HKSAR v. Tsui Sin Yee

HCMA409/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

(Appellate Jurisdiction)

MAGISTRACY APPEAL NO. 409 OF 2009

(ON APPEAL FROM STCC 270 OF 2009)

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BETWEEN

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Before : Hon McMahon J in Court

Date of Hearing : 25 November 2009

Date of Judgment : 24 December 2009

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J U D G M E N T

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1.The appellant was convicted after trial at Shatin Magistracy of two offences of attempting to export goods to which a forged trademark was applied, contrary to section 12 (1) of the Trade Descriptions Ordinance, Cap. 362 (“the Ordinance”) and section 159G of the Crimes Ordinance, Cap. 200 (being Charges 1 and 4); and two offences of possession of goods for sale, trade or manufacture to which a forged trademark was applied, contrary to section 9(2) of the Ordinance (being Charges 2 and 3).  

2.The appellant was sentenced in respect of the offences to 180 hours community service.  She appeals her convictions only. 

3.Section 12 of the Ordinance is as follows, and provides for the defence set out in section 12(2)(a) :

“Prohibited import and export of certain goods

(1)     Subject to section 13, no person shall import or export any goods to which a false trade description or forged trade mark is applied.

(2)     Any person who imports or exports any goods contrary to subsection (1) commits an offence unless he proves that—

(a)   he did not know, had no reason to suspect and could not with reasonable diligence have found out that the goods are goods to which a false trade description or forged trade mark is applied; or

(b)   the goods are not intended for trade or business.”

4.Section 9(2) is in the following terms :

“(2)    Subject to the provisions of this Ordinance, any person who sells or exposes or has in his possession for sale or for any purpose of trade or manufacture, any goods to which any forged trade mark is applied, or to which any trade mark or mark so nearly resembling a trade mark as to be calculated to deceive is falsely applied, commits an offence.”

5.A further defence is provided by section 26(4) so far as the section 9 offences are concerned :

“(4)    In any proceedings for an offence under section 9(2) it shall be a defence for the person charged to prove that he did not know, had no reason to suspect and could not with reasonable diligence have ascertained, that a forged trade mark had been applied to the goods or that a trade mark or mark so nearly resembling a trade mark as to be calculated to deceive had falsely been applied to the goods.”

6.The facts of the offences were not disputed; on 31 March 2008 a customs officer at the Hong Kong International Airport inspected a parcel being sent by the appellant to an address in the United Kingdom.  It was found to contain 114 mobile telephone covers to which a forged “Nokia” trademark was applied (charge 1).  

7.On 16 April 2008, the appellant went to Shatin Post Office and air-mailed four parcels to the United Kingdom.  Those parcels were later intercepted by customs officers at Hong Kong International Airport.  They were found to contain 60 mobile telephone covers with a forged “Nokia” trademark and 4 memory card adaptors with a forged “Sandisk” trademark (charge 4). 

8.On the same day the appellant was arrested by customs officers and her motor vehicle was searched.  Inside her motor vehicle (which was parked near by the Shatin Post Office) was found 9 mobile telephone plastic housings and 50 mobile telephone parts each of which bore a forged “Nokia” trademark (charge 2). 

9.The appellant was then taken to her flat in Shatin and in her bedroom were found 427 mobile telephone parts, housings and batteries bearing forged trademarks in the names of “Nokia”, “Sony Ericsson”, “Samsung” and “Motorola” (charge 3).  

10.The appellant gave evidence at her trial.  Her defence was that she had wished to start up a business exporting mobile telephone parts and accessories.  She had a purchaser in the United Kingdom to whom she could export.  She therefore set about obtaining goods to export. 

11.According to her evidence the initial batch of mobile telephone parts ordered by her were sourced through the internet.  When they were delivered she noticed that they were of inferior quality even though they bore highly reputable brand names.  She suspected they were counterfeit and simply left them in a bag in her bedroom.  They were, she said, the items particularised in charge 3.  She did not intend to sell them or trade in them in any way. 

12.So far as the items the subject of the others charges are concerned her evidence was to the effect that she believed them to be genuine and had taken reasonable and diligent steps to ensure that was so.  That was because after having being disappointed in her attempt to purchase goods through the internet she personally went to Shenzhen where she found a shop which sold “Nokia” items and accessories and which displayed certificates stating that it was an authorised Nokia dealer. 

13.The Nokia items they sold appeared to be of high quality and the appellant accepted them as being genuine.  She then, through a person “Mr Cheung”, an ex-PLA solider she had met through a friend who acted as a freelance agent in such transactions, commenced ordering goods from, she believed, the shop she had found and nominated to Mr Cheung.  Her case, on that factual basis, was said to fall within the defence provided by section 12(2)(a) of the Ordinance so far as charges 1 and 4 are concerned and on the defence provided in section 26(4) so far as charge 2 was concerned.  So far as the offence the subject of charge 3 was concerned, it was not disputed the appellant had reason to suspect the items had forged trademarks, and the only issue was whether she had been proven to intend to sell or otherwise trade in those items. 

14.Mr Graham Harris for the appellant, who was not trial counsel, advanced a number of grounds of appeal.  They can be summarised in respect of the offences the subject of charges 1, 2 and 4 as follows :

(1)     the magistrate required too high a standard of diligence to be established by the appellant;

(2)     that the magistrate applied the wrong test when considering the defences under section 12(2) and 26(4) of the Ordinance;

and in respect of the offence the subject of charge 3;

(3)     the magistrate reversed the burden of proof;

(4)     the magistrate failed to apply the rule in Browne v Dunn;

and in respect of all offences :

(5)     that fresh evidence (which was produced pursuant to section 118(1)(b) of the Magistrates Ordinance, Cap. 227) supports the defence case so as to render the convictions unsafe and unsatisfactory. 

Ground 1

15.The trial before the magistrate was conducted on the basis that the sole issue, so far as charges 1, 2 and 4 were concerned, was whether the appellant, on the balance of probabilities, had established she had exercised reasonable diligence in the purchase of the “Nokia” branded telephone parts from the Shenzhen store. 

16.Mr Harris argues that the magistrate adopted too onerous a standard of “reasonable diligence”.  The magistrate said in his Statement of Findings concerning the appellant’s effects to ascertain whether the products were genuine :

“… The defendant told me that she went to the shop in Shenzhen and saw various certificates there to prove the authenticity of the goods they sold.  But the defendant made no attempt to obtain those kinds of certificates, or even a copy of them.  Finally, the defendant was sourcing items supposedly from reputable manufacturers, such as Nokia, Sony Ericsson, Sandisk, Samsung and Motorola.  Despite all the inquiries she said she made, she never once took any of these products that she was sourcing to any of those manufacturers and asked them if there was a problem with them. 

She never seems to have made any enquiries with those manufacturers to find out how she would identify a genuine from a non-genuine product.  I can understand that from a layperson, but for a person who set themselves up in that business, that is not reasonable or realistic.  ”

17.So far as the certificates referred to by the magistrate are concerned it transpired during the course of this hearing that those certificates may well have been certificates as to the registered status of the shop in Shenzhen for general business and taxation purposes and not certificates relating specifically to the genuineness of the “Nokia” products the appellant or her agent Mr Cheung were purchasing.  

18.Even if the certificates referred to in evidence were concerned with the genuineness of the “Nokia” products sold by the shop it seems to me the magistrate’s point was in any event valid.  Where an individual intends to embark upon a business involving the export of a substantial quantity of goods over time, the taking of steps to obtain a document as to the genuineness of those goods or some other written assurance would appear to be a reasonable precaution. 

19.In any event the other comments of the magistrate set out above are entirely valid.  It would seem a perfectly feasible and reasonable exercise for a businesswoman such as the appellant was hoping to be to at least check with some representative from Nokia so far as charges 1, 2 and 4 were concerned as to whether the “Nokia” mobile telephone parts were genuine. 

20.The appellant in this day and age cannot sensibly suggest that she was unable to contact Nokia, an international company, or one of is representatives or outlets in Hong Kong so as to find out whether the products she had purchased from the shop in Shenzhen were genuine. 

21.I am satisfied that it would not have been unreasonable for the appellant to have taken some such steps to ascertain whether the products she was purchasing were genuine, and that the magistrate’s findings in this regard were correct and did not place too high a burden upon the appellant.  I appreciate that the appellant was not in a large or even moderate way of business.  What she was doing was, at least at the time of the offences, a part-time enterprise which had just begun.  But she was alert to the possibility of forgeries (she had suspected the items the subject of charge 3 were counterfeit) and she intended her business to expand.  In her circumstances something more than the vague enquiries she told the magistrate she had undertaken was required. 

22.I might add that in any event the magistrate rightly regarded the appellant’s credibility to be central to the defences she relied upon under section 12(2)(a) and section 26(4), but he rejected her as a credible witness and gave compelling reasons for doing so, not the least being that the appellant, who was purportedly running a business and who had said she had extensive dealings with the Shenzhen shop, was able to produce at trial only one receipt with a named shop on it. 

23.The magistrate concluded that the evidence of the appellant was not sufficiently credible to satisfy the statutory defences she relied upon.  Given that the burden of proof was upon her I cannot disagree with that conclusion and this ground fails.  

Ground 2

24.Mr Harris further argues by this ground that there was another consideration the magistrate was required to take into account and did not.  That consideration was whether, even if the appellant did not take reasonably diligent steps to determine the genuiness of the “Nokia” products she had purchased, any exercise of reasonable diligence would have been futile as it would not have revealed the items to be forgeries.

25.In his closing speech defence counsel had stated unequivocally that the only question the magistrate had to address was whether the appellant had exercised reasonable diligence.  At no point did defence counsel invite the magistrate to consider this further question. 

26.In HKSAR v Kong Hing Agency Ltd [2008] 2 HKLRD 461 Ma CJHC, in the course of the court’s analysis of the reasonable diligence defence available under section 12(2) said, after referring to the objective nature of the phrase “reasonable diligence” :

“(2)    It is this objective test that is relevant rather than what an importer or exporter in any given case has actually done.  Conceptually, what an importer or exporter has actually done will not assist him if he could or ought reasonably have done more; equally, even if nothing has been done, an accused may escape liability where the exercise of reasonable diligence would not have resulted in the discovery of the use of false trade descriptions or forged trademarks. … ”  [emphasis added]

27.It is correct that this was not a matter which was considered by the magistrate.  But that is not surprising.  It must have been plain and obvious in the circumstances of this case that due diligence could have revealed that the “Nokia” phone parts were not genuine.  Hong Kong is a large and sophisticated city.  Nokia is a very well-known international company with outlets here in Hong Kong.  It simply is not conceivable that reasonable diligence, particularly if exercised by a business person, or a person intending to set themselves up in business as the appellant claimed to be, would not have arrived at a result which informed the appellant of the counterfeit nature of the phone parts she was dealing with. 

28.I appreciate that it may well be that some forgeries of “Nokia” products may be so proficient that expert knowledge is required to determine whether or not a particular item was genuine.  But at trial the report of an expert witness, Mr Villamill, was produced and it contained information which at least in part, such as that concerning the packaging of genuine Nokia products, would have as a matter of practicality alerted the appellant to the very real risk that the products purchased by her or by her agent, Mr Cheung, from the shop in Shenzhen were not genuine.  That information would have been available to her had she made reasonable enquiries. 

29.In circumstances where she was already rightly suspicious of previous items she had purchased (although not from the same shop) one would have expected the appellant to have taken such steps.  This ground also fails. 

Ground 3

30.This ground relates only to charge 3.  The complaint made is that the magistrate reversed the burden of proof so far as that charge was concerned. 

31.Mr Harris’ argument in this regard stems from the magistrate’s final comments in his Statement of Findings where he said :

“        Her evidence was not sufficient to raise any of the statutory defences to establish any of those statutory defences.  Nor was it sufficient for me to have a reasonable doubt as to the reason why she possessed the items in Charge 3. 

Now, as far as the Charges 1, 2 and 4 are concerned, the defendant, as I say, was not capable of evidencing the statutory defence to those charges.  There can be no dispute, that the evidence called by the prosecution clearly prove those charges.  In relation to Charge 3, the evidence called by the prosecution clearly would establish that charge and prove that charge.  I did not accept, that the defendant had introduced any reasonable doubt that the possession of those items was for sale, or for the purpose of trade or manufacture.”

32.What is advanced on behalf of the appellant as a consequence of that is that the magistrate shifted the burden of disproving the prosecution’s case to the appellant. 

33.But what was said must be looked at in the context of the case as a whole so far as it relates to the defence the subject of the 3^rd charge.  The fact of the appellant’s possession of the items the subject of the charge was never in dispute.  It was an admitted fact that the items had been found in her bedroom and what therefore was in issue was the explanation of the appellant that, while she had possessed the items, she did not intend to sell or trade in them as she thought they may have been counterfeit. 

34.Prior to that part of his Statement of Findings which Mr Harris complains of, the magistrate had said regarding the appellant’s credibility :

“        The conclusion I reached after hearing the defendant’s evidence was that I could not rely on what she told me about how she conducted her business.  I did not find that she was being frank or honest with me about the essential elements of how she conducted her business, and I found I could not place any reliance upon what she told me.”

35.The effect of that finding was that the appellant’s explanation as to why she possessed the items was rejected.  Nevertheless the magistrate still had to determine whether the prosecution evidence established guilt beyond reasonable doubt. 

36.Earlier in his findings the magistrate had said :

“        In respect of charges 1, 2 and 4, the defendant must establish that defence on a balance of probability.  In relation to charge 3, the defendant said she did not have the items for sale.  The Prosecution need to establish that she did have those items for sale beyond reasonable doubt, so the burden of proof is slightly altered.  I needed to examine the defendant’s evidence to see if I can, in fact, place reliance on what she told me.”

37.It is clear that in regard to the 3^rd charge the magistrate, even in the circumstances of having rejected the evidence of the appellant, was perfectly aware that the burden of proof remained on the prosecution and that it had to prove its case beyond reasonable doubt on that charge. 

38.The passage from the magistrate’s findings complained of therefore must be looked at in the context of the magistrate already having clearly stated that the prosecution carried the burden and criminal standard of proof, that he rejected the appellant’s case and that the prosecution evidence had proven the offence the subject of the charge. 

39.In my judgment, although the magistrate could have perhaps expressed himself more clearly, in the context of his findings there is no doubt that the magistrate was perfectly aware of the correct burden and standard of proof and applied it. 

40.This ground must fail. 

Ground 4

41.The complaint advanced by this ground is that the prosecution breached the rule in Browne v Dunn (1894) 6 R 67 in that it was never put to the appellant by the prosecutor that, in respect of the items the subject of the 3^rd charge, she intended to sell or trade in them. 

42.In that case Lord Hershell LC said this :

“… My Lords, I have always understood that if you intend to impeach a witness you are bound, whilst he is in the box, to give him an opportunity of making any explanation which is open to him; and, as it seems to me, that is not only a rule of professional practice in the conduct of a case, but is essential to fair play and fair dealing with witnesses.  Sometimes reflections have been made upon excessive cross-examination of witnesses, and it has been complained of as undue; but it seems to me that a cross-examination of a witness which errs in the direction of excess may be far more fair to him than to leave him without cross-examination, and afterwards to suggest that he is not a witness of truth, I mean upon a point on which it is not otherwise perfectly clear that he has had full notice beforehand that there is an intention to impeach the credibility of the story which he is telling.  Of course I do not deny for a moment that there are cases in which that notice has been so distinctly and unmistakably given, and the point upon which he is impeached, and is to be impeached, is so manifest, that it is not necessary to waste time in putting questions to him upon it.  All I am saying is that it will not do to impeach the credibility of a witness upon a matter on which he has not had any opportunity of giving an explanation by reason of there having been no suggestion whatever in the course of the case that his story is not accepted.”

43.Lord Hershell’s judgment in this regard plainly does not require a mantra of the details of a prosecution case to be put to a defendant in the witness box even in circumstances where a defendant must be aware of what that case is. 

44.The purpose of the rule established by Browne v Dunn is to prevent a party; and the rule as a matter of practicality is directed usually at the party whose evidence is given last, from embarking upon a presentation of their case in evidence which is novel and upon which, if it had been put to them, the other parties’ witnesses would have been able to provide relevant evidence.  It is not a rule which requires aspects of a party’s case to be put to the other party where the other party must have in any event been perfectly aware from the conduct of the proceedings that those assertions were part of the case against him. 

45.In the present case it is difficult to see how the defence were in any way unaware that it was the prosecution’s case that the appellant possessed the items the subject of the 3^rd charge for sale or trade.  That was set out succinctly in the charge and the appellant (and her representatives) must have been well aware of that because she gave detailed evidence as to how she came to suspect the items the subject of charge 3 were counterfeit, and how she then decided not to use them in the course of her business. 

46.The prosecution of the appellant was conducted in a manner which must have left her and those representing her in no doubt that the prosecution asserted she possessed those items for sale or trade.  This ground fails. 

Ground 5

47.I allowed the appellant to produce additional documents for the purpose of the appeal pursuant to section 118(1)(b) of the Magistrates Ordinance and section 83V of the Criminal Procedure Ordinance.  Those documents included photographs of the Nokia shop in Shenzhen from which the appellant said she had purchased the items, or believed Mr Cheung had purchased the items.  It transpired that the photographs had been produced at trial, so they did not advance her case significantly.  Some documents were supposedly invoices from the Nokia shop, but they bore no obvious correlation to the charged telephones or indeed to the shop.  Other documents purported to be business records produced to rebut the magistrate’s conclusion as to the unreliability of the appellant’s evidence that she was running a business.  But the new records produced could best be described as money transfer forms, more invoices without any obvious connection to the Nokia shop although one described the customer’s name as “Cheung” and a notebook with various pages of numbers and occasional references to Nokia mobile phones. 

48.These documents were ambiguous in meaning and fell a long way short of amounting to the business records the magistrate found were absent from the evidence before him.  There was nothing in them which amounted to something in the nature of an accounting process.  They do not cause me to conclude that the magistrate’s assessment of the appellant’s credibility may have been flawed.  Indeed I agree with his assessment as to credibility. 

49.In any event, even had the magistrate decided that some credibility be given to the appellant and her description as to the steps she took to ascertain the genuineness of the charged items it seems to me that going to a store in a street in Shenzhen with a Nokia sign outside it and asking staff whether the products they sold were genuine could not amount to the appellant establishing reasonable diligence as required by section 12(2) and section 26(4) of the Ordinance, particularly in circumstances where the appellant was aware of the risk, as she admitted, of buying such goods in Shenzhen, and where she had earlier realised that goods she had purchased (though not from Shenzhen) were forgeries. 

50.I might add that the medical certificate produced by the appellant to the effect she had been treated for depression some 11 months before these offences does not advance her case.  That time frame is too remote to assist the appellant, and in my view her mental state would not in any event have been a factor to take into account in determining objectively whether she had exercised reasonable diligence. 

51.This ground also fails and the appeal is dismissed. 

Ms Betty Fu, PP of the Department of Justice, for HKSAR

Mr Graham Harris, instructed by Messrs Hau, Lau, Li & Yeung,

for the Appellant