HKSAR v. TIMFUL GARMENT LTD.

HCMA 770/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 770 OF 2001

(ON APPEAL FROM CASE NO. FLS 1147 & 1148/2001)

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J U D G M E N T

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1. The Appellant was convicted of an offence under the Import and Export Ordinance, Cap. 60 and Section 159G of the Crime Ordinance, Cap. 200. The particulars of this charge are that the Appellant on the 17th of October 2000 in Hong Kong did attempt to export textiles, specified in the second column of Part I of the second schedule to the Import and Export (General) Regulations, Cap. 60, not under and in accordance with an export licence issued by the director, namely 3,144 pieces of ladies' 100% cotton woven pants and 1,891 kilograms of component parts for cotton pants to Mainland China.

2. The 2nd offence charges the Appellant, on or about 17 October in Hong Kong in respect of a document which is required to be lodged with the Customs and Excise office, pursuant to the provisions of the Import and Export Ordinance, Cap. 60, namely in the Hong Kong Export Manifest No. LMC DA 67 05162, caused to be omitted the information regarding 1,891 kilograms of component parts for cotton pants which is contrary to section 36(1)C of the Import and Export Ordinance, Cap. 60.

3. The facts admitted under section 65C of the Criminal Procedure Ordinance, which is exhibited as Exhibit 18, was that under the Import and Export Ordinance, Cap. 60, textile products are prohibited articles, the export of which must be under and in accordance with valid export licences issued by the Trade and Industry Department. However, textiles traders registered under the Textiles Traders Registration Scheme with the Trade and Industry Department may complete and submit Export Notifications, in place of licences, to cover the export of the said textiles to other countries or places. In the Export Notifications, the traders are required to disclose full particulars and correct information in relation to the export of such goods.

4. On the 17th of October 2000, the Appellant company was a valid registrant under the Textile Traders Registration Scheme. The Trade and Industry Department had also implemented an Outward Processing Arrangement (OPA) since 1981. Manufacturers registered under the scheme can sub-contract outside Hong Kong, the subsidiary or minor finishing processes for their textiles and garment products without affecting the eligibility of such goods from claiming Hong Kong origin. For control purposes, the outward and inward movements of the products under the scheme must be covered by a designated OPA form endorsed by the officers of the Customs and Excise Department at the Border Control Point. The endorsed OPA form can be used to support the re-importation of the same goods into Hong Kong. The record showed that 10 OPA registration cards were issued to the Appellant company on the 19th of July 2000.

5. On the 17th of October 2000, officers of the Customs and Excise Department intercepted an outgoing lorry at Lok Ma Chau Control Point for cargo examination. The driver of the lorry submitted 4 Export Notifications, 4 corresponding OPA forms and an export manifest numbered LMC D8 67 05162 to the officers, purporting to cover the export of 9,562 pieces of ladies' 100% cotton woven pants to China. However, contrary to the quantities and descriptions of goods stated in the said export documents, the officers found that being conveyed in the lorry were:

(1) 3,144 ladies' 100% cotton woven pants; and

(2) 1,891 kilograms of component parts for cotton pants.

6. Mr So Pak Chuen, the authorised representative of the Appellant, attended an interview with the Customs and Excise Department on 17 October 2000. His record of interview was produced as an exhibit. It was also admitted that the value of the goods seized were $9,744 and the total value of the goods covered by the 4 Export Notifications was $248,612. The Appellant company had a clear record.

7. The defence did not dispute the prosecution evidence. In the record of interview, Mr So Pak Chuen said that he was a production manager of the Appellant company at the material time. He was responsible for the production of the goods, the issue of invoices and the arrangement for the goods to be delivered to the Mainland for further processing. He admitted that he had instructed his subordinate to fill in the 4 OPA which contained the false information. He agreed that he was fully authorised by the board of directors of the Appellant to deal with the investigation carried out by the Customs and Excise in this matter.

8. The defence relied upon the answers Mr So gave to questions 14 and 17. In question 14, Mr So was asked why it was that in the OPA forms, it was written that the quantity of articles was in the region of 6,836 and 2,726 but the Customs and Excise Officers found only 1,454 and 1,690 pieces. In answer, Mr So said "我係運輸到本廠收貨時，我疏忽攪錯咗，無交俾運輸，其實款號2411嘅尾數5,382件及款號2513嘅尾數1,072件已經完成生產，現時依然存放在本廠內。" In that answer，Mr So was admitting that it was his mistake that he did not give the rest of the articles to the Transportation Company and in fact those goods are still in the Company's premises. In question 17 Mr So was asked whether he had any export documents relating to the 1,891 kilograms of component parts for cotton pants for export to Mainland China. In his answer in answer 17, he said "本人為咗貪一時方便才咁做，搵埋運輸運上去大陸同一間廠。" Mr So was admitting there that for the sake of his own convenience, he decided to send the 1,891 kilograms to China through this same transportation company as it was intended for the same factory.

9. The defence relied on the general principle of criminal law established in R v Wong Tak Choy [1994] 3 HKC 353 which is that a man is not liable to be charged criminally for the act of his servant unless the particular statute imposed this liability upon him by express terms or by implication.

10. The defence argued that Mr So had made a mistake in not including the lot of goods which gave rise to Charge 1；and in Charge 2, the defence relied on the statutory defence in section 36(1) of the Import and Export Ordinance, that the Defendant did not know and had no reason to believe that the statement or information was false or misleading.

11. The Magistrate, in his statement of findings, came to the conclusion that he viewed these offences as one of strict liability and therefore there is no question of vicarious liability in such cases, as the act of the employee is the act of the employer. He also said that the conventional view is that the Company will have imputed to it, the acts and state of mind of those of its directors and managers who represent its directing mind and will.

12. The learned Magistrate also found that the answer Mr So gave to question 14 was not convincing. The learned Magistrate when considering whether the actions of Mr So can be imputed to the Company said that as Mr So had full authority from the board of directors to deal with manufacturing matters and import and export to and from China, his actions can be imputed to the Company. The learned Magistrate noticed that in various parts of his record of interview, Mr So constantly refers not to himself but use the words "本廠" meaning "our company". So the learned Magistrate after considering all the evidence concluded that Mr So was the directing mind and will of the Appellant and therefore the Appellant was guilty of both charges.

13. At the hearing of this appeal, Mr Hung who represented the Appellant requested for the appeal to be heard in English and with no objection from the Respondent, I acceded to that request. The main ground of appeal is that the learned Magistrate had erred in concluding that the Appellant company had caused the prohibited acts complained of in the 1st charge and that the offence alleged in the 2nd charge is unknown to law. The Respondent conceded that the offence in the 2nd charge is not an offence known in law.

14. I agree with Mr Hung for the Appellant that these are strict liability offences as Litton JA said in the R v Wong Tak Choy [1994] 3 HKC 353:

"The Import and Export "General" Regulations do not by express terms make an employer liable for a servant's act of taking article out of Hong Kong contrary to the provision of the export licence unless he has caused the servant to do so. The effect of the verb to cause in the context of the Import and Export Regulations has been exhaustively analyzed by the Privy Council in AG v Tse Hung Lit [1986] AC 876. There the Privy Council expressively approve of the passage in the judgment of the High Court of Australia in O'Sullivan v Truth and Sportmans Limited 1957-96 CLR 2001 where the High Court was dealing with the offence of causing a newspaper to be offered for sale containing certain prohibited matters. The passage is in these terms:

"(The expression to cause) should be interpreted as confined to cases where the prohibited act is done on the actual authority, express or implied, of the party said to have caused it or in consequence of his exerting some capacity which he possesses in fact or law to control or influence the acts of the other. He must moreover contemplate or desire that the prohibited act will ensue."

15. The Appellant in Wong Tak Choy's case was not a limited company. The Appellant was one of the three partners of a garment factory. In Wong's case there was evidence that a Mr Tsang who was in charge of the Shipping Department had carried out some import and export transactions and that the Appellant did not authorise it and knew nothing about it.

16. The Magistrate in Wong's case decided that Wong was vicariously liable for what Mr Tsang had done. Litton JA (as he then was) held that the decision was wrong and that the Appellant could only be found guilty if there was evidence to show that he did cause the servant to commit the crime.

17. I agree with the Respondent that the present case can be distinguished from Wong Tak Choy's case in that the Appellant is a limited company and its mind and will must, of course, be exercised by the Company Directors and Managers, and the Company had through its board of directors, given full authority to Mr So to act on its behalf, as its production manager, in charge of not only production but import and export.

18. The learned Magistrate correctly found that a company "will have imputed to it the state of mind, both of its directors and managers, who represent its directing will and mind." So any mistakes or intentional flouting of the law by Mr So can be imputed to the Company. I therefore find that there is no merit in the appeal against conviction in relation to Charge 1.

Charge 2

19. As I have mentioned earlier, the Respondent had properly conceded that Charge 2 is an offence not known to law. The Respondent submitted that they should be allowed to amend the charge even at this late stage, as there would be no disadvantage caused to the interests of the Appellant. I disagree.

20. In the court below, the whole of the prosecution evidence was admitted by the defence. I agree with Mr Hung that if the charge had been amended in the court below, the defence may have approached the matter in a different way. In the circumstance, I therefore allow the appeal against conviction on the 2nd Charge and quash the conviction of the Appellant company on the 2nd Charge.