HKSAR v. HA BUT YEE

CACC 104/2023, [2025] HKCA 274

On Appeal From [2023] HKCFI 1208

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 104 OF 2023

(ON APPEAL FROM HCCC NOS 290 AND 319 OF 2016

(CONSOLIDATED))

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REASONS FOR JUDGMENT

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Hon Macrae Acting CJHC (giving the Reasons for Judgment of the Court):

1.  On 22 January 2018, the applicant (who was D2 at trial) pleaded guilty to one count of offering an advantage to an agent, contrary to sections 9(2)(a) and 12(1) of the Prevention of Bribery Ordinance, Cap 201, while Ma Sin Chi (who was D1 at trial) (“D1”) pleaded guilty to one count of accepting an advantage as an agent, contrary to sections 9(1)(a) and 12(1) of the same Ordinance. Both pleas were entered before the trial judge, Campbell-Moffat J (“the judge”), at what was itself a retrial[1].

2.  The judge sentenced the applicant to 45 months’ imprisonment on 26 February 2018[2]; and on 11 May 2023 imposed a confiscation order against the applicant in the sum of HK$63 million (being the realisable property of the applicant) to be paid on or before 11 November 2023 (which was subsequently varied on a number of occasions by Deputy Judge A Kwok, as A Kwok J then was; see infra at [16]), failing which the applicant was to serve 10 years’ imprisonment in default consecutively to the 45 months’ imprisonment term[3].

3.  On 6 June 2023, the applicant filed an application for leave to appeal against the confiscation order. On 3 April 2024, about a week before the leave hearing, the applicant’s solicitors informed the court that the applicant was unable to attend the hearing on medical grounds[4]. On 19 April 2024, after hearing the parties’ submissions in the absence of the applicant, the Single Judge[5] referred the leave application to the full court for consideration on the following basis[6]:

“13. I have decided to refer the leave application to the full court of the Court of Appeal in order to address the issue of whether D2 [the applicant] can proceed with his leave application without being present in court or in the jurisdiction, if in the event he does not attend the hearing of the leave application. I should note that in addition to the grounds of appeal advanced on D2’s behalf, there is the issue of the parallel proceedings in HCCC 290 and 319/2016 (the confiscation order) and HCMP 373/2012 (the restraint order) and how they impact on each other, particularly the basis on which the orders were made in HCMP 373/2012 varying the confiscation order which was made by the Judge in HCCC 290 and 319/2016 and is subject of appeal proceedings before this Court.”

4.  On 7 May 2024, the applicant indicated his intention to take out an application for stay of execution of the confiscation order pending determination of the applicant’s leave application, by way of a letter enclosing a draft summons and an affidavit from the applicant’s sister Ms Winnie Ha in support[7]. On 13 May 2024, the applicant filed a consent summons, in which the parties consented to extend the date to satisfy the confiscation order from 11 May 2024 to a date before 30 June 2024[8]. On 20 May 2024, the Appeal Registry issued a letter to the applicant informing him that the applications would be dealt with by the Court of Appeal, and stating that the direction did not prevent him from satisfying the confiscation order in whole or in part before the appeal hearing.

5.  On 5 June 2024, the parties were directed to address the Court on the issue of whether a defendant, who has lodged an appeal against his sentence solely in respect of a confiscation order, can (as occurred here) vary the terms of the relevant confiscation order (and the underlying restraint order) before the disposal of the appeal (“the jurisdiction issue”).

6.  By the time of this hearing, the applicant had paid HK$3,250,030.82 on 15 March 2024; HK$1,822,201.55 on 7 May 2024 and HK$5,935,218.03 on 18 October 2024 (some HK$11 million in total) to the High Court Accounts Office as part payment of the confiscation order.

7.  On 17 December 2024, we granted leave to the applicant to appeal but dismissed the appeal. However, we gave a 4 months’ extension for payment of the remaining sum under the Order, which must now be paid by or before 17 April 2025. We said we would give reasons for our decision in due course. This we now do.

The facts admitted by the applicant

8.  By way of background, this was a retrial of D1 and the applicant. The guilty pleas related to the payment of bribes by the applicant to D1 between 16 January 2007 and 7 May 2008, which originally totalled HK$24,800,000 but, as part of an agreement between the parties, was reduced to HK$6,391,758. At the relevant time, D1 was a Chief Trader at Deutsche Bank in derivative warrants, and the applicant paid bribes to D1 for information and advice concerning derivative warrant transactions.

9.  The Summary of Facts admitted by the applicant set out the information and assistance rendered by D1 to the applicant (referred to therein as D2) as follows[9]:

“12. The said advantages were accepted by D1 as rewards for (1) giving information to D2 and his associates on 231 DB Warrants during the Material Period, which may assist D2 and his associates in their trading of the said DB Warrants (see para. 13 below) or (2) rendering assistance to D2 and his associates in their trading of the said DB Warrants (see para. 14 below).

13. In the Material Period, there were 356 telephone conversations between D1 and D2 or D2’s associates recorded and stored by Deutsche Bank in which D1 had given information to D2 and his associates on the said DB Warrants, which may assist D2 and his associates in their trading of the said DB Warrants. The information given by D1 included:

(a) Giving specific recommendations to D2 as to which DB Warrants to trade when D2 asked for such information;

(b) Responding to D2’s enquiries about the pricing (too high or too low) of a particular DB Warrant;

(c) Responding to D2’s enquiries on whether a particular DB Warrant was being priced manually or by the automatic price quotation system.

14. In addition, D1 had rendered assistance to D2 and his associates in their trading of the said DB Warrants, and in particular, the following:

(a) on or about 4^th June 2007, D2 asked D1 to provide bids for D2 to exit a particular DB Warrant (DW03539) at a price specified by D2;

(b) on or about 9^th August 2007, D2 asked D1 to help him get out of a trade as D2 had erroneously bought a DB Warrant (DW02454) at a high price;

(c) on or about 5^th October 2007, D2 asked D1 to sell DW06899 to him at a lower price;

(d) on or about 3^rd September 2007, D2 asked D1 to sell back 2 million DW04479 at the same price to HA SC who has oversold 2 million DW04479.

[It may be noted that these events were referred to as the ‘smoking gun incidents’]

15. During the Material Period, the HA family, including D2, Yam, HA SM, HA SC, HA Winnie, made a net profit of HK$203,689,156.68 through the trading of the said DB Warrants, which was deposited into the securities accounts held in name of YAM, HA SM, HA SC and Ha Winnie with CSL.”

The Reasons for Sentence

10.  On 26 February 2018, after a review of the case and its history together with an overview of the mitigation presented on behalf of D1 and the applicant as well as the relevant sentencing principles, the judge, having adopted a starting point of 5 years’ imprisonment, which she discounted by 25% for the late pleas of guilty, sentenced both D1 and the applicant to 3 years and 9 months’ imprisonment. The judge further ordered D1 to pay HK$6,391,758 to Deutsche Bank by way of restitution (representing the advantages paid by the applicant to D1).

The confiscation proceedings

11.  Upon the conviction of the applicant on 22 January 2018, the Secretary for Justice made an oral application before the judge for a confiscation order under section 8 of the Organized and Serious Crimes Ordinance, Cap 455 (“OSCO”) in the sum of HK$63,000,000[10].

12.  The Secretary for Justice filed a section 10 statement, dated 9 April 2018[11], and the applicant filed a reply, dated 27 August 2018[12]. The Secretary for Justice filed a second section 10 statement, dated 22 October 2018[13], and the applicant filed a further reply, dated 3 December 2018[14]. The judge held a series of hearings in respect of the section 8 application on 7 February 2023, 24 February 2023[15] and 27 April 2023[16] and handed down her decision on 11 May 2023. She ordered the applicant to pay the sum of HK$63,000,000 on or before 11 November 2023, failing which he was to serve a term of imprisonment of 10 years in default, which sentence was to be served consecutively to that imposed by the court on 26 February 2018 (“the Decision”).

13.  The Secretary for Justice’s submission in relation to the confiscation order was succinctly stated by the judge in the Decision as follows:

“7. At this time, D2 was trading, inter alia, in Deutsche Bank derivative warrants (‘DBWs’) through D1. It is the prosecution case that D2 spoke with D1 on an almost daily basis and they discussed both the market generally and specifically. In particular, the prosecution alleged, and the defence accepted, that D1, on a continuous basis, provided information by means of 356 telephone conversations by way inter alia of specific recommendations to D2 as to which Deutsche Bank warrants to trade[17]; responding to enquiries from D2 about pricing of particular DBWs and responding to enquiries from D2 as to whether particular warrants were being priced manually or automatically[18]. In addition to that general and specific information, D1 rendered continuous assistance to D2 and his associates in their trading of DBWs. By way of specimen examples of such assistance, such assistance was given by providing D2 with a bid which allowed D2 to exit DW 03539 on 4 June 2007; by helping D2 get out of trade in DW02454 on 9 August 2007, which D2 had purchased at too high a price; by selling DW06899 to D2 on 5 October 2007 at a lower price and by selling back 2 million of DW04479 to D2’s son when his son had oversold 2 million of that warrant.

8. It was the prosecution case, and accepted by D1 & D2, that the Ha family made a total net profit of $203,689,156.68 through the trading of DBWs during the relevant period[19] and that D1 received a total of $6,391,758[20] from D2 during the same period as a reward for information and assisting them to do so. …”

14.  The judge went on to summarise the position of the applicant as follows:

“16. Mr Robert Lee SC submits that the amount of benefit should be limited to $4,629,650 (the four ‘smoking gun’ incidents identified within the indictment) plus a sum of up to a further (a) $927,814 (Average Profit Method) or (b) $5,127,920 (Actual Profit Method) or (c) $6,374,917 (Ratio Profit Method), which is derived from 34 out of the 356 telephone calls made between D1 and D2 during the relevant period.

17. It is Mr Lee’s primary submission that the Court should determine this issue by means of a three stage approach. Firstly, by deciding whether the respondent had benefitted from the offence. Secondly, by deciding whether the respondent received payments/trading profits ‘in connection with the commission of the (relevant) offence’. Lastly, the Court must quantify that profit in accordance with s11 of OSCO. This is what he refers to as the illegality, causation and quantification requirements.

18. For these purposes, Mr Lee SC submits that the Court must consider the relevant offence and the manner in which that offence was committed. In this case, that was the provision of information by D1 to D2 via 356 phone calls which ‘may assist’ D2 and his associates in their trading of DBWs and the direct rendering of assistance, examples of which have been provided within the indictment and referred to as ‘the smoking gun’ incidents. He asks the Court to break down that ‘information and/or assistance’ by incident such that the Court is required to look at each and every telephone call to satisfy itself that some form of offending took place. Having confirmed that offending, the Court may go on to consider the gain made from the ensuing trade. It is his proposition that the act of providing information and/or assistance must be connected to an actual subsequent trade which makes a gain. For this proposition he prays in aid the Expert Report of Cheng Kai-sum (‘CKS’), in which CKS identifies 75 of the 356 telephone calls, which cover situations either where there is an enquiry as to the pricing of a DBW or where there is an enquiry as to whether the quotes for a DBW were manual or computer generated. Of these 75 telephone calls, Mr Lee SC submits that CKS identified 34 as containing information which ‘may assist’ D2’s warrant trading in that they were followed by a trade and a gain.

19. Mr Lee SC maintains that exercise was carried out by CKS and is reduced to tabulated form at CKS-22 & 23 of his report. The prosecution’s application should therefore be limited to those figures. If the Court accepts that proposition, the Court may then go on to assess the value of D2’s proceeds of crime by any of three possible methods. The greatest liability from which would amount to HK$9,747,570 under the Actual Profit Method. There is no necessity to explain the proposed methodology here save to say that I have considered it in detail and that I can see no merit in any calculation other than one which simply adds together all of the gains made without any offset for losses.”

15.  Having analysed the arguments[21], the judge accepted that the applicant’s benefit was HK$125,664,254.30[22] and that his realisable assets, as agreed between the parties, were HK$63,000,000[23].

The related proceedings in HCCC 290 and 319/2016 (the confiscation order) and HCMP 373/2012 (the restraint order)

16.  The confiscation order has been the subject of various variation orders and payments (or failure to make payments) as follows:

(i)  On 30 November 2023, Deputy Judge A Kwok in HCCC 290 and 319/2016, by consent of the parties, varied the confiscation order to extend the time for payment of HK$9,000,000 to 15 December 2023, and HK$54,000,000 to 11 May 2024;

(ii)  On 4 December 2023, Deputy Judge A Kwok in HCMP 373/2012, by consent of the parties, varied the restraint order against the applicant and others to permit the sale of assets to satisfy the confiscation order.

(iii)  On 15 December 2023, the applicant defaulted in making the first payment of HK$9,000,000.

(iv)  On 3 January 2024, Deputy Judge A Kwok in HCMP 373/2012, by consent of the parties, further varied the restraint order against the applicant and others to permit the sale of assets to satisfy the confiscation order.

(v)  On 16 January 2024, the applicant attempted to pay HK$1,550,990.39 out of time, but the payment was refused by the High Court Accounts Office.

(vi)  On 28 February 2024, Deputy Judge A Kwok in HCCC 290 & 319/2016, by consent of the parties, granted leave to the applicant to pay out of time, and from time to time, any sums he may receive from the disposal of his assets to the HKSAR Government in satisfaction of the outstanding sum of HK$9,000,000.

(vii)  On 15 March 2024, the applicant paid HK$3,250,030.82 to the High Court Accounts Office.

(viii)  On 7 May 2024, the applicant paid HK$1,822,201.55 to the High Court Accounts Office.

(ix)  On 13 May 2024, the confiscation order was further varied to the extent that the applicant should pay HK$63,000,000 on or before 30 June 2024; in default of which he should serve 10 years’ imprisonment;

(x)  On 18 October 2024, the applicant paid HK$5,935,218.03 to the High Court Accounts Office.

17.  As of the date of the hearing, therefore, the applicant has paid some HK$11 million as part of the HK$63 million confiscation order. By way of a consent summons, an extension of time was agreed by the parties until 30 June 2024 so that interest would accrue on any outstanding amount to be recovered after that date (section 11A of OSCO).

The applicant’s grounds of appeal and submissions

18.  On 23 August 2023, Mr Robert S K Lee, SC, with him Mr Brian Chau, for the applicant, both of whom also appeared for the applicant in the original confiscation proceedings, filed perfected grounds of appeal against sentence. It was submitted that the confiscation order was both wrong in principle and manifestly excessive and ought to be quashed. There are seven grounds of appeal, all of which, save Ground 6, complain about the judge’s evaluation of the agreed facts and her findings regarding the proceeds of the crime. It is contended that the judge erred in her understanding of the nature and ambit of the confiscation order, which only applies to gains caused by proven or admitted criminality. Ground 6 separately complains that the judge improperly used her own “expert opinion” and relied on extraneous materials in her determination of the amount of the confiscation order without any prior notification to the parties[24].

19.  Mr Lee argued that a majority of the transactions and their gains, which were taken into account by the judge in her calculation of the amount of the confiscation order, were outside the specific charge to which the applicant had pleaded guilty and should not have been treated as proceeds of the crime. It was said that of the 356 recorded telephone calls between D1 and the applicant, only 75 calls involved D1 providing information to the applicant, of which 38 calls and an additional four calls (referred to as the “smoking gun” incidents) concerned illicit or tainted transactions, resulting in gains of HK$9.72 million[25]. He contended that the rest of the transactions amounted to general trading in the market between the applicant and D1, which was permitted by Deutsche Bank, and should not have been taken into account in determining the extent of the confiscation order. Accordingly, it was submitted that the judge was wrong to find that the proceeds of the crime amounted to HK$203 million, which was reduced to HK$125 million after excluding the proceeds of the applicant’s family members. In essence, Mr Lee adopted the arguments he advanced during the confiscation proceedings.

20.  In respect of the jurisdiction issue, Mr Lee submitted that: firstly, the jurisdiction to make and enforce both the restraint order and the confiscation order (including variation of their terms) lay in the Court of First Instance on a reading of the relevant legislation[26]; secondly, there should be a separation of jurisdiction to enforce a confiscation order (which is criminal in nature) and the underlying restraint order (which requires full disclosure of the offender’s assets) so as to avoid privileged and potentially self-incriminating materials being accessed by the criminal court and the parties before it; thirdly, the Court of Appeal only assumes jurisdiction over enforcement matters of a confiscation order[27] after granting leave to appeal against the same. In the present case, since the Single Judge has referred the leave application to the full court, it was appropriate for the applicant to make the applications for an extension of time (to 30 June 2024) and an interim stay of execution to the Court of Appeal. However, the jurisdiction to deal with enforcement matters relating to the underlying restraint order remains with the Court of First Instance, not the Court of Appeal.

The respondent’s submissions

21.  Ms Betty Fu, together with Mr Matthew Hui, for the respondent, both of whom also appeared at the original confiscation proceedings, pointed out that the bribes paid by the applicant to D1 in the amount of HK$6,391,758 over 17 months in respect of 231 derivative warrants were for D1 giving information to the applicant and his associates in respect of derivative warrants issued by Deutsche Bank, which may assist the applicant and his associates in their trading of those derivative warrants.

22.  In respect of the jurisdiction issue, the respondent submitted, firstly, that HCMP 373/2012 (concerning the restraint of funds in order to preserve the assets of the defendant for any subsequent confiscation order[28]) and HCCC 290/2016 (concerning the confiscation order seeking to deprive the offender’s ill-gotten gains by stripping him of the proceeds or benefits obtained) are related proceedings, but with different objectives, and not parallel proceedings in its strict sense. They impact on each other, but the existence or otherwise of a restraint order does not affect the granting of a confiscation order, or the amount to be confiscated. Secondly, the respondent agreed with the applicant that the variation of the underlying restraint order does not engage the jurisdiction of the Court of Appeal in the application for leave to appeal against a confiscation order and the jurisdiction still lies with the Court of First Instance[29]. Thirdly, depending on the matter to be varied in a confiscation order, the jurisdiction may rest with the Court of First Instance, or the Court of Appeal, or both. The variation of a confiscation order, insofar as an adjustment of realisable property is concerned, under section 20 of OSCO, falls within the jurisdiction of the Court of First Instance. An appeal against a confiscation order by virtue of section 83I of the Criminal Procedure Ordinance, Cap 221 (involving the scope and quantum of confiscation) falls within the jurisdiction of the Court of Appeal. Extension of time can be viewed as one of the matters collateral to the exercise of criminal jurisdiction[30] and can be dealt with by the Court of First Instance or the Court of Appeal (either sitting as the Full Court or as a Single Judge) under the Rules of the High Court[31].

23.  In the present case, the respondent opposed the stay application, and argued that the claim that a forced sale would result in a loss on the applicant’s part (as asserted in the affirmation of the applicant’s sister) could not justify late payment, since: (i) the interests of justice did not operate in such a way as to accommodate the preferred or best financial timing in which to satisfy a confiscation order; (ii) the contention does not involve the loss of liberty or irremediable dissipation of the offender’s assets; (iii) a weak property market is not a valid reason for late payment, and the better course would be an application under section 20 of OSCO.

Discussion

24.  The foundation of Mr Lee’s argument is that since “a person’s proceeds of an offence” are limited to “any payments or other rewards received by him at any time in connection with the commission of that offence”, in accordance with section 2(6)(a)(i) of OSCO, it was incumbent on the prosecution, in what were contended to be separate and distinct proceedings for confiscation, to prove which of the specific transactions had resulted in gains so as to determine “the payments or other rewards” he received from them. Accordingly, what was required was proof of which gain was assisted by which telephone call between the applicant and D1. Mr Lee argued that only 34 telephone calls could be said to have resulted in the applicant making any gains and asserted that most of the 4,605 warrant transactions were conducted by the applicant otherwise than in connection with the telephone calls. Moreover, those transactions which may be said to be connected with the 34 telephone calls suggested gains of only HK$9.72 million. A further separate argument suggested that since Deutsche Bank must have known about the conversations between D1 and the applicant because they were recorded and would have realised how much the applicant was making from his trades in derivative warrants, there was tacit consent to an arrangement from which the bank was deriving a substantial benefit, which militated against the making of any confiscation order at all.

25.  We unreservedly reject these arguments. The Summary of Facts, which the applicant accepted and admitted when he pleaded guilty (at a time when he was represented by different Senior Counsel), explicitly stated that the advantages concerned were rewards for D1 giving information to the applicant in relation to “231 DB Warrants during the Material Period”[32], which period was specified as “between 16^th January 2007 and 7^th May 2008”[33]; and that during this specified period, “there were 356 telephone calls between D1 and D2 or D2’s associates recorded and stored by Deutsche Bank in which D1 had given information to D2 and his associates on the said DB Warrants, which may assist D2 and his associates in their trading of the said DB Warrants” (emphasis added)[34]. It was further admitted that “during the material period, the HA family, including D2, YAM, HA SM, HA SC, HA Winnie, made a net profit of HK$203,689,156.68 through trading of the said DB Warrants, which was deposited into the securities accounts held in name of YAM, HA SM, HA SC and HA Winnie with CSL” (emphasis added)[35].

26.  It seemed to us that Mr Lee was attempting to go behind, if not resile from, the plain terms of the applicant’s admissions in the Summary of Facts, which were that there were 356 telephone calls during the material period, when information was given by D1 for reward so as to assist the applicant and his associates on the 231 DB Warrants, thereby yielding them a net gain of HK$203,689,156.68. With respect, it is not open to him to do so.

27.  As for the notion that Deutsche Bank should be taken to have approved of these transactions because they were recorded by the Bank, both D1 and the applicant pleaded guilty to their respective offences. It was never contended that Deutsche Bank knew about the bribes paid to its employee (D1) and it cannot sensibly be argued now that there was consent in law, even on an implied, tacit basis.

28.  The plain words of the Summary of Facts, which were formally admitted at the retrial, when the applicant was properly and fully represented by experienced Senior Counsel, are, with respect, the simple answer to Mr Lee’s submissions. It is also clear to us that there must have been significant and lengthy discussions between the parties in arriving at a Summary of Facts agreeable to the defence because the applicant’s then Senior Counsel referred during mitigation to a protracted period of “plea bargaining”[36], during which the applicant had not been able to indicate his intention of pleading guilty, “because there was no deal”[37]. We also note, that the judge in her Reasons for Sentence recorded that “the figure which now appears on the indictment is something of a compromise, as it reflects the difference between the monies said to be received by D1 from all the Ha family accounts and the profit made by him in his Hang Seng Index Futures trading”[38].

29.  We might further point out that when Mr Lee later appeared for the applicant at separate forfeiture proceedings, the applicant’s realisable assets were further “agreed at a compromise figure of HKD63,000,000”[39]. Clearly, where such enormous figures were concerned, as they were in this case, both successive Senior Counsel, who represented the applicant, would have been concerned to reduce the relevant figures in the interests of their client for sentencing purposes, which would inevitably include confiscation or forfeiture proceedings. That is part of the accepted process of criminal litigation. In so doing, however, we cannot accept that admissions made by the applicant, when properly and fully represented throughout this process by experienced Senior Counsel, did not mean precisely what they said.

30.  The sum involved is a very large sum of money indeed, although it could have been even larger. We understand that the applicant is very ill and it will have taken time to realise his assets in order to satisfy the order for forfeiture, in a market that may not be conducive to achieving the sort of prices he might have wished or expected a few years ago. This Court, however, cannot be dictated to by market forces on a matter such as this. Accordingly, while we grant the applicant leave to appeal against the confiscation order of 11 May 2023, we dismiss the appeal.

31.  Nevertheless, we decided that in all the circumstances we should grant a further extension of time for the applicant to settle the confiscation order. Since, as a matter of fact, the applicant was present in Court at both hearings on 4 and 17 December 2024, we consider it unnecessary to decide the moot question as to whether the application may proceed in the applicant’s absence.

32.  An incidental question arose, during the course of argument, as to whether, if we did so, we were in effect allowing the appeal to that extent, or still dismissing the appeal. We noted that in HKSAR v Lin Kei Tat[40], the Court dismissed an appeal against a confiscation order in the sum of some HK$10,334,000 but gave the appellant three months to comply with the order, with a prison term in default. A similar order was made by the Court in 香港特別行政區 訴 李文健[41]. We agree with that way of disposing of the matter.

33.  Having dismissed this appeal, we shall nevertheless extend the date for payment of the sum in the order, which must be paid on or before 17 April 2025, with the prescribed period of imprisonment in default.