THE QUEEN v. LO YAU-WAI

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JUDGMENT

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[A textile export quota allocation is property capable of being stolen.]

Roberts, C.J. -

1. The defendant faced eighteen charges of theft and was convicted on nine of them. Those charges of which he was convicted each involved the theft of a textile export quota belonging to May Fung Alliance Limited. Paired with each of these nine charges were nine further charges relating to the theft of the proceeds of the sale of these quotas by the defendant.

2. In view of his finding of guilt on the nine charges of the theft of the quotas, the judge made no finding in relation to what he described as ''the nine alternative charges".

3. The defendant at all relevant times was an employee of the May Fung Alliance Limited Company ("the Company") which was engaged in the textile business and which, during the relevant period from December 1982 to April 1983, owned textile quotas allocated to it by the Trade Department of the Hong Kong Government.

4. It was the case for the Crown, and there was ample evidence to support it, that the defendant had obtained the approval of Mr. LAM Tuck-wah; the managing director of the Company, to the sale to transferees of portions of the Company's textile quota. Having secured his permission and his signature on the requisite application for transfer of quota form, the defendant altered the quantities specified in the application form, so that the transferee was paying for a larger allocation of quota than that which Mr. Lam had authorized.

5. Thus, the amount received by the defendant from the transferee, for the enhanced quota, was greater than the price for the quota authorized by Mr. Lam. The proceeds of the sale of these quotas, with the exception of the lesser amount of the authorized transfers, for which the defendant accounted, was received by the defendant and converted to his own use.

6. The defendant gave no evidence and called no witnesses. Counsel appearing for him before us admitted that the grounds which he was putting forward to us were technical ones and that he could not argue, if those failed, that there was insufficient evidence to justify the judge in reaching the conclusion which he did.

7. The way in which the textile quota system works was set out in outline in a long statement of agreed facts, which was put before the trial judge.

8. Under the control system, which is operated by the Department of Trade in Hong Kong, all textiles to be exported from Hong Kong need a valid export licence. In relation to some countries there are restraint limits on the quantity of classes of goods to be exported to them. These restraint limits are usually the result of individual treaties entered between Hong Kong and the importing country.

9. Hong Kong is permitted by those importing countries to operate internally a control system to ensure that the relevant treaty is fully complied with. The Department of Trade, at the beginning of each accounting period, will divide up the permitted export limits of goods ;in the class concerned among those manufacturers of such goods which have applied to it for a quota. This quota takes the form of a licence. This contains the quantity in grams, square yards or pieces, which that manufacturer is permitted to export during the coming period.

10. In practice, during the quota period, some manufacturers will be unable to use the full amount which has been allocated to them, while others will use it up quickly and want more. Since the total quota cannot be exceeded, by virtue of the restrictions imposed by treaty, a market has grown up, with the approval of the Department of Trade, whereby those to whom quotas have been allocated, may sell part of them to others. This transfer of quota, as it is called in the official documents issued by the Department, is subject to the approval of the Trade Department; a control which is necessary, for a number of reasons, among them the need of the Department to ensure that quotas do not fall into the hands of persons who had shown themselves unreliable in the operation of the system.

11. Counsel for the defendant argued that the possession of a quota could not amount to ownership in law of anything, because as I understood his argument, it was necessary at a later stage for the possessor of the quota to apply for export licences. He also drew attention to the fact that the quota could be cancelled, that transfer could be refused and that, on the bankruptcy of the holder, the allocation would revert to the Department of Trade.

12. It does not seem to us that any of these conditions upon which a quota is issued, detract from the fact that the allocation to a company of a quota gives it something which is of substantial value which, subject to the conditions mentioned, it alone can use. It is true that the mere possession of an allocated quota, by itself, is not sufficient for the company to be able to export; to do this it must also obtain an export licence. But it cannot apply for a licence unless it is, first of all, in possession of a quota.

13. It was also suggested that the quota does not fall within the definition of "Property" in section 5(1) of the Theft Ordinance, which reads -

"'Property' includes money and all other property, real and personal including things in action and other intangible property."

14. We have no doubt that a quota falls within the phrase "things in action and other intangible property". It is at its narrowest a piece of paper, but so is a cheque. It is a document which confers valuable rights upon its holder. It's value is apparent from the fact that, for a small portion of the company's quota, the defendant obtained large sums of money.

15. If a transaction took place between the owner of a quota and a purchaser of it and either party were to default, an action to enforce rights under that sale would properly lie. Because the holder of the quota must obtain permission to transfer it and it is subject to cancellation by the department does not mean that he does not own it. We are satisfied that a quota is property within the meaning of section 5(1) of the Theft Ordinance.

16. There was abundant evidence which entitled the judge to reach the conclusion which he did and we do not see substance in the arguments of Mr. Finny Chan on the technical grounds.

17. We refuse the application for leave to appeal against conviction. Application for leave to appeal against sentence out of time has been abandoned.