THE QUEEN v. LEE KAI CHEUNG

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H E A D N O T E

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IMPORT & EXPORT ORDINANCE, CAP 60 - FALSE DECLARATION - GOODS SHIPPED TO SPAIN AS BONA FIDE DESTINATION - FAILURE OF BUYER TO ACCEPT - ON ARRIVAL IN PORT GOODS REROUTED TO PHILIPPINES - GOODS NOT "EXPORTED" TO SPAIN.

IN THE HIGH COURT OF JUSTICE

HONG KONG

MAGISTRACY APPEAL NO. 252 OF 1988

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J U D G M E N T

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1. The appellant was convicted by Mr White at South Kowloon Magistrates Court of making a statement in writing Which was false in a material particular, contrary to S.36(1)(c) of the Import and Export Ordinance, Cap. 60. He was fined a total of $100,000, payable within three months, and sentenced to six months imprisonment in default. This is the first prosecution of its kind in Hong Kong.

2. The facts are not in dispute. The appellant is an exporter of textiles. In July, 1985, he shipped a consignment of goods under licence to Spain. Before the ship reached port, the appellant issued instructions that the goods should not be discharged in Spain, but should be forwarded to Manila. It is accepted by the respondent that the change of plan was caused by the English buyer's refusal to accept the goods and that, at the time of shipment, the appellant intended that they should be discharged in Spain. It is not clear whether they were off-loaded in port and stored in a warehouse, or whether the same ship carried them to Manila. The former is more likely, but it matters not. The goods arrived in the Philippines on 14th October.

3. In anticipation of the entry of Spain and Portugal to the EEC in January, 1986, the Trade Department sent a notice to exporters, which advised that quotas for those countries would be required in 1986 and would be allocated on the basis of shipments licensed between July, 1984 and June, 1985.

4. Attached to the notice was a blank return form, which exporters were asked to submit to the department not later than 16th December 1985, if they wanted quotas for the following year. Details of all shipments to Spain and Portugal in 1984/85 were required. The form was headed "Export of Textile Products to Spain and Portugal".

5. On 14th December the appellant completed signed four such forms in respect of the goods that had reached Manila in August. The forms contained full particulars of the consignment and included declarations that the latter were true and correct. At the top left hand corner of the form the appellant had stated that the market for the goods had been Spain.

6. The only ground of appeal is that the magistrate erred in ruling that the appellant had not exported the goods to Spain. "Export" is defined in Section 2 of the Ordinance as "to take, or cause to be taken, out of Hong Kong any article other than an article in transit". Mr. Raffell, for the appellant, submits that the material time should be the date of exportation from Hong Kong; since Spain was the bona fide destination at that time, the goods were exported to Spain. To which argument, Mr Harris for the Crown, replies that it could scarcely be maintained that the goods had been exported to Spain if the ship had sunk in mid-ocean.

7. Counsel also relies on R. v Smith⁽¹⁾ in Which it was held that :-

"....for the purpose of the Customs and Excise Act 1952, in deciding whether proibited goods retained within the customs area were imported into the United Kingdom, no distinction was to be drawn between importation and unloading, and therefore, although the cannabis had merely been transferred from one aircraft to another, it had been imported into the country when the aircraft from Kenya landed at Heathrow and had been exported when placed on board the aircraft bound for Bermuda."

8. Mr Raffell submits by analogy that, since these goods entered Spanish territorial waters, they must be taken to have been imported into Spain, even though they did not go through customs in that country. If that is right, he argues, they were exported to Spain.

9. In Smith, however, as Mr Harris points out, the court was concerned with the statutory definition of "import", the time of which was by s.79 (2) of the Customs and Excise Act 1952, deemed to be "the time when the aircraft carrying (the goods) lands in the United Kingdom or the time when the goods are unloaded in the United Kingdom, whichever is the earlier. This case, therefore, is not very helpful.

10. Mr Harris submits that "import" and "export" are two sides of the same coin. "Import" is defined in the Ordinance as "to bring, or cause to be brought, into Hong Kong any article other than an article in transit". Since the goods were in transit in Spain, he argues, they were not imported into Spain and therefore were not exported to that country.

11. When the appellant made these declarations, he was well aware of their purpose. He did not have to make them. He did so, as advised by Government, in order to qualify for quotas in 1986. The fact that he did not use the quotas subsequently issued to him, because of the financial collapse of his buyer in England, is irrelevant.

12. The appellant had a licence to export these goods to Spain. Spain was the market stated on the declaration. When the appellant made this declaration, he well knew that the goods had gone to the Philippines and that that was their final destination. In my judgment it would be just as absurd to say that they had been exported to Spain as it would be to say that they had been exported to a port Where the ship had called en route. See R. v Wong Man Shun⁽²⁾, in which Roberts C.J. held that "destination" means the ultimate destination of the goods. The statement was untrue and the appellant was rightly convicted. I dismiss the appeal against conviction.

13. So far as sentence is concerned, the magistrate was satisfied that the appellant committed these offences in order to obtain quota to which he was not entitled. He took the view that such a fraud on the Government and on his competitors warranted a deterrent sentence. He also took into account that the appellant had two previous convictions for offences under this Ordinance.

14. This was far from being a technical offence,as suggested by Mr McCoy, who appeared for the appellant on the appeal against sentence. The magistrate was entitled to take a serious view of the matter. Having regard to the maximum fine of $500,000, a substantial penalty was in order.

15. On the other hand, a sentencer must bear in mind an offender's ability to pay. The magistrate stated, in the course of counsel's mitigation, that he found it difficult to accept that the appellant's earnings were only $23,000 a month, and he specifically asked counsel for the Crown if he accepted that figure. He was therefore bound by the affirmative reply and Mr Harris does not suggest otherwise.

16. In these circumstances, I think a fine of $100,000 was too severe. The appeal against sentence is allowed and the fine on each of the four summonses is reduced to $10,000.

(1) [1973] 1 Q.B. 924

(2) [1980] H.K.L.R. 266