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

CACV 125/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 125 OF 2013

(ON APPEAL FROM HCAL NO. 74 OF 2013)

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BETWEEN

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Hon Stock VP (giving the Reasons of the Court):

Introduction

1.  This is an expedited appeal from a judgment of Godfrey Lam J on 5 June 2013 whereby he refused an application, heard inter partes, for leave to apply for judicial review.

2.  On 5 July 2013 we dismissed the appeal and said we would give reasons later.  These are our reasons.

The background

3.  The decision under challenge was that of the Secretary for Justice of 15 April 2013 pursuant to s 12(8) of the Mutual Legal Assistance in Criminal Matters Ordinance, Cap 525 (the Ordinance) that copies of documents seized from the applicants on 18 January 2007 be sent to the appropriate authorities of the Italian Republic.

4.  The case concerns a Letter of Request dated 10 July 2006 from the public prosecutor in Milan for assistance in a number of forms including a search of the premises of some of the applicants in this case.

5.  The history of the case is summarised with admirable clarity in the judgment below[1] and given the narrow compass within which the appeal falls we do not propose to deal in detail with that history.

6.  It suffices for present purposes to say that the Letter of Request, which is dated 10 July 2006 and which is at the heart of the present application for leave to apply for judicial review, described in considerable detail the background of two closely interlinked cases.  The first case was said to involve serious fraud including money-laundering committed in the period 1995 to 1999 and the second was an investigation concerning such offences committed “in more recent times.”

7.  The background common to the two cases is constituted by the activities of one Frank Agrama who purchased broadcasting rights from Paramount in the USA and sold them on at grossly inflated prices to companies under the control of Silvio Berlusconi in Italy, which companies included a public company called Mediaset.  This led to an indictment of Agrama and Berlusconi in the Mediaset proceedings by which the defendants were accused of misappropriation, false accounting, tax fraud and money laundering.  Those proceedings concluded in October 2012 when Agrama, Berlusconi and two others were convicted of the offence of tax fraud in relation to the years 2002 and 2003; whereas the limitation periods for the other offences charged expired during the trial.

The Letter of request

8.  Having recited the history of that case, the Letter stated that the Request was made in the context of a “new investigation” whereby “the offences of misappropriation of Mediaset financial resources and the subsequent laundering of these funds have been assumed”; and that the new investigation was directed at ascertaining the effects of the earlier fraud on and in relation to an allied company called Mediatrade and at whom was involved in and after the year 2000 in money-laundering arising from the Mediaset misappropriation.  The first and second applicants are shareholders and directors of companies (the other applicants) said to have facilitated the laundering of criminal proceeds.  The Letter said:  

“In the new investigation, in the context of which this request has been made, the offences of misappropriation of Mediaset financial resources and the subsequent laundering of these funds had been assumed. The investigation was initiated very recently and it is not yet possible to calculate the effects of fraud on the tax returns and balance sheets of Mediatrade [and others].”

9.  The public prosecutor, Mr De Pasquale, then recited the relevant provisions of Italian law including provisions relating to the offence of money laundering.

10.  Under the heading “Purpose of the request” he said:

“We have received from the Italian FIU information and from the JFIU Hong Kong as to the existence of a bank account in the name of Harmony Gold Ltd … at UBS AG Hong Kong.

The Hong Kong citizens, Paddy Chan Mei Yiu and Katherine Hsu May-chun have been declared the beneficial owners of this account. Frank Agrama has his signature on it.

We have also been informed that huge amounts of funds have recently been deposited onto this account – in particular:

• 15 million US dollars on May 24, 2005

• 15 million US dollars on September 1, 2005

• 10 million US dollars on September 14, 2005

We suspect that these funds come from the Swiss accounts of Harmony Gold and the other Agrama companies at UBS Lugano.

We also consider it likely that there be further bank accounts at UBS AG Hong Kong in the names of the companies Wiltshire Trading, Melchers, Meadowview, Olympus Trading and of Frank Agrama.

The fundamental purpose of this request is that of seizing the sums of money specified above … and any others in existence in other bank accounts in Hong Kong in the names of Wiltshire Trading and Melchers. The sums are in fact the proceeds of the offence of misappropriation of Mediaset Financial Resources. …

It is furthermore necessary to obtain the documentation over the greatest possible time-span of all bank relations opened in the names of companies of individuals traceable to Frank Agrama.

It is necessary to carry out a search of the offices of Paddy Chan Mei Yiu and Katherine Hsu May-chun and to interview them.

…

Paddy Chan and Katherine Hsu have been directors and shareholders of Frank Agram’s (sic) screen companies in Hong Kong, the Netherlands Antilles and in Ireland from time immemorial.”[2]

11.  In supplementary information provided in November 2006, Mr de Pasquale, suggested that Paddy Chan “seems to have been for many years the sort of treasurer for Agrama” and that “the only thing the Hong Kong citizens [the first two applicants] seem to have carried out is the management of the money Agrama get from the fraud.  “It is,” he said “clear the importance of the investigation that is to be carried out in Hong Kong.  With regard to Chan and Hsu May Chun an approach to strategy should be discussed.  The police may ask them whether they accept to release a voluntary statement and only subsequently they should be heard in court.  The question is delicate as it involves points of law (are Chan and Hsu May Chun to be considered mere witnesses or potential suspects?)”.

12.  The Letter of Request asked for assistance in the form of examination on oath or affirmation of some of the applicants; the production of bank documents; a search of the premises of the 1^st and 2^nd applicants’ premises and the 6^th applicant’s office premises, shared by the 4^th and 5^th applicants; and the seizure of funds.

Subsequent events

13.  Pursuant to the relevant statutory provision[3] the Secretary for Justice nominated an authorised officer to apply to a magistrate for a search warrant of the various premises; information was laid before a magistrate in January 2007; the search warrants were granted and a substantial volume of documents were seized.  These documents were delivered into the custody and control of the Commissioner of Police.  These are the documents which the Secretary for Justice has directed to be handed over to the Italian authorities.

14.  Representatives of the Italian prosecutor took part in the searches on 17 January 2007.  The involvement of these representatives led to a number of judicial reviews which were not resolved until November 2012 when the Appeal Committee of the Court of Final Appeal refused the applicants leave to appeal to that body.  It is unnecessary for present purposes to rehearse the details of those proceedings.

15.  The materials seized in the 2007 searches remained in the custody of the Commissioner all the while but eventually, on 15 April 2013, the impugned direction for copies of the documents seized (save those covered by legal professional privilege) to be sent to the central authorities in Italy was made; and these proceedings then commenced.

The statutory provisions

16.  Section 8 of the Ordinance provides as follows:

“(1) A request by a place outside Hong Kong to Hong Kong for assistance in a criminal matter may be made to the Secretary for Justice.

(2) A request under subsection (1) shall be accompanied by-

(a) the name of the authority concerned with the criminal matter to which the request relates;

(b) a description of the nature of the criminal matter (in particular, details of the external offence to which the criminal matter relates) and a statement setting out a summary of the relevant facts and laws;

(c) a description of the purpose of the request and of the nature of the assistance being sought;

(d) details of the procedure that the place outside Hong Kong concerned wishes to be followed by Hong Kong in giving effect to the request, including details of the manner and form in which any information, document or thing is to be supplied to the place pursuant to the request;

(e) a statement setting out the wishes of the place concerning the confidentiality of the request and the reason for those wishes;

(f) details of the period within which the place wishes the request be complied with;

(g) if the request involves a person travelling from Hong Kong to the place, details of allowances to which the person will be entitled, and of the arrangements for accommodation for the person, while the person is in the place pursuant to the request;

(h) a statement setting out the maximum penalty for the external offence to which the criminal matter relates; and

(i) any other information that may assist in giving effect to the request.”

17.  A “criminal matter” is defined by section 2 as:

“(a) an investigation;

(b) a prosecution; or

(c) an ancillary criminal matter.”

18.  An “external offence” (外地罪行) means “an offence against a law of a place outside Hong Kong.”[4]

19.  Section 5(1)(e) of the Ordinance states that :

“(1) A request by a place outside Hong Kong for assistance under this Ordinance shall be refused if, in the opinion of the Secretary for Justice-

…

(e) the request relates to the prosecution of a person for an external offence in a case where the person has been convicted, acquitted or pardoned by a competent court or other authority in the place, or has undergone the punishment provided by the law of that place, in respect of that offence or of another external offence constituted by the same act or omission as that offence;”

20.  Section 12(8) is in the following terms: 

“Where a thing is delivered into the custody and control of the Commissioner under subsection (7), the Commissioner shall arrange for the thing to be kept for a period not exceeding one month from the day on which the thing was seized pending a direction in writing from the Secretary for Justice as to the manner in which the thing is to be dealt with (which may include, subject to subsection (11), a direction that the thing be sent to an appropriate authority of a place outside Hong Kong).”

The challenge below

21.  There were a number of grounds upon which the decision of the Secretary for Justice was challenged.

22.  The first was that an application of section 5(1)(e) of the Ordinance to the facts of the case dictated a refusal to send the papers seized because “at the time of the request the only offence under investigation in the Mediatrade proceedings was the alleged misappropriation by Mr Agrama for the years 2000 – 2002 and the only relevant person investigated in the Mediatrade proceedings was Mr Agrama.  The fact of the acquittal of Mr Agrama on 18 October 2011 in the Mediatrade proceedings therefore rendered it mandatory for the [Secretary for Justice] to refuse the request under section 5(1) of the Ordinance”[5].

23.  The reference to the acquittal of Mr Agrama in the context of the Mediatrade case arises as follows.  The preliminary investigations in that case were concluded in January 2010 and the proceedings split into two: one in Rome and one in Milan.  In the Milan proceedings, Agrama has been acquitted of the offence of misappropriation allegedly committed by him in the years 2000 – 2002, this because of a limitation period; Berlusconi has been acquitted, on the merits, of all charges; but the 1^st and 2^nd applicants (as well as others) have been indicted and their trial is currently in progress in respect of alleged offences of misappropriation (for the years 2004 and 2005), tax fraud and money laundering.  The Rome part of the proceedings have come to an end when the Judge of the Preliminary Hearing decided, on the basis of the statutes of limitation and insufficiency of evidence, not to proceed.[6]

24.  So, it is in effect said by the applicants that since the Letter of Request was directed at an investigation into Mr Agrama’s alleged criminal conduct in the years 2000 to 2002 – and that alone – and since he has been acquitted, that must be the end of the matter, since section 5(1)(e) so dictates.

25.  The judge, quite rightly in our opinion, held the submissions to be wholly untenable, but they form the gravamen of this appeal.  The judge held that it was clear beyond doubt that the request read as a whole related not only to alleged misappropriation by Agrama in 2000 – 2002 “but also to an investigation into offences of tax fraud and money-laundering against Agrama and others for the period from 2000 onwards”[7].

26.  It was also suggested that the investigation to which the public prosecutor referred was not shown to be a criminal investigation under court supervision of the type envisaged by the civil law applicable in Italy and that the judge had interpreted “investigation” too widely.  There is some attempt to revive this complaint too upon this appeal.  The judge – again rightly in our opinion – held that the investigation contemplated by the Ordinance was to be construed in a commonsense way and not defined “by reference to the procedures of the particular foreign jurisdiction that may or may not bear the label ‘investigation’ but is to be given its ordinary meaning, independent of the terminology used in the foreign law.”[8]

27.  The final limb of the application for leave to apply for judicial review with which this appeal is concerned complains that some of the documents seized are not relevant to the Milan limb of the Mediatrade case but were relevant for the Mediaset proceedings and the Rome limb of the Mediatrade proceedings; so that sending them would not be permissible.  The judge rejected this argument and did so on the basis that the public prosecutor said in terms that all the documents seized were relevant to the extant Mediatrade proceedings.  It is now said that that is too flimsy a basis upon which to reject the argument.

This appeal

28.  Counsel for the applicants helpfully crystallised the essence of the appeal in their oral submissions to us.  That essence falls within a narrow compass.

29.  The complaint is this: that the Secretary for Justice ignored what in fact was being investigated by the public prosecutor at the time of the Letter of Request.  The evidence which he is said to have ignored is evidence that what was in fact being investigated was only the alleged offence of misappropriation by Agrama between 2000 to 2002; and since Agrama has been acquitted of that offence, section 5(1)(e) bites, so that the request must be refused and the order for the delivery of the documents seized must then necessarily be set aside.

30.  The evidential basis for this contention – the evidence suggestedly ignored – are two applications filed by the public prosecutor to the relevant judge in the Mediatrade case, one dated 6 April 2006 ( prior to the Letter of Request) and the other dated 20 November 2006 (after the Letter of Request), for an extension of time for the preliminary investigations.  Those extensions are expressly in relation to the case against Agrama for the offence of misappropriation.  That shows, according to the argument, that that was the only offence under investigation at the time of the Letter of Request.  This, it is said, has to be looked at in conjunction with a declaration by an Italian advocate representing the first two applicants, dated 3 December 2012, who suggests that this documentation “represents the only juridical basis of the [letter of request] to the Hong Kong Special Administrative Region” and shows that, undisputedly, “the potential charge being investigated” was “only the one of misappropriation … for the period prior to December 31, 2002.”

31.  This assertion by the advocate was hotly disputed by the public prosecutor who was asked about it by the Secretary for Justice.  The public prosecutor emphasized, by reference to the terms of the Letter of Request itself, that the further investigation referred to in that Letter was not confined to Agrama or limited to the offence of misappropriation from 2000 to 2002 “but also covered misappropriation beyond 2002 and other offences of tax fraud, false accounting and money-laundering against Agrama and other persons from 2000 onwards.”[9]

32.  As for the extension applications, Mr De Pasquale explained that there exists, under Italian law, a requirement for the public prosecutor to make an offence report during the investigative stage which is updated from time to time as enquiries proceed but which register or report “in no way limits the power of the prosecutor to expand the perimeter of investigation beyond the period indicated in the original offence report.”  It is only at the end of the investigative phase that the public prosecutor has precisely to define the charges that will be subject to trial.  That was a stage that was only reached in the Mediatrade proceedings in March 2010.

33.  All of this was considered by the Secretary for Justice, as we see from his letter dated 23 April 2013 addressed to the solicitors acting for the applicants.

34.  Counsel for the applicants was ultimately constrained to contend that what the public prosecutor expressly represented in the Letter of Request as to the width and purpose of the investigation was inaccurate; alternatively, that the Secretary for Justice failed to consider evidence which so suggested.

35.  These contentions were, with respect, wholly without merit.  They simply ignored the terms of the Letter of Request itself, and the supplementary information provided in support of it.  It could not have been more clear from the Letter and the supplementary information that the investigation afoot, in respect of which the assistance of the Hong Kong authorities was requested, was an investigation that went beyond the period 2000 – 2002 and, in particular, was not restricted to the alleged criminality of Mr Agrama; nor solely to the offence of misappropriation.  It is entirely clear that the investigation concerned a range of possible offences, most particularly money-laundering, through the applicant companies apparently controlled by the first and second applicant and that the first and second applicant were potential suspects.  The fact – if it is a fact – that there was some duty to update the register and that that duty was not fulfilled, would hardly mean that there was in truth no wider investigation than that suggested by the register.  And given the public prosecutor’s assurance that his original representations were and remained correct – an assurance backed by a detailed explanation – the acceptance by the Secretary for Justice of that assurance and explanation does not begin to be impeachable at law.  Nor is the suggestion tenable that the Secretary for Justice did not take into account the declaration made by the advocate acting for the applicants.

36.  Then we received a repeat of the submission, rejected by Lam J, that the meaning of “investigation” for the purpose of the Ordinance must vary according to the law of the requesting state whereas the Letter of Request referred to investigations not under the umbrella of juridical preliminary investigations according to Italian law and therefore not an investigation contemplated by the Ordinance.

37.  The Ordinance was enacted as the instrument by which to give and to receive mutual legal assistance in criminal matters.  An Ordinance of this kind is to be interpreted generously and purposively bearing in mind the need for international cooperation to combat crime.  That is not to say that the Secretary is permitted to rubber stamp applications for assistance or that the Courts will do other than properly scrutinise challenges to the legality of his decisions.  Yet it is to say that the Ordinance is to be interpreted in a common sense manner that properly and expeditiously facilitates assistance.  The test in this case is whether the competent authorities in the foreign jurisdiction had at the time of the Letter of Request embarked upon a process which can fairly be described as the commencement of an investigation with a view to ascertaining whether suspected offences had indeed been committed and if so by whom.[10]  They clearly had.  They said so; and there was and is no reasonable basis at all to doubt what they said.

38.  In so far as it has been suggested that the offences under investigation were not sufficiently particularised, that is a suggestion that does not bear proper scrutiny.  There is no need in the case of a request made in support of an investigation to provide such particulars as may be necessary upon the preferment of an indictment; and the description in the Letter of Request of the possible offences under investigation was entirely adequate.

39.  The second limb of this appeal was to the effect that documents seized in early 2007 which concerned the Mediaset prosecution and the Rome segment of the Mediatrade proceedings cannot now lawfully be sent to Italy because those proceedings have been concluded.  But the public prosecutor has said in terms, in his letter of 29 January 2013, that: “The material seized pursuant to the letter of request is relevant to the ongoing Mediatrade proceedings.”  The argument is that that is too general a statement.  The statement is indeed general but, as a matter of law, the applicants must show that the Secretary for Justice was not entitled to accept that assurance and in seeking to discharging that onus the applicants entirely fail.

Result

40.  For these reasons, the appeal was dismissed with an order that the costs of and occasioned by the appeal be to the respondents to be taxed if not agreed.