ATTORNEY GENERAL v. SO LO KAM

HEADNOTE

Criminal law and procedure - forfeiture provisions under Import and Export Ordinance, Cap. 60 - magistrate to give reasons for making or refusing order for forfeiture - principles to be considered by magistrate in forfeiture application - forfeiture orders not limited to dutiable, prohibited or licensable goods.

IN THE HIGH COURT OF HONG KONG

(APPELLATE JURISDICTION)

MAGISTRACY CRIMINAL APPEAL NO. 940 OF 1985

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JUDGMENT

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1. This is an appeal by the Commissioner of Customs and Excise (through the Attorney-General) by way of a case stated under the provisions of the Import and Export Ordinance, Cap. 60 against the decision of a magistrate refusing to make an order for forfeiture of silver coins and ingots found in 25 Sonny sacks weighing 325 kgs and worth $700,000-.

2. The Respondent did not appear at the hearing of the appeal nor was he legally represented. A letter from Messrs Lawrence Pang & Co., Solicitors representing the claimant addressed to the Attorney General and copied to the Registrar and dated the 31st October, 1985 was handed to the Court by Counsel for the Appellant. That letter states that neither the claimant nor his solicitors would attend the hearing.

3. Paragraph 4 of the Case Stated reads:

"Upon the hearing of the application it was proved on behalf of the Appellant and found as a fact that:

4. The magistrate wont on to state:

He then states as follows:

5. The magistrate gave no reasons for making the Order he did. The failure to give reasons was, in my view, a regrettable omission. The value of smuggled goods (soo definition of "Smuggling" in Section 2 of the Ordinance) frequently runs into hundreds of thousands of dollars, sometimes millions, far in excess of the monetary jurisdiction of the District Court in civil proceedings. It behaves magistrates, in the interests of justice in general and of the parties in particular, to state their reasons for making or refusing a forfeiture order. To de otherwise is not only unfair to the parties and renders the Appeal Judge's task mere difficult but it givers an impression of perfunctoriness.

6. As Deputy High Court Judge Crudon observed in TSANG Koon-ah for FAN Wing-lung⁽²⁾ (infra)

"Forfeiture applications are invariably consequential to criminal proceedings and it may be that in the past they have not always been given the importance they deserve. As the onus is on the claimant once a conviction is obtained I recognize that a forfeiture application in practice is invariably thereafter considerably simplified. But Section 28 proceedings remain important and at least when the Magistrate is invested with a discretion, should never be regarded as perfunctory".

7. The questions posed by the learned magistrate are:

8. The leading case on forfeiture is The Attorney-General and CHIN Chack- wing⁽¹⁾ where the Full Court dealt with the question of forfeiture under the Dutiable Commodities Ordinance. In that case, the first respondent was the registered owner of a motorcar purchased on hire purchase terms financed by the second respondent (the Finance Company) who under the hire purchase agreement were the legal owners of the vehicle. While the vehicle was under the control of a third party to whom it had been loaned by the first respondent dutiable tobacco was seized from it.

Hogan, C.J. stated at page 487:

 

"To our mind the operative factor here is the presence of the dutiable goods in the car. The section says that in such circumstances the car may be forfeited; there is no suggestion that an additional fact of guilt or negligence on the part of the owner is necessary before the forfeiture provisions can be applied.

We think the magistrate was wrong in seeking some general rule or principle of criminal law on which to rest an order of forfeiture. What he was asked to do was to apply the terms of a particular section, not limited in its effect by any such principle. Similarly, we think the magistrate was wrong in approaching the question on the basis that, in the absence of complicity or what he termed 'negligence', he could not forfeit. "

And 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. The difficult in the present instance flows from the fact that whilst the Finance Company is, in a sense, free from fault or error, this is an innocence resting on ignorance of what is happening to its own property. The Company has chosen, and chosen quite deliberately, to relinquish effective day to day control over property in which it claims the ultimate ownership, and has participated in setting in notion a train of events which has ended in the misuse of the car. True, the Company did not foresee that end but the possibility of such an outcome must have been foreseen and, whilst maintaining legal ownership, the Company took no effective steps to prevent it. If the Company's ownership was ineffective to prevent misuse of the car, should it suffice to preclude forfeiture?

And finally, at page 490:

9. That case established that, in the absence of some "good reason" to the contrary a Magistrate should, in the exercise of his discretion, order forfeiture where the prescribed conditions were established.

10. In TSANG Koon-ah for FAN Wing-lung⁽²⁾ Deputy High Court Judge Cruden, commenting on CHIN Chack-wing's case^(l) (supra) stated:

"In particular where (the prescribed) conditions are established and the article was liable to forfeiture the Crown was not obliged to prove additional requirements of guilt or negligence before the discretion could be exercised against a claimant. Good faith, or innocence resting on ignorance, did not entitle the claimant to have the articles restored to him".

11. It is trite law that the onus of establishing some "good reason" in forfeiture proceedings rests on the claimant by affirmative evidence (my emphasis) on the basis of the preponderance of probabilities.

12. Where the prescribed conditions are established (as in this case) then, unless the claimant discharges the onus which rests on him, an order for forfeiture should be made.

13. MacDougall, J. in Director of Immigration and CHU Shui-fat⁽³⁾ dealt on appeal with a case in which the magistrate, under the Immigration Ordinance, Cap. 115, had refused to order forfeiture of a vehicle in which the respondent had conveyed are illegal immigrant. He held, inter alia, that:

 

At page 781 he observed:

 

"Insofar as the learned magistrate concluded that he must exercise his discretion in favour of the respondent for the reason that an order for forfeiture of the vehicle would amount to the imposition of a further penalty which would necessarily cause undue hardship because the first magistrate must have considered the fine of $2,000 to be adequate, he must be wrong. If the view taken by the learned magistrate were correct it would mean that a court would always be obliged to exercise its discretion in favour of a claimant who had been convicted and punished in respect of the earlier prosecution relating to his use of the vehicle for the carrying of illegal immigrants. This cannot possibly have been the intention of the legislature".

14. In The Queen and CHAN Kin-kwan⁽⁴⁾ it was submitted to Addison, J. that undue hardship to the claimant would result from a forfeiture order because the claimant, who was not a man of substantial wealth, would suffer considerable financial loss ($330,000).

Addison, J. said:

 

"There is a fallacy in this argument, as I see it, in that it would put a premium on a person always to smuggle or attempt to smuggle goods into another country of a value far in excess of his financial wealth. Should these articles be seized he would always be able to say that he suffers ruin ...... Mr Cagney for the Crown put the matter very succinctly when he said the loss of the whole investment on a venture of this kind is a hardship but not an undue hardship".

15. Silver is not a prohibited or dutiable commodity; nor does it require an import licence. The magistrate made no reference to these matters but, of themselves, they would not have availed the claimant. Diamonds, gold, jewellery, wrist-watches, cameras, etc. are not prohibited or dutiable goods nor do they require an import licence. The forfeiture provisions in the Ordinance are not limited to prohibited or dutiable commodities nor to those for which an import licence is required. The Crown does not have to prove an attempt to defraud the revenue.

16. In CHAN ham-bor & others v. R⁽⁵⁾ O'Connor, J. said:

"It is clear that a continuing snuggling of articles of any type in either direction between Hong Kong and China is an irritant, tending to disturb the smooth relationship existing between Hong Kong and China. " (em phasis added. )

17. This passage was cited with approval by the Court of Appeal in Attorney General v. SO Chan-por and others⁽⁶⁾ Roberts C.J. said at page 698:

"We agree that substantial weight can be given to the damage that is likely to be done to Hong Kong's relationship with other territories by activities of this nature. "

18. As no reasons were given by the magistrate for refusing to make a forfeiture order I do not know what factors persuaded him to make the order he did. In these circumstances I feel obliged to refer briefly to the basic principles applicable in forfeiture cases.

19. In my view, in forfeiture applications, the magistrate should bear in mind that:

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. As Fuad, J. (as he then was) said "In the Matter of an Application for Forfeiture of fishing vessel No. M640419P by the Director of Immigration"⁽⁷⁾:

"The penalty of forfeiture, when added to a substantial sentence of imprisonment, is no doubt a severe one and the law is, in that sense, harsh, but it is quite clear the legislature made provision for forfeiture as an added deterent to persons who might be minded to breach the immigration legislation in a manner which has had such serious repercussions on society in Hong Kong"

21. I was puzzled by the magistrate's second question until I realized, or rather assumed, that the magistrate was, in fact, asking whether an order should have been made to return the silver to the owner in China. There was no evidence before the magistrate which could possibly have justified the exercise of his discretion in that manner.

22. In LAM Wah and The Crown⁽⁸⁾ Gould, J. dealt with an appeal from an order for forfeiture made against the masters of two junks who had been tried and found guilty of attempting to export a quantity of copper and vaseline without a licence contrary to the Importation and Exportation Ordinance.

Gould, J. stated, inter alia:

 

"The object of the subsection is to penalize the owners of cargo; it does not require that the owner shall have first been convicted of any offence. Its basis in equity lies in the reasonable assumption of fact that in 99 cases out of 100 of attempted illegal exportation or importation the owner is an accessory, if not a principal, and in the fact that if the finding or conviction of the owner were a pre-requisite the section would be largely nugatory. How elusive an owner can be when it suits him is well known to all connected with law and commerce in Hong Kong".

23. In the present case the evidence of the claimant cannot in any way properly have been construed as a good reason why a forfeiture order should not have been made. The claimant, therefore, failed to discharge the onus on him.

24. The answer to the lst question posed by the learned magistrate is, "No".

25. The answer to the 2nd question is, "Forfeited to the Crown".

26. It follows from my answers to the two questions that not only was it open to the magistrate to order forfeiture but that he should have ordered it. In pursuance of the powers conferred by Section 119 of the Magistrates Ordinance, I hereby order that the silver be forfeited to the Crown.

(1) (1961) HKLR 479

(2) Magistracy Appeal No. 211of 1985

(3) (1980) HKLR 780

(4) Magistracy Appeal 652 of 1983

(5) Criminal Appeal No. 239 of 1981

(6) (1981) HKLR 686

(7) M.P. 470 of 1981

(8) (1952) HKLR 91