HKSAR v. SEGYUNG HONG KONG LTD.

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY CRIMINAL APPEAL NO. 953 OF 1997

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J U D G M E N T

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1. The Appellant in this case appeals against fines of $798,000.00 imposed in respect of sixteen summonses. The summonses related to the importation of video controllers and microprocessors on 8 occasions between 30th June 1995 and 26th January 1996. The Appellant imported a quantity of video controllers and microprocessors into Hong Kong from the United States and Malaysia. An investigation by Customs and Excise revealed that the Appellant had not applied for import licences from the Trade Department prior to the importing of the said goods. The goods were imported without a valid licence.

2. After importation, the microprocessors were destined for local consumption and re-exportation to South Korea under the cover of proper export licences. However, the Appellant failed to apply for export licences in respect of a quantity of video controllers on 3rd August and those goods were exported without a valid licence.

3. In the same investigation it was revealed that the Appellant, instead of approaching the Trade Department for the issue of retrospective licences, as he could have done, applied for 11 import licences from the Trade Department for the importation of 8 consignments. To obtain the licences in 7 of those applications for import licences, the arrival date was falsely declared in order to conceal the fact that the goods had already been imported.

4. The total value of the goods in question was HK$4,031,943.00.

5. The penalties imposed are considered by the Appellant to be excessive and too harsh in the circumstances of the case and it was submitted that the Magistrate failed to consider the mitigating factors namely that the contraventions were unintentional and not deliberate; that the articles were common computer components legitimately purchased; that licences would have been readily granted had a proper application been made; that no harm was caused, or intended to be caused, to Hong Kong's trading reputation; that the articles were almost obsolete by the time the matter came before the learned Magistrate; that the amount of profit at that stage as suggested to the Magistrate was $161,000.00 in total; that the Appellant afforded co-operation to the officers of the Customs and Excise and that Appellant's good character and pleas of guilty were relevant.

6. It was also suggested that the Magistrate simply followed some arithmetical formula on penalty without sufficiently regarding the individual facts of the case and the impact on the Appellant of such financial penalties. The general ground was that the combined sentences resulting in the fine of $798,000.00 in total were too harsh in the circumstances of the case and disproportionate to the relatively trivial nature of the allegations.

7. The Magistrate considered her reasons for sentence very carefully. There was no dispute about the facts which had been agreed. The Appellant chose not be represented before the Magistrate and although at the appeal hearing it was suggested that Appellant's authorised representative may have had language difficulties, it does not appear from the Magistrate's findings or from the transcript that they were of a nature to preclude the Magistrate's knowing what the mitigation was at the time. Certainly, the Magistrate took account of the clear record and various matters that were put forward including the fact that the Appellant did not know that retrospective licences should be applied for, that business was not so good and that the products were not strategic items from that year which was 1997.

8. The maximum penalty on summary conviction for these offences is the fine of $500,000.00 and imprisonment for 2 years. In considering the sentences, the Magistrate had regard to the guiding cases of R. v. Mak Shui-cho and Son Ltd. [1987] HKLR 882, the A.G. v. Marvels Clothing Co. A/R 7/84 and also the A.G. v. Eagles Eye Hong Kong Ltd. [1987] HKLR 839 which set out guideline fines as 40% of the value of the goods. She also had regard to the R. v. Pac-Fung Feather Co. Ltd. [1997] 1HKC 503 where it was held that:

"Each case must be determined according to its merits."

The Magistrate also bore in mind the principle of the removal of profit with an additional penalty to reflect the Appellant's culpability should be followed.

10. Today, Mr. Harris for the Appellant, has gone into great detail over the various grounds of the appeal. He referred me to the case of R. v. Video Technology Computers Ltd. MA 861/1991 where Duffy J. took into account what he considered powerful mitigating factors in relation to a case which Mr. Harris says is similar to this one but which in fact is not. However, for the record the grounds that Duffy J. took into account were the fact there had been no deliberate deception; no harm caused to Hong Kong's trading reputation; that that Appellant had made no extra profit speak of from the mistake; there was full co-operation with Customs and Excise and documents had been put forward to assist and a licence would have been readily obtainable.

11. I do not regard that case as particularly helpful nor do I consider that the Magistrate did not have those factors before her mind. The only matter advanced today that was not before the Magistrate, was the actual pre-tax profit of the company for 1996. That was put before the court today and stated to be $140,225.00.

12. I have considered the facts of the case. I have considered the additional mitigating factors, such as they are, that have been urged by Mr. Harris today. I am satisfied that the Magistrate did not adopt a rigid arithmetical approach to this. The total fines imposed were just under 20% of the value of the goods. The consignment of goods was a very valuable consignment and I can see nothing wrong or inappropriate about the level of the sentences imposed by the Magistrate. The appeal against sentences is dismissed.