Peter Klauser and Another v. The Queen

CACC000074/1968

IN THE SUPREME COURT OF HONG KONG

APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 74 OF 1968

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Coram: Scholes & Mills-Owens, JJ.

Date of Judgment: 17 April 1968

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JUDGMENT

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1. The appellants were separately charged with similar offences, namely importing gold into the Colony without a permit from the Director of Commerce and Industry, contrary to regulation 3 of the Importation of Gold (Prohibition) Regulations made under section 3 of the Importation and Exportation Ordinance, (Cap.50), and the particulars of the offences were to the effect that each of them had imported into the Colony 35 bars of gold at Kai Tak Airport, Kowloon, on the 19th December, 1967, without such a permit. They were tried together in the Magistrate's Court and each was convicted of the offence with which he was charged, and was fined therefor the sum of $25,000 or 6 months imprisonment in default, and the fines were duly paid. They both appeal against conviction and sentence.

2. Neither of the appellants gave evidence or made a statement at the conclusion of the case for the prosecution, but they called two witnesses, namely the Deputy Director of the Commerce and Industry Department, whose evidence was not material, and the Chief Inspector of Immigration to whose evidence we make reference below.

3. The facts of the case are not in dispute and are shortly as follows. The two appellants arrived by air at Kai Tak Airport from Beirut at 4.40 p.m. on the 19th December, 1967, on Pan American flight No.2, which flight after an hour's stop at Kai Tak Airport was to go on to Tokyo and San Francisco. It is not entirely clear whether there was to be an intermediate stop at Taiwan (Formosa). When the Pan American aircraft arrived at Kai Tak Airport the two appellants were observed by officers attached to the airport to go to the transit lounge where they sat down on a sofa. They were then approached by a Senior Revenue Inspector who asked them where they had come from, and each appellant replied to the effect that he was continuing his journey from Beirut to Taipei, in Taiwan, by China Airlines flight No.806. The appellants were asked if they had anything to declare including gold, and each replied 'no'. They were then searched, and each was found to be wearing a specially made vest with pockets under his shirt and jacket, and each vest had in its pockets 35 bars of metal, later found by analysis to be gold, totalling 35 kilogrammes in weight. When the vests were found on the appellants and they were asked what they contained they answered that it was gold; and each appellant admitted that he had no permit to import the gold. Both were in fact booked to fly on the China Airlines flight No.806 to Taipei, which flight was due to leave Kai Tak Airport for Taipei some time after 6.00 p.m. the same evening, the 19th December, 1967, and each appellant was in possession of a ticket for this flight to Taipei.

4. Exhibits P8 and P9 were the 1st appellant's and the 2nd appellant's passports respectively, which were not available to this court having been returned to the appellants prior to their leaving the Colony. The record of the trial on the matter is rather scanty, but it would appear from the evidence of the Chief Inspector of Immigration that the 1st appellant's passport was endorsed with authority for the 1st appellant to stay in Hong Kong up to the 12th January, 1968, whilst the passport of the 2nd appellant was endorsed with authority for the 2nd appellant to stay in Hong Kong up to the 14th January, 1968.

5. Mr. Lee, counsel who appeared for the appellants both at the trial and on the hearing of the appeals, confined his arguments on the appeals against conviction to the one combined ground of appeal namely that the conviction could not be supported by the evidence, and that the learned magistrate in the court below had misdirected himself on a point of law in holding that the appellants were guilty of the offence when they were only in transit in Hong Kong. Mr. Lee's point was that the evidence showed that the appellants were only in transit in Hong Kong, which was not disputed by the Crown, and that that being so the gold could not be held to have been imported into the Colony. The Crown opposed this contention and maintained that passengers in transit in Hong Kong in possession of gold must be held to have imported it into the Colony.

6. The issue for the court to determine on the appeals against conviction depends upon the construction to be placed on the relevant Ordinance and Regulations.

7. Regulation 3 of the Importation of Gold (Prohibition) Regulations provides:-

"          No person shall except under an import permit granted by the Director of Commerce and Industry, import gold into the Colony."

The definition of the word "import" contained in section 2 of the Importation and Exportation Ordinance is:-

"'import' means to bring or cause to be brought into the Colony by land, air or water;"

By virtue of section 31 of the Interpretation and General Clauses Ordinance (Cap.1) this definition applies to the Regulations.

8. Mr. Lee at the outset of his arguments conceded that there were a number of Hong Kong cases which were completely against his contentions, namely the cases of Cathay Pacific Airways Ltd. v. The Crown⁽¹⁾, Pan American World Airways Incorporated v. The Queen⁽²⁾, Ho Shing v. The Queen⁽³⁾, and the recent case of A.M. Bertschy v. The Queen⁽⁴⁾, but submitted that they could be distinguished.

9. He pointed out that it had never been suggested by the Crown that the appellants were not transit passengers, or denied that they would have left Hong Kong again in about an hour's time for Taipei if they had not been arrested. He submitted that the suspicious way in which the appellants carried the gold was irrelevant. We accept that it was not proved that the appellants intended to enter the Colony, in the sense of leaving the airport.

10. Counsel for the appellants went on to point out that the definitions of "import" and "export" in section 2 of the Importation and Exportation Ordinance were not in directly contrasting or antithetical terms, the definition of the word "export" being:-

"'export' means to take or cause to be taken out of the Colony by land, air or water, and includes the export of anything taken or sent from any country and brought into the Colony by land, air or water (whether or not landed or transhipped in the Colony) for the sole purpose of being carried to another country either by the same or another conveyance."

Thus, whereas in the definition of "export" the words "(whether or not landed or transhipped in the Colony)" were used, indicating that the word "export" included goods in transit, the definition of the word "import" in the same section did not do so, thereby implying, as counsel argued, that the word "import" did not include goods in transit, and that if it had been intended that the word "import" should include goods in transit the words "(whether or not landed or transhipped in the Colony)" or some expression indicating an intention to cover goods in transit would also have been included in the definition of the word "import", but that that had not been cone. He contended further that whenever the Legislature in Hong Kong intended to refer to goods in transit it did so in precise terms. Thus the Dangerous Drugs Ordinance, Cap.134, in section 2, contained an express definition of the phrase "in transit", which was as follows:-

"'in transit' means taken or sent from any country and brought into the Colony by land, air or water (whether or not landed or transhipped in the Colony) for the sole purpose of being carried to another country either by the same or another conveyance;"

It was to be noted also that the definition of the word "export" in the relevant Ordinance (Cap.50) contained similar expressions to those used in the definition of the phrase "in transit" appearing in the Dangerous Drugs Ordinance. All this, counsel contended, went to show that in the relevant Ordinance (Cap.50) the intention was to exclude goods in transit from the meaning of the word "import". Mr. Lee also drew attention to the fact that in the Dangerous Drugs Ordinance, although there was a section prohibiting the import or export of dangerous drags, namely section 10, there was also another section, section 6(1), which prohibited a person bringing dangerous drugs into the Colony in transit, thereby showing that the words "import" and "export", unless otherwise stated, did not include goods in transit.

11. Mr. Lee also submitted that the Full Court in the Bertschy case⁽⁴⁾, in taking the view that the liability of an importer of gold, was an absolute one, had not adverted to section 18 of the Ordinance (Cap.50) which enables regulations to be made imposing an absolute liability; in fact the Regulations male did not purport to exercise that power. Accordingly, he argued, the question whether or not the legislation prohibited the importation of gold was a matter of ordinary, and not strict construction. In our view, we are not concerned with the matter of mens rea. In the present case there is no question, such as there was in the Cathay Pacific case⁽¹⁾, and the Pan American case⁽²⁾, whether the importers had knowledge of what was being carried; the appellants brought in the gold in the knowledge that it was gold, and of their own volition. The question before us is: did they "import" the gold.

12. Counsel's next argument was in regard to the mischief which the relevant legislation sets out to prevent, and he referred to Ho Shing's case⁽³⁾ a case concerning the importation of cameras, in which Blair-Kerr J. citing from the judgment of Gould J. in the Cathay Pacific Airways' case⁽¹⁾ said:-

Mr. Lee submitted that the object of the relevant legislation (Cap.50 and the Regulations made thereunder) was to prevent the smuggling of gold into Hong Kong, and the Legislature did not intend to prohibit any gold being taken from one place in the world to another place in the world via Hong Kong, because had that been the intention the Legislature could certainly have said so in more specific terms. In the Cathay Pacific⁽¹⁾ and Pan American⁽²⁾ cases it was uncertain whether the unmanifested cargo was intended for Hong Kong, whereas in the present case it was clear that the appellants were in transit and that the gold was never intended for Hong Kong. The two cases referred to were to be distinguished, counsel contended, because in those cases the unmanifested cargo had been found in the aircraft and there was no indication whether or not it would have been taken from the aircraft in Hong Kong or have been taken on to another port, no evidence as to whether it was an "inside job" so that later the cargo would be taken out and taken into Hong Kong by members of the crew; in both cases the Full Court considered the purpose of the legislation, and the mischief rule was applied, and since the legislation was intended to assist in the regulation of trade and the prevention of smuggling into Hong Kong the convictions were upheld, but these considerations did not apply to the present case because it was clear that the gold was meant for Taipei.

13. He drew attention to the following passage in the Full Court's judgment in Bertschy's case⁽⁴⁾ which says:-

"          We are fully appreciative of the fact that the construction placed upon the word 'import' by reference to the definition contained in the Ordinance itself in certain circumstances may well cause very real hardship and possible injustice. For example, what would be the legal position of a transit passenger, bound for an onward destination to a country in which the importation of gold is legal, who had remained within a plane which had stopped for refuelling in Hong Kong, and who had openly entrusted a consignment of gold in his possession to the steward of the plane for safe custody whilst the plane was on Hong Kong soil in the process of being refuelled? Could it be fairly and properly said that he had committed the offence of unlawfully importing the gold into the Colony of Hong Kong?"

Mr. Lee submitted that a strict construction should not be given to the word "import", and he posed the case of a person carrying gold by air from a country not prohibiting or expressly permitting the export of gold, and wanting to take the gold to Taipei - assuming that it was legal to import gold there - and of the aircraft having to come down in Hong Kong to refuel, or on account of engine trouble, or on account of being diverted on account of bad weather; could a person be held to "import" gold in those circumstances? If a strict interpretation were applied to the word "import" it would mean in effect that the Colony had taken to itself power so to legislate as to make an illegal act out of something which was legal both in the exporting and importing countries, simply because the passenger had the gold when forced to come to Hong Kong. He submitted that such a strong prohibition was repugnant to the comity of nations. He further submitted that if the gold was to be imported into Taiwan, it was up to the Taiwan authorities to take action and forfeit the gold if they so thought fit.

14. Although the point to be determined has already been decided by the Full Court in Bertschy's case⁽⁴⁾, we consider that this appeal, in which new arguments have been raised, should be entertained for the purpose of complying with the principle enunciated by the Full Court of Criminal Appeal of seven judges in England in the case of Rex v. Taylor⁽⁵⁾ in which Lord Goddard C.J. giving the judgment of the court said:-

The matter is referred to in paragraph 915 of the 36th edition of Archbold's Criminal Pleading Evidence and practice.

15. The position in regard to the House of Lords has now been modified in accordance with the statement of Lord Gardiner given in the House of Lords on the 26th July,. 1966 ⁽⁶⁾.

16. In this connection we would observe that not only were the facts different in the Cathay Pacific⁽¹⁾, Pan American⁽²⁾ and Ho Shing⁽³⁾ cases but so also was the subsidiary legislation.

17. In regard to the arguments raised by counsel for the appellants, his first argument, which has already been set out, related to the different form of the definitions given to the words "export" and "import" in section 2 of the relevant Ordinance. We think that the reason why the definition of the word "export" has been expanded beyond that of the definition of the word "import" is to ensure that the word applies not only to goods produced locally but also to re-exports in the course of the entrepot trade. It is intended to deal with a situation which does not arise in connection with the meaning of the word "import". We do not therefore think that it can be implied, on this account, that it was intended that the word "import" should exclude goods in transit. The existence of the very considerable entrepot trade in Hong Kong provides a sound reason why the words "export" and "import" are not defined in antithetical terms. The draftsman clearly foresaw the necessity of defining "export" to include re-export. It was necessary to expand the definition of "export" but not the definition of "import". Indeed, the argument may be said to re-bound against the appellants; the Legislature clearly had in mind the matter of goods in transit.

18. Whilst dealing with the definitions of the words "export" and "import" in the relevant Ordinance, it is an appropriate time to state that in the course of the hearing of the appeal the court put to Mr. Lee the following proposition, namely that if goods brought into the Colony, in transit, could be the subject of "export", which he conceded to be correct, previously they must have been the subject of "import", and counsel for the appellants was unable to give any satisfactory answer to that proposition, and it follows that if that proposition is correct the word "import" must include goods brought into the Colony in transit.

19. With regard to Mr. Lee's arguments concerning the Dangerous Drugs Ordinance, the words "export" and "import" are so defined in that Ordinance as specifically to exclude goods in transit, which is not the case in the definitions in the relevant Ordinance, but not only is there a section in the Dangerous Drugs Ordinance prohibiting the export and import of dangerous drugs, namely section 10, but another section, namely section 6(1), which is designed to prohibit dangerous drugs being brought into the Colony in transit, except with permission. It is no doubt for this purpose that a definition of the words "in transit" has been inserted in section 2 of that Ordinance to make special provision for drugs in transit. The definitions of "export" and "import" in section 2 of the Dangerous Drugs Ordinance are as follows:-

The Legislature is therefore at pains to exclude drugs in transit from these definitions and to regulate them separately, which is not the case in respect of the relevant Ordinance (Cap.50). The Dangerous Drugs Ordinance is a different Ordinance and no doubt there was considered to be good reason to make specific provision for the regulation of dangerous drugs in transit.

20. In regard to the mischief which the relevant legislation is enacted to prevent, we think that it is designed to assist in the regulation of trade and the prevention of smuggling, and that in the case of gold these purposes are extended to preserving the economic stability of the Colony and international monetary exchange stability, so that in the case of gold the object of the legislation is also to control the movement of gold, and no doubt with this object in view to allow the Director of Commerce and Industry to have knowledge of the movement of gold through the Colony. If these are the objects, as we think they are, it is necessary for the word "import", as defined, to be given a plain and natural construction.

21. Concerning the question posed by Mr. Lee of an aircraft, carrying a passenger with gold, being forced to land in Hong Kong on account of engine trouble, bad weather, or to refuel, in those circumstances we think that the emphasis, in the definition of "import", would not be on the words "into the Colony" but on the words "bring or cause to be brought" so that the question would be whether such a person could correctly be said to have brought or caused the gold to be brought into the Colony. On the other hand if a a person wishes to pass through Hong Kong in transit with gold he may always apply for a permit to do so.

22. In the Bertschy case⁽⁴⁾, the Full Court, in giving the reasons for its decision, and referring to the Cathay Pacific Airways⁽¹⁾ and the Pan American World Airways⁽²⁾ cases, said:-

"In our view both the Hong Kong cases to which we have already made reference are directly relevant for consideration in the case now before us in that they define the meaning to be placed upon the word 'import' as defined in section 2 of the Ordinance itself and the absolute liability, irrespective of innocent intent, placed upon any person or firm or organization that 'imports' goods or cargo into the Colony. The same meaning in respect of the word 'import' is to be placed upon the subsidiary legislation made under the Importation and Exportation Ordinance, whether it be under the Unmanifested Cargo Order or, as in this case, the Importation of Gold (Prohibition) Regulations. In the Pan American Airways case the learned Chief Justice, delivering the judgment of the Court, after referring to the definition of 'import' as meaning 'to bring or cause to be brought into the Colony' went on to say

'I can see no reason for imposing on these terms 'import' and 'Bring' when used in the Hong Kong legislation, any narrower meaning than is required by these words when used in their natural sense ....'.

Ever if we did not consider ourselves bound by the decided authority of the Pan American Airways case as to the proper construction to be placed upon the word 'import', we would respectfully agree with the construction placed upon it by the learned Chief Justice delivering the judgment of the Full Court in that case."

23. We think that it is appropriate to refer to section 19 of the Interpretation and General Clauses Ordinance (Cap.1) which provides:-

"          An Ordinance shall be deemed to be remedial and shall receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Ordinance according to its true intent, meaning and spirit."

In this regard it is pertinent to note what the editor of the 6th Edition of Craies on Statute Law says (at page 531):-

"          The distinction between a strict and a liberal construction has almost disappeared with regard to all classes of statutes, so that all statutes, whether penal or not, are now construed by substantially the same rules. 'All modern Acts are framed with regard to equitable as well as legal principles.' (Edward v. Edwards 1876, 2 Ch.D.291, 297) 'A hundred years ago,' said the court in Lyons' case (1858 Bell C.C.38, 45), 'statutes were required to be perfectly precise, and resort was not had to a reasonable construction of the Act, and thereby criminals were often allowed to escape. This is not the present mode of construing Acts of Parliament. They are construed now with reference to the true meaning and real intention of the legislature.' Therefore, 'although the common distinction,' 'as Pollock C.B. said in Nicholson v. Fields (1862, 7 H. & N. 810, 817), 'taken between penal Acts and remedial Acts, that the former are to be construed strictly and the others are to be construed liberally is not a distinction, perhaps, that ought to be erased from the mind of a judge,' yet the distinction now means little more than 'that penal provisions, like all others, are to be fairly construed according to the legislative intent as expressed in the enactment, the courts refusing on the one hand to extend the punishment to cases which are not clearly embraced in them, and on the other equally refusing by any mere verbal nicety, forced construction, or equitable interpretation to exonerate parties plainly within their scope.' (Sedgwick, Statutory Law, 2nd ed., p.282)"

In the opinion of the Privy Council delivered in the case of In re Macmanaway and In re The House of Commons (Clergy Disqualification) Act, 1801⁽⁷⁾, it was said:-

"The meaning which these words ought to be understood to bear is not to be ascertained by any process akin to speculation. The primary duty of a court of law is to find the natural meaning of the words used in the context in which they occur, that context including any other phrases in the Act which may throw light on the sense in which the makers of the Act used the words in dispute."

24. We would also refer to the case of Joseph Orakwue Isuora v. The Queen⁽⁸⁾ in which Lord Tucker, when delivering the opinion of the Privy Council said:-

"          Their Lordships ....... consider that the governing principle to be applied in the present case is that stated by Viscount Simon in Nokes' case where he said (1940 A.C. 1022): 'The golden rule is that the words of a statute must prima facie be given their ordinary meaning.'"

25. Applying section 19 of the Interpretation and General Clauses Ordinance in the light of these pronouncements, we think that if goods are brought into the Colony in transit they are imported into the Colony, within the meaning of the definition of "import" contained in section 2 of the Ordinance (Cap.50), and in our view to so hold is not only to give the words of the definition their plain and ordinary meaning, but also to give them a fair and reasonable construction having regard to the objects of the legislation. There is no reason, in the case of statutory prohibitions of this nature, to resort to definitions contained in other enactments, or to adopt a 'mercantile' or other special construction.

26. For these reasons the appeals against conviction are dismissed.

27. In regard to the appeals against sentence it was urged on behalf of the appellants that the sentences should be reduced because, inter alia, in each of the Airways cases, to which reference has already been made, the companies were only fined $5,000. But in those cases it appears to be clear that the companies were quite unaware that they were bringing the goods into the Colony, whereas in the present case the appellants deliberately brought in the gold of their own volition. This is obviously a highly significant distinction. It was also suggested that the appellants were guilty of mere technical offences. We are unable to agree with that view. We must assume that the rewards for this type of offence, for those who indulge in them, are correspondingly high. Accordingly any fine that is imposed must, in the absence of mitigating circumstances be of such an amount as to be a deterrent, in order to be effective. Forfeiture of the gold seized is automatic, where an offence is proved (sec.17 of Cap.50), subject to the Director of Commerce and Industry's power to remit it, and must be regarded as a risk deliberately undertaken in this type of offence. The lower court was told, and it has not been disputed, that the value of gold which each appellant was carrying was $250,000, making in the aggregate $500,000. We consider that the fines imposed, in the circumstances of this case, bear a reasonable relationship to the sums involved, and are not excessive. It is open to persons wishing to transport gold via Hong Kong to seek a permit for that purpose and if they fail to do so then, in our opinion, a serious view must be taken, dependent inter alia on the magnitude of the operations involved.

28. We are therefore not disposed to interfere with the sentences of the court below and accordingly the appeals against sentence are also dismissed.

17th April, 1968.

Representation:

M. Lee (Kho & Co.) for Appellants.

M.J. Alexander C.C. for Respordent.

Judgment read by President.

(1) (1952) H.K.L.R.30.

(2) (1959) H.K.L.R.366.

(3) (1967) H.K.L.R.63.

(4) Cr.App. 613 of 1967.

(5) (1950) 2 K.B. 368. at 371.

(6) (1966) 3 A.E.R. 77.

(7) (1951) A.C. 161 at 169.

(8) (1953) A.C. 327 at 335.