METRONIC MULTIMEDIA H.K. LTD. v. COMMISSIONER OF CUSTOMS AND EXCISE

1998 HCAL No. 88

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

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J U D G M E N T

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The facts

1. On the morning of 1st August, premises in Kwai Chung were raided by officers of the Customs and Excise Department. It was believed that infringing copies of video compact discs were being produced there. The officers found a large quantity of video compact discs on the premises. It was believed that they were infringing copies. They were seized, and in due course they were removed from the premises.

2. Three compact disc production machines were also on the premises. It was believed that those machines had been used to produce the seized video compact discs. If the seized video compact discs had been infringing copies, their production would have been an offence under Part II of the Copyright Ordinance (Cap. 528) ("the Ordinance"). Accordingly, it was decided to exercise the powers conferred by section 122(1)(b)(ii) of the Ordinance, which permits the seizure, removal and detention of anything which appears to be likely to be evidence of an offence under Part II of the Ordinance. The production machines were therefore seized.

3. The production machines, though, were not removed from the premises. I know from other cases that the risk of serious damage to such machines, if they are dismantled and removed by contractors unfamiliar with them, is considerable. However, it was decided to detain the production machines so that they could not be used. After all, if they remained in the control of the persons who were suspected of using them to commit criminal offences, there was the danger that they would be used to produce more allegedly infringing copies of video compact discs.

4. There is a dispute as to whether the steps taken to prevent the use of the production machines involved simply cordoning them off or sealing the premises altogether. This application for judicial review proceeds on the assumption that it was the premises which were sealed. What is sought is a declaration that the Commissioner of Customs and Excise ("the Commissioner") had no power to seal the premises under the Ordinance under which he purported to act. The Applicant, Metronic Multimedia H.K. Limited ("the Company"), claims to be the tenant of the premises and the owner of the production machines, and the leave to apply for judicial review which the Company obtained from Barnett J. related to the alleged sealing of the premises.

The sealing of the premises

5. The statutory regime under which the officers of the Customs and Excise Department were acting is that laid down by the Ordinance. Section 122 of the Ordinance gives various powers to officers investigating the production of articles alleged to be infringing copies. Those powers do not include the power to seal premises in which the production of infringing copies is alleged to have taken place. However, a new Ordinance specifically addresses the problem of video compact discs which are alleged to be infringing copies. That Ordinance is the Prevention of Copyright Piracy Ordinance (Cap. 544), which came into operation on 28th May. That Ordinance permits premises in which the production of allegedly infringing video compact discs has taken place to be sealed.

6. Since the Commissioner does not contend that his officers were acting under the new Ordinance, he accepts that his officers had no power to seal the premises. It follows that the sole issue relating to the sealing of the premises is whether they were in fact sealed. The Company says that they were. The Commissioner says that they were not. It is not possible for me to decide that issue of fact on the affirmations which have been filed, and I shall decide what course should be taken to resolve that issue of fact when I have considered another feature of the conduct of the officers of the Customs and Excise Department which the Company wishes to challenge.

The continued occupation of the premises

7. Officers of the Customs and Excise Department are still on the premises. It is said that they are there to ensure that the production machines are not used. Even if the premises are found not to be sealed, the Company wishes to challenge the legality of the officers' continuing presence on the premises. The Commissioner's case is that one of the Company's directors consented to his officers remaining on the premises, and it was only because the Company did not want the production machines to be dismantled and removed that the continuing presence of the officers on the premises was necessary. The Company's response is that it was not reasonable for the Commissioner to insist that, if the production machines were not dismantled and removed, his officers had to remain on the premises to ensure that they would not be used. In any event, the Company asserts that the time has now come when the officers should no longer be permitted to remain on the premises.

8. An attempt to plead the true basis of the Company's case was hurriedly made this morning, but it is extremely difficult to plead a complicated case properly when you are under pressure of time. No criticism can therefore be attached to either Mr. Gerard McCoy S.C. or Mr. Victor Luk, counsel for the Company, for not producing a proposed re-amendment to the Notice of Application which sufficiently pleaded the Company's case so that (a) the Commissioner knows the case which he has to meet, and so that (b) the court can decide whether to grant leave to the Company to apply for judicial review of the continued occupation of the premises.

9. I do not think that it is necessary to require the Company to file a new application for leave to apply for judicial review. I see no compelling reason why the new challenge should not be included in the current proceedings, bearing in mind that there is still an application for judicial review of the sealing of the premises to be decided. The course which I propose to take, therefore, is to adjourn the application for leave to re-amend the Notice of Application to enable a proper re-amendment to be formulated. The application for leave to re-amend the Notice of Application can then be made before me as soon as reasonably practicable. At that hearing, if leave to re-amend is granted, I shall also decide whether, in the light of that re-amendment, to grant leave to the Company to apply for judicial review of the continued occupation of the premises. The hearing will be inter partes, because I am willing to hear from the Commissioner if he wishes representations to be made to me. I shall also decide then what course to take in connection with the original allegation that the premises have been sealed.

The seizure and detention of the production machines

10. The one issue of substance which I have addressed today relates to the seizure and detention of the production machines. Mr. McCoy wished to argue that their seizure and detention was unlawful. The legality of their seizure and detention had not been challenged in the original Notice of Application, but because the argument involved a point of statutory construction, I gave the Company both leave to amend the Notice of Application and leave to apply for judicial review of the seizure and detention of the production machines in order to enable the point to be argued.

11. The argument is a simple one. The power under which the Commissioner purported to seize and detain the production machines was that contained in section 122(1)(b) of the Ordinance. However, it is said that that power was in this particular case expressly limited by the magistrate who issued the search warrant authorizing the entry into, and search of, the premises. The warrant authorized officers of the Customs and Excise Department

"to enter ... [the premises] and to search for and seize any article which appear[ed] to [the officers] to be an infringing copy of a copyright work."

It is said that since the warrant authorized only the seizure of infringing video compact discs, the warrant was limiting the powers conferred by section 122(1)(b), which would otherwise have permitted the seizure and detention of the production machines if they appeared likely to be evidence of an offence under Part II of the Ordinance.

12. I reject this argument. The magistrate's powers under section 123(2) of the Ordinance were limited to issuing

"a warrant authorizing an authorized officer to enter and search the premises."

The magistrate had no power either to permit the seizure of anything found on the premises or to limit the type of articles which could be seized. The powers as to seizure and detention of articles found on a search to which a search warrant related are governed by section 122(1)(b). That is borne out by the structure of section 122(1) itself. The power in section 122(1)(a) to enter and search premises is expressly made subject to section 123, whereas the power in section 122(1)(b) to seize, remove and detain articles is not. It follows that the seizure and detention of the three production machines was not unlawful - at any rate not on the sole ground on which Mr. McCoy has alleged it to be unlawful.