HKSAR v. NGAN SHU HUNG

HCMA1266/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO.1266 OF 2004

(ON APPEAL FROM TWCC 1372 OF 2004)

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J U D G M E N T

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1. After his trial before a magistrate sitting in the Tsuen Wan Magistracy, the appellant was convicted of one charge each of importing unmanifested cargo, contrary to section 18(1)(a) of the Import & Export Ordinance, Cap.60 and importing goods to which a forged trademark was applied, contrary to section 12(1) and (2) of the Trade Descriptions Ordinance, Cap.362.  The appellant was sentenced to five months’ imprisonment for each charge and both sentences were ordered to run concurrently.  He now appeals against his convictions.

2. The subject matter of the two charges were some 1.94 million sticks of cigarettes which bore labels of popular brand names.  There was no dispute at the trial that the cigarettes were unmanifested cargo and that the trademarks and descriptions applied on those cigarettes were forged.

3. The prosecution case at the trial was that on 23 March 2004 the appellant drove his lorry into Hong Kong from China.  On board the lorry there were 380 cartons which were described in the cargo manifest as “10 oz Glasses”.  The appellant was intercepted by officers of the Customs & Excise Department in a car park in the Kwai Chung area when two men were seen unloading the cartons from his lorry and transferring them to another vehicle which was parked alongside the appellant’s.  Subsequent inspection by the authorities revealed that 253 out of the 380 cartons on board the appellant’s lorry contained duty-unpaid counterfeit cigarettes.

4. According to the officer who gave evidence as PW1 at the trial, the appellant admitted under caution that he had carried the cargo from China earlier that morning and he had instructions to deliver them to a certain Mr Chan in Kwai Chung.  When asked by the officer as to whether he knew what the goods were, the appellant told the officer that he had no idea.  He said when the cartons were being loaded into his lorry that morning in China, he had gone to the washroom.  However, on his way back to the lorry he noted that all the cartons had been loaded and he saw the words “10 oz Glasses” printed on the side of the cartons.  He was given a manifest of the goods in which the cartons were described as to contain glasses.  He had no reason to believe otherwise.

5. The evidence of PW2 to PW6 was not in dispute.  PW2 was the exhibit officer.  His evidence was that he opened some of the cartons seized from the appellant’s lorry and found them to contain cigarettes.  This witness was able to confirm that there were no secret compartments inside the appellant’s lorry and there was no unusual locking device installed.  The four remaining prosecution witnesses were trademark experts who gave evidence on the forged trademarks appearing on the cigarettes.  They agreed with the defence suggestion that a person without professional training could not tell whether the trademarks applied to the cigarettes were forged.

6. The appellant elected to give evidence.  He was a professional driver operating his own lorry and his business was to carry goods between China and Hong Kong.  On the morning in question he was in China and he received a telephone call from a Mr Kwok requesting for his services to deliver goods to Hong Kong.  When asked about the nature of goods, he was told that they were glasses.  A fee of RMB1,500 was agreed for his services and he was given a cargo manifest which was exhibited at the trial as a prosecution exhibit.  He was also given a piece of paper upon which was written the address and telephone number of his contact in Hong Kong for picking up the cargo.

7. At the trial Mr Lau for the appellant who also appeared in this appeal relied on the statutory defence provided under section 18(2) of the Import & Export Ordinance and section 12(2)(a) of the Trade Descriptions Ordinance to the respective charges.  The burden was therefore on the appellant to bring himself within the statutory provisions on the balance of probabilities.  In summary, the appellant’s evidence was this : the cargo was described as glasses by Mr Kwok and was so stated in the manifest.  He had no reason to believe otherwise and that his belief was confirmed by actually seeing the contents of some of the cartons in the warehouse where he picked up the goods.

8. On the 2^nd charge, the appellant claimed that all along he believed the goods he was carrying were glasses.  That being the case he did not know and there was no basis for him to embark on any enquiries.

9. The magistrate rejected the appellant’s account of the incident and found both charges proved against the appellant.

10. Mr Lau advanced five grounds of appeal.  The first two grounds related to both charges.  The magistrate was criticised for wrongly rejecting the evidence of the appellant that he had seen the contents of the cartons shortly before they were loaded onto the appellant’s lorry, and also on the part of the appellant’s evidence that he had conducted a manifest check on the Chinese Export Manifest prior to carrying the cartons to Hong Kong.

11. The importance of this part of the appellant’s evidence was that if his evidence was accepted, the appellant would have been misled by the printed words on the cartons and by the fact that he saw glasses being placed into the cartons.  There would have been no reason for him to believe that the contents of the cartons would be anything other than 10-oz glasses as described.

12. The reasons for the magistrate in rejecting the appellant’s evidence were stated in paragraphs 13 and 19 of his Statement of Findings :

13.	The defendant further said that after he met Mr Kwok, he was taken to this single-storey warehouse where he saw 20 cartons boxes on the loading platform.  Mr Kwok told him that they were the goods for transportation.  In re-examination, however, the defendant said there were only three to four boxes of goods on the platform, whilst the rest of these 20 boxes were inside the warehouse where there were many boxes, all with the same markings.  I found he was not being truthful in this evidence.
….
19.	I found my disbelief of the defendant evidence was confirmed when I found he did not mention anything in his cautioned statement, made on the very same day as the incident, about his having seen several boxes of glasses lying open on the loading platform.  Neither did he mention anything about the warehouse workers putting glasses into boxes.  When challenged about this in cross-examination, the defendant said that he had forgotten to put these details in the record of interview, and he was not asked about it.  I disbelieved these reasons.”
(Emphasis added)

13. It was conceded by the respondent at the appeal that the magistrate was mistaken when he attributed to the appellant in saying that there were three to four open cartons of goods on the platform during his re-examination.  A copy of the transcript of the appellant’s re-examination was made available to this court and the record showed that the appellant never departed from his original testimony about the number of cartons.  This departure, the magistrate said albeit it mistakenly, was one of the reasons for him to find the appellant not being truthful with his evidence. 

14. The other reason for the magistrate for disbelieving the appellant’s evidence was that the appellant had made no reference in his cautioned statement of the fact that he saw there were glasses inside the cartons and that some of the workers were seen putting glasses into some of the cartons.  In so finding, the magistrate must have found that the appellant had concocted this part of his evidence to bolster his defence.

15. It would be useful to note that from the record of interview, the voluntariness of which was not disputed, the appellant was informed by customs officers specifically that they had seized duty-unpaid cigarettes from his lorry.  When the appellant was asked in Question 23 whether he had inspected or checked the goods while in China, the appellant’s reply was that he did not conduct a check.  The magistrate found this response to be inconsistent with the appellant’s oral testimony for had he been under the genuine but mistaken belief that the contents of the cartons were glasses, he would have told the interviewing officer.

16. If the mistake of the magistrate regarding the number of cartons mentioned by the appellant in his re-examination is placed in its proper context, the conclusion reached by the magistrate was that he rejected the part of the appellant’s that he had seen the contents of the cartons.  From this perspective, the exact number of cartons which the appellant claimed to have seen would have minimum impact on the prosecution’s case.

17. Once the magistrate rejected the account of the appellant on the basis that he was not a truthful witness, the magistrate was entitled to come to his finding in paragraph 16 that the appellant had concocted the part of his evidence that he had telephoned his Hong Kong office and requested for a check on the manifest declaration.  Both the first and second grounds of appeal must fail.

18. Ground 3 of the appeal was directed at the finding by the magistrate that the appellant had not exercised due diligence in respect of the statutory defence to the 1^st Charge.  It was submitted by Mr Lau that the magistrate misdirected himself on the correct test to be applied.

19. The magistrate accepted that the appellant did not know the cargo was unmanifested but he did not accept that there was no way which the appellant could have ascertained the contents of the cartons.  The legislation placed the burden of establishing reasonable diligence on the appellant.  There was no dispute that out of 380 cartons there were 253 cartons of cigarettes.  The cartons containing cigarettes were placed at the very back of the compartment of the lorry and those containing glasses were placed on the outer part of the compartment where access would be relatively easier.  What then was the evidence capable to be construed as the appellant having exercised reasonable diligence?  With respect to Mr Lau, once the magistrate had rejected the appellant’s account, there was none.  There was no evidence that the appellant had taken steps to check any of the cartons, inactivity on the appellant’s part, in the present case, could never be interpreted as acts amounting to reasonable diligence.  There is no merit in Ground 3 of the appeal.

20. Ground 4 was directed at the conviction of Charge 2 only.  Mr Lau submitted that in finding the appellant had not exercised reasonable diligence in respect of the statutory defence to Charge 2, the magistrate had misdirected himself on the correct test to be applied.

21. In paragraph 9 of the Statement of Findings, the magistrate accepted the evidence of the trademark experts.  He said :

“

9.

PW3, PW4, PW5 and PW6 were I found trade mark experts in determining false trade marks for their own brands, and I accepted that each had his own particular way of checking, which involved company information which was not publicized.  Trademark certificates were put into evidence by agreement.  I found that the 1,9450, 280 [sic] cigarettes were all carrying infringing trademarks of the trademarks stated in charge 2 and I found (it was not disputed) that each trademark on the cigarettes stated in Charge 2 had been copied without the authority of the trademark holder.  (I found in fact most of the cross-examination of these witnesses was irrelevant, as the defendant’s case was that he had never seen these cigarettes at any time.)”

22. The magistrate found the evidence of the four experts as irrelevant to the defence as the appellant’s case was that he had not seen the cigarettes.  Mr Lau’s argument was this : if the magistrate was correct, then no-one could ever raise the statutory defence under section 12(2)(a) of the Trade Descriptions Ordinance.  With respect to counsel, I could not follow his reasoning in this line of argument.  The section provides :

“	(2)	Any person who imports or exports any goods contrary to subsection (1) commits an offence unless he proves that—
		(a)	he did not know, had no reason to suspect and could not with reasonable diligence have found out that the goods are goods to which a false trade description or forged trade mark is applied;
	…”

23. Any defendant who wants to avail himself of the statutory defence must prove, on a balance of probabilities, that “he did not know, he had no reason to suspect and could not with reasonable diligence have found out ….”.  It is clear that the three elements were phrased in the conjunctive.  If a defendant pursuing the statutory defence chooses only to adduce evidence that he did not know of the existence of the goods and ignores the other elements in question, then he does so in his peril.  This was the approach adopted by the appellant at his trial.  There was no evidence in this case to support the other two requisite elements.  The criticism levelled at the magistrate’s approach to the evidence was made without a proper understanding of the wording of the section and is therefore ill-founded. 

24. The appellant had failed to demonstrate to this court that the magistrate had committed an error of law in his interpretation of the statutory requirements.  There was ample evidence to support his decision to convict which the magistrate had arrived after considering the evidence before him in detail.  The convictions are neither unsafe nor unsatisfactory.

25. The appeal against the convictions of Charges 1 and 2 is dismissed.