ATTORNEY GENERAL v. CHOI WING CHEONG AND ANOTHER

Mag. App.
1988, No. 30

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H E A D N O T E

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EXPORT OF STRATEGIC COMPUTORS - INTENDED DESTINATION NORTH KOREA - DECLARED DESTINATION MACAU - GOODS OFF-LOADED IN MACAU - NO BURDEN ON CROWN TO PROVE GOODS ARRIVED IN NORTH KOREA - BREACH OF EXPORT LICENCE.

IN THE SUPREME COURT OF HONG KONG

(Appellate Jurisdiction)

MAGISTRACY CRIMINAL APPEAL NO. 30 OF 1988

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J U D G M E N T

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1. This is an appeal by case stated from a decision by Mr Yung at San Po Kong Magistrates Court.

2. 1st respondent was charged with exporting strategic commodities, namely 130 Sanyo Computers, to North Korea, other than under and in accordance with an export licence, contrary to Regulation 2 of the Import & Export (Strategic Commodities) Regulations, Chapter 60. 2nd respondent was charged with aiding abetting, counselling or procuring 1st respondent to commit the offence.

3. The magistrate found the following facts:

"4.1     the said computers, which were specified as strategic commodities in the Schedule of the said Regulations, were exported from Hong Kong;

4.2     the said Schedule was based on a list formulated by the Co-ordinating Committee for Multilateral Export Controls (COCOM), which comprises NATO countries and Japan as members, with the responsibility to restrict strategically sensitive high technology equipment, such as the scheduled commodities, from being exported to proscribed countries, including North Korea;

4.3     the First Respondent obtained the Export Licence in which "Macau" was declared as the 'destination country' and 'Mondial Trading (Macau) Company' as the 'consignee';

                4.4      the said computers were offloaded in Macau;

4.5     the Respondents arranged for the said computers to be delivered to North Korea;

4.6     the Respondents at all time knew that the said computers would end up in North Korea if all went well and they so intended it to happen;

                4.7      there was a scheme to avoid trade restrictions."

4. The magistrate proceeded to summarise the argument and his decision thus:

"5.     It was contended on the part of the Appellant that the destination country meant the ultimate destination and the onus was, as provided in section 34(1) of the Import and Export Ordinance, Chapter 60, on the Respondents to show, on the balance of probabilities, the place to which the said computers were intended to be exported,' once the Crown had proved that the Respondents caused the said computers be taken out of Hong Kong. It was nevertheless contended on the part of the respondents that, whilst the Export Licence gave no definition to 'destination country', the Crown had to prove that the said computers were removed from Macau and eventually arrived in North Korea. It was further contended on the part of the First Respondent that what happened after the said computers had been offloaded in Macau had nothing to do with the First Respondent, even if he might know, they would go to North Korea.

6. I, however, being of opinion that, as long as the goods were purportedly imported to a country named as destination country, it mattered not that they might end up in another country within a short time, and that the Crown had to prove beyond reasonable doubt that the goods actually arrived in North Korea and held that the Crown had proved only on the balance of probabilities that the said computers went to North Korea and that the Crown had failed to prove beyond reasonable doubt that Mondial Trading, Macau Company was a sham. I further held that the Crown had also failed to negative the probability that the said, computers were properly imported to Macau and re-exported from there to China or North Korea according to the procedures in Macau. I accordingly held that the Crown's case was not proved and dismissed the summonses."

5. The questions of law for the opinion, of this court are: -

"FIRSTLY WHETHER I was correct in holding as a matter of law that, if the strategic commodities were in fact exported to the destination country as declared in the Export Licence (Macau), then no offence under Regulation 2 of the Import and Export (Strategic Commodities) Regulations, Chapter 60 was committed, even though the goods were intended to be re-exported from there to another country (North Korea) in accordance with the procedures of the destination country (Macau).

SECONDLY WHETHER I was correct in holding that, inasmuch as the Crown could not prove beyond a reasonable doubt that the goods actually arrived in North Korea, I was entitled to find on the facts that the goods were not re-exported from the destination country (Macau).

6. Mr. Hartmann for the appellant, has made it clear that the purpose of this appeal is to obtain directions in law. He does not ask that the matter be remitted to the magistrate in the event of the appeal being allowed.

7. In these circumstances, and having heard Mr. Hartmann's argument, counsel for the respondents each chose not to address the court.

8. Mr. Hartmann pointed out that, had the respondents declared North Korea as the ultimate destination of the goods, a special licence would have been required, North Korea being a proscribed country under the regulations. Almost certainly that would not have been issued.

9. Macau is not a proscribed country. The respondents thought that, if the goods were physically off-loaded in Macau and went through customs, their onward journey was subject to Macau laws and nothing to do with the Hong Kong authorities, in spite of the fact that, in the export licence, the destination country is stated to be Macau.

10. As counsel says, if such a ploy is , not a breach of the regulations, the objects of the latter are frustrated and they are rendered nugatory. In support he cites s.19 of the Interpretation Ordinance Chapter 1, which provides:-

"An Ordinance shall be deemed to be remedial and shall receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Ordinance according to its true intent, meaning and spirit.."

11. The authorities on the meaning of 'destination' are all one way and are to the effect that it means the ultimate intended port of disembarkation. See Merchant Service Guild of Austral-Asia v. Commonwealth Steamship Owners Association⁽¹⁾, R. v. Lee Kai, Cheung⁽²⁾ and R. v. Hong Hong Wan Shun⁽³⁾.

12. Mr. Hartmann is, clearly right when he says that an exporter does not evade liability by offloading in a port en route to the intended ultimate destination and putting, the goods on the next ship to the latter. This is supported both by the plain meaning of the word 'destination' and by the evident intention of the legislation.

13. There was insufficient evidence to prove that the computers reached North Korea. But s. 34(1)(a)(ii) makes it clear that the burden of proving the place of intended export - the ultimate destination - lies on the exporter. The section provides :-

    "(1) In any proceedings under this Ordinance the onus of proving: -

        (a)     the place -

(i)     ......

(ii)     to which an article is intended to be exported;

shall lie upon the defendant in any such criminal proceedings and the claimant in any forfeiture proceedings."

The magistrate was, therefore, won- to require the prosecution to prove that the goods reached North Korea. That would be an impossible' task in the majority of cases and is obviously the reason why this provision was inserted.

14. On the other hand, the respondents failed - by some way - to prove that Macau was the ultimate destination. They are, therefore, in breach of their licence.

15. The answer to both questions is in the negative.

(1) [1913] 16 C.L.R. 697

(2) M.A. 252 of 1988

(3) [1980] H.K.L.R. 266