HKSAR v. CHAN CHUN HEI

CACC 52/2022 [2023] HKCA 926

On appeal from [2022] HKDC 1022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 52 OF 2022

(ON APPEAL FROM DCCC NO 267 OF 2021)

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REASONS FOR JUDGMENT

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Hon Zervos JA (giving the Reasons for Judgment of the Court):

Introduction

1.  The appellant stood trial before District Court Judge E. Lin (the judge) in respect of one charge of trafficking 2.7 grammes of cocaine and one charge of dangerous driving.  He entered pleas of guilty to possession of the cocaine and to careless driving, but the prosecution rejected these pleas[1].

2.  On 17 February 2022, after trial, the judge did not find the trafficking charge proven but convicted the appellant of simple possession of the drugs.  He did, however, find the dangerous driving charge proven and convicted the appellant accordingly. 

3.  The judge sentenced the appellant to 12 months’ imprisonment on the possession charge and 6 months’ imprisonment on the dangerous driving charge.  He ordered that 3 months of the sentence on the dangerous driving charge run consecutively to the sentence on the possession charge, resulting in a total term of imprisonment of 15 months.  He also disqualified the appellant from driving for 12 months and ordered that he complete a driving improvement course.  He further forfeited the total sum of $60,782.60 cash[2] in the appellant’s possession at the time of his arrest.

The ground of appeal

4.  On 29 April 2022, the appellant applied for leave to appeal against his sentence, including the forfeiture order.  After perfected grounds of appeal were filed on 6 October 2022, a Single Judge[3] heard the leave application on 25 November 2022, refusing leave to appeal on those grounds except for the one regarding the forfeiture order of the cash in the appellant’s possession. 

5.  The ground of appeal complained that the judge had not been receptive to receiving any submissions from the appellant on the question of the forfeiture of the cash and failed to give reasons for making the order.  Consequently, it was submitted that the judge erred in law in making the forfeiture order.

6.  At the conclusion of the appeal hearing, we allowed the appeal on the forfeiture order.  We quashed the forfeiture order in respect of Exhibits 3 to 12, consisting of various quantities of cash, which we substituted by an order that Exhibits 3 to 12 on the application are to be returned to the appellant.  We also granted the appellant his costs of the appeal hearing only with a certificate for one counsel.  We indicated that we would hand down our reasons for our decision in due course, which we now do.

The brief facts

7.  The brief facts of the case were as follows.  At about 5:41 am on 26 September 2020, the appellant was driving his motor vehicle along Tsing Sha Highway, Kwai Chung, when he came to a police roadblock.  As he approached the roadblock, he threw a Marlboro cigarette packet from the front passenger seat window of the vehicle.  He then reversed his vehicle for about 20 meters but came to a stop because of a light goods vehicle behind him.  He was pursued by the police and promptly arrested.  The cigarette packet was retrieved by the police, who found inside it 20 transparent bags containing a total of 2.70 grammes of cocaine narcotic.  The police also found $60,782.60 cash inside the vehicle. 

8.  It was the prosecution case that the appellant was trafficking the drugs, given the quantity of packets and cash found in his possession. The appellant testified in his defence.  He said he had a drug addiction, but was not involved in trafficking the drugs.  He explained that he did not drive his vehicle dangerously.  When he saw the police roadblock, he panicked and reversed his vehicle for only a short distance.  He admitted, however, he drove his vehicle carelessly.

The conviction of the appellant

9.  The judge handed down his reasons for verdict on 17 February 2022.  He noted that most of the appellant’s evidence concerned how he came by the 20 packets of drugs and his financial position[4].  On this latter aspect of the defence case, the judge summarised the evidence before him as follows:

“18.     The defendant sought to give evidence to explain his financial situation.  He said that he was running a garage with a friend, and that night he was given that amount of money, and because of two invoices, he even attempted to produce two invoices.  However, the defence decided for one reason or another not to further proceed in order to allow this court to take into consideration the content of these invoices.”

10.  The judge went on to conclude that the appellant’s financial position was “something he probably made up.”[5]  He disbelieved the appellant mainly because of his explanation that he obtained the drugs from a person whom he could not name (except by a nickname) or contact.  He found that the appellant lied about how he came by the drugs, which the appellant said were for his own consumption[6].

11.  As the judge explained in his reasons, he had not fully considered the appellant’s financial position because the appellant did not produce the two invoices he referred to in his evidence “in order to allow this court to take into consideration the content of these invoices.”[7]

12.  Having rejected the appellant’s evidence, the judge noted that “the most salient part of the prosecution’s evidence was that he was found to be in possession of a packet in which there are secret packets in which there were 20 small packets of dangerous drugs, and he attempted to dispose of the same and took flight when intercepted by the police.”  He then concluded:

“23. This, I would say, is not sufficient as has been pointed out by the Court of Final Appeal. The quantity of the dangerous drugs and the number of the packets involved, they are not determining factors. The fact that he attempted to flee and to dispose of the same before the police found out, they are as consistent with his possession of the dangerous drug as well as possession for the purpose of trafficking. So rather reluctantly in this case, I did not find that the prosecution has proved the case beyond all reasonable doubt for the count of trafficking. I find him guilty of possession.”

13.  The reference to the comments of the Court of Final Appeal was in respect of the case of Chan Chuen Ho v HKSAR [8].  That case concerned the application of the statutory presumptions of trafficking in a dangerous drug. When considering whether to invoke the proviso to section 83(1) of the Criminal Procedure Ordinance, Cap 221, the Court commented that the large quantity of drugs in the appellant’s possession was not so large as to be incompatible for being for his own use, and when considered together with other circumstances, the quantity was not such as to lead inevitably to a conclusion of trafficking[9].  These comments did not lay down a direction that a case of trafficking could not be made out in the same or similar circumstances.  We do not, with respect, consider it appropriate to simply equate the factual circumstances of one case with those of the case under consideration and adopt the same conclusion without properly evaluating and assessing the evidence in respect of the elements of the offence of the case under consideration.

The forfeiture order

14.  Immediately after he handed down his reasons for verdict, the judge had the following exchange with counsel[10]:

“COURT: So mitigation -- or would you like to reserve it?

MR SO: Can I reserve my mitigation after the court?

COURT: All right. Exhibit?

MR SHERRY: Actually, we could deal with it all at the very end, would that be preferable?

COURT: No, I can deal with it now.

MR SHERRY: Understood. All right.

COURT: I’m sure you prepared …

MR SHERRY: Certainly.

COURT: … my draft order.

MR SHERRY: Thank you, your Honour. Yes, we do have an application.

COURT: Have you seen it?

MR SO: I haven’t.

COURT: You haven’t?

MR SO: I haven’t.

COURT: Well, have a look.

MR SO: Most grateful.

MR SHERRY: We just seek an order in terms of the list.

MR SO: Your Honour, I would venture to suggest items 3 to 12, being the cash …

COURT: No. I’m going to forfeit it.

MR SO: Understood.

COURT: All right. Exhibit, order in terms.

MR SHERRY: Thank you, your Honour.”

15.  It was when prosecuting counsel applied for an order for the disposal of exhibits that the issue of the forfeiture of the cash arose.  It was apparent that defence counsel wished to make a submission against the forfeiture of the cash, but the judge would not entertain it and immediately announced that he would forfeit the cash.  

16.  The judge remanded the appellant in custody and called for a Background Report and a Drug Addiction Treatment Centre (DATC) Suitability Report. 

The sentencing of the appellant

17.  At the resumed hearing on 8 April 2022, the reports were tabled before the court.  The background report presented the appellant in a favourable light, while the DATC report noted that he was drug dependent and said that he was suitable for admission to a DATC. 

18.  At the time of the offence, the appellant was 25 years old, and a partner in a motor vehicle repair business.  It was accepted that he was of good character and had no previous convictions.  The mitigation focused on addressing the judge on an appropriate prison sentence for the two charges. 

19.  The judge did not make a DATC order, despite the recommendation, because he was of the view that such an order was for the purpose of rehabilitation, and the circumstances in the present case required deterrence to take precedence[11]. He considered the behaviour of the appellant and the latent risk of trafficking to be important.[12] He sentenced the appellant to 12 months’ imprisonment on the possession charge and 6 months’ imprisonment and disqualified from driving for 12 months on the dangerous driving charge.  He ordered that 3 months of the sentence on the dangerous driving charge run consecutively to the sentence on the possession charge.  Accordingly, the appellant was sentenced to a total term of imprisonment of 15 months.  It should be noted that the judge adopted a starting point of 9 months’ imprisonment for the dangerous driving charge and reduced it by one third under the misapprehension that the appellant had pleaded guilty to the charge.

20.  The judge noted that the usual range of sentences for possession of a dangerous drug was 12 to 18 months’ imprisonment.  He adopted a starting point of 15 months’ imprisonment, taking into account that the total quantity of cocaine was 2.7 grammes packaged into 20 packets, which had been stored in a cigarette box that the appellant discarded upon seeing the police roadblock.  The appellant then sought to avoid apprehension by the police, who chased after him.  He was in possession of the drugs in the early morning, driving his vehicle on a public roadway.  The judge enhanced the sentence by 3 months for the latent risk factor, which was accepted as appropriate. However, he made no reference whatsoever in his reasons for sentence to the forfeiture order of the cash.

21.  As for the judge’s comments that deterrence should take precedence over rehabilitation, it is important to recognise that imprisonment is not always the most appropriate response of the courts to those involved in a drug offence for the first time, and in appropriate cases the public interest would be better served by focusing on the rehabilitation of the offender.  This principle has been given legislative force by the Drug Addiction Treatment Centres Ordinance, Cap 244.

Discussion

22.  The issue in this appeal is whether the judge fairly and properly dealt with the forfeiture of the cash in the appellant’s possession at the time of the offence.  It was the prosecution case that the appellant was trafficking in the drugs because of the number of packets in which the drugs had been packaged and the sum of cash in his possession.  The judge was not satisfied to the requisite standard that the appellant had committed the offence of trafficking in the drugs but instead found him guilty of the lesser offence of possession of the drugs. 

23.  The appellant testified that he purchased the drugs for his personal consumption, not to traffic in them.  The appellant explained that he had the financial means to make such a purchase.  However, the judge doubted his evidence about his financial situation, having stated in his reasons for verdict that it was “probably made up”[13]. The appellant had testified that he operated a garage with a friend and had been given the cash in question for work done, as evidenced by two invoices. The judge noted that the two invoices referred to by the appellant had not been produced, and he was therefore unable to take their contents into consideration[14]. 

24.  In addressing this ground of appeal, it is first necessary to consider the statutory provision under which the prosecution made the application for the forfeiture of the cash.  Immediately following the handing down of the verdict, the prosecution applied for the disposal of the exhibits in the case, including the forfeiture of the cash, pursuant to section 102 of the Criminal Procedure Ordinance, Cap 221[15], which reads:

“102. Disposal of property connected with offences

(1) Where—

(a) any property has come into the possession of a court, the police or the Customs and Excise Service in connection with any offence;

(b) it appears to a court that an offence has been committed in respect of any property in the possession of the court, the police or the Customs and Excise Service; or

(c) it appears to a court that any property in the possession of the court, the police or the Customs and Excise Service has been used in the commission of an offence,

then, whether or not the offence was committed or appears to have been committed in Hong Kong, a court may dispose of such property in the manner provided in this section.

(2) Of its own motion or upon application, a court may—

(a) in respect of property to which subsection (1)(a) applies—

(i) make an order for the delivery of any such property to the person who appears to the court to be entitled thereto;

(ii) where the person so entitled is unknown or cannot be found, make an order that the property be sold or retained in the possession of the court, the police or the Customs and Excise Service; or

(iii) if the property is of no value, order that the property be destroyed; and

(b) in respect of property to which subsection (1)(b) or (c) applies—

(i) deal with such property under paragraph (a) in the like manner as property to which subsection (1)(a) applies; or

(ii) make an order for the forfeiture of the property.

(3) Save where the property is perishable, no order for the delivery, sale or forfeiture of property shall be made under subsection (2) unless the court is satisfied that the property will not be required as an exhibit in any proceedings before a court.

(4) Where under subsection (2) a court orders the sale or retention of property, and no person establishes a claim to the property or the proceeds of sale thereof within 6 months from the date such order is made, the property or the proceeds of sale shall become the property of the Government.

(5) An order made under subsection (2), other than an order for the retention of property, shall not, except when the property is a live animal, bird or fish or is perishable, be carried out until the period allowed for making an appeal against the order has expired or, where such an appeal is duly made, until the appeal has been finally determined or abandoned.

(6) 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.

(7) The power conferred on a court by subsection (2)(b)(ii) to order the forfeiture of property shall not apply in respect of immovable property or any aircraft, motor vehicle or ship.

(8) In this section court (法院、法庭) includes a magistrate.”

25.  Section 2 defines property as including “goods, chattels, money, valuable securities, and every other matter or thing, whether real or personal, upon or with reference to which any offence may be committed”. 

26.  The disposal power, as stipulated under section 102, concerns property that is in possession of a court, the police, or the Customs and Excise Service and comes within one of the following three categories: (1) property in connection with any offence (subsection (1)(a)); (2) property where it appears to a court that an offence has been committed in respect of it (subsection (1)(b)); and (3) property where it appears to a court that it has been used in the commission of an offence (subsection (1)(c)).  It is further provided under subsection (1) that it does not matter that the relevant offence was not committed or appears not to have been committed in Hong Kong.

27.  Property that comes within the category of subsection (1)(a) is to be dealt with as provided by subsection (2)(a), while property that comes within the categories of subsections (1)(b) and (1)(c) is to be dealt with as provided by subsection (2)(b).  The power to make a forfeiture order is only provided for by subsection (2)(b)(ii), which concerns property in the categories of subsections (1)(b) and (1)(c).  However, subsection (7) provides that a forfeiture order shall not apply in respect of immovable property or any aircraft, motor vehicle or ship.

28.  There is a limitation on the application of the disposal power under section 102 as stipulated by subsection (6), which directs that where it is provided by any other Ordinance that “a particular property or class of property shall or may be forfeited, destroyed or disposed of, then the provisions of such Ordinance shall prevail”. 

29.  There are two specific provisions that provide for the forfeiture of the cash, which is alleged to have been the proceeds of the drug trafficking. 

30.  The first is section 3(1) of the Drug Trafficking (Recovery of Proceeds) Ordinance, Cap 405, but this only applies when a person has been convicted of a drug trafficking offence before the Court of First Instance or the District Court for which he is in the process of being sentenced.  The Secretary for Justice may apply for a confiscation order of the proceeds of drug trafficking.  Under section 4 a person’s proceeds of drug trafficking is broadly defined and includes any payments or other rewards in connection with drug trafficking carried on by him or another.  Before a court can entertain an application for an order of confiscation, three preconditions must be satisfied.  First, the person the subject of the application has been convicted of a drug trafficking offence before the Court of First Instance or the District Court (section 3(1)(a)(i)).  Secondly, the person has yet to be sentenced by the court concerned (section 3(1)(a)(i)). Thirdly, the application has been made by the Secretary for Justice (section 3(1)(b)) [16].  In the present case, the preconditions have not been satisfied primarily because the appellant was not convicted of a drug trafficking offence and the Secretary for Justice had not made an application under this section.    

31.  The second is section 56(1) of the Dangerous Drugs Ordinance, Cap 134, which specifically deals with the forfeiture to the Government of any money, thing or other property connected to or involved in a drug offence, even where the relevant charge failed.  The section reads:

“(1) A court may (whether or not any person has been convicted of such offence) order to be forfeited to the Government-

(a) any money or thing (other than premises, a ship exceeding 250 gross tons, an aircraft or a train) which has been used in the commission of or in connection with;

(b) any money or other property received or possessed by any person as the result or product of, an offence under this Ordinance or a drug trafficking offence within the meaning of the Drug Trafficking (Recovery of Proceeds) Ordinance (Cap 405).

(2) An order under subsection(1) for the forfeiture of a thing may include a term permitting a specified person or persons to redeem such thing on such conditions, including conditions as to the payment of the value or a proportion of the value thereof to the Government, as the court may think fit.

(3) The court may require that notice of an application for forfeiture under subsection(1) shall be given in such manner as it thinks fit.

(4) The Chief Executive in Council may, in his absolute discretion and after any proceedings under this Ordinance are concluded, entertain and give effect to any moral claim to or in respect of any money, thing or other property which has been forfeited to the Government.”

32.  Section 56(1) covers a discretion on the court which can be exercisable without a conviction and involves alternatives, namely (a) any money or thing which has been used in the commission of or in connection with; or (b) any money or other property received or possessed by a person as the result or product of, an offence under the Dangerous Drugs Ordinance or a drug trafficking offence within the meaning of the Drugs Trafficking (Recovery of Proceeds) Ordinance[17].

33.  Section 56(2) further provides that a court may include in the order a term permitting a person or persons to redeem such thing on conditions that it thinks fit.  There is also provision for a subsequent claim under section 56(4) to the Chief Executive in Council, which may entertain and give effect to any moral claim to or in respect of any money, thing or other property which has been forfeited to the Government.

34.  In HKSAR v Yeung Shek Kin[18], a defendant pleaded guilty to trafficking in dangerous drugs and the prosecution applied, under section 102(2), for the forfeiture of cash found in his possession.  Deputy High Court Judge Keith noted that section 102(2) contained a general power of forfeiture, while section 56(1) provided for forfeiture in specific cases.  He considered that the manifest purpose of section 102(6) 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.  He held, correctly in our view, that the application should have been made under section 56(1).  He then proceeded to deal with the application under section 56(1).  The application of these two related provisions was an important consideration that did not take place in the present case.

35.  The Court of Final Appeal in Wong Hon Sun v HKSAR[19] stressed the importance of the constitutional imperative of a fair hearing in forfeiture proceedings. Bohkary PJ pointed out that forfeiture proceedings affect the property rights of owners and should be determined in accordance with the law.  Sir Anthony Mason NPJ, in addressing a different statutory regime governing forfeiture, propounded various underlying principles that have been accepted as having general application to forfeiture proceedings.  An application for forfeiture is civil in nature, and the applicant bears the burden of establishing that the seized item is liable to forfeiture.  The burden of proof is discharged to the civil standard of the balance of probabilities, and once this has been satisfied, then there is a prima facie case for a forfeiture order of the seized item.  If a claimant asserts that the seized item belongs to him, then the onus would pass to him to show on a balance of probabilities that the seized item should not be forfeited and should be returned or given to him. 

36.  In an application for forfeiture, the first question a court must ask is pursuant to what statutory provision is the application being made?  The relevant statutory provision determines the jurisdiction of the court, sets the parameters of the court’s power and identifies the matters of which the court must be satisfied in the exercise of its power.  The second question the court must ask is on what evidence are the parties relying on in order to satisfy the court that the application should or should not be granted? [20] Furthermore, a forfeiture application must be formally decided on the basis of evidence, and the court should alert an aggrieved party if it has taken a position against them on the available evidence in order to afford them the opportunity to give or call evidence on the issue. [21]  However, it would usually be obvious from the evidence in a contested trial, or from the agreed facts and other information presented to the court upon the hearing of a plea of guilty, as to what is the basis of an application for forfeiture, but an aggrieved party should be given the opportunity to address the court on the matter[22]. 

37.  In considering an application pursuant to subsection 56(1), a court has discretion as to whether or not to make an order for the property to be forfeited to the Government.  Where the prosecution has shown on a balance of probabilities that there is a prima facie case that the property comes within one or both of the limbs under section 56(1), then the burden will pass on to the defendant to show otherwise.  If the defendant has not discharged this burden, an order will be made for the property to be forfeited. If, however, the prosecution has not shown on a balance of probabilities that there is a prima facie case for the forfeiture order, the property should be returned to the defendant if it belongs or should be given to him and there is no other reason not to do so.

38.  Mr So argued that notwithstanding that the judge expressed the view in his reasons for verdict that the appellant’s financial condition was probably made up he did not make any factual finding that the cash in question was connected to the drug trafficking activities or possession of the drugs by the appellant.  He noted that the judge in his reasons for sentence, accepted the appellant’s financial background and that his family was financially comfortable[23]. He submitted that the judge did not follow the relevant procedures or requirements of either section 102 of the Criminal Procedure Ordinance or section 56(1) of the Dangerous Drugs Ordinance.  He complained that the judge failed to identify the basis and provide reasons for the forfeiture order.

39.  The respondent accepted that the judge did not provide the appellant with the opportunity to make submissions or call evidence in respect of the forfeiture application and did not explain the grounds for forfeiting the cash.  Notwithstanding there were inadequacies in the forfeiture proceedings, the respondent submitted that it did not necessarily result in the judge making a wrong decision.  It was argued that on the evidence at trial that there was a sufficient prima facie case that the seized cash was connected to the drug offence.  It was contended that this is supported by the circumstances of the offence that involved the appellant transporting drugs stored in multiple packets in the early hours of the morning in his motor vehicle, and the circumstances of the appellant’s drug dependence with a monthly income of about $15,000 to support his drug addiction.

40.  As for the appellant’s claim that the source of the cash was his garage business, it was argued by the respondent that because the judge had found that the appellant’s evidence about his financial position was made up, there was no other explanation for the source of the cash.  It was therefore submitted that there was an evidential basis for forfeiting the cash by the judge because there was prima facie evidence to establish a nexus between the cash and the drug offence for which the appellant was convicted. 

41.  As is apparent, the judge made the forfeiture order under section 102 of the Criminal Procedure Ordinance, when he was required by that provision to specifically deal with the issue of the forfeiture of the cash under section 56(1) of the Dangerous Drugs Ordinance.  Moreover, what took place in the present case was not a fair and proper hearing of the application.  The judge had already made up his mind that he would forfeit the cash and denied defence counsel the opportunity to make a submission concerning the forfeiture of the cash when it was quite apparent that he wished to do so.

42.  In our view, procedural fairness was not afforded to the appellant.  The exercise of discretion was flawed, and there was a risk of prejudice to the appellant by the judge denying defence counsel the opportunity to address him on the application for forfeiture of the cash.

Conclusion

43.  We were satisfied that in all the circumstances, the judge’s order could not stand.  We allowed the appeal and quashed the forfeiture order in respect of Exhibits 3 to 12, which we substituted with an order that Exhibits 3 to 12 on the application (Exhibit P3) be returned to the appellant.  We ordered that the appellant receive his costs for the appeal hearing only with a certificate for one counsel.

[1]  Appeal Bundle (AB), 52B-C.

[2]  The application for disposal of exhibits listed the cash as Exhibits 3 to 12.  However, the total quantity of the cash in the sum of $60,782.60 had been marked as Exhibit P3 pursuant to the Admitted Facts, at [4].  AB, 10.

[3]  Zervos JA.

[4]  AB, 54, Reasons for Verdict, at [11].

[5]  AB, 57, Reasons for Verdict, at [22].

[6]  AB, 56, Reasons for Verdict, at [19]-[21].

[7]  AB, 56, Reasons for Verdict, at [18].

[8]  Chan Chuen Ho v HKSAR (1999) 2 HKCFAR 198.

[9]  Ibid., 203F-I. 

[10]  AB, 49-50.

[11]  AB, 27L-R.

[12]  AB, 26K-R. 

[13]  AB, 57, Reasons for Verdict, at [22]. 

[14]  AB, 55-56, Reasons for Verdict, at [18].

[15]  AB, 58.

[16]  See HKSAR v Musah Hakeem Tahiru [2018] 1 HKLRD 352, at [26]-[61].

[17]  See HKSAR v Ngoma Juma Shabani [2015] 5 HKLRD 57.

[18]  HKSAR v Yeung Shek Kin [2017] 2 HKC 560.

[19]  Wong Hon Sun v HKSAR (2009) 12 HKCFAR 877.

[20]  HKSAR v Shoki Fatuma Ramadhani [2015] 2 HKLRD 696, at [55] and [56] per McWalters JA.

[21]  HKSAR v Rawe Waikama Magarya, unreported, CACC 215/2014, 25 November 2014, at [11] per Lunn VP. 

[22]  HKSAR v Ngoma Juma Shabani, at [23]-[27] per Macrae JA.

[23]  AB, 26, Reasons for Sentence, at [6].