ATTORNEY GENERAL v. CHUNG CHI WING

1987, No. 892

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HEADNOTE

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Forfeiture proceedings – order of speeches – admissibility of documents – principles on which discretion to be exercised.

IN THE SUPREME COURT OF HONG KONG

(Appellate Jurisdiction)

MAGISTRACY CRIMINAL APPEAL NO. 892 OF 1987

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J U D G M E N T

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1. This is a case stated by E.S. Yanne, Esq. on the application of the Attorney General.

2. At South Kowloon Magistrates Court the respondent pleaded guilty to importing unmanifested cargo contrary to section 18(1)(a) of the Import and Export Ordinance, Cap. 60. The cargo was 1440 kilogrammes of raw silk valued at $400,000 approximately. The respondent was sentenced to four months' imprisonment, which was suspended for two years on appeal.

3. On 28th April a Customs Inspector made an application for forfeiture of the goods under section28( 7) of the Ordinance. This was refused on 22nd May, the learned magistrate ordering that the silk be returned to the respondent unconditionally. On 24th June this decision was confirmed on review, though the order has since been stayed by O'Dea J., pending the determination of this appeal.

4. No oral evidence was led, but the respondent tendered six documents relating to the purchase of the silk in China.

5. Counsel for the respondent then submitted that a forfeiture order should not be made. The magistrate refused to hear the Customs Inspector in reply, on the grounds that, these being; civil proceedings in which no oral evidence had been called, the respondent was entitled to the last word.

6. The magistrate made the following findings:-

(a)   The respondent was the owner of the goods.

(b)   The goods were liable to forfeiture.

(c)   There was no evidence to suggest that the exportation of raw silk from China, or it's importation into Hong Kong, was prohibited. It's movement could not therefore be said to offend the comity of nations.

7. He took the view that the respondent had paid for the goods and, the offence having been committed unwittingly, he should not be deprived of them.

8. The questions of law for the opinion of this court are:

(a)   Was the appellant entitled to address me at the conclusion of the respondent's case on the evidence adduced by the respondent in view of the fact that the respondent had not called any oral evidence or witnesses, in the circumstances?

(b)   Should I have admitted into evidence the exhibits which are attached and form part of this Case Stated, marked D1 to D6 (together with certified translations) in the Respondent's case?

(c)   Was I correct in refusing to order that the goods be forfeited to the Crown?

9. Forfeiture proceedings are civil in nature. A.G. v. Mercado[1] There need be no dependent. They are commenced by complaint under section 8 of the Magistrates Ordinance. Proceedings at the hearing are governed by section 19 of that ordinance. The latter, however, is silent as to the order of speeches.

10. The equivalent section in England is section 53 of the Magistrates Courts Act, 1980. The order of speeches is set out in rules made under that Act. Rule 14 provides:-

"14.(1) On the hearing of a complaint, except where the court determines under section 53(3) of the Act 1980 to make the order with the consent of the defendant without hearing evidence, the complainant shall call his evidence, and before doing so may address the court.

(2) At the conclusion of the evidence for the complainant the defendant may address the court, whether or not he afterwards calls evidence (a).

(3) At the conclusion of the evidence, if any, for the defence, the complainant may call evidence to rebut (b) that evidence.

(4) At the conclusion of the evidence for the defence and the evidence, if any, in rebuttal, the defendant may address the court if he has not already done so.

(5) Either party may, with the leave of the court, address the court a second time, but where the court grants leave to one party it shall not refuse leave to the other (c).

(6) Where the defendant obtains leave to address the court for a second time his second address shall be made before the second address, if any, of the complainant."

11. Mr. Dykes, counsel for the appellant, submits that the magistrate having been informed that the Customs Inspector wished to address him concerning the exhibits, should have noted his application, heard the respondent and then given leave to the Inspector to address him subject to a right of reply by the respondent.

12. Mrs. Barnes, who appears for the respondent, agrees that this would have been the proper approach. I am satisfied that the magistrate was wrong to prevent the Customs Inspector from commenting on the evidence. Nevertheless, the answer, to the first question, as framed, is in the negative.

13. As to the second question, concerning the exhibits, Mr. Dykes submits that they were irrelevant to the forfeiture issue and were in any event hearsay and inadmissible.

14. Sections 27 and 28 of the Import and Export Ordinance make it clear that, once the offence is proved and notice of forfeiture proceedings is served, a magistrate has a discretion to order forfeiture of the goods or their delivery to the owner, either unconditionally or on terms. The record of proceedings leading to a conviction in respect of the goods is admissible in these proceedings by virtue of section 28(8)(a).

15. Section 34(2) of the ordinance extends the provisions of Part IV of the Evidence Ordinance, which relates to the admissibility of hearsay evidence in civil proceedings, for the purposes of the section. The section, however, is only concerned with the place and manner of import or export, matters which were not in dispute before the magistrate and which were irrelevant to the forfeiture proceedings.

16. Mrs. Barnes agrees that the magistrate's decision cannot be supported, but asks that the case be remitted in order that the respondent himself may produce the documents. It was open to him to have made an application to do so at the trial and I am not prepared, in view of their doubtful relevance, to allow him to pursue the matter at this stage.

17. The main question in this appeal is whether the magistrate was right to refuse to forfeit the goods. The burden of showing why they should not be forfeited lay on the respondent, Lam Wah v. R.[2] Forfeiture should be ordered where the prescribed conditions are established, as here, in the absence of good reason to the contrary. A.G. v. Chin Chack-wing[3].

18. The principles on which the discretion should be exercised have been set out in several recent decisions including Director of Immigration v. Chu Shui-fat[4]; Tsang Koon-ah v. R.[5]; R. v. Man Kin-ping and another[6]; R. v. Ngai Wai[7] and A.G. v. So Lo-kan[8].

19. They have been conveniently summarised in the latter case by de Basto J. in these terms:-

"1. The purpose for which the forfeiture provisions were enacted was to enforce the Ordinance and to serve as a deterrent against its contravention, that is, that forfeiture provisions are penal and deterrent in nature.

2. He must not make an order the result of which would be to frustrate the object of the legislation or to impair its effectiveness.

3. Once the prescribed conditions are established the Crown is not obliged to prove an additional fact of guilt or negligence.

4. Once the prescribed conditions are fulfilled an order for forfeiture should be made unless some good reason is shown by the claimant, on the balance of probabilities, why a forfeiture order should not be made.

5. Good faith, or innocence based on ignorance, do not entitle the claimant to have the article, vessel or vehicle restored to him.

6. The sentence passed on a claimant in the prior criminal proceedings is irrelevant.

7. Considerable financial loss, even for a claimant not of substantial wealth, is a hardship but not an undue hardship.

8. The mere fact that forfeiture would cause undue hardship on a claimant does not, of itself, mean that a forfeiture order should be refused."

20. In Director of Immigration v. Chu Shui-fat⁴, Macdougall, J. held that where there is a complete absence of fault on the part of the owner, the magistrate should exercise his discretion in the owner's favour, but it did not follow that, where there was fault on the part of the owner, the court must necessarily order forfeiture. I respectfully agree.

21. In the present appeal the respondent was aware that the goods were unmanifested. He is not therefore blameless.

22. On the other hand there has been no loss to the revenue: the goods are not dutiable and no import licence was required. There is no evidence that their export from China is prohibited. They were not concealed on board the vessel.

23. There is thus no explanation for the failure to manifest the goods. If there are restrictions in the export of raw silk from China, it was open to the Crown to lead evidence to that effect. As it is, there is simply no evidence on the point.

24. Manifests are necessary for the prevention of smuggling and the orderly conduct of trade. Forfeiture serves as a deterrent against contravention of the ordinance.

25. In A.G. v. Chin Chack-wing³, Sir Michael Hogan C.J. said at page 489:

"We have, on the one side, the interests of the community as represented by the state, endeavouring to prevent breaches of the law and to stop smuggling, by seizing those instruments of transportation which are used in the course of, or for the purpose of, committing offences against the law. On the other hand, we have the natural reluctance to deprive an owner of his property if no fault or error can be laid at his door."

26. Applying these principles to the evidence before the magistrate, I am satisfied that he was not justified in refusing to make a forfeiture order.

27. I am however concerned about the cost to the respondent of such an order. In R. v. Ngai Wai⁷ Nazareth J. was faced with a similar problem. In resolving it he said this :

"I consider that forfeiture constitutes so grossly disproportionate a penalty in the particular circumstances of this essentially technical offence, that that of itself must constitute good reason for not ordering it. I remain of that view notwithstanding Mr. Jenkyn Jones' submission that return of the goods upon condition that the owner pays part of their value, would place a premium upon and encourage the unlicensed export of consignments of very large value. Whether or not that would be so, which I doubt, the amounts to be paid could be set to provide an effective deterrent. In this regard, at the hearing before the magistrate, an offer was made, which was renewed at the appeal, to pay 20% of the value of the goods. However I consider that 25% of their value would be more appropriate and would clearly secure the objects of the legislation in the present circumstances."

28. Given the great value of the raw silk, I think justice will be done if a conditional order under section 28(7)(ii) is made on similar terms.

29. I order that the goods be returned to the respondent on payment to the Commissioner of Customs and Excise, on behalf of the Crown, the sum of $100,000 before 1st February, 1988. In default of payment the goods will be forfeited.

30. The answer to the third question raised by the magistrate is in the negative.