HKSAR v. R & M Fashion Factory Ltd. and Another

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO. 140 OF 1998

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J U D G M E N T

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1. The Appellants (A.1 and A.2) were convicted in the Magistracy on charges under the Import and Export Ordinance (Cap. 60). In each case in respect of an application for a license, the Appellants had made a statement in the manufacturer's declaration which was allegedly false or misleading in a material particular; namely that the goods were of Hong Kong origin, when in fact some of them were not. The clothing concerned was 73 3/12 dozen ladies 90% polyester and 10% spandex dresses.

Facts

2. A1 is a manufacturer of ladies clothing and A2 is a director of A1. A1 supplied a quantity of ladies dresses for a U.S.A. fashion house, shipping the consignment on or about 23rd August 1996. The required export licence described the goods as "ladies 90% polyester 10% spandex woven dress" and they were declared to be of H.K. origin. The total quantity of dresses shipped was stated in the licence to be 104 9/12 dozen.

3. In September 1996 a Trade Control Officer of Customs and Excise Department carried out an investigation into the export licence application at A1's premises. A2 was asked for production records and produced some documents including a purchase order (Exh. P.4) invoices, a packing order (Exh. P.5) and a sewing and cutting record (Exh. P.7).

4. As the officer found that A2 could produce only part of the records, a search of the office was made and documents were found which aroused suspicion that some or all of the goods had been manufactured in China. These documents were production log books, wages cards, a processing agreement and a cutting breakdown from a factory in China, Ocean Fashion Trading Company. The processing contract bore the same style number as the purchase order produced.

Grounds of Appeal

5. It was argued that the Magistrate erred in holding that the garments manufactured by Ocean Fashion formed part of Al's consignment and that there was insufficient evidence to establish that Appellants had contravened s.36(1)(a) of the Import and Export Ordinance, Cap. 60.

6. Ground 4 set out 14 matters the Magistrate was said to have failed to consider adequately, or at all, in deciding whether the dresses manufactured by Ocean Fashion were part of the consignment shipped by A1. These related to differences in quantity; fabric type; sizes; number of labels and absence of any manifest showing the goods had been brought into H.K.

7. Grounds 5 and 6 argued an alleged error of law by the Magistrate in ruling certain exhibits inadmissible as being hearsay.

8. Grounds 7, 8, 9 related to the Magistrate's failure to consider the defence evidence sufficiently.

9. The points raised by the Appellants as to the differences in quantity, sizing, presence or absence of an "A" suffix on documents and the lack of a manifest showing entry of the garments to Hong Kong were not of real significance. For example in terms of disparate quantities, an order quantity is limited to the number of items that can be cut from the amount of material supplied and items over and above an order quantity may be provided deliberately for quality control purposes. An incomplete size range may be explicable because another factory was instructed to produce the relevant quantity of "missing" sizes. The existence of a manifest may be irrelevant if the garments said to be made in China can be identified accurately as the garments in the export shipment.

10. In this case the question of identifying the garments was important and it appears that on the point of the type of material used there was insufficient evidence to satisfy a court beyond reasonable doubt that the goods made by Ocean Fashion were the same goods as those shipped by the Appellants.

11. The original order specified that the fabric to be used was a mixture of 90% Polyester and 10% Spandex. The sole defence witness gave evidence to the effect that a person required only a modicum of experience to distinguish 100% Polyester fabric from fabric that was 90% Polyester and 10% Spandex. While it was not necessarily possible to distinguish them visually, it was a simple matter to do so by touch. It would not be possible to tell the proportions of the two components, but the higher the Spandex content, the greater the elasticity.

12. P.W.2, the owner of Ocean Fashion told the Court he was aware of the difference between 100% Polyester and a Polyester/Spandex mixture. When questioned about the material used, P.W.2 agreed that in his original statement to Customs and Excise he had described the fabric used for the goods his factory processed as 100% polyester. When shown a manifest, Exh. D1, he confirmed that it related to the material used by his factory (supplied by A1 and sent by P.W.2 to the factory in China) and that it referred to 100% Polyester.

13. In re-examination (B51) P.W.2 said he did not know the composition of the fabric exactly, "normally we treated that as polyester". P.W.2 was not questioned in any detail by the prosecutor about the material used, or its particular qualities, or any differences in sewing techniques that might have been necessitated by any Spandex content. He was not asked to elaborate on his answer "normally we treated that as polyester" - an answer which left alive the possibility that the reason the material was treated as polyester, was because it was polyester.

14. Nor was P.W.2 asked to describe what he meant in describing the material as elastic silk-velvet, a term used on some documents. In the course of his evidence amendments were made changing the certified translation on Exh. P.11B of the words "polyester spandex" to "elastic silk-velvet". No examination by the prosecution was undertaken to establish the significance of this change of description - a description which, at face value, indicated that the dresses were to be made of silk, a wholly natural fabric without any polyester content at all.

15. There is another matter which raises doubts about whether these Appellants were properly convicted. This related to certain documentary exhibits 8, 9 and 10 found on A1's premises. Exh. P.8 was produced by A2, and Exhs 9, 10 were seized after a search.

16. Exh. 8 was 3 wages cards which appeared to relate to sewing work done at A1's factory in Hong Kong for the U.S.A. order. Exh. 9 was a production log book and Exh. P.10 was 3 sewing cards which also appeared to relate to the U.S.A. order.

17. The Magistrate admitted Exhs 8, 9 and 10 after hearing submissions on admissibility, saying he would consider their evidentiary weight later. This approach is confirmed at Para. 10 of his Statement of Findings (B.69). However in Para. 11 (B.70) he concludes that Exhs 8, 9 and 10 were hearsay in nature and ignored their weight altogether.

18. As these items were of the same nature and provenance as Exhs 4, 5, 6 and 7 it is difficult to see that the Magistrate could simply ignore them. The documents were business records of A1 which had been seized by the Trade Control Officer and, on their face, appeared to relate to the disputed consignment.

19. Those documents raised the possibility that the garments the subject of the summons had been manufactured in Hong Kong and it was necessary for the Magistrate to consider what effect their contents might have on his final decision. He might choose to ignore or reject any favourable inferences thereafter, but it was evidence that he had to consider and, in the interests of justice, that he had to have been seen to have considered. That was not done.

20. Overall, having considered the evidence I am of the view that while grave suspicion might attach to the behaviour of the Appellants in this matter, the evidence is such that there is a doubt that the garments made by Ocean Fashion were identified sufficiently as those in the consignment.

21. Accordingly I allow the appeals by A1 and A2.