HKSAR v. LUI SIU CHAM

HCMA120/98

IN THE HIGH COURT OF THE

HONG KONG SPEICAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

HIGH COURT MAGISTRACY APPEAL NO.120 OF 1998

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J U D G M E N T

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1. The Appellant pleaded guilty to three summonses which charged him with the offence of importing or exporting goods covered by Schedule 1 to the Import and Export (Strategic Commodities) Regulations without applying for the necessary import or export licence issued by the Director of Trade.

2. In respect of those pleas on one summons, he was fined $300,000 by the learned Magistrate, which was reduced to $250,000 on a review of sentence, that was Summons FLS 9146/97. In respect of the other two summonses, he was fined on each $15,000 by the learned Magistrate. The offences all concerned computer parts which were imported into Hong Kong and in two instances were exported from Hong Kong without the requisite licence.

3. In respect of all three summonses, the Appellant, in person, applied for leave to appeal against the convictions out of time. Leave to appeal against convictions out of time was earlier granted to the Appellant by Mr Justice Chan, the Chief Judge. The basis of his appealing against convictions, despite having pleaded guilty to the three summonses, was simply that the Strategic Commodities Regulations were devised by what is known in brief as "COCOM" even though they were passed by the Hong Kong Legislature. The Appellant addressed me at some length about how COCOM was, in devising those policies, acting against the interests of the People's Republic of China. The full name of COCOM is the "Co-ordinating Committee for Multilateral Exports" comprising the North Atlantic Treaty Organisation Countries and Japan as its members. Because these policies discriminated against China, the Appellant submitted that they were therefore against the Basic Law. He also made the point that as a Chinese national who now lives in Hong Kong, which is now part of the People's Republic of China, he is no longer bound by these discriminatory laws against China.

4. These offences had occurred between October 1995 and January 1996 when sovereignty in Hong Kong was still vested in the United Kingdom Government. These Regulations under the Import and Export Ordinance were passed by the then legislature of Hong Kong and whether or not they were drafted based upon policies devised by COCOM, the fact remains that they were regulations passed by the legislature of Hong Kong. I am informed by Mr Law, appearing for the Department of Justice, that COCOM was dissolved in 1994, but these Regulations are still part of the present laws of Hong Kong. I therefore find that these Regulations are not in breach of the Basic Law and the convictions are good in law. Accordingly, the appeals against convictions are dismissed.

5. On the appeal against sentence, which is only against the sentence imposed in Summons FLS 9146/97, Mr Chan appeared on behalf of the Appellant. Mr Chan submitted that the fine of $250,000 was manifestly excessive, and submitted that there were two important factors in the case which the learned Magistrate did not give any or any sufficient consideration to. The first matter is that the goods, the subject matter of the Summons in question had in fact been exported to Hong Kong from Shanghai. In respect of that importation, the Appellant, as the proprietor of a trading company in Hong Kong, did apply for an import licence from the Trade Department. However, when the Appellant arranged for these goods to be re-exported to Shenzhen, China on 31st January 1996, he did not apply for an export licence from the Trade Department. Because these goods had emanated from the PRC and were exported back to another part of the PRC, Mr Chan submitted that this was only a technical breach and did not breach the spirit of the Strategic Commodities Regulations which are to control the export from Hong Kong to certain countries of high-tech goods imported into Hong Kong from other countries.

6. The other matter that Mr Chan relied upon is the fact that it was in March 1996 that the Appellant himself reported to the Trade Department that he had exported these goods to China without applying for the requisite export licences. It was after this disclosure by the Appellant himself that the Trade Department referred the case to the Customs & Excise Department for investigation which resulted in three summonses being laid against the Appellant. Mr Chan therefore made the point that if it had not been for the voluntary disclosure by the Appellant himself, the matters would not have come to light.

7. Mr Law, appearing for the Respondent, referred me to certain calculations that he had made of the fines imposed in two previous cases. In the case of AG v. Chan Kin-Yam [1986] HKLR 115, the value of goods in question was $2 million and the fine of $175,000 represented 8.5% of the value of the goods. In that case the goods had been imported into Hong Kong from the United States and were then exported to China. In the case of R. v. Mak Shui-cho and Son Ltd. [1987] HKLR 882, the value of the goods was $10 million and the fine of $50,000 represented, in percentage terms, 0.5%. In that case, the goods had been imported into Hong Kong from Singapore and then exported to China. The appellant in that case acted as a forwarding agent and prepared the necessary documentation. The misleading description on the bill of lading had been put on the document by the consignors in Singapore. The Court in that case held that the consignors had practised a deceit on the appellant company which was the reason why the fine was as low as it was.

8. In the present case, the goods in question were worth $7.8 million, the fine of $250,000 represented, in percentage terms, 3%. In the Reasons for Sentence prepared by the learned Magistrate, he mentioned the value of the goods, he mentioned that the Appellant was aged 44 and had started this particular trading company six years ago. It was also mentioned that the Appellant operated the company from his home and that his business had not been very good. The learned Magistrate then said that he took into account all the circumstances of the case including the Appellant's financial circumstances and arrived at the fine of $250,000. There appears to be no mention by the learned Magistrate of the two matters upon which Mr Chan relied to say that the sentence is manifestly excessive.

Whether these matters had been considered by the learned Magistrate, in my judgment, the fact that the goods in question had been exported from Shanghai and after they came into Hong Kong, were exported to Shenzhen, is an important matter in terms of whether the spirit of the Strategic Commodities Regulations had been breached. The Hong Kong Government apparently did not find the importation of these goods into Hong Kong in any way objectionable because the Trade Department issued an import licence to the Appellant. I also regard as an important factor the fact that the offences had been disclosed voluntarily by the Appellant to the authorities. Addison J in the case of Mak Shui-cho had said that no inflexible rule of thumb can be laid down as a sentencing policy in respect of strategic commodities and that each case must depend on its own facts. Taking into account the two matters relied upon, and which I have mentioned, I have come to the conclusion that the justice of this case will be met by my allowing the appeal against sentence and reducing the fine from $250,000 to one of $200,000. The appeal against sentence is therefore allowed to that extent.