Luk Ying Tai v. The Queen

CACC000246/1968

IN THE SUPREME COURT OF HONG KONG

APPELLATE JURISDICTION

CRIMINAL APPEAL NO.246 OF 1968

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Coram: Briggs J.

Date of Judgment: 6 July 1968

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JUDGMENT

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1. On March 25th 1968 the appellant was convicted of selling wrist watches bearing a false description, namely, "Swiss made" contrary to section 3(2) of the Merchandise Marks Ordinance. He was fined $750. He appeals to the court against his conviction on four grounds.

2. The facts are simple. The appellant is the proprietor of a business which is engaged in the watch trade. He is the registered owner of a trade mark for watches. The movements for the watches are imported, the watch cases are made here and the watches are assembled here. Then they are sold by the appellant to retailers or are exported. The appellant is not a retailer.

3. Originally the watch movements came from Switzerland and when the watches were sold by the appellant they were marked on the dial "Swiss made". Later the watch movements were obtained from countries other than Switzerland but the same mould bearing the impression "Swiss made" was used for the dials. The appellant instructed his foreman to see that the words "Swiss made" were erased from any watches which contained movements which did not come from Switzerland. The appellant has not been incorporating Swiss movements in his watches since 1966.

4. However there were exhibited to the court nineteen watches bearing the description "Swiss made". It is not in dispute that these watches were sold by the appellant and that the description "Swiss made" is a false description: the watch movements having come from Russia.

5. The factory of the appellant is small and there are about six persons engaged in assembling the watches. Some 2,000 watches are assembled daily. At the material time the dials of the watches were printed in the appellant's factory with his trade mark, and the words "Swiss made". When dry the words "Swiss made" were erased - which is a very easy process taking about 30 seconds.

6. The appellant was asked why he had not had a new mould made without the words "Swiss made" appearing on it. His unconvincing answer was that a mould was difficult to make, and it would cost one hundred dollars. He also said that someone might make a duplicate of the mould, which is perhaps an even more unconvincing answer when it is realised that the appellant has been engaged in this trade for 30 years and has a registered trade mark.

7. The truth of the matter is that the appellant had an inefficient assembly line. No check was made of the watches after they had been assembled. And what has occurred is that nineteen watches bearing the erroneous description have slipped by.

8. At the trial in the Magistrates Court the appellant was acquitted of another offence in respect of the same watches. He was charged with causing a false description, namely "Swiss made" to be applied to the dials of the nineteen watches contrary to section 3(1)(d) of the Merchandise Marks Ordinance. In acquitting him on this charge the Magistrate said that though he did not find the evidence of the appellant very impressive he thought that on the balance of probabilities the appellant had acted without the intent to defraud.

9. As to the charge on which he was convicted the Magistrate held that the appellant cannot escape liability because on his own evidence he failed to take precautions necessary to avoid committing an offence under section 3(2) of the Ordinance or that he had an inefficient assembly line which resulted directly in such an offence being committed.

10. The first ground of appeal is that it was not open to the Magistrate to find the appellant guilty of the offence under section 3(2) and at the same time to acquit him of an offence under section 3(1)(d) of the Ordinance. The evidence being exactly the same in each case. Or at any rate the verdicts are inconsistent.

11. If I understand the argument correctly it is this - the defence open to an accused under section 3(1) is exactly the same as that open to him under section 3(2); absence of intent to defraud under the former subsection must be equated with acting innocently under the latter.

12. With respect I do not see anything in this point. The two subsections deal with entirely different offences: nor are the defences the same. A person charged with applying a false trade description is guilty of an offence unless he can satisfy the court that he acted without fraud. A person charged with selling goods bearing a false description is guilty of an offence unless he can satisfy the court that he acted innocently. This is entirely different. Various cases were quoted to me to show that the intent to defraud referred to in section 3(1) of the Ordinance bears a very special meaning and covers cases where there is no moral fault. To come within the ambit of the section it is not necessary to prove that a seller is attempting to pass off inferior goods.

13. But I do not think that this helps us here. In my view the Magistrate was entitled on the same evidence to acquit the appellant of the charge of applying a false trade description accepting his evidence that he had not acted fraudulently and at the same time to convict him of the offence of selling goods with a false trade description, holding that that same evidence did not sufficiently prove the innocence of the appellant.

14. This disposes of the first and third grounds of appeal. The second and fourth grounds of appeal may be taken together.

15. The appellant complains that the Magistrate misdirected himself. He says the Magistrate applied the wrong test when he said that a person can only be said to have acted innocently if he can establish that he honestly and reasonably believed that the false description did not appear on the goods. In addition he says that the Magistrate confused paragraph (a) and (b) of section 3(2) of the Ordinance. And finally that he applied the principles laid down in the case of Kat v. Diment⁽¹⁾ which are inapplicable: but that in any event those principles were misunderstood by the Magistrate.

16. I think a certain amount of confusion has arisen in this case and in some of the cases quoted before me because paragraph (a) of subsection 2 of section 3 of the Ordinance has not always been clearly distinguished from paragraph (b). With paragraph (a) we are not here concerned: it was not relied upon as a defence by the appellant and indeed from the facts of this case could not have been relied upon.

17. It was argued on behalf of the appellant that if it could be shown that the appellant honestly and genuinely believed that the watches did not bear a false description, however unreasonable such belief might be, that that would be enough to allow the appellant to take advantage of paragraph (b). What is objected to is the importation into this case of the element of "reasonableness". And comparisons were drawn between the wording of this Ordinance and the special defences to the crimes of blackmail, bigamy etc. It was argued further that the mens rea in the sense of an intention to defraud was not a constituent of the offence forbidden with which the appellant was charged.

18. In Allard v. Selfridge⁽²⁾ Shearman J. relying on Stone v. Burn⁽³⁾ and the principle enunciated in Christie v. Cooper⁽⁴⁾ said "I think the plain meaning of this statute is that the guilt or innocence is determined by the answer to the question whether intentionally an act has been done which is contrary to the words of the statute". And Lord Hewart said "'Innocence' for this purpose means 'innocence of any intention to infringe the Act of Parliament'".

19. If a person sells watches bearing the description "Swiss made" which are not made in Switzerland, the law assumes he intends to sell watches under that description, namely he intends to do the act forbidden by the section. He is guilty of an offence under the section unless he can bring himself within either of the two defences in paragraphs (a) and (b). Here of course it is paragraph (b) with which we are concerned. He must be convicted unless he can show on the balance of probabilities that there was no intention to sell the watches as "Swiss made".

20. In Slatcher v. Mence Smith⁽⁵⁾ it was held that the defence contained in paragraph (b) applied only where the defendant had acted inadvertently or under some mistake of fact and the fact that the defendant had acted in good faith and had taken all precautions against committing an offence against the Act would not amount to proof that otherwise he had acted innocently within the meaning of paragraph (b).

21. It was further argued on the appellant's behalf that as he had no knowledge of the fact that the watches were sold with the false description upon them he could not be convicted. It is obvious that his knowledge is a most important factor to consider. And it was not in dispute that in the present case the appellant did not see the finished articles in the condition they were in before they were sold. But lack of knowledge is only one factor to be considered. In Coppen v. Moore No.2⁽⁶⁾ an employee acted not only without the knowledge of his employer but against his express instructions and it was held that the employer was none the less liable. In this case the appellant was both manufacturer and seller.

22. Looking at the facts of the case here has the appellant proved on the balance of probabilities that he acted inadvertently or under some mistake of fact? I do not see that he has. The facts show that the system of assembly was inefficient. For two years no "Swiss made" parts had been assembled yet the mould bearing the words "Swiss made" was still in use. This coupled with the smallness of the factory, the ease with which the words could be removed from the article, the lack of supervision and the lame excuse for not having a new mould made all point to the fact that the selling of the watches with the false description was the result of the negligence of the appellant and not to mere inadvertence. If a person's negligence directly results in the selling of goods bearing a description which is false that person cannot in my view be said to have acted innocently as that term has been interpreted by the court.

23. I do not think that the words of the Magistrate in his Statement of Findings go further than this. What he is there saying is that he believed the evidence given by the appellant and his witnesses but that that evidence showed that the appellant had not acted innocently. The lack of taking all reasonable precautions is only another way of saying that the system of assembly was inefficient, was not efficient enough to prevent the mischief aimed at in the Ordinance.

24. It is true that Kat v. Diment⁽¹⁾ was referred to by the Magistrate and that that case is concerned with an offence under subsection 1 of the Ordinance. However the Magistrate was concerned with the comments upon Allard v. Selfridge⁽²⁾ which are contained in the judgment of that case and which are directly in point in this case.

25. I therefore think that the decision of the Magistrate was correct and the appeal is dismissed.

Representation:

Charles Ching (Philip Remedios & Co.) for Appellant.

Sandor C.C. for Crown/Respondent.

6th July, 1968.

(1) (1950) 2 A.E.R. 657.

(2) (1925) 1 K.B. 129.

(3) (1911) 1 K.B. 927.

(4) (1900) 1 Q.B. 522.

(5) (1951) 2 K.B. 631.

(6) (1898) 2 Q.B. 306.