RE SUSANTO KAM AND ANOTHER

HCMP1692/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.1692 OF 2002

---------------------

----------------------

-------------------------

J U D G M E N T

-------------------------

1. This is an application by way of a joint summons by the respondents who are husband and wife for variations to restraint and charging orders made in respect of their assets by Bokhary J on 3 May 2002. The 1st respondent stands charged with an offence of bookmaking, contrary to section 7(1) of the Gambling Ordinance, Cap. 148, which is a specified offence under the provisions of the Organized and Serious Crimes Ordinance, Cap. 455 ("the Ordinance"). Both the 1st respondent and the 2nd respondent have also been jointly charged with a further offence of dealing in the proceeds of an indictable offence, contrary to section 25(1) of the Ordinance. Their trial is due to commence on 12 May 2003, i.e. in about six months' time.

2. The very brief facts of the offences as alleged by the prosecution are that the 1st respondent is claimed to have assisted in the operation of a telephone bookmaking operation with a person called OEI who acted as the banker of the operation and who was based in Indonesia.

3. The 1st respondent operated seven bank accounts. Through those bank accounts over a period of about six years flowed sums totalling $487 million. There may have been some uncertainty in this figure as the result of some cross-flow of funds between accounts and resultant "double-counting", but it is accepted by Mr Bruce who appears for both respondents that very large sums of money passed through these seven accounts, under the control of the 1st respondent, over that period of time. The 1st respondent admitted under caution that he had assisted the person OEI and in return had received a commission for his services. In addition, by way of his affirmation, the 1st respondent set out various positions of employment he had during the period 1995 to 2001, during which he earned something between $1.3 million and $1.8 million annual income. I should say now, given his purchase of a flat valued at $2.2 million during that period and the daily expenses of a person such as the 1st respondent, I do not think his present statement of assets is so disproportionate as to suggest he has not made full disclosure if his income was restricted to that earned from his various employments. As will be seen the question of whether he has made full disclosure of his assets revolves around his handling of the aggregate sum of $487 million which passed through his bank accounts.

4. So far as the 2nd respondent is concerned, the allegations against her are to the effect that the 1st respondent assigned half of the matrimonial flat to her (which flat is subject to the restraint and charging orders) and further that the 1st respondent had provided sums totalling over some $3 million to her during the same period of six years that the $487 million funds related to the 1st respondent alleged bookkeeping activities had been processed through his accounts.

5. I am told that as a result of the restraint and charging orders of 3 May, the only property made the subject of the orders are the various bank accounts of the 1st respondent (being "transit" accounts) and two time deposits of the 2nd respondent (having being uplifted shortly after the 1st respondent's arrest) and that those bank accounts contained amounts totalling about $300,000 in respect of each; a Mercedes Benz car was also subject to the orders and, further, the two respondents' joint tenancy flat at Mei Foo Sun Chuen which is unencumbered and is estimated to be worth, as I say, about $2.2 million. A further sum of $600,000 was paid to the respondents' solicitors. That is apparently held in trust for the respondents by their solicitors but would in any event, so far as its disposal was concerned, be property in which the respondents had an interest and be subject to the existing orders made on 3 May.

6. The respondents, by their joint summons, seek the following variations to the existing orders of 3 May :

(1) That a sum of $40,000 per month be released from the 1st respondent's bank accounts for their family living expenses, backdated to 1 June his year.

(2) The 1st respondent be at liberty to sell the Mercedes Benz motor car, registration no.EE730, so as to repay the outstanding hire purchase loan in respect of that vehicle.

(3) The $600,000 lodged on account of the respondents' legal costs with their solicitors be released from the existing orders so far as it is required to meet the respondents' legal costs incurred with that firm so far as their defence to the present charges against them is concerned.

7. On the face of it, the variations to the restraint and charging orders sought by the respondents' are reasonable in the amounts involved, and indeed that is acknowledged by Mr Lai for the prosecution. What the prosecution object to is what they say amounts to a failure by the 1st respondent to disclose the whereabouts or destination of the $487 million or so processed through his accounts over that period of six years.

8. They say, so far as the 1st respondent is concerned, that this non-disclosure precludes him from obtaining the variations to the existing orders he seeks by his summons, as this court cannot be satisfied he has no other funds available to meet his living and legal expenses apart from those the subject of the order.

9. The 1st respondent quite candidly agrees that he has not disclosed the destination or usage of those funds which were processed through his account. That is because, he says, he wishes to assert what was referred to as his right to silence on the basis that providing that information may well be of assistance to the prosecution in his forthcoming trial. Accordingly, he asserts there is good reason not to provide such information and that in not providing the information he is simply exercising his legal right not to incriminate himself. That non-disclosure therefore, says the 1st respondent, should not be held against him.

10. There is inherent in the legislation pursuant to which restraint and charging orders can be made prohibiting accused persons dealing with all property under their control an evident tension between the rights of the accused person, who is until conviction presumed innocent, and the interests of the community of Hong Kong, whose justifiable interest in recovering from persons eventually convicted of serious criminal offences the proceeds of their crimes must require some method by which such accused persons can be prevented from dissipating those assets before trial.

11. The dangers of such a restriction causing potential injustice have long been appreciated. Accordingly, drawing from the somewhat analogous principles relating to the operation of Mareva injunctions, the courts in Hong Kong have attempted to strike a balance between the rights of the accused person to the use of property or assets owned by him and the interests of the community.

12. Pursuant to sections 15(5) and 16(6) of the Ordinance, restraint and charging orders can be varied upon the application of a respondent so as to release assets from the effect of those orders for the respondents usual living expenses or payment of their usual debts. Such a variation can be, and very often is, made for the purposes of allowing a respondent his reasonable legal expenses. But in allowing a variation for that purpose, a court must be alert to the variation requested undermining the purposes of the order, i.e. the request for the expenses of the respondent to be paid out of the restrained or charged assets being made so as to preserve other undisclosed assets in or outside the jurisdiction.

13. For that reason, it is proper that the respondent requesting the payment of his expenses out of restrained or charged assets satisfy the court that there are no other such hidden or unknown assets available to him, and that he has fully disclosed his assets to the court and that those are the assets the subject of the orders. The resolution of the question of whether a respondent has made full disclosure is a matter of common sense. If, as in this case, it has been shown that in recent history a respondent has been in control of very significant sums of money or other assets which have been transferred or sent to an unknown destination, then before a court were satisfied those assets or any significant part of them were no longer under the respondent's control, it would in the usual course be required of a respondent to disclose sufficient information as to the circumstances of his disposal of those assets so as to satisfy the court those assets were no longer under his control, and his only remaining assets for the purpose of payment of his expenses were those the subject of the orders. Otherwise there would be a very real risk of any payments being allowed and made out of restrained or charged assets being payments which effectively dissipated those assets contrary to the communities interests.

14. The requirement of a respondent to make full disclosure may not be carved in stone. A court still has a discretion, if there be good reason, to allow expenses of a respondent to be paid out of restrained assets even though it is not satisfied full disclosure has been made : Campbell Mussels v. Thompson, The Times (1985) 135 NLJ 1012.

15. In the present case, it is common ground the 1st respondent has not made full disclosure in the stark and simple sense that in his affirmations, he has not told the court what he has done with the $487 million processed through his bank accounts during that six-year period. Simply stopping there, this court would not have therefore sufficient information before it so as to be satisfied that the 1st respondent required a variation of the present order to pay his living expenses out of his charged and restrained assets. But the 1st respondent says there is good reason why he has not made full disclosure. As I say, he prays in aid his rights to silence and to not being obliged to incriminate himself. He says that regardless of whether there is a condition in the existing orders which prevents any disclosure relating to his assets being used against him (as in fact appears in paragraph 7 of the existing orders), any such disclosure if made by him may well provide information to the prosecuting authorities which would be of indirect assistance to them in his forthcoming trial.

16. This assertion of the 1st respondent can be answered quite simply.

17. Firstly, his rights to silence and to not being required to incriminate himself are not being interfered with. It is entirely a matter for him as to whether he divulges information as to the present whereabouts and control or past dealings by him with the $487 million which passed through his accounts. He is not being compelled to divulge that information. It may well be that by not divulging that information he is making his task in satisfying this court that he has no other assets from which to pay his expenses other than the restrained and charged assets all the harder. But that is a foreseeable and assessable concomitant of his choice not to divulge the information.

18. Secondly, any suggestion that there may be some indirect way in which the prosecution could use any such information and in doing so successfully circumvent the provisions of paragraph 7 of the order is purely speculative. I do not think by divulging the information required the 1st respondent could be said to be incriminating himself so far as his trial is concerned.

19. Accordingly, I am quite satisfied the 1st respondent has not disclosed pertinent information concerning the present whereabouts and control of the $487 million, and that such information is required in these proceedings before I could be satisfied the assets the subject of the orders are the only assets available for the payment of the 1st respondent's claimed expenses. I do not think the 1st respondent's reasons for not making full disclosure as to the circumstances of his disposal of or dealings with the $487 million have any merit. They do not amount, in my view, to good reason being shown for his non-disclosure.

20. Accordingly, he has failed to satisfy me that his assets, presently the subject of the orders of Bokhary J of 3 May, are the only assets he has available for his living and legal expenses and I decline to make the orders sought by him pursuant to his summons so far as his living expenses or legal expenses are concerned.

21. However, so far as his request that his motor vehicle EE730 be sold so as to discharge the debt owed to the hire purchase company, Dah Sing Finance Ltd, is concerned, in my view, that gives rise to a further consideration.

22. The purpose of a restraint or charging order is to preserve assets for possible future confiscation.

23. The 1st respondent's trial is still possibly many months away before its completion. The relatively new vehicle will depreciate in value over that time. It will require maintenance and running expenses. The monthly hire purchase repayments from the documents provided by the respondents are in the vicinity of $19,000 per month. In other words, it may well itself consume a significant part of the present assets of the 1st respondent if it were to remain in his possession and use for the period of time up to the making of any future confiscation order.

24. Secondly, in this regard, it is not only the interests of the Hong Kong community to be taken into account but also that of bona fide creditors of the 1st respondent, in this case the hire purchase company.

25. On balance, I think it fair and sensible to allow the vehicle be disposed of so as to reduce the risk of potential loss or erosion of the 1st respondent's aggregate assets, and allow its value to be realized at the present time on conditions which will prevent any potential abuse by way of its private sale. I will deal with those conditions at the end of this judgment.

26. So far as the 2nd respondent is concerned, she seeks the same orders claimed by way of the summons so far as her family's living expenses and her own legal expenses are concerned. She has no interest in the sale of the vehicle.

27. It is not asserted by the Department of Justice that the 2nd respondent has failed to make full disclosure. She had no part in the operation of the 1st respondent's bank accounts over the six-year period during which the aggregate amount of $487 million passed through them. Even if funds from those accounts were paid into her accounts or converted into assets over which she has or had control or partial control, it is not challenged that there has been, now, full disclosure as to her dealings with those assets.

28. That being so, and I am satisfied on the material before me that it is so, in my view, the 2nd respondent is entitled to her reasonable living and legal expenses.

29. It does not matter in my view that the 1st and 2nd respondents are husband and wife. Their status in that regard has no particular bearing on the 2nd respondent's rights to her reasonable legal and living expenses should she be able to satisfy the court she has no assets other than those the subject of the orders from which those expenses can be met. Her marital relationship with the 1st respondent, in my view, is simply one of the factual circumstances in this case to fall for consideration in determining whether she has control of other assets other than those the subject of the orders. Her marital relationship in any other sense should by no means prejudice her interests in bringing this application. There is nothing before me to suggest she had any dealings with the fund of $487 million which in my view is the only asset which has not been fully disclosed by the 1st respondent.

30. If the contrary had been the case and there was evidence which tended to implicate her in the transferring of the $487 million over that six-year period to other places or persons, then her position so far as the present summons is concerned may well have been quite different. As it stands however there is no such evidence. Monies she received from the 1st respondent have been in my view satisfactorily accounted for by her in her affirmations. It is agreed that the quantum of her claimed expenses are reasonable.

31. Accordingly, I allow her those sums claimed by her in paragraphs 1(a) and (c) of the present summons.

32. I might add by allowing her claim in paragraph 1(a), that no doubt the 1st respondent by the back door may be, as a matter of practicality, partially successful in obtaining some benefit because, as the 2nd respondent's husband, he will no doubt form part of her family expenses. So be it. It is completely impractical and undesirable to impose any condition on the 2nd respondent that she is not to provide in any way for any part of her husband's living expenses out of the monies awarded by me on her summons.

33. Further, so far as the $600,000 lodged with the 2nd respondent's solicitors is concerned, I do not see any merit in imposing detailed, and in my view, impractical and unrealistic limitations on its use. I order merely that it be used in payment of the 2nd respondent's legal expenses.

34. Accordingly, the applications of the 1st respondent pursuant to paragraphs 1(a) and (c) of the summons are dismissed.

35. The applications of the 2nd respondent as contained within paragraphs 1(a) and (c) of the summons are allowed save that her withdrawals of funds under paragraph 1(a) are restricted to her own bank accounts and monetary assets the subject of the present orders.

36. The application of the 1st respondent pursuant to paragraph 1(b) of the summons is allowed save that any sale of the vehicle is to be under the auspices of and with the approval of the creditor finance company. Any surplus realized from the sale of the vehicle is to be paid into a bank account of the 1st respondent presently the subject of the restraint and charging orders.