THE QUEEN v. SHANTOU SPECIAL ECONOMIC ZONE TEXING INDUSTRY TRADE COMPANY

IN THE SUPREME COURT OF HONG KONG

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO. 1072 OF 1995

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J U D G M E N T

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1. This was an appeal against a forfeiture order made by the learned Magistrate. The facts of the case were that at 9:30 a.m.on 26th November 1994, A Custom launch intercepted a Chinese cargo vessel in Hong Kong Waters. The vessel was boarded. After a through search, there was found concealed and wrapped in kraft paper the electrical goods which were the subject of the charge. They included cameras, movie cameras, fax machines, walkman, discman, radios etc. Three men were arrested and later prosecuted and pleaded guilty to carrying unmanifested cargo. At the end of the trial the Appellant, a wholly owned public company in China claimed that the goods belonged to it. It claimed that it was an innocent victim and that it had bought the goods, which were valued at approximately $4m, in Hong Kong and had arranged that they be shipped to China.

2. Mr Lin Shing Tong, the Deputy General Manager of the Appellant company came from China to give evidence at the forfeiture hearing. He produced invoices, quota certificates, and other documents to substantiate his claim that his company was the rightful owner of the goods. He also testified that he had arranged for the goods to be manifested and shipped to China.

3. I need not go into the merits of the case because the appeal had to be allowed because of the inadequate manner in which the learned Magistrate went about giving his reasons.

4. At the end of the forfeiture hearing the learned Magistrate gave reasons for his verdict. This consisted of slightly less than two pages. Only one paragraph could possibly be described as a finding and it went as follows:

" From the above, if what LIN alleges is to be believed then clearly the transaction must be one which relied very much upon the honesty of the parties concerned but it had been shown that MA Wei who disappeared from the scene is clearly tainted with suspicion. Again, the verbal arrangements alleged by LIN made between the said Company and the Province must also be suspicious.

Taking into consideration the above, I am not satisfied that LIN on behalf of the said Company has shown this court that the said Company is truly the beneficial owner of the said cargo. I thus exercise my 'unfettered discretion' and refuse the application by LIN. I order the said cargo be forfeited to the Custom & Excises Department for the Crown."

5. In view of the evidence that had been given in this case, of the documents that had been produced, and of the matters which had been raised, these reasons were wholly inadequate and did not begin to address the issues involved.

6. When the appeal was lodged, the learned Magistrate gave further reasons. In this statement of findings comprising two and a half pages, the learned Magistrate firstly set out the evidence. Then he said this:

"The applicant which was the said company, was not the party which had the import permit to import the said goods (as the evidence showed it was the said centre which had the import permit). The said goods had according to Lin's verbal testimony only been sold to the said province prior to the said goods being imported into China. Ma had disappeared without any explanation. Lin stated that payments of over $3,800,000 had be paid to the four Hong Kong companies supplying the said goods yet the capital of the said company was stated to be only RMB2,800,000 and no explanation was given as to how the extra payment of nearly one million had been obtained for paying the said four companies. Taking into consideration all these and other factors, I am not at all satisfied that the Applicant had shown a case that the Applicant (the said company) was entitled to the said goods as the bona fide owner of the said goods."

7. Thus it can be seen that the only reason, apparently, given by the learned Magistrate for his findings was that the paid up capital of the Appellant company was only RMB2,800,000 and yet the goods cost $3,800,000. Taking that into consideration, and other factors which he does not mention, he found in favour of the Crown.

8. The paid up capital of the company has nothing to do with the value of goods it buys. This could not possibly be a valid reason for the learned Magistrate finding against the Appellant. These findings are different from the reasons he gave at the end of the hearing, and, are equally inadequate. None of the issues are addressed, and no proper reasons are given for his finding.

9. I must allow this appeal. I ordered that the goods be unconditionally returned to the Appellant, as it had clearly been established to be the owner of this goods and not been established it was part of the smuggling operation.