HKSAR v. Tsui San Lan and Another

DCCC 231/2020

[2020] HKDC 751

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CRIMINAL CASE NO 231 OF 2020

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Reasons for Sentence

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1.On 27 January 2019, Custom and Excise Department conducted a test-buy operation in premises where false trade mark goods were being sold. Two test-buy agents successfully purchased four pieces of goods to which a forged trade mark was applied in Flat C2, 1st Floor, Fu On Commercial Building, 190-192 Cheung Sha Wan Road, Sham Shui Po. The 1st defendant sold them the four items and the 2nd defendant was outside the door ushering customers in and out. Both defendants were charged with selling goods to which a forged trade mark was applied (Charge 1).

2.I will make it clear here that for the 2nd defendant, as far as Charge 1 is concerned, that charge was put on the court file.

3.When the operation turned overt, Customs officers entered these premises, hereinafter referred to as “Flat A”, and found many forged trade mark items for sale.  The 1st and 2nd defendant have pleaded guilty to this charge, Charge 2.

4.Another flat in the same building, Flat B, 10th Floor, hereinafter referred to as “Flat B”, was searched by Customs officers and similarly they found many forged trade mark items for sale inside those premises.  The 1st and 2nd defendant have pleaded guilty to this charge, Charge 3.

5.There was a third flat in the same building, Flat C, 6th Floor, hereinafter referred to as “Flat C”, which was also searched by Customs officers and likewise they found more forged trade mark items for sale inside those premises.  The 1st and 2nd defendant have pleaded guilty to this charge, Charge 4.

6.In short, the 1st defendant has pleaded guilty to one charge of selling forged trade mark goods in Flat A and three charges of possession for sale or for any purpose forged trade mark goods in Flats A, B and C respectively.

7.The 2nd defendant, who is the 1st defendant’s boyfriend, has pleaded guilty to the same three charges of possession for sale or for any purpose forged trade mark goods.

Summary of facts

8.Flat A was set up as a showroom for customers to enter as well as partly a storeroom for forged trade mark goods.  Flat B and C were only storerooms where forged trade mark goods were kept and, when the showroom needed replenishing, goods were moved from those two storerooms.

9.The Customs & Excise obviously had information that this operation was selling low-grade forged trade mark goods to domestic helpers.  The test-buy agents were both Filipino nationals who entered to secure a controlled buy.  They identified the 1st defendant as the saleswoman and cashier, taking a total of $140 from both of them for four items.  They identified the 2nd defendant as having stood outside the door of the flat, Flat A, ensuring a smooth flow of customers in and out, making sure the door remained closed to avoid detection.

10.After their arrest, both were searched and both had keys to all the material premises in that building.

11.In a fourth flat, hereinafter referred to as “Flat D”, Customs & Excise officers found tenancy agreements for those premises. The 1st defendant was the tenant on paper for Flat A between January 2016 and March 2019 as well as the tenant for Flat B between July 2016 and February 2019.  She was also the tenant for Flat D between September 2017 and March 2019.  She was also the registered holder of the water and power supply accounts for Flats A and D.

12.In the search of the premises, Customs & Excise officers found in Flat A a total of 7,847 items to which a forged trade mark had been applied.  In Flat B, they found a total of 6,013 similar items. In Flat C, they found a total of 4,772 similar items.  By “items”, I refer to handbags, wallets, shoes and sports trainers.  The items add up to 18,636 if I include the four items of Charge 1, those four items sold to the two undercover agents.  Customs & Excise Department have calculated that the total value of all these items is an estimated HK$12 million. 

13.Both defendants made full admissions and co-operated with the police.  Under caution, they admitted their involvement in these offences.  The 1st defendant says the entire operation is her responsibility only.

Mitigation

14.Both defendants were represented by Ms Catherine Wong leading Mr Michael Lee.  I thank them for written mitigation submitted. Everything that can be said on behalf of both defendants has been canvassed in mitigation. 

15.I have been told that the 1st defendant is 40 years old, divorced, and a mother to one teenage daughter.  She does have one previous criminal conviction in 2002.  She was fined for a breach of her condition of stay.  Despite this old conviction, I will treat her as a woman with a clear record. 

16.The 2nd defendant is 41 years old, single, and living with the 1st defendant and her daughter.  He is a man with a clear record.  Both his parents are over 80 years old and receive visits from the 2nd defendant every week.  They have not been told about these offences so as not to worry them.  Both defendants have pleaded guilty at the earliest opportunity.

17.The 1st defendant was born in Mainland China and settled permanently in Hong Kong in 2006 after marrying her husband, a Hong Kong resident.  She had to give up her education in Mainland China after Primary 3 because she came from a poor farming background and was required to give up her education to look after her younger siblings at home.  Her biological father had passed away when she was only 6 and her mother remarried.  She left home to work in factories in Dongguan to support her family at a young age.  She met her husband when she moved to Shenzhen in around 1999 to sell clothes as a hawker.  They married in 2001 and their child was born in 2002. 

18.After she came to Hong Kong she worked in the hotel industry from 2006 to 2009 and did well.  I have been shown her numerous awards and certificates obtained as a hotel employee.  She divorced her husband in 2007 and brought up her daughter on her own.  Her former husband was a gambler and burdened the family with his gambling debts, which she was required to pay on his behalf. 

19.In 2009 she left the hotel industry to set up her business selling clothes and garments.  She worked hard and was successful enough to be able to put down a deposit on a property in Kowloon in 2016 with some help from friends and relatives.  She lived there with her daughter and her boyfriend.

20.With the rise of online shopping, her business started to falter, leading to cash flow problems and even mortgage repayment difficulties.  At the end of 2018, a friend suggested a bulk purchase of counterfeit goods from Mainland China, which could be purchased cheaply. Profit could be made by selling them even at low prices.  She intended to sell them to domestic helpers at low prices.  She did not suggest to any of her customers that these goods were genuine goods.  She is remorseful and underestimated the seriousness of the offences. 

21.It is stressed she will not reoffend and is no longer a tenant of Flat A, B or C. 

22.I have a mitigation letter from her daughter, asking for leniency for her mother.  She believed her mother only wanted to provide her with a good home and education.  She has passed her DSE exams and will read journalism at the University of Hong Kong this year. 

23.I have also heard full mitigation for the 2nd defendant.  After he finished school he attained certificates in kitchen operations and baking.  He attended vocational training courses.  He started working in different hotels and restaurants from 1998.  He did start his own restaurant with a friend in 2011 but now, since his arrest for these offences, has been working in a Hyatt hotel as an assistant pastry chef, earning $25,000 a month.  He has continued to educate and train himself even after he entered the workforce.  I have also been told that he is a kind and charitable person. He has, for over 10 years, made regular monthly donations to various charities to give something back to society. 

24.He admits that he helped the 1st defendant manage that business by restocking goods from the storeroom to the showroom and cleaning up from time to time.  He did not receive any remuneration or benefit economically from these offences.

25.Defence counsel, Ms Wong, has referred me to two authorities and set them out in detail in the written submissions for mitigation.  Essentially, there are no sentencing guidelines for the offence of selling goods to which forged trade marks are applied and possession for sale or for a purpose of trade or manufacture of the same goods.

26.In HKSAR v Hui Chi Kwan, CACC 138/2012, the appellant was sentenced to 8 months’ imprisonment.  He had operated 14 retail shops selling forged trade mark goods purporting to be genuine items. The 14 retail stores were designed and decorated in such a way to give a false impression that the goods sold within were associated with the brand Burberry.

27.The Court of Appeal in that authority referred to the Secretary for Justice v Lam Chi Wah [1999] 4 HKC 343, where the Court of Appeal did not consider tariff guidelines for offences of this nature but re-sentenced that defendant and used a starting point of 12 months’ imprisonment for that case.  That case involved 14,000 items of counterfeit goods of different trade marks for sale.  That defendant pleaded guilty in the District Court. 

28.It was noted in both authorities that offences involving counterfeit goods under both the Copyright Ordinance and the Trade Descriptions Ordinance were becoming more prevalent.  This had a detrimental effect to Hong Kong’s reputation.  Both courts have said that, whilst fines may have been adequate punishment in the past, more severe sentences were required for the future.  Sentences that had a deterrent effect should be imposed.

Reasons for sentence

29.I have taken into account everything said on behalf of the defendants in mitigation, including their backgrounds, their remorse and previous clear records.  I have considered the sentences and principles referred to in those two authorities above.  I have taken into account the history behind this operation and how it was set up.  It is also very relevant that the foreign domestic helper market was the target.  This is a market I doubt would be spending large sums of money on such goods.  This is why I suspect and accept the submission that the quality of goods were not of a particularly high grade. 

30.I have to balance those facts against the fact there were a large number of items involved in this case, an operation of a considerable size.  It was not a hawker selling low-grade counterfeit goods from a market stall.  Premises were rented to operate this business. 

31.I also have to take into account that offences involving counterfeit goods do affect the reputation of Hong Kong.  The Court of Appeal has said sentences imposed should have a deterrent effect.  That court said more severe sentences should be imposed going forward if the problem persists or the facts require it. 

32.It is fair to say that few of these cases have come to the District Court, but on this occasion the number of items were over 18,600 pieces and the valuation that the Customs & Excise Department applied to these items is high:  $12.1 million.  The prosecution agrees that this was the basis for bringing this case to this court.

33.I have been informed that the Customs & Excise Department calculate what they estimate the retail price for each fake item to fetch to reach a valuation.  They use information obtained from their past cases, investigation and other data.  They had no information what the 1st defendant sold those various items for, but we do know from the test-buy by two Filipino undercover agents that a Louis Vuitton wallet was sold for $50 and a Louis Vuitton pouch was sold for $20.  I was told, for example, the Department estimated $900 would buy a small counterfeit handbag, $1,100 would buy a medium-size counterfeit handbag, and $1,300 would buy a counterfeit handbag.

34.Ms Wong does not challenge the calculation of the estimated value but she has asked me to consider it to be on the high side, when it is accepted that the 1st defendant’s targeted market is domestic helpers.  This operation was conducted on a Sunday, when the majority of domestic helpers are on holiday and the showroom would be sure to be open.  

35.I find there is merit in Ms Wong’s submission. I doubt many domestic helpers would spend 900 to 1,300 dollars on a handbag.  I do not criticise the Customs & Excise Department’s calculation but I think, in this particular and rather unusual case, the estimate value is high.

36.I have considered the roles of each defendant and what they admitted to the police.  It may very well be that the 1st defendant financially funded this illegal business but the 2nd defendant did assist her in running it.  The 1st defendant has stressed that he is only assisting her in his own time and not part of the business or operation.  Ms Wong has urged me to find him less culpable than the 1st defendant.

37.After careful consideration of all the relevant factors above, I find it appropriate that the 1st defendant does serve a term of imprisonment to reflect the facts and the principle a deterrent sentence should be imposed in such cases. 

38.For the 1st defendant, I take a starting point of 15 months for Charges 1 to 4 and I apply a discount of one-third for her guilty plea at the earliest opportunity.  After that discount is applied, the defendant is sentenced to 10 months’ imprisonment for each charge.  I order all sentences to be served concurrently.  Accordingly, the 1st defendant is sentenced to a total of 10 months’ imprisonment.

39.For the 2nd defendant, I take the same starting point of 15 months for Charges 2 to 4 and I apply a discount of one-third for his guilty plea at the earliest opportunity.  After that discount is applied, the 2nd defendant is sentenced to 10 months’ imprisonment for each charge.  I order all sentences to be served concurrently.  I order that all sentences be suspended for a period of 18 months.  Accordingly, the 2nd defendant is sentenced to a total of 10 months’ imprisonment, suspended for 18 months. 

40.This means if the 2nd defendant commits and is convicted of an offence punishable by imprisonment in the next 18 months, then he will more than likely serve this 10-month term of imprisonment on top of his other sentence.