Popular Machinery Co., Ltd. v. The Queen
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CACC000950/1971 IN THE SUPREME COURT OF HONG KONG (APPELLATE JURISDICTION) CRIMINAL APPEAL NO. 950 OF 1971 -----------------
----------------- Coram: Rigby, C.J., Briggs & Pickering, JJ. Date of Judgment: 12th April, 1972. ----------------- JUDGMENT ----------------- Pickering, J.: 1. This appeal has been referred to the Full Court by the Order of a single judge under the provisions of s.118 of the Magistrates Ordinance, Cap.227. 2. The appellant company was summonsed under five separate informations for knowingly or recklessly lodging with the Director of Commerce and Industry five declarations which were inaccurate in material particulars contrary to Regulation 5(5) of the Importation and Exportation (Registration of Imports and Exports) Regulations, Cap.50. The appellant company, through its solicitor, pleaded guilty to each of the five summonses and was fined one thousand dollars in respect of each offence. 3. The facts admitted on behalf of the appellant company were that on the 8th of June, 1971, the company lodged a Re-Export Declaration with the Director of Commerce and Industry in respect of the re-export of 50 pieces of induction motors to Indonesia. A verification check carried out by an officer of the Commerce and Industry Department in July 1971 revealed that the valuations shown on the declaration had been understated by $8,329.00, the genuine value being $13,029.00. Similar irregularities were found to exist in regard to four other declarations concerning respectively hand-drills, grinders, a flour-milling machine and a petrol engine. The Managing Director of the appellant company, in a cautioned statement, admitted the under-declarations which he said were made at the request of the Indonesian buyer for the purpose of evading import duties in Indonesia. 4. No import or export duties are involved in Hong Kong and the total evasion of tax in Hong Kong amounts to the sum of $10.50 in respect of ad valorem Stamp Duty charges. The amount of import duty evaded in Indonesia was approximately $5,133.00. The appellant company has a declared capital of $200,000. and its turnover for the last financial year was approximately $3,500,000. The profit gained from the transactions the subject of the five summonses with which we are concerned, was stated in the court below to be $4,000. 5. The first ground of appeal put forward by Mr. Robert Tang with, as he confessed, some diffidence, was that the learned magistrate had erred in law in fining the appellant under Regulation 5 of the Importation and Exportation (Registration of Imports and Exports) Regulations in that, since no form had been prescribed by the Director of Commerce and Industry, Regulation 5 could not be invoked. Regulation 5(1) reads:-
6. It was Mr. Tang's contention that as no form had ever been published by the Director of Commerce and Industry in the Gazette, in substitution for the old form in use before Regulation 5 was amended in 1970, then if publication was a condition precedent to the validity of the form, it would not have been possible to have made a declaration in the specified form so that the appellant company should not have been charged under Regulation 5(5). 7. Mr. Tang, however, freely conceded that he found it difficult to argue that this was the correct interpretation of Regulation 13, which provides:-
That Regulation, Mr. Tang said, provided merely for publication, and whilst no publication had taken place there did exist a specified form which had been in existence before the alteration to the Regulations in 1970 and which had been used for a long time. 8. Mr. Eric Li, for the Crown, urged that it could hardly be argued that business circles were not in a position to know what forms they should use for this type of declaration. With that contention we agree. A form had in fact been specified and in common commercial use for a long time. The fact that the form has never been published in the Gazette, as it should have been under Regulation 13 which was added in 1970, does not mean that the form is not a specified form and this ground of appeal fails. 9. Mr. Tang further submitted that this was a first offence, and that the company had co-operated with the Commerce and Industry Department - both matters which had been taken into consideration by the learned magistrate. Counsel argued, however, that the sentence was excessive in that it represented nearly 500 times the Stamp Duty evaded in Hong Kong. In imposing sentence the learned magistrate had taken into account the well-being of the Colony's trade and the deterrent effect upon that trade of mis-statements in forms of this kind; whilst it was not wrong for the learned magistrate to take those matters into consideration, he had gone further than was necessary, as was reflected in the sentence he imposed; although in the court below the appellant company had agreed the facts, it was the case that the net profit on the five transactions amounted to $2,000. and not $4,000. Counsel submitted that the test was not necessarily whether the sentence was unreasonable or excessive as suggested by the case of Tong Wing Sang and Others v. The Queen(1) but whether or not the sentence was a proper one as suggested by the case of Sum Kim Wah and Others v. The Queen(2) 10. Taking fully into account everything urged on behalf of the appellant company we are unable to say that we would be justified in interfering with the sentence imposed by the learned magistrate. The fact that the loss occasioned to the Hong Kong revenue as a result of these mis-statements was negligible, is not, we think, the criterion. Virtually the whole of the financial loss occasioned by the mis-statements fell upon the revenues of Indonesia and we acknowledge fully the accepted principle that in the absence of special circumstances, it is no part of the function of the courts of one country to enforce the revenue laws of another or to punish, on behalf of that other country, for infringements of those laws. 11. To relate the fines imposed, however, to the loss to the revenues of Hong Kong, would be totally unrealistic. The damage done by false export declarations, if incapable of precise estimation in terms of dollars and cents, certainly bears no relation to the amount of stamp duty evaded and to attempt so to relate it could lead to absurdity. Thus we are confident that in a case where, for reasons of his own, an exporter had overstated the value of goods, so involving himself in the payment of more stamp duty than would otherwise have been attracted, counsel would not for one moment argue that the exporter, so far from being fined, should be applauded for increasing the revenue. Far-fetched as that illustration may be, we think it demonstrates the falsity of any approach in cases of this kind to the determination of sentence by reference to the amount of stamp duty evaded. 12. The true damage occasioned by offences of this kind is not to the Revenue. It lies in the distortion of export figures, in the intangible but real effect upon international relations of the inhabitants of one country assisting those of another to defraud the Revenue of that other and in the loss to commercial confidence occasioned by the knowledge that declarations intended to be "accurate and complete" cannot be relied upon. Another matter which the learned magistrate legitimately took into account was that an increasing number of inaccurate declarations appear to be coming before the courts. 13. Few cases are identical and the penalty in each has to be decided on the merits of the case having regard to the circumstances of both the o fence and the offender. Whilst therefore we refrain from attempting to lay down any mathematical formula or rule of thumb for the assessment of penalties in cases involving commercial misrepresentation, we are constrained to observe that in a case where the Court is fully satisfied that the profits derived from such a misrepresentation, have been accurately disclosed to the Court, there is merit in assessing the penalty to be imposed by reference to that figure of profit. In the present case the ratio of penalty to disclosed net profit was 2 1/2:1 and we are of the opinion that such a ratio is by no means excessive. Indeed in Criminal Appeal No.411 of 1971 the appeal judge, though regarding the ratio of 8 1/2:1 adopted by the learned magistrate in that case as excessive and allowing the appeal against sentence, substituted fines which bore the ratio 5:1. 14. The appeal is dismissed. Representation: Robert Tang for Appellant Eric Li, C.C. for Respondent (1) 1969 H.K.L.R. 21 (2) 1967 H.K.L.R. 140. |
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