Tung Hing Technology Investment Ltd. and Others v. The Commissioner of Customs and Excise

HCAL000095A/1998

1998 HCAL No. 95

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

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Coram: The Hon. Mr. Justice Keith in Court

Date of Hearing: 27 January 1999

Date of Delivery of Judgment: 27 January 1999

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J U D G M E N T

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Introduction

1. This is the adjourned hearing of an application for judicial review. The background was explained in the judgment which I handed down on 18th December. Further evidence has now been filed on behalf of the Commissioner, purporting now to show:

(a) that there is some foundation for S. I. Wong's belief that the remaining 12.5m. VCDs are likely to be infringing copies,

(b) that S. I. Wong believes that they are likely to be relied on as evidence in proceedings for an offence under Part II of the Ordinance to prove that such an offence has been committed,

(c) that there is some foundation for that belief,

(d) that S. I. Wong believes that the 40 production machines and the 12 printing machines are likely to be relied on as evidence in proceedings for an offence under Part II of the Ordinance to prove that such an offence has been committed, and

(e) that there is some foundation for that belief.

The admissibility of this evidence

2. It was originally contended that the evidence relating to (a) should be excluded. That was because the court had already decided that there was no foundation for S. I. Wong's belief that the remaining 12.5m. VCDs were likely to be infringing copies. To permit the Commissioner to rely on such evidence now would be to permit him to re-open an issue which had already been decided. That argument was not pressed by Mr. Dykes. In my earlier judgment, I referred to the possibility of there being, by the date of this hearing, some foundation for S. I. Wong's belief that the remaining 12.5m. VCDs were likely to be infringing copies. I expressly left open the opportunity for the Commissioner to prove that. I did that for the reason set out earlier in my judgment:

"If [the remaining 12.5m. VCDs] appear to him [at the date of the next hearing] to be likely to be evidence of an offence, the detention [at the date of the next hearing] will be lawful, whatever may have been the position in the past, and no question of any relief relating to their return ... would arise."

Moreover, it was today contended that the evidence relating to (b), (c), (d) and (e) should be excluded. However, that argument was also not pressed by Mr. Dykes. It was not known prior to my earlier judgment how the words "likely to be ... evidence of an offence under this Part" in section 122(1)(b)(ii) of the Ordinance would be construed, and the construction which I adopted has required further evidence to be obtained.

"Evidence of an offence"

3. In my earlier judgment, I construed the words "likely to be ... evidence of an offence under this Part" in section 122(1)(b)(ii) of the Ordinance as meaning "likely to be relied on as evidence in proceedings for an offence under Part II of the Ordinance to prove that such an offence has been committed". Mr. Dykes now wishes to argue that that construction is incorrect. He contends that the words should be construed as meaning "likely to have been used in connection with an offence under Part II of the Ordinance".

4. I doubt whether it is now open to me to express a different view as to the proper construction of section 122(1)(b)(ii) of the Ordinance, having reached a concluded view on its construction after considering the submissions which had been advanced to me. But I have looked at the issue again, and I have not been persuaded that my earlier construction was incorrect. The crucial word "evidence" is much more consistent with my construction than that advanced by Mr. Dykes. For my part, I see nothing offensive in the legality of the seizure or detention of articles depending on what an officer of the Customs and Excise Department believes may be relied on as evidence in criminal proceedings. I appreciate that articles lawfully seized and detained will have to be returned (despite the officer's belief that they may be relied on as evidence in criminal proceedings) if an application for their forfeiture is dismissed, but that simply illustrates the importance of distinguishing between the circumstances which give rise to seizure and detention, and the circumstances which would justify their subsequent forfeiture.

The Mei Ah and China Star VCDs

5. The new evidence establishes to my satisfaction that there is some foundation for S. I. Wong's belief that 8.5m. of the 11m. Mei Ah VCDs and 5.6m. of the 6.2m. China Star VCDs are likely to be infringing copies. However, there is still no foundation for his belief that the remaining 2.5m. Mei Ah VCDs and the 600,000 China Star VCDs are likely to be (rather than could be) infringing copies. It is therefore necessary to consider whether those 2.5m. Mei Ah VCDs and 600,000 China Star VCDs are likely to be relied on as evidence in proceedings for an offence under Part II of the Ordinance.

6. Para. 12 of S. I. Wong's second affirmation reads:

"Regarding discs where there appears to be an authorisation, I am advised by the Department of Justice and believe that it will be necessary to produce all of the discs that relate to the title, some of which might be claimed by the Defence in the criminal proceedings to be authorised production ... The only way to reliably demonstrate unauthorised production is to be able to show that the permitted quantity has been exceeded, which requires that all the discs are retained. The discs cannot be conveniently substituted by a photograph: the film title recorded on a disc is not clear from the appearance of many discs. To prove what they are they must be available to be played. Thus, even if a disc cannot be said to be an infringing disc with any accurate degree of likelihood I believe that it is still likely to be evidence at a trial where over production is the basis of the prosecution."

In my view, that is a sufficient basis for concluding that S. I. Wong believes that the remaining 2.5m. Mei Ah VCDs and the remaining 600,000 China Star VCDs are likely to be relied on as evidence in proceedings for an offence under Part II of the Ordinance to prove that such an offence has been committed, and that there is some foundation for that belief. However, there will be no need for non-infringing Mei Ah and China Star VCDs to be relied upon as evidence if all the Defendants against whom they might be admissible admit the facts which their production would have proved. It follows that, if such admissions are made, the foundation for S. I. Wong's belief will disappear, and from that time on the 2.5m. Mei Ah VCDs and the 600,000 China Star VCDs may no longer be detained - unless, of course, further evidence has become available by then which establishes that there is then some foundation for S. I. Wong's belief that they are likely to be infringing copies.

The unmarked VCDs

7. The new evidence establishes to my satisfaction that there is some foundation for S. I. Wong's belief that many of the unmarked VCDs are likely to be infringing copies. The difficulty is that only a few of the 3.9m. unmarked VCDs have yet been played to see what films or games are on them. However, so far as the VCDs which have been examined to date are concerned, I find that there is some foundation for S. I. Wong's belief that those with Western titles and those which bear titles of films which Mei Ah and China Star have authorised the Company to produce are infringing copies.

8. As for the other VCDs which have been examined, and the VCDs which have not yet been examined, I do not think that it can be said that there is some foundation for S. I. Wong's belief that any particular VCD is likely to be an infringing copy. It could be, but it cannot be said that it is likely to be. Nor can any of them be said to be likely to be relied on as evidence in proceedings for an offence under Part II of the Ordinance when it is not known what they are even VCDs of. I am prepared to accept, in favour of the Commissioner but without deciding, that the detention of the unmarked VCDs was lawful for such time as was reasonable to examine them to see whether they were infringing copies, and if not, whether they were likely to be relied on as evidence for some other purpose. But nine months have elapsed since they were seized, and their continued detention can no longer be justified on that ground. Thus, apart from the unmarked VCDs which have been examined and which bear either Western titles or titles which Mei Ah and China Star have authorised the Company to produce, the detention of the unmarked VCDs has now become unlawful, and I direct that they be returned to the Company as soon as reasonably practicable.

The production and printing machines

9. In para. 30 of his second affirmation, S. I. Wong stated that he had been informed that the Company's production records reveal that all the production machines which had not been in operation at the time of the raid had been used to produce infringing copies prior to the date of the raid. In para. 36 of his second affirmation, he stated that copyright agents have confirmed that all the titles being printed on the 12 printing machines at the time of the raid were infringing copies. It follows that there is some foundation for S. I. Wong's belief that all of the production and printing machines currently being detained have at some time or other been used to produce or print infringing copies. On the way the case was originally being put by Mr. Dykes, therefore, they could all have been said to appear to S. I. Wong to be likely to be evidence of an offence under Part II of the Ordinance.

10. But having regard to my construction of section 122(1)(b)(ii), the question is: does S. I. Wong believe that they are likely to be relied on as evidence in proceedings for an offence under Part II of the Ordinance to prove that such an offence has been committed, and is there some foundation for that belief? It is not disputed that that is what he believes. As for whether there is any foundation for that belief, one of the offences in Part II of the Ordinance which the Company is alleged to have committed is that it possessed the production and printing machines knowing that they were being used to make infringing copies. In my view, it is inconceivable that the very articles which the Company is accused of possessing would not be relied upon as evidence in proceedings for that offence. Indeed, I doubt whether a suitable admission would render it unnecessary for the machines to be relied on as evidence. It follows that there is some foundation for S. I. Wong's belief that all the production and printing machines currently being detained are likely to be relied on as evidence in proceedings for an offence under Part II of the Ordinance.

Conclusion

11. I dealt in my earlier judgment with the Commissioner's failure to apply to the court for the forfeiture of the VCDs and the production and printing machines. I have in the course of this judgment made an order relating to some of the unmarked VCDs. Save for those orders, I make no further order on this application for judicial review.

Representation:

Mr. Philip Dykes S.C., Mr. Johnny Mok and Mr. Dominic Yeung, instructed by Messrs. George Tung, Jimmy Ng & Valent Tse, for the Applicants.

Mr. Adrian Huggins S.C. and Mr. David Fitzpatrick, instructed by the Department of Justice, for the Respondent.