THE QUEEN v. CHAN KIM FAI

IN THE SUPREME COURT OF HONG KONG

(Appellate Jurisdiction)

MAGISTRACY APPEAL N0. 982 OF 1993

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J U D G M E N T

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1. This is an appeal against conviction and sentence. The appellant was charged with an offence contrary to s.18(1)(b)of the Import and Export Ordinance. The allegation was that on 15th July 1993, he attempted to export unmanifested cargo, namely, 510 video cassette players. He appeared before the magistrate on 10th November 1993, pleaded not guilty, but was convicted and sent to prison for three months.

2. The following facts were agreed at the outset - that the appellant was the driver of a lorry on the afternoon in question, and at Mankamto Control Point he submitted a cargo manifest which declared that there were 16 bundles of waste paper on the lorry. The consignor in Hong Kong was the Tung Po Trading Company and, on the Mainland, the consignee was the Shenzhen Hoi Pan Trading Company. There was indeed waste paper on board, but an examination revealed that inside the bundles of paper were metal cages, and inside the cages were 510 video cassette players. The appellant was arrested and denied knowledge of the cassette players.

3. A Senior Customs Officer, Mr Chan, gave evidence. He inspected the 16 boxes or crates. Each crate was surrounded by paper held down by bands and the act of poking the bundles with a pike was insufficient to tell what was or might be inside. A bolt-cutter was used to cut the bands. Once that was achieved, the paper could be removed, but before it was achieved, there was nothing to indicate that the bales contained anything other than paper. Once the paper was removed, or fell away, cardboard cartons with iron frames were revealed. Once the frames were unscrewed and removed, the contents of the cardboard cartons could be examined. 15 of the 16 bundles contained video cassettes, only one consisted wholly of waste paper.

4. Then there was evidence that the appellant made a statement to a customs officer. It is in question and answer form, and in it the appellant accepts that the lorry in question was his. As to the episode in question, he said that he had been telephoned that day by a Miss Cheung, whom he did not know, and asked to go to an industrial building in Shatin to load goods. Once there, he saw three men waiting for him. They then loaded the paper and he, the appellant, went off for lunch. One of the men provided the information for customs purposes, i.e. that there were 16 bundles of waste paper, and he did not how that there was anything other than paper in the bales. That was the evidence adduced by the prosecution.

5. There was then a submission made that there was no case to answer, including the contention that had the appellant exercised due diligence, he could not even then have discovered the true nature of the goods. This submission was rejected.

6. The appellant gave evidence much along the lines of his written statement. He said that the lady who commissioned this job, Miss Cheung, told him that the goods were papers. That is what he saw when he arrived at the industrial building, paper bundled together and ready for loading. He saw nothing strange about the packets. He did not how Miss Cheung and he had never been to tile industrial building in Fo Tan. He filled in the manifest when he arrived at Mankamto, and on that manifest put the address of the consignor in Hong Kong, the name of the consignee and the description of the goods and their weight. That information had come from Miss Cheung. He said in examination-in-chief that he satisfied himself that the parcels consisted of waste paper but he did not say how he so satisfied himself. Though he had a cutter in his vehicle, it was used by the customs officers to try to cut the metal bands, but without success. He said that he did not suspect that the packets contained anything other than paper.

7. He said in cross-examination that he had seen paper wrapped before in the same manner as on this occasion. He was asked whether he tried to learn something about Miss Cheung or the three men, and it was evident that he did not. As for checking the goods, he did so by looking at them once loaded. In re-examination he was asked whether it was his normal practice to ask a lot of questions where the goods came from. “Yes”, he said. “I asked what kind of goods”. He did not ask on this occasion, but could see from the appearance of the bundles what they were.

8. Then Miss Chung gave evidence. She works for the Ko Fai Transportation Company, and on 15th July 1993 she received a telephone call from a Miss Cheng of Ming Fai Transportation Company, who said she needed a vehicle to deliver papers to Shenzhen. Ko Fai’s vehicles were out, so Miss Cheung paged for an outside vehicle. Eventually, contact was made with the appellant. She told him what the goods were, by which I take it that she meant paper. She did not know the appellant and she was not cross-examined. So her evidence, which strongly supports the scenario of a man who accepted what he was told about the nature of the goods, was unchallenged.

9. The magistrate’s Statement of Findings is in three parts. He accurately summarises the evidence, then assesses the credibility of the appellant's account, and finally applies the law to that assessment.

10. In assessing the appellant's evidence he says in terms : “I find that he was not telling me the truth.” In support of that adverse finding he refers to conflicts within the evidence as to the source of the appellant’s information about the quantity and weight of the goods, to evidence about the address the appellant said he inserted on the manifest, which address was not in fact on the manifest, and to the appellant’s explanation for the failure to insert the consignee's address as an incredible explanation.

11. With this adverse assessment, the magistrate came to the following conclusion :

“The evidence adduced by the Appellant are full of contradictions. I am not satisfied that the whole truth in respect of the circumstances under which the waste papers were loaded onto his vehicle has been presented to Court. I do not accept that they were loaded in the circumstances as described by him, both in the evidence adduced in Court and in the cautioned statement. Section 18(2) is open to him. But the first and most important thing he must do is to adduce truthful evidence. Then based on such evidence I could decide if he has satisfied the statutory defence on the balance of probability. Save and except the admitted facts as disclosed in the summary of facts, I would not and could not, in view of the serious conflicts, make findings as to how he had obtained the goods. He failed in his statutory defence under section 18(2).”

12. Section 18 of the Import and Export Ordinance is in these terms:

"18.

(1) Any person who-

(a) imports any unmanifested cargo; or

(b) exports any unmanifested cargo,

shall be guilty of an offence and shall be liable on conviction to a fine of $500,000 and to imprisonment for 2 years.

(2) It shall be a defence to a charge under this section against the owner of a vessel, aircraft or vehicle, if the owner proves that he did not know and could not with reasonable diligence have known that the cargo was unmanifested,”

It follows that if the appellant failed to show that he did not know that there was unmanifested cargo, the question of reasonable diligence, or what reasonable diligence might have disclosed, does not arise. That initial hurdle is important in this case because the brunt of this appeal has been directed at the magistrate's approach to the second leg of the defence, namely, the reasonable diligence aspect.

13. Mr Dunn, who appears for the appellant, argues that if the magistrate has indeed found that the appellant has failed to show that he did not know what the goods were, he, the magistrate has not make that clear; alternatively, if that was his finding, it ran contrary to the weight of the evidence. There is nothing on page 62 of the record (the page from which I have just quoted) which suggests that the magistrate addressed separately the question of knowledge and the question of reasonable diligence. Mr Dunn takes me also to that part of the record of proceedings which records what the magistrate said at the time he delivered his decision. There again, the magistrate refers to the conflicts in the appellant’s evidence as to who told him about the weight of the goods, and it is in that respect that the magistrate there says that he was not satisfied that the appellant was telling the truth. There is no finding there either which is expressly directed at the burden concerning knowledge as to the nature of the goods. Indeed, the gravamen of the reason for conviction then expressed was clearly directed at the appellant’s failure to exercise reasonable diligence to ascertain the nature of the goods. Mr Dunn also refers me to the fact that in passing sentence, the magistrate has said that he sentenced the appellant: “on the basis he had no knowledge of the existence of the smuggled goods,” and Mr Dunn translates that into a finding of fact by the magistrate. I do not think that that necessarily follows. It may well be that the magistrate was saying that because of the inconsistencies in the appellant's evidence, he could not be satisfied, on a balance of probabilities, that the appellant did not know about the nature of the goods, but that, conversely, for sentencing purposes, he, the magistrate, was not sure that the appellant in fact knew the manifest to be false .

14. Be that as it may, Mr Cheung, on behalf of the Crown, reads the record as a whole as a conviction by the magistrate based only on the failure of the appellant to satisfy the reasonable diligence test. I do not, in these circumstances, and given also the unchallenged evidence of Miss Cheung, and the evidence of the customs officers as to the appearance of the goods and the difficulty of ascertaining their nature, think it safe to assume that the magistrate was proceeding on the footing that the defendant failed at the first hurdle. I think that something more explicit would be required.

15. I turn then to the second limb.

16. What the magistrate has done in relation to that second limb is to ask whether m fact reasonable diligence was exercised by the appellant, and to discard the question what such diligence might, in the circumstances, have disclosed. In other words, he has said that it matters not for the purpose of section 18(2) that a diligent inquiry would not have revealed the true nature of the cargo. What matters is at the owner of the vehicle did nothing and took no precautions. This is how that approach is expressed in the Statement of Findings:

"Section 18(2) requires him to exercise ‘reasonable diligence’ so as to justify his allegation that he could not have known that the cargo was unmanifested. It is irrelevant that he had no suspicion about the goods delivered, and it is irrelevant that after exercising reasonable diligence it would have made no difference."

17. Mr Dunn points me in the direction of a number of authorities for the proposition that reasonable diligence is not a counsel of perfection. It is "not the doing of everything possible, but the doing of that which, under ordinary circumstances, and having regard to expense and difficulty, can be reasonably required.” (See The Europa (1863) N.R. 194, 196.)

18. So far so good, for the magistrate has acknowledged that approach when at page 63 of the record, he says:

“… in my view reasonable diligence does not mean the doing of everything possible, like the thorough search by the Customs Officers. That standard would be too high; but it must mean such diligence as an ordinarily prudent and diligent man would exercise under the circumstances of his case.”

So no complaint can validly be made in that regard. The complaint, however, concentrates itself on the emphasis placed by the magistrate on the fact that having received information from Miss Cheung about the nature of the goods, noting was done by the appellant save to transport them; in other words, the approach by the magistrate that section 18(2) requires steps regardless, however, of the potential efficacy of those steps.

19. The magistrate's approach and the nature of the attack upon it can only properly be appreciated by a full rehearsal of his findings concerning the question of diligence, set out at pages 63, 64 and 65 of the record which read:

“Even on the assumption that he was telling me the whole truth, he still failed to satisfy the ‘reasonable diligence’ test under section 18(2). I have not been able to find from decided cases the meaning or definition of this phrase. But in my view it does not mean the doing of everything possible, like the thorough search by the Customs Officers. That standard would be too high; but it must mean such diligence as an ordinarily prudent and diligent man would exercise under the circumstances of his case.

The Appellant's Counsel submitted that since there was no suspicion about the waste papers, so the ‘due diligence’ test is not invoked, and even if such diligence had been exercised, it would not have made any difference because unless the metal bands were cut open, there was no way to find out what was inside the bundles. However it is clear from the wording of section 18(2) that he must prove, of course, on the balance of probability, that he could not with reasonable diligence have known that the cargo was unmanifested. Section 18(2) requires him to exercise ‘reasonable diligence’ so as to justify his allegation that he could not have known that the cargo was unmanifested. It is irrelevant that he had no suspicion about the goods delivered, and it is irrelevant that after exercising reasonable diligence it would have made no difference. In this respect although the external appearance of the bundles presented no suspicion, it is quite obvious that things could be hidden inside them. In this case, even accepting what he said as being truthful, he exercised no diligence at all, let alone ‘reasonable diligence’. He did not know Miss CHEUNG, Miss CHEUNG and the 3 loading workers. He had not transported waste papers before, and he had not been to the loading place before. An ordinarily prudent and diligent man in these circumstances would supervise the whole course of loading, to ensure that nothing would go wrong, and that the goods to be loaded onto his vehicle would comply with the delivery order received by him. But when the loading was half-way done, he went to have lunch! No explanation was offered as to why he did this. Upon his return from lunch he just went on board his vehicle to take a look of the goods. That is simply insufficient. He did not witness what was happening to the loading process during the period he was away. He was working for a complete stranger, a new customer. He should at least make some enquiries or some physical checking upon the goods and confirm their quantity. An ordinarily prudent and diligent man in his circumstances would have done so. But he didn't even count the number of bundles! He admitted that he did not verify the goods. He said that as drivers they were only to count the quantity of goods and know what kinds of goods they were, so that they could fill out the manifest. This must be right because it is the duty of a driver to ensure that the particulars filled out in the manifest are true and correct. But he failed to comply what they drivers were supposed to do, namely to count the number of bundles, so as to confirm that he was conveying the correct amount of goods. It was obviously a very easy thing for him to do. There were just 16 large bundles and not difficult to be counted.

He said that if he cut open one bundle he would be responsible for the damage done. But it was only after he had arrived at Mankamto that it was found out that the bundles could only be cut open by bolt-cutters. It is not for this reason that he did not cut open the bundles. He did not even count the number of bundles. It is not the situation that before he set off for Mankamto he intended to cut open one bundle but he restrained himself so doing for fear that he would have to be responsible for the damage if nothing went wrong. He simply did not care, and according to him he had no suspicion about the goods. The intention to cut open the metal bands could not be in his mind before he arrived at Mankamto. He failed in his defence.”

20. It seems clear to me that in saying that it is irrelevant that reasonable diligence would have made no difference, the magistrate has misstated the law, for if in the circumstances of a particular case the taking of all reasonable steps would nevertheless have rendered the inquirer none the wiser, the defence is made out. What are reasonable steps, what is reasonable diligence, will vary with the facts and with the legislative context in which those words appear; see Peco Arts Inc v. Hazlitt Gallery Ltd. [1983] 3 All ER 193.

21. In the context of the statutory framework which is before me in this case, it is to be remembered that the smuggling of goods across the border to the Mainland is a scourge which needs harsh legislation, and is one about which no lorry driver will be ignorant. So there must be a burden on drivers to make suitable enquiries about the nature of the goods they are carrying; and it is, in my judgment, no answer for a driver to say “I am a mere driver. Who am I to make sure, if I can, what it is I am carrying?" What those steps should be will depend on the facts of the case. But it does not follow that reasonable diligence will always reveal tile truth. If the exercise of reasonable diligence could still not reveal the fact that the cargo was unmanifested, then, in my judgment, no blame attaches to the driver.

22. I do not intend to delve into the question whether in this case the appellant could or ought to have done more, and what those steps or extra steps might have revealed, for the proviso available to the Court of Appeal in appeals against conviction is not available to this court sitting on appeals from magistrates' decisions, and I say that without intending to hint at any conclusion I might have reached. It suffices to say for the purpose of this appeal that in proceeding on the basis that the consequence of reasonable diligence was irrelevant, the magistrate adopted, in my judgment, an erroneous approach.

23. As to the particular steps which the magistrate says the appellant could have or should have taken, it is difficult to see how they would have revealed anything more about the goods than he had already been told. He had been told the bundles were paper. That was uncontested. It was uncontested that to the naked eye they appeared to be paper. The magistrate said that an ordinarily prudent and diligent man would have supervised the loading. He does not say how that would or could have revealed that the goods were not what they appeared. He says that the appellant should have made "some inquires or some physical checking upon the goods and confirm their quantity”, and there is much emphasis on the desirability of confirming or checking tile quantity of goods; again, it is difficult to see how that could or would have revealed their true nature, though in suggesting enquiries or physical checking it may be that the magistrate was not restricting himself to ascertaining the quantity. It is evident, however, that these passages are directed at what steps the appellant took, rather than what he should have done which could have revealed the true nature of the cargo.

24. In these circumstances, this appeal is allowed. The conviction is set aside as is tile sentence.