In re Anwide Ltd

1993, NO. 126
(Civil)

IN THE SUPREME COURT OF HONG KONG

(Appellate Jurisdiction)

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J U D G M E N T

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Hon Yang, C.J.:

1. On 6 January 1994, we allowed the appeal and ordered that the order made by Mayo J, made on 8 July 1993, be set aside. We indicated that we would reduce our judgment into writing; this we now do.

2. The appellant is Anwide Ltd ("Anwide"), the 15th Respondent of a total of 39 Respondents in a summons taken out by the Attorney General in proceedings known at the hearing of this appeal on 14 December 1992 as HCMP 1711 of 1991, whereby the Attorney General acting on behalf of the Government of the United States of America ("the USA") applied to register foreign (in this case the United States of America) confiscation orders under Sec. 29 of the Drug Trafficking (Recovery of Proceeds) Ordinance ("the Ordinance"). The 4th Respondent in HCMP 1711 of 1991 was LO Chak-man ("Lo"), a director of Anwide.

3. The Attorney General acted as agent for the USA pursuant to Article VI of the Agreement made in 1990 between the Government of Hong Kong ("HK") and the USA concerning the Confiscation and Forfeiture of the Proceeds and Instrumentalities of Drug Trafficking ("the 1990 US-HK Agreement").

4. In HCMP 1711 of 1991, the Attorney General applied for an order that Lo and a number of other persons resident or occupant at premises located at the Ground Floor of House B, DD 224, Lot 385, Hang Hau Road, Hang Hau, Sai Kung, New Territories ("the Sai Kung property"), shall vacate and deliver up vacant possession to the receivers appointed herein on or before 7 January 1993.

However, the Sai Kung property was not the only property which formed the subject matter of the foreign confiscation orders. There were other properties and monies. What this court is concerned with here is not the Sai Kung property, but a property known as the Clear Water Bay property at House F1, Island View, DD 238, Lots 536 and 537, Wing Lung Road, Pan Long Wan, Clear Water Bay, New Territories, and monies held in Anwide's bank accounts at the Head Office of the Hang Seng Bank. In order to understand how these properties and monies came to feature at the hearing before us, it is necessary to go back in time to 1983.

5. On 17 November 1983, Lo purchased the Clear Water Bay property. Eleven days later Lo assigned the property to Anwide.

6. On 1 September 1989, the Ordinance came into force, except for Sec. 25, which became effective on 1 December 1989. Sec. 25 provides, inter alia, that a person commits an offence if he enters into or is otherwise concerned in an arrangement, whereby (a) the retention or control by or on behalf of another ("the relevant person") of the relevant person's proceeds of drug trafficking is facilitated (whether by concealment, removal from the jurisdiction, transfers to nominees or otherwise); or (b) the relevant person's proceeds of drug trafficking - (i) are used to secure that funds are placed at the relevant person's disposal; or (ii) are used for the relevant person's benefit to acquire property by way of investment, knowing or having reasonable grounds to believe that the relevant person is a person who carries on or has carried on drug trafficking or has benefited from drug trafficking.

7. On 18 December 1989, Lo was arrested under Sec. 25 of the Ordinance. As has been seen, in 1990, the 1990 US-HK Agreement was made. In January 1991, the Drug Trafficking (Recovery of Proceeds) (Designated Countries and Territories) Order was made by the Governor-in-Council under Sec. 28 of the Ordinance.

8. In civil actions brought on 12 June 1991 in the USA to condemn and forfeit the properties and funds, known as Verified Complaints in rem, the Clear Water Bay property was identified as Anwide's property in case CV 91-2110, and the Hang Seng Banks were identified as Anwide's bank account in case CV 91-2111. The Sai Kung property was described in case CV 91-2110 as being LAW Kin-man (the 1st Respondent in HCMP 1711 of 1991). These proceedings in the USA were brought in respect of an alleged conspiracy to possess with intent to distribute heroin between May 1986 and February 1988. Lo and a number of other persons, named and unnamed, were alleged to be the conspirators. The alleged conspiracy was therefore said to have been committed after Lo had purchased and assigned the Clear Water Bay property to Anwide.

9. On 20 November 1991, Glasser J of the US District Court ordered the forfeiture of the real properties in case CV 91-2110, including the Sai Kung and Clear Water Bay properties. On 17 October 1991, the same judge ordered the forfeiture of monies, including those held by Anwide in the Hang Seng Bank.

10. Upon the Attorney General's application in HCMP 1711 of 1991, Gall J ordered the registration of the confiscation orders in cases CV 91-2110 and CV 91-2111.

11. Lo's trial ended with the indictment quashed by Gall J. On the Attorney General's appeal to the Privy Council, Gall J's order was reversed. Lo now faces a re-trial.

12. On 14 December 1992, the Attorney General took out a summons in HCMP 1711 of 1991 for possession of the Sai Kung property (see above). Then, in February 1993, Anwide and Lo filed summonses to set aside the judgment of Gall J. Lo filed an affirmation in support of Anwide, in his capacity as a director.

13. On 15 April 1993, the Attorney General applied to stay the application for possession of the Sai Kung property in HCMP 1711 of 1991.

14. On 17 May 1993, the Attorney General took out an originating summons under RSC Ord. 113 in respect of the Sai Kung property. Eight days later, Master Jennings granted the Attorney General possession of the Sai Kung property under RSC Ord. 113.

15. On 8 June 1993, the Attorney General applied by inter partes summons to set aside the February summons of Anwide and Lo (see above) on the grounds that the court had no jurisdiction to grant the relief sought.

16. On 16 June 1993, the Attorney General was granted leave to withdraw his application for possession of the Sai Kung property made in his summons in HCMP 1711 of 1991 on 14 December 1992 (see above).

17. On the following day, Kaplan J dismissed Lo's appeal in his capacity as the 4th Respondent against Master Jennings' order in respect of the Sai Kung property on the ground that Lo's interest in the property had been extinguished and therefore he had no locus standi.

18. On 5 July 1993, the Attorney General amended his summons to dismiss the February applications of the 4th and 15th Respondents on the additional ground that the two Respondents were out of time.

19. On 8 July 1993, Mayo J granted the Attorney General's application to dismiss the applications of the 4th and 15th Respondents on the ground that he was bound by Kaplan J's judgment that neither Respondent could establish any locus standi in respect of "the same land", i.e., the Sai Kung property.

20. It is against Mayo J's judgment that the appellant now appeals.

21. From this very long narrative of the background which leads to this appeal, it will be seen that the USA confiscation orders covered various properties, including the Sai Kung property, the Clear Water Bay property, and monies held by Anwide. At the time of the hearing before Mayo J, the Sai Kung property had fallen out of the picture when the Attorney General was granted leave to withdraw on 16 June 1993 (see above). The only properties left for consideration at the time the matter came before Mayo J consisted of the Clear Water Bay property and the monies in both of which Anwide clearly had an interest. The learned judge was therefore in error in allowing himself to be persuaded that an imprecisely worded affidavit of Lo, affirmed in his capacity as a director of Anwide and filed in support of Anwide's application, could properly be taken as confining Anwide's interest to the Sai Kung property. Anwide had never claimed to have any interest in that property and, indeed, at the hearing before Mayo J expressly disclaimed any such interest. It did, however, clearly have a legitimate interest in the monies and in the Clear Water Bay property as was admitted by Mr John Carlson, a Senior Crown Counsel, in his affidavit filed in HCMP 1711 of 1991.

22. For these reasons, we allowed the appeal and set aside the judge's order. It follows that the 15th Respondent's application to set aside the order of Gall J dated 25 February 1992 is restored. The Notice of Appeal also prayed that the application of the 15th Respondent be allowed. As that application was not the subject of the present appeal and therefore never before this court, we do reject the submission that it would be proper for us to deal therewith.

23. In the course of the hearing of this appeal, a number of important questions of law were raised on behalf of the appellant but, in the light of our judgement, none of these need be gone into here.

24. Costs of the appeal and below to the appellant.