ATTORNEY GENERAL v. LEE CHAU PING AND ANOTHER

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. I have before me an ex parts originating summons taken out by the applicant dated 17 December 1996 under the Drug Trafficking (Recovery of Proceeds) Ordinance, Chapter 405 (the Ordinance) and rule 2A of Order 115 of the Supreme Court Rules. The applicant asks for orders that the first respondent pay $22,830,000, and the second respondent pay $630,000, to the Registrar.

2. In terms of Order 115, this application was heard in chambers, but, with the agreement of the applicant, I adjourn the matter into court for the purposes of delivering this judgment.

3. 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 So-ngor, the mother of the first respondent, and the court appointed receiver of the property of both respondents. Mr Lee Wai Kong, a brother of the first respondent, appeared at the request of Madame Luk So-ngor and Mr Cheuk Tak-wah, but they did not wish to make a 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.

4. The scheme of Part II of the Ordinance, so far as it is relevant to this matter, is that, under section 3(1), where "proceedings for one or more drug trafficking offences have been instituted against a person but have not been concluded because the person has absconded and an application is made by or on behalf of the Attorney General for a confiscation order", the court must follow a specific procedure.

5. On such an application, the court has to determine whether the person has benefited from drug trafficking. In the circumstances of this case, there are several things regarding which the court must be satisfied before it is able to proceed to the step of determining whether the person has benefited from drug trafficking -

6. In the context, "those proceedings" referred to in item 4. seem to refer to the prosecution proceedings for a drug trafficking offence, not the proceedings for a confiscation order, in spite of the fact that this does not make much sense.

7. Once the court is so satisfied, the court then determines whether the person has benefited from drug trafficking; that is, whether he has received any payment or other reward in connection with drug trafficking carried on by him or another.

          "If the court determines that he has so benefited, the court shall determine in accordance with section 6 the amount to be recovered", and shall order the person to pay that amount.

8. Section 4 provides that a person's proceeds of drug trafficking are any payments or other rewards received by him in connection with drug trafficking and any property derived or realised, directly or indirectly, by him from any of the payments or other rewards. The value of the proceeds is the aggregate of the values of the payments or other rewards and that property.

9. This section seems clear enough, although its effect seems to be that, if a defendant sells drugs for $50 million and buys a house with that money, the proceeds of drug trafficking are both the $50 million and the house, and the value of the proceeds is $100 million.

10. Under section 6, the amount to be recovered shall be the amount the court assesses to be the value of the proceeds of the trafficking. If the court is satisfied as to any matter relevant for determining the amount that might be realised at the time the confiscation order is made, whether by an acceptance under section 5 or otherwise, the court may issue a certificate giving the court's opinion as to the matters concerned.

11. The standard of proof required to determine any question as to whether a person has benefited from drug trafficking or the amount to be recovered shall be on the balance of probabilities.

12. In the ordinary course, the way in which a court is satisfied about something is by evidence. In this case, no evidence has been presented. I have before me a meticulously prepared statement by Detective Senior Inspector Tse Leung-wah, together with many box files of witness statements and exhibits to which the inspector refers in his statement. This statement by Inspector Tse is said to be prepared for the purposes of section 5. There is no doubt that what Inspector Tse says, supported by the documents to which he refers, would, if admissible for this purpose, satisfy me to a high degree of everything in respect of which the applicant is required to satisfy me. The applicant clearly rests his case on this section 5 statement; there is nothing else upon which it can rest. The question is: Is the statement admissible for the purposes of satisfying the court of the essential facts?

13. Section 5 is not free from difficulties in construction. It is clear that amendments made in 1995 were designed to adapt the provisions for the case where the defendant had died or absconded, but the end product does not achieve this objective very well, if at all. I hasten to say that this may not be the fault of the draftsman. I know how pressures from legislators and unwelcome contributions to the drafting process during the legislative process can sometimes destroy a carefully crafted legislative structure.

14. 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 -

15. Section 5(1B) says -

"(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 -

16. No such requirement has been imposed in this case. This is not surprising. The whereabouts of the respondents is unknown. It would not make much sense to impose such a requirement in these circumstances.

17. If the defendant accepts any allegation, the court may, for the purposes of determining whether the defendant could have been convicted, whether the defendant benefited from drug trafficking and assessing the value of the proceeds, as conclusive.

18. Under section 5(3), if the defendant fails to comply with a requirement under subsection (1B), he may be treated for the purposes of this section as accepting every allegation in the statement apart from, as far as is relevant here, any allegation that he could have been convicted, any allegation that he has benefited from drug trafficking and any allegation that any payment or other reward was received by him in connection with drug trafficking.

19. Section 5(7) provides, as far as relevant, that in as case such as this, section 5 "shall have effect as if a copy of the statement tendered under subsection (1) had been served on the defendant."

20. It is difficult to understand what purpose is served by subsection (7). Nothing flows from the provision except the effect of subsection (3). But subsection (3) only kicks in if there has been a requirement under subsection (1B). But even if such a requirement had been illogically imposed, with the obvious consequence of the respondents failing to comply, subsection 3 says the respondents may be treated as accepting every allegation in the statement apart from the some of the very allegations on which the applicant seeks to rely.

21. Frankly, section 5 leaves me baffled. It does not seem to be effective in achieving what I assume the 1995 amendments set out to achieve. I do not how I can construe the section so that the statement can be used to satisfy the court on the points on which it must be satisfied.

22. The effect of section 5 was not argued before me on 17 April 1997. It was assumed, I think, by Mr Blanchflower that the section worked as it seems it was intended to work, and I did not spot the difficulties during the course of argument. I thought I might have overlooked some way out of the problem. I believed the applicant should have the opportunity of addressing further argument to me on the point. Accordingly, I invited Mr Blanchflower to address further argument to me. He did so on 23 April 1997.

23. Mr Blanchflower agrees that he cannot rely on section 5(3). He 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 section 5 statement can be used by the court although it is not evidence and although there is no express provision in the legislation allowing me to do this.

24. 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.

25. 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.

26. 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.

27. The applicant may wish to proceed on the basis of evidence. Accordingly, I adjourn this matter sine die, with liberty to set the matter down for further hearing for directions or the hearing of evidence.