CHAN MEI YIU, PADDY AND ANOTHER v. SECRETARY FOR JUSTICE AND OTHERS

CACV 172/2010, CACV 173/2010, CACV 174/2010,
AND CACV 175/2010

CACV 172/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 172 OF 2010

(ON APPEAL FROM HCAL NO. 16 OF 2007)

________________________

________________________

AND

CACV 173/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 173 OF 2010

(ON APPEAL FROM HCAL NO. 17 OF 2007)

________________________

BETWEEN

________________________

AND

CACV 174/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 174 OF 2010

(ON APPEAL FROM HCAL NO. 18 OF 2007)

________________________

BETWEEN

________________________

AND

CACV 175/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 175 OF 2010

(ON APPEAL FROM HCAL NO. 19 OF 2007)

________________________

BETWEEN

________________________

(Heard Together)

________________________

J U D G M E N T

________________________

Hon Kwan JA:

1.  I have had the advantage of reading in draft the judgment of Fok JA. For the reasons given in his judgment, I would dismiss these four appeals and make an order nisi as to costs in the way he has indicated.

Hon Fok JA:

2.  These appeals arise out of judicial review proceedings in which the applicants challenged various decisions relating to the Secretary for Justice’s acceptance of a request for assistance by an Italian prosecutor and the consequent application for, and issue of, search warrants, pursuant to the provisions of the Mutual Legal Assistance in Criminal Matters Ordinance, Cap. 525 (“the Ordinance”).

3.  By his judgment dated 30 July 2010 (“the Judgment”), Saunders J dismissed the applications for judicial review and the applicants appeal against that judgment.  They seek orders that the search warrants and the searches should be quashed and also an order that all the documents, copies and notes seized (which have been ordered to be sealed pending the appeal) should be returned to the applicants and not be transmitted to Italy or otherwise be provided to any Italian officials.

4.  Before identifying the issues arising in the appeals, it is helpful to set out the factual background relating to the issue of the search warrants, their execution and the steps taken with the documents after their seizure.  It is also necessary, in the light of certain submissions made on behalf of the applicants, to summarise certain background facts concerning earlier searches undertaken in California.

The search warrants

5.  As was the case before the Judge below, there is no dispute between the parties as to the facts which gave rise to the issue of the search warrants.  Those facts are set out in the Judgment at paragraphs 28 to 56 and it is sufficient for present purposes to summarise the content of those paragraphs.

6.  In May 2005 and October 2005, Italian prosecutors requested the Milan court to commit Mr Frank Agrama and others for trial for alleged offences of misappropriation, tax fraud and false accounting in relation to two companies, namely Mediaset SpA and Mediatrade SpA respectively.  In July 2006, an Italian judge dismissed the majority of the charges in the proceedings relating to Mediaset SpA on the basis of a time bar.  This resulted in the reduction of the amount involved in the alleged offences from US$170 million to about US$19 million.  The amount was subsequently further reduced as a result of the application of the relevant time bar to US$741,024.  Mr Agrama and others were committed for trial on the remainder of the charges, with the trial due to commence in November 2006.

7.  On 10 July 2006, Mr Fabio de Pasquale, a public prosecutor in the Prosecutor’s Office in Milan, issued a letter of request to the Department of Justice in Hong Kong seeking, amongst other things, a search of the residential premises of Ms Paddy Chan Mei Yiu and Ms Katherine Hsu May Chun (the two personal applicants in these proceedings) and the office premises of Loong Po Management Limited (one of the corporate applicants) in connection with the investigation.[1]

8.  This letter of request was dispatched from Milan, through the appropriate diplomatic channels, to Hong Kong.  It was received by the Mutual Legal Assistance Unit of the Department of Justice in Hong Kong in September 2006, where it was assigned to be dealt with by Ms Susana Sit, Senior Government Counsel.  Ms Sit had for some time before that been in correspondence with Mr de Pasquale about the matter.

9.  Ms Sit duly prepared a memorandum dated 10 January 2007 addressed to the Law Officer (International Law) requesting the formal appointment of an officer pursuant to s. 12(1)(c) of the Ordinance in order to apply for, amongst other things, search warrants.  On 15 January 2007, the Law Officer (International Law)[2] duly nominated DSI Leung King Hung, pursuant to s. 12(1) of the Ordinance, to apply to a magistrate for the proposed search warrants.

10.  On 16 January 2007, DSI Leung laid an information before a magistrate at the Eastern Magistrates’ Court seeking the search warrants.  As DSI Leung put it, the information sought:

“….the issuance of the search warrants authorising myself, with such other assistance and by such force as is necessary and reasonable, to enter the above premises and to search for and seize any such things (specified)”.

11.  It is convenient to set out the relevant part of DSI Leung’s affirmation in these proceedings[3], in which he set out the factual background justifying the application for the search warrants, which stated as follows:

“The Request from Italy

5. The request was made by the Public Prosecutor at the Milan Court of Italy in connection with a prosecution and continuing investigation that had commenced in Italy involving external serious offences relating to fraud, false-accounting, misappropriation and money laundering, against Farouk Agrama (also known as Frank Agrama) (“Agrama”) and Silvio Berlusconi (“Berlusconi’) and their associates.

6. It was alleged that for over two decades, Agrama had been purchasing broadcasting rights from Paramount for the Berlusconi Group which included three national television networks. He conducted his business through his company Harmony Gold USA. Between 1988 and 1999, Agrama conspired with Berlusconi and arranged fictitious sales of the broadcasting rights to a number of dummy companies under the control of the Berlusconi Group at an inflated price. These dummy companies had been reselling the broadcasting rights at an over-price to Italian companies and to Mediaset spa (“Mediaset”) a listed company in Italy since 1995. The initial estimate of the amount involved in the criminal matter is USD200 million.

7. The management of Mediaset had been under the control of Berlusconi. Prior to 2000, Berlusconi owned 50% of Mediaset. After 2000, his share had decreased to 35% since he increasingly involved in politics. He had become the prime minister in 2001. Even so, he still exercised influence over the management of Mediaset and manipulated its affairs through his associates who were top executives in the company.

8. Investigations had also revealed that a number of directors of Mediaset were involved. They had received bribes from Agrama to facilitate the inflated sales agreements.

9. Certain funds generated from the criminal activities were found to have channelled into the accounts of the companies under the control of Berlusconi, including the Fininvest Group, Principal Network Ltd and International Media Services Ltd.

10. Other funds had gone into the bank accounts of Agrama’s companies, including Wiltshire Trading Ltd (domiciled in Hong Kong) and Melchers Limited N.V. (domiciled in the Netherlands), maintained at Sanwa Bank in Los Angeles and UBS New York. It was alleged that Agrama had also set up other companies to facilitate the laundering of the criminal proceeds. They included Harmony Gold Ltd (domiciled in Hong Kong), Meadowview Overseas Ltd and Olympus Trading Ltd (domiciled in Ireland). It was further discovered that the above companies had common shareholders and company directors. Paddy Chan Mei Yu (“Paddy Chan”) and Katherine Hsu May Chun (“Katherine Hsu”), who are Hong Kong residents, are the shareholders and directors of these companies.

11. Italian authorities had also discovered that an approximate amount of 150 million Swiss Francs had been credited to the accounts opened at UBS Lugano under the names of Harmony Gold Ltd, Wiltshire Trading Ltd and other companies traceable to Agrama. Substantial deposits came from the account of Melchers Ltd held at Banca del Gottardo in Lugano. Paddy Chan and Katherine Hsu are the authorised signatories of Melchers Ltd’s account.

12. Italian investigations had also revealed that Paddy Chan is the authorised signatory of the accounts of Wiltshire Trading Ltd and Melchers Ltd opened at UBS’s New York Branch.

13. Assistance sought by the request included, inter alia, searching the premises: (i) Flat C, 16/F Hung Fook Court, 169 Tin Hau Temple Road, Bedford Gardens, Hong Kong (residence of Paddy Chan); (ii) Flat C, 16/F Yuan Kung Mansion, Kam Din Terrace, 20 Taikoo Shing Road, Taikoo Shing, Hong Kong (residence of Katherine Hsu); (iii) 12/F Inchape Insurance Tower, 3 Lockhart Road, Wanchai, Hong Kong (registered address of Wiltshire Trading Ltd); and (iv) Room 1523, Prince’s Building, 10 Chater Road, Hong Kong (registered address of Harmony Gold Ltd, CS Secretaries Ltd and Loong Po Management Ltd) and seizing the things as itemized at A below relating to the persons and entities as identified at B below:

A: Things to be seized

(i) company incorporation documents, articles of association, shareholding and capital (including the transfer, sale or purchase of shares) details, beneficial ownership, written resolutions, change of name, directors and secretaries or addresses information;

(ii) correspondence, notes agreements, contracts, letter of engagement, instructions;

(iii) invoices, receipts and payments;

(iv) financial records, including company accounts, cash books, ledgers, profit and loss accounts, balance sheets and statements;

(v) banking records including mandates, cheque books, cheques journals, statements of account for all accounts held, cheque stubs and paid cheques, money transfer instructions and any correspondence with banks;

(vi) powers of attorney;

(vii) bank drafts, loan certificates of deposits, and guarantees;

(viii) documents relating to Trusts (including trust deeds and appointment of trustees) set up for the benefit of the company or associated persons;

(ix) investment certificates, share certificates, certificate of title and ownership;

(x) minutes of meetings, file notes, working papers, reports, diary notes, telephone attendance notes, internal memoranda;

(xi) documents relating to services provided, including valuation services, acquisition, sale or possession of film rights;

(xii) contact addresses and telephone numbers;

(xiii) documents relating to any external storage facility; and

(xiv) documents relating to any management agency, fiduciary or formation agent used by the individual or company.

B: Persons and entities identified

Persons

Farouk Agrama (also known as Frank Agrama)

Colleen Morris

Vilma Thomas

Silvio Berlusconi

Pier Silvio Berlusconi

Marina Berlusconi

Daniele Lorenzano

Carlo Bernasconi

Roberto Pace

Gabriella Ballabio

Giovanni Stabilini

Aldo Spagnoli

Guido Babieri

Luca Dermitzel

Oscar Garzotto

Bruce Gordon

Peter Mustaky Cary

Gary Marenzi

Joe Lucas

Companies connected with Farouk Agrama

Harmony Gold HK Ltd

Harmony Gold Usa

Wiltshire Trading Ltd

Melchers N.V. Ltd

Meadowview Overseas Ltd

Olympus Trading Ltd

The Agrama Trust

Companies connected with Silvio Berlusconi

Fininvest

Silvio Berlusconi Finanziaria

Societé Financiére d’Investissement

Principal Network Ltd

International Media Services Ltd

Waotu Investment Ltd

Other companies

Mediaset

Mediatrade

RTI

Paramount

Banks

Sanwa Bank

Bank of The West

UBS Lugano

UBS New York

UBS Hong Kong

Banca del Gottardo

Cedars Bank

National Irish Banks

14.       It was also requested that the Italian authorities that were involved in the prosecution and investigation of the criminal matter in Italy be allowed to assist the Hong Kong authorities in the execution of the search warrants.”

12.  On 16 January 2007, the Magistrate issued four search warrants addressed to DSI Leung which were in the following terms:

“NOW THEREFORE I, under section 12 of the Ordinance, hereby authorise you, for the purpose of assisting in that prosecution and continuing investigation in relation to those external offences, with such assistance, and by such force, as is necessary and reasonable:

At any time of the day between 7:00 a.m. and 10:00 p.m., to enter into the said premises to search for the things kept in paper or computerized form, described in Schedule A being things connected with the individuals and/or institutions listed in Schedule B;

and to seize those things found in the course of the search that you believe, on reasonable ground [sic], to be relevant to the prosecution and continuing investigation in relation to those external serious offences.” (original emphasis)

Schedule A of the warrants set out the documents and Schedule B, the persons and companies and banks, as described in paragraph 14 of DSI Leung’s affirmation set out above.  The four warrants related to Ms Chan’s residence (in Tin Hau Temple Road), Ms Hsu’s residence (in Taikoo Shing), the office of Wiltshire Trading Limited (in Wanchai) and the offices of Ms Chan, Ms Hsu and Harmony Gold Limited, CS Secretaries Limited and Loong Po Management Limited (in Prince’s Building).

13.  The search warrants were issued under the provisions of the Ordinance rather than the regulations under the Mutual Legal Assistance in Criminal Matters (Italy) Order (Cap. 525, Sub Leg G), which regulations, although gazetted, were not in force until, as we were informed by Mr Wayne Walsh,[4] August 2010.

The execution of the search warrants

14.  The search warrants were executed on the morning of 18 January 2007.  The facts relating to their execution were dealt with by the Judge at paragraphs 57 to 93 of the Judgment and, again, it is sufficient for present purposes to summarise the main facts.

15.  As intended at the time when the search warrants were applied for, four representatives of the Italian prosecutor came to Hong Kong in order to take part in the searches.  These individuals were: Mr de Pasquale, the public prosecutor; another prosecutor named Mr Sergio Spadaro; two forensic accountants of the firm KPMG, namely Ms Gabriella Chersicla and Mr Stefano Martinazzo.  I shall refer to these individuals collectively as “the Italian officers”.

16.  DSI Leung assembled a team comprising himself, a sergeant, two detective constables and two constables.  Prior to the execution of the search warrants, DSI Leung divided his team into two.  DSI Leung, together with a woman detective constable and a constable were responsible for searching the residence of Ms Hsu in Taikoo Shing and the office premises of Wiltshire Trading Limited in Wanchai.  DSI Leung’s team was assisted by Mr Spadaro and Ms Chersicla.  The other team, led by Sgt Ho Chi Pui, together with a detective constable and constable, was assigned to search the residence of Ms Chan in Tin Hau Temple Road.  Sgt Ho’s team was assisted by Mr de Pasquale and Mr Martinazzo.  After those searches, the two teams were to assemble in order together to search the office premises of the other companies in Prince’s Building.  Although it was intended that the teams should arrive simultaneously at Prince’s Building, DSI Leung did not arrive there until about 20 minutes after Sgt Ho’s team together with Ms Chan and her lawyer Ms Fong had arrived.

17.  It follows that DSI Leung was not present at the search of Ms Chan’s residence or for the first 20 minutes after the entry at Prince’s Building.

18.  When briefing them, DSI Leung instructed his team members that the Italian officers were to be present to help them identify materials relevant to the criminal matter in Italy.  They were told that if searching officers found anything apparently covered by the search warrants during the search, they would confirm with the Italian officers the relevancy of the documents, which would then be seized.

19.  At the premises to be searched, the Hong Kong police officers identified themselves to the person answering the door, informed that person that they were there to execute a search warrant and, on each occasion, were granted admission to the premises for that purpose.  The Italian officers were immediately introduced and the reason for their presence explained.

20.  In paragraphs 63 and following of the Judgment, the Judge described the evidence of the physical searches undertaken at the premises in question.  It will be necessary to return later in this judgment to address some of the findings made by Judge in respect of the searches.  Two documents were seized at Ms Chan’s residence, one file was seized at Wiltshire Trading Limited’s offices in Wanchai (being surrendered to the police upon their arrival without a search being conducted) and 58 documents were seized at the offices in Prince’s Building.  No documents were seized at Ms Hsu’s residence in Taikoo Shing.  The seized documents consisted of a total some 20 box files of individual documents.

The steps taken with the documents after seizure

21.  The documents seized at the various premises were collected together by WDPC Lai, who was designated the exhibits officer, and taken by her to Police Headquarters in Arsenal Street.  This was pursuant to s. 12(7) of the Ordinance which provides that anything seized must be delivered into the custody and control of, in this case, the Commissioner of Police.

22.  In the afternoon of the day after the searches were conducted, 19 January 2007, on DSI Leung’s instructions, WDPC Lai assisted the Italian officers to study the seized documents at Police Headquarters.

23.  At 16.53 hours that afternoon, DSI Leung received a faxed letter from solicitors acting for the applicants asserting legal professional privilege (“LPP”) in relation to the seized documents.  DSI Leung therefore asked WDPC Lai to stop inspecting the documents and she then secured those documents. The Italian officers left Police Headquarters at 17.30 hours.

24.  It would appear that the Italian officers had, in the course of inspecting the documents, also been making notes and photocopies of documents.  This fact was revealed in a subsequent affirmation of DSI Leung dated 13 September 2007 in the following terms:

“In view of the LPP claim, I asked the Italian officers to stop inspecting the seized documents and hand all the notes and photocopies of the seized documents to the Police as I believed they were not empowered to keep the documents until the matter was resolved in court. The Italian officers understood and agreed, and the notes and photocopies of the seized documents were handed to (WDPC Lai). I also asked WDPC Lai to check the bags of the Italian officers and confirm that they did not take away any notes or photocopies of the seized documents and WDPC Lai did so.

At the material time, it was my concern and I wished to confirm that the Italian officers would not take away the notes and photocopies of the seized documents and that nobody could read them again.  As all the seized documents would be sealed later, I considered that the best way to deal with the notes and photocopies of the seized documents was to destroy them so that nobody could read them again before the matter was resolved.  Therefore, I instructed WDPC Lai to shred the notes and photocopies of the seized documents and she did so with the shredding machine placed near the Conference Room. Only WDPC Lai and I were involved in getting back the notes and photocopies of the seized documents and the shredding of them.  No log or copy of the shredded notes and photocopies of the seized documents was kept.”

The earlier searches in California

25.  In addition to the Hong Kong search warrants, Mr de Pasquale had also issued a letter of request to the Attorney General of the United States of America requesting searches of Mr Agrama’s offices and residence in Los Angeles and that documentation from several banks be obtained.

26.  Accordingly, by 15 November 2006, search warrants permitting those searches were obtained by an Assistant United States Attorney for the Central District of California and, on that day, searches of Mr Agrama’s office and residence in Los Angeles were undertaken and documents and computers were seized. Mr de Pasquale and two KPMG auditors forming part of Mr de Pasquale’s prosecution team were present in the offices and residential premises searched.

27.  Mr Agrama challenged the search and seizure relying on, amongst other things, the contention that the Italian prosecution team had access to privileged material in the course of the search.  For its part, in opposition to this challenge, the United States Government filed a non-sworn statement of Mr de Pasquale, in which he denied seeing any attorney-client or work product material of any kind during the search.

28.  However, on 21 January 2007, the Assistant United States Attorney for the Central District of California handling the matter wrote to Mr Agrama’s attorney to disclose the fact that the KPMG auditors had reviewed boxes seized in the search, at least some of which were subsequently ascertained to contain privileged attorney-client correspondence.

29.  Therefore, based on that advice, on 22 January 2007, the United States Government filed a statement in the United States District Court in which it accepted that mistakes were made in following the “taint” procedures to protect Mr Agrama’s attorney-client and work product materials as a result of which the Italian prosecutor’s staff was allowed access to materials that in fact contained attorney-client material.  Consequently, the United States Government withdrew the unsworn statement of Mr de Pasquale referred to above.

30.  In the result, the challenge by Mr Agrama to the search and seizure was successful and the documents and computers seized were returned to him.

The issues arising on the appeals

31.  As noted above, in these appeals, the applicants contend that the search warrants and the searches should be quashed and that all the documents, copies and notes seized should be returned to them and not be transmitted to Italy or otherwise be provided to any Italian officials.  The notices of appeal and submissions made by Mr Gerard McCoy SC, leading counsel for the applicants, attacked the propriety of the search warrants at various stages.

32.  First, in relation to the application for the search warrants, Mr McCoy submitted that all of the search warrants were vitiated by the failure of DSI Leung and the Department of Justice to disclose to the Magistrate in the evidence leading to the issue of the search warrants various matters.  This raises the question of whether there was material non-disclosure in the application for the search warrants (Issue 1).

33.  Next, Mr McCoy made submissions concerning the execution of the search warrants.  In relation to the search of Ms Chan’s residence and the first part of the search of the Prince’s Building offices, Mr McCoy submitted that DSI Leung’s absence from the search of those premises (and the entry into the Prince’s Building offices) was fatal to the due execution of the search warrant of those premises so that it followed that the documents seized there must be returned to Ms Chan.  This raises the question of whether the authorised officer named in a search warrant issued under s. 12(3) of the Ordinance must be present and must himself enter the premises and conduct the search (Issue 2).

34.  In any event, as regards the execution of the search warrants, Mr McCoy submitted that all of the search warrants were vitiated on the basis that, on the proper construction of s. 12(3) of the Ordinance, the assistance permitted to an authorised officer in the execution of a search warrant did not include any involvement of foreign officials of the place making the request for assistance.  This raises the question of the proper construction of s. 12(3) (Issue 3).

35.  Alternatively, Mr McCoy submitted that to the extent such involvement was permitted under s. 12(3), then, as a matter of fact, the assistance rendered in the present case was not “necessary and reasonable”.  This raises the questions of whether the Judge’s finding that the Italian officers were not engaged in the search of Ms Chan’s residence is perverse and inconsistent (Issue 4) and whether, to the extent the Italian officers in fact participated in the searches, that participation constituted assistance that was “necessary and reasonable” (Issue 5).

36.  As to the final stage, after the searches were concluded and the documents seized, Mr McCoy submitted that the review and copying of the documents by the Italian officers before the Secretary for Justice’s direction that they be transmitted to the requesting authority vitiated the searches, in particular because documents conceded to be covered by LPP had been seized.  This raises the questions of the proper construction of s. 12(8) of the Ordinance and whether the decision of Chung J in Re Anson Garments Limited [2006] 2 HKC 246 is correct.  Specifically, it raises the question of whether the review and copying of documents by Italian officers before the Secretary for Justice’s direction to transmit them to the Italian authorities vitiated the searches (Issue 6).

Issue 1: whether material non-disclosure?

37.  There can be no doubt that an authorised officer applying for a search warrant under the Ordinance is subject to a duty to bring to the notice of the magistrate issuing the warrant all facts material to the decision to be made by him.  This flows from the nature of the search warrant, being an infringement of the right to the inviolability of homes and other premises and the protection against arbitrary or unlawful search or intrusion into such places guaranteed under Article 29 of the Basic Law, and also from the ex parte nature of the application: cf. Karina Fisheries Pty Limited & Ors v Mitson & Ors (1990) 26 FCR 473 at pp. 480-481.

38.  Mr McCoy submitted that DSI Leung and the Department of Justice had a duty to disclose to the Magistrate various matters, namely (i) the intended role of the Italian officers, (ii) the incompetence of the Italian officers to give evidence in Hong Kong proceedings, and (iii) the possible existence of LPP material at the premises to be searched.  Although material non-disclosure of (i) and (iii) are specifically raised in the notices of appeal, (ii) is not.

39.  There is no doubt that the police and the Department of Justice were well aware that the Italian officers intended to be present and participate in the searches of the premises in Hong Kong.  As regards the intended role of the Italian officers, Mr McCoy submitted that both the police and the Department of Justice deliberately withheld this fact from the Magistrate.  He submitted that the Magistrate should have been told about the intended participation by the Italian officers and that this would have been material to the adjudicative exercise as to whether to issue the search warrants and, if so, whether to impose conditions on their execution.  Mr McCoy contended that the Magistrate would need to know matters such as the identities of the Italian officers, the number of them involved and the role intended to be carried out by them.  This submission was subject to Mr McCoy’s overriding submission that, as a matter of jurisdiction, the involvement of foreign law enforcement officials in the execution of a search warrant under the Ordinance was not permitted (which submission I shall address below in considering Issue 3).

40.  DSI Leung was cross-examined in the course of the proceedings below and said that, although there had been no mention in the information that the representatives of the Italian prosecutors wanted to be present at the searches, he felt comfortable to proceed with the application for the warrant in terms without those facts being stated.  The Judge quoted DSI Leung’s reasons for this in the Judgment (at §54) as follows:

“So I regarded the presence of the Italian officers as some kind of assistance. They only assist me in identifying documents relevant to their investigation. That’s what I always keep -- I kept on reminding my boys during my subsequent briefings, that they should not allow the Italian offices to do the search, they are only present -- they were only present to assist us to identify relevant documents.”

41.  The Judge identified the question of whether the failure to draw to the attention of the Magistrate the fact that Italian law enforcement agents would be present and might take part in the search constituted a material non-disclosure (Judgment §4(ii)).  However, although he returned to deal with this issue later in the Judgment (at §152), he did not specifically deal with the question of whether this was a material non-disclosure to justify quashing the search warrants.

42.  The Judge indicated that he would consider the submission of material non-disclosure on the basis that the Italian officers would be present during the search in order to advise the Hong Kong police officers as to the relevance of things found, in order that decisions could be made as to seizure (Judgment §153).  He then addressed whether the participation of the Italian officers fell within the ambit of “such assistance … as is necessary and reasonable” within s. 12(3) of the Ordinance and concluded that it was (Judgment §§156 and 171).

43.  As will be seen, for the reasons set out below in respect of Issues 3 and 5, it is my view that the participation of the Italian officers in the execution of these search warrants is properly to be characterised as falling within the phrase “such assistance … as is necessary and reasonable” in s. 12(3) and was therefore lawful.  It is also my view, for the reasons set out below in respect of Issue 2, that it is not necessary for the search warrant to identify by name each of the persons who may render assistance to the authorised officer in the course of its execution.

44.  In the light of those conclusions, it follows, in my view, that it was not necessary for DSI Leung to disclose in the information that the Italian officers would be present at and participate in the searches.  Their participation might or might not be assistance that was necessary and reasonable within s. 12(3) but that question would fall to be determined after the execution of the search warrants in the light of any challenge on the basis that their participation exceeded what was necessary and reasonable.

45.  The matter can be tested by taking an uncontroversial example.  It was not disputed that an authorised officer executing a search warrant under the Ordinance might enlist the assistance of a locksmith in order to gain entry to the premises to be searched.  The authorised officer applying for a search warrant might hope that entry to the premises could be obtained with the consent of the occupier so that a locksmith would not be required.  However, the fact that he might need to resort to the assistance of a locksmith is not a fact that would be material to the magistrate’s decision whether or not to issue the search warrant.

46.  I therefore conclude that there was no material non-disclosure in relation to (i), the intended role of the Italian officers.

47.  I turn to deal with the contention that there was material non-disclosure in relation to (iii), the possible existence of LPP material at the premises to be searched.

48.  In my view, this contention fails as a matter of fact.  There was no reason, in my opinion, for DSI Leung to anticipate that there might be LPP material at the premises to be searched.  As to the facts, I agree with the Judge who said:

“176. The proposed searches were of private homes and office premises and not law offices. In that respect they were no different at all from any other document search that might be undertaken by police officers. There is nothing in the evidence to suggest that there was any special reason to believe that there might be LPP material in the search.

177. It is tolerably clear from the factual circumstances that the allegation made by the Italian prosecutors was that the Hong Kong companies involved in the alleged fraud were merely alter egos of Mr Agrama, and were being used to give an apparent, but arguably unjustified, commercial separation between the transactions in California and the transactions in Italy. In those circumstances, rather than it being likely that there would be LPP material on the premises, it becomes unlikely that such material would exist in those premises.

178.     If there was no reasonable cause to believe that the premises were likely to contain privileged material there is no requirement to make disclosure to the magistrate: see Philip KH Wong, Kennedy YH Wong & Co v ICAC at §§ 49 and 94.”

49.  It was Mr McCoy’s submission that the possible presence of LPP material should reasonably have been anticipated because of the fact that the California searches had resulted in attorney-client or work product material being seized.  However, the Judge was well aware of what he described as the “Los Angeles circumstances” and did not consider that they lead to the inference which Mr McCoy would have had him (and this Court) draw.  In any event, as a matter of chronology, it was only after the execution of the search warrants in Hong Kong that the United States Government accepted the validity of Mr Agrama’s challenge to the validity of the search and seizure of the documents and computers in California and so that fact could not have been material to be disclosed to the Magistrate in Hong Kong, even if there was a reasonable anticipation that there might be LPP material at the premises to be searched.

50.  The Judge also reasoned, in respect of the question of whether there might be LPP material in the premises to be searched, that there was no reasonable cause to believe this because “the claim for LPP was ultimately entirely withdrawn” (Judgment §179).  This is also reflected in comments of the Judge that “all claims for legal professional privilege in respect of the items seized were abandoned by the applicants” (Judgment §5) and “[a]t the end of the day, there being no LPP issue …” (Judgment §126).

51.  These statements are, unfortunately, incorrect since it is common ground between the parties that after the conclusion of the hearing on the substantive issues on 31 March 2010, the parties had reached an agreement that 96 of the documents seized during the execution of the search warrants were covered by LPP.  This agreement was recorded in correspondence from the applicants’ solicitors to the Department of Justice dated 29 April 2010 and was reported to the Judge in open court on that date.  It would therefore appear that the Judge had forgotten this when he handed down the Judgment on 30 July 2010.

52.  However, this error does not, in my view, vitiate the Judge’s finding of fact that there was no reasonable cause to believe that the premises were likely to contain privileged material, since this was only an additional reason given by the Judge which does not affect his finding independent of this error.  It follows, in my opinion, that there was no requirement to make disclosure of this to the Magistrate.

53.  As for (ii) the incompetence of the Italian officers to give evidence in Hong Kong proceedings, I have already mentioned that this was not raised in the notices of appeal.  In his oral submissions, Mr McCoy contended that the Magistrate should have been informed that the Italian officers would take the position that they were not competent to give evidence in Hong Kong.  That they would take this position appears to be based on the fact that, in December 2006, Mr de Pasquale informed the Assistant United States Attorney handling the matter in California that the Chief Prosecutor in Milan was reluctant to allow him to testify in the court proceedings in California and also on the fact that, in these proceedings, the Italian officers declined to come to Hong Kong to give evidence when asked to do so (as the Judge noted in the Judgment at §14).

54.  I do not agree with the applicant’s contention in this regard.  Whether or not the Italian officers might, at some later time, have material evidence to give in respect of the execution of the search warrants is not something that could be anticipated at the earlier time when DSI Leung was applying for the issue of the search warrants.  As such, the fact that the Italian officers might subsequently be unwilling to give evidence in proceedings in Hong Kong would not be a material fact required to be disclosed to the Magistrate since it was simply not a fact known at the time of the application and could not therefore be required to be disclosed.  Further, and in any event, there was, at the time of the application for the search warrants, no reasonable basis for thinking that the Italian officers might be asked to give evidence in Hong Kong proceedings.  The mere fact that there had been factual disputes in relation to the execution of the search warrants in California does not mean that there would likely be such disputes in Hong Kong.  Absent such likelihood, there would not have been a basis for requiring DSI Leung to make any disclosure as to the willingness of the Italian officers to give evidence in Hong Kong proceedings.

Issue 2: whether entry or search otherwise than by DSI Leung

unauthorised?

55.  As noted above, DSI Leung was not involved in the search of Ms Chan’s residence.  Those premises were searched by the team led by Sgt Ho.  It is also the case that DSI Leung did not arrive until about 20 minutes after the entry of the Prince’s Building offices by Sgt Ho’s team.

56.  Mr McCoy submitted that DSI Leung was the only person named on the four search warrants and it was DSI Leung, and no one else, who was authorised by the Magistrate to enter the premises and carry out the searches with such assistance as was necessary and reasonable.  He contrasted those search warrants with a search warrant issued under s. 50(7) of the Police Force Ordinance (Cap. 232) under which a magistrate may direct “any police officer” to conduct a search.

57.  Mr McCoy relied on the proposition that a warrant is a document “authorising the doing of an act which would otherwise be illegal” (per Lord Wilberforce in R v ICR, Ex p. Rossminster [1980] AC 952 at p. 1000A). He submitted that in the present case only DSI Leung was authorised to enter and search the premises and he must be personally present and supervise the searches.  In support of the latter contention, Mr McCoy relied on Federal Republic of Germany v Ebke (2001) 158 CCC (3d) 253.

58.  In Ebke, a decision of the Northwest Territories Supreme Court, the Federal Republic of Germany was seeking the extradition of a German citizen resident in Canada who was suspected of having been a member of a terrorist criminal organisation and of participating in bombings in Berlin, being criminal offences in Germany.  In addition to a provisional arrest warrant, the judge had issued a search warrant under the authority of s. 12 of the Mutual Legal Assistance in Criminal Matters Act 1985 of Canada.  The information to obtain the search warrant was sworn by a Corporal Munn of the RCMP and she was authorised to enter the premises to search and seize things outlined in the description and any other evidence of the commission of the alleged offences.  However, Corporal Munn was not the officer in charge of the search team, she did not decide what items were to be seized and she was not even on the scene during the search except for a very brief period of time.  Instead, a Sergeant Hardy was commander of the search team under an assignment made prior to seeking the search warrant.

59.  Mr McCoy relied in particular on the judgment of Vertes J at §§75-76, where he held:

“75. The naming requirement is to ensure that there is one officer who is in charge of, and responsible for, the search. That officer must be personally present and supervise the search. That officer may have the assistance of others in carrying out the search but he or she cannot delegate the supervisory role to another officer. As noted in Strachan, the important point is that the search be conducted under the close control and supervision of the officer named in the warrant: …

76. I think there can be no doubt that Corporal Munn failed to exercise that close control and supervision required of her as the officer named in the warrant. I recognise that she was tasked with leading the arrest team. But, and especially since the command responsibilities had been allocated prior to the application to the search warrant, it would have been an easy step to name Sergeant Hardy, who was designated as the leader of the search team, as the specified officer in the warrant. This is not a mere technicality. It is a serious disregard of the responsibilities cast upon the named officer by this type of statutory provision. …”.

60.  In this regard, Mr McCoy also relied on another Canadian decision, Re Old Rex Café (1972) 7 CCC (2d) 279, in which it was held, in relation to a warrant issued under s. 181 of the Criminal Code, that the peace officer to whom the search warrant is issued must be present at its execution.

61.  I do not accept Mr McCoy’s submission that DSI Leung was required to be present at the execution of the search warrants in question and that, in his absence, any search of premises and seizure of evidence would be unlawful.

62.  The answer to his submissions is provided by an analysis of the relevant statutory provisions.  I shall address the proper construction of s. 12(3) of the Ordinance in more detail below, but for present purposes, it is relevant to examine the scheme of the provisions of s. 12(1) to s. 12(4) of the Ordinance, which provide:

“12 (1) Where-

(a) a criminal matter involving an external serious offence has commenced in a place outside Hong Kong;

(b) there are reasonable grounds to believe that a thing (including a thing belonging to a class of things) relevant to the criminal matter is located in Hong Kong; and

(c) an appropriate authority of that place requests the Secretary for Justice to arrange for the issue of a search warrant under this section in relation to that thing,

the Secretary for Justice may nominate in writing an authorized officer to apply to a magistrate for the search warrant so requested. (Amended L.N. 362 of 1997)

(2) Where an authorized officer nominated under subsection (1) has reason to believe that the thing to which the request relates is, or will, at a specified time, be-

(a)- (d) (omitted)

(e) upon or in any premises,

the relevant officer may-

(i) lay before a magistrate an information on oath setting out the grounds for that belief; and

(ii) apply for the issue of a warrant under this section.

(3) Where an application is made under subsection (2), the magistrate shall, subject to subsection (4), issue a warrant authorizing an authorized officer (whether or not named in the warrant), with such assistance, and by such force, as is necessary and reasonable to do such of the following as are specified in the warrant-

(a) (omitted)

(b) to enter upon land, or upon or into premises, specified in the warrant;

(c) to search any such land or premises for the thing; and

(d) to seize any thing found in the course of any such search that the relevant officer believes, on reasonable grounds, to be relevant to the criminal matter in the place outside Hong Kong concerned.

(4) A magistrate shall not issue a warrant under this section unless-

(a) the informant or some other person has given to the magistrate either orally on oath or by affidavit, such further information, if any, as the magistrate requires concerning the grounds on which the issue of the warrant is sought; and

(b) the magistrate is satisfied that there are reasonable grounds for issuing the warrant.”

63.  Under s. 12(1) of the Ordinance, where the relevant conditions in paragraphs (a), (b) and (c) apply, the Secretary for Justice may nominate in writing an authorised officer to apply to a magistrate for a search warrant as requested by the relevant requesting authority.  If the authorised officer so nominated has reason to believe any of the matters set out in paragraphs (a) to (e), he may lay before a magistrate an information on oath setting out the grounds of his belief and apply for the issue of a warrant under s. 12(2) of the Ordinance.  The authorised officer who makes application for the issue of a warrant under s. 12(2) must, of course, be the specific authorised officer (as that term is defined in s. 2 of the Ordinance, which definition includes “any police officer”) so nominated by the Secretary for Justice under s. 12(1).  Where the conditions set out in s. 12(4) of the Ordinance pertain, s. 12(3) of the Ordinance requires the magistrate to issue a warrant “authorising an authorised officer (whether or not named in the warrant)” to do the various acts specified in the warrant which may include those matters set out in paragraphs (a) to (d) of s. 12(3).

64.  Thus, a police officer (being an authorised officer for the purpose of the Ordinance: see the definition of “authorized officer” in s. 2) derives authority to conduct the search, not from the fact that he is named in the warrant, but from the warrant itself.  This is clearly demonstrated by the words “whether or not named in the warrant” in s. 12(3).

65.  Mr McCoy’s reliance on Ebke does not provide support for his submission because the relevant section giving jurisdiction for the issue of a search warrant, s. 12(1) of the Mutual Legal Assistance in Criminal Matters Act 1985 of Canada, provides:

“A judge of a province to whom an application is made under subsection 11(2) may issue a search warrant authorizing a peace officer named therein to executed anywhere in the province, where the judge is satisfied by statements under oath that there are reasonable grounds to believe …”. (Underlining added)

That section therefore limits the peace officer who may execute a search warrant to that officer named in it.  This is to be contrasted with the very different wording of s. 12(3) of the Ordinance relevant in the present case.

66.  As for the case of Re Old Rex Café, the relevant statutory provision, s. 181 of the Criminal Code, provided that “the justice … may issue a warrant … authorizing a peace officer to enter …”.  It was in the face of that statutory language that Morrow J held (at p. 284) that he was “inclined to the view that s. 181(1) requires the peace officer named to execute the search warrant”.  However, it is noteworthy that he added:

“It may be that the language is open to the construction that included with the name of the person who obtained a warrant the Justice could have added ‘peace officer or peace officers in the said district or territory of (as required)’ but in the present case the search warrant under attack is addressed only to Constable F. R. Kempton and the language used is: ‘Now therefore I hereby authorize you to enter and search …”.

67.  I do not therefore consider that either Ebke or Re Old Rex Café support the applicants’ case on this issue.  I accept the submission advanced by Mr Clive Grossman SC, leading counsel to the respondent, that the fact that DSI Leung was named in the search warrants did not prevent other authorised officers (as that term is defined) from executing the warrants.  I would accept that the practice of naming an officer flows from the requirement of the Secretary for Justice to nominate a particular officer to apply for the warrant under s. 12(1) and s. 12(2) of the Ordinance and the statutory form of the warrant[5] which contemplates the naming of the same nominated officer in the warrant.

68.  That another police officer, other than the officer named in the search warrant, might in fact execute the warrant is also supported by the terms of s. 12(9) of the Ordinance which provides:

“(9) An authorized officer who executes a search warrant issued under this section shall, as soon as practicable after the execution of the warrant, give to the person, or give to the owner or occupier of the land or premises or leave in a prominent position on the land or at the premises, as the case requires-

(a) a notice setting out-

(i) the name and rank of the authorized officer;

(ii) the name of the magistrate who issued the warrant and the day on which it was issued; and

(iii) a description of any thing seized and removed in accordance with the warrant; and

(b) in the case of any such thing which is a document, a copy of the document if that person, owner or occupier, as the case may be, so requests.”

This sub-section refers to “an” authorised officer who carries out the search, not “the” authorised officer: as it might if only the authorised officer named in the warrant was entitled to execute it.

69.  Furthermore, it will not be uncommon that search warrants in relation to the same criminal investigation are sought in respect of multiple premises and, as a matter of practical necessity, those search warrants will have to be executed simultaneously in order to avoid the occupiers of other premises being alerted to the intended search by an earlier search.[6] Given the form of the warrant, it would be unnecessarily cumbersome, in my opinion, to require a different authorised officer to lay an information seeking the issue of a search warrant for each of the separate premises to be searched and I do not consider that s. 12(3) of the Ordinance requires this.  The named officer in the search warrant issued under s. 12(3) will, of course, remain the officer in charge of the search and seizure operation and answerable for the due execution of the search warrant by those other authorised officers who assist him in this task.

70.  In any event, in relation to the complaint concerning the first 20 minutes or so of the search at the Prince’s Building offices, the Judge found that the search there did not start until DSI Leung arrived and that the other police officers were already there “perfectly sensibly, to secure the premises pending the search” (Judgment §85).  This finding was based on DSI Leung’s description of the search of the premises at Prince’s Building, in respect of which he stated:

“41. At 1113 hours, we arrived at [the Prince’s Building offices]. We met Sergeant Mak Ching Yu and Woman Police Constable 57013 Tan Sze Wan … at the reception area. Their main role was to inform the staff that police were going to execute a search warrant at the premises and to make sure that nobody tempered [sic] anything before the arrival of the police search party. They did not take part in the search.”[7]

Issue 3: proper interpretation of s. 12(3) of Ordinance

71.  The issue here is whether the participation of the Italian officers was within the ambit of “such assistance … as is necessary and reasonable” in s. 12(3) of the Ordinance.  It was the applicants’ case that, on a proper interpretation of s. 12(3) of the Ordinance, no such participation was permissible.

72.  I have already referred above to the constitutional protection of homes and other premises under Article 29 of the Basic Law.  Any infringement of the inviolability of such homes and premises can only be permitted under clear authority of the law and by clear statutory language.  The applicants prayed in aid the principle, which was not disputed by the respondent, that courts are enjoined from imputing to the legislature an intention to abrogate or curtail human rights or freedoms (especially those constitutionally protected) unless such an intention is clearly manifested by unmistakable and unambiguous language, which indicates that the legislature has directed its attention to the rights and freedoms in question.

73.  Amongst the various cases cited for the above principle, it is sufficient to cite passages from the two which Mr McCoy addressed in his oral submissions.  First, in Coco v R (1994) 179 CLR 427, Mason CJ, Brennan, Gaudron and McHugh JJ held, in their joint judgment, at pp. 436-437:

“Statutory authority to engage in what otherwise would be tortious conduct must be clearly expressed in unmistakable and unambiguous language. Indeed, it has been said that the presumption is that, in the absence of express provision to the contrary, the legislature did not intend to authorize what would otherwise have been tortious conduct. But the presumption is rebuttable and will be displaced if there is a clear implication that authority to enter or remain upon private property was intended. Such an implication may be made, in some circumstances, if it is necessary to prevent the statutory provisions from becoming inoperative or meaningless.

…

            The insistence on express authorization of an abrogation or curtailment of a fundamental right, freedom or immunity must be understood as a requirement for some manifestation or indication that the legislature has not only directed its attention to the question of the abrogation or curtailment of such basic rights, freedoms or immunities but has also determined upon abrogation or curtailment of them. The courts should not impute to the legislature an intention to interfere with fundamental rights. Such an intention must be clearly manifested by unmistakable and unambiguous language. General words will rarely be sufficient for that purpose if they do not specifically deal with the question because, in the context in which they appear, they will often be ambiguous on the aspect of interference with fundamental rights.”

74.  Secondly, in R v Secretary of State for the Home Department, ex p. Simms & Anor [2000] 2 AC 115, Lord Hoffmann held (at p. 131E-G):

“Parliamentary sovereignty means that Parliament can, if it chooses, legislate contrary to fundamental principles of human rights. The Human Rights Act 1998 will not detract from this power. The constraints upon its exercise by Parliament are ultimately political, not legal. But the principle of legality means that Parliament must squarely confront what it is doing and accept the political cost. Fundamental rights cannot be overtaken by general or ambiguous words. This is because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. In the absence of express language or necessary implication to the contrary, the courts therefore presume that even the most general words were intended to be subject to the basic rights of the individual. In this way the courts of the United Kingdom, though acknowledging the sovereignty of Parliament, apply principles of constitutionality little different from those which exist in countries where the power of the legislature is expressly limited by a constitutional document.”

75.  It is clear that the Judge was aware that the context of the issue before him included an invasion of the homes and premises of Hong Kong residents and the need for strict compliance with the relevant statutory conditions for the issue of the search warrants (Judgment §§132 to 134).

76.  Mr McCoy submitted that “assistance … as is necessary and reasonable” means: in the context of s. 12(3)(b), assistance without which the authorised officer cannot reasonably gain entry upon or into the premises; in the context of s. 12(3)(c), assistance without which the authorised officer cannot reasonably search for the things in the premises; in the context of s. 12(3)(d), assistance without which the authorised officer cannot reasonably seize the things; and, in all cases, assistance which satisfies the dual test of necessity and reasonableness, is assistance which is indispensable and essential, not merely convenient expedient or useful.

77.  It was therefore submitted that the phrase “with such assistance … as is necessary and reasonable” in s. 12(3) of the Ordinance does not permit the executing authorised officer to engage the assistance of a law enforcement agent of the foreign beneficiary of the search warrant in order to conduct any of the acts listed in paragraphs (a) to (d) of s. 12(3) as might be specified in the warrant.

78.  I am unable to accept Mr McCoy’s submissions in this regard for the following reasons.

79.  It was unnecessary for the legislature to define what assistance was reasonable and necessary, as this will inevitably differ in each case.  The statutory language used, being “necessary and reasonable”, does not, in my opinion, equate to “indispensible and essential”.  Instead, the test, which applies both to the assistance and also the force used by the authorised officer in carrying out the various acts authorised by the search warrant, is one which is to be judged by reference to the particular factual circumstances of any particular case and which raises the question of whether the assistance or force used was reasonably necessary to do the particular specified act in question.

80.  In the case of a search warrant to seize things which may include documents, the nature and type of documents to be seized will be relevant in determining the reasonable necessity of the engagement of any particular assistance in the search and seizure of those documents.  The context of the present search warrants is the granting by the Hong Kong authorities of mutual legal assistance in criminal matters arising in Italy.  This is not a purely domestic criminal context in which one might safely assume that local law enforcement officers would not require assistance in order to effect a search and seizure of documents pursuant to a search warrant.  Nor is this a straightforward criminal matter, being instead a complex case of tax fraud, false accounting and money-laundering.

81.  In these circumstances, it seems to me that, on the proper interpretation of s. 12(3) of the Ordinance, the assistance to which the authorised officer executing the search warrants might have resort could include the assistance of the Italian officers.  Some assistance with this interpretation of s. 12(3) can be derived from the cases of Dunesky v Commonwealth of Australia (1996) 89 A Crim R 372, R v Middlesex Guildhall Crown Court & Anor, ex p. Tamosius & Partners (a firm) [2000] 1 WLR 453 and Budd (FN6 above).

82.  Dunesky concerned a search warrant issued under s. 10 of the Crimes Act 1914 (Cth) in connection with an investigation focusing on tax evasion. The relevant part of s. 10 of the Crimes Act empowered a Justice of the Peace to “grant a search warrant authorising any constable named in the warrant, with such assistance, and by such force, as is necessary and reasonable, to enter … and to seize …”.  The statutory language regarding assistance and force was therefore materially the same as that used in s. 12(3) of the Ordinance.  The issue was whether the fact that the police were accompanied by Australian Taxation Office officers affected the validity of the execution of the warrant.  As to this, Lockhart J held (at pp. 384-385):

“Purvis was the officer in charge of the search of the Dunesky house. … In my opinion the police officers named in the warrant did not abdicate their responsibility to consider the relevant documents and decide whether or not they fell within the scope of the warrant. Abdication is said to be in favour of the ATO officers who also attended the search. It is plain that certain of the ATO officers not only examined, but selected documents, whereupon they were given to Purvis or other AFP officers and noted in the PSR. But the presence of persons other than those authorised to execute the warrant is not fatal to the validity of the execution. I do not accept the argument of counsel for the applicants that on its proper construction s 10 does not authorise persons, other than the police officers named in the warrant, to give assistance beyond assistance in the nature of ‘locksmith’s assistance’. The authority conferred by s 10 upon constables named in the warrant to enter premises and seize things found there is to pursue these activities ‘with such assistance … as is necessary and reasonable’. The obtaining of the assistance with entry, search (by implication), and seizure is not limited merely to assistance with entry of the premises. This follows both from the literal construction of s 10 and its obvious intent. The assistance includes assistance in relation to seizure of things, which in turn must carry with it, by implication, inspection of the articles, including documents, to see if they come within the terms of the warrant.

The facts and circumstances that surround this matter are complex and have involved years of investigation by the Australian Taxation Office into the activities of the applicants. In my view it is not only permissible under s 10 of the Crimes Act for ATO officers to accompany the police officers on the search; but it is probably in the interests of both the prosecuting authorities and the applicants that they do so. Who better to assist in the identification of relevant documents (ie relevant according to the terms of the warrant) than the ATO officers who are intimately conversant with the subject matter of their audits? It is true that the ATO officers cannot take over the role of the police officers in the conduct of the search and seizure of documents; but plainly they were retained for the purpose of distinguishing between relevant and irrelevant material, that is material which would or would not answer the description of the documents in the warrants themselves.”

83.  Tamosius concerned search warrants issued under s. 20C(1) of the Taxes Management Act 1970.  Under s. 20C(3)(a) of that Act, it was provided that an officer who enters the premises under the authority of the warrant may “take with him such other persons as appear to him to be necessary”.  When executing one of the warrants, the revenue officers brought with them a barrister, nominated by the Attorney-General and instructed by the revenue, for the purpose of advising whether material was subject to legal professional privilege.  Judicial review was sought of the validity of the decision to issue the warrants and one of the grounds concerned the revenue’s decision to take counsel with them when carrying out the search.  Moses J held (at p. 463F-H):

“The applicant sought to confine the persons to which subsection (3)(a) refers to those who might assist in a purely ancillary role in the process of entry and search, such as those skilled in opening cabinets. In my judgment there is no basis for confining the persons to which subsection (3)(a) refers. True it is that only officers may search under the authority of the warrant and only officers may seize and remove relevant material. But an officer may take any other person who appears to him to be necessary. The limitation on those other persons is to be found in the words ‘as appear to him to be necessary.’ Those words prohibit the presence of persons who could not reasonably be expected to assist in any of the tasks the officer is authorised to undertake.”

84.  In Budd, McKinnon J considered the judgment of Vertes J in Ebke to the effect that the examination of the material by a representative of the requesting state before an order was issued directing material to be sent to the requesting state would defeat the entire purpose of the relevant statutory provisions in the Mutual Legal Assistance in Criminal Matters Act (Canada).  He said (at §66):

“I am unable to agree with the decision in Ebke. If giving directions as to what may be searched for and examining certain items during the course of the search ‘defeats the entire purpose of these statutory provisions’ then Officer Trede should probably not have been permitted to attend as an observer. As I pointed out earlier in these reasons, Article VIII of the Treaty between Canada and the United States specifically contemplates the presence of foreign agents during the course of the search. It must be remembered that the search is in furtherance of crimes alleged to have been committed in a foreign jurisdiction. The foreign agents know the case they are attempting to mount. The fact that they may be permitted to make suggestions to their Canadian counterparts as to what should be seized and what should not be seized to me makes eminent good sense. Obviously, materials should not be retained by foreign agents, nor copied, nor notes taken as to what has been seized, until a hearing has been held pursuant to s 15. But I have no objection to foreign officers actively participating in the search and providing direction to their Canadian counterparts as to what may be relevant or irrelevant. Obviously, the foreign agents must be subject to the supervision of Canadian peace officers and at all times act in accordance with Canadian law and within the four corners of the specific warrants. However, it seems to me that searches conducted under MLACMA should not be a game of ‘blind man’s buff’. Foreign agents on occasion may be necessary and integral to an orderly search. They should be able to observe the material of interest and advise as to its materiality to the foreign case. Permitting foreign estate agents to be present during the execution of warrants under the Act should not be viewed as an affront to Canadian sovereignty. On the contrary, the practice might be regarded as an enhancement of Canadian sovereignty, signifying a commitment to Canada’s place in the world as a cooperative partner to our Treaties with foreign nations who are resolved to combat international crime, whose perpetrators have no regard for borders and a demonstrated contempt for the sovereignty and laws of individual nations.”

85.  Likewise, in my opinion, the assistance and force to which resort may be had by an authorised officer executing a search warrant under s. 12(3) of the Ordinance is plainly not limited to “locksmith’s assistance” as a matter of construction.  Nor is it limited to assistance which is indispensable and essential.  Instead, it extends to assistance or force which, in the circumstances of the case, is considered to be reasonably necessary.  It seems to me that to construe s. 12(3) as including a blanket exclusion of assistance from any representative of a foreign requesting party would be to construe the provision in an overly restrictive manner and in a way which would be destructive to the legislative intent: see Rmbsa Corporate Services Limited & Anor v Secretary for Justice & Anor [2008] 2 HKC 81 at §32.[8]

86.  The decision as to what is reasonably necessary will have to be taken by the authorised officer responsible for the execution of the search warrant.  I do not accept the applicants’ submission that this in effect grants the law enforcement agents a carte blanche[9]to decide on the reasonableness and necessity of the assistance.  The authorised officer will be answerable, upon a judicial review, if there is later a challenge to the extent of assistance or force used.  I shall address below, in discussing Issue 5, the question of whether in fact the assistance of the Italian officers was within the ambit of what would be necessary and reasonable assistance in the present case.

Issue 4:Judge’s finding relating to participation of Italian officers at

search of Ms Chan’s residence

87.  The Judge set out the relevant evidence in respect of the search of Ms Chan’s residence at paragraphs 63 to 69 of the Judgment and then made a finding that “the evidence does not substantiate an assertion that the Italian officers were physically engaged in the search of Ms Chan’s home” (Judgment §94).

88.  The applicants’ notices of appeal and skeleton argument advanced the contention that the Judge’s finding in this regard was perverse and inconsistent with his finding that the Italian officers, having actively and physically engaged in the searches in California, declared that they intended to come to Hong Kong to take part in the search and did come for that purpose (see Judgment §§33, 36, 41-44, 57 and 99-106).

89.  It was contended that the logical conclusion was that the Italian officers intended to and did engage actively and physically in the searches and that an adverse inference of the highest severity (based on authorities such as Jones v Dunkel (1959) 101 CLR 298 at p. 308) should be drawn against the respondents in light of the failure of the Italian officers to make themselves available to be cross-examined by the applicants in these judicial review proceedings and in the persistent effort of the respondents and the Italian officers in resisting the applicants’ application to have their evidence taken under letters of request. [10]

90.  It is correct, as a matter of fact, that the Italian officers were not called as witnesses in these proceedings by the Department of Justice and that they declined an invitation to come to Hong Kong to be cross-examined in these proceedings (Judgment §§12 and 14).  It is also true that a letter of request was issued by the Judge for the taking of the Italian officers’ evidence and that, due to an unfortunate postal failure, the applicants were not notified of the relevant hearing so that the evidence was taken in the absence of the applicants and there was no cross-examination (Judgment §§15 to 21). Furthermore, subsequent steps for a new letter of request for the taking of the evidence of the Italian officers were frustrated by the revocation by the Court of Appeal of Milan, on Mr de Pasquale’s complaint, of its order authorising the taking of evidence under the letter of request (Judgment §§22 to 25).

91.  Nevertheless, I do not consider that it is open to this court to reverse the Judge’s finding of fact in respect of participation of the Italian officers in the search of Ms Chan’s premises.  I do not consider that the evidence of the applicants in support of the contention that the Italian officers participated in that search, which the Judge summarised in paragraphs 63 to 69 of the Judgment, is sufficient to support a finding that they did so participate.  Nor is that evidence sufficient, in my opinion, to give rise to an adverse inference on the basis of the principle in Jones v Dunkel.

Issue 5: factual extent of Italian officers’ participation and whether this

was “necessary and reasonable”?

92.  At paragraph 156 of the Judgment, the Judge accepted that the presence of the Italian officers at the searches was both reasonable and necessary for the purpose of advising on the relevance of documents.

93.  However, Mr McCoy contended that a search by the local law enforcement agents would be sufficient for the statutory purpose and that, whilst it might be expedient to have the assistance of the Italian officers, it was not necessary and reasonable for them to be allowed to intrude into and search private premises.  Mr McCoy referred to paragraph 61 of the Judgment, where the Judge held:

“DSI Leung agreed that he would have been able to conduct the searches without the presence of the Italian officers. He said however, and I accept, that in those circumstances the search would have been more difficult. His evidence was that with the Italian officers present the search was more ‘conveniently’ undertaken because of their ability to identify relevant documents.”

He contended that this demonstrated that it was not necessary for DSI Leung to have the assistance of the Italian officers to execute the search warrants.  Instead, their assistance was a matter of mere convenience and this was reflected in the Judge’s holding (at Judgment §171) that the presence of the Italian officers at the searches for the purpose of advising on the relevance of the material found in the course of the searches that might be seized was “sensible, and desirable”.  Mr McCoy submitted that the Judge was wrong to say that this was “consequently ‘necessary and reasonable assistance’ ”.

94.  Contrary to Mr McCoy’s submissions, there is, in my opinion, obvious good reason in allowing foreign agents to be present at a search.  In addition to the cases of Dunesky, Tamosius and Budd, support for this proposition is provided by R v Secretary of State for the Home Department, ex p. Fininvest SpA & ors [1997] 1 All ER 942.  In that case, a search warrant was issued upon the request of Italian prosecuting authorities under the provisions of the European Convention on Mutual Assistance in Criminal Matters 1959 for the seizure of documents held by a company (CMM) at its offices in London.  A warrant was issued duly authorising entry to CMM’s premises to search for the documents and six named Italians were permitted to accompany any police constable issuing the warrant.  As to this, Simon Brown LJ (as he then was) observed (at p. 950b-c):

“This had been specifically requested for good reason: the documents related to highly complex matters and many were in Italian. The Italians were there to advise where necessary as to which documents fell within the terms of the warrant.”

95.  As a matter of fact, none of the documents seized under the search warrants in this case were in Italian and it had not been suggested that this was the reason why the Italian officers’ assistance was necessary and reasonable.  Obviously, if there were documents in that language, the presence of the Italian officers might have been all the easier to justify.  Nevertheless, the fact remains that the present case was one involving a complex case of tax fraud, false accounting and money laundering in which many individuals and companies played a part, as reflected in DSI Leung’s affirmation set out above.  The presence of the Italian officers, which included two forensic accountants, would plainly assist the due and efficient execution of the search warrants by enabling the authorised officer executing the search warrant there and then to take advice on the relevance of things seized.  In the words of McKinnon J, the search is not meant to be a game of “blind man’s buff”.  This would not only be in the interests of the authorised officer executing the search warrants but also that of the applicants, as it would avoid the situation of the police taking the course, in order to ensure the search warrant was properly complied with, of seizing more documents than were ultimately necessary in order to be able to undertake the exercise of review for relevance when the documents were safely in the custody of the Commissioner of Police.

96.  It follows that I agree with the Judge in his holding (Judgment §167) that:

“It is entirely sensible that the Hong Kong police officers should have the assistance in the search of officers who are familiar with the nature of the offence alleged and the factual parameters of the offence. Fraud or misappropriation offences, particularly when committed on an international scale, can involve a wide range of documents. Until a search is undertaken, it is unlikely that investigators will know precisely what documents may be available to assist in establishing the offence. Without the presence of investigators familiar with the offence and circumstances it may be necessary for large numbers of documents to be seized, only subsequently to be returned as irrelevant.”

97.  Mr McCoy submitted that foreign law enforcement officers were not subject to local rules of investigation and this posed a danger when they were intruding into and searching private premises.  But the Judge expressly found (Judgment §185) that:

“… the Hong Kong police officers did not abdicate their searching responsibility to the Italian officers. The reality of the situation is that they were assisted in their searching responsibility by the Italian officers.”

As such, the search was at all times conducted under the auspices of DSI Leung, the named authorised officer in the search warrants who remained responsible for their due and lawful execution. Furthermore, the Judge noted (Judgment §170) that it was open to DSI Leung to refuse the Italian officers’ request to be present.

98.  I would accept that if, due to lack of diligence on the part of the Hong Kong law enforcement officers or overzealousness on the part of the foreign law enforcement officers, the latter effectively took over the execution of the search warrants, this would vitiate the searches and their execution would not be duly carried out under the Ordinance.

99.  That, though, is not the case here on the facts.  In the present case, the Judge found that the Italian officers had actively participated in the searches at Ms Hsu’s residence and the Prince’s Building offices.  However, as he stated, (correctly in my view):

“185. I am satisfied, that in the circumstances of this case, where the Italian officers were lawfully present at the search, and were fully entitled to examine documents and things found for the purpose of relevance, it cannot be said at that the act of physically locating a document or thing in the course of the search, is an act that would justify the setting aside of the warrants. However, just as in Dunesky, it is plain that the Hong Kong police officers did not abdicate their searching responsibility to the Italian officers. The reality of the situation is that they were assisted in their searching responsibility by the Italian officers.

186.  It might have been better if the Italian officers had simply sat at a table and made decisions on relevance of any documents or brought to them.  They would have been entitled to leaf through a file looking at documents to determine whether or not they were relevant.  But it would be an unwarranted act of hair splitting to find that they could look through a file, but not open a drawer and take out a file.”

100.  Finally, I would accept that, if the Judge had simply applied a test of mere expedience in determining the question of whether the assistance of the Italian officers in this case was necessary and reasonable, this would have been wrong.  However, notwithstanding the use of language in which necessary and reasonable assistance appeared to be equated with that which was sensible and desirable, or convenient,[11] I am satisfied that the Judge’s finding, as reflected in paragraph 156 of the Judgment was that the presence of the Italian officers was “both reasonable and necessary” and so within the language of s. 12(3) of the Ordinance.

Issue 6: whether review and copying of documents by Italian officers

before Secretary for Justice’s direction to transmit vitiated searches?

101.  Where an authorised officer finds, as a result of a search in accordance with a warrant issued under s. 12(3) of the Ordinance, a thing which the authorised officer seizes wholly or partly because he believes the thing on reasonable grounds to be relevant to the criminal matter in the place outside Hong Kong concerned, the authorised officer is required to deliver the thing into the custody and control of the Commissioner: s. 12(7) of the Ordinance.[12]

102.  The provisions of s. 12(8) and s. 12(11) of the Ordinance are then relevant.  They provide:

“(8) Where a thing is delivered into the custody and control of the Commissioner under subsection (7), the Commissioner shall arrange for the thing to be kept for a period not exceeding one month from the day on which the thing was seized pending a direction in writing from the Secretary for Justice as to the manner in which the thing is to be dealt with (which may include, subject to subsection (11), a direction that the thing be sent to an appropriate authority of a place outside Hong Kong). (Amended L.N. 362 of 1997)

…

(11) The Secretary for Justice shall not give a direction under subsection (8) that the original of a thing be sent to the appropriate authority of a place outside Hong Kong unless-

(a) the appropriate authority of the place has, not more than 1 month after the thing was seized, given the Secretary for Justice a notice in writing setting out the grounds on which the original of the thing is required for the purposes of the criminal matter concerned in that place; and

(b) in any case where the Secretary for Justice is of the opinion, after considering all the circumstances, that the original of the thing should be returned to Hong Kong upon the conclusion of the proceedings relating to that criminal matter, the appropriate authority has given an unqualified undertaking to the Secretary for Justice that the original of the thing will be so returned. (Amended L.N. 362 of 1997)”.

103.  There is no doubt that one of the purposes of the scheme under ss. 12(8) and 12(11) of the Ordinance is so that the interests of the subject of a search warrant are protected.  The requirement for a direction by the Secretary for Justice provides a period of time for the making of objections to the seizure and transmission of things seized on the grounds of, for example, relevance or privilege.

104.  The Judge followed the decision of Chung J in Re Anson Garment Ltd & Ors [2006] 2 HKC 246 in holding that it was proper for the foreign investigators to review documents seized for the purpose of identifying the documents required in the investigation and whether the original documents were required, to enable the Secretary for Justice to make a proper decision under ss. 12(8) and 12(11) of the Ordinance (see Judgment §§206 to 209).

105.  It was the applicants’ case that if the foreign law enforcement agents were allowed to examine the seized documents pending a direction by the Secretary for Justice under s. 12(8) of the Ordinance, the entire purpose of the protective role of the Secretary for Justice would be defeated.  As for Re Anson Garment, Mr McCoy submitted that that case was wrongly decided on this point and should be overruled by this Court.

106.  In support of the applicants’ case, Mr McCoy relied upon Ebke and another Canadian case, USA v Orphanou (2004) 182 CCC (3d) 554.  In Ebke, Vertes J held:

“86. I do not think there is anything untoward about having Officer Trede on the scene as an observer: see R v Rutherford Ltd. (1995), 101 C.C.C. (3d) 260 (B.C.S.C.), at para.25. It is no doubt necessary and helpful to have an officer from the investigating jurisdiction provide background information and to act as an advisor and resource person. But that advice surely cannot extend to allowing the officer of the requesting state to examine items and then instruct the Canadian police to seize them. After all, the whole purpose of a s.15 hearing is to determine if the things seized should be sent to the requesting state. Nothing is to be sent to the requesting state unless an order is issued to that effect. It necessarily follows that no representative of the requesting state should be able to examine the material before such an order is made. Letting Trede see the materials and decide what to seize defeats the entire purpose of these statutory provisions.”

107.  Orphanou concerned a search warrant executed by the Canadian police pursuant to a request by the US authorities.  The assistance order authorised the presence of a US Postal Inspector, Mr Adiano, to be present at the search and to assist the officers executing it.  Low J of the Ontario Superior Court held:

“63. As indicated above, I am not satisfied that the warrant was executed according to its terms. The role played by Mr. Adiano exceeded that contemplated in the assistance order. Because he took an active part in the search and because seized material was placed in his possession, the applicant achieved a circumvention of the intents and purposes of the Act. This was compounded by the conduct of the police in relation to the seizure of the 23 hard drives from the respondent’s place of business. Assuming that there was reasonable cause to seize them all initially, the refusal to return at least a copy to the owner together with the refusal to identify the relevant documents in the drives from the irrelevant, is to give an unwarranted primacy to police expedience at the grave expense of the privacy interests of the citizen.

64. In balancing the several interests engaged, the right of the individual to be free from unreasonable search and seizure, the obligations of Canada as a treaty partner and the interest of international co-operation, it is necessary to have regard to the compliance or lack thereof with the process established by the Act both on the part of the requesting state and its agents and on the part of the Canadian authorities. I am persuaded that in the circumstances before me, the applicant has, through Mr. Adiano, and with the co-operation of Ontario peace officers, achieved an end run around the statute. I agree with the observation of Vertes J. in Ebke that the Act does not contemplate that material seized come into the hands of agents of the requesting state in the absence of a sending order. Otherwise the process of seeking a sending order is merely an exercise. …”.

108.  These Canadian cases must be considered in their proper context, which includes a statutory requirement (under s. 15 of the Mutual Legal Assistance in Criminal Matters Act 1985 of Canada, set out in Orphanou at §23) for a hearing before a judge to determine if a sending order should be made in respect of the seized documents. It is clear from its provisions that s. 15 does not contemplate representations being made to the judge by the requesting state in order for him to determine if a sending order should, or should not, be made.

109.  There is no such process under the Ordinance and, insofar as the Secretary for Justice is required to determine whether to make a direction to send the seized materials to the requesting state, there is nothing in ss. 12(8) or 12(11) of the Ordinance which prohibits a representative of the requesting state having sight of any of the materials in question.

110.  As Chung J held in Re Anson Garment, at §61:

“It must have been the legislative intention (and this is undisputed by the respondents) that the decision of both the Secretary for Justice and the appropriate overseas authority (provided for by ss 12(8) and 12(11)(a) respectively) should be based on reasonable grounds. The one-month period referred to in those provisions must have been intended to give them sufficient time to make such decision. In order to properly exercise that power, the seized ‘things’ would have to be examined and considered by the Secretary for Justice and the appropriate overseas authority (as the case may be).”

At §§87 and 88, Chung J therefore concluded that, in order for a proper decision to be made under ss. 12(8) and 12(11)(a), a review of the documents must be undertaken by the Secretary for Justice and the overseas appropriate authority and that the examination of the documents in that case by the Customs & Excise officers (whether done alone or together with the US customs officers) was not unlawful or ultra vires.

111.  I do not accept the applicants’ contention that Re Anson Garment was wrongly decided in this regard.  On the contrary, I consider that Chung J was correct in his construction of ss. 12(8) and 12(11)(a) of the Ordinance and that the Judge was right to follow that decision.  For the reasons I have addressed above in respect of Issue 3, I consider that the rendering of assistance by representatives of the foreign requesting party in the execution of a search warrant is within the scheme of the Ordinance.  If so, it seems to me that it would be artificial to exclude those representatives from reviewing the seized documents prior to a direction by the Secretary for Justice under s. 12(8).  Their review could further ensure that only relevant documents were made the subject of such a direction.  Furthermore, the specific provision in s. 12(11)(a) entitling the appropriate overseas authority to give notice requesting the original of the document to be sent, strongly supports the conclusion that representatives of the foreign requesting party are permitted to examine the materials seized before a s. 12(8) direction is given.

112.  In the present case, there is no doubt, as the respondent rightly conceded, that the police were wrong to permit the Italian officers to make copies of seized documents when they were in the custody of the Commissioner and the Judge duly recorded this concession (Judgment §205). Nor should notes have been made of the seized documents.  I have therefore considered carefully the question of whether the propriety of the searches is affected by those admittedly wrongful actions.  The possibility that the Italian officers may have seen documents covered by LPP is relevant because the Ordinance does not require “the disclosure of any items subject to legal privilege” (see s. 2(10)).

113.  However, there is no basis for rejecting the evidence of DSI Leung regarding the confiscation and destruction of the notes and the Judge did not suggest there was any reason to do so.  It is therefore the case that, as soon as the claim for LPP was asserted, the inspection ceased, the documents were sealed and all the copies and notes made by the Italian officers were recovered and destroyed.

114.  Mr McCoy invited the Court to apply the maxim omnia praesumuntur contra spoliatorem (all things are presumed against a wrongdoer)[13] in this case and to draw the inference that the documents seen by the Italian officers included those covered by LPP.

115.  But even if one assumes that the Italian officers may have read or made notes of documents that are subject to LPP, and even if one then makes the further assumption that the Italian officers may have retained the substance of privileged material in their heads, I do not consider that this is relevant to the questions presently before the Court on this judicial review.

116.  Instead, I accept Mr Grossman’s submission that none of the particular decisions under challenge (summarised in the Judgment at §2) is affected by the complaint concerning the review of the documents seized by the Italian officers after the completion of the execution of the search warrants.  Furthermore, there is no suggestion that, as a matter of fact, the Italian officers have actually retained any privileged material in their heads and there is no evidence, even after the period of over five years that has now elapsed since the searches, that the Italian prosecutors have sought to deploy information derived from documents covered by LPP that were seized during the execution of these search warrants.  If the Italian prosecutors did attempt to do so, then it may well be the case that it would be open to the applicants to come to the Court in Hong Kong to seek declaratory relief in respect of the execution of the search warrants but there is no suggestion of such unlawful use of privileged material by the Italian prosecutors.

Conclusion

117.  For the above reasons, I would dismiss these appeals.

118.  As for costs, I would make an order nisi that the applicants pay the respondents’ costs of the appeals, to be taxed if not agreed, with a certificate for two counsel.

Hon Reyes J:

119.  I agree with the reasons stated by Fok JA.