HKSAR v. RICHCO GARMENTS LTD. AND ANOTHER

HCMA 657/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 657 OF 2001

(ON APPEAL FROM NKS 26106/2000 & 26107/2000)

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J U D G M E N T

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1. The Appellants were summonsed and convicted for Furnishing False or Misleading Information in a Production Notification for cut-and-sewn garments, contrary to Section 36(1)(c) and 36A of the Import and Export Ordinance, Cap 60. Both Applicants appeal their convictions and after hearing counsel for the Appellant and the Respondent, I reserved my decision which I now give.

2. The first ground of appeal was that the Magistrate erred in law in failing to make a ruling as to whether PW1 was an expert witness and, in any event, appeared, wrongly, to rely on the evidence of PW1 as expert evidence. Further, it was suggested that the Magistrate wrongly asked a leading question on an issue vital to the Respondent and addressed that question to PW1. It was alleged that the Magistrate in considering PW1's evidence failed to consider it in a proper manner, or to investigate PW1's independence.

3. The second ground of appeal was that the Magistrate failed to resolve properly the material conflict between the evidence of PW2 and PW3 the Customs officers about an oral admission, allegedly made by the 2nd Appellant. It was submitted further that the Magistrate failed to consider whether the Record of Interview of the 2nd Appellant was admissible against her and whether or not it was given as a result of an inducement contained in a letter of authority supplied by the 1st Appellant.

Background

4. The alleged false production notification related to an order for 688 dozen ladies' knitted tank tops. The procedure prescribed was that manufacturers registered with the Trade Department and when they produced goods for export to certain countries, which goods were to bear a "Made in Hong Kong" label, were required to lodge with the Trade Department a production notification, within 3 working days of the commencement of the major assembly work in Hong Kong. Goods covered by the production notification must be of Hong Kong origin and the assembly work to transform the component parts must be done in Hong Kong.

5. The goods seized by the Customs officers included 410 completed tops, but the rest of the goods seized had not been assembled completely, in that the fronts had not been sewn to the backs and the labels had not been affixed. The component parts were partially assembled, to the extent that the grey interior panels of the tops had been sewn to the blue exteriors at top and bottom.

6. The production notification (Exh. P6) lodged by the 1st Appellant, asserted that the assembly work had been carried out in Hong Kong, whereas it was the prosecution case that significant parts of that assembly work were carried out by a factory in China.

7. The defence case was that the assembly work was not carried out in China, but that even if it had been, it could not be regarded as assembly work.

Ground 1

8. PW1 was a Trade Officer whose principal evidence was how the production notification system operated. She had no manufacturing experience and had been working as a Trade Officer for 6 months at the time of the alleged offence. She told the court that certain processes could be done outside Hong Kong, for instance, the formation, dyeing, and embroidery of the fabric as these were not principal processes. It was permissible to have garment parts temporarily linked but there was no definition of what constituted a temporary link. It was her view that the stitching of the inner to the outer parts garments in this case could not be regarded as a temporary linking. She said that some temporary links were effected by plastic strings linking pieces of material.

9. At trial defence counsel objected to PW1 being asked questions about temporary linking, submitting she was not an expert witness and that only an expert could give evidence on this matter.

10. PW1 was not put forward by the prosecution as an expert in manufacturing processes. Although the Magistrate did not comment in his Statement of Findings on defence counsel's allegation that PW1 was purporting to give evidence as an expert, it appears that he neither treated her as an expert witness, nor relied on her evidence, as one would rely on the evidence of an expert. The Magistrate took the view that as a Trade Department officer PW1 could comment on what she believed temporary linking to be. It was for the Magistrate himself to decide whether or not the parts joined as they were, were temporarily linked or not.

11. The Magistrate evaluated the evidence and examined the relevant exhibits, P7 to P9. From his own observation he concluded this was not a temporary linking. I do not find any substance in the allegation that the Magistrate treated PW1 as an expert witness.

Ground 2

12. The prosecution relied on a Record of Interview and an oral admission allegedly made by the 2nd Appellant.

13. It was submitted that the Magistrate failed to resolve a material conflict between the evidence of PW2 and PW3, the Customs officers as to which was speaking the truth about an oral admission allegedly made by the 2nd Appellant.

14. The defence challenged the admissibility of the Record of Interview and it was put to the officers that no oral admission had ever been made. The challenge to the Record of Interview was that the 2nd Appellant was pressured into making admissions by the officers, who threatened that if she did not admit what was necessary, any future applications made by the 1st Appellant would be subjected to very thorough checks which could affect the company's business.

15. The officers denied impropriety in dealing with the 2nd Appellant over the Record of Interview. A conflict arose as to the timing of her alleged oral admission. PW2 said this admission was made before any documents were produced for the officers by the 2nd Appellant, but, in cross-examination he agreed that in his witness statement he said the admission was made after documents were produced by PW2 for perusal by the officers.

16. PW3's evidence was that no oral admission had ever been made prior to the interview. No proper record of the alleged admission was made by the officers in their notebooks, either contemporaneously or later.

17. In evidence in chief, PW2 referred to the 2nd Appellant's admitting that the top and bottom parts were sewn in Mainland China. In cross-examination, he repeated that assertion. She was said to have made the admission after the officers had seen the garment parts outside the factory at 12 o'clock (B85). PW2 was asked whether before the interview she had made the admission once and confirmed that was correct. He said it was round about 12 o'clock, but he had not cautioned her, or made any note of the admission. He had not made any note because he could not take the admission as accurate before he referred to the documents (B86). He did not caution her because he "did not know whether she had said something wrong".

18. PW2 made a witness statement about the incident only in January 2001 (B86J), although the offence took place in March 2000. It was put to him that in his statement he said the oral admission was made after production documents had been shown to him. The officer had no choice, given his own statement, but to agree. He admitted that he had a file on the case and possibly had some notes and that he "should have" used those notes when he made the statement. He did not know whether he made the notes because the file was stored in the Custom & Excise store room. He considered that was not very important. He said (B88R) "it only helps me to recall the gist of that incident, the most important part was in the Record of Interview". He was cross-examined further on this point and also questioned by the court. He said that although the officers had notebooks, he had made notes in his only "to record the process".

19. The notebook showed no record of any conversation with the 2nd Appellant, apart from a note of an admission, at some point, that the things had been made in China. There was a conversation between the officers and the 2nd Appellant from about 12 o'clock to 3:40, when the Record of Interview began, but no details of that period were recorded in the notebook.

20. PW3, the other Customs Officer, was tendered for cross-examination. He confirmed he made his statement about the incident on 15 January 2001 and, apart from the statement and the Record of Interview, had no other record of what had taken place. He said that all had been recorded in the Record of Interview. He considered that apart from the Record of Interview they also relied on other documents, such as those produced by the 2nd Appellant.

21. His evidence was that the 2nd Appellant had not made any admission about the goods having been made in China during the inquiries prior to the interview. This directly contradicted the evidence of PW2. PW3 said he recorded things briefly in his notebook, but that everything had been recorded in a case diary which was submitted to his superior (B113).

22. The case was adjourned so that the notebook and diary could be inspected. Defence counsel, having inspected the notebook, confirmed from PW3 that the admission was made by the 2nd Appellant, after a caution had been administered for the interview and not before that time.

23. The Magistrate dealt with the oral admission in his Statement of Findings (B20) by saying:

"PW2 said that this submission was made before any documents were produced. In cross-examination he admitted that in his statement he said the admission was made after the documents were produced. PW3 gave evidence that no admission was made at all prior to the record of interview."

24. In evaluating the evidence, the Magistrate said:

"I considered very carefully all the evidence in relation to the special issue and in particular the conflict in the evidence of PW2 as regards the alleged oral admission and the conflict between his evidence and that of PW3.

I did not accept the evidence of the defendant as regards her assertions that she was dealt with oppressively and threatened by PWs 2 and 3. I believed the evidence of PWs 2 and 3 that they had neither threatened the defendant nor dealt with her oppressively. I was sure beyond reasonable doubt that any admissions were made voluntarily and saw no reason to exercise my residuary discretion to exclude them."

25. The Magistrate referred again (B22) to the conflict between the oral evidence of PW2 and his written statement and also the conflict with PW3's evidence that no oral admission had been made by the 2nd Appellant prior to the Record of Interview.

26. At B23 the Magistrate said:

"No record was made by either officer as to the details of this conversation. PW2 said he had not made a note of the alleged admission because he felt it was not necessary. It was hardly surprising therefore that conflicts arose in their evidence.

In the circumstances I decided that notwithstanding my finding that there had been no impropriety by the officers in their dealings with the defendant I should disregard the evidence of PW2 as regards any alleged oral admission."

27. The Magistrate proceeded on the basis of the Record of Interview alone.

28. Counsel for the Appellants complains that no proper resolution of the conflict was achieved by the Magistrate. He referred to The Queen v. Chong Kam Sau, where the parameters of reasons for verdict were set out by O'Connor J. The judge or magistrate should:

"in a manner appropriate to the circumstances of the case, illustrate the salient points in the case and demonstrate that the evidence had been evaluated. Significant inconsistencies and conflicts should be dealt with in such a manner as to indicate how those matters were resolved..... The magistrate should state his reasons, to such an extent as will inform the parties as to how and why the particular verdict was arrived at, and furthermore will enable an appellate court to perform its duty."

29. The credibility of PW2 and PW3 was very important, in particular because of the defence allegations that the Record of Interview was obtained in circumstances where the 2nd Appellant had been put under pressure to answer. The Magistrate stated simply that he was satisfied that no impropriety had taken place. He did not go further and consider what PW2's evidence meant in terms of his general credibility and, in particular its effect on his evidence relating to the circumstances under which the Record of Interview was obtained.

30. On PW2's evidence the 2nd Appellant had made an admission for which a caution should have been administered, albeit he professed that he did not know if she had said something wrong. Despite this he and PW3 proceeded to discuss with the 2nd Appellant related topics, details of which were not recorded, for a period of several hours, before a formal interview was held. Neither officer had any reliable written records as to what had happened apart from the Record of Interview itself. Both officers waited about 9 months before preparing witness statements, statements which could not have been based on anything except the interview record and their (by then) unreliable memories of events preceding it.

31. Given these matters it was insufficient for the Magistrate simply to ignore the evidence of the oral admission without explaining why he was prepared to accept PW2 as a credible witness on matters relating to the Record of Interview, or indeed why he was prepared to accept PW3 as a reliable witness given the conflict of evidence.

32. The third ground advanced by Mr Grounds related to a letter of authorisation produced for the investigation by Richco Garments Limited; such letter being prepared and signed by Chan To Ming, a director of the company. This stated that Chan To Ming, for and on behalf of the Board of Directors of Richco Garments authorised Wong Ah Han, (the 2nd Appellant), to furnish information in relation to the manufacture of 688 dozen ladies' knitted tank tops covered by the Production Notification for cut-and-sewn garments, submitted to the Trade Department. That letter concluded with the sentence: "our company will bear all the legal responsibilities for the information furnished by Miss Wong". This letter was requested by the Customs officers prior to the Record of Interview and purportedly gave Miss Wong authority to speak on behalf of Richco Garments Limited.

33. The Appellants' counsel submitted that this letter raised the issue of whether Miss Wong was also speaking on her own behalf when giving the interview and that the Magistrate failed to consider this matter. It was submitted that the Magistrate erred by failing to direct himself on the inducement apparently contained in the letter namely: "our company will bear all legal responsibility for the information given by Miss Wong." None of those matters was raised by the defence counsel at trial.

34. In respect of ground 3 the letter authorising the 2nd Appellant to speak on behalf of the company does appear to be phrased in such a way that it could be regarded as inducing her to participate in the interview, in the belief that she would not run the risk of being charged with any offence. The usual caution was given at the start of the interview but may not have been regarded with the same attention as it would have been if the letter had not existed.

35. Although this was not a ground raised on behalf of the 2nd Appellant when contesting the voluntariness of the Record of Interview at trial it was for the prosecution to establish beyond reasonable doubt that no such inducement existed or had operated on the mind of the 2nd Appellant. As no reference was made by either counsel to the blurring of the lines of responsibility as between the company and the 2nd Appellant the Magistrate did not do more than acknowledge the existence of the letter.

36. This apparent inducement; the equivocal evidence relating to the admission; the lengthy, uncautioned period before the interview; the lack of notebook or file entries and the very late preparation of witness statements cumulatively convince me that these convictions are unsafe.

37. I allow each of these appeals and order that any fines paid should be returned.

38. In conclusion I would state that from my reading of the transcript this was a poorly prepared case. The Customs officers appeared to place sole reliance on the Record of Interview. They did not make adequate contemporaneous notes of relevant events peripheral to the interview and left far too long a gap between the date of the incident and the time their witness statements were prepared. This caused the trial court unnecessary difficulty and led to time being wasted in calling up the investigation diary and the notebook of one of the officers. The notebook entries of these officers assume particular importance because of the many inspections they do in their daily work and because the often lengthy lapse of time before trial means it is rarely possible for them to recall individual inspections. In this case there was an 18 month gap between the inspection and the trial.