Attorney General v. Chan Kin Yam

CAAR000003/1985

BETWEEN

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Coram: McMullin, V.-P., Silke, J.A. & Mayo, J.

Dates of hearing: 28 and 29 May 1985

Date of delivery of judgment: 7 June 1985

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JUDGMENT

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Silke, J.A.:

1. This is an application by the Attorney General for a Review of the sentences passed upon the Respondont, Chan Kin Yam, who trades as Kai Shun Trading Company. Leave out of time was granted on the 26th March 1985.

2. The Respondent had faced two charges in the Magistrates Court. The first, exporting "strategic commodities" not under and in accordance with a licence, which is an offence contrary to Regulation 2 of the Import and Export (Strategic Commodities) Regulations, Cap. 60. It alleged that he, on the 11th November 1984, did export strategic commodities namely, 50 sets of IBM personal computer XT system unit, not under and in accordance with an export licence granted by the Director of Trade. This charge was later amended and I shall deal with that in a moment.

3. The second charge was one of removing a prohibited article from a specified place without authority, which is an offence contrary to section 12(6), read with section 12(4), of the Import and Export Ordinance Cap. 60. This also related to the computer XT system unit- "the computer unit".

4. The Respondent was fined $30,000 on the first charge and $5,000 on the second. The application of the Attorney General is based on the grounds that the sentences are manifestly inadequate and wrong in principle. His concern is with the fine imposed on the first charge.

5. The history of the proceedings is of moment and it is this: The Respondent first appeared before a Magistrate sitting at South Kowloon Magistracy where, upon the facts being read to him, he pleaded guilty and was fined, on the first charge, the sum of $250,000 and on the second $10,000. He then sought a Review and, in some fashion which is not clear to us the Crown not being then present, was permitted to alter his plea.

6. Upon his next appearance before another Magistrate he pleaded not guilty and, the prosecution evidence having concluded, an application to amend the first charge to add the words "in parts thereof after the words "50 sets" appearing therein was granted. Whereupon the Respondent altered his plea to one of guilty to both charges and the fines, to which I have referred, were imposed.

7. It is unfortunate that the trial Magistrate, having been asked to comply with the provisions of subsection (2A) of section 81A of the Criminal Procedure Code did not see fit to do so properly. His purported compliance was to send to the Crown the order that appears at the conclusion of the record and which reads:

"Defendant has taken all initiatives in obtaining a proper licence to export his computers.

Defendant is fined $30,000 for the A charge and $5,000 for the B charge payable within one month."

8. This is unhelpful to the Crown, the Respondent and this Court. We are not assisted by the record which is largely incomprehensible.

9. However, through the good offices of counsel, the facts generally have been agreed.

10. Those facts are: That in early October Fai Ma Trading Company imported into Hong Kong the computer units. These, in the amount of 150, were part of a larger order of 500. These goods were inspected by Customs and Excise personnel and Fai Ma was served with an order specifying the place in which they should be kept and prohibiting their removal from that place without the authority of the Director of Trade. Further units arrived on the 22nd October 1984, in respect of which a further restrictive notice was served. On the 23rd October the Telecommunications Branch of the General Post Office was asked to classify the computer parts. The computer system contained nine parts which required licences. Of those nine, three were classified as being within the ambit of the Strategic Commodities Regulations. For the six parts to which those regulations did not apply, the Respondent obtained export licences. He had a customer in China for fifty units and desired to export by rail the whole of each computer unit. Each computer unit would be useless without the particular three parts which needed the "strategic commodities" licence. There was a prior legitimate sale before the equally legitimate sale of the units to the Respondent.

11. Strategic commodities need a special licence. The schedule to the relevant Regulations is based upon a list formulated by the Co-ordinating Committee (COCOM) for Mutilateral Exports, which comprises the North Atlantic Treaty Organisation countries and Japan as members. This Committee has the responsibility of preventing certain high technology equipment, such as electronic computers, from being exported to certain countries designated by it. The Trade Department is the sole licensing authority in Hong Kong. It may grant or refuse export licences to cover the export of such items to the designated countries of which one is the People's Republic of China.

12. The United States Customs Service had alerted the Customs and Excise Department in Hong Kong of the importation from the United States of these computer units.

13. The Respondent was well aware that he needed licences having been so informed by the Trade Department. He equally well knew that the issue of "strategic commodities" licences could well take some time, for approval is necessary from the United Kingdom before the Trade Department can issue them. He was fully aware that the restrictive notice necessitated his keeping the compute units in his godown until such time as he was given authority to remove them by the Trade Department.

14. He was clearly impatient, having applied for and received his export licences relating to general parts, to meet his customers' demands. He had delayed delivery for about 14 days in the hopes that the strategic commodities licence would become available. On the 11th November, without such licence, he exported the units to his customer in China, a University. On the 7th December 1984 a Customs Officer, having for some days previously attempted to contact the Respondent, finally did so, went to the specified godown and found that the computers units had been removed and without authority.

15. The order to China was worth approximately HK$2 million and, on his own evidence, the Respondent's profit was $100,000.

16. In Popular Machinery Co Ltd. v. The Queen, ⁽¹⁾ the Full Court enunciated the principle that in circumstances such as this, a person should not be allowed to profit from his crime and suggested that a tariff of two and one half times the profit be the appropriate fine. This principle was followed by Addison, J. in a Magisterial Appeal, Shiu Chen Chuan v. The Queen, ⁽²⁾ where he applied the suggested tariff. Both of those cases involved deliberate deception by the defendants concerned. We accept that there was no deliberate deception here but that the Respondent, anxious no doubt to complete a profitable commercial transaction, ignored the necessity for licences and the directions properly given him.

17. In The Queen v. Hau Sang, ⁽³⁾ it was said:

"It is appropriate, when deciding on the sentence, to have regard to the damaging effect the breach of the law may have on our external relations, which, in their turn, can have domestic repercussions."

18. The seriousness with which the legislature views offences of this kind is reflected in the recent increases in penalty to a maximum of $500,000 from a $50,000 fine on the strategic commodities charge - With the imprisonment period being increased from one to two years.

19. We have also been referred to The Attorney General v. Marvels Clothing Ltd., The Attorney General v. Eagle's Eye (Hong Kong) Ltd., ⁽⁴⁾ two Application for Review heard together, in which another Division of this Court doubted whether it was right to place "such singular emphasis upon the question of profit." Cons, J.A. in delivering the judgmnt of the Court said, at page 6:

"In our view the damage occasioned abroad is more correctly reflected in the size of the transaction. The larger and more valuable that it is, the more will other countries be disturbed by the fact that Hong Kong allowed it to occur."

He went on:

"           There is a further point in relation to profit.A fine should in no instance be fixed at a level which would allow a person or corporation to emerge from prosecution still showing a profit on the relevant transaction.

We agree that as a general rule it is undesirable to assess fines on a purely mathematical basis. Nevertheless, in the interest of uniformity there must be some basic guideline, which can then be adapted by the individual court to the individual circumstances. We would suggest as a guideline a figure of 40% of the value of the goods. We appreciate that this will result in substantial fines, but in our view these are substantial offences and the action of the legislature in 1980 indicates that the legislature intended them to be treated as such."

20. We are, with respect, in entire agreement with those general conclusions. However, each case must be dealt with on its individual merits. Were we here to adopt the suggested guildeline of 40% of the value of the goods, we would arrive at a fine considerably in excess of the maximum permitted.

21. There was, as we have said, no deliberate deception in the sense there can be where applications relating to export quotas or countries of origin are deliberately falsified. We are told that this is the first case of its king which has reached this Court where strategic commodities arc involved.

22. We adopt the principle that as well as a removal of profit there should also be an added penalty. We think that in the circumstances of this particular case that is the attempt to get an appropriate licence and the substantial hope that it would soon be available, the over anxiety of the Respondent to complete his transaction, the brining into being of his company as lately as June of 1984, his possible inexperience which led him to leave too short time between the acceptance of the order from his customer and the promise of its execution and his clear record that a proper fine would have been $175,000.

23. This being a Review, we would allow the usual discount and, the sentence imposed by the trial Magistrate being both wrong in principle and manifestly inadequate, quash the sentence on the A charge and substitute therefore a fine of $150,000. As on the second charge a fine of half the maximum penalty of $10,000 was imposed, that fine will remain unaltered. The Application for Review is granted in the terms that we have stated.

(1) Criminal Appeal 950/71

(2) Criminal Appeal 785/81

(3) [1963] H.K.L.R. p.881

(4) Application for Review No. 77 of 1984, Application for Review No. 8 of 1984 - unreported

Representation:

J.P. McNamara, Esq., for the Attorney General - Applicant.

K. Ramanathan, Esq., (So & Karbhari) for Respondent.