HKSAR v. TJON KENNETH LIE SIN AND ANOTHER

HCMA 492/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO 492 OF 2011

(ON APPEAL FROM ESS 44056/2010 & ESCC 5248/2010)

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J U D G M E N T

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1.  The first appellant (“A1”) was charged with “possession for sale or for any purpose of trade or manufacture goods to which a forged trade mark was applied”, contrary to section 9(2) as read with section 18(1) of the Trade Description Ordinance, Cap 362. The second appellant (“A2”) was summonsed for the same offence. As the two cases arose out of the same incident they were tried together.

2.  They were respectively convicted of the charge and the summons after trial.  A1 was sentenced to three months imprisonment suspended for 18 months and A2 was fined $35,000.  The appellants appeal against their convictions and sentences. The appeal against sentences was abandoned at the time of the appeal hearing.

3.  On 23 April 2013 the court allowed the appeal of the 2 appellants and set aside their convictions and sentences.  They now ask for:

(a) Costs of trial at the magistrate’s court;

(b) Costs of A1’s application for bail after the trial pending appeal;

(c) Costs of the appeal; and

(d) Costs of the application for costs.

4.  The respondent objects to the application of the 2 appellants.

Evidence of the prosecution

5.  During the trial most of the evidence of the prosecution was not in dispute.  At about 1550 hours on 4 August 2010, Customs Officers disguising as customers brought a pair of boots bearing “UGG Australia” trademark from a saleslady at A2 in Ap Lei Chau, Hong Kong.  At the time of sale A1, the sole director of A2, was present and admitted to be the “boss” of A2.  On being arrested and cautioned he further admitted that the suspected counterfeit “UGG Australia” boots found in A2 belonged to him and were for sale.

6.  A2 was searched and 12 pairs of boots bearing “UGG Australia” trademark together with some other items were seized.  The trademark “UGG Australia” is registered under the Trade Marks Ordinance, Cap 559.  When interviewed under caution A1 said that A2 had purchased the boots from one Ricky Siu of Owen Industrial Company. On 18 March 2011, A1, through his legal representative, provided their details to the Customs and Excise Department and it was confirmed after investigations that Ricky Siu (Siu Chi Wai) was the sole proprietor of Owen Industrial Company which commenced business on 1 August 2009 and ceased business on 31 March 2010.

7.  The Finance Director of Deckers Asia Pacific limited, which was wholly owned by Deckers Outdoors Corporation, the registered owner of the “UGG Australia” trademark examined the 13 pairs of boots and concluded that they were all counterfeit goods.

8.  The appellants challenged her expertise regarding the authenticity of the “UGG Australia” boots and the magistrate after hearing the evidence and submissions accepted her expertise and her evidence.

Evidence of Defence

9.  A1 was the managing director of A2 which was owned by a company owned by A1.  A2 started business in 2007, selling furniture and luxurious bedding.

10.  About December 2009, a man called Ricky Siu (“Siu”) came to A2’s showroom and introduced himself as the sales agent of “UGG Australia” boots, presenting a name card in the company name of Owen Industrial Company with address and telephone number.  A web site “UGG.lifestyle.com” were also printed on the card.  He also produced some kind of certificate but A1 paid no attention to its contents.

11.  After talking to his friends and family A1 asked Siu to bring a sample for further discussion.           When Siu came A1 asked him how to tell if the product was genuine.  Siu even went through the official website of “UGG Australia” with A1.  After comparing the sample brought by Siu with the information on the Website A1 thought that the boots were genuine and agreed to place an order with Siu.

12.  The first order of about 15 pairs of boots arrived around the end of January 2010.  A1 and A2’s saleslady checked them to confirm that they were genuine.  Thereafter, A1 delegated the purchase and inspection of further products from Siu to the saleslady.  A1 did not know that the boots were counterfeit goods and would not have agreed to purchase them if he had known about it.

13.  A1 agreed that he knew nothing about Siu, Siu’s company and “UGG”.  He had not been to Siu’s company and the factory manufacturing the boots and had not asked Siu details about them.  He did nothing to approach “UGG” to indicate his interest in becoming its official retailer and made no enquiries from the factory about the authenticity of the boots despite A2’s saleslady finding a problem with the quality of a couple of pairs of boots which were replaced by Siu without question.

14.  He did not ask to see the certificate presented by Siu or a copy of it even when he decided to place an order for the boots and relied solely on the words of Siu who was a stranger to him.

Legal Principles

15.  It is well settled that an acquitted defendant should normally be awarded costs of the proceedings unless there are good reasons not to do so. In Tong Cun Lin v HKSAR [1999] 2 HKCFAR 531, Litton PJ said this:

“14. When a defendant has been brought to trial upon particular charges and is then found not guilty it is clearly right that he should normally be compensated out of public revenue for the costs incurred in defending those charges. In considering whether, despite this general rule, he should be deprived of all or part of his costs, the judge exercising the discretion must obviously look to his conduct generally, so long as such conduct is relevant to the charges he faced. This cannot be confined to any particular period of time. Since, however, the discretion is being exercised in the context of an acquittal – the averments constituting the charges having been found by the jury as not amounting to the crimes alleged – it follows that, generally speaking, the conduct most relevant to the matters under consideration must be the defendant’s conduct during the investigation and at the trial: How he first responded to the investigators, the answers he gave when confronted with the accusations, the consistency of those answers with his subsequent defence, etc. Wrapped up with this is the strength of the case against the defendant and the circumstances under which he came to be acquitted: These too are relevant to the exercise of the discretion to deprive him of his costs, so long as the judge is not, indirectly, thereby punishing him by taking a view of the facts palpably different from that taken by the jury and reflected in the not-guilty verdict. The person in the best position to weigh those matters is clearly the judge himself.”

16.  This clearly shows that the court in deciding whether to exercise its discretion has to look to the conduct of the defendant generally, so long as such conduct is relevant to the charges he faced.  In the case of Hui Yui Sang v HKSAR [2006] 9 HKCFAR 308, Chan PJ, in discussing about the relevant conduct, affirmed Tong Cun Lin and the principle that a defendant who has brought suspicion upon himself can be deprived of costs:

“12. As a general rule, the court should normally award costs to an acquitted defendant unless there are positive reasons to deprive him of such costs. One of the positive reasons is that the defendant has brought suspicion upon himself.”

17.  It should be pointed out that Tong Cun Lin was decided on section 73A of the Criminal Procedure Ordinance, Cap 221 which was replaced by a similar provision, section 5 of the Costs in Criminal Cases Ordinance, Cap 492, the relevant legislation in the decision of Hui Yui Sang.  The new section 5 and the repealed section 73A both empower the District Court and the Court of First Instance to award costs to a defendant acquitted after trial in the respective Court. 

18.  The present application is made pursuant to section 8 of the Costs in Criminal Cases Ordinance and section 120 of the Magistrates Ordinance, Cap 227 which give the Court of First Instance the discretion to award costs of the appeal and costs in the lower court to an appellant when an appeal is allowed. It is, however, the view of the court that despite the different legislation the legal principles to be applied are the same.

Costs of Trial

19.  The appellant contends that they had not done anything to bring suspicion upon themselves.  In Tong Cun Lin it was said that the conduct of the defendant to be considered must be relevant to the charges and is not confined to any particular period of time.  By way of illustration it, however, went on to say that generally speaking the conduct of the defendant most relevant to such consideration is his conduct during the investigation and at the trial.  In Ting James Henry v HKSAR FACC 4/2007 the Court of Final Appeal dealt with the issue in more specific terms.  Li CJ said:

“16. It may often be the case that a defendant’s conduct during the investigation and at the trial is such that it brings suspicion on himself, providing a ground for refusing him costs.  Such conduct has been described as “most relevant” to the discretionary exercise.  However, it is incorrect to suggest (and the authorities give no warrant for suggesting) that a defendant can only be regarded as having brought suspicion on himself by virtue of his conduct during the investigation or at trial and not otherwise.  The discretion is not bounded by any such inflexible rule.  By his conduct prior to the investigation and trial stages, including conduct which formed part of the setting for the charges laid against him, the defendant may plainly have brought suspicion upon himself.  There is no reason to ignore such conduct in the exercise of the court’s discretion on costs following an acquittal on the charges laid, provided always that the discretion is not exercised so as to undermine the presumption of innocence, and in particular, provided that its exercise does not involve the court in adopting a position at variance with the defendant’s acquittal by the tribunal of fact.”

20.  In the case of HKSAR v Li Siu Tong and 2 Others HCMA 547/2000 it was also held that the relevant conduct of an acquitted defendant covered not only his conduct during the investigations and at trial but also his actions directly surrounding the alleged criminal conduct.

21.  The appellants contend that they had not done anything to bring suspicion on themselves and set out in their submission what they had done during the investigation and trial.  The respondent on the other hand argues that the appellants had brought suspicion on themselves or misled the prosecution into believing that it had a much stronger case against them.  It cites the following part of the judgment of the court in the appeal:

“16. A1 agreed that he knew nothing about Siu, Siu’s company and “UGG”. He had not been to Siu’s company and the factory manufacturing the boots and had not asked Siu details about them. He did nothing to approach “UGG” to indicate his interest in becoming its official retailer and made no enquiries from the factory about the authenticity of the boots despite A2’s saleslady finding a problem with the quality of a couple of pairs of boots which were replaced by Siu without question.

17. He did not ask to see the certificate presented by Siu or a copy of it even when he decided to place an order for the boots and relied solely on the words of Siu who was a stranger to him.”

22.  The respondent adds that the magistrate had found that A1 had failed to show on an evidential basis that he had taken all reasonable precautions and exercised all due diligence to avoid the commission of the offence, or that he did not know, had no reason to suspect and could not with reasonable diligence have ascertained that the trade mark had been falsely applied.

23.  The appellants counter argue that whether or not the magistrate had such a finding cannot now be given more than negligible weight because the evaluation of A1’s evidence by the magistrate had been tainted with the procedural unfairness of the magistrate in conducting her own research on the internet.

24.  The court is of the view that the finding of the magistrate in this regard was based on the admission of A1 and is certainly not tainted in the way as suggested by the respondent.  The reasons for the court in allowing the appeal of the appellants are not in any way inconsistent with such finding of the magistrate. 

25.  The court agrees with the respondent that A1 by his own conduct had brought suspicion on himself and A2 and misled the prosecution into thinking that into believing that it had a much stronger case against the appellants. According to the case of R v Kwok Moon Yan [1989] 2 HKLR 396 cited by the appellants these, either separately or combined, are factors for the court to consider in the exercise of its discretion.

26.  In view of the conduct of A1 the court concludes that there is ample justification not to award costs to the appellants for the trial in the magistrate’s court. The court so orders.

Costs of Appeal and Application for Bail Pending Appeal

27.  As regards the costs for the appeal, the court is of the view that even though the appellants withdrew their appeal against sentences at the time of the hearing and of the 2 grounds of appeal against conviction advanced only one of them succeeded, the appeal had been properly conducted by the appellants and the appeal was allowed.  The present case is different from the case of HKSAR v Lee To Yim HCMA 957/2005 cited by the respondent in which the Court of First Instance refused to award costs to a success appellant because the grounds of appeal and the submission were prolix and confusing in the extreme. The court cannot find any reason why the 2 appellants in the present case should not be allowed the costs of their appeal.  The court therefore orders that the appellants be paid the costs of the appeal in a sum to be agreed and if not agreed, to be taxed. 

28.  The application for bail pending appeal flowed directly from the conviction of A1 which has now been quashed.  The court is of the view that the costs in respect of the application should also be given to A1 and orders the same be paid to A1 and in case the amount cannot be agreed, to be taxed.

Costs of Present Application

29.  In view of the result that the appellants does not succeed in all the items of costs applied for the court is of the view that it is not appropriate to award costs of the present application to the appellants.  The court therefore makes no order of costs in respect the application for costs by the appellants.