RE THE HONG KONG AND SHANGHAI BANKING CORPORATION LTD

DC MP 974 of 1991
DC MP 975 of 1991

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HEAD NOTE

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                Ex parte application - Production Orders - Search Warrant - Sections 20 and 21 of the Drug Trafficking (Recovery of Proceeds) Ordinance (Cap. 405) - Order 115 Rule 1A of Rules of Supreme Court - Article 14 of the Hong Kong Bill of Rights - Section 8 of the Canadian Charter of Rights and Freedom.

IN THE DISTRICT COURT OF HONG KONG

MISCELLANEOUS PROCEEDINGS NO. 974 OF 1991

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REASONS FOR DECISION

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Background

1. On 8th August 1991 the Crown applied, ex parte, in Miscellaneous Proceedings No. 974 of 1991, for 6 production orders under Section 20 of the Drug Trafficking (Recovery of Proceeds) Ordinance, (the "Ordinance") and in Miscellaneous Proceedings No. 975 of 1991, for a search warrant under Section 21 of the Ordinance.  The two applications are based on 2 sworn information of the police.

2. The production orders were sought to compel 5 banks in Hong Kong and the Inland Revenue Department to disclose details of bank accounts and records of a suspect who is charged with the offence of possession of dangerous drugs for the purpose of unlawful trafficking. Inquiries revealed that the suspect maintained accounts with 5 banks.

3. The search warrant was sought to search 2 suitcases of a suspect who is now remanded in Hong Kong pending his extradiction to the United States of America on an offence relating to drug trafficking.  A warrant of arrest of the suspect was issued by the court in U.S.A..  The suspect, before his arrest in Hong Kong, stayed in a local hotel under an assumed name.  He later moved to another hotel and had given instructions to the first hotel to send his 2 suitcases to an overseas address immediately.

4. I granted the production orders and search warrant sought by the Crown in Chambers I now give the reasons for my decision in court in view of the importance of the issue raised in theses 2 applications.

Issue

5. The issue involved in these 2 applications is whether Sections 20 and 21 of the Ordinance are incorsistent with Article 14 of the Hong Kong Bills of Rights Ordinance 1991 (the "Bill of Rights")

Drug Trafficking (Recovery of Proceeds) Ordinance

6. The Ordinance was enacted to provide for the tracing, confiscation and recovery of the proceeds of drug trafficking, to create the offence of assisting drug traffickers to retain those proceeds and for incidental or related matters.  Sections 20 and 21 are as follows :-

7. An authorised officer is described in Section 2 as meaning any police office, any member of the Customs and Excise Service and any person authorized in writing by the Attorney General for the purposes of the Ordinance.

8. Section 22 defines court in relation to the provisions of Sections 20 and 21 as meaning the High Court and District Court.

Hong Kong Bills of Rights Ordinance 1991

9. The Bill of Rights came into operation in Hong Kong on 8th June 1991. It is an ordinance which provides for the incorporation into the law of Hong Kong of provisions of the International Covenant on Civil and Political Rights as applied to Hong Kong and for ancillary and connected matters. Section 3(2) of the Bill of Rights provides that all pre-existing legislation that does not admit of a construction consistent with the Bill of Rights is, to the extent of the inconsistency, repealed.

10. Article 14 of the Bill of Rights is as follows : -

11. Section 14 of the Bill of Rights and the Schedule thereto provide that 6 specific ordinances are not subject to the provisions of the Bill of Rights for a period of 1 year from the date of its commencement.  The Ordinance is not one of the excepted ordinances.

Interpretation of Article 14

12. In interpreting Article 14, considerable assistance is derived from the decisions of the Canadian courts dealing with the Canadian Charter of Rights and Freedoms (the "Canadian Charter of Rights"). The Canadian Charter of Rights is, of course, entrenched in the Constitution of Canada and is part of the Constitution.  Elaborate procedures are prescribed for the amendment or repeal of the provisions of the Constitution. In interpreting the provisions of the Charter of Rights, the Canadian courts have adopted a purposive approach.  For example, in Hunter et al v. Southam Inc (1984) 11 D.L.R. (4th) 641, Dickson J. of the Supreme Court of Canada had this to say :-

                "I begin with the obvious. The Canadian Charter of Rights and Freedoms is a purposive document. Its purpose is to guarantee and to protect, within the limits of reason, the enjoyment of the rights and freedoms it enshrinesIt is intended to constrain governmental action inconsistent with those rights' and freedoms; it is not in itself an authorisation for governmental action."

13. The Bill of Rights is not part of the constitutional documents of Hong Kong.  It was enacted by the Hong Kong Legislature and could be repealed like any other legislation in Hong Kong.   However, to the extent that existing legislat-ion is deemed to be repealed if its construction is inconsistent with the Bill of Rights, it is clear that the Legislature intended that the Bill of Rights should take precedence over other legislation. Thus ordinary principles of statutory interpretation. is not appropriate in construing the provisions of the Bill of Rights. I am of the view that it is appropriate to adopt the purposive and generous approach in interpreting the Bill of Rights which is consistent with the interpretation of similar provisions entrenched in the constitutions of other countries.

Arbitrary or unlawful interference with privacy

14. The execution of a search warrant or a production order would necessarily interfere with the privacy of an individual. However it is only arbitrary or unlawful interference with privacy that is prohibited by the Bill of Rights.

15. Sections 20 and 21 provide a detailed scheme dealing with the application and granting of the production order and search warrant.  There is no dispute that in making the present application the procedure prescribed by the Ordinance has been observed by the Crown and the jurisdiction of the court to grant the relief is fully set out in the Ordinance. No issue arises on the question of lawfulness of the application.

16. The only question to be decided is whether there is an arbitrary interference with the privacy of the individual. In this connection, reference can be made to the case of Hunter et al. v. Southam Inc (supra) which I have referred to earlier. In that ease the Combines Investigation Act of Canada authorized the Director of the Combines Investigation Branch, or his representative to enter any premises on which the Director believes there may be evidence relevant to an inquiry under the Act, to search for evidence on premises, and to seize the evidence found there. The Act qualifies this power by requiring the Director, before exercising the power, to obtain an authorization from a member of the Restrictive Trade Practices Commission. The statutory power was employed to search the premises of a newspaper, as part of a combines inquiry into the newspaper industry in Edmonton.. The search of the newspaper is files was interrupted by the newspaper owner's application for an injunction.  The application raises the question whether the Act infringed Section 8 of the Charter of Rights which provides that :

                "Everyone has the right to be secure against unreasonable search or seizure."

17. Dickson J. in delivering the unanimous judgment of the Supreme Court held that :

             "The guarantee of security from unreasonable search and seizure only protects a reasonable expection. This imitation on the right guaranteed by section 8, whether it is expressed negatively as freedom from "unreasonable" search and seizure or positively as an entitlement to a "reasonable" expectation of privacy, indicates that an assessment must be made as to whether in a particular situation the public's interest in being left alone by government must give way to the government's interest in intruding on the individual's privacy in order to advance its goals, notably those of law enforement."

 

18. Dickson J. held that a search of the kind in issue was reasonable only if it were authorized by statute and 3 conditions were stipulated by the authorizing statute :

19. In respect of the first requirement, Dickson J. held that a warrantless search is prima facie unreasonable and it is for the party seeking to justify a warrantless search to rebut the presumption of unreasonableness, He recognized, however, that it may not be reasonable in every instance to insist on prior authorization in order to validate governmental intrusions upon individuals' expectations of privacy (The situations in which it is not feasible to obtain a prior authorization are the situations in which a statute or the common law could authorize a warrantless search or seizure.  See, for example R. v. Longtin (1983) 41 O.R. (2nd) 545).

20. In respect of the second requirement, Dickson J. held that the person who gives the authorization need not be a judge, but he must at a minimum be capable of acting judicially.

21. In respect of the third requirement, Dickson J. held that an applicant's reasonable belief that evidence may be uncovered in the search is not sufficient.In the case before him, Dickson J, held that the second and third requirements' had not been fulfilled because the person who issued the warrant was entrusted with investigatory functions and therefore could not act impartially.  Furthermore the Act did not stipulate upon what standard or by what means of proof the member of the Commission should decide whether there was sufficient reason to issue a warrant.

22. I would respectfully adopt the same requirements in construing whether Sections 20 and 21 are inconsistent with Article 14 of the Bill of Rights.  I find that there is little difference in principle in regard to the questions of "unreasonable search" and "arbitrary interference with privacy".  I am fortified in this view by the construction placed by the Canadian courts on Section 10 of the Charter of Rights which states that :

                ''Everyone has the right not to be arbitrary detained or imprisoned".

23. The courts there held that an arbitrary detention. would be one that was unreasonable or capricious or one made without reference to an adequate determining principleor standard (see Levitz v. Ryan [1972] O.R. 783)

Sections 20 and 21 of the Ordinance

24. I now turn to examine whether the three requirements are satisfied in the provisions of Sections 20 and 21 of the Ordinance. There is no dispute that the first and second requirement have been satisfied.  The sections provide for the prior authorization of the production order and search warrant.  The orders are to be made by a judge of the District Court or the High Court and the judge has a discretion whether to grant the orders or not.

25. In relation to the third requirement, Section 20(6) states that rules of court may provide for proceeding relating to. the orders applied for under the section.  Order 115 of the Rules of Supreme Court were enacted to prescribe for the proceedings under the Ordinance. Rule 1A of Order 115 provides that the applications under Sections 20 and 21 are to be made ex parte to a judge by laying an information on oath Section 20 sets out the conditions that have to be fulfilled before the court may make the order for the production of material. The Crown has to show firstly the particulars of the material (Section 20(1)) and that a specified person is in possession of the material (Section 20 (2)). Under Section 20 (4)(a) and Section 20(4)(b)(i), it is further necessary to show that there are reasonable grounds for suspecting that a suspect has, inter alia, carried on drug trafficking and the material to which the application relates is likely to be of substantial value to the investigation for the purpose of which the application is made. In my view, Section 20(4)(b)(i) provides more than a reasonable belief that evidence may be found.  The existence of the material having been identified by Sections 20(1) and 20(2), the reference in Section 20(4)(b)(i) to a reasonable belief that the material is likely to be of substantial value to the investigation clearly points to a reasonable belief that there is evidence to be found in the material sought to be produced.

26. Section 20(4) refers to the other conditions, namely that the material is not subject to legal privilege (Section 20(4)(b)(ii)) and that public interest requires the product ion of the material (Section 20(4)(c)).  Even without these 2 conditions, Section 20 clearly satisfies the requirement that an order can only be issued after it has been established on oath that reasonable and probable grounds exist to believe that an offence has been committed and that there is evidence to be found at the place of search, or, as in this instance, in the material in the possession of a specified person.

27. In relation to the application for search warrant under Section 21 the court may, pursuant to Section 21 (2), issue a warrant under either one of the following situations :-

28. No issue arises in this application on the first and second situations because they referred to the conditions under Section 20 which I find have satisfied the third requirement profounded by Dickson J.

29. Under the third situation, which is the one relied by the Crown in this application, the conditions that have to be fulfilled under Section 21(4) are that there must be reasonable grounds for believing that a suspect has, inter alia, carried on drug trafficking and there is on the premises material. relating to the suspect which is likely to be of substantial value to the investigation, but that the material cannot at the time of the application be particularized. Further it is necessary to show that. inter alia it is not practicable to communicate with any person entitled to grant entry to the premises.   Again the reference to a reasonable belief that there is on the premises material relating to the suspect which is likely to be of substantial value to the investigation points to a reasonable belief that there is evidence to be found on the premises.  In my view the conditions set out in Section 21(4) satisfy the third requirement propounded by Dickson J..

30. As Sections 20 and 21 of the Ordinance satisfy the three requirements, any orders issued therein could not be an arbitrary interference with the privacy of the individual.

31. I am further satisfied that on the information disclosed by the Crown, the conditions for obtaining the production orders and the search warrant have been satisfied in these 2 applications.

32. In respect of the application for production orders, the suspect is charged with the offence of drug trafficking in Hong Kong.  He has 5 bank accounts.  Statements and records of transaction of these accounts are in the possession of the banks.  The Crown. is also seeking production of documents in the possession of the Inland Revenue Department.  I am satisfied that the Crown has shown that there are reasonable grounds to believe that an offence has been committed by the suspect and that there is evidence to be found in the bank documents and in the tax files of the suspect in connection with the offence of drug trafficking.

33. In respect of the application for search warrant, the suspect is charged with a drug trafficking offence in the U.S.A..  He came to Hong Kong and checked into a hotel under an assumed name.  He had given instructions to the hotel to deliver his suitcases to an overseas address immediately.  I am satisfied that the Crown has shown that there are reasonable grounds to believe that an offence has been committed by the suspect and there is evidence to be found in the 2 suitcases in the premises of the hotel.

Conclusion

34. The conclusion I reached is that Sections 20 and 21 of the Ordinance are not inconsistent with Article 14 of the Bills of Rights and the productions orders and search warrant issued therein do not constitute an arbitrary or unlawful interference with the privacy of the suspects.

Dated the 27th day of August 1991.