R. v. KAM SHEK KWONG

Magistracy Appeal No.140 of 1994

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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HEADNOTE

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Criminal Law - magistrate appeal - forfeiture of excavator - exercise of discretion under s.28 of Cap.60 - innocent owner.

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J U D G M E N T

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1. On the 20th January 1994, Mr. S.C. Poon made an order under s.28(7) of the Import and Export Ordinance Cap.60 forfeiting 1 hydraulic excavator belonging to the Appellant. The Appellant appealed against this order and on 4th May I allowed the appeal to set aside the order for forfeiture and ordered the return of the excavator to the Appellant. I said I would give my reasons later which I now do.

2. The magistrate found that the excavator was siezed in connection with a contravention of s.35 of the Import and Export Ordinance and was thus liable to forfeiture.

3. The Appellant had hired the excavator in question, together with a driver, to a company called Grand Base who was concerned with carrying out reclamation works near to the water at Junk Bay.

4. On 23rd January 1992, officers of the Anti-smuggling Task Force and Organized Crime and Triad Bureau mounted a joint anti- smuggling operation at Tseung Kwan O Reclamation Area. At about 1815 hours, the excavator which was inside the Reclamation Area moved towards the direction of Tiu Keng Leng and later stopped at the seashore opposite to the hillside of Tiu Keng Leng. At about 2045 hours, the van, 2 jeeps and a private car entered the Reclamation Area, moved towards the seashore and later stopped next to the excavator. Several males alighted the van and the private car and walked towards the direction of the excavator. The van was then driven out of the construction site and stopped at the entrance to the Reclamation Area. Several males then used the excavator to lift up one of the jeeps and swing it towards the side of the sea. At 2125 hours, 2 speedboats commonly known as "Tai Fei" drove near the location of the seashore where the excavator was situated. The excavator loaded the jeep onto one of the speedboats which then left in high speed. Officers then moved in and several arrests were made. Various items, including the van and the excavator, were later seized. Upon seizure, it was found that the excavator was still on and the ignition key, which could be used to start the excavator, was still next to its gear box.

5. Eventually, 2 separate charges under the s.35A(1)(e) of the Ordinance were laid against the 5 arrested persons. The trial of D1, D2 and D3 on Charge A on the one hand and that of D4 and D5 on Charge B on the other were severed. After trial, D1 to D3 were all convicted as charged and sentenced to 8 months imprisonment. D4 and D5, who admitted that they acted as lookouts, pleaded guilty to Charge B. 4 months imprisonment suspended for 18 months and a fine of HK$10,000 were imposed upon them.

6. Mr. Kam, the Appellant gave evidence before the magistrate. He admitted that the excavator had been tampered with before the present incident and had discussed the matter with Grand Base. Consequently, the battery of the excavator was disconnected every day after work. However Mr. Kam also admitted that it would only take some 4 to 5 minutes to connect the battery.

7. Mr. Kam contended that his company had suffered financial hardship as a result of the seizure of the excavator in the sum of about $20,000 a month. He admitted in cross-examination that at the time of seizure, his company only had 4 machines but at the time of hearing, there were 8. He explained that the company had got another tender and had pseveral million dollars worth of instruments. Some of the items urchased purchased were acquired by cash and some by hire-purchase.

8. Before the magistrate, Ms. Cruden, who also appeared on this appeal for the Appellant, emphasized that the Appellant was innocent in that neither himself nor any of his employee was charged with or convicted of the smuggling of fence. The excavator was used in the smuggling activity without the prior knowledge or consent of the Appellant. She submitted that the Appellant had, in those circumstances, taken effective measures to safeguard the excavator from being tampered with or illegally used. She also relied upon financial hardship as a result of the seizure and submitted that it was not just in all the circumstances to order forfeiture.

9. The magistrate correctly set out the proper approach in dealing with an application for forfeiture by referring to the judgment of Bokhary J.A. in R. v. CEC Finance limited (1993) 2 HKLR 134 at 138 where he said :

"The discretion to order forfeiture being unfettered, the question whether or not to so order is to be approached from a neutral starting point, with both parties on a level playing field, so to speak, and each with the onus of proving on a balance of probabilities any fact he or it asserts if that fact is not admitted by the opposite party. That is how the question is to be approached. And it is to be answered by reference to what is just in all the circumstances as the magistrate finds such circumstances proved or admitted."

10. The learned magistrate purported to apply this basic principle. At page 26 of the bundle, the learned magistrate said this : -

"The remaining question is how I should exercise my discretion under s.28(7) of the Ordinance to dispose of the excavator. My discretion must be exercised judicially to further the objects of the Ordinance, i.e., to regulate and control the import of articles into, and export of articles from Hong Kong. That would involve combating smuggling in a reasonable manner".

11. The learned magistrate then concluded that the Appellant had not done his best to safeguard the excavator from the illegal use. He relied upon the fact that the excavator could be easily started. He relied upon the fact that it had been tampered with on a previous occasion. The magistrate was not satisfied that the disconnection of the battery was a sufficient step. The learned magistrate concluded : -

"In the circumstances the Claimant ought to employ more stringent and effective measures to prevent the excavator from being illegally used, eg, installing a suitable locking device. In my judgment, what the Claimant had done was simply not sufficient enough."

12. As to financial hardship, the magistrate noted that the Appellant's own evidence suggested that his business has expanded after the seizure. He found there was no immediate hardship to the Appellant because he coped with the situation well. The further planning of his business can make allowance for such loss. The learned magistrate then concluded thus : -

"Any loss to the Appellant is in any event outweighed by the benefit to the community of the deterrent effect of forfeiture. Smuggling of vehicles is notorious. Forfeiture of machines used in such smuggling activities is certainly one of the more effective weapons available to combat smuggling. That is clearly consistent with the objects and spirit of the relevant provisions of the Ordinance."

13. I have to say that I cannot agree with the magistrate's approach. This was a case of a purely innocent owner of an excavator which had been used by other persons, with whom he had no connection whatsoever, for the purposes of smuggling. No evidence was led by the Crown that the use of the excavators for smuggling cars was notorious. In argument, the Crown was pressed to suggest that perhaps the Appellant should have provided some guard at night over these excavators. In my judgment, that is a proposition which cannot be supported in any way.

14. I find it is impossible to conclude that the forfeiture of this excavator in these circumstances can have any deterrent defect whatsoever upon those engaged in smuggling. Furthermore, it is notorious that vehicles are easy to break into and to start. It is a matter of public knowledge that the manufacturers of the most expensive cars are still struggling to find a way of making their cars burglar proof. So far they have failed. Those who wish to break into cars, it seems, are able to do so with impunity. Police officers can break into a car if it is in the interest of justice to do so. In this case we are dealing with an excavator which has a glass cabin which can easily be broken into and could obviously be started. The Appellant had taken the precaution of disconnecting the battery. It was never made clear in the court below, nor in submission before me, as to precisely what he should have done in order to wholly immobilise this vehicle.

15. The use of an excavator as an instrument to aid smuggling was something which could not possibly have been within the contemplation of the Appellant and for him to be subject to the forfeiture of his excavator would, in my judgment, be such a gross injustice that no magistrate should have come to this decision. I accept that each case has to be dealt with on its own facts. In most cases where a vehicle belongs to a finance company, who is perfectly innocent, it would probably be unjust to deprive them of their vehicle. However, there may be circumstances such as when they hire a vehicle to persons who are not above suspicion and in those or similar circumstances the normal approach might not be taken. All depends on the facts.

16. In CEC Finance it was made clear that the discretion is unfettered and thus there can be no basis for a pre-disposition against finance companies or for that matter against any innocent owner. However it seems to me that there has to be something in the facts of the case involving an innocent owner which can justify the exercise of this discretion and the making of a draconian order depriving the rightful owner of his property. A discretion was given to the courts. The legislation does not impose forfeiture in all cases as it could have done. Forfeiture of items belonging to those involved in a crime and used in a crime is one thing and can be seen as part of society's determination to be ruthless with criminals. Forfeiture of the property belonging to wholly innocent parties is quite another thing and the discretion to exercise that power should be exercised judicially and with great care.

17. Further, because CEC Finance overruled AG V Chin Chack win [1961] HKLR 479 cases decided before it must be looked at with great caution. I note that in R V Yeung tak sing (unreported, 147 Of 1993, Saied J 26th November 1993) it was held that a motor vehicle belonging to a Finance Company but which had been used in connection with drugs was not forfeited.

18. In the present case, there was absolutely no connection between the Appellant and the smugglers. The only criticism made against the Appellant was that he did not take sufficient precautions to immobilise his excavator for use by smugglers in circumstances, which I am satisfied, he could never have contemplated. I accept that the forfeiture provisions are designed to under pin the anti-smuggling provisions and quite rightly too. However, their application to cases such as this require the court to look at all the circumstances and exercise it's undoubted discretion in a judicial manner. It seems to me that the learned magistrate here, firstly came to a decision which no reasonable magistrate should have arrived at and thus the exercise of his discretion was flawed. Secondly, he took into account factors which were not proper factors to consider. To say that the Appellant should have taken further steps to immobilise the excavator is placing an impossible burden upon an innocent owner of an excavator who has hired it out to a genuine third party.

19. The result arrived at by the magistrate in this case offends against all my notions of justice, fair play and reasonableness. I have to say that I am surprised that the Customs and Excise Department thought it right to initiate this application for forfeiture and I am also surprised that the Attorney General thought it right to attempt to support that decision and to attempt to argue that the Magistrate was correct.

20. Those then were the reasons why I allowed the appeal, set aside the order for forfeiture and ordered the return of the excavator to the Appellant. I also made an order that the Appellant have his costs herein and below to be taxed if not agreed.