THE QUEEN v. KWAN PING CHUNG

1989, No 93

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H E A D N O T E

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IF WHAT ARE ALLEGED TO HAVE BEEN IMPORTED OR EXPORTED WITH A FALSE TRADE MARK OR DESCRIPTION CONTRARY TO SECTION 12 OF THE TRADE DESCRIPTION ORDINANCE CAP.362 ARE ONLY PARTS OF FINISHED PRODUCTS, THE MAGISTRATE IN IMPOSING FINES SHOULD BASE THESE ON THE VALUE OF THE COMPLETED GOODS RATHER THAN JUST THE PARTS WHICH ARE THE SUBJECT OF THE CHARGE.

IN THE SUPREME COURT OF HONG KONG

(Appellate Jurisdiction)

MAGISTRACY CRIMINAL APPEAL NO. 93 OF 1989

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J U D G M E N T

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1. Having disposed of the matter of conviction in favour of the respondent, I now turn to the sentence which was a fine of $15,000. Mr T. Cheung argues that this is far in access of the 40% of the value of the good which was the figure recommended in Applications for Review Nos. 7 & 8, the Attorney General and Marvels. Clothing Co. Ltd. and Eagles. Eye. (Hong Kong). Ltd.

2. In his reasons for sentence, the magistrate, in effect, distinguished those cases from the instant case in that the goods imported in this case, were he said, "only the labels of the completed goods". He suggested that in that event what he had to consider was not the value of the actual goods imported but the value of the goods when fully made up with the labels upon them. Of? course "the labels" he refers to this case are the cassette recorder panels to which a false trade description "Sharp" had been applied.

3. In the cases of the Marvels Clothing Co. Ltd, and Eagles Eye (Hong Kong) Ltd., Cons J.A. giving the judgment of court acknowledged that applying a 40% figure of the value of goods as a guideline for appropriate levels of fines would result in substantial fines. He, however, went on to say that these are substantial offences and the action of the legislature in 1980 (he refers there to the increase in penalty) indicates that the legislature intended them to he treated as such".

4. In the instant case, the learned magistrate decided that the only way to reach a figure approximating a proper penalty would be to take five times the value of the goods themselves. That would amount to $15,000 (5 x $3,000). He has assessed the value of the completed cassette recorders at $100 saying at the same time that that would be "significantly below the value". It seems to me that he could have pitched his assessment at a figure at least seven times that amount to have got to a reasonably accurate assessment.

5. What the magistrate decided, and what I have got to consider, is whether he was right to look beyond the value of the imported goods themselves, because they were merely, the "labels" for the completed goods. It seems to me that that is the proper approach to sentencing in a case of this sort, because what ought to be considered is the whole of the damage that flowed from the appellant's unlawful act, and that would necessarily involve, in this case, the completed cassette recorders which must have been within the contemplation of the appellant when he imported the panels. As Cong J.A. observed in the Marvels Clothing Co. Ltd. and Eagles Eye Hong Kong Ltd. cases:

"For our part we, doubt whether it is right to place such singular emphasis upon the question of profit.  Prosecutions of this kind are not brought to discourage dishonest enrichment. They are brought to protect the international reputation of Hong Kong. That is made clear in each of the cases to which we have just referred. We would respectfully endorse the remarks of Yang J. (as he then was) in YEUNG Hui-yu v. R Criminal Appeal 121 of 1979:

'Trade being the life blood of Hong Kong, any conduct which damages our Commerical reputation must he stopped. More especially, our reputation and image abroad must be resolutely protected, so that the Confidence of our trading partners in all parts of the world, built up by our industry and integrity over many years, must not he permitted to be underminded by the dishonest few.’

That confidence is no less than undermined cause the dishonest merchant made a profit smaller than might usually have been expected or perhaps made none at all. In our view the damage occasioned abroad is more correctly reflected in the size of the transaction. The larger and more valuable that it is, the more will other courtries be disturbed by the fact that Hong Kong allowed it to occur."

Applying the principles stated in that case to the facts of the present the case, the magistrate was correct to sentence on the basis of the completed goods rather than just the cassette recorder panels. After all it was the panels which bore the false trade description, and, they would be affixed to the finished cassette recorders which would be sold with that "label" upon them. The damage occasioned abroad, in other words, would be correctly reflected in the completed goods rather than in the panels themselves.

6. The difficulty for the magistrate in this case was that there was no value given for the completed goods Mr Cheung suggested that I should put the value that the good would have in China, which he said was the ultimate destination for the goods arguing that that would likely be much less than in Hong Kong. I cannot think that these goods could be sold anywhere for a price less than HK$700, so that the learned magistrate's estimate of $100 is, as he quite properly pointed out, significantly below the actual value. Applying a 40% figure to that value, it can readily be seen that the figure of $100 suggested by learned magistrate is a well below 40% of $700. In the end, of course, the magistrate sentenced the appellant to five times, the value of the panels. He could have sentenced him to, a fine of 1,600 (there were 1,600 panels) x 40% of 700 which would have been considerably more.

7. As a matter of sentencing principle I think that the learned magistrate was correct to suggest that the value of the finished products should be taken. In line with Cons J.A.'s recommendations in the cases referred to earlier, I think the fine should be 40% of that It would be, in a situation such as this, for the Crown to lead evidence as to the actual or estimated value of the completed product so that that would he of assistance to the magistrate in passing sentence.

8. In this case, the fine of $15,000 is probably very much below the figure which would have been arrived at had these principles been put into practice. The sentence certainly was not excessive. This appeal, therefore, is dismissed.