SECRETARY FOR JUSTICE v. LEE CHAU PING AND ANOTHER

HCMP4412/96

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.4412 OF 1996

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J U D G M E N T

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1. This is an application made under s.5 of the Drug Trafficking (Recovery of Proceeds) Ordinance Cap. 405 for confiscation orders under s.3 of the ordinance against the defendants, Lee Chau Ping and Tam Wai Hung. Lee Chau Ping and Tam Wai Hung absconded from criminal proceedings brought against them in Hong Kong and the prosecution does not know their whereabouts. As the facts in relation to both defendants are common, the applications are made concurrently.

2. Three preliminary issues arise for my determination :

1. The sufficiency of a statement made under s.5 of the Ordinance to satisfy me of the condition in s.3(2)(c)(iii) of the Ordinance, that the defendants, Lee Chau Ping and Tam Wai Hung, could have been convicted of a drug trafficking offence.

2. The standard of proof applicable under s.3(2)(c)(iii) of the Ordinance, in relation to the question of my being satisfied that an absconded person could have been convicted in respect of a drug trafficking offence

3. The standing of third parties in applications for confiscation orders under the Ordinance.

Sufficiency of the s.5 statement

3. In relation to the first preliminary issue, Findlay J., who first dealt with this application, said the Secretary for Justice could not rely on a statement made under s.5 of the Ordinance. In his judgment of 25 April 1997 he said:

"Mr Blanchflower ... argues, however, that the legislation contemplates that I can use the section 5 statement to satisfy myself on the matters upon which I am required to be satisfied, although it cannot be said that there is an implied acceptance of any of the contents of the statement by the respondents. In other words, Mr Blanchflower contends that the court can use the section 5 statement although it is not evidence and although there is no express provision in the legislation allowing me to do this.

I can understand the convenience of doing this, but I cannot follow this course if the law does not allow it. Unfortunately, I do not think the law does allow it.

The legislation is peppered with the requirement that I be 'satisfied' of various things. Normally, a court cannot be satisfied of anything unless it is so satisfied by evidence, or the law clearly contemplates otherwise. Here, in my view the legislation does not clearly contemplate otherwise. Mr Blanchflower says that the court may have 'regard to all the relevant matters before it'. This, in my judgment, means 'all relevant matters before it' by means of evidence, or as provided for in section 5. If the legislature contemplated that a court could have regard to the section 5 statement without more, there would be no need at all for the elaborate provisions of section 5.

In the result, I find there is nothing properly before me on which I can act in this matter. The failure of section 5 to operate in this case means that there must be evidence on which I can act. It seems to me that this evidence may be by way of affidavit in support of the originating summons, but, because this is not an interlocutory matter, the affidavits may not contain hearsay evidence."

4. Findlay J.'s judgment was not appealed, since it was made in a criminal cause or matter, and there is no jurisdiction for the Court of Appeal to hear an appeal from it under s.13(3) of the High Court Ordinance, Cap. 4.

5. Mr Michael Blanchflower, who again appears for the Secretary for Justice, has raised the issue with me again and after having heard his argument, I am of the view that the Secretary for Justice can rely on the s.5 statement to satisfy me of the condition in s.3(2)(c) of the Ordinance, as well as all the other conditions on which I must be satisfied.

6. My reasons are :

Before September 1995, s.5 read :

"5(1) Where -

(a) the prosecutor tenders to the High Court or the District Court, as the case may be, a statement as to any matters relevant to the determination whether the defendant has benefited from drug trafficking or to the assessment of the value of his proceeds of drug trafficking; and

(b) the defendant accepts to any extent any allegation in the statement, the court may, for the purposes of that determination and assessment, treat his acceptance as conclusive of the matters to which the acceptance relates.

(2) Where -

(a) a statement is tendered under subsection (1) (a); and

(b) the court is satisfied that a copy of that statement has been served on the defendant, the court may require the defendant to indicate to what extent he accepts each allegation in the statement and, so far as he does not accept any such allegation, to indicate any matters he proposes to rely on.

(3) If the defendant fails in any respect to comply with a requirement under subsection (2) he may be treated for the purposes of this section as accepting every allegation in the statement apart from -

(a) any allegation in respect of which he has complied with the requirement; and

(b) any allegation that he has benefited from drug trafficking or that any payment or other reward was received by him in connection with drug trafficking carried on by him or another."

7. In September 1995 the Ordinance was amended to provide, amongst other things, for the making of confiscation orders against persons who had died, or had absconded. One protection afforded to the personal representatives of a deceased person and to an absconded person, was the condition that the court must first be satisfied that a person "could have been convicted" of the drug trafficking offence in respect of which proceedings had been instituted. In particular s.3(2)(c)(iii) reads :

"...having regard to all relevant matters before it, the person could have been convicted in respect of the offence, or as the case may be, the offences concerned."

Section 5 was amended to allow the court to be satisfied of the condition in s.3(2)(c)(iii) by means of a s.5 statement. Section 5(1) reads :

"(1) Where an application is made for a confiscation order, the prosecutor may tender to the High Court or the District Court, as the case may be, a statement of matters relevant to any of the following -

a) where s.3(1)(a)(ii) is applicable, in determining whether the defendant could have been convicted in respect of the offence, or as the case may be, the offences concerned;

b) determining whether the defendant has benefited from drug trafficking;

c) assessing the value of the defendant's proceeds of drug trafficking."

8. In s.5(1) the phrase, "a statement of matters" parallels the introductory words in s.3(2)(c)(iii), "having regard to all relevant matters before it". The reason for the parallel wording is that it was intended that the s.5 statement would be either the only, or the prime source, of the matters referred to in the introductory words.

9. Section 5(1) must be read with O.115, r.22(2)(c) of the Rules of the High Court, which reads :

"(2) Any statement tendered to the Court by the Secretary for Justice under s. 5(1) shall include the following particulars, namely -

(a) ...

(b) ...

(c) ... such information known to the person who made the statement as is relevant to -

(i) where s. 3(1)(a)(ii) [that is an application for a confiscation order against a dead or absconded defendant] is applicable, the determination whether the defendant could have been convicted in respect of the drug trafficking offence or offences concerned;

(ii) the determination whether the defendant has benefited from drug trafficking;

(iii) the assessment of the value of the defendant's proceeds of drug trafficking."

10. There is no reference in either s.3(2)(c)(iii), s.5(1), or O.115, r.22, to "evidence". This must be a deliberate choice of words : to make it clear that evidence is not required to be produced to a court in order for it to be satisfied of the condition in s.3(2)(c)(iii). If it had been intended that the court had to be satisfied by way of evidence, then the introductory words to s.3(2)(c)(iii) would have read "having regard to all relevant evidence before it".

11. Other parts of s.5 support this view :

See :

"5(1B). Where any statement has been tendered under subsection (1) and the court is satisfied that a copy of the statement has been served on the defendant, it may require the defendant -

(a) to indicate to it, within such period as it may direct, the extent to which he accepts each allegation in the statement; and

(b) so far as he does not accept any such allegation, to give particulars of any matters on which he proposes to rely."

And :

"5(2). Where the defendant accepts to any extent any allegation in any statement tendered under subsection (1), the court may, for the purposes of -

(a) where s.3(1) (a)(ii) is applicable, determining whether the defendant could have been convicted in respect of the offence, or as the case may be, the offences concerned;

(b) determining whether the defendant has benefited from drug trafficking; or

(c) assessing the value of his proceeds of drug trafficking, treat his acceptance as conclusive of the matters to which the allegation relates."

And :

"5(3). If the defendant fails in any respect to comply with a requirement under subsection (lB) he may be treated for the purposes of this section as accepting every allegation in the statement apart from -

(a) any allegation in respect of which he has complied with the requirement;

(b) where s.3(1) (a) (ii) is applicable, any allegation that he could have been convicted in respect of the offence, or as the case may be, the offences concerned;

(c) any allegation that he has benefited from drug trafficking; and

(d) any allegation that any payment or other reward was received by him in connection with drug trafficking carried on by him, or another."

And :

"Section 5(7). In any proceedings on an application made for a confiscation order where s.3(1)(a) (ii) or (7) is applicable -

(a) if the defendant has died, subsection (lB) shall have effect as if it required a copy of the statement tendered under subsection (1) to be served on the defendant's personal representative;

(b) if the defendant has absconded and s.3(2)(c)(ii)(A) or (9)(b)(i) is not applicable to him, this section shall have effect as if a copy of the statement tendered under subsection (1) had been served on the defendant."

12. Where an application for a confiscation order is made after a defendant has been convicted of a drug trafficking offence, the prosecution may rely upon a s.5 statement or the evidence in the trial or both for the purpose of the court determining whether the defendant benefited from drug trafficking. They may also use it for the purpose of asking the court to ascertain the value of that benefit and his proceeds from drug trafficking. In these circumstances, when the prosecutor tenders the statement to the court, a copy is served upon the defendant. And under s.5(1B) the court may require the defendant to indicate whether he accepts the allegations in the statement and if he doesn't, to give particulars of any matters on which he proposes to rely. Then, ss.5(2) and (3) come into operation.

13. In the case of a deceased person, under s.3(14), his personal representatives are entitled to be heard on the application for the purpose of opposing it, and to call, examine and cross-examine witnesses. In order for them to do this s.5(7)(a) requires service of the s.5 statement upon them and under s.5(1B) the court may require them to file a reply statement. Then, ss.5(2) and (3) come into operation.

14. However, in the case of an absconded person whose whereabouts are unknown, there is no one upon whom a s.5 statement can be served. Here, s.5(7)(b) permits the confiscation hearing to proceed in the absence of the defendant and the provisions of "this section" that is s.5 to have effect.

15. Sub-sections 5(2) and 5(3) are inapplicable in the case of an absconded person whose whereabouts are unknown. Since he was not served with a s.5 statement and directed by the court to file a reply to it, he can not fail to comply with s.5(1B). There is no question of an implied acceptance by him of any of the allegations in the statement.

16. In s.5(3)(b) the reference to "where s.3(1)(a)(ii) is applicable" is either to a person who has died [s.3(l)(a)(ii)(A)], or a person who absconded and whose whereabouts are known [s.3(2)(c)(ii)(A)(III)and s.3(9)(a)(b)(i)]. In their cases, the court is left to determine whether they could have been convicted of a drug trafficking offence on the basis of the s.5 statement.

17. Although the scheme of s.5 contemplates that the statement is served upon the defendant, the purpose of s.5(7)(b) is to prevent the statement being disregarded by the court, because it was not served on him. In the case of an absconded person whose whereabouts are unknown, service of the statement is impossible and to prevent non-service being a reason for the court to reject the statement, s.5(7)(b) deems the defendant to have been served with it. It Is reasonable to assume that s.5(7)(b) was designed to bring into play the provisions which operate in this case. If s.5(7)(b) was not in s.5, there would be a risk of the court disregarding the s.5 statement, because it had not been served on the defendant, notwithstanding that it was impossible to do so.

18. I am satisfied that in an application of this kind, where the defendant is an absconded person whose whereabouts are unknown, the provisions of sub-sections 5(1B), (1C), (2), (3), (4), (5) (in part) and (6) are irrelevant because there is no defendant present. The only relevant provisions are sub-sections 5(1), (lA) and (8).

19. In conclusion, I am satisfied that in the case of an absconded person whose whereabouts were not known, I may determine :

(a) whether an absconded person could have been convicted of a drug trafficking offence

(b) his benefit from drug trafficking

(c) the value of his proceeds of drug trafficking,

on the basis of the contents of a s.5 statement.

20. In deference to Findlay J, it is, I believe, correct to say that in April 1997 Mr Blanchflower did not have the luxury of time to mount the persuasive argument he advanced to me and in consequence Findlay J. was deprived of its assistance in arriving at his conclusion.

The standard of proof

21. The second preliminary issue concerns the standard of proof applicable under s.3(2)(c)(iii) of the Ordinance, in relation to the question of my being satisfied that an absconded person could have been convicted in respect of a drug trafficking offence. As the Ordinance is silent on the matter, Mr Blanchflower has asked me to rule upon it.

22. In doing so, it is necessary to consider the :

- nature of a confiscation hearing,

- purpose of a confiscation order,

- other sections of the Ordinance,

- nature of application.

As to their nature, s.3(11) of the Ordinance provides that a confiscation hearing is a criminal proceeding and a confiscation order is part of the sentence in a criminal case.

23. As to their purpose, a confiscation order made in relation to a deceased or absconded person affects property belonging to that person, or the persons holding it. The legislature's intention behind s.3(2)(c)(iii) is to ensure that a confiscation order is only made in a case where the court is satisfied that had the person not died or absconded, a confiscation order could have been made against him.

24. Other sections of the Ordinance expressly specify the standard of proof : s.3(12) provides that the applicable standard when determining : (a) whether a person has benefited from drug trafficking, or (b) the amount to be recovered, is on a balance of probabilities. Similarly in s.24D which relates to the forfeiture of seized property if a court is satisfied that the property (a) represents any person's proceeds of drug trafficking, (b) has been used in drug trafficking, or (c) is intended for use in drug trafficking subsection (4) provides that the standard of proof is on a balance of probabilities.

25. As to the nature of the application, a number of factors distinguish proceedings for an application for a confiscation order against an absconded person, from a criminal trial or a contested committal hearing.

26. In a criminal trial :

- The defendant is present.

- It is an adversarial process in which witnesses are examined and cross-examined.

- Common law and statutory rules of evidence apply.

- The prosecution must prove their case beyond a reasonable doubt.

- If convicted the defendant is at risk of being imprisoned.

27. In a contested committal hearing :

- The defendant is present.

- It is an adversarial process in which witnesses are examined and cross-examined.

- Common law and statutory rules of evidence apply.

- The prosecution must adduce evidence which establishes a prima facie case.

- If committed for trial, the defendant is at risk of being convicted of the offence.

28. In contrast, in an application for a confiscation order against an absconded person :

- The court must have regard to "relevant matters". The Ordinance deliberately uses the words "relevant matters", not "evidence".

- The relevant matters are intended to be contained in a s.5 statement. The Ordinance, therefore, expects the court to receive written submissions and not hear witnesses, assess credibility, weigh evidence, or rule upon the admissibility of evidence.

- Under s.3(2) (c) the court must be "satisfied" of other matters. For example : that the person has absconded, and if the person's whereabouts are known, that reasonable steps have been taken to secure his return.

- Under s.3(13) a finding that a person could have been convicted of the offence is not admissible in any proceedings for the offence.

- If the absconded person returns to Hong Kong he can be prosecuted for the drug trafficking offence which was the subject of the application for the confiscation order, see : s.27(1). A previous finding by a court under s.3(2)(c)(iii) is not a bar to prosecution.

29. In an application against a deceased or absconded person, there are four possible standards of proof :

- beyond reasonable doubt.

- balance of probabilities.

- a prima facie case.

- judicial standard.

Beyond reasonable doubt

30. I am satisfied that the legislature did not intend that I must be satisfied beyond a reasonable doubt that the absconded person could have been convicted of the offence, for these reasons :

- In applications of this kind there is no other person present in the proceedings, neither is their liberty at stake.

- The Ordinance neither impliedly, or expressly, requires a witness to give oral evidence at the hearing of the application. This is in contrast to a criminal trial, where the trier of fact must observe the demeanour of witnesses and assesses their credibility.

- In a criminal trial, only admissible evidence is received. In a confiscation hearing, hearsay evidence is admissible. In R. v. Lum Wai Ming H.C. No. 75 of 1991 (unreported) Deputy Judge Burrell (as he then was) said, at p.4 :

"The enquiry is not governed by strict application of rules of evidence. Matters may be taken into account which might be inadmissible in a criminal trial if, in the view of the court, they are of assistance in the enquiry, provided they are admitted within the scope of Cap. 405 and considered judicially."

- Order 115 r.22(2)(c) of the Rules of the High Court provides that :

"Any statement tendered to the High Court by the Secretary for Justice under section 5(1) should include the following particulars, namely - (inter alia)

(a)...

(b)....

(c) such information known to the person who made the statement as is relevant to -

...

(iii) where section 3(1)(a)(ii) is applicable, the determination whether the defendant could have been convicted in respect of the drug trafficking offence or offences concerned; "

31. In O.115 r.22 the word "information", not "evidence", is used, indicating that information which would be inadmissible in a criminal trial may be admitted and considered in these applications.

32. By contrast, in R. v. Tam Kit Nim [1982] HKC 40, O'Connor J, in obiter interpreted the word "satisfied" in s.45(1)(a)(iii) of the Mental Health Ordinance, Cap 136 [which empowers a magistrate to commit a mentally disordered person to a psychiatric centre, where the person is charged before a magistrate with an act or omission as an offence punishable on summary conviction by imprisonment and the magistrate is satisfied that such person did the act or omission] to mean satisfied beyond reasonable doubt. He said at p.42 A-B

"...a detention order under s.45 disposes of the charge once and for all. It would have the same effect as a conviction or acquittal, in so far as the possibility of further proceedings are concerned. The detention order may be for any period not exceeding the length of sentence which could have been imposed following a conviction. From a consideration of those factors, it would appear that the order is not an interlocutory order, but is one aimed at the final determination of criminal proceedings in a manner resulting in incarceration of the defendant. One would expect that the standard of proof required would be the standard in criminal cases and that the rules of evidence would apply."

33. I am satisfied that these applications are distinguishable from a mental health order applications, because :

- there is no final determination,

- a person's liberty is not at stake,

- the rules of evidence do not apply.

Balance of probabilities

34. As to the standard of proof of a balance of probabilities : in the earlier proceedings before Findlay J. it was accepted, without argument, by both judge and counsel, that this was the applicable standard. This standard means that evidence is weighed to see whether it is more likely than not, that the issue to be decided has been proved. In these applications, where the defendant has absconded and his whereabouts are not known, there is only one party before the court and it cannot weigh a defendant's case to see whether it is more likely than not that he committed the offence.

35. Where the Ordinance intends the standard of proof of a balance of probabilities to apply, it expressly provides so. For example, when the court is asked to determine whether a person benefited from drug trafficking [s.3(3)], or the amount to be recovered [s.3(5)], the standard of proof is stated to be a balance of probabilities, see : s.3(12). Likewise, in other provisions in the Ordinance, it is expressly provided that the word "satisfied" requires a standard of proof of a balance of probabilities. For example, when the court is asked to make a forfeiture order of property related to drug trafficking under s.24(D), it must be satisfied of the tainted source of the property on a balance of probabilities, see : s.24(D)(4). However, in these forfeiture proceedings there are two parties to the proceedings the Secretary for Justice and the person from whom the property was seized or a person who has an interest in the property this is not the case here.

Prima facie case

36. As to the standard of a prima facie case : in Murray v. Director of Public Prosecutions [1994] 99 CAR 396 (HL), Lord Mustill defined a "prima facie case" in these terms, at p.399 :

"...it seems to me, therefore, that the expression 'a prima facie case' was intended to denote a case which is strong enough to go to a jury i.e. a case consisting of direct evidence which, if believed and combined with legitimate inferences based upon it, could lead a properly directed jury to be satisfied beyond reasonable doubt (or whatever formula is preferred) that each of the essential elements of the offence is proved."

37. In R. v. Alick Au Shui Yuen [1993] 2 HKC 219, the Court of Appeal decided that a prima facie test applied in deciding whether the words and acts of the appellant's co-conspirators were admissible against him, on the basis that those words and acts were in furtherance of the conspiracy. They rejected the standard of balance of probabilities, Sir T.L. Yang C.J. saying at p.226 E :

"This is a concept normally associated with the final determination of a case, after weighing (on balance) both the evidence for one party and that for the other. 'Prima facie case' seems to us to be preferable because it does not imply a final determination. It is also preferable to 'reasonable evidence' because it is precise and readily understood and applicable."

In this application there is no final determination of any one's guilt. The proceedings were instituted against Lee Chau Ping and Tam Wai Hung when magistrates issued warrants for their arrest, however, there are no charges in an indictment for them to plead to.

38. In hearing this application I am asked to conduct an inquiry : I have to be satisfied whether or not the absconded defendant could have been convicted of a drug trafficking offence. My role, in some respects, is similar to the role I have in determining applications by a defendant under s.16 of the Criminal Procedure Ordinance, Cap. 221, for his discharge on the basis that the evidence disclosed in the documents handed to the Court under s.80(1) of the Magistrates Ordinance, Cap. 227, is insufficient to establish a prima facie case against him. But, with this difference, in this application, the relevant matters I will consider are not evidence and there is no other party to the proceedings from whom I can hear representations.

Judicial standard

39. Instead of identifying a particular known standard, the fourth alternative is for me to adopt a judicial standard. That is : can I be satisfied, or can I make up my mind, upon the material presented in the s.5 statement, that Lee Chau Ping and Tam Wai Hung, could have been convicted of a drug trafficking offence? It would be dangerous for me to do this, because there are no known bounds to that approach.

40. I was initially of the view that the standard I should apply is that of a prima facie case. As Sir T.L. Yang C.J. said in Alick Au Shui Yuen, that standard is "precise and readily understood". However, that standard is usually applied in applications where the consequence of a finding adverse to the defendant is that he is compelled to go on to a further stage in the judicial process. For example, committal for trial in the Court of First Instance after a preliminary hearing before a magistrate.

41. Here, although there is no question of Lee Chau Ping and Tam Wai Hung being found guilty of a drug trafficking offence, the consequence of my finding that they could have been found guilty the s.3(2)(c)(iii) test is that I will make an order confiscating their identified assets. This is a considerable penalty and I had reservations about applying a standard of proof commonly associated with preliminary issues to a matter, which has such weighty consequences.

Conclusion

42. At the preliminary hearing on October 1998, Mr Blanchflower argued that it was consistent with the scheme of the Ordinance for the standard to be the balance of probabilities. In the absence of clearer guidance, I agreed, but not without the reservations expressed above. I therefore accept that as being the standard applicable to the question of my being satisfied that Lee Chau Ping and Tam Wai Hung could have been convicted in respect of a drug trafficking offence at the hearing of the substantive application.

The standing of third parties

43. I turn to the third preliminary issue. As I have said, under s.3(1)(a)(ii) and s.3(1)(b), an application for a confiscation order may be made against a deceased or absconding person. In the case of a deceased person, under s.3(14), the personal representatives of the deceased are entitled to be heard on the application and to call, examine and cross-examine any witness for the purposes of opposing the application. In the case of an absconding person there is no specific provision governing the representation for, or on behalf of, the absconding person. Section 5(7)(b), already quoted, suggests that there is no such representation. Since the s.5 statement is deemed to be served on the defendant, the Secretary for Justice can proceed with the application without the absconding person or his representatives being present

44. In these applications, if I make the confiscation orders sought, then the certificates made pursuant to s.6(2) will contain particulars of Lee Chau Ping and Tam Wai Hung's property that may be realised to satisfy the confiscation orders.

45. Since third parties appear to have an interest in some of Lee Chau Ping and Tam Wai Hung's property, and gifts or dispositions were made by Lee Chau Ping to third parties, the former Attorney General in February 1997 notified the following third parties of the April 1997 hearing before Findlay J. and the fact that property in which they appear to have an interest may be included in a certificate made under s.6(2).

1. Cheuk Tak Wah - Lee Chau Ping's husband.

2. Hui Hoi Wah - a so called 'office assistant' formerly employed by Lee and Tam.

3. Luk Soo Ngor - Lee Chau Ping's mother.

4. Kenneth Morrison - The court appointed receiver of Lee and Tam's property.

On 11 March 1997 Mr Morrison notified the Attorney General that he did not intend to make any representations to the Court.

46. In his judgment of 25 April 1997 at p.22 A-J, Findlay J. commented upon the standing of third parties in the applications, as follows :

"From an abundance of caution, in February 1997, notice of these proceedings was given to Mr Cheuk Tak-wah, the husband of the first respondent, Madame Hui Hoi-wah, a business associate of both respondents, Madame Luk Soo-ngor, the mother of the first respondent, and the court appointed receiver of the property of both respondents. Mr Lee Wai-kwong, a brother of the first respondent, appeared at the request of Madame Luk Soo-ngor and Mr Cheuk Tak-wah, but they did not wish to make representations; just to be told the outcome of the proceedings. Madame Hui Hoi-wah appeared by Mr. Paul Leung of counsel, but he agreed that his client had no standing in these proceedings. That, to me, appears to be the Position; that only the respondents, or the personal representatives of a deceased defendant, have standing to be heard in proceedings for a confiscation order. It may be, as in this case, that other persons claim an interest in property said to have been derived or realised from payments received in connection with drug trafficking, but they have the opportunity of being heard when the Attorney General takes steps to realise the property under section 12."

47. I respectfully agree with Findlay J., third parties have no standing in an application by the Secretary for Justice for a confiscation order against an absconding person. They cannot make representations on the conditions of making a confiscation order; for example, whether Lee Chau Ping and Tam Wai Hung could have been convicted of drug trafficking offences, or whether they benefited from drug trafficking and, if they did, the amount of their benefit. If confiscation orders are made against Lee Chau Ping and Tam Wai Hung, then an application under s.12 is made to the Court of First Instance for an order appointing a receiver to realise their property and pay the realised amounts to the Registrar of the High Court. Under s.12(8) the Court must not exercise this power unless a reasonable opportunity has been given to persons holding any interest in the property to make representations to the Court. That is the subsection, which protects third parties' interests in Lee Chau Ping, and Tam Wai Hung's property.

The substantive application

48. I turn now to the substantive application.

49. To recap, in applications against absconding persons, such as Lee Chau Ping and Tam Wai Hung are said to be, the conditions on which I must be satisfied are :

(1) That the application is made by the Secretary for Justice [s.3(1)(b)].

(2) Proceedings for one or more drug trafficking offences have been instituted against them [s.3(1)(a)(ii)].

(3) Those proceedings have not been concluded [s.3(1)(a)(ii)].

(4) They have absconded [s.3(1)(a)(ii)(B)].

(5) Six months have elapsed from the date they absconded [s.3(2)(c)(i)].

(6) Their exact whereabouts are not known and reasonable steps have been taken to give them notice of the proceedings [s.3(2)(c)(ii)(B)].

(7) They could have been convicted of a drug trafficking offence or offences [s.3(2)(c)(iii)].

(8) They benefited from drug trafficking [s.3(3)].

If items (1) to (8) are satisfied, then I have to determine :

(A) The value of their benefit [ss.3(5), 5, & 6(1)].

(B) The amounts of the confiscation orders [s.3(6)].

(C) The amounts that might be realised for the purposes of the making of the certificates [s.6(2)].

50. In R. v. Ko Chi Yuen [1993] 2 HKCLR 101 at p.104, Leonard J. suggested how the s.5 statement should be drafted, he said :

"In my view, a s.5 statement should be drafted in the same way as a Notice to Admit Facts. The prosecution should set out clearly and simply in a series of numbered paragraphs the allegations of fact upon which it relies. There should be no recital of hearsay or expression of opinion. Schedules and annexures, such as bank statements may be incorporated by reference."

Leonard J.'s views were made before the 1995 amendments permitting a confiscation order to be made against dead or absconding persons. In such cases, the conditions that must be satisfied, i.e. the person has absconded or the person could have been convicted of a drug trafficking offence, must, by necessity, be put forward in hearsay form.

51. In these applications the Secretary for Justice has filed and relies on the s.5 statement of Detective Senior Inspector Tse Leung Wah, dated 14 October 1998. I have also heard oral evidence from :

(1) Lee Wai Kwong, Lee Chau Ping's brother.

(2) Tsang Pui Sheung, Tam Wai Hung's estranged wife.

(3) Yu Yem Kin.

(4) Senior Inspector Ho Tze Ming, of the Hong Kong Police Force.

(5) Sgt. Thomas Hansen, of the Royal Canadian Mounted Police.

(6) Chief Inspector Cheung Yui Mo, of the Hong Kong Police Force.

(7) Mark Bowra a Certified Public Accountant with the Forensic Accounting Division of Messrs Peat Marwick, Certified Public Accountants in Hong Kong.

That the application is made by the Secretary for Justice

52. As to the first condition, I am satisfied that the application is made by the Secretary for Justice. Order 115, r.2A of the Rules of the High Court provides for the Secretary for Justice to make an application by way of originating summons for a confiscation order under s.3 where the person has died or absconded. An ex-parte originating summons in these applications was filed in the High Court by the former Attorney General on 23 December 1996.

That proceedings for a drug trafficking offence have been commenced against the defendants

53. As to the second condition, s.2(1) of the Ordinance defines a "drug trafficking offence" to mean :

"(a) any of the offences specified in Schedule 1;

(b) conspiracy to commit any of those offences;

.....

(e) aiding, abetting, counseling or procuring the commission of any of those offences."

54. Section 2(11) defines when proceedings for an offence have been instituted in Hong Kong. It includes under s.2(11)(a), when a magistrate issues a warrant or summons under s.72 of the Magistrates Ordinance in respect of the offence.

55. Warrants for Lee Chau Ping's arrest were issued on 30 September 1992, containing two counts (Exhibit 5) and 11 December 1992, containing 20 counts (Exhibit 6) alleging that she committed offences of conspiracy to manufacture a dangerous drug, conspiracy to traffic in a dangerous drug, and trafficking in a dangerous drug. A warrant for Tam Wai Hung's arrest was issued on 14 November 1992 (Exhibit 7) alleging that he committed an offence of conspiracy to manufacture a dangerous drug and an offence of conspiracy to traffic in a dangerous drug. These are all drug trafficking offences listed in Schedule 1 of the Ordinance. I am satisfied that the second condition has been proved.

That the proceedings against the defendants have not concluded

56. As to the third condition, s.2(12A) defines when proceedings have concluded in respect of persons who have absconded

"An application for a confiscation order made in respect of a defendant where section 3(1)(a) (ii) or (7) [defendant dies or absconds after conviction] is applicable is concluded -

(a) if the High Court (now the Court of First Instance of the High Court) or the District Court decides not to make such an order, when it makes that decision; or

(b) if such an order is made as a result of that application, when the order is satisfied."

No order has yet been made by the Court of First Instance and I am satisfied that the proceedings have not been concluded.

57. Section 3(15) permits the 1995 amendments to operate against persons who absconded before 1 September 1995. It reads :

"(15) Where -

(a) before the commencement of the Drug Trafficking (Recovery of Proceeds) (Amendment) Ordinance 1995, proceedings for one or more drug trafficking offences have been instituted against a person but have not been concluded because that person has absconded; and

(b) immediately before that commencement, any realizable property of that person is the subject of a charging order or restraint order,

- then the provisions of this Ordinance as amended by that Ordinance shall apply in relation to that person ..."

I am satisfied that the s.3(15) conditions are proved. Proceedings against Lee Chau Ping and Tam Wai Hung were instituted by the issue of the warrants for their arrest. They have not concluded, because they absconded. On 29 September 1992 the High Court made an ex-parte restraint order in respect of their realizable property and on 9 October 1992 an inter partes restraint order was made. On 22 October 1992 an ex-parte restraint order was made against Gooders Trading Ltd. and on 4 November 1992 an inter partes restraint order was made against Gooders Trading Ltd. None of the restraint orders have been discharged. On 15 March 1994 an order was made appointing receivers to manage the property covered by the restraint orders.

That the defendants have absconded

58. As to the fourth condition, s.2(1) defines "absconded" as follows :

"'absconded', in relation to a person, includes absconded for any reason whatsoever, and whether or not, before absconding, the person had been -

(a) taken into custody; or

(b) released on bail."

59. Here, the following facts are relevant. Lai Chi Ming ("Ming Ming") who helped with the first ice factory in Jiangmen was arrested in the mainland on 19 May 1992. On 9 September 1992 Wong Moon Chi's residence was searched.

60. Chief Inspector Cheng testified that Yu Yem Kin's flat at Grandeur Villa was searched on 14 September 1992. A man, Yu Wing Kwong, who was wanted in a murder case in the USA, was arrested and several women were taken in for questioning. The search was reported in the newspapers. Newspaper articles that refer to this search were found in Lee Chau Ping's house in Vancouver. [Exhibit 27/B/494-501]

61. Yu Yem Kin was arrested on 21 September 1992. On 21 September in Vancouver, that is 22 September in Hong Kong, a Hong Kong lawyer told Lee Chau Ping that Yu had been arrested. [s.5 statement, p.58, para.244]

62. On 28 September 1992 Tam Wai Hung called Au Keung Wah, and said that he was in trouble and had to leave Hong Kong. [s.5 statement, p.57, para.240] He has not been heard of since.

63. On 29 September 1992, when the Royal Canadian Mounted Police searched her residence in Vancouver, Lee Chau Ping knew that she was wanted by the Hong Kong Police and was suspected of committing offences in Canada. She has not been heard of since 10 October 1992 when Hui Hoi Wah saw her in Thailand.

64. I am satisfied that the evidence shows that Lee Chau Ping and Tam Wai Hung absconded in September - October 1992. A strong inference may be drawn that they absconded because they knew that other members of their ice manufacturing and trafficking syndicate had been arrested in Hong Kong and the mainland, and that their arrests were imminent.

That the defendants have absconded for not less than six months

65. As to the fifth condition, under s.3(2)(c)(i), I must be satisfied that the defendants absconded and that not less than six months have elapsed beginning with the date, which in my opinion, is the date on which they did so. I am satisfied that more than six months have elapsed since Lee Chau Ping and Tam Wai Hung absconded in September - October 1992.

That the exact whereabouts of the defendants are not known and reasonable steps have been taken to give them notice of the proceedings

66. As to the sixth condition, s.3(2)(c)(ii)(B) provides that, if a person's exact whereabouts are not known, then reasonable steps must have been taken to give him notice of "those proceedings". In his judgment, Findlay J., at p.3 D-F, observed that the phrase "those proceedings" appears to refer to the proceedings for the prosecution of a drug trafficking offence, not the proceedings for an application for a confiscation order.

67. Lee Chau Ping's brother, Lee Wai Kwong, does not know where she is and Tam Wai Hung's estranged wife, Tsang Pui Sheung, does not know where he is.

68. Evidence of the steps taken to notify Lee Chau Ping and Tam Wai Hung of the proceedings was given by Chief Inspector Cheng Yiu Mo, Senior Inspector Ho Tze Ming of the Hong Kong Police Force and Sgt. Tom Hansen of the Royal Canadian Mounted Police. It includes the facts that :

- Warrants for their arrest have been issued.

- Lee Chau Ping is the subject of an Interpol Red Notice.

- Both are on the "wanted" list of the Criminal Record Bureau.

- Both are on the Immigration Department's "stop" list.

- The Immigration Department's movement records do not show that they have entered Hong Kong in recent years.

- Repeated unsuccessful enquiries have been made of their family members as to their whereabouts.

- The Narcotics Bureau have requested assistance to locate them from the Public Security Bureau in the mainland, The Royal Thai Police, The Royal Canadian Mounted Police, the United States Drugs Enforcement Agency office in Bangkok and the Investigation Bureau of the Taiwanese Ministry of Justice.

69. Sgt. Hansen's statement, at para.11, which he read out to me, lists the exhaustive efforts of the Royal Canadian Mounted Police to arrest Lee Chau Ping.

70. I am satisfied that Lee Chau Ping and Tam Wai Hung's exact whereabouts are not known and that reasonable steps have been taken to notify them of the criminal proceedings instituted against them.

That the defendants could have been convicted of drug trafficking offences

71. As to the seventh condition; I have already ruled that the applicable standard of proof in relation to this issue is the civil standard of a balance of probabilities.

Summary

72. The following is a summary of the evidence put before me on this issue :

73. Yu Yem Kin said he first met Lee Chau Ping in 1978. He identified her photograph. She then worked in the medical clinic of a Dr Yu Hung Kei.

74. In 1982, in Japan, Yu was convicted of trafficking in ice and sentenced to five years' imprisonment. While in prison he met a Taiwanese prisoner who gave him a detailed hand written formula for making ice [Exhibit 35]. After serving his sentence he returned to Hong Kong and met Lee Chau Ping again.

PNK Development Ltd.

75. At the end of 1988, Au Keung Wah (a friend of Lee Chau Ping) introduced Tam Wai Hung to Hui Hoi Wah. Lee Chau Ping was present at the introduction. They agreed to set up a business to purchase cloth in China and sell it in Hong Kong. PNK Development Ltd. was incorporated on 22 November 1988 and commenced business on 12 December 1988. PNK's directors were: Tam Wai Hung, Hui Hoi Wah, Au Keung Wah and Cheuk Tak Wah (Lee Chau Ping's husband). Yu said that PNK's directors were all friends or relatives of Lee Chau Ping. Its first three employees were Tam Wai Hung, Hui Hoi Wah, and a receptionist. PNK only did two or three small transactions in cloth and after June 1989 this side of the business ceased.

76. On 30 November 1988 Lee Chau Ping bought premises at 11th floor, Good Dragon Building, Ki Lung Street, Sham Shui Po, in the name of Newpark Development Ltd., another company she owned. PNK moved into the premises in April 1989.

77. Lee Chau Ping paid PNK's expenses and the employees' salaries. She made all decisions relating to PNK. Lee Chau Ping and Tam Wai Hung made deposits in PNK's bank account. Lee Chau Ping treated PNK's bank accounts as her own.

78. In June 1991 Cheung Wing Yan, was hired as a clerk. It was her impression that PNK was a trading company; Tam Wai Hung was the director; and Hui Hoi Wah the manager. When Lee Chau Ping and Yu Yem Kin came to the company they spoke with Tam Wai Hung and Hui. Cheung issued PNK's cheques upon Hui's instructions. The cheques were signed by Tam Wai Hung and Hui.

79. Yu Yem Kin identified photographs of different equipment and materials found in factories in China, and said that they were purchased by PNK.

80. On two occasions, 26 October 1989 and 23 August 1990, Lee Chau Ping asked Hui to order silica gel from Leon Trading Company in Castle Peak, Kowloon. Silica gel is used to extract humidity from goods in order to keep them dry. On another occasion Lee Chau Ping asked Hui and Tam Wai Hung to purchase silica gel from a supermarket. Lee Chau Ping paid for the gel. It was taken to PNK's offices and later removed. Yu Yem Kin said that silica gel was packed with the manufactured ice.

81. Lee Chau Ping asked Hui to order vacuum pumps from Hong Kong Scientific Supplies Ltd. The pumps were delivered to PNK's offices, then they disappeared. Hui never saw any documents relating to the sale of these goods by PNK.

82. Sometime after June 1989 Lee Chau Ping came to PNK's offices with samples of palladium chloride, funnels and raw silk and asked Hui to look for them.

83. Hui, instructed Cheung Wing Yan, to order pumps, goggles and funnels from Hong Kong Scientific Company. Hui said they were to be sent to China.

84. Lee Chau Ping asked Hui to look for palladium chloride in Hong Kong. Hui found that Johnson Matthey Hong Kong Ltd. supplied it, and placed orders for it with them. Between September 1989 to August 1992 Johnson Matthey supplied PNK with 110 kilogrammes of palladium chloride. It came in 100 gram plastic bottles each with a Johnson Matthey label. If the quantity ordered was small, Hui would collect the order; if it was large it would be delivered to PNK's offices. Lee Chau Ping asked PNK employees including Hui to divide it into 50 gram or 25 gram bottles. The palladium chloride was placed in a safe to which Tam Wai Hung and Hui had access.

85. On 28 April 1992 PNK ordered 45 kilogrammes of palladium chloride from Johnson Matthey. PNK paid for the order. Hui, collected 15 kilogrammes in May 1992 and 5 kilogrammes in July 1992; the balance of 15 kilogrammes was not collected.

86. Hui said she never saw any documentation relating to the sale of palladium chloride by PNK. Neither did she see anybody take the palladium chloride from PNK's office.

87. Yu Yem Kin said that during the manufacture of ice, 50 gm and 25 gm of palladium chloride were added to 10 kilogrammes and 5 kilogrammes of ephedrine.

88. Bottles of palladium chloride sold by Johnson Matthey are shown in photograph no. 36 of Exhibit 13 of the photographs taken of the equipment and material in the Jiangmen factory.

89. Chan Man Fai, a Government Chemist, said that palladium chloride is used with hydrochloric acid as a catalyst in the manufacture of ice. Twenty grammes of palladium chloride is needed to make one kilogramme of methylamphetamine (ice).

90. In early 1990 Lee Chau Ping introduced Hui to Chui Lap Man of the Kou Hing Hong Scientific Supplies Ltd. in Hong Kong. From late 1989 to mid-1992, Kou Hing Hong Scientific Supplies Ltd. supplied PNK with funnels, rubber stoppers, face masks, plastic goggles, filters, test papers and vacuum pumps. The goods were ordered by Hui and delivered to PNK's office. Lee Chau Ping arranged for payment for these goods. There are no records of sales of these goods by PNK.

91. Vacuum pumps and test papers sold on 4 March 1992 by Kou Hing Hong Scientific Supplies Ltd are shown in photographs 31 and 35 of the photographs of the Jiangmen factory. Yu Yem Kin identified the test papers shown in the photographs.

92. Plastic stoppers sold on 30 March 1992 by Kou Hing Hong Scientific Supplies Ltd. are shown in photograph 30 of the photographs of the Jiangmen factory.

93. Porcelain funnels sold on 21 May 1992 by Kou Hing Hong Scientific Supplies Ltd. are shown in photograph 31 of the photographs of the Jiangmen factory.

94. Cheung Wing Yan saw Tam Wai Hung help to move pumps, goggles and funnels purchased from Hong Kong Scientific Supplies Ltd. and Kou Hing Hong Scientific Supplies Ltd. from PNK's offices.

The ice factories

95. Yu said that in 1988 he found the formula for manufacturing ice [Exhibit 31] which had been given to him by the Taiwanese prisoner in Japan. He asked Lee Chau Ping if she was interested in the formula. She said she was, and Yu gave the formula to her.

96. In 1988 Yu met his friend, Wat Tan, and Lee Chau Ping at the Ramada Hotel, Wan Chai, Hong Kong. Lee Chau Ping and Wat Tan talked about manufacturing ice. After Lee Chau Ping asked Yu if he was interested in the ice business. He said he was not, but then Lee Chau Ping said she would do it herself and Yu asked for a one third share.

At Jiangmen

97. Yu said that Lee Chau Ping decided to find a place in the mainland to manufacture ice. Lee Chau Ping was responsible for locating this; Lai Chi Ming ("Ming Ming") assisted her. They found a factory at Jiangmen.

98. Ming Ming employed the workers for the factory. They were friends of his and natives of Jiangmen.

99. Ming Ming had connections with the Jiangmen Medicine Factory. He was responsible for purchasing the materials for manufacturing ice, such as ephedrine, palladium chloride, and sodium hydroxide.

100. At first, the factory was unsuccessful. Yu said that once the Jiangmen factory was successfully producing ice Lee Chau Ping spoke to him about running the business and sharing the profits. Lee Chau Ping was to find customers and receive 66.6% of the profits, she agreed to give him 33.3% of profits, after deducting expenses

101. Tam Wai Hung helped her. He received and delivered the ice in Hong Kong. Yu identified Tam's photograph.

102. Most of the materials and equipment for the factory at Jiangmen were purchased in the mainland. It produced about 1400-1500 kg of ice. Yu received about HK$10,000,000 from the sale of this ice. Lee Chau Ping's 66.6% share of the profit from the Jiangmen factory would have been about $20,000,000.

At Shilong

103. Yu said that Lee Chau Ping spoke to him about problems at the Jiangmen factory. It was very smoky which aroused suspicion, and Ming Ming had secretly sold some of the ice. Lee Chau Ping wanted to get rid of Ming Ming, and she asked Yu to move the factory to another place. She also asked Chan Wai Tong (nicknamed "Li Chai"), Wong Moon Chi and Wong Pui to help. Yu said it was Wong Moon Chi who found the factory in Shilong.

104. Chan Wai Tong arranged for the equipment and one ton of chemicals to be moved from the Jiangmen factory to Shilong. The factory was set up in about July-August 1991. Lee Chau Ping taught the workers how to make ice. Yu said Lee Chau Ping and he visited the factory about 3-4 times. Later he took over running the Shilong factory, including buying equipment and materials. There were difficulties in obtaining suitable equipment and materials in China. Lee Chau Ping purchased them in Hong Kong in PNK's name.

105. Yu arranged for his friend, Chiu Man Song, to smuggle the ice from Shilong to Sha Tau Kok and hand it over to NG Man Shing. He smuggled it to Hong Kong, where it was handed to Tam Wai Hung. Yu had a buyer, Lam Kwok Chan. At first, Lam placed orders for ice with Yu, later, he approached Tam Wai Hung directly. He bought about 500-600 kilogrammes of ice and paid Tam Wai Hung in cash. If Lam placed an order for more than 30 kilogrammes of ice, Tam Wai Hung would notify Yu. Later, Lee Chau Ping asked Lam to carry ice to the Philippines to hand it to her buyer there. He was paid $7,000 per kilogramme for doing this.

106. Yu said that the Shilong factory produced about 500 kg of ice in the first one or two months of operation, Lee Chau Ping and he shared the profits equally. They agreed to give 3% of the ice to Wong Pui, 3% to another and 6% to Chan Wai Tong. After paying expenses, he earned about $2,000,000 from the sale of his share of the ice made at Shilong. Lee Chau Ping's share of the profits would have been about $4,000,000.

At Taixu

107. Yu then had a disagreement over money with Chan Wai Tong, he told Lee Chau Ping that she should look for another factory.

108. Yu said that Chiu Man Song suggested going to his home town in Taixu, Fuzhou. Chiu found a place in Taixu, and the factory in Shilong was closed. Chiu employed the workers at the factory and Lee Chau Ping taught them how to make ice. Once it was operational, Lee Chau-ping purchased one ton of materials from Ming Ming. The factory produced about 500 kg of ice from these.

109. Lee Chau Ping and Yau Cho Yick were responsible for transporting the ice from the factory by boat.

110. Chiu Man Song and another worker at the factory, Yu Chin Pang, received 15% of ice made at Taixu. Yu said he and Lee Chau Ping shared the profits equally, he got about $3,000,000, her share would also have been about $3,000,000.

111. Yu said that subsequently, "Siu-Ko", the officer-in-charge of Public Security Bureau office in Taixu changed, and there were complaints about the smell from the factory.

At Longmen Village

112. Chiu Man Song suggested moving the factory to a factory in Changle, Xian. He and "Siu-Ko" were from that village. Yu inspected the place and asked Chiu to build the factory. The equipment from the Taixu factory was moved to Longmen.

113. Lee Chau Ping came to the factory and taught the workers how to manufacture ice. At first, they were unsuccessful and there was a lot of smoke. Lee Chau Ping asked her friend, Yung So Chat, ("Ah Kwok"), a Thai, for technical assistance. This worked and the factory made 1000 kg of ice from about two tons of raw material. Public Security Bureau officers found about 300 kilogrammes of this when they raided the factory. About 700 kilogrammes of ice was sold.

114. Yu and Lee Chau Ping were to have shared the profits equally, but Yu didn't receive his share because he was arrested in September 1992. Yu estimated that Lee Chau Ping's net profit from the ice sold to be about $10,000,000.

At Zhanggang

115. During the time ice was being made at Longmen Village, Yu set up another ice factory in Zhanggang in a former salt factory. He said this factory only made ice up to the first stage of the manufacturing process.

The involvement of Chiu Pak Wing

116. Chiu Pak Wing had been a drug trafficker since 1988. He transported ice from Hong Kong to the Philippines for sale there.

117. In November 1989 he was introduced to Peter Chan ("Chan"). They gambled together and Chan borrowed money from Chiu. Chan told Chiu that he had a friend, "Ah Chi", in Hong Kong who could repay the money owed and supply him with ice.

118. In December 1989, after Chiu returned to Hong Kong, Wong Moon Chi, also known as "Ah Chi", called him and said he was Chan's friend. They met at the '123 Restaurant' in Mongkok. Chiu asked for repayment of the money Chan owed him; Wong said he would be repaid. Chiu told Wong he could sell 30 to 40 kilogrammes of ice in the Philippines every month. Wong said his syndicate could supply it and his boss "Ah Che" would talk to Chiu. When Chiu returned home at midnight Wong called him and told him to go to the Pok Hong Restaurant, Shatin, that day. Chiu went to the restaurant and met Wong who took him to a table where Lee Chau Ping and a man were seated. She was introduced to Chiu as "Ah Che" and gave Chiu the money Chan owed him. He told her that he needed 30 to 40 kilogrammes of ice a month, but the price had to be low and the ice of good quality. Lee Chau Ping said that she could meet his needs as she had a factory in China. She said she transported "goods" to the Philippines and Japan and buyers found her ice was good. She said she could supply any quantity of ice at HK$29,000 per kilogramme.

Charges 1 and 2 warrant dated 11 December 1992.

119. About two days later Chiu picked up about 30 grammes of ice from Wong as a sample given by Lee Chau Ping. He took it home, tested it and found it to be good quality ice. He confirmed this with Wong and said he would order an initial 10 kilogrammes.

Charges 3 and 4

120. In mid-January 1990 Chiu met Wong to discuss the first order. They drove to the Chuk Yuen Estate with an unknown man. He left the car and returned with a bag that he put in the boot of Chiu's car. Chiu examined the ice inside the bag and handed HK$290,000 to Wong. Packed within the 10 kilogrammes of ice were paper bags of silica gel. Chiu took the ice to the Philippines in a karaoke machine and handed it to P.K. Yuen.

Charges 5 and 6

121. In March 1990 Chiu placed a second order for 10 kilogrammes of ice with Ah Chi. Chiu parked his car in Middle Road Carpark, Tsimshatsui, and gave the parking permit, the car key and HK$290,000 to Ah Chi. The next day Ah Chi called Chiu and told him where his car was. He went there, inside the car's boot he found a bag containing ice. He took the ice to the Philippines and gave it to P.K. Yuen.

122. After this transaction, there was a period of six months during which Chiu had no transactions with Ah Chi.

Charges 7 and 8

123. In October 1990 Chiu telephoned Wong to arrange a third order of 10 kilogrammes of ice for HK$290,000. Chiu parked his car in the Energy Plaza Car Park and handed Wong the keys and $290,000. The next day Wong called and told him to pick up his car at the Middle Road Car Park. Chiu took the ice to the Philippines in a karaoke machine and gave it to P.K. Yuen.

Charges 9 and 10

124. In October 1990, shortly after the third order, Chiu called Wong and asked for more ice. He met Wong at the Energy Plaza and gave him HK$290,000 and the car keys. The next morning Wong called and said that the car was at Middle Road Car Park. Inside the boot of the car was a black bag with 10 packets of ice. Chiu hid the ice in a karaoke machine and took it to the Philippines where he gave it to P.K. Yuen.

Charges 11 and 12

125. In late October 1990 Chiu phoned Wong to place a fifth order of 10 kilogrammes of ice. Wong did not answer the call and Chiu left a message. Later, Lee Chau Ping called Chiu and said that she would deal with this transaction as Wong was not in Hong Kong. At an arranged time and place, Chiu met Lee Chau Ping and gave her HK$290,000, the car keys and the parking permit. The next day Lee Chau Ping telephoned Chiu and told him where the car was. In it were 10 packets of ice packed in an identical manner to those in the earlier transactions with Wong. Later, Lee Chau Ping telephoned Chiu and asked if things were all right. Chiu hid the ice in a karaoke machine and took it to the Philippines.

Charges 13 and 14

126. In mid-January 1991 Chiu telephoned Ah Chi and placed a sixth order for 20 kilogrammes of ice. Later, Lee Chau Ping called Chiu and arranged a meeting at Hotel Nikko in Hong Kong. Chiu parked his car at Middle Road Car Park and took a taxi to the hotel. There he gave Lee Chau Ping a manila envelope containing HK$580,000, the car keys and the parking permit. During their discussion, Lee Chau Ping offered to supply ice directly to Chiu in the Philippines at the rate of 100 kilogrammes per month at a price of HK$42,000 per kilogramme.

127. The next day Lee Chau Ping called Chiu telling him where his car was. Chiu picked up the car and found 20 packets of ice in two black bags inside it. The ice was shipped in the usual manner to the Philippines.

Charges 15 and 16

128. In March 1991 Chiu ordered a seventh shipment of ice. He told Lee Chau Ping he wanted 10 kilogrammes on credit because he didn't have money. Later, Lee Chau Ping met Chiu at the Energy Plaza and collected his car keys and parking permit. She gave him her bank account number and her surname and agreed that he could remit the purchase price to her from the Philippines. The next morning she phoned him and said his car was at the Middle Road Car Park. Inside the boot of the car was a black bag containing ice. Chiu took it to the Philippines and there remitted HK$290,000 to Lee Chau Ping's bank account.

Charges 17 and 18

129. In May 1991 Chiu phoned Wong to place an eighth order for 10 kilogrammes of ice. Wong met Chiu and collected the money and the car keys. The next day, 10 kilogrammes of ice were transferred in the same manner as before. Chiu hid the ice in a karaoke machine and took it to the Philippines, where he handed it to P.K. Yuen.

Charges 19 and 20

130. On 20 June 1991 CHIU called Ah Chi to place the ninth order for 10 kilogrammes of ice. Ah Chi met Chiu at Middle Road Car Park and collected the money, the car key and parking permit. In the afternoon of 21 June 1991 Chiu went to Middle Road car park and met Ah Chi. They examined the ice in the boot of the car. Chiu took the ice home and packed it in a karaoke machine. Later that day the Police arrested him.

131. Yu Yem Kin said that Wong Moon Chi purchased ice from Lee Chau Ping and him.

Shipments of ice to the Philippines

132. In early 1991 PW 2, Yau Cho Yick, met Lee Chau Ping in Aberdeen. They had known each other years' before. He told her that he had a fishing boat and could carry goods and asked her if she had any business for him. Yau's partner in the boat was So Leung. She told him to visit her office in Guangzhou City. He went there in mid-1991 and met Lee Chau Ping and Yu Yem Kin. Lee Chau Ping said Yu was her partner.

133. In early 1992 Lee Chau Ping asked him to transport ice for her from China by sea, she would pay him $2,000 per kilogramme. Yau refused, because he did not want to take the risk.

134. Between April and July 1992 Yau moved goods such as taps, light bulbs, and plastic basins from PNK's offices to Lee Chau Ping's factories in China.

135. Around May 1992 Lee Chau Ping told Yau to carry "raw materials" from China to waters near the Philippines. He asked So to take their fishing boat to Gangkou, China. There Lee Chau Ping's associates, Ching Chung Ying and Ah Fei, loaded four fruit boxes onto the boat. So sailed to the Philippines with Ah Fei on board supervising the trip. They planned to hand the boxes to another vessel at sea off the Philippines. The boat arrived at the destination and stayed there for three days, but Ah Fei could not contact the other vessel by radio. They returned to Gangkou and the four boxes were returned to Ching Chung Ying and So returned to Hong Kong.

136. Between May-June 1992, S0 made three attempts to deliver the boxes to vessels at sea off the Philippines. On the fourth attempt, the other vessel arrived and picked up the boxes. During the transfer four packages fell into the sea but were retrieved. So asked Ah Fei what was inside the packages, he said it was ice and the total quantity was about 100 kilogrammes.

137. Yu Yem Kin said that he paid Yau $50,000 for making these trips to the Philippines.

138. In August 1992 Lee Chau Ping telephoned Yau Cho Yick and asked him to transport "raw materials" and "finished products" from Fuzhou City to a vessel at sea. Yau knew that by "finished products" she meant ice. He learnt from "Ah Ying", Lee's associate in Fuzhou, that there were two tons of ephedrine and 310 kilogrammes of ice. In September 1992, on Yau's instruction, So went to Fuzhou City to hire a boat to transport the ice from Fuzhou City to Xisha. While he was in Fuzhou City Ching Chung Ying, another of Lee's associates told him, that the Public Security Bureau was watching him (Ching). So told Yau about this and then went to Gangkou from where he returned to Hong Kong by boat. On returning to Hong Kong, on 29 September 1992, he was arrested.

Arrests and Searches

139. On 25 May 1992 Lee Chau Ping and her family left Hong Kong and immigrated to Canada. After she arrived in Canada she telephoned Hui Hoi Wah and told her that she wanted to wind-up PNK. She told Hui to call Yu Yem Kin concerning the disposal of the 15 kilogrammes of palladium chloride stored in PNK's offices. Yu told Hui to give the palladium chloride to Tam Wai Hung.

140. In late May 1992 Lai Chi Ming ("Ming Ming") was arrested in the mainland.

141. On 19 May 1992 Public Security Bureau officers in Jiangmen City, searched the factory in Jiangmen. They arrested a number of people, and seized 112.9 kilogrammes of ice and chemicals, including ephedrine. On 28 August a sample of 250 grammes was analysed at the Criminal Scientific Technology Identification Section, of the Public Security Bureau, the analysis confirmed it to be ice.

142. On 19 August 1992 Narcotics Bureau officers went to Jiangmen and took photographs of the factory and the ice seized by the Public Security Bureau. The photographs were shown to Ho Tak Ching, who worked for Johnson Matthey. She recognized the containers of palladium chloride to be Johnson Matthey's products. Chiu Lap Man, who worked for Kou Hing Hong Scientific Supplies Ltd. recognized the laboratory equipment as being that sold by Kou Hing Hong Scientific Supplies Ltd. to PNK.

143. The photographs were also shown to Yu Yem Kin. He said :

1. photograph no. 4 - shows the steel bucket used after the first manufacturing process, ephedrine, palladium chloride and hydrogen were put in the bucket;

2. photograph no. 26 - shows light bulbs used to dry the ice;

3. photograph 31 - shows the vacuum pump purchased from Hong Kong Scientific Company, and glass bottles similar to those purchased from Kau Hing Scientific Company; and

4. photograph no. 35 - shows test papers purchased from Kau Hing Scientific Equipment.

144. On 24 August 1992 Narcotics Bureau officers searched PNK's office and took photographs and seized a bundle of documents containing information on different kinds of chemicals and chemical equipment. The office was abandoned. Yu Yem Kin was shown these documents, he said they were records of expenses for purchasing materials for the manufacture of ice at the Jiangmen factory.

145. On 9 September 1992, Narcotics Bureau officers searched Wong Moon Chi's residence at Prince Edward Road, and seized two invoices for the purchase of a refrigerator and chemicals, including hydrochloric acid, sodium hydrochloride, sodium hydroxide and sodium chloride. All these chemicals are used to manufacture ice.

146. On 30 September 1992, Narcotics Bureau officers searched Hui Hoi Wah's flat in Hong Kong and four invoices sent by Kou Hing Scientifc Supplied Ltd. to PNK between 4 March 1992 and 21 May 1992, and PNK's Cash Book.

147. On 30 September 1992, acting upon the information provided by Narcotics Bureau, Public Security Bureau officers searched the abandoned factory at Longmen village. They found five refrigerators, a generator, four ventilation fans, 31 boxes of ice; each containing 10 packets, 140 boxes of ephedrine, an electronic scale and a sealing machine. On 1 October 1992 they searched the factory at Zhanggang and found a quantity of ice and ephedrine.

148. On 6 November 1992 NB officers searched PNK's office for the second time. They found photographs of Yu Yem Kin, 16 chemistry books, scales, and four sheets of technical notes. The Government Chemist said these describe the process of converting ephedrine into ice.

149. Yu Yem Kin was shown the notes and said they were the formula for manufacturing ice that he had obtained from the Taiwanese prisoner in Japan and later given to Lee Chau Ping.

150. On 24 November 1992 Narcotics Bureau officers went to Fuzhou City to investigate Lee Chau Ping's case and took photographs of the exhibits and the ice seized by the Public Security Bureau. Yu Yem Kin was shown these, he said that :

1. photograph 3 showed bottles purchased from Kau Hing Scientific Equipments,

2. photographs 5-8 showed sundries and switches purchased from the Yuen Kee Metal Co,

3. photograph 15 - showed silica gel purchased by PNK in Hong Kong,

4. photograph 16 showed electric light bulbs used to dry ice, and

5. photograph 23 - showed a shaking machine used to shake the steel bucket after chemicals were added.

Tam Wai Hung's escape

151. On 28 September 1992 Tam Wai Hung telephoned Au Keung Wah, and said that he was in trouble and had to leave Hong Kong.

152. On 29 September 1992 Narcotics Bureau officers searched Tam Wai Hung's flat at A, 7/F, Block 4, Grandeur Villa, Yau Yat Chuen, Kowloon. Inside were Tam Wai Hung's estranged wife, Tsang Pui Sheung, and two other people, Tam was not there. During the search of the premises invoices and receipts from Kou Hing Hong Scientific Supplies Ltd. were found.

Lee Chau Ping's escape

153. On 14 September 1992 Narcotics Bureau officers searched Yu Yem Kin's residence and on 21 September 1992 he was arrested in Hong Kong.

154. On 21 September 1992 Hui Hoi Wah visited Lee Chau Ping in Vancouver. Hui intended to return to Hong Kong on 29 September 1992.

155. On 21 September 1992, in Vancouver (22 September in Hong Kong), Lee Chau Ping received a telephone call from a lawyer in Hong Kong telling her that Yu Yem Kin had been arrested. Lee Chau Ping told Hui, that PNK was being investigated.

156. On 29 September 1992 Sgt. Hansen and other Royal Canadian Mounted Police officers searched Lee Chau Ping's house at 151 West 45th Avenue, Vancouver, Canada. Lee Chau Ping, her parents, and Hui Hoi Wah, were there. Sgt. Hansen spoke of the seizure of exhibits inside the residence, including a note book and sheets of accounts. Yu Yem Kin identified entries in these. He said that the accounts sheet, were signed "Mei", a name used by Hui Hoi Wah. The message at the bottom was addressed to "Elder Sister", Hui called Lee Chau Ping her elder sister.

157. After the Royal Canadian Mounted Police search on 29 September 1992 Lee Chau Ping was seen to leave the house and not return until the next morning. She told HUI that she needed to go away for a while and told Hui to go to Thailand.

158. Sgt. Hansen said that on 30 September 1992 Royal Canadian Mounted Police surveillance officers observed Lee Chau Ping in Vancouver. She visited a bank safety deposit box in the Canadian Imperial Bank of Commerce on Main Street and a law office in Chinatown.

159. On or about 1 October 1992 Hui, in Vancouver called her husband, in Hong Kong. He told her that if she returned to Hong Kong she would be arrested.

160. Sgt. Hansen said that when he conducted a second search of Lee Chau Ping's house on 7 October 1992, her parents and Hui were present. Her mother said that on 29 September the day after the previous search Lee had left the house saying she was going to get groceries, she never returned.

161. On 7 or 8 October 1992 Hui went to Thailand and met Lee Chau Ping. Lee Chau Ping told her that Ming Ming ("LAI Chi Ming") had been arrested in China for manufacturing ice. Lee Chau Ping told Hui that when Yu Yem Kin was in prison in Japan he obtained the formula for making ice and she had taught the formula to Ming Ming in Jiangmen, and to people in Fuzhou City.

162. Hui also said that at the end of 1992, when she was in Singapore, she had watched a television program about ice and seen Ming Ming featured in the programme. Lee Chau Ping had then telephoned her and told her that she, Lee Chau Ping, had to go because everything had been exposed.

Immigration Department records

163. Immigration Department records for the period 1 January 1987 to 31 December 1997 show that Lee Chau Ping and Tam Wai Hung frequently traveled to the mainland and Macau and that they traveled together on seven occasions between 6 September 1990 to 10 February 1992.

Determination

164. From the above, I am satisfied that the evidence is sufficient to prove on a balance of probabilities that Lee Chau Ping could have been convicted of the drug trafficking offences set out in the two warrants of arrest against her. Likewise, I am satisfied that the evidence is sufficient to prove on a balance of probabilities that Tam Wai Hung could have been convicted of the two drug trafficking offences set out in the warrant of arrest against him.

That the defendants benefited from drug trafficking

Definitions

165. As to the eighth condition, s.3(3) refers to "drug trafficking" not to "drug trafficking offence of which he was convicted". "Drug trafficking" is defined in s.2 to mean :

"doing or being concerned in, whether in Hong Kong or elsewhere, any act constituting a 'drug trafficking offence', or an offence punishable under a corresponding law, committed in Hong Kong, as well as an offence committed elsewhere."

166. Therefore, my determination of whether Lee Chau Ping and Tam Wai Hung benefited from drug trafficking is not confined to the proceeds arising from the particular offences of which each could have been convicted. For which I rely on the English authorities of R. v. Dickens [1990] 2 WLR 1385 (CA) and R. v. Tredwen [1994] 99 CAR 154 (CA) at 157. Though in these applications the distinction is not relevant since their benefits relate to the offences of which they are accused.

167. Section 4(1) defines a person's proceeds of drug trafficking :

"4(1). For the purposes of this Ordinance -

(a) a person's proceeds of drug trafficking are -

(i) any payments or other rewards received by him at any time...in connection with drug trafficking carried on by him or another; and

(ii) any property derived or realised, directly or indirectly, by him from any of the payments or other rewards; and

(b) the value of the persons proceeds of drug trafficking is the aggregate of the values of -

(i) the payments or other rewards; and

(ii)that property."

168. Under s.3(4) a person who has at anytime received any payment or other reward in connection with drug trafficking carried on by him or another has benefited from drug trafficking.

Assumptions

169. For the purpose of determining whether Lee Chau Ping and Tam Wai Hung benefited from drug trafficking, and if they did, of assessing the value of their proceeds of drug trafficking, I may make the assumptions contained in s.4(3), namely :

"(a) that any property appearing to the court -

(1) to have been held by him at any time

(A) since his conviction;

(B) where section 3(1)(a)(ii) [person absconded or died] is applicable, since the application was made for a confiscation order in his case; or

(ii) to have been transferred to him at any time since the beginning of the period of 6 years ending when the proceedings were instituted against him -

was received by him, at the earliest time at which he appears to the court to have held it, as his proceeds of drug trafficking.

(b) that any expenditure of his since the beginning of that period was met out of his proceeds of drug trafficking; and

(c) that, for the purpose of valuing any property received or assumed to have been received by him at any time as his proceeds of drug trafficking, he received the property free of any other interests in it."

170. The burden is upon the defendant to prove, on a balance of probabilities, that the assumptions are incorrect. In these applications, since Lee Chau Ping and Tam Wai Hung are not present to rebut the assumptions, they must stand. However, it is not necessary for me to rely solely upon the assumptions since I have Yu Yem Kin's evidence of Lee Chau Ping's and Tam Wai Hung's profits from drug trafficking.

Standard of Proof

171. Under s.3(12) the standard of proof required to determine whether person benefited from drug trafficking is a balance of probabilities. [seeR. v. Dickens at p.1388]

Benefit

Lee Chau Ping

172. The following is a summary of the estimated quantity of ice manufactured at the various ice factories set up by Lee Chau Ping and Yu Yem Kin, and the net profit Yu claimed to have received :

173. Yu did not share in the proceeds of the 1,000 kg of ice manufactured at the factory in Longmen Village because he was arrested in September 1992. According to Yu, Lee Chau Ping's net profit from the 700 kg of ice produced and disposed of by this factory before it was raided by the Public Security Bureau, was $10,000,000.

174. Based upon Yu's evidence, Lee Chau Ping's estimated profit from manufacturing ice is :

Factory Location	%Share Of Profit	Net Proceeds
1st ice factory Jiangmen	2/3	$20,000,000
2nd ice factory Shilong	1/2	$4,000,000
3rd ice factory Taixu	1/2	$3,000,000
4th ice factory Longmen village	whole	$10,000,000
Total		$37,000,000

The 5th ice factory at Zhanggang, failed to produce any ice suitable for sale.

Tam Wai Hung

175. Yu said Tam Wai Hung paid Lee Chau Ping and him about $23,000 per kilogramme, and Tam sold it for about $30,000 per kilogramme. Yu said that Tam purchased about 2,000 kilogrammes of ice from them. Based on that, Tam's estimated net proceeds of drug trafficking would be at least ($30,000 - $23,000) x 2,000 kg = $14,000,000.

176. I am satisfied that Yu Yem Kin's evidence shows on a balance of probabilities that Lee Chau Ping and Tam Wai Hung benefited from drug trafficking.

The value of the benefit

177. As may be seen from the preceding paragraphs, the information before me shows that Lee Chau Ping's proceeds of drug trafficking was approximately $37,000,000 and Tam Wai Hung's approximately $14,000,000.

The amounts of the confiscation orders

178. I must now, under s.3(5) of the Ordinance determine in accordance with s.6 the amount to be recovered by means of confiscation orders.

179. Section 6(1) provides that the amount to be recovered under the confiscation order is the value of the person's proceeds of drug trafficking. Or, under s.6(3), if the amount that might be realised at the time of the confiscation order is made is less than the amount the Court assesses to be the value of his proceeds of drug trafficking, then the amount to be recovered is :

"(a) the amount appearing to the court to be so realised, or

(b) a nominal amount, where it appears to the court (on the information available to it at the time) that the amount that might be so realised is nil."

180. The onus is upon the defendant to prove on a balance of probabilities under s.6(3) that the amount that might be realised is less than the value of his proceeds of drug trafficking. See: R. v. Ko Chi Yuen [1993] 2 HKCLR 101, at p.111. In these applications Lee Chau Ping and Tam Wai Hung are not present to take advantage of s.6(3) and to seek to prove that the amounts that might be realised are less than their proceeds of drug trafficking.

181. There are two means for calculating the amounts of the confiscation orders. Under s.6(1) I can make the orders in the respective amounts of Lee Chau Ping's and Tam Wai Hung's proceeds of drug trafficking, and issue a certificate under s6(2) of the amounts that might be realised. Alternatively, under s.6(3), I can make the orders for the respective amount that might be realised from the realisation of Lee Chau Ping's and Tam Wai Hung's property and issue a certificate under s.6(2) of the amounts that might be realised. Mr. Blanchflower submits that I should make the orders under s.6(1) as Lee Chau Ping and Tam Wai Hung are unable to satisfy me that the amounts that might be realised is less than their proceeds of drug trafficking.

Amounts that might be realised

Definitions

182. For purposes of a certificate made under s.6(2) the amount that might be realised at the time a confiscation order is made against the person is defined in s.7(3) to mean :

"(a) the total of the values at that time of all the realisable property held by the person, less

(b) where there are obligations having priority at that time, the total amounts payable in pursuance of such obligations, together with the total of the values at that time of all gifts caught by this Ordinance."

183. Section 7(7) defines when an obligation has priority where court orders have been made against the person. It reads :

"(7) For the purposes of subsection (3), an obligation has priority at any time if it is an obligation of the defendant to

(a) pay an amount due in respect of a fine, or other order of a court, imposed or made on conviction of an offence, where the fine was imposed or order made before the confiscation order; or

(b) pay any sum which, if the defendant had been adjudged bankrupt or was being wound up, would be among the preferential debts."

184. Central to the determination of the amounts that might be realised is the definition of "realisable property" in s.7(1), the definition of that term is :

"(a) any property held by the defendant;

(b) any property held by a person to whom the defendant has directly or indirectly made a gift caught by this Ordinance; and

(c) any property that is subject to the effective control of the defendant."

"Property" is defined in s.2 to include both movable and immovable property within the meaning of s.3 of the Interpretation and General Clauses Ordinance.

Lee Chau Ping

185. I turn now to Lee Chau Ping's property.

186. Firstly there is the property she held in her own name. Section 7(1)(a) relates to this and for the purposes of that sub-section, s.2(7) provides that property is 'held" by any person if he holds any interest in it. Under s.2(1) an "interest" in relation to property, includes a right. The sum of $409,242,73 is held by the Receiver's in a bank account, together with the accrued interest, this represents Lee Chau Ping's property and is an amount that can be realised. [s.5 statement, p.79 para.329]

Companies

187. Secondly there is the property held in various companies she controlled. The evidence and information before me and particularly that of Mr Mark Bowra, who sets out the relationship between Lee Chau Ping and these companies shows that PNK Development Ltd., Newpark Investment Ltd., Wah Luen Hong, King Development Ltd., Youthtown Investment Ltd., and Gooders Trading Ltd., were all owned or controlled by Lee Chau Ping.

188. The general common law principle is that a company is a separate legal entity and must be treated like any other independent person with its own rights and liabilities distinct from those of its shareholders. See : Salmon v. Salmon & Co [1897] AC 22 (HL). However, the corporate veil may be lifted if there is a prima facie case that a defendant controlled the company, or that the company has been used for crime and that the company's accounts benefited a defendant. In Re H and others (restraint order : realisable property) [1996] 2 All ER 391, Rose LJ said at p. 402, line A :

"As to the evidence, it provides a prima facie case that the defendants control these companies; that the companies have been used for fraud, in particular the evasion of excise duty on a large scale; that the defendants regard the companies as carrying on a family business, and that company cash has benefited the defendants in substantial amounts."

He concluded at p.402 e

"In all the circumstances, I am entirely satisfied that it is appropriate to lift the corporate veil in this case and to treat the stock in the companies' warehouses and the motor vehicles as property held by the defendants."

189. PNK was principally used for Lee Chau Ping's drug trafficking activities. It was used to purchase equipment and chemicals used to manufacture ice. For example, from October 1989 to April 1992 PNK paid Johnson Matthey $2 million for palladium chloride. Her proceeds from manufacturing and trafficking in ice paid PNK's expenses and she treated PNK's accounts as hers. The other companies were financed from the proceeds of her drug trafficking, and were controlled by her and used for her convenience and profit. I am satisfied that the property belonging to these companies is Lee Chau Ping's property and represent amounts that might be realised.

Gifts

190. Thirdly there are gifts she made to her husband, Cheuk Tak Wah, and to Hui Hoi Wah her so-called "office assistant".

191. A gift is caught under s.7(9) if :

"(a) it was made by the defendant at any time since the beginning of the period of 6 years ending when the proceedings were instituted against him; or

(b) it was made by the defendant at any time and was a gift of property -

(i) received by the defendant in connection with drug trafficking carried on by him or another; or

(ii) which in whole or in part directly or indirectly represented in the defendant's hands property received by him in that connection."

192. The value of a gift caught by the Ordinance is calculated in accordance with the provisions of s.7(5), which provides :

"(5)Subject to subsection (10), references in this Ordinance to the value at any time (referred to in subsection (6) as "the material time") of a gift caught by this Ordinance or of any payment or reward are references to -

(a) the value of the gift, payment or reward to the recipient when he received it adjusted to take account of subsequent changes in the value of money; or

(b) where subsection (6) applies, the value there mentioned, whichever is the greater."

and s.7(10) provides :

'(10) For the purposes of this Ordinance -

(a) the circumstances in which the defendant is to be treated as making a gift include those where he transfers property to another person directly or indirectly for a consideration the value of which is significantly less than the value of the consideration provided by the defendant; and ..."

193. It is not necessary that the gift is still in the possession of the recipient, so long as it comes within s.7(9), see R. v. Dickens (above) at 1392D-1393

Cheuk Tak Wah

194. At pages 79-83 (paras. 332-349), the s.5 statement gives details of the gifts Lee Chau Ping made to her husband Cheuk Tak Wah. For the purposes of s.7(10)(a), I note that on 5 July 1988 one of her limited companies Youthtown Ltd., purchased a flat and car parking space at Dragon Court in Waterloo Road for $870,000 and "sold" it to Cheuk on 22 November 1989 for the same price -$870,000. I am satisfied that Lee Chau Ping made gifts to Cheuk Tak Wah in the sum of $973,909.09 and that this amount might be realised. The value of the gifts she made to Cheuk Tak Wah have increased due to the accrual of interest. Applying s.7(5), the value of those gifts is their present value, not their value when made.

Hui Hoi Wah

195. Lee Chau Ping placed substantial sums of money in the hands of this woman.

196. Under s.7(1)(c) "realisable property" includes property which is subject to the "effective control" of a defendant. Section 7(11) defines what is meant by "effective control" :

"(11) For the purposes of subsection (1) [definition of "realisable property"] -

(a) property, or an interest in property, may be subject to the effective control of the defendant whether or not the defendant has -

(i) a legal or equitable estate or interest in the property; or

(ii) a right, power or privilege in connection with the property;

(b) without limiting the generality of any other provision of this Ordinance, in determining -

(i) whether or not property, or an interest in property, is subject to the effective control of the defendant; or

(ii) whether or not there are grounds to believe that property, or an interest in property, is subject to the effective control of the defendant

regard may be had to -

(A) shareholdings in, debentures over or directorships of a company that has an interest (whether direct or indirect) in the property;

(B) a trust that has a relationship to the property; and

(C) family, domestic and business relationships between person having an interest in the property, or in companies of the kind referred to in sub-paragraph (A) or trusts of the kind referred to in sub-paragraph (B), and other persons."

197. There can be no doubt that Hui's property which is now subject to restraint was under Lee Chau Ping's effective control [s.5 statement, pp.87-90]. The evidence shows that after Lee Chau Ping emigrated to Canada on 25 May 1992, PNK Ltd. was wound down. Hui effectively became Lee Chau Ping's "treasurer" in Hong Kong, receiving and dispersing her money, and accounting to Lee for it in Vancouver. This may be seen from the following items of evidence :

198. Hui had two bank accounts, a Hang Seng Bank Savings Account No. 329-6-020609, which was opened on 28 January 1992 EX 277/1/2885-2886 and a Hang Seng Bank Flexiphone Account No. 329-043160-888, which was opened 20 July 1992 EX 277/1/2887-2898.

199. The Royal Canadian Mounted seized from Lee Chau Ping's house in Vancouver :

1. EX 277/1/2884, 2894-2898, statements of Hui's Hang Seng Bank Accounts.

2. EX 26/B/488-493 a "Campus" brand notebook.

3. EX 278/J/3257 a Hang Seng Bank Customer's Receipt dated 1 July 1992 showing a transfer of CND$100,000 (HK$644,700) from HUI to LEE Chau-ping. This was found in her purse.

4. EX 295/J/3331-3333 a hand written accounting sheet, which was found in purple folder in her bedroom.

5. EX 296/J/3334 a Hang Seng Bank Customer's Receipt dated 12 August 1992, showing a transfer of CDN$20,000 (HK$130,440) from Hui to Lee.

6. EX 297/J/3335-3336 a copy of the front and back of a Hang Seng Bank cheque no. 092733 for $150,000 issued by Yu Wing Kwong

200. Hui's Hang Seng Bank Account No. 329-6-020609 shows the following transactions :

1. A deposit of $900,000 on 30 June 1992. Yu Yem Kin said that he paid this money into the account. The figure is shown in the "Campus" notebook as "30/6 paid Hui HK nine hundred thousand" EX 26/B/489. It is also shown in the Accounting Sheet as "30/6 Yu paid HK dollars" [EX 295/J/3332].

2. A withdrawal on 1 July 1992 of $644,800, this was for a transfer of CND$100,000 (HK$644,700 plus $100 cable charge) from Hui to Lee EX293/J/3324/6. The copy of the Customer's Receipt found in Lee's house relates to this transfer. EX 278/J/3257. And the transfer is shown in the Accounting Sheet as "1/7 telegraphic transfer CDN$100,000" [EX 295/J/3332]. Sgt. Hansen said that this transfer was used to purchase Lee Chau Ping's house at 151 West 45th Avenue, Vancouver on 16 July 1992.

3. Withdrawals of $l5,000 and $31,500 on 1 July 1992. These are recorded in the Accounting Sheet as "Mr Yu withdraw interest on behalf of Tung" and "Pay for Fat Boy's 3 air tickets" [EX 295/J/3332].

4. Deposits on 17 July 1992, these came from Tung Hon Ling, Chau Chi Wing (Tung's husband) and Lai Kei Beauty House. In her statement, Tung said that sometimes Hui gave her money to deposit into PNK's bank account, Tung also said that Lee was a customer of Lai Kei Beauty House, her beauty salon.

5. A deposit on 17 July 1992 of $250,000, this deposit of a cheque drawn on TUNG Hon-ling's Hang Seng Bank account.

201. Hui's Hang Seng Bank Flexiphone Account No. 043160-888 shows the following transactions :

1. A transfer on 20 July 1992 of $975,000 to a time deposit account. This sum was transferred from Hui's Hang Seng Bank Account no. 329-6-020609 to her Hang Seng Flexiphone Account and then deposited into the time deposit as CDN$l50,000 [EX 277/1/2886; 2895 (b)]. The time deposit is recorded in the Accounting Sheet as "20/7 fixed term 150,000 CDN" [EX 295/J/3332].

2. A deposit of $150,000 on 1 September 1992. A cheque drawn on the account of Yu Wing Kwong dated 28 or 29 August 1992 for $150,000 has endorsed on its reverse "329-043160-888", the number of the Flexiphone Account, [EX 297/J/3335-3336]. Yu Yem Kin said that Yu Wing Kwong borrowed $200,000 - $300,000 from Lee Chau Ping and that the cheque was a part repayment to her.

3. A withdrawal of $130,440 on 12 August 1992, this withdrawal came after cash deposits of $130,440 made into the savings account [EX 277/1/2894] were transferred to another account. On 12 August HUI transferred CDN$20,000 (HK$130,440 plus $100 cable charges) to Lee Chau Ping. The transfer is recorded in the Accounting Sheet as "12/8 telegraphic transfer 20,000" [EX 296/J/3334 & EX 295/J/3333]. Yu Yem Kin said that this represented a remittance to Lee Chau-ping after he sold his flat. This transfer is recorded in the "Campus" Notebook as "Remittance (Canada) twenty thousand (Yu)" [EX 26/B/491]. The copy of the Customer's Receipt found in Lee Chau Ping's bedroom relates to this transfer. Sgt. Hansen said that this sum was used to pay Lee Chau Ping's mortgage payments on her house in Vancouver.

Tam Wai Hung

202. I now turn to Tam Wai Hung's property, this comprises of monies held by the receivers in a bank account amounting to $691,138.24, together with accrued interest. Property found in safe deposit box no. 2733 maintained in Tam Wai Hung's name at the Standard Chartered Bank's Shek Kip Mei branch includes :

(1) Two Dupont cigarrette lighters.

(2) A gold plate with a dragon pattern.

(3) Four pieces of jade.

(4) A coin.

(5) A number of low denomination banknotes in various currencies.

(6) A private car, a Mitsubishi station wagon, registered number EF 122.

Certificate

203. Section 6(2) provides that if I am satisfied as to any matter relevant for determining the amount that might be realised at the time of the confiscation order is made, I may issue a certificate giving my opinion as to the matters concerned. And must do so if I am satisfied that the amount that might be realised at the time of the confiscation order is made is less than the amount the court assesses to be the value of his proceeds of drug trafficking. The latter part of s.6(2) is only relevant where a defendant satisfies the court that the value of his property is less than his benefit from drug trafficking, and is not applicable to these applications.

204. I am satisfied that I should issue the certificates and make the confiscation orders requested by the Secretary for Justice.

205. In Lee Chau Ping's case the property that is to be realised and included in the certificate is summarised below. The amounts in the bank accounts include accrued interest.

206. In Tam Wai Hung's case the property that is to be realised and included in the certificate is summarised below. The amount in the bank account includes accrued interest.

(1)	Bank balance	$691,138.24
(2)	The Property found in safe deposit box no. 2733 at the Standard Chartered Bank's Shek Kip Mei Branch.
(3)	The private car, registered number EF 122.