THE QUEEN v. LOLLY QUEEN CO LTD

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JUDGMENT   OF   THE  COURT

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Macdougall, JA (sitting as an additional High Court Judge):

1. The appellant company was convicted after trial by Mr. J .M. Meredith at San Po Kong Magistracy of applying in the course of trade or business a false trade description namely 'Made in Hong Kong' to ladies leather shoes contrary to section 7 (1) (a) (i) of the Trade Descriptions Ordinance Cap. 362. It now appeals against that conviction.

2. The evidence for the prosecution was that a customs officer on duty on 9. August 1990 at Man Kam To border check point conducted a search of a lorry entering Hong Kong from China and found on board a number of cartons of ladies' shoes on the soles of which was printed the words "Made in Hong Kong". The shoes were not completely finished products as the heels, although connected to the soles, were not fully secured and the inner soles had not been completed.

3. As a result of this discovery customs officers visited a company called. Hung Wai Trading Co. ("Hung Wai") which was named on the manifest relating to the shoes. Following an interview with a Miss Lee, the productionmanager of Hung Wai, the officers went to the appellant company's premises. There they found 1053 pairs of completed shoes and a number of documents exhibits relating to them.

4. Miss Lee testified that Hung wai had received an order through a Mr. Eddie Chu of the appellant company for the manufacture of ladies' shoes. The arrangement was that the appellant company would supply the raw materials for the shoes. She despatched a vehicle to the appellant company to collect the raw materials which were then sent direct to China for the lasting process and the rolling in of the outer soles. When this process was completed in China the shoes were returned for completion, namely, nailing of the heels, attachment of the inner soles, coloring and spraying of a gloss on the uppers.

5. A customs officer who had attended at the search of the appellant company interviewed at those premises a Mr. Lam. Mr. Lam gave instructions to an employee as result of which a contract document Exhibit P6 relating to the shoes was produced. This revealed that the shipping mark for the shoes was to be "Made in Hong Kong". Another document, Exhibit P7, which was under the appellant Company's own letterhead, also revealed that the same shipping mark was to apply to the shoes.  Mr. Lam then made a statement under caution in which he stated that he was a director of the appellant company and that his major duties were to handle company finance, personnel, administration, importing and exporting.

6. He admitted that the shoes seized at Man Kam To on 9 August and the 1053 pairs of completed shoes seized at the company's premises belonged to the same batch of goods and to those specified in the contract document, Exhibit P6. Mr. Lam admitted that the order for the carrying out of the fabrication of the uppers, the lasting and the attachment of the soles had been suo-contracted to Hung Wai and that after this work had been performed the appellant company would complete the process by nailing the heels, adhering the inner soles, polishing the shoes and packing them.

7. He further admitted that the appellant company supplied the plastic sheeting for the shoes to Hung Wai for delivery to China for cutting and tailoring into the shape of  the soles, and that the understanding was that the marking "Made in Hong Kong" would be applied there in accordance with the appellant company's requirements.

8. On the day of the trial Mr. Lam  appeared in court and pleaded not guilty to the charge on behalf of the company.

9. Mr. Andrew Cheung, who appeared for the appellant company in this Court but not before the magistrate, submitted that the magistrate erred in finding that Mr. Lam was a director of the appellant company  at the time of making the statement. The evidence which it is said is inconsistent with Mr. Lam being a director at the relevant time is an annual return of the company which showed that he was not a director. However this return purported only to having been made up to 31 December 1985. The offence alleged in the charge related to 1990.

10. There was also a document bearing the appellant company's letterhead and signed by Mr. Lam for the company authorising him to make statements on its behalf in respect of the shoes. I accept that this document, having been made by Mr. Lam himself, really takes his admission that he was a director no further. However, in my view there was amply evidence from which the magistrate was entitled to conclude that Mr. Lam was authorised to make admissions on behalf of the appellant company.

11. The circumstances in which a person makes admissions are very relevant to the assessment of the question of whether he or she was an authorised agent of the company. Such circumstances can include the fact of an assertion as to status in the company, coupled with the physical circumstances of the conversation in which they were made, for example, the making of admissions by a person on company premises.

12. In Edwards v. Brookes (Milk) Ltd. [1963] All ER 62 an inspector of weights and measures took some cartons of milk from a vending machine to the defendant company where the had a conversation with a Mr. Norman Jones who ..said that he was the depot manager.

13. The justices refused to admit evidence as to admissions made by Mr. Jones in the course of that conversation on the basis that it had not been proved that he was an agent of the defendant company whose admissions were evidence against the company or were authorised by the company to make admissions on its behalf.

14. On appeal by way of case  stated it was held that evidence and been wrongly excluded and that there was prima facie evidence from which the justices could infer that Mr. Jones was the company's agent and that he ostensibly had a status that would qualify him to make statements on behalf of the company.

15. Lord Parker C.J. said at page 64:

"In the ordinary way, the inspector would go to the depot and say: 'I want to speak to somebody in authority', and he then speaks to someone whom he has no reason to believe is not a person in authority, and that person tells him that he is the depot manager. In my judgment, prima facie, he is the depot manager, and, as such, an agent of the company. Counsel for the respondents objects that that evidence is inadmissible under the hearsay rule. In my judgment, it is evidence of what the man who called himself Norman Jones said. It is not evidence by itself of the truth of that matter, but when one gets, as here, the full circumstances of going to the depot, trying to speak to someone in authority, finding someone who appears to be in authority, and then being told by him that he is the depot manager, that must, in my judgments, be evidence on which the justices run, if they. so wish, infer that the man Norman Jones was an agent of the respondents."

 

Edmund Davies J. had this to say at page 65:

 

"One is here dealing with the question whether there exists a prima facie case, whether the court can properly infer that Norman Jones was indeed the respondents' depot manager. The inspector, when calling at the depot, would naturally seek out or have brought to him a responsible representative of the respondents, and he saw in fact a man who described himself as the depot manager. For the reasons already stated by Lord Parker, C.J., in my judgment also a prima facie case was established that Norman Jones was indeed the depot manager; so it does not, in my judgment, infringe the general prohibition against the acceptance of hearsay evidence. As to the authority of such a depot manager, I entertain no doubt that, again prima facie, he would have the authority to discuss the matter of the milk with the inspector of weights and measures."

 

Havers, J. likewise said at page 65:

 

"I agree with my lord that an inspector going there for the purpose for which he was going would, in the normal course of events, be expected to ask to see some responsible representative of the respondents with whom he could have a conversation. He did find someone there, and that person, Norman Jones, said that  he was the depot manager. In those circumstances, Tam of the opinion there was prima facie evidence that he was an agent of the respondents."

16. Mr. Cheung also submitted that the magistrate erred in accepting Mr. Lam's asserted knowledge of the relevant matters as sufficient evidence of knowledge on the appellant company's part that the false trade description was to be applied to the shoes. The basis of this submission is that the contract with Hung Wai had been negotiated by the appellant company's Mr. Eddie Chu, who did not give evidence, and not by Mr. Lam , and that there was no evidence that there had been any previous dealings between Mr. Lam and Hung Wai. It was also contended that Mr. Lam's role as manager of imports and exports was "too vague to explain his knowledge or understanding".

17. However, on the basis of the  evidence before the magistrate concerning Mr. Lam's knowledge, his status in the company and the duties which he performed, I am satisfied that the magistrate was entitled to impute to the appellant company the requisite knowledge that the shoes were to be manufactured China and that false trade descriptions that they were made in Hong Kong were to be applied to them.

18. A further submission was that the magistrate erred in holding that the shoes were not made in Hong Kong. In this regard it was contended that a statement that had been admitted in evidence pursuant to sec 65B of Criminal Procedure Ordinance was irrelevant and that its effect on the magistrate's mind in coming to his decision "is unknown".

19. As this evidence concerned certificates of origin, and as it seems that the shoes did not require this type of certification, it is difficult to see what relevance it had to the case.  However, the appellant company did not object to the tendering of the statement in evidence, when plainly it could have done so under sub-section (2) of that section.  Moreover, in his Statement of Findings the magistrate made no mention of the matters to which the statement referred. I can find nothing in his reasoning that suggests that it played any part in his decision, let alone his finding that the shoes were not made in Hong Kong.

20. Mr. Cheung also sought to make the point that, in determining whether the shoes were made in Hong Kong, the magistrate paid no or no sufficient regard to the process which the shoes underwent in Hong Kong after they had been returned from China. There is no substance in this submission. The magistrate specifically listed details of the process that had been carried out in China and referred to sec. 2 (2) (a) (i) of the ordinance which provides:

"For the purposes of the Ordinance, goods shall be deemed to have been -

 

21. The fact that the appellant company carried out a further process in the completion of the manufacture of the shoes was not a relevant factor. Plainly, on the uncontested evidence before the magistrate, the raw material provided by the appellant company underwent a process in China which permanently and substantially changed its shape and utility.

22. Finally, Mr. Cheung submitted that, because the shoes had been manufactured in China, it was not possible to say that the appellant company had applied the false trade description to them unless it could be established under section 22 of the ordinance that the company was an accessory to the offence. It was his contention that theevidence-was incapable of supporting such a finding. Section 22 provides:

"22. Subject to the provisions of this Ordinance; any person who, in Hong Kong, procures, counsels, aids, abets or is accessory to the commission outside Hong Kong of an act which, if committed in Hong Kong, would be an offence under this Ordinance, commits that offence as a principal and shall be liable to be prosecuted in Hong Kong as if the offence had been committed within Hong Kong."

23. This submission must fail. The provision by the appellant company of the raw materials to Hung wai with the knowledge and intention that that company would despatch them to China where the false marking "Made in Hong Kong" was to be applied, and was in fact applied, to shoes manufactured there from those raw materials, plainly constituted the procuring of the commission or an act which if committed in Hong Kong would have been an offence under the Ordinance.

24. Notwithstanding Mr. Cheung's able submissions I am satisfied, for the reasons I have given, that this appeal must be dismissed.