HONG KONG SPECIAL ADMINISTRATIVE REGION v. YEUNG SHEK KIN

HCCC 329/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CRIMINAL CASE NO 329 OF 2016

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RULING

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1.  On 7 February 2017, the defendant pleaded guilty to trafficking in dangerous drugs. The prosecution applied for an order under section 102(2) of the Criminal Procedure Ordinance (Cap 221) for the disposal of the exhibits in a manner set out in a document prepared by a senior police officer. Those exhibits included $13,760 in cash found in one of the pockets of the shorts which the defendant was wearing at the time of his arrest, and $17,990 and RMB420 in cash found in a leather bag on a sofa in the defendant’s flat. The prosecution sought the forfeiture of these exhibits. Apart from these exhibits, the defendant did not object to an order being made in the terms of the application, and the court made such an order. However, the defendant challenged the application for the forfeiture of the cash on the basis that the money had had nothing to do with his drug-dealing activities, and so the court ordered that the application for the forfeiture of the cash should be determined at a subsequent hearing. This is the court’s judgment following that hearing.

2.  A number of different drugs were found in the defendant’s flat.  They consisted of

  (a) almost 71 grammes of heroin,

  (b) just over 3½ grammes of ice — although it was accepted by the prosecution that this was for the defendant’s own consumption,

  (c) just under 1 gramme of ketamine,

  (d)just over half a gramme of a metabolised form of heroin, and

  (e)tiny amounts of the stimulant methamphetamine and the sedative midazolam. 

Most of the drugs were packaged in a way which enabled them to be sold as individual wraps.  There was no direct evidence of where the defendant was in the distribution chain, but since there was no drug paraphernalia in his flat, and since the drugs were in numerous packets, it looked as if the defendant was either selling drugs himself to end-users, or was arranging for others to do that.  That was the basis on which the court sentenced him.  He was sentenced to 6 years and 9 months’ imprisonment.

3.  A court may order property in the possession of the police to be forfeited under section 102(2) of the Criminal Procedure Ordinance if it appears to the court that “an offence has been committed in respect of” the property or that the property “has been used in the commission of an offence”.  The prosecution’s case is that the cash found on the defendant and in his bag represented the proceeds of drug trafficking, whether what he was paid by the end-users for what he supplied to them or what he received from those who he got to do the selling for him.  The defendant’s case is that for a short time before his arrest he had been buying and selling mobile phones, that most of the cash represented what was left of a loan of $30,000 which had been made to him by a friend as working capital for his fledgling business, and that the rest of the cash, which included all of the money found in the bag and which amounted to about $7,000, represented what he was paid by his customers for the mobile phones he had sold to them.

4.  A preliminary point arises.  Section 102(6) of the Criminal Procedure Ordinance provides: 

“ Where by any other Ordinance it is provided that any particular property or class of property shall or may be forfeited, destroyed or disposed of, then the provisions of such Ordinance shall prevail.”

That raises the question whether there is another ordinance which provides that cash seized in the circumstances in which it was seized in this case may be forfeited.  In my opinion, there is.  That ordinance is the Dangerous Drugs Ordinance (Cap 134), section 56(1) of which provides that a court may order the forfeiture of any money “which has been used in the commission of or in connection with” a drug trafficking offence, or which has been “received or possessed by any person as the result or product of” such an offence.  If the facts advanced by the prosecution are correct, the cash seized by the police had indeed been used in the commission of or in connection with a drug trafficking offence or had been received or possessed by the defendant as the result or product of a drug trafficking offence.  Mr Richard Donald for the defendant did not suggest otherwise.  In those circumstances, section 56(1) of the Dangerous Drugs Ordinance prevails over section 102(2) of the Criminal Procedure Ordinance.

5.  Does that mean that this application for forfeiture cannot be made under section 102(2) of the Criminal Procedure Ordinance and has to be made under section 56(1) of the Dangerous Drugs Ordinance?  The editors of Sentencing in Hong Kong, 7^th ed, think so. At p 264, they wrote:

“ Section 102 cannot, however, be invoked if any other Ordinance makes provision for the disposal of the property in question …”

There is a similar statement in Archbold Hong Kong 2017 at para 5-436.  The case of Attorney General v Yeung Lui [1988] HKC 871 is cited as authority for that proposition in both publications.  However, Yeung Lui does not support that proposition at all.  It was argued in Yeung Lui that section 102(6) of the Criminal Procedure Ordinance had that effect.  But Hooper J declined to address that issue because section 102(2) had not been the section under which the application for forfeiture had been made in that case. So the question whether the power in section 102(2) had been displaced by section 102(6) in that case was not answered.

6.  However, although Yeung Lui does not support the proposition in both publications, I think that the proposition must nevertheless be right.  Section 102(2) of the Criminal Procedure Ordinance contains a general power of forfeiture.  Section 56(1) of the Dangerous Drugs Ordinance is just one of a number of statutory provisions which provides for forfeiture in specific cases.  Others include section 28 of the Import and Export Ordinance (Cap 60) and section 26 of the Gambling Ordinance (Cap 148).  The manifest purpose of section 102(6) of the Criminal Procedure Ordinance was to ensure that where forfeiture was provided for in a specific case, the general power of forfeiture under section 102(2) should not be used.  It follows that the application in the present case should have been made under section 56(1) of the Dangerous Drugs Ordinance.

7.  However, there is no reason why the court should not now proceed as if the application was being made under section 56(1) of the Dangerous Drugs Ordinance.  There are no rules governing how applications under section 56(1) should be made, and there is therefore no bar to such an application being made orally.  The defence must of course be given an adequate opportunity to contest the application, and if that means that the hearing of the application has to be adjourned, then the hearing of the application will have to be adjourned.  That, though, is unnecessary here because the defendant and his legal team came to court to meet an identical application for forfeiture, albeit made under a different statutory provision. I therefore propose to treat today’s application as an application for the forfeiture of the cash under section 56(1) of the Dangerous Drugs Ordinance.  Mr Donald did not seek to argue otherwise.

8.  Since the Court of Final Appeal has decided that forfeiture proceedings are civil in nature, the standard of proof is the civil standard.  Mr Edward Laskey for the prosecution has elected to rely on the second limb of section 56(1), namely that the cash was received by the defendant as a result of a drug trafficking offence.  As I have said, Mr Donald accepts that if the case advanced by the prosecution is accepted, then the defendant must have received the cash as a result of a drug trafficking offence.  It is for the prosecution to establish a prima facie case that the defendant received the cash as a result of a drug trafficking offence.  The defence accepts, and I agree, that such a prima facie case has been established, and in the circumstances the law is that it is for the defendant to show that he had not received the cash as a result of a drug trafficking offence. 

9.  As I have said, the defendant claims that about $7,000 of the money found in his bag came from customers who bought mobile phones from him.  He claims that this money was in red lai see packets. I do not believe him.  DPC Leung, whose evidence I accept, would have seen that if it was true, and he did not.  In any event, bearing in mind that the defendant was arrested in August, there was no reason for his customers to pay him in lai see packets, or for him to keep the money in lai see packets.  The defendant explained that on the basis that he had had this money for some time, but that was inconsistent with his evidence that he had only been buying and selling mobile phones for a month or so before his arrest.

10.  Indeed, I do not believe that he was buying and selling mobile phones at all.  He claims that in a good month, he made a profit - which represented half his turnover - of $10,000-$20,000 a month.  That would have required him to buy and sell quite a number of phones since the profit he claims to have made was only $100 or so on each phone, and yet there was virtually no sign of any phones in his flat.  Indeed, when asked, a few weeks ago, what his employment history was for the purpose of preparing his antecedents, he did not say that he bought and sold mobile phones.

11.  Nor do I believe that the defendant borrowed $30,000 from anyone.  He has not called Man Wang Ping as a witness, who is the friend who he claims lent him the money, nor has he called his mother as a witness to confirm his understanding that she repaid $25,000 of that loan.  The defendant has produced a bank receipt which shows that $25,000 was paid into Man Wan Ping’s account in August 2014, but that could have related to just about anything.  Indeed, at no stage in the course of his trial was it suggested that the cash found on him or in the bag represented what was left of a loan of $30,000. Moreover, the defendant acknowledged that no interest was to be charged on the loan, and that no arrangements had been made for its repayment, save only that it was to be repaid when the circumstances of his business allowed it.  In my opinion, his account is just too fanciful to be believed.

12.  In the circumstances, the defendant has not satisfied me that any of this cash was not received as a result of a drug trafficking offence.  Indeed, I am sure that it was.  Section 56(1) confers a discretion on the court in those circumstances to make a forfeiture order, and I can discern no reason why a forfeiture order should not be made.  Mr Donald did not suggest that, if I were to find the facts to be as the prosecution contended, this was not a case for the making of a forfeiture order.  I therefore order that the cash be forfeited.