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

HCAL 16/2007
HCAL 17/2007
HCAL 18/2007
HCAL 19/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 16 OF 2007

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HCAL 17/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 17 OF 2007

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HCAL 18/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 18 OF 2007

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______________________

AND

HCAL 19/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 19 OF 2007

______________________

______________________

(Heard Together)

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D E C I S I O N

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Background:

1.  The Applicants in these three judicial review proceedings seek to re-amend the application to widen the challenge beyond its present scope.

2.  As originally drafted and filed on 15 February 2007, the application for judicial review sought to challenge the decision of a magistrate, on 16 January 2007, to issue, pursuant to a letter of request received in Hong Kong from the Government of the Italian Republic, under the provisions of the Mutual Legal Assistance in Criminal Proceedings Ordinance, Cap 525, (MLAO), certain search warrants.  The primary complaint made by the Applicants was as to the nondisclosure to the magistrate of the prospect of the active involvement of Italian prosecutors and investigators in the search.

The prior amendment:

3.  On 16 July 2007, without opposition, the application was amended by adding a reference to similar steps that had been taken by the same Italian authorities, by way of letter of request, in the Republic of Ireland.  The steps taken in Ireland were taken in relation to the same primary subjects of investigation who are the primary subject of investigation in the letter of request issued to Hong Kong. 

4.  The purpose of adding the reference to the Irish proceedings was to buttress an additional contention, also added, without opposition, on 16 July 2007, that the applicants had reason to believe that the letter of request contained misrepresentations as to the nature of the Italian criminal proceedings, and failed to disclose material information as to those proceedings, and that consequently those misrepresentations and the material nondisclosure had improperly been taken into account by the magistrate in issuing the search warrants.

5.  Consequently, amongst other issues to be determined, the substantive application for judicial review will involve a determination whether the letter of request from Italy to Hong Kong contained misrepresentations or omissions that may have operated in the mind of the magistrate when he decided on the applications for the search warrants, on the basis of information prepared by reference to the letter of request.

The application to re-amend:

6.  Now the Applicants seek to re-amend the application for judicial review by adding to the challenge, two further decisions :

(a)	The decision by the Secretary for Justice to accept the request by the Italian Republic to render assistance under the MLAO in respect of the Applicants and their affairs;
(b)	The decision by the 2nd and 3rd Respondents to apply under s 12(2) of the MLAO to the 4th Respondent on 16 January 2007.

Consequent upon the addition of the two further decisions to the challenge, further relief is sought by way of order that the Respondents be restrained, and a permanent injunction be granted, restraining them from taking steps to use or in any way give effect to the relevant request for mutual legal assistance by the Government of the Italian Republic in respect of the Applicants and their affairs.

7.  The argument for the Applicants is that just as the alleged matters of misrepresentation and material nondisclosure may have wrongly operated on the mind of the magistrate, so may they have wrongly operated on the mind of the Secretary for Justice in making the decisions now sought to be the subject of challenge.

Re-amendment is opposed:

8.  Mr Walsh opposes the application on two grounds.

9.  First, he says that there has been unreasonable delay without any proper explanation.  In conjunction with the delay argument, he says that an amendment now, to expand the scope of the application for judicial review, would be detrimental to good administration and prejudicial to the Respondents. 

10.  Second, he says that the amendment would transform the judicial review application from a discreet challenge by Hong Kong parties to the execution of search warrants on their premises, to an all-out attempt by parties under investigation in Italy to stop all investigations in relation to their alleged criminal activities.  Mr Walsh says that the High Court should exercise its supervisory powers over such proceedings with discipline, and decline to permit the expansion of the scope of the enquiry.

The time frame:

11.  The letter of request was issued by Italy on 10 July 2006, and received in Hong Kong shortly thereafter.  It was however, not until very late in 2006 or in January 2007, that a decision was made by the Secretary for Justice to act upon the letter.  The interim period had been spent, by the prosecutors in Italy and Hong Kong, in clarifying matters raised by the letter of request.  The decision by the Secretary for Justice to accept the letter of request was made following that clarification, and the application for the search warrant presumably followed virtually immediately thereafter.  The search warrants were issued on 16 January 2007.

12.  The search warrants were executed on Thursday 18 January 2007.  It was soon apparent to the Applicants, for they were either shown copies of the search warrants, or shortly thereafter their legal advisers received copies of them, that the search warrants had been issued following a letter of request under MLAO.  The applications for judicial review were issued promptly, on 15 February 2007.

The requirement to bring proceedings promptly:

13.  Order 53 r 4(1) requires that an application for leave to apply for judicial review shall be made promptly and in any event within three months from the date when grounds for the application first arose unless the Court considers that there is a good reason for extending the period within which the application shall be made.  In the present case, the first the Applicants would have learned of the existence of the letter of request would have been on or shortly after 18 January 2007.

14.  Regard must be had also to s 21K (6) High Court Ordinance, Cap 4, which provides that where the Court of First Instance considers that there has been undue delay in making an application for judicial review, the court may refuse to either grant leave, or the relief sought, if it considers that the granting of the relief sought would be likely to cause substantial hardship to, or substantially prejudice the rights, any person or would be detrimental to good administration.  Thus, with any argument based upon delay, it will be necessary to consider any consequential prejudice.

15.  There can be no doubt that these principles ought to be applied to any application to amend judicial review proceedings.

16.  While the application to challenge the issuance of the search warrants was plainly within time, the application to challenge the decision of the Secretary for Justice to act upon the letter of request, the grounds of challenge having arisen upon the execution of the search warrants on or about 18 January 2007, has not been brought until July 2007.

17.  That is not a mere delay of three months, for the three month period provided in O 53 r 4(1) is preceded by a requirement to act promptly.  The existence of the three month period does not entitle an applicant to wait until the end of the three month period, for if he does so he will not have acted promptly.  The period of delay in my view is a period of at least five months.

The reason for the delay:

18.  No explanation for the delay is offered on the papers.  Mr Kwan, by way of explanation, said that the question of challenging the original decision of the Secretary for Justice was considered at the time the application for judicial review was made in February, but a view was taken then that a challenge to the decision of the Secretary for Justice to act upon the letter of request was not open at law.  He said that a subsequent review of the position had brought to the Applicants’ advisers to a different conclusion.

19.  Mr Kwan says that it is necessary to widen the scope of the attack because if the argument based upon misrepresentation and material nondisclosure is successful, it would be wrong to permit information to be obtained by way of the letter of request from independent parties who hold information that is private and confidential to the Applicants.  He refers particularly to banks in Hong Kong that may operate bank accounts for the Applicants.

The argument in opposition:

20.  Mr Walsh’s argument on prejudice overlaps with his argument that the amendment of the application, broadening as it does its scope, is detrimental to good administration.

21.  The Secretary for Justice was in a position by January 2007, to act upon the letter of request.  He did so immediately and obtained the search warrants during that month.  The warrants were executed and documents seized on 18 January 2007, for use in a trial in Italy that was then under way.  Seven months later, little progress has been made on resolving the matter, and the Secretary for Justice has not been able to meet his obligations consequent upon the acceptance of the letter of request to have the search completed in the relevant documents delivered to the Italian authorities.  Mr Walsh says that this is plain prejudice which will be further compounded by further delays resulting from the amendment.

22.  Mr Walsh says that the widening of the scope of the application for judicial review may result in a renewed application for inspection of the letter of request, yet a further delay he says.

23.  Mr Walsh relies upon the decision in Super Lion Enterprises Ltd v Commissioner of Rating and Valuation, HCAL 71/2005, (unreported 6 October 2006), in which Hartmann J. correctly referred to the importance of the requirement that an applicant for judicial review of a public law decision is obliged to challenge the actual substantive decision which reflects the true substance of the case he brings: see para 222.  In that case the applicant, being plainly out of time, sought to put himself in time by seeking a review of a decision by the Commissioner, and then challenging the reviewed decision.

24.  Mr Walsh relies also upon Lau Kong Yung & Ors v Director of Immigration  (1999) 2 HKFRC 300 at 340, where Litton PJ, in trenchant terms, counselled against liberal amendment of the grounds upon which judicial review were sought, after leave had been given.

25.  Mr Walsh contends that the effect of the proposed amendment is to transform a judicial review application which is a discreet challenge to the issue and execution of search warrants, to an all-out attempt by parties under investigation in Italy to stop all investigations in relation to their alleged criminal activities.  He points out, relying upon the steps taken in California and Ireland, (see judgement in this matter delivered 28 June 2007), that plainly the person behind the litigation being undertaken in these proceedings, is Mr Agrama, the person who is the subject of the criminal proceedings presently underway in Italy and the person who was the primary subject of investigation by way of letters of request to both California USA, and Ireland.

Discussion:

26.  In determining whether or not I should exercise my discretion to permit the amendment of the pleadings I have had regard to all of these matters.

27.  From the very beginning of this application for judicial review, the issue of material nondisclosure has been a central element of the basis of the Applicants challenge.  Without objection, that was extended to include misrepresentation.

28.  There are plainly arguable grounds upon which the Applicants can contend that there has been both misrepresentation and material nondisclosure to the magistrate.  Precisely the same arguments are available to the applicants to contend that no other steps should be taken that might reveal information concerning their affairs, although those steps might not directly involved the applicants personally.  The only way the applicants can challenge those steps, they not being privy to those steps, is to challenge the prior decision of the Secretary for Justice in deciding to act upon the letter of request. 

29.  Just as it is arguable that material nondisclosure and misrepresentation has acted upon the mind of the magistrate in the issuance of the search warrants, so it is arguable that the material nondisclosure and misrepresentation has acted upon the mind of the Secretary for Justice in authorising action on the letter of request which action may lead, or have led, to further steps indirectly involving the applicants affairs.

30.  It is the fact that the very same argument is being mounted, but not a new ground of challenge, that tells against the argument of Mr Walsh.  It is quite understandable in my view, that those advising the Applicants in February 2007, would be concentrating on the immediate concern of the search warrants.  Realistically it was not until they saw the detail of the letter of request as to the investigation being undertaken, set out in the judgment of 28 June 2007, that they would be able to appreciate the real scope of the letter of request. 

31.  They have acted sufficiently promptly since the delivery of that judgment in seeking to expand the scope of the judicial review that in my view there cannot be said to be a delay that will cause substantial hardship will substantially prejudice the rights of either the Secretary for Justice or the Government of the Republic of Italy.

32.  Any information that is held in the hands of third-party such as banks will still be there, and has not lost to the investigators, should they successfully resist the application for judicial review.  It is right that there is a delay in transmitting the information to Italy, but that is an inevitable consequence of the fact of a challenge.

33.  I have had careful regard to the argument of Mr Walsh that these proceedings an all-out attempt by parties under investigation in Italy to stop all investigations in relation to their alleged criminal activities.  It may well be that if the judicial review is successful, the aspect of the investigation in Hong Kong, in its present form, may not be able to proceed.   As a consequence thereof any information contained in Hong Kong which might otherwise assist the prosecutors in Italy would not be available to them.

34.  I must weigh on the one hand, the proper interest that society has in bringing criminals to justice, and on the other hand, the requirement that the application of the rule of law in Hong Kong must mean that the legal facilities of Hong Kong should only be available, whether for local purposes or for international legal assistance, when proper grounds are established.  The courts of Hong Kong should not countenance the availability of invasive procedures such as search and seizure, whether of a Hong Kong resident, or of other persons were authorities in Hong Kong holding information concerning a Hong Kong resident, authorised on the basis of either misrepresentation or material nondisclosure.

35.  The amendments sought do not seek to extend in a vague and ill-defined way the grounds upon which relief is sought, which would be contrary to the clear principle stated by Litton PJ in Lau Kong Yung.  The amendments do not seek to extend the grounds for relief at all.  The amendments do seek, in two short clear and precise paragraphs, to extend the scope of the judicial review.  The amendments do not, in my view, offend against the mischief sensibly recognised by Litton PJ.

36.  I entirely agree with Hartmann J. when he said in Super Lion, at para 233:

“	Clearly, in cases involving fundamental human rights this court will be circumspect in too rigorously applying the normal principles in relation to delay.”

The nature of the case in Super Lion was made plain when the learned judge went on to say:

“	However this case does not involve fundamental rights.  At issue is no more than the payment over of a sum of money until the determination of court proceedings dictates whether that sum should be return to (the applicant), in part or whole, or kept by the Commissioner.”

Quite to the contrary, this present case involves the fundamental human right, protected by Article 28 of the Basic Law, of Hong Kong residents to be free from arbitrary or unlawful search.  That right must plainly extend not only to a resident’s own property or possession, but to information property or possessions held by third parties for or on behalf of a Hong Kong resident

37.  Notwithstanding the delay in seeking judicial review against the decisions not sought to be included in the proceedings, I am satisfied that this is a case where it is just to exercise discretion to allow the amendments sought.

Interim relief:

38.  Mr Walsh did not oppose the grant of interim relief, which he agreed it would be appropriate, should leave to amend the application for judicial review be granted.  There will be an order granting interim relief in the terms sought by the Applicants.

Preservation of evidence:

39.  A matter dealt with in the evidence of the solicitor for the Applicants is that of preservation of evidence. It was not addressed at the hearing, but plainly, consequent upon the grant of leave to amend the application and grant of the interim relief, issues as to preservation of evidence will arise.

40.  The search warrants were executed on 18 January 2007.  On 19 January 2007, the solicitors for the Applicants wrote to the Department of Justice making a number of requests in order to ensure that the seized materials remained within the jurisdiction of Hong Kong, and that there was no breach of legal professional privilege, (LPP).

41.  On 22 January 2007, the solicitors for the Applicants sought confirmation from the Department of Justice that:

“	No notes in relation to the documents seized were made by the third parties who were present during the search and seizure operation, either during or after the time when the search warrants were executed.”

42.  The response, on 24 January 2007, and made presumably after a proper enquiry, was somewhat disingenuous.  It was in these terms:

“	Apart from those who executed and assisted in the execution of the search warrants, as identified above, no other persons assisted in the search and seizure operations.  Notes may have been made by those who executed the search warrants.”  (The emphasis is mine).

43.  On 12 July 2007, the solicitors for the Applicants wrote to the Department Justice request in confirmation that no handwritten notes were taken by the Italian prosecutors or the accountants instructed by them, either during or after the execution of the search warrants.  Four days later, on 16 July 2007, this elicited a response in the following terms, clearly demonstrating the disingenuous nature of the earlier response:

“

According to the police, the Italian prosecutor Mr Sergio Spadaro, and the KPMG staff, Ms Gabriella Chericla and Mr Stefano Martinazzo, had made some notes and copies in respect of the seized documents at the Police Headquarters on 19 January 2007.  However, on the same day as soon as the police received your letter claiming LPP, the police took the notes and copies from the above Italian offices and shredded them.”

44.  I am fully aware of the fact that I have yet to hear from council for the Respondents on this matter.  However it is a matter of concern, I put it no higher than that at this stage, that on 24 January 2007, it is said, presumably after enquiry, that notes may have been made, but an admission is made on 16 July 2007, that notes were made. 

45.  It is a greater matter of concern that, upon the claim for LPP being made, a claim that was made to the Department of Justice, and communicated presumably from there to the Police, (for that is the only way the Police could have learned of the claim), the notes and copies made should have been shredded.  Plainly the proper course would have been to secure and seal the notes and copies, thereby preserving the best evidence as to precisely what had been noted and what had been copied.

46.  It is plain from Mr Walsh’s submissions that further steps have been taken consequent upon the letter of request.  It is reasonable to suppose that those steps may have included enquiries of banks or other institutions which might hold information relating to the Applicants.

47.  The enlargement of the scope of the application for judicial review, and the interim relief granted raises concerns as to the preservation of evidence that may have been obtained from third parties.  If it should be determined that the steps taken on the letter of request are unlawful, then the Applicants will be entitled to have all seized material returned to them, and any information obtained from third parties returned to those third parties.  In respect of both the direct searches, and the indirect searches, neither the Respondents nor the Italian authorities would be entitled to retain any of the information obtained in reliance upon the letter of request. 

48.  In the event that information relating to the Applicants has been obtained from third parties pursuant to the letter of request, it is now essential that that information be sealed and protected.  There will accordingly be an order that, any information obtained concerning the Applicants’ affairs, by way of the letter of request, must be sealed and protected forthwith.  In the event of any notes of that information having been made, or copies of that information having been made, those notes and copies must now be sealed and protected forthwith.

49.  It will be a matter for the Applicants to consider whether or not there is any jurisdiction in this Court, or if they wish to take any steps, in relation to notes or copies of that information which might have been made and removed from this jurisdiction.

50.  As I indicated above, other than having the opportunity to read the affidavit of the Applicants’ solicitor, to which there was no reply, I have not heard from the parties on this particular matter.  The orders made in paragraph 48 are accordingly orders made out of necessity as I perceive it, and thus on an interim basis. 

51.  Leave is reserved to apply at short notice  should either party be dissatisfied with that order.

Costs:

52.  All questions of costs reserved.