HKSAR v. CHEN MEI LING AND ANOTHER

HCMA 329/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 329 OF 2008

(ON APPEAL FROM TWCC 497/2007)

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J U D G M E N T

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APPEAL AGAINST CONVICTION AND SENTENCE

1.  On the 12th March 2008, each of the appellants was convicted after an eight-day trial in the magistracy of one re-amended joint charge under section 118(1)(d) of the Copyright Ordinance, Cap. 528 (the Ordinance).  The offence was charged under a version of section 118 which was current when the offence was committed in February 2007.  It has since been substantially amended.  At the material time the relevant part of the section read as follows:

“118(1)    A person commits an offence if he, without the licence of the copyright owner -

...

(d)     possesses for the purpose of, in the course of, or in connection with, any trade or business with a view to committing any act infringing the copyright;

...

an infringing copy of a copyright work.”

2.  References in this judgment to the Ordinance refer to that version, current at the time, unless otherwise stated.

3.  It is alleged that the appellants (to whom I will refer by their trial designation of D1 and D2) possessed a total of 622 music compact discs or music video compact discs which were infringing copies of copyright works, namely a sound recordings, with a view to committing an act infringing the copyright.  D1 was sentenced to 7 months’ imprisonment; D2 to 15 months’ imprisonment.  They each appeal against conviction and sentence.

APPEAL AGAINST CONVICTION

4.  It is common ground that on the 12th February 2007, customs officers went to premises at 278, Sha Tsui Road, Tsuen Wan, which at the time was an open fronted shop divided into two parts, one of which was selling household goods and the other CDs and MCDs.  The latter part seems to have been the smaller section of the shop.

5.  Exhibit 1 in the trial was a set of admitted facts relating to a test purchase transaction by one of the customs officers, who was served by D1.  The officer revealed his identity to D1 after the transaction was complete, whereupon she replied, “I am in trouble, yes, right”.  She was arrested.  After the commencement of the raid, D2, who was the proprietor of the relevant part of the business, returned to the premises and was in due course himself arrested.

6.  About 2500 discs were seized.  Those referred to in the charge were, the prosecution alleged, infringing copies in that they contained music track(s) the copyright of which was owned by one of four Hong Kong companies, Wing Hang (represented by PW3), Warner (HK) (PW4), Emperor Entertainment Group or EEG (PW6) and Universal Music Group (PW7).  I shall refer to these tracks as the “questioned tracks/discs”.

7.  The prosecution produced and relied upon an affidavit, affirmed under the then current section 121 of the Ordinance (Exhibit 14), in relation to the ownership and subsistence of the copyright in the allegedly infringing material.  The magistrate acceded to an application by the defence to have the deponent called to give evidence at trial, and she became PW5.

8.  The principal issues in the prosecution case were whether the ownership of the copyright in the works had been properly proved and whether the prosecution had proved that no licences had been issued in respect of the works permitting their publication in the form in which they appeared in the seized discs.

9.  The defendants sought to establish a statutory defence under section 118(3) of the Ordinance and to that end, each gave evidence.  The magistrate disbelieved their evidence and rejected the statutory defences.  He was satisfied that the ownership of the copyright had been properly established by the section 121 affidavit and by the evidence of PWs 3, 4, 6 and 7; and that no licences have been granted by the companies in respect of the copyright works.  Accordingly he was sure the question tracks were infringing copies of copyright works.  No issue arose as to whether the defendants possessed the questioned items in the course of trade or business given that the discs containing the offending material had been sold (in the test purchase) or offered or exposed for sale in a shop. 

10.  There was no issue that if the copyright owner had not issued a licence in respect of the tracks contained in the seized discs, they were infringing copies and selling them, or exposing them to sale in the shop, amounted to an act infringing the copyright.  Neither was there any issue that the statutory defences set out in section 118(3), as further enlarged in sections 118(6) and (7), were available to the accused. 

Grounds of appeal

11.  There were four broad grounds of appeal which were directed at:

·  the validity of the section 121 affidavit (Ground 1);

·  the adequacy of the evidence establishing that no licence has been issued, together with issues that focused on the reliability of the witnesses (Ground 2);

·  the rejection of D1’s statutory defence (Ground 3); and

·  similarly, the rejection of D2’s statutory defence (Ground 4).

Ground 1:  the section 121 affidavit

12.  Section 121 of the Ordinance allows for the presentation of evidence on the existence and subsistence of copyright in a work in Hong Kong by way of affidavit.  Since this is a procedural section, designed to deal with issues of evidence, rather than creating any offence or a liability, it is the current version which is relevant to these proceedings, the trial of which started after its introduction on the 6th July 2007.  The prosecution has not sought to prove the absence of licences by virtue of section 121(2)(b) which therefore has no application to this case.

13.  Not all the complaints raised before the magistrate as to the validity of the affidavit (which included arguments based on the existence of juxtaposed exclamation marks and question marks together on one of the pages) have been canvassed before this court.  Essentially however, it is suggested that the form and content of the affidavit are such that it should be ruled as inadmissible.  The faults in the affidavit said to be cumulative, so that even if any one of them is insufficient alone to rule it out, the combination is enough.  The magistrate disagreed.  I am satisfied that his decision was correct.

14.  It is submitted by the appellants that the form of the affidavit should strictly comply with Order 41 of the Rules of the High Court (RHC) which prescribes the layout, structure, numbering and the exhibiting of schedules and documents.  A number of complaints are made, for example, that the schedules listing the categories of information which might be expected to be exhibited separately, and annexed to the affidavit, had become incorporated into it.  In consequence, the paragraph numbering is not sequential and the jurat, instead of being placed, without a page break, at the end of the body of the document, is affixed to the end of one of the wrongly incorporated schedules.

15.  In addition, there is a confusion of the labelling of the exhibits/schedules which both bore the description “CYL-1” and “CYL-2”.  There is reference on one of the schedules to information about a sound recording which is not material to the prosecution case; and there is a complaint about the use of “HKSAR, China” as a description for the place of first publication. 

16.  The magistrate found that the RHC have no application to criminal proceedings because O. 2, r. 3 expressly excludes their application to criminal proceedings of this type.  In my judgment, that approach was correct.  However, even assuming that the rules do apply, O. 41, r. 4, provides that “an affidavit may, with the leave of the court, be filed or used in evidence notwithstanding any irregularity in the form thereof”.  This rule presumes that (as in the present case) the document has been properly sworn and has thereby become an affidavit, but it gives the court a discretion, which is to be exercised in a reasonable and fair manner, having regard both to the circumstances of the instant case and the extent of any irregularities together with their impact upon the proceedings.  The magistrate held that the affidavit in its existing form did not cause any prejudice or injustice to the appellants.  I agree with that conclusion so far as these complaints are concerned.

17.  This affidavit does not follow the rules or the notes to the rules set out in the White Book, particularly as to the placements of the schedules, which should be exhibited separately; and the location of the jurat, which should be at the end of the body of the affidavit; and the marking of the exhibits/schedules which, save for the fact this is a relatively simple document, could be confusing.  It is an untidy document and, as I said during argument, it is a mystery why the Customs and Excise (on advice from the Department of Justice) do not have a standard form of affidavit to provide to prospective deponents or, if they do, why they do not insist on it being applied. 

18.  This is by no means the first time that the quality of a section 121 affidavit has attracted adverse judicial comment.  The cases referred to in this judgment are two examples, this present case is another and the experience of magistrates and judges demonstrates that it is a continuing problem.  The Director of Public Prosecutions should examine the problem and ensure that a firm control over this aspect of these cases is obtained, thus saving huge amounts of court time and litigants’ money.  It should not be a difficult task for the Department of Justice to achieve success in this regard.

19.  In the end, I am satisfied that the affidavit complies with section 124(4) of the Ordinance.  No sound reason has been given as to why, if the RHC do apply, the court should not allow the affidavit to be used in evidence despite its irregularity in form.  No injustice or prejudice would result.  I would give leave for it to be so used if that were necessary.

20.  As to the contents, I deal first with the inclusion in the affidavit of details two tracks about which no complaint is made in the charge.  The consequence of this is, I judge, simply that the material is irrelevant.  Irrelevant material is to be ignored.  It has no impact on the other relevant evidence adduced by the affirmation and its inclusion did not affect the fairness of the case against the appellants in any way.

21.  A more substantial point is taken about the use of “HKSAR, China” in column 4 of the schedule to the affidavit which relates to the date of the first place of the publication of the songs in question.  All of the publication dates were before 1997 and therefore before the establishment of the Hong Kong Special Administrative Region of the Peoples’ Republic of China.  It is submitted that the reference ought to have been to the Colony of Hong Kong. 

22.  The appellants’ argument is based on the leading case on section 121 affidavits which is HKSAR v Tse Mui Chun (2003) 4HKCFAR 681 (Tse’s case)  where the Court of Final Appeal referred to “unnecessary and regrettable sloppiness” in the drafting of the affidavit, a characteristic which, as I have observed, unhappily still subsists.  In that case, it was held that, given the nature of this “statutory shortcut” to the proof of evidential matters, it is essential that the conditions of the shortcut be strictly observed.

23.  In Tse’s case, the affidavit pleaded the maker of copyright works as being a corporation.  It was required to state of the place of incorporation which the affidavit simply stated to be “USA”.  The court held that this was not sufficient because in the United States, companies are not incorporated under federal law but under state laws.  Thus, it was held, although it was “highly likely” that the companies in question were resident in the USA, it was necessary to specify in which state to fulfil a requirement to identify the residence of that corporation.  This was a technical breach of section 121; but, in the circumstances, a fatal one and the appeal was allowed.

24.  The appellants rely on this authority to support the proposition that as the HKSAR did not exist at the date of the first publication of the questioned items, the requirements of section 121(1)(a), to state “the place that the work was first published” are not met; in the same way as in Tse’s case, the breach might be technical, but, it is submitted, it is fatal.

25.  The respondent seeks to engage the Reunification Ordinance, Part 19/1, Volume 1, Laws of Hong Kong, and the Interpretation and General Clauses Ordinance, Cap. 1, to support its contention that section 121 is satisfied.  I do not need to rehearse all this because, in my judgment, Tse’s case is to be distinguished from this one.  There, it was crucial to satisfy the requirements of section 121(b) that the residence of the corporation be identified: that would enable a proper understanding of the legal basis of its incorporation, which was necessary to enable the reader of the affidavit, and, in particular in a criminal case, the defendants against whom it was sought to prove the contents, to see that there was a proper, substantial and legal basis for the claim to copyright which was found in the affidavit.

26.  Here, the questioned statement, appearing in column 4 of the schedule, is the place where the work was first published.  It is focused on the location, which was Hong Kong, and in that sense the description given (HKSAR) adequately identifies the location.  It also accurately states the present name (at least in its commonly used and statutorily approved abbreviation) and location:  the Ordinance makes no requirement that the name be stated as it was at the time of the first publication – it asks for an identification of the place.  Of course, the affidavit dates from after the handover.  There was, in my judgment, no need to state the place name for publications which first occurred in Hong Kong before 1997 as “the Colony of Hong Kong”, “the Crown Colony of Hong Kong” or any similar terms. 

27.  The respondent submits it can rely on HKSAR v Chan Tak-tun [2004] 3 HKLRD 112 (CA) at paragraph 14, where the Court of Appeal held that it was appropriate to:

“… look at the wider question associated with the alleged non-compliance with the requirements under section 121.  Assuming for one moment that a particular paragraph does in fact fail to provide the information as required under this section for one author, does it render the entire affirmation inadmissible as evidence?  The better view must be that it only affects that part of the affirmation with which the court finds non-compliance.  The non-infringing part remains admissible nevertheless.” 

28.  The difficulty here is that the complaint in the present case affects each of the entries on the relevant schedule, so that if there is a non-compliance, it runs throughout the document.  All the Court of Appeal was saying (having considered Tse Mui Chun) was that where non-compliance is limited to a particular entry in a section 121 affidavit, that entry can be ignored but the rest remains valid and reliable.  I do not find that assists in the present case: however, as I have said, I am satisfied that I do not need to resort to that approach.

29.  I add however, that if I were wrong to conclude that the use of the expression “HKSAR, China” has no impact on the validity of the section 121 affidavit, then this being a technical error, the remedy at this rehearing would be to reopen the prosecution case, either in this court, under section 119(1)(d) of the Magistrates Ordinance, Cap. 227, and then to direct (pursuant to section 118(1)(b)) that a fresh affidavit be submitted with due notice, amending the description of the location; or to sent the case back to the magistrate with this court’s opinion so that he can do the same.  In the circumstances, such a course is unnecessary.  I am satisfied that the section 121 affidavit was a valid document.  Taken together with the evidence of PW5, the deponent, which was accepted by the magistrate as honest and reliable, and the evidence of the representatives of the copyright owners, it proved the existence and the subsistence of the copyright in the relevant works.

30.  A point has been raised about the source of the information as to authorship of the Wing Hong questioned tracks in the section 121 affidavit.  I have considered the evidence and the submissions on both sides and I am satisfied that there is nothing in it to undermine the convictions.

31.  There is nothing in this ground of appeal and it must be dismissed. 

Ground 2: proof of the absence of licences

32.  The second ground of appeal is directed towards what are said to be inadequacies and insufficiencies in the prosecution evidence adduced to establish that no licences had been granted in respect of the questioned tracks.

33.  This attack on the findings of the magistrate commenced with a claim that as the witnesses representing the copyright owners had lunched together during the course of the trial, there was an appearance of collusion between them and therefore bias;  and that consequently, their evidence should be excluded.  Much reliance has been placed on the dicta of Lord Hewart CJ in R v Sussex Justices, Ex parte McCarthy [1924] 1 KB 256 which include references to the determination of issues as to bias depending “not upon what actually was done but upon what might appear to have been done”.  In my judgment, not only are the facts of that case, from which the dicta are derived, far removed from the present case (which is also distinguishable because here, the alleged bias involved witnesses who could be cross-examined, rather than the tribunal which could not), but subsequent judicial consideration of the Sussex Justices case has substantially modified the principles.  In particular, in R v Robert Brian Gough [1993] AC 646, the House of Lords identified the proper test as being whether there was a “real danger” of injustice having occurred: such test was “quite capable of producing the right answer and ensuring that the purity of justice is maintained across the range of situations where bias may exist”, per Lord Woolf at 673G.

34.  I have considered the allegations made here, the evidence given and the magistrates findings, and I am sure that there is no merit whatsoever in the allegations made against the witnesses.  There was nothing improper in them lunching together; there was no evidence that they had not followed the magistrate’s instruction not to discuss the case; there was no basis for any finding that they had tailored their evidence.  There was no danger of injustice arising from this aspect of the case.

35.  It was accepted that the duty lay on the prosecution to establish that no licences had been issued in respect of the questioned tracks.

36.  The method employed by the prosecution in this respect was primarily by use of section 17A of the Evidence Ordinance, Cap. 8, a relatively rarely used provision which is titled “Evidence in criminal proceedings to prove unrecorded event did not happen”.  Essentially, the prosecution said that there was no record in any of the companies of the issue of licences to authorise the production of the questioned tracks and that if such licences existed, they would have been recorded because a system had been followed in each case by a person acting under a duty (or a series of such persons) to compile a record of the issue of such licences.  Therefore, the prosecution argued, the court could be sure that there were no such licences.  It might be said that this approach simply involved the drawing of such inferences as were properly available in the ordinary way.  However, it is appropriate to mention section 17A little further since it was relied upon by the magistrate.

37.  Section 17A, so far as is material, provides:

(1)  Where in any criminal proceedings the happening of an event of any description is relevant, and it is proved that a system has been followed whereby a person acting under a duty has compiled a record of the happening of all events of that description, evidence that there is no record of the happening of the event in question shall be admitted as prima facie evidence to prove that the event did not happen.

(2)   ...

(3)   ...

(4)  Any reference in this section to a person acting under a duty includes a reference to a person acting in the course of any occupation in which he is engaged or employed.

38.  Here, the relevant event was licensing.  There was evidence that no records of licences existed.  Therefore, the question under section 17A was whether there was proof that a system of recording the existence of licences had been followed in each case by a person acting under a duty, i.e. a person acting, for the time being in the course of employment, in respect of each of the companies owning the copyright to the questioned tracks.

39.  The alternative approach, that is, determining whether ordinary inferences to the same effect could properly be drawn, depended on whether the evidence of the witnesses from the copyright owners, PW3, PW4, PW6 and PW7, established facts which gave rise to only one reasonable inference, namely that no licences had been issued.

40.  I have reviewed the magistrate’s thorough analysis of the evidence of each of these witnesses and I have read the transcript of their evidence.

PW3 Wing Hong

41.  The thrust of PW3’s evidence for Wing Hong was that the company continued to own the copyright in the questioned tracks, that (save for a licence to EMI, to which I shall refer in a moment) it had not licensed these tracks to third parties, that any such licences were securely retained by the company, that PW3 was able to check, and had checked, the relevant files and that there were no such licences.

42.  The EMI licence (Exhibit 13), as the magistrate found, covered two particular compilations which included the two questioned tracks.  They were licensed to appear only in the form of those compilations, and not as appeared on the challenged discs; and although EMI (which was in a joint venture agreement with Wing Hong) was empowered to sublicense, it could only do so to its own subsidiaries (clause 10.1 of Exhibit 13); and also that any such sublicence must be for the compilations as a whole, not just for the individual songs and not, therefore, in the form in which they appeared on the questioned discs.  PW3’s evidence was that no other licences were issued.  It was not suggested to her that there were other licences.  The magistrate, who analysed her evidence carefully, was entitled in my judgment to reach the conclusion that copyright existed in the questioned tracks and that there were no licences permitting the use of those tracks on the discs which were seized from the defendants.  The magistrate also took into account the fact that the company policy was that all licencees must include the Wing Hong logo on the discs and their cases, and that this was absent from the seized discs containing the questioned tracks; and that the questioned tracks did not appear in compilations approved under the EMI licence which they would have been required to do.  Those discs were therefore infringing.

43.  The magistrate relied on system, specifically that all licence contracts at Wing Hong were kept securely in special document files in the managing director’s room; the files contained the IFPI registrations, details of the fees received and receipts issued:  no such records were destroyed.  This system had been in operation at all material times and the magistrate was able to infer from PW3’s description of it over the 12 years that she had been in the company that it had subsisted prior to that time.  He rejected suggestions that it had simply been a bald assertion of system by PW3.  He applied section 17A to this evidence.  He was entitled to but I am satisfied that he did not need to do so.  The evidence led to the only reasonable inference which was that no licence existed for the questioned tracks to permit their reproduction on the seized discs.  The determination by the magistrate was correct in this respect.

44.  An issue arose as to whether there was permission granted in the PRC to publish one of the tracks.  I am satisfied that the evidence relating to this, which was considered and dealt with adequately by the magistrate, does not undermine the conclusion that these tracks, as they appeared on the seized discs, were infringing.

PW4 Warner (HK)

45.  I appreciate that PW4’s evidence in chief was not always clear; but I am bound to say that prosecuting counsel clearly found it difficult to examine him in chief, given the number of interruptions by defence counsel.  With this witness, and to some extent with others, there was a constant stream of comments and objections, many without substance, which ought, with respect, to have been firmly controlled by the magistrate.  In cross-examination by the prosecution of D2, there were further frequent interruptions.  Of course, legitimate objections must be made and determined; but my reading of the transcript is that there was at times unnecessary harassment of the prosecutor which made his task of presenting his case difficult.  It also tended to impede the flow of the evidence.

46.  However, through the evidence, there is a clear thread that PW4, having checked the contracts in respect of the two questioned tracks relating to Warner (HK), which he asked his staff to retrieve, was able to state that no licence had been issued in Hong Kong for the compilations which were the subject of the charge because, if there had been, such licences would have been annexed to the original contract.  He testified that no licences could have been issued on the Mainland, that the two tracks in question and the compilations in question were unlicensed, and they were therefore infringing.  PW4 was giving direct evidence that there were no licences.  He was entitled to give that evidence even though his staff had retrieved the documents at his request.  It was suggested that his evidence was therefore hearsay in this respect.  That was not the case.  He testified that he checked the documents himself and could state directly that there were no licences.  The contracts and licences were kept by his department in secure conditions.  He also stated (appeal bundle, page 466G) that although Warner had offices in the Mainland, including Beijing, those offices could not licence the songs in question because they were Hong Kong songs and only the Hong Kong office could issue licences.

47.  He also testified, and the magistrate accepted, that Warner HK had never authorised the defendants or the publishers named on the questioned discs to produce the two songs which were part of a compilation of other songs, not owned by Warner, again a demonstration that they were not licensed by Warner.

48.  The magistrate also relied on evidence of the system employed by the company (that is, that records of licences would be made and would be securely retained).  In the absence of evidence to the contrary, it is an inevitable inference that employees of a company such as Warner, acting in the course of their duty, will keep proper records of licences issued and that those records will be available for inspection.  Section 17A of the Evidence Ordinance would be satisfied; but, it is plain in my judgment, that the only reasonable inference on the evidence is that there were no licences issued by Warner in respect of the questioned tracks.

49.  The questioned tracks were infringing and the magistrate was right to so conclude.

PW6 Emperor Entertainment group (EEG)

50.  PW6 (whose evidence was accepted as honest and reliable by the magistrate) had been the sales manager at EEG for 4½ years.  She was responsible for the documentary records of the company.  She had previously been involved in Mainland China business, including the issue of licences and was fully aware of company practices in that regard.  Copies of licences granted by EEG were kept in PW6’s department in a filing cabinet.  She had full access both to computer records of the company and hard copies of documents.  She was referred to four songs by particular well-known Hong Kong artists, Isabella Leong, Twins and Joey Yung.  These were local productions, the copyright to which was held by EEG.  Licences had been issued by EEG,  but only to one particular company, Guangdong Mei Ka Wen Hua Yin Xiang Co Ltd, or its successor after a corporate takeover, and this company was not associated with the questioned discs.  Copies of the licences were safely kept and, if any at licences had been issued for inclusion of these particular tracks in compilations, there would have been separate contracts and separate registration with the trade body, IFPI.  PW6 had herself checked the records and there were no records of any licences which had been issued.  She was intensely cross-examined about these matters but she maintained her position.  I agree with the magistrate’s conclusion that if relevant licences had existed, they would have been discovered by PW6. 

51.  I am satisfied, as was the magistrate, that the only reasonable inference from the absence of records of licences, in a manifestly properly managed company such as this, is that there were no such licences issued.  There was a good, safe, secure system of recording and retaining licences.  Therefore the questioned tracks, included as they were in the seized discs, were infringing the copyright held by EEG.

52.  There is no substance in complaints made by the appellants over the production by the witness of part of the contracts relating to these tracks.  The contracts were produced specifically at the request of the defence, not as part of the prosecution case, and some sensitive material had understandably been deleted.  PW6 said that she had inspected the original contracts and no licences had been issued under them.  PW6 was able to say that none of the producers listed on Exhibit 15 (a list of the purported names of producers appearing on the seized discs, the subject of the charges) was in fact the producer of the questioned tracks and she was able to point to differences between the cases of the seized discs and those issued by her company which were consistent with their being infringing.

PW7 Universal

53.  PW7, who the magistrate found on substantial grounds, to be an honest and reliable witness, was the production manager at Universal Music Group, the successor  in title to certain other companies (including PolyGram and Cinepoly) which owns the copyright in the questioned track, a song by an artist called Faye Wong.  He was responsible, amongst other things, for the control of all master tapes and was able to check original contracts in respect of music tracks which were held securely in filing cabinets.  He was in a position therefore to check whether any licences were attached to the contracts.  Only he, his superior in the company and that person’s secretary had access to the filing cabinets in question.  The company only issued licences to three or four other companies with which he was fully familiar.  Such licences subsisted for 3 to 4 years.

54.  PW7 had personally made such checks in respect of the questioned track.  It had not been sold or assigned.  No such licence was in the filing cabinet attached to the contract.  Although this song had been produced by a Cinepoly in 1992, PW7 said that he retained the master tape and indeed, he brought it to court for examination if required.  Cinepoly licences for other tracks were retained in the filing cabinets, showing that there was an effective record-keeping system for licensing of tracks produced by Cinepoly prior to its incorporation into Universal.  

55.  PW7 was able to say, as the trial magistrate described, that if any track was licensed for publication in Mainland China, the license would be registered with the IFPI and the registration would contain the contract.  There was no such registration for the questioned track.  PW7 had been involved with the management of master tapes since 1995, and any licensing would involve the use of such master tapes as were under his control.  If a tape was issued to a licensee, he would invariably check the licence contract in advance.  No master tape had ever been passed by him to D1, D2 or to the producer of any company listed on the list Exhibit 15, that is, those company names which appeared on allegedly infringing discs.

56.  The magistrate concluded, on the evidence, that no licences had been issued.  He relied on section 17A of the Evidence Ordinance to conclude that there was a system of record-keeping which had been followed by persons acting under a duty to record the issue of all licences and that the absence of any such records led to the prima facie conclusion that no such licences had been issued, a conclusion which he found to be proved.  I am satisfied that the magistrate was entitled to reach that conclusion.  The only reasonable inference from the evidence of PW7 was that there had at all material times been a system in operation which fulfilled the requirements of section 17A.

57.  I would also reach the conclusion that no licences had been issued by finding that to be the only reasonable inference from the evidence which established: that the company operated a properly organised system of records for these important documents, including a secure repository for the contracts and licences and by the crosschecking of master tapes to contracts in which PW7 was personally involved; and that if the questioned track had been licensed, PW7 would have known of that fact. 

58.  In all the circumstances, it was properly proved that the publication of the track in question on the seized discs was an act infringing the copyright of the copyright owner, Universal.

Grounds 3 and 4: Statutory defences

59.  The charge relates to a strict liability offence for which a statutory defence is provided.  It is to be noted that the statutory defences under section 118(3) as further provided for in subsections (6) and (7) which were relevant to this case appear in a former version of the Ordinance.  So far as is material to this case, and they read:

“(3)  It is a defence for the person charged with an offence under subsection (1)  to prove that he did not know and had no reason to believe that the copy in question was an infringing copy of a copyright work.

…

(6)  For the purposes of subsections (1)(b) and (3),where a person is charged with an offence under subsection (1) in respect of a copy of the copyright work which is an infringing copy by virtue only of section 35(3) and not being excluded under section 35 (4), if he proves that –

(a)  he had made a reasonable enquiries sufficient to satisfy himself that the copying question was not an infringing copy of the work;

(b)  he had reasonable grounds to be satisfied in the circumstances of the case that the copy was not an infringing copy;

(c)  there were no other circumstances which would have led him reasonably to suspect that the copy was an infringing copy,

he has proved that he had no reason to believe that the copying question was an infringing copy of the work.

(7)  In determining whether a person charged has proved under subsection (6) that he had no reason to believe that the copy in question was an infringing copy of the work, the court may have regard to, including but not limited to, the following –

(a)  whether he had made enquiries with the relevant trade body in respect of that category of work;

(b)  whether he had given any notice drawing [the] attention of the copyright owner or exclusive licensee to his interest (sic) to import and to sell the copy of the work;

(c)   …

(d)  …

(e)  …

(f.)  …

(g)  …”

Ground 4 – D2, the statutory defence

60.  I shall deal with D2 first in this regard, given that he was the proprietor of the business in question, which he had established in around 2005 and which, he said, involved sourcing and importing optical discs from the Mainland.  He testified that in about January 2007, a month or so before the relevant Customs and Excise raid, he had entered an agreement with the proprietor of the household goods shop to rent a portion of that shop for $800 per day including the provision of sales staff.

61.  D2 advances the statutory defence on two essential grounds: (a) that he made enquiries (through his solicitors) of the Customs and Excise in Hong Kong as to whether certain works were in breach of copyright (Exhibit D1); (b) that he made initial oral enquiries in the Mainland, through a body which he described as the Guangzhou City Cultural Bureau (GCCB) as to whether the discs were infringing; and after his arrest, he obtained certificates as to a large number of titles which included the questions tracks in this case (Exhibits D3(1) to (3)).

62.  I can deal with the first of these matters quite shortly.  In August 2005, D2, through his solicitors, sent a bundle of documents to the Customs and Excise in Hong Kong, including lists of titles which, it was asserted, were lawfully on sale in the Mainland, and inviting the Customs and Excise not to engage in “random investigations on infringing discs in future”.  Not surprisingly, Customs and Excise gave short shrift to such a suggestion and told the appellant, through his solicitors, that he must satisfy himself that the discs were not infringing: “Your client will need to seek such confirmation from the respective copyright owners” (Exhibit D1).

63.  It is now suggested that this correspondence provides some basis for satisfying the requirements of the statutory defence.  It does no such thing and the magistrate was entirely correct to reject this approach.

64.  The appellant’s case on the GCCB documents was that, prior to obtaining the discs, he went to his wholesalers in the Mainland and they told him that the discs were not infringing and they said that could be verified by the GCCB.  So the appellant visited that body which told him, orally, that if the discs were “legitimate” the bureau would “approve them to be exported”; if not, they would not be approved.  He then placed his orders through the wholesalers which were delivered to Hong Kong, so he presumed that they had been approved for export and therefore that they were not infringing.

65.  After his arrest, he went to the GCCB with someone from the wholesalers.  He waited outside the office and in due course he was given a copy of what is now Exhibit D3, three documents each comprising a long list of titles (including those the subject of this case).  The certificate at the head of the document reads in translation: “In accordance with the ‘Regulations on the Administration of Audio and Video Products’ and the relevant laws and regulations, the above-mentioned audio and video products, upon vetting, were found to be legitimate audio and video products”.  Each document bears a seal, said to be that of the GCCB.

66.  After argument, these documents were admitted into evidence under section 22 of the Evidence Ordinance, Cap. 8, as prima facie evidence of the truth of their contents.  I have to say, I doubt that they were admissible under that section, simply on the basis of the evidence of the appellant that he sat outside the office of the GCCB and in due course was given them.  I do not see how section 22(b) of the Evidence Ordinance could ever have been satisfied on the evidence:  that they were or formed part of a record compiled by a person acting under a duty from information supplied by a person who had or may reasonably be supposed to have had, personal knowledge of the matters dealt with in the information.  However, this has not been argued before me and I make no determination on the matter.

67.  In fact, the magistrate, for reasons which I do not need to repeat here, found that the documents were not genuine and that therefore they were not true.  He was entitled to come to that conclusion on the evidence.

68.  It is worth remarking that the scheme of the statutory defence was helpfully elucidated by the Court of Appeal in HKSE v Tan Say Seng, HCMA 431/1999, on a reference from the Court of First Instance, where it was held that section 118(3) has two limbs, the first to be judged subjectively (that the defendant “did not know” that the copy was infringing); and the second to be judged objectively (that the defendant had “no reason to believe” that the copy was infringing).  Section 118(6) then sets out how the defendant can satisfy the court that he has no reason to believe that it was an infringing copy.  There are three things that he must prove (construed conjunctively, as per McMahon J in HKSR v Hang Chi Lok, HCMA1138/2005) - reasonable enquiries to satisfy himself of the fact; reasonable grounds to satisfy himself of that fact; and no other circumstances which would have led him reasonably to suspect.  Section 118(7) sets out various factors which could be taken into account in determining whether section 118(6) had been satisfied.  They are not exhaustive but are naturally compelling.  The first is as to whether the defendant had made enquiries with the relevant trade body in respect of the category of work and the second is whether he had given notice to the copyright owner of his intention to import and to sell the copy of the work.

69.  Tan Say Seng (above) related to reliance on documents reportedly coming from a different authority in the Mainland than the one in the present case and related to manufacture, not import/sale; but the difference is not so great that the effect of what was said by the Court of Appeal is lost.  The court was constrained to point out that such certificates, however necessary, useful and reliable they might be in China, cannot be of similar status in Hong Kong because of their inherent weaknesses.  It was obvious that such certificates are produced in the Mainland to govern Mainland practices relating to the copying of goods.  They may offer protection to those who rely on them in respect of goods covered in the Mainland, but they cannot offer the same protection so far as Hong Kong legal requirements are concerned.  There are obvious drawbacks and dangers in relying on such certificates.  Details of their issue and purpose is known only through witnesses who wish to rely on them.  No cogent, independent, evidence establishes the alleged rigour of underlying enquiries and checks said to be made by the provider of the certificate.

70.  The same broad considerations apply to this case and are to be added to the magistrate’s finding that it was not a genuine document.

71.  Even on the footing that the document is not proof of the truth of its contents, even prima facie, the question still remains as to whether the appellant did not know and had no reason to believe that the copies were infringing works.  Given the inherent weaknesses of the documents, they cannot be said, as the magistrate found, to prove the ingredients of the statutory defence on a balance of probabilities. 

72.  However, the matter goes further than that because it was at all times open to the appellant, and indeed incumbent upon him in the circumstances of this case, to approach the copyright owners, whom he could easily identify, to make simple enquiries as to the status of the copies which he was proposing to import to Hong Kong to sell in shops such as the one in this case.  He did not do so.  The reason he gave for that was that he knew that these were parallel imports, “grey imports”, and he feared he might be subject to some civil claim by the copyright owners, an injunction or a claim for damages.  Thus he did not want to approach them.  This cannot amount to a reason, in the context of the statutory defence, to justify not making the enquiries.  The appellant well knew the risks: hence his enquiries to the Customs and Excise in Hong Kong and his claims as to enquiries made in the Mainland.  He had been advised by Customs and Excise to make enquiries directly of the copyright owners, as Exhibit D1 shows.  He was obliged, in my judgment, to make such enquiries in Hong Kong in order to satisfy the requirements of the statutory defence.  Furthermore, it was open to him to approach the IFPI to inspect its register, but he did not do so.

73.  The statutory defence was not made out here.  The magistrate was correct in reaching that conclusion.  It follows that as the prosecution had proved its case beyond reasonable doubt and as the appellant had failed to establish his case on the balance of probabilities or at all, he was properly convicted.  His appeal against conviction must be dismissed.

Ground 3 – D1, the statutory defence

74.  I do not have a transcript of D1’s evidence: I am told by both sides that I do not need it and that I can rely on the magistrate’s summary.  D1 relied on the statutory defence.

75.  The evidence was that D1 had served a customs officer who made the test purchase.  She claimed that she was employed by the proprietor of the companion household goods shop, rather than by the appellant.  The magistrate rejected this claim.  In fact, it makes little difference in my judgment as to exactly who employed D1.  D2’s evidence was that he rented both the section of the household goods shop and its staff for use in operating his optical disc business.  So in that sense, he employed D1.  She did not challenge that she served the customs officer with the discs, she did not challenge that she was aware of the risk that the discs were infringing – even D2 said that she had enquired of him as to whether they were legitimate.  The magistrate was sure that upon arrest and caution, she had said, “I am in trouble”, which he treated as an acknowledgement that the discs were not genuine.  He rejected any claim by her to rely on the home-made notices posted in the shop which claimed that the discs were genuine and which offered a discount for bulk purchases.  He rejected her evidence that she believed infringing discs were only sold at markets for $10 for three to five discs and that discs sold in shops were legitimate.  He was right to do so in my judgment, given D1’s enquiries to D2 and her comments to the officer arresting her.

76.  In fact the magistrate rejected D1’s claim that she had asked D2 about the integrity of the discs in the shop and though I am in no position to gainsay his finding, for my part, I rather think that shows a consciousness by her of the risks of infringing material and of the need to make proper enquiries beyond simply asking for D2’s assurance.  D1 knew what was being established in the shop where she already worked was a side business to the main business of the shop.  It was not a dedicated, well-established, optical disc retailer of the sort with which we are all familiar: it had all the hallmarks of what she herself said was the more suspicious type of business, one of short duration, with handwritten sales notices, fitted into the corner of an existing retail outlet of a different type.  I am in no doubt that the magistrate was right to reject statutory defence in D1’s case, finding as he did, that it was not proved on a balance of probabilities that she did not know and had no reason to believe in the infringing nature of the discs which she was selling.

77.  Accordingly, the case against her was proved and she was rightly convicted.  Her appeal against the conviction must be dismissed.

APPEAL AGAINST SENTENCE

78.  The magistrate had regard to Secretary for Justice v Choi Sai Lok & Anor, [1999] 4 HKC 334, which established that immediate custodial sentences should be imposed for offences of this kind unless the circumstances could be said to be truly exceptional.

D1 Chen Mei Ling

79.  D1 was a woman in her 30s with a clear record, married, with a daughter.

80.  Various complaints are made about the magistrates approached the sentence which do not have any real merit.  The overall complaint is that the sentence of 7 months was too severe in all circumstances.  The mitigation advanced was that she had a clear record (though she had only come to Hong Kong in 2004) and that she played a subsidiary role of the commission of the offence.

81.  It seems to me that the most powerful point in her favour was the fact she only became involved in the offence by reason of her existing legitimate employment in the household goods shop.  D2 agreed with her employer to rent space and use of staff.  She could hardly refuse to participate in this illicit business without putting her principal employment at risk.  There is no evidence that she was paid extra to sell optical discs.  She is to be distinguished from the person who sets out to join a business selling infringing discs.

82.  I do not criticise the magistrate for his decision; but I do take a different view at this rehearing.  I am satisfied that whilst a sentence of imprisonment was appropriate, the proper term was one of 3 months’ imprisonment.  D1 may well have served all of that, having spent 2  months in custody before being granted bail by the Court of First Instance.

D2 Ng Kim

83.  D2 is a man in his 50s.  He does not have a clear record though most of his convictions date from his youth.

84.  As was said in Choi Sai Lok’s case (above), a distinction should be made between proprietors of retail outlets (such as D2) and persons employed by them (such as D1) and regard should be had to the length of time they had been involved in trading in infringing discs.

85.  The number of infringing discs here was about 620, which is only a proportion of the whole stock of the shop.  The seizure was of 2500 discs.  In Choi Sai lok in the first respondent had faced a charge involving about the same number of infringing discs as in this case.  He was a courier, operating from a warehouse in which there were many thousands of infringing discs, and was delivering to retail outlets where, obviously, the main, if not exclusive, business was the sale of such discs.  The Court of Appeal said that the sentence should be based on a 12 month starting point.

86.  Here, there is an element which the magistrate took as an aggravation, namely that the appellant, D2, imported the discs for retail sale.  I take that into account.  The prosecution concede that the usual sentence in a case such as this is of the order of 12 months’ imprisonment and produced some examples in written submissions.

87.  Again, various complaints were made about the magistrate’s approach, including his decision not to obtain a background report on either of these appellants.  I have to say that there is absolutely no merit to such a complaint.  This lengthy trial, spread over many months, hardly required yet another adjournment after conviction.  There should be special circumstances to justify obtaining a background report after trial.  There were none here.

88.  However, as with D1, whilst I do not criticise the magistrate’s decision to take 15 months as a starting point, largely because of the importation element, nevertheless I judge the proper sentence to be 10 months’ imprisonment.  Sentences in the range of 12 to 15 months are usually imposed where the number of discs is of the order of 1000 to 2000 and where the retail outlet is designed to sell only infringing discs.  Some repeat offenders in the more notorious malls, where hole-in-the-wall shops are reopened days, if not hours, after closure by the Customs, are sentenced to 15 to 18 months’ imprisonment.  I regard this case is being in a different, lower category.  This appellant was convicted having acquired and imported infringing discs for sale in his shop without taking the necessary steps to provide himself with a statutory defence, rather than by setting out blatantly to commit an offence. 

89.  There are slightly unusual circumstances here because unlike D1, this appellant was refused bail pending appeal when the application was heard by the Court of First Instance in May.  When his appeal was first listed on the 23rd September 2008, D1 had just been granted legal aid and for that and other reasons unconnected to this appellant, the judge decided to adjourn the hearing.  Bail was granted to this appellant at that time.  He has now served the equivalent of a 9 month sentence, assuming full remission is allowed, and I am satisfied that it would be appropriate in all the circumstances to vary the sentence for this offence to one of 9 months' imprisonment.

90.  I conclude with this comment:  the trial was conducted on the 2nd and 3rd October 2007, then adjourned to the 22nd, 23rd, 24th and 25th of January and then adjourned again to the 6th and 13th of February 2008.  This was most unsatisfactory.  Criminal trials should generally be conducted continuously.  No such adjournments should be permitted.  They lead, as the transcript shows, to a loss of focus, a repetition of evidence, a lengthening of the proceedings, and difficulties for the participants to recollect earlier parts of the trial.  The court and counsel should make themselves available for a continuous trial.  Diaries should be cleared and briefs which clash with the continuous conduct of the trial should be returned.  It is not in the interests of the courts, the litigants (both the prosecution and the defence) or the witnesses, for a case to be heard in this fractured manner, over such a length of time.