HKSAR v. PAU SZE CHIU

1997, No. HCCC 441

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CRIMINAL JURISDICTION

CRIMINAL CASE NO. 441 OF 1997

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J U D G M E N T

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1. This is an application for a confiscation order under s.3 of the Drug Trafficking (Recovery of Proceeds) Ordinance, Cap. 405 ("the Ordinance"). The confiscation order is sought against the Defendant, Pau Sze-chiu, who was on 26th March 1998 sentenced in the High Court by Saied J. to a total of 18 years' imprisonment on three charges of trafficking in dangerous drugs, he having earlier pleaded guilty to those charges in the Magistrate's Court. The dangerous drugs the subject-matter of these three charges came to a total of 4,125.54 gms of a mixture containing 2,994.72 gms of heroin hydrochloride.

2. The prosecution has submitted a draft order, the terms of which read as follows:

"(i) The Defendant PAU Sze-chiu has benefited from drug trafficking in the amount of HK$892,120.00.

(ii) The Defendant's realisable property is the sum of HK$576,728.82, of which HK$541,287.40 is held by Chinese female YU Lai-wah (holder of Hong Kong Identity Card No. XXXXXXX(X)) at her Bank of China account No. 012-878-1-021760-2.

(iii) The Defendant do pay the sum of HK$576,728.82 to the Registrar of the High Court from funds lawfully held by the Commissioner of Police so soon thereafter as is practicable to do so and in default to serve a term of imprisonment, such sentence to run consecutively to the sentence of 18 years' imprisonment imposed by Mr. Justice Saied on 26th March 1998."

3. I am asked to make an order in those terms, fixing such term of imprisonment in default as I see fit subject to the Ordinance.

4. The issue is whether the money in the account referred to in item (ii) of the order sought belongs to the Defendant rather than the account holder, Madam Yu Lai-wah, who is the Defendant's common law wife. The statement tendered by the prosecution under s. 5 of the Ordinance congently traces the proceeds of the Defendant's drug dealing into that account (which I will call "the said account") and if the money therein is not Madam Yu's, then the only reasonable inference is that it constitutes realisable property of the Defendant's being the proceeds of drug trafficking on his part.

5. The Defendant did not file anything in response to the section 5 statement tendered to the court by the prosecution.

6. What had happened was that Madam Yu, who was the 3rd Respondent in the restraint proceedings, purported to take part in the confiscation proceedings even though, as Mr McLanachan who appeared on her behalf accepted when I pointed it out to him, she was not entitled to be heard as a party in this application for a confiscation order against the Defendant.

7. Mr McLanachan sought a short adjournment, which I granted. Following the adjournment, Mr McLanachan appeared for the Defendant, and eventually called Madam Yu as one of the witnesses for the Defendant in these confiscation proceedings.

8. It was agreed between the prosecution and the Defendant that Madam Yu's 3rd affirmation would stand as the Defendant's response to the section 5 statement tendered by the prosecution.

9. Initially Mr McLanachan indicated that Madam Yu was laying claim to only $126,300 of the money in the said account. However in the course of giving evidence Madam Yu said that she is laying claim to all the money in the said account. I should mention that Ms Chan for the prosecution submitted that the Defendant was not entitled to rely on matters other than those covered by Madam Yu's 3rd affirmation. But I indicated to Ms Chan that she should conduct her application on the assumption that no such restriction would be placed on the Defendant's opposition to the application for this confiscation order. I received all the evidence tendered on behalf of the Defendant including the oral evidence of: Madam Yu; her stepsister Madam Miu Lai Ming; her son Mr Chan Hoi Wai; and her daughter Ms Chan Hoi Yan. I take all of that evidence into account.

10. As far as Madam Yu's son and daughter are concerned, they both gave evidence of giving her money regularly. The son said that he used to give her $2,000 per month since 1994 when he started working. The daughter said that she used to give her $3,000 per month since 1992 when she started working. Even assuming all of that to be true, it does not show that the money in the said account came from such payments by Madam Yu's children.

11. The daughter also gave evidence, which I will deal with later, about the gift of money to Madam Yu by the groom's family on the occasion of the daughter's wedding.

12. The evidence of Madam Yu's stepsister also has something to do with that wedding. Such evidence comes to this. In September 1996 she had borrowed $40,000 from Madam Yu and she had repaid that loan to Madam Yu by two instalments of $20,000 each, once on 17th December 1996 and once on 27th December 1996. The connection with the wedding will appear when I deal with Madam Yu's evidence later.

13. I turn now to Madam Yu's evidence. Her evidence is that all the funds in the said account are her personal savings over the years and have nothing to do with the Defendant's criminal activities. In particularising that assertion, she spoke in her 1st affirmation of: pocket money from her son and daughter accounting to $60,000 a year; her earnings as a waitress in a karoke restaurant of about $9,000 to $10,000 a month; her earnings of about $2,400 a month as a part-time receptionist in a karaoke restaurant; profits of about $180,000 to $200,000 from a garment business of hers; about $20,000 per month as pocket money given to her by a Taiwanese businessman who wanted her to be his girlfriend; and jewellery given to her by him which she sold for about $300,000.

14. In her 2nd affirmation, she said that her salary as a waitress was paid by autopay into her Hang Seng Bank account and when part of the salary was not used, it would be deposited into the said account. She also dealt with what she called the "account history" of the said account exhibiting a statement for the period from 31st May 1996 to 31st May 1997.

15. In her third and last affirmation, she dealt with $63,150 deposited into the said account by way of three deposits during the second half of 1996, saying that that sum was made up from gifts of money to her on the occasion of her daughter's wedding. She said that of that $63,150, $23,150 was the amount remaining after purchasing jewellery for her daughter out of the gift of money of $28,000 from the groom's family. As to the remaining $40,000, she said this. Out of the $46,100 which she received as gifts from the wedding guests, she had lent $40,000 to her stepsister, and when her stepsister repaid her in December 1996, she had deposited $20,000 into the said account on the 17th and had deposited another $20,000 into the said account on the 27th of December 1996.

16. In her oral evidence, she sought to support this by pointing to two deposit entries in the statement of the said account showing two deposits of $20,000 each on each of those two dates. She also dealt in her oral evidence with all the matters covered by her affirmations except that she did not deal with her earnings as a part-time receptionists, the pocket money from the Taiwanese businessman or the gifts of jewellery from him.

17. Madam Yu's evidence, both in her affirmations and in her oral evidence, was lacking in detail even where detail is reasonably to be expected. On the whole, her account strikes me as inherently improbable, especially when contrasted with the prosecution's material indicating a pattern by which the proceeds of the Defendant's drug dealing activities found their way into the said account. I also have to say that, having seen and heard Madam Yu giving evidence, I formed an unfavorable impression of her credibility.

18. In addition to the foregoing, there are the following matters. First of all, there are internal contradictions in her evidence. These include the following. In her 1st affirmation, she said that her garment business lasted from 1994 to 1996. In her oral evidence, she said that the business lasted from 1995 to 1997. When taxed with that discrepancy, she offered an explanation which I did not find convincing either as a matter of substance or in the way she gave it. Another internal contradiction is this. She testified that she would save up the sums given to her by her children and then make deposits into the said account in larger amounts. There are however a significant number of deposits into the said account made in sums considerably less than what she said that her children gave her each month. In her evidence-in-chief, she spoke of depositing into the said account a sum of $6,100 representing what remained of the wedding gifts of money totalling $46,100 after she had loaned $40,000 of that sum to her stepsister. When she was cross-examined as to why no deposit of $6,100 was shown in the statement of the said account, she began by denying that she had testified to having made such a deposit. When a note of her testimony to that effect was read out to her, she then said that she had deposited a sum larger than $6,100 made up of that $6,100 and some other money of her own.

19. Secondly, there was the following discrepancy between Madam Yu's evidence and that of her daughter. Madam Yu said that out of the gift money of $28,000 from the groom's family, one necklace was purchased leaving a balancing of $23,150 which was deposited into the said account. She sought to support this by pointing to a deposit entry in the statement of the said account showing a deposit of $23,150 on 10th September 1996. Her daughter's evidence, however, contradicted this. The daughter said that out of that $28,000, not only a necklace but also a bracelet and a ring were purchased and that the amount left was $7,000 to $8,000. I find the daughter's evidence on this more convincing than Madam Yu's. And what the daughter said flatly contradicts Madam Yu's evidence to the effect that the $23,150 was from the gift of money from the groom's family.

20. I reject Madam Yu's evidence by which a confiscation order is opposed. I am satisfied on the whole of the evidence that the Defendant has benefited from drug trafficking. I assess the value of the Defendant's proceeds of drug trafficking at HK$892,120.00. I am also satisfied that the amount that might be realised is less than the assessed value of the Defendant's proceeds of drug trafficking, and I certify that the following items to be realisable assets with a total estimated value of HK$576,728.82:

1) Monies in various bank accounts held in the name of the Defendant totalling HK$5,441.42;

2) One private car registration no. GM8414 with the estimated value of HK$30,000 and

3) Monies held in the said account i.e., bank account number 012-878-1-021760-2 of Chinese female Yu Lai-wah (holder of Hong Kong Identity Card No. XXXXXXX (X)) at the Bank of China in the amount of HK$541,287.40.

21. I make a confiscation order against the Defendant in the sum of HK$576,728.82, and I fix a term of imprisonment of 20 months which the Defendant is to serve if any of the amount which he is liable to pay is not duly paid or recovered.