THE QUEEN v. YEUNG KAI PUN

IN THE SUPREME COURT OF HONG KONG

(APPELLATE JURISDICTION)

MAGISTRACY APPEAL NO. 1239 OF 1989

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BETWEEN

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JUDGMENT

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1. The appellant pleaded guilty before Mr W. Eccleton to one charge of selling 10,000 integrated circuits to which a forged trade mark had been applied. The Magistrate imposed a fine of $60,000 against which the appellant now appeals.

2. The goods were purchased from a local company for $15,000 and sold to another local trader for $40,000, yielding a profit of $25,000. The Magistrate accepted that at the time of the transactions, the appellant was not aware that the goods bore false trade marks. The Magistrate correctly directed himself to the authorities which state that a figure amounting to 40% of the value of the goods should be imposed in cases of this kind. In this case, however, a fine based on 40% of the value of the goods would have resulted in the fine being considerably less than the appellant's profit on the sale. The Magistrate quite properly found this unacceptable reflecting the view of the Court of Appeal in the Attorney General v. Marvels Clothing Co. Ltd.; Attorney General v. Eagles Eye (Hong Kong) Ltd. [1987]2 H.K.L.R. 839 where Cons J.A. said at p.843 :-

"A fine should in no instance be fixed at a level which would allow a person or corporation to emerge from prosecution though still a profit on the relevant transaction."

3. The Magistrate instead adopted a fine based on the ratio of penalty to net profit of 2+ to 1. This was the formula used by the courts prior to the Marvels Clothing Co. Ltd. decision. This resulted in the fine of $60,000 being imposed.

4. The Magistrate was right to impose a fine, the case did not justify a custodial sentence. However, having correctly decided that the 40% formula was not appropriate, the magistrate seems to have felt an obligation to impose a fine based on the old formula of 2+ to 1 ratio profit basis. He was of course under no such obligation as any tariff is no more than a guideline. The appellant is a first offender and the Magistrate found he had no guilty knowledge. In these circumstances, I consider the fine of $60,000 was excessive given that the maximum fine for offences of this kind is only $100,000. There is, however, a further factor which needs to be considered in this case and that is the appellant's ability to pay a fine. The Magistrate did hear the appellant, who was unrepresented, in mitigation before imposing the fine. He did not however accept the appellant's statement that the only profit the firm had made was from this transaction nor that the appellant was receiving only $2,000 per month in wages. I have the benefit of seeing the appellant firm's profit and loss account and balance sheet prepared by chartered accountants and it is clear that the firm is in financial difficulties. The appellant does draw only $2,000 per month and the firm still shows a substantial loss. He does not appear to have any substantial assets or savings. The fine needs to be fixed at a figure which the appellant can realistically pay.

5. Having regard to these factors, I allow the appeal to the extent that the fine is reduced to $30,000.