Case Detail

HCAL000088B/1998

HCAL88/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO.88 OF 1998

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BETWEEN
	METRONIC MULTIMEDIA HK LIMITED	Applicant

	AND

	THE COMMISSIONER OF CUSTOMS AND EXCISE	Respondent

-------------

Coram: Hon Cheung J in Chambers

Date of Hearing: 13 June 2000

Date of Judgment: 13 June 2000

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J U D G M E N T

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1. I would not dismiss the applicant's action.

2. It is not disputed that the applicant had served all the documents it had in its possession, custody and control on 3 June 2000. In my view, there were exceptional circumstances in this case which would justify an extension of time to comply with the unless order. There was change in the management of the applicant and the new director only discovered the summons to dismiss the action after he was appointed as the director. The new director had to spend time to locate the documents. Another director who was appointed in 1998 stated that he was not involved with the daily operation of the applicant but left the matters in the hands of another director who recently chose to relinquish his management of the applicant. In the circumstances of the case, the failure by the applicant to comply with the unless order is not intentional or contumelious.

3. Furthermore, in my view, no prejudice is caused to the respondent now that all the documents that were available to the applicant had been produced. If the applicant was unable to produce all the documents covering the period of its claim, all that it means is that the applicant would not be able to substantiate some part of its claim.

4. I would allow the applicant time to comply with the unless order on the condition that the applicant is required to pay the costs of $50,000 within 14 days to the respondent. This represents the provisional costs of today's application and of the last hearing.

5. The respondent's application is refused.

	(P. Cheung)
	Judge of the Court of the First Instance, High Court

Representation:

Ms Peony Wong, instructed by Messrs K.B. Chau & Co., for the Applicant

Mr Newton Chan, GC of Department of Justice, for the Respondent

HCAL000088A/1998

1998 HCAL No. 88

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

____________

BETWEEN
	METRONIC MULTIMEDIA H. K. LIMITED	Applicant

	AND

	COMMISSIONER OF CUSTOMS AND EXCISE	Respondent

____________

Coram: The Hon. Mr. Justice Keith in Court

Date of Hearing: 11 December 1998

Date of Delivery of Judgment: 11 December 1998

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J U D G M E N T

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The background

1. The history of this case is set out in the judgment which I delivered on 1st December. A proposed re-amendment to the Notice of Application has now been prepared. What is sought by that re-amendment is leave to apply for judicial review of the continued presence on the Company's premises of officers of the Customs and Excise Department, and of the detention of the production machines on the premises. The relief sought is a declaration that the officers' presence on the premises and the detention of the production machines on the premises has been unlawful, unreasonable and in excess of jurisdiction, and damages for trespass.

The arguments

2. The argument goes like this. The search warrant permitted the officers to enter and search the Company's premises. The Copyright Ordinance (Cap. 528) permitted the officers to seize, remove and detain articles which they found there, and which appeared to them to be likely to be evidence of an offence under Part II of the Ordinance. They had a reasonable time in which to remove from the premises those articles which they seized and which they proposed to detain. However, once that time had elapsed, they were no longer entitled to remain on the premises and they had to leave . As for the detention of the production machines, what is alleged is that there was no warrant for their detention in situ, and that their detention in situ is unlawful.

3. I know from the evidence filed on behalf of the Commissioner that his case is as follows. Among the articles seized were three video compact disc production machines. It was believed that they had been used to produce infringing video compact discs. However, there was a considerable risk of serious damage to those machines if they had been dismantled and removed by contractors who were unfamiliar with them. That was why it was decided to detain them in situ. But if they were detained in situ, the Company's staff could have had access to them. The Commissioner did not want that: if the very people who were suspected of using them to commit criminal offences had access to them, there was the danger that they would be used to produce more allegedly infringing copies of video compact discs. That was why it was decided that the officers should remain on the premises to prevent the production machines from being used. The evidence, though denied, is that one of the directors of the Company accepted the officers' right to be there.

4. The Company's response is that the Commissioner has no right to detain the production machines in situ. Therefore, since the officers are remaining on the premises because the production machines are being detained in situ, and since it is unlawful for the production machines to be detained in situ, the officers' continued presence on the premises is unlawful. I propose to give the Company leave to re-amend the Notice of Application, so that the question as to whether leave to apply for judicial review can be properly considered.

Leave to apply for judicial review

5. On that issue, it is important to note that there is no challenge to the legality of the detention of the machines per se. The challenge is to the legality of their detention in situ. Accordingly, the Company can have no legitimate objection to the dismantling and removal of the machines and their detention elsewhere. Mr. Gerard McCoy S. C. for the Company does not suggest otherwise. In these circumstances, the Company has two choices. The first is to permit the machines to be dismantled and removed from the premises, so that they will be detained elsewhere. The second is to permit the machines to be detained in situ, with the consequence that they will continue to be guarded by officers of the Customs and Excise Department. The one thing which the Company cannot insist upon is the machines remaining on its premises but not being guarded by officers from the Customs and Excise Department. Since the machines are being detained, and if at the Company's request they are being detained in situ, it is for the Commissioner to decide how they should be detained. I can discern no arguable basis for saying that if the Company chooses to permit the Commissioner to detain the machines in situ, it can dictate to him the way in which he does so. It is for him to decide whether the detention of the machines in situ requires for their security the presence of officers from his Department guarding them, and I can discern no arguable basis for saying that his decision that their detention does require that is Wednesbury unreasonable.

6. I return, then, to the only two choices which the Company has. Mr. McCoy told me at the last hearing - and he has confirmed it to me this morning - that the Company would prefer the machines to be detained in situ, albeit guarded by officers of the Customs and Excise Department, rather than for the machines to be dismantled, removed from the premises and detained elsewhere. This preference necessarily involves abandoning the claim that detention in situ is unlawful, because it would not be possible for the Company to select an option which is unlawful in preference to one which is lawful. Since the Company is in effect abandoning the only ground on which the legality of the detention of the machines, and the legality of the officers' continuing presence on the premises, is challenged, it follows that this application for leave to apply for judicial review of the continued presence of the officers on the premises, and the detention of the production machines on the premises, must be refused.

	(Brian Keith)
	Judge of the Court of First Instance

Representation:

Mr. Gerard McCoy S. C. and Mr. Victor Luk, instructed by Messrs. Y. T. Szeto & Co., for the Applicant.

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

HCAL000088/1998

1998 HCAL No. 88

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

____________

BETWEEN
	METRONIC MULTIMEDIA H.K. LIMITED	Applicant

	AND

	COMMISSIONER OF CUSTOMS AND EXCISE	Respondent

____________

Coram: The Hon. Mr. Justice Keith in Court

Date of Hearing: 1 December 1998

Date of Delivery of Judgment: 1 December 1998

_______________

J U D G M E N T

_______________

The facts

1. On the morning of 1st August, premises in Kwai Chung were raided by officers of the Customs and Excise Department. It was believed that infringing copies of video compact discs were being produced there. The officers found a large quantity of video compact discs on the premises. It was believed that they were infringing copies. They were seized, and in due course they were removed from the premises.

2. Three compact disc production machines were also on the premises. It was believed that those machines had been used to produce the seized video compact discs. If the seized video compact discs had been infringing copies, their production would have been an offence under Part II of the Copyright Ordinance (Cap. 528) ("the Ordinance"). Accordingly, it was decided to exercise the powers conferred by section 122(1)(b)(ii) of the Ordinance, which permits the seizure, removal and detention of anything which appears to be likely to be evidence of an offence under Part II of the Ordinance. The production machines were therefore seized.

3. The production machines, though, were not removed from the premises. I know from other cases that the risk of serious damage to such machines, if they are dismantled and removed by contractors unfamiliar with them, is considerable. However, it was decided to detain the production machines so that they could not be used. After all, if they remained in the control of the persons who were suspected of using them to commit criminal offences, there was the danger that they would be used to produce more allegedly infringing copies of video compact discs.

4. There is a dispute as to whether the steps taken to prevent the use of the production machines involved simply cordoning them off or sealing the premises altogether. This application for judicial review proceeds on the assumption that it was the premises which were sealed. What is sought is a declaration that the Commissioner of Customs and Excise ("the Commissioner") had no power to seal the premises under the Ordinance under which he purported to act. The Applicant, Metronic Multimedia H.K. Limited ("the Company"), claims to be the tenant of the premises and the owner of the production machines, and the leave to apply for judicial review which the Company obtained from Barnett J. related to the alleged sealing of the premises.

The sealing of the premises

5. The statutory regime under which the officers of the Customs and Excise Department were acting is that laid down by the Ordinance. Section 122 of the Ordinance gives various powers to officers investigating the production of articles alleged to be infringing copies. Those powers do not include the power to seal premises in which the production of infringing copies is alleged to have taken place. However, a new Ordinance specifically addresses the problem of video compact discs which are alleged to be infringing copies. That Ordinance is the Prevention of Copyright Piracy Ordinance (Cap. 544), which came into operation on 28th May. That Ordinance permits premises in which the production of allegedly infringing video compact discs has taken place to be sealed.

6. Since the Commissioner does not contend that his officers were acting under the new Ordinance, he accepts that his officers had no power to seal the premises. It follows that the sole issue relating to the sealing of the premises is whether they were in fact sealed. The Company says that they were. The Commissioner says that they were not. It is not possible for me to decide that issue of fact on the affirmations which have been filed, and I shall decide what course should be taken to resolve that issue of fact when I have considered another feature of the conduct of the officers of the Customs and Excise Department which the Company wishes to challenge.

The continued occupation of the premises

7. Officers of the Customs and Excise Department are still on the premises. It is said that they are there to ensure that the production machines are not used. Even if the premises are found not to be sealed, the Company wishes to challenge the legality of the officers' continuing presence on the premises. The Commissioner's case is that one of the Company's directors consented to his officers remaining on the premises, and it was only because the Company did not want the production machines to be dismantled and removed that the continuing presence of the officers on the premises was necessary. The Company's response is that it was not reasonable for the Commissioner to insist that, if the production machines were not dismantled and removed, his officers had to remain on the premises to ensure that they would not be used. In any event, the Company asserts that the time has now come when the officers should no longer be permitted to remain on the premises.

8. An attempt to plead the true basis of the Company's case was hurriedly made this morning, but it is extremely difficult to plead a complicated case properly when you are under pressure of time. No criticism can therefore be attached to either Mr. Gerard McCoy S.C. or Mr. Victor Luk, counsel for the Company, for not producing a proposed re-amendment to the Notice of Application which sufficiently pleaded the Company's case so that (a) the Commissioner knows the case which he has to meet, and so that (b) the court can decide whether to grant leave to the Company to apply for judicial review of the continued occupation of the premises.

9. I do not think that it is necessary to require the Company to file a new application for leave to apply for judicial review. I see no compelling reason why the new challenge should not be included in the current proceedings, bearing in mind that there is still an application for judicial review of the sealing of the premises to be decided. The course which I propose to take, therefore, is to adjourn the application for leave to re-amend the Notice of Application to enable a proper re-amendment to be formulated. The application for leave to re-amend the Notice of Application can then be made before me as soon as reasonably practicable. At that hearing, if leave to re-amend is granted, I shall also decide whether, in the light of that re-amendment, to grant leave to the Company to apply for judicial review of the continued occupation of the premises. The hearing will be inter partes, because I am willing to hear from the Commissioner if he wishes representations to be made to me. I shall also decide then what course to take in connection with the original allegation that the premises have been sealed.

The seizure and detention of the production machines

10. The one issue of substance which I have addressed today relates to the seizure and detention of the production machines. Mr. McCoy wished to argue that their seizure and detention was unlawful. The legality of their seizure and detention had not been challenged in the original Notice of Application, but because the argument involved a point of statutory construction, I gave the Company both leave to amend the Notice of Application and leave to apply for judicial review of the seizure and detention of the production machines in order to enable the point to be argued.

11. The argument is a simple one. The power under which the Commissioner purported to seize and detain the production machines was that contained in section 122(1)(b) of the Ordinance. However, it is said that that power was in this particular case expressly limited by the magistrate who issued the search warrant authorizing the entry into, and search of, the premises. The warrant authorized officers of the Customs and Excise Department

"to enter ... [the premises] and to search for and seize any article which appear[ed] to [the officers] to be an infringing copy of a copyright work."

It is said that since the warrant authorized only the seizure of infringing video compact discs, the warrant was limiting the powers conferred by section 122(1)(b), which would otherwise have permitted the seizure and detention of the production machines if they appeared likely to be evidence of an offence under Part II of the Ordinance.

12. I reject this argument. The magistrate's powers under section 123(2) of the Ordinance were limited to issuing

"a warrant authorizing an authorized officer to enter and search the premises."

The magistrate had no power either to permit the seizure of anything found on the premises or to limit the type of articles which could be seized. The powers as to seizure and detention of articles found on a search to which a search warrant related are governed by section 122(1)(b). That is borne out by the structure of section 122(1) itself. The power in section 122(1)(a) to enter and search premises is expressly made subject to section 123, whereas the power in section 122(1)(b) to seize, remove and detain articles is not. It follows that the seizure and detention of the three production machines was not unlawful - at any rate not on the sole ground on which Mr. McCoy has alleged it to be unlawful.

	(Brian Keith)
	Judge of the Court of First Instance

Representation:

Mr. Gerard McCoy S.C. and Mr. Victor Luk, instructed by Messrs. Y.T. Szeto & Co., for the Applicant.

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

METRONIC MULTIMEDIA H. K. LTD. v. COMMISSIONER OF CUSTOMS AND EXCISE

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