R. v. LI WAN KEI AND ANOTHER

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J U D G M E N T

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Mortimer, J.A. (giving the judgment of the Court):

1. In 2 December 1996 the two applicants, Li Wan-kei (D1) and Lee Wan-sang (D2), pleaded guilty to four charges before Her Honour Judge Beeson in the District Court. There were three charges of possession for sale of infringing copies of 192 video CDs, 16 audio compact discs, and 76 CD-ROM discs together with the 3rd charge which was possession of 21 CD-ROM discs with the forged trademark 'Microsoft'.

2. The judge called for reports. On 19 December, D1 was sentenced to a total of 2 years imprisonment on those charges and D2 to 16 months imprisonment. They each apply for leave to appeal against those sentences.

The facts

3. On 4 January 1996 officers of the Copyright Investigation Division of the Customs and Excise Department raided a shop in Aberdeen Main Street. D2 was present at the shop and the property in the charges was seized.

4. Enquiries were then undertaken. It was discovered that there was no business registered at the premises. The landlord of the premises was eventually traced. A tenancy agreement showed that a man called Leung held the lease of the premises for 2 years from December 1995, one month before the offences. In fact Leung was not found for a considerable time - until about August 1996. He said that he had second thoughts as to whether the business there was viable and had informally allowed D1 to take over the rental.

The investigation

5. The investigation into these matters which was both expensive and time-consuming eventually showed that there were copyright owners where copyright was involved and that the trademark 'Microsoft' had been forged on those CD-ROM discs charged in count 4.

6. D1 made a statement after his arrest. He said that D2 was the salesman of the shop and that shop, he knew, sold the type of articles which were seized but he denied being the proprietor.

7. As for D2, he admitted that he was the sole sales assistant there. The shop sold articles of the type seized but he had worked in the shop only for about one month for the remuneration of $300 a day paid in cash. D1 was his employer, he had not only employed him but he received the takings and was responsible for purchasing the goods. D2 admitted the items in the shop were for sale but denied knowledge of infringement. Those matters are relevant to this extent. Neither of them was prepared to admit his part in the offence at that stage so as to avoid the elaborate investigations which were necessary to prove the offences.

8. The number of infringing articles which were seized in part of the charge was 284 and it was an admitted fact that the average retail value of those goods was $24,430. That perhaps establishes the type of offences with which the judge was dealing.

The records of the applicants

9. The next important part of the background concerned the five previous occasions for similar offences: three times in 1994 when he received increasing fines. On the first occasion he was fined $1,500; the second occasion $8,000 and the third occasion he was fined $10,000 with 2 months imprisonment in default. Coming to 1995 he was convicted on one occasion when two months sentence of imprisonment was passed, suspended for 18 months, and he was fined $5,000 with one month in default. In 1996, for an offence committed at the end of 1995, he was fined $5,000 and his suspended sentence was brought into effect, so he served two months in jail - one in 1994 and two in 1995. On each occasion he was fined increasingly and on the last of those offences he was fined $12,000.

Reports

10. The judge called for reports and those were taken into account by her in sentencing. D1 had difficulties because of his health. He has tuberculosis but the report shows that he was not a regular worker but was a persistent law breaker -demonstrated also by the record we have dealt with. He has however a supportive family.

11. D2 is an older man, born in 1956. He led a law-abiding life until 1994 but then committed offences of dishonesty. As a result of imprisonment and people he met there, he was introduced to D1. None of those matters is of great importance in the judge's task in assessing the sentence.

The sentences

12. The judge took a view that deterrent sentences by way of imprisonment were called for. So far as D1 was concerned, she took as her starting point for the four offences 3 years imprisonment and reduced the sentence to 2 years. As for D2 she took as her starting point 2 years and reduced the sentence to 1 year and 4 months - the reduction of each case because of the plea.

The application

13. Mr Jerome Matthews appears for both applicants. The particular point which he relies upon is that even if deterrent sentences are called for because of the record of both applicants, the sentences must properly relate to the seriousness of the offences themselves. And that when that is properly taken into account - that is they involve a total of 284 units of a value of $24,430 - the starting point for these sentences was manifestly excessive.

14. Mr Kripas who appears for the Crown has helpfully given the court some of the history to the legislation and the background to these offences. In the end, he found that he had to concede that the starting points of these sentences were manifestly excessive. That is on the basis that experience shows that often seizures of this type of goods run into tens of thousands rather than the amount involved here.

15. We agree and in those circumstances we consider the sentences that ought to be passed in these cases.

Guidelines inappropriate

16. Mr Kripas has invited the court to lay down some guidelines for this type of offence. We are not prepared to do that. Indeed it would be inappropriate -certainly at this stage. The circumstances of offences and offenders obviously vary widely. Judges in the District Court for the more serious offences will build up their experience dealing with these matters. They will take account of their experience to pass appropriate sentences. Hopefully our decision on this case will be of some assistance.

The sentences to be passed

17. So here both applicants are persistent offenders. They each in their way had demonstrated a contempt for the law. They had been treated in the past mainly with fines. D1 served a very short period of imprisonment. But that way of dealing with these offences is clearly not successful.

18. The law was changed in May 1995 to increase the penalties for infringing copyright copies and particularly for offenders who offend more than once. In those circumstances the case was sent to the District Court. The judge properly came to the conclusion that custodial sentences by way of deterrence was called for. All the circumstances must be borne in mind. We list them as follows:

(1) We are dealing with persistent offenders.

(2) Deterrence is necessary.

(3) But the quantity seized is limited - a relatively small operation was involved with a retail value of $24,500.

(4) The two applicants pleaded guilty but not until all the elaborate preparation of the case was complete involving great expense and effort.

19. Nevertheless the judge decided that they were entitled to the usual one-third reduction from the starting point for their pleas. It may be that in other cases in this field if there is a full indication of an intention to plead guilty at the very outset which avoids all the elaborate preparation and expense for trial, this also will be reflected in the sentence passed.

20. Finally, deterrent sentences are called for and the court must remember that Hong Kong's international reputation as a fair trading centre must be protected.

21. Bearing those factors in mind we consider that heavy sentences are called for. But those passed by the judge were manifestly excessive. So far as D1 is concerned, the proper starting point in his case is 2 years imprisonment. We reduce that to 16 months on the grounds of his plea.

22. D2's role was less - as the judge found. We think the proper sentence in this case is one of 18 months as the starting point, reduced to 1 year for his plea.

23. We allow the appeal to that extent and substitute those sentences.