R. v. ORIENTAL KING LTD. (as CHINA LINK TRADING (GARMENT) CO.)

1997, NO. MA 369

IN THE SUPREME COURT OF HONG KONG

(Appellate Jurisdiction)

MAGISTRACY APPEAL

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J U D G M E N T

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1. The appellant pleaded guilty to three charges of causing another to make a misleading statement, contrary to s.36(1)(a) of Import and Export Ordinance, Cap.60. On the first charge, the appellant was fined at $900; on the second charge $3,300 and on the third charge $5,400, making a total of $87,900. He was given three months to pay. He now seeks to appeal against sentence.

2. The first ground was that the learned magistrate was wrong to attribute two-thirds of the blame to the appellant. I would therefore have to look at the facts as disclosed in the statement of facts.

3. Between 30th November 1994 and 12^th December 1994, the Trade Department received three applications for export licences for textile in respect of 1,120 3/4 dozens of ladies' jacket under quota category 635 for export to the United States of America. The applications were submitted by three local exporters. These applications were approved by the Trade Department. However, these three local exporters did not receive the purchase orders from the United States buyer but from the appellant company. It was falsely represented that the U.S. buyer had a local agent called Ying Leong Cheong Industrial Company Limited and that this company contacted another local trading company called Christie (Asia) Industries. It got in touch with the appellant and transferred the three applications for licences in respect of the three orders to the appellant. According to the statement of facts, it was the appellant which asked a Mr Mo Ho Yeung, partner of Christie for assistance to make out a document purporting to be an agency agreement between the U.S. buyer and the appellant. It is the appellant which asked Mr Mo to make out the false agency agreement purporting to show that the appellant was the appointed local agent for the U.S. buyer. As a result of all this, there was false information in the applications for export licence regarding the conditions to be fulfilled.

4. Looking at the admitted facts, it is, in my view, quite clear that the learned magistrate was entitled to come to the conclusion which he did. The false agency agreement was in the name of the appellant. The appellant requested Mr Mo to prepare such an agreement. It is clear that the appellant could have chopped its signature there and it was the party to benefit from the transaction. In my view, the appellant is more culpable than the local exporters which submitted the applications to the Trade Department.

5. At the hearing on the first occasion when the appellant was not legally represented, the learned magistrate indicated that the appellant should be more culpable than the local exporters. On the second occasion when the appellant was represented by a counsel, the learned magistrate heard submissions from both counsel for the appellant and the lawyer for the local exporter. He then came to the conclusion that the appellant should be two-thirds to blame in these transactions. In my view, it cannot be said that the magistrate had prejudged the matter at an early stage when the appellant was not legally represented. The learned magistrate considered the facts and came to a preliminary view. He heard submissions on the second occasion. There is nothing to suggest that he had not seriously considered the submissions of counsel. Although the learned magistrate did not in his reasons for sentence expressly specified the reasons for the apportionment of blame, it is quite clear that there was nothing which could persuade him to change his preliminary view regarding the relative culpability between the parties involved, notwithstanding the submissions of counsel and lawyer.

6. The second ground relied upon by counsel was that the learned magistrate did not have sufficient regard to the ability of the appellant to pay the fine. The magistrate simply arrived at the figure after applying 10% on the amount of the transactions and ordered the fines. Before imposing a fine, the court has an obligation to make enquiries into the financial ability of a defendant. In my view this the learned magistrate had done. It is quite clear from the notes of proceedings that he had considered the appellant's ability to pay the fines. He went out of his way to do so, and even suggested that an accountant should be engaged by the appellant and the local exporters. His suggestion was that witnesses could be called.

7. Eventually, counsel submitted a document which purported to the financial statement of the appellant. As I mentioned in arguments, this consisted of two pages which appeared on pages 46 and 47. With respect, they did not mean anything at all. The statement showed a deficit but consisted of very scanty information, to say the least, and it is quite clear that this is not acceptable. Although there is no express finding in the magistrate's reasons for sentence regarding this document, I think it is abundantly clear that anyone looking at this document would find it to be totally unacceptable and unsatisfactory. I think it is not surprising that it was rejected.

8. The principle involved is whether the court should normally impose a fine which would quibble the business of the appellant. The fact that the company is not doing well and suffering from loss cannot be a good reason for the court not to impose any penalty. Here there is very little or nothing to assist the magistrate with regard to the ability of the appellant to pay the fines. In my view, he did consider that matter. There is nothing to persuade me that he has come to a wrong conclusion. The appeal must be dismissed.