HKSAR v. LAM SHING FAI and Others

1997, NO. MA 128

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL

_________________

_________________

_______________

J U D G M E N T

_______________

1. This is an appeal by the Government by way of case stated on the magistrate's order under s.102(1)(a) and (2) of the Criminal Procedure Ordinance, Cap.221 ordering the police to return to the owner certain properties in the possession of the police.

2. These properties were seized by the police when they arrested the respondents for sale of intoxicating liquor without a licence and possession of intoxicating liquor for sale without a licence. The respondents were prosecuted for these offences and on 8th March 1996, they appeared before the magistrate and pleaded guilty to them and were respectively fined. At the end of the hearing, the properties seized except those which were the subject matter of subsequent hearing relating to their forfeiture (the "disputed items") were disposed of by the magistrate without disagreement by the appellant and the respondents. The "disputed items" were karaoke equipments consisting of TV, laser disc players, microphones etc. and furniture. They were dismantled and removed by the police on 4th February 1996 from the karaoke premises. The disposal of the "disputed items" was adjourned by the magistrate for arguments.

3. On 27^th March 1996, the magistrate heard arguments from both sides, as a result he made the following order in respect of the "disputed items":

"All the disputed items (i.e. the karaoke system and equipment as well as the furniture which the police had on 4^th February 1996 dismantled and removed from the premises known as Hollywood Karaoke Restaurant situated at 1st to 3rd Floors, 673 Nathan Road) be returned by the police to the lawful owners at the said premises within 3 days from the date of this order and the same be reinstated to their original state by the police at their own expenses with the least disturbance to the lawful business of the said Restaurant."

4. It is against this order that the appellant appealed.

5. According to the facts admitted and stated in the case, the ground floor of the premises was used as a European style restaurant while the 2^nd and 3^rd floors with 20 and 32 VIP rooms respectively were used as Karaoke Box. Each room was equipped with a karaoke system. Customers patronising the karaoke were provided food and drinks including intoxicating liquor with no valid liquor licence in force. The "disputed items" were found in 23 such rooms and one DJ room on the 2^nd and 3^rd floors and were seized by the Police raiding the premises.

6. The magistrate stated in the case that there was no dispute that the "disputed items" were seized in the presence of the respondents and s.48(3) of the Dutiable Commodities Ordinance (which required the Commissioner of Customs and Excise to give notice of seizure if the seizure was carried out in the absence of the owner) has no application.

7. The appellant's submission before the magistrate was that the magistrate had no jurisdiction to dispose of the "disputed items". It was submitted that the items were liable to forfeiture and disposal could only be by way of forfeiture proceedings under s.48 of the Dutiable Commodities Ordinance, Cap.109 which could only be commenced by the Commissioner after there was a notice of claim served on the Commissioner within 30 days of seizure. No such notice had been served within the prescribed period and the items were deemed to have been forfeited. The argument was that the words "use" and "made use of" in s.15(1) and s.48(2) of the Ordinance should be construed liberally to mean "facilitating or promoting" the commission of an offence under the Ordinance. If that construction was adopted, the "disputed items" were "used" or "made use" of by the respondents to facilitate or promote sale of intoxicating liquor on the unlicensed premises and thus the commission of an offence under the Ordinance. Section 48 thus applied.

8. The respondents argued before the magistrate that the "disputed items" were not lawfully seized and were not liable to forfeiture and they were not deemed to have been forfeited. They should be disposed of in the same manner as the other exhibits in the case i.e. return to the owners.

9. The magistrate found as a fact that the "disputed items" and other exhibits were seized during the raid and in circumstances leading to the offences. His conclusion was that they were lawfully seized under s.15(1) of the Dutiable Commodities Ordinance.

10. As to whether s.48(2) of the Ordinance applied so that the disputed items were liable to forfeiture, the magistrate concluded that the words "use" and "made use of" in s.15(1) and s.48(2) should not be accorded the more liberal meaning as contended by the appellant and should not be extended beyond their natural meaning. By this construction, the disputed items were not liable to forfeiture and s.48 did not apply. The magistrate also found as a fact that the solicitors for the respondents represented the lawful owners of the "disputed items". The magistrate found that he had jurisdiction under s.102(1)(a) and (2) of the Criminal Procedure Ordinance to dispose of the properties and make an order to return the "disputed items" to the owners represented by the solicitors for the respondents.

11. The magistrate stated the following questions of law for the opinion of this court :

(1) Whether he was correct to rule that the court had jurisdiction to hear an application by the solicitor for the owners of the disputed items for their disposal in the manner at the conclusion of the criminal proceedings regarding the offences in question, other than in a forfeiture proceedings initiated by the Commissioner of Customs and Excise;

(2) Whether he was correct in his construction of s.48 of Cap.109 and in particular the meaning of the word "use" therein;

(3) Whether he was correct in his ruling that s.15(1)(c) of Cap.109 had no application;

(4) Whether he conducted the hearing according to law, in particular whether he was correct in ordering the return of the disputed items to the "lawful owners" under s.102(1)(a) and (2)(a)(i) of the Criminal Procedure Ordinance, Cap.221;

(5) Whether he had power, in ordering the return of the exhibits also order the manner and time the disputed items be returned by way of ancillary terms and conditions; and

(6) Whether he was expressly prohibited from making an order for the disposal of the disputed items by s.102(6) of the Criminal Procedure Ordinance, Cap.221.

These questions are on the construction of s.15(1) and s.48(2), (3) and (6) of the Dutiable Commodities Ordinance, Cap.109 and s.102 of the Criminal Procedure Ordinance, Cap.221.

12. Section 15(1) of Cap.109 provides for seizure of things used for commission of offences under the Ordinance. Subsection (1) provides as follows :

"(1) Whenever it is lawful under this Ordinance for a member of the Customs and Excise Service or a police officer to seize, remove and detain any goods, it shall be lawful for him in a like manner to seize, remove and detain -

(a) any receptacle in which the goods are contained;

(b) any ship not exceeding 250 tons gross tonnage or any vehicle or aircraft not being a public transport or state aircraft in which the goods are found;

(c) any machinery, implement, utensil or material used or intended to be used for the commission of an offence against this Ordinance; and

(d) anything which may appear to be or to contain evidence that any offence against this Ordinance has been or is about to be committed."

13. Section 48 deals with forfeiture of goods and other things. The relevant provisions are as follows :

"(2) Wherever there occurs a contravention or an attempted contravention of any provision of this Ordinance, any things which are mentioned in section 15(1)(a), (b), (c) and (d) and which are made use of in such contravention or attempted contravention shall be liable to forfeiture whether or not any person is convicted of any offence.

(6) ..."

14. Section 102 of the Criminal Procedure Ordinance provides for disposal of property connected with offences. The relevant provisions of s.102 provide as follows :

"(1) Where -

(a) any property has come into the possession of a court, the police or the Customs and Excise Service in connection with any offence;

(b) it appears to a court that an offence has been committed in respect of any property in the possession of the court, the police or the Customs and Excise Service; or

(c) it appears to a court that any property in the possession of the court, the police or the Customs and Excise Service has been used in the commission of an offence,

then, whether or not the offence was committed or appears to have been committed in Hong Kong, a court may dispose of such property in the manner provided in this section.

(2) Of its own motion or upon application, a court may -

(a) in respect of property to which subsection (l)(a) applies -

(i) make an order for the delivery of any such property to the person who appears to the court to be entitled thereto;

(ii) where the person so entitled is unknown or cannot be found, make an order that the property be sold or retained in the possession of the court, the police or the Customs and Excise Service; or

(iii) if the property is of no value order that the property be destroyed; and

(b) in respect of property to which subsection (l)(b) or (c) applies -

(i) deal with such property under paragraph (a) in the like manner as property to which subsection (l)(a) applies; or

(ii) make an order for the forfeiture of the property.

.....

(6) Where by any other Ordinance it is provided that any particular property or class of property shall or may be forfeited, destroyed or disposed of, then the provisions of such Ordinance shall prevail."

Mr Liu for the appellant submitted that the disputed items were lawfully seized under s.15 and were liable to forfeiture under s.48(2) because they were used or made use of in the contraventions committed by the respondents - the sale or possession for sale of intoxicating liquors without a licence. His argument was these karaoke equipments were for the enjoyment of customers of the karaoke and it was well known that generally in the atmosphere of a karaoke, customers would take alcohol. Without these equipments, customers might not have done so. He submitted that the words "use" and "made use of" in these sections should be liberally construed as to mean "facilitate" or "promote" and not to confine to mean "directly use". When that construction was adopted, the karaoke equipments could be said to be there to facilitate or promote the sale or possession for sale without licence of intoxicating liquor by the respondents and thus liable to forfeiture under s.48(2).

15. Mr Liu further argued the magistrate generally had power under s.102 of the Criminal Procedure Ordinance to order disposal of properties which had come into the possession of the police in connexion of any offence, but in the present case where the disputed items were liable to forfeiture under s.48(2), s.102(6) made it clear that the disputed items could not be disposed of except in accordance with s.48 which prevailed. The magistrate was therefore wrong in making that order.

16. Mr Chong for the respondents on the other hand argued that the words "use" and "made use of" in the sections could only mean "directly used" in connexion with or in the commission of an offence under Cap.109 and could not and should not be construed to mean "facilitate". He submitted that s.48 was penal in nature and these operative words which made private properties liable to forfeiture should be strictly construed. He submitted that there was no evidence for the magistrate to conclude that the disputed items were used or intended for use in connecxion with the commission of any offence under Cap.109. The disputed items could hardly be said to have been used directly or otherwise in connexion with the offences committed by the respondents. They were not liable to forfeiture and they could be disposed of by the magistrate under s.102. Where the magistrate had power to dispose of the disputed items as he did, the magistrate was also empowered to decide on the manner of disposal which could include the setting of conditions for the return of them to the owners.

17. In the opinion of this court, s.48 is a statute penal in nature because its application entails an infliction of economic detriment on the owner when the properties are forfeited. The general principle is that a person should not be penalised except under clear law. In "Statutory Interpretation" by F.A.R. Bennion the learned author states this principle as the principle against doubtful penalisation and that the presumption against imposition of a statutory detriment to a person's property or other economic interests without clear words is one aspect of this general principle. In Craies on Statue Law, the learned author states that the modern approach in construction of statutes is with reference to the true meaning and real intention of the legislature. At page 532 he refers to the principle of construction as this :

"In construing an Act of Parliament, every word must be understood according to the legal meaning, unless it shall appear from the context that the legislature has used it in a popular or more enlarged sense. That is the general rule, but in a penal enactment, where you depart from the ordinary meaning of the words used, the intention of the legislature that those words should be understood in a more large or popular sense must plainly appear."

He also refers to the principle as this :

"This principle of construction is thus accurately stated by Sedgwick :

'The more correct version of the doctrine appears to be that the statues of this class are to be fairly construed and faithfully applied according to the intent of the legislature, without unwarrantable severity on the one hand or unjustifiable lenity on the other, in cases of doubt the courts inclining to mercy.'"

18. Applying these principles, it could not have been the intention of the legislature that all things which were found on unlicenced premises where contraventions, against the Dutiable Commodities Ordinance were committed could be seized and made a subject of forfeiture proceedings where these things could not be shown to have been directly used or made use of in committing such contraventions, even though they might have been there to promote patronage. To give the operative words in the sections the wider meaning and to depart from their ordinary meaning in such context is to impose unwarranted severity. Karaoke equipments on unlicenced premises could not be made use of in sale or possession for sale of liquor on the premises. Karaoke is not inseparable from alcohol. The disputed items might have appeared to be connected with the commission of the offence because the respondents were caught serving liquor to customers using the equipments in the room and they might appear to contain evidence of such sale if they had been contaminated with liquor, but certainly they were not used or made use of to commit the offences. The disputed items do not fall within s.15(1)(c) and s.48(2) and they are not things liable to forfeiture. Section 48 does not apply.

19. That being so, it was within the magistrate's jurisdiction to dispose of the disputed items in the same manner under s.102(1)(a) and s.102(2)(a), because they were properties which had come into possession of the police in connecxion with an offence. The magistrate having found as a fact that the respondents' solicitor also represented the owners of these items and thereby identified the persons who appeared to him to be the owners, was entitled to make the order that was made. In making the order, the magistrate was also entitled to include in the order such terms as she deemed just in the circumstances that would attain the purpose of returning to the owner the properties seized.

20. The answers to questions (1) to (5) posed by the magistrate are "Yes" and the answer to question (6) is "No". The appeal is dismissed.