R. v. YEUNG TAK SING AND ANOTHER

Case No. 147 of 1993

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

__________

_______________

J U D G M E N T

_______________

1. This is an application by the Crown under the provisions of s.56 of the Dangerous Drugs Ordinance, Cap. 134 (hereinafter referred to as the Ordinance) for forfeiture of a Mazda 323 private car bearing registration number FK6929 which was stopped and seized by Customs and Excise officers on 2nd February, 1993 after its front sear passenger YEUNG Tak- sing, who was D1 and the vehicle's registered owner, was found in possession of a quantity of dangerous drugs.

2. On 12th October 1993 YEUNG Tak-sing pleaded guilty to the offence of trafficking in a dangerous drug, contrary to s.4(1)(a) of the Ordinance and was sentenced by a Deputy Judge of the High Court to a term of 9 years' imprisonment.

3. Later at the trial of the driver of the vehicle - the 2nd defendant - the Crown offered no evidence and he was found not guilty of the same offence.

4. S.56 of the Ordinance deals with forfeiture of articles, etc., used in connection with an offence and states:

"(1) A court may (whether or not any person has been convicted of such offence) order to be forfeited to the Crown-

(a) any money or thing (other than premises, a ship exceeding 250 gross tons, an aircraft or a train) which has been used in the commission of or in connection with an offence under his Ordinance; and

(b) any money or other property received or possessed by any person as the result or product of an offence under this Ordinance.

(2) An order under subsection (1) for the forfeiture of a thing may include a term permitting a specified person or persons to redeem such thing on such conditions, including conditions as to the payment of the value or a proportion of the value thereof to the Crown, as the court may think fit.

(3) The court may require that notice of an application for forfeiture under subsection (1) shall be given in such manner as it thinks fit.

(4) The Governor in Council may, in his absolute discretion and after any proceedings under this Ordinance are concluded, entertain and give effect to any moral claim to or in respect of any money, thing or other property which has been forfeited to the Crown."

5. The first defendant attended the hearing of this application and said that, when he was hold of this application, he had agreed to the forfeiture of the vehicle. He confirmed that this still was his position, and he left the Court at his application which was allowed.

6. This application is opposed by the Wayfoong Credit Limited which, as the vehicle's legal owner, had hired it to the convicted person, YEUNG Tak-sing under the terms and conditions of a hire purchase agreement dated 12th January 1993. It is not disputed that of the total hire purchase price, D1 had made an initial deposit payment of $27,344.00, leaving a balance of hire of $120,624.00, which was to be paid by 48 monthly installments of $2,513.00 per month commencing 11th February 1993 and thereafter on the 11th of each succeeding month. It is also not disputed that D1 defaulted in the payment of the first installment, he having been arrested on the 2nd February. By letter dated 16th March, 1993, by which time two installments were in arrears, the finance company accepted the first defendant's wrongful repudiation of the hire purchase agreement and terminated that agreement.

7. Mr. Dykes, appearing for the Crown, said that as the first defendant had pleaded guilty to the offence and admitted to the statement of facts, the Court was relieved of having to hear any evidence. The first defendant admitted as stated in that statement that at about 4.40 p.m. on 2nd February, Customs and Excise officers who had him under observation saw him carrying an envelope and getting into the vehicle FK6929 driven by another man and which was parked in the parking lot outside the Queen Elizabeth Hospital. The vehicle was later intercepted at a set of traffic lights at the junction of Jordan Road and Nathan Road. The statement continues:

"When the Customs and Excise officers looked in the vehicle Yeung was holding an envelope which, when opened, was found to contain 2 slabs of a substance wrapped in yellow plastic sheets. The Customs and Excise officers suspected that the substance was heroin and Yeung was thereupon arrested for possession of what was suspected to be dangerous drugs."

8. Later the same evening the first defendant made a statement confessing that he had bought the drugs - 682.12 grammes of a mixture containing 303.35 grammes of salts of esters of morphine - for $36,000 for his own consumption, he being an addict and at the time of his arrest was taking the drugs to his home in Taipo.

9. Mr. Dykes said that the thrust of the finance company's case is set out in paragraph 7 of the first affirmation of WONG Po-san, who is the Section Head of the Arrears Section of the finance company, and it reads:

"7. At all material times, there was nothing which served to place the claimant on notice or to have any suspicion that the vehicle was going to be used for any illegal purpose and the claimant had no knowledge that the 1st accused is alleged to have used the vehicle for drug trafficking until it received information from the Customs and Excise Department on or about 17th February, 1993."

10. Mr. Dykes said that in former days, prior to April 1993, there was to be found in cases such as these that there was a "presumption in favour of forfeiture" where a thing had been used in the commission of an offence and the presumption arose even where a third party had an interest in the thing. In April 1993 came The Queen v. CEC Finance Ltd., Magistracy Appeal No. 451 of 1992 [CA] where the Court of Appeal held that this view, which had prevailed since the days of A.-G. v. CHIN Chack-wing (1961) H.K.L.R. 479, was "going too far". In the former, the CEC Finance Ltd. case, the vehicle had been used in smuggling television sets by one of the partners of the enterprise. The other partner and the finance company who had let out the vehicle on hire purchase were blameless. The culprit partner was caught and convicted of an offence under s.35A(1)(c) of the Import and Export Ordinance, Cap. 60. The vehicle thus was rendered liable to forfeiture under s.27(1)(b) of Cap. 60 as a "vehicle so seized and which has been used in connection with .... the contravention of any provision of this Ordinance". The Import and Export Ordinance makes provisions for forfeiture in respect of an article which is a strategic commodity, when the magistrate must order forfeiture. But in case of non-strategic articles the court was left the discretion as to whether or not to order forfeiture. In the case of a strategic community, forfeiture is mandatory [the word "shall" being used in s.28(6)]; in the case of non-strategic articles forfeiture is discretionary (the word "may" being used in s.28(7)].

11. BOKHARY, J.A., giving the judgment of court said at p.6:

"The Legislature could have provided that forfeiture orders cannot be made to the deteriment of blameless hire purchase companies. On the other hand, it could have provided that hire purchase arrangements are to be ignored where forfeiture orders are concerned. But it did neither. Instead it gave the magistrate an unfettered discretion."

12. Pausing here for a moment, s.56 of the Ordinance, employing the same technique and using the word "may" also gives the court an unfettered discretion, and this is recognised and conceded also by Mr. Dykes.

13. The judgment continues:

"Of course, even such a discretion must be exercised judicially. And it should be exercised to further the objects of the statute concerned. That object, as the Ordinance's long title tells us, is to regulate and control the import of articles into, and the export of articles from, Hong Kong. And that involves combating smuggling - in a reasonable manner of course."

14. The objects of the Dangerous Drug Ordinance are plain to see and manifestly are to combat the vile trade of pushing and peddling dangerous drugs to others. It is accepted by both sides that the discretion ought to be exercised judicially to further the objects of the statute concerned. How that is to be achieved is apparent from the following direction from the Court of Appeal on the last page of its judgment:

"The discretion to order forfeiture being unfettered, the question whether or not to so order is to be approached from a neutral starting point, with both parties on a level playing field, so to speak, and each with the onus of proving on balance of probabilities any fact which he or it asserts if that fact is not admitted by the opposite party. That is how the question is to be approached. And it is to be answered by reference to what is just in all the circumstances as the magistrate finds such circumstances proved or admitted."

15. Mr. Dykes contended that the position of the finance company was, notwithstanding it had no actual knowledge of the intended use of the car, to be distinguished from that of a father who lends a motor car to his son without a view to profiting from the loan. He said that he was not trying to go back to the old case which has been over-turned but maintained that the Court's discretion was now, in the light of the new authority, to be used to further the objects of the statute concerned and as such, it was conceivable that an order may be made against a blameless company. This enabled Mr. Dykes to say that the Crown's application was on the basis that the policy of legislation may over-ride the interest of a blameless hire purchase company.

16. Mr. Stone for the intervening finance company, submitted rightly, in my opinion, that each case must depend on its own facts. He said that the Court of Appeal having now provided a level playing field, all that the Crown has is its reliance on the policy of the legislation because of which it may conceptually be possible for a blameless company to be subject to forfeiture. Mr. Stone submitted that it is not possible to envisage a set of circumstances and facts which would lead to that "alarming" situation. He said that it cannot be that the policy alone were to over-ride the court's discretion, otherwise the legislation would have said so. Later, during his reply, Mr. Dykes was to say that it was not his argument that policy prevailed over discretion; it simply was that policy is a relevant factor to be taken into account. Mr. Stone said the finance company had on its side the following factors:

(i) a conceded blamelessness;

(ii) the brevity of the agreement it was entered into on 12th January 1993; the first defendant was arrested on 2nd February, the first instalment became due on 11th February;

(iii) commercial reality being that D1 is a man of straw, now serving a long prison term, there being no benefit to the finance company getting a judgment against him;

(iv) this car was simply the site of the arrest. The drugs were found in a brown paper bag on the thighs of D1. Mr. Stone stressed that the car was not riddled with drugs, it was clean and no secret compartments were found nor was the car made an exhibit in the case;

(v) Mr. Stone described the application to forfeit as a "knee-jerk" reaction and said that when looked at analytically, there was nothing in the arguments on behalf of the Crown except the policy point. He said it could not have been the intention of the legislature to stifle bonafide commercial enterprises.

17. It cannot be denied or refuted that a finance company is by its nature in the field of financing other entities and its avenues of channelling its funds for this purpose are many, one being the hire purchase operation, and it protects its funds so advanced through various means, all within the law. In the general scope of a level playing field it must be appreciated that whatever the play it has to be regulated and kept under proper control to restrain the parties from exceeding the bounds of fair and just play. So, the concept of a financial company undertaking some commercial risk in the process of lending its funds, while it may enter into the play, is now no more of such strength as to give rise to any presumption and simply is a factor to be taken into account in the balance of probabilities.

18. On the Crown's side, it is conceded that there is only the matter of the policy and aims of the legislation; on the side of the finance company are all those other matters which have been set out above. The vehicle used was only recently acquired and although Mr. Dykes referred to some evidence to be seen in some of the depositions about its use in the intervening period since it was taken on hire and its seizure, I am not inclined to take any of that into consideration. That evidence was not admitted by the other side; and the Crown did not call it before this Court in support of their application. That the car was otherwise clean is not disputed.

19. With regard to the argument that in the circumstances of this case the car was simply the site of the arrest, I must say that it is a very robust submission. The man was using the car as a means of conveyance not only of himself but also of all that he had with him on his person or inside the car. I am not impressed by this argument.

20. In so far as the commercial reality argument is concerned, I think that the finance company is on a firmer ground. It received only the initial deposit, subsequent to which the first defendant was arrested before the first instalment became due and was not paid, nor was the second instalment paid. The allegation that he is a man of straw has not been disputed and on this basis, it is evident that the finance company can expect no recovery from the hirer.

21. Weighing all these factors, keeping at the forefront of my mind the policy and aims of the Ordinance, I am of the considered opinion that, in all the circumstances discussed above, it would be unjust to order forfeiture of the vehicle Mazda 323, FK6929. The Crown's application is dismissed and I order that the vehicle is to be released into the custody of its legal owner, the Wayfoong Credit Ltd.