R. v. CHENG KAI and Another

IN THE SUPREME COURT OF HONG KONG

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO. 753 OF 1994

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J U D G M E N T

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1. The two appellants were convicted after trial before a Magistrate of attempting to export unmanifested cargo, contrary to s.18(1)(b) of the Import and Export Ordinance, Cap.60 and s.81 of the Interpretation and General Clauses Ordinance, Cap.1. They were sentenced to 12 months imprisonment. They now appeal against conviction and sentence.

2. At about midnight on 1st February 1994, some Customs Officers went on board a vessel "Tong Fa" which was berthed at the Western Anchorage and inspected the containers on the vessel. They also seized the manifests relating to these containers. There were eight containers which were shipped by a Manwall Company of which the two appellants were partners. The manifests relating to these eight containers described them as pallets whereas in fact five of the containers contained electrical appliances. In the afternoon of the same day, Customs Officers also went to the address of the two appellants. They seized some documents including shipping orders and packing lists relating to the shipment of this cargo.

3. Investigations made by the officers revealed that about one or two weeks before that, a Miss Chan Sau Wai, staff of the shipping company, Danfast, had received enquiries on the telephone from the 2nd appellant as to the shipping date and other particulars. She informed the 2nd appellant that the vessel would be expected to leave Hong Kong on 1st February 1994 as soon as all the goods were unloaded and new goods were loaded on board. She also informed the 2nd appellant that the deadline for delivery of goods for loading was 29th January 1994.

4. According to Miss Chan, the usual practice was this. A shipper would contact the shipping company asking for the departure date and the availability of space on the vessel. She would then accept the booking and issue a shipping order to the shipper. The shipper would then obtain the required number of containers, pack the goods into the containers and return them to the godown by the deadline for delivery. The shipper would also fill in a shipping order and hand it over to the shipping company. The shipping order would contain a description of the goods packed into the containers. Based on the information set out in the shipping order, the shipping company would prepare the necessary bills of lading and the manifests showing the details of the shipment.

5. Miss Chan testified that the 2nd appellant initially reserved space for 12 containers. Subsequently it was changed to eight containers. She confirmed that shippers frequently changed instructions as they were entitled to do so. She said that the practice was that she would tender the manifests to the Trade Department for declaration within 14 days after departure of the vessel. The shipper would, therefore, have such time to either confirm the instructions or make the necessary amendments upon the payment of a charge of $200. However, she added that she had never come across a complete change in the description of the goods to be shipped.

6. Another witness called by the prosecution was Mr Lee Kit Chiu who was a representative of a shipping agent. The 2nd appellant was his customer. He confirmed that he was asked to do the physical loading of three of the containers according to the instructions of the Chinese customer.

7. The two appellants had also given cautioned statements to the Customs Officers. In the cautioned statement of the 1st appellant, he admitted that he knew that the containers were carrying electrical appliances, but did not know whether there were pallets inside or not. He was asked by the 2nd Appellant to declare the goods as pallets for export and he had agreed to do so. However, he had asked the customers to officially send a letter confirming their request to declare the cargo as pallets. But up to the time of arrest, the customers had not yet done so. He further pointed out that he did not charge the customers any additional fee for declaring electrical appliances as pallets for export. The company would receive the same profit whatever the declaration was.

8. In the 2nd appellant's cautioned statement, he admitted that he had declared in the shipping order that the eight containers were carrying pallets but they were in fact air-conditioners and electrical appliances. He explained that his customers had placed an order for the shipment of a quantity of electrical appliances. He telephoned the shipping company to reserve space and arranged for the appliances to be shipped to the Mainland. His customers had notified him that the declaration on the shipping order was to be pallets.

9. The 2nd appellant also gave evidence at the trial. He said that in January, his customer Mr Cheng had asked him to buy five containers of electrical appliances for delivery to China before the Chinese New Year. He had ordered such goods. His customers told him that there would be another seven containers of pallets. He therefore tried to book shipping space for 12 containers by ringing up Miss Chan of the shipping company. However at a later stage, his customers informed him that instead of seven containers, there would only be three. These containers were to be physically loaded by another person Mr Lee Kit Chiu who was PW3. He admitted that in the shipping order, the goods were described as pallets. He said that he did so because he knew that three of the containers were to contain pallets. He thought that the shipping order form was merely a formality to ensure shipping space at that time, and that this could be subject to changes. He received a fax from the Chinese customers instructing him to declare them temporarily as pallets pending their instructions and the issuance of a licence for the electrical appliances from the Chinese authorities. He had chased after the Chinese customers by telephone for the particulars of the other three containers. He had prepared a packing list (P-15) which was to be sent to the shipping company for the purpose of amending the manifest upon receipt of the particulars of the three containers. When these particulars were not forthcoming, he made enquiries with the shipping company as to the departure time of the vessel. He was informed that the departure was to be delayed because of engineer troubles. That was on the morning of 1st February 1994. In the afternoon, Customs Officers arrived at his office and seized all the documents. It was the appellants' case that there was no intention to make a false declaration on the manifest. He had always intended to have the goods properly described when the details of the goods arrived from his customers. However, they did not arrive before he was arrested.

10. A number of grounds of appeal had been canvassed by leading counsel for the two appellants. The first ground was that the learned Magistrate had erred in applying the decision in R. v. Lau Sai Wai [1985] HKLR 423. In his written submissions, counsel seemed to suggest that the learned Magistrate was wrong to hold that proof of mens rea was not required for the completed offence. He cited the learned Magistrate as saying at pp.52 - 53 of the Appeal Bundle :

"This is not to say that it must prove an intention to export unmanifested cargo. The offence is complete when it is proved that the cargo was unmanifested."

He submitted that the learned Magistrate had a misunderstanding of the law and its application in regard to strict liability. Counsel argued that it was the intention behind the act which categorised the act as lawful or unlawful. I note however that counsel did not seek to submit that the case of Lau Sai Wai was wrongly decided.

11. It is clear that the offence created by section 18 of the Import and Export Ordinance, that is, exporting unmanifested cargo, is an offence of strict liability. (See Lau Sai Wai [1985] HKLR 423, Lui Tak Hoi, unreported, Magistracy Appeal No.1 of 1993, C.A.). As such, it is not necessary to show that a defendant of this offence had intended that the cargo exported by him was to be unmanifested. Apart from showing that the cargo was not declared or properly declared in the manifest, the prosecution is only required to prove that he intended to and did export the cargo, that is to say, proof of the actus reus that he had exported the cargo. I think it is of vital importance to distinguish between an intention to export (which is part of the actus reus of export) on the one hand and the knowledge or intention that the cargo exported is unmanifested or falsely described in the manifest (which is a mens rea which is not required for a strict liability) on the other.

12. With regard to an attempt to commit an s.18 offence, it is necessary for the prosecution to show that a defendant had done acts which are not only preparatory but also immediately connected with the act of exporting the cargo and were intended to and did constitute part of the act of export. In my view, with respect to the learned Magistrate, this was exactly what he was referring to in his decision. Since it is not disputed that the manifest in respect of the cargo in the present case was indeed wrong, the issue to be dealt with is whether the appellants had done acts which amounted to an attempt to export the cargo in question. This includes of course their intention to carry out those acts. This is not the same as the intention to export unmanifested cargo. If, however, there is evidence that the appellants also had an intention to export unmanifested cargo (as opposed to the intention to export cargo), that would go a long way in establishing that they had attempted to commit an s.18 offence. I do not think the learned Magistrate could be criticised for taking the approach which he did.

13. The second ground of appeal was that the learned Magistrate had erred in fact and in law in ruling that the appellants' conduct amounted to an attempt to export. It was submitted that the Magistrate had erred in holding that they had caused the exportation of the eight containers. It was pointed out that the evidence was that the 2nd appellant had only dealt with five of the containers leaving the other three to be handled by PW3. Counsel also argued that the Magistrate had erred in law and in fact in holding that the conduct of the 2nd appellant amounted to more than preparatory acts and constituted an attempt to export unmanifested cargo. Counsel submitted that the Magistrate also erred in holding that the appellants never had any intention of providing a proper manifest. It was pointed out that the basis of his finding was mistaken and contrary to the facts. It was submitted that there was clear evidence that the appellants had the intention to properly describe the cargo in the manifest. Counsel relied on Exh.P-4 and P-15. It was pointed out that the appellants had deliberately left out a space for completion in P-15 and that this indicated that he had the intention to give a correct description. Counsel also relied on P-17 and P-18 as showing that the Chinese customers had confirmed that they had asked the appellants to describe the cargo as pallets on a temporary basis and that without any proper import licence into China, the cargo simply could not be imported into China lawfully. It was argued that the Magistrate had erred in failing to take into account the effect of the positive steps taken by the 2nd appellant in rectifying the situation before the departure of the vessel.

14. If I understand counsel correctly, the arguments under this ground had two limbs. First, the Magistrate was wrong to hold that there was sufficient evidence of an attempt on the part of the appellants. Second, since there was evidence that the appellants had the intention to properly describe the manifest and had taken steps to do so, this would go to show that there was no attempt on the part of the appellants.

15. In the present case, the appellant was approached by the Chinese customers to obtain supplies of electrical appliances. They had purchased these goods for the purpose of delivery to Shantou in China. The 2nd appellant, to the knowledge of the 1st appellant, had booked shipping space for a certain number of containers, be it 12 or 8. They obtained containers for the packing of these electrical appliances. Electrical appliances were indeed packed into at least five containers. The appellants had filled in the shipping order and returned it to the shipping company with the containers. In the shipping order, these containers of electrical appliances were however described as pallets. This, of course, was not correct. The shipping order was used to prepare the manifest. The containers were delivered to the shipping company. The appellants were told initially that the deadline was 29th January and that the vessel would sail on 31st January. It was due to "engineer troubles" (which was in fact an excuse for the Customs Officers to inspect the vessel) so that the sailing date was postponed to 1st February.

16. The test for attempt has been "whether an accused's last act in furtherance of his design is of such a kind that it is intended to form and does form part of a series of acts which would only constitute the actual commission of the substantive offence were it not interrupted". In these circumstances, I am quite satisfied that the learned Magistrate was entitled to hold, as he did, that there was ample evidence of acts which were more than preparatory to the exporting of these containers. It was the appellants, in every sense of the word, who caused the cargo in question to be exported. They clearly wanted and intended the cargo to be exported. I am also satisfied that the learned Magistrate was right in holding that the conduct of the appellants was immediately connected with the exporting of the cargo and formed such last acts which would only constitute the actual commission of the offence of exporting unmanifested cargo if the police had not come in on 1st February 1994.

17. With regard to the three containers which were loaded and packed by Mr Lee, PW3, it is also clear that the appellants were responsible for booking the shipping space, filling in the shipping order and making arrangements with the shipping company. In any event, I think it is sufficient that at least five containers were arranged to be exported by the appellants.

18. The second limb of counsel's arguments was, in effect, this. The appellant had all along the intention to make a proper description in the manifest but had failed to do so because they were either misled or let down by the Chinese customers and hence they should not be guilty of an attempt to export unmanifested cargo even though the act (or actus reus) of an attempt had been proved. In my view, this is a subtle and indirect attempt to revive the argument which had been put at rest by the Court of Appeal in Lai Sai Wai. The Court of Appeal decided that mens rea is unnecessary for an attempt if the substantive offence does not require it. Exporting an unmanifested cargo, contrary to s.18 of Cap.60, is a strict liability. It means, therefore, that a person is guilty of the offence if he exports cargo which is not properly manifested notwithstanding that he might have failed to do so because of, for instance, some inadvertence on the part of his staff with or without his knowledge. The fact that he can prove that he has all along intended to do it properly is not relevant to liability. It is only a mitigating factor. It would follow from Lai Sau Wai that if he has done all the preparatory acts which are immediately connected with exporting the cargo but has failed to make a proper manifest, he is still guilty of an attempt. It would also seem that the evidence which was relied upon by the appellants to show that they had all along the intention to make a proper manifest, even if it was believed by the Magistrate, is not relevant. The important issue is whether there was sufficient evidence of an attempt. As I said, there was ample evidence. I do not think the second ground of appeal can succeed.

19. The third and fourth grounds of appeal can be dealt with together. Counsel submitted that the learned Magistrate was wrong to conclude that the appellants had no intention of making a proper and correct manifest and that they had the intention to export unmanifested cargo. The relevant part of the judgment of the learned Magistrate relating to this aspect is as follows :

"It is clear from the evidence that neither D2 nor D1, who left what was to be done to his co-defendant having agreed with him beforehand, took any steps to provide the correct manifest to Danfast, or even a part of the correct manifest. Indeed the evidence is that they never had any intention of providing a proper manifest, despite D2's protestations to the contrary.

I say this because officers of the Customs & Excise Department seized documents from Man Wall's office on the 1st February 1994 which proved the defendants' intention."

The learned Magistrate then referred to P-4 and P-15. He continued :

"Each of these lists declares that the five containers which D2 admits were packed by him, as opposed to the three he claims were packed by his customer, contained only 1134 air-conditioners and 129 laser disc players. This is to say, even accepting D2's explanation, that he intended to declare on the manifest only 50% of the air-conditioners that Man Wall was exporting to China."

20. Counsel drew my attention to the fact that the learned Magistrate had made a wrong calculation and failed to take note that the air-conditioners in question were of the split type. This means that each set of air-conditioner comprised an indoor unit and an outdoor unit. The charge sheets referred to 1134 sets of indoor and outdoor air-conditioners whereas the learned Magistrate referred to only 1134 air-conditioners. This gives rise to an impression on the pat of the learned Magistrate that even P-15 only disclosed 50% of the air-conditioners.

21. With respect, the learned Magistrate did not seem to be correct in referring to 50% of the air-conditioners. It is quite clear that the air-conditioners were in sets of two pieces each, one being the outdoor unit and the other an indoor unit. It appears that P-4 and P-5 were seized by the police in the afternoon of 1st February 1994. P-15 shows that the appellants had set out the correct contents, i.e. electrical appliances, contained in the five containers and had left blanks for the three containers which were packed by PW3. These documents may suggest that the appellants had already prepared this document before the police arrived. The existence of this document may throw light on whether the appellants had any intention of ultimately making a proper manifest within the usual period of grace of 14 days after the departure of the vessel. However, that is not the only piece of evidence on this issue. It cannot be said that the learned Magistrate had only relied on P-4 and P-15. The appellants knew that 5 out of the 8 containers contained electrical appliances. The excuse that they were described as pallets as a matter of convenience and that this could be changed at a later stage clearly cannot be accepted. It is unbelievable that a shipper would knowingly put down a description which is completely different simply because it can be changed later. The explanation that the appellant declared the cargo as pallets according to customers' instructions knowing that this was incorrect is, to say the least, highly suspicious. They knew the vessel would leave on 1st February (as it would have if it had not been delayed by the Customs Officers) and they were content that the cargo would also leave with an entirely wrong description leaving it to be changed later. Afterall, they were responsible for shipping the cargo. Having heard all the evidence, the learned Magistrate rejected the appellants' evidence and found that they had no intention to declare a correct manifest. I do not think it can be said that he had come to the wrong conclusion.

22. In any event, in view of the fact that the offence of which the appellants were convicted were of strict liabilities, the fact that there might be some intention to correct it at a later stage before it was too late does not constitute a defence. At best, it would be a good mitigating factor.

23. For the reasons which I have given, I take the view that the learned Magistrate was correct in coming to the conclusion which he did. I do not think the convictions are in any way unsafe or unsatisfactory. The appeals against conviction are therefore dismissed. I shall hear counsel on the appeal against sentence.

(Submissions on sentence)

Appeal against sentence

24. I have set out the facts in my judgment regarding the appeal against conviction. I must say at the outset that I do not think in principle that there is any difference between a case where there was no manifest and a case where the manifest made was a false one. However, I do accept that this is not an ordinary case of smuggling where cargoes or containers were shipped very secretly by speed boats in the middle of the night to China. On the other hand, I agree that the success rate of such an operation as in the present case would be much higher. The proper procedure appeared on the face of the documents to have been properly followed and yet the most important document were incorrect.

25. There are authorities to the effect that in cases of this nature, the usual tariff would be an immediate custodial sentence, and the sentence would depend on the quantity or the value of the goods and, of course, the mitigating circumstances.

26. One thing which I notice in this case is that the learned Magistrate in sentencing the Appellants described the value of the cargo to be $13.4 million. It appears from the documents that the invoiced value of the 5 containers of electrical appliances in respect of which the manifest was incorrect stated that it was only to the region of about $5 million, which was much less than what the learned Magistrate had in mind. Furthermore, I see that there is no evidence of any actual benefit to the appellants. They might have but there is no such evidence. As a matter of fact, according to the cautioned statement of the 1st appellant, his company, or he and the 2nd appellant, would receive the same profit whatever the declaration was, be it for electrical appliances or pallets. I would take that into consideration.

27. The other matter I take into account is that a proper licence was obtained very shortly after the arrest. It means that the cargo could then properly be imported into China. Counsel submitted that without the proper manifest and the necessary licence, there would be no way to obtain delivery of the goods. There is no fianancial loss to Hong Kong or even China. In the circumstances, I would accept that for the purpose of mitigation.

28. I take into consideration also the financial loss to these two appellants in the present case. I also take note of their personal circumstances. I think in the circumstances it does appear to me that the sentence of 12 months' imprisonment was on the high side even if the value of the goods had been $13 million. Bearing in mind all the matters which had been urged upon me, I would allow the appeal, set aside the sentence and substitute a sentence of 6 months' imprisonment in respect of the 2nd appellant and 3 months' imprisonment in respect of 1st appellant. I think there are also circumstances to persuade me to suspend the sentences. And I suspend the sentences for 2 years. I think the fact that they have the prison doors clanging behind them would be sufficient deterrence for them in future.