HKSAR v. WONG HON SUN

[English Translation – 英譯本]

HCMA 608/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO. 608 OF 2007

(ON APPEAL FROM FLMP NO. 77 OF 2007)

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J U D G M E N T

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1. On 5 October 2006, the appellant bought a batch of 42 silver bricks for $1,644,167.00 in cash. At 3:48 p.m. on 7 October 2006, the Hong Kong Customs and Excise Service found the batch of silver bricks hidden in an exiting goods vehicle. The driver of the vehicle, by the name of Lee Wai Hoi (李偉海), was about to smuggle the silver bricks out of the territory at that time, and he did not have the papers pertaining to the silver bricks.

2. The appellant was the owner of the goods and the batch of silver bricks was goods liable to forfeiture.

3. The driver of the goods vehicle was subsequently charged with the offence of attempting to export unmanifested cargo. He pleaded guilty and was sentenced to 12 months’ imprisonment.

4. The Customs and Excise Department applied to a magistrate for forfeiture of the batch of silver bricks under sections 27 and 28 of the Import and Export Ordinance, Cap. 60 of the Laws of Hong Kong. The appellant as claimant opposed the application, claiming that he was an innocent owner of the goods.

5. On 6 June 2007, having considered all relevant matters which included the evidence of the appellant in court and the cautioned statements made to the Customs by the appellant and one Kong Wai Ming (江偉明), who was entrusted by the appellant to transport the silver bricks to Futian Bonded Area on the Mainland, the Permanent Magistrate took the view that the appellant failed to establish on a balance of probabilities any reason for the full return or conditional return of the batch of silver bricks. He therefore ordered the forfeiture of the whole batch of silver bricks.

6. The appellant now appeals against the order.

Facts

7. The appellant’s case, as set out in the skeleton submissions of the respondent, was as follows:

“6.    Counsel for the appellant only called the owner of the goods, i.e. the appellant Mr. Wong Hon Sun to give evidence. His evidence upon examination-in-chief is set out at 50E-52M of the Appeal Bundle. He first confirmed the truth of the cautioned statement that he made to the Customs on 17 October, and he adopted all the answers he had given therein as his evidence at trial (see 50K-M of the Appeal Bundle). Furthermore, a bill was produced (marked as Exhibits C1 and C2) which showed that on 5 October he purchased the 42 silver bricks from Gold Apex Precious Metal (H.K.) Limited (金協貴金屬（香港）有限公司), paying the purchase price of HK$1,644,167.00 in cash (see pages 44 to 45 of the Appeal Bundle).

7.  However, under further examination-in-chief, he gave a different account of what happened on 5 October. He said:

(i)   Having bought 42 silver bricks from Gold Apex Precious Metal Co., he entrusted them to Kong Wai Ming on the following day, i.e. 6 October, for the purpose of delivery. He telephoned Kong on 6 October, telling Kong that he had to take a business trip to Beijing and hence he would entrust Kong with the job of transporting the silver bricks to one Man Fook Industrial Co. (萬福實業公司) on 7 October for temporary storage (see 51I to K of the Appeal Bundle).

(ii)  The appellant also told Kong Wai Ming over the telephone that the batch of silver bricks was ultimately bound for the Mainland and that he had found a Mainland customer who would want that batch of goods. As he had not done any Mainland business before, he relied on that Mainland customer to complete the formalities in the Futian Duty Declaration Area. He then asked Kong Wai Ming to engage a transportation company to go through the proper declaration procedures for the storage of the silver bricks. Upon his return from Beijing, he would then deliver the silver bricks to that Mainland customer (see 51L to N of the Appeal Bundle).

(iii)    He had been acquainted with Kong Wai Ming in the transportation field for 5 to 6 years. He would normally ask Kong to transport goods for him because he considered Kong responsible and honest. No papers were signed in respect of the consignment in question as this was considered unnecessary by reason of their long period of acquaintance (see 51P to U of the Appeal Bundle).

(iv)    He did not know the driver Lee Wai Hoi who had pleaded guilty in the case (51U to V of the Appeal Bundle). Nor had he entrusted any goods vehicle driver with the transport of the goods to the Mainland on 7 October (52A to B of the Appeal Bundle). 

(v)  Man Fook Industrial was situated at Lai Chi Kok Road. He told Kong that the bricks could not be transported to the Mainland until after the Mainland customer completed the requisite formalities for the Futian Duty Declaration Area. He did not tell Kong the detailed address because he had to wait for the Mainland customer to tell him where in the Futian Duty Declaration Area the goods were ultimately to be transported to (see page 52C to J of the Appeal Bundle).”

The Magistrate’s judgment

8. After trial, the Magistrate delivered the following judgment:

“2.  I have reminded myself that the standard of proof to be applied to the present application is proof on a balance of probabilities and that I have to consider the evidence adduced by both parties and the claimant’s submissions on an equal basis. The following matters are not in dispute:

· The documents submitted by the Customs and Excise in support of the application are all in order. All the evidence tendered by the applicant is accepted.

· The 42 silver bricks in question are goods liable to forfeiture.

· The claimant is the owner of the goods.

· The claimant and Kong Wai Ming, the driver entrusted by him, attended the Customs and Excise office for interviews under caution on 17 October 2006 and 7 November 2006 respectively.

3. When giving evidence, the claimant adopted the contents of his interview record as part of his evidence, and confirmed the accuracy and truth of those parts in the interview record of Mr. Kong Wai Ming that related to the claimant, namely Q/A 9-17 and Q/A 25.

4. The claimant said in the recorded interview that the silver bricks were for investment purpose, and no mention was made of there being a customer (refer to Q/A 32 of his interview record).

Q32  Why did you buy those 42 silver bricks?

A32  I am in the trading business. I bought this batch of 42 silver bricks for investment purpose. I would sell them when the price of silver rose.

This was different from what he said in evidence, namely that he purchased the goods because he had a customer who wanted about 1.6 million dollars worth of silver bricks. As the claimant did not mention that there was already a customer, he also did not mention who was to take delivery of the goods in the Bonded Area. Nor was he asked any question in that regard; see A12 of Kong Wai Ming’s interview record, which is different from what the claimant said.

5. As appears from the interview record, the claimant’s version is that he asked Kong Wai Ming to find a transportation company to transport 42 silver bricks to the Mainland and to process the customs declaration and examination of the goods. … On the afternoon of 6 October 2006, he telephoned Kong, asking him to help him transport 42 bars of silver to the Mainland as quickly as possible and to have them stored in Futian Bonded Area through proper procedures … and he arranged for Kong to deliver 42 bars of silver to Man Fook Industrial Co. (see A14 of the claimant’s interview record). The storage provided by Man Fook Industrial was highly secure and rental-free (see 15 of the claimant’s interview record). Kong went to his residence to take delivery of 42 silver bricks at midday on 7 October (see A20 of the claimant’s interview record).

6. As appears from the interview record, the claimant’s version is that he did not give Kong Wai Ming the consignment note for the 42 bars of silver but gave him the telephone number of one Wong Charn Kai (王燦佳) of Man Fook Industrial (see A23 of the claimant’s interview record). He entirely left the matter of storage of the goods in Futian Bonded Area to the care of Kong (see A25 of the claimant’s interview record). As Kong was not yet able to find a transportation company, neither the processing fee for customs declaration nor the freight was known at that time (see A34 of the claimant’s interview record). It should be noted that the claimant said in the interview that he completely relied on Kong to get someone to process the customs declaration, and yet the claimant had not given Kong any document relating to the silver bricks. Nor had the two of them agreed on the customs declaration processing fee or the freight.

7. As appears from the interview record, the claimant’s version is that as the arrangements for the transport to the Mainland and the customs declaration were not yet finalized, he requested that the goods be delivered to Man Fook Industrial for interim storage. It should be noted that Man Fook Industrial was at the material time located at Lai Chi Kok Road whereas Gold Apex Precious Metal was located at Nathan Road. Why did the claimant have to ask Gold Apex Precious Metal to deliver the silver bricks to his own residence, and then have them picked up by Kong Wai Ming who would then deliver them to Nathan Road? According to the claimant, he trusted Kong and Man Fook Industrial completely. Otherwise, why did he not require any documentation of the delivery and receipt? The claimant only intended to store the silver bricks in the highly secure Man Fook Industrial until he returned from the business trip. He obviously considered that this was safer than keeping them at his own residence or in the village house at Tai Sang Wai. Why then did he not have the batch of silver bricks directly delivered from Gold Apex Precious Metal to Man Fook Industrial? The evidence shows that the silver bricks had never made their way to Man Fook Industrial (see A18 of Kong Wai Ming’s interview record).

8. If what the claimant said in the interview under caution was true, i.e. that the batch of silver bricks was for investment purpose and there was no designated buyer yet, and that he was not familiar with the Mainland formalities, then why did he have to take great pains to entrust Kong Wai Ming with the job of getting someone to transport the goods to Futian Bonded Area, given the availability of storage service by Man Fook Industrial which was free and highly secure? (see A12 and A15 of Kong’s interview record)

9. It should be noted that subsequent to the interview of the claimant, Kong Wai Ming attended the Customs and Excise office for an interview under caution on 7 November 2006. As appears from the interview record, Kong’s version is that in early October 2006, Wong Hon Sun asked him to help transport the silver bricks in question to Man Fook Industrial (see A9 of Kong’s interview record). On the night of 6 October 2006, Wong Hon Sun rang him up, making mention of a batch of silver bricks that had to be transported. On the morning of 7 October, Wong telephoned Kong again, asking him to go to a village house at Wo Shang Wai to pick up that batch of silver bricks and deliver them to Man Fook Industrial in Lai Chi Kok (see A10 of Kong’s interview record).

10.  As appears from the interview record, Kong Wai Ming’s version is that on the morning of 7 October 2006 he went to Wo Shang Wai to take delivery of the silver bricks which had been properly wrapped with newspaper. Wong Hon Sun told him that as he had to go on a business trip to Beijing on 8 October, the batch of 42 silver bricks had to be delivered to Man Fook Industrial (see A11 of Kong’s interview record). He had previously transported precious metal to Man Fook Industrial for Wong Hon Sun. He only knew that the batch of silver bricks was to be transported to the bonded warehouse in Futian Bonded Area for storage upon Wong Hon Sun’s return from his Beijing business trip, and that he would then have to go through proper customs declaration procedures for the goods to be delivered to Futian Bonded Area. Wong Hon Sun said that he had a customer who wanted the batch of silver bricks but the formalities for Futian bonded warehouse had not yet been completed (see A12 of Kong’s interview record). He knew nothing about Wong Hon Sun’s customer (see A14 of Kong’s interview record). Wong Hon Sun said that his customer had requested to have the silver bricks transported to Futian Bonded Area (see A15 of Kong’s interview record).

11.  The claimant said under cross-examination that what Kong Wai Ming had said in Q/A 9-17 were all correct and true. Therefore, at his interview on 7 November 2006, Kong had explained why the claimant had to deliver the silver bricks to Futian Bonded Area. At the same time, however, another version was presented as to the purpose of buying the batch of silver bricks.

12.  The claimant testified that he rang up Kong Wai Ming on 6 October 2006 to entrust him with the delivery of the silver bricks involved in the present application. He told Kong over the telephone that he had a customer on the Mainland and that the goods would be transported to the Bonded Area after the customer completed the formalities at the Bonded Area. He said he had met the customer in Shenzhen to discuss this transaction, although no document was signed at that time. After he purchased the goods, he faxed the invoice, to which a commission was added, to the customer on 6 or 7 October 2006, but no copy was made of the invoice, and no mention was made that the customer had made payment. It should be noted that the claimant’s evidence continued what Kong had said at the interview, namely that there was a designated customer, but the claimant did not provide any information about that customer.

13.  It should be noted that the claimant said during the interview that he asked Kong Wai Ming to store the goods in Futian Bonded Area as quickly as possible. But where were they to be stored (and there was no mention of a customer at that time)? The claimant testified that the customer was responsible for completing the formalities for taking delivery of the goods. But how could such formalities be completed before the goods were transported to the Bonded Area? Besides, in what capacity would the customer, who had not paid for the goods, take delivery? The claimant’s case was silent on this. Nor did the claimant point out in his testimony who the customer was or provide any information on the customer.

14.  When asked if he had told Kong Wai Ming where in Futian Bonded Area the batch of silver bricks was to be transported to, the claimant answered in the negative, saying that he was awaiting notification from the customer. It should be noted that at that time he was not asked about Kong’s interview record and there was no mention of it in his own interview record. If he had not told Kong where in Futian Bonded Area the goods should be transported to, how could Kong submit a quotation for him? Did he not tell Kong that they were to be transported to a bonded warehouse? That was what Kong had told the Customs; and subsequently, upon being presented with Kong’s interview record, the claimant agreed that it was true. In my view, during the period between 17 October and 7 November 2006, the claimant and Kong had discussed how Kong should answer questions posed by the Customs.

15.  It is the claimant’s evidence that he initially just intended to transport the silver bricks to Man Fook Industrial before he went on a business trip to Beijing. It is not disputed that the goods were not transported to Man Fook Industrial and instead were found by the Customs to have been smuggled through the border. Kong Wai Ming explained that as his goods vehicle had broken down, he asked Lee Wai Hoi for help. Kong’s goods vehicle should have been repaired properly, and so it later arrived at the ground level carpark of San Miguel Brewery from Fairview Roundabout (see A18 and A19 of Kong’s interview record). It so happened that Lee Wai Hoi plied the route of Futian Bonded Area and, as further coincidence, Kong, who tried to contact Wong Hon Sun but in vain, decided of his own volition to hand to Lee Wai Hoi the silver bricks belonging to Wong Hon Sun. It should be noted that the claimant said in his interview record that he was out all day and that the battery of his mobile phone was flat (A26). This chain of happenstances was relied on to explain why the silver bricks were, unbeknownst to the claimant, found in Lee Wai Hoi’s vehicle.

16.  It should be noted that Kong Wai Ming knew that the silver bricks were precious metal and also knew that the claimant wanted him to transport the silver bricks to a jewellery and goldsmith workshop which had a safe and was secure (see A11 and A12 of Kong’s interview record). Kong should have known that the claimant was very concerned about that batch of silver bricks. Kong’s version is that he was at that time only asked to transport silver bricks to Man Fook Industrial (see A9 and A10 of Kong’s interview record), and that the claimant told him that upon his return from the business trip (i.e. after 8 October) the batch of silver bricks was to be transported to a bonded warehouse in Futian Bonded Area for storage, and that the customer had not yet completed the formalities (see A12 of Kong’s interview record). Why did Kong have to hand the batch of silver bricks to Lee Wai Hoi so urgently? 

17.  It should be noted that one of the purposes for the claimant to produce the temporary receipt is obviously to prove that Kong Wai Ming had entrusted Lee Wai Hoi with the job at a reasonable price. The receipt showed that the processing fees for Mainland customs declaration, storage and the freight totalled $2,000. Kong only handled local transportation and the freight that he charged should be far less than the value of the batch of silver bricks. If the situation was as Kong said and as the claimant agreed, namely that the claimant had not indicated that the matter was urgent and that the goods were to be transported to the Mainland only after his return from the business trip (8 October), then I do not see why he did not first transport the goods to Man Fook Industrial (in order to earn the freight for that leg) before telling the claimant the fees quoted by Lee Wai Hoi and handing the goods to Lee Wai Hoi for transportation after obtaining approval. Why did he instead make a decision of his own volition, thereby exposing himself to the unnecessary risk of being personally claimed against? After consideration, I find what Kong said at his recorded interview about the handling of the batch of silver bricks unbelievable and I will not give it any weight. After consideration, I do not accept that the temporary receipt was drafted and signed in the circumstances described in Kong’s interview record.

18.  The claimant testified that he thought of calling Kong Wai Ming to make enquiries after Kong took delivery of the silver bricks on 7 October, but he did not do so because he went out with his family to have fun and failed to notice that the battery of his mobile phone was flat. After consideration, I find this unbelievable. The claimant’s evidence suggests that he left everything to the care of Kong after the goods were given to Kong and that he did not know what happened. After consideration, I find this incredible.

19.  In my view, the claimant aimed to dissociate himself from the smuggling by giving different accounts at different stages of the batch of silver bricks. I find that the claimant and Kong Wai Ming had, prior to 7 November 2006, discussed how Kong was to fabricate an explanation of the incident to the Customs. After consideration, I firmly believe that what the claimant and Kong said in their interview records about the reasons for purchasing the silver bricks, the transportation arrangement, and the plan that the bricks would be transported from Hong Kong to the Mainland only after the Mainland customs declaration formalities were completed, is incredible and untrue. No weight will be given thereto.

20.  It is undisputed that the claimant bought a batch of 42 bars of silver, which was worth $1,644,167.00, on 5 October 2006 and made payment in cash. The batch of silver bricks was then found hidden in an exiting goods vehicle at 3:48 p.m. on 7 October 2006. The driver Lee Wai Hoi was about to smuggle the batch of silver bricks out of the territory. At that time the driver did not have any document relating to the batch of silver bricks.

21.  The claimant was the owner of the batch of silver bricks and he wanted to transport the goods to Futian Bonded Area on the Mainland. The claimant’s evidence shows that he believed it was necessary to go through formalities to transport the goods to Futian Bonded Area, but the relevant formalities had not been done. The claimant would be the person who would enjoy the bulk of the gain if the silver bricks in question could be successfully smuggled out of the territory and transported to the destination that the claimant had in mind. It should be noted that no insurance was in place for the silver bricks which were of considerable value. How then would the claimant have casually entrusted them to another for handling?

22.  I firmly believe that the only reasonable inference is that the claimant well knew how the batch of silver bricks would be transported out of Hong Kong to the destination that he had in mind. After consideration, I firmly believe that the claimant knew that the batch of silver bricks was being smuggled to the Mainland and that he consented to such act. I firmly believe that the claimant was neither merely negligent nor an innocent owner of the goods.

23.  In his submission, the claimant requested the conditional return of the silver bricks in question on the ground of undue hardship. The claimant alleged that his business did not have a constant monthly turnover and the monthly average profits ranged from zero to tens of thousands. However, he has neither adduced any solid evidence to support the allegation nor provided any specific information on the operation of his company. After consideration, I find [what he said] incredible. The only thing which is certain is that he was able to produce $1.7 million in cash at one go to purchase the silver bricks and he did not take out insurance for them. The remaining sum of $55,833 from the purchase of the silver bricks was kept in the account with Gold Apex Precious Metal. After consideration, I do not think that the forfeiture of the 42 silver bricks in question will cause undue hardship to the claimant.

24.  Having considered the overall evidence, I hold that the claimant has failed to establish on a balance of probabilities any good reason for the complete return or conditional return of the silver bricks in question. After consideration, I conclude that the appropriate approach is to forfeit all 42 silver bricks in question. I make the following order accordingly.”

Grounds of appeal

9. Mr. Wong, SC and Mr. Chan, Counsel for the appellant, have put forward the following five grounds of appeal against the forfeiture order:

“1.  The Magistrate erroneously thought that the appellant bore the burden of proof and adopted a wrong standard of proof.

Particulars:

(i)   In forfeiture proceedings, where the owner of the subject goods is not a convicted defendant, the court must be satisfied that the owner is also culpable before it can order the forfeiture of the articles. Otherwise, the goods should be returned to the owner.

R v CEC Finance Ltd. [1993] 1 HKC 127

      R v Kam Shek Kwong [1994] 1 HKC 681

      R v Shum Wah-wah & Another HCMA 419/1995

(ii)  The appellant herein has not been charged with or convicted of any offence and it is not disputed that the appellant is the owner of the goods (AB page 11, paragraph 2). Therefore, the court must be satisfied that the appellant is culpable before it can order the forfeiture of the goods.

(iii)    Article 11(1) in section 8 of the Hong Kong Bill of Rights Ordinance (Cap. 383) provides that everyone charged with a criminal offence shall have the right to be presumed innocent until proved guilty according to law.

(iv)    When a proceeding involves a substantial penalty the purpose of which is punitive and deterrent rather than compensatory, the proceeding should be regarded as a criminal proceeding for the purposes of the Bill of Rights and the said article 11(1) of the Bill of Rights is applicable accordingly.

Koon Wing Yee v Insider Dealing Tribunal and Another CACV 358/2005 and CACV 360/2005

(v)  The proceedings in the present case were conducted under sections 27 and 28 of the Import and Export Ordinance, Cap. 60. The court is entitled under the said provisions to order unconditional forfeiture of all the articles involved. Such an order is plainly punitive and deterrent but not compensatory in nature (AG v F Gardiner Esq. Permanent Magistrate [1981] HKLR 22, 28; AG v So Lo Kam [1986] HKLR 564). Furthermore, no upper limit is set to the value of the articles liable to forfeiture. The present case involves silver bricks worth approximately HK$1.7 million. It can therefore be seen that the said provisions involve a substantial penalty and therefore the said article 11(1) of the Bill of Rights applies.

(vi)    For the above reasons, in these proceedings the Government (applicant) had the onus of proving beyond reasonable doubt the appellant’s culpability before the application to the court for forfeiture of the goods could be allowed (Koon Wing Yee v Insider Dealing Tribunal & Another CACV 358/2005 and CACV 360/2005).

(vii)   However, the Magistrate erroneously thought that the appellant (claimant) bore the legal burden to prove on a balance of probabilities that there was a good reason for the court not to order the unconditional forfeiture of all the goods (AB page 10, paragraph 2; page 16, paragraph 24). The Magistrate therefore erred in a fundamental point of law.

(viii)  Even if the said case of Koon Wing Yee did not apply to the present case, the Government (applicant) still bore the legal burden of proving on a balance of probabilities the appellant’s culpability and it was not for the appellant to prove it was more likely than not that he was not culpable. Therefore, the Magistrate still erred in law.

R v CEC Finance Ltd. [1993] 1 HKC 127

HKSAR v Chan Sai Tak & Another [1998] 4 HKC 468

HKSAR v Ling Lai Hung HCMA 928/2006

2.   When the appellant was giving evidence in court, the applicant never put to the appellant or pointed out that the appellant had discussed with Kong Wai Ming about how Kong should fabricate an explanation of the incident to the Customs. However, the Magistrate held in his judgment that the appellant had done so with Kong and, on this basis, rejected the appellant’s and Kong’s evidence (AB pages 13-14, paragraph 14; AB page 15, paragraph 19). This constituted a material irregularity.

  Gutierrez v R [1997] 1 NZLR 192

  Lo Chun Nam v HKSAR (2001) 4 HKCFAR 1

  HKSAR v Lo Shiu Kei (羅兆麒) HCMA 453/2003

3.   The magistrate erred in finding, in the absence of supporting evidence, that the applicant [sic] was the person who would enjoy the bulk of the gain if the silver bricks could be successfully smuggled out of the territory to the destination that the appellant had in mind (AB page 15, paragraph 21).

4.   Having rejected the appellant’s version of events, the Magistrate erred in finding, in the absence of supporting evidence, that the appellant knew that the silver bricks would be smuggled into the Mainland and consented to such act (AB page 15, paragraph 22).

5.   To sum up, for the aforesaid reasons, the forfeiture order made by the Magistrate should be quashed; and as there was no evidence whatsoever at trial to prove that the appellant was culpable rather than an innocent owner of the goods, the Court of First Instance should order the unconditional return of all the goods to the appellant.

HKSAR v Chan Sai Tak [1998] 4 HKC 468 at 475E to G.”

Reasons for judgment on appeal

First ground of appeal

10. Having considered the appellant’s evidence, the Magistrate made the following findings:

(i) The appellant had discussed with the driver Kong Wai Ming about how Kong should answer questions from the Customs.

(ii)    The appellant was the person who would take the bulk of the gain from the incident.

(iii)    The Magistrate drew the only reasonable inference that the appellant clearly knew the route by which the batch of silver bricks would be transported out of Hong Kong to the destination that he had in mind.

(iv)    The appellant knew that the batch of silver bricks was being smuggled into the Mainland and consented to such act.

(v)    The appellant was not merely negligent and was not an innocent owner of the goods.

(vi)    The appellant failed to establish on a balance of probabilities any good reason for the full return or conditional return of the silver bricks in question.

11. I do not agree that the Magistrate took the view that the appellant bore any burden of proof.

12. In my view, the Magistrate was correct in assessing the appellant’s evidence on a balance of probabilities. In R. v. CEC Finance Ltd [1993] 2 HKCLR 134, Bokhary JA said at 138:

“… The discretion to order forfeiture being unfettered, the question whether or not to so order is to be approached from a neutral starting point, with both parties on a level playing field, so to speak, and each with the onus of proving on a balance of probabilities any fact which he or it asserts if that fact is not admitted by the opposite party. That is how the question is to be approached. …”

13. In HKSAR v. Chan Sai Tak & Anor [1998] 4 HKC 468, I held as follows:

   “…

(2)    In forfeiture proceedings, the Commissioner of the Customs & Excise Department had to prove a contravention of the Import and Export Ordinance which led to the application …

(3)   If the contravention of the Ordinance was proved, it would be up to the claimant to prove that he was the person who was or would be entitled to make a claim under s 27(5) of the Ordinance as the owner, the agent of the owner, a person who was in possession of the article or a person having a legal or equitable interest in the goods …

(4)    The appellants only had an evidential burden to try to satisfy the court that he was an innocent party and not a party to the wrongdoing which led to the contravention of the Ordinance. They did not have a burden, on balance of probabilities, to prove that they should get their goods back. …

(5)    … There was nothing to show that the appellants were in any way connected with the wrongdoing of the defendant. The order of forfeiture was quashed …”

14. In the said case of Chan Sai Tak, I also mentioned (page 472):

“  If the court is satisfied that the article is liable to forfeiture, but the claimant fails to prove that he is entitled to claim, and no other person appears before the court to make such a claim, then under s 28(6), it is mandatory on the court to order the goods to be forfeited. However, under s 28(7), if the article is liable to forfeiture and the claimant proves that he is a person who is entitled to make a claim, then the court can do one of three things:

1.   forfeit the goods to the Government;

2.   deliver the goods to the claimant subject to any condition; or

3.   dispose of the goods in such manner and subject to any condition specified.

What that means in practice is that the claimant has a legal burden to prove that he is or would have been entitled to make a claim under s 27(5). Under s 27(5), the claimant has to prove that he is either the owner, or the authorised agent of the owner, or a person who was in possession of the article, or a person who has a legal or equitable interest in the article. That is all that a claimant has to prove to sustain his claim for the return of the goods. However, in my judgment, he does have the evidential burden to try and satisfy the court that he is an innocent party and is not a party to the wrongdoing which led to the contravention of a provision of the Ordinance. If the claimant can discharge that evidential burden, then obviously it makes it much easier for the court, hearing the forfeiture application, to rule in the claimant’s favour. That approach is, in my view, consistent with what has been decided earlier on in cases involving applications for forfeiture.”

15. With respect, I do not agree with the submission of Mr. Wong, SC that the court must be satisfied that the owner is also culpable before it can order the forfeiture of the goods. As found by the Magistrate, the appellant was not an innocent owner of the goods. In R. v. Kam Shek Kwong [1994] 1 HKC 681, Kaplan J said:

“… Forfeiture of the property belonging to wholly innocent parties is quite another thing and the discretion to exercise that power should be exercised judicially and with great care. ”

16. In R. v. Shum Wah Wah & Anor (HCMA 419/1995), Gall J said:

“… I also accept … that where a party is innocent, the goods of that party would be unlikely to be forfeited. It is necessary, therefore, for the learned magistrate to consider firstly on the evidence before him whether he is satisfied that the party is wholly innocent or whether on the balance of probabilities, there may be some complicity by that party in the offence which leads to the forfeiture.”

17. As to the submission of Mr. Wong, SC on article 11(1) in section 8 of the Hong Kong Bill of Rights Ordinance (Cap. 383), I am of the view that the Ordinance does not apply because the appellant has not been charged with any criminal offence.

18. Mr. Wong, SC cited Koon Wing Yee v. Insider Dealing Tribunal & Another,CACV 358/2005 & CACV 360/2005 in support of his submission that the applicant bore the onus of proving its case beyond reasonable doubt since the proceedings before the Magistrate were criminal proceedings. In Koon Wing Yee, the Court of Final Appeal concluded that proceedings before the Insider Dealing Tribunal was tantamount to the trial of a criminal case. With respect, I do not agree with the submission of Mr. Wong, SC that that case applies to the present case.

19. I agree with the submissions of Ms. Lam, Senior Public Prosecutor for the respondent, that:

(i) The proceedings before the Insider Dealing Tribunal in Koon Wing Yee was completely different in nature from the present case. 

(ii)   In forfeiture proceedings, any seized article shall be liable to forfeiture whether or not any person has been convicted of an offence (section 27(1) of Cap. 60).

(iii)  As the Court of Final Appeal has pointed out:

“… proceedings do not involve the determination of a criminal charge within the meaning of article 6 unless they are capable of resulting in the imposition of a penalty by way of punishment … ”

(iv)  The long title of the Import and Export Ordinance states that the Ordinance provides for the regulation and control of the activities of import of articles into and export of articles from Hong Kong. The Ordinance does not seek to eradicate those activities, and hence a licensing system has been established. The Import and Export Ordinance is obviously regulatory and protective.

(v)   Under the forfeiture mechanism, even for articles which are no longer of real value, such as a vessel or a vehicle which was damaged in the course of interception, applications for their forfeiture can still be made under this forfeiture mechanism as long as the articles have been involved in the contravention of the provisions of the Import and Export Ordinance. Therefore, the so-called “sanction” is not necessarily severe.

20. In Koon Wing Yee, the Court of Final Appeal pointed out:

“55.    Air Canada v. United Kingdom [26], on which the appellant also relies strongly, was very different from the present case. In Air Canada, an aircraft was seized and forfeited by the British customs authority under a statutory power on the ground that a large quantity of cannabis, a prohibited drug, was found on the aircraft. The aircraft was handed back on the payment by the owner operator of the aircraft of a fine of £50,000 imposed administratively. The Strasbourg Court held that what happened did not involve the determination of a criminal charge and was civil. The administrative procedure was civil in character, being a process in rem against any vehicle used in smuggling. … ”

In my judgment, the decision in Air Canada v. United Kingdom is applicable to the present case.

21. Ms. Lam, Senior Public Prosecutor, also relied on AGOSI v. United Kingdom (1987) 9 EHRR 1. She submitted as follows:

“AGOSI, which was cited in Air Canada, involved the selling and delivery by AGOSI Co. of 1,500 gold coins to X and Y. The contract stipulated that AGOSI retained ownership of the gold coins until it received the payment in full. X and Y issued cheques which were dishonoured, and they were subsequently convicted of attempting to smuggle gold coins into the United Kingdom. The court ordered forfeiture of the gold coins which the British customs had seized. The Strasbourg Court held that the forfeiture proceedings did not involve any criminal element. ”

22. Mr. Wong, SC submitted that even if Koon Wing Yee was not applicable to the present case, it was still for the Government (applicant) to prove on a balance of probabilities that the appellant was culpable, and not for the appellant to prove that it was more likely than not that he was not culpable, and therefore the Magistrate had still erred in law. With respect, I do not agree. As I have pointed out in HKSAR v. Chan Sai Tak & Anor,the Government (applicant) did not bear any burden of proving the appellant’s culpability. In Chan Sai Tak, I pointed out that the applicant [sic] only bore an evidential burden of proving that he was innocent and not a party to the wrongdoing. If the appellant could prove this, the court would very likely refuse the Government’s application for forfeiture of the appellant’s articles.

Second ground of appeal

23. With respect, I do not agree with the submission of Mr. Wong, SC that at trial the applicant had the duty to assert or point out that the appellant had discussed with Kong Wai Ming about how Kong should fabricate an explanation of the incident to the Customs. In my view, the Magistrate was entitled in law to draw an inference on that question. That question was not the only reason why the magistrate rejected the appellant’s and Kong Wai Ming’s evidence. The Magistrate clearly pointed out in his Statement of Findings that he found the appellant’s evidence on certain issues unbelievable.

Third ground of appeal

24. Nor do I agree with the submission of Mr. Wong, SC that the Magistrate erred in finding that the appellant was the person who would take the bulk of the gain from the incident. In my judgment, this finding was amply justified. According to the appellant, he personally provided the money for the purchase of the batch of silver bricks, which he intended to sell to a customer on the Mainland. Had the transaction gone through, all the profits would obviously have gone to the appellant.

Fourth ground of appeal

25. With respect, I do not agree with the submission of Mr. Wong, SC that the Magistrate erred in finding that the appellant knew the batch of silver bricks would be smuggled to the Mainland and consented to such act. Although there was no direct evidence in support, the Magistrate was, in my view, entitled to draw an inference on that question. In giving evidence, the appellant admitted that he did not take out any insurance for the silver bricks which were of considerable value. This being the case, it is difficult to believe that the appellant would have casually entrusted the bricks to someone for handling and that Kong Wai Ming would have decided of his own volition to give the bricks to Lee Wai Hoi when he was unable to contact the appellant and when the appellant had no knowledge of what was going on.

Fifth ground of appeal

26. There is nothing in this ground of appeal which sums up the other grounds in respect of which I have given judgment above.

27. For the aforesaid reasons, I dismiss the appellant’s appeal and affirm the Magistrate’s order that all the silver bricks in question be forfeited.