The Secretary for Justice v. Choi Sai Lok and Another

CAAR000002/1999

HEADNOTE

[(1) Custodial sentences of immediate effect should be imposed for offences under section 118(1)(d) of the Copyright Ordinance (Cap. 528) unless the circumstances can truly be said to be exceptional.

(2) A distinction should be drawn between the proprietors of retail outlets and warehouses who commit such offences, and those employed by them. The former should receive longer sentences than the latter. The roles played by storemen, packers, delivery men and salesmen may be different, but there is not much difference between them in terms of criminal culpability.

(3) An assertion by a defendant that he is a mere employee in the business will not warrant the suspension of an otherwise appropriate sentence of imprisonment.]

CAAR 2/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

APPLICATION FOR REVIEW NO. 2 OF 1999

(ON APPEAL FROM DCCC NO. 1231 OF 1998)

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Coram: Nazareth V.-P., Stuart-Moore V.-P. and Keith J.A. in Court

Date of Hearing: 8 September 1999

Date of Delivery of Judgment: 8 September 1999

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J U D G M E N T

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Keith J.A. (giving the judgment of the Court):

Introduction

1. The Respondents pleaded guilty in the District Court to charges relating to the possession of infringing copies of copyright works. They were sentenced by Judge Davies to suspended terms of imprisonment. The Secretary for Justice now applies for a review of those sentences, leave to do so having been granted by Chan C.J.H.C.

The statutory provisions

2. The section under which the charges were laid was section 118(1)(d) of the Copyright Ordinance (Cap. 528). It provides as follows:

"A person commits an offence if he, without the licence of the copyright owner..., .... possesses for the purpose of trade or business with a view to committing any act infringing the copyright ..... an infringing copy of a copyright work."

That Ordinance came into force in June 1997, and replaced an earlier Copyright Ordinance (Cap. 39) which had been enacted in 1973.

3. When the original Ordinance had been enacted, the maximum sentence for the offence equivalent to section 118(1)(d) of the new Copyright Ordinance was a fine of $1,000.00 in respect of each infringing copy and imprisonment for 12 months. In those days, the imposition of fines tended to be the norm. The maximum was increased in May 1995 when the old Copyright Ordinance was amended. From then on, the maximum sentence for the offence equivalent to section 118(1)(d) of the new Copyright Ordinance was

(a) in the case of a first conviction for such an offence, a fine at level 4, i.e. $25,000.00, for each infringing copy and imprisonment for 2 years, and

(b) in the case of a second or subsequent conviction for such an offence, a fine at level 5, i.e. $50,000.00, in respect of each infringing copy and imprisonment for 4 years.

The maximum sentence was again increased in June 1997 when the offence created by section 118(1)(d) of the new Copyright Ordinance was enacted. The distinction between first and subsequent offences has disappeared, and by section 119(1), a person who commits an offence under section 118(1)(d) is liable to a fine at level 5, i.e. $50,000.00, in respect of each infringing copy and to imprisonment for 4 years. Offences relating to the manufacture of equipment for making infringing copies are punishable with a fine up to $500,000.00 and imprisonment for 8 years.

4. These increases in the maximum sentences reflect the escalating gravity with which offences under section 118(1)(d) have come to be viewed. The message is a clear one. As the judge himself said when sentencing the Respondents:

"It is clear by the enhancement in June 1997 of the maximum punishments for such offences that the authorities considered the problem of copyright piracy to be a continuing and major problem to Hong Kong's good reputation in the world."

The judge was echoing what a number of judges had said before. In Ng Wai Ching (MA 1309/96), Leonard J. said:

"The victims are the proprietors of the intellectual property whose rights are being violated. There is international pressure upon Hong Kong to stamp out the traffic in pirated goods. Failure to attack the illegal activity which is carried out openly and in defiance of the law in certain notorious locations in Hong Kong would be perceived as a default on the part of the government on its international obligations."

In Li Wan Kei (CA 13/97), Mortimer J.A. (as he then was) said, in the context of an application for leave to appeal against sentence in a copyright piracy case, that "Hong Kong's international reputation as a fair trading centre must be protected". He added that deterrence was necessary and therefore deterrent sentences were called for. Finally, in Tsui Man Leung (HCMA 643/98), Deputy Judge Lugar-Mawson (as he then was) said:

"It is well-recognised that the piracy of CD discs, both video CD discs and computer discs, is an enormous problem in Hong Kong. Hong Kong has gained the unenviable reputation among all major trading nations in the world, both in the West and in the East, of being a centre both for the production and supply of these illegal items. This is causing tremendous difficulties in relation to Hong Kong's trading relations, with its major international customers. It could possibly lead to major trading countries such as the United States and the European Union imposing economic sanctions upon Hong Kong. That would severely affect Hong Kong's economy....."

We do not suppose that these comments were based on evidence. Rather, they were facts of which the judges who made them felt able to take judicial notice. We take judicial notice of them as well.

The facts

5. On 5th April 1998, Choi Sai Lok, the 1st Respondent (R1), was seen by police officers in a street in Shamshuipo. He was carrying two cartons. When he saw the police, he discarded the cartons and walked off. The police officers stopped him and began to question him. While they were questioning him, Mak Wai Hon, the 2nd Respondent (R2), was seen walking out of a nearby building. He was carrying a carton. When he saw the police questioning R1, he discarded his carton and walked off. He too was stopped.

6. The two cartons which R1 had been carrying were found to contain 719 video compact discs. They were all infringing copies. It was his possession of them which constituted the first charge. When he was interviewed, he admitted that he worked for a man called "Ah Hung", and that he was paid $350.00 a day for delivering compact discs, which he knew to be pirated copies, from the mezzanine floor of the nearby building to wherever he was directed to take them.

7. The carton which R2 had been carrying was found to contain 544 video compact discs and 100 music compact discs. They were all infringing copies. It was his possession of them which constituted the second charge. In addition, the police found a bunch of keys on R2. Those keys enabled the police to gain access to the mezzanine floor of the nearby building. There they found a substantial number of video compact discs and music compact discs, together with paraphernalia used for labeling, pricing and packing them. Of those compact discs, 21,763 of the video compact discs and 1,200 of the music compact discs were found to be infringing copies. It was R2's possession of them which constituted the third charge. There were other compact discs there, but there was no evidence as to whether they were infringing copies, and they were therefore not taken into account. When R2 was interviewed, he gave a version of events similar to that of R1. He also admitted that he worked for Ah Hung, and that Ah Hung had given him the keys to the premises. He was also paid $350.00 a day for packing whatever compact discs Ah Hung wanted and delivering them to a designated delivery point. He also admitted knowing that the compact discs were pirated copies.

8. The upshot was that R1 faced a single charge relating to the video compact discs found in the two cartons he had been carrying, and R2 faced two separate charges relating to (a) the compact discs found in the carton he had been carrying, and (b) the compact discs in the nearby building. The prosecution did not challenge the truth of what the Respondents had said when they were interviewed, and that was therefore the factual basis on which they were to be sentenced.

The approach of the judge

9. In a clear and concise explanation of his reasons for sentence, the judge said:

"... so far as I am aware the Court of Appeal still feels that at this stage no guidelines for sentence need be laid down because the circumstances of offences and offenders obviously vary widely. That said, the seriousness with which these offences are now viewed would clearly make some form of custodial sentence the norm rather than the exception when persons are convicted of being involved in this illegal enterprise, although each case has to be considered on its merits; that is, bearing in mind its particular facts and the circumstances of the individual offenders."

With that we entirely agree, though we emphasise that custodial sentences of immediate effect should be imposed for offences of this kind unless the circumstances can truly be said to be exceptional. Indeed, the judge himself said, at the very end of his sentencing remarks:

"In conclusion, I wish to give this general warning that anyone connected in any position with this illegal activity will have to show exceptional circumstances to escape with anything less than some form of custodial sentence."

The open flouting of the law in this trade requires sentences, even for first offenders, to act as a deterrent to others. The judge then went on to deal with a number of cases which had been cited to him. Of those cases, he said:

"... none can be seen as being on all fours with the present case and indeed were related to offences which occurred prior to the recent enhancement in the maximum sentence. Not only do the numbers of pirated copies understandably differ from the present case, but more to the point the status of the particular defendants were different, being either owners or salesmen, whereas these two defendants were transporters of the goods rather than distributors."

We shall have to return to this passage later.

10. The judge then referred to the personal circumstances of the Respondents. They were, or were to be treated as, family men in their early forties of hitherto good character. They had been in regular work throughout their working lives but had recently become unemployed. They had succumbed to the offer of "dubious" casual work from Ah Hung when no other work was available to them, and they had made a clean breast of what they had done when arrested. In the case of R2, the judge noted that it was only because he had been considered as trustworthy by Ah Hung that Ah Hung had entrusted him with the keys to his storeroom.

11. In these circumstances, the judge took 18 months' imprisonment as his starting point for R1, and 2 years' imprisonment as his starting point for R2. Those were the starting points he would have taken had they pleaded not guilty. Having considered their personal circumstances, and in view of the fact that their "status" in this business was that of "transportation workers" rather than "owners" or "salesmen", the judge believed that justice would be served by imposing suspended terms of imprisonment. He therefore sentenced R1 to 18 months' imprisonment suspended for 2 years, and ordered him to pay $5,000.00 towards the costs of the prosecution. He sentenced R2 to 18 months' imprisonment on the second charge and to 2 years' imprisonment on the third charge. They were to be served concurrently with each other but were also to be suspended for 2 years. He was ordered to pay $8,000.00 towards the costs of the prosecution. It should be noted that the judge did not reduce his starting points to take into the account the pleas of guilty. He plainly took the view that the pleas of guilty should be reflected in the suspension of the terms of imprisonment.

The appropriate sentences

12. We do not know what cases were cited to the judge, though one of them was undoubtedly Li Wan Kei. A total of eight cases have been referred to us by Mr. Kevin Zervos for the Secretary for Justice in his helpful skeleton argument. All of them resulted in custodial sentences of immediate effect being imposed, though that does not mean that there have not been other cases in which non-custodial sentences or suspended terms of imprisonment have been imposed. Half of the cases cited by Mr. Zervos related to offences committed before the enactment of the new Copyright Ordinance, and the other half related to offences committed since then. Some of them concerned the proprietors of retail outlets of varying sizes, while others concerned young men who worked at such outlets as salesmen. One of the defendants ran a warehouse at which the proprietors of various retail outlets kept their stocks so that they did not have to have pirated compact discs in their shops. None of these cases concerned storemen, packers or delivery men. In almost all the cases, the defendants had pleaded guilty, and apart from two young offenders who were ordered to be detained in a detention centre, the sentences of imprisonment ranged from 6 months' to 16 months'.

13. We have no doubt that a distinction should be drawn between the proprietors of retail outlets and warehouses who commit these offences, and the persons employed by them. The former should receive longer sentences than the latter. But where we disagree with the judge is in the distinction which he drew between salesmen on the one hand and couriers on the other. The roles played by storemen, packers, delivery men and salesmen may be different, but we do not see much difference between them in terms of criminal culpability. What will justify differences in sentences between them will be, for example, the number of infringing copies involved, the length of time in which they had been engaged in the trade and factors personal to them such as pleas of guilty.

14. What must be stated is that an assertion by a defendant that he is a mere employee in the business will not warrant the suspension of an otherwise appropriate sentence of imprisonment. In this context, it is well to heed the wise words of Leonard J. in Ng Wai Ching:

"The typical case is one where a young man with no previous convictions is employed to sell the goods from a small shop for a salary. When arrested and charged he pleads guilty and says that he had not been employed there for long. The employers are not brought to justice despite claims in mitigation that the salesman gave as much information as he could to investigators..... It is very unfortunate that, despite their efforts the Customs and Excise appear to have been unable so far to catch the big fish of the trade and can only bring the minnows before the courts. Without their salesmen, however, the big fish cannot operate and so the salesmen must be deterred. Experience has shown that they are not deterred by fines, so that resort needs to be had to custodial sentences, even where the offender is a young person with a clear record."

That is a clear echo of the thinking behind the sentencing, for example, of couriers in the narcotics trade.

15. For these reasons, we have concluded that in suspending the sentences of imprisonment which he imposed on the Respondents, the judge was wrong in principle. There were no exceptional circumstances which justified the course which the judge took. Had he been imposing sentences of imprisonment of immediate effect, we think that he would have adopted slightly lower starting points. In our opinion, the correct starting point in the case of R1 would have been 12 months' imprisonment, and the correct starting point in the case of R2 would have been 18 months' imprisonment. The Respondents' pleas of guilty and other mitigating factors justify reducing those sentences by one-third, bringing them down to 8 months' and 12 months' imprisonment respectively. Since this application for review involves the Respondents having to serve sentences of imprisonment which they would not otherwise have had to serve, we think that a further discount of one-quarter is appropriate.

16. There is one further point which we wish to add. The preparation of a case of this kind for trial involves considerable efforts in locating the copyright owners of the infringing copies, and obtaining confirmation from them that they are indeed the copyright owners and that the copies seized were not produced under licence. That caused Mortimer J.A. in Li Wan-kei to say:

"It may be that ...... if there is a full indication of an intention to plead guilty at the very outset which avoids all the elaborate preparation and expense for trial, this also will be reflected in the sentence passed."

We agree with that observation.

Conclusion

17. Accordingly, this application for review is granted, the sentences imposed by the judge are set aside, and the following sentences will be substituted for them. On charge 1, R1 will go to prison for 6 months. On charge 2, R2 will go to prison for 6 months. On charge 3, R2 will go to prison for 9 months. Those sentences will be served concurrently with each other making 9 months' imprisonment in all. There will no order for any payment towards the costs of the prosecution.

Representation:

Mr. Kevin Zervos, of the Department of Justice, for the Applicant.

Ms. Juliana Chow, instructed by the Director of Legal Aid, for the Respondents.