HKSAR v. MIDDLE INDUSTRIAL LTD.

HCMA 1134/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 1134 OF 2002

(ON APPEAL FROM TMS 4522-26, 4532-33 and 4536 of 2002)

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J U D G M E N T

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Introduction

1. This is an appeal against a magistrate's refusal to award costs to the Appellant who was acquitted of the charges laid against it. The Appellant and its forwarder each faced eight summonses for importing textile without licence, contrary to section 6C(1) and 6C(2) of the Import and Export Ordinance, Cap 60. The forwarder pleaded guilty while the Appellant entered pleas of not guilty. The case against the Appellant was set down for trial on 25 October 2002 before another magistrate. Two days before the hearing, the prosecution informed the Appellant's solicitors that it would offer no evidence against the Appellant. Accordingly, at the hearing the magistrate dismissed the summonses on the prosecution offering no evidence. The Appellant's solicitor then made an application for costs. Upon hearing the parties, the magistrate refused the costs application on the grounds that (1) the Appellant had brought suspicion on itself for not having applied for the licences; (2) the Appellant had pleaded guilty to 8 other charges and (3) in subsequently applying for the licences, which were granted, the Appellant had acknowledged that the grant of the licences shall not constitute a defence to a charge of importing without licence.

2. The proceedings before the magistrate was conducted in Chinese. But at the request of the Appellant's solicitor, the appeal was conducted in English.

Magistrate's mistaken belief that the Appellant had pleaded guilty to eight other charges

3. From the transcript and the trial magistrate's reasons for decision, it is clear that the magistrate mistook the guilty pleas entered by the forwarder as if they were the Appellant's. Mr Chan, for the Appellant, argued that this mistaken belief clouded the magistrate's mind and misled him to assume that the common foundation on which these 16 charges were laid was proved and that the Appellant had only been acquitted of 8 out of 16 charges. Mr Chan further argued that because of the mistake, the magistrate effectively accepted the case of the prosecution at face value and that there were no other defences opened to the Appellant.

4. Miss Wong, for the Respondent, sought to salvage the magistrate's decision by arguing on the basis of the ex tempore reasons given by the magistrate that the mistake was not operative on the magistrate's mind at the time when he refused the application. I do not think there is any merit in such argument. The mistake that the Appellant pleaded guilty to eight of the summonses was clearly set out by the magistrate in the chronology at paragraph 2 of his reasons for decision and he also expressly made reference to those guilty pleas as a reason for his decision at paragraph 7. The real question is how did that mistake in the totality of the circumstances affect his decision. As the magistrate's reasons for decision show, the important consideration was the conduct of the Appellant, I do not think this mistake adversely affected the exercise of his discretion.

The Appellant's conduct

5. Section 3(1)(c) of the Costs in Criminal Cases Ordinance gives the Magistrate the discretion to award costs to an acquitted Defendant. While the magistrate has wide discretion in awarding or refusing costs, such discretion has to be exercised in accordance with legal principles. It is the prosecution who decides to bring a Defendant to court. Thus, in general, a successful Defendant should be awarded his costs except where there are positive reasons for depriving him of it. In R. v. Kwok Moon Yan & Another [1989] 2 HKLR 396 the Court of Appeal held that positive reasons exist where the appellant's own conduct has brought suspicion on himself and has misled the prosecution into thinking that the case against him is stronger than it is.

6. At the hearing it was submitted to the magistrate by the prosecutor that subsequent to the event, the Appellant successfully applied for a supplemental import licence. As the transcript shows, a copy of the licence was produced to the magistrate for perusal. These licences are issued as an administrative measure under the discretion of the Director General of Trade and Industry in cases where the applicant has neglected to apply for the licence. The application states clearly that the grant of the licence is for the convenience of the applicant and shall not constitute a defence to prosecution for importing without licence.

7. Mr Chan, who also represented the Appellant before the magistrate, replied that he did not wish to address that issue about supplemental licence but sought to argue on a matter of general principle that costs should follow the event. He had the conduct of the Appellant's litigation. He was at liberty to take that course. But in the light of what was submitted by prosecution and the copy of the supplemental licence produced, if he chose not to respond, the Appellant cannot complain if the magistrate accepted, as he did, that the Appellant had neglected to apply for import licences which necessitated the subsequent application for supplemental licences. The Appellant cannot complain if the magistrate further found, as indeed he did, that it was the Appellant's own neglect which brought suspicion on itself and which led to its prosecution.

8. Next, Mr Chan complains that such finding effectively meant the magistrate accepted the case of the prosecution at face value that there was no other defence opened to the Appellant. He submitted that on plea day, he had indicated to the court that a record of interview was likely to be challenged. Today, he sought to argue in addition that the Appellant had a valid defence under the Textile Trader Registration Circular No. 6/98. Hence, he submitted, without the prospect of a trial by the prosecution offering no evidence, the Appellant was not able to set up these defences and recover its wasted costs. I do not agree. The position is the same whether the Defendant was acquitted after trial or upon the prosecution offering no evidence. The consideration is also the same.

9. In deciding whether there are positive reasons to deprive an acquitted Defendant of his costs, the more important consideration is the conduct of the Defendant, i.e. whether he has put suspicion on himself and not whether he is successful in his defence or whether he has a defence. That a Defendant will challenge admissibility of his caution statement is neither here nor there. He may challenge it based on a pure technicality, or that he misunderstood the questions asked of him at the interview and not necessarily that it was involuntary. Moreover, a voluntary statement may be excluded at the discretion of the trial magistrate. There may be circumstances where the Defendant may have himself to blame, not to mention that the prosecution may not be adducing the caution statement as well. Similarly, if the Appellant is relying on any exemption under Textile Trader Registration Circular No. 6/98, he may have brought suspicion on himself by not disclosing his defence and misleading prosecution into believing that it has a much stronger case. While the prosecution bears the burden of proving positive reasons and, hence, misconduct of the Appellant, if he chose not to contest the prosecution's claim of positive reasons, he cannot complain if the court is indeed satisfied that there are positive reasons to deprive him of his costs. These points that Mr Chan is submitting today should have been raised before the trial magistrate so that he may consider how in the light of all the circumstances he should exercise his discretion. It will then be for the magistrate to decide whether to conduct an inquiry on any of the issues raised. In the majority of cases, this may not be necessary. However, Mr Chan chose not to bring those matters to the attention of the magistrate and the magistrate could only exercise his discretion in their absence.

10. This discretion, like any other discretion, must of course be exercised judicially. But when a judge, deliberately intending to exercise his discretionary powers, has acted on facts connected with or leading up to the proceedings which have been proved before him or which he has himself observed during the progress of the case, then it seems to me that an appellate court, although it may deem his reasons insufficient and may even disagree with his conclusion, is prohibited from entertaining an appeal from it. In addition, an appellate court may not take into consideration other matters not placed before the trial magistrate and then put itself in the shoes of the trial magistrate and wonder how he would have exercised his discretion.

11. In the present case, I am satisfied that the trial magistrate has applied the correct legal principles and has exercised his discretion judicially on the facts placed before him. I do not consider his mistake about the Appellant's pleas of guilty would adversely have affected his decision. Accordingly, the appeal is dismissed.