HKSAR v. GUO XIN ZHI AND ANOTHER

HCMA117/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO.117 OF 2004

(ON APPEAL FROM FLCC 1097 AND FLS 2459 OF 2003)

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REASONS FOR JUDGMENT

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1. This is an appeal against conviction and sentence.

2. The appellants were convicted of attempting to import goods into Hong Kong to which a false trade description was applied contrary to sections 12(1) and (2) and 18(1) of the Trade Descriptions Ordinance, Cap.362 ("the Ordinance") and section 159G of the Crimes Ordinance, Cap.200. Each appellant was fined $80,000. The 1st appellant was the managing director of the 2nd appellant.

3. The facts of the case, as found by the magistrate, were that the appellants had imported from mainland China into Hong Kong 940,000 gas lighters which were stamped "made in Malaysia". The fact that the goods had been imported from the mainland into Hong Kong was not in issue. The magistrate was satisfied that the description of the goods as having been made in Malaysia was false because they had been in fact made in mainland China.

4. In coming to that conclusion the magistrate necessarily relied upon the provisions of section 24A of the Ordinance. That section is in these terms :

" In any prosecution for an offence under this Ordinance in respect of the import of goods to which a false trade description of the place or country of manufacture, production, processing or reconditioning is applied, evidence that the goods were imported from a place or country shall be prima facie evidence that the goods were manufactured, produced, processed or reconditioned, as the case may be, in such place or country." [emphasis added]

5. Mr Yeung who appears for the appellants says that the magistrate misdirected herself as to the effect of the provisions of section 24A and placed upon the appellants a burden of proof they were not required to bear. Mr Yeung advanced other grounds of appeal against conviction as well, but in the event this is the only one I need deal with.

6. Mr Yeung's complaint is that section 24A by its terms does not create any presumption of fact. All it does is to allow evidence of the importation of goods into Hong Kong from another place or country to stand as evidence of the goods being manufactured etc. in that place or country.

7. He further says that if he is right in that interpretation of section 24A then the magistrate, so far as she regarded section 24A as creating a presumption which required rebuttal by the appellants, was wrong in law.

8. During the course of counsel's final submissions before the magistrate the following transpired :

"MR YEUNG: ...I will state my proposition in law. The proposition is that falsity, at the end of the day,
	needs to be proven beyond reasonable doubt. In a case in which there's no evidence to show falsity, the so-called presumption is not a presumption which requires the contrary to be proved on the balance of probability. The wording of the presumption shows that ...
COURT:		No need to be rebutted?
...
MR YEUNG: ... all the evidence shows that this goods were made in Malaysia. This evidence is not
	rebutted at all. The empty assertion, as put forward for the first time in the halfway submission by my learned friend, that they were made in China and we heard in final submission that they might be make in China or elsewhere. This is not evidence, your Worship.
	Now, what is the difference? In my humble submission, it's that if the section shows that any goods imported from a place is presumed to be manufactured in that place, unless the contrary is show, or unless the contrary is proven, then it would require the party showing the contrary to prove on the balance. But, in this case, it is not part of the main legislation; it is a sub-rule which states that there is prima facie evidence that the goods were manufactured in the place from which they were imported. The difference ...
COURT:		I think there's an authority saying that it must be rebutted.
MR YEUNG: Yes. And I will submit that the standard of rebuttal is ...
COURT:		On balance of probabilities.
MR YEUNG: In my submission, it would be a reasonable doubt situation. But, if I am wrong, then I will
	submit that, in this case, bearing in mind there's no -- there being no evidence to show they are being manufactured in PRC or South Korea, ...
COURT:		Thank you."

9. Although certain aspects of counsel's submissions were somewhat confusing, it seems clear to me, at least at that stage of the proceedings, the magistrate was of the initial view that section 24A in its operation created a presumption of fact which, once triggered required rebuttal by a defendant on the balance of probabilities.

10. In her verdict and subsequent Statement of Findings the magistrate put in somewhat differently :

" D2 was evasive and inconsistent. His evidence was full of contradictions. He is dishonest and unreliable. He make up the story and he told a pack of lies in court.

D2 and the defendant have not rebutted the section 24(a) presumption.

Looking at the evidence as a whole, the only irresistible and compelling inference the court could draw was the gas lighters were manufactured in China. There were no other co-existing circumstances which would weaken or destroy the inference. ..." [emphasis added]

11. As to whether the magistrate at the time of her verdict still regarded section 24A as giving rise to a presumption of fact or, because of her reference to the drawing of inferences, to only prima facie evidence of manufacturing is perhaps unclear.

12. But from the underlined sentence of the finding, it seems to me that it is at least possible that the magistrate's initial view as expressed during final submissions of counsel that section 24A created a rebutable presumption of fact as to the place of manufacture of the goods had continued.

13. That being so the question is whether, as Mr Yeung asserts, the magistrate was wrong in law in that regard.

14. In my judgment, section 24A creates no presumptions of fact. All it does is require evidence of one event (i.e. the importation of goods into Hong Kong) to be taken as prima facie evidence of another event (i.e. the manufacture of those goods in the country or place from which they came into Hong Kong).

15. That something be taken as prima facie evidence does not render it a presumption of fact. The former is nothing more than evidence of a fact. At the end of the day the court may accept it or, in the context of the evidence in the case as a whole, reject it as being of no or little weight.

16. There is certainly no requirement that a defendant in a criminal trial rebut such evidence on the balance of probabilities.

17. On the other hand, a presumption of fact presumes in certain circumstances the proof of that fact, and a defendant when faced with such a presumption in the normal course of events has the burden of displacing it.

18. Most legislation in creating presumptions of fact in the criminal law carries with it a requirement that any such presumption once brought into effect be displaced by a defendant on the balance of probabilities.

19. Section 24A makes no mention in its terms of any presumption arising or of any requirement of rebuttal by a defendant.

20. In my judgment it is quite plain that section 24A creates no presumption of fact at all but merely allows evidence of one sort of fact to operate also as evidence of another sort of fact. The question as to whether that evidence at the end of the day proves beyond reasonable doubt the latter fact remains a matter for the court.

21. I might add that there seems to be, so far as the researches of Mr Patrick Cheung for the respondent were able to reveal, only one prior judgment concerning the interpretation of section 24A. It is that case the magistrate was no doubt referring to in the course of her discussion with counsel during final submissions as set out above. That case is R. v. Enterprise Lacasa & Associates Ltd [1991] 2 HKC 486. The judgment of Penlington JA (sitting as an additional judge in the High Court) included this passage :

"... I am, nevertheless, satisfied that although some of the words in the section may be superfluous, it means that any goods which bore a false trade description, whether that was on the goods when they arrived in Hong Kong or whether it was affixed here, should be presumed to be manufactured in the country from which they had been imported. Quite clearly this section was designed to overcome the enormous difficulty faced by the prosecution of proving beyond reasonable doubt the country of manufacture of any particular goods. It is, in my view, a not unreasonable presumption and one which, if it is not correct, can easily be rebutted. ..." [emphasis added]

22. Insofar as Penlington JA refers to "presumptions" arising under section 24A I do not think he was necessarily expressing any decided view as to the provisions of section 24A creating presumptions of fact but was perhaps merely using a shorthand form of expression to describe what in many cases would be seen as the practical effect of section 24A. In any event, the issue of interpretation before the court in that case was quite different. It concerned whether section 24A applied also to goods which had false trade descriptions attached to them once they had been imported into Hong Kong, or whether its application was restricted only to goods which had such false descriptions already attached to them at the time they were imported into Hong Kong. The question which arises in the present case was never addressed by Penlington JA and his descriptions of section 24A as creating presumptions, if he went so far, is obiter.

23. Understandably, however, the trial magistrate, no doubt bearing Enterprise Lacasa's case in mind may have regarded it as authority for the proposition that section 24A creates a presumption of fact. That interpretation is, however, wrong and it is at least possible the magistrate adopted such an interpretation in arriving at her findings of fact.

24. The possible wrongful attribution of a burden of proof to a defendant is a material misdirection. That is certainly so in the present case where it related to the fundamental issue before the court. I cannot say that the magistrate would inevitably have arrived at the same conclusion had she properly directed herself.

25. For these reasons, the appeals of both appellants were allowed, their convictions quashed and their sentences set aside. No retrial was requested or ordered.