HKSAR v. KOO WAI LAU AND ANOTHER

HCMA 790/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 790 OF 1998

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J U D G M E N T

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1. On 31 July 1998 at Tuen Mun Magistracy before Mr Eric So, Permanent Magistrate, the 1st appellant, Koo Wai Lau and the 2nd appellant, Cheung Kwok Keung were convicted after trial of two joint offences of dealing with goods to which the Dutiable Commodities Ordinance applies, contrary to s.17(1) as read with s.46(3) of that Ordinance. The goods involved in Charge 1 were 595,740 cigarettes and those involved in Charge 2, 350,000 cigarettes. Upon their conviction, Mr So sentenced both appellants to five months' imprisonment on each charge, to be served concurrently. The appellants now appeal their convictions. They have abandoned their appeals against sentence. The appellants were of clear record and were represented at trial by a solicitor.

2. At trial, under s.65C of the Criminal Procedure Ordinance, the prosecution and the defence agreed that :

1) The first quantity of cigarettes were seized inside a container house near lamp post No. FA4222 1 at Tan Kwai Tsuen, Hung Shui Kui, New Territories ("Place A"). The second quantity were seized inside another container house adjacent to No.101 of Tan Kwai Tsuen, Hung Shui Kiu, New Territories ("Place B").

(As I understand it, a container house is a number of shipping containers placed together and converted to make a warehouse.)

2) A bundle of keys had been seized from the 1st appellant, some of the keys in that bundle could open the padlocks and the door locks to the two container houses, others were ignition keys for a light goods vehicle EF1298 ("the van").

3) Cigarettes of the quantity specified in the charges were found in cartons in the two container houses and were dutiable goods. In Place A, 61 cartons of cigarettes were found and in Place B, 34 cartons were found.

3. The cautioned statement of the 1st appellant was produced without objection as to its admissibility. The Court visited Place B in the afternoon of 20 July 1998, the first day of the trial.

4. The prosecution called two witnesses, Customs and Excise Officers 8788 (PW1) and 8601 (PW2).

5. PW1 said that on 12 May 1998 at around 12:30 p.m. while he was keeping observation, he was informed by his colleague, PW2, that the van was coming from Wo Ping San Tsuen Lan in the direction of Tan Kwai Tsuen. After seeing the van, he followed it to the container house at Place B. He kept observation through a hole in what he referred to as an "iron fence", which I understand to be metal boards about seven feet in height and five feet in width standing outside the container house and forming a fence to that structure. From a distance of about 10 feet, he saw the appellants move about 20 cartons from the container house onto the van. Then one of the appellants got into the van. The other appellant went into a truck parked outside the fence. He reversed it into the fenced area, got out of it and locked all the doors of the container house and then got into the van. The appellants then drove away in the van.

6. On seeing this, he informed PW2, through the beat radio, that the van was heading in the direction of Wo Ping Sun Tsuen Lane. He went in that direction and met PW2 at the Lane where he saw the van parked near to the container house at Place A. He then saw the appellants moving cartons from the van into that container house. On instruction from their superior officer, both officers approached Place A, revealed their identities and intercepted the appellants.

7. PW1 told the Magistrate that when he entered the container house at Place A, he found many cartons there. One was opened and contained packets of cigarettes which bore no health warning or tar group definition. Suspecting that these were dutiable goods, he arrested and cautioned the 1st appellant. Upon caution, the 1st appellant replied that he did not know anything and had nothing to say. The officer searched the 1st appellant and found the bundle of keys. His colleagues and he then took both appellants back to Place B. Inside the container house there he found many cartons. Loose on top of one were packets of cigarettes which bore no health warning or tar group definition. Suspecting that these, too, were dutiable goods, he cautioned the 1st appellant who again remained silent.

8. After arrest, both appellants were taken back to the Customs & Excise Headquarters at Canton Road, where PW1 took a cautioned statement from the 1st appellant. In that statement, the 1st appellant made no admissions of guilt.

9. In cross-examination, PW1 agreed that the cartons he saw being moved were sealed ones, bound with yellow bands. He said in cross-examination that he was not sure if other cartons containing other goods were in the container houses at either location.

10. PW2 said that at about 12:20 in the afternoon while he was on duty, he saw the van in which there was the driver and one passenger, it was travelling in the direction of Tan Kwai Tsuen. He informed PW1 of this through the beat radio. About six to seven minutes later, PW1 told him, again through the radio, that the van was moving back in his direction. He then saw the van parked near to lamp post No. FA4222 1. From a distance of about 25 to 30 metres he saw the 2nd appellant open the door of the container house at Place A and the rear door of the van. He saw the appellants move cartons from the van into the container house, they took about one minute to do this. On the instruction of his superior officer, he, together with PW1, approached the appellants. He revealed his identity to the 2nd appellant. When informed by PW1 that cigarettes had been found, he arrested and cautioned the 2nd appellant. He found two bundles of keys upon search of the 2nd appellant.

11. Other colleagues arrived at Place A soon after and together with PW1 and his colleagues, he took both appellants back to Place B. Inside that container house, there were many cartons of loose packets of cigarettes which he suspected to be dutiable goods. He checked the packets and found that there were no health warning and no tar group definition markings on them.

12. There was no evidence of what other items - if indeed there were any - that the Customs and Excise officers found in either container house, other than that it was agreed, by reference to an exhibit list, that binding belts and packing equipment were found in the container house at Place A. The same agreed list says that the bulk of the packets of cigarettes found bore no health warning or tar group definition markings. A few, those of "Double Happiness" brand, bore a health warning and a Hong Kong Non Duty Paid marking.

13. Of the 61 cartons of cigarettes found in Place A, there was no evidence that identified the 20 cartons the appellants were seen transporting there as separate items from the other cartons of cigarettes found there.

14. The appellants elected to give evidence. The 1st appellant adopted the content of his cautioned statement as part of his evidence. In that statement he said he had worked for a Mr Lai for slightly more than a month before arrest in looking after both container houses, for a wage of $1,000 a month. He said he was not aware of the nature of the goods stored in either place. He said the keys to the container houses had been provided by Mr Lai. He had no idea why the 2nd appellant was at Place A. Nobody had come to Place A to look for him.

15. He said that the Customs and Excise officers had only seized the cartons containing cigarettes but had not seized plastic water bottles which were also stored at Place B. He denied that he had ever moved any carton boxes at Place B, in fact, he had never been to the container house at that place.

16. He went on to say that he lived next to the container house at Place A which he rented to Mr Lai. Mr Lai had given him a name card, which he had lost, and he had forgotten Mr Lai's phone number. At the time of arrest, he had told the Customs and Excise officers that Mr Lai had another container house at Place B and he had been taken there in the van by the officers. He said that when he first entered the container house at Place B, the cartons were not open.

17. He said he was in the vicinity of Place A as he had an appointment with the 2nd appellant to play mahjong there. His alleged reason for entering the container house was that he had heard the sound of an air-conditioner and he had gone in to turn it off. He was arrested as soon as he entered the place.

18. In cross-examination, contrary to what he had said in chief when adopting the contents of his cautioned statement, he said that he looked after the container house at Place A for Mr Lai for no reward as he had rented it to Mr Lai. He had never issued a rent receipt and the rent was paid in cash. He said that he had known Mr Lai for several years, but was unable to give his full name. He denied moving cartons together with the 2nd appellant from Place B to Place A, and he said that the keys seized from him were not provided by Mr Lai.

19. The 2nd appellant said in his defence that at about 12:00 noon, he went in his own vehicle to find the 1st appellant to play mahjong, but had been unable to locate him. On hearing the sound of a vehicle he went in the direction the sound came from and saw that the 1st appellant had already parked the van at the container house at Place A. He had walked up to the 1st appellant, however in doing so he had bumped into the binding belts on the cartons and had squatted down to pick them up. While doing so he was arrested by the Customs and Excise officers who handcuffed and searched him. They then took him to the van at Place B.

20. In cross-examination, he said that three of the four persons who intended to play mahjong had arrived, that is, the 1st appellant, himself and one "Hong Chai", he did not know his full name, only that his surname is Chan. The fourth one "Fat Pat" - again he did not know his full name - had not yet arrived. The appointment to play mahjong had been arranged over the telephone with the 1st appellant in the evening of the day before.

21. He denied that he ever moved any cartons from Place B to Place A and claimed that the prosecution witnesses were telling lies. He denied knowing what the contents of the cartons were.

22. Mr Peter Duncan, Counsel for the 1st appellant, advances two grounds of appeal, namely :

"1) The learned Magistrate failed to consider whether the prosecution had established that the appellant had dealt with goods to which the Dutiable Commodities Ordinance applies. In fact, there was no evidence that the appellant had dealt with such goods.

2) The learned Magistrate failed to address the possibility that the cartons of goods which the appellant was alleged to have conveyed contained goods other than dutiable goods as alleged by the prosecution. In fact, there was no evidence that the only goods in each of the carton boxes were cigarettes."

23. Mr John Dunn, Counsel for the 2nd appellant, also advances two grounds of appeal, namely :

"1) After considering all the evidence the learned Magistrate stated that he believed the testimony of the two prosecution witnesses and disbelieved the testimony of the 2nd appellant. However, the evidence of the prosecution witnesses could not, on its own, prove one of the essential elements of the offences, namely that the 2nd appellant knew that the items he was dealing with were dutiable commodities. In convicting the 2nd appellant, the learned Magistrate failed to consider the mental element required for these offences. The 2nd appellant will rely upon R. v. Wang Shih-hung [1995] HKLR 193.

2) There was no evidence before the court to show that the boxes carried by the 2nd appellant contained dutiable commodities, nor was there any evidence which showed what proportion of the goods found in the two container huts were dutiable commodities and how many were legitimate materials. Without this information, it was unsafe for the learned Magistrate to draw an inference regarding the 2nd appellant's knowledge of the presence of the dutiable commodities on both premises."

24. Mr Dunn's first ground is substantially the same as Mr Duncan's second. Both Counsel say that in all the circumstances, the convictions of the appellants are unsafe and unsatisfactory.

25. Section 17(1) of the Dutiable Commodities Ordinance reads as follows :

"No person shall import or export or have in his possession, custody or control, or in any way deal with or dispose of any goods to which this Ordinance applies-

(a) expect in accordance with the provisions of this Ordinance; or

(b) unless he has discharged all the obligations with respect to the goods imposed upon him by or under this Ordinance."

The Ordinance gives no definition of the word "deal" or "dealing".

26. Mr Duncan's argument on his first ground of appeal, which he says was raised by the defence at trial and which the learned Magistrate failed to address, is that the normal meaning of "deal" connotes an act of trading or buying and selling. For this, he relies on The New Shorter Oxford Dictionary, at p.601, where the following definition is given, under heading 3 :

"an act of trading or of buying or selling, a business transaction, a bargain, an arrangement, especially a private or secret arrangement entered into by parties for their mutual benefit."

He also relies on Black's Law Dictionary, 6th Ed., at p.399 where the following definition is given :

"To traffick, to transact business, to bargain or trade, also to act between two persons, to intervene or to have to do with."

27. He says that there are several statutory definitions which extend the meaning of "deal" beyond its normal meaning : s.2 of the Firearms and Ammunition Ordinance, Cap. 238 and s.2 of the Organised and Serious Crimes Ordinance, Cap. 455 are but two examples. He cited decided cases in Hong Kong on the words "deal" and "dealing" in relation to charges under the Dangerous Drugs Ordinance. For example, R. v. Diu Lap Nin Crim. App. 1439/83 (unreported), Attorney Gerenal v. Lau Chi Sing (1987) HKLR 703 and R. v. Yan Kwok Kwong [1994] 2 HKC 245 which go no further than establishing that for the purposes of the Dangerous Drugs Ordinance "storage for subsequent disposal" may amount to "dealing".

28. He contends that there was no, or insufficient, evidence that the appellants were engaged in the storage process. At best, the prosecution case contained evidence of possession and the proper charge that should have been laid was one of possession of dutiable goods.

29. With respect, I cannot accept that argument. The words "deal" and "dealing" are ordinary English words, a person who transports goods, either on his own behalf or on behalf of another, can be said to be dealing in them. In Diu Lap Nin (above), cited by Mr Duncan, the Court of Appeal, at p.8 of the transcript of that judgment said :

".... the phrase 'dealing with dangerous drug' [part of the Dangerous Drugs Ordinance definition of 'trafficking'] is sufficient .... to cover any activity which can be said to be related to, or connected with, the dangerous drug, including storage for subsequent disposal."

30. I am aware that in Yan Kwok Kwong (above), also cited by Mr Duncan, Mortimer JA at p.248, in obiter, observed that the true construction of the words "dealing in or with" in s.2 of the Dangerous Drugs Ordinance must involve some disposal of the drugs and said that he found it difficult to accept that the mere packing and weighing of dangerous drugs could amount to dealing in them. Nevertheless, he accepted that the Court was bound by its earlier decision in Diu Lap Nin.

31. Mortimer JA went on to observe, at p.249, that in Diu Lap Nin, the evidence was such that anyone involved in the packing and weighing of the quantity of dangerous drugs involved in that case must inevitably have been doing that for the purposes of disposing or trading in them. To my mind, the same argument applies here : anyone involved in transporting or storing nearly a million cigarettes can only be doing so for the purposes of their subsequent sale.

32. Mr Duncan's second and Mr Dunn's two grounds of appeal can be taken together as they are interrelated.

33. As I have said, there was no evidence which of the 61 cartons found in the container house at Place A were the 20 cartons the Customs and Excise officers had seen the appellants transporting there. The 20 cartons were sealed and bound with yellow binding tape. There was no evidence that they, or any of the cartons either in Place A or B, bore marks indicating what their contents were. There was no evidence that either container house contained only cigarettes. And there were no admissions from either appellant that they knew what was in any of the cartons.

34. In Wang Shih Hung (above), cited by Mr Dunn, Bokhary JA at p.201, said of the mental element that must be proved by the prosecution in prosecutions for this offence :

".... the issue is not as to knowledge that the goods involved were of the kind to which the DCO applies. Rightly, Mr Bailey accepts that such knowledge is an element of each of the offences charged here. Were it otherwise, liability under the relevant provisions would be absolute. Plainly, that is not so. Such knowledge is necessary....

So the goods must be of the kind to which the DCO applies. And the prosecution must therefore prove beyond reasonable doubt that the accused knew that the goods were of that kind. Of course, if the goods happened to be alcoholic liquors, but the accused thought that they took the form of tobacco, that mistake would be no defence. Both alcoholic liquors and tobacco are goods of the kind to which the DCO applies. That is enough. The law takes no notice of mere quibbles."

35. Essentially, it is Mr Duncan and Mr Dunn's complaint that there were insufficient primary facts proved from which the Magistrate could have inferred that the appellants knew that dutiable goods, not necessarily cigarettes, were in any of the cartons. They say that the Magistrate failed to appreciate that and jumped to an assumption that this necessary element of the offence have been established without first analyzing the evidence.

36. It is true that the Magistrate did not set out his reasons for arriving at his conclusion of either appellant's guilt. In his oral admissions, delivered on 31 July 1998, he said no more than this :

".... I have reminded myself that it is the burden of the prosecution to prove beyond reasonable doubt that all ingredients of the offence is present, I am so satisfied that the prosecution has so discharged their burden. I accordingly convict both defendants in respect of the two charges."

He did that without setting out what the ingredients of the offence are.

37. In his written reasons prepared for the appeal, after an exhaustive recital of the evidence, the resolution of inconsistencies, and after rejecting the appellants' defences, he said no more than this :

"It was still the burden of the Prosecution to prove the case beyond all reasonable doubt and I was so satisfied that the Prosecution has (sic) duly discharged their burden. I accordingly convicted both Defendants in respect of both charges."

38. For myself, I am satisfied that sufficient primary facts were established to support an irresistible inference that the appellants were aware of the nature of the goods stored in the container houses at both Places A and B. It is clear from the evidence that the two container houses were warehouses, and that, regardless of whether other goods were stored there, each housed a considerable number of cartons containing dutiable cigarettes. In both container houses, some of those cartons had been opened, exposing their contents.

39. PW1 spoke of seeing opened cartons at Place A exposing the packets of cigarettes which were packed inside, and of there being at Place B, packets of cigarettes lying on top of the cartons stored there. If the Customs and Excise officer saw them, it follows that the appellants, who as I understood it, left Place B before the Customs and Excise officers entered it, and entered Place A before the Customs and Excise officers did, must have seen them as well. As far as I can see from the appeal bundle, all cartons were of a similar size, shape and appearance, giving rise to a strong inference that if cigarettes were in one carton, then cigarettes must be in the others.

40. Given the large number of cartons found in the two container houses, the issue of whether or not other goods were stored at either place is irrelevant. No one entering either container house could have failed to have been aware of the presence of those cartons.

41. Those are inferences which, to my mind, necessarily and irresistibly followed from the facts that the Magistrate found proved, any other inference would be speculative. Once the Magistrate had rejected the two appellants' defences - and as a trier of fact, it was open to him to reject them - it must be the case that the prosecution had proved inferentially that the appellants were aware of the nature of the contents of all such cartons at both places.

42. What then of the Magistrate's failure to demonstrate in both his oral and written reasons for verdict that he had undertaken such an analysis of the evidence?

43. There is nothing in the appeal bundle which indicates that he did not. The trial lasted for three days, the Magistrate could not have failed to have been aware that proof of the appellants' knowledge of the cartons' contents was a vital issue. On the facts he found proved, an inference of this knowledge was an obvious one. Certainly, it would have been better if he had set out his conclusions and the reasons for them. But his failure to do so is not fatal to the convictions. It has been said by the Court of Appeal, on many occasions, that a magistrate is not duty bound to set down in his reasons of verdict precisely what evidence he accepts, what evidence he rejects and what weight he attaches to every piece of the evidence, or the arguments of Counsel on the evidence, or the whole of the workings of his mind in arriving at his conclusions : R. v. Robert Alice Low [1961] HKLR 13 and Chan King Man & Others v. R. [1980] HKLR 105, are but two examples of authority for that proposition.

44. I am satisfied that the Magistrate's convictions of both appellants is neither unsafe nor unsatisfactory and their appeals against conviction are dismissed.