Gold Peak Electric Co., Ltd. v. The Queen

CACC000411/1971

IN THE SUPREME COURT OF HONG KONG

(APPELLATE JURISDICTION)

CRIMINAL APPEAL NO. 411 OF 1971

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Coram: Pickering, J.

Date of Judgment: 11th August, 1971.

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JUDGMENT

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1. The appellant limited company was summonsed upon thirteen informations laid by the Commerce and Industry Department. Ten of these related to offences contrary to Section 8(1)(a) of the Protection of Non-Government Certificates of Origin Ordinance and three to offences contrary to regulation 11(2)(b) of the Exportation (Certificates of Origins and Commonwealth Preference Certificates) Regulations under Cap. 50. All the offences related to the giving of false information with intent to deceive. Ten of the false statements were made to the Hong Kong General Chamber of Commerce to obtain Certificates of Origin, and three to the Commerce and Industry Department for the same purpose.

2. The appellant limited company pleaded guilty to these summonses and it was fined a total of $95,000 upon the thirteen summonses, that is to say $10,000 each upon six summonses which related to goods having their origin in Taiwan and $5,000 in respect of each of seven summonses which related to goods manufactured in Hong Kong but not, as stated in the application for a Certificate of Origin, in the defendant company's own premises.

3. In the Statement of Facts given in the court below, it was stated that in February of this year the Department of Commerce and Industry initiated an investigation which showed that between July 1970 and January 1971 the defendant company had purchased some 800,000 pieces of 9 volt dry battery from Taiwan, which had been processed in a building in Shatin, apparently unregistered as a factory, by having metal jackets welded on to them bearing "Hong Kong" marks. There was evidence of these transactions being disguised in the appellant company's books and it was admitted on behalf of the company that of these 800,000 pieces, a total of 550,000 valued at $156,014.85 had been exported under cover of six Certificates of Origin obtained from the Commerce and Industry Department and the Hong Kong General Chamber of Commerce by false declarations which were the subject of some of the summonses.

4. It was further discovered that the appellant company had purchased 1.5 volt penlite batteries from other Hong Kong factories and after putting on its own labels, exported a total of 248,800 pieces valued at $31,509.60 under cover of seven Certificates of Origin similarly obtained.

5. The quantity of goods involved is trivial in regard to the annual production of the appellant company, which is in the region of 18 million pieces. It is admitted on behalf of the appellant company that a net profit of $9,360 was gained from those transactions involving the Taiwan batteries.

6. It is against the fine totalling $95,000 that the appellant company now appeals.

7. It is apparent from the learned magistrate's Statement of Findings that he viewed these summonses very seriously, and in those findings he ranged widely over the topic of the importance of Certificates of Origin and made many references to the Colony's trade and the possible effects upon that trade of dishonesty in the manner of obtaining such certificate.

8. Mr. Zimmern contends on behalf of the appellant company that much of the magistrate's thinking on this subject is irrelevant to the summonses which were before him and joins issue with the suggestion that this was a deliberate and dishonest course of conduct in respect of the Taiwan products ranging from August 1970 to February 1971. These offences, Mr. Zimmern says, were specific offences on specific dates and were spasmodic carried on at the rate of, at the most, two in any one month.

9. For my own part, I would not quarrel with the learned magistrate's description or with his comment that this was a series of calculated deceptions rather than one composite offence - a remark which, as I understand it, was directed at the mitigation put forward in the court below, which was to the effect that the offences had been committed in an endeavour to complete shipments on their due dates.

10. Mr. Zimmern suggests also that the magistrate's reflections upon the friendly relations existing between Hong Kong and those countries with which it trades and the dependency of those relations upon the certificate system have no bearing upon the summonses. With that proposition I am unable to agree and I think that it would be runrealistic if magistrates were not to look at the purpose of legislation such as that with which we are concerned. Possibly, in speculating upon what might or might not have happened had the quality of the batteries obtained from Taiwan been of low grade, the magistrate was considering matters not strictly germane to the issues before him and, for my part, whilst the deterrent object of punishment is a concept well known and well recognised, I find novel the incorporation in the reasons for sentence, of an objective such as encouraging law-abiding traders who have resisted the temptation of easy profits.

11. Mr. Zimmern made a point of the fact that the total amount of the fines constituted 9.5 per cent of the capital of the appellant company and went on to say that such a proportion might be sufficient to put a company out of business. I am unimpressed with this particular argument and it is certainly the case that where individuals are charged with such offences as smuggling gold or drugs they are subjected to fines which, in very many cases, must amount to a considerably higher proportion of their total wealth than 9.5 per cent, but nobody raises any eyebrows at these fines on those grounds.

12. The learned magistrate rightly, in my view, regarded these offences seriously and I am in agreement with him that they call for heavy fines. But, in my view, the fines imposed were draconian. In the case of the offences relating to the penlight batteries manufactured in Hong Kong, the fines amounted to more than 100 per cent of the total value of goods involved, and must have comprised many hundred per cent of the profit obtained from those transactions. In the case of the summonses involving goods manufactured in Taiwan, the fine amounted to 40 per cent of the value of the goods.

13. Whilst supporting the proposition that heavy fines are called for, I consider that the fines imposed in this particular case were excessive, and upon those summonses which relate to the goods manufactured in Hong Kong, I allow the appeals and reduce the fines from $5,000 to $3,000. In the case of these summonses which relate to the goods manufactured in Taiwan, the appeals are similarly allowed and the fines reduced from $10,000 to $5,500. The final result of that is that the total fines of $95,000 are reduced to $54,000.

14. The figure of $54,000 has not been drawn out of empty air. Its significance is that if the profit from the Taiwan-manufactured goods (valued at $156,000) was $9,360, then the total profit from those transactions and from the falsely-labelled goods actually manufactured in Hong Kong (valued at $31,5000) must have been approximately $11,000 assuming the same ratio of profit on both types of transaction. The fine of $95,000 represented some eight-and-a-half times the profit obtained. Rounding off the amended fines to the nearest $500 in each case results in a punishment of approximately five times the profit obtained - a figure which seems to me adequate both as a punishment to the offending company and as a deterrent to others.

Representation:

A. Zimmern (C.P. Lai) for appellant.

Lucas S.C.C. for Crown.