HKSAR v. 深圳市泰杰寶珠寶首飾有限公司

HCMA 97/2018

[2018] HKCFI 1390

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO 97 OF 2018

(ON APPEAL FROM FLMP 455 OF 2017)

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J U D G M E N T

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1.  This is an appeal against a forfeiture order.

2.  The Customs and Excise applied to a magistrate under section 28 of the Import and Export Ordinance (Cap 60) for the forfeiture of 10 gold slabs each weighing one kilogram.  The gold slabs had been seized by the Customs and Excise in connection with the importing of them as unmanifested cargo by a Mr Tse Wai Man, contrary to section 18(1)(a) of that Ordinance.

3.  Mr Tse pleaded guilty in the Magistrates’ Court to that offence and received a sentence of 4 months’ imprisonment suspended for 30 months plus a fine of $10,000.  He committed the offence by entering Hong Kong from the Mainland at the Lok Ma Chau Control Point with the gold slabs hidden in a girdle wrapped around his waist.

4.  The Appellant, a Mainland company, opposed forfeiture of the gold slabs.  Following a hearing at which the Customs and Excise and the Appellant were both represented by counsel and after having reserved her decision for almost a month, the Magistrate who heard the forfeiture application ordered that the gold slabs be forfeited.  Her reasons for so ordering are set out in a Statement of Findings consisting of 25 paragraphs.  The Appellant is referred to in the Statement of Findings as “the claimant”.

5.  It was not disputed that the gold slabs were liable to forfeiture.

6.  Under the heading “The Claim”, this is said in the Statement of Findings:

“ 5. The claimant contests that they are the owner of the gold slabs. The first claimant’s witness, Mr Ma Wenchang, testifies that he is the owner of the claimant. He bought the gold slabs in PRC and entrusted the defendant in the criminal case, Mr Tse, to deliver the gold slabs from PRC toMr Ma’s cousin in Hong Kong, that is, the second claimant’s witness, Mr Wu Chuangzheng. There were two previous similar dealings between Mr Ma and Mr Tse. Mr Wu received the gold slabs successfully on those two occasions. The claimant asserts that they are not negligent in facilitating the contravention which has resulted in the gold slabs becoming liable to forfeiture.

6. Two key issues arise in this case.  Firstly, is the claimant theowner of the gold slabs?  If the answer is in the affirmative, should the court exercise the discretion to deliver the gold slabs to the claimant?”

7.  For the reasons set out in paragraphs 7 to 12 of the Statement ofFindings, the Magistrate, as she said in paragraph 13 thereof, found on the balance of probabilities that the Appellant was the owner of the gold slabs.

8.  The Magistrate then turned to the issue of whether she shouldexercise her discretion in favour of forfeiture or against it.  She dealt withthis issue in paragraphs 14 to 25 of the Statement of Findings.  Ultimately, she said in the last of those paragraphs that “it was the claimant’s negligence in facilitating the contravention which has resulted in the gold slabs becoming liable to forfeiture” and that she therefore declined to order that the gold slabs be delivered to the Appellant and ordered instead that they be forfeited. 

9.  It is appropriate to recite paragraphs 14 to 25 of the Statement of Findings.  They read as follows:

“ 14. No evidence in this case shows the claimant has participated the contravention by design, so the question remains: was the claimant negligent in resulting in the gold slabs becoming liable to forfeiture?

15. Mr Ma’s evidence says that Mr Tse’s company in Shenzhen has a good reputation. Mr Ma’s company had business dealings with Mr Tse’s company for more than 3 years. The material transaction was the third time Mr Ma’s company entrusted Mr Tse to deliver the gold slabs to Mr Wu in Hong Kong. The two previous dealings were successful. This time, Mr Ma passed all the information relating to Custom & Excise declarations in PRC and Hong Kong to Mr Tse before delivery.

16. Mr Ma denies in cross-examination that he did not care if Mr Tse complied with the regulations regarding Custom & Excise declarations and maintains Mr Tse did twice for them before and Mr Wu did receive the goods successfully.

17. I see there is no reasonable basis to support Mr Ma’s trust onMr Tse. In relation to the two prior dealings, under cross-examination, when the applicant puts to Mr Ma that he did not check if Mr Tse complied with the Custom & Excise declaration requirements, Mr Ma replies Mr Tse told him he did comply with the requirements. Upon further cross-examination, when the applicant asks if Mr Ma meant there is no need to check if Mr Tse did the declarations or not, Mr Ma fails to give any positive reply but simply says, ‘Of course, he needs to do Custom & Excise declaration.’ Theapplicant further pushes Mr Ma to answer if he has confirmedwith Mr Tse that he did the declaration in the first two times and then Mr Ma finally comes up with an answer saying he confirmed. Mr Ma is evasive in answering questions relating to whether he checked with Mr Tse if he complied with the Custom & Excise declaration requirements.

18. Despite Mr Ma says he confirmed with Mr Tse that he did the declarations, nothing from the evidence supports the basis of such allegation. The only basis Mr Ma advanced is that Mr Tse told him that he did so. No evidence shows Mr Ma did take any steps to check or to verify or to even ask what Mr Tse did on the first two occasions or the last delivery in question.

19. I do not see any real difficulties or impracticalities for Mr Ma to ask Mr Tse if he complied with the declaration requirements at least once during all these deliveries. These gold slabs worth a lot of money, that is at least more than HK$3 million. It does not make sense for a prudent ownerof the goods to make no enquiries as to whether the delivery was done legally or not.

20. In fact, Mr Ma’s evidence reveals that he, indeed, cannot care less about how Mr Tse delivered the gold slabs. In cross-examination, Mr Ma says he did not know how Mr Tse prepared the manifest documents. He provided the documents to Mr Tse and Mr Tse told Mr Ma he did all the proper procedures to prepare the manifest and that is all. Again, Mr Ma had no idea at all as to how Mr Tse prepared the manifest. He simply relied on the words of Mr Tse, which are not supported by any good reasons.

21. Further, even in examination-in-chief, Mr Ma shows hesitation as to whether Mr Tse complied with the export requirements in PRC. Mr Ma says he knew that export permit for gold is needed in PRC. When he is asked if Mr Tse had the permit, his first answer is, ‘They are supposed to have it.’ Upon further questioned by the claimant’s counsel, his second answer is ‘They should have it.’ Again, until further pushes by the claimant’s counsel, Mr Ma finally comes up with the third answer that matches the claimant’s case, ‘They did have it.’.

22. I do not accept that Mr Ma is really clear or believes that Mr Tse complied with all the legal requirements in the delivery in question and, based on the above analysis, I am not persuaded that Mr Ma has any valid basis to believe or honestly believe that Mr Tse complied with the legal requirements concerning the manifest in question.

23. I do not see any good reasons to support that the claimant was not negligent in facilitating the contravention which has resulted in the gold slabs becoming liable to forfeiture.

24. Mr Wu testifies that he was informed by Mr Ma prior to this delivery that there might be a delivery to him but he never received the goods. However, he cannot even recall when Mr Ma informed him of such delivery. His evidence is of not much assistance here.

25. Based on the above analysis, I accept that it was the claimant’s negligence in facilitating the contravention which has resulted in the gold slabs becoming liable to forfeiture.  I, therefore, allow the applicant’s application for forfeiture and dismiss the claimant’s claim in the delivery of gold slabs to them and order that items 1 to 10 on the summons be forfeited.”

10.  Two amended perfected grounds of appeal have been filed on the Appellant’s behalf.

11.  Under Ground 1, it is complained that “[t]he learned Magistrateerred in law and/or on the facts by failing to take into account (and/or show that she had taken into account) relevant considerations: which resulted in (1) the conclusion that the Appellant was negligent; and (2) the learned Magistrate had fettered her discretion and failed to exercise her discretion judicially.”

12.  That is followed by lengthy particulars consisting of four items.

13.  Item 1 of the particulars to Ground 1 reads:

“ In holding that the Appellant did not have ‘any valid basis to believe or honestly believe that Mr Tse complied with the legal requirements concerning the manifest in question’, the learned magistrate had applied a standard of care on the Appellant that was greater than on a balance of probabilities.”

14.  In my view, that finding does not, on a fair reading of the Statement of Findings as a whole, involve imposing a higher standard of care than the correct one.

15.  Item 2 of the particulars to Ground 1 consists of five sub-items, two of them with a number of bullet points each.  Item 2 reads:

“ 2. In her Statement of Findings, the learned Magistrate had failedto consider and or show that she had considered relevant matters:-

(1) TSE Wai-man was an independent contractor;

(2) The Appellant was entitled to entrust the handling of the manifests of the gold slabs to TSE Wai-man because he held himself out as an indenpendent [sic] entity (Wei Man Logistics) skilled in the business freight forwarding to Hong Kong and in particular:

• Mr TSE Wai-man’s company in Shenzhen has a good reputation;

• That this was the practice in China,

• The Xuibui District all specialised in trading of gold and jewellery;

• Previous business dealings were over three years and not as the learned magistrate stated ‘two prior dealings’,

• Exhibit C2, invoice receipts etc., were handed to TSE Wai-man on 3 June 2016 for China customs declarations and Exhibit C3 was to be treated as the manifest for Hong Kong Customs,

• TSE Wai-man had forgotten to take the manifest,

• All fellow traders do business by delegating compliance of customs requirements to logistic companies,

(3) The learned Magistrate failed to consider the factual basis that TSE Wai-man was an independent contractor.

• The Appellant could not export gold from China to Hong Kong and had to delegate the delivery to a licensed logistics company which held a permit or authorisation required under Chinese Law.

• The Appellant’s had discharged his duty after handing the cargo and documentations to the independent forwarder. The Appellant could not be physically present when the manifest was handed over to the the [sic] Commissioner for Customs.

• See Wong Hon Sun v HKSAR (2009) 12 HKCFAR at page 900-D identifying the judicial discretion with respect to the owner of goods who was innocent of any association with the contravention of the law. See also Charlesworth & Percy on Negligence, (13^th ed.) paragraph 3‑182

(4) On the facts of this case, the Appellant should not be ‘punished’ for the wrong-doing of TSE Wai-man who acted as an independent contractor: see Pickard v Smith [1961–73] All ER 204; and Allen v Hayward (1845) 7 Q.B. 960.

(5) The learned Magistrate never made a finding as to the credibility and/or reliability of the Appellant’s representative,MA Wenchang, which was clearly an important issue in this case.”

16.  As to sub-item (1) of item 2, the Magistrate had obviously proceeded on the basis that Mr Tse was an independent contractor.

17.  As to sub-item (2) of item 2, my observations are as follows.  Merely because Mr Tse had held himself out as an independent entity skilled in the business of freight forwarding to Hong Kong does not mean that he was to be trusted to the extent that he was.  There is no reason to think that the Magistrate had or might have failed in her duty to consider all of the evidence, including the whole of Mr Ma Wencheng’s testimony, and all of the arguments advanced on the Appellant’s behalf.  When the Magistrate referred to two previous dealings, she was, it is clear from paragraph 15 of her Statement of Findings, referring to delivery of gold slabs to Hong Kong.  Mr Ma’s reference to three years was, it is clear fromhis evidence at p 75Q–T of the record, to transportation within the Mainland.

18.  When Mr Ma was being cross-examined: Mr David Boyton forthe Appellant suggested that the correct term for Exhibit C3 was “Manifest”; counsel for the prosecution disagreed; and Mr Boyton then said “Invoice”.  That appears at p 79R–U of the record.  The parties agree that “Out of Warehouse Invoice” is the correct translation into English of the heading of Exhibit C3 in Chinese.  Mr Boyton argued on appeal that Exhibit C3 is nevertheless a “manifest” within the interpretation of that term given under section 2 of the Import and Export Ordinance in which it is said that “‘manifest’ means a record prepared as a manifest containing the particulars prescribed under section 17 but does not include any record, containing the same particulars, which is not specifically prepared as a manifest”.  I do not accept that argument.  Exhibit C3 was not specifically prepared as a manifest. As appears from pp 80S – 81G of the record: Mr Ma said under cross-examination that Exhibit C3 was “only our internal document”and agreed with the cross-examiner that it was “a confirmation that [Mr Tse] received these ten gold slabs” which could “in case he ran away” be used “to chase after him”.  Quite apart from anything else, this evidence goes against the notion that the Appellant trusted Mr Tse as much as now suggested on its behalf.  These 10 gold slabs were imported as unmanifested cargo.  There was that contravention, and the Magistrate rightly directed her mind to the question of whether it was facilitated by the Appellant’s negligence and to the question of how her discretion ought to be exercised if it was facilitated by the Appellant’s negligence.

19.  As to sub-item (3) of item 2, I repeat my observation that thereis no reason to think that the Magistrate had or might have failed in her duty to consider all of the evidence, including the whole of Mr Ma’s testimony, and all of the arguments advanced on the Appellant’s behalf.  Handing thegold slabs to an independent contractor does not of itself conclude the matterin the Appellant’s favour.  There is no reason to think that Magistrate had misunderstood the judicial discretion involved.

20.  As to sub-item (4) of item 2, the Magistrate did not punish the Appellant.

21.  As to sub-item (5) of item 2, the short answer to it is that, as appears from paragraphs 15 to 22 of her Statement of Findings, the Magistrate dealt adequately with the effect of Mr Ma’s testimony and its shortcomings.

22.  I now come to item 3 of the particulars to Ground 1.  This item reads:

“ The learned Magistrate had fettered her discretion in failing to to [sic] consider and/or show that she had considered the said factual matters, is supported by the conclusion that, ‘I do not see any good reason to support that the claimant was not negligent in facilitating the contravention which [h]as resulted in the gold slabs becoming liable to forfeiture.’”

23.  That statement by the Magistrate is to be read in the context of her Statement of Findings as a whole.  It does not suggest that she had or might have erred as asserted in this item or at all.

24.  The final item of the particulars to Ground 1, item 4, reads:

“ The learned Magistrate’s discretion should have been directed as to whether or not, the Appellant had failed to practice care and discretion in the choice of a competent and careful contractor; and in failing to consider and/or refer to the the [sic] relevant facts and/or evidence referred to above, applied her discretion erroneously, against the weight of the evidence.”

25.  In my view, there is no reason to think that the Magistrate had or might have misdirected herself in the exercise of her discretion or that she had or might have erred as asserted in this item or at all.

26.  Ground 1 fails.

27.  The complaint under Ground 2 is that “[i]f the Appellant was negligent, the learned Magistrate had erred in law and/or on the facts, in finding that the negligence had facilitated the contravention, which resulted in the article being forfeited; and in the result fettered her discretion and failed to exercise her discretion judicially.”

28.  The particulars to Ground 2 consist of two items.

29.  Item 1 of the particulars to Ground 2 reads:

“ 1. Having referred to the following matters, the learned Magistrate found the Appellant negligent as ‘there is no reasonable basis to support Mr Ma’s trust on Mr Tse’:

(a) There was no evidence to show Mr Ma took any steps to check or to even asked what Mr Tse did on the first two deliveries;

(b) It does not make sense for a prudent owner to make no enquiries as to whether the delivery was done legally or not;

(c) Mr Ma simply relied on the words of Mr Tse, which are not supported by any good reason;

(d) Mr Ma knew (or may not have known) that an export permit for gold is needed in the PRC; and

(e) Mr Ma is ‘not clear or believes’ that Mr Tse complied with all the legal requirement.”

30.  This item does not go to the question of causation raised in Ground 2.

31.  Finally, item 2 of the particulars to Ground 2 reads:

“ 2. The learned Magistrate had erroneously found that these negligent matters, as having facilitated the contravention:

(a) The negligence refered to by the learned Magistrate were related to past transactions, and not in relation to the present contravention on 6 June 2016;

(b) The export permit for gold is needed in the PRC and not required (for import) into Hong Kong and therefore such negligence, if any, did not facilitate the contravention in Hong Kong;

(c) Reliance on TSE was not facilitating the contravention, in that Ma procured or caused the contravention: see the clarification of the meaning of ‘facilitating’ in HKSAR v Shenzhen Bada Logistics Co Ltd, HCMA 171/2015 which explained the Court of Final Appeal judgment in WONG Hon-sun v HKSAR (2009) 12 HKCFAR 877 at page 901-G; and

(d) The finding that Mr Ma is not really clear, or believes thatMr Tse complied with all the legal requirement, is ambiguous.  If Mr Ma was not really clear that Tse complied with the legal requirements: Ma may not necessarily have facilitated the contravention; whereas, if Ma believes that Mr Tse failed to comply with the legal requirements, then Mr Ma may have facilitated the contravention.”

32.  It is not accurate to suggest that the negligence found by the Magistrate related to past transactions to the exclusion of the present contravention.  By calling Mr Ma to give the testimony which he did, it is plain that the Appellant was to a material extent relying on its past transactions with Mr Tse for the purpose of disputing that how it dealt with him on the present occasion was negligent and/or had facilitated the present contravention.  It was appropriate for the Magistrate to consider what had and had happened in the past.  That no export or import permit was required is not to the point.  The contravention did not consist of export or import without a permit.  It consisted of importing unmanifested cargo.  In relation to that, the Magistrate found and was entitled to find that the Appellant was negligent and that its negligence facilitated the present contravention.  The cases cited in this item do not assist the Appellant.  There is no ambiguity in the Magistrate’s findings.

33.  Ground 2 fails.

34.  There is no proper basis on which to interfere with this forfeiture order.

35.  Accordingly, the appeal is dismissed.