COMMISSIONER OF CUSTOMS AND EXCISE v. BHAGWAN KANAYALAL CHANDIRAMANI

FACV No. 8 of 2002

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 8 OF 2002 (CIVIL)

(ON APPEAL FROM CACV NO. 566 OF 2001)

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J U D G M E N T

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Mr Justice Bokhary PJ:

1. This appeal by the Commissioner of Customs and Excise ("the Commissioner") arises out of judicial review proceedings brought by the respondent, Mr B.K. Chandiramani. The material facts are within a small compass. But in order to follow their significance, it is necessary to be aware of the terms of s.27 of the Import and Export Ordinance, Cap. 60. Accordingly I will, before going into the facts, set out the whole of s.27. Since it is a lengthy section, I will introduce it by stages in the following manner.

2. Liability to forfeiture is dealt with in subsection (1) which reads:

" There shall be liable to forfeiture -

(a) any article which has been seized by a member of the Customs and Excise Service or an authorized officer in connexion with the contravention of any provision of this Ordinance;

(b) any vessel not exceeding 250 gross tons and any vehicle so seized and which has been used in connexion with, or is the subject of, the contravention of any provision of this Ordinance,

whether or not any person has been convicted of an offence in respect of such contravention."

3. Restoration of seized articles, vessels and vehicles is provided for under subsection (2) which reads:

" The Commissioner may, within 30 days of the seizure of an article, vessel or vehicle, restore any article (other than an article referred to in Schedule l) or any vessel or vehicle which is liable to forfeiture to the person who appears to him to be the owner thereof or the authorized agent of the owner; and upon such restoration sections 28, 29, 29A, 29B and 30 shall cease to apply to the article, vessel or vehicle."

4. If any seized article, vessel or vehicle is not restored, then the question of a notice of seizure arises. This is dealt with in subsections (3), (3A) and (3B) which read:

" (3) The Commissioner shall, subject to subsection (3A) and not later than 30 days beginning on the date of the seizure of an article, vessel or vehicle, serve notice of the seizure on a person who was to the knowledge of the Commissioner at the time of, or immediately after, seizure, an owner of the article, vessel or vehicle.

(3A) Subsection (3) shall not apply -

(a) if the article, vessel or vehicle was seized in the presence of -

(i) an owner, or an employee or agent of the owner, of the article, vessel or vehicle;

(ii) the person whose offence or suspected offence gave rise to the seizure; or

(iii) in the case of a vessel or vehicle, the master or person in charge; or

(b) in relation to an owner who does not have a permanent address in Hong Kong at the time of seizure.

(3B) Notwithstanding anything in subsection (3A)(a), where the Commissioner believes that the article, vessel or vehicle is a stolen article, vessel or vehicle, he shall serve notice of the seizure within the period specified in subsection (3), on a person whom he believed at the time of, or immediately after, seizure, to be an owner of the article, vessel or vehicle."

5. Mode of service is dealt with by subsection (4) which reads:

" A notice given under subsection (3) or (3B) shall be deemed to have been duly served if -

(a) it is delivered to the person on whom it is to be served;

(b) it is sent by registered post addressed to such person at the place of residence or business of such person, if any, known to the Commissioner; or

(c) where it cannot be served in accordance with paragraph (a) or (b), the notice is exhibited at the Customs and Excise Department, in a place to which the public have access, for a period of not less than 7 days commencing within 30 days from the date of the seizure of the article, vessel or vehicle."

6. Notices of claim are dealt with in subsections (5), (5A) and (5B) which read:

" (5) If an article, vessel or vehicle is liable to forfeiture under subsection (l), the owner of the authorized agent of the owner of the article, vessel or vehicle or a person who was in possession of the article, vessel or vehicle at the time of seizure, or a person who has a legal or equitable interest in the article, vessel or vehicle, may within 30 days beginning -

(a) on the date of the seizure; or

(b) where notice under subsection (3) or (3B) is -

(i) served by delivery to the person to be served, on the date of service;

(ii) sent by registered post, 2 days after the date of posting; or

(iii) exhibited as described in subsection (4)(c), on the first day it is so exhibited,

give notice in writing to the Commissioner claiming that the article, vessel or vehicle is not liable to forfeiture and of his full name and address for service in Hong Kong.

(5A) Where a claimant does not have a permanent address in Hong Kong, the notice to the Commissioner under subsection (5) shall nominate a solicitor qualified to practise under the Legal Practitioners Ordinance (Cap. 159), by including the name and address of the solicitor, who is authorized to accept service on his behalf in relation to any forfeiture proceedings.

(5B) If a notice referred to in subsection (5A) does not include the name and address of a solicitor as required under that subsection, it shall be regarded as if no notice had been given."

7. Forfeiture itself is dealt with in the final subsection of s.27, namely subsection (6) which reads:

" If, on the date of expiration of the appropriate period of time specified in subsection (5) for the giving of a notice of claim, under that subsection, no such notice has been given in writing to the Commissioner the article, vessel or vehicle shall be forfeited forthwith to the Government."

8. Throughout this judgment all references to sections and subsections are to those of this statute, the Import and Export Ordinance.

The material facts

9. I turn now to the material facts. Shortly stated, they are as follows.

10. Mr Chandiramani is a Hong Kong businessman who acted as agent for a Mr K.S. Law who resided in the Philippines. In mid-May 2000 Mr Law arranged for about $800,000 worth of watches, watch parts and mobile telephones ("the goods") to be delivered to Mr Chandiramani. Mr Law instructed Mr Chandiramani to have the goods delivered to couriers, Federal Express, for carriage by air to him i.e. Mr Law in the Philippines. Mr Chandiramani followed these instructions. More to the point for present purposes, he also followed Mr Law's instructions ? apparently aimed at evading high Filipino customs duty on watches ? to misdescribe the goods in all the documents involved as "metal spare parts".

11. On 22 May 2000, while the goods were in Federal Express's custody at the airport here, officers of the Customs and Excise Service ("the CES") unpacked the goods, examined them and discovered that they had been misdescribed. The officers detained the goods. On 23 May Mr Chandiramani, having learnt that the goods had not arrived at their destination, got in touch with Federal Express and asked them where the goods were. They informed him that the goods had been detained by the CES, and advised him to contact Inspector S.Y. Lau of that service. Mr Chandiramani did so, and it was arranged that he would be interviewed on 27 May. Meanwhile on 25 May the detained watches and watch parts bearing "Citizen" and "Tag Heuer" marks were examined by representatives of their manufacturers. These representatives confirmed that the watches and watch parts were genuine rather than counterfeit as the CES had suspected.

12. There remained the question whether the goods were stolen property. Suspicion in this regard was fuelled by a fax sent to the CES by Tag Heuer on 26 May, saying that "[s]ince the quantity is large and we have no record regarding such shipment, we have reason to believe that the examined goods are stolen shipment or obtained from an illegal abnormal source". However on 27 May the police informed Inspector Lau that they had no record of the goods being either lost or stolen.

13. On the same day Mr Chandiramani was interviewed under caution by Inspector Lau. The inspector's questions and Mr Chandiramani's answers were recorded, and they both signed this record (which I will refer to as Mr Chandiramani's "statement"). In his statement Mr Chandiramani said that he had acted as agent for Mr Law who was the owner and shipper of the goods and on whose instructions he had misdescribed the goods in order to evade high Filipino customs duty on watches.

14. At the conclusion of the interview, Inspector Lau formed the view that Mr Chandiramani had committed the offence of assisting in the export of unmanifested cargo, contrary to s.18A(1). The goods were then seized in Mr Chandiramani's presence, and he was issued with receipts for them. I am satisfied that prior to this seizure in Mr Chandiramani's presence on 27 May the goods had merely been detained for examination. It is to be noted that s.20(1)(f) expressly empowers any member of the CES and any authorized officer to "examine any article if he considers it necessary to do so to ascertain whether or not the provisions of the Ordinance are being, or have been, complied with by a person in respect of that article". A power reasonably to detain goods is necessarily implicit in a power to examine them.

15. Two days later, on 29 May, the CES received a fax sent by Mr Law from the Philippines. This fax bears the reference number assigned to this matter by the CES. The body of the fax reads:

"My name is K.S. Law of West star, Incorporated, Philippines. Mr Chandiramani Bhgawan Kanayalal has called me on long distance telephone and has said that you need to interview me about the airway bill number 023-0532-7114, I want to state that Chandiramani Bhagwan Kanayalal of Santori (H.K.) Ltd is my agent and has nothing to do with the matters herein. In fact, there is no inconsistency of the goods and the description in the airway bill in the Philippines we call watch parts as metal parts.

I understand that in export declaration Mr Chandiramani Bhawan Kanayalal will specifically mention that the goods are watches, watch spare parts and mobile phones.

As I am busy in the Philippines now I will not be able to come to Hong Kong, please take this as my statement.

Thanking you for your assistance if you need anything further then please contact me."

16. About two weeks passed. Then, on 16 June, the CES exhibited a notice of seizure in respect of the goods. This notice was exhibited at the CES's headquarters. Despite the fact that the Citizen and Tag Heuer watches and watch parts were genuine, the notice of seizure described them as forged.

17. Reverting to Mr Chandiramani, he was formally charged on 15 July with assisting in the export of unmanifested cargo. Five days later, on 20 July, solicitors acting for him wrote to the Commissioner. After referring to the fact that Mr Chandiramani would be appearing in the Magistrate's Court on 1 August, the solicitors said this:

"Further please be informed that the seized things are not liable to forfeiture and we are instructed to make an application in this regard to the Learned Magistrate which we will do on the date of the hearing."

The letter continued by asking when the goods could be collected from the Commissioner.

18. No reply was received prior to the hearing on 1 August. At the hearing on that date, Mr Chandiramani pleaded guilty and was fined $10,000. Nothing was said to the magistrate about either the forfeiture or the return of the goods. But after the hearing and on the same day, Mr Chandiramani's solicitors wrote to the Commissioner again, asking for the release of the goods to Mr Chandiramani. The Commissioner replied by a letter dated 7 August. The key paragraph of this letter reads:

" The subject lot of goods was seized on 27.5.2000 by our department. However, we have not received any notice of claim from you client, Mr CHANDIRAMANI Bhagwan Kanayalal within 30 days beginning on the date of the seizure as stipulated in Section 27(5) of the Import and Export Ordinance, Cap. 60, Laws of Hong Kong. Thus, I regret to inform you that your present claim is outdated."

19. Lengthy correspondence between Mr Chandiramani's solicitors and the Commissioner ensued. This correspondence included the Commissioner's letters of 16 and 28 August. By the first of these letters the Commissioner communicated ? and by the second of them he reiterated ? his decision to regard the goods as forfeited. This decision became the subject-matter of a judicial review challenge which Mr Chandiramani brought and in which, I should think, Mr Law had a commercial interest.

In the courts below

20. On 9 March 2001 this judicial review challenge to the Commissioner's decision failed before Hartmann J who dismissed it with costs. But on 15 January 2002 the Court of Appeal (Rogers VP and Le Pichon JA, Burrell J dissenting) allowed Mr Chandiramani's appeal against Hartmann J's judgment, quashed the Commissioner's decision and ordered that the goods be released to Mr Chandiramani within 21 days of its Order unless the Commissioner applied for their forfeiture under s.28. The Court of Appeal was not invited to make any order as to the costs before it, and did not do so. By leave of the Appeal Committee granted on 27 May 2002, the Commissioner now appeals to this Court, asking us to reverse the Court of Appeal's judgment. Argument in support of the Commissioner's appeal has been presented by Mr Simon Westbrook SC leading Mr S.H. Kwok. Mr Chandiramani has chosen not to appear or be represented before us. But argument in support of the result reached by the majority in the Court of Appeal has been presented by Mr Anderson Chow as amicus curiae.

Notice of claim to be given

21. It will be remembered that s.27(3B) opens with the words "Notwithstanding anything in subsection (3A)(a)" but does not refer to subsection (3A)(b). Accordingly, Mr Westbrook submits, subsection (3B) can only ever disapply subsection (3A)(a)'s disapplication of subsection (3), and can never disapply subsection (3A)(b)'s disapplication of subsection (3). Mr Chow submits to the contrary. For the purpose of the present case, it suffices to say this. Whatever other effect subsection (3B) can have in circumstances different from those of the present case, I am satisfied that it does not create any notice requirement on which Mr Chandiramani or Mr Law can rely. For subsection (3B) is directed to stolen goods, and it is not the stance of either of them that the goods were stolen property. And in any event, I do not think that the Commissioner had the belief necessary to engage subsection (3B). He seems, at the most, to have suspected that the goods may have been stolen from some person or persons unknown.

22. In my view, therefore, the notice of seizure which the Commissioner exhibited was not required by law and was purely voluntary. It is true that the notice of seizure was inaccurate in that it misdescribed the seized Citizen and Tag Heuer watches and watch parts as forged when they were genuine. But whether or not anybody else can complain about such inaccuracy, I am satisfied that neither Mr Chandiramani nor Mr Law have any standing to do so. It is unnecessary to consider what the position may be if the fact of the voluntary notice of seizure or its inaccuracy had induced some act or omission on Mr Chandiramani or Mr Law's part or had generated some legitimate expectation on their part or had misled them. For there is nothing to suggest that anything of the kind happened in the present case.

23. Accordingly the time within which Mr Chandiramani and Mr Law had to serve a notice of claim was 30 days beginning on the date of the seizure i.e. 27 May 2000.

Was not given

24. The majority in the Court of Appeal decided as they did because they took the view that a notice of claim had been given within the time for giving one. In their view, a notice of claim was constituted by a combination of Mr Chandiramani's statement of 27 May 2000 and Mr Law's fax of 29 May.

25. I readily accept that two or more documents can sometimes be read together as a single valid notice of claim even though none of the documents on its own would amount to such a claim. Mr Westbrook rightly concedes as much. But the question is whether the two documents in question can be so read. Time is not a problem since 29 May would be within 30 days of the seizure even if, contrary to my view, the seizure is to be regarded as having taken place on 22 May rather than on May 27. However it would be necessary, quite apart from anything else, to view any notice of claim as one by the authorized agent Mr Chandiramani rather than the owner Mr Law. This is because, as we have seen: (i) Mr Law had no permanent address in Hong Kong; (ii) his fax made no mention of a solicitor; and (iii) the effect of s.27(5A) and (5B) is that a claimant who does not have a permanent address in Hong Kong must nominate a solicitor in his notice of claim or else it will not be regarded as a notice.

26. Did these two documents combine to form a notice of claim by the agent? Mr Chow submits that they did while Mr Westbrook submits that they did not. In my view, they did not. In his statement the agent did no more than answer questions in such a way as to confess to assisting in the export of unmanifested cargo. The statement was not a notice of claim or even the beginnings of one. As for the owner's fax, let us assume that it was a notice of claim in that it amounted to a denial that any offence had been committed and consequently an assertion that the goods were not liable to forfeiture (thus contradicting the agent's statement which admitted an offence). Even so it would be a claim by the owner. There is no basis for holding that it combined with the agent's statement (which it contradicted) so as to form a notice of claim by the agent. As a claim by the owner, it would be rendered null and void by operation of s.27(5A) and (5B).

Forfeited

27. Accordingly the period for giving a notice of claim in respect of the goods expired without any such notice having been given. So by the time of the Commissioner's decision in August 2000 to treat the goods as forfeited to the Government, they had indeed been so forfeited. They had been so forfeited by operation of subsection (6). The Commissioner's decision was therefore correct in law.

Result

28. In the result, I would allow the Commissioner's appeal, set aside the Court of Appeal's Order and dismiss Mr Chandiramani's application for judicial review. It has been agreed between the Commissioner and Mr Chandiramani that there be no order as to costs here or in the courts below whatever the result of this appeal. So the order as to costs obtained by the Commissioner at first instance should be set aside, and I would order that there be no order as to costs here or in the courts below.

Mr Justice Chan PJ:

29. I agree with the judgment of Mr Justice Bokhary PJ.

Mr Justice Ribeiro PJ:

30. I agree with the judgment of Mr Justice Bokhary PJ.

Mr Justice Nazareth NPJ:

31. I agree with the judgment of Mr Justice Bokhary PJ.

Lord Millett NPJ:

32. I agree with the judgment of Mr Justice Bokhary PJ.

Mr Justice Bokhary PJ:

33. The Court unanimously allows the appeal, sets aside the Court of Appeal's Order, dismisses Mr Chandiramani's application for judicial review, sets aside the order as to costs obtained by the Commissioner at first instance and orders that there be no order as to costs here or in the courts below.