calculators? Must it follow that the appellant had imported the radios? I see no reason to make any distinction. The appellant would be under no criminal liability, by virtue of the statutory defence provided by s.12(2). But where goods are consigned to a person in Hong Kong under a contract of sale, he must be. said, for the purposes of this ordinance, to have imported them. If they bear a forged trade mark, that is an offence, even though the importer is subsequently acquitted because he has successfully brought himself within s.12(2).

27. For these reasons I am satisfied that an offence contrary to section 12 was committed and the goods were liable to forfeiture.

28. A forfeiture order should be made unless there are good reasons for not making one AG. v. Chin Chock-wing ⁽¹⁾. A valid reason for exercising the discretion in favour of the owner is where there has been no fault on the latter's part R. v. Man Kim-ping and another ⁽²⁾. Although there was no fault in this case on the part of the appellant, there was fault by the supplier, who the appellant claims is the owner.

29. The magistrate has given his reasons for not making an order under s.30(4)(d). I am satisfied that they are valid reasons and that this court should not interfere with his discretion.

30. The appellant also appeals against the magistrate's refusal to grant costs to the defence. Application was made under S.28 of the Ordinance, which provides:

"In any proceedings under this Ordinance, the 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."

31. This is wider than S. 69(1) of the Magistrates Ordinance, which governs the award of costs generally in magistrates courts. This reads:

"In every case of summary conviction or of an order made by a magistrate, except as provided in section 71 it shall be lawful for the magistrate making the same to award and order in and by the conviction or order that the defendant shall pay to the complainant or informant respectively such costs, not exceeding $5,000, as he may think fit; and where a magistrate dismisses the complaint or information he may, if he is satisfied that the proceedings ought not to have been instituted or pursued against the defendant, order that the complainant or informant shall pay to the defendant such costs, not exceeding $5,000, as he may think fit."

32. The magistrate refused costs because, although he believed the defendant's evidence, he did not consider the Customs Department erred in bringing the prosecution. He had regard to the difficulties faced by a defendant who attempted to bring himself within one of the statutory defences.

33. Mr. Chung, for the appellant, submits that the magistrate applied the wrong test. He argues that the wider terms of S. 28 indicate that it was the intention of the legislature that the test in S. 69, which the magistrate applied, should not be used. He does not suggest, however, what consideration should be taken into account. In my judgment S. 28 is framed in such terms that a magistrate cannot be criticised if he applies the S. 69 test.

34. Mr. Chung also argues that, even on this basis, the magistrate should have awarded costs, because it must have been obvious from the beginning that the prosecution could not succeed. I do not agree. It was for the magistrate to decide whether the defendant had a defence. The prosecution was therefore properly brought.

35. The appeal is dismissed.

(1) 1961 HKLR 479 

(2) Mag. App. 646/85