THE QUEEN v. AU KWOK KWAN

IN THE SUPREME COURT OF HONG KONG

(Appellate Jurisdiction)

MAGISTRACY CRIMINAL APPEAL NO. 1099 OF 1990

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BETWEEN

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JUDGMENT

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1. This is an appeal from a decision of Mr. H.L. Brazire sitting at Tuen Mun whereby on 2nd July 1990 he dismissed an application made by the Appellant for the return of 69,000 watch parts which had been seized on 8th April 1990 pursuant to the provisions of the Import and Export Ordinance Cap 60. The 69,000 parts were contained in 69 cartons which were worth, at the time of seizure, approximately HK$750,000.

2. The Appellant purchased these goods from a Hong Kong seller and he then arranged to have the goods taken to Shenzen where they were to be put together as watches and thence returned to Hong Kong for the purposes of an onward sale to customers in the U.S.S.R. or Vietnam.

3. The Appellant had to get the goods to Shenzen in a hurry and approached a Mr. Tsang with whom he had dealings once before. Tsang said he only had a fishing vessel available and the goods were loaded on a fishing vessel which was intercepted on the 8th April. The 3 men on the boat were all Chinese and they were arrested, charged and pleaded guilty to attempting to export unmanifested cargo from Hong Kong. Each was sentenced to 6 months imprisonment. The maximum fine for the offence is $50,000. It was accepted that no question of evading duty arose and no license was required to take the goods into China.

4. It is clear that the learned Magistrate considered this case very carefully and conscientiously. He had cited to him a number of cases. He concluded that there were a number of unusual feature in this case, some 13 in all, and he was satisfied that they were suspicious and that there was "skullduggery at work". He concluded that those on board the vessel, as well as those behind it, should suffer.

5. Mr. Rodway, Q.C. with whom Mr. Macrae appeared for the Appellant submitted that the Magistrate was not justified on the evidence to conclude that these 13 features were in fact suspicious. He submitted that because the Magistrate relied on these factors, which he submitted were not suspicious, the exercise of discretion was flawed and that I should look at the matter afresh. Further or alternatively, he submitted that the forfeiture of all of the goods worth $750,000 was a grossly disproportionate penalty in the circumstances of the case.

6. I should have added that after the Magistrate listed the 13 suspicious factors he said this:

"All in all, an astonishing series of suspicious factors; none of which singly give rise to a presumption of blamelessness".

7. In my judgment, the learned Magistrate was perfectly entitled to come to the view that forfeiture was appropriate because forfeiture can be, and is, ordered even though the owner of the goods has not committed a criminal offence. Nevertheless, owners of goods cannot wash their hands of the provisions of the Import and Export Ordinance. The forfeiture provisions are there to underpin the legislation and if owners wish to avoid the risk of forfeiture, and the costs involved in trying to get goods back, they should take certain basic steps to ensure that the Ordinance is not breached by those to whom they have entrusted the carriage of the goods. However, even if there is an element of fault on the part to the owner of goods, it does not necessarily follow that forfeiture must be ordered or that if forfeiture does follow it should be of all the goods in question. The wide discretion should not be unduly circumscribed. Each case must be considered oh its merits.

8. When I look at the 13 suspicious factors given by the Magistrate I must say that some of them do not, to my mind, bear that connotation. For instance the first one is that the Appellant used someone to transport the goods whom he had only used once before. At the worst I would navy said this is a neutral point. Another view is that it is less suspicious than using someone whom he had never used before. Another of the points is that a fishing vessel was used but the Appellant was told that there was no motor vehicle available and that is why a fishing vessel was used. The third matter is that the goods were not insured. If a businessman wishes to bear the risk himself I did not see why, in this sort of transaction, the absence of insurance for a very short voyage is suspicious. The Magistrate thought it suspicious that the Appellant entered into this contract in an individual capacity and not through a limited liability company. I would have thought that was a neutral point but I can see how it can be said that it might be more suspicious if he had used a limited liability company, perhaps a 2 dollar company. The Magistrate relied on the fact that there were no lights on the fishing vessel. However, there is no evidence at all that the Appellant knew this or sanctioned it. I fail to see how it could be said that this is a factor that can be used against him.

9. The Magistrate concluded that there was 'skullduggery at work'. We know that the Ordinance was breached by the 3 persons on the vessel. I assume by skullduggery he means that in some way the Appellant was involved in a criminal offence. He has not been so charged. He has not been charged with conspiring to evade the Ordinance. It may be however that by skullduggery the learned Magistrate meant that the Appellant shut his eyes to what was happening or was likely to happen.

10. I think the Magistrate's criticism of the Appellant was overstated on the evidence before him. The Appellant gave evidence as did the seller of the goods to the Appellant and as did the master of the fishing vessel. Although I accept, of course, that a Court does not have to believe what a witness says nevertheless there is a limit beyond which it is not safe to go without evidence. For instance there may be thousands of sale of goods transaction taking place in Hong Kong without insurance. I fail to see how the learned Magistrate could have concluded on the evidence before him that such was 'very unlikely'.

11. As in my judgment the case against the Appellant has been overstated by the learned Magistrate I am entitled to look at the matter afresh. I must immediately state that the forfeiture of goods worth $750,000 at the time of seizure is a grossly disproportionate penalty bearing in mind the maximum financial penalty when the Ordinance is $50,000 and that there was no evasion of duty in this case nor was there any failure to obtain any appropriate licenses.

12. It was for all the above reasons that I announced at the end of the hearing that I proposed to vary the order of the learned Magistrate by ordering the return to the Appellant 70% of the goods and thus forfeiture of 30%. This penalty when taking into account the inevitable deterioration in the goods since April is a sufficient penalty and is one which I am sure will bring home to the Appellant and to others that owners of goods ignore the provision of this Ordinance at their peril. If an owner can be shown to have taken steps to ensure compliance by the carrier of goods then a forfeiture order against him, in the event of breach by the carrier, will be substantially less likely.

13. This appeal is thus allowed to the extent that I order the return of 70% of the goods seized.