HKSAR v. Tsang Sio Pou and Another

[English Translation - 英譯本]

HCMA 299/2019

[2020] HKCFI 612

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MAGISTRACY APPEAL NO 299 OF 2019

(ON APPEAL FROM KTCC 1982 OF 2018)

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BETWEEN

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J U D G M E N T

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Introduction

1.The 1^st Appellant Tsang Sio Pou (“A1”) and the 2^nd Appellant Ng Chun Ting (“A2”) were jointly charged with one count of “possession, for sale or for any purpose of trade or manufacture, of goods to which a forged trade mark was applied”, contrary to section 9(2)[1] as read with section 18(1)[2] of the Trade Descriptions Ordinance, Cap 362, Laws of Hong Kong (“the Ordinance”).  The particulars of the offence alleged that the Appellants, on the 13^th day of September 2017, at Shops C1-C2, G/F, Block 3, Camel Paint Building, 60 Hoi Yuen Road, Kwun Tong, Hong Kong (“the location in question”), had in their possession, for sale or for any purpose of trade or manufacture, a total of 619 pieces of goods, to each of which a forged trade mark was applied, namely 292 Vivienne Westwood long wallets and 327 Vivienne Westwood short wallets.

2.A1 and A2 denied the offence and stood trial before Deputy Magistrate Mr Chan Chee Fai, Philip (“the magistrate”).  After trial, on 25 April 2019, A1 was acquitted but his application for costs was refused, while A2 was convicted and sentenced to 40 hours of community service.

3.A1 appeals against the refusal of his application for costs and A2, his conviction.

Facts of the case and evidence

4.PW4 found out from the Internet that luxury wallets were available for sale at the location in question, where he purchased two wallets[3] on 13 September 2017.  Later, custom officers arrived and seized the wallets purchased by PW4.  Custom officers also seized from the location in question the long[4] and short[5] wallets set out in the charge.  Such goods were all confirmed to be counterfeits upon examination by the prosecution’s expert witness (PW1).

5.At the material time, A1, who was at the location in question, identified himself to the custom officer (PW2) as the manager.  PW2 thus revealed his identity to A1, placed him under arrest and cautioned him. Under caution[6], A1 admitted that he was the “manager, person in charge” of the location in question but denied that the subject goods were his.  A1 said he leased the premises to Mr Ng (A2), who placed goods there on consignment.  A1 also provided A2’s phone number.  The rents, A1 said, were calculated by him on a revenue-sharing basis (i.e. fifteen percent of the profit) and that the lease could be provided.  Custom officers subsequently displayed the seized goods to A1, who, having been cautioned again, said that those goods were “supplied by the supplier Mr Ng”.

6.A2 was arrested on 8 October 2017.  In the cautioned statement[7] taken from him by a custom officer, he said that he mainly obtained goods from two suppliers, a Mr Chow and a Miss Yau.  A2 said that on 8 August 2017 through a friend Billy, he came to know Mr Chow, whom he found trustworthy.  Mr Chow supplied Vivienne Westwood wallets at $220 each for small wallets and $300 each for long wallets.  A2 said he later got to know Miss Yau via A1 and the purchase prices were $350 for a small wallet, $390 for a medium wallet and $450 for a large wallet.  A2 and A1 were running a “warehouse sale” at the location in question between 8 September and 17 September.  Of the prices of the goods which were fixed by A2 together with A1, fifteen percent went towards the rent of the premises concerned that A2 leased from A1.  A2 also said that Billy had taught him how to differentiate genuine wallets from the fakes.  A2 said that he would inspect the goods if he was at the location in question when they were received; however, sometimes he did not do so as he did not have time to take delivery of the goods.  Mr Chow told him that documentary proofs certifying the authenticity of the goods could not be provided.  As to Miss Yau, A2 did not ask for documentary proofs for he believed her.  A2 admitted that he did not approach the trade mark holder to get authorised for selling the wallets seized; nor did he contact the trade mark holder to verify whether the wallets he had were genuine or counterfeit.

7.Both Appellants elected not to give evidence or call any witnesses.  A1 objected to the admissibility of his verbal admission and post-recorded cautioned statement whereas A2 did not dispute the voluntariness of his cautioned statement.  A1 contended that the prosecution did not have sufficient evidence to establish “possession” by him of the goods in question and had failed to prove the subject goods bore forged trade marks. A1 and A2 both relied on the defence provided under section 26[8] and section 26AAB[9] of the Ordinance.

The findings of the magistrate

8.The magistrate accepted the expert evidence from the expert witness for the prosecution (PW1) as well as all the prosecution witnesses’ evidence.

A1

9.The magistrate ruled A1’s verbal admission and post-recorded cautioned statement (P15) admissible in evidence.  He, on the other hand, noted that despite A1’s claim to be the manager of the location in question, PW4, a customer, said he did not have any contact with A1.  In addition, the agreement signed between Sweety Magic Limited and A2[10] showed that A2 had control and possession of the subject goods.  Thus, the magistrate came to the view that A1’s having in his possession the subject wallets was not the only reasonable inference.  The magistrate stated that although what A1 said under caution was very suspicious, pursuant to the principle of giving the defendant the benefit of the doubt, the prosecution had failed to prove A1’s guilt beyond reasonable doubt and so the magistrate found A1 not guilty of the offence.  

10.A1, represented by a senior counsel leading a junior counsel at trial, applied for costs following his acquittal. The magistrate took the view that, by being at the location in question, by identifying himself as the shop manager when inquiries were made of him and by admitting in his verbal admission and post-recorded cautioned statement that he was the manager, person-in-charge, A1 behaved in such a manner that brought suspicion upon himself or led the prosecution into thinking that the case against him was stronger than it was.  The magistrate found A1’s conduct to be highly suspicious in all the circumstances of the case, and therefore refused his application for costs.

A2

11.The magistrate, having considered A[2]’s record of interview, was not convinced that A2 had exercised reasonable diligence or could not have with reasonable diligence discovered that the subject wallets were counterfeit.  Consequently, A2 could not rely on section 26(1)(a)(i)(B) or (C) or 26AAB as defence.  In the end, the magistrate found that the prosecution had proved beyond reasonable doubt the elements of the offence faced by the Appellant and convicted him of the offence.

Legal principles concerning appeals

12.A magistracy appeal is conducted by way of “rehearing” on the evidence before the magistrate: Chou Shih Bin v HKSAR[11].  In HKSAR v Ip Chin Kei[12], McWalters J (as he then was) summarised the legal principles concerning the approach to magistracy appeals, which included the following:

(1)  The appellate court will only depart from the lower court’s finding of fact and assessment of a witness’s credibility where the trial magistrate’s finding of fact is plainly wrong.

(2)  The test in deciding whether the trial magistrate has erred so that an appeal should be allowed is whether it is just for the conviction to be quashed.

(3)  Notwithstanding the absence of any error by the trial magistrate, the appellate court must still perform the statutory requirement of conducting a “rehearing”.  The appellate court is therefore required to closely examine whether on the evidence adduced, the charge is proved beyond reasonable doubt, failing which the appeal should be allowed.

Yet, on point (1), the appellate court is required to have regard to the fact that the trial magistrate enjoyed the advantage of having seen and heard the witnesses giving evidence, which it does not enjoy: Raymond Chen v HKSAR[13]. In general, the credibility and reliability of a witness is within the assessment of the trial magistrate.  As Barnes J pointed out in HKSAR v Chan Wai Yip Albert[14], when the findings of the trial magistrate are shown to be unreasonable or illogical, or inherently improbable; or that the trial magistrate has misquoted, or omitted, or failed to consider and analyse any significant aspect of the evidence, the conviction would then be rendered unsafe and unsatisfactory. 

A2’s appeal against conviction

Grounds of appeal

13.Purely for the sake of convenience, I would first deal with A2’s appeal against conviction.  Shortly stated, A2’s grounds of appeal are as follows:

(1)  The magistrate erred [in] neglecting or failing to properly consider that there was ample evidence in A2’s record of interview (P17) to support the defence provided under section 26 of the Trade Descriptions Ordinance;

(2)  The magistrate erred [in] neglecting or failing to properly consider that there was ample evidence in P17 to support the defence provided under section 26AAB of the Trade Descriptions Ordinance;

(3)  The magistrate neglected or failed to properly consider that what A2 purchased were parallel imports and they were old models from 2015.  The magistrate also erred in his view that (i) A2 could approach the trade mark holder to get authorised for the selling of the wallets seized; and/or that (ii) he could seek cooperation of the trade mark holder in verifying whether the subject goods were genuine or false; and

(4)  The magistrate erred in his understanding or application of section 26AAB of the Trade Descriptions Ordinance by thinking that A2 is required to prove he had exercised reasonable diligence.

As regards ground (4) of the grounds of appeal: the magistrate’s observations on the two defences

14.I would first address this ground of appeal as it concerns principles of law.

15.With respect to the legal principles relevant to the instant case, in the magistrate’s Statement of Findings concerning A2, he said:

“23. As to the defence having to establish exercise of due diligence, the defence only bears an evidential burden: Lee To Nei v HKSAR (2012) 115 HKCFAR 162 [sic][15].

24. In Lee To Nei, the Court of Final Appeal pointed out: Whilst reasonable diligence is not a counsel of perfection, it is ‘not the doing of everything possible, but the doing of that which, under ordinary circumstances, and having regard to expense and difficulty, can reasonably be required’.

25. It was noted in HKSAR v Kong Hing Agency Ltd[16] that there may be cases where: ‘... even if nothing has been done, an accused may escape liability where the exercise of reasonable diligence would not have resulted in the discovery of the use of false trade descriptions or forged trade marks’.

26. According to Section 26AAB of the Trade Descriptions Ordinance, there is the additional defence for sale of goods to which forged trade mark is applied etc.. The Appellant discharges an evidential burden on whether he has the reasonable diligence defence. [sic]

27. The defence only bears the evidential burden to establish reasonable diligence having been exercised.

28. The Appellant made absolutely no mention in his record of interview about why the two suppliers were selected. Aside from him finding the two suppliers trustworthy, no enquiries had been made as to whether the prices were reasonable, such as the prices offered by suppliers from other regions. Moreover, he did not examine the goods every time; nor did he ask Miss Yau if there was any document to substantiate the authenticity of the wallets. The Appellant said that he did not suspect the wallets were fakes. Nonetheless, in my view, the Appellant must still prove that he could not with reasonable diligence ascertain forged trade marks had been applied to the goods.

29. I do not consider this to be indicative of reasonable diligence having been exercised.

30. I believe the Appellant could have done more in the examination of the subject wallets. I do not find the Appellant to have exercised reasonable diligence or to have been unable to find out with reasonable diligence the subject wallets being counterfeits. In the circumstances, I take the view that the Appellant cannot rely on sections 26(1)(a)(i)(B) or (C), or section 26AAB” (Emphasis added)

16.I note that, whilst section 26 and section 26AAB both provide a defence to the offence created by section 9(2), the words used in the former are “reasonable precautions” and in the latter, “reasonable diligence”.  Are the two terms the same or interchangeable in meaning?  Further, section 26(1)(a)(ii) of the Ordinance requires that a person charged “took all reasonable precautions and exercised all due diligence” to avoid the commission of the offence.  What is the distinction and is there any relationship between “reasonable precautions” and “reasonable diligence”?  Neither the Appellant nor the Respondent explore the above issues in detail.

17.In my humble view, since the legislature adopted different wording for the same issue (defence to section 9(2)) in different parts of the same ordinance — “reasonable precautions” in section 26 and “reasonable diligence” in section 26AAB, the court should not presume that these two terms are the same or interchangeable in meaning unless there are valid and sufficient reasons.

18.As observed by the appellate court in HKSAR v Kong Hing Agency Ltd[17], “reasonable diligence” and “due diligence” entail different requirements.  The use of the word “reasonable” connotes that the test is an objective one.  The court is required to examine what the accused could have been reasonably expected to have done in the circumstances of the case.  The appellate court in HKSAR v Kong Hing Agency Ltd and the Court of Final Appeal in Lee To Nei v HKSAR[18]concurred with what Stock J (as he then was) said in R v Mulitex (Exports) Ltd[19]: “Reasonable diligence” does not require the doing of everything possible, but the doing of that which, under ordinary circumstances, and having regard to expense and difficulty, can reasonably be required.  What are reasonable steps, and what is reasonable diligence will vary with the legislative context in which those words appear and with the facts of the case.

19.Based on the above, I take the view that if “reasonable precautions” in section 26 of the Ordinance is equated with “reasonable diligence” while “reasonable diligence” and “due diligence” both describe the same thing, the provision is not only semantically tautological, but also close to requiring a person charged to do everything subjectively and objectively possible, a standard that would be near unattainable.  I do not believe this would be the intention of the legislature.  And semantically, section 26 of the Ordinance is capable of a clearer, more natural and reasonable construction.

20.In my humble view, to render the provisions of section 26 internally consistent and thereby avoid a conflict between “all reasonable precautions” and “all due diligence”, the former focuses on “precautions”, which should refer to the scope of what the person charged was reasonably required to do and the steps therefor.  The latter focuses on whether diligence on the part of the person charged was sufficient, which should refer to the manner and extent in which he should exercise diligence in doing what was within the said scope, given the circumstances of the case as well as his own circumstances and limitations, such as whether he should conduct verification on his own or can rely on other persons to do so: see Russell v DPP[20]. There, the appellant, working as relief manager of a bar, was charged with supplying intoxicating liquor to a person under the age of 18 years.  The bar had a good system preventing its employees from selling liquor to a person under the age of 18 years.  Any employee who had suspicion about the age of a customer may require that customer to produce photo-bearing identification. The customer concerned provided the appellant’s superior with false identification which did not look like a forgery on its face.  Well-experienced as he was, his superior was taken in, and believing that the customer was 18 years old, he authorised the appellant to sell liquor to the customer.  The Queen’s Bench Divisional Court of England found it entirely reasonable in the circumstances of the case that the appellant should rely upon the check conducted by his superior, and held that the defence of “having exercised all due diligence” had been satisfied.  The Court further said that to expect the appellant to contradict the assessment of his superior would be a wholly excessive and unrealistic expectation.

21.Further, another distinction between section 26 and section 26AAB of the Ordinance, in my view, is the requirement of the former that the person charged “took all reasonable precautions and exercised all due diligence”, which suggests that certain precautions were taken by the person charged, whereas for the latter, there is no such written requirement.  The phrase “could not with” used in 26AAB(a)(iii) refers to a hypothetical situation which may not have occurred.  It appears to me that the test for section 26AAB(a)(iii) – could not with reasonable diligence have ascertained – is an objective one: see HKSAR v Diao Rui[21].  Hence, as noted by the appellate court in HKSAR v Kong Hing Agency Ltd with respect to section 26AAB, what an accused has actually done is not crucial; even if he has done nothing, he may escape liability.  The essence of the matter is, where the exercise of reasonable diligence would not have resulted in the discovery of the contravention concerned, and other conditions set out in section 26AAB exist, the person charged may be absolved of the liability under section 9(2).

22.In my judgment, there are deficiencies in the magistrate’s findings quoted above in that section 26 and section 26AAB were not separately considered; nor were the different requirements of the two provisions clearly identified.  The magistrate did not make it clear whether or not, with regard to section 26AAB, the defendant had to adduce evidence to demonstrate that he “had exercised reasonable diligence”.  Besides, the magistrate repeatedly mentioned “reasonable diligence” without ever making reference to “reasonable precautions”.  He did not give any explanation for that.  In the light of the above, I cannot be sure if the magistrate understood the difference between the two and if he confused the different conditions under section 26 and section 26AAB.   

23.The present appeal is conducted by way of “rehearing”, which means an error in law by the trial court may not result in a conviction being set aside.  Section 119(1)(d) of the Magistrates Ordinance, Cap 227, Laws of Hong Kong, requires that in dealing with magistracy appeals, this Court has to decide whether there has been, in the trial magistrate’s decision, an error which makes it just that the appeal should be allowed and the conviction set aside: Ching Kwok Yin v HKSAR[22]. Put differently, this Court may uphold the conviction provided that the trial magistrate’s findings of fact justify and are safe to support the charge, and the conviction itself is just according to the correct legal principles.

As regards ground (1) of the grounds of appeal: section 26 and related findings of fact

24.A2’s cautioned statement (P17) is a mixed statement in the sense that it is in part inculpatory and in part exculpatory. The magistrate, being the fact-finder, is entitled to attach different weight to different parts of a cautioned statement: HKSAR v Poon Hoi Wing & Anor[23]. The magistrate, however, did not specify in his Statement of Findings whether he rejected the exculpatory parts in P17 in full or whether any weight was placed on those parts.  What is more, not only did the magistrate, in paragraph 28 of his Statement of Findings, quote certain exculpatory statements in P17, but he also did not reject their truthfulness[24]. Consequently, I can only assume that the magistrate accepted the whole of P17 as the basis for deciding the case, which is to say the magistrate accepted that A2’s wrongdoing was a result of his reliance on the information Mr Chow and Miss Yau supplied to him as well as the conduct of Mr Chow and Miss Yau[25].

25.As the Court of Final Appeal observed in Ko Man Chun v HKSAR[26], one of the most important aspects of our criminal justice system is to resolve issues of fact in the trial court.  As to this, the accepted norms include these.  The issues of fact must be approached with care.  And the conclusions thereon, although not always or even generally required to be lengthy, must be expressed in terms indicative of such care.

26.In the instant case, the magistrate’s explanation on his finding that A2 had failed to satisfy the conditions under section 26 or section 26AAB only appeared once in paragraph 28 of his Statement of Findings. Paragraphs 29 and 30 are his conclusions rather than his analysis.  I am of the view that the magistrate failed to adequately analyse the relevant evidence and refer to evidence that may be favourable to A2.  For instance:

(1)  The magistrate said A2 had failed to make inquiries as to whether the prices were reasonable.  In this respect, the trade mark expert pointed out the subject wallets had retail prices ranging from HK$1,000 to HK$3,890[27] without stating what the cost prices should be.  Did the magistrate take into account the difference between the retail prices and cost prices?  If A2’s goods were “parallel imports”, as he purportedly thought, were the prices at which A2 purchased his goods unreasonable as far as “parallel imports” were concerned?  I cannot possibly know as the magistrate did not touch on these in his Statement of Findings.

(2)  According to the Additional Admitted Facts (P18), among the exhibits seized by the custom officers, 117 pieces of goods in total, which were P3A (5 long wallets), P4A (3 short wallets), P5A (46 long wallets) and P6A (63 short wallets), were confirmed, upon examination, to be goods to which no forged trade marks had been applied.  In other words, they are genuine goods. Nonetheless, there was absolutely no mention by the magistrate of this admitted fact.  Was this due to the magistrate’s view that this admitted fact was not material or his momentary forgetfulness?  I cannot possibly know.

(3)  Were there any manifest differences between the said 117 genuine wallets and the 619 fake wallets set out in the charge, and were they discernible by the general public?  Were the goods A2 said he did not take delivery of or examine the genuine ones or the fake ones?  Since some of the goods A2 purchased from his two suppliers were genuine, did this increase or could this have increased A2’s confidence in the two suppliers, making it reasonable for him to believe that the goods they supplied to him were genuine?  There was no evidence from the prosecution in this regard and these matters, which may be favourable to A2, were not addressed by the magistrate.

27.It would appear that the magistrate did not take account of matters which were material to A2’s case.  I, therefore, do not consider it safe and satisfactory for him to find on the facts that A2 “cannot rely on Section 26(1)(a)(i)(B) or (C)”.

28.For the avoidance of doubt, it should be made clear that I am not saying the prosecution will inevitably fail to prove commission of an offence under section 9(2) of the Ordinance by a person charged in the event that he has both genuine and false goods in his possession. This depends on the whole of the evidence in individual cases, how the trial court deals with such evidence, whether the facts found by it justify the charge and whether such findings are safe.

Conclusions

29.I find that grounds (1) and (4) of the grounds of appeal put forward by A2 have been established.  In the light of the foregoing discussion on ground (1) of the grounds of appeal, I cannot affirm his conviction on the basis that the magistrate would, as a matter of course, refuse to accept A2’s defence and would automatically convict him.  I consider it just in the circumstances of the present case to overturn the conviction.

30.In view of the above ruling on grounds (1) and (4), I am not minded to deal with the remaining grounds of appeal advanced by A2 individually.  Nevertheless, with regard to ground (3), I cannot find any admissible evidence in the case to show the wallets in question were “old European models from 2015” and Mr Lau, counsel for A2 (who did not appear for A2 at trial), is unable to assist the court on this.

A1’s appeal against the refusal of costs application

Grounds of Appeal

31.A1’s grounds of appeal can be summarised as follows:

(1)  A1’s admission did not bring suspicion upon himself or mislead the prosecution; and

(2)  The magistrate failed to consider or fully consider the grounds favourable to A1.

Appeal procedures

32.A1’s appeal was brought pursuant to section 114 of the Magistrates Ordinance, Cap 227.

33.In general, it is appropriate to bring an appeal against a costs order under section 19 of the Costs in Criminal Cases Ordinance, Cap 492, Laws of Hong Kong, as this ordinance sets out a complete set of procedures and has laid down principles and factors of consideration: see HKSAR v Wei Bing[28].

34.There are nevertheless specific restrictions in section 19 of the Costs in Criminal Cases Ordinance on its application:

“19. Appeals against award of costs

(1) Where a court or a judge has made an order that costs be awarded to any of the parties to the proceedings any of such parties may appeal against that order.

(2) A legal or other representative who has been ordered to meet the payment of any wasted costs or any part thereof may appeal against that order.

…” (Emphasis added)

From its wording, section 19 of the Costs in Criminal Cases Ordinance does not cover appeals against refusal of costs application.

35.On the other hand, section 113(1) and section 114 of the Magistrates Ordinance, Laws of Hong Kong, provide:

“113. Right of appeal from magistrate in any matter

(1) Any person aggrieved by any conviction, order or determination of a magistrate in respect of or in connection with any offence, who did not plead guilty or admit the truth of the information or complaint, may appeal from the conviction, order or determination, in manner hereinafter provided to a judge.

…

114. Procedure for appeals under section 113 prior to entry of appeal

Where a person is authorized by section 113 to appeal to a judge, the following provisions shall apply —

(a) the appellant shall, within 14 days after the day of his conviction or the order or determination by the magistrate or within such extended time as may be ordered upon application made in accordance with section 114A, give to the magistrates’ clerk notice in writing of his appeal, stating the general grounds of his appeal, and signed by him or his agent on his behalf, and thereupon the magistrates’ clerk shall give a copy of such notice to the respondent and, if he is not the respondent, also to the Secretary for Justice; (See Forms 101, 102)

(b) when a notice of appeal has been given to the magistrates’ clerk the magistrate whose conviction, order or determination is the subject of the notice of appeal shall prepare a signed statement of his findings on the facts and other grounds of his decision and within 15 days after the day on which the notice of appeal was given cause a copy to be served upon the appellant and respondent and, if he is not the respondent, also upon the Secretary for Justice.”  

It will be seen from the above that section 113(1) and section 114 of the Magistrates Ordinance, when read together, can cover appeals against refusal of costs application.

36.Accordingly, I agree with the submission of Mr Kwok, counsel for A1, that the circumstances in the present case are different from those in HKSAR v Wei Bing and A1’s appeal should proceed under the Magistrates Ordinance.  In any event, Miss Ng for the Respondent does not object to this.

Legal principles on costs

37.I adopt the following laws on costs:

(1)  As a general rule, unless there are positive reasons, an acquitted defendant should be awarded costs.  Positive reasons include: (a) the defendant’s having brought suspicion on himself, and (b) his conduct having misled the prosecution into believing that they had a case stronger than what it actually was: Tong Cun Lin v HKSAR[29];

(2)  A defendant’s acquittal on a technicality can be a positive reason for not allowing costs: Tsang Wai Ping v HKSAR[30];

(3)  The court, however, may not refuse a defendant’s costs application if it violates the presumption of innocence: Tsang Wai Ping v HKSAR, supra;

(4)  The costs shall not be punitive but shall be sums reasonably sufficient to compensate a successful defendant for any expenses properly incurred by him in the course of those proceedings.  Additionally, an order for costs shall be just and reasonable: see Section 15 of the Costs in Criminal Cases Ordinance;

(5)  For cases in the magistrates’ courts, where a defendant instructs a senior counsel, the court has to consider whether the defendant’s decision to instruct senior counsel was “reasonable”.  On this issue, the Court has to take into account various factors such as the nature and gravity of the offence, the complexity of the case and the sentence a defendant may face. The court ought not refuse to award costs to a defendant for engagement of a senior counsel simply for the reason that a counsel or solicitor could have dealt with the case: Archbold Hong Kong 2018 §6-45; R v Dudley Magistrates’ Court, ex p Power City Store Ltd[31]; Xinyuan Trading Co Ltd v NPH Petrochemical Limited[32];

(6)  Nowadays, senior counsel may appear for a defendant without the assistance of a junior counsel.  Therefore, even if the court deems it reasonable for a defendant to instruct a senior counsel to defend him, this does not mean he will automatically be allowed the fees for two counsel (including the senior counsel and junior counsel); and

(7)  The trial court has the advantage over the appellate court in assessing a multitude of factors relevant to the exercise of discretion to award costs.  Hence, the appellate court should be slow to interfere with a trial judge’s decision unless, in the trial judge’s costs order or decision to refuse costs, there is plainly an error which includes consideration having been given to matters that are irrelevant: Tong Cun Lin v HKSAR[33].

Consideration

38.A1’s two grounds of appeal can be dealt with together.

39.In my judgment, the magistrate’s refusal of the costs application by A1 is not amply justified:

(1)  Although A1 was present at the scene, stated that he was the “manager, person-in-charge” of the premises, and stated under caution that the premises had been leased to A2 and he had a share of the revenue, he maintained, at all time, that he did not know how the goods in question were obtained.  Whether A1 was in possession of the fake wallets in question is an element of the offence which the prosecution had the burden to prove.  Given that the magistrate was of the view that a person managing an outlet store may not at the same time possess everything thereat or may not be aware whether the goods placed there on consignment were genuine or false, in what ways did A1 differ in terms of words and conduct from other proper outlet store operators that resulted in him “bringing suspicion upon himself”?  There was no explanation from the magistrate and I also cannot see the reason for that.  

(2)  A1 told the custom officers on his own initiative that he could provide the lease in support of what he said.  The prosecution had had the lease before the trial for consideration.  As the prosecution did not have any evidence indicating what A1 said under caution was not the truth, what justification is there that he made the prosecution believe their case against him was stronger than it was?  I would respectfully disagree with this.

(3)  As far as the prosecution witnesses are concerned, according to PW4, he did not have any contact with A1 and it was another person who distributed number tickets or serve him.  PW2, however, conceded whether or not A1 was managing the entire outlet store was a matter of his own thinking.  All these were evidence in A1’s favour that prosecution had access to before the trial.

40.It follows from the foregoing, in my view, that the magistrate’s refusal of A1’s costs application was in violation of the “presumption of innocence”.  And I see no positive reason for the magistrate to refuse the said application.  In the circumstances, A1, having been acquitted, should have been entitled to costs of the trial.

41.In regard to the fees incurred by A1 in engaging senior and junior counsel at trial, I take into consideration that the facts and evidence of the present case are not complex, but A1 may be sentenced to imprisonment in the event of a conviction and a conviction may undermine A1’s reputation as an outlet store manager since the premises he managed may be reckoned to be one where everything on sale was fake.  I also have regard to the principle that an award of costs is compensatory to compensate the winning party rather than punitive to punish the losing party.  Hence, I consider A1’s decision to instruct senior counsel for his defence was a reasonable one.  That said, there were only factual disputes in the present case and the trial ended within one and a half days.  It was neither necessary nor reasonable, in my judgment, for A1 to engage two counsel for his defence.  Accordingly, I decline to grant certificate of two counsel to A1 and only allow the fees he incurred in instructing senior counsel and solicitor.

Orders

A1

42.A1’s appeal against refusal of his costs application is allowed with costs of the trial and those of the present appeal to A1.  However, I do not grant certificate for two counsel to A1 and only allow the fees he incurred in instructing senior counsel and solicitor.  Such costs are to be taxed by a master, if not agreed.

A2

43.A2’s appeal against conviction is allowed and his conviction quashed.

44.Any application by A2 for costs of the trial and of the present appeal must be made in writing within 14 days from the date hereof. Any objection to A2’s application by the Respondent must be made in writing within 7 days thereafter.  A2 shall provide his response, if any, in writing to the Respondent’s objection within 3 days thereafter.  The Court will hand down its decision on A2’s costs application (if any) in due course.

45.Lastly, it remains for me to thank all counsel for their assistance to the Court.

Miss Hermina NG, SPP of the Department of Justice, for the Respondent

Mr Charles KWOK, instructed by Messrs Benny Kong & Tsai, for the 1^st Appellant

Mr Roy LAU, instructed by Messrs Francis Kong & Co., Solicitors, for the 2^nd Appellant

Translated by the Judgment Translation Unit of the Judiciary and vetted by Mr. P. Y. Lo, Barrister-at-law.