HKSAR v. SWEETMART GARMENT WORKS LTD

HCMA 462/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 462 OF 2004

(ON APPEAL FROM TWS 18405 to 18410 OF 2003)

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J U D G M E N T

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1. The Appellant is a limited company in the business of exporting garments. This appeal concerns six lots of ladies' woven shorts exported by the Appellant to the United Kingdom. Having received the orders for these garments, the Appellant got a manufacturer named Brilliant Star Garment Factory to manufacture them. The certificates of Hong Kong origin for each of these six lots of garments exported by the Appellant turned out to be false. As a result the Appellant faced six summonses, one in respect of each lot, for exporting textiles which were not covered by a valid certificate of Hong Kong origin, contrary to s.6D(1) and (3) of the Import and Export Ordinance, Cap. 60.

2. Section 6D(1) reads:

"Subject to the Import and Export (General) Regulations (Cap. 60 sub. leg. A), no person shall export any article specified in the second column of the Second Schedule to those regulations to the country or place specified opposite thereto in the third column of that Schedule except under and in accordance with an export licence issued under section 3."

Subsection (3) reads:

"Any person who contravenes subsection (1) in respect of any article specified in the second column of Part I of the Second Schedule to the Import and Export (General) Regulations (Cap. 60 sub. leg. A) shall be guilty of an offence and shall be liable on conviction to a fine of $500,000 and to imprisonment for 2 years."

In Part I of the Second Schedule, the words "All countries" appear in the third column opposite the word "Textiles" in the second column.

3. The certificates of origin in the present case being false, the textiles in question were exported otherwise than in accordance with an export licence.

4. On 1 April 2004 the Appellant was convicted after trial before Kevin Browne, Esq. in the Magistrate's Court at Tsuen Wan on each of the six summonses. It now appeals against conviction.

5. Three perfected grounds of appeal against conviction have been filed on the Appellant's behalf. Ground 1 reads:

"The learned Magistrate erred in law in finding that the Appellant was only entitled to be acquitted if:-

a.	the Appellant believed for good and sufficient reason, though erroneously, that the statutory provisions had been complied with, and that
b.	the onus of proving such belief is upon the Appellant,

when:-

c. the law is and should be that:-

i.	the Appellant was entitled to be acquitted of all six summonses so long as it genuinely believed that the statutory provisions had been complied with, irrespective of whether the belief was based upon reasonable reason or not, and
ii.	that the onus of proving the absence of such a genuine belief on the part of the Appellant was upon the prosecution, and the standard of proof is that of beyond reasonable doubt;

Authorities:-

(1)	R. v. Morgan [1976] A.C. 182, H.L.
(2)	R. v. Williams (Gladstone) (1987) 3 All E.R. 411, C.A., 415
(3)	R. v. He Kaw Teh 157 C.L.R. 523, H.C., 537, 582
(4)	R. v. Beckford [1988] A.C. 130, P.C., 144
(5)	B. (A Minor) v. Director of Public Prosecutions [2000] 2 A.C. 428, H.L., 461-463, 477-478
(6)	R. v. K [2002] 1 A.C. 462, H.L., 474-475
(7)	The Hong Kong cases of R. v. Fong Chin-Yue [1995] 1 HKCLR 193 and Uniglobe Telecom (Far East) Ltd v. HKSAR (1999) 2 HKCFAR 214, and all subsequent cases which followed them:-

(a)	are per incuriam of the cases cited in paragraphs (1) to (4) above, and
(b)	are inconsistent with the two House of Lords cases cited in paragraphs (5) and (6) above, and

should not therefore be followed;

d.

and that applying the correct test in law as set out above, the learned Magistrate should have found that the prosecution had failed to prove beyond reasonable doubt the absence of such a genuine belief on the part of the Appellant. In so far as necessary, the evidence set out in Ground 2 below will be relied upon."

6. The Magistrate was following the approach laid down by the Court of Appeal in R v. Fong Chin-yue [1995] 1 HKCLR 193 and the Court of Final Appeal in Uniglobe Telecom (Far East) Ltd v. HKSAR (1999) 2 HKCFAR 214 when he proceeded on the basis that it was for the Appellant to prove on a balance of probabilities that its belief that the certificates of origin were genuine was reasonable as well as honest. As can be seen from Ground 1, counsel for the Appellant submits that I should decline to follow these two cases because they are, he says, per incuriam foreign cases decided before them and inconsistent with foreign case decided after them.

7. That submission is frivolous. Even if those Hong Kong cases were inconsistent with foreign cases, they could not be per incuriam the foreign cases any more than the foreign cases could be per incuriam them. I am bound by decisions of the Court of Appeal and the Court of Final Appeal. The idea that I could take it upon myself to depart from a decision of the Court of Final Appeal is particularly absurd.

8. In any event, there is no inconsistency between the Hong Kong cases and the foreign ones. It is true that the foreign cases cited make honest belief a defence without requiring that the belief be reasonable, and place the burden on the prosecution to disprove honest belief beyond reasonable doubt. But they all deal with traditional criminal matters, namely: rape (in R v. Morgan [1976] AC 182); dangerous drugs, namely heroin (in R v. He Kaw Teh (1984-1985) 157 CLR 523); assault occasioning actual bodily harm (in R v. Williams (Gladstone) [1987] 3 All ER 411); murder (in R v. Beckford [1988] AC 130); indecency with children (in B (A Minor) v. DPP [2000] 2 AC 428); and indecent assault (in R v. K [2002] 1 AC 462). The Hong Kong cases of R v Fong Chin-yue and Uniglobe Telecom (Far East) Ltd v. HKSAR, on the other hand, deal with regulatory matters, namely dutiable commodities (in Fong's case) and telecommunication (in the Uniglobe case). The present case also deals with a regulatory matter, namely export. As Lord Nicholls of Birkenhead (who sat as a member of the Court of Final Appeal in the Uniglobe case) said in his speech in B (a Minor) v. DPP at p 464 B about the presumption of mens rea: "The more serious the offence, the greater is the weight to be attached to the presumption, because the more severe is the punishment and the graver the stigma which accompany a conviction."

9. Whether a statutory offence is absolute or requires mens rea and, if so, what mens rea and where the burden of proof as to that lies are matters of the true construction of each statute (see Gammon (Hong Kong) Ltd v. Attorney General of Hong Kong [1985] AC 1 at p.16B), and the statutes in the Hong Kong cases, including this one, differ in kind from the statutes in the foreign cases cited by counsel for the Appellant. The Fong/Uniglobe approach is the appropriate one in the present case, which, like Fong's case and the Uniglobe case, deal with regulatory matters in respect of which the objective of the statute would be promoted by strict liability subject to a defence of honest and reasonable belief to be proved by the accused on a balance of probabilities.

10. Where crimes of the traditional type are concerned, in other words "where the offence is 'truly criminal' in character" as Lord Scarman put it in the Gammon case at p.14B, our notions of justice drives us to accept that honest belief is enough to avoid liability and that it is for the prosecution to disprove that belief beyond reasonable doubt. But where regulatory offences are concerned, it is often the case that the objective of the statute would be promoted by insisting that the belief must be reasonable as well as honest and that it is for the defence to prove that belief on a balance of probabilities. This promotes reasonable care which in turn promotes the objective of the statute. Just as in Fong's case and the Uniglobe case, this is so in the present case.

11. For the foregoing reasons, Ground 1 fails.

12. Ground 2 reads:

"Further or alternative to Ground 1 above, and even upon the assumption that the learned Magistrate had committed no error of law and had applied the correct test, he erred in law and in fact in finding that the Appellant had failed to establish, on the balance of probabilities, that it did believe for good and sufficient reason that the provisions of the Import and Export Ordinance had been complied with. In arriving at such finding, the learned Magistrate:-

a. FAILED TO TAKE INTO ACCOUNT AND/OR PROPERLY EVALUTE:-

i.	the evidence of Miss Cheng Mei-mei (DW1), that the applications for the relevant Certificates of Origin were submitted by Brilliant Star Garment Factory ("Brilliant Star);
ii.	Brilliant Star was a garment factory situated in Hong Kong, and was the manufacturer of the relevant garments exported under the 6 relevant Export Licences;
iii.	the contents of each of the 6 relevant Export Licences, which contain, at page 2 of each of them, a formal declaration by Brilliant Star as the manufacturer that all the relevant garments were of Hong Kong origin;
iv.	the contents of each of the 6 relevant Certificates of Origin, which contain on the face of each of them the factory number of Brilliant Star (i.e. 37160);
v.	the evidence of PW2, a manager of the Hong Kong General Chambers of Commerce, that the 6 relevant Certificates of Origin were indistinguishable from an earlier genuine Certificate of Origin that Brilliant Star had obtained in respect of a number of baby anoraks that it had manufactured for the Appellant;
vi.	the evidence of DW1, that Mr. Cheng Kwok-fai, a sales manager of the Appellant at the material times, was instructed by her to look for a suitable manufacturer for the relevant garments, that he dealt with Brilliant Star, and that he was responsible for following up on the progress of the manufacturing process of the relevant garments, checking the quality of the products, and preparing reports in those regards. Inspections of the manufacturing process were in fact carried out, and inspection reports were in fact prepared, which cast no doubt on the place of manufacturing of the relevant garments;
vii.	the lack of any allegation or evidence that the Appellant, prior to the commencement of the investigation conducted by the Customs & Excise Department leading to the present proceedings, knew that the 6 relevant Certificate of Origin were not genuine;
viii.	the lack of any evidence of any facts which might give rise to any suspicion on the part of Mr. Cheng Kwok-fai, DW1 or any officer of the Appellant that the 6 relevant Certificates of Origin might not be genuine;
ix.	the lack of any evidence that the Appellant stood to benefit or had cause to use or to permit the use of any faked certificates of origin;

b. WRONGLY FOUND AND/OR RELIED UPON:-

i.	The election of Mr. Cheng Kwok-fai to remain silent when being interviewed by the Customs and Excise Department, when Mr. Cheng was in fact being interviewed not only as a representative of the Appellant but also in his own personal capacity as a suspect, that he had been cautioned, and that he was told that he had the right to remain silent;
ii.	that Mr. Cheng Kwok-fai had never been contacted to attend court to give evidence about this matter, when according to the evidence of DW1, she had tried to contact Mr. Cheng by phone, but that he had not responded;
iii.	the apparent failure on the part of the Appellant to check with Brilliant Star the genuineness of the 6 relevant Certificates of Origin, when there was neither:-

(1) any legal duty, nor any

(2) factual reasons

which called for such checks."

13. In his Statement of Findings, the Magistrate said this:

"The person who handled this matter for the company was Mr Cheng, the former sales manager. He was authorised by the company to make and sign declarations on behalf of the company with the Trade and Industry Department. He was authorised by the company to speak to the Customs and Excise Department in relation to their inquiries with the company about these matters.

He elected to say nothing. After the summonses were served, no statement was ever taken from Mr Cheng by the defendant company and he was never contacted to attend court to give evidence about this matter.

Miss Cheng, on behalf of the company, says that she thought the certificates were genuine and made no further inquiries. Brilliant Star had obtained a genuine certificate of Hong Kong Origin in respect of an earlier transaction (Exhibit D1) with the defendant company. No receipts were ever produced in respect of the fees paid, no inquiries were made about the certificates with the Trade and Industry Department or the Hong Kong General Chamber of Commerce. The defendant company had only had dealings with this small manufacturer on one previous occasion.

Taking into account all the circumstances and all the evidence, I was not satisfied that the defendant company had established, on the balance of probabilities, that it did believe for good and sufficient reason that the provisions of the ordinance had been complied with."

14. In my view, the Magistrate was justified in his approach. In the circumstances, the Appellant's mind, for the purpose of attempting to make out its reasonable belief defence on a balance of probabilities, was essentially Mr Cheng's mind. There is no evidence from him to the effect that he reasonably believed that the certificates of origin were genuine. Nor in my view does any of the other evidence, whether direct or circumstantial, establish the existence, on balance of probabilities, of a reasonable belief on the part of the Appellant that the certificates of origin were genuine. In my view, Ground 2 also fails.

15. The third ground of appeal is that the conviction is unsafe and unsatisfactory. There is nothing in this ground independent of the preceding two grounds. It also fails.

16. In the result, the appeal is dismissed.